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Date

Thursday, Feb. 19, 2026 at 10:00 a.m. ET

Call participants

  • Chief Executive Officer — Laura Louene Prieskorn
  • Chief Financial Officer — Don Wayne Cummings
  • Chief Actuary — Lynn Sun
  • Head of Investor Relations — Elizabeth Werner
  • Chief Accounting Officer — Brian Michael Walta
  • Chief Investment Officer — Christopher Allen Raub

Takeaways

  • Adjusted operating earnings growth -- Nearly 12% increase, supported by stable fee income and improved spread earnings.
  • Adjusted operating earnings per share -- Over 20% growth, driven by capital return and share repurchases.
  • Full-year free capital generation -- Exceeded $1 billion for the second consecutive year.
  • Full-year free cash flow -- Delivered well over $800 million, underpinning capital return and business investment.
  • Full-year retail annuity sales -- Nearly $20 billion, the highest since 2019.
  • Total retail annuity account values -- Increased 7% to $269 billion at year-end.
  • Return to common shareholders -- Over $860 million for the year, surpassing the disclosed target range.
  • Holding company liquidity -- Ended period with $650 million in liquidity and a 567% RBC ratio.
  • Distribution from operating company -- Over $1 billion distributed, a 27% year-over-year increase.
  • RILA sales -- Reached a quarterly record of nearly $2.3 billion and grew 22% for the full year.
  • RILA account value -- $20 billion at year-end, marking a 14% sequential and 74% annual increase.
  • Fee-based advisory sales -- Achieved a record $1.5 billion.
  • RILA and FIA sales -- Drove expanded broker-dealer partnerships and business diversification.
  • 2026 free capital generation target -- Set at $1.2 billion or higher, contingent on continued profitability.
  • 2026 capital return target -- Range increased to $900 million to $1.1 billion, a 16% step-up from the prior year.
  • Quarterly dividend -- Increased to $0.90 per share, representing "a nearly 13% increase over our prior quarterly dividend."
  • Adjusted operating earnings (Q4) -- $455 million, aided by actuarial assumption review and spread-product expansion.
  • Adjusted book value per share -- Rose 4% to $155.78, attributed to share repurchases.
  • Adjusted operating return on common equity -- 14.7%, up from 12.9% in the prior year.
  • Adjusted operating EPS (Q4) -- $6.61 reported; $6.43 after adjusting for notable items and tax rate differences, a 33% increase from Q4 2024.
  • Annual actuarial assumption impact -- Provided a $0.23 per-share benefit, versus a $0.31 unfavorable effect in the prior year.
  • RILA record sales (Q4) -- $2.3 billion, up 53% from the year-ago quarter and 10% quarter over quarter.
  • Fixed index annuity sales (Q4) -- $812 million from the new product launch.
  • Net non-variable annuity flows (Q4) -- $2.8 billion, attributable to RILA and spread-product performance.
  • Variable annuity account value growth -- 2.8%, supported by favorable investment performance.
  • Retail annuity average AUM -- $268 billion, up from $254 billion one year earlier.
  • GAAP pretax loss attributable to JXN -- $376 million loss versus pretax adjusted operating earnings of $529 million, explained by net hedge and MRB losses.
  • Hedging results -- Net quarterly loss of $405 million, largely from equity index volatility and interest rates; net hedge loss (excluding volatility) was $62 million.
  • Quarterly guarantee fees -- $800 million; $3.1 billion for the full year, described as a stable revenue source.
  • MRB impact -- $405 million quarterly loss primarily tied to variable annuity guarantees and elevated implied equity volatility.
  • Reserve and embedded derivative losses -- $393 million, with much of this offset by RILA hedge gains.
  • Annual actuarial review impact -- $360 million unfavorable, mainly from higher reserves for updated lapse and behavior assumptions, partially offset by improvements in mortality experience.
  • Brook Re equity -- Ended the year at $1.7 billion (pre-Hickory Re), with an additional $150 million after funding Hickory Re, totaling just under $1.9 billion.
  • Capital generation at Brook Re (2025) -- $27 million before actuarial review, with resilience shown despite surrender and volatility headwinds.
  • Quarterly after-tax statutory capital generation -- $266 million, impacted by a $150 million nonrecurring reserve increase in the runoff closed block.
  • Quarterly free capital generation -- $235 million, reflecting diversification and growth from new business.
  • Full-year free capital generation -- Nearly $1.4 billion, surpassing prior expectations.
  • Free cash flow yield -- Estimated 12% for the year.
  • Capital returned to shareholders (Q4) -- $205 million, a 51% increase in per diluted share terms over the prior-year quarter.
  • Total adjusted capital (Jackson National Life) -- Just over $5.5 billion at period-end.
  • RBC ratio -- 567% at quarter-end, above stated targets.
  • New common stock issuance to TPG -- $500 million in stock issued for $650 million in value, at a 30% premium.
  • Holding company cash and investments -- $691 million at period-end, down from $797 million in the third quarter due to captive formation and shareholder capital return.
  • Brook Re liability diversification -- Recent transactions added $1.3 billion in payout annuities and ceded $1.2 billion in fixed and fixed index annuity liabilities to Hickory Re.
  • Hickory Re -- Formed and capitalized in the fourth quarter, anticipated to generate medium-term free cash flow contributions.

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Risks

  • Don Wayne Cummings stated, "The only other notable item this quarter was a $0.13 unfavorable impact from limited partnership results, which came in below our long-term 10% return assumption."
  • Annual actuarial assumption review resulted in a $360 million unfavorable impact due to higher reserves for updated policyholder lapse and utilization assumptions.
  • Elevated surrender rates on the variable annuity block, especially in the second half, may persist, with management noting, "we have seen surrenders pick up in the second half of the year. Looking ahead, we expect surrender activity to remain closely tied to what is happening in the equity markets."
  • Brook Re capital generation for 2025 totaled only $27 million before reviews due to volatility and higher-than-expected surrenders, which management described as "headwinds that resulted in the numbers you see here."

Summary

Jackson Financial (JXN 0.80%) delivered record retail annuity sales, robust growth in RILA and fixed index annuity distribution, and achieved a new high in full-year free capital generation. Management completed the previously announced strategic partnership with TPG, providing $650 million in new value and issuing $500 million in common stock at a 30% premium to support growth in spread-based businesses and captive reinsurance strategies. Adjusted operating earnings and return on equity increased notably, supported by product diversification, favorable mortality, and disciplined capital returns including a 13% quarterly dividend hike. The formation of Hickory Re and the allocation of new business blocks to Brook Re drove further liability and capital diversification, while net hedging losses and actuarial assumption changes impacted GAAP results, highlighting ongoing exposure to market and policyholder behavior shifts.

  • Management outlined, "we expect to maintain our balanced approach to capital management focusing on financial strength, future growth, and capital return to shareholders," setting a higher 2026 target for capital returns.
  • Net hedge results were clarified by new segment disclosure, allowing improved transparency of offsetting equity exposures between RILA and variable annuities.
  • PPM America's asset allocation enhancements enabled deployment into higher-yielding asset classes, contributing to stronger spread results across products.
  • The company expects both Hickory Re and Brook Re to become incremental sources of free cash flow in future years, supporting upward-revised capital return targets.

Industry glossary

  • RILA: Registered Index-Linked Annuity, a type of annuity offering returns based on the performance of a reference index with limited downside protection.
  • FIA: Fixed Index Annuity, an insurance contract that credits interest based on a specified equity index with principal protection.
  • Brook Re: An in-house captive reinsurance company established by Jackson Financial to economically hedge and manage capital requirements against its variable annuity liabilities.
  • Hickory Re: Jackson Financial's captive reinsurer, newly formed to manage fixed and fixed index annuity liabilities, supporting strategic growth and capital efficiency.
  • MRB: Market Risk Benefit, an accounting and risk measure for the economic value and volatility of variable annuity guarantees.

Full Conference Call Transcript

Laura Prieskorn. Thank you, Elizabeth. Good morning, and thank you for joining our 2025 fourth quarter and full year earnings call. I will begin with a review of our recently announced strategic actions followed by a discussion of our 2025 accomplishments, our progress since separation, and our 2026 financial targets. 2025 was an exceptional year as we surpassed our financial targets and set records for sales and distribution. We delivered another year of over $1,000,000,000 in free capital generation and grew free cash flow while providing initial funding for our new captive reinsurer, Hickory Re. Following my remarks, our CFO, Don Cummings, will discuss our financial performance in further detail.

Beginning on slide three, Jackson Financial Inc.'s execution focus and core capabilities have been steadfast and are evident in both our success as a leading provider of retirement solutions and our performance as a public company. As an important next step in Jackson Financial Inc.'s growth, we recently closed on our previously announced strategic partnership agreement with TPG. This long-term partnership will support accelerated growth of our spread-based business and future flexibility. TPG's unique investment capabilities and collaborative culture align well with Jackson Financial Inc., and our teams have already been working closely together. Our partnership with TPG combined with the capital efficiency from our captive strategy positions us well for fixed and fixed index annuity sales momentum.

Turning to slide four, our strong full year operating results drove nearly 12% growth in our adjusted operating earnings supported by stable fee income and increased investment spread earnings. Our commitment to shareholder capital return, and the benefit of share repurchases resulted in over 20% growth in adjusted operating earnings per share for the full year. As a reminder, our net income includes the impact of our annual assumption review and net hedge results, which Don will discuss. Over the course of 2025, our sustained profitability and disciplined capital management resulted in well over $800,000,000 in free cash flow and capital return.

Importantly, we expect to maintain our balanced approach to capital management focusing on financial strength, future growth, and capital return to shareholders. We achieved the highest quarterly and annual annuity sales since going public in the fourth quarter and full year 2025. Fixed index annuity continued growth in RILA combined with accelerated growth in our recently introduced have deepened our distribution relationships and diversified our business. For the full year, retail annuity sales of nearly $20,000,000,000 are at their highest level since 2019, and net flows improved for the quarter and full year.

While the strong equity market continues to impact net flows in our healthy variable annuity book, our RILA and FIA sales are an increasing off to VA lapses. These strong sales in a favorable market contributed to the 7% increase in total retail annuity account values to $269,000,000,000 at 2025 year end. Turning to slide five, we exceeded all our 2025 financial targets, surpassing the high end of our capital return target range with over $860,000,000 returned to common shareholders. We also ended the year with over $650,000,000 in holding company liquidity and an RBC ratio of 567%. Free capital generation was over $1,000,000,000 for the second year in a row.

As a result, we distributed over $1,000,000,000 from our operating company, Jackson National Life, to our holding company, a 27% increase from 2024. We expect our strong capital generation to both support growth and continued capital return, and we have established a new financial target for free capital generation, reflecting our view of future profitability. Our accomplishments last year are significant not only on a single year basis, but also as they reflect Jackson Financial Inc.'s continued progress over more than four years.

Operator: Slide six highlights the significant growth in capital return since separation due to our

Elizabeth Werner: strong cash flows and prudent capital management. Beginning in 2021, when we launched as a public company and each subsequent year, Jackson Financial Inc. increased its common shareholder dividend and raised its target for capital return to common shareholders. During this time, we managed through periods of external market volatility and formed the captive, Brook Re, that allows for more economic hedging and has significantly improved capital stability. Furthermore, Jackson Financial Inc.'s commitment to investing in our business supports our continued track record of capital returns. Turning to slide seven, our ongoing product innovation has resulted in sales growth and greater business diversification.

This year was no exception, and we saw the benefits from our second quarter launch of Jackson Financial Inc.'s Market Link Pro 3 and Market Link Pro Advisory 3, which we refer to as RILA 3.0. In the fourth quarter, RILA sales set a record at nearly $2,300,000,000 and for the 2025 full year, RILA sales rose 22%. RILA account value at 2025 year end $20,000,000,000, a 14% increase from third quarter 2025 and a 74% increase from 2024. We expect RILA to remain a valuable offering for our and their clients, and RILA 3.0 offers a broad range of index and crediting options along with valuable protection benefits.

In addition to RILA, our recently launched fixed index annuity, Jackson Income Assurance, was a significant contributor to fourth quarter sales. And looking ahead, we expect this offering to provide further diversification in our new business mix. Importantly, RILA and FIA have broadened our distribution reach resulting in expanded broker-dealer partnerships and deeper relationships with advisers selling multiple Jackson Financial Inc. product lines. We also see momentum in the fee-based advisory business where 2025 sales reached a record $1,500,000,000. The growth was broad based, as our investment-only variable annuity, Elite Access, and our offering accounted for over two thirds of advisory sales, while our traditional variable annuity accounted for nearly all of the remainder.

Jackson Financial Inc.'s expanding annuity product portfolio allows advisers to best meet their clients' individual retirement planning goals. In our fifth year as an independent public company, we are well positioned with a more diverse product suite and broader distribution than at separation. Turning to slide eight, as we look ahead to 2026, we expect our partnership with TPG and our captive strategy will contribute to stronger and more stable capital generation. As a result, we believe free capital generation will reach or exceed $1,200,000,000 given our healthy book of business and outlook for profitable growth.

We are also raising our capital return targets for the fifth time, setting a 2026 target of $900,000,000 to $1,100,000,000, a 16% increase from our 2025 actual capital return of $862,000,000. Jackson Financial Inc.'s free capital generation provides greater visibility into potential free cash flow and sustainable capital return to shareholders. To that end, our board approved our fifth increase in our quarterly dividend to $0.90 per share, a nearly 13% increase over our prior quarterly dividend. We believe Jackson Financial Inc.'s approach to capital management balancing investment in our business, maintaining financial strength, and returning capital to shareholders will continue to serve all stakeholders. I will now turn the call over to Don. Thank you, Laura.

Operator: Let us turn to slide nine and walk through our consolidated financial results

Don Wayne Cummings: for the fourth quarter. We delivered adjusted operating earnings of $455,000,000 driven by continued strength across our spread-based products. Earnings benefited from the ongoing expansion of our RILA, fixed and fixed index annuity lines, as well as our institutional products. We also saw a favorable operating earnings impact this quarter from our annual actuarial assumption review, which added to the solid performance. As always, our spread-based products are supported by a high-quality, conservatively managed investment portfolio. Diversification and strong credit quality remain core to how we manage the portfolio, and that discipline continues to serve us well. Our spread-based product sales reflect the enhanced asset sourcing capabilities at PPM America.

PPM's work has allowed us to direct new money into select higher-yielding asset classes, such as emerging markets, residential mortgages, and investment-grade structured securities. This modest shift in new money allocation combined with a compelling product lineup has helped Jackson Financial Inc. maintain a stable and competitive position in the spread product market throughout 2025. And looking forward, we are excited about the momentum created by our new strategic partnership with TPG, along with the ongoing benefit of our capital-efficient captive strategy. Together, these initiatives will further strengthen our ability to offer competitive spread products that generate attractive financial returns.

Given the recent headlines around asset-based finance and direct lending, it is worth noting that Jackson Financial Inc. is currently underweight in these asset classes compared to our peers. We actually see potential market stress as an opportunity to step in and be selective investors. Additionally, TPG's expertise in direct lending, where they emphasize strong covenants and deep credit knowledge in the lower middle market segment, positions us well as we gradually build exposure in this space. Now before we get into the notable items for the quarter, I would like to take a moment to highlight our strong performance in book value per common share. Over the course of the year, we returned $862,000,000 of capital to shareholders.

As you would expect, that level of return contributed to a modest decline in total adjusted book value since year end 2024. But importantly, our share repurchase activity reduced the diluted share count, which helped drive a 4% increase in adjusted book value per share, bringing it to $155.78. We are also very pleased with our profitability metrics. Our adjusted operating return on common equity for the year came in at 14.7%, up from 12.9% in 2024, reflecting the underlying strength and resilience of the business. Turning to slide 10, let me walk you through the notable items that affected adjusted operating earnings this quarter. We reported adjusted operating earnings per share of $6.61.

After backing out $0.10 of notable items, and adjusting for the difference between our actual tax rate and our 15% tax guidance, adjusted operating EPS was $6.43. That is a 33% increase from last year's fourth quarter. The improvement reflects the strong spread income growth I mentioned earlier, along with the benefit from a lower diluted share count because of our repurchase activity. As we typically do, we completed our annual actuarial assumptions review in the fourth quarter. This year's review resulted in a $0.23 per share operating earnings benefit compared to a $0.31 unfavorable impact in the prior year quarter.

The 2025 update primarily reflected favorable mortality trends, which supported operating income in both our Retail Annuities segment and our Closed Block. The only other notable item this quarter was a $0.13 unfavorable impact from limited partnership results, which came in below our long-term 10% return assumption. Moving to slide 11, this chart walks through our notable items for the full year. After adjusting for those items, our 2025 earnings per share were up 22% compared to last year. That growth was driven primarily by the strong improvement in our spread earnings along with the benefit of a lower diluted share count from our repurchase program.

On slide 12, we take a closer look at the diverse and growing new business profile within our Retail Annuities segment. The segment delivered 27% growth over last year's fourth quarter and 10% growth sequentially. Our RILA product suite continues to be a standout. We achieved record sales of $2,300,000,000, up 53% from the prior year quarter and 10% from the third quarter. Since launching the product in 2021, RILA assets under management have grown steadily and reached a record high of more than $20,000,000,000 at the 2025. As I mentioned earlier, our spread products are also benefiting from strong momentum. The successful launch of our new FIA offering contributed to $812,000,000 in fixed index annuity sales during the quarter.

With our recently announced strategic partnership with TPG, we feel very well positioned to continue this growth and expand the potential of our spread-based

Operator: business.

Don Wayne Cummings: Turning to net flows. Our strong RILA sales and spread product performance drove $2,800,000,000 of non-variable annuity net flows in the fourth quarter. On the variable annuity side, net outflows have remained somewhat elevated. This reflects several expected factors: the current moneyness of the block, an aging policyholder base, and the impact of older, larger sales vintages coming off their surrender periods. On a full year basis, our surrender rate was essentially flat, reflecting overall strong equity market returns. We saw some quarterly fluctuations in surrender rates this year. In the 2025, surrenders improved as market volatility kept policyholders on the sidelines.

But since April, as equity markets reached new highs, we have seen surrenders pick up in the second half of the year. Looking ahead, we expect surrender activity to remain closely tied to what is happening in the equity markets. Importantly, those same strong market returns generated over $28,000,000,000 of separate account investment performance for the year, over $9,000,000,000 more than our variable annuity net outflows. This helped drive 2.8% growth in variable annuity account values and supported the strong levels of fee income we delivered throughout the year. Slide 13 gives an overview of pretax adjusted earnings across each of our business segments. Starting with Retail Annuities, we continued to see strong momentum in our spread business.

That performance helped lift our average Retail Annuity AUM to $268,000,000,000, up from $254,000,000,000 in last year's fourth quarter. This growth more than offset the lower favorable impact from this year's actuarial assumption update, resulting in pretax adjusted operating earnings that were $19,000,000 higher than the prior year quarter. In our Institutional segment, pretax adjusted operating earnings were also up year over year. The increase reflects higher spread income driven by our expanding book of business. New business activity was elevated throughout the year, supported by strong demand for spread lending and our ability to act opportunistically in the market. Finally, in the Closed Block segment, pretax adjusted operating earnings improved compared to the fourth quarter of last year.

The primary driver was a comparatively favorable impact from the annual actuarial assumptions update. Let me draw your attention to slide 14, which really highlights how the quality and structure of our variable annuity book set us apart and support our economic hedging strategy. With Brook Re, we have created a framework that lets us align our variable annuity hedging directly with the economics of our guarantees. Our VA guarantees at Brook Re are well protected, and we are seeing stable regulatory capital and distributable earnings at Jackson National Life. That has been clear in our strong free capital generation, free cash flow, and capital return over the past eight quarters.

This structure also benefits how we manage our RILA business. RILA remains at Jackson National Life, separate from the variable annuity guarantees, and is managed and priced on a stand-alone basis. All capital generation from RILA flows through Jackson National Life's results. There is a natural equity offset between RILA and our variable annuity guarantees. RILA is exposed to upside equity risk, while the VA guarantees are exposed to downside risk. Each is reserved and capitalized independently, VA guarantees under our modified GAAP framework at Brook Re and RILA under the statutory regime at Jackson National Life, with no diversification benefit between the two.

While we do not get a capital or reserving benefit from these offsetting risks, we do gain hedging efficiency by netting them internally, which reduces our need for external equity hedging. And if RILA grows to surpass variable annuities in terms of equity risk, that benefit continues. Our external hedging would just shift from downside to upside protection. We see this structure as a real differentiator, underscoring our consistent economic approach and the strong performance of our book. We are confident in the quality of our annuity business and our ability to manage risk effectively.

Slide 15 walks through a bridge comparing our fourth quarter pretax adjusted operating earnings of $529,000,000 to the GAAP pretax loss attributable to Jackson Financial Inc. of $376,000,000. We have heard your feedback, so this quarter, we are also providing additional disclosure that breaks out our net hedging results for VA and RILA separately. This should give you a clearer view of how the offsetting equity risks between these businesses are playing out in our results and hopefully make it easier to compare Jackson Financial Inc.'s net hedge results with what is happening at Brook Re. One of the themes I want to highlight here is the continued stability in our nonoperating results.

Since shifting to a more economic hedging approach at the 2024, we have seen a meaningful improvement in consistency, which has also supported stronger and more predictable capital generation. Our total net hedge result for the quarter was a net loss of $405,000,000, driven largely by the impact of equity index implied volatility. Let me break the components down. Our hedging program is supported by a robust and stable stream of guaranteed benefit fees, which are assessed on the benefit base, not account value. This structure means our guarantee fee revenue remains consistent even during market downturns, helping to smooth earnings across cycles. In the fourth quarter, guarantee fees totaled $800,000,000, bringing the full year figure to $3,100,000,000.

This continues to demonstrate the durability and predictability of this revenue source. Turning to hedging instruments. Our hedging program produced a $370,000,000 net loss in the quarter. This was primarily driven by losses on interest rate hedges, as long-term rates moved higher, and losses on VA equity hedges from modest gains in equity markets. Our new disclosure really brings out how the RILA business naturally offsets our VA equity exposure. When markets move higher, we typically see losses on our VA hedges, but those are often balanced by gains on our RILA hedges. This dynamic helps drive better overall hedge efficiency for the portfolio. We recorded a $405,000,000 MRB loss related primarily to our variable annuity guarantees.

The biggest driver here was higher equity index implied volatility during the quarter. It is worth noting that implied volatility does not impact the MRB calculation at Brook Re because that entity uses a fixed volatility assumption, an approach designed to enhance balance sheet stability. Excluding the impact from volatility, MRB movements were modest this quarter and our VA net hedge results tracked closely with expectations. We also recognized a $393,000,000 reserve and embedded derivative loss, reflecting higher RILA reserves tied to stronger equity markets. Much of this impact was offset by gains on our RILA hedges. Stepping back, after isolating the volatility effects I just mentioned, our overall net hedge result for the quarter was a modest $62,000,000 loss.

A very stable outcome, especially given the size and complexity of our liability profile. We believe these results underscore the effectiveness of our hedging program in supporting capital stability, managing economic risk proactively, and preserving the durability of our business model. Lastly, our annual actuarial assumptions review resulted in an unfavorable impact of $360,000,000. This was driven mainly by higher reserves from updated policyholder behavior assumptions, including lapses. These increases were partially offset by favorable mortality updates and some model refinements. Given the scale of our variable annuity block, we view the overall impact of these updates as very manageable.

Now let us turn to slide 16, which walks through how Brook Re's equity position evolved over the course of 2025. Throughout the year, Brook Re's capital position proved resilient, and we continued to build on our base of hard assets, reinforcing the overall strength of the balance sheet and Brook Re's self-sustaining design. We started the year in a strong position, about $2,100,000,000 of capital, which put us well above both our internal risk framework and our minimum operating capital requirements. For the full year, Brook Re generated $27,000,000 of capital before the annual actuarial assumptions review.

Given the market volatility we saw in the second quarter, and the higher lapse rates during the year, that is a solid result. Even with those headwinds, we still grew our capital base, which underscores the strength of our hedging and risk management under the Brook Re structure. Now the assumptions review had a $349,000,000 after-tax impact. This differs a bit from what we saw at consolidated Jackson Financial Inc. level, mainly because Jackson Financial Inc. includes non-variable annuity business. The changes at Brook Re were mostly tied to updates in lapse and utilization assumptions, and reflect our long-term best estimate expectations of behavior.

We expect those updates to lead to better actual-to-expected results in 2026, compared to the last couple of years if experience is similar. At year end, Brook Re's equity stood at $1,700,000,000 before we formed and capitalized Hickory Re. Even at that level, we were comfortably above both our internal and regulatory capital thresholds. Once we added the initial capitalization for Hickory Re, reported year end equity increased by another $150,000,000, bringing total reported equity to just under $1,900,000,000. Shifting to how we think about risk and capital management at Brook Re, our goal is to make sure the entity always holds enough capital to stay well above minimum operating capital, even under stress.

When we first launched Brook Re, we discussed how our capital framework was built to hold up under stress—specifically, to give us 95% confidence that we could withstand a wide range of market scenarios. That confidence level comes from running a robust set of stochastic scenarios to illustrate how our capital position would perform over time. At launch, we did not just meet the 95% confidence level, we actually capitalized Brook Re well above, closer to the 98th percentile of our projected capital distribution. In other words, we started from a position of real strength. At the 2025, we continue to be capitalized well into the tail, consistent with the 98th percentile and beyond.

So overall, 2025 was a year that tested the structure. Brook Re performed exactly as intended, maintaining strength through volatility and positioning us well heading into 2026. We expect Brook Re to remain self-sustaining under normal market conditions, and over time, we see it becoming an additional source of free cash flow. Slide 17 highlights the continued growth in our capital generation and free cash flow. At Jackson Financial Inc., we follow a straightforward philosophy: earn it, then pay it. This framework rests on three pillars: generating free capital—this is where we earn it; converting that capital into free cash flow—this is where we pay it; and returning capital to common shareholders—the outcome of the first two steps working together.

In the fourth quarter, after-tax statutory capital generation was $266,000,000. We view this metric as one of the clearest indicators of the underlying strength of our business, and it guides how we balance future growth with returning capital to shareholders. Quarterly capital generation was reduced by a one-time reserve increase of about $150,000,000, or about $173,000,000 including deferred tax impacts, primarily related to the runoff closed block. This adjustment was not related to variable annuities or RILA. Excluding this nonrecurring item, capital generation was broadly consistent with the run rate we saw over the first nine months of the year.

Free capital generation was $235,000,000 in the quarter, reflecting the estimated change in required capital driven by our strong and diversified new business results. For the full year, free capital generation totaled nearly $1,400,000,000, well ahead of our $1,000,000,000 plus expectation. As Laura mentioned, we have now added free capital generation to our financial targets for the year. In 2026, we expect to generate at least $1,200,000,000 in free capital, assuming equity markets deliver a 5% return and interest rates move in line with the year-end forward curve.

While we are maintaining our RBC risk gap appetite at 425%, the stability we have seen in RBC over the past two years gives us confidence to shift our focus toward free capital generation, aligning with our earn it and pay it approach. Free cash flow was again strong and consistent in the quarter. After funding the $150,000,000 initial capitalization of Hickory Re, and covering expenses and other cash flow items, free cash flow at the holding company totaled $119,000,000. For the full year, we distributed over $1,100,000,000 to the holding company and generated $838,000,000 of free cash flow. Based on our year-end market capitalization, that represents a free cash flow yield of about 12% for 2025.

While valuation reflects many factors, we believe this is a powerful indicator of Jackson Financial Inc.'s value, and it reinforces our commitment to continue repurchasing shares while also investing in growth. Our strong free capital generation and growing free cash flow enabled us to return $205,000,000 to common shareholders in the fourth quarter, a 51% increase from the prior year quarter on a per diluted share basis. For the full year, we returned $862,000,000, above the top end of our disclosed range. Since becoming an independent public company, Jackson Financial Inc. has now returned more than $2,700,000,000 to common shareholders, exceeding our initial market capitalization at separation.

As Laura highlighted, we are increasing our capital return targets again—our fifth raise since going public—setting a target of $900,000,000 to $1,100,000,000, up from the $862,000,000 we returned in 2025. Our strong capital position and high-quality book of business underpin our ability to generate free capital well beyond 2026. This consistent capital generation supports a sustainable stream of free cash flow and enables continued capital returns to shareholders. Looking ahead, we expect growth in free capital generation to accelerate in line with the ongoing growth of our business. These results reinforce Jackson Financial Inc.'s robust capital generation profile, the stability and growth of our cash distributions, and our continued focus on delivering enhanced long-term value for shareholders.

Turning to slide 18, this slide highlights the continued growth in our capital and liquidity position. Our in-force business continues to be a strong driver of profitability. Fee income from our variable annuity-based contracts, along with growing spread-based earnings, supported solid capital generation during the quarter. At Jackson National Life, our capital position and RBC ratio have become much less sensitive to equity market movements thanks to the Brook Re structure. Today, changes in the equity markets primarily affect our assets under management and future capital generation, not our immediate capital levels or RBC ratio. In that sense, our earnings profile is looking more and more like an asset management business.

Consistent with our approach of taking smaller periodic distributions, we paid $300,000,000 to the holding company during the fourth quarter. After accounting for the impact of that distribution on our deferred tax assets, total adjusted capital ended the quarter just over $5,500,000,000. Our RBC ratio came in at 567%, comfortably above our minimum target. Overall, we believe Jackson Financial Inc. is operating from a position of real strength as we move into 2026. As I mentioned earlier, Brook Re's capitalization remains well above both our internal risk management target, which reflects a range of detailed scenarios, and our regulatory minimum operating capital level.

During the quarter, there were no capital contributions to or distributions from Brook Re other than the initial capitalization of Hickory Re. Looking ahead, we will continue to manage Brook Re on a self-sustaining basis, given the long-term nature of its liabilities. As we announced last week, our strategic partnership with TPG has officially closed. The growth capital from that transaction will flow down through the ownership chain to Hickory Re. Just as a quick reminder, we received $650,000,000 in value from the deal and issued $500,000,000 of common stock. That equates to roughly 4,700,000 shares at an effective premium of 30% at the time of signing.

It is a great outcome that further strengthens our balance sheet and supports future growth. At the holding company level, we ended the quarter with $691,000,000 in cash and investments, still above our minimum buffer and providing strong financial flexibility. That is down from $797,000,000 in the third quarter, mainly reflecting the funding of our new captive and capital return to shareholders, which more than offset the operating company dividends. Overall, our fourth quarter results show strong momentum, supported by a solid balance sheet, healthy capital and liquidity levels, and a business that is well positioned for continued success. I will now turn the call back to Laura.

Elizabeth Werner: Thank you, Don. Turning to slide 19. You can see our track record of executing on our business initiatives, delivering on our financial targets, and creating value for all stakeholders. 2025 marked another year of significant progress and an important milestone for Jackson Financial Inc. as we look forward to new growth opportunities. We expect our long-term partnership with TPG to leverage our core capabilities and lead to an expansion of our spread-based business. Jackson Financial Inc. remains dedicated to serving financial professionals and their with the goal of helping Americans grow and protect their retirement savings and income.

As we reflect on the year and our opportunities ahead, we recognize the hard work of all our associates whose talent and dedication remain our greatest strength. At this time, I will turn it over to the operator for questions.

Operator: Thank you. In preparing to ask your question, please ensure you are muted locally. As a reminder, press star then one on your telephone keypad. Our first question comes from Suneet Kamath of Jefferies. Suneet, your line is open. Please go ahead. Great. Thank you. I had a couple on slide

Suneet Kamath: 16. Just in terms of the capital levels, I mean, you have kind of given us qualitative sort of framework for how you think about the minimum capital. But I am just wondering if there is any way that you can kind of give us a little bit more of a target so we can track this over time?

Don Wayne Cummings: Hey, Suneet. It is Don. So first of all, just on Brook Re, I think it is important to kind of zoom out and put our progress since early 2024 in perspective. And when we formed Brook Re, we had shared quite a bit of detail around how we think about and manage capital there. And when we first set it up, the liability profile was almost entirely tied to our variable annuity guarantees. Now since then, we have taken a couple of important steps, both of which happened in the fourth quarter. And we believe those will give Brook Re a more diversified liability and capital profile than it had initially.

So I want to just spend a minute and cover what those are. First of all, we reinsured about $1,300,000,000 of payout annuity liabilities on a coinsurance basis, with assets transferring over to support that block. And these liabilities are somewhat similar to the GMWB benefits on our VA book, but importantly, they do not have any equity market exposure, which means that block is going to be more stable over time. And another thing to keep in mind is we bring on assets through our partnership with TPG, we do see opportunities to enhance the profitability of that payout annuity block. Secondly, we did establish Hickory Re as a subsidiary of Brook Re.

We ceded roughly $1,200,000,000 of in-force assets and liabilities into that structure. And there are a few advantages that I want to highlight here. Firstly, the modified GAAP framework we already use at Brook Re is well understood by our regulator, and it has worked effectively over the past two years. So it made sense to kind of build on that foundation rather than setting up an offshore structure, which would just add cost and complexity to us. With respect to the liabilities at Hickory Re, which are the fixed annuity and fixed index annuity liabilities, we also get a diversification benefit in our minimum operating capital calculation, and that benefit should increase as the block grows with new sales.

And then over the next couple of years, we do expect Hickory Re will be an additional source of free cash flow for us. And longer term, we believe that Brook Re on a stand-alone basis will also be generating sufficient capital to support distributions back to the holding company. And then finally, the growth capital from TPG that came in at closing, that gives us more flexibility at Jackson National Life because it frees up excess capital that we otherwise would have used to fund our accelerated growth plans for spread products. And so that gives us confidence in stepping up our capital return plans as we have laid out in our financial targets.

And as I have mentioned on prior calls, we would expect our RBC ratio to come down over time. So we are very comfortable with the performance and the balance sheet strength that we have at Brook Re. And we will continue to update you on progress there as we go throughout the year.

Suneet Kamath: Okay. That is helpful. Then I guess the second question on the slide is the $27,000,000 of capital generation. It just seems like a low number, especially in a pretty favorable equity market environment. I know in your prepared remarks, you called out a couple things, the surrender and, I guess, volatility. But can you kind of dimension how big of an impact that had on capital generation? Or maybe said another way, what would you expect normal course capital generation to be?

Don Wayne Cummings: Yes. We have not provided guidance in terms of normal market environment capital generation. But you are right. The two items that I mentioned in my prepared remarks, the first one related to the volatility that we saw in the early part of the second quarter, and that certainly was a headwind for us. And then the second item, and we do provide some disclosure on this in our financial supplement in the MRB roll forward, we did see some pressure

Operator: from

Don Wayne Cummings: higher-than-expected surrenders. The overall objective for Brook Re is to keep it to have it be self-sustaining over time. And we continue to believe that will be the case. It just so happens that this year, we did see a couple of headwinds that resulted in the numbers you see here.

Operator: Okay. Thanks. Thank you. Our next question comes from Alex Scott of Barclays. Alex, your line is open. Please go ahead. Hi.

Ryan Joel Krueger: Thanks for taking the question. First thing I wanted to ask about was

Alex Scott: just the initiative with TPG and what, in any way, to help us think through what that could mean for growth in the retail annuity platform and, you know, ultimately, that will lead to flows and so maybe not asking for an outlook. You probably want to give an outlook on flows per se, but maybe just helping us think directionally, like, what that will look like and when you could maybe expect to get growth mode for AUM overall from a flow standpoint.

Laura Louene Prieskorn: Good morning, Alex. Slightly hard to hear. I think you were asked about the partnership with TPG and what the growth outlook looks like as a result of that partnership.

Alex Scott: Yes. You know what about? I switched

Operator: to the headset. Yes. You had the question right. Apologies.

Laura Louene Prieskorn: Okay. Thank you. Thank you. Our overall goal is to have a diversified set of competitive products that continue to meet a variety of consumer needs within the industry overall. We continue to see strong demand for a variety of needs: income, protection,

Alex Scott: growth,

Laura Louene Prieskorn: legacy benefits, so having that

Suneet Kamath: broad range

Laura Louene Prieskorn: of annuity offerings

Alex Scott: helps

Suneet Kamath: support that

Laura Louene Prieskorn: goal that we have for diversifying sales. Don, do you have anything to add around the TPG partnership to support that goal?

Suneet Kamath: Yes. So

Don Wayne Cummings: Alex, thanks for that question. I would say that just highlight the progress that we made in spread products over the last half of this past year. We introduced a new product late in the third quarter that really came online fully in the fourth quarter. That is our fixed index annuity product. And you can see we did, between that and just other spread products, about $800,000,000 in the quarter. I think that is probably a good yardstick to think about how much we can generate on an annual basis with the

Alex Scott: TPG partnership

Don Wayne Cummings: in place. The other point that I would highlight for you is that we will be leveraging the TPG assets for other product lines outside of just fixed annuities and FIA products. We also anticipate some of those assets will fit in well with our RILA asset allocation strategy as well as even some on our institutional products. So we feel quite comfortable that, as you look at our results going forward, we will continue to be able to produce strong retail annuity sales results.

And in terms of your question on when we would expect to get to kind of flat net flows, I would say it probably is going to take us a couple of years to sort of have the additional levels of sales coming in to offset what we are seeing on the VA book. And, of course, with the VA book, that is going to depend on market environments because as we saw this year, even though we did have net outflows, we had investment performance that offset that by about $9,000,000,000. So we are pretty optimistic about the partnership with TPG and how that is getting operationalized.

Alex Scott: Great. Thank you. Another question I had is on the Hickory Re. Just thinking through your comment that could be a medium-term contributor to remittances versus Brook Re more long term. If you had cash flow coming out of Hickory Re since it sits underneath Brook Re, would that cash flow—can we assume that in the medium term that cash flow could be taken up to the holdco and go through Brook Re? Even if it is not sort of Brook Re standalone.

I just wanted to clarify that point whether it would be retained or not, and then maybe any other comments you have on just potential uses of excess capital you have at the holdco at Jackson National Life?

Don Wayne Cummings: Yes. So, you are right about dividends that we would pay the way the Brook Re restructure works. So it would go up to Brook Re, and then we would anticipate, assuming there is not anything unusual going on with markets at the time, that we would then be able to distribute that up through Brook Re to our holding company, similar to the way we do today with our stacked structure on the Jackson National Life side. So you have that right. And just in terms of other uses of excess capital, we continue to be focused on growth.

We think we have a very good opportunity with our broad distribution network to really focus in on the spread sales here in the near term. And as other opportunities come up for us to grow inorganically, we would look at those relative to how we can leverage that capital for returning to shareholders.

Alex Scott: Thank you.

Operator: Thank you. As a reminder, if you would like to ask a question, please dial star then one. Our next question comes from Thomas Gallagher of Evercore. Thomas, your line is open. Please go ahead.

Alex Scott: Thanks. A few questions. First is just on the Brook Re equity. If you have a net MRB asset of $4,200,000,000, how is the Brook Re equity only $1,700,000,000? What would the other accounting adjustment be on where the value of the net MRB asset is going to?

Don Wayne Cummings: Yes. Thanks for that, Thomas. So, you are looking at two components of the balance sheet, and I am not going to get into all the kind of puts and takes. But we obviously have other assets at Brook Re as well as liabilities. And so the net of all those represents the equity that we have left. As I mentioned in the more overview and putting Brook Re in perspective, we have done a couple of

Laura Louene Prieskorn: transactions

Don Wayne Cummings: in the fourth quarter with the blocks of business that we reinsured into Brook Re as well as into Hickory Re. So if you look at Brook Re's consolidated balance sheet, we have a pretty strong position in terms of invested assets. Also, if you look at the capital that we put in initially, which was a total of $1.9 billion, $700,000,000 of that was hard assets. We have seen that grow over the last couple of years as we have executed on the reinsurance settlements.

Alex Scott: Got it. And, Don, can you update us on what the hard assets are in Brook Re at this point?

Don Wayne Cummings: Yes. I am not going to give you the exact number, but I would just say that the $700,000,000 has grown pretty significantly. So that is the stand-alone VA piece. And as I mentioned earlier, those blocks that we moved over in the fourth quarter, those were supported by invested assets as well. So we believe Brook Re has got a pretty strong consolidated balance sheet. And even if you look at the VA and the payout annuity lines of business separately, we are quite comfortable there too.

Alex Scott: Got it. And then just my follow-up is

Ryan Joel Krueger: if we think about the annual

Alex Scott: actuarial review charges, if lapses do remain high on the VA side, and you have another year of, we will call it, close to breakeven hedging on VA. The $300,000,000 to $400,000,000 that you have been having every year would be a decent percentage of this $1,700,000,000. So I guess

Ryan Joel Krueger: when we think about

Alex Scott: playing that out for the next two or three years, is there a risk that you would have to contribute capital to Brook Re? Because I know you said you have a buffer, I think it was

Brian Michael Walta: 98 plus versus 95 CTE level currently. If I think about just what is happened over the last three years and the why, like, where—how should we think about playing that out for the next two or three years? Thanks.

Don Wayne Cummings: So I will make a couple of comments and maybe just ask

Alex Scott: Lynn

Don Wayne Cummings: Sun, our new Chief Actuary, to kind of give a little bit of perspective on our actuarial assumption review process. Just in terms of thinking about how that could impact capital at Brook Re, one of the things that I mentioned in my prepared remarks was that because the assumption updates that we included in the fourth quarter, those were primarily focused on lapses and benefit utilization. So we would expect that A versus E policyholder behavior that we disclose in the MRB roll forward, we would expect that to close somewhat. And so that would certainly be helpful. And we will continue to see how markets play out.

As you know from our prior discussions, we do tend to see a slowdown in surrender activity when equity markets are volatile or in periods where equity markets decline. We saw that clearly in 2002, if you look back on our results then. Maybe, Lynn, if you could just add a little bit of color around what we went through on the actuarial assumption review.

Laura Louene Prieskorn: Happy to. So as you mentioned, the majority of the assumption unlocking impact in 2025 was due to updating our long-term assumptions on lapses. Over the last few quarters, similar to other carriers, the industry, we saw an increase in lapses on our annuity book. We also saw fluctuations month to month and quarter to quarter. Lapses decreased. We saw a trend of that in the 2025 before they increased again in the second half of the year. Our analysis shows that the elevated lapse experience was particularly prevalent for variable annuity policies with GLWB at the money

Christopher Allen Raub: or slightly in the money relative to their account value. And we have updated our assumptions to reflect that dynamic. Based on my prior experience in the industry, I am confident that our annual assumption process is robust and we are well positioned for evaluating experience and bringing in the data when it becomes credible and affects our long-term view of experience.

Operator: Okay. Thank you. Thank you very much. We have no further questions registered on today's call, and therefore, conclude the Q&A session. I will now hand the call back over to Laura Prieskorn for any concluding or final remarks.

Christopher Allen Raub: Thank you. As you have heard this morning, 2025 was an exceptional year of progress for Jackson Financial Inc. We look forward to continuing these discussions and sharing our progress toward our 2026 targets after the first quarter. We thank you all for joining us today and your continued interest in Jackson Financial Inc.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.