Jackson Financial Inc. · NYSE:JXN
Jackson Financial — FY2022 Earnings Presentation
33 slides from Jackson Financial's earnings presentation, Feb 28, 2023
Slide 1: Fourth Quarter and Full Year 2022 Financial Results
March 1, 2023 Jackson Financial Inc. Fourth Quarter and Full Year 2022 Financial Results
Slide 2: Forward-Looking Statements and Non-GAAP Measures
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 h
Slide 3: Full Year 2022 Highlights
Full Year 2022 Highlights Resilient Earnings Results • Net Income attributable to JFI of $5.7 billion • Adjusted Operating Earnings 1 of $1.4 billion • Pretax Adjusted Operating Earnings, excluding notable items 2 , of $1.8 billion Strong Capital Position • Operating company Risk Based Capital (RBC)
Slide 4: Met or Exceeded All 2022 Key Financial Targets
Met or Exceeded All 2022 Key Financial Targets 1) Adjusted RBC ratio reflects the capital and capital requirements of Jackson National Life Insurance Company and its subsid iar ies, adjusted to include cash and highly liquid securities at Jackson Financial Inc. in excess of our target minimum. 2) Se
Slide 5: Financial Summary
8,937 9,827 11,608 12,376 11,798 4Q21 1Q22 2Q22 3Q22 4Q22 707 354 225 373 491 4Q21 1Q22 2Q22 3Q22 4Q22 Financial Summary Adjusted Operating Earnings • Adjusted Operating Earnings for 4Q22 of $491 million was down from 4Q21, primarily the result of lower fee income due to lower average separate accou
Slide 6: LDTI GAAP Accounting Impact
LDTI GAAP Accounting Impact No impact to cash flow or statutory capital Recast financial supplement expected to be posted on website on or about March 22 nd 6 Adjusted Operating Earnings Adjusted Book Value Net Income Shareholders’ Equity • Compared to current approach, net hedge results are expecte
Slide 7: Notable Items – 4Q22
Notable Items – 4Q22 4Q21 4Q22 ($ millions, except per share amounts) Pretax After - tax 1 EPS - Diluted Pretax After - tax 1 EPS - Diluted Income Attributable to Jackson Financial Inc. 2 672 585 6.19 (945) (710) (8.48) Non - Operating Loss / (Income) 145 122 1,512 1,201 Adjusted Operating Earnings
Slide 8: Notable Items – FY22
Notable Items – FY22 FY21 FY22 ($ millions, except per share amounts) Pretax After - tax 1 EPS - Diluted Pretax After - tax 1 EPS - Diluted Income Attributable to Jackson Financial Inc. 3,785 3,183 33.69 7,068 5,697 64.23 Non - Operating (Income)/Loss (1,004) (785) (5,436) (4,254) Adjusted Operating
Slide 9: Non-Operating Items
Non - Operating Items • FY22 net hedge gain 1 of $2,377 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 10: Segment Results – Retail Annuities
5.0 4.8 4.1 3.6 3.2 4Q21 1Q22 2Q22 3Q22 4Q22 Segment Results – Retail Annuities 1 • Variable annuity (VA) sales down 47% in 4Q22 compared to 4Q21, primarily due to the decline in equity markets and shifting consumer preferences in a rising interest rate environment • Registered Index - Linked Annuit
Slide 11: Segment Results – Retail Annuities
110 1,875 4Q21 4Q22 258 206 4Q21 4Q22 750 638 4Q21 4Q22 Segment Results – Retail Annuities • Pretax adjusted operating earnings decreased year over year due to reduced fee income resulting from lower average variable a nnu ity account values, lower limited partnership income, and a 4Q21 benefit from
Slide 12: Segment Results – Institutional & Closed Blocks
36% 38% 20% 6% Segment Results – Institutional & Closed Blocks • Pretax adjusted operating earnings 1 of $17 million in 4Q22 down from $27 million in the year - ago quarter • Institutional sales of $908 million during 4Q22 and $2.4 billion during 2022 • Pretax adjusted operating loss 1 of $32 millio
Slide 13: Strong Year-End 2022 Capital Position
Strong Year - End 2022 Capital Position Returned $86 million to shareholders in 4Q22 through $38 million of share repurchases and $48 million in dividends • Board authorized a $450 million increase to share repurchase authorization, adding to the $106 million remaining on the then cur rent authoriza
Slide 14: Cumulative Capital Return to Shareholders
Oct 2021 Nov 2021 Dec 2021 Jan 2022 Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Cumulative Capital Return to Shareholders JFI updates capital return target to $425 - $525m for calendar year 2022 JFI announces increased share repurchase authoriza
Slide 15: Summary
15 ― Resilient FY22 results amid volatile financial market conditions ― Met or exceeded all 2022 key financial targets ― Maintained strong balance sheet and robust levels of liquidity ― Well - positioned for continued long - term value creation for shareholders Summary 15
Slide 16: 2023 Key Financial Targets
2023 Key Financial Targets
Slide 17: Operating Company RBC Ratio Target
Operating Company RBC Ratio Target 17 1) Adjusted RBC ratio reflects the capital and capital requirements of Jackson National Life Insurance Company and its subsid iar ies, adjusted to include cash and highly liquid securities at Jackson Financial Inc. in excess of our target minimum. Adjusted RBC r
Slide 18: Robust Holding Company Liquidity Provides Flexibility
Robust Holding Company Liquidity Provides Flexibility 18 Minimum buffer targets 2 years of holding company fixed expenses ‒ At current run - rate this equates to approximately $250 million for the minimum buffer ‒ This buffer along with other cash sources provides a strong liquidity backdrop for Jac
Slide 19: Healthy Year-end Capital Position Supports Strong Cash Return in 2023
Healthy Year - end Capital Position Supports Strong Cash Return in 2023 19 Very strong excess capital position at year - end 2022 ‒ Capital in excess of 425% at the operating company was over $1.5 billion ‒ Approximately $675 million of cash at holding company, which is $425 million above $250 milli
Slide 20: Conservatively Manage Leverage
Conservatively Manage Leverage 20 1) See the Appendix for the non - GAAP financial measures, definitions, and reconciliations to the most comparable GAAP measures. Healthy balance sheet position both before and after LDTI ‒ Total financial leverage ratio of 18.3% at year - end 2022 ‒ Leverage ratio
Slide 21: 2023 Key Financial Target Summary
2023 Key Financial Target Summary 21 425% - 500% Risk Based Capital (RBC) ratio under normal market conditions Approximately 2 years of holding company fixed expenses RBC target at the operating company (Jackson National Life Insurance Company) Holding company expenses including interest expense $45
Slide 22: Appendix
Appendix
Slide 23: GAAP – Investment Portfolio
GAAP – Investment Portfolio December 31, 2022 • Market/book ratio of the fixed maturity portfolio is 0.90 • Exposure to below investment grade securities 2 is only 6% which is almost entirely corporate bonds and loans • Exposure to U.S. Treasuries is 12% • 99% of securitized assets are investment gr
Slide 24: Statutory – Investment Portfolio
U.S government securities 10% Other government securities 2% Corporate securities 52% Residential mortgage - backed <1% Commercial mortgage - backed 3% Other asset - backed securities 5% Equity securities 1% Mortgage loans 17% Policy loans 2% Derivatives 2% Limited Partnerships 4% Other invested ass
Slide 25: Statutory – Fixed Maturity Rating Distribution
Statutory – Fixed Maturity Rating Distribution December 31, 2022 Notes: Excludes Funds Withheld. Statutory statement value based on NAIC ratings. Includes Brooke, Squire, Squire II, Jackson , a nd Jackson New York. $31b 25 US Treasuries 14% NAIC 1A - 1D (AAA - AA - ) 16% NAIC 1E - 1G (A) 31% NAIC 2A
Slide 26: Statutory – Corporate Portfolio
Statutory – Corporate Portfolio December 31, 2022 1) Excludes Funds Withheld. Based on NAIC expanded ratings and Statement value. Includes Brooke, Squire, Squire II, Jackson, and Jackson New York. Corporate Portfolio Rating Distribution 1 Key Highlights • Market/book ratio of the corporate portfolio
Slide 27: Statutory – ABS Portfolio
CLOs 45% Structured Settlements 17% Whole Business Securitization 11% Tax Liens 7% Rooftop Solar 9% Timeshare 6% Single Family Rental 2% Servicer Advance 1% Other 1% Stranded Utility <1% Auto Subprime <1% Auto Prime <1% NAIC 1A - 1D 54% NAIC 1E - 1G 37% NAIC 2A - 2C 9% NAIC 3A - 3C <1% Statutory – A
Slide 28: 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 ect non - GAAP financial measures. Management believes that the use of these non - GAAP financial measures, together with relevant U.S. GAAP
Slide 29: 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 30: Adjusted Operating Earnings Reconciliation
Adjusted Operating Earnings Reconciliation $ millions, except effective tax rate For the Three Months Ended For the Twelve Months Ended 12/31/21 03/31/22 06/30/22 9/30/22 12/31/22 12/31/21 12/31/22 Adjusted Operating Earnings Net income (loss) attributable to Jackson Financial Inc. 585 2,025 2,903 1
Slide 31: Select GAAP to Non-GAAP Reconciliation
Select GAAP to Non - GAAP Reconciliation $ millions, except per share and shares outstanding data For the Three Months Ended For the Twelve Months Ended 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 12/31/21 12/31/22 Net Income (Loss) 661 2,056 2,934 1,468 (718) 3,445 5,740 Income attributable to non -
Slide 32: Glossary
Glossary Assets Under Management (AUM) – Investment assets that are managed by one of our subsidiaries and includes: ( i ) the assets in our investment portfolio managed by PPM, which excludes assets held in funds withheld accounts for reinsurance transactions, (ii) third - party assets managed by P
Slide 33: Glossary
Glossary 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