Jackson(US:JXN)2025-08-05 20:24Revenue and Income - Jackson Financial's revenues are primarily derived from fee income, spread income from investments, and margins on insurance products [289]. - Net income attributable to common shareholders for Q2 2025 was $168 million, down from $264 million in Q2 2024, while adjusted operating earnings were $350 million compared to $410 million in the same period [294]. - Total revenues for the three months ended June 30, 2025, were $471 million, a significant decrease from $1,247 million in the same period of 2024 [340]. - The company reported a net income attributable to Jackson Financial Inc. of $179 million for the three months ended June 30, 2025, down from $275 million in 2024 [350]. - Adjusted Operating Earnings for Q2 2025 were $350 million, a decrease of 14.6% compared to $410 million in Q2 2024 [332]. - The company experienced a $1,631 million decrease in total net gains (losses) on derivatives and investments, resulting in total net losses of $3,187 million for the three months ended June 30, 2025 [341]. Business Segments - The company manages its business through three reportable segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks [292]. - Total retail annuity sales for Q2 2025 reached $4,380 million, an increase from $4,229 million in Q2 2024, driven by higher fixed annuity sales [300][301]. - Total institutional product sales for Q2 2025 were $930 million, significantly higher than $612 million in Q2 2024, reflecting an opportunistic approach to the business [300][301]. - Institutional Products segment's pretax adjusted operating earnings decreased by $10 million to $19 million for Q2 2025, down from $29 million in Q2 2024, primarily due to a $9 million decrease in spread income [358]. - Closed Life and Annuity Blocks segment's pretax adjusted operating earnings decreased by $13 million to $22 million for Q2 2025, down from $35 million in Q2 2024 [362]. Assets and Management - Significant assets are held due to funds withheld reinsurance arrangements, including the Athene Reinsurance Transaction, which benefits the related reinsurer [290]. - As of June 30, 2025, total assets under management (AUM) reached $336,725 million, up from $324,718 million on December 31, 2024, reflecting a growth of approximately 3.1% [308]. - Jackson invested assets increased to $51,302 million as of June 30, 2025, compared to $46,143 million at the end of 2024, representing an increase of about 11.7% [308]. - The total policy and contract liabilities reached $299,938 million as of June 30, 2025, compared to $293,402 million on December 31, 2024 [389]. - The total carrying value of commercial mortgage loans was $9,046 million as of June 30, 2025, compared to $8,942 million at December 31, 2024, indicating an increase of about 1.2% [381]. Cash Flow and Capital Management - Free cash flow for the parent company was $290 million in Q2 2025, up from $229 million in Q2 2024, and $503 million for the six months ended June 30, 2025, compared to $249 million in the same period last year [295]. - The company returned $447 million to common shareholders in the first half of 2025, consisting of $117 million in dividends and $330 million in share repurchases, with a target of $700-$800 million for the full year [295]. - The company’s free cash flow is defined as net cash provided by operating activities less preferred stock dividends, which is crucial for capital return to common shareholders [338]. - Cash flows from financing activities increased by $904 million to $968 million for the six months ended June 30, 2025, compared to $64 million for the same period in 2024 [402]. Risk Management and Market Conditions - The company emphasizes disciplined risk management and cost control to maintain profitability [289]. - The company does not directly hedge against market risk benefit liabilities, leading to net income volatility [291]. - Market volatility and economic uncertainty could pressure sales and reduce demand for products, as consumers may consider alternative options [311]. - The company anticipates that rising interest rates may lead to lower hedging costs and reduced levels of hedging going forward, potentially offsetting near-term hedging losses [315]. Regulatory and Tax Considerations - The 2024 Fiduciary Advice Rule may lead to changes in compensation practices and product offerings, potentially impacting annuity sales through distribution partners [322]. - Changes in U.S. tax laws could materially affect the demand for the company's annuities, impacting overall sales [326]. - The effective income tax rate for the three months ended June 30, 2025, was 2%, down from 11% in the same period of 2024, reflecting changes in taxable income relative to pre-tax income [344]. Investment Portfolio - The investment portfolio primarily consists of fixed-income securities, with a focus on maintaining a diversified and largely investment-grade fixed income portfolio [369]. - Available-for-sale debt securities increased to $43,814 million as of June 30, 2025, from $40,289 million at December 31, 2024, representing a growth of approximately 6.3% [374]. - The total fair value of debt securities was $47,128 million as of June 30, 2025, up from $43,335 million at December 31, 2024, indicating an increase of about 8.5% [376]. Shareholder Returns - During Q2 2025, Jackson paid cash dividends totaling $69 million, with $58 million for common shares and $11 million for preferred shares [414]. - Jackson repurchased 3,887,063 shares of common stock for an aggregate purchase price of $330 million in the six months ended June 30, 2025 [415].