Jackson[R] Reports 2008 IFRS Revenue of $4.5 Billion; Strong Core Operating Earnings Offset by Investment Writedowns.
"Under challenging economic conditions, Jackson delivered strong sales and good pretax operating income," said Clark Manning, Jackson's president and chief executive officer. "Jackson's conservative approach to risk management allowed the company to preserve capital and mitigate the impact of falling equity markets and frozen credit markets during the latter half of the year."
Jackson, an indirect wholly owned subsidiary of the United Kingdom's Prudential plc (NYSE: PUK), recorded sales and deposits of more than $14.0 billion3 in 2008, down slightly from record sales of $14.5 billion in the prior year. At year-end 2008, Jackson had nearly $4.0 billion of regulatory adjusted capital, nearly nine times the regulatory requirements4, after remitting a $280-million dividend to its parent company.
"Due to disciplined pricing and comprehensive hedging of variable annuity guarantees, Jackson's equity hedging program performed as designed, on a statutory capital basis, offsetting the effect of the 38.5-percent drop in the S&P 500 Index in 2008," said Andy Hopping, Jackson's chief financial officer.
Jackson reduced its statutory general expense to average assets ratio to 47 basis points in 2008 from 49 basis points in 2007, giving the company a 28-basis-point advantage over the average expense ratio of its top 25 annuity competitors.5Although Jackson increased the efficiency of its operations, it was not at the expense of service. In 2008, Jackson earned its fourth World Class Customer Satisfaction award from the Service Quality Measurement (SQM) group and SQM's Highest Satisfaction by Industry award for having the highest customer satisfaction in the financial services industry.
Jackson's retail sales and deposits, which exclude institutional product sales, exceeded $11.8 billion in 2008, compared to $12.6 billion in 2007.3 Variable annuity sales totaled $6.5 billion, down from $9.1 billion during the prior year, reflecting continued volatility in US equity markets and intense price competition. Jackson ranked 12th in new VA sales in 2008, the same as in 2007.6 In the fourth quarter of 2008, Jackson climbed two spots to rank 10th in new VA sales.6 In full-year 2008, Jackson's flagship variable annuity, Perspective II([R]), was the top-selling VA contract in the independent broker-dealer channel for the sixth year in a row.7
Sales of traditional fixed annuities were $3.2 billion during 2008, up from $1.1 billion in 2007, reflecting Jackson's ability to meet changing customer demands through the company's diversified product portfolio. Jackson sold $928 million in fixed index annuities, up from $894 million during 2007. According to LIMRA, during the fourth quarter of 2008, Jackson achieved a top-10 ranking in total annuity sales, as well as in variable annuity, fixed annuity and fixed index annuity sales.8
Curian Capital, Jackson's separately managed accounts subsidiary, accumulated $1.1 billion in deposits during 2008, compared to $1.3 billion in the prior year. As of December 31, 2008, Curian's IFRS assets under management totaled $2.6 billion, compared to $3.5 billion at the end of 2007, due primarily to a sharp decline in equity markets.
Jackson's US affiliate, National Planning Holdings([R]), Inc. (NPH), a network of four independent broker-dealers, generated IFRS revenue of $608 million in 2008, up 1 percent over 2007, and $9 million in IFRS net income, down from $10 million during the prior year. The network recorded gross product sales of more than $14.6 billion, up 2 percent over 2007. NPH increased its number of registered representatives by 5 percent to an all-time high of 3,165 at the end of 2008.
"As a result of our Long-Term Smart(SM) strategy, Jackson has provided Prudential plc with a self-financing, scale position in the world's largest retirement market; a well-managed, disciplined operation with a solid capital base, despite one of the worst credit environments since the Great Depression; and a dividend that has increased at a 24-percent compound average growth rate over the past five years," Manning said.
(1)International Financial Reporting Standards (IFRS) is a principles-based set of international accounting standards indicating how transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board in an effort to increase global comparability of financial statements and results. IFRS is used by Jackson's parent, Prudential plc, to report the Group's financial results.
(2)IFRS pretax operating income is based on longer-term investment returns and longer-term normalized derivative pricing. It excludes short-term fluctuations in investment returns and derivative pricing as well as changes in accounting principles and extraordinary items. A reconciliation to net loss based on US generally accepted accounting principles (US GAAP) is as follows (amounts in millions):
(3)Deposits from retail mutual funds and Jackson's subsidiary Curian Capital have been included in Jackson's total and retail sales and deposits figures.
(4)Based on authorized control level capital requirements.
(5)The top 25 individual annuity peer competitors encompass about 40 percent of industry assets and include the 25 largest individual annuity competitors ranked by individual annuity reserves. Source: National Underwriter Insurance Data Services from Highline Data, as of 12/31/08.
(6)Source: The Variable Annuity Research & Data Service (VARDS([R])), a unit of Morningstar, Inc., 2008 year-end results. Jackson ranked 12(th) out of 39 companies in full-year 2008 and 10(th) out of 38 companies in 4Q08.
(7)Source: Morningstar([R]) Annuity Research Center, 2003, 2004, 2005, 2006, 2007 and 2008 year-end results. Ranked number one out of 980 investment contracts in 2008; one out of 528 in 2007; one out of 487 in 2006; one out of 260 in 2005; one out of 374 in 2004; and one out of 251 in 2003. Does not apply to Perspective II in New York.
(8)Source: LIMRA International U.S. Individual Annuities Sales Survey, Fourth Quarter 2008; 59 companies were included in the survey.
About Jackson National Life Insurance Company
With nearly $75 billion in assets (IFRS)*, Jackson National Life Insurance Company (Jackson) is an industry leader in variable, fixed and fixed index annuities. The company also offers life insurance and institutional products. Jackson markets its products in 49 states and the District of Columbia through independent and regional broker-dealers, financial institutions and independent insurance agents. Jackson's subsidiary, Jackson National Life Insurance Company of New York([R]), similarly markets products in the state of New York. Through its affiliates and subsidiaries, Jackson also provides asset management, retail mutual funds and retail brokerage services. For more information, visit www.jackson.com.
*Jackson has nearly $75 billion in total IFRS assets and more than $69 billion in IFRS policy liabilities set aside to pay primarily future policyowner benefits (as of 12/31/08).
Annuities and life insurance products are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable products are distributed by Jackson National Life Distributors LLC. May not be available in all states and state variations may apply. These contracts have limitations and restrictions, including possible withdrawal charges, recapture charges and excess interest adjustments. Contact your representative or the Company for more information.
Please remember that a Jackson annuity is intended to be a long-term, tax-deferred vehicle for retirement. An annuity's earnings are taxable as ordinary income when withdrawn and, if taken before age 59 1/2, may be subject to a 10% federal tax penalty. Variable annuities involve investment risks and may lose value.
Jackson National Life Insurance Company is an indirect subsidiary of Prudential plc, a company incorporated and with its principal place of business in the United Kingdom. Prudential plc and its affiliated companies constitute one of the world's leading financial service groups. It provides insurance and financial services directly and through its subsidiaries and affiliates throughout the world. It has been in existence for over 150 years and had more than $358 billion in assets under management as of December 31, 2008. Prudential plc is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.
The following cautionary statement is included to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. However, as with any projection or forecast, forward-looking statements are inherently susceptible to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated as reflected in such forward-looking statements. There can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished.
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|Article Type:||Financial report|
|Date:||Mar 19, 2009|
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