Jackson Financial Inc. (NYSE: JXN) (Jackson®) today announced
financial results for the third quarter ended September 30,
2023.
Key Highlights
- Net income attributable to Jackson Financial Inc. common
shareholders of $2,762 million, or $33.35 per diluted share in the
third quarter of 2023, compared to $1,879 million, or $21.38 per
diluted share in the third quarter of 2022
- Adjusted operating earnings1 of $315 million, or $3.80 per
diluted share in the third quarter of 2023, compared to $376
million, or $4.28 per diluted share in third quarter of 2022
- Returned $123 million to common shareholders in the third
quarter of 2023 through $71 million of share repurchases and $52
million in dividends; on pace to achieve 2023 capital return target
of $450-$550 million
- Third quarter 2023 registered index-linked annuity (RILA) sales
of $807 million, up from $562 million in the third quarter of
2022
- Total annuity account value of $218 billion as of the third
quarter of 2023, up 10% from the third quarter of 2022, driven
largely by higher equity markets over the 12-month period
- Estimated Risk Based Capital (RBC) ratio at Jackson National
Life Insurance Company as of the third quarter of 2023 was up from
the second quarter of 2023 and above our target range of
425-500%
- Subsequent to the end of the third quarter, Jackson Financial
Inc. completed the planned sale of limited partnership assets as
described in second quarter results. As a result, on a pro forma
basis for this transaction, JFI had nearly $1.4 billion of cash and
highly liquid securities.
Laura Prieskorn, President and Chief Executive Officer of
Jackson, stated, “Jackson’s third quarter 2023 results highlight
our continued strategic and operational momentum as well as our
commitment to ongoing diversification across our product portfolio.
Our recently enhanced RILA suite gained traction, delivering a
record level of RILA sales in the third quarter. Further, during
the third quarter we successfully launched Flex Suite, a
streamlined and simplified menu of add-on living benefits within
our Perspective family of variable annuity products. In line with
our commitments, we returned $123 million to common shareholders
through dividends and share buybacks over the third quarter,
positioning us well to achieve our 2023 capital return target of
$450-$550 million. We’re pleased with our healthy regulatory
capital position, as our estimated third quarter operating company
RBC ratio is above our target range. We also maintained healthy
levels of excess liquidity at the holding company and successfully
completed our limited partnership sale. We are on track to deliver
on our financial targets for the second year in a row and remain
committed to creating long-term value for our shareholders.”
Consolidated Third Quarter 2023
Results
The company reported net income attributable to Jackson
Financial Inc. common shareholders of $2,762 million, or $33.35 per
diluted share for the three months ended September 30, 2023,
compared to $1,879 million, or $21.38 per diluted share for the
three months ended September 30, 2022. The current quarter net
income primarily reflects a larger net hedging gain compared to the
prior year’s third quarter. The current quarter net hedging gain
was driven by significant increases in interest rates, while the
comparison to the prior year was mainly the result of stronger
equity market returns. The change in the reported fair value of
derivatives is not expected to match the change in hedged
liabilities on a U.S. GAAP basis period-to-period, which can result
in net income volatility. We believe the non-GAAP measure of
adjusted operating earnings better represent 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. Additionally, net income
in the third quarter reflects a $462 million gain from business
reinsured to third parties, while the prior year’s third quarter
included a gain of $868 million. These figures consist of the
gain/loss on a funds withheld reinsurance treaty and related net
investment income, which do not impact our statutory capital or
free cash flow and can be volatile quarter to quarter. These
figures also have a minimal net impact on shareholders’ equity
because they are offset by related changes in AOCI within the funds
withheld account.
Adjusted operating earnings for the three months ended September
30, 2023, were $315 million, or $3.80 per diluted share, compared
to $376 million or $4.28 per diluted share for the three months
ended September 30, 2022. The current quarter adjusted operating
earnings benefited from improved spread income as higher net
investment income was only partially offset by the impact of
resetting minimum interest crediting rates on variable annuity
fixed rate options in 2023, as well as higher fee income resulting
from higher average variable annuity assets under management (AUM).
These were more than offset by lower income on operating
derivatives, a gain on updating future policy benefits cash flow
assumptions in the prior year’s third quarter that did not repeat
in the current quarter, and higher operating and interest
expenses.
The current quarter’s adjusted operating earnings included a $41
million comparative pretax benefit to the third quarter of 2022
from returns on private equity and other limited partnership assets
relative to a 10% annualized return assumption.
Total common shareholders’ equity was $8.9 billion or $110.64
per diluted share as of September 30, 2023, compared to $8.6
billion or $100.56 per diluted share as of year-end 2022. Adjusted
book value attributed to common shareholders2 was $11.9 billion or
$146.84 per diluted share as of September 30, 2023, compared to
$9.9 billion or $115.36 per diluted share as of year-end 2022. The
increase during the nine months ended September 30, 2023 was
primarily the result of non-operating hedging gains as well as
adjusted operating earnings of $869 million.
Segment Results – Pretax Adjusted
Operating Earnings2
Three Months Ended
(in millions)
September 30, 2023
September 30, 2022
Retail Annuities
$354
$330
Institutional Products
21
20
Closed Life and Annuity Blocks
6
76
Corporate and Other
(26)
(12)
Total3
$355
$414
Retail Annuities
Retail Annuities reported pretax adjusted operating earnings of
$354 million in the third quarter of 2023 compared to $330 million
in the third quarter of 2022. The current quarter benefited from
improved spread income as higher net investment income was only
partially offset by the impact of resetting minimum interest
crediting rates on variable annuity fixed rate options in 2023, and
higher fee income resulting from higher average variable annuity
AUM. These items were partially offset by increases in other
policyholder benefits, operating and interest expenses, and a loss
on operating derivatives compared to a gain in the prior year’s
third quarter.
Current quarter total annuity sales of $3.3 billion were up from
the second quarter of 2023 and down 7% from the third quarter of
2022. Traditional variable annuity sales have stabilized over
recent quarters and were down 16% compared to the third quarter of
2022, primarily due to consumer preferences for asset protection.
The current quarter also included $807 million in RILA product
sales, up from $562 million in the third quarter of 2022,
reflecting strong demand for our recently enhanced RILA product
suite. Fixed and fixed indexed annuity sales in the current quarter
totaled $76 million, compared to $112 million in the third quarter
of 2022.
Institutional Products
Institutional Products reported pretax adjusted operating
earnings of $21 million in the third quarter of 2023, broadly in
line with $20 million in the third quarter of 2022. Total sales for
the current quarter were $112 million. Net flows totaled $(242)
million in the current quarter, and total account value of $8.7
billion was up from $8.4 billion in the third quarter of 2022.
Closed Life and Annuity Blocks
Closed Life and Annuity Blocks reported pretax adjusted
operating earnings of $6 million in the third quarter of 2023
compared to $76 million in the third quarter of 2022. The current
quarter was negatively impacted by a loss on updating future policy
benefits cash flow assumptions compared to a gain in the prior
year’s third quarter, lower income on operating derivatives, and
higher operating expenses, partially offset by favorable policy
reserve movements.
Corporate and Other
Corporate and Other reported a pretax adjusted operating loss of
$(26) million in the third quarter of 2023 compared to a loss of
$(12) million in the third quarter of 2022. The change was
primarily due to lower net investment income and lower income on
operating derivatives.
Capitalization and
Liquidity
(Unaudited, in billions)
September 30, 2023
June 30, 2023
Statutory Total Adjusted Capital (TAC)
Jackson National Life Insurance Company
$4.5
$3.8
Jackson National Life Insurance Company’s (JNLIC) estimated RBC
ratio as of the third quarter of 2023 was up from the second
quarter of 2023 and above our 425-500% target range.
Statutory TAC at JNLIC was $4.5 billion as of the current
quarter, up from $3.8 billion as of the second quarter of 2023. TAC
increased primarily due to base contract cash flows, positive VA
net guarantee results, and related tax benefits including deferred
tax asset admissibility limits. JNLIC’s estimated company action
level (CAL) required capital was up slightly during the quarter as
a result of equity market and interest rate movements.
Subsequent to the end of the third quarter, Jackson Financial
Inc. completed the planned sale of limited partnership assets as
described in second quarter results. As a result, on a pro forma
basis for this transaction, JFI had nearly $1.4 billion of cash and
highly liquid securities. Prior to this transaction, holding
company assets (excluding equity in subsidiaries) totaled nearly
$1.4 billion, including cash and highly liquid securities of more
than $0.9 billion as of September 30, 2023, which was above our
targeted minimum liquidity buffer of 2x annual holding company
expenses. On November 22, 2023, we expect to retire $600 million of
senior notes with cash on hand.
Earnings Conference Call
Jackson will host a conference call Thursday, November 9, 2023,
at 10 a.m. ET to review the third 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, 2022, as
filed with the SEC on March 1, 2023, (the "2022 Annual Report"), as
Part II, Item 7 was recast to reflect the adoption of the Long
Duration Targeted Improvements accounting principle in our Current
Report on Form 8-K filed May 10, 2023, and elsewhere in the
Company’s reports filed with the U.S. Securities and Exchange
Commission. 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 Third
Quarter 2023 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 2006-2022, 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 GAAP, we use and report
selected non-GAAP financial measures. Management believes the use
of these non-GAAP financial measures, together with relevant 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 GAAP and
should not be viewed as a substitute for the 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 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 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 third quarter ended September 30, 2023,
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)
September 30, 2023
September 30, 2022
Net income (loss) attributable to
Jackson Financial Inc. common shareholders
$
2,762
$
1,879
Add: dividends on preferred stock
11
—
Add: income tax expense (benefit)
712
657
Pretax income (loss) attributable to
Jackson Financial Inc.
3,485
2,536
Non-operating adjustments – (income)
loss:
Guaranteed benefits and hedging
results:
Fees attributed to guaranteed benefit
reserves
(784
)
(771
)
Net movement in freestanding
derivatives
271
253
Market risk benefits (gains) losses,
net
(2,376
)
(913
)
Net reserve and embedded derivative
movements
(45
)
7
Amortization of DAC associated with
non-operating items at date of transition to LDTI*
148
162
Total guaranteed benefits and hedging
results
(2,786
)
(1,262
)
Net realized investment (gains) losses
127
6
Net realized investment (gains) losses on
funds withheld assets
(159
)
(555
)
Net investment income on funds withheld
assets
(303
)
(313
)
Other items
(9
)
2
Total non-operating adjustments
(3,130
)
(2,122
)
Pretax adjusted operating
earnings
355
414
Less: operating income tax expense
(benefit)
29
38
Adjusted operating earnings before
dividends on preferred stock
326
376
Less: dividends on preferred stock
11
—
Adjusted operating earnings
$
315
$
376
Weighted Average diluted shares
outstanding
82,821,818
87,895,919
Net income (loss) per diluted
share
$
33.35
$
21.38
Adjusted Operating Earnings per diluted
share
$
3.80
$
4.28
*LDTI - 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)
September 30, 2023
December 31, 2022
Total shareholders’ equity
$
9,478
$
8,646
Less: Preferred equity
533
—
Total common shareholders’
equity
8,945
8,646
Adjustments to total common
shareholders’ equity:
Exclude Accumulated Other Comprehensive
(Income) Loss attributable to Jackson Financial Inc.
2,926
1,272
Adjusted Book Value Attributable to
Common Shareholders
$
11,871
$
9,918
Condensed Consolidated Balance
Sheets
September 30,
December 31,
2023
2022
(in millions, except share and per
share data)
Assets
Investments:
Debt Securities, available-for-sale, net
of allowance for credit losses of $26 and $23 at September 30, 2023
and December 31, 2022, respectively (amortized cost: 2023 $46,203;
2022 $48,798)
$
39,078
$
42,489
Debt Securities, at fair value under fair
value option
2,244
2,173
Debt Securities, trading, at fair
value
66
100
Equity securities, at fair value
277
393
Mortgage loans, net of allowance for
credit losses of $200 and $95 at September 30, 2023 and December
31, 2022, respectively
10,136
10,967
Mortgage loans, at fair value under fair
value option
476
582
Policy loans (including $3,432 and $3,419
at fair value under the fair value option at September 30, 2023 and
December 31, 2022, respectively)
4,368
4,377
Freestanding derivative instruments
925
1,270
Other invested assets
3,553
3,595
Total investments
61,123
65,946
Cash and cash equivalents
2,760
4,298
Accrued investment income
505
514
Deferred acquisition costs
12,447
12,923
Reinsurance recoverable, net of allowance
for credit losses of $33 and $15 at September 30, 2023 and December
31, 2022, respectively
26,212
29,046
Reinsurance recoverable on market risk
benefits, at fair value
167
221
Market risk benefit assets, at fair
value
6,815
4,865
Deferred income taxes, net
632
320
Other assets
970
944
Separate account assets
202,903
195,906
Total assets
$
314,534
$
314,983
Condensed Consolidated Balance
Sheets
September 30,
December 31,
2023
2022
(in millions, except share and per
share data)
Liabilities and Equity
Liabilities
Reserves for future policy benefits and
claims payable
$
11,418
$
12,318
Other contract holder funds
55,766
58,190
Market risk benefit liabilities, at fair
value
3,917
5,662
Funds withheld payable under reinsurance
treaties (including $3,599 and $3,582 at fair value under the fair
value option at September 30, 2023 and December 31, 2022,
respectively)
19,973
22,957
Long-term debt
2,635
2,635
Repurchase agreements and securities
lending payable
28
1,048
Collateral payable for derivative
instruments
450
689
Freestanding derivative instruments
2,548
2,065
Notes issued by consolidated variable
interest entities, at fair value under fair value option
2,011
1,732
Other liabilities
2,632
2,403
Separate account liabilities
202,903
195,906
Total liabilities
304,281
305,605
Equity
Series A non-cumulative preferred stock
and additional paid in capital, $1 par value per share: 24,000
shares authorized; shares issued: 2023 - 22,000; liquidation
preference $25,000 per share
533
—
Common stock; 1,000,000,000 shares
authorized, $0.01 par value per share and 80,051,900 and 82,690,098
shares issued and outstanding at September 30, 2023 and December
31, 2022, respectively
1
1
Additional paid-in capital
6,007
6,063
Treasury stock, at cost; 14,429,106 and
11,784,813 shares at September 30, 2023 and December 31, 2022,
respectively
(537
)
(443
)
Accumulated other comprehensive income
(loss), net of tax expense (benefit) of $(354) and $(66) at
September 30, 2023 and December 31, 2022, respectively
(5,187
)
(3,378
)
Retained earnings
8,661
6,403
Total shareholders' equity
9,478
8,646
Noncontrolling interests
775
732
Total equity
10,253
9,378
Total liabilities and equity
314,534
314,983
Condensed Consolidated Income
Statements
Three Months Ended September
30,
Nine Months Ended September
30,
(in millions, except per share
data)
2023
2022
2023
2022
Revenues
Fee income
$
1,950
$
1,908
$
5,751
$
5,854
Premiums
32
36
109
105
Net investment income:
Net investment income excluding funds
withheld assets
479
327
1,314
1,085
Net investment income on funds withheld
assets
303
313
862
937
Total net investment income
782
640
2,176
2,022
Net gains (losses) on derivatives and
investments:
Net gains (losses) on derivatives and
investments
(335
)
(196
)
(5,173
)
1,176
Net gains (losses) on funds withheld
reinsurance treaties
159
555
(648
)
2,660
Total net gains (losses) on derivatives
and investments
(176
)
359
(5,821
)
3,836
Other income
18
19
52
60
Total revenues
2,606
2,962
2,267
11,877
Benefits and Expenses
Death, other policy benefits and change in
policy reserves, net of deferrals
232
237
701
811
(Gain) loss from updating future policy
benefits cash flow assumptions, net
(1
)
(37
)
23
(8
)
Market risk benefits (gains) losses,
net
(2,376
)
(913
)
(5,120
)
(1,636
)
Interest credited on other contract holder
funds, net of deferrals and amortization
284
224
864
630
Interest expense
49
29
150
73
Operating costs and other expenses, net of
deferrals
626
592
1,862
1,801
Amortization of deferred acquisition
costs
290
305
874
929
Total benefits and expenses
(896
)
437
(646
)
2,600
Pretax income (loss)
3,502
2,525
2,913
9,277
Income tax expense (benefit)
712
657
399
1,890
Net income (loss)
2,790
1,868
2,514
7,387
Less: Net income (loss) attributable to
noncontrolling interests
17
(11
)
21
51
Net income (loss) attributable to Jackson
Financial Inc.
2,773
1,879
2,493
7,336
Less: Dividends on preferred stock
11
—
24
—
Net income (loss) attributable to Jackson
Financial Inc. common shareholders
$
2,762
$
1,879
$
2,469
$
7,336
Earnings per share
Basic
$
33.66
$
22.08
$
29.95
$
85.18
Diluted
$
33.35
$
21.38
$
29.20
$
82.13
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108058026/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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