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What changed in Jackson Financial Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Jackson Financial Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+781 added−843 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-01)

Top changes in Jackson Financial Inc.'s 2023 10-K

781 paragraphs added · 843 removed · 402 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

147 edited+164 added−195 removed46 unchanged
Biggest changeA change in outlook to negative on our ratings, a downgrade in any of our ratings, an announcement of a potential downgrade, or customer concerns about the possibility of a downgrade, could cause direct or indirect adverse effects, including impacts on: • product sales; • relationships with our sales force and independent sales intermediaries; • the number or amount of policy surrenders and withdrawals by customers; • our ability to obtain new reinsurance or obtain it on reasonable pricing terms; • our ability to raise capital and its cost; • liquidity through increased collateral required by counterparties; • our ability to maintain existing derivative contracts or to purchase new derivatives contracts, on acceptable terms or at all; • our ability to compete for attractive acquisition opportunities; and • our cost of borrowing.
Biggest changeA downgrade in any of our ratings could directly or indirectly lead to negative impacts on: • our product sales and distribution relationships; • the number or amount of surrenders and withdrawals by customers; • our ability to obtain new reinsurance or obtain it on reasonable terms; • our ability to maintain existing derivative contracts or purchase new derivative contracts, which are used to manage risk, on acceptable terms or at all; • our need for increased liquidity due to increased collateral required by counterparties; • our ability to compete for attractive acquisition opportunities; and • our cost of and access to capital.
The USA PATRIOT Act of 2001 includes anti-money laundering and financial transparency laws as well as various regulations applicable to broker-dealers and other financial services companies, including insurance companies.
USA PATRIOT Act of 2001 The USA PATRIOT Act of 2001 includes anti-money laundering and financial transparency laws as well as various regulations applicable to broker-dealers and other financial services companies, including insurance companies.
The SEC and FINRA also regulate the sales practices of broker-dealers. In recent years, both SEC and FINRA have intensified their scrutiny of sales practices relating to variable annuities and variable life insurance.
The SEC and FINRA also regulate the sales practices of broker-dealers. In recent years, both the SEC and FINRA have intensified their scrutiny of sales practices relating to variable annuities and variable life insurance.
In some of our markets, we face competitors that are larger, have greater financial resources or greater market share, have better brand recognition, offer a broader range of products, or have higher crediting rates. Our competitors include major stock and mutual insurance companies, mutual fund organizations, banks, and other financial services companies.
In some markets, we face competitors that are larger, have greater financial resources or greater market share, have better brand recognition, offer a broader range of products, or have higher crediting rates. Our competitors include major stock and mutual insurance companies, mutual fund organizations, banks, and other financial services companies.
The National Association of Insurance Commissioners ("NAIC") has established model regulations that provide minimum capitalization requirements for insurance companies based on risk-based capital ("RBC") formulas. Each of our U.S. insurance subsidiaries is subject to RBC standards or other minimum statutory capital and surplus requirements imposed under the laws of its respective jurisdiction of domicile.
The National Association of Insurance Commissioners ("NAIC") established model regulations that provide minimum capitalization requirements for insurance companies based on risk-based capital formulas. Each of our U.S. insurance subsidiaries is subject to RBC standards or other minimum statutory capital and surplus requirements imposed under the laws of its respective jurisdiction of domicile.
The Advisory Council developed a framework and strategy, which includes ensuring an inclusive workplace, developing a diverse talent pool, leveraging diversity and inclusion in the marketplace and reporting our progress. We recognize the diversity of our associates’ backgrounds and cultures through our voluntary, employee-led Business Resource Associate Groups (“BRAGs”).
The Advisory Council developed a framework and strategy, which includes ensuring an inclusive workplace, developing a diverse talent pool, leveraging diversity and inclusion in the marketplace and reporting our progress. We recognize the diversity of our associates’ backgrounds and cultures through our voluntary, associate-led Business Resource Associate Groups (“BRAGs”).
In addition, rating agencies may implement changes to their own internal models, which differ from the RBC capital model, and that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries should hold relative to the rating agencies’ expectations.
In addition, rating agencies may implement changes to their own internal models, which differ from the RBC capital model, that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries should hold relative to the rating agencies’ expectations.
Social We demonstrate our commitment to corporate social responsibility with charitable donations that (i) generate impact in the communities we serve, (ii) engage associates in a culture of philanthropy, and (iii) grow awareness for our commitment to being a good corporate neighbor.
Valuing our Communities We demonstrate our commitment to corporate social responsibility with charitable donations that (i) generate impact in the communities we serve, (ii) engage associates in a culture of philanthropy, and (iii) grow awareness for our commitment to being a good corporate neighbor.
The inability of our subsidiaries to pay dividends or provide other distributions could have a material adverse effect on our business, financial condition, and cash flows, and restrict our ability to pay dividends to our shareholders or repurchase stock.
The inability of our subsidiaries to pay dividends or provide other distributions could have a material adverse effect on our financial condition and cash flows and restrict our ability to pay dividends to our shareholders or repurchase stock.
The Division of Examinations subsequently issued a risk alert highlighting ESG deficiencies, internal control weaknesses and effective practices identified during recent examinations of investment advisers, registered investment companies and private funds.
The SEC's Division of Examinations subsequently issued a risk alert highlighting ESG deficiencies, internal control weaknesses and effective practices identified during recent examinations of investment advisers, registered investment companies and private funds.
Business | Regulation Jackson National Asset Management LLC ("JNAM") is registered with the SEC as an investment adviser pursuant to the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act").
Investment Adviser Regulation Jackson National Asset Management LLC ("JNAM") is registered with the SEC as an investment adviser pursuant to the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act").
U.S. state regulators have five years from the dates the Covered Agreements were signed to adopt reinsurance reforms removing reinsurance collateral requirements for EU and UK reinsurers that meet the prescribed minimum conditions set forth in the applicable Covered Agreement or else state laws imposing such reinsurance collateral requirements may be subject to federal preemption.
U.S. state regulators had five years from the dates the Covered Agreements were signed to adopt reinsurance reforms removing reinsurance collateral requirements for EU and UK reinsurers that meet the prescribed minimum conditions set forth in the applicable Covered Agreement or else state laws imposing such reinsurance collateral requirements may be subject to federal preemption.
A failure to meet these requirements could subject them to further examination or corrective action imposed by insurance regulators, including limitations on their ability to write additional business, increased regulatory supervision, or seizure or liquidation. Any corrective action imposed could cause a material adverse effect on our business, financial condition, results of operations and cash flows.
A failure to meet these requirements could subject our subsidiaries to further examination or corrective action imposed by insurance regulators, including limitations on their ability to write additional business, increased regulatory supervision, seizure or liquidation. Any corrective action imposed could cause a material adverse effect on our business, financial condition, results of operations and cash flows.
Jackson encourages community engagement by providing associates with paid time off for volunteering, nonprofit board training and placement, and matching gifts programs for employee charitable contributions and volunteer hours. We remain committed to empowering people and communities and continue to invest in building relationships that serve the greater good.
Jackson encourages community engagement by providing associates with paid time off for volunteering, nonprofit board training and placement, and matching gifts programs for associate charitable contributions and volunteer hours. We remain committed to empowering people and communities and continue to invest in building relationships that serve the greater good.
To the extent that an insurance subsidiary’s RBC ratio is deemed to be insufficient, we may seek to take actions either to increase the capitalization of the insurer or to reduce the capitalization requirements. If we were unable to accomplish such actions, the rating agencies could view this as a reason for a ratings downgrade.
To the extent that an insurance subsidiary’s RBC ratio is deemed to be insufficient, we may seek to take actions either to increase the insurance subsidiary’s capitalization or reduce the capitalization requirements. If we were unable to accomplish such actions, the rating agencies could view this as a reason for a ratings downgrade.
In addition, each variable annuity and variable life product is subject to SEC registration and regulation. PPM is registered with the SEC as an investment adviser under the Investment Advisers Act. PPM serves as the investment adviser to Jackson National Life and as the primary U.S. institutional investment adviser for certain other affiliated insurance company accounts.
In addition, each variable annuity and variable life product is subject to SEC registration and regulation. PPM America, Inc. ("PPM") is registered with the SEC as an investment adviser under the Investment Advisers Act. PPM serves as the investment adviser to Jackson National Life and as the primary U.S. institutional investment adviser for certain other affiliated insurance company accounts.
Our annuities contain many options and features, and we rely on third-party distributors to describe and explain our products to investors and our customers. There is a risk that we or our distributors fail to describe every feature and option in contracts, forms, regulatory filings, marketing literature, and other written descriptions.
Our annuities contain many options and features, and we rely on third-party distributors to describe and explain our products to investors and our customers. There is a risk that we or our distributors fail to describe accurately and completely every feature and option in our contracts, forms, regulatory filings, marketing literature, and other written descriptions.
The FSOC has the ability to designate certain insurance companies and insurance holding companies that pose a systemic risk to the financial stability of the U.S., in which case such companies would become subject to heightened prudential regulation by the Board of Governors of the United States Federal Reserve (the “Federal Reserve Board”).
The FSOC has the ability to designate certain insurance companies and insurance holding companies that pose a systemic risk to the financial stability of the U.S., in which case such companies would become subject to heightened prudential regulation by the Board of Governors of the U.S. Federal Reserve (the “Federal Reserve Board”).
Our comprehensive benefits package includes medical, dental, vision, and paid time off along with more innovative benefits including employee and dependent tuition reimbursement programs, paid parental leave, adoption assistance, paid time off to volunteer, and employee charitable gift matching. Our associates are compensated based on their job performance.
Our comprehensive benefits package includes medical, dental, vision, and paid time off along with more innovative benefits including associate and dependent tuition reimbursement programs, paid parental leave, adoption assistance, paid time off to volunteer, and associate charitable gift matching. Our associates are compensated based on their job performance.
Intellectual Property We rely on a combination of copyright, trademark, service mark, and internet domain laws to establish and protect our intellectual property rights. We maintain a portfolio of trademarks, service marks, and internet domain names that we consider important to the marketing of our products and business, and that are registered with the U.S. Patent and Trademark Office.
Business | Intellectual Property Intellectual Property We rely on a combination of copyright, trademark, service mark, and internet domain laws to establish and protect our intellectual property rights. We maintain a portfolio of trademarks, service marks, and internet domain names that we consider important to the marketing of our products and business, and that are registered with the U.S.
The executive officers serve until the next annual appointment of executive officers, or until earlier resignation or removal. Name Age Positions and Offices Held and Principal Occupation Carrie L. Chelko 49 Executive Vice President and General Counsel of Jackson Financial Inc., a position held since September 2021. As Executive Vice President and General Counsel, Ms.
The executive officers serve until the next annual appointment of executive officers, or until earlier resignation or removal. Name Age Positions and Offices Held and Principal Occupation Carrie L. Chelko 50 Executive Vice President, General Counsel of Jackson Financial Inc., a position held since September 2021. As Executive Vice President and General Counsel, Ms.
See Note 11 of Notes to Consolidated Financial Statements for a description of those funding agreements and related collateral requirements . Additionally, we use agreements with the FHLBI to meet near-term liquidity needs, augmenting our repurchase agreement capacity from other counterparties.
See Note 10 of Notes to Consolidated Financial Statements for a description of those funding agreements and related collateral requirements. Additionally, we use agreements with the FHLBI to meet near-term liquidity needs, augmenting our repurchase agreement capacity from other counterparties.
In the past, even some of our high-quality investments experienced reduced liquidity during periods of market volatility or disruption.
In the past, some of our high-quality investments experienced reduced liquidity during periods of market volatility or disruption.
Under stressed or stagnant capital market conditions and with the aging of existing insurance liabilities, without offsets from new business, the amount of additional statutory reserves that an insurance subsidiary is required to hold could materially increase. These factors would decrease the total adjusted capital available for use in calculating the subsidiary’s RBC ratio.
Under stressed or stagnant capital market conditions and with the aging of existing insurance liabilities, without offsets from new business, the amount of additional statutory reserves that an insurance subsidiary is required to hold could materially increase. Any of these would decrease the total adjusted capital available for use in calculating an RBC ratio.
JNAM is registered as a “commodity pool operator” with the National Futures Association (“NFA”) pursuant to Commodity Futures Trade Commission (“CFTC”) regulations and acts as a commodity pool operator with respect to the operation of certain of the mutual funds.
Commodities Regulation JNAM is registered as a “commodity pool operator” with the National Futures Association (“NFA”) pursuant to the Commodity Futures Trade Commission (“CFTC”) regulations and acts as a commodity pool operator with respect to the operation of certain of the mutual funds.
Business | Available Information Available Information We make available free of charge, through our website, investors.jackson.com, our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our proxy statements, and any amendments to those reports or statements as soon as reasonably practicable after these materials are electronically filed with, or furnished to, the U.S.
Available Information We make available free of charge, through our website, investors.jackson.com, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our proxy and information statements, and any amendments to those reports or statements as soon as reasonably practicable after these materials are electronically filed with, or furnished to, the U.S.
The Fiduciary Advice Rule may also lead to changes to our compensation practices and product offerings and increased litigation risk, which could adversely affect our results of operations and financial condition. We may also need to take certain additional actions to comply with, or assist our distributors in their compliance with, the Fiduciary Advice Rule.
We may need to take certain additional actions to comply with, or assist our distributors in their compliance with, the 2023 Fiduciary Advice Rule. The 2023 Fiduciary Advice Rule may also lead to changes to our compensation practices and product offerings and increase litigation risk, which could adversely affect our results of operations and financial condition.
In 2022, Jackson continued its mentoring program to support the long-term career growth of associates, with particular focus on development opportunities for diverse associates and emerging leaders.
In 2023, Jackson continued its mentoring program to support the long-term career growth of associates, with particular focus on development opportunities for diverse associates and emerging leaders.
In its first year, the on-site solar farm at our home office in Lansing, Michigan, is generating renewable energy and reducing our need for traditional power generation.
In its second year, the on-site solar farm at our home office in Lansing, Michigan, is generating renewable energy and reducing our need for traditional power generation.
The insurance holding company laws and regulations vary by jurisdiction, but generally require each controlled insurance company to register with state regulatory authorities and file reports that provide information, including capital structure, ownership, financial condition, certain intercompany transactions and general business operations.
These laws and regulations vary by jurisdiction, but generally require each controlled insurance company to register with state regulatory authorities and file reports that provide information, including capital structure, ownership, financial condition, certain intercompany transactions and general business operations.
JNLD is registered as a broker-dealer with the SEC, pursuant to the Securities Exchange Act of 1934, as amended, and is registered as a broker-dealer in all applicable states. JNLD is also a member of, and subject to regulation by, the Financial Industry Regulatory Authority ("FINRA"), a self-regulatory organization subject to SEC oversight.
Broker-Dealer Regulation JNLD is registered as a broker-dealer with the SEC, pursuant to the Securities Exchange Act of 1934, as amended, and is registered as a broker-dealer in all applicable states. JNLD is also a member of, and subject to regulation by, FINRA, a self-regulatory organization subject to SEC oversight.
PPM has established a distribution function to further extend its investment advisory capabilities to the institutional marketplace with separate account and institutional product offerings. The U.S. mutual funds for which PPM serves as adviser and sub-adviser are subject to U.S. federal regulation, and similar vehicles organized outside of the U.S. are also subject to regulation under applicable local law.
Business | Regulation distribution function to further extend its investment advisory capabilities to the institutional marketplace with separate account and institutional product offerings. The U.S. mutual funds for which PPM serves as adviser and sub-adviser are subject to U.S. federal regulation, and similar vehicles organized outside of the U.S. are also subject to regulation under applicable local law.
That’s why we make it our priority to offer opportunities for personal growth, talent development, and rewarding career paths for all Jackson team members. We believe our collaborative culture is one of our greatest strengths and is a significant factor in our ability to continue to be an industry leader. 23 Part I | Item 1.
We make it our priority to offer opportunities for personal growth, talent development, and rewarding career paths for all Jackson team members. We believe our collaborative culture is one of our greatest strengths and is a significant factor in our ability to continue to be an industry leader. 21 Part I | Item 1.
Or, if our creditworthiness falls below the FHLBI’s requirements or if legislative or other political actions cause changes to the FHLBI’s mandate or to the eligibility of life insurance companies to be members of the FHLBI system, we could be required to find other sources to replace this funding, which may prove difficult and increase our liquidity risk.
Also, if our creditworthiness were to fall below the FHLBI’s requirements, or if legislative or other political actions cause changes to the FHLBI’s mandate or to the eligibility of life insurance companies to be members of the FHLBI system, we could be required to find other sources to replace this funding, which may prove difficult and increase our liquidity risk.
The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 26 Part I | Item 1. Business | Information about our Executive Officers Information about our Executive Officers Below are the executive officers of Jackson Financial Inc. as of December 31, 2022.
The SEC’s website, www.sec.gov, contains financial reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 24 Part I | Item 1. Business | Information about our Executive Officers Information about our Executive Officers Below are the executive officers of Jackson Financial Inc. as of December 31, 2023 1 .
However, dividends in excess of prescribed limits, based on prior year’s earnings and surplus of the insurance company, are considered extraordinary transactions and require explicit approval from the applicable regulator.
However, dividends in excess of prescribed limits, based on prior year’s earnings and surplus of the insurance company, are considered extraordinary transactions and require explicit approval from the applicable regulator. See Item 1A.
Insurance holding company regulations generally provide that no person, corporation or other entity may acquire control of an insurance company, or a controlling interest in any parent company of an insurance company, without the prior approval of such insurance company’s domiciliary state insurance regulator.
Restrictions on Acquiring “Control” Insurance holding company regulations generally provide that no person, corporation or other entity may acquire control of an insurance company, or a controlling interest in any parent company of an insurance company, without the prior approval of such insurance company’s domiciliary state insurance regulator.
In any particular year, total adjusted capital amounts and RBC ratios could change due to a variety of factors, including the amount of statutory earnings generated by the insurance subsidiary, the amount of additional capital that insurer must hold to support business growth, equity market and credit market conditions, the value and credit ratings of certain fixed income and equity securities in its investment portfolio, as well as changes to the RBC formulas and the interpretation of the NAIC’s instructions with respect to RBC calculation methodologies.
In any particular year, total adjusted capital amounts and RBC ratios could change due to a variety of factors, including: • the amount of statutory earnings generated by the insurance subsidiary, • the amount of additional capital that an insurer must hold to support business growth, • equity, interest rate, and credit market conditions, • the value and credit ratings of certain fixed income and equity securities in an insurance subsidiary's investment portfolio, and • changes to the RBC formulas and the interpretation of the NAIC’s instructions with respect to RBC calculation methodologies.
Governmental regulatory authorities may institute administrative or judicial proceedings that may result in censure, fines, the issuance of cease-and-desist orders, trading prohibitions, the suspension or expulsion of a broker-dealer or member, its officers, registered representatives or employees or other similar sanctions. 22 Part I | Item 1.
Governmental regulatory authorities may institute administrative or judicial proceedings that may result in censure, fines, the issuance of cease-and-desist orders, trading prohibitions, the suspension or expulsion of a broker-dealer or member, its officers, registered representatives or employees or other similar sanctions.
If we were required to liquidate these investments on short notice, we could have difficulty doing so and could be forced to sell them for less than we otherwise would have been able to realize, which could cause a material adverse effect on our business, financial condition, results of operations and cash flows. 35 Part I | Item 1A.
If we were required to liquidate these investments on short notice, we could have difficulty doing so and could be forced to sell them for less than we otherwise would have been able to realize, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
A decrease in the risk-based capital ("RBC") ratio (as a result of a reduction in statutory capital and surplus or increase in RBC requirements) of our insurance subsidiaries could result in increased scrutiny by insurance regulators and rating agencies, which scrutiny could lead to corrective measures and ratings declines adversely affecting our business, financial condition, results of operations and cash flows.
A decrease in the risk-based capital ("RBC") ratio (as a result of a reduction in statutory capital and surplus or increase in RBC requirements) of our insurance subsidiaries could result in increased scrutiny by insurance regulators and rating agencies, which could lead to corrective measures and ratings downgrades that would adversely affect our business, financial condition, results of operations and cash flows.
We offer programs and educational tools to support their long-term financial wellness. These efforts help our associates build a more confident future for themselves, as well as for the long-term success of our Company and for our shareholders.
We offer programs and educational tools to support their long-term financial wellness. These efforts help our associates build a more confident future for themselves, as well as for the long-term success of our Company and for our shareholders. 23 Part I | Item 1.
In recent years, substantial consolidation and convergence among companies in the insurance and financial services industries resulted in increased competition from large, well-capitalized insurance and financial services firms that market products and services similar to ours. These competitors compete with us for customers, distribution partners (such as brokers and independent agents), and employees.
In recent years, substantial consolidation and convergence among companies in the insurance and financial services industries resulted in increased competition from large, well-capitalized insurance and financial services firms that market products and services similar to ours. These companies and firms compete with us for customers, distribution partners, and employees.
Item 1. Business | Regulation margin (comprised of specified liquid instruments and subject to required haircuts) when entering into uncleared swaps and security-based swaps with regulated entities. The initial margin requirements are being phased-in and may also ultimately require us to post initial margin when entering into such derivatives.
The variation margin requirements require us to exchange variation margin (comprised of specified liquid instruments and subject to required haircuts) when entering into uncleared swaps and security-based swaps with regulated entities. The initial margin requirements are being phased-in and may also ultimately require us to post initial margin when entering into such derivatives.
The SEC's regulatory asset management agenda, including items that have been implemented within the last year and those that are under consideration, may impact the growth of our investment advisory business due to the increased regulatory and compliance burdens.
The SEC's regulatory asset management agenda, including items that have been implemented in 2022 and those that are under consideration, may impact the growth of our investment advisory business due to the increased regulatory and compliance burdens.
Business | Human Capital Resources Talent Development, Diversity and Inclusion We have an established history of developing talent from within. Our senior management team has an average tenure at Jackson of over 20 years.
Business | Human Capital Resources Talent Development, Diversity and Inclusion We have an established history of developing talent from within. Our senior management team has an average tenure of over 20 years with the Company.
These rules generally require the banking institutions and their applicable affiliates to include contractual provisions in their qualified financial contracts that limit or delay certain rights of their counterparties including counterparties’ default rights (such as the right to terminate the contracts or foreclose on collateral) and restrictions on assignments and transfers of credit enhancements (such as guarantees) arising in connection with the banking institution or an applicable affiliate becoming subject to a bankruptcy, insolvency, resolution or similar proceeding.
Banking regulators' rules applicable to certain qualified financial contracts with banking institutions and their applicable affiliates, such as many derivatives contracts, securities lending agreements and repurchase agreements, generally require the inclusion of contractual provisions that limit or delay certain rights of their counterparties, including counterparties’ default rights (such as the right to terminate the contracts or foreclose on collateral) and restrictions on assignments and transfers of credit enhancements (such as guarantees) arising in connection with the banking institution or an applicable affiliate becoming subject to a bankruptcy, insolvency, resolution or similar proceeding.
Volatile market environments have the potential to increase hedging-related liquidity requirements, as the amount of cash we need to pay out in variation margin each day is directly related to the magnitude of equity market and interest rate movements.
Volatile market environments have the potential to increase hedging-related liquidity requirements, as the amount of cash we need to pay out in variation margin each day is directly related to the magnitude of equity market and interest rate movements and the size of our current positions in those instruments.
Any such failure, or any other intentional or unintentional misrepresentation of our products in advertising materials or other external communications, or inappropriate activities by our personnel or third-party distributors, could adversely affect our reputation and business, as well as lead to potential regulatory actions or litigation.
Any such failure, or any intentional or unintentional misrepresentation of our products in advertising materials or other external communications, or inappropriate activities by our associates or third-party distributors, could adversely affect our reputation and business and lead to potential regulatory action or litigation.
The CFTC is a federal agency that is responsible for, among other things, the regulation of commodity interests and enforcement of the Commodity Exchange Act of 1974. The NFA is a self-regulatory organization to which the CFTC has delegated, among other things, the administration and enforcement of commodity regulatory registration requirements and the regulation of its members.
The CFTC is a federal agency whose responsibilities include the regulation of commodity interests and enforcement of the Commodity Exchange Act of 1974. The NFA is a self-regulatory organization to which the CFTC has delegated, among other things, the administration and enforcement of commodity regulatory registration requirements and the regulation of its members.
In addition, broker-dealers are also subject to regulation by state securities administrators in those states in which they conduct business, who may also conduct examinations and direct inquiries to broker-dealers. 21 Part I | Item 1.
In addition, broker-dealers are also subject to regulation by state securities administrators in those states in which they conduct business, who may also conduct examinations and direct inquiries to broker-dealers.
Additionally, four of the seven-member senior management team are women, including our CEO and CFO. Benefits and Rewards We recognize the contributions our associates make to our future and their futures by offering competitive salaries, wages, and benefits.
Additionally, four of the eight-member executive committee team are women, including our CEO and CFO. Benefits and Rewards We recognize the contributions our associates make to our future and their futures by offering competitive salaries, wages, and benefits.
The second standard allows an insurer to pay an ordinary dividend out of other than earned surplus if such insurer does not have sufficient positive earned surplus to pay an ordinary dividend.
One standard allows a domestic stock life insurer to pay an ordinary dividend out of earned surplus. The second standard allows an insurer to pay an ordinary dividend out of other than earned surplus if such insurer does not have sufficient positive earned surplus to pay an ordinary dividend.
The program began in 2021 and in its second year is still seeing strong participation including: • More than 245 mentor pairings; • More than 2,000 hours of mentoring reported by participants; and • 4.5 out of 5 rating in overall program and relationship satisfaction.
The program began in 2021 and in its third year is still seeing strong participation including: • More than 210 mentor pairings; • More than 1,000 hours of mentoring reported by participants; and • 4.7 out of 5 rating in overall program and relationship satisfaction.
Through learning and development programs, succession and talent management processes, and competitive rewards and recognition, our diverse and high-performing associates are empowered to innovate and challenge one another to be their best selves. In 2022, 96.4% or over 3,750 of our associates have completed diversity and inclusion training.
Through learning and development programs, succession and talent management processes, and competitive rewards and recognition, our diverse and high-performing associates are empowered to innovate and challenge one another to be their best selves. In 2023, over 95% of our associates have completed diversity and inclusion training.
Additionally, U.S. federal income tax law imposes requirements relating to annuity and insurance product design, administration and investments that are conditions for beneficial tax treatment of such products under the Internal Revenue Code of 1986, as amended (the “Code”).
U.S. federal income tax law imposes requirements relating to annuity and insurance product design, administration and investments that are conditions for beneficial tax treatment of such products under the Internal Revenue Code of 1986, as amended (the “Code”). State and federal securities and insurance laws also impose requirements relating to annuity and insurance product design, offering, distribution, and administration.
Our key distribution partners could merge, consolidate, or change their business models in ways that affect how our products are sold or terminate their distribution contracts with us. New distribution channels could emerge and adversely impact the effectiveness of our distribution efforts.
Key distributors could terminate their relationship with us, reduce their distribution contracts with us, or reduce the amount of sales they produce for us. Our key distribution partners could merge, consolidate, or change their business models in ways that affect how our products are sold, or new distribution channels could emerge and adversely impact the effectiveness of our distribution efforts.
We had approximately 3,895 associates as of December 31, 2022, comprised of approximately 2,975 full-time associates and approximately 920 part-time associates, inclusive of our Strategic Support Program associates (a flexible, cost-efficient, part-time workforce provides just-in-time scale). Each of our associates play an important role in delivering on our brand promise of clarity for a more confident future.
We had approximately 3,840 associates as of December 31, 2023, comprised of approximately 3,015 full-time associates and approximately 825 part-time associates, inclusive of our Strategic Support Program associates (a flexible, cost-efficient, part-time workforce that provides just-in-time scale). Each of our associates play an important role in delivering on our brand promise of clarity for a more confident future.
These risks include: General conditions in the global capital markets and the economy could have a material adverse effect on our business, financial condition, results of operations and cash flows. Volatility in global capital markets and general economic downturns could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Risks Related to Conditions in Global Financial Markets and the Economy General conditions in the global financial markets and the economy could have a material adverse effect on our business, financial condition, liquidity, results of operations and cash flows. Volatility in global financial markets and general economic downturns could have a material adverse impact on us.
Prudential and its affiliates represent $23.3 billion of assets under management or 33% of PPM’s total assets under management. PPM’s investment management agreements with Prudential and its affiliates are terminable at any time or on short notice by either party, and Prudential and its affiliates are not under any obligation to maintain any level of assets under management with PPM.
Prudential and its affiliates represent $24.5 billion or 34% of PPM’s total assets under management. PPM’s investment management agreements with Prudential and its affiliates are terminable at any time or on short notice by either party, and Prudential and its affiliates are under no obligation to maintain any level of assets under management with PPM.
We also face competition from new entrants into our markets or non-traditional or online competitors, many of whom are leveraging digital technology that could challenge the position of traditional financial service companies, including us, by providing new services or creating new distribution channels.
We also face competition from new entrants into our markets or non-traditional or online competitors, many of whom leverage digital technology that could challenge us, a traditional financial service company, by providing new services or creating new distribution channels.
Prieskorn has been with Jackson National Life Insurance Company for more than 30 years, serving in roles of increasing responsibilities. Ms. Prieskorn's prior management positions include Executive Vice President and Chief Operating Officer from March 2020 through February 2021, and Senior Vice President, Operations from December 2009 through March 2020. Scott E.
Prieskorn has been with Jackson National Life Insurance Company for more than 30 years, serving in roles of increasing responsibilities. Ms. Prieskorn's prior management positions include Chief Operating Officer from April 2019 through February 2021, and Senior Vice President, Chief Administration Officer from December 2009 through April 2019. Christopher A.
These models may be ineffective due to incomplete or inaccurate assumptions or errors in data analysis or interpretation, which could result in materially inaccurate risk assessments and output. We use complex models to predict customer behavior, identify potential risks and estimate financial performance, including market trends.
We rely on complex models to predict behavior, identify potential risks and estimate financial performance, which models may be ineffective due to incomplete or inaccurate assumptions or errors in data collection, analysis or interpretation that could result in materially inaccurate risk assessments and output. We use complex models to predict customer behavior, identify risks and establish reserves.
These risks include: 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. Jackson Financial is the holding company for all our operations and is a separate legal entity from its subsidiaries.
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. Jackson Financial is the holding company for all our operations and is a separate legal entity from its subsidiaries.
In an economic downturn, our customers may choose to utilize guaranteed benefits differently than we have assumed, potentially taking partial withdrawals more regularly, which may lead to an increase in policyholders claims.
In an economic downturn, our customers may choose to utilize guaranteed benefits differently than we have assumed, potentially taking, for example, partial withdrawals more regularly.
Ganguly 47 Executive Vice President, Chief Operating Officer of Jackson Financial Inc., a position assumed in February 2021. Mr. Ganguly has served in various leadership roles with Jackson National Life Insurance Company including Senior Vice President and Chief Information Officer from July 2018 to February 2021. Prior to becoming Chief Information Officer, Mr.
Cummings is a Certified Public Accountant. Devkumar D. Ganguly 48 Executive Vice President, Chief Operating Officer of Jackson Financial Inc., a position assumed in February 2021. Mr. Ganguly has served in various leadership roles with Jackson National Life Insurance Company including Senior Vice President and Chief Information Officer from July 2018 to February 2021.
See “Risk Factors – Risks Related 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." Broker-Dealer, Investment Adviser, Mutual Fund and Securities Regulation We and certain policies and contracts offered by us are subject to regulation under the federal and state securities laws and regulations.
Risk Factors – “ Risks Related to Ratings, Liquidity and Capital Management -- 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. ” Broker-Dealer, Investment Adviser, Mutual Fund and Securities Regulation We and certain policies and contracts offered by us are subject to regulation under the federal and state securities laws and regulations.
These trademarks and service marks include those entity and product names that appear in this Form 10-K and our logo, as well as names of other products, advisor platforms, optional benefit annuity riders and marketing-related taglines. 25 Part I | Item 1.
Patent and Trademark Office. These trademarks and service marks include those entity and product names, that appear in this Form 10-K, and our logo, names of our other products, advisor platforms, optional benefit annuity riders and marketing-related taglines.
The state insurance regulators, however, may find that “control” exists in circumstances in which a person owns or controls less than 10% of voting securities.
Business | Regulation a showing that control does not, in fact, exist. The state insurance regulators, however, may find that “control” exists in circumstances in which a person owns or controls less than 10% of voting securities.
A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and cause a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Related to Ratings, Liquidity and Capital Management An actual or potential downgrade in our financial strength or issuer credit ratings could result in a loss of business and cause a material adverse effect on our business, financial condition, results of operations and cash flows.
Securities and Exchange Commission ("SEC"). We use our website, investors.jackson.com, as a routine channel for distribution of important information, including news releases, analyst presentations, financial information, and corporate governance information.
Securities and Exchange Commission ("SEC"). We use the investor relations page of our website, investors.jackson.com, as a routine channel for dissemination of important information, including news releases, analyst presentations, financial information, insider beneficial owner reports, and corporate governance information.
The ability of our insurance subsidiaries to pay dividends and make other distributions to Jackson will further depend on the impact such distributions may have on their financial strength ratings, and their ability to meet applicable regulatory standards and receive regulatory approvals.
The ability of our insurance subsidiaries to pay dividends and make other distributions to JFI depends on the impact such distributions may have on their financial strength ratings, their ability to meet applicable regulatory standards, and their ability to receive regulatory approvals to make such remittances to JFI. See “Item 1.
These risks include: Our failure to accurately describe the many features and options of our annuities or to administer the many features and options consistent with their descriptions could adversely impact our business, financial condition, results of operations and cash flows.
Risks Related to the Distribution of Our Products Our failure to accurately describe the features and options of our annuities, failure to administer those features and options consistent with their descriptions or mishandling of customer complaints could adversely impact our business, financial condition, results of operations and cash flows.
Consolidation of distributors or other industry changes could also increase the likelihood that distributors will try to renegotiate the terms of any existing selling agreements to terms less favorable to us.
Consolidation of distributors or other industry changes could also increase the likelihood that distributors will try to renegotiate the terms of any existing selling agreements to terms less favorable to us. Competition could adversely affect our market share and financial results.
Under the laws of each domiciliary state of our insurance subsidiaries, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company. This statutory presumption of control may be rebutted by a showing that control does not, in fact, exist.
Under the laws of each domiciliary state of our insurance subsidiaries, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company. This statutory presumption of control may be rebutted by 18 Part I | Item 1.
Jackson also has a risk management framework embedded across the Company, supporting the effectiveness of risk management and the control environment including oversight of ESG risks. We believe our long-term focus produces sustainable, competitive returns for our shareholders.
Our Company has an ownership culture that focuses on providing exceptional value to advisors, policyholders, and shareholders. Jackson also has a risk management framework embedded across the Company, supporting the effectiveness of risk management and the control environment including oversight of ESG risks. We believe our long-term focus produces sustainable, competitive returns for our shareholders.
We believe competition will intensify across all regions in response to consumer demand, digital and other technological advances, the need for economies of scale and the consequential impact of consolidation, regulatory actions, and other factors. Our ability to generate appropriate returns will depend significantly on our capacity to anticipate and respond appropriately to these competitive pressures.
Our ability to generate appropriate returns will depend significantly on our capacity to anticipate and respond appropriately to consumer demand, digital and other technological advances, the need for economies of scale and the consequential impact of consolidation, regulatory actions, and other factors.
An increase in bank, wire house and broker-dealer consolidation activity could increase competition for access to distributors, result in greater distribution expenses and impair our ability to market products through these channels.
An increase in bank, wire house and broker-dealer consolidation activity could increase competition for access to distributors, result in greater distribution expenses and impair our ability to market products through these channels. Any of these changes in distribution could materially and adversely impact our business, financial condition, results of operations.
PPM also acts as a sub-adviser to certain U.S. mutual funds for which JNAM serves as investment adviser. In addition, PPM serves as an investment adviser and sub-adviser to Prudential's Asian affiliates and other unaffiliated institutional clients primarily for U.S. focused portfolios.
PPM also acts as a sub-adviser to certain U.S. mutual funds for which JNAM serves as investment adviser. In addition, PPM serves as an investment adviser and sub-adviser to our former parent's Asian affiliates and other institutional clients primarily for U.S. focused portfolios. PPM has established a 19 Part I | Item 1.
Chelko was Senior Vice President and Chief Compliance Officer of Fidelity Investments, Personal Investing. Prior to Fidelity, from May 2013 through March 2020, Ms. Chelko served as the Senior Vice President and Chief Counsel at Lincoln Financial Group. Don W. Cummings 59 Senior Vice President, Chief Accounting Officer and Controller of Jackson Financial Inc., a position assumed in December 2020.
Prior to joining Jackson, from April 2020 through August 2021, Ms. Chelko was Senior Vice President and Chief Compliance Officer of Fidelity Investments, Personal Investing. Prior to Fidelity, from May 2013 through March 2020, Ms. Chelko served as the Senior Vice President and Chief Counsel at Lincoln Financial Group. Don W.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSome of our customers, prospective investors, or shareholders, or those considering such a relationship with us, may evaluate our business or other practices according to a variety of ESG standards and expectations. Some of our regulators have proposed ESG rules or announced that they intend to review our practices against ESG standards; others may yet do so.
Biggest changeOur efforts to meet Environmental, Social, and Governance (“ESG”) standards may not meet investors’ or regulators’ expectations; and our customers, prospective investors or shareholders, or those considering such a relationship with us, may negatively evaluate our business or other practices according to a variety of ESG standards and expectations.
For example, our certificate of incorporation and by-laws collectively: • authorize the issuance of shares of common stock to create voting impediments or to frustrate persons seeking to effect a takeover or gain control; • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt; • provide that, vacancies on our Board of Directors, including vacancies resulting from an enlargement of our Board of Directors, may be filled only by a majority vote of Directors then in office; • prohibit shareholder action by written consent, thereby requiring all actions to be taken at a meeting of the shareholders; and • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders.
For example, our certificate of incorporation and by-laws collectively: • authorize the issuance of shares of common stock that could be used to create voting impediments or to frustrate persons seeking to effect a takeover or gain control; • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt; • provide that vacancies on our Board of Directors, including vacancies resulting from an enlargement of our Board of Directors, may be filled only by a majority vote of Directors then in office; • prohibit shareholder action by written consent, thereby requiring all actions to be taken at a meeting of the shareholders; and • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders.
It is possible that an associate, contractor, or representative could, intentionally or unintentionally, disclose or misappropriate personal information or other confidential information. Our associates, distribution partners and other third-party partners use portable computers or mobile devices that could contain similar information to that in our information systems, and these devices have been and could be lost, stolen or damaged.
It is possible that an associate, contractor, or representative could, intentionally or unintentionally, disclose or misappropriate personal data or other confidential information. Our associates, distribution partners and other third-party partners use portable computers or mobile devices that could contain similar information to that in our information systems, and these devices have been and could be lost, stolen or damaged.
Any breach in the security of our information technology systems could result in the disclosure or misuse of confidential or proprietary business information, including sensitive customer, supplier, or associate information maintained in the ordinary course of our business.
Any breach in the security of our information technology systems could result in the disclosure or misuse of confidential or proprietary business information, including sensitive customer, supplier, or associate data maintained in the ordinary course of our business.
Risk Factors Anti-takeover provisions in our certificate of incorporation and by-laws could discourage, delay, or prevent a change of control of our Company and could affect the trading price of our common stock.
Anti-takeover provisions in our certificate of incorporation and by-laws could discourage, delay, or prevent a change of control of our Company and could affect the trading price of our common stock.
Our certificate of incorporation and our by-laws contain provisions that could discourage, delay, or prevent a change in our management or control over us, which shareholders consider favorable.
Our certificate of incorporation and our by-laws contain provisions that could discourage, delay, or prevent a change in our management or control over us, which shareholders consider to be favorable.
We employ a large number of complex and interconnected information technology and finance systems, models, and user developed applications in our processes to support our business operations. We also have arrangements in place with third-party suppliers and other service providers through which we share and receive information.
We employ a large number of complex and interconnected information technology and finance systems, models, and user developed applications in our processes to support our business operations. We also have arrangements in place with third-party suppliers and other service providers with whom we share and receive information.
We rely on commercial technologies and third parties to maintain the security of those systems. Anyone who circumvents our security measures and penetrates our information systems, or the cloud-based systems we use, could access, view, misappropriate, alter or delete any information in the systems, including personally identifiable customer information and proprietary business information.
We rely on commercial technologies and third parties to maintain the security of those systems. Anyone who circumvents our security measures and penetrates our information systems, or the cloud-based systems we use, has and could access, view, misappropriate, alter or delete any information in the systems, including customer data and proprietary business information.
Stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of particular companies. These broad market fluctuations could adversely affect the trading price of our common stock.
Stock markets have experienced extreme volatility in recent years unrelated to the operating performance of particular companies. These broad market fluctuations could adversely affect the trading price of our common stock.
Our information technology systems could fail, which could cause a material adverse effect on our business, financial condition, results of operations and cash flows. Our business operations depend on the ability to process large numbers of transactions for numerous and diverse products, which requires the effective operation of our information technology systems.
Risks Related to Information Technology, Security and Data Our information technology systems could fail, which could cause a material adverse effect on our business, financial condition, results of operations and cash flows. Our business operations depend on the ability to process large numbers of transactions for numerous and diverse products, which requires the effective operation of our information technology systems.
In addition, the market price of our common stock could fluctuate significantly due to, among other factors, our results of operations and any capital markets activities, investors’ perceptions of us relative to other companies in the insurance industry and other industries, and any related actions on the part of regulators or rating agencies. 49 Part I | Item 1A.
In addition, the market price of our common stock could fluctuate significantly due to, among other factors, our results of operations and any capital markets activities, investors’ perceptions of us relative to other companies in the insurance industry and other industries, and actions on the part of regulators or rating agencies.
Our inability to recruit, motivate and retain key associate s and experienced and productive associate s could cause a material adverse effect on our business, financial condition, results of operations and cash flows. Our business depends on our ability to attract, motivate, and retain highly skilled, and often highly specialized, technical, investment, actuarial, managerial, and executive personnel.
Risk Factors Our inability to recruit, motivate and retain key associates and experienced and productive associates could cause a material adverse effect on our business, financial condition, results of operations and cash flows. Our business depends on our ability to attract, motivate, and retain highly skilled, and often highly specialized, technical, investment, actuarial, managerial, and executive personnel.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our shareholders by any of our current or former directors, officers, other associates, agents or shareholders, (iii) any action asserting a claim arising out of or under the Delaware General Corporation Law ("DGCL"), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware (including, without limitation, any action asserting a claim arising out of or pursuant to our certificate of incorporation or our bylaws) or (iv) any action asserting a claim that is governed by the internal affairs doctrine.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf, • any action asserting a claim of breach of a fiduciary duty owed to us or our shareholders by any of our current or former directors, officers, other associates, agents or shareholders, • any action asserting a claim arising out of or under the Delaware General Corporation Law ("DGCL"), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware (including, without limitation, any action asserting a claim arising out of or pursuant to our certificate of incorporation or our bylaws), or 38 Part I | Item 1A.
We have made acquisitions and other strategic transactions in the past and may pursue further acquisitions or other strategic transactions, including reinsurance, dispositions, and joint ventures, in the future.
We face risks arising from acquisitions or other complex strategic transactions. We have made acquisitions and other strategic transactions in the past and may pursue further acquisitions or other strategic transactions, including reinsurance, dispositions, and joint ventures, in the future.
We are exposed to continuously evolving risks of attempts to disrupt the availability, confidentiality and integrity of our information technology systems, which could result in disruption to key operations or loss of the availability, confidentiality or integrity of customer or other Company data. This could result in reputational damage and direct or indirect financial loss.
We are exposed to continuously evolving risks of attempts to disrupt the availability, confidentiality and integrity of our information technology systems, which could result in disruption to key operations or loss of the availability, confidentiality or integrity of customer, associate, or other data.
Any compromise of the security of our information technology systems that results in the unauthorized disclosure of personally identifiable customer information could damage our reputation in the marketplace, deter people from purchasing our products, subject us to civil and criminal liability and require us to incur significant technical, legal and other expenses, any of which could cause a material adverse effect on our business, financial condition, results of operations, and cash flows.
Any compromise of our information technology systems or of the third-party partners' systems that results in the unauthorized access or disclosure of personal data or proprietary business information could damage our reputation in the marketplace, deter customers from purchasing our products, subject us to civil and criminal liability and require us to incur significant technical, legal and other expenses, any of which could cause a material adverse effect on our business, financial condition, results of operations, and cash flows.
We define our own corporate purpose, in part, by the sustainability of our practices and our impact on all our stakeholders. Our practices may not change in the way or at the rate all or any stakeholders expect.
Our decisions or priorities must necessarily and simultaneously, consider our business goals and interests. We define our own corporate purpose, in part, by the sustainability of our practices and our impact on all our stakeholders. Our practices may not change in the way or at the rate stakeholders expect.
Adverse outcomes from the operational risks of our material outsourcing partners, could disrupt our business, and have a negative impact on our business, financial condition, results of operations and cash flows. We rely on the performance and operations of a number of third-party distribution, policy administration, outsourcing (including external technology and data hosting), and service partners.
Adverse outcomes from the operational risks of our material outsourcing partners, could disrupt our business, and have a negative impact on our business, financial condition, results of operations and cash flows.
As a result, our efforts to conduct our business in accordance with some or all these expectations may involve compromises, at least in the short run. We may fail to meet our ESG commitments or targets.
As a result, our efforts to conduct our business in accordance with expectations may involve compromises, at least in the short run. We may fail to meet our ESG commitments or targets. Our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not be completely effective or satisfy investors, regulators, or other stakeholders.
Any such event, or any failure to comply with these data privacy requirements or other laws in this area, could cause damage to our reputation, or loss of revenue and could result in legal liability or penalties. In addition, we could incur large expenditures to investigate, remediate, and recover networks or information systems and protect against similar future events.
Any such event, or any failure to comply with these data privacy requirements or other laws in this area, 35 Part I | Item 1A. Risk Factors could cause damage to our reputation, or loss of revenue and could result in legal liability or penalties.
Our information technology systems, and those of our outside vendors and service providers, are vulnerable to physical or electronic intrusions, computer viruses, ransomware or other attacks, programming errors and disruption from similar events.
Our information technology systems, and those of our third-party vendors and service providers, are vulnerable to physical or electronic intrusions, computer viruses, ransomware or other attacks potentially exposing confidential customer or associate data or proprietary business information.
We are exposed to risks related to natural and man-made disasters and catastrophes, diseases, epidemics, pandemics, malicious acts, terrorist acts, civil unrest, and global climate change.
We are exposed to risks related to natural and man-made disasters and catastrophes, diseases, epidemics, pandemics, malicious acts, terrorist acts, civil unrest, and global climate change. We face exposure from the effects of natural or man-made catastrophic events (such as natural disasters, pandemics like COVID-19, cyber-attacks, acts of terrorism, civil unrest, and other catastrophes), and other external events.
These include back-office support functions, such as those relating to information technology infrastructure, development and support, and customer facing operations and services, such as product distribution and services (including through digital channels) and investment operations.
We rely on the performance and operations of a number of third-party relationships providing services such as back-office support functions, information technology infrastructure, customer facing operations and services, product distribution and services (including through digital channels), and investment operations.
Our security measures, including information security policies, administrative, technical, and physical controls, associate training and other preventative actions may not fully protect us from such events. During times of significant change, the resilience and operational effectiveness of these systems and processes could be adversely impacted.
Our security measures, including information security policies, standards, administrative, technical, and physical controls, associate training and other preventative actions may not fully protect us from such events. See "Item 1C. Cybersecurity" for more information.
We also face risks associated with the actions or inactions of our associates. These risks include: Adverse outcomes from the operational risks inherent in our business could disrupt our business, and have a negative impact on our business, financial condition, results of operations and cash flows.
In addition, new and currently unforeseeable regulatory issues could also arise due to the developing and uncertain regulatory environment. General Risk Factors Adverse outcomes from the operational risks inherent in our business could disrupt our business, and have a negative impact on our business, financial condition, results of operations and cash flows.
Our investors or others may evaluate our practices by ESG criteria that are continually evolving and not always clear. These standards and expectations may also reflect contrasting or conflicting values or agendas. Our decisions or priorities must also necessarily and simultaneously, consider our business goals and interests.
Some of our regulators have proposed ESG rules or announced that they intend to review our practices against ESG standards; others may yet do so. Our investors or other stakeholders may evaluate our practices by ESG criteria that are continually evolving and not always clear. These standards and expectations may also reflect contrasting or conflicting values or agendas.
We also face exposure from fraud, the effects of natural or man-made catastrophic events (such as natural disasters, pandemics, cyber-attacks, acts of terrorism, civil unrest, and other catastrophes), and other external events. These risks could also adversely impact us through our distribution partners and our partners that provide outsourcing, policy administration, external technology, data hosting and other services.
These risks could also adversely impact us through our distribution partners and our third-party relationships that provide outsourcing services such as policy administration, technology, and data hosting and administration.
Furthermore, we may need to take additional impairments or provide for additional allowances in the future, which could cause a material adverse effect on our business, financial condition, results of operations and cash flows. See Note 4 of Notes to Consolidated Financial Statements for further information . 44 Part I | Item 1A.
Even if we ultimately prevail in any litigation, arbitration, or any action or investigation by governmental authorities or regulators, we could suffer significant reputational harm, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. See Note 16 of Notes to Consolidated Financial Statements for further information.
GAAP and statutory financial statements and operation of internal controls. Our success also depends on the continued service of our key senior management team, including executive officers and senior managers.
Intense competition exists for key associates with demonstrated abilities, and we may be unable to retain or hire such associates. Our success also depends on the continued service of our key senior management team, including executive officers and senior managers.
New and currently unforeseeable regulatory issues could also arise from the increased use of emerging technology, data, and digital services. We retain confidential information in our information systems and in cloud-based systems (including customer transactional data and personal information about our distribution partners, customers, and our own associates).
In addition, we could incur large expenditures to investigate, remediate, and recover networks or information systems and protect against similar future events. We retain confidential information in our information systems and in cloud-based systems (including customer transactional data and personal data about our distribution partners, customers, and our own associates).
Failure to protect the confidentiality of customer information or proprietary business information could adversely affect our reputation and cause a material adverse effect on our business, financial condition, results of operations and cash flows.
Legal and regulatory investigations and actions are increasingly common in our industry and could result in a material adverse effect on our business, financial condition, results of operations and cash flows.
Removed
Item 1A. Risk Factors “market sensitivities”), which are used to guide our assessment of investment and hedging strategies and capital reserves. Any such market sensitivities may use inputs which are difficult to approximate and could include estimates that differ materially from actual results.
Added
Item 1A. Risk Factors From time to time, proposed tax law changes could, for example, eliminate all or a portion of the income tax advantages described above for annuities and life insurance. If legislation were enacted to eliminate the tax deferral for annuities, such a change would have an adverse effect on our ability to sell our annuities.
Removed
Any such estimates, or the absence thereof, could be associated with, among other things: (i) differences in returns of equity or fixed income indices and policyholder funds, (ii) actuarial assumptions related to customer behavior and life expectancy and (iii) management actions, including changes in investment and hedging activities, that may occur in response to developing facts, circumstances and experience for which no estimates are made in any market sensitivities.
Added
Moreover, if the treatment of annuities were changed prospectively, and the tax-favored status of existing contracts was grandfathered, holders of existing contracts would be less likely to surrender or rollover their contracts. These tax law changes, if implemented, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Removed
Any such estimates, or the absence thereof, could produce sensitivities that could differ materially from actual outcomes and therefore affect our actions in connection with our risk management program.
Added
The Inflation Reduction Act of 2022 (“IRA”) established in 2023 a new 15 percent corporate alternative minimum tax (“CAMT”) on large applicable corporations. The Company is a large applicable corporation and is subject to the tax each year starting in 2023. The implementation of the CAMT contemplates that the U.S. Department of Treasury issues final regulatory guidance.
Removed
Our liquidity, statutory capitalization, results of operations and financial condition could be adversely affected by a broad range of capital market scenarios, which could materially affect our reserving requirements and, by extension, could materially affect the accuracy of estimates used in any market sensitivities.
Added
It remains difficult to predict the specific final guidance or the definition of adjusted financial statement income.
Removed
If our reserves for future policy benefits and claims are not sufficient, we would be required to increase our reserve liabilities. We calculate and maintain reserves for estimated future benefit payments to our customers. We release these reserves as those future obligations are extinguished. The reserves we establish necessarily reflect estimates and actuarial assumptions about our expected future experience.
Added
In the absence of further guidance, despite our federal net operating loss and foreign tax credit carryforwards, we may be required to pay tax equal to 15 percent of our pre-tax financial statement income, as adjusted by the CAMT, which includes certain items that are non-economic and can fluctuate significantly based on the movement of interest rates and equity markets.
Removed
These estimates and actuarial assumptions include estimates and assumptions related to future mortality, longevity, interest rates, future equity performance, reinvestment rates, persistency, claims experience and customer elections (i.e., the exercise or non-exercise of rights by customers under the contracts). Examples of customer elections include lapses and surrenders, withdrawals and amounts of withdrawals, and contributions and the allocation thereof.
Added
The CAMT, including the potential impacts of pending regulatory guidance, and any potential future increase in the U.S. corporate income tax rate could have a material adverse effect on our results of operations and cash flows. Our investment advisory agreements with clients are subject to termination or non-renewal on short notice.
Removed
The assumptions and estimates used in connection with the reserve estimation process are inherently uncertain and involve the exercise of significant judgment. Annually, or as circumstances warrant, we conduct a comprehensive review of the assumptions used in connection with the reserve estimation process. Based on this review, reserves may be adjusted with a corresponding benefit or charge to net income.
Added
Our investment advisory subsidiaries’ written investment management agreements with their clients are terminable without penalty at any time or upon relatively short notice by either party. Moreover, our investment advisory subsidiaries’ investment management agreements with U.S.
Removed
Our future financial results depend on the extent to which our actual future experience is consistent with the assumptions we have used in pricing our products and determining our reserves. Many factors affect future experience, including economic, political, and social conditions, inflation, healthcare costs and changes in doctrines of legal liability and damage awards in litigation.
Added
Securities and Exchange Commission-registered investment companies (each, an “RIC”), including the RICs affiliated with Jackson that serve as the sole investment options for our variable annuities, may be terminated at any time, without payment of any penalty, by each RIC’s Board of Trustees (including a majority of the independent trustees) or by vote of a majority of the outstanding voting securities of the RIC on not more than 60 days’ notice.
Removed
The ultimate amounts we will pay for actual future benefits and the timing of those payments is uncertain. We could face unanticipated losses if there are significant deviations from our assumptions regarding the persistency of our annuity contracts or if mortality rates differ significantly from our pricing expectations.
Added
The investment management agreements pursuant to which our investment advisory subsidiaries manage RICs must be renewed and approved by each RICs’ Boards of Trustees or by vote of a majority of the outstanding voting securities of the RIC (including a majority of each RIC’s independent trustees) annually. A significant majority of an RIC’s trustees are independent.
Removed
Our future profitability is based in part on expected patterns of premiums, expenses and benefits using a number of assumptions, including those related to the probability that a policy or contract will remain in force from one period to the next, or persistency or mortality.
Added
Consequently, the Board of Trustees of each RIC may not approve the investment management agreement each year or may condition its approval on revised terms that are materially adverse to us.
Removed
It is not possible to precisely predict persistency or mortality, and actual results could differ significantly from assumptions. The effect of persistency on profitability varies for different products. For certain products, actual persistency that is lower than assumptions could have an adverse impact on future profitability.
Added
Also, as required by the Investment Company Act of 1940, as amended (the “Investment Company Act”), each investment advisory agreement with a RIC automatically terminates upon its assignment, although new investment advisory agreements may be approved by the RIC’s Board of Trustees and shareholders.
Removed
In addition, we could also be forced to sell investments at a loss to fund withdrawals. For some life insurance and variable annuities, actual persistency in later policy durations that is higher than assumed persistency could also have a negative impact on profitability.
Added
The Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”), also requires approval or consent of investment advisory agreements by clients in the event of an assignment of the agreement.
Removed
If these policies remain in force longer than assumed, we could be required to make greater benefit payments than we had anticipated when we priced these products. In addition, we set prices and initial crediting rates for our annuities based on expected claims and payment patterns, using assumptions for, among other factors, the persistency and mortality rates of our customers.
Added
An “assignment” for purposes of both the Investment Company Act and the Investment Advisers Act includes a sale of a controlling block of the voting stock of the investment adviser or its parent company, or a change in control of the investment adviser.
Removed
Significant deviations in experience from assumptions regarding persistency and mortality rates could have an adverse effect on our business, financial condition, results of operations and cash flows. The subjective determination of the amount of allowances and impairments taken on our investments could cause a material adverse effect on our business, financial condition, results of operations and cash flows.
Added
If an assignment were to occur, clients may not approve it, which event could have a material adverse effect on our business.
Removed
The manner of determining the amount of allowances and impairments varies by investment type and is based upon our evaluation and assessment of known and inherent risks associated with the respective asset class. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised.
Added
Changes to comply with new and potential laws or regulations that impose fiduciary or best interest standards in connection with the sale of our products could materially increase our costs, decrease our sales and result in a material adverse impact on our business, financial condition, results of operations and cash flows.
Removed
Management’s judgments, as reflected in our financial statements, may not be an accurate estimate of the actual and eventual diminution in realized value. Historical trends may not be indicative of future impairments or allowances.
Added
Regulators continue to propose and adopt fiduciary rules, best interest standards and other similar laws and regulations applicable to the sale of annuities. These rules, standards, laws, and regulations generally require advisers providing investment recommendations to act in the client’s best interest or put the client’s interest ahead of their own interest.
Removed
Risk Factors Risks Related to Counterparty Performance and Reinsurance We face credit risk from our transactions with counterparties relating to derivatives, reinsurance, and other transactions. These risks include: Our use of financial derivative transactions to hedge risks associated with our operations exposes us to counterparty credit risk that could adversely affect us.
Added
We face uncertainty regarding the adoption of these rules and regulations and the U.S. Securities and Exchange Commission, the U.S. Department of Labor, and state insurance departments could adopt potentially conflicting or overlapping standards.
Removed
We use derivatives primarily as part of our financial risk management strategy, principally to manage the inherent equity market and interest rate risk associated with the optional guaranteed benefits embedded in our products.
Added
Changes in these standards, rules and laws could lead to changes to our compensation practices and product offerings and increase our litigation risk, which could adversely affect our results of operations and financial condition. See “Item 1. Business—Regulation—Federal Initiatives.” Changes in accounting standards could cause a material adverse effect on our business, financial condition, results of operations and cash flows.
Removed
Derivative contracts, primarily composed of futures and options on equity indices and interest rates, are an essential part of our risk management program and are selected to provide a measure of protection against adverse financial market events.
Added
Our consolidated financial statements are prepared in accordance with U.S. GAAP, the principles of which are revised from time to time. Changes to U.S.
Removed
These transactions are designed to manage the risk of a change in the value, yield, price, cash flows or degree of exposure with respect to assets, liabilities, or future cash flows that we have acquired or incurred.
Added
GAAP could affect the way we account for and report significant areas of our business, impose special demands on us in areas of governance, associate training, internal controls and disclosures, and affect how we manage our business.
Removed
For information regarding notional amounts on our derivative instruments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Investments—Derivative Instruments.” We manage the potential credit exposure for derivative contracts through the use of the International Swaps and Derivatives Association’s (“ISDA’s”) collateral agreements and master netting agreements, and by limiting exposure to each counterparty based on their credit worthiness.
Added
To the extent that such changes affect income, expenses, assets, liabilities or shareholders’ equity, they could adversely affect rating agency metrics and could consequently adversely impact our financial strength ratings 34 Part I | Item 1A. Risk Factors and our ability to incur new indebtedness or refinance our existing indebtedness.
Removed
If our counterparty fails or refuses to honor its obligations under the derivative contracts, such failure or refusal could cause a material adverse effect on our business, financial condition, results of operations and cash flows, as we may not be able to realize the full market value of the derivative positions if the value exceeds the amount of collateral held, or we are unable to replace the derivative positions with a new counterparty.
Added
See Note 2 of Notes to Consolidated Financial Statements for a description of recently adopted and pending changes in accounting principles . Our operating insurance companies are also subject to statutory accounting practices prescribed or permitted by their states of domicile, whose accounting practices are driven by the NAIC.
Removed
Our transactions with financial and other institutions generally specify the circumstances under which either party is required to pledge collateral related to any change in the market value of the derivatives contracts. The amount of collateral, or variation margin, we are required to post under these agreements could increase under certain circumstances, which could adversely affect our liquidity.
Added
Any changes in the method of calculating reserves for our products under statutory accounting practices could result in increases in, and volatility of, reserve and capital requirements. For example, the NAIC is currently working to revise the economic scenarios that are inputs to the calculation of statutory reserves and required capital for many insurance products.
Removed
We invest on a short-term basis the cash collateral pledged to us by our derivative counterparties in unsecured money market and prime funds, which exposes us to the credit risk of the financial institutions where we invest funds received as collateral.
Added
Those revisions, which are expected to be finalized prior to 2026, could result in a material impact on the level and volatility of our statutory surplus and required statutory capital.
Removed
Additionally, implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) and other regulations could increase the need for liquidity and for the amount of collateral assets in excess of current levels, further exacerbating these risks.

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Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeWe also have leases for the following offices: • District of Columbia under a lease that expires in 2029; • Chicago, Illinois under a lease that in expires in 2029; • Schaumburg, Illinois under a lease that expires in 2025; and • East Lansing, Michigan under a lease that expires in 2024.
Biggest changeWe also have leases for the following offices: • District of Columbia under a lease that expires in 2029; • Chicago, Illinois under a lease that in expires in 2029; • Schaumburg, Illinois under a lease that expires in 2025; • East Lansing, Michigan under a lease that expires in 2029; and • Lansing, Michigan under a lease that expires in 2028.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

106 edited+76 added−62 removed24 unchanged
Biggest changeThe information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes elsewhere in this Report: Years Ended December 31, 2022 2021 2020 (in millions) Revenues Fee income $ 7,722 $ 8,059 $ 6,928 Premiums 132 148 187 Net investment income 2,761 3,424 2,818 Net gains (losses) on derivatives and investments 3,851 (2,478) (6,451) Other income 85 94 64 Total revenues 14,551 9,247 3,546 Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 2,290 970 1,362 Interest credited on other contract holder funds, net of deferrals and amortization 862 834 1,301 Interest expense 113 37 88 Operating costs and other expenses, net of deferrals 2,432 2,839 1,299 Cost of reinsurance — — 2,520 Amortization of deferred acquisition costs 1,743 520 (533) Total benefits and expenses 7,440 5,200 6,037 Pretax income (loss) 7,111 4,047 (2,491) Income tax expense (benefit) 1,371 602 (854) Net income (loss) 5,740 3,445 (1,637) Less: Net income (loss) attributable to noncontrolling interests 43 262 (3) Net income (loss) attributable to Jackson Financial Inc. $ 5,697 $ 3,183 $ (1,634) Adjusted Operating Earnings Net income (loss) attributable to Jackson Financial Inc. $ 5,697 $ 3,183 $ (1,634) Income tax expense (benefit) 1,371 602 (854) Pretax income (loss) attributable to Jackson Financial Inc. 7,068 3,785 (2,488) Non-operating adjustments (income) loss: Fees attributable to guarantee benefit reserves (3,077) (2,854) (2,509) Net movement in freestanding derivatives 2,744 5,674 4,662 Net reserve and embedded derivative movements (2,891) (2,753) 3,184 DAC and DSI impact 1,214 266 (1,261) Assumption changes (367) (24) (128) Total guaranteed benefits and hedging results (2,377) 309 3,948 Net realized investment gains (losses) including change in fair value of funds withheld embedded derivative (1,827) (161) (817) Loss on Athene Reinsurance Transaction — — 2,082 Net investment income on funds withheld assets (1,254) (1,188) (792) Other items 22 36 41 Total non-operating adjustments (5,436) (1,004) 4,462 Pretax Adjusted Operating Earnings 1,632 2,781 1,974 Operating income taxes 189 383 94 Adjusted Operating Earnings $ 1,443 $ 2,398 $ 1,880 66 Part II | Item 7.
Biggest changeThe information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes elsewhere in this report: Years Ended December 31, 2023 2022 2021 (in millions) Revenues Fee income $ 7,680 $ 7,722 $ 8,059 Premiums 147 132 148 Net investment income: Net investment income excluding funds withheld assets 1,756 1,507 2,236 Net investment income on funds withheld assets 1,174 1,254 1,188 Total net investment income 2,930 2,761 3,424 Net gains (losses) on derivatives and investments: Net gains (losses) on derivatives and investments (5,864) (3,023) (5,344) Net gains (losses) on funds withheld reinsurance treaties (1,801) 2,186 (21) Total net gains (losses) on derivatives and investments (7,665) (837) (5,365) Other income 67 85 94 Total revenues 3,159 9,863 6,360 Benefits and Expenses Death, other policy benefits and change in policy reserves, net of deferrals 965 1,062 925 (Gain) loss from updating future policy benefits cash flow assumptions, net 102 (34) 41 Market risk benefits (gains) losses, net (3,897) (3,536) (3,966) Interest credited on other contract holder funds, net of deferrals and amortization 1,145 866 832 Interest expense 185 113 37 Operating costs and other expenses, net of deferrals 2,549 2,432 2,839 Amortization of deferred acquisition costs 1,152 1,226 1,307 Total benefits and expenses 2,201 2,129 2,015 Pretax income (loss) 958 7,734 4,345 Income tax expense (benefit) 4 1,505 666 Net income (loss) 954 6,229 3,679 Less: Net income (loss) attributable to noncontrolling interests 20 43 262 Net income (loss) attributable to Jackson Financial Inc. 934 6,186 3,417 Less: Dividends on preferred stock 35 — — Net income (loss) attributable to Jackson Financial Inc. common shareholders $ 899 $ 6,186 $ 3,417 57 Part II | Item 7.
Total AUM reflects exclusions between segments to avoid double counting. We believe AUM is a useful metric for understanding of, among other things, the sources of our earnings, net investment income and performance of our invested assets, customer directed investments and risk management priorities.
Total AUM reflects exclusions between segments to avoid double counting. 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.
Monetary and fiscal policy in the U.S., or similar actions in foreign nations, could result in increased volatility in financial markets, including interest rates, currencies and equity markets, and could impact our business in both the short-term and medium-term.
Monetary and fiscal policy in the U.S., or similar actions in foreign nations, could result in increased volatility in financial markets, including interest rates, currencies and equity markets, and could impact our business in both the short- and medium-term.
Due to increases in interest rates, the yield on new investments has generally exceeded the yield on asset maturities and redemptions (runoff yield). Rising interest rates also impact the hedging results of our variable annuity business as the market value of interest rate hedges decline driving immediate hedging losses.
Due to increases in interest rates, the yield on new investments has generally exceeded the yield on asset maturities and redemptions (runoff yield). Rising interest rates also impact the hedging results of our variable annuity business as the market value of interest rate hedges decline, thereby driving immediate hedging losses.
Investment Strategy Our overall investment strategy is to maintain a diversified and largely investment grade fixed income portfolio that is capital efficient, achieves risk-adjusted returns that support competitive pricing for our products, generates profitable growth of our business and maintains adequate liquidity to support our obligations.
Investment Strategy Our overall investment strategy seeks to maintain a diversified and largely investment grade fixed income portfolio that is capital efficient, achieves risk-adjusted returns that support competitive pricing for our products, generates profitable growth of our business and maintains adequate liquidity to support our obligations.
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 income and policyholder behavior.
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.
We make funds available to customers where we believe we can transact in sufficiently correlated hedge assets, and we anticipate some variance in the performance of our hedge assets and customer funds. This variance may result in our hedge assets outperforming or underperforming the customer assets they are intended to match.
We make available to customers funds where we believe we can transact in sufficiently correlated hedge assets, yet we anticipate some variance in the performance of our hedge assets and customer funds. This variance may result in our hedge assets outperforming or underperforming the customer assets they are intended to match.
Management’s Discussion and Analysis of Financial Condition and Results of Operations 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview 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.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Common Stock Performance Graph The graph and table, below, compare the total return on our common stock with the total return on the S&P Global Ratings (“S&P”) 500, S&P 500 Insurance, S&P 500 Financials, and S&P Insurance Select Industry indices, respectively, between September 20, 2021 (the date that our common stock commenced regular way trading on the NYSE) through December 31, 2022.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Common Stock Performance Graph The graph and table, below, compare the total return on our common stock with the total return on the S&P Global Ratings (“S&P”) 500, S&P 500 Insurance, S&P 500 Financials, and S&P Insurance Select Industry indices, respectively, between September 20, 2021 (the date that our common stock commenced regular way trading on the NYSE) through December 31, 2023.
Closed Life and Annuity Blocks The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Closed Life and Annuity Blocks segment.
Closed Life and Annuity Blocks The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Closed Block Life and Annuity Blocks segment.
In addition, the potential risk to government social safety net programs and shifting of responsibility for retirement planning and financial security from employers and other institutions to employees, highlights the need for individuals to plan for their long-term financial security and will create additional opportunities to generate sustained demand for our products.
In addition, the potential risk to government social safety net programs and shifting of responsibility for retirement planning and financial security from employers and other institutions to employees, highlight the need for individuals to plan for their long-term financial security and will create additional opportunities to generate sustained demand for our products.
In recent years, we have introduced new products to better address changes in consumer demand and targeted distribution channels which meet changes in consumer preferences. Demographics We expect demographic trends in the U.S. population, in particular the increase in the number of retirement age individuals, to generate significant demand for our products.
In recent years, we have introduced new products to better address changes in consumer demand and targeted distribution channels that meet changes in consumer preferences. Demographics We expect demographic trends in the U.S. population, in particular the increase in the number of retirement age individuals, to generate significant demand for our products.
We have risk management plans in place and have been able to navigate through COVID-19 with remote and hybrid work environments; however, those plans may be challenged by a new public health emergency. Consumer Behavior We believe that many retirees have begun to look to tax-efficient savings products as a tool for addressing their unmet need for retirement planning.
We have risk management plans in place and were able to navigate through COVID-19 with remote and hybrid work environments; however, those plans may be challenged by a new public health emergency. Consumer Behavior We believe that many retirees look to tax-efficient savings products as a tool for addressing their unmet need for retirement planning.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Key Operating Measures Key Operating Measures We use a number of operating measures, discussed below, that management believes provide useful information about our businesses and the operational factors underlying our financial performance.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Key Operating Measures Key Operating Measures We use a number of operating measures, discussed below, which management believes provide useful information about our businesses and the operational factors underlying our financial performance.
The value of the shares withheld is the closing price of common stock of Jackson Financial Inc. on the date the relevant transaction occurs. 52 Part II | Item 5.
The value of the shares withheld is the closing price of common stock of Jackson Financial Inc. on the date the relevant transaction occurs. 42 Part II | Item 5.
(“Jackson Financial”) along with its subsidiaries (collectively, the “Company,” which also may be referred to as “we,” “our” or “us”), is a financial services company focused on helping Americans grow and protect their savings and income to enable them to pursue financial freedom for life.
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 focused on helping Americans grow and protect their retirement savings and income to enable them to pursue financial freedom for life.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments Debt Securities At December 31, 2022 and December 31, 2021, 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): December 31, 2022 Amortized Cost Allowance for Credit Loss Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government securities $ 6,192 $ — $ 1 $ 1,008 $ 5,185 Other government securities 1,719 2 1 251 1,467 Corporate securities Utilities 5,893 — 27 695 5,225 Energy 3,006 10 7 390 2,613 Banking 1,994 — 2 234 1,762 Healthcare 2,956 — 8 439 2,525 Finance/Insurance 4,497 4 8 621 3,880 Technology/Telecom 2,333 1 2 296 2,038 Consumer goods 2,463 — 10 378 2,095 Industrial 1,675 — 8 173 1,510 Capital goods 1,982 — 3 196 1,789 Real estate 1,723 — 1 225 1,499 Media 1,230 — 1 175 1,056 Transportation 1,576 — 3 214 1,365 Retail 1,312 — 5 182 1,135 Other (1) 2,056 — 1 178 1,879 Total Corporate Securities 34,696 15 86 4,396 30,371 Residential mortgage-backed 510 6 19 59 464 Commercial mortgage-backed 1,821 — — 183 1,638 Other asset-backed securities 6,133 — 8 504 5,637 Total Debt Securities $ 51,071 $ 23 $ 115 $ 6,401 $ 44,762 (1) No single remaining industry exceeds 3% of the portfolio. 75 Part II | Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments December 31, 2022 Amortized Cost Allowance for Credit Loss Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government securities $ 6,192 $ — $ 1 $ 1,008 $ 5,185 Other government securities 1,719 2 1 251 1,467 Corporate securities Utilities 5,893 — 27 695 5,225 Energy 3,006 10 7 390 2,613 Banking 1,994 — 2 234 1,762 Healthcare 2,956 — 8 439 2,525 Finance/Insurance 4,497 4 8 621 3,880 Technology/Telecom 2,333 1 2 296 2,038 Consumer goods 2,463 — 10 378 2,095 Industrial 1,675 — 8 173 1,510 Capital goods 1,982 — 3 196 1,789 Real estate 1,723 — 1 225 1,499 Media 1,230 — 1 175 1,056 Transportation 1,576 — 3 214 1,365 Retail 1,312 — 5 182 1,135 Other (1) 2,056 — 1 178 1,879 Total Corporate Securities 34,696 15 86 4,396 30,371 Residential mortgage-backed 510 6 19 59 464 Commercial mortgage-backed 1,821 — — 183 1,638 Other asset-backed securities 6,133 — 8 504 5,637 Total Debt Securities $ 51,071 $ 23 $ 115 $ 6,401 $ 44,762 (1) No single remaining industry exceeds 3% of the portfolio.
As such, significant credit rating downgrades along with elevated defaults and OTTI losses would negatively impact our RBC ratio which could impact available dividends from our insurance subsidiaries. Pandemics and Other Public Health Crises The COVID-19 pandemic disrupted our business and contributed to additional operating costs over the past several years.
As such, significant credit rating downgrades along with elevated defaults and OTTI losses would negatively impact our RBC ratio, which could impact available dividends from our insurance subsidiaries. Pandemics and Other Public Health Crises The COVID-19 pandemic disrupted our business and contributed to additional operating costs in prior years.
Our financial performance can be adversely affected by market volatility and equity market declines if fees assessed on the account value of our annuities fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows. Equity Market Environment Our financial performance is impacted by the performance of equity markets.
Our financial performance can be adversely affected by market volatility and equity market declines if fees assessed on the account value of our annuities fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows.
Interest Rate Environment The interest rate environment has affected, and will continue to affect our business and financial performance in the future for the following reasons: • Periods of sharp rises in interest rates, as we have seen recently as a result of the Federal Reserve's actions and signals about upcoming interest rate decisions, impact investment related activity including investment income returns, net investment spread results, new money rates, mortgage loan prepayments, and bond redemptions.
Interest Rate Environment The interest rate environment has affected, and will continue to affect, our business and financial performance for the following reasons: • Periods of sharp rises in interest rates, as we have seen as a result of the Federal Reserve’s past actions, impact investment-related activity including investment income returns, net investment spread results, new money rates, mortgage loan prepayments, and bond redemptions.
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. • Finally, some of our annuities have a guaranteed minimum interest crediting rate.
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.
We believe account value is a useful metric in providing an understanding of, among other things, the sources of potential fee income generation, potential benefit obligations and risk management priorities. 60 Part II | Item 7.
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.
The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this Report: Years Ended December 31, 2022 2021 2020 (in millions) Institutional Products: Operating Revenues Net investment income $ 312 $ 260 $ 355 Income (loss) on operating derivatives (22) (3) — Other income — — 1 Total Operating Revenues 290 257 356 Operating Benefits and Expenses Interest credited on other contract holder funds, net of deferrals and amortization 201 188 250 Interest expense 5 — 16 Operating costs and other expenses, net of deferrals 5 5 5 Total Operating Benefits and Expenses 211 193 271 Pretax Adjusted Operating Earnings $ 79 $ 64 $ 85 The following table summarizes a roll forward of activity affecting account value for our Institutional Products segment for the periods indicated: Years Ended December 31, 2022 2021 2020 (in millions) Institutional Products: Balance as of beginning of period $ 8,830 $ 11,138 $ 12,287 Premiums and deposits 2,398 475 1,284 Surrenders, withdrawals, and benefits (2,358) (2,915) (2,801) Net flows 40 (2,440) (1,517) Credited Interest 201 188 266 Policy Charges and other (52) (56) 102 Balance as of end of period $ 9,019 $ 8,830 $ 11,138 70 Part II | Item 7.
The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this report: Years Ended December 31, 2023 2022 2021 (in millions) Institutional Products: Operating Revenues Net investment income $ 474 $ 312 $ 260 Income (loss) on operating derivatives (50) (22) (3) Total Operating Revenues 424 290 257 Operating Benefits and Expenses Interest credited on other contract holder funds, net of deferrals and amortization 334 201 188 Interest expense 16 5 — Operating costs and other expenses, net of deferrals 5 5 5 Total Operating Benefits and Expenses 355 211 193 Pretax Adjusted Operating Earnings $ 69 $ 79 $ 64 The following table summarizes a roll-forward of activity affecting account value for our Institutional Products segment for the periods indicated: Years Ended December 31, 2023 2022 2021 (in millions) Institutional Products: Balance as of beginning of period $ 9,019 $ 8,830 $ 11,138 Premiums and deposits 1,065 2,398 475 Surrenders, withdrawals, and benefits (2,050) (2,358) (2,915) Net flows (985) 40 (2,440) Credited Interest 334 201 188 Policy Charges and other 38 (52) (56) Balance as of end of period $ 8,406 $ 9,019 $ 8,830 61 Part II | Item 7.
The fair value of these and our other invested assets fluctuates depending on market and other general economic conditions and the interest rate environment and could be adversely impacted by other economic factors.
The fair value of these and our other invested assets fluctuates depending on market and other general economic conditions and the interest rate environment and is affected by other economic factors.
While the effects of that pandemic appear to be subsiding, other pandemics, epidemics or disease outbreaks in the U.S. or globally could disrupt our business by affecting how we protect and interact with our critical workforce, customers, key vendors, third-party suppliers, or counterparties with whom we transact.
Other similar pandemics, epidemics or disease outbreaks in the U.S. or globally could disrupt our business by affecting how we protect and interact with our critical workforce, customers, key vendors, third-party suppliers, or counterparties with whom we transact.
Macroeconomic and Financial Market Conditions Our business and results of operations are affected by macroeconomic factors. The level of interest rates and shape of the yield curve, credit and equity market performance and equity volatility, regulation, tax policy, the level of U.S. employment, inflation and the overall economic growth rate can affect both our short and long-term profitability.
The level of interest rates and shape of the yield curve, credit and equity market performance and equity volatility, regulation, tax policy, the level of U.S. employment, inflation and the overall U.S. economic growth rate can affect both our short- and long-term profitability.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends Macroeconomic, Industry and Regulatory Trends We discuss a number of trends and uncertainties below that we believe could materially affect our future business performance, including our results of operations, our investments, our cash flows, and our capital and liquidity position.
Macroeconomic, Industry and Regulatory Trends We discuss a number of trends and uncertainties below that we believe could materially affect our future business performance, including our results of operations, our investments, our cash flows, and our capital and liquidity position. Macroeconomic and Financial Market Conditions Our business and results of operations are affected by macroeconomic factors.
Further, we expect near-term hedging losses from rising rates may be more than offset by changes in the fair value of the related guaranteed benefit liabilities as was the case for the year ended December 31, 2022. • Interest rate increases also expose us to disintermediation risk, where higher rates make currently sold fixed annuity products more attractive while simultaneously reducing the market value of assets backing our liabilities.
Further, we expect near-term hedging losses from rising rates may be more than offset by changes in the fair value of the related guaranteed benefit liabilities, which are reduced with an increase in interest rates due to the higher discount rate. • Interest rate increases also expose us to disintermediation risk, where higher rates make currently sold fixed annuity products more attractive while simultaneously reducing the market value of assets backing our liabilities.
We exclude AOCI attributable to JFI from Adjusted Book Value 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 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.
Account Value Institutional product account value increased from $8,830 million at December 31, 2021 to $9,019 million at December 31, 2022. The increase in account value was driven by new issuances in 2022, partially offset by continued maturities of the existing contracts and funding agreements.
Account Value Institutional product account value decreased from $9,019 million at December 31, 2022 to $8,406 million at December 31, 2023. The decrease in account value was driven by continued maturities of the existing contracts, partially offset by new issuances in 2023.
Consequently, our non-GAAP financial measures may not be comparable to similar measures used by other companies. These non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with U.S. GAAP.
These non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with U.S. GAAP.
GAAP, we use and report, selected non-GAAP financial measures. Management believes that the use of these non-GAAP financial measures, together with relevant U.S. GAAP financial measures, provides a better understanding of our results of operations, financial condition and the underlying performance drivers of our business.
Management believes that the use of these non-GAAP financial measures, together with relevant U.S. GAAP financial measures, provides a better understanding of our results of operations, financial condition and the underlying performance drivers of our business. 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.
Pretax Adjusted Operating Earnings by Segment The following table summarizes pretax adjusted operating earnings from the Company's business segment operations and also provides a reconciliation of the segment measure to net income on a consolidated U.S. GAAP basis. See also Item 8.
The following tables and discussion represent an overall view of our results of operations for each segment. Pretax Adjusted Operating Earnings by Segment The following table summarizes pretax adjusted operating earnings (non-GAAP) from the Company's business segment operations and also provides a reconciliation of the segment measure to net income on a consolidated GAAP basis. Also, see Item 8.
In particular, our hedges could be less effective in periods of large directional movements or we could experience more frequent or more costly rebalancing in periods of high volatility, which would lead to adverse performance versus our hedge targets and increased hedging costs.
In addition, our hedges could be less effective in periods of large directional movements or we could experience more frequent or more costly rebalancing in periods of high volatility, which would lead to adverse performance versus our 51 Part II | Item 7.
However, we believe the adjustments to net income are useful for gaining an understanding of our overall results of operations. Adjusted Operating Earnings equals our net income adjusted to eliminate the impact of the following items: 1.
However, we believe the adjustments to net income are useful for gaining an understanding of our overall results of operations.
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.
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. Consequently, our non-GAAP financial measures may not be comparable to similar measures used by other companies.
Political events, including precautions with the COVID-19 pandemic, civil unrest, tariffs or other barriers to international trade, and the effects that these or other political events could have on levels of economic activity, could also impact our business through impacts on consumers’ behavior or impact on financial markets.
Government actions, including responses to future pandemics, civil unrest, tariffs or other barriers to international trade, and the effects that these or other government events could have on levels of U.S. economic activity, could also impact our business through any of their individual impacts on consumers’ behavior or on financial markets.
We believe excluding AOCI attributable to JFI is more useful to investors in analyzing trends in our business. Adjusted Book Value and Adjusted Operating ROE should not be used as substitutes for total shareholders’ equity and ROE as calculated using annualized net income and average equity in accordance with U.S. GAAP.
Adjusted Book Value Attributable to Common Shareholders and Adjusted Operating ROE Attributable to Common Shareholders should not be used as substitutes for total shareholders’ equity and ROE as calculated using annualized net income and average equity in accordance with U.S. GAAP.
We would expect lower hedging costs and reduced levels of hedging going forward.
We would expect lower hedging costs and reduced levels of hedging going forward after such an increase in rates.
After tightening in 2021, credit spreads widened in 2022. As credit spreads widen, the fair value of our existing investment portfolio generally decreases, although we generally expect the widening spreads to increase the yield on new fixed income investments.
As credit spreads widen, the fair value of our existing investment portfolio generally decreases, although we generally expect the widening spreads to increase the yield on new fixed income investments. Conversely, as credit spreads tighten, the fair value of our existing investment portfolio 52 Part II | Item 7.
(3) Includes shares withheld pursuant to the terms of awards under the Company's 2021 Omnibus Incentive Plan to offset tax withholding obligations that occur upon vesting and release of shares, which are treated as share repurchases.
Note 24 - Equity of Notes to Consolidated Financial Statements included elsewhere in this Form 10-K. (2) Includes shares withheld pursuant to the terms of awards under the Company's 2021 Omnibus Incentive Plan to offset tax withholding obligations that occur upon vesting and release of shares, which are treated as share repurchases.
We report certain activities and items that are not included in these segments, including the results of PPMH, the holding company of PPM, which manages the majority of our general account investment portfolio, in Corporate and Other. See Note 3 to Consolidated Financial Statements for further information on our segments .
We report certain activities and items that are not included in these segments, including the results of PPM Holdings, Inc., the holding company of PPM America Inc. ("PPM"), which manages the majority of our general account investment portfolio, in Corporate and Other. See Item 8.
The calculation of adjusted financial statement income, and therefore the AMT, is subject to the issuance of regulatory guidance by the U.S. Department of the Treasury, which is expected throughout 2023.
The calculation of adjusted financial statement income, and therefore the CAMT, is subject to the issuance of regulatory guidance by the U .S. Department of the Treasury, which may materially change the estimated provision for the CAMT.
Assets Under Management AUM, or assets under management, refers to investment assets that are managed by one of our subsidiaries and includes: (i) the assets in our investment portfolio managed by PPM, which excludes assets held in funds withheld accounts for reinsurance transactions, (ii) third party assets managed by PPM, including those for Prudential and its affiliates or third parties, and (iii) the separate account assets of our Retail Annuities segment that Jackson National Asset Management ("JNAM") manages and administers.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Key Operating Measures Assets Under Management AUM, or assets under management, refers to investment assets that are managed by one of our subsidiaries and includes: (i) assets managed by PPM, including our investment portfolio (but excluding assets held in funds withheld accounts for reinsurance transactions) and third-party assets (including our former parent and its affiliates) and (ii) the separate account assets of our Retail Annuities segment managed and administered by one of our subsidiaries, Jackson National Asset Management LLC ("JNAM").
The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this Report: Years Ended December 31, 2022 2021 2020 (in millions) Corporate and Other: Operating Revenues Fee income $ 52 $ 65 $ 88 Net investment income 65 55 (35) Income (loss) on operating derivatives 14 32 21 Other income 8 8 8 Total Operating Revenues 139 160 82 Operating Benefits and Expenses Interest expense 76 15 45 Operating costs and other expenses, net of deferrals 123 146 134 Amortization of deferred acquisition costs 12 34 20 Total Operating Benefits and Expenses 211 195 199 Pretax Adjusted Operating Earnings $ (72) $ (35) $ (117) Year Ended December 31, 2022 compared to Year Ended December 31, 2021 Pretax Adjusted Operating Earnings Pretax adjusted operating earnings decreased $37 million to $(72) million for the year ended December 31, 2022 from $(35) million for the year ended December 31, 2021 primarily due to the following: • $61 million higher interest expense incurred in the current year primarily related to our senior notes.
The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this report: Years Ended December 31, 2023 2022 2021 (in millions) Corporate and Other: Operating Revenues Fee income $ 52 $ 52 $ 65 Net investment income 71 65 55 Income (loss) on operating derivatives (13) 14 32 Other income 5 8 8 Total Operating Revenues 115 139 160 Operating Benefits and Expenses Interest expense 85 76 15 Operating costs and other expenses, net of deferrals 203 123 147 Total Operating Benefits and Expenses 288 199 162 Pretax Adjusted Operating Earnings $ (173) $ (60) $ (2) Year Ended December 31, 2023 compared to Year Ended December 31, 2022 Pretax Adjusted Operating Earnings Pretax adjusted operating earnings decreased $113 million to $(173) million for the year ended December 31, 2023 from $(60) million for the year ended December 31, 2022 primarily due to the following: • $80 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in deferred compensation expenses in 2023; • $27 million decrease in income on operating derivatives primarily due to the increase in floating rates in 2023; and • $9 million higher interest expense incurred in the current year primarily related to our senior notes.
A prolonged low interest rate environment subjects us to increased hedging costs or an increase in the amount of statutory reserves that our insurance subsidiaries are required to hold for optional guaranteed benefits, decreasing statutory surplus, which would adversely affect their ability to pay dividends.
See Executive Summary above for more information regarding the Brooke Re Transaction. • Low interest rate environments could also subject us to increased hedging costs or an increase in the amount of statutory reserves that our insurance subsidiaries are required to hold for optional guaranteed benefits, decreasing statutory surplus, which would adversely affect our insurance subsidiaries' ability to pay dividends.
Years Ended December 31, 2022 2021 2020 (in millions) Sales Variable annuities $ 13,638 $ 19,073 $ 16,621 RILA 1,811 108 — Fixed Index Annuities 126 115 997 Fixed Annuities 162 33 327 Total Retail Annuity Sales 15,737 19,329 17,945 Total Institutional Product Sales 2,398 475 1,284 Total Sales $ 18,135 $ 19,804 $ 19,229 For the year ended December 31, 2022, total sales decreased by $1,669 million compared to the year ended December 31, 2021.
Years Ended December 31, 2023 2022 2021 (in millions) Sales Variable annuities $ 9,540 $ 13,638 $ 19,073 RILA 2,890 1,811 108 Fixed Index Annuities 210 126 115 Fixed Annuities (1) 193 162 33 Total Retail Annuity Sales 12,833 15,737 19,329 Total Institutional Product Sales 1,065 2,398 475 Total Sales $ 13,898 $ 18,135 $ 19,804 (1) Includes payout annuities For the year ended December 31, 2023, total sales decreased significantly compared to the year ended December 31, 2022.
The graph and table show the total return on a hypothetical $100 investment in our shares of common stock and in each index, respectively, on September 20, 2021, including the reinvestment of all dividends. 9/20/2021 12/31/2021 03/31/2022 06/30/2022 09/30/2022 12/31/2022 Jackson Financial Inc. 100 162.50 174.23 107.00 112.99 141.65 S&P 500 Index 100 109.37 103.96 86.87 82.28 88.11 S&P 500 Insurance Index 100 107.51 116.53 104.36 100.16 116.26 S&P 500 Financial Index 100 106.77 104.73 85.96 82.85 93.58 S&P Insurance Select Industry Index 100 106.97 111.32 100.32 95.74 108.77 Item 6. [Reserved] 53 Item 7.
The graph and table show the total return on a hypothetical $100 investment in our shares of common stock and in each index, respectively, on September 20, 2021, including the reinvestment of all dividends. 9/20/2021 12/31/2021 12/31/2022 03/31/2023 06/30/2023 09/30/2023 12/31/2023 Jackson Financial Inc. 100 162.50 141.65 153.01 128.08 164.18 226.00 S&P 500 Index 100 109.37 88.11 94.30 102.13 98.40 109.46 S&P 500 Insurance Index 100 107.51 116.26 109.73 114.08 117.43 124.78 S&P 500 Financial Index 100 106.77 93.58 87.92 92.17 90.69 102.88 S&P Insurance Select Industry Index 100 106.97 108.77 104.55 108.47 112.87 120.00 Item 6. [Reserved] 43 Item 7.
Further, we are also exposed to basis risk, which results from our inability to purchase or sell hedge assets whose performance is perfectly correlated to the performance of the funds into which customers allocate their assets.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends hedge targets and increased hedging costs. Further, we also are exposed to basis risk, which results from our inability to purchase or sell hedge assets whose performance is directly correlated to the performance of the funds into which customers allocate their assets.
Namely, it makes it easier for 401(k) programs to offer annuities as an investment option by, among other things, creating a statutory safe harbor in ERISA for a retirement plan’s selection of an annuity provider. The SECURE Act represents the largest overhaul to retirement plans in over a decade.
Namely, it made it easier for 401(k) programs to offer annuities as an investment option by, among other things, creating a statutory safe harbor in ERISA for a retirement plan’s selection of an annuity provider. On December 29, 2022, Congress signed into law the SECURE 2.0 Act of 2022 (“SECURE 2.0”).
See “Critical Accounting Estimates” below for more information. Also, an understanding of several key operating measures, including sales, account value, net flows, benefit base and assets under management ("AUM"), is helpful to evaluating our results. See “Key Operating Measures” below.
Financial Statements and Supplementary Data — Note 3 - Segment Information of Notes to Condensed Consolidated Financial Statements for further information on our segments. An understanding of several key operating measures, including sales, account value, net flows, benefit base and assets under management ("AUM"), is helpful in evaluating our results. See “Key Operating Measures” below.
You should read this Annual Report on Form 10-K (the "Form 10-K") in its entirety for a more detailed description of events, trends, uncertainties, risks and critical accounting estimates affecting us. Discussion related to the results of operations for the Company's comparison of 2021 results to 2020 results have been omitted in this Form 10-K.
You should read this Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "Form 10-K") in its entirety for a more detailed description of events, trends, uncertainties, risks and critical accounting estimates affecting us.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments Portfolio Composition The following table summarizes the carrying values of our investments: December 31, 2022 2021 Investments excluding Funds Withheld Funds Withheld Total Investments excluding Funds Withheld Funds Withheld Total (in millions) Debt Securities, available-for-sale, net of allowance for credit losses $ 28,867 $ 13,622 $ 42,489 $ 32,453 $ 19,094 $ 51,547 Debt Securities, at fair value under fair value option 2,014 159 2,173 1,547 164 1,711 Debt securities, trading, at fair value 100 — 100 117 — 117 Equity securities, at fair value 316 77 393 163 116 279 Mortgage loans, net of allowance for credit losses 6,840 4,127 10,967 6,743 4,739 11,482 Mortgage loans, at fair value under fair value option — 582 582 — — — Policy loans 942 3,435 4,377 992 3,483 4,475 Freestanding derivative instruments 1,192 78 1,270 1,375 42 1,417 Other invested assets 2,802 793 3,595 2,484 715 3,199 Total investments $ 43,073 $ 22,873 $ 65,946 $ 45,874 $ 28,353 $ 74,227 Available-for-sale debt securities decreased to $42,489 million at December 31, 2022 from $51,547 million at the end of 2021, primarily due to a decrease in net unrealized gains.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Investments Portfolio Composition The following table summarizes the carrying values of our investments: December 31, 2023 2022 Investments excluding Funds Withheld Funds Withheld Total Investments excluding Funds Withheld Funds Withheld Total (in millions) Debt Securities, available-for-sale, net of allowance for credit losses $ 28,896 $ 11,526 $ 40,422 $ 28,867 $ 13,622 $ 42,489 Debt Securities, at fair value under fair value option 2,037 116 2,153 2,014 159 2,173 Debt securities, trading, at fair value 68 — 68 100 — 100 Equity securities, at fair value 243 151 394 316 77 393 Mortgage loans, net of allowance for credit losses 7,015 3,067 10,082 6,840 4,127 10,967 Mortgage loans, at fair value under fair value option — 481 481 — 582 582 Policy loans 928 3,471 4,399 942 3,435 4,377 Freestanding derivative instruments 375 15 390 1,192 78 1,270 Other invested assets 1,757 709 2,466 2,802 793 3,595 Total investments $ 41,319 $ 19,536 $ 60,855 $ 43,073 $ 22,873 $ 65,946 Available-for-sale debt securities decreased to $40,422 million at December 31, 2023 from $42,489 million at the end of 2022, primarily due to dispositions, partially offset by declines in unrealized losses primarily in the funds withheld portfolio.
As previously mentioned, our investment manager accesses a broad universe of potential investments to construct the investment portfolio and considers the benefits of diversification across various sectors, collateral types and asset classes.
Recognizing the trade-offs between the level of risk, required capital, liquidity and investment return, the largest allocation within our investment portfolio is to investment grade fixed income securities. As previously mentioned, our investment manager accesses a broad universe of potential investments to construct the investment portfolio and considers the benefits of diversification across various sectors, collateral types and asset classes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Segment Results of Operations Year Ended December 31, 2022 compared to Year Ended December 31, 2021 Pretax Adjusted Operating Earnings Pretax adjusted operating earnings increased $15 million to $79 million for the year ended December 31, 2022 from $64 million for the year ended December 31, 2021 primarily due to increased investment income partially offset by higher interest credited and increased losses on operating derivatives, driven by interest rate and foreign exchange movements, compared to prior year.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Segment Results of Operations Year Ended December 31, 2023 compared to Year Ended December 31, 2022 Pretax Adjusted Operating Earnings Pretax adjusted operating earnings decreased $10 million to $69 million for the year ended December 31, 2023 from $79 million for the year ended December 31, 2022 primarily due to higher interest credited on new business and floating rate contract holder funds, decreased income on operating derivatives resulting from changes in currency exchange rates and the increase in floating rates in 2023, and higher interest expense, partially offset by higher investment income.
The following table shows variable annuity account value and benefit base as of December 31, 2022 and 2021: Years Ended December 31, 2022 2021 Account Value Benefit Base Account Value Benefit Base (in millions) No Living Benefits $ 49,073 N/A $ 60,719 N/A By Guaranteed Living Benefits: GMWB for Life 149,706 189,814 188,078 183,626 GMWB 5,674 5,655 7,318 5,860 GMIB (1) 1,356 1,929 1,808 2,059 Total $ 205,809 $ 197,398 $ 257,923 $ 191,545 By Guaranteed Death Benefit: Return of AV (No GMDB) $ 25,049 N/A $ 30,337 N/A Return of Premium 157,339 138,419 197,544 135,034 Highest Anniversary Value 12,128 14,272 15,599 14,767 Rollup 3,229 4,695 4,188 4,850 Combination HAV/Rollup 8,064 10,297 10,255 10,402 Total $ 205,809 $ 167,683 $ 257,923 $ 165,053 (1) Substantially all our GMIB benefits are reinsured.
The following table shows variable annuity account value and benefit base as of December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Account Value Benefit Base Account Value Benefit Base (in millions) No Living Benefits $ 53,645 N/A $ 49,073 N/A By Guaranteed Living Benefits: GMWB for Life 166,688 188,722 149,706 189,814 GMWB 6,092 5,348 5,674 5,655 GMIB (1) 1,352 1,799 1,356 1,929 Total $ 227,777 $ 195,869 $ 205,809 $ 197,398 By Guaranteed Death Benefit: Return of AV (No GMDB) $ 27,486 N/A $ 25,049 N/A Return of Premium 174,841 137,287 157,339 138,419 Highest Anniversary Value ("HAV") 13,213 13,522 12,128 14,272 Rollup 3,347 4,484 3,229 4,695 Combination HAV/Rollup 8,890 10,057 8,064 10,297 Total $ 227,777 $ 165,350 $ 205,809 $ 167,683 (1) Substantially all our GMIB benefits are reinsured. 50 Part II | Item 7.
(1) 3,375 (1,457) (2,608) Adjusted Book Value $ 11,798 $ 8,937 $ 6,821 ROE on average equity 60.7 % 31.5 % (20.1) % Adjusted Operating ROE on average equity 13.2 % 28.6 % 27.6 % (1) Accumulated other comprehensive income (loss) of $(2,106) million and $287 million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of December 31, 2022 and 2021, respectively, 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 to total shareholders’ equity. 59 Part II | Item 7.
(1) 1,196 1,272 (1,073) Adjusted Book Value Attributable to Common Shareholders $ 10,833 $ 9,918 $ 6,568 ROE Attributable to Common Shareholders 10.3 % 69.7 % 44.1 % Adjusted Operating ROE Attributable to Common Shareholders on average equity 10.6 % 16.2 % 32.8 % (1) Excludes $(1,612) million, $(2,106) million and $287 million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of December 31, 2023, 2022 and 2021, 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. 56 Part II | Item 7.
To this end, our SAA and investment portfolio includes allocations to public and private corporate bonds (both investment grade and high yield), mortgage loans, structured securities, private equity and U.S. Treasury securities. These U.S. Treasury securities, while lower yielding than other alternatives, provide a higher level of liquidity and play a role in managing our interest rate exposure.
To this end, our SAA and investment portfolio includes allocations to public and private corporate bonds (both investment grade and high yield), mortgage loans, structured securities, private equity and U.S. Treasury securities. These U.S.
Adjusted Operating ROE excludes items that vary from period to period due to accounting treatment under U.S. GAAP or that are non-recurring in nature, as such items may distort the underlying performance of our business. We calculate Adjusted Operating ROE by dividing our Adjusted Operating Earnings by average Adjusted Book Value.
GAAP or that are non-recurring in nature, as such items may distort the underlying performance of our business; and (ii) is calculated by dividing our Adjusted Operating Earnings by average Adjusted Book Value Attributable to Common Shareholders.
Account Value Retail annuities account value, net of reinsurance, decreased $50.1 billion between periods primarily due to negative variable annuity separate account returns driven by unfavorable market performance in 2022, as well as negative net flows over the period, primarily from our reinsured fixed and fixed index annuity block.
Account Value Retail annuities account value, net of reinsurance, increased $25.5 billion between periods primarily due to positive variable annuity separate account returns driven by favorable market performance in 2023, as well as positive RILA net flows over the period.
GAAP accounting requirements, such as our investments in CLOs, but for which the consolidation effects are not aligned with our economic interest or exposure to those entities.
GAAP accounting requirements, such as our investments in collateralized loan obligations (CLOs), but for which the consolidation effects are not consistent with our economic interest or exposure to those entities, and (ii) one-time or other non-recurring items, such as costs relating to our separation from Prudential.
Conversely, as credit spreads tighten, the fair value of our existing investment portfolio generally increases, and the yield available on new investment purchases decreases. While changing credit spreads impact the fair value of our investment portfolio, this revaluation is generally reflected in our AOCI.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends generally increases, and the yield available on new investment purchases decreases. While changing credit spreads impact the fair value of our investment portfolio, this revaluation is generally reflected in our accumulated other comprehensive income, or AOCI.
As of December 31, 2022, Apollo managed $19.7 billion of cash and investments and other third-party investment managers represented approximately $182 million of investments. Our investment program seeks to generate a competitive rate of return on our invested assets to support the profitable growth of our business, while maintaining investment portfolio allocations within the Company’s risk tolerance.
Our investment program seeks to generate a competitive rate of return on our invested assets to support the profitable growth of our business, while maintaining investment portfolio allocations within the Company’s risk tolerance.
As such, regulations recently approved or currently under review at both the U.S. federal and state level could impact our business model, including statutory reserve and capital requirements. We anticipate that our ability to respond to changes in regulation and other legislative activity will be critical to our long-term financial performance.
New federal and state regulations could impact our business model, including statutory reserve and capital requirements. Our ability to respond to changes in regulation and other legislative activity are critical to our long-term financial performance.
We report certain activities and items that are not included in these segments, including the results of PPM Holdings, Inc., the holding company of PPM, within Corporate and Other. The following tables and discussion represent an overall view of our results of operations for each segment.
Segment Results of Operations We manage our business through three segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks. We report certain activities and items that are not included in these segments, including the results of PPM Holdings, Inc., the holding company of PPM, within Corporate and Other.
We expect any AMT incurred to be treated as a taxable temporary difference, and recorded as a deferred tax asset, so it is not expected to have a direct impact on total income tax expense; although it could affect our cash tax liabilities. As of December 31, 2022, we have not recorded any provision for the AMT.
Any CAMT incurred is treated as a taxable temporary difference, and recorded as a deferred tax asset ("DTA"). We have determined that a valuation allowance against the DTA is not currently required therefore there is no direct impact on total income tax expense; although it could affect our cash tax liabilities.
Net Realized Investment Gains and Losses including change in fair value of funds withheld embedded derivative: Realized investment gains and losses associated with the periodic sales or disposals of securities, excluding those held within our trading portfolio, as well as impairments of securities, after adjustment for the non-credit component of the impairment charges and change in fair value of funds withheld embedded derivative related to the Athene Reinsurance Transaction; 3.
Net Realized Investment Gains and Losses: 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. 54 Part II | Item 7.
The lower sales were partially offset by sales of our lifetime income solutions offering in the defined contribution market and our new RILA product, which were launched in the fourth quarter of 2021. Sales of fixed index and fixed annuities increased in 2022 due to the rising interest rate environment, which enabled more favorable pricing actions.
Lower retail sales were primarily due to decreased sales of our variable annuities with lifetime living benefits, partially offset by RILA sales. Sales of fixed index and fixed annuities increased in 2023 due to the higher interest rate environment, which enabled more favorable pricing actions.
We believe that we are uniquely positioned in our markets because of our differentiated products, well-known brand and disciplined risk management. Our market leadership is supported by our efficient and scalable operating platform and industry-leading distribution network. We believe these core strengths will enable us to grow profitably as an aging, U.S. population transitions into retirement.
Executive Summary We help Americans grow and protect their retirement savings and income to enable them to pursue financial freedom for life. We believe that we are uniquely positioned in our markets because of our differentiated products, well-known brand and disciplined risk management. Our market position is supported by our efficient and scalable operating platform and industry-leading distribution network.
Legislative Reforms Congress approved the Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act") on December 20, 2019. The SECURE Act provides individuals with greater access to retirement products.
The Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act"), approved by Congress on December 20, 2019, provides 53 Part II | Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends individuals with greater access to retirement products.
The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for Corporate and Other.
Corporate and Other Corporate and Other includes the operations of PPM Holdings, Inc., the holding company of PPM, and unallocated corporate revenue and expenses, as well as certain eliminations and consolidation adjustments. The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for Corporate and Other.
For interim reporting periods, the Company uses an estimated annual effective tax rate (“ETR”) in computing its tax provision including consideration of discrete items.
For interim reporting periods, the Company uses an estimated annual effective tax rate (“ETR”) in computing its tax provision including consideration of discrete items. The following is a reconciliation of Adjusted Operating Earnings to net income (loss) attributable to Jackson Financial common shareholders, the most comparable U.S.
December 31, 2022 2021 (in millions) Jackson Invested Assets $ 44,486 $ 47,224 Third Party Invested Assets (including CLOs) 26,993 31,980 Total PPM AUM 71,479 79,204 Total JNAM AUM 219,070 280,250 Total AUM $ 290,549 $ 359,454 Total AUM decreased for the year ended December 31, 2022, compared to the year ended December 31, 2021, driven by a decline in separate account balances managed by JNAM due to negative equity market returns over the last year. 62 Part II | Item 7.
December 31, 2023 2022 (in millions) Jackson Invested Assets $ 44,068 $ 44,486 Third Party Invested Assets (including CLOs) 29,043 26,993 Total PPM AUM 73,111 71,479 Total JNAM AUM 242,727 219,070 Total AUM $ 315,838 $ 290,549 Total AUM increased for the year ended December 31, 2023, compared to the year ended December 31, 2022, driven primarily by an increase in separate account balances managed by JNAM due to positive equity market returns during the year.
The Company's comparison of 2021 results to 2020 results is included in the Company's Annual Report on Form 10-K for the fiscal year en ded December 31, 2021 , un der Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Executive Summary and Results of Operations . Jackson Financial Inc.
The Company's comparison of 2022 results to 2021 results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 1, 2023, (the "2022 Annual Report"), as recast to reflect the adoption of LDTI in our Current Report on Form 8-K filed May 10, 2023, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations .
The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this Report: Years Ended December 31, 2022 2021 2020 (in millions) Retail Annuities: Operating Revenues Fee income $ 4,108 $ 4,636 $ 3,806 Premiums 10 15 27 Net investment income 403 692 956 Income (loss) on operating derivatives 17 52 48 Other income 42 47 30 Total Operating Revenues 4,580 5,442 4,867 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves 59 13 142 Interest credited on other contract holder funds, net of deferrals and amortization 254 226 477 Interest expense 32 22 27 Operating costs and other expenses, net of deferrals 2,174 2,456 2,158 Amortization of deferred acquisition costs 435 197 57 Total Operating Benefits and Expenses 2,954 2,914 2,861 Pretax Adjusted Operating Earnings $ 1,626 $ 2,528 $ 2,006 The following table summarizes a roll forward of activity affecting account value for our Retail Annuities segment for the periods indicated: Years Ended December 31, 2022 2021 2020 (in millions) Retail Annuities Account Value: Balance as of beginning of period $ 259,423 $ 229,965 $ 230,932 Premiums and deposits 15,855 19,467 18,117 Surrenders, withdrawals, and benefits (16,245) (20,251) (16,027) Net flows (390) (784) 2,090 Credited Interest/Investment performance (46,962) 32,831 27,251 Policy Charges and other (2,753) (2,589) (30,308) Balance as of end of period, net of ceded reinsurance 209,318 259,423 229,965 Ceded reinsurance 21,849 24,956 26,775 Balance as of end of period, gross $ 231,167 $ 284,379 $ 256,740 Year Ended December 31, 2022 compared to Year Ended December 31, 2021 Pretax Adjusted Operating Earnings Pretax a djusted operating earnings decreased $902 million to $1,626 million for the year ended December 31, 2022 from $2,528 million for the year ended December 31, 2021 primarily due to: • $528 million decrease in fee income primarily due to a decrease in average variable annuity account values stemming from unfavorable separate account performance in 2022. • $289 million decrease in net investment income primarily due to lower levels of investment income on private equity and other limited partnership investments, when compared to the same period in 2021. 69 Part II | Item 7.
The information contained in the table below should be read in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this report: Years Ended December 31, 2023 2022 2021 (in millions) Retail Annuities: Operating Revenues Fee income $ 4,036 $ 4,108 $ 4,636 Premiums 21 10 15 Net investment income 541 403 692 Income (loss) on operating derivatives (45) 17 52 Other income 37 42 47 Total Operating Revenues 4,590 4,580 5,442 Operating Benefits and Expenses Death, other policy benefits and change in policy reserves 43 61 6 (Gain) loss from updating future policy benefits cash flow assumptions, net (4) (4) 225 Interest credited on other contract holder funds, net of deferrals and amortization 374 253 (8) Interest expense 84 32 22 Operating costs and other expenses, net of deferrals 2,178 2,174 2,456 Amortization of deferred acquisition costs 551 557 557 Total Operating Benefits and Expenses 3,226 3,073 3,258 Pretax Adjusted Operating Earnings $ 1,364 $ 1,507 $ 2,184 The following table summarizes a roll-forward of activity affecting account value for our Retail Annuities segment for the periods indicated: Years Ended December 31, 2023 2022 2021 (in millions) Retail Annuities Account Value: Balance as of beginning of period $ 209,967 $ 260,135 $ 230,741 Premiums and deposits 13,015 15,961 19,594 Surrenders, withdrawals, and benefits (19,353) (16,430) (20,459) Net flows (6,338) (469) (865) Investment performance 33,807 (47,149) 32,621 Change in value of equity option 509 (41) 7 Interest credited 372 244 223 Policy charges and other (2,852) (2,753) (2,592) Balance as of end of period, net of ceded reinsurance 235,465 209,967 260,135 Ceded reinsurance 18,370 22,037 25,075 Balance as of end of period, gross of reinsurance $ 253,835 $ 232,004 $ 285,210 Year Ended December 31, 2023 compared to Year Ended December 31, 2022 Pretax Adjusted Operating Earnings Pretax a djusted operating earnings decreased $143 million to $1,364 million for the year ended December 31, 2023 from $1,507 million for the year ended December 31, 2022 primarily due to: • $72 million decrease in fee income primarily due to lower average separate account values compared to prior year; 60 Part II | Item 7.
Adjusted Book Value excludes Accumulated Other Comprehensive Income (Loss) ("AOCI") attributable to Jackson Financial Inc ("JFI"). AOCI attributable to JFI excludes AOCI arising from investments held within the funds withheld account related to the Athene Reinsurance Transaction.
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. 55 Part II | Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Non-GAAP Financial Measures The following is a reconciliation of Adjusted Book Value to total shareholders’ equity and a comparison of Adjusted Operating ROE to ROE, the most comparable U.S.
However, we believe the adjustments to equity and earnings are useful to gaining an understanding of our overall results of operations. 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Macroeconomic, Industry and Regulatory Trends • Additionally, our statutory total adjusted capital ("TAC") may be negatively impacted by rising rates due to minimum required reserving levels (i.e., cash surrender value floor) when reserve releases are limited and unable to offset interest rate hedging losses.
This creates an incentive for our customers to lapse their products in an environment where selling assets causes us to realize losses. • In the past, our statutory total adjusted capital ("TAC") has been negatively impacted by rising rates due to minimum required reserving levels ( i.e. , cash surrender value floor) when reserve releases are limited and unable to offset interest rate hedging losses.
We also offer fixed index annuities and fixed annuities. In the fourth quarter of 2021, our primary life insurance subsidiary, Jackson National Life Insurance Company (“Jackson”) and its insurance subsidiaries successfully launched Jackson Market Link Pro SM and Jackson Market Link Pro Advisory SM , its commission and advisory based suite of registered index-linked annuities ("RILA").
Financial Statement and Supplementary Data -- Note 24 - Equity of Notes to Consolidated Financial Statements for further information on our share repurchases. • RILA Product: In the fourth quarter of 2021, our primary life insurance subsidiary, Jackson, successfully launched Jackson Market Link Pro SM and Jackson Market Link Pro Advisory SM , a commission and an advisory based suite of registered index-linked annuities ("RILA").
The investments within our investment portfolio are primarily managed by PPM, our wholly-owned registered investment advisor. Our investment strategy benefits from PPM’s ability to originate investments directly, as well as participate in transactions originated by banks, investment banks, commercial finance companies and other intermediaries.
Our investment strategy benefits from PPM’s ability to originate investments directly, as well as participate in transactions originated by banks, investment banks, commercial finance companies and other intermediaries. Certain investments held in funds withheld accounts for reinsurance transactions are managed by Apollo Insurance Solutions Group LP ("Apollo"), an Athene affiliate. S ee Item 8.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations 54 Executive Summary 54 Impact of Recent Accounting Pronouncements 55 Non-GAAP Financial Measures 56 Key Operating Measures 60 Macroeconomic, Industry, and Regulatory Trends 63 Consolidated Results of Operations 66 Segment Results of Operations 68 Investments 73 Policy and Contract Liabilities 83 Liquidity and Capital Resources 86 Critical Accounting Estimates 92 Item 7A.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations 44 Executive Summary 44 Key Operating Measures 47 Macroeconomic, Industry and Regulatory Trends 51 Non-GAAP Financial Measures 54 Consolidated Results of Operations 57 Segment Results of Operations 59 Investments 64 Policy and Contract Liabilities 70 Liquidity and Capital Resources 72 Impact of Recent Accounting Pronouncements 79 Critical Accounting Estimates 80 Item 7A.
Quantitative and Qualitative Disclosures about Market Risk 99 Item 8. Financial Statements and Supplementary Data 104 Reference to Financial Statements and Schedules 104
Quantitative and Qualitative Disclosures about Market Risk 87 Item 8. Financial Statements and Supplementary Data 93 Reference to Financial Statements and Schedules 93

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended December 31, 2022 2021 2020 (in millions) Assumption Review Impact: Total assumption review impact on pretax (loss) income $ 420 $ 62 $ (24) Total assumption review impact on pretax non-operating adjustments (367) (24) (128) Total assumption review impact on Pretax Adjusted Operating Earnings $ 53 $ 38 $ (152) Assumption Review Impact on Pretax Adjusted Operating Earnings by Segment: Retail Annuities $ 59 $ 38 $ (138) Closed Life and Annuity Blocks (6) — (14) Total assumption review impact on Pretax Adjusted Operating Earnings $ 53 $ 38 $ (152) 2022 Assumption Updates The impact of assumption changes on Pretax Adjusted Operating Earnings was $53 million, with the majority of this impact attributed to the Retail Annuities segment at $59 million.
Biggest changeActuarial Assumption Changes (Unlo cking) The following tables reflect the impacts from our annual assumption review to pre-tax income (loss), pre-tax non-operating adjustments and Pre-Tax Adjusted Operating Earnings for the periods presented: Years Ended December 31, 2023 2022 2021 (in millions) Assumption Review Impact: Total assumption review impact on pretax (loss) income $ (466) $ (448) $ (13) Less: total assumption review impact on pretax non-operating (406) (486) (13) Total assumption review impact on Pretax Adjusted Operating Earnings $ (60) $ 38 $ — Assumption Review Impact on Pretax Adjusted Operating Earnings by Segment: Retail Annuities $ — $ (9) $ — Closed Life and Annuity Blocks (60) 47 — Total assumption review impact on Pretax Adjusted Operating Earnings $ (60) $ 38 $ — 2023 Assumption Updates The impact of assumption changes on Pretax Adjusted Operating Earnings was $(60) million, with the impact attributed to the Closed Life and Annuity Blocks segment.
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 the alternate sources of liquidity and capital described herein.
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.
Therefore, there can be no assurance that we will pay any cash dividends to holders of our common stock or approve any further increase in the existing, or any new, stock repurchase program, or as to the amount of any such cash dividends or stock repurchases.
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 as to the amount of any such cash dividends or stock repurchases.
Freestanding derivative instruments are reported at fair value, that reflects the estimated amounts, net of payment accruals, which we would receive or pay upon sale or termination of the contracts at the reporting date. Freestanding derivatives priced using third party pricing services incorporate inputs that are predominantly observable in the market.
Freestanding derivative instruments are reported at fair value, which reflects the estimated amounts, net of payment accruals, that we would receive or pay upon sale or termination of the contracts at the reporting date. Freestanding derivatives priced using third party pricing services incorporate inputs that are predominantly observable in the market.
Embedded Derivatives - Funds Withheld Reinsurance Agreements The Company has recorded an embedded derivative liability related to the Athene Reinsurance Agreement (the “Athene Embedded Derivative”) in accordance with ASC 815-15 as Jackson’s obligation under the Reinsurance Agreement is based on the total return of investments in a segregated funds withheld account rather than Jackson’s own creditworthiness.
Embedded Derivatives - Funds Withheld Reinsurance Agreements The Company has recorded an embedded derivative liability related to the Athene coinsurance agreement (the “Athene Embedded Derivative”) in accordance with ASC 815-15 as Jackson’s obligation under the coinsurance agreement is based on the total return of investments in a segregated funds withheld account rather than Jackson’s own creditworthiness.
This adjustment was recorded in reserves for future policy benefits and claims payable. This component of the acquired reserves is reassessed at the end of each period, taking into account changes in the in-force block. Any resulting change in the reserve is recorded as a change in policy reserve through the Consolidated Income Statements.
This adjustment is recorded in reserves for future policy benefits and claims payable. This component of the acquired reserves is reassessed at the end of each period, taking into account changes in the in-force block. Any resulting change in the reserve is recorded as a change in policy reserve through the Consolidated Income Statements.
We intend to maintain a minimum amount of cash and highly liquid securities at Jackson Financial adequate to fund two years of holding company fixed expenses, which may change over time as we refinance existing debt or make changes to our debt and capital structure, and is currently targeted at $250 million.
We intend to maintain a minimum amount of cash and highly liquid securities at Jackson Financial adequate to fund two years of holding company fixed net expenses, which is currently targeted at $250 million but may change over time as we refinance existing debt or make changes to our debt and capital structure.
Best Fitch Moody’s S&P Jackson National Life Insurance Company Rating A A A2 A Outlook stable stable negative stable Jackson National Life Insurance Company of New York Rating A A A2 A Outlook stable stable negative stable Brooke Life Insurance Company Rating A Outlook stable In evaluating a company’s financial strength, the rating agencies evaluate a variety of factors including our strategy, market positioning and track record, mix of business, profitability, leverage and liquidity, the adequacy and soundness of our reinsurance, the quality and estimated market value of our assets, the adequacy of our surplus, our capital structure, and the experience and competence of our management.
Best Fitch Moody’s S&P Jackson National Life Insurance Company Rating A A A3 A Outlook stable stable stable stable Jackson National Life Insurance Company of New York Rating A A A3 A Outlook stable stable stable stable Brooke Life Insurance Company Rating A Outlook stable In evaluating our Company’s financial strength, the rating agencies evaluate a variety of factors including our strategy, market positioning and track record, mix of business, profitability, leverage and liquidity, the adequacy and soundness of our reinsurance, the quality and estimated market value of our assets, the adequacy of our surplus, our capital structure, and the experience and competence of our management.
Any declaration of cash dividends or stock repurchases will be 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, 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.
Any declaration of cash dividends or stock repurchases is at the discretion of JFI’s Board of Directors and will depend on our financial condition, earnings, liquidity and capital requirements, regulatory constraints, level of indebtedness, preferred stock and other contractual restrictions with respect to paying cash dividends or repurchasing stock, restrictions imposed by Delaware law, general business conditions and any other factors that JFI’s Board of Directors deems relevant in making any such determination.
As the Reinsurance Agreement transfers the economics of the investments in the segregated funds withheld account to Athene, they will receive an investment return equivalent to owning the underlying assets. At inception of the Reinsurance Agreement, the Athene Embedded Derivative was valued at zero.
As the coinsurance agreement transfers the economics of the investments in the segregated funds withheld account to Athene, they will receive an investment return equivalent to owning the underlying assets. At inception of the coinsurance agreement, the Athene Embedded Derivative was valued at zero.
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 December 31, 2022, approximately half of Jackson’s general account reserves are either not surrenderable, included surrender charges greater than 5%, or market value adjustments to discourage early withdrawal of policy and contract funds.
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 December 31, 2023, 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.
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. 91 Part II | Item 7.
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. 78 Part II | Item 7.
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 which the director determines to be available for such payments under Michigan insurance law.
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.
Decreases in equity markets increase the likelihood that a customer’s account value will be insufficient to cover the benefit paid to the beneficiary at the time of a claim following the customer’s death. As a result, the risk associated with such payouts is dependent on both the equity market performance and the time of the claim.
Decreases in equity markets increase the likelihood that a customer’s account value will be insufficient to cover the benefit paid to the beneficiary at the time of a claim following the customer’s death. As a result, the risk associated with such payouts is dependent on both the equity market performance and the time of the claim. See Item 1.
See “Part I – Item 1. Business – Our Product Offerings by Segment – Retail Annuities” for additional information about variable annuity guaranteed living benefit and guaranteed death benefit riders. In addition to equity market declines, certain other equity market changes could also increase our losses.
See Item 1. Business – “Our Product Offerings by Segment – Retail Annuities” for additional information about variable annuity guaranteed living benefit and guaranteed death benefit riders. In addition to equity market declines, certain other equity market changes could also increase our losses.
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.
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 Item 1A.
As a result, the risk associated with such payouts is dependent on both the equity market performance and the time of the claim. • As of December 31, 2022, 75% of total variable annuity account value included either a GMWB for Life or GMWB selection. These benefits guarantee minimum payments based on a fixed annual percentage of the benefit base.
As a result, the risk associated with such payouts is dependent on both the equity market performance and the time of the claim. • As of December 31, 2023, 76% of total variable annuity account value included either a GMWB for Life or GMWB selection. These benefits guarantee minimum payments based on a fixed annual percentage of the benefit base.
Management’s judgments are potentially subject to change given the inherent uncertainty in predicting future performance, which is impacted by such factors as policyholder behavior, competitor pricing and other specific industry and market conditions.
Management’s judgments are potentially subject to change given the inherent uncertainty in predicting future performance, which is impacted by such factors as policyholder behavior, competitor pricing and other specific industry and market conditions. See Item 8.
Increases or decreases in the value of the referenced equity securities will increase or decrease the associated core contract charges and investment management fees. • As of December 31, 2022, 76% of our total variable annuity account value included a return of premium death benefit and 11% of our total variable annuity account value included an enhanced GMDB selection.
Increases or decreases in the value of the referenced equity securities will increase or decrease the associated core contract charges and investment management fees. • As of December 31, 2023, 77% of our total variable annuity account value included a return of premium death benefit and 11% of our total variable annuity account value included an enhanced GMDB selection.
Risk Measurement—Sensitivity Analysis In the following discussion and analysis, we measure market risk related to our market sensitive assets and liabilities based on changes in interest rates and equity market prices utilizing an internal sensitivity analysis. Due to our current portfolio structure and holdings, foreign currency movements are not material to the Company.
Quantitative and Qualitative Disclosures about Market Risk Risk Measurement—Sensitivity Analysis In the following discussion and analysis, we measure market risk related to our market sensitive assets and liabilities based on changes in interest rates and equity market prices utilizing an internal sensitivity analysis. Due to our current portfolio structure and holdings, foreign currency movements are not material to the Company.
Subsequent to the effective date of the Reinsurance Agreement, the Athene Embedded Derivative is measured at fair value with changes reported in Net gains (losses) on derivatives and investments in the Consolidated Income Statement. The Athene Embedded Derivative Liability is included in Funds withheld payable under reinsurance treaties in the Consolidated Balance Sheet.
Subsequent to the effective date of the coinsurance agreement, the Athene Embedded Derivative is measured at fair value with changes reported in Net gains (losses) on derivatives and investments in the Consolidated Income Statement. The Athene Embedded Derivative Liability is included in Funds withheld payable under reinsurance treaties in the Consolidated Balance Sheet. See Item 8.
Interest is payable semi-annually on March 15th and September 15th of each year. Interest expense on the notes was $20 million, $20 million, and $21 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Interest is payable semi-annually on March 15th and September 15th of each year. Interest expense on the notes was $20 million, $20 million, and $20 million for the years ended December 31, 2023, 2022 and 2021, respectively.
To recognize a tax benefit in the Consolidated Financial Statements, there must be a greater than 50% chance of success of our position being sustained by the relevant taxing authority with regard to that tax position.
To recognize a tax benefit in the Consolidated Financial Statements, there must be a greater than 50% chance of success of our position being sustained by the relevant taxing authority.
Capital in excess of the amount required to support our core operating strategies is considered excess equity capital and is reflected in Corporate and Other. Contingent Liabilities We are a party to legal actions and, at times, regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate their impact on our financial position.
Net investment income on capital in excess of the amount required to support our core operating strategies is reflected in Corporate and Other. Contingent Liabilities We are a party to legal actions and, at times, regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate their impact on our financial position.
Revolving Credit Facility On February 24, 2023, the Company entered into a revolving credit facility (the "2023 Revolving Credit Facility") with a syndicate of banks and Bank of America, N.A., as Administrative Agent. The 2023 Revolving Credit Facility replaced an existing revolving credit facility that was due to expire in February 2024.
Revolving Credit and Short-Term Borrowing Facilities On February 24, 2023, the Company entered into a revolving credit facility (the "2023 Revolving Credit Facility") with a syndicate of banks and Bank of America, N.A., as Administrative Agent. The 2023 Revolving Credit Facility replaced an existing revolving credit facility that was due to expire in February 2024.
Advances are in the form of either notes or funding agreements issued to FHLBI. As of December 31, 2022 and 2021, Jackson held a bank loan with an outstanding balance of $62 million and $67 million, respectively.
Advances are in the form of either notes or funding agreements issued to FHLBI. As of December 31, 2023 and 2022, Jackson held a bank loan with an outstanding balance of $57 million and $62 million, respectively.
See Note 8 to Consolidated Financial Statements for additional information on Athene Reinsurance Transaction. Net Investment Income Net investment income reported for each of our three segments and Corporate and Other includes an allocation for investment income generated on assigned capital.
Financial Statements and Supplementary Data -- Note 8 - Reinsurance of Notes to Consolidated Financial Statements for additional information on Athene Reinsurance Transaction. Net Investment Income Net investment income reported for each of our three segments and Corporate and Other includes an allocation for investment income generated on assigned capital.
The liquidity sources for our insurance company subsidiaries are their cash, short-term investments, sales of publicly traded bonds, insurance premiums, fees charged on our products, sales of annuities and institutional products, investment income, commercial repurchase agreements and utilization of a short-term borrowing facility with the FHLBI. 89 Part II | Item 7.
The liquidity sources for our insurance company subsidiaries are their cash, short-term investments, sales of publicly traded bonds, insurance premiums, fees charged on our products, sales of annuities and institutional products, investment income, commercial repurchase agreements and utilization of a short-term borrowing facility with the FHLBI.
As of December 31, 2022, Jackson’s outstanding surplus notes and bank debt included $ 62 million of bank loans from the Federal Home Loan Bank of Indianapolis ("FHLBI"), collateralized by mortgage-related securities and mortgage loans and $250 million of surplus notes maturing in 2027.
As of December 31, 2023, Jackson’s outstanding surplus notes and bank debt included $ 57 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.
GAAP, which primarily consist of $11.0 billion and $11.5 billion of mortgage loans as of December 31, 2022 and 2021, respectively; • the analysis excludes the effect of market or interest rate impacts on assets and liabilities related our funds withheld reinsurance treaties; • the analysis excludes real estate holdings; • the analysis excludes the impact of changes in DAC and income taxes; and • the analysis assumes that the composition of assets and liabilities remains unchanged upon measurement and excludes the impacts of management actions.
GAAP, which primarily consist of $10.1 billion and $11.0 billion of mortgage loans as of December 31, 2023 and 2022, respectively; • the analysis excludes the effect of market or interest rate impacts on assets and liabilities related to our funds withheld reinsurance treaties; • the analysis excludes real estate holdings; • the analysis excludes the impact of changes in income taxes; and • the analysis assumes that the composition of assets and liabilities remains unchanged upon measurement and excludes the impacts of management actions.
Business – Risk Management – Financial Risk.” Depending on market conditions and our capital position, we may favor the use of one type of hedging instrument over another. When evaluating the effectiveness of our hedge program we look at the combined net effect of our hedge assets and the liabilities these assets are intended to hedge.
Depending on market conditions and our capital position, we may favor the use of one type of hedging instrument over another. When evaluating the effectiveness of our hedge program we look at the combined net effect of our hedge assets and the liabilities these assets are intended to hedge.
Under the Michigan Insurance Code of 1956, for statutory reporting purposes, the surplus notes are not part of the legal liabilities of the Company and are considered surplus funds.
Under Michigan insurance law, for statutory reporting purposes, the surplus notes are not part of the legal liabilities of the Company and are considered surplus funds.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources As of February 22, 2023, the financial strength ratings of our principal insurance subsidiaries were as follows : Company A.M.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources As of February 20, 2024, the financial strength ratings of our principal insurance subsidiaries were as follows : Company A.M.
The fees attributable to guaranteed benefits are generally calculated based on the benefit base, so the scenario in which equity markets increase and then later decrease will also result in relatively higher fee income.
The fees attributable to guaranteed benefits are generally calculated based on the benefit base, so the scenario in which equity markets increase and then later decrease will also result in relatively higher fee income. 87 Part II | Item 7A.
Assets held under funds withheld agreements are included on our balance sheets, but remain the property of the respective counterparties subject to triggers embedded within the relevant reinsurance agreements. Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards.
Assets held under funds withheld agreements are included on our Consolidated Balance Sheets and subject to triggers embedded within the relevant reinsurance agreements. Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources 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.
Unless otherwise approved by the Michigan Director of Insurance, dividends may only be paid from earned surplus. Also, surplus note arrangements and interest payments must be approved by the Michigan Director of Insurance and such interest payments to related parties reduce the otherwise calculated ordinary dividend capacity for that period. In New York, all dividends require approval from the NYSDFS.
Unless otherwise approved by the Michigan Director of Insurance, dividends may only be paid from earned surplus. Also, surplus note arrangements and interest payments must be approved by the Michigan Director of Insurance and such interest payments to related parties reduce the otherwise calculated ordinary dividend capacity for that period.
These guarantees include benefits that are payable upon the depletion of funds (GMWB), in the event of death (GMDB), at annuitization (GMIB), or at the end of a specified period (GMAB). Substantially all of our GMIB benefits are reinsured. GMIB benefits and GMAB benefits were discontinued in 2009 and 93 Part II | Item 7.
These guarantees include benefits that are payable upon the depletion of funds (GMWB), in the event of death (GMDB), at annuitization (GMIB), or at the end of a specified period (GMAB). Substantially all of our GMIB benefits are reinsured. GMIB benefits and GMAB benefits were discontinued in 2009 and 2011, respectively.
We are required to test the value of deferred tax assets for realizability. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
Deferred tax assets are reduced by a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The sensitivity analysis reflects changes in fair value resulting from changes in interest rates or equity market levels and does not reflect changes in the economic value of assets or liabilities. 101 Part II | Item 7A.
The sensitivity analysis reflects changes in fair value resulting from changes in interest rates or equity market levels and does not reflect changes in the economic value of assets or liabilities.
In conjunction with a prior acquisition, we recorded a fair value adjustment related to certain annuity and interest-sensitive liability blocks of business to reflect the cost of the interest guarantees within the in-force liabilities, based on the difference between the guaranteed interest rate and an assumed new money guaranteed interest rate.
Other Future Policy Benefits and Claims Payable In conjunction with a prior acquisition, we recorded a fair value adjustment related to certain annuity and interest-sensitive life blocks of business to reflect the cost of the interest guarantees within the in-force liabilities, based on the difference between the guaranteed interest rate and an assumed new money guaranteed interest rate.
As such, Jackson Financial’s ability to receive dividend payments from our insurance company subsidiaries is effectively limited by Brooke Life’s ability to make dividend payments to Jackson Financial. On March 1, 2022, Jackson remitted a $600 million return of capital to its parent company, Brooke Life.
As such, Jackson Financial’s ability to receive dividend payments from our insurance company subsidiaries is effectively limited by Brooke Life’s ability to make dividend payments to Jackson Financial. On March 1, 2023, Jackson paid a $450 million ordinary dividend and remitted a $150 million return of capital to its parent company, Brooke Life.
Fixed Index Annuity Equity Market Risk We sell fixed index annuities where the crediting rate to the contract holder is determined by reference to equity market performance.
Quantitative and Qualitative Disclosures about Market Risk Fixed Index Annuity Equity Market Risk We sell fixed index annuities where the crediting rate to the contract holder is determined by reference to equity market performance.
The principal operating cash outflows are the result of annuity and life insurance benefits, interest credited on other contract holder funds, operating expenses and income tax, as well as interest expense. The primary liquidity concern with respect to these cash flows is the risk of early contract holder and policyholder benefit payments.
The principal operating cash outflows are the result of the payment of annuity and life insurance benefits, operating expenses and income tax, as well as interest expense. The primary liquidity concern with respect to these cash flows is the risk of earlier than expected contract holder and policyholder benefit payments.
Quantitative and Qualitative Disclosures about Market Risk The market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including: • interest-rate sensitive liabilities do not include $72.0 billion and $73.3 billion of policy and contract liabilities as of December 31, 2022 and 2021, respectively, which are accounted for on a book value basis under U.S.
The market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including: • interest-rate sensitive liabilities do not include $65.9 billion and $70.3 billion of policy and contract liabilities as of December 31, 2023 and 2022, respectively, which are accounted for on a book value basis under U.S.
Equity Markets Our market risk exposure to changes in equity markets principally arises from investments in equity securities, equity derivative instruments and embedded derivatives associated with variable annuity, fixed index annuity guaranteed benefits, and RILA.
Equity Markets Our risk exposure to changes in equity markets principally arises from investments in equity securities, equity derivative instruments, in addition to market risk benefits and embedded derivatives associated with certain variable annuities, fixed index annuities, and RILAs.
As of December 31, 2022, 93% of fixed annuity, fixed-indexed annuity, and the fixed accounts of RILA and variable annuity correspond to crediting rates that are at the guaranteed minimum crediting rate.
As of December 31, 2023, 94% 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.
All of our business operations are conducted through our subsidiaries. Any dividends we pay or stock repurchases we make will depend upon the funds legally available for distribution, including dividends or distributions from our subsidiaries to us. The states in which our insurance subsidiaries 87 Part II | Item 7.
All of our business operations are conducted through our subsidiaries. Any dividends we pay or stock repurchases we make will depend upon the funds legally available for distribution, including dividends or distributions from our subsidiaries to us.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 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 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.
Collateral posting requirements can result in material liquidity needs for our insurance subsidiaries. As of December 31, 2022, we were in a net collateral payable position of $689 million compared to $913 million as of December 31, 2021.
Collateral posting requirements can result in material liquidity needs for our insurance subsidiaries. As of December 31, 2023, we were in a net collateral payable position of $780 million, as compared to $689 million as of December 31, 2022. 76 Part II | Item 7.
Cash Flows The following table presents a summary of our cash flow activity for the periods set forth below: Years Ended December 31, 2022 2021 2020 (in millions) Net cash provided by (used in) operating activities $ 5,206 $ 5,682 $ 3,712 Net cash provided by (used in) investing activities (1,374) (1,296) (4,333) Net cash provided by (used in) financing activities (2,162) (3,774) 705 Net increase (decrease) in cash, cash equivalents, and restricted cash 1,670 612 84 Cash, cash equivalents, and restricted cash at beginning of period 2,631 2,019 1,935 Total cash, cash equivalents, and restricted cash at end of period $ 4,301 $ 2,631 $ 2,019 Cash flows from Operating Activities The principal operating cash inflows from our insurance activities come from insurance premiums, fees charged on our products and net investment income.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources Cash Flows The following table presents a summary of our cash flow activity for the periods set forth below: Years Ended December 31, 2023 2022 2021 (in millions) Net cash provided by (used in) operating activities $ 5,310 $ 5,206 $ 5,682 Net cash provided by (used in) investing activities (592) (1,374) (1,296) Net cash provided by (used in) financing activities (6,328) (2,162) (3,774) Net increase (decrease) in cash, cash equivalents, and restricted cash (1,610) 1,670 612 Cash, cash equivalents, and restricted cash at beginning of period 4,301 2,631 2,019 Total cash, cash equivalents, and restricted cash at end of period $ 2,691 $ 4,301 $ 2,631 Cash flows from Operating Activities The principal operating cash inflows from our insurance activities come from insurance premiums, fees charged on our products and net investment income.
As of December 31, 2022, the portfolio of cash, short-term investments and privately and publicly traded securities and equities, which are unencumbered and unrestricted to sale, amounted to $23.3 billion.
As of December 31, 2023, the portfolio of cash, short-term investments and privately and publicly traded securities and equities that are unencumbered and unrestricted to sale, amounted to $22.4 billion.
In such instances, there could be no or limited observable market data for these assets and liabilities. Fair value estimates for financial instruments deemed to be in an illiquid market are based on judgments regarding current economic conditions, liquidity discounts, currency, credit and interest rate risks, loss experience and other factors.
Fair value estimates for financial instruments deemed to be in an illiquid market are based on judgments regarding current economic conditions, liquidity discounts, currency, credit and interest rate risks, loss experience and other factors.
For those entities deemed to be VIEs, we further assess whether the VIE must be consolidated as a result of the terms specific to each entity. Entities for which consolidation is required are included on our Consolidated Financial Statements. To the extent that external parties are also invested in 98 Part II | Item 7A.
For those entities deemed to be VIEs, we further assess whether the VIE must be consolidated as a result of the terms specific to each entity. Entities for which consolidation is required are included on our Consolidated Financial Statements.
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market 97 Part II | Item 7.
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments.
For mortgage-backed securities, credit losses are assessed using a cash flow model that estimates the cash flows on the underlying mortgages, using the security-specific collateral characteristics and transaction structure.
Where possible, this data is benchmarked against third-party sources. For mortgage-backed securities, credit losses are assessed using a cash flow model that estimates the cash flows on the underlying mortgages, using the security-specific collateral characteristics and transaction structure.
For 2022, Jackson and Brooke Life have total ordinary dividend capacity, based on 2021 statutory capital and surplus and statutory net gain from operations, subject to the availability of earned surplus, of $608 million and $514 million, respectively.
For 2024, Jackson and Brooke Life has a total ordinary dividend capacity, based on 2023 statutory capital and surplus and statutory net gain from operations, subject to the availability of earned surplus, of $464 million and $371 million, respectively.
The discussion below describes our liquidity and capital resources for the years ended December 31, 2022, 2021 and 2020.
The discussion below describes our liquidity and capital resources for the years ended December 31, 2023, 2022 and 2021. 72 Part II | Item 7.
Risk Factors – Risks Related to Conditions in the Global Financial Markets and Economy.” Interest Rates Our market risk exposure to changes in interest rates principally arises from investments in fixed-income securities (primarily, publicly-traded corporate and government bonds and asset-backed securities), interest-rate derivative instruments and embedded derivatives associated with variable and fixed index annuity guaranteed benefits.
Interest Rates Our market risk exposure to changes in interest rates principally arises from investments in fixed-income securities (primarily, publicly-traded corporate and government bonds and asset-backed securities), interest-rate derivative instruments, in addition to market risk benefits and embedded derivatives associated with certain variable annuities, fixed index annuities, and RILAs.
Decreases in equity markets increase the likelihood that a customer’s account value will be insufficient to cover the benefit paid 99 Part II | Item 7A. Quantitative and Qualitative Disclosures about Market Risk to the beneficiary at the time of a claim following the customer’s death.
Decreases in equity markets increase the likelihood that a customer’s account value will be insufficient to cover the benefit paid to the beneficiary at the time of a claim following the customer’s death.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources are domiciled impose certain restrictions on our insurance subsidiaries’ ability to pay dividends to their parent companies. These restrictions are based in part on the prior year’s statutory income and surplus, as well as earned surplus.
The states in which our insurance subsidiaries are domiciled impose certain restrictions on our insurance subsidiaries’ ability to pay dividends to their parent companies. These restrictions are based in part on the prior year’s statutory income and surplus, as well as earned surplus.
These estimated cash flows are developed using available performance indicators from the underlying assets including current and projected default or delinquency rates, levels of credit enhancement, current subordination levels, vintage, expected loss severity and other relevant characteristics. These 96 Part II | Item 7.
These estimated cash flows are developed using available performance indicators from the underlying assets including current and projected default or delinquency rates, levels of credit enhancement, current subordination levels, vintage, expected loss severity and other relevant characteristics. These estimates reflect a combination of data derived by third parties and internally developed assumptions.
We issue variable contracts through our separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Critical Accounting Estimates Variable Annuities We issue variable contracts through our separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder.
We also offer an optional lifetime withdrawal guarantee benefit on our fixed index annuities, which allows contract holders to withdraw a specified amount each year until death, or until the contract holder’s account value is exhausted. See “Part I – Item 1.
We also offer an optional lifetime withdrawal guarantee benefit on our fixed index annuities, which allows contract holders to withdraw a specified amount each year until death, or until the contract holder’s account value is exhausted. See Item 1. Business – “Our Product Offerings by Segment – Retail Annuities” for additional information about fixed index annuity guaranteed living benefit riders.
Contractual Obligations We have contractual obligations identified within Item 8. "Financials Statements and Supplementary Data; Note. 5 Derivative Instruments, Note 9. Reserves for Future Policy Benefits and Claims Payable and Other Contract Holder Funds, Note 10. Certain Nontraditional Long-Duration Contracts and Variable Annuity Guarantees, Note 11. Long-Term Debt, Note 14. Commitments and Contingencies, and Note 15.
Contractual Obligations We have contractual obligations identified within Item 8. Financials Statements and Supplementary Data -- Note. 5. Derivative Instruments, Note 9. Reserves for Future Policy Benefits and Claims Payable, Note 10. Other Contract Holder Funds, Note 11. Separate Account Assets and Liabilities, Note 12. Market Risk Benefits, Note 13. Long-Term Debt, Note 16. Commitments and Contingencies, and Note 17.
Our exposures to interest rates and equity markets also impact our business, financial condition, results of operations and cash flows other than through changes in fair value. See “Part I – Item 1A.
Our exposures to interest rates and equity markets also impact our business, financial condition, results of operations and cash flows other than through changes in fair value. See Item 1A. Risk Factors – “Risks Related to Conditions in the Global Financial Markets and Economy.” 89 Part II | Item 7A.
As of December 31, 2022, 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. 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.
As of December 31, 2023, 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.
Cash flows used in investing activities decreased $78 million to $(1,374) million during the year ended December 31, 2022 from $(1,296) million during the year ended December 31, 2021.
Cash flows provided by (used in) investing activities increased $782 million to $(592) million during the year ended December 31, 2023 from $(1,374) million during the year ended December 31, 2022.
The following are our most critical estimates, which require management’s most difficult, subjective and complex judgments, including the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. The following discussion is not intended to represent a comprehensive list of our accounting policies.
GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in our Consolidated Financial Statements. The following are our most critical estimates, which require management’s most difficult, subjective and complex judgments, including the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
Any amount deemed unrecoverable is written off with a charge through deferred acquisition costs amortization. Reserves for Future Policy Benefits and Claims Payable and Other Contract Holder Funds We establish reserves for future policy benefits to, or on behalf of, customers in the same period in which the policy is issued or acquired, using methodologies prescribed by U.S. GAAP.
Reserves for Future Policy Benefits and Claims Payable We establish reserves for future policy benefits to, or on behalf of, customers in the same period in which the policy is issued or acquired, using methodologies prescribed by U.S. GAAP.
Given the limitations described above, we use models as tools and not as substitutes for the experience and judgment of our management. Based on the fair values of the financial instruments and our analysis of the impacts of the measured changes in market rates and prices, we have determined that our interest rate and equity market exposures are material.
Based on the fair values of the financial instruments and our analysis of the impacts of the measured changes in market rates and prices, we have determined that our interest rate and equity market exposures are material. 90 Part II |
Reinsurance Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risk with respect to reinsurance receivables.
Financial Statements and Supplementary Data -- Note 15 – Income Taxes for additional information on these accounting policies and the estimated provision for the CAMT. Reinsurance Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risk with respect to reinsurance receivables.
Quantitative and Qualitative Disclosures about Market Risk Our Hedging Approach and Evaluating Hedge Effectiveness Our hedging program seeks to balance three objectives: protecting against the economic impact of adverse market conditions, protecting our statutory capital and stabilizing our statutory distributable earnings throughout market cycles.
In computing the duration of liabilities, we consider all policyholder guarantees as well as non-guaranteed elements of policyholder liabilities. Our Hedging Approach and Evaluating Hedge Effectiveness Our hedging program seeks to balance three objectives: protecting against the economic impact of adverse market conditions, protecting our statutory capital, and stabilizing our statutory distributable earnings throughout market cycles.
This analysis estimates the potential changes in estimated fair value or carrying value with respect to our reserves based on a hypothetical 50 basis point parallel shift (increase or decrease) in risk-free interest rates and a 10% change (increase or decrease) in equity market prices.
This analysis estimates the potential changes in estimated fair value based on a hypothetical 50 basis point parallel shift (increase or decrease) in risk-free interest rates and a 10% change (increase or decrease) in equity market prices. In performing the analysis summarized below, we used market rates and balance sheet positions as of December 31, 2023 and 2022, respectively.
RILA Equity Market Risk We sell RILA where the crediting rate to the contract holder is determined by reference to equity market performance.
In addition, increasing equity markets could potentially increase the specified amount available for withdrawal. RILA Equity Market Risk We sell RILA where the crediting rate to the contract holder is determined by reference to equity market performance.
Brooke Life subsequently paid a $510 million ordinary dividend to its ultimate parent, Jackson Financial and $90 million of interest associated with the $2 billion surplus note between Brooke Life and Jackson Finance, LLC ("Jackson Finance"), a subsidiary of Jackson Financial, respectively. 88 Part II | Item 7.
Brooke Life subsequently paid a $360 million ordinary dividend and remitted a $150 million return of capital to its ultimate parent, Jackson Financial. In addition, for the year ended December 31, 2023, Brooke Life paid $90 million of interest associated with the $2 billion surplus note between Brooke Life and Jackson Finance, LLC ("Jackson Finance"), a subsidiary of Jackson Financial.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | Liquidity and Capital Resources Cash flows from Financing Activities The principal cash inflows from our financing activities come from deposits of funds associated with policyholder account balances, issuance of debt, and lending of securities.
Cash flows from Financing Activities The principal cash inflows from our financing activities come from deposits of funds associated with policyholder account balances, issuance of securities and lending of securities. The principal cash outflows come from withdrawals associated with policyholder account balances, repayment of debt, and the return of securities on loan.
On February 27, 2023, our Board of Directors approved a first quarter cash dividend on JFI's common stock of $0.62 per share, payable on March 23, 2023 to shareholders of record on March 14, 2023.
On February 20, 2024, our Board of Directors approved a first quarter cash dividend on JFI's common stock of $0.70 per share, payable on March 21, 2024 to shareholders of record on March 12, 2024. The company also declared a cash dividend of $0.50 per depositary share.
This decrease was primarily due to lower sales of debt securities in 2022 compared to 2021, partially offset by decreased outflows related to our hedging program for derivative settlements and collateral predominately resulting from movements in the equity markets in 2022 compared to 2021 in addition to lower debt security purchases in 2022 compared to 2021. 86 Part II | Item 7.
This increase was primarily due to lower purchases of debt securities in 2023 compared to 2022 and sales of limited partnerships in 2023, partially offset by increased outflows related to our hedging program for derivative settlements and collateral, predominately resulting from market increases in 2023 compared to 2022.
We have an Asset Liability Management Committee (“ALCO”) that maintains a written asset-liability management policy, which is approved by our Board of Directors. The membership of ALCO includes the Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Actuary and Head of Asset-Liability Management. ALCO regularly reviews all material financial risks in accordance with our asset-liability management policy.
Business – Risk Management.” We have an Asset Liability Management Committee (“ALCO”) that maintains a written Asset Liability Management Policy ("ALM Policy"). ALCO regularly reviews all material financial risks in accordance with our ALM Policy. If market risks exceed predetermined tolerances, management is required to inform the Finance and Risk Committee of our Board of Directors.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe table below provides details regarding the potential change in estimated fair value of our derivative instruments due to a 50 basis point parallel increase and decrease in the yield curve by type of derivative instrument, as well as the potential change in estimated fair value of our derivative instruments due to a 10% increase and decrease in equity prices (in millions): Interest Rate Sensitivity Notional Weighted Impact of Fair Impact of Amount Average Term +50 bps Value -50 bps (Years) Change Change December 31, 2022 Swaps $ 11,053 6.01 $ (165) $ (257) $ 174 Swaptions $ 25,000 1.07 $ (685) $ (1,711) $ 647 Interest Rate Futures $ 105,261 0.91 $ (102) $ — $ 83 Total $ (952) $ (1,968) $ 904 December 31, 2021 Swaps $ 10,995 6.99 $ (226) $ 450 $ 238 Swaptions $ 19,000 2.07 $ (427) $ 133 $ 416 Interest Rate Futures $ 912 0.25 $ (66) $ — $ 73 Total $ (719) $ 583 $ 727 Equity Sensitivity Notional Weighted Impact of Fair Impact of Amount Average Term +10% Value -10% (Years) Change Change December 31, 2022 Options $ 48,000 0.53 $ 225 $ 1,064 $ 916 Calls $ 17,500 0.10 $ 698 $ 106 $ (99) Puts $ 30,500 0.77 $ (473) $ 958 $ 1,015 Equity Futures $ 19,760 1.78 $ (1,988) $ — $ 1,988 Total Return Swaps $ 739 4.34 $ (71) $ 31 $ 71 Total $ (1,834) $ 1,095 $ 2,975 December 31, 2021 Options $ 48,500 0.20 $ 1,549 $ 756 $ (115) Calls $ 21,000 0.20 $ 1,672 $ 606 $ (569) Puts $ 27,500 0.20 $ (123) $ 150 $ 454 Equity Futures $ 18,258 0.21 $ (1,826) $ — $ 1,826 Total $ (277) $ 756 $ 1,711 103
Biggest changeQuantitative and Qualitative Disclosures about Market Risk The table below provides details regarding the potential change in estimated fair value of our derivative instruments due to a 50 basis point parallel increase and decrease in the yield curve by type of derivative instrument, as well as the potential change in estimated fair value of our derivative instruments due to a 10% increase and decrease in equity prices (dollars in millions): Interest Rate Sensitivity Notional Weighted Impact of Fair Impact of Amount Average Term +50 bps Value -50 bps (Years) Change Change December 31, 2023 Swaps $ 7,893 5.68 $ (93) $ (120) $ 96 Swaptions 23,500 0.36 (612) (752) 885 Interest Rate Futures 33,926 0.25 (1,011) — 1,138 Total $ (1,716) $ (872) $ 2,119 December 31, 2022 Swaps $ 11,053 6.01 $ (165) $ (257) $ 174 Swaptions 25,000 1.07 (685) (1,711) 647 Interest Rate Futures 105,261 0.91 (102) — 83 Total $ (952) $ (1,968) $ 904 Equity Sensitivity Notional Weighted Impact of Fair Impact of Amount Average Term +10% Value -10% (Years) Change Change December 31, 2023 Options Calls $ — — $ — $ — $ — Puts 26,000 0.07 (55) 59 1,226 Total options 26,000 0.07 (55) 59 1,226 Equity Futures 24,739 1.81 (1,452) — 1,452 Total Return Swaps 1,599 4.50 (162) (22) 162 Total $ (1,669) $ 37 $ 2,840 December 31, 2022 Options Calls $ 17,500 0.10 $ 698 $ 106 $ (99) Puts 30,500 0.77 (473) 958 1,015 Total options 48,000 0.53 225 1,064 916 Equity Futures 19,760 1.78 (1,988) — 1,988 Total Return Swaps 739 4.34 (71) 31 71 Total $ (1,834) $ 1,095 $ 2,975 92
Quantitative and Qualitative Disclosures about Market Risk The table below provides additional detail regarding the potential change in estimated fair value of our equity investment portfolio and carrying value of our fixed index and variable annuity guarantee liabilities due to a 10% increase and decrease in equity market prices by type of asset or liability (in millions): December 31, 2022 December 31, 2021 Fair Impact of Impact of Fair Impact of Impact of Value 10% -10% Value 10% -10% Change Change Change Change Equity Securities and Limited Partnerships $ 2,734 $ (273) $ 273 $ 2,279 $ (228) $ 228 December 31, 2022 December 31, 2021 Carrying Impact of Impact of Carrying Impact of Impact of Value 10% -10% Value 10% -10% Change Change Change Change Fixed Index and Variable Annuity Guarantee Liabilities $ 499 $ (1,793) $ 2,202 $ 4,031 $ (663) $ 1,526 The carrying value of our annuity guarantee liabilities reflect our contract holders’ exposure to equity market declines.
The table below provides additional detail regarding the potential change in estimated fair value of our equity investment portfolio in addition to our variable annuity, fixed index and RILA market risk benefits and embedded derivatives due to a 10% increase and decrease in equity market prices by type of asset or liability (in millions): December 31, 2023 December 31, 2022 Fair Impact of Impact of Fair Impact of Impact of Value 10% -10% Value 10% -10% Change Change Change Change Equity Securities and Limited Partnerships $ 1,665 $ (167) $ 167 $ 2,734 $ (273) $ 273 December 31, 2023 December 31, 2022 Fair Impact of Impact of Fair Impact of Impact of Value 10% -10% Value 10% -10% Change Change Change Change Fixed index and RILA embedded derivatives $ 1,275 $ 2 $ (5) $ 235 $ 1 $ (3) Market risk benefits (1,136) (2,048) 2,587 2,753 (2,382) 2,867 The fair value of our market risk benefits reflect our contract holders’ exposure to equity market declines.
When equity markets increase, this exposure and the related liability declines.
When equity markets increase, this exposure and the related fair value declines. 91 Part II | Item 7A.
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Quantitative and Qualitative Disclosures about Market Risk The table below provides detail regarding the potential change in estimated fair value of our debt securities in addition to our variable annuity, fixed index and RILA market risk benefits and embedded derivatives due to a 50 basis point parallel increase and decrease in the yield curve by type of asset or liability (in millions): December 31, 2023 December 31, 2022 Fair Impact of Impact of Fair Impact of Impact of Value +50 bps -50 bps Value +50 bps -50 bps Change Change Change Change Debt Securities (1) Floating Rate $ 3,019 $ (2) $ 2 $ 3,025 $ — $ 1 Fixed Rate 27,982 (814) 862 27,956 (906) 946 (1) Includes debt securities that are classified as available-for-sale or trading and includes securities at fair value under the fair value option.
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December 31, 2023 December 31, 2022 Fair Value Impact of +50 bps Change Impact of -50 bps Change Fair Value Impact of +50 bps Change Impact of -50 bps Change Fixed index and RILA embedded derivatives $ 1,275 $ (49) $ 52 $ 235 $ (9) $ 9 Market risk benefits (1,136) (2,213) 2,470 2,753 (2,212) 2,463 The fair value of certain market risk benefits reflects the present value of projected benefit payments less the present value of attributed fees.
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These benefit payments and fees are subject to differing degrees of discounting, as benefit payments are generally projected to occur further in the future as compared to attributed fees.
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As a result, the degree of sensitivity between the present values of projected fees as compared to the present values of projected benefit payments may result in disproportionate sensitivity impacts relative to the market risk benefits fair value.

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