OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” from “aa-” of Jackson National Life Insurance Company (JNL), its wholly owned subsidiary, Jackson National Life Insurance Company of New York, and its direct parent, Brooke Life Insurance Company. These companies collectively are referred to as the Jackson National Group (JNG). Additionally, AM Best has downgraded the Long-Term Issue Credit Ratings (Long-Term IR) to “a+” from “aa-” on the notes issued under JNL’s funding agreement-backed securities programs and the Long-Term IR to “a-” from “a” on JNL’s surplus notes. The outlook of the Long-Term ICRs has been revised to negative from stable, while the outlook of the FSR remains stable. All companies are headquartered in Lansing, MI. (Please see below for a detailed listing of the Long-Term IRs).
The ratings reflect JNG’s balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, favorable business profile and very strong enterprise risk management. Additionally, the ratings reflect AM Best’s view of JNG’s strategic importance – albeit somewhat diminished – to its parent, Prudential plc (Prudential).
The ratings actions follow the recent announcement by Prudential that it intends to proceed with a minority initial public offering (IPO) of JNG. Prudential remains committed to maintaining an appropriate level of capitalization at JNG and believes that third-party funding will benefit the strategic growth and diversification of product and distribution. Currently, JNG benefits from rating enhancement from its parent’s financial strength and ability to provide financial flexibility if needed. The rating downgrades therefore reflect AM Best’s opinion that JNG is somewhat less strategically important to Prudential following the announcement of the intended IPO.
The negative Long-Term ICR outlook reflects the potential for pressure on the balance sheet strength and operating performance assessments, driven by factors related to the quickly evolving macroeconomic environment, which could also result in potential execution and/or timing risks related to the planned IPO. Additionally, should Prudential decide to pursue a further divestiture of its interest in JNG beyond the scope of its recent announcement, AM Best’s view of JNG’s strategic importance to Prudential would be further diminished, likely resulting in a loss of its remaining rating enhancement. AM Best also notes that the pressure on JNG’s balance sheet assessment is compounded by a material decline in regulatory risk-adjusted capitalization as of year-end 2019, driven in part by the early adoption of the NAIC’s recently adopted variable annuity reform rules.
The following Long-Term IRs have been downgraded and the outlooks have been revised to negative from stable:
Jackson National Life Insurance Company—
--to “a-” from “a” on $250 million 8.15% surplus notes, due 2027
Jackson National Life Funding, LLC—to “a+” from “aa-” on program rating
Jackson National Life Global Funding— to “a+” from “aa-” on program rating
-- to “a+” from “aa-” on all outstanding notes issued under the program
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