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Chief Executive Officer — Laura Louene Prieskorn
Chief Financial Officer — Don Wayne Cummings
Chief Investment Officer — Christopher Allen Raub
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Laura Louene Prieskorn: Thank you, Elizabeth Ann Werner. Good morning, everyone. I appreciate you joining us today for Jackson Financial Inc.’s first quarter 2026 earnings call. I will start by highlighting the quarter’s positive results and the solid progress toward achieving our 2026 financial targets. Following my remarks, Don Wayne 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, we successfully executed our capital management and growth initiatives. Turning to the quarter’s key metrics on slide three, you will see we maintained a resilient capital position. Total adjusted capital of $5.5 billion is up nearly 5% from the first quarter last year.
Our strong capital generation continues to support both distributions to our holding company and consistent capital return to shareholders. During the quarter, we distributed $288 million from our operating company to Jackson Financial Inc., 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 are 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 Market Link Pro 3 and Market Link Pro Advisory 3, our leading RILA offerings.
RILA sales have now exceeded $2 billion in quarterly sales since we launched the products in May 2025. We are 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 growth potential and 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 and helps advisers deliver retirement income protection solutions their clients can count on.
Since our launch in August 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 $750 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 are confident in our ability to offer competitive spread-based products to our many distribution partners. Importantly, we saw considerable improvement in net outflows, 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 are expanding and making annuities more accessible as a retirement solution. Within the advisory channel, we are 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 Financial Inc. remains a trusted partner across a growing and dynamic annuity market. Turning to slide four, 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 have made in diversifying our in-force book. Nearly five years into our journey as a public company, our focus remains clear.
We are 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 Financial Inc. 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 five and looking ahead to the full year, we have 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 have already started allocating new money to TPG-managed assets and, while we do not 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, a 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 will 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 will turn the call over to Don. Thank you.
Don Wayne Cummings: Let us turn to slide six 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 will 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-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 and 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 Financial Inc. maintain a stable and competitive position in the spread product market through late 2025 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 would like to highlight the continued strength and profitability of our in-force business. Our adjusted operating return on equity for the trailing twelve 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 the business as we continue to grow and diversify our sales mix and balance sheet in a disciplined, value-accretive way.
Turning to slide seven, I will walk through the notable items that affected adjusted operating earnings this quarter. Free capital generation, which I will 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 process and data sourcing to more efficiently identify deceased 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 eight, we take a closer look at the diverse, expanding new business profile within our retail annuity segment, which holds a top-three 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 and 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 non-variable 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 have included advisory sales trends to highlight the breadth of our distribution capabilities. Jackson Financial Inc. maintains a leading position in the advisory annuity space, supported by a full spectrum of product offerings. Notably, in 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 nine, 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 Inc.
Since moving to a more economic hedging approach in 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 benefit liabilities, offers insight into the change in equity at Brook 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 variable annuity 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, Brook 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 Brook Re during the quarter. Looking ahead, we will continue to manage Brook 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 the consistency of our capital return and free cash flow. At Jackson Financial Inc., we operate under a straightforward philosophy: Earn it, then pay it. This framework is built on three 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 two steps working together. In the first quarter, after-tax debt 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 two 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 partner 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 Financial Inc. has returned nearly $3 billion to common shareholders, exceeding our initial market capitalization at separation. These results reinforce Jackson Financial Inc.’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 Financial Inc.’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 have become significantly less sensitive to equity market movements, reflecting the benefits of the Brook 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 Financial Inc. 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 Financial Inc. 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, financial leverage remains modest at 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 Financial Inc.’s ability to source attractive yields and maintain product competitiveness across both our retail and institutional businesses. PPM is a core component of Jackson Financial Inc.’s strategic growth profile, managing $59 billion of Jackson Financial Inc.’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 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 Financial Inc.’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 Financial Inc. 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 Financial Inc. 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. 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 will now turn the call back to Laura.
Laura Louene Prieskorn: Thank you, Don Wayne Cummings. 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 are committed to our mission of helping Americans secure their financial futures. As always, we are grateful for the dedication of our associates, whose contributions each quarter remain our greatest strength. At this time, I will turn the call over to the operator for questions.
Operator: We will now open the call for questions. If you would like to ask a question and have joined via the webinar, please use the raise hand icon which can be found in the black bar at the bottom of the webinar application screen. If you joined via telephone, please press 9 on your keypad to raise your hand. When you hear your name called, you will be prompted to unmute your line and ask your question. Our first question comes from Suneet Kamath with Jefferies.
Suneet Kamath: Sorry, I think I just unmuted. Can you hear me?
Suneet Kamath: Okay, sorry about that. Good morning. I wanted to start with annuities. Do you have a sense of what percentage of your sales represent exchange activity versus true new business?
Laura Louene Prieskorn: Good morning, 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.
Suneet Kamath: Okay. And then I guess maybe a bigger picture question. Oh, sorry—there is some background noise. So, bigger picture question: obviously, there is a pretty large merger of equals going on in the annuity space. We have not seen one of those in, I do not know, twenty years or so. Just wondering, Laura, if you think this changes the industry dynamic at all, and any thought that you could give on overall consolidation in the space would be helpful. Thanks.
Laura Louene Prieskorn: I agree with you. This is a large change and one that we have not 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 would not have any comment on what else might occur. But I think we will continue to compete constructively with both organizations as we have in the past, and look forward, from our diversified product offerings, to continuing to focus on growth across all those annuity types.
Don Wayne Cummings: And just to chime in on the merger, as Laura highlighted, we already have a 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 are expanding this year. So we feel well positioned both with our product suite and with our distribution capabilities going forward.
Suneet Kamath: Got it. And then just one other one for Don, if I could. Just on Brook Re and the additional capital that is now in the subsidiary, I guess related to Hickory. Does that change the timing of when you might be able to take dividends out of Brook Re? Any update there would be helpful.
Don Wayne Cummings: Sure, happy to take that question, Suneet. You are right—we did put $500 million of capital into Brook Re during the quarter. That is the growth capital that we have designated for Hickory Re. After the capital contribution and the roughly $100 million loss we experienced at Brook Re during the quarter, we are still up in capital there. In terms of the timing of when we expect to be able to distribute capital from Brook Re, as I mentioned on the fourth quarter earnings call, we would anticipate that Hickory will start generating capital that we will be able to distribute in the near term—think the next few years.
Capital that would be distributed from the business that is sitting at Brook Re on a standalone basis would be more of a longer-term timeframe. Hopefully that helps.
Operator: Thank you. Our next question comes from Ryan Krueger with KBW. Please unmute to ask your question.
Ryan Joel Krueger: Hey, thanks. Good morning. My first question was on capital generation. Given the continued headwinds to alternative returns, can you give us any sense of how sensitive your capital generation is to the alts returns? I know we can look at the dollar-for-dollar return impact, but I think there is probably also an offset in required capital given high capital charges against alts. So just any sensitivity that you could provide would be helpful.
Don Wayne Cummings: Yeah, good morning, Ryan. Thanks for that question. You are right—there is a bit of sensitivity with capital generation, and you do get a bit of an offset given the higher capital charge. As we look at the results we generated in the first quarter, and given the recovery in markets since the end of the quarter—equity markets are back near or at all-time highs—we feel pretty comfortable for the full year in being able to hit our $1.2 billion target. And as a reminder, that was based on a 5% total equity market return. We feel good about that.
We do not see any issues with our alternative returns, but I will ask Christopher Allen Raub to add a little color on how we look at that asset class and our recent performance as well as long term.
Christopher Allen Raub: Thanks, Don. Ryan, thanks for the question. Just some flavor to help you as you think about that portfolio: it is predominantly private equity investing with a middle-market buyout focus. We also have a modest amount of CLO equity and some other fund investments in there. Returns are reported on a one-quarter lag and will reflect market conditions at the time. Nothing we saw in the quarter changes our thoughts around the 10% long-term assumption. In fact, that is a measure we have outperformed since being public a number of years ago.
Ryan Joel Krueger: Thanks. And then on the TPG relationship, I know you talked about allocating 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. 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?
Don Wayne Cummings: Thanks, Ryan. We closed the partnership with TPG midway through the quarter, and we have started seeing some capital deployed by TPG. It is early days. In terms of being able to reposition our overall portfolio outside of our new business flows, we still have that potential. That is certainly on our list to work through as we get the partnership fully stood up.
Operator: Thank you. Our next question comes from Alex Scott with Barclays. Please unmute to ask your question. Alex, please unmute to ask your question.
Alex Scott: Hi, good morning. Hope you can hear me. I just wanted to first ask about the growth that you are seeing in some of the RILAs and FIAs. Can you take us into some of the feature changes and things that you are doing to prompt more of the growth? Are there bonuses on the products? Have you increased cap rates? What features are you tweaking to make it more attractive?
Laura Louene Prieskorn: Good morning, Alex. Thank you for the question. Throughout 2025, we refreshed our RILA product, and in the fall we launched an FIA product as well. Both Don and I have talked about the diversification of our sales being a goal, and RILA sales were about 40% of our total retail sales in the first quarter. The product update for RILA in 2025 included flexibility and choice that differentiate it from other products in the market—in terms of crediting methods, the protection level, and the number of indexes available. On the FIA front, that launch included a living benefit option that can be elected not just at sale, but also post-sale, which is a unique feature.
We have seen great momentum in FIA sales, and as we continue through this year, we expect spread-based sales growth to benefit not just from the product refresh, but also from the efforts at PPM to seek greater yield, the establishment of the captive for fixed and FIA, as well as the partnership with TPG that Don just discussed. We are excited about the growth on the spread-based side.
Alex Scott: That is helpful. Thank you. Next question I had is on the PCAPS, actually. I thought it was interesting as you were describing the PCAPS—you mentioned that it could potentially allow you to run leaner on capital. Is that something I should pay more attention to? Your RBC ratio in the operating company is pretty high at the moment, and your holdco cash is pretty high relative to your thresholds. Does adding that kind of contingent liquidity change the way you may be able to manage some of those levels?
Don Wayne Cummings: Hey, Alex. Let me first highlight our RBC levels. As we have talked about on prior calls, given our shift to continuing to focus on our business and more on spread-based products, we do expect to see our RBC ratio come down over time. So that is point one. Second, specifically around the use of PCAPS, we think the way that facility is structured provides a very good source of contingent capital should we get into a severe stress scenario, and that is one of the features we found attractive.
We obviously do very robust stress testing at a variety of 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.
Operator: This concludes our Q&A session. I will now turn the call back to Laura Louene Prieskorn for closing remarks.
Laura Louene Prieskorn: Thank you. Jackson Financial Inc.’s strong first quarter performance reinforces the resilience of our business. We look forward to continuing these discussions and sharing our progress toward our 2026 targets after next quarter. Thank you for your ongoing interest in Jackson Financial Inc.
Operator: The call has concluded. Thank you for joining. You may now disconnect.
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JXN Q1 2026 Earnings Transcript was originally published by The Motley Fool