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Hello, everyone, and welcome to the Jackson Financial Inc. 2024 Q4 earnings call. My name is Charlie, and I'll be coordinating the call today. You will have the opportunity to ask your questions at the end of the presentation. I would now like to hand the call over to our host, Elizabeth Werner, Head of Investor Relations, to begin. Please go ahead.

Good morning, everyone, and welcome to Jackson's 2024 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 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. Joining us today are our CEO, Laura Prieskorn, our CFO, Don Cummings, the President of Jackson National Life Distributors, Scott Romine, our Chief Actuary, Steve Binioris, and the President and Chief Investment Officer of PPM, Craig Smith. At this time, I'll turn the call over to our CEO, Laura Prieskorn.

Thank you, Elizabeth. Good morning, everyone, and welcome to our fourth quarter and full year 2024 earnings call. I'll begin by reviewing our full year results and the success we had in delivering on our 2024 key financial targets. In addition to reviewing our results, I will highlight the great progress we have made since becoming an independent public company. I will also share our outlook for 2025, including new financial targets for the year, and then I'll turn it over to our CFO, Don Cummings, to discuss our performance in the fourth quarter and past year in more detail. 2024 was a pivotal year for Jackson, marked by significant operational and financial accomplishments. We completed a full year of operating with a more economic hedging approach, realizing the benefits of greater capital stability. We increased transparency in the capital generation at Jackson National. The strong results at Jackson National Life resulted in 2024 distributions to our holding company of $875 million, the highest annual level in the company's history. Moving to our full year results on slide three, net income exceeded $900 million, and adjusted operating earnings were $1.4 billion, largely due to the significant growth in earnings of our retail annuity segment. Retail annuity sales of $18 billion increased 39% year over year, with strong sales across our annuity product. In 2024, we benefited from more diversified product sales and growing distribution. Our profitability and healthy capital position were evident throughout the year, and Jackson National Life made periodic distributions to our holding company during 2024. At the same time, our RBC ratio was relatively stable during 2024, and we ended the year at an estimated 572%. This was comfortably above our target, providing us with significant capital to return to shareholders and support new business. The combination of capital distributions to our holding company and level of holding company liquidity provided for free cash flow of $767 million and $631 million of capital return to common shareholders. We are proud of these results and plan to build upon this momentum in the year ahead. As you can see on slide four, we were near the top of our targeted range for capital return to common shareholders while maintaining more than $700 million of highly liquid assets at our holding company. Our capital return increased 36%, excluding the $700 million distribution from Jackson National Life, used to establish Brook Re, our Michigan-based captive reinsurer. This marks the fourth consecutive achievement of our annual financial targets since becoming an independent company, and we are eager to continue delivering on our targets going forward. Our strong holding company liquidity, combined with our remaining share repurchase authorization of more than $600 million at year-end, positions us well for continued capital flexibility, investment in our business, and return to shareholders. As you can see on slide five, we take a balanced long-term view of capital management and have steadily increased our common dividend and share buyback program. We also announced the board's approval of our fourth dividend increase to $0.80 per common share, a 14% increase over the prior year's quarterly dividend level. Our healthy and profitable book of business has provided a consistent return of capital to common shareholders while continuing to maintain our financial strength. By the end of 2024, our cumulative return to shareholders was more than $1.8 billion. Product innovation, distribution expansion, and industry-leading service continue to be differentiators for us. On slide six, you can see the positive outcome of our focus on sales diversification. Over the last three years, RILA has grown to contribute more than 30% of our total retail annuity sales. Our success with RILA, along with recent growth in fixed annuities and institutional sales, has diversified our new business beyond traditional variable annuities with living benefits. Variable annuities remain a valuable product for financial professionals and their clients, and our total traditional variable annuity sales were up 11% in 2024. Our consumer-oriented product offerings and service capabilities led to new and diverse distribution relationships. Growth in distribution created increases in new producers, multiproduct producers, and the total number of producers and new sales. Applications for new business have grown, and in the fast-growing advisory market, I'm pleased to share in 2024, Jackson reached $1 billion in advisory sales. As more Americans plan for retirement, we see increasing interest in solutions that offer investment protection and guaranteed lifetime income, allowing for greater certainty for the future. Recent LIMRA estimates indicate 2025 industry sales will remain strong, with traditional variable annuity sales holding steady near their recent levels. Assuming stable markets, LIMRA projects RILA sales to be slightly above 2024 sales, and fixed annuities are estimated to decline, assuming a lower interest rate environment. Jackson continues to introduce leading product features to meet the needs of financial professionals and their clients. In the fourth quarter alone, we introduced a RILA product in New York, partnered with JPMorgan Chase to offer our RILA product through their network of advisers, and added a guaranteed minimum accumulation benefit to Elite Access, our investment-only variable annuity. Our investments in technology and commitment to service excellence position us well in the market and continue to enhance our distribution relationship. Our annuity modeling tools and suitability support kit help financial professionals see the value our products can have in a client's financial plan and understand the expectations of best interest standards for their business and clients. We are proud to be one of the first insurers to implement a paperless annuity replacement in collaboration with the Insured Retirement Institute and the Depository Trust and Clearing Corporation, further bridging the gap between annuities and other financial instruments. The outcome for Jackson and the industry is greater efficiency and reduced processing time for financial professionals and their clients. These examples, along with our other corporate initiatives, are a continuation of our long history of excellent execution and operating discipline, and we look forward to building further on this track record. Turning to slide seven, as we look ahead to 2025, we are pleased that our healthy business enables us to provide sustainable capital return to shareholders. For 2025, we have increased our total capital return target to $700 to $800 million compared to our 2024 capital return of $631 million. This represents an increase of more than 10% at the low end of the range and more than 25% at the high end of the range. As you can see, our commitment to holding company liquidity and operating company capital has not changed. We expect to hold a buffer of $250 million at the holding company and maintain an RBC ratio above 425%. Our capital management approach will continue balancing investment in our business, maintaining financial strength, and returning capital to shareholders. Now I'll turn the call over to Don to further discuss our financial results.

Thank you, Laura. I'll begin on slide eight with our fourth quarter 2024 consolidated financial results. Adjusted operating earnings of $349 million were up 71% over the fourth quarter of last year. This significant growth in our earnings was primarily due to higher fee income from growth in variable annuity assets under management and higher earnings on spread products. The sequential comparable was impacted by our annual assumptions review, which reduced fourth quarter earnings by $23 million after tax, or $0.31 per share. Outside of the assumptions review, we continue to see positive sequential earnings trends develop for fee and spread income during the fourth quarter. Spread earnings benefited from gains in net investment income, primarily driven by the growth of our RILA and fixed annuity blocks, as well as higher yields on our bond portfolio. The investment portfolio supporting our spread products has continued to perform well. The appendix of our earnings presentation provides information on our high-quality diversified investment portfolio. This information includes insights into our commercial office loans, which represent less than 2% of the overall investment portfolio. It also includes our exposure to below-investment-grade securities, which represents only 1% of the portfolio. Before turning to notable items in the quarter, I want to highlight the growth of our book value in 2024. Our adjusted book value attributable to common shareholders at the end of the fourth quarter was $11.2 billion, or $150.11 per diluted share, an increase of 10% from last year driven by our strong operating performance and common share repurchase activity. Adjusted operating return on equity increased 230 basis points to 12.9% for full year 2024, up from 10.6% last year. Slide nine outlines the notable items included in adjusted operating earnings. Reported adjusted operating earnings per share were $4.65 for the current quarter. Adjusting for $0.19 of notable items and the difference in tax rates from our 15% guidance, earnings per share were $4.84 for the current quarter, up 55% from $3.13 in the prior year's fourth quarter. This strong earnings improvement was primarily due to the growth in assets under management and spread income benefits noted earlier, as well as a reduction in diluted share count from common share repurchase activity. Consistent with prior years, we completed our annual actuarial assumptions review in the fourth quarter. This led to an unfavorable earnings per share impact of $0.31 in the current quarter compared to an unfavorable impact of $0.79 in last year's fourth quarter. The 2024 assumption updates were primarily related to higher mortality, which unfavorably impacted the closed block segment, as we recorded a reserve increase for life insurance. The same mortality trends led to a benefit on payout annuity reserves, positively impacting the retail annuity segment. The other notable item for the current quarter was a $0.04 benefit from limited partnership results coming in above our 10% long-term assumption. Slide ten provides a breakdown of our full year notable items. Earnings per share in 2024, after adjusting for the notable items, were up 37% compared to the prior year. This was primarily the result of growing variable annuity AUM, improved spread earnings, and a reduction in the diluted share count. Turning to slide eleven, we've included a waterfall comparison of our fourth quarter pretax adjusted operating earnings of $405 million to the GAAP pretax income attributable to Jackson Financial of $367 million. While there are some largely offsetting items for the quarter, the trend of more stable non-operating results continued throughout 2024. Before covering the results of our hedging program, I want to note that non-operating results include $347 million in earnings from business reinsurance to third parties. This resulted from fair value gains on a legacy funds withheld reinsurance treaty and the related investment income. Non-operating items related to this reinsurance treaty can be volatile from period to period and have a minimal net impact on our adjusted book value. Furthermore, these items do not impact Jackson's capital generation or free cash flow. The fourth quarter non-operating results also include an unfavorable impact of $419 million from the annual actuarial assumptions review. This was primarily related to data enhancements and assumption updates to allow for more refined projections of timing and frequency of withdrawal behavior on policies with guaranteed withdrawal benefits. Overall, the impact of our updates in the fourth quarter is quite reasonable given the size of our variable annuity block. Now turning to our hedging program. The net hedge result was a gain of $79 million in the fourth quarter and a net hedge gain of $285 million for the full year. While we don't expect to report gains in every market environment, our move to a more economic hedging approach in 2024 has clearly provided more stability in our non-operating results and capital generation. Our hedging program is supported by a robust stream of guaranteed benefit fees that are assessed on the benefit base rather than account value. This approach provides stability to the guaranteed fees even in periods when markets decline, as we experienced in 2022. Guarantee fees for the fourth quarter were $0.8 billion and over $3.1 billion for the full year. During the fourth quarter, our results included a net loss on hedging assets of about $2.8 billion, primarily due to losses on interest rate hedges in a quarter where long-term interest rates were up about 70 basis points, and a smaller loss on equity hedges reflecting modestly higher equity markets. Changes in market risk benefits, or MRB, were driven in part by the same interest rate and equity market movements, leading to a nearly $2.2 billion positive offset to the hedging assets loss. The reserve and embedded derivative loss of $89 million during the fourth quarter primarily reflects increases in RILA reserves resulting from higher equity markets. The RILA business continues to provide a natural equity risk offset to our guaranteed variable annuity business, which results in hedging efficiencies. We believe this year's results demonstrate that our hedging program continues to be effective in improving the stability of our capital generation and managing the economic risks of our business. On slide twelve, we focus on the diverse new business profile of our retail annuities segment, illustrated by growth of 42% from the fourth quarter. Our RILA product delivered fourth quarter sales of $1.5 billion, supporting further diversification in our top-line growth. We expect future growth in our RILA business to be supported by our 2024 launch of our Plus Income living benefit, the availability of one of Jackson's RILA products in New York, and our expanded distribution opportunities through financial professionals at JPMorgan Wealth Management. Sales of variable annuities remain strong, growing 27% from the fourth quarter of last year and 5% from the third quarter of 2024. Importantly, our sales of variable annuities without lifetime benefits were up 46% from the fourth quarter of last year. As Laura mentioned already, we continue to believe there is long-term demand for variable annuity products from the millions of Americans who retire each year seeking additional asset growth and guaranteed income. Jackson's history of product innovation, industry-leading service, and prudent risk management positions us well to capitalize on opportunities in the variable annuity marketplace going forward. During the fourth quarter, we continued to produce healthy volumes of spread product sales and delivered $397 million of fixed and fixed index annuity sales in the quarter. Our overall sales mix during 2024 remains capital efficient, and this stability provides us the opportunity to continue allocating some capital towards spread products as we further diversify our business going forward. As Laura mentioned earlier, we have been pleased with our progress in diversifying our new business mix since becoming an independent public company. Turning to net flows, the sales we generated in RILA and other spread products translated to $1.8 billion of non-variable annuity net flows in the fourth quarter. These net flows provide valuable economic diversification and hedging efficiency benefits. While variable annuity net outflows were elevated, our average variable annuity net account value increased by over 9% in 2024, driven by strong equity market performance, which also resulted in higher fee income. During times of robust equity market performance, as seen in 2024, we often observe heightened variable annuity outflows since guaranteed benefits become less in the money. In 2024, our older policy vintages from years of higher sales are exiting their surrender charge periods, which typically leads to increased surrenders. Additionally, as our policyholders age, there is greater utilization of retirement income and death benefits, which positions us to assist in helping customers reach their financial goals. Jackson's long-standing commitment to investment freedom and our rigorous fund selection process have contributed to the growth of our healthy variable annuity book of business. The more recent environment of higher interest rates and attractive annuity alternatives, such as RILA, combined with Jackson's seasoned out-of-the-money book, heightens exchange activity for us and the industry. Looking at pretax adjusted operating earnings for our segments on slide thirteen, higher equity markets and a continued positive environment for spread products have driven solid growth in our retail annuities segment, up 57% compared to the fourth quarter of last year and 12% from the third quarter of this year. Fourth quarter results for retail annuities also benefited from the assumptions review I noted earlier. Jackson's earnings power is supported by the growing level of assets under management. Strong separate account returns combined with growing non-variable annuity net flows have built our retail annuity AUM up to $252 billion, an increase of 7% from the end of 2023. Importantly, the positive separate account fund performance has more than offset our retail annuity net outflows by nearly $18 billion in 2024. For our institutional segment, pretax adjusted operating earnings were broadly in line with the fourth quarter of last year. We believe our higher level of new business activity in 2024 creates positive momentum entering 2025, and we will continue to be opportunistic in the institutional market. Our closed block segment reported pretax adjusted operating earnings that were improved from the fourth quarter of 2023 due to higher net investment income. Results were down sequentially due to the assumptions review impacts in the current quarter, which I noted earlier. Slide fourteen highlights our capital generation and free cash flow. This quarter, we are enhancing our disclosures to bolster transparency regarding these metrics, which we believe will offer clearer insights into the robustness of our results and our updated targets. We acknowledge that there are diverse methodologies within the industry. However, as previously discussed in our calls, Jackson adheres to an earnings-then-pay-it philosophy for capital return. This philosophy is built upon three pillars: the generation of free capital, where we earn it, the creation of free cash flow, where we pay it, and ultimately the return of capital to our common shareholders. Starting with the first pillar, after-tax statutory capital generation was more than $1.7 billion in 2024. We believe this metric offers the most insight into the underlying strength of our business and provides the foundation for making capital allocation decisions about future organic growth, pursuing strategic inorganic opportunities, and returning capital to shareholders. Free capital generation was more than $1.3 billion in 2024, after reducing gross capital generation by about $400 million, reflecting the change in required capital or CAL resulting from our strong and diversified new business results during the year. Free capital generation represents excess capital that is available to support cash distributions to the holding company, which continues to be subject to regulatory considerations and desired RBC levels at the operating company. Both after-tax statutory capital generation and free capital generation exceeded $1 billion. Each of these capital generation metrics included a one-time benefit of about $190 million related to the corporate alternative minimum tax in 2024. In 2025, we continue to expect free capital generation in excess of $1 billion under normal market conditions. We believe this leaves us well-positioned to continue to deliver on our strategic and operational objectives as well as our updated capital return targets for 2025. Moving to the second pillar, our free cash flow grew substantially in 2024, once again illustrating the stability of our capital generation. In 2024, over two-thirds of free capital generation, or $875 million, was distributed to JFI, which was up about 46% from $600 million in 2023. After covering expenses and other cash flow items at the holding company, the resulting free cash flow of $498 million in 2023 grew to $767 million in 2024. Finally, looking at the rightmost pillar, the outcome of strong free capital generation and growing free cash flow allowed us to return $631 million to common shareholders in 2024, up 48% from 2023 on a per diluted share basis. Our 2025 total capital return target of $700 to $800 million represents further growth from the 2024 level. Overall, these results and updated targets highlight Jackson's strong capital generation profile and more stable cash distributions to JFI, which have enhanced value for our shareholders. Slide fifteen summarizes our formidable capital and liquidity position for 2024. The profitability of our in-force business, driven by fee income from our variable annuity-based contract and the one-time tax benefit I mentioned earlier, provided statutory capital generation of $591 million during the fourth quarter. Consistent with our prior guidance for smaller periodic distributions from Jackson National Life, $280 million was distributed during the fourth quarter. After accounting for the impact of this distribution and the related reduction in deferred tax, asset and disability, Jackson's total adjusted capital, or TAC, increased and ended the quarter at $5.1 billion. CAL at Jackson National Life has continued to remain stable, as was apparent in our fourth quarter results, with estimated CAL slightly higher, reflecting strong and diversified new business activity. Our estimated RBC ratio was up from the third quarter to 572% and remains well above our minimum of 425%. We are also pleased with Brook Re's performance during 2024, which continues to operate as expected and remains capitalized well above our minimum operating capital level. While we did see an impact on Brook Re capital in the fourth quarter from the actuarial assumption update, capital for the full year increased by about $200 million. Other than the initial formation, there were no capital contributions to or distributions from Brook Re in 2024. Going forward, we will continue to manage Brook Re on a self-sustaining basis given the long-term nature of its liabilities. Our holding company cash and highly liquid asset position at the end of the quarter grew to more than $700 million, which continues to be above our minimum buffer and provides substantial financial flexibility. The periodic dividends and distributions to JFI throughout 2024 are consistent with the goal of stabilizing RBC compared to our past practice of a sizable annual dividend. We believe our robust capital position provides a strong financial base for future operating company dividends. We returned $148 million to common shareholders during the quarter through share repurchases and dividends, allowing us to finish 2024 near the top of our targeted capital return range of $550 to $650 million. Overall, I am very pleased with our fourth quarter and full year 2024 results, which demonstrate positive momentum in sales, earnings, free capital generation, free cash flow, and capital return. I'll now turn the call back to Laura.

Thank you, Don. 2024 was a year of significant progress for Jackson and an important one for demonstrating the consistency of our commitment to all stakeholders. We remain dedicated to serving financial professionals and their clients with the goal of helping Americans grow and protect their retirement savings and income. As always, I'd like to recognize the efforts of all our associates whose talent and dedication remain our greatest strength. Our award-winning culture was recently recognized with Jackson National Asset Management and PPM America named best places to work in money management by Pensions and Investments. This further showcases our strong workplace environment, employee engagement, and dedication to supporting each other, our business partners, and the community. At this time, I'll turn it over to the operator for questions.

Thank you. If you'd like to ask a question, please ensure you are muted locally. As a reminder, press star followed by one on your telephone keypads now. Our first question comes from Ryan Krueger of KBW. Ryan, your line is open. Go ahead.

Hey. Thanks. Good morning. First question was, could you provide a little bit more color on the moving pieces within Brook Re in 2024 that ultimately produced the $200 million increase in capital?

Hey, Ryan. It's Don. Good morning. Happy to take you through the components of that. So first of all, I would just maybe remind folks that we've indicated that the consolidated hedging results are, you know, a decent direction indicator, but they're not sort of a direct read across for Brook Re results given that, you know, we follow a modified GAAP. The other thing that I would highlight is that on a consolidated basis, $285 million of net hedge gain for the full year includes both the results of our variable annuity hedging as well as our RILA. And under the structure that we set up with Brook Re, we are not reinsuring the RILA business to Brook Re, nor are we reinsuring the variable annuity business in our New York subsidiary. So that's one sort of, you know, scope difference that needs to keep in mind. The second thing is I would just reiterate what we previously disclosed. We have some disclosures around our modified GAAP approach. In our 2023 earnings materials, you can look at slide nineteen. There are essentially four modifications to the GAAP results that we implemented in connection with Brook Re. The first step was really to kind of promote stability in Brook Re's balance sheet and included, you know, having sort of a fixed long-term volatility assumption, and we have discussed that element on prior calls. Volatility actually for the full year was fairly muted. And then the other sort of balance sheet stability item was just the way that we handle the nonperformance risk spread at Brook Re. It's more of a fixed approach compared to GAAP. And then there are two final modifications, both of which are, you know, part of our goal of having Brook Re be a self-sustaining organization going forward. And that was we apply a haircut to the guarantee fee stream, and we also apply an expense provision for administrative costs. So when you factor in, you know, sort of the difference in the blocks of business that sit at Brook Re versus in our consolidated results, which is primarily RILA, and then consider these modifications that I just mentioned, those are the items that sort of, you know, make up the difference between consolidated results and results at Brook Re on a standalone basis.

Great. Thanks. And then a question on the assumption review. Sounds like the main impact was around utilization. I think you've also had actual to expect adverse actual to expected results over the last year or two around higher lapses. I know you also mentioned, you know, you're seeing more exchange activity in the current environment. So just curious, did you, you know, if you considered changing the long-term lapse assumption and ultimately what led to keeping the existing lapse assumption?

Yeah. And so before I kind of get into the specifics of your questions there, maybe just helpful just to kind of step back and put the overall impact of the assumption updates in context. So when you combine both the piece of our assumption updates that impacted our operating earnings, that was about $26 million, you know, unfavorable, and that's primarily due to mortality as we described. It kind of impacts closed block in a negative way because that's related to some life business where we increased reserves. There's a favorable impact within retail annuities related to a block of payout annuity products, so that sort of offset the item that we saw on closed block. So $26 million operating earnings primarily related to mortality. For the non-operating earnings impact, which was the $419 million, as we mentioned in our prepared remarks, it's primarily related to refining our projections on withdrawal behavior. And so we do look at, you know, all of our various assumptions when we go through our unlocking every year. And this year, kind of taking a look at, you know, refining the projections around withdrawal behavior for policies that do have GMWBs, we took a look at all the data we have, which is quite substantial given the size of our VA block, and essentially, we updated the granularity of models so that we could better more precisely capture elected withdrawal frequencies. So turning to kind of the unexpected policyholder behavior, which you mentioned, which is included in our MRB roll forward, I did want to highlight that that unexpected behavior consists of both surrenders and withdrawals. So the item that we changed the assumption for in the fourth quarter, as well as death and annuitization. So it's really all three of those combined. And then lastly, you know, just on the exchanges, well, before I go to the exchanges, just one more comment on surrenders. So obviously, given the strong equity market performance that we've seen in 2024, as well as 2023, you know, a lot of the benefits are out of the money in the current environment. And so we do tend to see higher levels of outflows when we're in that situation. We also have the dynamic that we've got some older policy vintages that were from years where our sales were much higher that are coming out of their surrender charge period, so that contributes to the, you know, what we're seeing in terms of the surrender rate. And then on, you know, the exchange comment in the prepared remarks, given, you know, that the current environment, there are, you know, there are some more attractive annuity alternatives for customers who have got these products that are, you know, kind of out of the money, which is, you know, driven by the higher rate environment, also with RILA products. And so we have seen what we believe is a high level of surrender activity. When we look back at, you know, setting our assumption for surrenders going forward, we look at that over time. That includes both periods of up markets and down markets. And so as we went through that, we didn't believe that it made sense to make any changes to our surrender assumptions at this point. And I would just highlight that if you look back to the last down market that we had in 2022, our surrender rate was about 7%. So that's where we landed on the assumption update.

Great. Thank you.

Thank you. Our next question comes from Suneet Kamath of Jefferies. Suneet, your line is open. Please go ahead.

Great. Thanks. I just have a follow-up to Ryan's question on Brook Re. You know, one of the questions that we get most often from investors is, you know, how do you get comfort that Brook Re is well capitalized? And I take your comments on the call, but is there something that you guys could sort of provide us on a more regular basis that we can sort of anchor to? There seems to be some reluctance in terms of providing additional disclosure on Brook Re. And since it's such an important part of your strategy, I'm wondering if there's something that you guys could give us on a more regular basis that we can use to track the performance there.

Thanks for that, Suneet. So we take a look at our disclosures on Brook Re every quarter. And as I mentioned, you know, in response to Ryan's question, we did provide quite a bit of disclosure around Brook Re last year. I think we had about a dozen pages in our earnings call materials. And, you know, we're essentially one year in with Brook Re. Those liabilities are quite long-term, probably, you know, twenty years on average. So we're going to continue to manage Brook Re on a long-term self-sustaining basis. As we go forward, you know, to the extent we have any need for additional capital in Brook Re, we would obviously share that. We'll also share when we take capital out of Brook Re. And then as we've done this year-end, we'll kind of give a little bit of, you know, additional disclosure at the end of the year in terms of, you know, how we saw the results play out during the course of the year.

Okay. And then second on capital, I mean, I appreciate the increase in the capital return guide for 2025. But if we just sort of think about how much excess capital you have between the RBC level being above your target and then the HoldCo cash also being above your target, you know, it's a pretty big number. So I guess what is keeping you from, you know, bringing down some of that excess capital even more? And, again, I appreciate the increase in capital return, but it still seems like there's a sizable amount of excess on the balance sheet.

Sure. So let me share with you some of our thinking, Suneet. So, you know, as we kind of laid out with our new disclosures, we are sort of continuing to stay focused on this concept of earning the capital, paying it up to the holding company, and then returning it to shareholders. At the operating company, you know, we were obviously operating with a significant buffer above our 425 minimum. Some of that reflects the fact that there is a bit of market sensitivity on the base contract that remains at Jackson National. And so, we want to be able to have a sustainable level of capital return coming out of the company. And so you likely see that level of RBC come down over time as opposed to sort of one, you know, kind of major transaction. I would also highlight that, you know, all of those distributions continue to be subject to discussions with our regulators. But we feel pretty good that, you know, if you look at the capital generation that we had for 2024, on a reported basis, it's up about or represents about 66% of the, or we sent up to the holding company about 66% of what we generated. If you factor in that we had kind of a one-time item benefiting the capital generation related to the CAMT, we're more like 80%. So we feel good about that. And, you know, we believe cash that we have at the holding company provides us with, you know, additional flexibility as we look at continuing to grow going forward, including, you know, organic growth at the operating company as well as any strategic opportunities that might come up.

Okay. Thanks for your answers.

Thank you. Our next question comes from Alex Scott of Barclays. Alex, your line is open. Please proceed.

Hey. Thanks for taking the question. First one is actually on PPM. I know it's a, you know, relevant business from an earnings standpoint for you all. But I would be interested in, you know, where you see PPM going over the long term. Is that something that may become a bigger piece of the strategy over time?

Good morning, Alex. Thanks for the question. We do see PPM as a core part of our business at Jackson. They, you know, support us with management of our general account and in other ways with our corporate strategy. From an overall performance perspective, as you can see in our disclosures, they do well for us. I think as we continue to move forward, if there is an opportunity for PPM to be viewed as a larger part of our strategy, we, you know, would look for that opportunity to come into play. We'll continue to have them operate as is and manage, you know, the general account. I'll invite Craig Smith, who's here with us, to share any additional remarks that you may want to in terms of PPM's specific initiatives.

Sure. Thank you, Laura, and thanks, Alex, for the question. You know, on our business at PPM, as Laura mentioned, about half, just under half of the assets under management are associated with the Jackson General account. We also have a third-party business. We operate our business across five verticals: public fixed income, private fixed income, CLO management, commercial mortgage debt, and private equity. And in all of those verticals, we are not only providing those services to Jackson but also to third parties. And we have a robust effort to increase distribution to institutional investors across the globe. Recently, you probably read, Alex, of our hiring of an experienced emerging market debt team from Western Asset Management just three or four weeks ago. And that is an illustration of Jackson's commitment to PPM's business, the growth of our business, and the increasing capabilities at our investment management firm.

Got it. That's helpful. And that Western Asset Management hire did catch my eye. That was one of the reasons I was interested in asking about that. Alright. I guess, for my follow-up, I wanted to ask about the free capital generation. The guide's unchanged in terms of, you know, exceeding $1 billion. I'd say 2024 being, you know, $1.7 billion before funding sort of business growth, $1.3 billion after, as you laid out in your deck. That seemed pretty darn strong to me. And I guess I just wanted to ask, you know, how much is that, excuse me, number benefiting from strong equity markets, higher interest rates, etcetera? I mean, is that something where maybe we shouldn't think about it being quite that strong in 2025 because there were, like, you know, sort of one-time market benefits in the market being strong, or do you view that as a pretty good run rate at this point?

Yeah. So thanks for that, Alex. It's Don. So the first thing I would just highlight in terms of the billion-dollar-plus for 2025, as I mentioned earlier, we did have sort of a one-time tax benefit in 2024 that will not repeat going forward. So, you know, you back that out, you're essentially kind of at $1.1 billion for 2024 on a more normalized basis. And in terms of going forward, you know, there is some equity market sensitivity, as I mentioned, but we have a fairly, you know, what we believe is a reasonable level of equity market return built into our plan for 2025, and we feel very comfortable with that billion-dollar guidance.

Got it. Thank you.

Thank you. As another reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Tom Gallagher of ISI. Tom, your line is open. Please go ahead.

Morning. First, I wanted to come back to the actuarial review. So was the charge taken because more customers are utilizing the GMWB features than you had modeled? I guess, I've sort of looked at your guarantees and thought the vast majority of them are probably out of the money at this point. But I guess there are cohorts that are in the money. And is that, Don, is that what you're making the adjustment change as you've looked at different cohorts? If you can unpack that a little bit. Thanks.

Sure. Good morning, Tom. So, yeah, let me try and unpack that for you and make it a bit more clear. So the adjustment that we made as part of our assumption review was not directly related to utilization. It was more related to kind of making sure that we've got captured in our projections, you know, more precise information around the frequency of withdrawals as opposed to being able to utilize those benefits. And, you know, even though the overall book is largely out of the money, you know, we still have people who are using these products as they were designed. They're taking withdrawals on a regular basis, and that's really what the focus of our assumption update was in the quarter.

Gotcha. And then just a couple of other quick ones. Did you say your ultimate lapse rate assumption for total annuities was around 7%? I'm just looking at this quarter. It was around 13%. Just want to make sure I'm looking at apples to apples.

Yeah. No. The 7% that I mentioned was the surrender rate that we experienced in 2022. My point in having you look back at that is that was the last down market experience that we had. And so because we do tend to see changes in our surrenders in, you know, equity markets that tend to result in more surrenders, we have the opposite impact that occurs when we have a down market. And so that's what the 7% relates to.

Okay. And what is your terminal lapse rate assumption? I just want to at least level set where we are now and if lapses remain elevated, whether you might have to make some adjustments.

Yeah. It's probably closer to the 8% to 9% range would be a more typical in-the-money lapse rate. Or I'm sorry. At-the-money lapse rate.

Gotcha. And then just one final one if I could. This is a little more of, like, a structural question. So I know you have the permitted practice with Brook Re. Is there, within that permitted practice, are there guardrails around you still being beholden somehow to RBC on a statutory basis? The reason I ask is when I see, like, there's proposed changes to the scenario generator in 2026, I wonder how is that even going to affect you if you're using modified GAAP. But, anyway, is there any guardrail that's still where there's still a relevance to statutory, or is that not even relevant anymore in terms of the deal you have with the regulator?

Yeah. It's a good question, Tom. Thanks for that. So it is largely the GOES impact is largely not applicable to the book of business that we've reinsured to Brook Re. And in terms of guardrails, the primary guardrail that we have there is our minimum operating capital, which we had outlined in our disclosures, you know, year-end last year. In terms of the framework that we use there. So we do have a minimum level of capital that we've committed to Michigan to maintain in Brook Re, and we're well above that given where we ended 2024.

Okay. Thank you.

Thank you. At this time, we have no further questions registered on today's call. So I'll hand back over to Laura Prieskorn, CEO, for any closing remarks.

Thank you. As you've heard this morning, 2024 was a great year of progress for Jackson. We look forward to continuing the discussions and sharing our progress toward our 2025 targets after the first quarter. Thank you all for your continued interest in Jackson.