Jackson Financial Inc. · NYSE:JXN
Jackson Financial — Q1 2022 Earnings Presentation
23 slides from Jackson Financial's earnings presentation, May 10, 2022
Slide 1: First Quarter 2022 Financial Results
May 11, 2022 Jackson Financial Inc. First Quarter 2022 Financial Results
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward - Looking Statements and Non - GAAP Measures This document may contain certain statements, other than those relating to historical facts, that constitute “forward - looking st atements.” Forward - looking statements can generally be identified by their use of terms such as “anticipate,” “est
Slide 3: First Quarter 2022 Highlights
First Quarter 2022 Highlights Resilient Earnings Results • Net Income attributable to JFI of $2.0 billion • Adjusted Operating Earnings 1 of $354 million • Adjusted Pretax Operating Earnings, excluding notable items 2 , of $463 million, up from $459 million in 1Q21 Solid Capital Return • Share repur
Slide 4: 2022 Key Financial Targets
2022 Key Financial Targets 4 500 - 525% adjusted Risk Based Capital (RBC) ratio 1 $250 million minimum cash and cash equivalents at holding company 20 - 25% total financial leverage 2 Estimated adjusted RBC ratio was within our target range at the end of the quarter Holding company cash position of
Slide 5: Adjusted Operating Earnings and Adjusted Book Value
8,814 8,632 8,694 8,937 9,827 1Q21 2Q21 3Q21 4Q21 1Q22 568 636 487 707 354 1Q21 2Q21 3Q21 4Q21 1Q22 5 Adjusted Operating Earnings 1 ($ millions) Adjusted Book Value 1 ($ millions) Adjusted Operating Earnings • Adjusted Operating Earnings of $354 million, down from 1Q21, primarily the result of lower
Slide 6: Notable Items
Notable Items 6 1Q21 1Q22 ($ millions, except per share amounts) Pretax After - tax 1 EPS - Diluted Pretax After - tax 1 EPS - Diluted Income Attributable to Jackson Financial Inc. 3,518 2,932 31.03 2,355 2,025 22.51 Non - Operating Gains (2,885) (2,364) (25.02) (1,937) (1,671) (18.57) Adjusted Oper
Slide 7: Key Impacts of Rising Interest Rates for VA
Key Impacts of Rising Interest Rates for VA 7 Topic Immediate Go - Forward Notes Hedging Cash Flows Negative Positive • Higher rates drive hedging losses in the current period • Reduced amount of hedging required going forward • Lower cost of hedging instruments going forward Statutory (TAC) Negativ
Slide 8: Non-Operating Items
Non - Operating Items 8 • 1Q22 net hedge gain 1 of $782 million • Accounting mismatch on equity market impact as equity derivatives are marked - to - market while non - economic reserves are only partially fair valued • Mismatch from interest rate movements: ― SOP - 03 - 1 not sensitive to interest
Slide 9: Segment Results – Retail Annuities
4.7 4.9 4.8 5.0 4.8 1Q21 2Q21 3Q21 4Q21 1Q22 Segment Results – Retail Annuities • Variable annuity sales down 2% compared to 1Q21 reflecting: ― 10% decrease in sales of other variable annuities without lifetime benefit guarantees ― 1% decrease in sales of variable annuities with lifetime benefit gua
Slide 10: Segment Results – Retail Annuities
305 1Q21 1Q22 0 237 241 1Q21 1Q22 568 406 1Q21 1Q22 Segment Results – Retail Annuities • Pretax adjusted operating earnings decreased, reflecting lower limited partnership income, as well as a DAC acceleration impa ct from negative 6.2% separate account return in the quarter compared to a DAC decele
Slide 11: Segment Results – Institutional & Closed Blocks
10.6 9.2 ( 3.0 ) ( 0.0 ) 1.5 0.2 1Q21 Sales Surrenders, Withdrawals, and Benefits Interest Credited Policy Charges and Other 1Q22 36% 38% 20% 6% Segment Results – Institutional & Closed Blocks • Pretax adjusted operating earnings of $23 million increased from $10 million in the year - ago quarter, a
Slide 12: Capital Management
Capital Management 12 • Returned $192 million to shareholders through $140 million of share repurchases and $52 million in dividends, in - line with full year capital return target of $425 - $525 million • Holding company cash of nearly $1 billion, providing an excess cash position over the minimum
Slide 13: Summary
― Solid 1Q22 results reflect resiliency of business ― Maintained strong balance sheet and robust levels of liquidity ― Retail sales supported by recently launched RILA and Defined Contribution products ― Well positioned to meet strategic and operational goals and continue creating value for sharehol
Slide 14: Appendix
Appendix
Slide 15: DAC / Mean Reversion Overview
DAC / Mean Reversion Overview 15 ▪ For annuity products, the key driver that determines DAC amortization is historical and projected spread or fee income. For fixed annuities, this is typically stable through time, with account balances growing steadily by a modestly varying growth rate. ▪ However,
Slide 16: DAC acceleration/deceleration estimation
▪ DAC (acceleration)/deceleration is determined by separate account returns as detailed in the prior slide, and has both a drop - off of the 3 - year return component and a current period return component ▪ Estimating the impact from the drop - off of the return 3 years ago is simple, as it remains
Slide 17: Drivers of GAAP Guaranteed Benefits and Hedging Results
Drivers of GAAP Guaranteed Benefits and Hedging Results 17 Macroeconomic Factor Impact to Total Guaranteed Benefit Reserves and Hedging Results Reason Equity Markets Up Negative Hedges fully mark to fair value, while not all liabilities are fully fair valued (SOP 03 - 1). This is true under current
Slide 18: Non-GAAP Financial Measures
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, sel ected non - GAAP financial measures. Management believes that the use of these non - GAAP financial measures, together with relevant U.S. GAA
Slide 19: Non-GAAP Financial Measures Adjusted Operating Earnings (Continued)
Non - GAAP Financial Measures Adjusted Operating Earnings (Continued) Adjusted Operating Earnings equals our net income adjusted to eliminate the impact of the items listed on the previous slide plu s the following items: 2) Net Realized Investment Gains and Losses including change in fair value of
Slide 20: Adjusted Operating Earnings Reconciliation
Adjusted Operating Earnings Reconciliation 20 $ millions For the Three Months Ended 3/31/21 6/30/21 9/30/21 12/31/21 3/31/22 Adjusted Operating Earnings Net income (loss) attributable to Jackson Financial Inc. 2,932 (540) 206 585 2,025 Income tax expense (benefit) 586 (55) (16) 87 330 Pretax income
Slide 21: Select GAAP to Non-GAAP Reconciliation
Select GAAP to Non - GAAP Reconciliation 21 $ millions, except per share and shares outstanding data For the Three Months Ended 3/31/21 6/30/21 9/30/21 12/31/21 3/31/22 Net Income (Loss) 3,000 (484) 268 661 2,056 Income attributable to non - controlling interest 68 56 62 76 31 Net Income (Loss) Attr
Slide 22: Glossary
Glossary Assets Under Management (AUM) - General account investments and separate account assets. Deferred Acquisition Cost (DAC) - Represent the incremental costs related directly to the successful acquisition of new and certain renewal insurance policies a nd annuity contracts and which have been
Slide 23: Glossary
Glossary Risk Based Capital (RBC) - Rules to determine insurance company statutory capital requirements. It is based on rules published by the National Associat i on of Insurance Commissioners (NAIC). Return of Premium (ROP) Death Benefit - This death benefit pays the greater of the account value at