Jackson Financial Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm (KPMG LLP, Minneapolis, MN, Auditor Firm ID: 185 ) 99 Consolidated Balance Sheet s as of December 31, 2024 and 2023 102 Consolidated Income Statements for the years ended December 31, 2024, 2023 and 2022 103 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022 104 Consolidated Statements of Equity for the years ended December 31, 2024, 2023 and 2022 105 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 106 Notes to Consolidated Financial Statements Note 1. Business and Basis of Presentation 108 Note 2. Summary of Significant Accounting Policies 110 Note 3. Segment Information 112 Note 4. Investments 117 Note 5. Derivative Instruments 133 Note 6. Fair Value Measurements 138 Note 7. Deferred Acquisition Costs 157 Note 8. Reinsurance 158 Note 9. Reserves for Future Policy Benefits and Claims Payable 163 Note 10. Other Contract Holder Funds 167 Note 11. Separate Account Assets and Liabilities 173 Note 12. Market Risk Benefits 174 Note 13. Long-term Debt 177 Note 14. Federal Home Loan Bank Advances 178 Note 15. Income Taxes 179 Note 16. Commitments and Contingencies 183 Note 17. Leases 183 Note 18. Share-Based Compensation 184 Note 19. Other Related Party Transactions 187 Note 20. Statutory Accounting and Regulatory Matters 187 Note 21. Benefit Plans 188 Note 22. Operating Costs and Other Expenses 188 Note 23. Accumulated Other Comprehensive Income (Loss) 189 Note 24. Equity 190 Note 25. Earnings Per Share 192 Note 26. Subsequent Events 193 Financial Statement Schedules: Schedule I—Summary of Investments—Other Than Investments in Related Parties as of December 31, 2024 194 Schedule II—Financial Statements of Jackson Financial Inc. (Parent Only) as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 195 Schedule III—Supplemental Insurance Information for the years ended December 31, 2024, 2023 and 2022 198 Schedule IV—Reinsurance for the years ended December 31, 2024, 2023 and 2022 200 Schedule V—Valuation and Qualifying Accounts for the years ended December 31, 2024 and 2023 201 98 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Jackson Financial Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Jackson Financial Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated income statements, statements of comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedules I to V (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 99 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Fair value of market risk benefits As disclosed in Notes 6 and 12, contracts or contract features that provide protection to the contract holder from capital market risk and expose the Company to other-than-nominal capital market risk are classified as market risk benefits (MRBs). The Company estimates MRBs at fair value using subjective judgments related to the discount rate assumptions, including the Company’s nonperformance risk, and actuarially determined assumptions, including mortality, benefit utilization and lapse. As of December 31, 2024, the fair value of MRB assets and liabilities were estimated to be $8,899 million and $3,774 million, respectively. We identified the evaluation of the fair value of MRB assets and liabilities as a critical audit matter. Specifically, there was a high degree of auditor effort and subjective auditor judgment involved in evaluating the nonperformance risk, mortality, benefit utilization, and lapse assumptions used to estimate the fair value of MRB assets and liabilities. Evaluation of the assumptions required valuation and actuarial professionals with specialized skills and knowledge. The following are the primary procedures we performed to address this critical audit matter. With the assistance of a valuation professional, we evaluated the design and tested the operating effectiveness of certain internal controls related to the development of the nonperformance risk adjustment used to develop the discount rate assumption. With the assistance of actuarial professionals, we evaluated the design and tested the operating effectiveness of certain internal controls related to the fair value of MRBs, including controls related to the development of the mortality, benefit utilization and lapse assumptions. We involved a valuation professional with specialized skills and knowledge who assisted in evaluating the Company’s nonperformance risk assumption used to estimate the fair value of MRBs, which included assessing the methodology and inputs utilized by the Company by developing an independent credit curve to compare to the credit curve used by the Company. The independent credit curve developed by the valuation professional used market observable instruments issued by the Company and its affiliates, as well as indicative pricing for the Company’s debt, with certain adjustments. We involved actuarial professionals with specialized skills and knowledge, who assisted in evaluating the Company’s estimate of the fair value of MRB assets and liabilities, by: 100 • Evaluating the Company’s methodology for determining mortality, benefit utilization, and lapse assumptions used to estimate the fair value of MRBs for compliance with generally accepted actuarial standards. • Comparing the mortality, benefit utilization, and lapse assumptions with the Company’s emerging experience or market trends and evaluating reasonableness of these assumptions where deviations from Company experience or market trends were identified. • Assessing the reasonableness of the Company’s fair value estimate for a selection of policies with MRBs by recalculating the fair value and comparing to the Company’s estimate. /s/ KPMG LLP We have served as the Company’s auditor since 1999. Minneapolis, Minnesota February 26, 2025 101 Jackson Financial Inc. Consolidated Balance Sheets (in millions, except share data) December 31, 2024 2023 Assets Investments: Debt Securities, available-for-sale, net of allowance for credit losses of $ 39 and $ 21 at December 31, 2024 and 2023, respectively (amortized cost: 2024 $ 45,007 ; 2023 $ 44,844 ) $ 40,289 $ 40,422 Debt Securities, at fair value under fair value option 3,046 2,153 Debt Securities, trading, at fair value — 68 Equity securities, at fair value 197 394 Mortgage loans, net of allowance for credit losses of $ 121 and $ 165 at December 31, 2024 and 2023, respectively 9,462 10,082 Mortgage loans, at fair value under fair value option 449 481 Policy loans (including $ 3,489 and $ 3,457 at fair value under the fair value option at December 31, 2024 and 2023, respectively) 4,403 4,399 Freestanding derivative instruments 297 390 Other invested assets 2,864 2,466 Total investments 61,007 60,855 Cash and cash equivalents 3,767 2,688 Accrued investment income 529 512 Deferred acquisition costs 11,887 12,302 Reinsurance recoverable, net of allowance for credit losses of $ 27 and $ 29 at December 31, 2024 and 2023, respectively 21,830 25,422 Reinsurance recoverable on market risk benefits, at fair value 121 149 Market risk benefit assets, at fair value 8,899 6,737 Deferred income taxes, net 480 640 Other assets 787 1,294 Separate account assets 229,143 219,656 Total assets $ 338,450 $ 330,255 Liabilities and Equity Liabilities Reserves for future policy benefits and claims payable $ 11,072 $ 11,898 Other contract holder funds 58,312 55,319 Market risk benefit liabilities, at fair value 3,774 4,785 Funds withheld payable under reinsurance treaties (including $ 3,667 and $ 3,626 at fair value under the fair value option at December 31, 2024 and 2023, respectively) 16,742 19,952 Long-term debt 2,034 2,037 Repurchase agreements and securities lending payable 1,554 19 Collateral payable for derivative instruments 150 780 Freestanding derivative instruments 361 1,210 Notes issued by consolidated variable interest entities, at fair value under fair value option (See Note 4) 2,343 1,988 Other liabilities 2,983 2,277 Separate account liabilities 229,143 219,656 Total liabilities 328,468 319,921 Commitments, Contingencies, and Guarantees (See Note 16) Equity Series A non-cumulative preferred stock and additional paid in capital, $ 1.00 par value per share: 24,000 shares authorized; 22,000 shares issued and outstanding at December 31, 2024 and December 31, 2023; liquidation preference $ 25,000 per share (See Note 24) 533 533 Common stock; 1,000,000,000 shares authorized, $ 0.01 par value per share and 73,380,643 and 78,660,221 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively (See Note 24) 1 1 Additional paid-in capital 6,046 6,005 Treasury stock, at cost; 21,107,672 and 15,820,785 shares at December 31, 2024 and 2023, respectively ( 1,007 ) ( 599 ) Accumulated other comprehensive income (loss), net of tax expense (benefit) of $( 311 ) in 2024 and $( 178 ) in 2023 ( 3,522 ) ( 2,808 ) Retained earnings 7,713 7,038 Total shareholders' equity 9,764 10,170 Noncontrolling interests 218 164 Total equity 9,982 10,334 Total liabilities and equity $ 338,450 $ 330,255 See Notes to Consolidated Financial Statements. 102 Jackson Financial Inc. Consolidated Income Statements (in millions, except per share data) For the Years Ended December 31, 2024 2023 2022 Revenues Fee income $ 8,083 $ 7,680 $ 7,722 Premiums 146 147 132 Net investment income: Net investment income excluding funds withheld assets 1,838 1,680 1,492 Net investment income on funds withheld assets 1,024 1,174 1,254 Total net investment income 2,862 2,854 2,746 Net gains (losses) on derivatives and investments: Net gains (losses) on derivatives and investments ( 6,812 ) ( 5,864 ) ( 3,023 ) Net gains (losses) on funds withheld reinsurance treaties ( 1,052 ) ( 1,801 ) 2,186 Total net gains (losses) on derivatives and investments ( 7,864 ) ( 7,665 ) ( 837 ) Other income 44 67 85 Total revenues 3,271 3,083 9,848 Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 868 965 1,062 (Gain) loss from updating future policy benefits cash flow assumptions, net 46 102 ( 34 ) Market risk benefits (gains) losses, net ( 3,809 ) ( 3,897 ) ( 3,536 ) Interest credited on other contract holder funds, net of deferrals and amortization 1,110 1,145 866 Interest expense 101 109 98 Operating costs and other expenses, net of deferrals 2,825 2,549 2,432 Amortization of deferred acquisition costs 1,108 1,152 1,226 Total benefits and expenses 2,249 2,125 2,114 Pretax income (loss) 1,022 958 7,734 Income tax expense (benefit) 46 4 1,505 Net income (loss) 976 954 6,229 Less: Net income (loss) attributable to noncontrolling interests 30 20 43 Net income (loss) attributable to Jackson Financial Inc. 946 934 6,186 Less: Dividends on preferred stock 44 35 — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 902 $ 899 $ 6,186 Earnings per share Basic $ 11.86 $ 10.99 $ 72.34 Diluted $ 11.74 $ 10.76 $ 69.75 See Notes to Consolidated Financial Statements. 103 Jackson Financial Inc. Consolidated Statements of Comprehensive Income (Loss) (in millions) For the Years Ended December 31, 2024 2023 2022 Net income (loss) $ 976 $ 954 $ 6,229 Other comprehensive income (loss), net of tax: Change in unrealized gains (losses) on securities with no credit impairment net of tax expense (benefit) of: $( 9 ), $ 201 , and $( 917 ) for the years ended December 31, 2024, 2023 and 2022, respectively ( 259 ) 1,697 ( 7,507 ) Change in unrealized gains (losses) on securities with credit impairment, net of tax expense (benefit) of: nil , $( 7 ), and $( 1 ) for the years ended December 31, 2024, 2023 and 2022, respectively ( 5 ) ( 26 ) ( 2 ) Change in current discount rate related to reserve for future policy benefits, net of tax expense (benefit) of $ 20 , $( 41 ) and $ 361 for the years ended December 31, 2024, 2023 and 2022, respectively 70 ( 146 ) 1,303 Change in non-performance risk on market risk benefits, net of tax expense (benefit) of $( 144 ), $( 265 ) and $ 407 for the years ended December 31, 2024, 2023 and 2022, respectively ( 520 ) ( 955 ) 1,468 Total other comprehensive income (loss) ( 714 ) 570 ( 4,738 ) Comprehensive income (loss) 262 1,524 1,491 Less: Comprehensive income (loss) attributable to noncontrolling interests 30 20 43 Comprehensive income (loss) attributable to Jackson Financial Inc. $ 232 $ 1,504 $ 1,448 See Notes to Consolidated Financial Statements. 104 Jackson Financial Inc. Consolidated Statements of Equity (in millions) Accumulated Additional Treasury Other Total Non- Preferred Common Paid-In Stock Comprehensive Retained Shareholders' Controlling Total Stock Stock Capital at Cost Income (Loss) Earnings Equity Interests Equity Balances as of December 31, 2021 $ — $ 1 $ 6,051 $ ( 211 ) $ 1,360 $ 440 $ 7,641 $ 680 $ 8,321 Net income (loss) — — — — — 6,186 6,186 43 6,229 Other comprehensive income (loss) — — — — ( 4,738 ) — ( 4,738 ) — ( 4,738 ) Change in equity of noncontrolling interests — — — — — — — 9 9 Dividends on common stock — — — — — ( 199 ) ( 199 ) — ( 199 ) Purchase of treasury stock — — — ( 321 ) — — ( 321 ) — ( 321 ) Share-based compensation — — 12 89 — ( 24 ) 77 — 77 Balances as of December 31, 2022 $ — $ 1 $ 6,063 $ ( 443 ) $ ( 3,378 ) $ 6,403 $ 8,646 $ 732 $ 9,378 Net income (loss) — — — — — 934 934 20 954 Other comprehensive income (loss) — — — — 570 — 570 — 570 Change in equity of noncontrolling interests — — — — — — — ( 588 ) ( 588 ) Dividends on preferred stock — — — — — ( 35 ) ( 35 ) — ( 35 ) Dividends on common stock — — — — — ( 209 ) ( 209 ) — ( 209 ) Purchase of treasury stock — — — ( 306 ) — — ( 306 ) — ( 306 ) Share-based compensation — — ( 58 ) 150 — ( 55 ) 37 — 37 Issuance of preferred stock 533 — — — — — 533 — 533 Balances as of December 31, 2023 $ 533 $ 1 $ 6,005 $ ( 599 ) $ ( 2,808 ) $ 7,038 $ 10,170 $ 164 $ 10,334 Net income (loss) — — — — — 946 946 30 976 Other comprehensive income (loss) — — — — ( 714 ) — ( 714 ) — ( 714 ) Change in equity of noncontrolling interests — — — — — — — 24 24 Dividends on preferred stock — — — — — ( 44 ) ( 44 ) — ( 44 ) Dividends on common stock — — — — — ( 216 ) ( 216 ) — ( 216 ) Purchase of treasury stock — — — ( 442 ) — — ( 442 ) — ( 442 ) Share-based compensation — — 41 34 — ( 11 ) 64 — 64 Balances as of December 31, 2024 $ 533 $ 1 $ 6,046 $ ( 1,007 ) $ ( 3,522 ) $ 7,713 $ 9,764 $ 218 $ 9,982 See Notes to Consolidated Financial Statements. 105 Jackson Financial Inc. Consolidated Statements of Cash Flows (in millions) Years Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income (loss) $ 976 $ 954 $ 6,229 Adjustments to reconcile net income to net cash provided by operating activities: Net realized losses (gains) on investments 11 554 359 Net losses (gains) on derivatives 6,801 5,310 2,664 Net losses (gains) on funds withheld reinsurance treaties 1,052 1,801 ( 2,186 ) Net (gain) loss on market risk benefits ( 3,809 ) ( 3,897 ) ( 3,536 ) (Gain) loss from updating future policy benefits cash flow assumptions, net 46 102 ( 34 ) Interest credited on other contract holder funds, gross 1,110 1,145 866 Mortality, expense and surrender charges ( 545 ) ( 528 ) ( 530 ) Amortization of discount and premium on investments ( 33 ) ( 27 ) 11 Deferred income tax expense (benefit) 294 ( 207 ) 1,547 Share-based compensation expense 191 107 131 Change in: Accrued investment income ( 17 ) 2 ( 11 ) Deferred acquisition costs 415 622 601 Funds withheld, net of reinsurance 211 ( 20 ) ( 73 ) Future policy benefits ( 777 ) ( 731 ) ( 1,137 ) Other assets and liabilities, net ( 133 ) 123 305 Net cash provided by (used in) operating activities 5,793 5,310 5,206 Cash flows from investing activities: Sales, maturities and repayments of: Debt securities 10,524 11,488 11,535 Equity securities 289 316 84 Mortgage loans 1,783 2,492 1,695 Purchases of: Debt securities ( 11,718 ) ( 8,231 ) ( 11,606 ) Equity securities ( 16 ) ( 200 ) ( 249 ) Mortgage loans ( 1,132 ) ( 1,605 ) ( 1,816 ) Settlements related to derivatives and collateral on investments ( 6,481 ) ( 5,475 ) ( 674 ) Other investing activities ( 339 ) 623 ( 343 ) Net cash provided by (used in) investing activities ( 7,090 ) ( 592 ) ( 1,374 ) (continued) See Notes to Consolidated Financial Statements. 106 Jackson Financial Inc. Consolidated Statements of Cash Flows (continued) (in millions) Years Ended December 31, 2024 2023 2022 Cash flows from financing activities: Policyholders' account balances: Deposits 20,122 14,189 18,456 Withdrawals ( 39,372 ) ( 29,112 ) ( 25,173 ) Net transfers to separate accounts 19,892 10,017 5,685 Proceeds from (payments on) repurchase agreements and securities lending 1,532 ( 1,025 ) ( 541 ) Net proceeds from (payments on) Federal Home Loan Bank notes 450 250 — Proceeds from debt — — 750 Payments on debt ( 5 ) ( 603 ) ( 825 ) Debt issuance costs — — ( 7 ) Issuance of debt of consolidated investment entities 948 297 — Repayments of debt of consolidated investment entities ( 526 ) ( 351 ) — Contributions from partners of consolidated investments 29 111 — Distributions from partners of consolidated investments — ( 92 ) — Dividends on common stock ( 211 ) ( 201 ) ( 186 ) Dividends on preferred stock ( 44 ) ( 35 ) — Purchase of treasury stock ( 442 ) ( 306 ) ( 321 ) Issuance of preferred stock — 533 — Net cash provided by (used in) financing activities 2,373 ( 6,328 ) ( 2,162 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 1,076 ( 1,610 ) 1,670 Cash, cash equivalents, and restricted cash at beginning of period 2,691 4,301 2,631 Total cash, cash equivalents, and restricted cash at end of period $ 3,767 $ 2,691 $ 4,301 Supplemental cash flow information Income taxes paid (received) $ ( 8 ) $ ( 21 ) $ ( 5 ) Interest paid $ 263 $ 183 $ 107 Non-cash investing activities Debt securities acquired from exchanges, payments-in-kind, and similar transactions $ 50 $ 144 $ 506 Other invested assets acquired from stock splits and stock distributions $ — $ 317 $ 112 Non-cash financing activities Non-cash dividend equivalents on stock based awards $ ( 5 ) $ ( 8 ) $ ( 13 ) Reconciliation to Consolidated Balance Sheets Cash and cash equivalents $ 3,767 $ 2,688 $ 4,298 Restricted cash (included in Other assets) — 3 3 Total cash, cash equivalents, and restricted cash $ 3,767 $ 2,691 $ 4,301 See Notes to Consolidated Financial Statements. 107 Jackson Financial Inc. Notes to Consolidated Financial Statements 1. Business and Basis of Presentation Jackson Financial Inc. ("JFI" or “Jackson Financial”) together with its subsidiaries (the “Company,” which also may be referred to as “we,” “our” or “us”), is a financial services company focused on helping Americans grow and protect their retirement savings and income to enable them to pursue financial freedom for life. Jackson Financial is domiciled in the state of Delaware in the United States (“U.S.”). Prior to September 13, 2021, we were a majority-owned subsidiary of Prudential plc ("Prudential"), London, England and served as Prudential's holding company for its U.S. operations. On September 13, 2021, the Company demerged from Prudential (the "Demerger") and became a stand-alone U.S. public company. Prudential retained an equity interest in the Company after the Demerger, but as of June 30, 2023, had sold its entire equity interest in the Company. Jackson Financial’s primary life insurance subsidiary, Jackson National Life Insurance Company and its insurance subsidiaries (collectively, “Jackson”), is licensed to sell group and individual annuity products (including variable, registered index-linked, fixed index, fixed and payout annuities), and individual life insurance products, including variable universal life, in all 50 states and the District of Columbia. Jackson also participates in the institutional products market through the issuance of guaranteed investment contracts (“GICs”), funding agreements and medium-term note funding agreements. In addition to Jackson, Jackson Financial’s other operating subsidiaries are as follows: • PPM America, Inc. (“PPM”), a registered investment adviser, is the Company’s investment management operation that manages the life insurance companies’ general account investment funds. PPM also provides investment services to other former affiliated and unaffiliated institutional clients. • Brooke Life Insurance Company (“Brooke Life”), the direct parent of Jackson, is a Michigan life insurance company licensed to sell life insurance and annuity products in the state of Michigan. • Brooke Life Reinsurance Company ("Brooke Re"), also a direct subsidiary of Brooke Life, was formed January 1, 2024, as a Michigan captive reinsurance company. Other significant wholly-owned subsidiaries of Jackson are as follows: • Life insurers: Jackson National Life Insurance Company of New York (“Jackson NY” or “JNY”); Squire Reassurance Company II, Inc. (“Squire Re II”); and VFL International Life Company SPC, LTD; • Registered broker-dealer: Jackson National Life Distributors LLC (“JNLD”); and • Registered investment adviser: Jackson National Asset Management LLC (“JNAM”) manages the life insurance companies' separate account funds underlying our variable annuities products, which funds are sub-advised. JNAM manages and oversees those sub-advisers. The Company's Consolidated Financial Statements also include other insignificant partnerships, limited liability companies (“LLCs”) and other variable interest entities (“VIEs”) in which the Company is deemed the primary beneficiary. Brooke Life Reinsurance Company During the first quarter of 2024, Jackson entered into a reinsurance transaction with Brooke Re and all economics of the transaction were effective as of January 1, 2024. Jackson and Brooke Re are both direct subsidiaries of Brooke Life and the reinsurance transaction eliminates upon consolidation at JFI. The reinsurance 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 (constituting “market risk benefits”), both in-force on the effective date of the reinsurance agreement and written in the future ( i.e. , on a “flow” basis). For regulatory reporting purposes, Brooke Re utilizes a modified U.S. generally accepted accounting principles ("U.S. 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 reinsurance transaction and related modified U.S. GAAP approach 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 allows for more efficient economic hedging of the underlying risks of Jackson’s business. 108 Part II | Item 8. Notes to Consolidated Financial Statements | 1. Business and Basis of Presentation Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. Intercompany accounts and transactions have been eliminated upon consolidation. Certain amounts in the 2023 Notes to Consolidated Financial Statements have been reclassified to conform to the 2024 presentation. With the establishment of Brooke Re in the first quarter of 2024, the Company’s hedging program was enhanced to align hedging instruments more closely with market risk benefit reserves, which resulted in higher levels of interest rate hedging consistent with the economics of our business. In connection with this enhanced hedging approach, the Company reviewed its existing interest rate hedging instruments and determined that interest rate swaps that were historically used for duration management purposes should be recharacterized as supporting our hedging of variable annuity market risk benefits. Accordingly, effective January 1, 2024, the periodic settlements and change in settlement accruals on interest rate swaps are now classified as non-operating and excluded from our non-GAAP financial measure of pretax adjusted operating earnings. Prior period amounts have not been adjusted for this prospective recharacterization with respect to interest rate swaps. Additionally, to better represent the underlying performance of our business, we have made certain reclassifications between financial statement line items within the Consolidated Income Statement and our non-GAAP financial measure of pretax adjusted operating earnings. These reclassifications, described below, had no impact on Net Income or our non-GAAP financial measure of Adjusted Operating Earnings. • Operating derivative income (loss) will no longer be shown as a separate line item within pretax adjusted operating earnings, as these amounts have been reclassified to net investment income. After recharacterizing the interest rate swaps described above, the only item remaining in operating derivatives was periodic settlements and change in settlement accruals on cross-currency swaps that are intended to hedge certain foreign denominated fixed maturity securities. This reclassification only applies to pretax adjusted operating earnings (non-GAAP). • Interest costs related to portfolio leverage transactions (repurchase agreements, Federal Home Loan Bank short-term advances, and cash collateral costs) were reclassified from Interest Expense to Net Investment Income. This reclassification applies to Net Income (GAAP) and pretax adjusted operating earnings (non-GAAP). Use of Estimates The preparation of these Consolidated Financial Statements in conformity with U.S. GAAP requires the use of estimates and assumptions about future events that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Significant estimates or assumptions, as further discussed in these notes, include: • Valuation of investments and derivative instruments, including fair values of securities deemed to be in an illiquid market and the determination of when an impairment is necessary; • Assumptions used in calculating policy reserves and liabilities, including policyholder behavior, mortality rates, expenses, investment returns and policy crediting rates; • Assumptions as to future earnings levels being sufficient to realize deferred tax benefits; • Estimates related to expectations of credit losses on certain financial assets and off-balance sheet exposures; • Assumptions and estimates associated with the Company’s tax positions, including an estimate of the dividends received deduction, which impact the amount of recognized tax benefits recorded by the Company; • Assumptions used in calculating market risk benefits, including policyholder behavior, mortality rates, and capital market assumptions; and • Assumptions impacting the expected term used in amortizing deferred acquisition costs, including policyholder behavior and mortality rates. 109 Part II | Item 8. Notes to Consolidated Financial Statements | 1. Business and Basis of Presentation These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other appropriate factors. As facts and circumstances dictate, these estimates and assumptions may be adjusted. Since future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates, including those resulting from continuing changes in the economic environment, will be reflected in the Consolidated Financial Statements in the periods the estimates are changed. 2. Summary of Significant Accounting Policies The following table identifies our significant accounting policies presented in other Notes to Consolidated Financial Statements: Investments Note 4 Derivative Instruments Note 5 Fair Value Measurements Note 6 Deferred Acquisition Costs Note 7 Reinsurance Note 8 Reserves for Future Policy Benefits and Claims Payable Note 9 Other Contract Holder Funds Note 10 Separate Account Assets and Liabilities Note 11 Market Risk Benefits Note 12 Long-Term Debt Note 13 Income Taxes Note 15 Commitments, Contingencies, and Guarantees Note 16 Share-Based Compensation Note 18 Accumulated Other Comprehensive Income (Loss) Note 23 Earnings Per Share Note 25 Other Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents primarily include money market instruments and bank deposits. Cash equivalents also include all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase. Revenue and Expense Recognition Premiums for traditional life insurance and limited-payment insurance contracts are reported as revenues when due. Benefits, claims and expenses are associated with earned revenues in order to recognize profit over the lives of the contracts. This association is accomplished through provisions for future policy benefits and the deferral and amortization of certain acquisition costs. Deposits on interest-sensitive life products and investment contracts, principally deferred annuities and guaranteed investment contracts, are treated as policyholder deposits and excluded from revenue. Revenues consist primarily of investment income and charges assessed against the account value for mortality charges, surrenders, variable annuity benefit guarantees and administrative expenses. Fee income also includes revenues related to asset management fees and certain service fees. Surrender benefits are treated as repayments of the policyholder account. Annuity benefit payments are treated as reductions to the policyholder account. Death benefits in excess of the policyholder account are recognized as an expense when incurred. Expenses consist primarily of the interest credited to policyholder deposits. Acquisition expenses directly related to the successful acquisition of these contracts are deferred. These deferred acquisition costs are amortized on a constant-level basis over the expected term of the contracts. Expenses not related to policy acquisition are recognized when incurred. 110 Part II | Item 8. Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies Management Fees Based on a Formula PPM receives an investment management fee for services as an asset manager for various entities. Revenue for these services is measured based on the terms specified in a customer's contract and is recognized when PPM has satisfied a performance obligation. These investment management fees are recognized ratably over the period that assets are managed, and when the probability of significant revenue reversal is remote. PPM also receives performance-based incentive fees from certain entities for which it invests based on predetermined formulas. Performance related management fees are earned over a specified period and can result in additional fees. These fees are recognized at the end of the specified period, once the fees are fixed, determinable, not subject to further performance metrics, and probability of significant revenue reversal is remote. Changes in Accounting Principles – Adopted in Current Year In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients for applying U.S. GAAP to contracts and other transactions affected by reference rate reform and was originally effective for contract modifications made between March 12, 2020 and December 31, 2022. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” that defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. If certain criteria are met, an entity will not be required to remeasure or reassess contracts impacted by reference rate reform. The practical expedient allowed by this standard was elected and applied by the Company. The contracts modified met the criteria for the practical expedient and, therefore, the transition did not have a material impact on the Company’s Consolidated Financial Statements. The Company has completed its transition from the London Interbank Offered Rate ("LIBOR"). In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures”, which requires a public entity to disclose its significant segment expenses regularly provided to the chief operating decision maker ("CODM") and the amount and composition of other segment items. It also requires a public entity to disclose the title and position of the CODM. The ASU allows a public entity to disclose multiple measurements of segment profit or loss if a CODM uses multiple measures to assess segment’s performance and allocate resources. This ASU also expands the current interim disclosure requirements to require that nearly all of the annual segment disclosures be made on an interim basis. Effective for the annual period ended December 31, 2024, the Company adopted this ASU retrospectively and recast previously reported segment information. The required disclosures under this ASU are included in Note 3 - Segment Information . Changes in Accounting Principles – Issued but Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures”, which enhances annual income tax disclosures by requiring disclosure of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The new requirements in this ASU will be effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted, and are to be applied on a prospective basis with the option to apply retrospectively. The Company is in the process of evaluating the impact of the new guidance and determining the transition method and the timing of adoption. In November 2024, the FASB issued ASU 2024-03, “Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)”, which requires disaggregated disclosure of income statement expenses for public business entities. The ASU requires footnote disclosure about specific types of expenses included in the expense captions presented on the face of the income statement and the total amount of selling expenses on an annual and interim basis. The entity is also required to disclose its definition of selling expenses in annual reporting periods. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of evaluating the impact of the new guidance and determining the transition method and the timing of adoption. 111 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information 3. Segment Information The Company has three reportable segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks. The Company reports, in Corporate and Other, certain activities and items that are not included in these reportable segments, including the results of PPM Holdings, Inc., the holding company of PPM, which manages the majority of the Company’s general account investment portfolio. The reportable segments reflect how the Company’s chief operating decision maker views and manages the business. The Company’s chief operating decision maker function is performed jointly by the Chief Executive Officer and the Chief Financial Officer. For the Retail Annuities, Closed Life and Annuity Blocks, and Institutional Products segments, the chief operating decision maker uses segment pretax adjusted operating earnings to allocate resources for each segment, predominantly through the annual budget and forecasting process, and to assess the performance of each segment, predominantly by comparing the results of each segment with one another, with planned and forecasted results, and with comparative prior period results. The following is a brief description of the Company’s reportable segments, plus its Corporate and Other segment. Retail Annuities The Company’s Retail Annuities segment offers a variety of retirement income and savings products through its diverse suite of products, consisting primarily of variable annuities, registered index-linked annuities ("RILA"), fixed index annuities, fixed annuities and payout annuities. These products are distributed through various wirehouses, insurance brokers and independent broker-dealers, as well as through banks and financial institutions. The Company’s variable annuities represent an attractive option for retirees and soon-to-be retirees, providing access to equity market appreciation and add-on benefits, including guaranteed lifetime income. A RILA offers customers access to market returns through market index-linked investment options, subject to a cap, and offers a variety of features designed to modify or limit losses. A fixed index annuity is designed for investors who desire principal protection with the opportunity to participate in capped upside investment returns linked to a reference market index. The Company also provides access to guaranteed lifetime income as an add-on benefit. A fixed annuity is a guaranteed product designed to build wealth without market exposure, through a crediting rate that is likely to be superior to interest rates offered by banks or money market funds. The financial results of the variable annuity business within the Company’s Retail Annuities segment are largely dependent on the performance of the contract holder account value, which impacts both the level of fees collected and the benefits paid to the contract holder. The financial results of the Company’s fixed annuities, including the fixed option on variable annuities, RILA and fixed index annuities, are largely dependent on the Company’s ability to earn a spread between earned investment rates on general account assets and the interest credited to contract holders. Institutional Products The Company’s Institutional Products segment consists of traditional Guaranteed Investment Contracts ("GICs"), funding agreements (including agreements issued in conjunction with the Company’s participation in the U.S. Federal Home Loan Bank ("FHLB") program) and medium-term note funding agreements. The Company’s GIC products are marketed to defined contribution pension and profit-sharing retirement plans. Funding agreements are marketed to institutional investors, including corporate cash accounts and securities lending funds, as well as money market funds, and are issued to the FHLB in connection with its program. The financial results of the Company’s institutional products business are primarily dependent on the Company’s ability to earn a spread between earned investment rates on general account assets and the interest credited on GICs and funding agreements. 112 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information Closed Life and Annuity Blocks The Company's Closed Life and Annuity Blocks segment is primarily composed of blocks of business that have been acquired since 2004. This segment includes various protection products, primarily whole life, universal life, variable universal life, and term life insurance products, as well as fixed, fixed index, and payout annuities. The Company historically offered traditional and interest-sensitive life insurance products but discontinued new sales of life insurance products in 2012, as we believe opportunistically acquiring mature blocks of life insurance policies is a more efficient means of diversifying our in-force business than selling new life insurance products. The profitability of the Company’s Closed Life and Annuity Blocks segment is largely driven by its historical ability to appropriately price its products and purchase appropriately priced blocks of business, as realized through underwriting, expense and net gains (losses) on derivatives and investments, and the ability to earn an assumed rate of return on the assets supporting that business. Corporate and Other The Company’s Corporate and Other segment primarily consists of the operations of its investment management subsidiary, PPM, VIEs, and unallocated corporate income and expenses. The Corporate and Other segment also includes certain eliminations and consolidation adjustments. Segment Performance Measurement Segment operating revenues and pretax adjusted operating earnings are non-GAAP financial measures that management believes are critical to the evaluation of the financial performance of the Company’s segments. The Company uses the same accounting policies and procedures to measure segment pretax adjusted operating earnings as used in its reporting of consolidated net income. Its primary measure is pretax adjusted operating earnings, which is defined as net income recorded in accordance with U.S. GAAP, excluding certain items that may be highly variable from period to period due to accounting treatment under U.S. GAAP, or that are non-recurring in nature, as well as certain other revenues and expenses that are not considered to drive underlying performance. Operating revenues and pretax adjusted operating earnings should not be used as a substitute for revenues and net income, respectively, as calculated in accordance with U.S. GAAP. Pretax adjusted operating earnings equals net income adjusted to eliminate the impact of the items described in the following numbered paragraphs. These items are excluded from pretax adjusted operating earnings as they may vary significantly from period to period due to near-term market conditions and, therefore, are not directly comparable or reflective of the underlying performance of our business. We believe these exclusions provide investors a better picture of the drivers of our underlying performance. 1. Net Hedging Results: Comprised of: (i) fees attributed to guaranteed benefits; (ii) 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. 2. 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; 3. 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. 113 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information 4. Net Realized Investment Gains and Losses: Comprised of: (i) realized investment gains and losses associated with the periodic sales or disposals of securities, excluding those held within our trading portfolio; and (ii) impairments of securities, after adjustment for the non-credit component of the impairment charges. 5. Change in Value of Funds Withheld Embedded Derivative and Net Investment Income on Funds Withheld Assets: Comprised of: (i) the change in fair value of funds withheld embedded derivatives; and (ii) net investment income on funds withheld assets related to funds withheld reinsurance transactions. 6. Other items: Comprised of: (i) the impact of investments that are consolidated in our financial statements due to U.S. GAAP accounting requirements, such as our investments in collateralized loan obligations ("CLOs"), but for which the consolidation effects are not consistent with our economic interest or exposure to those entities, and (ii) one-time or other non-recurring items. 7. Income taxes. Set forth in the tables below is certain information with respect to the Company’s segments, as described above (in millions): For the Year Ended December 31, 2024 Retail Annuities Institutional Products Closed Life and Annuity Blocks Corporate and Other Total Consolidated Operating Revenues Fee income $ 4,460 $ — $ 443 $ 49 $ 4,952 Premiums 52 — 103 — 155 Net investment income 725 438 659 ( 2 ) 1,820 Other income (loss) 32 — 31 ( 19 ) 44 Total Operating Revenues 5,269 438 1,236 28 6,971 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 67 — 573 — 640 (Gain) loss from updating future policy benefits cash flow assumptions, net ( 54 ) — 104 — 50 Interest credited on other contract holder funds, net of deferrals and amortization 362 338 410 — 1,110 Interest expense 23 — — 78 101 Asset-based commission expenses 1,137 — — — 1,137 Other commission expenses 891 — 37 — 928 Sub-advisor expenses 334 — — ( 8 ) 326 General and administrative expenses 788 4 106 222 1,120 Deferral of acquisition costs ( 693 ) — 7 — ( 686 ) Amortization of deferred acquisition costs 559 — 8 — 567 Total Operating Benefits and Expenses 3,414 342 1,245 292 5,293 Pretax Adjusted Operating Earnings $ 1,855 $ 96 $ ( 9 ) $ ( 264 ) $ 1,678 114 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information For the Year Ended December 31, 2023 Retail Annuities Institutional Products Closed Life and Annuity Blocks Corporate and Other Total Consolidated Operating Revenues Fee income $ 4,036 $ — $ 457 $ 52 $ 4,545 Premiums 21 — 136 — 157 Net investment income 436 408 644 58 1,546 Other income (loss) 37 — 25 5 67 Total Operating Revenues 4,530 408 1,262 115 6,315 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 43 — 641 — 684 (Gain) loss from updating future policy benefits cash flow assumptions, net ( 4 ) — 106 — 102 Interest credited on other contract holder funds, net of deferrals and amortization 374 334 437 — 1,145 Interest expense 24 — — 85 109 Asset-based commission expenses 1,022 — — — 1,022 Other commission expenses 691 — 29 — 720 Sub-advisor expenses 318 — — ( 7 ) 311 General and administrative expenses 677 5 115 210 1,007 Deferral of acquisition costs ( 530 ) — 19 — ( 511 ) Amortization of deferred acquisition costs 551 — 10 — 561 Total Operating Benefits and Expenses 3,166 339 1,357 288 5,150 Pretax Adjusted Operating Earnings $ 1,364 $ 69 $ ( 95 ) $ ( 173 ) $ 1,165 For the Year Ended December 31, 2022 Retail Annuities Institutional Products Closed Life and Annuity Blocks Corporate and Other Total Consolidated Operating Revenues Fee income $ 4,108 $ — $ 474 $ 52 $ 4,634 Premiums 10 — 134 — 144 Net investment income 410 285 737 79 1,511 Other income (loss) 42 — 35 8 85 Total Operating Revenues 4,570 285 1,380 139 6,374 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 61 — 734 — 795 (Gain) loss from updating future policy benefits cash flow assumptions, net ( 4 ) — ( 24 ) — ( 28 ) Interest credited on other contract holder funds, net of deferrals and amortization 253 201 412 — 866 Interest expense 22 — — 76 98 Asset-based commission expenses 1,010 — — — 1,010 Other commission expenses 809 — 37 — 846 Sub-advisor expenses 337 — — ( 8 ) 329 General and administrative expenses 642 5 97 131 875 Deferral of acquisition costs ( 624 ) — ( 4 ) — ( 628 ) Amortization of deferred acquisition costs 557 — 11 — 568 Total Operating Benefits and Expenses 3,063 206 1,263 199 4,731 Pretax Adjusted Operating Earnings $ 1,507 $ 79 $ 117 $ ( 60 ) $ 1,643 115 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information Intersegment eliminations in the above tables are included in the Corporate and Other segment. These include the elimination of investment income, between Retail Annuities and the Corporate and Other segments, as well as the elimination from fee income and investment income of investment fees paid by Jackson Financial and its subsidiaries to PPM, which were $ 81 million, $ 76 million, and $ 74 million for the years ended December 31, 2024, 2023 and 2022, respectively. The following table summarizes the reconciling items from the non-GAAP measure of total operating revenues to the U.S. GAAP measure of total revenues attributable to the Company (in millions): Years Ended December 31, 2024 2023 2022 Total operating revenues $ 6,971 $ 6,315 $ 6,374 Fees attributed to guarantee benefit reserves 3,122 3,125 3,077 Net gains (losses) on hedging instruments and investments ( 7,904 ) ( 7,512 ) ( 878 ) Net investment income (loss) related to noncontrolling interests 30 20 43 Consolidated investments 28 ( 39 ) ( 22 ) Net investment income on funds withheld assets 1,024 1,174 1,254 Total revenues (1) $ 3,271 $ 3,083 $ 9,848 (1) Substantially all the Company's revenues originated in the U.S. There were no customers that, individually, generate revenues that exceeded 10% of total revenues. The following table summarizes the reconciling items from the non-GAAP measure of total operating benefits and expenses to the U.S. GAAP measure of total benefits and expenses attributable to the Company (in millions): Years Ended December 31, 2024 2023 2022 Total operating benefits and expenses $ 5,293 $ 5,150 $ 4,731 Net (gain) loss on market risk benefits ( 3,809 ) ( 3,897 ) ( 3,536 ) Benefits attributed to guaranteed benefit features 224 281 261 Amortization of DAC related to non-operating revenues and expenses 541 591 658 Total benefits and expenses $ 2,249 $ 2,125 $ 2,114 116 Part II | Item 8. Notes to Consolidated Financial Statements | 3. Segment Information The following table summarizes the reconciling items, from the non-GAAP measure of pretax adjusted operating earnings to the U.S. GAAP measure of net income attributable to the Company (in millions): Years Ended December 31, 2024 2023 2022 Pretax adjusted operating earnings $ 1,678 $ 1,165 $ 1,643 Pre-tax reconciling items from adjusted operating income to net income (loss) attributable to Jackson Financial Inc.: Fees attributable to guarantee benefit reserves 3,122 3,125 3,077 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 ) Actuarial assumption updates and model enhancements ( 419 ) ( 406 ) ( 486 ) Net realized investment gains (losses) ( 11 ) ( 554 ) ( 359 ) Net realized investment gains (losses) on funds withheld assets ( 1,052 ) ( 1,801 ) 2,186 Net investment income on funds withheld assets 1,024 1,174 1,254 Other items 28 ( 39 ) ( 22 ) Pretax income (loss) attributable to Jackson Financial Inc. 992 938 7,691 Income tax expense (benefit) 46 4 1,505 Net income (loss) attributable to Jackson Financial Inc. 946 934 6,186 Dividends on preferred stock 44 35 — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 902 $ 899 $ 6,186 The following table summarizes total assets by segment (in millions): December 31, 2024 2023 Retail Annuities $ 296,621 $ 288,301 Closed Life and Annuity Blocks 26,700 27,642 Institutional Products 9,332 9,234 Corporate and Other 5,797 5,078 Total Assets $ 338,450 $ 330,255 4. Investments Investments consist primarily of fixed-income securities and loans, principally publicly-traded corporate and government bonds, asset-backed securities and mortgage loans. Asset-backed securities include mortgage-backed and other structured securities. The Company generates the majority of its general account deposits from interest-sensitive individual annuity contracts, life insurance products and institutional products on which it has committed to pay a declared rate of interest. The Company's strategy of investing in fixed-income securities and loans seeks the matching of the asset yield with the amounts credited to the interest-sensitive liabilities and to earn a stable return on its investments. Debt Securities Debt securities consist primarily of bonds, notes, and asset-backed securities. Acquisition discounts and premiums on debt securities are amortized into investment income through call or maturity dates using the effective interest method. Discounts and premiums on asset-backed securities are amortized over the estimated redemption period. Certain asset-backed securities for which the Company might not recover substantially all of its recorded investment are accounted for on a prospective basis according to changes in the estimated future cash flows. 117 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Debt securities are generally classified as available-for-sale and are carried at fair value. For debt securities in an unrealized loss position, for which the Company deems an impairment necessary, the amortized cost may be written down to fair value through net gains (losses) on derivatives and investments, or an allowance for credit loss (“ACL”) may be recorded along with a charge to net gains (losses) on derivatives and investments. Certain debt securities included from consolidation of certain VIEs are carried at fair value under the fair value option with changes in fair value included in net investment income. Other debt securities included from consolidation of certain VIEs are classified as trading securities and are carried at fair value with the changes in fair value included in net investment income. The following table sets forth the composition of the fair value of debt securities at December 31, 2024 and 2023, classified by rating categories as assigned by nationally recognized statistical rating organization (a “rating agency”), the NAIC, or if not rated by such organizations, the Company’s investment advisors. The Company uses the second lowest rating by a rating agency when rating agencies' ratings are not equivalent and, for purposes of the table, if not otherwise rated by a rating agency, the NAIC rating of a security is converted to an equivalent rating agency rating. At December 31, 2024 and 2023, the carrying value of investments rated by the Company’s consolidated investment advisor totaled $ 417 million and $ 486 million, respectively. Percent of Total Debt Securities Carrying Value December 31, Investment Rating 2024 2023 U.S. government securities 7.3 % 10.1 % AAA 6.1 % 6.5 % AA 9.6 % 9.0 % A 31.2 % 31.5 % BBB 38.8 % 35.9 % Investment grade 93.0 % 93.0 % BB 3.1 % 3.5 % B and below 3.9 % 3.5 % Below investment grade 7.0 % 7.0 % Total debt securities 100.0 % 100.0 % At December 31, 2024 and 2023, the total carrying value of debt securities in an unrealized loss position consisted of: December 31, 2024 2023 Investment grade securities 79 % 77 % Below investment grade securities 1 % 2 % Not rated securities 20 % 21 % Unrealized losses on debt securities that were below investment grade or not rated were approximately 19 % and 21 % of the aggregate gross unrealized losses on available-for-sale debt securities at December 31, 2024 and 2023, respectively. Corporate securities in an unrealized loss position were diversified across industries as follows (in millions, except percentages): December 31, 2024 2023 Industries accounting for the largest percentage of corporate gross unrealized losses: Utility 18 % 17 % Financial Services 13 % 14 % Largest unrealized loss related to a single corporate obligor $ 61 $ 50 118 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments At December 31, 2024 and 2023, the amortized cost, ACL, gross unrealized gains and losses, and fair value of debt securities, including trading securities and securities carried at fair value under the fair value option, were as follows (in millions): Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2024 Cost (1) Credit Loss Gains Losses Value U.S. government securities $ 4,120 $ — $ 1 $ 962 $ 3,159 Other government securities 1,345 — 1 252 1,094 Public utilities 5,716 — 29 589 5,156 Corporate securities 30,581 8 137 2,732 27,978 Residential mortgage-backed 374 6 14 44 338 Commercial mortgage-backed 1,674 — 3 100 1,577 Other asset-backed securities 4,243 25 11 196 4,033 Total debt securities $ 48,053 $ 39 $ 196 $ 4,875 $ 43,335 Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2023 Cost (1) Credit Loss Gains Losses Value U.S. government securities $ 5,154 $ — $ 3 $ 845 $ 4,312 Other government securities 1,622 — 1 221 1,402 Public utilities 5,598 — 42 513 5,127 Corporate securities 27,870 15 194 2,572 25,477 Residential mortgage-backed 422 6 12 53 375 Commercial mortgage-backed 1,569 — 1 147 1,423 Other asset-backed securities 4,830 — 6 309 4,527 Total debt securities $ 47,065 $ 21 $ 259 $ 4,660 $ 42,643 (1) Amortized cost, apart from the carrying value for securities carried at fair value under the fair value option and trading securities. The amortized cost, ACL, gross unrealized gains and losses, and fair value of debt securities at December 31, 2024, by contractual maturity, are shown below (in millions). Actual maturities may differ from contractual maturities where securities can be called or prepaid with or without early redemption penalties. Allowance Gross Gross Amortized for Unrealized Unrealized Fair Cost (1) Credit Loss Gains Losses Value Due in 1 year or less $ 1,724 $ — $ 1 $ 8 $ 1,717 Due after 1 year through 5 years 10,872 7 51 256 10,660 Due after 5 years through 10 years 12,996 1 71 901 12,165 Due after 10 years through 20 years 8,887 — 41 1,560 7,368 Due after 20 years 7,283 — 4 1,810 5,477 Residential mortgage-backed 374 6 14 44 338 Commercial mortgage-backed 1,674 — 3 100 1,577 Other asset-backed securities 4,243 25 11 196 4,033 Total $ 48,053 $ 39 $ 196 $ 4,875 $ 43,335 (1) Amortized cost, apart from the carrying value for securities carried at fair value under the fair value option and trading securities. As required by law in various states in which business is conducted, securities with a carrying value of $ 83 million and $ 91 million at December 31, 2024 and 2023, respectively, were on deposit with regulatory authorities. 119 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Residential mortgage-backed securities (“RMBS”) include certain RMBS that are collateralized by residential mortgage loans and are neither expressly nor implicitly guaranteed by U.S. government agencies (“non-agency RMBS”). The Company’s non-agency RMBS include investments in securities backed by prime, Alt-A, and subprime loans as follows (in millions): Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2024 Cost (1) Credit Loss Gains Losses Value Prime $ 145 $ 3 $ 2 $ 18 $ 126 Alt-A 52 3 8 11 46 Subprime 5 — 4 — 9 Total non-agency RMBS $ 202 $ 6 $ 14 $ 29 $ 181 Allowance Gross Gross Amortized for Unrealized Unrealized Fair December 31, 2023 Cost (1) Credit Loss Gains Losses Value Prime $ 164 $ 2 $ 1 $ 19 $ 144 Alt-A 71 3 5 20 53 Subprime 7 1 4 — 10 Total non-agency RMBS $ 242 $ 6 $ 10 $ 39 $ 207 (1) Amortized cost, apart from carrying value for securities carried at fair value under the fair value option and trading securities. The Company defines its exposure to non-agency RMBS as follows: • Prime loan-backed securities are collateralized by mortgage loans made to the highest rated borrowers. • Alt-A loan-backed securities are collateralized by mortgage loans made to borrowers who lack credit documentation or necessary requirements to obtain prime borrower rates. • Subprime loan-backed securities are collateralized by mortgage loans made to borrowers that have a FICO score of 660 or lower. 120 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments The following table summarizes the number of securities, fair value and the gross unrealized losses of debt securities, aggregated by investment category and length of time that individual debt securities have been in a continuous loss position (dollars in millions): December 31, 2024 December 31, 2023 Less than 12 months Less than 12 months Gross Fair Value Gross Fair Value Unrealized # of Unrealized # of Losses securities Losses securities U.S. government securities $ 6 $ 172 21 $ 52 $ 306 11 Other government securities 2 47 13 1 51 9 Public utilities 26 835 92 11 287 32 Corporate securities 179 5,998 694 50 1,331 227 Residential mortgage-backed 3 96 52 2 48 45 Commercial mortgage-backed 18 265 31 — 46 6 Other asset-backed securities 9 641 51 27 707 55 Total temporarily impaired securities $ 243 $ 8,054 954 $ 143 $ 2,776 385 12 months or longer 12 months or longer Gross Fair Value Gross Fair Value Unrealized # of Unrealized # of Losses securities Losses securities U.S. government securities $ 956 $ 2,149 23 $ 793 $ 2,774 23 Other government securities 250 1,026 130 220 1,301 151 Public utilities 563 3,486 449 502 4,105 491 Corporate securities 2,553 13,956 1,828 2,522 17,457 2,207 Residential mortgage-backed 41 187 204 51 251 219 Commercial mortgage-backed 82 1,002 150 147 1,294 177 Other asset-backed securities 187 1,609 194 282 3,141 427 Total temporarily impaired securities $ 4,632 $ 23,415 2,978 $ 4,517 $ 30,323 3,695 Total Total Gross Fair Value Gross Fair Value Unrealized # of Unrealized # of Losses securities (1) Losses securities (1) U.S. government securities $ 962 $ 2,321 38 $ 845 $ 3,080 30 Other government securities 252 1,073 142 221 1,352 157 Public utilities 589 4,321 524 513 4,392 513 Corporate securities 2,732 19,954 2,380 2,572 18,788 2,355 Residential mortgage-backed 44 283 255 53 299 262 Commercial mortgage-backed 100 1,267 175 147 1,340 182 Other asset-backed securities 196 2,250 238 309 3,848 469 Total temporarily impaired securities $ 4,875 $ 31,469 3,752 $ 4,660 $ 33,099 3,968 (1) Certain securities contain multiple lots and fit the criteria of both aging groups. 121 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Debt securities in an unrealized loss position as of December 31, 2024 did not require an impairment recognized in earnings as (i) the Company did not intend to sell these debt securities, (ii) it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost basis, and (iii) the difference in the fair value compared to the amortized cost was due to factors other than credit loss. Based upon this evaluation, the Company believes it has the ability to generate adequate amounts of cash from normal operations to meet cash requirements with a reasonable margin of safety without requiring the sale of impaired securities. As of December 31, 2024, unrealized losses associated with debt securities are primarily due to widening credit spreads or rising risk-free rates since purchase. As described below, the Company performed analyses of the financial performance of the underlying issues in an unrealized loss position and believes that recovery of the entire amortized cost of each impaired security is expected. Evaluation of Available-for-Sale Debt Securities for Credit Loss For debt securities in an unrealized loss position, management first assesses whether the Company has the intent to sell, or whether it is more likely than not it will be required to sell, the security before the amortized cost basis is fully recovered. If either criterion is met, the amortized cost is written down to fair value through net gains (losses) on derivatives and investments as an impairment. If neither criterion is met, the securities are further evaluated to determine if the cause of the decline in fair value resulted from credit losses or other factors, such as estimates about issuer operations and future earnings potential. The credit loss evaluation for a security may consider the following: • the extent to which the fair value is below amortized cost; • changes in ratings; • whether a significant covenant has been breached; assessments of the issuer’s ability to make scheduled debt payments based upon judgments related to its current and projected financial position, including whether it has filed or indicated a possibility of filing for bankruptcy, has missed or announced it intends to miss a scheduled debt service payment, or has experienced a specific material adverse change that may impair its creditworthiness; • the existence of, and realizable value of, any collateral backing the obligations; • the macro-economic and micro-economic outlooks for the issuer and its industry; • for asset-backed securities: includes an assessment of future estimated cash flows under expected and stress case scenarios to identify potential shortfalls in contractual payments. These estimated cash flows are developed using available performance indicators from the underlying assets, such as current and projected default or delinquency rates, levels of credit enhancement, current subordination levels, vintage, expected loss severity and other relevant characteristics; and • for mortgage-backed securities, credit losses are assessed using a cash flow model that estimates the cash flows on the underlying mortgages, using the security-specific collateral characteristics and transaction structure. The model estimates cash flows from the underlying mortgage loans and distributes those cash flows to various tranches of securities based on the transaction structure and any existing subordination and credit enhancements. The cash flow model incorporates actual cash flows on the mortgage-backed securities through the current period and then projects the remaining cash flows using a number of assumptions, including prepayment timing, default rates and loss severity. Specifically, for prime and Alt-A RMBS, the assumed default percentage is dependent on the severity of delinquency status, with foreclosures and real estate owned receiving higher rates, but also includes the currently performing loans. These estimates reflect a combination of data derived by third parties and internally developed assumptions. Where possible, this data is benchmarked against other third-party sources. In addition, these estimates are extrapolated along a default timing curve to estimate the total lifetime pool default rate. When a credit loss is determined to exist and the present value of cash flows expected to be collected is less than the amortized cost of the security, an allowance for credit loss is recorded along with a charge to net gains (losses) on derivatives and investments, limited by the amount that the fair value is less than amortized cost. Any remaining unrealized loss after recording the allowance for credit loss is the non-credit amount and is recorded to other comprehensive income. 122 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments There are inherent uncertainties in assessing the fair values assigned to the Company’s investments. The Company’s reviews of net present value and fair value involve several criteria including economic conditions, credit loss experience, other issuer-specific developments and estimated future cash flows. These assessments are based on the best available information at the time. Factors such as market liquidity, the widening of bid/ask spreads and a change in the cash flow assumptions can contribute to future price volatility. If actual experience differs negatively from the assumptions and other considerations used in the Consolidated Financial Statements, unrealized losses currently reported in accumulated other comprehensive income (loss) may be recognized in the Consolidated Income Statements in future periods. The Company currently has no intent to sell securities with unrealized losses considered to be temporary until they mature or recover in value and believes that it has the ability to do so. However, if the specific facts and circumstances surrounding an individual security, or the outlook for its industry sector change, the Company may sell the security prior to its maturity or recovery and realize a loss. The allowance for credit loss for specific debt securities may be increased or reversed in subsequent periods due to changes in the assessment of the present value of cash flows that are expected to be collected. Any changes to the allowance for credit loss are recorded as a provision for (or reversal of) credit loss expense in net gains (losses) on derivatives and investments. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses. Accrued interest receivables are presented separate from the amortized cost basis of debt securities. Accrued interest receivables that are determined to be uncollectible are written off with a corresponding reduction to net investment income. Accrued interest of $ 1 million and $ 1 million was written off during the years ended December 31, 2024 and 2023, respectively. The roll-forward of the allowance for credit loss for available-for-sale securities by sector is as follows (in millions): December 31, 2024 US government securities Other government securities Public utilities Corporate securities Residential mortgage-backed Commercial mortgage-backed Other asset-backed securities Total Balance at January 1, 2024 $ — $ — $ — $ 15 $ 6 $ — $ — $ 21 Additions for which credit loss was not previously recorded — — 16 — 16 — 27 59 Changes for securities with previously recorded credit loss — — — 1 2 — — 3 Additions for purchases of PCD debt securities (1) — — — — — — — — Reductions from charge-offs — — — ( 6 ) ( 16 ) — — ( 22 ) Reductions for securities disposed — — ( 16 ) ( 2 ) ( 2 ) — — ( 20 ) Securities intended/required to be sold before recovery of amortized cost basis — — — — — — ( 2 ) ( 2 ) Balance at December 31, 2024 (2) $ — $ — $ — $ 8 $ 6 $ — $ 25 $ 39 123 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments December 31, 2023 US government securities Other government securities Public utilities Corporate securities Residential mortgage-backed Commercial mortgage-backed Other asset-backed securities Total Balance at January 1, 2023 $ — $ 2 $ — $ 15 $ 6 $ — $ — $ 23 Additions for which credit loss was not previously recorded — 2 — 48 1 9 — 60 Changes for securities with previously recorded credit loss — 1 — 1 2 — — 4 Additions for purchases of PCD debt securities (1) — — — — — — — — Reductions from charge-offs — — — ( 2 ) — — — ( 2 ) Reductions for securities disposed — ( 3 ) — ( 24 ) ( 3 ) — — ( 30 ) Securities intended/required to be sold before recovery of amortized cost basis — ( 2 ) — ( 23 ) — ( 9 ) — ( 34 ) Balance at December 31, 2023 (2) $ — $ — $ — $ 15 $ 6 $ — $ — $ 21 (1) Represents purchased credit-deteriorated ("PCD") fixed maturity available-for-sale securities. (2) Accrued interest receivable on debt securities totaled $ 435 million and $ 411 million as of December 31, 2024 and 2023, respectively, and was excluded from the determination of credit losses for the years ended December 31, 2024 and 2023. Net Investment Income The sources of net investment income were as follows (in millions): Years Ended December 31, 2024 2023 2022 Debt securities (1) $ 1,546 $ 1,516 $ 1,076 Equity securities 5 2 ( 16 ) Mortgage loans 330 318 285 Policy loans 67 68 69 Limited partnerships 163 22 144 Other investment income 189 108 49 Total investment income excluding funds withheld assets 2,300 2,034 1,607 Investment expenses (2)(3) ( 462 ) ( 354 ) ( 115 ) Net investment income excluding funds withheld assets 1,838 1,680 1,492 Net investment income on funds withheld assets (see Note 8) 1,024 1,174 1,254 Net investment income $ 2,862 $ 2,854 $ 2,746 (1) Includes changes in fair value gains (losses) on trading securities and includes $( 77 ) million, $ 34 million and $( 149 ) million for the years ended December 31, 2024, 2023 and 2022, respectively, related to the change in fair value for securities carried under the fair value option. (2) In the first quarter of 2024, interest costs principally associated with repurchase agreements and cash collateral were reclassified from interest expense to net investment income. All prior period amounts have been conformed to current period presentation. (3) Includes expenses from consolidated variable interest entities, which includes changes in fair value of notes issued by those entities, of $( 195 ) million, $( 186 ) million, and $( 10 ) million for the years ended December 31, 2024, 2023 and 2022, respectively, Investment income is not accrued on securities in default and otherwise where the collection is uncertain. In these cases, receipts of interest on such securities are used to reduce the cost basis of the securities. Unrealized gains (losses) included in investment income that were recognized on equity securities held were $ 4 million, $( 20 ) million and $( 52 ) million, for the years ended December 31, 2024, 2023 and 2022, respectively. 124 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Net Gains (Losses) on Derivatives and Investments Realized gains and losses on sales of investments are recognized in income at the date of sale and are determined using the specific cost identification method. The following table summarizes net gains (losses) on derivatives and investments (in millions): Years Ended December 31, 2024 2023 2022 Available-for-sale securities Realized gains on sale $ 23 $ 22 $ 41 Realized losses on sale ( 136 ) ( 397 ) ( 429 ) Credit loss income (expense) ( 1 ) ( 29 ) ( 5 ) Credit loss income (expense) on mortgage loans 16 ( 104 ) ( 16 ) Other (1) 87 ( 46 ) 50 Net gains (losses) excluding derivatives and funds withheld assets ( 11 ) ( 554 ) ( 359 ) Net gains (losses) on derivative instruments (see Note 5) ( 6,801 ) ( 5,310 ) ( 2,664 ) Net gains (losses) on derivatives and investments ( 6,812 ) ( 5,864 ) ( 3,023 ) Net gains (losses) on funds withheld reinsurance treaties (see Note 8) ( 1,052 ) ( 1,801 ) 2,186 Total net gains (losses) on derivatives and investments $ ( 7,864 ) $ ( 7,665 ) $ ( 837 ) (1) Includes the foreign currency gain or loss related to foreign denominated trust instruments supporting funding agreements. Net gains (losses) on funds withheld reinsurance treaties represents income (loss) from the sale of investments held in segregated funds withheld accounts in support of reinsurance agreements for which Jackson retains legal ownership of the underlying investments. These gains (losses) are increased or decreased by changes in the embedded derivative liability related to the Athene Life Re Ltd. ("Athene") funds withheld coinsurance agreement and also include (i) changes in the related funds withheld payable, as all economic performance of the investments held in the segregated accounts inure to the benefit of the reinsurers under the respective reinsurance agreements with each reinsurer, and (ii) amortization of the difference between book value and fair value of the investments as of the effective date of the reinsurance agreements with each reinsurer. The aggregate fair value of securities sold at a loss for the years ended December 31, 2024, 2023 and 2022 was $ 2,921 million, $ 5,529 million and $ 5,376 million, which was approximately 94 %, 97 % and 93 % of book value, respectively. Proceeds from sales of available-for-sale debt securities were $ 4.3 billion, $ 6.8 billion and $ 8.0 billion during the years ended December 31, 2024, 2023 and 2022, respectively. Consolidated Variable Interest Entities ("VIEs") The Company’s involvement with VIEs is primarily to invest in assets that gain exposure to a broadly diversified portfolio of asset classes. A VIE is an entity that does not have sufficient equity to finance the activities of the entity without additional subordinated financial support or where equity investors lack certain characteristics of a controlling financial interest. The Company performs ongoing qualitative assessments of variable interests in VIEs to determine whether it has a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of a VIE, it consolidates the assets and liabilities of the VIE in its Consolidated Financial Statements. The Company concluded that the following entities are VIEs and that the Company is the primary beneficiary as it has both the power to direct the most significant activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In each case, the Company’s exposure to loss is limited to the capital invested plus, in the cases of the limited liability companies ("LLCs") and the Private Equity Funds, unfunded capital commitments. Creditors of the consolidated VIEs do not have recourse to the general credit of the Company: 125 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments • The Company funds affiliated LLCs to facilitate the issuance of collateralized loan obligations ("CLOs"). The Company's policy is to record the consolidation of VIEs on a one-month lag due to the timing of when information is available from the VIE. In December 2023, a consolidated CLO expanded its issuance by $ 97 million, net of the Company’s holding, which was not reflected in the Company's Consolidated Balance Sheet as of December 31, 2023 due to the reporting lag. • Private Equity Funds III – VIII are limited partnership structures that invest the ownership capital in portfolios of various other limited partnership structures. Private Equity Fund IX was created in 2024 but is not expected to be funded by the Company until 2025. The Company sold all of its investment in Private Equity Funds III - VI and the majority of its investment in Private Equity Fund VII during the year ended December 31, 2023. The Company recorded a loss of $ 97 million on the sale, which it recognized in Net Investment Income for the year ended December 31, 2023. Those entities were deconsolidated as of December 31, 2023. • PPM has created and managed institutional share class mutual funds, where Jackson seeds new funds, or new share classes within a fund, when deemed necessary to develop the requisite record prior to allowing investment by external parties. These mutual funds ceased operations during the year ended December 31, 2024. Asset and liability information for the consolidated VIEs included on the Consolidated Balance Sheets are as follows (in millions): December 31, 2024 2023 Assets Debt securities, at fair value under fair value option $ 2,429 $ 2,037 Debt securities, trading — 68 Equity securities 6 7 Other invested assets 620 396 Cash and cash equivalents 178 93 Other assets 51 49 Total assets $ 3,284 $ 2,650 Liabilities Notes issued by consolidated VIEs, at fair value under fair value option $ 2,343 $ 1,988 Other liabilities 279 98 Total other liabilities 2,622 2,086 Securities lending payable — 2 Total liabilities $ 2,622 $ 2,088 Equity Noncontrolling interests $ 218 $ 164 126 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Unconsolidated VIEs The Company has concluded the following entities are VIEs but does not consolidate them. Based on analysis of the limited partnerships ("LPs"), LLCs and the mutual funds, the Company is not the primary beneficiary of the VIE because the Company lacks the power to direct the activities of the VIE that most significantly impact the VIE's performance or lacks the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entities, or both. • The carrying amounts of the Company’s investments in certain LPs and LLCs are recognized in other invested assets on the Consolidated Balance Sheets. Unfunded capital commitments for these investments are detailed in Note 16 of the Notes to Consolidated Financial Statements. The Company’s exposure to loss was limited to $ 2,637 million and $ 2,576 million as of December 31, 2024 and 2023, respectively, representing the aggregate capital invested and unfunded capital commitments related to the LPs/LLCs at those dates. The capital invested in an LP or LLC equals the original capital contributed, increased for additional capital contributed after the initial investment, and reduced for any returns of capital from the LP or LLC. LPs and LLCs are carried at fair value. • The Company's investments in certain mutual funds are recognized in equity securities on the Consolidated Balance Sheets and were $ 19 million and $ 21 million as of December 31, 2024 and 2023, respectively. The Company’s maximum exposure to loss on these mutual funds is limited to the amortized cost for these investments. The Company makes investments in structured debt securities issued by VIEs for which it is not the manager. These structured debt securities include RMBS, Commercial Mortgage-Backed Securities ("CMBS"), and Asset-Backed Securities ("ABS"). The Company does not consolidate the securitization trusts utilized in these transactions because it does not have the power to direct the activities that most significantly impact the economic performance of these securitization trusts. The Company does not consider its continuing involvement with these VIEs to be significant because it either invests in securities issued by the VIE and was not involved in the design of the VIE or no transfers have occurred between the Company and the VIE. The Company’s maximum exposure to loss on these structured debt securities is limited to the amortized cost of these investments. The Company does not have any further contractual obligations to the VIE. The Company recognizes the variable interest in these VIEs at fair value on the Consolidated Balance Sheets. Commercial and Residential Mortgage Loans The following table shows commercial mortgage loans, residential mortgage loans, and the respective accrued interest thereon at December 31, 2024 and 2023 (in millions): December 31, 2024 2023 Commercial mortgage loans (1) $ 8,826 $ 9,562 Accrued interest receivable on commercial mortgage loans 34 39 Residential mortgage loans (2) 1,085 1,001 Accrued interest receivable on residential mortgage loans 7 7 (1) Net of an allowance for credit losses of $ 116 million and $ 160 million at each date, respectively. (2) Net of an allowance for credit losses of $ 5 million and $ 5 million at each date, respectively. Commercial and residential mortgage loans are generally carried at the aggregate unpaid principal balance, adjusted for any applicable unamortized discount or premium, or ACL. Acquisition discounts and premiums on mortgage loans are amortized into investment income through maturity dates using the effective interest method. Interest income is accrued on the principal balance of the loan based on the loan’s contractual interest rate. Interest income and amortization of premiums and discounts are reported in net investment income along with prepayment fees and mortgage loan fees, which are recorded as incurred. At December 31, 2024, commercial mortgage loans were collateralized by properties located in 36 states, the District of Columbia, and Europe, while residential mortgage loans were collateralized by properties located in 49 states, the District of Columbia, Mexico, and Europe. 127 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Evaluation for Credit Losses on Mortgage Loans The Company reviews mortgage loans that are not carried at fair value under the fair value option on a quarterly basis to estimate the ACL with changes in the ACL recorded in net gains (losses) on derivatives and investments. Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses. The Company utilizes a third-party forecasting model to estimate lifetime expected credit losses at a loan level for mortgage loans. The model forecasts net operating income and property values for the economic scenario selected. The debt service coverage ratios (“DSCR”) and loan to values (“LTV”) are calculated over the forecastable period by comparing the projected net operating income and property valuations to the loan payment and principal amounts of each loan. The model utilizes historical mortgage loan performance based on DSCRs and LTV to derive probability of default and expected losses based on the economic scenario that is similar to the Company’s expectations of economic factors such as unemployment, gross domestic product growth, and interest rates. The Company determined the forecastable period to be reasonable and supportable for a period of two years beyond the end of the reporting period. Over the following one-year period, the model reverts to the historical performance of the portfolio for the remainder of the contractual term of the loans. In cases where the Company does not have an appropriate length of historical performance, the relevant historical rate from an index or the lifetime expected credit loss calculated from the model may be used. Unfunded commitments are included in the model and an ACL is determined accordingly. Credit loss estimates are pooled by property type and the Company does not include accrued interest in the determination of ACL. For individual loans or for types of loans for which the third-party model is deemed not suitable, the Company utilizes relevant current market data, industry data, and publicly available historical loss rates to calculate an estimate of the lifetime expected credit loss. Mortgage loans on real estate deemed uncollectible are charged against the ACL, and subsequent recoveries, if any, are credited to the ACL, limited to the aggregate of amounts previously charged-off and expected to be charged-off. Mortgage loans on real estate are presented net of the ACL on the Consolidated Balance Sheets . The following table provides the change in the allowance for credit losses in the Company’s mortgage loan portfolios (in millions): December 31, 2024 Apartment Hotel Office Retail Warehouse Other Residential Mortgage Total Balance at January 1, 2024 $ 28 $ 4 $ 78 $ 27 $ 17 $ 6 $ 5 $ 165 Charge offs, net of recoveries ( 3 ) — — — — — — ( 3 ) Additions from purchase of PCD mortgage loans — — — — — — — — Provision (release) ( 2 ) 3 ( 34 ) ( 8 ) 3 ( 3 ) — ( 41 ) Balance at December 31, 2024 (1)(2) $ 23 $ 7 $ 44 $ 19 $ 20 $ 3 $ 5 $ 121 December 31, 2023 Apartment Hotel Office Retail Warehouse Other Residential Mortgage Total Balance at January 1, 2023 $ 16 $ 20 $ 15 $ 21 $ 16 $ 3 $ 4 $ 95 Charge offs, net of recoveries — — ( 66 ) — — — — ( 66 ) Additions from purchase of PCD mortgage loans — — — — — — — — Provision (release) 12 ( 16 ) 129 6 1 3 1 136 Balance at December 31, 2023 (1)(2) $ 28 $ 4 $ 78 $ 27 $ 17 $ 6 $ 5 $ 165 (1) Accrued interest receivable totaled $ 41 million and $ 46 million as of December 31, 2024 and 2023, respectively, and was excluded from the determination of credit losses. (2) Accrued interest amounting to $ 1 million and $ 2 million was written 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 Company’s mortgage loans that are current and in good standing are accruing interest. Interest is not accrued on loans greater than 90 days delinquent and in process of foreclosure, when deemed uncollectible. Delinquency status is determined from the date of the first missed contractual payment. 128 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments The following table provides information about our residential mortgage loans in process of foreclosure (in millions): December 31, 2024 2023 Recorded investment (1) $ 29 $ 24 Unpaid principal balance 33 27 Related loan allowance 1 1 Average recorded investment 30 19 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. The following tables provide information about the credit quality with vintage year and category of mortgage loans (dollars in millions): December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Loans Total % of Total Commercial mortgage loans Loan to value ratios (1) : Less than 70% $ 577 $ 639 $ 505 $ 594 $ 481 $ 4,504 $ 4 $ 7,304 83 % 70% - 80% 105 49 204 312 169 235 — 1,074 12 % 80% - 100% — — 130 40 — 168 — 338 4 % Greater than 100% — — — 20 28 62 — 110 1 % Total commercial mortgage loans 682 688 839 966 678 4,969 4 8,826 100 % Debt service coverage ratios (2) : Greater than 1.20x 666 578 627 590 570 4,693 4 7,728 88 % 1.00x - 1.20x 16 103 135 262 108 205 — 829 9 % Less than 1.00x — 7 77 114 — 71 — 269 3 % Total commercial mortgage loans 682 688 839 966 678 4,969 4 8,826 100 % Residential mortgage loans Performing 304 110 32 132 65 344 — 987 91 % Nonperforming — 18 45 4 6 25 — 98 9 % Total residential mortgage loans 304 128 77 136 71 369 — 1,085 100 % Total mortgage loans $ 986 $ 816 $ 916 $ 1,102 $ 749 $ 5,338 $ 4 $ 9,911 100 % (1) The loan to value ratio is derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated annually for each mortgage loan. (2) The debt service coverage ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service. 129 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total % of Total Commercial mortgage loans Loan to value ratios (1) : Less than 70% $ 659 $ 800 $ 937 $ 653 $ 1,251 $ 4,300 $ 4 $ 8,604 90 % 70% - 80% 24 138 325 122 61 41 — 711 7 % 80% - 100% — 25 — 37 41 93 — 196 2 % Greater than 100% — — 26 — 22 3 — 51 1 % Total commercial mortgage loans 683 963 1,288 812 1,375 4,437 4 9,562 100 % Debt service coverage ratios (2) : Greater than 1.20x 546 611 932 667 1,302 4,189 4 8,251 86 % 1.00x - 1.20x 129 277 356 145 30 191 — 1,128 12 % Less than 1.00x 8 75 — — 43 57 — 183 2 % Total commercial mortgage loans 683 963 1,288 812 1,375 4,437 4 9,562 100 % Residential mortgage loans Performing 193 136 155 36 30 361 — 911 91 % Nonperforming 3 41 10 7 3 26 — 90 9 % Total residential mortgage loans 196 177 165 43 33 387 — 1,001 100 % Total mortgage loans $ 879 $ 1,140 $ 1,453 $ 855 $ 1,408 $ 4,824 $ 4 $ 10,563 100 % (1) The loan to value ratio is derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated annually for each mortgage loan. (2) The debt service coverage ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service. Accruing Loans (1) December 31, 2024 Current 30-89 Days Past Due (2) 90 Days or Greater Past Due (2) Non-accrual Loans (1) Total Loans (1) Non-accrual Loans with No Allowance (1) Interest Income on Non-accrual Loans Apartment $ 2,450 $ — $ — $ — $ 2,450 $ — $ — Hotel 835 — — — 835 — — Office 1,317 — — — 1,317 — — Retail 1,685 — — — 1,685 — — Warehouse 2,134 — — — 2,134 — — Other 521 — — — 521 — — Total commercial 8,942 — — — 8,942 — — Residential (2) 833 154 24 79 1,090 — 2 Total $ 9,775 $ 154 $ 24 $ 79 10,032 $ — $ 2 ACL ( 121 ) Total with ACL $ 9,911 130 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments Accruing Loans (1) December 31, 2023 Current 30-89 Days Past Due (2) 90 Days or Greater Past Due (2) Non-accrual Loans (1) Total Loans (1) Non-accrual Loans with No Allowance (1) Interest Income on Non-accrual Loans Apartment $ 2,868 $ — $ — $ — $ 2,868 $ — $ — Hotel 772 — — — 772 — — Office 1,457 — — — 1,457 — — Retail 1,891 — — — 1,891 — — Warehouse 2,033 — — — 2,033 — — Other 701 — — — 701 — — Total commercial 9,722 — — — 9,722 — — Residential (2) 723 190 27 66 1,006 — 2 Total $ 10,445 $ 190 $ 27 $ 66 $ 10,728 $ — $ 2 ACL ( 165 ) Total with ACL $ 10,563 (1) Amortized cost or fair value for loans carried at fair value under the fair value option. (2) 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 information about the mortgage loans modified during the periods indicated to borrowers experiencing financial difficulty (dollars in millions): Term Extension Amortized Cost Basis Percent of Total Class December 31, 2024 Commercial mortgage loans $ 24 0.27 % December 31, 2023 Commercial mortgage loans $ 17 0.17 % As of December 31, 2024, the above modified loans had no unfunded commitment. The following table describes the financial effect of the modifications made to the loans noted above: Term Extension Financial Effect December 31, 2024 Commercial mortgage loans Granted extension of term for three -years and rate converted from variable to 4 % fixed. December 31, 2023 Commercial mortgage loans Granted extension of term for three -years and required partial principal repayment at extension of the loan. The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months (in millions): Payment Status (Amortized Cost Basis) Current 30-89 Days Past Due 90+ Days Past Due December 31, 2024 Commercial mortgage loans $ 24 $ — $ — December 31, 2023 Commercial mortgage loans $ 17 $ — $ — 131 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments As of December 31, 2024 and 2023, stressed mortgage loans for which the Company is dependent, or expects to be dependent, on the underlying property to satisfy repayment were $ 27 million and $ 19 million, respectively. Equity Securities Equity securities include common stocks, preferred stocks and mutual funds. All equity securities are carried at fair value with changes in value included in net investment income. Policy Loans Policy loans are loans the Company issues to contract holders that use the cash surrender value of their life insurance policy or annuity contract as collateral. At December 31, 2024 and 2023, $ 3.5 billion and $ 3.5 billion of these loans were carried at fair value, which the Company believes is equal to unpaid principal balances, plus accrued investment income. At December 31, 2024 and 2023, the Company had $ 0.9 billion and $ 0.9 billion, respectively, of policy loans not held as collateral for reinsurance, which were carried at the unpaid principal balances. Other Invested Assets Other invested assets primarily include investments in Federal Home Loan Bank of Indianapolis ("FHLBI") capital stock, limited partnerships (“LPs”), and real estate. FHLBI capital stock is carried at cost and adjusted for any impairment. At December 31, 2024 and 2023, FHLB capital stock had a carrying value of $ 127 million and $ 108 million, respectively. Real estate is carried at the lower of depreciated cost or fair value and real estate occupied by the Company is carried at depreciated cost. At December 31, 2024 and 2023, real estate totaling $ 232 million and $ 226 million, respectively, included foreclosed properties with a book value of $ 14 million and $ 6 million, respectively. Carrying values for LP investments are generally determined by using the proportion of the Company’s investment in each fund (Net Asset Value (“NAV”) equivalent) as a practical expedient for fair value, and generally are recorded on a three-month lag, with changes in value included in net investment income. At December 31, 2024 and 2023, investments in LPs had carrying values of $ 2.5 billion and $ 2.1 billion, respectively. Securities Lending The Company has entered into securities lending agreements with agent banks whereby blocks of securities are loaned to third parties, primarily major brokerage firms. As of December 31, 2024 and 2023, the estimated fair value of loaned securities was $ 13 million and $ 19 million, respectively. The agreements require a minimum of 102 % of the fair value of the loaned securities to be held as collateral, calculated daily. To further minimize the credit risks related to these programs, the financial condition of counterparties is monitored on a regular basis. At December 31, 2024 and 2023, cash collateral received in the amount of $ 14 million and $ 19 million, respectively, was invested by the agent banks and included in cash and cash equivalents of the Company. A securities lending payable for the overnight and continuous loans is included in liabilities in the amount of cash collateral received. Securities lending transactions are used to generate income. Income and expenses associated with these transactions are reported as net investment income. Repurchase Agreements The Company routinely enters into repurchase agreements whereby the Company agrees to sell and repurchase securities. These agreements are accounted for as financing transactions, with the assets and associated liabilities included in the Consolidated Balance Sheets. At December 31, 2024 and 2023, the outstanding repurchase agreement balance was $ 1.5 billion and nil , respectively, having maturities within 30 days, and was included within repurchase agreements and securities lending payable in the Consolidated Balance Sheets. These repurchase agreements were collateralized with U.S. Treasury securities and corporate securities of $ 1.5 billion and nil , respectively, at December 31, 2024 and 2023. In the event of a decline in the fair value of the pledged collateral under these agreements, the Company may be required to transfer cash or additional securities as pledged collateral. Interest expense totaled $ 69 million, $ 45 million and $ 8 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included within net investment income. 132 Part II | Item 8. Notes to Consolidated Financial Statements | 4. Investments 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 collateral upgrade transactions, the Company lends securities (e.g., corporate debt securities or other securities agreed upon between the parties) to bank counterparties in exchange for U.S. Treasury securities that the Company then uses to provide as collateral. The paired repurchase and reverse repurchase transactions are settled on a net basis in accordance with master repurchase agreements. As a result, there was no cash exchanged at initiation of these agreements. The paired transactions are reported net within the Consolidated Balance Sheets. These transactions do not have a stated maturity and require at least 150 -days' notice prior to termination. At December 31, 2024 and 2023, the fair value of the U.S. treasuries received was $ 1.5 billion and nil , respectively, collateralized with corporate securities with a fair value of $ 1.6 billion and nil , respectively. Subsequently, the Company provided these U.S. Treasury securities as collateral for derivative trades, and they are included as part of the derivative collateral disclosures. In the event of a decline in the fair value of the pledged collateral under these agreements, the Company may be required to transfer cash or additional securities as pledged collateral. Gross interest income of $ 71 million, nil , and nil and gross interest expense of $ 79 million, nil , and nil for the years ended December 31, 2024, 2023 and 2022, respectively, are included within net investment income. 5. Derivative Instruments The Company utilizes freestanding and embedded derivatives as follows: Freestanding Derivative Instruments The Company enters 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 the Company has acquired or incurred. The Company does not account for freestanding derivatives as either fair value or cash flow hedges as might be permitted if specific hedging documentation requirements were followed. As a result, freestanding derivatives are carried at fair value on the balance sheet with settlements and changes in fair value recorded in net gains (losses) on derivatives and investments. With respect to the Company’s interest rate swaps, total return swaps, and cross-currency swaps, the Company records the income related to periodic interest payment settlements within net gains (losses) on derivatives and investments. Although the Company does not account for these as cash flow hedges, the income from these settlements is considered operating income due to the cash settlement nature and is reported, as such, within the Company’s segment related disclosure within pretax adjusted operating earnings. The Company manages the potential credit exposure for over-the-counter derivative contracts through evaluation of the counterparty credit standing, collateral agreements, and master netting agreements. The Company is exposed to credit-related losses in the event of nonperformance by counterparties, however, it does not anticipate nonperformance. There were no charges due to nonperformance by derivative counterparties in 2024, 2023 or 2022. Embedded Derivatives—Product Liabilities Certain product features, including the index-linked crediting option offered in connection with fixed index annuities and RILAs issued by the Company, are classified as embedded derivatives. These embedded derivatives are separated for accounting purposes and are carried at fair value. These embedded derivatives are reported within other contract holder funds in the Consolidated Balance Sheets consistent with the host contract. The results from changes in value of these embedded derivatives are reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. 133 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments See Note 10 - Other Contract Holder Funds of the Notes to Consolidated Financial Statements for additional information on the accounting policies for these embedded derivatives within fixed index and registered index-linked annuities. Embedded Derivatives—Funds Withheld Reinsurance Agreements The Company has recorded an embedded derivative liability related to the Athene coinsurance agreement (the “Athene Embedded Derivative”) in accordance with FASB ASC 815-15-55-107 and 108, “Derivatives and Hedging Case B: Reinsurer’s Receivable Arising from a Modified Coinsurance Arrangement” as Jackson’s obligation under the Reinsurance Agreement is based on the total return of investments in a segregated funds withheld account rather than Jackson’s own creditworthiness. As the Reinsurance Agreement transfers the economics of the investments in the segregated funds withheld account to Athene, it will receive an investment return equivalent to owning the underlying assets. At inception of the Reinsurance Agreement, the Athene Embedded Derivative was valued at zero. Additionally, the inception fair value of the investments in the segregated funds withheld account differed from their book value and, accordingly, the amortization of this difference is reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements, while the investments are held. Subsequent to the effective date of the Reinsurance Agreement, the Athene Embedded Derivative is measured at fair value with changes reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. The Athene Embedded Derivative Liability is included in funds withheld payable under reinsurance treaties in the Consolidated Balance Sheets. See “Athene Reinsurance” in Note 8 - Reinsurance of the Notes to Consolidated Financial Statements for additional information on the Athene Reinsurance Transaction. A summary of the aggregate contractual or notional amounts and fair values of the Company’s freestanding and embedded derivative instruments are as follows (in millions): December 31, 2024 Contractual/ Assets Liabilities Net Notional Fair Fair Fair Value Amount (1) Value Value Asset (Liability) Freestanding derivatives Cross-currency swaps $ 1,725 $ 121 $ 151 $ ( 30 ) Equity index futures (2) 33,104 — — — Equity index put options 10,000 77 — 77 Interest rate swaps 5,978 3 177 ( 174 ) Put-swaptions — — — — Interest rate futures (2) 20,592 — — — Total return swaps 2,065 39 — 39 Bond forwards 609 — 21 ( 21 ) Total freestanding derivatives 74,073 240 349 ( 109 ) Embedded derivatives Fixed index annuity embedded derivatives (3) N/A — 877 ( 877 ) Registered index-linked annuity embedded derivatives (3) N/A — 3,065 ( 3,065 ) Total embedded derivatives N/A — 3,942 ( 3,942 ) Derivatives related to funds withheld under reinsurance treaties Cross-currency swaps 158 18 1 17 Cross-currency forwards 1,017 39 11 28 Funds withheld embedded derivative (4) N/A 2,314 — 2,314 Total derivatives related to funds withheld under reinsurance treaties 1,175 2,371 12 2,359 Total $ 75,248 $ 2,611 $ 4,303 $ ( 1,692 ) (1) The notional amount for swaps and swaptions represents the stated principal balance used as a basis for calculating payments. The contractual amount for futures, forwards, and options represents the market exposure of open positions. (2) Variation margin is considered settlement resulting in the netting of cash received/paid for variation margin against the fair value of the trades. (3) Included within other contract holder funds on the Consolidated Balance Sheets. The non-performance risk adjustment is included in the balance above. (4) Included within funds withheld payable under reinsurance treaties on the Consolidated Balance Sheets. 134 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments December 31, 2023 Contractual/ Assets Liabilities Net Notional Fair Fair Fair Value Amount (1) Value Value Asset (Liability) Freestanding derivatives Cross-currency swaps $ 1,665 $ 123 $ 116 $ 7 Equity index futures (2) 24,739 — — — Equity index put options 26,000 59 — 59 Interest rate swaps 6,228 5 132 ( 127 ) Put-swaptions 23,500 153 905 ( 752 ) Interest rate futures (2) 33,926 — — — Total return swaps 1,599 1 23 ( 22 ) Total freestanding derivatives 117,657 341 1,176 ( 835 ) Embedded derivatives Fixed index annuity embedded derivatives (3) N/A — 866 ( 866 ) Registered index-linked annuity embedded derivatives (3) N/A — 1,224 ( 1,224 ) Total embedded derivatives N/A — 2,090 ( 2,090 ) Derivatives related to funds withheld under reinsurance treaties Cross-currency swaps 158 14 1 13 Cross-currency forwards 1,410 35 33 2 Funds withheld embedded derivative (4) N/A 2,468 — 2,468 Total derivatives related to funds withheld under reinsurance treaties 1,568 2,517 34 2,483 Total $ 119,225 $ 2,858 $ 3,300 $ ( 442 ) (1) The notional amount for swaps and swaptions represents the stated principal balance used as a basis for calculating payments. The contractual amount for futures, and options represents the market exposure of open positions. (2) Variation margin is considered settlement resulting in the netting of cash received/paid for variation margin against the fair value of the trades. (3) Included within other contract holder funds on the Consolidated Balance Sheets. The non-performance risk adjustment is included in the balance above. (4) Included within funds withheld payable under reinsurance treaties on the Consolidated Balance Sheets. 135 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments The following table reflects the results of the Company’s derivatives, including gains (losses) and change in fair value of freestanding derivative instruments and embedded derivatives (in millions): Years Ended December 31, 2024 2023 2022 Derivatives excluding funds withheld under reinsurance treaties Cross-currency swaps $ ( 66 ) $ ( 4 ) $ ( 67 ) Equity index call options 18 916 ( 1,830 ) Equity index futures ( 1,704 ) ( 3,543 ) 3,005 Equity index put options ( 358 ) ( 2,172 ) ( 244 ) Interest rate swaps ( 127 ) ( 63 ) ( 615 ) Interest rate swaps - cleared — ( 10 ) ( 201 ) Put-swaptions ( 516 ) ( 61 ) ( 1,832 ) Interest rate futures ( 2,741 ) 373 ( 925 ) Total return swaps ( 302 ) ( 240 ) 5 Bond forwards ( 21 ) — — Fixed index annuity embedded derivatives ( 38 ) 5 3 Registered index-linked annuity embedded derivatives ( 946 ) ( 511 ) 37 Total net gains (losses) on derivative instruments excluding derivative instruments related to funds withheld under reinsurance treaties ( 6,801 ) ( 5,310 ) ( 2,664 ) Derivatives related to funds withheld under reinsurance treaties Cross-currency swaps 6 ( 7 ) 14 Cross-currency forwards 27 ( 30 ) 79 Funds withheld embedded derivative ( 154 ) ( 690 ) 3,278 Total net gains (losses) on derivative instruments related to funds withheld under reinsurance treaties ( 121 ) ( 727 ) 3,371 Total net gains (losses) on derivative instruments including derivative instruments related to funds withheld under reinsurance treaties $ ( 6,922 ) $ ( 6,037 ) $ 707 All the Company’s trade agreements for freestanding, over-the-counter derivatives, contain credit downgrade provisions that allow a party to assign or terminate derivative transactions if the counterparty’s credit rating declines below an established limit. At December 31, 2024 and 2023, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $ 203 million and $ 117 million, respectively, and held collateral was $ 252 million and $ 841 million, respectively, related to these agreements. At December 31, 2024 and 2023, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $ 267 million and $ 937 million, respectively, and provided collateral was $ 302 million and $ 751 million, respectively, related to these agreements. If all of the downgrade provisions had been triggered at December 31, 2024 and 2023, in aggregate, the Company would have had to disburse $ 49 million and $ 910 million, respectively, and would have been allowed to claim $ 35 million and nil , respectively. The Company pledged collateral of $ 1,780 million and $ 2,616 million as of December 31, 2024 and 2023, respectively, for initial margin related to uncleared margin for over-the-counter derivatives and exchange-traded futures. Variation margin on exchange traded futures is settled through the netting of cash paid/received for variation margin against the fair value of the trades. Offsetting Assets and Liabilities The Company’s derivative instruments, repurchase agreements and securities lending agreements are subject to master netting arrangements and collateral arrangements. A master netting arrangement with a counterparty creates a right of offset for amounts due to and due from that same counterparty that is enforceable in the event of a default or bankruptcy. The Company recognizes amounts subject to master netting arrangements on a gross basis within the Consolidated Balance Sheets. 136 Part II | Item 8. Notes to Consolidated Financial Statements | 5. Derivative Instruments The following tables present the gross and net information about the Company’s financial instruments subject to master netting arrangements (in millions): December 31, 2024 Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets Financial Instruments (1) Cash Collateral Securities Collateral (2) Net Amount Financial Assets: Freestanding derivative assets $ 297 $ — $ 297 $ 95 $ 149 $ 21 $ 32 Financial Liabilities: Freestanding derivative liabilities $ 361 $ — $ 361 $ 95 $ — $ 215 $ 51 Securities loaned 14 — 14 — 14 — — Repurchase agreements 1,540 — 1,540 — — 1,540 — Repurchase agreements - Collateral upgrade 1,476 ( 1,476 ) — — — — — Total financial liabilities $ 3,391 $ ( 1,476 ) $ 1,915 $ 95 $ 14 $ 1,755 $ 51 (1) Represents the amount that could be offset under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets. (2) Excludes initial margin amounts for exchange-traded derivatives. December 31, 2023 Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets Financial Instruments (1) Cash Collateral Securities Collateral (2) Net Amount Financial Assets: Freestanding derivative assets $ 390 $ — $ 390 $ 273 $ 108 $ — $ 9 Financial Liabilities: Freestanding derivative liabilities $ 1,210 $ — $ 1,210 $ 273 $ 6 $ 744 $ 187 Securities loaned 19 — 19 — 19 — — Repurchase agreements — — — — — — — Total financial liabilities $ 1,229 $ — $ 1,229 $ 273 $ 25 $ 744 $ 187 (1) Represents the amount that could be offset under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets. (2) Excludes initial margin amounts for exchange-traded derivatives. In the above tables, the amounts of assets or liabilities presented in the Company’s Consolidated Balance Sheets are offset first by financial instruments that have the right of offset under master netting or similar arrangements with any remaining amount reduced by the amount of cash and securities collateral. The actual amount of collateral may be greater than amounts presented in the tables. The above tables exclude net embedded derivative liabilities of $ 3,942 million and $ 2,090 million as of December 31, 2024 and 2023, respectively, as these derivatives are not subject to master netting arrangements. The above tables also exclude the funds withheld embedded derivative asset (liability) of $ 2,314 million and $ 2,468 million at December 31, 2024 and 2023, respectively. 137 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements 6. Fair Value Measurements Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. All financial assets and liabilities measured at fair value are required to be classified into one of the following categories: Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include U.S. Treasury securities and exchange traded equity securities and derivative instruments. Level 2 Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most debt securities that are model priced using observable inputs are classified within Level 2. Also included are freestanding and embedded derivative instruments that are priced using models with observable market inputs. Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Embedded derivatives that are valued using unobservable inputs are included in Level 3. Because Level 3 fair values, by their nature, contain unobservable market inputs, considerable judgment may be used to determine the Level 3 fair values. Level 3 fair values represent the Company’s best estimate of an amount that could be realized in a current market exchange absent actual market exchanges. In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy. In these situations, the Company determines the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values that the Company has classified within Level 3. The Company determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Company may also determine fair value based on estimated future cash flows discounted at the appropriate current market rate. When appropriate, fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity and risk margins on unobservable inputs. Where quoted market prices are not available, fair value estimates are made at a point in time, based on relevant market data, as well as the best information about the individual financial instrument. At times, illiquid market conditions may result in inactive markets for certain of the Company’s financial instruments. In such instances, there may be no or limited observable market data for these assets and liabilities. Fair value estimates for financial instruments deemed to be in an illiquid market are based on judgments regarding current economic conditions, liquidity discounts, currency, credit and interest rate risks, loss experience and other factors. These fair values are estimates and involve considerable uncertainty and variability as a result of the inputs selected and may differ materially from the values that would have been used had an active market existed. As a result of market inactivity, such calculated fair value estimates may not be realizable in an immediate sale or settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique could significantly affect these fair value estimates. 138 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The following table summarizes the fair value and carrying value of the Company’s financial instruments (in millions): December 31, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value Assets Debt securities (1) $ 43,335 $ 43,335 $ 42,643 $ 42,643 Equity securities 197 197 394 394 Mortgage loans (1) 9,911 9,351 10,563 9,994 Limited partnerships 2,505 2,505 2,132 2,132 Policy loans (1) 4,403 4,403 4,399 4,399 Freestanding derivative instruments 297 297 390 390 FHLBI capital stock 127 127 108 108 Cash and cash equivalents 3,767 3,767 2,688 2,688 Reinsurance recoverable on market risk benefits 121 121 149 149 Market risk benefit assets 8,899 8,899 6,737 6,737 Separate account assets 229,143 229,143 219,656 219,656 Liabilities Annuity reserves (2) 38,640 36,522 35,251 33,678 Market risk benefit liabilities 3,774 3,774 4,785 4,785 Reserves for guaranteed investment contracts (3) 556 546 700 674 Trust instruments supported by funding agreements (3) 5,892 5,825 5,756 5,601 FHLB funding agreements (3) 1,936 1,900 1,950 1,893 Funds withheld payable under reinsurance treaties (1) 16,742 16,742 19,952 19,952 Long-term debt 2,034 1,836 2,037 1,851 Securities lending payable (4) 14 14 19 19 Freestanding derivative instruments 361 361 1,210 1,210 Notes issued by consolidated VIEs 2,343 2,343 1,988 1,988 Repurchase agreements (4) 1,540 1,540 — — FHLB advances (5) 700 700 250 250 Separate account liabilities 229,143 229,143 219,656 219,656 (1) Includes items carried at fair value under the fair value option and trading securities included as a component of debt securities. (2) Annuity reserves represent only the components of other contract holder funds and reserves for future policy benefits and claims payable that are considered to be financial instruments. (3) Included as a component of other contract holder funds on the Consolidated Balance Sheets. (4) Included as a component of repurchase agreements and securities lending payable on the Consolidated Balance Sheets. (5) Included as a component of other liabilities on the Consolidated Balance Sheets. The following is a discussion of the methodologies used to determine fair values of the financial instruments measured on a recurring basis reported in the following tables. Debt and Equity Securities The fair values for debt and equity securities are determined using information available from independent pricing services, broker-dealer quotes, or internally derived estimates. Priority is given to publicly available prices from independent sources, when available. Securities for which the independent pricing service does not provide a quotation are either submitted to independent broker-dealers for prices or priced internally. Typical inputs used by these three pricing methods include reported trades, benchmark yields, credit spreads, liquidity premiums and/or estimated cash flows based on default and prepayment assumptions. 139 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements As a result of typical trading volumes and the lack of specific quoted market prices for most debt securities, independent pricing services will normally derive the security prices through recently reported trades for identical or similar securities, making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recently reported trades, the independent pricing services and broker-dealers may use matrix or pricing model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at relevant market rates. Certain securities are priced using broker-dealer quotes, which may utilize proprietary inputs and models. Additionally, the majority of these quotes are non-binding. These securities are classified as Level 3 in the fair value hierarchy. Included in the pricing of asset-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment assumptions believed to be relevant for the underlying collateral. Actual prepayment experience may vary from these estimates. Internally derived estimates may be used to develop a fair value for securities for which the Company is unable to obtain either a reliable price from an independent pricing service or a suitable broker-dealer quote. These fair value estimates may incorporate Level 2 and Level 3 inputs, as defined below, and are generally derived using expected future cash flows, discounted at market interest rates available from market sources based on the credit quality and duration of the instrument. For securities that may not be reliably priced using these internally developed pricing models, a fair value may be estimated using indicative market prices. These prices are indicative of an exit price, but the assumptions used to establish the fair value may not be observable or corroborated by market observable information and, therefore, represent Level 3 inputs. The Company performs an analysis on the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include initial and ongoing review of third-party pricing service methodologies, review of pricing statistics and trends, back testing recent trades and monitoring of trading volumes. In addition, the Company considers whether prices received from independent broker-dealers represent a reasonable estimate of fair value using internal and external cash flow models, which are developed based on spreads and, when available, market indices. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the available market data, the price received from the third party may be adjusted accordingly. For those securities that were internally valued at December 31, 2024 and 2023, the pricing model used by the Company utilizes current spread levels of similarly rated securities to determine the market discount rate for the security. Furthermore, appropriate risk premiums for illiquidity and non-performance are incorporated in the discount rate. Cash flows, as estimated by the Company using issuer-specific default statistics and prepayment assumptions, are discounted to determine an estimated fair value. On an ongoing basis, the Company reviews the independent pricing services’ valuation methodologies and related inputs and evaluates the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy distribution based upon trading activity and the observability of inputs. Based on the results of this evaluation, each price is classified into Level 1, 2, or 3. Most prices provided by independent pricing services are classified into Level 2 due to their use of market observable inputs. Limited Partnerships Fair values for limited partnership interests, which are included in other invested assets, are generally determined using the proportion of the Company’s investment in the value of the net assets of each fund (“NAV equivalent”) as a practical expedient for fair value, and generally, are recorded on a three-month lag. No adjustments to these amounts were deemed necessary at December 31, 2024 and 2023. As a result of using the net asset value per share practical expedient, limited partnership interests are not classified in the fair value hierarchy. 140 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The Company’s limited partnership interests are not redeemable, and distributions received are generally the result of liquidation of the underlying assets of the partnerships. The Company generally has the ability under the partnership agreements to sell its interest to another limited partner with the prior written consent of the general partner. In cases when the Company expects to sell the limited partnership interest, the estimated sales price is used to determine the fair value rather than the practical expedient. Limited partnership interests expected to be sold are classified as Level 2 in the fair value hierarchy. In cases when a limited partnership’s financial statements are unavailable and a NAV equivalent is not available or practical, the fair value may be based on an internally developed model or provided by the general partner as determined using private transactions, information obtained from the primary co-investor or underlying company, or financial metrics provided by the lead sponsor. These investments are classified as Level 3 in the fair value hierarchy. Policy Loans Policy loans are funds provided to policyholders in return for a claim on the policies' values. They are repaid upon repayment, death or surrender, and there is only one market price at which the loans could be settled – the then current carrying value. The loans are limited to, and fully collateralized by, the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk. Policy loans do not have a stated maturity, and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans approximates fair value. The reinsurance related component of policy loans at fair value under the fair value option have been classified as Level 3 within the fair value hierarchy. Freestanding Derivative Instruments Freestanding derivative instruments are reported at fair value, which reflects the estimated amounts, net of payment accruals, that the Company would receive or pay upon sale or termination of the contracts at the reporting date. Changes in fair value are included in net gains (losses) on derivatives and investments. Freestanding derivatives priced using third-party pricing services incorporate inputs that are observable in the market. Inputs used to value derivatives include interest rate swap curves, credit spreads, interest rates, counterparty credit risk, equity volatility and equity index levels. Freestanding derivative instruments classified as: • Level 1 include futures, which are traded on active exchanges. • Level 2 include interest rate swaps, cross currency swaps, forwards, credit default swaps, total return swaps, bond forwards, put-swaptions and certain equity index call and put options. These derivative valuations are determined by third-party pricing services using pricing models with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. • Level 3 include interest rate contingent options that are valued by third-party pricing services utilizing significant unobservable inputs. Cash and Cash Equivalents Cash and cash equivalents primarily include money market instruments and bank deposits. Cash equivalents also include all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase. Certain money market instruments are valued using unadjusted quoted prices in active markets and are classified as Level 1. Funds Withheld Payable Under Reinsurance Treaties The funds withheld payable under reinsurance treaties includes both the funds withheld payable that are held at fair value under the fair value option and the funds withheld embedded derivative. Both are considered Level 3 in the fair value hierarchy. • The fair value of the funds withheld payable that is held at fair value under the fair value option is equal to the fair value of the assets held as collateral, which primarily consists of policy loans using industry standard valuation techniques. 141 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements • The funds withheld embedded derivative is determined based upon a total return swap technique referencing the fair value of the investments held under the reinsurance contract and requires certain significant unobservable inputs. Separate Account Assets Separate account assets are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available and are categorized as Level 2 assets. Market Risk Benefits Variable Annuities Variable annuity contracts issued by the Company may include various guaranteed minimum death, withdrawal, income and accumulation benefits, which are classified as market risk benefits ("MRBs") and measured at fair value. Our MRB assets and MRB liabilities are reported separately on our Consolidated Balance Sheets. Increases to an asset or decreases to a liability are described as favorable changes to fair value. Changes in fair value are reported in Market risk benefits (gains) losses, net on the Consolidated Income Statements. However, the change in fair value related to our own non-performance risk is recognized as a component of other comprehensive income ("OCI") and is reported in Change in non-performance on market risk benefits, net of tax expense (benefit) on the Consolidated Statements of Comprehensive Income (Loss). The fair value of variable annuity guaranteed benefit features classified as MRBs, which have explicit fees, are measured using the attributed fee method as the difference between the present value of projected future liabilities and the present value of projected attributed fees. At the inception of the contract, the Company attributes to the MRB a portion of total fees expected to be assessed against the contract holder's account value to offset the projected claims over the lifetime of the contract. The attributed fee is expressed as a percentage of total projected future fees at inception of the contract. This percentage of total projected fees is considered a fixed term of the MRB feature and is held static over the life of the contract. As the Company may issue contracts that have projected future liabilities greater than the projected future guaranteed benefit fees at issue, the Company may also attribute mortality and expense charges when performing this calculation. The percentage of guaranteed benefit fees and the percentage of mortality and expense charges may not exceed 100% of the total projected fees as of contract inception. In subsequent valuations, both the present value of future projected liabilities and the present value of projected attributed fees are remeasured based on current market conditions and policyholder behavior assumptions. The Company has ceded the guaranteed minimum income benefit (“GMIB”) features elected on certain annuity contracts to an unrelated party. The GMIBs ceded under this reinsurance treaty are classified as a MRB in their entirety. The reinsurance contract is measured at fair value and reported in Reinsurance recoverable on market risk benefits. Changes in fair value are recorded in Market risk benefits (gains) losses, net. Due to the inability to economically reinsure or hedge new issues of the GMIB, the Company discontinued offering the benefit in 2009. Fair values for MRBs related to variable annuities, including the contract reinsuring GMIB features, are calculated using internally developed models because active, observable markets do not exist for those guaranteed benefits. The fair value calculation is based on the present value of future cash flows comprised of future expected benefit payments, less future attributed rider fees, over the lives of the contracts. Estimating these cash flows requires numerous estimates and subjective judgments related to capital market inputs, as well as actuarially determined assumptions related to expectations concerning policyholder behavior. Capital market inputs include expected market rates of return, market volatility, correlations of market index returns to fund returns, and discount rates, which includes an adjustment for non-performance risk. The more significant actuarial assumptions include benefit utilization by policyholders, lapse, mortality, and withdrawal rates. Best estimate assumptions plus risk margins are used as applicable. 142 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements At each valuation date, the fair value calculation reflects expected returns based on treasury rates as of that date to determine the value of expected future cash flows produced in a stochastic process. Volatility assumptions are based on available market data for implied market volatility for durations up to 5 years, grading to a historical volatility level by year 10, where such long-term historical volatility levels contain an explicit risk margin. Non-performance risk is incorporated into the calculation through the adjustment of the risk-free rate curve based on credit spreads for debt and debt-like instruments issued by the Company or its insurance operating subsidiaries, adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries. Risk margins are also incorporated into the model assumptions, particularly for policyholder behavior. Estimates of future policyholder behavior are subjective and are based primarily on the Company’s experience. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions for the fair value model. The use of the models and assumptions described above requires a significant amount of judgment. Management believes this results in an amount that the Company would be required to transfer for a liability, or receive for an asset, to or from a willing buyer or seller, if one existed, for those market participants to assume the risks associated with the guaranteed benefits and the related reinsurance. However, the ultimate settlement amount of the asset or liability, which is currently unknown, could likely be significantly different than this fair value. Fixed Index Annuities The longevity riders issued on fixed index annuities are classified as MRBs and measured at fair value. Similar to the variable annuity guaranteed benefit features, these contracts have explicit fees and are measured using the attributed fee method. The Company attributes a percentage of total projected future fees expected to be assessed against the policyholder to offset the projected future claims over the lifetime of the contract. If the fees attributed are insufficient to offset the claims at issue, the shortfall is borrowed from the host contract rather than recognizing a loss at inception. RILA RILA guaranteed benefit features are classified as MRBs and measured at fair value. The fair value measurement represents the present value of future claims payable by the MRB feature. At inception, the value of the MRB is deducted from the value of the contract resulting in no gain or loss. See Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements for more information regarding MRBs. Fixed Index Annuities The fair value of the index-linked crediting derivative feature embedded in fixed index annuities, included in Annuity Reserves in the above tables, is calculated using the closed form Black-Scholes Option Pricing model or Monte Carlo simulations, as appropriate for the type of option, incorporating such factors as the volatility of returns, the level of interest rates and the time remaining until the option expires. Additionally, although not a significant input, assumed withdrawal rates are used to estimate the expected volume of embedded options that will be realized by policyholders. RILA The fair value of the index-linked crediting derivative feature embedded in RILAs, included in Annuity Reserves in the above table, is calculated using the closed form Black-Scholes Option Pricing model, incorporating such factors as the volatility of returns, the level of interest rates and the time remaining until the option expires. Additionally, although not a significant input, assumed withdrawal rates are used to estimate the expected volume of embedded options that will be realized by policyholders. 143 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Notes Issued by Consolidated VIEs These notes are issued by CLOs and are carried at fair value under the fair value option based on the fair values of corresponding fixed maturity collateral. The CLO liabilities are also reduced by the fair value of the beneficial interest the Company retains in the CLO and the carrying value of any beneficial interests that represent compensation for services. As the notes are valued based on the reference collateral, they are classified as Level 2. Fair Value Option The Company elected the fair value option for debt securities related to certain consolidated investments totaling $ 2,429 million and $ 2,037 million at December 31, 2024 and 2023, respectively. These debt securities are reflected on the Company’s Consolidated Balance Sheets as debt securities, at fair value under the fair value option. During the third quarter of 2024, the Company began purchasing certain debt securities for purposes of mitigating components of the Company’s exposure to changes in the value of certain market risk benefits. The Company elected the fair value option on these debt securities, with changes in fair value reflected in net income, to align with the corresponding changes in the value of the market risk benefits recognized through net income. These debt securities totaling $ 501 million and nil at December 31, 2024 and 2023, respectively, are presented as debt securities, at fair value under the fair value option in the Consolidated Balance Sheets. The Company has elected the fair value option for certain funds withheld assets, which are held as collateral for reinsurance, totaling $ 4,054 million and $ 4,054 million at December 31, 2024 and 2023, respectively, as discussed above, and includes mortgage loans as discussed below. The Company elected the fair value option for certain mortgage loans held under the funds withheld reinsurance agreement with Athene. The fair value option was elected for these mortgage loans, purchased or funded after December 31, 2021, to mitigate inconsistency in earnings that would otherwise result between these mortgage loan assets and the funds withheld liability, including the associated embedded derivative, and are valued using third-party pricing services. Changes in fair value are reflected in net investment income on the Consolidated Income Statements. The fair value and aggregate contractual principal for mortgage loans where the fair value option was elected after December 31, 2021, were as follows (in millions): December 31, 2024 2023 Fair value $ 449 $ 481 Aggregate contractual principal 464 491 As of December 31, 2024, no loans in good standing for which the fair value option was elected were in non-accrual status, and no loans were more than 90 days past due and still accruing interest. The Company elected the fair value option for notes issued by consolidated VIEs totaling $ 2,343 million and $ 1,988 million at December 31, 2024 and 2023, respectively. Income and changes in unrealized gains and losses on other assets for which the Company has elected the fair value option are immaterial to the Company’s Consolidated Financial Statements. 144 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables summarize the Company’s assets and liabilities that are carried at fair value by hierarchy levels (in millions): December 31, 2024 Total Level 1 Level 2 Level 3 Assets Debt securities U.S. government securities $ 3,159 $ 3,159 $ — $ — Other government securities 1,094 — 1,094 — Public utilities 5,156 — 5,112 44 Corporate securities 27,978 — 27,704 274 Residential mortgage-backed 338 — 338 — Commercial mortgage-backed 1,577 — 1,577 — Other asset-backed securities 4,033 — 3,372 661 Equity securities 197 9 181 7 Mortgage loans 449 — — 449 Limited partnerships (1) 195 — — 195 Policy loans 3,489 — — 3,489 Freestanding derivative instruments 297 — 297 — Cash and cash equivalents 3,767 3,767 — — Reinsurance recoverable on market risk benefits 121 — — 121 Market risk benefit assets 8,899 — — 8,899 Separate account assets 229,143 — 229,143 — Total $ 289,892 $ 6,935 $ 268,818 $ 14,139 Liabilities Embedded derivative liabilities (2) $ 3,942 $ — $ 3,942 $ — Funds withheld payable under reinsurance treaties (3) 1,353 — — 1,353 Freestanding derivative instruments 361 — 361 — Notes issued by consolidated VIEs 2,343 — 2,343 — Market risk benefit liabilities 3,774 — — 3,774 Total $ 11,773 $ — $ 6,646 $ 5,127 (1) Excludes $ 2,310 million of limited partnership investments measured at NAV. (2) Includes the embedded derivative liabilities of $ 3,065 million related to RILA and $ 877 million of fixed index annuities, both included in other contract holder funds on the Consolidated Balance Sheets. (3) Includes the Athene embedded derivative asset of $ 2,314 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. 145 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements December 31, 2023 Total Level 1 Level 2 Level 3 Assets Debt securities U.S. government securities $ 4,312 $ 4,312 $ — $ — Other government securities 1,402 — 1,252 150 Public utilities 5,127 — 5,086 41 Corporate securities 25,477 — 25,394 83 Residential mortgage-backed 375 — 375 — Commercial mortgage-backed 1,423 — 1,423 — Other asset-backed securities 4,527 — 3,552 975 Equity securities 394 182 204 8 Mortgage loans 481 — — 481 Limited partnerships (1) 135 — — 135 Policy loans 3,457 — — 3,457 Freestanding derivative instruments 390 — 390 — Cash and cash equivalents 2,688 2,688 — — Reinsurance recoverable on market risk benefits 149 — — 149 Market risk benefit assets 6,737 — — 6,737 Separate account assets 219,656 — 219,656 — Total $ 276,730 $ 7,182 $ 257,332 $ 12,216 Liabilities Embedded derivative liabilities (2) $ 2,090 $ — $ 2,090 $ — Funds withheld payable under reinsurance treaties (3) 1,158 — — 1,158 Freestanding derivative instruments 1,210 — 1,210 — Notes issued by consolidated VIEs 1,988 — 1,988 — Market risk benefit liabilities 4,785 — — 4,785 Total $ 11,231 $ — $ 5,288 $ 5,943 (1) Excludes $ 1,997 million of limited partnership investments measured at NAV. (2) Includes the embedded derivative liabilities of $ 1,224 million related to RILA and $ 866 million of fixed index annuities, both included in other contract holder funds on the Consolidated Balance Sheets. (3) Includes the Athene embedded derivative asset of $ 2,468 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. 146 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) Level 3 Assets and Liabilities by Price Source The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources (in millions): December 31, 2024 Assets Total Internal External Debt securities: Public utilities $ 44 $ 44 $ — Corporate 274 47 227 Other asset-backed securities 661 28 633 Equity securities 7 1 6 Mortgage loans 449 — 449 Limited partnerships 195 1 194 Policy loans 3,489 3,489 — Reinsurance recoverable on market risk benefits 121 121 — Market risk benefit assets 8,899 8,899 — Total $ 14,139 $ 12,630 $ 1,509 Liabilities Funds withheld payable under reinsurance treaties (1) 1,353 1,353 — Market risk benefit liabilities 3,774 3,774 — Total $ 5,127 $ 5,127 $ — (1) Includes the Athene Embedded Derivative asset of $ 2,314 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. December 31, 2023 Assets Total Internal External Debt securities: Other government securities $ 150 $ — $ 150 Public utilities 41 41 — Corporate 83 — 83 Other asset-backed securities 975 50 925 Equity securities 8 1 7 Mortgage loans 481 — 481 Limited partnerships 135 1 134 Policy loans 3,457 3,457 — Reinsurance recoverable on market risk benefits 149 149 — Market risk benefit assets 6,737 6,737 — Total $ 12,216 $ 10,436 $ 1,780 Liabilities Funds withheld payable under reinsurance treaties (1) 1,158 1,158 — Market risk benefit liabilities 4,785 4,785 — Total $ 5,943 $ 5,943 $ — (1) Includes the Athene Embedded Derivative asset of $ 2,468 million and funds withheld payable under reinsurance treaties at fair value under the fair value option. External pricing sources for securities represent unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available. 147 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities The table below presents quantitative information on internally priced Level 3 assets and liabilities that use significant unobservable inputs (dollar amounts in millions): As of December 31, 2024 Fair Value Valuation Technique(s) Significant Unobservable Input(s) Assumption or Input Range Impact of Increase in Input on Fair Value Assets Reinsurance recoverable on market risk benefits $ 121 Discounted cash flow Mortality (1) 0.01 % - 20.63 % Increase Lapse (2) 1.47 % - 8.10 % Increase Utilization (3) 0.00 % - 50.00 % Decrease Withdrawal (4) 41.00 % - 46.50 % Decrease Non-performance risk adjustment (5) 0.35 % - 1.20 % Increase Long-term Equity Volatility (6) 18.50 % Decrease Market risk benefit assets $ 8,899 Discounted cash flow Mortality (1) 0.00 % - 23.47 % Increase Lapse (2) 0.05 % - 30.76 % Increase Utilization (3) 0.00 % - 100.00 % Decrease Withdrawal (4) 4.00 % - 100.00 % Decrease Non-performance risk adjustment (5) 0.65 % - 1.75 % Increase Long-term Equity Volatility (6) 18.50 % Decrease Liabilities Market risk benefit liabilities $ 3,774 Discounted cash flow Mortality (1) 0.00 % - 23.47 % Decrease Lapse (2) 0.05 % - 30.76 % Decrease Utilization (3) 0.00 % - 100.00 % Increase Withdrawal (4) 4.00 % - 100.00 % Increase Non-performance risk adjustment (5) 0.65 % - 1.75 % Decrease Long-term Equity Volatility (6) 18.50 % Increase (1) Mortality rates vary by attained age, tax qualification status, guaranteed benefit election, and duration. The range displayed reflects ages from the minimum issue age for the benefit through age 95, which corresponds to the typical maturity age. A mortality improvement assumption is also applied. (2) Base lapse rates vary by contract-level factors, such as product type, surrender charge schedule and 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. Lapse rates are also adjusted to reflect lower lapse expectations when guaranteed benefits are utilized. (3 The utilization rate represents the expected percentage of contracts that will utilize the benefit through annuitization (GMIB) or commencement of withdrawals (GMWB). Utilization may vary by benefit type, attained age, duration, tax qualification status, benefit provision, and degree to which the guaranteed benefit is in-the-money. (4) The withdrawal rate represents the percentage of annual withdrawal assumed relative to the maximum allowable withdrawal amount under the free partial withdrawal provision or the GMWB, as applicable. Free partial withdrawal rates vary based on the product type, 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. (5) Non-performance risk adjustment is applied as a spread over the risk-free rate to determine the rate used to discount the related cash flows and varies by projection year. (6) Long-term equity volatility represents the equity volatility beyond the period for which observable equity volatilities are available. 148 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements As of December 31, 2023 Fair Value Valuation Technique(s) Significant Unobservable Input(s) Assumption or Input Range Impact of Increase in Input on Fair Value Assets Reinsurance recoverable on market risk benefits $ 149 Discounted cash flow Mortality (1) 0.01 % - 20.71 % Increase Lapse (2) 1.47 % - 8.55 % Increase Utilization (3) 0.00 % - 50.00 % Decrease Withdrawal (4) 47.50 % - 50.00 % Decrease Non-performance risk adjustment (5) 0.10 % - 1.50 % Increase Long-term Equity Volatility (6) 18.50 % Decrease Market risk benefit assets $ 6,737 Discounted cash flow Mortality (1) 0.01 % - 23.46 % Increase Lapse (2) 0.05 % - 37.06 % Increase Utilization (3) 0.00 % - 100.00 % Decrease Withdrawal (4) 11.25 % - 100.00 % Decrease Non-performance risk adjustment (5) 0.70 % - 2.11 % Increase Long-term Equity Volatility (6) 18.50 % Decrease Liabilities Market risk benefit liabilities $ 4,785 Discounted cash flow Mortality (1) 0.01 % - 23.46 % Decrease Lapse (2) 0.05 % - 37.06 % Decrease Utilization (3) 0.00 % - 100.00 % Increase Withdrawal (4) 11.25 % - 100.00 % Increase Non-performance risk adjustment (5) 0.70 % - 2.11 % Decrease Long-term Equity Volatility (6) 18.50 % Increase (1) Mortality rates vary by attained age, tax qualification status, guaranteed benefit election, and duration. The range displayed reflects ages from the minimum issue age for the benefit through age 95, which corresponds to the typical maturity age. A mortality improvement assumption is also applied. (2) Base lapse rates vary by contract-level factors, such as product type, surrender charge schedule and 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. Lapse rates are also adjusted to reflect lower lapse expectations when guaranteed benefits are utilized. (3) The utilization rate represents the expected percentage of contracts that will utilize the benefit through annuitization (GMIB) or commencement of withdrawals (GMWB). Utilization may vary by benefit type, attained age, duration, tax qualification status, benefit provision, and degree to which the guaranteed benefit is in-the-money. (4) The withdrawal rate represents the percentage of annual withdrawal assumed relative to the maximum allowable withdrawal amount under the free partial withdrawal provision or the GMWB, as applicable. Free partial withdrawal rates vary based on the product type and duration. Withdrawal rates on contracts with a GMWB vary based on attained age, tax qualification status, GMWB type and GMWB benefit provisions. (5) Non-performance risk adjustment is applied as a spread over the risk-free rate to determine the rate used to discount the related cash flows and varies by projection year. (6) Long-term equity volatility represents the equity volatility beyond the period for which observable equity volatilities are available. 149 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Sensitivity to Changes in Unobservable Inputs The following is a general description of sensitivities of significant unobservable inputs and their impact on the fair value measurement for the assets and liabilities reflected in the tables above. At December 31, 2024 and 2023, $ 121 million and $ 93 million, respectively, of debt securities, equity securities, and limited partnerships are fair valued using techniques incorporating unobservable inputs and are classified in Level 3 of the fair value hierarchy. For these assets, their unobservable inputs and ranges of possible inputs do not materially affect their fair valuations and have been excluded from the quantitative information in the tables above. Policy loans that support funds withheld reinsurance agreements that are held at fair value under the fair value option on the Company’s Consolidated Balance Sheets are excluded from the tables above. These policy loans do not have a stated maturity and the balances, plus accrued investment income, are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans, which includes accrued investment income, approximates fair value and is classified as Level 3 within the fair value hierarchy. The fair value of funds withheld payable under the Reassure America Life Insurance Company ("REALIC") reinsurance treaties is determined based upon the fair value of the funds withheld investments held by the Company and is excluded from the tables above. The funds withheld payable under the Athene reinsurance treaty includes the Athene embedded derivative which is measured at fair value. The valuation of the embedded derivative utilizes a total return swap technique that incorporates the fair value of the invested assets supporting the reinsurance agreement as a component of the valuation. As a result, these valuations for the funds withheld payable under the REALIC reinsurance treaties and the Athene embedded derivative require certain significant inputs that are generally not observable and, accordingly, the valuation is considered Level 3 in the fair value hierarchy. The GMIB reinsurance recoverable fair value calculation is based on the present value of future cash flows comprised of future expected reinsurance benefit receipts, less future attributed premium payments to reinsurers, over the lives of the contracts. Estimating these cash flows requires actuarially determined assumptions related to expectations concerning policyholder behavior and long-term market volatility. The more significant policyholder behavior actuarial assumptions include benefit utilization, fund allocation, lapse, and mortality. The MRB asset and liability fair value calculation is based on the present value of future cash flows comprised of future expected benefit payments, less future attributed fees (if applicable), over the lives of the contracts. Estimating these cash flows requires numerous estimates and subjective judgments related to capital market inputs, as well as actuarially determined assumptions related to expectations concerning policyholder behavior. The more significant actuarial assumptions include benefit utilization by policyholders, lapse, mortality, and withdrawal rates. Best estimate assumptions plus risk margins are used as applicable. 150 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The tables below provide roll-forwards for the years ended December 31, 2024 and 2023 of the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement. Gains and losses in the tables below include changes in fair value due partly to observable and unobservable factors. The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments hedging the related risks may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the impact of the derivative instruments reported in Level 3 may vary significantly from the total income effect of the hedged instruments. Total Realized/Unrealized Gains (Losses) Included in Purchases, Fair Value Sales, Transfers Fair Value as of Other Issuances in and/or as of January 1, Net Comprehensive and (out of) December 31, December 31, 2024 2024 Income Income Settlements Level 3 2024 Assets Debt securities Other government securities $ 150 $ — $ 6 $ ( 156 ) $ — $ — Public utilities 41 ( 18 ) 7 ( 41 ) 55 44 Corporate securities 83 5 ( 1 ) 153 34 274 Other asset-backed securities 975 ( 13 ) 12 ( 313 ) — 661 Equity securities 8 ( 1 ) — — — 7 Mortgage loans 481 ( 5 ) — ( 27 ) — 449 Limited partnerships 135 26 — 34 — 195 Policy loans 3,457 42 — ( 10 ) — 3,489 Reinsurance recoverable on market risk benefits 149 ( 28 ) — — — 121 Market risk benefit assets 6,737 2,162 — — — 8,899 Liabilities Funds withheld payable under reinsurance treaties ( 1,158 ) ( 199 ) — 4 — ( 1,353 ) Market risk benefit liabilities ( 4,785 ) 1,674 ( 663 ) — — ( 3,774 ) 151 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Total Realized/Unrealized Gains (Losses) Included in Purchases, Fair Value Sales, Transfers Fair Value as of Other Issuances in and/or as of January 1, Net Comprehensive and (out of) December 31, December 31, 2023 2023 Income Income Settlements Level 3 2023 Assets Debt securities Other government securities $ — $ — $ ( 9 ) $ — $ 159 $ 150 Public utilities — — — — 41 41 Corporate securities 56 ( 13 ) 8 ( 24 ) 56 83 Other asset-backed securities — 2 15 ( 60 ) 1,018 975 Equity securities 122 ( 35 ) — ( 78 ) ( 1 ) 8 Mortgage loans 582 ( 3 ) — ( 98 ) — 481 Limited partnerships 440 ( 36 ) — ( 281 ) 12 135 Policy loans 3,419 3 — 35 — 3,457 Reinsurance recoverable on market risk benefits 221 ( 72 ) — — — 149 Market risk benefit assets 4,865 1,872 — — — 6,737 Liabilities Funds withheld payable under reinsurance treaties ( 424 ) ( 693 ) — ( 41 ) — ( 1,158 ) Market risk benefit liabilities ( 5,662 ) 2,096 ( 1,219 ) — — ( 4,785 ) 152 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The components of the amounts included in purchases, sales, issuances and settlements for the years ended December 31, 2024 and 2023 shown above are as follows (in millions): December 31, 2024 Purchases Sales Issuances Settlements Total Assets Debt securities Other government securities $ — $ ( 156 ) $ — $ — $ ( 156 ) Public utilities 4 ( 45 ) — — ( 41 ) Corporate securities 230 ( 77 ) — — 153 Other asset-backed securities 250 ( 563 ) — — ( 313 ) Mortgage loans 227 ( 254 ) — — ( 27 ) Limited partnerships 34 — — — 34 Policy loans — — 221 ( 231 ) ( 10 ) Total $ 745 $ ( 1,095 ) $ 221 $ ( 231 ) $ ( 360 ) Liabilities Funds withheld payable under reinsurance treaties $ — $ — $ ( 697 ) $ 701 $ 4 December 31, 2023 Purchases Sales Issuances Settlements Total Assets Debt securities Corporate securities $ 17 $ ( 41 ) $ — $ — $ ( 24 ) Other asset-backed securities 68 ( 128 ) — — ( 60 ) Equity securities — ( 78 ) — — ( 78 ) Mortgage loans 233 ( 331 ) — — ( 98 ) Limited partnerships 30 ( 311 ) — — ( 281 ) Policy loans — — 231 ( 196 ) 35 Total $ 348 $ ( 889 ) $ 231 $ ( 196 ) $ ( 506 ) Liabilities Funds withheld payable under reinsurance treaties $ — $ — $ ( 281 ) $ 240 $ ( 41 ) In 2024, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 13 million and transfers from Level 2 to Level 3 were $ 102 million. There were no transfers from Level 3 to NAV or transfers from NAV to Level 3. In 2023, transfers from Level 3 to Level 2 of the fair value hierarchy were $ 57 million, transfers from Level 2 to Level 3 were $ 1,331 million, transfers from Level 3 to NAV were $ 7 million, and transfers from NAV to Level 3 were $ 18 million. During 2023, management determined that the fair value measurements for certain securities, primarily comprised of asset-backed and other debt securities included in funds withheld accounts, which were classified as Level 2 measurements within the fair value hierarchy in prior reporting periods, should be classified as Level 3 fair value measurements. The fair value of these securities is primarily obtained from external sources that may use unobservable inputs, proprietary inputs and models, or inputs or values that cannot be corroborated by market transactions and should be classified as externally priced Level 3 fair value measurements. The 2023 Fair Value on a Recurring Basis table, Level 3 Assets and Liabilities by Price Source table, Level 3 Rollforward table, and Level 3 Purchases, Sales, Issuances and Settlements table reflect this change in classification. In 2023, securities totaling $ 1,336 million, were reported as Level 3 and included in “Transfers in and/or (out of) Level 3”. The change in classification did not change the fair value of these securities and did not impact the Consolidated Balance Sheets or Consolidated Income Statements. 153 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The portion of gains (losses) included in net income (loss) or OCI attributable to the change in unrealized gains and losses on Level 3 financial instruments still held was as follows (in millions): Year Ended December 31, 2024 2023 Included in Net Income Included in OCI Included in Net Income Included in OCI Assets Debt securities Other government securities $ — $ — $ — $ ( 9 ) Public utilities ( 1 ) 1 — — Corporate securities ( 3 ) ( 3 ) ( 5 ) 6 Other asset-backed securities ( 11 ) 5 2 15 Equity securities ( 1 ) — ( 21 ) — Mortgage loans ( 5 ) — ( 3 ) — Limited partnerships 26 — 2 — Policy loans 42 — 3 — Reinsurance recoverable on market risk benefits ( 28 ) — ( 72 ) — Market risk benefit assets 2,162 — 1,872 — Liabilities Funds withheld payable under reinsurance treaties ( 199 ) — ( 693 ) — Market risk benefit liabilities 1,674 ( 663 ) 2,096 ( 1,219 ) 154 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements Fair Value of Financial Instruments Carried at Other Than Fair Value The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value (in millions): December 31, 2024 Fair Value Carrying Value Total Level 1 Level 2 Level 3 Assets Mortgage loans $ 9,462 $ 8,902 $ — $ — $ 8,902 Policy loans 914 914 — — 914 FHLBI capital stock 127 127 127 — — Liabilities Annuity reserves (1) $ 34,698 $ 32,580 $ — $ — $ 32,580 Reserves for guaranteed investment contracts (2) 556 546 — — 546 Trust instruments supported by funding agreements (2) 5,892 5,825 — — 5,825 FHLB funding agreements (2) 1,936 1,900 — — 1,900 Funds withheld payable under reinsurance treaties 15,389 15,389 — — 15,389 Long-term debt 2,034 1,836 — 1,836 — Securities lending payable (3) 14 14 — 14 — Repurchase agreements (3) 1,540 1,540 — 1,540 — FHLB advances (4) 700 700 — 700 — Separate account liabilities (5) 229,143 229,143 — 229,143 — December 31, 2023 Fair Value Carrying Value Total Level 1 Level 2 Level 3 Assets Mortgage loans $ 10,082 $ 9,513 $ — $ — $ 9,513 Policy loans 942 942 — — 942 FHLBI capital stock 108 108 108 — — Liabilities Annuity reserves (1) $ 33,161 $ 31,588 $ — $ — $ 31,588 Reserves for guaranteed investment contracts (2) 700 674 — — 674 Trust instruments supported by funding agreements (2) 5,756 5,601 — — 5,601 FHLB funding agreements (2) 1,950 1,893 — — 1,893 Funds withheld payable under reinsurance treaties 18,794 18,794 — — 18,794 Long-term debt 2,037 1,851 — 1,851 — Securities lending payable (3) 19 19 — 19 — FHLB advances (4) 250 250 — 250 — Separate account liabilities (5) 219,656 219,656 — 219,656 — (1) Annuity reserves represent only the components of other contract holder funds that are considered to be financial instruments. (2) Included as a component of other contract holder funds on the Consolidated Balance Sheets. (3) Included as a component of repurchase agreements and securities lending payable on the Consolidated Balance Sheets. (4) Included as a component of other liabilities on the Consolidated Balance Sheets. (5) The values of separate account liabilities are set equal to the values of separate account assets. 155 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements The following is a discussion of the methodologies used to determine fair values of the financial instruments that are not reported at fair value reported in the table above: Mortgage Loans Fair values are generally determined by discounting expected future cash flows at current market interest rates, inclusive of a credit spread, for similar quality loans. For loans whose value is dependent on the underlying property, fair value is the estimated value of the collateral. Certain characteristics considered significant in determining the spread or collateral value may be based on internally developed estimates. As a result, these investments have been classified as Level 3 within the fair value hierarchy. Mortgage loans held under the funds withheld reinsurance agreement are valued using third-party pricing services, which may use economic inputs, geographical information, and property specific assumptions in deriving the fair value price. The Company reviews the valuations from these pricing providers to ensure they are reasonable. Due to lack of observable inputs, these investments have been classified as Level 3 within the fair value hierarchy. Policy Loans As described under “Policy Loans” in Note 4 – Investments of Notes to Consolidated Financial Statements, due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans approximates fair value. The non-reinsurance related component of policy loans has been classified as Level 3 within the fair value hierarchy. FHLBI Capital Stock FHLBI capital stock, which is included in other invested assets, can only be sold to FHLBI at a constant price of $ 100 per share. Due to the lack of valuation uncertainty, the investment has been classified as Level 1. Other Contract Holder Funds Fair values for immediate annuities without mortality features are derived by discounting the future estimated cash flows using current market interest rates for similar maturities. Fair values for deferred annuities, including the fixed option on variable annuities, fixed annuities, fixed index annuities and RILAs, are determined using projected future cash flows discounted at current market interest rates. Fair values for guaranteed investment contracts, trust instruments supported by funding agreements and FHLB funding agreements are based on the present value of future cash flows discounted at current market interest rates. Funds Withheld Payable Under Reinsurance Treaties The fair value of the funds withheld payable is equal to the fair value of the assets held as collateral, which primarily consists of bonds, mortgages, limited partnerships, and cash and cash equivalents. The fair value of the assets generally uses industry standard valuation techniques as described above and the funds withheld payable components are valued consistent with the assets in the fair value hierarchy and the funds withheld payable is classified in its entirety according to the lowest level input that is significant to the determination of the fair value. The funds withheld payable is classified as Level 3 within the fair value hierarchy. Debt Fair values for the Company’s surplus notes and long-term debt are generally determined by prices obtained from independent broker dealers or discounted cash flow models. Such prices are derived from market observable inputs and are classified as Level 2. Securities Lending Payable The Company’s securities lending payable is set equal to the cash collateral received. Due to the short-term nature of the loans, carrying value is a reasonable estimate of fair value and is classified as Level 2. 156 Part II | Item 8. Notes to Consolidated Financial Statements | 6. Fair Value Measurements FHLB Advances Carrying value of the Company’s FHLB advances, which are included in other liabilities, is considered a reasonable estimate of fair value due to their short-term maturities and are classified as Level 2. Repurchase Agreements Carrying value of the Company’s repurchase agreements is considered a reasonable estimate of fair value due to their short-term maturities and are classified as Level 2. Separate Account Liabilities The values of separate account liabilities are set equal to the values of separate account assets, which are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available and are categorized as Level 2. 7. Deferred Acquisition Costs Certain costs that are directly related to the successful acquisition of new or renewal insurance business are capitalized as deferred acquisition costs ("DAC") in the period in which they are incurred. These costs primarily pertain to commissions and certain costs associated with policy issuance and underwriting. All other acquisition costs are expensed as incurred. Contracts are grouped into cohorts by contract type and issue year. For traditional and limited-payment insurance contracts, contracts are grouped consistent with the groupings used in estimating the associated liability. DAC are amortized into expense on a constant level basis over the expected term of the grouped contracts. For traditional and limited-payment insurance contracts, amortization is determined based on projected in force amounts. For non-traditional contracts, amortization is determined based on projected policy counts . The expected term used to amortize DAC is determined using best estimate assumptions, including mortality and persistency, consistent with the best estimate assumptions used to determine the reserve for future policy benefits, MRBs, and additional liabilities for applicable contracts. For amortization of DAC related to contracts without these balances, assumptions used to determine expected term are developed in a similar manner. The amortization rate is determined using all information available as of the end of the reporting period, including actual experience and any assumption updates. Annually, or as circumstances warrant, a comprehensive review of assumptions is conducted, and assumptions are revised as appropriate. If assumptions are revised, the amortization rate is calculated using revised assumptions such that the effect of revised assumptions is recognized prospectively as of the beginning of that reporting period. Unamortized DAC are written off when a contract is internally replaced and substantially changed. Substantially unchanged contracts are treated as a continuation of the replaced contract, with no change to the unamortized DAC at the time of the replacement. 157 Part II | Item 8. Notes to Consolidated Financial Statements | 7. Deferred Acquisition Costs The following table presents the roll-forward of the DAC (in millions). The current period amortization is based on the end of the period estimates of mortality and persistency. The amortization pattern is revised on a prospective basis at the beginning of the period based on the period’s actual experience. Years Ended December 31, 2024 2023 2022 Variable Annuities Balance, beginning of period $ 11,967 $ 12,699 $ 13,364 Change in accounting principle — — — Deferrals of acquisition costs 411 394 544 Amortization ( 1,064 ) ( 1,126 ) ( 1,209 ) Variable Annuities balance, end of period $ 11,314 $ 11,967 $ 12,699 Reconciliation of total DAC Variable Annuities balance, end of period $ 11,314 $ 11,967 $ 12,699 Other product lines, end of period 573 335 224 Total balance, end of period $ 11,887 $ 12,302 $ 12,923 The assumptions most relevant to calculating the amortization of deferred acquisition costs are mortality and persistency. We have undertaken a comprehensive review of the assumptions used in the amortization of deferred acquisition costs, and there was no significant impact during the periods presented from changes to the mortality or persistency assumptions. 8. Reinsurance The Company, through its subsidiary insurance companies, assumes and cedes reinsurance from and to other insurance companies as a means of managing capital and risk exposures. However, if the reinsurer is unable to meet its obligations, the originating issuer of the coverage retains the liability. The Company reinsures certain of its risks to other reinsurers on a coinsurance, coinsurance with funds withheld, modified coinsurance, or yearly renewable term basis. The Company regularly monitors the financial strength ratings of its reinsurers. Athene Reinsurance The Company entered into a funds withheld coinsurance agreement with Athene effective June 1, 2020, to reinsure on a 100 % quota share basis, a block of Jackson’s in-force fixed and fixed index annuity product liabilities in exchange for a $ 1.2 billion ceding commission. The coinsurance with funds withheld agreement ("the coinsurance agreement") required Jackson to establish a segregated account in which the investments supporting the ceded obligations are maintained. While the economic benefits of the investments flow to Athene, Jackson retains physical possession and legal ownership of the investments supporting the reserve. Upon closing of the transaction, Jackson placed investments into the segregated account with a statutory book value of $ 25.6 billion. The investments maintained in the segregated account are valued at statutory carrying value for purposes of determining periodic settlement amounts under the Athene coinsurance agreement. Further, the investments in the segregated account are not available to settle any policyholder obligations other than those specifically covered by the coinsurance agreement and are not available to settle obligations to general creditors of Jackson. The profit and loss with respect to obligations ceded to Athene are included in periodic net settlements pursuant to the coinsurance agreement. To further support its obligations under the coinsurance agreement, Athene procured $ 1.2 billion in letters of credit for Jackson’s benefit and established a trust account for Jackson’s benefit, which had a book value of approximately $ 86 million at December 31, 2024. Pursuant to the Athene coinsurance agreement, the Company holds certain assets as collateral. At December 31, 2024 and 2023, assets held as collateral in the segregated custody account were $ 13.1 billion and $ 16.3 billion, respectively. Swiss Re Reinsurance Jackson has three retrocession reinsurance agreements (“retro treaties”) with Swiss Reinsurance Company Ltd. (“SRZ”). Pursuant to these retro treaties, Jackson ceded certain blocks of business to SRZ on a 100 % coinsurance with funds withheld basis, subject to pre-existing reinsurance with other parties. As a result of the reinsurance agreements with SRZ, Jackson withholds certain assets, primarily in the form of policy loans and debt securities, as collateral for the reinsurance recoverable. 158 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance The Company has also acquired certain blocks of business that are closed to new business and wholly ceded to non-affiliates. These include both direct and assumed accident and health businesses, direct and assumed life insurance business, and certain institutional annuities. GMIB Reinsurance The Company’s guaranteed minimum income benefits ("GMIBs") are reinsured with an unrelated party. GMIB reinsured benefits are subject to aggregate annual claim limits. Deductibles also apply on reinsurance of GMIB business issued since March 1, 2005. The Company discontinued offering the GMIB in 2009. Assumed and Ceded Premiums and Benefits Paid or Provided Assumed and ceded premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premium income and benefit expenses are reported net of reinsurance assumed and ceded. The effect of reinsurance on premiums and benefits was as follows (in millions): For the Years Ended December 31, 2024 2023 2022 Premiums Direct $ 339 $ 328 $ 360 Assumed 28 35 40 Ceded ( 221 ) ( 216 ) ( 268 ) Total premium $ 146 $ 147 $ 132 Benefits Direct $ 1,369 $ 1,582 $ 1,718 Assumed 812 802 868 Ceded ( 771 ) ( 831 ) ( 921 ) Change in reserves, net of reinsurance ( 542 ) ( 588 ) ( 603 ) Total benefits $ 868 $ 965 $ 1,062 Reinsurance Recoverables and Reinsured Market Risk Benefits Ceded reinsurance agreements are reported on a gross basis on the Company’s Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other assets or liabilities for amounts, such as premiums, owed to or due from reinsurers. Reinsurance recoverables relating to reinsurance of traditional and limited-payment contracts are required to be recognized and measured in a manner consistent with liabilities relating to the underlying reinsured contracts, including using consistent assumptions. Reinsurance contracts may be executed subsequent to the direct contract issue dates, and market interest rates may have changed between the date that the underlying insurance contracts were issued and the date the reinsurance contract is recognized in the financial statements, resulting in the underlying discount rate differing between the direct and reinsured business. The Company regularly monitors the financial strength ratings of its reinsurers. At December 31, 2024 and 2023, the Company had an allowance for credit losses (“ACL”) of $ 27 million and $ 29 million, respectively, on its reinsurance recoverables, which are reported net of ACL on the Consolidated Balance Sheets. The ACL considers the credit quality of the reinsurer and is generally determined based on probability of default and loss given default assumptions, after considering any applicable collateral arrangements. 159 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance For reinsurance recoverables that are collateralized, the amount of collateral is expected to be adjusted as necessary as a result of fair value changes in that collateral. If the fair value of the collateral at the reporting date is less than the carrying value of the reinsurance recoverable, the Company recognizes an ACL on the difference between the fair value of the collateral at the reporting date and the carrying value of the reinsurance recoverable. Additions to or releases of the ACL are reported in Death, other policyholder benefits, and changes in reserves, net of deferrals in the Consolidated Income Statements. Reinsurance recoverable on market risk benefits is recognized at fair value with changes being recognized in current period earnings within market risk benefit (gains) losses, net. Non-performance risk of the reinsurer is incorporated into the calculation through the adjustment of the risk-free rate curve based on credit spreads observed on instruments issued by similarly-rated life insurance companies. The Company’s reinsurance contract that cedes only the GMIB elected on certain variable annuity products is classified as a reinsurance recoverable on market risk benefits. These reinsured MRBs may have direct MRB balances recorded as either assets or liabilities; however, because the unit of account for the reinsured MRB is the reinsurance contract, the ceded MRB is presented in total within reinsurance recoverable on market risk benefits. The fees used to determine the fair value of the reinsurance recoverable on market risk benefits are those defined in the reinsurance contract. Guaranteed benefits related to the optional lifetime income rider offered on certain fixed index annuities are MRBs that are reinsured with Athene. The reinsured MRBs are measured using a non-option valuation approach that uses cash flow assumptions and an attributed fee ratio consistent with those used to measure the MRBs on the direct contract and a discount rate that considers the reinsurer’s credit risk. The attributed fee is locked-in at inception of the contract. Components of the Company’s reinsurance recoverable excluding MRBs were as follows (in millions): December 31, 2024 2023 Reserves: Life $ 5,205 $ 5,370 Accident and health 450 510 Annuity benefits (1) 15,526 18,873 Claims liability and other 649 669 Total $ 21,830 $ 25,422 (1) Other annuity benefits primarily attributable to fixed and fixed index annuities reinsured with Athene. Components of the Company’s reinsurance recoverable on market risk benefits were as follows (in millions): Years Ended December 31, 2024 2023 Variable annuity $ 62 $ 90 Other product lines 59 59 Total $ 121 $ 149 Reinsurance and Funds Withheld Payable Under Reinsurance Treaties Under the reinsurance agreement with Athene and the retro treaties with SRZ, the Company maintains ownership of the underlying investments instead of transferring them to the reinsurer and, as a result, records a funds withheld liability payable to the reinsurer. Investment returns earned on withheld assets are paid by the Company to the reinsurer, pursuant to the terms of the agreements. Investment income and net gains (losses) on derivatives and investments are reported net of gains or losses on the funds withheld payable under reinsurance treaties. The amounts credited to reinsurers on the funds withheld payable is based on the return earned on those assets. The return earned on the assets is subject to the credit risk of the original issuer of the instrument rather than Jackson’s own creditworthiness, which results in an embedded derivative (total return swap). 160 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance Funds withheld under reinsurance agreement with Athene The Company recognizes a liability for the embedded derivative related to the funds withheld under the reinsurance agreement with Athene within funds withheld payable under reinsurance treaties in the Consolidated Balance Sheets. The embedded derivative is measured at fair value with changes in fair value reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. At inception of the reinsurance agreement with Athene, the fair value of the withheld investments differed from their book value and, accordingly, while the investments are held, the amortization of this difference is reported in net gains (losses) on derivatives and investments in the Consolidated Income Statements. See Note 5 - Derivative Instruments of the Notes to Consolidated Financial Statements for more information on the embedded derivative. Funds withheld under reinsurance agreements with SRZ At execution of the retro treaties with SRZ, the Company elected the fair value option for the withheld assets, as well as the related funds withheld payable. Accordingly, the embedded derivative is not bifurcated or separately measured. The funds withheld payable is measured at fair value with changes in fair value reported in net gains (losses) on derivatives and investments. The fair value of the funds withheld payable is equal to the fair value of the assets held as collateral. The following assets and liabilities were held in support of reserves associated with the Company’s funds withheld reinsurance agreements and were reported in the respective financial statement line items in the Consolidated Balance Sheets (in millions): December 31, 2024 2023 Assets Debt securities, available-for-sale $ 9,058 $ 11,526 Debt securities, at fair value under the fair value option 116 116 Equity securities 125 151 Mortgage loans 2,611 3,067 Mortgage loans, at fair value under the fair value option 449 481 Policy loans 3,501 3,471 Freestanding derivative instruments, net 45 15 Other invested assets 777 709 Cash and cash equivalents 253 543 Accrued investment income 114 146 Other assets and liabilities, net ( 41 ) 1 Total assets (1) $ 17,008 $ 20,226 Liabilities Funds held under reinsurance treaties (2) $ 16,742 $ 19,952 Total liabilities $ 16,742 $ 19,952 (1) Certain assets are reported at amortized cost while the fair value of those assets is reported in the embedded derivative in the funds withheld liability. (2) Includes funds withheld embedded derivative asset (liability) of $ 2,314 million and $ 2,468 million at December 31, 2024 and 2023, respectively. 161 Part II | Item 8. Notes to Consolidated Financial Statements | 8. Reinsurance The sources of income related to funds withheld under reinsurance treaties reported in net investment income in the Consolidated Income Statements were as follows (in millions): Years Ended December 31, 2024 2023 2022 Debt securities (1) $ 503 $ 644 $ 680 Equity securities 12 ( 22 ) ( 34 ) Mortgage loans (2) 177 231 231 Policy loans 328 321 312 Limited partnerships 49 52 149 Other investment income 16 21 1 Total investment income on funds withheld assets 1,085 1,247 1,339 Other investment expenses on funds withheld assets (3) ( 61 ) ( 73 ) ( 85 ) Total net investment income on funds withheld reinsurance treaties $ 1,024 $ 1,174 $ 1,254 (1) Includes $ 1 million, $ 5 million, and $( 10 ) million for the years ended December 31, 2024, 2023 and 2022, respectively, related to the change in fair value for securities carried under the fair value option. (2) Includes $( 5 ) million, $( 3 ) million, and $( 7 ) million for the years ended December 31, 2024, 2023 and 2022, respectively, related to the change in fair value for mortgage loans carried under the fair value option. (3) Includes management fees. The gains and losses on funds withheld reinsurance treaties as a component of net gains (losses) on derivatives and investments in the Consolidated Income Statements were as follows (in millions): Years Ended December 31, 2024 2023 2022 Available-for-sale securities Realized gains on sale $ 5 $ 26 $ 43 Realized losses on sale ( 69 ) ( 173 ) ( 54 ) Credit loss expense ( 41 ) ( 5 ) ( 26 ) Credit loss expense on mortgage loans 25 ( 32 ) 15 Other ( 31 ) 12 ( 62 ) Net gains (losses) on non-derivative investments ( 111 ) ( 172 ) ( 84 ) Net gains (losses) on derivative instruments 33 ( 37 ) 93 Net gains (losses) on funds withheld payable under reinsurance treaties (1) ( 974 ) ( 1,592 ) 2,177 Total net gains (losses) on derivatives and investments $ ( 1,052 ) $ ( 1,801 ) $ 2,186 (1) Includes the Athene embedded derivative gain (loss) of $( 154 ) million, $( 690 ) million and $ 3,278 million for the years ended December 31, 2024, 2023 and 2022, respectively. 162 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable 9. Reserves for Future Policy Benefits and Claims Payable Reserves for Future Policy Benefits For non-participating traditional and limited-payment insurance contracts, the reserve for future policy benefits represents the present value of estimated future policy benefits to be paid to or on behalf of policyholders in future periods and certain related expenses less the present value of estimated future net premiums. Reserves for future policy benefits for non-participating traditional and limited-payment insurance contracts are measured using the net premium ratio ("NPR") measurement model. The NPR measurement model accrues for future policy benefits in proportion to the premium revenue recognized. The reserve for future policy benefits is derived from the Company's best estimate of future net premium and future benefits and expenses, which is based on best estimate assumptions including mortality, persistency, claims expense, and discount rate. On an annual basis, or as circumstances warrant, we conduct a comprehensive review of our current best estimate assumptions based on our experience, industry benchmarking, and other factors, as applicable. Expense assumptions are updated based on estimates of expected non-level costs, such as termination or settlement costs, and costs after the premium-paying period and exclude acquisition costs or any costs that are required to be charged to expenses as incurred. Updates to assumptions are applied on a retrospective basis, and the change in the reserve for future policy benefits resulting from updates to assumptions is reported separately on the Consolidated Income Statements within the (gain) loss from updating future policy benefits cash flow assumptions, net. Each reporting period the reserve for future policy benefits is updated to reflect actual experience to date. The Company establishes cohorts, which are groupings used to measure reserves for future policy benefits. In determining cohorts, the Company considered both qualitative and quantitative factors, including the issue year, type of product, product features, and legal entity. The discount rate used to estimate reserves for future policy benefits is consistent with an upper-medium grade (low-credit risk) fixed-income corporate instrument yield, which has been interpreted to represent a single-A corporate instrument yield. This discount rate curve is determined by fitting a parametric function to yields to maturity and related times to maturity of market observable single-A rated corporate instruments. The discount rate used to recognize interest accretion on the reserves for future policy benefits is locked at the initial measurement of the cohort. Each reporting period, the reserve for future policy benefits is remeasured using the current discount rate. The difference between the reserve calculated using the current discount rate and the reserve calculated using the locked-in discount rate is recorded in OCI. For limited-payment insurance contracts, premiums are paid over a period shorter than the period over which benefits are provided. Gross premiums received in excess of the net premium are deferred and recognized as a deferred profit liability ("DPL"). The DPL is included within the reserve for future policy benefits and profits are recognized in income as a component of benefit expenses on a constant relationship with the amount of expected future benefit payments. Interest is accreted on the balance of the DPL using the discount rate locked in at the initial measurement of the cohort. Measurement of the DPL uses best estimate assumptions for mortality. These assumptions are similarly subject to the annual review process discussed above. Additional Liabilities – Universal Life-type For universal life-type insurance contracts, a liability is recognized for the policyholder’s account value as discussed further in Note 10 of the Notes to Consolidated Financial Statements . Where these contracts provide additional benefits beyond the account balance or base insurance coverage that are not market risk benefits or embedded derivatives, liabilities in addition to the policyholder’s account value are recognized. These additional liabilities for annuitization, death and other insurance benefits are reported within reserves for future policy benefits and claims payable. The methodology uses a benefit ratio defined as a constant percentage of the assessment base. This ratio is multiplied by current period assessments to determine the reserve accrual for the period. The assumptions used in the measurement of the additional liabilities for annuitization, death and other insurance benefits are based on best estimate assumptions including mortality, persistency, investment returns, and discount rates. These assumptions are similarly subject to the annual review process discussed above. As available-for-sale debt securities are carried at fair value, an adjustment is made to these additional liabilities equal to the change in liability that would have occurred if such securities had been sold at their stated fair value and the proceeds reinvested at current yields. This adjustment, along with the change in net unrealized gains (losses) on available-for-sale debt securities, net of applicable tax, is credited or charged directly to equity as a component of OCI. 163 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable See Note 10 - Other Contract Holder Funds of the Notes to Consolidated Financial Statements for more information regarding other contract holder funds. Other Future Policy Benefits and Claims Payable In conjunction with a prior acquisition, the Company recorded a fair value adjustment at acquisition related to certain annuity and interest-sensitive liability blocks of business to reflect the cost of the interest guarantees within the in-force liabilities, based on the difference between the guaranteed interest rate and an assumed new money guaranteed interest rate at acquisition. This adjustment is included in other future policy benefits and claims payable as disclosed in the table below. This liability is remeasured at the end of each period, taking into account changes in the in-force block. Any resulting change in the liability is recorded as a Gain (loss) from updating future policy benefits cash flow assumptions, net through the Consolidated Income Statements. In addition, annuity and life claims liabilities in course of settlement are included in other future policy benefits and claims payable as disclosed in the table below. The following table summarizes the Company’s reserves for future policy benefits and claims payable balances (in millions): December 31, 2024 2023 Reserves for future policy benefits Payout Annuities $ 1,095 $ 1,090 Closed Block Life 3,578 3,994 Closed Block Annuity 3,837 4,215 Reserves for future policy benefits 8,510 9,299 Additional liabilities Closed Block Life 1,184 1,153 Other future policy benefits and claims payable 1,378 1,446 Reserves for future policy benefits and claims payable $ 11,072 $ 11,898 The following tables present the roll-forward of components of reserves for future policy benefits (in millions): Present Value of Expected Net Premiums Year Ended December 31, Year Ended December 31, 2024 2023 Payout Closed Block Closed Block Payout Closed Block Closed Block Annuities Life Annuity Annuities Life Annuity Balance, beginning of period $ — $ 1,140 $ — $ — $ 1,287 $ — Beginning of period cumulative effect of changes in discount rate assumptions — 113 — — 161 — Beginning balance at original discount rate — 1,253 — — 1,448 — Effect of changes in cash flow assumptions — ( 193 ) — — 22 — Effect of actual variances from expected experience — ( 2 ) — — ( 95 ) — Balance adjusted for variances from expectation — 1,058 — — 1,375 — Issuances — 4 — — 6 — Interest accrual — 41 — — 38 — Net premiums collected — ( 131 ) — — ( 166 ) — Ending balance at original discount rate — 972 — — 1,253 — End of period cumulative effect of changes in discount rate assumptions — ( 125 ) — — ( 113 ) — Balance, end of period $ — $ 847 $ — $ — $ 1,140 $ — 164 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable Present Value of Expected Future Policy Benefits Year Ended December 31, Year Ended December 31, 2024 2023 Payout Closed Block Closed Block Payout Closed Block Closed Block Annuities Life Annuity Annuities Life Annuity Balance, beginning of period $ 1,090 $ 5,134 $ 4,215 $ 1,042 $ 5,448 $ 4,434 Beginning of period cumulative effect of changes in discount rate assumptions 99 767 185 132 958 275 Beginning balance at original discount rate (including DPL of $ 42 , $ 0 and $ 626 in December 31, 2024, and, $ 40 , $ 0 and $ 671 in December 31, 2023 for payout annuities, closed block life and closed block annuity, respectively) 1,189 5,901 4,400 1,174 6,406 4,709 Effect of changes in cash flow assumptions ( 41 ) ( 247 ) ( 13 ) — 65 ( 3 ) Effect of actual variances from expected experience ( 34 ) ( 6 ) 4 ( 16 ) ( 95 ) ( 8 ) Balance adjusted for variances from expectation 1,114 5,648 4,391 1,158 6,376 4,698 Issuances 173 10 — 117 15 1 Interest accrual 45 165 182 43 195 194 Benefits payments ( 137 ) ( 592 ) ( 481 ) ( 129 ) ( 685 ) ( 493 ) Ending balance of original discount rate (including DPL of $ 91 , $ 0 and $ 588 in December 31, 2024, and, $ 42 , $ 0 and $ 626 in December 31, 2023 for payout annuities, closed block life and closed block annuity, respectively) 1,195 5,231 4,092 1,189 5,901 4,400 End of period cumulative effect of changes in discount rate assumptions ( 100 ) ( 806 ) ( 255 ) ( 99 ) ( 767 ) ( 185 ) Balance, end of period $ 1,095 $ 4,425 $ 3,837 $ 1,090 $ 5,134 $ 4,215 Reserves for future policy benefits 1,095 3,578 3,837 1,090 3,994 4,215 Less: Reinsurance recoverable 109 1,978 4 94 2,200 4 Reserves for future policy benefits, after reinsurance recoverable $ 986 $ 1,600 $ 3,833 $ 996 $ 1,794 $ 4,211 The following table presents the weighted average duration of the reserves for future policy benefits. The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount: Payout Closed Block Closed Block Annuities Life Annuity December 31, 2024 Weighted average duration (years) 6.5 6.9 6.6 December 31, 2023 Weighted average duration (years) 7.0 7.2 7.0 The significant assumptions used in the liability for future policy benefits calculation consist of mortality, persistency, and discount rate. We undertook a comprehensive review of the significant assumptions used in the liability for future policy benefits calculation during 2024. Assumptions were unlocked with the most significant impact from an update to a more recent mortality table on the life insurance business and an increase in mortality on the payout annuities. The same mortality table update was made for the additional liabilities - universal life-type insurance contracts. The discount rate assumption related to the single-A corporate instrument yield was updated based on current market data. Discount rates increased in 2024 compared to 2023, based on the duration of the liability. This resulted in a decrease in the liability. Refer to the roll-forward above for further details. 165 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable The following table presents the amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for future policy benefits for non-participating traditional and limited-payment insurance contracts (in millions). The discounted premiums are calculated using the current discount rate, while the undiscounted cash flows represent the gross cash flows before any discounting is applied: December 31, 2024 2023 Undiscounted Discounted Undiscounted Discounted Payout Annuities Expected future benefit payments $ 1,530 $ 1,003 $ 1,579 $ 1,043 Expected future gross premiums — — — — Closed Block Life Expected future benefit payments 6,820 4,539 7,729 5,251 Expected future gross premiums 4,589 2,729 5,056 3,119 Closed Block Annuity Expected future benefit payments 4,988 3,226 5,421 3,565 Expected future gross premiums $ — $ — $ — $ — The following table presents the amount of revenue and interest related to non-participating traditional and limited-pay insurance contracts recognized in the Consolidated Income Statements (in millions): Gross Premiums Interest Expense Years Ended December 31, Years Ended December 31, 2024 2023 2024 2023 Payout Annuities $ 53 $ 22 $ 45 $ 43 Closed Block Life 316 340 124 157 Closed Block Annuity ( 2 ) 1 182 194 Total $ 367 $ 363 $ 351 $ 394 The following table presents the weighted average interest rate for the reserves for future policy benefits at the cohort's level for the locked-in discount rate (interest accretion rate), and current discount rate, weighted by the cohort's benefit reserve amount: December 31, 2024 2023 Payout Annuities Interest accretion rate 4.06 % 3.86 % Current discount rate 5.52 % 5.12 % Closed Block Life Interest accretion rate 3.05 % 3.07 % Current discount rate 5.65 % 5.06 % Closed Block Annuity Interest accretion rate 4.40 % 4.40 % Current discount rate 5.54 % 5.12 % 166 Part II | Item 8. Notes to Consolidated Financial Statements | 9. Reserves for Future Policy Benefits and Claims Payable The following table presents a roll-forward of Closed Block Life additional liabilities for annuitization, death and other insurance benefits (in millions): Years Ended December 31, 2024 2023 Balance, beginning of period $ 1,153 $ 1,131 Beginning of period cumulative effect of changes in shadow adjustments 17 41 Beginning balance excluding shadow 1,170 1,172 Effect of changes in cash flow assumptions 90 44 Effect of actual variances from expected experience 18 46 Interest accrual 57 56 Net assessments collected ( 128 ) ( 148 ) Ending balance excluding shadow 1,207 1,170 End of period cumulative effect of changes in shadow adjustments ( 23 ) ( 17 ) Balance, end of period $ 1,184 $ 1,153 The following table presents the weighted average duration of Closed Block Life additional liabilities for annuitization, death and other insurance benefits. The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount: December 31, 2024 2023 Weighted average duration (years) 9.1 9.7 The significant assumptions used in the additional liability for annuitization, death and other insurance benefits calculation consist of mortality, persistency, investment returns, and crediting rate. We have undertaken a comprehensive review of the significant assumptions used in the additional liability for annuitization, death, and other insurance benefit calculations and updated to a more recent mortality table within the calculation. The following table presents assessments and interest expense of Closed Block Life additional liabilities for annuitization, death and other insurance benefits recognized in the Consolidated Income Statements (in millions): Assessments Interest Expense Years Ended December 31, Years Ended December 31, 2024 2023 2024 2023 Additional liability for annuitization, death and other insurance benefits $ ( 128 ) $ ( 148 ) $ 57 $ 56 The following table presents the weighted average current discount rate of Closed Block Life additional liabilities for annuitization, death and other insurance benefits, applied at the cohort level weighted by reserve benefit amount: December 31, 2024 2023 Weighted average current discount rate 4.99 % 4.97 % 10. Other Contract Holder Funds Other contract holder funds represent the policyholder account balance on our universal life-type products, investment contracts, and the fair value of the embedded derivatives associated with the indexed crediting features on our fixed index annuities and registered index-linked annuities. Universal life type contracts have, as a principal component, an account balance in which interest is credited to policyholders and assessments are deducted for mortality risk and contract administration. The account balance is recognized as a liability within other contract holder funds, and the liability is updated each period for fee and assessment deductions and increased for interest or returns credited to the account balance. 167 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds Certain of our universal life type contracts contain features that are not classified as market risk benefits or embedded derivatives but provide additional benefits beyond the account balance or base insurance coverage for which a liability in addition to the account balance is necessary. These additional liabilities for death or other insurance benefits are reported as a component of reserves for future policy benefits and claims payable in the Consolidated Balance Sheets. See Note 9 - Reserves for Future Policy Benefits and Claims Payable of the Notes to Consolidated Financial Statements for more information regarding these additional liabilities. Certain contracts without significant mortality or morbidity risk and certain annuities that lack insurance risk are treated as investment contracts. For investment contracts, payments received are reported as liabilities and accounted for in a manner consistent with the accounting for interest-bearing or other financial instruments, within other contract holder funds. The Company issues a variety of annuity products including variable annuities, registered index linked annuities, fixed index annuities, fixed annuities and payout annuities. For annuity contracts that are classified as investment contracts, the liability is the account balance as of the reporting date, reported within the other contract holder funds. For the variable annuity products, only the allocations to fixed fund options are reported in other contract holder funds. For our fixed index annuities and registered index-linked annuities, the equity-linked option issued by the Company is accounted for as an embedded derivative measured at fair value and reported as a component of other contract holder funds on the Consolidated Balance Sheets with changes in fair value recorded in net income within net gains (losses) on derivatives and investments. The fair value is determined using an option-budget method with capital market inputs of market index returns and discount rates as well as actuarial assumptions including lapse, mortality and withdrawal rates. Favorable equity market movements cause increases in future contract holder benefits, resulting in an increase in the fair value of the embedded derivative liability (and vice versa). The Company also establishes a host contract reserve to support the underlying guaranteed account value growth. This host contract liability is included as a component of other contract holder funds on the Consolidated Balance Sheets. Interest is accreted to the host contract liability using an effective yield method. Our annuity products may contain certain features or guarantees that are classified as MRBs. These market risk benefits are a component of the market risk benefits line items in the Consolidated Balance Sheet. See Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements for more information regarding market risk benefits. The Company’s institutional products business is comprised of the guaranteed investment contracts, medium-term funding agreement-backed notes and funding agreements (including agreements issued in conjunction with the Company’s participation in the U.S. Federal Home Loan Bank ("FHLB") program) described below. Jackson has established a $ 27 billion aggregate Global Medium-Term Note ("MTN") program. Jackson National Life Global Funding was formed as a statutory business trust, solely for the purpose of issuing Medium-Term Note instruments to institutional investors, the proceeds of which are deposited with the Company and secured by the issuance of funding agreements. The carrying values at December 31, 2024 and 2023 totaled $ 5.9 billion and $ 5.8 billion, respectively. Those Medium-Term Note instruments issued in a foreign currency have been hedged for changes in exchange rates using cross-currency swaps. The unrealized foreign currency gains and losses on those Medium-Term Note instruments are included in the carrying value of the trust instruments supported by funding agreements. Trust instrument liabilities are adjusted to reflect the effects of foreign currency translation gains and losses using exchange rates as of the reporting date. Foreign currency translation gains and losses are included in net gains (losses) on derivatives and investments. Jackson is a member of the FHLBI primarily for the purpose of participating in the bank’s mortgage-collateralized loan advance program with long-term funding facilities. Advances are in the form of funding agreements, short-term and long-term borrowings issued to FHLBI. At December 31, 2024 and 2023, the Company held $ 127 million and $ 108 million of FHLBI capital stock, respectively, supporting $ 2.7 billion and $ 2.3 billion in funding agreements and short-term and long-term borrowings at December 31, 2024 and 2023, respectively. At December 31, 2024 and 2023, the funding agreements and short-term and long-term borrowings were collateralized by mortgage-related securities and commercial mortgage loans with a carrying value of $ 4.2 billion and $ 3.5 billion, respectively. 168 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds The following table presents the liabilities for other contract holder funds (in millions): December 31, 2024 2023 Variable Annuity $ 7,206 $ 8,396 RILA 11,685 5,219 Fixed Index Annuities 8,515 10,243 Fixed Annuity 9,615 9,736 Payout Annuity 844 860 Closed Block Life 10,750 11,039 Closed Block Annuity 1,149 1,252 Institutional Products 8,384 8,406 Other Product Lines 164 168 Total other contract holder funds $ 58,312 $ 55,319 The following table presents a roll-forward of other contract holder funds, gross of reinsurance (in millions): Fixed Closed Closed Variable Index Fixed Payout Block Block Annuity RILA Annuities Annuity Annuity Life Annuity Total Balance as of January 1, 2024 $ 8,396 $ 5,219 $ 10,243 $ 9,736 $ 860 $ 11,039 $ 1,252 $ 46,745 Deposits 722 5,674 181 1,427 214 280 4 8,502 Surrenders, withdrawals and benefits ( 2,160 ) ( 193 ) ( 2,298 ) ( 1,706 ) ( 258 ) ( 694 ) ( 151 ) ( 7,460 ) Net transfers from (to) separate accounts 94 — — — — — — 94 Investment performance / change in value of equity option — 948 232 — — — — 1,180 Interest credited 225 37 175 319 28 613 45 1,442 Policy charges and other ( 71 ) — ( 18 ) ( 161 ) — ( 488 ) ( 1 ) ( 739 ) Balance as of December 31, 2024 $ 7,206 $ 11,685 $ 8,515 $ 9,615 $ 844 $ 10,750 $ 1,149 $ 49,764 Fixed Closed Closed Variable Index Fixed Payout Block Block Annuity RILA Annuities Annuity Annuity Life Annuity Total Balance as of January 1, 2023 $ 10,259 $ 1,875 $ 11,787 $ 11,696 $ 837 $ 11,215 $ 1,319 $ 48,988 Deposits 995 2,890 211 234 202 307 4 4,843 Surrenders, withdrawals and benefits ( 1,788 ) ( 70 ) ( 1,954 ) ( 2,406 ) ( 231 ) ( 738 ) ( 115 ) ( 7,302 ) Net transfers from (to) separate accounts ( 1,256 ) — — — — — — ( 1,256 ) Investment performance / change in value of equity option — 509 51 — — — — 560 Interest credited 273 14 210 342 25 730 44 1,638 Policy charges and other ( 87 ) 1 ( 62 ) ( 130 ) 27 ( 475 ) — ( 726 ) Balance as of December 31, 2023 $ 8,396 $ 5,219 $ 10,243 $ 9,736 $ 860 $ 11,039 $ 1,252 $ 46,745 169 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds The following table presents weighted average crediting rate, net amount at risk, and cash surrender value of contract holder account balances (dollars in millions): Fixed Closed Closed Variable Index Fixed Payout Block Block Annuity RILA Annuities Annuity Annuity Life Annuity December 31, 2024 Weighted-average crediting rate (1) 3.12 % 0.32 % 2.06 % 3.32 % 3.32 % 5.70 % 3.92 % Net amount at risk (2) $ — $ — $ — $ — $ — $ 15,713 $ — Cash surrender value (3) $ 7,153 $ 11,285 $ 8,256 $ 9,446 $ — $ 10,694 $ 1,148 December 31, 2023 Weighted-average crediting rate (1) 3.25 % 0.27 % 2.05 % 3.51 % 2.91 % 6.61 % 3.51 % Net amount at risk (2) $ — $ — $ — $ — $ — $ 16,619 $ — Cash surrender value (3) $ 8,306 $ 4,896 $ 9,999 $ 9,639 $ — $ 10,970 $ 1,252 (1) Weighted average crediting rate is the average crediting rate weighted by contract holder account balances invested in fixed account funds. (2) Net amount at risk represents the standard excess benefit base for guaranteed death benefits on universal life type products. The net amount at risk associated with market risk benefits are presented within Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements. (3) Cash surrender value represents the amount of the contract holder’s account balance distributable at the balance sheet date less the applicable surrender charges. At December 31, 2024 and 2023, excluding reinsurance business, approximately 94 % and 92 % of the Company’s annuity account values correspond to crediting rates that are at the minimum guaranteed interest rates, respectively. At December 31, 2024 and 2023, excluding reinsurance business, approximately 82 % and 64 % of the Company’s closed block life account values correspond to crediting rates that are at the minimum guaranteed interest rates, respectively. 170 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds The following table presents contract holder account balances invested in fixed account funds by range of guaranteed minimum crediting rates and the related range of the difference between rates being credited to other contract holder funds and the respective guaranteed minimums (in millions): December 31, 2024 At Guaranteed 1 Basis Point-50 51 Basis Points-150 Greater Than 150 Range of Guaranteed Minimum Crediting Rate Minimum Basis Points Above Basis Points Above Basis Points Above Total Variable Annuities 0.00 %- 1.50 % $ — $ 10 $ — $ — $ 10 1.51 %- 2.50 % 153 — — — 153 Greater than 2.50 % 7,043 — — — 7,043 Total $ 7,196 $ 10 $ — $ — $ 7,206 RILA 0.00 %- 1.50 % $ 6 $ — $ 3 $ 4 $ 13 1.51 %- 2.50 % $ — $ — $ — $ — — Greater than 2.50 % 89 10 — — 99 Total $ 95 $ 10 $ 3 $ 4 $ 112 Fixed Index Annuities 0.00 %- 1.50 % $ 3 $ 8 $ 2 $ 38 $ 51 1.51 %- 2.50 % — — — — — Greater than 2.50 % 17 — 94 28 139 Total $ 20 $ 8 $ 96 $ 66 $ 190 Fixed Annuities 0.00 %- 1.50 % $ 34 $ 44 $ 28 $ 1 $ 107 1.51 %- 2.50 % 24 1 1 — 26 Greater than 2.50 % 2,075 41 1 265 2,382 Total $ 2,133 $ 86 $ 30 $ 266 $ 2,515 Closed Block Life 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % 1 11 — — 12 Greater than 2.50 % 5,461 403 746 5 6,615 Total $ 5,462 $ 414 $ 746 $ 5 $ 6,627 Closed Block Annuity 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — 1 11 12 Greater than 2.50 % 950 19 25 — 994 Total $ 950 $ 19 $ 26 $ 11 $ 1,006 171 Part II | Item 8. Notes to Consolidated Financial Statements | 10. Other Contract Holder Funds December 31, 2023 At Guaranteed 1 Basis Point-50 51 Basis Points-150 Greater Than 150 Range of Guaranteed Minimum Crediting Rate Minimum Basis Points Above Basis Points Above Basis Points Above Total Variable Annuities 0.00 %- 1.50 % $ — $ 12 $ 1 $ — $ 13 1.51 %- 2.50 % 173 — — — 173 Greater than 2.50 % 8,186 — — 24 8,210 Total $ 8,359 $ 12 $ 1 $ 24 $ 8,396 RILA 0.00 %- 1.50 % $ 7 $ — $ 4 $ 1 $ 12 1.51 %- 2.50 % — — — — — Greater than 2.50 % 39 12 — — 51 Total $ 46 $ 12 $ 4 $ 1 $ 63 Fixed Index Annuities 0.00 %- 1.50 % $ 4 $ 9 $ 3 $ 43 $ 59 1.51 %- 2.50 % — — — — — Greater than 2.50 % 21 — 62 10 93 Total $ 25 $ 9 $ 65 $ 53 $ 152 Fixed Annuities 0.00 %- 1.50 % $ 17 $ 55 $ 70 $ 1 $ 143 1.51 %- 2.50 % 29 1 1 — 31 Greater than 2.50 % 721 51 1 271 1,044 Total $ 767 $ 107 $ 72 $ 272 $ 1,218 Closed Block Life 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — — — — Greater than 2.50 % 4,425 1,830 603 16 6,874 Total $ 4,425 $ 1,830 $ 603 $ 16 $ 6,874 Closed Block Annuity 0.00 %- 1.50 % $ — $ — $ — $ — $ — 1.51 %- 2.50 % — — 1 12 13 Greater than 2.50 % 896 169 23 — 1,088 Total $ 896 $ 169 $ 24 $ 12 $ 1,101 172 Part II | Item 8. Notes to Consolidated Financial Statements | 11. Separate Account Assets and Liabilities 11. Separate Account Assets and Liabilities The Company issues variable contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder (traditional variable annuities). The Company also issues variable annuity and life contracts through separate accounts where the Company contractually guarantees to the contract holder (variable contracts with guarantees) either a) return of no less than total deposits made to the account adjusted for any partial withdrawals, b) total deposits made to the account adjusted for any partial withdrawals plus a minimum return, or c) the highest account value on a specified anniversary date adjusted for any withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death (guaranteed minimum death benefits, or "GMDB"), at annuitization (guaranteed minimum income benefits, or "GMIB"), upon the depletion of funds (guaranteed minimum withdrawal benefits, or "GMWB") or at the end of a specified period (guaranteed minimum accumulation benefits, or "GMAB"). These guarantees are classified as market risk benefits. See Note 12 - Market Risk Benefits of the Notes to Consolidated Financial Statements for more information regarding market risk benefits. The separate account assets supporting the variable portion of both traditional variable annuities and variable contracts with guarantees are carried at fair value and reported as summary total separate account assets with an equivalent summary total reported for separate account liabilities. At December 31, 2024 and 2023, the assets and liabilities associated with variable life and annuity contracts were $ 229 billion and $ 220 billion, respectively. Investment risks associated with market value changes are borne by the contract holders, except to the extent of minimum guarantees made by the Company. Separate account net investment income, net investment realized and unrealized gains and losses, and the related liability changes are offset within the same line item in the Consolidated Income Statements. Amounts assessed against the contract holders for mortality, variable annuity benefit guarantees, administrative, and other services are reported in revenue as fee income. Included in the separate account assets and liabilities described above is a Jackson issued group variable annuity contract designed for use in connection with and issued to the Company’s Defined Contribution Retirement Plan. These deposits are allocated to the Jackson National Separate Account - II, which had balances of $ 208 million and $ 198 million at December 31, 2024 and 2023, respectively. The Company receives administrative fees for managing the funds. These fees are recorded as earned and included in fee income in the Consolidated Income Statements. The following table presents the roll-forward of the separate account balance for variable annuities (in millions): Years Ended December 31, 2024 2023 Balance as of beginning of period $ 219,381 $ 195,550 Deposits 9,839 8,545 Surrenders, withdrawals and benefits ( 27,016 ) ( 17,029 ) Net transfer from (to) general account ( 94 ) 1,256 Investment performance 29,532 33,807 Policy charges and other ( 2,791 ) ( 2,748 ) Balance as of end of period, gross $ 228,851 $ 219,381 Cash surrender value (1) $ 224,157 $ 214,395 (1) Cash surrender value represents the amount of the contract holder’s account balances distributable at the balance sheet date less applicable surrender charges. 173 Part II | Item 8. Notes to Consolidated Financial Statements | 11. Separate Account Assets and Liabilities The following table presents the reconciliation of the separate account balance in the Consolidated Balance Sheets (in millions): December 31, 2024 2023 Variable Annuities $ 228,851 $ 219,381 Other Product Lines 292 275 Total $ 229,143 $ 219,656 The following table presents aggregate fair value of assets, by major investment asset category, supporting separate accounts (in millions): December 31, 2024 2023 Variable Annuities By Fund Type Equity $ 163,904 $ 154,020 Bond 19,486 19,801 Balanced 42,909 42,831 Money Market 2,552 2,729 Total Variable Annuities 228,851 219,381 Other Product Lines 292 275 Total Separate Accounts $ 229,143 $ 219,656 12. Market Risk Benefits Contracts or contract features that provide protection to the contract holder from capital market risk and expose the Company to other-than-nominal capital market risk are classified as MRBs. All long-duration insurance contracts and certain investment contracts are subject to MRB evaluation. MRBs are measured at fair value at the contract level and can be in either an asset or liability position. For contracts that contain multiple MRB features, the MRBs are valued together as a single compound MRB. Market risk benefit assets and Market risk benefit liabilities are reported separately on the Consolidated Balance Sheets. Changes in fair value are reported in Net (gains) losses on market risk benefits on the Consolidated Income Statements. However, the change in fair value related to our own non-performance risk is reported as a component of other comprehensive income in Change in non-performance risk on market risk benefits on the Consolidated Statements of Comprehensive Income (Loss). A description of the items effecting the change in fair value by category is as follows: • Changes in interest rates — movement in risk free rates (impacts both assumed future separate account returns and discounting of cash flows) • Fund performance — separate account returns gross of fees • Change in equity index volatility — movement in implied volatility • Expected policyholder behavior — policyholder behavior as assumed in reserving • Actual policyholder behavior different than expected — difference between actual behavior during the period versus assumed behavior • Time — effect of passage of time including reduction to separate account balances from fees, the change in proximity of future cash flows, and impacts to policy features such as bonus credits • Change in assumptions — changes in assumptions resulting from our periodic review • Change in non-performance risk — changes in Jackson’s non-performance risk See Note 6 - Fair Value Measurements of the Notes to Consolidated Financial Statements for more information regarding fair value measurements. 174 Part II | Item 8. Notes to Consolidated Financial Statements | 12. Market Risk Benefits Additionally, when an annuitization occurs (for annuitization benefits) or upon extinguishment of the account balance (for withdrawal benefits), the balance related to the MRB is derecognized and the amount deducted (after derecognition of any related amount included in accumulated other comprehensive income) is used in the calculation of the liability for future policy benefits for the resulting payout annuity. Variable Annuities Variable annuity contracts issued by the Company offer various guaranteed minimum death, withdrawal, income and accumulation benefits. These guaranteed benefit features, as well as the reinsurance recoverable on the Company’s GMIB, are classified as MRBs and measured at fair value. The Company discontinued offering the GMIB in 2009. Variable annuity guaranteed benefit features classified as MRBs, which have explicit fees, are measured using the attributed fee method. Under the attributed fee method, fair value is measured as the difference between the present value of projected future liabilities and the present value of projected attributed fees. At the inception of the contract, the Company attributes to the MRB a portion of total fees expected to be assessed against the contract holder to offset the projected claims over the lifetime of the contract. The attributed fee is expressed as a percentage of total projected future fees at inception of the contract. This percentage of total projected fees is considered a fixed term of the MRB feature and is held static over the life of the contract. This percentage may not exceed 100% of the total projected contract fees as of contract inception. As the Company may issue contracts that have projected future liabilities greater than the projected future guaranteed benefit fees at issue, the Company may also attribute mortality and expense charges when performing this calculation. In subsequent valuations, both the present value of future projected liabilities and the present value of projected attributed fees are remeasured based on current market conditions and policyholder behavior assumptions. Fixed Index Annuities The longevity riders issued on fixed index annuities are classified as MRBs and measured at fair value. Similar to the variable annuity guaranteed benefits features, these contracts have explicit fees and are measured using the attributed fee method. The Company attributes a percentage of total projected future fees expected to be assessed against the policyholder to offset the projected future claims over the lifetime of the contract. If the fees attributed are insufficient to offset the claims at issue, the shortfall is borrowed from the host contract rather than recognizing a loss at inception. RILA RILA guaranteed benefit features are classified as MRBs and measured at fair value. The fair value measurement represents the present value of future claims payable by the MRB feature. At inception, the value of the MRB is deducted from the value of the contract resulting in no gain or loss. The following table presents the reconciliation of the market risk benefits balance in the Consolidated Balance Sheets (in millions): December 31, 2024 December 31, 2023 Variable Other Variable Other Annuities Product Lines Total Annuities Product Lines Total Market risk benefit - (assets) $ ( 8,894 ) $ ( 5 ) $ ( 8,899 ) $ ( 6,732 ) $ ( 5 ) $ ( 6,737 ) Market risk benefit - liabilities 3,718 56 3,774 4,732 53 4,785 Market risk benefit - net (asset) liability $ ( 5,176 ) $ 51 $ ( 5,125 ) $ ( 2,000 ) $ 48 $ ( 1,952 ) 175 Part II | Item 8. Notes to Consolidated Financial Statements | 12. Market Risk Benefits The following table presents the roll-forward of the net MRB (assets) liabilities for variable annuities (dollars in millions): Years Ended December 31, 2024 2023 Net MRB balance, beginning of period $ ( 2,000 ) $ 767 Beginning of period cumulative effect of changes in non-performance risk 972 2,185 Net MRB balance, beginning of period, before effect of changes in non-performance risk ( 1,028 ) 2,952 Effect of changes in interest rates ( 3,555 ) ( 733 ) Effect of fund performance ( 3,545 ) ( 5,401 ) Effect of changes in equity index volatility ( 196 ) ( 1,107 ) Effect of expected policyholder behavior 820 612 Effect of actual policyholder behavior different from expected 673 483 Effect of time 1,537 1,829 Effect of changes in assumptions 432 337 Net MRB balance, end of period, before effect of changes in non-performance risk ( 4,862 ) ( 1,028 ) End of period cumulative effect of changes in non-performance risk ( 314 ) ( 972 ) Net MRB balance, end of period, gross ( 5,176 ) ( 2,000 ) Reinsurance recoverable on market risk benefits at fair value, end of period ( 62 ) ( 90 ) Net MRB balance, end of period, net of reinsurance $ ( 5,238 ) $ ( 2,090 ) Weighted average attained age (years) (1) 70 69 Net amount at risk (2) $ 6,360 $ 8,225 (1) Weighted-average attained age is defined as the average age of policyholders weighted by account value. (2) Net amount at risk (NAR) is defined as of the valuation date for each contract as the greater of Death Benefit NAR (DBNAR) and Living Benefit NAR (LBNAR), as applicable, where DBNAR is the GMDB benefit base in excess of the account value, and LBNAR is the actuarial present value of guaranteed living benefits in excess of the account value. At each reporting date, the Company regularly evaluates the inputs and assumptions to be used to measure the fair value of the MRB assets and MRB liabilities. In prior periods, the non-performance risk adjustment was determined based on credit spreads indicated by a blend of yields on similarly rated peer debt and yields on Company debt. Starting June 30, 2023, non-performance risk is incorporated into the calculation through the adjustment of the risk-free rate curve based only on credit spreads for debt and debt-like instruments issued by the Company or its insurance operating subsidiaries, adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries. The change was made as a result of management’s determination that the reliability of credit spreads on debt and debt-like instruments issued by the Company as a measure of company-specific credit risk has increased due to sustained levels of market trading volume of these instruments. The significant assumptions used in the MRB fair value calculations are discussed in Note 6 - Fair Value Measurements of the Notes to Consolidated Financial Statements. The use of models and assumptions used to determine fair value of MRBs requires a significant amount of judgement. As such, we have undertaken a comprehensive review of the significant assumptions used. During 2024, the following notable changes were made to the inputs and assumptions used in the fair value estimates of the MRB calculations: • Increases in interest rates led to higher assumed separate account returns and higher discount rates, which resulted in a decrease to the MRB reserve. • Increases in equity markets led to higher separate account fund performance and a decrease in future projected benefits, which resulted in a decrease in the MRB reserve. • Impacts of our annual assumption review resulted in an increase in the MRB reserve. This reserve increase was primarily related to data enhancements and assumption updates for withdrawal utilization on policies with GMWBs. • Decreases in equity index volatility led to higher assumed separate account returns, which resulted in a decrease in the MRB reserve. • The non-performance risk adjustment decreased as a result of decreasing spreads on the short end of the curve, which resulted in an increase in the MRB reserve that was recorded within OCI. 176 Part II | Item 8. Notes to Consolidated Financial Statements | 12. Market Risk Benefits During 2023, the following notable changes were made to the inputs and assumptions used in the fair value estimates of the MRB calculations: • Increases in equity markets led to higher separate account fund performance and a decrease in future projected benefits, which resulted in a decrease in the MRB reserve. • Decreases in equity index volatility led to higher assumed separate account returns, which resulted in a decrease in the MRB reserve. • Increases in interest rates led to higher assumed separate account returns and higher discount rates, which resulted in a decrease to the MRB reserve. • Impacts of our annual assumption review resulted in an increase in the MRB reserve. This reserve increase was primarily related to assumption updates to lapse rates and GMWB withdrawal utilization. • The non-performance risk adjustment decreased as a result of decreasing credit spreads, which resulted in an increase in the MRB reserve that was recorded within OCI. 13. Long-Term Debt Liabilities for the Company’s debt are primarily carried at an amount equal to the principal balance net of any unamortized original issuance discount or premium. Original issuance discount or premium and any debt issue costs, if applicable, are recognized as a component of interest expense over the period the debt is expected to be outstanding. The aggregate carrying value of long-term debt was as follows (in millions): December 31, 2024 2023 Long-Term Debt Senior Notes due 2027 $ 398 $ 398 Senior Notes due 2031 497 495 Senior Notes due 2032 347 347 Senior Notes due 2051 490 490 Surplus notes due 2027 250 250 FHLBI bank loans due 2034 & 2035 52 57 Total long-term debt $ 2,034 $ 2,037 The following table presents the contractual maturities of the Company's long-term debt as of December 31, 2024 (in millions): Calendar Year 2025 2026 2027 2028 2029 and thereafter Total Long-term debt $ — $ — $ 648 $ — $ 1,386 $ 2,034 Senior Notes On June 8, 2022, the Company issued $ 750 million aggregate principal amount of its senior unsecured notes, consisting of $ 400 million aggregate principal amount of 5.170 % Senior Notes due June 8, 2027, and $ 350 million aggregate principal amount of 5.670 % Senior Notes due June 8, 2032. The net proceeds of these notes were used, together with cash on hand, to repay the Company’s $ 750 million aggregate principal amount senior unsecured term loan due February 2023. Revolving Credit Facility On February 24, 2023, the Company replaced the 2021 Revolving Credit Facility that was due to expire in February 2024 and entered into a revolving credit facility (the "2023 Revolving Credit Facility") with a syndicate of banks and Bank of America, N.A., as Administrative Agent. The 2023 Revolving Credit Facility provides for borrowings for working capital and other general corporate purposes under aggregate commitments of $ 1.0 billion, with a sub-limit of $ 500 million available for letters of credit. The 2023 Revolving Credit Facility further provides for the ability to request, subject to customary terms and conditions, an increase in commitments thereunder by up to an additional $ 500 million. 177 Part II | Item 8. Notes to Consolidated Financial Statements | 13. Long-Term Debt The credit agreement for the 2023 Revolving Credit Facility contains financial maintenance covenants, including a minimum adjusted consolidated net worth test of no less than 70 % of our adjusted consolidated net worth as of September 30, 2022 (plus (to the extent positive) or minus (to the extent negative) 70 % of the impact on such adjusted consolidated net worth resulting from the application of a one-time transition adjustment for the LDTI accounting change for insurance contracts, and plus 50 % of the aggregate amount of any increase in adjusted consolidated net worth resulting from equity issuances by the Company and its consolidated subsidiaries after September 30, 2022), and a maximum consolidated indebtedness to total capitalization ratio test not to exceed 35 %. Commitments under the 2023 Revolving Credit Facility terminate on February 24, 2028. Surplus Notes Under Michigan insurance law, for statutory reporting purposes, the surplus notes are not part of the legal liabilities of the Company and are considered surplus funds. Payments of interest or principal may only be made with the prior approval of the Michigan Director of Insurance and only out of surplus earnings that the director determines to be available for such payments under Michigan insurance law. On March 15, 1997, the Company, through its subsidiary, Jackson, issued 8.2 % surplus notes in the principal amount of $ 250 million due March 15, 2027. These surplus notes are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims and may not be redeemed at the option of the Company or any holder prior to maturity. Interest is payable semi-annually on March 15th and September 15th of each year. Interest expense on the notes was $ 20 million, $ 20 million, and $ 20 million for the years ended December 31, 2024, 2023 and 2022, respectively. FHLB Loans The Company received loans of $ 50 million from the FHLBI under its community investment program in both 2015 and 2014, which amortize on a straight-line basis over the loan term. The weighted average interest rate on these loans was 5.1 % and 5.1 % for the years ended December 31, 2024 and 2023, respectively. The outstanding balance on these loans was $ 52 million and $ 57 million at December 31, 2024 and 2023, respectively. See Note 10 - Other Contract Holder Funds of the Notes to Consolidated Financial Statements for the carrying value of our collateralization of our FHLB obligations . Line of Credit Agreement Jackson is a party to an Uncommitted Money Market Line Credit Agreement dated April 6, 2023, among Jackson, Jackson Financial, and Société Générale. This agreement is an uncommitted short-term cash advance facility that provides an additional form of liquidity to Jackson and to Jackson Financial. The aggregate borrowing capacity under the agreement is $ 500 million and each cash advance request must be at least $ 100 thousand. The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance. Jackson and Jackson Financial are jointly and severally liable to repay any advance under the agreement, which must be repaid prior to the last day of the quarter in which the advance was drawn. 14. Federal Home Loan Bank Advances The Company, through its subsidiary, Jackson, entered into an advance program with the FHLBI in which interest rates were either fixed or variable based on the FHLBI cost of funds or market rates. Advances of $ 700 million and $ 250 million were outstanding at December 31, 2024 and 2023, respectively, and were recorded in other liabilities. Interest expense on such advances was $ 6 million, $ 7 million, and nil for the years ended December 31, 2024, 2023 and 2022, respectively. See Note 10 - Other Contract Holder Funds of the Notes to Consolidated Financial Statements for the carrying value of our collateralization of our FHLB obligations . 178 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes 15. Income Taxes U.S. Tax Law Changes On September 12, 2024, the U.S. Treasury Department and the Internal Revenue Service released proposed regulations addressing the application of the corporate alternative minimum tax (“CAMT”) that was enacted as part of the Inflation Reduction Act of 2022 (“IRA”). On December 23, 2024, the U.S. Treasury Department and the Internal Revenue Service released technical corrections to those proposed regulations. The proposed regulations reflecting the technical corrections are generally applicable to tax years ending after September 12, 2024 and consistent with many of the provisions provided in prior CAMT guidance. In 2024, the Company did not elect to early adopt the proposed regulations for the 2023 tax returns and relied on reasonable interpretations of previously published guidance resulting in a reduction of $ 263 million to the estimated CAMT liability and the related CAMT deferred tax asset previously recorded as of December 31, 2023. The Company recorded nil at December 31, 2024 of estimated CAMT liability and the related CAMT deferred tax asset for the 2024 tax year based on carryover impacts from the 2023 tax return and consideration of the applicability of the proposed regulations. The U.S. 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. Effective Tax Rate The components of the provision for federal, state and local income taxes were as follows (in millions): Years Ended December 31, 2024 2023 2022 Current tax expense (benefit) Federal $ ( 250 ) $ 213 $ ( 43 ) State and local 2 ( 2 ) 1 Total current tax expense (benefit) ( 248 ) 211 ( 42 ) Deferred tax expense (benefit) Federal 275 ( 205 ) 1,489 State and local 19 ( 2 ) 58 Total deferred tax expense (benefit) 294 ( 207 ) 1,547 Total income taxes $ 46 $ 4 $ 1,505 The federal income tax provisions differ from the amounts determined by multiplying pretax income attributable to the Company by the statutory federal income tax rate of 21% as follows (in millions): Years Ended December 31, 2024 2023 2022 Income taxes at statutory rate $ 208 $ 197 $ 1,615 State income taxes 17 ( 1 ) 47 Dividends received deduction ( 134 ) ( 133 ) ( 142 ) Valuation allowance ( 6 ) ( 7 ) 2 Foreign and other tax credits (1) ( 37 ) ( 48 ) ( 24 ) Other (2) ( 2 ) ( 4 ) 7 Income tax (benefit) expense $ 46 $ 4 $ 1,505 Effective tax rate 4.6 % 0.5 % 19.6 % (1) For the years ended December 31, 2024, 2023 and 2022, this primarily represents the benefit from foreign tax credits generated by the fund investments of the variable life and annuity contracts. (2) Aggregation of insignificant reconciling items that are less than 5% of the computed income tax expense (benefit). 179 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes The dividends received deduction (“DRD”) reduces the amount of income subject to tax. The DRD for the current period was estimated using information from 2023 and estimates of current year investments results. The actual current year DRD can vary based on factors such as changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD. Income Taxes Paid Income taxes paid (refunded) were $( 8 ) million, $( 21 ) million, and $( 5 ) million in 2024, 2023 and 2022, respectively. The income taxes refunded in 2024 include $( 12 ) million of net IRS interest. Deferred Taxes and Assessment of Valuation Allowance The tax effects of significant temporary differences that gave rise to deferred tax assets and liabilities were as follows (in millions): December 31, 2024 2023 Gross deferred tax asset Difference between financial reporting and the tax basis of: Policy reserves and other insurance items $ — $ 1,052 Employee benefits 147 140 Derivative investments 1,174 870 Tax Credits Carryforward 203 374 Net unrealized losses 1,013 952 Net operating loss carryforward 1,768 952 Other 64 34 Total gross deferred tax asset 4,369 4,374 Valuation allowance ( 734 ) ( 689 ) Gross deferred tax asset, net of valuation allowance $ 3,635 $ 3,685 Gross deferred tax liability Difference between financial reporting and the tax basis of: Policy reserves and other insurance items $ ( 148 ) $ — Deferred acquisition costs and sales inducements ( 2,368 ) ( 2,465 ) Other investment items ( 598 ) ( 561 ) Other ( 41 ) ( 19 ) Total gross deferred tax liability ( 3,155 ) ( 3,045 ) Net deferred tax asset $ 480 $ 640 Deferred income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. Such temporary differences are principally related to the effects of recording certain invested assets at market value, the deferral of acquisition costs and sales inducements, the provisions for future policy benefits and expenses, and net operating losses. Deferred tax assets and liabilities are measured using the tax rates expected to be in effect when such benefits are realized. In 2016, the Company reached an agreement with the IRS regarding the taxation of hedging activities. This agreement requires the current taxation of all unrealized gains and losses on hedge-related investments, but then defers two-thirds of the amount ratably over the following two years . Accordingly, there is an acceleration of taxes incurred currently and a related offset to the taxes being deferred. 180 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes The Company is required to evaluate the recoverability of its deferred tax assets and establish a valuation allowance, if necessary, to reduce its deferred tax asset to an amount that is more likely than not to be realizable. Considerable judgment and the use of estimates are required when determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. When evaluating the need for a valuation allowance, the Company considers many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused. The Company has adopted an accounting policy to analyze the ability to recover the CAMT credit carryover deferred tax asset separately from the deferred tax assets generated under the regular tax system. The Company utilized a three-year rolling calculation of actual comprehensive income before taxes adjusted for permanent items to measure the cumulative losses in recent years. In 2020, the Company entered into a funds withheld coinsurance agreement with Athene, which results in the cumulative comprehensive income including items that are not indicative of the Company’s ability to generate future taxable income. As such, an adjustment was made to exclude the change in AOCI not attributable to the funds withheld coinsurance agreement with Athene. The change in AOCI attributable to these assets is excluded because our invested assets are generally invested to closely match the duration of our liabilities, which are longer duration in nature, and therefore the Company believes that the period-to-period fair market value fluctuations in AOCI are inconsistent when analyzing trends in our business. The changes in AOCI within the funds withheld account related to the Athene Reinsurance Transaction are not excluded because they offset the related earnings from the Athene Reinsurance Transaction included in pre-tax income and thus appropriately results in removing the impact from the Athene Reinsurance Transaction from the cumulative income test which economically should be minimal over the life of the reinsured business. Based on these factors, it is reasonable for the Company to rely on the estimated projection of future income as evidence in assessing the sources of taxable income available to realize the benefit of deferred tax assets. The Company evaluated each component of the deferred tax asset and assessed the effects of limitations and/or interpretations on the value of such components to be fully recognized in the future. The Company also evaluated the likelihood of sufficient taxable income in the future to offset the available deferred tax assets based on evidence considered to be objective and verifiable. Based on the analysis at December 31, 2024 and 2023, the Company concluded that it is more likely than not, that the $ 480 million and $ 640 million, respectively, of net deferred tax assets will be realized through future projected taxable income. For the year ended December 31, 2024, changes in market conditions and interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolio resulting in deferred tax assets related to net unrealized tax capital losses for the life insurance group. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery, our capital loss carryback capacity, along with reversing capital deferred tax liabilities. As of December 31, 2024, based on all available evidence, the Company concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses that are not more likely than not to be realized. For the year ended December 31, 2024, the Company recorded an increase of $ 45 million to the valuation allowance associated with the realized capital losses and the unrealized tax losses in the Company’s available for sale securities portfolio. The $ 45 million increase for the twelve months ending December 31, 2024 to the valuation allowance consists of $ 51 million tax expense recorded to other comprehensive income and $ 6 million tax benefit recorded in the income tax expense. At December 31, 2024 and 2023, the Company has recorded a total valuation allowance of $ 734 million and $ 689 million, respectively, primarily associated with the unrealized tax losses in the Life Companies’ available for sale securities portfolio where it is not more likely than not that the full tax benefit of the losses will be realized. 181 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes Carryforwards The following table sets forth the amount and expiration dates of federal and state operating, capital loss and tax credit carryforwards for tax periods indicated. Included in the table is a Section 382 loss carryforward attributable to a previous acquisition. Section 382 of the Internal Revenue Code imposes limitations on the utilization of net operating loss carryforwards. The Section 382 limitation is an annual limitation on the amount of pre-acquisition net operating losses that a corporation may use to offset post-acquisition income. Section 382 further limits certain unrealized built-in losses at the time of acquisition. December 31, 2024 2023 Federal net operating and capital loss carryforwards (1) $ 8,104 $ 4,253 Section 382 net operating loss from previous acquisition (2) 137 137 State net operating and capital loss carryforwards (3) 594 562 Federal capital loss carryforwards (4) 116 — Foreign Tax Credit (5) 196 104 Alternative Minimum Credit (6) 6 269 Total $ 9,153 $ 5,325 (1) Unlimited carryforward (2) Begins to expire in 2026. Annual limitation is approximately $ 21 million. (3) For the year ended December 31, 2024, $ 399 million expires in 0 - 20 years and $ 195 million unlimited carryforward. (4) For the year ended December 31, 2024, $ 14 million expires in 2028 and $ 102 million expires in 2029. (5) 10 year carryforward and begin to expire in 2032. (6) Subject to 383 limitations Accounting for Uncertainty in Income Taxes The Company determines whether a tax position is more likely than not to be sustained upon examination by tax authorities. The portion of a tax position that is greater than the 50% likelihood of being realized is recorded on the financial statements and any unrecognized part of a position due to uncertainties are recorded as a liability and are charged to income tax in the period that determination is made. The Company has considered both permanent and temporary positions in determining the unrecognized tax benefit rollforward. At December 31, 2024 and 2023, the Company held no reserves related to unrecognized tax benefits. The Company recognizes interest and penalties accrued, if any, related to unrecognized tax benefits as a component of income tax (benefit) expense. The Company did not recognize any material interest and penalty expense in 2024, 2023 or 2022. For 2024 and 2023, the Company had accrued total interest expense of nil and an immaterial amount, respectively. For 2024 and 2023, the Company did not accrue any amounts for penalties. Based on information available as of December 31, 2024, the Company believes that, in the next 12 months, there are no positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease. Tax Examinations and Litigation The Company is no longer subject to U.S. federal tax examinations by tax authorities for years prior to 2019. Tax years from 2019 to 2024 remain open under the statute of limitations. The 2019 to 2023 Brooke Life consolidated life insurance federal income tax returns are under examination by the Internal Revenue Service. The 2018 IRS exam of the JFI non-life federal consolidated return closed during 2022 with no material impact to the Company. Certain of the Company’s subsidiaries’ state income tax returns are currently under examination by various jurisdictions for years ranging from 2018 to 2022. The Company does not anticipate any material changes from any of these audits. 182 Part II | Item 8. Notes to Consolidated Financial Statements | 15. Income Taxes Organization and Tax Sharing Agreements Our U.S. federal consolidated income tax group includes both life companies and non-life companies. The Company files separate non-life and life insurance consolidated federal income tax returns with the U.S. federal government and various state and local jurisdictions, as well as certain foreign jurisdictions. Jackson Financial and its non-life insurance subsidiaries, Jackson Holdings, LLC and PPM, file a consolidated non-life federal income tax return. Brooke Life files a consolidated life insurance company tax return with Jackson, JNY, Squire Re II and Brooke Re. Jackson National Life (Bermuda) LTD, which was dissolved in November 2024, and VFL International Life Company SPC, LTD are taxed as controlled foreign corporations of Jackson. With the exception of several insignificant wholly-owned subsidiaries that are not included in the Brooke Life consolidated tax return, all other subsidiaries of Jackson are limited liability companies with all of their interests owned by Jackson. Accordingly, they are not considered separate entities for income tax purposes and, therefore, are taxed as part of the operations of Jackson. Income tax expense is calculated on a separate company basis. Jackson Financial, Jackson Holdings, LLC, and PPM have entered into written tax sharing agreements. These tax sharing agreements are generally based on a separate return basis with benefits for credits and losses. Brooke Life, Jackson, JNY, Squire RE II, and Brooke Re have entered into written tax sharing agreements. These tax sharing agreements are generally based on a separate return basis with benefits for credits and losses. CAMT liability is allocated to each company based on its share of the impact of CAMT in the respective consolidated tax return filing group in which it is a member. 16. Commitments and Contingencies In the ordinary course of business, the Company and its subsidiaries are parties to legal actions and, at times, regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate their impact on the Company’s financial position. A reserve is established for contingent liabilities if it is probable that a loss has been incurred and the amount is reasonably estimable. It is possible that an adverse outcome in certain of the Company’s contingent liabilities, or the use of different assumptions in the determination of amounts recorded, could have a material effect upon the Company’s financial position. However, it is the opinion of management that the ultimate disposition of contingent liabilities is unlikely to have a material adverse effect on the Company’s financial position. Jackson has been named in civil litigation proceedings, which appear to be substantially similar to other class action litigation brought against many life insurers including allegations of misconduct in the sale of insurance products. The Company accrues for legal contingencies once the contingency is deemed to be probable and reasonably estimable. At December 31, 2024, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $ 930 million. At December 31, 2024, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $ 546 million. 17. Leases The Company leases office space and equipment under several operating leases that expire at various dates through 2051. The Company determines if a contract is a lease at inception or modification. Lease terms may include options to extend or terminate the lease and are included in the lease measurement when it is reasonably certain that the Company will exercise that option. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and corresponding lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are determined using the Company’s incremental borrowings rate based upon information available at lease commencement. Certain lease incentives such as free rent periods are recorded as a reduction of the ROU asset. Lease costs for operating leases are recognized on a straight-line basis over the life of the lease. The Company has lease agreements with both lease and non-lease components. The Company elected the practical expedient to combine lease and non-lease components for certain real estate leases. 183 Part II | Item 8. Notes to Consolidated Financial Statements | 17. Leases Variable lease expenses may include changes in index-linked lease payments and certain variable operating expenses associated with real estate leases. These payments are recognized in operating expenses in the period incurred. At December 31, 2024 and 2023, the Company had operating lease net ROU assets of $ 20 million and $ 24 million and associated lease liabilities of $ 26 million and $ 32 million, respectively, classified within other assets and other liabilities , respectively. Net lease expense was $ 53 million, $ 43 million, and $ 46 million in 2024, 2023 and 2022, respectively, including expenses associated with software leases. The following table summarizes the components of operating lease costs and other information related to operating leases recorded within operating costs and other expenses, net of deferrals, (dollars in millions): Years Ended December 31, 2024 2023 2022 Lease Cost: Operating leases (1) $ 7 $ 7 $ 7 Variable lease costs 4 4 4 Sublease income ( 3 ) ( 3 ) ( 3 ) Net Lease Cost $ 8 $ 8 $ 8 Other Information: Cash paid for amounts included in the measurement of operating lease liability $ 9 $ 10 $ 9 ROU assets obtained in exchange for new lease liabilities $ — $ 2 $ — Weighted average lease term 5 years 5 years 6 years Weighted average discount rate 4.2 % 4.0 % 3.9 % (1) Operating lease costs exclude software leases, as intangible assets are excluded from the scope of Accounting Standard Codification 842, Leases. At December 31, 2024, the maturities of operating lease liabilities were as follows (in millions): 2025 $ 8 2026 7 2027 5 2028 5 2029 3 Thereafter 1 Total $ 29 Less: interest 3 Present value of lease liabilities $ 26 18. Share-Based Compensation 2021 Omnibus Incentive Plan In April 2021, the Company’s Board of Directors adopted, and the Company’s shareholders approved, Jackson Financial Inc.’s 2021 Omnibus Incentive Plan (the “Incentive Plan”). This Incentive Plan became effective following the completion of the Demerger and replaced the Prudential share plans. The outstanding unvested awards previously issued under the Prudential share plans were exchanged for equivalent awards of shares of JFI’s Common Stock under the Incentive Plan, with a grant date of October 4, 2021. The performance conditions of the awards were modified to be based on U.S. GAAP based metrics. The incremental compensation cost resulting from the modifications is being recognized ratably over the remaining requisite service period of each award. 184 Part II | Item 8. Notes to Consolidated Financial Statements | 18. Share-Based Compensation The Incentive Plan allows for stock-based awards including stock options, stock appreciation rights, restricted share awards, performance share awards, and deferred share units. The Incentive Plan has a ten-year term, expiring in September 2031. The Company currently has Restricted Share Unit and Performance Share Unit equity-based compensation awards outstanding. Dividend equivalents are generally accrued on restricted share units and performance share units outstanding as of the record date. These dividend equivalents are paid only on restricted share units and performance share units that ultimately vest. Generally, the requisite service period is the vesting period. In the case of retirement (eligibility for which is based on the associate's age and years of service as provided in the relevant award agreement), awards vest in full but are subject to the satisfaction of any applicable performance criteria and paid in line with the original vesting date. The maximum aggregate number of shares of the Company’s common stock that may be issued pursuant to awards under the Incentive Plan shall not exceed 11,000,000 shares. Shares for which payment is in cash, including the shares withheld to cover associate payroll taxes, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded or granted again under the Incentive Plan. The Company reflects the cash settled awards under the Incentive Plan as a liability classified plan and, therefore, reports the accrued compensation expense and the value of the cash settled awards within other liabilities. At December 31, 2024 and 2023, the Company had $ 139 million and $ 85 million accrued for future payments under the Incentive Plan, respectively. Restricted Share Units ("RSUs") JFI grants RSUs to certain associates and non-employee directors. The majority of associate RSUs are expected to vest in three equal installments on the first through third anniversaries of the grant date over a 3-year service period, subject to forfeiture and transfer restrictions, and are payable in cash or shares at the Company’s discretion. The associate awards granted in 2021 had a shortened, 30-month vesting period. In addition, 1 - and 2-year awards were issued in connection with the Company’s Demerger. RSUs have immediate dividend rights and voting rights upon issuance of underlying shares when the share units vest. In lieu of cash dividend payments, the dividends on unvested RSUs are awarded in additional units equal to the value of the dividends and are subject to the same vesting and distribution conditions as the underlying RSU. Outstanding non-vested RSUs granted to associates were as follows: Year Ended December 31, 2024 Share-Settled Cash-Settled RSUs Weighted-Average Grant Date Fair Value per Share RSUs Weighted-Average Grant Date Fair Value per Share Non-vested at beginning of period 604,577 $ 36.93 2,122,780 $ 36.85 Granted (1) 311,851 $ 61.47 920,951 $ 61.62 Vested ( 343,185 ) $ 37.21 ( 1,172,161 ) $ 37.77 Forfeited ( 14,252 ) $ 53.85 ( 46,221 ) $ 50.05 Non-vested at end of period 558,991 $ 52.18 1,825,349 $ 51.44 (1) Includes dividend equivalents granted in the current period on awards outstanding Year Ended December 31, 2023 Share-Settled Cash-Settled RSUs Weighted-Average Grant Date Fair Value per Share RSUs Weighted-Average Grant Date Fair Value per Share Nonvested at beginning of period 1,178,009 $ 30.38 2,156,773 $ 32.89 Granted (1) 314,285 $ 39.31 1,086,035 $ 39.53 Vested ( 857,312 ) $ 28.96 ( 1,015,923 ) $ 31.72 Forfeited ( 30,405 ) $ 35.35 ( 104,105 ) $ 35.34 Nonvested at end of period 604,577 $ 36.93 2,122,780 $ 36.85 (1) Includes dividend equivalents granted in the current period on awards outstanding 185 Part II | Item 8. Notes to Consolidated Financial Statements | 18. Share-Based Compensation Performance Share Units ("PSUs") JFI grants PSUs to certain associates. PSU awards entitle recipients to receive, upon vesting, a number of units that ranges from 0 % to 200 % of the number of PSUs awarded, depending on the level of achievement of specified performance conditions. For PSUs granted in 2024 and 2023, the awards also include a vesting modifier based on the Company's performance relative to a defined peer group. The awards generally are expected to vest after a period of three years , subject to forfeiture and transfer restrictions, and are payable in cash or shares at the Company’s discretion; and, for senior vice presidents and above, the awards are distributed only in shares. The awards granted in 2021 had a shortened, 30-month vesting period. Award recipients have immediate dividend rights and voting rights upon issuance of underlying shares when the share units vest. The dividends on unvested PSUs are awarded in additional units equal to the value of the dividends and are subject to the same vesting and distribution conditions as the underlying PSUs. Outstanding non-vested PSUs granted were as follows: Year Ended December 31, 2024 Share-Settled Cash-Settled PSUs Weighted-Average Grant Date Fair Value per Share PSUs Weighted-Average Grant Date Fair Value per Share Non-vested at beginning of period 1,477,574 $ 35.59 687,751 $ 35.34 Granted (1) 300,747 $ 62.98 16,747 $ 75.93 Vested ( 527,001 ) $ 32.53 ( 258,968 ) $ 32.33 Forfeited ( 96,459 ) $ 34.35 ( 50,367 ) $ 34.15 Non-vested at end of period 1,154,861 $ 48.55 395,163 $ 44.92 (1) Includes dividend equivalents granted in the current period on awards outstanding Year Ended December 31, 2023 Share-Settled Cash-Settled PSUs Weighted-Average Grant Date Fair Value per Share PSUs Weighted-Average Grant Date Fair Value per Share Nonvested at beginning of period 4,075,330 $ 28.59 1,487,453 $ 28.73 Granted (1) 514,799 $ 41.68 242,355 $ 42.04 Vested ( 3,027,869 ) $ 27.27 ( 1,009,199 ) $ 27.30 Forfeited ( 84,686 ) $ 33.31 ( 32,858 ) $ 34.00 Nonvested at end of period 1,477,574 $ 35.59 687,751 $ 35.34 (1) Includes dividend equivalents granted in the current period on awards outstanding Compensation Cost JFI charges the fair value of the restricted share units and performance share units to expense over the requisite service period. For performance-based awards, JFI estimates the number of shares expected to vest at the end of the performance period based on the probable achievement of the performance objectives. RSUs have graded vesting features and JFI recognizes expense for those awards on a straight-line basis over the requisite service period. The Company recognizes forfeitures as they occur when recognizing share-based compensation expense. For most of the equity-classified RSUs and PSUs, the fair value is based on the price of JFI’s common stock on the grant date. For PSU equity awards granted in 2024 and 2023, the Company measures fair value using a Monte Carlo simulation that considers the Company’s projected total shareholder return (“TSR”) relative to a defined group of peers as well as other inputs to estimate the grant date fair value of awards. For liability-classified RSUs and most liability-classified PSUs, the fair value is based on the price of JFI’s common stock as of the reporting date. For PSU liability awards granted in 2023, the Company uses a Monte Carlo simulation that considers the Company’s projected TSR relative to a defined group of peers as well as other inputs to estimate the grant date fair value of awards. 186 Part II | Item 8. Notes to Consolidated Financial Statements | 18. Share-Based Compensation Total expense related to these share-based plans was as follows (in millions): For the Years Ended December 31, 2024 2023 2022 Compensation expense recognized $ 191 $ 107 $ 131 Income tax benefit recognized 39 25 29 Unrecognized compensation cost for RSUs and PSUs under the Incentive Plan as of December 31, 2024 was $ 64 million with a weighted average recognition period of 1.08 years. The shares issued under the Incentive Plan may be authorized and unissued, or reacquired treasury shares. 19. Other Related Party Transactions The Company's investment management operation, PPM, provides investment services to entities affiliated with the Company's former parent. As of June 30, 2023, the former parent had no remaining equity interest in the Company and therefore its affiliated entities are no longer designated as related parties. The Company recognized $ 18 million and $ 33 million of revenue during the years ended December 31, 2023 and 2022, associated with these investment services. This revenue was included in fee income in the accompanying Consolidated Income Statements. 20. Statutory Accounting and Regulatory Matters The Company’s insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred and establishing future policy benefit liabilities using different actuarial assumptions, as well as valuing investments and certain assets and accounting for deferred income taxes on a different basis. At December 31, 2024 and 2023, Jackson’s statutory capital and surplus was $ 4.4 billion and $ 4.7 billion, respectively. Jackson had statutory net income (loss) of $ 278 million, $( 122 ) million, and $ 3,688 million, in 2024, 2023 and 2022, respectively. Furthermore, at December 31, 2024 and 2023, Brooke Life’s statutory capital and surplus was $ 5.1 billion and $ 4.7 billion, respectively, which includes its total investments in Jackson and Brooke Re of $ 5.1 billion and $ 4.7 billion, in 2024 and 2023, respectively. Brooke Life’s statutory net income (loss) was $ 713 million, $ 385 million, and $( 109 ) million in 2024, 2023, and 2022, respectively. Brooke Life’s statutory net income included a dividend payment of $ 830 million and $ 450 million from Jackson in 2024 and 2023, respectively. The Company’s consolidated assets are primarily those of its life insurance subsidiary, Jackson. Under the Michigan Insurance Code of 1956, Jackson must notify the Michigan Director of Insurance prior to payment of any dividend. Ordinary dividends on capital stock are subject to a capacity calculation and may only be distributed out of earned surplus. Ordinary dividend capacity is limited to the greater of 10% of statutory surplus as of the preceding year end, excluding any increase arising from the application of permitted practices, or the statutory net income, excluding any net realized investment gains, for the twelve-month period ended on the preceding December 31, the result of which is reduced by cumulative dividends and other capital distributions occurring in the preceding twelve-month period. Earned surplus is reported unassigned surplus on the preceding December 31 reduced by any unrealized capital gains and effect of increase from the application of permitted practices, if any. The Michigan Director of Insurance may approve payment of dividends in excess of these amounts, which would be deemed an extraordinary dividend. As a result of cumulative dividends and other capital distributions occurring in the preceding 12 months as of December 31, 2024, future dividends from both Jackson and Brooke Life are expected to be classified as extraordinary. The Company’s insurance subsidiaries have received approval in the past for payments of extraordinary dividends. 187 Part II | Item 8. Notes to Consolidated Financial Statements | 20. Statutory Accounting and Regulatory Matters 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. In subsequent quarters of 2024, Jackson paid cumulative extraordinary dividends of $ 830 million to Brooke Life. In the first quarter of 2023, Jackson paid an ordinary dividend of $ 450 million and a return of capital of $ 150 million to Brooke Life. Brooke Life paid cumulative returns of capital of $ 785 million in 2024 and an ordinary dividend of $ 360 million and a return of capital of $ 150 million in the first quarter of 2023 which were up streamed to its ultimate parent, Jackson Financial. The NAIC has developed certain risk-based capital (“RBC”) requirements for life insurance companies. Under those requirements, compliance is determined by a ratio of a company’s total adjusted capital (“TAC”), to its authorized control level RBC, each calculated in a manner prescribed by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences is twice the authorized control level RBC (“Company action level RBC”). At December 31, 2024, Jackson and Brooke Life’s TAC remained well in excess of the Company action level RBC. In addition, on the basis of statutory financial statements that insurers file with the state insurance regulators, the NAIC annually calculates twelve financial ratios to assist state regulators in monitoring the financial condition of insurance companies. A usual range of results for each ratio is used as a benchmark and departure from the usual range on four or more of the ratios can lead to inquiries from individual state insurance departments. In 2024 and 2023, there were no significant exceptions with any ratios. 21. Benefit Plans Jackson has a defined contribution retirement plan covering substantially all associates and certain affiliates. Associates are immediately eligible to participate in Jackson’s matching contribution. To be eligible to participate in Jackson’s profit-sharing contribution, an associate must have attained the age of 21, completed at least 1,000 hours of service in a 12-month period and passed their 12-month employment anniversary. In addition, the associate must be employed on the applicable January 1 or July 1 entry date. Jackson’s annual profit-sharing contributions, as declared by Jackson’s Board of Directors, are based on a percentage of eligible compensation paid to participating associates during the year. In addition, Jackson matches a participant’s elective contributions, up to 6 percent of eligible compensation, to the plan during the year. The expense related to this plan was $ 37 million, $ 34 million, and $ 31 million in 2024, 2023 and 2022, respectively. Jackson maintains non-qualified voluntary deferred compensation plans for certain associates and independent agents. At December 31, 2024 and 2023, the total aggregate liability for such plans was $ 479 million and $ 474 million, respectively, and was reported in other liabilities. The expense (income) related to these plans, including a match of elective deferrals for the agents’ deferred compensation plan and the change in value of participant elective deferrals, was $ 48 million, $ 58 million, and $( 47 ) million in 2024, 2023 and 2022, respectively. 22. Operating Costs and Other Expenses The following table is a summary of the Company’s operating costs and other expenses (in millions): Years Ended December 31, 2024 2023 2022 Asset-based commission expenses $ 1,137 $ 1,022 $ 1,010 Other commission expenses 928 720 846 Sub-advisor expenses 326 311 329 General and administrative expenses 1,120 1,007 875 Deferral of acquisition costs ( 686 ) ( 511 ) ( 628 ) Total operating costs and other expenses $ 2,825 $ 2,549 $ 2,432 188 Part II | Item 8. Notes to Consolidated Financial Statements | 23. Accumulated Other Comprehensive Income (Loss) 23. Accumulated Other Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in shareholders’ equity (except those arising from transactions with owners/shareholders) and includes net income, net unrealized gains or losses on available-for-sale securities, the impact of changes in the non-performance risk used in the remeasurement of market risk benefits, and the impact of changes in the discount rate used in the remeasurement of our reserves for future policy benefits and claims payable. The following table represents changes in the balance of accumulated other comprehensive income ("AOCI"), net of income tax, related to unrealized investment gains (losses) (in millions): Years Ended December 31, 2024 2023 2022 Balance, beginning of period (1) $ ( 2,808 ) $ ( 3,378 ) $ 1,360 Change in unrealized gains (losses) of investments ( 337 ) 1,337 ( 8,296 ) Change in current discount rate - reserve for future policy benefits (2) 90 ( 187 ) 1,664 Change in non-performance risk on market risk benefits ( 664 ) ( 1,220 ) 1,875 Change in unrealized gains (losses) - other 5 ( 21 ) 36 Change in deferred tax asset 135 231 114 Other comprehensive income (loss) before reclassifications ( 771 ) 140 ( 4,607 ) Reclassifications from AOCI, net of tax 57 430 ( 131 ) Other comprehensive income (loss) ( 714 ) 570 ( 4,738 ) Balance, end of period (1) $ ( 3,522 ) $ ( 2,808 ) $ ( 3,378 ) (1) Includes $( 1,597 ) million, $( 1,612 ) million and $( 2,106 ) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of December 31, 2024, 2023 and 2022, respectively. (2) Represents the impact of changes in the discount rate used in the remeasurement of our direct reserves for future policy benefits and claims payable, net of the remeasurement of ceded reserves for future policy benefits and claims payable. The following table represents amounts reclassified out of AOCI (in millions): AOCI Components Amounts Reclassified from AOCI Affected Line Item in the Consolidated Income Statement Years Ended December 31, 2024 2023 2022 Net unrealized investment gain (loss): Net realized gain (loss) on investments $ 69 $ 600 $ ( 167 ) Net gains (losses) on derivatives and investments Other impaired securities ( 10 ) ( 51 ) — Net gains (losses) on derivatives and investments Net unrealized gain (loss) 59 549 ( 167 ) Income tax expense (benefit) 2 119 ( 36 ) Reclassifications, net of income taxes $ 57 $ 430 $ ( 131 ) 189 Part II | Item 8. Notes to Consolidated Financial Statements | 24. Equity 24. Equity Preferred Stock On March 13, 2023, the Company issued and sold 22,000,000 depositary shares (the “Depositary Shares”), each representing a 1/1,000th fractional interest in a share of the Company’s Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A, $ 25,000 liquidation preference per share (equivalent to $ 25 per Depositary Share), with a 5-year dividend rate reset period and noncumulative dividends (the “Series A Preferred Stock”). After underwriting discounts and expenses, we received net proceeds of approximately $ 533 million. The Series A Preferred Stock carries i) an initial dividend rate of 8.000 % per annum to but excluding, March 30, 2028; and ii) from, and including, March 30, 2028, during each reset period, at a rate per annum equal to the Five-year U.S. Treasury Rate as of the applicable reset dividend determination date plus 3.728 %. The dividend is payable quarterly in arrears on March 30, June 30, September 30 and December 30, and commenced on June 30, 2023. Dividends on the Series A Preferred Stock are not cumulative. Under the terms of the Series A Preferred Stock, if the Company has not declared and paid, or declared and set aside a sum sufficient for the payment of, dividends on the Series A Preferred Stock for the immediately preceding dividend period, then the Company’s ability to pay dividends or make distributions with respect to its common stock, or to repurchase or otherwise acquire its common stock, is subject to certain restrictions. Similar restrictions would apply in respect of any preferred stock ranking on parity with, or junior to, the Series A Preferred Stock, if any such preferred stock were to be issued by the Company. We may, at our option, redeem the shares of Series A Preferred Stock (a) in whole but not in part at any time prior to March 30, 2028, (i) within 90 days after the occurrence of a “rating agency event” at a redemption price equal to $ 25,500 per share (equivalent to $ 25.50 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date, or (ii) within 90 days after the occurrence of a “regulatory capital event,” at a redemption price equal to $ 25,000 per share (equivalent to $ 25 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date, or (b) in whole or in part, from time to time, on or after March 30, 2028, at a redemption price equal to $ 25,000 per share (equivalent to $ 25 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date. If we redeem any shares of Series A Preferred Stock, a proportionate number of Depositary Shares will be redeemed. Holders of Depositary Shares have no right to require the redemption or repurchase of the Series A Preferred Stock or the Depositary Shares. The net proceeds from the sale were used for general corporate purposes, including the repayment of senior notes that matured in November 2023. The following table presents the declaration date, record date, payment date and dividends paid per preferred share of, and per depositary share representing the Series A Preferred Stock: Dividends Paid Declaration Date Record Date Payment Date Per Preferred Share Per Depositary Share Quarter Ended 03/31/2024 February 20, 2024 March 12, 2024 April 1, 2024 $ 500 $ 0.50 06/30/2024 May 2, 2024 June 6, 2024 July 1, 2024 $ 500 $ 0.50 09/30/2024 August 1, 2024 September 5, 2024 September 30, 2024 $ 500 $ 0.50 12/31/2024 November 1, 2024 December 5, 2024 December 30, 2024 $ 500 $ 0.50 Quarter Ended 06/30/2023 May 8, 2023 June 1, 2023 June 30, 2023 $ 594.44 $ 0.59444 09/30/2023 August 7, 2023 August 31, 2023 October 2, 2023 $ 500.00 $ 0.50000 12/31/2023 November 6, 2023 November 30, 2023 January 2, 2024 $ 500.00 $ 0.50000 Common Stock At December 31, 2024 and 2023, the Company was authorized to issue up to 1 billion shares of common stock with a par value of $ 0.01 per share. 190 Part II | Item 8. Notes to Consolidated Financial Statements | 24. Equity Share Repurchase Program On February 27, 2023 and August 1, 2024, our Board of Directors authorized increases of $ 450 million and $ 750 million, respectively, in our existing authorization to repurchase shares of our outstanding common stock as part of the Company's share repurchase program. As of February 18, 2025, the Company had remaining authorization to purchase $ 568 million of its common shares. The Company expects to repurchase common shares from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the Company, other potential uses for such funds, market conditions, the Company's capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any time. It does not have an expiration date. There can be no assurance that we will continue share repurchases or approve any further increase to our current, or approve any new, stock repurchase program, or any assurance to the amount of any repurchases that may be made pursuant to such programs. Through December 31, 2024, we have incurred $ 4 million of excise tax in connection with share repurchases that exceeded stock issuances. The excise tax incurred was recognized as part of the cost basis of the treasury stock acquired and not reported as income tax expense. The following table represents share repurchase activities as part of our share repurchase program: Period Number of Shares Repurchased Total Payments (in millions) Average Price Paid Per Share 2023 (January 1- March 31) 1,721,737 $ 70 $ 40.42 2023 (April 1- June 30) 1,394,797 47 33.87 2023 (July 1- September 30) 1,873,727 71 38.13 2023 (October 1- December 31) 1,512,263 67 44.37 Total 2023 6,502,524 $ 255 $ 39.27 2024 (January 1- March 31) 2,157,372 116 53.76 2024 (April 1- June 30) 1,294,473 90 69.16 2024 (July 1- September 30) 1,352,821 113 83.39 2024 (October 1- December 31) 974,324 96 98.31 Total 2024 5,778,990 $ 415 $ 71.65 2025 (January 1 - February 18) 740,388 $ 68 $ 92.13 The following table presents changes in the number of shares of common stock outstanding: Common Stock Treasury Stock Total Common Stock Outstanding Shares at December 31, 2022 94,474,911 ( 11,784,813 ) 82,690,098 Share-based compensation programs 6,095 2,466,552 (1) 2,472,647 Shares repurchased under repurchase program — ( 6,502,524 ) ( 6,502,524 ) Shares at December 31, 2023 94,481,006 ( 15,820,785 ) 78,660,221 Share-based compensation programs 7,309 492,103 (1) 499,412 Shares repurchased under repurchase program — ( 5,778,990 ) ( 5,778,990 ) Shares at December 31, 2024 94,488,315 ( 21,107,672 ) 73,380,643 (1) Represents net shares issued from treasury stock pursuant to the Company’s share-based compensation programs. 191 Part II | Item 8. Notes to Consolidated Financial Statements | 24. Equity Dividends to Shareholders Any declaration of cash dividends on common stock will be at the discretion of JFI’s Board of Directors and will depend on our financial condition, earnings, liquidity and capital requirements, regulatory constraints, level of indebtedness, preferred stock, contractual restrictions with respect to paying cash dividends, restrictions imposed by Delaware law, general business conditions and any other factors that JFI’s Board of Directors deems relevant in making any such determination. Therefore, there can be no assurance that we will pay any cash dividends to holders of our stock or as to the amount of any such cash dividend. The following table presents declaration date, record date, payment date and dividends paid per share of JFI’s common stock: Declaration Date Record Date Payment Date Dividends Paid Per Share Quarter Ended 03/31/2024 February 20, 2024 March 12, 2024 March 21, 2024 $ 0.70 06/30/2024 May 2, 2024 June 6, 2024 June 20, 2024 $ 0.70 09/30/2024 August 1, 2024 September 5, 2024 September 19, 2024 $ 0.70 12/31/2024 November 1, 2024 December 5, 2024 December 19, 2024 $ 0.70 Quarter Ended 03/31/2023 February 27, 2023 March 14, 2023 March 23, 2023 $ 0.62 06/30/2023 May 8, 2023 June 1, 2023 June 15, 2023 $ 0.62 09/30/2023 August 7, 2023 August 31, 2023 September 14, 2023 $ 0.62 12/31/2023 November 6, 2023 November 30, 2023 December 14, 2023 $ 0.62 Quarter Ended 03/31/2022 February 28, 2022 March 14, 2022 March 23, 2022 $ 0.55 06/30/2022 May 9, 2022 June 2, 2022 June 16, 2022 $ 0.55 09/30/2022 August 8, 2022 September 1, 2022 September 15, 2022 $ 0.55 12/31/2022 November 7, 2022 December 1, 2022 December 15, 2022 $ 0.55 Dividend equivalents are generally accrued on restricted share units and performance share units outstanding as of the record date. Dividend equivalents on restricted share units and performance share units that are ultimately payable in cash are recognized as compensation expense while those that are ultimately payable in shares are recognized as dividends. 25. Earnings Per Share Basic earnings per share is calculated by dividing net income (loss) attributable to Jackson Financial common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the net income (loss) attributable to Jackson Financial common shareholders, by the weighted-average number of shares of common stock outstanding for the period, plus shares representing the dilutive effect of share-based awards. The Company grants share-based awards subject to vesting provisions of the 2021 Omnibus Incentive Plan, which can have a dilutive effect. See Note 18 - Share-Based Compensation of the Notes to Consolidated Financial Statements for further description of our share-based awards. 192 Part II | Item 8. Notes to Consolidated Financial Statements | 23. Earnings Per Share The following table sets forth the calculation of earnings per common share: Years Ended December 31, 2024 2023 2022 (in millions, except share and per share data) Net income (loss) attributable to Jackson Financial Inc. $ 946 $ 934 $ 6,186 Less: Preferred stock dividends 44 35 — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 902 $ 899 $ 6,186 Weighted average shares of common stock outstanding - basic 76,049,665 81,799,820 85,513,787 Dilutive common shares 759,722 1,777,406 3,176,913 Weighted average shares of common stock outstanding - diluted 76,809,387 83,577,226 88,690,700 Earnings per share—common stock Basic $ 11.86 $ 10.99 $ 72.34 Diluted $ 11.74 $ 10.76 $ 69.75 26. Subsequent Events The Company has evaluated subsequent events through February 26, 2025, the date of the filing of the Form 10-K for the year ended December 31, 2024. Dividends Declared to Shareholders On February 17, 2025, our Board of Directors approved a first quarter cash dividend on JFI's common stock, $ 0.80 per common share, payable on March 20, 2025, to shareholders of record on March 11, 2025. The Company also declared a cash dividend of $ 0.50 per depositary share (the "Depositary Shares"), each representing a 1/1,000th interest in a share of Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A. The dividend will be payable on March 31, 2025, to depositary shares shareholders of record at the close of business on March 11, 2025. 193 Schedule I Jackson Financial Inc. Summary of Investments—Other Than Investments in Related Parties (In millions) As of December 31, 2024 Amount at Which Shown Cost or on Balance Type of Investment Amortized Cost Fair Value Sheet Debt securities: Bonds: U.S. government securities $ 4,120 $ 3,159 $ 3,159 Other government securities 1,345 1,094 1,094 Public utilities 5,716 5,156 5,156 Corporate securities 30,581 27,978 27,978 Residential mortgage-backed 374 338 338 Commercial mortgage-backed 1,674 1,577 1,577 Other asset-backed securities 4,243 4,033 4,033 Total debt securities 48,053 43,335 43,335 Equity securities 197 197 197 Mortgage loans 9,911 N/A 9,911 Policy loans 4,403 N/A 4,403 Derivative instruments 297 N/A 297 Other invested assets 2,461 N/A 2,864 Total investments $ 65,322 $ 61,007 See the accompanying Report of Independent Registered Public Accounting Firm 194 Schedule II Jackson Financial Inc. (Parent Company Only) Balance Sheets (In millions, except share data) December 31, 2024 2023 Assets Investment in subsidiaries $ 8,756 $ 9,277 Cash and cash equivalents 712 599 Accrued investment income 3 5 Intercompany receivables 2,027 2,026 Deferred income taxes, net 5 79 Other assets 4 2 Total assets $ 11,507 $ 11,988 Liabilities and Equity Liabilities Senior Notes due 2027 - unaffiliated (1) (2) $ 398 $ 398 Senior Notes due 2031 - unaffiliated (1) (2) 497 495 Senior Notes due 2032 - unaffiliated (1) (2) 347 347 Senior Notes due 2051 - unaffiliated (1) (2) 490 490 Other liabilities 11 88 Total liabilities 1,743 1,818 Equity Series A non-cumulative preferred stock and additional paid in capital, $ 1.00 par value per share: 24,000 shares authorized; 22,000 shares issued and outstanding at December 31, 2024 and December 31, 2023; liquidation preference $ 25,000 per share (See Note 24 to Consolidated Financial Statements) 533 533 Common stock; 1,000,000,000 shares authorized, $ 0.01 par value per share and 73,380,643 and 78,660,221 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively (See Note 24 to Consolidated Financial Statements) 1 1 Additional paid-in capital 6,046 6,005 Treasury stock, at cost; 21,107,672 and 15,820,785 shares at December 31, 2024 and 2023, respectively ( 1,007 ) ( 599 ) Accumulated other comprehensive income (loss) ( 3,522 ) ( 2,808 ) Retained earnings (deficit) 7,713 7,038 Total equity 9,764 10,170 Total liabilities and equity $ 11,507 $ 11,988 (1) See Note 13 - Long-Term Debt to our Consolidated Financial Statements for additional information regarding these borrowings. (2) Includes unamortized debt issuance costs totaling $ 14 million and $ 15 million for the senior notes on a combined basis at December 31, 2024 and 2023, respectively. (continued) 195 Schedule II Jackson Financial Inc. (Parent Company Only) Statements of Income (In millions) For the Years Ended December 31, 2024 2023 2022 Revenues Net investment income $ 25 $ 29 $ 10 Dividends from subsidiaries — 360 510 Interest income from subsidiaries 90 91 90 Other income ( 1 ) ( 2 ) — Total revenues 114 478 610 Benefits and Expenses Interest expense 78 84 76 Operating costs and other expenses 46 34 29 Total benefits and expenses 124 118 105 Pretax income ( 10 ) 360 505 Income tax expense (benefit) ( 3 ) 1 ( 1 ) Subsidiary equity earnings (loss) 953 575 5,680 Net income (loss) 946 934 6,186 Less: Dividends on preferred stock 44 35 — Net income (loss) attributable to common shareholders $ 902 $ 899 $ 6,186 (continued) 196 Schedule II Jackson Financial Inc. (Parent Company Only) Statements of Cash Flows (In millions) For the Years Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 946 $ 934 $ 6,186 Adjustments to reconcile net income to net cash provided by operating activities: Subsidiary equity earnings ( 953 ) ( 575 ) ( 5,680 ) Amortization of discount and premium on investments — ( 23 ) ( 5 ) Change in other assets and liabilities, net 58 62 80 Net cash provided by (used in) operating activities 51 398 581 Cash flows from investing activities: Sales, maturities and repayments of: Debt securities — 1,373 — Purchases of: Debt securities — ( 900 ) ( 445 ) Other investing activities ( 1 ) ( 26 ) — Net cash provided by (used in) investing activities ( 1 ) 447 ( 445 ) Cash flows from financing activities: Proceeds from debt — — 750 Payments on debt — ( 598 ) ( 750 ) Debt issuance costs — — ( 7 ) Capital distribution from subsidiary 785 150 — Capital contribution to subsidiary ( 25 ) ( 15 ) — Dividends on common stock ( 211 ) ( 201 ) ( 186 ) Dividends on preferred stock ( 44 ) ( 35 ) — Purchase of treasury stock ( 442 ) ( 306 ) ( 321 ) Issuance of preferred stock — 533 — Net cash provided by (used in) financing activities 63 ( 472 ) ( 514 ) Net increase (decrease) in cash and cash equivalents 113 373 ( 378 ) Cash and cash equivalents, beginning of year 599 226 604 Total cash and cash equivalents, end of year $ 712 $ 599 $ 226 Non-cash financing transactions Non-cash dividend equivalents on stock based awards $ ( 5 ) $ ( 8 ) $ ( 13 ) See the accompanying Report of Independent Registered Public Accounting Firm 197 Schedule III Jackson Financial Inc. Supplemental Insurance Information (In millions) Reserves for Deferred Future Policy Acquisition Benefits and Other Contract Costs Claims Payable Holder Funds December 31, 2024 Retail Annuities $ 11,786 $ 1,408 $ 37,865 Institutional Products — — 8,384 Closed Life and Annuity Blocks 101 9,664 12,063 Corporate and Other — — — Total $ 11,887 $ 11,072 $ 58,312 December 31, 2023 Retail Annuities $ 12,192 $ 1,426 $ 34,454 Institutional Products — — 8,406 Closed Life and Annuity Blocks 110 10,472 12,459 Corporate and Other — — — Total $ 12,302 $ 11,898 $ 55,319 December 31, 2022 Retail Annuities $ 12,740 $ 1,412 $ 36,454 Institutional Products — — 9,019 Closed Life and Annuity Blocks 119 10,906 12,717 Corporate and Other 64 — — Total $ 12,923 $ 12,318 $ 58,190 (continued) 198 Schedule III Jackson Financial Inc. Supplemental Insurance Information (In millions) Interest Credited Deferred on Other Acquisition and Operating Net Investment Contract Holder Sales Inducements Costs and Premium Income Funds Amortization Other Expenses December 31, 2024 Retail Annuities $ 52 $ 725 $ 362 $ 559 $ 2,457 Institutional Products — 438 338 — 4 Closed Life and Annuity Blocks 103 659 410 8 150 Corporate and Other — ( 2 ) — — 214 Segment subtotal 155 1,820 1,110 567 2,825 Non-operating items (1) ( 9 ) 1,042 — 541 — Total $ 146 $ 2,862 $ 1,110 $ 1,108 $ 2,825 December 31, 2023 Retail Annuities $ 21 $ 436 $ 374 $ 551 $ 2,178 Institutional Products — 408 334 — 5 Closed Life and Annuity Blocks 136 644 437 10 163 Corporate and Other — 58 — — 203 Segment subtotal 157 1,546 1,145 561 2,549 Non-operating items (1) ( 10 ) 1,308 — 591 — Total $ 147 $ 2,854 $ 1,145 $ 1,152 $ 2,549 December 31, 2022 Retail Annuities $ 10 $ 410 $ 253 $ 557 $ 2,174 Institutional Products — 285 201 — 5 Closed Life and Annuity Blocks 134 737 412 11 130 Corporate and Other — 79 — — 123 Segment subtotal 144 1,511 866 568 2,432 Non-operating items (1) ( 12 ) 1,235 — 658 — Total $ 132 $ 2,746 $ 866 $ 1,226 $ 2,432 (1) See Note 3- Segment Information for further details on the non-operating items. See the accompanying Report of Independent Registered Public Accounting Firm 199 Schedule IV Jackson Financial Inc. Reinsurance For the Years Ended December 31, 2024, 2023, and 2022 (In millions) % Amount Assumed to Gross Amount Ceded Assumed Net Amount Net December 31, 2024 Life insurance in-force $ 69,428 $ 37,458 $ 14,238 $ 46,208 30.8 % Insurance premium Life insurance $ 264 $ 187 $ 26 $ 103 25.2 % Accident and health 22 24 2 — Payout annuity 53 — — 53 Annuity guaranteed benefits — 10 — ( 10 ) Total insurance premium $ 339 $ 221 $ 28 $ 146 19.2 % December 31, 2023 Life insurance in-force $ 75,239 $ 40,972 $ 15,545 $ 49,812 31.2 % Insurance premium Life insurance $ 280 $ 176 $ 32 $ 136 23.5 % Accident and health 26 29 3 — Payout annuity 22 — — 22 Annuity guaranteed benefits — 11 — ( 11 ) Total insurance premium $ 328 $ 216 $ 35 $ 147 23.8 % December 31, 2022 Life insurance in-force $ 86,792 $ 49,007 $ 15,976 $ 53,761 29.7 % Insurance premium Life insurance $ 325 $ 228 $ 37 $ 134 26.2 % Accident and health 25 28 3 — Payout annuity 10 — — 10 Annuity guaranteed benefits — 12 — ( 12 ) Total insurance premium $ 360 $ 268 $ 40 $ 132 30.3 % See the accompanying Report of Independent Registered Public Accounting Firm 200 Schedule V Jackson Financial Inc. Valuation and Qualifying Accounts For the Years Ended December 31, 2024 and 2023 (In millions) Balance at Charged to Beginning Costs and Balance at of Period Expenses Deductions End of Period December 31, 2024 Allowance for credit losses on debt securities $ 21 $ 62 $ ( 44 ) (1) $ 39 Allowances for credit losses on mortgage and other loans 165 ( 3 ) ( 41 ) (2) 121 Allowance for credit losses on reinsurance recoverable 29 — ( 2 ) 27 Valuation allowance on deferred tax asset 689 45 (3) — 734 $ 904 $ 104 $ ( 87 ) $ 921 December 31, 2023 Allowance for credit losses on debt securities $ 23 $ 64 $ ( 66 ) (1) $ 21 Allowances for credit losses on mortgage and other loans 95 ( 66 ) 136 (2) 165 Allowance for credit losses on reinsurance recoverable 15 14 — 29 Valuation allowance on deferred tax asset 910 — ( 221 ) (3) 689 $ 1,043 $ 12 $ ( 151 ) $ 904 (1) Represents reductions for securities disposed. (2) Represents provision (release) of allowance for write-offs. (3) Includes increase (decrease) of $ 46 million and $( 218 ) million valuation allowance during the years ended December 31, 2024 and 2023, respectively, associated with the unrealized tax losses in the companies' available for sale securities portfolio, see Note 15. Income Taxes for further information. See the accompanying Report of Independent Registered Public Accounting Firm 201 Part II Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.