Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jackson Financial Inc (JXN, Financial) reported a 59% increase in total retail annuity sales for the third quarter, marking the highest and most diversified quarter of sales since becoming an independent company.
- The company achieved a 9% growth in assets under management, reaching over $250 billion, driven by favorable equity markets and increasing sales.
- Adjusted operating earnings increased by 11% over the third quarter of last year, supported by higher fee income and greater investment spread income.
- Jackson Financial Inc (JXN) successfully launched new products, including the Principal Guard guaranteed minimum accumulation benefit, enhancing their product offerings.
- The company returned $167 million to shareholders in the third quarter and is on track to meet the upper half of its $550 million to $650 million capital return target for the year.
Negative Points
- Jackson Financial Inc (JXN) reported a net income loss for the third quarter, despite positive results over the full nine months.
- The company experienced a $295 million loss in its hedging program during the third quarter, primarily due to losses on equity hedges.
- There was a $514 million negative impact from actual policyholder behavior versus expectations, driven by higher-than-expected lapse rates.
- The institutional segment saw a decline in pretax adjusted operating earnings due to reductions in average assets under management.
- The company anticipates lower near-term volumes in fixed annuity sales compared to the strong third quarter levels.
Q & A Highlights
Q: Can you explain the impact of strong statutory earnings this quarter and how much of it is nonrecurring? How does this relate to the growth in RILA sales and the net uplift to RBC?
A: Don Cummings, CFO: We are comfortable with our current capital mix, which is relatively capital efficient. The increased level of fixed annuity sales had a capital impact, but it was offset by normal portfolio activity. The RILA sales have a minimal impact on TAC currently, but as assets grow, there will be capital requirements. Overall, we are comfortable with our product mix and its manageability.
Q: Regarding Brooke Re, when might you have the confidence to take a common dividend to help the company's cash flow?
A: Don Cummings, CFO: We have three quarters of experience with Brooke Re and expect it to be capital generative over time. We don't plan to take capital out of Brooke Re in the near term, as we have sufficient capital generation at JNL to meet our targets.
Q: Can you discuss the capital generation and the expectation for holding company dividends?
A: Don Cummings, CFO: 2024 is unique due to the setup of Brooke Re. We expect to continue periodic capital distributions based on business performance. We will share our capital return targets with our fourth-quarter results. Historically, we've had a balanced approach to capital return, and we anticipate an increase in 2025 if performance continues as expected.
Q: How do you price and hold capital for RILA, and do you consider the diversification benefit with the traditional VA business?
A: Don Cummings, CFO: Pricing is done on a stand-alone basis without considering the diversification benefit from the VA business. The benefit comes through in hedging results, allowing for lower levels of external hedging.
Q: Can you provide more color on the capital movement at Brooke Re year-to-date?
A: Don Cummings, CFO: We don't disclose exact financials for Brooke Re, but there has been some growth in equity. Initially, $700 million was put in for capitalization, and the equity has grown over the first nine months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
