Jackson Financial Inc.

Hello and welcome to the Jackson Financial Inc 2Q 2022 earnings call. My name is Lauren and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing start later by one on your telephone keypad. I will now hand you over to your host, Liz Werner, Head of Investor Relations to begin. Liz, please go ahead.

Good morning, everyone. Before we begin, we remind you that today's presentation may include forward-looking statements which are not guarantees of future performance or outcomes. A number of factors, including risks, uncertainties, and assumptions discussed in risk factors and management's discussion and analysis of financial condition in the company's 2021 Form 10-K and the most recent first quarter 10-Q could cause actual results 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 Prescorn, our CFO, Marsha Watson, our Vice Chair, Chad Myers, our Head of ALM and Chief Actuary, Steve Ben-Yuris, and the President and CEO of PPM, Craig Smith. At this time, I'll turn the call over to Laura.

Thank you, Liz. Good morning, and welcome to our second quarter earnings call. In addition to our second quarter results, we'll discuss Jackson's financial strength, our continued capital return to shareholders, and our favorable business outlook. Despite a challenging market, our disciplined approach to risk management and the profitability of our healthy book resulted in strong capital levels at both our operating and holding companies. Looking forward, we see a clear path to achieving our 2022 capital return target and remain confident in our long-term capital generation. For the second quarter, we reported net income of nearly $3 billion driven by sizable net hedging gains that protected our business during equity market stress conditions. Our hedging strategy performed as intended preserving statutory capital during periods of significant stress, which was evident in our healthy and growing operating company RBC ratio. Although market volatility was high during the quarter, some benefit of higher rates was realized in hedging costs that were largely in line with our guaranteed benefit fees. These fees are based on a policyholder's benefit base, which is not subject to market volatility and are intended to cover our hedge costs over the life of a policy and throughout market cycles. We believe the effectiveness of our hedging strategy is most evident in challenging environments, which was the case this quarter. From an operating standpoint, we focus on adjusted operating earnings excluding notable items, which were $481 million for the quarter, driven by the impact of the equity market on separate account fees. Our separate account assets outpaced the broader S&P by 2% during the quarter as a result of our diversification and investment performance. Importantly, with over $208 billion in annuity assets, we have the scale to support future growth and capital generation. Our confidence in Jackson's long-term profitability, growth, and capital generation is also tied to the company's history of operating efficiency. Jackson's culture of expense discipline seeks to maximize productivity and prioritize stakeholder value. Our operating expenses include some variable components that dampen potential earnings volatility through market cycles. In the past, we've referred to our flexible on-demand workforce as one example of creatively managing expenses. This quarter, our asset-based commissions declined, which partially offset the market impact on our fee income. Separately, we also realized a benefit from lower stock-based compensation expense in the quarter, reflecting our June 30th share price. Throughout the quarter, we were once again deliberate in returning capital to shareholders, which totaled $116 million and included share repurchases and shareholder dividends. In the second quarter, we also completed the last step in our recapitalization and issued senior notes to repay term loan debt. And yesterday, we announced approval of our third quarter dividend of 55 cents per share, an indication of the sustainability of our cash flow and our long-term commitment to return capital to shareholders. Our business momentum continued this quarter as we saw expanding RILA sales through the period. For the quarter, Ryla sales were $490 million, up from $199 million in the first quarter. Last week, we reached over $1 billion in Ryla sales since our launch last October. At our current level, we are approaching a $2 billion annual sales run rate, and we are seeing the true capabilities of the Jackson Distribution Network. Approximately 17% of our Ryla sales are with new producers for Jackson. which speaks to both our distribution strength and our product design. Throughout this period of market uncertainty, we remain well positioned as a market leader with stable and highly valued service that our distribution partners and policyholders have come to expect and rely upon. Given the weak equity market and demand for principal protection, traditional variable annuity sales declined across the industry, including for Jackson. However, our asset retention remains high, consistent with our experience and expectations of policyholder behavior during periods of market volatility, and highlights the long-term value proposition our annuities provide over the course of market cycles. Importantly, our total net flows were positive for our retail annuities business. Annuity industry sales for the quarter are estimated to have reached a record of over $77 billion due largely to a shift towards fixed and fixed index annuity products. We continue to monitor interest rate changes, review pricing and distribution opportunities that best meet demand for spread business, and update our product pricing in a disciplined manner. For the industry, RILA sales growth continues, and second quarter sales were over $10 billion while traditional VA sales were $15 billion. During a period of market uncertainty, we believe annuities are a valuable option for protecting retirement assets and income and managing market exposure. Our RILA sales provide meaningful capital synergies with our VA business, and we look forward to further product innovations that meet the needs of our advisors and their clients. During the quarter, we saw further expansion of our advisor relationships with the addition of the Pinnacle Group, serving 15,000 RIAs and offering advisory annuity products. Our continued focus and commitment to the advisory channel reflects our view that annuities are a valuable solution for advisors offering retirement planning, as well as the overall growth opportunity in the RIA space. Delivering technology-driven solutions and quality service also distinguishes Jackson and positions the company as a leader within this emerging annuity channel. As recognition of our innovative approach, our Retirement Expense and Income Calculator Program was one of five finalists for the Insurance Technology Award for Wealth Management's Annual Awards Program. We also maintained our presence in the institutional market and would expect to be opportunistic over the remainder of the year. We see continued value in the diversification benefits, cost effectiveness, and stable statutory capital generation this business provides. Turning to page four, we are reaffirming our 2022 financial targets. The significant progress we have made through the first half of the year puts us in a very solid position for reaching our target of 425 to 525 million in capital return to shareholders. We have returned 308 million through share repurchases and shareholder dividends during the first half of this year, which highlights our commitment to providing shareholder value. Last quarter, we stated that our adjusted RBC range of 500 to 525% represents a long-term target during a normal market condition. We do not consider the current environment to be normal, and the adjusted RBC is not our measure of excess capital. While our adjusted RBC was slightly below our long-term target this quarter, absent the nuances of the calculation of this metric under stress conditions, the ratio would have been within the target range. Marsha will cover this in more detail later in the presentation. Cash at our holding company exceeded $800 million, well above our minimum buffer, and the excess represents nearly two years of current holding company expenses and shareholder dividends. We ended the quarter with our operating company RBC up from the first quarter and over 450%. During the second quarter, our capital formation exceeded our capital return to shareholders. Our substantial operating company capital positions Jackson for continued growth and future capital generation. Combined with our holding company excess capital and low leverage, Jackson has the capital flexibility and financial strength to pursue its business strategies and maintain its balanced approach to capital management. We'll discuss both our operating and adjusted RBC ratios in more detail to provide additional insight into our capital strength and flexibility later in this presentation. While our adjusted RBC provides insight into capital across the company, we know that sustainable capital return is supported by both the current balance sheet strength of our operating company and its ability to continue to generate statutory capital. We are confident in our outlook for continued capital generation and our ability to successfully navigate challenging markets. I'll now turn the call over to Marcia to review the quarter's financial results in more detail.