Jackson Financial Inc

We manage our business through three segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks. We report certain activities and items that are not included in these segments, including the results of PPM Holdings, Inc., the holding company of PPM, within Corporate and Other. The following tables and discussion represent an overall view of our results of operations for each segment.

Pretax Adjusted Operating Earnings by Segment

The following table summarizes pretax adjusted operating earnings (non-GAAP) from the Company's business segment operations and also provides a reconciliation of the segment measure to net income on a consolidated U.S. GAAP basis. Also, see Note 3 - Segment Information of the Notes to Condensed Consolidated Financial Statements for further information regarding the calculation of pretax adjusted operating earnings:

Retail Annuities

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Retail Annuities segment. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

The following table summarizes a roll-forward of activity affecting account value for our Retail Annuities segment for the periods indicated:

Pretax adjusted operating earnings increased $137 million to $465 million for the three months ended June 30, 2024, from $328 million for the three months ended June 30, 2023, primarily due to:

•$100 million increase in fee income primarily due to higher average separate account values compared to the prior year; and

•$86 million increase in spread income primarily due to $74 million higher investment income driven by higher income on bonds due to higher asset balances earning higher yields in 2024, compared to the prior year quarter, partially offset by higher investment expenses related to repurchase agreements, and $12 million lower interest credited on contract holder funds compared to prior year.

These increases were partially offset by:

•$72 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, compared to the prior year, and an increase in incentive compensation expenses during the three months ended June 30, 2024.

Pretax adjusted operating earnings increased $200 million to $884 million for the six months ended June 30, 2024, from $684 million for the six months ended June 30, 2023, primarily due to:

•$208 million increase in fee income primarily due to higher average separate account values compared to prior year; and

•$133 million increase in spread income primarily due to $111 million higher investment income driven by higher income on bonds driven by higher asset balances earning higher yields in 2024, compared to the prior year, partially offset by higher investment expenses related to repurchase agreements, and $22 million lower interest credited on contract holder funds compared to prior year.

These increases were partially offset by:

•$136 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, and an increase in incentive compensation expenses during the six months ended June 30, 2024.

Retail annuities account value, net of reinsurance, increased $19.9 billion between periods primarily due to positive variable annuity separate account returns driven by favorable market performance in 2024, as well as positive RILA net flows over the period.

Institutional Products

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Institutional Products segment. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

The following table summarizes a roll-forward of activity affecting account value for our Institutional Products segment for the periods indicated:

Pretax adjusted operating earnings increased $12 million to $29 million for the three months ended June 30, 2024, from $17 million for the three months ended June 30, 2023, primarily due to an $12 million increase in spread income primarily due to $16 million higher investment income, partially offset by $4 million higher interest credited on contract holder funds.

Pretax adjusted operating earnings increased $34 million to $60 million for the six months ended June 30, 2024, from $26 million for the six months ended June 30, 2023, primarily due to a $34 million increase in spread income primarily due to $43 million higher investment income, partially offset by $9 million higher interest credited on contract holder funds.

Institutional product account value decreased from $8,887 million at June 30, 2023, to $7,299 million at June 30, 2024. The decrease in account value was driven by continued maturities of the existing contracts and funding agreements in addition to decreased issuances in 2024.

Closed Life and Annuity Blocks

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Closed Block Life and Annuity Blocks segment. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

Pretax adjusted operating earnings increased $28 million to $35 million for the three months ended June 30, 2024, from $7 million for the three months ended June 30, 2023, primarily due to:

•$23 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

•$14 million decrease in interest credited on contract holder funds related to persistency bonuses in 2023.

Pretax adjusted operating earnings increased $67 million to $54 million for the six months ended June 30, 2024, from $(13) million for the six months ended June 30, 2023, primarily due to:

•$50 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

•$21 million decrease in interest credited on contract holder funds related to persistency bonuses in 2023.

Corporate and Other

Corporate and Other includes the operations of PPM Holdings, Inc., the parent holding company of PPM, and unallocated corporate revenue and expenses, as well as certain eliminations and consolidation adjustments. The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for Corporate and Other. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

Pretax adjusted operating earnings decreased $9 million to $(56) million for the three months ended June 30, 2024, from $(47) million for the three months ended June 30, 2023, primarily due to a $9 million decrease in other income and an $8 million decrease in net investment income partially offset by a $7 million decrease in operating costs and other expenses, net of deferrals, primarily due to decreased deferred compensation expenses during the three months ended June 30, 2024.

Pretax adjusted operating earnings decreased $46 million to $(136) million for the six months ended June 30, 2024, from $(90) million for the six months ended June 30, 2023, primarily due to a $25 million decrease in other income primarily due to a one-time reinsurance related adjustment and a $22 million decrease in net investment income.