JXN Q2 Deep Dive: Annuity Sales Diversification and Capital Strength Drive Performance

Retirement solutions provider Jackson Financial (NYSE:JXN) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 1.4% year on year to $1.75 billion. Its non-GAAP profit of $4.87 per share was 5% above analysts’ consensus estimates.

Is now the time to buy JXN? Find out in our full research report (it’s free).

StockStory’s Take

Jackson Financial’s second quarter results generated a positive market response, reflecting management’s focus on growing its product mix and strengthening capital generation. CEO Laura Prieskorn highlighted robust gains in the Registered Index-Linked Annuity (RILA) segment and improvements in variable annuity net outflows, while the company’s disciplined asset allocation into higher-yielding classes contributed to greater spread income. Prieskorn emphasized, “RILA now accounts for nearly one-third of total Retail Annuity sales, underscoring Jackson’s leadership in meeting the growing demand for solutions that offer participation in equity market growth with downside protection.”

Looking forward, Jackson Financial’s outlook is shaped by further product expansion, ongoing investment in distribution technology, and a strong capital position that supports both growth and shareholder returns. Management pointed to continued RILA product innovation, disciplined risk management, and the potential for mergers or acquisitions as key elements of its strategy. CFO Don Cummings explained, “We believe that we can continue to support maintaining the strength of our balance sheet while also investing in the growth of our business and returning capital to shareholders. We don’t think this is a one or the other situation. We think we can do both.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to accelerating RILA adoption, improved operating leverage, and enhanced digital tools for advisers.

• RILA sales momentum: The Registered Index-Linked Annuity business saw account balances rise nearly 80% year-over-year and 26% since year-end 2024, supported by new product launches such as Market Link Pro III, which offers NASDAQ 100 options and principal protection features.
• Improved variable annuity outflows: Net outflows for variable annuities declined for the second consecutive quarter, down 27% year-over-year, aided by positive separate account performance and greater sales diversification across annuity types.
• Enhanced asset allocation: The company’s allocation to higher-yielding asset classes—including emerging markets, residential mortgages, and investment-grade structured securities—helped boost spread income, supporting the earnings mix as interest rates and market volatility fluctuated.
• Digital adviser experience: Jackson introduced a new digital platform for financial professionals, integrating adviser input to streamline product selection, enhance client alignment, and facilitate wholesaler connections, signaling continued investment in distribution tools.
• Capital and liquidity strength: Capital generation and free cash flow remained above the $1 billion annualized run rate, leading to ongoing capital returns and a strong risk-based capital ratio well above regulatory minimums, which management sees as a foundation for further growth and capital deployment.

Drivers of Future Performance

Jackson Financial expects its diversified annuity product mix, technology upgrades, and capital flexibility to influence the outlook for the remainder of the year.

• Product and sales diversification: Management believes continued growth in RILA and fixed annuities will offset competitive pressures in variable annuities, with new features such as full principal protection and expanded distribution channels aiming to capture a wider adviser and client base.
• Technology and service investment: Ongoing enhancements to digital tools for advisers are expected to improve sales efficiency and client experience, which management sees as differentiators in a crowded marketplace. These investments aim to support future growth and retention.
• Strategic capital deployment: The company is weighing organic growth, potential risk transfer transactions, and selective M&A to drive capital generation and shareholder value. Management noted that opportunities involving captive structures or leveraging its Brook Re subsidiary could further enhance capital efficiency and support inorganic expansion.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of RILA and fixed annuity sales expansion, especially as new product features are adopted; (2) improvements in net outflows and retention rates in the variable annuity portfolio; and (3) capital deployment decisions, including the potential for acquisitions or risk transfer arrangements. Execution on technology enhancements and adviser engagement will be additional markers of progress.

Jackson Financial currently trades at $91.55, up from $86.50 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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