Jackson Financial touts strong RILA sales, investment income in Q3

A product pivot to registered indexed-linked annuities delivered momentum for Jackson Financial during the third quarter.

RILA product sales totaled $807 million in the quarter, up from $562 million in the year-ago quarter. Strong investment income helped Jackson's retail annuities segment to pretax adjusted operating earnings of $354 million in Q3, compared to $330 million in the third quarter of 2022.

RILA sales hit record levels for the month of September, said Laura Prieskorn, Jackson president and CEO, and 26% of producers were either new or "reactivated" producers. Sales reflect demand for the enhanced Market Link Pro RILA suite launched in early June of 2023, Jackson said.

"Our enhanced RILA product and focus on digital marketing have made for a powerful combination in the market," Prieskorn said. "Our innovative RILA digital experience ensures that financial professionals can more easily educate their clients on the benefits of a RILA and how it fits into their specific goals for growth, protection, flexibility."

More than one-third of Jackson's RILA sales came via producers using the insurer's "digital experience" option, she noted.

Jackson's annuity segment stabilized in recent quarters. The insurer relied on variable annuity products for many years, but economic conditions have VAs in a sales spiral, with Jackson joining the many insurers in the RILA marketplace.

Total annuity sales of $3.3 billion were up from the second quarter of 2023 and down 7% from the year-ago third quarter. Traditional VA sales "have stabilized over recent quarters and were down 16% compared to the third quarter of 2022, primarily due to consumer preferences for asset protection," Jackson said in a news release.

Jackson reported revenue of $2.61 billion, down 35.2% over the same period last year, but well exceeding the Zacks Consensus Estimate of $1.62 billion. Similar to other insurers, Jackson reported strong Q3 net investment income of $782 million, compared to $640 million in the year-ago quarter.

Fiduciary rule hurdle

Unprompted, Prieskorn ventured into regulatory news and the proposed fiduciary rule published last week by the Department of Labor. The rule was widely criticized by industry trade groups who claim the extension of fiduciary duty to virtually anyone recommending an annuity would have a chilling effect on advice to middle-market savers.

Jackson Financial executives are still reviewing the fiduciary proposal, Prieskorn said, which runs nearly 500 pages, and will work with legislators, regulators and trade groups it belongs to in the coming months.

"Our initial reaction is that the DOL may not have fully considered the regulations developed by the National Association of Insurance Commissioners and the safeguards these rules provide to retirement investors," she added.

Forty states have adopted the NAIC’s February 2020 updates to the Suitability in Annuity Transactions Model Regulation, which requires that all recommendations by agents and insurers must be in the best interest of the consumer, and that agents and carriers may not place their financial interest ahead of the consumer's interest in making a recommendation.

If the DOL fiduciary standard is implemented, Jackson will comply, Prieskorn said.

"Jackson is fully accustomed to operating in a highly regulated industry and has a track record of successfully adapting to new and updated regulations," she added. "If the rule becomes effective, Jackson will work through our change management process to implement the final requirements."

Improving sales mix

Jackson continues to see rising sales of annuities without lifetime benefits, said Marcia Wadsten, chief financial officer. During the early 2000s, insurers sold a lot of VAs with lifetime benefits that later proved to be a financial drain.

"Sales of annuities without lifetime benefits increased to 48% of our total retail sales up from 41% in the third quarter of last year," she said. "While we expect this percentage to vary somewhat over time, based on market conditions and consumer demand, our RILA offering has contributed to diversification within our sales mix."

Jackson plans to retire $600 million in senior debt this month and will enter 2024 with a strong level of liquidity within the holding company, Prieskorn said.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.