Jackson Financial Inc 8-K, filed Feb 19, 2025
Jackson Financial Inc. (JXN)
About this 8-K
Jackson Financial Inc filed this 8-K on February 19, 2025.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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CURRENT REPORT
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Item 7.01 Regulation FD Disclosure.
Jackson Financial Inc. has prepared a slide presentation to accompany its fourth quarter and full year ended December 31, 2024 earnings call to be held on Thursday, February 20, 2025, at 9:00 a.m. Eastern Time. A copy of that slide presentation is furnished as Exhibit 99.1 to this report.
The information in this Item (including Exhibit 99.1) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth in such a filing.
SAFE HARBOR
The information in this report (including Exhibit 99.1) contains forward-looking statements about future events and circumstances and their effects upon revenues, expenses and business opportunities. Generally speaking, any statement in this report (including Exhibit 99.1) 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,” “predict,” “remain,” “future,” “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 (“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 presentation 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 presentation. 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 presentation.
Certain financial data included in this presentation 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.
We routinely use our investor relations website, at investors.jackson.com, as a primary channel for disclosing key information to our investors. We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts. We and certain of our senior executives 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, our social media channels, or our executives’ social media channels, is not incorporated by reference into and is not part of this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Slide presentation that will accompany the Jackson Financial Inc. fourth quarter and full year ended December 31, 2024, earnings call. | |
| 104 | Cover Page Interactive Data File (the coverage page XBRL tags are embedded within the Inline XBRL Document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JACKSON FINANCIAL INC. | ||
| By: | /s/ Don W. Cummings | |
| Don W. Cummings | ||
| Executive Vice President and Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| Date: February 19, 2025 | ||
Exhibit 99.1
For Presentation on February 20, 2025 Jackson Financial Inc. Fourth Quarter and Full Year 2024 Financial Results
Forward - Looking Statements and Non - GAAP Measures The information in this document contains forward - looking statements about future events and circumstances and their effects upo n revenues, expenses and business opportunities. Generally speaking, any statement in this document not based upon historical fact is a forward - looking statement. Forward - lookin g statements can also be identified by the use of forward - looking or conditional words, such as “could,” “should,” “can,” “continue,” “estimate,” “forecast,” “intend,” “look,” “m ay,” “will,” “expect,” “believe,” “anticipate,” “plan,” “predict,” “remain,” “future,” “confident,” and “commit” or similar expressions. In particular, statements regarding plans, s tra tegies, prospects, targets and expectations regarding the business and industry are forward - looking statements. They reflect expectations, are not guarantees of performance and speak onl y 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 the For m 1 0 - K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2024, and elsewhere in Jackson Financial Inc.’s fili ngs 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 state ments. Certain financial data included in this document consists of non - GAAP (“Generally Accepted Accounting Principles”) financial mea sures. 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 fin ancial 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 f inancial 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 document. A r econciliation of the non - GAAP financial measures to the most directly comparable U.S. GAAP financial measure can be found under “Non - GAAP Financial Measures” in the Appendix of thi s document. Certain financial data included in this document consists of statutory accounting principles (“statutory”) financial measures , i ncluding “total adjusted capital.” These statutory financial measures are included in or derived from the Jackson National Life Insurance Company (“JNLIC”) annual and/or quarterly statem ent s 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/fina nci als/statutory - filings. We routinely use our investor relations website, at investors.jackson.com, as a primary channel for disclosing key informatio n t o our investors. We may use our website as a means of disclosing material, non - public information and for complying with our disclosure obligations. Accordingly, investors should mo nitor our investor relations website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts, some of which may c ont ain material and previously non - public information. We and certain of our senior executives may also use social media channels to communicate with our investors and the public abou t o ur 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, our social media channels, or our executives’ social media channels is not incorporated by reference into and is not part of this document. 2
2024 Full - Year Financial Results Key Highlights $902M GAAP earnings $1.4B Non - GAAP earnings 1 $11.74 GAAP earnings per share $18.79 Non - GAAP earnings per share 1 $631M Capital return 572% Statutory capital position 39% Retail annuity sales Net income attributable to Jackson Financial Inc. (JFI) common shareholders Net income per common share Common share dividends and repurchases Jackson National Life Insurance Company (JNLIC) e stimated risk - based capital (RBC) ratio Adjusted Operating Earnings 1 Adjusted Operating Earnings per common share 1 Retail annuity sales up over prior year 3 1) See the Appendix for the non - U.S. GAAP financial measures, definitions and reconciliations to most comparable U.S. GAAP measu re. $767M Free cash flow 1 Cash distributed to JFI, net of JFI expenses
425% Risk - Based Capital (RBC) ratio minimum Approximately two years of holding company fixed expenses Estimated RBC ratio of 572% at year end 2024, after reflecting $875 million 2 of cumulative year - to - date distributions from JNLIC to JFI Holding company cash and highly liquid securities of more than $700 million at year end 2024, which is above Jackson’s $250 million minimum liquidity buffer 1 $550 - $650 million capital return to common shareholders Returned $631 million of capital to common shareholders in 2024 Delivered on All 2024 Financial Targets 4 Capital Return Holdco Liquidity JNLIC RBC Ratio Full - Year Results 2024 Targets 1) We intend to maintain a minimum amount of cash and highly liquid securities at Jackson Financial Inc. adequate to fund two ye ars of holding company fixed net expenses, which is currently targeted at $250 million but may change over time as we refinance existing debt or make changes to our debt and capital structure. 2) Does not in clude capital distribution of $704 million related to Brooke Re formation.
Progress Since Becoming an Independent Company Significant Capital Return Growth 5 Each Quarter Dividend Per Common Share 2021 2024 Total Capital Return 64% 96% Diluted Share Count $0.50 $0.70 74.3M $631M Near the Top of the Target Range of $550 - 650m 90.6M +40% +68% - 18% $375M Midpoint of Initial Target Range of $325 - 425m Returned more than $1.8 billion to common shareholders since separation
Progress Since Becoming an Independent Company Diversified New Business Mix VA FA/FIA RILA Institutional Sales By Product VA FA/FIA RILA Institutional 2021 2024 VA With Lifetime Benefits All Other Sales Benefit Mix VA With Lifetime Benefits All Other Sales 36% 64% 96% 53% Non - VA +43pts Non - LB +28pts Total Sales $19.8bn Total Sales $19.8bn 6
425% Risk - Based Capital (RBC) ratio minimum Approximately two years of holding company fixed expenses Excess capital at Jackson National Life Insurance Company based on a 425% RBC ratio minimum Holding company fixed net expenses, including interest expense, at approximately $250 million 1 $700 - $800 million capital return to common shareholders Represents an 11% - 27% increase in total capital return target from 2024 actual. Increased 1Q25 common dividend 14% to $0.80 per share 2025 Financial Targets 7 Capital Return Holdco Liquidity JNLIC RBC Ratio Stronger More Stable Capital Generation Supports Increased Capital Return Target 1) Jackson intends to maintain a minimum amount of cash and highly liquid securities at Jackson Financial Inc. adequate to fund two years of holding company fixed net expenses, which is currently targeted at $250 million but may change over time as we refinance existing debt or make changes to our debt and cap ita l structure.
350 204 349 4Q23 3Q24 4Q24 9,918 10,833 11,156 4Q22 4Q23 4Q24 Consolidated Results Adjusted Operating Earnings 4Q24 vs. 4Q23 • 4Q24 benefited from increased fee income resulting from higher average variable annuity assets under management and improved spread income, partially offset by higher market - related costs and other expenses 4Q24 vs. 3Q24 • 4Q24 flat compared to 3Q24 due to favorable impacts from lower market - related costs and other expenses, improved spread income and an increase from higher fee income resulting from higher average variable annuity assets under management, offset by the annual actuarial assumption update Total Common Shareholders’ Equity • Total Common Shareholders’ Equity at 4Q24 of $9.2 billion compared to a balance of $9.6 billion at 4Q23 • Adjusted Book Value Attributable to Common Shareholders at 4Q24 of $11.2 billion up from 4Q23, primarily due to adjusted operating earnings of $1.4 billion, partially offset by non - operating actuarial assumption review impacts, non - operating earnings and capital return to shareholders during 2024 Adjusted Operating Earnings 1 ($ millions) Adjusted Book Value Attributable to Common Shareholders 1 ($ millions) Key Takeaways 1) See the Appendix for the non - U.S. GAAP financial measures, definitions, and reconciliations to the most comparable U.S. GAAP measure. 8 Fourth Quarter 2024
Notable Items Fourth Quarter 2024 4Q24 4Q23 EPS - Diluted After - tax 1,2 Pretax EPS - Diluted After - tax 1,2 Pretax ($ millions, except per share amounts) $4.65 349 405 $2.53 204 203 Adjusted Operating Earnings 3 Notable Items Included in Adjusted Operating Earnings 0.04 3 3 (0.37) (30) (28) Out performance/(Under performance) from Limited Partnership Income 4 - - - (0.08) (6) (6) Allowance for Reinsurance Credit Losses 5 (0.31) (23) (26) (0.79) (64) (60) Annual Assumption Unlocking 428 297 Adjusted Pretax Operating Earnings, Excluding Notable Items 0.08 0.64 Impact from Effective Tax Rate versus a 15% Tax Rate Guidance $4.84 $3.13 Adjusted Earnings Per Share, Excluding Notables and Adjusted for Tax Impact 1) After - tax results for Notable Items were calculated using the corresponding quarter’s effective tax rate for adjusted operating earnings (4Q23 of - 5.9%; 4Q24 of 11.1%). 2) Includes preferred stock dividends of $11m. 3) See the Appendix for the non - U.S. GAAP financial measures, definitions, and reconciliations to the most comparable U.S. GAAP mea sure. 4) Limited Partnership (LP) income assumes an annualized 10% return and excludes income and assets attributable to non - controlling interests. Income from LPs is reported on a one - quarter lag. Operating LP return of 3% and 11% for 4Q23 and 4Q24, respectively. Total LP returns (including non - operating) of 1% and 14% for 4Q23 and 4Q24, respectively. 5) During 4Q23, the Company increased its allowance for credit losses related to a specific insurer, which had been ordered into li quidation. 9
Notable Items Full Year 2024 FY24 FY23 EPS - Diluted After - tax 1,2 Pretax EPS - Diluted After - tax 1,2 Pretax ($ millions, except per share amounts) $18.79 1,443 1,678 $12.84 1,073 1,165 Adjusted Operating Earnings 3 Notable Items Included in Adjusted Operating Earnings (0.15) (12) (13) (0.97) (81) (85) Out performance/(Under performance) from Limited Partnership Income 4 0.31 24 27 - - - Payout Annuity Reserve Release Due to Deaths - - - (0.35) (29) (31) Allowance for Reinsurance Credit Losses 5 (0.30) (23) (26) (0.68) (57) (60) Annual Assumption Unlocking 1,690 1,341 Adjusted Pretax Operating Earnings, Excluding Notable Items 0.23 1.20 Impact from Effective Tax Rate versus a 15% Tax Rate Guidance $18.70 $13.64 Adjusted Earnings Per Share, Excluding Notables and Adjusted for Tax Impact 1) After - tax results for Notable Items were calculated using the corresponding year’s effective tax rate for adjusted operating ear nings (FY23 of 4.9%; FY24 of 11.4%). 2) Includes preferred stock dividends of $35m and $44m for FY23 and FY24, respectively. 3) See the Appendix for the non - U.S. GAAP financial measures, definitions, and reconciliations to the most comparable U.S. GAAP mea sure. 4) Limited Partnership (LP) income assumes an annualized 10% return and excludes income and assets attributable to non - controlling interests. Income from LPs is reported on a one - quarter lag. Operating LP return of 5% and 9% for FY23 and FY24, respectively. Total LP returns (including non - operating) of 1% and 10% for FY23 and FY24, respectively. 5) During 2Q23 and 4Q23, the Company increased its allowance for credit losses related to a specific insurer, which had been ord ere d into liquidation. 10
Stable Non - Operating Results Pretax income attributable to Jackson Financial Inc. (U.S. GAAP) Pretax adjusted operating earnings (Non - GAAP) 1 Net gain on funds withheld 3 (419) 1) See the Appendix for the non - U.S. GAAP financial measures, definitions, and reconciliations to the most comparable U.S. GAAP measure. 2) Represents non - operating Total Guaranteed Benefits and Hedging Results. 3) Includes $147m net realized investment gains and $200m net investment income. 4) Net reserve and embedded derivative movements includ es guaranteed benefit claims. (131) 405 347 11 86 Net hedge gain 2 Net realized investment gains and other, net • Stable guarantee fee stream supports hedging needs • Economic hedging better aligns with U.S. GAAP accounting following the establishment and funding of Brooke Re, leading to a better alignment between adjusted earnings and U.S. GAAP earnings, excluding impacts of the legacy funds withheld reinsurance arrangement • Changes in volatility impact our MRB measurements for U.S. GAAP without a corresponding hedge offset as we do not hedge changes in volatility. Changes in volatility do not impact our Brooke Re MRB measurement where the modified GAAP methodology uses a fixed volatility assumption (designed to promote balance sheet stability). • Income on funds withheld is offset by the change in AOCI arising from investments in the funds withheld account related to the Athene Reinsurance Transaction, resulting in a minimal net impact on the adjusted book value of Jackson Financial Inc. • Actuarial assumption impact primarily related to data enhancements and assumption updates for withdrawal utilization on policies with GMWBs Highlights FY24 4Q24 $3,122 $775 Fees attributable to guarantee benefit reserves (5,856) (2,788) Net losses on hedging instruments 4,243 2,181 Market risk benefits gains, net (1,224) (89) Net reserve and embedded derivative movements 4 285 79 Net Hedge Gain 79 Amortization of DAC associated with non - operating items at date of transition to LDTI Actuarial assumption updates and model enhancements 367 ($ millions) Fourth Quarter 2024
3.3 5.3 4.7 4Q23 3Q24 4Q24 1,000 2,539 1,779 4Q23 3Q24 4Q24 Continued Progress on Retail Sales Diversification 1 • 4Q24 retail annuity sales up 42% from 4Q23, with an increasingly diversified product mix • 2024 retail annuity sales of $17.8 billion up from $12.8 billion in 2023. This amount is the highest retail annuity sales level since 2021 • RILA sales grew 47% from 4Q23. 2024 RILA sales of $5.7 billion nearly doubled when compared to 2023. • During 2024 Jackson opportunistically leveraged our broad retail annuity distribution platform resulting in $1.6 billion of fixed and fixed index annuity sales, up from $403 million for 2023 • Continued momentum in non - VA net flows. Although 4Q24 non - VA net flows were down when compared to 3Q24, as expected, 2024 non - VA net flows of $6.9 billion were more than double the $2.9 billion for 2023 Retail Sales ($ billions) Non - VA Net Flows 2 Highlights 1) Excludes the FA/FIA business ceded to Athene. 2) Includes net flows related to FIA, FA, payout annuities and RILA. Variable Annuities RILA FA / FIA 12 ($ millions) Fourth Quarter 2024
Segment Results Retail Institutional Closed Block • 4Q24 vs. 4Q23 : Up from 4Q23 reflecting higher net investment income. • 4Q24 vs. 3Q24 : Decrease primarily due to the unfavorable impact of the annual actuarial assumption update • 4Q24 vs. 4Q23 : Current quarter benefited from higher fee income resulting from higher average variable annuity assets under management, higher spread income and a benefit from the annual assumptions review, partially offset by higher market - related costs and other expenses • 4Q24 vs. 3Q24 : Current quarter up due primarily to the favorable impact of the annual actuarial assumption update and higher fee income ($ millions) 22 17 19 4Q23 3Q24 4Q24 ($ millions) ($ millions) ($ millions) Pre - tax adjusted operating earnings 1 Pre - tax adjusted operating earnings 1 Pre - tax adjusted operating earnings 1 • 4Q24 vs. 4Q23 : Results consistent with 4Q23 • 4Q24 vs. 3Q24 : Results consistent with 3Q24 13 458 42 326 471 4Q23 3Q24 4Q24 1) See the Appendix for the non - U.S. GAAP financial measures, definitions, and reconciliations to the most comparable U.S. GAAP measure. Fourth Quarter 2024 (28) 7 (2) (60) (68) 4Q23 3Q24 4Q24 (88) (70) Annual actuarial assumption impact Annual actuarial assumption impact 513
Improved Capital Generation and Free Cash Flow Capital Generation Provides Foundation for New Business Growth and Distributions to Holding Company • After - Tax Statutory Capital Generation provides foundation for new business growth while Free Capital Generation 1 supports distributions to holding company subject to regulatory considerations and desired RBC levels • Free Capital Generation exceeded $1bn for 2024, and we expect to exceed $1bn for 2025 2 Free Cash Flow 4 at Holding Company Allows for Financial Flexibility and Long - Term Value Creation for Shareholders • Cash distributed to JFI was 66% of Free Capital Generation • Free cash flow increased over 50% based on strong operating company distributions Capital Return to Common Shareholders is Balanced and Consistent Including Dividends and Share Repurchases • 2024 capital return reflects stronger, more stable capital generation post - Brooke Re • 2025 capital return target of $700 - 800 million represents 11 - 27% growth from 2024 capital return • 2025 quarterly dividend up 14% to $0.80 2024 2023 (in millions) $415 $255 Common Share Repurchases 216 209 Common Dividends $631 $464 Capital Return to Common Shareholders 2024 2023 (in millions) $875 $600 Cash Distributed to JFI (108) (102) JFI Expenses and Other, net $767 $498 Free Cash Flow 2024 3 (in millions) $1,734 After - Tax Statutory Capital Generation (412) Change in CAL at 425% $1,322 Free Capital Generation 1 ) Free capital generation is Jackson National Life’s (JNL) statutory after - tax capital generation, adjusted for the change in comp any action level required capital (CAL) for JNL calibrated to a 425% RBC ratio. Free capital generation is only shown on an annual basis starting at December 31, 2024. 2) Under normal market conditions 3) Reflects period following formation of Brooke Re 4) See Appendix for the non - U.S. GAAP financial measures, definitions and reconciliations to most comparable U.S. GAAP measure. Free Capital Generation has Produced Strong Double - Digit Growth in Free Cash Flow and Capital Return to Common Shareholders 14
Strong Capital and Liquidity Position Highlights • Jackson National Life Insurance Company (JNLIC) estimated RBC ratio of 572% as of end of 4Q24 • Statutory Total Adjusted Capital (TAC) at JNLIC ended 4Q24 at $5.1 billion • JNLIC generated $1.7 billion of capital in 2024 1 • Free cash flow 2 of $767 million moved to the holding company in 2024 • Brooke Re remains well capitalized and hedging performed as expected • Holding company cash and highly liquid assets totaled more than $700 million as of end of 4Q24 • Returned $148 million to common shareholders in 4Q24 through $96 million of share repurchases and $52 million in dividends 15 45 250 300 280 1Q24 2Q24 3Q24 4Q24 360 321 462 591 1Q24 2Q24 3Q24 4Q24 Dividends and Distributions to JFI ($ millions) Statutory Capital Generation 1 ($ millions) 1) Represents statutory after - tax income from operations, realized gains/losses, unrealized gain/losses, and other surplus adjus tments to provide a comprehensive view of the drivers of capital generation. For the three and twelve months ended December 31, 2024, includes a benefit of $145 million and $187 million rel ate d to the Corporate Alternative Minimum Tax (CAMT). 2) See the Appendix for the non - U.S. GAAP financial measures, definitions and reconciliations to most comparable U.S. GAAP measure. 466 511 644 712 1Q24 2Q24 3Q24 4Q24 Holding Company Cash and Highly Liquid Assets ($ millions)
16 2024 Capital Return Targets Achieved While Maintaining a Strong Balance Sheet 16 Achieved all 2024 key financial targets Maintained strong balance sheet and robust levels of liquidity Demonstrated distribution strength and consistent capital generation Well - positioned to expect continued long - term value creation for shareholders
Investments
18 High Quality, Diversified Investment Portfolio 18 Corporate portfolio is concentrated in investment - grade securities Highly rated and diversified commercial mortgage loan office portfolio, which is less than 2% of the general account portfolio Strategic, conservative underwriting across our portfolio See the Appendix for the non - U.S. GAAP financial measures, definitions and reconciliations to most comparable U.S. GAAP measure.
U.S government securities 7% Other government securities 2% Corporate securities 59% Residential mortgage - backed <1% Commercial mortgage - backed 3% Other asset - backed securities 6% Equity securities <1% Mortgage loans 15% Policy loans 2% Derivatives <1% Limited partnerships 4% Other invested assets <1% U.S. GAAP – Investment Portfolio December 31, 2024 • Market/book ratio of the fixed maturity portfolio is 0.93 • Exposure to below investment grade securities is 6% 2 of the total investment portfolio, which is almost entirely corporate bonds and loans • Highly liquid U.S. Treasuries represent 7% of total investment portfolio • 100% of securitized assets are investment grade • 99% of Commercial Mortgage Loans are first mortgage and 95% are CM1 - 2 rated Investment Portfolio Classification 1 Key Highlights 1) Excludes Funds Withheld. 2) I ncludes investments in affiliate Collateralized Loan Obligations (CLO) which results in the entire CLO being consolidated for U. S. GAAP reporting purposes. While this results in all the underlying loans held by the CLO being included in our financial statements, our economic risk is solely limited to our direct investment in t he CLO. Excluding these consolidated items, our exposure to below investment grade securities was 1 % at December 31, 2024 . Percentages may not total 100 due to rounding. $44B 19
U.S government securities 9% Other government securities 2% Corporate securities 57% Residential mortgage - backed <1% Commercial mortgage - backed 3% Other asset - backed securities 6% Equity securities <1% Mortgage loans 16% Policy loans 2% Derivatives 0% Limited partnerships 3% Other invested assets <1% Statutory 1 – Investment Portfolio December 31, 2024 Investment Portfolio Classification Key Highlights • Market/book ratio of the fixed maturity portfolio is 0.93 • Exposure to below investment grade securities is only 1% which is almost entirely corporate bonds and loans • Highly liquid U.S. Treasuries represent 9% of total investment portfolio • 96% of securitized assets are rated NAIC 1 • 99% of Commercial Mortgage Loans are first mortgage and 95% are CM1 - 2 rated 20 $44B 1) Statutory investments are generally carried at amortized cost (book value) and exclude certain variable interest entities tha t are consolidated for GAAP, assets held on balance sheet under funds withheld reinsurance agreements and immaterial non - insurance company investments. Includes Brooke, Squire II, Jackson, Jackson New York and Brooke R einsurance. Includes Jackson and Jackson New York RILA non - insulated separate accounts. Percentages may not total 100 due to rounding.
US Treasuries 12% NAIC 1A - 1D (AAA - AA - ) 16% NAIC 1E - 1G (A) 33% NAIC 2A - 2C (BBB) 37% NAIC 3A - 3C (BB) 1% NAIC 4A - 4C (B) <1% NAIC 5/6 <0.1% Statutory – Fixed Maturity Rating Distribution December 31, 2024 $34B 21 98% of portfolio is investment grade Note: Percentages may not total 100 due to rounding.
AAA: <1% AA: 7% A: 41% BBB: 50% BB: 1% B: <1% CCC and below: <0.1% Statutory – Corporate Portfolio December 31, 2024 Corporate Portfolio Rating Distribution 1 Key Highlights • Market/book ratio of the corporate portfolio is 0.95 • High - yield corporates account for 1% of the total investment portfolio and 2% of total corporate portfolio • Exposure to BBBs represents 29% of the total investment portfolio ‒ Highly diversified across 515 issuers with an average position size of $24 million by statement value ‒ 80% of all BBBs are rated BBB or BBB+ ‒ 26% of BBBs are privates, which offer better covenant protection vs. publics $25B 22 1) Based on NAIC expanded ratings and statement value. Percentages may not total 100 due to rounding.
NAIC 1A - 1D (AAA - AA - ) 52% NAIC 1E - 1G (A) 41% NAIC 2 (BBB) 6% NAIC 3 (BB) <0.1% NAIC 4 <0.1% CLOs 45% Structured settlements 11% Rooftop solar 9% Consumer PACE 6% Time Share 5% Music Royalties 5% PDP Wells 4% Data Center 3% Aircraft 3% Fiber 2% Whole Business Securitizations 2% Small Business Loans 1% Other 4% Statutory – ABS Portfolio December 31, 2024 $2.8B ABS Sector Distribution 1 NAIC Rating Distribution $2.8B 23 1) ABS exposure excludes subprime, which is included with the RMBS exposure. Percentages may not total 100 due to rounding.
AAA 39% AA 35% A 23% BBB 3% B <1% Statutory – Collateralized Loan Obligations (CLO) Debt December 31, 2024 CLO NAIC Distribution 1 Key Highlights • CLO exposure highly rated with virtually all rated single A or above • Exposure is diversified among 48 different managers and 78 CLOs • Each CLO is diversified, averaging 250 names • High - quality CLO tranches are well protected even in severe default cycles $1.3B 24 1) Based on NAIC expanded ratings and statement value. Percentages may not total 100 due to rounding.
Office , 12% Retail , 8% Hotel , 7% Industrial , 7% Multi - family , 6% Other , 3% Single Asset/Single Borrower 43% Agency 4% Conduit 53% Statutory – Commercial Mortgage - Backed Securities (CMBS) December 31, 2024 CMBS Distribution Key Highlights • 97% are rated AA - or higher • 53% of CMBS portfolio are diversified pools of commercial mortgages (“Conduit”) • 64% are senior AAA and guaranteed agency tranches • 32% average credit enhancement for the portfolio (excluding guaranteed agency bonds) • Single Asset/Single Borrower ($598 million) ‒ 33% average credit enhancement and 45% in the senior tranche ‒ $167 million of office - related Single Asset/Single Borrower with 95% having the highest NAIC rating of 1A $1.4B 25 CMBS Single Asset/Single Borrower Distribution Note: Percentages may not total 100 due to rounding.
CM 1 69% CM 2 27% CM 3/4 5% Industrial 28% Multi - Family 26% Retail 21% Office 11% Hotels 10% Other 3% Statutory – Commercial Mortgage Loan Portfolio 1 December 31, 2024 CML NAIC Distribution CML Property Type Distribution • Highly diversified with an average loan size of $19 million • 99% are senior/first mortgage loans • 95% of the portfolio has the highest ratings of CM1 - 2 • Weighted average loan - to - value based on 2024 internal valuation is 55.3% • Weighted average debt service coverage is 2.2x • No delinquencies and no foreclosed/REO at end of 3Q24 $6.7B 26 Loan - to - Value / Debt Service Coverage 2 $6.7B Debt Service Coverage Ratio Total <1.00x 1.00x - 1.25x 1.25x - 1.50x >1.50x 59.2% 0.3% 0.7% 5.7% 52.4% <60% Loan - to - Value 22.2% 1.1% 3.6% 6.2% 11.3% 60 - 70% 11.5% 0.2% 0.7% 4.7% 6.0% 70 - 80% 7.1% 0.5% 1.9% 0.8% 3.9% >80% 100.0% 2.2% 6.9% 17.4% 73.5% Total 1) Based on NAIC expanded ratings and statement value. Percentages may not total 100 due to rounding. 2) Loan - to - value is calculated using an internal value, based on an annual valuation process that uses the latest available propert y - level data combined with updated market vacancy, rental and capitalization rates. This valuation process is typically completed by the end of Q3. In addition, loans of elevated concern may be subject to either a broker opinion of value (BOV) or Mortgage Appraisal Institute (MAI) appraisal on an as - needed basis. Percentages may not sum, due to rounding.
CM 1 81% CM 2 8% CM 3/4 11% Suburban 73% Urban 25% Single Story Office & R&D 1% Medical Office 1% Statutory – Commercial Mortgage Loan Office Exposure 1 December 31, 2024 NAIC Rating Distribution – Office Exposure Key Highlights $0.7B 27 Loan - to - Value / Debt Service Coverage 2 1) Based on NAIC expanded ratings and statement value. Percentages may not total 100 due to rounding. 2) Loan - to - value is calculated using an internal value based on an annual valuation process that uses the latest available property - level data combined with updated market vacancy, rental and capitalization rates. This valuation process is typically completed by the end of Q3. In addition, loans of elevated concern may be subject to either a broker opinion of va lue (BOV) or Mortgage Appraisal Institute (MAI) appraisal on an as - needed basis. Percentages may not sum, due to rounding. Debt Service Coverage Ratio Total <1.00x 1.00x - 1.25x 1.25x - 1.50x >1.50x 38.2% 0.0% 0.0% 0.0% 38.2% <60% Loan - to - Value 15.7% 0.0% 4.4% 0.0% 11.3% 60 - 70% 10.3% 0.3% 0.0% 0.0% 10.0% 70 - 80% 35.9% 1.5% 2.6% 8.5% 23.3% >80% 100.0% 1.8% 7.0% 8.5% 82.7% Total • Highly diversified with an average loan size of $14 million • 100% are senior/first mortgage loans • 89% of the portfolio has the highest ratings of CM1 - 2 • Weighted average loan - to - value based on 2024 internal valuation is 72.8% • Weighted average debt service coverage is 2.2x • 93% has a maturity date in 2027 or later Office Type – Office Exposure Geographic – Office Exposure $0.7B
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 s ele cted non - GAAP financial measures. Management believes that the use of these non - GAAP financial measures, together with relevant U.S. GAAP financial measures, provides a better understanding of our results of op era tions, 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 pres ent ed 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 th e way we calculate such measures. Consequently, our non - GAAP financial measures may not be comparable to similar measures used by other companies. These non - GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with U.S. GAAP. Adjusted Operating Earnings Adjusted Operating Earnings is an after - tax non - GAAP financial measure, which we believe should be used to evaluate our financia l 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 certa in 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. Adjusted Operating Earnings equals our Net income (loss) attributable to Jackson Financial Inc. common shareholders (which ex clu des income attributable to non - controlling interest and dividends on preferred stock) adjusted to eliminate the impact of the items described in the following numbered paragraphs. These items are excluded as th ey may vary significantly from period to period due to near - term market conditions or are otherwise not directly comparable or reflective of the underlying performance of our business. We believe these exclusions p rov ide investors a better picture of the drivers of our underlying performance. 1) Net Hedging Results: Comprised of: (i) fees attributed to guaranteed benefits; (ii) net gains (losses) on hedging instruments which includes: (a) cha nges in the fair value of freestanding derivatives , and related commissions and expenses, used to manage the risk associated with market risk benefits and other guaranteed benefit features, ex cluding earned income from periodic settlements and changes in settlement accruals on cross - currency swaps; and (b) investment income and change in fair value of certain non - derivative assets used to ma nage the risk associated with market risk benefits and other guaranteed benefit features; (iii) the movements in reserves, market risk benefits, guaranteed benefit features accounted for as embedded deriva tiv e instruments, and related claims and benefit payments (excluding impacts of actuarial assumption updates and model enhancements). We believe excluding these items removes the impact to both revenue and re lated expenses associated with Net Hedging Results. 2) Amortization of DAC associated with non - operating items at date of transition to LDTI: Amortization of the balance of unamortized deferred acquisition costs, at January 1, 2021, the date of transition to current Long Duration Targeted Improvements (LDTI) accounting guidance, associated with items excluded from pretax adjusted operating ea rnings prior to transition. 3) Actuarial Assumption Updates and Model Enhancements: The impact on the valuation of MRBs and embedded derivatives arising from our annual actuarial assumption updates and model e nha ncements review. 4) Net Realized Investment Gains and Losses: Comprised of: ( i ) realized investment gains and losses associated with the periodic sales or disposals of securities, excluding those held wi thi n our trading portfolio; and (ii) impairments of securities, after adjustment for the non - credit component of the impairment charges. 5) Change in Value of Funds Withheld Embedded Derivative and Net investment income on funds withheld assets: Comprised of (i) the change in fair value of funds withheld embedded derivatives; and (ii) net investment income on funds withheld assets related to funds withheld reinsurance transactions. 6) Other items: Comprised of: (i) the impact of investments that are consolidated in our financial statements due to U.S. GAAP accounting req uir ements, such as our investments in collateralized loan obligations (CLOs), but for which the consolidation effects are not consistent with our economic interest or exposure to those entities; and (ii) one - time or other non - recurring items, such as costs relating to our separation from our former parent. Operating income taxes are calculated using the prevailing corporate federal income tax rate of 21% while taking into account any items recognized d iff erently in our financial statements and federal income tax returns, including the dividends received deduction and other tax credits. For interim reporting periods, the Company uses an es timated annual effective tax rate ("ETR") in computing its tax provision including consideration of discrete items. 29
Non - GAAP Financial Measures Adjusted Book Value Attributable to Common Shareholders Adjusted Book Value Attributable to Common Shareholders excludes Preferred Stock and Accumulated Other Comprehensive Income ( Los s) (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 AOC I a ttributable 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 duratio n i n 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 t ren ds 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 Jackson Financial Inc. Adjusted Operating Return on Equity Attributable to Common Shareholders We use Adjusted Operating Return on Equity (ROE) Attributable to Common Shareholders to manage our business and evaluate our fin ancial performance which: (i) excludes items that vary from period - to - period due to accounting treatment under U.S. GAAP or that are non - recurring in nature, as such items may distort the underlying performanc e of our business; and (ii) is calculated by dividing our Adjusted Operating Earnings by average Adjusted Book Value Attributable to Common Shareholders. Adjusted Book Value Attributable to Common Shareholders and Adjusted Operating ROE Attributable to Common Shareholders should no t be used as substitutes for total shareholders’ equity and ROE as calculated using annualized net income and average equity in accordance with U.S. GAAP. However, we believe the adjustments to equity an d e arnings are useful to gaining an understanding of our overall results of operations. Free Cash Flow Free cash flow is Jackson Financial Inc. (Parent Company)(JFI) net cash provided by (used in) operating activities less prefe rre d stock dividends and capital contributions to PPM, plus the return of capital from subsidiaries. Free cash flow should not be used as a substitute for JFI’s net cash provided by (used in) operating activitie s i n accordance with U.S. GAAP. However, we believe these adjustments are useful to gaining an understanding of our overall available cash flow at JFI for return of capital to common shareholders or other corporate initi ati ves. Notable Items Notable items reflect the impact on our results of certain items or events that may or may not have been anticipated and resu lte d in volatility in the Company's earnings expectations. The presentation of notable items is intended to help investors better understand our results for the period and to evaluate and forecast those results. 30
Adjusted Operating Earnings Reconciliation For the Twelve Months Ended For the Three Months Ended $ millions, except effective tax rate 12/31/24 12/31/23 12/31/24 9/30/24 6/30/24 3/31/24 12/31/23 902 899 334 (480) 264 784 (1,570) Net income (loss) attributable to Jackson Financial Inc. common shareholders 44 35 11 11 11 11 11 Add: dividends on preferred stock 46 4 22 (113) 36 101 (395) Add: income tax expense (benefit) 992 938 367 (582) 311 896 (1,954) Pretax income (loss) attributable to Jackson Financial Inc. Non - Operating Adjustments (Income) Loss: Guaranteed benefits and hedging results: (3,122) (3,125) (775) (779) (780) (788) (780) Fees attributable to guarantee benefit reserves 5,856 4,651 2,788 (591) 1,083 2,576 (43) Net (gains) losses on hedging instruments 1 (4,243) (4,295) (2,181) 1,172 (516) (2,718) 825 Market risk benefits (gains) losses, net 1,224 779 89 493 278 364 441 Net reserve and embedded derivative movements (285) (1,990) (79) 295 65 (566) 443 Total net hedging results 541 591 131 135 136 139 141 Amortization of DAC associated with non - operating items at date of transition to LDTI 419 406 419 - - - 406 Actuarial Assumption updates and model enhancements 11 554 (71) 45 30 7 319 Net realized investment (gains) losses 1,052 1,801 (147) 784 214 201 1,153 Net realized investment (gains) losses on funds withheld assets (1,024) (1,174) (200) (269) (285) (270) (312) Net investment income on funds withheld assets (28) 39 (15) 3 2 (18) 7 Other items 686 227 38 993 162 (507) 2,157 Total non - operating adjustments 1,678 1,165 405 411 473 389 203 Pre - tax adjusted operating earnings 191 57 45 50 52 44 (12) Less: operating income tax expense (benefit) 1,487 1,108 360 361 421 345 215 Adjusted operating earnings before dividends on preferred stock 44 35 11 11 11 11 11 Less: dividends on preferred stock 1,443 1,073 349 350 410 334 204 Adjusted operating earnings 11.4% 4.9% 11.1% 12.1% 10.9% 11.3% (5.9)% Effective tax rates on adjusted operating earnings 31
Select U.S. GAAP to Non - GAAP Reconciliation For the Nine Months Ended For the Three Months Ended $ millions, except per share and shares outstanding data 12/31/24 12/31/23 12/31/24 9/30/24 6/30/24 3/31/24 12/31/23 976 954 358 (466) 282 802 (1,560) Net Income (Loss) 30 20 13 3 7 7 (1) Income attributable to non - controlling interest 946 934 345 (469) 275 795 (1,559) Net Income (Loss) Attributable to Jackson Financial Inc. 44 35 11 11 11 11 11 Less: Dividends on preferred stock 902 899 334 (480) 264 784 (1,570) Net Income (Loss) Attributable to Jackson Financial Inc. Common Shareholders [a] 9,764 10,170 9,764 10,698 10,084 10,169 10,170 Total Shareholders' Equity 533 533 533 533 533 533 533 Less: Preferred equity 9,231 9,637 9,231 10,165 9,551 9,636 9,637 Total Common Shareholders’ Equity 9,644 8,690 9,698 9,858 9,594 9,637 9,291 Average Common Shareholders' Equity [b] 9.4% 10.3% 13.8% - 19.5% 11.0% 32.5% - 67.6% Total ROE Attributable to Common Shareholders [a]/[b]; Annualized 1,443 1,073 349 350 410 334 204 Adjusted Operating Earnings [c] Adjusted Book Value Attributable to Common Shareholders: 9,231 9,637 9,231 10,165 9,551 9,636 9,637 Total common shareholders' equity 1,925 1,196 1,925 1,047 1,914 1,762 1,196 Exclude AOCI attributable to Jackson Financial Inc. 11,156 10,833 11,156 11,212 11,465 11,398 10,833 Adjusted Book Value Attributable to Common Shareholders 11,213 10,151 11,184 11,339 11,432 11,116 11,352 Average Adjusted Book Value Attributable to Common Shareholders[d] 12.9% 10.6% 12.5% 12.3% 14.3% 12.0% 7.2% Adjusted Operating ROE Attributable to Common Shareholders [c]/[d]; Annualized Per Share Data (Common Shareholders) 11.86 10.99 4.50 (6.37) 3.45 10.04 (19.64) Net income (loss) (basic) 11.74 10.76 4.45 (6.37) 3.43 9.94 (19.64) Net income (loss) (diluted) 1 18.79 12.84 4.65 4.60 5.32 4.23 2.53 Adjusted operating earnings per common share (diluted) 124.21 121.29 124.21 135.35 125.25 124.42 121.29 Book value per common share (diluted) 150.11 136.34 150.11 149.29 150.35 147.17 136.34 Adjusted book value per common share (diluted) Shares Outstanding 76,049,665 81,799,820 74,193,054 75,374,073 76,599,547 78,059,817 79,923,108 Weighted average number of common shares (basic) 76,809,387 83,577,226 75,128,975 76,125,719 77,078,930 78,867,103 80,716,770 Weighted average number of common shares (diluted) 73,380,643 78,660,221 73,380,643 74,351,061 75,700,457 76,621,374 78,660,221 End of period common shares (basic) 74,316,564 79,455,615 74,316,564 75,102,707 76,255,727 77,447,425 79,455,615 End of period common shares (diluted) 32 1) In a quarter in which we reported a net loss attributable to Jackson Financial Inc., all common stock equivalents are anti - di lutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts. The shares excluded from the diluted EPS calculation were 751,646 and 793,662 for the three months ended September 3 0, 2024, and December 31, 2023, respectively.
Select U.S. GAAP to Non - GAAP Reconciliation For the Twelve Months Ended $ millions 12/31/24 12/31/23 51 398 Jackson Financial Inc. Net Cash Provided by Operating Activities (Parent Company Only) Adjustments from Net Cash Provided by Operating Activities to Free Cash Flow: 785 150 Capital Distribution from Subsidiaries (25) (15) Capital Contributed to PPM (44) (35) Dividends on Preferred Stock 716 100 Total Adjustments 767 498 Free Cash Flow Free Cash Flow Comprised of: 785 150 Capital Distributions from Subsidiaries - 360 Dividends from Subsidiaries 90 90 Interest on Surplus Note from subsidiary 875 600 Cash Distributed to JFI (124) (118) Parent Company Expenses 24 28 Net Investment Income and Other Income (8) (12) Other, net (108) (102) JFI Expenses and Other, net 767 498 Free Cash Flow 33
Glossary Assets Under Management (AUM) - Investment assets that are managed by one of our subsidiaries and includes: (i) assets managed by PPM America, Inc. (PPM), in c luding our investment portfolio (but excludes assets held in funds withheld accounts for reinsurance transactions), (ii) third - party assets (including our former parent and its affiliates, and (i ii) the separate account assets of our retail annuities managed and administered by Jackson National Asset Management LLC (JNAM). Athene Reinsurance Transaction - The funds withheld coinsurance agreement with Athene Life Re Ltd., entered on June 18, 2020, and effective June 1, 2020, to r e insure a 100% quota share of a block of our in - force fixed and fixed index annuity liabilities in exchange for approximately $1.2 billion in ceding commissions. Deferred Acquisition Cost (DAC) - Represent the incremental costs related directly to the successful acquisition of new, and certain renewal, insurance policie s and annuity contracts. The recognition of these costs has been deferred, and the deferred amounts are shown on the balance sheet as an asset, which is subject to amortization over the estimated lives of th ose policies and contracts. Derivative Instruments - Jackson Financial Inc.'s (JFI) business model includes the acceptance, monitoring and mitigation of risk. Specifically, JFI c onsiders, among other factors, exposures to interest rate and equity market movements, foreign exchange rates and other asset or liability prices. JFI uses derivative instruments to mitigate or reduce these risk s i n accordance with established policies and goals. JFI's derivative holdings, while effective in managing defined risks, are not structured to meet accounting requirements to be designated as hedging instruments. As a result, freestanding de rivatives are carried at fair value with changes each period recorded in net gains or losses on derivatives and investments. Earnings per Share (EPS) - Basic earnings per share is calculated by dividing net income (loss) attributable to JFI common shareholders by the weighted - a verage number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the net income (loss) attributable to JFI common shareholders, by the weighted - average numbe r of shares of common stock outstanding for the period, plus shares representing the dilutive effect of share - based awards. Fixed Annuity (FA) - An annuity that guarantees a set annual rate of return with interest at rates we determine, subject to specified minimums. C r edited interest rates are guaranteed not to change for certain limited periods of time, after which rates may reset. Fixed Index Annuity (FIA) - An annuity with an ability to share in the upside from certain financial markets such as equity indices and provides downside protection. Guaranteed Minimum Accumulation Benefit (GMAB) - An add - on benefit (enhanced benefits available for an additional cost) that entitles an owner to a minimum payment, typically in lump - sum, after a set period of time, referred to as the accumulation period. The minimum payment is based on the benefit base, which could be greater than the underlying accoun t v alue. Guaranteed Minimum Death Benefit (GMDB) - An add - on benefit (enhanced benefits available for an additional cost) that guarantees an owner's beneficiaries are entitled t o a minimum payment based on the benefit base, which could be greater than the underlying account value, upon the death of the owner. Guaranteed Minimum Income Benefit (GMIB) - An add - on benefit (available for an additional cost) where an owner is entitled to annuitize the policy and receive a minimum payment stream based on the benefit base, which could be greater than the payment stream resulting from current annuitization of the underlying account value. Guaranteed Minimum Withdrawal Benefit (GMWB) - An add - on benefit (available for an additional cost) where an owner is entitled to withdraw a maximum amount of their benefit base each year, for which cumulative payments to the owner could be greater than the underlying account value. Guaranteed Minimum Withdrawal Benefit for Life (GMWB for Life) - An add - on benefit (available for an additional cost) where an owner is entitled to withdraw the guaranteed annual withdrawal a mount each year for the duration of the policyholder's life, regardless of account performance. LDTI - Accounting Standards Update 2018 - 12, “Targeted Improvements to the Accounting for Long - Duration Contracts”, effective January 1, 2023, with a transition date of January 1, 2021. Net Amount at Risk (NAR) - The greater of Death Benefit NAR (DBNAR) and Living Benefit NAR (LBNAR), as applicable, where DBNAR is the GMDB benefit base i n excess of the account value, and the LBNAR is the actuarial present value of guaranteed living benefits in excess of the account value. 34
Glossary Net Flows - The net change in customer account balances during a period, including gross premiums, surrenders, withdrawals and benefits. Net flows exclude investment performance, interest credited to customer accounts and policy charges. Registered Index - Linked Annuity (RILA) - A registered index - linked annuity, which offers market index - linked investment options, subject to a cap, and offers a variety of guarantees designed to modify or limit losses. Return of Premium (ROP) Death Benefit - This death benefit pays the greater of the account value at the time of a claim following the owner's death or the total cont r ibutions to the contract (subject to adjustment for withdrawals). The charge for this benefit is usually included in the Mortality and Expense fee that is deducted daily from the net assets in ea ch variable investment option. We also refer to this death benefit as the Return of Principal death benefit. Risk Based Capital (RBC) - Statutory minimum level of capital that is required by regulators for an insurer to support its operations. Segment - Retail Annuities JFI's Retail Annuities segment offers a variety of retirement income and savings products through its diverse suite of produc ts, consisting primarily of variable annuities, fixed index annuities, fixed annuities, payout annuities and registered index - linked annuities (RILA). These products are distributed through various wirehouses, insurance brokers and inde pendent broker - dealers, as well as through banks and financial institutions, primarily to high - net - worth investors and the mass and affluent markets. The financial results of the variable annuity business within the Company’s Retail Annuities segment are largely dependent on th e performance of the contract holder account value, which impacts both the level of fees collected and the benefits paid to the contract holder. The financial results of the Company’s fixed annuities, including the fixed option on var iable annuities, RILA and fixed index annuities, are largely dependent on the Company's ability to earn a spread between earned investment rates on general account assets and the interest credited to contract holders. Segment - Institutional Products JFI's Institutional Products consist of traditional guaranteed investment contracts (GICs), funding agreements (including agr eem ents issued in conjunction with JFI's participation in the U.S. Federal Home Loan Bank (FHLB) program) and Medium - Term Note funding agreements. JFI's GIC products are marketed to defined contribution pension and profit - sharing retirem ent plans. Funding agreements are marketed to institutional investors, including corporate cash accounts and securities lending funds, as well as money market funds, and are issued to the FHLB in connection with its progr am. The financial results of JFI's Institutional Products business are primarily dependent on the Company’s ability to earn a spr ead between earned investment rates on general account assets and the interest credited on GICs and funding agreements. Segment - Closed Life and Annuity Blocks JFI’s Closed Life and Annuity Blocks segment is primarily composed of blocks of business that have been acquired since 2004. Th e segment includes various protection products, primarily whole life, universal life, variable universal life, and term life insurance products as well as fixed, fixed index, and payout annuities. The Closed Life and Annuity Blocks seg men t also includes a block of group payout annuities that we assumed from John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York through reinsurance transactions in 2018 and 2019, respecti vel y. The Company historically offered traditional and interest - sensitive life insurance products but discontinued new sales of life insurance products in 2012, as we believe opportunistically acquiring mature blocks of life in sur ance policies is a more efficient means of diversifying our in - force business than selling new life insurance products. The profitability of JFI's Closed Life and Annuity Blocks segment is largely driven by its historical ability to appropriatel y p rice its products and purchase appropriately priced blocks of business, as realized through underwriting, expense and net gains (losses) on derivatives and investments, and the ability to earn an assumed rate of return on the assets suppor tin g that business. Variable Annuity (VA) - An annuity that offers tax - deferred investment into a range of asset classes and a variable return, which offers insurance fea tures related to potential future income payments. 35