Jackson to Fully Separate From Prudential plc Through Proposed Spin-Off in 2Q 2021
Prudential plc announced plans to separate Jackson Financial Inc. through a demerger in Q2 2021, distributing Jackson shares to Prudential shareholders. This move is subject to shareholder and regulatory approval and signifies a quicker transition than a minority IPO. Prudential will retain a 19.9% interest in Jackson, which plans to list on the NYSE under the ticker 'JXN'. Steven A. Kandarian has been appointed as non-executive chair of Jackson's Board. Jackson's Risk Based Capital (RBC) ratio is projected to be around 425-450% at separation, up from an estimated 340-355% as of December 31, 2020.
- Demerger of Jackson from Prudential allowing shareholders to gain direct ownership.
- Appointment of experienced non-executive chair Steven A. Kandarian to lead Jackson.
- Projected RBC ratio improvement to 425-450% at separation, indicating financial stability.
- Jackson's RBC ratio estimated to drop by 80 percentage points due to regulatory changes.
Prudential plc (“Prudential” or “the Group”), the parent company of Jackson Financial Inc.¹ (“Jackson”), today announced that the Prudential Board has decided to pursue the separation of Jackson from the Group in the second quarter of 2021 through a demerger, whereby shares in Jackson would be distributed to Prudential shareholders. The demerger, also known as a spin-off in the U.S., is subject to shareholder and regulatory approval and would lead to a significantly earlier separation of Jackson than would have been possible through a minority IPO and future sell-downs. At the time of the spin-off, Prudential intends to retain a 19.9 percent interest in Jackson that it will fully divest over time.
Prudential also announced the appointment of Steven A. Kandarian as non-executive chair of Jackson’s Board of Directors. Mr. Kandarian, the former Chief Executive Officer of MetLife, will assume his new role on February 1, 2021, and brings substantial and relevant experience to the governance and leadership of an independent Jackson. Additional appointments of independent directors for Jackson will be announced in due course.
“As we move closer to the demerger, Jackson continues its core focus on providing industry leading products and services to our clients, managing risk and generating capital returns for shareholders,” said Michael Falcon, chief executive officer of Jackson. “Steve brings significant insurance sector experience to Jackson that will serve our firm and stakeholders well. We are excited to have him on board and look forward to benefiting from his insights and guidance in years to come.”
Jackson continues to progress with key stakeholders and, following the proposed separation, expects to list on the New York Stock Exchange using the ticker “JXN.”
“I am honored to lead Jackson’s board as non-executive chair at this pivotal time,” Kandarian said. “Jackson is a market leader in helping U.S. investors meet their retirement income needs and I look forward to supporting Jackson’s growth and success as an independently listed company.”
Jackson is revising its hedge modeling for U.S. statutory standards for calculating reserves and capital from December 31, 2020, which is estimated to reduce Jackson’s Risk Based Capital (RBC) ratio² by around 80 percentage points. Allowing for this change and other second half 2020 items, Jackson’s RBC ratio as of December 31, 2020 is estimated to be around 340 to 355 percent. At the point of proposed separation, Jackson expects to have an RBC ratio in the range of 425 to 450 percent and total financial leverage³ in the range of 25 to 30 percent, subject to market conditions. Jackson expects to achieve this level of RBC at the point of separation by contributing proceeds of its debt and hybrid capital raising to its regulated insurance subsidiaries.
“Our priorities as a Group remain, first, to ensure our investors fully benefit from the opportunities of Asia and, second, to pursue, at pace, a fully independent Jackson,” said Mike Wells, Group chief executive of Prudential plc. “The demerger we are announcing today will significantly accelerate Prudential’s transformation into a business purely focused on profitable growth in Asia. I am delighted that Steve has agreed to join as Jackson chairman. He brings an unrivaled track-record in the U.S. life insurance sector, and I am more confident than ever that Jackson will flourish as a separate business.”
Jackson expects to announce its full-year 2020 financial results on March 3, 2021.
Notes
1 Jackson Financial Inc. (“JFI”) is a U.S. holding company and the direct parent of Jackson Holdings LLC (“JHLLC”). The indirect subsidiaries of JHLLC include Jackson National Life Insurance Company and PPM America, Inc
2 The RBC ratio throughout this announcement is calculated for Jackson National Life, Jackson’s main regulated insurance entity, and its subsidiaries.
3 Calculated on a U.S. GAAP basis as the ratio of total debt (including senior debt, hybrid debt and preferred securities) to total debt and shareholders’ equity (excluding Other Comprehensive Income).
About Jackson
Jackson is a leading provider of retirement products for industry professionals and their clients. The company and its affiliates offer variable, fixed and fixed index annuities designed for tax-efficient growth and distribution of retirement income for retail customers, as well as products for institutional investors. Jackson is a proud founding member and co-chair of the Alliance for Lifetime Income, a nonprofit 501(c)(6) organization formed and supported by 24 of the nation’s financial services organizations to create awareness and educate Americans about the importance of protected lifetime income. With
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Jackson is an indirect subsidiary of Prudential plc, an Asia-led portfolio of businesses focused on structural growth markets. The business helps people get the most out of life through life and health insurance, and retirement and asset management solutions. Prudential plc has 20 million customers (as of June 30, 2020) and is listed on stock exchanges in London, Hong Kong, Singapore and New York. Prudential plc is not affiliated in any manner with Prudential Financial, Inc. a company whose principal place of business is in the United States of America, nor with the Prudential Assurance Company, a subsidiary of M&G plc, a company incorporated in the United Kingdom.
About Steven A. Kandarian
From 2012 to April 2019, Mr. Kandarian, 68, served as Chairman of the Board, President and Chief Executive Officer of MetLife, Inc., a leading financial services company providing insurance, annuities, and asset management. He was named President and Chief Executive Officer in 2011 and served as Executive Vice President and Chief Investment Officer from 2005 to 2011. Mr. Kandarian has also served as an executive director of the Pension Benefit Guaranty Corporation from 2001 to 2004, as the founder of Orion Partners, LP from 1993 to 2001, as the founder of Eagle Capital Holdings from 1990 to 1993 and as a managing director of Lee Capital Holdings from 1984 to 1990. Mr. Kandarian currently serves as a director of ExxonMobil, Neuberger Berman and the Damon Runyon Cancer Research Foundation. He is a member of the Business Council.
This press release may contain certain statements that constitute “forward-looking statements.” Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. However, as with any projection or forecast, forward-looking statements are inherently susceptible to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated as reflected in such forward-looking statements. There can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished. Any forward-looking statements reflect Jackson’s views and assumptions as of the date of this press release and Jackson disclaims any obligation to update forward-looking information.
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