JACKSON FINANCIAL INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS - CAUTIONARY LANGUAGE

Certain statements made in this report are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). A
forward-looking statement is a statement that is not a historical fact and
includes any statement that may predict, forecast, indicate or imply future
results, performance or achievements. Forward-looking statements may contain
words like: "anticipate," "believe," "estimate," "expect," "project," "shall,"
"will" and other words or phrases with similar meaning in connection with a
discussion of future operating or financial performance. In particular, these
include statements relating to future actions, trends in our businesses,
prospective services or products, future performance or financial results and
the outcome of contingencies, such as legal proceedings.

Forward-looking statements are subject to risks and uncertainties. Actual
results could differ materially from those expressed in or implied by such
forward-looking statements due to a variety of factors, including:

• general conditions in the global capital markets and the economy;

• adverse capital and credit market conditions, including volatility in
interest rates and credit spreads, prolonged periods of low interest rates,
volatile equity markets and decreased liquidity and credit capacity;

• adverse impacts on our results of operations and capitalization as a result
of optional guarantee benefits within certain of our annuities;

•  unavailability of hedging instruments and inadequacy of our hedging and
reinsurance programs to protect us against the full extent of the exposure or
losses we seek to mitigate;
•  variance in the performance of our hedge assets and customer funds, also
referred to as basis risk;

• disruptions in our business functions as a result of adverse outcomes from
our operational risks and those of our material outsourcing partners;

•  operational failures, failure of our information technology systems, and the
failure to protect the confidentiality of customer information or proprietary
business information;

• inability to recruit, motivate and retain experienced and productive
employees;

•  misconduct by our employees or business partners;

•  difficulty in marketing and distributing products;

• Jackson Financial's dependence on the ability of its subsidiaries to transfer
funds to meet Jackson Financial's obligations and liquidity needs;

• risks arising from acquisitions or other strategic transactions;

• risks related to natural and man-made disasters and catastrophes, diseases,
epidemics, pandemics (including COVID-19), malicious acts, cyberattacks,
terrorist acts, civil unrest and climate change;

• the degree to which we are leveraged and our inability to refinance our
indebtedness;

• deterioration of the credit quality of the securities and loans in our
investment portfolio;

•  failure to adequately describe and administer, or meet any of the complex
product and regulatory requirements relating to, the many complex features and
options contained in our annuities;

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•  our counterparties' requirements to pledge collateral or make payments
related to declines in estimated fair value of specified assets and changes in
the actual or perceived soundness or condition of other financial institutions
and market participants;

• inadequate reserves due to differences between our actual experience and
management's estimates and assumptions;

• significant deviations from our assumptions regarding the probabilities that
our annuity contracts will remain in force from one period to the next;

• changes in the levels of amortization of deferred acquisition costs ("DAC");

• changes in accounting standards;

•  models that rely on a number of estimates, assumptions, sensitivities and
projections that are inherently uncertain and which may contain misjudgments and
errors;

• a downgrade in our financial strength or credit ratings;

•  competition from other insurance companies, banks, asset managers and other
financial institutions;
•  failure of our risk management policies and procedures to adequately
identify, monitor and manage risks, which could leave us exposed to unidentified
or unanticipated risks;

• changes in U.S. federal income or other tax laws or the interpretation of tax
laws;

• changes in U.S. federal, state and other securities and state insurance laws
and regulations; and

• adverse outcomes of legal or regulatory actions.

The risks and uncertainties included here are not exhaustive. Our Form 10
includes additional factors that could affect our businesses and financial
performance. Moreover, we operate in a rapidly changing and competitive
environment. New risk factors emerge from time to time, and it is not possible
for management to predict all such risk factors.

Further, it is not possible to assess the effect of all risk factors on our
businesses or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of
actual results. In addition, we disclaim any obligation to update any
forward-looking statements to reflect events or circumstances that occur after
the date of this report, except as otherwise required by law.

Available Information

We maintain a public website at www.jackson.com. We use our website as a routine
channel for distribution of important information, including news releases,
analyst presentations, financial information and corporate governance
information. We post filings on our website as soon as practicable after they
are electronically filed with, or furnished to, the SEC, including our annual
and quarterly reports on Forms 10-K and 10-Q, respectively, and current reports
on Form 8-K; our proxy statements, and any amendments to those reports or
statements. All such postings and filings are available free of charge on the
"Investor Relations" section of our website, investors.jackson.com. The SEC's
website, www.sec.gov, contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC.
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Overview of Management's Discussion and Analysis of Financial Condition and

                             Results of Operations.

The following discussion and analysis of our financial condition and results of
operations should be read in its entirety and in conjunction with the condensed
consolidated financial statements and related notes contained in Part I, Item
1 of this Quarterly Report on Form 10-Q, as well as "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section in our Form
10 that was declared effective by the SEC on August 6, 2021 (the "Form 10") and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the company's quarterly report for the quarter ended June 30,
2021, that were filed with the U.S. Securities and Exchange Commission (the
"SEC").

Jackson Financial Inc. ("Jackson Financial") along with its subsidiaries
(collectively, the "Company," which also may be referred to as "we," "our" or
"us"), is a financial services company focused on helping Americans grow and
protect their retirement savings and income to enable them to pursue financial
freedom for life in the United States ("U.S."). Jackson Financial, domiciled in
the U.S., was previously a majority-owned subsidiary of Prudential plc
("Prudential"), London, England and was the holding company for Prudential's
U.S. operations. As described below, the Company's demerger from Prudential was
completed on September 13, 2021 ("Demerger"), and the Company is no longer a
majority-owned subsidiary of Prudential. Jackson Financial's primary life
insurance subsidiary, Jackson, is licensed to sell group and individual annuity
products (including fixed, fixed index and variable annuities), and various
protection products, primarily whole life, universal life and variable universal
life and term life insurance products in all 50 states and the District of
Columbia.

On January 28, 2021, Prudential announced its intent to pursue the separation of
its U.S. business operations in 2021. On August 6, 2021, the registration on
Form 10 of the Company's Class A common stock became effective under the
Securities Exchange Act of 1934, as amended. The Demerger transaction described
in the Form 10 was effective on September 13, 2021. Post-demerger, Prudential
retained a 19.9 percent non-controlling interest in the Company.

On September 9, 2021, the Company effected a 104,960.3836276-for-1 stock split
of its Class A common stock and Class B common stock by way of a
reclassification of its Class A common stock and Class B common stock. The
incremental par value of the newly issued shares was recorded with the offset to
additional paid-in capital. All share and earnings per share information
presented herein have been retroactively adjusted to reflect the stock split.

On June 18, 2020, the Company's subsidiary, Jackson, announced that it had
entered into a funds withheld coinsurance agreement with Athene Life Re Ltd.
("Athene") effective June 1, 2020 to reinsure on 100% quota share basis, a block
of Jackson's in-force fixed and fixed-index annuity product liabilities in
exchange for a $1.2 billion ceding commission.

In addition, we entered into an investment agreement with Athene Life Re Ltd.,
pursuant to which Athene invested $500.0 million of capital into the Company in
return for a 9.9% voting interest corresponding to a 11.1% economic interest in
the Company. The transaction was completed on July 17, 2020. In August 2020, the
Company contributed the $500.0 million, as a capital contribution, to its
subsidiary, Jackson.

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Executive Summary

This executive summary of Management's Discussion and Analysis of Financial
Condition and Results of Operation highlights selected information and may not
contain all of the information that is important to current or potential
investors in our securities. You should read this Quarterly Report on Form 10-Q,
together with the Form 10, in their entirety for a more detailed description of
events, trends, uncertainties, risks and critical accounting estimates affecting
us.

We help Americans grow and protect their retirement savings and income to enable
them to pursue financial freedom for life. We believe that we are uniquely
positioned in our markets because of our differentiated products, well-known
brand and disciplined risk management. Our market leadership is supported by our
efficient and scalable operating platform and industry-leading distribution
network. We believe these core strengths will enable us to grow profitably as an
aging U.S. population transitions into retirement.

We offer a diverse suite of annuities to retail investors in the U.S. Our
variable annuities have been among the best-selling products of their kind in
the U.S. primarily due to the differentiated features we offer as compared to
our competitors, in particular the wider range of investment options and greater
freedom to invest across multiple investment options. We also offer fixed index
annuities and fixed annuities. In the fourth quarter of 2021, Jackson
successfully launched Market Link ProSM and Market Link Pro AdvisorySM, its
commission and advisory based suite of Registered Index-Linked Annuities
(RILAs). Also in the fourth quarter of 2021, we entered the Defined Contribution
market as a carrier in the AllianceBernstein Lifetime Income Strategy.

We sell our products through a distribution network that includes independent
broker-dealers, wirehouses, regional broker-dealers, banks, and independent
registered investment advisors, third-party platforms and insurance agents. We
have been the top selling retail annuity company in the United States for eight
of the past nine years, according to the Life Insurance Marketing and Research
Association (LIMRA).

Our operating platform is scalable and efficient. We administer approximately
75% of our in-force policies on our in-house policy administration platform. The
remainder of our business is administered through established third-party
arrangements. We believe that our operating platform provides us with a
competitive advantage by allowing us to grow efficiently and provide superior
customer service.

We manage our business through three segments: Retail Annuities, Institutional
Products, and Closed Life and Annuity Blocks. We report certain activities and
items that are not included in these segments, including the results of PPM, in
Corporate and Other. See Note 13 to Condensed Consolidated Financial Statements
for further information on our segments.

Revenues

Our revenues come from five primary sources:

• Fee income derived from our annuities and investment management products;

• Net investment income from our investment portfolio;

• Premiums from certain of our life insurance and annuity products, as well as
premiums from reinsurance transactions;

• Net realized gains (losses) on investments, including trading activity within
our investment portfolio and risk management related derivative activities; and

• Other income, which primarily represents expense allowances associated with
our reinsurance agreements.

Benefits and Expenses

Our benefits and expenses consist of five primary sources:

• Death, other policy benefits and change in policy reserves, net of deferrals;

• Interest credited on contract holder funds, net of deferrals;

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• Operating costs and other expenses, net of deferrals;

• Interest expense; and

• Amortization of deferred acquisition and sales inducement costs.

Net Income Volatility

Our results experience net income volatility due to the mismatch between
movements in our policyholder liabilities and the market driven movements in the
derivatives used in our hedging program. Our hedging program seeks to balance
three objectives: protecting against the economic impact of adverse market
conditions, protecting our statutory capital and stabilizing our statutory
distributable earnings throughout market cycles. Our hedging program is based on
economic cash flow models of our liabilities, rather than the U.S. GAAP
accounting view of the embedded derivative liabilities. We do not directly seek
to offset the movement in our U.S. GAAP liabilities from adverse market
conditions. As a result, the changes in the value of the derivatives used as
part of the hedging program are not expected to match the movements in the
hedged liabilities on a U.S. GAAP basis from period to period, resulting in
volatility as a result of changes in fair value recorded to net income.
Accordingly, we evaluate and manage the performance of our business using
Adjusted Operating Earnings, a non-GAAP financial measure that reduces the
impact of market volatility by excluding changes in fair value of freestanding
and embedded derivative instruments.

Significant Factors Impacting Results

The following selected factors have impacted, and may in the future impact, our
financial condition and results of operations.

Impact of Hedging

We utilize derivatives primarily as part of our variable and fixed index annuity
financial risk management program, primarily to reduce the inherent equity
market and interest rate risk associated with the optional guarantee benefits
embedded in those products. Derivative contracts, primarily composed of futures
and options on equity indices and interest rates, are an essential part of our
program and are selected to provide a measure of economic protection. These
transactions are intended to manage the risk of a change in the value, yield,
price, cash flows or degree of exposure with respect to assets, liabilities or
future cash flows which we have acquired or incurred. Our hedging program seeks
to balance three objectives: protecting against the economic impact of adverse
market conditions, protecting our statutory capital and stabilizing our
statutory distributable earnings throughout market cycles. The balance among
these three objectives may shift over time based on our capital position, market
conditions and other needs of the business. For example, in 2020, our total
level of hedging requirements under our risk framework were higher as a result
of our level of statutory capital and our focus on protecting statutory capital
in preparation for the Demerger.

We do not employ a hedging program that seeks to offset the movement in our U.S.
GAAP liabilities. As a result, the changes in the value of these derivatives are
not expected to match the movements in hedged liabilities on a U.S. GAAP basis
from period to period. With this focus, the program does not meet the accounting
requirements for hedge accounting and, accordingly, we have not sought hedge
accounting treatment on either a U.S. GAAP or Statutory accounting principles
basis. Accordingly, changes in value of the derivatives are recognized in the
period in which they occur with offsetting changes in reserves recognized in the
current period, resulting in net income volatility.

Impact of Mean Reversion Methodology on DAC Amortization

Our operating income includes amortization of DAC balances. For our variable
annuities, DAC is amortized in proportion to expected gross profits. A
significant portion of the expected gross profits on our variable annuities are
composed of the core contract charges, investment management fees, and
associated administrative fees, which depend on the performance of the account
value upon which fees are assessed, as well as guarantee fees, which are
assessed on the benefit base. This, in turn, depends on account value returns
from period to period, including in future periods, and the features of optional
guarantee benefits selected by our customers. We employ a mean reversion
methodology with the objective of stabilizing the amortization of DAC that would
otherwise be highly volatile due to fluctuations in future gross profits arising
from changes in equity market and interest rate levels over the short term. The
mean reversion methodology seeks to achieve this objective by applying a dynamic
adjustment to the assumption for short-term future investment returns. This
dynamic adjustment incorporates actual returns for the current and preceding two
years combined along with our estimate of
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projected returns for the next five years that are set such that the average
rate of return over the eight-year period is equivalent to the current long-term
assumed return. This methodology prevents our DAC models from being distorted by
a significant increase or decrease in the account value or benefit base in one
period from inflated or deflated projected contract-related charges (including
core contract charges and guarantee fees, as applicable) due to volatility in
equity market returns or interest rates. However, this methodology does result
in income volatility when historical period returns that deviate significantly
from the mean are dropped from the mean reversion formula. For example, during a
period in which a large negative return falls out of the calculation due to the
passage of time, the projected returns for the next five years would be reset at
a lower level, such that the average rate of return over the eight-year period
remains equivalent to the current long-term assumed return. This would result in
a potentially materially higher amortization of DAC for the current period, even
if the actual returns for the current period are equivalent to the current
long-term assumed return.

Recent Acquisitions and Reinsurance Transactions

We expect to continue to manage and diversify our overall mortality and
longevity risks through closed block acquisitions, which we believe provide
opportunities to deploy capital at attractive risk-adjusted returns and
diversify our in-force business. We also use third-party reinsurance to manage
capital in support of our strategy by monetizing selected risks in our in-force
business. A reinsurance transaction could have a significant impact on our
results of operations in the period in which the transaction occurs as a result
of the reserves acquired or divested at the time the transaction is closed, and
assets added or removed from the balance sheet (including any premium paid or
received), net of ceding commission. A reinsurance transaction could also impact
the credit risk in our investment portfolio. Generally, acquired blocks of
business will increase our exposure to credit risk in our investment portfolio,
while business that is disposed of or reinsured will reduce the amount of credit
risk in our investment portfolio and increase the counterparty credit risk to
which we are exposed.

Retail Annuities

Effective June 1, 2020, we entered into a reinsurance agreement with Athene,
ceding a $27.6 billion portfolio of fixed and fixed index annuity liabilities in
exchange for approximately $1.2 billion in ceding commissions. Our reinsurance
arrangement with Athene is a funds withheld coinsurance arrangement where
Athene, as reinsurer, will bear responsibility for all financial terms of the
reinsured policies (i.e., premiums, expenses, claims, etc.) and, we, as the
ceding company, hold certain assets backing the reserves as collateral in a
segregated custody account.

Separation Costs

Prior to the Demerger, we received certain operational support services from
Prudential and provided services to Prudential, pursuant to an intra-group
master services agreement. That intra-group master services agreement was
terminated in connection with the Demerger as part of the complete operational
separation of Prudential's and our businesses. The process of replicating and
replacing functions, systems and infrastructure provided by Prudential or
certain of its affiliates in order to operate as a separate public company has
been completed. In connection with preparing for the Demerger and our operation
as a separate, publicly traded company, we incurred, and expect to incur,
one-time and recurring expenses. We estimated that the aggregate amount of these
one-time expenses would be approximately $75 million, of which approximately $18
million was incurred in 2020 and approximately $63 million was incurred during
the nine months ended September 30, 2021. We estimate that our incremental
annual recurring expenses relating to operating on a stand-alone basis will be
between approximately $25 million and $30 million. These expenses primarily
relate to information security, finance, risk management, human resources,
corporate communications, public relations and other support services.

Macroeconomic, Industry and Regulatory Trends

We discuss a number of trends and uncertainties below that we believe could
materially affect our future business performance, including our results of
operations, our investments, our cash flows, and our capital and liquidity
position.

Macroeconomic and Financial Market Conditions

Our business and results of operations are affected by macroeconomic factors.
The level of interest rates and shape of the yield curve, credit and equity
market performance (including market paths, equity volatility and other
factors), regulation, tax policy, the level of U.S. employment, inflation and
the overall economic growth rate can affect both our short and long-term
profitability. Monetary and fiscal policy in the United States, or similar
actions in foreign nations, could result in increased volatility in financial
markets, including interest rates, currencies and equity markets, and could
impact our
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business in both the short-term and medium-term. Political events, including the
imposition of stay-at-home orders and business shutdowns or other effects
arising as a result of the COVID-19 pandemic, civil unrest, tariffs or other
barriers to international trade, and the effects that these or other political
events could have on levels of economic activity, could also impact our business
through impacts on consumers' behavior or impact on financial markets.

In the short- to medium-term, the potential for increased volatility, coupled
with prevailing interest rates remaining below historical averages and uncertain
equity market performance, could pressure sales and reduce demand for our
products as consumers consider purchasing alternative products to meet their
objectives. In addition, this environment could make it difficult to
consistently develop products that are attractive to customers. Our financial
performance can be adversely affected by market volatility and equity market
declines if fees assessed on the account value or benefit base of our annuities
fluctuate, hedging costs increase and revenues decline due to reduced sales and
increased outflows.

Equity Market Environment

Our financial performance is impacted by the performance of equity markets. For
example, our variable annuities earn fees based on the account value, which
changes with equity market levels. After a very volatile 2020, U.S. equity
markets have performed well in 2021 with the S&P 500 generally at or near all
time highs throughout the year. Equity volatility has moderated in 2021 from
historically high levels in 2020 resulting in reduced hedging costs year over
year. While equity implied volatility has decreased in 2021 it still remains
above its historical median despite the high S&P 500 levels. The financial
performance of our hedging program could be impacted by large directional market
movements or periods of high volatility. In particular, our hedges could be less
effective in periods of large directional movements or we could experience more
frequent or more costly rebalancing in periods of high volatility, which would
lead to adverse performance versus our hedge targets and increased hedging
costs. Further, we are also exposed to basis risk, which results from our
inability to purchase or sell hedge assets whose performance is perfectly
correlated to the performance of the funds into which customers allocate their
assets. We make funds available to customers where we believe we can transact in
sufficiently correlated hedge assets, and we anticipate some variance in the
performance of our hedge assets and customer funds. This variance may result in
our hedge assets outperforming or underperforming the customer assets they are
intended to match. This variance may be exacerbated during periods of high
volatility, leading to a mismatch in our hedge results relative to our hedge
targets.

Interest Rate Environment

We believe the interest rate environment will continue to impact our business
and financial performance in the future for several reasons, including the
following:

•  Our investment portfolio is predominantly composed of fixed income
securities. In the near term, we expect the yields we earn on new investments
will be materially lower than yields we earned on maturing investments due to
the low interest rate environment.

•  A prolonged low interest rate environment could subject us to increased
hedging costs or an increase in the amount of statutory reserves that our
insurance subsidiaries are required to hold for optional guarantee benefits,
decreasing statutory surplus, which would adversely affect their ability to pay
dividends. Certain inputs to the statutory models rely on prescribed interest
rates, which are, in turn, determined using a historical interest rate
perspective with a mean reversion path over the longer term. If rates remain at
the current low levels, we expect these prescribed rates to continue to decline
as the NAIC updates the calculations each year, which would adversely impact our
statutory capital. In addition, low interest rates could also increase the
perceived value of optional guarantee benefits features to our customers, which
in turn could lead to a higher utilization of withdrawal or annuitization
features of annuity policies and higher persistency of those products over time.
Finally, low interest rates could continue to cause an acceleration of DAC
amortization or reserve increase due to loss recognition for annuities and
interest-sensitive life insurance. A gradual rise in interest rates would have
benefits that are offsetting to risks previously described. Those potential
benefits include increased new money investment yields, a reduction in hedging
requirements and more attractive product features.

•  Some of our annuities have a guaranteed minimum interest crediting rate.
These guaranteed minimum interest crediting rates may not be lowered, even if
earnings on our investment portfolio decline, resulting in net investment spread
compression that negatively impacts earnings. In addition, we expect more
customers to hold policies with comparatively high guaranteed minimum interest
crediting rates longer in a low interest rate environment, resulting in lower
than previously expected lapse rates. Conversely, a rise in the average yield on
our investment portfolio should positively impact earnings. Similarly, we expect
customers would be less likely to hold policies if existing
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guaranteed minimum interest crediting rates are perceived to have less value as
interest rates rise, resulting in higher than previously expected lapse rates.

Credit Market Environment

Our financial performance is impacted by conditions in fixed income markets.
With an improving economy, credit spreads have tightened in 2021 after
increasing substantially at the onset of the COVID-19 pandemic in 2020, and
credit defaults have also reduced from levels seen in 2020. As credit spreads
widen, the fair value of our existing investment portfolio generally decreases,
although we generally expect the widening spreads to increase the yield on new
fixed income investments. Conversely, as credit spreads tighten, the fair value
of our existing investment portfolio generally increases, and the yield
available on new investment purchases decreases. While changing credit spreads
impact the fair value of our investment portfolio, this revaluation will not
affect our net income, unless such changes are realized through the sale of
securities or are included in our trading portfolios and is instead reflected in
our AOCI. Shifts in the credit quality of the assets underlying our investment
portfolio may also impact the level of regulatory required statutory capital for
our insurance company subsidiaries. As such, significant credit rating
downgrades or payment defaults could negatively impact our RBC ratio.

COVID-19

We continue to closely monitor developments related to the COVID-19 pandemic.
The COVID-19 pandemic has caused significant economic and financial turmoil both
in the United States and around the world. These conditions could continue and
could worsen in the future. At this time, it is not possible to estimate the
long-term effectiveness of any therapeutic treatments and vaccines for COVID-19,
or their efficacy with respect to current or future variants or mutations of
COVID-19, or the longer-term effects that the COVID-19 pandemic could have on
our business. The extent to which the COVID-19 pandemic impacts our business,
results of operations, financial condition and cash flows will depend on future
developments which are highly uncertain and cannot be predicted, including the
availability and efficacy of vaccines against COVID-19 and against variant
strains of the virus. Federal and state authorities' actions could include
restrictions of movements. We are not able to predict the duration and
effectiveness of governmental and regulatory actions taken to contain or address
the COVID-19 pandemic or the impact of future laws, regulations or restrictions
on our business.

Consumer Behavior

We believe that many retirees have begun to look to tax-efficient savings
products as a tool for addressing their unmet need for retirement planning. We
believe our products are well positioned to meet this increasing consumer
demand. However, consumer behavior may be impacted by increased economic
uncertainty, increased unemployment rates, declining equity markets, lower
interest rates and increased volatility of financial markets. In recent years,
we have introduced new products to better address changes in consumer demand and
targeted distributions channels which meet changes in consumer preferences.

Demographics

We expect demographic trends in the U.S. population, in particular the increase
in the number of retirement age individuals, to generate significant demand for
our products. In addition, the potential risk to government social safety net
programs and shifting of responsibility for retirement planning and financial
security from employers and other institutions to employees, highlights the need
for individuals to plan for their long-term financial security and will create
additional opportunities to generate sustained demand for our products. Based on
a 2017 U.S. Census Bureau Population Projection, the portion of the U.S.
population age 55 or older is expected to grow through 2030 at double the annual
rate of growth forecast for the overall U.S. population. If this growth is
realized, 32% of the overall U.S. population, or 112 million individuals, will
be age 55 or older by 2030, compared to 29%, or 95 million individuals, in 2018.
We believe we are well positioned to capture the increased demand generated by
these demographic trends.

Competition

The insurance industry is highly competitive, with several factors affecting our
ability to compete effectively, including the range of products offered, product
terms and features, financial strength and credit ratings, brand strength and
name recognition, investment management performance and fund management trends,
the ability to respond to developing demographic trends, customer appetite for
certain products and technological advances. Our competitors include major stock
and mutual insurance companies, mutual fund organizations, banks and other
financial services companies. In recent
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years, there has been substantial consolidation and convergence among companies
in the insurance and financial services industries resulting in increased
competition from large, well-capitalized insurance and financial services firms
that market products and services similar to us. Increased consolidation among
banks and other financial services companies could create firms with even
stronger competitive positions, negatively impact the insurance industry's
sales, increase competition for access to distribution partners, result in
greater distribution expenses and impair our ability to market our annuities to
our current customer base or expand our customer base. Despite the increasing
competition, we believe that our competitive strengths position us well in the
current competitive environment.

Regulatory Policy

We operate in a highly regulated industry. Our insurance company subsidiaries
are regulated primarily at the state level, with some policies and products also
subject to federal regulation. As such, regulations recently approved or
currently under review at both the U.S. federal and state level could impact our
business model, including statutory reserve and capital requirements. We
anticipate that our ability to respond to changes in regulation and other
legislative activity will be critical to our long-term financial performance. In
particular, the following could materially impact our business:

Department of Labor Fiduciary Advice Rule

The Department of Labor ("DOL") has issued a new regulatory action (the
"Fiduciary Advice Rule") effective February 16, 2021, that reinstates the text
of the DOL's 1975 investment advice regulation defining what constitutes
fiduciary "investment advice" to ERISA Plans and IRAs and provides guidance
interpreting such regulation. The guidance provided by the DOL broadens the
circumstances under which financial institutions, including insurance companies,
could be considered fiduciaries under ERISA or the Tax Code. In particular, the
DOL states that a recommendation to "roll over" assets from a qualified
retirement plan to an IRA, or from an IRA to another IRA, can be considered
fiduciary investment advice if provided by someone with an existing relationship
with the ERISA Plan or an IRA owner (or in anticipation of establishing such a
relationship). This guidance reverses an earlier DOL interpretation suggesting
that roll over advice did not constitute investment advice giving rise to a
fiduciary relationship. Because we do not engage in direct distribution of
annuities, including IRA products and annuities sold to ERISA plan participants
and to IRA owners, we believe that we will have limited exposure to the new
Fiduciary Advice Rule. Unlike the DOL's previous fiduciary rule issued in 2016,
compliance with the Fiduciary Advice Rule will not require us or our
distributors to provide the disclosures required for exemptive relief under the
previous rule. However, we continue to analyze the impact of the Fiduciary
Advice Rule, and, while we cannot predict the rule's impact, it could have an
adverse effect on sales of annuities through our distribution partners, as
approximately 62% of our annuity sales were purchased within IRAs or other
qualified accounts (excluding employer-sponsored qualified plans) during 2020.
The Fiduciary Advice Rule may also lead to changes to our compensation practices
and product offerings and increased litigation risk, which could adversely
affect our results of operations and financial condition. We may also need to
take certain additional actions in order to comply with or assist our
distributors in their compliance with the Fiduciary Advice Rule.

Legislative Reforms

Congress approved the Setting Every Community Up for Retirement Enhancement Act
of 2019 (the "SECURE Act") on December 20, 2019. The SECURE Act provides
individuals with greater access to retirement products. Namely, it makes it
easier for 401(k) programs to offer annuities as an investment option by, among
other things, creating a statutory safe harbor in ERISA for a retirement plan's
selection of an annuity provider. The SECURE Act represents the largest overhaul
to retirement plans in over a decade. We view these reforms as beneficial to our
business model and expect growth opportunities will arise from the new law.

Tax Laws

All of our annuities offer investors the opportunity to benefit from tax
deferral. If U.S. tax laws were to change, such that our annuities no longer
offer tax-deferred advantages, demand for our products could materially
decrease.

Key Non-GAAP Financial Measures and Operating Measures

In addition to presenting our results of operations and financial condition in
accordance with U.S. GAAP, we use and report, selected non-GAAP financial
measures. Management believes that the use of these non-GAAP financial measures,
together with relevant U.S. GAAP financial measures, provides a better
understanding of our results of operations, financial
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condition and the underlying profitability drivers of our business. These
non-GAAP financial measures should be considered supplementary to our results of
operations and financial condition that are presented in accordance with U.S.
GAAP and should not be viewed as a substitute for the U.S. GAAP financial
measures. Other companies may use similarly titled non-GAAP financial measures
that are calculated differently from the way we calculate such measures.
Consequently, our non-GAAP financial measures may not be comparable to similar
measures used by other companies. These non-GAAP financial measures should not
be viewed as substitutes for the most directly comparable financial measures
calculated in accordance with U.S. GAAP.

We also use a number of operating measures that management believes provide
useful information about our businesses and the operational factors underlying
our financial performance.

Non-GAAP Financial Measures

Adjusted Operating Earnings

Adjusted Operating Earnings is an after-tax non-GAAP financial measure, which we
believe should be used to evaluate our financial performance on a consolidated
basis by excluding certain items that may be highly variable from period to
period due to accounting treatment under U.S. GAAP or that are non-recurring in
nature, as well as certain other revenues and expenses which we do not view as
driving our underlying profitability. Adjusted Operating Earnings should not be
used as a substitute for net income as calculated in accordance with U.S. GAAP.
However, we believe the adjustments to net income are useful for gaining an
understanding of our overall results of operations.

Adjusted Operating Earnings equals our net income adjusted to eliminate the
impact of the following items:

•  Fees Attributable to Guarantee Benefits: fees paid in conjunction with
guaranteed benefit features offered for certain of our variable annuities and
fixed index annuities are set at a level intended to mitigate the cost of
hedging and funding the liabilities associated with such guaranteed benefit
features. The full amount of the fees attributable to guaranteed benefit
features have been excluded from Adjusted Operating Earnings as the related net
movements in freestanding derivatives and net reserve and embedded derivative
movements, as described below, have been excluded from Adjusted Operating
Earnings. This presentation of our earnings is intended to directly align
revenue and related expenses associated with the guaranteed benefit features;

•  Net Movement in Freestanding Derivatives, except earned income (periodic
settlements and changes in settlement accruals) on derivatives that are hedges
of investments, but do not qualify for hedge accounting treatment: changes in
the fair value of our freestanding derivatives used to manage the risk
associated with our life and annuity reserves, including those arising from the
guaranteed benefit features offered for certain of our variable annuities and
fixed index annuities. Net movements in freestanding derivatives have been
excluded from Adjusted Operating Earnings because the market value of these
derivatives may vary significantly from period to period as a result of
near-term market conditions and therefore are not directly comparable or
reflective of the underlying profitability of our business;

•  Net Reserve and Embedded Derivative Movements: changes in the valuation of
certain life and annuity reserves, a portion of which are accounted for as
embedded derivative instruments, and which are primarily composed of variable
and fixed index annuity reserves, including those arising from the guaranteed
benefit features offered for certain of our variable annuities. Net reserve and
embedded derivative movements have been excluded from Adjusted Operating
Earnings because the carrying values of these derivatives may vary significantly
from period to period as the result of near-term market conditions and
policyholder behavior-related inputs and therefore are not directly comparable
or reflective of the underlying profitability of our business. Movements in
reserves attributable to the current period claims and benefit payments in
excess of a customer's account value on these policies are also excluded from
Adjusted Operating Earnings as these benefit payments are affected by near-term
market conditions and policyholder behavior-related inputs and therefore may
vary significantly from period to period;

•  Net Realized Investment Gains and Losses including change in fair value of
funds withheld embedded derivative: Realized investment gains and losses
associated with the periodic sales or disposals of securities, excluding those
held within our trading portfolio, as well as impairments of securities, after
adjustment for the non-credit component of the impairment charges and change in
fair value of funds withheld embedded derivative related to the Athene
Reinsurance Transaction;

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•  DAC and DSI Impact: amortization of deferred acquisition costs and deferred
sales inducements associated with the items excluded from Adjusted Operating
Earnings;

•  Assumption changes: the impact on the valuation of Net Derivative and Reserve
Movements, including amortization on DAC, arising from changes in underlying
actuarial assumptions;

• Loss on Athene Reinsurance Transaction: includes contractual ceding
commission, cost of reinsurance write-off and DAC and DSI write-off related to
the Athene Reinsurance Transaction;

• Net investment income on funds withheld assets: includes net investment
income on funds withheld assets related to funds withheld reinsurance
transactions;

•  Other items: one-time or other non-recurring items, such as costs relating to
the Demerger and our separation from Prudential, the impact of discontinued
operations and investments that are consolidated on our financial statements due
to U.S. GAAP accounting requirements, such as our investments in collateralized
loan obligations, but for which the consolidation effects are not aligned with
our economic interest or exposure to those entities; and

•  Operating income taxes are calculated using the prevailing corporate federal
income tax rate of 21% while taking into account any items recognized
differently in our financial statements and federal income tax returns,
including the dividends received deduction and other tax credits. For interim
reporting periods, the company uses an estimated annual effective tax rate in
computing its tax provision including consideration of discrete items.

As detailed above, the fees attributed to guaranteed benefits, the associated
movements in optional guaranteed benefit liabilities and related claims and
benefit payments are excluded from Adjusted Operating Earnings, as we believe
this approach appropriately removes the impact to both revenue and related
expenses associated with the guaranteed benefit features that are offered for
certain of our variable annuities and fixed index annuities and gives investors
a better picture of what is driving our underlying profitability.

The following is a reconciliation of Adjusted Operating Earnings to net income
(loss) attributable to Jackson Financial Inc., the most comparable U.S. GAAP
measure.

                                                   Three Months Ended September 30,            Nine Months Ended September 30,
                                                       2021                   2020                2021                2020
                                                                                 (in millions)
Net income (loss) attributable to Jackson
Financial, Inc.                                 $          206.2          $   (396.6)         $  2,597.7          $ (1,709.2)
Income tax expense (benefit)                               (16.4)             (157.0)              514.7              (580.8)
Pretax income (loss) attributable to Jackson
Financial Inc                                              189.8              (553.6)            3,112.4            (2,290.0)
Non-operating adjustments (income) loss:
Fees attributable to guarantee benefit reserves           (728.1)             (633.7)           (2,100.7)           (1,858.3)
Net movement in freestanding derivatives                   493.3             3,530.3             3,966.3               812.4
Net reserve and embedded derivative movements              996.7            (1,378.1)           (2,221.8)            5,158.6
DAC and DSI impact                                        (169.3)             (349.1)              283.8              (980.9)
Net realized investment gains (losses)
including change in fair value of funds
withheld embedded derivative                                79.1               355.4              (218.7)             (974.5)
Loss on Athene Reinsurance Transaction                         -                34.9                   -             2,081.6
Net investment income on funds withheld assets            (299.6)             (277.1)             (884.5)             (506.0)
Other items                                                  9.3               (83.3)               28.5               (12.4)
Total non-operating adjustments                            381.4             1,199.3            (1,147.1)            3,720.5
Pretax Adjusted Operating Earnings                         571.2               645.7             1,965.3             1,430.5
Operating income taxes                                      83.8                98.9               273.3               195.8
Adjusted Operating Earnings                     $          487.4          $    546.8          $  1,692.0          $  1,234.7



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Adjusted Book Value and Adjusted Operating ROE

We use Adjusted Operating ROE to manage our business and evaluate our financial
performance. Adjusted Operating ROE excludes items that vary from period to
period due to accounting treatment under U.S. GAAP or that are non-recurring in
nature, as such items may distort the underlying profitability of our business.
We calculate Adjusted Operating ROE by dividing our Adjusted Operating Earnings
by average Adjusted Book Value. Adjusted Book Value excludes AOCI attributable
to Jackson Financial Inc. AOCI attributable to Jackson Financial Inc. does not
include AOCI arising from investments held within the funds withheld account
related to the Athene Reinsurance Transaction. We exclude AOCI attributable to
Jackson Financial Inc. from Adjusted Book Value because our invested assets are
generally invested to closely match the duration of our liabilities, which are
longer duration in nature, and therefore we believe period-to-period fair market
value fluctuations in AOCI to be inconsistent with this objective. We believe
excluding AOCI attributable to Jackson Financial Inc. is more useful to
investors in analyzing trends in our business. Changes in AOCI within the funds
withheld account related to the Athene Reinsurance Transaction offset the
related non-operating earnings from the Athene Reinsurance Transaction resulting
in a minimal net impact on Adjusted Book Value of Jackson Financial Inc.

Adjusted Book Value and Adjusted Operating ROE should not be used as substitutes
for total stockholders' equity and ROE as calculated using net income and total
equity in accordance with U.S. GAAP. However, we believe the adjustments to
equity and earnings are useful to gaining an understanding of our overall
results of operations.

The following is a reconciliation of Adjusted Book Value to total stockholders'
equity and a comparison of Adjusted Operating ROE to ROE, the most comparable
U.S. GAAP measure:

                                                      Three Months Ended September 30,               Nine Months Ended September 30,
                                                           2021                   2020                   2021                   2020
                                                                                       (in millions)

Total stockholders' equity                         $       10,258.2           $ 9,375.8          $       10,258.2           $ 9,375.8
Adjustments
to total
stockholders'
equity:
Exclude accumulated other comprehensive income
attributable to Jackson Financial Inc. (1)                 (1,563.9)           (2,636.7)                 (1,563.9)           (2,636.7)
Adjusted Book Value                                $        8,694.3           $ 6,739.1          $        8,694.3           $ 6,739.1

ROE                                                             8.0   %           (17.4) %                   34.6   %           (28.1) %
Adjusted Operating ROE on average equity                       22.5   %            33.0  %                   27.4   %            24.3  %

(1) Excludes $481.3 million and $1,213.9 million related to the investments held within the funds withheld account related to the Athene
Reinsurance Transaction as of September 30, 2021 and September 30, 2020, respectively.

Operating Measures

Sales

Sales of annuities and institutional products include all money deposited by
customers into new and existing contracts. We believe sales statistics are
useful to gaining an understanding of, among other things, the attractiveness of
our products, how we can best meet our customers' needs, evolving industry
product trends and the performance of our business from period to period.

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                                             Three Months Ended September 30,           Nine Months Ended September 30,
                                                 2021                2020                  2021                   2020
                                                                             (in millions)
Sales
Variable annuities                           $  4,737.7          $ 4,457.9          $       14,232.7          $ 11,757.0
Fixed Index Annuities                              23.3               61.4                      92.3               949.8
Fixed Annuities                                     7.7                8.9                      27.0               315.3
Total Retail Annuity Sales                      4,768.7            4,528.2                  14,352.0            13,022.1

Total Institutional Product Sales                  43.4                  -                      43.4             1,284.2

Total Sales                                  $  4,812.1          $ 4,528.2          $       14,395.4          $ 14,306.3



Our new business annuities sales levels for the three and nine months ended
September 30, 2021 have been in line with the trends seen in the second half of
2020. For the three and nine months ended September 30, 2021, sales of variable
annuities were higher than in the three and nine months ended September 30,
2020, driven primarily by an increased level of sales of variable annuities
without lifetime living benefits. For the three and nine months ended
September 30, 2021, sales of fixed index annuities and fixed annuities remained
at historically low levels following pricing actions taken in early 2020. In
addition, there were $43.4 million in sales of institutional products during the
three and nine months ended September 30, 2021, compared to nil and $1.3 billion
during the comparable periods in the prior year.

Account Value

Account Value generally equals the policy account value of our variable
annuities, fixed index annuities, fixed annuities and institutional products. It
reflects the total amount of customer invested assets that have accumulated
within a respective product and equals cumulative customer contributions, which
includes gross deposits or premiums plus accrued credited interest plus or minus
the impact of market movements, as applicable, less withdrawals and various
fees. Annual average account value is calculated by averaging balances as of the
end of each month in the trailing 12-month period, as well as the ending balance
of the prior 12-month period. Quarterly average account value is calculated by
averaging balances as of the end of each month in the quarter, as well as the
ending balance of the prior quarter. We believe account value is a useful metric
in providing an understanding of, among other things, the sources of potential
fee income generation, potential benefit obligations and risk management
priorities.

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                                                                             As of September 30,
                                                                          2021                  2020
                                                                                (in millions)
Account Value
GMWB For Life                                                       $   179,806.7          $ 148,657.6
GMWB                                                                      7,078.9              6,196.2
Other Guarantees - Living Benefits                                        1,788.9              1,730.8
No Living Benefits                                                       57,731.8             47,948.9
Total Variable Annuity Account Value                                    246,406.3            204,533.5

Fixed Index Annuity (1)                                                     265.4                125.5
Fixed Annuity (1)                                                         1,098.6              1,066.6
Total Fixed & Fixed Index Annuity Account Value                           1,364.0              1,192.1

Total Retail Annuities Account Value                                $   

247,770.3 $ 205,725.6

Total Institutional Products Account Value                          $     

8,838.5 $ 12,310.8

Total Closed Life and Annuity Blocks Account Value (2)              $     

8,847.2 $ 9,183.3

(1) Net of reinsurance to Athene, where substantially all of our in-force fixed and fixed index annuity
product liabilities were reinsured, effective June 1, 2020.
(2) Excludes payout annuities and traditional life insurance without account value.

Net Flows

Net flows represents the net change in customer account balances during a
period, including gross premiums, surrenders, withdrawals and benefits. Net
flows excludes investment performance, interest credited to customer accounts,
transfers between fixed and variable benefits for variable annuities and policy
charges. We believe net flows is a useful metric in providing an understanding
of, among other things, sales, ongoing premiums and deposits, the changes in
account value from period to period, sources of potential fee income and
policyholder behavior.

                                                   Three Months Ended
                                                     September 30,                 Nine Months Ended September 30,
                                                 2021              2020                2021                2020
                                                                         (in millions)
Net Flows:
Variable Annuity                             $  (129.4)         $  885.3          $    (694.8)         $ 1,190.0
Fixed Index Annuity (1)                         (347.1)           (235.5)              (998.2)              12.1
Fixed Annuity (1)                               (249.8)           (257.0)              (786.0)            (637.2)
Total Retail Annuities Net Flows             $  (726.3)         $  392.8    

$ (2,479.0) $ 564.9

Total Institutional Products Net Flows $ (103.7) $ (115.0)

$ (2,384.3) $ (223.4)

Total Closed Life and Annuity Blocks Net
Flows (2)                                    $   (65.4)         $  (62.3)   

$ (209.9) $ (218.8)

(1) Gross of reinsurance to Athene.
(2) Excludes payout annuities and traditional life insurance without account value.

The decrease in net flows for the three and nine months ended September 30,
2021, was primarily due to strong variable annuity sales being exceeded by
surrender and death benefit outflows from our large in-force block.

Benefit Base

Benefit base refers to a notional amount that represents the value of a
customer's guaranteed benefit, and therefore may be a different value from the
invested assets in a customer's account value. The benefit base may be used to
calculate the fees
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for a customer's guaranteed benefits within an annuity contract. The guaranteed
death benefit and guaranteed living benefit within the same contract may not
have the same benefit base. We believe benefit base is a useful metric for our
variable annuity policies in providing an understanding of, among other things,
fee income generation, potential optional guarantee benefit obligations and risk
management priorities.

                                                                 September 30, 2021                             December 31, 2020
                                                         Account Value          Benefit Base           Account Value          Benefit Base
                                                                                           (in millions)
No Living Benefits                                     $     57,731.8                      N/A       $     53,021.6                      N/A

By Guaranteed Living Benefits:

 GMWB for Life                                              179,806.7             178,354.8               167,007.2             160,225.7
 GMWB                                                         7,078.9               5,834.6                 6,807.4               5,557.7
 GMIB (1)                                                     1,788.9               2,096.8                 1,826.5               2,216.3
 GMAB                                                               -                     -                    49.2                   7.2
Total                                                  $    246,406.3          $  186,286.2          $    228,711.9          $  168,006.9

By Guaranteed Death Benefit:

 Return of AV (No GMDB)                                $     28,821.6                      N/A       $     26,368.6                      N/A
 Return of Premium                                          188,608.5             133,447.5               174,678.2             128,481.5
 Highest Anniversary Value                                   15,015.1              14,606.2                14,322.9              13,175.2
 Rollup                                                       4,119.1               4,906.3                 4,061.8               5,005.5
 Combination HAV/Rollup                                       9,842.0              10,294.0                 9,280.4               9,447.0
Total                                                  $    246,406.3          $  163,254.0          $    228,711.9          $  156,109.2

(1) Substantially all of our GMIB benefits are reinsured.

AUM

AUM, or assets under management, refers to investment assets that are managed by
one of our subsidiaries and includes: (i) the assets in our investment portfolio
managed by PPM, which excludes assets held in funds withheld accounts for
reinsurance transactions, (ii) other assets managed by PPM, including those for
Prudential and its affiliates or third parties and (iii) the separate account
assets of our Retail Annuities segment which JNAM administers. Total AUM
reflects exclusions between segments to avoid double counting. We believe AUM is
a useful metric for understanding of, among other things, the sources of our
earnings, net investment income and performance of our invested assets, customer
directed investments and risk management priorities.

                                                    September 30,       December 31,
                                                         2021               2020
                                                             (in millions)
Jackson Invested Assets                            $     47,400.6      $   49,832.2
Former Asia Affiliates Invested Assets                   26,721.4          

31,009.4

Former United Kingdom Affiliates Invested Assets 2,071.6 22,882.1
Other Third Party Invested Assets

                         2,922.0           2,253.9
Total PPM AUM                                            79,115.6         105,977.6
Total JNAM AUM                                          268,452.0         255,668.7
Total AUM                                          $    347,567.6      $  361,646.3



PPM manages the majority of our investment portfolio and provides investment
management services to former affiliates in Asia and the United Kingdom and
other third parties across markets, including public fixed income, private
equity, private debt and commercial real estate. Since December 31, 2020, PPM's
assets under management have decreased, primarily due to withdrawals by the
former United Kingdom affiliate.

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