Jackson National Pivots to Profit

Jackson National Life Insurance, seller of the popular Elite Access and Perspective family of variable annuities, reported first half net income of $310 million, compared with a loss of $446 million in the year-ago period.

Pretax operating income rose 7 percent to $1.4 billion over the first half of 2016 on sales and deposits of $12.1 billion, up 8 percent over the year-ago period, the company reported.

Lansing, Mich.-based Jackson National booked hedging losses of $970 million in the reporting period, the company reported.

“During the first half of the year, our disciplined approach to business produced excellent results, even amid a disruptive industry environment,” said Barry Stowe, chairman and CEO of Jackson National, in a news release.

In the first half, Jackson National paid out a $600 million dividend to its corporate parent, he said.

The company reports under International Financial Reporting Standards, which differ from U.S. accounting standards known as US GAAP.

On a US GAAP basis, the company reported net income of $302 million in the first half, compared with a loss of $466 million in the year-ago period.

In April, Jackson National launched the nonprofit Jackson Charitable Foundation to advance financial knowledge on a national scale.

The foundation will support educational programs designed to improve how Americans manage, protect and grow their personal finances, the company said.

No 1 Variable Annuity Seller

Jackson National has been the No. 1 seller of variable annuities in the U.S. for several years.

Advisors like the fact that Jackson National’s variable annuities come with fewer investment restrictions compared with other variable annuities in the market.

To offer more investment freedom to advisors, the company hedges variable annuity risks on an economic basis rather than on an accounting basis, according to the company’s approach to risk management.

Jackson National sold $17 billion worth of variable annuities last year even as the variable annuity market continued to shrink.

U.S. variable annuity sales declined by 21 percent to $101 billion last year compared with 2015, according to Morningstar.

Sales fell another 8 percent to $24 billion in the first quarter of this year compared to the year-ago quarter, according to LIMRA Secure Retirement Institute.

Jackson National is a unit of UK-based Prudential Plc and not connected to Newark, N.J.-based Prudential Financial.

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.