Jackson Financial Inc. · NYSE:JXN
Jackson Financial — Q2 2023 Earnings Presentation
31 slides from Jackson Financial's earnings presentation, Aug 9, 2023
Slide 1: Second Quarter 2023 Financial Results
Jackson Financial Inc. Second Quarter 2023 Financial Results August 9, 2023
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 upon revenues, expenses and business opportunities. Generally speaking, any statement in this document not based upon historic
Slide 3: Cumulative Capital Return to Common Shareholders
Cumulative Capital Return to Common Shareholders JFI has repurchased 16.5 million shares, which equates to 18% of outstanding common shares since separation February 28, 2023 JFI updates capital return target to $450-$550m for calendar year 2023 $967m JFI announces increased share repurchase authori
Slide 4: 2023 Key Financial Targets
2023 Key Financial Targets 425-500% Risk Based Capital Estimated RBC was up from 1Q23 and within target range for normal market (RBC) ratio under normal conditions market conditions Holding company assets (excluding equity in subsidiaries) of nearly $1.5 Approximately two years of billion at 2Q23, i
Slide 5: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights Resilient Earnings Results • Net income attributable to JFI of $1.2 billion • Adjusted Operating Earnings1 of $283 million • Adjusted Operating Earnings per common share (Diluted)1 of $3.34 • Adjusted Operating Earnings per common share, excluding notable items2, of $3
Slide 6: Financial Summary
Financial Summary Adjusted Operating Earnings1 Key Takeaways ($ millions) Adjusted Operating Earnings 407 376 294 283 • Adjusted Operating Earnings for 2Q23 of $283 million compared to $407 million for 271 2Q22, driven by expenses associated with the higher interest rate environment and lower fee in
Slide 7: Notable Items – 2Q23
Notable Items – 2Q23 2Q22 2Q23 ($ millions, except EPS amounts) Pretax After-tax1 EPS-Diluted Pretax After-tax1,2 EPS-Diluted Adjusted Operating Earnings3 464 407 4.56 305 283 3.34 Notable Items Included in Adjusted Operating Earnings Out performance/(Under performance) from Limited Partnership Inco
Slide 8: Non-Operating Items
Non-Operating Items 2Q23 Pretax Adjusted Operating Earnings Reconciliation Highlights ($ millions) Net Hedge Gain1: $1,097 million • 2Q23 net hedge gain of $1,097 million 2,570 ― Higher equity markets drove freestanding derivative losses as well as a substantial gain in market risk benefits (MRB) 25
Slide 9: Segment Results – Retail Annuities
Segment Results – Retail Annuities1 Retail Sales Recent Trends ($ billions) • Variable annuity (VA) sales of nearly $2.5 billion in 2Q23 have stabilized over 4.1 recent quarters in the higher interest rate environment, consistent with 3.6 3.2 consumer preference for protection 3.1 3.1 • RILA sales o
Slide 10: Segment Results – Retail Annuities
Segment Results – Retail Annuities Variable Annuity Account Value RILA Account Value FA / FIA Account Value ($ billions) ($ billions) ($ billions) 3.1 1.8 206 222 1.4 0.7 2Q22 2Q23 2Q22 2Q23 2Q22 2Q23 Separate Account General Account • Pretax adjusted operating earnings for 2Q23 of $328 million comp
Slide 11: Segment Results – Institutional & Closed Blocks
Segment Results – Institutional & Closed Blocks Institutional Account Value Institutional Highlights ($ billions) • Pretax adjusted operating earnings1 of $17 million in 2Q23 down from $19 million in the year-ago quarter 2.2 0.3 8.9 • Institutional sales of $304 million during 2Q23 reflecting our 8.
Slide 12: Delivering On Our Capital Management Commitments
Delivering On Our Capital Management Commitments Committed to achieving 2023 capital return target of $450-$550 million with $224 million returned in the first half of 2023 • Returned $100 million to common shareholders in 2Q through $47 million of share repurchases and $53 million in dividends • $4
Slide 13: Summary
Summary ― Continued progress toward our strategic and operational goals ― Maintained strong balance sheet and robust levels of liquidity ― Committed to achieving 2023 key financial targets ― Well positioned for continued long-term value creation for shareholders 13 13
Slide 14: Investments
Investments @ JACKSON’
Slide 15: High Quality, Diversified Investment Portfolio
High Quality, Diversified Investment Portfolio ― Conservative underwriting is a consistent theme throughout ― Highly rated and diversified commercial mortgage loan office portfolio, which is less than 2% of the general account portfolio ― Corporate portfolio is concentrated in investment-grade secur
Slide 16: U.S. GAAP – Investment Portfolio
U.S. GAAP – Investment Portfolio June 30, 2023 Investment Portfolio Classification1 Key Highlights Other invested assets <1% • Market/book ratio of the fixed maturity portfolio is 0.92 Limited Partnerships 6% U.S government securities 10% Derivatives 2% Other government securities • Exposure to belo
Slide 17: Statutory – Investment Portfolio
Statutory – Investment Portfolio June 30, 2023 Investment Portfolio Classification1 Key Highlights • Market/book ratio of the fixed maturity portfolio is 0.90 Other invested assets <1% Limited Partnerships 3% U.S government securities 10% Derivatives 1% Policy loans 2% Other government securities 2%
Slide 18: Statutory – Fixed Maturity Rating Distribution
Statutory – Fixed Maturity Rating Distribution June 30, 2023 US Treasuries NAIC 1A-1D (AAA-AA-) 13% 17% NAIC 5/6 <0.1% NAIC 4A-4C (B) <1% NAIC 3A-3C (BB) 1% $32b NAIC 1E-1G (A) 31% NAIC 2A-2C (BBB) 37% 18 Notes: Excludes Funds Withheld. Statutory statement value based on NAIC ratings. Includes Brook
Slide 19: Statutory – Corporate Portfolio
Statutory – Corporate Portfolio June 30, 2023 Corporate Portfolio Rating Distribution1 Key Highlights CCC and below: <0.1% • Market/book ratio of the corporate portfolio is 0.92 B: <1% AAA: 1% BB: 1% AA: 6% • High yield corporates account for 1% of invested assets and 2% of total corporate portfolio
Slide 20: Statutory – ABS Portfolio
Statutory – ABS Portfolio June 30, 2023 ABS Sector Distribution1, 2, 3 NAIC Rating Distribution1, 3 Consumer Loans <1% Aircraft 1% Equipment Leases <1% Single Family Rentals 2% Other, 1% Music Royalties 2% PDP Wells 3% NAIC 1A-1D (AAA-AA-) 51% Timeshare 4% NAIC 3 (BB) <1% Whole Business 5% NAIC 2 (B
Slide 21: Statutory – Collateralized Loan Obligations (CLO) Debt
Statutory – Collateralized Loan Obligations (CLO) Debt June 30, 2023 CLO NAIC Distribution Key Highlights • CLO exposure highly rated with virtually all rated single A AAA or above 47% BBB • Exposure is diversified among 36 different managers and <1% 61 CLOs • Each CLO is diversified, averaging 250
Slide 22: Statutory – Commercial Mortgage Loan Portfolio
Statutory – Commercial Mortgage Loan Portfolio1 June 30, 2023 CML NAIC Distribution CML Property Type Distribution Multi-Family 28% CM 1 71% CM 3/4 Other 4% 4% Retail $7.1b Hotels $7.1b 23% 11% CM 2 25% Office 10% Industrial Loan-to-Value / Debt Service Coverage2 24% Debt Service Coverage Ratio • Hi
Slide 23: Statutory – Commercial Mortgage Loan Office Exposure
Statutory – Commercial Mortgage Loan Office Exposure1 June 30, 2023 NAIC Rating Distribution – Office Exposure Key Highlights • Highly diversified with an average loan size of $14m CM 1 • 100% are senior/first mortgage loans CM 2 86% 14% $0.7b • 100% of the portfolio has the highest rating, CM1-2 •
Slide 24: Appendix
Appendix @ JACKSON’
Slide 25: VA Market Risk Benefits
VA Market Risk Benefits Liability Effect Category Runs Through: Description of Impact Drivers Changes in Interest Rates Net Income Movement in risk free rates (impacts both assumed future separate account returns and discounting of cash flows) Fund Performance Net Income Separate account returns gro
Slide 26: 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, selected non-GAAP financial measures. Management believes that the use of these non-GAAP financial measures, together with relevant U.S. GAAP finan
Slide 27: Non-GAAP Financial Measures
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 (Loss) ("AOCI") attributable to Jackson Financial Inc ("JFI"). AOCI attributable to JFI excl
Slide 28: Adjusted Operating Earnings Reconciliation
Adjusted Operating Earnings Reconciliation For the Six $ millions, except effective tax rate For the Three Months Ended Months Ended 6/30/22 9/30/22 12/31/22 3/31/23 6/30/23 6/30/22 6/30/23 Net income (loss) attributable to Jackson Financial Inc. common shareholders 3,263 1,879 (1,150) (1,497) 1,204
Slide 29: Select U.S. GAAP to Non-GAAP Reconciliation
Select U.S. GAAP to Non-GAAP Reconciliation For the Six $ millions, except per share and shares outstanding data For the Three Months Ended Months Ended 6/30/22 9/30/22 12/31/22 3/31/23 6/30/23 6/30/22 6/30/23 Net Income (Loss) 3,294 1,868 (1,158) (1,496) 1,220 5,519 (276) Income attributable to non
Slide 30: 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 America, Inc. (“PPM”), which excludes assets held in funds withheld accounts for reinsurance transactions, (ii) third-party a
Slide 31: Glossary
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