Jackson Financial Inc. · NYSE:JXN
Jackson Financial — Q1 2023 Earnings Presentation
32 slides from Jackson Financial's earnings presentation, May 10, 2023
Slide 1: First Quarter 2023 Financial Results
Jackson Financial Inc. First Quarter 2023 Financial Results May 10, 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: First Quarter 2023 Highlights
First Quarter 2023 Highlights Resilient Earnings Results • Net loss attributable to JFI of $1.5 billion • Adjusted Operating Earnings1 of $271 million • Adjusted Operating EPS (Diluted)1 of $3.15 • Pretax Adjusted Operating Earnings1, excluding notable items2, of $322 million Strong Capital Position
Slide 4: 2023 Key Financial Targets
2023 Key Financial Targets 425-500% Risk Based Capital (RBC) ratio under normal RBC within target range for normal market conditions market conditions Approximately two years of Holding company cash and highly liquid securities of over $1.5 billion at the holding company fixed expenses end of the qu
Slide 5: Cumulative Capital Return to Common Shareholders
Cumulative Capital Return to Common Shareholders JFI has repurchased 15.1 million shares life to date, which equates to 16% of outstanding shares at the time of spin off February 28, 2023 $868m JFI updates capital return target to $450-$550m for calendar year 2023 JFI announces increased share repur
Slide 6: Financial Summary
Financial Summary Adjusted Operating Earnings1 Key Takeaways ($ millions) Adjusted Operating Earnings 377 407 376 294 • Adjusted Operating Earnings for 1Q23 of $271 million was down from 1Q22, primarily the 271 result of lower annuity account value driven by lower equity markets over the twelve- mon
Slide 7: Notable Items – 1Q23
Notable Items – 1Q23 1Q22 1Q23 ($ millions, except per share amounts) Pretax After-tax1 EPS-Diluted Pretax After-tax1 EPS-Diluted2 Income Attributable to Jackson Financial Inc. 2,582 2,194 24.39 (2,055) (1,497) (18.11) Non-Operating Loss / (Income) (2,137) (1,817) 2,357 1,768 Adjusted Operating Earn
Slide 8: Non-Operating Items
Non-Operating Items 1Q23 Pretax Adjusted Operating Earnings Reconciliation Highlights ($ millions) • 1Q23 net hedge loss of $1,900 million Net Hedge Loss1: $1,900 million ― Higher equity markets drove freestanding derivative losses, as 780 well as a substantial gain in market risk benefits (MRB) ― L
Slide 9: Segment Results – Retail Annuities
Segment Results – Retail Annuities1 Retail Sales Recent Trends ($ billions) 4.8 • Variable annuity (VA) sales down 46% in 1Q23 compared to 1Q22, primarily 4.1 due to the continued volatility in equity markets and shifting consumer 3.6 3.2 preferences in a rising interest rate environment 3.1 • RILA
Slide 10: Segment Results – Retail Annuities
Segment Results – Retail Annuities Pretax Adjusted Operating Earnings1 Variable Annuity Account Value RILA Account Value FA / FIA Account Value ($ millions) ($ billions) ($ billions) ($ billions) 2.5 241 1.7 214 425 1.4 356 0.3 1Q22 1Q23 1Q22 1Q23 1Q22 1Q23 1Q22 1Q23 Separate Account General Account
Slide 11: Segment Results – Institutional & Closed Blocks
Segment Results – Institutional & Closed Blocks Institutional Account Value Institutional Highlights ($ billions) • Pretax adjusted operating earnings1 of $9 million in 1Q23 down from $23 2.1 million in the year-ago quarter due to higher interest credited and a higher loss on operating derivatives,
Slide 12: Capital Management
Capital Management Returned $124 million to common shareholders in 1Q23 through $70 million of share repurchases and $54 million in dividends • Remaining board repurchase authorization of $486 million at end of the quarter Statutory Total Adjusted Capital (TAC) ended 1Q23 at $4.7 billion • TAC decre
Slide 13: Summary
Summary ― Resilient 1Q23 results amid volatile financial market conditions ― Maintained strong balance sheet and robust levels of liquidity ― Confident in ability to achieve 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 ― Limited exposure to U.S. Regional Banks ― Highly rated and diversified commercial mortgage loan office portfolio, which is less than 2% of the general account portfolio ― Corporate portfolio
Slide 16: GAAP – Investment Portfolio
GAAP – Investment Portfolio March 31, 2023 Investment Portfolio Classification1 Key Highlights Limited Partnerships 6% Other invested assets <1% • Market/book ratio of the fixed maturity portfolio is 0.92 U.S government securities 11% Derivatives 2% Policy loans 2% Other government securities • Expo
Slide 17: Statutory – Investment Portfolio
Statutory – Investment Portfolio March 31, 2023 Investment Portfolio Classification1 Key Highlights Other invested assets <1% • Market/book ratio of the fixed maturity portfolio is 0.92 Limited Partnerships 4% 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 March 31, 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 Broo
Slide 19: Statutory – Corporate Portfolio
Statutory – Corporate Portfolio March 31, 2023 Corporate Portfolio Rating Distribution1 Key Highlights CCC and below: <0.1% • Market/book ratio of the corporate portfolio is 0.93 B: <1% AAA: 1% BB: 2% AA: 6% • High yield corporates account for 1% of invested assets and 2% of total corporate portfoli
Slide 20: Statutory – ABS Portfolio
Statutory – ABS Portfolio March 31, 2023 ABS Sector Distribution1, 2, 3 NAIC Rating Distribution1, 3 Consumer Loans <1% Aircraft 2% Equipment Leases <1% Single Family Rentals 2% Other, 1% Music Royalties 2% PDP Wells 3% NAIC 1A-1D (AAA-AA-) 56% NAIC 3 (BB) Whole Business 5% <1% Timeshare 5% NAIC 2 (
Slide 21: Statutory – Collateralized Loan Obligations (CLO) Debt
Statutory – Collateralized Loan Obligations (CLO) Debt March 31, 2023 CLO NAIC Distribution Key Highlights • CLO exposure highly rated with 76% rated AAA or AA AAA 47% • Exposure is diversified among 36 different managers and BBB 61 CLOs 1% • Each CLO is diversified, averaging 250 names $1.1b • High
Slide 22: Statutory – Commercial Mortgage Loan Portfolio
Statutory – Commercial Mortgage Loan Portfolio1 March 31, 2023 CML NAIC Distribution CML Property Type Distribution Multi-Family 30% CM 1 69% CM 3/4 Other 4% 4% $7.0b Hotels $7.0b Retail 23% 11% CM 2 27% Office 11% Industrial 21% Loan-to-Value / Debt Service Coverage2 Debt Service Coverage Ratio • H
Slide 23: Statutory – Commercial Mortgage Loan Office Exposure
Statutory – Commercial Mortgage Loan Office Exposure1 March 31, 2023 NAIC Rating Distribution – Office Exposure Key Highlights • Highly diversified with an average loan size of $15m CM 3/4 2% CM 1 84% • 98% are senior/first mortgage loans CM 2 $0.8b 14% • 98% of the portfolio has the highest rating,
Slide 24: Statutory – Regional Bank Exposure
Statutory – Regional Bank Exposure1 March 31, 2023 Regional Banks with <$250B in Total Assets Key Highlights ($ millions) • Limited exposure to U.S. Regional Banks Huntington Bank 31.4 Key Bank 29.3 • Zero exposure to Silicon Valley Bank, Signature Bank, Comerica 18.2 and First Republic Bank, and al
Slide 25: Appendix
Appendix @ JACKSON’
Slide 26: 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 27: 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 28: 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 29: Adjusted Operating Earnings Reconciliation
Adjusted Operating Earnings Reconciliation $ millions, except effective tax rate For the Three Months Ended 3/31/22 06/30/22 09/30/22 12/31/22 3/31/23 Adjusted Operating Earnings Net income (loss) attributable to Jackson Financial Inc. 2,194 3,263 1,879 (1,150) (1,497) Income tax expense (benefit) 3
Slide 30: Select U.S. GAAP to Non-GAAP Reconciliation
Select U.S. GAAP to Non-GAAP Reconciliation $ millions, except per share and shares outstanding data For the Three Months Ended 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 Net Income (Loss) 2,225 3,294 1,868 (1,158) (1,496) Income attributable to non-controlling interest 31 31 (11) (8) 1 Net Income (Lo
Slide 31: 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 32: 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