Jackson Financial Stock

Good day, everyone. Welcome to the Jackson Financial Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Liz Werner, Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Jackson's 2026 Second 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. 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.

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.

Presenting on today's call are Jackson, CEO, Laura Prieskorn; and CFO, Don Cummings. Joining us in the room are our President of PPM America, our investment management subsidiary, Chris Raub; our Head of Planning and Asset Liability Management, Brian Walta; and our Head of Distribution of Jackson National Life distributors, Alison Reed.

At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Liz. Good morning, everyone. I appreciate you joining us for Jackson Financial's Second Quarter 2026 Earnings Call. I'll start by highlighting the quarter's strong operating results, continued capital generation and a robust free cash flow. Following my remarks, Don Cummings, our CFO, discuss our financial results in greater detail. Lastly, prior to Q&A, I'll share comments on our upcoming executive management transitions we recently announced in my confidence in the leadership guiding Jackson forward.

Beginning at a high level, our performance in the first half of 2026 positions Jackson to achieve our financial targets for the year and sets a foundation for anticipated long-term profitability. Turning to financial metrics on Slide 3. In the second quarter, operating earnings benefited from strong fee income and significant spread-based income growth. We reached a new quarterly record for adjusted operating earnings of $7.30 per diluted share. The combined total account value for retail annuities and institutional exceeded $295 billion, representing a 10% increase from the prior quarter and included a greater percentage of spread-based account growth.

In addition, through the first half of the year, our adjusted operating earnings grew more than 20%. We expect our sizable healthy in-force business, our increasing diversification and our continued sales momentum to provide sustainable earnings and cash flows for the foreseeable future. Jackson's growth is supported by a strong capital position and continued capital generation. At the end of the quarter, total adjusted capital was $5.8 billion, up nearly 9% from the second quarter a year ago. Despite the strong growth in new business, our ability to generate free cash flow and return capital to shareholders has continued to improve.

For the first half of 2026, free cash flow was $575 million, a 14% increase from last year. During the same time, we returned $547 million to shareholders in the form of common shareholder dividends and share repurchases. We remain focused on our balanced approach to capital management that has allowed us to maintain financial strength while supporting new business and capital return.

Turning to retail annuity sales. We saw sales accelerate in the second quarter and approach $6 billion, a 34% increase from a year ago. Importantly, sales across all our products were up from the first quarter as well as from the second quarter a year ago. We remain an industry leader with more than $26 billion in RILA assets and $2.3 billion in second quarter RILA sales. This was a record sales quarter and the fourth consecutive quarter of more than $2 billion in RILA sales. We anticipate continued RILA sales growth resulting from our June launch of Market Link Pro 4 and Market Link Pro Advisory 4.

This latest addition to our RILA product suite is the first in the industry to reflect the Dow Jones industrial average index option. We believe these enhancements provide valued options for our advisers and their clients and add to RILA'S attractive product features of growth potential with downside protection. Further adding to our spread-based business and diversification, our fixed and fixed index annuity products whose account values increased 28% to $6.3 billion in the first half of 2026.

Our income-focused FIA product, Jackson Income Assurance delivered another quarter of solid sales, bringing FIA sales for the first 6 months to $1.3 billion. Our FIA offers a highly valued income benefit that allows advisers to offer an income protection solution that their clients can depend upon. Looking forward, we expect the combination of our investment XPs at PPM and our TPG investment partnership will continue to support Jackson's ability to offer competitive spread-based products. Our partnership with TPG and the collaboration with PPM have already produced attractive new investment opportunities and enhanced investment yields.

Importantly, we saw total retail annuity net outflows decline for the second quarter in a row and improved by 20% through the first half of the year compared to the prior year period. While the strong equity market drove variable annuity surrenders this quarter, increasing net inflows for RILA, fixed annuities and fixed index annuities all contributed to the quarter's improving net flow trend. We anticipate that policyholders with mature variable annuities will continue to take advantage of the high growth in their funds and their valued benefits and believe the impact on total net flows should recede over time. Our broader range of annuity products continue to drive growth by expanding distribution and increasing the use of annuities in client portfolios.

During the quarter, more advisers sold multiple products helping build stronger distribution relationships. We also remain a leader in the advisory channel where RILA, FIA and Elite Access, our investment-only variable annuity made up nearly 80% of first half advisory annuity sales. This reflects the strength of our product diversification strategy. In addition, our RILA offerings continue to expand our distribution network. Since 2025, we've added nearly 1,500 new advisers and reactivated 2,300 advisers who had not recently sold a Jackson product.

Our recently launched FIA product is also helping grow our distribution footprint. Approximately 60% of the producers selling this product are either new or reactivated Jackson producers. In addition to our innovative annuity products, we offer advisers a solutions-based approach, supported by advanced digital capabilities and ongoing industry-leading service. Jackson was recently named Investment News 2026 Annuity Provider of the Year. This award illustrates the strength of the organization, the trusted relationships we've built with our distribution partners and the dedication of our associates whose hard work helps drive meaningful outcomes for the customers we serve every day.

Jackson has a long history of supporting our distribution partners and advisers as they help their clients reach their retirement goals. We are proud of this recognition and remain focused on our mission of helping Americans secure their financial futures.

Turning to Slide 4. The shift in our business mix and separation highlights the diversification benefit resulting from Jackson's broad product portfolio. We ended the quarter with nearly 40% of our in-force book comprised of spread-based and investment-only variable annuities, reflecting the growth across all our products this quarter. Jackson's focus remains clear, and we continue to drive growth through product innovation and an expanded distribution reach, which we believe leads to sales diversification and a more balanced in-force book of business.

Turning to Slide 5 and looking ahead to the full year, as I said earlier, we are pleased with our first half accomplishments and the momentum we have built going into the second half of the year. We remain confident in our ability to achieve our free capital generation target of $1.2 billion and deliver on our capital return to common shareholders target of $900 million to $1.1 billion. In addition, our holding company liquidity is well above our minimum buffer, excluding the recent proceeds from our senior debt issuance. Importantly, we believe Jackson's market presence, operating strength and capital position provide the foundation for long-term value creation.

At this time, I'll turn the call over to Don.

Thank you, Laura. Before turning to our quarterly results, I want to recognize Laura for her nearly 40 years of dedicated service to Jackson. Under steadfast leadership, the company navigated a transformational period advancing many important strategic initiatives that have strengthened our foundation and positioned Jackson well for continued growth. On behalf of the organization, I want to thank Laura for her leadership and lasting contributions. I'm honored by the Board's confidence in appointing me as Jackson's next President and CEO, and I look forward to leading Jackson through its next phase of growth.

My career began in Retirement Services and joining Jackson in 2020 was a return to an industry I know well. At that time, the company was preparing for registering with the SEC and its listing on the New York Stock Exchange and entering into an important new chapter. 5 years later, I'm privileged to succeed Laura and guide Jackson as we continue to execute on our long-term strategy and capitalize on the opportunities ahead.

I also want to highlight Brian Walta's appointment as Chief Financial Officer. Brian is a highly respected leader with deep financial and actuarial expertise, and I'm confident he will carry forward Jackson's strong attrition of disciplined financial management while supporting our strategic priorities and delivering value for shareholders. Jackson's reputation has been built on financial strength, disciplined execution and long-standing partnerships. Our commitment to serving financial professionals and policyholders while maintaining leadership within the retirement services industry remains unchanged. We believe the company is well positioned for the future, supported by a strong balance sheet, differentiated capabilities and an experienced management team focused on delivering sustainable value for our stakeholders.

With that, let's turn to Slide 6 and review our second quarter financial results. We reported pretax adjusted operating earnings of $618 million for the quarter or $648 million, excluding notable items. On an ex notables basis, earnings increased 50% year-over-year, driven by continued momentum across our spread-based business and healthy growth of our in-force fee-based AUM. Sequentially, ex notables earnings were also meaningfully higher than the first quarter of 2026, reflecting continued growth in both fee and spread-based AUM.

Sequential net investment income benefited from more than $3 billion of higher average invested assets, modest improvement in total portfolio yield as new money was invested at rates above the existing yield and more favorable marks in the second quarter. The quarter also benefited from normal seasonality with pretax operating expenses, including compensation, about $48 million lower than in the first quarter. Our spread-based earnings continued to demonstrate strong growth. Supported by a competitive product spectrum and a high-quality conservatively managed investment portfolio. Diversification and disciplined credit management remains central to our investment approach and continue to support consistent performance.

Sales of our bread-based products also reflect the enhanced asset sourcing capabilities at PPM which have enabled greater allocation and new money and to select higher-yielding asset classes. This measured shift in new money deployment, combined with a compelling product lineup, has helped Jackson maintain a stable and competitive position in this spread product market. We are also beginning to see increasing contributions from our strategic partnership with TPG alongside the continued benefits of our capital-efficient strategy. Capital deployment through the partnership continued to build momentum during the quarter and remains aligned with the AUM targets we outlined earlier this year. The partnership is clearly broadening investment opportunities and helping drive higher new money yields.

Before turning to notable items, I want to highlight the continued strength and profitability of our in-force business. Adjusted operating return on equity for the trailing 12 months ended June 2026 was 16.3%, up from 12.7% for the comparable period ending June 2025. This improvement reflects the resilience and earnings power of the business as we continue to diversify our sales mix and balance sheet in a disciplined and value-accretive way.

Turning to Slide 7. I'll walk through the notable items that impacted adjusted operating earnings this quarter. Free capital generation, which I'll discuss later, was also affected by these items. We reported adjusted operating earnings per diluted common share of $7.30. Excluding $0.36 of notable items and normalizing for the difference between our actual tax rate and our 15% tax guidance, adjusted operating EPS was $7.68. That represents a 55% increase versus the second quarter of last year driven by strong spread income growth discussed earlier, along with the benefit of a lower diluted share count from our ongoing share repurchase program.

During the quarter, limited partnership results were below our long-term 10% return assumption, resulting in an unfavorable impact of $0.36 per share. As expected, valuations within the limited partnership portfolio can vary quarter-to-quarter, but we remain confident in the underlying quality and long-term performance of these investments. Our effective tax rate for the quarter was 15.2%, consistent with our guidance.

Turning to Slide 8. We'll take a closer look at the continued diversification and growth within our Retail Annuity segment, where we maintained the #1 position in traditional variable annuities and a top 4 position in RILA. The segment delivered 34% year-over-year sales growth in the second quarter, reflecting strong execution across our broad product portfolio, continued expansion of wholesaler territories is driving deeper engagement across existing distribution relationships and supporting sustained sales momentum.

As Laura noted earlier, Jackson was recognized by Investment News as annuity Provider of the Year, which we believe reflects the strength of both our product platform and distribution capabilities. Importantly, spread-based products represented 54% of total sales in the quarter, highlighting the continued evolution and diversification of our business mix. Sequentially, total retail sales increased 12% from the first quarter. Our RILA product suite continues to perform exceptionally well.

Second quarter RILA sales exceeded $2.3 billion up 69% from the prior year quarter and represents a new quarterly record. Since launching the product in 2021, RILA AUM has grown steadily to more than $26 billion at quarter end. We also continue to see strong momentum in other spread-based products. Our recently launched Jackson Income Assurance product contributed to $812 million of total fixed and fixed index annuity sales during the quarter, up 73% year-over-year. We believe the continued scaling of our strategic partnership, TPG positions us well to support further growth enhance the long-term earnings potential of our spread-based business.

Turning to net flows. Strong RILA and other spread product sales drove $2.9 billion of nonvariable annuity net inflows in the quarter, up 65% from the prior year period and 16% sequentially. Within variable annuities, the all-in surrender rate was essentially flat sequentially and modestly higher than the prior year quarter. As expected, surrender activity within the in-force block continues to be influenced by equity market performance.

During the second quarter, separate account returns were 12.9% which contributed to more than $27 billion of investment gains in variable annuity AUM during the quarter, exceeding variable annuity net outflows by more than $22 billion. The overall growth in account values continues to support strong fee income generation. We've included advisory sales trends to further illustrate the breadth and diversification of our distribution capabilities. Jackson continues to hold a leading position in the advisory and annuity market, ranking #2 supported by a comprehensive suite of product offerings. Notably, nearly 50% of advisory sales in the second quarter of 2026 came from products other than variable annuities, reflecting the continued success of our growth and diversification strategy.

Lastly, institutional product sales were $1.4 billion in the second quarter increasing both year-over-year and sequentially. These results highlight our continued ability to capitalize on strong demand for spread lending products and reflect the effectiveness of our opportunistic sales strategy supported by our strong market position.

Turning to Slide 9. We highlight second quarter net hedge results by product along with a waterfall comparison of pretax adjusted operating earnings to the GAAP pretax income attributable to Jackson Financial. Since transitioning to a more economic hedging approach, we have seen a meaningful improvement in the consistency of our hedging program outcomes, supporting stronger and more predictable capital generation.

As a reminder, we recently enhanced our disclosure of net hedge results to separately present outcomes for our variable annuity and RILA businesses. This added transparency provides a clearer view of the offsetting equity exposures across these product lines and excluding the impact of implied volatility on market risk benefits offers insight into the change in equity at Brooke Re. After isolating the volatility-related impacts, our overall net hedge result for the quarter was a modest $2 million gain. Given the size and complexity of the liability profile, we view this as a favorable outcome.

As shown on the slide, gains from the RILA and FIA businesses were largely offset by losses in the VA business. As a reminder, for RILA and FIA products, our hedging strategy is designed to prioritize economic outcomes rather than the JFI GAAP, and there can be meaningful differences between these two perspectives. As a result, quarterly gains or losses on a JFI GAAP basis may or may not align with the underlying economics and to not be viewed as the sole indication of hedging effectiveness. That dynamic was evident in the second quarter as strong equity market performance, combined with modestly higher interest rates resulted in a gain of about $200 million for RILA and FIA driven by hedge gains that more than offset reserve movements.

On an economic basis, net hedging results for these products were much closer to neutral. This outcome continues to demonstrate our ability to protect the in-force business from market impacts, while generating healthy operating income. With variable annuities, net hedging results reflected the same market conditions with hedge losses exceed market risk benefit gains. Excluding the approximately $270 million benefit from implied volatility during the quarter, VA reported a loss of roughly $200 million, broadly offsetting gains generated from the RILA and FIA businesses.

As a reminder, there are also scope and accounting modification differences between JFI/VA results and Brooke Re results beyond the implied volatility impact. On a Brooke Re basis, net hedge results were essentially flat for the quarter. Brooke Re's capitalization remains well above both our internal risk management target and our regulatory minimum operating capital level. Furthermore, during the quarter, there were no capital contributions to or distributions of capital from Brooke Re. Looking ahead, we will continue to manage Brooke Re on a self-sustaining basis, consistent with the long-term nature of its liabilities and our disciplined approach to capital management. Overall, these results underscore the effectiveness of our hedging program in maintaining capital stability, proactively managing economic risk and preserving the durability and resilience of our business model.

Turning to Slide 10. We highlight consistency of our capital generation, free cash flow and shareholder returns. In the second quarter, after-tax statutory capital generation was $656 million, benefiting from the strong equity market performance and continued growth in our spread-based businesses. We continue to view statutory capital generation as one of the clearest indicators of the underlying earnings power of the business and an important guidepost in balancing investment for future growth with capital return to shareholders. Free capital generation was $304 million in the quarter, reflecting the estimated change in required capital associated with strong and diversified new business production.

Required capital growth in the quarter also included impacts related to equity markets and sales patterns that are inherent in the RBC framework and as a result, we would not expect the same level of headwind in future quarters if sales remain at current levels. Based on results through the first half of 2026, we remain confident in achieving at least $1.2 billion in free capital generation for the full year. While our RBC risk appetite remains at 425%, the stability in RBC levels over the past 2 years continues to support our focus on sustained free capital generation, consistent with our earn it, then pay it philosophy.

Holding company for cash flow remained strong and consistent at $287 million in the quarter, broadly in line with both the prior year period in the first quarter of 2026 after funding expenses and other cash flow items. The strength of our free capital generation and free cash flow supported $290 million of capital return to common shareholders during the quarter, representing a 38% increase on a per diluted share basis compared to the prior year quarter. Since becoming an independent public company, Jackson has returned nearly $3.3 billion to common shareholders, exceeding our initial market capitalization at our IPO. Overall, these results continue to reinforce the strength and consistency of Jackson's capital duration profile, the durability of our cash flows and our commitment to delivering long-term shareholder value.

Turning to Slide 11. This slide highlights Jackson's strong capital and liquidity position. Our in-force business continues to be a significant driver of profitability. Fee income from our variable annuity based contracts, together with growth in spread-based earnings supported solid capital generation during the quarter.

At Jackson National Life, our capital position and RBC ratio have become less sensitive to equity market movements, reflecting the benefits of the Brooke Re restructure. Today, changes in the equity markets primarily impact assets under management and future capital generation rather than near-term capital levels. As a result, our earnings profile has become increasingly steady, diversified and capital-efficient similar to an asset management business. Consistent with our disciplined capital management approach, we distributed $325 million to the holding company during the second quarter. After reflecting the impact of that distribution on deferred tax assets, total adjusted capital ended the quarter at $5.8 billion, with an estimated RBC ratio of 538%, comfortably above our minimum target. These results continue to demonstrate the strength and resilience of our balance sheet as we move through 2026.

At the holding company, we ended the quarter with nearly $1.4 billion in cash and investments, well above our updated minimum liquidity buffer and providing substantial financial flexibility. The increase from the first quarter primarily reflects proceeds from our recent senior debt issuance.

Overall, second quarter results reflect strong momentum across the business. Supported by a healthy balance sheet, robust capital and liquidity levels and a business model well positioned to support continued growth and shareholder value accretion.

Slide 12 highlights the substantial liquidity resources we maintain across our legal entities, which continues to support our strong capital position. These resources now also include our recently issued P-Caps, newly expanded revolving credit facility and proceeds from the senior debt issuance completed during the quarter. During the second quarter, we issued $750 million of senior debt, effectively prefunding $650 million of debt maturities due in 2027 while also adding $100 million of incremental holding company liquidity. We also expanded our revolving credit facility from $1 billion to $1.25 billion and extended the maturity from 2028 to 2031.

Including holding company cash, highly liquid securities and the undrawn revolving credit facility Total available liquidity at Jackson Financial, Inc. was approximately $4 billion at quarter end. At the operating company level, Jackson National Life maintained more than $32 billion of available liquidity, including $6 billion in cash and U.S. treasury securities and an additional $23 billion in other highly liquid marketable securities. Jackson National Life also benefits from its long-standing relationship with the Federal Home Loan Bank which provides $2.6 billion of additional borrowing capacity through its collateralized loan advance program.

Finally, Jackson's leverage profile remains among the strongest in its peer group with a total leverage ratio of approximately 23.4%, excluding AOCI. Adjusting for the planned retirement of our 2027 maturities, leverage would be approximately 19.7%. Overall, our combination of strong capitalization, substantial liquidity and modest leverage continues to provide significant financial flexibility and supports a balance sheet designed to perform across a range of market environments.

Turning to Slide 13. This slide highlights PPM America, our wholly owned asset management subsidiary. This quarter, PPM AUM exceeded $100 billion, benefiting from growth in Jackson's spread-based businesses and growth in third-party AUM. We PPM, together with our strategic relationship with TPG, enhances Jackson's ability to source attractive yields and maintain product competitiveness across both our retail and institutional spread businesses. We remain highly optimistic about PPM's growth trajectory and the opportunities to further expand its capabilities reinforcing its role as a strategic differentiator and a key contributor to Jackson's long-term success.

Moving to Slide 14. We highlight the quality, diversification and conservative positioning of our investment portfolio as of the second quarter. Jackson takes a disciplined approach to managing our assets and liabilities, which guides how we make strategic decisions about asset allocation. Our fixed maturity portfolio remains high quality and defensively positioned with a meaningful allocation to highly liquid U.S. treasuries, which represent approximately 6% of the portfolio. The market to book ratio of 96% reflects our disciplined approach to asset selection and prudent portfolio management.

Exposure to below investment-grade securities remains very limited at just 1% of the portfolio, consisting almost entirely of corporate bonds and loans. The portfolio is well diversified by asset type. Corporate securities account for roughly 58% of invested assets, complemented by mortgage loans, asset-backed securities and a modest allocation to private equity through our limited partnership investments. Our commercial mortgage portfolio is conservatively underwritten, supported by strong loan-to-value and debt service coverage ratios ensuring resilience across market cycles. Overall, our investment portfolio reflects a conservative credit philosophy centered on quality, diversification and liquidity which continues to support the stability of our capital position and the durability of our earnings profile.

Slide 15 enhances disclosures on our private investment exposure. As noted last quarter, Jackson remains underway in direct lending relative to peers. We view the current market dislocation as an opportunity to invest selectively at more attractive valuations than those seen in recent vintages. In addition, our strategic partnership provides access to deep expertise in direct lending particularly in the lower middle market segment where TPG emphasizes strong covenants and rigorous credit underwriting. This positions us well as we gradually and prudently build exposure in the space.

As of the second quarter, our private debt portfolio consisted of 62% traditional private placements with the remainder allocated to infrastructure, asset-backed securities and credit tenant leases. Overall, our private investment portfolio is conservatively positioned and supported by robust credit oversight. We maintain substantial capacity to deploy capital on attractive terms, reinforcing our growth and diversification strategy while preserving the strength and stability of the balance sheet.

I'll now turn the call back to Laura.

Thank you, Don. Turning to Slide 16. We maintain a positive outlook for the future as we continue to build upon our strong business and financial flexibility. Since separation, we've successfully navigated volatile market conditions and have opportunistically pursued profitable growth. As always, I'm grateful for the dedication of our associates whose contributions each quarter remain our greatest strength.

As we announced on July 22, after nearly 40 years with Jackson, I've decided to retire at the end of the year. I'm also pleased that Don Cummings, our CFO, will succeed me as Jackson's next President and CEO; and Brian Walta, Senior Vice President of Planning and Asset Liability Management will succeed Don as our next CFO both effective on October 1. This transition reflects the strength of Jackson's organization and the thoughtful succession planning process in place to ensure continuity, stability and long-term success.

We are fortunate to have a deep and experienced leadership team, strong talent across the organization and a clear strategic vision for the future. I'm excited for Don and Brian and I'm confident in their leadership. I'm incredibly proud of the people I've worked with and all that we've accomplished together. It's been a privilege to serve and be a part of an organization that meets an essential need for Americans and their financial futures.

At this time, I'll turn the call over to the operator for questions.

Our first question comes from Suneet Kamath with Jefferies.

Okay, great. Just on the quarter's normalized earnings of $540 million, that's something like a 30% sequential increase. And I know markets were positive in the quarter, but that increase was much more than what we expected. Is the current level of earnings sustainable? And maybe talk about the drivers of the sequential increase?

Suneet, it's Don. I'll take that question. So yes, it was a very strong quarter for earnings results, and I'll kind of cover it between our fee-based results and also spread earnings. And as you mentioned, it was a very strong equity market in the quarter, which was a tailwind for our results. S&P 500 was up about 15%. Our separate account return in the quarter was up 13%. So obviously, that contributed to our fee-based earnings results.

But we did see significant contribution from our spread business. And you can just look at our AUM progression over the last several quarters there to get a sense of the kind of growth that we're seeing. AUM was up about 14% sequentially and almost 50% year-over-year. And so that certainly contributed to our spread-based earnings I did mention in prepared remarks, our NII saw a fairly sizable increase, primarily due to having higher average AUM. We also saw an increase in our overall total portfolio yield as we invested new money and cash flows coming off the portfolio at higher rates that contributed.

And then finally, just some more favorable marks from our LP investments. So overall, very strong result on earnings. What I would say, just go looking forward, I think it was part of your question there. Higher equities, higher interest rates are good for our businesses. And while we're not providing full year financial guidance, there are a couple of indicators that I think bode well for us having drawn results going forward. The equity markets, assuming that they kind of trade within a range around where they are today, that should continue to be a tailwind for us.

Now if there's a significant equity market decline, we'll see -- that will turn into a headwind. And then on the spread-based earnings, our strategy to shift our business mix to be more weighted towards spread products is working and we expect to continue to see growth in spread assets. And so the interest rate environment, as I mentioned, and putting new money to work will continue to be a benefit there.

And just finally, we do see a little bit of seasonality in expenses as we get towards the end of the year. But all in, I think we would expect to continue to see strong earnings results, as I mentioned.

Okay. So it doesn't sound like there's anything unusual in the quarter. Okay. Then my second question just relates to the assumption review. And I know you don't want to front run your analysis, but if we think about the past couple of years, I think there have been some charges related to policyholder behavior. So as you think back over the past few quarters since 3Q, has there been anything that you've seen that's different relative to what your updated assumptions?

Yes. Thanks for that question. So you're right. We don't want to get ahead of our process. We do make our decisions around assumption updates in the fourth quarter and we'll be working through that in the latter half of the year here. But just in terms of policyholder behavior, I think if you look at our financial supplement, you can see that that's been a bit more modest than it had been over the course of the last year in terms of actual versus expected. And -- but obviously, that can be influenced by equity markets, but I think the trends that we've seen recently are encouraging.

Our next question comes from Alex Scott with Barclays.

First one I had a sort of a follow-up on just the impact of higher equity markets and Wanted to see if you could talk about how it will affect your statutory capital generation and ultimately free cash flow and flexibility at the holding company. I mean does that flow through in a pretty similar way to kind of the beta on earnings? Or are there some nuances that we should think about? I'm just trying to consider what's happened through the first half of the year and whether there's upside to what you guided to at the beginning of the year based on markets.

Alex, thanks for that question. So in terms of the drivers that I kind of went through earlier for earnings, those will -- generally speaking, carry over to our capital generation. There are some kind of nuances in the statutory required capital framework that do sort of offset that a bit. But in terms of our just after-tax statutory capital generation, we would expect the benefits that we see from higher equity markets and continuing to grow our spread business would be beneficial to our capital generation.

Got it. Okay. That's helpful. And then maybe next, you could talk about the partnership with TPG, the progress you're making on that how much would you expect that to continue fueling the growth you're getting in RILA and are you -- maybe you could also talk about how you're staying disciplined and I think it is still a pretty competitive market for private credit and structured assets in particular.

Yes. In terms of market competitiveness, we are staying disciplined. We have seen with our products, obviously, you can see our RILA sales and FIA have been strong. MYGA, on the other hand, we've chosen to kind of maintain our return discipline there and sales are a little bit lighter. In terms of the TPG partnership, maybe I'll just pass it over to Chris Raub to say a few comments about how that's continuing to develop.

Yes. Thanks, Don. Alex, we're really happy with both the deal flow, which is progressing as expected. The types of deals and quality of deals we're seeing from TPG as well as the level of collaboration and connectivity between our firms. We've got lots of productive discussions occurring on a regular basis across our platforms beyond just direct lending and ABF. So far, so good with TPG.

Yes. And as we laid out in our announcement on the TPG partnership, we do expect that our deployment of capital under the arrangement will play out over time and we're comfortable with the targets that we've laid out.

Our next question comes from Tom Gallagher with Evercore ISI.

Great. So other way, Laura best of luck to you. The first question I wanted to ask was just on hedging. Don, if I followed you correctly, you were mentioning economically, it looked like there was a $200 million gain for RILA and FIA, but you said economically, it was about breakeven. And then VA looks like it had a $200 million loss ex fall. Can you just sort of unpack what happened on -- to your hedging results in the quarter? And is there a natural hedge between those different businesses as you think about them? Or was that more randomness in terms of 1 was negative, 1 was positive in terms of RILA FIA versus VA.

Tom, thanks for those questions. I'm going to ask Brian to kind of chime in on the dynamic that we saw in the quarter between VA business and the RILA FIA. But I would just say, overall, we believe the overall hedging results since our shift to more economic framework has been very beneficial in showing some stability in our nonoperating results as well as our capital position.

But with that, Brian, do you want to provide some color on the hedging for the quarter?

Yes. Absolutely. I'll start with RILA first. You mentioned that it's a big positive, plus $200 million. I would want to emphasize that we definitely do not hedge to the GAAP accounting framework. We're hedging to the economic framework, which is actually quite similar to stat. Really, we're well aligned to hedging the movement in the account value. So what Don was referencing earlier is that from an economic standpoint, we had really matched that quite well, and that really does flow through our stack capital generation. So we should expect to see some level of noise in this line, the RILA and FIA. This was larger than typical because it's probably a very outsized equity movement for the quarter.

We typically are going to outperform a little bit in up markets on RILA and FIA on this basis on GAAP. But once again, we expect to be relatively neutral, well managed to the economic/statutory framework. Regarding VA, There, as we talked about, we're hedging to broke and we had more of a neutral net hedge result there. They are relatively well aligned JFI GAAP versus broker, but we always call out the MRB volatility impact. That's one difference. So we had a little bit larger delta here than normal.

But once again, that's driven by the very large outsized equity movements, plus 15%, while it's generally well aligned, there's going to be some noise items that come through with that type of move. I would say that the overall net impact of them offsetting is somewhat coincidental. I think there may be a little bit of reason why they should offset, but not necessarily to that degree. And I would just stress again that we manage each of them independently. We manage strictly to the RILA liability and then to the VA liability and then we strike our hedges accordingly. We will let them for external hedging, but we don't take any diversification benefit when it comes to managing each of those liabilities.

One thing I would just add on the VA loss that you see there, Tom, is what we messaged on prior calls that the GAAP results are kind of an indicator of what's going on at Brooke Re, there are scope differences. For example, our New York business is not seeded to Brooke Re. So that's an example of one scope difference. And then in addition to having the fixed volatility assumption, there are a couple of other modifications. And so as Brian highlighted, although we have a GAAP reported loss for VA, it was really pretty much flat if you look at just the Brooke Re results.

Yes. I would emphasize that at Brooke Re, we felt like it was very well managed. And we were happy to have the quarter played out.

Got you. That's helpful. And then my follow-up is just on where you see things going on investment spreads? It looks like you had both good general account growth, but also wider investment spreads if I just look at NII versus cost of crediting, would you expect there to continue to be a tailwind, meaning good general account growth and continued further widening of investment spreads? Or would you expect more stability with investment spreads? And maybe a little bit about what's driving that? Is there -- are there certain asset classes that are driving that?

Yes. So I would say you're on the right track there. Certainly, as we grow spread-based AUM we're going to see that come through in our earnings results, as I kind of mentioned in response to an earlier question. And in terms of NII and how that impacts our spreads, we have seen positive results there as generally, when we're putting new money to work, that's at a rate above our overall portfolio rate.

So that's going to be helpful to our to our overall results. If you look at just the quarter and not sure that you could use this for all periods going forward, but just for the quarter of the money that we put to work, the new money yield was roughly about 100 basis points ahead of our overall portfolio yield. So we will see that helping as we move forward.

Last question will come from Ryan Krueger with KBW.

First question is just on required capital growth. I know it was outsized in the quarter and it was impacted by the equity market. Can you give us any sense of what you could expect the growth in required capital to be in a more typical quarter or a year we were to kind of assume more normal equity market growth?

Sure. So I think you could probably -- if you look back over our results over the last 1.5 years outside of this quarter, I think you probably could see a little more consistent trend there. We did call out the couple of things, equity markets being one. And then there's also kind of a little bit of a seasonality factor in the required capital for spread-based products. So that's kind of for J&L, it's primarily writing RILA. We do see the FIA business over to Hickory Re. But under the RBC formula, we still have to put up kind of the business risk component of required capital. So that does have a little bit of a impact and it's based on a kind of a trailing 12-month premium volume. So we would expect that to moderate some before the end of the year.

And then can you provide any updated thoughts on potentially inorganic growth. I think whether it be block transactions or more strategic M&A, what types of things you may be interested in over time, if there's opportunities.

Sure. So as we've mentioned on prior calls, anything that we would look at from an inorganic perspective, we would weigh relative to returning capital to shareholders. But we also believe that we would like to continue our strategy of diversifying our business. So to the extent that we see opportunities that would be a good fit from that perspective. We would certainly want to pursue them.

Jackson has its roots in the life insurance business, and we don't currently originate new life insurance liabilities, but if there were an opportunity to do that through an inorganic opportunity, we would certainly look very strongly at that.

That concludes our Q&A session. I will now turn the call back to Laura Prieskorn for closing remarks.

Thank you. As we've discussed this morning, Jackson's record second quarter performance highlights the ongoing strength and increased diversification of our business. As this is my last earnings call as CEO, I want to express my gratitude to our investors and analysts for your continued support and interest in Jackson. We look forward to sharing our progress toward our 2026 targets after the next quarter. Thank you, and take care.

Good day, everyone. Welcome to the Jackson Financial First Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Liz Werner, Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Jackson's 2026 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. 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.

Today's remarks may 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, our financial supplement and earnings presentation, all of which are available on the Investor Relations page of our website at investors.jackson.com.

Presenting on today's call are Jackson's CEO, Laura Prieskorn; and CFO, Don Cummings. Joining us in the room are our President of PPM America, our Investment Management subsidiary, Chris Raub; and our Head of Asset Liability Management, Brian Walta.

At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Liz. Good morning, everyone. I appreciate you joining us today for Jackson Financial's First Quarter 2026 Earnings Call. I'll start by highlighting the quarter's positive results and the solid progress toward achieving our 2026 financial targets. Following my remarks, Don Cummings, our Chief Financial Officer, will discuss our financial results in greater detail.

Beginning with the bigger picture, 2026 is off to a strong start. Through a volatile market [Audio Gap] generation and continues to support both distributions to our holding company and consistent capital return to shareholders holders.

During the quarter, we distributed $288 million from our operating company to JFI, our holding company. Our common shareholders benefited from an 11% increase in capital return from a year ago to $257 million in the form of shareholder dividends and share repurchases. We remain focused on maintaining a balanced approach to capital management, including investing in new business while maintaining our financial strength and consistent capital return to our shareholders.

Looking ahead, we're confident in our ability to generate free cash flow supported by a healthy book of business and expectations for profitable growth.

Turning to earnings. Our operating performance was strong. Pretax operating earnings were up 12% from a year ago, excluding the impact of notable items. On a per share basis, the increase was 18%, reflecting the benefits of our share repurchase program. Growth of spread-based earnings more than offset the impact of market volatility on fee income. We expect continued momentum here driven by our spread-based business and the benefits of our expanding product lineup, our enhanced investment capabilities and our broad distribution reach.

For the first quarter, retail annuity sales increased 31% from a year ago, a great result. Much of that growth came from our Marketlink Pro 3 and Marketlink Pro Advisory III, our leading RILA offerings. RILA sales have now exceeded $2 billion in quarterly sales since we launched the products in May of 2025. We're proud these sales have elevated us to be the industry's third largest RILA provider with more than $21 billion in RILA assets. We expect continued strong demand from advisers and their clients who value the combination of the growth potential and the downside protection that these products offer.

Further adding to retail annuity sales growth was our spread-based business, including the recent launch of Jackson Income Assurance, our fixed indexed annuity or FIA. Our FIA offers a highly valued income benefit [indiscernible] and helps advisers deliver retirement income protection solutions their clients can count on. Since our launch in August of 2025, our FIA offering has been positively received, and we expect FIA sales momentum to continue. In the first quarter, fixed annuity and FIA sales reached $756 million, a significant increase from $174 million a year ago.

We anticipate future sales momentum for our spread-based products. With PPM's broad-based investment expertise and the recently announced investment partnership with TPG, we're confident in our ability to offer competitive spread-based products to our many distribution partners.

Importantly, we saw considerable improvement in net outflows and which improved by 30% from a year ago and decreased nearly 6% from the fourth quarter 2025. This improvement reflects significant RILA inflows and lower variable annuity surrenders and withdrawals. The decline from last quarter reflects recent equity market uncertainty, which typically leads to lower surrender activity.

As our variable annuity block continues to mature, we do expect continued withdrawal activity as policyholders take advantage of their valued benefits. On the distribution front, we're expanding and making annuities more accessible as a retirement solution. Within the advisory channel, we're a leading provider and have accelerated our product diversification efforts. In the first quarter, RILA and Elite Access accounted for more than 70% of fee-based advisory sales. Additionally, our new competitive FIA product accounted for more than 10% of total advisory sales this quarter, and we anticipate continued growth in its contribution to sales in this channel.

As advisers and their clients navigate changing markets and individual financial goals, we believe our solutions-based and consultative approach underscores a unique value proposition across a growing annuity market. With our full suite of products and industry-leading service, Jackson remains a trusted partner across a growing and dynamic annuity market.

Turning to Slide 4. You can see the significant shift in our business since our separation. Today, nearly 40% of our account values come from spread-based and investment-only variable annuities, a meaningful shift that reflects the progress we've made in diversifying our in-force book. Nearly 5 years into our journey as a public company, our focus remains clear. We're driving growth through a diversified and broader product portfolio and expanded distribution reach.

Staying disciplined and execution-focused is a long-held strength for Jackson. As we execute on our growth initiatives and deliver on our commitments, we expect to build long-term value in our business and for our stakeholders.

Now turning to Slide 5 and looking ahead to the full year, we've started the year off strong and are on track to achieve our 2026 financial targets. In the quarter, free capital generation was $271 million, and we expect that to build over the course of the year under our current modest market assumption. We continue to expect to reach our 2026 free capital generation target of $1.2 billion, along with our capital return to common shareholders in the range of $900 million to $1.1 billion.

Further, at the end of the first quarter, our holding company liquidity is nearly $650 million, comfortably above our minimum buffer. As you know, we recently established a long-term strategic partnership with TPG, which brings expertise in asset-based finance and direct lending areas that complement PPM's existing capabilities and create opportunities for enhanced investment returns. We've already started allocating new money to TPG managed assets. And while we don't expect an outsized allocation to these asset classes, we do believe the investment returns will support profitable growth across our spread-based products over time.

Importantly, our relatively low current exposure to private credit provides us the flexibility to invest opportunistically when market volatility creates attractive entry points. We continue to maintain our disciplined investment approach, working closely with TPG and see great value in our strategic partnership. Later in our remarks, you'll hear more about our investment portfolio and how the asset classes and the expertise TPG brings fit well within our current portfolio and business strategy.

At this time, I'll turn the call over to Don.

Thank you, Laura. Let's turn to Slide 6 and walk through our consolidated financial results for the first quarter. We reported pretax adjusted operating earnings of $430 million or $503 million, excluding notable items, which I'll discuss in more detail shortly.

On this ex notables basis, earnings increased 12% year-over-year, reflecting continued momentum across our spread-based businesses and steady growth in in-force assets under management. Sequentially, ex notables earnings were modestly lower than the fourth quarter of 2025, primarily due to approximately $30 million of headwinds in fee income this quarter. These headwinds were driven by slightly lower average AUM in fewer days in the quarter. Excluding these timing-related factors, earnings were up modestly from the prior quarter.

Our spread-based earnings continued to demonstrate a strong growth trajectory, supported by a full suite of competitive product offerings and a high-quality, conservatively managed investment portfolio. Diversification and disciplined credit management remain central to our investment approach, and that consistency continues to deliver solid results. Sales of our spread-based products also reflect the enhanced asset sourcing capabilities at PPM, which have enabled us to allocate new money into select higher-yielding asset classes. This measured shift in new money deployment, combined with a compelling product lineup has helped Jackson maintain a stable and competitive position in the spread product market through the last half of 2025 and into 2026.

We are also seeing positive early results from our new strategic partnership with TPG, along with the ongoing benefits of our capital-efficient strategy. TPG began deploying capital in the quarter, further expanding our investment opportunities and supporting higher new money yields.

Before turning to notable items for the quarter, I'd like to take a moment to highlight the continued strength and profitability of our in-force business. Our adjusted operating return on equity for the trailing 12 months ended March 2026 was 14.8%, up from 13.2% for the comparable period ending March 2025. This improvement underscores the resilience and underlying profitability of our business as we continue to grow and diversify our sales mix and balance sheet in a disciplined value-accretive way.

Turning to Slide 7, I'll walk through the notable items that affected adjusted operating earnings this quarter. Free capital generation, which I'll cover later, was also impacted by these notable items in the quarter. We reported adjusted operating earnings per share of $5.15. After excluding $0.90 of notable items and normalizing for the difference between our actual tax rate and our 15% tax guidance, adjusted operating EPS was $5.94. This represents an 18% increase compared to the first quarter of last year, reflecting the strong spread income growth I discussed earlier as well as the benefit of a lower diluted share count from our ongoing share repurchase program.

These positive factors more than offset the impact of the 4.7 million shares issued to TPG midway through the quarter. During the quarter, we experienced a $0.48 unfavorable impact from limited partnership results, which came in below our long-term 10% return assumption. While valuations of our limited partnership investments can experience quarterly fluctuations, we remain confident in the underlying strength and long-term performance of the portfolio.

In addition, we proactively enhanced our processes and data sourcing to more efficiently identify the ceased policyholders. This initiative resulted in higher claims during the quarter leading to a $0.42 unfavorable impact. While this initiative will temporarily affect results, it strengthens our data integrity, streamlines the policyholder experience and ensures greater consistency in future reporting.

Our effective tax rate for the quarter was 13.5%, modestly lower than our 15% tax guidance.

Turning to Slide 8. We take a closer look at the diverse and expanding new business profile within our retail annuity segment, which holds a top 3 leadership position in both our traditional variable annuity and RILA product lines. The segment delivered 31% year-over-year sales growth in the first quarter, underscoring the success of our comprehensive product suite. Spread-based products represented 52% of total sales, reflecting the continued balance across our offerings.

On a sequential basis, sales were modestly lower, consistent with typical seasonal patterns. Our RILA product suite continues to be a standout performer. We achieved $2 billion in RILA sales, an increase of 68% from the year ago quarter. Since launching the product in 2021, RILA assets under management have grown steadily, reaching a record high of more than $21 billion at the end of the first quarter.

As mentioned earlier, our spread-based products are also benefiting from strong momentum. The successful launch of our new fixed index annuity offering contributed to $756 million in fixed index annuity sales during the quarter, an increase of over 300% year-over-year. Combined with our recently announced strategic partnership with TPG, we are well positioned to sustain this growth and further expand the potential of our spread-based business.

Turning to net flows. Strong RILA sales and spread product performance drove $2.5 billion of nonvariable annuity net inflows in the first quarter. Within variable annuities, the all-in surrender rate declined both year-over-year and sequentially, resulting in modestly lower net outflows for the quarter. We continue to expect equity market volatility to influence surrender activity within our in-force block. Importantly, while equity markets were volatile early in 2026, we entered the second quarter with equity indices near all-time highs. Should this environment persist, we may see higher surrender activity, but it would also support growth in variable annuity AUM and fee income over the remainder of the quarter.

Lastly, we've included advisory sales trends to highlight the breadth of our distribution capabilities. Jackson maintains a leading position in the advisory annuity space, supported by a full spectrum of product offerings. Notably, in the first quarter of 2026, nearly 50% of advisory sales came from products other than variable annuities, demonstrating the continued strength in our growth and diversification strategy.

Turning to Slide 9. We highlight our first quarter net hedge results by product along with a waterfall comparison of pretax adjusted operating earnings to the GAAP pretax loss attributable to Jackson Financial. Since moving to a more economic hedging approach at the beginning of 2024, we have seen a meaningful improvement in the consistency of our hedging program outcomes, which, in turn, has supported stronger and more predictable capital generation. As a reminder, last quarter, we enhanced our disclosure of net hedge results to separately present outcomes for our variable annuity and RILA businesses. This additional transparency provides a clearer view of the offsetting equity risk between these product lines and excluding the impact of implied volatility and market risk benefit liabilities offers insight into the change in equity at Brooke Re.

After isolating the volatility effects, our overall net hedge result for the quarter was a loss of $101 million. Given the size and complexity of our liability profile, we view this result as a very stable and well-managed outcome. As shown on the slide, the RILA and FIA products generated a modest gain, while the loss was concentrated in our VA business. The variable annuity net hedging results reflect the breadth of available funds on our separate account platform, which includes both indexed and actively managed strategies.

During the first quarter, market dislocations, driven by investor sentiment around artificial intelligence and ongoing geopolitical developments led to divergent performance between certain actively managed funds and their benchmarks. This relative underperformance versus the indices we use in our hedging program resulted in the modest net hedging loss for the quarter. It is important to note that this dynamic can move in both directions. And historically, these effects have tended to balance out over time. Despite the modest loss from our hedging program during the quarter, Brooke Re's capitalization remains well above both our internal risk management target, which reflects a range of severe stress and tail scenarios and our regulatory minimum operating capital level.

Aside from the $500 million of growth capital contributed to Hickory Re, there were no additional capital flows for Brooke Re during the quarter. Looking ahead, we will continue to manage Brooke Re on a self-sustaining basis, consistent with the long-term nature of its liabilities and our disciplined approach to capital management.

Overall, these results underscore the effectiveness of our hedging program in maintaining capital stability, proactively managing economic risk in preserving the durability and resilience of our business model.

Turning to Slide 10. We highlight the consistency of our capital return and free cash flow. At Jackson, we operate under a straightforward philosophy, earn it, then pay it. This framework is built on 3 pillars: generating free capital, this is where we earn it; converting that capital into free cash flow, this is where we pay it; and returning capital to common shareholders. The outcome of the first 2 steps working together.

In the first quarter, after-tax statutory capital generation was $342 million. We view this as one of the clearest indicators of the underlying strength of our business and it serves as a key guidepost in balancing future growth with capital return to shareholders. Free capital generation was $271 million in the quarter, reflecting the estimated change in required capital, driven by our strong and diversified new business results. For full year 2026, we continue to expect to generate at least $1.2 billion in free capital, assuming equity markets deliver a 5% return and interest rates move in line with the year-end forward curve.

While we maintain our RBC risk appetite at 425%, the stability in RBC levels over the past 2 years gives us confidence to focus on sustained free capital generation consistent with our earn it, then pay it approach. Free capital generation was modestly reduced by the same limited partnership returns and elevated claims that impacted adjusted operating earnings.

Additionally, slightly lower average AUM and fewer days in the quarter weighed on fee income. However, the market recovery early in the second quarter positions us well for the remainder of the quarter. Excluding these temporary factors, capital generation was broadly consistent with the 2025 run rate. Free cash flow remained strong and consistent totaling $288 million at the holding company, up 35% year-over-year after funding expenses and other cash flow items.

Our robust free capital generation and growing free cash flow enabled us to return $257 million to common shareholders in the first quarter, an increase of 17% year-over-year on a per diluted share basis. Since becoming an independent public company, Jackson has returned nearly $3 billion to common shareholders, exceeding our initial market capitalization at separation. These results reinforce Jackson's strong capital generation profile, the stability of our cash distributions and our continued commitment to delivering long-term value for shareholders.

Turning to Slide 11. This slide highlights Jackson's robust capital and liquidity position. Our in-force business continues to be a key driver of profitability. Fee income from our variable annuity based contracts, combined with growing spread-based earnings supported solid capital generation during the quarter. As noted earlier, results were modestly impacted by the notable items we discussed previously.

At Jackson National Life, our capital position and RBC ratio have become significantly less sensitive to equity market movements, reflecting the benefits of the Brooke Re structure. Today, changes in the equity markets primarily influence our assets under management and future capital generation rather than our immediate capital levels. In many ways, this evolution has made our earnings profile, increasingly resemble that of an asset management business, steady, diversified and capital efficient.

Consistent with our disciplined approach of taking smaller periodic distributions, we paid $325 million to the holding company during the first quarter. After considering the impact of that distribution on our deferred tax assets, total adjusted capital ended the quarter at $5.5 billion, with an estimated RBC ratio of 554%, comfortably above our minimum target. These results underscore that Jackson is operating from a position of real strength as we progress through 2026.

At the holding company level, we ended the quarter with nearly $650 million in cash and investments, well above our minimum liquidity buffer and providing strong financial flexibility. The slight decline from the fourth quarter primarily reflects capital return to shareholders. Overall, our first quarter results show strong momentum, supported by a solid balance sheet, healthy capital and liquidity levels and a business model well positioned for continued success.

Slide 12 highlights the substantial liquidity sources we maintain across our legal entities, which underpin our strong capital position and now include our recently issued PCAPs facility. We view the PCAPs facility as an important extension of our commitment to balance sheet strength and enhanced risk management. This $900 million contingent capital facility strengthens our liquidity profile and reinforces capital resilience across market cycles, while allowing us to maintain a lean and efficient balance sheet. The facility is designed for flexible application, serving both as a buffer against severe market stress events and as a tool to proactively manage our capital structure. This ensures that Jackson remains well capitalized under a wide range of market conditions and scenarios.

When combined with holding company cash and highly liquid securities, along with our undrawn revolving credit facility, total available liquidity at Jackson Financial Inc. stands at approximately $3 billion. At the operating company level, Jackson National Life maintains more than $35 billion of available liquidity, including $7 billion in cash and U.S. treasury securities and an additional $25 billion in other highly liquid marketable securities.

Jackson National Life also benefits from our long-standing relationship with the Federal Home Loan Bank, which provides $2.6 billion of additional capacity through its collateralized loan advance program.

Finally, Jackson's leverage remains among the lowest in our peer group, with a total leverage ratio of approximately 19.8%, excluding AOCI. Our combination of strong capitalization, substantial liquidity and modest leverage provides meaningful financial flexibility and supports our ongoing commitment to maintaining a balance sheet built to perform through multiple market cycles.

Turning to Slide 13. This slide highlights PPM America, our wholly owned asset management subsidiary. PPM oversees approximately $95 billion in total assets under management. And together with our new strategic relationship with TPG, enhances Jackson's ability to source attractive yields and maintain product competitiveness across both our retail and institutional businesses.

PPM is a core component of Jackson's strategic growth profile, managing $59 billion of Jackson's assets and an additional $36 billion of third-party AUM, which has grown meaningfully since our separation. PPM manages our general account investment portfolio, directly supporting the profitable growth of our business and our objective of maintaining strong capitalization. Our ownership of PPM provides structural advantages and strategic alignment, including synergies across asset-liability management, product design and investment execution. This integration ensures that our investment strategy remains closely aligned with our product and risk management frameworks.

PPM has also expanded its investment capabilities, enabling new money allocations to select higher-yielding asset classes such as emerging markets, residential and commercial mortgage loans and investment-grade structured securities. These enhancements strengthen our ability to optimize portfolio returns while maintaining a disciplined approach to credit quality and diversification.

In addition, PPM maintains oversight of third-party asset managers, including our strategic partnership with TPG. This oversight encompasses the establishment of investment guidelines for asset classes managed by TPG and ongoing monitoring of deal flow and performance. While the partnership is still in its early stages, collaboration between the teams has been strong, and we are encouraged by the positive initial progress. We remain highly optimistic about PPM's growth trajectory and the opportunities to further expand its capabilities, reinforcing its role as a strategic differentiator and a key contributor to Jackson's long-term success.

Moving to Slide 14. We highlight the quality, diversification and conservative positioning of our investment portfolio as of the first quarter. Jackson takes a disciplined approach to managing our assets and liabilities, which guides how we make strategic decisions about asset allocation. Our fixed maturity portfolio remains high quality and defensively positioned with a meaningful allocation to highly liquid U.S. treasuries, which represent approximately 6% of the portfolio. The market-to-book ratio of 95% reflects our disciplined approach to asset selection and prudent portfolio management.

Exposure to below investment-grade securities remains very limited at just 1% of the portfolio, consisting almost entirely of corporate bonds and loans. The portfolio is well diversified by asset type. Corporate securities account for roughly 57% of invested assets, complemented by mortgage loans, asset-backed securities and a modest allocation to private equity through our limited partnership investments. Our commercial mortgage portfolio is conservatively underwritten, supported by strong loan-to-value and debt service coverage ratios, ensuring resilience across market cycles.

Overall, our investment portfolio reflects a conservative credit philosophy centered on quality, diversification and liquidity, which continues to support the stability of our capital position and the durability of our earnings profile.

Given the recent headlines surrounding asset-based finance and direct lending, Slide 15 provides enhanced disclosures on our private investment exposure. As noted last quarter, Jackson remains underweight in direct lending relative to peers. We view the current market dislocation as an opportunity to invest selectively at more attractive valuations than those seen in recent vintages. In addition, our strategic partnership with TPG provides access to deep expertise in direct lending, particularly in the lower middle market segment where TPG emphasizes strong covenants and rigorous credit underwriting. This positions us well as we gradually and prudently build exposure in this space.

As of the first quarter, our private debt portfolio consisted of 63% traditional private placements, with the remainder allocated to infrastructure, asset-backed securities and credit tenant leases.

From a ratings perspective, the portfolio is 99% investment grade with private letter ratings representing only 6% of total invested assets. Exposure to Egan-Jones-rated securities is immaterial and our software industry exposure is modest, focused exclusively on high-quality investment-grade issuers. Overall, our private investment portfolio is conservatively positioned and supported by robust credit oversight. We maintain substantial capacity to deploy capital on attractive terms, reinforcing our growth and diversification strategy while preserving the strength and stability of our balance sheet.

I'll now turn the call back to Laura.

Thank you, Don. Turning to Slide 16. Our outlook remains strong. we expect to continue our track record of maintaining capital strength, generating excess capital and delivering on our financial targets. Throughout all types of market environments, the need for retirement security is highly valued, and we're committed to our mission of helping Americans secure their financial futures. As always, we're grateful for the dedication of our associates whose contributions each quarter remain our greatest strength.

At this time, I'll turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from Suneet Kamath with Jefferies.

Sorry, I think I just unmuted. Can you hear me?

We can.

Okay. Sorry about that. I wanted to just start with annuities. Do you have a sense of what percentage of your sales represent sort of exchange activity versus sort of true new business?

Suneet, thank you for the question. the first quarter sales, which were very healthy at $5.3 billion, are a reflection of new business without any internal exchanges. So the sales reported would be all new business, minus any internal exchanges.

Okay. And then I guess maybe a bigger picture question -- sorry. Can you hear me?

Yes, we can. Yes.

Yes. Okay. I don't know. There's some background noise. So a bigger picture question. Obviously, there's a pretty large merger of equals going on in the annuity space. We haven't seen one of those in, I don't know, 20 years or so. Just wondering, Laura, if you think this changes the industry dynamic at all? And any thoughts that you could give on overall consolidation in the space would be helpful.

Sure. I agree with you, this is a large change in one that we haven't seen in the industry in quite some time. From a competitive perspective, I would say we compete with both organizations that are recently involved in the merger announcement. We have a diversified product set that I think in comparison to the combined organization will allow us to continue to compete well.

In terms of any other consolidation, I wouldn't have any comment or remarks on what else might occur. But I think we'll continue to compete constructively with both organizations as we have in the past and look forward from our diversified product offerings to continue to focus on growth across all those annuity types.

I can just sneak one in for Don.

Yes.

I'm just going to chime in on Laura's response on the merger of equitable and core bridge. As Laura highlighted, we already have kind of a pretty comprehensive product suite. And we also happen to have one of the largest distribution forces in our space. Our wholesaler group has been quite effective over the last several years, and we're expanding this year. So we feel pretty well positioned both with our product suite and with our distribution capabilities going forward.

Got it. And then just one other one for Don, if I could. Just on Brooke Re and the additional capital that's now in the subsidiary, I guess, related to Hictory, does that change the timing of when you might be able to take dividends out of Brooke Re? And any update there would be helpful.

Sure. Happy to take that question, Suneet. So you're right, we did put $500 million of capital into Brooke Re during the quarter. That's the growth capital that we've designated for Hickory Re. And so we did -- after the capital contribution and the kind of $100 million or so loss we experienced at Brooke Re during the quarter, we're still up in capital there.

In terms of the timing of when we expect to be able to distribute capital from Brooke Re, I believe, as I mentioned on the fourth quarter earnings call. We would anticipate that Hickory Re will start generating capital that we will be able to distribute kind of in the near term. So think about next few years. And then capital that would be distributed from the business that is sitting at Brooke Re kind of on a stand-alone basis, that would be more of a longer-term time frame. Hopefully, that helps.

Our next question comes from Ryan Krueger with KBW.

My first question was on capital generation. I guess given the continued headwinds to alternative investment returns, can you give us any sense of how -- just how sensitive your capital generation is to the alts returns? I know we can look at the dollar to dollar return impact, but I think there's probably also an offset in required capital, given high capital charges against all. So just any sensitivity that you could provide would be helpful.

Yes. Ryan, thanks for that question. So you're right. There is a bit of sensitivity with capital generation. And you do get a bit of an offset given the fact that heavy requires a higher capital charge. But as we look at the results we generated in the first quarter, and just kind of given the recovery in markets since the end of the quarter, equity markets are back near or at all-time highs, and we feel pretty comfortable with capital generation for the full year and being able to hit our $1.2 billion target.

And as a reminder, that was based on kind of a 5% total equity market return. So we feel good about that. We don't see really any issues with our alternative returns, but maybe I'll ask Chris just to chime in and add a little color on how we look at that asset class and our recent performance as well as long term.

Yes. Thanks, Don. Ryan, thanks for the question. Just some flavor to help you as you think about that portfolio, it's predominantly private equity investing with the middle-market buyout focus. We do also have a modest amount of CLO equity and some other fund investments in there.

Returns are reported on a 1-quarter lag there and will reflect market conditions at the time. So nothing we saw in the quarter changes our thoughts around the 10% long-term assumption. In fact, that's a measure that we've outperformed since being public a number of years ago.

And then on the TPG relationship, I know you talked about allocating -- starting to allocate new money to assets managed by TPG. I think you had also talked about maybe an opportunity to reposition some of the existing assets, particularly in the payout annuity book, is that something that -- can you give us any sense of the timing on that? Is this going to take a while to do? Or is that something that could happen more quickly on repositioning of the existing assets?

Yes. Thanks, Ryan. So just in terms of the partnership with TPG, we closed that kind of midway through the quarter. So we have started seeing some capital deployed by TPG. It is early days. And in terms of being able to reposition our overall portfolio, outside of our kind of new business returns, we still do have that potential. We -- and that certainly on our list of things to work through as we get the partnership fully stood up.

Our next question comes from Alex Scott with Barclays.

I hope you can hear me. I just wanted to first ask about the growth that you're seeing in some of the RILA and FIAs. And if you could take us into some of the future changes and things that you're doing to more of the growth? Like can you tell us about it? Are there bonuses on the products? Have you increased cap rates? What are the different features that you're tweaking to make it more attractive?

Alex, thank you for the question. We did throughout 2025 refresh our RILA product. And in the fall, we launched in FIA product as well. Both Don and I have talked about the diversification of our sales being a goal. And the RILA sales are now at 40% of our total retail sales as we had seen in the first quarter.

The product update for RILA was in the mid part of 2025. And that product design has flexibility and choice that is a differentiation from other products that you see in the market in terms of crediting methods, the protection level and the number of indexes that we have available for choice. And then on the FIA front, that launch included a living benefit option as well that can be elected not just at sale, but also post sale, which is a unique feature for the FIA product. We've seen great momentum in sales with the FIA product and expect as we continue through this year that the spread-based sales growth will benefit from not just the product refresh that we've done, but also from the efforts at PPM to seek greater yield the establishment of the captive for fixed and FIA as well as with the partnership with TPG that Don just took the opportunity to talk through. So we're excited about the growth on the spread-based side.

That's helpful. Next question I had is on the PCAPs actually. Is that as interesting as you were describing the PCAPs? You kind of mentioned that it could potentially allow you to run more leaner on capital. And I just wanted to understand if that was something I should pay more attention to. Your RBC ratio and the operating company is pretty high at the moment and your hold through cash is pretty high relative to your threshold. Does adding that kind of contingent liquidity change the way you may be able to manage some of those levels?

Alex, it's Don. So let me first just highlight with our RBC levels. As we've talked about on prior calls, given our shift to continuing to focus on diversifying our business and more focused on the spread-based products, we do expect to see our RBC ratio come down over time. So I would say that's point one.

The second point specifically around the use of PCAPs, we think that the way that facility is structured, it does provide very -- a very good source of contingent capital should we get into sort of a severe stress scenario. And that's one of the features of that facility that we found attractive. We obviously do a very robust stress testing on a variety of different levels. And as we went through our overall enterprise stress testing, felt that a facility like PCAPs provides a good source of capital in a very severe stress environment.

This concludes our Q&A session. I will now turn the call back to Laura Prieskorn for closing remarks.

Thank you. Jackson's strong first quarter performance reinforces the resilience of our business. We look forward to continuing this discussion and sharing our progress toward our 2026 targets after next quarter. Thank you for your ongoing interest in Jackson.

The call has concluded. Thank you for joining. You may now disconnect.

Hello, everyone, and welcome to the Jackson Financial Inc. 4Q '25 Earnings Call. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions]

I'll now hand over to our host, Liz Werner, Head of Investor Relations, to begin. Liz, please go ahead.

Good morning, everyone, and welcome to Jackson's 2025 Fourth Quarter and Full Year 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.

Presenting on today's call are Jackson CEO, Laura Prieskorn and CFO, Don Cummings. Joining us in the room are our President of Jackson National Life Insurance Company, Chris Rob, our Head of Asset Liability Management, Brian Walter, our Chief Actuary, Lin Sun; and our Treasurer and Head of Corporate Development, Dean Scott. At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Liz. Good morning, and thank you for joining our 2025 Fourth Quarter and Full Year Earnings Call. I'll begin with a review of our recently announced strategic actions, followed by a discussion of our 2025 accomplishments, our progress since separation and our 2026 financial targets. 2025 was an exceptional year as we surpassed our financial targets and set records for sales and distribution. We delivered another year of over $1 billion in free capital generation and grew free cash flow while providing initial funding for our new captive reinsurer, Hickory Reed. Following my remarks, our CFO, Don Cummings, will discuss our financial performance in further detail.

Beginning on Slide 3, Jackson's execution focus and core capabilities have been steadfast and are evident in both our success as a leading provider of retirement solutions and our performance as a public company. As an important next step in Jackson's growth, we recently closed on our previously announced strategic partnership agreement with TPG -- this long-term partnership will support accelerated growth of our spread-based business and future flexibility.

TPG's unique investment capabilities and collaborative culture align well with Jackson and our teams have already been working closely together. Our partnership with TPG, combined with the capital efficiency from our captive strategy positions us well for fixed and fixed index annuity sales momentum. Turning to Slide 4, our strong full year operating results drove nearly 12% growth in our adjusted operating earnings, supported by stable fee income and increased investment spread earnings. Our commitment to shareholder capital return and the benefit of share repurchases resulted in over 20% growth in adjusted operating earnings per share for the full year.

As a reminder, our net income includes the impact of our annual assumption review and net hedge results, which Don will discuss. Over the course of 2025, our sustained profitability and disciplined capital management resulted in well over $800 million in free cash flow and capital return. Importantly, -- we expect to maintain our balanced approach to capital management, focusing on financial strength, future growth and capital return to shareholders. We achieved the highest quarterly and annual retail annuity sales since going public in the fourth quarter and full year 2025. Continued growth in RILA, combined with accelerated growth in our recently introduced fixed index annuity have deepened our distribution relationships and diversified our business. For the full year, retail annuity sales of nearly $20 billion are at their highest level since 2019, and net flows improved for the quarter and full year.

While the strong equity market continues to impact net flows and our healthy variable annuity book, our RILA and FIA sales are an increasing offset to VA lapses. These strong sales in a favorable market contributed to the 7% increase in total retail annuity account values to $269 billion at 2025 year-end.

Turning to Slide 5. We exceeded all our 2025 financial targets, surpassing the high end of our capital return target range with over $860 million returned to common shareholders. We also ended the year with over $650 million in holding company liquidity and an RBC ratio of 567%, free capital generation was over $1 billion for the second year in a row. As a result, we distributed over $1 billion from our operating company, Jackson National Life to our holding company a 27% increase from 2024.

We expect our strong capital generation to both support growth and continued capital return and we have established a new financial target for free capital generation, reflecting our view of future profitability. Our accomplishments last year are significant, not only on a single year basis, but also as they reflect Jackson's continued progress over more than 4 years.

Slide 6 highlights the significant growth in capital return since separation due to our strong cash flows and prudent capital management. Beginning in 2021, when we launched as a public company in each subsequent year, Jackson increased its common shareholder dividend and raised its targets for capital return to common shareholders. During this time, we managed through periods of external market volatility and form the captive for [indiscernible] That allows for more economic hedging and has significantly improved capital stability.

Furthermore, Jackson's commitment to investing in our business supports our continued track record of capital return. Turning to Slide 7. Our ongoing product innovation has resulted in sales growth and greater business diversification. This year was no exception, and we saw the benefits from our second quarter launch of Jackson's MarketLink Pro 3 and Market Link Pro Advisory 3, which we refer to as RILA 3.0.h -- in the fourth quarter, RILA sales set a record at nearly $2.3 billion and for the 2025 full year, RILA sales rose 22%. RILA account value at 2025 year-end was $20 billion, a 14% increase from third quarter 2025 and a 74% increase from 2024. We expect RILA to remain a valuable offering for our advisers and their clients, and RILA 3.0 offers a broad range of index and crediting options, along with valuable protection benefit.

In addition to RILA, our recently launched fixed index annuity, Jackson Income Assurance was a significant contributor to fourth quarter sales -- and looking ahead, we expect this offering to provide further diversification in our new business mix. Importantly, RILA and FIA have broadened our distribution reach, resulting in expanded broker-dealer partnerships and deeper relationships with advisers selling multiple Jackson product line. We also see momentum in the fee-based advisory business, where 2025 sales reached a record $1.5 billion.

The growth was broad-based as our investment-only variable annuity, elite Access and our RILA offering accounted for over 2/3 of advisory sales, while our traditional variable annuity accounted for nearly all of the remainder. Jackson's expanding annuity product portfolio allows advisers to best meet their clients' individual retirement planning goals. In our fifth year as an independent public company, we are well positioned with a more diverse product suite and broader distribution than at separation.

Turning to Slide 8. As we look ahead to 2026, we expect our partnership with TPG and our captive strategy will contribute to stronger and more stable capital generation. As a result, we believe free capital generation will reach or exceed $1.2 billion given our healthy book of business and outlook for profitable growth. We are also raising our capital return targets for the fifth time, setting a 2026 target of $900 million to $1.1 billion. A 16% increase from our 2025 actual capital return of $862 million.

Jackson's free capital generation provides greater visibility into potential free cash flow and sustainable capital return to shareholders. To that end, our Board approved our fifth increase in our quarterly dividend to $0.90 per share, a nearly 13% increase over our prior quarterly dividend. We believe Jackson's approach to capital management, balancing investment in our business, maintaining financial strength and returning capital to shareholders will continue to serve all stakeholders.

At this time, I'll turn the call over to Don.

Thank you, Laura. Let's turn to Slide 9 and walk through our consolidated financial results for the fourth quarter. We delivered adjusted operating earnings of $455 million, driven by continued strength across our spread-based products. Earnings benefited from the ongoing expansion of our RILA 6 and fixed index annuity lines as well as our institutional products. We also saw a favorable operating earnings impact this quarter from our annual actuarial assumption review which added to the solid performance. As always, our spread-based products are supported by a high-quality, conservatively managed investment portfolio. Diversification and strong credit quality remain core to how we manage the portfolio, and that discipline continues to serve us well. Our spread-based product sales reflect the enhanced asset sourcing capabilities at PPM America.

PPM's work has allowed us to direct new money and to select higher-yielding asset classes. -- such as emerging markets, residential mortgages and investment-grade structured securities. This modest shift in new money allocation combined with a compelling product lineup, has helped Jackson maintain a stable and competitive position in the spread product market throughout the back half of 2025.

And looking forward, -- we're excited about the momentum created by our new strategic partnership with TPG, along with the ongoing benefit of our capital-efficient captive strategy. Together, these initiatives will further strengthen our ability to offer competitive spread products that generate attractive financial returns.

Given the recent headlines around asset-based finance and direct lending, -- it's worth noting that Jackson is currently underweight in these asset classes compared to our peers. We actually see potential market stress as an opportunity to step in and be selective investors. Additionally, TPG's expertise in direct lending, where they emphasize strong covenants and deep credit knowledge in the lower middle market segment positions us well as we gradually build exposure in this space.

Now before we get into the notable items for the quarter, I'd like to take a moment to highlight our strong performance in book value per common share. Over the course of the year, we returned $862 million of capital to shareholders. As you would expect, that level of return contributed to a modest decline in total adjusted book value since year-end 2024. But importantly, our share repurchase activity reduced the diluted share count, which helped drive a 4% increase in adjusted book value per share, bringing it to $155.78. We're also very pleased with our profitability metrics. Our adjusted operating return on common equity for the year came in at 14.7%, up from 12.9% in 2024, reflecting the underlying strength and resilience of the business.

Turning to Slide 10. Let me walk you through the notable items that affected adjusted operating earnings this quarter. We reported adjusted operating earnings per share of $6.61, after backing out $0.10 of notable items and adjusting for the difference between our actual tax rate and our 15% tax guidance, adjusted operating EPS was $6.43. That's a 33% increase from last year's fourth quarter. The improvement reflects the strong spread income growth I mentioned earlier, along with the benefit from a lower diluted share count because of our repurchase activity.

As we typically do, we completed our annual actuarial assumption review in the fourth quarter. This year's review resulted in a $0.23 per share operating earnings benefit compared to a $0.31 unfavorable impact in the prior year quarter. The 2025 update primarily reflected favorable mortality trends which supported operating income in both our Retail Annuities segment and our Closed Block. The only other notable item this quarter was a $0.13 unfavorable impact from limited partnership results, which came in below our long-term 10% return assumption.

Moving to Slide 11. This chart walks through our notable items for the full year. After adjusting for those items, our 2025 earnings per share were up 22% compared to last year. That growth was driven primarily by the strong improvement in our spread earnings, along with the benefit of a lower diluted share count from our repurchase program. On Slide 12, we take a closer look at the diverse and growing new business profile within our Retail Annuities segment. The segment delivered 27% growth over last year's fourth quarter and 10% growth sequentially. Our RILA product suite continues to be a standout. We achieved record sales of $2.3 billion, up 53% from the prior year quarter and 10% from the third quarter. Since launching the product in 2021, RILA assets under management have grown steadily and reached a record high of more than $20 billion at the end of 2025.

As I mentioned earlier, our spread products are also benefiting from strong momentum. The successful launch of our new FIA offering contributed to $812 million in fixed and fixed index annuity sales during the quarter. With our recently announced strategic partnership with TPG, we feel very well positioned to continue this growth and expand the potential of our spread-based business.

Turning to net flows. Our strong RILA sales and spread product performance drove $2.8 billion of nonvariable annuity net flows in the fourth quarter. On the variable annuity side, net outflows have remained somewhat elevated. This reflects several expected factors, the current moneyness of the block an aging policyholder base and the impact of older, larger sales vintages coming off their surrender periods. On a full year basis, our surrender rate was essentially flat, reflecting overall strong equity market returns. We saw some quarterly fluctuations in surrender rates this year.

In the first half of 2025 surrenders improved as market volatility kept policyholders on the sidelines. But since April, as equity markets reached new highs, we've seen surrenders pick up in the second half of the year. Looking ahead, we expect surrender activity to remain closely tied to what's happening in the equity markets. Importantly, those same strong market returns generated over $28 billion of separate account investment performance for the year, over $9 billion more than our variable annuity net outflows. This helped drive 2.8% growth in variable annuity account values and supported the strong levels of fee income we delivered throughout the year.

Slide 13 gives an overview of pretax adjusted operating earnings across each of our business segments. Starting with retail annuities, we continue to see strong momentum in our spread business. That performance helped lift our average retail annuity AUM to $268 billion, up from $254 billion in last year's fourth quarter. This growth more than offset the lower favorable impact from this year's actuarial assumption update, resulting in pretax adjusted operating earnings that were $19 million higher than the prior year quarter.

In our institutional segment, pretax adjusted operating earnings were also up year-over-year. The increase reflects higher spread income driven by our expanding book of business. New business activity was elevated throughout the year, supported by strong demand for spread lending and our ability to act opportunistically in the market. Finally, in the Closed Block segment, pretax adjusted operating earnings improved compared to the fourth quarter of last year. The primary driver was a comparatively favorable impact from the annual actuarial assumptions update.

Let me draw your attention to Slide 14, which really highlights how the quality and structure of our variable annuity book set us apart and support our economic hedging strategy. With Brook Re, we've created a framework that lets us align our variable annuity hedging directly with the economics of our guarantees. Our VA guarantees at Brook we are well protected and we're seeing stable regulatory capital and distributable earnings at Jackson National Life. That's been clear in our strong free capital generation, free cash flow and capital return over the past 8 quarters.

This structure also benefits how we manage our RILA business. RILA remains at J&L, separate from the variable annuity guarantees and is managed and priced on a stand-alone basis. All capital generation from RILA flows through J&Ls results. There's a natural equity offset between RILA and our variable annuity guarantees. RILA is exposed to upside equity risk, while the VA guarantees are exposed to downside risk. Each is reserved and capitalized independently, VA guarantees under our modified GAAP framework at Brook Re; and RILA under the statutory regime at J&L with no diversification benefit between the two. While we don't get a capital or reserving benefit from these offsetting risk, we do gain hedging efficiency by netting them internally, which reduces our need for external equity hedging. And if RILA grows to surpass variable annuities in terms of equity risk, that benefit continues. Our external hedging would just shift from downside to upside protection.

We see this structure as a real differentiator, underscoring our consistent economic approach and the strong performance of our book. We're confident in the quality of our annuity business, and our ability to manage risk effectively. Slide 15 walks through a waterfall comparing our fourth quarter pretax adjusted operating earnings of $529 million to the GAAP pretax loss attributable to Jackson Financial of $376 million. We've heard your feedback. So this quarter, we're also providing additional disclosure that breaks out our net hedging results for VA and RILA separately. This should give you a clearer view of how the offsetting equity risk between these businesses are playing out in our results and hopefully make it easier to compare JFI's net hedge results with what's happening at Brook Re.

One of the themes I want to highlight here is the continued stability in our nonoperating results. Since shifting to a more economic hedging approach at the beginning of 2024, we've seen a meaningful improvement in consistency which has also supported stronger and more predictable capital generation. Our total net hedge result for the quarter was a net loss of $405 million, driven largely by the impact of equity index implied volatility.

Let me break the components down. Our hedging program is supported by a robust and stable stream of guaranteed benefit fees which are assessed on the benefit base, not account value. This structure means our guarantee fee revenue remains consistent even during market downturns, helping to smooth earnings across cycles. In the fourth quarter, guarantee fees totaled $800 million, bringing the full year figure to $3.1 billion. This continues to demonstrate the durability and predictability of this revenue source.

Turning to hedging instruments. Our hedging program produced a $370 million net loss in the quarter. This was primarily driven by losses on interest rate hedges as long-term rates moved higher and losses on VA equity hedges from modest gains in equity markets. Our new disclosure really brings out how the RILA business naturally offsets our VA equity exposure. When markets move higher, we typically see losses on our VA hedges but those are often balanced by gains on our RILA hedges. This dynamic helps drive better overall hedge efficiency for the portfolio. We recorded a $405 million MRB loss related primarily to our variable annuity guarantees. The biggest driver here was higher equity index implied volatility during the quarter. It's worth noting that implied volatility does not impact the MRB calculation at Brook Re because that entity uses a fixed volatility assumption, an approach designed to enhance balance sheet stability.

Excluding the impact from volatility, MRB movements were modest this quarter, and our VA net hedge results track closely with expectations. We also recognized a $393 million reserve and embedded derivative loss, reflecting higher RILA reserves tied to stronger equity markets. Much of this impact was offset by gains on our RILA hedges. Stepping back, after isolating the volatility effects I just mentioned, our overall net hedge result for the quarter was a modest $62 million loss, a very stable outcome, especially given the size and complexity of our liability profile. We believe these results underscore the effectiveness of our hedging program in supporting capital stability, managing economic risk proactively and preserving the durability of our business model.

Lastly, our annual actuarial assumptions review resulted in an unfavorable impact of $360 million. This was driven mainly by higher reserves from updated policyholder behavior assumptions, including lapses. These increases were partially offset by favorable mortality updates, and some model refinements. Given the scale of our variable annuity block, we view the overall impact of these updates as very manageable.

Now let's turn to Slide 16 which walks through how Brooke Re's equity position evolved over the course of 2025. Throughout the year, Brooke Re's capital position proved resilient, and we continue to build on our base of hard assets. reinforcing the overall strength of the balance sheet and Brooke's self-sustaining design. We started the year in a strong position, about $2.1 billion of capital, which put us well above both our internal risk framework and our minimum operating capital requirements. For the full year, Brooke Re generated $27 million of capital before the annual actuarial assumptions review. Given the market volatility we saw in the second quarter and the higher lapse rates during the year, that's a solid result. Even with those headwinds, we still grew our capital base, which underscores the strength of our hedging and risk management under the Brooke re structure.

Now the assumption review had a $349 million after-tax impact. This differs a bit from what we saw at the consolidated JFI level mainly because JFI includes nonvariable annuity business. The changes at Brooke Re were mostly tied to updates in lapse and utilization assumptions and reflect our long-term best estimate expectations of behavior. We expect those updates to lead to better actual to expected results in 2026 compared to the last couple of years if experience is similar. At year-end, Brooke Re's equity stood at $1.7 billion before we formed and capitalized Hickory Re. Even at that level, we were comfortably above both our internal and regulatory capital thresholds. Once we added the initial capitalization for Hickory Re, reported year-end equity increased by another $150 million, bringing total reported equity to just under $1.9 billion.

Shifting to how we think about risk and capital management at Brooke Re, our goal is to make sure the entity always holds enough capital to stay well above minimum operating capital, even under stress. When we first launched Brooke Re, we discussed how our capital framework was built to hold up under stress. Specifically, to give us 95% confidence that we can withstand a wide range of market scenarios. That confidence level comes from running a robust set of stochastic scenarios to illustrate how our capital position would perform over time. At launch, we didn't just meet the 95% confidence level. We actually capitalized Brooke Re well above closer to the 98th percentile of our projected capital distribution. In other words, we started from a position of real strength.

At the end of 2025, we continue to be capitalized well into the tail, consistent with the 98th percentile and beyond. So overall, 2025 was a year that tested the structure and Brooke Re performed exactly as intended, maintaining strength through volatility and positioning us well heading into 2026. We expect Brooke Re to remain self-sustaining under normal market conditions and over time, we see it becoming an additional source of free cash flow.

Slide 17 highlights the continued growth in our capital generation and free cash flow. At Jackson, we follow a straightforward philosophy, earn it, then pay it. This framework rests on 3 pillars: Generating free capital, this is where we earn it, converting that capital into free cash flow, this is where we pay it and returning capital to common shareholders, the outcome of the first 2 steps working together. In the fourth quarter, after-tax statutory capital generation was $266 million. We view this metric as one of the clearest indicators of the underlying strength of our business, and it guides how we balance future growth with returning capital to shareholders.

Quarterly capital generation was reduced by a onetime reserve increase of about $150 million or about $173 million, including deferred tax impacts, primarily related to the runoff Closed Block. This adjustment was not related to variable annuities or RILA. Excluding this nonrecurring item, capital generation was broadly consistent with the run rate we saw over the first 9 months of the year. Free capital generation was $235 million in the quarter, reflecting the estimated change in required capital driven by our strong and diversified new business results. For the full year, free capital generation totaled nearly $1.4 billion, well ahead of our $1 billion-plus expectation. As Laura mentioned, we've now added free capital generation to our financial targets for the year.

In 2026, we expect to generate at least $1.2 billion in free capital, assuming equity markets deliver a 5% return and interest rates move in line with the year-end forward curve. While we're maintaining our RBC risk appetite at 425%, and the stability we've seen in RBC over the past 2 years gives us confidence to shift our focus toward free capital generation, aligning with our earned then pay it approach. Free cash flow was again strong and consistent in the quarter. After funding the $150 million initial capitalization of Hickory Re and covering expenses and other cash flow items, free cash flow at the holding company totaled $119 million.

For the full year, we distributed over $1.1 billion to the holding company and generated $838 million of free cash flow. Based on our year-end market capitalization, that represents a free cash flow yield of about 12% for 2025. While valuation reflects many factors, -- we believe this is a powerful indicator of Jackson's value, and it reinforces our commitment to continue repurchasing shares while also investing in growth. Our strong free capital generation and growing free cash flow enabled us to return $205 million to common shareholders in the fourth quarter, a 51% increase from the prior year quarter on a per diluted share basis.

For the full year, we returned $862 million, above the top end of our disclosed range. Since becoming an independent public company, Jackson has now returned more than $2.7 billion to common shareholders, exceeding our initial market capitalization at separation. As Laura highlighted, we're increasing our capital return targets again, our raise since going public, setting a target of $900 million to $1.1 billion up from the $862 million we returned in 2025.

Our strong capital position and high-quality book of business underpin our ability to generate free capital well beyond 2026. This consistent capital generation supports a sustainable stream of free cash flow and enables continued capital returns to shareholders. Looking ahead, we expect growth in free capital generation to accelerate in line with the ongoing growth of our business. These results reinforce Jackson's robust capital generation profile the stability and growth of our cash distributions and our continued focus on delivering enhanced long-term value for shareholders.

Turning to Slide 18, this slide highlights the continued growth in our capital and liquidity position. Our in-force business continues to be a strong driver of profitability. Fee income from our variable annuity based contracts along with growing spread-based earnings supported solid capital generation during the quarter. At Jackson National Life, our capital position and RBC ratio have become much less sensitive to equity market movements, thanks to the Brooke Re structure. Today, changes in the equity markets primarily affect our assets under management and future capital generation, not our immediate capital levels or RBC ratio.

In that sense, our earnings profile is looking more and more like an asset management business. Consistent with our approach of taking smaller periodic distributions, we paid $300 million to the holding company during the fourth quarter. After accounting for the impact of that distribution on our deferred tax assets, total adjusted capital ended the quarter just over $5.5 billion. Our RBC ratio came in at 567%, comfortably above our minimum target. Overall, we believe Jackson is operating from a position of real strength as we move into 2026. As I mentioned earlier, Brooke Re's capitalization remains well above both our internal risk management target, which reflects a range of detailed scenarios and our regulatory minimum operating capital level.

During the quarter, there were no capital contributions to or distributions from Booke Re, other than the initial capitalization of Hickory Re. Looking ahead, we'll continue to manage Brooke Re on a self-sustaining basis, given the long-term nature of its liabilities. As we announced last week, -- our strategic partnership with TPG has officially closed. The growth capital from that transaction will flow down through the ownership chain to Hickory Re. Just as a quick reminder, we received $650 million in value from the deal and issued $500 million of common stock. That equates to roughly 4.7 million shares at an effective premium of 30% at the time of signing. It's a great outcome that further strengthens our balance sheet and supports future growth.

At the holding company level, we ended the quarter with $691 million in cash and investments, still above our minimum buffer and providing strong financial flexibility. That's down from $797 million in the third quarter, mainly reflecting the funding of our new captive and capital return to shareholders, which more than offset the operating company dividends. Overall, our fourth quarter results show strong momentum, supported by a solid balance sheet, healthy capital and liquidity levels and a business that's well positioned for continued success.

I'll now turn the call back to Laura.

Thank you, Don. Turning to Slide 19. You can see our track record of executing on our business initiatives, delivering on our financial targets, and creating value for all stakeholders. 2025 marked another year of significant progress and an important milestone for Jackson as we look forward to new growth opportunities. We expect our long-term partnership with TPG to leverage our core capabilities and lead to an expansion of our spread-based business. Jackson remains dedicated to serving financial professionals and their clients with the goal of helping Americans grow and protect their retirement savings and income.

As we reflect on the year and our opportunities ahead, we recognize the hard work of all our associates whose talent and dedication remain our greatest strength.

At this time, I'll turn it over to the operator for questions.

[Operator Instructions] Our first question comes from Suneet Kamath of Jefferies.

I had a couple on Slide 16. Just in terms of the capital levels, I mean, you've kind of given us a qualitative sort of framework for how you think about the minimum capital. But I'm just wondering is there any way that you can kind of give us a little bit more of a target, so we can track this over time.

Suneet it's Don. So first of all, just on Brooke Re, I think it's important to kind of zoom out and put our progress since early 2024 in perspective. And when we formed Brooke re, we had shared quite a bit of detail around how we think about and manage capital there. And when we first set it up, the liability profile was almost entirely tied to our variable annuity guarantees. Now since then, we've taken a couple of important steps, both of which happened in the fourth quarter, and we believe those will give Brooke a more diversified liability and capital profile than it had initially.

So I want to just spend a minute and cover what those are. First of all, we reinsured about $1.3 billion of payout annuity liabilities on a call insurance basis with assets transferring over to support that block. And these liabilities are somewhat similar to the GMWB benefits on our VA book. But importantly, they don't have any equity market exposure. -- which means that, that block is going to be more stable over time. And another thing to keep in mind as we bring on assets through our partnership with TPG we do see opportunities to enhance the profitability of that payout annuity plan.

Secondly, we did establish Hickory Re as a subsidiary of Brooke Re and we ceded roughly $1.2 billion of in-force assets and liabilities into that structure. And there are a few advantages that I want to highlight here. Firstly, the modified gap framework, we already use a Brooke Re is well understood by our regulator, and it's worked effectively over the past 2 years. So it made sense to kind of build on that foundation rather than setting up an offshore structure which would just add cost and complexity to us.

With respect to the liabilities at Hickory Re, which are the fixed annuity and fixed index annuity liabilities, we also get a diversification benefit in our minimum operating capital calculation, and that benefit should increase as the block grows with new sales. And then over the next couple of years, we do expect Hickory Re will be an additional source of free cash flow for us. And longer term, we believe that Brooke Re on a stand-alone basis we'll also be generating sufficient capital to support distributions back to the holding company. And then finally, the growth capital from that came in at closing. That gives us more flexibility at J&L because it frees up excess capital that we otherwise would have used to fund our accelerated growth plans for spread products. And so that gives us confidence in stepping up our capital return plans as we've laid out in our financial targets. And as I've mentioned on prior calls, we would expect our RBC ratio to come down over time. So we're very comfortable with the performance and the balance sheet strength that we have at Brook Re and we'll continue to update you on progress there as we go throughout the year.

Okay. That's helpful. And then I guess the second question on the slide is the $27 million of capital generation. It just seems like a low number, especially in a pretty favorable equity market environment. I know in your prepared remarks, you called out a couple of things, the surrenders and I guess, volatility. But -- can you not mention how big of an impact that had on capital generation? Or maybe said another way, what would you expect normal course capital generation to be?

Yes. We haven't provided guidance in terms of kind of normal market environment, capital generation. But you're right, the 2 items that I mentioned in my prepared remarks, -- the first one related to the volatility that we saw in the early part of the second quarter, and that certainly was a headwind for us. And then the second item, and we do provide some disclosure on this in our financial supplement in the MRB roll forward. We did see some pressure from higher-than-expected surrenders. The overall objective for Brooke Reis to keep it be self-sustaining over time. And we continue to believe that, that will be the case. It's just so happens that this year, we did see a couple of headwinds that resulted in the numbers you see here.

Our next question comes from Alex Scott of Barclays.

First thing I wanted to ask about was just the initiative with TPG. And what -- any way to help us think through what that could mean for growth in the retail annuity platform. And ultimately, that will lead to flows. And so maybe not asking for an outlook, you probably don't want to give an outlook for flows per se, but maybe just talking what that will look like and when you could maybe expect to get to growth mode for AUM overall from a flow standpoint.

Good morning, Alex. Slightly hard to hear. I think you were asking about the partnership with TPG and what the growth outlook looks like as a result of that partnership.

Sorry about that. I switched to the headset. Yes, you had the question, right, apologies.

Okay. Thank you. Our overall goal is to have a diverse set of competitive products that continue to meet a variety of consumer needs. Within the industry overall, we've continued to see strong demand for a variety of needs, income, protection, growth, legacy benefits. So having that broad range of annuity offerings helps support that goal that we have for diversifying sales. Don, do you have anything to add around the TPG partnership to support that goal?

Yes. So Alex, thanks for that question. I would say that I would just highlight the progress that we made in spread products over the last half of this past year. We introduced a new product in late in the third quarter that really came online fully in the fourth quarter. That's our fixed index annuity product. And you can see we did between that and just other spread products, about $800 million in the quarter. I think that's probably a good yardstick to think about how much we can generate on an annual basis with the TPG partnership in place. The other point that I would highlight for you is that we'll be leveraging the TPG assets for other product lines outside of just fixed annuities and FIA products.

We also anticipate -- some of those assets will fit in well with our RILA asset allocation strategy as well as even some on our institutional products. So we feel quite comfortable that as you look at our results going forward, we'll continue to be able to produce strong retail annuity sales results. And in terms of your question on when we would expect to get to kind of flat net flows, I would say it probably is going to take us a couple of years to sort of have the additional levels of sales coming in to offset what we're seeing on the VA book. And of course, with the VA book, that's going to depend on market environments because as we saw this year, even though we did have net outflows, we had investment performance that offset that by about $9 billion.

So we're pretty optimistic about the partnership with TPG and how that's getting operationalized.

Great. Another question I had is on the Hickory Re, just thinking through your comment that, that could be a medium-term contributor to remittances versus brokery more long term. if you had cash flow coming out of Hickory Re, since it sits underneath Brooke Re would that cash flow -- can we assume that in the medium term, that cash flow could be taken up to the holdco and go through Brooke Re even if it's not sort of Brooke Re stand-alone. I just wanted to clarify that point whether it would be retained or not? And then maybe any other comments you have on just potential uses of excess capital you have at the HoldCo and J.

Yes. So you're right about the way the Hickory restructure works. So any dividend that we would pay would go up to Brooke Re -- and then we would anticipate assuming there's not anything unusual going on with markets at the time that we would then be able to distribute that up through Brooke Re to our holding company, similar to the way we do today with our stacked structure on the J&L side. So you have that right -- and just in terms of other uses of excess capital, we continue to be focused on growth. We think we have a very good opportunity with our broad distribution network to really focus in on the spread sales here in the near term. And as other opportunities come up for us to grow inorganically, we would look at those relative to how we can leverage that capital for returning to shareholders. .

Our next question comes from Tom Gallagher of Evercore.

A few questions. First is just on the Brooke Re equity. If you have a net MRB asset of $4.2 billion, how is the Brooke Re equity only $1.7 billion? What would the other accounting adjustment be on where the value of the net MRP asset is going to. .

Yes. Thanks for that, Tom. So you're looking at 2 sort of components of the balance sheet, and I'm not going to get into all the kind of puts and takes, but we obviously have other assets at Brooke Re as well as liabilities. And so obviously, the net of all those represents the equity that we have left. As I mentioned in the kind of the more overview and putting Brooke Re in perspective. We have done a couple of transactions in the fourth quarter with the blocks of business that we reinsured into Booke Re as well as into Hickory Re. So if you look at Brooke Re's consolidated balance sheet, we have a pretty strong position in terms of invested assets.

Also, if you look at the capital that we put in initially, which was a total of $1.9 million and $700 million of that was hard assets. We've seen that grow over the last couple of years as we've executed on the reinsurance settlements.

Got you. And Don, can you update us on what the hard assets are in Brooke Re at this point?

Yes, I'm not going to give you the exact number, but I would just say that the $700 million has grown pretty significantly. So that's the kind of the stand-alone VA piece. And as I mentioned earlier, those blocks that we moved over in the fourth quarter, those were supported by invested assets as well. So we believe Brooke Re has got a pretty strong consolidated balance sheet. And even if you look at the VA and the payout annuity lines of business separately, we're quite comfortable there, too.

Got you. And then just my follow-up is -- if we think about the annual actuarial review charges, if lapses do remain high on the VA side, and you have another year of, we'll call it, close to breakeven hedging on VA, the $300 million to $400 million that you've been having every year would be a decent percentage of this $1.7 billion. So I guess, when we think about playing that out for the next 2 or 3 years, is there a risk that you would have to contribute capital to Brooke Re? Because I know you said you have a buffer, I think it was 98% plus versus 95 CTE level currently. But if I think about just what's happening .

Lenson, our new Chief Actuary to kind of give a little bit of perspective on our actuarial assumption review process. But just in terms of thinking about how that could impact capital are, 1 of the things that I mentioned in my prepared remarks was that because the assumption updates that we included in the fourth quarter, those were primarily focused on lapses and benefit utilization. So we would expect that A versus E policyholder behavior that we disclosed in the MRB roll forward, we would expect that to close somewhat. And so that would certainly be helpful. And we'll continue to see how markets play out. As you know from our prior discussions, we do tend to see a slowdown in surrender activity when equity markets are volatile or in periods where equity markets decline.

We saw that clearly in 2002, if you look back on our results then. But maybe, Lynn, if you could just add a little bit of color around what we went through on the actuarial assumption review.

Happy to. So as you mentioned on the majority of the assumption unlocking impact in 2025 was due to updating our long-term assumptions on lapses. Over the last few quarters, similar to other carriers in the industry, we saw an increase in lapses on our annuity book. We also saw fluctuations once a month and quarter-to-quarter lapses decreased -- we saw a trend of that in the first half of 2025 before they increase again in the second half of the year.

Our analysis shows that the elevated lapse experience was particularly prevalent for variable annuity policies with GLWB at the money or slightly in the money relative to their company. And we've updated our assumptions to reflect that dynamic. -- based on my prior experience in the industry, I'm confident that our annual assumption process is robust, and we're well positioned for evaluating experience and bringing in the data when it becomes credible and it affects our long-term view of experience.

Thank you very much. We have no further questions registered on today's call, and therefore, this concludes the Q&A session. I'll now hand the call back over to Laura Prieskorn for any concluding or final remarks.

Thank you. As you've heard this morning, 2025 was an exceptional year of progress for Jackson. We look forward to continuing these discussions and sharing our progress toward our 2026 target after the first quarter. We thank you all for joining us today and your continued interest in Jackson.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.

Hello, everyone, and welcome to the Jackson Financial Inc. 3Q '25 Earnings Call. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions]

I'll now hand the call over to our host, Liz Werner, Head of Investor Relations to begin. Liz, please go ahead.

Good morning, everyone, and welcome to Jackson's Third Quarter 2025 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' 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.

Presenting on today's call are our CEO, Laura Prieskorn; and our CFO, Don Cummings. Joining us in the room are our President of Jackson National Life Insurance Company, Chris Raub; our President of PPM, Craig Smith; and the Head of Asset Liability Management, Brian Walta.

At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Liz. Good morning, and thank you for joining our third quarter 2025 earnings call. I'll begin by reviewing the quarter's positive results, including strong sales growth and diversification, robust capital generation and consistent capital return to shareholders. Following my remarks, our CFO, Don Cummings, will discuss our financial performance in further detail.

Beginning with Slide 3. Jackson's third quarter performance highlights our strong earnings diversification and healthy book of business. Adjusted operating earnings of $433 million increased over 20% from the year ago quarter, led by our Retail Annuities business. Retail Annuities continued to see significant growth and diversification from investment spread income as well as solid fee income from nearly $240 billion of separate account value. Retail annuities sales for the quarter reached their highest levels since we became an independent company, exceeding $5 billion for the quarter, driven by growth in RILA and traditional variable annuities.

Last quarter, we highlighted the launch of Jackson's Market Link Pro 3 and Market Link Pro Advisory 3, which we refer to as RILA 3.0. The positive reception to RILA 3.0, combined with a robust RILA market, resulted in record sales of $2 billion in the quarter, accounting for 38% of overall retail annuity sales. We expect RILA to remain a valuable source of growth, providing sustainable investment spread income and earnings diversification.

Our RILA account balance approached $18 billion, a 21% increase from the second quarter and a 74% increase from the prior year. While the RILA market continues to evolve and grow, we believe our RILA 3.0 product offerings provides advisers and their clients with a broad range of index and crediting options and a valuable range of protection levels. Jackson's long-held focus on product innovation and consumer choice has differentiated us and is highly valued by our distribution partners and their clients.

Our RILA offerings continue to drive growth in the breadth and depth of our distribution. Since launching RILA 3.0 in May, we've added over 500 new advisers. Our new RILA relationship with JPMorgan Chase is one example of accelerating RILA sales through a valued partnership.

Traditional variable annuities remain core to our business and accounted for over 1/2 of our third quarter retail annuity sales. Variable annuity sales increased 13% from the second quarter and 8% from a year ago. The growth of variable annuities sold without a lifetime benefit continued and sales increased 24% for the first 9 months of 2025. Year-to-date, variable annuity sales without a living benefit accounted for 38% of Jackson's total variable annuity sales.

Importantly, average variable annuity balances increased by $10 billion from the second quarter, supporting an increase in third quarter fee income of 8% quarter-over-quarter. Variable annuity net outflows improved from a year ago and were consistent with strong equity market performance.

For the third quarter, strong investment performance exceeded the impact of net flows by over $7 billion. The diversity of Jackson's variable annuity fund offerings remains a valued feature and, for the first 9 months of 2025, separate account performance exceeded 13%. We continue to believe the asset growth potential, investment flexibility and guaranteed income provided by Jackson's traditional variable annuities a long-term need for millions of Americans retiring each year. This profitable book of business exhibits Jackson's thoughtful product design and disciplined risk management capabilities.

Fixed and fixed index annuity sales reflect our opportunistic approach to pricing and have contributed to our sales diversification. Looking ahead, we expect our recent fixed index annuity launch will contribute to future sales growth. The Jackson Income Assurance suite has an embedded guaranteed minimum withdrawal benefit designed to meet consumer demand for income and protected growth. Jackson's fixed index products further expand our portfolio of annuity solutions, meeting a wide range of retirement planning goals for advisers and their clients.

Complementing the growth of our business is the investment expertise and asset growth of our investment manager, PPM America. Last quarter, we highlighted PPM's additional investment capabilities, which support the competitiveness and profitability of our spread-based products in the market. We believe our disciplined approach to the market, combined with incremental yield provided by PPM investment capabilities, position us well for future growth and profitability across spread-based annuity solutions.

The profitability of our in-force business and capital generation resulted in continued free cash flow and capital distributions. Through the first 3 quarters of this year, free capital generation exceeded $1 billion and free cash flow was $719 million. Quarterly distributions to our holding company through the first 9 months of this year have totaled $815 million. These strong results lead us to believe we are well positioned to maintain capital flexibility at our holding company and sustain future capital return to our common shareholders.

We continued to return capital consistently and for the third quarter returned $210 million, bringing our year-to-date capital return totaled to $657 million. Given this pace and our outlook for the fourth quarter, we expect to exceed our 2025 capital return target range of $700 million to $800 million. Since becoming an independent company, we have returned nearly $2.5 billion to common shareholders, exceeding our initial market capitalization. We believe that our balanced approach to capital management will continue to support Jackson's financial strengths, ongoing investments in long-term growth and future capital return to shareholders.

Turning to Slide 4. We began the fourth quarter with great momentum and are approaching the end of 2025 in a very strong position with respect to all our financial targets. I've already addressed capital return and would add that in September, our Board of Directors approved a $1 billion increase to our common share repurchase authorization. Yesterday, we announced our Board also approved a fourth quarter cash dividend of $0.80 per common share. We believe shareholder dividends underscore our outlook for long-term profitability and, combined with share buyback, highlight our commitment to shareholder returns.

Over the course of 2025, our strong capital generation resulted in a risk-based capital ratio that was consistently well above our targeted minimum level of 425%, and we ended the third quarter at an estimated 579%. In addition, at the end of the quarter, the cash and liquid securities position at our holding company was over $750 million.

Our strong capital position combined with holding company liquidity provides valuable capital flexibility. Jackson's resilient capital, effective hedging strategy and disciplined risk management have enabled us to navigate through periods of market uncertainty. In today's environment, we believe this experience is essential to maintaining long-term leadership in the annuity market.

At this time, I'll turn it over to Don.

Thank you, Laura. I'll begin on Slide 5 with our consolidated financial results for the third quarter. Adjusted operating earnings were $433 million, reflecting strong performance from our spread products where earnings were supported by the continued expansion of our RILA fixed, fixed index annuities and institutional products. Additionally, strong equity markets in the quarter led to increased variable annuity assets under management driving stronger fee income.

Our high-quality conservative investment portfolio supporting the spread product business is well positioned with diversification and strong credit quality, a theme throughout the portfolio. The exposure of our portfolio to commercial office loans and below investment-grade securities is less than 2% and 1%, respectively. Given recent headlines on asset quality, it is also important to note that our regional bank exposure is about 1% of our portfolio, and we have no material exposure to First Brands or Tricolor. Furthermore, our CLO portfolio remains highly rated and well-diversified.

Our spread product sales continue to benefit from enhanced asset sourcing capabilities at PPM America, which enabled recent new money allocation to certain higher-yielding asset classes, including emerging markets, residential home mortgages and investment-grade structured securities. We believe this modest shift in our new money asset allocation, combined with an attractive product lineup, will allow Jackson to maintain a consistent and stable presence in the spread product marketplace.

Before discussing notable items for the quarter, I want to highlight our strong performance in book value per common share. During the first 9 months of the year, we returned $657 million of capital to shareholders, which has contributed to a modest decrease in adjusted book value since year-end. Importantly, our share repurchase activity reduced the diluted share count, driving a 6% increase in adjusted book value per share to $158.44. Additionally, our adjusted operating return on common equity for the first 9 months of this year was 14%, up from 13% in the first 9 months of last year.

Slide 6 outlines the notable items included in adjusted operating earnings. Reported adjusted operating earnings per share was $6.16 for the current quarter. Adjusting for $0.04 of notable items and the difference in tax rates from our 15% guidance, adjusted operating earnings per share was $6.15 for the current quarter, up 27% from $4.86 in the prior year's third quarter. This improvement was primarily due to the growth in spread income noted earlier as well as a reduction in diluted share count from share repurchase activity.

The only notable item for the current quarter was a $0.04 negative as limited partnership results came in slightly below our 10% long-term assumption. The prior year's third quarter included a larger $0.28 negative impact from this item.

On Slide 7, we highlight the diverse and growing new business profile of our Retail Annuities segment, which achieved 2% growth over last year's strong third quarter and 22% growth from the second quarter of this year. Our RILA product suite delivered record sales of $2.1 billion, up 28% from the prior year's third quarter and 49% compared to the second quarter of this year. Since its launch in 2021, RILA assets under management have grown consistently, reaching a record high of nearly $18 billion at the end of the third quarter.

As mentioned earlier, our spread product offerings were further supported by enhanced capabilities at PPM, resulting in $444 million in fixed and fixed index annuity sales for the third quarter. We are confident about the future growth potential of our spread business with strong early momentum from our recently launched fixed index annuity suite of products.

Our sales mix continues to be capital efficient, which has provided flexibility to allocate additional capital to spread products as we focus on diversifying our business. We are pleased with the progress that we've made in building a well-diversified new business mix since becoming an independent public company, and we continue to explore opportunities to write higher levels of spread business on a capital-efficient basis.

Turning to net flows. The sales we generated in RILA and other spread products translated to $2.3 billion of nonvariable annuity net flows in the third quarter. Variable annuity net outflows have been elevated in recent quarters, reflecting the moneyness profile of our book, the aging of policyholders and some larger past sales years coming out of the surrender period.

On a year-to-date basis, our surrender rate was flat, even though strong equity market returns led to a higher surrender rate in the third quarter. These strong market returns also resulted in separate account investment performance of nearly $25 billion year-to-date, exceeding variable annuity net outflows by over $11 billion. This has driven variable annuity account value growth year-to-date and supported our strong levels of fee income.

Slide 8 highlights pretax adjusted operating earnings across our business segments. In Retail Annuities, we benefited from a favorable environment for spread products and higher levels of fee income. Like an asset management business, retail annuity earnings are driven by the level of assets under management. Growing nonvariable annuity net flows and strong separate account returns have increased our average retail annuity AUM to $263 billion, up from year-end 2024.

For the institutional segment, pretax adjusted operating earnings were up from the third quarter of last year, reflecting higher spread income from our growing book of business. Our higher level of new business activity this year reflects strong demand for spread lending and our opportunistic approach in the institutional marketplace.

Our closed block segment reported pretax adjusted operating earnings that were up from the third quarter of last year, primarily due to higher spread income. Earnings were down modestly on a sequential basis, reflecting higher levels of mortality.

Slide 9 includes a waterfall comparison of our third quarter pretax adjusted operating earnings of $505 million to GAAP pretax income attributable to Jackson Financial of $57 million. The stability in our nonoperating results has significantly improved after moving to a more economic hedging approach in 2024, which has also contributed to our consistent capital generation.

During the third quarter, our hedge results included a $14 million net loss on hedging instruments, supporting our variable annuity and RILA businesses. This loss was primarily from equity hedges reflecting S&P returns of about 8% during the quarter and gains on interest rate hedges resulting from lower long-term interest rates. Our RILA business continues to provide a natural offset to the equity risk of our variable annuity guarantees. This enhances our overall hedging efficiency as higher equity markets typically result in losses on our variable annuity hedges while resulting in gains for our RILA hedges.

Changes in market risk benefits, or MRB, were driven in part by the same interest rate and equity market movements in the quarter, leading to a $226 million gain that more than offset the loss on our hedges. As a reminder, changes in the MRB relate primarily to our variable annuity business and include the impact of equity index implied volatility, which was a modest benefit during the quarter. Changes in implied volatility do not impact our Brooke Re MRB measurement since its modified GAAP methodology uses a fixed volatility assumption designed to promote balance sheet stability.

The reserve and embedded derivative loss of $1.2 billion during the third quarter reflects increases in RILA reserves resulting from higher equity markets, which was largely offset by a gain on our RILA hedges. Net hedging results for variable annuities also reflect the highly diversified nature of our separate accounts, which can lead to differing performance relative to the market in periods where the returns of an index are driven by a subset of companies.

This dynamic was at play in the current quarter with the underperformance of our separate accounts relative to certain hedging indices, leading to a modest net hedging loss. It is important to note that this dynamic plays out in both directions and, as a result, these impacts have tended to smooth out over time. In fact, this dynamic produced a modest benefit over the first half of this year. We believe these results underscore the effectiveness of our hedging program in supporting capital stability and proactively managing the economic risks of our business.

Slide 10 provides a summary of Jackson's high-quality variable annuity business, which is differentiated in the marketplace, enabling us to outperform peers. In large part, our success can be attributed to our focusing on withdrawal benefits and avoiding more challenging guarantee features. Jackson also has long been a proponent of providing customers with investment freedom without forcing allocations or managed volatility funds.

This approach is supported by a rigorous fund manager due diligence and oversight process to ensure a high correlation between separate account assets and the related benchmarks over time. The strong underlying fund performance benefits both our policyholders and Jackson. Prudent pricing and disciplined product design further mitigate risk and enable agile product launches and repricing actions as market conditions evolve. We believe our variable annuity products are highly valued in the marketplace, and we remain a consistent product provider for our distribution partners and their clients.

The substantial cash flows generated by our large in-force block, combined with extensive policyholder experience data, enhance our risk management capabilities. By utilizing Brooke Re, we are able to further protect our book from market volatility and hedge more closely to the economics of our business. We believe our hedging performance has been proven through recent periods of financial market stress.

Slide 11 provides context on how our high-quality variable annuity book and differentiated structure support our economic hedging approach. Brooke Re creates a structure for us to manage a profitable variable annuity block without the constraint of the cash surrender value floor, allowing us to align our hedging with the underlying economics of the guarantees. Specifically, we are focused on mitigating the impact of lower equity markets and interest rates on these liabilities.

The result is well protected variable annuity guarantees at Brooke Re and stable regulatory capital and distributable earnings at Jackson National Life, which has been evident in our strong free capital generation, free cash flow and capital return over the last 7 quarters. This structure is beneficial for our management of the RILA business as well. Under this framework, RILA remains at JNL, separate from the variable annuity guarantees. The RILA business is managed and priced on a stand-alone basis with capital generation included in JNL's results.

RILA and variable annuity guarantees have a natural equity offset with RILA exposed to upside equity risk and variable annuity guarantees exposed to downside equity risks. Variable annuity guarantees are reserved and capitalized on a stand-alone basis under our modified GAAP framework at Brooke Re, and RILA is reserved and capitalized under the statutory regime at JNL without consideration of a diversification benefit.

While there is no reserving or capital benefit of the offsetting equity risks, we are able to realize a hedging efficiency by netting them off through fully settled internal trades, leaving a reduced need for external equity hedging. Importantly, this benefit would continue even if RILA grew to the point of overtaking variable annuities from an equity risk perspective, simply shifting the external equity need from downside protection to upside protection.

We believe this structure is a differentiator that highlights our consistent economic approach and the strong underlying performance of our book. We remain confident in the quality of our annuity business and our risk management capabilities.

Slide 12 highlights our growing capital generation and free cash flow. Jackson adheres to an earn it, then pay it philosophy for capital return. This philosophy is built upon three pillars: the generation of free capital where we earn it, the creation of free cash flow where we pay it and, ultimately, the return of capital to our common shareholders.

After-tax statutory capital generation was $579 million in the third quarter. We believe this metric offers helpful insight into the underlying strength of our business and provides the foundation for making capital allocation decisions that balance future growth with the return of capital to shareholders. Free capital generation was $459 million in the quarter, reflecting the estimated change in required capital [ or ] resulting from our strong and diversified new business results during the quarter.

Free capital generation totaled $1.1 billion in the first 9 months of the year,and $1.6 billion on a trailing 12-month basis. This pace is well above our $1 billion-plus expectation for the full year.

Free cash flow was strong in the current quarter, once again illustrating the stability of our capital generation. In the third quarter, $250 million were distributed to the holding company. After covering expenses and other cash flow items, the resulting free cash flow at the holding company was $216 million in the quarter. Over the last 12 months, we've distributed nearly $1.1 billion to the holding company and generated free cash flow of nearly $1 billion.

Based on Jackson's market capitalization at quarter end, we have produced a free cash flow yield of about 14% for the trailing 12 months. Although there are many factors that impact valuation, we believe this metric is a strong indicator of Jackson's value, and we will continue to pursue share repurchases while investing in the growth of our business.

The outcome of our strong free capital generation and growing free cash flow allowed us to return $210 million to common shareholders in the quarter, up 37% from last year's third quarter on a per diluted share basis. On a trailing 12-month basis, we have returned $805 million and we are on pace to exceed the top end of our full year capital return range. Jackson has now returned nearly $2.5 billion to common shareholders, exceeding our initial market capitalization as an independent public company.

These results reinforce Jackson's robust capital generation profile and stable growing cash distributions, delivering enhanced value to our shareholders.

Slide 13 summarizes our growing capital and liquidity position. The profitability of our in-force business, driven by fee income from our variable annuity based contract and growing spread-based earnings, provided strong capital generation during the quarter. Our capital position and RBC ratio at Jackson National Life continues to be less sensitive to equity market movements with the Brooke restructure. The main impacts of equity market changes is on AUM and future capital generation rather than immediate changes in capital or RBC. This results in the earnings stream at Jackson National Life being like an asset management business.

Consistent with our approach of taking smaller periodic distributions, we distributed $250 million to the holding company during the third quarter. After considering the impact of this distribution on our deferred tax assets, Jackson's total adjusted capital, or TAC, increased and ended the quarter at $5.6 billion. Our estimated RBC ratio ended the quarter at 579% and remains well above our minimum target of 425%. We believe Jackson is operating from a position of strength as we head into the end of the year.

During the third quarter, Brooke Re continued to operate as expected. While equity was down modestly from the second quarter, Brooke Re's capitalization remains well above our internal risk management target that reflects a variety of detailed scenarios and our regulatory minimum operating capital level. During the quarter, there were no capital contributions to or distribution of capital from Brooke Re. Going forward, we will continue to manage Brooke Re on a self-sustaining basis given the long-term nature of its liabilities.

Our holding company cash and highly liquid asset position at the end of the quarter was $751 million, which continues to be above our minimum buffer and provide substantial financial flexibility. This was up from $713 million in the second quarter of this year, reflecting operating company dividends and capital return to shareholders.

Our third quarter results demonstrate strong positive momentum, bolstered by a robust balance sheet and rising capital and liquidity levels that firmly position us for continued success.

I'll now turn the call back to Laura.

Thanks, Don. In September, we hit our 4-year milestone as an independent company. During this time frame, we've worked hard to capture opportunities to grow profitably while diversifying our sales mix and earnings. Our third quarter results represent another period of excellent operational and financial accomplishments. As the end of the year approaches, we'll take time to reflect on our valued relationships with our distribution partners and their clients and continue our shared mission to help hardworking Americans protect and grow their retirement savings and income.

Most importantly, we believe our accomplishments and ability to consistently deliver on our promises are only possible through the dedication and hard work of our associates. We are truly grateful for all they do at Jackson and in the communities we call home.

At this time, I'll turn it over to the operator for your questions.

[Operator Instructions] Our first question comes from Ryan Krueger of KBW.

My first question is on the actual to expected policyholder behavior. It has improved year-over-year but it got more -- I guess, it increased in the third quarter from the recent run rate. Can you give some perspective on what's causing this? I assume it's still just higher lapses. And to what extent you may consider changing your dynamic lapse assumption given that this has been occurring for a few years consistently now?

Ryan, thanks for the question. I'll turn it to Don to respond.

Ryan, yes, so just to give you a little bit of context on policyholder behavior and kind of the level of net outflows that we've been seeing on our variable annuity book. First of all, I think it's important to remember that our surrender rate is sort of an all-in surrender rate, as we've talked about on prior calls. So you decompose that 12% that we've seen on a year-to-date basis, it breaks down like about 7% of that is full surrenders. And then there's 4% which are withdrawals, and that's just simply customers using the benefit that they purchase those products forward and being able to generate income and retirement. And then the remaining 1% is related to death benefits.

And I would highlight that just for the quarter, we did see a bit of an uptick in the surrender rate, primarily driven by the fact that equity markets were up and that does tend to influence surrender activity because of the moneyness in the contracts. Just overall, the VA performance that we saw in the quarter, which was also driven by the higher equity markets, was about $25 million, and that will offset the level of net outflows that we're seeing.

So in terms of how we think about that from our assumption setting process, first of all, we do take a very comprehensive look at our assumptions every year. We complete that work in the fourth quarter. And we're setting assumptions with the long-term nature of our liabilities in mind. So we do look at our recent experience, but we wouldn't take 1 or 2 quarters of experience and simply use that to set our long-term assumption. We would look at our experience over time. Having said that, we'll certainly look at the experience we've been seeing over the last couple of years as we update our assumptions in the fourth quarter. And we'll publish those results along with our overall fourth quarter results as well as our financial targets for 2026. And we look forward to being able to discuss that in February.

One follow-up on that. I've heard some suggest that there has been some targeted efforts by distributors to roll older variable annuity contracts into other products when they've been out of the money, and that may be contributing to the higher lapse rates beyond just the pure markets but also may eventually dissipate once they kind of contacted all of their clients. Is that something -- do you agree with that? Is that something that you've seen at all impact the lapse rate?

I would say, Ryan, it's primarily more driven by the market environment and specific activities that might take place.

Our next question comes from Suneet Kamath of Jefferies.

Just wanted to ask a couple on capital. So first, on the RBC target of 425, you've been traveling well north of that for a while. My math suggests that if you were to bring that to 425, maybe $1.5 billion of excess could be released. I guess if 425 is really the target, what needs to happen in order to bring your RBC back down to that level?

Yes. Thanks for the question, Suneet. So yes, you're right. At the 425 target, we do have a substantial amount of excess capital at J&L. As we've talked about in the past, we expect that will come down over time rather than some sort of onetime outsized upstreaming of capital to the holding company.

We believe that we are in a unique position to continue our efforts to diversify our book of business through focusing on more spread product sales, as I mentioned in the prepared remarks. And that obviously will assume a bit more capital than what we've historically been writing over the years, which is variable annuity business. And we've seen some of that over the course of this year.

So we believe that we can both continue to grow our business through diversifying into more spread-type products as well as continuing to return significant levels of capital. But you'll see that ratio come down over time as opposed to one sizable transaction.

Okay. And then I guess my second one is on this closed block segment that you have. I mean, it doesn't get a lot of attention. We never get asked about it. I'm just curious, what's the strategic value of having that? I know it's small, but also curious about how much capital is supporting those liabilities that are in that segment.

Yes. Yes, good question. We obviously look at the closed block very frequently and we're comfortable with the liabilities that are there. As you mentioned, it's not a huge portion of our balance sheet. However, we believe it does provide some balance to our overall general account structure because there are some life liabilities in there along with some annuities and other blocks of business that came about through some acquisitions that Jackson completed a number of years ago.

So we do monitor the performance of that lot closely. And to the extent we find opportunities to better leverage our capital, we would be prepared to take advantage of those.

And how much capital is in that segment? Is it a meaningful amount?

Yes. We don't break out, Suneet, the allocation of our capital across the segments, but the liabilities are roughly about $20 billion.

Our next question comes from Tom Gallagher of Evercore.

Just a follow-up question on hedging. I heard the comment about how your RILA naturally hedges part of your VA guarantees, which lowers your need to buy the quantity of derivatives and hedges you need to buy. You have a peer out there, Brighthouse, that used to make the similar point. They eventually hit a limit and the company has struggled since they hit the limit.

Now I'm sure there are differences between your book and their book. Your guarantees look far less risky, quite candidly, from my perspective. So that might be one of the reasons. But curious why you won't hit a limit and if you've spent any time thinking about what you're doing versus what Brighthouse is doing just so you can at least clear up any confusion about why your program is fine.

Yes. Tom, thanks for that question. We have spent a lot of time thinking about this issue, and we're very comfortable with the structure that we have in place. The new slide that we shared in the materials this quarter is intended to kind of help explain why we're different. And it really comes down to the fact that we have -- the VA guarantees are housed within Brooke Re. The RILA business is at JNL, and we're able to get this efficiency from a hedging perspective as we sort of offset the internal trades and then go out to our derivative counterparties to purchase external hedges.

The reason we're very comfortable that we won't have the issue that others have run into is because we don't have the guarantees and the RILA business being reserved for and hedged under a statutory framework, which I think was primarily the problem that you're referring to, which is the VM-21 construct. So we're very comfortable that even if the equity risk on RILA were to surpass the equity risk that we have on the VAs, then all that does is just shift the nature of our external hedging. It doesn't mean that we would have to suddenly put out some additional level of reserves.

Got you. That's super clear. Yes, that is. Just from a follow-up perspective, if there was any impact to the actuarial review, to Ryan's question, would that likely show up in JNL or Brooke Re in terms of any changes that we would see there?

Yes. Well, as I mentioned, we're still working through our actuarial assumption review. But my expectation would be that we would see very minimal impacts at JNL. Any impact related to our VA business would be sort of below the line and a component of our MRB.

Our final question of today comes from Alex Scott of Barclays.

I just had a follow-up on same kind of question that you just had from Tom and Ryan. So on the potential for an impact in Brooke Re, if there is an impact, do I take the comments that you made earlier in your script around the self-sustaining nature of the capital in Brooke Re to mean that based on what you're seeing, at least as of today, regardless of how that actuarial review pans out, you don't feel like there's risk that you would have to fund any capital into there? Is that a correct way of reading those comments earlier?

Alex, yes, so my comments earlier were more long-term focused in that we do believe, given the nature of the guarantees in Brooke Re, that over the long term that Brooke Re will actually generate capital and be self-sustaining. I don't want to get ahead of the completion of our actuarial review work at this point. We'll certainly look at it. And as I said, when we report fourth quarter earnings and our 2026 financial targets including our capital return targets for next year, we'll update you on the status of our -- or the impact of our actuarial review.

Understood. Okay. And then I also wanted to ask about potential reinsurance opportunities out there. I mean, I think, on one hand, we're questioning you all about actuarial studies and so forth. I know, on the other hand, you guys have expressed a lot of confidence about your ability to manage VAs. I mean, are there opportunities out there that you're still considering and looking at around reinsurance of other blocks of business to take advantage of what you built there?

Yes. So we talked a little bit about this on last quarter's call, Alex, and we certainly believe that we have very good expertise in the VA space and with risk management and hedging. And so to the extent that there were high-quality variable annuity blocks that were available that we believe would be complementary to what we already have at Brooke Re, that would be something that we would consider.

We do believe that some of the recent VA transactions that you've seen indicate there are some buyers that see value in high-quality VA blocks, and we would look to participate in that. That probably wouldn't be the highest priority on our list.

I think if we were looking at some sort of transaction, we might want to look at opportunities to further accelerate all of the work that we've done since becoming an independent public company to diversify our book, and that could include reinsurance of potentially some life business or something along that line that would be complementary to the businesses that we already have. But we're certainly aware of what's going on in the marketplace and are monitoring those kinds of things closely.

I would just add that any growth opportunities that we were to explore or evaluate would be done in comparison to the value that we receive from buying back our own shares.

Thank you. We have no further questions registered on today's call. So I'll hand back over to Laura Prieskorn for any closing remarks.

Thank you all for your continued interest in Jackson. As you've heard this morning, our latest results represent another period of excellent operational accomplishments. We look forward to continuing this discussion and sharing our continued progress on our 2025 targets after the end of the fourth quarter.

Thank you, and take care.

Ladies and gentlemen, this concludes today's call. Thank you so much for joining. You may now disconnect your lines.