Jackson — the Annuity Giant — Separates From Parent

Prudential has cut its stake in Jackson to 19.9% of the total, by passing a large majority of its Jackson stock on to its own shareholders.

Jackson also told analysts that it has a large, productive wholesaling force, with about 600 distribution partners and relationships with about 140,000 agents and advisors, and that its ratio of operating expenses to assets is about half the average level at its variable annuity peers.

Jackson said some of the opportunities for profitable growth include:

• Increasing sales of registered index-linked annuities.
• Launching a simple, low-cost, fee-based variable annuity.
• Adding new retail broker-dealer relationships and institutional partnerships and platforms.
• Accelerating sales of fee-based annuities by RIAs and affiliated investment advisors.
• Working to integrate annuities into wealth management too.

The Demerger

The U.K. Prudential still holds a 19.9% stake in Jackson but plans to sell its shares within a year. It separated from Jackson by distributing the rest of its Jackson stock to its own shareholders, through a distribution that Prudential shareholders voted to approve Aug. 27.

Prudential shareholders of record at the close of business Sept. 2 received one share of Jackson’s Class A common stock for every 40 shares of Prudential ordinary stock they held.

The first shares distributed began appearing on the New York Stock Exchange, under the ticker symbol JXN, Sept. 1. The current share price, of about $27 per share, implies that the company as a whole has a market capitalization level, or total stock value, of $2.6 billion.

Shares will begin trading in an ordinary fashion, in the “regular way,” Sept. 20, according to Jackson.

Jackson and Prudential said when they announced the separation that they would seek to increase Jackson National Life’s capital to a high level.

Jackson has implemented the capital increase efforts by arranging for $2.35 billion in financing from a group of lenders led by an arm of Citigroup.

The capital contribution made in connection with the financing will have the effect of increasing Jackson National Life’s risk-based capital ratio, or financial strength indicator, to about 500% to 525%

The life insurer ended 2020 with an RBC ratio of about 340% to 355%. The RBC ratio was down from about 400%, as of June 30,2020, because of a change in the approach the company took to “hedge modeling,” or efforts to predict how well investment risk control efforts might work.

Laura Prieskorn, CEO of Jackson Financial