Jackson Financial Q3 Earnings Call Highlights

Key Points

• Jackson Financial reported Q3 2026 adjusted operating earnings of $7.55 per diluted share, supported by growth in spread-based income and record annuity sales. For the first nine months, adjusted operating earnings rose 20% and free cash flow increased 18% to $850 million.
• Retail annuity sales topped $6.5 billion, up 22% year over year; record RILA sales of $3 billion and stronger fixed-annuity sales helped drive non-variable annuity net inflows up 52%.
• Jackson reaffirmed its full-year targets of $1.2 billion in free capital generation and $900 million to $1.1 billion in shareholder returns, and named itself the exclusive annuity provider for AARP members, with an initial 10-state launch planned for mid-November.

Jackson Financial NYSE: JXN reported third-quarter 2026 adjusted operating earnings of $7.55 per diluted share, as growth in spread-based income and record annuity sales supported results. The company also reaffirmed its full-year capital generation and shareholder return targets.

Chief Executive Officer Don Cummings said Jackson is on track to generate $1.2 billion in free capital for the full year and return between $900 million and $1.1 billion to shareholders. Based on progress through September, the company expects capital returns to be at or above the midpoint of that range.

During the first nine months of 2026, adjusted operating earnings increased 20%, while free cash flow rose 18% to $850 million, Cummings said. Jackson returned $838 million to shareholders through dividends and share repurchases over that period.

Spread-based products drive sales growth

Third-quarter retail annuity sales exceeded $6.5 billion, up 22% from a year earlier and 11% from the second quarter. Spread-based products accounted for 58% of sales, reflecting Jackson’s efforts to diversify beyond traditional variable annuities.

Sales of registered index-linked annuities, or RILAs, reached a record $3 billion, up 44% year over year. RILA assets under management were nearly $29 billion at quarter-end. Fixed and fixed index annuity sales totaled $796 million, an increase of 79% from the prior-year quarter, Chief Financial Officer Brian Walta said.

Strong sales in those categories generated $3.5 billion in non-variable annuity net inflows, up 52% year over year. Total retail annuity net outflows improved for a third consecutive quarter and declined 22% during the first nine months of the year compared with the same period in 2025, Cummings said.

Variable annuity surrender rates increased modestly from both the preceding quarter and a year earlier, which management attributed in part to strong equity markets. Walta said investment gains in variable annuity assets exceeded net outflows by more than $2 billion through September, supporting account values and fee income.

Pretax adjusted operating earnings were $612 million, or $631 million excluding notable items. On the latter basis, earnings rose 24% year over year but declined slightly from the second quarter, as higher acquisition costs associated with record sales offset growth in fee- and spread-based assets, Walta said.

Adjusted operating earnings per share were $7.67 after excluding notable items and normalizing the tax rate to the company’s 15% guidance, up 28% from a year earlier. Walta attributed the increase to spread income growth and a lower diluted share count.

AARP partnership expands distribution

Jackson has been named the exclusive annuity provider for AARP members and plans to launch the program in 10 states in mid-November, with national availability targeted for the first half of 2027. The program will initially offer a distinct set of fixed and fixed index annuities through a digital-focused, direct-to-consumer platform.

Alison Reed, head of distribution for Jackson National Life Distributors, said the company sees the program as a source of incremental growth and may expand its product offerings in the future. Cummings cautioned that the program is early in development and will take time to roll out nationally.

Jackson also introduced accumulation-focused fixed index annuities in October and added a cost-of-living adjustment feature to its single premium immediate annuity in September.

Capital position and captive reinsurer in focus

Jackson generated $491 million of after-tax statutory capital and $281 million of free capital during the third quarter. Holding company free cash flow was $275 million, up 27% from a year earlier, and capital returned to common shareholders totaled $291 million.

Jackson National Life’s estimated risk-based capital ratio was 524% at quarter-end, above the company’s 425% risk appetite. Total adjusted capital was $5.9 billion, and the holding company ended the quarter with nearly $1.4 billion in cash and investments.

Analysts questioned management about Brooke Re, Jackson’s Michigan-based captive reinsurer for variable annuity guarantees, including the timing of its hedge settlements and its ability to meet obligations if markets and interest rates continue to rise.

Cummings said rising markets and rates can create liquidity pressure at Brooke Re even as they benefit the broader enterprise. He said Jackson has liquidity sources available and would take appropriate action if support for Brooke Re were needed. Walta added that a notable portion of the outstanding reinsurance balance is offset by internal trades associated with Jackson’s RILA hedging.

Brooke Re’s hard assets have increased from the $700 million contributed at formation, Cummings and Walta said, because cumulative fees received have exceeded required settlement payments. Walta said Jackson plans to provide additional detail, including an equity walkthrough, with its year-end results.

Asked about regulatory scrutiny of captive insurers, Cummings said Brooke Re and Jackson’s Hickory Re captive were authorized under Michigan law and that he does not expect a change in the state’s administration to require changes to either structure.

Management also said its fourth-quarter review of policyholder behavior assumptions, including lapse rates, remains underway. Walta said the company will disclose the results at year-end and declined to speculate on the financial impact.

About Jackson Financial (NYSE:JXN)

Jackson Financial Inc is a U.S.-based financial services company focused on helping individuals and institutions pursue retirement security. Through its operating subsidiaries, the company develops and distributes annuity products designed to provide income, investment growth opportunities and protection against certain retirement-related risks.

Jackson's offerings include variable annuities, fixed annuities and fixed-indexed annuities, along with related retirement planning solutions.

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