What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 650 added, 407 removed, 2402 unchanged (31% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except per share data)

March 31, December 31,

(in millions, except share data)

June 30, December 31,

2023 2022 (1)

Assets (Unaudited) (Unaudited)

Debt Securities, available-for-sale, net of allowance for credit losses of $ 29 and $ 23 at March 31, 2023 and December 31, 2022, respectively (amortized cost:

Assets (Unaudited)

Debt Securities, available-for-sale, net of allowance for credit losses of $ 16 and $ 23 at June 30, 2023 and December 31, 2022, respectively (amortized cost:

2023 $ 47,871 ;

4 unchanged sentences

Equity securities, at fair value 267 393

Mortgage loans, net of allowance for credit losses of $ 146 and $ 95 at March 31, 2023 and December 31, 2022, respectively

Mortgage loans, net of allowance for credit losses of $ 162 and $ 95 at June 30, 2023 and December 31, 2022, respectively

10,303 10,967

Mortgage loans, at fair value under fair value option 509 582

Policy loans (including $ 3,427 and $ 3,419 at fair value under the fair value option at March 31, 2023 and December 31, 2022, respectively)

Policy loans (including $ 3,438 and $ 3,419 at fair value under the fair value option at June 30, 2023 and December 31, 2022, respectively)

Freestanding derivative instruments 946 1,270

4 unchanged sentences

Deferred acquisition costs 12,599 12,923

Reinsurance recoverable, net of allowance for credit losses of $ 15 and $ 15 at March 31, 2023 and December 31, 2022, respectively

Reinsurance recoverable, net of allowance for credit losses of $ 39 and $ 15 at June 30, 2023 and December 31, 2022, respectively

27,069 29,046

9 unchanged sentences

Market risk benefit liabilities, at fair value 4,463 5,662

Funds withheld payable under reinsurance treaties (including $ 3,591 and $ 3,582 at fair value under the fair value option at March 31, 2023 and December 31, 2022, respectively)

Funds withheld payable under reinsurance treaties (including $ 3,602 and $ 3,582 at fair value under the fair value option at June 30, 2023 and December 31, 2022, respectively)

21,170 22,957

14 unchanged sentences

Common stock;

1,000,000,000 shares authorized, $ 0.01 par value per share and 81,044,318 and 82,690,098 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively (See Note 20)

1,000,000,000 shares authorized, $ 0.01 par value per share and 81,910,831 and 82,690,098 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (See Note 20)

Additional paid-in capital 5,997 6,063

Treasury stock, at cost;

13,431,514 and 11,784,813 shares at March 31, 2023 and December 31, 2022, respectively

12,570,175 and 11,784,813 shares at June 30, 2023 and December 31, 2022, respectively

( 466 ) ( 443 )

Accumulated other comprehensive income (loss), net of tax expense (benefit) of $ 52 and $( 66 ) at March 31, 2023 and December 31, 2022, respectively

Accumulated other comprehensive income (loss), net of tax expense (benefit) of $( 127 ) and $( 66 ) at June 30, 2023 and December 31, 2022, respectively

( 3,365 ) ( 3,378 )

10 unchanged sentences

(Unaudited, in millions, except per share data)

Three Months Ended March 31,

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

2023 2022 (1)

Fee income $ 1,913 $ 1,934 $ 3,801 $ 3,946

25 unchanged sentences

1,217 3,263 ( 280 ) 5,457

Dividends on preferred stock 13 — 13 —

Net income (loss) attributable to Jackson Financial Inc.

common shareholders $ 1,204 $ 3,263 $ ( 293 ) $ 5,457

Earnings per share

7 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

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

2023 2022 (1)

Net income (loss) $ 1,220 $ 3,294 $ ( 276 ) $ 5,519

1 unchanged sentence

Change in unrealized gains (losses) on securities with no credit impairment net of tax expense (benefit) of:

$ 92 and $( 777 ), for the three months ended March 31, 2023 and 2022, respectively

$( 34 ) and $( 390 ), for the three months ended June 30, 2023 and 2022, respectively, and $ 58 and $( 1,167 ) for the six months ended June 30, 2023 and 2022, respectively.

( 532 ) ( 2,888 ) 436 ( 5,714 )

Change in unrealized gains (losses) on securities with credit impairment, net of tax expense (benefit) of:

$( 2 ) and $ 4 million for the three months ended March 31, 2023 and 2022, respectively

Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) of $( 32 ) and $ 166 for the three months ended March 31, 2023 and 2022, respectively.

Change in non-performance risk on market risk benefits, net of tax expense (benefit) of $ 60 and $ 202 for the three months ended March 31, 2023 and 2022, respectively.

$( 1 ) and $ 2 million for the three months ended June 30, 2023 and 2022, respectively, and $( 3 ) and $ 6 for the six months ended June 30, 2023 and 2022, respectively.

( 1 ) 8 ( 9 ) 22

Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) of $ 21 and $ 128 for the three months ended June 30, 2023 and 2022, respectively, and $( 11 ) and $ 294 for the six months ended June 30, 2023 and 2022, respectively.

75 463 ( 39 ) 1,062

Change in non-performance risk on market risk benefits, net of tax expense (benefit) of $( 165 ) and $ 220 for the three months ended June 30, 2023 and 2022, respectively, and $( 105 ) and $ 422 for the six months ended June 30, 2023 and 2022, respectively.

( 599 ) 797 ( 375 ) 1,531

Total other comprehensive income (loss) ( 1,057 ) ( 1,620 ) 13 ( 3,099 )

12 unchanged sentences

Stock Stock Capital at Cost Income Earnings Equity Interests Equity

Balances as of March 31, 2023 $ 533 $ 1 $ 6,070 $ ( 510 ) $ ( 2,308 ) $ 4,852 $ 8,638 $ 829 $ 9,467

Net income (loss) — — — — — 1,217 1,217 3 1,220

Other comprehensive income (loss) — — — — ( 1,057 ) — ( 1,057 ) — ( 1,057 )

Change in equity of noncontrolling interests — — — — — — — ( 61 ) ( 61 )

Dividends on preferred stock — — — — — ( 13 ) ( 13 ) — ( 13 )

Dividends on common stock — — — — — ( 53 ) ( 53 ) — ( 53 )

Purchase of treasury stock — — — ( 94 ) — — ( 94 ) — ( 94 )

Share based compensation — — ( 73 ) 138 — ( 51 ) 14 — 14

Balances as of June 30, 2023 $ 533 $ 1 $ 5,997 $ ( 466 ) $ ( 3,365 ) $ 5,952 $ 8,652 $ 771 $ 9,423

Additional Treasury Other Total Non-

Preferred Common Paid-In Stock Comprehensive Retained Shareholders' Controlling Total

Stock Stock Capital at Cost Income Earnings Equity Interests Equity

Balances as of March 31, 2022 (1)

$ — $ 1 $ 6,081 $ ( 351 ) $ ( 119 ) $ 2,582 $ 8,194 $ 715 $ 8,909

Net income (loss) — — — — — 3,263 3,263 31 3,294

Other comprehensive income (loss) — — — — ( 1,620 ) — ( 1,620 ) — ( 1,620 )

Change in equity of noncontrolling interests — — — — — — — 1 1

Dividends on common stock — — — — — ( 50 ) ( 50 ) — ( 50 )

Purchase of treasury stock — — — ( 100 ) — — ( 100 ) — ( 100 )

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

Balances as of June 30, 2022 (1)

$ — $ 1 $ 6,020 $ ( 371 ) $ ( 1,739 ) $ 5,795 $ 9,706 $ 747 $ 10,453

Additional Treasury Other Total Non-

Preferred Common Paid-In Stock Comprehensive Retained Shareholders' Controlling Total

Stock Stock Capital at Cost Income Earnings Equity Interests Equity

Balances as of December 31, 2022 (1)

3 unchanged sentences

Change in equity of noncontrolling interests — — — — — — — 35 35

Dividends on preferred stock — — — — — ( 13 ) ( 13 ) — ( 13 )

Dividends on common stock — — — — — ( 107 ) ( 107 ) — ( 107 )

2 unchanged sentences

Share based compensation — — ( 66 ) 141 — ( 51 ) 24 — 24

Balances as of March 31, 2023 $ 533 $ 1 $ 6,070 $ ( 510 ) $ ( 2,308 ) $ 4,852 $ 8,638 $ 829 $ 9,467

Balances as of June 30, 2023 $ 533 $ 1 $ 5,997 $ ( 466 ) $ ( 3,365 ) $ 5,952 $ 8,652 $ 771 $ 9,423

Additional Treasury Other Total Non-

6 unchanged sentences

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

Purchase of treasury stock — — — ( 140 ) — — ( 140 ) — ( 140 )

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

Purchase of treasury stock — — — ( 240 ) — — ( 240 ) — ( 240 )

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

Balances as of March 31, 2022 (1)

Balances as of June 30, 2022 (1)

$ — $ 1 $ 6,020 $ ( 371 ) $ ( 1,739 ) $ 5,795 $ 9,706 $ 747 $ 10,453

5 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 (1)

35 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 (1)

5 unchanged sentences

Proceeds from (payments on) repurchase agreements and securities lending 630 ( 1,557 )

Net proceeds from (payments on) Federal Home Loan Bank notes — 500

Net proceeds from (payments on) debt ( 46 ) ( 783 )

Net proceeds from issuance of Senior Notes — 750

Debt issuance costs — ( 7 )

Dividends on common stock ( 101 ) ( 102 )

Dividends on preferred stock ( 13 ) —

Purchase of treasury stock ( 164 ) ( 240 )

Issuance of preferred stock 533 —

Other financing activities — 7

Net cash provided by (used in) financing activities ( 1,941 ) ( 2,032 )

21 unchanged sentences

Jackson Financial Inc.

(“Jackson Financial”) along with its subsidiaries (collectively, the “Company,” which also may be referred to as “we,” “our” or “us”), is a financial services company focused on helping Americans grow and protect their retirement savings and income to enable them to pursue financial freedom for life.

("JFI" or “Jackson Financial”) together with its subsidiaries, (the “Company,” which also may be referred to as “we,” “our” or “us”), is a financial services company focused on helping Americans grow and protect their retirement savings and income to enable them to pursue financial freedom for life.

Jackson Financial, domiciled in the state of Delaware in the United States (“U.S.”), was a majority-owned subsidiary of Prudential plc (“Prudential”), London, England, and was the holding company for Prudential’s U.S.

As described below under "Other," the Company's demerger from Prudential was completed on September 13, 2021 ("Demerger"), and the Company is a stand-alone United States ("U.S.") public company.

As described below under "Other," the Company's demerger from Prudential was completed on September 13, 2021 ("Demerger"), and the Company is a stand-alone U.S.

public company.

As of June 30, 2023, Prudential has no remaining equity interest in the Company.

Jackson Financial’s primary life insurance subsidiary, Jackson National Life Insurance Company and its insurance subsidiaries (collectively, “Jackson”), is licensed to sell group and individual annuity products (including immediate, registered index-linked, deferred fixed, fixed index and variable annuities), and individual life insurance products, including variable universal life, in all 50 states and the District of Columbia.

Jackson also participates in the institutional products market through the issuance of guaranteed investment contracts (“GICs”), funding agreements and medium-term note funding agreements.

In addition to Jackson, Jackson Financial’s primary operating subsidiaries are as follows:

In addition to Jackson, Jackson Financial’s other operating subsidiaries are as follows:

• PPM America, Inc.

12 unchanged sentences

• Registered investment adviser:

Jackson National Asset Management LLC (“JNAM“), which manages the life insurance companies' separate account funds underlying the variable annuities products, which are sub-advised.

Jackson National Asset Management LLC (“JNAM”), which manages the life insurance companies' separate account funds underlying our variable annuities products, which funds are sub-advised.

JNAM manages and oversees those sub-advisers;

6 unchanged sentences

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, 2023, Prudential has a 7.1 % remaining equity interest in the Company.

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

Business and Basis of Presentation

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

The COVID-19 pandemic caused significant economic and financial turmoil in the U.S.

and around the world.

Since the height of the pandemic, t here has been a steady resumption of activity.

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.

The Company implemented business continuity plans that already were in place to ensure the availability of services for our customers, work at home capabilities for our associates, where appropriate, and other ongoing risk management activities.

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

The Company rolled out a broader “return to office plan” for all associates, and since September 2022, required some associates to return to the office five days a week.

Associates below director level remain on an “office-centric” hybrid schedule between in-office and remote working arrangements.

Basis of Presentation

4 unchanged sentences

GAAP, but not required for interim reporting purposes, has been condensed or omitted.

The condensed consolidated financial information as of December 31, 2022, included herein, has been derived from the audited Consolidated Financial Statements in the 2022 Annual Report, but recast, as described in these notes, to reflect the adoption of the accounting standard discussed in the next paragraph.

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, 2022, as filed with the SEC on March 1, 2023, (the "2022 Annual Report"), as recast in our Current Report on 8-K filed May 10, 2023, to reflect the adoption of the accounting standard discussed in the next paragraph.

The condensed consolidated financial information as of December 31, 2022, included herein, has been derived from the audited Consolidated Financial Statements, as so recast.

The Company adopted Accounting Standards Update (“ASU”) 2018-12, “Targeted Improvements to the Accounting for Long-Duration Contracts” (“LDTI”), effective January 1, 2023, with a transition date of January 1, 2021.

See Note 2 of the Notes to Condensed Consolidated Financial Statements for further description of the adoption of LDTI.

Certain accounting policies, which significantly affect the determination of financial condition, results of operations and cash flows, are summarized in the Notes to Consolidated Financial Statements in the Company’s 2022 Annual Report.

New accounting policies adopted for LDTI are included in the Notes 7, 8, 9, 10, 11, and 12 to the Condensed Consolidated Financial Statements in this Form 10-Q.

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, 2023, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023.

See Note 2 of the Notes to Condensed Consolidated Financial Statements for further description of our adoption of LDTI.

New accounting policies adopted for LDTI are included in Notes 7, 8, 9, 10, 11, and 12 to the Condensed Consolidated Financial Statements in this Form 10-Q.

In the opinion of management, these Condensed Consolidated Financial Statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results.

Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023.

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

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S.

The preparation of these Condensed Consolidated Financial Statements in conformity with U.S.

GAAP requires the use of estimates and assumptions about future events that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying notes.

7 unchanged sentences

• Assumptions used in calculating market risk benefits including policyholder behavior, mortality rates, and capital market assumptions;

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

Business and Basis of Presentation

• Assumptions impacting the expected term used in the calculation of amortization of deferred acquisition costs, including policyholder behavior and mortality rates.

• Assumptions impacting the expected term used amortizing deferred acquisition costs, including policyholder behavior and mortality rates.

These estimates and assumptions are based on management’s best estimates and judgments.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors deemed appropriate.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other appropriate factors.

As facts and circumstances dictate, these estimates and assumptions may be adjusted.

1 unchanged sentence

Changes in estimates, including those resulting from continuing changes in the economic environment, will be reflected in the consolidated financial statements in the periods the estimates are changed.

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

Business and Basis of Presentation

Revision of Prior Period Financial Statements

20 unchanged sentences

Under the full retrospective transition approach, the Company applied the guidance as of the transition date, using actual historical assumption information as of contract inception, as if the accounting principle had always been applied.

Amounts reported as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 within these Condensed Consolidated Financial Statements are accounted for and presented in accordance with U.S.

Amounts reported as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 within these Condensed Consolidated Financial Statements are accounted for and presented in accordance with U.S.

GAAP reflecting the adoption of LDTI.

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

New Accounting Standards

LDTI contains four significant changes:

Market risk benefits:

market risk benefits, a new term for certain contract features that provide for potential benefits in addition to the account balance that expose the Company to other-than-nominal market risk (for example, guaranteed benefits on annuity contracts, including guaranteed minimum withdrawal benefits and guaranteed minimum death benefits on variable annuities), are measured at fair value.

market risk benefits (“MRBs”), a new term for certain contract features that provide for potential benefits in addition to the account balance that expose the Company to other-than-nominal market risk (for example, guaranteed benefits on annuity contracts, including guaranteed minimum withdrawal benefits and guaranteed minimum death benefits on variable annuities), are measured at fair value.

Changes in fair value are recorded and presented separately within the income statement, with the exception of changes in fair value due to non-performance risk, which are recognized in other comprehensive income (loss) (“OCI”);

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

New Accounting Standards

Deferred acquisition costs:

8 unchanged sentences

The primary drivers for this impact to total equity included:

the classification of certain benefits as market risk benefits (“MRB”) which were remeasured at fair value as of the transition date.

the classification of certain benefits as market risk benefits, which were remeasured at fair value as of the transition date.

The resulting change in the value of these benefits at the transition date, net of the related deferred tax effect, is recognized in retained earnings, with the exception of the cumulative effect of changes in non-performance risk, net of the related deferred tax effect, which is recognized in AOCI;

41 unchanged sentences

Adjustment for loss contracts under the modified retrospective approach 4 15 18 37

Effect of remeasurement of liability at current discount rates 143 560 997 1,700

Effect of remeasurement of liability at current discount rate 143 560 997 1,700

Reserves for future policy benefits at January 1, 2021 $ 1,295 $ 6,384 $ 6,343 $ 14,022

52 unchanged sentences

Balance, January 1, 2021 - Reinsurance recoverable on market risk benefits at fair value $ 368 $ 103 $ 471

The adoption of LDTI resulted in an increase in net income attributable to Jackson Financial Inc.

of $ 169 million for the three months ended March 31, 2022, and also resulted in an increase in total equity of $ 223 million for the year ended December 31, 2022.

The adoption of LDTI resulted in an increase in net income attributable to Jackson Financial of $ 360 million and $ 529 million for the three and six months ended June 30, 2022, respectively, and also resulted in an increase in total equity of $ 223 million for the year ended December 31, 2022.

The following table presents amounts previously reported in the Consolidated Balance Sheets as of December 31, 2022, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts as of December 31, 2022 (in millions):

20 unchanged sentences

New Accounting Standards

The following table present amounts previously reported in Condensed Consolidated Income Statements as revised ( see Note 22- Revision and Reclassifications of Prior Period Financial Statements for further details ) for the three months ended March 31, 2022, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts (in millions):

The following table presents amounts previously reported in Condensed Consolidated Income Statements as revised ( see Note 22- Revision and Reclassifications of Prior Period Financial Statements for further details ) for the three and six months ended June 30, 2022, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts (in millions):

As revised As Adjusted

Three Months Ended Effect of Three Months Ended

March 31, 2022 Changes March 31, 2022

June 30, 2022 Changes June 30, 2022

Total net gains (losses) on derivatives and investments $ 3,867 $ 148 $ 4,015

15 unchanged sentences

Diluted $ 32.56 $ 4.03 $ 36.59

The following table presents amounts previously reported in Consolidated Statements of Comprehensive Income (Loss) as revised ( see Note 22- Revision and Reclassifications of Prior Period Financial Statements for further details ) for the three months ended March 31, 2022, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts (in millions):

As revised As Adjusted

Six Months Ended Effect of Six Months Ended

June 30, 2022 Changes June 30, 2022

Total net gains (losses) on derivatives and investments $ 5,472 $ ( 1,995 ) $ 3,477

Total revenues 10,910 ( 1,995 ) 8,915

Benefits and Expenses

Death, other policy benefits and change in policy reserves, net of deferrals 1,504 ( 930 ) 574

(Gain) loss from updating future policy benefits cash flow assumptions, net — 29 29

Market risk benefits (gains) losses, net — ( 723 ) ( 723 )

Interest credited on other contract holder funds, net of deferrals and amortization 404 2 406

Amortization of deferred acquisition costs 1,712 ( 1,088 ) 624

Total benefits and expenses 4,873 ( 2,710 ) 2,163

Pretax income (loss) 6,037 715 6,752

Income tax expense (benefit) 1,047 186 1,233

Net income (loss) 4,990 529 5,519

Net income (loss) attributable to Jackson Financial Inc.

$ 4,928 $ 529 $ 5,457

Earnings per share

Basic $ 56.87 $ 6.11 $ 62.98

Diluted $ 54.72 $ 5.88 $ 60.60

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

New Accounting Standards

The following table presents amounts previously reported in Condensed Consolidated Statements of Comprehensive Income (Loss) as revised ( see Note 22- Revision and Reclassifications of Prior Period Financial Statements for further details ) for the three and six months ended June 30, 2022, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts (in millions):

As Revised As Adjusted

Three Months Ended Effect of Three Months Ended

March 31, 2022 Changes March 31, 2022

June 30, 2022 Changes June 30, 2022

Net income (loss) $ 2,934 $ 360 $ 3,294

6 unchanged sentences

$ 120 $ 1,523 $ 1,643

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

New Accounting Standards

As Revised As adjusted

Six Months Ended Effect of Six Months Ended

June 30, 2022 Changes June 30, 2022

Net income (loss) $ 4,990 $ 529 $ 5,519

Other comprehensive income (loss), net of tax:

Change in unrealized gains (losses) on securities with no credit impairment, net of tax expense (benefit) ( 5,488 ) ( 226 ) ( 5,714 )

Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) — 1,062 1,062

Change in non-performance risk on market risk benefits, net of tax expense (benefit) — 1,531 1,531

Total other comprehensive income (loss) ( 5,466 ) 2,367 ( 3,099 )

Comprehensive income (loss) attributable to Jackson Financial Inc.

$ ( 538 ) $ 2,896 $ 2,358

The adoption of LDTI did not affect the previously reported as revised ( see Note 22- Revision and Reclassifications of Prior Period Financial Statements for further details ) totals for net cash flows provided by (used in) operating, investing, or financing activities, but did affect the following components of net cash flows provided by (used in) operating activities:

As Revised As Adjusted

Three Months Ended Effect of Three Months Ended

March 31, 2022 Changes March 31, 2022

Six Months Ended Effect of Six Months Ended

June 30, 2022 Changes June 30, 2022

Cash flows from operating activities:

11 unchanged sentences

Net cash provided by (used in) operating activities $ 2,052 $ — $ 2,052

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

New Accounting Standards

In addition, information regarding periods ended on or before December 31, 2022 presented in the following Notes to the Condensed Consolidated Financial Statements has been recast to reflect the adoption of LDTI:

9 unchanged sentences

Segment Information

The Company has three reportable segments consisting of Retail Annuities, Institutional Products, Closed Life and Annuity Block, plus its Corporate and Other segment.

These segments reflect how the Company’s chief operating decision maker views and manages the business.

The following is a brief description of the Company’s reportable segments.

The Company has three reportable segments:

Retail Annuities, Institutional Products, and Closed Life and Annuity Block.

The Company reports certain activities and items that are not included in these reportable segments, including the results of PPM Holdings, Inc., the holding company of PPM, which manages the majority of the Company’s general account investment portfolio, in Corporate and Other.

The reportable segments reflect how the Company’s chief operating decision maker views and manages the business.

The following is a brief description of the Company’s reportable segments, plus its Corporate and Other segment.

Retail Annuities

1 unchanged sentence

These products are distributed through various wirehouses, insurance brokers and independent broker-dealers, as well as through banks and financial institutions, primarily to high-net worth investors and the mass and affluent markets.

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

Segment Information

The Company’s variable annuities represent an attractive option for retirees and soon-to-be retirees, providing access to equity market appreciation and add-on benefits, including guaranteed lifetime income.

2 unchanged sentences

A fixed annuity is a guaranteed product designed to build wealth without market exposure, through a crediting rate that is likely to be superior to interest rates offered from banks or money market funds.

A RILA product offers customers exposure to market returns through market index-linked investment options, subject to a cap, and offers a variety of guarantees designed to modify or limit losses.

A RILA offers customers exposure to market returns through market index-linked investment options, subject to a cap, and offers a variety of guarantees designed to modify or limit losses.

The financial results of the variable annuity business within the Company’s Retail Annuities segment are largely dependent on the performance of the contract holder account value, which impacts both the level of fees collected and the benefits paid to the contract holder.

The financial results of the Company’s fixed annuities, including the fixed option on variable annuities, RILA and fixed index annuities, are largely dependent on the Company’s ability to earn a spread between earned investment rates on general account assets and the interest credited to contract holders.

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

Segment Information

Institutional Products

The Company’s Institutional Products consist of traditional Guaranteed Investment Contracts ("GICs"), funding agreements (including agreements issued in conjunction with the Company’s participation in the U.S.

The Company’s Institutional Products segment consists of traditional Guaranteed Investment Contracts ("GICs"), funding agreements (including agreements issued in conjunction with the Company’s participation in the U.S.

Federal Home Loan Bank ("FHLB") program) and medium-term note funding agreements.

50 unchanged sentences

Segment Information

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

Three Months Ended March 31, 2023 Retail Annuities Institutional

Set forth in the tables below is certain information with respect to the Company’s segments, as described above (in millions, 2022 information recast for the adoption of LDTI):

Three Months Ended June 30, 2023 Retail Annuities Institutional

Products Closed Life

10 unchanged sentences

reserves, net of deferrals 12 — 154 — 166

(Gain) loss from updating future policy benefits cash flow assumptions, net — — 11 — 11

Interest credited on other contract holder funds, net

of deferrals and amortization

96 84 115 — 295

Interest expense 32 4 — 22 58

Operating costs and other expenses, net of deferrals 529 1 42 48 620

Amortization of deferred acquisition costs 139 — 3 — 142

Total Operating Benefits and Expenses 808 89 325 70 1,292

Pretax Adjusted Operating Earnings $ 328 $ 17 $ 7 $ ( 47 ) $ 305

Three Months Ended June 30, 2022 Retail Annuities Institutional

Products Closed Life

Blocks Corporate and

Operating Revenues

Fee income $ 1,034 $ — $ 119 $ 14 $ 1,167

Premiums — — 35 — 35

Net investment income 113 72 167 9 361

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

Other income 11 — 9 1 21

Total Operating Revenues 1,165 68 343 32 1,608

Operating Benefits and Expenses

Death, other policy benefits and change in policy

reserves, net of deferrals 16 — 194 — 210

(Gain) loss from updating future policy benefits cash flow assumptions, net 1 — 14 — 15

Interest credited on other contract holder funds, net

of deferrals and amortization 61 47 101 — 209

Interest expense 6 — — 18 24

3 unchanged sentences

Pretax Adjusted Operating Earnings $ 425 $ 19 $ 12 $ 8 $ 464

Three Months Ended March 31, 2022 Retail Annuities Institutional

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

Segment Information

Six Months Ended June 30, 2023 Retail Annuities Institutional

Products Closed Life

10 unchanged sentences

reserves, net of deferrals ( 3 ) — 317 — 314

(Gain) loss from updating future policy benefits cash flow assumptions, net ( 2 ) — 27 — 25

Interest credited on other contract holder funds, net

of deferrals and amortization

194 160 226 — 580

Interest expense 49 8 — 44 101

Operating costs and other expenses, net of deferrals 1,051 2 81 102 1,236

Amortization of deferred acquisition costs 277 — 5 — 282

Total Operating Benefits and Expenses 1,566 170 656 146 2,538

Pretax Adjusted Operating Earnings $ 684 $ 26 $ ( 13 ) $ ( 90 ) $ 607

Six Months Ended June 30, 2022 Retail Annuities Institutional

Products Closed Life

Blocks Corporate and

Operating Revenues

Fee income $ 2,142 $ — $ 240 $ 30 $ 2,412

Premiums 3 — 72 — 75

Net investment income 227 136 356 43 762

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

Other income 22 — 17 2 41

Total Operating Revenues 2,412 131 713 93 3,349

Operating Benefits and Expenses

Death, other policy benefits and change in policy

reserves, net of deferrals 48 — 419 — 467

(Gain) loss from updating future policy benefits cash flow assumptions, net ( 2 ) — 32 — 30

Interest credited on other contract holder funds, net

of deferrals and amortization 118 86 202 — 406

Interest expense 11 — — 33 44

4 unchanged sentences

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 were $ 18 million and $ 16 million for the three months ended March 31, 2023 and 2022 , respectively .

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 were $ 19 million and $ 18 million for the three months ended June 30, 2023 and 2022, respectively, and $ 37 million and $ 34 million for the six months ended June 30, 2023 and 2022, respectively .

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

1 unchanged sentence

The following table summarizes the reconciling items from the non-GAAP measure of operating revenues to the U.S.

GAAP measure of total revenues attributable to the Company (in millions, recast for the adoption of LDTI):

Three Months Ended March 31,

GAAP measure of total revenues attributable to the Company (in millions, 2022 information recast for the adoption of LDTI):

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

2023 2022 2023 2022

Total operating revenues $ 1,597 $ 1,608 $ 3,145 $ 3,349

9 unchanged sentences

The following table summarizes the reconciling items from the non-GAAP measure of operating benefits and expenses to the U.S.

GAAP measure of total benefits and expenses attributable to the Company (in millions, recast for the adoption of LDTI):

Three Months Ended March 31,

GAAP measure of total benefits and expenses attributable to the Company (in millions, 2022 information recast for the adoption of LDTI):

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

2023 2022 2023 2022

Total operating benefits and expenses $ 1,292 $ 1,144 $ 2,538 $ 2,440

5 unchanged sentences

The following table summarizes the reconciling items, from the non-GAAP measure of pretax adjusted operating earnings to the U.S.

GAAP measure of net income attributable to the Company (in millions, recast for the adoption of LDTI):

Three Months Ended March 31,

GAAP measure of net income attributable to the Company (in millions, 2022 information recast for the adoption of LDTI):

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

2023 2022 2023 2022

Pretax adjusted operating earnings $ 305 $ 464 $ 607 $ 909

4 unchanged sentences

Net reserve and embedded derivative movements ( 194 ) — ( 383 ) ( 40 )

Amortization of DAC associated with non-operating items ( 153 ) ( 173 )

Guaranteed benefits and net hedging results ( 1,900 ) 982

Amortization of DAC associated with non-operating items at date of transition to LDTI ( 149 ) ( 166 ) ( 302 ) ( 339 )

Total guaranteed benefits and net hedging results 1,097 2,262 ( 803 ) 3,244

Net realized investment gains (losses) ( 40 ) 5 ( 108 ) ( 125 )

3 unchanged sentences

Pretax income (loss) attributable to Jackson Financial Inc 1,462 4,108 ( 593 ) 6,690

( 2,055 ) 2,582

Income tax expense (benefit) 245 845 ( 313 ) 1,233

Net income (loss) attributable to Jackson Financial Inc 1,217 3,263 ( 280 ) 5,457

$ ( 1,497 ) $ 2,194

Dividends on preferred stock 13 — 13 —

Net income (loss) attributable to Jackson Financial Inc common shareholders $ 1,204 $ 3,263 $ ( 293 ) $ 5,457

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

4 unchanged sentences

Debt Securities

The following table sets forth the composition of the fair value of debt securities at March 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, classified by rating categories as assigned by a nationally recognized statistical rating organization (“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, 2023 and December 31, 2022, the carrying value of investments rated by the Company’s consolidated investment advisor totaled $ 492 million and $ 32 million, respectively.

At June 30, 2023 and December 31, 2022, the carrying value of investments rated by the Company’s consolidated investment advisor totaled $ 492 million and $ 32 million, respectively.

Percent of Total Debt

Securities Carrying Value

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Investment Rating

7 unchanged sentences

100.0 % 100.0 %

At March 31, 2023, of the total carrying value of debt securities in an unrealized loss position, 78 % were investment grade, 2 % were below investment grade and 20 % were not rated.

At June 30, 2023, of the total carrying value of debt securities in an unrealized loss position, 77 % were investment grade, 2 % were below investment grade and 21 % were not rated.

Unrealized losses on debt securities that were below investment grade or not rated were approximately 21 % 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, 2023, the industries accounting for the largest percentage of unrealized losses included utility ( 16 % of corporate gross unrealized losses) and healthcare ( 10 %).

The largest unrealized loss related to a single corporate obligor was $ 51 million at March 31, 2023.

As of June 30, 2023, the industries accounting for the largest percentage of unrealized losses included utility ( 16 % of corporate gross unrealized losses) and healthcare ( 10 %).

The largest unrealized loss related to a single corporate obligor was $ 53 million at June 30, 2023.

As of December 31, 2022, the industries accounting for the largest percentage of unrealized losses included utility ( 16 % of corporate gross unrealized losses) and healthcare ( 10 %).

The largest unrealized loss related to a single corporate obligor was $ 57 million at December 31, 2022.

At March 31, 2023 and December 31, 2022, 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):

At June 30, 2023 and December 31, 2022, 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):

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

1 unchanged sentence

Amortized for Unrealized Unrealized Fair

March 31, 2023 Cost (1)

June 30, 2023 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, ACL, gross unrealized gains and losses, and fair value of debt securities at March 31, 2023, 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, 2023, 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.

As required by law in various states in which business is conducted, securities with a carrying value of $ 94 million and $ 90 million at March 31, 2023 and December 31, 2022, respectively, were on deposit with regulatory authorities.

As required by law in various states in which business is conducted, securities with a carrying value of $ 93 million and $ 90 million at June 30, 2023 and December 31, 2022, respectively, were on deposit with regulatory authorities.

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

4 unchanged sentences

Amortized for Unrealized Unrealized Fair

March 31, 2023 Cost (1)

June 30, 2023 Cost (1)

Credit Loss Gains Losses Value

18 unchanged sentences

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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Less than 12 months Less than 12 months

35 unchanged sentences

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

Debt securities in an unrealized loss position as of March 31, 2023 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.

Debt securities in an unrealized loss position as of June 30, 2023 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.

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

As of March 31, 2023, unrealized losses associated with debt securities are primarily due to widening credit spreads or rising risk-free rates since purchase.

As of June 30, 2023, 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.

36 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 during the three months ended March 31, 2023 and 2022.

Accrued interest of nil was written off during the three and six months ended June 30, 2023 and 2022.

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

Three Months Ended March 31, 2023 US

Three Months Ended June 30, 2023 US

securities Other government securities Public

1 unchanged sentence

asset-backed securities Total

Balance at April 1, 2023 $ — $ 3 $ — $ 21 $ 5 $ — $ — $ 29

Additions for which credit loss was not previously recorded — — — 1 — — — 1

Changes for securities with previously recorded credit loss — — — ( 1 ) 2 — — 1

Additions for purchases of PCD debt securities (1)

— — — — — — — —

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

Reductions for securities disposed — — — ( 14 ) ( 1 ) — — ( 15 )

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

Balance at June 30, 2023 (2)

$ — $ 3 $ — $ 7 $ 6 $ — $ — $ 16

Three 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 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

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

Six Months Ended June 30, 2023 US

securities Other government securities Public

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

asset-backed securities Total

Balance at January 1, 2023 $ — $ 2 $ — $ 15 $ 6 $ — $ — $ 23

6 unchanged sentences

Securities intended/required to be sold before recovery of amortized cost basis — — — ( 17 ) — — — ( 17 )

Balance at March 31, 2023 (2)

Balance at June 30, 2023 (2)

$ — $ 3 $ — $ 7 $ 6 $ — $ — $ 16

Three Months Ended March 31, 2022 US

Six Months Ended June 30, 2022 US

securities Other government securities Public

9 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

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

(2) Accrued interest receivable on debt securities totaled $ 413 million and $ 385 million as of March 31, 2023 and 2022, respectively, and was excluded from the determination of credit losses for the three months ended March 31, 2023 and 2022.

(2) Accrued interest receivable on debt securities totaled $ 429 million and $ 382 million as of June 30, 2023 and 2022, respectively, and was excluded from the determination of credit losses for the three and six months ended June 30, 2023 and 2022.

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

1 unchanged sentence

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,

2023 2022 2023 2022

Debt securities (1)

$ 338 $ 213 $ 720 $ 486

Equity securities 9 6 ( 1 ) 7

8 unchanged sentences

Net investment income $ 672 $ 692 $ 1,394 $ 1,382

(1) Includes unrealized gains (losses) on trading securities and includes $ 27 million and $( 10 ) million for the three months ended March 31, 2023 and 2022, respectively, related to the change in fair value for securities carried under the fair value option.

Unrealized gains (losses) included in investment income that were recognized on equity securities held were $( 14 ) million and $( 18 ) million, for the three months ended March 31, 2023 and 2022, respectively.

(1) Includes unrealized gains (losses) on trading securities and includes $( 35 ) million and $( 8 ) million for the three and six months ended June 30, 2023, respectively, and $( 95 ) million and $( 85 ) million for the three and six months ended June 30, 2022, respectively, related to the change in fair value for securities carried under the fair value option.

Unrealized gains (losses) included in investment income that were recognized on equity securities held were $( 8 ) million and $( 13 ) million, for the three months ended June 30, 2023 and 2022, respectively, and $( 22 ) million and $( 31 ) million, for the six months ended June 30, 2023 and 2022, respectively.

Net Gains (Losses) on Derivatives and Investments

The following table summarizes net gains (losses) on derivatives and investments (in millions, recast for the adoption of LDTI):

Three Months Ended March 31,

The following table summarizes net gains (losses) on derivatives and investments (in millions, 2022 information recast for the adoption of LDTI):

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

2023 2022 2023 2022

Available-for-sale securities

3 unchanged sentences

Credit loss income (expense) on mortgage loans ( 13 ) ( 9 ) ( 60 ) 3

( 11 ) 71 — 83

Net gains (losses) excluding derivatives and funds withheld assets ( 40 ) 5 ( 108 ) ( 125 )

6 unchanged sentences

These gains (losses) are increased or decreased by changes in the embedded derivative liability related to the Athene funds withheld coinsurance 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, 2023 and 2022 was $ 1,797 million and $ 2,392 million, which was approximately 97 % and 92 % of book value, respectively.

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

Proceeds from sales of available-for-sale debt securities were $ 2.1 billion and $ 4.0 billion during the three months ended March 31, 2023 and 2022, respectively.

The aggregate fair value of securities sold at a loss for the three and six months ended June 30, 2023 was $ 356 million and $ 2,153 million, which was approximately 93 % and 96 % of book value, 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.

Proceeds from sales of available-for-sale debt securities were $ 1.3 billion and $ 3.3 billion during the three and six months ended June 30, 2023, respectively, and $ 0.8 billion and $ 4.9 billion during the three and six months ended June 30, 2022, respectively.

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

16 unchanged sentences

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

The Company intends to divest its investment in certain private equity funds.

While there are multiple scenarios for how the divestiture may be completed, it is probable that the divestiture will result in a loss due to the illiquidity discount that market participants require.

The Company estimates that the loss will approximate $ 50 million and has recognized this amount in Net Investment Income as of June 30, 2023.

PPM has created and managed institutional share class mutual funds, where Jackson seeds new funds, or new share classes within a fund, when deemed necessary to develop the requisite track record prior to allowing investment by external parties.

4 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Debt securities, at fair value under fair value option $ 2,049 $ 2,014

17 unchanged sentences

Unfunded capital commitments for these investments are detailed in Note 16 of the Notes to Condensed Consolidated Financial Statements.

The Company’s exposure to loss is limited to the capital invested and unfunded capital commitments related to the LPs/LLCs, which was $ 3,379 million and $ 3,285 million as of March 31, 2023 and December 31, 2022, respectively.

The Company’s exposure to loss is limited to the capital invested and unfunded capital commitments related to the LPs/LLCs, which was $ 3,016 million and $ 3,285 million as of June 30, 2023 and December 31, 2022, 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 $ 28 million as of March 31, 2023 and December 31, 2022, 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 $ 19 million and $ 28 million as of June 30, 2023 and December 31, 2022, respectively.

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

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

The Company makes investments in structured debt securities issued by VIEs for which it is not the manager.

4 unchanged sentences

The Company does not have any further contractual obligations to the VIE.

The Company recognizes the variable interest in these VIEs at fair value on the Condensed Consolidated Balance Sheets.

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

Company recognizes the variable interest in these VIEs at fair value on the Condensed Consolidated Balance Sheets.

Commercial and Residential Mortgage Loans

Commercial mortgage loans of $ 10.2 billion and $ 10.2 billion at March 31, 2023 and December 31, 2022, respectively, are reported net of an allowance for credit losses of $ 139 million and $ 91 million at each date, respectively.

At March 31, 2023, commercial mortgage loans were collateralized by properties located in 37 states, the District of Columbia, and Europe.

Accrued interest receivable on commercial mortgage loans was $ 39 million and $ 39 million at March 31, 2023 and December 31, 2022, respectively.

Residential mortgage loans of $ 1.1 billion and $ 1.3 billion at March 31, 2023 and December 31, 2022, respectively, are reported net of an allowance for credit losses of $ 7 million and $ 4 million at each date, respectively.

Commercial mortgage loans of $ 9.7 billion and $ 10.2 billion at June 30, 2023 and December 31, 2022, respectively, are reported net of an allowance for credit losses of $ 154 million and $ 91 million at each date, respectively.

At June 30, 2023, commercial mortgage loans were collateralized by properties located in 37 states, the District of Columbia, and Europe.

Accrued interest receivable on commercial mortgage loans was $ 37 million and $ 39 million at June 30, 2023 and December 31, 2022, respectively.

Residential mortgage loans of $ 1.1 billion and $ 1.3 billion at June 30, 2023 and December 31, 2022, respectively, are reported net of an allowance for credit losses of $ 8 million and $ 4 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 $ 8 million and $ 9 million at March 31, 2023 and December 31, 2022, respectively.

Accrued interest receivable on residential mortgage loans was $ 7 million and $ 9 million at June 30, 2023 and December 31, 2022, respectively.

Mortgage Loan Concessions

In response to the adverse economic impact of the COVID-19 pandemic, the Company granted concessions to certain of its commercial mortgage loan borrowers, including payment deferrals and other loan modifications.

In response to the generally adverse economic impact of the COVID-19 pandemic, the Company granted concessions to certain of its commercial mortgage loan borrowers, including payment deferrals and other loan modifications.

The Company has elected the option under the Coronavirus Aid, Relief, and Economic Security Act, the Consolidated Appropriations Act of 2021, and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) not to account for or report qualifying concessions as troubled debt restructurings and does not classify such loans as past due during the payment deferral period.

Additionally, in accordance with the FASB’s published response to a COVID-19 Pandemic technical inquiry, the Company continues to accrue interest income on such loans that have deferred payment.

For some commercial mortgage loan borrowers (principally in the hotel and retail sectors), the Company granted concessions which were primarily interest and/or principal payment deferrals generally ranging from 6 to 14 months and, to a much lesser extent, maturity date extensions.

For some commercial mortgage loan borrowers (principally in the hotel and retail sectors), the Company granted concessions that were primarily interest and/or principal payment deferrals generally ranging from 6 to 14 months and, to a much lesser extent, maturity date extensions.

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, 2023.

Deferred commercial mortgage loan interest and principal payments were $ 9 million at June 30, 2023.

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.

8 unchanged sentences

Over the following one-year period, the model reverts to the historical performance of the portfolio for the remainder of the contractual term of the loans.

In cases where the Company does not

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

have an appropriate length of historical performance, the relevant historical rate from an index or the lifetime expected credit loss calculated from the model may be used.

In cases where the Company does not have an appropriate length of historical performance, the relevant historical rate from an index or the lifetime expected credit loss calculated from the model may be used.

Unfunded commitments are included in the model and an ACL is determined accordingly.

Credit loss estimates are pooled by property type and the Company does not include accrued interest in the determination of ACL.

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

For individual loans or for types of loans for which the third-party model is deemed not suitable, the Company utilizes relevant current market data, industry data, and publicly available historical loss rates to calculate an estimate of the lifetime expected credit loss.

Mortgage loans on real estate deemed uncollectible are charged against the ACL, and subsequent recoveries, if any, are credited to the ACL, limited to the aggregate of amounts previously charged-off and expected to be charged-off.

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

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

Three Months Ended March 31, 2023 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Mortgage loans on real estate are presented net of the ACL on the Condensed Consolidated Balance Sheets.

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

Three Months Ended June 30, 2023 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Balance at April 1, 2023 $ 20 $ 19 $ 67 $ 22 $ 11 $ 7 $ 146

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

Provision (release) ( 2 ) ( 12 ) 24 4 1 1 16

Balance at June 30, 2023 (1) (2)

$ 18 $ 7 $ 91 $ 26 $ 12 $ 8 $ 162

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) (2)

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

Six Months Ended June 30, 2023 Apartment Hotel Office Retail Warehouse Residential Mortgage Total

Balance at January 1, 2023 $ 18 $ 20 $ 15 $ 22 $ 16 $ 4 $ 95

1 unchanged sentence

Provision (release) — ( 13 ) 76 4 ( 4 ) 4 67

Balance at March 31, 2023 (1)

Balance at June 30, 2023 (1) (2)

$ 18 $ 7 $ 91 $ 26 $ 12 $ 8 $ 162

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

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) $ 21 $ 9 $ 22 $ 14 $ 12 $ 6 $ 84

(1) Accrued interest receivable totaled $ 47 million and $ 44 million as of March 31, 2023 and 2022, respectively, and was excluded from the determination of credit losses.

Balance at June 30, 2022 (1) (2)

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

(1) Accrued interest receivable totaled $ 44 million and $ 44 million as of June 30, 2023 and 2022, respectively, and was excluded from the determination of credit losses.

(2) Accrued interest amounting to $ 2 million and nil were written off as of June 30, 2023 and 2022, respectively, relating to loans that were greater than 90 days delinquent or in the process of foreclosure.

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, 2023, there was $ 15 million of recorded investment, $ 16 million of unpaid principal balance, no related loan allowance, $ 16 million of average recorded investment, and no investment income recognized on impaired residential mortgage loans.

At June 30, 2023, there was $ 13 million of recorded investment, $ 14 million of unpaid principal balance, no related loan allowance, $ 15 million of average recorded investment, and no investment income recognized on impaired residential mortgage loans.

At December 31, 2022, there was $ 15 million of recorded investment, $ 16 million of unpaid principal balance, no related loan allowance, $ 18 million of average recorded investment, and no investment income recognized on impaired residential mortgage loans.

1 unchanged sentence

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

March 31, 2023

June 30, 2023

2023 2022 2021 2020 2019 Prior Revolving

38 unchanged sentences

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

March 31, 2023

June 30, 2023

In Good Standing (1)

21 unchanged sentences

Total $ 11,471 $ — $ 63 $ 15 $ 11,549

(1) At March 31, 2023 and December 31, 2022, includes mezzanine and bridge loans of $ 378 million and $ 410 million in the Apartment category, $ 36 million and $ 41 million in the Hotel category, $ 187 million and $ 236 million in the Office category, $ 31 million and $ 43 million in the Retail category, and $ 201 million and $ 140 million in the Warehouse category, respectively.

(2) At March 31, 2023 and December 31, 2022, includes $ 41 million and $ 41 million of loans purchased when the loans were greater than 90 days delinquent and $ 11 million and $ 12 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, 2023 and December 31, 2022, 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 $ 4 million and $ 3 million, respectively.

(1) At June 30, 2023 and December 31, 2022, includes mezzanine and bridge loans of $ 377 million and $ 410 million in the Apartment category, $ 29 million and $ 41 million in the Hotel category, $ 171 million and $ 236 million in the Office category, $ 31 million and $ 43 million in the Retail category, and $ 253 million and $ 140 million in the Warehouse category, respectively.

(2) At June 30, 2023 and December 31, 2022, includes $ 28 million and $ 41 million of loans purchased when the loans were greater than 90 days delinquent and $ 9 million and $ 12 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, 2023 and December 31, 2022, 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 and $ 3 million, respectively.

Policy loans are loans the Company issues to contract holders that use the cash surrender value of their life insurance policy or annuity contract as collateral.

At both March 31, 2023 and December 31, 2022, $ 3.4 billion these loans were carried at fair value, which the Company believes is equal to unpaid principal balances, plus accrued investment income.

At both March 31, 2023 and December 31, 2022, the Company had $ 1.0 billion of policy loans not held as collateral for reinsurance, which were carried at the unpaid principal balances.

At both June 30, 2023 and December 31, 2022, $ 3.4 billion of these loans were carried at fair value, which the Company believes is equal to unpaid principal balances, plus accrued investment income.

At both June 30, 2023 and December 31, 2022, the Company had $ 1.0 billion of policy loans not held as collateral for reinsurance, which were carried at the unpaid principal balances.

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

Other Invested Assets

Other invested assets primarily include investments in Federal Home Loan Bank capital stock, limited partnerships (“LPs”), and real estate.

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

At both March 31, 2023 and December 31, 2022, FHLB capital stock had carrying value of $ 146 million, respectively.

Other invested assets primarily include investments in Federal Home Loan Bank of Indianapolis ("FHLBI") capital stock, limited partnerships (“LPs”), and real estate.

FHLBI capital stock is carried at cost and adjusted for any impairment.

At both June 30, 2023 and December 31, 2022, FHLB capital stock had carrying value of $ 146 million, respectively.

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

At March 31, 2023 and December 31, 2022, real estate totaling $ 235 million and $ 237 million, respectively, included foreclosed properties with a book value of nil at both March 31, 2023 and December 31, 2022, respectively.

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, 2023 and December 31, 2022, investments in LPs had carrying values of $ 3,330 million and $ 3,212 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.

The LPs sold were carried at estimated sales price.

At June 30, 2023 and December 31, 2022, real estate totaling $ 234 million and $ 237 million, respectively, included foreclosed properties with a book value of $ 1 million and nil at June 30, 2023 and December 31, 2022, respectively.

Carrying values for LP 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 June 30, 2023 and December 31, 2022, investments in LPs had carrying values of $ 3,123 million and $ 3,212 million, respectively.

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, 2023 and December 31, 2022, the estimated fair value of loaned securities was $ 38 million and $ 35 million, respectively.

As of June 30, 2023 and December 31, 2022, the estimated fair value of loaned securities was $ 51 million and $ 35 million, respectively.

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

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

At March 31, 2023 and December 31, 2022, cash collateral received in the amount of $ 39 million and $ 36 million, respectively, was invested by the agent banks and included in cash and cash equivalents of the Company.

At June 30, 2023 and December 31, 2022, cash collateral received in the amount of $ 52 million and $ 36 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 $ 808 million for three months ended March 31, 2023 and $ 311 million for the year ended December 31, 2022, with weighted average interest rates of 3.87 % and 2.54 %, respectively.

At March 31, 2023 and December 31, 2022, the outstanding repurchase agreement balance was $ 1,085 million and $ 1,012 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.

Short-term borrowings under such agreements averaged $ 1,051 million and $ 271 million with weighted average interest rates of 4.71 % and 0.19 % for the six months ended June 30, 2023 and 2022, respectively.

At June 30, 2023 and December 31, 2022, the outstanding repurchase agreement balance was $ 1,626 million and $ 1,012 million, respectively, collateralized with U.S.

Treasury notes and corporate securities 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 $ 8 million and nil both for the three months ended March 31, 2023 and 2022, respectively.

The highest level of short-term borrowings at any month end was $ 1,085 million and $ 584 million for the three months ended March 31, 2023 and 2022, respectively.

Interest expense totaled $ 17 million and $ 25 million for the three and six months ended June 30, 2023, respectively, and nil for both the three and six months ended June 30, 2022, respectively.

The highest level of short-term borrowings at any month end was $ 1,626 million and $ 584 million for the six months ended June 30, 2023 and 2022, respectively.

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

7 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, 2022 information recast for the adoption of LDTI):

March 31, 2023

June 30, 2023

Contractual/ Assets Liabilities Net

7 unchanged sentences

Interest rate swaps 7,728 5 241 ( 236 )

Interest rate swaps - cleared (2)

Put-swaptions 19,500 — 1,362 ( 1,362 )

61 unchanged sentences

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, 2022 information recast for the adoption of LDTI):

Three Months Ended March 31,

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

2023 2022 2023 2022

Derivatives excluding funds withheld under reinsurance treaties

18 unchanged sentences

All 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, 2023 and December 31, 2022, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $ 749 million and $ 885 million, respectively, and held collateral was $ 695 million and $ 858 million, respectively, related to these agreements.

At March 31, 2023 and December 31, 2022, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $ 1,208 million and $ 1,680 , respectively, and provided collateral was $ 1,357 million and $ 1,650 , respectively, related to these agreements.

If all the downgrade provisions had been triggered at March 31, 2023 and December 31, 2022, in aggregate, the Company would have had to disburse nil and $ 30 million, respectively, and would have been allowed to claim $ 203 million and $ 27 million, respectively.

At June 30, 2023 and December 31, 2022, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $ 581 million and $ 885 million, respectively, and held collateral was $ 519 million and $ 858 million, respectively, related to these agreements.

At June 30, 2023 and December 31, 2022, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $ 1,451 million and $ 1,680 million, respectively, and provided collateral was $ 1,652 million and $ 1,650 million, respectively, related to these agreements.

If all the downgrade provisions had been triggered at June 30, 2023 and December 31, 2022, in aggregate, the Company would have had to disburse nil and $ 30 million, respectively, and would have been allowed to claim $ 263 million and $ 27 million, respectively.

Offsetting Assets and Liabilities

5 unchanged sentences

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

March 31, 2023

June 30, 2023

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 $ 1,384 million and $ 1,136 million as of March 31, 2023 and December 31, 2022, respectively, as these derivatives are not subject to master netting arrangements.

The above tables also exclude the funds withheld embedded derivative asset (liability) of $ 2,788 million and $ 3,158 million at March 31, 2023 and December 31, 2022.

The above tables exclude net embedded derivative liabilities of $ 1,609 million and $ 1,136 million as of June 30, 2023 and December 31, 2022, respectively, as these derivatives are not subject to master netting arrangements.

The above tables also exclude the funds withheld embedded derivative asset (liability) of $ 2,901 million and $ 3,158 million at June 30, 2023 and December 31, 2022.

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

2 unchanged sentences

The following table summarizes the fair value and carrying value of the Company’s financial instruments (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Value Carrying

8 unchanged sentences

Freestanding derivative instruments 946 946 1,270 1,270

Federal Home Loan Bank of Indianapolis ("FHLBI") capital stock 146 146 146 146

FHLBI capital stock 146 146 146 146

Cash and cash equivalents 2,100 2,100 4,298 4,298

19 unchanged sentences

Separate account liabilities 212,719 212,719 195,906 195,906

(1) Includes items carried at fair value under the fair value option and trading securities.

(1) Includes items carried at fair value under the fair value option and trading securities included as a component of debt securities.

(2) Annuity reserves represent only the components of other contract holder funds and reserves for future policy benefits and claims payable that are considered to be financial instruments.

16 unchanged sentences

Internally derived estimates may be used to develop a fair value for securities for which the Company is unable to obtain either a reliable price from an independent pricing service or a suitable broker-dealer quote.

These fair value estimates may incorporate Level 2 and Level 3 inputs and are generally derived using expected future cash flows, discounted at market interest rates available from market sources based on the credit quality and duration of the instrument.

These fair value estimates may incorporate Level 2 and Level 3 inputs, as defined below, and are generally derived using expected future cash flows, discounted at market interest rates available from market sources based on the credit quality and duration of the instrument.

For securities that may not be reliably priced using these internally developed pricing models, a fair value may be estimated using indicative market prices.

5 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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022.

No adjustments to these amounts were deemed necessary at June 30, 2023 and December 31, 2022.

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

14 unchanged sentences

Freestanding Derivative Instruments

Freestanding derivative instruments are reported at fair value, which reflects the estimated amounts, net of payment accruals, which the Company would receive or pay upon sale or termination of the contracts at the reporting date.

Freestanding derivative instruments are reported at fair value, which reflects the estimated amounts, net of payment accruals, that the Company would receive or pay upon sale or termination of the contracts at the reporting date.

Changes in fair value are included in net gains (losses) on derivatives and investments.

10 unchanged sentences

Funds Withheld Payable Under Reinsurance Treaties

The funds withheld payable under reinsurance treaties includes both the funds withheld payable which are held at fair value under the fair value option and the funds withheld embedded derivative.

The fair value of the funds withheld payable which are held at fair value under the fair value option is equal to the fair value of the assets held as collateral, which primarily consists of policy loans using industry standard valuation techniques.

The funds withheld payable under reinsurance treaties includes both the funds withheld payable that are held at fair value under the fair value option and the funds withheld embedded derivative.

The fair value of the funds withheld payable that are held at fair value under the fair value option is equal to the fair value of the assets held as collateral, which primarily consists of policy loans using industry standard valuation techniques.

The funds withheld embedded derivative is determined based upon a total return swap technique referencing the fair value of the investments held under the reinsurance contract and requires certain significant unobservable inputs.

The funds withheld payable which are held at fair value under the fair value option and the funds withheld embedded derivative are considered Level 3 in the fair value hierarchy.

The funds withheld payable that are held at fair value under the fair value option and the funds withheld embedded derivative are both considered Level 3 in the fair value hierarchy.

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

9 unchanged sentences

Changes in fair value are reported in Market risk benefits (gains) losses, net on the Condensed Consolidated Income Statements.

However, the change in fair value related to our own non-performance risk is recognized as a component of other comprehensive income and is reported in Change in non-performance on market risk benefits, net of tax expense (benefit) on the Condensed Consolidated Statements of Comprehensive Income (Loss).

However, the change in fair value related to our own non-performance risk is recognized as a component of other comprehensive income ("OCI") and is reported in Change in non-performance on market risk benefits, net of tax expense (benefit) on the Condensed Consolidated Statements of Comprehensive Income (Loss).

Variable annuity guaranteed benefit features classified as MRBs, which have explicit fees, are measured using the attributed fee method.

8 unchanged sentences

The Company has ceded the guaranteed minimum income benefit (“GMIB”) features elected on certain annuity contracts to an unrelated party.

The GMIBs ceded under this reinsurance treaty are classified as an MRB in their entirety.

The GMIBs ceded under this reinsurance treaty are classified as a MRB in their entirety.

The reinsurance contract is measured at fair value and reported in Reinsurance recoverable on market risk benefits.

11 unchanged sentences

Volatility assumptions are based on a weighting of available market data for implied market volatility for durations up to 10 years, grading to a historical volatility level by year 15, where such long-term historical volatility levels contain an explicit risk margin.

Non-performance risk is incorporated into the calculation through the adjustment of the risk-free rate curve based on spreads indicated by a blend of yields on similarly-rated peer debt and yields on JFI debt (adjusted to operating company levels).

Non-performance risk is incorporated into the calculation through the adjustment of the risk-free rate curve based on credit spreads for debt and debt-like instruments issued by the Company or its insurance operating subsidiaries, adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries.

Risk margins are also incorporated into the model assumptions, particularly for policyholder behavior.

19 unchanged sentences

Additionally, assumed withdrawal rates are used to estimate the expected volume of embedded options that will be realized by policyholders.

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

Fair Value Measurements

Notes Issued by Consolidated VIEs

2 unchanged sentences

As the notes are valued based on the reference collateral, they are classified as Level 2.

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

Fair Value Measurements

Fair Value Option

The Company elected the fair value option for debt securities related to certain consolidated investments totaling $ 2,093 million and $ 2,014 million at March 31, 2023 and December 31, 2022, respectively.

The Company elected the fair value option for debt securities related to certain consolidated investments totaling $ 2,049 million and $ 2,014 million at June 30, 2023 and December 31, 2022, 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 $ 4,069 million and $ 4,160 million at March 31, 2023 and December 31, 2022, respectively, as discussed above, and includes mortgage loans as discussed below.

The Company has elected the fair value option for certain funds withheld assets, which are held as collateral for reinsurance, totaling $ 4,108 million and $ 4,160 million at June 30, 2023 and December 31, 2022, 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 with Athene.

2 unchanged sentences

The fair value and aggregate contractual principal for mortgage loans where the fair value option was elected after December 31, 2021, were as follows (in millions):

March 31, December 31,

June 30, December 31,

Fair value $ 509 $ 582

Aggregate contractual principal 519 591

As of March 31, 2023, 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.

The Company elected the fair value option for notes issued by consolidated VIEs totaling $ 2,016 million and $ 1,732 million at March 31, 2023 and December 31, 2022, respectively.

As of June 30, 2023, no loans in good standing 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.

The Company elected the fair value option for notes issued by consolidated VIEs totaling $ 1,996 million and $ 1,732 million at June 30, 2023 and December 31, 2022, respectively.

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.

3 unchanged sentences

The following tables summarize the Company’s assets and liabilities that are carried at fair value by hierarchy levels (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023

June 30, 2023

Total Level 1 Level 2 Level 3

65 unchanged sentences

The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023

June 30, 2023

Assets Total Internal External

32 unchanged sentences

The table below presents quantitative information on internally-priced Level 3 assets and liabilities that use significant unobservable inputs (in millions, 2022 information recast for the adoption of LDTI):

As of March 31, 2023

As of June 30, 2023

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

10 unchanged sentences

Long-term Equity Volatility (6)

18.13 % - 22.50 %

Market risk benefit assets $ 5,957 Discounted cash flow Mortality (1)

8 unchanged sentences

Long-term Equity Volatility (6)

18.13 % - 22.50 %

Market risk benefit liabilities $ 4,463 Discounted cash flow Mortality (1)

8 unchanged sentences

Long-term Equity Volatility (6)

18.13 % - 22.50 %

(1) Mortality rates vary by attained age, tax qualification status, guaranteed benefit election, and duration.

65 unchanged sentences

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 March 31, 2023 and December 31, 2022, securities of $ 2 million and $ 9 million are fair valued using techniques incorporating unobservable inputs and are classified in Level 3 of the fair value hierarchy, respectively.

At June 30, 2023 and December 31, 2022, securities of $ 1 million and $ 9 million are fair valued using techniques incorporating unobservable inputs and are classified in Level 3 of the fair value hierarchy, respectively.

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.

1 unchanged sentence

These policy loans do not have a stated maturity and the balances, plus accrued investment income, are repaid either by the policyholder or with proceeds from the policy.

Due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans, which includes accrued investment income, approximates fair value and are classified as Level 3 within the fair value hierarchy.

Due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans, which includes accrued investment income, approximates fair value and is classified as Level 3 within the fair value hierarchy.

The fair value of funds withheld payable under the Reassure America Life Insurance Company ("REALIC") reinsurance treaties, is determined based upon the fair value of the funds withheld investments held by the Company and is excluded from the tables above.

The funds withheld payable under the Athene reinsurance treaty includes the Athene embedded derivative which is measured at fair value.

The valuation of the embedded derivative utilizes a total return swap technique which incorporates the fair value of the invested assets supporting the reinsurance agreement as a component of the valuation.

As a result, these valuations for the funds withheld payable under the REALIC reinsurance treaties and the Athene embedded derivative require certain significant inputs which are generally not observable and, accordingly, the valuation is considered Level 3 in the fair value hierarchy.

The valuation of the embedded derivative utilizes a total return swap technique that incorporates the fair value of the invested assets supporting the reinsurance agreement as a component of the valuation.

As a result, these valuations for the funds withheld payable under the REALIC reinsurance treaties and the Athene embedded derivative require certain significant inputs that are generally not observable and, accordingly, the valuation is considered Level 3 in the fair value hierarchy.

The GMIB reinsurance recoverable fair value calculation is based on the present value of future cash flows comprised of future expected reinsurance benefit receipts, less future attributed premium payments to reinsurers, over the lives of the contracts.

7 unchanged sentences

Fair Value Measurements

The tables below, 2022 information recast for the adoption of LDTI, provide roll-forwards for the three months ended March 31, 2023 and 2022 of the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement.

The tables below, 2022 information recast for the adoption of LDTI, provide roll-forwards for the three and six months ended June 30, 2023 and 2022 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.

4 unchanged sentences

Fair Value Sales, Transfers Fair Value

as of Other Issuances in and/or as of

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

Three Months Ended March 31, 2023 2023 Income Income Settlements Level 3 2023

as of Net Other Issuances in and/or as of

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

Three Months Ended June 30, 2023 2023 (Loss) Income (Loss) Settlements Level 3 2023

Debt securities

10 unchanged sentences

Fair Value Sales, Transfers Fair Value

as of Other Issuances in and/or as of

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

Three Months Ended March 31, 2022 2022 Income Income Settlements Level 3 2022

as of Net Other Issuances in and/or as of

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

Three Months Ended June 30, 2022 2022 (Loss) Income (Loss) Settlements Level 3 2022

Debt securities

10 unchanged sentences

Fair Value Measurements

The components of the amounts included in purchases, sales, issuances and settlements for the three months ended March 31, 2023 and 2022 shown above are as follows (in millions):

Three Months Ended March 31, 2023 Purchases Sales Issuances Settlements Total

Total Realized/Unrealized Gains (Losses) Included in

Fair Value Sales, Transfers Fair Value

as of Net Other Issuances in and/or as of

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

Six Months Ended June 30, 2023 2023 (Loss) Income (Loss) Settlements Level 3 2023

Debt securities

3 unchanged sentences

Limited partnerships 440 ( 22 ) — 11 ( 7 ) 422

Reinsurance recoverable on market risk benefits 221 ( 27 ) — — — 194

Market risk benefit assets 4,865 1,092 — — — 5,957

Policy loans 3,419 107 — ( 88 ) — 3,438

Funds withheld payable under reinsurance treaties ( 424 ) ( 362 ) — 85 — ( 701 )

Market risk benefit liabilities ( 5,662 ) 1,679 ( 480 ) — — ( 4,463 )

Total Realized/Unrealized Gains (Losses) Included in

Fair Value Sales, Transfers Fair Value

as of Net Other Issuances in and/or as of

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

Six Months Ended June 30, 2022 2022 (Loss) Income (Loss) 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 396 — — — — 396

Reinsurance recoverable on market risk benefits 383 ( 77 ) — — — 306

Market risk benefit assets 1,664 665 — — — 2,329

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

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

Market risk benefit liabilities ( 8,033 ) 135 1,953 — — ( 5,945 )

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, 2023 and 2022 shown above are as follows (in millions):

Three Months Ended June 30, 2023 Purchases Sales Issuances Settlements Total

Debt securities

Corporate securities $ ( 1 ) $ — $ — $ — $ ( 1 )

Equity securities — 1 — — 1

Mortgage loans 99 ( 70 ) — — 29

Limited partnerships — — — — —

Policy loans — — — ( 67 ) ( 67 )

Total $ 98 $ ( 69 ) $ — $ ( 67 ) $ ( 38 )

Funds withheld payable under reinsurance treaties $ — $ — $ ( 1 ) $ 66 $ 65

Three Months Ended March 31, 2022 Purchases Sales Issuances Settlements Total

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

2 unchanged sentences

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

For the three months ended March 31, 2023, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 37 million, transfers from Level 2 to Level 3 were $ 11 million, and transfers from Level 3 to NAV were $ 7 million.

For the three months ended March 31, 2022, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 4 million, transfers from Level 2 to Level 3 were $ 7 million, and there were no transfers from Level 3 fair value hierarchy to NAV.

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, 2022 information recast for the adoption of LDTI):

Three Months Ended March 31,

Six Months Ended June 30, 2023 Purchases Sales Issuances Settlements Total

Debt securities

Corporate securities $ — $ ( 4 ) $ — $ — $ ( 4 )

Equity securities — — — — —

Mortgage loans 135 ( 206 ) — — ( 71 )

Limited partnerships 18 ( 7 ) — — 11

Policy loans — — 35 ( 123 ) ( 88 )

Total $ 153 $ ( 217 ) $ 35 $ ( 123 ) $ ( 152 )

Funds withheld payable under reinsurance treaties $ — $ — $ ( 36 ) $ 121 $ 85

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

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

Fair Value Measurements

For the three and six months ended June 30, 2023, transfers from Level 3 to Level 2 of the fair value hierarchy were $( 6 ) million and $ 31 million, respectively, transfers from Level 2 to Level 3 were $( 3 ) million and $ 8 million, respectively, and transfers from Level 3 to NAV were nil and $ 7 million, respectively.

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, and no transfers from Level 3 to NAV.

The portion of gains (losses) included in net income (loss) or OCI attributable to the change in unrealized gains and losses on Level 3 financial instruments still held was as follows (in millions, 2022 information recast for the adoption of LDTI):

Three Months Ended June 30,

Net Income Included in OCI Included in

10 unchanged sentences

Market risk benefit liabilities 1,861 ( 764 ) ( 1,060 ) 1,017

Six Months Ended June 30,

Net Income Included in OCI Included in

Net Income Included in OCI

Debt securities

Corporate securities $ ( 9 ) $ — $ 5 $ —

Equity securities ( 35 ) — 16 —

Mortgage loans ( 2 ) — ( 3 ) —

Limited partnerships ( 22 ) — — —

Reinsurance recoverable on market risk benefits ( 27 ) — ( 77 ) —

Market risk benefit assets 1,092 — 665 —

Policy loans 107 — 136 —

Funds withheld payable under reinsurance treaties ( 362 ) — 2,492 —

Market risk benefit liabilities 1,679 ( 480 ) 135 1,953

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

22 unchanged sentences

Fair values for deferred annuities, including the fixed option on variable annuities, fixed annuities, fixed index annuities and RILAs, are determined using projected future cash flows discounted at current market interest rates.

Fair values for guaranteed investment contracts are based on the present value of future cash flows discounted at current market interest rates.

Fair values for trust instruments supported by funding agreements are based on the present value of future cash flows discounted at current market interest rates.

Fair values of the FHLB funding agreements are based on the present value of future cash flows discounted at current market interest rates.

Fair values for guaranteed investment contracts, trust instruments supported by funding agreements and FHLB funding agreements are based on the present value of future cash flows discounted at current market interest rates.

Funds Withheld Payable Under Reinsurance Treaties

17 unchanged sentences

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, 2023

June 30, 2023

Value Total Level 1 Level 2 Level 3

42 unchanged sentences

This note contains the new accounting policy for the adoption of LDTI

Certain costs that are directly related to the successful acquisition of new or renewal insurance business are capitalized as deferred acquisition costs in the period they are incurred.

Certain costs that are directly related to the successful acquisition of new or renewal insurance business are capitalized as DAC in the period they are incurred.

These costs primarily pertain to commissions and certain costs associated with policy issuance and underwriting.

2 unchanged sentences

For traditional and limited-payment insurance contracts, contracts are grouped consistent with the groupings used in estimating the associated liability.

Deferred acquisition costs are amortized into expense on a constant level basis over the expected term of the grouped contracts.

DAC are amortized into expense on a constant level basis over the expected term of the grouped contracts.

For traditional and limited-payment insurance contracts, amortization is determined based on projected in force amounts.

For non-traditional contracts, amortization is determined based on projected policy counts .

The expected term used to amortize deferred acquisition costs is determined using best estimate assumptions, including mortality and persistency, consistent with the best estimate assumptions used to determine the reserve for future policy benefits, market risk benefits, and additional liabilities for applicable contracts.

For amortization of deferred acquisition costs related to contracts without these balances, assumptions used to determine expected term are developed in a similar manner.

The expected term used to amortize DAC is determined using best estimate assumptions, including mortality and persistency, consistent with the best estimate assumptions used to determine the reserve for future policy benefits, MRBs, and additional liabilities for applicable contracts.

For amortization of DAC related to contracts without these balances, assumptions used to determine expected term are developed in a similar manner.

The amortization rate is determined using all information available as of the end of the reporting period, including actual experience and any assumption updates.

1 unchanged sentence

If assumptions are revised, the amortization rate is calculated using revised assumptions such that the effect of revised assumptions is recognized prospectively as of the beginning of that reporting period.

Unamortized deferred acquisition costs are written off when a contract is internally replaced and substantially changed.

Substantially unchanged contracts are treated as a continuation of the replaced contract, with no change to the unamortized deferred acquisition costs at the time of the replacement.

The following table presents the roll-forward of the deferred acquisition costs (in millions, 2022 information recast for the adoption of LDTI).

Unamortized DAC are written off when a contract is internally replaced and substantially changed.

Substantially unchanged contracts are treated as a continuation of the replaced contract, with no change to the unamortized DAC at the time of the replacement.

The following table presents the roll-forward of the DAC (in millions, 2022 information recast for the adoption of LDTI).

The current period amortization is based on the end of the period estimates of mortality and persistency.

The amortization pattern is revised on a prospective basis at the beginning of the period based on the period’s actual experience.

Three Months Ended March 31, Twelve months Ended December 31,

Six Months Ended June 30, Year Ended December 31,

Variable Annuities

3 unchanged sentences

Variable Annuities balance, end of period $ 12,333 $ 12,699

Reconciliation of total deferred acquisition costs

Reconciliation of total DAC

Variable Annuities balance, end of period $ 12,333 $ 12,699

5 unchanged sentences

However, if the reinsurer is unable to meet its obligations, the originating issuer of the coverage retains the liability.

The Company reinsures certain of its risks to other reinsurers under a coinsurance, coinsurance with funds withheld, modified coinsurance, or yearly renewable term basis.

The Company reinsures certain of its risks to other reinsurers on a coinsurance, coinsurance with funds withheld, modified coinsurance, or yearly renewable term basis.

The Company regularly monitors the financial strength ratings of its reinsurers.

Athene Reinsurance

The Company entered into a funds withheld coinsurance agreement with 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.

The coinsurance with funds withheld agreement required Jackson to establish a segregated account in which the investments supporting the ceded obligations are maintained.

The Company entered into a funds withheld coinsurance agreement with Athene effective June 1, 2020, to reinsure on a 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.

The coinsurance with funds withheld agreement ("the coinsurance agreement") required Jackson to establish a segregated account in which the investments supporting the ceded obligations are maintained.

While the economic benefits of the investments flow to Athene, Jackson retains physical possession and legal ownership of the investments supporting the reserve.

1 unchanged sentence

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 $ 147 million at March 31, 2023.

Swiss Re Reinsurance

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

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

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

As a result of the reinsurance agreements with SRZ, Jackson withholds certain assets, primarily in the form of policy loans and debt securities, as collateral for the reinsurance recoverable.

The Company has also acquired certain blocks of business that are closed to new business and wholly ceded to non-affiliates.

These include both direct and assumed accident and health business, direct and assumed life insurance business, and certain institutional annuities.

These include both direct and assumed accident and health businesses, direct and assumed life insurance business, and certain institutional annuities.

GMIB Reinsurance

6 unchanged sentences

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

Reinsurance recoverables relating to reinsurance of traditional and limited-payment contracts are required to be recognized and measured in a manner consistent with the liabilities relating to the underlying reinsured contracts, including using consistent assumptions.

Reinsurance recoverables relating to reinsurance of traditional and limited-payment contracts are required to be recognized and measured in a manner consistent with liabilities relating to the underlying reinsured contracts, including using consistent assumptions.

Reinsurance contracts may be executed subsequent to the direct contract issue dates, and market interest rates may have changed between the date that the underlying insurance contracts were issued and the date the reinsurance contract is recognized in the financial statements, resulting in the underlying discount rate differing between the direct and reinsured business.

The Company regularly monitors the financial strength ratings of its reinsurers.

At March 31, 2023 and December 31, 2022, the Company had ACL of $ 15 million and $ 15 million, respectively, on its reinsurance recoverables, which are reported net of ACL on the Condensed Consolidated Balance Sheets.

At June 30, 2023 and December 31, 2022, the Company had an allowance for credit losses (“ACL”) of $ 39 million and $ 15 million, respectively, on its reinsurance recoverables, which are reported net of ACL on the Condensed Consolidated Balance Sheets.

The ACL considers the credit quality of the reinsurer and is generally determined based on probability of default and loss given default assumptions, after considering any applicable collateral arrangements.

During the second quarter, the Company increased its ACL related to a specific reinsurer which was recently ordered into liquidation.

The recognized ACL represents our current best estimate of our remaining loss exposure associated with this reinsurer.

For reinsurance recoverables that are collateralized, and the amount of collateral is expected to be adjusted as necessary as a result of fair value changes in the collateral, the Company determines that the expectation of nonpayment of the carrying value of the reinsurance recoverable is zero.

2 unchanged sentences

Reinsurance recoverable on market risk benefits is recognized at fair value.

The change in the fair value of reinsurance recoverable on market risk benefits, including the change in fair value due to the change in third-party credit risk (i.e., credit risk of the reinsurer), is recognized in current period earnings within market risk benefit (gains) losses, net.

The change in the fair value of reinsurance recoverable on market risk benefits, including the change in fair value due to the change in third-party credit risk (i.e., non-performance risk of the reinsurer), is recognized in current period earnings within market risk benefit (gains) losses, net.

Non-performance risk of the reinsurer is incorporated into the calculation through the adjustment of the risk-free rate curve based on credit spreads observed on instruments issued by similarly-rated life insurance companies.

The Company’s reinsurance contract that cedes only the GMIB elected on certain variable annuity products is classified as a reinsurance recoverable on market risk benefits.

2 unchanged sentences

The fees used to determine the fair value of the reinsurance recoverable on market risk benefits are those defined in the reinsurance contract.

Guaranteed benefits related to the optional lifetime income rider offered on certain fixed index annuities are market risk benefits that are reinsured with Athene.

The reinsured market risk benefit is measured using a non-option valuation approach which uses cash flow assumptions and an attributed fee ratio consistent with those used to measure the market risk benefit on the direct contract and a discount rate that considered the reinsurer’s credit risk.

Guaranteed benefits related to the optional lifetime income rider offered on certain fixed index annuities are MRBs that are reinsured with Athene.

The reinsured MRBs is measured using a non-option valuation approach which uses cash flow assumptions and an attributed fee ratio consistent with those used to measure the MRBs on the direct contract and a discount rate that considered the reinsurer’s credit risk.

The attributed fee is locked-in at inception of the contract.

Components of the Company’s reinsurance recoverable excluding market risk benefits were as follows (in millions, 2022 information recast for the adoption of LDTI):

March 31, December 31,

Components of the Company’s reinsurance recoverable excluding MRBs were as follows (in millions, 2022 information recast for the adoption of LDTI):

June 30, December 31,

Life $ 5,317 $ 5,307

6 unchanged sentences

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

Components of the Company’s reinsurance recoverable on market risk benefits were as follows (in millions, recast for the adoption of LDTI):

March 31, December 31,

Components of the Company’s reinsurance recoverable on market risk benefits were as follows (in millions, 2022 information recast for the adoption of LDTI):

June 30, December 31,

Variable annuity $ 151 $ 183

5 unchanged sentences

Investment income and net gains (losses) on derivatives and investments are reported net of gains or losses on the funds withheld payable under reinsurance treaties.

The amounts credited to reinsurers on the funds withheld payable is based on the return earned on those assets which is subject to the credit risk of the original issuer of the instrument rather than Jackson’s own creditworthiness, which results in an embedded derivative (total return swap).

The amounts credited to reinsurers on the funds withheld payable is based on the return earned on those assets.

The return earned on the assets is subject to the credit risk of the original issuer of the instrument rather than Jackson’s own creditworthiness, which results in an embedded derivative (total return swap).

Funds withheld under reinsurance agreement with Athene

9 unchanged sentences

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 $ 12,085 $ 13,622

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 $ 2,788 million and $ 3,158 million at March 31, 2023 and December 31, 2022, respectively.

(2) Includes funds withheld embedded derivative asset (liability) of $ 2,901 million and $ 3,158 million at June 30, 2023 and December 31, 2022, 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,

2023 2022 2023 2022

Debt securities (1)

$ 160 $ 180 $ 332 $ 330

Equity securities ( 37 ) ( 9 ) ( 38 ) ( 25 )

Mortgage loans (2)

60 49 126 101

Policy loans 77 79 158 159

Limited partnerships 7 86 15 102

Other investment income 3 1 3 1

Total investment income on funds withheld assets 270 386 596 668

2 unchanged sentences

Total net investment income on funds withheld reinsurance treaties $ 252 $ 364 $ 559 $ 624

(1) Includes $ 2 million and $( 6 ) million for the three months ended March 31, 2023 and 2022, respectively, related to the change in fair value for securities carried under the fair value option.

(2) Includes $( 2 ) million and $ 2 million for the three months ended March 31, 2023 and 2022, respectively, related to the change in fair value for mortgage loans carried under the fair value option.

(1) Includes nil and $ 2 million for the three and six months ended June 30, 2023, respectively, and $( 2 ) million and $( 8 ) million for the three and six months ended June 30, 2022, respectively, related to the change in fair value for securities carried under the fair value option.

(2) Includes nil and $( 2 ) million for the three and six months ended June 30, 2023, respectively, and $( 5 ) million and $( 3 ) million for the three and six months ended June 30, 2022, respectively, related to the change in fair value for mortgage loans carried under the fair value option.

(3) Includes management fees.

1 unchanged sentence

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,

2023 2022 2023 2022

Available-for-sale securities

9 unchanged sentences

Total net gains (losses) on derivatives and investments $ ( 134 ) $ 1,077 $ ( 807 ) $ 2,105

(1) Includes the Athene embedded derivative gain (loss) of $( 370 ) million and $ 1,281 million for the three months ended March 31, 2023 and 2022, respectively.

(1) Includes the Athene embedded derivative gain (loss) of $ 113 million and $( 257 ) million for the three and six months ended June 30, 2023, respectively, and $ 1,347 million and $ 2,628 million for the three and six months ended June 30, 2022, respectively.

Reserves for Future Policy Benefits and Claims Payable

15 unchanged sentences

Each reporting period, the reserve for future policy benefits is remeasured using the current discount rate.

The difference between the reserve calculated using the current discount rate and the reserve calculated using the locked-in discount rate is recorded in other comprehensive income.

The difference between the reserve calculated using the current discount rate and the reserve calculated using the locked-in discount rate is recorded in OCI.

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

15 unchanged sentences

As available-for-sale debt securities are carried at fair value, an adjustment is made to these additional liabilities equal to the change in liability that would have occurred if such securities had been sold at their stated fair value and the proceeds reinvested at current yields.

This adjustment, along with the change in net unrealized gains (losses) on available-for-sale debt securities, net of applicable tax, is credited or charged directly to equity as a component of other comprehensive income.

This adjustment, along with the change in net unrealized gains (losses) on available-for-sale debt securities, net of applicable tax, is credited or charged directly to equity as a component of OCI.

See Note 10 of the Notes to Condensed Consolidated Financial Statements for more information regarding other contract holder funds.

8 unchanged sentences

The following table summarizes the Company’s reserves for future policy benefits and claims payable balances (in millions, 2022 information recast for the adoption of LDTI):

March 31, December 31,

June 30, December 31,

Reserves for future policy benefits

9 unchanged sentences

Present Value of Expected Net Premiums

Three Months Ended March 31, Year Ended December 31,

Six Months Ended June 30, Year Ended December 31,

Payout Closed Block Closed Block Payout Closed Block Closed Block

15 unchanged sentences

Present Value of Expected Future Policy Benefits

Three Months Ended March 31, Year Ended December 31,

Six Months Ended June 30, Year Ended December 31,

Payout Closed Block Closed Block Payout Closed Block Closed Block

2 unchanged sentences

Beginning of period cumulative effect of changes in discount rate assumptions 132 958 275 ( 84 ) ( 349 ) ( 689 )

Beginning balance at original discount rate (including DPL of $ 40 , $0 and $ 671 in March 31, 2023, and, $ 38 , $0 and $ 459 in December 31, 2022 for payout annuities, closed block life and closed block annuity, respectively)

Beginning balance at original discount rate (including DPL of $ 40 , $ 0 and $ 671 in June 30, 2023, and, $ 38 , $ 0 and $ 459 in December 31, 2022 for payout annuities, closed block life and closed block annuity, respectively)

1,174 6,406 4,709 1,165 6,564 5,050

5 unchanged sentences

Benefits payments ( 66 ) ( 358 ) ( 253 ) ( 124 ) ( 750 ) ( 506 )

Ending balance of original discount rate (including DPL of $ 40 , $0 and $ 658 in March 31, 2023, and, $ 40 , $0 and $ 671 in December 31, 2022 for payout annuities, closed block life and closed block annuity, respectively)

Ending balance of original discount rate (including DPL of $ 41 , $ 0 and $ 644 in June 30, 2023, and, $ 40 , $ 0 and $ 671 in December 31, 2022 for payout annuities, closed block life and closed block annuity, respectively)

1,178 6,098 4,544 1,174 6,406 4,709

8 unchanged sentences

Annuities Life Annuity

March 31, 2023

June 30, 2023

Weighted average duration (years) 7.0 7.9 7.1

1 unchanged sentence

Weighted average duration (years) 6.9 7.8 7.0

The significant assumptions used in the future policy benefits calculation consist of mortality, persistency, and discount rate.

We have undertaken a comprehensive review of the significant assumptions used in the future policy benefits calculation.

No significant changes were made to the mortality, persistency or claim expense assumptions during first quarter of 2023.

During 2022, increase in benefits from active life reserves for certain Closed Block Life policies resulted in an increase in the liability for future policy benefits.

However, this business is fully reinsured, resulting in no impact to the Company.

No other significant changes were made during 2022.

The discount rate assumption was updated based on current market data.

Discount rates decreased in the first quarter of 2023 since the fourth quarter of 2022 primarily due to the decrease in risk-free rates resulting in an increase in liability for future policy benefits.

Discount rates was flat in the second quarter of 2023 compared to the fourth quarter of 2022.

Discount rates increased substantially throughout 2022 primarily due to increases in risk-free rates, which resulted in a decrease in the liability for future policy benefits.

4 unchanged sentences

The discounted premiums are calculated using the current discount rate, while the undiscounted cash flows represent the gross cash flows before any discounting is applied:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Undiscounted Discounted Undiscounted Discounted

10 unchanged sentences

Gross Premiums Interest Expense

Three Months Ended March 31, 2023 Year Ended December 31, 2022 Three Months Ended March 31, 2023 Year Ended December 31, 2022

Six Months Ended June 30, 2023 Year Ended December 31, 2022 Six Months Ended June 30, 2023 Year Ended December 31, 2022

Payout Annuities $ 10 $ 10 $ 21 $ 40

3 unchanged sentences

The following table presents the weighted average interest rate for the reserves for future policy benefits at the cohort's level for the locked-in discount rate (interest accretion rate), and current discount rate, weighted by the cohort's benefit reserve amount (2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Payout Annuities

10 unchanged sentences

The following table presents a roll-forward of Closed Block Life additional liabilities for annuitization, death and other insurance benefits (in millions, 2022 information recast for the adoption of LDTI):

Three Months Ended March 31, 2023 Year Ended December 31, 2022

Six Months Ended June 30, 2023 Year Ended December 31, 2022

Balance, beginning of period $ 1,131 $ 1,173

10 unchanged sentences

The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount (2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Weighted average duration (years) 7.8 8.1

The significant assumptions used in the additional liability for annuitization, death and other insurance benefits calculation consists of mortality, persistency, investment returns, and crediting rate.

We have undertaken a comprehensive review of the significant assumptions used in the additional liability for annuitization, death and other insurance benefits calculation, and did not make any significant changes to the mortality, persistency, investment returns, or crediting rates in 2022 and will review these assumptions later in 2023.

The following table presents assessments and interest expense of Closed Block Life additional liabilities for annuitization, death and other insurance benefits recognized in the Condensed Consolidated Income Statements (in millions, 2022 information recast for the adoption of LDTI):

Assessments Interest Expense

Three Months Ended March 31, 2023 Year Ended December 31, 2022 Three Months Ended March 31, 2023 Year Ended December 31, 2022

Six Months Ended June 30, 2023 Year Ended December 31, 2022 Six Months Ended June 30, 2023 Year Ended December 31, 2022

Additional liability for annuitization, death and other insurance benefits $ ( 92 ) $ ( 107 ) $ 28 $ 56

The following table presents the weighted average current discount rate of Closed Block Life additional liabilities for annuitization, death and other insurance benefits, applied at the cohort level weighted by reserve benefit amount (2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Weighted average current discount rate 4.96 % 4.96 %

4 unchanged sentences

Other contract holder funds represent the policyholder account balance on our universal life-type products, investment contracts, and the fair value of the embedded derivatives associated with the indexed crediting features on our fixed index annuities and registered index-linked annuities.

Universal life type contracts have an account balance as a principal component in which interest is credited to policyholders and assessments are deducted for mortality risk and contract administration.

Universal life type contracts have, as a principal component, an account balance in which interest is credited to policyholders and assessments are deducted for mortality risk and contract administration.

The account balance is recognized as a liability within other contract holder funds, and the liability is updated each period for fee and assessment deductions and increased for interest or returns credited to the account balance.

3 unchanged sentences

Certain contracts without significant mortality or morbidity risk and certain annuities that lack insurance risk are treated as investment contracts.

As investment contracts, payments received are reported as liabilities and accounted for in a manner that is consistent with the accounting for interest-bearing or other financial instruments, within other contract holder funds.

For investment contracts, payments received are reported as liabilities and accounted for in a manner consistent with the accounting for interest-bearing or other financial instruments, within other contract holder funds.

The Company issues a variety of annuity products including fixed annuities, fixed index annuities, registered index linked annuities, variable annuities and payout annuities.

7 unchanged sentences

Interest is accreted to the host contract liability using an effective yield method.

Our annuity products may contain certain features or guarantees that are classified as market risk benefits.

Our annuity products may contain certain features or guarantees that are classified as MRBs.

These market risk benefits are a component of the market risk benefits line items in the Condensed Consolidated Balance Sheet.

4 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, 2023 and December 31, 2022 totaled $ 5.6 billion and $ 5.9 billion, respectively.

The carrying values at both June 30, 2023 and December 31, 2022 totaled $ 5.9 billion, respectively.

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

6 unchanged sentences

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

At both March 31, 2023 and December 31, 2022, the Company held $ 146 million of FHLBI capital stock, respectively, supporting $ 2.2 billion and $ 2.1 billion in funding agreements and long-term borrowings at March 31, 2023 and December 31, 2022, respectively.

At both June 30, 2023 and December 31, 2022, the Company held $ 146 million of FHLBI capital stock, respectively, supporting $ 2.2 billion and $ 2.1 billion in funding agreements and long-term borrowings at June 30, 2023 and December 31, 2022, respectively.

The following table presents the liabilities for other contract holder funds (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Payout Annuity $ 853 $ 837

19 unchanged sentences

Policy charges and other 23 ( 46 ) ( 67 ) ( 52 ) ( 1 ) ( 225 ) 2 ( 366 )

Balance as of March 31, 2023 $ 847 $ 9,927 $ 11,082 $ 11,375 $ 2,501 $ 11,179 $ 1,316 $ 48,227

Balance as of June 30, 2023 $ 853 $ 9,384 $ 10,601 $ 11,049 $ 3,144 $ 11,100 $ 1,284 $ 47,415

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

15 unchanged sentences

Annuity Annuity Annuity Annuities RILA Life Annuity

March 31, 2023

June 30, 2023

Weighted-average crediting rate (1)

13 unchanged sentences

(2) Net amount at risk represents the standard excess benefit base for guaranteed death benefits on universal life type products.

The net amount at risk associated with market risk benefits are presented within Note 12 of the Notes to Consolidated Financial Statements.

The net amount at risk associated with market risk benefits are presented within Note 12 of the Notes to Consolidated Financial Statements, as recast in our Current Report on Form 8-K filed May 10, 2023.

(3) Cash surrender value represents the amount of the contract holder’s account balance distributable at the balance sheet date less the applicable surrender charges.

At both March 31, 2023 and December 31, 2022, excluding reinsurance business, approximately 92 % of the Company’s annuity account values correspond to crediting rates that are at the minimum guaranteed interest rates.

At March 31, 2023 and December 31, 2022, excluding reinsurance business, approximately 64 % and 65 % of the Company’s closed block life account values correspond to crediting rates that are at the minimum guaranteed interest rates, respectively.

At June 30, 2023 and December 31, 2022, excluding reinsurance business, approximately 93 % and 92 % of the Company’s annuity account values correspond to crediting rates that are at the minimum guaranteed interest rates, respectively.

At June 30, 2023 and December 31, 2022, excluding reinsurance business, approximately 62 % and 65 % of the Company’s closed block life account values correspond to crediting rates that are at the minimum guaranteed interest rates, respectively.

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

1 unchanged sentence

The following table presents contract holder account balances invested in fixed account funds by range of guaranteed minimum crediting rates and the related range of the difference between rates being credited to other contract holder funds and the respective guaranteed minimums (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023

June 30, 2023

At Guaranteed 1 Basis Point-50 51 Basis Points-150 Greater Than 150

24 unchanged sentences

1.51 %- 2.50 %

$ — $ — $ — $ — —

Greater than 2.50 %

69 unchanged sentences

The separate account assets supporting the variable portion of both traditional variable annuities and variable contracts with guarantees are carried at fair value and reported as summary total separate account assets with an equivalent summary total reported for separate account liabilities.

At March 31, 2023 and December 31, 2022, the assets and liabilities associated with variable life and annuity contracts were $ 204 billion and $ 196 billion, respectively.

At June 30, 2023 and December 31, 2022, the assets and liabilities associated with variable life and annuity contracts were $ 213 billion and $ 196 billion, respectively.

Investment risks associated with market value changes are borne by the contract holders, except to the extent of minimum guarantees made by the Company.

2 unchanged sentences

Included in the separate account assets and liabilities described above is a Jackson issued group variable annuity contract designed for use in connection with and issued to the Company’s Defined Contribution Retirement Plan.

These deposits are allocated to the Jackson National Separate Account - II, which had balances of $ 304 million and $ 285 million at March 31, 2023 and December 31, 2022, respectively.

These deposits are allocated to the Jackson National Separate Account - II, which had balances of $ 316 million and $ 285 million at June 30, 2023 and December 31, 2022, respectively.

The Company receives administrative fees for managing the funds.

1 unchanged sentence

The following table presents the roll-forward of the separate account balance for variable annuities (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

Six Months Ended June 30, 2023 Year Ended December 31, 2022

Balance as of beginning of period $ 195,550 $ 248,469

11 unchanged sentences

The following table presents the reconciliation of the separate account balance in the Condensed Consolidated Balance Sheets (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Variable Annuities $ 212,328 $ 195,550

2 unchanged sentences

The following table presents aggregate fair value of assets, by major investment asset category, supporting separate accounts (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Variable Annuities By Fund Type

23 unchanged sentences

• Change in assumptions — changes in assumptions resulting from our periodic review

• Change in non-performance risk — changes in Jackson’s own credit spread

• Change in non-performance risk — changes in Jackson’s non-performance risk

See Note 6 of the Notes to Condensed Consolidated Financial Statements for more information regarding fair value measurements.

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These guaranteed benefit features, as well as the reinsurance recoverable on the Company’s guaranteed minimum income benefits (“GMIB”), are classified as MRBs and measured at fair value.

The Company discontinued offering the GMIB in 2009 and GMAB in 2011.

The Company discontinued offering the GMIB in 2009 and the guaranteed minimum accumulation benefits (“GMAB”) in 2011.

Variable annuity guaranteed benefit features classified as MRBs, which have explicit fees, are measured using the attributed fee method.

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The following table presents the reconciliation of the market risk benefits balance in the Condensed Consolidated Balance Sheets (in millions, 2022 information recast for the adoption of LDTI):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Variable Other Variable Other

2 unchanged sentences

Market risk benefit - liabilities 4,423 40 4,463 5,623 39 5,662

Market risk benefit - net liabilities $ 318 $ 38 $ 356 $ 767 $ 30 $ 797

Market risk benefit - net $ ( 1,528 ) $ 34 $ ( 1,494 ) $ 767 $ 30 $ 797

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 12.

Market Risk Benefits

The following table presents the roll-forward of the net (assets) liabilities of the market risk benefits for variable annuities (in millions, 2022 information recast for the adoption of LDTI):

Three Months Ended March 31, 2023 Year Ended December 31, 2022

Net liability balance, beginning of period $ 767 $ 6,281

Net liability beginning of period cumulative effect of changes in non-performance risk 2,185 326

Net liability balance, beginning of period, before effect of changes in non-performance risk 2,952 6,607

The following table presents the roll-forward of the net MRB (assets) liabilities for variable annuities (in millions, 2022 information recast for the adoption of LDTI):

Six Months Ended June 30, 2023 Year Ended December 31, 2022

Net MRB balance, beginning of period $ 767 $ 6,281

Beginning of period cumulative effect of changes in non-performance risk 2,185 326

Net MRB balance, beginning of period, before effect of changes in non-performance risk 2,952 6,607

Effect of changes in interest rates 515 ( 14,137 )

5 unchanged sentences

Effect of changes in assumptions — 465

Net liability balance, end of period, before effect of changes in non-performance risk 2,784 2,952

Net liability end of period cumulative effect of changes in non-performance risk ( 2,466 ) ( 2,185 )

Net liability balance, end of period, gross 318 767

Net MRB balance, end of period, before effect of changes in non-performance risk 177 2,952

End of period cumulative effect of changes in non-performance risk ( 1,705 ) ( 2,185 )

Net MRB balance, end of period, gross ( 1,528 ) 767

Reinsurance recoverable on market risk benefits at fair value, end of period ( 151 ) ( 183 )

Net liability balance, end of period, net of reinsurance 126 584

Net MRB balance, end of period, net of reinsurance ( 1,679 ) 584

Weighted average attained age (years) (1)

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(2) Net amount at risk (NAR) is defined as of the valuation date for each contract as the greater of Death Benefit NAR (DBNAR) and Living Benefit NAR (LBNAR), as applicable, where DBNAR is the GMDB benefit base in excess of the account value, and the LBNAR is the actuarial present value of guaranteed living benefits in excess of the account value.

At each reporting date, the Company regularly evaluates the inputs and assumptions to be used to measure the fair value of the MRB assets and MRB liabilities.

In prior periods, the non-performance risk adjustment was determined based on credit spreads indicated by a blend of yields on similarly rated peer debt and yields on Company debt.

As of June 30, 2023, non-performance risk is incorporated into the calculation through the adjustment of the risk-free rate curve based only on credit spreads for debt and debt-like instruments issued by the Company or its insurance operating subsidiaries, adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries.

The change was made as a result of management’s determination that the reliability of credit spreads on debt and debt-like instruments issued by the Company as a measure of company-specific credit risk has increased due to sustained levels of market trading volume of these instruments.

For the three months ended June 30, 2023, this change in estimate resulted in other comprehensive income of $ 692 million and is reflected as a component of the change in non-performance risk on market risk benefits in Condensed Consolidated Statements of Comprehensive Income (Loss).

The significant assumptions used in the MRB fair value calculations are discussed in Note 6 of the Notes to Condensed Consolidated Financial Statements.

The use of models and assumptions used to determine fair value of MRBs requires a significant amount of judgement.

As such, we have undertaken a comprehensive review of the significant assumptions used.

During the three months ended March 31, 2023, the following notable changes were made to the inputs to the fair value estimates of the MRB calculations:

• There were no changes made to assumed mortality rates.

• There were no changes made to assumed lapse rates.

• There were no changes made to assumed GMWB or GMIB utilization rates.

• There were no changes made to assumed GMWB or non-GMWB withdrawal rates.

• The non-performance risk adjustment increased as a result of increasing credit spreads, which resulted in a decrease in the MRB reserve that was recorded within OCI.

• There were no changes made to assumed long-term equity volatility.

• Decreases in interest rates led to lower assumed separate account and lower discount rates, which resulted in an increase in the MRB reserve.

• Increases in equity markets led to higher separate account fund performance and a decrease in future projected benefits, which resulted in a decrease in the MRB reserve.

• Decreases in equity index volatility led to higher assumed separate account returns, which resulted in an increase in the MRB reserve.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 12.

Market Risk Benefits

During the year ended December 31, 2022, the following notable changes were made to the inputs to the fair value estimates of the MRB calculations:

• Assumed mortality rates for certain policies were increased as a result of trends in actual mortality experience within those blocks of business, which resulted in an increase in the MRB reserve.

• Assumed lapse rates were reduced to capture recent trends in actual lapse experience and to reflect a strengthening of the risk margin, which resulted in an increase in the MRB reserve.

• An update was made in the GMWB utilization modeling framework to allow for more direct modeling of certain product features and risk margins were strengthened to reflect the credibility associated with the increased granularity of the parameterization, which resulted in a net increase in the MRB reserve.

No adjustments were made to the GMIB utilization rates.

• Assumed GMWB withdrawal rates were increased as a result of trends in actual experience, which resulted in an increase in the MRB reserve.

Minor adjustments were made to the free partial withdrawal rates on policies without a GMWB with no material impact on the resulting MRB reserve.

• The non-performance risk adjustment increased as a result of increasing credit spreads, which resulted in a decrease in the MRB reserve that was recorded within OCI.

• There were no changes made to assumed long-term equity volatility.

• Increases in interest rates led to higher assumed separate account returns and higher discount rates, which resulted in a decrease in the MRB reserve.

• Decreases in equity markets led to lower separate account fund performance and an increase in future projected benefits, which resulted in an increase in the MRB reserve.

• Increases in equity index volatility led to lower assumed separate account returns, which resulted in an increase in the MRB reserve.

Long-Term Debt

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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.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 13.

Long-Term Debt

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

March 31, December 31,

June 30, December 31,

Long-Term Debt

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Total long-term debt $ 2,633 $ 2,635

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 13.

Long-Term Debt

The following table presents the contractual maturities of the Company's long-term debt as of March 31, 2023 (in millions):

The following table presents the contractual maturities of the Company's long-term debt as of June 30, 2023 (in millions):

Calendar Year

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Long-term debt $ 599 $ — $ — $ — $ 2,034 $ 2,633

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 and $ 350 million aggregate principal amount of 5.670 % Senior Notes due June 8, 2032.

The net proceeds of these 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.

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

The net proceeds of these notes were used, together with cash on hand, to repay the Company’s $ 750 million aggregate principal amount senior unsecured term loan due February 2023.

Revolving Credit Facility

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Commitments under the 2023 Revolving Credit Facility terminate on February 24, 2028.

Line of Credit Agreement

Jackson is a party to an Uncommitted Money Market Line Credit Agreement dated April 6, 2023 among Jackson, Jackson Financial, and Société Générale.

This agreement is an uncommitted short-term cash advance facility that provides an additional form of liquidity to Jackson and to Jackson Financial.

The aggregate borrowing capacity under the agreement is $ 500 million and each cash advance request must be at least $ 100 thousand.

The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance.

Jackson and Jackson Financial are jointly and severally liable to repay any advance under the agreement, which must be repaid prior to the last day of the quarter in which the advance was drawn.

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

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 nil were outstanding at both March 31, 2023 and December 31, 2022 and were recorded in other liabilities.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.

The IRA includes a new Federal alternative minimum tax (“AMT”), effective in 2023, that is based on 15% of an applicable corporation’s adjusted financial statement income (“AFSI”).

Advances of nil were outstanding at both June 30, 2023 and December 31, 2022 and were recorded in other liabilities.

Interest expense on such advances was $ 6 million and nil for the three months ended June 30, 2023 and 2022, respectively, and $ 6 million and nil for the six months ended June 30, 2023 and 2022, respectively.

The Inflation Reduction Act of 2022 (“IRA”) includes a new Federal alternative minimum tax (“AMT”), effective in 2023, that is based on 15% of an applicable corporation’s adjusted financial statement income (“AFSI”).

A corporation will be subject to the AMT if its average pre-tax AFSI over three prior years (starting with 2020-2022) is greater than $1 billion (an “applicable corporation”).

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However, any AMT paid would be indefinitely available as a credit carryover that could reduce future regular corporate income tax in excess of AMT.

Starting in 2023, the Company became an applicable corporation.

That determination is based on interpretations and assumptions we have made regarding the AMT provisions of the IRA, which may change once regulatory guidance is issued.

As of March 31, 2023, we have not recorded any provision for the AMT.

Department of the Treasury is expected to issue regulatory guidance throughout 2023.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 15.

The Company expects to be an applicable corporation starting in 2023.

That expectation is based on interpretations and assumptions we have made regarding the AMT provisions of the IRA, which may change once regulatory guidance is issued.

As of June 30, 2023, we have not recorded any provision for the AMT.

Department of the Treasury is expected to issue regulatory guidance regarding the AMT throughout 2023.

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

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

The Company’s effective income tax rate was 27.2 % for the three months ended March 31, 2023, compared with 15.0 % for the same period in 2022.

The Company’s effective income tax rate was 16.8 % and 52.8 % for the three and six months ended June 30, 2023, compared with 20.6 % and 18.4 % for the same period in 2022.

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 months ended March 31, 2023 compared to the three months ended March 31, 2022 was due to the relationship of taxable income to consolidated pre-tax income.

The ETR differs for the three months ended March 31, 2023 from the full year-ended December 31, 2022 ETR of 19.6 % due to the relationship of taxable income to consolidated pre-tax income.

The change in the ETR for the three and six months ended June 30, 2023 compared to 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, 2023 from the full year-ended December 31, 2022 ETR of 19.6 % due to the relationship of taxable income to consolidated pre-tax income.

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.

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

For the three months ended March 31, 2023, recent changes in market conditions and 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.

For the six months ended June 30, 2023, changes in market conditions and 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 March 31, 2023, 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 ended March 31, 2023, the Company recorded a decrease of $ 136 million to the valuation allowance associated with the unrealized tax losses in the companies’ available for sale securities portfolio.

The $ 136 million decrease to the valuation allowance consists of $ 141 million tax benefit recorded to other comprehensive income offset by a $ 5 million tax expense recorded in the income tax (benefit).

At March 31, 2023 and December 31, 2022, the Company has recorded a total valuation allowance for $ 770 million and $ 906 million, respectively, associated with the unrealized tax losses in the companies' available for sale securities portfolio.

At March 31, 2023 and December 31, 2022, the Company has recorded a total valuation allowance for $ 4 million and $ 4 million, respectively, against the deferred tax assets associated with both realized and unrealized losses on capital assets in the Non-life Companies’ where it is not more-likely-than-not that the full tax benefit of the losses will be realized.

As of June 30, 2023, 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 and six months ended June 30, 2023, the Company recorded an increase of $ 93 million and a decrease of $ 42 million to the valuation allowance associated with the unrealized tax losses in the Company's available for sale securities portfolio.

The $ 93 million increase for the three months ended June 30, 2023 to the valuation allowance consists of $ 88 million tax

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 15.

expense recorded to other comprehensive income and $ 5 million tax expense recorded in the income tax expense.

The $ 42 million decrease for the six months ended June 30, 2023 to the valuation allowance consists of $ 52 million tax (benefit) recorded to other comprehensive income offset by $ 10 million tax expense recorded in the income tax (benefit).

At June 30, 2023 and December 31, 2022, the Company has recorded a total valuation allowance for $ 864 million and $ 906 million, respectively, associated with the unrealized tax losses in the Company's available for sale securities portfolio.

At June 30, 2023 and December 31, 2022, the Company has recorded a total valuation allowance for $ 4 million and $ 4 million, respectively, against the deferred tax assets associated with both realized and unrealized losses on capital assets in the Non-life Companies’ where it is not more-likely-than-not that the full tax benefit of the losses will be realized.

Commitments and Contingencies

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

At March 31, 2023, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $ 1,283 million.

At March 31, 2023, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $ 1,342 million.

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

Other Related Party Transactions

At June 30, 2023, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $ 994 million.

At June 30, 2023, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $ 942 million.

Other Related Party Transactions

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

The Company recognized $ 8 million and $ 9 million of revenue during the three months ended March 31, 2023 and 2022, associated with these investment services.

The Company recognized $ 10 million and $ 9 million of revenue during the three months ended June 30, 2023, and 2022, and $ 18 million and $ 18 million of revenue during the six months ended June 30, 2023 and 2022, associated with these investment services.

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

As discussed further in Note 1 of the Notes to Condensed Consolidated Financial Statements, as of June 30, 2023, Prudential has no remaining equity interest in the Company and is no longer a related party.

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,

2023 2022 2023 2022

Asset-based commission expenses $ 255 $ 250 $ 505 $ 525

4 unchanged sentences

Total operating costs and other expenses $ 620 $ 543 $ 1,236 $ 1,209

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 19.

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, 2022 information recast for the adoption of LDTI):

Three Months Ended March 31,

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

2023 2022 2023 2022

Balance, beginning of period (1)

2 unchanged sentences

Change in current discount rate - reserve for future policy benefits (2)

96 591 ( 50 ) 1,356

Change in non-performance risk on market risk benefits ( 764 ) 1,017 ( 480 ) 1,953

6 unchanged sentences

$ ( 3,365 ) $ ( 1,739 ) $ ( 3,365 ) $ ( 1,739 )

(1) Includes $( 1,832 ) million and $( 2,106 ) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of March 31, 2023 and December 31, 2022, respectively.

(1) Includes $( 1,930 ) million and $( 2,106 ) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of June 30, 2023 and December 31, 2022, respectively.

(2) Represents the impact of changes in the discount rate used in the remeasurement of our direct reserves for future policy benefits and claims payable, net of the remeasurement of ceded reserves for future policy benefits and claims payable.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 19.

Accumulated Other Comprehensive Income (Loss)

The following table represents amounts reclassified out of AOCI (in millions, 2022 information recast for the adoption of LDTI):

2 unchanged sentences

Consolidated Income Statement

Three Months Ended March 31,

Three Months Ended June 30,

Net unrealized investment gain (loss):

1 unchanged sentence

Other impaired securities ( 7 ) 12 Net gains (losses) on derivatives and investments

Net unrealized gain (loss) 37 ( 13 )

Amortization of deferred acquisition costs — —

Reclassifications, before income taxes 37 ( 13 )

Net unrealized gain (loss), before income taxes 9 5

Income tax expense (benefit) 2 2

Reclassifications, net of income taxes $ 7 $ 3

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 $ 76 $ ( 38 ) Net gains (losses) on derivatives and investments

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

Net unrealized gain (loss), before income taxes 46 ( 8 )

Income tax expense (benefit) 10 ( 1 )

Reclassifications, net of income taxes $ 36 $ ( 7 )

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

Preferred Stock

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The Series A Preferred Stock carries i) an initial dividend rate of 8.000 % per annum to but excluding, March 30, 2028;

ii) from, and including, March 30, 2028, during each reset period, at a rate per annum equal to the Five-year U.S.

Treasury Rate as of the applicable reset dividend determination date plus 3.728 % and be payable in arrears on March 30, June 30, September 30 and December 30, commencing on June 30, 2023.

and ii) from, and including, March 30, 2028, during each reset period, at a rate per annum equal to the Five-year U.S.

Treasury Rate as of the applicable reset dividend determination date plus 3.728 %.

The dividend is payable quarterly in arrears on March 30, June 30, September 30 and December 30, and commenced on June 30, 2023.

Dividends on the Series A Preferred Stock are not cumulative.

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Holders of Depositary Shares have no right to require the redemption or repurchase of the Series A Preferred Stock or the Depositary Shares.

We will use the net proceeds from the sale for general corporate purposes, including future repayments of debt.

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

The net proceeds from the sale are being used for general corporate purposes, including future repayments of debt.

The following table presents declaration date, record date, payment date and dividends paid per preferred share and per depositary share of JFI’s Series A preferred stock:

Dividends Paid

Declaration Date Record Date Payment Date Per Preferred Share Per Depositary Share

Quarter Ended

06/30/2023 May 8, 2023 June 1, 2023 June 30, 2023 $ 594.44 $ 0.59444

At the time of the Demerger, the Company had two classes of common stock:

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On June 9, 2022, our shareholders approved the Third Amended and Restated Certificate of Incorporation, which amended and restated the Second Amended and Restated Certificate of Incorporation to eliminate the Class B Common Stock.

At March 31, 2023 and December 31, 2022, the Company was authorized to issue up to 1 billion shares of common stock (formerly known as the Class A Common Stock at December 31, 2021).

At June 30, 2023 and December 31, 2022, the Company was authorized to issue up to 1 billion shares of common stock (formerly known as the Class A Common Stock at December 31, 2021).

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

Share Repurchase Program

On February 27, 2023, our Board of Directors authorized an increase of $ 450 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 May 3, 2023, the Company had remaining authorization to purchase $ 457 million of its common shares.

On February 27, 2023, our Board of Directors authorized an increase of $ 450 million in our existing authorization to repurchase shares of our outstanding common stock as part of the Company's share repurchase program.

As of August 3, 2023, the Company had remaining authorization to purchase $ 439 million of its common shares.

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

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corporations.

Starting in 2023, such excise tax generally applies if a company repurchases in excess of $1 million worth of its stock in any given calendar year.

The impact of this provision is dependent on the extent of net share repurchases made.

Starting in 2023, such excise tax generally applies if a company repurchases in excess of $1 million of its stock in any given calendar year.

The impact of this provision depends on the extent to which net share repurchases are made.

Any excise tax incurred on corporate stock repurchases will generally be recognized as part of the cost basis of the treasury stock acquired and not reported as income tax expense.

Through March 31, 2023, we have not incurred any excise tax as stock issuances were greater than stock repurchases.

Through June 30, 2023, we have not incurred any excise tax as stock issuances (including preferred stock) were greater than stock repurchases.

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

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2023 (January 1- March 31) 1,721,737 70 40.42

2023 (April 1- May 3) 804,797 29 35.87

2023 (April 1- June 30) 1,394,797 47 33.87

Total 2023 3,116,534 $ 117 $ 37.49

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Shares repurchased under repurchase program — ( 3,116,534 ) ( 3,116,534 )

Shares at March 31, 2023 94,475,832 ( 13,431,514 ) 81,044,318

Shares at June 30, 2023 94,481,006 ( 12,570,175 ) 81,910,831

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

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

Dividends to Shareholders

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.

Any declaration of cash dividends on common stock 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, preferred stock, and 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 stock or as to the amount of any such cash dividend.

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

The following table presents declaration date, record date, payment date and dividends paid per share of JFI’s common stock:

2 unchanged sentences

03/31/2023 February 27, 2023 March 14, 2023 March 23, 2023 $ 0.62

06/30/2023 May 8, 2023 June 1, 2023 June 15, 2023 $ 0.62

Quarter Ended

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

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

Earnings Per Share

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

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

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, including the treatment for the earnings per share calculations.

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 common stock outstanding for the period, plus shares representing the dilutive effect of share-based awards.

Beginning in 2021, the Company granted its first share-based awards subject to vesting provisions of the Incentive Plan, which have a dilutive effect.

See Note 18 to Consolidated Financial Statements for further description of share-based awards in the Company's 2022 Annual Report.

Basic earnings per share is calculated by dividing net income (loss) attributable to Jackson Financial shareholders by the weighted-average number of common shares outstanding during the period.

Diluted earnings per share is calculated by dividing the net income (loss) attributable to Jackson Financial shareholders, by the weighted-average number of shares of common stock outstanding for the period, plus shares representing the dilutive effect of share-based awards.

Beginning in 2021, the Company granted its first share-based awards subject to vesting provisions of the 2021 Omnibus Incentive Plan, which have a dilutive effect.

See Note 18 of the Notes to Consolidated Financial Statements in the Company’s 2022 Annual Report, as recast in our Current Report on Form 8-K filed May 10, 2023, for further description of share-based awards.

The following table sets forth the calculation of earnings per common share (2022 information recast for the adoption of LDTI):

Three Months Ended March 31,

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

2023 2022 2023 2022

(in millions, except share and per share data)

1 unchanged sentence

$ 1,217 $ 3,263 $ ( 280 ) $ 5,457

Preferred stock dividends 13 — 13 —

Net income (loss) attributable to Jackson Financial Inc.

common shareholders $ 1,204 $ 3,263 $ ( 293 ) $ 5,457

Weighted average shares of common stock outstanding - basic 82,595,287 85,968,564 82,620,558 86,649,493

5 unchanged sentences

Diluted $ 14.21 $ 36.59 $ ( 3.55 ) $ 60.60

(1) If we reported a net loss attributable to Jackson Financial Inc., all common stock equivalents are anti-dilutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts.

The shares excluded from the diluted EPS calculation were 3,436,857 shares for the three months ended March 31, 2023.

(1) In a quarter in which we reported a net loss attributable to Jackson Financial Inc., all common stock equivalents are anti-dilutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts.

The shares excluded from the diluted EPS calculation were 2,794,562 shares for the six months ended June 30, 2023.

Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 22.

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At September 30, 2022, the Company identified errors related to the classification of certain balances and amounts in line items of Condensed Consolidated Income Statements, and Condensed Consolidated Statements of Cash Flows of its previously issued Condensed Consolidated Financial Statements.

These errors consist of balances and amounts related to deferred sales inducement assets, liabilities for certain life-contingent annuities, sub-advisor fee expenses, and other operating expenses and do not impact previously reported net income, total equity, or net cash flows.

These errors consisted of balances and amounts related to deferred sales inducement assets, liabilities for certain life-contingent annuities, sub-advisor fee expenses, and other operating expenses and did not impact previously reported net income, total equity, or net cash flows.

Management evaluated these errors and the impact to previously issued financial statements based upon SEC Staff Accounting Bulletin No.

99, Materiality, which has since been codified in Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections.

Based on this evaluation, management has concluded that the adjustments and impact of these errors were not material to any previously issued quarterly or annual financial statements.

However, to improve the consistency and comparability of the financial statements, management has revised previously reported financial statement line items and related disclosures in this report.

Based on this evaluation, management concluded that the adjustments and impact of the errors were not material to any previously issued quarterly or annual financial statements.

However, to improve the consistency and comparability of the financial statements, management revised previously reported financial statement line items and related disclosures in this report.

In addition, certain other immaterial amounts in prior period financial statements have been reclassified to conform to the current period presentation.

The following tables, recast for the adoption of LDTI, present condensed statement of income line items affected by the revisions and reclassifications of previously reported financial statements, detailing amounts previously reported, the impact upon those line items due to revisions and reclassifications and amounts as currently revised within the financial statements.

For the three months ended March 31, 2022, the reclassification also impacted the Condensed Consolidated Statement of Cash Flows in the amount of $ 27 million, which increased financing cash flows offset by a decrease in operating cash flows.

The following tables, recast for the adoption of LDTI, present Condensed Consolidated Income Statements line items affected by the revisions and reclassifications of previously reported financial statements, detailing amounts previously reported, the impact upon those line items due to revisions and reclassifications and amounts as currently revised within the financial statements.

For the six months ended June 30, 2022, the reclassification also impacted the Condensed Consolidated Statement of Cash Flows in the amount of $ 44 million, which increased financing cash flows offset by a decrease in operating cash flows.

Condensed Consolidated Income Statements

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Operating costs and other expenses, net of deferrals 517 — 26 543

Amortization of deferred acquisition costs 515 ( 198 ) — 317

Amortization of DAC 1,198 ( 890 ) ( 1 ) 307

Total benefits and expenses 2,868 ( 340 ) 27 2,555

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Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 22.

Subsequent Events

Revision and Reclassifications of Prior Period Financial Statements

Condensed Consolidated Income Statements

(in millions) As Previously Reported Impact for the Adoption of LDTI Impact of Revisions

and Reclassifications As Revised

Six Months Ended Six Months Ended Six Months Ended Six Months Ended

6/30/22 6/30/22 6/30/22 6/30/22

Fee income $ 3,774 $ — $ 172 $ 3,946

Premium 66 — 3 69

Net investment income 1,467 — ( 85 ) 1,382

Total net gains (losses) on derivatives and investments 5,472 ( 1,995 ) — 3,477

Total revenues 10,820 ( 1,995 ) 90 8,915

Benefits and Expenses

Death, other policy benefits and change in policy reserves, net of deferrals 1,479 ( 930 ) 25 574

(Gain) loss from updating future policy benefits cash flow assumptions, net — 29 — 29

Market risk benefits (gains) losses, net — ( 723 ) — ( 723 )

Interest credited on other contract holder funds, net of deferrals and amortization 423 2 ( 19 ) 406

Operating costs and other expenses, net of deferrals 1,124 — 85 1,209

Amortization of deferred acquisition costs 1,713 ( 1,088 ) ( 1 ) 624

Total benefits and expenses 4,783 ( 2,710 ) 90 2,163

Pretax income (loss) 6,037 715 — 6,752

Income tax (benefit) expense 1,047 186 — 1,233

Net income (loss) $ 4,990 $ 529 $ — $ 5,519

Subsequent Events

The Company has evaluated subsequent events through the date these Condensed Consolidated Financial Statements were issued.

Line of Credit Agreement

Jackson is a party to an Uncommitted Money Market Line Credit Agreement dated April 6, 2023 among Jackson, Jackson Financial, and Société Générale.

This agreement is an uncommitted short-term cash advance facility that provides an additional form of liquidity to Jackson and to Jackson Financial.

The aggregate borrowing capacity under the agreement is $ 500 million and each cash advance request must be at least $ 100 thousand.

The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance.

Jackson and Jackson Financial are jointly and severally liable to repay any advance under the agreement, which must be repaid prior to the last day of the quarter in which the advance was drawn.

As of May 9, the Company has not borrowed on this line of credit.

Dividends Declared to Shareholders

On May 8, 2023, our Board of Directors approved a second quarter cash dividend on JFI's common stock, $ 0.62 per share, payable on June 15, 2023, to shareholders of record on June 1, 2023.

The Company also announced the declaration of a cash dividend of $ 0.59444 per depositary share, each representing a 1/1,000th interest in a share of Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A.

The dividend will be payable on June 30, 2023, to shareholders of record at the close of business on June 1, 2023.

On August 7, 2023, our Board of Directors approved a third quarter cash dividend on JFI's common stock, $ 0.62 per share, payable on September 14, 2023, to shareholders of record on August 31, 2023.

The Company also declared a cash dividend of $ 0.50 per depositary share (the "Depositary Shares"), each representing a 1/1,000th interest in a share of Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A.

The dividend will be payable on October 2, 2023, to Depositary Shares shareholders of record at the close of business on August 31, 2023.

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