Jackson National Parent Rumored to Step Further from Annuities
August 8, 2017 by Jay Cooper
Prudential plc, the parent company of Jackson National Life, may be shopping its European-focused annuities business. So reports The Times of London. While such a move would seem to signal the parent company is de-emphasizing annuities, the company has not announced any plans concerning Jackson National.
Prudential recently searched for investment bankers to advise it on the divestment of its £10 billion annuities business, which could lead to the entire sale of the division, according to the article. The company may break up the sale into two £5 billion components.
Some shareholders have been interested in breaking up the business to focus on its fast-growing Asian business, The Times reports. However, Mike Wells, Prudential’s CEO, has made investments to expand the business in the UK and Europe since he took over two years ago, and he may choose to keep the business intact, the article notes.
A sale of the business would follow Prudential’s slow withdrawal from annuities. As reported by the Financial Times, Prudential decided to pull out of the UK annuity market in February. The company has been gradually exiting the market since 2016, claiming the EU’s Solvency II capital rules made annuities far more expensive for insurers to write, according to the Financial Times article.
In March of 2016, Prudential exited the bulk annuities business. In the summer of that year, it withdrew from the market where insurers offer annuities to consumers with pension savings.
In earnings results during 2016, the company said its appetite for the annuities business had diminished.
Prudential would not be the first company to offload a portion of its annuities business. MetLife spun off Brighthouse to exit the retail life and annuities business and focus on group benefits and international growth opportunities. ManuLife Financial, meanwhile, is exploring a spinoff or IPO of its U.S. unit, John Hancock, according to an article in The Wall Street Journal.
It is unclear whether any of this affects Jackson National, which was not mentioned in The Times article. Jackson National officials did not provide comment by deadline. A Prudential plc spokesperson says only that the company does not comment on market rumors or speculation.
Earlier this summer, in a Best’s Review article, Wells expressed confidence in Jackson National’s potential to take advantage of industry changes brought on by the Department of Labor’s fiduciary rule thanks to its prep work on technology and compliance, Best’s Review writes.
Wells told the publication that “product innovation” aimed at compliance with the rule, in addition to Jackson’s existing IT capabilities, will allow the U.S. firm to tap into retirement assets it couldn’t access before. Further, Jackson stands to benefit from the demographic changes in the U.S., namely, an aging population searching for ways to ensure retirement income, Wells tells Best’s Review.
In 2016, Jackson led the industry in individual annuity sales, according to LIMRA.
