Jackson Financial Inc. (JXN) Q1 2025 Earnings Summary

Executive Summary

• Adjusted operating EPS of $5.10 beat Wall Street consensus of $4.93 by $0.17 (+3%); GAAP diluted EPS was $(0.48), reflecting a $161M loss on reinsured business and unfavorable net hedging versus prior year . EPS consensus from S&P Global: $4.93*.
• Revenue printed at $3.75B vs consensus $1.78B, reflecting derivative and market risk benefit movements intrinsic to Jackson’s GAAP construct; adjusted operating earnings rose 13% YoY to $376M . Revenue consensus from S&P Global: $1.78B*.
• Retail annuity sales grew 9% YoY to $4.0B, with VA $2.7B (+9%), RILA $1.2B (+3%), fixed/fixed index $174M (+74%); average annuity AUM increased 2% YoY to $246B .
• Capital and liquidity remained robust: JNLIC RBC 585% and TAC $5.2B; holding company cash >$600M; Q1 free cash flow $213M; capital return $231M (repurchases $172M, dividends $59M) .
• Key stock catalysts: sustained capital return ($700–$800M 2025 target set last quarter), RILA/fee-based advisory momentum, and management’s reiterated confidence in >$1B 2025 free capital generation under normal conditions .

What Went Well and What Went Wrong

What Went Well

• Retail sales growth and mix diversification: total retail annuity sales $4.0B (+9% YoY), with strong VA ($2.7B) and steady RILA ($1.2B); fixed/fixed index surged to $174M (+74%) . CEO: “We achieved 9% growth in retail annuity sales… with growth across all product lines” .
• Cash generation and capital strength: free cash flow $213M in Q1, nearly $1B over LTM; JNLIC RBC ratio 585% and TAC $5.2B; holding company liquidity >$600M .
• Operating leverage and buybacks: adjusted operating EPS $5.10 (+20% per share YoY) driven by higher spread income from RILA AUM growth and lower diluted share count; adjusted operating ROE 13.6% (vs 12.0% in Q1’24) .

What Went Wrong

• GAAP net loss and hedging drag: GAAP net income attributable to common was $(35)M (diluted $(0.48)), with total net hedging loss of $134M and $161M loss on reinsured business; contrasted against prior-year hedging/AOCI alignment .
• Lower institutional and closed block contribution: Institutional pretax AO earnings fell to $18M (from $31M YoY); Closed Block $28M (from $19M YoY, but lower sequentially in later periods), reflecting spread dynamics and assumption impacts across periods .
• Elevated variable annuity outflows and higher G&A: management cited VA net outflows from aging cohorts and exchange activity, with higher G&A and policyholder benefits in Retail partially offsetting fee/spread income .

Financial Results

Multi-period headline comparison (oldest → newest)

Q1 2025 actual vs Wall Street consensus

Values marked with * retrieved from S&P Global.

Margins (S&P Global standardized; informational)

Values marked with * retrieved from S&P Global.

Segment pretax adjusted operating earnings ($USD Millions)

KPIs and operating indicators

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We achieved 9% growth in retail annuity sales… Our robust in-force book of business delivered free cash flow of $213 million… and delivered nearly $1 billion over the last 12 months… returning $231 million to common shareholders… retaining healthy levels of excess cash at the holding company” .
• CFO: “Adjusted operating earnings of $376 million were up 13%… primarily due to higher earnings on spread products… growth of our RILA and fixed annuity blocks… higher yields on our bond portfolio” .
• CFO on hedging: “Our hedging program performed well during [April]… Brooke Re did not require any capital contributions… we remain in a very healthy position relative to our risk management framework” .
• CEO on distribution: “Elite Access growth benefited from… Principal Guard… Sales of variable annuities without living benefits were up 40%” .

Q&A Highlights

• Brooke Re capital and volatility: Management described April’s impact as “fairly modest,” reiterated minimum operating capital guardrails and internal risk framework targeting >95% scenario coverage; no capital contributions required .
• M&A philosophy: Past bolt-ons (Life of Georgia, REALIC, John Hancock); any future opportunity weighed versus buybacks/balance-sheet strengthening .
• Spread products without alt-manager tie-up: Jackson competitive in RILA without external partnerships; RILA AUM ~$12B .
• Advisory channel: Tools, planning models, dual fee/commission support; growing RIA distribution .
• Taxes/capital generation: DTA admissibility and NOL utilization contributed to statutory capital generation; not quantified .

Estimates Context

• Adjusted Operating EPS: $5.10 vs S&P Global consensus $4.93*; beat driven by higher spread income from RILA AUM growth and lower share count .
• Revenue: $3.75B vs S&P Global consensus $1.78B*; Jackson’s GAAP revenue incorporates derivative/market risk benefit movements that can drive large swings versus consensus expectations .
• Where estimates may adjust: Analysts likely mark up AO EPS trajectory and segment AO earnings (Retail/Closed), while modeling continued volatility in GAAP revenue/hedging; revenue lines may be de-emphasized in favor of AO metrics and capital generation disclosures.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• The beat on AO EPS ($5.10 vs $4.93*) and resilient free cash/capital return cadence reinforce near-term support for the equity, despite GAAP volatility from hedging and reinsured blocks .
• RILA and advisory channel expansion continue to diversify top line and enhance spread income, while VA mix shifts toward investment-only/no-living-benefits improve capital efficiency .
• Capital strength (RBC 585%) and holdco liquidity >$600M underpin the $700–$800M capital return target for 2025 and buffer macro shocks; management emphasized Brooke Re’s self-sustaining profile with robust guardrails .
• Trading lens: Focus on capital return updates, buyback pace, and advisory/RILA sales prints; watch hedging/MRB disclosures and any April-like volatility commentary for sentiment swings .
• Medium-term thesis: Earnings power aligned to AO EPS growth via spread income and AUM, with de-risked RBC sensitivity post Brooke Re; watch institutional opportunities and potential bolt-on M&A discipline .
• Model considerations: Anchor to AO EPS, AO ROE (13.6%), segment AO earnings, and free capital generation; treat GAAP revenue variability as non-core to valuation .
• Dividend compounding: $0.80/share quarterly dividend (+14%) adds to total return alongside repurchases .