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Good day, everyone. Welcome to the Jackson Financial First Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode until the question and answer session begins. Following the presentation, we will conduct a question and answer session. This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Elizabeth Werner, Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Jackson's 2026 First Quarter 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. 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.

Today's remarks may 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, our 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 CEO, Laura Prieskorn, and CFO, Don Cummings.

Joining us in the room are our President of PPM America, our investment management subsidiary, Chris Raub, and our Head of Asset Liability Management, Brian Walta. At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Liz. Good morning, everyone. I appreciate you joining us today for Jackson Financial's First Quarter 2026 Earnings Call. I'll start by highlighting the quarter's positive results and the solid progress toward achieving our 2026 financial targets. Following my remarks, Don Cummings, our Chief Financial Officer, will discuss our financial results in greater detail. Beginning with the bigger picture, 2026 is off to a strong start.

Through a volatile market, we successfully executed our capital management and growth initiatives. Turning to the quarter's key metrics on slide three, you'll see we maintained a resilient capital position. Total adjusted capital of $5.5 billion is up nearly 5% from the first quarter last year. Our strong capital generation continues to support both distributions to our holding company and consistent capital return to shareholders.

During the quarter, we distributed $288 million from our operating company to JFI, our holding company. Our common shareholders benefited from an 11% increase in capital return from a year ago to $257 million in the form of shareholder dividends and share repurchases. We remain focused on maintaining a balanced approach to capital management, including investing in new business while maintaining our financial strength and consistent capital return to our shareholders.

Looking ahead, we're confident in our ability to generate free cash flow supported by a healthy book of business and expectations for profitable growth. Turning to earnings, our operating performance was strong. Pre-tax operating earnings were up 12% from a year ago, excluding the impact of notable items. On a per share basis, the increase was 18%, reflecting the benefits of our share repurchase program.

Growth of spread-based earnings more than offset the impact of market volatility on fee income. We expect continued momentum here, driven by our spread-based business and the benefits of our expanding product lineup, our enhanced investment capabilities, and our broad distribution reach. For the first quarter, retail annuity sales increased 31% from a year ago, a great result. Much of that growth came from our Market Link Pro III and Market Link Pro Advisory III, our leading RILA offerings.

RILA sales have now exceeded $2 billion in quarterly sales since we launched the products in May of 2025. We're proud these sales have elevated us to be the industry's third-largest RILA provider with more than $21 billion in RILA assets. We expect continued strong demand from advisors and their clients who value the combination of the growth potential and the downside protection that these products offer.

Further adding to retail annuity sales growth was our spread-based business, including the recent launch of Jackson Income Assurance, our fixed indexed annuity or FIA. Our FIA offers a highly valued income benefit and helps advisors deliver retirement income protection solutions their clients can count on. Since our launch in August of 2025, our FIA offering has been positively received, and we expect FIA sales momentum to continue.

In the first quarter, fixed annuity and FIA sales reached $756 million, a significant increase from $174 million a year ago. We anticipate future sales momentum for our spread-based products. With PPM's broad-based investment expertise and the recently announced investment partnership with TPG, we're confident in our ability to offer competitive spread-based products to our many distribution partners.

Importantly, we saw considerable improvement in net outflows, which improved by 30% from a year ago and decreased nearly 6% from the fourth quarter 2025. This improvement reflects significant RILA inflows and lower variable annuity surrenders and withdrawals. The decline from last quarter reflects recent equity market uncertainty, which typically leads to lower surrender activity. As our variable annuity block continues to mature, we do expect continued withdrawal activity as policyholders take advantage of their valued benefits.

On the distribution front, we're expanding and making annuities more accessible as a retirement solution. Within the advisory channel, we're a leading provider and have accelerated our product diversification efforts. In the first quarter, RILA and Elite Access accounted for more than 70% of fee-based advisory sales. Additionally, our new competitive FIA product accounted for more than 10% of total advisory sales this quarter. We anticipate continued growth in its contribution to sales in this channel.

As advisors and their clients navigate changing markets and individual financial goals, we believe our solutions-based and consultative approach underscores a unique value proposition across a growing annuity market. With our full suite of products and industry-leading service, Jackson remains a trusted partner across a growing and dynamic annuity market. Turning to slide four, you can see the significant shift in our business since our separation.

Today, nearly 40% of our account values come from spread-based and investment-only variable annuities, a meaningful shift that reflects the progress we've made in diversifying our in-force book. Nearly five years into our journey as a public company, our focus remains clear. We're driving growth through a diversified and broader product portfolio and expanded distribution reach. Staying disciplined and execution-focused is a long-held strength for Jackson.

As we execute on our growth initiatives and deliver on our commitments, we expect to build long-term value in our business and for our stakeholders. Now turning to slide five and looking ahead to the full year, we've started the year off strong and are on track to achieve our 2026 financial targets. In the quarter, free capital generation was $271 million, and we expect that to build over the course of the year under our current modest market assumption.

We continue to expect to reach our 2026 free capital generation target of $1.2 billion, along with our capital return to common shareholders in the range of $900 million-$1.1 billion. Further, at the end of the first quarter, our holding company liquidity is nearly $650 million, comfortably above our minimum buffer.

As you know, we recently established a long-term strategic partnership with TPG, which brings expertise in asset-based finance and direct lending areas that complement PPM's existing capabilities and create opportunities for enhanced investment returns. We've already started allocating new money to TPG-managed assets. While we don't expect an outsized allocation to these asset classes, we do believe the investment returns will support profitable growth across our spread-based products over time.

Importantly, our relatively low current exposure to private credit provides us the flexibility to invest opportunistically when market volatility creates attractive entry points. We continue to maintain our disciplined investment approach, working closely with TPG, and see great value in our strategic partnership.

Later in our remarks, you'll hear more about our investment portfolio and how the asset classes and the expertise TPG brings fit well within our current portfolio and business strategy. At this time, I'll turn the call over to Don.

Thank you, Laura. Let's turn to slide six and walk through our consolidated financial results for the first quarter. We reported pre-tax adjusted operating earnings of $430 million or $503 million excluding notable items, which I'll discuss in more detail shortly. On this ex-notables basis, earnings increased 12% year-over-year, reflecting continued momentum across our spread-based businesses and steady growth in in-force assets under management.

Sequentially, ex-notables earnings were modestly lower than the fourth quarter of 2025, primarily due to approximately $30 million of headwinds in fee income this quarter. These headwinds were driven by slightly lower average AUM and fewer days in the quarter. Excluding these timing-related factors, earnings were up modestly from the prior quarter.

Our spread-based earnings continued to demonstrate a strong growth trajectory, supported by a full suite of competitive product offerings and a high-quality, conservatively managed investment portfolio. Diversification and disciplined credit management remain central to our investment approach, and that consistency continues to deliver solid results. Sales of our spread-based products also reflect the enhanced asset sourcing capabilities at PPM, which have enabled us to allocate new money into select higher-yielding asset classes.

This measured shift in new money deployment, combined with a compelling product lineup, has helped Jackson maintain a stable and competitive position in the spread product market through the last half of 2025 and into 2026. We are also seeing positive early results from our new strategic partnership with TPG, along with the ongoing benefits of our capital-efficient strategy.

TPG began deploying capital in the quarter, further expanding our investment opportunities and supporting higher new money yields. Before turning to notable items for the quarter, I'd like to take a moment to highlight the continued strength and profitability of our in-force business. Our Adjusted Operating Return on Equity for the trailing 12 months ending March 2026 was 14.8%, up from 13.2% for the comparable period ending March 2025.

This improvement underscores the resilience and underlying profitability of our business as we continue to grow and diversify our sales mix and balance sheet in a disciplined, value-accretive way. Turning to Slide seven, I'll walk through the notable items that affected Adjusted Operating Earnings this quarter. Free Capital Generation, which I'll cover later, was also impacted by these notable items in the quarter.

We reported Adjusted Operating Earnings per share of $5.15. After excluding $0.90 of notable items and normalizing for the difference between our actual tax rate and our 15% tax guidance, Adjusted Operating EPS was $5.94. This represents an 18% increase compared to the first quarter of last year, reflecting the strong spread income growth I discussed earlier, as well as the benefit of a lower diluted share count from our ongoing share repurchase program.

These positive factors more than offset the impact of the 4.7 million shares issued to TPG midway through the quarter. During the quarter, we experienced a $0.48 unfavorable impact from limited partnership results, which came in below our long-term 10% return assumption. While valuations of our limited partnership investments can experience quarterly fluctuations, we remain confident in the underlying strength and long-term performance of the portfolio.

In addition, we proactively enhanced our processes and data sourcing to more efficiently identify deceased policyholders. This initiative resulted in higher claims during the quarter, leading to a $0.42 unfavorable impact. While this initiative will temporarily affect results, it strengthens our data integrity, streamlines the policyholder experience, and ensures greater consistency in future reporting. Our effective tax rate for the quarter was 13.5%, modestly lower than our 15% tax guidance.

Turning to slide eight, we take a closer look at the diverse and expanding new business profile within our Retail Annuity segment, which holds a top three leadership position in both our traditional variable annuity and RILA product lines. The segment delivered 31% year-over-year sales growth in the first quarter, underscoring the success of our comprehensive product suite. Spread-based products represented 52% of total sales, reflecting the continued balance across our offerings.

On a sequential basis, sales were modestly lower, consistent with typical seasonal patterns. Our RILA product suite continues to be a standout performer. We achieved $2 billion in RILA sales, an increase of 68% from the year ago quarter. Since launching the product in 2021, RILA assets under management have grown steadily, reaching a record high of more than $21 billion at the end of the first quarter. As mentioned earlier, our spread-based products are also benefiting from strong momentum.

The successful launch of our new fixed indexed annuity offering contributed to $756 million in fixed and fixed indexed annuity sales during the quarter, an increase of over 300% year-over-year. Combined with our recently announced strategic partnership with TPG, we are well-positioned to sustain this growth and further expand the potential of our spread-based business. Turning to net flows, strong RILA sales and spread product performance drove $2.5 billion of non-variable annuity net inflows in the first quarter.

Within variable annuities, the all-in surrender rate declined both year-over-year and sequentially, resulting in modestly lower net outflows for the quarter. We continue to expect equity market volatility to influence surrender activity within our in-force block. Importantly, while equity markets were volatile early in 2026, we entered the second quarter with equity indices near all-time highs.

Should this environment persist, we may see higher surrender activity, but it would also support growth in variable annuity AUM and fee income over the remainder of the quarter. Lastly, we've included advisory sales trends to highlight the breadth of our distribution capabilities. Jackson maintains a leading position in the advisory annuity space, supported by a full spectrum of product offerings.

Notably, in the first quarter of 2026, nearly 50% of advisory sales came from products other than variable annuities, demonstrating the continued strength in our growth and diversification strategy. Turning to slide nine, we highlight our first quarter net hedge results by product, along with a waterfall comparison of pre-tax adjusted operating earnings to the GAAP pre-tax loss attributable to Jackson Financial.

Since moving to a more economic hedging approach at the beginning of 2024, we have seen a meaningful improvement in the consistency of our hedging program outcomes, which in turn has supported stronger and more predictable capital generation. As a reminder, last quarter we enhanced our disclosure of net hedge results to separately present outcomes for our variable annuity and RILA businesses.

This additional transparency provides a clearer view of the offsetting equity risk between these product lines and excluding the impact of implied volatility on market risk benefit liabilities offers insight into the change in equity at Brooke Re. After isolating the volatility effects, our overall net hedge result for the quarter was a loss of $101 million. Given the size and complexity of our liability profile, we view this result as a very stable and well-managed outcome.

As shown on the slide, the RILA and FIA products generated a modest gain, while the loss was concentrated in our VA business. The variable annuity net hedging results reflect the breadth of available funds on our separate account platform, which includes both indexed and actively managed strategies. During the first quarter, market dislocations driven by investor sentiment around artificial intelligence and ongoing geopolitical developments led to divergent performance between certain actively managed funds and their benchmarks.

This relative underperformance versus the indices we use in our hedging program resulted in the modest net hedging loss for the quarter. It is important to note that this dynamic can move in both directions, and historically, these effects have tended to balance out over time. Despite the modest loss from our hedging program during the quarter, Brooke Re's capitalization remains well above both our internal risk management target, which reflects a range of severe stress and tail scenarios, and our regulatory minimum operating capital level.

Aside from the $500 million of growth capital contributed to Hickory Re, there were no additional capital flows for Brooke Re during the quarter. Looking ahead, we will continue to manage Brooke Re on a self-sustaining basis consistent with the long-term nature of its liabilities and our disciplined approach to capital management.

Overall, these results underscore the effectiveness of our hedging program in maintaining capital stability, proactively managing economic risk, and preserving the durability and resilience of our business model. Turning to slide 10, we highlight the consistency of our capital return and free cash flow. At Jackson, we operate under a straightforward philosophy, earn it, then pay it.

This framework is built on three pillars. Generating Free Capital, this is where we earn it, converting that capital into free cash flow, this is where we pay it, and returning capital to common shareholders, the outcome of the first two steps working together. In the first quarter, after-tax statutory capital generation was $342 million. We view this as one of the clearest indicators of the underlying strength of our business, and it serves as a key guidepost in balancing future growth with capital return to shareholders.

Free Capital Generation was $271 million in the quarter, reflecting the estimated change in required capital driven by our strong and diversified new business results. For full year 2026, we continue to expect to generate at least $1.2 billion in free capital, assuming equity markets deliver a 5% return and interest rates move in line with the year-end forward curve.

While we maintain our RBC risk appetite at 425%, the stability in RBC levels over the past two years gives us confidence to focus on sustained free capital generation consistent with our earn it, then pay it approach. Free capital generation was modestly reduced by the same limited partnership returns and elevated claims that impacted Adjusted Operating Earnings. Additionally, slightly lower average AUM and fewer days in the quarter weighed on fee income.

However, the market recovery early in the second quarter positions us well for the remainder of the quarter. Excluding these temporary factors, capital generation was broadly consistent with the 2025 run rate. Free cash flow remained strong and consistent, totaling $288 million at the holding company, up 35% year-over-year after funding expenses and other cash flow items.

Our robust free capital generation and growing free cash flow enabled us to return $257 million to common shareholders in the first quarter, an increase of 17% year-over-year on a per diluted share basis. Since becoming an independent public company, Jackson has returned nearly $3 billion to common shareholders, exceeding our initial market capitalization at separation.

These results reinforce Jackson's strong Capital Generation Profile, the stability of our cash distributions, and our continued commitment to delivering long-term value for shareholders. Turning to slide 11, this slide highlights Jackson's robust capital and liquidity position. Our in-force business continues to be a key driver of profitability. Fee income from our variable annuity base contracts, combined with growing spread-based earnings, supported solid capital generation during the quarter.

As noted earlier, results were modestly impacted by the notable items we discussed previously. At Jackson National Life, our capital position and RBC ratio have become significantly less sensitive to equity market movements, reflecting the benefits of the Brooke Re structure. Today, changes in the equity markets primarily influence our assets under management and future capital generation rather than our immediate capital levels.

In many ways, this evolution has made our earnings profile increasingly resemble that of an asset management business: steady, diversified, and capital efficient. Consistent with our disciplined approach of taking smaller periodic distributions, we paid $325 million to the holding company during the first quarter. After considering the impact of that distribution on our deferred tax assets, Total Adjusted Capital ended the quarter at $5.5 billion with an estimated RBC ratio of 554%, comfortably above our minimum target.

These results underscore that Jackson is operating from a position of real strength as we progress through 2026. At the holding company level, we ended the quarter with nearly $650 million in cash and investments, well above our minimum liquidity buffer and providing strong financial flexibility. The slight decline from the fourth quarter primarily reflects capital return to shareholders.

Overall, our first quarter results show strong momentum supported by a solid balance sheet, healthy capital and liquidity levels, and a business model well-positioned for continued success. Slide 12 highlights the substantial liquidity sources we maintain across our legal entities, which underpin our strong capital position and now include our recently issued PCAPS facility. We view the PCAPS facility as an important extension of our commitment to balance sheet strength and enhanced risk management.

This $900 million contingent capital facility strengthens our liquidity profile and reinforces capital resilience across market cycles while allowing us to maintain a lean and efficient balance sheet. The facility is designed for flexible application, serving both as a buffer against severe market stress events and as a tool to proactively manage our capital structure. This ensures that Jackson remains well-capitalized under a wide range of market conditions and scenarios.

When combined with holding company cash and highly liquid securities, along with our undrawn revolving credit facility, total available liquidity at Jackson Financial Inc. stands at approximately $3 billion. At the operating company level, Jackson National Life maintains more than $35 billion of available liquidity, including $7 billion in cash and U.S. Treasury securities and an additional $25 billion in other highly liquid marketable securities.

Jackson National Life also benefits from our long-standing relationship with the Federal Home Loan Bank, which provides $2.6 billion of additional capacity through its collateralized loan advance program. Finally, Jackson's leverage remains among the lowest in our peer group, with a total leverage ratio of approximately 19.8%, excluding AOCI.

Our combination of strong capitalization, substantial liquidity, and modest leverage provides meaningful financial flexibility and supports our ongoing commitment to maintaining a balance sheet built to perform through multiple market cycles. Turning to slide 13, this slide highlights PPM America, our wholly owned asset management subsidiary.

PPM oversees approximately $95 billion in total assets under management, and together with our new strategic relationship with TPG, enhances Jackson's ability to source attractive yields and maintain product competitiveness across both our retail and institutional businesses. PPM is a core component of Jackson's strategic growth profile, managing $59 billion of Jackson's assets and an additional $36 billion of third-party AUM, which has grown meaningfully since our separation.

PPM manages our general account investment portfolio directly supporting the profitable growth of our business and our objective of maintaining strong capitalization. Our ownership of PPM provides structural advantages and strategic alignment, including synergies across Asset Liability Management, product design, and investment execution. This integration ensures that our investment strategy remains closely aligned with our product and risk management frameworks.

PPM has also expanded its investment capabilities, enabling new money allocations to select higher yielding asset classes such as emerging markets, residential and commercial mortgage loans, and investment grade structured securities. These enhancements strengthen our ability to optimize portfolio returns while maintaining a disciplined approach to credit quality and diversification. In addition, PPM maintains oversight of third-party asset managers, including our strategic partnership with TPG.

This oversight encompasses the establishment of investment guidelines for asset classes managed by TPG and ongoing monitoring of deal flow and performance. While the partnership is still in its early stages, collaboration between the teams has been strong, and we are encouraged by the positive initial progress. We remain highly optimistic about PPM's growth trajectory and the opportunities to further expand its capabilities, reinforcing its role as a strategic differentiator and a key contributor to Jackson's long-term success.

Moving to slide 14, we highlight the quality, diversification, and conservative positioning of our investment portfolio as of the first quarter. Jackson takes a disciplined approach to managing our assets and liabilities, which guides how we make strategic decisions about asset allocation. Our fixed maturity portfolio remains high quality and defensively positioned, with a meaningful allocation to highly liquid U.S. Treasuries, which represent approximately 6% of the portfolio.

The market-to-book ratio of 95% reflects our disciplined approach to asset selection and prudent portfolio management. Exposure to below investment-grade securities remains very limited at just 1% of the portfolio, consisting almost entirely of corporate bonds and loans. The portfolio is well-diversified by asset type. Corporate securities account for roughly 57% of invested assets, complemented by mortgage loans, asset-backed securities, and a modest allocation to private equity through our limited partnership investments.

Our commercial mortgage portfolio is conservatively underwritten, supported by strong loan-to-value and debt service coverage ratios, ensuring resilience across market cycles. Overall, our investment portfolio reflects a conservative credit philosophy centered on quality, diversification, and liquidity, which continues to support the stability of our capital position and the durability of our earnings profile.

Given the recent headlines surrounding asset-based finance and direct lending, slide 15 provides enhanced disclosures on our private investment exposure. As noted last quarter, Jackson remains underweight in direct lending relative to peers. We view the current market dislocation as an opportunity to invest selectively at more attractive valuations than those seen in recent vintages.

In addition, our strategic partnership with TPG provides access to deep expertise in direct lending, particularly in the lower middle market segment, where TPG emphasizes strong covenants and rigorous credit underwriting. This positions us well as we gradually and prudently build exposure in this space. As of the first quarter, our private debt portfolio consisted of 63% traditional private placements, with the remainder allocated to infrastructure, asset-backed securities, and credit tenant leases.

From a ratings perspective, the portfolio is 99% investment grade, with private letter ratings representing only 6% of total invested assets. Exposure to Egan-Jones rated securities is immaterial, and our software industry exposure is modest, focused exclusively on high quality investment grade issuers. Overall, our private investment portfolio is conservatively positioned and supported by robust credit oversight.

We maintain substantial capacity to deploy capital on attractive terms, reinforcing our growth and diversification strategy while preserving the strength and stability of our balance sheet. I'll now turn the call back to Laura.

Thank you, Don. Turning to slide 16, our outlook remains strong. We expect to continue our track record of maintaining capital strength, generating excess capital, and delivering on our financial targets. Throughout all types of market environments, the need for retirement security is highly valued, and we're committed to our mission of helping Americans secure their financial futures.

As always, we're grateful for the dedication of our associates, whose contributions each quarter remain our greatest strength. At this time, I'll turn the call over to the operator for questions.

We will now begin the question and answer session. If you'd like to ask a question and have joined via the webinar, please use the raise hand icon, which can be found in the black bar at the bottom of the webinar application screen. If you have joined via telephone, please press star nine on your keypad to raise your hand.

When you hear your name called, you will be prompted to unmute your line and ask your question. If you have joined via phone, please dial star six to unmute your line. We will now take a moment to allow the queue to form.Our first question comes from Suneet Kamath with Jefferies.

Sorry, I think I just unmuted. Can you hear me?

We can.

Okay. Sorry about that. Morning. I wanted to just start with annuities. Do you have a sense of what percentage of your sales represent, sort of exchange activity versus sort of true new business?

Good morning, Suneet. Thank you for the question. The first quarter sales, which were very healthy at $5.3 billion, are a reflection of new business without any internal exchanges. The sales reported would be all new business minus any internal exchanges.

Okay. I guess maybe a bigger picture question. Oh, sorry.

We can still hear you.

Sorry, can you hear me?

Yes, we can. Yes.

Okay. I don't know. There's some background noise. Bigger picture question. You know, obviously there's a pretty large merger of equals going on in the annuity space. We haven't seen one of those in, I don't know, 20 years or so. Just wondering, Laura, if you think this changes the industry dynamic at all, and any thoughts that you could give on overall consolidation in the space would be helpful. Thanks.

Sure. I agree with you. This is a large change and one that we haven't seen in the industry in quite some time. From a competitive perspective, I would say, we compete with both organizations that are, you know, recently involved in the merger announcement. We have a diversified product set that I think in comparison to the combined organization will allow us to continue to compete well. In terms of any, you know, other consolidation, I wouldn't, you know, have any comment or remarks on what else, you know, might occur.

I think we'll continue to, you know, compete constructively with both organizations as we have in the past, and look forward from our diversified product offerings to continue to focus on a growth across all those annuity types.

Hey, Suneet, it's Don.

If I could just sneak one in for Don. Yeah, go ahead.

I was just gonna chime in on Laura's response on the, you know, the merger of Equitable and Corebridge. As Laura highlighted, you know, we already have kind of a pretty comprehensive product suite, and we also happen to have one of the largest distribution forces in our space. Our wholesaler group has been quite effective over the last several years, and we're expanding this year. We feel pretty well-positioned both with our product suite and with our distribution capabilities going forward.

Got it. Just one other one for Don, if I could. Just on Brooke Re and the additional capital that's now in subsidiary, I guess related to Hickory Re, does that change the timing of when you might be able to take dividends out of Brooke Re? Any update there would be helpful. Thanks.

Sure. Happy to take that question, Suneet. You're right. We did put $500 million of capital into Brooke Re during the quarter. That's the, you know, the growth capital that we've designated for Hickory Re. We did, you know, after the capital contribution and the, you know, kind of $100 million or so loss we experienced at Brooke Re during the quarter, we're still up in capital there.

In terms of the timing of when we expect to be able to distribute capital from Brooke Re, I believe as I mentioned on the fourth quarter earnings call, we would anticipate that Hickory will start generating capital that we will be able to distribute, kind of in the near term. You know, think about next few years. Capital, that would be distributed from the business that is sitting at Brooke Re kind of on a standalone basis, that would be more of a longer-term timeframe. Hopefully, that helps.

Okay, thanks. Yeah, it does.

Thank you. Our next question comes from Ryan Krueger with KBW. Please unmute to ask your question.

Hey, thanks. Good morning. My first question was on capital generation. I guess given the continued headwinds to alternative investment returns, can you give us any sense of how just how sensitive your capital generation is to the alts returns? I know we can look at the dollar per dollar, you know, return impact, but I think there's probably also an offset in required capital given high capital charges against alts. Just any sensitivity that you could provide would be helpful. Thanks.

Hey, good morning, Ryan. Thanks for that question. You're right. There is a bit of sensitivity with capital generation, you know, and you do get a bit of an offset given the fact that Hickory Re requires a higher capital charge. You know, as we look at the results we generated in the first quarter and just kind of given, you know, the recovery in markets since the end of the quarter. Equity markets are back near or at all-time highs, we feel pretty comfortable with capital generation for the full year and being able to hit our $1.2 billion target.

As a reminder, that was based on kind of a 5% total equity market return. We feel good about that. We don't see really any issues with our alternative returns. Maybe I'll ask Chris just to chime in and add a little color on how we look at that asset class and our recent performance as well as long term.

Yeah. Thanks, Don. Ryan, thanks for the question. You know, just some flavor to help you as you think about that portfolio. It's predominantly a private equity investing with a middle market buyout focus. We do also have a modest amount of CLO equity and some other fund investments in there.

You know, returns are reported on a one-quarter lag there and will reflect market conditions at the time. You know, nothing we saw in the quarter changes our thoughts around the 10% long-term assumption. In fact, that's a measure that we've outperformed since being public a number of years ago.

Thanks. On the TPG relationship, I know you talked about allocating new, you know, starting to allocate new money to assets managed by TPG. I think you had also talked about maybe an opportunity to reposition some of the existing assets, particularly in the payout annuity book. Is that something that can you give us any sense of the timing on that? Is this, you know, gonna take a while to do, or is that something that could happen more quickly on repositioning of existing assets?

Yeah. Thanks, Ryan. Just in terms of the partnership with TPG, you know, we closed that kind of midway through the quarter. We have started seeing, you know, some capital deployed by TPG. It is early days. In terms of being able to, you know, reposition our overall portfolio, outside of our, you know, kind of new business returns, we still do have that potential. We, you know, that's certainly on our list of things to work through as we get the partnership fully stood up.

Thank you.

Thank you. Our next question comes from Alex Scott with Barclays. Please unmute to ask your question. Alex, please unmute to ask your question.

Hi. Good morning. Hope you can hear me. I just wanted to first ask about, you know, the growth that you're seeing in some of the RILA and FIAs. You know, if you could take us into, you know, some of the feature changes and things that you're doing to, you know, prompt more of the growth. Like, can you tell us about, like, are there bonuses on the products? Have you increased cap rates? You know, what are the different features that you're tweaking to make it more attractive?

Good morning, Alex. Thank you for the question. We did, throughout 2025, refresh our RILA product, and in the fall, we launched an FIA product as well. Both Don and I have talked about, you know, the diversification of our sales being a goal. The RILA sales are now at 40% of our total retail sales, as we had seen in the first quarter. The product update for RILA was in the mid part of 2025.

You know, that product design has flexibility and choice that is, you know, a differentiation from other products that you see in the market, in terms of crediting methods, the protection level, and the number of indexes that we have available for choice. On the FIA front, that launch included a living benefit option as well that can be elected not just at sale, but also post-sale, which is a unique feature for the FIA product.

We've seen great momentum in sales with the FIA product and expect as we continue through this year that the spread-based sales growth, you know, will benefit from not just the product refresh that we've done, but also from the efforts at PPM to seek greater yield, the establishment of the captive for fixed and FIA, as well as with the partnership with TPG that Don just took the opportunity to talk through. We're excited about the growth on the spread-based side.

That's helpful. Thank you. Next question I had is on the PCAPS, actually. I thought it was interesting as you were describing the PCAPS, you kind of mentioned that it could potentially allow you to, you know, run more leaner on capital.

I just wanted to understand if that was something I should pay more attention to, or you know, your RBC ratio in the operating company is pretty high at the moment, and your holdco cash is pretty high relative to your thresholds. You know, does adding that kind of contingent liquidity change the way you may be able to manage some of those levels?

Hey, Alex, it's Don. Let me first just highlight on with, you know, our RBC levels, as we've talked about on prior calls, given our, you know, shift to continuing to focus on diversifying our business and more focus on the spread-based products. We do expect to see our RBC ratio come down over time. I would say that's point one. The second point, specifically around the use of PCAPS, we think that the way that facility is structured, it does provide very a very good source of contingent capital should we get into sort of a severe stress scenario.

That's one of the features of that facility that we found attractive. We obviously do very robust, you know, stress testing at a variety of different levels. As we went through our overall enterprise stress testing, felt that, you know, a facility like PCAPS provides a good source of capital in a very severe stress environment.

Okay. Thank you.

This concludes our Q&A session. I'll now turn the call back to Laura Prieskorn for closing remarks.

Thank you. Jackson's strong first quarter performance reinforces the resilience of our business. We look forward to continuing these discussions and sharing our progress toward our 2026 targets after next quarter. Thank you for your ongoing interest in Jackson.

The call has concluded. Thank you for joining. You may now disconnect.