Our businesses and
their performance

United States

Providing US baby boomers with solutions for a stable retirement

People riding bikes through a park

“Jackson continues its long-term disciplined approach to our business, with a sharp focus on aligning the needs of our stakeholders. This disciplined approach has enabled us to manage successfully volatile macroeconomic conditions, and drive consistently positive outcomes even in the midst of unsteady financial markets.

Jackson’s mission is important. We provide financial
security to our customers with products and
services designed to support them into and
through retirement. Our strategy
remains focused on providing a strong
proposition to our customers and value
creation for our shareholders.”

Barry Stowe
Chairman and Chief Executive Officer,
North America Business Unit

Barry Stowe

Our strategy

Our strategy and operating principles diagram: United States

Prudential’s strategy in the US is well established and continues to focus on:

  • Capitalising on baby boomer retirement opportunities;
  • Maintaining a balanced product suite throughout the economic cycle;
  • Streamlining operating platforms, driving further operational efficiencies; and
  • Conservative, economic based approach to pricing and risk management.

Read more: Our strategy

Performance highlights

  • Cash remittance increased by 13 per cent to a record level of £470 million
  • Total IFRS operating profit of £1,702 million, up 9 per cent from year-end 2014
  • Continued strong returns on shareholder capital across all key financial metrics
  • Successfully managed sales of variable annuities with guarantees in line with risk appetite
  • Awarded ‘World Class Certification’ by Service Quality Measurement Group, Inc. and ‘Highest Customer Satisfaction by Industry’ award – the tenth consecutive year of recognition for customer service performance in these two categories

Visit the Jackson website

New business profit1 £m

2011 2012 2013 2014 2015
530 568 706 694 809

IFRS operating profit £m

2011 2012 2013 2014 2015
675 1003 1302 1443 1702

Net cash remittances £m


*One-off release of excess surplus

Growth in statutory admitted assets US$bn

2011 2012 2013 2014 2015
107.6 142.8 170.9 190.0 199.1

Market overview

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Providing solutions to retirement challenges

The US is the world’s largest retirement savings market with total assets in the annuity sector of over US$2.6 trillion2. Each year, approximately four million baby boomers reach retirement age.

The number of retirees entering this stage of their life are triggering a shift from savings accumulation to retirement income generation of more than US$10 trillion3.

However, as a group, baby boomers are under-saved and, in addition, their life expectancies continue to rise. They are in need of insurance products that offer the opportunity to grow their assets and to provide with guaranteed lifetime income to support them through these challenges.

The US retirement market continues to offer significant opportunities for profitable growth by providing solutions to the millions of baby boomers and to the future generations that will follow.

US economic environment

Despite a noticeable deceleration in consumer spending and a contraction in business investment in the fourth quarter, the US economy continued its trend of modest annual growth. While some sectors were disappointing, notably manufacturing, the US economy created 2.7 million new jobs4, pushed unemployment down to 5.0 per cent and showed continued improvement in the housing market.

In December, the Federal Reserve raised the Federal Funds rate by 25 basis points, their first increase in almost 10 years. The S&P 500 returned approximately negative 1 per cent in 2015, after much stronger returns in 2013 and 2014, while the benchmark 10-year US Treasury note yield rose from 2.18 per cent at the end of 2014 to 2.28 per cent at 31 December 2015.

Regulatory landscape

In addition to the uneven economic conditions in 2015, the insurance industry continues to deal with an evolving regulatory landscape and a multitude of initiatives. Many of these initiatives began in response to the financial crisis over eight years ago and were focused on the broader financial services industry. Within the insurance industry, we continue to see changes in supervisory structures, new global group supervision and capital standards and a focus on the reduction of ‘systemic risk’.

More recently, with the release of a US Department of Labor (DOL) proposal to introduce new fiduciary obligations for distributors of investment products to holders of regulated accounts, the industry is now dealing with a regulatory initiative that will significantly impact the delivery of advice to our customers. The rules related to this proposal are not yet final, but as a leader in the industry, we have spent many hours with a wide variety of stakeholders to highlight the issues and to ensure that lawmakers and regulators understand the impact of what is proposed and the consequences it will have on various segments of the retirement market.

Jackson has a good track record of navigating and, at times, benefiting from changes in the regulatory environment. This remains our mindset as we work to meet the needs of all of our stakeholders.

Competitive landscape

We continue to see significant changes across the competitive landscape as well. Sales in the annuity industry were down approximately 2 per cent5 comparing third quarter year-to-date 2015 (latest available data) against third quarter year-to-date and total industry variable annuity sales were down approximately 4 per cent5. These results partially reflect the headwinds the industry faced in 2015, including market volatility and unknown regulatory outcomes.

Competitors continued to make product changes across many segments and we noted competitors evolving across product categories. In 2015, we saw more competitors join the fixed-index annuities space. In many cases they offered living benefits on their products in an attempt to compete with variable annuities. In addition, some insurers have made changes to the fund platforms within their variable annuity products, requiring managed volatility funds with a living benefit guarantee which purportedly protect annuity customers from downside market risks. There are now 17 Investment Only Variable Annuity (IOVA) products that compete directly with Elite Access, our variable annuity product with no guarantee benefits. The majority of those competitors have added guaranteed benefits to the IOVA products. Elite Access still commands a significant market share with sales of £3.1 billion in 2015.

Despite positive demographic trends and the needs of retirees, these competitive activities, market volatility and regulatory headwinds have impacted the industry, and further market share adjustments have resulted as customers and distributors seek insurers like Jackson that offer consistency, stability and financial strength.

What we do and how we do it

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Long-term perspective

Jackson’s long-term strategy is focused on profitable growth opportunities created by the demand for retirement income and accumulation products in the world’s largest retirement market.

We take a disciplined approach by leveraging our distinctive distribution capabilities and asset liability management expertise to offer prudently priced annuity products aligned with our risk appetite.

There continues to be strong consumer demand for our products. We continue to respond to this demand with product innovation and distribution strategies that meet the needs of a growing retirement population while generating shareholder value.

With a long-term focus on balancing the needs of multiple stakeholders, Jackson has forged a solid reputation and built strong relationships based upon its financial stability, innovative and creative products and market-leading adviser support.

Our relentless pursuit of excellence has earned us a leading position in the industry.

Creative product development

Jackson develops and distributes products that address the retirement needs of our customers through various market cycles. These products include variable annuities, fixed annuities and fixed index annuities.

Among the main attractions of a variable annuity product is the optional lifetime guarantee, where customers can access a stream of payments with downside protection while still being able to invest in a broad range of assets, as well as the benefit of tax deferral on the investment growth within the product. The breadth of our product offering, strength of our distribution relationships and our ability to maintain financial stability through the crisis and remain as a consistent presence within the market, has resulted in Jackson being the number one5 writer of variable annuities in the US.

Additionally, Jackson’s success with the development, launch and execution of Elite Access demonstrates the depth and strength of our creative and distribution capabilities in the industry. We now command a leading position in a market we were not operating in prior to 2012. Elite Access is the third best-selling variable annuity product in the US6. As of third quarter of 2015, Jackson offers three of the top 10 best-selling variable annuity products across the industry6.

The strength of our product development capabilities continues to support the diversification of our product mix, with the sale of variable annuities with living benefit guarantees remaining in line with our risk appetite in 2015. As expected, in the current historically low interest rate environment, variable annuities continue to outsell fixed rate products. While sales of fixed annuities have been lower in recent years, fixed index annuities increased 15 per cent from 2014. These products still make up a significant portion of our balance sheet and earnings.

Jackson stopped selling traditional life insurance products in 2012; however, we continue to look for opportunistic ‘bolt-on’ acquisitions to further diversify our earnings and balance sheet risks. In the past, these disciplined acquisitions have shaped Jackson’s earnings while helping to diversify Jackson’s overall risk profile.

We continue to balance proactively value, volume, capital and balance sheet strength across our suite of product offerings, which allows us to compete effectively throughout the economic cycle.

Strength of distribution

Our distribution teams set us apart from our competitors. Jackson’s wholesaling force is the largest in the industry, supporting thousands of advisers across multiple channels and distribution outlets.

Our wholesalers provide extensive training to these advisers. In 2015, we led the industry with the highest level of sales efficiency, with gross sales per wholesaler 32 per cent higher than the nearest competitor.

National Planning Holdings, an affiliate of Jackson, is the sixth7 largest independent broker-dealer network in the US. Leveraging the collective strength of the four broker-dealers within the network, National Planning Holdings is able to meet the specific needs of three key distribution channels: independent representatives, financial institutions, and tax and accounting professionals. We offer registered representatives and investment advisers access to industry-leading mutual fund/asset management companies, insurance carriers, and to thousands of brokerage products. National Planning Holdings provides significant benefits for Jackson by offering Jackson products and providing market intelligence.

The strength and flexibility of this network will give us distinct advantages as we continue to manage through the pending US Department of Labor fiduciary proposal which, as it is drafted today, will have a direct impact on the distribution of annuities in the future.

Efficient operations

We support our industry-leading product development and distribution teams with award-winning customer service. Jackson was awarded by Service Quality Measurement Group, Inc. World Class Certification in customer satisfaction and received the Highest Customer Satisfaction by Industry award, achieving the top rating for the financial industry for the tenth consecutive year.

High-quality information technology systems are critical for providing award-winning customer service. We leverage technology to enhance processing quality and reduce the time required to process new business and commissions. The flexibility of our information technology systems contributes to our ability to manufacture, distribute and service an unbundled product design unique to the industry. The focus on our operational platforms, and the efficiencies achieved as a result, has provided us with among the lowest general and administration expense to asset ratio relative to competitors.

Disciplined risk management

Jackson operates within a well-defined risk framework aligned with the overall Prudential Group risk appetite. The type and number of products we sell remains balanced. Our conservative and disciplined economic approach to pricing is designed to achieve both adequate returns on our products and sufficient resources to support our hedging programme.

Our hedge philosophy has not changed in 2015. Jackson is able to aggregate financial risks across the Company, obtain a unified view of our risk positions, and actively manage net risks through an economically based hedging programme. A key element of our core strategy is to protect the Company from severe economic scenarios while maintaining adequate regulatory capital. We benefit from the fact that the competitive environment continues to favour companies with robust financial strength and a demonstrated track record of financial discipline, both key elements of our long-term strategy.

Our customers in focus

An older couple

Grandparents Joanne and Charlie (68 and 69) are both semi-retired, and live in the Dallas-Fort Worth area. They own a Jackson annuity contract.

‘After weathering the storm in 2000 and watching our portfolio take another hit during the crisis in 2008, Charlie and I decided that we couldn’t go through that agony for a third time. After listening to our story, our wonderful financial professional, being the excellent teacher that he is, introduced us to annuities, explaining that these products offered guaranteed income for life, the opportunity for growth over our lifetime, and that our children could even benefit from the products as our heirs. It’s very clear that our financial professional cares about us, so we took his advice, and honestly we could not be happier. Our annuity has worked exactly as he described it, and Charlie and I agree that it’s the very best product for us.’

Jackson is a leading provider of retirement solutions for industry professionals and their clients. The Company offers a diverse range of products including variable, fixed and fixed index annuities designed for tax-efficient accumulation and distribution of retirement income for retail customers, and fixed income products for institutional investors.8


  1. The 2015 EEV results of the Group are presented on a post-tax basis and, accordingly, prior years’ results are shown on a comparable basis.
  2. LIMRA, Annuity US Individual Annuities Survey Participant’s Report (Q3 2015).
  3. US Census Bureau.
  4. Bureau of Labor Statistics, US Department of Labor.
  5. LIMRA/Secure Retirement Institute, US Individual Annuities Sales Survey (Q3 2015). Jackson is ranked first in total Variable Annuities sales out of 44 participating companies in LIMRA’s quarterly survey as of 3Q YTD 2015.
  6. ©2015 Morningstar Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Annuity Research Center 3QYTD15 variable annuity sales by contract.
  7. Paikert, C. (2015). New Paths to Scale. Financial Planning. June 2015.
  8. Any investors should note that the value of investments, and the income from them, will fluctuate, which will cause fund prices to fall as well as rise and they may not get back the original amount they invested. The customers’ circumstances and views are specific to them and should not be taken as a recommendation, advice or forecast.

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United Kingdom - Insurance and investments


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