Jackson Financial shares fell 4.71% to $130.64 on Thursday afternoon after The Bear Cave published a report, based on analysis from investment firm QVT Financial, alleging that the insurer uses opaque accounting and optimistic actuarial assumptions to bolster solvency and fund dividends and buybacks. The central critique focuses on Jackson's operating subsidiary, Jackson National Life, and its captive reinsurer, Brooke Re, which QVT says runs an internal installment plan that defers quarterly variable annuity hedging losses over three years rather than settling them immediately. Driven by rising equity markets, those deferred bills accumulated into an estimated $6.8 billion net receivable owed to JNL by mid-2026, equal to 137% of JNL's primary statutory capital surplus. QVT also asserts that Brooke Re relies on overstated market risk benefit valuations that fail to account for adverse policyholder behavior such as higher-than-expected contract surrenders, which have repeatedly forced multi-billion-dollar markdowns and call into question Brooke Re's ability to remain self-sustaining. While Jackson has repurchased over a third of its initial shares outstanding since its 2021 spin-off, the report cautions that its regulatory surplus remains highly dependent on an affiliate IOU; Jackson Financial did not immediately respond to Benzinga's request for comment.
Jackson Financial IncBear Cave/QVT report alleges opaque accounting and overstated actuarial assumptions at Brooke Re, with a $6.8B net receivable equal to 137% of JNL's statutory surplus, raising doubts about solvency and funding of dividends/buybacks.
