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Prudential May Adjust Jackson National Stock Sale Plan

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Market turmoil could make Prudential PLC change its strategy for getting outside cash into Jackson National Life Insurance Company.

The British Prudential has been talking about selling a minority stake in Jackson to investors, through a public stock offering.

(Related: U.K. Pru Aims to Sell Stake in Jackson to Investors)

Mike Wells, Prudential’s group executive officer, now says that the economic uncertainty created by COVID-19 could force Prudential to be flexible about how it executes its corporate strategy.

The British Prudential, which is based in London and has no connection with Prudential Financial Inc. of Newark, New Jersey, has large operations in Asia.

The Prudential teams in Asia have already been living with the COVID-19 outbreak for several months, Wells says in the public message.

“They have been performing heroically, providing outstanding service to customers in a challenging environment,” Wells says. “COVID-19 has now developed rapidly from a largely regional issue into a global pandemic. This means we are having to adapt further.”

The Prudential teams in the United States, the United Kingdom, and Africa are now learning from the experience of their colleagues in Asia, Wells says.

Wells says that, in spite of all of the market volatility, Jackson’s risk-based capital ratio has held steady.

The Prudential board still wants to expand Prudential’s business in Asia and to “pursue a path for an independent Jackson,” Wells says.

Wells noted that, a few weeks ago, Prudential said it preferred to get outside capital for Jackson by selling a minority stake in Jackson to investors through a minority initial public offering (IPO).

“In light of continued turmoil in public equity markets, the board is ensuring that, alongside preparations for a minority IPO, it continues to actively evaluate other options in relation to Jackson, driven by the focus and objectives that underline our strategic priorities,” Wells says.

Wells, who served as Jackson’s CEO from 2011 to 2015, does not talk in the message about what the “other options” might be.

S&P rating analysts have suggested in a commentary on the proposed minority IPO that Jackson is a well-run company in a tough sector.

“We believe Jackson’s competitive strengths include its top market position in the U.S. variable annuity market; its profitability; and its expense advantage, compared with that of some of its peers, due to its headquarters in low-cost Michigan,” the analysts said in the commentary.

Jackson also has experienced managers who are good at hedging, the S&P anaysts said.

“However, our view of Jackson’s competitive position is constrained to satisfactory due to its business concentration in variable annuities,” the analysts said.

Wells has said that one reason for Prudential to seek outside capital for Jackson is to help Jackson diversify its product offerings.

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