Jackson Financial Inc.

Hello and welcome to today's Jackson Financial Incorporated fourth quarter 2021 earnings call. My name is Bailey and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to Liz Warner, Head of Investor Relations. Liz, please go ahead. Your line is now open.

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 third quarter 10-Q, 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's CEO, Laura Preeskorn, our CFO, Marcia Watson, and our Vice Chair, Chad Myers. At this time, I'll turn it over to Laura.

Good morning. and welcome to our full year and fourth quarter earnings call. This morning, we'll discuss our accomplishments for the full year and the quarter, as well as our outlook for the future. Looking back on 2021, we've successfully transitioned to operating as a public company, executed on our business strategies, and delivered on our commitments to shareholders. 2021 was a momentous year for Jackson, and throughout our transition, we maintained a leading market position, exceeding $19 billion in annuity sales through a network of over 580 distributors. We believe our diversified annuity offerings and dedicated distribution support and service sets us apart from competitors and positions us for the future. This year, we are pleased to once again be recognized by Service Quality Measurement Group the independent organization that benchmarks over 500 leading customer contact centers across North America. Jackson received four awards for its service efforts in 2021, including highest customer service for the financial services industry. These awards reflect the hard work and leadership of our operations team and Jackson's continued commitment to serving financial professionals and their clients. We remained focused on managing profitability, risk, and capital and are on track to reach our capital return target ahead of schedule. Yesterday's announcements included an increase to both our shareholder dividend per share and our existing share repurchase authorization. Today, we'll provide our outlook for capital return to shareholders, which has been reset to a calendar year basis for 2022. We look to our future with confidence and remain committed to our business and building a track record of delivering on our financial targets. Last quarter, I commented on the hard work and collaboration of our colleagues to position Jackson for success as an independent company. The Jackson culture and a long-tenured leadership team continue to serve us well. Turning to slide three, our focus on execution is highlighted in Jackson's full-year financial results. In 2021, both net income and adjusted operating earnings reached a three-year high. I'll speak to adjusted operating earnings, which excludes both hedging-related volatility as well as the guaranteed benefit fees intended to address hedging costs. For the full year 2021, adjusted operating earnings of $2.4 billion exceeded the prior year by over $500 million. These results include the benefit of limited partnership returns that were well above our long-term assumption, as well as the incremental impact of other notable items. Adjusting for all notable items, our full-year pre-tax adjusted operating earnings increased 22% from the prior year. Of note, our retail annuity segment accounted for nearly two-thirds of total growth in pre-tax adjusted operating earnings. Later in the presentation, we provide insight into notable items for greater transparency into the strength of our underlying core business. The solid growth of our business combined with effective risk management resulted in healthy statutory capital generation, and we ended the year with total adjusted capital of $6.6 billion and an RBC ratio of 580% at our operating company, Jackson National Life Insurance. We finished 2021 in a strong regulatory capital position consistent with the help of our annuity book and the favorable market environment. Since our separation, you've seen that we've promptly returned excess capital to shareholders following our first dividend and share repurchase program authorization announced four months ago. Under our initial share repurchase program, we opportunistically pursued both open market purchases and a private share repurchase transaction with Prudential PLC and Athene. In 2021, total share repurchase activity was $211 million, or approximately 5.8 million shares. Importantly, we continue to view our stock as attractively valued and share repurchases are a good use of shareholder capital. As we enter 2022, we expect to deliver on our targeted capital return to shareholders ahead of schedule. Our initial target was a total capital return of $325 to $425 million in the first 12 months as a public company, taking us through September of 2022. Our revised target represents an increase in capital return to shareholders and a shift to a calendar year basis. For the calendar year 2022, we're targeting capital return of $425 to $525 million, or a 27 percent increase at the midpoint of the previous target range. Yesterday's announced dividend and an additional $300 million in authorized share repurchase capacity is supported by an approved capital distribution from our operating company. These announcements allow Jackson to maintain its balanced approach to capital return. Based upon current shares outstanding, our first quarter dividend will be approximately $50 million, consistent with our fourth quarter dividend. Turning to slide four, I'll review our progress on each of our financial targets. As I mentioned, we're on track to complete our 12-month targeted capital return to shareholders earlier than projected. The combination of a shareholder dividend and opportunistic share buybacks allowed for a swift execution relating to this target. Our holding company cash and liquid assets are in excess of our previously stated minimum cash requirement of $250 million. We had over $600 million at the holding company as of year end 2021, and that is after returning $261 million to shareholders and dividend and share repurchases. Our risk-based capital ratio at both the operating company and on an adjusted basis is also ahead of target. For 2022, we're maintaining a 500 to 525 percent adjusted RBC target, which includes excess holding company liquidity. We believe this RBC target, along with a 20 to 25 percent leverage ratio, is most appropriate for our business mix. Now let's turn to the fourth quarter financial and operating highlights on slide five. Our fourth quarter adjusted operating earnings of $7.48 per share reflect continued growth in fee income tied to strong account value growth, as well as certain notable items in the quarter. Similar to last quarter, we benefited from outperformance in our limited partnership investment. We also benefited from a claims recovery as well as market-driven deferred acquisition cost amortization and our annual assumption unlocking, which Marshall will cover in more detail. As I mentioned last quarter, the market-driven DAC volatility will change next year with the adoption of the GAAP accounting standard referred to as LDTI. Excluding notable items for the 2020 and 2021 fourth quarters, adjusted pre-tax operating earnings increased 30%. Importantly, our pre-tax retail annuity fee income increased 17% this quarter compared to the year-ago quarter. This top-line momentum is largely the result of account value growth, which benefits both earnings growth and ROE. We expect retail annuities to drive further profitability and growth as we benefit from an increasingly diverse set of products and expanding distribution networks. Retail annuity account values were $259 billion at 2021 year end, up nearly 13% from the prior year end. This in-force business provides a level of profitability and scale that supports our business growth plans and capital return targets. Our fourth quarter annuity sales were at their highest level for the year at $5 billion, up modestly from the prior year's quarter. Looking ahead, we expect sales momentum for Jackson and the industry to continue. For the 2021 full year, Jackson's variable annuity and RILA sales grew 15 percent over the prior year due to momentum and investment-only variable annuity sales, as well as the rollout of our RILA product suite called Jackson Market Link Pro. Our strong fee-based advisory sales were also at a record level of $1.3 billion, up from $1 billion last year, highlighting our ability to broaden the annuity market. Looking at the annuity sales survey results from the Secure Retirement Institute, we see positive future trends. For the industry overall, this is the third highest year ever. All annuity categories saw growth, including fixed, fixed index, fixed index, RILA, and variable annuities. Last year's industry-wide traditional variable annuity and RILA sales combined were $125 billion, a 27 percent increase, driven by the strong RILA market and a reversal of declines in traditional variable annuity sales. This is a helpful backdrop for Jackson, and advisors attribute this strong demand to the need for balancing protection and growth amidst rising inflation along with proactive tax planning. Last quarter, we mentioned our entry into the defined contribution market with our Alliance Bernstein partnership, and we look forward to continued opportunities in this market. We believe our expertise as a provider of lifetime income solutions will increase in value as retirement plan sponsors look to address income protection and longevity risk for their plan participants. These opportunities are more episodic, and future sales will be provided in our financial supplement. Our product expertise and innovation, along with best-in-class operational and distribution support, strongly position us for future growth. As I mentioned earlier, we actively deployed capital in the fourth quarter and ended the year in a strong capital position. Our adjusted RBC at year-end was 611% ahead of our 500% to 525% target. As a reminder, the adjusted RBC considers both the capital position of our operating company and excess holding company liquidity. Finally, in December, we refinanced a term loan with a $1.6 billion senior debt issuance and are at the midpoint of our financial leverage target range. At this time, I'll turn the call over to Marcia to provide more details on our fourth quarter financial results.