A.M. Best Downgrades Issuer Credit and Debt Ratings of Jackson National Life Insurance Company and Its Affiliates

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the issuer credit ratings (ICR) to "aa-"? from "aa"? and affirmed the financial strength rating of A+ (Superior) of Jackson National Life Insurance Company, its wholly owned subsidiary, Jackson National Life Insurance Company of New York and the direct parent, Brooke Life Insurance Company (collectively referred to as JNL). Concurrently, A.M. Best has downgraded the debt ratings to "a"? from "a+"? on the existing surplus notes and to "aa-"? from "aa"? on notes issued under funding agreement-backed securities programs of JNL. The outlook for all ratings is stable. All the above companies are headquartered in Lansing, MI. (See below for a detailed listing of the companies and debt ratings.)

JNL represents the U.S. life insurance and annuity operations of its ultimate parent, Prudential plc (Prudential), an international financial services company based in the United Kingdom. Prudential plc is not affiliated with Prudential Financial, Inc., a global financial services company based in the United States.

The downgrading of the ICRs and debt ratings of JNL primarily reflects the decline in Prudential's enterprise-wide profitability and investment performance during 2008, as well as its exposure to additional asset impairments. On an international financial reporting standards basis (IFRS), Prudential reported an after-tax net loss of GBP 391 million in 2008 due to nearly GBP 1.8 billion of short-term fluctuations in investment returns primarily reflecting the temporary market value movements of instruments held by the shareholder-backed operations. Accordingly, IFRS shareholders' equity fell by approximately GBP 1 billion. Although A.M. Best does not publish ratings on the parent organization, JNL's ratings receive enhancement in consideration of the financial strength and support provided to JNL by Prudential.


Moreover, the downgrades also recognize the volatility inherent in JNL's earnings and investment mix within the current economic environment. For year-end 2008, JNL experienced a $982 million net loss on a U.S. GAAP basis, which was driven by over $1.2 billion of pre-tax net realized investment losses. On a U.S. statutory basis, the net loss was $1.03 billion. A.M. Best notes that JNL's GAAP and statutory results include the mark-to-market impact of its macro hedging program. Adjusting for the mark-to-market impact would improve GAAP and statutory earnings by approximately $800 million and $685 million, respectively. Furthermore, while JNL's statutory capital ratio remains sufficient for its current ratings, the 2008 ratio benefited from state permitted practices related to deferred tax asset recognition and C3 Phase II, as well as an affiliated reinsurance transaction.

The ratings of JNL acknowledge its strong market position in the individual annuity arena, its solid risk-adjusted capitalization and historically profitable operations. JNL is one of the largest U.S. writers of individual annuities and achieved a top-10 position for variable annuity sales in first quarter 2009 (currently top-10 in fixed annuities sales). Prior to 2008, JNL delivered double-digit sales growth, as well as strong U.S. statutory and GAAP earnings, which have allowed it to organically fund its growth while also contributing dividends to Prudential. The ratings also acknowledge JNL's strong asset/liability management capabilities, in particular the hedging of its variable annuity guarantees. For 2008, gains on hedging assets more than offset the required statutory reserve increases on variable guarantees net of internal reinsurance.

Offsetting these positive rating factors is JNL's liability profile, which remains less diversified than many of its similarly-rated peers due to a heavy concentration in retail and institutional annuities. Historically, JNL primarily has focused on the production of individual annuities, and therefore, is more dependent on spread and fee income than other Superior-rated companies.

					The following debt ratings have been downgraded:
					Jackson National Life Funding, LLC--to "aa-"? from "aa"? program rating
					-- to "aa-"? from "aa"? on all outstanding notes issued under the program
					Jackson National Life Global Funding--to "aa-"? from "aa"? program rating
					-- to "aa-"? from "aa"? on all outstanding notes issued under the program
					Jackson National Life Insurance Company--
					-- to "a"? from "a+"? on $250 million 8.15% surplus notes, due 2027

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.





A.M. Best Co.

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Darian Hala, 908-439-2200, ext. 5802

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Thomas Rosendale, 908-439-2200, ext. 5201

thomas.rosendale@ambest.com

or

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Jim Peavy, 908-439-2200, ext. 5644

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Rachelle Morrow, 908-439-2200, ext. 5378

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Source: A.M. Best Co.