Jackson Delivers Strong 2006 Performance
LANSING, Mich. - Jackson National Life Insurance Company generated $3.7 billion in GAAP revenues and $542 million in GAAP net income during 2006 – the third consecutive year that the company’s net income has exceeded $500 million. Jackson achieved record sales of more than $11 billion, a 21-percent increase over 2005, and surpassed $74 billion in assets at the end of 2006.
“Not only did Jackson set a new sales record in 2006, the company also reduced its general expense ratios and increased its overall profit margin,” said Clark Manning, Jackson’s president and chief executive officer. “Jackson’s strong earnings performance in 2006 underscores the company’s ongoing commitment to growing top line results in a profitable manner, returning a growing annual dividend to our parent company and building long-term value in the business.”
Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc (NYSE: PUK), generated significant levels of capital, improving its capital ratio from 9.2 percent in 2005 to 9.8 percent in 2006. Furthermore, Jackson’s statutory capital, surplus and asset valuation reserve position improved by $193 million over the prior year, even after remitting a $200-million dividend to its parent company. GAAP net income of $542 million and GAAP revenues of $3.7 billion in 2006 compared to GAAP net income of $594 million and GAAP revenues of $3.8 billion in 2005, as Jackson’s 2005 results were boosted by short-term derivative income of $223.7 million, net of deferred acquisition costs.
Jackson increased sales of its core life insurance and annuity products by nearly 28 percent in 2006. Combined with more than $845 million in separately managed account deposits from Jackson’s subsidiary Curian Capital, retail sales in 2006 exceeded $10 billion for the first time. The increase in Jackson’s retail sales was driven primarily by record variable annuity (VA) sales of $7 billion, up 48 percent over 2005, in an overall VA market that rose 18 percent over the prior year.2 Record VA sales during the year helped Jackson increase its VA assets under management by 40 percent to $25 billion at year-end 2006.
In 2006, Jackson’s share of the VA market increased to 4.6 percent from 3.6 percent in 2005 and Jackson ranked 12th in VA sales.2 The company also expanded its VA market share in its primary distribution channels. Jackson’s VA market share increased from 9.2 percent to 10.8 percent in the independent broker-dealer channel and from 4.8 percent to 5.8 percent in the regional broker-dealer channel.2 Jackson’s flagship variable annuity, Perspective II®, was the top-selling VA contract in the independent broker-dealer channel for the fourth year in a row.2
“Jackson’s distribution relationships give us valuable insight into the evolving issues facing advisers and their clients. Through our ability to understand advisers’ challenges, we are in an advantaged position to deliver innovative solutions and unsurpassed sales support,” said Clifford Jack, executive vice president and chief distribution officer for Jackson. “Through our targeted relationship-based distribution model, Jackson can drive annual sales growth in an efficient and cost-effective manner, while building valuable and trusted relationships with advisers that lead to long-term, productive partnerships.”
Despite record sales, Jackson was able to lower its statutory basis general expense to average assets ratio from 48 bps in 2005 to 46 bps in 2006 – 17 bps lower than the average statutory basis expense ratio of its top 25 individual annuity competitors.4 By keeping expenses low, Jackson can offer more competitively priced products, which facilitate higher sales. Higher sales provide expanded distribution and administrative scale that, in turn, result in greater efficiency.
Jackson subsidiary Curian Capital, a registered investment adviser providing fee-based managed accounts and investment products to financial professionals, generated double-digit growth in 2006. Curian recorded more than $845 million in deposits, an increase of 12 percent from the prior year. At the end of 2006, Curian had $2.4 billion in assets under management, up from $1.7 billion at the end of 2005.
Jackson’s US affiliate, National Planning Holdings®, Inc. (NPH), a network of four independent broker-dealers, delivered an exceptional performance during 2006. NPH posted record revenue of nearly $493 million in 2006, a 17-percent increase over 2005, on record gross product sales of nearly $12 billion, and generated $11 million in pretax income, up 51 percent from 2005. The network also increased its number of registered representatives to more than 2,600.
“As a product provider in a highly competitive and fast-evolving market, Jackson cannot afford to be complacent,” Manning said. “The company’s future success depends upon its commitment to continuous improvement, innovation and its ability to execute strategy better than the competition.”
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