Jackson Financial Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm ( KPMG LLP , Chicago, IL , Auditor Firm ID: 185 ) 94 Consolidated Balance Sheet s as of December 31, 2023 and 2022 97 Consolidated Income Statements for the years ended December 31, 2023, 2022 and 2021 98 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 99 Consolidated Statements of Equity for the years ended December 31, 2023, 2022 and 2021 100 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 101 Notes to Consolidated Financial Statements Note 1. Business and Basis of Presentation 103 Note 2. Summary of Significant Accounting Policies 105 Note 3. Segment Information 114 Note 4. Investments 119 Note 5. Derivative Instruments 135 Note 6. Fair Value Measurements 140 Note 7. Deferred Acquisition Costs 158 Note 8. Reinsurance 159 Note 9. Reserves for Future Policy Benefits and Claims Payable 164 Note 10. Other Contract Holder Funds 169 Note 11. Separate Account Assets and Liabilities 175 Note 12. Market Risk Benefits 176 Note 13. Long-term Debt 180 Note 14. Federal Home Loan Bank Advances 181 Note 15. Income Taxes 181 Note 16. Commitments and Contingencies 186 Note 17. Leases 186 Note 18. Share-Based Compensation 187 Note 19. Other Related Party Transactions 190 Note 20. Statutory Accounting and Regulatory Matters 190 Note 21. Benefit Plans 191 Note 22. Operating Costs and Other Expenses 191 Note 23. Accumulated Other Comprehensive Income (Loss) 192 Note 24. Equity 193 Note 25. Earnings Per Share 195 Note 26. Subsequent Events 196 Financial Statement Schedules: Schedule I—Summary of Investments—Other Than Investments in Related Parties as of December 31, 2023 197 Schedule II—Financial Statements of Jackson Financial Inc. (Parent Only) as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 198 Schedule III—Supplemental Insurance Information for the years ended December 31, 2023, 2022 and 2021 201 Schedule IV—Reinsurance for the years ended December 31, 2023, 2022 and 2021 203 Schedule V—Valuation and Qualifying Accounts for the years ended December 31, 2023 and 2022 204 93 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Jackson Financial Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Jackson Financial Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated income statements, statements of comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedules I to V (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company adopted 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. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 94 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Fair value of market risk benefits As disclosed in Notes 6 and 12, contracts or contract features that provide protection to the contract holder from capital market risk and expose the Company to other-than-nominal capital market risk are classified as market risk benefits (MRBs). The Company estimates MRBs at fair value using subjective judgments related to the discount rate assumptions, including the Company’s nonperformance risk, and actuarially determined assumptions, including mortality, benefit utilization and lapse. As of December 31, 2023, the fair value of MRB assets and liabilities were estimated to be $6,737 million and $4,785 million, respectively. We identified the evaluation of the fair value of MRB assets and liabilities as a critical audit matter. Specifically, there was a high degree of auditor effort and subjective auditor judgment involved in evaluating the nonperformance risk, mortality, benefit utilization, and lapse assumptions used to estimate the fair value of MRB assets and liabilities. Evaluation of the assumptions required valuation and actuarial professionals with specialized skills and knowledge. The following are the primary procedures we performed to address this critical audit matter. With the assistance of a valuation professional, we evaluated the design and tested the operating effectiveness of certain internal controls related to the development of the nonperformance risk adjustment used to develop the discount rate assumption. With the assistance of actuarial professionals, we evaluated the design and tested the operating effectiveness of certain internal controls related to the fair value of MRBs, including controls related to the development of the mortality, benefit utilization and lapse assumptions. We involved a valuation professional with specialized skills and knowledge who assisted in evaluating the Company’s nonperformance risk assumption used to estimate the fair value of MRBs, which included assessing the methodology and inputs utilized by the Company by developing an independent credit curve to compare to the credit curve used by the Company. The independent credit curve developed by the valuation professional used market observable instruments issued by the Company and its affiliates, as well as indicative pricing for the Company’s debt, with certain adjustments. We involved actuarial professionals with specialized skills and knowledge, who assisted in evaluating the Company’s estimate of the fair value of MRB assets and liabilities, by: 95 • Evaluating the Company’s methodology for determining mortality, benefit utilization, and lapse assumptions used to estimate the fair value of MRBs for compliance with generally accepted actuarial standards. • Comparing the mortality, benefit utilization, and lapse assumptions with the Company’s emerging experience or market trends and evaluating reasonableness of these assumptions where deviations from Company experience or market trends were identified. • Assessing the reasonableness of the Company’s fair value estimate for a selection of policies with MRBs by recalculating the fair value and comparing to the Company’s estimate. /s/ KPMG LLP We have served as the Company’s auditor since 1999. Chicago, Illinois February 28, 2024 96 Jackson Financial Inc. Consolidated Balance Sheets (in millions, except per share data) December 31, 2023 2022 Assets Investments: Debt Securities, available-for-sale, net of allowance for credit losses of $ 21 and $ 23 at December 31, 2023 and 2022, respectively (amortized cost: 2023 $ 44,844 ; 2022 $ 48,798 ) $ 40,422 $ 42,489 Debt Securities, at fair value under fair value option 2,153 2,173 Debt Securities, trading, at fair value 68 100 Equity securities, at fair value 394 393 Mortgage loans, net of allowance for credit losses of $ 165 and $ 95 at December 31, 2023 and 2022, respectively 10,082 10,967 Mortgage loans, at fair value under fair value option 481 582 Policy loans (including $ 3,457 and $ 3,419 at fair value under the fair value option at December 31, 2023 and 2022, respectively) 4,399 4,377 Freestanding derivative instruments 390 1,270 Other invested assets 2,466 3,595 Total investments 60,855 65,946 Cash and cash equivalents 2,688 4,298 Accrued investment income 512 514 Deferred acquisition costs 12,302 12,923 Reinsurance recoverable, net of allowance for credit losses of $ 29 and $ 15 at December 31, 2023 and 2022, respectively 25,422 29,046 Reinsurance recoverable on market risk benefits, at fair value 149 221 Market risk benefit assets, at fair value 6,737 4,865 Deferred income taxes, net 640 320 Other assets 1,294 944 Separate account assets 219,656 195,906 Total assets $ 330,255 $ 314,983 Liabilities and Equity Liabilities Reserves for future policy benefits and claims payable $ 11,898 $ 12,318 Other contract holder funds 55,319 58,190 Market risk benefit liabilities, at fair value 4,785 5,662 Funds withheld payable under reinsurance treaties (including $ 3,626 and $ 3,582 at fair value under the fair value option at December 31, 2023 and 2022, respectively) 19,952 22,957 Long-term debt 2,037 2,635 Repurchase agreements and securities lending payable 19 1,048 Collateral payable for derivative instruments 780 689 Freestanding derivative instruments 1,210 2,065 Notes issued by consolidated variable interest entities, at fair value under fair value option (See Note 4) 1,988 1,732 Other liabilities 2,277 2,403 Separate account liabilities 219,656 195,906 Total liabilities 319,921 305,605 Commitments, Contingencies, and Guarantees (See Note 16) Equity Series A non-cumulative preferred stock and additional paid in capital, $ 1.00 par value per share: 24,000 shares authorized; shares issued: 2023 - 22,000 ; liquidation preference $ 25,000 per share (See Note 24) 533 — Common stock; 1,000,000,000 shares authorized, $ 0.01 par value per share and 78,660,221 and 82,690,098 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively (See Note 24) 1 1 Additional paid-in capital 6,005 6,063 Treasury stock, at cost; 15,820,785 and 11,784,813 shares at December 31, 2023 and 2022, respectively ( 599 ) ( 443 ) Accumulated other comprehensive income (loss), net of tax expense (benefit) of $( 178 ) in 2023 and $( 66 ) in 2022 ( 2,808 ) ( 3,378 ) Retained earnings 7,038 6,403 Total shareholders' equity 10,170 8,646 Noncontrolling interests 164 732 Total equity 10,334 9,378 Total liabilities and equity $ 330,255 $ 314,983 See Notes to Consolidated Financial Statements. 97 Jackson Financial Inc. Consolidated Income Statements (in millions, except per share data) For the Years Ended December 31, 2023 2022 2021 Revenues Fee income $ 7,680 $ 7,722 $ 8,059 Premiums 147 132 148 Net investment income: Net investment income excluding funds withheld assets 1,756 1,507 2,236 Net investment income on funds withheld assets 1,174 1,254 1,188 Total net investment income 2,930 2,761 3,424 Net gains (losses) on derivatives and investments: Net gains (losses) on derivatives and investments ( 5,864 ) ( 3,023 ) ( 5,344 ) Net gains (losses) on funds withheld reinsurance treaties ( 1,801 ) 2,186 ( 21 ) Total net gains (losses) on derivatives and investments ( 7,665 ) ( 837 ) ( 5,365 ) Other income 67 85 94 Total revenues 3,159 9,863 6,360 Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 965 1,062 925 (Gain) loss from updating future policy benefits cash flow assumptions, net 102 ( 34 ) 41 Market risk benefits (gains) losses, net ( 3,897 ) ( 3,536 ) ( 3,966 ) Interest credited on other contract holder funds, net of deferrals and amortization 1,145 866 832 Interest expense 185 113 37 Operating costs and other expenses, net of deferrals 2,549 2,432 2,839 Amortization of deferred acquisition costs 1,152 1,226 1,307 Total benefits and expenses 2,201 2,129 2,015 Pretax income (loss) 958 7,734 4,345 Income tax expense (benefit) 4 1,505 666 Net income (loss) 954 6,229 3,679 Less: Net income (loss) attributable to noncontrolling interests 20 43 262 Net income (loss) attributable to Jackson Financial Inc. 934 6,186 3,417 Less: Dividends on preferred stock 35 — — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 899 $ 6,186 $ 3,417 Earnings per share Basic $ 10.99 $ 72.34 $ 36.35 Diluted $ 10.76 $ 69.75 $ 36.17 See Notes to Consolidated Financial Statements. 98 Jackson Financial Inc. Consolidated Statements of Comprehensive Income (Loss) (in millions) For the Years Ended December 31, 2023 2022 2021 Net income (loss) $ 954 $ 6,229 $ 3,679 Other comprehensive income (loss), net of tax: Change in unrealized gains (losses) on securities with no credit impairment net of tax expense (benefit) of: $ 201 , $( 917 ), and $( 594 ) for the years ended December 31, 2023, 2022 and 2021, respectively 1,697 ( 7,507 ) ( 2,144 ) Change in unrealized gains (losses) on securities with credit impairment, net of tax expense (benefit) of: $( 7 ), $( 1 ), and $ 1 for the years ended December 31, 2023, 2022 and 2021, respectively ( 26 ) ( 2 ) 3 Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) of $( 41 ), $ 361 and $ 110 for the years ended December 31, 2023, 2022 and 2021, respectively ( 146 ) 1,303 397 Change in non-performance risk on market risk benefits, net of tax expense (benefit) of $( 265 ), $ 407 and $( 92 ) for the years ended December 31, 2023, 2022 and 2021, respectively ( 955 ) 1,468 ( 332 ) Total other comprehensive income (loss) 570 ( 4,738 ) ( 2,076 ) Comprehensive income (loss) 1,524 1,491 1,603 Less: Comprehensive income (loss) attributable to noncontrolling interests 20 43 262 Comprehensive income (loss) attributable to Jackson Financial Inc. $ 1,504 $ 1,448 $ 1,341 See Notes to Consolidated Financial Statements. 99 Jackson Financial Inc. Consolidated Statements of Equity (in millions) Accumulated Additional Treasury Shares Equity Other Total Non- Preferred Common Paid-In Stock Held Compensation Comprehensive Retained Shareholders' Controlling Total Stock Stock Capital at Cost In Trust Reserve Income (Loss) Earnings Equity Interests Equity Balances as of December 31, 2020 $ — $ 1 $ 5,927 $ — $ ( 4 ) $ 8 $ 3,821 $ ( 324 ) $ 9,429 $ 494 $ 9,923 Change in accounting principle, net of tax — — — — — ( 385 ) ( 2,603 ) — ( 2,988 ) — ( 2,988 ) Net income (loss) — — — — — — — 3,417 3,417 262 3,679 Other comprehensive income (loss) — — — — — — ( 2,076 ) — ( 2,076 ) — ( 2,076 ) Change in equity of noncontrolling interests — — — — — — — — — ( 76 ) ( 76 ) Dividends on common stock — — — — — — — ( 50 ) ( 50 ) — ( 50 ) Purchase of treasury stock — — — — — — — — ( 211 ) — ( 211 ) Shares sold in connection with demerger — — 1 — 4 — — — 5 — 5 Share-based compensation — — 123 — — — — — 123 — 123 Reserve for equity compensation plans — — — — — ( 8 ) — — ( 8 ) — ( 8 ) Balances as of December 31, 2021 $ — $ 1 $ 6,051 $ ( 211 ) $ — $ — $ 1,360 $ 440 $ 7,641 $ 680 $ 8,321 Net income (loss) — — — — — — — 6,186 6,186 43 6,229 Other comprehensive income (loss) — — — — — — ( 4,738 ) — ( 4,738 ) — ( 4,738 ) Change in equity of noncontrolling interests — — — — — — — — — 9 9 Dividends on common stock — — — — — — — ( 199 ) ( 199 ) — ( 199 ) Purchase of treasury stock — — — ( 321 ) — — — — ( 321 ) — ( 321 ) Share-based compensation — — 12 89 — — — ( 24 ) 77 — 77 Balances as of December 31, 2022 $ — $ 1 $ 6,063 $ ( 443 ) $ — $ — $ ( 3,378 ) $ 6,403 $ 8,646 $ 732 $ 9,378 Net income (loss) — — — — — — — 934 934 20 954 Other comprehensive income (loss) — — — — — — 570 — 570 — 570 Change in equity of noncontrolling interests — — — — — — — — — ( 588 ) ( 588 ) Dividends on preferred stock — — — — — — — ( 35 ) ( 35 ) — ( 35 ) Dividends on common stock — — — — — — — ( 209 ) ( 209 ) — ( 209 ) Purchase of treasury stock — — — ( 306 ) — — — — ( 306 ) — ( 306 ) Share-based compensation — — ( 58 ) 150 — — — ( 55 ) 37 — 37 Issuance of preferred stock 533 — — — — — — — 533 — 533 Balances as of December 31, 2023 $ 533 $ 1 $ 6,005 $ ( 599 ) $ — $ — $ ( 2,808 ) $ 7,038 $ 10,170 $ 164 $ 10,334 See Notes to Consolidated Financial Statements. 100 Jackson Financial Inc. Consolidated Statements of Cash Flows (in millions) Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income (loss) $ 954 $ 6,229 $ 3,679 Adjustments to reconcile net income to net cash provided by operating activities: Net realized losses (gains) on investments 554 359 ( 182 ) Net losses (gains) on derivatives 5,310 2,664 5,526 Net losses (gains) on funds withheld reinsurance treaties 1,801 ( 2,186 ) 21 Net (gain) loss on market risk benefits ( 3,897 ) ( 3,536 ) ( 3,966 ) (Gain) loss from updating future policy benefits cash flow assumptions, net 102 ( 34 ) 41 Interest credited on other contract holder funds, gross 1,145 866 832 Mortality, expense and surrender charges ( 528 ) ( 530 ) ( 553 ) Amortization of discount and premium on investments ( 27 ) 11 49 Deferred income tax expense (benefit) ( 207 ) 1,547 739 Share-based compensation expense 107 131 129 Change in: Accrued investment income 2 ( 11 ) 55 Deferred acquisition costs 622 601 519 Funds withheld, net of reinsurance ( 20 ) ( 73 ) ( 626 ) Future policy benefits ( 731 ) ( 1,137 ) ( 1,102 ) Other assets and liabilities, net 123 305 521 Net cash provided by (used in) operating activities 5,310 5,206 5,682 Cash flows from investing activities: Sales, maturities and repayments of: Debt securities 11,488 11,535 19,568 Equity securities 316 84 50 Mortgage loans 2,492 1,695 1,747 Purchases of: Debt securities ( 8,231 ) ( 11,606 ) ( 14,733 ) Equity securities ( 200 ) ( 249 ) ( 111 ) Mortgage loans ( 1,605 ) ( 1,816 ) ( 2,427 ) Settlements related to derivatives and collateral on investments ( 5,475 ) ( 674 ) ( 4,836 ) Other investing activities 623 ( 343 ) ( 554 ) Net cash provided by (used in) investing activities ( 592 ) ( 1,374 ) ( 1,296 ) (continued) See Notes to Consolidated Financial Statements. 101 Jackson Financial Inc. Consolidated Statements of Cash Flows (continued) (in millions) Years Ended December 31, 2023 2022 2021 Cash flows from financing activities: Policyholders' account balances: Deposits 14,189 18,456 20,134 Withdrawals ( 29,112 ) ( 25,173 ) ( 28,712 ) Net transfers to separate accounts 10,017 5,685 2,664 Proceeds from (payments on) repurchase agreements and securities lending ( 1,025 ) ( 541 ) 476 Net proceeds from (payments on) Federal Home Loan Bank notes 250 — ( 380 ) Proceeds from debt — 750 3,943 Payments on debt ( 603 ) ( 825 ) ( 1,615 ) Debt issuance costs — ( 7 ) ( 28 ) Issuance of debt of consolidated investment entities 297 — — Repayments of debt of consolidated investment entities ( 351 ) — — Contributions from partners of consolidated investments 111 — — Distributions from partners of consolidated investments ( 92 ) — — Disposition of shares held in trust at cost, net — — 5 Dividends on common stock ( 201 ) ( 186 ) ( 50 ) Dividends on preferred stock ( 35 ) — — Purchase of treasury stock ( 306 ) ( 321 ) ( 211 ) Issuance of preferred stock 533 — — Net cash provided by (used in) financing activities ( 6,328 ) ( 2,162 ) ( 3,774 ) Net increase (decrease) in cash, cash equivalents, and restricted cash ( 1,610 ) 1,670 612 Cash, cash equivalents, and restricted cash at beginning of period 4,301 2,631 2,019 Total cash, cash equivalents, and restricted cash at end of period $ 2,691 $ 4,301 $ 2,631 Supplemental cash flow information Income taxes paid (received) $ ( 21 ) $ ( 5 ) $ ( 403 ) Interest paid $ 183 $ 107 $ 30 Non-cash investing activities Debt securities acquired from exchanges, payments-in-kind, and similar transactions $ 144 $ 506 $ 370 Other invested assets acquired from stock splits and stock distributions $ 317 $ 112 $ 99 Non-cash financing activities Non-cash dividend equivalents on stock based awards $ ( 8 ) $ ( 13 ) $ — Reconciliation to Consolidated Balance Sheets Cash and cash equivalents $ 2,688 $ 4,298 $ 2,623 Restricted cash (included in Other assets) 3 3 8 Total cash, cash equivalents, and restricted cash $ 2,691 $ 4,301 $ 2,631 See Notes to Consolidated Financial Statements. 102 Jackson Financial Inc. Notes to Consolidated Financial Statements 1. Business and Basis of Presentation Jackson Financial Inc. ("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 is domiciled in the state of Delaware in the United States (“U.S.”). We were previously a majority-owned subsidiary of Prudential plc ("Prudential"), London, England and served as the holding company for its U.S. operations. The Company's demerger from Prudential was completed on September 13, 2021 ("Demerger"), and the Company is a stand-alone U.S. public company. Prudential retained an equity interest in us after the Demerger. As a result of sales subsequent to the Demerger, Prudential has no remaining equity interest in the Company as of June 30, 2023. 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 other operating subsidiaries are as follows: • PPM America, Inc. (“PPM”), is the Company’s investment management operation that manages the life insurance companies’ general account investment funds. PPM also provides investment services to other former affiliated and unaffiliated institutional clients. • Brooke Life Insurance Company (“Brooke Life”), Jackson’s direct parent, is a life insurance company licensed to sell life insurance and annuity products in the state of Michigan. Other wholly-owned subsidiaries of Jackson are as follows: • Life insurers: Jackson National Life Insurance Company of New York (“Jackson NY” or “JNY”); Squire Reassurance Company LLC (“Squire Re”); Squire Reassurance Company II, Inc. (“Squire Re II”); and VFL International Life Company SPC, LTD; • Registered broker-dealer: Jackson National Life Distributors LLC (“JNLD”); • Registered investment adviser: 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; and • Other insignificant wholly-owned subsidiaries. The Company's Consolidated Financial Statements also include other insignificant partnerships, limited liability companies (“LLCs”) and other variable interest entities (“VIEs”) in which the Company is deemed the primary beneficiary. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Intercompany accounts and transactions have been eliminated upon consolidation. Certain amounts in the 2022 Notes to Consolidated Financial Statements have been reclassified to conform to the 2023 presentation. 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 - Summary of Significant Accounting Policies of Notes to 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 Consolidated Financial Statements in this Form 10-K. 103 Part II | Item 8. Notes to Consolidated Financial Statements | 1. Business and Basis of Presentation Use of Estimates The preparation of these 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 Consolidated Financial Statements and the accompanying notes. Significant estimates or assumptions, as further discussed in these notes, include: • Valuation of investments and derivative instruments, including fair values of securities deemed to be in an illiquid market and the determination of when an impairment is necessary; • Assessments as to whether certain entities are VIEs, the existence of reconsideration events and the determination of which party, if any, should consolidate the entity; • Assumptions used in calculating policy reserves and liabilities including policyholder behavior, mortality rates, expenses, investment returns and policy crediting rates; • Assumptions as to future earnings levels being sufficient to realize deferred tax benefits; • Estimates related to expectations of credit losses on certain financial assets and off-balance sheet exposures; • Assumptions and estimates associated with the Company’s tax positions, including an estimate of the dividends received deduction, which impact the amount of recognized tax benefits recorded by the Company; • Assumptions used in calculating market risk benefits, including policyholder behavior, mortality rates, and capital market assumptions; and • Assumptions impacting the expected term used in 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 appropriate factors. As facts and circumstances dictate, these estimates and assumptions may be adjusted. Since future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. 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. 104 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies 2. Summary of Significant Accounting Policies The following table identifies our significant accounting policies presented in other Notes to Consolidated Financial Statements: Investments Note 4 Derivatives and Hedge Accounting Note 5 Fair Value Measurements Note 6 Deferred Acquisition Costs Note 7 Reinsurance Note 8 Reserves for Future Policy Benefits and Claims Payable Note 9 Other Contract Holder Funds Note 10 Separate Account Assets and Liabilities Note 11 Market Risk Benefits Note 12 Long-Term Debt Note 13 Income Taxes Note 15 Commitments, Contingencies, and Guarantees Note 16 Share-Based Compensation Note 18 Accumulated Other Comprehensive Income (Loss) Note 23 Earnings Per Share Note 25 Other Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents primarily include money market instruments and bank deposits. Cash equivalents also include all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase. Revenue and Expense Recognition Premiums for traditional life insurance and limited-payment insurance contracts are reported as revenues when due. Benefits, claims and expenses are associated with earned revenues in order to recognize profit over the lives of the contracts. This association is accomplished through provisions for future policy benefits and the deferral and amortization of certain acquisition costs. Deposits on interest-sensitive life products and investment contracts, principally deferred annuities and guaranteed investment contracts, are treated as policyholder deposits and excluded from revenue. Revenues consist primarily of investment income and charges assessed against the account value for mortality charges, surrenders, variable annuity benefit guarantees and administrative expenses. Fee income also includes revenues related to asset management fees and certain service fees. Surrender benefits are treated as repayments of the policyholder account. Annuity benefit payments are treated as reductions to the policyholder account. Death benefits in excess of the policyholder account are recognized as an expense when incurred. Expenses consist primarily of the interest credited to policyholder deposits. Acquisition expenses directly related to the successful acquisition of these contracts are deferred. These deferred acquisition costs are amortized on a constant-level basis over the expected term of the contracts. Expenses not related to policy acquisition are recognized when incurred. Management Fees Based on a Formula PPM receives an investment management fee for services as an asset manager for various entities. Revenue for these services is measured based on the terms specified in a customer's contract and is recognized when PPM has satisfied a performance obligation. These investment management fees are recognized ratably over the period that assets are managed, and when the probability of significant revenue reversal is remote. PPM also receives performance-based incentive fees from certain entities for which it invests based on predetermined formulas. Performance related management fees are earned over a specified period and can result in additional fees. These fees are recognized at the end of the agreement, once 105 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies the fees are fixed, determinable, not subject to further performance metrics, and probability of significant revenue reversal is remote. Changes in Accounting Principles – Adopted in Current Year In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients for applying U.S. GAAP to contracts and other transactions affected by reference rate reform and is effective for contract modifications made between March 12, 2020 and December 31, 2022. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” that defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. If certain criteria are met, an entity will not be required to remeasure or reassess contracts impacted by reference rate reform. The practical expedient allowed by this standard was elected and is being applied prospectively by the Company as reference rate reform unfolds. The contracts modified to date met the criteria for the practical expedient and therefore had no material impact on the Company’s Consolidated Financial Statements. The Company will continue to evaluate the impacts of reference rate reform on contract modifications and other transactions through December 31, 2024. In August 2018, the FASB issued ASU 2018-12, “Targeted Improvements to the Accounting for Long Duration Contracts,” ("LDTI"), which included changes to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The Company adopted LDTI effective January 1, 2023, with a transition date of January 1, 2021, using the modified retrospective transition method relating to liabilities for traditional and limited payment contracts and deferred policy acquisition costs associated therewith; and on a retrospective basis, in relation to market risk benefits ("MRBs"). Under the modified retrospective approach, the Company applied the guidance to contracts in force on the transition date on the basis of their existing carrying value, using updated future cash flow assumptions, and eliminated certain related amounts in accumulated other comprehensive income (loss) (“AOCI”). 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 December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 within these Consolidated Financial Statements are accounted for and presented in accordance with U.S. GAAP reflecting the adoption of LDTI. LDTI contains four significant changes: 1. 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. 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”); 2. Deferred acquisition costs: deferred acquisition costs (“DAC”) are amortized on a constant-level basis, independent of profitability of the underlying business; 3. Liability for future policy benefits: annual review and, if necessary, update of cash flow assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited-payment insurance contracts is required. These liabilities are discounted using an upper-medium grade fixed income instrument yield which is updated quarterly, with related changes in the liability recognized in OCI; and 4. Enhanced disclosures: enhanced disclosures, including disaggregated roll-forwards of certain balance sheet accounts that provide information about actual and expected cash flows, as well as information about significant inputs, judgments, assumptions and methods used in measurement, are required. The enhanced disclosures are intended to improve the ability of users of the financial statements to evaluate the timing, amount, and uncertainty of cash flows arising from long-duration contracts. 106 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies The adoption of LDTI resulted in a decrease in total equity of $ 3.0 billion as of the transition date of January 1, 2021, comprised of a reduction in AOCI of $ 0.4 billion and a reduction in retained earnings of $ 2.6 billion. The primary drivers for this impact to total equity included: 1. 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; 2. changes to the discount rate used to measure liabilities for future policyholder benefits which, under LDTI, are remeasured each reporting period using current upper-medium grade fixed-income instrument yields, which are generally considered to be those on single-A rated public corporate debt. The cumulative effect of the remeasurement of these liabilities using the transition date discount rate, net of the related deferred tax effect, is recognized in AOCI; and 3. the removal of certain shadow adjustments previously recorded in AOCI related to the impact of unrealized gains (losses) on investments that were included in the estimated gross profit amortization calculation for deferred acquisition costs, which, since the adoption of LDTI, are no longer recognized. The following table presents the effect of transition adjustments on shareholders' equity due to the adoption of LDTI (in millions): January 1, 2021 Accumulated other Retained earnings comprehensive income Deferred acquisition costs $ — $ 106 Reinsurance recoverable on market risk benefits — ( 34 ) Reserves for future policy benefits and claims payable 97 141 Market risk benefits ( 2,700 ) ( 598 ) Total $ ( 2,603 ) $ ( 385 ) The following table presents amounts previously reported as of December 31, 2020, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts as of January 1, 2021 (in millions): As Previously Effect of As of Reported Changes 1/1/2021 Assets Deferred acquisition costs $ 13,897 $ 146 $ 14,043 Reinsurance recoverable, net of allowance for credit losses 35,270 ( 154 ) 35,116 Reinsurance recoverable on market risk benefits, at fair value — 471 471 Market risk benefit assets, at fair value — 690 690 Deferred income taxes, net 1,058 824 1,882 Other assets 1,179 2 1,181 Total assets $ 353,532 $ 1,979 $ 355,511 Liabilities and Equity Liabilities Reserves for future policy benefits and claims payable $ 22,512 $ ( 5,716 ) $ 16,796 Other contract holder funds 63,592 ( 7 ) 63,585 Market risk benefit liabilities, at fair value — 10,690 10,690 Total liabilities 343,609 4,967 348,576 Equity Accumulated other comprehensive income, net of tax expense 3,821 ( 385 ) 3,436 Retained earnings ( 324 ) ( 2,603 ) ( 2,927 ) Total equity 9,923 ( 2,988 ) 6,935 Total liabilities and equity $ 353,532 $ 1,979 $ 355,511 107 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies Liability for future policy benefits For the liability for future policy benefits, the net transition adjustment is related to the difference in the discount rate used pre-transition and the discount rate at January 1, 2021. The discount rate used to measure the liability at transition was generally lower than the rates used to measure the liability prior to the adoption of LDTI. Additionally, at transition, where net premiums exceeded gross premiums at the cohort level, the Company set net premiums equal to gross premiums and recognized the resulting increase in the liability for future policy benefits as an adjustment to opening retained earnings. The following table presents the impact of the adoption of LDTI, as of the transition date, on reserves for future policy benefits and claims payable (in millions): Payout Closed Closed Annuities Block Life Block Annuity Total Reserves for future policy benefits at December 31, 2020 $ 1,148 $ 5,809 $ 5,328 $ 12,285 Adjustment for loss contracts under the modified retrospective approach 4 15 18 37 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 Other future policy benefits and claims payable 2,774 Reserves for future policy benefits and claims payable at January 1, 2021 $ 16,796 The following table presents the transition date reclassifications and adjustments to reserves for future policy benefits by category resulting from the adoption of LDTI (in millions): Reserve for future policy benefits Other (1) Total Reserve for future policy benefits and claims payable at December 31, 2020 $ 12,285 $ 10,227 $ 22,512 Adjustments for LDTI transition 1,737 ( 7,453 ) ( 5,716 ) Reserve for future policy benefits and claims payable at January 1, 2021 $ 14,022 $ 2,774 $ 16,796 (1) Includes variable annuity embedded derivatives that were reclassed to market risk benefits. The following table presents the impact of the adoption of LDTI, as of the transition date, on Closed Block Life additional liabilities for universal life-type contracts (in millions): Closed Block Life Balance, December 31, 2020 $ 1,157 Adjustment for reversal of AOCI adjustments 28 Adjustment for cumulative effect of adoption of LDTI — Balance, January 1, 2021 $ 1,185 Market risk benefits For MRBs, the net transition adjustment relates to the measurement of certain guaranteed benefit features at fair value that were previously measured using an insurance accrual model. The measurement of these features at fair value includes use of generally lower discount rates and lower assumed future fund performance relative to their previous measurement, as well as inclusion of risk margins, all of which lead to a generally higher fair value balance relative to the carrying value prior to transition to LDTI. The transition adjustment to AOCI for MRBs relates to the effect of changes in the non-performance risk between the contract issuance date and the transition date. The remaining difference between the carrying value of these contract features under the insurance accrual model prior to transition to LDTI and the fair value measured at transition was recorded as an adjustment to retained earnings as of the transition date. 108 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies The following table presents the impact of the adoption of LDTI, as of the transition date, on MRBs, net (in millions): Variable Other Annuities Product Lines Total Balance, December 31, 2020 - Carrying amount of MRBs under prior guidance $ 7,306 $ 74 $ 7,380 Adjustment for reversal of AOCI adjustments ( 27 ) ( 48 ) ( 75 ) Cumulative effect of the changes in non-performance risk between the original contract issuance date and the transition date ( 743 ) ( 6 ) ( 749 ) Remaining cumulative difference (exclusive of non-performance risk change) between 12/31/20 carrying amount and fair value measurement for the MRBs 3,372 72 3,444 Balance, January 1, 2021 - Market risk benefits, net, at fair value $ 9,908 $ 92 $ 10,000 Deferred acquisition costs For DAC, at transition to LDTI, the Company removed shadow adjustments previously recorded in AOCI for the impact of unrealized gains and losses that were included in the estimated gross profit amortization calculation prior to the adoption of LDTI. The following table presents the impact of the adoption of LDTI, as of the transition date, on DAC (in millions): Variable Other Annuities Product Lines Total Balance, December 31, 2020 - Deferred acquisition costs $ 13,725 $ 172 $ 13,897 Adjustment for reversal of AOCI adjustments 151 ( 5 ) 146 Balance, January 1, 2021 - Deferred acquisition costs $ 13,876 $ 167 $ 14,043 Reinsurance recoverable The following table presents the impact of the adoption of LDTI, as of the transition date, on reinsurance recoverable (in millions) : Total Balance, December 31, 2020 $ 35,270 Reclass of carrying amount of MRBs under prior guidance ( 407 ) Adjustment for loss contracts under the modified retrospective approach — Effect of remeasurement of liability at current discount rate 253 Balance, January 1, 2021 $ 35,116 The following table presents the impact of the adoption of LDTI, as of the transition date, on reinsurance recoverable on market risk benefits at fair value (in millions): Variable Other Annuities Product Lines Total Balance, December 31, 2020 - Carrying amount of MRBs under prior guidance $ 340 $ 67 $ 407 Adjustment for reversal of AOCI adjustments — ( 47 ) ( 47 ) Cumulative difference between 12/31/2020 carrying amount and fair value measurement for the MRBs 28 83 111 Balance, January 1, 2021 - Reinsurance recoverable on market risk benefits at fair value $ 368 $ 103 $ 471 The adoption of LDTI resulted in increases in net income attributable to Jackson Financial of $ 489 million and $ 234 million for the years ended December 31, 2022 and 2021, respectively, and also resulted in an increase in total equity of $ 223 million for the year ended December 31, 2022. 109 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies 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): As Previously As Adjusted Reported Effect of As of December 31, 2022 Changes December 31, 2022 Assets Deferred acquisition costs $ 13,422 $ ( 499 ) $ 12,923 Reinsurance recoverable, net of allowance for credit losses 29,641 ( 595 ) 29,046 Reinsurance recoverable on market risk benefits, at fair value — 221 221 Market risk benefit assets, at fair value — 4,865 4,865 Deferred income taxes, net 385 ( 65 ) 320 Other assets 946 ( 2 ) 944 Total assets $ 311,058 $ 3,925 $ 314,983 Liabilities and Equity Liabilities Reserves for future policy benefits and claims payable $ 14,273 $ ( 1,955 ) $ 12,318 Other contract holder funds 58,195 ( 5 ) 58,190 Market risk benefit liabilities, at fair value — 5,662 5,662 Total liabilities 301,903 3,702 305,605 Equity Accumulated other comprehensive income, net of tax expense ( 5,481 ) 2,103 ( 3,378 ) Retained earnings 8,283 ( 1,880 ) 6,403 Total equity 9,155 223 9,378 Total liabilities and equity $ 311,058 $ 3,925 $ 314,983 The following tables present amounts previously reported in the Consolidated Income Statements for the years ended December 31, 2022 and 2021, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts (in millions, except per share amounts): As Previously Reported for As Adjusted the Year Ended Year Ended December 31, Effect of December 31, 2022 Changes 2022 Revenues Total net gains (losses) on derivatives and investments $ 3,851 $ ( 4,688 ) $ ( 837 ) Total revenues 14,551 ( 4,688 ) 9,863 Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 2,290 ( 1,228 ) 1,062 (Gain) loss from updating future policy benefits cash flow assumptions, net — ( 34 ) ( 34 ) Market risk benefits (gains) losses, net — ( 3,536 ) ( 3,536 ) Interest credited on other contract holder funds, net of deferrals and amortization 862 4 866 Amortization of deferred acquisition costs 1,743 ( 517 ) 1,226 Total benefits and expenses 7,440 ( 5,311 ) 2,129 Pretax income (loss) 7,111 623 7,734 Income tax expense (benefit) 1,371 134 1,505 Net income (loss) 5,740 489 6,229 Net income (loss) attributable to Jackson Financial Inc. $ 5,697 $ 489 $ 6,186 Earnings per share Basic $ 66.62 $ 5.72 $ 72.34 Diluted $ 64.23 $ 5.52 $ 69.75 110 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies As Previously Reported for As Adjusted the Year Ended Year Ended December 31, Effect of December 31, 2021 Changes 2021 Revenues Total net gains (losses) on derivatives and investments $ ( 2,478 ) $ ( 2,887 ) $ ( 5,365 ) Total revenues 9,247 ( 2,887 ) 6,360 Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 970 ( 45 ) 925 (Gain) loss from updating future policy benefits cash flow assumptions, net — 41 41 Market risk benefits (gains) losses, net — ( 3,966 ) ( 3,966 ) Interest credited on other contract holder funds, net of deferrals and amortization 834 ( 2 ) 832 Amortization of deferred acquisition costs 520 787 1,307 Total benefits and expenses 5,200 ( 3,185 ) 2,015 Pretax income (loss) 4,047 298 4,345 Income tax expense (benefit) 602 64 666 Net income (loss) 3,445 234 3,679 Net income (loss) attributable to Jackson Financial Inc. $ 3,183 $ 234 $ 3,417 Earnings per share Basic $ 33.86 $ 2.49 $ 36.35 Diluted $ 33.69 $ 2.48 $ 36.17 111 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies The following tables present amounts previously reported in Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021, to reflect the effect of the change due to the adoption of LDTI, and the adjusted amounts (in millions): As Previously Reported for the As Adjusted Year Ended Year Ended December 31, Effect of December 31, 2022 Changes 2022 Net income (loss) $ 5,740 $ 489 $ 6,229 Other comprehensive income (loss), net of tax: Change in unrealized gains (losses) on securities with no credit impairment, net of tax expense (benefit) ( 7,223 ) ( 284 ) ( 7,507 ) Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) — 1,303 1,303 Change in non-performance risk on market risk benefits, net of tax expense (benefit) — 1,468 1,468 Total other comprehensive income (loss) ( 7,225 ) 2,487 ( 4,738 ) Comprehensive income (loss) attributable to Jackson Financial Inc. $ ( 1,528 ) $ 2,976 $ 1,448 As Previously Reported for the As Adjusted Year Ended Year Ended December 31, Effect of December 31, 2021 Changes 2021 Net income (loss) $ 3,445 $ 234 $ 3,679 Other comprehensive income (loss), net of tax: Change in unrealized gains (losses) on securities with no credit impairment, net of tax expense (benefit) ( 2,080 ) ( 64 ) ( 2,144 ) Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) — 397 397 Change in non-performance risk on market risk benefits, net of tax expense (benefit) — ( 332 ) ( 332 ) Total other comprehensive income (loss) ( 2,077 ) 1 ( 2,076 ) Comprehensive income (loss) attributable to Jackson Financial Inc. $ 1,106 $ 235 $ 1,341 112 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies The adoption of LDTI did not affect the previously reported 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 Previously Reported for the As Adjusted Year Ended Year Ended December 31, Effect of December 31, 2022 Changes 2022 Cash flows from operating activities: Net income $ 5,740 $ 489 $ 6,229 Adjustments to reconcile net income to net cash provided by operating activities: Net losses (gains) on derivatives ( 2,024 ) 4,688 2,664 Net (gain) loss on market risk benefits — ( 3,536 ) ( 3,536 ) (Gain) loss from updating future policy benefits cash flow assumptions, net — ( 34 ) ( 34 ) Interest credited on other contract holder funds, gross 862 4 866 Deferred income tax expense (benefit) 1,413 134 1,547 Change in deferred acquisition costs 1,119 ( 518 ) 601 Change in funds withheld, net of reinsurance ( 402 ) 329 ( 73 ) Change in other assets and liabilities, net 724 ( 1,556 ) ( 832 ) Total adjustments 1,692 ( 489 ) 1,203 Net cash provided by (used in) operating activities $ 5,206 $ — $ 5,206 As Previously Reported for the As Adjusted Year Ended Year Ended December 31, Effect of December 31, 2021 Changes 2021 Cash flows from operating activities: Net income $ 3,445 $ 234 $ 3,679 Adjustments to reconcile net income to net cash provided by operating activities: Net losses (gains) on derivatives 2,639 2,887 5,526 Net (gain) loss on market risk benefits — ( 3,966 ) ( 3,966 ) (Gain) loss from updating future policy benefits cash flow assumptions, net — 41 41 Interest credited on other contract holder funds, gross 834 ( 2 ) 832 Deferred income tax expense (benefit) 675 64 739 Change in deferred acquisition costs ( 270 ) 789 519 Change in funds withheld, net of reinsurance ( 757 ) 131 ( 626 ) Change in other assets and liabilities, net ( 403 ) ( 178 ) ( 581 ) Total adjustments 2,718 ( 234 ) 2,484 Net cash provided by (used in) operating activities $ 5,682 $ — $ 5,682 In March 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” The new guidance eliminates the accounting guidance for troubled debt restructurings by creditors, and instead requires an entity to evaluate whether a modification represents a new loan or a continuation of an existing loan. The amendments also enhance disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. New guidance for vintage disclosures requires that current-period gross write-offs be disclosed by year of origination for financing receivables and net investments in leases that fall within scope of the current expected credit loss model. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Updates should be applied prospectively. However, an entity has the option to apply the modified retrospective method related to the recognition and measurements of troubled debt restructurings. Effective January 1, 2023, the Company adopted ASU 2022-02, which did not have a material impact to the Consolidated Financial Statements. Changes in Accounting Principles – Issued but Not Yet Adopted In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which requires a public entity to disclose its significant segment expenses regularly provided to the chief operating decision maker (CODM) and the amount and composition of other segment items. It also requires a public entity to disclose the title and position of the CODM. The ASU allows a public entity to disclose multiple measurements of segment profit or loss if a CODM uses 113 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies multiple measures to assess segment’s performance and allocate resources. This ASU also expands the current interim disclosure requirements to require that nearly all of the annual segment disclosures be made on an interim basis. The amendments in this ASU will be effective for the Company for annual periods beginning after December 15, 2023, with early adoption permitted, and are to be applied retrospectively. The Company is in the process of evaluating the impact of the new guidance and determining the timing of adoption. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The new requirements in this ASU will be effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted, and are to be applied on a prospective basis with the option to apply retrospectively. The Company is in the process of evaluating the impact of the new guidance and determining the transition method and the timing of adoption. 3. Segment Information 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 The Company’s Retail Annuities segment offers a variety of retirement income and savings products through its diverse suite of products, consisting primarily of variable annuities, fixed index annuities, fixed annuities, payout annuities, and registered index-linked annuities ("RILA"). 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. 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. A fixed index annuity is designed for investors who desire principal protection with the opportunity to participate in capped upside investment returns linked to a reference market index. The Company also provides access to guaranteed lifetime income as an add-on benefit. 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 offers customers exposure to market returns through market index-linked investment options, subject to a cap, and offers a variety of features 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. Institutional Products 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. The Company’s GIC products are marketed to defined contribution pension and profit-sharing retirement plans. Funding agreements are marketed to institutional investors, including corporate cash accounts and securities lending funds, as well as money market funds, and are issued to the FHLB in connection with its program. 114 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information The financial results of the Company’s institutional products business are primarily dependent on the Company’s ability to earn a spread between earned investment rates on general account assets and the interest credited on GICs and funding agreements. Closed Life and Annuity Blocks The Company's Closed Life and Annuity Blocks segment is primarily composed of blocks of business that have been acquired since 2004. This segment includes various protection products, primarily whole life, universal life, variable universal life, and term life insurance products, as well as fixed, fixed index, and payout annuities. The Closed Life and Annuity Blocks segment also includes a block of group payout annuities that we assumed from John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York through reinsurance transactions in 2018 and 2019, respectively. The Company historically offered traditional and interest-sensitive life insurance products but discontinued new sales of life insurance products in 2012, as we believe opportunistically acquiring mature blocks of life insurance policies was a more efficient means of diversifying our in-force business than selling new life insurance products. The profitability of the Company’s Closed Life and Annuity Blocks segment is largely driven by its historical ability to appropriately price its products and purchase appropriately priced blocks of business, as realized through underwriting, expense and net gains (losses) on derivatives and investments, and the ability to earn an assumed rate of return on the assets supporting that business. Corporate and Other The Company’s Corporate and Other segment primarily consists of the operations of its investment management subsidiary, PPM, VIE’s, and unallocated corporate income and expenses. The Corporate and Other segment also includes certain eliminations and consolidation adjustments. Segment Performance Measurement Segment operating revenues and pretax adjusted operating earnings are non-GAAP financial measures that management believes are critical to the evaluation of the financial performance of the Company’s segments. The Company uses the same accounting policies and procedures to measure segment pretax adjusted operating earnings as used in its reporting of consolidated net income. Its primary measure is pretax adjusted operating earnings, which is defined as net income recorded in accordance with U.S. GAAP, excluding certain items that may be highly variable from period to period due to accounting treatment under U.S. GAAP, or that are non-recurring in nature, as well as certain other revenues and expenses that are not considered to drive underlying performance. Operating revenues and pretax adjusted operating earnings should not be used as a substitute for revenues and net income as calculated in accordance with U.S. GAAP. Pretax adjusted operating earnings equals net income adjusted to eliminate the impact of the items described in the following numbered paragraphs. These items are excluded from pretax adjusted operating earnings as they may vary significantly from period to period due to near-term market conditions and therefore are not directly comparable or reflective of the underlying performance of our business. We believe these exclusions provide investors a better picture of the drivers of our underlying performance. 1. Net Hedging Results: Comprised of: (i) fees attributed to guaranteed benefits; (ii) changes in the fair value of freestanding derivatives used to manage the risk associated with market risk benefits and other guaranteed benefit features, excluding earned income (periodic settlements and changes in settlement accruals); (iii) the movements in reserves, market risk benefits, guaranteed benefit features accounted for as embedded derivative instruments, and related claims and benefit payments; (iv) amortization of the balance of unamortized deferred acquisition costs at the date of transition to current LDTI accounting guidance on January 1, 2021 associated with items excluded from pretax adjusted operating earnings prior to transition; and (v) the impact on the valuation of Guaranteed Benefits and Net Hedging Results arising from changes in underlying actuarial assumptions. We believe excluding these items removes the impact to both revenue and related expenses associated with Guaranteed Benefits and Net Hedging Results. 115 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information 2. Net Realized Investment Gains and Losses: Comprised of: (i) realized investment gains and losses associated with the periodic sales or disposals of securities, excluding those held within our trading portfolio; and (ii) impairments of securities, after adjustment for the non-credit component of the impairment charges. 3. Change in Value of Funds Withheld Embedded Derivative and Net Investment Income on Funds Withheld Assets: Comprised of: (i) the change in fair value of funds withheld embedded derivatives; and (ii) net investment income on funds withheld assets related to funds withheld reinsurance transactions. 4. Other items: Comprised of: (i) the impact of investments that are consolidated in our financial statements due to U.S. GAAP accounting requirements, such as our investments in collateralized loan obligations ("CLOs"), but for which the consolidation effects are not consistent with our economic interest or exposure to those entities, and (ii) one-time or other non-recurring items. 5. Income taxes. Set forth in the tables below is certain information with respect to the Company’s segments, as described above (in millions): For the Year Ended December 31, 2023 Retail Annuities Institutional Products Closed Life and Annuity Blocks Corporate and Other Total Consolidated Operating Revenues Fee income $ 4,036 $ — $ 457 $ 52 $ 4,545 Premiums 21 — 136 — 157 Net investment income 541 474 689 71 1,775 Income (loss) on operating derivatives ( 45 ) ( 50 ) ( 45 ) ( 13 ) ( 153 ) Other income 37 — 25 5 67 Total Operating Revenues 4,590 424 1,262 115 6,391 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 43 — 641 — 684 Interest credited on other contract holder funds, net of deferrals 374 334 437 — 1,145 (Gain) loss from updating future policy benefits cash flow assumptions, net ( 4 ) — 106 — 102 Interest expense 84 16 — 85 185 Operating costs and other expenses, net of deferrals 2,178 5 163 203 2,549 Amortization of deferred acquisition costs 551 — 10 — 561 Total Operating Benefits and Expenses 3,226 355 1,357 288 5,226 Pretax Adjusted Operating Earnings $ 1,364 $ 69 $ ( 95 ) $ ( 173 ) $ 1,165 116 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information For the Year Ended December 31, 2022 Retail Annuities Institutional Products Closed Life and Annuity Blocks Corporate and Other Total Consolidated Operating Revenues Fee income $ 4,108 $ — $ 474 $ 52 $ 4,634 Premiums 10 — 134 — 144 Net investment income 403 312 706 65 1,486 Income (loss) on operating derivatives 17 ( 22 ) 31 14 40 Other income 42 — 35 8 85 Total Operating Revenues 4,580 290 1,380 139 6,389 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 61 — 734 — 795 Interest credited on other contract holder funds, net of deferrals 253 201 412 — 866 (Gain) loss from updating future policy benefits cash flow assumptions, net ( 4 ) — ( 24 ) — ( 28 ) Interest expense 32 5 — 76 113 Operating costs and other expenses, net of deferrals 2,174 5 130 123 2,432 Amortization of deferred acquisition costs 557 — 11 — 568 Total Operating Benefits and Expenses 3,073 211 1,263 199 4,746 Pretax Adjusted Operating Earnings $ 1,507 $ 79 $ 117 $ ( 60 ) $ 1,643 For the Year Ended December 31, 2021 Retail Annuities Institutional Products Closed Life and Annuity Blocks Corporate and Other Total Consolidated Operating Revenues Fee income $ 4,636 $ — $ 492 $ 65 $ 5,193 Premiums 15 — 145 — 160 Net investment income 692 260 950 55 1,957 Income (loss) on operating derivatives 52 ( 3 ) 72 32 153 Other income 47 — 39 8 94 Total Operating Revenues 5,442 257 1,698 160 7,557 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 6 — 752 — 758 Interest credited on other contract holder funds, net of deferrals 225 188 419 — 832 (Gain) loss from updating future policy benefits cash flow assumptions, net ( 8 ) — 80 — 72 Interest expense 22 — — 15 37 Operating costs and other expenses, net of deferrals 2,456 5 179 147 2,787 Amortization of deferred acquisition costs 557 — 13 — 570 Total Operating Benefits and Expenses 3,258 193 1,443 162 5,056 Pretax Adjusted Operating Earnings $ 2,184 $ 64 $ 255 $ ( 2 ) $ 2,501 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 Financial and its subsidiaries to its affiliate PPM, which were $ 76 million, $ 74 million, and $ 69 million for the years ended December 31, 2023, 2022 and 2021, respectively. 117 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information The following table summarizes the reconciling items from the non-GAAP measure of total operating revenues to the U.S. GAAP measure of total revenues attributable to the Company (in millions): Years Ended December 31, 2023 2022 2021 Total operating revenues $ 6,391 $ 6,389 $ 7,557 Fees attributed to guarantee benefit reserves 3,125 3,077 2,855 Net gains (losses) on derivatives and investments ( 7,512 ) ( 878 ) ( 5,519 ) Net investment income (loss) related to noncontrolling interests 20 43 262 Consolidated investments ( 39 ) ( 22 ) 17 Net investment income on funds withheld assets 1,174 1,254 1,188 Total revenues (1) $ 3,159 $ 9,863 $ 6,360 (1) Substantially all the Company's revenues originated in the U.S. There were no individual customers that exceeded 10% of total revenues. The following table summarizes the reconciling items from the non-GAAP measure of total operating benefits and expenses to the U.S. GAAP measure of total benefits and expenses attributable to the Company (in millions): Years Ended December 31, 2023 2022 2021 Total operating benefits and expenses $ 5,226 $ 4,746 $ 5,056 Net (gain) loss on market risk benefits ( 3,897 ) ( 3,536 ) ( 3,966 ) Benefits attributed to guaranteed benefit features 281 261 137 Amortization of DAC related to non-operating revenues and expenses 591 658 737 Other items — — 51 Total benefits and expenses $ 2,201 $ 2,129 $ 2,015 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): Years Ended December 31, 2023 2022 2021 Pretax adjusted operating earnings $ 1,165 $ 1,643 $ 2,501 Non-operating adjustments income (loss): Fees attributable to guarantee benefit reserves 3,125 3,077 2,855 Net movement in freestanding derivatives ( 4,651 ) ( 2,744 ) ( 5,674 ) Market risk benefits gains (losses), net 3,897 3,536 3,966 Net reserve and embedded derivative movements ( 787 ) ( 222 ) ( 141 ) Amortization of DAC associated with non-operating items at date of transition to LDTI ( 591 ) ( 658 ) ( 737 ) Total Guaranteed benefits and net hedging results 993 2,989 269 Net realized investment gains (losses) ( 554 ) ( 359 ) 182 Net realized investment gains (losses) on funds withheld assets ( 1,801 ) 2,186 ( 21 ) Net investment income on funds withheld assets 1,174 1,254 1,188 Other items ( 39 ) ( 22 ) ( 36 ) Pretax income (loss) attributable to Jackson Financial Inc. 938 7,691 4,083 Income tax expense (benefit) 4 1,505 666 Net income (loss) attributable to Jackson Financial Inc. 934 6,186 3,417 Dividends on preferred stock 35 — — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 899 $ 6,186 $ 3,417 118 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information The following table summarizes total assets by segment (in millions): December 31, 2023 2022 Retail Annuities $ 288,301 $ 269,972 Closed Life and Annuity Blocks 27,642 28,961 Institutional Products 9,234 10,175 Corporate and Other 5,078 5,875 Total Assets $ 330,255 $ 314,983 4. Investments Investments consist primarily of fixed-income securities and loans, principally publicly-traded corporate and government bonds, asset-backed securities and mortgage loans. Asset-backed securities include mortgage-backed and other structured securities. The Company generates the majority of its general account deposits from interest-sensitive individual annuity contracts, life insurance products and institutional products on which it has committed to pay a declared rate of interest. The Company's strategy of investing in fixed-income securities and loans seeks the matching of the asset yield with the amounts credited to the interest-sensitive liabilities and to earn a stable return on its investments. Debt Securities Debt securities consist primarily of bonds, notes, and asset-backed securities. Acquisition discounts and premiums on debt securities are amortized into investment income through call or maturity dates using the effective interest method. Discounts and premiums on asset-backed securities are amortized over the estimated redemption period. Certain asset-backed securities for which the Company might not recover substantially all of its recorded investment are accounted for on a prospective basis according to changes in the estimated future cash flows. Debt securities are generally classified as available-for-sale and are carried at fair value. For debt securities in an unrealized loss position, for which the Company deems an impairment necessary, the amortized cost may be written down to fair value through net gains (losses) on derivatives and investments, or an allowance for credit loss (“ACL”) may be recorded along with a charge to net gains (losses) on derivatives and investments. Certain debt securities included from consolidation of certain VIEs are carried at fair value under the fair value option with changes in fair value included in net investment income. Other debt securities included from consolidation of certain VIEs are classified as trading securities and are carried at fair value with the changes in fair value included in net investment income. 119 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments The following table sets forth the composition of the fair value of debt securities at December 31, 2023 and 2022, classified by rating categories as assigned by nationally recognized statistical rating organization (a “rating agency”), 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 a rating agency when rating agencies ratings are not equivalent and, for purposes of the table, if not otherwise rated by a rating agency, the NAIC rating of a security is converted to an equivalent rating agency rating. At December 31, 2023 and 2022, the carrying value of investments rated by the Company’s consolidated investment advisor totaled $ 486 million and $ 32 million, respectively. Percent of Total Debt Securities Carrying Value December 31, Investment Rating 2023 2022 U.S. Treasuries 10.1 % 11.6 % AAA 6.5 % 6.4 % AA 9.0 % 8.2 % A 31.5 % 29.8 % BBB 35.9 % 36.4 % Investment grade 93.0 % 92.4 % BB 3.5 % 3.9 % B and below 3.5 % 3.7 % Below investment grade 7.0 % 7.6 % Total debt securities 100.0 % 100.0 % At December 31, 2023 and 2022, the total carrying value of debt securities in an unrealized loss position consisted of: December 31, 2023 2022 Investment grade securities 77 % 78 % Below investment grade securities 2 % 2 % Not rated securities 21 % 20 % Unrealized losses on debt securities that were below investment grade or not rated were approximately 21 % and 21 % of the aggregate gross unrealized losses on available-for-sale debt securities at December 31, 2023 and 2022, respectively. Corporate securities in an unrealized loss position were diversified across industries as follows (in millions, except percentages): December 31, 2023 2022 Industries accounting for the largest percentage of corporate gross unrealized losses: Utility 17 % 16 % Financial Services 14 % 14 % Largest unrealized loss related to a single corporate obligor $ 50 $ 57 120 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments At December 31, 2023 and 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): Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2023 Cost (1) Credit Loss Gains Losses Value U.S. government securities $ 5,154 $ — $ 3 $ 845 $ 4,312 Other government securities 1,622 — 1 221 1,402 Public utilities 5,598 — 42 513 5,127 Corporate securities 27,870 15 194 2,572 25,477 Residential mortgage-backed 422 6 12 53 375 Commercial mortgage-backed 1,569 — 1 147 1,423 Other asset-backed securities 4,830 — 6 309 4,527 Total debt securities $ 47,065 $ 21 $ 259 $ 4,660 $ 42,643 Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2022 Cost (1) Credit Loss Gains Losses Value U.S. government securities $ 6,192 $ — $ 1 $ 1,008 $ 5,185 Other government securities 1,719 2 1 251 1,467 Public utilities 5,893 — 27 695 5,225 Corporate securities 28,803 15 59 3,701 25,146 Residential mortgage-backed 510 6 19 59 464 Commercial mortgage-backed 1,821 — — 183 1,638 Other asset-backed securities 6,133 — 8 504 5,637 Total debt securities $ 51,071 $ 23 $ 115 $ 6,401 $ 44,762 (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 December 31, 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. Allowance Gross Gross Amortized for Unrealized Unrealized Fair Cost (1) Credit Loss Gains Losses Value Due in 1 year or less $ 3,001 $ — $ 1 $ 21 $ 2,981 Due after 1 year through 5 years 10,030 10 40 280 9,780 Due after 5 years through 10 years 11,657 5 102 974 10,780 Due after 10 years through 20 years 8,626 — 80 1,288 7,418 Due after 20 years 6,930 — 17 1,588 5,359 Residential mortgage-backed 422 6 12 53 375 Commercial mortgage-backed 1,569 — 1 147 1,423 Other asset-backed securities 4,830 — 6 309 4,527 Total $ 47,065 $ 21 $ 259 $ 4,660 $ 42,643 (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 $ 91 million and $ 90 million at December 31, 2023 and 2022, respectively, were on deposit with regulatory authorities. 121 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Residential mortgage-backed securities (“RMBS”) include certain RMBS that are collateralized by residential mortgage loans and are neither expressly nor implicitly guaranteed by U.S. government agencies (“non-agency RMBS”). The Company’s non-agency RMBS include investments in securities backed by prime, Alt-A, and subprime loans as follows (in millions): Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2023 Cost (1) Credit Loss Gains Losses Value Prime $ 164 $ 2 $ 1 $ 19 $ 144 Alt-A 71 3 5 20 53 Subprime 7 1 4 — 10 Total non-agency RMBS $ 242 $ 6 $ 10 $ 39 $ 207 Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2022 Cost (1) Credit Loss Gains Losses Value Prime $ 206 $ 4 $ 2 $ 30 $ 174 Alt-A 84 2 7 10 79 Subprime 27 — 10 1 36 Total non-agency RMBS $ 317 $ 6 $ 19 $ 41 $ 289 (1) Amortized cost, apart from carrying value for securities carried at fair value under the fair value option and trading securities. The Company defines its exposure to non-agency RMBS as follows: • Prime loan-backed securities are collateralized by mortgage loans made to the highest rated borrowers. • Alt-A loan-backed securities are collateralized by mortgage loans made to borrowers who lack credit documentation or necessary requirements to obtain prime borrower rates. • Subprime loan-backed securities are collateralized by mortgage loans made to borrowers that have a FICO score of 660 or lower. 122 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments 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): December 31, 2023 December 31, 2022 Less than 12 months Less than 12 months Gross Fair Value Gross Fair Value Unrealized # of Unrealized # of Losses securities Losses securities U.S. government securities $ 52 $ 306 11 $ 339 $ 2,815 40 Other government securities 1 51 9 174 1,258 143 Public utilities 11 287 32 508 4,279 490 Corporate securities 50 1,331 227 2,087 17,068 2,323 Residential mortgage-backed 2 48 45 43 279 196 Commercial mortgage-backed — 46 6 138 1,421 177 Other asset-backed securities 27 707 55 282 3,485 417 Total temporarily impaired securities $ 143 $ 2,776 385 $ 3,571 $ 30,605 3,786 12 months or longer 12 months or longer Gross Fair Value Gross Fair Value Unrealized # of Unrealized # of Losses securities Losses securities U.S. government securities $ 793 $ 2,774 23 $ 669 $ 1,386 6 Other government securities 220 1,301 151 77 177 23 Public utilities 502 4,105 491 187 520 87 Corporate securities 2,522 17,457 2,207 1,614 4,601 644 Residential mortgage-backed 51 251 219 16 81 94 Commercial mortgage-backed 147 1,294 177 45 192 31 Other asset-backed securities 282 3,141 427 222 1,551 171 Total temporarily impaired securities $ 4,517 $ 30,323 3,695 $ 2,830 $ 8,508 1,056 Total Total Gross Fair Value Gross Fair Value Unrealized # of Unrealized # of Losses securities (1) Losses securities (1) U.S. government securities $ 845 $ 3,080 30 $ 1,008 $ 4,201 42 Other government securities 221 1,352 157 251 1,435 162 Public utilities 513 4,392 513 695 4,799 562 Corporate securities 2,572 18,788 2,355 3,701 21,669 2,806 Residential mortgage-backed 53 299 262 59 360 290 Commercial mortgage-backed 147 1,340 182 183 1,613 206 Other asset-backed securities 309 3,848 469 504 5,036 577 Total temporarily impaired securities $ 4,660 $ 33,099 3,968 $ 6,401 $ 39,113 4,645 (1) Certain securities contain multiple lots and fit the criteria of both aging groups. 123 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Debt securities in an unrealized loss position as of December 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. Based upon this evaluation, the Company believes it has the ability to generate adequate amounts of cash from normal operations to meet cash requirements with a reasonable margin of safety without requiring the sale of impaired securities. As of December 31, 2023, unrealized losses associated with debt securities are primarily due to widening credit spreads or rising risk-free rates since purchase. As described below, the Company performed analyses 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. Evaluation of Available-for-Sale Debt Securities for Credit Loss For debt securities in an unrealized loss position, management first assesses whether the Company has the intent to sell, or whether it is more likely than not it will be required to sell the security before the amortized cost basis is fully recovered. If either criterion is met, the amortized cost is written down to fair value through net gains (losses) on derivatives and investments as an impairment. If neither criterion is met, the securities are further evaluated to determine if the cause of the decline in fair value resulted from credit losses or other factors, such as estimates about issuer operations and future earnings potential. The credit loss evaluation for a security may consider the following: the extent to which the fair value is below amortized cost; changes in ratings; whether a significant covenant has been breached; assessments of the issuer’s ability to make scheduled debt payments based upon judgments related to its current and projected financial position, including whether it has filed or indicated a possibility of filing for bankruptcy, has missed or announced it intends to miss a scheduled debt service payment, or has experienced a specific material adverse change that may impair its creditworthiness; the existence of, and realizable value of, any collateral backing the obligations; and the macro-economic and micro-economic outlooks for the issuer and its industry. In addition to the above, the credit loss review of asset-backed securities includes an assessment of future estimated cash flows under expected and stress case scenarios, to identify potential shortfalls in contractual payments. These estimated cash flows are developed using available performance indicators from the underlying assets, such as current and projected default or delinquency rates, levels of credit enhancement, current subordination levels, vintage, expected loss severity and other relevant characteristics. For mortgage-backed securities, credit losses are assessed using a cash flow model that estimates the cash flows on the underlying mortgages, using the security-specific collateral characteristics and transaction structure. The model estimates cash flows from the underlying mortgage loans and distributes those cash flows to various tranches of securities based on the transaction structure and any existing subordination and credit enhancements. The cash flow model incorporates actual cash flows on the mortgage-backed securities through the current period and then projects the remaining cash flows using a number of assumptions, including prepayment timing, default rates and loss severity. Specifically, for prime and Alt-A RMBS, the assumed default percentage is dependent on the severity of delinquency status, with foreclosures and real estate owned receiving higher rates, but also includes the currently performing loans. These estimates reflect a combination of data derived by third parties and internally developed assumptions. Where possible, this data is benchmarked against other third-party sources. In addition, these estimates are extrapolated along a default timing curve to estimate the total lifetime pool default rate. When a credit loss is determined to exist and the present value of cash flows expected to be collected is less than the amortized cost of the security, an allowance for credit loss is recorded along with a charge to net gains (losses) on derivatives and investments, limited by the amount that the fair value is less than amortized cost. Any remaining unrealized loss after recording the allowance for credit loss is the non-credit amount and is recorded to other comprehensive income. 124 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments There are inherent uncertainties in assessing the fair values assigned to the Company’s investments. The Company’s reviews of net present value and fair value involve several criteria including economic conditions, credit loss experience, other issuer-specific developments and estimated future cash flows. These assessments are based on the best available information at the time. Factors such as market liquidity, the widening of bid/ask spreads and a change in the cash flow assumptions can contribute to future price volatility. If actual experience differs negatively from the assumptions and other considerations used in the Consolidated Financial Statements, unrealized losses currently reported in accumulated other comprehensive income (loss) may be recognized in the Consolidated Income Statements in future periods. The Company currently has no intent to sell securities with unrealized losses considered to be temporary until they mature or recover in value and believes that it has the ability to do so. However, if the specific facts and circumstances surrounding an individual security, or the outlook for its industry sector change, the Company may sell the security prior to its maturity or recovery and realize a loss. The allowance for credit loss for specific debt securities may be increased or reversed in subsequent periods due to changes in the assessment of the present value of cash flows that are expected to be collected. Any changes to the allowance for credit loss is recorded as a provision for (or reversal of) credit loss expense in net gains (losses) on derivatives and investments. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses. Accrued interest receivable s are presented separate from the amortized cost basis of debt securities. Accrued interest receivables that are determined to be uncollectible are written off with a corresponding reduction to net investment income. Accrued interest of $ 1 million and nil was written off during the years ended December 31, 2023 and 2022, respectively. The roll-forward of the allowance for credit loss for available-for-sale securities by sector is as follows (in millions): December 31, 2023 US government 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 Additions for which credit loss was not previously recorded — 2 — 48 1 9 — 60 Changes for securities with previously recorded credit loss — 1 — 1 2 — — 4 Additions for purchases of PCD debt securities (1) — — — — — — — — Reductions from charge-offs — — — ( 2 ) — — — ( 2 ) Reductions for securities disposed — ( 3 ) — ( 24 ) ( 3 ) — — ( 30 ) Securities intended/required to be sold before recovery of amortized cost basis — ( 2 ) — ( 23 ) — ( 9 ) — ( 34 ) Balance at December 31, 2023 (2) $ — $ — $ — $ 15 $ 6 $ — $ — $ 21 125 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments December 31, 2022 US government securities Other government securities Public utilities Corporate securities Residential mortgage-backed Commercial mortgage-backed Other asset-backed securities Total Balance at January 1, 2022 $ — $ — $ — $ — $ 2 $ — $ 7 $ 9 Additions for which credit loss was not previously recorded — 6 1 43 4 — — 54 Changes for securities with previously recorded credit loss — — ( 1 ) ( 10 ) — — ( 7 ) ( 18 ) Additions for purchases of PCD debt securities (1) — — — — — — — — Reductions from charge-offs — — — — — — — — Reductions for securities disposed — ( 4 ) — ( 1 ) — — — ( 5 ) Securities intended/required to be sold before recovery of amortized cost basis — — — ( 17 ) — — — ( 17 ) Balance at December 31, 2022 (2) $ — $ 2 $ — $ 15 $ 6 $ — $ — $ 23 (1) Represents purchased credit-deteriorated ("PCD") fixed maturity available-for-sale securities. (2) Accrued interest receivable on debt securities totaled $ 411 million and $ 407 million as of December 31, 2023 and 2022, respectively, and was excluded from the determination of credit losses for the years ended December 31, 2023 and 2022. Net Investment Income The sources of net investment income were as follows (in millions): Years Ended December 31, 2023 2022 2021 Debt securities (1) $ 1,516 $ 1,076 $ 1,154 Equity securities 2 ( 16 ) 8 Mortgage loans 318 285 319 Policy loans 68 69 73 Limited partnerships 22 144 795 Other investment income 108 49 13 Total investment income excluding funds withheld assets 2,034 1,607 2,362 Investment expenses ( 278 ) ( 100 ) ( 126 ) Net investment income excluding funds withheld assets 1,756 1,507 2,236 Net investment income on funds withheld assets (see Note 8) 1,174 1,254 1,188 Net investment income $ 2,930 $ 2,761 $ 3,424 (1) Includes changes in fair value gains (losses) on trading securities and includes $ 34 million, $( 149 ) million and $ 26 million for the years ended December 31, 2023, 2022 and 2021, respectively, related to the change in fair value for securities carried under the fair value option. Investment income is not accrued on securities in default and otherwise where the collection is uncertain. In these cases, receipts of interest on such securities are used to reduce the cost basis of the securities. Unrealized gains (losses) included in investment income that were recognized on equity securities held were $( 20 ) million, $( 52 ) million and $ 26 million, for the years ended December 31, 2023, 2022 and 2021, respectively. 126 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Net Gains (Losses) on Derivatives and Investments Realized gains and losses on sales of investments are recognized in income at the date of sale and are determined using the specific cost identification method. The following table summarizes net gains (losses) on derivatives and investments (in millions): Years Ended December 31, 2023 2022 2021 Available-for-sale securities Realized gains on sale $ 22 $ 41 $ 169 Realized losses on sale ( 397 ) ( 429 ) ( 88 ) Credit loss income (expense) ( 29 ) ( 5 ) ( 10 ) Credit loss income (expense) on mortgage loans ( 104 ) ( 16 ) 62 Other (1) ( 46 ) 50 49 Net gains (losses) excluding derivatives and funds withheld assets ( 554 ) ( 359 ) 182 Net gains (losses) on derivative instruments (see Note 5) ( 5,310 ) ( 2,664 ) ( 5,526 ) Net gains (losses) on derivatives and investments ( 5,864 ) ( 3,023 ) ( 5,344 ) Net gains (losses) on funds withheld reinsurance treaties (see Note 8) ( 1,801 ) 2,186 ( 21 ) Total net gains (losses) on derivatives and investments $ ( 7,665 ) $ ( 837 ) $ ( 5,365 ) (1) Includes the foreign currency gain or loss related to foreign denominated trust instruments supporting funding agreements. Net gains (losses) on funds withheld reinsurance treaties represents income (loss) from the sale of investments held in segregated funds withheld accounts in support of reinsurance agreements for which Jackson retains legal ownership of the underlying investments. 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 years ended December 31, 2023, 2022 and 2021 was $ 5,529 million, $ 5,376 million and $ 2,604 million, which was approximately 97 %, 93 % and 95 % of book value, respectively. Proceeds from sales of available-for-sale debt securities were $ 6.8 billion, $ 8.0 billion and $ 9.6 billion during the years ended December 31, 2023, 2022 and 2021, respectively. Consolidated Variable Interest Entities ("VIEs") The Company’s involvement with VIEs is primarily to invest in assets that gain exposure to a broadly diversified portfolio of asset classes. A VIE is an entity that does not have sufficient equity to finance the activities of the entity without additional subordinated financial support or where equity investors lack certain characteristics of a controlling financial interest. The Company performs ongoing qualitative assessments of variable interests in VIEs to determine whether it has a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of a VIE, it consolidates the assets and liabilities of the VIE in its Consolidated Financial Statements. The Company concluded that the following entities are VIEs and that the Company is the primary beneficiary as it has both the power to direct the most significant activities of the VIE as well as the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In each case, the Company’s exposure to loss is limited to the capital invested plus, in the cases of the limited liability companies and the Private Equity Funds, unfunded capital commitments: • The Company funds affiliated limited liability companies to facilitate the issuance of collateralized loan obligations ("CLOs"). In April 2022, the Company reinvested in CLO issuances resulting in an increase of consolidated assets and liabilities. In December 2022, a consolidated VIE issued $ 276 million par, net of the 127 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Company’s holding of CLOs. The Company’s policy is to record the consolidation of VIEs on a one-month lag due to the timing of when information is available from the VIE. Therefore, the VIE's issuance of this CLO is not reflected in the Company’s Consolidated Balance Sheet as of December 31, 2022 but its inclusion would not materially impact the financial position of the Company as a result of the offsetting changes to assets and liabilities. In December 2023, a consolidated CLO expanded its issuance by $ 97 million, net of the Company’s holding, which was not reflected in the Company's Consolidated Balance Sheet as of December 31, 2023 due to the reporting lag. The inclusion of these additional issuances would not materially impact the financial position of the Company due to the offsetting changes to assets and liabilities. • Private Equity Funds III – VIII are limited partnership structures that invest the ownership capital in portfolios of various other limited partnership structures. The Company sold all of its investment in Private Equity Funds III - VI and the majority of its investment in Private Equity Fund VII during the year ended December 31, 2023. The Company recorded a loss of $ 97 million on the sale, which it recognized in Net Investment Income for the year ended December 31, 2023. Those entities were deconsolidated as of December 31, 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. Jackson may sell its interest in a fund once opened to investment by external parties. Asset and liability information for the consolidated VIEs included on the Consolidated Balance Sheets are as follows (in millions): December 31, 2023 December 31, 2022 Assets Debt securities, at fair value under fair value option $ 2,037 $ 2,014 Debt securities, trading 68 100 Equity securities 7 127 Other invested assets 396 1,507 Cash and cash equivalents 93 75 Other assets 49 19 Total assets $ 2,650 $ 3,842 Liabilities Notes issued by consolidated VIEs, at fair value under fair value option $ 1,988 $ 1,732 Other liabilities 98 343 Total other liabilities 2,086 2,075 Securities lending payable 2 4 Total liabilities $ 2,088 $ 2,079 Equity Noncontrolling interests $ 164 $ 732 Unconsolidated VIEs The Company has concluded the following entities are VIEs but does not consolidate them. Based on analysis of the limited partnerships, limited liability companies and the mutual funds, the Company is not the primary beneficiary of the VIE because the Company lacks the power to direct the activities of the VIE that most significantly impact the VIE's performance or lacks the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entities, or both. 128 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments • The Company invests in certain limited partnerships ("LPs") and limited liability companies ("LLCs"). The carrying amounts of the Company’s investments in these LPs and LLCs are recognized in other invested assets on the Consolidated Balance Sheets. Unfunded capital commitments for these investments are detailed in Note 16 of Notes to 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 $ 2,576 million and $ 3,285 million as of December 31, 2023 and 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. LPs and LLCs are carried at fair value. • The Company invests in certain mutual funds. Mutual funds are recognized in equity securities on the Consolidated Balance Sheets and were $ 21 million and $ 28 million as of December 31, 2023 and 2022, respectively. The Company’s maximum exposure to loss on these mutual funds is limited to the amortized cost for these investments. The Company makes investments in structured debt securities issued by VIEs for which it is not the manager. These structured debt securities include RMBS, Commercial Mortgage-Backed Securities ("CMBS"), and asset-backed securities ("ABS"). The Company does not consolidate the securitization trusts utilized in these transactions because it does not have the power to direct the activities that most significantly impact the economic performance of these securitization trusts. The Company does not consider its continuing involvement with these VIEs to be significant because it either invests in securities issued by the VIE and was not involved in the design of the VIE or no transfers have occurred between the Company and the VIE. The Company’s maximum exposure to loss on these structured debt securities is limited to the amortized cost of these investments. 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 Consolidated Balance Sheets. Commercial and Residential Mortgage Loans The following table shows commercial mortgage loans, residential mortgage loans, and the respective accrued interest thereon at December 31, 2023 and 2022 (in millions): December 31, 2023 2022 Commercial mortgage loans (1) $ 9,562 $ 10,241 Accrued interest receivable on commercial mortgage loans 39 39 Residential mortgage loans (2) 1,001 1,308 Accrued interest receivable on residential mortgage loans 7 9 (1) Net of an allowance for credit losses of $ 160 million and $ 91 million at each date, respectively. (2) Net of an allowance for credit losses of $ 5 million and $ 4 million at each date, respectively. Commercial and residential mortgage loans are generally carried at the aggregate unpaid principal balance, adjusted for any applicable unamortized discount or premium, or ACL. Acquisition discounts and premiums on mortgage loans are amortized into investment income through maturity dates using the effective interest method. Interest income is accrued on the principal balance of the loan based on the loan’s contractual interest rate. Interest income and amortization of premiums and discounts are reported in net investment income along with prepayment fees and mortgage loan fees, which are recorded as incurred. At December 31, 2023, commercial mortgage loans were collateralized by properties located in 36 states, the District of Columbia, and Europe, while residential mortgage loans were collateralized by properties located in 50 states, the District of Columbia, Mexico, and Europe. Mortgage Loan Concessions 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 129 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments 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 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 $ 8 million at December 31, 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. Evaluation for Credit Losses on Mortgage Loans The Company reviews mortgage loans that are not carried at fair value under the fair value option on a quarterly basis to estimate the ACL with changes in the ACL recorded in net gains (losses) on derivatives and investments. Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses. The Company utilizes a third-party forecasting model to estimate lifetime expected credit losses at a loan level for mortgage loans. The model forecasts net operating income and property values for the economic scenario selected. The debt service coverage ratios (“DSCR”) and loan to values (“LTV”) are calculated over the forecastable period by comparing the projected net operating income and property valuations to the loan payment and principal amounts of each loan. The model utilizes historical mortgage loan performance based on DSCRs and LTV to derive probability of default and expected losses based on the economic scenario that is similar to the Company’s expectations of economic factors such as unemployment, gross domestic product growth, and interest rates. The Company determined the forecastable period to be reasonable and supportable for a period of two years beyond the end of the reporting period. 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 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. 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 ACL on the Consolidated Balance Sheets . The following table provides the change in the allowance for credit losses in the Company’s mortgage loan portfolios (in millions): December 31, 2023 Apartment Hotel Office Retail Warehouse Residential Mortgage Total Balance at January 1, 2023 $ 18 $ 20 $ 15 $ 22 $ 16 $ 4 $ 95 Charge offs, net of recoveries — — ( 66 ) — — — ( 66 ) Additions from purchase of PCD mortgage loans — — — — — — — Provision (release) 13 ( 15 ) 130 6 1 1 136 Balance at December 31, 2023 (1) $ 31 $ 5 $ 79 $ 28 $ 17 $ 5 $ 165 130 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments December 31, 2022 Apartment Hotel Office Retail Warehouse Residential Mortgage Total Balance at January 1, 2022 $ 19 $ 9 $ 28 $ 17 $ 12 $ 9 $ 94 Charge offs, net of recoveries — — — — — — — Additions from purchase of PCD mortgage loans — — — — — — — Provision (release) ( 1 ) 11 ( 13 ) 5 4 ( 5 ) 1 Balance at December 31, 2022 (1) $ 18 $ 20 $ 15 $ 22 $ 16 $ 4 $ 95 (1) Accrued interest receivable totaled $ 46 million and $ 48 million as of December 31, 2023 and 2022, respectively, and was excluded from the determination of credit losses. The Company’s mortgage loans that are current and in good standing are accruing interest. Interest is not accrued on loans greater than 90 days delinquent and in process of foreclosure, when deemed uncollectible. Delinquency status is determined from the date of the first missed contractual payment. Accrued interest amounting to $ 2 million and nil were written off as of December 31, 2023 and 2022, respectively, relating to loans that were greater than 90 days delinquent or in the process of foreclosure. The following table provides information about our impaired residential mortgage loans (in millions): December 31, 2023 2022 Recorded investment $ 24 $ 15 Unpaid principal balance 27 16 Related loan allowance 1 — Average recorded investment 19 18 Investment income recognized 1 — 131 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments The following tables provide information about the credit quality and vintage year of mortgage loans (in millions): December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total % of Total Commercial mortgage loans Loan to value ratios: Less than 70% $ 659 $ 800 $ 937 $ 653 $ 1,251 $ 4,300 $ 4 $ 8,604 90 % 70% - 80% 24 138 325 122 61 41 — 711 7 % 80% - 100% — 25 — 37 41 93 — 196 2 % Greater than 100% — — 26 — 22 3 — 51 1 % Total commercial mortgage loans 683 963 1,288 812 1,375 4,437 4 9,562 100 % Debt service coverage ratios: Greater than 1.20x 546 611 932 667 1,302 4,189 4 8,251 86 % 1.00x - 1.20x 129 277 356 145 30 191 — 1,128 12 % Less than 1.00x 8 75 — — 43 57 — 183 2 % Total commercial mortgage loans 683 963 1,288 812 1,375 4,437 4 9,562 100 % Residential mortgage loans Performing 193 136 155 36 30 361 — 911 91 % Nonperforming 3 41 10 7 3 26 — 90 9 % Total residential mortgage loans 196 177 165 43 33 387 — 1,001 100 % Total mortgage loans $ 879 $ 1,140 $ 1,453 $ 855 $ 1,408 $ 4,824 $ 4 $ 10,563 100 % December 31, 2022 2022 2021 2020 2019 2018 Prior Revolving Loans Total % of Total Commercial mortgage loans Loan to value ratios: Less than 70% $ 771 $ 1,266 $ 1,171 $ 1,473 $ 1,480 $ 3,421 $ 4 $ 9,586 94 % 70% - 80% 125 190 32 13 5 59 — 424 4 % 80% - 100% — 152 — — 5 40 — 197 2 % Greater than 100% — — — 25 — 9 — 34 — % Total commercial mortgage loans 896 1,608 1,203 1,511 1,490 3,529 4 10,241 100 % Debt service coverage ratios: Greater than 1.20x 694 1,092 955 1,387 1,324 3,211 4 8,667 85 % 1.00x - 1.20x 202 372 106 83 34 172 — 969 9 % Less than 1.00x — 144 142 41 132 146 — 605 6 % Total commercial mortgage loans 896 1,608 1,203 1,511 1,490 3,529 4 10,241 100 % Residential mortgage loans Performing 413 308 49 37 14 409 — 1,230 94 % Nonperforming 6 11 8 6 7 40 — 78 6 % Total residential mortgage loans 419 319 57 43 21 449 — 1,308 100 % Total mortgage loans $ 1,315 $ 1,927 $ 1,260 $ 1,554 $ 1,511 $ 3,978 $ 4 $ 11,549 100 % 132 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments December 31, 2023 In Good Standing (1) Restructured Greater than 90 Days Delinquent In the Process of Foreclosure Total Carrying Value Apartment $ 3,213 $ — $ — $ — $ 3,213 Hotel 870 — — — 870 Office 1,440 — — — 1,440 Retail 1,992 — — — 1,992 Warehouse 2,047 — — — 2,047 Total commercial 9,562 — — — 9,562 Residential (2) 911 — 66 24 1,001 Total $ 10,473 $ — $ 66 $ 24 $ 10,563 December 31, 2022 In Good Standing (1) Restructured Greater than 90 Days Delinquent In the Process of Foreclosure Total Carrying Value Apartment $ 3,558 $ — $ — $ — $ 3,558 Hotel 1,015 — — — 1,015 Office 1,795 — — — 1,795 Retail 2,085 — — — 2,085 Warehouse 1,788 — — — 1,788 Total commercial 10,241 — — — 10,241 Residential (2) 1,230 — 63 15 1,308 Total $ 11,471 $ — $ 63 $ 15 $ 11,549 (1) At December 31, 2023 and 2022, includes mezzanine loans of $ 391 million and $ 410 million in the Apartment category, $ 21 million and $ 41 million in the Hotel category, $ 171 million and $ 236 million in the Office category, $ 32 million and $ 43 million in the Retail category, and $ 312 million and $ 140 million in the Warehouse category, respectively. (2) At December 31, 2023 and 2022, includes $ 22 million and $ 41 million of loans purchased when the loans were greater than 90 days delinquent and $ 5 million and $ 12 million of loans in process of foreclosure are supported with insurance or other guarantees provided by various governmental programs, respectively. The following table provides information about the mortgage loans modified to borrowers experiencing financial difficulty (in millions, except for percentage information): Term Extension Amortized Cost Basis at December 31, 2023 Percent of Total Class Commercial mortgage loans $ 17 0.17 % The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty: Term Extension Financial Effect Commercial mortgage loans Granted extension of term for three -years and required partial principal repayment at extension of the loan. The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months (in millions): Payment Status (Amortized Cost Basis) Current 30-89 Days Past Due 90+ Days Past Due Commercial mortgage loans $ 17 $ — $ — 133 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments As of December 31, 2022, there were no commercial mortgage loans involved in troubled debt restructuring. As of December 31, 2023 and 2022, stressed mortgage loans for which the Company is dependent, or expects to be dependent, on the underlying property to satisfy repayment were $ 19 million and $ 3 million, respectively. Equity Securities Equity securities include common stocks, preferred stocks and mutual funds. All equity securities are carried at fair value with changes in value included in net investment income. Policy Loans 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 December 31, 2023 and 2022, $ 3.5 billion and $ 3.4 billion, respectively, of these loans were carried at fair value, which the Company believes is equal to unpaid principal balances, plus accrued investment income. At December 31, 2023 and 2022, the Company had $ 0.9 billion and $ 1.0 billion, respectively, of policy loans not held as collateral for reinsurance, which were carried at the unpaid principal balances. Other Invested Assets 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 December 31, 2023 and 2022, FHLB capital stock had carrying value of $ 108 million and $ 146 million, respectively. Real estate is carried at the lower of depreciated cost or fair value and real estate occupied by the Company is carried at depreciated cost. At December 31, 2023 and 2022, real estate totaling $ 226 million and $ 237 million, included foreclosed properties with a book value of $ 6 million and nil , 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 December 31, 2023 and 2022, investments in LPs had carrying values of $ 2,132 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 December 31, 2023 and 2022, the estimated fair value of loaned securities was $ 19 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 December 31, 2023 and 2022, cash collateral received in the amount of $ 19 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. Securities lending transactions are used to generate income. Income and expenses associated with these transactions are reported as net investment income. 134 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Repurchase Agreements The Company routinely enters into repurchase agreements whereby the Company agrees to sell and repurchase securities. These agreements are accounted for as financing transactions, with the assets and associated liabilities included in the Consolidated Balance Sheets. The following table presents information regarding these transactions for the December 31, 2023 and 2022 (in millions, except percentage data): December 31, 2023 2022 Highest level of short-term borrowings at any month end $ 1,660 $ 1,012 Average short-term borrowing 970 311 Weighted average interest rate 4.59 % 2.54 % Outstanding repurchase agreement balance (1) — 1,012 (1) Collateralized with U.S. Treasury securities and corporate securities of nil and $ 1,056 million at December 31, 2023 and 2022, respectively, maturing within 30 days, and was included within repurchase agreements and securities lending payable in the 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 $ 45 million, $ 8 million and $ 1 million for the years ended December 31, 2023, 2022 and 2021, respectively. 5. Derivative Instruments Freestanding Derivative Instruments The Company enters into financial derivative transactions, including swaps, put-swaptions, futures and options to reduce and manage business risks. These transactions manage the risk of a change in the value, yield, price, cash flows, credit quality or degree of exposure with respect to assets, liabilities or future cash flows that the Company has acquired or incurred. The Company does not account for freestanding derivatives as either fair value or cash flow hedges as might be permitted if specific hedging documentation requirements were followed. As a result, freestanding derivatives are carried at fair value on the balance sheet with settlements and changes in fair value recorded in net gains (losses) on derivatives and investments. With respect to the Company’s interest rate swaps, total return swaps, and cross-currency swaps, the Company records the income related to periodic interest payment settlements within net gains (losses) on derivatives and investments. Although the Company does not account for these as cash flow hedges, the income from these settlements is considered operating income due to the cash settlement nature and is reported, as such, within the Company’s segment related disclosure within pretax adjusted operating earnings. The Company manages the potential credit exposure for over-the-counter derivative contracts through evaluation of the counterparty credit standing, collateral agreements, and master netting agreements. The Company is exposed to credit-related losses in the event of nonperformance by counterparties, however, it does not anticipate nonperformance. There were no charges due to nonperformance by derivative counterparties in 2023, 2022 or 2021. Embedded Derivatives—Product Liabilities Certain product features, including the index-linked crediting option offered in connection with fixed index annuities and RILAs issued by the Company, are classified as embedded derivatives. These embedded derivatives are separated for accounting purposes and are carried at fair value. These embedded derivatives are reported within other contract holder funds in the Consolidated Balance Sheets consistent with the host contract. The results from changes in value of these embedded derivatives are reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. See Note 10 - Other Contract Holder Funds of Notes to Consolidated Financial Statements for additional information on the accounting policies for these embedded derivatives within fixed index and registered index-linked annuities. 135 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments Embedded Derivatives—Funds Withheld Reinsurance Agreements The Company has recorded an embedded derivative liability related to the Athene coinsurance agreement (the “Athene Embedded Derivative”) in accordance with FASB ASC 815-15-55-107 and 108, “Derivatives and Hedging Case B: Reinsurer’s Receivable Arising from a Modified Coinsurance Arrangement” as Jackson’s obligation under the Reinsurance Agreement is based on the total return of investments in a segregated funds withheld account rather than Jackson’s own creditworthiness. As the Reinsurance Agreement transfers the economics of the investments in the segregated funds withheld account to Athene, it will receive an investment return equivalent to owning the underlying assets. At inception of the Reinsurance Agreement, the Athene Embedded Derivative was valued at zero. Additionally, the inception fair value of the investments in the segregated funds withheld account differed from their book value and, accordingly, the amortization of this difference is reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements, while the investments are held. Subsequent to the effective date of the Reinsurance Agreement, the Athene Embedded Derivative is measured at fair value with changes reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. The Athene Embedded Derivative Liability is included in funds withheld payable under reinsurance treaties in the Consolidated Balance Sheets. See “Athene Reinsurance” in Note 8 of the Notes to the Consolidated Financial Statements for additional information on the Athene Reinsurance Transaction. 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): December 31, 2023 Contractual/ Assets Liabilities Net Notional Fair Fair Fair Value Amount (1) Value Value Asset (Liability) Freestanding derivatives Cross-currency swaps $ 1,665 $ 123 $ 116 $ 7 Equity index call options — — — — Equity index futures (2) 24,739 — — — Equity index put options 26,000 59 — 59 Interest rate swaps 6,228 5 132 ( 127 ) Put-swaptions 23,500 153 905 ( 752 ) Interest rate futures (2) 33,926 — — — Total return swaps 1,599 1 23 ( 22 ) Total freestanding derivatives 117,657 341 1,176 ( 835 ) Embedded derivatives Fixed index annuity embedded derivatives (3) N/A — 866 ( 866 ) Registered index-linked annuity embedded derivatives (3) N/A — 1,224 ( 1,224 ) Total embedded derivatives N/A — 2,090 ( 2,090 ) Derivatives related to funds withheld under reinsurance treaties Cross-currency swaps 158 14 1 13 Cross-currency forwards 1,410 35 33 2 Funds withheld embedded derivative (4) N/A 2,468 — 2,468 Total derivatives related to funds withheld under reinsurance treaties 1,568 2,517 34 2,483 Total $ 119,225 $ 2,858 $ 3,300 $ ( 442 ) (1) The notional amount for swaps and swaptions represents the stated principal balance used as a basis for calculating payments. The contractual amount for futures and options represents the market exposure of open positions. (2) Variation margin is considered settlement resulting in the netting of cash received/paid for variation margin against the fair value of the trades. (3) Included within other contract holder funds on the Consolidated Balance Sheets. The non-performance risk adjustment is included in the balance above. (4) Included within funds withheld payable under reinsurance treaties on the Consolidated Balance Sheets. 136 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments December 31, 2022 Contractual/ Assets Liabilities Net Notional Fair Fair Fair Value Amount (1) Value Value Asset (Liability) Freestanding derivatives Cross-currency swaps $ 1,825 $ 73 $ 104 $ ( 31 ) Equity index call options 17,500 106 — 106 Equity index futures (2) 19,760 — — — Equity index put options 30,500 958 — 958 Interest rate swaps 7,728 5 231 ( 226 ) Interest rate swaps - cleared (2) 1,500 — — — Put-swaptions 25,000 — 1,711 ( 1,711 ) Interest rate futures (2) 105,261 — — — Total return swaps 739 31 — 31 Total freestanding derivatives 209,813 1,173 2,046 ( 873 ) Embedded derivatives Fixed index annuity embedded derivatives (3) N/A — 931 ( 931 ) Registered index-linked annuity embedded derivatives (3) N/A — 205 ( 205 ) Total embedded derivatives N/A — 1,136 ( 1,136 ) Derivatives related to funds withheld under reinsurance treaties Cross-currency swaps 158 23 1 22 Cross-currency forwards 1,490 74 18 56 Funds withheld embedded derivative (4) N/A 3,158 — 3,158 Total derivatives related to funds withheld under reinsurance treaties 1,648 3,255 19 3,236 Total $ 211,461 $ 4,428 $ 3,201 $ 1,227 (1) The notional amount for swaps and swaptions represents the stated principal balance used as a basis for calculating payments. The contractual amount for futures and options represents the market exposure of open positions. (2) Variation margin is considered settlement resulting in the netting of cash received/paid for variation margin against the fair value of the trades. (3) Included within other contract holder funds on the Consolidated Balance Sheets. The non-performance risk adjustment is included in the balance above. (4) Included within funds withheld payable under reinsurance treaties on the Consolidated Balance Sheets. 137 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments The following table reflects the results of the Company’s derivatives, including gains (losses) and change in fair value of freestanding derivative instruments and embedded derivatives (in millions): Years Ended December 31, 2023 2022 2021 Derivatives excluding funds withheld under reinsurance treaties Cross-currency swaps $ ( 4 ) $ ( 67 ) $ ( 36 ) Equity index call options 916 ( 1,830 ) 1,479 Equity index futures ( 3,543 ) 3,005 ( 4,663 ) Equity index put options ( 2,172 ) ( 244 ) ( 1,202 ) Interest rate swaps ( 63 ) ( 615 ) ( 179 ) Interest rate swaps - cleared ( 10 ) ( 201 ) ( 64 ) Put-swaptions ( 61 ) ( 1,832 ) 134 Interest rate futures 373 ( 925 ) ( 989 ) Total return swaps ( 240 ) 5 — Fixed index annuity embedded derivatives 5 3 ( 5 ) Registered index-linked annuity embedded derivatives ( 511 ) 37 ( 1 ) Total net gains (losses) on derivative instruments excluding derivative instruments related to funds withheld under reinsurance treaties ( 5,310 ) ( 2,664 ) ( 5,526 ) Derivatives related to funds withheld under reinsurance treaties Cross-currency swaps ( 7 ) 14 15 Cross-currency forwards ( 30 ) 79 42 Funds withheld embedded derivative ( 690 ) 3,278 707 Total net gains (losses) on derivative instruments related to funds withheld under reinsurance treaties ( 727 ) 3,371 764 Total net gains (losses) on derivative instruments including derivative instruments related to funds withheld under reinsurance treaties $ ( 6,037 ) $ 707 $ ( 4,762 ) All of the Company’s trade agreements for freestanding, over-the-counter derivatives, contain credit downgrade provisions that allow a party to assign or terminate derivative transactions if the counterparty’s credit rating declines below an established limit. At December 31, 2023 and 2022, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $ 117 million and $ 885 million, respectively, and held collateral was $ 841 million and $ 858 million, respectively, related to these agreements. At December 31, 2023 and 2022, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $ 937 million and $ 1,680 million, respectively, and provided collateral was $ 751 million and $ 1,650 million, respectively, related to these agreements. If all of the downgrade provisions had been triggered at December 31, 2023 and 2022, in aggregate, the Company would have had to disburse $ 910 million and $ 30 million, respectively, and would have been allowed to claim nil and $ 27 million, respectively. The Company pledged collateral with a carrying value of $ 2,616 million and $ 1,641 million as of December 31, 2023 and 2022, respectively, for initial margin related to uncleared margin for over-the-counter derivatives and exchange-traded futures. Variation margin on exchange traded futures is settled through the netting of cash paid/received for variation margin against the fair value of the trades. Offsetting Assets and Liabilities The Company’s derivative instruments, repurchase agreements and securities lending agreements are subject to master netting arrangements and collateral arrangements. A master netting arrangement with a counterparty creates a right of offset for amounts due to and due from that same counterparty that is enforceable in the event of a default or bankruptcy. The Company recognizes amounts subject to master netting arrangements on a gross basis within the Consolidated Balance Sheets. 138 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments The following tables present the gross and net information about the Company’s financial instruments subject to master netting arrangements (in millions): December 31, 2023 Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets Financial Instruments (1) Cash Collateral Securities Collateral (2) Net Amount Financial Assets: Freestanding derivative assets $ 390 $ — $ 390 $ 273 $ 108 $ — $ 9 Financial Liabilities: Freestanding derivative liabilities $ 1,210 $ — $ 1,210 $ 273 $ 6 $ 744 $ 187 Securities loaned 19 — 19 — 19 — — Repurchase agreements — — — — — — — Total financial liabilities $ 1,229 $ — $ 1,229 $ 273 $ 25 $ 744 $ 187 (1) Represents the amount that could be offset under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets. (2) Excludes initial margin amounts for exchange-traded derivatives. December 31, 2022 Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets Financial Instruments (1) Cash Collateral Securities Collateral (2) Net Amount Financial Assets: Freestanding derivative assets $ 1,270 $ — $ 1,270 $ 385 $ 683 $ 157 $ 45 Financial Liabilities: Freestanding derivative liabilities $ 2,065 $ — $ 2,065 $ 385 $ — $ 1,638 $ 42 Securities loaned 36 — 36 — 36 — — Repurchase agreements 1,012 — 1,012 — — 1,012 — Total financial liabilities $ 3,113 $ — $ 3,113 $ 385 $ 36 $ 2,650 $ 42 (1) Represents the amount that could be offset under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets. (2) Excludes initial margin amounts for exchange-traded derivatives. In the above tables, the amounts of assets or liabilities presented in the Company’s Consolidated Balance Sheets are offset first by financial instruments that have the right of offset under master netting or similar arrangements with any remaining amount reduced by the amount of cash and securities collateral. The actual amount of collateral may be greater than amounts presented in the tables. The above tables exclude net embedded derivative asset (liability) of $( 2,090 ) million and $( 1,136 ) million as of December 31, 2023 and 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 $ 2,468 million and $ 3,158 million at December 31, 2023 and 2022. 139 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements 6. Fair Value Measurements Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. All financial assets and liabilities measured at fair value are required to be classified into one of the following categories: Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include U.S. Treasury securities and exchange traded equity securities and derivative instruments. Level 2 Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most debt securities that are model priced using observable inputs are classified within Level 2. Also included are freestanding and embedded derivative instruments that are priced using models with observable market inputs. Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Embedded derivatives that are valued using unobservable inputs are included in Level 3. Because Level 3 fair values, by their nature, contain unobservable market inputs, considerable judgment may be used to determine the Level 3 fair values. Level 3 fair values represent the Company’s best estimate of an amount that could be realized in a current market exchange absent actual market exchanges. In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy. In these situations, the Company determines the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values that the Company has classified within Level 3. The Company determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Company may also determine fair value based on estimated future cash flows discounted at the appropriate current market rate. When appropriate, fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity and risk margins on unobservable inputs. Where quoted market prices are not available, fair value estimates are made at a point in time, based on relevant market data, as well as the best information about the individual financial instrument. At times, illiquid market conditions may result in inactive markets for certain of the Company’s financial instruments. In such instances, there may be no or limited observable market data for these assets and liabilities. Fair value estimates for financial instruments deemed to be in an illiquid market are based on judgments regarding current economic conditions, liquidity discounts, currency, credit and interest rate risks, loss experience and other factors. These fair values are estimates and involve considerable uncertainty and variability as a result of the inputs selected and may differ materially from the values that would have been used had an active market existed. As a result of market inactivity, such calculated fair value estimates may not be realizable in an immediate sale or settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique could significantly affect these fair value estimates. 140 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The following table summarizes the fair value and carrying value of the Company’s financial instruments (in millions): December 31, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Assets Debt securities (1) $ 42,643 $ 42,643 $ 44,762 $ 44,762 Equity securities 394 394 393 393 Mortgage loans (1) 10,563 9,994 11,549 10,841 Limited partnerships 2,132 2,132 3,212 3,212 Policy loans (1) 4,399 4,399 4,377 4,377 Freestanding derivative instruments 390 390 1,270 1,270 FHLBI capital stock 108 108 146 146 Cash and cash equivalents 2,688 2,688 4,298 4,298 Reinsurance recoverable on market risk benefits 149 149 221 221 Market risk benefit assets 6,737 6,737 4,865 4,865 Separate account assets 219,656 219,656 195,906 195,906 Liabilities Annuity reserves (2) 35,251 33,678 37,357 32,377 Market risk benefit liabilities 4,785 4,785 5,662 5,662 Reserves for guaranteed investment contracts (3) 700 674 1,128 1,099 Trust instruments supported by funding agreements (3) 5,756 5,601 5,887 5,760 FHLB funding agreements (3) 1,950 1,893 2,004 2,104 Funds withheld payable under reinsurance treaties (1) 19,952 19,952 22,957 22,957 Long-term debt 2,037 1,851 2,635 2,344 Securities lending payable (4) 19 19 36 36 Freestanding derivative instruments 1,210 1,210 2,065 2,065 Notes issued by consolidated VIEs 1,988 1,988 1,732 1,732 Repurchase agreements (4) — — 1,012 1,012 FHLB advances (5) 250 250 — — Separate account liabilities 219,656 219,656 195,906 195,906 (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. (3) Included as a component of other contract holder funds on the Consolidated Balance Sheets. (4) Included as a component of repurchase agreements and securities lending payable on the Consolidated Balance Sheets. (5) Included as a component of other liabilities on the Consolidated Balance Sheets. The following is a discussion of the methodologies used to determine fair values of the financial instruments measured on a recurring basis reported in the following tables. Debt and Equity Securities The fair values for debt and equity securities are determined using information available from independent pricing services, broker-dealer quotes, or internally derived estimates. Priority is given to publicly available prices from independent sources, when available. Securities for which the independent pricing service does not provide a quotation are either submitted to independent broker-dealers for prices or priced internally. Typical inputs used by these three pricing methods include reported trades, benchmark yields, credit spreads, liquidity premiums and/or estimated cash flows based on default and prepayment assumptions. 141 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements As a result of typical trading volumes and the lack of specific quoted market prices for most debt securities, independent pricing services will normally derive the security prices through recently reported trades for identical or similar securities, making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recently reported trades, the independent pricing services and broker-dealers may use matrix or pricing model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at relevant market rates. Certain securities are priced using broker-dealer quotes, which may utilize proprietary inputs and models. Additionally, the majority of these quotes are non-binding. These securities are classified as Level 3 in the fair value hierarchy. Included in the pricing of asset-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment assumptions believed to be relevant for the underlying collateral. Actual prepayment experience may vary from these estimates. 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, 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. These prices are indicative of an exit price, but the assumptions used to establish the fair value may not be observable or corroborated by market observable information and, therefore, represent Level 3 inputs. The Company performs an analysis on the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include initial and ongoing review of third-party pricing service methodologies, review of pricing statistics and trends, back testing recent trades and monitoring of trading volumes. In addition, the Company considers whether prices received from independent broker-dealers represent a reasonable estimate of fair value using internal and external cash flow models, which are developed based on spreads and, when available, market indices. 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 December 31, 2023 and 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. Cash flows, as estimated by the Company using issuer-specific default statistics and prepayment assumptions, are discounted to determine an estimated fair value. On an ongoing basis, the Company reviews the independent pricing services’ valuation methodologies and related inputs and evaluates the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy distribution based upon trading activity and the observability of inputs. Based on the results of this evaluation, each price is classified into Level 1, 2, or 3. Most prices provided by independent pricing services are classified into Level 2 due to their use of market observable inputs. Limited Partnerships Fair values for limited partnership interests, which are included in other invested assets, are 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 December 31, 2023 and 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. 142 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The Company’s limited partnership interests are not redeemable, and distributions received are generally the result of liquidation of the underlying assets of the partnerships. The Company generally has the ability under the partnership agreements to sell its interest to another limited partner with the prior written consent of the general partner. In cases when the Company expects to sell the limited partnership interest, the estimated sales price is used to determine the fair value rather than the practical expedient. Limited partnership interests expected to be sold are classified as Level 2 in the fair value hierarchy. In cases when a limited partnership’s financial statements are unavailable and a NAV equivalent is not available or practical, the fair value may be based on an internally developed model or provided by the general partner as determined using private transactions, information obtained from the primary co-investor or underlying company, or financial metrics provided by the lead sponsor. These investments are classified as Level 3 in the fair value hierarchy. Policy Loans Policy loans are funds provided to policyholders in return for a claim on the policies values and function like demand deposits, which are redeemable upon repayment, death or surrender, and there is only one market price at which the transaction could be settled – the then current carrying value. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest 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 approximates fair value. The reinsurance related component of policy loans at fair value under the fair value option have been classified as Level 3 within the fair value hierarchy. Freestanding Derivative Instruments 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. Freestanding derivatives priced using third-party pricing services incorporate inputs that are observable in the market. Inputs used to value derivatives include interest rate swap curves, credit spreads, interest rates, counterparty credit risk, equity volatility and equity index levels. Freestanding derivative instruments classified as: • Level 1 include futures, which are traded on active exchanges. • Level 2 include interest rate swaps, cross currency swaps, cross-currency forwards, credit default swaps, total return swaps, put-swaptions and certain equity index call and put options. These derivative valuations are determined by third-party pricing services using pricing models with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. • Level 3 include interest rate contingent options that are valued by third-party pricing services utilizing significant unobservable inputs. Cash and Cash Equivalents Cash and cash equivalents primarily include money market instruments and bank deposits. Cash equivalents also includes all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase. Certain money market instruments are valued using unadjusted quoted prices in active markets and are classified as Level 1. Funds Withheld Payable Under Reinsurance Treaties 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 and are both considered Level 3 in the fair value hierarchy. 143 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements • 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. Separate Account Assets Separate account assets are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available, and are categorized as Level 2 assets. Market Risk Benefits Variable Annuities Variable annuity contracts issued by the Company may include various guaranteed minimum death, withdrawal, income and accumulation benefits, which are classified as MRBs and measured at fair value. Our MRB assets and MRB liabilities are reported separately on our Consolidated Balance Sheets. Increases to an asset or decreases to a liability are described as favorable changes to fair value. Changes in fair value are reported in Market risk benefits (gains) losses, net on the 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 ("OCI") and is reported in Change in non-performance on market risk benefits, net of tax expense (benefit) on the 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. Under the attributed fee method, fair value is measured as the difference between the present value of projected future liabilities and the present value of projected attributed fees. At the inception of the contract, the Company attributes to the MRB a portion of total fees expected to be assessed against the contract holder's account value to offset the projected claims over the lifetime of the contract. The attributed fee is expressed as a percentage of total projected future fees at inception of the contract. This percentage of total projected fees is considered a fixed term of the MRB feature and is held static over the life of the contract. This percentage may not exceed 100% of the total projected contract fees as of contract inception. As the Company may issue contracts that have projected future liabilities greater than the projected future guaranteed benefit fees at issue, the Company may also attribute mortality and expense charges when performing this calculation. The percentage of guaranteed benefit fees and the percentage of mortality and expense charges may not exceed 100% of the total projected fees as of contract inception. In subsequent valuations, both the present value of future projected liabilities and the present value of projected attributed fees are remeasured based on current market conditions and policyholder behavior assumptions. 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 a MRB in their entirety. The reinsurance contract is measured at fair value and reported in Reinsurance recoverable on market risk benefits. Changes in fair value are recorded in Market risk benefits (gains) losses, net. Due to the inability to economically reinsure or hedge new issues of the GMIB, the Company discontinued offering the benefit in 2009. Fair values for MRBs related to variable annuities, including the contract reinsuring GMIB features, are calculated using internally developed models because active, observable markets do not exist for those guaranteed benefits. The fair value calculation is based on the present value of future cash flows comprised of future expected benefit payments, less future attributed rider fees, over the lives of the contracts. Estimating these cash flows requires numerous estimates and subjective judgments related to capital market inputs, as well as actuarially determined assumptions related to expectations concerning policyholder behavior. Capital market inputs include expected market rates of return, market volatility, correlations of market index returns to fund returns, and discount rates, which includes an adjustment for non-performance risk. The more significant actuarial assumptions include benefit utilization by policyholders, lapse, mortality, and withdrawal rates. Best estimate assumptions plus risk margins are used as applicable. 144 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements At each valuation date, the fair value calculation reflects expected returns based on treasury rates as of that date to determine the value of expected future cash flows produced in a stochastic process. 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 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. Estimates of future policyholder behavior are subjective and are based primarily on the Company’s experience. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions for the fair value model. The use of the models and assumptions described above requires a significant amount of judgment. Management believes this results in an amount that the Company would be required to transfer for a liability, or receive for an asset, to or from a willing buyer or seller, if one existed, for those market participants to assume the risks associated with the guaranteed benefits and the related reinsurance. However, the ultimate settlement amount of the asset or liability, which is currently unknown, could likely be significantly different than this fair value. Fixed Index Annuities The longevity riders issued on fixed index annuities are classified as MRBs and measured at fair value. Similar to the variable annuity guaranteed benefit features, these contracts have explicit fees and are measured using the attributed fee method. The Company attributes a percentage of total projected future fees expected to be assessed against the policyholder to offset the projected future claims over the lifetime of the contract. If the fees attributed are insufficient to offset the claims at issue, the shortfall is borrowed from the host contract rather than recognizing a loss at inception. RILA RILA guaranteed benefit features are classified as MRBs and measured at fair value. Unlike variable or fixed index annuities, RILA products do not have explicit fees and are measured using an option-based method. The fair value measurement represents the present value of future claims payable by the MRB feature. At inception, the value of the MRB is deducted from the value of the contract resulting in no gain or loss. See Note 12 - Market Risk Benefits of Notes to Consolidated Financial Statements for more information regarding MRBs. Fixed Index Annuities The fair value of the index-linked crediting derivative feature embedded in fixed index annuities, included in Annuity Reserves in the above tables, is calculated using the closed form Black-Scholes Option Pricing model or Monte Carlo simulations, as appropriate for the type of option, incorporating such factors as the volatility of returns, the level of interest rates and the time remaining until the option expires. Additionally, although not a significant input, assumed withdrawal rates are used to estimate the expected volume of embedded options that will be realized by policyholders. RILA The fair value of the index-linked crediting derivative feature embedded in RILAs, included in Annuity Reserves in the above table, is calculated using the closed form Black-Scholes Option Pricing model, incorporating such factors as the volatility of returns, the level of interest rates and the time remaining until the option expires. Additionally, although not a significant input, assumed withdrawal rates are used to estimate the expected volume of embedded options that will be realized by policyholders. 145 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Notes Issued by Consolidated VIEs These notes are issued by CLOs and are carried at fair value under the fair value option based on the fair values of corresponding fixed maturity collateral. The CLO liabilities are also reduced by the fair value of the beneficial interest the Company retains in the CLO and the carrying value of any beneficial interests that represent compensation for services. As the notes are valued based on the reference collateral, they are classified as Level 2. Fair Value Option The Company elected the fair value option for debt securities related to certain consolidated investments totaling $ 2,037 million and $ 2,014 million at December 31, 2023 and 2022, respectively. These debt securities are reflected on the Company’s 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 $ 4,054 million and $ 4,160 million at December 31, 2023 and 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. The fair value option was elected for these mortgage loans, purchased or funded after December 31, 2021, to mitigate inconsistency in earnings that would otherwise result between these mortgage loan assets and the funds withheld liability, including the associated embedded derivative, and are valued using third-party pricing services. Changes in fair value are reflected in net investment income on the Consolidated Income Statements. 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): December 31, December 31, 2023 2022 Fair value $ 481 $ 582 Aggregate contractual principal 491 591 As of December 31, 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 $ 1,988 million and $ 1,732 million at December 31, 2023 and 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 Consolidated Financial Statements. 146 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables summarize the Company’s assets and liabilities that are carried at fair value by hierarchy levels (in millions): December 31, 2023 Total Level 1 Level 2 Level 3 Assets Debt securities U.S. government securities $ 4,312 $ 4,312 $ — $ — Other government securities 1,402 — 1,252 150 Public utilities 5,127 — 5,086 41 Corporate securities 25,477 — 25,394 83 Residential mortgage-backed 375 — 375 — Commercial mortgage-backed 1,423 — 1,423 — Other asset-backed securities 4,527 — 3,552 975 Equity securities 394 182 204 8 Mortgage loans 481 — — 481 Limited partnerships (1) 135 — — 135 Policy loans 3,457 — — 3,457 Freestanding derivative instruments 390 — 390 — Cash and cash equivalents 2,688 2,688 — — Reinsurance recoverable on market risk benefits 149 — — 149 Market risk benefit assets 6,737 — — 6,737 Separate account assets 219,656 — 219,656 — Total $ 276,730 $ 7,182 $ 257,332 $ 12,216 Liabilities Embedded derivative liabilities (2) $ 2,090 $ — $ 2,090 $ — Funds withheld payable under reinsurance treaties (3) 1,158 — — 1,158 Freestanding derivative instruments 1,210 — 1,210 — Notes issued by consolidated VIEs 1,988 — 1,988 — Market risk benefit liabilities 4,785 — — 4,785 Total $ 11,231 $ — $ 5,288 $ 5,943 (1) Excludes $ 1,997 million of limited partnership investments measured at NAV. (2) Includes net embedded derivative liabilities of $ 1,224 million related to RILA and $ 866 million of fixed index annuities, both included in other contract holder funds on the Consolidated Balance Sheets. (3) Includes the Athene Embedded Derivative asset of $ 2,468 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. 147 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements December 31, 2022 Total Level 1 Level 2 Level 3 Assets Debt securities U.S. government securities $ 5,185 $ 5,184 $ 1 $ — Other government securities 1,467 — 1,467 — Public utilities 5,225 — 5,225 — Corporate securities 25,146 — 25,090 56 Residential mortgage-backed 464 — 464 — Commercial mortgage-backed 1,638 — 1,638 — Other asset-backed securities 5,637 — 5,637 — Equity securities 393 165 106 122 Mortgage loans 582 — — 582 Limited partnerships (1) 440 — — 440 Policy loans 3,419 — — 3,419 Freestanding derivative instruments 1,270 — 1,270 — Cash and cash equivalents 4,298 4,298 — — Reinsurance recoverable on market risk benefits 221 — — 221 Market risk benefit assets 4,865 — — 4,865 Separate account assets 195,906 — 195,906 — Total $ 256,156 $ 9,647 $ 236,804 $ 9,705 Liabilities Embedded derivative liabilities (2) $ 1,135 $ — $ 1,135 $ — Funds withheld payable under reinsurance treaties (3) 424 — — 424 Freestanding derivative instruments 2,065 — 2,065 — Notes issued by consolidated VIEs 1,732 — 1,732 — Market risk benefit liabilities 5,662 — — 5,662 Total $ 11,018 $ — $ 4,932 $ 6,086 (1) Excludes $ 2,772 million of limited partnership investments measured at NAV. (2) Includes net embedded derivative liabilities of $ 205 million related to RILA and $ 931 million of fixed index annuities, both included in other contract holder funds on the Consolidated Balance Sheets. (3) Includes the Athene Embedded Derivative liability of $ 3,158 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. 148 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) Level 3 Assets and Liabilities by Price Source The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources (in millions): December 31, 2023 Assets Total Internal External Debt securities: Other government securities $ 150 $ — $ 150 Public utilities 41 41 — Corporate 83 — 83 Other asset-backed securities 975 50 925 Equity securities 8 1 7 Mortgage loans 481 — 481 Limited partnerships 135 1 134 Policy loans 3,457 3,457 — Reinsurance recoverable on market risk benefits 149 149 — Market risk benefit assets 6,737 6,737 — Total $ 12,216 $ 10,436 $ 1,780 Liabilities Funds withheld payable under reinsurance treaties (1) 1,158 1,158 — Market risk benefit liabilities 4,785 4,785 — Total $ 5,943 $ 5,943 $ — (1) Includes the Athene Embedded Derivative asset of $ 2,468 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. December 31, 2022 Assets Total Internal External Debt securities: Corporate $ 56 $ — $ 56 Equity securities 122 1 121 Mortgage loans 582 — 582 Limited partnerships 440 8 432 Policy loans 3,419 3,419 — Reinsurance recoverable on market risk benefits 221 221 — Market risk benefit assets 4,865 4,865 — Total $ 9,705 $ 8,514 $ 1,191 Liabilities Funds withheld payable under reinsurance treaties (1) 424 424 — Market risk benefit liabilities 5,662 5,662 — Total $ 6,086 $ 6,086 $ — (1) Includes the Athene Embedded Derivative asset of $ 3,158 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. External pricing sources for securities represent unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available. 149 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities The table below presents quantitative information on internally priced Level 3 assets and liabilities that use significant unobservable inputs (in millions): As of December 31, 2023 Fair Value Valuation Technique(s) Significant Unobservable Input(s) Assumption or Input Range Impact of Increase in Input on Fair Value Assets Reinsurance recoverable on market risk benefits $ 149 Discounted cash flow Mortality (1) 0.01 % - 20.71 % Increase Lapse (2) 1.47 % - 8.55 % Increase Utilization (3) 0.00 % - 50.00 % Decrease Withdrawal (4) 47.50 % - 50.00 % Decrease Non-performance risk adjustment (5) 0.10 % - 1.50 % Increase Long-term Equity Volatility (6) 18.50 % Decrease Market risk benefit assets $ 6,737 Discounted cash flow Mortality (1) 0.01 % - 23.46 % Increase Lapse (2) 0.05 % - 37.06 % Increase Utilization (3) 0.00 % - 100.00 % Decrease Withdrawal (4) 11.25 % - 100.00 % Decrease Non-performance risk adjustment (5) 0.70 % - 2.11 % Increase Long-term Equity Volatility (6) 18.50 % Decrease Liabilities Market risk benefit liabilities $ 4,785 Discounted cash flow Mortality (1) 0.01 % - 23.46 % Decrease Lapse (2) 0.05 % - 37.06 % Decrease Utilization (3) 0.00 % - 100.00 % Increase Withdrawal (4) 11.25 % - 100.00 % Increase Non-performance risk adjustment (5) 0.70 % - 2.11 % Decrease Long-term Equity Volatility (6) 18.50 % Increase (1) Mortality rates vary by attained age, tax qualification status, guaranteed benefit election, and duration. The range displayed reflects ages from the minimum issue age for the benefit through age 95, which corresponds to the typical maturity age. A mortality improvement assumption is also applied. (2) Base lapse rates vary by contract-level factors, such as product type, surrender charge schedule and optional benefits election. Lapse rates are further adjusted based on the degree to which a guaranteed benefit is in-the-money, with lower lapse applying when benefits are more in-the-money. Lapse rates are also adjusted to reflect lower lapse expectations when guaranteed benefits are utilized. (3 The utilization rate represents the expected percentage of contracts that will utilize the benefit through annuitization (GMIB) or commencement of withdrawals (GMWB). Utilization may vary by benefit type, attained age, duration, tax qualification status, benefit provision, and degree to which the guaranteed benefit is in-the-money. (4) The withdrawal rate represents the percentage of annual withdrawal assumed relative to the maximum allowable withdrawal amount under the free partial withdrawal provision or the GMWB, as applicable. Free partial withdrawal rates vary based on the product type and duration. Withdrawal rates on contracts with a GMWB vary based on attained age, tax qualification status, GMWB type and GMWB benefit provisions. (5) Non-performance risk adjustment is applied as a spread over the risk-free rate to determine the rate used to discount the related cash flows and varies by projection year. (6) Long-term equity volatility represents the equity volatility beyond the period for which observable equity volatilities are available. 150 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements As of December 31, 2022 Fair Value Valuation Technique(s) Significant Unobservable Input(s) Assumption or Input Range Impact of Increase in Input on Fair Value Assets Reinsurance recoverable on market risk benefits $ 221 Discounted cash flow Mortality (1) 0.01 % - 23.33 % Increase Lapse (2) 2.97 % - 8.10 % Increase Utilization (3) 0.00 % - 20.00 % Decrease Withdrawal (4) 47.50 % - 52.50 % Decrease Non-performance risk adjustment (5) 0.64 % - 2.27 % Increase Long-term Equity Volatility (6) 18.50 % - 23.68 % Decrease Market risk benefit assets $ 4,865 Discounted cash flow Mortality (1) 0.01 % - 23.33 % Increase Lapse (2) 0.05 % - 41.28 % Increase Utilization (3) 0.00 % - 100.00 % Decrease Withdrawal (4) 11.25 % - 100.00 % Decrease Non-performance risk adjustment (5) 0.64 % - 2.27 % Increase Long-term Equity Volatility (6) 18.50 % - 23.68 % Decrease Liabilities Market risk benefit liabilities $ 5,662 Discounted cash flow Mortality (1) 0.01 % - 23.33 % Decrease Lapse (2) 0.05 % - 41.28 % Decrease Utilization (3) 0.00 % - 100.00 % Increase Withdrawal (4) 11.25 % - 100.00 % Increase Non-performance risk adjustment (5) 0.64 % - 2.27 % Decrease Long-term Equity Volatility (6) 18.50 % - 23.68 % Increase (1) Mortality rates vary by attained age, tax qualification status, guaranteed benefit election, and duration. The range displayed reflects ages from the minimum issue age for the benefit through age 95, which corresponds to the typical maturity age. A mortality improvement assumption is also applied. (2) Base lapse rates vary by contract-level factors, such as product type, surrender charge schedule and optional benefits election. Lapse rates are further adjusted based on the degree to which a guaranteed benefit is in-the-money, with lower lapse applying when benefits are more in-the-money. Lapse rates are also adjusted to reflect lower lapse expectations when guaranteed benefits are utilized. (3) The utilization rate represents the expected percentage of contracts that will utilize the benefit through annuitization (GMIB) or commencement of withdrawals (GMWB). Utilization may vary by benefit type, attained age, duration, tax qualification status, benefit provision, and degree to which the guaranteed benefit is in-the-money. (4) The withdrawal rate represents the percentage of annual withdrawal assumed relative to the maximum allowable withdrawal amount under the free partial withdrawal provision or the GMWB, as applicable. Free partial withdrawal rates vary based on the product type and duration. Withdrawal rates on contracts with a GMWB vary based on attained age, tax qualification status, GMWB type and GMWB benefit provisions. (5) Non-performance risk adjustment is applied as a spread over the risk-free rate to determine the rate used to discount the related cash flows and varies by projection year. (6) Long-term equity volatility represents the equity volatility beyond the period for which observable equity volatilities are available. 151 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Sensitivity to Changes in Unobservable Inputs The following is a general description of sensitivities of significant unobservable inputs and their impact on the fair value measurement for the assets and liabilities reflected in the tables above. At December 31, 2023 and 2022, securities of $ 93 million and $ 9 million, respectively, are fair valued using techniques incorporating unobservable inputs and are classified in Level 3 of the fair value hierarchy. For these assets, their unobservable inputs and ranges of possible inputs do not materially affect their fair valuations and have been excluded from the quantitative information in the tables above. Policy loans that support funds withheld reinsurance agreements that are held at fair value under the fair value option on the Company’s Consolidated Balance Sheets are excluded from the tables above. 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 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 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. Estimating these cash flows requires actuarially determined assumptions related to expectations concerning policyholder behavior and long-term market volatility. The more significant policyholder behavior actuarial assumptions include benefit utilization, fund allocation, lapse, and mortality. The MRB asset and liability fair value calculation is based on the present value of future cash flows comprised of future expected benefit payments, less future attributed fees (if applicable), over the lives of the contracts. Estimating these cash flows requires numerous estimates and subjective judgments related to capital market inputs, as well as actuarially determined assumptions related to expectations concerning policyholder behavior. The more significant actuarial assumptions include benefit utilization by policyholders, lapse, mortality, and withdrawal rates. Best estimate assumptions plus risk margins are used as applicable. 152 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The tables below provide roll-forwards for the years ended December 31, 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. The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments hedging the related risks may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the impact of the derivative instruments reported in Level 3 may vary significantly from the total income effect of the hedged instruments. Total Realized/Unrealized Gains (Losses) Included in Purchases, Fair Value Sales, Transfers Fair Value as of Other Issuances in and/or as of January 1, Net Comprehensive and (out of) December 31, December 31, 2023 2023 Income Income Settlements Level 3 2023 Assets Debt securities Other government securities $ — $ — $ ( 9 ) $ — $ 159 $ 150 Public utilities — — — — 41 41 Corporate securities 56 ( 13 ) 8 ( 24 ) 56 83 Other asset-backed securities — 2 15 ( 60 ) 1,018 975 Equity securities 122 ( 35 ) — ( 78 ) ( 1 ) 8 Mortgage loans 582 ( 3 ) — ( 98 ) — 481 Limited partnerships 440 ( 36 ) — ( 281 ) 12 135 Policy loans 3,419 3 — 35 — 3,457 Reinsurance recoverable on market risk benefits 221 ( 72 ) — — — 149 Market risk benefit assets 4,865 1,872 — — — 6,737 Liabilities Funds withheld payable under reinsurance treaties ( 424 ) ( 693 ) — ( 41 ) — ( 1,158 ) Market risk benefit liabilities ( 5,662 ) 2,096 ( 1,219 ) — — ( 4,785 ) Total Realized/Unrealized Gains (Losses) Included in Purchases, Fair Value Sales, Transfers Fair Value as of Other Issuances in and/or as of January 1, Net Comprehensive and (out of) December 31, December 31, 2022 2022 Income Income Settlements Level 3 2022 Assets Debt securities Corporate securities $ 9 $ — $ ( 13 ) $ 12 $ 48 $ 56 Equity securities 112 7 — 3 — 122 Mortgage loans — ( 7 ) — 589 — 582 Limited partnerships 396 8 — 27 9 440 Policy loans 3,467 29 — ( 77 ) — 3,419 Reinsurance recoverable on market risk benefits 383 ( 162 ) — — — 221 Market risk benefit assets 1,664 3,201 — — — 4,865 Liabilities Funds withheld payable under reinsurance treaties ( 3,759 ) 3,249 — 86 — ( 424 ) Market risk benefit liabilities ( 8,033 ) 497 1,874 — — ( 5,662 ) 153 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The components of the amounts included in purchases, sales, issuances and settlements for the years ended December 31, 2023 and 2022 shown above are as follows (in millions): December 31, 2023 Purchases Sales Issuances Settlements Total Assets Debt securities Corporate securities $ 17 $ ( 41 ) $ — $ — $ ( 24 ) Other asset-backed securities 68 ( 128 ) — — ( 60 ) Equity securities — ( 78 ) — — ( 78 ) Mortgage loans 233 ( 331 ) — — ( 98 ) Limited partnerships 30 ( 311 ) — — ( 281 ) Policy loans — — 231 ( 196 ) 35 Total $ 348 $ ( 889 ) $ 231 $ ( 196 ) $ ( 506 ) Liabilities Funds withheld payable under reinsurance treaties $ — $ — $ ( 281 ) $ 240 $ ( 41 ) December 31, 2022 Purchases Sales Issuances Settlements Total Assets Debt securities Corporate securities $ 15 $ ( 3 ) $ — $ — $ 12 Equity securities 7 ( 4 ) — — 3 Mortgage loans 632 ( 43 ) — — 589 Limited partnerships 45 ( 18 ) — — 27 Policy loans — — 215 ( 292 ) ( 77 ) Total $ 699 $ ( 68 ) $ 215 $ ( 292 ) $ 554 Liabilities Funds withheld payable under reinsurance treaties $ — $ — $ ( 222 ) $ 308 $ 86 In 2023, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 57 million, transfers from Level 2 to Level 3 were $ 1,331 million, transfers from Level 3 to NAV were $ 7 million, and transfers from NAV to Level 3 were $ 18 million. During the current year, management determined that the fair value measurements for certain securities, primarily comprised of asset-backed and other debt securities included in funds withheld accounts, which were classified as Level 2 measurements within the fair value hierarchy in prior reporting periods, should be classified as Level 3 fair value measurements. The fair value of these securities is primarily obtained from external sources which may use unobservable inputs, proprietary inputs and models, or inputs or values that cannot be corroborated by market transactions, and should be classified as externally priced Level 3 fair value measurements. The Fair Value on a Recurring Basis table, Level 3 Assets and Liabilities by Price Source table, Level 3 Rollforward table, and Level 3 Purchases, Sales, Issuances and Settlements table reflect this change in classification. In the 2023 tables, securities totaling totaling $ 1,336 million, were reported as Level 3 and included in “Transfers in and/or (out of) Level 3”. The change in classification did not change the fair value of these securities and did not impact the Consolidated Balance Sheets or Consolidated Income Statements. In 2022, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 5 million, transfers from Level 2 to Level 3 were $ 53 million, and transfers from NAV equivalent to Level 3 were $ 9 million. There were no transfers from Level 3 to NAV. 154 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements 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): Year Ended December 31, 2023 2022 Included in Net Income Included in OCI Included in Net Income Included in OCI Assets Debt securities Other government securities $ — $ ( 9 ) $ — $ — Corporate securities ( 5 ) 6 — ( 13 ) Other asset-backed securities 2 15 — — Equity securities ( 21 ) — 21 — Mortgage loans ( 3 ) — ( 7 ) — Limited partnerships 2 — 8 — Policy loans 3 — 29 — Reinsurance recoverable on market risk benefits ( 72 ) — ( 162 ) — Market risk benefit assets 1,872 — 3,201 — Liabilities Funds withheld payable under reinsurance treaties ( 693 ) — 3,249 — Market risk benefit liabilities 2,096 ( 1,219 ) 497 1,874 155 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Fair Value of Financial Instruments Carried at Other Than Fair Value 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): December 31, 2023 Fair Value Carrying Value Total Level 1 Level 2 Level 3 Assets Mortgage loans $ 10,082 $ 9,513 $ — $ — $ 9,513 Policy loans 942 942 — — 942 FHLBI capital stock 108 108 108 — — Liabilities Annuity reserves (1) $ 33,161 $ 31,588 $ — $ — $ 31,588 Reserves for guaranteed investment contracts (2) 700 674 — — 674 Trust instruments supported by funding agreements (2) 5,756 5,601 — — 5,601 FHLB funding agreements (2) 1,950 1,893 — — 1,893 Funds withheld payable under reinsurance treaties 18,794 18,794 — — 18,794 Long-term debt 2,037 1,851 — 1,851 — Securities lending payable (4) 19 19 — 19 — FHLB advances (5) 250 250 — 250 — Separate account liabilities (3) 219,656 219,656 — 219,656 — December 31, 2022 Fair Value Carrying Value Total Level 1 Level 2 Level 3 Assets Mortgage loans $ 10,967 $ 10,259 $ — $ — $ 10,259 Policy loans 958 958 — — 958 FHLBI capital stock 146 146 146 — — Liabilities Annuity reserves (1) $ 36,222 $ 31,242 $ — $ — $ 31,242 Reserves for guaranteed investment contracts (2) 1,128 1,099 — — 1,099 Trust instruments supported by funding agreements (2) 5,887 5,760 — — 5,760 FHLB funding agreements (2) 2,004 2,104 — — 2,104 Funds withheld payable under reinsurance treaties 22,533 22,533 — — 22,533 Long-term debt 2,635 2,344 — 2,344 — Securities lending payable (4) 36 36 — 36 — Repurchase agreements (4) 1,012 1,012 — 1,012 — Separate account liabilities (3) 195,906 195,906 — 195,906 — (1) Annuity reserves represent only the components of other contract holder funds that are considered to be financial instruments. (2) Included as a component of other contract holder funds on the Consolidated Balance Sheets. (3) The values of separate account liabilities are set equal to the values of separate account assets. (4) Included as a component of repurchase agreements and securities lending payable on the Consolidated Balance Sheets. (5) Included as a component of other liabilities on the Consolidated Balance Sheets. 156 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The following is a discussion of the methodologies used to determine fair values of the financial instruments that are not reported at fair value reported in the table above: Mortgage Loans Fair values are generally determined by discounting expected future cash flows at current market interest rates, inclusive of a credit spread, for similar quality loans. For loans whose value is dependent on the underlying property, fair value is the estimated value of the collateral. Certain characteristics considered significant in determining the spread or collateral value may be based on internally developed estimates. As a result, these investments have been classified as Level 3 within the fair value hierarchy. Mortgage loans held under the funds withheld reinsurance agreement are valued using third-party pricing services, which may use economic inputs, geographical information, and property specific assumptions in deriving the fair value price. The Company reviews the valuations from these pricing providers to ensure they are reasonable. Due to lack of observable inputs, these investments have been classified as Level 3 within the fair value hierarchy. Policy Loans Policy loans are funds provided to policyholders in return for a claim on the policies values and function like demand deposits which are redeemable upon repayment, death or surrender, and there is only one market price at which the transaction could be settled – the then current carrying value. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest 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 approximates fair value. The non-reinsurance related component of policy loans has been classified as Level 3 within the fair value hierarchy. FHLBI Capital Stock FHLBI capital stock, which is included in other invested assets, can only be sold to FHLBI at a constant price of $ 100 per share. Due to the lack of valuation uncertainty, the investment has been classified as Level 1. Other Contract Holder Funds Fair values for immediate annuities without mortality features are derived by discounting the future estimated cash flows using current market interest rates for similar maturities. 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, 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 The fair value of the funds withheld payable is equal to the fair value of the assets held as collateral, which primarily consists of bonds, mortgages, limited partnerships, and cash and cash equivalents. The fair value of the assets generally uses industry standard valuation techniques as described above and the funds withheld payable components are valued consistent with the assets in the fair value hierarchy and the funds withheld payable is classified in its entirety according to the lowest level input that is significant to the determination of the fair value. The funds withheld payable is classified as Level 3 within the fair value hierarchy. Debt Fair values for the Company’s surplus notes and long-term debt are generally determined by prices obtained from independent broker dealers or discounted cash flow models. Such prices are derived from market observable inputs and are classified as Level 2. 157 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Securities Lending Payable The Company’s securities lending payable is set equal to the cash collateral received. Due to the short-term nature of the loans, carrying value is a reasonable estimate of fair value and is classified as Level 2. FHLB Advances Carrying value of the Company’s FHLB advances, which are included in other liabilities, is considered a reasonable estimate of fair value due to their short-term maturities and are classified as Level 2. Repurchase Agreements Carrying value of the Company’s repurchase agreements is considered a reasonable estimate of fair value due to their short-term maturities and are classified as Level 2. Separate Account Liabilities The values of separate account liabilities are set equal to the values of separate account assets, which are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available, and, are categorized as Level 2. 7. Deferred Acquisition Costs 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. All other acquisition costs are expensed as incurred. Contracts are grouped into cohorts by contract type and issue year. For traditional and limited-payment insurance contracts, contracts are grouped consistent with the groupings used in estimating the associated liability. 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 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. Annually, or as circumstances warrant, a comprehensive review of assumptions is conducted and assumptions are revised as appropriate. 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 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. 158 Part II | Item 8. Notes to Consolidated Financial Statements | 7. Deferred Acquisition Costs The following table presents the roll-forward of the DAC (in millions). 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. Years Ended December 31, 2023 2022 2021 (1) Variable Annuities Balance, beginning of period $ 12,699 $ 13,364 $ 13,725 Change in accounting principle — — 151 Deferrals of acquisition costs 394 544 779 Amortization ( 1,126 ) ( 1,209 ) ( 1,291 ) Variable Annuities balance, end of period $ 11,967 $ 12,699 $ 13,364 Reconciliation of total DAC Variable Annuities balance, end of period $ 11,967 $ 12,699 $ 13,364 Other product lines, end of period 335 224 161 Total balance, end of period $ 12,302 $ 12,923 $ 13,525 (1) See Note 2 - Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for the transition to LDTI impact to the 2021 beginning of period balance for DAC. The assumptions used in the amortization of deferred acquisition costs consist of mortality and persistency. We have undertaken a comprehensive review of the assumptions used in the amortization of deferred acquisition costs, and there was no significant impact from changes to the mortality or persistency assumptions. 8. Reinsurance The Company, through its subsidiary insurance companies, assumes and cedes reinsurance from and to other insurance companies to limit losses from large exposures. 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 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 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. Upon closing of the transaction, Jackson placed investments into the segregated account with a statutory book value of $ 25.6 billion. The investments maintained in the segregated account are valued at statutory carrying value for purposes of determining periodic settlement amounts under the Athene coinsurance agreement. Further, the investments in the segregated account are not available to settle any policyholder obligations other than those specifically covered by the coinsurance agreement and are not available to settle obligations to general creditors of Jackson. 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 $ 83 million at December 31, 2023. Pursuant to the Athene coinsurance agreement, the Company holds certain assets as collateral. At December 31, 2023 and 2022, assets held as collateral in the segregated custody account were $ 16.3 billion and $ 19.4 billion, respectively. 159 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance Swiss Re Reinsurance Jackson has three retrocession reinsurance agreements (“retro treaties”) with Swiss Reinsurance Company Ltd. (“SRZ”). 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 businesses, direct and assumed life insurance business, and certain institutional annuities. GMIB Reinsurance The Company’s guaranteed minimum income benefits (GMIBs) are reinsured with an unrelated party. GMIB reinsured benefits are subject to aggregate annual claim limits. Deductibles also apply on reinsurance of GMIB business issued since March 1, 2005. The Company discontinued offering the GMIB in 2009. Assumed and Ceded Premiums and Benefits Paid or Provided Assumed and ceded premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premium income and benefit expenses are reported net of reinsurance assumed and ceded. The effect of reinsurance on premiums and benefits was as follows (in millions): For the Years Ended December 31, 2023 2022 2021 Premiums Direct $ 328 $ 360 $ 407 Assumed 35 40 42 Ceded ( 216 ) ( 268 ) ( 301 ) Total premium $ 147 $ 132 $ 148 Benefits Direct $ 1,582 $ 1,718 $ 1,500 Assumed 802 868 880 Ceded ( 831 ) ( 921 ) ( 830 ) Change in reserves, net of reinsurance ( 588 ) ( 603 ) ( 625 ) Total benefits $ 965 $ 1,062 $ 925 Reinsurance Recoverables and Reinsured Market Risk Benefits Ceded reinsurance agreements are reported on a gross basis on the Company’s Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other assets or liabilities for amounts, such as premiums, owed to or due from reinsurers. 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 December 31, 2023 and 2022, the Company had ACL of $ 29 million and $ 15 million, respectively, on its reinsurance recoverables, which are reported net of 160 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance ACL on the 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 2023, 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. If the fair value of the collateral at the reporting date is less than the carrying value of the reinsurance recoverable, the Company recognizes an ACL on the difference between the fair value of the collateral at the reporting date and the carrying value of the reinsurance recoverable. Additions to or releases of the ACL are reported in Death, other policyholder benefits, and changes in reserves, net of deferrals in the Consolidated Income Statements. Reinsurance recoverable on market risk benefits is recognized at fair value with changes being 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. These reinsured MRBs may have direct MRB balances recorded as either assets or liabilities; however, because the unit of account for the reinsured MRB is the reinsurance contract, the ceded MRB is presented in total within reinsurance recoverable on market risk benefits. 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 MRBs that are reinsured with Athene. The reinsured MRBs are 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 considers the reinsurer’s credit risk. The attributed fee is locked-in at inception of the contract. Components of the Company’s reinsurance recoverable excluding MRBs were as follows (in millions): December 31, 2023 2022 Reserves: Life $ 5,370 $ 5,307 Accident and health 510 482 Annuity benefits (1) 18,873 22,470 Claims liability and other 669 787 Total $ 25,422 $ 29,046 (1) Other annuity benefits primarily attributable to fixed and fixed index annuities reinsured with Athene. Components of the Company’s reinsurance recoverable on market risk benefits were as follows (in millions): Years Ended December 31, 2023 2022 Variable annuity $ 90 $ 183 Other product lines 59 38 Total $ 149 $ 221 Reinsurance and Funds Withheld Payable Under Reinsurance Treaties Under the reinsurance agreement with Athene and the retro treaties with SRZ, the Company maintains ownership of the underlying investments instead of transferring them to the reinsurer and, as a result, records a funds withheld liability payable to the reinsurer. Investment returns earned on withheld assets are paid by the Company to the reinsurer, pursuant to the terms of the agreements. 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. 161 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance 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 The Company recognizes a liability for the embedded derivative related to the funds withheld under the reinsurance agreement with Athene within funds withheld payable under reinsurance treaties in the Consolidated Balance Sheets. The embedded derivative is measured at fair value with changes in fair value reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. At inception of the reinsurance agreement with Athene, the fair value of the withheld investments differed from their book value and, accordingly, while the investments are held, the amortization of this difference is reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. See Note 5 of Notes to Consolidated Financial Statements for more information on the embedded derivative. Funds withheld under reinsurance agreements with SRZ At execution of the retro treaties with SRZ, the Company elected the fair value option for the withheld assets, as well as the related funds withheld payable. Accordingly, the embedded derivative is not bifurcated or separately measured. The funds withheld payable is measured at fair value with changes in fair value reported in net gains (losses) on derivatives and investments. The fair value of the funds withheld payable is equal to the fair value of the assets held as collateral. 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 Consolidated Balance Sheets (in millions): December 31, 2023 2022 Assets Debt securities, available-for-sale $ 11,526 $ 13,622 Debt securities, at fair value under the fair value option 116 159 Equity securities 151 77 Mortgage loans 3,067 4,127 Mortgage loans, at fair value under the fair value option 481 582 Policy loans 3,471 3,435 Freestanding derivative instruments, net 15 78 Other invested assets 709 793 Cash and cash equivalents 543 260 Accrued investment income 146 166 Other assets and liabilities, net 1 ( 73 ) Total assets (1) $ 20,226 $ 23,226 Liabilities Funds held under reinsurance treaties (2) $ 19,952 $ 22,957 Total liabilities $ 19,952 $ 22,957 (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 $ 2,468 million and $ 3,158 million at December 31, 2023 and 2022, respectively. 162 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance The sources of income related to funds withheld under reinsurance treaties reported in net investment income in the Consolidated Income Statements were as follows (in millions): Years Ended December 31, 2023 2022 2021 Debt securities (1) $ 644 $ 680 $ 762 Equity securities ( 22 ) ( 34 ) 5 Mortgage loans (2) 231 231 179 Policy loans 321 312 314 Limited partnerships 52 149 35 Other investment income 21 1 — Total investment income on funds withheld assets 1,247 1,339 1,295 Other investment expenses on funds withheld assets (3) ( 73 ) ( 85 ) ( 107 ) Total net investment income on funds withheld reinsurance treaties $ 1,174 $ 1,254 $ 1,188 (1) Includes $ 5 million, $( 10 ) million, and $( 3 ) million for the years ended December 31, 2023, 2022 and 2021, respectively, related to the change in fair value for securities carried under the fair value option. (2) Includes $( 3 ) million, $( 7 ) million, and nil for the years ended December 31, 2023, 2022 and 2021, respectively, related to the change in fair value for mortgage loans carried under the fair value option. (3) Includes management fees. The gains and losses on funds withheld reinsurance treaties as a component of net gains (losses) on derivatives and investments in the Consolidated Income Statements were as follows (in millions): Years Ended December 31, 2023 2022 2021 Available-for-sale securities Realized gains on sale $ 26 $ 43 $ 536 Realized losses on sale ( 173 ) ( 54 ) ( 52 ) Credit loss expense ( 5 ) ( 26 ) ( 1 ) Credit loss expense on mortgage loans ( 32 ) 15 23 Other 12 ( 62 ) ( 29 ) Net gains (losses) on non-derivative investments ( 172 ) ( 84 ) 477 Net gains (losses) on derivative instruments ( 37 ) 93 58 Net gains (losses) on funds withheld payable under reinsurance treaties (1) ( 1,592 ) 2,177 ( 556 ) Total net gains (losses) on derivatives and investments $ ( 1,801 ) $ 2,186 $ ( 21 ) (1) Includes the Athene embedded derivative gain (loss) of $( 690 ) million, $ 3,278 million and $ 707 million for the years ended December 31, 2023, 2022 and 2021, respectively. 163 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable 9. Reserves for Future Policy Benefits and Claims Payable Reserves for Future Policy Benefits For non-participating traditional and limited-payment insurance contracts, the reserve for future policy benefits represents the present value of estimated future policy benefits to be paid to or on behalf of policyholders in future periods and certain related expenses less the present value of estimated future net premiums. Reserves for future policy benefits for non-participating traditional and limited-payment insurance contracts are measured using the net premium ratio ("NPR") measurement model. The NPR measurement model accrues for future policy benefits in proportion to the premium revenue recognized. The reserve for future policy benefits is derived from the Company's best estimate of future net premium and future benefits and expenses, which is based on best estimate assumptions including mortality, persistency, claims expense, and discount rate. On an annual basis, or as circumstances warrant, we conduct a comprehensive review of our current best estimate assumptions based on our experience, industry benchmarking, and other factors, as applicable. Expense assumptions are updated based on estimates of expected non-level costs, such as termination or settlement costs, and costs after the premium-paying period and exclude acquisition costs or any costs that are required to be charged to expenses as incurred. Updates to assumptions are applied on a retrospective basis, and the change in the reserve for future policy benefits resulting from updates to assumptions is reported separately on the Consolidated Income Statements within the (Gain) loss from updating future policy benefits cash flow assumptions, net. Each reporting period the reserve for future policy benefits is updated to reflect actual experience to date. The Company establishes cohorts, which are groupings used to measure reserves for future policy benefits. In determining cohorts, the Company considered both qualitative and quantitative factors, including the issue year, type of product, product features, and legal entity. The discount rate used to estimate reserves for future policy benefits is consistent with an upper-medium grade (low-credit risk) fixed-income corporate instrument yield, which has been interpreted to represent a single-A corporate instrument yield. This discount rate curve is determined by fitting a parametric function to yields to maturity and related times to maturity of market observable single-A rated corporate instruments. The discount rate used to recognize interest accretion on the reserves for future policy benefits is locked at the initial measurement of the cohort. 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 OCI. For limited-payment insurance contracts, premiums are paid over a period shorter than the period over which benefits are provided. Gross premiums received in excess of the net premium are deferred and recognized as a deferred profit liability ("DPL"). The DPL is included within the reserve for future policy benefits and profits are recognized in income as a component of benefit expenses on a constant relationship with the amount of expected future benefit payments. Interest is accreted on the balance of the DPL using the discount rate locked in at the initial measurement of the cohort. Measurement of the DPL uses best estimate assumptions for mortality. These assumptions are similarly subject to the annual review process discussed above. Additional Liabilities – Universal Life-type For universal life-type insurance contracts, a liability is recognized for the policyholder’s account value as discussed further in Note 10 of Notes to Consolidated Financial Statements. Where these contracts provide additional benefits beyond the account balance or base insurance coverage that are not market risk benefits or embedded derivatives, liabilities in addition to the policyholder’s account value are recognized. These additional liabilities for annuitization, death and other insurance benefits are reported within reserves for future policy benefits and claims payable. The methodology uses a benefit ratio defined as a constant percentage of the assessment base. This ratio is multiplied by current period assessments to determine the reserve accrual for the period. The assumptions used in the measurement of the additional liabilities for annuitization, death and other insurance benefits are based on best estimate assumptions including mortality, persistency, investment returns, and discount rates. These assumptions are similarly subject to the annual review process discussed above. 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 OCI. 164 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable See Note 10 - Other Contract Holder Funds of Notes to Consolidated Financial Statements for more information. Other Future Policy Benefits and Claims Payable In conjunction with a prior acquisition, the Company recorded a fair value adjustment at acquisition related to certain annuity and interest-sensitive liability blocks of business to reflect the cost of the interest guarantees within the in-force liabilities, based on the difference between the guaranteed interest rate and an assumed new money guaranteed interest rate at acquisition. This adjustment is included in other future policy benefits and claims payable as disclosed in the table below. This liability is remeasured at the end of each period, taking into account changes in the in-force block. Any resulting change in the liability is recorded as a Gain (loss) from updating future policy benefits cash flow assumptions, net through the Consolidated Income Statements. In addition, annuity and life claims liabilities in course of settlement are included in other future policy benefits and claims payable as disclosed in the table below. The following table summarizes the Company’s reserves for future policy benefits and claims payable balances (in millions): December 31, 2023 2022 Reserves for future policy benefits Payout Annuities $ 1,090 $ 1,042 Closed Block Life 3,994 4,161 Closed Block Annuity 4,215 4,434 Reserves for future policy benefits 9,299 9,637 Additional liabilities Closed Block Life 1,153 1,131 Other future policy benefits and claims payable 1,446 1,550 Reserves for future policy benefits and claims payable $ 11,898 $ 12,318 165 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable The following tables present the roll-forward of components of reserves for future policy benefits (in millions): Present Value of Expected Net Premiums Year Ended December 31, Year Ended December 31, 2023 2022 Payout Closed Block Closed Block Payout Closed Block Closed Block Annuities Life Annuity Annuities Life Annuity Balance, beginning of year $ — $ 1,287 $ — $ — $ 1,464 $ — Beginning of period cumulative effect of changes in discount rate assumptions — 161 — — ( 157 ) — Beginning balance at original discount rate — 1,448 — — 1,307 — Effect of changes in cash flow assumptions — 22 — — 242 — Effect of actual variances from expected experience — ( 95 ) — — 1 — Balance adjusted for variances from expectation — 1,375 — — 1,550 — Issuances — 6 — — 6 — Interest accrual — 38 — — 39 — Net premiums collected — ( 166 ) — — ( 147 ) — Ending balance at original discount rate — 1,253 — — 1,448 — End of period cumulative effect of changes in discount rate assumptions — ( 113 ) — — ( 161 ) — Balance, end of year $ — $ 1,140 $ — $ — $ 1,287 $ — 166 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable Present Value of Expected Future Policy Benefits Year Ended December 31, Year Ended December 31, 2023 2022 Payout Closed Block Closed Block Payout Closed Block Closed Block Annuities Life Annuity Annuities Life Annuity Balance, beginning of year $ 1,042 $ 5,448 $ 4,434 $ 1,249 $ 6,913 $ 5,739 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 December 31, 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 Effect of changes in cash flow assumptions — 65 ( 3 ) 4 331 ( 15 ) Effect of actual variances from expected experience ( 16 ) ( 95 ) ( 8 ) ( 37 ) 38 ( 34 ) Balance adjusted for variances from expectation 1,158 6,376 4,698 1,132 6,933 5,001 Issuances 117 15 1 126 14 4 Interest accrual 43 195 194 40 209 210 Benefits payments ( 129 ) ( 685 ) ( 493 ) ( 124 ) ( 750 ) ( 506 ) Ending balance of original discount rate (including DPL of $ 42 , $ 0 and $ 626 in December 31, 2023, and, $ 40 , $ 0 and $ 671 in December 31, 2022 for payout annuities, closed block life and closed block annuity, respectively) 1,189 5,901 4,400 1,174 6,406 4,709 End of period cumulative effect of changes in discount rate assumptions ( 99 ) ( 767 ) ( 185 ) ( 132 ) ( 958 ) ( 275 ) Balance, end of year $ 1,090 $ 5,134 $ 4,215 $ 1,042 $ 5,448 $ 4,434 Reserves for future policy benefits 1,090 3,994 4,215 1,042 4,161 4,434 Less: Reinsurance recoverable 94 2,200 4 71 2,263 2 Reserves for future policy benefits, after reinsurance recoverable $ 996 $ 1,794 $ 4,211 $ 971 $ 1,898 $ 4,432 The following table presents the weighted average duration of the reserves for future policy benefits. The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount: Payout Closed Block Closed Block Annuities Life Annuity December 31, 2023 Weighted average duration (years) 7.0 7.2 7.0 December 31, 2022 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 during 2023. Assumptions were unlocked and the impacts of the unlocking on future policy benefits for mortality and persistency were not significant during 2023. The discount rate assumption methodology was updated for additional liabilities – universal life-type insurance contracts, leading to an increase in the discount rate. The discount rate assumption related to the single-A corporate instrument yield was updated based on current market data. Discount rates decreased in 2023 compared to 2022, based on the duration of the liability. This resulted in an increase in the liability. Refer to the roll-forward above for further details. 167 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable The following table presents the amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for future policy benefits for non-participating traditional and limited-payment insurance contracts (in millions). 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: December 31, 2023 2022 Undiscounted Discounted Undiscounted Discounted Payout Annuities Expected future benefit payments $ 1,579 $ 1,043 $ 1,542 $ 999 Expected future gross premiums — — — — Closed Block Life Expected future benefit payments 7,729 5,251 8,751 5,578 Expected future gross premiums 5,056 3,119 5,976 3,489 Closed Block Annuity Expected future benefit payments 5,421 3,565 5,834 3,729 Expected future gross premiums $ — $ — $ — $ — The following table presents the amount of revenue and interest related to non-participating traditional and limited-pay insurance contracts recognized in the Consolidated Income Statements (in millions): Gross Premiums Interest Expense Years Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Payout Annuities $ 22 $ 10 $ 43 $ 40 Closed Block Life 340 390 157 170 Closed Block Annuity 1 — 194 210 Total $ 363 $ 400 $ 394 $ 420 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: December 31, 2023 2022 Payout Annuities Interest accretion rate 3.86 % 3.71 % Current discount rate 5.12 % 5.40 % Closed Block Life Interest accretion rate 3.07 % 3.01 % Current discount rate 5.06 % 5.34 % Closed Block Annuity Interest accretion rate 4.40 % 4.40 % Current discount rate 5.12 % 5.41 % 168 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable The following table presents a roll-forward of Closed Block Life additional liabilities for annuitization, death and other insurance benefits (in millions): Years Ended December 31, 2023 2022 Balance, beginning of year $ 1,131 $ 1,173 Beginning of period cumulative effect of changes in shadow adjustments 41 ( 14 ) Beginning balance excluding shadow 1,172 1,159 Effect of changes in cash flow assumptions 44 6 Effect of actual variances from expected experience 46 58 Interest accrual 56 56 Net assessments collected ( 148 ) ( 107 ) Ending balance excluding shadow 1,170 1,172 End of period cumulative effect of changes in shadow adjustments ( 17 ) ( 41 ) Balance, end of year $ 1,153 $ 1,131 The following table presents the weighted average duration of Closed Block Life additional liabilities for annuitization, death and other insurance benefits. The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount: December 31, 2023 2022 Weighted average duration (years) 9.7 8.1 The significant assumptions used in the additional liability for annuitization, death and other insurance benefits calculation consist 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 calculations and updated for a decrease in lapse rates and an update to the methodology in determining the long-term earned-rate. The following table presents assessments and interest expense of Closed Block Life additional liabilities for annuitization, death and other insurance benefits recognized in the Consolidated Income Statements (in millions): Assessments Interest Expense Years Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Additional liability for annuitization, death and other insurance benefits $ ( 148 ) $ ( 107 ) $ 56 $ 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: December 31, 2023 2022 Weighted average current discount rate 4.97 % 4.96 % 10. Other Contract Holder Funds 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, 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. 169 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds Certain of our universal life type contracts contain features that are not classified as market risk benefits or embedded derivatives but provide additional benefits beyond the account balance or base insurance coverage for which a liability in addition to the account balance is necessary. These additional liabilities for death or other insurance benefits are reported as a component of reserves for future policy benefits and claims payable in the Consolidated Balance Sheets. See Note 9 - Reserves for Future Policy Benefits and Claims Payable of the Notes to the Consolidated Financial Statements for more information regarding these additional liabilities. Certain contracts without significant mortality or morbidity risk and certain annuities that lack insurance risk are treated as investment contracts. 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. For annuity contracts that are classified as investment contracts, the liability is the account balance as of the reporting date, reported within the other contract holder funds. For the variable annuity products, only the allocations to fixed fund options are reported in other contract holder funds. For our fixed index annuities and registered index-linked annuities, the equity-linked option issued by the Company is accounted for as an embedded derivative measured at fair value and reported as a component of other contract holder funds on the Consolidated Balance Sheets with changes in fair value recorded in net income within net gains (losses) on derivatives and investments. The fair value is determined using an option-budget method with capital market inputs of market index returns and discount rates as well as actuarial assumptions including lapse, mortality and withdrawal rates. Favorable equity market movements cause increases in future contract holder benefits, resulting in an increase in the fair value of the embedded derivative liability (and vice versa). The Company also establishes a host contract reserve to support the underlying guaranteed account value growth. This host contract liability is included as a component of other contract holder funds on the Consolidated Balance Sheets. 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 MRBs. These market risk benefits are a component of the market risk benefits line items in the Consolidated Balance Sheet. See Note 12 - Market Risk Benefits of Notes to Consolidated Financial Statements for more information regarding market risk benefits. The Company’s institutional products business is comprised of the guaranteed investment contracts, medium-term funding agreement-backed notes and funding agreements (including agreements issued in conjunction with the Company’s participation in the U.S. Federal Home Loan Bank program) described below. The Company has established a $ 27 billion aggregate Global Medium-Term Note ("MTN") program. 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 December 31, 2023 and 2022 totaled $ 5.8 billion and $ 5.9 billion, respectively. Those Medium-Term Note instruments issued in a foreign currency have been hedged for changes in exchange rates using cross-currency swaps. The unrealized foreign currency gains and losses on those Medium-Term Note instruments are included in the carrying value of the trust instruments supported by funding agreements. Trust instrument liabilities are adjusted to reflect the effects of foreign currency translation gains and losses using exchange rates as of the reporting date. Foreign currency translation gains and losses are included in net gains (losses) on derivatives and investments. Jackson is a member of the FHLBI primarily for the purpose of participating in the bank’s mortgage-collateralized loan advance program with long-term funding facilities. Advances are in the form of funding agreements, short-term and long-term borrowings issued to FHLBI. At December 31, 2023 and 2022, the Company held $ 108 million and $ 146 million of FHLBI capital stock, respectively, supporting $ 2.3 billion and $ 2.1 billion in funding agreements and short-term and long-term borrowings at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, the funding agreements and short-term and long-term borrowings were collateralized by mortgage-related securities and commercial mortgage loans with a carrying value of $ 3.5 billion and $ 3.1 billion, respectively. 170 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds The following table presents the liabilities for other contract holder funds (in millions): December 31, 2023 2022 Payout Annuity $ 860 $ 837 Variable Annuity 8,396 10,259 Fixed Annuity 9,736 11,696 Fixed Indexed Annuities 10,243 11,787 RILA 5,219 1,875 Closed Block Life 11,039 11,215 Closed Block Annuity 1,252 1,319 Institutional Products 8,406 9,019 Other Product Lines 168 183 Total other contract holder funds $ 55,319 $ 58,190 The following table presents a roll-forward of other contract holder funds, gross of reinsurance (in millions): Fixed Closed Closed Payout Variable Fixed Indexed Block Block Annuity Annuity Annuity Annuities RILA Life Annuity Total Balance as of January 1, 2023 $ 837 $ 10,259 $ 11,696 $ 11,787 $ 1,875 $ 11,215 $ 1,319 $ 48,988 Deposits 202 995 234 211 2,890 307 4 4,843 Surrenders, withdrawals and benefits ( 231 ) ( 1,788 ) ( 2,406 ) ( 1,954 ) ( 70 ) ( 738 ) ( 115 ) ( 7,302 ) Net transfers from (to) separate accounts — ( 1,256 ) — — — — — ( 1,256 ) Investment performance / change in value of equity option — — — 51 509 — — 560 Interest credited 25 273 342 210 14 730 44 1,638 Policy charges and other 27 ( 87 ) ( 130 ) ( 62 ) 1 ( 475 ) — ( 726 ) Balance as of December 31, 2023 $ 860 $ 8,396 $ 9,736 $ 10,243 $ 5,219 $ 11,039 $ 1,252 $ 46,745 Fixed Closed Closed Payout Variable Fixed Indexed Block Block Annuity Annuity Annuity Annuities RILA Life Annuity Total Balance as of January 1, 2022 $ 831 $ 9,456 $ 13,185 $ 13,161 $ 110 $ 11,570 $ 1,394 $ 49,707 Deposits 213 1,350 276 126 1,811 320 9 4,105 Surrenders, withdrawals and benefits ( 230 ) ( 1,492 ) ( 2,017 ) ( 1,414 ) ( 8 ) ( 766 ) ( 118 ) ( 6,045 ) Net transfers from (to) separate accounts — 870 — — — — — 870 Investment performance / change in value of equity option — — — ( 302 ) ( 37 ) — — ( 339 ) Interest credited 20 168 389 238 2 659 48 1,524 Policy charges and other 3 ( 93 ) ( 137 ) ( 22 ) ( 3 ) ( 568 ) ( 14 ) ( 834 ) Balance as of December 31, 2022 $ 837 $ 10,259 $ 11,696 $ 11,787 $ 1,875 $ 11,215 $ 1,319 $ 48,988 171 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds The following table presents weighted average crediting rate, net amount at risk, and cash surrender value of contract holder account balances (dollars in millions): Fixed Closed Closed Payout Variable Fixed Indexed Block Block Annuity Annuity Annuity Annuities RILA Life Annuity December 31, 2023 Weighted-average crediting rate (1) 2.91 % 3.25 % 3.51 % 2.05 % 0.27 % 6.61 % 3.51 % Net amount at risk (2) $ — $ — $ — $ — $ — $ 16,619 $ — Cash surrender value (3) $ — $ 8,306 $ 9,639 $ 9,999 $ 4,896 $ 10,970 $ 1,252 December 31, 2022 Weighted-average crediting rate (1) 2.39 % 1.64 % 3.33 % 2.02 % 0.11 % 5.88 % 3.64 % Net amount at risk (2) $ — $ — $ — $ — $ — $ 17,427 $ — Cash surrender value (3) $ — $ 10,101 $ 11,573 $ 11,409 $ 1,728 $ 7,096 $ 1,319 (1) Weighted average crediting rate is the average crediting rate weighted by contract holder account balances invested in fixed account funds. (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 Notes to Consolidated Financial Statements. (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 December 31, 2023 and 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, respectively. At December 31, 2023 and 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. 172 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds 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): December 31, 2023 At Guaranteed 1 Basis Point-50 51 Basis Points-150 Greater Than 150 Range of Guaranteed Minimum Crediting Rate Minimum Basis Points Above Basis Points Above Basis Points Above Total Variable Annuities 0.00 %- 1.50 % $ — $ 12 $ 1 $ — $ 13 1.51 %- 2.50 % 173 — — — 173 Greater than 2.50 % 8,186 — — 24 8,210 Total $ 8,359 $ 12 $ 1 $ 24 $ 8,396 Fixed Annuities 0.00 %- 1.50 % $ 17 $ 55 $ 70 $ 1 $ 143 1.51 %- 2.50 % 29 1 1 — 31 Greater than 2.50 % 721 51 1 271 1,044 Total $ 767 $ 107 $ 72 $ 272 $ 1,218 Fixed Indexed Annuities 0.00 %- 1.50 % $ 4 $ 9 $ 3 $ 43 $ 59 1.51 %- 2.50 % — — — — — Greater than 2.50 % 21 — 62 10 93 Total $ 25 $ 9 $ 65 $ 53 $ 152 RILA 0.00 %- 1.50 % $ 7 $ — $ 4 $ 1 $ 12 1.51 %- 2.50 % $ — $ — $ — $ — — Greater than 2.50 % 39 12 — — 51 Total $ 46 $ 12 $ 4 $ 1 $ 63 Closed Block Life 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — — — — Greater than 2.50 % 4,425 1,830 603 16 6,874 Total $ 4,425 $ 1,830 $ 603 $ 16 $ 6,874 Closed Block Annuity 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — 1 12 13 Greater than 2.50 % 896 169 23 — 1,088 Total $ 896 $ 169 $ 24 $ 12 $ 1,101 173 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds December 31, 2022 At Guaranteed 1 Basis Point-50 51 Basis Points-150 Greater Than 150 Range of Guaranteed Minimum Crediting Rate Minimum Basis Points Above Basis Points Above Basis Points Above Total Variable Annuities 0.00 %- 1.50 % $ 6,679 $ 32 $ 2 $ 75 $ 6,788 1.51 %- 2.50 % 200 — — — 200 Greater than 2.50 % 3,271 — — — 3,271 Total $ 10,150 $ 32 $ 2 $ 75 $ 10,259 Fixed Annuities 0.00 %- 1.50 % $ 19 $ 76 $ 95 $ — $ 190 1.51 %- 2.50 % 35 2 1 — 38 Greater than 2.50 % 576 64 351 — 991 Total $ 630 $ 142 $ 447 $ — $ 1,219 Fixed Indexed Annuities 0.00 %- 1.50 % $ 6 $ 17 $ 5 $ 40 $ 68 1.51 %- 2.50 % — — — — — Greater than 2.50 % 24 — — — 24 Total $ 30 $ 17 $ 5 $ 40 $ 92 RILA 0.00 %- 1.50 % $ 10 $ — $ 7 $ — $ 17 1.51 %- 2.50 % — — — — — Greater than 2.50 % — — — — — Total $ 10 $ — $ 7 $ — $ 17 Closed Block Life 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — — — — Greater than 2.50 % 4,566 1,868 619 14 7,067 Total $ 4,566 $ 1,868 $ 619 $ 14 $ 7,067 Closed Block Annuity 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — 1 10 11 Greater than 2.50 % 980 159 21 — 1,160 Total $ 980 $ 159 $ 22 $ 10 $ 1,171 174 Part II | Item 8. Notes to Consolidated Financial Statements | 11. Separate Account Assets and Liabilities 11. Separate Account Assets and Liabilities The Company issues variable contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder (traditional variable annuities). The Company also issues variable annuity and life contracts through separate accounts where the Company contractually guarantees to the contract holder (variable contracts with guarantees) either a) return of no less than total deposits made to the account adjusted for any partial withdrawals, b) total deposits made to the account adjusted for any partial withdrawals plus a minimum return, or c) the highest account value on a specified anniversary date adjusted for any withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death (guaranteed minimum death benefits, or "GMDB"), at annuitization ("GMIB"), upon the depletion of funds ("GMWB") or at the end of a specified period ("GMAB"). These guarantees are classified as market risk benefits. See Note 12 - Market Risk Benefits of Notes to Consolidated Financial Statements for more information regarding market risk benefits. 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 December 31, 2023 and 2022, the assets and liabilities associated with variable life and annuity contracts were $ 220 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. Separate account net investment income, net investment realized and unrealized gains and losses, and the related liability changes are offset within the same line item in the Consolidated Income Statements. Amounts assessed against the contract holders for mortality, variable annuity benefit guarantees, administrative, and other services are reported in revenue as fee income. 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 $ 198 million and $ 285 million at December 31, 2023 and 2022, respectively. The Company receives administrative fees for managing the funds. These fees are recorded as earned and included in fee income in the Consolidated Income Statements. The following table presents the roll-forward of the separate account balance for variable annuities (in millions): Years Ended December 31, 2023 2022 Balance as of beginning of year $ 195,550 $ 248,469 Deposits 8,545 12,288 Surrenders, withdrawals and benefits ( 17,029 ) ( 14,554 ) Net transfer from (to) general account 1,256 ( 870 ) Investment performance 33,807 ( 47,150 ) Policy charges and other ( 2,748 ) ( 2,633 ) Balance as of end of year, gross $ 219,381 $ 195,550 Cash surrender value (1) $ 214,395 $ 190,243 (1) Cash surrender value represents the amount of the contract holder’s account balances distributable at the balance sheet date less applicable surrender charges. The following table presents the reconciliation of the separate account balance in the Consolidated Balance Sheets (in millions): December 31, 2023 2022 Variable Annuities $ 219,381 $ 195,550 Other Product Lines 275 356 Total $ 219,656 $ 195,906 175 Part II | Item 8. Notes to Consolidated Financial Statements | 11. Separate Account Assets and Liabilities The following table presents aggregate fair value of assets, by major investment asset category, supporting separate accounts (in millions): December 31, 2023 2022 Variable Annuities By Fund Type Equity $ 154,020 $ 132,547 Bond 19,801 19,155 Balanced 42,831 40,797 Money Market 2,729 3,051 Total Variable Annuities 219,381 195,550 Other Product Lines 275 356 Total Separate Accounts $ 219,656 $ 195,906 12. Market Risk Benefits Contracts or contract features that provide protection to the contract holder from capital market risk and expose the Company to other-than-nominal capital market risk are classified as MRBs. All long-duration insurance contracts and certain investment contracts are subject to MRB evaluation. MRBs are measured at fair value at the contract level and can be in either an asset or liability position. For contracts that contain multiple MRB features, the MRBs are valued together as a single compound MRB. Market risk benefit assets and Market risk benefit liabilities are reported separately on the Consolidated Balance Sheets. Changes in fair value are reported in Net (gains) losses on market risk benefits on the Consolidated Income Statements. However, the change in fair value related to our own non-performance risk is reported as a component of other comprehensive income in Change in non-performance risk on market risk benefits on the Consolidated Statements of Comprehensive Income (Loss). A description of the items effecting the change in fair value by category is as follows: • Changes in interest rates — movement in risk free rates (impacts both assumed future separate account returns and discounting of cash flows) • Fund performance — separate account returns gross of fees • Change in equity index volatility — movement in implied volatility • Expected policyholder behavior — policyholder behavior as assumed in reserving • Actual policyholder behavior different than expected — difference between actual behavior during the period versus assumed behavior • Time — effect of passage of time including reduction to separate account balances from fees, the change in proximity of future cash flows, and impacts to policy features such as bonus credits • Change in assumptions — changes in assumptions resulting from our periodic review • Change in non-performance risk — changes in Jackson’s non-performance risk See Note 6 - Fair Value Measurements of Notes to Consolidated Financial Statements for more information. Additionally, when an annuitization occurs (for annuitization benefits) or upon extinguishment of the account balance (for withdrawal benefits), the balance related to the MRB is derecognized and the amount deducted (after derecognition of any related amount included in accumulated other comprehensive income) is used in the calculation of the liability for future policy benefits for the resulting payout annuity. Variable Annuities Variable annuity contracts issued by the Company offer various guaranteed minimum death, withdrawal, income and accumulation benefits. 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 the guaranteed minimum accumulation benefits (“GMAB”) in 2011. 176 Part II | Item 8. Notes to Consolidated Financial Statements | 12. Market Risk Benefits Variable annuity guaranteed benefit features classified as MRBs, which have explicit fees, are measured using the attributed fee method. Under the attributed fee method, fair value is measured as the difference between the present value of projected future liabilities and the present value of projected attributed fees. At the inception of the contract, the Company attributes to the MRB a portion of total fees expected to be assessed against the contract holder to offset the projected claims over the lifetime of the contract. The attributed fee is expressed as a percentage of total projected future fees at inception of the contract. This percentage of total projected fees is considered a fixed term of the MRB feature and is held static over the life of the contract. This percentage may not exceed 100% of the total projected contract fees as of contract inception. As the Company may issue contracts that have projected future liabilities greater than the projected future guaranteed benefit fees at issue, the Company may also attribute mortality and expense charges when performing this calculation. In subsequent valuations, both the present value of future projected liabilities and the present value of projected attributed fees are remeasured based on current market conditions and policyholder behavior assumptions. Fixed Index Annuities The longevity riders issued on fixed index annuities are classified as MRBs and measured at fair value. Similar to the variable annuity guaranteed benefits features, these contracts have explicit fees and are measured using the attributed fee method. The Company attributes a percentage of total projected future fees expected to be assessed against the policyholder to offset the projected future claims over the lifetime of the contract. If the fees attributed are insufficient to offset the claims at issue, the shortfall is borrowed from the host contract rather than recognizing a loss at inception. RILA RILA guaranteed benefit features are classified as MRBs and measured at fair value. Unlike variable or fixed index annuities, RILA products do not have explicit fees and are measured using an option-based method. The fair value measurement represents the present value of future claims payable by the MRB feature. At inception, the value of the MRB is deducted from the value of the contract resulting in no gain or loss. The following table presents the reconciliation of the market risk benefits balance in the Consolidated Balance Sheets (in millions): December 31, 2023 December 31, 2022 Variable Other Variable Other Annuities Product Lines Total Annuities Product Lines Total Market risk benefit - (assets) $ ( 6,732 ) $ ( 5 ) $ ( 6,737 ) $ ( 4,856 ) $ ( 9 ) $ ( 4,865 ) Market risk benefit - liabilities 4,732 53 4,785 5,623 39 5,662 Market risk benefit - net (asset) liability $ ( 2,000 ) $ 48 $ ( 1,952 ) $ 767 $ 30 $ 797 177 Part II | Item 8. Notes to Consolidated Financial Statements | 12. Market Risk Benefits The following table presents the roll-forward of the net MRB (assets) liabilities for variable annuities (dollars in millions): Years Ended December 31, 2023 2022 Net MRB balance, beginning of year $ 767 $ 6,281 Beginning of year cumulative effect of changes in non-performance risk 2,185 326 Net MRB balance, beginning of year, before effect of changes in non-performance risk 2,952 6,607 Effect of changes in interest rates ( 733 ) ( 14,137 ) Effect of fund performance ( 5,401 ) 6,432 Effect of changes in equity index volatility ( 1,107 ) 1,576 Effect of expected policyholder behavior 612 532 Effect of actual policyholder behavior different from expected 483 ( 230 ) Effect of time 1,829 1,707 Effect of changes in assumptions 337 465 Net MRB balance, end of year, before effect of changes in non-performance risk ( 1,028 ) 2,952 End of year cumulative effect of changes in non-performance risk ( 972 ) ( 2,185 ) Net MRB balance, end of year, gross ( 2,000 ) 767 Reinsurance recoverable on market risk benefits at fair value, end of year ( 90 ) ( 183 ) Net MRB balance, end of year, net of reinsurance $ ( 2,090 ) $ 584 Weighted average attained age (years) (1) 69 69 Net amount at risk (2) $ 8,225 $ 15,592 (1) Weighted-average attained age is defined as the average age of policyholders weighted by account value. (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. Starting 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. The significant assumptions used in the MRB fair value calculations are discussed in Note 6 of Notes to 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 2023, the following notable changes were made to the inputs to the fair value estimates of the MRB calculations: • Assumed mortality rates were increased as a result of trends in actual mortality experience, which resulted in a decrease in the MRB reserve. • Assumed lapse rates were reduced to capture recent trends in actual lapse experience, which resulted in an increase in the MRB reserve. • Assumed GMWB utilization rates were increased to capture recent trends in actual experience, which resulted in an increase in the MRB reserve. Assumed GMIB utilization rates were reduced to capture recent trends in actual experience, which resulted in a decrease in the MRB reserve. • 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. 178 Part II | Item 8. Notes to Consolidated Financial Statements | 12. Market Risk Benefits • The non-performance risk adjustment decreased as a result of decreasing credit spreads, which resulted in an increase 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. • 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 a decrease in the MRB reserve. During 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. 179 Part II | Item 8. Notes to Consolidated Financial Statements | 13. Long-Term Debt 13. Long-Term Debt Liabilities for the Company’s debt are primarily carried at an amount equal to the principal balance net of any unamortized original issuance discount or premium. Original issuance discount or premium and any debt issue costs, if applicable, are recognized as a component of interest expense over the period the debt is expected to be outstanding. The aggregate carrying value of long-term debt was as follows (in millions): December 31, 2023 2022 Long-Term Debt Senior Notes due 2023 $ — $ 598 Senior Notes due 2027 398 397 Senior Notes due 2031 495 493 Senior Notes due 2032 347 347 Senior Notes due 2051 490 488 Surplus notes 250 250 FHLBI bank loans 57 62 Total long-term debt $ 2,037 $ 2,635 The following table presents the contractual maturities of the Company's long-term debt as of December 31, 2023 (in millions): Calendar Year 2024 2025 2026 2027 2028 and thereafter Total Long-term debt $ — $ — $ — $ 648 $ 1,389 $ 2,037 Senior Notes 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. Revolving Credit Facility On February 24, 2023, the Company replaced the 2021 Revolving Credit Facility that was due to expire in February 2024 and entered into a revolving credit facility (the "2023 Revolving Credit Facility") with a syndicate of banks and Bank of America, N.A., as Administrative Agent. The 2023 Revolving Credit Facility provides for borrowings for working capital and other general corporate purposes under aggregate commitments of $ 1.0 billion, with a sub-limit of $ 500 million available for letters of credit. The 2023 Revolving Credit Facility further provides for the ability to request, subject to customary terms and conditions, an increase in commitments thereunder by up to an additional $ 500 million. The credit agreement for the 2023 Revolving Credit Facility contains financial maintenance covenants, including a minimum adjusted consolidated net worth test of no less than 70 % of our adjusted consolidated net worth as of September 30, 2022 (plus (to the extent positive) or minus (to the extent negative) 70 % of the impact on such adjusted consolidated net worth resulting from the application of a one-time transition adjustment for the LDTI accounting change for insurance contracts, and plus 50 % of the aggregate amount of any increase in adjusted consolidated net worth resulting from equity issuances by the Company and its consolidated subsidiaries after September 30, 2022), and a maximum consolidated indebtedness to total capitalization ratio test not to exceed 35 %. Commitments under the 2023 Revolving Credit Facility terminate on February 24, 2028. 180 Part II | Item 8. Notes to Consolidated Financial Statements | 13. Long-Term Debt Surplus Notes Under Michigan insurance law, for statutory reporting purposes, the surplus notes are not part of the legal liabilities of the Company and are considered surplus funds. Payments of interest or principal may only be made with the prior approval of the Michigan Director of Insurance and only out of surplus earnings which the director determines to be available for such payments under Michigan insurance law. On March 15, 1997, the Company, through its subsidiary, Jackson, issued 8.2 % surplus notes in the principal amount of $ 250 million due March 15, 2027. These surplus notes are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims and may not be redeemed at the option of the Company or any holder prior to maturity. Interest is payable semi-annually on March 15th and September 15th of each year. Interest expense on the notes was $ 20 million, $ 20 million, and $ 20 million for the years ended December 31, 2023, 2022 and 2021, respectively. FHLB Loans The Company received loans of $ 50 million from the FHLBI under its community investment program in both 2015 and 2014, which amortize on a straight-line basis over the loan term. The weighted average interest rate on these loans was 5.1 % and 1.7 % for the years ended December 31, 2023 and 2022, respectively. The outstanding balance on these loans was $ 57 million and $ 62 million at December 31, 2023 and 2022, respectively. See Note 10 - Other Contract Holder Funds of Notes to Consolidated Financial Statements for the carrying value of total collateralization of our FHLB obligations . 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. 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 $ 250 million and nil were outstanding at December 31, 2023 and 2022, respectively, and were recorded in other liabilities. Interest expense on such advances was $ 7 million, nil , and $ 6 million for the years ended December 31, 2023, 2022 and 2021, respectively. See Note 10 - Other Contract Holder Funds of Notes to Consolidated Financial Statements for the carrying value of total collateralization of our FHLB obligations . 15. Income Taxes U.S. Tax Law Changes On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA includes a new Federal corporate alternative minimum tax (“CAMT”), effective in 2023, that is based on 15% of an applicable corporation’s adjusted financial statement income (“AFSI”). A corporation is subject to the CAMT if its average pre-tax AFSI over three prior years (starting with 2020-2022) is greater than $1 billion (an “applicable corporation”). Upon becoming an applicable corporation, an entity will remain so for all future years, except under limited circumstances. The corporation’s CAMT liability is payable to the extent the CAMT liability exceeds regular corporate income tax. However, any CAMT paid would be indefinitely available as a credit carryover that could reduce future regular corporate income tax in excess of CAMT. The Company is an applicable corporation starting in 2023. That determination is based on interpretations and assumptions we have made regarding the CAMT provisions of the IRA, which may change once further regulatory guidance is issued. As of December 31, 2023, the Company has recorded an estimate of $ 263 million for the 181 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes provision of CAMT based on the Company’s interpretation of available guidance with an offsetting increase to the deferred tax asset for the credit carryover resulting in no impact to total tax expense. The U.S. Department of the Treasury is expected to issue additional regulatory guidance in 2024 that may materially change the estimated provision of the CAMT. Effective Tax Rate The components of the provision for federal, state and local income taxes were as follows (in millions): Years Ended December 31, 2023 2022 2021 Current tax expense (benefit) Federal $ 213 $ ( 43 ) $ ( 71 ) State and local ( 2 ) 1 ( 2 ) Total current tax expense (benefit) 211 ( 42 ) ( 73 ) Deferred tax expense (benefit) Federal ( 205 ) 1,489 715 State and local ( 2 ) 58 24 Total deferred tax expense (benefit) ( 207 ) 1,547 739 Total income taxes $ 4 $ 1,505 $ 666 The federal income tax provisions differ from the amounts determined by multiplying pretax income attributable to the Company by the statutory federal income tax rate of 21% as follows (in millions): Years Ended December 31, 2023 2022 2021 Income taxes at statutory rate $ 197 $ 1,615 $ 857 State income taxes ( 1 ) 47 17 Dividends received deduction ( 133 ) ( 142 ) ( 146 ) Valuation allowance ( 7 ) 2 — Foreign and other tax credits (1) ( 48 ) ( 24 ) ( 46 ) Other (2) ( 4 ) 7 ( 16 ) Income tax (benefit) expense $ 4 $ 1,505 $ 666 Effective tax rate 0.5 % 19.6 % 16.3 % (1) For the years ended December 31, 2023, 2022 and 2021, this primarily represents the benefit from foreign tax credits generated by the fund investments of the variable life and annuity contracts. (2) Aggregation of insignificant reconciling items that are less than 5% of the computed income tax expense (benefit). The dividends received deduction (“DRD”) reduces the amount of income subject to tax. The DRD for the current period was estimated using information from 2022 and estimates of current year investments results. The actual current year DRD can vary based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD. Income Taxes Paid Income taxes paid (refunded) were $( 21 ) million, $( 5 ) million, and $( 403 ) million in 2023, 2022 and 2021, respectively. The income taxes refunded in 2021 include $( 314 ) million of taxes and $( 24 ) million of net interest related to the IRS audit that closed during 2021 and $( 73 ) million of refunds from the overpayment of 2020 taxes in 2021. 182 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes Deferred Taxes and Assessment of Valuation Allowance The tax effects of significant temporary differences that gave rise to deferred tax assets and liabilities were as follows (in millions): December 31, 2023 2022 Gross deferred tax asset Difference between financial reporting and the tax basis of: Policy reserves and other insurance items $ 1,052 $ 1,645 Employee benefits 140 165 Derivative investments 870 789 Tax Credits Carryforward (1) 374 51 Net unrealized losses 952 1,364 Net operating loss carryforward 952 587 Other (1) 34 24 Total gross deferred tax asset 4,374 4,625 Valuation allowance ( 689 ) ( 910 ) Gross deferred tax asset, net of valuation allowance $ 3,685 $ 3,715 Gross deferred tax liability Difference between financial reporting and the tax basis of: Deferred acquisition costs and sales inducements $ ( 2,465 ) $ ( 2,586 ) Other investment items ( 561 ) ( 781 ) Other ( 19 ) ( 28 ) Total gross deferred tax liability ( 3,045 ) ( 3,395 ) Net deferred tax asset $ 640 $ 320 (1) For the year ended December 31, 2022, Tax Credits Carryfoward were reclassed from Other Gross deferred tax asset for comparability to 2023. Deferred income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. Such temporary differences are principally related to the effects of recording certain invested assets at market value, the deferral of acquisition costs and sales inducements and the provisions for future policy benefits and expenses. Deferred tax assets and liabilities are measured using the tax rates expected to be in effect when such benefits are realized. In 2016, the Company reached an agreement with the IRS regarding the taxation of hedging activities. This agreement requires the current taxation of all unrealized gains and losses on hedge-related investments, but then defers two-thirds of the amount ratably over the following two years. Accordingly, there is an acceleration of taxes incurred currently and a related offset to the taxes being deferred. The Company is required to evaluate the recoverability of its deferred tax assets and establish a valuation allowance, if necessary, to reduce its deferred tax asset to an amount that is more likely than not to be realizable. Considerable judgment and the use of estimates are required when determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. When evaluating the need for a valuation allowance, the Company considers many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused. The Company has adopted an accounting policy to analyze the ability to recover the CAMT credit carryover deferred tax asset separately from the deferred tax assets generated under the regular tax system. 183 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes The Company utilized a three-year rolling calculation of actual comprehensive income before taxes adjusted for permanent items to measure the cumulative losses in recent years. In 2020, the Company entered into a funds withheld coinsurance agreement with Athene. The cumulative comprehensive income includes items that are not indicative of the Company’s ability to generate future taxable income. As such, an adjustment was made to exclude the change in AOCI not attributable to the funds withheld coinsurance agreement with Athene. The change in AOCI attributable to these assets is excluded because our invested assets are generally invested to closely match the duration of our liabilities, which are longer duration in nature, and therefore the Company believes that the period-to-period fair market value fluctuations in AOCI are inconsistent when analyzing trends in our business. The changes in AOCI within the funds withheld account related to the Athene Reinsurance Transaction are not excluded because they offset the related earnings from the Athene Reinsurance Transaction included in pre-tax income and thus appropriately results in removing the impact from the Athene Reinsurance Transaction from the cumulative income test which economically should be minimal over the life of the reinsured business. Based on these factors, it is reasonable for the Company to rely on the estimated projection of future income as evidence in assessing the sources of taxable income available to realize the benefit of deferred tax assets. The Company evaluated each component of the deferred tax asset and assessed the effects of limitations and/or interpretations on the value of such components to be fully recognized in the future. The Company also evaluated the likelihood of sufficient taxable income in the future to offset the available deferred tax assets based on evidence considered to be objective and verifiable. Based on the analysis at December 31, 2023 and 2022, the Company concluded that it is more likely than not, that the $ 640 million and $ 320 million, respectively, of net deferred tax assets will be realized through future projected taxable income. For the year ended December 31, 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 for the life insurance group. 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, our capital loss carryback capacity, along with reversing capital deferred tax liabilities. As of December 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 year ended December 31, 2023 and 2022, respectively, the Company recorded a $ 688 million and $ 906 million valuation allowance associated with the unrealized tax capital losses in the Life Insurance Companies' available for sale securities portfolio. At December 31, 2023 and 2022, respectively, the Company recorded a valuation allowance in the amount of $ 1 million and $ 4 million 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. For the year ended December 31, 2023, the Company recorded a decrease of $ 221 million to the valuation allowance associated with the unrealized tax losses in the Company’s available for sale securities portfolio and both realized and unrealized losses on capital assets of the Non-life Companies. The $ 221 million decrease for the twelve months ending December 31, 2023 to the valuation allowance consists of $ 214 million tax benefit recorded to other comprehensive income and $ 7 million tax benefit recorded in the income tax expense. 184 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes Carryforwards The following table sets forth the amount and expiration dates of federal and state operating, capital loss and tax credit carryforwards for tax periods indicated. Included in the table is a Section 382 loss carryforward attributable to a previous acquisition. Section 382 of the Internal Revenue Code imposes limitations on the utilization of net operating loss carryforwards. The Section 382 limitation is an annual limitation on the amount of pre-acquisition net operating losses that a corporation may use to offset post-acquisition income. Section 382 further limits certain unrealized built-in losses at the time of acquisition. December 31, 2023 2022 Federal net operating and capital loss carryforwards (1) $ 4,253 $ 2,568 Section 382 net operating loss from previous acquisition (2) 137 137 State net operating and capital loss carryforwards (3) 562 350 Foreign Tax Credit (4) 104 44 Alternative Minimum Credit (5) 269 6 Total $ 5,325 $ 3,105 (1) Unlimited carryforward (2) Begins to expire in 2026 with annual limitation of approximately $ 21 million. (3) For the year ended December 31, 2023, includes $ 204 million with expiration of 0 - 20 years, and with $ 358 million unlimited carryforward. (4) 10 year carryforward and begin to expire in 2032. (5) $ 263 million relates to CAMT with an unlimited carryforward and $ 6 million is subject to 383 limitations Accounting for Uncertainty in Income Taxes The Company determines whether a tax position is more likely than not to be sustained upon examination by tax authorities. The portion of a tax position that is greater than the 50% likelihood of being realized is recorded on the financial statements and any unrecognized part of a position due to uncertainties are recorded as a liability and are charged to income tax in the period that determination is made. The Company has considered both permanent and temporary positions in determining the unrecognized tax benefit rollforward. At December 31, 2023 and 2022, the Company held no reserves related to unrecognized tax benefits. The Company recognizes interest and penalties accrued, if any, related to unrecognized tax benefits as a component of income tax (benefit) expense. The Company did not recognize any material interest and penalty expense in 2023, 2022 or 2021. For 2023 and 2022, the Company had accrued total interest expense of an immaterial amount for both periods. For 2023 and 2022, the Company did not accrue any amounts for penalties. Based on information available as of December 31, 2023, the Company believes that, in the next 12 months, there are no positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease. Tax Examinations and Litigation The Company is no longer subject to U.S. federal tax examinations by tax authorities for years prior to 2019. Tax years from 2019 to 2023 remain open under the statute of limitations. The 2018 IRS exam of the JFI non-life federal consolidated return closed during 2022 with no material impact to the Company. Certain of the Company’s subsidiaries’ state income tax returns are currently under examination by various jurisdictions for years ranging from 2018 to 2022. The Company does not anticipate any material changes from any of these audits. Organization and Tax Sharing Agreements Our U.S. federal consolidated income tax group includes both life companies and non-life companies. The Company files separate non-life and life insurance consolidated federal income tax returns with the U.S. federal government and various state and local jurisdictions, as well as certain foreign jurisdictions. 185 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes Jackson Financial and its non-life insurance subsidiaries, Jackson Holdings, LLC and PPM, file a consolidated non-life federal income tax return. Brooke Life files a consolidated life insurance company tax return with Jackson, JNY, and Squire Re II. Jackson National Life (Bermuda) LTD and VFL International Life Company SPC, LTD are taxed as controlled foreign corporations of Jackson. With the exception of several insignificant wholly-owned subsidiaries that are not included in the Brooke Life consolidated tax return, all other subsidiaries of Jackson are limited liability companies with all of their interests owned by Jackson. Accordingly, they are not considered separate entities for income tax purposes and, therefore, are taxed as part of the operations of Jackson. Income tax expense is calculated on a separate company basis. Jackson Financial, Jackson Holdings LLC, and PPM have entered into written tax sharing agreements. These tax sharing agreements are generally based on a separate return basis with benefits for credits and losses. Brooke Life, Jackson, JNY, and Squire RE II have entered into written tax sharing agreements. These tax sharing agreements are generally based on a separate return basis with benefits for credits and losses. CAMT liability is allocated to each company based on its share of the impact of CAMT in the respective consolidated tax return filing group in which it is a member. 16. Commitments and Contingencies In the ordinary course of business, the Company and its subsidiaries are parties to legal actions and, at times, regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate their impact on the Company’s financial position. A reserve is established for contingent liabilities if it is probable that a loss has been incurred and the amount is reasonably estimable. It is possible that an adverse outcome in certain of the Company’s contingent liabilities, or the use of different assumptions in the determination of amounts recorded, could have a material effect upon the Company’s financial position. However, it is the opinion of management that the ultimate disposition of contingent liabilities is unlikely to have a material adverse effect on the Company’s financial position. Jackson has been named in civil litigation proceedings, which appear to be substantially similar to other class action litigation brought against many life insurers including allegations of misconduct in the sale of insurance products. The Company accrues for legal contingencies once the contingency is deemed to be probable and reasonably estimable. At December 31, 2023, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $ 812 million. At December 31, 2023, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $ 976 million. 17. Leases The Company leases office space and equipment under several operating leases that expire at various dates through 2051. The Company determines if a contract is a lease at inception or modification. Lease terms may include options to extend or terminate the lease and are included in the lease measurement when it is reasonably certain that the Company will exercise that option. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and corresponding lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are determined using the Company’s incremental borrowings rate based upon information available at lease commencement. Certain lease incentives such as free rent periods are recorded as a reduction of the ROU asset. Lease costs for operating leases are recognized on a straight-line basis over the life of the lease. The Company has lease agreements with both lease and non-lease components. The Company elected the practical expedient to combine lease and non-lease components for certain real estate leases. Variable lease expenses may include changes in index-linked lease payments and certain variable operating expenses associated with real estate leases. These payments are recognized in operating expenses in the period incurred. At December 31, 2023 and 2022, the Company had operating lease net ROU assets of $ 24 million and $ 26 million and associated lease liabilities of $ 32 million and $ 36 million, respectively, classified within other assets and other liabilities , respectively. Net lease expense was $ 43 million, $ 46 million, and $ 33 million in 2023, 2022 and 2021, respectively, including expenses associated with software leases. 186 Part II | Item 8. Notes to Consolidated Financial Statements | 17. Leases The following table summarizes the components of operating lease costs and other information related to operating leases recorded within operating costs and other expenses, net of deferrals, (dollars in millions): Years Ended December 31, 2023 2022 2021 Lease Cost: Operating leases (1) $ 7 $ 7 $ 8 Variable lease costs 4 4 4 Sublease income ( 3 ) ( 3 ) ( 4 ) Net Lease Cost $ 8 $ 8 $ 8 Other Information: Cash paid for amounts included in the measurement of operating lease liability $ 10 $ 9 $ 11 ROU assets obtained in exchange for new lease liabilities $ 2 $ — $ — Weighted average lease term 5 years 6 years 7 years Weighted average discount rate 4.0 % 3.9 % 3.8 % (1) Operating lease costs exclude software leases, as intangible assets are excluded from the scope of Accounting Standard Codification 842, Leases. At December 31, 2023, the maturities of operating lease liabilities were as follows (in millions): 2024 $ 9 2025 7 2026 7 2027 5 2028 4 Thereafter 4 Total $ 36 Less: interest 4 Present value of lease liabilities $ 32 18. Share-Based Compensation Prudential Share Plans Historically, certain associates participated in various share award plans relating to Prudential shares and/or American Depositary Receipts (“ADRs”) that were tradable on the New York Stock Exchange. Outstanding non-vested Prudential ADRs granted as of December 31, 2020 were 6,241,847 . In 2021, these plans were replaced through a re-issuance under Jackson Financial Inc.’s 2021 Omnibus Incentive Plan (the “Incentive Plan”) and the remaining outstanding awards were exchanged for awards under the new plan as further described below. 2021 Omnibus Incentive Plan In April 2021, the Company’s Board of Directors adopted, and the Company’s shareholders approved, the Incentive Plan. This Incentive Plan became effective following the completion of the Demerger and replaced the Prudential Share Plans. The outstanding unvested awards previously issued under the Prudential Share Plans were exchanged for equivalent awards of shares of JFI’s Class A Common Stock under the Incentive Plan, with a grant date of October 4, 2021. The performance conditions of the awards were modified to be based on U.S. GAAP based metrics. The incremental compensation cost resulting from the modifications will be recognized ratably over the remaining requisite service period of each award. 187 Part II | Item 8. Notes to Consolidated Financial Statements | 18. Share-Based Compensation The Incentive Plan allows for stock-based awards including stock options, stock appreciation rights, restricted share awards, performance share awards, and deferred share units. The Incentive Plan has a ten-year term, expiring in September 2031. The Company currently has Restricted Share Unit and Performance Share Unit equity-based compensation awards outstanding. Dividend equivalents are generally accrued on restricted share units and performance share units outstanding as of the record date. These dividend equivalents are paid only on restricted share units and performance share units that ultimately vest. Generally, the requisite service period is the vesting period. In the case of retirement (eligibility for which is based on the associate's age and years of service as provided in the relevant award agreement), awards vest in full, but are subject to the satisfaction of any applicable performance criteria and paid in line with the original vesting date. The maximum aggregate number of shares of the Company’s common stock that may be issued pursuant to awards under the Incentive Plan shall not exceed 11,000,000 shares. Shares for which payment is in cash, including the shares withheld to cover associate payroll taxes, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded or granted again under the Incentive Plan. The Company reflects the cash settled awards of the above plan as a liability classified plan and, therefore, reports the accrued compensation expense and the value of the cash settled awards within other liabilities. At December 31, 2023 and 2022, the Company had $ 85 million and $ 79 million accrued for future payments under this plan, respectively. Restricted Share Units ("RSUs") JFI grants RSUs to certain associates and non-employee directors. The majority of associate RSUs are expected to vest in three equal installments on the first through third anniversaries of the grant date over a 3-year service period, subject to forfeiture and transfer restrictions, and are payable in cash or shares at the Company’s discretion. The associate awards granted in 2021 have a shortened, 30-month vesting period. In addition, 1 - and 2-year awards were issued in connection with the Company’s Demerger. RSUs have immediate dividend rights and voting rights upon issuance of underlying shares when the share units vest. In lieu of cash dividend payments, the dividends on unvested RSUs are awarded in additional units equal to the value of the dividends and are subject to the same vesting and distribution conditions as the underlying RSU. Outstanding non-vested RSUs granted to associates were as follows: Year Ended December 31, 2023 Share-Settled Cash-Settled RSUs Weighted-Average Grant Date Fair Value per Share RSUs Weighted-Average Grant Date Fair Value per Share Non-vested at beginning of period 1,178,009 $ 30.38 2,156,773 $ 32.89 Granted (1) 314,285 $ 39.31 1,086,035 $ 39.53 Vested ( 857,312 ) $ 28.96 ( 1,015,923 ) $ 31.72 Forfeited ( 30,405 ) $ 35.35 ( 104,105 ) $ 35.34 Non-vested at end of period 604,577 $ 36.93 2,122,780 $ 36.85 (1) Includes dividend equivalents granted in the current period on awards outstanding Year Ended December 31, 2022 Share-Settled Cash-Settled RSUs Weighted-Average Grant Date Fair Value per Share RSUs Weighted-Average Grant Date Fair Value per Share Nonvested at beginning of period 1,345,401 $ 26.65 1,920,880 $ 26.09 Granted (1) 400,179 $ 38.32 1,171,221 $ 38.74 Vested ( 421,085 ) $ 27.14 ( 836,671 ) $ 26.98 Forfeited ( 146,486 ) $ 27.15 ( 98,657 ) $ 29.01 Nonvested at end of period 1,178,009 $ 30.38 2,156,773 $ 32.89 (1) Includes dividend equivalents granted in the current period on awards outstanding 188 Part II | Item 8. Notes to Consolidated Financial Statements | 18. Share-Based Compensation Performance Share Units ("PSUs") JFI grants PSUs to certain associates. PSU vesting is contingent on meeting a specified service requirement and the level of achievement of performance conditions. The PSU awards entitle recipients to receive, upon vesting, a number of units that ranges from 0 % to 200 % of the number of PSUs awarded, depending on the level of achievement of the specified performance conditions. For PSUs granted in 2023, the awards also include a vesting modifier based on the Company's performance relative to a defined peer group. The awards are generally expected to vest after a period of three years , subject to forfeiture and transfer restrictions, and are payable in cash or shares at the Company’s discretion. However, the awards granted in 2021 have a shortened, 30-month vesting period. Award recipients have immediate dividend rights and voting rights upon issuance of underlying shares when the share units vest. The dividends on unvested PSUs are awarded in additional units equal to the value of the dividends and are subject to the same vesting and distribution conditions as the underlying PSUs. The modified PSU awards retained their vesting and performance conditions, modified to be based on U.S. GAAP based metrics, rather than IFRS. Outstanding non-vested PSUs granted were as follows: Year Ended December 31, 2023 Share-Settled Cash-Settled PSUs Weighted-Average Grant Date Fair Value per Share PSUs Weighted-Average Grant Date Fair Value per Share Non-vested at beginning of period 4,075,330 $ 28.59 1,487,453 $ 28.73 Granted (1) 514,799 $ 41.68 242,355 $ 42.04 Vested ( 3,027,869 ) $ 27.27 ( 1,009,199 ) $ 27.30 Forfeited ( 84,686 ) $ 33.31 ( 32,858 ) $ 34.00 Non-vested at end of period 1,477,574 $ 35.59 687,751 $ 35.34 (1) Includes dividend equivalents granted in the current period on awards outstanding Year Ended December 31, 2022 Share-Settled Cash-Settled PSUs Weighted-Average Grant Date Fair Value per Share PSUs Weighted-Average Grant Date Fair Value per Share Nonvested at beginning of period 5,775,795 $ 26.59 1,993,641 $ 26.56 Granted (1) 749,064 $ 37.75 292,132 $ 37.87 Vested ( 2,127,430 ) $ 26.64 ( 709,089 ) $ 26.63 Forfeited ( 322,099 ) $ 27.00 ( 89,231 ) $ 26.79 Nonvested at end of period 4,075,330 $ 28.59 1,487,453 $ 28.73 (1) Includes dividend equivalents granted in the current period on awards outstanding Compensation Cost JFI charges the fair value of the restricted share units and performance share units to expense over the requisite service period. For performance-based awards, JFI estimates the number of shares expected to vest at the end of the performance period based on the probable achievement of the performance objectives. RSUs have graded vesting features and JFI recognizes expense for those awards on a straight-line basis over the requisite service period. The Company recognizes forfeitures as they occur when recognizing share-based compensation expense. For most of the equity-classified RSUs and PSUs, the fair value is based on the price of JFI’s common stock on the grant date. For PSU equity awards granted in 2023, the Company measures fair value using a Monte Carlo simulation that considers the Company’s projected total shareholder return (“TSR”) relative to a defined group of peers as well as other inputs to estimate the grant date fair value of awards. For liability-classified RSUs and most liability-classified PSUs, the fair value is based on the price of JFI’s common stock as of the reporting date. For PSU liability awards granted in 2023, the Company uses a Monte Carlo simulation that considers the Company’s projected TSR relative to a defined group of peers as well as other inputs to estimate the grant date fair value of awards. 189 Part II | Item 8. Notes to Consolidated Financial Statements | 18. Share-Based Compensation Total expense related to these share-based plans was as follows (in millions): For the Years Ended December 31, 2023 2022 2021 Compensation expense recognized $ 107 $ 131 $ 129 Income tax benefit recognized 25 29 26 Unrecognized compensation cost for RSUs and PSUs under the Incentive Plan as of December 31, 2023 was $ 49 million with a weighted average recognition period of 1.05 years. The shares issued under the Incentive Plan may be authorized and unissued, or reacquired treasury shares. 19. Other Related Party Transactions The Company's investment management operation, PPM, provides investment services to entities affiliated with the Company's former parent. As of June 30, 2023, the former parent had no remaining equity interest in the Company and therefore its affiliated entities are no longer designated as related parties. The Company recognized $ 18 million, $ 33 million, and $ 28 million of revenue during the years ended December 31, 2023, 2022 and 2021, associated with these investment services. This revenue is included in fee income in the accompanying Consolidated Income Statements. 20. Statutory Accounting and Regulatory Matters The Company’s insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred and establishing future policy benefit liabilities using different actuarial assumptions, as well as valuing investments and certain assets and accounting for deferred income taxes on a different basis. At December 31, 2023 and 2022, Jackson’s statutory capital and surplus was $ 4.7 billion and $ 6.0 billion, respectively. Jackson had statutory net income (loss) of $( 122 ) million, $ 3,688 million, and $ 136 million, in 2023, 2022 and 2021, respectively. Furthermore, at December 31, 2023 and 2022, Brooke Life’s statutory capital and surplus was $ 4.7 billion and $ 6.0 billion, respectively, which includes its investment in Jackson of $ 4.7 billion and $ 6.0 billion, in 2023 and 2022, respectively. Brooke Life’s statutory net income (loss) was $ 385 million, $( 109 ) million, and $( 94 ) million in 2023, 2022, and 2021, respectively. Brooke Life’s statutory net income included a dividend payment of $ 450 million from Jackson in 2023. Brooke Life did not receive dividend payments from Jackson in 2022. Brooke Life paid dividends of $ 360 million and $ 510 million to its parent in 2023 and 2022, respectively. The Company’s consolidated assets are primarily those of its life insurance subsidiary, Jackson. Under the Michigan Insurance Code of 1956, Jackson must notify the Michigan Director of Insurance prior to payment of any dividend. Ordinary dividends on capital stock may only be distributed out of earned surplus, excluding any unrealized capital gains and the effect of permitted practices (referred to as adjusted earned surplus). Ordinary dividends are also limited to the greater of 10% of statutory surplus as of the preceding year end, excluding any increase arising from the application of permitted practices, or the statutory net income, excluding any net realized investment gains, for the twelve-month period ended on the preceding December 31. The Michigan Director of Insurance may approve payment of dividends in excess of these amounts, which would be deemed an extraordinary dividend. The maximum amount that would qualify as an ordinary dividend for Jackson, which would consequently be free from restriction and available for payment of dividends to Brooke Life in 2024, is estimated to be $ 464 million, subject to the availability of adjusted earned surplus as of the dividend date. At December 31, 2023, Jackson had no adjusted earned surplus available for ordinary dividends. Furthermore, at December 31, 2023, Brooke Life had adjusted earned surplus of $ 329 million. The maximum amount that would qualify as an ordinary dividend for Brooke Life, which would consequently be free from restriction and available for payment of dividends to Brooke Life’s parent in 2024, is estimated to be $ 371 million, subject to the availability of adjusted earned surplus as of the dividend date. 190 Part II | Item 8. Notes to Consolidated Financial Statements | 20. Statutory Accounting and Regulatory Matters On February 24, 2023, Jackson received approval from the Michigan Director of Insurance for a $ 600 million distribution to Jackson’s parent company, Brooke Life. The distribution occurred in the first quarter of 2023. Brooke Life subsequently upstreamed this distribution to its ultimate parent, Jackson Financial, except for $ 90 million of the distribution to be used for debt servicing of its surplus note payable. Under Michigan insurance law, Value of Business Acquired ("VOBA") is reported as an admitted asset if certain criteria are met. Jackson's statutory basis VOBA was fully amortized in 2022. The NAIC has developed certain risk-based capital (“RBC”) requirements for life insurance companies. Under those requirements, compliance is determined by a ratio of a company’s total adjusted capital (“TAC”), calculated in a manner prescribed by the NAIC to its authorized control level RBC, calculated in a manner prescribed by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences is twice the authorized control level RBC (“Company action level RBC”). At December 31, 2023, Jackson and Brooke Life’s TAC remained well in excess of the Company action level RBC. In addition, on the basis of statutory financial statements that insurers file with the state insurance regulators, the NAIC annually calculates twelve financial ratios to assist state regulators in monitoring the financial condition of insurance companies. A usual range of results for each ratio is used as a benchmark and departure from the usual range on four or more of the ratios can lead to inquiries from individual state insurance departments. In 2023 and 2022, there were no significant exceptions with any ratios. 21. Benefit Plans The Company has a defined contribution retirement plan covering substantially all associates and certain affiliates. Effective January 1, 2020, associates are immediately eligible to participate in the Company’s matching contribution. To be eligible to participate in the Company’s profit-sharing contribution, an associate must have attained the age of 21, completed at least 1,000 hours of service in a 12-month period and passed their 12-month employment anniversary. In addition, the associate must be employed on the applicable January 1 or July 1 entry date. The Company’s annual profit-sharing contributions, as declared by Jackson’s Board of Directors, are based on a percentage of eligible compensation paid to participating associates during the year. In addition, the Company matches a participant’s elective contribution, up to 6 percent of eligible compensation, to the plan during the year. The Company’s expense related to this plan was $ 34 million, $ 31 million, and $ 32 million in 2023, 2022 and 2021, respectively. The Company maintains non-qualified voluntary deferred compensation plans for certain associates and independent agents. At December 31, 2023 and 2022, the total aggregate liability for such plans was $ 474 million and $ 469 million, respectively, and was reported in other liabilities. The Company’s expense (income) related to these plans, including a match of elective deferrals for the agents’ deferred compensation plan and the change in value of participant elective deferrals, was $ 58 million, $( 47 ) million, and $ 54 million in 2023, 2022 and 2021, respectively. 22. Operating Costs and Other Expenses The following table is a summary of the Company’s operating costs and other expenses (in millions): Years Ended December 31, 2023 2022 2021 Asset-based commission expenses $ 1,022 $ 1,010 $ 1,126 Other commission expenses 720 846 1,042 Sub-advisor expenses 311 329 389 General and administrative expenses 1,007 875 1,078 Deferral of acquisition costs ( 511 ) ( 628 ) ( 796 ) Total operating costs and other expenses $ 2,549 $ 2,432 $ 2,839 191 Part II | Item 8. Notes to Consolidated Financial Statements | 23. Accumulated Other Comprehensive Income (Loss) 23. Accumulated Other Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in shareholders’ equity (except those arising from transactions with owners/shareholders) and includes net income, net unrealized gains or losses on available-for-sale securities, the impact of changes in the non-performance risk used in the remeasurement of market risk benefits, and the impact of changes in the discount rate used in the remeasurement of our reserves for future policy benefits and claims payable. The following table represents changes in the balance of AOCI, net of income tax, related to unrealized investment gains (losses) (in millions): Years Ended December 31, 2023 2022 2021 Balance, beginning of period (1) $ ( 3,378 ) $ 1,360 $ 3,821 Change in accounting principle, net of tax — — ( 385 ) Other comprehensive income (loss): Change in unrealized gains (losses) of investments 1,337 ( 8,296 ) ( 1,829 ) Change in current discount rate - reserve for future policy benefits (2) ( 187 ) 1,664 507 Change in non-performance risk on market risk benefits ( 1,220 ) 1,875 ( 424 ) Change in unrealized gains (losses) - other ( 21 ) 36 37 Change in deferred tax asset 231 114 371 Other comprehensive income (loss) before reclassifications 140 ( 4,607 ) ( 1,338 ) Reclassifications from AOCI, net of tax 430 ( 131 ) ( 738 ) Other comprehensive income (loss) 570 ( 4,738 ) ( 2,076 ) Balance, end of period (1) $ ( 2,808 ) $ ( 3,378 ) $ 1,360 (1) Includes $( 1,612 ) million, $( 2,106 ) million and $ 287 million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of December 31, 2023, 2022 and 2021, 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. The following table represents amounts reclassified out of AOCI (in millions): AOCI Components Amounts Reclassified from AOCI Affected Line Item in the Consolidated Income Statement Years Ended December 31, 2023 2022 2021 Net unrealized investment gain (loss): Net realized gain (loss) on investments $ 600 $ ( 167 ) $ ( 932 ) Net gains (losses) on derivatives and investments Other impaired securities ( 51 ) — ( 10 ) Net gains (losses) on derivatives and investments Net unrealized gain (loss) 549 ( 167 ) ( 942 ) Income tax expense (benefit) 119 ( 36 ) ( 204 ) Reclassifications, net of income taxes $ 430 $ ( 131 ) $ ( 738 ) 192 Part II | Item 8. Notes to Consolidated Financial Statements | 24. Equity 24. Equity Preferred Stock On March 13, 2023, the Company issued and sold 22,000,000 depositary shares (the “Depositary Shares”), each representing a 1/1,000th fractional interest in a share of the Company’s Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A, $ 25,000 liquidation preference per share (equivalent to $ 25 per Depositary Share), with a 5-year dividend rate reset period and noncumulative dividends (the “Series A Preferred Stock”). After underwriting discounts and expenses, we received net proceeds of approximately $ 533 million. The Series A Preferred Stock carries i) an initial dividend rate of 8.000 % per annum to but excluding, March 30, 2028; 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. Under the terms of the Series A Preferred Stock, if the Company has not declared and paid, or declared and set aside a sum sufficient for the payment of, dividends on the Series A Preferred Stock for the immediately preceding dividend period (for the avoidance of doubt, there is no preceding dividend period for the initial dividend period), then the Company’s ability to pay dividends or make distributions with respect to its common stock, or to repurchase or otherwise acquire its common stock, is subject to certain restrictions. Similar restrictions would apply in respect of any preferred stock ranking on parity with, or junior to, the Series A Preferred Stock, if any such preferred stock were to be issued by the Company. We may, at our option, redeem the shares of Series A Preferred Stock (a) in whole but not in part at any time prior to March 30, 2028, (i) within 90 days after the occurrence of a “rating agency event” at a redemption price equal to $ 25,500 per share (equivalent to $ 25.50 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date, or (ii) within 90 days after the occurrence of a “regulatory capital event,” at a redemption price equal to $ 25,000 per share (equivalent to $ 25 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date, or (b) in whole or in part, from time to time, on or after March 30, 2028, at a redemption price equal to $ 25,000 per share (equivalent to $ 25 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date. If we redeem any shares of Series A Preferred Stock, a proportionate number of Depositary Shares will be redeemed. Holders of Depositary Shares have no right to require the redemption or repurchase of the Series A Preferred Stock or the Depositary Shares. The net proceeds from the sale were used for general corporate purposes, including the repayment of senior notes that matured in November 2023. The following table presents declaration date, record date, payment date and dividends paid per preferred share of, and per depositary share representing, 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 09/30/2023 August 7, 2023 August 31, 2023 October 2, 2023 $ 500.00 $ 0.50000 12/31/2023 November 6, 2023 November 30, 2023 January 2, 2024 $ 500.00 $ 0.50000 193 Part II | Item 8. Notes to Consolidated Financial Statements | 24. Equity Common Stock At the time of the Demerger, the Company had two classes of common stock: Class A Common Stock and Class B Common Stock. Both classes had a par value of $ 0.01 per share. Each share of Class A Common Stock was entitled to one vote per share. Each share of Class B Common Stock was entitled to one-tenth of one vote per share. Except for voting rights, the Company’s Class A Common Stock and Class B Common Stock had the same dividend rights, were equal in all other respects, and were otherwise treated as if they were one class of shares. 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 December 31, 2023 and 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). Share Repurchase Program On November 8, 2021, our Board of Directors authorized a share repurchase program of our Class A Common Stock of $ 300 million. On February 28, 2022, our Board of Directors authorized an increase of $ 300 million in our existing authorization to repurchase shares of our outstanding Class A Common Stock as part of the Company's share repurchase program. 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 February 20, 2024, the Company had remaining authorization to purchase $ 237 million of its common shares. The Company expects to repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the parent company, other potential uses for such funds, market conditions, the Company's capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any time. It does not have an expiration date. There can be no assurance that we will continue share repurchases or approve any increase to, or approve any new, stock repurchase program, or as to the amount of any repurchases made pursuant to such programs. The Inflation Reduction Act of 2022 creates a 1% excise tax on net stock buybacks of publicly-traded U.S. corporations. 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 December 31, 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: Period Number of Shares Repurchased Total Payments (in millions) Average Price Paid Per Share 2022 (January 1 - March 31) 3,433,610 $ 140 $ 40.84 2022 (April 1 - June 30) 1,870,854 66 35.15 2022 (July 1 - September 30) 1,200,000 39 32.75 2022 (October 1 - December 31) 1,142,105 38 33.33 Total 2022 7,646,569 $ 283 $ 37.05 2023 (January 1- March 31) 1,721,737 70 40.42 2023 (April 1- June 30) 1,394,797 47 33.87 2023 (July 1- September 30) 1,873,727 71 38.13 2023 (October 1- December 31) 1,512,263 67 44.37 Total 2023 6,502,524 $ 255 $ 39.27 2024 (January 1 - February 20) 1,247,950 $ 63 $ 50.70 194 Part II | Item 8. Notes to Consolidated Financial Statements | 24. Equity The following table represents changes in the balance of common stock outstanding: Common Stock Treasury Stock Total Common Stock Outstanding Shares at December 31, 2021 94,464,343 ( 5,778,649 ) 88,685,694 Share-based compensation programs 10,568 1,640,405 (1) 1,650,973 Shares repurchased under repurchase program — ( 7,646,569 ) ( 7,646,569 ) Shares at December 31, 2022 94,474,911 ( 11,784,813 ) 82,690,098 Share-based compensation programs 6,095 2,466,552 (1) 2,472,647 Shares repurchased under repurchase program — ( 6,502,524 ) ( 6,502,524 ) Shares at December 31, 2023 94,481,006 ( 15,820,785 ) 78,660,221 (1) Represents net shares issued from treasury stock pursuant to the Company’s share-based compensation programs. Dividends to Common Shareholders 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. The following table presents declaration date, record date, payment date and dividends paid per share of JFI’s common stock: Declaration Date Record Date Payment Date Dividends Paid Per Share Quarter Ended 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 09/30/2023 August 7, 2023 August 31, 2023 September 14, 2023 $ 0.62 12/31/2023 November 6, 2023 November 30, 2023 December 14, 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 09/30/2022 August 8, 2022 September 1, 2022 September 15, 2022 $ 0.55 12/31/2022 November 7, 2022 December 1, 2022 December 15, 2022 $ 0.55 Quarter Ended 12/31/2021 November 8, 2021 November 19, 2021 December 9, 2021 $ 0.50 Dividend equivalents are generally accrued on restricted share units and performance share units outstanding as of the record date. Dividend equivalents on restricted share units and performance share units that are ultimately payable in cash are recognized as compensation expense while those that are ultimately payable in shares are recognized as dividends. 25. Earnings Per Share Basic earnings per share is calculated by dividing net income (loss) attributable to Jackson Financial common 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 common 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 - Share-Based Compensation of Notes to Consolidated Financial Statements for further information regarding our share-based awards. 195 Part II | Item 8. Notes to Consolidated Financial Statements | 23. Earnings Per Share The following table sets forth the calculation of earnings per common share (in millions): Years Ended December 31, 2023 2022 2021 (in millions, except share and per share data) Net income (loss) attributable to Jackson Financial Inc. $ 934 $ 6,186 $ 3,417 Less: Preferred stock dividends 35 — — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 899 $ 6,186 $ 3,417 Weighted average shares of common stock outstanding - basic 81,799,820 85,513,787 93,994,520 Dilutive common shares 1,777,406 3,176,913 470,991 Weighted average shares of common stock outstanding - diluted 83,577,226 88,690,700 94,465,511 Earnings per share—common stock Basic $ 10.99 $ 72.34 $ 36.35 Diluted $ 10.76 $ 69.75 $ 36.17 26. Subsequent Events The Company has evaluated subsequent events through February 28, 2024, the date of the filing of the Form 10-K for the year ended December 31, 2023. Dividends Declared to Shareholders On February 20, 2024, our Board of Directors approved a first quarter cash dividend on JFI's common stock, $ 0.70 per share, payable on March 21, 2024, to shareholders of record on March 12, 2024. 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 April 1, 2024, to Depositary Shares shareholders of record at the close of business on March 12, 2024. Brooke Life Reinsurance Company (“Brooke Re”) During the first quarter of 2024, Jackson entered into a reinsurance transaction with Brooke Re and all economics of the transaction are effective as of January 1, 2024. Jackson and Brooke Re are both direct subsidiaries of Brooke Life and the reinsurance transaction eliminates upon consolidation at JFI. The transaction provides for the cession from Jackson to Brooke Re of liabilities associated with certain guaranteed benefit riders under our variable annuity contracts and similar products of Jackson (“market risk benefits”), both in-force on the effective date of the reinsurance agreement and written in the future (i.e., on a “flow” basis). Brooke Re will utilize a modified GAAP approach primarily related to market risk benefits, with the intent to increase alignment between assets and liabilities in response to changes in economic factors. The transaction allows us to mitigate the impact of the cash surrender value floor on Jackson’s total adjusted capital, statutory required capital, and risk-based capital ratio, as well as to allow for more efficient economic hedging of the underlying risks of Jackson’s business. 196 Schedule I Jackson Financial Inc. Summary of Investments—Other Than Investments in Related Parties (In millions) As of December 31, 2023 Amount at Which Shown Cost or on Balance Type of Investment Amortized Cost Fair Value Sheet Debt securities: Bonds: U.S. government securities $ 5,154 $ 4,312 $ 4,312 Other government securities 1,622 1,402 1,402 Public utilities 5,598 5,127 5,127 Corporate securities 27,870 25,477 25,477 Residential mortgage-backed 422 375 375 Commercial mortgage-backed 1,569 1,423 1,423 Other asset-backed securities 4,830 4,527 4,527 Total debt securities 47,065 42,643 42,643 Equity securities 394 394 394 Mortgage loans 10,563 N/A 10,563 Policy loans 4,399 N/A 4,399 Derivative instruments 390 N/A 390 Other invested assets 2,187 N/A 2,466 Total investments $ 64,998 $ 60,855 See the accompanying Report of Independent Registered Public Accounting Firm 197 Schedule II Jackson Financial Inc. (Parent Company Only) Balance Sheets (In millions, except share data) December 31, 2023 2022 Assets Debt securities, available-for-sale $ — $ 450 Investment in subsidiaries 9,277 8,266 Cash and cash equivalents 599 226 Accrued investment income 5 1 Intercompany receivables 2,026 2,054 Deferred income taxes, net 79 — Other assets 2 4 Total assets $ 11,988 $ 11,001 Liabilities and Equity Liabilities Senior Notes due 2023 - unaffiliated (1) (2) — 598 Senior Notes due 2027 - unaffiliated (1) (2) 398 397 Senior Notes due 2031 - unaffiliated (1) (2) 495 493 Senior Notes due 2032 - unaffiliated (1) (2) 347 347 Senior Notes due 2051 - unaffiliated (1) (2) 490 488 Deferred income taxes, net — 1 Intercompany payables — 19 Other liabilities 88 12 Total liabilities 1,818 2,355 Equity Series A non-cumulative preferred stock and additional paid in capital, $ 1.00 par value per share: 24,000 shares authorized; shares issued: 2023 - 22,000 ; liquidation preference $ 25,000 per share (See Note 24 to Consolidated Financial Statements) 533 — Common stock; 1,000,000,000 shares authorized, $ 0.01 par value per share and 78,660,221 and 82,690,098 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively (See Note 24 to Consolidated Financial Statements) 1 1 Additional paid-in capital 6,005 6,063 Treasury stock, at cost; 15,820,785 and 11,784,813 shares at December 31, 2023 and 2022, respectively ( 599 ) ( 443 ) Accumulated other comprehensive income (loss) ( 2,808 ) ( 3,378 ) Retained earnings (deficit) 7,038 6,403 Total equity 10,170 8,646 Total liabilities and equity $ 11,988 $ 11,001 (1) See Note 13 - Long-Term Debt to our Consolidated Financial Statements for additional information regarding these borrowings. (2) Includes unamortized debt issuance costs totaling $ 15 million and $ 20 million for the senior notes on a combined basis at December 31, 2023 and 2022, respectively. (continued) 198 Schedule II Jackson Financial Inc. (Parent Company Only) Statements of Income (In millions) For the Years Ended December 31, 2023 2022 2021 Revenues Net investment income $ 29 $ 10 $ — Dividends from subsidiaries 360 510 — Interest income from subsidiaries 91 90 90 Other income ( 2 ) — — Total revenues 478 610 90 Benefits and Expenses Interest expense 84 76 15 Operating costs and other expenses 34 29 53 Total benefits and expenses 118 105 68 Pretax income 360 505 22 Income tax expense (benefit) 1 ( 1 ) 9 Subsidiary equity earnings (loss) 575 5,680 3,404 Net income (loss) 934 6,186 3,417 Less: Dividends on preferred stock 35 — — Net income (loss) attributable to common shareholders $ 899 $ 6,186 $ 3,417 (continued) 199 Schedule II Jackson Financial Inc. (Parent Company Only) Statements of Cash Flows (In millions) For the Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income $ 934 $ 6,186 $ 3,417 Adjustments to reconcile net income to net cash provided by operating activities: Subsidiary equity earnings ( 575 ) ( 5,680 ) ( 3,404 ) Interest expense 84 76 15 Amortization of discount and premium on investments ( 23 ) ( 5 ) — Change in other assets and liabilities, net ( 22 ) 4 ( 43 ) Net cash provided by (used in) operating activities 398 581 ( 15 ) Cash flows from investing activities: Sales, maturities and repayments of: Debt securities 1,373 — — Purchases of: Debt securities ( 900 ) ( 445 ) — Other investing activities ( 26 ) — — Net cash provided by (used in) investing activities 447 ( 445 ) — Cash flows from financing activities: Proceeds from debt — 750 3,943 Payments on debt ( 598 ) ( 750 ) ( 1,610 ) Debt issuance costs — ( 7 ) ( 28 ) Dividends on common stock ( 201 ) ( 186 ) ( 50 ) Dividends on preferred stock ( 35 ) — — Capital contribution from subsidiary 150 — — Capital distribution to subsidiary ( 15 ) — ( 1,550 ) Share based compensation — — 123 Purchase of treasury stock ( 306 ) ( 321 ) ( 211 ) Issuance of preferred stock 533 — — Net cash provided by (used in) financing activities ( 472 ) ( 514 ) 617 Net increase (decrease) in cash and cash equivalents 373 ( 378 ) 602 Cash and cash equivalents, beginning of year 226 604 2 Total cash and cash equivalents, end of year $ 599 $ 226 $ 604 Non-cash financing transactions Non-cash dividend equivalents on stock based awards $ ( 8 ) $ ( 13 ) $ — See the accompanying Report of Independent Registered Public Accounting Firm 200 Schedule III Jackson Financial Inc. Supplemental Insurance Information (In millions) Reserves for Deferred Future Policy Acquisition Benefits and Other Contract Costs Claims Payable Holder Funds December 31, 2023 Retail Annuities $ 12,192 $ 1,426 $ 34,454 Closed Life and Annuity Blocks 110 10,472 12,459 Institutional Products — — 8,406 Corporate and Other — — — Total $ 12,302 $ 11,898 $ 55,319 December 31, 2022 Retail Annuities $ 12,740 $ 1,412 $ 36,454 Closed Life and Annuity Blocks 119 10,906 12,717 Institutional Products — — 9,019 Corporate and Other 64 — — Total $ 12,923 $ 12,318 $ 58,190 December 31, 2021 Retail Annuities $ 13,368 $ 1,709 $ 36,743 Closed Life and Annuity Blocks 130 13,481 13,148 Institutional Products — — 8,830 Corporate and Other 27 — — Total $ 13,525 $ 15,190 $ 58,721 (continued) 201 Schedule III Jackson Financial Inc. Supplemental Insurance Information (In millions) Interest Credited Deferred on Other Acquisition and Operating Net Investment Contract Holder Sales Inducements Costs and Premium Income Funds Amortization Other Expenses December 31, 2023 Retail Annuities $ 21 $ 541 $ 374 $ 551 $ 2,178 Closed Life and Annuity Blocks 136 689 437 10 163 Institutional Products — 474 334 — 5 Corporate and Other — 71 — — 203 Segment subtotal 157 1,775 1,145 561 2,549 Non-operating items (1) ( 10 ) 1,155 — 591 — Total $ 147 $ 2,930 $ 1,145 $ 1,152 $ 2,549 December 31, 2022 Retail Annuities $ 10 $ 403 $ 253 $ 557 $ 2,174 Closed Life and Annuity Blocks 134 706 412 11 130 Institutional Products — 312 201 — 5 Corporate and Other — 65 — — 123 Segment subtotal 144 1,486 866 568 2,432 Non-operating items (1) ( 12 ) 1,275 — 658 — Total $ 132 $ 2,761 $ 866 $ 1,226 $ 2,432 December 31, 2021 Retail Annuities $ 15 $ 692 $ 225 $ 557 $ 2,456 Closed Life and Annuity Blocks 145 950 419 13 179 Institutional Products — 260 188 — 5 Corporate and Other — 55 — — 147 Segment subtotal 160 1,957 832 570 2,787 Non-operating items (1) ( 12 ) 1,467 — 737 52 Total $ 148 $ 3,424 $ 832 $ 1,307 $ 2,839 (1) See Note 3- Segment Information for further details on the non-operating items. See the accompanying Report of Independent Registered Public Accounting Firm 202 Schedule IV Jackson Financial Inc. Reinsurance For the Years Ended December 31, 2023, 2022, and 2021 (In millions) % Amount Assumed to Gross Amount Ceded Assumed Net Amount Net December 31, 2023 Life insurance in-force $ 75,239 $ 40,972 $ 15,545 $ 49,812 31.2 % Insurance premium Life insurance $ 280 $ 176 $ 32 $ 136 23.5 % Accident and health 26 29 3 — Payout annuity 22 — — 22 Annuity guaranteed benefits — 11 — ( 11 ) Total insurance premium $ 328 $ 216 $ 35 $ 147 23.8 % December 31, 2022 Life insurance in-force $ 86,792 $ 49,007 $ 15,976 $ 53,761 29.7 % Insurance premium Life insurance $ 325 $ 228 $ 37 $ 134 27.6 % Accident and health 25 28 3 — Payout annuity 10 — — 10 Annuity guaranteed benefits — 12 — ( 12 ) Total insurance premium $ 360 $ 268 $ 40 $ 132 30.3 % December 31, 2021 Life insurance in-force $ 105,704 $ 63,548 $ 16,358 $ 58,514 28.0 % Insurance premium Life insurance $ 354 $ 247 $ 38 $ 145 26.2 % Accident and health 38 42 4 — Payout annuity 15 — — 15 Annuity guaranteed benefits — 12 — ( 12 ) Total insurance premium $ 407 $ 301 $ 42 $ 148 28.4 % See the accompanying Report of Independent Registered Public Accounting Firm 203 Schedule V Jackson Financial Inc. Valuation and Qualifying Accounts For the Years Ended December 31, 2023 and 2022 (In millions) Balance at Charged to Beginning Costs and Balance at of Period Expenses Deductions End of Period December 31, 2023 Allowance for credit losses on debt securities $ 23 $ 64 $ ( 66 ) (1) $ 21 Allowances for credit losses on mortgage and other loans 95 ( 66 ) 136 (2) 165 Allowance for credit losses on reinsurance recoverable 15 14 — 29 Valuation allowance on deferred tax asset 910 — ( 221 ) (3) 689 $ 1,043 $ 12 $ ( 151 ) $ 904 December 31, 2022 Allowance for credit losses on debt securities $ 9 $ 36 $ ( 22 ) (1) $ 23 Allowances for credit losses on mortgage and other loans 94 — 1 (2) 95 Allowance for credit losses on reinsurance recoverable 12 3 — 15 Valuation allowance on deferred tax asset 2 908 (3) — 910 $ 117 $ 947 $ ( 21 ) $ 1,043 (1) Represents reductions for securities disposed. (2) Represents provision (release) of allowance for write-offs. (3) Includes increase (decrease) of $( 218 ) million and $ 906 million valuation allowance during the years ended December 31, 2023 and 2022, respectively, associated with the unrealized tax losses in the companies' available for sale securities portfolio, see Note 15. Income Taxes for further information. See the accompanying Report of Independent Registered Public Accounting Firm 204 Part II Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.