What happened

Jackson Financial (JXN -0.69%) saw its stock price rocket higher on Wednesday, up as much as 15.9% to over $33 per share at around 10:15 a.m. By 1:15 p.m. ET on Wednesday, the stock was up 14.6% to $32.77.

All the major indexes were up big on Wednesday morning, but Jacksonʻs catalyst was its second-quarter earnings, released Tuesday after market close, which bested analystsʻ estimates.

So what

Jackson Financial is the second-largest provider of annuities in the U.S. It spun off of London-based insurance and financial services firm Prudential Plc last fall.

Jackson Financial posted adjusted operating earnings of $252 million, or $2.52 per share, down from $6.74 per share in the second quarter of 2021. The drop was primarily due to higher levels of deferred acquisition costs (DAC) amortization and lower fee income caused by a drop in asset under management, related to market depreciation. The company uses adjusted earnings because it excludes, among other things, changes in fair value of derivative instruments tied to market volatility.

The total annuity account value decreased by 17% year over year, with annuity sales down 15%. However, the company saw sales of registered index-linked annuity (RILA) products spike to $490 million, up from $199 million in the first quarter. These products were just introduced in the fourth quarter of last year.

The market reacted favorably to the earnings news, as Jackson crushed analysts estimates of $1.76 to $1.91 adjusted EPS.

Now what

Investors may have also liked the fact that Jackson Financial declared a $0.55 dividend in the third quarter, the same as the previous quarter, at a 7.7% yield. As president and CEO Laura Prieskorn said in the earnings report, the company lowered its debt and improved its liquidity, paving the way to return capital to shareholders.

"Our healthy balance sheet position enabled us to return $116 million to shareholders during the quarter and supports our continued commitment to returning capital to shareholders through dividends and opportunistic share buybacks consistent with our targeted $425 million to $525 million capital return range for 2022," she said.

With interest rates continuing to rise, annuity sales are expected to be robust for the rest of 2022, which should help Jackson Financial. Plus, the stock is extremely cheap, with a price-to-earnings ratio of 1 and price-to-book ratio of 0.26.