Overview of Jackson Financial’s Financial Performance

Jackson Financial Inc. (JFI) is a financial services company that helps Americans grow and protect their retirement savings and income. The company’s primary operating subsidiary is Jackson National Life Insurance Company, which sells annuity and life insurance products.

In 2024, JFI reported strong financial results, with net income attributable to common shareholders of $902 million, up slightly from $899 million in 2023. Adjusted Operating Earnings, a non-GAAP measure that excludes market volatility impacts, increased to $1.44 billion in 2024 from $1.07 billion in 2023.

The company’s total sales grew significantly in 2024, reaching $19.8 billion compared to $13.9 billion in 2023. This was driven by a surge in sales of variable annuities, registered index-linked annuities (RILAs), and fixed annuities. Assets under management (AUM) also increased to $324.7 billion at the end of 2024, up from $315.8 billion a year earlier.

Revenue and Profit Trends

JFI’s revenue is generated primarily from fee income, investment spread income, and margins on insurance products. The company’s profitability depends on its ability to properly price and manage risk on its products, effectively manage its investment portfolio, and control expenses.

In 2024, fee income increased by $403 million to $8.08 billion, driven by higher average separate account values. Net investment income remained relatively stable at $2.86 billion. However, total net gains and losses on derivatives and investments decreased by $199 million, primarily due to unfavorable movements in equity hedges and embedded derivatives.

On the expense side, death, other policy benefits, and changes in policy reserves decreased by $153 million, mainly due to the impact of actuarial assumption updates, improved mortality, and lower other policyholder benefits. Interest credited on contract holder funds also decreased by $35 million. These savings were offset by a $276 million increase in operating costs and other expenses, primarily due to higher asset-based commissions, incentive compensation, and other commissions related to the growth in RILA sales.

Overall, the company’s pretax income increased by $64 million to $1.02 billion in 2024, and net income attributable to common shareholders remained relatively flat at $902 million.

Strengths and Weaknesses

One of JFI’s key strengths is its differentiated product offerings, including variable annuities, RILAs, and fixed annuities, which have enabled the company to capitalize on growing consumer demand for retirement planning solutions. The company’s well-known brand and disciplined risk management practices also contribute to its market position.

However, JFI’s financial performance is subject to significant volatility due to its exposure to market risks, particularly equity market and interest rate movements. The company does not directly hedge the movement in its U.S. GAAP market risk benefit liabilities, which can lead to significant swings in net income from period to period. This volatility is mitigated to some extent by the company’s use of Adjusted Operating Earnings as a performance metric, which excludes the impact of market-related items.

Another potential weakness is the company’s reliance on its insurance subsidiaries for dividends and distributions to fund its holding company expenses and capital return to shareholders. Regulatory restrictions on the ability of the insurance subsidiaries to pay dividends could limit the holding company’s financial flexibility.

Outlook and Future Prospects

JFI believes it is well-positioned to capture the growing demand for retirement products driven by demographic trends in the U.S. population, such as the increasing number of retirees. The company’s efficient and scalable operating platform, industry-leading distribution network, and disciplined risk management practices are expected to support its ability to grow profitably.

However, the company’s financial performance will continue to be influenced by macroeconomic and industry trends, such as interest rate movements, equity market performance, credit market conditions, and regulatory changes. Volatility in these factors could impact sales, fee income, investment returns, and hedging costs, which could in turn affect the company’s profitability and capital position.

To mitigate these risks, JFI has taken steps to optimize its hedging and capital management, such as the Brooke Re reinsurance transaction, which is expected to stabilize the company’s capital generation and produce more predictable financial results going forward.

Overall, JFI appears to be a well-positioned player in the retirement planning market, but its financial performance will remain subject to the broader economic and industry environment.