Separate Account Assets and Liabilities

9 Months Ended

Sep. 30, 2023

This note contains the new accounting policy for the adoption of LDTI.

The Company issues variable contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder (traditional variable annuities). The Company also issues variable annuity and life contracts through separate accounts where the Company contractually guarantees to the contract holder (variable contracts with guarantees) either a) return of no less than total deposits made to the account adjusted for any partial withdrawals, b) total deposits made to the account adjusted for any partial withdrawals plus a minimum return, or c) the highest account value on a specified anniversary date adjusted for any withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death (guaranteed minimum death benefits, or "GMDB"), at annuitization ("GMIB"), upon the depletion of funds ("GMWB") or at the end of a specified period ("GMAB"). These guarantees are classified as market risk benefits. See Note 12 of the Notes to Condensed Consolidated Financial Statements for more information regarding market risk benefits.

The separate account assets supporting the variable portion of both traditional variable annuities and variable contracts with guarantees are carried at fair value and reported as summary total separate account assets with an equivalent summary total reported for separate account liabilities. At September 30, 2023 and December 31, 2022, the assets and liabilities associated with variable life and annuity contracts were $203 billion and $196 billion, respectively. Investment risks associated with market value changes are borne by the contract holders, except to the extent of minimum guarantees made by the Company.

Separate account net investment income, net investment realized and unrealized gains and losses, and the related liability changes are offset within the same line item in the Condensed Consolidated Income Statements. Amounts assessed against the contract holders for mortality, variable annuity benefit guarantees, administrative, and other services are reported in revenue as fee income.

Included in the separate account assets and liabilities described above is a Jackson issued group variable annuity contract designed for use in connection with and issued to the Company’s Defined Contribution Retirement Plan. These deposits are allocated to the Jackson National Separate Account - II, which had balances of $180 million and $285 million at September 30, 2023 and December 31, 2022, respectively. The Company receives administrative fees for managing the funds. These fees are recorded as earned and included in fee income in the Condensed Consolidated Income Statements.

The following table presents the roll-forward of the separate account balance for variable annuities (in millions, 2022 information recast for the adoption of LDTI):


	Nine Months Ended September 30, 2023		Year Ended December 31, 2022
Balance as of beginning of period	$	195,550	$	248,469
Deposits	6,558		12,288
Surrenders, withdrawals and benefits	(12,169)		(14,554)
Net transfer from (to) general account	959		(870)
Investment performance	13,813		(47,150)
Policy charges and other	(2,060)		(2,633)
Balance as of end of period, gross	$	202,651	$	195,550



Cash surrender value (1)	$	197,645	$	190,243

(1) Cash surrender value represents the amount of the contract holder’s account balances distributable at the balance sheet date less applicable surrender charges.

The following table presents the reconciliation of the separate account balance in the Condensed Consolidated Balance Sheets (in millions, 2022 information recast for the adoption of LDTI):


	September 30, 2023		December 31, 2022
Variable Annuities	$	202,651	$	195,550
Other	252		356
Total	$	202,903	$	195,906

The following table presents aggregate fair value of assets, by major investment asset category, supporting separate accounts (in millions, 2022 information recast for the adoption of LDTI):


	September 30, 2023		December 31, 2022
Variable Annuities By Fund Type
Equity	$	140,677	$	132,547
Bond	18,916		19,155
Balanced	40,220		40,797
Money Market	2,838		3,051
Total Variable Annuities	202,651		195,550
Other Product Lines	252		356
Total Separate Accounts	$	202,903	$	195,906