Jackson Financial Inc. · NYSE:JXN
Jackson Financial — Q3 2021 Earnings Presentation
24 slides from Jackson Financial's earnings presentation, Nov 9, 2021
Slide 1: Jackson Financial Inc. Third Quarter 2021 Financial Results
Jackson Financial Inc. Third Quarter 2021 Financial Results November 10, 2021
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: Sustained Momentum through Demerger Completion
• Jackson’s first Analyst Presentation published August 17 • Demerger / Separation effective September 13 ‒ Appointed Board of Directors became effective • JXN begins regular - way trading September 20 • Standalone capital structure established • $27.3 billion in total retail annuity sales 1 since t
Slide 4: Key Financial Targets
Key Financial Targets 4 500 - 525% adjusted RBC ratio 2 $250 million minimum cash at the holding company 20 - 25% total financial leverage 4 Jackson National Life Insurance Company estimated RBC ratio above 525% 3 Holding company cash position over $800 million at the end of the quarter Total financ
Slide 5: Third Quarter Financial Highlights
Third Quarter Financial Highlights 5 • Strong quarterly earnings and return on equity • Results driven by growing fee - based AUM Delivered Strong Quarterly Earnings Results • Operating entities currently capitalized above target range while establishing a substantial holding company cash position •
Slide 6: Financial Summary
6,739 6,821 8,814 8,632 8,694 3Q20 4Q20 1Q21 2Q21 3Q21 547 645 568 636 487 3Q20 4Q20 1Q21 2Q21 3Q21 6 Adjusted Operating Earnings 1 ($ millions) Adjusted Book Value 1 ($ millions) Adjusted Operating Earnings of $487 million; EPS (diluted) of $5.16 • Adjusted operating earnings were down compared to
Slide 7: Notable Items
Notable Items 7 3Q20 3Q21 ($ millions, except per share amounts) Pretax After - tax 1 EPS - Diluted Pretax After - tax 1 EPS - Diluted (Loss)/Income Attributable to Jackson Financial Inc. (554) (397) (4.28) 190 206 2.18 Non - Operating Losses 1,200 944 10.19 381 281 2.97 Adjusted Operating Earnings
Slide 8: Non-Operating Items
Non - Operating Items 8 • Year - to - date net hedge gain 1 of $73 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 t
Slide 9: Segment Results – Retail Annuities
4.5 4.9 4.7 4.9 4.8 3Q20 4Q20 1Q21 2Q21 3Q21 Segment Results – Retail Annuities • Variable annuity sales were up 6% compared to the year - ago quarter reflecting: ― 71% increase in Elite Access (Investment - Only VA) ― 33% increase in other variable annuities without lifetime benefit guarantees ― 8%
Slide 10: Segment Results – Retail Annuities
543 527 3Q20 3Q21 1.2 1.4 3Q20 3Q21 205 246 3Q20 3Q21 Segment Results – Retail Annuities • Pretax adjusted operating earnings down approximately 3% compared to the year - ago quarter due to higher DAC amortization as a re sult of lower equity market returns in the current period compared to the year
Slide 11: Segment Results – Institutional & Closed Blocks
37% 37% 20% 6% Segment Results – Institutional & Closed Blocks • Pretax earnings in the Institutional segment were $21 million for the third quarter of 2021, compared to $26 million in the year - ago quarter • Jackson temporarily suspended sales of its institutional products following the separation
Slide 12: Capital Management
Capital Management 12 • Announced quarterly dividend and share repurchase program 1 reflect our resilient, cash generative business model x On track to meet or exceed target $325 - 425 million in total shareholder returns in the first twelve months following the demerger • Holding company cash was o
Slide 13: Summary
― Successful Execution of the Demerger ― Strong Balance Sheet ― Delivering Solid 2021 Results ― Continue to Broaden Distribution Capabilities ― Product Expansion with RILA Launch ― Well Positioned for the Future Summary 13
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: Operating DAC Amortization Modeling
Operating DAC Amortization Modeling 16 (Expense) / Benefit (in $ millions) 3Q21 Actual 4Q21 Baseline Core DAC (109) (a) Drop - off T - 3 Return (39) (b) Current Period Return (24) (c) Operating DAC amortization (173) (a+b+c) ▪ Core DAC amortization is not directly market sensitive, as it is a functi
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 Benefits 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) Equity Markets Down Positive Risk Fr
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, se lected non - GAAP financial measures. Management believes that the use of these non - GAAP financial measures, together with relevant U.S. GA
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: DAC and DSI impact : amortization of deferred acquisition costs and deferred s
Slide 20: Non-GAAP Financial Measures: Financial Leverage Ratio
Non - GAAP Financial Measures Financial Leverage Ratio We use the Financial Leverage Ratio to manage our financial flexibility and ensure that we maintain our financial strength ra tin gs. Total financial leverage is the ratio of total debt to the Total Adjusted Capitalization (combined total debt a
Slide 21: Adjusted Operating Earnings Reconciliation
Adjusted Operating Earnings Reconciliation 21 $ millions For the Three Months Ended For the Nine Months Ended 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 9/30/20 9/30/21 Adjusted Operating Earnings Net income (loss) attributable to Jackson Financial Inc. (397) 76 2,932 (540) 206 (1,709) 2,598 Income ta
Slide 22: Select GAAP to Non-GAAP Reconciliation
Select GAAP to Non - GAAP Reconciliation 22 $ millions, except per share and shares outstanding data For the Three Months Ended For the Nine Months Ended 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 09/30/20 09/30/21 Net Income (Loss) (375) 110 3,000 (484) 268 (1,747) 2,784 Income attributable to no
Slide 23: 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 24: 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