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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-07 · 275 added, 180 removed, 1014 unchanged (31% of the section changed)

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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.”).

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.

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

Jackson Financial’s principal 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 including, whole life, universal life, variable universal life and term life insurance products in all 50 states and the District of Columbia.

We help Americans secure their financial futures.

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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, 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.

This 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, including the Condensed Consolidated Financial Statements (Unaudited) 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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The table below presents selected financial and operating measures:

Three Months Ended March 31,

(in millions)

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

2025 2024 2025 2024

(in millions) (in millions)

Net income (loss) attributable to Jackson Financial Inc.

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Adjusted Operating Earnings (1)

350 410 726 744

Amount of shares repurchased under share repurchase program 158 90 330 206

Dividends on common shares 58 54 117 110

Jackson Financial, Inc.

Net cash provided by operating activities (Parent Company Only) (24) (10) 5 21

Free cash flow (1)

290 229 503 249

Return on Equity ("ROE") Attributable to Common Shareholders 6.9 % 11.0 % 2.8 % 21.8 %

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• Capital Returned to Common Shareholders:

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.

Since January 1, 2025 through June 30, 2025, we have returned $447 million to our common shareholders consisting of $117 million in dividends and $330 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 73,380,643 at December 31, 2024 to 71,878,542 at March 31, 2025.

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 69,958,388 at June 30, 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.

◦ Our free capital generation during the six months ended June 30, 2025 exceeded $650 million.

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.

As explained below under “Liquidity and Capital Resources – Distributions and Dividends,” 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) was $290 million and $503 million during the three and six months ended June 30, 2025, respectively, compared to $229 million and $249 million during the three and six months ended June 30, 2024, respectively.

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.

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GAAP measure.

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

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

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

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

Jackson and Brooke Re are both direct subsidiaries of Brooke Life Insurance Company ("Brooke Life").

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.

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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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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.

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 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 March 31,

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

2025 2024 2025 2024

(in millions)

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(1) Excludes certain internal exchanges.

(2) Includes payout annuities.

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

Higher retail annuity sales for the three and six months ended June 30, 2025, were primarily due to increased fixed annuity sales.

Sales of our fixed annuities have increased as PPM America has added capabilities to source higher yielding assets supporting our spread based products.

In addition, sales of our institutional products were higher for the three and six months ended June 30, 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.

Account Value

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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.

March 31, 2025 December 31, 2024

June 30, 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 March 31,

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

2025 2024 2025 2024

(in millions)

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(71) (89) (140) (179)

Total Net Flows $ (2,511) $ (4,612) $ (6,176) $ (8,963)

(1) Net of reinsurance.

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.

Net flows, net of reinsurance, improved for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, driven by increased institutional and fixed annuity sales, partially offset by lower variable annuity sales.

Elevated 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.

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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 March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

The following table shows variable annuity account value and benefit base as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

Account Value Benefit Base Account Value Benefit Base

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No Living Benefits $ 58,397 N/A $ 56,894 N/A

By Guaranteed Living Benefits:

By Guaranteed Living Benefit:

GMWB for Life 172,771 178,527 171,745 181,379

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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.

March 31, December 31,

June 30, December 31,

(in millions)

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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”).

Higher equity markets also increase account values on our RILA and fixed index annuities.

This increases the amount of regulatory reserves that our insurance subsidiaries are required to hold, decreasing regulatory surplus, which could adversely affect our insurance subsidiaries' ability to pay dividends.

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

Interest Rate Environment

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

Our business and financial performance are affected by periods of rising or falling interest rates and periods of interest rate volatility.

• 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.

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

This in turn may lead to reduced sales volumes.

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

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

• Some of our annuities have guaranteed minimum interest crediting rates (“GMICRs”) that limit our ability to reduce crediting rates.

If earnings on our investment portfolio decline, those GMICRs may result in net investment spread compression that negatively impacts earnings.

Many of our annuities have GMICRs that reset at contractually specified times after issue, subject to a contractually specified minimum GMICR.

In a rising interest rate environment, these GMICRs can increase over time.

Conversely, in a falling interest rate environment, the interest crediting rate will eventually decrease;

however, there may be a lag between interest rate movements and the GMICR reset, temporarily limiting our ability to lower crediting rates.

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.

• 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.

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

• Increasing interest rates also increase the cash surrender values of some of our RILA.

• 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.

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

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

This in turn may lead to reduced sales volumes.

• Some of our annuities have guaranteed minimum interest crediting rates (“GMICRs”) that limit our ability to reduce crediting rates.

If earnings on our investment portfolio decline, those GMICRs may result in net investment spread compression that negatively impacts earnings.

Many of our annuities have GMICRs that reset at contractually specified times after issue, subject to a contractually specified minimum GMICR.

In a rising interest rate environment, these GMICRs can increase over time.

Conversely, in a falling interest rate environment, the interest crediting rate will eventually decrease;

however, there may be a lag between interest rate movements and the GMICR reset, temporarily limiting our ability to lower crediting rates.

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

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

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

New federal and state regulations could impact our business model, as described below and in Part I.

Business - Regulation in our 2024 Annual Report.

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

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These non-GAAP financial measures should be considered supplementary to our results of operations and financial condition that are presented in accordance with U.S.

GAAP and should not be viewed as a substitute for the U.S.

GAAP financial measures.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such 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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Comprised of:

(i) realized investment gains and losses associated with the periodic sales or disposals of securities, excluding those held within our trading portfolio, and (ii) impairments of securities, after adjustment for the non-credit component of the impairment charges.

(i) realized investment gains and losses associated with the periodic sales or disposals of securities, excluding those held within our trading portfolio;

(ii) impairments of securities, after adjustment for the non-credit component of the impairment charges;

and (iii) foreign currency gain or loss on foreign denominated funding agreements and associated cross-currency swaps.

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

(i) the change in fair value of funds withheld embedded derivatives, and (ii) net investment income on funds withheld assets related to funds withheld reinsurance transactions.

(i) the change in fair value of funds withheld embedded derivatives;

and (ii) net investment income on funds withheld assets related to funds withheld reinsurance transactions.

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

Other items :

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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, (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.

(ii) impacts from derivatives not included in Net Hedging Results or Net Realized Investment Gains or Losses (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.

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

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

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

GAAP measure.

Three Months Ended March 31,

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

2025 2024 2025 2024

(in millions)

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

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

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

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

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 March 31,

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

2025 2024 2025 2024

(in millions)

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Exclude AOCI attributable to Jackson Financial Inc.

1,233 1,914 1,233 1,914

Adjusted Book Value Attributable to Common Shareholders $ 11,054 $ 11,465 $ 11,054 $ 11,465

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Adjusted Operating ROE Attributable to Common Shareholders on average equity 12.7 % 14.3 % 13.1 % 13.2 %

(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.

(1) Excludes $(1,390) million and $(1,712) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of June 30, 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.

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

Free Cash Flow

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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,

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

2025 2024 2025 2024

(in millions)

Dividends and distributions to parent (1)

$ 325 $ 250 $ 565 $ 295

Jackson Financial expenses and other, net (35) (21) (62) (46)

Free Cash Flow $ 290 $ 229 $ 503 $ 249

(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

(1) Cash distributed to Jackson Financial includes cash dividends and distributions of $325 million and $520 million and interest payments on surplus notes of nil and $45 million to Jackson Financial from its subsidiaries for the three and six months ended June 30, 2025, respectively, and includes cash dividends and distributions of $250 million and $250 million and interest payments on surplus notes of nil and $45 million to JFI from its subsidiaries for the three and six months ended June 30, 2024, respectively.

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,

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

2025 2024 2025 2024

(in millions)

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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 March 31,

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

2025 2024 2025 2024

(in millions)

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Net income (loss) attributable to Jackson Financial Inc.

179 275 155 1,070

Dividends on preferred stock 11 11 22 22

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

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

Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024

Pretax Income (Loss)

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:

Three Months Ended March 31,

Our pretax income (loss) decreased by $129 million to $189 million for the three months ended June 30, 2025, from $318 million for the three months ended June 30, 2024, primarily due to:

• $1,631 million decrease in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

Three Months Ended June 30,

2025 2024 Variance

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◦ 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 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

The movements in interest rate hedges during the three months ended June 30, 2025 reflected relatively stable interest rates whereas the movements in interest rate hedges during the three months ended June 30, 2024 were primarily driven by an increase in interest rates.

The movements in equity hedges during the three months ended June 30, 2025 were primarily driven by larger increases in equity markets compared to smaller increases during the three months ended June 30, 2024;

◦ Embedded derivative movements were unfavorable largely due to equity market increase impacts on our growing RILA block during the three months ended June 30, 2025, compared to the prior year;

• $77 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 and higher other policyholder benefits during the three months ended June 30, 2025, compared to the prior year;

• $66 million decrease in fee income primarily due to decreases in variable fee income, due to lower average separate account values, and decreases in benefit-based guarantee fee income during the three months ended June 30, 2025, compared to the prior year;

• $30 million decrease in net investment income as a result of lower income on limited partnerships, which are recorded on a one quarter lag, and lower income on funds withheld assets, partially offset by higher income on bonds and lower expenses during the three months ended June 30, 2025;

• $22 million increase in interest credited on other contract holder funds, net of deferrals and amortization, primarily due to higher average institutional account balances and fixed annuity and RILA new business during the three months ended June 30, 2025, compared to the prior year.

These movements were partially offset by:

• $1,687 million favorable movements in market risk benefits (gains) losses, largely due to favorable movements in fund performance during the three months ended June 30, 2025, compared to the prior year.

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

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

Income tax expense decreased $32 million to an expense of $4 million for the three months ended June 30, 2025, from an expense of $36 million for the three months ended June 30, 2024.

The provision for income tax in the current period led to an effective income tax rate ("ETR") of 2% for the three months ended June 30, 2025, compared to the ETR of 11% for the three months ended June 30, 2024.

The change in the ETR during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was due to the relationship of the taxable income to the consolidated 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.

Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024

Pretax Income (Loss)

Our pretax income (loss) decreased by $1,049 million to $172 million for the six months ended June 30, 2025, from $1,221 million for the six months ended June 30, 2024, primarily due to:

• $3,277 million in unfavorable movements in market risk benefits (gains) losses, net, primarily due to less favorable movements in interest rates and fund performance, as well as unfavorable volatility movements in 2025, compared to the prior year;

• $101 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 and higher other policyholder benefits;

• $78 million decrease in fee income primarily due to decreases in variable fee income, due to lower average separate account values, and decreases in benefit-based guarantee fee income during 2025, compared to the prior year;

• $37 million increase in interest credited on contract holder funds, net of deferrals and amortization, primarily due to higher average institutional account balances in 2025 and fixed annuity and RILA new business, compared to the prior year.

These movements were partially offset by:

• $2,417 million improvement in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

Six Months Ended June 30,

2025 2024 Variance

(in millions)

Net gains (losses) excluding derivatives and funds withheld assets $ (175) $ (37) $ (138)

Net gains (losses) on freestanding derivatives (742) (3,674) 2,932

Net gains (losses) on embedded derivatives (excluding funds withheld reinsurance) (600) (523) (77)

Net gains (losses) on derivative instruments (1,342) (4,197) 2,855

Net gains (losses) on funds withheld reinsurance (715) (415) (300)

Total net gains (losses) on derivatives and investments $ (2,232) $ (4,649) $ 2,417

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

◦ 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 six months ended June 30, 2025 were primarily driven by a decrease in interest rates as opposed to an increase in interest rates during the prior year.

The movements in equity hedges during the six months ended June 30, 2025 were primarily driven by smaller increases in equity markets compared to larger increases in equity markets during the six months ended June 30, 2024;

◦ Higher losses recognized on funds withheld reinsurance were driven by the decrease in interest rates impacting the value of the embedded derivative during 2025, compared to an increase in interest rates in 2024.

Income tax expense decreased $132 million to an expense of $5 million for the six months ended June 30, 2025, from an expense of $137 million for the six months ended June 30, 2024.

The provision for income tax in the current period led to an ETR of 3% for the six months ended June 30, 2025 compared to the ETR of 11% the six months ended June 30, 2024.

The change in the ETR during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 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.

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

Segment Results of Operations

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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 results of this reallocation are reflected in the net investment income reported for the second 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 March 31,

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

2025 2024 2025 2024

(in millions)

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Pretax income (loss) attributable to Jackson Financial Inc.

183 311 160 1,207

Income tax expense (benefit) 4 36 5 137

Net income (loss) attributable to Jackson Financial Inc.

179 275 155 1,070

Dividends on preferred stock 11 11 22 22

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 March 31,

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

2025 2024 2025 2024

(in millions)

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

Three Months Ended March 31,

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

2025 2024 2025 2024

(in millions)

2 unchanged sentences

Premiums and deposits (1)

4,421 4,265 8,509 7,989

Surrenders, withdrawals, and benefits (1)

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

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

Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

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;

Pretax adjusted operating earnings decreased $48 million to $417 million for the three months ended June 30, 2025, from $465 million for the three months ended June 30, 2024, primarily due to:

• $43 million decrease in fee income attributable to lower average separate account values during the three months ended June 30, 2025, compared to the prior year;

• $38 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 attributable to higher other policyholder benefits during the three months ended June 30, 2025.

These decreases were partially offset by:

• $21 million increase in spread income due to $38 million higher investment income, partially offset by $17 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:

• $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.

Increased interest credited on contract holder funds was primarily due to higher fixed annuity and RILA new business;

• $11 million decrease in commissions and general expenses, net of deferrals, reflecting lower non-deferrable asset-based commissions expense of $6 million and lower sub-advisor expenses of $6 million, primarily driven by lower account values during the three months ended June 30, 2025.

Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $47 million to $837 million for the six months ended June 30, 2025, from $884 million for the six months ended June 30, 2024, primarily due to:

• $47 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 attributable to higher other policyholder benefits during the six months ended June 30, 2025;

• $31 million decrease in fee income primarily due to lower average separate account values, compared to the prior year;

• $15 million increase in commissions and general expenses, net of deferrals, reflecting higher general and administrative expenses of $19 million during the six months ended June 30, 2025.

These decreases were partially offset by:

• $50 million increase in spread income primarily due to $73 million higher investment income and $23 million higher interest credited on contract holder funds compared to the prior year period.

Investment income was driven by higher invested asset balances.

Increased interest credited on contract holder funds was primarily due to higher fixed annuity and RILA new business.

Account Value

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.

Retail annuities account value, net of reinsurance, increased $11 billion over the prior year period primarily due to positive variable annuity separate account returns driven by favorable market performance in 2025, as well as positive RILA and fixed annuity net flows over the period.

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

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 March 31,

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

2025 2024 2025 2024

(in millions)

8 unchanged sentences

Pretax Adjusted Operating Earnings $ 19 $ 29 $ 37 $ 60

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 March 31,

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

2025 2024 2025 2024

(in millions)

6 unchanged sentences

Policy charges and other (1)

551 5 596 (61)

Balance as of end of period $ 10,354 $ 7,299 $ 10,354 $ 7,299

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

(1) Includes net deposit and withdrawal activity for FABCP funding agreements.

Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

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

Pretax adjusted operating earnings decreased $10 million to $19 million for the three months ended June 30, 2025, from $29 million for the three months ended June 30, 2024, reflecting a $9 million decrease in spread income primarily due to a $16 million increase in interest credited on contract holder funds, due to increased account values, partially offset by a $7 million increase in investment income.

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

Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $23 million to $37 million for the six months ended June 30, 2025, from $60 million for the six months ended June 30, 2024, reflecting a $22 million decrease in spread income primarily due to a $32 million increase in interest credited on contract holder funds, due to increased account values, partially offset by a $10 million increase in investment income.

Account Value

Institutional product account value increased from $7,299 million at June 30, 2024, to $10,354 million at June 30, 2025.

The increase in account value was primarily driven by an increased amount of FABN funding agreements and FABCP funding agreement in 2025.

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 March 31,

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

2025 2024 2025 2024

(in millions)

16 unchanged sentences

Pretax Adjusted Operating Earnings $ 22 $ 35 $ 50 $ 54

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

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

Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

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.

Pretax adjusted operating earnings decreased $13 million to $22 million for the three months ended June 30, 2025, from $35 million for the three months ended June 30, 2024, primarily due to:

• $23 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;

• $7 million decrease in premiums resulting from the continued run off of the closed block of life business.

These decreases were partially offset by:

• $13 million increase in net investment income;

• $11 million decrease in interest credited on other contract holder funds, net of deferrals and amortization, resulting from the continued run off of the closed block of life business.

Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings decreased $4 million to $50 million for the six months ended June 30, 2025, from $54 million for the six months ended June 30, 2024, primarily due to:

• $39 million increase in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to changes in mortality, partially offset by lower other policyholder benefits;

• $8 million decrease in premium resulting from the continued run off of the closed block of life business.

These decreases were partially offset by:

• $37 million increase in net investment income;

• $18 million decrease in interest credited on contract holder funds, net of deferrals and amortization, resulting from the continued run off of the closed block of life business.

Item 2 | Management’s Discussion and Analysis | Segment 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 appearing elsewhere in this report:

Three Months Ended March 31,

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

2025 2024 2025 2024

(in millions)

11 unchanged sentences

Pretax Adjusted Operating Earnings $ (52) $ (56) $ (76) $ (136)

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

Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

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.

Pretax adjusted operating earnings improved $4 million to $(52) million for the three months ended June 30, 2025, from $(56) million for the three months ended June 30, 2024, primarily driven by a $10 million increase in other income, and a $9 million increase in net investment income, partially offset by a $13 million increase in general and administrative expenses, due to increased deferred compensation expenses during the three months ended June 30, 2025.

Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024

Pretax Adjusted Operating Earnings

Pretax adjusted operating earnings improved $60 million to $(76) million for the six months ended June 30, 2025, from $(136) million for the six months ended June 30, 2024, primarily driven by a $25 million increase in other income primarily due to a one-time reinsurance related adjustment in 2024, a $21 million decrease in general and administrative expenses, due to decreased deferred compensation expenses, and a $16 million increase in net investment income.

Item 2 | Management’s Discussion and Analysis | Investments

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

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.

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 seconding preceding paragraph.

As of June 30, 2025, Apollo managed $12.4 billion of cash and investments and other third-party investment managers managed approximately $304 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.

9 unchanged sentences

The following table summarizes the carrying values of our investments:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

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

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Total investments $ 49,356 $ 15,619 $ 64,975 $ 44,325 $ 16,682 $ 61,007

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.

Available-for-sale debt securities increased to $43,814 million at June 30, 2025, from $40,289 million at December 31, 2024.

The amortized cost of available-for-sale debt securities increased to $47,515 million as of June 30, 2025, from $44,976 million as of December 31, 2024.

Further, net unrealized losses, after adjusting for allowance for credit loss, were $3,689 million as of June 30, 2025, compared to $4,679 million as of December 31, 2024.

Other Invested Assets

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

Other invested assets increased to $2,896 million at June 30, 2025 from $2,864 million at December 31, 2024 .

Item 2 | Management’s Discussion and Analysis | Investments

Debt Securities

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

At June 30, 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):

June 30, 2025 Amortized

Cost Allowance for Credit Loss Gross

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

Evaluation of Available-For-Sale Debt Securities

Evaluation of Available-For-Sale Debt Securities for Credit Loss

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

Equity Securities

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

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

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

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The following table summarizes our holdings:

March 31, December 31,

June 30, December 31,

(in millions)

4 unchanged sentences

Mortgage Loans

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

At June 30, 2025, commercial mortgage loans were collateralized by properties located in 34 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.

Item 2 | Management’s Discussion and Analysis | Investments

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

March 31, December 31,

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

June 30, December 31,

(in millions)

9 unchanged sentences

Total with ACL $ 9,938 $ 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.

(1) At June 30, 2025 and December 31, 2024, a llowance for credit losses included $122 million and $116 million, respectively, for commercial loans and $15 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:

March 31, December 31,

June 30, December 31,

(in millions)

14 unchanged sentences

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

March 31, December 31,

June 30, December 31,

(in millions)

11 unchanged sentences

Total mortgage loans $ 9,938 $ 9,911

(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.

(1) At June 30, 2025 and December 31, 2024, includes $20 million and $24 million, respectively, of loans 30-89 days past due and $16 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:

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Charge offs, net of recoveries (6) —

Reductions for mortgages disposed (2) —

Provision (release) 24 (5)

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

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.

Accrued interest amounting to $1 million and $1 million were written off as of June 30, 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):

March 31, 2025 December 31, 2024

June 30, 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.

(1) At June 30, 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 March 31, 2025 and December 31, 2024.

Evaluation of Invested Assets

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

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.

As of June 30, 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 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

June 30, 2025 Separate Accounts Reserves for future policy benefits Other contract holder funds Market Risk Benefits Total

(in millions)

27 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 $2,833 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.

(1) Includes the embedded derivative liabilities in other contract holder funds related to RILA of $4,032 million and $3,065 million at June 30, 2025 and December 31, 2024, respectively.

(2) Includes the embedded derivative liabilities related to fixed index annuity in other contract holder funds of $825 million and $877 million at June 30, 2025 and December 31, 2024, respectively.

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

As of March 31, 2025:

As of June 30, 2025:

• $232.2 billion or 78% of our policy and contract liabilities were backed by separate account assets.

3 unchanged sentences

• $13.9 billion of our policy and contract liabilities were reinsured by Athene and backed by funds withheld assets.

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.

As of June 30, 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 three months ended March 31, 2025 .

The discussion below describes our liquidity and capital resources for the six months ended June 30, 2025 .

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

Three Months Ended March 31,

Six Months Ended June 30,

(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 $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.

Cash flows provided by (used in) operating activities decreased by $137 million to $2,767 million for the six months ended June 30, 2025, from $2,904 million for the six months ended June 30, 2024.

This was primarily due to the timing related to the settlement of certain short-term payables.

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

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

Cash flows provided by (used in) investing activities increased $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 provided by (used in) investing activities improved $202 million to $(3,718) million during the six months ended June 30, 2025, from $(3,920) million during the six months ended June 30, 2024.

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

Cash flows from Financing Activities

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

Cash flows provided by (used in) financing activities decreased $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.

Cash flows provided by (used in) financing activities increased $904 million to $968 million during the six months ended June 30, 2025, from $64 million during the six months ended June 30, 2024.

This increase was primarily due to h igher deposits from increased fixed annuity and institutional sales during the six months ended June 30, 2025, partially offset by repayments on repurchase agreements and federal home loan bank notes during 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 March 31, 2025, our insurance companies were well in excess of the minimum required capital levels.

As of June 30, 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.

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The main uses of liquidity for Jackson Financial are interest payments and debt repayment, holding company operating expenses, payment of dividends and other distributions to shareholders, which may include stock repurchases, and capital contributions, if needed, to our insurance company subsidiaries.

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

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.

Insurance Company Subsidiaries’ Liquidity

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 borrowing facilities, including a short-term borrowing facility with the Federal Home Loan Bank of Indianapolis ("FHLBI").

The liquidity requirements for our insurance company subsidiaries include:

• liabilities associated with their insurance and reinsurance activities.

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;

• purchases of new investments;

• management of derivative-related margin requirements.

The derivative contracts are an integral part of our risk management program, especially for the management of our variable annuities program, and are managed in accordance with our hedging and risk management program.

Our cash flows associated with collateral received from counterparties and posted with counterparties fluctuates with changes in the market value of the underlying derivative contract and/or the market value of the collateral.

The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged.

As of June 30, 2025, we were in a net collateral payable position of $125 million, compared to $150 million as of December 31, 2024;

• repayment of principal and interest on debt, and payments of interest on surplus notes.

As of June 30, 2025, Jackson’s outstanding surplus notes and bank debt included $48 million of bank loans from the FHLBI, collateralized by mortgage-related securities and mortgage loans, and $250 million of surplus notes maturing in 2027;

• funding of expenses including payment of commissions, operating expenses and taxes.

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.

Significant increases in interest rates or equity markets may also result in higher margin and collateral requirements on our derivative portfolio.

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 June 30, 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.

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 June 30, 2025.

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

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

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 June 30, 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 $30.8 billion.

Distributions and Dividends

• Holding Company

Any declaration of cash dividends or stock repurchases by JFI 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.

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

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

See “Distributions and Dividends - Insurance Company Subsidiaries” below for a discussion of those restrictions .

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

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.

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.

During the second 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 $58 million, respectively.

On August 1, 2025, our Board of Directors approved a third quarter cash dividend on JFI's common stock of $0.80 per share, payable on September 25, 2025, to common shareholders of record on September 15, 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 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 1,966,909 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.

The dividend will be payable on September 30, 2025, to depositary shareholders of record at the close of business on September 15, 2025.

We repurchased a total of 1,920,154 shares and 3,887,063 shares of common stock for an aggregate purchase price of $158 million and $330 million in the three and six months ended June 30, 2025, respectively, which were funded with cash on hand.

As of July 25, 2025, the Company had remaining authorization to purchase $279 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 .

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

Distributions from our Insurance Company Subsidiaries

• Insurance Company Subsidiaries

The ability of our insurance company subsidiaries to pay dividends is limited by applicable laws and regulations of the jurisdictions where such subsidiaries are domiciled as well as agreements entered into with regulators.

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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 March 31, 2025 , 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 June 30, 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.

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

Insurance Company Subsidiaries’ Liquidity

The liquidity requirements for our insurance company subsidiaries primarily relate to the liabilities associated with their insurance and reinsurance activities, operating expenses and income taxes.

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 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 or equity markets may also result in higher margin and collateral requirements on our derivative portfolio.

The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged.

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

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.

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 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.

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

In November 2021 and June 2022, the Company issued an aggregate of $2,350 million principal amount of its senior notes, shown as Long-term debt on the Condensed Consolidated Balance Sheets.

The proceeds of the note issuances were used, together with cash on hand, to retire the Company’s previously outstanding term loans.

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

Revolving Credit and Short-Term Borrowing Facilities

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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 March 31, 2025.

We were in compliance with these covenants at June 30, 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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Interest is payable semi-annually on March 15th and September 15th of each year.

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

Interest expense on the notes was $5 million and $10 million for the three and six months ended June 30, 2025, respectively and interest expense on the notes was $5 million and $10 million for the three and six months ended June 30, 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 March 31, 2025 and December 31, 2024, Jackson held a bank loan with an outstanding balance of $48 million and $52 million, respectively.

As of June 30, 2025 and December 31, 2024, Jackson held a bank loan with an outstanding balance of $48 million and $52 million, respectively.

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

Collateral Upgrade Transactions

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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.

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

As of July 25, 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

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.

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

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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While the degree to which ratings adjustments will affect sales of our annuities and institutional products, and persistency is unknown, if our ratings are negatively adjusted for any reason, we believe we could experience a material decline in the sales in our individual channel, origination in our institutional channel, and the persistency of our existing business.

Item 2 | Management’s Discussion and Analysis | Impact of Recent Accounting Pronouncements

Impact of Recent Accounting Pronouncements

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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