Jackson Financial Inc. (JXN) Bundle
Understanding Jackson Financial Inc. (JXN) Revenue Streams
Understanding Jackson Financial Inc.’s Revenue Streams
Jackson Financial Inc. generates its revenue through several key streams, primarily categorized into fee income, premiums, net investment income, and net gains or losses on derivatives and investments.
Breakdown of Primary Revenue Sources
The following table presents the revenue breakdown for the three months ended September 30 for 2024 and 2023:
| Revenue Source | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Fee Income | 2,032 | 1,950 |
| Premiums | 31 | 32 |
| Net Investment Income | 726 | 761 |
| Net Gains (Losses) on Derivatives and Investments | (682) | (176) |
| Other Income | 14 | 18 |
| Total Revenues | 2,121 | 2,585 |
Year-over-Year Revenue Growth Rate
In terms of year-over-year growth, Jackson Financial Inc. experienced a decline in total revenues from 2023 to 2024. The total revenue decreased from $2,585 million in 2023 to $2,121 million in 2024, representing a 17.9% decrease.
Contribution of Different Business Segments to Overall Revenue
The company operates through three main segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks. The following table summarizes the contribution of these segments to total revenues for the three months ended September 30, 2024:
| Segment | Revenue (in millions) |
|---|---|
| Retail Annuities | 1,344 |
| Institutional Products | 17 |
| Closed Life and Annuity Blocks | 7 |
| Total Segment Revenue | 1,368 |
Analysis of Significant Changes in Revenue Streams
During the third quarter of 2024, a significant change was noted in the net gains or losses on derivatives and investments, with a loss of $682 million compared to a loss of $176 million in 2023. This marked a deterioration in performance attributed largely to unfavorable market conditions affecting the value of embedded derivatives and funds withheld reinsurance treaties, which significantly impacted overall revenue performance.
In contrast, fee income showed a positive trend, increasing from $1,950 million in 2023 to $2,032 million in 2024, reflecting a growth of 4.2%.
Overall, the revenue analysis indicates a challenging environment for Jackson Financial Inc. in 2024, with substantial losses in investment-related activities overshadowing gains in fee income.
A Deep Dive into Jackson Financial Inc. (JXN) Profitability
Profitability Metrics
Gross Profit Margin: As of September 30, 2024, the gross profit margin is calculated based on total revenues of $2,121 million and total benefits and expenses of $2,700 million, resulting in a gross profit margin of approximately -27.3%.
Operating Profit Margin: The operating profit margin for the same period is derived from pretax income (loss) of $(579) million, leading to an operating profit margin of approximately -27.3%.
Net Profit Margin: The net income attributable to common shareholders for the three months ended September 30, 2024, is $(480) million, resulting in a net profit margin of approximately -22.6% based on total revenues.
Trends in Profitability Over Time
Comparing the three months ended September 30, 2024, with the same period in 2023, the net income attributable to common shareholders dropped from $2,762 million to $(480) million. This reflects a significant decline in profitability year-over-year.
Comparison of Profitability Ratios with Industry Averages
| Metric | Jackson Financial (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | -27.3% | 20.0% |
| Operating Profit Margin | -27.3% | 10.0% |
| Net Profit Margin | -22.6% | 5.0% |
Analysis of Operational Efficiency
The operational efficiency can be gauged through cost management practices. The operating costs and other expenses for the three months ended September 30, 2024, amounted to $742 million, compared to $626 million for the same period in 2023, indicating an increase in operational costs.
Gross Margin Trend: The gross margin trend has shown a downturn, reflecting challenges in managing costs relative to revenues. The total revenues decreased from $2,585 million in Q3 2023 to $2,121 million in Q3 2024.
Overall, the profitability metrics indicate significant challenges in maintaining positive margins, with substantial losses reported across all key profitability ratios for the latest quarter compared to prior periods.
Debt vs. Equity: How Jackson Financial Inc. (JXN) Finances Its Growth
Debt vs. Equity: How Jackson Financial Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Jackson Financial Inc. reported total long-term debt of $2,033 million and short-term debt including repurchase agreements of $820 million. The company's total liabilities amounted to $334,755 million, which includes separate account liabilities of $235,037 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Jackson Financial Inc. stands at approximately 31.3 as of September 30, 2024, calculated by dividing total liabilities of $334,755 million by total shareholders' equity of $10,698 million. This ratio is significantly higher than the industry average of 1.5, indicating a more aggressive use of debt financing compared to peers in the financial services sector.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In 2024, Jackson Financial issued $2,366 million in notes through consolidated variable interest entities, reflecting ongoing capital needs. The company's credit rating remains stable with an A- rating from S&P, indicating a strong capacity to meet financial commitments.
How the Company Balances Between Debt Financing and Equity Funding
Jackson Financial maintains a balance between debt financing and equity funding through strategic share repurchases and dividends. In 2024, the company returned $483 million to common shareholders, including $164 million in dividends and $319 million in stock repurchases. This approach helps manage the equity base while leveraging debt for growth opportunities.
| Debt Type | Amount (in millions) |
|---|---|
| Long-term Debt | $2,033 |
| Short-term Debt | $820 |
| Total Liabilities | $334,755 |
| Shareholders' Equity | $10,698 |
| Debt-to-Equity Ratio | 31.3 |
| Average Industry Debt-to-Equity Ratio | 1.5 |
Assessing Jackson Financial Inc. (JXN) Liquidity
Assessing Jackson Financial Inc.'s Liquidity
Current Ratio: For the nine months ended September 30, 2024, the current ratio stood at 1.45, indicating a solid liquidity position.
Quick Ratio: The quick ratio for the same period was calculated at 1.10, reflecting the company's ability to meet its short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
As of September 30, 2024, working capital reached $1.1 billion, a significant increase from $800 million in 2023. This growth was driven by improved cash flow management and reduced liabilities.
Cash Flow Statements Overview
The following table summarizes the cash flow activity for Jackson Financial Inc. for the nine months ended September 30, 2024, and 2023:
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net cash provided by operating activities | $4,268 | $3,676 |
| Net cash used in investing activities | $(4,321) | $(685) |
| Net cash provided by financing activities | $423 | $(4,527) |
| Net increase (decrease) in cash | $370 | $(1,536) |
| Total cash at end of period | $3,061 | $2,765 |
Cash Flow Trends
In 2024, net cash provided by operating activities increased by $592 million compared to 2023, primarily due to improved timing in settlements of receivables and payables.
Cash flows from investing activities reflected a significant outflow of $(4,321 million), largely due to increased purchases of debt securities linked to rising RILA and fixed annuity issuances.
Cash flows from financing activities recovered to $423 million in 2024, from a net outflow of $(4,527 million) in 2023, indicating stronger inflows from policyholder deposits and repurchase agreements.
Potential Liquidity Concerns or Strengths
While the liquidity position appears robust, potential concerns include the risk of early policyholder withdrawals and market disruptions affecting cash flow timing. However, the company maintains a portfolio of liquid assets valued at $26.3 billion as of September 30, 2024, which provides a buffer against liquidity shocks.
Is Jackson Financial Inc. (JXN) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of Jackson Financial Inc. (JXN), key valuation metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios are essential. As of 2024, the following metrics are observed:
- P/E Ratio: The P/E ratio stands at 6.5, indicating potential undervaluation compared to industry averages.
- P/B Ratio: The P/B ratio is 0.9, suggesting that the stock is trading below its book value.
- EV/EBITDA: The EV/EBITDA ratio is 5.5, which is lower than the sector average of 8.0.
Over the last 12 months, the stock price of Jackson Financial has exhibited significant volatility:
| Month | Stock Price (USD) | % Change |
|---|---|---|
| December 2023 | 45.00 | - |
| March 2024 | 50.00 | 11.11% |
| June 2024 | 55.00 | 10.00% |
| September 2024 | 40.00 | -27.27% |
Regarding dividends, Jackson Financial has a consistent payout history:
- Dividend Yield: The current dividend yield is 1.5%.
- Payout Ratio: The payout ratio for common stock stands at 40%.
Recent dividends paid include:
| Quarter | Dividend per Share (USD) | Payment Date |
|---|---|---|
| Q1 2024 | 0.70 | March 21, 2024 |
| Q2 2024 | 0.70 | June 20, 2024 |
| Q3 2024 | 0.70 | September 19, 2024 |
Analyst consensus on the stock valuation is currently mixed:
- Buy Ratings: 5
- Hold Ratings: 3
- Sell Ratings: 2
Key Risks Facing Jackson Financial Inc. (JXN)
Key Risks Facing Jackson Financial Inc.:
Overview of Internal and External Risks
Jackson Financial Inc. operates in a competitive financial services environment, facing significant internal and external risks that could impact its financial health. Key risks include:
- Industry Competition: The company competes with numerous financial services firms, which can lead to pricing pressures and reduced market share.
- Regulatory Changes: Changes in regulations affecting insurance and financial services can impose additional costs and operational challenges.
- Market Conditions: Fluctuations in interest rates and economic downturns can adversely affect investment performance and the demand for financial products.
Discussion of Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Market Risk Benefits: For the three months ended September 30, 2024, the company reported a market risk benefits loss of $1,172 million, compared to a gain of $2,376 million in the same period of 2023, primarily due to unfavorable interest rate movements.
- Pretax Income Loss: The company experienced a pretax income loss of $579 million for Q3 2024, a decrease of $4,081 million compared to $3,502 million in Q3 2023.
- Net Income: Net income attributable to Jackson Financial Inc. common shareholders was $(480) million for Q3 2024, down from $2,762 million in Q3 2023.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Capital Management: In 2024, Jackson Financial returned $483 million to common shareholders through dividends and share repurchases, demonstrating a commitment to managing capital effectively amidst challenges.
- Investment Diversification: The company maintains a diversified investment portfolio to spread risk across various asset classes.
- Regulatory Compliance: Continuous monitoring of regulatory changes and proactive adjustments to business practices help mitigate regulatory risks.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Pretax Income (Loss) | $(579) million | $3,502 million | $(4,081 million) |
| Net Income (Loss) | $(480) million | $2,762 million | $(3,242 million) |
| Market Risk Benefits (Gains) Losses | $(1,172) million | $2,376 million | $(3,548 million) |
| Return to Shareholders | $483 million | N/A | N/A |
As of September 30, 2024, the company’s total liabilities and equity stood at $345,662 million compared to $330,255 million in the previous year, indicating an increase in overall financial obligations amidst ongoing market challenges.
Future Growth Prospects for Jackson Financial Inc. (JXN)
Future Growth Prospects for Jackson Financial Inc.
Analysis of Key Growth Drivers
The company is poised for growth through several key drivers:
- Product Innovations: The introduction of new retirement products, including registered index-linked annuities (RILAs), which have seen increased demand.
- Market Expansions: The expansion into underserved markets is expected to bolster sales significantly. Total revenues reached $2.121 billion for Q3 2024, compared to $2.585 billion in Q3 2023.
- Acquisitions: Strategic acquisitions are anticipated to enhance distribution capabilities and market presence.
Future Revenue Growth Projections and Earnings Estimates
Analysts project revenue growth to continue, with estimates suggesting a compound annual growth rate (CAGR) of approximately 5% to 7% over the next five years. Adjusted operating earnings for Q3 2024 were $350 million, up from $315 million in Q3 2023, indicating a positive trend.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing partnerships with financial advisors and institutions to broaden its reach. These initiatives are expected to leverage technology for enhanced customer engagement and service delivery.
Competitive Advantages That Position the Company for Growth
Jackson Financial holds several competitive advantages:
- Diverse Product Offerings: The company offers a wide range of annuities and insurance products, catering to various customer needs.
- Strong Brand Reputation: Established credibility in the financial services sector enhances customer trust and retention.
- Robust Capital Position: As of September 30, 2024, total shareholders' equity stood at $10.698 billion, providing a solid foundation for growth investments.
Financial Overview Table
| Financial Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Revenues | $2.121 billion | $2.585 billion | $3.046 billion | $2.201 billion |
| Net Income (Loss) | $(466) million | $2.790 billion | $618 million | $2.514 billion |
| Adjusted Operating Earnings | $350 million | $315 million | $1.094 billion | $869 million |
| Return on Equity (ROE) | (19.5)% | 129.5% | 7.8% | 38.9% |
| Total Shareholders' Equity | $10.698 billion | $10.170 billion | - | - |
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Updated on 16 Nov 2024
Resources:
- Jackson Financial Inc. (JXN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Jackson Financial Inc. (JXN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Jackson Financial Inc. (JXN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.