Jackson Financial Inc. (NYSE:JXN) Q4 2023 Earnings Call Transcript
Jackson Financial Inc. (NYSE:JXN) Q4 2023 Earnings Call Transcript February 22, 2024
Jackson Financial Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning and I would like to welcome you all to the Jackson Financial Inc. Fourth Quarter 2023 Earnings Call. My name is Brika and I will be the moderator for today’s conference. [Operator Instructions] I would now like to pass the conference over to your host, Liz Werner, Head of Investor Relations from Jackson Financial to begin. So Liz, please go ahead.
Liz Werner: Good morning, everyone and welcome to Jackson’s fourth quarter and full year 2023 earnings call. Today’s remarks may contain forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based upon management’s current expectations. Jackson’s filings with the SEC provide details on important factors that may cause actual results or events to differ materially. Except as required by law Jackson is under no obligation to update any forward-looking statements if circumstances or management’s estimates or opinions should change. Today’s remarks also refer to certain non-GAAP financial measures. The reconciliation of those measures to the most comparable U.S. GAAP figures is included in our earnings release, financial supplement and earnings presentation.
All of which are available on the Investor Relations page of our website at investors.jackson.com. Joining us today are our CEO, Laura Prieskorn; our CFO, Marcia Wadsten; our Head of Asset Liability Management and Chief Actuary, Steve Binioris; and our President and Chief Investment Officer of PPM, Craig Smith. At this time, I’ll turn the call over to our CEO, Laura Prieskorn.
Laura Prieskorn: Thank you, Liz. Good morning, everyone and welcome to our fourth quarter and full year 2023 earnings call. We have quite a bit to cover today, so will allow extra time to provide updates and answer your questions. We will start with a review of our strong track record of capital return and success in delivering on our financial targets, followed by an overview of our fourth quarter and full year 2023 results. We will also provide insights into the structure and strategic benefits of Brook Life Reinsurance Company, or Brook Re, our recently formed captive reinsurer. In prior quarters, we discussed our focus on finding a durable solution to the statutory impact of the cash surrender value floor with the goal of better aligning our reserve liability with the economics of our business.
By addressing the statutory requirements associated with the cash surrender value floor, Brook Re provides the ability for more stable capital generation and reduced RBC volatility. It also allows the profitability of our healthy variable annuity book to be more transparent and intuitive in our results. Finally, we will conclude today’s remarks with our 2024 outlook and financial targets, along with our expectations for sustainable capital return to shareholders. Turning to Slide 3. Jackson’s capital return to common shareholders since becoming a standalone public company in 2021 has exceeded $1.2 billion in the form of share repurchases and shareholder dividends. The fourth quarter of 2023 marked our ninth consecutive quarter with share buyback activity.
And as of year end 2023, the cumulative common shares repurchased represented over 21% of shares outstanding at separation. We view our cash dividend as a valuable source of sustainable capital return and have cumulatively paid more than $450 million to common shareholders in just over 2 years. Yesterday, we announced our Board’s approval of the third increase in our common shareholder quarterly dividend to $0.70 per share, highlighting our confidence in our ability to generate capital, our focus on long-term profitability and our commitment to increasing shareholder value. Moving to Slide 4. Maintaining a strong capital position at our operating companies and parent companies, Jackson Financial, remains a priority as evidenced again this quarter.
We ended 2023 above our RBC target range with an estimated ratio of 624% and with total adjusted statutory capital of more than $5 billion. In January, we established Brook Re to be self-sustaining from a capital standpoint, both initially and into the future. Pro forma for the transactions with Brook Re, Jackson National Life has an estimated RBC ratio of 543% and consistent with our guidance and our quarterly track record of being within or above our target RBC range. Going forward, we expect Jackson National Life statutory earnings and distribution capacity will more closely align with our adjusted operating earnings. Our holding company liquidity at year end continue to be well above our targeted minimum level and was approximately $600 million.
As scheduled in November, we repaid $600 million in senior debt, further enhancing our financial flexibility and resilient balance sheet. Holding company liquidity supports our capital return goals and provides a buffer for covering holding company expenses. In 2023, we returned $464 million to common shareholders through share repurchases and common dividends, comfortably within our target range for capital return of $450 million to $550 million. Our remaining common share repurchase authorization of approximately 300 million combined with our holding company liquidity, position us well for reaching our 2024 target and building on our track record of consistent shareholder returns. Jackson has consistently achieved or exceeded its financial target commitment and has maintained a strong capital position throughout.
Our first 12-month capital return target was achieved within 6 months, and we have consistently raised our annual financial targets. We are pleased to share we are once again increasing our financial return targets in 2024, and we’ll share more details later in the call. Moving to Slide 5. 2023 was a fantastic year of execution for Jackson with our financial performance, highlighting the strong fundamentals of our business. Net income for the year was nearly $900 million and adjusted operating earnings were $1.1 billion. In 2023, we navigated volatile markets and maintained a resilient capital position, delivering on our commitments and investing in our business. Our statutory capital discipline allowed us to meet and exceed our financial targets while also capitalizing Brook Re in January 2024.
Beginning in 2024, and subject to regulatory approval, we intend to have periodic distributions from our operating company throughout the year with the goal of reducing the RBC volatility that occurred from our past practice of sizable annual dividend. Variable annuity sales remained relatively stable over the course of the year, and we have seen VA profitability improved with the rise in interest rates. Consumer preference for protection-oriented products impacted the broader annuity market and Jackson market demand through our registered index-linked annuity or RILA product suite. In our second full year selling RILA, sales were nearly $3 billion, up 60% from 2022. Notably, RILA sales in the fourth quarter alone reached $1 billion, accounting for nearly one-third of our total annuity sales and reaching a $4 billion annual run rate.
For Jackson, RILA’s value proposition goes beyond sales diversification and positive net flows. RILA also contributes to hedging efficiency, which in turn, positively impacts capital. We have a long history of product innovation, strong distribution partnerships and industry-leading service. These strengths, combined with the enhancements made to our RILA’s suite earlier this year positioned Jackson well for continued RILA sales momentum. Our consistent ability to execute enables us to achieve our strategic and operational goals and serves as the foundation of our results. Summing it up on Slide 6, 2023 was a terrific year of progress for Jackson. We met or exceeded all financial targets for the third consecutive time, ended 2023 with robust levels of capital and liquidity, grew our RILA business and continue to create long-term value for shareholders.
I’ll now turn the call over to Marcia to review our fourth quarter and full year financials and provide an overview of our Brook Re transaction.
Marcia Wadsten: Thank you, Laura. I’ll begin with our fourth quarter results summary on Slide 7. Adjusted operating earnings of $204 million decreased from last year’s fourth quarter as stronger fee and spread earnings were more than offset by higher expenses as well as the impact of our annual assumption review update. Our fourth quarter adjusted book value attributable to common shareholders increased from last year’s fourth quarter due to healthy full year adjusted operating earnings. Slide 8 outlines the notable items included in adjusted operating earnings for the fourth quarter. Results from limited partnership investments, which report on a 1-quarter delay were below our long-term expectation for a negative $28 million notable impact.
In the fourth quarter of 2022, limited partnership income was below our long-term expectations, but to a greater degree, creating a comparative pre-tax benefit in the current quarter of $34 million. Consistent with prior years, we completed our annual actuarial assumptions review in the fourth quarter. This led to an unfavorable pre-tax adjusted operating earnings impact of $60 million in the current quarter compared to a benefit of $38 million in the fourth quarter of 2022. The impact in 2023 was focused in the closed block segment where we recorded a reserve increase for life insurance and annuitization benefits driven by a decrease in lapses partially offset by an increase in the long-term earned rate. In addition to these notable items, both fourth quarter 2022 and fourth quarter 2023 benefited from a lower effective tax rate relative to the 15% long-term guidance with a larger benefit in the current quarter.
This occurred due to lower pre-tax operating earnings in the current quarter, which made tax benefits that are similar on a dollar basis more impactful. Adjusted for both the notable items and the tax rate difference, earnings per share were $3.07 for the current quarter compared to $3.37 in the prior year’s fourth quarter. Key drivers of the year-over-year difference include higher levels of market-related costs within operating expenses resulting from stronger equity markets as well as lower on operating derivatives from higher levels of floating interest rates. While higher equity markets and interest rates created this near-term reduction in adjusted operating earnings, they provide a positive tailwind for future adjusted operating earnings due to a significantly larger fee base and an improved profitability profile.
Slide 9 shows the same analysis, but on a full year basis. Earnings per share in 2023 after adjusting for the notable items were down 18% compared to full year 2022. Consistent with the fourth quarter of 2023, this was primarily the result of lower income on operating derivatives and higher levels of market-related costs. As noted for the quarter, the same tailwinds from higher rates and equity markets will benefit earnings going forward. Slide 10 illustrates the reconciliation of our fourth quarter pre-tax adjusted operating earnings of $203 million to the pre-tax loss attributable to Jackson Financial of $2 billion. As shown in the table, the total guaranteed benefits and hedge results or net hedge result was a loss of $990 million in the fourth quarter of 2023.
Starting from the left side of the chart, you see a robust guaranteed benefit fee stream of $780 million, providing significant resources to support the hedging of our guarantees. These guaranteed benefit fees are calculated based on the benefit base rather than the account value, which provides stability to the guaranteed fee stream, protecting our hedge budget when markets decline. Consistent with our practice, all guarantee fees are presented in non-operating income to align with the related hedging and liability movements. There was a $43 million gain on freestanding derivatives primarily due to gains on interest rate hedges in a quarter where interest rates were down across the yield curve, mostly offset by losses on equity hedges in a rising equity market environment.
Movements in net market risk benefits, or net MRB drove a $1.2 billion loss that more than offset the freestanding derivative movements due in large part to the same interest rate decreases. This illustrates that net income has historically included changes in liability values under U.S. GAAP accounting that have not aligned well with our hedging assets. As I will discuss later, we would expect going forward that U.S. GAAP accounting will better align with our economic hedging with the establishment and funding of the reinsurance relationship with Brook Re leading to lower levels of net hedging gains or losses. Non-operating results also included $841 million of losses from business reinsured to third parties. This was primarily due to a loss on the funds withheld reinsurance treaty due to the change in the associated embedded derivative value and the related net investment income.
These non-operating items, which can be volatile from period to period are offset by changes in accumulated other comprehensive income, or AOCI, and in the funds withheld account related to reinsurance, resulting in a minimal net impact on Jackson’s adjusted book value. Furthermore, these items do not impact our statutory capital or free cash flow. Our segment results start on Slide 11 with retail annuity. As Laura highlighted, our RILA product continues to gain momentum with our fourth quarter sales reaching a record level of more than $1 billion, supporting further diversification in our top line. Sales of without lifetime benefits increased to 53% of our total retail sales, up from 43% in the fourth quarter of last year. While recent consumer preference for protection results in VA sales below historical levels, higher interest rates provide an even stronger profitability profile on current sales.
When viewed through a net flow lens, the gross sales we are generating in RILA and other spread products translated to $1 billion of non-VA net flow in the fourth quarter of 2023, which has grown materially over time. These net flows provide valuable economic diversification and capital efficiency benefits. Importantly, our overall sales mix remains efficient from the standpoint of new business strain. Looking at pre-tax adjusted operating earnings for our Retail Annuities segment on Slide 12, we show positive underlying trends in the growth across our annuity product categories as demonstrated by assets under management, or AUM. Our variable annuity account values grew by double digits, benefiting from stronger equity markets. Spread income continues to benefit from higher interest rates and strong net flows are driving growth in RILA, fixed and fixed indexed annuity account values.
Furthermore, the positive momentum for our enhanced RILA’s suite positions us well for ongoing success as we enter 2024. RILA growth has an added benefit to our hedging efficiency as it has an upside equity risk profile that offsets the downside equity risk profile in our guaranteed VA business. Netting these risks reduce the fee amount of external equity hedging required to protect our business and this reduction grew to 14% as of the fourth quarter of 2023. As you can see, the benefit is not dollar for dollar as our $5 billion of RILA account value is offsetting a larger amount of VA guaranteed equity exposure, illustrating that we can rapidly grow this hedging offset benefit as RILA AUM increases. Our other operating segments are shown on Slide 13.
For our institutional segment, pre-tax adjusted operating earnings were up from the prior year due to higher spread income and reduced interest expense. Sales in 2023 totaled $1.1 billion and account values ended the year at $8.4 billion. Our Closed Life and Annuity Blocks segment reported lower pre-tax adjusted operating earnings compared to the prior year. This is primarily due to the assumptions review impact I discussed earlier, partially offset by lower expenses. Slide 14 summarizes our year-end capital position. We returned $117 million to common shareholders in the fourth quarter through a combination of dividends and share repurchases. And we reached our capital return target for the third straight time since becoming a public company.
As Laura mentioned earlier, we also announced a 13% increase in our first quarter common dividend to $0.70 per share. We generated significant regulatory capital or TAC in the quarter, driven by the profitability of our variable annuity book and effective risk management. Our TAC increased by approximately $700 million to $5.2 billion, reflecting positive variable annuity net guarantee results, strong base contract cash flows and tax effect. As we move closer to the end of the year, we began to transition our hedging to align more with our captive new modified GAAP approach, adding meaningful interest rate protection. This increased level of protection led to hedging gains when interest rates declined in December, which had little offset in regulatory capital due to our deeply floored out reserve position and contributed to the gain in capital in the fourth quarter.
These gains on interest rate hedges reflected an offset to the impact of lower rates on modified GAAP liabilities in Brooke Re and helped to fund the initial capitalization I will discuss in a few moments. As we noted in our 8-K in December, we expected JNL to remain at or above our target RBC range after the formation of Brooke Re, which we were positioned to do whether interest rates rose or declined in December. There was an additional benefit from a lower level of required capital or CAL, which was driven by strong equity markets, partially offset by lower interest rates. The combined effects of the TAC increase and CAL reduction led to our estimated RBC ratio rising to 624% well above our target range. Our holding company cash and highly liquid asset position at the end of the year was approximately $600 million, which continues to be well above our minimum buffer.
We repaid the $600 million senior debt obligation that matured in November and have no debt maturities until 2027. In the midst of Jackson’s progress in 2023, the execution of our innovative long-term solution to the cash surrender value floor was certainly a highlight, which we dive into beginning on Slide 16. Here, we show the non-economic aspects of the cash surrender value floor within statutory reserves and required capital. Statutory accounting for variable and uses a principal-based reserving approach looking at the present value of cash flows across a distribution of thousands of scenarios. It then focuses on the tail of these outcomes to determine the level of statutory reserves and required capital. These cash flow-based outcomes would be represented by the red line on the chart, where you can see that as you move left to right toward more favorable scenarios, the requirement gets smaller and smaller.
The statutory framework also considers the aggregate cash surrender value, or CSV, of the variable annuity book, which is the amount due to policyholders in the unlikely event that 100% of all policyholders immediately surrendered their annuity. The statutory framework forces the cash flow-based scenario requirements to be overwritten by this cash surrender value, if that surrender value exceeds the cash flow-based outcome. This is illustrated by the base line in the chart where only the extreme portion of the tail is above the cash surrender value and the remainder of the distribution is floored out. This has been a common issue for years at Jackson as our prudently designed and priced variable annuity book led to healthy cash flow-based outcomes and a large portion of these scenarios floored at the CSV.
We successfully managed this dynamic for many years, protected our balance sheet and generated significant distributable capital. However, the rise in interest rates pushed this impact further and further into the tail of the distribution. We continue to successfully navigate the situation, but the greater impact of the CSC floor led to several consequences. The fundamental impact was a consistently non-economic profile of our statutory liability requirements that often could not decrease and could only increase. As a consequence of this non-economic liability profile, we experienced volatility in statutory capital, required capital and the RBC ratio, especially when equity markets or interest rates were rising. Managing this one-sided movement required elevated levels of non-economic hedging with associated costs to protect our capital position from these upside scenarios.
Turning to Slide 17. You can see that this non-economic hedging made our hedging strategy complex and consumed resources that could have been put to better use. This resulted in yet another adverse outcome of less predictable earnings results and capital generation. We have consistently stated that our goals for this transaction were not focused on day 1 capital benefit, but rather on creating a liability framework consistent with the way we manage our business. Specifically, this means reserves and hedging instruments would be aligned. This not only reduces the need for non-economic hedging, but also makes it easier to explain our hedging strategy and allows us to focus hedging on the economic impact to our business. And lastly, the removal of the CSC floor driven volatility means that we would see capital impacts emerge more intuitively, changes in equity markets and interest rates, making our results more predictable.
Slide 18 describes the structure and initial capital flows of our CSC floor solution. We formed Brooke Re, a Michigan-based captive reinsurer wholly owned by Brooke Life Insurance Company. Brooke Life, Brooke Re and Jackson National Life Insurance Company, or JNL, are all domiciled in Michigan, giving us consistent regulatory oversight. Through the coinsurance agreement executed in January, the in-force and future VA guaranteed benefits are transferred to Brooke Re, while the VA based contract remains at JNL. The base contract is expected to continue generating substantial earnings and capital for JNL and will continue to be subject to the CSC floor requirement. Application of the CSC floor minimum liability requirement is more relevant to the base contract and be monetized unlike the guaranteed benefits.
The determination of reserves and required capital for the guaranteed benefits reinsured to Brooke Re will follow a modified GAAP framework, which we believe is a more appropriate economic approach. JNL will execute the hedging of these guarantees on Brooke Re’s behalf and will transfer the hedging gains and losses to Brooke Re through a coinsurance agreement along with future fees collected, benefits paid and an allowance for expenses. JNL made a $749 million capital distribution to Brooke Life, which retained $50 million to increase its capital position. Booke Life made a $699 million initial capital investment into Brooke Re that serves as the carrying value on Brooke Life’s statutory balance sheet, a ceding commission of nearly $1.2 billion reflects the healthy expected cash profile of our VA guarantee.
The ceding commission was funded through transactions that effectively round-tripped the commission from JNL to Brooke Life, then to Brooke Re and back to JNL. Importantly, all of these initial capital flows were entirely within the operating entities, so holding company liquidity at JFI was not impacted by this transaction. Slide 19 summarizes the benefits of our modified GAAP reserve approach, which, as we previously mentioned, aligns the economic of our liability with the way we manage our business. The key aspect is the lack of a cash surrender value floor, which means that modified GAAP reserves are always responsive to market movements as are the related hedge assets. Another benefit is that this arrangement creates a clear dividing line between the base contract at JNL and the guarantees at Brooke Re. This will allow us to focus hedging under guarantees and will help each quarter to provide greater transparency into the underlying economics and capital generation at JNL.
The reserving methodology is modified GAAP as we received regulatory approval for some modifications to U.S. GAAP to add incremental stability to the captive balance sheet and facilitate a self-sustaining entity, with full main adjustments noted here on the slide. Two of the adjustments are to use fixed long-term volatility and non-performance risk spread assumptions rather than market implied volatility in Jackson’s own credit spread. These two adjustments help align the liability treatment to the hedging by removing aspects that we do not consider as primary risks to the business and therefore, do not hedge. The second two adjustments are intended to apply a margin of prudence to the liability to help support the self-sustaining design.
These adjustments include a haircut to the guarantee fee stream reflected in the reserve and an expense provision for administration costs. All of these adjustments collectively tend to result in a more conservative reserve compared to U.S. GAAP. On Slide 20, we explain our minimum operating capital and the determination of the initial capitalization amount. Our minimum operating capital framework is broadly similar to the statutory required capital risk charge methodology. A key change we made to the statutory framework is in the market risk component. As a reminder, statutory market risk charge uses the same methodology as the reserve calculation, but measured further into the tail. The charge has been based on the relationship between the detail requirement and the reserves already posted.
However, if we kept this exact approach, our reserves and required capital would be misaligned with reserves using an economic modified GAAP framework and the required capital using the statutory framework, which is impacted by the CSG floor. We corrected this by replacing the statutory detail calculation with a modified GAAP reserve that has been recalculated under stressed conditions. The market risk charge is then based on this stressed reserve relative to the original modified GAAP reserve. As a result of the $699 million initial capitalization, Brooke Re’s equity position is well above its minimum operating capital level. We seek to hold capital sufficient to remain above this minimum level following adverse scenarios. Our initial capitalization level means that we would have sufficient resources to remain above our minimum operating capital in more than 95% of scenarios and across multiple time frames.
Importantly, we expect Brooke Re to not only be self-sustaining the capital generative over the long-term. Looking at Slide 21. This economic reserve and required capital framework is expected to lead to fewer one-sided hedging outcomes going forward. An economically responsive liability makes our hedge target more predictable and requires less frequent rebalancing and the removal of non-economic upside protection reduces equity hedging costs. We will expect to have a higher level of interest rate protection going forward, which aligns up well with our economic framework and is no longer complicated by the CSC floor. Lastly, we anticipate a high level of hedge effectiveness from this framework while continuing to protect the business from the impact of larger shock.
All of these items should lead to a simpler hedging strategy and more intuitive financial results. Slide 22 summarizes how Brooke Re will check all the boxes for our stated goals. We are very pleased to have a durable long-term solution that aligns our reserves and hedging instruments, avoids having resources consumed by non-economic hedging and simplifies the communication of our hedging strategy and financial results. Moving on from Brooke Re. Slide 24 lays out the favorable profile of JNL going forward. We expect to see a more stable and predictable capital generation and that this capital generation will better align with adjusted operating earnings as reported by JFI. Additionally, U.S. GAAP net income will benefit from lower volatility in net hedging results given our more U.S. GAAP focused liability structure.
Capital generation at JNL will primarily be driven by VA-based contract fee income, which is now completely separated from the guarantee. While fee business is the main driver of capital generation, we also continue to have significant balance sheet diversification from our in-force spread and mortality business, which we seek to grow over time. Lastly, in addition to the anticipated strong future cash flow profile, JNL will have a robust initial capital position well above our targeted RBC level after consideration of the initial transaction impact. Turning to Slide 25. As I noted earlier, one of the advantages of the Brooke Re solution is increased alignment of capital generation at JNL with adjusted operating earnings at JFI. While there are differences in the two approaches, which is tax outcomes and acquisition cost treatment, we would expect adjusted operating earnings to be a directional proxy for capital generation over time.
This would imply a greater degree of capital generation going forward than what we have seen since separation. We currently estimate that our annual capital generation would generally be at or above $1 billion. The pie chart on the left side of the slide looks at U.S. GAAP reserves at JFI. Variable annuity fee-based AUM makes up most of the reserves and will likewise be the biggest driver of capital generation. Economically, this is very similar to an asset management business with the earnings trajectory tightly aligned with AUM. As such, the level of future capital generation will be sensitive to equity markets, and, to a lesser degree, net flows. We have a meaningful level of spread reserves and given the recent vintages of our retained non-VA annuity block, we are delivering strong net flows.
We expect this to continue given our positive momentum in RILA and our desire to grow other spread sales as well. Lastly, our closed block life reserves reflect our successful M&A track record. Growth in this segment will depend on future acquisition activity. Slide 26 shows the JNL capital position after the funding of Brooke Re. We ended 2023 with a very strong 624% estimated RBC ratio and our hedging will now fully align with our new framework. As I noted earlier, a $749 million return of capital payment from JNL strengthened the capital position at Brooke Life and gave a robust starting position at Brooke Re. When you consider the secondary deferred tax asset admissibility impact, JNL TAC was reduced to $4.3 billion. There was a modest offsetting benefit from the release of the VA guaranteed capital requirement reducing CAL by $36 million.
This led to a very healthy pro forma estimated RBC ratio at JNL of over 540%. Slide 27 provides a look into the capital framework at the three main entities following this transaction. The target at our holding company, JFI, remains at 2x its annual fixed expenses and as well in excess of that position coming into 2024. Jackson National Life is our primary operating company and as noted, maintains a strong RBC level after the funding of Brooke Re. Our captive reinsurer Brooke Re is well capitalized, with the expectation to be self-sustaining under adverse scenario, a capital generative over the long-term, and we expect our hedging to have a high degree of effectiveness. In summary, our innovative CSC floor solution delivers on the established goals of reducing the non-economic influences in our liability requirements and hedging as well as increased transparency and more intuitive results.
I will now turn it back over to Laura to provide our updated 2024 financial targets on Page 29.
Laura Prieskorn: Thank you, Marcia. We are pleased to have yet again achieved our financial targets for the year ending 2023 and a strong financial position. Our year-end results underscore Jackson’s ability to maintain financial and risk management discipline while continuing to serve our customers through product innovation, exceptional distribution and industry-leading service. In 2024, we are targeting $550 million to $650 million in capital return to common shareholders. This represents a 20% increase from last year is our third increase since becoming an independent company, and we believe there is further potential to grow given the expected long-term benefits of Brooke Re. We have increased our per share common dividend level by 13%, representing continued confidence in our business.
Looking over the long-term, since establishing our first dividend in the fourth quarter of 2021, we’ve increased our dividend per share by 40%. We continue to view our minimum RBC ratio at JNL as 425% and expect to operate above this level. Given a more stable and predictable capital and RBC ratio following the Brooke Re transaction, we believe that an RBC target range is no longer necessary. With respect to operating company dividends, our intent is to maintain our distributions from JNL to JFI through periodic payments over the course of the year as opposed to one large annual payment in the first quarter. Our outlook for consistent capital generation reflects our high-quality book of business and our ability to execute. Before closing, I’d like to acknowledge that the 2023 accomplishments covered today reflect the hard work of our incredibly talented associates who show up each day to provide long-term solutions for Americans planning for their financial futures.
I am grateful for their contributions, and I am proud to work alongside the team so committed to our business, our communities, each other and the customers we serve. I look forward to working together to execute against our strategic priorities, building on our strong track record of performance excellence and delivering another set of outstanding results for 2024. Before we turn the call over to Q&A, I want to comment on the news of our CFO, Marcia Wadsten’s future retirement plans. After 32 years of outstanding and dedicated service, Marcia has decided to retire. During her long tenure, she has led finance and actuarial teams across the organization and has had an incredible impact on the company overall. Her deep subject matter expertise has allowed for positive rating agency, analyst and shareholder engagement.
Marcia was instrumental in our execution and transition to an independent public company and to our recently announced formation of Brooke Re. Marcia will remain CFO until early June and will then continue to serve in an advisory capacity. We anticipate a smooth transition to Don Cummings who is expected to assume the role of CFO at the time of Marcia’s retirement. Many of you know Don, who is our current Controller and Chief Accounting Officer. He has been a valuable member of our senior management team since joining Jackson, and we look forward to his future contributions as our next CFO. We are extremely grateful to Marcia for her contributions and leadership which have had a positive impact on associates and external stakeholders, and we are excited for her to eventually enjoy retirement.
I will now turn the call over to the operator for questions.
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