Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

Jackson Announces First Quarter 2024 Results


Jackson Financial Inc. (NYSE: JXN) (Jackson®) today announced its financial results for the first quarter ended March 31, 2024.

Key Highlights

Laura Prieskorn, President and Chief Executive Officer of Jackson, stated, "Our first quarter results demonstrate significant momentum across our business including the successful establishment of our Brooke Re captive reinsurance solution. Our retail annuity sales were up nearly 20% from the first quarter of 2023 driven by record RILA sales that further diversify our product mix. Additionally, we are off to a positive start on our financial targets, growing our capital and RBC position over the current quarter, returning $172 million to common shareholders in the first quarter, and retaining healthy levels of excess cash at the holding company. We look forward to building upon this momentum through the remainder of 2024 and continuing to deliver on our mission of helping Americans achieve financial freedom for life."

Consolidated First Quarter 2024 Results

The Company reported net income (loss) attributable to Jackson Financial Inc. common shareholders of $784 million, or $9.94 per diluted share for the three months ended March 31, 2024, compared to $(1.5) billion, or $(18.11) per diluted share for the three months ended March 31, 2023. The current period benefited from a net hedging gain compared to a net hedging loss in the prior year's first quarter. This reflects a closer alignment of our U.S. GAAP hedging results with the movement in market risk benefits as we updated our hedging program in connection with the formation of Brooke Re. The improvement in net hedge results compared to the prior year quarter was driven primarily by increases in interest rates in the current period compared to declines in interest rates in the prior year's first quarter. The higher current quarter net income also reflects a $69 million gain from business reinsured to third parties, while the prior year's first quarter included a loss of $366 million. The results of this reinsured business can be volatile 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 March 31, 2024, were $334 million, or $4.23 per diluted share, compared to $271 million or $3.15 per diluted share for the three months ended March 31, 2023. The current quarter adjusted operating earnings benefited from higher fee income resulting from higher average variable annuity assets under management (AUM), and higher spread income. These were partially offset by higher market-related costs and other expenses.

Total common shareholders' equity was $9.6 billion or $124.42 per diluted share as of March 31, 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 $11.4 billion or $147.17 per diluted share as of March 31, 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 $334 million as well as non-operating net hedging gains during the first quarter of 2024.

Segment Results ? Pretax Adjusted Operating Earnings2

 

Three Months Ended

(in millions)

March 31, 2024

March 31, 2023

Retail Annuities

$419

$356

Institutional Products

31

9

Closed Life and Annuity Blocks

19

(20)

Corporate and Other

(80)

(43)

Total3

$389

$302

Retail Annuities

Retail Annuities reported pretax adjusted operating earnings of $419 million in the first quarter of 2024, compared to $356 million in the first quarter of 2023. The current quarter benefited from higher fee income resulting from higher average variable annuity AUM, and higher spread income primarily due to both higher asset balances and higher yields in 2024 compared to the prior year. These items were partially offset by higher market-related costs and other expenses in the current quarter, in addition to higher policyholder benefits expenses.

Total annuity sales of $3.7 billion in the first quarter of 2024 were up 18% from the first quarter of 2023, driven by record RILA sales of $1.2 billion, up 117% from the first quarter of 2023. Traditional variable annuity sales in the current quarter were essentially flat compared to the first quarter of 2023. Fixed and fixed indexed annuity sales in the current quarter totaled $100 million, compared to $133 million in the first quarter of 2023.

Institutional Products

Institutional Products reported pretax adjusted operating earnings of $31 million in the first quarter of 2024, compared to $9 million in the first quarter of 2023. The increase from the prior year's first quarter was due to higher spread income. Net flows were $(596) million in the current quarter, and total account value of $7.8 billion was down from $8.7 billion in the first quarter of 2023.

Closed Life and Annuity Blocks

Closed Life and Annuity Blocks reported pretax adjusted operating income of $19 million in the first quarter of 2024 compared to a loss of $(20) million in the first quarter of 2023. The increase from the prior year's quarter was primarily due to a greater decrease in reserves in the current quarter as the closed block of life business continues to run off.

Corporate and Other

Corporate and Other reported a pretax adjusted operating loss of $(80) million in the first quarter of 2024 compared to a loss of $(43) million in the first quarter of 2023. The decline was primarily due to lower other income and net investment income, as well as higher market-related operating costs and other expenses.

Capitalization and Liquidity

(Unaudited, in billions)

March 31, 2024

January 1, 2024 Pro
Forma reflecting
Brooke Re

December 31, 2023

Statutory Total Adjusted Capital (TAC)
Jackson National Life Insurance Company

$4.7

$4.3

$5.2

Statutory TAC at JNLIC was nearly $4.7 billion as of March 31, 2024, down from $5.2 billion as of December 31, 2023 but up from $4.3 billion of TAC pro forma for the January 2024 establishment and funding of Brooke Re, our wholly-owned Michigan based captive reinsurer. The $0.4 billion increase in TAC from the pro forma level during the first quarter primarily reflects strong variable annuity base contract cash flows. JNLIC's estimated RBC ratio as of March 31, 2024 was 555-575%, down from 624% as of December 31, 2023 but up from the January 2024 level of 543% pro forma for the establishment of Brooke Re.

Cash and highly liquid securities at the holding company totaled nearly $500 million as of March 31, 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, May 9, 2024, at 10 a.m. ET to review the first 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.

Visit investors.jackson.com to view information regarding Jackson Financial Inc., including a supplement regarding the First Quarter 2024 results. We use this website as a primary channel for disclosing key information to our investors, some of which may contain material and previously non-public information.

*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).

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 first quarter ended March 31, 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 GAAP measure.

GAAP Net Income (Loss) to Adjusted Operating Earnings

 

Three Months Ended

(in millions, except share and per share data)

March 31, 2024

March 31, 2023

Net income (loss) attributable to Jackson Financial Inc. common shareholders

$

784

 

$

(1,497

)

Add: dividends on preferred stock

 

11

 

 

?

 

Add: income tax expense (benefit)

 

101

 

 

(558

)

Pretax income (loss) attributable to Jackson Financial Inc.

 

896

 

 

(2,055

)

Non-operating adjustments ? (income) loss:

 

 

Guaranteed benefits and hedging results:

 

 

Fees attributed to guaranteed benefit reserves

 

(788

)

 

(780

)

Net movement in freestanding derivatives1

 

2,576

 

 

2,512

 

Market risk benefits (gains) losses, net

 

(2,718

)

 

(174

)

Net reserve and embedded derivative movements

 

364

 

 

189

 

Amortization of DAC associated with non-operating items at date of transition to LDTI2

 

139

 

 

153

 

Total guaranteed benefits and hedging results

 

(427

)

 

1,900

 

Net realized investment (gains) losses

 

7

 

 

68

 

Net realized investment (gains) losses on funds withheld assets

 

201

 

 

673

 

Net investment income on funds withheld assets

 

(270

)

 

(307

)

Other items

 

(18

)

 

23

 

Total non-operating adjustments

 

(507

)

 

2,357

 

Pretax adjusted operating earnings

 

389

 

 

302

 

Less: operating income tax expense (benefit)

 

44

 

 

31

 

Adjusted operating earnings before dividends on preferred stock

 

345

 

 

271

 

Less: dividends on preferred stock

 

11

 

 

?

 

Adjusted operating earnings

$

334

 

$

271

 

 

 

 

Weighted Average diluted shares outstanding

 

78,867,103

 

 

86,082,970

 

Net income (loss) per diluted share

$

9.94

 

$

(18.11

)

Adjusted Operating Earnings per diluted share

$

4.23

 

$

3.15

 

1Includes $17 million loss related to interest rate swaps in 1Q24.

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 Jackson Financial Inc.

(in millions)

March 31, 2024

December 31, 2023

Total shareholders' equity

$

10,169

$

10,170

Less: Preferred equity

 

533

 

533

Total common shareholders' equity

 

9,636

 

9,637

Adjustments to total common shareholders' equity:

 

 

Exclude Accumulated Other Comprehensive (Income) Loss attributable to Jackson Financial Inc.

 

1,762

 

1,196

Adjusted Book Value Attributable to Common Shareholders

$

11,398

$

10,833

Condensed Consolidated Balance Sheets

 

 

March 31,

 

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 $20 and $21 at March 31, 2024 and December 31, 2023, respectively (amortized cost: 2024 $44,796; 2023 $44,844)

 

$

40,090

 

$

40,422

Debt Securities, at fair value under fair value option

 

 

2,256

 

 

2,153

Debt Securities, trading, at fair value

 

 

70

 

 

68

Equity securities, at fair value

 

 

222

 

 

394

Mortgage loans, net of allowance for credit losses of $162 and $165 at March 31, 2024 and December 31, 2023, respectively

 

 

9,899

 

 

10,082

Mortgage loans, at fair value under fair value option

 

 

455

 

 

481

Policy loans (including $3,448 and $3,457 at fair value under the fair value option at March 31, 2024 and December 31, 2023, respectively)

 

 

4,386

 

 

4,399

Freestanding derivative instruments

 

 

213

 

 

390

Other invested assets

 

 

2,580

 

 

2,466

Total investments

 

 

60,171

 

 

60,855

Cash and cash equivalents

 

 

2,542

 

 

2,688

Accrued investment income

 

 

488

 

 

512

Deferred acquisition costs

 

 

12,173

 

 

12,302

Reinsurance recoverable, net of allowance for credit losses of $30 and $29 at March 31, 2024 and December 31, 2023, respectively

 

 

24,558

 

 

25,422

Reinsurance recoverable on market risk benefits, at fair value

 

 

126

 

 

149

Market risk benefit assets, at fair value

 

 

8,025

 

 

6,737

Deferred income taxes, net

 

 

749

 

 

640

Other assets

 

 

675

 

 

1,294

Separate account assets

 

 

230,773

 

 

219,656

Total assets

 

$

340,280

 

$

330,255

Condensed Consolidated Balance Sheets

 

 

March 31,

 

December 31,

 

 

2024

 

2023

(in millions, except share and per share data)

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Liabilities

 

 

 

 

 

Reserves for future policy benefits and claims payable

 

$

11,585

 

 

$

11,898

 

 

Other contract holder funds

 

 

54,897

 

 

 

55,319

 

 

Market risk benefit liabilities, at fair value

 

 

3,843

 

 

 

4,785

 

 

Funds withheld payable under reinsurance treaties (including $3,618 and $3,626 at fair value under the fair value option at March 31, 2024 and December 31, 2023, respectively)

 

 

19,244

 

 

 

19,952

 

 

Long-term debt

 

 

2,033

 

 

 

2,037

 

 

Repurchase agreements and securities lending payable

 

 

1,820

 

 

 

19

 

 

Collateral payable for derivative instruments

 

 

92

 

 

 

780

 

 

Freestanding derivative instruments

 

 

1,288

 

 

 

1,210

 

 

Notes issued by consolidated variable interest entities, at fair value under fair value option

 

 

2,068

 

 

 

1,988

 

 

Other liabilities

 

 

2,281

 

 

 

2,277

 

 

Separate account liabilities

 

 

230,773

 

 

 

219,656

 

 

Total liabilities

 

 

329,924

 

 

 

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 March 31, 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 76,621,374 and 78,660,221 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

1

 

 

 

1

 

 

Additional paid-in capital

 

 

6,005

 

 

 

6,005

 

 

Treasury stock, at cost; 17,859,632 and 15,820,785 shares at March 31, 2024 and December 31, 2023, respectively

 

 

(713

)

 

 

(599

)

 

Accumulated other comprehensive income (loss), net of tax expense (benefit) of $(274) and $(178) at March 31, 2024 and December 31, 2023, respectively

 

 

(3,423

)

 

 

(2,808

)

 

Retained earnings

 

 

7,766

 

 

 

7,038

 

 

Total shareholders' equity

 

 

10,169

 

 

 

10,170

 

 

Noncontrolling interests

 

 

187

 

 

 

164

 

 

Total equity

 

 

10,356

 

 

 

10,334

 

 

Total liabilities and equity

 

 

340,280

 

 

 

330,255

 

 

Condensed Consolidated Income Statements

 

 

Three Months Ended March 31,

(in millions, except per share data)

 

2024

 

2023

Revenues

 

 

 

 

 

Fee income

 

$

1,998

 

 

$

1,888

 

 

Premiums

 

 

38

 

 

 

25

 

 

Net investment income:

 

 

 

 

 

Net investment income excluding funds withheld assets

 

 

464

 

 

 

400

 

 

Net investment income on funds withheld assets

 

 

270

 

 

 

307

 

 

Total net investment income

 

 

734

 

 

 

707

 

 

Net gains (losses) on derivatives and investments:

 

 

 

 

 

Net gains (losses) on derivatives and investments

 

 

(2,892

)

 

 

(2,726

)

 

Net gains (losses) on funds withheld reinsurance treaties

 

 

(201

)

 

 

(673

)

 

Total net gains (losses) on derivatives and investments

 

 

(3,093

)

 

 

(3,399

)

 

Other income

 

 

1

 

 

 

15

 

 

Total revenues

 

 

(322

)

 

 

(764

)

 

 

 

 

 

 

Benefits and Expenses

 

 

 

 

 

Death, other policy benefits and change in policy reserves, net of deferrals

 

 

221

 

 

 

228

 

 

(Gain) loss from updating future policy benefits cash flow assumptions, net

 

 

11

 

 

 

14

 

 

Market risk benefits (gains) losses, net

 

 

(2,718

)

 

 

(174

)

 

Interest credited on other contract holder funds, net of deferrals and amortization

 

 

273

 

 

 

285

 

 

Interest expense

 

 

25

 

 

 

28

 

 

Operating costs and other expenses, net of deferrals

 

 

685

 

 

 

616

 

 

Amortization of deferred acquisition costs

 

 

278

 

 

 

293

 

 

Total benefits and expenses

 

 

(1,225

)

 

 

1,290

 

 

Pretax income (loss)

 

 

903

 

 

 

(2,054

)

 

Income tax expense (benefit)

 

 

101

 

 

 

(558

)

 

Net income (loss)

 

 

802

 

 

 

(1,496

)

 

Less: Net income (loss) attributable to noncontrolling interests

 

 

7

 

 

 

1

 

 

Net income (loss) attributable to Jackson Financial Inc.

 

 

795

 

 

 

(1,497

)

 

Less: Dividends on preferred stock

 

 

11

 

 

 

?

 

 

Net income (loss) attributable to Jackson Financial Inc. common shareholders

 

$

784

 

 

$

(1,497

)

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

Basic

 

$

10.04

 

 

$

(18.11

)

 

Diluted (1)

 

$

9.94

 

 

$

(18.11

)

 

 

(1) In a quarter in which 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 3,436,857 shares for the three months ended March 31, 2023.

____________________________

1

 

For the reconciliation of non-GAAP measures to the most comparable 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 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.

 


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