Jackson Financial Incorporation Class A ((JXN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Jackson Financial Inc. recently held its earnings call, revealing a strong performance throughout the year marked by significant capital returns, robust retail annuity sales, and strategic advancements in hedging and dividends. The sentiment was predominantly positive despite some challenges, such as high net outflows in the variable annuity segment and concerns regarding transparency in Brook Re’s operations.
Record Distributions to Holding Company
Jackson National Life achieved a milestone with its record distribution of $875 million to the holding company, marking the highest annual level in the company’s history. This substantial distribution underscores Jackson Financial’s robust financial position and commitment to enhancing shareholder value.
Strong Retail Annuity Sales Growth
The earnings call highlighted a remarkable 39% growth in retail annuity sales, reaching $18 billion. This increase was fueled by diversified product offerings and expanded distribution channels, demonstrating the company’s successful strategy in capturing market opportunities.
Robust Capital Return and Liquidity
Jackson Financial reported a 36% increase in capital return to common shareholders, excluding the distribution used to establish Brook Re. The company also maintained over $700 million in highly liquid assets, providing a solid foundation for future growth and stability.
Positive Adjusted Operating Earnings
Adjusted operating earnings for Q4 2024 surged to $349 million, a 71% increase from the previous year. This was primarily driven by higher fee income from variable annuity assets and increased earnings on spread products, reflecting the company’s strong operational performance.
Increased Dividend and Share Buyback Program
The board approved a fourth dividend increase, raising it to $0.80 per common share, representing a 14% increase over the prior year. This move highlights Jackson Financial’s commitment to returning value to shareholders through dividends and share buybacks.
Successful Hedging Program
The adoption of a more economic hedging approach resulted in a net hedge gain of $285 million for the year, adding stability to the company’s non-operating results and capital generation.
Healthy Capital Generation
Jackson Financial reported free capital generation exceeding $1.3 billion in 2024, with statutory capital generation surpassing $1.7 billion. This strong capital generation underscores the company’s ability to support growth initiatives and shareholder returns.
Elevated Variable Annuity Net Outflows
The company faced challenges with elevated net outflows in the variable annuity segment due to older policy vintages exiting surrender charge periods and increased utilization of retirement income and death benefits.
Impact of Assumption Updates
Jackson Financial recorded an unfavorable non-operating earnings impact of $419 million due to annual actuarial assumption updates, mainly related to withdrawal behavior projections.
Challenges with Brook Re Transparency
Investor concerns were raised regarding the lack of regular detailed disclosures on Brook Re’s capitalization and performance, highlighting a need for improved transparency.
Forward-Looking Guidance
Looking ahead, Jackson Financial aims to increase its capital return target to $700-$800 million in 2025, reflecting a more than 10% rise from 2024. The company plans to maintain an RBC ratio above 425% and hold a $250 million buffer at the holding company, indicating a focus on sustaining financial stability and growth.
In conclusion, Jackson Financial’s earnings call conveyed a positive outlook with strong financial performance and strategic initiatives. Despite some challenges, the company remains focused on enhancing shareholder value through increased dividends, share buybacks, and maintaining robust capital generation. The forward-looking guidance suggests continued growth and stability, positioning Jackson Financial for a prosperous future.
