Jackson Financial has taken a significant blow to its net income attributable to common shareholders due to an unfavorable net hedging result.
In its quarterly financial results, Jackson reported that its net income attributable to common shareholders amounted to $264 million in the second quarter – a considerable drop from $1.2 billion in the same period last year.
Lifting the lid on the result, the company noted: “The lower current period net income was primarily due to an unfavorable net hedging result compared to the prior year’s second quarter. The prior year’s second quarter reflected a larger market risk benefits gain resulting from comparatively greater increases in interest rates and more favorable fund performance.
“The current quarter net income reflects a $71 million gain from business reinsured to third parties, while the prior year’s second quarter included a gain of $118 million.”
Jackson, however, pointed out that its statutory capital or free cash flow is not affected and that there’s a minimal net impact on shareholders’ equity.
The annuity expert’s adjusted operating earnings stood at $410 million, which is higher than last year’s $283 million.
Commenting, Jackson president and chief executive Laura Prieskorn (pictured) said: “Jackson’s second quarter results highlight our distribution strength and consistent capital generation. Our retail annuity sales were up 36% from the second quarter of 2023 driven by record RILA (registered index-linked annuity) sales that further diversify our product mix.
“Consistent with our move to smaller, periodic operating company distributions, Jackson National Life distributed $250 million to its parent during the second quarter.
“We are well-positioned relative to our financial targets, as we maintained more than $1 billion in excess capital above our targeted minimum RBC (risk-based capital) ratio of 425%, returned $144 million to common shareholders during the second quarter, and increased our excess cash at the holding company.”
Prieskorn added that they expect to build on this momentum through the remainder of 2024.
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