What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 293 added, 321 removed, 901 unchanged (41% of the section changed)

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Generally speaking, any statement in this report not based upon historical fact is a forward-looking statement.

Forward-looking statements can also be identified by the use of forward-looking or conditional words, such as “could,” “should,” “can,” “continue,” “estimate,” “forecast,” “intend,” “look,” “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “remain,” “confident” and “commit” or similar expressions.

Forward-looking statements can also be identified by the use of forward-looking or conditional words, such as “could,” “should,” “can,” “continue,” “estimate,” “forecast,” “intend,” “look,” “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “predict,” “remain,” “future,” “confident,” and “commit” or similar expressions.

In particular, statements regarding plans, strategies, prospects, targets and expectations regarding the business and industry are forward-looking statements.

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Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the U.S.

Securities and Exchange Commission (the "SEC") on February 28, 2024, (the "2023 Annual Report"), and elsewhere in Jackson Financial Inc.’s filings with the SEC.

Securities and Exchange Commission (the "SEC") on February 26, 2025, (the "2024 Annual Report"), and elsewhere in Jackson Financial Inc.’s reports filed with the SEC.

Except as required by law, Jackson Financial Inc.

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You should not rely unduly on forward-looking statements.

We routinely use our investor relations website, at investors.jackson.com, as a primary channel for disclosing key information to our investors, some of which may contain material and previously non-public information.

Certain financial data included in this release consists of non-GAAP (Generally Accepted Accounting Principles) financial measures.

These non-GAAP financial measures may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with U.S.

Although the Company believes these non-GAAP financial measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-GAAP financial measures and ratios included in this release.

A reconciliation of the non-GAAP financial measures to the most directly comparable U.S.

GAAP financial measure can be found in the “Non-GAAP Financial Measures” in this report.

Certain financial data included in this release consists of statutory accounting principles (“statutory”) financial measures.

These statutory financial measures are included in or derived from the Jackson National Life Insurance Company annual and/or quarterly statements filed with the Michigan Department of Insurance and Financial Services and available in the investor relations section of the Company’s website at investors.jackson.com/financials/statutory-filings.

We routinely use our investor relations website, at investors.jackson.com, as a primary channel for disclosing key information to our investors.

We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations.

Accordingly, investors should monitor our investor relations website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts.

We and certain of our senior executives may also use social media channels to communicate with our investors and the public about our Company and other matters, and those communications could be deemed to be material information.

The information contained on, or that may be accessed through, our website, or our or our executives' social media channels, is not incorporated by reference into and is not part of this report.

The information contained on, or that may be accessed through, our website, our social media channels, or our executives' social media channels, is not incorporated by reference into and is not part of this report.

Item 2 | Management’s Discussion and Analysis | Available Information & Principal Definitions

Available Information

We make available free of charge, through our investor relations page of our website, investors.jackson.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and any amendments to those reports or statements as soon as reasonably practicable after these materials are electronically filed with, or furnished to, the SEC.

We use our investor relations page of our website as a routine channel for distribution of important information, including news releases, analyst presentations, financial information, and corporate governance information.

The content of Jackson’s website is not incorporated by reference into this report or in any other report or document filed with the SEC, and any references to Jackson’s website are intended to be inactive textual references only.

The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

We make available free of charge, through our website, investors.jackson.com , our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our proxy and information statements, and any amendments to those reports or statements as soon as reasonably practicable after these materials are electronically filed with, or furnished to, the SEC.

The SEC’s website, www.sec.gov, contains financial reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

We use the investor relations page of our website, investors.jackson.com, as a primary channel for dissemination of important information, including news releases, analyst presentations, financial information, insider beneficial owner reports, and corporate governance information.

We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations.

Accordingly, investors should monitor our investor relations website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts.

None of the content of Jackson’s website, jackson.com, the content of our social media channels or the content of our executives’ social media channels is incorporated by reference into this report or in any other report or document filed with the SEC, and any references to Jackson’s website are intended to be inactive textual references only.

Principal Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report

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Jackson Jackson National Life Insurance Company, our primary operating subsidiary

Brooke Life Brooke Life Insurance Company, our subsidiary and the direct parent company of Jackson National Life Insurance Company and Brooke Re

Brooke Life Brooke Life Insurance Company, our subsidiary and the direct parent company of Jackson and Brooke Re

Brooke Re Brooke Life Reinsurance Company, a direct subsidiary of Brooke Life, and a Michigan-based captive reinsurer

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Athene Athene Life Re Ltd.

and its affiliates and permitted transferees, including Athene Co-Invest Reinsurance Affiliate 1A Ltd.

and its affiliates, including Athene Co-Invest Reinsurance Affiliate 1A Ltd.

Athene Reinsurance Transaction The funds withheld coinsurance agreement with Athene, entered on June 18, 2020, and effective June 1, 2020, to reinsure a 100% quota share of a block of our in-force fixed and fixed index annuity liabilities in exchange for approximately $1.2 billion in ceding commissions

AUM ("Assets under management") Investment assets that are managed by one of our subsidiaries and includes:

(i) assets managed by PPM, including our investment portfolio (but excluding assets held in funds withheld accounts for reinsurance transactions), (ii) third-party assets (including our former parent and its affiliates), and (iii) the separate account assets of our retail annuities managed and administered by JNAM.

AUM ("Assets under management") Investment assets that are managed by our subsidiaries and includes:

(i) assets managed by PPM, including our investment portfolio (but excluding assets held in funds withheld accounts for reinsurance transactions), (ii) third-party assets (including those owned by our former parent and its affiliates), and (iii) the separate account assets of our retail annuities managed and administered by JNAM

Benefit base A notional amount (not actual cash value) used to calculate guaranteed benefits within an owner's annuity contract and fees due in respect of those guaranteed benefits.

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CMBS Commercial mortgage-backed securities

DAC ("Deferred acquisition costs") Represent the incremental costs related directly to the successful acquisition of new, and certain renewal, insurance policies and annuity contracts.

The recognition of these costs has been deferred, and the deferred amounts are shown on the balance sheet as an asset, which is subject to amortization over the estimated lives of those policies and contracts.

Deferred tax asset or Deferred tax liability Assets or liabilities that are recorded for the difference between financial reporting, or book basis, and tax basis of an asset or a liability.

Item 2 | Management’s Discussion and Analysis | Available Information & Principal Definitions

DAC ("Deferred acquisition costs") Represent the incremental costs related directly to the successful acquisition of new, and certain renewal, insurance policies and annuity contracts.

The recognition of these costs has been deferred, and the deferred amounts are shown on the balance sheet as an asset, which is amortized over the estimated lives of those policies and contracts.

Deferred tax asset or Deferred tax liability Asset or liability that is recorded for the difference between financial reporting, or book basis, and tax basis of an asset or a liability

Fixed Annuity An annuity that guarantees a set annual rate of return with interest at rates we determine, subject to specified minimums.

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Guarantee Fees Fees charged on our annuity contracts for optional benefit guarantees

GMAB ("Guaranteed minimum accumulation benefit") An add-on benefit (enhanced benefits available for an additional cost) that entitles an owner to a minimum payment, typically in lump-sum, after a set period of time, referred to as the accumulation period.

GMAB ("Guaranteed minimum accumulation benefit") An add-on benefit (enhanced benefits available for an additional cost) that entitles an owner to a minimum payment, typically in a lump-sum, after a set period of time, referred to as the accumulation period.

The minimum payment is based on the benefit base, which could be greater than the underlying account value.

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RBC ratio The ratio of statutory total adjusted capital to company action level required capital.

A formal calculation is made annually during the fourth quarter.

A formal calculation is made annually during the fourth quarter of each year.

In other periods, the ratio is estimated.

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Overview of Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I, Item 1 of this report, as well as the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our 2023 Annual Report.

Jackson Financial Inc.

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

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

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

Jackson Financial, domiciled in the state of Delaware, United States (“U.S.”).

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

Executive Summary

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

You should read this report, together with our 2023 Annual Report, in their entirety for a more detailed description of events, trends, uncertainties, risks and critical accounting estimates affecting us.

We help Americans grow and protect their retirement savings and income to enable them to pursue financial freedom for life.

We help Americans secure their financial futures.

We believe that we are uniquely positioned in our markets because of our differentiated products, well-known brand and disciplined risk management.

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population transitions into retirement.

Executive Summary

You should read this report, including the Condensed Consolidated Financial Statements and related notes contained in Part I, Item 1 of this report, and our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 26, 2025, (the "2024 Annual Report"), in their entirety for a more detailed description of events, trends, uncertainties, risks and critical accounting estimates affecting us.

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

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

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

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

generally accepted accounting principles ("U.S.

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

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

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

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

Accordingly, we evaluate and manage the performance of our business using Adjusted Operating Earnings, a non-GAAP financial measure that reduces the impact of market volatility by excluding changes in fair value of freestanding and embedded derivative instruments, market risk benefits and other items.

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

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

GAAP measures.

We manage our business through three segments:

We manage our business through three reportable segments:

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

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

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

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

See Note 3 - Segment Information of the Notes to Condensed Consolidated Financial Statements for further information on our segments.

Item 2 | Management’s Discussion and Analysis | Executive Summary

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

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Finally, we are affected by various economic, industry and regulatory trends , which are described below under “Macroeconomic, Industry and Regulatory Trends.”

Item 2 | Management’s Discussion and Analysis | Executive Summary

The table below presents selected financial and operating measures:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(in millions) (in millions)

Three Months Ended March 31,

(in millions)

Net income (loss) attributable to Jackson Financial Inc.

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Adjusted Operating Earnings (1)

350 315 1,094 869

Amount of shares repurchased under share repurchase program 172 116

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• Capital Returned to Common Shareholders:

Since January 1, 2024 through September 30, 2024, we have returned $483 million to our common shareholders consisting of $164 million in dividends and $319 million in common share repurchases.

Since January 1, 2025 through March 31, 2025, we have returned $231 million to our common shareholders consisting of $59 million in dividends and $172 million in common share repurchases.

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

Share repurchases, net of issuances for our share-based compensation, have reduced our outstanding shares of common stock from 78,660,221 at December 31, 2023 to 74,351,061 at September 30, 2024.

Share repurchases, net of issuances for our share-based compensation, have reduced our outstanding shares of common stock from 73,380,643 at December 31, 2024 to 71,878,542 at March 31, 2025.

See Note 19 of the Notes to Condensed Consolidated Financial Statements for further information on our share repurchases.

• Free Capital Generation and Free Cash Flow:

◦ Our free capital generation during the three months ended March 31, 2025 exceeded $400 million.

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

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

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

◦ The free cash flow at Jackson Financial (parent company only) during the three months ended March 31, 2025 was $213 million compared to $20 million during the three months ended March 31, 2024.

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

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

GAAP measure.

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

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

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

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

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

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

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

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

The reinsurance transaction eliminates upon consolidation at JFI.

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

Item 2 | Management’s Discussion and Analysis | Executive Summary

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

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Brooke Re utilizes a modified 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.

Item 2 | Management’s Discussion and Analysis | Executive Summary

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

GAAP approach for regulatory reporting purposes primarily related to market risk benefits, with the intent to increase alignment between assets and liabilities in response to changes in economic factors.

The modifications include a fixed long-term volatility assumption and adjustments to discount rates, guarantee fees and administrative expenses.

The transaction and related modified U.S.

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

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

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We believe sales statistics are useful to gaining an understanding of, among other things, the attractiveness of our products, how we can best meet our customers’ needs, evolving industry product trends and the performance of our business from period to period.

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

Variable annuities (1)

$ 2,662 $ 2,436

RILA 1,195 1,155

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Fixed Annuities (2)

984 35 1,090 146

Total Retail Annuity Sales 4,031 3,691

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Total Sales $ 5,630 $ 3,791

(1) Excludes certain internal exchanges.

(2) Includes payout annuities.

Higher retail sales for the three and nine months ended September 30, 2024 were primarily due to increased RILA and fixed annuity sales.

This was a strong quarter in the fixed annuity market, both for the Company and the industry, as consumers looked to lock in crediting rates during a quarter with declining interest rates.

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

In addition, sales of our institutional products were higher for the three and nine months ended September 30, 2024, reflecting our opportunistic approach to this business, which depends on both the risk-adjusted return on investment opportunities available and the prevailing cost of funding required by purchasers.

Higher retail annuity sales for the three months ended March 31, 2025 were primarily due to increased variable annuity sales.

In addition, sales of our institutional products were higher for the three months ended March 31, 2025, reflecting our opportunistic approach to this business, which depends on both the risk-adjusted return on investment opportunities available and the prevailing cost of funding required by purchasers.

Item 2 | Management’s Discussion and Analysis | Key Operating Measures

Account Value

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

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

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

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in millions)

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We believe net flows is a useful metric in providing an understanding of, among other things, sales, ongoing premiums and deposits, the changes in account value from period to period, sources of potential fee and spread income and policyholder behavior.

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Fixed Index Annuity (1)

44 36 103 171

Fixed Annuity (1)

953 10 968 (11)

Payout Annuity (1)

(8) (18) (36) (55)

Total Retail Annuities Net Flows (1)

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(1) Net of reinsurance.

Net flows, net of reinsurance, decreased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, driven by increased variable annuity surrenders and withdrawals, partially offset by increased RILA and fixed annuity sales.

Net flows, net of reinsurance, improved for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, driven by increased institutional and variable annuity sales, partially offset by increased variable annuity surrenders and withdrawals.

Increased variable annuity surrenders and withdrawals were driven by some mature policies from higher sales years coming out of their surrender charge period, along with higher surrenders as guaranteed benefits are less in the money during times of strong equity market performance.

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

Item 2 | Management’s Discussion and Analysis | Key Operating Measures

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We believe benefit base is a useful metric for our variable annuity policies in providing an understanding of, among other things, fee income generation, potential optional guarantee benefit obligations and risk management priorities.

The following table shows variable annuity account value and benefit base as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

The following table shows variable annuity account value and benefit base as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

Account Value Benefit Base Account Value Benefit Base

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1,141 1,520 1,218 1,561

GMAB 113 118 35 35

Total $ 224,309 $ 186,704 $ 236,057 $ 188,051

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We believe AUM is a useful metric for understanding, among other things, the sources of our earnings, net investment income and performance of our invested assets, customer directed investments and risk management priorities.

September 30, December 31,

March 31, December 31,

(in millions)

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Macroeconomic, Industry and Regulatory Trends

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

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

Macroeconomic and Financial Market Conditions

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

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

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

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

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

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

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

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

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

Equity Market Environment

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

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

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

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

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

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

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

GAAP results.

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

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

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

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

Item 2 | Management’s Discussion and Analysis | Macroeconomic, Industry and Regulatory Trends

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

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

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

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

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

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

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

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

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

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

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

• Additionally, rising interest rates decrease the value of bond funds held by variable annuity clients.

This in turn decreases the volume of fees we collect based on the account value and increases the value of any guaranteed benefits.

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

In the past, our statutory TAC may have been negatively impacted by rising interest rates due to minimum required reserving levels ( i.e.

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

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

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

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When policies have comparatively high GMICRs, in a subsequent low interest rate environment more customers are expected to hold on to their policies, which may result in lower lapses than previously expected.

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

Item 2 | Management’s Discussion and Analysis | Macroeconomic, Industry and Regulatory Trends

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

The revaluation will impact net income for realized gains or losses from the sale of securities, the change in fair value of trading securities or securities carried at fair value under the fair value election, or potential changes in the allowance for credit loss ("ACL").

The revaluation will impact net income in the case of realized gains or losses from the sale of securities, changes in fair value of trading securities or securities carried at fair value under the fair value election, or potential changes in the allowance for credit loss ("ACL").

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

OTTI in our underlying investments would result in a reduction in our insurance company subsidiaries' regulatory capital.

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

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

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

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

Pandemics and Other Public Health Crises

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

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

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

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

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

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

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

Additionally, widening credit spreads decrease the value of bond funds held by variable annuity clients.

This in turn decreases the volume of fees we collect based on the account value and increases the value of any guaranteed benefits.

Consumer Behavior

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

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

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

T he following regulations could materially impact our business:

Department of Labor Fiduciary Advice Rule

Effective February 16, 2021, the Department of Labor (the “DOL”) issued a regulatory action that defined what constitutes fiduciary “investment advice” to Employee Retirement Income Security Act ("ERISA") plans and individual retirement accounts ("IRAs"), essentially broadening the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries under ERISA or the Internal Revenue Code of 1986 (the “Federal tax code”).

On April 23, 2024, the DOL adopted a final rule that revised the 2021 definition of fiduciary and related Prohibited Transaction Exemptions (PTE) (combined, the “Fiduciary Advice Rule” or “final rule”), redefining what constitutes fiduciary “investment advice” to ERISA plans and IRAs.

The final rule extends fiduciary status to one-time rollover recommendations and broadens the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries under ERISA or the Federal tax code.

The final rule also includes revisions to two PTEs (2020-02 and 84-24) that govern the sale of annuities.

PTE 2020-02 governs the sale of annuity products by financial institutions, including broker-dealers, and any recommendations to purchase securities in qualified plans or from rollover funds.

PTE 84-24 was narrowed to only apply to independent insurance agents recommending non-securities products.

PTE 84-24 also imposes certain supervisory obligations on insurance carriers that are similar to obligations already covered under the National Association of Insurance Commissioner’s (the "NAIC") Suitability in Annuity Transactions Model Regulation, as well as new compliance policies and procedures.

The final rule was to take effect on September 23, 2024, with a one-year phase-in period for a majority of the provisions, based on certain conditions.

However, the final rule is facing significant litigation challenges;

and, on July 25, 2024, a federal district court in Texas issued an order that the effective date of the final rule is stayed until further order of the Court.

On September 20, 2024, the DOL timely filed an appeal related to the ruling on the stay.

Unless the DOL moves to expedite the appeal, it is expected that the Court will issue a decision in six to eight months.

We continue to analyze the impact of the adopted Fiduciary Advice Rule and, while we cannot predict the final rule’s impact, it could have an adverse effect on sales of annuities through our distribution partners and result in increased compliance costs to Jackson.

We may need to take additional actions to comply with, or assist our distributors in their compliance with, the Fiduciary Advice Rule.

In April 2024, the Department of Labor ( the "DOL") revised the definition of “fiduciary” and related Prohibited Transaction Exemptions ("PTE") (the “2024 Fiduciary Advice Rule”), redefining what constitutes fiduciary “investment advice” to Employee Retirement Income Security Act ("ERISA") plans and individual retirement accounts ("IRAs").

See Part I, Business – Regulation – “Federal Initiatives Impacting Insurance Companies – Department of Labor’s Fiduciary Advice Rule” in our 2024 Annual Report for more information regarding the 2024 Fiduciary Advice Rule.” The 2024 Fiduciary Advice Rule is currently being challenged in two separate litigation matters and the DOL has been stayed from enforcing the rule.

Depending on the outcome of the litigation, we may need to take certain additional actions to comply with, or assist our distributors in their compliance with, the 2024 Fiduciary Advice Rule.

The 2024 Fiduciary Advice Rule may also lead to changes to our compensation practices and product offerings and increase litigation risk, which could adversely affect our results of operations and financial condition.

Nonetheless, because the distribution of annuities is primarily through intermediaries, most of which have implemented systems and processes to align to existing state and federal fiduciary and/or best interest standards, we believe that we have limited exposure to the Fiduciary Advice Rule.

While the final rule may not have a material impact on our business, it may impede certain investors’ access to financial advice or annuities that provide guaranteed income streams.

Item 2 | Management’s Discussion and Analysis | Macroeconomic, Industry and Regulatory Trends

Nonetheless, because the distribution of annuities is primarily through intermediaries, most of which have implemented systems and processes to align to existing state and federal fiduciary and/or best interest standards, we believe that we will have more limited exposure to the 2024 Fiduciary Advice Rule.

While the rule may not have a material impact on our business, it may impede certain investors’ access to financial advice or annuities that provide guaranteed income streams.

Legislative Reforms

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

Item 2 | Management’s Discussion and Analysis | Non-GAAP Financial Measures

Non-GAAP Financial Measures

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However, we believe the adjustments to net income are useful for gaining an understanding of our overall results of operations.

Item 2 | Management’s Discussion and Analysis | Non-GAAP Financial Measures

Adjusted Operating Earnings equals our Net income (loss) attributable to Jackson Financial Inc.'s common shareholders (which excludes income attributable to non-controlling interest and dividends on preferred stock) adjusted to eliminate the impact of the items described in the following numbered paragraphs.

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We believe these exclusions provide investors a better picture of the drivers of our underlying performance.

Item 2 | Management’s Discussion and Analysis | Non-GAAP Financial Measures

Net Hedging Results :

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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;

(iii) the movements in reserves, market risk benefits, guaranteed benefit features accounted for as embedded derivative instruments, and related claims and benefit payments;

(iv) amortization of the balance of unamortized deferred acquisition costs, at January 1, 2021, the date of transition to current accounting guidance (LDTI), associated with items excluded from adjusted operating earnings prior to transition;

and (v) the impact on the valuation of Guaranteed Benefits and Net Hedging Results arising from changes in underlying actuarial assumptions.

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

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

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

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

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

Actuarial Assumption Updates and Model Enhancements:

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

Net Realized Investment Gains and Losses:

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(i) 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, such as costs relating to our separation from Prudential.

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, (ii) impacts from derivatives not included in Net Hedging Results (see 1.

above), excluding earned income from periodic settlements and changes in settlement accruals on cross-currency swaps, and (iii) one-time or other non-recurring items.

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

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GAAP measure.

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

Net income (loss) attributable to Jackson Financial Inc.

common shareholders $ (480) $ 2,762 $ 568 $ 2,469

Net income (loss) attributable to Jackson Financial Inc common shareholders $ (35) $ 784

dividends on preferred stock 11 11

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Pretax income (loss) attributable to Jackson Financial Inc (23) 896

(582) 3,485 625 2,892

Non-operating adjustments (income) loss:

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Net reserve and embedded derivative movements (333) 364

Total net hedging results 134 (566)

Amortization of DAC associated with non-operating items at date of transition to LDTI 128 139

Assumption changes — — — —

Total guaranteed benefits and net hedging results 430 (2,786) 204 (1,983)

Net realized investment (gains) losses 66 7

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Changes in AOCI within the funds withheld account related to the Athene Reinsurance Transaction offset the related non-operating earnings from the Athene Reinsurance Transaction resulting in a minimal net impact on Adjusted Book Value of Jackson Financial.

Item 2 | Management’s Discussion and Analysis | Non-GAAP Financial Measures

Adjusted Book Value Attributable to Common Shareholders and Adjusted Operating ROE Attributable to Common Shareholders should not be used as substitutes for total shareholders’ equity and ROE as calculated using annualized net income and average equity in accordance with U.S.

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

Item 2 | Management’s Discussion and Analysis | Non-GAAP Financial Measures

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

GAAP measure:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Exclude AOCI attributable to Jackson Financial Inc.

1,047 2,926 1,047 2,926

Adjusted Book Value Attributable to Common Shareholders $ 11,024 $ 11,398

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Adjusted Operating ROE Attributable to Common Shareholders on average equity 13.6 % 12.0 %

(1) Excludes $(1,336) million and $(2,261) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of September 30, 2024 and 2023, respectively, which are not attributable to Jackson Financial Inc.

(1) Excludes $(1,463) million and $(1,661) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of March 31, 2025 and 2024, respectively, which are not attributable to Jackson Financial Inc.

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

Free Cash Flow

Free cash flow is Jackson Financial Inc.

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

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

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

Three Months Ended March 31,

(in millions)

Dividends and distributions to parent (1)

Jackson Financial expenses and other, net (27) (25)

Free Cash Flow $ 213 $ 20

(1) Cash distributed to Jackson Financial includes cash dividends and distributions of $195 million and interest payments on surplus notes of $45 million to Jackson Financial from its subsidiaries for the three months ended March 31, 2025 and includes cash dividends and distributions of nil and interest payments on surplus notes of $45 million to JFI from its subsidiaries for the three months ended March 31, 2024.

Item 2 | Management’s Discussion and Analysis | Non-GAAP Financial Measures

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

GAAP measure, to Free Cash Flow:

Three Months Ended March 31,

(in millions)

Jackson Financial, Inc.

Net cash provided by operating activities (Parent Company Only) $ 29 $ 31

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

Capital distributions from subsidiaries 195 —

Dividends on preferred stock (11) (11)

Total adjustments 184 (11)

Free cash flow $ 213 $ 20

Free Cash Flow Comprised of:

Capital distributions from subsidiaries $ 195 $ —

Interest on surplus note from subsidiary 45 45

Cash distributed to Jackson Financial 240 45

Parent company expenses (28) (26)

Net investment income and other income 8 4

Other, net (7) (3)

Jackson Financial expenses and other, net (27) (25)

Free cash flow $ 213 $ 20

Item 2 | Management’s Discussion and Analysis | Consolidated Results of Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Net income (loss) attributable to Jackson Financial Inc.

(469) 2,773 601 2,493

Dividends on preferred stock 11 11

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Item 2 | Management’s Discussion and Analysis | Consolidated Results of Operations

Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

Pretax Income (Loss)

Our pretax income (loss) decreased by $4,081 million to $(579) million for the three months ended September 30, 2024, from $3,502 million for the three months ended September 30, 2023, primarily due to:

• $3,548 million unfavorable movements in market risk benefits (gains) losses, primarily due to unfavorable interest rate movements, partially offset by favorable fund performance during the three months ended September 30, 2024, compared to the prior year quarter;

• $506 million decrease in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

Three Months Ended September 30,

2024 2023 Variance

(in millions)

Net gains (losses) excluding derivatives and funds withheld assets $ (45) $ (127) $ 82

Net gains (losses) on freestanding derivatives 587 (310) 897

Net gains (losses) on embedded derivatives (excluding funds withheld reinsurance) (440) 102 (542)

Net gains (losses) on derivative instruments 147 (208) 355

Net gains (losses) on funds withheld reinsurance (784) 159 (943)

Total net gains (losses) on derivatives and investments $ (682) $ (176) $ (506)

◦ Embedded derivative movements were unfavorable primarily due to market increase impacts on our growing RILA block during the three months ended September 30, 2024, compared to the prior year quarter;

◦ Losses recognized on funds withheld reinsurance were driven by a decrease in interest rates impacting the value of the embedded derivative during the three months ended September 30, 2024, compared to increases in interest rates during the three months ended September 30, 2023;

These losses were partially offset by:

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

The movements in interest rate hedges during the three months ended September 30, 2024 were primarily driven by a decrease in interest rates whereas the movements in interest rate hedges during the three months ended September 30, 2023 were primarily driven by an increase in interest rates.

The movements in equity hedges during the three months ended September 30, 2024 were primarily driven by an increase in equity markets whereas the movement in equity hedges during the three months ended September 30, 2023 were primarily driven by a decrease in equity markets.

• $116 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in incentive and deferred compensation expenses during the three months ended September 30, 2024 and higher asset-based non-deferrable commissions, due to higher account values during the three months ended September 30, 2024;

• $35 million decrease in net investment income as a result of lower income on bonds and lower income on funds withheld assets compared to prior year quarter;

These movements were partially offset by:

• $82 million increase in fee income primarily due to higher average separate account values compared to the prior year quarter;

• $22 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to lower other policyholder benefits.

Item 2 | Management’s Discussion and Analysis | Consolidated Results of Operations

Income tax expense decreased $825 million to a benefit of $113 million for the three months ended September 30, 2024, from an expense of $712 million for the three months ended September 30, 2023.

The provision for income tax in the current period led to an effective income tax rate ("ETR") of 19% for the three months ended September 30, 2024, compared to the ETR of 21% the three months ended September 30, 2023.

The change in the ETR during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, was due to the relationship of the taxable income to the consolidated pre-tax income.

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

See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements in our 2023 Annual Report and Note 15 - Income Taxes of the Notes to Condensed Consolidated Financial Statements in this report for more information.

Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024

Pretax Income (Loss)

Our pretax income (loss) decreased by $2,271 million to $642 million for the nine months ended September 30, 2024, from $2,913 million for the nine months ended September 30, 2023, primarily due to:

• $3,058 million unfavorable movements in market risk benefits (gains) losses, net, primarily due to less favorable movements in interest rates and equity volatility, partially offset by favorable fund performance in 2024 compared to the prior year;

• $243 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in incentive and deferred compensation expenses during the nine months ended September 30, 2024 and higher asset-based non-deferrable commissions, due to higher account values during 2024, compared to the prior year period.

Our pretax income (loss) decreased by $920 million to $(17) million for the three months ended March 31, 2025, from $903 million for the three months ended March 31, 2024, primarily due to:

• $4,964 million unfavorable movements in market risk benefits (gains) losses, largely due to unfavorable movements in interest rates and fund performance as well as unfavorable volatility movements during the three months ended March 31, 2025, compared to the prior year;

• $24 million increase in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to changes in mortality;

• $12 million decrease in fee income primarily due to decreases in benefit-based guarantee fee income, partially offset by increases in variable fee income due to higher average separate account values compared to the prior year.

These movements were partially offset by:

• $4,048 million increase in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

Nine Months Ended September 30,

Three Months Ended March 31,

2025 2024 Variance

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Total net gains (losses) on derivatives and investments $ 955 $ (3,093) $ 4,048

◦ Embedded derivative movements were unfavorable primarily due to market increase impacts on our growing RILA block during the nine months ended September 30, 2024, compared to the prior year period;

◦ Higher losses recognized on funds withheld reinsurance were driven by the decrease in interest rates impacting the value of the embedded derivative during 2024, compared to an increase in interest rates in 2023;

These losses were partially offset by:

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

The movements in interest rate hedges during the nine months ended September 30, 2024 were primarily driven by a decrease in interest rates whereas the movements in interest rate hedges during the nine months ended September 30, 2023 were primarily driven by an increase in interest rates.

The movements in equity hedges during the nine months ended September 30, 2024 were primarily driven by increases in equity markets whereas the movements in equity hedges during the nine months ended September 30, 2023 were primarily driven by a decrease in equity markets.

The movements in interest rate hedges during the three months ended March 31, 2025 were largely driven by an increase in interest rates whereas the movements in interest rate hedges during the three months ended March 31, 2024 were primarily driven by a decrease in interest rates.

The movements in equity hedges during the three months ended March 31, 2025 were primarily driven by a decrease in equity markets whereas the movement in equity hedges during the three months ended March 31, 2024 were primarily driven by an increase in equity markets.

◦ Embedded derivative movements were favorable largely due to market decrease impacts on our growing RILA block during the three months ended March 31, 2025, compared to the prior year;

• $21 million increase in net investment income as a result of higher income on bonds and lower expenses related to consolidated entities, partially offset by lower income on funds withheld assets compared to prior year;

• $8 million decrease in operating costs and other expenses, net of deferrals, primarily due to a decrease in deferred compensation expenses during the three months ended March 31, 2025.

Income tax expense decreased $100 million to an expense of $1 million for the three months ended March 31, 2025, from an expense of $101 million for the three months ended March 31, 2024.

The provision for income tax in the current period led to an effective income tax rate ("ETR") of (6)% for the three months ended March 31, 2025, compared to the ETR of 11% for the three months ended March 31, 2024.

The change in the ETR during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was due to the relationship of the taxable income to the consolidated

Item 2 | Management’s Discussion and Analysis | Consolidated Results of Operations

• $287 million increase in fee income primarily due to higher average separate account values compared to the prior year period;

• $98 million increase in net investment income as a result of higher income on limited partnership investments, which are recorded on a one quarter lag, and higher income on bonds, driven primarily by higher yields in 2024, compared to the prior year period, partially offset by higher investment expenses;

• $92 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to improved mortality and lower other policyholder benefits;

• $43 million decrease in interest credited on contract holder funds, net of deferrals, primarily due to lower average fixed account balances in 2024, compared to the prior year.

Income tax expense decreased $375 million to an expense of $24 million for the nine months ended September 30, 2024, from an expense of $399 million for the nine months ended September 30, 2023.

The provision for income tax in the current period led to an ETR of 4% for the nine months ended September 30, 2024 compared to the ETR of 14% the nine months ended September 30, 2023.

The change in the ETR during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to the relationship of the taxable income to the consolidated pre-tax income.

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

pre-tax income (loss) and the valuation allowance.

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

See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements in our 2024 Annual Report and Note 15 - Income Taxes of the Notes to Condensed Consolidated Financial Statements in this report for more information.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Segment Results of Operations

We manage our business through three segments:

We manage our business through three reportable segments:

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

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

As part of the Company’s asset liability management program, management monitors the allocation of invested assets supporting the Company’s contractual liabilities.

During the first quarter of 2025, that monitoring resulted in the reallocation of certain invested assets across reportable segments and Corporate and Other.

The results of this reallocation are reflected in the net investment income reported for the first quarter of 2025.

The impact of the reallocation was not material to the prior period financial results and prior period financial figures were not recast to reflect the reallocated basis.

Also, s ee Note 3 - Segment Information of the Notes to Condensed Consolidated Financial Statements for further information regarding the calculation of pretax adjusted operating earnings:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

11 unchanged sentences

Net reserve and embedded derivative movements 333 (364)

Total net hedging results (134) 566

Amortization of DAC associated with non-operating items at date of transition to LDTI (128) (139)

Total guaranteed benefits and net hedging results (430) 2,786 (204) 1,983

Net realized investment gains (losses) (66) (7)

4 unchanged sentences

Pretax income (loss) attributable to Jackson Financial Inc.

(582) 3,485 625 2,892

Income tax expense (benefit) 1 101

Net income (loss) attributable to Jackson Financial Inc.

(469) 2,773 601 2,493

Dividends on preferred stock 11 11

5 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

11 unchanged sentences

Interest expense 6 6

Operating costs and other expenses, net of deferrals 638 554 1,825 1,605

Asset-based commission expenses 284 279

Other commission expenses 206 194

Sub-advisor expenses 80 82

General and administrative expenses 200 180

Deferral of acquisition costs (158) (149)

Amortization of deferred acquisition costs 145 137

2 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

3 unchanged sentences

Surrenders, withdrawals, and benefits (1)

(7,612) (6,523)

Net flows (3,524) (2,799)

6 unchanged sentences

Balance as of end of period, gross of reinsurance $ 255,121 $ 265,238

(1) Excludes certain internal exchanges.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings increased $104 million to $458 million for the three months ended September 30, 2024, from $354 million for the three months ended September 30, 2023, primarily due to:

• $90 million increase in fee income primarily due to higher average separate account values compared to the prior year quarter;

• $88 million increase in spread income primarily due to $86 million higher investment income and $2 million lower interest credited on contract holder funds compared to the prior year quarter.

Investment income was driven by higher income on bonds due to higher asset balances earning higher yields in 2024, compared to the prior year quarter, partially offset by higher investment expenses related to repurchase agreements.

These increases were partially offset by:

• $84 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during the three months ended September 30, 2024, compared to the prior year quarter, and an increase in incentive compensation expenses during the three months ended September 30, 2024.

Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings increased $304 million to $1,342 million for the nine months ended September 30, 2024, from $1,038 million for the nine months ended September 30, 2023, primarily due to:

• $298 million increase in fee income primarily due to higher average separate account values compared to the prior year period;

• $221 million increase in spread income primarily due to $197 million higher investment income driven by higher income on bonds driven by higher asset balances earning higher yields in 2024, compared to the prior year period, partially offset by higher investment expenses related to repurchase agreements, and $24 million lower interest credited on contract holder funds compared to the prior year period.

Pretax adjusted operating earnings increased $1 million to $420 million for the three months ended March 31, 2025, from $419 million for the three months ended March 31, 2024, primarily due to:

• $12 million increase in fee income attributable to higher average separate account values compared to the prior year;

• $29 million increase in spread income due to $35 million higher investment income, partially offset by $6 million higher interest credited on contract holder funds compared to the prior year.

Investment income was driven by higher invested asset balances.

These increases were partially offset by:

• $220 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during 2024, and an increase in incentive compensation expenses during the nine months ended September 30, 2024.

• $26 million increase in commissions and general expenses, net of deferrals, reflecting higher general and administrative expenses of $20 million during the three months ended March 31, 2025;

• $9 million increase in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, attributable to higher other policyholder benefits during the three months ended March 31, 2025.

Account Value

Retail annuities account value, net of reinsurance, increased $38.2 billion over the prior year period primarily due to positive variable annuity separate account returns driven by favorable market performance in 2024, as well as positive RILA and fixed annuity net flows over the period.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Retail annuities account value, net of reinsurance, decreased $6.8 billion between periods primarily due to negative variable annuity separate account returns driven by unfavorable market performance in 2025.

Institutional Products

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

5 unchanged sentences

Interest credited on other contract holder funds, net of deferrals and amortization 97 81

Operating costs and other expenses, net of deferrals 1 1 3 3

General and administrative expenses 1 1

Total Operating Benefits and Expenses 98 82

Pretax Adjusted Operating Earnings $ 18 $ 31

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

7 unchanged sentences

Balance as of end of period $ 9,262 $ 7,825

Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $4 million to $17 million for the three months ended September 30, 2024, from $21 million for the three months ended September 30, 2023, primarily due to a $4 million decrease in spread income primarily due to $8 million lower investment income, partially offset by $4 million lower interest credited on contract holder funds.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings increased $30 million to $77 million for the nine months ended September 30, 2024, from $47 million for the nine months ended September 30, 2023, primarily due to a $30 million increase in spread income primarily due to $35 million higher investment income, partially offset by $5 million higher interest credited on contract holder funds.

Pretax adjusted operating earnings decreased $13 million to $18 million for the three months ended March 31, 2025, from $31 million for the three months ended March 31, 2024, reflecting a $13 million decrease in spread income primarily due to a $16 million increase in interest credited on contract holder funds, partially offset by a $3 million increase in investment income.

Account Value

Institutional product account value decreased from $8,712 million at September 30, 2023, to $7,929 million at September 30, 2024.

The decrease in account value was driven by continued maturities of the existing contracts and funding agreements.

Institutional product account value increased from $7,825 million at March 31, 2024 to $9,262 million at March 31, 2025, primarily driven by increased sales in 2025.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Closed Life and Annuity Blocks

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Interest credited on other contract holder funds, net of deferrals and amortization 97 104

Operating costs and other expenses, net of deferrals 40 41 110 122

Other commission expenses 9 9

General and administrative expenses 27 25

Deferral of acquisition costs (1) 1

Amortization of deferred acquisition costs 2 2

1 unchanged sentence

Pretax Adjusted Operating Earnings $ 28 $ 19

Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings increased $1 million to $7 million for the three months ended September 30, 2024, from $6 million for the three months ended September 30, 2023, primarily due to a $12 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to lower other policyholder benefits, partially offset by an $8 million decrease in premiums.

Pretax adjusted operating earnings increased $9 million to $28 million for the three months ended March 31, 2025, from $19 million for the three months ended March 31, 2024, attributable to a $24 million increase in net investment income, partially offset by a $16 million increase in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due changes in mortality, partially offset by lower other policyholder benefits.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings increased $68 million to $61 million for the nine months ended September 30, 2024, from $(7) million for the nine months ended September 30, 2023, primarily due to:

• $62 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to improved mortality and lower other policyholder benefits;

• $24 million decrease in interest credited on contract holder funds related to persistency bonuses in 2023.

These increases were partially offset by:

• $22 million decrease in premiums as the closed block of life business continues to run off.

Corporate and Other

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

7 unchanged sentences

Interest expense 19 19

Operating costs and other expenses, net of deferrals 63 30 167 132

Sub-advisor expenses (2) (2)

General and administrative expenses 31 65

Total Operating Benefits and Expenses 48 82

Pretax Adjusted Operating Earnings $ (24) $ (80)

Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $45 million to $(71) million for the three months ended September 30, 2024, from $(26) million for the three months ended September 30, 2023, primarily driven by a $33 million increase in operating costs and other expenses, net of deferrals, due to increased deferred and incentive compensation expenses during the three months ended September 30, 2024 and a $14 million decrease in net investment income.

Item 2 | Management’s Discussion and Analysis | Segment Results of Operations

Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $91 million to $(207) million for the nine months ended September 30, 2024, from $(116) million for the nine months ended September 30, 2023, primarily driven by to a $36 million decrease in net investment income, a $35 million increase in operating costs and other expenses, net of deferrals, due to increased deferred and incentive compensation expenses, and a $27 million decrease in other income primarily due to a one-time reinsurance related adjustment.

Pretax adjusted operating earnings increased $56 million to $(24) million for the three months ended March 31, 2025, from $(80) million for the three months ended March 31, 2024, primarily driven by a $34 million decrease in general and administrative expenses, due to decreased deferred compensation expenses during the three months ended March 31, 2025, a $15 million increase in other income reflecting a one-time reinsurance related adjustment in 2024, and a $7 million increase in net investment income.

Item 2 | Management’s Discussion and Analysis | Investments

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

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

As of September 30, 2024, Apollo managed $14.7 billion of cash and investments and other third-party investment managers managed approximately $242 million of investments.

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

As of March 31, 2025, Apollo managed $13.0 billion of cash and investments and other third-party investment managers managed approximately $281 million of investments.

The fixed income portion of the SAA is assessed relative to a customized index of public corporate bonds that represents a close approximation of the maturity profile of our liabilities and a credit quality mix that is consistent with our risk tolerance.

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While PPM has access to a broad universe of potential investments, we believe grounding the investment program with a customized public corporate index that can be easily tracked and monitored helps guide PPM in meeting the risk and return expectations and assists with performance evaluation.

Item 2 | Management’s Discussion and Analysis | Investments

Recognizing the trade-offs between the level of risk, required capital, liquidity and investment return, the largest allocation within our investment portfolio is to investment grade fixed income securities.

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Treasury securities, while lower yielding than other alternatives, provide a higher level of liquidity and play a role in managing our interest rate exposure.

Item 2 | Management’s Discussion and Analysis | Investments

Portfolio Composition

The following table summarizes the carrying values of our investments:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Investments excluding Funds Withheld Funds Withheld Total Investments excluding Funds Withheld Funds Withheld Total

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Debt Securities, at fair value under fair value option 3,318 112 3,430 2,930 116 3,046

Debt securities, trading, at fair value 73 — 73 68 — 68

Equity securities, at fair value 71 120 191 72 125 197

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Total investments $ 47,646 $ 16,082 $ 63,728 $ 44,325 $ 16,682 $ 61,007

Available-for-sale debt securities increased to $42,289 million at September 30, 2024, from $40,422 million at December 31, 2023.

The amortized cost of available-for-sale debt securities increased to $45,536 million as of September 30, 2024, from $44,843 million as of December 31, 2023.

Further, net unrealized losses, after adjusting for allowance for credit loss, were $3,203 million as of September 30, 2024, compared to $4,401 million as of December 31, 2023.

Available-for-sale debt securities increased to $42,243 million at March 31, 2025, from $40,289 million at December 31, 2024.

The amortized cost of available-for-sale debt securities increased to $49,742 million as of March 31, 2025, from $44,976 million as of December 31, 2024.

Further, net unrealized losses, after adjusting for allowance for credit loss, were $4,029 million as of March 31, 2025, compared to $4,679 million as of December 31, 2024.

Other Invested Assets

Other invested assets increased to $2,747 million at September 30, 2024 from $2,466 million at December 31, 2023 .

Other invested assets decreased to $2,844 million at March 31, 2025 from $2,864 million at December 31, 2024 .

Item 2 | Management’s Discussion and Analysis | Investments

Debt Securities

At September 30, 2024 and December 31, 2023, the amortized cost, allowance for credit loss, 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):

September 30, 2024 Amortized

At March 31, 2025 and December 31, 2024, the amortized cost, allowance for credit loss, 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):

March 31, 2025 Amortized

Cost Allowance for Credit Loss Gross

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Equity securities consist of investments in common and preferred stock holdings and mutual fund investments.

Common and preferred stock investments generally arise out of previous private equity investments or other settlements rather than direct investments.

Common and preferred stock investments generally arise out of previous private equity investments or other settlements rather than as direct investments.

Mutual fund investments typically represent investments made in our own mutual funds to seed those structures for external issuance at a later date.

The following table summarizes our holdings:

September 30, December 31,

March 31, December 31,

(in millions)

4 unchanged sentences

Mortgage Loans

At September 30, 2024, commercial mortgage loans were collateralized by properties located in 36 states, the District of Columbia, and Europe.

At March 31, 2025, commercial mortgage loans were collateralized by properties located in 36 states, the District of Columbia, and Europe.

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

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

September 30, December 31,

March 31, December 31,

(in millions)

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Total Commercial

$ 9,114 $ 9,562

Residential 1,069 1,090

Total 10,156 10,032

(1) N et of an allowance for credit losses of $143 million and $160 million at September 30, 2024 and December 31, 2023, respectively.

(2) Net of an allowance for credit losses of $5 million and $5 million at September 30, 2024 and December 31, 2023, respectively.

Total with ACL $ 10,026 $ 9,911

(1) At March 31, 2025 and December 31, 2024 a llowance for credit losses included $116 million and $116 million, respectively, for commercial loans and $14 million and $5 million, respectively, for residential loans.

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

September 30, December 31,

March 31, December 31,

(in millions)

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

September 30, December 31,

March 31, December 31,

(in millions)

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Total mortgage loans $ 10,026 $ 9,911

(1) As of September 30, 2024 and December 31, 2023, includes $18 million and $22 million of loans purchased when the loans were greater than 90 days delinquent and $3 million and $5 million of loans in process of foreclosure, respectively, and are supported with insurance or other guarantees provided by various governmental programs.

(1) At March 31, 2025 and December 31, 2024, includes $24 million and $24 million, respectively, of loans 30-89 days past due and $20 million and $24 million, respectively, of loans 90 days or greater past due and supported with insurance or other guarantees provided by various governmental programs.

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

September 30,

(in millions)

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Balance at end of period $ 130 $ 162

(1) At September 30, 2023, the $105 million allowance for credit losses are primarily from two mezzanine loans experiencing stress around payoff, or refinance, of the loans for which the Company continues to assess options with the lending group and borrowers.

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

Interest is not accrued on loans greater than 90 days delinquent and in process of foreclosure, when deemed uncollectible.

Interest is not accrued on loans greater than 90 days delinquent or in process of foreclosure, when deemed uncollectible.

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

Accrued interest amounting to $1 million and $2 million were written off as of September 30, 2024 and 2023, respectively, relating to loans that were greater than 90 days delinquent or in the process of foreclosure.

Accrued interest amounting to nil and nil were written off as of March 31, 2025 and 2024, respectively, relating to loans that were greater than 90 days delinquent or in the process of foreclosure.

The following table provides information about our impaired residential mortgage loans (in millions):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Recorded investment (1)

3 unchanged sentences

Investment income recognized — 1

(1) At March 31, 2025 and December 31, 2024, includes $3 million and $2 million, respectively, of loans in process of foreclosure, all of which are loans supported with insurance or other guarantees provided by various governmental programs.

Item 2 | Management’s Discussion and Analysis | Investments

Derivative Instruments

Note 5 – Derivative Instruments of the Notes to Condensed Consolidated Financial Statements presents the aggregate contractual or notional amounts and the fair values of our freestanding and embedded derivatives instruments as of September 30, 2024 and December 31, 2023.

Evaluation of Invested Assets

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Policy and Contract Liabilities

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

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

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

1 unchanged sentence

Our policy and contract liabilities includes separate account liabilities, reserves for future policy benefits and claims payable and other contract holder funds.

As of September 30, 2024, 90% of our policy and contract liabilities were in our Retail Annuities segment, 3% were in our Institutional Products segment and 7% were in our Closed Life and Annuity Blocks segment.

As of March 31, 2025, 90% of our policy and contract liabilities were in our Retail Annuities segment, 3% were in our Institutional Products segment and 7% were in our Closed Life and Annuity Blocks segment.

Item 2 | Management’s Discussion and Analysis | Policy and Contract Liabilities

The tables below represent a breakdown of our policy and contract liabilities:

September 30, 2024 Separate Accounts Reserves for future policy benefits Other contract holder funds Market Risk Benefits Total

The table below represents a breakdown of our policy and contract liabilities:

March 31, 2025 Separate Accounts Reserves for future policy benefits Other contract holder funds Market Risk Benefits Total

(in millions)

1 unchanged sentence

— — 12,432 12 12,444

Fixed Annuities — — 9,593 1 9,594

Fixed Index Annuities (2)

— — 8,097 45 8,142

Fixed Annuities — — 9,441 1 9,442

Payout Annuities — 1,124 842 — 1,966

10 unchanged sentences

— — 11,685 6 11,691

Fixed Annuities — — 9,736 1 9,737

Fixed Index Annuities (2)

— — 8,515 37 8,552

Fixed Annuities — — 9,615 1 9,616

Payout Annuities — 1,095 844 — 1,939

6 unchanged sentences

Total $ 229,143 $ 11,072 $ 58,312 $ (5,125) $ 293,402

(1) Includes the embedded derivative liabilities in other contract holder funds related to RILA of $2,799 million and $1,224 million at September 30, 2024 and December 31, 2023, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity in other contract holder funds of $825 million and $866 million at September 30, 2024 and December 31, 2023, respectively.

(1) Includes the embedded derivative liabilities in other contract holder funds related to RILA of $2,833 million and $3,065 million at March 31, 2025 and December 31, 2024, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity in other contract holder funds of $817 million and $877 million at March 31, 2025 and December 31, 2024, respectively.

Item 2 | Management’s Discussion and Analysis | Policy and Contract Liabilities

As of September 30, 2024:

As of March 31, 2025:

• $218 billion or 77% of our policy and contract liabilities were backed by separate account assets.

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• $14.5 billion of our policy and contract liabilities were reinsured by Athene and backed by funds withheld assets.

As of September 30, 2024, 94% of fixed annuity, fixed-indexed annuity, and the fixed accounts of RILA and variable annuity correspond to crediting rates that are at the guaranteed minimum crediting rate.

As of March 31, 2025, 93% of fixed annuity, fixed-index annuity, and the fixed accounts of RILA and variable annuity correspond to crediting rates that are at the guaranteed minimum crediting rate.

We have the discretion, subject to contractual limitations and minimums, to reset the crediting terms on the majority of our fixed index annuities and fixed annuities.

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Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows on investments and products, general economic conditions and access to the capital markets and alternate sources of liquidity and capital described herein.

The discussion below describes our liquidity and capital resources for the nine months ended September 30, 2024 and 2023.

The discussion below describes our liquidity and capital resources for the three months ended March 31, 2025 .

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

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

9 unchanged sentences

The primary liquidity concern with respect to these cash flows is the risk of earlier than expected contract holder and policyholder benefit payments.

Cash flows provided by (used in) operating activities increased $592 million to $4,268 million for the nine months ended September 30, 2024, from $3,676 million for the nine months ended September 30, 2023.

Cash flows provided by (used in) operating activities increased $168 million to $1,594 million for the three months ended March 31, 2025, from $1,426 million for the three months ended March 31, 2024.

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

6 unchanged sentences

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

Cash flows provided by (used in) investing activities decreased $3,636 million to $(4,321) million during the nine months ended September 30, 2024, from $(685) million during the nine months ended September 30, 2023.

This decrease was primarily driven by increased purchases of debt securities, primarily driven by increased RILA and fixed annuity issuances in 2024, partially offset by lower outflows related to our hedging program for derivative settlements and collateral.

Cash flows provided by (used in) investing activities increased $1,053 million to $(953) million during the three months ended March 31, 2025, from $(2,006) million during the three months ended March 31, 2024.

This increase was primarily driven by inflows related to our hedging program for derivative settlements and collateral as compared to outflows in the prior year, partially offset by increased purchases of debt securities, primarily driven by increased institutional sales in 2025.

Cash flows from Financing Activities

2 unchanged sentences

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

Cash flows provided by (used in) financing activities increased $4,950 million to $423 million during the nine months ended September 30, 2024, from $(4,527) million during the nine months ended September 30, 2023.

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

Cash flows provided by (used in) financing activities decreased $954 million to $(521) million during the three months ended March 31, 2025, from $433 million during the three months ended March 31, 2024.

This decrease was primarily due to payments on repurchase agreements and federal home loan bank notes in 2025, partially offset by higher deposits from increased institutional sales during the three months ended March 31, 2025.

Statutory Capital

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The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not to rank insurers generally.

As of September 30, 2024, our insurance companies were well in excess of the minimum required capital levels.

As of March 31, 2025, our insurance companies were well in excess of the minimum required capital levels.

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

8 unchanged sentences

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

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

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

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

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

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

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See “Risk Factors—Risks relating to Financing and Liquidity - As a holding company, Jackson Financial depends on the ability of its subsidiaries to pay dividends and make other distributions to meet its obligations and liquidity needs, including servicing debt, dividend payments and stock repurchases” in our 2024 Annual Report.

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

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

See Note 19 - Equity of the Notes to Condensed Consolidated Financial Statements for more information, including restrictions on common stock dividends and repurchases if a quarterly dividend on preferred stock is not declared and paid.

During the third quarter of 2024, we paid a cash dividend of $0.50 per depositary share and $0.70 per share on JFI's preferred and common stock totaling $11 million and $54 million, respectively.

On November 1, 2024, our Board of Directors approved a cash dividend for the fourth quarter on JFI's common stock, $0.70 per share, payable on December 19, 2024, to common shareholders of record on December 5, 2024.

During the first quarter of 2025, we paid a cash dividend of $0.50 per depositary share and $0.80 per common share on JFI's preferred and common stock totaling $11 million and $59 million, respectively.

On May 2, 2025, our Board of Directors approved a second quarter cash dividend on JFI's common stock of $0.80 per share, payable on June 26, 2025, to common shareholders of record on June 12, 2025.

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

The dividend will be payable on December 30, 2024, to preferred shareholders of record at the close of business on December 5, 2024.

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

The dividend will be payable on June 30, 2025, to depositary shareholders of record at the close of business on June 12, 2025.

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

We repurchased a total of 1,352,821 shares and 4,804,666 shares of common stock for an aggregate purchase price of $113 million and $319 million in the three and nine months ended September 30, 2024, respectively, which were funded with cash on hand.

We repurchased a total of 1,966,909 shares of common stock for an aggregate purchase price of $172 million in the three months ended March 31, 2025, which were funded with cash on hand.

As of May 1, 2025, the Company had remaining authorization to purchase $431 million of its common shares.

See Note 19 - Equity of the Notes to Condensed Consolidated Financial Statements in this report for further information on dividends to shareholders and share repurchases .

At a holding company level, Jackson Financial has recorded a decrease of $ 94 million for the three months ended September 30, 2024 resulting in an estimated liability and deferred tax balance of nil for provision of the Federal corporate alternative minimum tax (“CAMT”), based on the Company's interpretation of available guidance, as of September 30, 2024.

At the JFI Consolidated level, an estimated $ 7 million was recorded with an offsetting deferred tax asset of $7 million of credit carryover which will reduce future tax liabilities.

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

Distributions from our Insurance Company Subsidiaries

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

As a result of cumulative dividends and other capital distributions occurring in the preceding 12 months as of September 30, 2024, including the January 2024 distributions to establish Brooke Re, future dividends from both Jackson and Brooke Life are expected to be classified as extraordinary.

As a result of cumulative dividends and other capital distributions occurring in the preceding 12 months as of March 31, 2025 , future dividends from both Jackson and Brooke Life are expected to be classified as extraordinary.

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

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

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

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

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Best, S&P, Moody’s and Fitch.

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

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

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

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

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

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

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

In addition, for the three months ended March 31, 2024, Brooke Life paid $45 million of interest associated with the $2 billion surplus note between Brooke Life and Jackson Finance, LLC ("Jackson Finance"), a subsidiary of Jackson Financial.

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

Brooke Life subsequently remitted a $255 million return of capital to its ultimate parent, Jackson Financial.

In addition, for the three months ended September 30, 2024, Brooke Life paid $45 million of interest associated with the $2 billion surplus note between Brooke Life and Jackson Finance.

Insurance Company Subsidiaries’ Liquidity

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Liabilities arising from insurance and reinsurance activities include the payment of policyholder benefits when due, cash payments in connection with policy surrenders and withdrawals and policy loans.

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

Liquidity requirements are principally for purchases of new investments, management of derivative-related margin requirements, repayment of principal and interest on debt, payments of interest on surplus notes, funding of insurance product liabilities including payments for policy benefits, surrenders, maturities and new policy loans, funding of expenses including payment of commissions, operating expenses and taxes.

As of September 30, 2024, Jackson’s outstanding surplus notes and bank debt included $52 million of bank loans from the Federal Home Loan Bank of Indianapolis ("FHLBI"), collateralized by mortgage-related securities and mortgage loans and $250 million of surplus notes maturing in 2027.

As of March 31, 2025, Jackson’s outstanding surplus notes and bank debt included $48 million of bank loans from the Federal Home Loan Bank of Indianapolis ("FHLBI"), collateralized by mortgage-related securities and mortgage loans, and $250 million of surplus notes maturing in 2027.

Significant increases in interest rates could create sudden increases in surrender and withdrawal requests by customers and contract holders and result in increased liquidity requirements at our insurance company subsidiaries.

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

As of September 30, 2024, we were in a net collateral payable position of $124 million, which is down from $780 million as of December 31, 2023.

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

As of March 31, 2025, we were in a net collateral payable position of $340 million, which is larger than the $150 million as of December 31, 2024.

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

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

As of September 30, 2024, 100% of our RILA policy and contract liabilities were subject to surrender charges of at least 5% or at market value in the event of discretionary withdrawal by customers.

Further, approximately half of Jackson’s general account reserves are not surrenderable, included surrender charges greater than 5%, or included market value adjustments to discourage early withdrawal of policy and contract funds as of September 30, 2024.

As of March 31, 2025, 100% of our RILA policy and contract liabilities were subject to surrender charges of at least 5% or at market value in the event of discretionary withdrawal by customers.

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

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Jackson’s principal sources of liquidity to meet unexpected cash outflows associated with sudden and severe increases in surrenders and withdrawals or benefit payments are its portfolio of liquid assets and its net operating cash flows.

As of September 30, 2024, the portfolio of cash, short-term investments and privately and publicly traded securities and equities that are unencumbered and unrestricted to sale, amounted to $26.3 billion.

As of March 31, 2025, the portfolio of cash, short-term investments and privately and publicly traded securities and equities that are unencumbered and unrestricted to sale, amounted to $29.3 billion.

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

Our Indebtedness

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The applicable adder is based upon the ratings assigned to the Company’s senior, unsecured, non-credit enhanced debt.

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

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

We were in compliance with these covenants at September 30, 2024.

We were in compliance with these covenants at March 31, 2025.

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

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

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

Surplus Notes

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Interest is payable semi-annually on March 15th and September 15th of each year.

Interest expense on the notes was $5 million and $15 million for the three and nine months ended September 30, 2024, respectively and interest expense on the notes was $6 million and $18 million for the three and nine months ended September 30, 2023, respectively.

Interest expense on the notes was $5 million and $5 million for the three months ended March 31, 2025 and 2024, respectively.

Under Michigan insurance law, for statutory reporting purposes, the surplus notes are not part of the legal liabilities of Jackson and are considered surplus funds.

Payments of interest or principal may only be made with the prior approval of the Michigan Director of Insurance and only out of surplus earnings that the Director determines to be available for such payments under Michigan insurance law.

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

Federal Home Loan Bank

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Advances are in the form of either notes or funding agreements issued to FHLBI.

As of September 30, 2024 and December 31, 2023, Jackson held a bank loan with an outstanding balance of $52 million and $57 million, respectively.

As of March 31, 2025 and December 31, 2024, Jackson held a bank loan with an outstanding balance of $48 million and $52 million, respectively.

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 netting agreements.

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

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

These transactions do not have a stated maturity and require at least 150-days' notice prior to termination.

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

Under these transactions, the Company lends securities ( e.g.

, corporate debt securities) to bank counterparties in exchange for U.S.

Treasury securities.

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

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

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

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

See “Collateral Upgrade Transactions” under Note 4 – Investments of the Notes to Condensed Consolidated Financial Statements for additional information .

Financial Strength Ratings

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

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

As of November 1, 2024, the financial strength ratings of our principal insurance subsidiaries were as follows :

As of May 1, 2025, the financial strength ratings of our principal insurance subsidiaries were as follows :

Best Fitch Moody’s S&P

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Outlook stable

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

Item 2 | Management’s Discussion and Analysis | Liquidity and Capital Resources

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis