Jackson Financial (NYSE:JXN) outlined two strategic initiatives in a company call that management said are intended to accelerate growth in spread-based annuities while maintaining a strong capital position. Executives described a long-term partnership with alternative asset manager TPG and the formation of a new onshore captive reinsurer, Hickory Brook Reinsurance Company (“Hickory Re”).
Strategic focus: growing spread-based products
CEO Laura Prieskorn said Jackson has been working to diversify beyond traditional variable annuities by expanding in registered index-linked annuities (RILAs) and other spread-based products. She noted that four years ago, shortly after becoming a public company, Jackson launched its first RILA and has since enhanced its RILA and spread-based offerings. She said the company focused on improving multi-year guaranteed annuity (MYGA) offerings in 2024 and launched a new RILA product and an updated fixed index annuity (FIA) with guaranteed minimum withdrawal benefit features in 2025.
TPG partnership: capital investment and expanded investment strategies
Management described a long-term strategic partnership with TPG, which Prieskorn called Jackson’s “first and only strategic partnership with an alternative asset manager.” She said the relationship is designed to provide access to investment strategies complementary to PPM America’s capabilities, particularly in private asset classes suited for insurance portfolios such as investment-grade asset-based finance and direct lending.
CFO Don Cummings outlined key terms:
- TPG equity investment: TPG will invest $500 million in Jackson’s common equity at a price per share equal to the trailing 30-day volume-weighted average price. Cummings said the stake represents approximately 7% ownership and is expected to make TPG the third-largest shareholder after closing.
- Lockup and restrictions: Shares will be subject to lockup and standstill provisions, with TPG able to monetize gains after the first two years. After the lockup, TPG agreed to sell-down restrictions and to retain at least $100 million of Jackson stock for the duration of the partnership.
- Jackson receives TPG shares: Jackson will receive $150 million of TPG common equity at close, with similar lockup and sale restrictions.
- Potential additional consideration: If $20 billion of assets under management (AUM) is achieved under the partnership by the 10th anniversary of closing, Jackson may elect to receive an additional $150 million of TPG common equity.
- Investment management agreement: The agreement has a 10-year initial term with automatic one-year renewals through year 15. Jackson committed to deliver $4 billion of AUM by the end of year two and $12 billion by the end of year five into investment-grade asset-based finance and direct lending strategies.
- Fees and oversight: The agreement includes a 50 basis point minimum fee, with asset management fees set at competitive market rates by asset class. Jackson and PPM will retain portfolio oversight, including asset-liability and risk management, while PPM continues to manage the majority of the general account.
Cummings said the company anticipates closing the TPG transaction in the first quarter of 2026, subject to customary conditions.
Hickory Re: an onshore captive to improve capital efficiency
Jackson also announced the creation of Hickory Re, a wholly owned Michigan-based captive reinsurer intended to support fixed and fixed index annuity growth with greater capital efficiency. Prieskorn said Jackson intends to initially capitalize Hickory Re with $650 million, consisting of $500 million from TPG’s investment in Jackson and $150 million of excess cash from Jackson.
Cummings said Hickory Re has already reinsured an initial block of in-force fixed and FIA products and will support future sales through a flow reinsurance arrangement. He added that Hickory Re will use an economic reserving framework similar to offshore entities that reinsure spread-based business, which he said can optimize capital efficiency, reduce strain, and improve returns.
During Q&A, Cummings said FIA products with income benefits carry “fairly sizable redundancy” in the statutory reserving framework and indicated that, for that product type, there is about a 20% redundancy. He said Hickory Re allows the company to avoid funding that requirement at Jackson National Life and instead use a more economic reserving framework, freeing capital for potential distributions to the holding company over time.
Financial expectations, capital return, and assumption review update
On growth outlook, Cummings said Jackson believes the partnership with TPG and Hickory Re will provide capacity to write $10 billion to $15 billion of cumulative fixed and FIA sales “over the next few years” in a capital-efficient manner. He also said management estimates the transactions will be accretive to adjusted operating EPS in 2027.
In response to an analyst question on the decision to raise external equity, Cummings emphasized the strategic value and alignment of the partnership with TPG and said Jackson continues to have significant excess capital at Jackson National Life. He said the additional growth capital is intended to facilitate accelerated growth and diversification, enhance future free capital generation and free cash flow conversion, and preserve capital flexibility while increasing capital return to shareholders.
Cummings also said that while 2026 targets had not been finalized, Jackson expects growth and capital return to shareholders to be about 20% above 2025 levels, “kind of in a range around a billion dollars,” including share repurchases and dividends.
Separately, Cummings provided an update on the annual actuarial assumption review. He said the after-tax impact on consolidated net income was less negative than in 2024 and that the after-tax negative impact on Brooke Re equity is expected to be about $350 million, primarily reflecting increased reserves from updated policyholder behavior assumptions such as lapses. He said positive impacts from updated mortality assumptions and model enhancements partially offset the reserve increase. He added that Brooke Re remained well capitalized relative to regulatory minimum operating capital and expected to be above the company’s internal risk framework, and that no capital contributions were required from the update.
Management said further details would be provided with the company’s fourth-quarter earnings release in February.
About Jackson Financial (NYSE:JXN)
Jackson Financial Inc is a U.S.-based financial services holding company headquartered in Lansing, Michigan. The company operates primarily through its principal subsidiary, Jackson National Life Insurance Company, and specializes in designing and distributing retirement products. Jackson Financial has been publicly traded on the New York Stock Exchange under the ticker JXN since its initial public offering in May 2022.
The company’s core offerings include a broad range of fixed, variable and indexed annuity products aimed at helping individuals preserve and grow retirement assets.
