On Tuesday, after the market closed, annuities giant Jackson National announced that its adjusted operating earnings for the quarter that ended June 30, 2023, were $283 million or $3.34 per diluted share, a steep drop from the figures last year of $407 million and $4.56 per diluted share, and $0.16 per diluted share below average analyst estimates.

The Lansing, Mich.-based provider of retirement-planning solutions, with subsidiaries and affiliates that offer asset management and brokerage services, also posted net income of $1.2 billion, which fell short of the average analyst estimate of $1.6 billion and is a sharp plunge from the $3.2 billion reported in the corresponding quarter last year.

Total revenue fell to $410 million from $6.7 billion a year earlier, a decline largely due to losses in derivatives and other investments, the company said.

In a press release, the decrease in adjusted operating earnings was attributed to several temporary factors. Among them were:

  • Higher operating and interest expenses;
  • Losses in operating derivatives; and
  • Lower fee income from a decline in average variable annuity AUM.

Laura Prieskorn, Jackson’s president and CEO, said in a statement that the company was on sound financial footing. It “returned $100 million to common shareholders through dividends and share buybacks over the second quarter and remain[s] committed to achieving our 2023 capital return target of $450 million to $550 million.”

Separately, the company announced a cash dividend of $0.62 per share of common stock, payable on September 14, 2023.

Before the announcement, shares of Jackson National were down roughly 3% for the year while the S&P 500 had leapt more than 17%.

When the results are broken down for the company’s various units, retail annuities brought in $328 million in adjusted operating earnings, which was $97 million less than it brought in during the corresponding period last year. At the same time, total annuity sales for the quarter were $3.1 billion, slipping 25% year over year.

Nevertheless, quarterly sales of the more conservative fixed and fixed-indexed annuities surged a heart-stopping 505% year over year to $115 million. Sales of traditional variable annuities, which essentially invest in mutual-fund-like subaccounts, slid 33% from the second quarter of 2022 to $2.5 million. This was attributed to consumer preferences for asset protection instead of asset accumulation.

But the newer type of structured variable annuity called a RILA, or registered index-linked annuity, which offers partial upside potential and partial downside protection, fared far better. RILA sales soared more than 10% in the quarter year over year to $541 million.

Jackson’s institutional products reported pretax adjusted operating earnings of $17 million in the second quarter, slightly down from the $19 million reported in the second quarter of 2022. Total sales of institutional products were $304 million.

The company’s total AUM ended the quarter at $306 billion, a gain of $11.8 billion from a year ago.