Closing of funds to investors suggests carrier's plan to slow variable annuity sales will be less aggressive than first thought; 'quite modest'
Jackson National Life Insurance Co. plans to close several funds available to its variable annuity customers, effective Aug. 29.
In a May 31 filing with the Securities and Exchange Commission, the insurer said that it would close four funds to separate account investors, including the JNL/Goldman Sachs Emerging Markets Debt Fund, the JNL/Lazard Emerging Markets Fund, the JNL/Mellon Capital Management Global Alpha Fund and the JNL Red Rocks Listed Private Equity Fund.
Investors will be able to access the options through Jackson's fund of funds selections.
In the filing, Jackson also said it would close the JNL Institutional Alt 65 Fund to all investors. That fund places about 35% of its assets into funds that invest in fixed income, U.S. equity and international securities. The remaining 65% goes into underlying funds that mostly invest in non-traditional asset classes.
In a 2010 annual report discussing fund performance, the insurer attributed the Alt 65 Fund's 15.85% gain that year to greater exposure to commodities, emerging- markets debt and emerging equity.
The SEC filing also showed that Jackson will change the structure of its JNL/BlackRock Global Allocation Fund option to a subadvised fund structure from a master-feeder structure, effective Aug. 29.
Back in March, Jackson said it would close off access to the $600 million clone of the master BlackRock Global Allocation Fund temporarily because additional shares in the master fund were unavailable.
In a separate May filing, the insurer said it would pull the 8% bonus and annual step-up option available under its LifeGuard Freedom Flex guaranteed-minimum-withdrawal benefit, effective Aug. 29. The 8% annual bonus allowed investors to increase their withdrawal benefit base by that percentage in years with no withdrawals. Customers also were able to capture investment gains annually.
Mortality and expense fees also will be up for VA contracts purchased after Aug. 29, according to a May SEC filing. So-called M&E fees are up to 1.6% from 1.5% for Perspective Advisors II and also have risen to 1.55% from 1.45% for the Perspective L Series.
Jackson spokesman Andrew Silver declined to comment on the filings. “Our product philosophy will continue to be on three core principles: to deliver value to the investor, to maintain sound pricing and corporate risk management practices and to allow the adviser to demonstrate his or her value to the client,” he said.
The changes follow on the heels of a May earnings call in which Tidjane Thiam, chief executive of Prudential PLC, Jackson's U.K.-based parent, had said the insurer would rein in its VA sales. He had said the initiatives would affect products with shorter surrender charge periods and could involve the investment options available to clients.
Thus far, the changes suggest the insurer is trying to slow its sales less drastically, noted Tamiko Toland, managing director for retirement income consulting at Strategic Insight. “When we saw these changes, we felt they were quite modest, given the goal of slowing sales,” she said. “I don't think they're trying to slam the brakes. They're tapping them.”
