Prudential said in August 2020 that it could use one of two exit strategies for Jackson: selling stock to investors through an initial public offering or by demerging, by giving Prudential share holders a special Jackson stock dividend. The Prudential board decided to pursue a demerger, because that "would lead to a significantly earlier separation of Jackson than would have been possible through a minority IPO and future sell-downs," Prudential said in an announcement release. After the demerger, or spin-off-, Prudential would keep a 19.9% interest in Jackson, Prudential said. Prudential would sell the remaining stock in Jackson over time, the company said. Jackson Financial shares would trade on the New York Stock Exchange, with the symbol JXN. Prudential said it needs approvals from its shareholders and from regulators before it can complete the transaction. MetLife Inc. used a similar demerger process to separate from Brighthouse Financial Inc. in 2017, and Prudential used a demerger process to separate from M&G Investments, a U.K. asset manager, in 2019.
Prudential said that Jackson Financial is changing its hedge modeling in a way that will cut its risk-based capital ratio, or financial strength summary figure, by about 0.8 percentage points, to about 340% to 355% as of Dec. 31, 2020. That compares with an RBC ratio "over 400%" as of June 30, 2020, and 366% as of Dec. 2019. Jackson Financial will use proceeds from debt and hybrid capital to increase the RBC ratio to a level over 425% at the point of separation, Prudential said.
Prudential said it has named Steven Kandarian, the former chairman of MetLife, to be Jackson Financial's chairman, starting Feb. 1. Michael Falcon will continue to be Jackson Financial's chief executive officer. Kandarian has a bachelor's degree from Clark University, a law degree from Georgetown University, and a master's degree in business from Harvard. He's now a director of ExxonMobil, Neuberger Berman and the Damon Runyon Cancer Research Foundation. — Read AIG Aims to Split Off Life & Retirement Business, on ThinkAdvisor. — Connect with ThinkAdvisor Life/Health on Facebook, LinkedIn and Twitter.
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