Jackson Financial Inc. Q1 FY2025 earnings call

• Strong first quarter results with adjusted operating earnings growth of 13% to $376 million.
• Consistent share repurchase and capital return to shareholders, with adjusted operating earnings per share up over 20% year-over-year.
• Retail annuity sales growth: Over $4 billion in Q1 2025, up >9% from Q1 2024, with variable annuities up 9% and RILA at $1.2 billion, up 3%.
• Fixed and fixed-indexed annuity sales had meaningful growth but more moderated than H2 2024.
• Advisory sales up 28% in Q1 2025, with an annual run rate over $1 billion.
• Adjusted operating return on common equity increased to 13.6% from 12% in Q1 2024.
• Hedging program results: Net hedge loss of $134 million, with a net gain on hedging assets, offset by changes in market risk benefits and reserve/embedded derivative gains.

Jackson's adjusted operating earnings were $376 million, a 13% growth year-over-year. Retail annuity sales were over $4 billion, up more than 9% from Q1 2024. Variable annuity sales increased 9% to $2.7 billion, with Elite Access growing due to the Principal Guard feature. RILA product suite had first-quarter sales of $1.2 billion, up 3% year-over-year. Fixed and fixed-indexed annuity sales showed meaningful growth but at a more moderated level than H2 last year. Advisory sales increased 28% over Q1 2024, with an annual run rate of over $1 billion. Revenue contribution: Retail annuities, variable annuities, RILA, fixed/fixed-indexed annuities, and advisory sales each played their roles in the overall revenue mix.

• Board approved a second quarter cash dividend of $0.80 per common share.
• Free capital generation is on pace to exceed the $1 billion-plus expectation for full-year 2025.
• Look forward to completing 2025 financial targets while positioning the company for long-term profitability.

• Market volatility in April impacted Brooke Re, but it didn't require a capital contribution. The impact was described as modest.
• Periods of heightened volatility combined with major equity market and interest rate shifts can be challenging for dynamic hedging programs.
• Changes in implied volatility can affect market risk benefits related to variable annuity business.

Q: Could you comment on inorganic growth opportunities and how they compare to share buybacks or balance sheet strengthening?

A: We've done successful bolt-on acquisitions in the past. Any future opportunity would be evaluated in comparison to the value from share buybacks or balance sheet strengthening.

Q: Thoughts on the spread-based products strategy and if it puts us at a competitive disadvantage?

A: We approach the market with discipline, reprice products actively, and stay open to competitive opportunities. RILA is a spread product where we've had success without certain alternative asset management partners.

Q: Impact of capital in April on Brooke Re and the buffer compared to $2.1 billion capital?

A: The impact in April was modest. Brooke Re has a minimum operating capital and an internal risk framework. The initial capitalization in Q1 last year was about $1.9 billion, and we're in a strong position relative to risk management.

Q: Sensitivities to market levels and interest rates on capital generation?

A: Scenarios requiring capital injection into Brooke Re would be very high volatility combined with deep equity stress or a combination of equity and interest rate stresses over an extended period. We have an internal risk management framework to handle such scenarios.