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 $4,081 million to $(579) million for the three months ended September 30, 2024, from $3,502 million for the three months ended September 30, 2023, primarily due to:

•$3,548 million unfavorable movements in market risk benefits (gains) losses, primarily due to unfavorable interest rate movements, partially offset by favorable fund performance during the three months ended September 30, 2024, compared to the prior year quarter;

•$506 million decrease in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

◦Embedded derivative movements were unfavorable primarily due to market increase impacts on our growing RILA block during the three months ended September 30, 2024, compared to the prior year quarter; and

◦Losses recognized on funds withheld reinsurance were driven by a decrease in interest rates impacting the value of the embedded derivative during the three months ended September 30, 2024, compared to increases in interest rates during the three months ended September 30, 2023;

These losses were partially offset by:

◦Volumes of freestanding derivatives can vary significantly period over period and movements in those derivatives are subject to interest rate or market movements. The movements in interest rate hedges during the three months ended September 30, 2024 were primarily driven by a decrease in interest rates whereas the movements in interest rate hedges during the three months ended September 30, 2023 were primarily driven by an increase in interest rates. The movements in equity hedges during the three months ended September 30, 2024 were primarily driven by an increase in equity markets whereas the movement in equity hedges during the three months ended September 30, 2023 were primarily driven by a decrease in equity markets.

•$116 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in incentive and deferred compensation expenses during the three months ended September 30, 2024 and higher asset-based non-deferrable commissions, due to higher account values during the three months ended September 30, 2024; and

•$35 million decrease in net investment income as a result of lower income on bonds and lower income on funds withheld assets compared to prior year quarter;

These movements were partially offset by:

•$82 million increase in fee income primarily due to higher average separate account values compared to the prior year quarter; and

•$22 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 lower other policyholder benefits.

Income Taxes

Income tax expense decreased $825 million to a benefit of $113 million for the three months ended September 30, 2024, from an expense of $712 million for the three months ended September 30, 2023. The provision for income tax in the current period led to an effective income tax rate ("ETR") of 19% for the three months ended September 30, 2024, compared to the ETR of 21% the three months ended September 30, 2023. The change in the ETR during the three months ended September 30, 2024, compared to the three months ended September 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) decreased by $2,271 million to $642 million for the nine months ended September 30, 2024, from $2,913 million for the nine months ended September 30, 2023, primarily due to:

•$3,058 million unfavorable movements in market risk benefits (gains) losses, net, primarily due to less favorable movements in interest rates and equity volatility, partially offset by favorable fund performance in 2024 compared to the prior year;

•$243 million increase in operating costs and other expenses, net of deferrals, primarily due to an increase in incentive and deferred compensation expenses during the nine months ended September 30, 2024 and higher asset-based non-deferrable commissions, due to higher account values during 2024, compared to the prior year period.

These movements were partially offset by:

•$490 million increase in total net gains (losses) on derivatives and investments as shown in the table below and driven by:

◦Embedded derivative movements were unfavorable primarily due to market increase impacts on our growing RILA block during the nine months ended September 30, 2024, compared to the prior year period; and

◦Higher losses recognized on funds withheld reinsurance were driven by the decrease in interest rates impacting the value of the embedded derivative during 2024, compared to an increase in interest rates in 2023;

These losses were partially offset by:

◦Volumes of freestanding derivatives can vary significantly period over period and movements in those derivatives are subject to interest rate or market movements. The movements in interest rate hedges during the nine months ended September 30, 2024 were primarily driven by a decrease in interest rates whereas the movements in interest rate hedges during the nine months ended September 30, 2023 were primarily driven by an increase in interest rates. The movements in equity hedges during the nine months ended September 30, 2024 were primarily driven by increases in equity markets whereas the movements in equity hedges during the nine months ended September 30, 2023 were primarily driven by a decrease in equity markets.

•$287 million increase in fee income primarily due to higher average separate account values compared to the prior year period;

•$98 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 the prior year period, partially offset by higher investment expenses;

•$92 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

•$43 million decrease in interest credited on contract holder funds, net of deferrals, primarily due to lower average fixed account balances in 2024, compared to the prior year.

Income Taxes

Income tax expense decreased $375 million to an expense of $24 million for the nine months ended September 30, 2024, from an expense of $399 million for the nine months ended September 30, 2023. The provision for income tax in the current period led to an ETR of 4% for the nine months ended September 30, 2024 compared to the ETR of 14% the nine months ended September 30, 2023. The change in the ETR during the nine months ended September 30, 2024 compared to the nine months ended September 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.