Jackson(JXN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Jackson Financial reported net income exceeding $900 million and adjusted operating earnings of$ 1.4 billion for 2024, largely driven by significant growth in the retail annuity segment [9][10] - The company's retail annuity sales reached $18 billion, marking a 39% year-over-year increase [10] - The RBC ratio remained stable at an estimated 572%, comfortably above the target, allowing for significant capital return to shareholders [11][22] Business Line Data and Key Metrics Changes - Retail annuities segment saw a 57% increase in adjusted operating earnings compared to the fourth quarter of the previous year, supported by strong equity markets and positive trends in spread products [45] - RILA (Registered Index-Linked Annuities) sales contributed significantly, with fourth quarter sales of$ 1.5 billion, and total traditional variable annuity sales increased by 11% in 2024 [39][16] - Fixed and fixed index annuity sales reached $397 million in the fourth quarter, indicating healthy volumes in spread product sales [41] Market Data and Key Metrics Changes - The advisory market saw Jackson reach$ 1 billion in advisory sales in 2024, reflecting growing interest in retirement solutions [17] - LIMRA estimates suggest that 2025 industry sales will remain strong, with traditional variable annuity sales holding steady and RILA sales projected to slightly exceed 2024 levels [18] Company Strategy and Development Direction - Jackson Financial aims to enhance product innovation, distribution expansion, and service excellence as key differentiators in the market [15] - The company plans to increase total capital return targets for 2025 to $700 to$ 800 million, representing a growth of over 10% at the low end and more than 25% at the high end compared to 2024 [22] - The focus remains on maintaining a balanced long-term view of capital management while supporting new business and returning capital to shareholders [13][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to build on the momentum from 2024, emphasizing a commitment to serving financial professionals and their clients [61] - The outlook for 2025 includes expectations for continued strong capital generation and free cash flow, with a target of exceeding $1 billion in free capital generation [53][55] Other Important Information - The company completed its annual actuarial assumptions review, which resulted in an unfavorable earnings impact primarily due to higher mortality rates [30][76] - Jackson's adjusted book value attributable to common shareholders increased by 10% to$ 11.2 billion, driven by strong operating performance and share repurchase activity [27] Q&A Session Summary Question: Can you provide more details on Brook Re's capital increase? - Management explained that the $200 million increase in Brook Re's capital was influenced by various factors, including the stability of the balance sheet and the performance of the hedging program [65][72] Question: What led to the decision to keep the existing lapse assumption? - Management clarified that the decision was based on a comprehensive review of historical data and current market conditions, indicating that no changes were deemed necessary at this time [81][90] Question: What is the long-term outlook for PPM? - Management views PPM as a core part of the business, with ongoing efforts to increase distribution to institutional investors and enhance capabilities [98][103] Question: How does the company plan to manage excess capital? - Management emphasized a focus on earning capital, paying it up to the holding company, and returning it to shareholders, while maintaining a buffer above regulatory requirements [92][93]