10-K: Jackson Financial Inc. Reports Strong 2024 Results, Announces Capital Return Target

Jackson Financial Inc. announces solid 2024 financial results, highlighting increased sales, AUM growth, and a commitment to returning capital to shareholders.

Summary

• Jackson Financial Inc. (JFI) reported its FY2024 financial results, showcasing growth in key areas.
• Total sales increased to $19.85 billion in 2024 from $13.90 billion in 2023.
• Assets Under Management (AUM) grew to $324.72 billion, up from $315.84 billion the previous year.
• Net income attributable to common shareholders was $902 million, slightly up from $899 million in 2023.
• Adjusted Operating Earnings, a non-GAAP measure, reached $1.44 billion, compared to $1.07 billion in the prior year.
• The company returned $631 million to common shareholders through dividends and share repurchases.
• The Return on Equity (ROE) was 9.4%, slightly lower than the 10.3% in 2023.
• The Jackson statutory risk-based capital ratio was 572%, down from 624% in the previous year.
• The company is targeting a capital return of $700-$800 million to common shareholders in 2025.
• Free capital generation exceeded $1 billion in 2024 and is expected to exceed $1 billion in 2025 under normal market conditions.
• Free cash flow at the parent company level was $767 million in 2024.
• The company completed a 100% coinsurance with funds withheld reinsurance transaction with Brooke Re, effective January 1, 2024, to optimize hedging and stabilize capital generation.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and a clear strategy for future growth. While there are some risks and challenges, the overall tone is optimistic and confident.

Positives

• Significant increase in total sales indicates strong market demand for Jackson's products.
• Growth in AUM reflects the company's ability to attract and retain customer assets.
• Increased Adjusted Operating Earnings demonstrates improved profitability and operational efficiency.
• Commitment to returning capital to shareholders through dividends and share repurchases enhances shareholder value.
• The reinsurance transaction with Brooke Re is expected to optimize hedging and stabilize capital generation.

Negatives

• Slight decrease in Return on Equity (ROE) from 10.3% to 9.4%.
• Decrease in Jackson's statutory risk-based capital ratio from 624% to 572%.

Risks

• General conditions in the global financial markets and the economy could have a material adverse effect on our business, financial condition, liquidity, results of operations and cash flows.
• An actual or potential downgrade in our financial strength or issuer credit ratings could result in a loss of business and cause a material adverse effect on our business, financial condition, results of operations and cash flows.
• As a holding company, Jackson Financial depends on the ability of its subsidiaries to pay dividends and make other distributions to meet its obligations and liquidity needs.
• Our failure to describe accurately the features and options of our annuities, failure to administer those features and options consistent with their descriptions or mishandling of customer complaints could adversely impact our business, financial condition, results of operations and cash flows.
• Our businesses are heavily regulated and changes in regulation could reduce our profitability and limit our growth.
• Our information technology systems could fail, which could cause a material adverse effect on our business, financial condition, results of operations and cash flows.

Future Outlook

The company is targeting a capital return of $700-$800 million to common shareholders in 2025 and expects free capital generation to exceed $1 billion under normal market conditions.

Industry Context

The report highlights Jackson's position as a leading annuity provider in the U.S. retirement market, noting its ranking as the eighth largest retail annuity company in the U.S. for the nine months ended September 30, 2024. The company's focus on RILA products aligns with the fastest-growing category in the annuity market.

Comparison to Industry Standards

• Jackson's variable annuities have a Net Promoter Score (NPS) of +42, compared to an industry average of +33, based on advisor surveys conducted by Market Metrics in 2024.
• The company's combined statutory operating expense-to-asset ratio of 29 basis points at its principal insurance company subsidiaries for the year ended December 31, 2024, which we believe is among the lowest in the life and annuity industry.
• According to LIMRA LOMA U.S. Individual Annuity Sales Industry report, for the nine months ended September 30, 2024, we accounted for 12.3% of all sales in the U.S. variable annuity market and ranked #2 in variable annuity sales.
• The industry-leading size of our wholesaling force propels our sales in the traditional variable annuity market to be more than double that of our closest competitor per ISS Market Intelligence's YTD third quarter 2024 Competitor Sales, Staffing and Productivity Benchmarking report.

Management Changes

Legal Proceedings

• The company faces a significant risk of litigation and regulatory investigations and actions in the ordinary course of operating our business, including the risk of class action lawsuits, arbitration claims, government subpoenas, regulatory investigations, examinations, actions, and other claims.

Stakeholder Impact

• Shareholders benefit from the company's commitment to returning capital through dividends and share repurchases.
• Customers benefit from the company's diverse product offerings and commitment to providing financial security.
• Employees benefit from the company's commitment to talent development, competitive compensation, and a safe and healthy workplace.
• Communities benefit from the company's charitable donations and commitment to corporate responsibility.

Next Steps

• The company intends to continue using its diverse product offerings, distribution capabilities, and operating platform to pursue growth opportunities.
• The company will continue to monitor and manage its key risks, including financial, operational, and regulatory risks.
• The company will continue to return capital to common shareholders through dividends and share repurchases.

Key Dates

Keywords

annuities, financial results, AUM, sales, capital return, risk-based capital, reinsurance, Jackson Financial