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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 390 added, 339 removed, 1070 unchanged (41% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This executive summary of Management’s Discussion and Analysis of Financial Condition and Results of Operation highlights selected information and may not contain all the information that is important to current or potential investors in our securities.

The following executive summary of Management’s Discussion and Analysis of Financial Condition and Results of Operation highlights selected information and may not contain all the information that is important to current or potential investors in our securities.

You should read this Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "Form 10-K") in its entirety for a more detailed description of events, trends, uncertainties, risks and critical accounting estimates affecting us.

Discussion related to the results of operations for the Company's comparison of 2022 results to 2021 results has been omitted in this Form 10-K.

The Company's comparison of 2022 results to 2021 results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 1, 2023, (the "2022 Annual Report"), as recast to reflect the adoption of LDTI in our Current Report on Form 8-K filed May 10, 2023, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations .

Discussion related to the Company's comparison of 2023 results to 2022 results of operations has been omitted in this Form 10-K.

The Company's comparison of 2023 results to 2022 results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024, (the "2023 Annual Report"), under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Jackson Financial Inc.

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

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

The Company's demerger from Prudential was completed on September 13, 2021 (the "Demerger").

(“Jackson Financial” or “JFI”) along with its subsidiaries (collectively, the “Company,” which also may be referred to as “we,” “our” or “us”), is a financial services company.

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

On September 13, 2021, the Company demerged from Prudential (the "Demerger").

Jackson Financial’s primary operating subsidiary, Jackson National Life Insurance Company ("Jackson"), is licensed to sell group and individual annuity products (including immediate, registered index-linked, deferred fixed, fixed index, fixed and variable annuities), and various protection products, primarily whole life, universal life, variable universal life and term life insurance products in all 50 states and the District of Columbia.

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We earn revenues predominantly from fee income, spread income resulting from what we earn on investments versus the interest we credit to contract holders, and margins on other insurance products.

Our profitability is dependent on our ability to properly price and manage risk on insurance and annuity products, to manage our portfolio of investments effectively, and to control costs through expense discipline.

Our profitability is dependent on our ability to properly price and manage risk on insurance and annuity products, manage our portfolio of investments effectively, and control costs through expense discipline.

Due to funds withheld reinsurance arrangements, including the Athene Reinsurance Transaction, we hold significant assets whose investment performance accrues to the benefit of the related reinsurer.

We experience net income volatility due to the fact that we do not directly use hedging to offset the movement in our U.S.

Generally Accepted Accounting Principles ("GAAP") market risk benefit liabilities as market conditions change from period to period.

Our core dynamic hedging program seeks to offset changes in the economic liability associated with variable annuity guaranteed benefits due to market movements, while our macro hedging program seeks to protect statutory capital under a range of stress scenarios.

We do not directly seek to offset the movement in our market risk benefit liabilities from changes in market conditions.

We experience net income volatility because we do not directly use hedging to offset the movement in our U.S.

generally accepted accounting principles ("U.S.

GAAP") market risk benefit liabilities as market conditions change from period to period.

Our core dynamic hedging program seeks to offset changes in the economic liability associated with variable annuity guaranteed benefits due to equity market and interest rate movements, while our macro hedging program seeks to provide additional liquidity and statutory capital protection as needed.

As a result, the changes in the fair value of the derivatives used as part of our overall hedging program are not expected to match the movements in the market risk benefit liabilities resulting in volatility from changes in fair value recorded to net income.

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

We report certain activities and items that are not included in these segments, including the results of PPM Holdings, Inc., the holding company of PPM America Inc.

("PPM"), which manages the majority of our general account investment portfolio, in Corporate and Other.

Financial Statements and Supplementary Data — Note 3 - Segment Information of Notes to Condensed Consolidated Financial Statements for further information on our segments.

We report in Corporate and Other activities and items that are not included in those three segments, including the results of PPM Holdings, Inc., the parent holding company of PPM America Inc.

("PPM"), that manages the majority of our general account investment portfolio.

Financial Statements and Supplementary Data — Note 3 - Segment Information of the Notes to Consolidated Financial Statements for further information on our segments.

An understanding of several key operating measures, including sales, account value, net flows, benefit base and assets under management ("AUM"), is helpful in evaluating our results.

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12.9 % 10.6 %

Jackson statutory risk-based capital (2)

Jackson statutory risk-based capital ratio (2)

(1) Non-GAAP Financial Measure.

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• Capital Returned to Common Shareholders:

During 2023, we returned $464 million to our common shareholders consisting of $209 million in dividends and $255 million in common share repurchases.

Our capital return target for common shareholders for 2023 was $450-$550 million.

Since January 1, 2024 through December 31, 2024, we have returned $631 million to our common shareholders, consisting of $216 million in dividends and $415 million in common share repurchases.

Our capital return target for common shareholders for 2025 is $700-$800 million.

Share repurchases, net of issuances for our share-based compensation, have reduced our outstanding shares of common stock from 78,660,221 at December 31, 2023 to 73,380,643 at December 31, 2024.

Financial Statement and Supplementary Data -- Note 24 - Equity of Notes to Consolidated Financial Statements for further information on our share repurchases.

• RILA Product:

In the fourth quarter of 2021, our primary life insurance subsidiary, Jackson, successfully launched Jackson Market Link Pro SM and Jackson Market Link Pro Advisory SM , a commission and an advisory based suite of registered index-linked annuities ("RILA").

In the second quarter of 2023, we enhanced our RILA suite of products with the launch of Jackson Market Link Pro SM II and Jackson Market Link Pro Advisory SM II.

See “Key Operating Measures – Sales” below for information regarding RILA sales.

• 2023 Annual Assumption Updates:

Consistent with prior years, we completed our annual actuarial assumptions review in the fourth quarter of 2023.

See “Policy and Contract Liabilities – Actuarial Assumption Changes (Unlocking)” below and Item 8.

Financial Statements and Supplementary Data -- Note 12 - Market Risk Benefits of Notes to Consolidated Financial Statements for further information regarding the notable assumption change updates included in the MRB calculation.

Financial Statement and Supplementary Data — Note 24 - Equity of the Notes to Consolidated Financial Statements for further information on our share repurchases.

• Free Capital Generation and Free Cash Flow:

◦ Our free capital generation during 2024 exceeded $1 billion.

Free capital generation represents Jackson’s aggregate statutory basis after-tax income from operations, realized gains (losses), unrealized gains (losses), and other surplus adjustments, adjusted for the change in Company Action Level required capital (CAL) for Jackson calibrated to a 425% RBC ratio.

We expect free capital generation in 2025 to exceed $1 billion, under normal market conditions.

As explained below under “Liquidity and Capital Resources – Holding Company Liquidity” and “- Distributions from Our Insurance Subsidiaries,” the payment of dividends or distributions from our capital generation is limited by applicable laws and regulations.

◦ The free cash flow at Jackson Financial (Parent Company only) during 2024 was $767 million.

Free cash flow is a non-GAAP financial measure calculated as the difference between cash received by Jackson Financial from its subsidiaries less holding company expenses and other, net.

See “Non-GAAP Financial Measures” below for information regarding our non-GAAP financial measures and reconciliation to the most comparable U.S.

GAAP measure.

• Brooke Life Reinsurance Company (“Brooke Re”):

During the first quarter of 2024, Jackson entered into a 100% coinsurance with funds withheld reinsurance transaction with Brooke Re with all economics of the transaction

Part II | Item 7.

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Executive Summary

• Inflation Reduction Act of 2022 ("IRA"):

As discussed in Item 8.

Note 15 - Income Taxes of Notes to Consolidated Financial Statements in this report, a new corporate alternative minimum tax (“CAMT”) based on adjusted financial statement income, rather than reported taxable income, became effective January 1, 2023.

We are subject to the CAMT in 2023.

Any CAMT incurred is treated as a taxable temporary difference, and recorded as a deferred tax asset ("DTA").

We have determined that a valuation allowance against the DTA is not currently required therefore there is no direct impact on total income tax expense;

although it could affect our cash tax liabilities.

As of December 31, 2023, the Company has recorded an estimate of $263 million for the provision for the CAMT based on the Company's interpretation of guidance with an offsetting increase to the deferred tax asset for the credit carryover resulting in no impact to total tax expense.

The calculation of adjusted financial statement income, and therefore the CAMT, is subject to the issuance of regulatory guidance by the U .S.

Department of the Treasury, which may materially change the estimated provision for the CAMT.

We continue to monitor developments and regulations associated with the IRA for any potential future impacts on our business, financial condition, results of operations and cash flows.

• Brooke Life Reinsurance Company (“Brooke Re”):

During the first quarter of 2024, Jackson entered into a 100% coinsurance with funds withheld reinsurance transaction with Brooke Re with all economics of the transaction effective as of January 1, 2024.

effective as of January 1, 2024.

Jackson and Brooke Re are both direct subsidiaries of Brooke Life.

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.

The transaction primarily provides for the cession from Jackson to Brooke Re of liabilities associated with certain guaranteed benefit riders under variable annuity contracts and similar products of Jackson (“market risk benefits”), both in-force on the transaction effective date and written in the future ( i.e.

, on a “flow” basis) as well as related future fees, claims and other benefits, and maintenance expenses in exchange for a ceding commission for the in-force business.

Jackson retains the variable annuity base contract, the annuity contract administration of the ceded business, and responsibility for investment management of the assets in the funds withheld account supporting the ceded liabilities.

Brooke Re paid a ceding commission of approximately $1.2 billion to Jackson in connection with the execution of the reinsurance transaction.

Brooke Re recorded a ceding commission of approximately $1.2 billion to Jackson in connection with the execution of the reinsurance transaction.

The reinsurance transaction eliminates upon consolidation at JFI.

Holding company liquidity at JFI was not impacted by the transactions.

Brooke Re is a Michigan captive insurer regulated by the Michigan Department of Insurance and Financial Services and created in the first quarter of 2024 for the express purpose of serving as the counterparty to the reinsurance transaction previously described with Jackson.

Holding company liquidity at JFI was not impacted by the transaction.

Brooke Re was capitalized with assets contributed from Brooke Life of approximately $1.9 billion originating from Jackson as a return of capital to Brooke Life.

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.

This outcome will serve the interests of policyholders by protecting statutory capital through diminished non-economic hedging and related costs.

Brooke Re utilizes a modified U.S.

GAAP approach for regulatory reporting purposes 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 and related modified U.S.

GAAP approach mitigate the impact of the cash surrender value floor on Jackson’s total adjusted capital, statutory required capital, and risk-based capital ("RBC") ratio and enables more efficient economic hedging of the underlying risks of Jackson’s business.

This outcome serves the interests of policyholders by protecting statutory capital through diminished non-economic hedging and related costs.

Overall, this transaction allows us to optimize our hedging, stabilize capital generation, and produce more predictable financial results going forward.

• 2024 Annual Actuarial Assumption Updates and Model Enhancements:

Consistent with prior years, we completed our annual actuarial assumptions review in the fourth quarter of 2024.

See “Policy and Contract Liabilities – Actuarial Assumption Updates and Model Enhancements” below and Item 8.

The following table reflects the impacts from our annual assumption review to Pretax Income (Loss) for the periods presented:

Years Ended December 31,

2024 2023 2022

(in millions)

Assumption Review Impact:

Net gains (losses) on derivatives and investments $ 15 $ (8) $ (1)

Total assumption review impact on Total Revenues 15 (8) (1)

Death, other policy benefits and change in policy reserves, net of deferrals $ (4) $ 21 $ 8

(Gain) loss from updating future policy benefits cash flow assumptions, net 30 41 (46)

Market risk benefits (gains) losses, net 434 398 485

Amortization of deferred acquisition costs — (2) —

Total assumption review impact on Total Benefits and Expenses 460 458 447

Total assumption review impact on Pretax Income (Loss) $ (445) $ (466) $ (448)

The following table reflects the impacts from our annual assumption review to segment Pretax Adjusted Operating Earnings for the periods presented:

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Key Operating Measures

Executive Summary

Years Ended December 31,

2024 2023 2022

(in millions)

Assumption Review Impact on Pretax Adjusted Operating Earnings by Segment:

Retail Annuities $ 42 $ — $ (9)

Closed Life and Annuity Blocks (68) (60) 47

Total assumption review impact on Pretax Adjusted Operating Earnings $ (26) $ (60) $ 38

Key Operating Measures

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Fixed Annuities (1)

1,433 193 162

Total Retail Annuity Sales 17,849 12,833 15,737

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(1) Includes payout annuities

For the year ended December 31, 2023, total sales decreased significantly compared to the year ended December 31, 2022.

Lower retail sales were primarily due to decreased sales of our variable annuities with lifetime living benefits, partially offset by RILA sales.

Sales of fixed index and fixed annuities increased in 2023 due to the higher interest rate environment, which enabled more favorable pricing actions.

In addition, sales of our institutional products were lower compared to the year ended December 31, 2022, reflecting our opportunistic approach to this business, depending on both the risk-adjusted return on investment opportunities available and the prevailing cost of funding required by purchasers.

Higher retail annuity sales for the year ended December 31, 2024, were primarily due to increased RILA and fixed annuity sales in 2024.

Sales in the fixed annuity market, particularly in the third quarter 2024, were robust as consumers looked to lock in crediting rates during a period with declining interest rates.

While we expect our distribution efforts to continue to deliver higher levels of fixed annuity sales going forward, we expect near-term volumes will be below third quarter 2024 levels.

In addition, sales of our institutional products were higher for the year ended December 31, 2024, reflecting our opportunistic approach to this business, which depends on both the risk-adjusted return on investment opportunities available and the prevailing cost of funding required by purchasers.

Part II | Item 7.

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Account value ("AV") generally equals the account value of our variable annuities, RILA, fixed index annuities, fixed annuities, interest sensitive life, and institutional products.

It reflects the total amount of customer invested assets that have accumulated within a respective product and equals cumulative customer contributions, which includes gross deposits or premiums, plus accrued credited interest plus or minus the impact of market movements, as applicable, less withdrawals and various fees.

It reflects the total amount of customer invested assets that have accumulated within a respective product and equals cumulative customer contributions, which includes gross deposits or premiums, plus accrued credited interest plus or minus the impact of equity market movements, as applicable, less withdrawals and various fees.

We believe account value is a useful metric in providing an understanding of, among other things, the sources of potential fee and spread income generation, potential benefit obligations and risk management priorities.

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Fixed Annuity (1)

1,302 (11) 90

Payout Annuity (1)

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(1) Net of reinsurance

Net flows, net of reinsurance, decreased for the year ended December 31, 2023, compared to the year ended December 31, 2022, driven by the decreased variable annuity sales coupled with increased variable annuity surrenders and withdrawals, partially offset by increased RILA sales.

Net flows, net of reinsurance, decreased for the year ended December 31, 2024, compared to the year ended December 31, 2023, driven by increased variable annuity surrenders and withdrawals due to some mature policies from higher sales years coming out of their surrender charge period, along with higher surrenders as guarantee benefits are less in the money during times of strong equity market performance.

The more recent environment of higher interest rates and attractive annuity alternatives, such as RILA, combined with Jackson’s seasoned “out-of-the-money” book heightens exchange activity for us and the industry.

The decrease in variable annuity net flows was partially offset by increased RILA and fixed annuity sales.

Variable annuity net flows were more than offset by an increase in AUM, as defined below, due to market performance in 2024.

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1,218 1,561 1,352 1,799

GMAB 35 35 — —

Total $ 236,057 $ 188,051 $ 227,777 $ 195,869

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(1) Substantially all our GMIB benefits are reinsured.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Key Operating Measures

Assets Under Management

AUM, or assets under management, refers to investment assets that are managed by one of our subsidiaries and includes:

(i) assets managed by PPM, including our investment portfolio (but excluding assets held in funds withheld accounts for reinsurance transactions) and third-party assets (including our former parent and its affiliates) and (ii) the separate account assets of our Retail Annuities segment managed and administered by one of our subsidiaries, Jackson National Asset Management LLC ("JNAM").

AUM, or assets under management, includes:

(i) investment assets managed by one of our subsidiaries, PPM, including our investment portfolio (but excluding assets held in funds withheld accounts for reinsurance transactions) and third-party assets (including our former parent and its affiliates) and (ii) the separate account investment assets of our Retail Annuities segment managed and administered by another subsidiary, JNAM.

Total AUM reflects exclusions between segments to avoid double counting.

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Total AUM increased for the year ended December 31, 2024, compared to the year ended December 31, 2023, driven primarily by an increase in separate account balances managed by JNAM due to positive equity market returns during the year.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends

Macroeconomic, Industry and Regulatory Trends

We discuss a number of trends and uncertainties below that we believe could materially affect our future business performance, including our results of operations, our investments, our cash flows, and our capital and liquidity position.

Risk Factors – “Risks Related to Conditions in Global Financial Markets and the Economy” and “Risks Related to Legal, Tax and Regulatory Matters” in this Form 10-K.

Macroeconomic and Financial Market Conditions

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Monetary and fiscal policy in the U.S., or similar actions in foreign nations, could result in increased volatility in financial markets, including interest rates, currencies and equity markets, and could impact our business in both the short- and medium-term.

Government actions, including responses to future pandemics, civil unrest, tariffs or other barriers to international trade, and the effects that these or other government events could have on levels of U.S.

Government actions, including responses to future pandemics, civil unrest, tariffs, sanctions or other barriers to international trade, and the effects that these or other government events could have on levels of U.S.

economic activity, could also impact our business through any of their individual impacts on consumers’ behavior or on financial markets.

In the short- to medium-term, the potential for increased volatility could pressure sales and reduce demand for our products as consumers consider purchasing alternative products to meet their objectives.

Our financial performance can be adversely affected by market volatility and equity market declines if fees assessed on the account value of our annuities fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows.

In early March through late April 2023, several regional U.S.

banks were taken over by federal regulators with the Federal Deposit Insurance Corporation ("FDIC") named as the receiver.

These bank failures raised concern among investors and depositors regarding the solvency and liquidity of regional banks across the country, leading to increased stress on the banking sector.

Except for assets held as part of reinsurance arrangements within our funds withheld portfolios, where the Company does not have direct exposure to default risk, the Company's general account portfolio had no exposure to Silicon Valley Bank ("SVB"), Signature Bank, First Republic Bank, and Credit Suisse Additional Tier 1 debt as of December 31, 2023.

Our financial performance can be adversely affected by market volatility and equity market declines if fees assessed on the account value of our annuities fluctuate, hedging costs increase, or revenues decline due to reduced sales and increased outflows.

Equity Market Environment

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On our variable annuities, the fees we earn that are not associated with guaranteed benefits are mainly based on the account value, which changes with equity market levels.

In addition, our hedges could be less effective in periods of large directional movements or we could experience more frequent or more costly rebalancing in periods of high volatility, which would lead to adverse performance versus our

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends

hedge targets and increased hedging costs.

Further, we also are exposed to basis risk, which results from our inability to purchase or sell hedge assets whose performance is directly correlated to the performance of the funds into which customers allocate their assets.

In addition, our hedges could be less effective in periods of large directional movements, or we could experience more frequent or more costly rebalancing in periods of high volatility, which would lead to adverse performance versus our hedge targets and increased hedging costs.

Further, we also are exposed to basis risk, which results from our inability to purchase or sell hedge assets whose performance strongly correlates to the performance of the funds into which customers allocate their assets.

We make available to customers funds where we believe we can transact in sufficiently correlated hedge assets, yet we anticipate some variance in the performance of our hedge assets and customer funds.

This variance may result in our hedge assets outperforming or underperforming the customer assets they are intended to match.

This variance may be exacerbated during periods of high volatility, leading to a mismatch in our hedge results relative to our hedge targets and U.S GAAP results.

This variance may be exacerbated during periods of high volatility, leading to a mismatch in our hedge results relative to our hedge targets and U.S.

GAAP results.

With the execution of the Brooke Re transaction in the first quarter of 2024, we are now able to largely moderate the impact of the cash surrender value floor going forward.

In the past, our statutory total adjusted capital ("TAC") has been negatively impacted by rising equity markets due to minimum required reserving levels (i.e., the cash surrender value floor) when reserve releases are limited and unable to offset equity hedging losses.

The risk-based capital, or RBC, ratio increased or decreased depending on the interaction between movements in TAC and movements in statutory required capital (the company action level, or "CAL”).

Interest Rate Environment

The interest rate environment has affected, and will continue to affect, our business and financial performance for the following reasons:

• Periods of sharp rises in interest rates, as we have seen as a result of the Federal Reserve’s past actions, impact investment-related activity including investment income returns, net investment spread results, new money rates, mortgage loan prepayments, and bond redemptions.

Due to increases in interest rates, the yield on new investments has generally exceeded the yield on asset maturities and redemptions (runoff yield).

Rising interest rates also impact the hedging results of our variable annuity business as the market value of interest rate hedges decline, thereby driving immediate hedging losses.

• Periods of rising interest rates impact investment-related activity, including investment income returns, net investment spread results, new money rates, mortgage loan prepayments, and bond redemptions .

Rising interest rates also impact the hedging results of our variable annuity business as the market values of interest rate hedges decline, thereby driving hedging losses.

We would expect lower hedging costs and reduced levels of hedging going forward after such an increase in rates.

Further, we expect near-term hedging losses from rising rates may be more than offset by changes in the fair value of the related guaranteed benefit liabilities, which are reduced with an increase in interest rates due to the higher discount rate.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends

• Interest rate increases also expose us to disintermediation risk, where higher rates make currently sold fixed annuity products more attractive while simultaneously reducing the market value of assets backing our liabilities.

This creates an incentive for our customers to lapse their products in an environment where selling assets causes us to realize losses.

• In the past, our statutory total adjusted capital ("TAC") has been negatively impacted by rising rates due to minimum required reserving levels ( i.e.

, cash surrender value floor) when reserve releases are limited and unable to offset interest rate hedging losses.

The risk-based capital, or RBC, ratio increased or decreased depending on the interaction between movements in TAC and movements in statutory required capital (the company action level, or "CAL”);

such movements can impact available dividends from our insurance subsidiaries.

We expect the Brooke Re transaction to largely moderate the impact of the cash surrender value floor going forward.

See Executive Summary above for more information regarding the Brooke Re Transaction.

• Low interest rate environments could also subject us to increased hedging costs or an increase in the amount of statutory reserves that our insurance subsidiaries are required to hold for optional guaranteed benefits, decreasing statutory surplus, which would adversely affect our insurance subsidiaries' ability to pay dividends.

• With the execution of the Brooke Re transaction in the first quarter of 2024, we are now able to largely moderate the impact of the cash surrender value floor going forward.

In the past, our statutory TAC may have been negatively impacted by rising interest rates due to minimum required reserving levels (i.e., the cash surrender value floor) when reserve releases are limited and unable to offset interest rate hedging losses.

The RBC ratio increased or decreased depending on the interaction between movements in TAC and movements in CAL.

• Pricing actions we take in response to decreasing interest rates may reduce the attractiveness of crediting rates, guaranteed benefits, and other product features.

This in turn may lead to reduced sales volumes.

• Low interest rate environments could also subject us to increased hedging costs or an increase in the amount of regulatory reserves that our insurance subsidiaries are required to hold for optional guaranteed benefits, decreasing regulatory surplus, which would adversely affect our insurance subsidiaries' ability to pay dividends.

In addition, low interest rates could also increase the perceived value of optional guaranteed benefit features to our customers, which in turn could lead to a higher utilization of withdrawal or annuitization features of annuity policies and higher persistency of those products over time.

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As credit spreads widen, the fair value of our existing investment portfolio generally decreases, although we generally expect the widening spreads to increase the yield on new fixed income investments.

Conversely, as credit spreads tighten, the fair value of our existing investment portfolio

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends

generally increases, and the yield available on new investment purchases decreases.

Conversely, as credit spreads tighten, the fair value of our existing investment portfolio generally increases, and the yield available on new investment purchases decreases.

While changing credit spreads impact the fair value of our investment portfolio, this revaluation is generally reflected in our accumulated other comprehensive income, or AOCI.

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In addition, if credit conditions deteriorate due to a recession or other negative credit events in capital markets, we could experience an increase in defaults and other-than-temporary-impairments (“OTTI”).

OTTI in our underlying investments would result in a reduction in TAC held by our insurance company subsidiaries.

Also, shifts in the credit quality or credit rating downgrades of our investments as a result of stressed credit conditions may also impact the level of regulatory required statutory capital for our insurance company subsidiaries.

OTTI in our underlying investments would reduce our insurance company subsidiaries' regulatory capital.

Also, shifts in the credit quality or credit rating downgrades of our investments as a result of stressed credit conditions may impact the level of regulatory required capital for our insurance company subsidiaries.

As such, significant credit rating downgrades along with elevated defaults and OTTI losses would negatively impact our RBC ratio, which could impact available dividends from our insurance subsidiaries.

Pandemics and Other Public Health Crises

The COVID-19 pandemic disrupted our business and contributed to additional operating costs in prior years.

Other similar pandemics, epidemics or disease outbreaks in the U.S.

or globally could disrupt our business by affecting how we protect and interact with our critical workforce, customers, key vendors, third-party suppliers, or counterparties with whom we transact.

Disruption could result from an inability of those persons to work or transact effectively due to illness, quarantines, and government actions in response to public health emergencies.

The extent and severity of governmental actions will necessarily depend on the extent and severity of the perceived emergency.

We have risk management plans in place and were able to navigate through COVID-19 with remote and hybrid work environments;

however, those plans may be challenged by a new public health emergency.

Consumer Behavior

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In recent years, we have introduced new products to better address changes in consumer demand and targeted distribution channels that meet changes in consumer preferences.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends

We expect demographic trends in the U.S.

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Our insurance company subsidiaries are regulated primarily at the state level, with some policies and products also subject to federal regulation.

New federal and state regulations could impact our business model, including statutory reserve and capital requirements.

Our ability to respond to changes in regulation and other legislative activity are critical to our long-term financial performance.

New federal and state regulations could impact our business model, including regulatory reserve and capital requirements.

Our ability to respond to changes in regulation and other legislative activity is critical to our long-term financial performance.

T he following regulations could materially impact our business:

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In recent years, Congress approved legislation beneficial to our business model.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act"), approved by Congress on December 20, 2019, provides

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends

individuals with greater access to retirement products.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act"), approved by Congress on December 20, 2019, provides individuals with greater access to retirement products.

Namely, it made it easier for 401(k) programs to offer annuities as an investment option by, among other things, creating a statutory safe harbor in ERISA for a retirement plan’s selection of an annuity provider.

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tax laws change such that our annuities no longer offer tax-deferred advantages, demand for our products could materially decrease.

Changes to individual income tax rates and other elements of tax policy can make the tax deferral aspects of our products more or less attractive to consumers, affecting demand for our products.

Non-GAAP Financial Measures

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These non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with U.S.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Non-GAAP Financial Measures

Adjusted Operating Earnings

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(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 accounting guidance on January 1, 2021 associated with items excluded from 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.

(ii) net gains (losses) on hedging instruments which includes:

(a) changes in the fair value of freestanding derivatives, and related commissions and expenses, used to manage the risk associated with market risk benefits and other guaranteed benefit features, excluding earned income from periodic settlements and changes in settlement accruals on cross-currency swaps;

and (b) investment income and change in fair value of certain non-derivative assets used to manage the risk associated with market risk benefits and other guaranteed benefit features;

and (iii) the movements in reserves, market risk benefits, guaranteed benefit features accounted for as embedded derivative instruments, and related claims and benefit payments (excluding impacts of actuarial assumption updates and model enhancements).

We believe excluding these items removes the impact to both revenue and related expenses associated with Net Hedging Results.

Amortization of DAC associated with non-operating items at date of transition to LDTI:

Amortization of the balance of unamortized deferred acquisition costs, at January 1, 2021, the date of transition to current Long Duration Targeted Improvements ("LDTI") accounting guidance, associated with items excluded from pretax adjusted operating earnings prior to transition.

Actuarial Assumption Updates and Model Enhancements:

The impact on the valuation of MRBs and embedded derivatives arising from our annual actuarial assumption updates and model enhancements review.

Net Realized Investment Gains and Losses:

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(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.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Non-GAAP Financial Measures

Change in Value of Funds Withheld Embedded Derivative and Net investment income on funds withheld assets:

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

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Non-GAAP Financial Measures

The following is a reconciliation of Adjusted Operating Earnings to net income (loss) attributable to Jackson Financial common shareholders, the most comparable U.S.

10 unchanged sentences

Fees attributable to guarantee benefit reserves (3,122) (3,125) (3,077)

Net movement in freestanding derivatives 4,651 2,744 5,674

Net (gains) losses on hedging instruments 5,856 4,651 2,744

Market risk benefits (gains) losses, net (4,243) (4,295) (4,021)

Net reserve and embedded derivative movements 1,224 779 221

Total net hedging results (285) (1,990) (4,133)

Amortization of DAC associated with non-operating items at date of transition to LDTI 541 591 658

Total guaranteed benefits and net hedging results (993) (2,989) (269)

Actuarial assumption updates and model enhancements 419 406 486

Net realized investment (gains) losses 11 554 359

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Adjusted Book Value Attributable to Common Shareholders excludes Preferred Stock and AOCI attributable to Jackson Financial, which does not include AOCI arising from investments held within the funds withheld account related to the Athene Reinsurance Transaction.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Non-GAAP Financial Measures

We exclude AOCI attributable to Jackson Financial from Adjusted Book Value Attributable to Common Shareholders because our invested assets are generally invested to closely match the duration of our liabilities, which are longer duration in nature, and therefore we believe period-to-period fair market value fluctuations in AOCI to be inconsistent with this objective.

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However, we believe the adjustments to equity and earnings are useful to gaining an understanding of our overall results of operations.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Non-GAAP Financial Measures

The following is a reconciliation of Adjusted Book Value Attributable to Common Shareholders to total shareholders’ equity and a comparison of Adjusted Operating ROE Attributable to Common Shareholders to ROE Attributable to Common Shareholders, the most comparable U.S.

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2024 2023 2022

(in millions)

(in millions, except percentages)

Net income (loss) attributable to Jackson Financial Inc.

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and are therefore not included as an adjustment to total shareholders’ equity in the reconciliation of Adjusted Book Value Attributable to Common Shareholders to total shareholders’ equity.

Free Cash Flow

Free cash flow is Jackson Financial Inc.

(Parent Company only) net cash provided by (used in) operating activities less preferred stock dividends and capital contributions to PPM or other subsidiaries, plus the return of capital from subsidiaries.

Free cash flow should not be used as a substitute for Jackson Financial’s net cash provided by (used in) operating activities in accordance with U.S.

However, we believe these adjustments are useful to gaining an understanding of our overall available cash flow at Jackson Financial for return of capital to common shareholders or other corporate initiatives.

Years Ended December 31,

(in millions)

Dividends and distributions to parent (1)

Jackson Financial expenses and other, net (108) (102)

Free Cash Flow $ 767 $ 498

(1) Cash distributed to Jackson Financial includes cash dividends and distributions of $785 million and interest payments on surplus notes of $90 million to Jackson Financial from its subsidiaries for the year-ended December 31, 2024 and includes cash dividends and distributions of $510 million and interest payments on surplus notes of $90 million to JFI from its subsidiaries for the year-ended December 31, 2023.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Non-GAAP Financial Measures

The following is a reconciliation of Jackson Financial net cash provided by operating activities (Parent Company only), the most comparable U.S.

GAAP measure, to Free Cash Flow:

Years Ended December 31,

(in millions)

Jackson Financial, Inc.

Net cash provided by operating activities (Parent Company Only) $ 51 $ 398

Adjustments from net cash provided by operating activities to free cash flow:

Capital distributions from subsidiaries 785 150

Capital contributed to PPM (25) (15)

Dividends on preferred stock (44) (35)

Total adjustments 716 100

Free cash flow $ 767 $ 498

Free Cash Flow Comprised of:

Capital distributions from subsidiaries $ 785 $ 150

Dividends from subsidiaries — 360

Interest on surplus note from subsidiary 90 90

Cash distributed to Jackson Financial 875 600

Parent company expenses (124) (118)

Net investment income and other income 24 28

Other, net (8) (12)

Jackson Financial expenses and other, net (108) (102)

Free cash flow $ 767 $ 498

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Consolidated Results of Operations

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Pretax Income (Loss)

Our pretax income (loss) decreased by $6,776 million to pretax income of $958 million for the year ended December 31, 2023, from $7,734 million for the year ended December 31, 2022, primarily due to:

Our pretax income (loss) increased by $64 million to pretax income of $1,022 million for the year ended December 31, 2024, from $958 million for the year ended December 31, 2023, primarily due to:

• $403 million increase in fee income due to higher average separate account values compared to the prior year;

• $153 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to the impact of actuarial assumption updates, improved mortality, and lower other policyholder benefits.

See " Policy and Contract Liabilities" below for further information regarding our actuarial assumption updates;

• $35 million decrease in interest credited on contract holder funds, net of deferrals, primarily due to lower average fixed account balances in 2024, compared to the prior year.

These increases were largely offset by:

• $276 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during 2024, an increase in incentive compensation expenses, and higher other commissions, net of deferrals, driven primarily by higher RILA sales in 2024;

• $199 million decrease in total net gains (losses) on derivatives and investments as shown in table below and driven by:

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Total net gains (losses) on derivatives and investments $ (7,864) $ (7,665) $ (199)

• Freestanding derivative losses on our equity derivatives were primarily driven by market increases in 2023, compared to decreases in the prior year, partially offset by gains within our interest rate related hedge instruments, reflecting relatively flat interest rate movements in 2023, compared to increasing rates in the prior year;

• Losses recognized on funds withheld reinsurance were driven by slightly lower rates in 2023 compared to gains in the prior year due to the significant rise in interest rates during 2022.

• $279 million increase in interest credited on contract holder funds, net of deferrals, primarily due to an increase in GMICRs on variable annuity general account funds and higher crediting rates on new institutional business;

• $117 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in deferred and incentive compensation expenses during 2023 compared to the prior year;

• $72 million higher interest expense incurred during 2023 primarily related to interest on our repurchase agreements, senior notes, and other short-term borrowings;

• $42 million decrease in fee income primarily due to lower average separate account values compared to prior year;

• $39 million increase in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to the impact of actuarial assumption updates and a $31 million increase in our allowance for reinsurance credit losses related to a specific reinsurer that was recently ordered into liquidation, partially offset by improved mortality and a greater decrease in reserves due to the payout of persistency bonuses on a portion of the business.

See " Policy and Contract Liabilities" below for further information regarding our actuarial assumption changes .

These decreases were partially offset by:

• $361 million favorable movements in market risk benefits (gains) losses, net, primarily driven by positive fund performance in the current year compared to declines in the prior year, as well as favorable changes in implied volatility, with offsetting unfavorable movements in interest rates in the current year;

• $169 million increase in net investment income as a result of higher income on bonds and short-term investments, driven by higher yields in 2023, partially offset by higher expenses related to consolidation in 2023 and lower income on limited partnership investments, which are recorded on a one quarter lag.

Income tax expense decreased $1,501 million to an expense of $4 million for the year ended December 31, 2023, from an expense of $1,505 million for the year ended December 31, 2022.

The 2023 income tax expense represents an effective tax

• Volumes of freestanding derivatives can significantly vary period over period and movements in those derivatives are subject to interest rate or equity market movements.

The movements in interest rate hedges during 2024 were primarily driven by an increase in interest rates, compared to relatively flat interest rate movements in 2023.

The movements in equity hedges during 2024 were primarily driven by slight increases in equity markets, compared to 2023.

• Embedded derivative movements were unfavorable primarily due to the impact of market increases on our growing RILA block during 2024, compared to the prior year.

• $88 million unfavorable movements in market risk benefits (gains) losses, net, primarily due to less favorable movements in equity volatility and fund performance, partially offset by more favorable changes in interest rates in 2024 compared to the prior year.

Income tax expense increased $42 million to an expense of $46 million for the year ended December 31, 2024, from an expense of $4 million for the year ended December 31, 2023.

The provision for income tax in the current period led to an effective tax rate ("ETR") of 5% for the year ended December 31, 2024, compared to an ETR of 1% for the year ended December 31, 2023.

The change in the ETR during the year ended December 31, 2024 compared to the year ended December 31, 2023 was due to the relationship of the taxable income to the consolidated pre-tax income.

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

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Consolidated Results of Operations

rate of 1%, versus a 2022 income tax expense that represents an effective income tax rate of 20%.

The lower effective tax rate for December 31, 2023 compared to December 31, 2022 is due to lower pretax earnings with similar amounts of permanent benefits.

Our effective tax rate typically varies from the marginal statutory rate of 21% due to the impact of permanent tax differences, such as dividends received deduction and foreign tax credits.

See “Recent Events of Note – Inflation Reduction Act of 2022” above regarding the effect of the IRA on cash tax liabilities.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Segment Results of Operations

We manage our business through three segments:

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Pretax Adjusted Operating Earnings by Segment

The following table summarizes pretax adjusted operating earnings (non-GAAP) from the Company's business segment operations and also provides a reconciliation of the segment measure to net income on a consolidated GAAP basis.

Also, see Item 8.

Financial Statements and Supplementary Data - Note 3 - Segment Information of Notes to Consolidated Financial Statements for further information regarding the calculation of pretax adjusted operating earnings :

Financial Statements and Supplementary Data — Note 3 - Segment Information of the Notes to Consolidated Financial Statements for further information regarding the calculation of pretax adjusted operating earnings :

Years Ended December 31,

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Fees attributable to guarantee benefit reserves 3,122 3,125 3,077

Net movement in freestanding derivatives (4,651) (2,744) (5,674)

Net gains (losses) on hedging instruments (5,856) (4,651) (2,744)

Market risk benefits gains (losses), net 4,243 4,295 4,021

Net reserve and embedded derivative movements (1,224) (779) (221)

Total net hedging results 285 1,990 4,133

Amortization of DAC associated with non-operating items at date of transition to LDTI (541) (591) (658)

Total guaranteed benefits and net hedging results 993 2,989 269

Actuarial assumption updates and model enhancements (419) (406) (486)

Net realized investment gains (losses) (11) (554) (359)

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Net investment income 725 436 410

Income (loss) on operating derivatives (45) 17 52

Other income 32 37 42

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Interest expense 23 24 22

Operating costs and other expenses, net of deferrals 2,178 2,174 2,456

Asset-based commission expenses 1,137 1,022 1,010

Other commission expenses 891 691 809

Sub-advisor expenses 334 318 337

General and administrative expenses 788 677 642

Deferral of acquisition costs (693) (530) (624)

Amortization of deferred acquisition costs 559 551 557

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Balance as of end of period, gross of reinsurance $ 266,716 $ 253,835 $ 232,004

Year Ended December 31, 2023 compared to Year Ended December 31, 2022

Pretax Adjusted Operating Earnings

Pretax a djusted operating earnings decreased $143 million to $1,364 million for the year ended December 31, 2023 from $1,507 million for the year ended December 31, 2022 primarily due to:

• $72 million decrease in fee income primarily due to lower average separate account values compared to prior year;

Part II | Item 7.

1 unchanged sentence

Segment Results of Operations

• $62 million decrease in income on operating derivatives primarily due to the increase in floating rates during 2023;

• $52 million increase in interest expense incurred in the current year primarily related to interest on our repurchase agreements and other short-term borrowings.

These decreases were partially offset by:

• $18 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to lower other policyholder benefits in 2023;

• $17 million increase in spread income primarily due to $138 million higher net investment income, partially offset by $121 million higher interest credited on contract holder funds driven by resetting GMICRs on variable annuity fixed rate options in the first quarter of 2023.

Year Ended December 31, 2024 compared to Year Ended December 31, 2023

Pretax Adjusted Operating Earnings

Pretax a djusted operating earnings increased $491 million to $1,855 million for the year ended December 31, 2024 from $1,364 million for the year ended December 31, 2023 primarily due to:

• $424 million increase in fee income primarily due to higher average separate account values compared to prior year;

• $301 million increase in spread income primarily due to $289 million higher net investment income and $12 million lower interest credited on contract holder funds.

The increase in investment income was primarily driven by higher income on bonds driven by higher asset balances earning higher yields in 2024, compared to the prior year, partially offset by higher investment expenses related to portfolio leveraged costs;

• $26 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to the impact of actuarial assumption updates, lower other policyholder benefits, and an increase in payout annuity reserves.

See " Policy and Contract Liabilities" below for further information regarding our actuarial assumption updates .

These increases were partially offset by:

• $279 million increase in commissions, sub-advisor, and general expenses, net of deferrals, primarily driven by a $115 million increase in non-deferrable asset-based commissions expense, primarily due to higher account values during 2024, and a $200 million increase in other commission expenses, net of deferrals of $163 million, primarily due to higher RILA sales in 2024.

In addition, general and administrative expenses increased $111 million primarily due to an increase in incentive compensation expenses in the current year.

Account Value

Retail annuities account value, net of reinsurance, increased $25.5 billion between periods primarily due to positive variable annuity separate account returns driven by favorable market performance in 2023, as well as positive RILA net flows over the period.

Retail annuities account value, net of reinsurance, increased $16.2 billion between periods primarily due to positive variable annuity separate account returns driven by favorable market performance in 2024, as well as positive RILA and fixed annuity net flows over the period.

Institutional Products

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Net investment income $ 438 $ 408 $ 285

Income (loss) on operating derivatives (50) (22) (3)

Total Operating Revenues 438 408 285

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Interest credited on other contract holder funds, net of deferrals and amortization 338 334 201

Interest expense 16 5 —

Operating costs and other expenses, net of deferrals 5 5 5

General and administrative expenses 4 5 5

Total Operating Benefits and Expenses 342 339 206

Pretax Adjusted Operating Earnings $ 96 $ 69 $ 79

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Segment Results of Operations

The following table summarizes a roll-forward of activity affecting account value for our Institutional Products segment for the periods indicated:

7 unchanged sentences

Net flows (270) (985) 40

Credited Interest 334 201 188

Interest credited 338 334 201

Policy Charges and other (90) 38 (52)

Balance as of end of period $ 8,384 $ 8,406 $ 9,019

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Segment Results of Operations

Year Ended December 31, 2024 compared to Year Ended December 31, 2023

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $10 million to $69 million for the year ended December 31, 2023 from $79 million for the year ended December 31, 2022 primarily due to higher interest credited on new business and floating rate contract holder funds, decreased income on operating derivatives resulting from changes in currency exchange rates and the increase in floating rates in 2023, and higher interest expense, partially offset by higher investment income.

Pretax adjusted operating earnings increased $27 million to $96 million for the year ended December 31, 2024 from $69 million for the year ended December 31, 2023 primarily due to a $26 million increase in spread income primarily due to $30 million higher investment income, partially offset by $4 million higher interest credited on contract holder funds.

Account Value

Institutional product account value decreased from $8,406 million at December 31, 2023 to $8,384 million at December 31, 2024.

The decrease in account value was driven by continued maturities of the existing contracts, partially offset by new issuances in 2023.

The decrease in account value was driven by continued maturities of the existing contracts and funding agreements, mostly offset by an increase in sales in 2024.

Closed Life and Annuity Blocks

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Closed Block Life and Annuity Blocks segment.

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Closed Life and Annuity Blocks segment.

The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this report:

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Net investment income 659 644 737

Income (loss) on operating derivatives (45) 31 72

Other income 31 25 35

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Interest credited on other contract holder funds, net of deferrals and amortization 410 437 412

Operating costs and other expenses, net of deferrals 163 130 179

Other commission expenses 37 29 37

General and administrative expenses 106 115 97

Deferral of acquisition costs 7 19 (4)

Amortization of deferred acquisition costs 8 10 11

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Pretax Adjusted Operating Earnings $ (9) $ (95) $ 117

Year Ended December 31, 2023 compared to Year Ended December 31, 2022

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $212 million to $(95) million for the year ended December 31, 2023 from $117 million for the year ended December 31, 2022 primarily due to:

• $76 million decrease in income on operating derivatives primarily due to the increase in floating rates during 2023;

• $37 million increase in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to the impact of actuarial assumption updates and a $31 million increase in our allowance for reinsurance credit losses related to a specific reinsurer which was recently ordered into liquidation, partially offset by improved mortality and a greater decrease in reserves due to

Part II | Item 7.

1 unchanged sentence

Segment Results of Operations

the payout of persistency bonuses on a portion of the business.

See “ Policy and Contract Liabilities” below for further information regarding our actuarial assumption changes ;

• $33 million increase in operating costs and other expenses, net of deferrals, primarily due to higher commissions, net of deferrals, related to persistency bonuses in 2023, and an increase in incentive compensation expenses compared to the prior year;

• $25 million increase in interest credited on other contract holder funds related to persistency bonuses in 2023.

Year Ended December 31, 2024 compared to Year Ended December 31, 2023

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings increased $86 million to $(9) million for the year ended December 31, 2024 from $(95) million for the year ended December 31, 2023 primarily due to:

• $70 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to the impact of actuarial assumption updates, improved mortality, and lower other policyholder benefits.

See “ Policy and Contract Liabilities” below for further information regarding our actuarial assumption updates ;

• $27 million decrease in interest credited on other contract holder funds related to persistency bonuses.

Corporate and Other

Corporate and Other includes the operations of PPM Holdings, Inc., the holding company of PPM, and unallocated corporate revenue and expenses, as well as certain eliminations and consolidation adjustments.

Corporate and Other includes the operations of PPM Holdings, Inc., the parent holding company of PPM, and unallocated corporate revenue and expenses, as well as certain eliminations and consolidation adjustments.

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for Corporate and Other.

7 unchanged sentences

Net investment income (2) 58 79

Income (loss) on operating derivatives (13) 14 32

Other income (19) 5 8

2 unchanged sentences

Interest expense 78 85 76

Operating costs and other expenses, net of deferrals 203 123 147

Sub-advisor expenses (8) (7) (8)

General and administrative expenses 222 210 131

Total Operating Benefits and Expenses 292 288 199

2 unchanged sentences

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $113 million to $(173) million for the year ended December 31, 2023 from $(60) million for the year ended December 31, 2022 primarily due to the following:

• $80 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in deferred compensation expenses in 2023;

• $27 million decrease in income on operating derivatives primarily due to the increase in floating rates in 2023;

• $9 million higher interest expense incurred in the current year primarily related to our senior notes.

Financial Statements and Supplementary Data - Note 13 - Long-Term Debt of Notes to Consolidated Financial Statements for further information regarding our long-term debt .

Pretax adjusted operating earnings decreased $91 million to $(264) million for the year ended December 31, 2024 from $(173) million for the year ended December 31, 2023 primarily due to a $60 million decrease in net investment income, and a $24 million decrease in other income primarily due to a one-time reinsurance related adjustment.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

Our investment portfolio primarily consists of fixed-income securities and loans, primarily publicly-traded corporate and government bonds, private securities and loans, asset-backed securities and mortgage loans.

Our investment portfolio primarily consists of fixed-income securities and loans, publicly-traded corporate and government bonds, private securities and loans, asset-backed securities and mortgage loans.

Asset-backed securities include mortgage-backed and other structured securities.

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We utilize repurchase and reverse repurchase transactions as a part of our overall portfolio management program to assist with collateral requirements associated with our hedging program and other liquidity needs of our insurance subsidiaries.

Our investment program seeks to generate a competitive rate of return on our invested assets to support the profitable growth of our business, while maintaining investment portfolio allocations within the Company’s risk tolerance.

This means maximizing risk-adjusted return within the context of a largely fixed income portfolio while also managing exposure to downside risk in a stressed environment, regulatory and rating agency capital models, overall portfolio yield, diversification and correlation with other investments and company exposures.

The investments within our investment portfolio are primarily managed by PPM, our wholly-owned registered investment advisor.

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Certain investments held in funds withheld accounts for reinsurance transactions are managed by Apollo Insurance Solutions Group LP ("Apollo"), an Athene affiliate.

Financial Statements and Supplementary Data -- Note 8 - Reinsurance of Notes to Consolidated Financial Statements for further details .

Financial Statements and Supplementary Data — Note 8 - Reinsurance of the Notes to Consolidated Financial Statements for further details .

We may also use other third-party investment managers for certain niche asset classes.

As of December 31, 2024, Apollo managed $13.4 billion of cash and investments and other third-party investment managers managed approximately $278 million of investments.

Our Investment Committee has specified a target strategic asset allocation (“SAA”) that is designed to deliver the highest expected return within a defined risk tolerance while meeting other important objectives such as those mentioned in the prior paragraph.

23 unchanged sentences

Total investments $ 44,325 $ 16,682 $ 61,007 $ 41,319 $ 19,536 $ 60,855

Available-for-sale debt securities decreased to $40,422 million at December 31, 2023 from $42,489 million at the end of 2022, primarily due to dispositions, partially offset by declines in unrealized losses primarily in the funds withheld portfolio.

The amortized cost of debt securities, available-for-sale, decreased from $48,798 million as of December 31, 2022 to $44,843 million as of December 31, 2023.

Available-for-sale debt securities decreased to $40,289 million at December 31, 2024 from $40,422 million at the end of 2023.

The amortized cost of debt securities, available-for-sale, increased to $44,976 million at December 31, 2024 from $44,843 million as of December 31, 2023.

Further, net unrealized losses, after adjusting for allowance for credit loss, were $4,679 million as of December 31, 2024, compared to $4,401 million as of December 31, 2023.

Other Invested Assets

Other invested assets decreased to $2,466 million at December 31, 2023 from $3,595 million at December 31, 2022 , primarily due to the sale of limited partnerships during 2023.

Other invested assets increased to $2,864 million at December 31, 2024 from $2,466 million at December 31, 2023.

Part II | Item 7.

56 unchanged sentences

(1) No single remaining industry exceeds 3% of the portfolio.

The tightening credit spreads of investment grade corporate securities resulted in decreased unrealized losses during the year ended December 31, 2023.

Of the $1,741 million total decrease in unrealized losses and the $6,014 million reduction in fair value on securities with an associated unrealized loss, $641 million and $1,679 million, respectively, are associated with assets subject to funds withheld agreements.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

Evaluation of Available-For-Sale Debt Securities

Financial Statements and Supplementary Data -- Note 4 - Investments of Notes to Consolidated Financial Statements for information about how we evaluate our available-for-sale debt securities for credit loss.

Financial Statements and Supplementary Data -- Note 4 - Investments of the Notes to Consolidated Financial Statements for information about how we evaluate our available-for-sale debt securities for credit loss.

Equity Securities

11 unchanged sentences

Residential mortgage loans were collateralized by properties located in 49 states, the District of Columbia, Mexico, and Europe.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

The table below presents the carrying value, net of allowance of credit loss, of our mortgage loans by property type:

5 unchanged sentences

Warehouse 2,134 2,033

Other 521 701

Total Commercial 8,942 9,722

$ 9,562 $ 10,241

Residential 1,090 1,006

Total 10,032 10,728

(1) N et of an allowance for credit losses of $160 million and $91 million at December 31, 2023 and 2022, respectively.

(2) Net of an allowance for credit losses of $5 million and $4 million at December 31, 2023 and 2022, respectively.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

Total with ACL $ 9,911 $ 10,563

(1) At December 31, 2024 and 2023 a llowance for credit losses included $116 million and $160 million, respectively, for commercial loans and $5 million and $5 million, respectively, for residential loans.

The table below presents the carrying value, net of allowance for credit loss, of our mortgage loans by region:

13 unchanged sentences

Total 9,911 10,563

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

The following table provides information about the credit quality of our mortgage loans:

12 unchanged sentences

Total mortgage loans $ 9,911 $ 10,563

(1) 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, respectively, and are supported with insurance or other guarantees provided by various governmental programs.

(1) At December 31, 2024 and 2023, includes $24 million and $29 million, respectively, of loans 30-89 days past due and $24 million and $27 million, respectively, of loans 90 days or greater past due and supported with insurance or other guarantees provided by various governmental programs.

The following table provides a summary of the allowance for credit losses related to our mortgage loans:

4 unchanged sentences

Balance at end of period $ 121 $ 165

(1) At December 31, 2023, the $70 million net increase in allowance for credit losses is due to an increase in expected credit losses, primarily in the office sector.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

(1) At December 31, 2024 and 2023, the $(44) million net decrease and $70 million net increase in allowance for credit losses is due to the change in expected credit losses, primarily in the office sector.

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.

Interest is not accrued on loans greater than 90 days delinquent or 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.

Accrued interest amounting to $1 million and $2 million were written off as of December 31, 2024 and 2023, 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):

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Investment income recognized 1 1

(1) At December 31, 2024 and 2023, includes $2 million and $5 million, respectively, of loans in process of foreclosure, all of which are loans supported with insurance or other guarantees provided by various governmental programs.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments

Derivative Instruments

Financial Statements and Supplementary Data -- Note 5 – Derivative Instruments of Notes to Consolidated Financial Statements, which presents the aggregate contractual or notional amounts and the fair values of our freestanding and embedded derivatives instruments as of December 31, 2023 and 2022.

Financial Statements and Supplementary Data — Note 5 – Derivative Instruments of the Notes to Consolidated Financial Statements, which presents the aggregate contractual or notional amounts and the fair values of our freestanding and embedded derivatives instruments as of December 31, 2024 and 2023.

Evaluation of Invested Assets

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Policy and Contract Liabilities

We establish, and carry as liabilities, actuarially determined amounts that are calculated to meet policy obligations or to provide for future annuity payments.

We establish, and carry as liabilities, actuarially determined amounts that are estimated as necessary to meet policy obligations or to provide for future annuity payments.

Amounts for actuarial liabilities are computed and reported on the Consolidated Financial Statements in conformity with U.S.

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— — 11,685 6 11,691

Fixed Annuities — — 9,736 1 9,737

Fixed Index Annuities 2

— — 8,515 37 8,552

Fixed Annuities — — 9,615 1 9,616

Payout Annuities — 1,095 844 — 1,939

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— — 5,219 3 5,222

Fixed Annuities — — 11,696 — 11,696

Fixed Index Annuities 2

— — 10,243 37 10,280

Fixed Annuities — — 9,736 1 9,737

Payout Annuities — 1,090 860 — 1,950

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Total $ 219,656 $ 11,898 $ 55,319 $ (1,952) $ 284,921

(1) Includes the embedded derivative liabilities in other contract holder funds related to RILA of $1,224 million and $205 million at December 31, 2023 and 2022, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity in other contract holder funds of $866 million and $931 million at December 31, 2023 and 2022, respectively.

(1) Includes the embedded derivative liabilities in other contract holder funds re lated to RILA of $3,065 million and $1,224 mill ion at December 31, 2024 and 2023, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity in other contract holder fu nds of $877 million and $866 mill ion at December 31, 2024 and 2023, respectively.

As of December 31, 2024:

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• $15.3 billion of our policy and contract liabilities were reinsured by Athene and backed by funds withheld assets.

As of December 31, 2023, 100% of our RILA policy and contract liabilities were subject to surrender charges of at least 5% or at market value in the event of discretionary withdrawal by customers.

As of December 31, 2024, 94% of fixed annuity, fixed-index annuity, and the fixed accounts of RILA and variable annuity correspond to crediting rates that are at the guaranteed minimum crediting rate.

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Policy and Contract Liabilities

Financial Statements and Supplementary Data -- Note 9 - Reserves for Future Policy Benefits and Claims Payable, Note 10 - Other Contract Holder Funds, Note 11 - Separate Account Assets and Liabilities, and Note 12 - Market Risk Benefits of Notes to Consolidated Financial Statements for additional discussion on accounting policies around Reserves for future policy benefits and claims payable, Other contract holder funds, Separate account assets and liabilities and MRBs.

Actuarial Assumption Changes (Unlo cking)

The following tables reflect the impacts from our annual assumption review to pre-tax income (loss), pre-tax non-operating adjustments and Pre-Tax Adjusted Operating Earnings for the periods presented:

Financial Statements and Supplementary Data — Note 9 - Reserves for Future Policy Benefits and Claims Payable, Note 10 - Other Contract Holder Funds, Note 11 - Separate Account Assets and Liabilities, and Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements for additional discussion on accounting policies around Reserves for future policy benefits and claims payable, Other contract holder funds, Separate account assets and liabilities and MRBs.

Actuarial Assumption Updates and Model Enhancements

The following tables reflect the impacts from our annual assumption review to pretax income (loss), pre-tax non-operating

adjustments and Pre-Tax Adjusted Operating Earnings for the periods presented:

Years Ended December 31,

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Total assumption review impact on Pretax Adjusted Operating Earnings $ (26) $ (60) $ 38

2023 Assumption Updates

The impact of assumption changes on Pretax Adjusted Operating Earnings was $(60) million, with the impact attributed to the Closed Life and Annuity Blocks segment.

The impact was mainly on the additional reserve for life insurance and annuitization benefits driven by a decrease in lapses, offset by a change in the long-term earned-rate.

The impact on pretax non-operating earnings was $(406) million attributed to the Retail Annuities segment.

2024 Actuarial Assumption Updates and Model Enhancements

The impact of assumption updates on Pretax Adjusted Operating Earnings was a loss of $26 million.

$68 million of this loss was attributed to the Closed Life and Annuity Blocks segment mainly on the additional reserve for life insurance and annuitization benefits driven by an update to a more recent mortality table, offset by favorable mortality experience on the reserves for future policyholder benefits on payout annuity blocks.

A gain of $42 million from the Retail Annuities segment was mainly driven by favorable mortality experience on payout annuities on the reserves for future policyholder benefits as well as other contract holder funds.

The impact on pretax non-operating earnings was a loss of $419 million attributed to the Retail Annuities segment.

This loss was due to changes on variable annuity MRB reserves of $434 million, which was primarily related to data enhancements and assumption updates for withdrawal utilization on policies with GMWBs.

This was partially offset by a gain of $15 million on fixed index annuities and RILA reserves, primarily driven by changes to RILA partial withdrawal assumptions.

Financial Statements and Supplementary Data -- Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements for further information regarding the notable assumption updates included in the MRB calculation.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Liquidity and Capital Resources

Liquidity is our ability to generate sufficient cash flows to meet the cash requirements of operating, investing and financing activities.

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The discussion below describes our liquidity and capital resources for the years ended December 31, 2024, 2023 and 2022.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

The following table presents a summary of our cash flow activity for the periods set forth below:

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Cash flows provided by (used in) operating activities increased $483 million to $5,793 million during the year ended December 31, 2024 from $5,310 million during the year ended December 31, 2023.

This was primarily due to the timing of settlements of receivables and payables as well as lower acquisition costs.

This increase was primarily due to the timing of settlements of receivables and payables.

Cash flows from Investing Activities

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The primary liquidity concerns with respect to these cash flows are the risk of default by debtors or market disruptions that might impact the timing of investment-related cash flows as well as derivative collateral needs, which could result in material liquidity needs for our insurance subsidiaries.

Cash flows provided by (used in) investing activities increased $782 million to $(592) million during the year ended December 31, 2023 from $(1,374) million during the year ended December 31, 2022.

This increase was primarily due to lower purchases of debt securities in 2023 compared to 2022 and sales of limited partnerships in 2023, partially offset by increased outflows related to our hedging program for derivative settlements and collateral, predominately resulting from market increases in 2023 compared to 2022.

Cash flows provided by (used in) investing activities decreased $6,498 million to $(7,090) million during the year ended December 31, 2024 from $(592) million during the year ended December 31, 2023.

This decrease was primarily driven by increased purchases of debt securities in 2024, primarily due to increased RILA and fixed annuity issuances in 2024, and increased outflows related to our hedging program for derivative settlements and collateral, predominately resulting from increases in interest rates and equity markets in 2024 compared to 2023.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Cash flows from Financing Activities

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The primary liquidity concerns with respect to these cash flows are market disruption and the risk of early policyholder withdrawal.

Cash flows provided by (used in) financing activities decreased $4,166 million to $(6,328) million during the year ended December 31, 2023 from $(2,162) million for the year ended December 31, 2022.

This decrease was primarily due to lower deposits from variable annuity sales in 2023 compared to 2022, higher payments on repurchase agreements, and repayment of our maturing 2023 senior notes, partially offset by proceeds from the issuance of our preferred stock.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Cash flows provided by (used in) financing activities increased $8,701 million to $2,373 million during the year ended December 31, 2024 from $(6,328) million for the year ended December 31, 2023.

This increase was primarily due to higher deposits from increased RILA and fixed annuity sales in 2024 in addition to higher proceeds from repurchase agreements in the current year, partially offset by the proceeds we received in the prior year from the issuance of our preferred stock.

Statutory Capital

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As of December 31, 2024, our insurance companies were well in excess of the minimum required capital levels.

Our statutory TAC (total adjusted capital) may be negatively impacted by minimum required reserving levels (i.e., cash surrender value floor) when reserve releases are limited and unable to offset losses from our hedging program.

The RBC ratio may increase or decrease depending on the interaction between movements in TAC and movements in statutory CAL (the company action level), which could impact available dividends from our insurance subsidiaries.

At times the cash surrender value floor materially affects the CAL calculation in addition to reserve levels.

The formation and operation of Brooke Re is anticipated to mitigate these impacts.

See “Recent Events of Note – Brooke Life Reinsurance Company” above for more information on Brooke Re and associated transactions.

With the execution of the Brooke Re transaction in the first quarter of 2024, we are now able to largely moderate the impact of the cash surrender value floor going forward.

In the past, our statutory TAC (total adjusted capital) may have been negatively impacted by minimum required reserving levels ( i.e.

, cash surrender value floor) when reserve releases were limited and unable to offset losses from our hedging program.

Jackson had an RBC ratio of 572%, 624% and 544% as of December 31, 2024, 2023 and 2022, respectively.

The increase in Jackson’s RBC ratio as of December 31, 2023 as compared to December 31, 2022 was primarily due to reductions in interest rate and market risk.

There was also lower asset risk subsequent to the sale of the private equities limited partnerships.

The decrease in Jackson’s RBC ratio as of December 31, 2024 as compared to December 31, 2023 was primarily due to an increase in dividends paid in 2024, an increase in asset risk driven by RILA separate account growth and increased collateral, and increased business risk, partially offset by reductions in interest rate and market risk.

Holding Company Liquidity

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Our principal sources of liquidity and our anticipated capital position are described in the following paragraphs.

Any declaration of cash dividends or stock repurchases is 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 other contractual restrictions with respect to paying cash dividends or repurchasing stock, 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 approve any further increase in the existing, or any new, common stock repurchase program, or as to the amount of any such cash dividends or stock repurchases.

Delaware law requires that dividends be paid and stock repurchases made only out of “surplus,” which is defined as the fair market value of our net assets, minus our stated capital;

or out of the current or the immediately preceding year’s earnings.

Any declaration of cash dividends or stock repurchases are 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 other contractual restrictions with respect to paying cash dividends or repurchasing stock, 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 approve any further increase in the existing, or any new, common stock repurchase program, or any assurance as to the amount of any such cash dividends or stock repurchases.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Under Delaware law, dividends may be paid, or stock may be repurchased out of “surplus,” or out of the current or the immediately preceding year's earnings.

Surplus is defined as the fair market value of net assets minus stated capital.

JFI is a holding company and has no direct operations.

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The states in which our insurance subsidiaries are domiciled impose certain restrictions on our insurance subsidiaries’ ability to pay dividends to their parent companies.

These restrictions are based in part on the prior year’s statutory income and surplus, as well as earned surplus.

See “Distributions from our Insurance Company Subsidiaries” below for a discussion of those restrictions .

Such restrictions, or any future restrictions adopted by the states in which our insurance subsidiaries are domiciled, could have the effect, under certain circumstances, of significantly reducing dividends or other amounts payable by our subsidiaries without affirmative approval of state regulatory authorities.

Risk Factors—“Risks relating to Financing and Liquidity - As a holding company, Jackson Financial depends on the ability of its subsidiaries to pay dividends and make

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

other distributions to meet its obligations and liquidity needs, including servicing debt, dividend payments and stock repurchases.”

On March 13, 2023, the Company issued and sold depositary shares representing interests in our Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A.

Risk Factors—“Risks relating to Financing and Liquidity - As a holding company, Jackson Financial depends on the ability of its subsidiaries to pay dividends and make other distributions to meet its obligations and liquidity needs, including servicing debt, dividend payments and stock repurchases.”

On March 13, 2023, the Company issued and sold depositary shares, each representing a 1/1000 th interest in a share of our Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A.

After underwriting discounts and expenses, we received net proceeds of approximately $533 million.

Financial Statements and Supplementary Data -- Note 24 - Equity of Notes to Consolidated Financial Statements for more information.

During the year ended December 31, 2023, we paid a cash dividend of $0.50 per depositary share and $0.62 per common share totaling $35 million and $209 million, respectively.

On February 20, 2024, our Board of Directors approved a first quarter cash dividend on JFI's common stock of $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 dividend will be payable on April 1, 2024, to depositary shareholders of record at the close of business on March 12, 2024.

On February 27, 2023, our Board of Directors authorized an increase of $450 million in our existing share repurchase authorization of JFI's common stock.

Financial Statements and Supplementary Data — Note 24 - Equity of the Notes to Consolidated Financial Statements for more information

During the year ended December 31, 2024, we paid a cash dividend of $0.50 per depositary share and $0.70 per common share on JFI's preferred and common stock totaling $44 million and $216 million, respectively.

On February 17, 2025, our Board of Directors approved a cash dividend for the first quarter on JFI's common stock of $0.80 per share, payable on March 20, 2025, to common shareholders of record on March 11, 2025.

The Company also announced the declaration of a cash dividend of $0.50 per depositary share, each representing a 1/1,000th interest in a share of Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A.

The dividend will be payable on March 31, 2025, to depositary shareholders of record at the close of business on March 11, 2025.

On August 1, 2024, our Board of Directors authorized an increase of $750 million in our existing authorization to repurchase shares of our outstanding common stock as part of the Company's share repurchase program.

We repurchased a total of 5,778,990 shares of common stock for an aggregate purchase price of $415 million for the year ended December 31, 2024, which were funded with cash on hand.

As of February 18, 2025, the Company had remaining authorization to purchase $568 million of its common shares.

Financial Statements and Supplementary Data -- Note 24 - Equity of Notes to Consolidated Financial Statements for further information on dividends to shareholders and share repurchase s.

Financial Statements and Supplementary Data — Note 24 - Equity of the Notes to Consolidated Financial Statements for further information on dividends to shareholders and share repurchase s.

During 2023, Jackson Financial purchased certain private equity fund investments from Jackson National Life Insurance Company for $452 million, with a carrying value of $502 million, as part of rebalancing Jackson National Life Insurance Company's portfolio mix.

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The Company recorded a loss of $ 97 million on the sale, which it recognized in Net Investment Income within the consolidated financial statements for the year ended December 31, 2023 , of which $37 million of this loss was attributable to Jackson Financial.

As of December 31, 2023 , Jackson Financial has recorded an estimate of $74 million ($263 million at a consolidated level) for the provision for the CAMT based on our interpretation of guidance with an offsetting increase to the deferred tax asset for the credit carryover resulting in no impact to total tax expense.

The calculation of the CAMT, is subject to the issuance of regulatory guidance by the U.S.

Department of the Treasury.

We continue to monitor developments and regulations associated with the CAMT for any potential future impacts on our business, financial condition, results of operations and cash flows.

Distributions from our Insurance Company Subsidiaries

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These laws and regulations require, among other things, our insurance company subsidiaries to maintain minimum solvency requirements and limit the amount of dividends these subsidiaries can pay.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Subject to these limitations, our insurance company subsidiaries are permitted to pay ordinary dividends based on calculations specified under insurance laws of the relevant state of domicile, subject to prior notification to the appropriate regulatory agency.

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Also, surplus note arrangements and interest payments must be approved by the Michigan Director of Insurance and such interest payments to related parties reduce the otherwise calculated ordinary dividend capacity for that period.

In New York, all dividends require approval from the NYSDFS.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

For 2023, Jackson and Brooke Life had a total ordinary dividend capacity, based on 2022 statutory capital and surplus and statutory net gain from operations, subject to the availability of earned surplus, of $3,688 million and $501 million, respectively.

Brooke Life, as the sole owner of our other insurance company subsidiaries, including Jackson and Jackson National Life NY, is the direct recipient of any dividend payments from those subsidiaries and must make dividend payments to its ultimate parent company, Jackson Financial, in order for any funds from our insurance company subsidiaries to reach Jackson Financial.

As such, Jackson Financial’s ability to receive dividend payments from our insurance company subsidiaries is effectively limited by Brooke Life’s ability to make dividend payments to Jackson Financial.

On March 1, 2023, Jackson paid a $450 million ordinary dividend and remitted a $150 million return of capital to its parent company, Brooke Life.

Brooke Life subsequently paid a $360 million ordinary dividend and remitted a $150 million return of capital to its ultimate parent, Jackson Financial.

In addition, for the year ended December 31, 2023, Brooke Life paid $90 million of interest associated with the $2 billion surplus note between Brooke Life and Jackson Finance, LLC ("Jackson Finance"), a subsidiary of Jackson Financial.

For 2024, Jackson and Brooke Life has a total ordinary dividend capacity, based on 2023 statutory capital and surplus and statutory net gain from operations, subject to the availability of earned surplus, of $464 million and $371 million, respectively.

In New York, all dividends require approval from the New York State Department of Financial Services.

For 2025, ordinary dividend capacity for Jackson and Brooke Life is based on the greater of 10% of 2024 reported statutory capital and surplus or statutory net gain from operations.

This capacity is then reduced by cumulative dividends and other capital distributions in the preceding 12 months, subject to the availability of earned surplus.

As a result of cumulative dividends and other capital distributions occurring in the preceding 12 months as of December 31, 2024 , including the January 2024 distributions to establish Brooke Re, future dividends from both Jackson and Brooke Life are expected to be classified as extraordinary.

There is a process within the Michigan Insurance Code to request extraordinary dividends that the companies have utilized previously.

Brooke Life, as the sole owner of Jackson and Brooke Re, is the direct recipient of any dividend payments from those subsidiaries and must make dividend payments to its ultimate parent company, Jackson Financial, in order for any funds from our insurance company subsidiaries to reach Jackson Financial.

The maximum distribution permitted by law or contract is not necessarily indicative of an insurer’s actual ability to pay such distributions, which may be constrained by business and other considerations, such as imposition of withholding tax, the impact of such distributions on surplus, which could affect the insurer’s credit and financial strength ratings or competitive position, the ability to generate new annuity sales and the ability to pay future dividends or make other distributions.

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Best, S&P, Moody’s and Fitch.

Given recent economic events that have affected the insurance industry, both regulators and rating agencies could become more conservative in their methodology and criteria, including increasing capital requirements for insurance company subsidiaries.

We believe our insurance company subsidiaries have sufficient statutory capital and surplus to maintain their desired financial strength rating.

Both regulators and rating agencies could become more conservative in their methodology and criteria, including increasing capital requirements for insurance company subsidiaries.

We believe our insurance company subsidiaries have sufficient statutory capital and surplus to maintain their desired financial strength ratings.

In connection with the formation of Brooke Re, Jackson remitted a $1,920 million return of capital to its parent company, Brooke Life, in the first quarter of 2024.

Brooke Life subsequently made a $1,870 million capital contribution to its subsidiary, Brooke Re.

Brooke Re then recorded a $1.2 billion ceding commission to Jackson.

On June 20, 2024, Jackson paid a $250 million extraordinary dividend to its parent company, Brooke Life.

Brooke Life subsequently remitted a $250 million return of capital to its ultimate parent, Jackson Financial.

On September 12, 2024, Jackson paid a $300 million extraordinary dividend to Brooke Life.

Brooke Life subsequently remitted a $255 million return of capital to Jackson Financial.

In addition, for the year ended December 31, 2024 , Brooke Life paid $90 million of interest associated with the $2 billion surplus note between Brooke Life and Jackson Finance, LLC ("Jackson Finance"), a subsidiary of Jackson Financial.

On December 10, 2024, Jackson paid a $280 million extraordinary dividend to Brooke Life.

Brooke Life subsequently remitted a $280 million return of capital to Jackson Financial.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Insurance Company Subsidiaries’ Liquidity

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Collateral posting requirements can result in material liquidity needs for our insurance subsidiaries.

As of December 31, 2023, we were in a net collateral payable position of $780 million, as compared to $689 million as of December 31, 2022.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Other factors that are not directly related to interest rates can also give rise to an increase in liquidity requirements, including, changes in ratings from rating agencies, general policyholder concerns relating to the life insurance industry (e.g., the unexpected default of a large, unrelated life insurer) and competition from other products, including non-insurance products such as mutual funds, certificates of deposit and newly developed investment products.

As of December 31, 2024, we were in a net collateral payable position of $150 million, which is down from $780 million as of December 31, 2023.

Other factors that are not directly related to interest rates can also give rise to an increase in liquidity requirements including, changes in ratings from rating agencies, general policyholder concerns relating to the life insurance industry ( e.g.

, the unexpected default of a large, unrelated life insurer) and competition from other products, including non-insurance products such as mutual funds, certificates of deposit and newly developed investment products.

Most of the life insurance and annuity products Jackson offers permit the policyholder or contract holder to withdraw or borrow funds or surrender cash values.

As of December 31, 2023, approximately half of Jackson’s general account reserves are not surrenderable, included surrender charges greater than 5%, or included market value adjustments to discourage early withdrawal of policy and contract funds.

The liquidity sources for our insurance company subsidiaries are their cash, short-term investments, sales of publicly traded bonds, insurance premiums, fees charged on our products, sales of annuities and institutional products, investment income, commercial repurchase agreements and utilization of a short-term borrowing facility with the FHLBI.

As of December 31, 2024, all of our RILA policy and contract liabilities were subject to surrender charges of at least 5% or at market value in the event of discretionary withdrawal by customers.

Further, approximately half of Jackson’s general account reserves are not surrenderable, included surrender charges greater than 5%, or included market value adjustments to discourage early withdrawal of policy and contract funds as of December 31, 2024.

The liquidity sources for our insurance company subsidiaries include their cash, short-term investments, sales of publicly traded bonds, insurance premiums, fees charged on their products, sales of annuities and institutional products, investment income, commercial repurchase agreements and utilization of a short-term borrowing facility with the FHLBI.

Jackson uses a variety of asset liability management techniques to provide for the orderly provision of cash flow from investments and other sources as policies and contracts mature in accordance with their normal terms.

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$600 million of these notes matured on November 22, 2023, and were paid with cash on hand at maturity.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Revolving Credit and Short-Term Borrowing Facilities

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The credit agreement governing the 2023 Revolving Credit Facility contains a number of customary representations and warranties, affirmative and negative covenants and events of default (including a change of control provision).

The credit agreement 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%.

See Note 13 – Long-Term Debt of the Notes to Consolidated Financial Statements for information regarding financial maintenance covenants contained in the credit agreement.

We were in compliance with these covenants at December 31, 2024.

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

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

additional form of liquidity to Jackson and to Jackson Financial.

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.

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Interest expense on the notes was $20 million, $20 million, and $20 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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.

Under Michigan insurance law, for statutory reporting purposes, the surplus notes are not part of the legal liabilities of Jackson 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 that the Director determines to be available for such payments under Michigan insurance law.

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As of December 31, 2024 and 2023, Jackson held a bank loan with an outstanding balance of $52 million and $57 million, respectively.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Collateral Upgrade Transactions

During the first quarter of 2024, Jackson executed certain paired repurchase and reverse repurchase transactions (“Collateral Upgrade” transactions) totaling $1.5 billion pursuant to master repurchase agreements with participating bank counterparties.

Under these transactions, the Company lends securities (e.g., corporate debt securities or other securities agreed upon between the parties) to one or more bank counterparties in exchange for cash (repurchase agreement) and exchange that cash for an equal value of U.S.

Treasury securities (reverse repurchase agreement) to provide as collateral as part of our hedging program.

The transactions are paired as two legs of a Collateral Upgrade trade.

During the first quarter of 2024, Jackson executed certain paired repurchase and reverse repurchase transactions totaling approximately $1.5 billion pursuant to master repurchase agreements with participating bank counterparties.

Under these transactions, the Company lends securities (e.g., corporate debt securities) to bank counterparties in exchange for U.S.

Treasury securities.

The paired repurchase and reverse repurchase transactions are settled on a net basis.

As a result, there was no cash exchanged at initiation of these transactions.

The paired transactions are reported net within the Consolidated Balance Sheets.

These transactions are evergreened and require at least 150-days' notice prior to termination.

See “Collateral Upgrade Transactions” under Note 4 – Investments of Notes to Consolidated Financial Services in Part II, Item 8.

Financial Statements and Supplementary Data in this Form 10-K for additional information.

Financial Strength Ratings

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Financial strength ratings are not recommendations to buy, sell or hold securities and may be revised or revoked at any time at the sole discretion of the rating organization.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

As of February 18, 2025, the financial strength ratings of our principal insurance subsidiaries were as follows:

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Outlook stable

In evaluating our Company’s financial strength, the rating agencies evaluate a variety of factors including our strategy, market positioning and track record, mix of business, profitability, leverage and liquidity, the adequacy and soundness of our reinsurance, the quality and estimated market value of our assets, the adequacy of our surplus, our capital structure, and the experience and competence of our management.

In evaluating our Company’s financial strength, the rating agencies evaluate a variety of factors including our strategy, market positioning and record, mix of business, profitability, leverage and liquidity, the adequacy and soundness of our reinsurance, the quality and estimated market value of our assets, the adequacy of our surplus, our capital structure, and the experience and competence of our management.

In addition to the financial strength ratings, rating agencies use an outlook statement to indicate a short- or medium-term trend which, if continued, may lead to a rating change.

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A stable outlook does not preclude a rating agency from changing a rating at any time without notice.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources

Best, S&P, Moody’s and Fitch review their ratings of insurance companies from time to time.

13 unchanged sentences

For a complete discussion of new accounting pronouncements affecting us, s ee Item 8.

Financials Statements and Supplementary Data -- Note 2 - Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements .

As discussed in Note 2 of Notes to Consolidated Financial Statements in this report, we adopted Accounting Standards Update ("ASU") 2018-12, “Targeted Improvements to the Accounting for Long-Duration Contracts” ("LDTI"), for our fiscal year beginning January 1, 2023, with a transition date of January 1, 2021.

Based upon the elected transition methods, 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 accumulated other comprehensive income ("AOCI") of $0.4 billion and a reduction in retained earnings of $2.6 billion.

The adoption of the standard resulted in increases in net income attributable to Jackson Financial Inc.

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 and a decrease of $2.8 billion for the years ended December 31, 2022 and 2021, respectively, from the amounts reported prior to the adoption of LDTI.

The change in the equity impact from the transition date was primarily due to higher interest rates and is comprised of a reduction in retained earnings that is more than offset

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

by an increase in AOCI.

See further discussion in Item 8.

Financial Statements and Supplementary Data -- Note 2 - Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for the significant changes associated with this change in accounting principle .

Financial Statements and Supplementary Data — Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements .

Critical Accounting Estimates

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For a detailed discussion of the application of these and other accounting policies, see Item 8.

Financials Statements and Supplementary Data — Note 2- Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements.

Financial Statements and Supplementary Data — Note 2- Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.

Reserves for Future Policy Benefits and Claims Payable

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Updates to assumptions are applied on a retrospective basis, and each reporting period the reserve for future policy benefits is updated to reflect actual experience to date.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

The Company establishes cohorts, which are product groupings used to measure reserves for future policy benefits.

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The primary reserves for these policies are the contract holder account balances reported within the other contract holder funds line of the Consolidated Balance Sheets.

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

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

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.

9 unchanged sentences

In addition, life and annuity claims liabilities in course of settlement are included in other future policy benefits and claims payable.

Financial Statements and Supplementary Data -- Note 9- Reserve for Future Policy Benefits and Claims Payable of Notes to Consolidated Financial Statements for additional information on these accounting policies.

Financial Statements and Supplementary Data — Note 9- Reserve for Future Policy Benefits and Claims Payable of the Notes to Consolidated Financial Statements for additional information on these accounting policies.

Market Risk Benefits

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A mortality improvement assumption is also applied.

• Base lapse rates - These vary by contract-level factors, such as product type, surrender charge schedule and optional benefits election.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

• Base lapse rates - These vary by contract-level factors, such as product type, surrender charge schedule and guaranteed 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.

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• Withdrawal rates - These represent 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.

Free partial withdrawal rates vary based on the product type, duration, and GMAB election.

Withdrawal rates on contracts with a GMWB vary based on attained age, tax qualification status, GMWB type and GMWB benefit provisions.

1 unchanged sentence

• Long-term equity volatility - This represents the equity volatility beyond the period for which observable equity volatilities are available.

Financial Statements and Supplementary Data -- Note 6 - Fair Value Measurements of Notes to Consolidated Financial Statements for additional information.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

Financial Statements and Supplementary Data — Note 6 - Fair Value Measurements of the Notes to Consolidated Financial Statements for additional information.

Variable Annuities

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Substantially all of our GMIB benefits are reinsured.

GMIB benefits and GMAB benefits were discontinued in 2009 and 2011, respectively.

GMIB benefits were discontinued in 2009.

For additional information regarding our account value by optional guarantee benefit, see Item 1.

13 unchanged sentences

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.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

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.

Financial Statements and Supplementary Data -- Note 12 - Market Risk Benefits of Notes to Consolidated Financial Statements for additional information on these accounting policies.

Financial Statements and Supplementary Data — Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements for additional information on these accounting policies.

Income taxes represent the net amount of income taxes that we expect to pay to or receive from various taxing jurisdictions in connection with our operations.

We provide for federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities.

As of December 31, 2023, the Company has recorded an estimate for the provision of the Corporate Alternative Minimum Tax (“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.

Department of the Treasury is expected to issue additional regulatory guidance in 2024 that may materially change the estimated provision of the CAMT.

The Company did not elect to early adopt the proposed regulations of the U.S.

Treasury Department and the Internal Revenue Service for the 2023 tax returns and relied on reasonable interpretations of previously published guidance resulting in a reduction to the Corporate Alternative Minimum Tax (“CAMT”) liability and related CAMT deferred tax asset previously recorded as of December 31, 2023.

The determination of the estimated 2024 CAMT liability considered carryover impacts from the 2023 tax return and consideration of the applicability of the proposed regulations.

Treasury Department is expected to issue Final Regulations after the year ended December 31, 2024, which may materially change the estimated provision of the CAMT.

Deferred federal 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

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

sales inducements and the provisions for future policy benefits and expenses.

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.

12 unchanged sentences

We review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

For reinsurance contracts, reinsurance recoverable balances are generally calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.

3 unchanged sentences

Accordingly, the reinsured MRB is recorded at fair value using internally developed models consistent with those used to value our direct MRBs.

Financial Statements and Supplementary Data -- Note 8 - Reinsurance of Notes to Consolidated Financial Statements for additional information on these accounting policies.

Financial Statements and Supplementary Data — Note 8 - Reinsurance of the Notes to Consolidated Financial Statements for additional information on these accounting policies.

Investments – Valuation and Impairment

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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 could

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

result in inactive markets for certain of our financial instruments.

At times, illiquid market conditions could result in inactive markets for certain of our financial instruments.

In such instances, there could be no or limited observable market data for these assets and liabilities.

12 unchanged sentences

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

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

In performing these reviews, we consider the relevant facts and circumstances relating to each investment and exercise considerable judgment in determining whether an impairment is needed for a particular security.

14 unchanged sentences

• We intend to sell a security;

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

• It is more likely than not that we will be required to sell a security prior to recovery;

11 unchanged sentences

Rather, receivable balances that are deemed uncollectible are written off with a corresponding reduction to net investment income.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

Freestanding Derivative Instruments

We enter 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 we have acquired or incurred.

We enter into financial derivative transactions, including swaps, put-swaptions, futures, forwards, and options to reduce and manage business risks.

These transactions manage the risk of a change in the value, yield, price, cash flows, foreign currency, credit quality or degree of exposure with respect to assets, liabilities or future cash flows that we have acquired or incurred.

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

2 unchanged sentences

Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, non-performance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models.

Financials Statements and Supplementary Data — Note 5 - Derivative Instruments and Note 6 - Fair Value Measurements of Notes to Consolidated Financial Statements for additional information on significant inputs into our derivative pricing methodology.

Financials Statements and Supplementary Data — Note 5 - Derivative Instruments and Note 6 - Fair Value Measurements of the Notes to Consolidated Financial Statements for additional information on significant inputs into our derivative pricing methodology.

Embedded Derivatives - Product Liabilities

3 unchanged sentences

We typically update our actuarial assumptions annually as discussed above, unless a material change is observed in an interim period that we feel is indicative of a long-term trend.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

The underlying assumptions may have a material impact on the measurement of the embedded derivative, including equity market movements.

Thus, 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).

Financials Statements and Supplementary Data -- Note 5 - Derivative Instruments and Note 10 - Other Contract Holder Funds of Notes to Consolidated Financial Statements for additional information on our accounting policies for embedded derivatives bifurcated for insurance host contracts.

Financials Statements and Supplementary Data -- Note 5 - Derivative Instruments and Note 10 - Other Contract Holder Funds of the Notes to Consolidated Financial Statements for additional information on our accounting policies for embedded derivatives bifurcated for insurance host contracts.

Embedded Derivatives - Funds Withheld Reinsurance Agreements

5 unchanged sentences

The Athene Embedded Derivative Liability is included in Funds withheld payable under reinsurance treaties in the Consolidated Balance Sheet.

Financial Statements and Supplementary Data -- Note 8 - Reinsurance of Notes to Consolidated Financial Statements for additional information on Athene Reinsurance Transaction.

Part II | Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations |

Critical Accounting Estimates

Financial Statements and Supplementary Data — Note 8 - Reinsurance of the Notes to Consolidated Financial Statements for additional information on Athene Reinsurance Transaction.

Net Investment Income

1 unchanged sentence

The amount of capital assigned to each of our segments for purposes of measuring segment net investment income is established at a level that management considers necessary to support the segment’s risks.

This assessment is determined based upon internal models and contemplates National Association of Insurance Commissioners (“NAIC”) RBC requirements at internally defined levels.

This assessment is determined based upon internal models and contemplates the NAIC RBC requirements at internally defined levels.

Net investment income on capital in excess of the amount required to support our core operating strategies is reflected in Corporate and Other.

10 unchanged sentences

To the extent that external parties are also invested in these VIEs, a non-controlling interest is reflected on our Consolidated Financial Statements as well.

Financial Statements and Supplementary Data -- Note 4 - Investments of Notes to Consolidated Financial Statements for additional information.

Financial Statements and Supplementary Data — Note 4 - Investments of the Notes to Consolidated Financial Statements for additional information.

Part II | Item 7A.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis