Jackson Financial Inc. Q1 FY2026 earnings call

• Operating performance was strong with pre-tax operating earnings up 12% from a year ago excluding notable items and per-share increase of 18% due to share repurchase program. • Growth of spread-based earnings offset market volatility on fee income. • Retail annuity sales increased 31% year-over-year, with RILA sales over $2 billion quarterly and fixed annuity/FIA sales up significantly. • Net outflows improved, reflecting RILA inflows and lower variable annuity surrenders/withdrawals. • Expanding distribution reach and making annuities more accessible, with RILA and Elite Access accounting for a large portion of fee-based advisory sales. • Enforce business had adjusted operating return on equity of 14.8% for trailing 12 months ending March 2026, up from 13.2% the prior year. • PPM's broad-based investment expertise and partnership with TPG to offer competitive spread-based products. • PPM oversees significant assets under management and has expanded investment capabilities.

Retail annuity sales increased 31% from a year ago. In the first quarter, retail annuity sales were strong, with much growth from MarketLink Pro 3 and MarketLink Pro Advisory 3. RILA sales have exceeded $2 billion in quarterly sales since launch in May 2025 and reached over $21 billion in RILA assets. Fixed annuity and FIA sales reached $756 million in the first quarter, a significant increase from $174 million a year ago. Spread-based products represented 52% of total retail annuity sales in the first quarter. Net outflows improved by 30% from a year ago and decreased nearly 6% from the fourth quarter 2025. RILA and Elite Access accounted for more than 70% of fee-based advisory sales in the first quarter, and the new FIA product accounted for more than 10% of total advisory sales this quarter. Nearly 40% of account values come from spread-based and investment-only variable annuities today.

• Expect to achieve 2026 financial targets. • Free capital generation in the quarter was $271 million and expect to build to $1.2 billion for full year 2026. • Capital return to common shareholders in range of $900 million to $1.1 billion. • Holding company liquidity was nearly $650 million at end of first quarter, comfortably above minimum buffer. • Expect continued strong demand for RILA and FIA products. • Confident in ability to offer competitive spread-based products with PPM's expertise and TPG partnership.

• Equity market uncertainty can lead to lower surrender activity but also may affect surrender activity. • Limited partnership results came in below long-term 10% return assumption, impacting results. • Proactive initiative to identify deceased policyholders led to higher claims, temporarily affecting results. • Market dislocations can lead to divergent performance of actively managed funds versus benchmarks, impacting net hedging results.

Q: Do you have a sense of what percentage of your sales represent sort of exchange activity versus sort of true new business?

A: The first quarter sales, which were very healthy at $5.3 billion, are a reflection of new business without any internal exchanges. So the sales reported would be all new business minus any internal exchanges.

Q: Obviously, there's a pretty large merger of equals going on in the annuity space. Just wondering if this changes the industry dynamic at all and any thoughts on overall consolidation in the space?

A: From a competitive perspective, we compete with both organizations that are recently involved in the merger announcement. We have a diversified product set that I think in comparison to the combined organization will allow us to continue to compete well. In terms of any other consolidation, I wouldn't have any comment or remarks on what else might occur. But I think we'll continue to compete constructively with both organizations as we have in the past.

Q: Just on brookery and the additional capital that's now in the subsidiary related to Hickory, does that change the timing of when you might be able to take dividends out of brookery?

A: We did put $500 million of capital into Brookry during the quarter. In terms of the timing of when we expect to be able to distribute capital from brookery, we would anticipate that Hickory will start generating capital that we will be able to distribute kind of in the near term. So, think about next few years. And then capital that would be distributed from the business that is sitting at Brookry kind of on a standalone basis, that would be more of a longer-term timeframe.

Q: Given the continued headwinds to alternative investment returns, can you give us any sense of just how sensitive your capital generation is to the alts returns?

A: There is a bit of sensitivity with capital generation, you do get a bit of an offset given the fact that it requires a higher capital charge. But as we look at the results we generated in the first quarter and given the recovery in markets since the end of the quarter, equity markets are back near or at all time highs. And we feel pretty comfortable with capital generation for the full year and being able to hit our $1.2 billion target.

Q: On the TPG relationship, can you give us any sense of the timing on reposition of existing assets?

A: We closed the partnership with TPG midway through the quarter. We have started seeing some capital deployed by TPG. It is early days. And in terms of being able to reposition our overall portfolio outside of our new business returns, we still do have that potential. We, you know, and that's certainly on our list of things to work through as we get the partnership fully stood up.

Q: About the growth in RILA and FIAs, can you tell us about future changes and features to prompt more growth?

A: We refreshed our Ryla product in 2025, which has flexibility and choice in crediting methods, protection level, and number of indexes available. The FIA launch included a living benefit option that can be elected not just at sale, but also post-sale. We expect spread-based sales growth to benefit from product refresh, PPN's efforts to seek greater yield, captive establishment for fixed and FIA, and partnership with TPG.

Q: On the PCAPs, does adding that kind of contingent liquidity change the way you may be able to manage some of those levels?

A: With our RBC levels, given our shift to diversifying business and focusing on spread-based products, we expect RBC ratio to come down over time. The PCAPS facility provides a good source of contingent capital in severe stress scenarios and is a feature that strengthens our liquidity profile and capital resilience across market cycles.