Jackson Financial (NYSE:JXN) Q3 2025 Earnings Call November 05, 2025 11:00 AM ET Speaker3Hello everyone, and welcome to the Jackson Financial 3Q 2025 earnings call. My name is Charlie, and I'll be coordinating the call today. You'll have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypads. I'll now hand the call over to our host, Liz Werner, Head of Investor Relations, to begin. Liz, please go ahe ...

Summary of F&G Conference Call Company Overview - **Company**: F&G (Fidelity & Guaranty Life) - **Industry**: Life Insurance and Annuities Key Points and Arguments Company Positioning and Strategy - F&G has undergone significant changes, including capital raising and a new reinsurance partnership, positioning itself for a more capital-light strategy with a focus on distribution rather than being a balance sheet-heavy company [3][4] - The company has committed $1 billion in capital to pursue this strategy, indicating a shift towards being a distributor for other companies' balance sheets [3] Retail Annuity Sales Growth - The industry has seen a substantial increase in annual annuity sales, from $250 billion to an expected $450 billion this year, attributed to demographic trends and increased acceptance of annuities by financial advisors [5][6] - The penetration rate of fixed annuities remains low, suggesting significant growth potential in this area [5] Competitive Environment - The annuity market has become increasingly competitive, particularly in the Multi-Year Guarantee Annuities (MYGA) space, where sales volume fluctuated significantly [8][9] - F&G maintains a stable business in Fixed Indexed Annuities (FIA), which is considered foundational for the company [9] Expense Management - F&G has taken actions to manage expenses due to spread pressure, aiming to improve the expense ratio by about 10 basis points [4][28] - The company has grown rapidly, leading to a reassessment of its project load and expense base [4] Pension Risk Transfer (PRT) Market - F&G focuses on the $100 million to $1 billion range in the PRT market, with a consistent pipeline of deals and a target of $1.5 to $2.5 billion in annual transactions [21][22] Return on Assets Target - F&G has set a five-year target for return on assets (ROA) of 133 to 155 basis points, with current performance at 129 basis points, indicating progress towards this goal [24][25][27] Reinsurance Strategy - The reinsurance strategy allows F&G to reduce capital requirements significantly, enhancing return on capital and positioning the company as a distributor rather than a balance sheet player [36][37] - The partnership with Blackstone is highlighted as a key component of this strategy, providing access to various asset classes [36][50] Life Insurance Business Performance - F&G's life insurance segment is performing well, with a focus on middle-market and cultural markets, contributing significantly to sales and profitability [57][58] - The company has a strong market share in Indexed Universal Life Insurance, ranking number six in sales [58] Investment Strategy and Market Conditions - The company is cautious about credit spreads and is not willing to stretch for returns, focusing on maintaining a stable investment portfolio [49][50] - F&G has a diversified asset allocation strategy, reducing exposure to floating rate assets as interest rates fluctuate [51] Regulatory Environment - The new NAIC rule on asset adequacy testing for reinsurance is not expected to have a significant impact on F&G, as the company is already compliant with rigorous testing standards [52][53] Future Outlook - F&G is optimistic about its growth trajectory, particularly in the annuity and life insurance markets, and is focused on leveraging its distribution strategy for future success [38][44] Additional Important Insights - The company is investing in technology and operational improvements to enhance productivity and scalability [34][32] - F&G's unique position in the market allows it to capitalize on opportunities in both the annuity and life insurance sectors, with a strong emphasis on independent distribution [44][58]

Financial Performance - Jackson Financial Inc reported a GAAP net loss attributable to common shareholders of $35 million, or $048 per share[8, 9, 10, 11] - Adjusted Operating Earnings were $376 million, or $510 per common share[12, 13] - Free cash flow was $213 million[13] - The company returned $231 million of capital to common shareholders through dividends and share repurchases[13, 17] Capital and Liquidity - Jackson National Life Insurance Company (JNLIC) estimated risk-based capital (RBC) ratio was 585% as of the end of 1Q25[13, 17, 53] - Holding company cash and highly liquid securities exceeded $600 million as of the end of 1Q25[17, 53] - JNLIC generated $441 million of statutory capital in 1Q25[45, 53] Sales and Diversification - Retail annuity sales increased by 9% compared to the prior year's first quarter[14, 32] - Retail sales reached $4 billion in 1Q25[30] - Fixed and fixed index annuity sales were up 74% from 1Q24[32] Investment Portfolio - The company's U S GAAP investment portfolio totaled $48 billion[60] - The statutory investment portfolio totaled $47 billion[65] - Exposure to below investment grade securities is 7% of the total U S GAAP investment portfolio and 1% of the statutory investment portfolio[63, 68]