Jackson Financial Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Suneet Kamath - Jefferies - Analyst : I just wanted to start with the capital generation. If we look kind of year to date, I think you're a little over $600 million, which is pretty well in excess of, I guess, your $1 billion-plus that you've talked about before. I just was hoping you could unpack that. How much of that was maybe the better market and versus better investment spreads? Because even if I think about the market impact, the growth seems just a lot higher than that. So I just wanted to understand what's going in there, please. Thanks.

Question: Suneet Kamath - Jefferies - Analyst : And maybe just to follow up on that, because I think the markets through the second quarter were up like 14%. If you just use the S&P and obviously the growth off of the so the run rate in capital generation is well above that percentage-wise. So it is it just the positive operating leverage that you're getting and that's what's giving you higher capital generation because it does seem to be coming in higher than the overall market. Thanks.

Question: Suneet Kamath - Jefferies - Analyst : And then my follow-up is just on just how where we sit today. Obviously, first half of the year was pretty good, but now volatility has spiked interest rates. I've been pretty volatile as well. I guess how should we think about the capital generation in general? And I see and the reason I ask is my thought was or my understanding was that most of the hedges are now in Brook Re, which means capital generation of JNIC might be a little bit more tied to the markets, but I just wanted to get your thoughts, but based on that as well as just where we sit today in terms of the volatility.

Question: Suneet Kamath - Jefferies - Analyst : Okay. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, JXN.N - Q2 2024 Jackson Financial Inc Earnings Call

Question: Thomas Gallagher - Evercore ISI - Analyst : Good morning. A couple of questions on hedging and Brook Re. So Don, I was following your comments and it sounds like the $200 million-plus derivative loss was largely offset by the fees you're collecting, the guaranteed fees you're collecting. I think you said it was a net of $64 million for Brooke Re in the quarter. So my question is can you just comment on what are the actual hard assets that are currently capitalizing Brooke on? And how does that compare to the $64 million? And just can you mention your capital levels there? Do you have a buffer over what you target?

Question: Thomas Gallagher - Evercore ISI - Analyst : Got you. And so the 64, I could compare to the $700 million or, you know, is the net assets of the net reserve position, that's an asset large enough where it's not going to be a 10% type swing in your capital there, that it would be much smaller. Can maybe if you could comment on that?

Question: Thomas Gallagher - Evercore ISI - Analyst : Okay. And then my last question is just when I if I look back a few years ago, when you were still using a different hedging approach. I think the duration of most of your derivatives were around three months. And then there was a period where as rates began to move higher, you started lengthening that out. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, JXN.N - Q2 2024 Jackson Financial Inc Earnings Call Can you comment about average duration of your hedging instruments and also roll risk if we get into an environment where the market becomes a lot more volatile, how should we think about roll risk on your hedges? Thanks.

Question: Thomas Gallagher - Evercore ISI - Analyst : Got you. Thanks for the color.