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Jackson(JXN) - 2024 Q3 - Earnings Call Transcript
JXNJackson(JXN)2024-11-07 20:19
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Financial Data and Key Metrics - Net income was a loss for Q3 but positive over the first 9 months, with reduced volatility due to the formation of Brook Re [7] - Adjusted operating earnings increased by 11% YoY in Q3, driven by higher fee income and investment spread income [17] - Assets under management grew by 9% YoY to over 250billion,supportedbyfavorableequitymarketsandincreasedsales[7]−After−taxcapitalgenerationreached250 billion, supported by favorable equity markets and increased sales [7] - After-tax capital generation reached 462 million in Q3 and over 1billionforthefirst9monthsof2024[12]−Holdingcompanycashapproached1 billion for the first 9 months of 2024 [12] - Holding company cash approached 650 million, including a 300milliondistributionfromJacksonNationalLife[12]−Capitalreturntoshareholderswas300 million distribution from Jackson National Life [12] - Capital return to shareholders was 167 million in Q3, with a year-to-date total of 483million[13][37]BusinessLinePerformance−Totalretailannuitysalesexceeded483 million [13][37] Business Line Performance - Total retail annuity sales exceeded 5 billion in Q3, up 59% YoY and 25% QoQ, marking the highest and most diversified quarter since becoming independent [8] - RILA segment achieved record sales of 1.6billioninQ3,bringingyear−to−datesalestoover1.6 billion in Q3, bringing year-to-date sales to over 4 billion [9] - Traditional variable annuity sales were 2.6billioninQ3,up62.6 billion in Q3, up 6% YoY, benefiting from favorable equity markets [10] - Fixed and fixed indexed annuity sales reached 1 billion in Q3, driven by targeted distribution partnerships and interest rate monitoring [11] Market Performance - The company expanded its distribution network, making Jackson Market Link Pro II available to approximately 5,000 financial professionals with JPMorgan Wealth Management [9] - The company reengaged in the fixed annuity market, delivering 1billioninspreadsalesinQ3,contributingtodiversificationandgrowth[11]StrategicDirectionandIndustryCompetition−Thecompanyemphasizeditsfocusonproductinnovation,riskmanagement,andstrongdistributionpartnershipstosustaingrowth[7]−TheintroductionofPrincipalGuardGMABtotheEliteAccessvariableannuitysuitehighlightsthecompany′scommitmenttoflexibleprotectionandincome−orientedsolutions[10]−Thecompanyexpectstoremainactiveinthespreadbusinesswhilemaintainingadisciplinedapproachtocapitalmanagement[11]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−ManagementhighlightedthebenefitsofBrookRe,whichhasimprovedcapitalstabilityandreducedvolatilityinGAAPincome[7][22]−Thecompanyisontracktomeetitsannualfinancialtargetsforthefourthconsecutiveyear,withanestimatedRBCratioof5501 billion in spread sales in Q3, contributing to diversification and growth [11] Strategic Direction and Industry Competition - The company emphasized its focus on product innovation, risk management, and strong distribution partnerships to sustain growth [7] - The introduction of Principal Guard GMAB to the Elite Access variable annuity suite highlights the company's commitment to flexible protection and income-oriented solutions [10] - The company expects to remain active in the spread business while maintaining a disciplined approach to capital management [11] Management Commentary on Operating Environment and Future Outlook - Management highlighted the benefits of Brook Re, which has improved capital stability and reduced volatility in GAAP income [7][22] - The company is on track to meet its annual financial targets for the fourth consecutive year, with an estimated RBC ratio of 550% to 570% [15] - Management expressed confidence in the company's ability to continue delivering strong capital generation and shareholder returns [39] Other Important Information - The company announced a common stock dividend of 0.70 per share for Q4 2024 and repurchased 48millionofcommonshares,leavinganoutstandingsharerepurchaseauthorizationofapproximately48 million of common shares, leaving an outstanding share repurchase authorization of approximately 684 million [13] - The company's adjusted book value per diluted share increased by 10% YoY to $149.29, driven by strong operating performance and share repurchases [19] Q&A Session Summary Question: Strong statutory earnings and capital generation - The company expects to continue periodic distributions of capital, with potential increases in capital return for 2025 [47][49] - RILA pricing is done on a stand-alone basis, without considering the diversification benefit from traditional VA business [50] Question: Brooke Re performance and capital movement - Brooke Re has shown growth in equity and is expected to be capital generative over time, with no near-term plans to take capital out [45][53] - The company has a strong buffer in Brooke Re, with significant market events required to impact capital [60][63] Question: Fixed and FIA sales and returns - Fixed annuity sales are driven by favorable demographics, demand for protection, and the integration of annuity solutions into financial planning tools [68][70] - The company is comfortable with the profitability of fixed annuities, which are at the lower end of the return range compared to VAs and RILAs [73] Question: Hedging and market risk benefits - Hedging losses in Q3 were primarily due to interest rate and equity market impacts, with a negative offset from net market risk benefits [24][57] - The company monitors internal risk levels and believes it is well-positioned to handle significant market events [59][65]