Jackson Financial Inc

The following table sets forth, for the periods presented, certain data from our Condensed Consolidated Income Statements. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes elsewhere in this report:

Pretax Income (Loss)

Our pretax income (loss) decreased by $1,147 million to $318 million for the three months ended June 30, 2024, from $1,465 million for the three months ended June 30, 2023, primarily due to:

•$2,054 million unfavorable movements in market risk benefits (gains) losses, primarily due to less favorable fund performance and interest rate movements during the three months ended June 30, 2024, compared to the prior year quarter; and

•$58 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during the three months ended June 30, 2024, and an increase in incentive compensation expenses, partially offset by decreased deferred compensation expenses during the three months ended June 30, 2024.

These movements were partially offset by:

•$690 million increase in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

◦Freestanding derivative movements were primarily driven by lower losses recognized on our equity derivatives resulting from lower market increases during the three months ended June 30, 2024, compared to the prior year; and

◦Higher losses recognized on funds withheld reinsurance were driven by a slight increase in interest rates during the three months ended June 30, 2024, compared to larger increases in interest rates during the three months ended June 30, 2023;

•$106 million increase in net investment income as a result of higher income on limited partnership investments, which are recorded on a one quarter lag, higher income on bonds driven primarily by higher yields in 2024, and higher income on funds withheld assets compared to prior year, partially offset by higher investment expenses;

•$95 million increase in fee income primarily due to higher average separate account values compared to the prior year; and

•$60 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to improved mortality and lower other policyholder benefits.

Income Taxes

Income tax expense decreased $209 million to an expense of $36 million for the three months ended June 30, 2024, from an expense of $245 million for the three months ended June 30, 2023. The provision for income tax in the current period led to an effective income tax rate ("ETR") of 11% for the three months ended June 30, 2024, compared to the June 30, 2023 ETR of 17%. The change in the ETR during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, was due to the relationship of the taxable income to the consolidated pre-tax income. The ETR differs from the statutory rate of 21% primarily due to the dividends received deduction, utilization of foreign tax credits, and valuation allowance. See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements in our 2023 Annual Report and Note 15 - Income Taxes of the Notes to Condensed Consolidated Financial Statements in this report for more information.

Pretax Income (Loss)

Our pretax income (loss) increased by $1,810 million to $1,221 million for the six months ended June 30, 2024, from $(589) million for the six months ended June 30, 2023, primarily due to:

•$996 million increase in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

◦Freestanding derivative movements were primarily driven by lower losses recognized on our equity derivatives resulting from lower market increases in 2024, compared to the prior year, partially offset by increased losses within our interest rate related hedge instruments resulting from increases in interest rates in 2024, compared to the prior year; and

◦Lower losses recognized on funds withheld reinsurance were driven by the increase in interest rates during 2024, compared to a slight decrease in interest rates in 2023;

•$490 million favorable movements in market risk benefits (gains) losses, net, primarily due to increases in interest rates, which were partially offset by less favorable fund performance and movements in volatility in 2024 compared to the prior year;

•$205 million increase in fee income primarily due to higher average separate account values compared to prior year;

•$133 million increase in net investment income as a result of higher income on limited partnership investments, which are recorded on a one quarter lag, and higher income on bonds, driven primarily by higher yields in 2024, compared to prior year, partially offset by higher investment expenses;

•$70 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to improved mortality and lower other policyholder benefits; and

•$34 million decrease in interest credited on contract holder funds, net of deferrals, primarily due to lower average general account balances in 2024, compared to the prior year.

These movements were partially offset by:

•$127 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during 2024, compared to the prior year, and an increase in incentive compensation expenses during the six months ended June 30, 2024.

Income Taxes

Income tax expense increased $450 million to an expense of $137 million for the six months ended June 30, 2024, from a benefit of $313 million for the six months ended June 30, 2023. The provision for income tax in the current period led to an ETR of 11% for the six months ended June 30, 2024 compared to the June 30, 2023 ETR of 53%. The change in the ETR during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was due to the relationship of the taxable income to the consolidated pre-tax income. Our ETR differs from the statutory rate of 21% primarily due to the dividends received deduction, utilization of foreign tax credits and valuation allowance. See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements in our 2023 Annual Report and Note 15 - Income Taxes of the Notes to Condensed Consolidated Financial Statements in this report for more information.