JACKSON FINANCIAL INC. – 10-Q – MD&A and Analysis of Financial Condition and Results of Operations – InsuranceNewsNet

FORWARD-LOOKING STATEMENTS – DISCLAIMER

Certain statements made in this Quarterly Report on Form 10-Q (this "Report")
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. A forward-looking statement is a statement that
is not a historical fact and includes any statement that may predict, forecast,
indicate or imply future results, performance or achievements. Forward-looking
statements may contain words like: "anticipate," "believe," "estimate,"
"expect," "project," "shall," "will" and other words or phrases with similar
meaning in connection with a discussion of future operating or financial
performance. In particular, these include statements relating to future actions,
trends in our businesses, prospective services or products, future performance
or financial results and the outcome of contingencies, such as legal
proceedings.

Forward-looking statements are subject to risks and uncertainties. Real
results could differ materially from those expressed or implied by such
forward-looking statements due to various factors, including:

•conditions in the capital and credit markets and the economy, which impact
liquidity, investment performance and valuation, hedge program performance,
interest rates and credit spreads;
•Jackson Financial's dependence on the ability of its subsidiaries to transfer
funds to meet Jackson Financial's obligations and liquidity needs;
•downgrade in our financial strength or credit ratings, which impact our
business and costs of financing;
•changes in laws and regulations, which impact how we conduct our business, the
relative appeal of our products versus those from other financial institutions,
and changes in accounting standards, which impact how we account for and present
our results of operations;
•operational failures, including failure of our information technology systems,
failure to protect the confidentiality of customer information or proprietary
business information, and disruptions from third-party outsourcing partners;
•a failure to adequately describe and administer, or meet any of the complex
product and regulatory requirements relating to, the many complex features and
options contained in our annuities;
•adverse impacts on our results of operations and capitalization as a result of
optional guaranteed benefits within certain of our annuities;
•models that rely on a number of estimates, assumptions, sensitivities and
projections, which models inform our business decisions and strategy, and which
may contain misjudgments and errors and may not be as predictive as desired;
•risks related to natural and man-made disasters and catastrophes, diseases,
epidemics, pandemics (including COVID-19), malicious acts, cyberattacks,
terrorist acts, civil unrest and climate change;
•inadequate reserves due to differences between our actual experience and
management's estimates and assumptions;
•changes in the levels of amortization of deferred acquisition costs ("DAC");
and
•adverse outcomes of legal or regulatory actions.

The risks and uncertainties included here are not exhaustive. Our Annual Report
on Form 10-K for the year ended December 31, 2021, as filed with the SEC on
March 7, 2022, (the "2021 Annual Report") and other reports filed with the
United States Securities and Exchange Commission ("SEC") includes additional
factors that could affect our businesses and financial performance. Moreover, we
operate in a rapidly changing and competitive environment. New risk factors
emerge from time to time, and it is not possible for management to predict all
such risk factors.

Further, it is not possible to assess the effect of all risk factors on our
businesses or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of
actual results. In addition, we disclaim any obligation to update any
forward-looking statements to reflect events or circumstances that occur after
the date of this Report, except as otherwise required by law.
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         Item 2 | Management's Discussion and Analysis | Available Information &
                                                           Principal Definitions

Available Information

We make available free of charge, through our website, investors.jackson.com,
our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, our proxy statements, and any amendments to those reports or
statements as soon as reasonably practicable after these materials are
electronically filed with, or furnished to, the SEC. We use our website as a
routine channel for distribution of important information, including news
releases, analyst presentations, financial information, and corporate governance
information. The content of Jackson's website is not incorporated by reference
into this Report or in any other report or document filed with the SEC, and any
references to Jackson's website are intended to be inactive textual references
only. The SEC's website, www.sec.gov, contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.

Main definitions, abbreviations and acronyms used in the text and the notes of
this report

we, us, our and the Company Jackson Financial Inc. and its consolidated subsidiaries, unless the

                                     context refers only to Jackson 

Financial Inc. as a legal person

                                     (which we refer to as "JFI" or "Jackson Financial")
Jackson                              Jackson National Life Insurance Company, a Company subsidiary.
Brooke Life                          Brooke Life Insurance Company, a 

Subsidiary of the company and direct

                                     parent company of Jackson National Life Insurance Company.
Jackson Finance                      Jackson Finance, LLC, a Company subsidiary.
PPMH                                 PPM Holdings, Inc., a Company subsidiary
PPM                                  PPM America Inc., a subsidiary of PPMH
ACL                                  Allowance for credit loss

Account Value or Account Balance The amount of money in a customer’s account. For example, the value

                                     increases with additional premiums and investment gains, and it
                                     decreases with withdrawals, investment losses and fees.
Athene                               Athene Life Re Ltd. and its affiliates and permitted transferees,
                                     including Athene Co-Invest Reinsurance Affiliate 1A Ltd.
Athene Equity Investment             The July 2020 investment of $500

million by Athene in JFI for Class

                                     A Common Stock and Class B Common 

Stock, representing approximately

                                     9.9% of the total combined voting 

power and approximately 11.1% of

                                     the total common stock of the Company

Athene Reinsurance Transaction The funds withheld co-insurance agreement entered into with Athene on

                                     June 18, 2020, effective June 1, 2020, to reinsure a 100% quota
                                     share of a block of our in-force fixed and fixed index annuity
                                     liabilities in exchange for

approximately $1.2 billion conceding

                                     commissions
Athene Transactions                  The Athene Reinsurance Transaction and 

the Athens Equity Investment,

                                     together.

AUM (Assets Under Management) Investment assets managed by one of our subsidiaries and

                                     includes: (i) the assets in our 

investment portfolio managed by PPM,

                                     which excludes assets held in funds 

accounts retained for

                                     reinsurance transactions, (ii) 

third-party assets managed by PPM,

                                     including those for Prudential and its 

affiliates or third parties,

                                     and (iii) the separate account assets 

of our retail annuities

                                     segment that Jackson National Asset 

Management, LLC (“JNAM”) manages

                                     and administers.
Benefit base                         A notional amount (not actual cash value) used to calculate the
                                     owner's guaranteed benefits within an annuity contract. The death
                                     benefit and living benefit within the same contract may have
                                     different benefit bases.
CMBS                                 Commercial mortgage-backed securities

DAC (Deferred Acquisition Costs) Represent additional costs directly related to success

                                     acquisition of new and certain renewal insurance policies and
                                     annuity contracts and which have been deferred on the balance sheet
                                     as an asset.
DDTL Facility                        Delayed Draw Term Loan Facility


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Item 2 | Management discussion and analysis | Information available &

                                                           Principal 

Definitions

Deferred tax asset or Deferred  Assets or liabilities that are recorded for the difference between
tax liability                   book basis and tax basis of an asset or a liability.
DSI (Deferred sales             Represent amounts that are credited to a policyholder's account
inducements)                    balance that are higher than the expected crediting rates on similar
                                contracts without such an inducement and that are an incentive to
                                purchase a contract and also meet the accounting criteria to be
                                deferred as an asset that is amortized over the life of the
                                contract.
Fixed Annuity                   An annuity that guarantees a set annual rate of return with interest
                                at rates we determine, subject to specified minimums. Credited
                                interest rates are guaranteed not to change for certain limited
                                periods of time.
Fixed Index Annuity             An annuity with an ability to share in the upside from certain
                                financial markets, such as equity indices, and provides downside
                                protection.
Form 10                         Form 10 registration statement registering the Company's Class A
                                Common Stock under the Securities Exchange Act of 1934, as amended,
                                which became effective on August 6, 2021.
General account assets          The assets held in the general accounts of our insurance companies.
GIC                             Guaranteed investment contract
Guarantee Fees                  Fees charged on annuities for optional benefit guarantees
GMAB (Guaranteed minimum        An add-on benefit (enhanced benefits available for an additional
accumulation benefit)           cost) which entitles an owner to a minimum payment, typically in
                                lump-sum, after a set period of time, typically referred to as the
                                accumulation period. The minimum payment is based on the benefit
                                base, which could be greater than the underlying account value.
GMDB (Guaranteed minimum death  An add-on benefit (enhanced benefits available for an additional
benefit)                        cost) that guarantees an owner's 

beneficiaries are entitled to a

                                minimum payment based on the benefit base, 

which could be bigger

                                than the underlying account value, upon the death of the owner.
GMIB (Guaranteed minimum income An add-on benefit (available for an additional cost) where an owner
benefit)                        is entitled to annuitize the policy and receive a minimum payment
                                stream based on the benefit base, which could be greater than the
                                payment stream resulting from current annuitization of the
                                underlying account value.
GMWB (Guaranteed minimum        An add-on benefit (available for an additional cost) where an owner
withdrawal benefit)             is entitled to withdraw a maximum amount of their benefit base each
                                year, for which cumulative payments to the owner could be greater
                                than the underlying account value.
GMWB for Life (Guaranteed       An add-on benefit (available for an additional cost) where an owner
minimum withdrawal benefit for  is entitled to withdraw the guaranteed annual withdrawal amount each
life)                           year, for the duration of the 

the life of the policyholder, regardless of

                                account performance.
NAIC                            National Association of Insurance Commissioners
NAV                             Net asset value
Net flows                       Net flows represent the net change in customer account balances
                                during a period, including gross premiums, surrenders, withdrawals
                                and benefits. Net flows exclude investment performance, interest
                                credited to customer accounts and policy charges.

RBC (Risk-Based Capital) rules for determining legal capital requirements for insurance companies.

                                It is based on rules published by the NAIC.
RILA                            A registered index-linked annuity that offers market index-linked
                                investment options, subject to a cap, and offers a variety of
                                guarantees designed to modify or limit losses.
RMBS                            Residential mortgage-backed securities
Variable annuity                A type of annuity that offers tax-deferred investment into a range
                                of asset classes and a variable return, which offers insurance
                                features related to potential future income payments.
VIE                             Variable interest entity



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Item 2 | Management discussion and analysis | Overview and Executive Summary

Overview of the management report and analysis of the financial situation and

                             Results of Operations

The following discussion and analysis of our financial condition and results of
operations should be read in its entirety and in conjunction with the Condensed
Consolidated Financial Statements and related notes contained in Part I, Item
1 of this Quarterly Report on Form 10-Q, as well as "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section in our 2021
Annual Report.

Jackson Financial Inc. ("Jackson Financial") along with its subsidiaries
(collectively, the "Company," which also may be referred to as "we," "our" or
"us"), is a financial services company focused on helping Americans grow and
protect their retirement savings and income to enable them to pursue financial
freedom for life. Jackson Financial, domiciled in the United States ("U.S."),
was previously a majority-owned subsidiary of Prudential plc ("Prudential"),
London, England and was the holding company for Prudential's U.S. operations.
The Company's demerger from Prudential was completed on September 13, 2021 (the
"Demerger"), and the Company no longer is a majority-owned subsidiary of
Prudential. See Note 1 to Condensed Consolidated Financial Statements for
further discussion of the Demerger. Jackson Financial's primary life insurance
subsidiary, Jackson, is licensed to sell group and individual annuity products
(including immediate, registered index-linked, deferred fixed, fixed index and
variable annuities), and various protection products, primarily whole life,
universal life and variable universal life and term life insurance products in
all 50 states and the District of Columbia.

Summary

This executive summary of Management's Discussion and Analysis of Financial
Condition and Results of Operation highlights selected information and may not
contain all of the information that is important to current or potential
investors in our securities. You should read this Quarterly Report on Form 10-Q,
together with our 2021 Annual Report, in their entirety for a more detailed
description of events, trends, uncertainties, risks and critical accounting
estimates affecting us.

We help Americans grow and protect their retirement savings and income to enable
them to pursue financial freedom for life. We believe that we are uniquely
positioned in our markets because of our differentiated products, well-known
brand and disciplined risk management. Our market leadership is supported by our
efficient and scalable operating platform and industry-leading distribution
network. We believe these core strengths will enable us to grow profitably as an
aging U.S. population transitions into retirement.

We offer a diverse suite of annuities to retail investors in the U.S. Our
variable annuities have been among the best-selling products of their kind in
the U.S. primarily due to the differentiated features we offer as compared to
our competitors, in particular the wider range of investment options and greater
freedom to invest across multiple investment options. We also offer fixed index
annuities and fixed annuities. In the fourth quarter of 2021, our primary life
insurance subsidiary, Jackson National Life Insurance Company and its insurance
subsidiaries ("Jackson") successfully launched Market Link ProSM and Market Link
Pro AdvisorySM, its commission and advisory based suite of registered
index-linked annuities ("RILA"). Also in the fourth quarter of 2021, we entered
the Defined Contribution market as a carrier in the AllianceBernstein Lifetime
Income Strategy ("AllianceBernstein").


We sell our products through a distribution network that includes independent
broker-dealers, wirehouses, regional broker-dealers, banks, and independent
registered investment advisors, third-party platforms and insurance agents. We
have been the top selling retail annuity company in the United States for nine
of the past ten years, according to the Life Insurance Marketing and Research
Association ("LIMRA").

Our operating platform is scalable and efficient. We administer approximately
77% of our in-force policies on our in-house policy administration platform. The
remainder of our business is administered through established third-party
arrangements. We believe that our operating platform provides us with a
competitive advantage by allowing us to grow efficiently and provide superior
customer service.

We manage our business through three segments: Retail Annuities, Institutional
Products, and Closed Life and Annuity Blocks. We report certain activities and
items that are not included in these segments, including the results of PPM
Holdings, Inc., the holding company of PPM, which manages the majority of our
general account investment portfolio, in Corporate and Other. See Note 3 to
Condensed Consolidated Financial Statements for further information on our
segments.

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               Item 2 | Management's Discussion and Analysis | Executive 

Summary

Several important recent events concern us, including:

•Demerger from Prudential plc: We were previously a majority-owned subsidiary of
Prudential plc ("Prudential"), London, England and served as the holding company
for its U.S. operations. The demerger, or separation, from Prudential was
completed on September 13, 2021 ("Demerger"), and we are no longer a
majority-owned subsidiary of Prudential. Prudential retained an equity interest
in us, which, as a result of sales subsequent to the Demerger, represents 14.3%
of our outstanding Class A Common Stock as of June 30, 2022. Prudential sold
additional shares of the Company's Class A Common Stock during the third quarter
of 2022 and as of August 5, 2022 Prudential retained a 9.0% remaining interest
in the Company.

•Common Stock Reclassification: On September 9, 2021, Jackson Financial effected
a 104,960.3836276-for-1 stock split of its Class A Common Stock and Class B
Common Stock by way of a reclassification of its Class A Common Stock and Class
B Common Stock. All share and earnings per share information presented in this
Report have been retroactively adjusted to reflect the stock split.

•Athene Transactions: On June 18, 2020, Jackson announced that it had entered
into a funds withheld coinsurance agreement (the "Athene Reinsurance Agreement")
with Athene Life Re Ltd. ("Athene") effective June 1, 2020 to reinsure on 100%
quota share basis, a block of Jackson's in-force fixed and fixed-index annuity
product liabilities in exchange for a $1.2 billion ceding commission (the
"Athene Reinsurance Transaction"). As a result, we hold various investments
whose economic performance accrues to Athene but is reported in our financial
statements. In July 2020, Athene invested $500 million of capital into the
Company for an equity interest. In August 2020, the Company contributed $500
million, as a capital contribution to Jackson. Athene has an equity interest in
us, which represents an 8.9% economic interest and an 8.9% voting interest of
our outstanding Class A Common Stock as of June 30, 2022.

• Elimination of Class B common shares: the June 9, 2022our Second Modified and
The updated certificate of incorporation has been further amended and updated,
after shareholder approval, eliminate the Class B common shares.

•Common Stock Repurchases: Since the Demerger and through June 30, 2022, we have
repurchased 11,083,113 shares of our Class A Common Stock for an aggregate
consideration of $417 million. After giving effect to those repurchases and
issuances for our share based compensation, we had 9,608,399 of treasury stock
and 84,864,727 shares of Class A Common Stock outstanding at June 30, 2022.

•As discussed in Note 2 of Notes to Condensed Consolidated Financial Statements
in this Report, we will be adopting ASU 2018-12, "Targeted Improvements to the
Accounting for Long-Duration Contracts," ("LDTI") for our fiscal year beginning
January 1, 2023, with a transition date of January 1, 2021. Based upon the
elected transition methods, the Company currently estimates the adoption of the
standard will result in a decrease of between approximately $2 billion and $4
billion in the Company's total equity at the transition date of January 1, 2021.
Market changes since the transition date, primarily higher interest rates, have
significantly reduced the estimated negative impact to the Company's total
equity as of June 30, 2022. See further discussion in Note 2 for the significant
changes for this future change in accounting principle.

Our GAAP results are affected by the potential variability associated with our
amortization of deferred acquisition costs and the fact that our use of
derivatives does not qualify for GAAP deferral, meaning that the derivatives are
marked to market each reporting period. See "Summary of Critical Accounting
Estimates" below for more information.

Also, an understanding of several key operating measures, including sales,
account value, net flows, benefit base and AUM, is helpful to evaluating our
results. See "Key Operating Measures" below. Finally, we are affected by various
economic, industry and regulatory trends, which are described below under
"Macroeconomic, Industry and Regulatory Trends."

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Item 2 | Management discussion and analysis | Non-GAAP Financial Measures
Non-GAAP Financial Measures

In addition to presenting our results of operations and financial condition in
accordance with U.S. GAAP, we use and report, selected non-GAAP financial
measures. Management believes that the use of these non-GAAP financial measures,
together with relevant U.S. GAAP financial measures, provides a better
understanding of our results of operations, financial condition and the
underlying performance drivers of our business. These non-GAAP financial
measures should be considered supplementary to our results of operations and
financial condition that are presented in accordance with U.S. GAAP and should
not be viewed as a substitute for the U.S. GAAP financial measures. Other
companies may use similarly titled non-GAAP financial measures that are
calculated differently from the way we calculate such measures. Consequently,
our non-GAAP financial measures may not be comparable to similar measures used
by other companies. These non-GAAP financial measures should not be viewed as
substitutes for the most directly comparable financial measures calculated in
accordance with U.S. GAAP.

Adjusted Operating Earnings

Adjusted Operating Earnings is an after-tax non-GAAP financial measure, which we
believe should be used to evaluate our financial performance on a consolidated
basis by excluding certain items that may be highly variable from period to
period due to accounting treatment under U.S. GAAP or that are non-recurring in
nature, as well as certain other revenues and expenses that we do not view as
driving our underlying performance. Adjusted Operating Earnings should not be
used as a substitute for net income as calculated in accordance with U.S. GAAP.
However, we believe the adjustments to net income are useful for gaining an
understanding of our overall results of operations.

Adjusted operating income is our net income adjusted to eliminate
impact of the following elements:

1.Guaranteed Benefits and Hedging Results: the fees attributed to guaranteed
benefits, the associated movements in optional guaranteed benefit liabilities
and related claims and benefit payments are excluded from Adjusted Operating
Earnings, as we believe this approach appropriately removes the impact to both
revenue and related expenses associated with the guaranteed benefit features
that are offered for certain of our variable annuities and fixed index annuities
and gives investors a better picture of what is driving our underlying
performance. This adjustment includes the following components:

•Fees Attributable to Guarantee Benefits: fees earned in conjunction with
guaranteed benefit features offered for certain of our variable annuities and
fixed index annuities are set at a level intended to mitigate the cost of
hedging and funding the liabilities associated with such guaranteed benefit
features. The full amount of the fees attributable to guaranteed benefit
features have been excluded from Adjusted Operating Earnings as the related net
movements in freestanding derivatives and net reserve and embedded derivative
movements, as described below, have been excluded from Adjusted Operating
Earnings. This adjusted presentation of our earnings is intended to directly
align revenue and related expenses associated with the guaranteed benefit
features;

•Net Movement in Freestanding Derivatives, except earned income (periodic
settlements and changes in settlement accruals) on derivatives that are hedges
of investments, but do not qualify for hedge accounting treatment: changes in
the fair value of our freestanding derivatives used to manage the risk
associated with our life and annuity reserves, including those arising from the
guaranteed benefit features offered for certain of our variable annuities and
fixed index annuities. Net movements in freestanding derivatives have been
excluded from Adjusted Operating Earnings as the market value of these
derivatives may vary significantly from period to period as a result of
near-term market conditions and therefore are not directly comparable or
reflective of the underlying performance of our business;

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     Item 2 | Management's Discussion and Analysis | Non-GAAP Financial Measures
•Net Reserve and Embedded Derivative Movements: changes in the valuation of
certain life and annuity reserves, a portion of which are accounted for as
embedded derivative instruments, and which are primarily composed of variable
and fixed index annuity reserves, including those arising from the guaranteed
benefit features offered for certain of our variable annuities. Net reserve and
embedded derivative movements have been excluded from Adjusted Operating
Earnings as the carrying values of these derivatives may vary significantly from
period to period as the result of near-term market conditions and policyholder
behavior-related inputs and therefore are not directly comparable or reflective
of the underlying performance of our business. Movements in reserves
attributable to the current period claims and benefit payments in excess of a
customer's account value on these policies are also excluded from Adjusted
Operating Earnings as these benefit payments are affected by near-term market
conditions and policyholder behavior-related inputs and therefore may vary
significantly from period to period;

• Impact of DACs and Deferred Sales Incentives (“DSI”): amortization of
acquisition costs and deferred sales incentives associated with items
excluded from adjusted operating income;

•Assumption changes: the impact on the valuation of Net Derivative and Reserve
Movements, including amortization on DAC, arising from changes in underlying
actuarial assumptions on an annual basis;

2.Net Realized Investment Gains and Losses including change in fair value of
funds withheld embedded derivative: Realized investment gains and losses
associated with the periodic sales or disposals of securities, excluding those
held within our trading portfolio, as well as impairments of securities, after
adjustment for the non-credit component of the impairment charges and change in
fair value of funds withheld embedded derivative related to the Athene
Reinsurance Transaction;

3. Loss on Athene reinsurance transaction: includes contractual cession
commission, amortization of reinsurance cost and DAC and DSI amortization related to
the Athene reinsurance operation;

4.Net investment income on retained assets: includes net investment income
on funds withheld assets related to funds withheld reinsurance operations;

5.Other items: one-time or other non-recurring items, such as costs relating to
the Demerger and our separation from Prudential, the impact of discontinued
operations and investments that are consolidated on our financial statements due
to U.S. GAAP accounting requirements, such as our investments in CLOs, but for
which the consolidation effects are not aligned with our economic interest or
exposure to those entities.

Operating income taxes are calculated using the prevailing corporate federal
income tax rate of 21% while taking into account any items recognized
differently in our financial statements and federal income tax returns,
including the dividends received deduction and other tax credits. For interim
reporting periods, the company uses an estimated annual effective tax rate
("ETR") in computing its tax provision including consideration of discrete
items.

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     Item 2 | Management's Discussion and Analysis | Non-GAAP Financial Measures
The following is a reconciliation of Adjusted Operating Earnings to net income
(loss) attributable to Jackson Financial Inc., the most comparable U.S. GAAP
measure.

                                                        Three Months Ended June 30,             Six Months Ended June 30,
                                                          2022               2021                 2022                2021
                                                                                   (in millions)
Net income (loss) attributable to Jackson
Financial, Inc.                                       $    2,903          $   (540)         $       4,928          $  2,392
Income tax expense (benefit)                                 717               (54)                 1,047               531
Pretax income (loss) attributable to Jackson
Financial Inc                                              3,620              (594)                 5,975             2,923
Non-operating adjustments (income) loss:
Guaranteed benefits and hedging results:
Fees attributable to guarantee benefit reserves             (765)             (701)                (1,529)           (1,373)
Net movement in freestanding derivatives                  (2,847)              442                 (1,371)            3,473
Net reserve and embedded derivative movements                772             1,374                 (1,067)           (3,219)
DAC and DSI impact                                           845              (243)                 1,190               453
Assumption changes                                             -                 -                      -                 -
Total guaranteed benefits and hedging results             (1,995)              872                 (2,777)             (666)
Net realized investment (gains) losses
including change in fair value of funds
withheld embedded derivative                              (1,082)              752                 (1,980)             (298)

Net investment income on funds withheld assets              (364)             (294)                  (624)             (585)
Other items                                                   64                25                     67                20
Total non-operating adjustments                           (3,377)            1,355                 (5,314)           (1,529)
Pretax Adjusted Operating Earnings                           243               761                    661             1,394
Operating income taxes                                        18               125                     82               189
Adjusted Operating Earnings                           $      225          $    636          $         579          $  1,205



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Item 2 | Management discussion and analysis | Non-GAAP Financial Measures
Adjusted book value and adjusted operating ROE

We use Adjusted Operating Return on Equity ("ROE") to manage our business and
evaluate our financial performance. Adjusted Operating ROE excludes items that
vary from period to period due to accounting treatment under U.S. GAAP or that
are non-recurring in nature, as such items may distort the underlying
performance of our business. We calculate Adjusted Operating ROE by dividing our
Adjusted Operating Earnings by average Adjusted Book Value. Adjusted Book Value
excludes Accumulated Other Comprehensive Income (Loss) ("AOCI") attributable to
Jackson Financial Inc. AOCI attributable to Jackson Financial Inc. does not
include AOCI arising from investments held within the funds withheld account
related to the Athene Reinsurance Transaction. We exclude AOCI attributable to
Jackson Financial Inc. from Adjusted Book Value because our invested assets are
generally invested to closely match the duration of our liabilities, which are
longer duration in nature, and therefore we believe period-to-period fair market
value fluctuations in AOCI to be inconsistent with this objective. We believe
excluding AOCI attributable to Jackson Financial Inc. is more useful to
investors in analyzing trends in our business. Changes in AOCI within the funds
withheld account related to the Athene Reinsurance Transaction offset the
related non-operating earnings from the Athene Reinsurance Transaction resulting
in a minimal net impact on Adjusted Book Value of Jackson Financial Inc.

Adjusted Book Value and Adjusted Operating ROE should not be used as substitutes
for total shareholders' equity and ROE as calculated using annualized net income
and average equity in accordance with U.S. GAAP. However, we believe the
adjustments to equity and earnings are useful to gaining an understanding of our
overall results of operations.

The following is a reconciliation of Adjusted Book Value to total shareholders'
equity and a comparison of Adjusted Operating ROE to ROE, the most comparable
U.S. GAAP measure:

                                                            Three Months Ended June 30,               Six Months Ended June 30,
                                                              2022                 2021                 2022                2021
                                                                                       (in millions)
Net income (loss) attributable to Jackson
Financial, Inc.                                         $       2,903           $   (540)         $      4,928           $  2,392
Adjusted Operating Earnings                             $         225                636                   579              1,205

Total shareholders' equity                              $       9,563           $ 10,391          $      9,563           $ 10,391
Adjustments
to total
shareholders'
equity:

Exclude accumulated other comprehensive income
(loss) attributable to Jackson Financial Inc. (1)               2,045             (1,758)                2,045             (1,758)
Adjusted Book Value                                     $      11,608           $  8,633          $     11,608           $  8,633

ROE                                                             121.4   %          (21.2) %              100.1   %           48.3  %
Adjusted Operating ROE on average equity                          8.4   %           29.2  %               11.4   %           31.2  %

(1) Excludes ($1,677) million and $632 million related to investments held in the funds withheld account related to the
Athene reinsurance operation in June 30, 2022 and 2021, respectively.

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Item 2 | Management discussion and analysis | Main operational measures

Main operational measures

We use a number of operational measures that management believe are helpful
information about our business and the operational factors underlying our
financial performance.

Sales

Sales of annuities and institutional products include all money deposited by
customers into new and existing contracts. We believe sales statistics are
useful to gaining an understanding of, among other things, the attractiveness of
our products, how we can best meet our customers' needs, evolving industry
product trends and the performance of our business from period to period.

                                                      Three Months Ended June 30,                Six Months Ended June 30,
                                                        2022                 2021                 2022                 2021
                                                                                  (in millions)
Sales
Variable annuities                                $        3,633          $  4,821          $        8,208          $  9,495
RILA                                                         490                 -                     689                 -
Fixed Index Annuities                                         13                32                      32                72
Fixed Annuities                                                6                 6                      10                16
Total Retail Annuity Sales                                 4,142             4,859                   8,939             9,583

Total Institutional Product Sales                            201                 -                   1,176                 -

Total Sales                                       $        4,343          $  4,859          $       10,115          $  9,583



For the three and six months ended June 30, 2022, total sales decreased by $516
million and increased by $532 million compared to the three and six months ended
June 30, 2021, respectively. Lower retail sales were primarily due to decreased
sales of our variable annuities with lifetime living benefits, partially offset
by sales of our lifetime income solutions offering in the defined contribution
market and our new RILA product, that were both launched in the fourth quarter
of 2021. In addition, sales of our institutional products were higher by $201
million and $1,176 million, compared to the three and six months ended June 30,
2021, respectively. Sales of fixed index and fixed annuities remained at
historically low levels although higher rates in 2022 have enabled more frequent
pricing actions.

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Item 2 | Management discussion and analysis | Main operational measures
Account value

Account value generally equals the account value of our variable annuities,
RILA, fixed index annuities, fixed annuities, and institutional products. It
reflects the total amount of customer invested assets that have accumulated
within a respective product and equals cumulative customer contributions, which
includes gross deposits or premiums, plus accrued credited interest plus or
minus the impact of market movements, as applicable, less withdrawals and
various fees. We believe account value is a useful metric in providing an
understanding of, among other things, the sources of potential fee income
generation, potential benefit obligations and risk management priorities.

                                                                  June 30, 2022           December 31, 2021
                                                                                (in millions)
Account Value
GMWB For Life                                                   $      149,730          $          188,078
GMWB                                                                     5,778                       7,318
Other Guarantees - Living Benefits                                       1,401                       1,808
No Living Benefits                                                      49,390                      60,719
Total Variable Annuity Account Value                                   206,299                     257,923

RILA                                                                       735                         110

Fixed Index Annuity (1)                                                    321                         291
Fixed Annuity (1)                                                        1,102                       1,099
Total Fixed & Fixed Index Annuity Account Value                          1,423                       1,390

Total Retail Annuities Account Value                            $      

$208,457,259,423

Total Institutional Products Account Value                      $        8,483          $            8,830

Total Account Value of Closed Life and Annuity Pools (2) $8,568 $

            8,778

(1) Net of reinsurance in Athens.
(2) Excludes payout annuities and traditional life insurance with no account value.


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Item 2 | Management discussion and analysis | Main operational measures
Net flows

Net flows represent the net change in customer account balances during a period,
including gross premiums, surrenders, withdrawals and benefits. Net flows
exclude investment performance, interest credited to customer accounts,
transfers between fixed and variable benefits for variable annuities and policy
charges. We believe net flows is a useful metric in providing an understanding
of, among other things, sales, ongoing premiums and deposits, the changes in
account value from period to period, sources of potential fee income and
policyholder behavior.

                                                     Three Months Ended June 30,              Six Months Ended June 30,
                                                       2022                2021                 2022                2021
                                                                                (in millions)
Net Flows:
Variable Annuity                                  $       (300)         $   (325)         $        (298)         $   (565)
RILA                                                       489                 -                    687                 -
Fixed Index Annuity (1)                                     18                27                     33                62
Fixed Annuity (1)                                           (8)               13                    (13)                3
Total Retail Annuities Net Flows, Net of
Reinsurance                                                199              (285)                   409              (500)
Net flows ceded to Athene                         $       (585)         $   (599)         $      (1,188)         $ (1,252)
Total Retail Annuities net flows, Gross of
Reinsurance                                       $       (386)         $   

(884) ($779) $(1,752)

Total Institutional Products Net Flows            $       (667)         $ 

(1,735) ($351) $(2,281)

Total Closed Life and Annuity Blocks Net
Flows (2)                                         $        (72)         $   

(61) ($159) ($145)

(1) Net of reinsurance in Athens.
(2) Excludes payout annuities and traditional life insurance with no account value.


Net flows improved for the three and six months ended June 30, 2022, compared to
the three and six months ended June 30, 2021, due primarily to increased sales
of both RILA and institutional products which has a positive effect on net
flows.

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Item 2 | Management discussion and analysis | Main operational measures
Benefit basis

Benefit base refers to a notional amount that represents the value of a
customer's guaranteed benefit, and therefore may be a different value from the
invested assets in a customer's account value. The benefit base may be used to
calculate the fees for a customer's guaranteed benefits within an annuity
contract. The guaranteed death benefit and guaranteed living benefit within the
same contract may not have the same benefit base. We believe benefit base is a
useful metric for our variable annuity policies in providing an understanding
of, among other things, fee income generation, potential optional guarantee
benefit obligations and risk management priorities. The following table shows
variable annuity account value and benefit base as of June 30, 2022 and
December 31, 2021:

                                                                         June 30, 2022                                December 31, 2021
                                                              Account Value           Benefit Base           Account Value           Benefit Base
                                                                                                 (in millions)
No Living Benefits                                          $       49,390                       N/A       $       60,719                       N/A

By Guaranteed Living Benefits:

 GMWB for Life                                                     149,730                187,862                 188,078                183,626
 GMWB                                                                5,778                  5,792                   7,318                  5,860
 GMIB (1)                                                            1,401                  1,977                   1,808                  2,059

Total                                                       $      206,299          $     195,631          $      257,923          $     191,545

By guaranteed death benefit:

 Return of AV (No GMDB)                                     $       25,114                       N/A       $       30,337                       N/A
 Return of Premium                                                 157,491                137,498                 197,544                135,034
 Highest Anniversary Value                                          12,242                 14,552                  15,599                 14,767
 Rollup                                                              3,334                  4,785                   4,188                  4,850
 Combination HAV/Rollup                                              8,118                 10,373                  10,255                 10,402
Total                                                       $      206,299          $     167,208          $      257,923          $     165,053

(1) Almost all of our GMIB benefits are reinsured.

Assets under management

AUM, or assets under management, refers to investment assets that are managed by
one of our subsidiaries and includes: (i) the assets in our investment portfolio
managed by PPM, which excludes assets held in funds withheld accounts for
reinsurance transactions, (ii) third-party assets managed by PPM, including
those for Prudential and its affiliates or third parties, and (iii) the separate
account assets of our Retail Annuities segment that Jackson National Asset
Management ("JNAM") manages and administers. Total AUM reflects exclusions
between segments to avoid double counting. We believe AUM is a useful metric for
understanding of, among other things, the sources of our earnings, net
investment income and performance of our invested assets, customer directed
investments and risk management priorities.

                                                 June 30,       December 31,
                                                   2022             2021
                                                        (in millions)
Jackson Invested Assets                         $  46,267      $      47,224

Third Party Invested Assets (including CLOs)       26,751             31,980
Total PPM AUM                                      73,018             79,204
Total JNAM AUM                                    221,634            280,250
Total AUM                                       $ 294,652      $     359,454



PPM manages the majority of our investment portfolio and provides investment
management services to Prudential affiliates in Asia, former affiliates in the
United Kingdom, and other third parties across markets, including public fixed
income, private equity, private debt and commercial real estate.


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Item 2 | Management discussion and analysis | Macroeconomics, Industry and

                                                               Regulatory 

Tendencies

Macroeconomic, sectoral and regulatory trends

We discuss below a number of trends and uncertainties that we believe may
materially affect our future business performance, including our results of
operations, investments, cash flows, capital and liquidity
position.

Macroeconomic and financial market conditions

Our business and results of operations are affected by macroeconomic factors.
The level of interest rates and shape of the yield curve, credit and equity
market performance (including market paths, equity volatility and other
factors), regulation, tax policy, the level of U.S. employment, inflation and
the overall economic growth rate can affect both our short and long-term
profitability. Monetary and fiscal policy in the United States, or similar
actions in foreign nations, could result in increased volatility in financial
markets, including interest rates, currencies and equity markets, and could
impact our business in both the short-term and medium-term. Political events,
including the imposition of stay-at-home orders and business shutdowns or other
effects arising as a result of the COVID-19 pandemic, civil unrest, tariffs or
other barriers to international trade, and the effects that these or other
political events could have on levels of economic activity, could also impact
our business through impacts on consumers' behavior or impact on financial
markets.

In the short- to medium-term, the potential for increased volatility could
pressure sales and reduce demand for our products as consumers consider
purchasing alternative products to meet their objectives, especially while
prevailing interest rates remain below historical averages. In addition, low
interest rate environments can make it difficult to consistently develop
products that are attractive to customers while rising interest rates may make
certain product features more attractive. Our financial performance can be
adversely affected by market volatility and equity market declines if fees
assessed on the account value of our annuities fluctuate, hedging costs increase
and revenues decline due to reduced sales and increased outflows.

Stock market environment

Our financial performance is impacted by the performance of equity markets. For
example, our variable annuities earn fees based on the account value, which
changes with equity market levels. After a very volatile 2020, U.S. equity
markets performed well in 2021 with the S&P 500 generally at or near all-time
highs throughout the year. Through the first half of 2022 equity markets
declined and equity volatility increased, resulting in higher hedging costs. The
financial performance of our hedging program could be impacted by large
directional market movements or periods of high volatility. In particular, our
hedges could be less effective in periods of large directional movements or we
could experience more frequent or more costly rebalancing in periods of high
volatility, which would lead to adverse performance versus our hedge targets and
increased hedging costs. Further, we are also exposed to basis risk, which
results from our inability to purchase or sell hedge assets whose performance is
perfectly correlated to the performance of the funds into which customers
allocate their assets. We make funds available to customers where we believe we
can transact in sufficiently correlated hedge assets, and we anticipate some
variance in the performance of our hedge assets and customer funds. This
variance may result in our hedge assets outperforming or underperforming the
customer assets they are intended to match. This variance may be exacerbated
during periods of high volatility, leading to a mismatch in our hedge results
relative to our hedge targets and GAAP results.


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     Item 2 | Management's Discussion and Analysis | Macroeconomic, Industry and
                                                               Regulatory Trends
Interest Rate Environment

The interest rate environment has affected and will continue to affect our
future business and financial performance for the following reasons:

•To the extent interest rates continue to increase, consistent with the Federal
Reserve's signals about upcoming interest rate decisions, the effects of low
interest rates discussed below will diminish over time. However, both nominal
and real interest rates remain low by historical standards and may continue to
be so even after additional rounds of interest rate increases by the Federal
Reserve.

During periods of sharp rises in interest rates, the results of our variable
annuity business, statutory capital and RBC ratio may be impacted both
positively and negatively. While rising rates result in hedging losses
immediately due to reductions in the market value of interest rate hedges, we
would expect lower hedging costs and reduced levels of hedging going forward in
a higher interest rate environment. Further, we expect near-term hedging losses
from rising rates may be more than offset by changes in the fair value of the
related guaranteed benefit liabilities as was the case in the first half of
2022. Our statutory capital and RBC ratio may be negatively impacted by rising
rates due to minimum required reserving levels (i.e., cash surrender value
floor) when reserve releases are limited and unable to offset interest rate
hedging losses.

•For the past several years, we have operated in a low interest rate
environment. A prolonged low interest rate environment subjects us to increased
hedging costs or an increase in the amount of statutory reserves that our
insurance subsidiaries are required to hold for optional guaranteed benefits,
decreasing statutory surplus, which would adversely affect their ability to pay
dividends. Certain inputs to the statutory models rely on prescribed interest
rates, which are, in turn, determined using a historical interest rate
perspective with a mean reversion path over the longer term. At low interest
rate levels these prescribed rates could decline further as the NAIC updates the
calculations each year, which would adversely impact our statutory capital. In
addition, low interest rates could also increase the perceived value of optional
guaranteed benefit features to our customers, which in turn could lead to a
higher utilization of withdrawal or annuitization features of annuity policies
and higher persistency of those products over time. Finally, low interest rates
would continue to cause an acceleration of DAC amortization or reserve increase
due to loss recognition for annuities and interest-sensitive life insurance.

A gradual rise in interest rates would have benefits that are offsetting to a
low interest rate environment previously described. Those potential benefits of
rising interest rates include increased new money investment yields, a reduction
in hedging requirements and more attractive product features.

•Some of our annuities have a guaranteed minimum interest crediting rate. These
guaranteed minimum interest crediting rates may not be lowered, even if earnings
on our investment portfolio decline, resulting in net investment spread
compression that negatively impacts earnings. In addition, we expect more
customers to hold policies with comparatively high guaranteed minimum interest
crediting rates longer in a low interest rate environment, resulting in lower
than previously expected lapse rates. Conversely, a rise in the average yield on
our investment portfolio should positively impact earnings. Similarly, we expect
customers would be less likely to hold policies if existing guaranteed minimum
interest crediting rates are perceived to have less value as interest rates
rise, resulting in higher than previously expected lapse rates.


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     Item 2 | Management's Discussion and Analysis | Macroeconomic, Industry and
                                                               Regulatory Trends
Credit Market Environment

Our financial performance is impacted by conditions in fixed income markets.
After tightening in 2021, credit spreads widened in the first half of 2022. As
credit spreads widen, the fair value of our existing investment portfolio
generally decreases, although we generally expect the widening spreads to
increase the yield on new fixed income investments. Conversely, as credit
spreads tighten, the fair value of our existing investment portfolio generally
increases, and the yield available on new investment purchases decreases. While
changing credit spreads impact the fair value of our investment portfolio, this
revaluation is generally reflected in our Accumulated Other Comprehensive
Income. The revaluation will impact net income for realized gains or losses from
the sale of securities, the change in fair value of trading securities or
securities carried at fair value under the fair value election, or potential
changes in the allowance for credit loss ("ACL"). Shifts in the credit quality
of the assets underlying our investment portfolio may also impact the level of
regulatory required statutory capital for our insurance company subsidiaries. As
such, significant credit rating downgrades or payment defaults could negatively
impact our RBC ratio.

COVID-19

We continue to closely monitor developments related to the COVID-19 pandemic.
The COVID-19 pandemic has caused significant economic and financial turmoil both
in the United States and around the world. While there has been a gradual
resumption of activity, COVID-19 and its variants continue to affect activity,
and those effects could worsen in the future. At this time, it is not possible
to estimate the long-term effectiveness of any therapeutic treatments and
vaccines for COVID-19, or their efficacy with respect to current or future
variants or mutations of COVID-19, or the longer-term effects that the COVID-19
pandemic could have on our business. The extent to which the COVID-19 pandemic
impacts our business, results of operations, financial condition and cash flows
will depend on future developments which are highly uncertain and cannot be
predicted, including the availability and efficacy of vaccines against COVID-19
and against variant strains of the virus. Federal and state authorities' actions
could include restrictions of movements. We are not able to predict the duration
and effectiveness of governmental and regulatory actions taken to contain or
address the COVID-19 pandemic or the impact of future laws, regulations or
restrictions on our business.

Consumer’s behavior

We believe that many retirees have begun to look to tax-efficient savings
products as a tool for addressing their unmet need for retirement planning. We
believe our products are well positioned to meet this increasing consumer
demand. However, consumer behavior may be impacted by increased economic
uncertainty, increased unemployment rates, declining equity markets, lower
interest rates and increased volatility of financial markets. In recent years,
we have introduced new products to better address changes in consumer demand and
targeted distribution channels which meet changes in consumer preferences.

Demography

We expect demographic trends in the U.S. population, in particular the increase
in the number of retirement age individuals, to generate significant demand for
our products. In addition, the potential risk to government social safety net
programs and shifting of responsibility for retirement planning and financial
security from employers and other institutions to employees, highlights the need
for individuals to plan for their long-term financial security and will create
additional opportunities to generate sustained demand for our products. We
believe we are well positioned to capture the increased demand generated by
these demographic trends.

Regulatory policy

We operate in a highly regulated industry. Our insurance company subsidiaries
are regulated primarily at the state level, with some policies and products also
subject to federal regulation. As such, regulations recently approved or
currently under review at both the U.S. federal and state level could impact our
business model, including statutory reserve and capital requirements. We
anticipate that our ability to respond to changes in regulation and other
legislative activity will be critical to our long-term financial performance. In
particular, the following could materially impact our business:

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Item 2 | Management discussion and analysis | Macroeconomics, Industry and

                                                               Regulatory 

Tendencies

Ministry of Labor Fiduciary Boards Rule

The Department of Labor ("DOL") has issued a new regulatory action (the
"Fiduciary Advice Rule") effective February 16, 2021, that reinstates the text
of the DOL's 1975 investment advice regulation defining what constitutes
fiduciary "investment advice" to Employee Retirement Income Security Act
("ERISA") Plans and Individual Retirement Accounts ("IRAs") and provides
guidance interpreting such regulation. The guidance provided by the DOL broadens
the circumstances under which financial institutions, including insurance
companies, could be considered fiduciaries under ERISA or the Tax Code. In
particular, the DOL states that a recommendation to "roll over" assets from a
qualified retirement plan to an IRA, or from an IRA to another IRA, can be
considered fiduciary investment advice if provided by someone with an existing
relationship with the ERISA Plan or an IRA owner (or in anticipation of
establishing such a relationship). This guidance reverses an earlier DOL
interpretation suggesting that roll over advice did not constitute investment
advice giving rise to a fiduciary relationship. Because we do not engage in
direct distribution of annuities, including IRA products and annuities sold to
ERISA plan participants and to IRA owners, we believe that we will have limited
exposure to the new Fiduciary Advice Rule. Unlike the DOL's previous fiduciary
rule issued in 2016, compliance with the Fiduciary Advice Rule will not require
us or our distributors to provide the disclosures required for exemptive relief
under the previous rule. However, we continue to analyze the impact of the
Fiduciary Advice Rule, and, while we cannot predict the rule's impact, it could
have an adverse effect on sales of annuities through our distribution partners.
The Fiduciary Advice Rule may also lead to changes to our compensation practices
and product offerings and increased litigation risk, which could adversely
affect our results of operations and financial condition. We may also need to
take certain additional actions in order to comply with or assist our
distributors in their compliance with the Fiduciary Advice Rule.

Legislative reforms

Congress approved the Setting Every Community Up for Retirement Enhancement Act
of 2019 (the "SECURE Act") on December 20, 2019. The SECURE Act provides
individuals with greater access to retirement products. Namely, it makes it
easier for 401(k) programs to offer annuities as an investment option by, among
other things, creating a statutory safe harbor in ERISA for a retirement plan's
selection of an annuity provider. The SECURE Act represents the largest overhaul
to retirement plans in over a decade. We view these reforms as beneficial to our
business model and expect growth opportunities will arise from the new law.


Tax laws

All our annuities offer investors the possibility of benefiting from a tax advantage
report. Whether WE tax laws were to change, so our annuities would no longer be
offer tax-deferred benefits, demand for our products could significantly
lessen.

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Valerie J. Wallis