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Jackson Financial’s third-quarter revenue missed the consensus, while its non-GAAP profit of $7.67 per share was 5.9% above the consensus. CFO Brian Walta said that earnings measure excludes notable items and uses the company’s 15% tax guidance.
Jackson reported Q3 FY2026 revenue of $1.5 billion, compared with $1.4 billion a year earlier, and diluted earnings per share of $12.37, versus $0.92. Its operating margin was 64.9%, compared with 5.08% a year earlier. CEO Don Cummings said fee income and growth in spread income contributed to adjusted operating earnings of $7.55 per diluted share.
Cummings said retail annuity sales exceeded $6.5 billion, up 22% from the prior-year quarter. Walta reported $281 million of free capital generation after the capital needed to support new business, and holding-company free cash flow of $275 million, up 27% year over year. Jackson’s estimated risk-based capital ratio ended the quarter at 524%, above its 425% risk appetite.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.5 billion | $1.4 billion | 8.90% |
| Diluted EPS | $12.37 | $0.92 | 1,244.6% |
| Gross margin | −68.7% | −120.3% | 51.5 percentage points |
| Operating margin | 64.9% | 5.08% | 59.8 percentage points |
| Free cash flow | $1.4 billion | $1.4 billion | 3.43% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $6.16 | $5.10 | Beat by 20.8% |
| Revenue | $1.9 billion | $1.9 billion | Beat by 0.75% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Don Cummings said nearly 60% of retail annuity sales came from spread-based products. CFO Brian Walta said registered index-linked annuity, or RILA, sales reached $3 billion, up 44% year over year, while fixed and fixed-indexed annuity sales rose 79% to $796 million. Cummings said equity markets contributed to higher variable annuity surrenders, but inflows into other products supported the overall net-flow trend.
Walta said the TPG partnership broadened investment opportunities and supported yields on new money, while growth in fee-based and spread-based assets was offset by higher acquisition costs associated with annuity sales. He said limited partnership returns fell below the company’s long-term assumption, reducing quarterly earnings by $0.24 per share.
Cummings said Jackson had been named the exclusive annuity provider for AARP members, with selected fixed and fixed-index annuities available through a direct-to-consumer platform. He expects the program to launch initially in 10 states later in November, with national availability targeted for the first half of 2027.
Discussing Brooke Re, Jackson’s captive reinsurer, Walta said its settlement period helps manage the timing difference between long-duration liabilities and shorter-term hedge cash flows. Asked about liquidity, Cummings said rising equities and interest rates can produce hedge losses and a liquidity headwind at Brooke Re even as they benefit Jackson overall. Walta added that a portion of the outstanding reinsurance balance is offset by internal trades linked to RILA hedging.
Walta said the fourth-quarter assumption review was still underway and that higher lapse rates would enter its analysis. He declined to speculate on the financial impact, saying, “we don’t know the impact at this point in time.” He said Jackson would provide details with year-end earnings and additional Brooke Re disclosures at year-end.
Guidance
CFO Brian Walta said he expects the risk-based capital headwind associated with trailing fixed and fixed-indexed annuity sales to moderate, absent a further meaningful increase in sales.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Share repurchases, Total Capital Return Including Dividends | FY2026 | $900.0 million–$1.1 billion | — | New |
| Free cash flow, Free Capital Generation | FY2026 | $1.2 billion | — | New |