Jackson[R] Reports Record Retail Sales; Rise in Net Income.LANSING, Mich. -- Jackson National Life Insurance Company([R]) (Jackson) generated retail sales and deposits of $3.4 billion during the second quarter of 2009, recording the highest retail sales quarter in the company's history.1 First half retail sales and deposits of $6.1 billion were up 3 percent over the same period in 2008. Jackson reported first half IFRS unaudited net income of $279 million2, up from $106 million during the first half of 2008, due primarily to the positive impact of movements in non-operating derivative holdings.
"Jackson's long-standing tradition of maintaining financial discipline has resulted in relatively few changes to the company's product set or business model," said Clark Manning, Jackson's president and chief executive officer. "Our consistency throughout the economic downturn has been perceived as a strength by our distribution partners and their clients, driving sales and new business opportunities."
Jackson, an indirect wholly owned subsidiary of the United Kingdom's Prudential plc (NYSE: PUK), sold $3.8 billion in variable annuities during the first six months of 2009, compared to $3.5 billion during the same period in the prior year. First half sales of fixed-rate annuities totaled $1.9 billion, up from $1.6 billion during the first half of 2008, and were comprised of $1.0 billion in traditional deferred fixed annuity sales and nearly $900 million in fixed index annuity sales. First half 2009 annuity net flows (total premium minus surrenders, exchanges and annuitizations) of $2.7 billion were 23 percent higher than the same period in the prior year.
At June 30, 2009, Jackson had $3.7 billion of regulatory adjusted capital, nearly seven times the regulatory requirements.3 Jackson has maintained the same financial strength ratings for more than six years. In August 2008, Standard & Poor's affirmed Jackson's financial strength rating. In March 2009, both Moody's Investors Service and Fitch Ratings affirmed Jackson's financial strength ratings. In July 2009, A.M. Best also affirmed Jackson's financial strength rating. As of July 31, 2009, Jackson was rated:
* A+ (superior) by A.M. Best
* AA (very strong) by Standard & Poor's
* AA (very strong) by Fitch Ratings
* A1 (good) by Moody's Investors Service, Inc.
"The diversification of Jackson's revenue and the success of the company's hedging programs have allowed us to effectively manage our earnings and capital in a very difficult market," said Andy Hopping, Jackson's chief financial officer.
In the first half of 2009, Jackson sold $25 million in life insurance products, compared to $30 million in the first half of 2008. Jackson did not sell any institutional products during the first half of 2009, as the company redirected available capital to support higher-margin annuity sales. Jackson participates in the institutional market on an opportunistic basis when capital is available and margins are attractive.
Jackson ranked eighth in new variable annuity sales during the first quarter of 2009, with a market share of 5.0 percent, up from 12th and a market share of 4.4 percent in the first quarter of 2008.4 In the first quarter of 2009, Jackson ranked sixth in sales of fixed index annuities, with a market share of 5.0 percent, up from 10th and a market share of 3.4 percent in the first quarter of 2008.5 Jackson ranked ninth in sales of traditional deferred fixed annuities, with a market share of 2.7 percent, compared to ninth and a market share of 3.3 percent in the first quarter of 2008.6
Curian Capital, Jackson's separately managed accounts subsidiary, accumulated $402 million in deposits during the first half of 2009, down from $668 million during the same period of the prior year, as the steep market decline in the first quarter weakened consumer demand for equity-based products. However, Curian's second quarter 2009 deposits rebounded with the equity markets, increasing 88 percent over first quarter 2009. As of June 30, 2009, Curian's IFRS assets under management totaled $2.7 billion, compared to $2.6 billion at the end of 2008.
Slowing consumer demand for equity-based products also negatively impacted the results of Jackson's affiliate, National Planning Holdings([R]), Inc. (NPH), a network of four independent broker-dealers. However, the network remained profitable in the first half of 2009. NPH generated IFRS revenue of $284 million, compared to $319 million during the first half of 2008, and $2 million in IFRS net income, down from $5 million during the same period of the prior year. The network reported gross product sales of $6.9 billion in first half 2009, compared to $7.4 billion in first half 2008. At June 30, 2009, NPH had increased its number of registered representatives to an all-time high of 3,535, up from 3,025 at June 30, 2008 and from 3,165 at December 31, 2008.
"The recent plunge in the equity markets has taken a huge toll on the 78 million Baby Boomers who are saving for retirement and further underscored the value of lifetime income guarantees," Manning said. "With a full suite of annuity products and a strong position in advice-based distribution channels, Jackson is well-positioned to benefit from increased consumer demand to utilize annuities as effective retirement vehicles."
(1)Deposits from retail mutual funds and Jackson's subsidiary Curian Capital have been included in Jackson's total and retail sales and deposits figures.
(2)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 is 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.
(3)Based on authorized control level capital requirements.
(4)Source: The Morningstar Annuity Research Center, First Quarter 2009 Results and First Quarter 2008 Results. Jackson ranked eighth out of 37 companies in first quarter 2009 and 12(th) out of 39 companies in first quarter 2008.
(5)Source: Advantage Index Sales and Market Report, 1(st) Quarter 2009 and 1(st) Quarter 2008. Jackson ranked sixth out of 39 companies in first quarter 2009 and 10(th) out of 46 companies in first quarter 2008.
(6)Source: LIMRA International U.S. Individual Annuities Sales Survey, First Quarter 2009 and First Quarter 2008. Jackson ranked ninth out of 56 companies in first quarter 2009 and ninth out of 59 companies in first quarter 2008.
About Jackson National Life Insurance Company
With nearly $77 billion in assets (IFRS unaudited)*, 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 and retail brokerage services. For more information, visit www.jackson.com.
*Jackson has nearly $77 billion in total IFRS assets and nearly $68 billion in IFRS policy liabilities set aside to pay primarily future policyowner benefits (as of 6/30/09).
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 $403 billion in assets under management as of June 30, 2009. 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.