Jackson National Life Global Funding — Moody’s affirms Jackson Financials’ ratings; outlook remains negative

 

New York, August 17, 2022 – Moody’s Investors Service, (”Moody’s”) has affirmed Jackson

Financial, Inc.’s (”Jackson”) issuer rating at Baa2 as well as the insurance financial strength (IFS)

rating at A2 for the rated operating insurance subsidiaries of Jackson National Life Insurance

Company and Jackson National Life Insurance Company of New York (collectively Jackson

National). The outlook for the ratings remains negative.
Please see below for a complete list of ratings.
RATINGS RATIONALE
Moody’s said the rating affirmation of Jackson Financial and its core life insurance subsidiaries

reflects Jackson’s leading position in the US asset accumulation business, as well as its sizable

market share in the variable annuity (VA) business. It has a broad annuity product offering effectively

leveraging multiple distribution channels, and an efficient back office infrastructure. The company

has also successfully completed its initial public offering (IPO) in September 2021, and repaid all of

the more than $2 billion outstanding on its term loan facilities drawn upon prior to the IPO replacing it

with a debt ladder consisting of multiple offerings of senior notes.
Jackson has good historical net capital generation that benefits from a successful hedging strategy.

However, it has significant exposure to earnings and capital volatility from equity markets and must

manage capital requirements that are sensitive to policyholder behavior, equity market returns,

and interest rates. The company continues to be challenged to improve its market position for new

products, increase product diversification, and to balance the competing demands to support growth

plans in its businesses and its increasing emphasis on returning capital back to shareholders in the

form of share repurchases and dividends.
During the outlook period, Moody’s will continue to evaluate the company’s capitalization and

hedging strategy under varying stress scenarios, liquidity needs, and plans to improve its product

diversification and lessen its concentration of VAs. Following the IPO, capitalization has been good,

but regulatory capital at Jackson National is lower than Moody’s anticipated. Jackson also plans to

manage leverage in the range of 20% - 25%, which is higher than Moody’s expects for the current

rating. However, Moody’s believes the company’s efforts to increase its product diversification

beyond its VA products and the expansion with other third party investment advisors is credit

positive. These investments in growth initiatives will take time to develop, and Jackson continues

to face challenges to profitably grow its businesses in these competitive markets which place

downward pressure on net capital generation, at least in the intermediate term.
Moody’s will consider the continued advancement of Jackson’s business plan and balanced growth

in new product sales leading to improved product diversification, and sustained market share

over the outlook period. Moody’s is looking for a sustained high level of regulatory and economic

capital to offset the volatility in earnings and net capital generation, and continued adjusted financial

leverage ratio consistently below 20% due to the high concentration in VAs, as well as the economic

exposure to interest rate risk in a lower rate environment. We also expect Jackson to continue to

maintain a solid hedging program to mitigate and proactively manage the risk associated with its VA

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook, there is limited upward pressure on Jackson’s ratings. A combination

of the following drivers could return Jackson’s outlook to stable: 1) Continued improvement in

Jackson’s standalone credit profile as evidenced by maintaining its business profile and more

balanced growth in new product sales with less emphasis on VAs with living benefits, 2) Strong

and stable NAIC CAL RBC ratio at Jackson National Life Insurance Company with demonstrated

resilience / protection of economic and regulatory capital ratios following a stress scenario, and 3)

Adjusted financial leverage ratio (excluding AOCI) remains below 20%.
The following factors could result in a downgrade of Jackson’s ratings: 1) Jackson National Life

Insurance Company’s NAIC RBC ratio falling below 425%, 2) Increased volatility of capital levels

and/or RBC at the operating companies, 3) Lower than expected sales of products other than VAs

with guarantees, or 4) Adjusted financial leverage ratio (excluding AOCI) consistently above 25%.
Affected Ratings:
The following ratings have been affirmed:
Jackson Financial, Inc.: long term issuer rating at Baa2, senior unsecured debt rating at Baa2, senior

unsecured shelf at (P)Baa2, subordinated shelf at (P)Baa3, junior subordinated shelf at (P)Baa3,

and preferred shelf at (P)Ba1;
Jackson National Life Insurance Company: insurance financial strength at A2, surplus notes at Baa1

(hyb), and short-term insurance financial strength at P-1;
Jackson National Life Insurance Co of New York: backed insurance financial strength at A2;
Jackson National Life Global Funding: senior secured regular bond/debenture at A2, senior secured

medium-term note program at (P)A2, and senior unsecured regular bond/debenture at A2.
Outlook actions:
..Jackson Financial, Inc.
….Outlook: remains negative
..Jackson National Life Insurance Company
….Outlook: remains negative
..Jackson National Life Insurance Co of New York
….Outlook: remains negative
Jackson National Life Global Funding
….Outlook: remains negative
Jackson National Life Insurance Company, the primary operating company of Jackson, provides

insurance protection, retirement, and investment products in the United States. As of June 30, 2022,

the company reported statutory assets of $256.6 billion and statutory capital and surplus of $7.7

billion.

The principal methodology used in this rating was Life Insurers Methodology published in August

2022 and available at

https://ratings.moodys.com/api/rmc-documents/391815

. Alternatively, please

see the Rating Methodologies page on

https://ratings.moodys.com

for a copy of this methodology.

REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections

Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating

Symbols and Definitions can be found on

https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security this announcement

provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or

note of the same series, category/class of debt, security or pursuant to a program for which the

ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices.

For ratings issued on a support provider, this announcement provides certain regulatory disclosures

in relation to the credit rating action on the support provider and in relation to each particular credit

rating action for securities that derive their credit ratings from the support provider’s credit rating.

For provisional ratings, this announcement provides certain regulatory disclosures in relation to the

provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent

to the final issuance of the debt, in each case where the transaction structure and terms have not

changed prior to the assignment of the definitive rating in a manner that would have affected the

rating. For further information please see the issuer/deal page for the respective issuer on

https://

ratings.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies)

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associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach

exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated

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The rating has been disclosed to the rated entity or its designated agent(s) and issued with no

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This rating is solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited

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Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the

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Moody’s general principles for assessing environmental, social and governance (ESG) risks in our

credit analysis can be found at

https://ratings.moodys.com/documents/PBC_1288235.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt

am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No

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The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada

Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK.

Further information on the UK endorsement status and on the Moody’s office that issued the credit

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Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to

the Moody’s legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures

for each credit rating.
Bob Garofalo

VP-Sr Credit Officer

Financial Institutions Group

Moody’s Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Scott Robinson, CFA

Associate Managing Director

Financial Institutions Group

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Releasing Office:

Moody’s Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

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