A.M. Best Affirms Ratings of Jackson National Life Insurance Company and Its Affiliates

  A.M. Best Affirms Ratings of Jackson National Life Insurance Company and Its
  Affiliates

Business Wire

OLDWICK, N.J. -- June 12, 2013

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and
issuer credit ratings of “aa-” of Jackson National Life Insurance Company
(Jackson),  its wholly owned subsidiary, Jackson National Life Insurance
Company of New York (together known as JNL), and its direct parent, Brooke
Life Insurance Company.  Additionally, A.M. Best has affirmed the ratings on
Jackson’s existing funding agreement-backed securities programs and
outstanding surplus notes. The outlook for all ratings is stable. All
companies above are headquartered in Lansing, MI. (Please see below for a
detailed listing of the companies and debt ratings.)

The ratings reflect JNL’s continued leading market position in the individual
annuity arena, its favorable operating performance and somewhat reduced risk
within its investment portfolio. JNL’s ratings also reflect the strength and
support of its U.K.-based ultimate parent, Prudential plc [NYSE: PUK].
Prudential plc is an international financial services group with significant
operations in Asia, the United States and the United Kingdom.

JNL continues to benefit from rising equity markets due to its concentration
in variable annuities as several of its competitors have either ceased
marketing variable annuities or have significantly changed their product
designs. JNL’s annuity sales have also benefited in recent periods from the
ongoing distribution channel expansion, which has led to favorable variable
annuity net inflows and a significant increase in assets under management.
This has resulted in record earnings for the company on both a GAAP and IFRS
basis. While A.M. Best believes that JNL’s hedging program has been effective,
it generally does not mitigate the impact on statutory income. Hence,
statutory operating results have been somewhat uneven, reflecting fluctuating
variable annuity reserve requirements. A.M. Best notes that JNL’s inforce
block of fixed annuities provides a partial offset to the interest rate
exposure in the variable annuity block due to the fixed annuities’ exposure to
rising rates.

Partially offsetting these positive rating factors is JNL’s high concentration
of variable annuity business, which represents approximately 63% of total
reserves. A.M. Best believes that variable annuities are a less creditworthy
line of business compared to ordinary life insurance products. While the 2012
acquisition of Reassure America Life Insurance Company (REALIC) from Swiss Re
almost doubled its life insurance reserves, A.M. Best believes JNL’s
stand-alone credit profile remains highly exposed to the equity market
sensitivity and spread-based liabilities. Additionally, the company maintains
a relatively high allocation to real estate-related assets in its general
account investment portfolio as commercial mortgage loans, residential
mortgage-backed securities (RMBS), commercial mortgage-backed securities and
real estate investment trust debt securities represent over three times
capital and surplus. A.M. Best notes the recent decline in the percentage of
commercial mortgages and non-agency backed RMBS, and that many of the
structured securities within the portfolio are either government agency-backed
or highly rated. JNL has also been reducing its exposure to below investment
grade bonds over the past few years. Moreover, although the asset mix was a
bit different from JNL’s, the credit profile of the acquired $9.8 billion
REALIC investment portfolio was comparable.

A.M. Best believes that Jackson and its affiliates are well positioned at
their current rating levels. Key rating drivers that may lead to a negative
rating action include a material decline in risk-adjusted capitalization
and/or a change in A.M. Best’s view of the strategic importance of JNL to
Prudential plc.

The FSR of A+ (Superior) and the ICRs of “aa-” have been affirmed for the
following:

  *Jackson National Life Insurance Company
  *Jackson National Life Insurance Company of New York
  *Brooke Life Insurance Company

The following debt ratings have been affirmed:

Jackson National Life Insurance Company—

-- “a” on $250 million 8.15% surplus notes, due 2027

Jackson National Life Funding, LLC —“aa-” program rating

-- “aa-” on all outstanding notes issued under the program

Jackson National Life Global Funding—“aa-” program rating

-- “aa-” on all outstanding notes issued under the program

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Michael Adams, FLMI, 908-439-2200, ext. 5133
Senior Financial Analyst
michael.adams@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Ken Johnson, CFA, 908-439-2200, ext. 5056
Managing Senior Financial Analyst
ken.johnson@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
 
Press spacebar to pause and continue. Press esc to stop.