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DATE

Tuesday, Aug. 4, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer - Laura Prieskorn
• Chief Financial Officer - Don Cummings
• President of PPM America - Chris Raub
• Senior Vice President of Planning and Asset Liability Management - Brian Walta
• Head of Distribution of Jackson National Life Distributors - Alison Reed
• Head of Investor Relations - Elizabeth Werner

TAKEAWAYS

• Adjusted Operating Earnings -- $7.30 per diluted share, or $7.68 excluding $0.36 in notable items primarily related to limited partnership performance.
• Retail Annuity Sales -- $5.9 billion, a 34% increase driven by record registered index-linked annuity performance and expanded spread-based product offerings.
• Record RILA Sales -- $2.3 billion, representing a 69% increase compared to the prior year quarter and the fourth consecutive quarter exceeding $2 billion.
• Variable Annuity Sales -- $2.7 billion, up 8% reflecting increased sales of products without lifetime benefits.
• Fixed and Fixed Index Annuity Sales -- $812 million, a 73% increase following the launch of the Jackson Income Assurance product.
• Institutional Product Sales -- $1.4 billion, reflecting demand for spread lending products and the effectiveness of an opportunistic sales strategy.
• Total Account Value -- $295 billion, a 10% sequential increase that includes a higher percentage of spread-based account growth.
• PPM Assets Under Management -- $101.1 billion, a 21% increase from the second quarter of 2025 driven by spread-based growth and third-party business.
• Free Cash Flow -- $287 million for the quarter, supported by $325 million in distributions from the operating company.
• Total Adjusted Capital -- $5.8 billion, representing a 9% increase compared to the second quarter a year ago.
• RBC Ratio -- 538% at Jackson National Life Insurance Company, which remains comfortably above the company's minimum target.
• Free Capital Generation -- $304 million in the second quarter, reflecting the estimated change in required capital associated with new business production.
• Capital Return to Shareholders -- $290 million in the quarter, including $227 million in share repurchases and $63 million in common dividends.
• Full Year Free Capital Generation Target -- $1.2 billion, which management expects to achieve based on performance through the first half of the year.
• Full Year Capital Return Target -- $900 million to $1.1 billion, maintained for the 2026 fiscal year.
• Total Available Liquidity -- $4 billion at the holding company, including cash, liquid securities, and the undrawn revolving credit facility.
• Total Leverage Ratio -- 23.4% excluding AOCI, which is projected to decline to 19.7% following the planned retirement of 2027 debt maturities.
• New Money Yield -- approximately 100 basis points higher than the overall portfolio yield, reflecting the benefit of investing at current interest rates.
• Retail Annuity Net Outflows -- improved by 20% through the first half of 2026, supported by positive inflows in RILA and fixed index annuity products.
• Adjusted Operating Return on Equity -- 16.3% for the trailing 12 months, compared to 12.7% for the period ended June 2025.

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RISKS

• Cummings stated, "limited partnership results were below our long-term 10% return assumption, resulting in an unfavorable impact of $0.36 per share," noting that valuations within this portfolio can vary quarter over quarter.
• Prieskorn stated, "the strong equity market drove variable annuity surrenders this quarter," identifying the impact of market performance on policyholder behavior and net flows.
• Cummings stated, "if there's a significant equity market decline, we'll see, that will turn into a headwind," identifying market volatility as a potential risk to fee-based earnings.

SUMMARY

Management reported record quarterly adjusted operating earnings for **Jackson Financial Inc.** (JXN +0.34%) and a significant increase in retail annuity sales driven by spread-based products. The company confirmed its full year targets for free capital generation and shareholder capital return while noting a transition in its business mix toward less market-sensitive products. Strategic developments included the progression of the TPG investment partnership and the launch of new index options within the retail annuity suite. Management indicated that the company is well positioned for the second half of 2026 based on first half momentum and a healthy balance sheet.

• Management announced that President and Chief Executive Officer Laura Prieskorn will retire at the end of the year, with Chief Financial Officer Don Cummings succeeding her as President and CEO on Oct. 1.
• Chief Financial Officer Don Cummings stated, "the partnership is clearly broadening investment opportunities and helping drive higher new money yields," regarding the strategic collaboration with TPG.
• Management reported the June launch of Market Link Pro 4 and Market Link Pro Advisory 4, which are the first RILA products in the industry to offer a Dow Jones Industrial Average Index option.
• The company expanded its distribution reach by adding 1,500 new advisers and reactivating 2,300 advisers since 2025 who had not recently sold a Jackson product.
• Non-variable annuity products accounted for nearly 50% of advisory channel sales in the second quarter, reflecting a strategy to diversify the company's distribution footprint.
• Senior Vice President Brian Walta stated, "from an economic standpoint, we had really matched that quite well, and that really does flow through our stat capital generation," regarding the performance of the hedging program during the quarter.
• Approximately 60% of producers selling the Jackson Income Assurance product were new or reactivated Jackson producers, according to management.

INDUSTRY GLOSSARY

• RILA: Registered Index-Linked Annuity, a category of annuity that offers growth potential tied to an index with limited downside protection.
• FIA: Fixed Index Annuity, an insurance contract that pays interest based on the performance of a specific market index.
• VA: Variable Annuity, an insurance contract that allows for investment in various subaccounts with returns that vary based on market performance.
• RBC Ratio: Risk-Based Capital Ratio, a regulatory measure used to ensure insurance companies have enough capital to support their business operations.
• TAC: Total Adjusted Capital, the sum of an insurer's statutory capital and surplus plus other qualifying items.
• AUM: Assets Under Management, the total market value of the investments that a person or entity handles on behalf of clients.
• AOCI: Accumulated Other Comprehensive Income, a component of shareholders' equity that includes unrealized gains and losses.
• Brooke Re: A captive reinsurance subsidiary used by Jackson to manage risks associated with variable annuity guarantees.
• P-Caps: Principal-protected notes or similar contingent capital instruments used to provide financial flexibility.

Full Conference Call Transcript

Operator: Good day, everyone. Welcome to the Jackson Financial Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Liz Werner, Head of Investor Relations. Please go ahead.

Elizabeth Werner: Good morning, everyone, and welcome to Jackson's 2026 Second Quarter Earnings Call. Today's remarks may contain forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events. Jackson's filings with the SEC provide details on important factors that may cause actual results or events to differ materially, except as required by law, Jackson is under no obligation to update any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. The reconciliation of those measures to the most comparable U.S. GAAP figures is included in our earnings release, financial supplement and earnings presentation, all of which are available on the Investor Relations page of our website at investors.jackson.com.

Presenting on today's call are Jackson CEO, Laura Prieskorn; and CFO, Don Cummings; joining us in the room are our President of PPM America, our investment management subsidiary, Chris Raub; our Head of Planning and Asset Liability Management, Brian Walta; and our Head of Distribution of Jackson National Life Distributors, Alison Reed. At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Laura Prieskorn: Thank you, Liz. Good morning, everyone. I appreciate you joining us for Jackson Financial's Second Quarter 2026 Earnings Call. I'll start by highlighting the quarter's strong operating results, continued capital generation and a robust free cash flow. Following my remarks, Don Cummings, our CFO, will discuss our financial results in greater detail. Lastly, prior to Q&A, I'll share comments on our upcoming executive management transitions we've recently announced, and my confidence in the leadership guiding Jackson forward. Beginning at a high level, our performance in the first half of 2026 positions Jackson to achieve our financial targets for the year and sets a foundation for anticipated long-term profitability. Turning to the financial metrics on Slide 3.

In the second quarter, operating earnings benefited from strong fee income and significant spread-based income growth. We reached a new quarterly record for adjusted operating earnings of $7.30 per diluted share. The combined total account value for retail annuities and institutional exceeded $295 billion, representing a 10% increase from the prior quarter and included a greater percentage of spread-based account growth. In addition, through the first half of the year, our adjusted operating earnings grew more than 20%. We expect our sizable healthy in-force business, our increasing diversification and our continued sales momentum to provide sustainable earnings and cash flows for the foreseeable future. Jackson's growth is supported by a strong capital position and continued capital generation.

At the end of the quarter, total adjusted capital was $5.8 billion, up nearly 9% from the second quarter a year ago. Despite the strong growth in new business, our ability to generate free cash flow and return capital to shareholders has continued to improve. For the first half of 2026, free cash flow was $575 million, a 14% increase from last year. During the same time, we returned $547 million to shareholders in the form of common shareholder dividends and share repurchases. We remain focused on our balanced approach to capital management that has allowed us to maintain financial strength while supporting new business and capital return. Turning to retail annuity sales.

We saw sales accelerate in the second quarter and approach $6 billion, a 34% increase from a year ago. Importantly, sales across all our products were up from the first quarter as well as from the second quarter a year ago. We remain an industry leader with more than $26 billion in RILA assets and $2.3 billion in second quarter RILA sales. This was a record sales quarter in the fourth consecutive quarter of more than $2 billion in RILA sales. We anticipate continued RILA sales growth resulting from our June launch of Market Link Pro 4 and Market Link Pro Advisory 4.

This latest addition to our RILA product suite is the first in the industry to reflect the Dow Jones Industrial Average Index option. We believe these enhancements provide valued options for our advisers and their clients and add to RILA's attractive product features of growth potential with downside protection. Further adding to our spread-based business and diversification, our fixed and fixed indexed annuity products whose account values increased 28% to $6.3 billion in the first half of 2026. Our income-focused FIA product, Jackson Income Assurance, delivered another quarter of solid sales, bringing FIA sales for the first 6 months to $1.3 billion.

Our FIA offers a highly valued income benefit that allows advisers to offer an income protection solution that their clients can depend upon. Looking forward, we expect the combination of our investment expertise at PPM and our TPG investment partnership will continue to support Jackson's ability to offer competitive spread-based products. Our partnership with TPG and the collaboration with PPM have already produced attractive new investment opportunities and enhanced investment yields. Importantly, we saw total retail annuity net outflows decline for the second quarter in a row and improved by 20% through the first half of the year compared to the prior year period.

While the strong equity market drove variable annuity surrenders this quarter, increasing net inflows for RILA, fixed annuities and fixed index annuities all contributed to the quarter's improving net flow trend. We anticipate that policyholders with mature variable annuities continue to take advantage of the high growth in their funds and their valued benefits and believe the impact on total net flows should recede over time. Our broader range of annuity products continue to drive growth by expanding distribution and increasing the use of annuities in client portfolios. During the quarter, more advisers sold multiple products, helping build stronger distribution relationships.

We also remain a leader in the advisory channel where RILA, FIA and Elite Access, our investment-only variable annuity, made up nearly 80% of first half advisory annuity sales. This reflects the strength of our product diversification strategy. In addition, our RILA offerings continue to expand our distribution network. Since 2025, we've added nearly 1,500 new advisers and reactivated 2,300 advisers who had not recently sold a Jackson product. Our recently launched FIA product is also helping grow our distribution footprint. Approximately 60% of the producers selling this product are either new or reactivated Jackson producers. In addition to our innovative annuity products, we offer advisers a solutions-based approach, supported by advanced digital capabilities and ongoing industry-leading service.

Jackson was recently named Investment News 2026 Annuity Provider of the Year. This award illustrates strength of the organization, the trusted relationships we've built with our distribution partners and the dedication of our associates whose hard work helps drive meaningful outcomes for the customers we serve every day. Jackson has a long history of supporting our distribution partners and advisers as they help their clients reach their retirement goals. We are proud of this recognition and remain focused on our mission of helping Americans secure their financial future. Turning to Slide 4. The shift in our business mix and separation highlights the diversification benefit resulting from Jackson's broad product portfolio.

We ended the quarter with nearly 40% of our in-force book comprised of spread-based and investment-only variable annuities, reflecting the growth across all our products this quarter. Jackson's focus remains clear, and we continue to drive growth through product innovation and an expanded distribution reach, which we believe leads to sales diversification and a more balanced in-force book of business. Turning to Slide 5 and looking ahead to the full year, as I said earlier, we are pleased with our first half accomplishments and the momentum we have built going into the second half of the year.

We remain confident in our ability to achieve our free capital generation target of $1.2 billion and deliver on our capital return to common shareholders target of $900 million to $1.1 billion. In addition, our holding company liquidity is well above our minimum buffer, excluding the recent proceeds from our senior debt issuance. Importantly, we believe Jackson's market presence, operating strength and capital position provide the foundation for long-term value creation. At this time, I'll turn the call over to Don.

Don Cummings: Thank you, Laura. Before turning to our quarterly results, I want to recognize Laura for her nearly 40 years of dedicated service to Jackson. Under her steadfast leadership, the company navigated a transformational period advancing many important strategic initiatives that have strengthened our foundation and positioned Jackson well for continued growth. On behalf of the organization, I want to thank Laura for her leadership and lasting contributions. I'm honored by the Board's confidence in appointing me as Jackson's next President and CEO, and I look forward to leading Jackson through its next phase of growth. My career began in retirement services and joining Jackson in 2020 was a return to an industry I know well.

At that time, the company was preparing for registering with the SEC and its listing on the New York Stock Exchange and entering into an important new chapter. Five years later, I'm privileged to succeed Laura and guide Jackson as we continue to execute on our long-term strategy and capitalize on the opportunities ahead. I also want to highlight Brian Walta's appointment as Chief Financial Officer. Brian is a highly respected leader with deep financial and actuarial expertise and I'm confident he will carry forward Jackson's strong tradition of disciplined financial management while supporting our strategic priorities and delivering value for shareholders. Jackson's reputation has been built on financial strength, disciplined execution and long-standing partnerships.

Our commitment to serving financial professionals and policyholders while maintaining leadership within the retirement services industry remains unchanged. We believe the company is well positioned for the future, supported by a strong balance sheet, differentiated capabilities and an experienced management team focused on delivering sustainable value for our stakeholders. With that, let's turn to Slide 6 and review our second quarter financial results. We reported pretax adjusted operating earnings of $618 million for the quarter or $648 million, excluding notable items. On an ex notables basis, earnings increased 50% year-over-year driven by continued momentum across our spread-based business and healthy growth of our in-force fee-based AUM.

Sequentially, ex notables earnings were also meaningfully higher than the first quarter of 2026, reflecting continued growth in both fee and spread-based AUM. Sequential net investment income benefited from more than $3 billion of higher average invested assets, modest improvement in total portfolio yield as new money was invested at rates above the existing yield and more favorable marks in the second quarter. The quarter also benefited from normal seasonality with pretax operating expenses, including compensation, about $48 million lower than in the first quarter. Our spread-based earnings continued to demonstrate strong growth supported by a competitive product spectrum and a high-quality, conservatively managed investment portfolio.

Diversification and disciplined credit management remains central to our investment approach and continue to support consistent performance. Sales of our spread-based products also reflect the enhanced asset sourcing capabilities at PPM which have enabled greater allocation and new money and to select higher-yielding asset classes. This measured shift in new money deployment, combined with a compelling product lineup, has helped Jackson maintain a stable and competitive position in the spread product market. We are also beginning to see increasing contributions from our strategic partnership with TPG alongside the continued benefits of our capital-efficient strategy. Capital deployment through the partnership continued to build momentum during the quarter and remains aligned with the AUM targets we outlined earlier this year.

The partnership is clearly broadening investment opportunities and helping drive higher new money yields. Before turning to notable items, I want to highlight the continued strength and profitability of our in-force business. Adjusted operating return on equity for the trailing 12 months ended June 2026 was 16.3%, up from 12.7% for the comparable period ending June 2025. This improvement reflects the resilience and earnings power of the business as we continue to diversify our sales mix and balance sheet in a disciplined and value-accretive way. Turning to Slide 7. I'll walk through the notable items that impacted adjusted operating earnings this quarter. Free capital generation, which I'll discuss later, was also affected by these items.

We reported adjusted operating earnings per diluted common share of $7.30. Excluding $0.36 of notable items and normalizing for the difference between our actual tax rate and our 15% tax guidance, adjusted operating EPS was $7.68. That represents a 55% increase versus the second quarter of last year driven by strong spread income growth discussed earlier, along with the benefit of a lower diluted share count from our ongoing share repurchase program. During the quarter, limited partnership results were below our long-term 10% return assumption, resulting in an unfavorable impact of $0.36 per share. As expected, valuations within the limited partnership portfolio can vary quarter-to-quarter, but we remain confident in the underlying quality and long-term performance of these investments.

Our effective tax rate for the quarter was 15.2%, consistent with our guidance. Turning to Slide 8. We'll take a closer look at the continued diversification and growth within our retail annuity segment, where we maintained the #1 position in traditional variable annuities and a top 4 position in RILA. The segment delivered 34% year-over-year sales growth in the second quarter, reflecting strong execution across our broad product portfolio, Continued expansion of wholesaler territories is driving deeper engagement across existing distribution relationships and supporting sustained sales momentum. As Laura noted earlier, Jackson was recognized by Investment News as Annuity Provider of the Year, which we believe reflects the strength of both our product platform and distribution capabilities.

Importantly, spread-based products represented 54% of total sales in the quarter, highlighting the continued evolution and diversification of our business mix. Sequentially, total retail sales increased 12% from the first quarter. Our RILA product suite continues to perform exceptionally well. Second quarter RILA sales exceeded $2.3 billion, up 69% from the prior year quarter and represents a new quarterly record. Since launching the product in 2021, RILA AUM has grown steadily to more than $26 billion at quarter end. We also continue to see strong momentum in other spread-based products. Our recently launched Jackson Income Assurance product contributed to $812 million of total fixed and fixed index annuity sales during the quarter, up 73% year-over-year.

We believe the continued scaling of our strategic partnership with TPG positions us well to support further growth and enhance the long-term earnings potential of our spread-based business. Turning to net flows. Strong RILA and other spread product sales drove $2.9 billion of nonvariable annuity net inflows in the quarter, up 65% from the prior year period and 16% sequentially. Within variable annuities, the all-in surrender rate was essentially flat sequentially and modestly higher than the prior year quarter. As expected, surrender activity within the in-force block continues to be influenced by equity market performance.

During the second quarter, separate account returns were 12.9% which contributed to more than $27 billion of investment gains in variable annuity AUM during the quarter, exceeding variable annuity net outflows by more than $22 billion. The overall growth in account values continues to support strong fee income generation. We've included advisory sales trends to further illustrate the breadth and diversification of our distribution capabilities. Jackson continues to hold a leading position in the advisory annuity market ranking #2 supported by a comprehensive suite of product offerings. Notably, nearly 50% of advisory sales in the second quarter of 2026 came from products other than variable annuities, reflecting the continued success of our growth and diversification strategy.

Lastly, institutional product sales were $1.4 billion in the second quarter, increasing both year-over-year and sequentially. These results highlight our continued ability to capitalize on strong demand for spread lending products and reflect the effectiveness of our opportunistic sales strategy supported by our strong market position. Turning to Slide 9. We highlight second quarter net hedge results by product, along with a waterfall comparison of pretax adjusted operating earnings to the GAAP pretax income attributable to Jackson Financial. Since transitioning to a more economic hedging approach, we have seen a meaningful improvement in the consistency of our hedging program outcomes, supporting stronger and more predictable capital generation.

As a reminder, we recently enhanced our disclosure of net hedge results to separately present outcomes for our variable annuity and RILA businesses. This added transparency provides a clearer view of the offsetting equity exposures across these product lines and excluding the impact of implied volatility on market risk benefits offers insight into the change in equity at Brooke Re. After isolating the volatility-related impacts, our overall net hedge result for the quarter was a modest $2 million gain. Given the size and complexity of the liability profile, we view this as a favorable outcome. As shown on the slide, gains from the RILA and FIA businesses were largely offset by losses in the VA business.

As a reminder, for RILA and FIA products, our hedging strategy is designed to prioritize economic outcomes rather than the JFI GAAP results. And there can be meaningful differences between these two perspectives. As a result, quarterly gains or losses on a JFI GAAP basis may or may not align with the underlying economics and should not be viewed as the sole indication of hedging effectiveness. That dynamic was evident in the second quarter as strong equity market performance, combined with modestly higher interest rates resulted in a gain of about $200 million for RILA and FIA, driven by hedge gains that more than offset reserve movements.

On an economic basis, net hedging results for these products were much closer to neutral. This outcome continues to demonstrate our ability to protect the in-force business from market impacts, while generating healthy operating income. With variable annuities, net hedging results reflected the same market conditions with hedge losses exceeding market risk benefit gains. Excluding the approximately $270 million benefit from implied volatility during the quarter, VA reported a loss of roughly $200 million, broadly offsetting gains generated from the RILA and FIA businesses. As a reminder, there are also scope and accounting modification differences between JF VA results and Brooke Re results beyond the implied volatility impact.

On a Brooke Re basis, net hedge results were essentially flat for the quarter. Brooke Re's capitalization remains well above both our internal risk management target and our regulatory minimum operating capital level. Furthermore, during the quarter, there were no capital contributions to or distributions of capital from Brooke Re. Looking ahead, we will continue to manage Brooke Re on a self-sustaining basis, consistent with the long-term nature of its liabilities and our disciplined approach to capital management. Overall, these results underscore the effectiveness of our hedging program in maintaining capital stability, proactively managing economic risk and preserving the durability and resilience of our business model. Turning to Slide 10.

We highlight the consistency of our capital generation, free cash flow and shareholder returns. In the second quarter, after-tax statutory capital generation was $656 million, benefiting from the strong equity market performance and continued growth in our spread-based businesses. We continue to view statutory capital generation as one of the clearest indicators of the underlying earnings power of the business and an important guidepost in balancing investment for future growth with capital return to shareholders. Free capital generation was $304 million in the quarter, reflecting the estimated change in required capital associated with strong and diversified new business production.

Required capital growth in the quarter also included impacts related to equity markets and sales patterns that are inherent in the RBC framework, and as a result, we would not expect the same level of headwind in future quarters if sales remain at current levels. Based on results through the first half of 2026, we remain confident in achieving at least $1.2 billion in free capital generation for the full year. While our RBC risk appetite remains at 425%, the stability in RBC levels over the past 2 years continues to support our focus on sustained free capital generation consistent with our earn it, then pay it philosophy.

Holding company free cash flow remained strong and consistent at $287 million in the quarter, broadly in line with both the prior year period in the first quarter of 2026 after funding expenses and other cash flow items. The strength of our free capital generation and free cash flow supported $290 million of capital return to common shareholders during the quarter, representing a 38% increase on a per diluted share basis compared to the prior year quarter. Since becoming an independent public company, Jackson has returned nearly $3.3 billion to common shareholders, exceeding our initial market capitalization at our IPO.

Overall, these results continue to reinforce the strength and consistency of Jackson's capital generation profile, the durability of our cash flows and our commitment to delivering long-term shareholder value. Turning to Slide 11. This slide highlights Jackson's strong capital and liquidity position. Our in-force business continues to be a significant driver of profitability. Fee income from our variable annuity based contracts, together with growth in spread-based earnings supported solid capital generation during the quarter. At Jackson National Life, our capital position and RBC ratio have become less sensitive to equity market movements, reflecting the benefits of the Brooke Re structure. Today, changes in the equity markets primarily impact assets under management and future capital generation rather than near-term capital levels.

As a result, our earnings profile has become increasingly steady, diversified and capital-efficient similar to an asset management business. Consistent with our disciplined capital management approach, we distributed $325 million to the holding company during the second quarter. After reflecting the impact of that distribution on deferred tax assets, total adjusted capital ended the quarter at $5.8 billion, with an estimated RBC ratio of 538%, comfortably above our minimum target. These results continue to demonstrate the strength and resilience of our balance sheet as we move through 2026. At the holding company, we ended the quarter with nearly $1.4 billion in cash and investments, well above our updated minimum liquidity buffer and providing substantial financial flexibility.

The increase from the first quarter primarily reflects proceeds from our recent senior debt issuance. Overall, second quarter results reflect strong momentum across the business supported by a healthy balance sheet, robust capital and liquidity levels and a business model well positioned to support continued growth and shareholder value creation. Slide 12 highlights the substantial liquidity resources we maintain across our legal entities, which continues to support our strong capital position. These resources now also include our recently issued P-Caps, newly expanded revolving credit facility and proceeds from the senior debt issuance completed during the quarter.

During the second quarter, we issued $750 million of senior debt, effectively prefunding $650 million of debt maturities due in 2027 while also adding $100 million of incremental holding company liquidity. We also expanded our revolving credit facility from $1 billion to $1.25 billion and extended the maturity from 2028 to 2031. Including holding company cash, highly liquid securities and the undrawn revolving credit facility, total available liquidity at Jackson Financial, Inc. was approximately $4 billion at quarter end. At the operating company level, Jackson National Life maintained more than $32 billion of available liquidity, including $6 billion in cash and U.S. treasury securities and an additional $23 billion in other highly liquid marketable securities.

Jackson National Life also benefits from its long-standing relationship with the Federal Home Loan Bank, which provides $2.6 billion of additional borrowing capacity through its collateralized loan advance program. Finally, Jackson's leverage profile remains among the strongest in its peer group with a total leverage ratio of approximately 23.4%, excluding AOCI. Adjusting for the planned retirement of our 2027 maturities, leverage would be approximately 19.7%. Overall, our combination of strong capitalization, substantial liquidity and modest leverage continues to provide significant financial flexibility and supports a balance sheet designed to perform across a range of market environments. Turning to Slide 13. This slide highlights PPM America, our wholly owned asset management subsidiary.

This quarter, PPM's AUM exceeded $100 billion, benefiting from growth in Jackson's spread-based businesses and growth in third-party AUM. PPM, together with our strategic relationship with TPG enhances Jackson's ability to source attractive yields and maintain product competitiveness across both our retail and institutional spread businesses. We remain highly optimistic about PPM's growth trajectory and the opportunities to further expand its capabilities, reinforcing its role as a strategic differentiator and a key contributor to Jackson's long-term success. Moving to Slide 14. We highlight the quality, diversification and conservative positioning of our investment portfolio as of the second quarter. Jackson takes a disciplined approach to managing our assets and liabilities, which guides how we make strategic decisions about asset allocation.

Our fixed maturity portfolio remains high quality and defensively positioned with a meaningful allocation to highly liquid U.S. treasuries, which represent approximately 6% of the portfolio. The market to book ratio of 96% reflects our disciplined approach to asset selection and prudent portfolio management. Exposure to below investment-grade securities remains very limited at just 1% of the portfolio, consisting almost entirely of corporate bonds and loans. The portfolio is well diversified by asset type. Corporate securities account for roughly 58% of invested assets, complemented by mortgage loans, asset-backed securities and a modest allocation to private equity through our limited partnership investments.

Our commercial mortgage portfolio is conservatively underwritten, supported by strong loan-to-value and debt service coverage ratios ensuring resilience across market cycles. Overall, our investment portfolio reflects a conservative credit philosophy centered on quality, diversification and liquidity which continues to support the stability of our capital position and the durability of our earnings profile. Slide 15 enhances disclosures on our private investment exposure. As noted last quarter, Jackson remains underway in direct lending relative to peers. We view the current market dislocation as an opportunity to invest selectively at more attractive valuations than those seen in recent vintages.

In addition, our strategic partnership provides access to deep expertise in direct lending, particularly in the lower middle market segment where TPG emphasizes strong covenants and rigorous credit underwriting. This positions us well as we gradually and prudently build exposure in the space. As of the second quarter, our private debt portfolio consisted of 62% traditional private placements, with the remainder allocated to infrastructure, asset-backed securities and credit tenant leases. Overall, our private investment portfolio is conservatively positioned and supported by robust credit oversight. We maintain substantial capacity to deploy capital on attractive terms, reinforcing our growth and diversification strategy while preserving the strength and stability of the balance sheet. I'll now turn the call back to Laura.

Laura Prieskorn: Thank you, Don. Turning to Slide 16. We maintain a positive outlook for the future as we continue to build upon our strong business and financial flexibility. Since separation, we've successfully navigated volatile market conditions and have opportunistically pursued profitable growth. As always, I'm grateful for the dedication of our associates whose contributions each quarter remain our greatest strength. As we announced on July 22, after nearly 40 years with Jackson, I've decided to retire at the end of the year.

I'm also pleased that Don Cummings, our CFO, will succeed me as Jackson's next President and CEO; and Brian Walta, Senior Vice President of Planning and Asset Liability Management will succeed Don as our next CFO both effective on October 1. This transition reflects the strength of Jackson's organization and the thoughtful succession planning process in place to ensure continuity, stability and long-term success. We are fortunate to have a deep and experienced leadership team, strong talent across the organization and a clear strategic vision for the future. I'm excited for Don and Brian and I'm confident in their leadership. I'm incredibly proud of the people I've worked with and all that we've accomplished together.

It's been a privilege to serve and be a part of an organization that meets an essential need for Americans and their financial futures. At this time, I'll turn the call over to the operator for questions.

Operator: Our first question comes from Suneet Kamath with Jefferies.

Suneet Kamath: Just on the quarter's normalized earnings of $540 million, that's something like a 30% sequential increase, and I know markets were positive in the quarter, but that increase was much more than what we expected. Is the current level of earnings sustainable? And maybe talk about the drivers of the sequential increase.

Don Cummings: Suneet, it's Don. I'll take that question. So yes, it was a very strong quarter for earnings results, and I'll kind of cover it between our fee-based results and also spread earnings. And as you mentioned, it was a very strong equity market in the quarter, which was a tailwind for our results. S&P 500 was up about 15%. Our separate account return in the quarter was up 13%, so obviously, that contributed to our fee-based earnings results. But we did see significant contribution from our spread business. And you can just look at our AUM progression over the last several quarters there to get a sense of the kind of growth that we're seeing.

AUM was up about 14% sequentially and almost 50% year-over-year, and so that certainly contributed to our spread-based earnings. I did mention in prepared remarks, our NII saw a fairly sizable increase primarily due to having higher average AUM. We also saw an increase in our overall total portfolio yield as we invested new money and cash flows coming off the portfolio at higher rates, that contributed. And then finally, just some more favorable marks from our LP investments. So overall, very strong result on earnings. What I would say, just looking forward, I think was part of your question there. Higher equities, higher interest rates are good for our businesses.

And while we're not providing full year financial guidance, there are a couple of indicators that I think bode well for us having strong results going forward. The equity markets, assuming that they kind of trade within a range around where they are today, that should continue to be a tailwind for us. Now if there's a significant equity market decline, we'll see, that will turn into a headwind. And then on the spread-based earnings, our strategy to shift our business mix to be more weighted towards spread products is working, and we expect to continue to see growth in spread assets.

And so the interest rate environment, as I mentioned, and putting new money to work will continue to be a benefit there. And just finally, we do see a little bit of seasonality in expenses as we get towards the end of the year. But all in, I think we would expect to continue to see strong earnings results, as I mentioned.

Suneet Kamath: So it doesn't sound like there was anything unusual in the quarter. Then my second question just relates to the assumption review. And I know you don't want to front run your analysis, but if we think about the past couple of years, I think there have been some charges related to policyholder behavior. So as you think back over the past few quarters since 3Q, has there been anything that you've seen that's different relative to what your updated assumptions were?

Don Cummings: Yes. Thanks for that question. So you're right. We don't want to get ahead of our process. We do make our decisions around assumption updates in the fourth quarter and we'll be working through that in the latter half of the year here. But just in terms of policyholder behavior, I think if you look at our financial supplement, you can see that, that's been a bit more modest than it had been over the course of the last year in terms of actual versus expected. But obviously, that can be influenced by equity markets, but I think the trends that we've seen recently are encouraging.

Operator: Our next question comes from Alex Scott with Barclays.

Taylor Scott: First one I had a sort of a follow-up on just the impact of higher equity markets and wanted to see if you could talk about how it will affect your statutory capital generation and ultimately free cash flow and flexibility at the holding company. I mean does that flow through in a pretty similar way to kind of the beta on earnings? Or are there some nuances that we should think about? I'm just trying to consider what's happened through the first half of the year and whether there's upside to what you guided to at the beginning of the year based on markets.

Don Cummings: Alex, thanks for that question. So in terms of the drivers that I kind of went through earlier for earnings, those will generally speaking, carry over to our capital generation. There are some kind of nuances in the statutory required capital framework that do sort of offset that a bit. But in terms of our just after-tax statutory capital generation, we would expect the benefits that we see from higher equity markets and continuing to grow our spread business would be beneficial to our capital generation.

Taylor Scott: Got it. Okay. That's helpful. And then maybe next, you could talk about the partnership with TPG, the progress you're making on that, how much would you expect that to continue fueling the growth you're getting in RILA. Are you -- maybe you could also talk about how you're staying disciplined in I think is still a pretty competitive market for private credit and structured assets in particular.

Don Cummings: Yes. In terms of market competitiveness, we are staying disciplined. We have seen with our spread products, obviously, you can see our RILA sales and FIA have been strong. MYGA, on the other hand, we've chosen to kind of maintain our return discipline there and sales are a little bit lighter. In terms of the TPG partnership, maybe I'll just pass it over to Chris Raub to say a few comments about how that's continuing to develop.

Christopher Raub: Yes. Thanks, Don. Yes, Alex, we're really happy with both the deal flow, which is progressing as expected. The types of deals and quality of deals we're seeing from TPG as well as the level of collaboration and connectivity between our firms. We've got lots of productive discussions occurring on a regular basis across our platforms beyond just direct lending and ABF. So, so far, so good with TPG.

Don Cummings: Yes. And as we laid out in our announcement on the TPG partnership, we do expect that our deployment of capital under the arrangement will play out over time and we're comfortable with the targets that we've laid out.

Operator: Our next question comes from Tom Gallagher with Evercore ISI.

Thomas Gallagher: So by the way, Laura best of luck to you. The first question I wanted to ask was just on hedging. Don, if I followed you correctly, you were mentioning economically, it looked like there was a $200 million gain for RILA and FIA, but you said economically, it was about breakeven. And then VA looks like it had a $200 million loss ex [ VA LB ]. Can you just sort of unpack what happened on -- to your hedging results in the quarter? And is there a natural hedge between those different businesses as you think about them?

Or is that more randomness in terms of one was negative, one was positive in terms of RILA, FIA versus VA.

Don Cummings: Tom, thanks for those questions. I'm going to ask Brian to kind of chime in on the dynamic that we saw in the quarter between the VA business and the RILA, FIA but I would just say, overall, we believe the overall hedging results since our shift to a more economic framework has been very beneficial and showing some stability in our nonoperating results as well as our capital position. But with that, Brian, do you want to provide some color on the hedging for the quarter?

Brian Walta: Yes, absolutely. I'll start with RILA first. You mentioned that it was a big positive, plus $200 million. I would want to emphasize that we definitely do not hedge to the GAAP accounting framework. We're hedging to the economic framework, which is actually quite similar to stat. Really, we're well aligned to hedging the movement in the account value. So what Don was referencing earlier is that from an economic standpoint, we had really matched that quite well, and that really does flow through our stack capital generation. So we should expect to see some level of noise in this line, the RILA and FIA.

This was larger than typical because it's probably a very outsized equity movement for the quarter. We typically are going to outperform a little bit in up markets on RILA and FIA on this basis on GAAP. But once again, we expect to be relatively neutral, well managed to the economic/statutory framework. Regarding VA, there -- as we talked about, we're hedging to brokery and we had more of a neutral net hedge result there, they are relatively well aligned JFI GAAP versus Brooke Re, but we always call out the MRP volatility impact. That's one difference. So we had a little bit larger delta here than normal.

But once again, that's driven by the very large outsized equity movements plus 15%, while it's generally well aligned, there's going to be some noise items that come through with that type of move. I would say that the overall net impact of them offsetting is somewhat coincidental. I think there may be a little bit of reason why they should offset, but not necessarily to that degree, and I would just stress again that we manage each of them independently. We manage strictly to the RILA liability and then to the VA liability and then we strike our hedges accordingly.

We will net them for external hedging, but we don't take any diversification benefit when it comes to managing each of those liabilities.

Don Cummings: One thing I would just add on the VA loss that you see there, Tom, is what we messaged on prior calls that the GAAP results are kind of an indicator of what's going on in Brooke Re, there are scope differences, for example, our New York business is not seeded to Brooke Re, so that's an example of one scope difference. And then in addition to having the fixed volatility assumption, there are a couple of other modifications. And so as Brian highlighted, although we have a GAAP reported loss for VA, it was really pretty much flat if you look at just the Brooke Re results.

Brian Walta: Yes, I would emphasize that at Brooke Re, we felt like it was very well managed, and we were happy with how the quarter played out.

Thomas Gallagher: Got you. That's helpful. And then my follow-up is just on where you see things going on investment spreads. It looks like you had both good general account growth, but also wider investment spreads if I just look at NII versus cost of crediting. Would you expect there to continue to be a tailwind, meaning good general account growth and continued further widening of investment spreads, or would you expect more stability with investment spreads? And maybe a little bit about what's driving that? Is there -- are there certain asset classes that are driving that? .

Don Cummings: Yes. So I would say you're on the right track there. Certainly, as we grow spread-based AUM we're going to see that come through in our earnings results, as I kind of mentioned in response to an earlier question. And in terms of NII and how that impacts our spreads, we have seen positive results there as generally when we're putting new money to work, that's at a rate above our overall portfolio rate, so that's going to be helpful to our overall results.

If you look at just the quarter, and not sure that you could use this for all periods going forward, but just for the quarter of the money that we put to work, the new money yield was roughly about 100 basis points ahead of our overall portfolio yield, so we would see that helping as we move forward.

Operator: Our last question will come from Ryan Krueger with KBW.

Ryan Krueger: First question is just on required capital growth. I know it was outsized in the quarter and it was impacted by the equity market. Can you give us any sense of what you would expect the growth in required capital to be in a more typical quarter or year if we were to kind of assume more normal equity market growth? .

Don Cummings: Sure. So I think you could probably -- if you look back over our results over the last 1.5 years outside of this quarter, I think you probably could see a little more consistent trend there. We did call out the couple of things, equity markets being one, and then there's also kind of a little bit of a seasonality factor in the required capital for spread-based products, so that's kind of for J&L, it's primarily writing RILA. We do seed the FIA business over to Hickory Re.

But under the RBC formula, we still have to put up kind of the business risk component of required capital, so that does have a little bit of a impact and it's based on a kind of a trailing 12-month premium volume, so we would expect that to moderate some before the end of the year.

Ryan Krueger: And then can you provide any updated thoughts on potentially inorganic growth? I think whether it be block transactions or more strategic M&A, what types of things you may be interested in over time, if there's opportunities.

Don Cummings: Sure. So as we've mentioned on prior calls, anything that we would look at from an inorganic perspective, we would weigh relative to returning capital to shareholders. But we also believe that we would like to continue our strategy of diversifying our business, so to the extent that we see opportunities that would be a good fit from that perspective. We would certainly want to pursue them. Jackson has its roots in the life insurance business, and we don't currently originate new life insurance liabilities, but if there were an opportunity to do that through an inorganic opportunity, we would certainly look very strongly at that.

Ryan Krueger: Congrats, everyone, on the management transition.

Operator: This concludes the Q&A session. I will now turn the call back to Laura Prieskorn for closing remarks.

Laura Prieskorn: Thank you. As we've discussed this morning, Jackson's record second quarter performance highlights the ongoing strength and increased diversification of our business. As this is my last earnings call as CEO, I want to express my gratitude to our investors and analysts for your continuing support and interest in Jackson. We look forward to sharing our progress toward our 2026 targets after the next quarter. Thank you, and take care.