Jackson Financial Inc.

Good morning, everyone. Before we start, we remind you that today's presentation may include forward-looking statements, which are not guarantees of future performance or outcomes. A number of important factors, including the risks, uncertainties, and assumptions discussed in risk factors, management's discussion and analysis of financial condition and results of operations, and business financial goals in the company's registration statement on Form 10, and management's discussion and analysis of financial condition and results of operations in the company's most recent second quarter 10Q, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. In this presentation, management will refer to certain non-GAAP measures, which management believes provide useful information in measuring the financial performance of the business. A reconciliation of non-GAAP financial measures to the most comparable GAAP measures is contained in the appendix to the presentation. With us today are Jackson CEO, Laura Preeskorn, our CFO, Marsha Wadston, and our Vice Chair, Chad Myers. At this time, I'll turn it over to Laura.

Good morning, everyone, and welcome to our third quarter earnings call. We look forward to this call as the first of many opportunities to discuss Jackson's quarterly results in progress towards our financial targets. As a clear annuity market leader, Jackson is focused on meeting the growing demand for retirement income and savings solutions. Before we review financial results, I'd like to reflect on the company's accomplishments to position Jackson as an independent public company. In September, we reached the end of a complicated and time-consuming 18-month process that culminated in an independent Jackson. While we have historically run as a standalone operation, there were a number of functions that we needed to build out to support a public company. This required recruiting many highly talented individuals during a time of change for the company and in the midst of a global pandemic. We were able to exit the prudential umbrella with no legacy service agreements or other operational ties, simplifying our go-forward strategy. Throughout this process, we continued our steady focus on business execution, delivering new product to the market alongside our best-in-class operational and distribution support to customers and partners. We expanded our distribution footprint and built the foundation for our launch into new annuity products. Since the separation announcement six quarters ago, our retail annuity sales have remained steady and in total exceeded $27 billion. Prior to our September separation, we held our first standalone analyst day and discussed our new business objectives and financial targets with the investment community. We accessed debt facilities, establishing our go-forward capital structure, and our new board of directors was appointed at separation and has been actively engaged since. I'm immensely grateful for all the hard work and long hours put in by the team to make this a reality. Their extraordinary efforts have led to extraordinary results and will continue to power our future success. Turning to our financial targets on slide four, We're well positioned to execute on our 12-month post-emerger target of a $325 to $425 million cash return to shareholders. We announced our board's approval of a quarterly dividend program, which in the fourth quarter of 2021 will be 50 cents per common share, or roughly $50 million in the quarter. This annualizes to approximately $200 million. We also obtained board authorization for share repurchase of $300 million. We believe these capital management actions are consistent with our outlook for sustainable capital generation and a long-term commitment to shareholders. Combination of dividends and share repurchase was deliberate and thoughtfully incorporates our views on Jackson today and into the future. Dividends represent a highly consistent source of capital return to shareholders. Our dividend is well supported by the distributable cash projections that we've provided in existing disclosures, giving room for potential future growth. Given our current share valuation and the accretion associated with share buyback at these levels, we expect benefits from share repurchase to emerge as we execute on our authorization. Between the dividend and share repurchase, we anticipate reaching our $325 to $425 million capital return target in the first 12 months following the merger. We ended the quarter with over $800 million in cash and liquid assets, well above our minimum holding company cash target. Our estimated risk-based capital, or RBC, ratio at the operating company level, which does not take into account the holding company liquidity position, exceeded our targeted 500% to 525% range, and total financial leverage is within our target range. As we look beyond 2021, we expect to grow our business and allocate capital as discussed in the Form 10 and at our Analyst Day presentation. We continue to balance financial strength, leverage, profitable growth, and capital return to shareholders for the long-term success of the company. Now let's look at the financial and operating highlights for the quarter on slide five. For the third quarter, adjusted operating earnings of $5.16 per share reflect the strong fee income from our growing variable annuity account balances. Retail annuity fee income increased 24% compared to last year's third quarter. With over $240 billion in annuity assets, we benefit from a level of profitability and scale that supports our business growth plans and capital return targets. Third quarter adjusted operating earnings reflected the natural market sensitivity and deferred acquisition costs, or DAC, amortization. As a reminder, market-related DAC volatility is expected to change with the adoption of the new GAAP accounting standard, referred to as LDTI, which will be effective in the first quarter of 2023. At that time, DAC will no longer be expensed as a percentage of profits, and we would expect less volatility due to the market changes. Marsha will speak to DAC and our financials in more detail later in this presentation. Jackson's return on equity continues to exceed 20% due to the quality of our in-force book. We expect our retail annuity segment to drive further profitability and growth as we benefit from an increasingly diverse set of products and features, as well as our focus on expanding distribution. During the third quarter, we completed our term loan draw as planned and contributed over $1.5 billion to our operating companies. putting us within our target leverage range and above our target RBC ratio range. We believe our strong balance sheet and free cash flow position provide us with valuable capital flexibility. As I mentioned, our business did not skip a beat as we successfully executed our demerger. For the third quarter, annuity sales were $4.8 billion, and in October, we introduced the Jackson MarketLink Pro product suite. our new registered index-linked annuity, or RILA product. We've received positive feedback from our advisors regarding this competitive, differentiated product, as well as the enhanced digital experience provided with this product launch. Jackson MarketLink Pro meets policyholders' demands and market participation, subject to a cap with protection on the downside. Our fee-based annuity business continues to grow. with third quarter 2021 sales of $330 million, up 18% from the prior year. Sales of Elite Access Advisory II, our fee-based investment only variable annuity, were the key driver of the growth. The RIA channel represents $5.7 trillion in assets with an expanding presence in the annuity market. We continue to focus on expanding distribution through independent RIAs. We also recently entered the defined contribution market as a provider within the lifetime income strategy offered by Alliance Bernstein. Jackson is one of several insurance providers selected to offer a lifetime income solution for participants at the time of retirement. The defined contribution market represents significant opportunity and we look forward to partnering with retirement plan sponsors looking to address both income protection and longevity risk for their plan participants. The Alliance Bernstein relationship is part of our focus strategy to expand our commercial opportunities and meet market demand for protected retirement solutions. The total industry annuity sales for the first nine months of 2021 were the strongest year-to-date period since 2008, with every single annuity category up from the prior year. This provides a very strong backdrop for further growth in our retail annuity business going forward. And now I'll turn it over to Marcia to provide more details on our third quarter financial results.

Thank you, Laura. Looking at our results on slide six, we continue to generate significant levels of adjusted operating earnings. As Laura just mentioned, our fee-focused business mix benefited from higher average separate account balances driving higher fee incomes. However, this was more than offset by higher DAC amortization in the current quarter, resulting largely from lower separate account returns compared to the prior year. As a reminder, we believe that Jackson has taken a conservative approach to the treatment of guaranteed fees within our definition of adjusted operating earnings, as all of the fees are moved below the line with no assumed profit on guaranteed benefits included in adjusted operating earnings. On a year-to-date basis, strong adjusted operating earnings combined with positive non-operating income resulted in a growing book value. Slide 7 outlines the notable items included in adjusted operating earnings for the third quarter, starting with the acceleration and or deceleration of DAC. To provide a little more background, the amortization of DAC is a key item for our results given our annuity-focused balance sheet, and operating DAC amortization has several components. For clarity, our financial supplement reports DAC amortization split between core amortization, which is driven primarily by our pre-DAC gross profits for the period, as well as any market-related acceleration or deceleration of DAC, which results from the pattern of separate account returns over time. Additionally, we will break out the DAC impact from our annual assumption review, which will be provided in Q4. In the third quarter of 2021, there was an acceleration of DAC amortization resulting in 63 million of additional DAC expense in the quarter. This was primarily due to slightly negative separate account returns in that period, which fell short of the assumed return. In the third quarter of 2020, there was a deceleration of DAC amortization resulting in a pre-tax $125 million reduction in DAC expense, primarily due to a 7% separate account return in that period which significantly exceeded the assumed return. As a result, the market-driven DAC effect was a net drag of $188 million on a pre-tax basis when comparing third quarter this year to prior year third quarter. In terms of future DAC acceleration or deceleration for modeling purposes, we have provided additional details on the mechanics of the DAC amortization calculation within the appendix of this presentation, which aligns with our financial supplement. As Laura noted, this is expected to change with the adoption in the first quarter of 2023 of LDTI under GAAP accounting. We expect to be providing more information regarding LDTI impacts in the middle of next year. Additionally, we would note that both third quarters included strong limited partnership income, which is reported on a lag and can vary significantly from quarter to quarter. Limited partnership income in excess of long-term expectations with $98 million in the current quarter compared to $63 million in prior year's quarter, creating a comparative pre-tax benefit of $35 million. We continue to see positive momentum in limited partnership performance, but do not expect Q4 to be as robust as Q3. Additionally, with respect to Q4, as we stand today, we expect our operating effective tax rate to be similar or slightly higher than the third quarter's 15%. Another important item to consider for the fourth quarter is the conversion of existing Prudential PLC share-based awards over to JXN share-based awards. In Q4, share-based awards will increase our diluted share count by 7.2 million shares and will be partially offset by any shares that we repurchase over the fourth quarter. Slide 8 illustrates the reconciliation of third quarter 2021 pre-tax adjusted operating earnings of $571 million, to pre-tax income attributable to Jackson Financial of $190 million. As shown in the table, the total guaranteed benefits and hedging result, or net hedge result, was negative $593 million in the third quarter. As we've noted, net income includes some changes in liability values under GAAP accounting that we consider to be non-economic and therefore will not align with our hedging assets. We focus our hedging on the economics of the business as well as statutory capital position and choose to accept the resulting gap below the line volatility. I would also note that while this was a loss in the current quarter, it was a small gain of $73 million for the year-to-date period. Starting from the left side of the waterfall chart, you see a robust guarantee fee stream of $728 million in the third quarter providing significant resources to support the hedging of our guarantees. These fees are calculated based on the benefit base rather than the account value, which provides stability to the guarantee fee stream and protects our hedging budget when markets decline. As previously noted, all guarantee fees are presented in non-operating income to align with the hedging and liability movement. Net reserves and embedded derivative liabilities for guaranteed benefits are defined by both SOPO 3-1, which calculates the insurance contract liabilities using longer-term assumptions, and by FAS 157, which calculates the embedded derivative liabilities using current market input. This quarter's loss is primarily the result of FAS 157 accounting for the increase in implied volatility over the third quarter. This implied volatility impact is an example of where our hedging approach and the GAAP treatment of liabilities are not aligned, as we do not explicitly hedge implied volatility, but rather focus on realized volatility under market shocks. We included a slide in the appendix which shows the key macroeconomic drivers of the GAAP net hedging result and how changes in these macro items may lead to non-economic gains or losses due to the lack of alignment between our hedging approach and GAAP accounting. Now let's switch gears and look at our segments, starting with retail annuities on slide 9, where we see our healthy sales trends. We continue to have strong levels of retail sales driven this quarter by growth in variable annuities without lifetime living benefits. Sales of Elite Access, our investment-only variable annuity, increased 71% from the prior year's quarter, and sales of other variable annuities without lifetime benefit guarantees were up 33%. While sales without lifetime benefits increased from 23% in third quarter of last year to 33% in the third quarter of this year, we expect this percentage may vary through time based on market conditions and customer demand. Our total annuity market share highlights our consistent presence in the market, our strong distribution relationship, and disciplined approach to pricing and product design. We expect these attributes to be supportive of the recent launch of our RILA product We view this as an important product launch, capturing the economic diversification benefit between a RILA and a traditional living benefit variable annuity, as well as capital efficiency through RILA account value growth alongside our large, healthy, enforced traditional variable annuity block. Looking at pre-tax adjusted operating earnings on slide 10, we are down from the prior year third quarter due to the market-driven DAC impacts I detailed earlier. Importantly, earnings were up from the prior year quarter outside of that impact. This was the result of higher separate account assets, as the third quarter 2021 variable annuity ending account value was up over 20% from the third quarter 2020 ending account value, primarily due to strong returns. As a reminder, we have investment freedom on our variable annuity products, allowing both policyholders and Jackson to more fully capture the benefits of rising equity markets. While fixed annuity and fixed indexed annuity account values are minimal after accounting for the business reinsured to a theme, they did grow during the period as well. Sales remain low, but the block has low surrender activity given the business was recently issued, meaning sales largely contribute directly to positive net flows. We will have a similar dynamic on RILA sales going forward as we are starting from scratch following our October launch. This gives us multiple levers to grow and diversify our book going forward. Our other operating segments are shown on slide 11. We suspended institutional business for new sales starting in early 2020 as we began the separation process, and this has largely continued through the third quarter of 2021. This led to significant outflows as existing business has run off throughout the year with account values declining from $12.3 billion a year ago to $8.8 billion as of the end of the third quarter. Now that we have completed our separation, we expect to return to the market with new issuances on an opportunistic basis. Our pre-tax adjusted operating earnings for the institutional segment of $21 million during the third quarter of 2021 was down from $26 million in the third quarter last year due to the declining account value of the segment and lower reinvestment yields over time. Going forward, the earnings should largely track the account values. Lastly, our closed life and annuity block segment reported a slight increase in pre-tax adjusted operating earnings. This reflected lower levels of benefits paid partially offset by lower premium income. Absent future M&A activity, the earnings should trend downward as the business runs off over time. Slide 12 summarizes our robust capital position as of the end of the third quarter 2021. This strong position has given us the confidence to provide detail on the form and timing of our capital return. Given our strong cash generation, we are pleased that the Board authorized a dividend program, which shows our confidence in the level of cash return going forward. The fourth quarter cash dividend of 50 cents per share corresponds to a cash outlay of roughly $50 million for the quarter at our current share count, a healthy level of cash to shareholders. We also announced a $300 million share repurchase authorization, which we believe will allow us sufficient capacity in combination with the dividend to deliver our $325 to $425 million cash return in the first 12 months after the demerger. The share repurchase authorization has the benefit of allowing us to be opportunistic in cash return given our current valuation. The number of shares to be repurchased and the timing of such transactions will depend upon a variety of factors, including market conditions. During the quarter, we completed the term loan draw and contributed the majority of the proceeds into our statutory operating company. The remainder was retained at the holding company, providing us with over $800 million of cash, well above our minimum liquidity target. It is also important to note that following the draw, our total gap leverage was at 23.5% within our 20 to 25% target range. We expect to refinance the two-term loan facilities by the end of the year. Following the capital contribution, Jackson National Life Insurance Company grew its total adjusted capital position to $6.8 billion, up from $4.4 billion as of the end of the prior quarter. Not only did the capital position benefit from the capital contribution, but also from meaningful in-force capital generation, continuing the trend from the second quarter. The estimated RBC at Jackson National Life as of this quarter was above 525%, up from the 500% to 525% pro forma RBC that we reported as of the prior quarter, continuing the growing RBC trend we've seen throughout 2021. This means that we are above our 500 to 525% adjusted RBC target, looking solely at the operating company and without taking any credit for the current level of excess capital at the holding company. So, in summary, it was a very successful quarter. We completed our term loan draw, provided further clarity on our current and future capital return programs, and have ample holding company liquidity. With our robust capital levels at the operating company, we are well-positioned for the future. And with that, I will turn it back to Laura for closing remarks.

Thank you, Marcia. We had a remarkable quarter when factoring in the successful completion of the demerger, the diversification of our distribution and product offering, as well as positioning the company to deliver on our financial targets. As we work to meet the growing demand for the retirement savings and income market, we remain focused on supporting financial professionals, providing award-winning service to our customers, and delivering value to all of our stakeholders.

At this time, we'd like to open up our call for Q&A. Maxine, could you take our first question?

Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you do change your mind, please press star followed by two. When preparing to ask your question, please ensure your line is unmuted. Our first question comes from Tom Gallagher from Evercore. Your line is now open. Please proceed.

Good morning. The first question I had is just on if I add up the common dividend of around $200 million annualized and the $300 million of buyback, that gets me to $500 million. That's above your initial capital return guidance. I realize there's timing issues here, but would you say the $500 million is a level you would expect you could sustain based on excess capital generation, or does that include any drawdown of your current access?

Good morning, Tom. Thanks for the question. I'll just make a general remark and then turn it over to Marcia to address the capital return outlook. But certainly with the announcement, we wanted to provide a balanced return of capital that's rooted in the expected cash generation of the company. We recognize the value of both options for sure. But I'll turn it over to Marcia to get to the longer term part of the question.

Marcia Gooding- Sure. Thanks, Tom. Yeah, you're correct in terms of how you're kind of putting the numbers together there and noting that there are timing or practical considerations around these returns. really wanted to come out with the shareholder dividend, you know, that speaks to our longer term view of the business and the ability of us to generate sustainable cash returns going forward into the future. And, you know, we're looking at the share we purchased at $300 million as, you know, a pretty significant program that, you know, will translate to about 10% of our current market cap, which is high relative to industry norms. And it's also size we think appropriately given those practical considerations around the regulatory requirements and trying to work within the time frames that we've put forth. But I think in terms of how that translates into future capital return, of course that's necessarily going to be dependent upon future capital formation, but and that'll be obviously somewhat dependent upon market. But I think, you know, what we've set out here is something that we feel, you know, really is a good reflection of our, you know, views of the types of capital generation that we think the business will generate and is, you know, in line with the kind of robust levels we saw in the period, you know, more recent period prior to when we were preparing for the demerger and working through the COVID market conditions. So we see, you know, we see that, you know, that aligns reasonably well with how the business has performed in the past.

Okay. Thanks, Marcia. And would you say, is it fair to say the $300 million share repurchase is going to be the variable component of And that's going to be more market dependent? Or do you believe under most plausible market scenarios, $300 million of buybacks would appear to be sustainable based on what you think is kind of a sustainable level of cash flow generation in the future, above your targets of RBC and excess whole co-cash?

Well, it certainly will be market dependent. I think that's true. But as Laura mentioned, we really did want to have a balanced approach with both a dividend and a longer term commitment component. balanced along with, you know, repurchase activity. So, you know, we would expect to have a balance, you know, somewhat similar to this as we move forward in time, but certainly recognize that the share repurchase component of it is a little bit more, you know, opportunistic in nature and market consistent, but I think or market sensitive, but I think it's consistent with kind of our view of the capital generation potential within the business.

Gotcha. Thank you. And then just one quick follow-up. There's $600 million of statutory net income in the quarter. Would you say that's a decent run rate to think about if markets are benign like they were this quarter, where you don't have much in the way of derivative gains and losses? Or was there anything unusual that broke positive or negative when we think about what might be trendable in terms of statutory net income?

Yeah, that's always a little bit challenging because it depends so much on the position of the business and, like you say, the market environment that develops over the period. But I think in generally benign markets, I can't point to anything I think notable or exceptional to raise in terms of how the how the statutory capital generation developed over this past quarter in the context of the market environment that we had.

Okay, thank you.

Our next question comes from Ryan Kruger from KBW. Your line is now open.

Hi, thanks. Good morning. My first question was on the additional 7.2 million shares that will come into the share count in the fourth quarter. Will that come into the common share count or just the diluted share count? And I'm just asking to get a sense of how it impacts the amount of dollars associated with your dividend.

That will be coming into the diluted share count.

Got it, but not the common. Right. Okay. Can you discuss how your variable annuity lapse assumptions compare to the NAIC's floor requirement in the standard projection, and then just any sense of how you've seen lapse rates trend over time?

Sure. So, I guess I'd say first with respect to the VA LAPS, you know, assumptions that we would have in our results. You know, we have a significant block of VA business, so we have the benefit of having a very vast set of experience data to use to inform our assumption setting process. And, you know, the nature of the VA LAPS assumption is fairly complex, driven by a lot of different factors, I think, which is I think consistent with what you would see across the industry. The standard projection, I'll say, is a, you know, as you know, it's kind of a guardrail test around prescribed assumptions relative to a company's assumptions. And I would say just in general sense, the result we see when we test that set of prescribed assumptions relative to our own company assumptions is that that does not generate any additional reserve or capital requirements, indicating that we're not needing anything additional to kind of meet the requirements of the regulatory assumption set. And I guess with respect to trends over time, I mean, you know, this is one where As I said, there's a lot of factors that go into the assumption structure and the drivers of that, some of which are going to be market dependent or the age of the block dependent. And I would say generally what we've seen in our experience aligns with those kinds of features. And I just note that in the financial supplement, we do have an aggregate lapse or lapse slash surrender withdrawal activity rate that's shown. And while that's simplified relative to the assumption structure as a whole, I think you'll see that that shows our experience in the most recent quarter is quite in line with where it was the year prior.

Got it. Thanks. And then just my last one was given that the NAIC has some proposals to change their interest rate generator, can you give us some level of sensitivity that your RBC ratio would have to the longer term statutory mean reversion rate that's currently embedded in the NAIC's model?

Sure. I guess I'd say first the the potential scenario changes that may be coming, you know, I think are, you know, not well defined yet. So that's something that we'll be watching as we move into 2022. I believe there'll be field testing in the early part of the year that we'll be able to participate in that will give us a little bit more transparency, I guess, into the potential set of changes. But under today's scenario structure and requirements, There is, as you know, that that mean reversion parameters that automatically gets updated at the 1st of each year. So we are expecting for 2022 that that parameter will reduce. To 3% from 3 and a quarter where it is today. It has decreased in the current year. 2, 3 and a quarter from 3 and a half percent where it was. In the prior year, and we had a. modest impact to our RBC when we made that change at the beginning of this year, and we expect since the magnitude of the MRP reduction is similar, that will be a similarly manageable change to our RBC ratio as we move into 2022.

Am I correct that the magnitude was about 20 to 25 points last time?

That's correct.

Okay, thank you.

Our next question comes from Nigel Daly from Morgan Stanley. Your line is now open. Please go ahead.

Great, thanks. Good morning. Can you comment on where you stand with considering other actions to accelerate the pace of capital return? In particular, several companies have executed risk transfer transactions free of capital on some of their older annuity blocks. Just wondering whether that's also an opportunity for Jackson that you're actively looking to pursue.

Yeah, good morning, Nigel. We've considered and executed on reinsurance transactions in the past. We would be open to transactions if they were on terms that were beneficial to our shareholders and certainly to the long-term profitability of the company. Marcia, I don't know if you would have any other remarks related to that topic?

Sure. Thanks for the question, Nigel. I guess When we look at our business, we have obviously the large VA block. We have already reinsured a significant component there of the fixed and fixed index annuity last year. And then we've got the closed block primarily life business that we have on the books as well. I guess thinking about the VA and the life components that we have, one of the things that we've thought about with respect to the VA block is just the fact that, you know, what we've typically seen in the market has on the Inforce side been more focused on blocks that are less healthy and maybe come with large reserve or capital requirements that can be released over time. And we're really comfortable with the VA pricing and the position of our Inforce books. So while, as Laura said, we'd certainly be open to considering opportunities, we would, you know, we would really have to be, you know, compensated for what we think is the value of that business in a way that is, you know, doing the right thing for our shareholders. And then I guess with respect to the lifeblocks, you know, that does provide us with diversification benefits that are valuable to us both in terms of, you know, the source of earnings being mortality-based and some parts of that block being spread-based as well. And it also provides diversification benefits within the capital requirements, statutory capital requirements. So, you know, we do see that block as valuable to us, and we note that, you know, that diversification is viewed favorably by a rating agency. So, you know, here again, we'd certainly be open to transactions, but there is some significant value to us in that business. So, you know, that would have to be taken into account in the terms to make it favorable. and in the best interest of the shareholders.

Great, thanks. And just a follow-up on the buybacks. Can you also comment on the nature of those buybacks? Would they more likely be regular open market repurchases, or would you also consider block transactions from some of your larger holders? You've indicated a preference not to be long-term holders of your stock. I think the issue of overhang has been an issue which has come up time and time again with investors. So is the buyback program something which potentially could address that?

Yeah, in general, we haven't limited ourselves to any precise method of repurchase in order to make sure we have the maximum amount of flexibility to execute.

Okay, makes sense. Thanks. Sure.

As another reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now. Our next question comes from Eric Bass from Autonomous Research. Your line is now open. Please go ahead.

Hi. Thank you. Can you discuss how you're planning to manage holding company liquidity going forward and your expectations for bringing dividends from your insurance subs up to the Holdco over the next year?

Sure. Thank you, Eric, for that question. As we've disclosed here, we have holding company cash currently in excess of the $800 million, and we have previously disclosed that we would want to maintain a minimum buffer there at about two times annual fixed expenses. As far as looking forward, we know that we have dividend capacity within the operating companies. that'll be fully defined as we progress through the end of the year. But we have the capacity there and we'll look to be able to pass cash up from the operating company as capital is generated and provide that liquidity at the holding company level. And we also have you know, sources, other sources of available liquidity if needed. And then with the liquidity we do have at the holding company, we would obviously look to, you know, kind of prioritize that across the various priorities that we've disclosed around maintaining our financial strength and optimizing leverage, you know, new business investment at appropriate margins, and of course, capital distribution to shareholders.

Got it. That's helpful. I guess I was wondering, should we expect that in the near term you're going to run with a sizable buffer similar to kind of where you are sitting today?

I think, you know, we would want to obviously maintain that roughly $250 million level buffer or minimum. And then, you know, I think naturally there might be some buffer above that, but I don't think we have anything we would at this point in terms of specific plans of what that level would remain at.

Okay, thanks. And then I was hoping you could talk about your expectations for the new Ryla product that you recently launched, and how quickly do you anticipate sales ramping there? And do you expect this to all be incremental to volumes, or will there be some cannibalization of sales from other products?

Well, we're definitely excited about our Ryla launch. We're in the market with a competitive product that we know has differentiated features, and as I indicated in the presentation early on, we've received good positive feedback from advisors. We haven't disclosed any sales projections, but we are recognizing that Ryla has expanded the market overall, and with The demand that we see, you know, we think there's lots of space for Jackson to enter this market, you know, and continue to meet that growing consumer demand.

Got it. And then last one, just hoping you could talk about the outlook for corporate expenses going forward. Presumably you'll have higher interest expense starting in the fourth quarter, but are there also any other incremental higher costs relating to being an independent public company that aren't in kind of the run rate expense right now.

Yeah, sure. Chad, do you want to take that one?

Sure. I think with that, we'll have some pluses and minuses there. Obviously, we've got some expenses that we've been running through the process of the demerger, so that's been pushing expenses a little bit higher, so we'll get some reduction coming off of that. Offsetting that, you're going to get higher expense from just, you know, we have a holding company we didn't have before. So there's holding company expenses there. There's interest expense and similar types of activities. So I think broadly speaking, we're not expecting any really big movements in corporate expenses there, but they might trend a little higher net-net with, well, specifically with the interest expense. Got it. Thank you.

As another reminder, to ask a question, please press star followed by one on your telephone keypad now. We have a follow-up question from Tom Gallagher from Evercore. Your line is now open.

Hi, thanks. Just a follow-up on Nigel's question on risk transfer. I just want to make sure I've got your responses clear in terms of at least my understanding of them. Are you actively exploring risk transfer strategies of variable annuities or life insurance right now, it sounded to me from your answers that it was less likely that you're sort of proactively pursuing something currently. Is that a fair way to characterize it or just wanted to be clear on that?

Yes, I think you've got that right, Tom.

Okay, thanks. Just as we think about the actuarial review for next quarter, recognizing it's a process, you're not going to front run it, going into it, are there any assumptions we should be thinking about that may get revised, such as long-term separate account return assumptions that does appear to be a bit higher than some others in the industry, or policyholder lapse experience, anything kind of high-level you think might come under more review when you go through that?

Well, I guess I would say one thing to share is that our annual review process is generally – One where we take a comprehensive look at everything and typically would make small adjustments if we see experience emerging in a certain area so that we avoid the likelihood of large changes from time to time because we're just kind of keeping up with the experience. And so that tends to result in potentially a few small adjustments here and there. And then depending upon what's emerging in the experience, You know, we just take that into account. But I would say from the cycle that we're working through right now, you know, we are still in the process and don't want to front run anything in particular. But this is not a year that we've identified, you know, really notable items. This has been more of a typical process of sorting through the experience data, looking for, you know, any kind of new emerging experience that would inform any adjustments.

Okay, that's helpful. One final one on that. Can you disclose what you're assuming for interest rates in your accounting in terms of a 10-year Treasury mean reversion assumption, what that number is?

Well, we have not disclosed that in the past. We have a – when you think about our business and the fact that – that type of an assumption doesn't apply directly to the majority of our business, particularly within the VA. You've already noted we have a longer term separate account growth assumption there. We don't define that as being tied directly to a 10 year treasury per se. But the rest of our business where future interest rate assumptions play into the projection of benefit payments or gross profits, Those are quite immaterial to our business, so we do have maybe a simplified approach in terms of how we set that up. It doesn't necessarily lend itself to a specific 10-year treasury, but that's just not a material assumption in our reserving methodologies given our mix of business.

Okay, got it. Thank you.

This concludes our Q&A session, so I'll hand it back to Laura for closing remarks.

Great. Well, thank you for joining us on our call today. We look forward to speaking with you again in the future.