Hello, everyone, and welcome to the Jackson Financial, Inc. 4Q '25 Earnings Call. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions] I'll now hand over to our host, Liz Werner, Head of Investor Relations, to begin. Liz, please go ahead.

Good morning, everyone, and welcome to Jackson's 2025 Fourth Quarter and Full Year Earnings Call. Today's remarks may contain forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based upon management's current expectations. Jackson's filings with the SEC provide details on important factors that may cause actual results or events to differ materially. Except as required by law, Jackson is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change. Today's remarks also refer to certain non-GAAP financial measures. The reconciliation of those measures to the most comparable U.S. GAAP figures is included in our earnings release, financial supplement and earnings presentation, all of which are available on the Investor Relations page of our website at investors.jackson.com. Presenting on today's call are Jackson's CEO, Laura Prieskorn; and CFO, Don Cummings. Joining us in the room are our President of Jackson National Life Insurance Company, Chris Raub; our Head of Asset Liability Management, Brian Walta; our Chief Actuary, Lin Sun; and our Treasurer and Head of Corporate Development, Dean Scott. At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Liz. Good morning, and thank you for joining our 2025 fourth quarter and full year earnings call. I'll begin with a review of our recently announced strategic actions, followed by a discussion of our 2025 accomplishments, our progress since separation and our 2026 financial targets. 2025 was an exceptional year as we surpassed our financial targets and set records for sales and distribution. We delivered another year of over $1 billion in free capital generation and grew free cash flow while providing initial funding for our new captive reinsurer, Hickory Re. Following my remarks, our CFO, Don Cummings, will discuss our financial performance in further detail. Beginning on Slide 3, Jackson's execution focus and core capabilities have been steadfast and are evident in both our success as a leading provider of retirement solutions and our performance as a public company. As an important next step in Jackson's growth, we recently closed on our previously announced strategic partnership agreement with TPG. This long-term partnership will support accelerated growth of our spread-based business and future flexibility. TPG's unique investment capabilities and collaborative culture align well with Jackson, and our teams have already been working closely together. Our partnership with TPG, combined with the capital efficiency from our captive strategy positions us well for fixed and fixed index annuity sales momentum. Turning to Slide 4. Our strong full year operating results drove nearly 12% growth in our adjusted operating earnings, supported by stable fee income and increased investment spread earnings. Our commitment to shareholder capital return and the benefit of share repurchases resulted in over 20% growth in adjusted operating earnings per share for the full year. As a reminder, our net income includes the impact of our annual assumption review and net hedge results, which Don will discuss. Over the…

Thank you, Laura. Let's turn to Slide 9 and walk through our consolidated financial results for the fourth quarter. We delivered adjusted operating earnings of $455 million, driven by continued strength across our spread-based products. Earnings benefited from the ongoing expansion of our RILA, fixed and fixed index annuity lines as well as our institutional products. We also saw a favorable operating earnings impact this quarter from our annual actuarial assumption review, which added to the solid performance. As always, our spread-based products are supported by a high-quality, conservatively managed investment portfolio. Diversification and strong credit quality remain core to how we manage the portfolio, and that discipline continues to serve us well. Our spread-based product sales reflect the enhanced asset sourcing capabilities at PPM America. PPM's work has allowed us to direct new money into select higher-yielding asset classes, such as emerging markets, residential mortgages and investment-grade structured securities. This modest shift in new money allocation, combined with a compelling product lineup has helped Jackson maintain a stable and competitive position in the spread product market throughout the back half of 2025. And looking forward, we're excited about the momentum created by our new strategic partnership with TPG, along with the ongoing benefit of our capital-efficient captive strategy. Together, these initiatives will further strengthen our ability to offer competitive spread products that generate attractive financial returns. Given the recent headlines around asset-based finance and direct lending, it's worth noting that Jackson is currently underweight in these asset classes compared to our peers. We actually see potential market stress as an opportunity to step in and be selective investors. Additionally, TPG's expertise in direct lending, where they emphasize strong covenants and deep credit knowledge in the lower middle market segment positions us well as we gradually build exposure in this…

Thank you, Don. Turning to Slide 19. You can see our track record of executing on our business initiatives, delivering on our financial targets and creating value for all stakeholders. 2025 marked another year of significant progress and an important milestone for Jackson as we look forward to new growth opportunities. We expect our long-term partnership with TPG to leverage our core capabilities and lead to an expansion of our spread-based business. Jackson remains dedicated to serving financial professionals and their clients with the goal of helping Americans grow and protect their retirement savings and income. As we reflect on the year and our opportunities ahead, we recognize the hard work of all our associates whose talent and dedication remain our greatest strength. At this time, I'll turn it over to the operator for questions.

[Operator Instructions] Our first question comes from Suneet Kamath of Jefferies.

I had a couple on Slide 16. Just in terms of the capital levels, I mean you've kind of given us a qualitative sort of framework for how you think about the minimum capital. But I'm just wondering, is there any way that you can kind of give us a little bit more of a target so we can track this over time?

Suneet, it's Don. So first of all, just on Brooke Re, I think it's important to kind of zoom out and put our progress since early 2024 in perspective. And when we formed Brooke Re, we had shared quite a bit of detail around how we think about and manage capital there. And when we first set it up, the liability profile was almost entirely tied to our variable annuity guarantees. Now since then, we've taken a couple of important steps, both of which happened in the fourth quarter. And we believe those will give Brooke Re a more diversified liability and capital profile than it had initially. So I want to just spend a minute and cover what those are. First of all, we reinsured about $1.3 billion of payout annuity liabilities on a coinsurance basis with assets transferring over to support that block. And these liabilities are somewhat similar to the GMWB benefits on our VA book. But importantly, they don't have any equity market exposure, which means that, that block is going to be more stable over time. And another thing to keep in mind as we bring on assets through our partnership with TPG, we do see opportunities to enhance the profitability of that payout annuity block. Secondly, we did establish Hickory Re as a subsidiary of Brooke Re, and we ceded roughly $1.2 billion of in-force assets and liabilities into that structure. And there are a few advantages that I want to highlight here. Firstly, the modified GAAP framework we already use at Brooke Re is well understood by our regulator, and it's worked effectively over the past 2 years. So it made sense to kind of build on that foundation rather than setting up an offshore structure, which would just add cost and complexity…

Okay. That's helpful. And then I guess the second question on the slide is the $27 million of capital generation. It just seems like a low number, especially in a pretty favorable equity market environment. I know in your prepared remarks, you called out a couple of things, the surrenders and I guess, volatility. But can you kind of dimension how big of an impact that had on capital generation? Or maybe said another way, what would you expect normal course capital generation to be?

Yes. We haven't provided guidance in terms of kind of normal market environment, capital generation. But you're right, the 2 items that I mentioned in my prepared remarks, the first one related to the volatility that we saw in the early part of the second quarter, and that certainly was a headwind for us. And then the second item, and we do provide some disclosure on this in our financial supplement and the MRB roll forward, we did see some pressure from higher-than-expected surrenders. The overall objective for Brooke Re is to keep it -- be self-sustaining over time. And we continue to believe that, that will be the case. It's just so happens that this year, we did see a couple of headwinds that resulted in the numbers you see here.

Our next question comes from Alex Scott of Barclays.

First thing I wanted to ask about was just the initiative with TPG and any way to help us think through what that could mean for growth in the retail annuity platform and how ultimately that will lead to flows. And so maybe not asking for an outlook, you probably don't want to give an outlook for flows per se. But maybe just helping us think directionally like what that will look like and when you could maybe expect to get to growth mode for AUM overall from a flow standpoint.

Slightly hard to hear. I think you were asking about the partnership with TPG and what the growth outlook looks like as a result of that partnership.

Yes. Sorry about that. I switched to the headset. Yes, you heard the question, right? Apologies.

Okay. Thank you. Our overall goal is to have a diversified set of competitive products that continue to meet a variety of consumer needs. Within the industry overall, we continue to see strong demand for a variety of needs, income, protection, growth, legacy benefits. So having that broad range of annuity offerings helps support that goal that we have for diversifying sales. Don, do you have anything to add around the TPG partnership to support that goal?

Yes. So Alex, thanks for that question. I would say that I would just highlight the progress that we made in spread products over the last half of this past year. We introduced a new product in -- late in the third quarter that really came online fully in the fourth quarter. That's our fixed index annuity product. And you can see we did between that and just other spread products, about $800 million in the quarter. I think that's probably a good yardstick to think about how much we can generate on an annual basis with the TPG partnership in place. The other point that I would highlight for you is that we'll be leveraging the TPG assets for other product lines outside of just fixed annuities and FIA products. We also anticipate some of those assets will fit in well with our RILA asset allocation strategy as well as even some on our institutional products. So we feel quite comfortable that as you look at our results going forward, we'll continue to be able to produce strong retail annuity sales results. And in terms of your question on when we would expect to get to kind of flat net flows, I would say it probably is going to take us a couple of years to sort of have the additional levels of sales coming in to offset what we're seeing on the VA book. And of course, with the VA book, that's going to depend on market environments because as we saw this year, even though we did have net outflows, we had investment performance that offset that by about $9 billion. So we're pretty optimistic about the partnership with TPG and how that's getting operationalized.

Great. Another question I had via is on the Hickory Re. Just thinking through your comment that, that could be a medium-term contributor to remittances versus Brooke Re more long term. if you had cash flow coming out of Hickory Re since it sits underneath Brooke Re, would that cash flow -- can we assume that in the medium term, that cash flow could be taken up to the HoldCo and go through Brooke Re even if it's not sort of Brooke Re stand-alone? I just wanted to clarify that point, whether it would be retained or not. And then maybe any other comments you have on just potential uses of excess capital you have at the HoldCo at JNL.

Yes. So you're right about the way the Hickory Re structure works. So any dividend that we would pay would go up to Brooke Re. And then we would anticipate, assuming there's not anything unusual going on with markets at the time that we would then be able to distribute that up through Brooke Re to our holding company, similar to the way we do today with our stacked structure on the J&L side. So you have that right. And just in terms of other uses of excess capital, we continue to be focused on growth. We think we have a very good opportunity with our broad distribution network to really focus in on the spread sales here in the near term. And as other opportunities come up for us to grow inorganically, we would look at those relative to how we can leverage that capital for returning to shareholders.

[Operator Instructions] Our next question comes from Tom Gallagher of Evercore.

A few questions. First is just on the Brooke Re equity. If you have a net MRB asset of $4.2 billion, how is the Brooke Re equity only $1.7 billion? What would the other accounting adjustment be on where the value of the net MRB asset is going to?

Yes. Thanks for that, Tom. So you're looking at 2 sort of components of the balance sheet, and I'm not going to get into all the kind of puts and takes, but we obviously have other assets at Brooke Re as well as liabilities. And so obviously, the net of all those represents the equity that we have left. As I mentioned in the kind of the more overview and putting Brooke Re in perspective, we have done a couple of transactions in the fourth quarter with the blocks of business that we reinsured into Brooke Re as well as into Hickory Re. So if you look at Brooke Re's consolidated balance sheet, we have a pretty strong position in terms of invested assets. Also, if you look at the capital that we put in initially, which was a total of $1.9 billion, $700 million of that was hard assets. We've seen that grow over the last couple of years as we've executed on the reinsurance settlements.

Got you. And Don, can you update us on what the hard assets are in Brooke Re at this point?

Yes, I'm not going to give you the exact number, but I would just say that the $700 million has grown pretty significantly. So that's the kind of the stand-alone VA piece. And as I mentioned earlier, those blocks that we moved over in the fourth quarter, those were supported by invested assets as well. So we believe Brooke Re has got a pretty strong consolidated balance sheet. And even if you look at the VA and the payout annuity lines of business separately, we're quite comfortable there, too.

Got you. And then just my follow-up is if we think about the annual actuarial review charges, if lapses do remain high on the VA side and you have another year of, we'll call it, close to breakeven hedging on VA, the $300 million to $400 million that you've been having every year would be a decent percentage of this $1.7 billion. So I guess when we think about playing that out for the next 2 or 3 years, is there a risk that you would have to contribute capital to Brooke Re? Because I know you said you have a buffer. I think it was 98% plus versus 95% CTE level currently. But if I think about just what's happened over the last three years and the why, like, we're how should we think about playing that out for the next two or three years? Thanks.

So, I'll make a couple of comments and maybe just ask Lin Sun, our new Chief Actuary, to kind of give a little bit of perspective on our actuarial assumption review process. But just in terms of thinking about how that could impact capital at Brooke Re, one of the things that I mentioned in my prepared remarks was that because the assumption updates that we included in the fourth quarter, those were primarily focused on lapses and benefit utilization. So we would expect that A versus E policyholder behavior that we disclosed in the MRB roll forward, we would expect that to close somewhat. And so that would certainly be helpful. And we'll continue to see how markets play out. As you know, from our prior discussions, -- we do tend to see a slowdown in surrender activity when equity markets are volatile or in periods where equity markets decline. We saw that clearly in 2002, if you look back on our results then. But maybe, Lin, if you could just add a little bit of color around what we went through on the actuarial assumption review.

Happy to. So as you mentioned, the majority of the assumption unlocking impact in 2025 was due to updating our long-term assumptions on lapses. Over the last few quarters, similar to other carriers in the industry, we saw an increase in lapses on our annuity book. We also saw fluctuations month-to-month and quarter-to-quarter. Lapses decreased. We saw a trend of that in the first half of 2025 before they increase again in the second half of the year. Our analysis showed that the elevated lapse experience was particularly prevalent for variable annuity policies with GLWPs at the money or slightly in the money relative to their account value. And we've updated our assumptions to reflect that dynamic. Based on my prior experience in the industry, I'm confident that our annual assumption process is robust, and we're well positioned for evaluating experience and bringing in the data when it becomes credible and affects our long-term view of experience.

Thank you very much. We have no further questions registered on today's call, and therefore, this concludes the Q&A session. I'll now hand the call back over to Laura Prieskorn for any concluding or final remarks.

Thank you. As you've heard this morning, 2025 was an exceptional year of progress for Jackson. We look forward to continuing these discussions and sharing our progress toward our 2026 targets after the first quarter. We thank you all for joining us today and your continued interest in Jackson.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.