Jackson Financial, Inc. (NYSE:JXN) Q2 2022 Earnings Conference Call August 10, 2022 10:00 AM ET

Company Participants

Liz Werner - Head, IR

Laura Prieskorn - CEO, President & Director

Marcia Wadsten - EVP & CFO

Conference Call Participants

Suneet Kamath - Jefferies

Alexander Scott - Goldman Sachs

Erik Bass - Autonomous Research

Operator

Good morning, and welcome to the Jackson Financial Inc. 2Q 2022 Earnings Call. My name is Lauren, and I’ll be coordinating your call today. [Operator Instructions].

I would now like to hand over to your host Liz Werner, Head of Investor Relations to begin. Liz, please go ahead.

Liz Werner

Good morning, everyone. Before we begin, we remind you that today’s presentation may include forward-looking statements, which are not guarantees of future performance or outcome. A number of important factors, including the risks, uncertainties and assumptions discussed in risk factors and management’s discussion and analysis of financial conditions in the company’s 2021 Form 10-K and the most recent first quarter 10-Q could cause actual results to differ materially from those reflected in the forward-looking statements.

In this presentation, management will refer to certain non-GAAP measures, which management believes provide useful information in measuring the financial performance of the business. A reconciliation of non-GAAP financial measures to the most comparable GAAP measures is contained in the appendix to the presentation. With us today are Jackson’s CEO, Laura Prieskorn; our CFO, Marcia Wadsten; and our Vice Chair, Chad Myers, our Head of [Indiscernible] and the President and CEO of [Indiscernible].

At this time I will turn the call over to Laura.

Laura Prieskorn

Thank you, Liz. Good morning, and welcome to our second quarter earnings call. In addition to our second quarter results, we’ll discuss Jackson’s financial strength, our continued capital return to shareholders and our favorable business outlook. Despite a challenging market, our disciplined approach to risk management and the profitability of our healthy book resulted in strong capital levels that both are operating and holding companies. Looking forward, we see a clear path to achieving our 2022 capital return target and remain confident in our long term capital generation.

For the second quarter, we reported net income of nearly $3 billion, driven by sizeable net hedging gains that protected our business during equity market stress conditions. Our hedging strategy performed as intended preserving statutory capital during periods of significant stress, which was evident in our healthy and growing operating company RBC ratio. Although market volatility was high during the quarter, some benefit of higher rates was realized in hedging costs that were largely in line with our guaranteed benefit fees. These fees are based on a policyholders benefit base, which is not subject to market volatility, and are intended to cover our hedge cost over the life of a policy and throughout market cycles.