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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
October 31, 2024
Date of Report (Date of earliest event reported)
Lincoln National Corporation
(Exact name of registrant as specified in its charter)
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| Indiana | | 1-6028 | | 35-1140070 |
| (State or other jurisdiction | | (Commission | | (IRS Employer |
| of incorporation) | | File Number) | | Identification No.) |
150 N. Radnor Chester Road, Radnor, PA 19087
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (484) 583-1400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | | | | |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
__________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| | |
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| Common Stock | LNC | New York Stock Exchange |
Depositary Shares, each representing a 1/1000th interest in a share of 9.000% Non-Cumulative Preferred Stock, Series D | LNC PRD | New York Stock Exchange |
__________________________________
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 31, 2024, Lincoln National Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2024, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The Company’s statistical supplement for the quarter ended September 30, 2024, is attached as Exhibit 99.2 and is incorporated herein by reference.
The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as otherwise expressly stated in such filing.
Item 7.01. Regulation FD Disclosure.
On October 31, 2024, in connection with the Company’s third quarter 2024 earnings conference call scheduled for the same date, the Company made available on its website a third quarter 2024 earnings supplement presentation dated October 31, 2024, a copy of which is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
This presentation is being furnished under this Item 7.01 and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in Exhibit 99.3 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
The following exhibits are being furnished with this Form 8-K.
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| |
Exhibit Number | Description |
| 99.1 | |
| 99.2 | |
| 99.3 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | LINCOLN NATIONAL CORPORATION |
| | | | | |
| | | | By | /s/ Adam Cohen |
| | | | Name: | Adam Cohen |
| | | | Title: | Senior Vice President, Chief Accounting Officer and Treasurer |
Date: October 31, 2024
'
For Immediate Release
Lincoln Financial Reports 2024 Third Quarter Results
____________________________________
Radnor, PA, October 31, 2024: Lincoln Financial (NYSE: LNC) today reported financial results for the third quarter ended September 30, 2024.
•Net income (loss) available to common stockholders was $(562) million, or $(3.29) per diluted share.
•Adjusted operating income (loss) available to common stockholders was $358 million, or $2.06 per diluted share.
•The primary differences between net income (loss) and adjusted operating income (loss) resulted from the following factors:
◦$(446) million of the pre-tax net loss, or $(2.61) per diluted share, was primarily driven by a change in the fair value of an embedded derivative related to the Fortitude Re reinsurance transaction, with a direct offset in other comprehensive income.
◦$(381) million of the pre-tax net loss, or $(2.23) per diluted share, was primarily due to changes in market risk benefits driven by the decrease in interest rates, a non-economic impact.
•The annual assumption review resulted in a favorable impact to both net income (loss) and adjusted operating income (loss) in the quarter.
•Lincoln's estimated RBC ratio was in excess of 420% at quarter-end.
"Our third quarter results exceeded our expectations and reinforced our disciplined strategic execution, supported by the momentum and strong underlying fundamentals in each of our businesses," said Ellen Cooper, Chairman, President and CEO of Lincoln Financial. “Group Protection delivered record third quarter results with earnings more than doubling year over year. Annuities earnings increased by 15% and sales by nearly 25%. Retirement Plan Services delivered another quarter of sequential earnings growth and an increase in year-to-date first-year sales of nearly 80% year over year. Life Insurance generated sequential sales growth for a second consecutive quarter.(1)
"We are leveraging our competitive advantages to grow profitably, advance operational efficiency, and build the capital flexibility of our franchise as we continue to reposition Lincoln for sustainable and increasing long-term value creation.”
(1) Operating earnings metrics in quote do not include the impact of the annual assumption review.
Business Highlights
Our businesses delivered strong operating earnings, a reflection of continued execution on their respective strategic initiatives. The segment operating results presented in the below bullets do not include the impact of our annual assumption review. See the segment discussions that follow for additional information.
•Annuities delivered $300 million in operating income, up 15% year over year, reflecting continued account balance growth, strong markets, and higher spread income. Total sales of $3.4 billion were up 24%, with over $1 billion of sales in each of our three primary product categories, reflecting the benefits of our diversified product offering. Spread-based products accounted for 66% of annuities sales in the quarter.
•Group Protection delivered operating income of $110 million, more than doubling versus third quarter 2023 operating earnings, attributable to strategic execution and continued supportive business trends. Third quarter margin expanded to 8.5%, an increase of 500 basis points driven by favorable long-term disability results, improving mortality trends, and strong operational execution. Premiums increased 3% year over year, reflecting continued pricing discipline on new sales combined with persistency in line with our expectations.
•Life Insurance delivered operating income of $14 million, compared to operating income of $23 million in the prior-year quarter, when also not including the impact of significant items in the prior-year quarter. Life operating income was in line with expectations as slightly unfavorable mortality was partially offset by higher-than-expected alternative investment income. Total sales grew 16% sequentially, resulting in a second consecutive quarter of sequential growth, as our distribution and product repositioning gained further traction.
•Retirement Plan Services reported operating income of $44 million, a 2% increase year over year and a 10% sequential increase, driven by increased account balances, higher equity markets, and continued expense discipline. First-year sales in the quarter were $1.7 billion, reflecting the strong pipeline communicated earlier this year. As a result, RPS experienced positive net flows of $651 million.
Earnings Summary
| | | | | | | | | | | | | | |
| (in millions, except per share data) | As of or For the Three Months Ended | As of or For the Nine Months Ended |
| 9/30/23(1) | 9/30/24 | 9/30/23(1) | 9/30/24 |
| Net income (loss) | $ | 853 | | $ | (528) | | $ | 483 | | $ | 1,588 | |
| Net income (loss) available to common stockholders | 819 | | (562) | | 410 | | 1,511 | |
Net income (loss) per diluted share available to common stockholders(2) | $ | 4.79 | | $ | (3.29) | | $ | 2.40 | | $ | 8.75 | |
| Adjusted income (loss) from operations | 84 | | 392 | | 728 | | 971 | |
| Adjusted income (loss) from operations available to common stockholders | 50 | | 358 | | 657 | | 891 | |
| Adjusted income (loss) from operations per diluted share available to common stockholders | $ | 0.29 | | $ | 2.06 | | $ | 3.85 | | $ | 5.16 | |
(1) Prior period impacts have been recast to conform to the current period presentation.
(2) In periods where a net loss is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use of diluted shares would result in a lower loss per share.
Reconciliation of Net Income to Adjusted Income from Operations(1)
| | | | | | | | | | | | | | | | | |
| (in millions) | For the Three Months Ended | | For the Nine Months Ended |
| 9/30/23(1) | 9/30/24 | | 9/30/23(1) | 9/30/24 |
| Net income (loss) available to common stockholders — diluted | $ | 819 | | $ | (562) | | | $ | 410 | | $ | 1,511 | |
| Less: | | | | | |
| Preferred stock dividends declared | (34) | | (34) | | | (71) | | (80) | |
| Adjusted for deferred units of LNC stock in our deferred compensation plans | — | | — | | | (2) | | 3 | |
| Net income (loss) | 853 | | (528) | | | 483 | | 1,588 | |
| Less: | | | | | |
| Net annuity product features, pre-tax | 1,322 | | (381) | | | 1,076 | | 1,319 | |
| Net life insurance product features, pre-tax | 108 | | (125) | | | (168) | | (253) | |
| Credit loss-related adjustments, pre-tax | (27) | | (88) | | | (53) | | (124) | |
Investment gains (losses), pre-tax(2) | (400) | | (105) | | | (1,126) | | (416) | |
| Changes in the fair value of reinsurance-related embedded derivatives, | | | | | |
trading securities and certain mortgage loans, pre-tax(2) | (29) | | (446) | | | (27) | | (51) | |
| Gains (losses) on other non-financial assets - sale of | | | | | |
subsidiaries/businesses, pre-tax(2) | — | | (2) | | | — | | 582 | |
Other items, pre-tax(2) | (12) | | (19) | | | (23) | | (238) | |
| Income tax benefit (expense) related to the above pre-tax items | (193) | | 246 | | | 76 | | (202) | |
| Adjusted income (loss) from operations | $ | 84 | | $ | 392 | | | $ | 728 | | $ | 971 | |
| Adjusted income (loss) from operations available to common stockholders | $ | 50 | | $ | 358 | | | $ | 657 | | $ | 891 | |
(1) See definition of Adjusted Income from Operations at the back of this press release for revisions made to the definition in the third quarter of 2024 and further explanation of reconciliation line items. Prior period impacts have been recast to conform to the current period presentation.
(2) Refer to full reconciliation at the back of this release for footnotes.
Variable Investment Income
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Alternative Investment Income, after-tax(1) | For the Three Months Ended | | For the Nine Months Ended |
| (in millions) | 9/30/23 | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 | | 9/30/23 | 9/30/24 |
| Annuities | $ | 3 | | $ | 3 | | $ | 2 | | $ | 1 | | $ | 3 | | | $ | 10 | | $ | 6 | |
| Life Insurance | 34 | 39 | 58 | 26 | 73 | | 125 | 157 |
| Group Protection | 2 | 2 | 1 | 1 | 1 | | 5 | 3 |
| Retirement Plan Services | 2 | 2 | 1 | — | | 2 | | | 6 | 3 |
| Other Operations | — | | — | | — | | — | | — | | | — | | — | |
| Consolidated | $ | 41 | | $ | 46 | | $ | 62 | | $ | 28 | | $ | 79 | | | $ | 146 | | $ | 169 | |
(1) Excludes alternative investment income on investments supporting our modified coinsurance and coinsurance with funds withheld agreements as we have limited economic interest in those investments.
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Prepayment Income, after-tax | For the Three Months Ended | | For the Nine Months Ended |
(in millions) | 9/30/23 | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 | | 9/30/23 | 9/30/24 |
Annuities | $ | 1 | | $ | 1 | | $ | 1 | | $ | — | | $ | — | | | $ | 1 | | $ | 1 | |
Life Insurance | — | 2 | — | 2 | 3 | | 2 | | 5 | |
Group Protection | — | — | — | — | 1 | | 1 | | — | |
Retirement Plan Services | — | — | 1 | — | — | | 1 | | 1 | |
Other Operations | — | — | — | — | — | | — | | — | |
Consolidated | $ | 1 | | $ | 3 | | $ | 2 | | $ | 2 | | $ | 4 | | | $ | 5 | | $ | 7 | |
Items Impacting Segment and Other Operations Results
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2024 |
(in millions) | Annuities | Life Insurance | Group Protection | Retirement Plan Services | Other Operations |
After-tax impacts: | | | | | |
Alternative investment income compared to return target(1) | $ | 1 | | $ | 6 | | $ | — | | $ | — | | $ | — | |
Prepayment income(2) | — | 3 | | 1 | — | — |
Annual assumption review | 1 | 8 | (1) | | — | — |
| Tax items | — | — | — | | — | | — |
| Other | — | — | — | — | — |
Total impact | $ | 2 | | $ | 17 | | $ | — | | $ | — | | $ | — | |
(1) Alternative investment income comparison to return target assumes a 10% annual return on the alternative investment portfolio.
(2) Prepayment income is actual income reported in the quarter.
Capital and Liquidity
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended |
| (in millions, except percent and per share data) | 9/30/23 | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 |
Holding company available liquidity(1) | $ | 455 | | $ | 458 | | $ | 466 | | $ | 463 | | $ | 459 | |
RBC ratio(2) | 375-385% | 407 | % | 400-410% | >420% | >420% |
| Book value per share (BVPS), including AOCI | $ | 13.04 | | $ | 34.81 | | $ | 38.46 | | $ | 40.78 | | $ | 46.97 | |
Book value per share, excluding AOCI(3) | $ | 63.03 | | $ | 55.30 | | $ | 61.63 | | $ | 66.37 | | $ | 62.67 | |
Adjusted book value per share(3),(4) | $ | 63.53 | | $ | 64.97 | | $ | 65.01 | | $ | 68.51 | | $ | 70.04 | |
(1) Holding company available liquidity presented as of 3/31/2024, 6/30/2024 and 9/30/2024 does not include the $300 million prefunding of a 2025 maturity.
(2) The RBC ratio is calculated as of December 31 annually, but is reported in the March statutory reporting, and as such, the quarterly ratios presented for 9/30/2023, 3/31/2024, 6/30/2024, and 9/30/2024 are considered estimates based on information known at the time of reporting.
(3) Refer to the reconciliation to book value per share, including AOCI, at the back of this release.
(4) This measure has been updated, effective beginning with the fourth quarter of 2023, to exclude reinsurance-related embedded derivatives and the underlying portfolio gains (losses), given the size of the impact of the fourth quarter 2023 reinsurance transaction. Such amounts in the prior periods presented, and the impact of this change to such prior periods, was not meaningful.
Annuities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions, except ROA data) | As of or For the Three Months Ended | | As of or For the Nine Months Ended |
| 9/30/23 | 12/31/23(1) | 3/31/24 | 6/30/24 | 9/30/24 | Change | | 9/30/23 | 9/30/24 | Change |
| Total operating revenues | $ | 1,197 | | $ | (525) | | $ | 1,269 | | $ | 1,209 | | $ | 1,195 | | (0.2) | % | | $ | 3,528 | | $ | 3,673 | | 4.1 | % |
| Total operating expenses | 915 | | (846) | | 952 | | 858 | | 836 | | (8.6) | % | | 2,636 | | 2,645 | | 0.3 | % |
| Income (loss) from operations before taxes | 282 | | 321 | | 317 | | 351 | | 359 | | 27.3 | % | | 892 | | 1,028 | | 15.2 | % |
| Federal income tax expense (benefit) | 34 | | 42 | | 58 | | 54 | | 58 | | 70.6 | % | | 98 | | 171 | | 74.5 | % |
| Income (loss) from operations | $ | 248 | | $ | 279 | | $ | 259 | | $ | 297 | | $ | 301 | | 21.4 | % | | $ | 794 | | $ | 857 | | 7.9 | % |
| Income (loss) from operations, excluding impact of annual assumption review | $ | 260 | | $ | 265 | | $ | 259 | | $ | 297 | | $ | 300 | | 15.3 | % | | $ | 806 | | $ | 856 | | 6.2 | % |
| Total sales | $ | 2,728 | | $ | 4,365 | | $ | 2,847 | | $ | 3,817 | | $ | 3,375 | | 23.7 | % | | $ | 8,475 | | $ | 10,038 | | 18.4 | % |
| Net flows | $ | (874) | | $ | 285 | | $ | (1,993) | | $ | (954) | | $ | (1,637) | | (87.3) | % | | $ | (2,312) | | $ | (4,584) | | (98.3) | % |
| Average account balances, net of reinsurance | $ | 151,312 | | $ | 147,419 | | $ | 155,291 | | $ | 158,370 | | $ | 161,680 | | 6.9 | % | | $ | 148,613 | | $ | 158,245 | | 6.5 | % |
| Return on average account balances (bps) | 66 | | 76 | | 67 | | 75 | | 74 | | | | 71 | | 72 | | |
(1) Day one impacts related to the reinsurance transaction with Fortitude Re caused line-item volatility in the fourth quarter 2023.
•Income from operations was $301 million for the third quarter, up 21% over the prior year. The year-over-year increase was primarily driven by account balance growth due to favorable equity markets.
•Total sales were $3.4 billion, an increase of 24% year over year driven by strong growth within spread-based products.
•RILA sales increased 13% year over year and 10% sequentially, following the successful launch of our second-generation RILA product.
•Net outflows were approximately $1.6 billion in the quarter, compared to net outflows of $874 million in the prior-year quarter, primarily the result of higher account balances.
•Average account balances, net of reinsurance, for the quarter were $162 billion, up 7%, compared to $151 billion in the prior-year quarter, primarily driven by growth in variable annuities and RILA. RILA represented 20% of total annuity ending account balances, net of reinsurance, an increase of 3 percentage points compared to the prior-year quarter.
Life Insurance
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | As for or For the Three Months Ended | | As of or For the Nine Months Ended |
| 9/30/23 | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 | Change | | 9/30/23 | 9/30/24 | Change |
| | | | | | | | | | |
| Total operating revenues | $ | 1,723 | | $ | 1,667 | | $ | 1,541 | | $ | 1,511 | | $ | 1,589 | | (7.8) | % | | $ | 5,241 | | $ | 4,640 | | (11.5) | % |
| Total operating expenses | 1,952 | | 1,681 | | 1,591 | | 1,562 | | 1,568 | | (19.7) | % | | 5,458 | | 4,719 | | (13.5) | % |
| Income (loss) from operations before taxes | (229) | | (14) | | (50) | | (51) | | 21 | | 109.2 | % | | (217) | | (79) | | 63.6 | % |
| Federal income tax expense (benefit) | (56) | | (8) | | (15) | | (16) | | (1) | | 98.2 | % | | (64) | | (31) | | 51.6 | % |
| Income (loss) from operations | $ | (173) | | $ | (6) | | $ | (35) | | $ | (35) | | $ | 22 | | 112.7 | % | | $ | (153) | | $ | (48) | | 68.6 | % |
| Income (loss) from operations, excluding the impact of annual assumption review | $ | (17) | | $ | (6) | | $ | (35) | | $ | (35) | | $ | 14 | | NM | | $ | 3 | | $ | (56) | | NM |
| Average account balances, net of reinsurance | $ | 50,130 | | $ | 45,608 | | $ | 42,280 | | $ | 43,230 | | $ | 44,055 | | (12.1) | % | | $ | 49,760 | | $ | 43,188 | | (13.2) | % |
| Total sales | $ | 144 | | $ | 144 | | $ | 91 | | $ | 105 | | $ | 122 | | (15.3) | % | | $ | 397 | | $ | 319 | | (19.6) | % |
•Income from operations was $22 million for the quarter, compared to an operating loss of $173 million in the prior-year quarter. The third quarter 2024 annual assumption review had an $8 million favorable impact, compared to an unfavorable impact of $156 million in the prior-year quarter. The operating loss in the third quarter of 2023 also included $40 million of unfavorable significant items, including $25 million in unclaimed property expense and $15 million related to a surrender benefit program.
•Not including the impact of the annual assumption review and prior-year quarter significant items, operating income in the third quarter of 2024 was $14 million compared to operating income of $23 million in the prior-year quarter, reflecting a lower run-rate post the Fortitude Re transaction.
•Total sales grew 16% sequentially, achieving a second consecutive quarter of sequential growth, as our distribution and product repositioning gained further traction.
•Average account balances, net of reinsurance, were $44 billion, down 12% compared to the prior-year quarter, driven by the impact of the Fortitude Re transaction.
Group Protection
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions, except margin data) | As of or For the Three Months Ended | | As of or For the Nine Months Ended |
| 9/30/23 | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 | Change | | 9/30/23 | 9/30/24 | Change |
| Total operating revenues | $ | 1,388 | | $ | 1,387 | | $ | 1,425 | | $ | 1,441 | | $ | 1,432 | | 3.2 | % | | $ | 4,176 | | $ | 4,299 | | 2.9 | % |
| Total operating expenses | 1,302 | | 1,322 | | 1,324 | | 1,276 | | 1,295 | | (0.5) | % | | 3,863 | | 3,896 | | 0.9 | % |
| Income (loss) from operations before taxes | 86 | | 65 | | 101 | | 165 | | 137 | | 59.3 | % | | 313 | | 403 | | 28.8 | % |
| Federal income tax expense (benefit) | 18 | | 13 | | 21 | | 35 | | 28 | | 55.6 | % | | 66 | | 85 | | 28.8 | % |
| Income (loss) from operations | $ | 68 | | $ | 52 | | $ | 80 | | $ | 130 | | $ | 109 | | 60.3 | % | | $ | 247 | | $ | 318 | | 28.7 | % |
| Income (loss) from operations, excluding the impact of annual assumption review | $ | 44 | | $ | 52 | | $ | 80 | | $ | 130 | | $ | 110 | | NM | | $ | 223 | | $ | 319 | | 43.0 | % |
| Insurance premiums | $ | 1,251 | | $ | 1,250 | | $ | 1,285 | | $ | 1,298 | | $ | 1,288 | | 3.0 | % | | $ | 3,765 | | $ | 3,871 | | 2.8 | % |
| Total sales | $ | 71 | | $ | 398 | | $ | 144 | | $ | 161 | | $ | 84 | | 18.3 | % | | $ | 295 | | $ | 389 | | 31.9 | % |
| Total loss ratio | 75.2 | % | 76.6 | % | 75.0 | % | 70.1 | % | 71.4 | % | | | 73.8 | % | 72.2 | % | |
Operating margin(1) | 5.4 | % | 4.1 | % | 6.2 | % | 10.0 | % | 8.4 | % | | | 6.6 | % | 8.2 | % | |
| Operating margin, excluding the impact of annual assumption review | 3.5 | % | 4.1 | % | 6.2 | % | 10.0 | % | 8.5 | % | | | 5.9 | % | 8.2 | % | |
(1) Operating margin is calculated by dividing income (loss) from operations by insurance premiums.
•Income from operations was $109 million in the quarter, compared to earnings of $68 million in the prior-year quarter. The annual assumption review had a $1 million unfavorable impact in the current quarter and a $24 million favorable impact in the third quarter of 2023.
•Not including the impact of the annual assumption review, operating income was up $66 million year over year due to the benefits from strategic and operational actions.
•Operating margin was 8.4%, 300 basis points higher than the third quarter of 2023.
•The total loss ratio was 71.4% in the quarter, 380 basis points lower than the prior-year quarter.
•Insurance premiums were $1.3 billion in the quarter, up 3% compared to the prior-year quarter.
Retirement Plan Services
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions, except ROA data) | As of or For the Three Months Ended | | As of or For the Nine Months Ended |
| 9/30/23 | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 | Change | | 9/30/23 | 9/30/24 | Change |
| Total operating revenues | $ | 327 | | $ | 322 | | $ | 322 | | $ | 327 | | $ | 335 | | 2.4 | % | | $ | 988 | | $ | 984 | | (0.4) | % |
| Total operating expenses | 277 | | 278 | | 281 | | 281 | | 286 | | 3.2 | % | | 831 | | 847 | | 1.9 | % |
| Income (loss) from operations before taxes | 50 | | 44 | | 41 | | 46 | | 49 | | (2.0) | % | | 157 | | 137 | | (12.7) | % |
| Federal income tax expense (benefit) | 7 | | 6 | | 5 | | 6 | | 5 | | (28.6) | % | | 24 | | 17 | | (29.2) | % |
| Income (loss) from operations | $ | 43 | | $ | 38 | | $ | 36 | | $ | 40 | | $ | 44 | | 2.3 | % | | $ | 133 | | $ | 120 | | (9.8) | % |
| | | | | | | | | | |
| Deposits | $ | 2,700 | | $ | 2,972 | | $ | 3,802 | | $ | 3,282 | | $ | 4,180 | | 54.8 | % | | $ | 8,806 | | $ | 11,265 | | 27.9 | % |
| Net flows | $ | (272) | | $ | (332) | | $ | 391 | | $ | (197) | | $ | 651 | | NM | | $ | 464 | | $ | 845 | | 82.1 | % |
| Average account balances | $ | 96,473 | | $ | 96,045 | | $ | 103,240 | | $ | 106,374 | | $ | 110,550 | | 14.6 | % | | $ | 93,897 | | $ | 106,595 | | 13.5 | % |
| Return on average account balances (bps) | 18 | 16 | 14 | 15 | 16 | | | 19 | 15 | |
•Income from operations was $44 million in the quarter, a 2% improvement compared to the prior-year quarter, primarily driven by higher account balances. Sequentially, income from operations was up 10%, driven by higher account balances.
•Total deposits for the quarter were $4.2 billion, an increase of 55% over the prior-year quarter driven by increased first-year sales in full-service segments.
•Net inflows totaled $651 million for the quarter driven by first-year sales growth.
•Average account balances for the quarter were $111 billion, increasing 15% from the prior-year quarter.
Other Operations
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | As of or For the Three Months Ended | | As of or For the Nine Months Ended | | |
| 9/30/23 | 12/31/23(1) | 3/31/24 | 6/30/24 | 9/30/24 | Change | | 9/30/23 | 9/30/24 | Change | | | | |
| Total operating revenues | $ | 38 | | $ | (884) | | $ | 27 | | $ | 39 | | $ | 52 | | 36.8 | % | | $ | 127 | | $ | 118 | | (7.1) | % | | | | |
Total operating expenses (2) | 170 | | (751) | | 146 | | 161 | | 157 | | (7.6) | % | | 499 | | 466 | | (6.6) | % | | | | |
Income (loss) from operations before taxes (2) | (132) | | (133) | | (119) | | (122) | | (105) | | 20.5 | % | | (372) | | (348) | | 6.5 | % | | | | |
Federal income tax expense (benefit) (2) | (30) | | (33) | | (23) | | (25) | | (21) | | 30.0 | % | | (79) | | (72) | | 8.9 | % | | | | |
Income (loss) from operations(2),(3) | $ | (102) | | $ | (100) | | $ | (96) | | $ | (97) | | $ | (84) | | 17.6 | % | | $ | (293) | | $ | (276) | | 5.8 | % | | | | |
(1) Day one impacts related to the reinsurance transaction with Fortitude Re caused line-item volatility in the fourth quarter of 2023.
(2) The prior period presentation has been recast to conform to the revised definition of income (loss) from operations. See Definitions of Non-GAAP Measures at the back of this press release.
(3) Income (loss) from operations does not include preferred dividends.
Unrealized Gains and Losses
The Company reported a net unrealized loss of $7.0 billion (pre-tax) on its available-for-sale securities as of September 30, 2024. This compared to a net unrealized loss of $14.2 billion (pre-tax) as of September 30, 2023, with the year-over-year increase primarily due to lower treasury rates.
The tables attached to this release define and reconcile the non-GAAP measures adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders, book value per share, excluding AOCI, and adjusted book value per share to net income (loss), net income (loss) available to common stockholders, and book value per share, including AOCI, calculated in accordance with GAAP.
This press release contains statements that are forward-looking, and actual results may differ materially. Please see the Forward-looking Statements – Cautionary Language at the end of this release for factors that may cause actual results to differ materially from the company’s current expectations.
For other financial information, please refer to the company’s third quarter 2024 statistical supplement and third quarter 2024 earnings supplement, which are available in the investor relations section of its website http://www.lincolnfinancial.com/investor.
Conference Call Information
Lincoln Financial will discuss the company’s third-quarter 2024 results with the investment community in a conference call beginning at 8:00 a.m. Eastern Time on Thursday, October 31, 2024.
The conference call will be broadcast live through the company’s website at www.lincolnfinancial.com/webcast. Please log on to the webcast at least 15 minutes prior to the start of the conference call to download and install any necessary streaming media software. A replay of the call will be available by 10:30 a.m. Eastern Time on October 31, 2024, at www.lincolnfinancial.com/webcast.
About Lincoln Financial
Lincoln Financial helps people to plan, protect and retire with confidence. As of December 31, 2023, approximately 17 million customers trust our guidance and solutions across four core businesses – annuities, life insurance, group protection, and retirement plan services. As of September 30, 2024, the company had $324 billion in end-of-period account balances, net of reinsurance. Headquartered in Radnor, Pa., Lincoln Financial is the marketing name for Lincoln National Corporation (NYSE: LNC) and its affiliates. Learn more at LincolnFinancial.com.
| | | | | | | | | | | | | | |
| Contacts: | | | | |
| Tina Madon | | Sarah Boxler | |
| 445-280-0488 | | 215-495-8439 | |
| Investor Relations | | Media Relations | |
| Tina.Madon@LFG.com | | Sarah.Boxler@LFG.com | |
Non-GAAP Measures
Management believes that adjusted income (loss) from operations (or adjusted operating income), adjusted income (loss) from operations available to common stockholders, and adjusted income (loss) from operations per diluted share available to common stockholders better explain the results of the company’s ongoing businesses in a manner that allows for a better understanding of the underlying trends in the company’s current business as the excluded items are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in most instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. Management also believes that using book value, excluding accumulated other comprehensive income (“AOCI”), and adjusted book value per share enables investors to analyze the amount of our net worth that is primarily attributable to our business operations. Book value per share, excluding AOCI is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates. Adjusted book value per share is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates.
For the historical periods, reconciliations of non-GAAP measures used in this press release to the most directly comparable GAAP measure may be included in this Appendix to the press release and/or are included in the Statistical Supplements for the corresponding periods contained in the Earnings section of the Investor Relations page on our website: http://www.lincolnfinancial.com/investor.
Definitions of Non-GAAP Measures Used in this Press Release
Adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders, book value per share, excluding AOCI, and adjusted book value per share are financial measures we use to evaluate and assess our results. Adjusted income (loss) from operations, adjusted income (loss) from operations available to common
stockholders, book value per share, excluding AOCI, and adjusted book value per share, as used in the press release, are non-GAAP financial measures and do not replace GAAP net income (loss), net income (loss) available to common stockholders, and book value per share, including AOCI, the most directly comparable GAAP measures.
Adjusted Income (Loss) from Operations
In the third quarter of 2024, we revised our definition of adjusted income (loss) from operations to exclude the impact of certain items that are not indicative of the ongoing operations of the business and may obscure trends in the underlying performance of the Company. The revised definition now excludes, as applicable, certain legal accruals, severance expense related to initiatives that realign the workforce, mark-to-market adjustment related to the LNC stock component of our deferred compensation plans, impacts from the settlement or curtailment of defined benefit obligations and the effect of tax adjustments such as changes to deferred tax valuation allowances from the definition of adjusted income (loss) from operations. The presentation of prior period adjusted income (loss) from operations has been recast to conform to the current period presentation.
Adjusted income (loss) from operations is GAAP net income excluding the following items, as applicable:
•Items related to annuity product features, which include changes in MRBs, including gains and losses and benefit payments, changes in the fair value of the derivative instruments we hold to hedge GLB and GDB riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the embedded derivative liabilities of our indexed annuity contracts and the associated index options we hold to hedge them, including collateral expense associated with the hedge program (collectively, “net annuity product features”);
•Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of VUL hedging, changes in reserves resulting from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our IUL contracts and the associated index options we hold to hedge them (collectively, “net life insurance product features”);
•Credit loss-related adjustments on fixed maturity AFS securities, mortgage loans on real estate and reinsurance-related assets (“credit loss-related adjustments”);
•Changes in the fair value of equity securities, certain derivatives, certain other investments and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, “investment gains (losses)”);
•Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option (“changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans”);
•Income (loss) from the initial adoption of new accounting standards, accounting policy changes and new regulations, including changes in tax law;
•Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;
•Losses from the impairment of intangible assets and gains (losses) on other non-financial assets;
•Income (loss) from discontinued operations;
•Other items, which include the following: certain legal accruals; severance expense related to initiatives that realign the workforce; transaction and integration costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business; mark-to-market adjustment related to the LNC stock component of our deferred compensation plans (“deferred compensation mark-to-market adjustment”); gains (losses) on modification or early extinguishment of debt; and impacts from settlement or curtailment of defined benefit obligations; and
•Income tax benefit (expense) related to the above pre-tax items, including the effect of tax adjustments such as changes to deferred tax valuation allowances.
Adjusted Income (Loss) from Operations Available to Common Stockholders
Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends.
Book Value Per Share, Excluding AOCI
Book value per share, excluding AOCI, is calculated based upon a non-GAAP financial measure.
•It is calculated by dividing (a) stockholders’ equity, excluding AOCI and preferred stock, by (b) common shares outstanding.
•We provide book value per share, excluding AOCI, to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations.
•Management believes book value per share, excluding AOCI, is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates.
•Book value per share is the most directly comparable GAAP measure.
Adjusted Book Value Per Share
Adjusted book value per share is calculated based upon a non-GAAP financial measure.
•It is calculated by dividing (a) stockholders’ equity, excluding AOCI, preferred stock, MRB-related impacts, GLB and GLB hedge instrument gains (losses), and the difference between amounts recognized in net income (loss) on reinsurance-related embedded derivatives and the underlying asset portfolios (“reinsurance-related embedded derivatives and portfolio gains (losses)”) by (b) common shares outstanding.
•We provide adjusted book value per share to enable investors to analyze the amount of our net worth that is primarily attributable to our business operations.
•Management believes adjusted book value per share is useful to investors because it eliminates the effect of market movements that are unpredictable that can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates.
•Book value per share is the most directly comparable GAAP measure.
Other Definitions
Holding Company Available Liquidity
Holding company available liquidity consists of cash and invested cash, excluding cash held as collateral, and certain short-term investments that can be readily converted into cash, net of commercial paper outstanding.
Sales
Sales as reported consist of the following:
•Annuities and Retirement Plan Services – deposits from new and existing customers;
•Universal life insurance (“UL”), indexed universal life insurance (“IUL”), variable universal life insurance (“VUL”) – first-year commissionable premiums plus 5% of excess premiums received;
•MoneyGuard® linked-benefit products – MoneyGuard® (UL), 15% of total expected premium deposits, and MoneyGuard Market AdvantageSM (VUL), 150% of commissionable premiums;
•Executive Benefits – insurance and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess premium received, and single premium bank-owned UL and VUL, 15% of single premium deposits;
•Term – 100% of annualized first-year premiums; and
•Group Protection – annualized first-year premiums from new policies.
Lincoln National Corporation
Reconciliation of Net Income to Adjusted Income from Operations and
Average Stockholders' Equity to Adjusted Average Stockholders' Equity
| | | | | | | | | | | | | | | | | | | | | | | |
| For the | | For the |
| (in millions, except per share data) | Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2024 | | 2023 (1) | | 2024 | | 2023 (1) |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Net Income (Loss) Available to Common | | | | | | | |
| Stockholders – Diluted | $ | (562) | | | $ | 819 | | | $ | 1,511 | | | $ | 410 | |
| Less: | | | | | | | |
| Preferred stock dividends declared | (34) | | | (34) | | | (80) | | | (71) | |
| Adjustment for deferred units of LNC stock in our | | | | | | | |
| deferred compensation plans | — | | | — | | | 3 | | | (2) | |
| Net Income (Loss) | (528) | | | 853 | | | 1,588 | | | 483 | |
| Less: | | | | | | | |
| Net annuity product features, pre-tax | (381) | | | 1,322 | | | 1,319 | | | 1,076 | |
| Net life insurance product features, pre-tax | (125) | | | 108 | | | (253) | | | (168) | |
| Credit loss-related adjustments, pre-tax | (88) | | | (27) | | | (124) | | | (53) | |
Investment gains (losses), pre-tax (2) | (105) | | | (400) | | | (416) | | | (1,126) | |
| Changes in the fair value of reinsurance-related | | | | | | | |
| embedded derivatives, trading securities and certain | | | | | | | |
mortgage loans, pre-tax (3) | (446) | | | (29) | | | (51) | | | (27) | |
| | | | | | | |
| Gains (losses) on other non-financial assets – sale of | | | | | | | |
subsidiaries/businesses, pre-tax (4) | (2) | | | — | | | 582 | | | — | |
Other items, pre-tax (5)(6)(7)(8) | (19) | | | (12) | | | (238) | | | (23) | |
| Income tax benefit (expense) related | | | | | | | |
| to the above pre-tax items | 246 | | | (193) | | | (202) | | | 76 | |
| Total adjustments | (920) | | | 769 | | | 617 | | | (245) | |
| Adjusted Income (Loss) from Operations | $ | 392 | | | $ | 84 | | | $ | 971 | | | $ | 728 | |
| Add: | | | | | | | |
| Preferred stock dividends declared | (34) | | | (34) | | | (80) | | | (71) | |
| Adjusted Income (Loss) from Operations Available to Common Stockholders | $ | 358 | | | $ | 50 | | | $ | 891 | | | $ | 657 | |
| | | | | | | |
Earnings (Loss) Per Common Share – Diluted (9) | | | | | | | |
| Net income (loss) | $ | (3.29) | | | $ | 4.79 | | | $ | 8.75 | | | $ | 2.40 | |
| Adjusted income (loss) from operations | 2.06 | | | 0.29 | | | 5.16 | | | 3.85 | |
| | | | | | | |
| Stockholders’ Equity, Average | | | | | | | |
| Stockholders' equity | $ | 8,481 | | | $ | 4,509 | | | $ | 7,816 | | | $ | 5,567 | |
| Less: | | | | | | | |
| Preferred stock | 986 | | | 986 | | | 986 | | | 986 | |
| AOCI | (3,526) | | | (6,792) | | | (3,800) | | | (5,425) | |
| Stockholders’ equity, excluding AOCI and preferred stock | 11,021 | | | 10,315 | | | 10,630 | | | 10,006 | |
| MRB-related impacts | 2,410 | | | 986 | | | 2,288 | | | (95) | |
| GLB and GDB hedge instruments gains (losses) | (2,767) | | | (1,519) | | | (2,623) | | | (921) | |
Reinsurance-related embedded derivatives and portfolio gains (losses)(10) | (455) | | | NM | | (462) | | | NM |
Adjusted average stockholders' equity(10) | $ | 11,833 | | | $ | 10,848 | | | $ | 11,427 | | | $ | 11,022 | |
| | | | | | | |
(1)Prior period impacts have been recast to conform to the current period presentation. See definitions of Non-GAAP measures earlier in this release.
(2)The three and nine months ended September 30, 2023, include impairments of certain fixed maturity AFS securities in an unrealized loss position, resulting from the Company’s intent to sell these securities as part of the fourth quarter 2023 reinsurance transaction.
(3)Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.
(4)Relates to the sale of our wealth management business, which provided approximately $650 million of statutory capital benefit.
(5)Includes certain legal accruals of $(12) million in the third quarter of 2023 and $(114) million primarily related to the settlement of cost of insurance litigation in the first quarter of 2024.
(6)Includes severance expense related to initiatives that realign the workforce of $(3) million, $(3) million, $(49) million, $(7) million and $(16) million in the first quarter of 2023, second quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively.
(7)Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(9) million, $(1) million, $(10) million, $(27) million and $(2) million for the second quarter of 2023, third quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively.
(8)Includes deferred compensation mark-to-market adjustment of $12 million, $(8) million, $1 million, $(13) million, $1 million and $(1) million in the first quarter of 2023, second quarter of 2023, third quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively.
(9)In periods where a net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use of diluted shares would result in a lower loss per share.
(10)This measure has been updated, effective beginning with the fourth quarter of 2023, to exclude reinsurance-related embedded derivatives and the underlying portfolio gains (losses), given the size of the impact of the fourth quarter 2023 reinsurance transaction. Such amounts in the prior periods presented, and the impact of this change to such prior periods, was not meaningful.
Lincoln National Corporation
Reconciliation of Book Value per Share
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of the Three Months Ended |
| | 9/30/23 | | 12/31/23 | | 3/31/24 | | 6/30/24 | | 9/30/24 |
| Book Value Per Common Share | | | | | | | | | | |
| Book value per share | $ | 13.04 | | $ | 34.81 | | $ | 38.46 | | $ | 40.78 | | $ | 46.97 | |
| Less: | | | | | | | | | | |
| AOCI | | (49.99) | | | (20.49) | | | (23.17) | | | (25.59) | | | (15.70) | |
| Book value per share, excluding AOCI | | 63.03 | | | 55.30 | | | 61.63 | | | 66.37 | | | 62.67 | |
| Less: | | | | | | | | | | |
| MRB-related gains (losses) | | 9.11 | | | 6.38 | | | 15.10 | | | 15.66 | | | 12.56 | |
| GLB and GDB hedge instruments gains (losses) | | (9.61) | | | (12.29) | | | (15.69) | | | (16.22) | | | (16.17) | |
Reinsurance-related embedded derivatives and portfolio gains (losses)(1) | | NM | | (3.76) | | | (2.79) | | | (1.58) | | | (3.76) | |
Adjusted book value per share(1) | $ | 63.53 | | $ | 64.97 | | $ | 65.01 | | $ | 68.51 | | $ | 70.04 | |
(1) This measure has been updated, effective beginning with the fourth quarter of 2023, to exclude reinsurance-related embedded derivatives and the underlying portfolio gains (losses), given the size of the impact of the fourth quarter 2023 reinsurance transaction. Such amounts in the prior periods presented, and the impact of this change to such prior periods, were not meaningful (NM).
Lincoln National Corporation
Digest of Earnings
| | | | | | | | | | | |
| For the |
| (in millions, except per share data) | Three Months Ended |
| September 30, |
| 2024 | | 2023 |
| | | |
| Revenues | $ | 4,111 | | | $ | 4,203 | |
| | | |
| Net Income (Loss) | $ | (528) | | | $ | 853 | |
| Preferred stock dividends declared | (34) | | | (34) | |
| | | |
| | | |
| Net Income (Loss) Available to Common | | | |
| Stockholders – Diluted | $ | (562) | | | $ | 819 | |
| | | |
| Net Income (Loss) Per Common Share – Basic | $ | (3.29) | | | $ | 4.82 | |
Net Income (Loss) Per Common Share – Diluted (2) | $ | (3.29) | | | $ | 4.79 | |
| | | |
| Average Shares – Basic | 170,773,438 | | | 169,645,881 |
| Average Shares – Diluted | 172,848,870 | | | 170,890,502 |
| | | |
| For the |
| Nine Months Ended |
| September 30, |
| 2024 | | 2023 |
| | | |
| Revenues | $ | 13,380 | | | $ | 10,946 | |
| | | |
| Net Income (Loss) | $ | 1,588 | | | $ | 483 | |
| Preferred stock dividends declared | (80) | | | (71) | |
| Adjustment for deferred units of LNC stock in our | | | |
deferred compensation plans (1) | 3 | | | (2) | |
| Net Income (Loss) Available to Common | | | |
| Stockholders – Diluted | $ | 1,511 | | | $ | 410 | |
| | | |
| Net Income (Loss) Per Common Share – Basic | $ | 8.85 | | | $ | 2.43 | |
| Net Income (Loss) Per Common Share – Diluted | $ | 8.75 | | | $ | 2.40 | |
| | | |
| Average Shares – Basic | 170,482,264 | | | 169,529,509 |
| Average Shares – Diluted | 172,767,554 | | | 170,625,444 |
(1) We exclude deferred units of LNC stock that are antidilutive from our diluted earnings per share calculation.
(2) In periods where a net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use of diluted shares would result in a lower loss per share.
FORWARD-LOOKING STATEMENTS – CAUTIONARY LANGUAGE
Certain statements made in this press release and in other written or oral statements made by Lincoln or on Lincoln’s behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may contain words like: “anticipate,” “believe,” “estimate,” “expect,” “project,” “shall,” “will” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in Lincoln’s businesses, prospective services or products, future performance or financial results and the outcome of contingencies, such as legal proceedings. Lincoln claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.
Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those expressed in or implied by such forward-looking statements due to a variety of factors, including:
•Weak general economic and business conditions that may affect demand for our products, account balances, investment results, guaranteed benefit liabilities, premium levels and claims experience;
•Adverse global capital and credit market conditions that may affect our ability to raise capital, if necessary, and may cause us to realize impairments on investments and certain intangible assets, including goodwill and the valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures;
•The inability of our subsidiaries to pay dividends to the holding company in sufficient amounts, which could harm the holding company’s ability to meet its obligations;
•Legislative, regulatory or tax changes, both domestic and foreign, that affect: the cost of, or demand for, our subsidiaries’ products; the required amount of reserves and/or surplus; our ability to conduct business and our captive reinsurance arrangements as well as restrictions on the payment of revenue sharing and 12b-1 distribution fees;
•Changes in tax law or the interpretation of or application of existing tax laws that could impact our tax costs and the products that we sell;
•The impact of regulations adopted by the Securities and Exchange Commission (“SEC”), the Department of Labor or other federal or state regulators or self-regulatory organizations that could adversely affect our distribution model and sales of our products and result in additional disclosure and other requirements related to the sale and delivery of our products;
•The impact of new and emerging rules, laws and regulations relating to privacy, cybersecurity and artificial intelligence that may lead to increased compliance costs, reputation risk and/or changes in business practices;
•Increasing scrutiny and evolving expectations and regulations regarding ESG matters that may adversely affect our reputation and our investment portfolio;
•Actions taken by reinsurers to raise rates on in-force business;
•Declines in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses and demand for our products;
•Rapidly increasing or sustained high interest rates that may negatively affect our profitability, value of our investment portfolio and capital position and may cause policyholders to surrender annuity and life insurance policies, thereby causing realized investment losses;
•The impact of the implementation of the provisions of the European Market Infrastructure Regulation relating to the regulation of derivatives transactions;
•The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as: adverse actions related to present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings;
•A decline or continued volatility in the equity markets causing a reduction in the sales of our subsidiaries’ products; a reduction of asset-based fees that our subsidiaries charge on various investment and insurance products; and an increase in liabilities related to guaranteed benefit riders, which are accounted for as market risk benefits, of our subsidiaries’ variable annuity products;
•Ineffectiveness of our risk management policies and procedures, including our various hedging strategies;
•A deviation in actual experience regarding future policyholder behavior, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries’ products and in establishing related insurance reserves, which may reduce future earnings;
•Changes in accounting principles that may affect our consolidated financial statements;
•Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on our ability to raise capital and on our liquidity and financial condition;
•Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the premium writings, policy retention, profitability of our insurance subsidiaries and liquidity;
•Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain financial assets, as well as counterparties to which we are exposed to credit risk, requiring that we realize losses on financial assets;
•Interruption in telecommunication, information technology or other operational systems or failure to safeguard the confidentiality or privacy of sensitive data on such systems, including from cyberattacks or other breaches of our data security systems;
•The effect of acquisitions and divestitures, including the inability to realize the anticipated benefits of acquisitions and dispositions of businesses and potential operating difficulties and unforeseen liabilities relating thereto, as well as the effect of restructurings, product withdrawals and other unusual items;
•The inability to realize or sustain the benefits we expect from, greater than expected investments in, and the potential impact of efforts related to, our strategic initiatives;
•The adequacy and collectability of reinsurance that we have obtained;
•Pandemics, acts of terrorism, war or other man-made and natural catastrophes that may adversely impact liabilities for policyholder claims, affect our businesses and increase the cost and availability of reinsurance;
•Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that our subsidiaries can charge for their products;
•The unknown effect on our subsidiaries’ businesses resulting from evolving market preferences and the changing demographics of our client base; and
•The unanticipated loss of key management or wholesalers.
The risks and uncertainties included here are not exhaustive. Our most recent Form 10-K, as well as other reports that we file with the SEC, include additional factors that could affect our businesses and
financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.
Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to correct or update any forward-looking statements to reflect events or circumstances that occur after the date of this press release.
The reporting of Risk-Based Capital (“RBC”) measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.
Statistical Supplement
Third Quarter 2024
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| Lincoln Financial |
| Table of Contents |
| |
| | |
| Notes ................................................................................................................................................................................................................................................................. | |
| Credit Ratings ................................................................................................................................................................................................................................................... | |
| Consolidated | |
| Consolidated Statements of Income (Loss) ................................................................................................................................................................................................ | |
| Consolidated Balance Sheets ....................................................................................................................................................................................................................... | |
| Earnings, Shares and Return on Equity ......................................................................................................................................................................................................... | |
| Key Stakeholder Metrics ............................................................................................................................................................................................................................... | |
| Select Earnings Drivers By Segment ............................................................................................................................................................................................................ | |
| Sales By Segment .......................................................................................................................................................................................................................................... | |
| | |
| Operating Commissions and Other Expenses ............................................................................................................................................................................................. | |
| | |
| Select Earnings and Operational Data from Business Segments and Other Operations | |
| | |
| Annuities ......................................................................................................................................................................................................................................................... | |
| Life Insurance ................................................................................................................................................................................................................................................ | |
| Group Protection ............................................................................................................................................................................................................................................ | |
| Retirement Plan Services .............................................................................................................................................................................................................................. | |
| | |
| DAC and Account Balance Roll Forwards | |
| | |
| Account Balance Roll Forwards: | |
| Annuities ...................................................................................................................................................................................................................................................... | |
| Life Insurance .............................................................................................................................................................................................................................................. | |
| Retirement Plan Services ............................................................................................................................................................................................................................ | |
| Investment Information | |
| Fixed-Income Asset Class ............................................................................................................................................................................................................................. | |
| Fixed-Income Credit Quality .......................................................................................................................................................................................................................... | |
| GAAP to Non-GAAP Reconciliations | |
| Select GAAP to Non-GAAP Reconciliations ................................................................................................................................................................................................. | |
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| Lincoln Financial | | | | | | | | | | | | | | | | | | | | | | | | | |
| Notes | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Non-GAAP Performance Measures | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP measures do not replace the most directly comparable GAAP measures, and we have included detailed reconciliations herein beginning on page 26. | | | | | | | | | | | | | | | | | | | | | | | | | |
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| In the third quarter of 2024, we revised our definition of adjusted income (loss) from operations to exclude the impact of certain items that are not indicative of the ongoing operations of | | | | | | | | | | | | | | | | | | | | | | | | | |
| the business and may obscure trends in the underlying performance of the Company. The revised definition now excludes, as applicable, certain legal accruals, severance expense related to initiatives | | | | | | | | | | | | | | | | | | | | | | | | | |
| that realign the workforce, the mark-to-market adjustment related to the LNC stock component of our deferred compensation plans, impacts from the settlement or curtailment of | | | | | | | | | | | | | | | | | | | | | | | | | |
| defined benefit obligations and the effect of tax adjustments such as changes to deferred tax valuation allowances from the definition of adjusted income (loss) from operations. | | | | | | | | | | | | | | | | | | | | | | | | | |
| The presentation of prior period adjusted income (loss) from operations has been recast to conform to the current period presentation. | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Adjusted Income (Loss) From Operations | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted income (loss) from operations is GAAP net income excluding the effects of the following items, as applicable: | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Items related to annuity product features, which include changes in market risk benefits (“MRBs”), including gains and losses and benefit payments (“MRB-related impacts”), changes in the fair | | | | | | | | | | | | | | | | | | | | | | | | | |
| value of the derivative instruments we hold to hedge guaranteed living benefit (“GLB”) and guaranteed death benefit (“GDB”) riders, net of fee income allocated to support the cost of hedging them, | | | | | | | | | | | | | | | | | | | | | | | | | |
| and changes in the fair value of the embedded derivative liabilities of our indexed annuity contracts and the associated index options we hold to hedge them, including collateral expense associated with | | | | | | | | | | | | | | | | | | | | | | | | | |
| the hedge program (collectively, “net annuity product features”); | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of variable universal life insurance (“VUL”) hedging, changes in reserves resulting | | | | | | | | | | | | | | | | | | | | | | | | | |
| from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our indexed universal life insurance (“IUL”) contracts | | | | | | | | | | | | | | | | | | | | | | | | | |
| and the associated index options we hold to hedge them (collectively, “net life insurance product features”); | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Credit loss-related adjustments on fixed maturity available-for-sale (“AFS”) securities, mortgage loans on real estate and reinsurance-related assets (“credit loss-related adjustments”); | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Changes in the fair value of equity securities, certain derivatives, certain other investments and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, “investment | | | | | | | | | | | | | | | | | | | | | | | | | |
| gains (losses)”); | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option (“changes in the fair value of reinsurance-related | | | | | | | | | | | | | | | | | | | | | | | | | |
| embedded derivatives, trading securities and certain mortgage loans”); | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Income (loss) from the initial adoption of new accounting standards, accounting policy changes and new regulations, including changes in tax law; | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance; | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Losses from the impairment of intangible assets and gains (losses) on other non-financial assets; | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Income (loss) from discontinued operations. | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Other items, which include the following: certain legal accruals; severance expense related to initiatives that realign the workforce; transaction and integration costs related to mergers and | | | | | | | | | | | | | | | | | | | | | | | | | |
| acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business; mark-to-market adjustment related to the LNC stock component of our | | | | | | | | | | | | | | | | | | | | | | | | | |
| deferred compensation plans (“deferred compensation mark-to-market adjustment”); gain (losses) on modification or early extinguishment of debt; and impacts from settlement or curtailment of | | | | | | | | | | | | | | | | | | | | | | | | | |
| defined benefit obligations; and | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Income tax benefit (expense) related to the above pre-tax items, including the effect of tax adjustments such as changes to deferred tax valuation allowances. | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends. | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Adjusted Operating Revenues | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted operating revenues represent GAAP revenues excluding the effects of the following items, as applicable: | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Changes in the fair value of the derivative instruments we hold to hedge GLB and GDB riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the | | | | | | | | | | | | | | | | | | | | | | | | | |
| embedded derivative liabilities of our indexed annuity and indexed universal life insurance contracts and the associated index options we hold to hedge them (“revenue adjustments from annuity and | | | | | | | | | | | | | | | | | | | | | | | | | |
| life insurance product features”); | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • Credit loss-related adjustments; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • Investment gains (losses); | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans; | | | | | | | | | | | | | | | | | | | | | | | | | |
| • Revenue adjustments from the initial adoption of new accounting standards; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (continued on following page) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Lincoln Financial | |
| Notes | |
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| Non-GAAP Performance Measures, Continued | |
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| (continued from the previous page) | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • Amortization of deferred gains arising from reserve changes on business sold through reinsurance; and | |
| • Gains (losses) on other non-financial assets. | |
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| Management believes that the non-GAAP performance measures discussed above explain the results of our ongoing businesses in a manner that allows for a better understanding of the underlying trends | |
| in our current business as the excluded items are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in many instances, | |
| decisions regarding these items do not necessarily relate to the operations of the individual segments. In addition, we believe that our definitions of adjusted operating revenues and adjusted income (loss) | |
| from operations provide investors with more valuable measures of our performance as they better reveal trends in our business. | |
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| Stockholders’ Equity, Excluding AOCI and Preferred Stock | |
| Stockholders’ equity, excluding AOCI and preferred stock is stockholders’ equity, excluding AOCI and preferred stock. Management believes this metric is useful to investors because it eliminates market | |
| movements that are unpredictable and can fluctuate significantly from period to period, primarily related to changes in interest rates. Stockholders’ equity is the most directly comparable GAAP measure. | |
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| Adjusted Stockholders’ Equity | |
| Adjusted stockholders’ equity is stockholders’ equity, excluding AOCI, preferred stock, MRB-related impacts, GLB and GDB hedged instruments gains (losses) and the difference between | |
| amounts recognized in net income (loss) on reinsurance-related embedded derivatives and the underlying asset portfolios (“reinsurance-related embedded derivatives and portfolio gains (losses)”). | |
| Management believes this metric is useful to investors because it eliminates the effect of market movements that are unpredictable and can fluctuate significantly from period to period, primarily related to | |
| changes in equity markets and interest rates. Stockholders’ equity is the most directly comparable GAAP measure. | |
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| Book Value per Share, Excluding AOCI | |
| Book value per share, excluding AOCI, is calculated by dividing stockholders’ equity, excluding AOCI and preferred stock, by common shares outstanding. We provide book value per share, excluding AOCI, to | |
| enable investors to analyze the amount of our net worth that is attributable primarily to our business operations. Management believes book value per share, excluding AOCI, is useful to investors because it | |
| eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per share is the most directly comparable GAAP | |
| measure. | |
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| Adjusted Book Value per Share | |
| Adjusted book value per share is calculated by dividing adjusted stockholders’ equity by common shares outstanding. We provide adjusted book value per share to enable investors to analyze the amount | |
| of our net worth that is attributable primarily to our business operations. Management believes adjusted book value per share is useful to investors because it eliminates the effect of items that are | |
| unpredictable and can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates. Book value per share is the most directly comparable GAAP measure. | |
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| Adjusted Income (Loss) From Operations Available to Common Stockholders, Excluding AOCI and Preferred Stock ROE | |
| Adjusted income (loss) from operations available to common stockholders, excluding AOCI and preferred stock ROE is calculated by dividing annualized adjusted income (loss) from operations available | |
| to common stockholders by average stockholders’ equity, excluding AOCI and preferred stock. Management believes this metric is useful to investors because it eliminates the effect of market movements | |
| on ROE that are unpredictable and can fluctuate significantly from period to period, primarily related to changes in interest rates. Net income (loss) ROE is the most directly comparable GAAP measure. | |
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| Adjusted Income (Loss) From Operations ROE | |
| Adjusted income (loss) from operations ROE is calculated by dividing annualized adjusted income (loss) from operations available to common stockholders by adjusted average stockholders’ equity. | |
| Management believes this metric is useful to investors because it eliminates the effect of market movements on ROE that are unpredictable and can fluctuate significantly from period to period, primarily | |
| related to changes in equity markets and interest rates. Net income (loss) ROE is the most directly comparable GAAP measure. | |
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| Management believes that the non-GAAP measures discussed above allow for a better understanding of the underlying trends in our current business as the excluded items are unpredictable and not necessarily | |
| indicative of current operating fundamentals or future performance of the business. | |
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| Lincoln Financial | |
| Notes | |
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| Computations | |
| • The quarterly financial information for the current year may not sum to the corresponding year-to-date amount as both are rounded to millions. | |
| • The financial ratios reported herein are calculated using whole dollars instead of dollars rounded to millions. | |
| • We exclude deferred units of LNC stock that are antidilutive from our diluted net income (loss) earnings per share calculation. In addition, for any period where a net loss or adjusted loss from operations | |
| is experienced, shares used in the diluted EPS calculation represent basic shares, as the use of diluted shares would result in a lower loss per share. | |
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| Definitions | |
| Holding company available liquidity consists of cash and invested cash, excluding cash held as collateral, and certain short-term investments that can be readily converted into cash, net of commercial paper | |
| outstanding. | |
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| Return on equity (“ROE”) measures how efficiently we generate profits from the resources provided by our net assets. See adjusted income (loss) from operations ROE and adjusted income (loss) from | |
| operations available to common stockholders, excluding AOCI and preferred stock ROE metrics on page 2 for further information on how these metrics are calculated. Management evaluates consolidated | |
| ROE by both including and excluding the effect of average goodwill. | |
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| Leverage ratio is a measure that we use to monitor the level of our debt relative to our total capitalization. Debt used in this metric reflects total debt and preferred stock adjusted for certain items. | |
| Total capitalization reflects debt used in the numerator of this ratio and stockholders' equity adjusted for certain items. | |
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| Indexed variable annuities are referred to as registered index-linked annuities (“RILA”). | |
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| Sales as reported consist of the following: | |
| • Annuities and Retirement Plan Services – deposits from new and existing customers; | |
| • Universal life insurance (“UL”), IUL, VUL – first-year commissionable premiums plus 5% of excess premiums received; | |
| • MoneyGuard® linked-benefit products – MoneyGuard® (UL), 15% of total expected premium deposits, and MoneyGuard Market AdvantageSM (VUL), 150% of commissionable premiums; | |
| • Executive Benefits – insurance and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess premium received, and single premium bank-owned UL and VUL, 15% of | |
| single premium deposits; | |
| • Term – 100% of annualized first-year premiums; and | |
| • Group Protection – annualized first-year premiums from new policies. | |
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| Statistical Supplement is Dated | |
| This document is dated October 31, 2024, and has not been updated since that date. Lincoln Financial does not intend to update this document. | |
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| Lincoln Financial | |
| Credit Ratings | |
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| | | | | | | | | | | | | | | | Ratings as of October 31, 2024 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Standard | |
| | | | | | | | | | | | | | | | | AM Best | | | Fitch | | | Moody's | | & Poor's | |
| Senior Debt Ratings | | | | | | | | | | | | | | | | bbb+ | | | BBB+ | | | Baa2 | | BBB+ | |
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| Financial Strength Ratings | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Lincoln National Life Insurance Company | | | | | | | | | | | | | | | | A | | | A+ | | | A2 | | A+ | |
| First Penn-Pacific Life Insurance Company | | | | | | | | | | | | | | | | A | | | A+ | | | A2 | | A- | |
| Lincoln Life & Annuity Company of New York | | | | | | | | | | | | | | | | A | | | A+ | | | A2 | | A+ | |
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| Investor Inquiries May Be Directed To: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tina Madon, Senior Vice President, | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Relations | | | | | | | | | | | | | | | | | | | | | | | | | |
| Email: InvestorRelations@lfg.com | | | | | | | | | | | | | | | | | | | | | | | | | |
| Phone: 800-237-2920 | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Lincoln Financial | |
| Consolidated Statements of Income (Loss) | |
| Unaudited (millions of dollars, except per share data) | |
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| | | For the Three Months Ended | | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Insurance premiums | $ | 1,566 | | | $ | (1,086) | | | $ | 1,601 | | | $ | 1,625 | | | $ | 1,614 | | | | 3.1 | % | | $ | 4,757 | | | $ | 4,839 | | | | 1.7 | % | |
| Fee income | | 1,363 | | | | 1,361 | | | | 1,324 | | | | 1,339 | | | | 1,352 | | | | -0.8 | % | | | 4,107 | | | | 4,015 | | | | -2.2 | % | |
| Net investment income | | 1,494 | | | | 1,411 | | | | 1,346 | | | | 1,332 | | | | 1,411 | | | | -5.6 | % | | | 4,468 | | | | 4,090 | | | | -8.5 | % | |
| Realized gain (loss) | | (453) | | | | (1,245) | | | | (434) | | | | 663 | | | | (431) | | | | 4.9 | % | | | (3,066) | | | | (201) | | | | 93.4 | % | |
| Other revenues | | 233 | | | | 259 | | | | 279 | | | | 194 | | | | 165 | | | | -29.2 | % | | | 680 | | | | 637 | | | | -6.3 | % | |
| Total revenues | | 4,203 | | | | 700 | | | | 4,116 | | | | 5,153 | | | | 4,111 | | | | -2.2 | % | | | 10,946 | | | | 13,380 | | | | 22.2 | % | |
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| Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits | | 2,152 | | | | (497) | | | | 2,003 | | | | 2,008 | | | | 1,937 | | | | -10.0 | % | | | 6,635 | | | | 5,948 | | | | -10.4 | % | |
| Interest credited | | 831 | | | | 824 | | | | 822 | | | | 853 | | | | 880 | | | | 5.9 | % | | | 2,424 | | | | 2,555 | | | | 5.4 | % | |
| Market risk benefit (gain) loss | | (1,428) | | | | 568 | | | | (1,907) | | | | (136) | | | | 657 | | | | 146.0 | % | | | (2,832) | | | | (1,386) | | | | 51.1 | % | |
| Policyholder liability remeasurement (gain) loss | | 159 | | | | (84) | | | | (12) | | | | (105) | | | | (50) | | | | NM | | | (68) | | | | (166) | | | | NM | |
| Commissions and other expenses | | 1,371 | | | | 1,421 | | | | 1,601 | | | | 1,351 | | | | 1,304 | | | | -4.9 | % | | | 4,071 | | | | 4,254 | | | | 4.5 | % | |
| Interest and debt expense | | 84 | | | | 81 | | | | 81 | | | | 86 | | | | 86 | | | | 2.4 | % | | | 250 | | | | 253 | | | | 1.2 | % | |
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| Total expenses | | 3,169 | | | | 2,313 | | | | 2,588 | | | | 4,057 | | | | 4,814 | | | | 51.9 | % | | | 10,480 | | | | 11,458 | | | | 9.3 | % | |
| Income (loss) before taxes | | 1,034 | | | | (1,613) | | | | 1,528 | | | | 1,096 | | | | (703) | | | | NM | | | 466 | | | | 1,922 | | | | NM | |
| Federal income tax expense (benefit) | | 181 | | | | (378) | | | | 306 | | | | 201 | | | | (175) | | | | NM | | | (17) | | | | 334 | | | | NM | |
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| Net income (loss) | | 853 | | | | (1,235) | | | | 1,222 | | | | 895 | | | | (528) | | | | NM | | | 483 | | | | 1,588 | | | | 228.8 | % | |
| Preferred stock dividends declared | | (34) | | | | (11) | | | | (34) | | | | (11) | | | | (34) | | | | 0.0% | | | (71) | | | | (80) | | | | -12.7 | % | |
| Adjustment for deferred units of LNC stock | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| in our deferred compensation plans | | — | | | | — | | | | 3 | | | | — | | | | — | | | | NM | | | (2) | | | | 3 | | | | 250.0 | % | |
| Net income (loss) available to common | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| stockholders – diluted | $ | 819 | | | $ | (1,246) | | | $ | 1,191 | | | $ | 884 | | | $ | (562) | | | | NM | | $ | 410 | | | $ | 1,511 | | | | 268.5 | % | |
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| Earnings (Loss) Per Common Share – Diluted | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net income (loss) | $ | 4.79 | | | $ | (7.35) | | | $ | 6.93 | | | $ | 5.11 | | | $ | (3.29) | | | | NM | | $ | 2.40 | | | $ | 8.75 | | | | 264.6 | % | |
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| Lincoln Financial |
| Consolidated Balance Sheets |
| Unaudited (millions of dollars) |
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| | | As of | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | | | | | | | |
| Fixed maturity available-for-sale (“AFS”) securities, net of allowance for | | | | | | | | | | | | | | | | | | |
| credit losses: | | | | | | | | | | | | | | | | | | |
| Corporate bonds | $ | 76,001 | | | $ | 69,657 | | | $ | 68,533 | | | $ | 67,313 | | | $ | 70,234 | | | | -7.6% | |
| U.S. government bonds | | 373 | | | | 393 | | | | 391 | | | | 389 | | | | 398 | | | | 6.7% | |
| State and municipal bonds | | 4,770 | | | | 2,790 | | | | 2,743 | | | | 2,564 | | | | 2,567 | | | | -46.2% | |
| Foreign government bonds | | 273 | | | | 283 | | | | 263 | | | | 260 | | | | 252 | | | | -7.7% | |
| Residential mortgage-backed securities | | 1,928 | | | | 1,773 | | | | 1,760 | | | | 1,795 | | | | 1,882 | | | | -2.4% | |
| Commercial mortgage-backed securities | | 1,701 | | | | 1,424 | | | | 1,484 | | | | 1,542 | | | | 1,643 | | | | -3.4% | |
| Asset-backed securities | | 12,393 | | | | 12,171 | | | | 12,349 | | | | 13,072 | | | | 13,444 | | | | 8.5% | |
| Hybrid and redeemable preferred securities | | 365 | | | | 247 | | | | 241 | | | | 239 | | | | 262 | | | | -28.2% | |
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| Total fixed maturity AFS securities, net of allowance for credit losses | | 97,804 | | | | 88,738 | | | | 87,764 | | | | 87,174 | | | | 90,682 | | | | -7.3% | |
| Trading securities | | 2,788 | | | | 2,359 | | | | 2,227 | | | | 2,201 | | | | 2,206 | | | | -20.9% | |
| Equity securities | | 383 | | | | 306 | | | | 319 | | | | 295 | | | | 293 | | | | -23.5% | |
| Mortgage loans on real estate, net of allowance for credit losses | | 18,751 | | | | 18,963 | | | | 19,266 | | | | 20,152 | | | | 20,856 | | | | 11.2% | |
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| Policy loans | | 2,428 | | | | 2,476 | | | | 2,476 | | | | 2,513 | | | | 2,510 | | | | 3.4% | |
| Derivative investments | | 5,790 | | | | 6,474 | | | | 8,394 | | | | 8,608 | | | | 9,522 | | | | 64.5% | |
| Other investments | | 4,551 | | | | 5,015 | | | | 5,256 | | | | 5,652 | | | | 5,743 | | | | 26.2% | |
| Total investments | | 132,495 | | | | 124,331 | | | | 125,702 | | | | 126,595 | | | | 131,812 | | | | -0.5% | |
| Cash and invested cash | | 2,529 | | | | 3,365 | | | | 4,122 | | | | 5,475 | | | | 6,013 | | | | 137.8% | |
| Deferred acquisition costs, value of business acquired and deferred sales inducements | | 12,341 | | | | 12,397 | | | | 12,405 | | | | 12,435 | | | | 12,475 | | | | 1.1% | |
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| Reinsurance recoverables, net of allowance for credit losses | | 18,924 | | | | 29,843 | | | | 29,461 | | | | 29,126 | | | | 29,233 | | | | 54.5% | |
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| Deposit assets, net of allowance for credit losses | | 12,494 | | | | 28,789 | | | | 28,904 | | | | 29,888 | | | | 30,501 | | | | 144.1% | |
| Market risk benefit assets | | 4,108 | | | | 3,894 | | | | 4,878 | | | | 4,754 | | | | 4,565 | | | | 11.1% | |
| Accrued investment income | | 1,372 | | | | 1,082 | | | | 1,127 | | | | 1,135 | | | | 1,160 | | | | -15.5% | |
| Goodwill | | 1,144 | | | | 1,144 | | | | 1,144 | | | | 1,144 | | | | 1,144 | | | | 0.0% | |
| Other assets | | 7,351 | | | | 9,311 | | | | 9,413 | | | | 8,782 | | | | 8,454 | | | | 15.0% | |
| Separate account assets | | 145,810 | | | | 158,257 | | | | 166,225 | | | | 165,199 | | | | 171,483 | | | | 17.6% | |
| Total assets | $ | 338,568 | | | $ | 372,413 | | | $ | 383,381 | | | $ | 384,533 | | | $ | 396,840 | | | | 17.2% | |
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| Lincoln Financial |
| Consolidated Balance Sheets |
| Unaudited (millions of dollars) |
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| | | As of | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | |
| Policyholder account balances | $ | 117,210 | | | $ | 120,737 | | | $ | 122,300 | | | $ | 124,113 | | | $ | 125,968 | | | | 7.5 | % | |
| Future contract benefits | | 39,362 | | | | 39,864 | | | | 38,848 | | | | 38,560 | | | | 41,169 | | | | 4.6 | % | |
| Funds withheld reinsurance liabilities | | 5,006 | | | | 17,641 | | | | 17,486 | | | | 17,044 | | | | 17,595 | | | | 251.5 | % | |
| Market risk benefit liabilities | | 1,385 | | | | 1,716 | | | | 1,266 | | | | 1,275 | | | | 1,272 | | | | -8.2 | % | |
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| Deferred front-end loads | | 5,695 | | | | 5,901 | | | | 6,099 | | | | 6,306 | | | | 6,517 | | | | 14.4 | % | |
| Payables for collateral on investments | | 8,046 | | | | 8,105 | | | | 10,117 | | | | 11,114 | | | | 10,570 | | | | 31.4 | % | |
| Short-term debt | | — | | | | 250 | | | | 503 | | | | 450 | | | | 300 | | | | NM | |
| Long-term debt by rating agency leverage definitions: | | | | | | | | | | | | | | | | | | |
| Operating (see note (2) on page 9 for details) | | 867 | | | | 867 | | | | 867 | | | | 867 | | | | 867 | | | | 0.0% | |
| Financial | | 5,038 | | | | 4,832 | | | | 4,859 | | | | 4,849 | | | | 5,030 | | | | -0.2 | % | |
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| Other liabilities | | 6,950 | | | | 7,350 | | | | 7,265 | | | | 6,807 | | | | 7,056 | | | | 1.5 | % | |
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| Separate account liabilities | | 145,810 | | | | 158,257 | | | | 166,225 | | | | 165,199 | | | | 171,483 | | | | 17.6 | % | |
| Total liabilities | | 335,369 | | | | 365,520 | | | | 375,835 | | | | 376,584 | | | | 387,827 | | | | 15.6 | % | |
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| Stockholders’ Equity | | | | | | | | | | | | | | | | | | |
| Preferred stock | | 986 | | | | 986 | | | | 986 | | | | 986 | | | | 986 | | | | 0.0% | |
| Common stock | | 4,591 | | | | 4,605 | | | | 4,624 | | | | 4,641 | | | | 4,660 | | | | 1.5 | % | |
| Retained earnings | | 6,102 | | | | 4,778 | | | | 5,887 | | | | 6,691 | | | | 6,049 | | | | -0.9 | % | |
| Accumulated other comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
| Unrealized investment gain (loss) | | (10,163) | | | | (4,813) | | | | (4,940) | | | | (5,253) | | | | (3,565) | | | | 64.9 | % | |
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| Market risk benefit non-performance risk gain (loss) | | 998 | | | | 1,070 | | | | 606 | | | | 409 | | | | 781 | | | | -21.7 | % | |
| Policyholder liability discount rate remeasurement gain (loss) | | 1,021 | | | | 587 | | | | 703 | | | | 795 | | | | 422 | | | | -58.7 | % | |
| Foreign currency translation adjustment | | (32) | | | | (26) | | | | (27) | | | | (27) | | | | (18) | | | | 43.8 | % | |
| Funded status of employee benefit plans | | (304) | | | | (294) | | | | (293) | | | | (293) | | | | (302) | | | | 0.7 | % | |
| Total accumulated other comprehensive income (loss) | | (8,480) | | | | (3,476) | | | | (3,951) | | | | (4,369) | | | | (2,682) | | | | 68.4 | % | |
| Total stockholders’ equity | | 3,199 | | | | 6,893 | | | | 7,546 | | | | 7,949 | | | | 9,013 | | | | 181.7 | % | |
| Total liabilities and stockholders’ equity | $ | 338,568 | | | $ | 372,413 | | | $ | 383,381 | | | $ | 384,533 | | | $ | 396,840 | | | | 17.2 | % | |
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| Lincoln Financial | | | | | | | |
| Earnings, Shares and Return on Equity | | | | | | | |
| Unaudited (millions of dollars, except per share data) | | | | | | | |
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| | | As of or For the Three Months Ended | | As of or For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | Change | | | 9/30/23 | | | 9/30/24 | | Change | |
| Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | $ | 853 | | | $ | (1,235) | | | $ | 1,222 | | | $ | 895 | | | $ | (528) | | | NM | | $ | 483 | | | $ | 1,588 | | | 228.8 | % | |
| Pre-tax adjusted income (loss) from operations (1) | | 58 | | | | 282 | | | | 291 | | | | 389 | | | | 461 | | | NM | | | 761 | | | | 1,141 | | | 49.9 | % | |
| After-tax adjusted income (loss) from operations (1)(2) | | 84 | | | | 263 | | | | 244 | | | | 335 | | | | 392 | | | NM | | | 728 | | | | 971 | | | 33.4 | % | |
| Adjusted operating tax rate (1) | | -44.7 | % | | | 7.0 | % | | | 16.1 | % | | | 13.7 | % | | | 15.0 | % | | | | | 4.3 | % | | | 14.9 | % | | | |
| Adjusted income (loss) from operations available to | | | | | | | | | | | | | | | | | | | | | | | | | |
| common stockholders (1) | | 50 | | | | 252 | | | | 210 | | | | 324 | | | | 358 | | | NM | | | 657 | | | | 891 | | | 35.6 | % | |
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| ROE | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) ROE | | 75.7 | % | | | -97.9 | % | | | 67.7 | % | | | 46.2 | % | | | -24.9 | % | | | | | 11.6 | % | | | 27.1 | % | | | |
| Adjusted income (loss) from operations available to common | | | | | | | | | | | | | | | | | | | | | | | | | |
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| stockholders, excluding AOCI and preferred stock ROE (1) | | 1.9 | % | | | 10.0 | % | | | 8.4 | % | | | 11.9 | % | | | 13.0 | % | | | | | 8.8 | % | | | 11.2 | % | | | |
| Adjusted income (loss) from operations ROE (1)(5) | | 1.8 | % | | | 9.2 | % | | | 7.6 | % | | | 11.4 | % | | | 12.1 | % | | | | | 7.9 | % | | | 10.4 | % | | | |
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| Per Common Share | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) (diluted) | $ | 4.79 | | | $ | (7.35) | | | $ | 6.93 | | | $ | 5.11 | | | $ | (3.29) | | | NM | | $ | 2.40 | | | $ | 8.75 | | | 264.6 | % | |
| Adjusted income (loss) from operations (diluted) (1)(3) | | 0.29 | | | | 1.47 | | | | 1.22 | | | | 1.87 | | | | 2.06 | | | NM | | | 3.85 | | | | 5.16 | | | 34.0 | % | |
| Dividends declared during the period | | 0.45 | | | | 0.45 | | | | 0.45 | | | | 0.45 | | | | 0.45 | | | 0.0% | | | 1.35 | | | | 1.35 | | | 0.0% | |
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| Book Value Per Common Share | | | | | | | | | | | | | | | | | | | | | | | | | |
| Book value per share | $ | 13.04 | | | $ | 34.81 | | | $ | 38.46 | | | $ | 40.78 | | | $ | 46.97 | | | 260.2 | % | | $ | 13.04 | | | $ | 46.97 | | | 260.2 | % | |
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| Book value per share, excluding AOCI (4) | | 63.03 | | | | 55.30 | | | | 61.63 | | | | 66.37 | | | | 62.67 | | | -0.6 | % | | | 63.03 | | | | 62.67 | | | -0.6 | % | |
| Adjusted book value per share (4)(5) | | 63.53 | | | | 64.97 | | | | 65.01 | | | | 68.51 | | | | 70.04 | | | 10.2 | % | | | 63.53 | | | | 70.04 | | | 10.2 | % | |
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| Common Shares | | | | | | | | | | | | | | | | | | | | | | | | | |
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| End-of-period – basic | | 169.7 | | | | 169.7 | | | | 170.5 | | | | 170.7 | | | | 170.9 | | | 0.7 | % | | | 169.7 | | | | 170.9 | | | 0.7 | % | |
| Average for the period – basic | | 169.6 | | | | 169.7 | | | | 170.0 | | | | 170.6 | | | | 170.8 | | | 0.7 | % | | | 169.5 | | | | 170.5 | | | 0.6 | % | |
| End-of-period – diluted (1) | | 171.0 | | | | 171.3 | | | | 172.4 | | | | 173.4 | | | | 173.6 | | | 1.5 | % | | | 171.0 | | | | 173.6 | | | 1.5 | % | |
| Average for the period – diluted (1) | | 170.9 | | | | 171.1 | | | | 171.8 | | | | 172.9 | | | | 173.6 | | | 1.6 | % | | | 170.6 | | | | 172.8 | | | 1.3 | % | |
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| (1) Prior period impacts have been recast to conform to the current period presentation. See page 1 for further information. | | | | | | | | | |
| (2) See reconciliation to net income (loss) on page 26. | | | | | | | | | | | | | | | | | |
| (3) See reconciliation to earnings (loss) per common share - diluted on page 28. | | | | | | | | | | | | | | | |
| (4) See reconciliation to stockholders’ equity and book value per common share on page 29. | |
| (5) This measure has been updated, effective beginning with the fourth quarter of 2023, to exclude reinsurance-related embedded derivatives and the underlying portfolio | |
| gains (losses), given the size of the impact of the fourth quarter 2023 reinsurance transaction. Such amounts in the prior periods presented, and the impact of this change to such | |
| prior periods, was not meaningful (“NM”). | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Lincoln Financial | | | | | | | |
| Key Stakeholder Metrics | | | | | | | |
| Unaudited (millions of dollars, except per share data) | | | | | | | |
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| | As of or For the Three Months Ended | | For the Nine Months Ended | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | Change | |
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| Cash Returned to Common Stockholders – Common Dividends | $ | 76 | | | $ | 76 | | | $ | 76 | | | $ | 77 | | | $ | 77 | | | | 1.3 | % | | $ | 229 | | | $ | 229 | | | 0.0% | |
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| Cash Returned to Preferred Stockholders – Preferred Dividends | $ | 34 | | | $ | 11 | | | $ | 34 | | | $ | 11 | | | $ | 34 | | | | 0.0% | | $ | 71 | | | $ | 80 | | | 12.7 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Leverage Ratio | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term debt (1) | $ | — | | | $ | 250 | | | $ | 503 | | | $ | 450 | | | $ | 300 | | | | NM | | | | | | | | | |
| Long-term debt | | 5,905 | | | | 5,699 | | | | 5,726 | | | | 5,716 | | | | 5,897 | | | | -0.1 | % | | | | | | | | | |
| Total debt (2) | | 5,905 | | | | 5,949 | | | | 6,229 | | | | 6,166 | | | | 6,197 | | | | 4.9 | % | | | | | | | | | |
| Preferred stock | | 986 | | | | 986 | | | | 986 | | | | 986 | | | | 986 | | | | 0.0% | | | | | | | | | |
| Total debt and preferred stock | | 6,891 | | | | 6,935 | | | | 7,215 | | | | 7,152 | | | | 7,183 | | | | 4.2 | % | | | | | | | | | |
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| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating debt (3) | | 867 | | | | 867 | | | | 867 | | | | 867 | | | | 867 | | | | 0.0% | | | | | | | | | |
| Pre-funding of upcoming debt maturities | | — | | | | — | | | | 300 | | | | 300 | | | | 300 | | | | NM | | | | | | | | | |
| 25% of capital securities and subordinated notes | | 302 | | | | 302 | | | | 302 | | | | 302 | | | | 302 | | | | 0.0% | | | | | | | | | |
| 50% of preferred stock | | 493 | | | | 493 | | | | 493 | | | | 493 | | | | 493 | | | | 0.0% | | | | | | | | | |
| Carrying value of fair value hedges and other items | | 111 | | | | 154 | | | | 133 | | | | 123 | | | | 153 | | | | 37.8 | % | | | | | | | | | |
| Total numerator | $ | 5,118 | | | $ | 5,119 | | | $ | 5,120 | | | $ | 5,067 | | | $ | 5,068 | | | | -1.0 | % | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted stockholders’ equity (4) | $ | 10,778 | | | $ | 11,023 | | | $ | 11,087 | | | $ | 11,698 | | | $ | 11,967 | | | | 11.0 | % | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Add: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 25% of capital securities and subordinated notes | | 302 | | | | 302 | | | | 302 | | | | 302 | | | | 302 | | | | 0.0% | | | | | | | | | |
| 50% of preferred stock | | 493 | | | | 493 | | | | 493 | | | | 493 | | | | 493 | | | | 0.0% | | | | | | | | | |
| Total numerator | | 5,118 | | | | 5,119 | | | | 5,120 | | | | 5,067 | | | | 5,068 | | | | -1.0 | % | | | | | | | | | |
| Total denominator | $ | 16,691 | | | $ | 16,937 | | | $ | 17,002 | | | $ | 17,560 | | | $ | 17,830 | | | | 6.8 | % | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Leverage ratio | | 30.7 | % | | | 30.2 | % | | | 30.1 | % | | | 28.9 | % | | | 28.4 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Holding Company Available Liquidity (5) | $ | 455 | | | $ | 458 | | | $ | 766 | | | $ | 763 | | | $ | 759 | | | | 66.8 | % | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) As of September 30, 2024, consists of $300 million principal amount of our 3.35% Senior Notes due March 9, 2025. | | | | | |
| (2) Excludes obligations under finance leases and certain financing arrangements of $559 million that are reported in other liabilities on our Consolidated Balance Sheets. | |
| (3) We have categorized as operating debt the senior notes issued in October 2007 and June 2010 because the proceeds were used as a long-term structured solution to reduce | |
| the strain on increasing statutory reserves associated with secondary guarantee UL and term policies. | |
| (4) See reconciliation to stockholders’ equity on page 29. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (5) Includes pre-funding of upcoming debt maturities. | | | | | |
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| Lincoln Financial | | | | | | | | |
| Select Earnings Drivers By Segment | | | | | | | | |
| Unaudited (millions of dollars) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | For the Nine Months Ended | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Annuities | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues | $ | 1,197 | | | $ | (525) | | | $ | 1,269 | | | $ | 1,209 | | | $ | 1,195 | | | | -0.2 | % | | $ | 3,528 | | | $ | 3,673 | | | | 4.1 | % | |
| Deposits | | 2,737 | | | | 4,359 | | | | 2,849 | | | | 3,823 | | | | 3,383 | | | | 23.6 | % | | | 8,461 | | | | 10,056 | | | | 18.9 | % | |
| Net flows | | (874) | | | | 285 | | | | (1,993) | | | | (954) | | | | (1,637) | | | | -87.3 | % | | | (2,312) | | | | (4,584) | | | | -98.3 | % | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Average account balances, net of reinsurance | | 151,312 | | | | 147,419 | | | | 155,291 | | | | 158,370 | | | | 161,680 | | | | 6.9 | % | | | 148,613 | | | | 158,245 | | | | 6.5 | % | |
| Alternative investment income (1) | | 4 | | | | 4 | | | | 2 | | | | 1 | | | | 4 | | | | 0.0% | | | 13 | | | | 7 | | | | -46.2 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Life Insurance | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues | $ | 1,723 | | | $ | 1,667 | | | $ | 1,541 | | | $ | 1,511 | | | $ | 1,589 | | | | -7.8 | % | | $ | 5,241 | | | $ | 4,640 | | | | -11.5 | % | |
| Deposits | | 1,272 | | | | 1,458 | | | | 1,208 | | | | 1,230 | | | | 1,262 | | | | -0.8 | % | | | 3,927 | | | | 3,699 | | | | -5.8 | % | |
| Net flows | | 821 | | | | 1,013 | | | | 741 | | | | 751 | | | | 738 | | | | -10.1 | % | | | 2,605 | | | | 2,230 | | | | -14.4 | % | |
| Average account balances, net of reinsurance | | 50,130 | | | | 45,608 | | | | 42,280 | | | | 43,230 | | | | 44,055 | | | | -12.1 | % | | | 49,760 | | | | 43,188 | | | | -13.2 | % | |
| Average in-force face amount | | 1,085,253 | | | | 1,087,535 | | | | 1,087,405 | | | | 1,085,383 | | | | 1,083,176 | | | | -0.2 | % | | | 1,080,887 | | | | 1,085,321 | | | | 0.4 | % | |
| Alternative investment income (1) | | 44 | | | | 49 | | | | 74 | | | | 32 | | | | 92 | | | | 109.1 | % | | | 158 | | | | 199 | | | | 25.9 | % | |
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| Group Protection | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues | $ | 1,388 | | | $ | 1,387 | | | $ | 1,425 | | | $ | 1,441 | | | $ | 1,432 | | | | 3.2 | % | | $ | 4,176 | | | $ | 4,299 | | | | 2.9 | % | |
| Insurance premiums | | 1,251 | | | | 1,250 | | | | 1,285 | | | | 1,298 | | | | 1,288 | | | | 3.0 | % | | | 3,765 | | | | 3,871 | | | | 2.8 | % | |
| Alternative investment income (1) | | 2 | | | | 2 | | | | 1 | | | | 1 | | | | 1 | | | | -50.0 | % | | | 7 | | | | 3 | | | | -57.1 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Retirement Plan Services | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues | $ | 327 | | | $ | 322 | | | $ | 322 | | | $ | 327 | | | $ | 335 | | | | 2.4 | % | | $ | 988 | | | $ | 984 | | | | -0.4 | % | |
| Deposits | | 2,700 | | | | 2,972 | | | | 3,802 | | | | 3,282 | | | | 4,180 | | | | 54.8 | % | | | 8,806 | | | | 11,265 | | | | 27.9 | % | |
| Net flows | | (272) | | | | (332) | | | | 391 | | | | (197) | | | | 651 | | | | NM | | | 464 | | | | 845 | | | | 82.1 | % | |
| Average account balances | | 96,473 | | | | 96,045 | | | | 103,240 | | | | 106,374 | | | | 110,550 | | | | 14.6 | % | | | 93,897 | | | | 106,595 | | | | 13.5 | % | |
| Alternative investment income (1) | | 2 | | | | 3 | | | | 1 | | | | 1 | | | | 2 | | | | 0.0% | | | 7 | | | | 4 | | | | -42.9 | % | |
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| Consolidated | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted operating revenues (2) | $ | 4,673 | | | $ | 1,967 | | | $ | 4,584 | | | $ | 4,527 | | | $ | 4,603 | | | | -1.5 | % | | $ | 14,060 | | | $ | 13,714 | | | | -2.5 | % | |
| Deposits | | 6,709 | | | | 8,789 | | | | 7,859 | | | | 8,335 | | | | 8,825 | | | | 31.5 | % | | | 21,194 | | | | 25,020 | | | | 18.1 | % | |
| Net flows | | (325) | | | | 959 | | | | (861) | | | | (400) | | | | (248) | | | | 23.7 | % | | | 757 | | | | (1,509) | | | | NM | |
| Average account balances, net of reinsurance | | 297,915 | | | | 289,072 | | | | 300,811 | | | | 307,974 | | | | 316,285 | | | | 6.2 | % | | | 292,270 | | | | 308,028 | | | | 5.4 | % | |
| Alternative investment income (1) | | 52 | | | | 58 | | | | 78 | | | | 36 | | | | 100 | | | | 92.3 | % | | | 185 | | | | 214 | | | | 15.7 | % | |
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| (1) Excludes alternative investment income on investments supporting our modified coinsurance and coinsurance with funds withheld agreements as we have a limited | | |
| economic interest in the investments. | |
| (2) See reconciliation to total revenues on page 27. | |
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| Lincoln Financial | | | | | | | |
| Sales By Segment | | | | | | | |
| Unaudited (millions of dollars) | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | For the Nine Months Ended | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Sales | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Annuities: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| RILA | $ | 1,069 | | | $ | 986 | | | $ | 942 | | | $ | 1,096 | | | $ | 1,203 | | | | 12.5 | % | | $ | 3,339 | | | $ | 3,241 | | | | -2.9 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other variable without GLBs | | 359 | | | | 362 | | | | 388 | | | | 420 | | | | 472 | | | | 31.5 | % | | | 954 | | | | 1,282 | | | | 34.4 | % | |
| Other variable with GLBs | | 530 | | | | 579 | | | | 546 | | | | 634 | | | | 691 | | | | 30.4 | % | | | 1,470 | | | | 1,870 | | | | 27.2 | % | |
| Total variable | | 1,958 | | | | 1,927 | | | | 1,876 | | | | 2,150 | | | | 2,366 | | | | 20.8 | % | | | 5,763 | | | | 6,393 | | | | 10.9 | % | |
| Fixed | | 770 | | | | 2,438 | | | | 971 | | | | 1,667 | | | | 1,009 | | | | 31.0 | % | | | 2,712 | | | | 3,645 | | | | 34.4 | % | |
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| Total Annuities | $ | 2,728 | | | $ | 4,365 | | | $ | 2,847 | | | $ | 3,817 | | | $ | 3,375 | | | | 23.7 | % | | $ | 8,475 | | | $ | 10,038 | | | | 18.4 | % | |
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| Life Insurance: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| IUL/UL | $ | 23 | | | $ | 34 | | | $ | 18 | | | $ | 25 | | | $ | 32 | | | | 39.1 | % | | $ | 85 | | | $ | 75 | | | | -11.8 | % | |
| MoneyGuard® | | 27 | | | | 27 | | | | 24 | | | | 34 | | | | 35 | | | | 29.6 | % | | | 71 | | | | 93 | | | | 31.0 | % | |
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| VUL | | 29 | | | | 38 | | | | 23 | | | | 19 | | | | 22 | | | | -24.1 | % | | | 93 | | | | 64 | | | | -31.2 | % | |
| Term | | 23 | | | | 21 | | | | 19 | | | | 18 | | | | 15 | | | | -34.8 | % | | | 79 | | | | 52 | | | | -34.2 | % | |
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| Executive Benefits | | 42 | | | | 24 | | | | 7 | | | | 9 | | | | 18 | | | | -57.1 | % | | | 69 | | | | 35 | | | | -49.3 | % | |
| Total Life Insurance | $ | 144 | | | $ | 144 | | | $ | 91 | | | $ | 105 | | | $ | 122 | | | | -15.3 | % | | $ | 397 | | | $ | 319 | | | | -19.6 | % | |
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| Group Protection: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Life | $ | 30 | | | $ | 167 | | | $ | 85 | | | $ | 81 | | | $ | 42 | | | | 40.0 | % | | $ | 167 | | | $ | 208 | | | | 24.6 | % | |
| Disability | | 32 | | | | 204 | | | | 51 | | | | 74 | | | | 36 | | | | 12.5 | % | | | 107 | | | | 161 | | | | 50.5 | % | |
| Dental | | 9 | | | | 27 | | | | 8 | | | | 6 | | | | 6 | | | | -33.3 | % | | | 21 | | | | 20 | | | | -4.8 | % | |
| Total Group Protection | $ | 71 | | | $ | 398 | | | $ | 144 | | | $ | 161 | | | $ | 84 | | | | 18.3 | % | | $ | 295 | | | $ | 389 | | | | 31.9 | % | |
| Percent employee-paid | | 48.8 | % | | | 33.8 | % | | | 70.4 | % | | | 50.0 | % | | | 52.8 | % | | | | | | 60.1 | % | | | 58.1 | % | | | | |
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| Retirement Plan Services: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| First-year sales | $ | 464 | | | $ | 874 | | | $ | 1,127 | | | $ | 821 | | | $ | 1,652 | | | | 256.0 | % | | $ | 2,019 | | | $ | 3,601 | | | | 78.4 | % | |
| Recurring deposits | | 2,236 | | | | 2,098 | | | | 2,675 | | | | 2,461 | | | | 2,528 | | | | 13.1 | % | | | 6,787 | | | | 7,664 | | | | 12.9 | % | |
| Total Retirement Plan Services | $ | 2,700 | | | $ | 2,972 | | | $ | 3,802 | | | $ | 3,282 | | | $ | 4,180 | | | | 54.8 | % | | $ | 8,806 | | | $ | 11,265 | | | | 27.9 | % | |
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| Lincoln Financial | | | | | | |
| Operating Revenues and General and Administrative Expenses By Segment and Other Operations | | | | | | |
| Unaudited (millions of dollars) | | | | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Operating Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Annuities | $ | 1,197 | | | $ | (525) | | | $ | 1,269 | | | $ | 1,209 | | | $ | 1,195 | | | | -0.2 | % | | $ | 3,528 | | | $ | 3,673 | | | | 4.1 | % | |
| Life Insurance | | 1,723 | | | | 1,667 | | | | 1,541 | | | | 1,511 | | | | 1,589 | | | | -7.8 | % | | | 5,241 | | | | 4,640 | | | | -11.5 | % | |
| Group Protection | | 1,388 | | | | 1,387 | | | | 1,425 | | | | 1,441 | | | | 1,432 | | | | 3.2 | % | | | 4,176 | | | | 4,299 | | | | 2.9 | % | |
| Retirement Plan Services | | 327 | | | | 322 | | | | 322 | | | | 327 | | | | 335 | | | | 2.4 | % | | | 988 | | | | 984 | | | | -0.4 | % | |
| Other Operations | | 38 | | | | (884) | | | | 27 | | | | 39 | | | | 52 | | | | 36.8 | % | | | 127 | | | | 118 | | | | -7.1 | % | |
| Total adjusted operating revenues | $ | 4,673 | | | $ | 1,967 | | | $ | 4,584 | | | $ | 4,527 | | | $ | 4,603 | | | | -1.5 | % | | $ | 14,060 | | | $ | 13,714 | | | | -2.5 | % | |
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| General and Administrative Expenses, | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net of Amounts Capitalized | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Annuities | $ | 138 | | | $ | 131 | | | $ | 134 | | | $ | 112 | | | $ | 103 | | | | -25.4 | % | | $ | 396 | | | $ | 350 | | | | -11.6 | % | |
| Life Insurance | | 138 | | | | 143 | | | | 130 | | | | 125 | | | | 126 | | | | -8.7 | % | | | 407 | | | | 382 | | | | -6.1 | % | |
| Group Protection | | 191 | | | | 191 | | | | 187 | | | | 193 | | | | 195 | | | | 2.1 | % | | | 573 | | | | 575 | | | | 0.3 | % | |
| Retirement Plan Services | | 81 | | | | 84 | | | | 81 | | | | 80 | | | | 81 | | | | 0.0% | | | 241 | | | | 242 | | | | 0.4 | % | |
| Other Operations (1) | | 68 | | | | 79 | | | | 57 | | | | 64 | | | | 67 | | | | -1.5 | % | | | 180 | | | | 186 | | | | 3.3 | % | |
| Total (1) | $ | 616 | | | $ | 628 | | | $ | 589 | | | $ | 574 | | | $ | 572 | | | | -7.1 | % | | $ | 1,797 | | | $ | 1,735 | | | | -3.5 | % | |
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| General and Administrative Expenses, | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net of Amounts Capitalized, as a Percentage | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| of Operating Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Annuities | | 11.5 | % | | | NM | | | 10.6 | % | | | 9.3 | % | | | 8.6 | % | | | | | | 11.2 | % | | | 9.5 | % | | | | |
| Life Insurance | | 8.0 | % | | | 8.6 | % | | | 8.5 | % | | | 8.3 | % | | | 7.9 | % | | | | | | 7.8 | % | | | 8.2 | % | | | | |
| Group Protection | | 13.8 | % | | | 13.8 | % | | | 13.1 | % | | | 13.4 | % | | | 13.6 | % | | | | | | 13.7 | % | | | 13.4 | % | | | | |
| Retirement Plan Services | | 24.9 | % | | | 26.1 | % | | | 25.3 | % | | | 24.4 | % | | | 24.3 | % | | | | | | 24.4 | % | | | 24.6 | % | | | | |
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| Total (1) | | 13.2 | % | | | 31.9 | % | | | 12.8 | % | | | 12.7 | % | | | 12.4 | % | | | | | | 12.8 | % | | | 12.7 | % | | | | |
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| (1) Prior period impacts have been recast to conform to the current period presentation. See page 1 for further information. | |
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| Lincoln Financial | | | | | |
| Operating Commissions and Other Expenses | | | | | |
| Unaudited (millions of dollars) | | | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Operating Commissions and | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Expenses Incurred | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| General and administrative expenses (1) | $ | 670 | | | $ | 686 | | | $ | 640 | | | $ | 638 | | | $ | 632 | | | | -5.7 | % | | $ | 1,957 | | | $ | 1,911 | | | | -2.4 | % | |
| Commissions | | 603 | | | | 651 | | | | 639 | | | | 561 | | | | 546 | | | | -9.5 | % | | | 1,835 | | | | 1,746 | | | | -4.9 | % | |
| Taxes, licenses and fees (1) | | 88 | | | | 81 | | | | 92 | | | | 76 | | | | 80 | | | | -9.1 | % | | | 262 | | | | 247 | | | | -5.7 | % | |
| Interest and debt expense | | 84 | | | | 81 | | | | 81 | | | | 86 | | | | 86 | | | | 2.4 | % | | | 250 | | | | 253 | | | | 1.2 | % | |
| Expenses associated with reserve financing | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| and letters of credit | | 28 | | | | 29 | | | | 30 | | | | 28 | | | | 32 | | | | 14.3 | % | | | 86 | | | | 90 | | | | 4.7 | % | |
| Total adjusted operating commissions and | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| other expenses incurred (1) | | 1,473 | | | | 1,528 | | | | 1,482 | | | | 1,389 | | | | 1,376 | | | | -6.6 | % | | | 4,390 | | | | 4,247 | | | | -3.3 | % | |
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| Less Amounts Capitalized | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| General and administrative expenses | | (54) | | | | (58) | | | | (51) | | | | (64) | | | | (60) | | | | -11.1 | % | | | (160) | | | | (176) | | | | -10.0 | % | |
| Commissions | | (223) | | | | (259) | | | | (205) | | | | (224) | | | | (236) | | | | -5.8 | % | | | (705) | | | | (665) | | | | 5.7 | % | |
| Taxes, licenses and fees | | (8) | | | | (8) | | | | (9) | | | | (7) | | | | (8) | | | | 0.0% | | | (25) | | | | (24) | | | | 4.0 | % | |
| Total amounts capitalized | | (285) | | | | (325) | | | | (265) | | | | (295) | | | | (304) | | | | -6.7 | % | | | (890) | | | | (865) | | | | 2.8 | % | |
| Total expenses incurred, net of amounts | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| capitalized, excluding amortization (1) | | 1,188 | | | | 1,203 | | | | 1,217 | | | | 1,094 | | | | 1,072 | | | | -9.8 | % | | | 3,500 | | | | 3,382 | | | | -3.4 | % | |
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| Amortization | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortization of DAC, VOBA and other intangibles (2) | | 270 | | | | 271 | | | | 271 | | | | 274 | | | | 299 | | | | 10.7 | % | | | 806 | | | | 843 | | | | 4.6 | % | |
| Total operating commissions and | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| other expenses (1)(2) | $ | 1,458 | | | $ | 1,474 | | | $ | 1,488 | | | $ | 1,368 | | | $ | 1,371 | | | | -6.0 | % | | $ | 4,306 | | | $ | 4,225 | | | | -1.9 | % | |
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| (1) Prior period impacts have been recast to conform to the current period presentation. See page 1 for further information. | | |
| (2) Effective in the third quarter of 2024, we collapsed the amortization of deferred gain (loss) on business sold through reinsurance line item, reclassifying the deferred gain | | |
| amortization to other revenues and presenting the amortization of deferred loss within operating expenses. For prior periods, the amortization of deferred gain (loss) | |
| on business sold through reinsurance is presented on a net basis within other revenues. | | |
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| Lincoln Financial | | | | | | | | | | |
| Annuities – Select Earnings and Operational Data | | | | | | | | | | |
| Unaudited (millions of dollars) | | | | | | | | | | |
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| | | | | As of or For the | | | | | | | | | | |
| | As of or For the Three Months Ended | | | Nine Months Ended | | | | | | | | | | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | | | | | | | | | | |
| Income (Loss) from Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Insurance premiums (1) | $ | 24 | | | $ | (1,700) | | | $ | 26 | | | $ | 34 | | | $ | 38 | | | | 58.3 | % | | $ | 116 | | | $ | 98 | | | | -15.5 | % | | | | | | | | | | |
| Fee income (2) | | 557 | | | | 552 | | | | 580 | | | | 587 | | | | 601 | | | | 7.9 | % | | | 1,644 | | | | 1,769 | | | | 7.6 | % | | | | | | | | | | |
| Net investment income | | 451 | | | | 425 | | | | 420 | | | | 435 | | | | 442 | | | | -2.0 | % | | | 1,309 | | | | 1,297 | | | | -0.9 | % | | | | | | | | | | |
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| Other revenues | | 165 | | | | 198 | | | | 243 | | | | 153 | | | | 114 | | | | -30.9 | % | | | 459 | | | | 509 | | | | 10.9 | % | | | | | | | | | | |
| Total operating revenues | | 1,197 | | | | (525) | | | | 1,269 | | | | 1,209 | | | | 1,195 | | | | -0.2 | % | | | 3,528 | | | | 3,673 | | | | 4.1 | % | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits (1) | | 45 | | | | (1,683) | | | | 27 | | | | 38 | | | | 38 | | | | -15.6 | % | | | 177 | | | | 102 | | | | -42.4 | % | | | | | | | | | | |
| Interest credited | | 330 | | | | 338 | | | | 354 | | | | 377 | | | | 399 | | | | 20.9 | % | | | 914 | | | | 1,129 | | | | 23.5 | % | | | | | | | | | | |
| Policyholder liability remeasurement (gain) loss | | 19 | | | | (15) | | | | — | | | | 2 | | | | — | | | | -100.0 | % | | | 17 | | | | 3 | | | | -82.4 | % | | | | | | | | | | |
| Commissions incurred | | 238 | | | | 252 | | | | 254 | | | | 269 | | | | 285 | | | | 19.7 | % | | | 719 | | | | 808 | | | | 12.4 | % | | | | | | | | | | |
| Other expenses incurred | | 276 | | | | 265 | | | | 309 | | | | 180 | | | | 136 | | | | -50.7 | % | | | 785 | | | | 625 | | | | -20.4 | % | | | | | | | | | | |
| Amounts capitalized | | (102) | | | | (110) | | | | (98) | | | | (115) | | | | (129) | | | | -26.5 | % | | | (300) | | | | (342) | | | | -14.0 | % | | | | | | | | | | |
| Amortization | | 109 | | | | 107 | | | | 106 | | | | 107 | | | | 107 | | | | -1.8 | % | | | 324 | | | | 320 | | | | -1.2 | % | | | | | | | | | | |
| Total operating expenses | | 915 | | | | (846) | | | | 952 | | | | 858 | | | | 836 | | | | -8.6 | % | | | 2,636 | | | | 2,645 | | | | 0.3 | % | | | | | | | | | | |
| Income (loss) from operations before taxes | | 282 | | | | 321 | | | | 317 | | | | 351 | | | | 359 | | | | 27.3 | % | | | 892 | | | | 1,028 | | | | 15.2 | % | | | | | | | | | | |
| Federal income tax expense (benefit) | | 34 | | | | 42 | | | | 58 | | | | 54 | | | | 58 | | | | 70.6 | % | | | 98 | | | | 171 | | | | 74.5 | % | | | | | | | | | | |
| Income (loss) from operations | $ | 248 | | | $ | 279 | | | $ | 259 | | | $ | 297 | | | $ | 301 | | | | 21.4 | % | | $ | 794 | | | $ | 857 | | | | 7.9 | % | | | | | | | | | | |
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| Effective Federal Income Tax Rate | | 12.0 | % | | | 12.9 | % | | | 18.5 | % | | | 15.4 | % | | | 16.3 | % | | | | | | 11.1 | % | | | 16.7 | % | | | | | | | | | | | | | |
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| Return on Average Account Balances, net of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| reinsurance (bps) | | 66 | | | | 76 | | | | 67 | | | | 75 | | | | 74 | | | | 8 | | | | 71 | | | | 72 | | | | 1 | | | | | | | | | | | |
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| Account Balances, Net of Reinsurance – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| End-of-Period | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| RILA account balances | $ | 25,006 | | | $ | 27,533 | | | $ | 30,100 | | | $ | 31,633 | | | $ | 33,245 | | | | 32.9 | % | | $ | 25,006 | | | $ | 33,245 | | | | 32.9 | % | | | | | | | | | | |
| Other variable account balances without GLBs | | 42,196 | | | | 45,499 | | | | 47,657 | | | | 47,321 | | | | 48,899 | | | | 15.9 | % | | | 42,196 | | | | 48,899 | | | | 15.9 | % | | | | | | | | | | |
| Other variable account balances with GLBs | | 64,754 | | | | 69,458 | | | | 71,822 | | | | 70,664 | | | | 72,664 | | | | 12.2 | % | | | 64,754 | | | | 72,664 | | | | 12.2 | % | | | | | | | | | | |
| Fixed account balances | | 14,694 | | | | 10,336 | | | | 10,214 | | | | 10,251 | | | | 10,349 | | | | -29.6 | % | | | 14,694 | | | | 10,349 | | | | -29.6 | % | | | | | | | | | | |
| Total account balances | $ | 146,650 | | | $ | 152,826 | | | $ | 159,793 | | | $ | 159,869 | | | $ | 165,157 | | | | 12.6 | % | | $ | 146,650 | | | $ | 165,157 | | | | 12.6 | % | | | | | | | | | | |
| Percent variable account balances with GLBs | | 44.2 | % | | | 45.4 | % | | | 44.9 | % | | | 44.2 | % | | | 44.0 | % | | | | | | 44.2 | % | | | 44.0 | % | | | | | | | | | | | | | |
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| Fee Income, Gross of Hedge Allowance | $ | 758 | | | $ | 752 | | | $ | 780 | | | $ | 787 | | | $ | 802 | | | | 5.8 | % | | $ | 2,253 | | | $ | 2,369 | | | | 5.1 | % | | | | | | | | | | |
| Net Investment Income, Net of Reinsurance (3) | | 409 | | | | 385 | | | | 390 | | | | 403 | | | | 412 | | | | 0.7 | % | | | 1,181 | | | | 1,205 | | | | 2.0 | % | | | | | | | | | | |
| Interest Credited, Net of Reinsurance (3) | | 270 | | | | 255 | | | | 245 | | | | 254 | | | | 270 | | | | 0.0% | | | 742 | | | | 769 | | | | 3.6 | % | | | | | | | | | | |
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| (1) Day one impacts related to the fourth quarter 2023 reinsurance transaction contributed to line item volatility in the fourth quarter. | | | | | | | | | | |
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| (2) Fee income is reported net of the hedge allowance, which represents fees allocated to net annuity product features to support the cost of hedging. | | | | | | | | | | |
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| (3) Net investment income and interest credited are both reported gross of reinsurance. Reinsurance impacts are settled through other revenues. | | | | | | | | | | |
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| Lincoln Financial | |
| Life Insurance – Select Earnings and Operational Data | |
| Unaudited (millions of dollars) | |
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| | | | | As of or For the | |
| | As of or For the Three Months Ended | | | Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Income (Loss) from Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Insurance premiums | $ | 289 | | | $ | 295 | | | $ | 288 | | | $ | 293 | | | $ | 286 | | | | -1.0 | % | | $ | 867 | | | $ | 866 | | | | -0.1 | % | |
| Fee income | | 739 | | | | 741 | | | | 672 | | | | 677 | | | | 672 | | | | -9.1 | % | | | 2,269 | | | | 2,021 | | | | -10.9 | % | |
| Net investment income | | 689 | | | | 629 | | | | 581 | | | | 533 | | | | 597 | | | | -13.4 | % | | | 2,083 | | | | 1,710 | | | | -17.9 | % | |
| Operating realized gain (loss) | | (2) | | | | (2) | | | | (2) | | | | (2) | | | | (2) | | | | 0.0% | | | (5) | | | | (5) | | | | 0.0% | |
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| Other revenues (1) | | 8 | | | | 4 | | | | 2 | | | | 10 | | | | 36 | | | | NM | | | 27 | | | | 48 | | | | 77.8 | % | |
| Total operating revenues | | 1,723 | | | | 1,667 | | | | 1,541 | | | | 1,511 | | | | 1,589 | | | | -7.8 | % | | | 5,241 | | | | 4,640 | | | | -11.5 | % | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits | | 1,129 | | | | 1,083 | | | | 928 | | | | 948 | | | | 895 | | | | -20.7 | % | | | 3,354 | | | | 2,769 | | | | -17.4 | % | |
| Interest credited | | 325 | | | | 312 | | | | 294 | | | | 299 | | | | 302 | | | | -7.1 | % | | | 978 | | | | 894 | | | | -8.6 | % | |
| Policyholder liability remeasurement (gain) loss | | 183 | | | | (37) | | | | 59 | | | | 16 | | | | 42 | | | | -77.0 | % | | | 183 | | | | 117 | | | | -36.1 | % | |
| Commissions incurred | | 129 | | | | 150 | | | | 113 | | | | 113 | | | | 120 | | | | -7.0 | % | | | 421 | | | | 346 | | | | -17.8 | % | |
| Other expenses incurred | | 215 | | | | 223 | | | | 204 | | | | 193 | | | | 198 | | | | -7.9 | % | | | 647 | | | | 596 | | | | -7.9 | % | |
| Amounts capitalized | | (152) | | | | (175) | | | | (133) | | | | (133) | | | | (140) | | | | 7.9 | % | | | (496) | | | | (406) | | | | 18.1 | % | |
| Amortization of DAC and VOBA | | 123 | | | | 125 | | | | 126 | | | | 126 | | | | 127 | | | | 3.3 | % | | | 371 | | | | 379 | | | | 2.2 | % | |
| Amortization of deferred loss on business | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| sold through reinsurance (1) | | — | | | | — | | | | — | | | | — | | | | 24 | | | | NM | | | — | | | | 24 | | | | NM | |
| Total operating expenses | | 1,952 | | | | 1,681 | | | | 1,591 | | | | 1,562 | | | | 1,568 | | | | -19.7 | % | | | 5,458 | | | | 4,719 | | | | -13.5 | % | |
| Income (loss) from operations before taxes | | (229) | | | | (14) | | | | (50) | | | | (51) | | | | 21 | | | | 109.2 | % | | | (217) | | | | (79) | | | | 63.6 | % | |
| Federal income tax expense (benefit) | | (56) | | | | (8) | | | | (15) | | | | (16) | | | | (1) | | | | 98.2 | % | | | (64) | | | | (31) | | | | 51.6 | % | |
| Income (loss) from operations | $ | (173) | | | $ | (6) | | | $ | (35) | | | $ | (35) | | | $ | 22 | | | | 112.7 | % | | $ | (153) | | | $ | (48) | | | | 68.6 | % | |
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| Effective Federal Income Tax Rate | | 24.2 | % | | | 59.7 | % | | | 29.7 | % | | | 31.2 | % | | | NM | | | | | | 29.3 | % | | | 39.6 | % | | | | |
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| Average Account Balances, Net of Reinsurance | $ | 50,130 | | | $ | 45,608 | | | $ | 42,280 | | | $ | 43,230 | | | $ | 44,055 | | | | -12.1 | % | | $ | 49,760 | | | $ | 43,188 | | | | -13.2 | % | |
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| In-Force Face Amount | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| UL and other | $ | 364,586 | | | $ | 365,938 | | | $ | 365,507 | | | $ | 365,030 | | | $ | 364,766 | | | | 0.0% | | $ | 364,586 | | | $ | 364,766 | | | | 0.0% | |
| Term insurance | | 721,927 | | | | 722,620 | | | | 720,745 | | | | 719,485 | | | | 717,071 | | | | -0.7 | % | | | 721,927 | | | | 717,071 | | | | -0.7 | % | |
| Total in-force face amount | $ | 1,086,513 | | | $ | 1,088,558 | | | $ | 1,086,252 | | | $ | 1,084,515 | | | $ | 1,081,837 | | | | -0.4 | % | | $ | 1,086,513 | | | $ | 1,081,837 | | | | -0.4 | % | |
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| (1) Effective in the third quarter of 2024, we collapsed the amortization of deferred gain (loss) on business sold through reinsurance line item, reclassifying the deferred gain | |
| amortization to other revenues and presenting the amortization of deferred loss within operating expenses. For prior periods, the amortization of deferred gain (loss) | |
| on business sold through reinsurance is presented on a net basis within other revenues. | | | | | |
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| Lincoln Financial | |
| Group Protection – Select Earnings and Operational Data | |
| Unaudited (millions of dollars) | |
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| | | | As of or For the | |
| | As of or For the Three Months Ended | | Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Income (Loss) from Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Insurance premiums | $ | 1,251 | | | $ | 1,250 | | | $ | 1,285 | | | $ | 1,298 | | | $ | 1,288 | | | | 3.0 | % | | $ | 3,765 | | | $ | 3,871 | | | | 2.8 | % | |
| Net investment income | | 84 | | | | 85 | | | | 85 | | | | 88 | | | | 87 | | | | 3.6 | % | | | 254 | | | | 261 | | | | 2.8 | % | |
| Other revenues | | 53 | | | | 52 | | | | 55 | | | | 55 | | | | 57 | | | | 7.5 | % | | | 157 | | | | 167 | | | | 6.4 | % | |
| Total operating revenues | | 1,388 | | | | 1,387 | | | | 1,425 | | | | 1,441 | | | | 1,432 | | | | 3.2 | % | | | 4,176 | | | | 4,299 | | | | 2.9 | % | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits | | 979 | | | | 984 | | | | 1,030 | | | | 1,032 | | | | 1,007 | | | | 2.9 | % | | | 3,036 | | | | 3,069 | | | | 1.1 | % | |
| Interest credited | | 1 | | | | 1 | | | | 1 | | | | 1 | | | | 1 | | | | 0.0% | | | 4 | | | | 3 | | | | -25.0 | % | |
| Policyholder liability remeasurement (gain) loss | | (39) | | | | (28) | | | | (67) | | | | (124) | | | | (88) | | | | NM | | | (260) | | | | (279) | | | | -7.3 | % | |
| Commissions incurred | | 109 | | | | 119 | | | | 109 | | | | 113 | | | | 114 | | | | 4.6 | % | | | 327 | | | | 336 | | | | 2.8 | % | |
| Other expenses incurred | | 245 | | | | 246 | | | | 246 | | | | 260 | | | | 255 | | | | 4.1 | % | | | 737 | | | | 762 | | | | 3.4 | % | |
| Amounts capitalized | | (26) | | | | (34) | | | | (29) | | | | (42) | | | | (30) | | | | -15.4 | % | | | (79) | | | | (101) | | | | -27.8 | % | |
| Amortization | | 33 | | | | 34 | | | | 34 | | | | 36 | | | | 36 | | | | 9.1 | % | | | 98 | | | | 106 | | | | 8.2 | % | |
| Total operating expenses | | 1,302 | | | | 1,322 | | | | 1,324 | | | | 1,276 | | | | 1,295 | | | | -0.5 | % | | | 3,863 | | | | 3,896 | | | | 0.9 | % | |
| Income (loss) from operations before taxes | | 86 | | | | 65 | | | | 101 | | | | 165 | | | | 137 | | | | 59.3 | % | | | 313 | | | | 403 | | | | 28.8 | % | |
| Federal income tax expense (benefit) | | 18 | | | | 13 | | | | 21 | | | | 35 | | | | 28 | | | | 55.6 | % | | | 66 | | | | 85 | | | | 28.8 | % | |
| Income (loss) from operations | $ | 68 | | | $ | 52 | | | $ | 80 | | | $ | 130 | | | $ | 109 | | | | 60.3 | % | | $ | 247 | | | $ | 318 | | | | 28.7 | % | |
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| Effective Federal Income Tax Rate | | 21.0 | % | | | 21.0 | % | | | 21.0 | % | | | 21.0 | % | | | 21.0 | % | | | | | | 21.0 | % | | | 21.0 | % | | | | |
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| Operating Margin (1) | | 5.4 | % | | | 4.1 | % | | | 6.2 | % | | | 10.0 | % | | | 8.4 | % | | | | | | 6.6 | % | | | 8.2 | % | | | | |
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| Loss Ratios by Product Line | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Life | | 76.8 | % | | | 67.2 | % | | | 76.1 | % | | | 75.6 | % | | | 68.1 | % | | | | | | 76.3 | % | | | 73.2 | % | | | | |
| Disability | | 74.1 | % | | | 83.1 | % | | | 74.2 | % | | | 65.9 | % | | | 73.2 | % | | | | | | 72.1 | % | | | 71.1 | % | | | | |
| Dental | | 75.9 | % | | | 75.4 | % | | | 76.5 | % | | | 78.9 | % | | | 79.0 | % | | | | | | 76.4 | % | | | 78.1 | % | | | | |
| Total | | 75.2 | % | | | 76.6 | % | | | 75.0 | % | | | 70.1 | % | | | 71.4 | % | | | | | | 73.8 | % | | | 72.2 | % | | | | |
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| (1) Operating margin is calculated by dividing income (loss) from operations by insurance premiums. | |
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| Lincoln Financial | |
| Retirement Plan Services – Select Earnings and Operational Data | |
| Unaudited (millions of dollars) | |
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| | | | As of or For the | |
| | As of or For the Three Months Ended | | Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Income (Loss) from Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fee income | $ | 66 | | | $ | 67 | | | $ | 70 | | | $ | 72 | | | $ | 74 | | | | 12.1 | % | | $ | 195 | | | $ | 216 | | | | 10.8 | % | |
| Net investment income | | 251 | | | | 248 | | | | 244 | | | | 247 | | | | 253 | | | | 0.8 | % | | | 765 | | | | 744 | | | | -2.7 | % | |
| Other revenues | | 10 | | | | 7 | | | | 8 | | | | 8 | | | | 8 | | | | -20.0 | % | | | 28 | | | | 24 | | | | -14.3 | % | |
| Total operating revenues | | 327 | | | | 322 | | | | 322 | | | | 327 | | | | 335 | | | | 2.4 | % | | | 988 | | | | 984 | | | | -0.4 | % | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest credited | | 165 | | | | 164 | | | | 166 | | | | 168 | | | | 170 | | | | 3.0 | % | | | 501 | | | | 505 | | | | 0.8 | % | |
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| Commissions incurred | | 22 | | | | 22 | | | | 23 | | | | 26 | | | | 28 | | | | 27.3 | % | | | 65 | | | | 76 | | | | 16.9 | % | |
| Other expenses incurred | | 90 | | | | 93 | | | | 92 | | | | 87 | | | | 88 | | | | -2.2 | % | | | 267 | | | | 267 | | | | 0.0% | |
| Amounts capitalized | | (5) | | | | (6) | | | | (5) | | | | (5) | | | | (5) | | | | 0.0% | | | (15) | | | | (15) | | | | 0.0% | |
| Amortization | | 5 | | | | 5 | | | | 5 | | | | 5 | | | | 5 | | | | 0.0% | | | 13 | | | | 14 | | | | 7.7 | % | |
| Total operating expenses | | 277 | | | | 278 | | | | 281 | | | | 281 | | | | 286 | | | | 3.2 | % | | | 831 | | | | 847 | | | | 1.9 | % | |
| Income (loss) from operations before taxes | | 50 | | | | 44 | | | | 41 | | | | 46 | | | | 49 | | | | -2.0 | % | | | 157 | | | | 137 | | | | -12.7 | % | |
| Federal income tax expense (benefit) | | 7 | | | | 6 | | | | 5 | | | | 6 | | | | 5 | | | | -28.6 | % | | | 24 | | | | 17 | | | | -29.2 | % | |
| Income (loss) from operations | $ | 43 | | | $ | 38 | | | $ | 36 | | | $ | 40 | | | $ | 44 | | | | 2.3 | % | | $ | 133 | | | $ | 120 | | | | -9.8 | % | |
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| Effective Federal Income Tax Rate | | 13.9 | % | | | 13.2 | % | | | 12.9 | % | | | 13.2 | % | | | 10.0 | % | | | | | | 15.1 | % | | | 12.0 | % | | | | |
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| Return on Average Account Balances (bps) | | 18 | | | | 16 | | | | 14 | | | | 15 | | | | 16 | | | | (2) | | | | 19 | | | | 15 | | | | (4) | | |
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| Net Flows by Market | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Small Market | $ | 21 | | | $ | 115 | | | $ | (32) | | | $ | 43 | | | $ | 11 | | | | -47.6 | % | | $ | 267 | | | $ | 22 | | | | -91.8 | % | |
| Mid - Large Market | | 83 | | | | 78 | | | | 847 | | | | 206 | | | | 1,069 | | | | NM | | | 1,202 | | | | 2,122 | | | | 76.5 | % | |
| Multi-Fund® and Other | | (376) | | | | (525) | | | | (424) | | | | (446) | | | | (429) | | | | -14.1 | % | | | (1,005) | | | | (1,299) | | | | -29.3 | % | |
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| Net Flows – Trailing Twelve Months | $ | 515 | | | $ | 132 | | | $ | (12) | | | $ | (410) | | | $ | 513 | | | | -0.4 | % | | $ | 515 | | | $ | 513 | | | | -0.4 | % | |
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| Base Spreads, Excluding Variable | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment Income (1) | | 1.10 | % | | | 1.09 | % | | | 1.02 | % | | | 1.03 | % | | | 1.05 | % | | | (5) | | | | 1.14 | % | | | 1.03 | % | | | (11) | |
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| (1) Variable investment income consists of commercial mortgage loan prepayment and bond make-whole premiums. | |
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| Lincoln Financial | |
| Other Operations – Select Earnings and Operational Data | |
| Unaudited (millions of dollars) | |
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| | | For the Three Months Ended | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Other Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Insurance premiums (1) | $ | 1 | | | $ | (930) | | | $ | 2 | | | $ | 1 | | | $ | 1 | | | | 0.0% | | $ | 8 | | | $ | 4 | | | | -50.0 | % | |
| Net investment income | | 37 | | | | 37 | | | | 16 | | | | 27 | | | | 34 | | | | -8.1 | % | | | 110 | | | | 77 | | | | -30.0 | % | |
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| Other revenues | | — | | | | 9 | | | | 9 | | | | 11 | | | | 17 | | | | NM | | | 9 | | | | 37 | | | | NM | |
| Total operating revenues | | 38 | | | | (884) | | | | 27 | | | | 39 | | | | 52 | | | | 36.8 | % | | | 127 | | | | 118 | | | | -7.1 | % | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits (1) | | 17 | | | | (918) | | | | 6 | | | | 4 | | | | (3) | | | | NM | | | 53 | | | | 10 | | | | -81.1 | % | |
| Interest credited | | 9 | | | | 9 | | | | 9 | | | | 8 | | | | 8 | | | | -11.1 | % | | | 27 | | | | 26 | | | | -3.7 | % | |
| Policyholder liability remeasurement (gain) loss | | (5) | | | | — | | | | (1) | | | | 1 | | | | — | | | | 100.0 | % | | | (3) | | | | — | | | | 100.0 | % | |
| Commissions and other expenses (2) | | 65 | | | | 77 | | | | 51 | | | | 62 | | | | 66 | | | | 1.5 | % | | | 172 | | | | 177 | | | | 2.9 | % | |
| Interest and debt expense | | 84 | | | | 81 | | | | 81 | | | | 86 | | | | 86 | | | | 2.4 | % | | | 250 | | | | 253 | | | | 1.2 | % | |
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| Total operating expenses (2) | | 170 | | | | (751) | | | | 146 | | | | 161 | | | | 157 | | | | -7.6 | % | | | 499 | | | | 466 | | | | -6.6 | % | |
| Income (loss) from operations before taxes (2) | | (132) | | | | (133) | | | | (119) | | | | (122) | | | | (105) | | | | 20.5 | % | | | (372) | | | | (348) | | | | 6.5 | % | |
| Federal income tax expense (benefit) (2) | | (30) | | | | (33) | | | | (23) | | | | (25) | | | | (21) | | | | 30.0 | % | | | (79) | | | | (72) | | | | 8.9 | % | |
| Income (loss) from operations (2) | $ | (102) | | | $ | (100) | | | $ | (96) | | | $ | (97) | | | $ | (84) | | | | 17.6 | % | | $ | (293) | | | $ | (276) | | | | 5.8 | % | |
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| (1) Day one impacts related to the fourth quarter 2023 reinsurance transaction contributed to line item volatility in the fourth quarter. | |
| (2) Prior period impacts have been recast to conform to the current period presentation. See page 1 for further information. | | | | |
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| Lincoln Financial | |
| Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards | |
| Unaudited (millions of dollars) | |
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| | For the Three Months Ended | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| DAC, VOBA and DSI | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 12,316 | | | $ | 12,341 | | | $ | 12,397 | | | $ | 12,405 | | | $ | 12,435 | | | | 1.0 | % | | $ | 12,235 | | | $ | 12,397 | | | | 1.3 | % | |
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| Business acquired (sold) through reinsurance | | — | | | | (11) | | | | — | | | | — | | | | — | | | | NM | | | — | | | | — | | | | NM | |
| Deferrals | | 289 | | | | 333 | | | | 274 | | | | 299 | | | | 309 | | | | 6.9 | % | | | 899 | | | | 881 | | | | -2.0 | % | |
| Operating amortization | | (264) | | | | (266) | | | | (266) | | | | (269) | | | | (269) | | | | -1.9 | % | | | (793) | | | | (803) | | | | -1.3 | % | |
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| Balance as of end-of-period | $ | 12,341 | | | $ | 12,397 | | | $ | 12,405 | | | $ | 12,435 | | | $ | 12,475 | | | | 1.1 | % | | $ | 12,341 | | | $ | 12,475 | | | | 1.1 | % | |
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| DFEL | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 5,494 | | | $ | 5,695 | | | $ | 5,901 | | | $ | 6,099 | | | $ | 6,306 | | | | 14.8 | % | | $ | 5,091 | | | $ | 5,901 | | | | 15.9 | % | |
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| Deferrals | | 275 | | | | 281 | | | | 272 | | | | 284 | | | | 289 | | | | 5.1 | % | | | 817 | | | | 845 | | | | 3.4 | % | |
| Operating amortization | | (74) | | | | (75) | | | | (74) | | | | (77) | | | | (78) | | | | -5.4 | % | | | (213) | | | | (229) | | | | -7.5 | % | |
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| Balance as of end-of-period | $ | 5,695 | | | $ | 5,901 | | | $ | 6,099 | | | $ | 6,306 | | | $ | 6,517 | | | | 14.4 | % | | $ | 5,695 | | | $ | 6,517 | | | | 14.4 | % | |
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| DAC, VOBA, DSI and DFEL | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of End-of-Period, After-Tax | $ | 5,250 | | | $ | 5,132 | | | $ | 4,981 | | | $ | 4,842 | | | $ | 4,707 | | | | -10.4 | % | | $ | 5,250 | | | $ | 4,707 | | | | -10.3 | % | |
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| Lincoln Financial | | | | | | | | | |
| Annuities – Account Balance Roll Forwards | | | | | | | | | |
| Unaudited (millions of dollars) | | | | | | | | | |
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| | For the Three Months Ended | | For the Nine Months Ended | | | | | | | | | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | | | | | | | | | |
| Traditional Variable Annuities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 112,848 | | | $ | 106,957 | | | $ | 114,963 | | | $ | 119,485 | | | $ | 117,990 | | | | 4.6 | % | | $ | 107,627 | | | $ | 114,963 | | | | 6.8 | % | | | | | | | | | |
| Gross deposits | | 889 | | | | 941 | | | | 934 | | | | 1,054 | | | | 1,163 | | | | 30.8 | % | | | 2,424 | | | | 3,152 | | | | 30.0 | % | | | | | | | | | |
| Full surrenders and deaths | | (1,559) | | | | (1,714) | | | | (2,142) | | | | (2,303) | | | | (2,382) | | | | -52.8 | % | | | (4,629) | | | | (6,827) | | | | -47.5 | % | | | | | | | | | |
| Other contract benefits | | (984) | | | | (1,147) | | | | (1,133) | | | | (1,130) | | | | (1,172) | | | | -19.1 | % | | | (2,955) | | | | (3,436) | | | | -16.3 | % | | | | | | | | | |
| Net flows | | (1,654) | | | | (1,920) | | | | (2,341) | | | | (2,379) | | | | (2,391) | | | | -44.6 | % | | | (5,160) | | | | (7,111) | | | | -37.8 | % | | | | | | | | | |
| Policyholder assessments | | (630) | | | | (624) | | | | (644) | | | | (650) | | | | (666) | | | | -5.7 | % | | | (1,878) | | | | (1,961) | | | | -4.4 | % | | | | | | | | | |
| Change in market value and reinvestment | | (3,607) | | | | 10,550 | | | | 7,507 | | | | 1,534 | | | | 6,635 | | | | 283.9 | % | | | 6,368 | | | | 15,677 | | | | 146.2 | % | | | | | | | | | |
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| Balance as of end-of-period, gross | | 106,957 | | | | 114,963 | | | | 119,485 | | | | 117,990 | | | | 121,568 | | | | 13.7 | % | | | 106,957 | | | | 121,568 | | | | 13.7 | % | | | | | | | | | |
| Account balances reinsured | | (7) | | | | (6) | | | | (6) | | | | (5) | | | | (5) | | | | 28.6 | % | | | (7) | | | | (5) | | | | 28.6 | % | | | | | | | | | |
| Balance as of end-of-period, net | $ | 106,950 | | | $ | 114,957 | | | $ | 119,479 | | | $ | 117,985 | | | $ | 121,563 | | | | 13.7 | % | | $ | 106,950 | | | $ | 121,563 | | | | 13.7 | % | | | | | | | | | |
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| RILA | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 24,407 | | | $ | 25,006 | | | $ | 27,533 | | | $ | 30,100 | | | $ | 31,633 | | | | 29.6 | % | | $ | 20,130 | | | $ | 27,533 | | | | 36.8 | % | | | | | | | | | |
| Gross deposits | | 1,069 | | | | 986 | | | | 942 | | | | 1,096 | | | | 1,203 | | | | 12.5 | % | | | 3,339 | | | | 3,241 | | | | -2.9 | % | | | | | | | | | |
| Full surrenders and deaths | | (105) | | | | (103) | | | | (115) | | | | (138) | | | | (326) | | | | NM | | | (248) | | | | (579) | | | | NM | | | | | | | | | |
| Other contract benefits | | (20) | | | | (45) | | | | (42) | | | | (14) | | | | (18) | | | | 10.0 | % | | | (78) | | | | (74) | | | | 5.1 | % | | | | | | | | | |
| Net flows | | 944 | | | | 838 | | | | 785 | | | | 944 | | | | 859 | | | | -9.0 | % | | | 3,013 | | | | 2,588 | | | | -14.1 | % | | | | | | | | | |
| Policyholder assessments | | (2) | | | | (3) | | | | (3) | | | | (3) | | | | (3) | | | | -50.0 | % | | | (6) | | | | (10) | | | | -66.7 | % | | | | | | | | | |
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| Change in market value and reinvestment | | 190 | | | | 213 | | | | 247 | | | | 288 | | | | 325 | | | | 71.1 | % | | | 478 | | | | 860 | | | | 79.9 | % | | | | | | | | | |
| Change in fair value of embedded derivative instruments and other | | (533) | | | | 1,479 | | | | 1,538 | | | | 304 | | | | 431 | | | | 180.9 | % | | | 1,391 | | | | 2,274 | | | | 63.5 | % | | | | | | | | | |
| Balance as of end-of-period, gross | $ | 25,006 | | | $ | 27,533 | | | $ | 30,100 | | | $ | 31,633 | | | $ | 33,245 | | | | 32.9 | % | | $ | 25,006 | | | $ | 33,245 | | | | 32.9 | % | | | | | | | | | |
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| Lincoln Financial | |
| Annuities – Account Balance Roll Forwards | |
| Unaudited (millions of dollars) | |
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| | For the Three Months Ended | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | Change | | | 9/30/23 | | | 9/30/24 | | Change | |
| Fixed Annuities | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 23,813 | | | $ | 23,681 | | | $ | 25,355 | | | $ | 25,162 | | | $ | 25,837 | | | 8.5 | % | | $ | 23,365 | | | $ | 25,355 | | | 8.5 | % | |
| Gross deposits | | 779 | | | | 2,432 | | | | 973 | | | | 1,673 | | | | 1,017 | | | 30.6 | % | | | 2,698 | | | | 3,663 | | | 35.8 | % | |
| Full surrenders and deaths | | (782) | | | | (878) | | | | (1,213) | | | | (1,020) | | | | (949) | | | -21.4 | % | | | (2,374) | | | | (3,183) | | | -34.1 | % | |
| Other contract benefits | | (161) | | | | (187) | | | | (197) | | | | (172) | | | | (173) | | | -7.5 | % | | | (489) | | | | (541) | | | -10.6 | % | |
| Net flows | | (164) | | | | 1,367 | | | | (437) | | | | 481 | | | | (105) | | | 36.0 | % | | | (165) | | | | (61) | | | 63.0 | % | |
| Policyholder assessments | | (13) | | | | (15) | | | | (17) | | | | (14) | | | | (14) | | | -7.7 | % | | | (41) | | | | (45) | | | -9.8 | % | |
| Reinvested interest credited | | 158 | | | | 172 | | | | 183 | | | | 199 | | | | 211 | | | 33.5 | % | | | 470 | | | | 593 | | | 26.2 | % | |
| Change in fair value of embedded derivative instruments | | | | | | | | | | | | | | | | | | | | | | | | | |
| and other | | (113) | | | | 150 | | | | 78 | | | | 9 | | | | 430 | | | NM | | | 52 | | | | 517 | | | NM | |
| Balance as of end-of-period, gross | | 23,681 | | | | 25,355 | | | | 25,162 | | | | 25,837 | | | | 26,359 | | | 11.3 | % | | | 23,681 | | | | 26,359 | | | 11.3 | % | |
| Account balances reinsured | | (8,987) | | | | (15,019) | | | | (14,948) | | | | (15,586) | | | | (16,010) | | | -78.1 | % | | | (8,987) | | | | (16,010) | | | -78.1 | % | |
| Balance as of end-of-period, net | $ | 14,694 | | | $ | 10,336 | | | $ | 10,214 | | | $ | 10,251 | | | $ | 10,349 | | | -29.6 | % | | $ | 14,694 | | | $ | 10,349 | | | -29.6 | % | |
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| Total | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 161,068 | | | $ | 155,644 | | | $ | 167,851 | | | $ | 174,747 | | | $ | 175,460 | | | 8.9 | % | | $ | 151,122 | | | $ | 167,851 | | | 11.1 | % | |
| Gross deposits | | 2,737 | | | | 4,359 | | | | 2,849 | | | | 3,823 | | | | 3,383 | | | 23.6 | % | | | 8,461 | | | | 10,056 | | | 18.9 | % | |
| Full surrenders and deaths | | (2,446) | | | | (2,695) | | | | (3,470) | | | | (3,461) | | | | (3,657) | | | -49.5 | % | | | (7,251) | | | | (10,589) | | | -46.0 | % | |
| Other contract benefits | | (1,165) | | | | (1,379) | | | | (1,372) | | | | (1,316) | | | | (1,363) | | | -17.0 | % | | | (3,522) | | | | (4,051) | | | -15.0 | % | |
| Net flows | | (874) | | | | 285 | | | | (1,993) | | | | (954) | | | | (1,637) | | | -87.3 | % | | | (2,312) | | | | (4,584) | | | -98.3 | % | |
| Policyholder assessments | | (645) | | | | (642) | | | | (664) | | | | (667) | | | | (683) | | | -5.9 | % | | | (1,925) | | | | (2,016) | | | -4.7 | % | |
| Change in market value, reinvestment and interest credited | | (3,259) | | | | 10,935 | | | | 7,937 | | | | 2,021 | | | | 7,171 | | | NM | | | 7,316 | | | | 17,130 | | | 134.1 | % | |
| Change in fair value of embedded derivative instruments | | | | | | | | | | | | | | | | | | | | | | | | | |
| and other | | (646) | | | | 1,629 | | | | 1,616 | | | | 313 | | | | 861 | | | 233.3 | % | | | 1,443 | | | | 2,791 | | | 93.4 | % | |
| Balance as of end-of-period, gross | | 155,644 | | | | 167,851 | | | | 174,747 | | | | 175,460 | | | | 181,172 | | | 16.4 | % | | | 155,644 | | | | 181,172 | | | 16.4 | % | |
| Account balances reinsured | | (8,994) | | | | (15,025) | | | | (14,954) | | | | (15,591) | | | | (16,015) | | | -78.1 | % | | | (8,994) | | | | (16,015) | | | -78.1 | % | |
| Balance as of end-of-period, net | $ | 146,650 | | | $ | 152,826 | | | $ | 159,793 | | | $ | 159,869 | | | $ | 165,157 | | | 12.6 | % | | $ | 146,650 | | | $ | 165,157 | | | 12.6 | % | |
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| Lincoln Financial | |
| Life Insurance – Account Balance Roll Forwards | |
| Unaudited (millions of dollars) | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| General Account | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 37,458 | | | $ | 37,217 | | | $ | 37,180 | | | $ | 37,006 | | | $ | 36,848 | | | | -1.6 | % | | $ | 37,694 | | | $ | 37,180 | | | | -1.4 | % | |
| Gross deposits | | 915 | | | | 1,006 | | | | 850 | | | | 893 | | | | 899 | | | | -1.7 | % | | | 2,749 | | | | 2,641 | | | | -3.9 | % | |
| Withdrawals and deaths | | (378) | | | | (359) | | | | (364) | | | | (389) | | | | (369) | | | | 2.4 | % | | | (1,095) | | | | (1,122) | | | | -2.5 | % | |
| Net flows | | 537 | | | | 647 | | | | 486 | | | | 504 | | | | 530 | | | | -1.3 | % | | | 1,654 | | | | 1,519 | | | | -8.2 | % | |
| Transfers between general and separate accounts | | 14 | | | | 7 | | | | 38 | | | | 74 | | | | 30 | | | | 114.3 | % | | | 90 | | | | 143 | | | | 58.9 | % | |
| Policyholder assessments | | (1,124) | | | | (1,140) | | | | (1,124) | | | | (1,130) | | | | (1,129) | | | | -0.4 | % | | | (3,373) | | | | (3,383) | | | | -0.3 | % | |
| Reinvested interest credited | | 370 | | | | 366 | | | | 365 | | | | 368 | | | | 375 | | | | 1.4 | % | | | 1,114 | | | | 1,109 | | | | -0.4 | % | |
| Change in fair value of embedded derivative instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| and other | | (38) | | | | 83 | | | | 61 | | | | 26 | | | | 38 | | | | 200.0 | % | | | 38 | | | | 124 | | | | 226.3 | % | |
| Balance as of end-of-period, gross | | 37,217 | | | | 37,180 | | | | 37,006 | | | | 36,848 | | | | 36,692 | | | | -1.4 | % | | | 37,217 | | | | 36,692 | | | | -1.4 | % | |
| Account balances reinsured | | (5,503) | | | | (15,777) | | | | (15,607) | | | | (15,467) | | | | (15,301) | | | | NM | | | (5,503) | | | | (15,301) | | | | NM | |
| Balance as of end-of-period, net | $ | 31,714 | | | $ | 21,403 | | | $ | 21,399 | | | $ | 21,381 | | | $ | 21,391 | | | | -32.6 | % | | $ | 31,714 | | | $ | 21,391 | | | | -32.6 | % | |
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| Separate Account | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 23,409 | | | $ | 22,642 | | | $ | 25,150 | | | $ | 27,007 | | | $ | 27,381 | | | | 17.0 | % | | | 20,920 | | | | $ | 25,150 | | | | 20.2 | % | |
| Gross deposits | | 357 | | | | 452 | | | | 358 | | | | 337 | | | | 363 | | | | 1.7 | % | | | 1,178 | | | | 1,058 | | | | -10.2 | % | |
| Withdrawals and deaths | | (73) | | | | (86) | | | | (103) | | | | (90) | | | | (155) | | | | NM | | | (227) | | | | (347) | | | | -52.9 | % | |
| Net flows | | 284 | | | | 366 | | | | 255 | | | | 247 | | | | 208 | | | | -26.8 | % | | | 951 | | | | 711 | | | | -25.2 | % | |
| Transfers between general and separate accounts | | (12) | | | | (7) | | | | (37) | | | | (76) | | | | (30) | | | | NM | | | (88) | | | | (143) | | | | -62.5 | % | |
| Policyholder assessments | | (238) | | | | (250) | | | | (246) | | | | (247) | | | | (248) | | | | -4.2 | % | | | (714) | | | | (742) | | | | -3.9 | % | |
| Change in market value and reinvestment | | (801) | | | | 2,399 | | | | 1,885 | | | | 450 | | | | 1,610 | | | | NM | | | 1,573 | | | | 3,945 | | | | 150.8 | % | |
| Balance as of end-of-period, gross | | 22,642 | | | | 25,150 | | | | 27,007 | | | | 27,381 | | | | 28,921 | | | | 27.7 | % | | | 22,642 | | | | 28,921 | | | | 27.7 | % | |
| Account balances reinsured | | (4,632) | | | | (5,062) | | | | (5,338) | | | | (5,371) | | | | (5,593) | | | | -20.7 | % | | | (4,632) | | | | (5,593) | | | | -20.7 | % | |
| Balance as of end-of-period, net | $ | 18,010 | | | $ | 20,088 | | | $ | 21,669 | | | $ | 22,010 | | | $ | 23,328 | | | | 29.5 | % | | $ | 18,010 | | | $ | 23,328 | | | | 29.5 | % | |
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| Total | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 60,867 | | | $ | 59,859 | | | $ | 62,330 | | | $ | 64,013 | | | $ | 64,229 | | | | 5.5 | % | | $ | 58,614 | | | $ | 62,330 | | | | 6.3 | % | |
| Gross deposits | | 1,272 | | | | 1,458 | | | | 1,208 | | | | 1,230 | | | | 1,262 | | | | -0.8 | % | | | 3,927 | | | | 3,699 | | | | -5.8 | % | |
| Withdrawals and deaths | | (451) | | | | (445) | | | | (467) | | | | (479) | | | | (524) | | | | -16.2 | % | | | (1,322) | | | | (1,469) | | | | -11.1 | % | |
| Net flows | | 821 | | | | 1,013 | | | | 741 | | | | 751 | | | | 738 | | | | -10.1 | % | | | 2,605 | | | | 2,230 | | | | -14.4 | % | |
| Transfers between general and separate accounts | | 2 | | | | — | | | | 1 | | | | (2) | | | | — | | | | | | | 2 | | | | — | | | | -100.0 | % | |
| Policyholder assessments | | (1,362) | | | | (1,390) | | | | (1,370) | | | | (1,377) | | | | (1,377) | | | | -1.1 | % | | | (4,087) | | | | (4,125) | | | | -0.9 | % | |
| Change in market value and reinvestment | | (431) | | | | 2,765 | | | | 2,250 | | | | 818 | | | | 1,985 | | | | NM | | | 2,687 | | | | 5,054 | | | | 88.1 | % | |
| Change in fair value of embedded derivative instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| and other | | (38) | | | | 83 | | | | 61 | | | | 26 | | | | 38 | | | | 200.0 | % | | | 38 | | | | 124 | | | | 226.3 | % | |
| Balance as of end-of-period, gross | | 59,859 | | | | 62,330 | | | | 64,013 | | | | 64,229 | | | | 65,613 | | | | 9.6 | % | | | 59,859 | | | | 65,613 | | | | 9.6 | % | |
| Account balances reinsured | | (10,135) | | | | (20,839) | | | | (20,945) | | | | (20,838) | | | | (20,894) | | | | NM | | | (10,135) | | | | (20,894) | | | | NM | |
| Balance as of end-of-period, net | $ | 49,724 | | | $ | 41,491 | | | $ | 43,068 | | | $ | 43,391 | | | $ | 44,719 | | | | -10.1 | % | | $ | 49,724 | | | $ | 44,719 | | | | -10.1 | % | |
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| Lincoln Financial | |
| Retirement Plan Services – Account Balance Roll Forwards | |
| Unaudited (millions of dollars) | |
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| | For the Three Months Ended | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| General Account | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 24,430 | | | $ | 24,099 | | | $ | 23,784 | | | $ | 23,586 | | | $ | 23,598 | | | | -3.4 | % | | $ | 25,138 | | | $ | 23,784 | | | | -5.4 | % | |
| Gross deposits | | 709 | | | | 750 | | | | 790 | | | | 846 | | | | 944 | | | | 33.1 | % | | | 2,026 | | | | 2,580 | | | | 27.3 | % | |
| Withdrawals | | (1,168) | | | | (1,233) | | | | (1,203) | | | | (1,072) | | | | (1,095) | | | | 6.3 | % | | | (3,262) | | | | (3,370) | | | | -3.3 | % | |
| Net flows | | (459) | | | | (483) | | | | (413) | | | | (226) | | | | (151) | | | | 67.1 | % | | | (1,236) | | | | (790) | | | | 36.1 | % | |
| Transfers between fixed and variable accounts | | (38) | | | | 2 | | | | 50 | | | | 69 | | | | 110 | | | | NM | | | (297) | | | | 230 | | | | 177.4 | % | |
| Policyholder assessments | | (3) | | | | (3) | | | | (3) | | | | (3) | | | | (4) | | | | -33.3 | % | | | (10) | | | | (10) | | | | 0.0% | |
| Reinvested interest credited | | 169 | | | | 169 | | | | 168 | | | | 172 | | | | 174 | | | | 3.0 | % | | | 504 | | | | 513 | | | | 1.8 | % | |
| Balance as of end-of-period | $ | 24,099 | | | $ | 23,784 | | | $ | 23,586 | | | $ | 23,598 | | | $ | 23,727 | | | | -1.5 | % | | $ | 24,099 | | | $ | 23,727 | | | | -1.5 | % | |
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| Separate Account and Mutual Funds | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 72,156 | | | $ | 69,834 | | | $ | 77,201 | | | $ | 83,226 | | | $ | 84,274 | | | | 16.8 | % | | $ | 63,592 | | | $ | 77,201 | | | | 21.4 | % | |
| Gross deposits | | 1,991 | | | | 2,222 | | | | 3,012 | | | | 2,436 | | | | 3,236 | | | | 62.5 | % | | | 6,780 | | | | 8,685 | | | | 28.1 | % | |
| Withdrawals | | (1,804) | | | | (2,071) | | | | (2,208) | | | | (2,407) | | | | (2,434) | | | | -34.9 | % | | | (5,080) | | | | (7,050) | | | | -38.8 | % | |
| Net flows | | 187 | | | | 151 | | | | 804 | | | | 29 | | | | 802 | | | | NM | | | 1,700 | | | | 1,635 | | | | -3.8 | % | |
| Transfers between fixed and variable accounts | | 42 | | | | (10) | | | | (34) | | | | (69) | | | | (106) | | | | NM | | | 306 | | | | (210) | | | | NM | |
| Policyholder assessments | | (62) | | | | (62) | | | | (64) | | | | (66) | | | | (70) | | | | -12.9 | % | | | (178) | | | | (201) | | | | -12.9 | % | |
| Change in market value and reinvestment | | (2,489) | | | | 7,288 | | | | 5,319 | | | | 1,154 | | | | 5,169 | | | | NM | | | 4,414 | | | | 11,644 | | | | 163.8 | % | |
| Balance as of end-of-period | $ | 69,834 | | | $ | 77,201 | | | $ | 83,226 | | | $ | 84,274 | | | $ | 90,069 | | | | 29.0 | % | | $ | 69,834 | | | $ | 90,069 | | | | 29.0 | % | |
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| Total | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of beginning-of-period | $ | 96,586 | | | $ | 93,933 | | | $ | 100,985 | | | $ | 106,812 | | | $ | 107,872 | | | | 11.7 | % | | $ | 88,730 | | | $ | 100,985 | | | | 13.8 | % | |
| Gross deposits | | 2,700 | | | | 2,972 | | | | 3,802 | | | | 3,282 | | | | 4,180 | | | | 54.8 | % | | | 8,806 | | | | 11,265 | | | | 27.9 | % | |
| Withdrawals | | (2,972) | | | | (3,304) | | | | (3,411) | | | | (3,479) | | | | (3,529) | | | | -18.7 | % | | | (8,342) | | | | (10,420) | | | | -24.9 | % | |
| Net flows | | (272) | | | | (332) | | | | 391 | | | | (197) | | | | 651 | | | | NM | | | 464 | | | | 845 | | | | 82.1 | % | |
| Transfers between fixed and variable accounts | | 4 | | | | (8) | | | | 16 | | | | — | | | | 4 | | | | 0.0% | | | 9 | | | | 20 | | | | 122.2 | % | |
| Policyholder assessments | | (65) | | | | (65) | | | | (67) | | | | (69) | | | | (74) | | | | -13.8 | % | | | (188) | | | | (211) | | | | -12.2 | % | |
| Change in market value and reinvestment | | (2,320) | | | | 7,457 | | | | 5,487 | | | | 1,326 | | | | 5,343 | | | | NM | | | 4,918 | | | | 12,157 | | | | 147.2 | % | |
| Balance as of end-of-period | $ | 93,933 | | | $ | 100,985 | | | $ | 106,812 | | | $ | 107,872 | | | $ | 113,796 | | | | 21.1 | % | | $ | 93,933 | | | $ | 113,796 | | | | 21.1 | % | |
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| Lincoln Financial |
| Fixed-Income Asset Class | | |
| Unaudited (millions of dollars) | | |
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| | As of 9/30/2023 | | As of 12/31/2023 | | As of 9/30/2024 | |
| | Amount | | % | | Amount | | % | | Amount | | % | | |
| Fixed Maturity AFS Securities, Net of Modified Coinsurance and Funds Withheld | | | | | | | | | | | | | | | | | | | |
| Investments and Allowance for Credit Losses, at Amortized Cost (1) | | | | | | | | | | | | | | | | | | | |
| Industry corporate bonds: | | | | | | | | | | | | | | | | | | | |
| Financial services | $ | 16,923 | | | | 15.1 | % | | $ | 13,510 | | | | 15.2 | % | | $ | 12,472 | | | | 14.3 | % | | |
| Basic industry | | 4,163 | | | | 3.7 | % | | | 2,986 | | | | 3.3 | % | | | 2,906 | | | | 3.3 | % | | |
| Capital goods | | 7,070 | | | | 6.3 | % | | | 5,568 | | | | 6.2 | % | | | 5,523 | | | | 6.3 | % | | |
| Communications | | 4,331 | | | | 3.9 | % | | | 3,110 | | | | 3.5 | % | | | 2,792 | | | | 3.2 | % | | |
| Consumer cyclical | | 5,926 | | | | 5.3 | % | | | 5,268 | | | | 5.8 | % | | | 5,403 | | | | 6.2 | % | | |
| Consumer non-cyclical | | 17,372 | | | | 15.6 | % | | | 13,458 | | | | 15.1 | % | | | 12,801 | | | | 14.8 | % | | |
| Energy | | 4,503 | | | | 4.0 | % | | | 2,776 | | | | 3.1 | % | | | 2,571 | | | | 3.0 | % | | |
| Technology | | 5,679 | | | | 5.1 | % | | | 4,376 | | | | 4.9 | % | | | 4,041 | | | | 4.6 | % | | |
| Transportation | | 3,690 | | | | 3.3 | % | | | 3,233 | | | | 3.6 | % | | | 3,191 | | | | 3.7 | % | | |
| Industrial other | | 2,298 | | | | 2.1 | % | | | 2,107 | | | | 2.4 | % | | | 2,174 | | | | 2.5 | % | | |
| Utilities | | 14,317 | | | | 12.9 | % | | | 11,613 | | | | 13.0 | % | | | 11,269 | | | | 12.9 | % | | |
| Government-related entities | | 1,798 | | | | 1.6 | % | | | 1,278 | | | | 1.4 | % | | | 1,216 | | | | 1.4 | % | | |
| Residential mortgage-backed securities ("RMBS") | | | | | | | | | | | | | | | | | | | |
| Agency backed | | 1,803 | | | | 1.6 | % | | | 1,505 | | | | 1.7 | % | | | 1,558 | | | | 1.8 | % | | |
| Non-agency backed | | 381 | | | | 0.3 | % | | | 332 | | | | 0.4 | % | | | 320 | | | | 0.4 | % | | |
| Commercial mortgage-backed securities ("CMBS") | | 1,963 | | | | 1.8 | % | | | 1,546 | | | | 1.7 | % | | | 1,673 | | | | 1.9 | % | | |
| Asset-backed securities ("ABS") | | | | | | | | | | | | | | | | | | | |
| Collateralized loan obligations ("CLOs") | | 9,202 | | | | 8.2 | % | | | 8,325 | | | | 9.3 | % | | | 8,124 | | | | 9.3 | % | | |
| Other ABS | | 3,957 | | | | 3.5 | % | | | 4,220 | | | | 4.7 | % | | | 5,375 | | | | 6.2 | % | | |
| Municipals | | 5,247 | | | | 4.7 | % | | | 2,973 | | | | 3.3 | % | | | 2,689 | | | | 3.1 | % | | |
| United States and foreign government | | 744 | | | 0.7 | % | | | 730 | | | 1.1 | % | | | 699 | | | 0.8 | % | | |
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| Hybrid & redeemable preferred securities | | 361 | | | | 0.3 | % | | | 237 | | | | 0.3 | % | | | 243 | | | | 0.3 | % | | |
| Total fixed maturity AFS securities, net of modified coinsurance and funds withheld | | | | | | | | | | | | | | | | | | | |
| investments and allowance for credit losses, at amortized cost | | 111,728 | | | | 100.0 | % | | | 89,151 | | | | 100.0 | % | | | 87,040 | | | | 100.0 | % | | |
| Trading Securities, Net of Modified Coinsurance and Funds Withheld Investments | | 670 | | | | | | | 626 | | | | | | | 515 | | | | | | |
| Equity Securities, Net of Modified Coinsurance and Funds Withheld Investments | | 295 | | | | | | | 275 | | | | | | | 263 | | | | | | |
| Total fixed maturity AFS, trading and equity securities, net of modified coinsurance and funds | | | | | | | | | | | | | | | | | | | |
| withheld investments and allowance for credit losses, at amortized cost | | 112,693 | | | | | | | 90,052 | | | | | | | 87,818 | | | | | | |
| Modified coinsurance and funds withheld investments | | 2,806 | | | | | | | 10,215 | | | | | | | 12,426 | | | | | | |
| Total fixed maturity AFS, trading and equity securities | $ | 115,499 | | | | | | $ | 100,267 | | | | | | $ | 100,244 | | | | | | |
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| (1) Net investment income and net gains (losses) related to assets held by us to support certain modified coinsurance and funds withheld agreements are included in periodic payments | | |
| to or from the reinsurers, resulting in the economic benefits of these assets flowing to the reinsurers. Accordingly, these assets have been excluded from summaries provided on | | |
| page 24 and page 25 as we have a limited economic interest in the assets. | | |
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| Lincoln Financial |
| Fixed-Income Credit Quality | | |
| Unaudited (millions of dollars) | | |
| | | | | | | | | | | | | | | | | | | | |
| | As of 9/30/2023 | | As of 12/31/2023 | | As of 9/30/2024 | |
| | Amount | | % | | Amount | | % | | Amount | | % | |
| Fixed Maturity AFS Securities, Net of Modified Coinsurance and Funds Withheld Investments | | | | | | | | | | | | | | | | | | | |
| and Allowance for Credit Losses, at Amortized Cost (1) | | | | | | | | | | | | | | | | | | | |
| NAIC 1 (AAA-A) | $ | 65,612 | | | | 58.7 | % | | $ | 51,738 | | | | 58.0 | % | | $ | 51,370 | | | | 58.9 | % | | |
| NAIC 2 (BBB) | | 42,676 | | | | 38.2 | % | | | 34,475 | | | | 38.7 | % | | | 32,774 | | | | 37.7 | % | | |
| Total investment grade | | 108,288 | | | | 96.9 | % | | | 86,213 | | | | 96.7 | % | | | 84,144 | | | | 96.6 | % | | |
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| NAIC 3 (BB) | | 1,598 | | | | 1.4 | % | | | 1,090 | | | | 1.2 | % | | | 1,008 | | | | 1.2 | % | | |
| NAIC 4 (B) | | 1,729 | | | | 1.6 | % | | | 1,760 | | | | 2.0 | % | | | 1,828 | | | | 2.1 | % | | |
| NAIC 5 (CCC and lower) | | 97 | | | | 0.1 | % | | | 86 | | | | 0.1 | % | | | 55 | | | | 0.1 | % | | |
| NAIC 6 (in or near default) | | 16 | | | | 0.0 | % | | | 2 | | | | 0.0 | % | | | 5 | | | | 0.0 | % | | |
| Total below investment grade | | 3,440 | | | | 3.1 | % | | | 2,938 | | | | 3.3 | % | | | 2,896 | | | | 3.4 | % | | |
| Total | $ | 111,728 | | | | 100.0 | % | | $ | 89,151 | | | | 100.0 | % | | $ | 87,040 | | | | 100.0 | % | | |
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| Commercial Mortgage Loans, Net of Modified Coinsurance and Funds Withheld Investments, | | | | | | | | | | | | | | | | | | | |
| at Amortized Cost (1)(2) | | | | | | | | | | | | | | | | | | | |
| CM1 (AAA-A) | $ | 13,451 | | | | 79.6 | % | | $ | 13,687 | | | | 80.4 | % | | $ | 13,665 | | | | 77.8 | % | | |
| CM2 (BBB) | | 3,387 | | | | 20.0 | % | | | 3,248 | | | | 19.1 | % | | | 3,819 | | | | 21.7 | % | | |
| CM3-7 (BB and lower) (3) | | 69 | | | | 0.4 | % | | | 84 | | | | 0.5 | % | | | 93 | | | | 0.5 | % | | |
| Total | $ | 16,907 | | | | 100.0 | % | | $ | 17,019 | | | | 100.0 | % | | $ | 17,577 | | | | 100.0 | % | | |
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| Total Fixed Maturity AFS Securities and Commercial Mortgage Loans, Net of Modified | | | | | | | | | | | | | | | | | | | |
| Coinsurance and Funds Withheld Investments, at Amortized Cost (1)(2) | | | | | | | | | | | | | | | | | | | |
| AAA-A | $ | 79,063 | | | | 61.5 | % | | $ | 65,425 | | | | 61.6 | % | | $ | 65,035 | | | | 62.1 | % | | |
| BBB | | 46,063 | | | | 35.8 | % | | | 37,723 | | | | 35.5 | % | | | 36,593 | | | | 35.0 | % | | |
| BB and lower | | 3,509 | | | | 2.7 | % | | | 3,022 | | | | 2.9 | % | | | 2,989 | | | | 2.9 | % | | |
| Total | $ | 128,635 | | | | 100.0 | % | | $ | 106,170 | | | | 100.0 | % | | $ | 104,617 | | | | 100.0 | % | | |
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| (1) Ratings are based upon the designations determined and provided by the National Association of Insurance Commissioners (“NAIC”) or based upon ratings from credit rating | | |
| agencies to derive the NAIC designation. | | |
| (2) CM ratings reflect the risk-based capital risk category for commercial mortgage loans. Letter ratings are assumed NAIC equivalent ratings where NAIC 1 = CM1, NAIC 2 = CM2 | | |
| and NAIC 3-6 = CM3-7. | | |
| (3) Includes Mortgage Fund LPs classified as CM3 that are included in "Other Investments" on the Consolidated Balance Sheets | | |
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| Lincoln Financial | |
| Select GAAP to Non-GAAP Reconciliations | |
| Unaudited (millions of dollars) | |
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| | For the Three Months Ended (1) | | For the Nine Months Ended (1) |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Net Income | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) available to common stockholders – diluted | $ | 819 | | | $ | (1,246) | | | $ | 1,191 | | | $ | 884 | | | $ | (562) | | | | NM | | $ | 410 | | | $ | 1,511 | | | | 269 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock dividends declared | | (34) | | | | (11) | | | | (34) | | | | (11) | | | | (34) | | | | 0.0% | | | (71) | | | | (80) | | | | (13) | % | |
| Adjustment for deferred units of LNC stock | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| in our deferred compensation plans | | — | | | | — | | | | 3 | | | | — | | | | — | | | | NM | | | (2) | | | | 3 | | | | 250 | % | |
| Net income (loss) | | 853 | | | | (1,235) | | | | 1,222 | | | | 895 | | | | (528) | | | | NM | | | 483 | | | | 1,588 | | | | 229 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net annuity product features, pre-tax | | 1,322 | | | | (1,008) | | | | 1,450 | | | | 252 | | | | (381) | | | | NM | | | 1,076 | | | | 1,319 | | | | 23 | % | |
| Net life insurance product features, pre-tax | | 108 | | | | (225) | | | | (130) | | | | 4 | | | | (125) | | | | NM | | | (168) | | | | (253) | | | | (51) | % | |
| Credit loss-related adjustments, pre-tax | | (27) | | | | (27) | | | | (1) | | | | (34) | | | | (88) | | | | NM | | | (53) | | | | (124) | | | | NM | |
| Investment gains (losses), pre-tax (2) | | (400) | | | | 167 | | | | (81) | | | | (230) | | | | (105) | | | | 74 | % | | | (1,126) | | | | (416) | | | | 63 | % | |
| Changes in the fair value of reinsurance-related | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| embedded derivatives, trading securities and certain | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| mortgage loans, pre-tax (3) | | (29) | | | | (776) | | | | 194 | | | | 201 | | | | (446) | | | | NM | | | (27) | | | | (51) | | | | (89) | % | |
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| Gains (losses) on other non-financial assets – sale of | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| subsidiaries/businesses, pre-tax (4) | | — | | | | — | | | | — | | | | 584 | | | | (2) | | | | NM | | | — | | | | 582 | | | | NM | |
| Other items, pre-tax (5)(6)(7)(8) | | (12) | | | | (32) | | | | (186) | | | | (33) | | | | (19) | | | | (58) | % | | | (23) | | | | (238) | | | | NM | |
| Income tax benefit (expense) related | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| to the above pre-tax items | | (193) | | | | 403 | | | | (268) | | | | (184) | | | | 246 | | | | 227 | % | | | 76 | | | | (202) | | | | NM | |
| Total adjustments | | 769 | | | | (1,498) | | | | 978 | | | | 560 | | | | (920) | | | | NM | | | (245) | | | | 617 | | | | NM | |
| Adjusted income (loss) from operations | | 84 | | | | 263 | | | | 244 | | | | 335 | | | | 392 | | | | NM | | | 728 | | | | 971 | | | | 33 | % | |
| Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock dividends declared | | (34) | | | | (11) | | | | (34) | | | | (11) | | | | (34) | | | | 0.0% | | | (71) | | | | (80) | | | | (13) | % | |
| Adjusted income (loss) from operations available | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| to common stockholders | $ | 50 | | | $ | 252 | | | $ | 210 | | | $ | 324 | | | $ | 358 | | | | NM | | $ | 657 | | | $ | 891 | | | | 36 | % | |
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| (1) Prior period impacts have been recast to conform to the current period presentation. See page 1 for further information. | | |
| (2) Includes intent to sell impairments during the second and third quarters of 2023 of certain fixed maturity AFS securities in an unrealized loss position, resulting from the | |
| Company’s intent to sell these securities as part of the fourth quarter 2023 reinsurance transaction. | |
| (3) Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction. | |
| (4) Relates to the sale of our wealth management business, which provided approximately $650 million of statutory capital benefit. | |
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| (continued on following page) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Lincoln Financial | |
| Select GAAP to Non-GAAP Reconciliations | |
| Unaudited (millions of dollars, except per share data) | |
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| (continued from the previous page) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (5) Includes certain legal accruals of $(12) million in the third quarter of 2023 and $(114) million primarily related to the settlement of cost of insurance litigation in | |
| the first quarter of 2024. | | | |
| (6) Includes severance expense related to initiatives that realign the workforce of $(3) million, $(3) million, $(49) million, $(7) million and $(16) million in the first quarter of 2023, second | |
| quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively. | |
| (7) Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(9) million, $(1) million, $(26) million, $(10) million, $(27) million and $(2) million | |
| for the second quarter of 2023, third, quarter of 2023, fourth quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively. | | | |
| (8) Includes deferred compensation mark-to-market adjustment of $12 million, $(8) million, $1 million, $(6) million, $(13) million, $1 million and $(1) million in the first quarter of 2023, | |
| second quarter of 2023, third quarter of 2023, fourth quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively. | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total revenues | $ | 4,203 | | | $ | 700 | | | $ | 4,116 | | | $ | 5,153 | | | $ | 4,111 | | | | -2.2 | % | | $ | 10,946 | | | $ | 13,380 | | | | 22.2 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenue adjustments from annuity | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| and life insurance product features | | (14) | | | | (631) | | | | (580) | | | | 105 | | | | 149 | | | | NM | | | (1,908) | | | | (325) | | | | 83.0 | % | |
| Credit loss-related adjustments | | (27) | | | | (27) | | | | (1) | | | | (34) | | | | (88) | | | | NM | | | (53) | | | | (124) | | | | NM | |
| Investment gains (losses) (1) | | (400) | | | | 167 | | | | (81) | | | | (230) | | | | (105) | | | | 73.8 | % | | | (1,126) | | | | (416) | | | | 63.1 | % | |
| Changes in the fair value of reinsurance-related | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| embedded derivatives, trading securities and certain | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| mortgage loans (2) | | (29) | | | | (776) | | | | 194 | | | | 201 | | | | (446) | | | | NM | | | (27) | | | | (51) | | | | -88.9 | % | |
| Gains (losses) on other non-financial assets – sale of | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| subsidiaries/businesses (3) | | — | | | | — | | | | — | | | | 584 | | | | (2) | | | | NM | | | — | | | | 582 | | | | NM | |
| Adjusted operating revenues | $ | 4,673 | | | $ | 1,967 | | | $ | 4,584 | | | $ | 4,527 | | | $ | 4,603 | | | | -1.5 | % | | $ | 14,060 | | | $ | 13,714 | | | | -2.5 | % | |
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| (1) Includes intent to sell impairments during the second and third quarters of 2023 of certain fixed maturity AFS securities in an unrealized loss position, resulting from the | | | |
| Company’s intent to sell these securities as part of the fourth quarter 2023 reinsurance transaction. | | | |
| (2) Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction. | | | |
| (3) Relates to the sale of our wealth management business, which provided approximately $650 million of statutory capital benefit. | | | |
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| Lincoln Financial | |
| Select GAAP to Non-GAAP Reconciliations | |
| Unaudited (millions of dollars, except per share data) | |
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| | For the Three Months Ended (1) | | | For the Nine Months Ended (1) | |
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| Earnings (Loss) Per Common Share – Diluted | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Net income (loss) | $ | 4.79 | | | $ | (7.35) | | | $ | 6.93 | | | $ | 5.11 | | | $ | (3.29) | | | | NM | | $ | 2.40 | | | $ | 8.75 | | | | 264.6 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net annuity product features, pre-tax | | 7.74 | | | | (5.96) | | | | 8.43 | | | | 1.46 | | | | (2.23) | | | | NM | | | 6.29 | | | | 7.65 | | | | 21.6 | % | |
| Net life insurance product features, pre-tax | | 0.63 | | | | (1.33) | | | | (0.75) | | | | 0.02 | | | (0.73) | | | | NM | | | (0.99) | | | | (1.46) | | | | -47.5 | % | |
| Credit loss-related adjustments, pre-tax | | (0.16) | | | | (0.15) | | | | — | | | | (0.20) | | | | (0.53) | | | | NM | | | (0.31) | | | | (0.72) | | | | NM | |
| Investment gains (losses), pre-tax | | (2.34) | | | | 0.98 | | | (0.47) | | | | (1.33) | | | | (0.61) | | | | 73.9 | % | | | (6.60) | | | | (2.41) | | | | 63.5 | % | |
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| Changes in the fair value of reinsurance-related | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| embedded derivatives, trading securities and certain | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| mortgage loans, pre-tax | | (0.18) | | | | (4.57) | | | | 1.13 | | | 1.16 | | | (2.61) | | | | NM | | | (0.15) | | | | (0.30) | | | | -100.0 | % | |
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| Gains (losses) on other non-financial assets – sale of | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| subsidiaries/businesses, pre-tax | | — | | | | — | | | | — | | | | 3.38 | | | | (0.01) | | | | NM | | | — | | | | 3.37 | | | | NM | |
| Other items, pre-tax (2)(3)(4)(5) | | (0.07) | | | | (0.18) | | | | (1.08) | | | | (0.19) | | | | (0.11) | | | | -57.1 | % | | | (0.14) | | | | (1.38) | | | | NM | |
| Income tax benefit (expense) related | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| to the above pre-tax items | | (1.12) | | | | 2.37 | | | | (1.55) | | | | (1.06) | | | | 1.44 | | | | 228.6 | % | | | 0.45 | | | | (1.16) | | | | NM | |
| Adjustment attributable to using different average | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| diluted shares for adjusted income (loss) from | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| operations as compared to net income (loss) (6) | | — | | | | 0.02 | | | | — | | | | — | | | | 0.04 | | | | NM | | | — | | | | — | | | | NM | |
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| Adjusted income (loss) from operations | $ | 0.29 | | | $ | 1.47 | | | $ | 1.22 | | | $ | 1.87 | | | $ | 2.06 | | | | NM | | $ | 3.85 | | | $ | 5.16 | | | | 34.0 | % | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) Prior period impacts have been recast to conform to the current period presentation. See page 1 for further information. | |
| (2) Includes certain legal accruals of $(0.08) in the third quarter of 2023 and $(0.65) primarily related to the settlement of cost of insurance litigation in the | |
| first quarter of 2024. | | | |
| (3) Includes severance expense related to initiatives that realign the workforce of $(0.02), $(0.02), $(0.29), $(0.04) and $(0.09) in the first quarter of 2023, second | | | |
| quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively. | | | |
| (4) Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(0.05), $(0.14), $(0.06), $(0.15) and $(0.01) for the second quarter of 2023, | | | |
| fourth quarter of 2023, first quarter of 2024, second quarter of 2024 and third quarter of 2024, respectively. | | | |
| (5) Includes deferred compensation mark-to-market adjustment of $0.07, $(0.05), $0.01, $(0.04), $(0.08) and $(0.01) in the first quarter of 2023, | | | |
| second quarter of 2023, third quarter of 2023, fourth quarter of 2023, first quarter of 2024 and third quarter of 2024, respectively. | | | |
| (6) In periods where net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use | |
| of diluted shares would result in a lower loss per share. Due to reporting adjusted income (loss) from operations per common share on a different share basis than net income (loss) | |
| per common share, we have included an adjustment to reconcile the two metrics. | |
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| Lincoln Financial | |
| Select GAAP to Non-GAAP Reconciliations | |
| Unaudited (millions of dollars, except per share data) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | For the Nine Months Ended | |
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| | | 9/30/23 | | | 12/31/23 | | | 3/31/24 | | | 6/30/24 | | | 9/30/24 | | Change | | | 9/30/23 | | | 9/30/24 | | | Change | |
| Stockholders’ Equity, End-of-Period | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' equity | $ | 3,199 | | | $ | 6,893 | | | $ | 7,546 | | | $ | 7,949 | | | $ | 9,013 | | | 181.7 | % | | $ | 3,199 | | | $ | 9,013 | | | | 181.7 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | 986 | | | | 986 | | | | 986 | | | | 986 | | | | 986 | | | 0.0% | | | 986 | | | | 986 | | | | 0.0% | |
| AOCI | | (8,480) | | | | (3,476) | | | | (3,951) | | | | (4,369) | | | | (2,682) | | | 68.4 | % | | | (8,480) | | | | (2,682) | | | | 68.4 | % | |
| Stockholders’ equity, excluding AOCI and preferred stock | | 10,693 | | | | 9,383 | | | | 10,511 | | | | 11,332 | | | | 10,709 | | | 0.1 | % | | | 10,693 | | | | 10,709 | | | | 0.1 | % | |
| MRB-related impacts | | 1,545 | | | | 1,083 | | | | 2,575 | | | | 2,673 | | | | 2,147 | | | 39.0 | % | | | 1,545 | | | | 2,147 | | | | 39.0 | % | |
| GLB and GDB hedge instruments gains (losses) | | (1,630) | | | | (2,085) | | | | (2,675) | | | | (2,770) | | | | (2,763) | | | -69.5 | % | | | (1,630) | | | | (2,763) | | | | -69.5 | % | |
| Reinsurance-related embedded derivatives and portfolio gains (losses) (1) | | NM | | | (638) | | | | (476) | | | | (269) | | | | (642) | | | | | | NM | | | (642) | | | | | |
| Adjusted stockholders' equity (1) | $ | 10,778 | | | $ | 11,023 | | | $ | 11,087 | | | $ | 11,698 | | | $ | 11,967 | | | 11.0 | % | | $ | 10,778 | | | $ | 11,967 | | | | 11.0 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders’ Equity, Average | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' equity | $ | 4,509 | | | $ | 5,046 | | | $ | 7,219 | | | $ | 7,747 | | | $ | 8,481 | | | 88.1 | % | | $ | 5,567 | | | $ | 7,816 | | | | 40.4 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | 986 | | | | 986 | | | | 986 | | | | 986 | | | | 986 | | | 0.0% | | | 986 | | | | 986 | | | | 0.0% | |
| AOCI | | (6,792) | | | | (5,979) | | | | (3,714) | | | | (4,160) | | | | (3,526) | | | 48.1 | % | | | (5,425) | | | | (3,800) | | | | 30.0 | % | |
| Stockholders’ equity, excluding AOCI and preferred stock | | 10,315 | | | | 10,039 | | | | 9,947 | | | | 10,921 | | | | 11,021 | | | 6.8 | % | | | 10,006 | | | | 10,630 | | | | 6.2 | % | |
| MRB-related impacts | | 986 | | | | 1,314 | | | | 1,829 | | | | 2,624 | | | | 2,410 | | | 144.4 | % | | | (95) | | | | 2,288 | | | | NM | |
| GLB and GDB hedge instruments gains (losses) | | (1,519) | | | | (1,857) | | | | (2,380) | | | | (2,723) | | | | (2,767) | | | -82.2 | % | | | (921) | | | | (2,623) | | | | NM | |
| Reinsurance-related embedded derivatives and portfolio gains (losses) (1) | | NM | | | (318) | | | | (557) | | | | (372) | | | | (455) | | | | | | NM | | | (462) | | | | | |
| Adjusted average stockholders' equity (1) | $ | 10,848 | | | $ | 10,900 | | | $ | 11,055 | | | $ | 11,392 | | | $ | 11,833 | | | 9.1 | % | | $ | 11,022 | | | $ | 11,427 | | | | 3.7 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Book Value Per Common Share | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Book value per share | $ | 13.04 | | | $ | 34.81 | | | $ | 38.46 | | | $ | 40.78 | | | $ | 46.97 | | | 260.2 | % | | $ | 13.04 | | | $ | 46.97 | | | | 260.2 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AOCI | | (49.99) | | | | (20.49) | | | | (23.17) | | | | (25.59) | | | | (15.70) | | | 68.6 | % | | | (49.99) | | | | (15.70) | | | | 68.6 | % | |
| Book value per share, excluding AOCI | | 63.03 | | | | 55.30 | | | | 61.63 | | | | 66.37 | | | | 62.67 | | | -0.6 | % | | | 63.03 | | | | 62.67 | | | | -0.6 | % | |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| MRB-related gains (losses) | | 9.11 | | | | 6.38 | | | | 15.10 | | | | 15.66 | | | | 12.56 | | | 37.9 | % | | | 9.11 | | | | 12.56 | | | | 37.9 | % | |
| GLB and GDB hedge instruments gains (losses) | | (9.61) | | | | (12.29) | | | | (15.69) | | | | (16.22) | | | | (16.17) | | | -68.3 | % | | | (9.61) | | | | (16.17) | | | | -68.3 | % | |
| Reinsurance-related embedded derivatives and portfolio gains (losses) (1) | | NM | | | (3.76) | | | | (2.79) | | | | (1.58) | | | | (3.76) | | | | | | NM | | | (3.76) | | | | | |
| Adjusted book value per share (1) | $ | 63.53 | | | $ | 64.97 | | | $ | 65.01 | | | $ | 68.51 | | | $ | 70.04 | | | 10.2 | % | | $ | 63.53 | | | $ | 70.04 | | | | 10.2 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) This measure has been updated, effective beginning with the fourth quarter of 2023, to exclude reinsurance-related embedded derivatives and the underlying portfolio | |
| gains (losses), given the size of the impact of the fourth quarter 2023 reinsurance transaction. Such amounts in the prior periods presented, and the impact of this change to | |
| such prior periods, were not meaningful (“NM”). | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings Supplement Third Quarter 2024 Insurance products issued by: The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York October 31, 2024
2 Forward-Looking Statements – Cautionary Language Certain statements made in this presentation and in other written or oral statements made by Lincoln or on Lincoln’s behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward- looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may contain words like: “anticipate,” “believe,” “estimate,” “expect,” “project,” “shall,” “will” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in Lincoln’s businesses, prospective services or products, future performance or financial results and the outcome of contingencies, such as legal proceedings. Lincoln claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those expressed in or implied by such forward-looking statements due to a variety of factors, including: • Weak general economic and business conditions that may affect demand for our products, account balances, investment results, guaranteed benefit liabilities, premium levels and claims experience; • Adverse global capital and credit market conditions that may affect our ability to raise capital, if necessary, and may cause us to realize impairments on investments and certain intangible assets, including goodwill and the valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures; • The inability of our subsidiaries to pay dividends to the holding company in sufficient amounts, which could harm the holding company’s ability to meet its obligations; • Legislative, regulatory or tax changes, both domestic and foreign, that affect: the cost of, or demand for, our subsidiaries’ products; the required amount of reserves and/or surplus; our ability to conduct business and our captive reinsurance arrangements as well as restrictions on the payment of revenue sharing and 12b-1 distribution fees; • Changes in tax law or the interpretation of or application of existing tax laws that could impact our tax costs and the products that we sell; • The impact of regulations adopted by the Securities and Exchange Commission (“SEC”), the Department of Labor or other federal or state regulators or self-regulatory organizations that could adversely affect our distribution model and sales of our products and result in additional disclosure and other requirements related to the sale and delivery of our products; • The impact of new and emerging rules, laws and regulations relating to privacy, cybersecurity and artificial intelligence that may lead to increased compliance costs, reputation risk and/or changes in business practices; • Increasing scrutiny and evolving expectations and regulations regarding ESG matters that may adversely affect our reputation and our investment portfolio; • Actions taken by reinsurers to raise rates on in-force business; • Declines in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses and demand for our products; • Rapidly increasing or sustained high interest rates that may negatively affect our profitability, value of our investment portfolio and capital position and may cause policyholders to surrender annuity and life insurance policies, thereby causing realized investment losses; • The impact of the implementation of the provisions of the European Market Infrastructure Regulation relating to the regulation of derivatives transactions; • The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as: adverse actions related to present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings; • A decline or continued volatility in the equity markets causing a reduction in the sales of our subsidiaries’ products; a reduction of asset-based fees that our subsidiaries charge on various investment and insurance products; and an increase in liabilities related to guaranteed benefit riders, which are accounted for as market risk benefits, of our subsidiaries’ variable annuity products; • Ineffectiveness of our risk management policies and procedures, including our various hedging strategies; • A deviation in actual experience regarding future policyholder behavior, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries’ products and in establishing related insurance reserves, which may reduce future earnings; • Changes in accounting principles that may affect our consolidated financial statements; • Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on our ability to raise capital and on our liquidity and financial condition; • Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the premium writings, policy retention, profitability of our insurance subsidiaries and liquidity; • Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain financial assets, as well as counterparties to which we are exposed to credit risk, requiring that we realize losses on financial assets; • Interruption in telecommunication, information technology or other operational systems or failure to safeguard the confidentiality or privacy of sensitive data on such systems, including from cyberattacks or other breaches of our data security systems; • The effect of acquisitions and divestitures, including the inability to realize the anticipated benefits of acquisitions and dispositions of businesses and potential operating difficulties and unforeseen liabilities relating thereto, as well as the effect of restructurings, product withdrawals and other unusual items; • The inability to realize or sustain the benefits we expect from, greater than expected investments in, and the potential impact of efforts related to, our strategic initiatives; • The adequacy and collectability of reinsurance that we have obtained; • Pandemics, acts of terrorism, war or other man-made and natural catastrophes that may adversely impact liabilities for policyholder claims, affect our businesses and increase the cost and availability of reinsurance; • Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that our subsidiaries can charge for their products; • The unknown effect on our subsidiaries’ businesses resulting from evolving market preferences and the changing demographics of our client base; and • The unanticipated loss of key management or wholesalers. The risks and uncertainties included here are not exhaustive. Our most recent Form 10-K, as well as other reports that we file with the SEC, include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to correct or update any forward-looking statements to reflect events or circumstances that occur after the date of this presentation. The reporting of Risk-Based Capital (“RBC”) measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.
3 3Q24 Key Messages Highest earnings quarter in over two years; achieving targeted outcomes through strong execution • Sustained momentum in every business supported by strong underlying fundamentals and continued progress toward strategic objectives. • Group Protection earnings more than doubled YOY and Annuities earnings grew 15%2. • Annual assumption review resulted in a modest benefit to operating earnings for the quarter. Accelerating sales trajectory as product and segment strategies gain traction • Annuities sales increased nearly 25% YOY, with spread-based products representing two-thirds of total Annuities sales. • RPS YTD first-year sales increased nearly 80% YOY, driven by strong execution against segment strategy. • Life Insurance generated sequential sales growth for the second quarter in a row. Capital position continued to strengthen, supported by improving free cash flow generation • RBC ratio remained above 420% as capital position continues to strengthen. • Leverage ratio continued to decline, driven by organic equity growth. • Expense discipline and operational efficiencies are driving operating leverage. After- tax Per share Adjusted Operating Income, ex. significant and normalizing items $343M $1.97 Significant items Assumption review benefit $8M $0.05 Normalizing items Alternative investment income compared to our 10% long-term return target $7M $0.04 Total items impact $15M $0.09 Adjusted Operating Income1 $358M $2.06 1 Represents Adjusted Operating Income Available to Common Stockholders. See Non-GAAP Financial Measures Appendix for definition and reconciliation. 2 Not including the impact of the annual assumption review.
4 3Q24 Metrics Key Highlights Adjusted Income from Operations Excluding Significant Items1 ($M) Average Account Balances ($B) • Quarterly adjusted operating income increased to its highest level in over two years, driven by strong underlying performance in all businesses. • Average account balances grew 6% YOY, further supporting profitable growth. • Capital continues to improve, increasing our RBC ratio and deceasing leverage ratio. Key Priorities Risk-Based Capital2 Leverage Ratio3 • Maintain foundational capital required to ensure enterprise stability across market cycles and support investment for growth. • Advance a scalable framework, managing the enterprise’s resources to maximize cost efficiency, general account optimization, and capital allocation. • Shift towards businesses and products with more stable cash flows, focusing on maximizing risk- adjusted returns while decreasing sensitivity to equity markets. 1 Represents Adjusted Operating Income Available to Common Stockholders, excluding Significant Items. Prior period amounts have been recast to conform to our revised definition of Adjusted Income from Operations. See Non-GAAP Financial Measures Appendix for revised definition and reconciliations. 2 The RBC ratio is calculated as of December 31 annually, but is reported in the March statutory reporting, and as such, the quarterly ratios presented for 9/30/2023, 3/31/2024, 6/30/2024, and 9/30/2024 are considered estimates based on information known at the time of reporting. 3 See Non-GAAP Financial Measures Appendix for definition and reconciliations. $181 $(14) $35 $(8) $50 $252 $210 $324 $358 $231 $238 $245 $324 $350 3Q23 4Q23 1Q24 2Q24 3Q24 Adjusted Income from Operations Significant Items 375-385% 407% 400-410% >420% >420% 3Q23 4Q23 1Q24 2Q24 3Q24 $298 $289 $301 $308 $316 3Q23 4Q23 1Q24 2Q24 3Q24 30.7% 30.2% 30.1% 28.9% 28.4% 3Q23 4Q23 1Q24 2Q24 3Q24
5 Annuities Key Highlights Operating Income1 ($M) Sales ($B) • Operating income of $300 million increased 15% YOY, reflecting account balance growth, increased spread income, and expense discipline1. • Sales grew nearly 25% YOY with increases in all major product categories, reflecting our product diversification. • RILA sales increased 13% YOY and 10% sequentially, following the successful launch of our second-generation RILA product in Q2 2024. Key Priorities Ending Account Balances ($B) Return on Average Account Balances1 • Grow our addressable market by extending reach to spread-based products. • Increase market competitiveness through development of new product features. • Optimize general account to support spread expansion. 1 Excludes the following impacts: 3Q23: $(12)M assumption review; 4Q23: $14M model refinement; 1Q24: $(19)M balance sheet true-up in preparation for the close of the sale of the wealth management business and $(12)M tax-related items; 3Q24 $1M assumption review. 10% 7% 6% 6% 6% 17% 18% 19% 20% 20% 29% 30% 30% 30% 30% 44% 45% 45% 44% 44% 3Q23 4Q23 1Q24 2Q24 3Q24 Fixed RILA VA w/o GLBs VA w/ GLBs 0.69% 0.72% 0.75% 0.75% 0.74% 3Q23 4Q23 1Q24 2Q24 3Q24 $260 $265 $290 $297 $300 3Q23 4Q23 1Q24 2Q24 3Q24 $147 $153 $160 $160 28% 56% 34% 44% 30% 39% 23% 33% 29% 36% 13% 8% 14% 11% 14%20% 13% 19% 16% 20% 3Q23 4Q23 1Q24 2Q24 3Q24 Fixed RILA VA w/o GLB VA w/ GLB $2.7 $4.4 $2.8 $3.8 $3.4 $165
6 Group Protection Key Highlights Operating Income1 ($M) Sales ($M) • Operating income of $110 million more than doubled YOY, resulting in a 500 bp margin increase to 8.5%1. These results were driven by favorable LTD experience and improving mortality in Life. • Premium growth remained at approximately 3% YOY, reflecting continued pricing discipline on new sales and persistency in line with expectations. • Sales increased 18% compared to the prior-year quarter with Supplemental Health sales doubling YOY. Key Priorities Premiums & Margin1 ($M) Loss Ratios1,2 • Diversify across market segments with an emphasis on growing local markets. • Expand and deepen product portfolio with a focus on growth in supplemental health. • Continued pricing discipline focused on profitable growth while investing in capabilities to improve the customer experience. 45% 51% 35% 46% 43%31% 40% 33% 34% 31%24% 9% 32% 20% 26% 3Q23 4Q23 1Q24 2Q24 3Q24 Disability Life Supp Health / Dental 81% 67% 76% 76% 72% 76% 83% 74% 70% 71% 3Q23 4Q23 1Q24 2Q24 3Q24 Life Disability $44 $52 $80 $130 $110 3Q23 4Q23 1Q24 2Q24 3Q24 Experience Refund $1,251 $1,250 $1,285 $1,298 $1,288 3.5% 4.1% 6.2% 10.0% 8.2% 8.5% 3Q23 4Q23 1Q24 2Q24 3Q24 Margin Margin, ex. Experience Refund $71 $398 $144 $161 1 Excludes the following impacts: 3Q23 $24M assumption review and 3Q24 $(1)M assumption review. 2 Excludes the impact of the $23M experience refund timing in 2Q24. $84
7 Retirement Plan Services Key Highlights Operating Income ($M) Sales ($B) • Operating income of $44 million increased 10% sequentially, reflecting higher account balances. • First-year sales more than tripled YOY, driven in part by increased sales growth in RPS’s full-service segments. • Ending account balances increased 21% YOY reflecting favorable market conditions and positive net flows. Key Priorities Ending Account Balances ($B) Net G&A Expenses ($M) • Growth in core recordkeeping and institutional market segments through our differentiated service model. • Expand access to retirement solutions by leveraging distribution relationships and product innovation. • Increase operational and expense efficiencies to drive down our cost per participant and improve profitability. 26% 24% 22% 22% 21% 74% 76% 78% 78% 79% $94 $101 $107 $108 $114 3Q23 4Q23 1Q24 2Q24 3Q24 General Account Separate Account and Mutual Funds $43 $38 $36 $40 $44 3Q23 4Q23 1Q24 2Q24 3Q24 $81 $84 $81 $80 $81 3Q23 4Q23 1Q24 2Q24 3Q24 61% 56% 34% 49% 27% 21% 23% 48% 23% 62% 18% 21% 18% 28% 11% 3Q23 4Q23 1Q24 2Q24 3Q24 Sm. Market Mid-Large Market Stable Value/Other $1.7 $0.5 $0.9 $1.1 $0.8
8 Life Insurance Key Highlights Operating Income1 ($M) Sales ($M) • Operating income of $14 million decreased YOY, reflecting a lower run-rate post the Fortitude Re transaction1. • Sales grew 16% sequentially as our ongoing strategic realignment gains traction. • Continued expense discipline resulting in a 9% reduction in net G&A YOY. Key Priorities Net Death Benefits ($M) Net G&A Expenses ($M) • Optimize product portfolio to support pivot toward products with more stable cash flows and higher risk-adjusted returns. • Continue efforts to reduce expense base to drive cost efficiency and earnings growth. • Maintain focus on optimizing the legacy in force and increase earnings. $138 $143 $130 $125 $126 3Q23 4Q23 1Q24 2Q24 3Q24 $43 $11 $(29) $4 $8 $(20) $(17) $(5) $(39) $6 3Q23 4Q23 1Q24 2Q24 3Q24 Above/Below-Target Alt. Inv. Impact Underlying Earnings $653 $668 $664 $644 $638 $500 $493 $758 $608 $663 3Q23 4Q23 1Q24 2Q24 3Q24 Net death benefits Death claims ceded 71% 83% 92% 91% 85% 29% 17% 8% 9% 15% $144 $144 $91 $105 $122 3Q23 4Q23 1Q24 2Q24 3Q24 Core Life Executive Benefits 1 Excludes the following impacts: 3Q23: $(156)M assumption review, $(25)M unclaimed property, and $(15)M surrender benefit program, 1Q24: $(1) related to Dividend Received Deduction true-up, and 3Q24: $8M assumption review. $23 $(6) $(34) $(35) $14
9 Key Highlights Operating Loss1,2 and Preferred Dividend ($M) Interest Expense ($M) • Operating loss was $(84) million, a 20% improvement year over year. 1 • Non-Spark G&A expenses increased by $3 million YOY driven by project spend. • Spark G&A expenses declined by 25% YOY, reflecting the planned reduction of program expense. Key Priorities Non-Spark G&A Expenses2,3 ($M) Spark Initiative Expenses ($M) • Reduce leverage ratio through continued growth in capital and opportunistic deleveraging. • Continued focus on operational efficiency, including the conclusion of Spark Initiative- related projects in 2025. Other Operations $(105) $(100) $(93) $(97) $(84) $(34) $(11) $(34) $(11) $(34) 3Q23 4Q23 1Q24 2Q24 3Q24 Operating Loss Preferred Dividend $84 $81 $81 $86 $86 3Q23 4Q23 1Q24 2Q24 3Q24 $36 $52 $27 $30 $27 3Q23 4Q23 1Q24 2Q24 3Q24 1 Excludes the following impacts: 3Q23: $3M in unclaimed property; 1Q24: Excess tax true-up impact of $(3)M. 2 Prior period amounts have been recast to conform to our revised definition of income (loss) from operations. 3 2Q24 and 3Q24 excludes the impact of expenses related to Other Operations associated with the sale of the wealth management business. These expenses are directly offset in Other Revenues. $32 $27 $30 $32 $35 3Q23 4Q23 1Q24 2Q24 3Q24
10 Investment Portfolio Key Highlights General Account ($B) Portfolio Quality • Well-diversified portfolio with 97% investment grade securities. • New money yield pick-up of 1.6% increased 70 bps YOY. • Our diversified alternatives portfolio delivered a 2.7% quarterly return, above our long-term expectation of 2.5%. Key Priorities New Money Alternative Investment Income ($M), Pre-Tax • Optimize new money strategies by leveraging the sourcing capabilities of our multi-manager platform. • New money strategy focused on maintaining diversification and high quality while capitalizing on less liquid assets and structured asset class premiums. • Achieve attractive risk-adjusted alternative returns. 5.3% 5.4% 5.0% 5.3% 4.8% 0.9% 1.0% 1.1% 1.6% 1.6% 6.2% 6.4% 6.1% 6.9% 6.4% 4.33% 4.37% 4.39% 4.50% 4.53% 3Q23 4Q23 1Q24 2Q24 3Q24 Yield Pick-up Average Market Yield New Money Yield Fixed Income Portfolio Yield $52 $58 $78 $36 $100 1.6% 1.7% 2.3% 1.0% 2.7% 3Q23 4Q23 1Q24 2Q24 3Q24 % Returns, Unannualized 61% 61% 62% 62% 62% 36% 36% 35% 35% 35% 3% 3% 3% 3% 3% 3Q23 4Q23 1Q24 2Q24 3Q24 NAIC 1/CM1 NAIC 2/CM2 NAIC 3-6/CM3-7 50% 50% 41% 40% 38% 15% 15% 18% 18% 18% 12% 13% 14% 14% 14% 13% 13% 17% 17% 17% 2% 2% 3% 3% 3% 8% 7% 7% 8% 10% 3Q23 4Q23 1Q24 2Q24 3Q24 Public Corps Private Corps Structured Mortgage Loans Alts Other $138 $113 $115 $119 1 Mortgage Loans include CMLs and RMLs. 2 Other includes cash, COLI, common and preferred stock, municipals, sovereign government and UST/agency. 3 Defined as the yield on the 7-year US Treasury note plus the Barclay’s Public Corp Industrial Spreads Weighted 50% A and 50% BBB. $118
11 Appendix
12 Investment portfolio High quality and well-diversified portfolio1 Industrial Other 2% Energy 2% Municipal 2% Communications 2% Basic Industry 2% Transportation 3% Alts 3% Technology 3% Consumer Cyclical 5% Capital Goods 5% Other2 7% Utilities 10% Consumer Non-Cyclical 11% Financials 7% Banking 4% Structured 14% CMLs 15% Resi 3% The portfolio is well-positioned • Long-term investment strategy is tightly aligned with our liability profile and positioned for various economic cycles. • 97% investment grade, the portfolio is up in quality providing flexibility to further add incremental yield. • Well positioned to further optimize the portfolio given high-quality asset mix and shift toward shorter duration liabilities. $119B Average A Rated Portfolio allocation by asset class 1 Data on slide is as of September 30, 2024. 2 Other asset classes primarily include quasi-sovereign, cash/collateral, and UST/agency. Note: All information regarding LNC’s investment portfolio in this earnings supplement excludes assets related to certain modified coinsurance and coinsurance with funds withheld transactions. The modified coinsurance and funds withheld reinsurance agreements investment portfolio has counterparty protections in place including investment guidelines, as well as additional support including trusts and letters of credit that were established to meet LNC’s risk management objectives.
13 Commercial mortgage loan portfolio Conservatively positioned CML portfolio1 Overall CML exposure • Disciplined portfolio construction delivering consistent loan performance. • Robust surveillance process (e.g. loan level financial review, rent roll analysis, stress testing, etc.). • Manageable near-term portfolio maturities in 2024 (1%), 2025 (3%) and 2026 (6%). • $9M2 average loan size across 2024-2026 maturity pool. Office exposure • CML office loans reduced by 5% since 2020; 3% of total invested assets well diversified by geography. • Limited maturities and conservatively positioned with average office loan size of $12 million2. • Maturities 2024-2025 = ~1% of our CML portfolio o 2024: $63 million with WA DSC 4.2x. o 2025: $169 million with WA DSC 3.4x. $17.5B Property types Apartment, 32% Industrial, 29% Office, 18% Retail, 15% Mixed Use, 1% Other, 5% 1 Data on slide is as of September 30, 2024. 2 Excludes loans managed by non-LFG third-party managers and fully amortizing loans. 3 Includes CMLs in LP funds. 4 Lincoln underwritten LTV is an internal estimate that considers the most recent financial reporting of each property and conservative cap rate assumptions. Portfolio LTV & DSC • Loan-to-values remain strong. • Strong debt service coverage reflecting recent property-level performance. • Diversified by property type, borrower, and geography. Portfolio Statistics Total CMLs Office Invested Asset % 15% 3% Avg Loan Size 2 $12M $17M Fixed Rate 100% 100% Remaining Term 8 Years 8 Years Debt Service Coverage 2.4x 2.3x Occupancy 93% 84% Credit Quality3 CM1 78% 82% CM2 22% 18% CM3-7 <1% <1% Property Type Book Value ($B) Debt Service Coverage Loan to Value (3rd Party Appraisal at Funding) Lincoln Underwritten Loan to Value4 Apartment $5.6 2.8x 44% 43% Industrial $5.0 2.2x 45% 49% Office $3.2 2.3x 43% 69% Retail $2.6 2.9x 41% 45% Other3 $0.9 2.5x 41% 43% Mixed Use $0.2 2.1x 47% 49% Portfolio $17.5 2.4x 44% 50%
14 Non-GAAP Financial Measures Appendix
15 Non-GAAP Financial Measures
16 Non-GAAP Financial Measures, Cont’d
17 Reconciliation of Net Income Available to Common Stockholders to Adjusted Income from Operations Available to Common Stockholders Unaudited (millions of dollars, except per share data)
18 Reconciliation of Adjusted Income from Operations Available to Common Stockholders to Adjusted Income from Operations Available to Common Stockholders, excluding Significant Items Unaudited (millions of dollars) 9/30/23 12/31/23 3/31/24 6/30/24 9/30/24 Adjusted income from operations available to common stockholders1,2 $50 $252 $210 $324 $358 Significant items: Tax-related items3 -- -- 16 -- -- Assumption review 144 -- -- -- (8) Model refinement -- (14) -- -- -- Unclaimed property 22 -- -- -- -- Surrender benefit program 15 -- -- -- -- Balance sheet true-up related to the sale of the wealth management business -- -- 19 -- -- Total significant items 181 (14) 35 -- (8) Adjusted income from operations available to common stockholders, excluding significant items $231 $238 $245 $324 $350 1 See reconciliation to Net Income Available to Common Stockholders on slide 17. 2 Prior period amounts have been recast to conform to our revised definition of Adjusted Income from Operations. See slide 15 for further information. 3 For the quarter ended 3/31/2024, primarily reflects a Dividend Received Deduction true-up, partially offset by an Uncertain Tax Position release.
19 Leverage Ratio Unaudited (millions of dollars)
20 Reconciliation of Stockholders’ Equity to Adjusted Stockholders’ Equity Unaudited (millions of dollars)
v3.24.3
Cover
|
Oct. 31, 2024 |
| Document Information [Line Items] |
|
| Document Type |
8-K
|
| Document Period End Date |
Oct. 31, 2024
|
| Entity Registrant Name |
Lincoln National Corporation
|
| Entity Incorporation, State or Country Code |
IN
|
| Entity File Number |
1-6028
|
| Entity Tax Identification Number |
35-1140070
|
| Entity Address, Address Line One |
150 N. Radnor Chester Road
|
| Entity Address, City or Town |
Radnor
|
| Entity Address, State or Province |
PA
|
| Entity Address, Postal Zip Code |
19087
|
| City Area Code |
484
|
| Local Phone Number |
583-1400
|
| Written Communications |
false
|
| Soliciting Material |
false
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| Pre-commencement Tender Offer |
false
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| Pre-commencement Issuer Tender Offer |
false
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| Entity Emerging Growth Company |
false
|
| Entity Central Index Key |
0000059558
|
| Amendment Flag |
false
|
| Common Stock |
|
| Document Information [Line Items] |
|
| Title of 12(b) Security |
Common Stock
|
| Trading Symbol |
LNC
|
| Security Exchange Name |
NYSE
|
| Depositary Shares, each representing a 1/1000th interest in a share of 9.000% Non-Cumulative Preferred Stock, Series D |
|
| Document Information [Line Items] |
|
| Title of 12(b) Security |
Depositary Shares, each representing a 1/1000th interest in a share of 9.000% Non-Cumulative Preferred Stock, Series D
|
| Trading Symbol |
LNC PRD
|
| Security Exchange Name |
NYSE
|
| X |
- DefinitionBoolean flag that is true when the XBRL content amends previously-filed or accepted submission.
| Name: |
dei_AmendmentFlag |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
| Name: |
dei_DocumentPeriodEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:dateItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
| Name: |
dei_DocumentType |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:submissionTypeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
| Name: |
dei_EntityAddressAddressLine1 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
dei_EntityAddressCityOrTown |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
dei_EntityAddressPostalZipCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
dei_EntityAddressStateOrProvince |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:stateOrProvinceItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTitle of a 12(b) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
| Name: |
dei_Security12bTitle |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Details
| Name: |
us-gaap_StatementClassOfStockAxis=us-gaap_CommonStockMember |
| Namespace Prefix: |
|
| Data Type: |
na |
| Balance Type: |
|
| Period Type: |
|
|
| X |
- Details
| Name: |
us-gaap_StatementClassOfStockAxis=us-gaap_SeriesDPreferredStockMember |
| Namespace Prefix: |
|
| Data Type: |
na |
| Balance Type: |
|
| Period Type: |
|
|
Lincoln National (NYSE:LNC-D)
Historical Stock Chart
From Dec 2024 to Jan 2025
Lincoln National (NYSE:LNC-D)
Historical Stock Chart
From Jan 2024 to Jan 2025
