Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6. Fair Value Measurements
Fair Value of Financial Instruments Carried at Other Than Fair Value
The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value (in millions):
| | | | | | | | | | | | | | | | | | | | |
| June 30, 2026 |
| | | Fair Value |
| Carrying
Value | | Total | Level 1 | Level 2 | Level 3 |
| Assets | | | | | | |
| Mortgage loans | $ | 10,414 | | | $ | 10,130 | | $ | — | | $ | — | | $ | 10,130 | |
| Policy loans | 867 | | | 867 | | — | | — | | 867 | |
| FHLBI capital stock | 87 | | | 87 | | 87 | | — | | — | |
| | | | | | |
| Liabilities | | | | | | |
Annuity reserves (1) | $ | 42,563 | | | $ | 40,777 | | $ | — | | $ | — | | $ | 40,777 | |
Guaranteed investment contracts and funding agreements (2) | 11,018 | | | 10,865 | | — | | — | | 10,865 | |
| Funds withheld payable under reinsurance treaties | 11,935 | | | 11,935 | | — | | — | | 11,935 | |
| Debt | 2,769 | | | 2,588 | | — | | 2,588 | | — | |
Securities lending payable (3) | 77 | | | 77 | | — | | 77 | | — | |
| | | | | | |
Repurchase agreements (3) | 400 | | | 400 | | — | | 400 | | — | |
Separate account liabilities (5) | 245,387 | | | 245,387 | | — | | 245,387 | | — | |
| | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| | | Fair Value |
| Carrying
Value | | Total | Level 1 | Level 2 | Level 3 |
| Assets | | | | | | |
| Mortgage loans | $ | 9,887 | | | $ | 9,624 | | $ | — | | $ | — | | $ | 9,624 | |
| Policy loans | 889 | | | 889 | | — | | — | | 889 | |
| FHLBI capital stock | 119 | | | 119 | | 119 | | — | | — | |
| | | | | | |
| Liabilities | | | | | | |
Annuity reserves (1) | $ | 39,059 | | | $ | 38,552 | | $ | — | | $ | — | | $ | 38,552 | |
Guaranteed investment contracts and funding agreements (2) | 11,021 | | | 11,077 | | — | | — | | 11,077 | |
| Funds withheld payable under reinsurance treaties | 12,989 | | | 12,989 | | — | | — | | 12,989 | |
| Debt | 2,030 | | | 1,877 | | — | | 1,877 | | — | |
Securities lending payable (3) | 35 | | | 35 | | — | | 35 | | — | |
Repurchase agreements (3) | 1,001 | | | 1,001 | | — | | 1,001 | | — | |
| | | | | | |
Separate account liabilities (5) | 236,496 | | | 236,496 | | — | | 236,496 | | — | |
| | | | | | |
(1) Annuity reserves represent only the components of other contract holder funds that are considered to be financial instruments. |
(2) Included as a component of other contract holder funds on the Condensed Consolidated Balance Sheets. |
(3) Included as a component of repurchase agreements and securities lending payable on the Condensed Consolidated Balance Sheets. |
(4) Included as a component of other liabilities on the Condensed Consolidated Balance Sheets. |
(5) The values of separate account liabilities are set equal to the values of separate account assets. |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 6. Fair Value Measurements
The following is a discussion of the methodologies used to determine fair values of the financial instruments that are not reported at fair value as shown in the table above:
•Mortgage Loans: Fair values are generally determined by discounting expected future cash flows at current market interest rates, inclusive of a credit spread, for similar quality loans. For loans whose value is dependent on the underlying property, fair value is the estimated value of the collateral. Certain characteristics considered significant in determining the spread or collateral value may be based on internally developed estimates. As a result, these investments have been classified as Level 3 within the fair value hierarchy.
Mortgage loans held under a funds withheld reinsurance agreement are valued using third-party pricing services, which may use economic inputs, geographical information, and property specific assumptions in deriving the fair value price. The Company reviews the valuations from these pricing providers to ensure they are reasonable. Due to lack of observable inputs, these investments have been classified as Level 3 within the fair value hierarchy.
•Policy Loans: As described under “Policy Loans” in Note 4 – Investments of these Notes to Condensed Consolidated Financial Statements, due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans approximates fair value. The non-reinsurance related component of policy loans has been classified as Level 3 within the fair value hierarchy.
•FHLBI Capital Stock: FHLBI capital stock, which is included in other invested assets, can only be sold to FHLBI at a constant price of $100 per share. Due to the lack of valuation uncertainty, the investment has been classified as Level 1.
•Other Contract Holder Funds: Fair values for immediate annuities without mortality features are derived by discounting the future estimated cash flows using current market interest rates for similar maturities. Fair values for deferred annuities, including the fixed option on variable annuities, fixed annuities, fixed index annuities and RILAs, are determined using projected future cash flows discounted at current market interest rates.
Fair values for guaranteed investment contracts and funding agreements are based on the present value of future cash flows discounted at current market interest rates.
•Funds Withheld Payable Under Reinsurance Treaties: The fair value of the funds withheld payable is equal to the fair value of the assets held as collateral, which primarily consists of bonds, mortgages, limited partnerships, and cash and cash equivalents. The fair value of the assets generally uses industry standard valuation techniques as described above and the funds withheld payable components are valued consistent with the assets in the fair value hierarchy and the funds withheld payable is classified in its entirety according to the lowest level input that is significant to the determination of the fair value. The funds withheld payable is classified as Level 3 within the fair value hierarchy.
•Debt: Fair values for the Company’s surplus notes and debt are generally determined by prices obtained from independent broker dealers or discounted cash flow models. Such prices are derived from market observable inputs and are classified as Level 2.
•Securities Lending Payable: The Company’s securities lending payable is set equal to the cash collateral received. Due to the short-term nature of the loans, carrying value is a reasonable estimate of fair value and is classified as Level 2.
•FHLB Advances: Carrying value of the Company’s FHLB advances, which are included in other liabilities, is considered a reasonable estimate of fair value due to their short-term maturities and are classified as Level 2.
•Repurchase Agreements: Carrying value of the Company’s repurchase agreements is considered a reasonable estimate of fair value due to their short-term maturities and are classified as Level 2.
•Separate Account Liabilities: The values of separate account liabilities are set equal to the values of separate account assets, which are comprised of investments in mutual funds that transact regularly, but do not trade in active markets as they are not publicly available and are categorized as Level 2.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 7. Deferred Acquisition Costs
7. Deferred Acquisition Costs
Certain costs directly related to the successful acquisition of new or renewal insurance business are capitalized as deferred acquisition costs ("DAC") in the period in which they are incurred. These costs primarily pertain to commissions and certain costs associated with policy issuance and underwriting. All other acquisition costs are expensed as incurred.
Contracts are grouped into cohorts by contract type and issue year. For traditional and limited-payment insurance contracts, contracts are grouped consistent with the groupings used in estimating the associated liability. DAC are amortized into expense on a constant level basis over the expected term of the grouped contracts. For traditional and limited-payment insurance contracts, amortization is determined based on projected in force amounts. For non-traditional contracts, amortization is determined based on projected policy counts.
The expected term used to amortize DAC is determined using best estimate assumptions, including mortality and persistency, consistent with the best estimate assumptions used to determine the reserve for future policy benefits, MRBs, and additional liabilities for applicable contracts. For amortization of DAC related to contracts without these balances, assumptions used to determine expected term are developed in a similar manner. The amortization rate is determined using all information available as of the end of the reporting period, including actual experience and any assumption updates. Annually, or as circumstances warrant, a comprehensive review of assumptions is conducted, and assumptions are revised as appropriate. If assumptions are revised, the amortization rate is calculated using revised assumptions such that the effect of revised assumptions is recognized prospectively as of the beginning of that reporting period.
Unamortized DAC are written off when a contract is internally replaced and substantially changed. Substantially unchanged contracts are treated as a continuation of the replaced contract, with no change to the unamortized DAC at the time of the replacement.
The following table presents the roll-forward of the DAC (in millions). The current period amortization is based on the end of the period estimates of mortality and persistency. The amortization pattern is revised on a prospective basis at the beginning of the period based on the period’s actual experience.
| | | | | | | | | | | |
| Six Months Ended June 30, | | Year Ended December 31, |
| 2026 | | 2025 |
| Variable Annuities | | | |
| Balance, beginning of period | $ | 10,810 | | | $ | 11,314 | |
| | | |
| Deferrals of acquisition costs | 308 | | | 526 | |
| Amortization | (508) | | | (1,030) | |
| Variable Annuities balance, end of period | $ | 10,610 | | $ | 10,810 | |
| | | |
| RILA | | | |
| Balance, beginning of period | $ | 637 | | $ | 399 | |
| Deferrals of acquisition costs | 183 | | 294 | |
| Amortization | (43) | | (56) | |
| RILA balance, end of period | $ | 777 | | $ | 637 | |
| | | |
| Reconciliation of total DAC | | | |
| Variable Annuities balance, end of period | $ | 10,610 | | | $ | 10,810 | |
| RILA balance, end of period | 777 | | | 637 | |
| Other product lines, end of period | 268 | | | 213 | |
| Total balance, end of period | $ | 11,655 | | | $ | 11,660 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 8. Reinsurance
8. Reinsurance
The Company, through its subsidiary insurance companies, assumes and cedes reinsurance from and to other insurance companies as a means of managing capital and risk exposures. However, if the reinsurer is unable to meet its obligations, the originating issuer of the coverage retains the liability. The Company reinsures certain of its risks to other reinsurers on a coinsurance, coinsurance with funds withheld, modified coinsurance, or yearly renewable term basis. The Company regularly monitors the financial strength ratings of its reinsurers.
Athene Reinsurance
The Company entered into a funds withheld coinsurance agreement with Athene effective June 1, 2020, to reinsure on a 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 coinsurance with funds withheld agreement ("the coinsurance agreement") required Jackson to establish a segregated account in which the investments supporting the ceded obligations are maintained. While the economic benefits of the investments flow to Athene, Jackson retains physical possession and legal ownership of the investments supporting the reserve. Further, the investments in the segregated account are not available to settle any policyholder obligations other than those specifically covered by the coinsurance agreement and are not available to settle obligations to general creditors of Jackson. The profit and loss with respect to obligations ceded to Athene are included in periodic net settlements pursuant to the coinsurance agreement. To further support its obligations under the coinsurance agreement, Athene procured $1.1 billion in letters of credit for Jackson’s benefit and established a trust account for Jackson’s benefit, which had a book value of approximately $57 million at June 30, 2026.
Swiss Re Reinsurance
Jackson has three retrocession reinsurance agreements (“retro treaties”) with Swiss Reinsurance Company Ltd. (“SRZ”). Pursuant to these retro treaties, Jackson ceded certain blocks of business to SRZ on a 100% coinsurance with funds withheld basis, subject to pre-existing reinsurance with other parties. As a result of the reinsurance agreements with SRZ, Jackson withholds certain assets, primarily in the form of policy loans and debt securities, as collateral for the reinsurance recoverable.
The Company has also acquired certain blocks of business that are closed to new business and wholly ceded to non-affiliates. These include both direct and assumed accident and health businesses, direct and assumed life insurance business, and certain institutional annuities.
GMIB Reinsurance
The Company’s guaranteed minimum income benefits (“GMIBs”) are reinsured with an unrelated party. GMIB reinsured benefits are subject to aggregate annual claim limits. Deductibles also apply on reinsurance of GMIB business issued since March 1, 2005. The Company discontinued offering the GMIB in 2009.
Reinsurance Recoverables and Reinsured Market Risk Benefits
Ceded reinsurance agreements are reported on a gross basis on the Company’s Condensed Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other assets or liabilities for amounts, such as premiums, owed to or due from reinsurers.
Reinsurance recoverables relating to reinsurance of traditional and limited-payment contracts are required to be recognized and measured in a manner consistent with liabilities relating to the underlying reinsured contracts, including using consistent assumptions. Reinsurance contracts may be executed subsequent to the direct contract issue dates, and market interest rates may have changed between the date that the underlying insurance contracts were issued and the date the reinsurance contract is recognized in the financial statements, resulting in the underlying discount rate differing between the direct and reinsured business.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 8. Reinsurance
The Company regularly monitors the financial strength ratings of its reinsurers. At June 30, 2026 and December 31, 2025, the Company had an ACL of $31 million and $30 million, respectively, on its reinsurance recoverables, which are reported net of ACL on the Condensed Consolidated Balance Sheets. The ACL considers the credit quality of the reinsurer and is generally determined based on probability of default and loss given default assumptions, after considering any applicable collateral arrangements.
For reinsurance recoverables that are collateralized, the amount of collateral is expected to be adjusted as necessary as a result of fair value changes in that collateral. If the fair value of the collateral at the reporting date is less than the carrying value of the reinsurance recoverable, the Company recognizes an ACL on the difference between the fair value of the collateral at the reporting date and the carrying value of the reinsurance recoverable. Additions to or releases of the ACL are reported in Death, other policyholder benefits, and changes in reserves, net of deferrals in the Condensed Consolidated Income Statements.
Reinsurance recoverable on market risk benefits is recognized at fair value with changes being recognized in current period earnings within market risk benefit (gains) losses, net. Non-performance risk of the reinsurer is incorporated into the calculation through the adjustment of the risk-free rate curve based on credit spreads observed on instruments issued by similarly-rated life insurance companies.
The Company’s reinsurance contract that cedes only the GMIB elected on certain variable annuity products is classified as a reinsurance recoverable on market risk benefits. These reinsured MRBs may have direct MRB balances recorded as either assets or liabilities; however, because the unit of account for the reinsured MRB is the reinsurance contract, the ceded MRB is presented in total within reinsurance recoverable on market risk benefits. The fees used to determine the fair value of the reinsurance recoverable on market risk benefits are those defined in the reinsurance contract.
Guaranteed benefits related to the optional lifetime income rider offered on certain fixed index annuities are MRBs that are reinsured with Athene. The reinsured MRBs are measured using a non-option valuation approach that uses cash flow assumptions and an attributed fee ratio consistent with those used to measure the MRBs on the direct contract and a discount rate that considers the reinsurer’s credit risk. The attributed fee is locked-in at inception of the contract.
Components of the Company’s reinsurance recoverable excluding MRBs were as follows (in millions):
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2026 | | 2025 |
| Reserves: | | | |
| Life | $ | 5,052 | | | $ | 5,164 | |
| Accident and health | 489 | | | 525 | |
Annuity benefits (1) | 12,163 | | | 13,196 | |
| Claims liability and other | 627 | | | 633 | |
| Total | $ | 18,331 | | | $ | 19,518 | |
(1) Other annuity benefits primarily attributable to fixed and fixed index annuities reinsured with Athene.
Components of the Company’s reinsurance recoverable on market risk benefits were as follows (in millions):
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2026 | | 2025 |
| Variable annuity | $ | 29 | | | $ | 41 | |
| Other product lines | 80 | | | 77 | |
| Total | $ | 109 | | | $ | 118 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 8. Reinsurance
Reinsurance and Funds Withheld Payable Under Reinsurance Treaties
Under the reinsurance agreement with Athene and the retro treaties with SRZ, the Company maintains ownership of the underlying investments instead of transferring them to the reinsurer and, as a result, records a funds withheld liability payable to the reinsurer. Investment returns earned on withheld assets are paid by the Company to the reinsurer, pursuant to the terms of the agreements. Investment income and net gains (losses) on derivatives and investments are reported net of gains or losses on the funds withheld payable under reinsurance treaties.
The amounts credited to reinsurers on the funds withheld payable is based on the return earned on those assets. The return earned on the assets is subject to the credit risk of the original issuer of the instrument rather than Jackson’s own creditworthiness, which results in an embedded derivative (total return swap).
Funds withheld under reinsurance agreement with Athene
The Company recognizes a liability for the embedded derivative related to the funds withheld under the Athene reinsurance agreement within funds withheld payable under reinsurance treaties on the Condensed Consolidated Balance Sheets. The embedded derivative is measured at fair value with changes in fair value reported in net gains (losses) on derivatives and investments in the Condensed Consolidated Income Statements. At inception of the reinsurance agreement with Athene, the fair value of the withheld investments differed from their book value and, accordingly, while the investments are held, the amortization of this difference is reported in net gains (losses) on derivatives and investments in the Condensed Consolidated Income Statements. See Note 5 - Derivative Instruments of these Notes to Condensed Consolidated Financial Statements for more information on the embedded derivative.
Funds withheld under reinsurance agreements with SRZ
At execution of the retro treaties with SRZ, the Company elected the fair value option for the withheld assets, as well as the related funds withheld payable. Accordingly, the embedded derivative is not bifurcated or separately measured. The funds withheld payable is measured at fair value with changes in fair value reported in net gains (losses) on derivatives and investments. The fair value of the funds withheld payable is equal to the fair value of the assets held as collateral.
The following assets and liabilities were held in support of reserves associated with the Company’s funds withheld reinsurance agreements and were reported in the respective financial statement line items on the Condensed Consolidated Balance Sheets (in millions):
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2026 | | 2025 |
| Assets | | | |
| Debt securities, available-for-sale | $ | 6,870 | | | $ | 7,947 | |
| Debt securities, at fair value under the fair value option | 182 | | | 6 | |
| Equity securities | 53 | | | 88 | |
| Mortgage loans | 1,986 | | | 2,102 | |
Mortgage loans, at fair value under the fair value option | 595 | | | 324 | |
| Policy loans | 3,628 | | | 3,548 | |
| Freestanding derivative instruments, net | 6 | | | (4) | |
| Other invested assets | 687 | | | 712 | |
| Cash and cash equivalents | 129 | | | 375 | |
| Accrued investment income | 83 | | | 92 | |
| Other assets and liabilities, net | 91 | | | 5 | |
Total assets (1) | $ | 14,310 | | | $ | 15,195 | |
| | | |
| Liabilities | | | |
Funds held under reinsurance treaties (2) | $ | 14,090 | | | $ | 14,960 | |
| Total liabilities | $ | 14,090 | | | $ | 14,960 | |
(1) Certain assets are reported at amortized cost while the fair value of those assets is reported in the embedded derivative in the funds withheld liability.
(2) Includes funds withheld embedded derivative asset (liability) of $1,651 million and $1,752 million at June 30, 2026 and December 31, 2025, respectively.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 8. Reinsurance
The sources of income related to funds withheld under reinsurance treaties reported in net investment income in the Condensed Consolidated Income Statements were as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
Debt securities (1) | $ | 82 | | | $ | 94 | | | $ | 169 | | | $ | 194 | |
| Equity securities | — | | | 1 | | | (1) | | | 1 | |
Mortgage loans (2) | 27 | | | 41 | | | 53 | | | 84 | |
| Policy loans | 86 | | | 83 | | | 173 | | | 166 | |
| Limited partnerships | 15 | | | 17 | | | 23 | | | 27 | |
| Other investment income | 2 | | | 3 | | | 5 | | | 7 | |
| Total investment income on funds withheld assets | 212 | | | 239 | | | 422 | | | 479 | |
Other investment expenses on funds withheld assets (3) | (11) | | | (12) | | | (22) | | | (25) | |
| Total net investment income on funds withheld reinsurance treaties | $ | 201 | | | $ | 227 | | | $ | 400 | | | $ | 454 | |
(1) Includes $— million and $— million for the three and six months ended June 30, 2026, respectively, and nil and $1 million for the three and six months ended June 30, 2025, respectively, related to the change in fair value for securities carried under the fair value option.
(2) Includes $(3) million and $(1) million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively, related to the change in fair value for mortgage loans carried under the fair value option.
(3) Includes management fees.
The gains and losses on funds withheld reinsurance treaties as a component of net gains (losses) on derivatives and investments in the Condensed Consolidated Income Statements were as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Available-for-sale securities | | | | | | | |
| Realized gains on sale | $ | 1 | | | $ | 3 | | | $ | 3 | | | $ | 8 | |
| Realized losses on sale | (55) | | | (25) | | | (67) | | | (74) | |
| Credit loss expense | 1 | | | (25) | | | (15) | | | (27) | |
| | | | | | | |
| Credit loss expense on mortgage loans | (2) | | | 1 | | | (7) | | | (3) | |
| Other | (14) | | | 15 | | | (6) | | | 22 | |
| Net gains (losses) on non-derivative investments | (69) | | | (31) | | | (92) | | | (74) | |
| Net gains (losses) on derivative instruments | (2) | | | (49) | | | 2 | | | (66) | |
Net gains (losses) on funds withheld payable under reinsurance treaties (1) | (226) | | | (247) | | | (366) | | | (575) | |
| Total net gains (losses) on derivatives and investments | $ | (297) | | | $ | (327) | | | $ | (456) | | | $ | (715) | |
| | | | | | | |
(1) Includes the Athene embedded derivative gain (loss) of $(115) million and $(101) million for the three and six months ended June 30, 2026, respectively, and $(130) million and $(331) million for the three and six months ended June 30, 2025, respectively. |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9. Reserves for Future Policy Benefits and Claims Payable
9. Reserves for Future Policy Benefits and Claims Payable
Reserves for Future Policy Benefits
For non-participating traditional and limited-payment insurance contracts, the reserve for future policy benefits represents the present value of estimated future policy benefits to be paid to or on behalf of policyholders in future periods and certain related expenses less the present value of estimated future net premiums.
Reserves for future policy benefits for non-participating traditional and limited-payment insurance contracts are measured using the net premium ratio ("NPR") measurement model. The NPR measurement model accrues for future policy benefits in proportion to the premium revenue recognized. The reserve for future policy benefits is derived from the Company's best estimate of future net premium and future benefits and expenses, which is based on best estimate assumptions including mortality, persistency, claims expense, and discount rate. On an annual basis, or as circumstances warrant, we conduct a comprehensive review of our current best estimate assumptions based on our experience, industry benchmarking, and other factors, as applicable. Expense assumptions are updated based on estimates of expected non-level costs, such as termination or settlement costs, and costs after the premium-paying period and exclude acquisition costs or any costs that are required to be charged to expenses as incurred. Updates to assumptions are applied on a retrospective basis, and the change in the reserve for future policy benefits resulting from updates to assumptions is reported separately in the Condensed Consolidated Income Statements within the (gain) loss from updating future policy benefits cash flow assumptions, net. The reserve for future policy benefits is updated each reporting period to reflect actual experience to date.
The Company establishes cohorts, which are groupings used to measure reserves for future policy benefits. In determining cohorts, the Company considers both qualitative and quantitative factors, including the issue year, type of product, product features, and legal entity.
The discount rate used to estimate reserves for future policy benefits is consistent with an upper-medium grade (low-credit risk) fixed-income corporate instrument yield, which has been interpreted to represent a single-A corporate instrument yield. This discount rate curve is determined by fitting a parametric function to yields to maturity and related times to maturity of market observable single-A rated corporate instruments. The discount rate used to recognize interest accretion on the reserves for future policy benefits is locked at the initial measurement of the cohort. Each reporting period thereafter, the reserve for future policy benefits is remeasured using the current discount rate. The difference between the reserve calculated using the current discount rate and the reserve calculated using the locked-in discount rate is recorded in OCI.
For limited-payment insurance contracts, premiums are paid over a period shorter than the period over which benefits are provided. Gross premiums received in excess of the net premium are deferred and recognized as a deferred profit liability ("DPL"). The DPL is included within the reserve for future policy benefits and profits are recognized in income as a component of benefit expenses on a constant relationship with the amount of expected future benefit payments. Interest is accreted on the balance of the DPL using the discount rate locked in at the initial measurement of the cohort. Measurement of the DPL uses best estimate assumptions for mortality. These assumptions are similarly subject to the annual review process discussed above.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9. Reserves for Future Policy Benefits and Claims Payable
Additional Liabilities – Universal Life-type
For universal life-type insurance contracts, a liability is recognized for the policyholder’s account value as discussed further in Note 10 - Other Contract Holder Funds of these Notes to Condensed Consolidated Financial Statements. Where these contracts provide additional benefits beyond the account balance or base insurance coverage that are not market risk benefits or embedded derivatives, liabilities in addition to the policyholder’s account value are recognized. These additional liabilities for annuitization, death and other insurance benefits are reported within reserves for future policy benefits and claims payable. The methodology uses a benefit ratio defined as a constant percentage of the assessment base. This ratio is multiplied by current period assessments to determine the reserve accrual for the period. The assumptions used in the measurement of the additional liabilities for annuitization, death and other insurance benefits are based on best estimate assumptions including mortality, persistency, investment returns, and discount rates. These assumptions are similarly subject to the annual review process discussed above. As available-for-sale debt securities are carried at fair value, an adjustment is made to these additional liabilities equal to the change in liability that would have occurred if such securities had been sold at their stated fair value and the proceeds reinvested at current yields. This adjustment, along with the change in net unrealized gains (losses) on available-for-sale debt securities, net of applicable tax, is credited or charged directly to equity as a component of OCI.
See Note 10 - Other Contract Holder Funds of these Notes to Condensed Consolidated Financial Statements for more information regarding other contract holder funds.
Other Future Policy Benefits and Claims Payable
In conjunction with a prior acquisition, the Company recorded a fair value adjustment at acquisition related to certain annuity and interest-sensitive liability blocks of business to reflect the cost of the interest guarantees within the in-force liabilities, based on the difference between the guaranteed interest rate and at purchase assumed new money guaranteed interest rate. This adjustment is included in other future policy benefits and claims payable as disclosed in the table below. This liability is remeasured at the end of each period, taking into account changes in the in-force block. Any resulting change in the liability is recorded as a gain (loss) from updating future policy benefits cash flow assumptions, net through the Condensed Consolidated Income Statements.
In addition, annuity and life claims liabilities in course of settlement are included in other future policy benefits and claims payable as disclosed in the table below.
The following table summarizes the Company’s reserves for future policy benefits and claims payable balances (in millions):
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2026 | | 2025 |
| Reserves for future policy benefits | | | |
| Payout Annuities | $ | 1,172 | | | $ | 1,169 | |
| Closed Block Life | 3,410 | | | 3,580 | |
| Closed Block Annuity | 3,466 | | | 3,647 | |
| Reserves for future policy benefits | 8,048 | | | 8,396 | |
| Additional liabilities | | | |
| Closed Block Life | 1,155 | | | 1,195 | |
| | | |
| | | |
| Other future policy benefits and claims payable | 1,431 | | | 1,305 | |
| Reserves for future policy benefits and claims payable | $ | 10,634 | | | $ | 10,896 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9. Reserves for Future Policy Benefits and Claims Payable
The following tables present the roll-forward of components of reserves for future policy benefits (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Present Value of Expected Net Premiums |
| Six Months Ended June 30, | | Year Ended December 31, |
| 2026 | | 2025 |
| Payout | | Closed Block | | Closed Block | | Payout | | Closed Block | | Closed Block |
| Annuities | | Life | | Annuity | | Annuities | | Life | | Annuity |
| Balance, beginning of period | $ | — | | | $ | 998 | | | $ | — | | | $ | — | | | $ | 847 | | | $ | — | |
| Beginning of period cumulative effect of changes in discount rate assumptions | — | | | 86 | | | — | | | — | | | 125 | | | — | |
| Beginning balance at original discount rate | — | | | 1,084 | | | — | | | — | | | 972 | | | — | |
| Effect of changes in cash flow assumptions | — | | | — | | | — | | | — | | | 232 | | | — | |
| Effect of actual variances from expected experience | — | | | (11) | | | — | | | — | | | (33) | | | — | |
| Balance adjusted for variances from expectation | — | | | 1,073 | | | — | | | — | | | 1,171 | | | — | |
| Issuances | — | | | 2 | | | — | | | — | | | 2 | | | — | |
| Interest accrual | — | | | 20 | | | — | | | — | | | 35 | | | — | |
| Net premiums collected | — | | | (63) | | | — | | | — | | | (124) | | | — | |
| Ending balance at original discount rate | — | | | 1,032 | | | — | | | — | | | 1,084 | | | — | |
| End of period cumulative effect of changes in discount rate assumptions | — | | | (95) | | | — | | | — | | | (86) | | | — | |
| Balance, end of period | $ | — | | | $ | 937 | | | $ | — | | | $ | — | | | $ | 998 | | | $ | — | |
The effect of actual variances from expected experience of $11 million and $33 million for the six months ended June 30, 2026 and the year ended December 31, 2025, respectively, was mainly attributed to slightly lower actual premiums versus expected premiums related to our closed block products, which are mostly reinsured, resulting in an immaterial net impact to the reserve balance.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9. Reserves for Future Policy Benefits and Claims Payable
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Present Value of Expected Future Policy Benefits |
| Six Months Ended June 30, | | Year Ended December 31, |
| 2026 | | 2025 |
| Payout | | Closed Block | | Closed Block | | Payout | | Closed Block | | Closed Block |
| Annuities | | Life | | Annuity | | Annuities | | Life | | Annuity |
| Balance, beginning of period | $ | 1,169 | | | $ | 4,578 | | | $ | 3,647 | | | $ | 1,095 | | | $ | 4,425 | | | $ | 3,837 | |
| Beginning of period cumulative effect of changes in discount rate assumptions | 58 | | | 671 | | | 157 | | | 100 | | | 806 | | | 255 | |
Beginning balance at original discount rate (including DPL of $110, nil and $546 in June 30, 2026, and $91, nil and $588 in December 31, 2025 for payout annuities, closed block life and closed block annuity, respectively) | 1,227 | | | 5,249 | | | 3,804 | | | 1,195 | | | 5,231 | | | 4,092 | |
| Effect of changes in cash flow assumptions | — | | | — | | | — | | | (20) | | | 414 | | | (8) | |
| Effect of actual variances from expected experience | (3) | | | 15 | | | 2 | | | (16) | | | (30) | | | 6 | |
| Balance adjusted for variances from expectation | 1,224 | | | 5,264 | | | 3,806 | | | 1,159 | | | 5,615 | | | 4,090 | |
| Issuances | 76 | | | 5 | | | — | | | 171 | | | 8 | | | — | |
| Interest accrual | 24 | | | 78 | | | 80 | | | 47 | | | 150 | | | 169 | |
| Benefits payments | (83) | | | (298) | | | (221) | | | (150) | | | (524) | | | (455) | |
Ending balance of original discount rate (including DPL of $105, nil and $523 in June 30, 2026, and $110, nil and $546 in December 31, 2025 for payout annuities, closed block life and closed block annuity, respectively) | 1,241 | | | 5,049 | | | 3,665 | | | 1,227 | | | 5,249 | | | 3,804 | |
| End of period cumulative effect of changes in discount rate assumptions | (69) | | | (702) | | | (199) | | | (58) | | | (671) | | | (157) | |
| Balance, end of period | $ | 1,172 | | | $ | 4,347 | | | $ | 3,466 | | | $ | 1,169 | | | $ | 4,578 | | | $ | 3,647 | |
| | | | | | | | | | | |
| Reserves for future policy benefits | 1,172 | | | 3,410 | | | 3,466 | | | 1,169 | | | 3,580 | | | 3,647 | |
| Less: Reinsurance recoverable | 136 | | | 1,927 | | | 4 | | | 128 | | | 2,012 | | | 4 | |
| Reserves for future policy benefits, after reinsurance recoverable | $ | 1,036 | | | $ | 1,483 | | | $ | 3,462 | | | $ | 1,041 | | | $ | 1,568 | | | $ | 3,643 | |
The following table presents the weighted average duration of the reserves for future policy benefits. The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount:
| | | | | | | | | | | | | | | | | |
| Payout | | Closed Block | | Closed Block |
| Annuities | | Life | | Annuity |
| June 30, 2026 | | | | | |
| Weighted average duration (years) | 6.2 | | 6.7 | | 6.4 |
| December 31, 2025 | | | | | |
| Weighted average duration (years) | 6.2 | | 6.8 | | 6.5 |
The discount rate assumption related to the single-A corporate instrument yield was updated based on current market data. Discount rates increased in 2026 compared to 2025, based on the duration of the liability. This resulted in a decrease in the liability. Refer to the roll-forward above for further details.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9. Reserves for Future Policy Benefits and Claims Payable
The following table presents the amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for future policy benefits for non-participating traditional and limited-payment insurance contracts (in millions). The discounted premiums are calculated using the current discount rate, while the undiscounted cash flows represent the gross cash flows before any discounting is applied:
| | | | | | | | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Undiscounted | Discounted | | Undiscounted | Discounted |
| Payout Annuities | | | | | |
| Expected future benefit payments | $ | 1,581 | | $ | 1,067 | | | $ | 1,547 | | $ | 1,059 | |
| Expected future gross premiums | $ | — | | $ | — | | | $ | — | | $ | — | |
| Closed Block Life | | | | | |
| Expected future benefit payments | $ | 6,580 | | $ | 4,464 | | | $ | 6,875 | | $ | 4,696 | |
| Expected future gross premiums | $ | 3,620 | | $ | 2,278 | | | $ | 3,810 | | $ | 2,429 | |
| Closed Block Annuity | | | | | |
| Expected future benefit payments | $ | 4,438 | | $ | 2,943 | | | $ | 4,618 | | $ | 3,101 | |
| Expected future gross premiums | $ | — | | $ | — | | | $ | — | | $ | — | |
The following table presents the amount of revenue and interest related to non-participating traditional and limited-pay insurance contracts recognized in the Condensed Consolidated Income Statements (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Gross Premiums | | Interest Expense |
| Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 | | Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 |
| Payout Annuities | $ | 23 | | | $ | 67 | | | $ | 24 | | | $ | 47 | |
| Closed Block Life | 134 | | | 295 | | | 58 | | | 115 | |
| Closed Block Annuity | 2 | | | (2) | | | 80 | | | 169 | |
| Total | $ | 159 | | | $ | 360 | | | $ | 162 | | | $ | 331 | |
The following table presents the weighted average interest rate for the reserves for future policy benefits at the cohort level for the locked-in discount rate (interest accretion rate), and current discount rate, weighted by the cohort's benefit reserve amount:
| | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Payout Annuities | | | |
| Interest accretion rate | 4.35 | % | | 4.26 | % |
| Current discount rate | 5.38 | % | | 5.10 | % |
| Closed Block Life | | | |
| Interest accretion rate | 3.08 | % | | 3.08 | % |
| Current discount rate | 5.49 | % | | 5.31 | % |
| Closed Block Annuity | | | |
| Interest accretion rate | 4.40 | % | | 4.40 | % |
| Current discount rate | 5.42 | % | | 5.16 | % |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9. Reserves for Future Policy Benefits and Claims Payable
The following table presents a roll-forward of Closed Block Life additional liabilities for annuitization, death and other insurance benefits (in millions):
| | | | | | | | | | | |
| Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 |
| Balance, beginning of period | $ | 1,195 | | | $ | 1,184 | |
| Beginning of period cumulative effect of changes in shadow adjustments | 14 | | | 23 | |
| Beginning balance excluding shadow | 1,209 | | | 1,207 | |
| Effect of changes in cash flow assumptions | — | | | 5 | |
| Effect of actual variances from expected experience | 15 | | | 33 | |
| | | |
| Interest accrual | 29 | | | 58 | |
| Net assessments collected | (56) | | | (94) | |
| | | |
| Ending balance excluding shadow | 1,197 | | | 1,209 | |
| End of period cumulative effect of changes in shadow adjustments | (42) | | | (14) | |
| Balance, end of period | $ | 1,155 | | | $ | 1,195 | |
The following table presents the weighted average duration of Closed Block Life additional liabilities for annuitization, death and other insurance benefits. The weighted average duration represents average cohort-level duration weighted by the benefit reserves amount:
| | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Weighted average duration (years) | 8.6 | | 8.7 |
The following table presents assessments and interest expense of Closed Block Life additional liabilities for annuitization, death and other insurance benefits recognized in the Condensed Consolidated Income Statements (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Assessments | | Interest Expense |
| Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 | | Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 |
| Additional liability for annuitization, death and other insurance benefits | $ | (56) | | | $ | (94) | | | $ | 29 | | | $ | 58 | |
The following table presents the weighted average current discount rate of Closed Block Life additional liabilities for annuitization, death and other insurance benefits, applied at the cohort level weighted by reserve benefit amount:
| | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Weighted average current discount rate | 5.00 | % | | 5.00 | % |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10. Other Contract Holder Funds
10. Other Contract Holder Funds
Other contract holder funds represent the policyholder account balance on our universal life-type products, investment contracts, and the fair value of the embedded derivatives associated with the indexed crediting features on our fixed index annuities and RILA.
•Universal life-type products: Universal life-type contracts have, as a principal component, an account balance on which interest is credited to policyholders and assessments are deducted for mortality risk and contract administration. The account balance is recognized as a liability within other contract holder funds, and the liability is updated each period for fee and assessment deductions and increased for interest or returns credited to the account balance.
Certain of our universal life-type contracts contain features that are not classified as market risk benefits or embedded derivatives but provide additional benefits beyond the account balance or base insurance coverage for which a liability in addition to the account balance is necessary. These additional liabilities for death or other insurance benefits are reported as a component of reserves for future policy benefits and claims payable in the Condensed Consolidated Balance Sheets. See Note 9 - Reserves for Future Policy Benefits and Claims Payable of these Notes to the Condensed Consolidated Financial Statements for more information regarding these additional liabilities.
•Investment contracts: Certain contracts without significant mortality or morbidity risk and certain annuities that lack insurance risk are treated as investment contracts. For investment contracts, payments received are reported as liabilities and accounted for in a manner consistent with the accounting for interest-bearing or other financial instruments, within other contract holder funds.
The Company issues a variety of annuity products including variable annuities, registered index linked annuities, fixed annuities, fixed index annuities, and payout annuities. For annuity contracts that are classified as investment contracts, the liability is the account balance as of the reporting date, reported within the other contract holder funds. For the variable annuity products, only the allocations to fixed fund options are reported in other contract holder funds.
•Embedded derivatives - product liabilities: For our RILA and fixed index annuities, the equity-linked option issued by the Company is accounted for at fair value as an embedded derivative on the Company's Condensed Consolidated Balance Sheets as a component of other contract holder funds, with changes in fair value recorded in net income.
The fair value of the embedded derivative for the FIA and RILA products is determined using an option-budget method with capital market inputs of market index returns and discount rates as well as actuarial assumptions including lapse, mortality and withdrawal rates. We typically update our actuarial assumptions annually, unless a material change is observed in an interim period that we feel is indicative of a long-term trend.
Our annuity products may contain certain features or guarantees that are classified as MRBs. These market risk benefits are a component of the market risk benefits line items in the Condensed Consolidated Balance Sheets. See Note 12 - Market Risk Benefits of these Notes to Condensed Consolidated Financial Statements for more information regarding market risk benefits.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10. Other Contract Holder Funds
The Company’s institutional products business is comprised of the guaranteed investment contracts, funding agreements backed by medium-term notes ("FABN funding agreements"), funding agreements backed by commercial paper ("FABCP funding agreements"), and funding agreements issued in conjunction with the Company's participation in the U.S. Federal Home Loan Bank ("FHLB") program ("FHLB funding agreements") described below.
•FABN funding agreements: Jackson has established a funding agreement-backed note (“FABN”) program, pursuant to which a special purpose statutory business trust may issue medium-term notes and deposit the proceeds with Jackson pursuant to a funding agreement issued by Jackson to the trust. The JNL board approved during its May meeting a $15.0 billion Global Debt Issuance program under which capacity will renew as notes mature (which differs from the way we had previously administered the program, where capacity did not renew as notes matured). The carrying values of the FABN funding agreements at June 30, 2026 and December 31, 2025 totaled $7.6 billion and $8.0 billion, respectively.
Liabilities for foreign currency denominated FABN funding agreements are adjusted to reflect the effects of foreign currency translation gains and losses using exchange rates as of the reporting date. Foreign currency translation gains and losses are included in net gains (losses) on derivatives and investments. FABN funding agreements issued in a foreign currency have been hedged for changes in exchange rates using cross-currency swaps.
•FABCP funding agreements: In the second quarter of 2025, Jackson established an FABCP funding agreement program, pursuant to which a special purpose limited liability company may issue commercial paper and deposit the proceeds with Jackson under funding agreements issued by Jackson to the limited liability company. The current maximum aggregate principal amount permitted to be outstanding at any one time under the program is $3.0 billion. As of June 30, 2026, the Company had $1.1 billion outstanding under the program.
•FHLB funding agreements: Jackson is a member of the FHLBI primarily for the purpose of participating in the bank’s mortgage-collateralized loan advance program with long-term funding facilities. Advances are in the form of funding agreements issued to, and short-term and long-term borrowings from, FHLBI. At June 30, 2026 and December 31, 2025, the Company held $87 million and $119 million of FHLBI capital stock, respectively, supporting $1.9 billion in FHLB funding agreements and short-term and long-term borrowings at both June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, the FHLB funding agreements and short-term and long-term borrowings were collateralized by mortgage-related securities and commercial mortgage loans with a carrying value of $2.9 billion and $2.8 billion, respectively.
The following table presents the liabilities for other contract holder funds (in millions):
| | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Variable Annuity | $ | 6,065 | | | $ | 6,351 | |
| RILA | 26,149 | | | 20,282 | |
| Fixed Annuity | 9,221 | | | 9,494 | |
| Fixed Index Annuities | 8,549 | | | 7,946 | |
| Payout Annuity | 826 | | | 854 | |
| Closed Block Life | 10,281 | | | 10,494 | |
| Closed Block Annuity | 1,015 | | | 1,057 | |
| Institutional Products | 11,018 | | | 11,021 | |
| Other Product Lines | 161 | | | 164 | |
| Total other contract holder funds | $ | 73,285 | | | $ | 67,663 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10. Other Contract Holder Funds
The following table presents a roll-forward of other contract holder funds, gross of reinsurance (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Fixed | | | | Closed | | Closed | | | | |
| Variable | | | | Fixed | | Index | | Payout | | Block | | Block | | | | |
| Annuity | | RILA | | Annuity | | Annuities | | Annuity | | Life | | Annuity | | | | Total |
| Balance as of January 1, 2026 | $ | 6,351 | | | $ | 20,282 | | | $ | 9,494 | | | $ | 7,946 | | | $ | 854 | | | $ | 10,494 | | | $ | 1,057 | | | | | $ | 56,478 | |
| Deposits | 398 | | | 4,354 | | | 244 | | | 1,331 | | | 83 | | | 124 | | | 2 | | | | | 6,536 | |
| Surrenders, withdrawals and benefits | (1,141) | | | (366) | | | (626) | | | (760) | | | (125) | | | (398) | | | (63) | | | | | (3,479) | |
| Net transfers from (to) separate accounts | 402 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | 402 | |
| Investment performance / change in value of equity option | — | | | 1,830 | | | — | | | 57 | | | — | | | — | | | — | | | | | 1,887 | |
| Interest credited | 78 | | | 47 | | | 177 | | | 82 | | | 14 | | | 313 | | | 19 | | | | | 730 | |
| Policy charges and other | (23) | | | 2 | | | (68) | | | (107) | | | — | | | (252) | | | — | | | | | (448) | |
| Balance as of June 30, 2026 | $ | 6,065 | | | $ | 26,149 | | | $ | 9,221 | | | $ | 8,549 | | | $ | 826 | | | $ | 10,281 | | | $ | 1,015 | | | | | $ | 62,106 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Fixed | | | | Closed | | Closed | | | | |
| Variable | | | | Fixed | | Index | | Payout | | Block | | Block | | | | |
| Annuity | | RILA | | Annuity | | Annuities | | Annuity | | Life | | Annuity | | | | Total |
| Balance as of January 1, 2025 | $ | 7,206 | | | $ | 11,685 | | | $ | 9,615 | | | $ | 8,515 | | | $ | 844 | | | $ | 10,750 | | | $ | 1,149 | | | | | $ | 49,764 | |
| Deposits | 855 | | | 6,926 | | | 1,085 | | | 816 | | | 220 | | | 272 | | | 3 | | | | | 10,177 | |
| Surrenders, withdrawals and benefits | (2,204) | | | (399) | | | (1,392) | | | (1,596) | | | (238) | | | (655) | | | (132) | | | | | (6,616) | |
| Net transfers from (to) separate accounts | 372 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | 372 | |
| Investment performance / change in value of equity option | — | | | 2,002 | | | — | | | 156 | | | — | | | — | | | — | | | | | 2,158 | |
| Interest credited | 182 | | | 66 | | | 350 | | | 150 | | | 28 | | | 631 | | | 38 | | | | | 1,445 | |
| Policy charges and other | (60) | | | 2 | | | (164) | | | (95) | | | — | | | (504) | | | (1) | | | | | (822) | |
| Balance as of December 31, 2025 | $ | 6,351 | | | $ | 20,282 | | | $ | 9,494 | | | $ | 7,946 | | | $ | 854 | | | $ | 10,494 | | | $ | 1,057 | | | | | $ | 56,478 | |
The following table presents weighted average crediting rate, net amount at risk, and cash surrender value of contract holder account balances (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Fixed | | | | Closed | | Closed |
| | Variable | | | | Fixed | | Index | | Payout | | Block | | Block |
| | Annuity | | RILA | | Annuity | | Annuities | | Annuity | | Life | | Annuity |
| June 30, 2026 | | | | | | | | | | | | | | |
Weighted-average crediting rate (1) | | 2.57 | % | | 0.36 | % | | 3.84 | % | | 1.92 | % | | 3.39 | % | | 6.09 | % | | 3.74 | % |
Net amount at risk (2) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 14,385 | | | $ | — | |
Cash surrender value (3) | | $ | 5,980 | | | $ | 25,911 | | | $ | 9,000 | | | $ | 8,319 | | | $ | — | | | $ | 10,232 | | | $ | 1,015 | |
| December 31, 2025 | | | | | | | | | | | | | | |
Weighted-average crediting rate (1) | | 2.87 | % | | 0.33 | % | | 3.69 | % | | 1.89 | % | | 3.28 | % | | 6.01 | % | | 3.60 | % |
Net amount at risk (2) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 14,750 | | | $ | — | |
Cash surrender value (3) | | $ | 6,330 | | | $ | 19,736 | | | $ | 9,277 | | | $ | 7,711 | | | $ | — | | | $ | 10,445 | | | $ | 1,057 | |
| | | | | | | | | | | | | | |
(1) Weighted average crediting rate is the average crediting rate weighted by contract holder account balances invested in fixed account funds.
(2) Net amount at risk represents the standard excess benefit base for guaranteed death benefits on universal life type products. The net amount at risk associated with market risk benefits are presented within Note 12 - Market Risk Benefits of these Notes to Condensed Consolidated Financial Statements.
(3) Cash surrender value represents the amount of the contract holder’s account balance distributable at the balance sheet date less the applicable surrender charges.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10. Other Contract Holder Funds
At June 30, 2026 and December 31, 2025, excluding reinsurance business, approximately 91% and 93%, respectively, of the Company’s annuity account values correspond to crediting rates that are at the minimum guaranteed interest rates. At June 30, 2026 and December 31, 2025, excluding reinsurance business, approximately 82% and 82%, respectively, of the Company’s closed block life account values correspond to crediting rates that are at the minimum guaranteed interest rates.
The following table presents contract holder account balances invested in fixed account funds by range of guaranteed minimum crediting rates and the related range of the difference between rates being credited to other contract holder funds and the respective guaranteed minimums (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2026 |
| At Guaranteed | | 1 Basis Point-50 | | 51 Basis Points-150 | | Greater Than 150 | | |
| Range of Guaranteed Minimum Crediting Rate | Minimum | | Basis Points Above | | Basis Points Above | | Basis Points Above | | Total |
| Variable Annuities | | | | | | | | | |
0.00%-1.50% | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
1.51%-2.50% | 4,070 | | | — | | | 151 | | | — | | | 4,221 | |
Greater than 2.50% | 1,844 | | | — | | | — | | | — | | | 1,844 | |
| Total | $ | 5,914 | | | $ | — | | | $ | 151 | | | $ | — | | | $ | 6,065 | |
| | | | | | | | | |
| RILA | | | | | | | | | |
0.00%-1.50% | $ | 5 | | | $ | — | | | $ | 3 | | | $ | 2 | | | $ | 10 | |
1.51%-2.50% | — | | | — | | | 37 | | | — | | | 37 | |
Greater than 2.50% | 127 | | | 119 | | | — | | | — | | | 246 | |
| Total | $ | 132 | | | $ | 119 | | | $ | 40 | | | $ | 2 | | | $ | 293 | |
| | | | | | | | | |
| Fixed Annuities | | | | | | | | | |
0.00%-1.50% | $ | 28 | | | $ | 21 | | | $ | 10 | | | $ | 1 | | | $ | 60 | |
1.51%-2.50% | 24 | | | 1 | | | 36 | | | 9 | | | 70 | |
Greater than 2.50% | 3,167 | | | 31 | | | — | | | 283 | | | 3,481 | |
| Total | $ | 3,219 | | | $ | 53 | | | $ | 46 | | | $ | 293 | | | $ | 3,611 | |
| | | | | | | | | |
| Fixed Index Annuities | | | | | | | | | |
0.00%-1.50% | $ | 3 | | | $ | 11 | | | $ | 2 | | | $ | 26 | | | $ | 42 | |
1.51%-2.50% | — | | | 44 | | | — | | | 24 | | | 68 | |
Greater than 2.50% | 33 | | | 15 | | | 67 | | | 44 | | | 159 | |
| Total | $ | 36 | | | $ | 70 | | | $ | 69 | | | $ | 94 | | | $ | 269 | |
| | | | | | | | | |
| Closed Block Life | | | | | | | | | |
0.00%-1.50% | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
1.51%-2.50% | 1 | | | 10 | | | — | | | — | | | 11 | |
Greater than 2.50% | 5,129 | | | 377 | | | 702 | | | 5 | | | 6,213 | |
| Total | $ | 5,130 | | | $ | 387 | | | $ | 702 | | | $ | 5 | | | $ | 6,224 | |
| | | | | | | | | |
| Closed Block Annuity | | | | | | | | | |
0.00%-1.50% | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
1.51%-2.50% | — | | | — | | | 1 | | | 11 | | | 12 | |
Greater than 2.50% | 833 | | | 17 | | | 23 | | | — | | | 873 | |
| Total | $ | 833 | | | $ | 17 | | | $ | 24 | | | $ | 11 | | | $ | 885 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10. Other Contract Holder Funds
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| At Guaranteed | | 1 Basis Point-50 | | 51 Basis Points-150 | | Greater Than 150 | | |
| Range of Guaranteed Minimum Crediting Rate | Minimum | | Basis Points Above | | Basis Points Above | | Basis Points Above | | Total |
| Variable Annuities | | | | | | | | | |
0.00%-1.50% | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
1.51%-2.50% | 137 | | | — | | | — | | | — | | | 137 | |
Greater than 2.50% | 6,113 | | | 101 | | | — | | | — | | | 6,214 | |
| Total | $ | 6,250 | | | $ | 101 | | | $ | — | | | $ | — | | | $ | 6,351 | |
| | | | | | | | | |
| RILA | | | | | | | | | |
0.00%-1.50% | $ | 5 | | | $ | — | | | $ | 3 | | | $ | 3 | | | $ | 11 | |
1.51%-2.50% | — | | | — | | | — | | | — | | | — | |
Greater than 2.50% | 136 | | | 93 | | | — | | | — | | | 229 | |
| Total | $ | 141 | | | $ | 93 | | | $ | 3 | | | $ | 3 | | | $ | 240 | |
| | | | | | | | | |
| Fixed Annuities | | | | | | | | | |
0.00%-1.50% | $ | 25 | | | $ | 37 | | | $ | 12 | | | $ | 28 | | | $ | 102 | |
1.51%-2.50% | 16 | | | 1 | | | 1 | | | — | | | 18 | |
Greater than 2.50% | 3,001 | | | 33 | | | — | | | 278 | | | 3,312 | |
| Total | $ | 3,042 | | | $ | 71 | | | $ | 13 | | | $ | 306 | | | $ | 3,432 | |
| | | | | | | | | |
| Fixed Index Annuities | | | | | | | | | |
0.00%-1.50% | $ | 3 | | | $ | 11 | | | $ | 2 | | | $ | 28 | | | $ | 44 | |
1.51%-2.50% | — | | | — | | | — | | | — | | | — | |
Greater than 2.50% | 36 | | | — | | | 86 | | | 53 | | | 175 | |
| Total | $ | 39 | | | $ | 11 | | | $ | 88 | | | $ | 81 | | | $ | 219 | |
| | | | | | | | | |
| Closed Block Life | | | | | | | | | |
0.00%-1.50% | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
1.51%-2.50% | 1 | | | 10 | | | — | | | — | | | 11 | |
Greater than 2.50% | 5,251 | | | 388 | | | 720 | | | 5 | | | 6,364 | |
| Total | $ | 5,252 | | | $ | 398 | | | $ | 720 | | | $ | 5 | | | $ | 6,375 | |
| | | | | | | | | |
| Closed Block Annuity | | | | | | | | | |
0.00%-1.50% | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
1.51%-2.50% | — | | | — | | | 1 | | | 11 | | | 12 | |
Greater than 2.50% | 872 | | | 18 | | | 24 | | | — | | | 914 | |
| Total | $ | 872 | | | $ | 18 | | | $ | 25 | | | $ | 11 | | | $ | 926 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 11. Separate Account Assets and Liabilities
11. Separate Account Assets and Liabilities
The Company issues variable contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder (traditional variable annuities). The Company also issues variable contracts through separate accounts where the Company contractually guarantees to the contract holder (variable contracts with guarantees) the following: a) return of no less than total deposits made to the account adjusted for any partial withdrawals, b) total deposits made to the account adjusted for any partial withdrawals plus a minimum return, or c) the highest account value on a specified anniversary date adjusted for any withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death (guaranteed minimum death benefits, or "GMDB"), at annuitization (guaranteed minimum income benefits, or "GMIB"), upon the depletion of funds (guaranteed minimum withdrawal benefits, or "GMWB") or at the end of a specified period (guaranteed minimum accumulation benefits, or "GMAB"). These guarantees are classified as market risk benefits. See Note 12 - Market Risk Benefits of these Notes to Condensed Consolidated Financial Statements for more information regarding market risk benefits.
The separate account assets supporting the variable portion of both traditional variable annuities and variable contracts with guarantees are carried at fair value and reported as summary total separate account assets with an equivalent summary total reported for separate account liabilities. At June 30, 2026 and December 31, 2025, the assets and liabilities associated with variable life and annuity contracts were $245 billion and $236 billion, respectively. Investment risks associated with market value changes are borne by the contract holders, except to the extent of minimum guarantees made by the Company.
Separate account net investment income, net investment realized and unrealized gains and losses, and the related liability changes are offset within the same line item in the Condensed Consolidated Income Statements. Amounts assessed against the contract holders for mortality, variable annuity benefit guarantees, administrative, and other services are reported in revenue as fee income.
The following table presents the roll-forward of the separate account balance for variable annuities (in millions):
| | | | | | | | | | | |
| Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 |
| Balance as of beginning of period | $ | 236,406 | | $ | 228,851 |
Deposits (1) | 4,849 | | 9,998 |
Surrenders, withdrawals and benefits (1) | (14,003) | | (27,633) |
| Net transfer from (to) general account | (402) | | (372) |
| Investment performance | 19,759 | | 28,278 |
| Policy charges and other | (1,320) | | (2,716) |
| Balance as of end of period, gross | $ | 245,289 | | $ | 236,406 |
| | | |
| | | |
| | | |
Cash surrender value (2) | $ | 240,566 | | $ | 231,711 |
(1) Excludes certain internal exchanges.
(2) Cash surrender value represents the amount of the contract holder’s account balances distributable at the balance sheet date less applicable surrender charges.
The following table presents the reconciliation of the separate account balance in the Condensed Consolidated Balance Sheets (in millions):
| | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Variable Annuities | $ | 245,289 | | $ | 236,406 |
| Other Product Lines | 98 | | 90 |
| Total | $ | 245,387 | | $ | 236,496 |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 11. Separate Account Assets and Liabilities
The following table presents aggregate fair value of assets, by major investment asset category, supporting separate accounts (in millions):
| | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Variable Annuities By Fund Type | | | |
| Equity | $ | 178,869 | | | $ | 171,046 | |
| Bond | 19,475 | | | 19,711 | |
| Balanced | 44,525 | | | 43,317 | |
| Money Market | 2,420 | | | 2,332 | |
| Total Variable Annuities | 245,289 | | | 236,406 | |
| Other Product Lines | 98 | | | 90 | |
| Total Separate Accounts | $ | 245,387 | | | $ | 236,496 | |
12. Market Risk Benefits
Contracts or contract features that provide protection to the contract holder from capital market risk and expose the Company to other-than-nominal capital market risk are classified as MRBs.
All long-duration insurance contracts and certain investment contracts are subject to MRB evaluation. MRBs are measured at fair value at the contract level and can be in either an asset or liability position. For contracts that contain multiple MRB features, the MRBs are valued together as a single compound MRB. Market risk benefit assets and Market risk benefit liabilities are reported separately on the Condensed Consolidated Balance Sheets.
Changes in fair value are reported in Net (gains) losses on market risk benefits in the Condensed Consolidated Income Statements. However, the change in fair value related to our own non-performance risk is reported as a component of other comprehensive income in Change in non-performance risk on market risk benefits on the Condensed Consolidated Statements of Comprehensive Income (Loss).
A description of the items affecting the change in fair value by category is as follows:
•Changes in interest rates — movement in risk free rates (impacts both assumed future separate account returns and discounting of cash flows)
•Fund performance — separate account returns gross of fees
•Change in equity index volatility — movement in implied volatility
•Expected policyholder behavior — policyholder behavior as assumed in reserving
•Actual policyholder behavior different than expected — difference between actual behavior during the period versus assumed behavior
•Time — effect of passage of time including reduction to separate account balances from fees, the change in proximity of future cash flows, and impacts to policy features such as bonus credits
•Change in assumptions — effect of actuarial assumption updates and model enhancements
•Change in non-performance risk — changes in Jackson’s non-performance risk
See Note 6 - Fair Value Measurements of these Notes to Condensed Consolidated Financial Statements for more information regarding fair value measurements.
Additionally, when an annuitization occurs (for annuitization benefits) or upon extinguishment of the account balance (for withdrawal benefits), the balance related to the MRB is derecognized and the amount deducted (after derecognition of any related amount included in accumulated other comprehensive income) is used in the calculation of the liability for future policy benefits for the resulting payout annuity.
Variable Annuities
Variable annuity contracts issued by the Company offer various guaranteed minimum death, withdrawal, income and accumulation benefits. These guaranteed benefit features, as well as the reinsurance recoverable on the Company’s GMIB, are classified as MRBs and measured at fair value. The Company discontinued offering the GMIB in 2009.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 12. Market Risk Benefits
Variable annuity guaranteed benefit features classified as MRBs, which have explicit fees, are measured using the attributed fee method. Under the attributed fee method, fair value is measured as the difference between the present value of projected future liabilities and the present value of projected attributed fees. At the inception of the contract, the Company attributes to the MRB a portion of total fees expected to be assessed against the contract holder to offset the projected claims over the lifetime of the contract. The attributed fee is expressed as a percentage of total projected future fees at inception of the contract. This percentage of total projected fees is considered a fixed term of the MRB feature and is held static over the life of the contract. This percentage may not exceed 100% of the total projected contract fees as of contract inception. As the Company may issue contracts that have projected future liabilities greater than the projected future guaranteed benefit fees at issue, the Company may also attribute mortality and expense charges when performing this calculation. In subsequent valuations, the present value of both future projected liabilities and projected attributed fees are remeasured based on current market conditions and policyholder behavior assumptions.
Fixed Index Annuities and RILA
Our FIA and RILA contracts may be issued with features that guarantee benefits that are payable upon death (GMDB) or upon depletion of funds (GMWB). These features are classified as MRBs and measured at fair value.
Where the guaranteed benefit features have explicit fees, the fair value of the MRB is measured as the difference between the present value of projected future guaranteed benefits and the present value of projected attributed fees (the attributed fee method). At inception of the contract, the Company attributes a percentage of total projected future fees expected to be assessed against the policyholder to offset the projected future guaranteed benefits over the lifetime of the contract. Where the projected attributed fees are sufficient to offset the projected guaranteed benefits at issue, the MRB has an initial fair value of zero resulting in no gain or loss on issuance of the contract. If the projected attributed fees are insufficient to offset the projected guaranteed benefits at issue, an MRB liability is recognized at issuance and the value of the MRB is deducted from the host contract liability resulting in no gain or loss on issuance of the contract.
If the guaranteed benefits do not have explicit fees, the fair value of the MRB is measured as the present value of projected future guaranteed benefits. At inception, the initial value of the MRB is deducted from the host contract liability resulting in no gain or loss on issuance of the contract.
The following table presents the reconciliation of the market risk benefits balance in the Condensed Consolidated Balance Sheets (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2026 | | December 31, 2025 |
| Variable | | Other | | | | Variable | | Other | | |
| Annuities | | Product Lines | | Total | | Annuities | | Product Lines | | Total |
| Market risk benefit - (assets) | $ | (8,043) | | | $ | (3) | | | $ | (8,046) | | | $ | (7,863) | | | $ | (4) | | | $ | (7,867) | |
| Market risk benefit - liabilities | 3,124 | | | 244 | | | 3,368 | | | 3,598 | | | 156 | | | 3,754 | |
| Market risk benefit - net (asset) liability | $ | (4,919) | | | $ | 241 | | | $ | (4,678) | | | $ | (4,265) | | | $ | 152 | | | $ | (4,113) | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 12. Market Risk Benefits
The following table presents the roll-forward of the net MRB (assets) liabilities for variable annuities (dollars in millions):
| | | | | | | | | | | |
| Six Months Ended June 30, 2026 | | Year Ended December 31, 2025 |
| Net MRB balance, beginning of period | $ | (4,265) | | | $ | (5,176) | |
| Beginning of period cumulative effect of changes in non-performance risk | (17) | | | 314 | |
| Net MRB balance, beginning of period, before effect of changes in non-performance risk | (4,282) | | | (4,862) | |
| Effect of changes in interest rates | (474) | | | (72) | |
| Effect of fund performance | (1,813) | | | (3,518) | |
| Effect of changes in equity index volatility | 281 | | | 509 | |
| Effect of expected policyholder behavior | 420 | | | 758 | |
| Effect of actual policyholder behavior different from expected | 225 | | | 572 | |
| Effect of time | 963 | | | 1,957 | |
| Effect of changes in assumptions | 4 | | | 374 | |
| Net MRB balance, end of period, before effect of changes in non-performance risk | (4,676) | | | (4,282) | |
| End of period cumulative effect of changes in non-performance risk | (243) | | | 17 | |
| Net MRB balance, end of period, gross | (4,919) | | | (4,265) | |
| | | |
| Reinsurance recoverable on market risk benefits at fair value, end of period | (29) | | | (41) | |
| Net MRB balance, end of period, net of reinsurance | (4,948) | | | (4,306) | |
| | | |
Weighted average attained age (years) (1) | 71 | | 70 |
Net amount at risk (2) | $ | 4,990 | | | $ | 5,471 | |
(1) Weighted-average attained age is defined as the average age of policyholders weighted by account value.
(2) Net amount at risk (NAR) is defined as of the valuation date for each contract as the greater of Death Benefit NAR (DBNAR) and Living Benefit NAR (LBNAR), as applicable, where DBNAR is the GMDB benefit base in excess of the account value, and LBNAR is the actuarial present value of guaranteed living benefits in excess of the account value.
The Company regularly evaluates the inputs and assumptions to be used to measure the fair value of the MRB assets and MRB liabilities. Non-performance risk is incorporated into the calculation through the adjustment of the risk-free rate curve based on credit spreads for debt and debt-like instruments issued by the Company or its insurance operating subsidiaries, adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries.
The significant assumptions used in the MRB fair value calculations are discussed in Note 6 - Fair Value Measurements of these Notes to Condensed Consolidated Financial Statements.
13. Debt
Liabilities for the Company’s debt are primarily carried at an amount equal to the principal balance net of any unamortized original issuance discount or premium. Original issuance discount or premium and any debt issue costs, if applicable, are recognized as a component of interest expense over the period the debt is expected to be outstanding.
The aggregate carrying value of debt was as follows (in millions):
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2026 | | 2025 |
| Debt | | | |
5.170% Senior Notes due 2027 | $ | 399 | | | $ | 399 | |
3.125% Senior Notes due 2031 | 497 | | | 496 | |
5.670% Senior Notes due 2032 | 348 | | | 348 | |
6.150% Senior Notes due 2037 | 742 | | | — | |
4.000% Senior Notes due 2051 | 490 | | | 490 | |
Surplus notes due 2027 | 250 | | | 250 | |
| FHLBI bank loans due 2034 & 2035 | 43 | | | 47 | |
| Total debt | $ | 2,769 | | | $ | 2,030 | |
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 13. Debt
The following table presents the contractual maturities of the Company's debt as of June 30, 2026 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Calendar Year | | |
| 2027 | | 2028 | | 2029 | | 2030 | | 2031 and thereafter | | Total |
| Debt | $ | 649 | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,120 | | | $ | 2,769 | |
Senior Notes
On June 15, 2026, JFI issued $750 million aggregate principal amount of 6.150% Senior Notes due January 15, 2037 (the “2037 Notes”). The 2037 Notes are unsecured. The net proceeds of the 2037 Notes are expected to be used for general corporate purposes, which may include, among other things, repaying or redeeming at or before maturity, JFI's $400 million aggregate principal amount 5.170% Senior Notes due June 8, 2027 and/or, at maturity, Jackson National Life’s $250 million surplus notes due March 15, 2027.
Facility Agreement for Senior Notes Issuance
In March 2026, JFI entered into:
•a 10-year facility agreement with a Delaware trust in connection with that trust’s sale of $500 million of pre-capitalized trust securities; and
•a 30-year facility agreement with a separate Delaware trust in connection with that trust’s sale of $400 million of pre-capitalized trust securities.
The pre-capitalized trust securities were issued and sold in a private placement pursuant to Rule 144A under the Securities Act. Each trust invested the proceeds from the sale of its trust securities in a portfolio of principal and/or interest strips of U.S. Treasury securities.
Each facility agreement provides the Company with the right to issue and sell to the applicable trust from time to time the Company’s unsecured senior notes, consisting of up to $500 million of 6.311% senior notes due February 15, 2036 (the "2036 Senior Notes"), in case of the 10-year facility agreement, and up to $400 million of 7.280% senior notes due February 15, 2056 (the "2056 Senior Notes"), in case of the 30-year facility agreement, in exchange for a corresponding amount of the U.S. Treasury securities held by the applicable trust. The U.S. Treasury securities held by a trust are pledged to the Company as collateral securing that trust’s performance under its facility agreement. The Company may direct a trust to grant the right to exercise the issuance right with respect to all or a designated amount of the applicable senior notes to one or more assignees (who are our consolidated subsidiaries or persons to whom we have an obligation). The issuance right under a facility agreement will be exercised automatically in full upon the Company’s failure to make certain payments to the applicable trust or upon certain bankruptcy events involving the Company. The Company is also required to exercise this issuance right if its consolidated shareholders’ equity, calculated in accordance with U.S. GAAP but excluding accumulated other comprehensive income and equity of non-controlling interests, falls below $2.8 billion, subject to adjustment from time to time in certain cases, and upon certain other events described in the applicable facility agreement.
Prior to any involuntary exercise of the issuance right under a facility agreement, the Company has the right to repurchase any or all of the senior notes then held by the applicable trust in exchange for U.S. Treasury securities. The Company may redeem any outstanding senior notes issued to a trust, in whole or in part, prior to their maturity at a redemption price equal to the greater of par or a make-whole redemption price. On or after their maturities, the senior notes may be redeemed at par. The Company is required to purchase from a trust any U.S. Treasury securities that are due and unpaid at an amount equal to their face amount.
The Company pays a semi-annual facility fee under the 10-year facility agreement and the 30-year facility agreement to the applicable trust at a rate of 2.066% and 2.430% per annum, respectively, applied to the maximum amount of senior notes that the Company could issue and sell to that trust, and reimburses each trust for its expenses under separate expense agreements. The facility fees and expense reimbursements are recorded in operating costs and other expenses.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 13. Debt
At June 30, 2026, the Company had not issued any senior notes under either facility agreement. The Company incurred $8 million of origination costs, which were capitalized and reported in other assets and will be amortized over the terms of the respective facility agreements.
Revolving Credit Facility
On June 30, 2026, JFI entered into $1.25 billion revolving credit facility with a syndicate of banks and Wells Fargo Bank, National Association, as Administrative Agent (the "2026 Revolving Credit Facility"). The 2026 Revolving Credit Facility replaced a prior $1.0 billion revolving credit facility that was scheduled to terminate in February 2028.
The 2026 Revolving Credit Facility provides for borrowings for working capital and other general corporate purposes, with a sub-limit of $500 million available for letters of credit. The 2026 Revolving Credit Facility further provides the Company the options for the ability to request, subject to customary terms and conditions, an increase in commitments thereunder by up to an additional $500 million and an extension of the term of the commitments by up to two years.
The 2026 Revolving Credit Facility contains financial maintenance covenants, including a minimum adjusted consolidated net worth (the total equity, determined in accordance with GAAP, of JFI and its Consolidated Subsidiaries shown on the consolidated balance sheets) test of no less than 65% of our adjusted consolidated net worth as of March 31, 2026, plus 50% of the aggregate amount of any increase in adjusted consolidated net worth resulting from equity issuances by the Company and its consolidated subsidiaries after March 31, 2026, and a maximum consolidated indebtedness to total capitalization ratio test not to exceed 35%. Commitments under the 2026 Revolving Credit Facility terminate on June 30, 2031, unless extended.
Line of Credit Agreement
Jackson is a party to an Uncommitted Money Market Line Credit Agreement, among Jackson, Jackson Financial, and Société Générale. This agreement is an uncommitted short-term cash advance facility that provides an additional form of liquidity to Jackson and to Jackson Financial. The aggregate borrowing capacity under the agreement is $500 million and each cash advance request must be at least $100 thousand. The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance. Jackson and Jackson Financial are jointly and severally liable to repay any advance under the agreement, which must be repaid prior to the last day of the quarter in which the advance was drawn.
14. Federal Home Loan Bank Advances
The Company, through its subsidiary, Jackson, entered into an advance program with the FHLBI in which interest rates were either fixed or variable based on the FHLBI cost of funds or market rates. No advances were outstanding at June 30, 2026 and December 31, 2025. Interest expense on such advances was nil and $1 million for the three months ended June 30, 2026 and 2025, respectively, and nil and $6 million for the six months ended June 30, 2026 and 2025, respectively. See Note 10 - Other Contract Holder Funds of these Notes to Condensed Consolidated Financial Statements for the carrying value of securities pledged as collateral for our FHLB obligations.
15. Income Taxes
The Company uses the estimated annual effective tax rate (“ETR”) method in computing the interim tax provision. Certain items, including those deemed unusual, infrequent, or that cannot be reliably estimated, are treated as discrete items and excluded from the estimated annual ETR. In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual ETR, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, which are recorded in the period in which the change occurs. The estimated annual ETR is revised, as necessary, at the end of successive interim reporting periods.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 15. Income Taxes
The Company's effective income tax rate was 0.8% and 9.8% for the three and six months ended June 30, 2026 compared with 1.8% and 2.9% for the same period in 2025, respectively. The ETR, excluding significant, unusual or infrequently occurring items, differs from the statutory rate of 21% primarily due to the dividends received deduction and utilization of foreign tax credits. The change in the ETR for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 was due to the relationship of taxable income to consolidated pre-tax income (loss). The ETR differs for the six months ended June 30, 2026 from the full year-ended December 31, 2025 ETR of 117% due to the relationship of taxable income to consolidated pre-tax income (loss), valuation allowance, the variance of the impact of tax adjustments related to prior year returns and the benefit of IRS refund interest on carryback claims and amended returns both recognized in 2025.
The determination of the estimated 2026 CAMT liability considered carryover impacts from prior tax years and consideration of the applicability of the proposed regulations and additional guidance issued by the Internal Revenue Service. The U.S. Treasury Department is expected to issue additional guidance in 2026 or later which may materially change the estimated provision of the CAMT.
The Company is required to evaluate the recoverability of its deferred tax assets and establish a valuation allowance, if necessary, to reduce its deferred tax asset to an amount that is more likely than not to be realizable. Considerable judgment and the use of estimates are required when determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. When evaluating the need for a valuation allowance, the Company considers many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused. The Company has adopted an accounting policy to analyze the ability to recover the CAMT credit carryover deferred tax asset separately from the deferred tax assets generated under the regular tax system.
For the six months ended June 30, 2026, changes in market conditions and interest rates impacted the unrealized tax gains and losses in the available-for-sale securities portfolio resulting in deferred tax assets related to net unrealized tax capital losses for the life insurance group. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery, our capital loss carryback capacity, along with reversing capital deferred tax liabilities.
As of June 30, 2026, based on all available evidence, we concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses and the charitable contributions carryover that are not more likely than not to be realized. For the three and six months ended June 30, 2026, the Company recorded a decrease of $20 million and increase of $107 million, respectively, to the valuation allowance associated with the unrealized tax losses in the Company’s available-for-sale securities portfolio and for the charitable contributions carryover. The $20 million decrease for the three months ended June 30, 2026 to the valuation allowance consists of $22 million tax benefit recorded to other comprehensive income and $2 million tax expense recorded in the income tax expense. The $107 million increase for the six months ended June 30, 2026 to the valuation allowance consists of $105 million tax expense recorded to other comprehensive income and $2 million tax expense record in the income tax expense.
At June 30, 2026 and December 31, 2025, the Company has recorded a total valuation allowance for $593 million and $486 million, respectively, associated with the unrealized tax losses in the Life Companies' available-for-sale securities portfolio and the charitable contributions carryover where it is not more likely than not that the full tax benefit of the losses will be realized.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 16. Commitments and Contingencies
16. Commitments and Contingencies
The Company and its subsidiaries are involved in litigation arising in the ordinary course of business. It is the opinion of management that the ultimate disposition of such litigation will not have a material adverse effect on the Company's financial condition. Jackson has been named in civil litigation proceedings, which appear to be substantially similar to other class action litigation brought against many life insurers including allegations of misconduct in the sale and administration of insurance products. The Company accrues for legal contingencies once the contingency is deemed to be probable and reasonably estimable.
At June 30, 2026, the Company had unfunded commitments related to its investments in limited partnerships and limited liability companies totaling $846 million. At June 30, 2026, unfunded commitments related to fixed-rate mortgage loans and other debt securities totaled $1,986 million.
17. Operating Costs and Other Expenses
The following table summarizes the Company’s operating costs and other expenses (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Asset-based commission expenses | $ | 298 | | | $ | 273 | | | $ | 593 | | | $ | 557 | |
| Other commission expenses | 353 | | | 243 | | | 675 | | | 458 | |
| Sub-advisor expenses | 73 | | | 76 | | | 147 | | | 154 | |
| | | | | | | |
General and administrative expenses (1) | 265 | | | 274 | | | 564 | | | 533 | |
| Deferral of acquisition costs | (302) | | | (185) | | | (557) | | | (344) | |
| Total operating costs and other expenses | $ | 687 | | | $ | 681 | | | $ | 1,422 | | | $ | 1,358 | |
| | | | | | | |
(1)Includes gains (losses) on derivative instruments economically hedging liabilities related to the non-qualified voluntary deferred compensation plan beginning in the third quarter 2025.
18. Accumulated Other Comprehensive Income (Loss)
The following table represents changes in the balance of accumulated other comprehensive income ("AOCI"), net of income tax, related to unrealized investment gains (losses) (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2026 | | 2025 | | 2026 | | 2025 |
Balance, beginning of period (1) | | $ | (2,728) | | | $ | (2,719) | | | $ | (2,470) | | | $ | (3,522) | |
| | | | | | | | |
| Change in unrealized gains (losses) of investments | | 151 | | | 351 | | | (424) | | | 992 | |
Change in current discount rate - reserve for future policy benefits(2) | | (14) | | | (31) | | | 59 | | | (106) | |
| Change in non-performance risk on market risk benefits | | (63) | | | (267) | | | 270 | | | 60 | |
| Change in unrealized gains (losses) - other | | 24 | | | (2) | | | 31 | | | (6) | |
| Change in deferred tax asset | | (1) | | | 55 | | | (91) | | | (38) | |
| Other comprehensive income (loss) before reclassifications | | 97 | | | 106 | | | (155) | | | 902 | |
| Reclassifications from AOCI, net of tax | | 6 | | | (10) | | | — | | | (3) | |
| Other comprehensive income (loss) | | 103 | | | 96 | | | (155) | | | 899 | |
Balance, end of period (1) | | $ | (2,625) | | | $ | (2,623) | | | $ | (2,625) | | | $ | (2,623) | |
(1)Includes $(1,238) million and $(1,269) million related to the investments held within the funds withheld account related to the Athene Reinsurance Transaction as of June 30, 2026 and December 31, 2025, respectively.
(2)Represents the impact of changes in the discount rate used in the remeasurement of our direct reserves for future policy benefits and claims payable, net of the remeasurement of ceded reserves for future policy benefits and claims payable.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 18. Accumulated Other Comprehensive Income (Loss)
The following table represents amounts reclassified out of AOCI (in millions):
| | | | | | | | | | | | | | | | | | | | |
| AOCI Components | | Amounts
Reclassified from AOCI | | Affected Line Item in the Condensed
Consolidated Income Statements |
| |
| | Three Months Ended June 30, | | |
| | 2026 | | 2025 | | |
| Net unrealized investment gain (loss): | | | | | | |
| Net realized gain (loss) on investments | | $ | 13 | | | $ | 21 | | | Net gains (losses) on derivatives and investments |
| Other impaired securities | | (7) | | | (33) | | | Net gains (losses) on derivatives and investments |
| Net unrealized gain (loss) | | 6 | | | (12) | | | |
| | | | | | |
| | | | | | |
| Income tax expense (benefit) | | — | | | (2) | | | |
| Reclassifications, net of income taxes | | $ | 6 | | | $ | (10) | | | |
| | | | | | | | | | | | | | | | | | | | |
| AOCI Components | | Amounts
Reclassified from AOCI | | Affected Line Item in the Condensed
Consolidated Income Statements |
| |
| | Six Months Ended June 30, | | |
| | 2026 | | 2025 | | |
| Net unrealized investment gain (loss): | | | | | | |
| Net realized gain (loss) on investments | | $ | 31 | | | $ | 45 | | | Net gains (losses) on derivatives and investments |
| Other impaired securities | | (31) | | | (48) | | | Net gains (losses) on derivatives and investments |
| Net unrealized gain (loss), before income taxes | | — | | | (3) | | | |
| | | | | | |
| | | | | | |
| Income tax expense (benefit) | | — | | | — | | | |
| Reclassifications, net of income taxes | | $ | — | | | $ | (3) | | | |
19. Equity
Preferred Stock
On March 13, 2023, the Company issued and sold 22,000,000 depositary shares (the “Depositary Shares”), each representing a 1/1,000th fractional interest in a share of the Company’s Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A, $25,000 liquidation preference per share (equivalent to $25 per Depositary Share), with a 5-year dividend rate reset period and noncumulative dividends (the “Series A Preferred Stock”). After underwriting discounts and expenses, we received net proceeds of approximately $533 million.
The Series A Preferred Stock carries a dividend rate equal to i) from issuance to but excluding March 30, 2028, 8.000% per annum; and ii) from, and including, March 30, 2028, during each reset period, at a rate per annum equal to the Five-year U.S. Treasury Rate as of the applicable reset dividend determination date plus 3.728%. The dividend is payable quarterly in arrears on March 30, June 30, September 30 and December 30, and commenced on June 30, 2023. Dividends on the Series A Preferred Stock are not cumulative. Under the terms of the Series A Preferred Stock, if the Company has not declared and paid, or declared and set aside a sum sufficient for the payment of, dividends on the Series A Preferred Stock for the immediately preceding dividend period, then the Company’s ability to pay dividends or make distributions with respect to its common stock, or to repurchase or otherwise acquire its common stock, is subject to certain restrictions. Similar restrictions would apply in respect of any preferred stock ranking on parity with, or junior to, the Series A Preferred Stock, if any such preferred stock were to be issued by the Company.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 19. Equity
We may, at our option, redeem the shares of Series A Preferred Stock (a) in whole but not in part at any time prior to March 30, 2028, (i) within 90 days after the occurrence of a “rating agency event” at a redemption price equal to $25,500 per share (equivalent to $25.50 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date, or (ii) within 90 days after the occurrence of a “regulatory capital event,” at a redemption price equal to $25,000 per share (equivalent to $25 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date, or (b) in whole or in part, from time to time, on or after March 30, 2028, at a redemption price equal to $25,000 per share (equivalent to $25 per Depositary Share), plus an amount equal to any accrued but unpaid dividends to, but excluding, the redemption date. If we redeem any shares of Series A Preferred Stock, a proportionate number of Depositary Shares will be redeemed. Holders of Depositary Shares have no right to require the redemption or repurchase of the Series A Preferred Stock or the Depositary Shares.
The net proceeds from the sale were used for general corporate purposes, including the repayment of senior notes that matured in November 2023.
The following table presents the declaration date, record date, payment date and dividends paid per preferred share of, and per depositary share representing, the Series A Preferred Stock:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Dividends Paid |
| Declaration Date | | Record Date | | Payment Date | | Per Preferred Share | | Per Depositary Share |
| Quarter Ended | | | | | | | | | |
| 03/31/2026 | February 16, 2026 | | March 16, 2026 | | March 30, 2026 | | $500 | | $0.50 |
| 06/30/2026 | May 1, 2026 | | June 11, 2026 | | June 30, 2026 | | $500 | | $0.50 |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Quarter Ended | | | | | | | | | |
| 03/31/2025 | February 17, 2025 | | March 11, 2025 | | March 31, 2025 | | $500 | | $0.50 |
| 06/30/2025 | May 2, 2025 | | June 12, 2025 | | June 30, 2025 | | $500 | | $0.50 |
| | | | | | | | | |
| | | | | | | | | |
Common Stock
At June 30, 2026 and December 31, 2025, the Company was authorized to issue up to 1 billion shares of common stock with a par value of $0.01 per share.
Shares Issued to TPG
In February 2026, Jackson Financial and TPG Inc. ("TPG") completed the transaction announced in January 2026, resulting in TPG acquiring 4,715,554 shares of Jackson Financial common stock for $500 million. As a result, Jackson Financial re-issued treasury shares having an aggregate cost of $178 million and recognized a corresponding gain on re-issuance of treasury shares of $322 million, which was recorded to additional paid-in capital. The cost of re-issued shares is determined on a first-in, first-out basis. See Note 25 - Subsequent Events of the Notes to Consolidated Financial Statements in the Company’s 2025 Annual Report for further discussion on this transaction.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 19. Equity
Share Repurchase Program
On September 18, 2025, our Board of Directors authorized an increase of $1 billion in our existing authorization to repurchase shares of our outstanding common stock as part of the Company's share repurchase program. As of July 27, 2026, the Company had remaining authorization to apply up to $526 million to the purchase of its common shares.
The Company expects to repurchase common shares from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the Company, other potential uses for such funds, market conditions, the Company's capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any time. It does not have an expiration date. There can be no assurance that we will continue share repurchases or approve any further increase to our current, or approve any new, stock repurchase program, or any assurance to the amount of any repurchases that may be made pursuant to such programs.
Through June 30, 2026, we have incurred $10 million of excise tax in connection with share repurchases that exceeded stock issuances. The excise tax incurred was recognized as part of the cost basis of the treasury stock acquired and not reported as income tax expense.
The following table represents share repurchase activities as part of our share repurchase program:
| | | | | | | | | | | | | | | | | |
| Period | Number of Shares Repurchased | | Total Payments
(in millions) | | Average Price Paid Per Share |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| 2025 (January 1- March 31) | 1,966,909 | | | $ | 172 | | | $ | 87.69 | |
| 2025 (April 1- June 30) | 1,920,154 | | | 158 | | | 82.06 | |
| 2025 (July 1- September 30) | 1,636,094 | | | 154 | | | 94.32 | |
| 2025 (October 1- December 31) | 1,507,378 | | | 150 | | | 99.66 | |
| Total 2025 | 7,030,535 | | | $ | 634 | | | $ | 90.26 | |
| 2026 (January 1- March 31) | 1,714,620 | | | 192 | | | 111.87 | |
| 2026 (April 1- June 30) | 2,086,601 | | | 227 | | | 108.67 | |
| 2026 (July 1- July 27) | 486,601 | | | 57 | | | 117.11 | |
| | | | | |
| Total 2026 | 4,287,822 | | | $ | 476 | | | $ | 110.91 | |
The following table presents changes in the number of shares of common stock outstanding:
| | | | | | | | | | | | | | | | | |
| Common Stock Issued | | Treasury Stock | | Total Common Stock Outstanding |
| Shares at December 31, 2025 | 94,488,315 | | | (27,662,683) | | | 66,825,632 | |
| Share-based compensation programs | — | | | 445,321 | | (1) | 445,321 | |
| Shares repurchased under repurchase program | — | | | (3,801,221) | | | (3,801,221) | |
| Common stock issued to TPG | — | | | 4,715,554 | | | 4,715,554 | |
| Shares at June 30, 2026 | 94,488,315 | | | (26,303,029) | | | 68,185,286 | |
(1) Represents net shares issued from treasury stock pursuant to the Company’s share-based compensation programs.
Dividends to Shareholders
Any declaration of cash dividends on common stock will be at the discretion of JFI’s Board of Directors and will depend on our financial condition, earnings, liquidity and capital requirements, regulatory constraints, level of indebtedness, preferred stock, contractual restrictions with respect to paying cash dividends, restrictions imposed by Delaware law, general business conditions and any other factors that JFI’s Board of Directors deems relevant in making any such determination. Therefore, there can be no assurance that we will pay any cash dividends to holders of our stock or as to the amount of any such cash dividend.
Item 1 | Notes to Condensed Consolidated Financial Statements (Unaudited) | 19. Equity
The following table presents declaration date, record date, payment date and dividends paid per share of JFI’s common stock:
| | | | | | | | | | | | | | | | | | | | | | | |
|
| Declaration Date | | Record Date | | Payment Date | | Dividends Paid Per Share |
| Quarter Ended | | | | | | | |
| 03/31/2026 | February 16, 2026 | | March 16, 2026 | | March 26, 2026 | | $0.90 |
| 06/30/2026 | May 1, 2026 | | June 11, 2026 | | June 25, 2026 | | $0.90 |
| | | | | | | |
| | | | | | | |
| Quarter Ended | | | | | | | |
| 03/31/2025 | February 17, 2025 | | March 11, 2025 | | March 20, 2025 | | $0.80 |
| 06/30/2025 | May 2, 2025 | | June 12, 2025 | | June 26, 2025 | | $0.80 |
| | | | | | | |
| | | | | | | |
20. Earnings Per Share
Basic earnings per share is calculated by dividing net income (loss) attributable to Jackson Financial common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the net income (loss) attributable to Jackson Financial common shareholders, by the weighted-average number of shares of common stock outstanding for the period, plus shares representing the dilutive effect of share-based awards. The Company grants share-based awards subject to vesting provisions of its 2021 Omnibus Incentive Plan, which can have a dilutive effect. See Note 18 - Share-Based Compensation of the Notes to Consolidated Financial Statements in the Company’s 2025 Annual Report for further description of our share-based awards.
The following table sets forth the calculation of earnings per common share:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| (in millions, except share and per share data) |
| | | | | | | |
| Net income (loss) attributable to Jackson Financial Inc. | $ | 655 | | | $ | 179 | | | $ | 231 | | | $ | 155 | |
| Less: Preferred stock dividends | 11 | | | 11 | | | 22 | | | 22 | |
| Net income (loss) attributable to Jackson Financial Inc. common shareholders | $ | 644 | | | $ | 168 | | | $ | 209 | | | $ | 133 | |
| | | | | | | |
| Weighted average shares of common stock outstanding - basic | 70,164,533 | | | 71,825,321 | | | 69,955,919 | | | 72,643,141 | |
| Dilutive common shares | 127,487 | | | 112,831 | | | 222,467 | | | 180,298 | |
| Weighted average shares of common stock outstanding - diluted | 70,292,020 | | | 71,938,152 | | | 70,178,386 | | | 72,823,439 | |
| | | | | | | |
| Earnings per share—common stock | | | | | | | |
| Basic | $ | 9.18 | | | $ | 2.34 | | | $ | 2.99 | | | $ | 1.83 | |
| Diluted | $ | 9.16 | | | $ | 2.34 | | | $ | 2.98 | | | $ | 1.83 | |
21. Subsequent Events
The Company has evaluated subsequent events through the date these Condensed Consolidated Financial Statements were issued.
Dividends Declared to Shareholders
On July 31, 2026, our Board of Directors approved a cash dividend on JFI's common stock of $0.90 per share for the third quarter 2026, payable on September 24, 2026, to common shareholders of record on September 15, 2026. The Company also announced the declaration of a cash dividend of $0.50 per depositary share, each representing a 1/1,000th interest in a share of Fixed-Rate Reset Noncumulative Perpetual Preferred Stock, Series A. The dividend will be payable on September 30, 2026, to depositary shareholders of record at the close of business on September 15, 2026.
