What changed in this filing

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Item 1. Financial Statements

2022-08-10 compared with 2022-05-11 · 588 added, 239 removed, 1717 unchanged (33% of the section changed)

3 unchanged sentences

(in millions, except per share data)

March 31, December 31,

Debt Securities, available-for-sale, net of allowance for credit losses of $ 32 and $ 9 at March 31, 2022 and December 31, 2021, respectively (amortized cost:

June 30, December 31,

Debt Securities, available-for-sale, net of allowance for credit losses of $ 43 and $ 9 at June 30, 2022 and December 31, 2021, respectively (amortized cost:

2022 $ 48,223 ;

4 unchanged sentences

Equity securities, at fair value 260 279

Mortgage loans, net of allowance for credit losses of $ 84 and $ 94 at March 31, 2022 and December 31, 2021, respectively

Mortgage loans, net of allowance for credit losses of $ 80 and $ 94 at June 30, 2022 and December 31, 2021, respectively

11,574 11,482

Mortgage loans, at fair value under fair value option 357 —

Policy loans (including $ 3,472 and $ 3,467 at fair value under the fair value option at March 31, 2022 and December 31, 2021, respectively)

Policy loans (including $ 3,485 and $ 3,467 at fair value under the fair value option at June 30, 2022 and December 31, 2021, respectively)

Freestanding derivative instruments 1,243 1,417

4 unchanged sentences

Deferred acquisition costs 13,115 14,249

Reinsurance recoverable, net of allowance for credit losses of $ 12 and $ 12 at March 31, 2022 and December 31, 2021, respectively

Reinsurance recoverable, net of allowance for credit losses of $ 11 and $ 12 at June 30, 2022 and December 31, 2021, respectively

31,667 33,126

6 unchanged sentences

Other contract holder funds 59,576 59,689

Funds withheld payable under reinsurance treaties (including $ 3,640 and $ 3,639 at fair value under the fair value option at March 31, 2022 and December 31, 2021, respectively)

Funds withheld payable under reinsurance treaties (including $ 3,649 and $ 3,639 at fair value under the fair value option at June 30, 2022 and December 31, 2021, respectively)

25,506 29,007

7 unchanged sentences

Commitments, Contingencies, and Guarantees (Note 14)

Common stock, (i) Class A Common Stock 900,000,000 shares authorized, $ 0.01 par value per share and 85,263,608 and 88,046,833 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively and (ii) Class B Common Stock 100,000,000 shares authorized, $ 0.01 par value per share and nil and 638,861 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (See Note 17)

Common stock, (i) Class A Common Stock 900,000,000 shares authorized, $ 0.01 par value per share and 84,864,727 and 88,046,833 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively and (ii) No authorized Class B Common Stock at June 30, 2022 and 100,000,000 shares authorized, $ 0.01 par value per share and 638,861 shares issued and outstanding at December 31, 2021 (See Note 18)

Additional paid-in capital 6,020 6,051

Treasury stock, at cost;

9,203,441 and 5,778,649 shares at March 31, 2022 and December 31, 2021, respectively.

9,608,399 and 5,778,649 shares at June 30, 2022 and December 31, 2021, respectively

( 371 ) ( 211 )

Accumulated other comprehensive income (loss), net of tax expense (benefit) of $( 547 ) in 2022 and $ 194 in 2021

Accumulated other comprehensive income (loss), net of tax expense (benefit) of $( 907 ) and $ 194 at June 30, 2022 and December 31, 2021, respectively

( 3,722 ) 1,744

8 unchanged sentences

(Unaudited, in millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Fee income $ 1,852 $ 1,896 $ 3,774 $ 3,712

24 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net income (loss) $ 2,934 $ ( 484 ) $ 4,990 $ 2,516

1 unchanged sentence

Securities with no credit impairment net of tax expense (benefit) of:

$( 745 ) and $ 656 , for the three months ended March 31, 2022 and 2021, respectively

$( 363 ) and $ 260 , for the three months ended June 30, 2022 and 2021, respectively, and $( 1,108 ) and $( 397 ), for the six months ended June 30, 2022 and 2021, respectively

( 2,791 ) 948 ( 5,488 ) ( 1,432 )

Securities with credit impairment, net of tax expense (benefit) of:

$ 4 and nil for the three months ended March 31, 2022 and 2021, respectively

$ 2 and nil for the three months ended June 30, 2022 and 2021, respectively, and $ 6 and $ 1 , for the six months ended June 30, 2022 and 2021, respectively

Total other comprehensive income (loss) ( 2,783 ) 948 ( 5,466 ) ( 1,430 )

10 unchanged sentences

Stock Capital at Cost In Trust Reserve Income Earnings Equity Interests Equity

Balances as of December 31, 2021 $ 1 $ 6,051 $ ( 211 ) $ — $ — $ 1,744 $ 2,809 $ 10,394 $ 680 $ 11,074

Balances as of March 31, 2022 $ 1 $ 6,081 $ ( 351 ) $ — $ — $ ( 939 ) $ 4,782 $ 9,574 $ 715 $ 10,289

Net income (loss) — — — — — — 2,903 2,903 31 2,934

4 unchanged sentences

Share based compensation — ( 61 ) 80 — — — — 19 — 19

Balances as of June 30, 2022 $ 1 $ 6,020 $ ( 371 ) $ — $ — $ ( 3,722 ) $ 7,635 $ 9,563 $ 747 $ 10,310

Additional Treasury Shares Equity Other Total Non-

Common Paid-In Stock Held Compensation Comprehensive Retained Shareholders' Controlling Total

Stock Capital at Cost In Trust Reserve Income Earnings Equity Interests Equity

Balances as of March 31, 2021 $ 1 $ 5,927 $ — $ ( 4 ) $ 10 $ 1,443 $ 2,608 $ 9,985 $ 585 $ 10,570

Net income (loss) — — — — — — ( 540 ) ( 540 ) 56 ( 484 )

Change in unrealized investment gains and losses, net of tax — — — — — 948 — 948 — 948

Change in equity of noncontrolling interests — — — — — — — — ( 42 ) ( 42 )

Reserve for equity compensation plans — — — — $ ( 1 ) — — ( 1 ) — ( 1 )

Balances as of June 30, 2021 $ 1 $ 5,927 $ — $ ( 4 ) $ 9 $ 2,391 $ 2,068 $ 10,392 $ 599 $ 10,991

Additional Treasury Shares Equity Other Total Non-

5 unchanged sentences

Change in equity of noncontrolling interests — — — — — — — — 5 5

Treasury stock acquired in connection with share repurchases — — ( 240 ) — — — — ( 240 ) — ( 240 )

Dividends on common stock — — — — — — ( 102 ) ( 102 ) — ( 102 )

Share based compensation — ( 31 ) 80 — — — — 49 — 49

Balances as of June 30, 2022 $ 1 $ 6,020 $ ( 371 ) $ — $ — $ ( 3,722 ) $ 7,635 $ 9,563 $ 747 $ 10,310

Additional Treasury Shares Equity Other Total Non-

Common Paid-In Stock Held Compensation Comprehensive Retained Shareholders' Controlling Total

Stock Capital at Cost In Trust Reserve Income Earnings Equity Interests Equity

Balances as of December 31, 2020 $ 1 $ 5,927 $ — $ ( 4 ) $ 8 $ 3,821 $ ( 324 ) $ 9,429 $ 494 $ 9,923

Net income (loss) — — — — — — 2,392 2,392 124 2,516

Change in unrealized investment gains and losses, net of tax — — — — — ( 1,430 ) — ( 1,430 ) — ( 1,430 )

Change in equity of noncontrolling interests — — — — — — — — ( 19 ) ( 19 )

Reserve for equity compensation plans — — — — 1 — — 1 — 1

Balances as of March 31, 2021 $ 1 $ 5,927 $ — $ ( 4 ) $ 10 $ 1,443 $ 2,608 $ 9,985 $ 585 $ 10,570

Balances as of June 30, 2021 $ 1 $ 5,927 $ — $ ( 4 ) $ 9 $ 2,391 $ 2,068 $ 10,392 $ 599 $ 10,991

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

30 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities:

6 unchanged sentences

Net proceeds from (payments on) debt ( 783 ) ( 4 )

Net proceeds from issuance of senior notes 750 —

Debt issuance costs ( 7 ) —

Dividends on common stock ( 102 ) —

Purchase of treasury stock ( 240 ) —

Other financing activities 7 —

Net cash provided by (used in) financing activities ( 2,076 ) ( 3,211 )

3 unchanged sentences

Supplemental cash flow information

Income taxes paid (received) $ ( 2 ) $ 34

Interest paid $ 40 $ 10

2 unchanged sentences

Other invested assets acquired from stock splits and stock distributions $ 42 $ 99

Reconciliation to Condensed Consolidated Balance Sheets

Reconciliation to Statement of Financial Position

Cash and cash equivalents $ 5,258 $ 1,536

21 unchanged sentences

Squire Reassurance Company II, Inc.

(“Squire Re II”);

VFL International Life Company SPC, LTD and Jackson National Life (Bermuda) LTD;

(“Squire Re II”) and VFL International Life Company SPC, LTD;

• Broker-dealer, investment management and investment advisor subsidiaries:

4 unchanged sentences

The Condensed Consolidated Financial Statements also include other insignificant partnerships, limited liability companies (“LLCs”) and other variable interest entities (“VIEs”) in which the Company is deemed the primary beneficiary.

On August 6, 2021, the registration statement on Form 10 of the Company's Class A Common Stock, par value $ 0.01 per share, filed with the U.S.

On August 6, 2021, the registration statement on Form 10 of the Company's Class A Common Stock filed with the U.S.

Securities and Exchange Commission (the "SEC"), became effective under the Securities Exchange Act of 1934, as amended.

We refer to that effective Form 10 registration as the "Form 10." The Demerger transaction described in the Form 10 was consummated on September 13, 2021.

As of March 31, 2022, Prudential retained a 19.2 % remaining interest in the Company, after the Company repurchased a total of 2,242,516 shares of the Company’s Class A Common Stock subsequent to the Demerger, as further discussed in Note 17.

As of June 30, 2022, Prudential retained a 14.3 % remaining interest in the Company.

Prudential sold additional shares of the Company’s Class A Common Stock during the third quarter of 2022 and as of August 5, 2022 Prudential retained a 9.0 % remaining interest in the Company.

On September 9, 2021, the Company effected a 104,960.3836276 -for-1 stock split of its Class A Common Stock and Class B Common Stock by way of a reclassification of its Class A Common Stock and Class B Common Stock (the “stock split”).

1 unchanged sentence

All share and earnings per share information presented herein have been retroactively adjusted to reflect the stock split.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 1.

Business and Basis of Presentation

On June 18, 2020, the Company’s subsidiary, Jackson, announced that it had entered into a funds withheld coinsurance agreement with Athene Life Re Ltd.

(“Athene”) effective June 1, 2020 to reinsure on 100 % quota share basis, a block of Jackson’s in-force fixed and fixed-index annuity product liabilities in exchange for a $ 1.2 billion ceding commission.

In addition, we entered into an investment agreement with Athene Life Re Ltd., pursuant to which Athene invested $ 500 million of capital in return for a 9.9 % voting interest corresponding to a 11.1 % economic interest in the Company.

1 unchanged sentence

In August 2020, the Company made a $ 500 million capital contribution to its subsidiary, Jackson.

As of March 31, 2022, Athene retained a 8.9 % voting interest and 8.9 % economic interest, after the Company repurchased a total of 1,884,767 shares of Class A Common Stock and a total of 1,364,484 shares of its Class B Common Stock automatically converted to Class A Common Stock on a one-for-one basis as further discussed in Note 17.

As of June 30, 2022, Athene retained a 8.9 % voting interest and 8.9 % economic interest.

We continue to closely monitor developments related to the COVID-19 pandemic.

The COVID-19 pandemic has caused significant economic and financial turmoil both in the United States and around the world.

These conditions could continue and could worsen in the future.

While there has been a gradual resumption of activity, COVID-19 and its variants continue to affect activity, and those effects could continue and could worsen in the future.

The extent to which the COVID-19 pandemic impacts our business, results of operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be predicted.

1 unchanged sentence

The Company has had employees, as needed or voluntarily, in our offices during this time, as permitted by local and state restrictions.

During 2021, the Company rolled out a broader “return to office plan” for all employees, with many associates in 2022 now working on an “office-centric” hybrid schedule between in-office and remote working arrangements.

The Company rolled out a broader “return to office plan” for all employees, with many associates in 2022 now working on an “office-centric” hybrid schedule between in-office and remote working arrangements.

Basis of Presentation

3 unchanged sentences

These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 7, 2022, (the "2021 Annual Report").

The condensed consolidated financial information as of December 31, 2021 included herein has been derived from the audited Consolidated Financial Statements in the 2021 Annual Report.

The condensed consolidated financial information as of December 31, 2021 included herein has been derived from the audited Consolidated Financial Statements in the 2021 Annual Report, although certain amounts have been reclassified to conform to the 2022 presentation.

Certain accounting policies, which significantly affect the determination of financial condition, results of operations and cash flows, are summarized in the Company’s Notes to Consolidated Financial Statements for the year ended December 31, 2021 in the Company’s 2021 Annual Report.

In the opinion of management, these financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results.

Operating results for the three months ended March 31, 2022, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022.

Operating results for the three and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022.

All material intercompany accounts and transactions have been eliminated in consolidation.

Certain amounts in the 2021 Condensed Consolidated Financial Statements and Notes have been reclassified to conform to the 2022 presentation.

Use of Estimates

4 unchanged sentences

• Assumptions impacting estimated future gross profits, including policyholder behavior, mortality rates, expenses, projected hedging costs, investment returns and policy crediting rates, used in the calculation of amortization of deferred acquisition costs;

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 1.

Business and Basis of Presentation

• Assumptions used in calculating policy reserves and liabilities, including policyholder behavior, mortality rates, expenses, investment returns and policy crediting rates;

29 unchanged sentences

These liabilities will be discounted using an upper-medium grade fixed income instrument yield which will be updated quarterly, with related changes in the liability recognized in OCI;

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 2.

New Accounting Standards

Enhanced disclosures:

enhanced disclosures, including disaggregated roll-forwards of certain balance sheet accounts that provide information about expected cash flows, estimates, and assumptions, as well as information about significant inputs, judgments, assumptions and methods used in measurement, will be required.

enhanced disclosures, including disaggregated roll-forwards of certain balance sheet accounts that provide information about actual and expected cash flows, as well as information about significant inputs, judgments, assumptions and methods used in measurement, will be required.

The enhanced disclosures are intended to improve the ability of users of the financial statements to evaluate the timing, amount, and uncertainty of cash flows arising from long-duration contracts.

1 unchanged sentence

Under the modified retrospective approach, the Company will apply the guidance to contracts in force on the transition date on the basis of their existing carrying value, using updated future cash flow assumptions, and eliminate certain related amounts in accumulated other comprehensive income (loss) (“AOCI”).

Under the full retrospective transition approach, the Company will apply the guidance as of the earliest period presented, using actual historical experience information as of contract inception, as if the principle had always been applied.

In accordance with its established governance framework, the Company continues to progress with implementation efforts including determining significant accounting policy decisions, modifying actuarial valuation models, revising reporting processes, and updating internal controls over financial reporting.

Given the nature and extent of the required changes, the adoption of this standard is expected to have a significant impact on the Company’s consolidated financial statements and disclosures.

The impacts to the financial statements at adoption are highly sensitive to equity markets and interest rates, which can be volatile and unpredictable.

Based upon the elected transition methods, the Company currently estimates the adoption of the standard will result in a decrease of between approximately $ 2 billion and $ 4 billion in the Company’s total equity at the transition date of January 1, 2021.

This estimate is based on the economic conditions experienced at the transition date.

The most significant drivers of the transition adjustment are expected to be:

• changes to the measurement of certain benefits currently accounted for as insurance benefits (e.g., guaranteed minimum death benefits on variable annuities) which will be classified as market risk benefits upon adoption and remeasured at fair value, the impact of which is highly dependent on market conditions, including interest rates;

• changes to the discount rate used to measure liabilities for future policyholder benefits which will be remeasured using current upper-medium grade fixed-income instrument yields, which are generally considered to be those on single-A rated public corporate debt;

• changes to the discount rate used to measure liabilities for future policyholder benefits that will be remeasured using current upper-medium grade fixed-income instrument yields, which are generally considered to be those on single-A rated public corporate debt;

• the removal of certain balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments.

In March 2022, the FASB issued ASU 2022-01, “Derivatives and Hedging (Topic 815):

5 unchanged sentences

Early adoption is permitted.

The Company is evaluating the impact of the new guidance and does not plan to early adopt.

The Company does not anticipate any impact when adopting the new guidance and does not plan to early adopt.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 3.

Segment Information

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326):

6 unchanged sentences

Early adoption is permitted.

The Company is evaluating the impact of the new guidance and does not plan to early adopt.

The Company does not anticipate a significant impact when adopting the new guidance and does not plan to early adopt.

Segment Information

18 unchanged sentences

The financial results of the Company’s institutional products business are primarily dependent on the Company’s ability to earn spreads on general account assets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 3.

Segment Information

Closed Life and Annuity Blocks

14 unchanged sentences

Guaranteed Benefits and Hedging Results:

the fees attributed to guaranteed benefits, the associated movements in optional guaranteed benefit liabilities and related claims and benefit payments are excluded from Adjusted Operating Earnings, as we believe this approach appropriately removes the impact to both revenue and related expenses associated with the guaranteed benefit features that are offered for certain of our variable annuities and fixed index annuities and gives investors a better picture of what is driving our underlying performance.

the fees attributed to guaranteed benefits, the associated movements in optional guaranteed benefit liabilities and related claims and benefit payments are excluded from pretax adjusted operating earnings, as we believe this approach appropriately removes the impact to both revenue and related expenses associated with the guaranteed benefit features that are offered for certain of our variable annuities and fixed index annuities and gives investors a better picture of what is driving our underlying performance.

This adjustment includes the following components:

1 unchanged sentence

fees earned in conjunction with guaranteed benefit features offered for certain of our variable annuities and fixed index annuities are set at a level intended to mitigate the cost of hedging and funding the liabilities associated with such guaranteed benefit features.

The full amount of the fees attributable to guaranteed benefit features have been excluded from Adjusted Operating Earnings as the related net movements in freestanding derivatives and net reserve and embedded derivative movements, as described below, have been excluded from Adjusted Operating Earnings.

The full amount of the fees attributable to guaranteed benefit features have been excluded from pretax adjusted operating earnings as the related net movements in freestanding derivatives and net reserve and embedded derivative movements, as described below, have been excluded from pretax adjusted operating earnings.

This adjusted presentation of our earnings is intended to directly align revenue and related expenses associated with the guaranteed benefit features;

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 3.

Segment Information

• Net Movement in Freestanding Derivatives, except earned income (periodic settlements and changes in settlement accruals) on derivatives that are hedges of investments, but do not qualify for hedge accounting treatment :

changes in the fair value of our freestanding derivatives used to manage the risk associated with our life and annuity reserves, including those arising from the guaranteed benefit features offered for certain of our variable annuities and fixed index annuities.

Net movements in freestanding derivatives have been excluded from Adjusted Operating Earnings as the market value of these derivatives may vary significantly from period to period as a result of near-term market conditions and therefore are not directly comparable or reflective of the underlying performance of our business;

Net movements in freestanding derivatives have been excluded from pretax adjusted operating earnings as the market value of these derivatives may vary significantly from period to period as a result of near-term market conditions and therefore are not directly comparable or reflective of the underlying performance of our business;

• Net Reserve and Embedded Derivative Movements:

changes in the valuation of certain life and annuity reserves, a portion of which are accounted for as embedded derivative instruments, and which are primarily composed of variable and fixed index annuity reserves, including those arising from the guaranteed benefit features offered for certain of our variable annuities.

Net reserve and embedded derivative movements have been excluded from Adjusted Operating Earnings as the carrying values of these derivatives may vary significantly from period to period as the result of near-term market conditions and policyholder behavior-related inputs and therefore are not directly comparable or reflective of the underlying performance of our business.

Movements in reserves attributable to the current period claims and benefit payments in excess of a customer’s account value on these policies are also excluded from Adjusted Operating Earnings as these benefit payments are affected by near-term market conditions and policyholder behavior-related inputs and therefore may vary significantly from period to period;

Net reserve and embedded derivative movements have been excluded from pretax adjusted operating earnings as the carrying values of these derivatives may vary significantly from period to period as the result of near-term market conditions and policyholder behavior-related inputs and therefore are not directly comparable or reflective of the underlying performance of our business.

Movements in reserves attributable to the current period claims and benefit payments in excess of a customer’s account value on these policies are also excluded from pretax adjusted operating earnings as these benefit payments are affected by near-term market conditions and policyholder behavior-related inputs and therefore may vary significantly from period to period;

• DAC and Deferred Sales Inducements ("DSI") Impact:

amortization of deferred acquisition costs and deferred sales inducements associated with the items excluded from Adjusted Operating Earnings;

amortization of deferred acquisition costs and deferred sales inducements associated with the items excluded from pretax adjusted operating earnings;

• Assumption changes :

10 unchanged sentences

Operating income taxes are calculated using the prevailing corporate federal income tax rate of 21% while taking into account any items recognized differently in our financial statements and federal income tax returns, including the dividends received deduction and other tax credits.

For interim reporting periods, the company uses an estimated annual effective tax rate in computing its tax provision including consideration of discrete items.

For interim reporting periods, the Company uses an estimated annual effective tax rate ("ETR") in computing its tax provision including consideration of discrete items.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 3.

Segment Information

Set forth in the tables below is certain information with respect to the Company’s segments, as described above (in millions):

Three Months Ended March 31, 2022 Retail Annuities Closed Life

Blocks Institutional

Products Corporate and

Three Months Ended June 30, 2022 Retail Annuities Institutional

Products Closed Life

Blocks Corporate and

Operating Revenues

2 unchanged sentences

Net investment income 124 72 185 35 416

Income on operating derivatives 11 15 ( 1 ) 10 35

Income (loss) on operating derivatives 7 ( 4 ) 13 8 24

Other income 11 — 9 1 21

11 unchanged sentences

Pretax Adjusted Operating Earnings $ 218 $ 19 $ 6 $ — $ 243

Three Months Ended March 31, 2021 Retail Annuities Closed Life

Blocks Institutional

Products Corporate and

Three Months Ended June 30, 2021 Retail Annuities Institutional

Products Closed Life

Blocks Corporate and

Operating Revenues

2 unchanged sentences

Net investment income 144 57 205 39 445

Income on operating derivatives 14 20 — 4 38

Income (loss) on operating derivatives 15 — 17 8 40

Other income 11 — 12 7 30

11 unchanged sentences

Pretax Adjusted Operating Earnings $ 683 $ 6 $ 56 $ 16 $ 761

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 3.

Segment Information

Six Months Ended June 30, 2022 Retail Annuities Institutional

Products Closed Life

Blocks Corporate and

Operating Revenues

Fee income $ 1,965 $ — $ 240 $ 35 $ 2,240

Premiums — — 72 — 72

Net investment income 242 136 381 88 847

Income (loss) on operating derivatives 18 ( 5 ) 28 18 59

Other income 22 — 17 2 41

Total Operating Revenues 2,247 131 738 143 3,259

Operating Benefits and Expenses

Death, other policy benefits and change in policy

reserves, net of deferrals 25 — 459 — 484

Interest credited on other contract holder funds, net

139 86 198 — 423

Interest expense 11 — — 33 44

Operating costs and other expenses, net of deferrals 945 3 79 96 1,123

Deferred acquisition and sales inducements

amortization 503 — 4 17 524

Total Operating Benefits and Expenses 1,623 89 740 146 2,598

Pretax Adjusted Operating Earnings $ 624 $ 42 $ ( 2 ) $ ( 3 ) $ 661

Six Months Ended June 30, 2021 Retail Annuities Institutional

Products Closed Life

Blocks Corporate and

Operating Revenues

Fee income $ 2,046 $ — $ 248 $ 39 $ 2,333

Premiums — — 71 — 71

Net investment income 349 120 461 54 984

Income (loss) on operating derivatives 29 — 38 12 79

Other income 23 — 22 8 53

Total Operating Revenues 2,447 120 840 113 3,520

Operating Benefits and Expenses

Death, other policy benefits and change in policy

reserves, net of deferrals 17 — 413 — 430

Interest credited on other contract holder funds, net

of deferrals 133 100 207 — 440

Interest expense 11 2 — — 13

Operating costs and other expenses, net of deferrals 961 2 78 107 1,148

Deferred acquisition and sales inducements

amortization 73 — 7 15 95

Total Operating Benefits and Expenses 1,195 104 705 122 2,126

Pretax Adjusted Operating Earnings $ 1,252 $ 16 $ 135 $ ( 9 ) $ 1,394

Intersegment eliminations in the above tables are included in the Corporate and Other segment.

These include the elimination of investment income between Retail Annuities and the Corporate and Other segments, as well as the elimination from fee income and investment income of investment fees paid by Jackson to its affiliate PPM, which was $ 14 million and $ 15 million for the three months ended March 31, 2022 and 2021 , respectively .

These include the elimination of investment income, net of deferred acquisition costs amortization, between Retail Annuities and the Corporate and Other segments, as well as the elimination from fee income and investment income of investment fees paid by Jackson to its affiliate PPM, which were $ 15 million for both the three months ended June 30, 2022 and 2021 , respectively, and $ 29 million and $ 30 million for the six months ended June 30, 2022 and 2021, respectively .

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 3.

Segment Information

The following table summarizes the reconciling items from the non-GAAP measure of operating revenues to the GAAP measure of total revenues attributable to the Company (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Total operating revenues $ 1,581 $ 1,741 $ 3,259 $ 3,520

9 unchanged sentences

The following table summarizes the reconciling items from the non-GAAP measure of operating benefits and expenses to the GAAP measure of total benefits and expenses attributable to the Company (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Total operating benefits and expenses $ 1,338 $ 980 $ 2,598 $ 2,126

5 unchanged sentences

The following table summarizes the reconciling items, net of deferred acquisition costs and deferred sales inducements, from the non-GAAP measure of pretax adjusted operating earnings to the GAAP measure of net income attributable to the Company (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Pretax adjusted operating earnings $ 243 $ 761 $ 661 $ 1,394

11 unchanged sentences

Pretax income (loss) attributable to Jackson Financial Inc.

3,620 ( 594 ) 5,975 2,923

Income tax expense (benefit) 717 ( 54 ) 1,047 531

1 unchanged sentence

$ 2,903 $ ( 540 ) $ 4,928 $ 2,392

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Investments are comprised primarily of fixed-income securities and loans, primarily publicly-traded corporate and government bonds, asset-backed securities and mortgage loans.

3 unchanged sentences

Debt Securities

The following table sets forth the composition of the fair value of debt securities at March 31, 2022 and December 31, 2021, classified by rating categories as assigned by nationally recognized statistical rating organizations (“NRSRO”), the National Association of Insurance Commissioners (“NAIC”), or if not rated by such organizations, the Company’s investment advisors.

The following table sets forth the composition of the fair value of debt securities at June 30, 2022 and December 31, 2021, classified by rating categories as assigned by nationally recognized statistical rating organizations (“NRSRO”), the National Association of Insurance Commissioners (“NAIC”), or if not rated by such organizations, the Company’s investment advisors.

The Company uses the second lowest rating by an NRSRO when NRSRO ratings are not equivalent and, for purposes of the table, if not otherwise rated by a NRSRO, the NAIC rating of a security is converted to an equivalent NRSRO-style rating.

At March 31, 2022 and December 31, 2021, the carrying value of investments rated by the Company’s consolidated investment advisor totaled $ 111 million and $ 13 million, respectively.

At June 30, 2022 and December 31, 2021, the carrying value of investments rated by the Company’s consolidated investment advisor totaled $ 76 million and $ 13 million, respectively.

Percent of Total Debt

Securities Carrying Value

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Investment Rating

7 unchanged sentences

100.0 % 100.0 %

At March 31, 2022, based on ratings by NRSROs, of the total carrying value of debt securities in an unrealized loss position, 74 % were investment grade, 4 % were below investment grade and 22 % were not rated.

At June 30, 2022, based on ratings by NRSROs, of the total carrying value of debt securities in an unrealized loss position, 76 % were investment grade, 3 % were below investment grade and 21 % were not rated.

Unrealized losses on debt securities that were below investment grade or not rated were approximately 20 % of the aggregate gross unrealized losses on available-for-sale debt securities.

2 unchanged sentences

Corporate securities in an unrealized loss position were diversified across industries.

As of March 31, 2022, the industries accounting for the largest percentage of unrealized losses included healthcare ( 12 % of corporate gross unrealized losses) and financial services ( 11 %).

The largest unrealized loss related to a single corporate obligor was $ 40 million at March 31, 2022.

As of June 30, 2022, the industries accounting for the largest percentage of unrealized losses included utilities ( 13 % of corporate gross unrealized losses) and energy ( 10 %).

The largest unrealized loss related to a single corporate obligor was $ 52 million at June 30, 2022.

As of December 31, 2021, the industries accounting for the largest percentage of unrealized losses included financial services ( 16 % of corporate gross unrealized losses) and consumer goods ( 15 %).

The largest unrealized loss related to a single corporate obligor was $ 16 million at December 31, 2021.

At March 31, 2022 and December 31, 2021, the amortized cost, gross unrealized gains and losses, fair value, and ACL of debt securities, including trading securities and securities carried at fair value under the fair value option, were as follows (in millions):

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

At June 30, 2022 and December 31, 2021, the amortized cost, allowance for credit loss ("ACL"), gross unrealized gains and losses, and fair value of debt securities, including trading securities and securities carried at fair value under the fair value option, were as follows (in millions):

Allowance Gross Gross

Amortized for Unrealized Unrealized Fair

March 31, 2022 Cost (1)

June 30, 2022 Cost (1)

Credit Loss Gains Losses Value

20 unchanged sentences

(1) Amortized cost, apart from the carrying value for securities carried at fair value under the fair value option and trading securities.

The amortized cost, allowance for credit losses, gross unrealized gains and losses, and fair value of debt securities at March 31, 2022, by contractual maturity, are shown below (in millions).

The amortized cost, ACL, gross unrealized gains and losses, and fair value of debt securities at June 30, 2022, by contractual maturity, are shown below (in millions).

Actual maturities may differ from contractual maturities where securities can be called or prepaid with or without early redemption penalties.

12 unchanged sentences

(1) Amortized cost, apart from the carrying value for securities carried at fair value under the fair value option and trading securities.

Securities with a carrying value of $ 106 million and $ 117 million at March 31, 2022 and December 31, 2021, respectively, were on deposit with regulatory authorities, as required by law in various states in which business is conducted.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Securities with a carrying value of $ 98 million and $ 117 million at June 30, 2022 and December 31, 2021, respectively, were on deposit with regulatory authorities, as required by law in various states in which business is conducted.

Residential mortgage-backed securities (“RMBS”) include certain RMBS that are collateralized by residential mortgage loans and are neither explicitly nor implicitly guaranteed by U.S.

3 unchanged sentences

Amortized for Unrealized Unrealized Fair

March 31, 2022 Cost (1)

June 30, 2022 Cost (1)

Credit Loss Gains Losses Value

16 unchanged sentences

• Subprime loan-backed securities are collateralized by mortgage loans made to borrowers that have a FICO score of 660 or lower.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

The following table summarizes the number of securities, fair value and the gross unrealized losses of debt securities, aggregated by investment category and length of time that individual debt securities have been in a continuous loss position (dollars in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Less than 12 months Less than 12 months

35 unchanged sentences

(1) Certain corporate securities contain multiple lots and fit the criteria of both aging groups.

Debt securities in an unrealized loss position as of March 31, 2022 did not require an impairment recognized in earnings as the Company did not intend to sell these debt securities, it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost basis, and the difference in the fair value compared to the amortized cost was due to factors other than credit loss.

Debt securities in an unrealized loss position as of June 30, 2022 did not require an impairment recognized in earnings as (i) the Company did not intend to sell these debt securities, (ii) it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost basis, and (iii) the difference in the fair value compared to the amortized cost was due to factors other than credit loss.

Based upon this evaluation, the Company believes it has the ability to generate adequate amounts of cash from normal operations to meet cash requirements with a reasonable margin of safety without requiring the sale of impaired securities.

As of March 31, 2022, unrealized losses associated with debt securities are primarily due to widening credit spreads or rising risk-free rates since purchase.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

As of June 30, 2022, unrealized losses associated with debt securities are primarily due to widening credit spreads or rising risk-free rates since purchase.

The Company performed a detailed analysis of the financial performance of the underlying issues in an unrealized loss position and determined that recovery of the entire amortized cost of each impaired security is expected.

In addition, mortgage-backed and asset-backed securities were assessed for credit impairment using a cash flow model that incorporates key assumptions including default rates, severities, and prepayment rates.

The Company estimated losses for a security by forecasting the underlying loans in each transaction.

The Company estimated losses for a security by forecasting performance in the underlying loans in each transaction.

The forecasted loan performance was used to project cash flows to the various tranches in the structure, as applicable.

5 unchanged sentences

Debt securities in an unrealized loss position for which the Company does not have the intent to sell or is not more likely than not to sell the security before recovery to amortized cost are further evaluated to determine if the cause of the decline in fair value resulted from credit losses or other factors, which includes estimates about the operations of the issuer and future earnings potential.

The credit loss evaluation may consider the extent to which the fair value is below amortized cost;

The credit loss evaluation may consider the following:

the extent to which the fair value is below amortized cost;

changes in ratings of the security;

whether a significant covenant related to the security has been breached;

or an issuer has filed or indicated a possibility of filing for bankruptcy, has missed or announced it intends to miss a scheduled interest or principal payment, or has experienced a specific material adverse change that may impair its creditworthiness;

whether an issuer has filed or indicated a possibility of filing for bankruptcy, has missed or announced it intends to miss a scheduled interest or principal payment, or has experienced a specific material adverse change that may impair its creditworthiness;

judgments about an obligor’s current and projected financial position;

15 unchanged sentences

Any remaining unrealized loss after recording the allowance for credit loss is the non-credit amount and is recorded to other comprehensive income.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

The allowance for credit loss for specific debt securities may be increased or reversed in subsequent periods due to changes in the assessment of the present value of cash flows that are expected to be collected.

3 unchanged sentences

Accrued interest receivables that are determined to be uncollectible are written off with a corresponding reduction to net investment income.

Accrued interest of nil was written off both during the three months ended March 31, 2022 and 2021.

The rollforward of the allowance for credit loss for available-for-sale securities by sector is as follows (in millions):

March 31, 2022 US

Accrued interest of nil was written off both during the three and six months ended June 30, 2022 and 2021.

The roll forward of the allowance for credit loss for available-for-sale securities by sector is as follows (in millions):

Three Months Ended June 30, 2022 US

securities Other government securities Public

1 unchanged sentence

asset-backed securities Total

Balance at April 1, 2022 $ — $ 6 $ — $ 22 $ 2 $ — $ 2 $ 32

Additions for which credit loss was not previously recorded — — 1 3 2 — — 6

Changes for securities with previously recorded credit loss — — — 5 3 — ( 2 ) 6

Additions for purchases of PCD debt securities (1)

— — — — — — — —

Reductions from charge-offs — — — — ( 1 ) — — ( 1 )

Reductions for securities disposed — — — — — — — —

Securities intended/required to be sold before recovery of amortized cost basis — — — — — — — —

Balance at June 30, 2022 (2)

$ — $ 6 $ 1 $ 30 $ 6 $ — $ — $ 43

Three Months Ended June 30, 2021 US

securities Other government securities Public

utilities Corporate securities Residential mortgage-backed Commercial mortgage-backed Other

asset-backed securities Total

Balance at April 1, 2021 $ — $ — $ — $ — $ 1 $ — $ 4 $ 5

Additions for which credit loss was not previously recorded — — — — — — — —

Changes for securities with previously recorded credit loss — — — — — — 2 2

Additions for purchases of PCD debt securities (1)

— — — — — — — —

Reductions from charge-offs — — — — — — — —

Reductions for securities disposed — — — — — — — —

Securities intended/required to be sold before recovery of amortized cost basis — — — — — — — —

Balance at June 30, 2021 (2)

$ — $ — $ — $ — $ 1 $ — $ 6 $ 7

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Six Months Ended June 30, 2022 US

securities Other government securities Public

utilities Corporate securities Residential mortgage-backed Commercial mortgage-backed Other

asset-backed securities Total

Balance at January 1, 2022 $ — $ — $ — $ — $ 2 $ — $ 7 $ 9

6 unchanged sentences

Securities intended/required to be sold before recovery of amortized cost basis — — — ( 5 ) — — — ( 5 )

Balance at March 31, 2022 (2)

Balance at June 30, 2022 (2)

$ — $ 6 $ 1 $ 30 $ 6 $ — $ — $ 43

March 31, 2021 US

Six Months Ended June 30, 2021 US

securities Other government securities Public

9 unchanged sentences

Securities intended/required to be sold before recovery of amortized cost basis — — — — — — — —

Balance at March 31, 2021 (2)

Balance at June 30, 2021 (2)

$ — $ — $ — $ — $ 1 $ — $ 6 $ 7

(1) Represents purchased credit-deteriorated ("PCD") fixed maturity available-for-sale securities.

(2) Accrued interest receivable on debt securities totaled $ 385 million and $ 426 million as of March 31, 2022 and 2021, respectively, and was excluded from the determination of credit losses for the three months ended March 31, 2022 and 2021.

(2) Accrued interest receivable on debt securities totaled $ 382 million and $ 397 million as of June 30, 2022 and 2021, respectively, and was excluded from the determination of credit losses for the three and six months ended June 30, 2022 and 2021.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Net Investment Income

The sources of net investment income were as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Debt securities (1)

$ 213 $ 277 $ 486 $ 601

Equity securities 6 7 7 7

9 unchanged sentences

Expenses related to consolidated entities (2)

Other investment expenses (3)

( 15 ) ( 9 ) ( 36 ) ( 17 )

Other investment income (expense) (3)

38 ( 22 ) 50 ( 45 )

Total investment expenses 19 ( 34 ) 6 ( 68 )

Net investment income $ 747 $ 796 $ 1,467 $ 1,724

(1) Includes unrealized gains and losses on trading securities and includes $( 10 ) million and $ 38 million as of March 31, 2022 and 2021, respectively, related to the change in fair value for securities carried under the fair value option.

(1) Includes unrealized gains and losses on trading securities and includes $( 95 ) million and $( 85 ) million for the three and six months ended June 30, 2022, respectively, and nil and $ 38 million for the three and six months ended June 30, 2021, respectively, related to the change in fair value for securities carried under the fair value option.

(2) Includes management fees, administrative fees, legal fees, and other expenses related to the consolidation of certain investments.

3 unchanged sentences

and other expenses.

Unrealized gains (losses) included in investment income that were recognized on equity securities held were $( 18 ) million and $ 5 million, for the three months ended March 31, 2022 and 2021, respectively.

Unrealized gains (losses) included in investment income that were recognized on equity securities held were $( 13 ) million and $ 10 million, for the three months ended June 30, 2022 and 2021, respectively, and $( 31 ) million and $ 15 million, for the six months ended June 30, 2022 and 2021, respectively.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Net Gains (Losses) on Derivatives and Investments

The following table summarizes net gains (losses) on derivatives and investments (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Available-for-sale securities

3 unchanged sentences

Credit loss income (expense) on mortgage loans ( 9 ) ( 10 ) 3 48

71 ( 18 ) 83 50

Net gains (losses) excluding derivatives and funds withheld assets 5 15 ( 125 ) 168

5 unchanged sentences

These gains (losses) are increased or decreased by changes in the embedded derivative liability related to the Athene Reinsurance Agreement and also include (i) changes in the related funds withheld payable, as all economic performance of the investments held in the segregated accounts inure to the benefit of the reinsurers under the respective reinsurance agreements with each reinsurer, and (ii) amortization of the difference between book value and fair value of the investments as of the effective date of the reinsurance agreements with each reinsurer.

The aggregate fair value of securities sold at a loss for the three months ended March 31, 2022, and 2021 was $ 2,392 million and $ 297 million, which was approximately 92 % and 98 % of book value, respectively.

Proceeds from sales of available-for-sale debt securities were $ 4,013 million and $ 2,827 million during the three months ended March 31, 2022, and 2021, respectively.

The aggregate fair value of securities sold at a loss for the three and six months ended June 30, 2022 was $ 506 million and $ 2,898 million, which was approximately 93 % and 92 % of book value, respectively.

The aggregate fair value of securities sold at a loss for the three and six months ended June 30, 2021 was $ 888 million and $ 1,184 million, which was approximately 94 % of book value in both periods.

Proceeds from sales of available-for-sale debt securities were $ 0.8 billion and $ 4.9 billion during the three and six months ended June 30, 2022, respectively, and $ 2.8 billion and $ 5.6 billion during the three and six months ended June 30, 2021, respectively.

There are inherent uncertainties in assessing the fair values assigned to the Company’s investments.

5 unchanged sentences

However, if the specific facts and circumstances surrounding an individual security, or the outlook for its industry sector change, the Company may sell the security prior to its maturity or recovery and realize a loss.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Consolidated Variable Interest Entities ("VIEs")

1 unchanged sentence

The Company concluded that these limited liability companies are VIEs and that the Company is the primary beneficiary as it has the power to direct the most significant activities affecting the performance of the entity as well as the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity.

In 2020, the Company sold the interest in one of the collateralized loan obligation issuances resulting in the reduction of consolidated assets and liabilities.

In April 2022, the Company reinvested in collateralized loan obligation issuances resulting in the increase of consolidated assets and liabilities.

The Company’s exposure to loss is limited to the capital invested and unfunded capital commitments.

8 unchanged sentences

Asset and liability information for the consolidated VIEs included on the Condensed Consolidated Balance Sheets are as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Debt securities, at fair value under fair value option $ 1,991 $ 1,546

11 unchanged sentences

Noncontrolling interests $ 747 $ 680

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Unconsolidated VIEs

4 unchanged sentences

Unfunded capital commitments for these investments are detailed in Note 14.

The Company’s exposure to loss is limited to the capital invested and unfunded capital commitments related to the LPs/LLCs, for both consolidated and unconsolidated VIEs, which was $ 4,261 million and $ 3,860 million as of March 31, 2022 and December 31, 2021, respectively.

The Company’s exposure to loss is limited to the capital invested and unfunded capital commitments related to the LPs/LLCs, for both consolidated and unconsolidated VIEs, which was $ 4,276 million and $ 3,860 million as of June 30, 2022 and December 31, 2021, respectively.

The capital invested in an LP or LLC equals the original capital contributed, increased for additional capital contributed after the initial investment, and reduced for any returns of capital from the LP or LLC.

2 unchanged sentences

Based on the analysis of these entities, the Company is not the primary beneficiary of the VIEs.

Mutual funds for which the Company does not have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entities are recognized in equity securities on the Condensed Consolidated Balance Sheets and were $ 30 million and $ 33 million as of March 31, 2022 and December 31, 2021, respectively.

Mutual funds for which the Company does not have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entities are recognized in equity securities on the Condensed Consolidated Balance Sheets and were $ 28 million and $ 33 million as of June 30, 2022 and December 31, 2021, respectively.

The Company’s maximum exposure to loss on these mutual funds is limited to the amortized cost for these investments.

7 unchanged sentences

Commercial and Residential Mortgage Loans

Commercial mortgage loans of $ 10.6 billion and $ 10.5 billion at March 31, 2022 and December 31, 2021, respectively, are reported net of an allowance for credit losses of $ 78 million and $ 85 million at each date, respectively.

At March 31, 2022, commercial mortgage loans were collateralized by properties located in 38 states, the District of Columbia, and Europe.

Accrued interest receivable on commercial mortgage loans was $ 33 million and $ 32 million at March 31, 2022 and December 31, 2021, respectively.

Residential mortgage loans of $ 1,039 million and $ 939 million at March 31, 2022 and December 31, 2021, respectively, are reported net of an allowance for credit losses of $ 6 million and $ 9 million at each date, respectively.

Commercial mortgage loans of $ 10.8 billion and $ 10.5 billion at June 30, 2022 and December 31, 2021, respectively, are reported net of an allowance for credit losses of $ 77 million and $ 85 million at each date, respectively.

At June 30, 2022, commercial mortgage loans were collateralized by properties located in 38 states, the District of Columbia, and Europe.

Accrued interest receivable on commercial mortgage loans was $ 35 million and $ 32 million at June 30, 2022 and December 31, 2021, respectively.

Residential mortgage loans of $ 1,170 million and $ 939 million at June 30, 2022 and December 31, 2021, respectively, are reported net of an allowance for credit losses of $ 3 million and $ 9 million at each date, respectively.

Loans were collateralized by properties located in 50 states, the District of Columbia, Mexico, and Europe.

Accrued interest receivable on residential mortgage loans was $ 11 million and $ 13 million at March 31, 2022 and December 31, 2021, respectively.

Accrued interest receivable on residential mortgage loans was $ 9 million and $ 13 million at June 30, 2022 and December 31, 2021, respectively.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Mortgage Loan Concessions

6 unchanged sentences

Repayment periods are generally within one year but may extend until maturity date.

Deferred commercial mortgage loan interest and principal payments were $ 10 million at March 31, 2022.

Deferred commercial mortgage loan interest and principal payments were $ 11 million at June 30, 2022.

The concessions granted had no impact on the Company’s results of operations or financial position as the Company has not granted concessions that would have been disclosed and accounted for as troubled debt restructurings.

2 unchanged sentences

Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses.

The Company utilizes a third-party forecasting model to estimate lifetime expected credit losses at a loan level for commercial mortgage loans.

The Company utilizes a third-party forecasting model to estimate lifetime expected credit losses at a loan level for mortgage loans.

The model forecasts net operating income and property values for the economic scenario selected.

9 unchanged sentences

Mortgage loans on real estate are presented net of the allowance for credit losses on the Condensed Consolidated Balance Sheets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

The following table provides a summary of the allowance for credit losses in the Company’s mortgage loan portfolios (in millions):

March 31, 2022 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Three Months Ended June 30, 2022 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Balance at April 1, 2022 $ 21 $ 9 $ 22 $ 14 $ 12 $ 6 $ 84

Charge offs, net of recoveries — — — — — — —

Provision (release) — 9 ( 6 ) ( 1 ) ( 3 ) ( 3 ) ( 4 )

Balance at June 30, 2022 (1)

$ 21 $ 18 $ 16 $ 13 $ 9 $ 3 $ 80

Three Months Ended June 30, 2021 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Balance at April 1, 2021 $ 27 $ 22 $ 16 $ 15 $ 13 $ 20 $ 113

Charge offs, net of recoveries — — — — — — —

Provision (release) — 11 4 8 ( 1 ) 1 23

Balance at June 30, 2021 (1)

$ 27 $ 33 $ 20 $ 23 $ 12 $ 21 $ 136

Six Months Ended June 30, 2022 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Balance at January 1, 2022 $ 19 $ 9 $ 28 $ 17 $ 12 $ 9 $ 94

1 unchanged sentence

Provision (release) 2 9 ( 12 ) ( 4 ) ( 3 ) ( 6 ) ( 14 )

Balance at March 31, 2022 (1)

Balance at June 30, 2022 (1)

$ 21 $ 18 $ 16 $ 13 $ 9 $ 3 $ 80

March 31, 2021 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Six Months Ended June 30, 2021 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Balance at January 1, 2021 $ 58 $ 34 $ 25 $ 24 $ 24 $ 14 $ 179

1 unchanged sentence

Provision (release) ( 31 ) ( 1 ) ( 5 ) ( 1 ) ( 12 ) 7 ( 43 )

Balance at March 31, 2021 (1)

Balance at June 30, 2021 (1)

$ 27 $ 33 $ 20 $ 23 $ 12 $ 21 $ 136

(1) Accrued interest receivable totaled $ 44 million and $ 35 million as of March 31, 2022 and 2021, respectively, and was excluded from the determination of credit losses.

(1) Accrued interest receivable totaled $ 44 million and $ 40 million as of June 30, 2022 and 2021, respectively, and was excluded from the determination of credit losses.

The Company’s mortgage loans that are current and in good standing are accruing interest.

1 unchanged sentence

Delinquency status is determined from the date of the first missed contractual payment.

At March 31, 2022, there was $ 19 million of recorded investment, $ 20 million of unpaid principal balance, no related loan allowance, $ 7 million of average recorded investment, and $ 1 million investment income recognized on impaired residential mortgage loans.

At June 30, 2022, there was $ 18 million of recorded investment, $ 19 million of unpaid principal balance, no related loan allowance, $ 12 million of average recorded investment, and no investment income recognized on impaired residential mortgage loans.

At December 31, 2021, there was $ 6 million of recorded investment, $ 7 million of unpaid principal balance, no related loan allowance, $ 2 million of average recorded investment, and no investment income recognized on impaired residential mortgage loans.

The following tables provide information about the credit quality and vintage year of mortgage loans (in millions):

March 31, 2022

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

The following tables provide information about the credit quality with vintage year and category of mortgage loans (in millions):

June 30, 2022

2022 2021 2020 2019 2018 Prior Revolving

39 unchanged sentences

Total mortgage loans $ 1,887 $ 1,447 $ 1,671 $ 1,691 $ 1,420 $ 3,362 $ 4 $ 11,482 100 %

March 31, 2022

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

June 30, 2022

In Good Standing (1)

21 unchanged sentences

Total $ 11,270 $ — $ 206 $ 6 $ 11,482

(1) At March 31, 2022 and December 31, 2021, includes mezzanine loans of $ 343 million and $ 278 million in the Apartment category, $ 76 million and $ 75 million in the Hotel category, $ 254 million and $ 252 million in the Office category, $ 26 million and $ 27 million in the Retail category, and $ 36 million and $ 26 million in the Warehouse category, respectively.

(2) At March 31, 2022 and December 31, 2021, includes $ 119 million and $ 202 million of loans purchased when the loans were greater than 90 days delinquent and $ 17 million and $ 5 million of loans in process of foreclosure, and are supported with insurance or other guarantees provided by various governmental programs, respectively.

As of March 31, 2022 and December 31, 2021, there were no commercial mortgage loans involved in troubled debt restructuring, and stressed loans for which the Company is dependent, or expects to be dependent, on the underlying property to satisfy repayment were nil.

(1) At June 30, 2022 and December 31, 2021, includes mezzanine loans of $ 420 million and $ 278 million in the Apartment category, $ 69 million and $ 75 million in the Hotel category, $ 259 million and $ 252 million in the Office category, $ 27 million and $ 27 million in the Retail category, and $ 55 million and $ 26 million in the Warehouse category, respectively.

(2) At June 30, 2022 and December 31, 2021, includes $ 56 million and $ 202 million of loans purchased when the loans were greater than 90 days delinquent and $ 15 million and $ 5 million of loans in process of foreclosure, and are supported with insurance or other guarantees provided by various governmental programs, respectively.

As of June 30, 2022 and December 31, 2021, there were no commercial mortgage loans involved in troubled debt restructuring, and stressed mortgage loans for which the Company is dependent, or expects to be dependent, on the underlying property to satisfy repayment were $ 3 million.

Other Invested Assets

1 unchanged sentence

Federal Home Loan Bank capital stock is carried at cost and adjusted for any impairment.

At March 31, 2022 and December 31, 2021, FHLB capital stock had carrying value of $ 146 million and $ 125 million, respectively.

At June 30, 2022 and December 31, 2021, FHLB capital stock had carrying value of $ 146 million and $ 125 million, respectively.

Real estate is carried at the lower of depreciated cost or fair value.

At March 31, 2022 and December 31, 2021, real estate totaling $ 242 million and $ 243 million, respectively, included foreclosed properties with a book value of $ 1 million at both March 31, 2022 and December 31, 2021.

At June 30, 2022 and December 31, 2021, real estate totaling $ 241 million and $ 243 million, respectively, included foreclosed properties with a book value of $ 1 million at both June 30, 2022 and December 31, 2021.

Carrying values for limited partnership investments are generally determined by using the proportion of the Company’s investment in each fund (Net Asset Value (“NAV”) equivalent) as a practical expedient for fair value, and generally are recorded on a three-month lag, with changes in value included in net investment income.

At March 31, 2022 and December 31, 2021, investments in LPs had carrying values of $ 3,016 million and $ 2,831 million, respectively.

At June 30, 2022 and December 31, 2021, investments in LPs had carrying values of $ 3,261 million and $ 2,831 million, respectively.

In June 2021, the Company entered into an arrangement to sell $ 420 million of limited partnership investments, of which $ 236 million and $ 168 million were sold in the second and third quarter of 2021, respectively, and the remainder was sold in January 2022.

1 unchanged sentence

The Company expects to reinvest in new LPs as attractive opportunities become available.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 4.

Securities Lending

The Company has entered into securities lending agreements with agent banks whereby blocks of securities are loaned to third parties, primarily major brokerage firms.

As of March 31, 2022 and December 31, 2021, the estimated fair value of loaned securities was $ 15 million and $ 17 million, respectively.

As of June 30, 2022 and December 31, 2021, the estimated fair value of loaned securities was $ 31 million and $ 17 million, respectively.

The agreements require a minimum of 102 percent of the fair value of the loaned securities to be held as collateral, calculated on a daily basis.

To further minimize the credit risks related to these programs, the financial condition of counterparties is monitored on a regular basis.

At March 31, 2022 and December 31, 2021, cash collateral received in the amount of $ 15 million and $ 17 million, respectively, was invested by the agent banks and included in cash and cash equivalents of the Company.

At June 30, 2022 and December 31, 2021, cash collateral received in the amount of $ 32 million and $ 17 million, respectively, was invested by the agent banks and included in cash and cash equivalents of the Company.

A securities lending payable for the overnight and continuous loans is included in liabilities in the amount of cash collateral received.

4 unchanged sentences

These agreements are accounted for as financing transactions, with the assets and associated liabilities included in the Condensed Consolidated Balance Sheets.

Short-term borrowings under such agreements averaged $ 210 million for three months ended March 31, 2022 and $ 1,548 million for the year ended December 31, 2021, with weighted average interest rates of 0.15 % and 0.07 %, respectively.

At March 31, 2022 and December 31, 2021, the outstanding repurchase agreement balance was $ 584 million and $ 1,572 million, respectively, collateralized with U.S.

Short-term borrowings under such agreements averaged $ 271 million for six months ended June 30, 2022 and $ 1,548 million for the year ended December 31, 2021, with weighted average interest rates of 0.19 % and 0.07 %, respectively.

At June 30, 2022 and December 31, 2021, the outstanding repurchase agreement balance was nil and $ 1,572 million, respectively, collateralized with U.S.

Treasury notes and corporate securities and maturing within 30 days, and was included within repurchase agreements and securities lending payable in the Condensed Consolidated Balance Sheets.

In the event of a decline in the fair value of the pledged collateral under these agreements, the Company may be required to transfer cash or additional securities as pledged collateral.

Interest expense totaled nil during both the three months ended March 31, 2022, and 2021, respectively.

The highest level of short-term borrowings at any month end was $ 584 million and $ 2,042 million for the three months ended March 31, 2022, and 2021, respectively.

Interest expense totaled nil both for the three and six months ended June 30, 2022, respectively, and nil and $ 1 million for the three and six months ended June 30, 2021.

The highest level of short-term borrowings at any month end was $ 584 million and $ 2,257 million for the six months ended June 30, 2022 and 2021, respectively.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 5.

Derivative Instruments

The Company’s business model includes the acceptance, monitoring and mitigation of risk.

4 unchanged sentences

A summary of the aggregate contractual or notional amounts and fair values of the Company’s freestanding and embedded derivative instruments are as follows (in millions):

March 31, 2022

June 30, 2022

Contractual/ Assets Liabilities Net

10 unchanged sentences

Treasury futures (2)

Total return swaps 700 12 4 8

Total freestanding derivatives 115,516 1,133 1,201 ( 68 )

Embedded derivatives

VA embedded derivatives (3)

Variable annuity embedded derivatives (3)

N/A — 601 ( 601 )

FIA embedded derivatives (4)

Fixed index annuity embedded derivatives (4)

N/A — 1,087 ( 1,087 )

RILA embedded derivatives (4)

Registered index linked annuity embedded derivatives (4)

N/A — 4 ( 4 )

15 unchanged sentences

(5) Included within funds withheld payable under reinsurance treaties on the Condensed Consolidated Balance Sheets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 5.

Derivative Instruments

December 31, 2021

11 unchanged sentences

Treasury futures (2)

Total return swaps — — — —

Total freestanding derivatives 97,665 1,374 35 1,339

Embedded derivatives

VA embedded derivatives (3)

Variable annuity embedded derivatives (3)

N/A — 2,626 ( 2,626 )

FIA embedded derivatives (4)

Fixed index annuity embedded derivatives (4)

N/A — 1,439 ( 1,439 )

RILA embedded derivatives (4)

Registered index linked annuity embedded derivatives (4)

N/A — 6 ( 6 )

15 unchanged sentences

(5) Included within funds withheld payable under reinsurance treaties on the Condensed Consolidated Balance Sheets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 5.

Derivative Instruments

The following table reflects the results of the Company’s derivatives, including gains (losses) and change in fair value of freestanding derivative instruments and embedded derivatives (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Derivatives excluding funds withheld under reinsurance treaties

7 unchanged sentences

Treasury futures ( 1 ) — ( 312 ) ( 773 )

Total return swaps 8 — 8 —

Fixed index annuity embedded derivatives 4 ( 2 ) 5 ( 2 )

5 unchanged sentences

Cross-currency forwards 51 ( 6 ) 69 13

Treasury futures — —

Funds withheld embedded derivative 1,347 ( 544 ) 2,628 454

2 unchanged sentences

All of the Company’s trade agreements for freestanding, over-the-counter derivatives, contain credit downgrade provisions that allow a party to assign or terminate derivative transactions if the counterparty’s credit rating declines below an established limit.

At March 31, 2022 and December 31, 2021, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $ 738 million and $ 1,376 million, respectively, and held collateral was $ 836 million and $ 1,576 million, respectively, related to these agreements.

At March 31, 2022 and December 31, 2021, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $ 217 million and nil , respectively, and provided collateral was $ 324 million and nil , respectively, related to these agreements.

If all of the downgrade provisions had been triggered at March 31, 2022 and December 31, 2021, in aggregate, the Company would have had to disburse $ 98 million and $ 200 million, respectively, and would have been allowed to claim $ 107 million and nil , respectively.

At June 30, 2022 and December 31, 2021, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $ 977 million and $ 1,376 million, respectively, and held collateral was $ 879 million and $ 1,576 million, respectively, related to these agreements.

At June 30, 2022 and December 31, 2021, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $ 951 million and nil , respectively, and provided collateral was $ 1,128 million and nil , respectively, related to these agreements.

If all of the downgrade provisions had been triggered at June 30, 2022 and December 31, 2021, in aggregate, the Company would have had to disburse nil and $ 200 million, respectively, and would have been allowed to claim $ 275 million and nil , respectively.

Offsetting Assets and Liabilities

2 unchanged sentences

The Company recognizes amounts subject to master netting arrangements on a gross basis within the Condensed Consolidated Balance Sheets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 5.

Derivative Instruments

The following tables present the gross and net information about the Company’s financial instruments subject to master netting arrangements (in millions):

March 31, 2022

June 30, 2022

Recognized Gross

44 unchanged sentences

The actual amount of collateral may be greater than amounts presented in the tables.

The above tables exclude net embedded derivative liabilities of $ 1,767 million and $ 4,071 million as of March 31, 2022 and December 31, 2021, respectively, as these derivatives are not subject to master netting arrangements.

The above tables also exclude the funds withheld embedded derivative asset (liability) of $ 1,161 million $( 120 ) million at March 31, 2022 and December 31, 2021.

The above tables exclude net embedded derivative liabilities of $ 1,692 million and $ 4,071 million as of June 30, 2022 and December 31, 2021, respectively, as these derivatives are not subject to master netting arrangements.

The above tables also exclude the funds withheld embedded derivative asset (liability) of $ 2,508 million and $( 120 ) million at June 30, 2022 and December 31, 2021.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

The following table summarizes the fair value and carrying value of the Company’s financial instruments (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Value Carrying

10 unchanged sentences

Cash and cash equivalents 5,258 5,258 2,623 2,623

GMIB reinsurance recoverable 232 232 262 262

Guaranteed minimum income benefits ("GMIB") reinsurance recoverable 232 232 262 262

Separate account assets 196,184 196,184 248,949 248,949

26 unchanged sentences

If there are no recently reported trades, the independent pricing services and broker-dealers may use matrix or pricing model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at relevant market rates.

Certain securities are priced using broker-dealer quotes, which may utilize proprietary inputs and models.

Certain securities are priced using broker-dealer quotes, which may utilize

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

proprietary inputs and models.

Additionally, the majority of these quotes are non-binding.

11 unchanged sentences

As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the available market data, the price received from the third party may be adjusted accordingly.

For those securities that were internally valued at March 31, 2022 and December 31, 2021, the pricing model used by the Company utilizes current spread levels of similarly rated securities to determine the market discount rate for the security.

For those securities that were internally valued at June 30, 2022 and December 31, 2021, the pricing model used by the Company utilizes current spread levels of similarly rated securities to determine the market discount rate for the security.

Furthermore, appropriate risk premiums for illiquidity and non-performance are incorporated in the discount rate.

5 unchanged sentences

Fair values for limited partnership interests, which are included in other invested assets, is generally determined using the proportion of the Company’s investment in the value of the net assets of each fund (“NAV equivalent”) as a practical expedient for fair value, and generally, are recorded on a three-month lag.

No adjustments to these amounts were deemed necessary at March 31, 2022 and December 31, 2021.

No adjustments to these amounts were deemed necessary at June 30, 2022 and December 31, 2021.

As a result of using the net asset value per share practical expedient, limited partnership interests are not classified in the fair value hierarchy.

5 unchanged sentences

These investments are classified as Level 3 in the fair value hierarchy.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Policy loans are funds provided to policyholders in return for a claim on the policies values and function like demand deposits which are redeemable upon repayment, death or surrender, and there is only one market price at which the transaction could be settled – the then current carrying value.

10 unchanged sentences

Freestanding derivative instruments classified as Level 1 include futures, which are traded on active exchanges.

Freestanding derivative instruments classified as Level 2 include interest rate swaps, cross currency swaps, cross-currency forwards, credit default swaps, put-swaptions and certain equity index call and put options.

Freestanding derivative instruments classified as Level 2 include interest rate swaps, cross currency swaps, cross-currency forwards, credit default swaps, total return swaps, put-swaptions and certain equity index call and put options.

These derivative valuations are determined by third-party pricing services using pricing models with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data.

2 unchanged sentences

Cash and cash equivalents primarily include money market instruments and bank deposits.

Cash equivalents also includes all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase.

Certain money market instruments are valued using unadjusted quoted prices in active markets and are classified as Level 1.

6 unchanged sentences

Separate account assets are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available, and, are categorized as Level 2 assets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Variable Annuity Guarantees

Variable annuity contracts issued by the Company offer various guaranteed minimum death, withdrawal, income and accumulation benefits.

Certain benefits, including non-life contingent components of guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum withdrawal benefits for life (“GMWB for Life”), guaranteed minimum accumulation benefits (“GMAB”), and the reinsurance recoverable on the Company’s guaranteed minimum income benefits (“GMIB”), are recorded at fair value.

Guaranteed benefits that are not subject to fair value accounting are accounted for as insurance benefits.

22 unchanged sentences

As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions for this component of the fair value model.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

The use of the models and assumptions described above requires a significant amount of judgment.

7 unchanged sentences

Fair Value Option

The Company has elected the fair value option for certain funds withheld assets, which are held as collateral for reinsurance, totaling $ 3,634 million and $ 3,632 million at March 31, 2022 and December 31, 2021, respectively, as discussed above.

The Company elected the fair value option for debt securities related to certain consolidated investments totaling $ 1,628 million and $ 1,546 million at March 31, 2022 and December 31, 2021, respectively.

The Company elected the fair value option for debt securities related to certain consolidated investments totaling $ 1,991 million and $ 1,546 million at June 30, 2022 and December 31, 2021, respectively.

These debt securities are reflected on the Company’s Condensed Consolidated Balance Sheets as debt securities, at fair value under the fair value option.

The Company has elected the fair value option for certain funds withheld assets, which are held as collateral for reinsurance, totaling $ 3,999 million and $ 3,632 million at June 30, 2022 and December 31, 2021, respectively, as discussed above, and includes mortgage loans as discussed below.

The Company elected the fair value option for certain mortgage loans held under the funds withheld reinsurance agreement.

4 unchanged sentences

Aggregate contractual principal 362

As of March 31, 2022, no loans for which the fair value option was elected were in non-accrual status, and no loans were more than 90 days past due and still accruing interest.

As of June 30, 2022, no loans for which the fair value option was elected were in non-accrual status, and no loans were more than 90 days past due and still accruing interest.

Income and changes in unrealized gains and losses on other assets for which the Company has elected the fair value option are immaterial to the Company’s Condensed Consolidated Financial Statements.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize the Company’s assets and liabilities that are carried at fair value by hierarchy levels (in millions):

March 31, 2022

June 30, 2022

Total Level 1 Level 2 Level 3

25 unchanged sentences

(3) Includes the Athene embedded derivative asset of $ 2,508 million and funds withheld payable under reinsurance treaties at fair value under the fair value option.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

December 31, 2021

25 unchanged sentences

(3) Includes the Athene embedded derivative liability of $ 120 million and funds withheld payable under reinsurance treaties at fair value under the fair value option.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

1 unchanged sentence

The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources (in millions):

March 31, 2022

June 30, 2022

Assets Total Internal External

30 unchanged sentences

External pricing sources for securities represent unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities

The table below presents quantitative information on significant internally-priced Level 3 assets and liabilities (in millions):

As of March 31, 2022

As of June 30, 2022

Value Valuation Technique(s) Significant Unobservable Input(s) Assumption or Input Range Impact of Increase in Input on Fair Value

34 unchanged sentences

(6) Long-term equity volatility represents the equity volatility beyond the period for which observable equity volatilities are available.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

As of December 31, 2021

35 unchanged sentences

(6) Long-term equity volatility represents the equity volatility beyond the period for which observable equity volatilities are available.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Sensitivity to Changes in Unobservable Inputs

The following is a general description of sensitivities of significant unobservable inputs and their impact on the fair value measurement for the assets and liabilities reflected in the tables above.

At both March 31, 2022 and December 31, 2021, securities of $ 2 million are fair valued using techniques incorporating unobservable inputs and are classified in Level 3 of the fair value hierarchy.

At both June 30, 2022 and December 31, 2021, securities of $ 2 million are fair valued using techniques incorporating unobservable inputs and are classified in Level 3 of the fair value hierarchy.

For these assets, their unobservable inputs and ranges of possible inputs do not materially affect their fair valuations and have been excluded from the quantitative information in the tables above.

13 unchanged sentences

The more significant policyholder behavior actuarial assumptions include benefit utilization, fund allocation, lapse, and mortality.

The tables below provide rollforwards for the three months ended March 31, 2022, and 2021 of the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

The tables below provide rollforwards for the three and six months ended June 30, 2022 and 2021 of the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement.

Gains and losses in the tables below include changes in fair value due partly to observable and unobservable factors.

5 unchanged sentences

as of Other Issuances in and/or as of

January 1, Net Comprehensive and (out of) March 31,

March 31, 2022 2022 Income Income Settlements Level 3 2022

April 1, Net Comprehensive and (out of) June 30,

Three Months Ended June 30, 2022 2022 Income Income Settlements Level 3 2022

Debt securities

10 unchanged sentences

as of Other Issuances in and/or as of

January 1, Net Comprehensive and (out of) March 31,

March 31, 2021 2021 Income Income Settlements Level 3 2021

April 1, Net Comprehensive and (out of) June 30,

Three Months Ended June 30, 2021 2021 Income Income Settlements Level 3 2021

Debt securities

6 unchanged sentences

Funds withheld payable under reinsurance treaties ( 3,486 ) ( 585 ) — ( 11 ) — ( 4,082 )

The components of the amounts included in purchases, sales, issuances and settlements for the three months ended March 31, 2022, and 2021 shown above are as follows (in millions):

March 31, 2022 Purchases Sales Issuances Settlements Total

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Total Realized/Unrealized Gains (Losses) Included in

Fair Value Sales, Transfers Fair Value

as of Other Issuances in and/or as of

January 1, Net Comprehensive and (out of) June 30,

Six Months Ended June 30, 2022 2022 Income Income Settlements Level 3 2022

Debt securities

Corporate securities $ 9 $ 5 $ — $ 3 $ 30 $ 47

Equity securities 112 16 — ( 4 ) — 124

Mortgage loans — ( 3 ) — 360 — 357

Limited partnerships 1 — — — — 1

GMIB reinsurance recoverable 262 ( 30 ) — — — 232

Policy loans 3,467 136 — ( 118 ) — 3,485

Embedded derivative liabilities $ ( 2,626 ) $ 2,025 $ — $ — $ — $ ( 601 )

Funds withheld payable under reinsurance treaties ( 3,759 ) 2,492 — 126 — ( 1,141 )

Total Realized/Unrealized Gains (Losses) Included in

Fair Value Sales, Transfers Fair Value

as of Other Issuances in and/or as of

January 1, Net Comprehensive and (out of) June 30,

Six Months Ended June 30, 2021 2021 Income Income Settlements Level 3 2021

Debt securities

Corporate securities $ 29 $ 2 $ — $ 6 $ ( 5 ) $ 32

Equity securities 104 7 — ( 8 ) — 103

Limited partnerships 1 — — — — 1

GMIB reinsurance recoverable 340 ( 73 ) — — — 267

Policy loans 3,454 125 — ( 41 ) — 3,538

Embedded derivative liabilities $ ( 5,592 ) $ 3,356 $ — $ — $ — $ ( 2,236 )

Funds withheld payable under reinsurance treaties ( 4,453 ) 329 2 40 — ( 4,082 )

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

The components of the amounts included in purchases, sales, issuances and settlements for the three and six months ended June 30, 2022 and 2021 shown above are as follows (in millions):

Three Months Ended June 30, 2022 Purchases Sales Issuances Settlements Total

Debt securities

Corporate securities $ 1 $ — $ — $ — $ 1

Equity securities — ( 4 ) — — ( 4 )

Mortgage loans 172 — — — 172

Policy loans — — 1 ( 64 ) ( 63 )

Total $ 173 $ ( 4 ) $ 1 $ ( 64 ) $ 106

Funds withheld payable under reinsurance treaties $ — $ — $ ( 1 ) $ 67 $ 66

March 31, 2021 Purchases Sales Issuances Settlements Total

Three Months Ended June 30, 2021 Purchases Sales Issuances Settlements Total

Debt securities

Corporate securities $ 5 $ — $ — $ — $ 5

Equity securities — ( 8 ) — — ( 8 )

Policy loans — — 8 ( 26 ) ( 18 )

1 unchanged sentence

Funds withheld payable under reinsurance treaties $ — $ — $ ( 129 ) $ 118 $ ( 11 )

For the three months ended March 31, 2022, and 2021, there were no transfers from Level 3 to NAV.

For the three months ended March 31, 2022, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 4 million and transfers from Level 2 to Level 3 were $ 7 million.

For the three months ended March 31, 2021, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 18 million and transfers from Level 2 to Level 3 were $ 5 million.

Six Months Ended June 30, 2022 Purchases Sales Issuances Settlements Total

Debt securities

Corporate securities $ 3 $ — $ — $ — $ 3

Equity securities — ( 4 ) — — ( 4 )

Mortgage loans 360 — — — 360

Policy loans — — 31 ( 149 ) ( 118 )

Total $ 363 $ ( 4 ) $ 31 $ ( 149 ) $ 241

Funds withheld payable under reinsurance treaties $ — $ — $ ( 32 ) $ 158 $ 126

Six Months Ended June 30, 2021 Purchases Sales Issuances Settlements Total

Debt securities

Corporate securities $ 6 $ — $ — $ — $ 6

Equity securities — ( 8 ) — — ( 8 )

Policy loans — — 36 ( 77 ) ( 41 )

Total $ 6 $ ( 8 ) $ 36 $ ( 77 ) $ ( 43 )

Funds withheld payable under reinsurance treaties $ — $ — $ ( 211 ) $ 251 $ 40

For the three and six months ended June 30, 2022 and 2021, there were no transfers from Level 3 to NAV.

For the three and six months ended June 30, 2022, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 1 million and $ 5 million, respectively, and transfers from Level 2 to Level 3 were $ 28 million and $ 35 million, respectively.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

For the three and six months ended June 30, 2021, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 13 million and $ 23 million, respectively, and transfers from Level 2 to Level 3 were $ 21 million and $ 18 million, respectively.

The portion of gains (losses) included in net income (loss) or other comprehensive income (loss) ("OCI") attributable to the change in unrealized gains and losses on Level 3 financial instruments still held was as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30,

Net Income Included in OCI Included in

8 unchanged sentences

Funds withheld payable under reinsurance treaties 1,272 — ( 543 ) —

Six Months Ended June 30,

Net Income Included in OCI Included in

Net Income Included in OCI

Debt securities

Corporate securities $ 5 $ — $ 2 $ —

Equity securities 16 — 7 —

Mortgage loans ( 3 ) — — —

GMIB reinsurance recoverable ( 30 ) — ( 73 ) —

Policy loans 136 — 125 —

Embedded derivative liabilities $ 2,025 $ — $ 3,356 $ —

Funds withheld payable under reinsurance treaties 2,492 — 456 —

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Fair Value of Financial Instruments Carried at Other Than Fair Value

25 unchanged sentences

The fair value of the assets generally use industry standard valuation techniques as described above and the funds withheld payable components are valued consistent with the assets in the fair value hierarchy.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

Fair values for the Company’s surplus notes and long-term debt are generally determined by prices obtained from independent broker dealers or discounted cash flow models.

9 unchanged sentences

The values of separate account liabilities are set equal to the values of separate account assets, which are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available, and, are categorized as Level 2.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6.

Fair Value Measurements

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value (in millions).

March 31, 2022

June 30, 2022

Value Total Level 1 Level 2 Level 3

14 unchanged sentences

Securities lending payable 32 32 — 32 —

FHLB advances 500 500 — 500 —

Repurchase agreements — — — — —

18 unchanged sentences

Securities lending payable 17 17 — 17 —

FHLB advances — — — — —

Repurchase agreements 1,572 1,572 — 1,572 —

3 unchanged sentences

(2) Included as a component of other contract holder funds on the Condensed Consolidated Balance Sheets.

(3) Excludes $ 742 million and $ 715 million of limited partnership investments measured at NAV at March 31, 2022 and December 31, 2021, respectively.

(4) Excludes $ 111 million of non-financial instruments at March 31, 2022.

(3) Excludes $ 753 million and $ 715 million of limited partnership investments measured at NAV at June 30, 2022 and December 31, 2021, respectively.

(4) Excludes $ 117 million of non-financial instruments at June 30, 2022.

(5) The values of separate account liabilities are set equal to the values of separate account assets.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 7.

Deferred Acquisition Costs

The balances of, and changes, in deferred acquisition costs were as follows (in millions):

Three Months Ended March 31,

Six Months Ended June 30,

Balance, beginning of period $ 14,249 $ 13,897

3 unchanged sentences

Balance, end of period $ 13,115 $ 13,813

See Note 7 of Notes to Consolidated Financial Statements in Part II, Item 8, Financial Statements and Supplementary Data of the Company’s annual report on Form 10-K for the year ended December 31, 2021, for more information regarding deferred acquisition costs.

See Note 7 of Notes to Consolidated Financial Statements in Part II, Item 8, Financial Statements and Supplementary Data of the Company’s 2021 Annual Report, for more information regarding deferred acquisition costs.

The Company assumes and cedes reinsurance from and to other insurance companies in order to limit losses from large exposures.

10 unchanged sentences

The profit and loss with respect to obligations ceded to Athene are included in periodic net settlements pursuant to the coinsurance agreement.

To further support its obligations under the coinsurance agreement, Athene procured $ 1.2 billion in letters of credit for Jackson’s benefit and established a trust account for Jackson’s benefit, which had a book value of approximately $ 360 million at March 31, 2022.

Swiss Re Reinsurance

The Company has three retrocession reinsurance agreements (“retro treaties”) with Swiss Reinsurance Company Ltd.

Pursuant to these retro treaties, the Company ceded to SRZ on a 100 % coinsurance basis, subject to pre-existing reinsurance with other parties, certain blocks of business.

Pursuant to these retro treaties, the Company ceded certain blocks of business to SRZ on a 100 % coinsurance basis, subject to pre-existing reinsurance with other parties.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 8.

The following assets and liabilities were held in support of reserves associated with the Company’s funds withheld reinsurance agreements and were reported in the respective financial statement line items in the Condensed Consolidated Balance Sheets (in millions):

March 31, December 31,

June 30, December 31,

Debt securities, available-for-sale $ 15,451 $ 19,094

15 unchanged sentences

(1) Certain assets are reported at amortized cost while the fair value of those assets is reported in the embedded derivative in the funds withheld liability.

(2) Includes funds withheld embedded derivative asset (liability) of $ 1,161 million and $( 120 ) million at March 31, 2022 and December 31, 2021, respectively.

(2) Includes funds withheld embedded derivative asset (liability) of $ 2,508 million and $( 120 ) million at June 30, 2022 and December 31, 2021, respectively.

The sources of income related to funds withheld under reinsurance treaties reported in net investment income in the Condensed Consolidated Income Statements were as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Debt securities (1)

$ 180 $ 194 $ 330 $ 398

Equity securities ( 9 ) 4 ( 25 ) 2

2 unchanged sentences

Limited partnerships 86 ( 2 ) 102 1

Other investment income 1 — 1 —

Total investment income on funds withheld assets 386 320 668 641

2 unchanged sentences

Total net investment income on funds withheld reinsurance treaties $ 364 $ 294 $ 624 $ 585

(1) Includes $( 6 ) million and $( 1 ) as of March 31, 2022 and 2021, respectively, related to the change in fair value for securities carried under the fair value option.

(2) Includes $ 2 million and nil as of March 31, 2022 and 2021, respectively, related to the change in fair value for mortgage loans carried under the fair value option.

(1) Includes $( 2 ) million and $( 8 ) million for the three and six months ended June 30, 2022, respectively, and nil and $( 1 ) million for the three and six months ended June 30, 2021, respectively, related to the change in fair value for securities carried under the fair value option.

(2) Includes $( 5 ) million and $( 3 ) million for the three and six months ended June 30, 2022, respectively, and nil both for the three and six months ended June 30, 2021, respectively, related to the change in fair value for mortgage loans carried under the fair value option.

(3) Includes management fees.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 8.

The gains and losses on funds withheld reinsurance treaties as a component of net gains (losses) on derivatives and investments in the Condensed Consolidated Income Statements were as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Available-for-sale securities

7 unchanged sentences

Net gains (losses) on funds withheld payable under reinsurance treaties (1)

1,057 ( 829 ) 2,100 ( 117 )

Total net gains (losses) on derivatives and investments $ 1,077 $ ( 768 ) $ 2,105 $ 130

(1) Includes the Athene embedded derivative gain (loss) of $ 1,281 million and $ 998 million for the three months ended March 31, 2022, and 2021, respectively.

(1) Includes the Athene embedded derivative gain (loss) of $ 1,347 million and $ 2,628 million for the three and six months ended June 30, 2022, respectively, and $( 544 ) million and $ 454 million for the three and six months ended June 30, 2021, respectively.

While the economic benefits of the funds withheld assets flow to the respective reinsurers, Jackson retains physical possession and legal ownership of the investments supporting the reserves.

2 unchanged sentences

Components of the Company’s reinsurance recoverable were as follows (in millions):

March 31, December 31,

June 30, December 31,

Life $ 5,728 $ 5,829

14 unchanged sentences

The liability for future benefits for these limited payment contracts is calculated using assumptions as of the acquisition date as to mortality and expense plus provisions for adverse deviation.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9.

Reserves for Future Policy Benefits and Claims Payable and Other Contract Holder Funds

In conjunction with a prior acquisition, the Company recorded a fair value adjustment at acquisition related to certain annuity and interest sensitive liability blocks of business to reflect the cost of the interest guarantees within the in-force liabilities, based on the difference between the guaranteed interest rate and an assumed new money guaranteed interest rate at acquisition.

3 unchanged sentences

The following table sets forth the Company’s reserves for future policy benefits and claims payable balances (in millions):

March 31, December 31,

June 30, December 31,

Traditional life $ 4,076 $ 4,187

7 unchanged sentences

The following table sets forth the Company’s liabilities for other contract holder funds balances (in millions):

March 31, December 31,

June 30, December 31,

Interest-sensitive life $ 11,363 $ 11,570

5 unchanged sentences

Total $ 59,576 $ 59,689

(1) Includes the embedded derivative liabilities related to RILA of $ 16 million and $ 6 million at March 31, 2022 and December 31, 2021, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity of $ 1,299 million and $ 1,439 million at March 31, 2022 and December 31, 2021, respectively.

(1) Includes the embedded derivative liabilities related to RILA of $ 4 million and $ 6 million at June 30, 2022 and December 31, 2021, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity of $ 1,087 million and $ 1,439 million at June 30, 2022 and December 31, 2021, respectively.

For interest-sensitive life contracts, liabilities approximate the policyholder’s account value, plus the remaining balance of the fair value adjustment related to previously acquired business, which is further discussed below.

The liability for fixed index annuities and registered index linked annuities is based on three components, 1) the imputed value of the underlying guaranteed host contract, 2) the fair value of the embedded option component of the contract, and 3) the liability for guaranteed benefits related to the optional lifetime income rider.

The liability for fixed index annuities and registered index linked annuities is based on three components:

1) the imputed value of the underlying guaranteed host contract, 2) the fair value of the embedded option component of the contract, and 3) the liability for guaranteed benefits related to the optional lifetime income rider.

For fixed annuities, variable annuity fixed option, and other investment contracts, as included in the above table, the liability is the account value, plus the unamortized balance of the fair value adjustment related to previously acquired business.

For payout annuities, as included in the above table, reserves are determined under the methodology for limited-payment contracts (for those with significant life contingencies) or using a constant yield method and assumptions as of the issue date for mortality, interest rates, lapse and expenses plus provisions for adverse deviations.

At March 31, 2022, the Company had interest sensitive life business with minimum guaranteed interest rates ranging from 2.5 % to 6.0 % with a 4.68 % average guaranteed rate and fixed interest rate annuities with minimum guaranteed rates ranging from 1.0 % to 5.5 % and a 1.99 % average guaranteed rate.

At March 31, 2022 and December 31, 2021, approximately 93 % and 94 %, respectively, of the Company’s annuity account values correspond to crediting rates that are at the minimum guaranteed interest rates.

At June 30, 2022, the Company had interest sensitive life business with minimum guaranteed interest rates ranging from 2.5 % to 6.0 % with a 4.68 % average guaranteed rate and fixed interest rate annuities with minimum guaranteed rates ranging from 1.0 % to 5.5 % and a 1.95 % average guaranteed rate.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9.

Reserves for Future Policy Benefits and Claims Payable and Other Contract Holder Funds

At June 30, 2022 and December 31, 2021, approximately 92 % and 94 %, respectively, of the Company’s annuity account values correspond to crediting rates that are at the minimum guaranteed interest rates.

The following tables show the distribution of the annuity account values within the presented ranges of minimum guaranteed interest rates, excluding the reinsured business (in millions):

March 31,2022

Guaranteed Interest Rate Account Value

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Total $ 14,354 $ 13,333 $ 1 $ 9,456 $ 37,144

At both March 31, 2022 and December 31, 2021, approximately 80 % of the Company’s interest sensitive life business account values correspond to crediting rates that are at the minimum guaranteed interest rates.

At both June 30, 2022 and December 31, 2021, approximately 80 % of the Company’s interest sensitive life business account values correspond to crediting rates that are at the minimum guaranteed interest rates.

The following table shows the distribution of the interest sensitive life business account values within the presented ranges of minimum guaranteed interest rates, excluding the business that is subject to the previously mentioned retro treaties (in millions):

March 31, December 31,

June 30, December 31,

Guaranteed Interest Rate 2022 2021

9 unchanged sentences

Jackson National Life Global Funding was formed as a statutory business trust, solely for the purpose of issuing Medium Term Note instruments to institutional investors, the proceeds of which are deposited with the Company and secured by the issuance of funding agreements.

The carrying values at March 31, 2022 and December 31, 2021 totaled $ 6.1 billion and $ 6.0 billion, respectively.

The carrying values at June 30, 2022 and December 31, 2021 totaled $ 5.3 billion and $ 6.0 billion, respectively.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9.

Reserves for Future Policy Benefits and Claims Payable and Other Contract Holder Funds

Those Medium-Term Note instruments issued in a foreign currency have been hedged for changes in exchange rates using cross-currency swaps.

2 unchanged sentences

Foreign currency translation gains and losses are included in net gains (losses) on derivatives and investments.

Jackson and Squire Re are members of the FHLBI primarily for the purpose of participating in the bank’s mortgage-collateralized loan advance program with long-term funding facilities.

Jackson is a member of the FHLBI primarily for the purpose of participating in the bank’s mortgage-collateralized loan advance program with long-term funding facilities.

Advances are in the form of long-term notes or funding agreements issued to FHLBI.

At March 31, 2022 and December 31, 2021, the Company held $ 146 million and $ 125 million of FHLBI capital stock, respectively, supporting $ 2.6 billion and $ 2.0 billion in funding agreements and long-term borrowings at March 31, 2022 and December 31, 2021, respectively.

At June 30, 2022 and December 31, 2021, the Company held $ 146 million and $ 125 million of FHLBI capital stock, respectively, supporting $ 2.1 billion and $ 2.0 billion in funding agreements and long-term borrowings at June 30, 2022 and December 31, 2021, respectively.

The Company’s institutional products business is comprised of the traditional guaranteed investment contracts, medium-term funding agreement-backed notes and funding agreements (including agreements issued in conjunction with the Company’s participation in the U.S.

9 unchanged sentences

Separate account net investment income, net investment realized and unrealized gains and losses, and the related liability changes are offset within the same line item in the Condensed Consolidated Income Statements.

At March 31, 2022 and December 31, 2021, the Company provided variable annuity contracts with guarantees, for which the net amount at risk is defined as the amount of guaranteed benefit in excess of current account value, as follows (dollars in millions):

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10.

Certain Nontraditional Long-Duration Contracts and Variable Annuity Guarantees

At June 30, 2022 and December 31, 2021, the Company provided variable annuity contracts with guarantees, for which the net amount at risk is defined as the amount of guaranteed benefit in excess of current account value, as follows (dollars in millions):

Minimum Return Account

Value Net Amount at Risk Weighted Average Attained Age Average Period until Expected Annuitization

March 31, 2022

June 30, 2022

Return of net deposits plus a minimum return

6 unchanged sentences

GMWB - Highest anniversary only 2,985 591

GMWB 1,016 61

Combination net deposits plus minimum return,

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The combination GMWB category also includes benefits with a defined increase in the withdrawal percentage under pre-defined non-market conditions.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10.

Certain Nontraditional Long-Duration Contracts and Variable Annuity Guarantees

Amounts shown as GMWB above include a ‘not-for-life’ component up to the point at which the guaranteed withdrawal benefit is exhausted, after which benefits paid are considered to be ‘for-life’ benefits.

2 unchanged sentences

Account balances of contracts with guarantees were invested in variable separate accounts as follows (in millions):

March 31, December 31,

June 30, December 31,

Equity $ 117,636 $ 154,368

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GMDB liabilities reflected in the general account were as follows (in millions):

Three Months Ended March 31,

Six Months Ended June 30,

Balance as of beginning of period $ 1,370 $ 1,418

4 unchanged sentences

The Company regularly evaluates estimates used and adjusts the liability balance through the Condensed Consolidated Income Statements, within death, other policy benefits and change in policy reserves, if actual experience or other evidence suggests that earlier assumptions should be revised.

The following assumptions and methodology were used to determine the GMDB liability at both March 31, 2022 and December 31, 2021 (except where otherwise noted):

The following assumptions and methodology were used to determine the GMDB liability at both June 30, 2022 and December 31, 2021 (except where otherwise noted):

• Use of a series of stochastic investment performance scenarios, based on historical average market volatility.

• Mean investment performance assumption of 7.15 %, after investment management fees, but before external investment advisory fees and mortality and expense charges.

• Mortality equal to 38 % to 100 % of the 2012 Individual Annuity Mortality ("IAM") basic table improved using Scale G2 through 2020.

• Mortality equal to 38 % to 100 % of the 2012 Individual Annuity Mortality basic table improved using Scale G2 through 2020.

• Lapse rates varying by contract type, duration and degree the benefit is in-the-money and ranging from 0.3 % to 27.9 % (before application of dynamic adjustments).

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The fair value of these liabilities is determined using stochastic modeling and inputs as further described in Note 6.

The fair valued GMWB had a reserve liability of $ 452 million and $ 2,626 million at March 31, 2022 and December 31, 2021, respectively, and was reported in reserves for future policy benefits and claims payable.

The fair valued GMWB had a reserve liability of $ 601 million and $ 2,626 million at June 30, 2022 and December 31, 2021, respectively, and was reported in reserves for future policy benefits and claims payable.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10.

Certain Nontraditional Long-Duration Contracts and Variable Annuity Guarantees

The Company has also issued certain GMWB products that guarantee payments over a lifetime.

Reserves for the portion of these benefits after the point where the guaranteed withdrawal balance is exhausted are calculated using assumptions and methodology similar to the GMDB liability.

At March 31, 2022 and December 31, 2021, these GMWB reserves totaled $ 223 million and $ 196 million, respectively, and were reported in reserves for future policy benefits and claims payable.

At June 30, 2022 and December 31, 2021, these GMWB reserves totaled $ 306 million and $ 196 million, respectively, and were reported in reserves for future policy benefits and claims payable.

GMAB benefits were offered on some variable annuity products.

2 unchanged sentences

The assumptions used for calculating the direct GMIB liability are consistent with those used for calculating the GMDB liability.

At March 31, 2022 and December 31, 2021, GMIB reserves before reinsurance totaled $ 97 million and $ 78 million, respectively.

At June 30, 2022 and December 31, 2021, GMIB reserves before reinsurance totaled $ 132 million and $ 78 million, respectively.

Other Liabilities – Insurance and Annuitization Benefits

1 unchanged sentence

Liabilities for these benefits, as established according to the methodologies described below, are as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Benefit Type Liability

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• Other experience assumptions similar to those used in amortization of deferred acquisition costs.

• Discount rates equal to credited interest rates, approximately 3.0 % to 5.5 % at both March 31, 2022 and December 31, 2021.

• Discount rates equal to credited interest rates, approximately 3.0 % to 5.5 % at both June 30, 2022 and December 31, 2021.

The Company also has a small closed block of two-tier annuities, where different crediting rates are used for annuitization and surrender benefit calculations.

A liability is established to cover future annuitization benefits in excess of surrender values and was immaterial to the Condensed Consolidated Financial Statements at both March 31, 2022 and December 31, 2021, respectively.

A liability is established to cover future annuitization benefits in excess of surrender values and was immaterial to the Condensed Consolidated Financial Statements at both June 30, 2022 and December 31, 2021, respectively.

The Company also offers an optional lifetime income rider with certain of its fixed index annuities.

The liability established for this rider before reinsurance was $ 41 million and $ 37 million at March 31, 2022 and December 31, 2021, respectively.

The liability established for this rider before reinsurance was $ 49 million and $ 37 million at June 30, 2022 and December 31, 2021, respectively.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 11.

Long-Term Debt

Liabilities for the Company’s debt are primarily carried at an amount equal to the unpaid principal balance.

Original issuance discount or premium and any debt issue costs, if applicable, are recognized as a component of interest expense over the period the debt is expected to be outstanding.

The aggregate carrying value of long-term debt were as follows (in millions):

June 30, December 31,

Long-Term Debt

Senior Notes due 2023 $ 596 $ 596

Senior Notes due 2027 397 —

Senior Notes due 2031 493 495

Senior Notes due 2032 347 —

Senior Notes due 2051 488 490

Term loan due 2023 — 751

Surplus notes 250 250

FHLBI bank loans 63 67

Total long-term debt $ 2,634 $ 2,649

The following table presents the contractual maturities of the Company's long-term debt as of June 30, 2022 (in millions):

Calendar Year

2023 2024 2025 2026 2027 and thereafter Total

Long-term debt $ 596 $ — $ — $ — $ 2,038 $ 2,634

On June 8, 2022, the Company issued $ 750 million aggregate principal amount of its senior unsecured notes, consisting of $ 400 million aggregate principal amount of 5.170 % Senior Notes due June 8, 2027 (the “2027 Notes”) and $ 350 million aggregate principal amount of 5.670 % Senior Notes due June 8, 2032 (the “2032 Notes”).

The net proceeds of the 2027 Notes and 2032 Notes were used, together with cash on hand, to repay the Company’s $ 750 million aggregate principal senior unsecured amount term loan due February 2023 (the “2023 DDTL Facility”).

On November 23, 2021, the Company issued $ 1.6 billion aggregate principal amount of its senior unsecured notes consisting of $ 600 million aggregate principal amount of 1.1 % Senior Notes due November 22, 2023 (the “2023 Senior Notes”), $ 500 million aggregate principal amount of 3.1 % Senior Notes due November 23, 2031 (the “2031 Senior Notes”) and $ 500 million aggregate principal amount of 4.0 % Senior Notes due November 23, 2051 (the “2051 Senior Notes” and, together with the 2023 Senior Notes and the 2031 Senior Notes, the “Senior Notes”).

The proceeds of the Senior Notes were used, together with cash on hand, to repay the Company’s $ 1.6 billion aggregate principal amount senior unsecured term loan due May 2022 (the “2022 DDTL Facility”), as described below.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 11.

Long-Term Debt

On February 22, 2021, the Company entered into loan facilities including a $ 1.0 billion revolving credit facility (the “Revolving Facility”), a $ 1.7 billion 2022 DDTL Facility and a $ 1.0 billion 2023 DDTL Facility (the “Credit Facilities”) with a syndicate of banks.

The Revolving Facility provides liquidity backstop.

On September 10, 2021, the Company borrowed an aggregate principal amount of $ 2.4 billion under the term loan facilities as follows:

$ 1.6 billion under the 2022 DDTL Facility and $ 750 million under the 2023 DDTL Facility.

The proceeds of those borrowings were used for general corporate purposes, including liquidity at the holding company and capitalization of the insurance subsidiaries.

Under the terms of the credit agreement for the DDTL Facilities, subject to certain exceptions, 100% of the net cash proceeds from any debt issuance, preferred equity issuance or hybrid instrument issuance by the Company or its subsidiaries is required to be applied (i) first to prepay the 2022 DDTL Facility and (ii) thereafter, to prepay the 2023 DDTL Facility.

As noted above, both term loans have been retired through the application of the proceeds from senior unsecured notes and cash on hand.

Federal Home Loan Bank Advances

The Company, through its subsidiary, Jackson, entered into an advance program with the FHLBI in which interest rates were either fixed or variable based on the FHLBI cost of funds or market rates.

Advances of $ 500 million and nil were outstanding at March 31, 2022 and December 31, 2021, respectively, and were recorded in other liabilities.

Advances of nil were outstanding at both June 30, 2022 and December 31, 2021, respectively, and were recorded in other liabilities.

The Company uses the estimated annual effective tax rate (“ETR”) method in computing the interim tax provision.

3 unchanged sentences

The estimated annual ETR is revised, as necessary, at the end of successive interim reporting periods.

The Company’s effective income tax rate was 14.0 % for the three months ended March 31, 2022, compared with 16.7 % for the same period in 2021.

The effective tax rate differs from the statutory rate of 21% primarily due to the dividends received deduction and utilization of foreign tax credits.

The effective tax rate differs for the three months ended March 31, 2022 and March 31, 2021 due to the relationship of taxable income to consolidated pre-tax income.

The effective tax rate differs for the three months ended March 31, 2022 from the full year-ended December 31, 2021 effective tax rate of 15.9 % due to the relationship of taxable income to consolidated pre-tax income, the provision-to-return adjustments recorded in 2021 and the net interest related to income taxes recorded in 2021 .

The Company’s effective income tax rate was 19.8 % and 17.5 % for the three and six months ended June 30, 2022, compared with 9.2 % and 18.2 % for the same periods in 2021.

The ETR differs from the statutory rate of 21% primarily due to the dividends received deduction and utilization of foreign tax credits.

The change in the ETR for the three and six months ended June 30, 2022 was due to the relationship of taxable income to consolidated pre-tax income.

The ETR differs for the six months ended June 30, 2022 from the full year-ended December 31, 2021 ETR of 15.9 % due to the relationship of taxable income to consolidated pre-tax income, the provision-to-return adjustments recorded in 2021 and the net interest related to income taxes recorded in 2021.

The Company is required to evaluate the recoverability of its deferred tax assets and establish a valuation allowance, if necessary, to reduce its deferred tax asset to an amount that is more likely than not to be realizable.

Considerable judgment and the use of estimates are required when determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance.

When evaluating the need for a valuation allowance, the Company considers many factors, including:

the nature and character of the deferred tax assets and liabilities;

taxable income in prior carryback years;

future reversals of temporary differences;

the length of time carryovers can be utilized;

and any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused.

For the three month period ended June 30, 2022, recent changes in market conditions, including rising interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolio resulting in deferred tax assets related to net unrealized tax capital losses.

The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery.

As of June 30, 2022, based on all available evidence, we concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses that are not more-likely-than-not to be realized.

For the three months ending June 30, 2022, the Company established $ 320 million of valuation allowance associated with the unrealized tax losses in the companies’ available for sale securities portfolio.

All of the valuation allowance establishment was allocated to other comprehensive income.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 14.

Commitments and Contingencies

The Company and its subsidiaries are involved in litigation arising in the ordinary course of business.

2 unchanged sentences

The Company accrues for legal contingencies once the contingency is deemed to be probable and reasonably estimable.

At March 31, 2022, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $ 1,807 million.

At March 31, 2022, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $ 1,956 million.

At June 30, 2022, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $ 1,676 million.

At June 30, 2022, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $ 1,596 million.

Other Related Party Transactions

The Company's investment management operation, PPM, provides investment services to certain Prudential affiliated entities.

The Company recognized $ 9 million and $ 10 million of revenue during the three months ended March 31, 2022, and 2021, associated with these investment services.

The Company recognized $ 9 million and $ 9 million of revenue during the three months ended June 30, 2022, and 2021, and $ 18 million and $ 19 million of revenue during the six months ended June 30, 2022 and 2021, associated with these investment services.

This revenue was included in fee income in the accompanying Condensed Consolidated Income Statements.

1 unchanged sentence

Apollo management fees, which are calculated and paid monthly in arrears, are paid directly from the funds withheld account, administered by Athene.

These payments were $ 22 million and $ 28 million during the three months ended March 31, 2022, and 2021, associated with these services.

These payments were $ 21 million and $ 26 million during the three months ended June 30, 2022, and 2021, and $ 43 million and $ 54 million during the six months ended June 30, 2022 and 2021, associated with these services.

Operating Costs and Other Expenses

The following table is a summary of the Company’s operating costs and other expenses (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Asset-based commission expenses $ 250 $ 281 $ 525 $ 548

3 unchanged sentences

Total operating costs and other expenses $ 517 $ 600 $ 1,124 $ 1,198

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 17.

Accumulated Other Comprehensive Income (Loss)

The following table represents changes in the balance of AOCI, net of income tax, related to unrealized investment gains (losses) (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Balance, beginning of period (1)

8 unchanged sentences

$ ( 3,722 ) $ 2,391 $ ( 3,722 ) $ 2,391

(1) Includes $( 686 ) million and $ 287 million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of March 31, 2022 and December 31, 2021, respectively.

(1) Includes $( 1,677 ) million, $ 287 million and $ 632 million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively.

The following table represents amounts reclassified out of AOCI (in millions):

2 unchanged sentences

Consolidated Income Statement

Three Months Ended March 31,

Three Months Ended June 30,

Net unrealized investment gain (loss):

6 unchanged sentences

Reclassifications, net of income taxes $ 4 $ ( 115 )

The Company has two classes of common stock:

AOCI Components Amounts

Reclassified from AOCI Affected Line Item in the Condensed

Consolidated Income Statement

Six Months Ended June 30,

Net unrealized investment gain (loss):

Net realized gain (loss) on investments $ ( 38 ) $ ( 268 ) Net gains (losses) on derivatives and investments

Other impaired securities 30 — Net gains (losses) on derivatives and investments

Net unrealized gain (loss) ( 8 ) ( 268 )

Amortization of deferred acquisition costs — 23

Reclassifications, before income taxes ( 8 ) ( 245 )

Income tax expense (benefit) ( 1 ) ( 53 )

Reclassifications, net of income taxes $ ( 7 ) $ ( 192 )

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 18.

The Company had two classes of common stock:

Class A Common Stock and Class B Common Stock.

Both classes have a par value of $ 0.01 per share.

Both classes had a par value of $ 0.01 per share.

Each share of Class A Common Stock is entitled to one vote per share.

Each share of Class B Common Stock is entitled to one-tenth of one vote per share.

Except for voting rights, the Company’s Class A Common Stock and Class B Common Stock have the same dividend rights, are equal in all respects, and are otherwise treated as if they were one class of shares.

At March 31, 2022 and December 31, 2021, the Company was authorized to issue up to 900 million shares of Class A Common Stock and 100 million shares of Class B Common Stock.

Share Repurchases

On February 28, 2022, our Board of Directors authorized an increase of $ 300 million in our existing share repurchase authorization of JFI's Class A Common Stock.

As of May 4, 2022, the Company had remaining authority to purchase $ 230 million of its common shares.

Each share of Class B Common Stock was entitled to one-tenth of one vote per share.

Except for voting rights, the Company’s Class A Common Stock and Class B Common Stock had the same dividend rights, were equal in all respects, and were otherwise treated as if they were one class of shares.

On June 9, 2022, our Second Amended and Restated Certificate of Incorporation was further amended and restated, following shareholder approval, to eliminate the Class B Common Stock.

At June 30, 2022 and December 31, 2021, the Company was authorized to issue up to 900 million shares of common stock (formerly known as the Class A Common Stock).

At June 30, 2022 and December 31, 2021, the Company was authorized to issue nil and 100 million shares of Class B Common Stock, respectively.

Share Repurchase Program

On February 28, 2022, our Board of Directors authorized an increase of $ 300 million in our existing authorization to repurchase shares of our outstanding Class A Common Stock as part of the Company's share repurchase program.

As of August 3, 2022, the Company had remaining authority to purchase $ 183 million of its common shares.

The Company expects to repurchase shares from time to time in the open market or in privately negotiated transactions.

2 unchanged sentences

It does not have an expiration date.

The following table represents share repurchase activities:

There can be no assurance that we will continue share repurchases or approve any increase to, or approve any new, stock repurchase program, or as to the amount of any repurchases made pursuant to such programs.

The following table represents share repurchase activities as part of this share repurchase program:

Period Number of Shares Repurchased Total Payments

3 unchanged sentences

2022 (January 1- March 31) 3,433,610 140 40.84

2022 (April 1- May 4) 433,299 19 43.37

2022 (April 1- June 30) 1,870,854 66 35.15

Total 2022 5,304,464 $ 206 $ 38.83

The following table represents changes in the balance of common shares outstanding:

Common Stock Treasury Stock Total Common Stock Outstanding

Shares outstanding at December 31, 2021 94,464,343 ( 5,778,649 ) 88,685,694

The following table represents changes in the balance of common stock outstanding:

Common Stock Issued Treasury Stock Total Common Stock Outstanding

Shares at December 31, 2021 94,464,343 ( 5,778,649 ) 88,685,694

Share-based compensation programs

1 unchanged sentence

Shares repurchased under repurchase program — ( 5,304,464 ) ( 5,304,464 )

Shares outstanding at March 31, 2022 94,467,049 ( 9,203,441 ) 85,263,608

(1) Represents net shares issued from treasury pursuant to the Company’s share-based compensation programs.

Shares at June 30, 2022 94,473,126 ( 9,608,399 ) 84,864,727

(1) Represents net shares issued from treasury stock pursuant to the Company’s share-based compensation programs.

On December 13, 2021, we repurchased 2,242,516 shares of our Class A Common Stock from Prudential and 1,134,767 shares of our Class A Common Stock from Athene.

2 unchanged sentences

On February 1, 2022, Athene converted the remaining 638,861 shares of its Class B Common Stock to Class A Common Stock on a one-for-one basis.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 18.

On March 12, 2022, we repurchased 750,000 shares of our Class A Common Stock from Athene.

2 unchanged sentences

Any declaration of cash dividends will be at the discretion of JFI’s Board of Directors and will depend on our financial condition, earnings, liquidity and capital requirements, regulatory constraints, level of indebtedness, contractual restrictions with respect to paying cash dividends, restrictions imposed by Delaware law, general business conditions and any other factors that JFI’s Board of Directors deems relevant in making any such determination.

Therefore, there can be no assurance that we will pay any cash dividends to holders of our common stock or approve any stock repurchase program, or as to the amount of any such cash dividends or stock repurchases.

Therefore, there can be no assurance that we will pay any cash dividends to holders of our common stock or as to the amount of any such cash dividend.

The following table presents declaration date, record date, payment date and dividends paid on per JFI’s Class A and Class B common shares:

Three Months Ended Declaration Date Record Date Payment Date Dividends Paid Per Share

Declaration Date Record Date Payment Date Dividends Paid Per Share

03/31/2022 February 28, 2022 March 14, 2022 March 23, 2022 $ 0.55

03/31/2021 N/A N/A N/A N/A

06/30/2022 May 9, 2022 June 2, 2022 June 16, 2022 $ 0.55

Earnings Per Share

1 unchanged sentence

shareholders by the weighted-average number of Class A and Class B common shares outstanding during the period.

Diluted earnings per share is calculated by dividing the net income (loss) attributable to Jackson Financial Inc.

shareholders, by the weighted-average number of shares of Class A Common Stock and Class B Common Stock outstanding for the period, plus shares representing the dilutive effect of share-based awards.

For the three months ended March 31, 2021, the Company did not have any outstanding share-based awards involving the issuance of the Company’s equity and, therefore, no impact to the diluted earnings per share calculation.

For the three and six months ended June 30, 2021, the Company did not have any outstanding share-based awards involving the issuance of the Company’s equity and, therefore, no impact to the diluted earnings per share calculation.

The Company grants share-based awards subject to vesting provisions as provided in the Company's 2021 Omnibus Incentive Plan, which have a dilutive effect.

See Note 16 for further description of share-based awards in the Company's Annual Report on Form 10-K for year ended December 31, 2021.

See Note 16 for further description of share-based awards in the Company's 2021 Annual Report.

The following table sets forth the calculation of earnings per common share:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(in millions, except share and per share data)

7 unchanged sentences

Diluted $ 32.56 $ ( 5.72 ) $ 54.72 $ 25.32

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 20.

Subsequent Events

The Company has evaluated subsequent events through the date these Condensed Consolidated Financial Statements were issued.

Dividends Declared to Shareholders

On May 9, 2022, our Board of Directors approved a second quarter cash dividend on JFI's Class A Common Stock of $ 0.55 per share, payable on June 16, 2022 to shareholders of record on June 2, 2022.

On August 8, 2022, our Board of Directors approved a third quarter cash dividend on JFI's Common Stock of $ 0.55 per share, payable on September 15, 2022 to shareholders of record on September 1, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements