Jackson Financial Inc. (NYSE: JXN) (Jackson®) today announced
its financial results for the second quarter ended June 30,
2024.
Key Highlights
- Strong earnings driven by a 9% increase in total annuity assets
under management, from $227 billion as of June 30, 2023 to $247
billion as of June 30, 2024, largely due to higher equity markets
over the past 12 month period
- Record level of registered index-linked annuity (RILA) sales of
$1.4 billion in the second quarter of 2024, up from $541 million in
the second quarter of 2023, reflecting our continued retail annuity
sales diversification efforts
- Net income attributable to Jackson Financial Inc. common
shareholders of $264 million, or $3.43 per diluted share in the
second quarter of 2024, compared to $1.2 billion, or $14.21 per
diluted share in the second quarter of 2023
- Adjusted operating earnings
- 1 of $410 million, or $5.32 per diluted share in the second
quarter of 2024, compared to $283 million, or $3.34 per diluted
share in the second quarter of 2023, driven largely by higher
spread income and growth in variable annuity assets under
management, as well as a reduction in the diluted share count due
to common share repurchases
- Robust capital position at the operating company, with total
adjusted capital of $4.7 billion and an estimated risk-based
capital (RBC) ratio at Jackson National Life Insurance Company
(JNLIC) of 550-570% as of June 30, 2024, which also reflects the
impact of a second quarter distribution from JNLIC of $250
million
- Returned $144 million to common shareholders in the second
quarter of 2024 through $90 million of common share repurchases and
$54 million in common dividends
- Cash and highly liquid securities at the holding company of
over $500 million as of June 30, 2024, which was above Jackson’s
targeted minimum liquidity buffer
- Received Board approval for an increase of $750 million to the
Company’s existing common share repurchase authorization
Laura Prieskorn, President and Chief Executive Officer of
Jackson, stated, “Jackson’s second quarter results highlight our
distribution strength and consistent capital generation. Our retail
annuity sales were up 36% from the second quarter of 2023 driven by
record RILA sales that further diversify our product mix.
Consistent with our move to smaller, periodic operating company
distributions, Jackson National Life distributed $250 million to
its parent during the second quarter. We are well-positioned
relative to our financial targets, as we maintained more than $1
billion in excess capital above our targeted minimum RBC ratio of
425%, returned $144 million to common shareholders during the
second quarter, and increased our excess cash at the holding
company. We anticipate building on this momentum through the
remainder of 2024 and continuing to deliver on our mission of
helping Americans achieve financial freedom for life.”
Consolidated Second Quarter 2024
Results
The Company reported net income attributable to Jackson
Financial Inc. common shareholders of $264 million, or $3.43 per
diluted share for the three months ended June 30, 2024, compared to
$1.2 billion, or $14.21 per diluted share for the three months
ended June 30, 2023. The lower current period net income was
primarily due to an unfavorable net hedging result compared to the
prior year’s second quarter. The prior year’s second quarter
reflected a larger market risk benefits gain resulting from
comparatively greater increases in interest rates and more
favorable fund performance. The current quarter net income reflects
a $71 million gain from business reinsured to third parties, while
the prior year’s second quarter included a gain of $118 million.
The results of reinsured business can differ significantly quarter
to quarter; however, these results do not impact our statutory
capital or free cash flow and have a minimal net impact on
shareholders’ equity because of the offset from related changes in
Accumulated Other Comprehensive Income (AOCI). We believe the
non-GAAP measure of adjusted operating earnings better represents
the underlying performance of our business as the figure excludes,
among other things, changes in fair value of derivative instruments
and market risk benefits tied to market volatility.
Adjusted operating earnings for the three months ended June 30,
2024, were $410 million, or $5.32 per diluted share, compared to
$283 million or $3.34 per diluted share for the three months ended
June 30, 2023. The current quarter adjusted operating earnings
benefited from improved spread income, increased fee income
resulting from higher average variable annuity assets under
management (AUM), and reduced diluted share count due to common
share repurchases. These were partially offset by higher
market-related costs and other expenses.
Total common shareholders’ equity was $9.6 billion or $125.25
per diluted share as of June 30, 2024, compared to $9.6 billion or
$121.29 per diluted share as of December 31, 2023. Adjusted book
value attributed to common shareholders2 was $11.5 billion or
$150.35 per diluted share as of June 30, 2024, compared to $10.8
billion or $136.34 per diluted share as of December 31, 2023. The
increase was driven primarily by adjusted operating earnings of
$744 million as well as non-operating, net hedging gains during the
six months ended June 30, 2024.
Segment Results – Pretax Adjusted
Operating Earnings2
Three Months Ended
(in millions)
June 30, 2024
June 30, 2023
Retail Annuities
$465
$328
Institutional Products
29
17
Closed Life and Annuity Blocks
35
7
Corporate and Other
(56)
(47)
Total3
$473
$305
Retail Annuities
Retail Annuities reported pretax adjusted operating earnings of
$465 million in the second quarter of 2024, compared to $328
million in the second quarter of 2023. The current quarter
benefited from higher fee income resulting from higher average
variable annuity AUM, and higher spread income. These items were
partially offset by higher market-related costs and other expenses
in the current quarter.
Total annuity sales of $4.2 billion in the second quarter of
2024 were up 36% from the second quarter of 2023, driven by record
RILA sales of $1.4 billion, up 163% from the second quarter of
2023. Traditional variable annuity sales in the current quarter of
$2.7 billion were up 11% from the second quarter of 2023. Fixed and
fixed indexed annuity sales in the current quarter totaled $85
million, compared to $115 million in the second quarter of
2023.
Institutional Products
Institutional Products reported pretax adjusted operating
earnings of $29 million in the second quarter of 2024, compared to
$17 million in the second quarter of 2023. The increase from the
prior year’s second quarter was due to higher spread income. Net
flows were $(619) million in the current quarter, and total account
value of $7.3 billion was down from $8.9 billion in the second
quarter of 2023.
Closed Life and Annuity Blocks
Closed Life and Annuity Blocks reported pretax adjusted
operating income of $35 million in the second quarter of 2024
compared to $7 million in the second quarter of 2023. The increase
from the prior year’s quarter was primarily due to improved
mortality and lower other policyholder benefits expense.
Corporate and Other
Corporate and Other reported a pretax adjusted operating loss of
$(56) million in the second quarter of 2024 compared to a loss of
$(47) million in the second quarter of 2023. The decline was
primarily due to lower other income and net investment income,
partially offset by lower operating expenses.
Capitalization and
Liquidity
(Unaudited, in billions)
June 30, 2024
March 31, 2024
Statutory Total Adjusted Capital (TAC)
Jackson National Life Insurance Company
$4.7
$4.7
Statutory TAC at JNLIC was $4.7 billion as of June 30, 2024, in
line with March 31, 2024. TAC was supported by strong base contract
cash flows which generated substantial statutory capital during the
quarter. This was broadly offset by a $250 million distribution to
JFI during the second quarter and the related reduction in deferred
tax asset admissibility. JNLIC’s estimated RBC ratio as of June 30,
2024 was 550-570%, down slightly from 555-575% as of March 31, 2024
due to a modest increase in estimated company action level (CAL)
required capital.
Cash and highly liquid securities at the holding company totaled
over $500 million as of June 30, 2024, which was above our targeted
minimum liquidity buffer of 2x annual holding company expenses.
Earnings Conference Call
Jackson will host a conference call Thursday, August 8, 2024, at
10 a.m. ET to review the second quarter results. The live webcast
is open to the public and can be accessed at
https://investors.jackson.com. A replay will be available following
the call.
To register for the webcast, click here.
FORWARD-LOOKING
STATEMENTS
The information in this press release contains forward-looking
statements about future events and circumstances and their effects
upon revenues, expenses and business opportunities. Generally
speaking, any statement in this release not based upon historical
fact is a forward-looking statement. Forward-looking statements can
also be identified by the use of forward-looking or conditional
words, such as “could,” “should,” “can,” “continue,” “estimate,”
“forecast,” “intend,” “look,” “may,” “will,” “expect,” “believe,”
“anticipate,” “plan,” “remain,” “confident” and “commit” or similar
expressions. In particular, statements regarding plans, strategies,
prospects, targets and expectations regarding the business and
industry are forward-looking statements. They reflect expectations,
are not guarantees of performance and speak only as of the dates
the statements are made. We caution investors that these
forward-looking statements are subject to known and unknown risks
and uncertainties that may cause actual results to differ
materially from those projected, expressed or implied. Factors that
could cause actual results to differ materially from those in the
forward-looking statements include those reflected in Part I, Item
1A. Risk Factors and Part II, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the year ended December 31, 2023, as
filed with the U.S. Securities and Exchange Commission (the SEC) on
February 28, 2024, and elsewhere in the Company’s reports filed
with the SEC. Except as required by law, Jackson Financial Inc.
does not undertake to update such forward-looking statements. You
should not rely unduly on forward-looking statements.
Certain financial data included in this release consists of
non-GAAP (Generally Accepted Accounting Principles) financial
measures. These non-GAAP financial measures may not be comparable
to similarly titled measures presented by other entities, nor
should they be construed as an alternative to other financial
measures determined in accordance with U.S. GAAP. Although the
Company believes these non-GAAP financial measures provide useful
information to investors in measuring the financial performance and
condition of its business, investors are cautioned not to place
undue reliance on any non-GAAP financial measures and ratios
included in this release. A reconciliation of the non-GAAP
financial measures to the most directly comparable U.S. GAAP
financial measure can be found in the “Non-GAAP Financial Measures”
Appendix of this release.
Certain financial data included in this release consists of
statutory accounting principles (“statutory”) financial measures,
including “total adjusted capital.” These statutory financial
measures are included in or derived from the Jackson National Life
Insurance Company annual and/or quarterly statements filed with the
Michigan Department of Insurance and Financial Services and
available in the investor relations section of the Company’s
website at investors.jackson.com/financials/statutory-filings.
ABOUT JACKSON
Jackson® (NYSE: JXN) is committed to helping clarify the
complexity of retirement planning—for financial professionals and
their clients. Through our range of annuity products, financial
know-how, history of award-winning service* and streamlined
experiences, we strive to reduce the confusion that complicates
retirement planning. We take a balanced, long-term approach to
responsibly serving all our stakeholders, including customers,
shareholders, distribution partners, employees, regulators and
community partners. We believe by providing clarity for all today,
we can help drive better outcomes for tomorrow. For more
information, visit www.jackson.com.
*SQM (Service Quality Measurement Group) Contact Center Awards
Program for 2004 and 2006-2023, for the financial services industry
(To achieve world-class certification, 80% or more of call-center
customers surveyed must have rated their experience as very
satisfied, the highest rating possible).
Jackson® is the marketing name for Jackson Financial Inc.,
Jackson National Life Insurance Company® (Home Office: Lansing,
Michigan) and Jackson National Life Insurance Company of New York®
(Home Office: Purchase, New York).
WEBSITE INFORMATION
Visit investors.jackson.com to view information regarding
Jackson Financial Inc., including a supplement regarding the Second
Quarter 2024 results. We routinely use our investor relations
website as a primary channel for disclosing key information to our
investors, some of which may contain material and previously
non-public information. We may also use social media channels to
communicate with our investors and the public about our Company and
other matters, and those communications could be deemed to be
material information. The information contained on, or that may be
accessed through, our website or social media channels is not
incorporated by reference into and is not part of this
document.
APPENDIX
Non-GAAP Financial Measures
In addition to presenting our results of operations and
financial condition in accordance with U.S. GAAP, we use and report
selected non-GAAP financial measures. Management believes the use
of these non-GAAP financial measures, together with relevant U.S.
GAAP financial measures, provides a better understanding of our
results of operations, financial condition and the underlying
performance drivers of our business. These non-GAAP financial
measures should be considered supplementary to our results of
operations and financial condition that are presented in accordance
with U.S. GAAP and should not be viewed as a substitute for the
U.S. GAAP financial measures. Other companies may use similarly
titled non-GAAP financial measures that are calculated differently
from the way we calculate such measures. Consequently, our non-GAAP
financial measures may not be comparable to similar measures used
by other companies.
Adjusted Operating Earnings
Adjusted Operating Earnings is an after-tax non-GAAP financial
measure, which we believe should be used to evaluate our financial
performance on a consolidated basis by excluding certain items that
may be highly variable from period to period due to accounting
treatment under U.S. GAAP or that are non-recurring in nature, as
well as certain other revenues and expenses that we do not view as
driving our underlying performance. Adjusted Operating Earnings
should not be used as a substitute for net income as calculated in
accordance with U.S. GAAP. However, we believe the adjustments to
net income are useful for gaining an understanding of our overall
results of operations.
For additional detail on the excluded items, please refer to the
supplement regarding the second quarter ended June 30, 2024, posted
on our website, https://investors.jackson.com.
The following is a reconciliation of Adjusted Operating Earnings
to net income (loss) attributable to Jackson Financial Inc. common
shareholders, the most comparable U.S. GAAP measure.
U.S. GAAP Net Income (Loss) to Adjusted
Operating Earnings
Three Months Ended
(in millions, except share and per
share data)
June 30, 2024
June 30, 2023
Net income (loss) attributable to
Jackson Financial Inc. common shareholders
$
264
$
1,204
Add: dividends on preferred stock
11
13
Add: income tax expense (benefit)
36
245
Pretax income (loss) attributable to
Jackson Financial Inc.
311
1,462
Non-operating adjustments – (income)
loss:
Guaranteed benefits and hedging
results:
Fees attributed to guaranteed benefit
reserves
(780
)
(781
)
Net movement in freestanding
derivatives1
1,083
1,911
Market risk benefits (gains) losses,
net
(516
)
(2,570
)
Net reserve and embedded derivative
movements
278
194
Amortization of DAC associated with
non-operating items at date of transition to LDTI2
136
149
Total guaranteed benefits and hedging
results
201
(1,097
)
Net realized investment (gains) losses
30
40
Net realized investment (gains) losses on
funds withheld assets
214
134
Net investment income on funds withheld
assets
(285
)
(252
)
Other items
2
18
Total non-operating adjustments
162
(1,157
)
Pretax adjusted operating
earnings
473
305
Less: operating income tax expense
(benefit)
52
9
Adjusted operating earnings before
dividends on preferred stock
421
296
Less: dividends on preferred stock
11
13
Adjusted operating earnings
$
410
$
283
Weighted Average diluted shares
outstanding
77,078,930
84,754,611
Net income (loss) per diluted
share
$
3.43
$
14.21
Adjusted Operating Earnings per diluted
share
$
5.32
$
3.34
1Includes $16 million loss related to
interest rate swaps in 2Q24.
2LDTI - Adoption of FASB issued ASU
2018-12 “Targeted Improvements to the Accounting for Long Duration
Contracts”.
Adjusted Book Value Attributable to Common
Shareholders
Adjusted Book Value Attributable to Common Shareholders excludes
Preferred Stock and Accumulated Other Comprehensive Income (Loss)
("AOCI") attributable to Jackson Financial Inc ("JFI"), which does
not include AOCI arising from investments held within the funds
withheld account related to the Athene Reinsurance Transaction. We
exclude AOCI attributable to JFI from Adjusted Book Value
Attributable to Common Shareholders because our invested assets are
generally invested to closely match the duration of our
liabilities, which are longer duration in nature, and therefore we
believe period-to-period fair market value fluctuations in AOCI to
be inconsistent with this objective. We believe excluding AOCI
attributable to JFI is more useful to investors in analyzing trends
in our business. Changes in AOCI within the funds withheld account
related to the Athene Reinsurance Transaction offset the related
non-operating earnings from the Athene Reinsurance Transaction
resulting in a minimal net impact on Adjusted Book Value of
JFI.
(in millions)
June 30, 2024
December 31, 2023
Total shareholders’ equity
$
10,084
$
10,170
Less: Preferred equity
533
533
Total common shareholders’
equity
9,551
9,637
Adjustments to total common
shareholders’ equity:
Exclude Accumulated Other Comprehensive
(Income) Loss attributable to Jackson Financial Inc.
1,914
1,196
Adjusted Book Value Attributable to
Common Shareholders
$
11,465
$
10,833
Condensed Consolidated Balance
Sheets
June 30,
December 31,
2024
2023
(in millions, except share and per
share data)
Assets
Investments:
Debt Securities, available-for-sale, net
of allowance for credit losses of $27 and $21 at June 30, 2024 and
December 31, 2023, respectively (amortized cost: 2024 $45,300; 2023
$44,844)
$
40,352
$
40,422
Debt Securities, at fair value under fair
value option
2,567
2,153
Debt Securities, trading, at fair
value
72
68
Equity securities, at fair value
212
394
Mortgage loans, net of allowance for
credit losses of $160 and $165 at June 30, 2024 and December 31,
2023, respectively
9,699
10,082
Mortgage loans, at fair value under fair
value option
430
481
Policy loans (including $3,511 and $3,457
at fair value under the fair value option at June 30, 2024 and
December 31, 2023, respectively)
4,439
4,399
Freestanding derivative instruments
226
390
Other invested assets
2,673
2,466
Total investments
60,670
60,855
Cash and cash equivalents
1,736
2,688
Accrued investment income
518
512
Deferred acquisition costs
12,066
12,302
Reinsurance recoverable, net of allowance
for credit losses of $27 and $29 at June 30, 2024 and December 31,
2023, respectively
23,699
25,422
Reinsurance recoverable on market risk
benefits, at fair value
121
149
Market risk benefit assets, at fair
value
8,556
6,737
Deferred income taxes, net
768
640
Other assets
554
1,294
Separate account assets
229,088
219,656
Total assets
$
337,776
$
330,255
Condensed Consolidated Balance
Sheets
June 30,
December 31,
2024
2023
(in millions, except share and per
share data)
Liabilities and Equity
Liabilities
Reserves for future policy benefits and
claims payable
$
11,370
$
11,898
Other contract holder funds
54,723
55,319
Market risk benefit liabilities, at fair
value
3,890
4,785
Funds withheld payable under reinsurance
treaties (including $3,683 and $3,626 at fair value under the fair
value option at June 30, 2024 and December 31, 2023,
respectively)
18,465
19,952
Long-term debt
2,034
2,037
Repurchase agreements and securities
lending payable
1,797
19
Collateral payable for derivative
instruments
116
780
Freestanding derivative instruments
900
1,210
Notes issued by consolidated variable
interest entities, at fair value under fair value option
2,041
1,988
Other liabilities
3,068
2,277
Separate account liabilities
229,088
219,656
Total liabilities
327,492
319,921
Equity
Series A non-cumulative preferred stock
and additional paid in capital, $1.00 par value per share: 24,000
shares authorized; 22,000 shares issued and outstanding at June 30,
2024 and December 31, 2023; liquidation preference $25,000 per
share
533
533
Common stock; 1,000,000,000 shares
authorized, $0.01 par value per share and 75,700,457 and 78,660,221
shares issued and outstanding at June 30, 2024 and December 31,
2023, respectively
1
1
Additional paid-in capital
6,007
6,005
Treasury stock, at cost; 18,780,549 and
15,820,785 shares at June 30, 2024 and December 31, 2023,
respectively
(796
)
(599
)
Accumulated other comprehensive income
(loss), net of tax expense (benefit) of $(277) and $(178) at June
30, 2024 and December 31, 2023, respectively
(3,626
)
(2,808
)
Retained earnings
7,965
7,038
Total shareholders' equity
10,084
10,170
Noncontrolling interests
200
164
Total equity
10,284
10,334
Total liabilities and equity
337,776
330,255
Condensed Consolidated Income
Statements
Three Months Ended June
30,
Six Months Ended June
30,
(in millions, except per share data)
2024
2023
2024
2023
Revenues
Fee income
$
2,008
$
1,913
$
4,006
$
3,801
Premiums
37
52
75
77
Net investment income:
Net investment income excluding funds
withheld assets
463
390
927
790
Net investment income on funds withheld
assets
285
252
555
559
Total net investment income
748
642
1,482
1,349
Net gains (losses) on derivatives and
investments:
Net gains (losses) on derivatives and
investments
(1,342
)
(2,112
)
(4,234
)
(4,838
)
Net gains (losses) on funds withheld
reinsurance treaties
(214
)
(134
)
(415
)
(807
)
Total net gains (losses) on derivatives
and investments
(1,556
)
(2,246
)
(4,649
)
(5,645
)
Other income
10
19
11
34
Total revenues
1,247
380
925
(384
)
Benefits and Expenses
Death, other policy benefits and change in
policy reserves, net of deferrals
209
241
430
469
(Gain) loss from updating future policy
benefits cash flow assumptions, net
(18
)
10
(7
)
24
Market risk benefits (gains) losses,
net
(516
)
(2,570
)
(3,234
)
(2,744
)
Interest credited on other contract holder
funds, net of deferrals and amortization
273
295
546
580
Interest expense
26
28
51
56
Operating costs and other expenses, net of
deferrals
678
620
1,363
1,236
Amortization of deferred acquisition
costs
277
291
555
584
Total benefits and expenses
929
(1,085
)
(296
)
205
Pretax income (loss)
318
1,465
1,221
(589
)
Income tax expense (benefit)
36
245
137
(313
)
Net income (loss)
282
1,220
1,084
(276
)
Less: Net income (loss) attributable to
noncontrolling interests
7
3
14
4
Net income (loss) attributable to Jackson
Financial Inc.
275
1,217
1,070
(280
)
Less: Dividends on preferred stock
11
13
22
13
Net income (loss) attributable to Jackson
Financial Inc. common shareholders
$
264
$
1,204
$
1,048
$
(293
)
Earnings per share
Basic
$
3.45
$
14.58
$
13.55
$
(3.55
)
Diluted1
$
3.43
$
14.21
$
13.44
$
(3.55
)
(1) If we reported a net loss attributable
to Jackson Financial Inc., all common stock equivalents are
anti-dilutive and are therefore excluded from the calculation of
diluted shares and diluted per share amounts. The shares excluded
from the diluted EPS calculation were 2,794,562 shares for the six
months ended June 30, 2023.
_____________
1 For the reconciliation of non-GAAP
measures to the most comparable U.S. GAAP measure, please see the
explanation of Non-GAAP Financial Measures in the Appendix to this
release.
2 For the reconciliation of non-GAAP
measures to the most comparable U.S. GAAP measure, please see the
explanation of Non-GAAP Financial Measures in the Appendix to this
release.
3 See reconciliation of Net Income to
Total Pretax Adjusted Operating Earnings in the Appendix to this
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807839754/en/
Investor Relations Contacts: Liz Werner elizabeth.werner@jackson.com
Andrew Campbell andrew.campbell@jackson.com
Media Contact: Patrick Rich patrick.rich@jackson.com
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