10-K: Jackson Financial Navigates Market Volatility, Boosts Capital

Jackson Financial Inc. reports a net loss for 2025 but demonstrates strong adjusted operating earnings and strategic capital management initiatives, including a new partnership with TPG and increased share repurchases.

Summary

• Jackson Financial Inc. reported a net loss attributable to common shareholders of $17 million for the year ended December 31, 2025, a significant decrease from $902 million net income in 2024.
• Adjusted Operating Earnings increased to $1,614 million in 2025 from $1,443 million in 2024, reflecting underlying business performance excluding market volatility.
• Total Sales grew to $23,211 million in 2025 from $19,849 million in 2024, driven by increased RILA and fixed index annuity sales.
• Assets Under Management (AUM) increased to $351,059 million in 2025 from $324,718 million in 2024, primarily due to favorable equity market performance and growth in RILA, fixed, and fixed index annuities.
• The company returned $862 million to common shareholders in 2025, comprising $228 million in dividends and $634 million in common share repurchases.
• Free capital generation for 2025 was $1.4 billion, exceeding the expectation of $1 billion under normal market conditions.
• A long-term strategic partnership with TPG Inc. was announced on January 6, 2026, and closed on February 11, 2026, aiming to expand spread-based product sales and enhance investment capabilities.
• Hickory Brooke Reinsurance Company (Hickory Re) was established in Q4 2025 to accelerate sales growth of fixed and fixed index annuity products and optimize capital efficiency.
• The Jackson statutory risk-based capital (RBC) ratio was 567% as of December 31, 2025, slightly down from 572% in 2024 but well above regulatory minimums.
• The company completed its annual actuarial assumption review in Q4 2025, resulting in an $18 million gain on Pretax Adjusted Operating Earnings but a $342 million loss on Pretax Income (Loss) due to MRB reserve changes.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive filing. While net income was negative due to market volatility, the strong adjusted operating earnings, significant sales growth, robust capital position, and strategic partnership with TPG indicate underlying business strength and future growth potential.

Positives

• Adjusted Operating Earnings increased by 11.8% to $1,614 million in 2025, demonstrating strong underlying business performance.
• Total Sales grew by 17% to $23,211 million in 2025, with Retail Annuity Sales up 10.2% and Institutional Product Sales up 76.6%.
• Assets Under Management (AUM) increased by 8.1% to $351,059 million, reflecting positive market performance and product growth.
• Free capital generation of $1.4 billion in 2025 exceeded the company's expectation of over $1 billion.
• The company returned $862 million to common shareholders in 2025 through dividends and share repurchases, indicating a commitment to shareholder returns.
• The Jackson statutory RBC ratio of 567% remains well above the company action level, indicating strong capital adequacy.
• The strategic partnership with TPG is expected to increase future profitability, general account asset growth, and capital generation.
• The establishment of Hickory Re provides a capital-efficient way to accelerate sales growth in fixed and fixed index annuities.
• Net flows, net of reinsurance, improved for the year ended December 31, 2025, driven by increased RILA, fixed index annuity, and institutional sales.
• The company received the Highest Customer Service – Financial Industry award for the 14th straight year in 2025, highlighting strong customer satisfaction.

Negatives

• Net income attributable to common shareholders was a loss of $17 million in 2025, a significant decline from $902 million in 2024, primarily due to unfavorable market risk benefit movements.
• Pretax income (loss) decreased by $1,136 million to a loss of $(114) million in 2025, mainly due to less favorable movements in interest rates and unfavorable equity volatility impacting market risk benefits.
• Fee income decreased by $100 million in 2025, attributed to market volatility in the first half of the year and decreases in benefit-based guarantee fee income.
• Elevated variable annuity surrenders and withdrawals were driven by mature policies exiting surrender charge periods and higher surrenders when guaranteed benefits are less 'in the money' during strong equity markets.
• The annual actuarial assumption review resulted in a $342 million loss on Pretax Income (Loss) in 2025, primarily due to updated policyholder behavior assumptions for variable annuity MRB reserves.
• The RBC ratio decreased slightly from 572% in 2024 to 567% in 2025, mainly due to an increase in asset risk from RILA separate account growth and increased business risk.

Risks

• Volatility in global financial markets and general economic downturns could materially impact profitability, investment returns, and liquidity.
• Equity market movements can lead to financial loss through higher payments on guaranteed benefits, lower fee-based income, and less effective hedging during volatile periods.
• Interest rate movements can lead to financial loss, with prolonged declines impacting guaranteed benefits and investment income, and prolonged increases affecting interest-crediting products and hedging effectiveness.
• Credit spread volatility, ratings downgrades, defaults, or impairments in general or separate account assets could negatively impact earnings and statutory capital.
• Reliance on complex models for predicting behavior, identifying risks, and estimating financial performance may lead to materially inaccurate output if assumptions or data are flawed.
• Difficulties in distributing products through third-party partners, including termination of agreements or increased competition for access to distributors, could adversely affect sales.
• Changes in U.S. federal income or other tax laws, or their interpretation, could affect product sales, cash flows, and profitability, particularly regarding tax deferral advantages for annuities.
• Legal and regulatory investigations and actions are increasingly common in the industry and could result in significant financial loss, reputational harm, or corrective measures.
• Information technology systems are vulnerable to failures, physical/electronic intrusions, computer viruses, or cyberattacks, potentially exposing confidential data or disrupting operations.
• The use of artificial intelligence (AI) may result in errors in analysis and decision-making, leading to adverse business effects, regulatory fines, or reputational damage.
• Risks arising from acquisitions or other complex strategic transactions, including difficulties in integration, unforeseen liabilities, or unfavorable market conditions.
• Anti-takeover provisions in the company's certificate of incorporation and by-laws could discourage, delay, or prevent a change of control, potentially affecting the common stock's trading price.
• The company is subject to liquidity risks associated with sourcing a large concentration of funding from the Federal Home Loan Bank of Indianapolis (FHLBI).

Future Outlook

The company expects free capital generation in 2026 to be at or above $1.2 billion, assuming a 5% equity market total return and rates following the year-end forward curve. The strategic partnership with TPG is anticipated to increase future profitability, general account asset growth, and capital generation, supporting growth in free cash flows and capital return to shareholders. The 2024 Fiduciary Advice Rule is currently being challenged in litigation, making it likely to be permanently vacated, which could impact annuity sales and compliance costs. New accounting pronouncements, ASU 2024-03, ASU 2025-06, ASU 2025-08, and ASU 2025-11, are being evaluated for their future impact on financial statements, with effective dates ranging from 2026 to 2027.

Management Comments

• We believe we are well-positioned in our markets because of our differentiated products and our well-known brand among distributors and advisors.
• We are confident these core strengths will enable us to grow as an aging U.S. population transitions into retirement.
• Our operating platform provides us with a competitive advantage by allowing us to grow efficiently and provide superior customer service.
• We intend to continue using our diverse product offerings, distribution capabilities, and operating platform to pursue growth opportunities.
• We have shown a commitment to long-term capital return to common shareholders through our share repurchase program and dividends.
• The transaction and related modified U.S. GAAP approach enable us to largely moderate the impact of the cash surrender value floor on Jackson's total adjusted capital, statutory required capital, and RBC ratio and enable more efficient economic hedging of the underlying risks of Jackson's business.
• This outcome serves the interests of policyholders by protecting statutory capital through diminished non-economic hedging and related costs.
• Overall, this transaction allows us to optimize our hedging, stabilize capital generation, and produce more predictable financial results going forward.
• The benefits of this strategic partnership (with TPG) include increased opportunities for new business and earnings diversification, enhanced profitability and greater long-term value for Jackson stakeholders.
• The combination of PPM and TPG's complementary investment capabilities is expected to enhance Jackson's profitability and competitive position.
• Hickory Re has been established to serve as a capital-efficient way to accelerate further sales growth of Jackson's fixed and fixed index annuity products as we grow our spread-based business.
• We believe our products are well-positioned to meet this increasing consumer demand (for tax-efficient savings products for retirement planning).
• We believe our insurance company subsidiaries have sufficient statutory capital and surplus to maintain their desired financial strength ratings.

Industry Context

StockSavvy.ai notes that Jackson Financial's focus on diverse annuity products, particularly RILAs and fixed index annuities, aligns with broader industry trends of increasing demand for retirement savings and income solutions among an aging U.S. population. The strategic partnership with TPG for private credit platform integration reflects a growing trend among insurers to diversify investment capabilities and enhance spread-based earnings, similar to moves by competitors seeking alternative asset strategies. The company's strong market position in variable annuities, ranking #2 in sales for the nine months ended September 30, 2025, indicates effective product differentiation and distribution in a competitive landscape that includes major stock and mutual insurance companies, private equity-backed firms, and banks. The ongoing regulatory scrutiny on fiduciary standards and AI use is an industry-wide challenge that Jackson is actively addressing.

Comparison to Industry Standards

• Jackson was the seventh largest retail annuity company in the U.S. for the nine months ended September 30, 2025, and the eighth largest for the year ended December 31, 2024, as measured by sales, according to LIMRA.
• The company accounted for 13.6% of all sales in the U.S. variable annuity market and ranked #2 in variable annuity sales for the nine months ended September 30, 2025, per LIMRA.
• Jackson's wholesaling force is more than double that of its closest competitor per ISS Market Intelligence's YTD third quarter 2025 Competitor Sales, Staffing and Productivity Benchmarking report.
• The RILA market has been the fastest growing category in the annuity market over the last five years, growing at a compound annual growth rate of 27% from 2021 through 2025, indicating Jackson's participation in a high-growth segment.
• Jackson's combined statutory operating expense-to-asset ratio of 27 basis points at its principal insurance company subsidiaries for 2025 is believed to be among the lowest in the life and annuity industry, suggesting superior operational efficiency compared to peers.
• The company's Net Promoter Score (NPS) for annuities is +46, compared to an industry average NPS of +37, based on advisor surveys conducted by Market Metrics in 2025, indicating stronger advisor satisfaction.

Management Changes

Corporate Governance

Legal Proceedings

• The company and its subsidiaries are parties to legal actions and regulatory investigations in the ordinary course of business.
• Jackson has been named in civil litigation proceedings, substantially similar to class action litigation against other life insurers, alleging misconduct in the sale and administration of insurance products.
• Management believes the ultimate disposition of contingent liabilities is unlikely to have a material adverse effect on the company's financial position.

Related Party Transactions

• PPM's investment management agreements with its customers, including former parent Prudential plc and its affiliates, are terminable at any time or on short notice. Prudential and its affiliates represent $29.8 billion or 32% of PPM's total assets under management.
• Intersegment eliminations include investment income and fees paid by Jackson Financial and its subsidiaries to PPM, which were $98 million, $81 million, and $76 million for the years ended December 31, 2025, 2024, and 2023, respectively.
• Jackson Financial and its non-life insurance subsidiaries, Jackson Holdings, LLC and PPM, file a consolidated non-life federal income tax return.
• Brooke Life, Jackson, JNY, Squire RE II, Brooke Re and Hickory Re have entered into written tax sharing agreements.
• VFL International Life Company SPC, LTD is taxed as a controlled foreign corporation of Jackson.
• Jackson maintains non-qualified voluntary deferred compensation plans for certain associates and independent agents, with a total aggregate liability of $481 million and $479 million at December 31, 2025 and 2024, respectively.

Stakeholder Impact

• Shareholders: Net loss in 2025 negatively impacts common shareholders, but increased Adjusted Operating Earnings, strong free cash flow, and increased share repurchases and dividends demonstrate a commitment to long-term shareholder value. The TPG partnership is expected to enhance profitability and value.
• Customers: Continued focus on differentiated products, superior customer service (14th consecutive year of 'Highest Customer Service' award), and a broad distribution network aim to meet evolving retirement planning needs. However, elevated variable annuity surrenders indicate some customers are seeking alternatives.
• Employees: The company emphasizes talent development, competitive compensation, and comprehensive benefits, including health and well-being programs. Management changes and retirements impact specific executive roles.
• Regulators: The company is subject to extensive and evolving state and federal regulations, including new cybersecurity and AI regulations, requiring continuous compliance efforts. Strong RBC ratios indicate adherence to capital requirements.
• Distribution Partners: The industry-leading distribution network and focus on growing sales through Independent RIAs, Platforms & Agents (IPA) channel aim to strengthen relationships, though increased competition for access to distributors remains a risk.
• Creditors: The company's strong RBC ratio and liquidity management strategies, including access to credit facilities, support its ability to meet debt obligations. The TPG partnership is expected to strengthen investment capabilities, benefiting the general account.

Next Steps

• Continue to use diverse product offerings, distribution capabilities, and operating platform to pursue growth opportunities.
• Monitor and respond to evolving macroeconomic, industry, and regulatory trends, including potential changes to the DOL Fiduciary Advice Rule and new accounting pronouncements.
• Integrate TPG's private credit platform to expand spread-based product sales and enhance investment capabilities.
• Utilize Hickory Re to accelerate sales growth of fixed and fixed index annuity products.
• Maintain a minimum of $250 million in cash and highly liquid securities at Jackson Financial to fund two years of holding company fixed net expenses.
• Repurchase common shares under the existing authorization of $903 million remaining as of February 18, 2026.
• Pay a cash dividend of $0.90 per common share on March 26, 2026, and $0.50 per depositary share on March 30, 2026.
• File the definitive proxy statement for the 2026 Annual Meeting of Shareholders on or about April 7, 2026.

Key Dates

Recommendation

Jackson Financial's 2025 results present a mixed picture. While the reported net loss is concerning, it's largely driven by non-cash market risk benefit movements and hedging volatility, which management actively mitigates through its Adjusted Operating Earnings metric. The significant increase in Adjusted Operating Earnings, robust sales growth in key annuity segments (RILA, fixed index), and strong free cash flow generation demonstrate underlying operational strength. The strategic partnership with TPG and the establishment of Hickory Re are positive long-term initiatives aimed at diversifying earnings and enhancing capital efficiency. However, the negative GAAP net income, slight dip in RBC ratio, and ongoing market volatility impacting fee income warrant caution. The stock's performance has been strong, but the inherent volatility in the insurance sector, coupled with regulatory uncertainties and the need for continued effective hedging, suggests a 'hold' position. Investors should monitor the execution of strategic partnerships, sustained growth in adjusted earnings, and the impact of market conditions on GAAP profitability.

Keywords

Annuities, Variable Annuities, RILA, Fixed Index Annuities, Life Insurance, Financial Services, Asset Management, SEC Filing, 10-K, Capital Management, Share Repurchase, Dividends, TPG Partnership, Reinsurance, Risk-Based Capital, Hedging, Market Risk, Interest Rates, Equity Markets, Cybersecurity, Corporate Governance