Jackson Financial took a hit to its net income attributable to common stockholders due to an unfavorable net hedging result.

In its quarterly financial results, Jackson reported that its net income attributable to common shareholders was $264 million in the second quarter — a significant drop from $1.2 billion in the same period last year.

In disclosing the results, the company noted that “the decrease in net income in the current period was primarily due to an unfavorable net hedging result compared to the second quarter of the previous year. The second quarter of the previous year reflected greater gains in market risk as a result of relatively larger increases in interest rates and more favorable fund performance.

“Net income for the current quarter reflects a gain of $71 million from business reinsured to third parties, while the prior year second quarter included a gain of $118 million.”

However, Jackson noted that the company’s legal capital or free cash flow is not affected and the net impact on shareholders’ equity is minimal.

The pension expert’s adjusted operating profit was $410 million, up from $283 million a year ago.

“Jackson’s second quarter results highlight the strength of our distribution and consistent capital generation,” said Laura Preskorn, Jackson’s president and CEO. “Our retail annuity sales increased 36% versus the second quarter of 2023 driven by record sales of Registered Index-Linked Annuities (RILAs) which further diversify our product mix.

“Consistent with our transition to smaller periodic distributions to operating companies, Jackson National Life distributed $250 million to its parent company during the second quarter.

“We are relatively well positioned with respect to our financial targets, having maintained over $1 billion of excess capital above our minimum target risk-based capital (RBC) ratio of 425%, returned $144 million to common shareholders during the second quarter, and increased our excess cash in the holding company.”

They expect to build on this momentum through the remainder of 2024, Preskorn added.

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