8-K: Jackson Financial Reports Strong Sales Growth but Net Loss in Third Quarter 2024

Jackson Financial experienced a significant increase in sales across all annuity product lines, but reported a net loss for the third quarter of 2024 due to losses on reinsured business.

Summary

• Jackson Financial announced its third quarter 2024 financial results, showing a 59% increase in retail annuity sales compared to the same period last year, reaching $5.3 billion.
• Variable annuity sales increased by 8% to $2.6 billion, while registered index-linked annuity (RILA) sales saw a 99% jump to a record $1.6 billion.
• Fixed and fixed index annuity sales also grew substantially, reaching $1 billion, up from $76 million in the third quarter of 2023.
• Total annuity assets under management (AUM) increased by 18% year-over-year, from $218 billion to $256 billion, largely due to higher equity markets.
• The company reported a net loss attributable to common shareholders of $(480) million, or $(6.37) per diluted share, primarily due to a loss on reinsured business.
• Adjusted operating earnings were $350 million, or $4.60 per diluted share, compared to $315 million, or $3.80 per diluted share in the third quarter of 2023.
• Jackson returned $167 million to shareholders in the third quarter through share repurchases and dividends, bringing the year-to-date total to $483 million.
• The company's statutory capital generation exceeded $1 billion over the first nine months of 2024.
• The company maintains a robust capital position with total adjusted capital of $4.8 billion and an estimated risk-based capital (RBC) ratio at Jackson National Life Insurance Company (JNLIC) of 550-570% as of September 30, 2024.
• Cash and highly liquid securities at the holding company were nearly $650 million as of September 30, 2024, exceeding the $250 million minimum liquidity buffer.

Sentiment

Score: 6

Explanation: The document presents a mixed picture with strong sales growth and positive adjusted operating earnings, but a significant net loss due to reinsurance and hedging impacts. The overall sentiment is cautiously optimistic due to the underlying business strength, but the net loss tempers the positive aspects.

Positives

• Jackson experienced strong growth in retail annuity sales, with a 59% increase compared to the third quarter of 2023.
• The company achieved record sales in registered index-linked annuities (RILA), with a 99% increase year-over-year.
• Total annuity assets under management (AUM) grew by 18%, indicating strong market performance and customer demand.
• Adjusted operating earnings increased, driven by higher fee income, improved spread income, and reduced share count.
• The company's capital position remains robust, with a high RBC ratio and significant cash reserves.
• Jackson has returned a substantial amount of capital to shareholders through share repurchases and dividends.
• Statutory capital generation exceeded $1 billion over the first nine months of 2024.

Negatives

• The company reported a net loss of $(480) million, or $(6.37) per diluted share, primarily due to a loss on reinsured business.
• The net loss was also impacted by unfavorable net hedging results compared to the prior year's third quarter.
• Corporate and Other segment reported a pretax adjusted operating loss of $(71) million, a decline from the previous year.
• Institutional Products segment saw a decrease in pretax adjusted operating earnings due to lower spread income.

Risks

• The company's financial results are subject to market volatility, which can impact hedging results and market risk benefits.
• Reinsured business can cause significant fluctuations in net income from quarter to quarter.
• Changes in interest rates can affect the company's market risk benefits and overall profitability.
• The company's performance is dependent on maintaining a strong distribution platform and offering competitive products.
• The company faces risks related to regulatory changes and compliance requirements.

Future Outlook

The company anticipates building on its momentum through the remainder of 2024 and into 2025, continuing to deliver on its mission of helping Americans achieve financial freedom for life.

Management Comments

• Laura Prieskorn, President and Chief Executive Officer of Jackson, stated, 'Jacksons third quarter results highlight our distribution strength and our continued focus and commitment to offering differentiated and innovative products while generating value for our shareholders.'
• Laura Prieskorn also noted, 'Our retail annuity sales were up 59% from the third quarter of 2023 with growth across every product line, delivering our largest and most diversified quarter of sales since becoming an independent company.'
• She added, 'Consistent with our move to smaller, periodic operating company distributions, Jackson National Life distributed $300 million to its parent company during the third quarter while increasing our statutory capital and our RBC ratio.'

Industry Context

The strong sales growth in annuities, particularly RILAs, reflects a broader trend in the insurance industry as investors seek products that offer both growth potential and downside protection. Jackson's focus on innovative products and a broad distribution platform positions it well to capitalize on this trend.

Comparison to Industry Standards

• Jackson's 59% increase in retail annuity sales significantly outperforms the industry average, which has seen more modest growth in recent quarters.
• The record RILA sales of $1.6 billion demonstrate Jackson's competitive edge in this product category, compared to competitors such as Prudential and Lincoln Financial.
• The company's RBC ratio of 550-570% is well above the regulatory minimum and compares favorably to peers, indicating a strong capital position.
• While the net loss is concerning, the adjusted operating earnings growth and strong sales figures suggest that Jackson's underlying business is performing well, which is a positive sign compared to some competitors facing similar market headwinds.

Stakeholder Impact

• Shareholders will be impacted by the net loss, but also by the increased capital return and positive adjusted operating earnings.
• Customers will benefit from the company's strong product offerings and financial stability.
• Employees will be impacted by the company's overall performance and future growth prospects.
• Distribution partners will benefit from the company's strong sales growth and product innovation.

Next Steps

• Jackson will host a conference call on November 7, 2024, to review the third quarter results.
• The company anticipates building on its momentum through the remainder of 2024 and into 2025.

Key Dates

Keywords

annuities, financial results, sales growth, RILA, variable annuities, fixed annuities, AUM, adjusted operating earnings, capital return, share repurchases, dividends, risk-based capital, reinsurance, hedging, statutory capital