Jackson Financial Inc.

Hello and welcome to today's Jackson Financial Incorporated first quarter 2023 earnings call. My name is Bailey and I'll 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 our host, Liz Werner, Head of Investor Relations. Liz, please go ahead.

Good morning everyone and welcome to Jackson's first quarter earnings call. Today's remarks may contain forward-looking statements which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based upon management's current expectations. Jackson's filings with the SEC provide details on important factors that may cause actual results or events to differ materially. Except as required by law, Jackson is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change. Today's remarks also refer to certain non-GAAP financial measures. The reconciliation of those measures to the most comparable U.S. GAAP figures is included in our earnings release, financial supplement, and earnings presentation, all of which are available on the investor relations page of our website at investors.jackson.com. Joining us today are our CEO, Laura Preeskorn, our CFO, Marcia Wadston, our Head of Asset Liability Management and Chief Actuary, Steve Ben-Yores, our President of Jackson National Life Distributors, Scott Romine, and our President and Chief Investment Officer of PBM, Craig Smith. At this time, I'll turn the call over to our CEO, Laura Prescorn.

Thank you, Liz. Good morning, and welcome to our first quarter 2023 earnings call. Today, we'll discuss our first quarter results, our progress towards our 2023 financial targets and our insights on the current state of the annuity industry. Over the course of the first quarter, we maintained our risk management discipline, preserving our capital strength and positioning the company for continued profitability. Our hedging strategy effectively navigated a period of significant equity market and interest rate volatility, and our capital position remained strong after remitting $600 million from our operating company in March. The strength of our capital position is reflected in both an operating company RBC within our target range and over $1.5 billion in holding company liquidity including $533 million in proceeds from our successful preferred stock issuance. We remain focused on returning capital to shareholders and are off to a strong start having returned $124 million during the first quarter through dividends and share repurchases. We consistently take a long-term view on our business and have significant experience managing through various market conditions. Turning to first quarter results, our adjusted operating earnings were $315 per share and largely reflect market impact on separate account values compared to a year ago, as well as the impact of the higher minimum interest credited rate we highlighted last quarter. Our operating results also reflect our efficient expense structure. Retail annuities delivered attractive operating margins benefiting from variable expenses and lower asset-based commissions. Combined, these variable costs contributed to a 7% decline in operating costs from a year ago and a 3% decline from the fourth quarter of 2022. This quarter, we're providing greater transparency into our investment portfolio given the regional bank crisis and emerging commercial real estate concerns. These additional disclosures provide key metrics that highlight credit quality across our fixed portfolio and commercial real estate assets. Our conservative underwriting and the high quality of our investment portfolio continue to be a strength of the company. These additional disclosures are in our earnings deck and will be covered in more detail later in the call. Retail annuity sales totaled $3.1 billion for the quarter and were relatively flat from the fourth quarter of 2022. The stabilization of variable annuity sales industry-wide is consistent with our view that recent sales trends reflected cyclical and not secular pressure. We continue to position our product portfolio for future growth implementing several changes to our traditional VA product offerings over the first quarter. These changes capture the benefit of the higher interest rate environment, offer attractive value to financial professionals and clients, and are aligned with our pricing and return requirements. Fixed and fixed index annuity sales continue to increase and provide positive net flows as we maintain pricing and investment discipline. Our Ryla offering, MarketLink Pro, generated sales of $533 million over the quarter and remains an opportunity for growth. We recently filed an update to our MarketLink Pro product suite that will offer enhanced solutions to financial professionals and their clients. Our growing success in the Ryla market has positively contributed to our distribution expansion and diversification strategy adding over 2,500 relationships with new or re-engaged advisors since introducing Market Link Pro 15 months ago, with nearly 500 added in the first quarter alone. The core of our business is bringing confidence and better outcomes to Americans' retirement portfolios. We are witnessing the greatest surge of new retirees our country has ever seen, with more than 10,000 Americans turning 65 every day, a number that will increase to more than 12,000 each day at its peak in 2024. When you add recent market volatility to the mix, the need for protected retirement solutions is reaching historic highs. Retirees and pre-retirees continue to report high concerns about inflation and their ability to successfully finance retirement. The 2023 Retirement Confidence Survey conducted by the Employee Benefit Research Institute, or EBRI, and Greenwald Research shows a significant decline in the confidence Americans feel in having enough money to live comfortably throughout their retirement years. EBRI is a nonpartisan nonprofit organization that focuses solely on data and research and does not advocate or lobby. This survey was sponsored by 18 of the largest global asset managers and insurance companies including Jackson. The survey reports that an understanding of retirement plan investment options is lacking for some and and that two-thirds of retirees prioritized income generation over maintaining wealth during retirement, with nearly three-quarters of pre-retirees feeling the same. This need in the market fuels Jackson's relentless focus on providing product solutions, planning tools, and resources to help our distribution partners and their clients protect and grow assets while creating opportunities for guaranteed lifetime income. With that backdrop, Jackson continues to be well positioned in the industry as the annuity market expands. According to data from a recent survey of financial professionals and investors by Cogent Syndicated, Jackson holds its lead as the firm with the broadest reach and has the strongest perception among annuity users for offering the best retirement income products. Consistent with our long history, Jackson also ranks highest by a notable margin for best-in-class service in acting in policyholders' best interest. Turning to page 4, I'll review our progress towards our 2023 key financial targets. Our operating company's RBC target range of 425 to 500% provides a significant level of capital to manage through periods of volatility, is consistent with our current A rating and rating agency expectations, and supports the long-term growth of our business. With over $1.5 billion in cash and highly liquid securities at our holding company, we believe we are well positioned and on pace to meet our 2023 capital return target of $450 to $550 million. In addition to our earnings release, we announced our board has approved a second quarter common dividend of 62 cents per share. We view our shareholder dividend as an important component of our capital return strategy, representing our continued confidence in long-term capital generation. Turning to page 5, you will see we have consistently returned capital to shareholders through both dividends and share repurchases. Through the first quarter, this has allowed us to repurchase 16% of our outstanding common shares since separation in September of 2021. This balanced approach to capital management supports growth and capital return to shareholders while maintaining a resilient balance sheet. With that, I'll turn the call over to Marcia to go over our financial results in greater detail.