Jackson National Operating Income Rises 3 Percent

Despite a difficult year for variable annuity sales, Jackson National pretax 2017 operating income rose 3 percent to a record $2.9 billion over 2016, the company reported Wednesday.

Net income fell to $285 million compared to $805 million in 2016, the company said.

Jackson, the nation’s largest seller of variable annuities, is a subsidiary of the London-based global financial services company Prudential Plc., and reports earnings under International Financial Reporting Standards, or IFRS.

Sales and deposits were $21.4 billion, Jackson said.

Net flows and the growth of separate account assets rose to a record $177 billion, the company said.

“As the American retirement wave picks up steam, the need for the products and education that Jackson provides has never been greater,” said Barry Stowe, chairman and CEO of the North American Business Unit of Prudential Plc., in a news release.

Total IFRS assets rose 12 percent to $264 billion, Jackson reported.

Variable annuity sales rose 1 percent over the year-ago period, the Lansing, Mich.-based company said.

The increase took place against a backdrop of an overall variable annuity market in which sales last year fell 9 percent to $128 billion compared to 2016.

Prudential Plc. is a separate company from Prudential Financial based in Newark, N.J.

2017 Initiatives Appeal to RIAs

Despite recent declines, demand for variable annuity sales is expected to continue as an estimated 40 million Americans reach retirement age over the next decade, Prudential Plc. executives told analysts in a conference call.

Variable annuity penetration is still relatively low, said Prudential Group Chief Executive Mike Wells.

To push further into the market, Jackson in November launched Perspective Advisory II, a fee-based version of the company’s flagship Perspective II variable annuity.

Perspective Advisory II is designed to appeal to the registered investment advisors (RIA) sales channel and comes with no surrender charge and low-cost investment options.

Advisors also like Jackson’s Elite Access and Perspective families of variable annuities because they offer more investment freedom.

Partly as a result, Jackson sells more variable annuities in the U.S. than any other company, about $12.8 billion worth in the third quarter of last year alone.

Jackson also launched the Private Wealth & Trust group last year dedicated to complex planning, investment management and tax mitigation for the high net worth segment.

The emergence of fee-based products and sales platforms that conform to the Department of Labor’s fiduciary rule has put the onus on broker-dealers to choose which insurers they want to link up with, Wells said.

Jackson's extensive wholesale distribution network and technology infrastructure will help retain and attract broker-dealers, he said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.