Core Viewpoint - Lincoln National Corporation (LNC) reported a decline in shares by 1.9% following its first-quarter 2025 results, primarily due to a significant rise in total expenses, although this was partially offset by higher insurance premiums and strong annuity deposits [1] Financial Performance - Adjusted earnings per share were $1.60, exceeding the Zacks Consensus Estimate by 3.9% and reflecting a year-over-year increase of 31.1% [2] - Adjusted operating revenues grew 2.2% year over year to $4.7 billion, but missed the consensus mark by 0.5% [2] - Total expenses more than doubled year over year to $5.7 billion, while net loss amounted to $722 million compared to a net income of $1.2 billion in the prior year [4] Segment Performance - The Annuities segment reported operating income of $290 million, a 12% increase year over year, but fell short of the consensus estimate [6] - The Life Insurance unit incurred an operating loss of $16 million, an improvement from the previous year's loss of $35 million, with operating revenues growing 3% year over year to $1.6 billion [7] - The Group Protection segment's operating income increased by 26.3% year over year to $101 million, supported by favorable long-term disability results [8] - The Retirement Plan Services segment recorded an operating income of $34 million, down 5.6% year over year, with total deposits advancing 8.2% year over year to $4.1 billion [9] Financial Position - As of March 31, 2025, Lincoln National had cash and invested cash of $4.3 billion, a decrease of 26.2% from the end of 2024 [11] - Total assets were $382.9 billion, down 2% from the previous year-end [11] - Book value per share, excluding accumulated other comprehensive income, was $61.63, a decline of 14.5% from the end of 2024 [12] Dividend and Outlook - Lincoln National paid out quarterly dividends of $77 million [13] - The company anticipates a seasonally higher loss ratio in the Group Protection unit for the fourth quarter of 2025, while favorable mortality results are expected in the Life Insurance segment [14] Long-term Projections - By 2026, the Annuities, Life Insurance, Group Protection, and Retirement Plan Services units are projected to account for 55-65%, 10-15%, 20-30%, and 5-15% of total operating income, respectively [15]

Financial Performance - Income from operations is emphasized as a key profitability measure, reflecting ongoing business performance [218]. - As of March 31, 2025, the company reported a net income loss of $722 million, a significant decrease from a net income of $1,222 million in the same period of 2024 [259]. - The company's annuity segment generated an income from operations of $290 million for the three months ended March 31, 2025, compared to $259 million in 2024, reflecting a year-over-year increase of approximately 12% [262]. - Total net investment income for Q1 2025 was $571 million, a decrease of 1.7% from $581 million in Q1 2024 [282]. - The total net investment income for the three months ended March 31, 2025, was $1,457 million, an increase from $1,346 million in the same period of 2024, reflecting a growth of 8.3% [353]. Investment Portfolio - As of March 31, 2025, Lincoln National Corporation reported total investments valued at approximately $99.1 billion, with 93% priced using observable inputs [227]. - The total fair value of investments includes $76.1 billion priced by third-party services, representing 76.7% of total investments [227]. - The total investment portfolio, including fixed maturity AFS, trading, and equity securities, was valued at $100,194 million, with a fair value of $90,626 million [332]. - The estimated fair value of private placement securities was $21.5 billion, representing 17% of total investments as of March 31, 2025 [341]. - The company emphasizes diversification across asset classes in its investment policy, which includes fixed maturity securities, mortgage loans, and real estate [328]. Risks and Challenges - The company faces risks from economic conditions, including low interest rates that could reduce investment income and affect product demand [212]. - Legislative and regulatory changes are potential risks that could impact product demand and operational costs [212]. - The company faces risks including changes in accounting principles, credit rating downgrades, and competitive pressures that may impact premium levels and profitability [218]. - A hypothetical 10% decrease in equity market return could result in a $600 million decrease in net income, while a 10% increase could result in a $600 million increase [247]. - The company anticipates managing the effects of interest rate spreads on near-term income from operations through portfolio management strategies [267]. Segment Performance - The company operates through four main segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services [219]. - Total operating revenues for the annuities segment decreased to $1,198 million in Q1 2025 from $1,269 million in Q1 2024, representing a decline of about 5.6% [262]. - Total operating revenues for Life Insurance segment reached $1,587 million in Q1 2025, up from $1,541 million in Q1 2024, indicating a growth of 3% [273]. - Total operating revenues for Group Protection increased to $1,521 million in Q1 2025, up from $1,425 million in Q1 2024, driven by higher insurance premiums [287]. - Income from operations for Group Protection increased to $101 million in Q1 2025, compared to $80 million in Q1 2024, attributed to growth in business in force [288]. Capital and Liquidity - The company’s liquidity and capital resources are critical for meeting obligations and funding growth initiatives [214]. - The company had an estimated maximum borrowing capacity of $7.0 billion under the Federal Home Loan Bank facility, with outstanding borrowings of $2.5 billion as of March 31, 2025 [381]. - The net collateral payable position decreased to $5.5 billion as of March 31, 2025, down from $7.1 billion as of December 31, 2024 [383]. - The company reported total long-term debt of $5.868 billion as of March 31, 2025, which includes senior notes of $4.510 billion and subordinated notes of $995 million [373]. - The company has access to $2.6 billion through committed repurchase agreements, none of which was utilized as of March 31, 2025 [382]. Regulatory and Legislative Factors - The company noted that legislative changes could impact its effective tax rate, highlighting the importance of ongoing analysis of tax laws and regulations [253]. - The liability for future policy benefits (LFPB) is calculated based on assumptions regarding mortality rates, morbidity, and policyholder behavior, with updates conducted quarterly [233]. - The company conducts a comprehensive review of actuarial assumptions annually to ensure adequate reserves for future policy benefits [233]. - The company utilizes derivatives primarily for hedging against various risks, with fair values fluctuating based on market conditions [228]. - The company expects to optimize its legacy life portfolio and enhance asset sourcing capabilities through the capital raised from the Bain Capital transaction [223].

Core Viewpoint - Lincoln National (LNC) reported a revenue of $4.69 billion for Q1 2025, marking a year-over-year increase of 2.2% and an EPS of $1.60, up from $1.37 a year ago, although slightly below the consensus revenue estimate of $4.71 billion, resulting in a surprise of -0.52% [1] Financial Performance Metrics - Loss Ratio for Group Protection was reported at 72.4%, better than the estimated 74.4% [4] - Net Flows for Annuities were -$1.68 billion, worse than the estimated -$1.54 billion [4] - Net Flows for Life Insurance were $569 million, below the estimated $643.81 million [4] - Net Flows for Retirement Plan Services were -$2.18 billion, significantly worse than the estimated -$493.84 million [4] - Net investment income revenue was $1.46 billion, exceeding the estimate of $1.39 billion, with a year-over-year increase of 8.3% [4] - Fee income revenue was $1.37 billion, matching the average estimate, with a year-over-year change of 3.1% [4] - Insurance premiums revenue was $1.68 billion, slightly above the estimated $1.65 billion, reflecting a year-over-year increase of 4.7% [4] - Life Insurance net investment income was $571 million, slightly below the estimate of $577.29 million, showing a year-over-year decrease of 1.7% [4] - Group Protection revenue was $1.52 billion, exceeding the estimate of $1.47 billion, with a year-over-year increase of 6.7% [4] - Life Insurance revenue was $1.59 billion, slightly below the estimated $1.60 billion, representing a year-over-year increase of 3% [4] - Retirement Plan Services revenue was $327 million, below the estimated $334.72 million, with a year-over-year increase of 1.6% [4] - Annuities insurance premiums revenue was $21 million, significantly below the estimated $33.76 million, reflecting a year-over-year decrease of 19.2% [4] Stock Performance - Lincoln National's shares returned +3% over the past month, compared to the Zacks S&P 500 composite's +11.3% change, with a current Zacks Rank of 3 (Hold) indicating potential performance in line with the broader market [3]

Financial Data and Key Metrics Changes - Adjusted operating income increased by 14% year over year, demonstrating continued execution of strategic initiatives [7][22] - First quarter adjusted operating income available to common stockholders was $280 million, or $1.60 per diluted share [23] - Net loss available to common shareholders was $756 million, or $4.41 per diluted share, primarily due to negative movements in market risk benefits [23][24] Business Line Data and Key Metrics Changes - Group Protection business saw a 26% year-over-year increase in earnings and 120 basis points of margin expansion [10][24] - Annuities reported operating income of $290 million, consistent with the prior year quarter, with total sales of $3.8 billion increasing 33% year over year [11][29] - Life insurance segment reported an operating loss of $16 million, an improvement from a loss of $35 million in the prior year quarter [33] Market Data and Key Metrics Changes - Total deposits in Retirement Plan Services increased by 8%, driven by growth in recurring deposits [20][32] - Group sales grew 9% year over year, with all market segments contributing to this result [16] - Annuity account balances net of reinsurance ended the quarter 5% above the prior year period [29] Company Strategy and Development Direction - The company is focusing on diversifying its business mix and enhancing operational efficiency to manage through market turbulence [6][10] - A long-term partnership with Bain Capital is expected to enhance growth in spread-based products and improve capital deployment [9][39] - The strategic emphasis on growing group business has increased its contribution to operating earnings from less than 10% pre-COVID to over 25% today [45] Management's Comments on Operating Environment and Future Outlook - Management acknowledged high market volatility and an uncertain external backdrop but expressed confidence in the company's resilience and strategic positioning [5][6] - The company is well-prepared to navigate potential economic downturns, maintaining a capital buffer above its 400% target [7][44] - Management remains focused on disciplined execution and advancing strategic priorities to deliver long-term shareholder value [21][46] Other Important Information - The alternative investments portfolio delivered a 7.6% annualized return in the quarter, though it was below the target [23][38] - The company ended the quarter with an estimated RBC ratio well above 420%, consistent with its strategy [37] Q&A Session Summary Question: Insights on Bain partnership and expected free cash flow improvement - Management indicated that the improvement in free cash flow per share is driven by capital deployment into growth areas, not share repurchases [48] Question: Favorability of mortality in the life business - Management noted that mortality was favorable relative to expectations, with first quarter typically being seasonally higher [50] Question: Rationale for issuing new equity to Bain instead of open market purchase - Management emphasized the importance of alignment and the ability to utilize capital for growth, which would not be feasible through open market purchases [56][58] Question: Impact of large plan termination on Retirement Plan Services - Management confirmed that a large case termination affected net outflows but noted that excluding this, flows were positive [78] Question: Update on expense initiatives and their impact - Management confirmed that expense reductions are emerging from operational efficiencies and that reinvestments are being made in growth areas [83]

Financial Data and Key Metrics Changes - Adjusted operating income increased by 14% year over year, demonstrating continued execution of strategic initiatives [6][10] - First quarter adjusted operating income available to common stockholders was $280 million, or $1.60 per diluted share [24] - Net loss available to common shareholders was $756 million, or $4.41 per diluted share, primarily due to negative movements in market risk benefits [25][26] Business Line Data and Key Metrics Changes - Group Protection business saw a 26% year-over-year increase in earnings and 120 basis points of margin expansion [10][16] - Annuities reported first quarter operating income of $290 million, consistent with the prior year quarter [30] - Life insurance segment reported a first quarter operating loss of $16 million, an improvement from a loss of $35 million in the prior year [34] Market Data and Key Metrics Changes - Total deposits in Retirement Plan Services grew by 8%, driven by a 13% increase in recurring deposits [33] - Group sales grew by 9% year over year, with all market segments contributing to this result [17] - Annuities total sales reached $3.8 billion, a 33% increase from the prior year quarter [11] Company Strategy and Development Direction - The company is focusing on diversifying its business mix and enhancing operational efficiency to manage market volatility [5][10] - A long-term partnership with Bain Capital is expected to enhance growth in spread-based products and improve capital deployment [9][40] - The strategic emphasis on growing group business has increased its contribution to operating earnings from less than 10% pre-COVID to over 25% today [46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged high market volatility and an uncertain external backdrop but expressed confidence in the company's resilience and strategic positioning [4][10] - The company is well-prepared to navigate potential economic downturns due to proactive capital management and diversified earnings sources [38][46] - Management remains focused on disciplined execution and believes current actions will lead to sustainable long-term value [47] Other Important Information - The company maintains an estimated RBC ratio well above 420%, providing a buffer against adverse economic conditions [7][38] - The alternative investments portfolio delivered a 7.6% annualized return in the quarter, though it was below the target [25][39] Q&A Session Summary Question: Insights on the Bain partnership and expected free cash flow improvements - Management indicated that the capital from Bain will be deployed to grow spread-based earnings and optimize the legacy LifeBlock, with no immediate plans for share repurchases [49] Question: Favorability of mortality in the life business - Management noted that mortality was better than expected, with first quarter typically being seasonally higher [50][51] Question: Rationale for issuing new equity to Bain instead of open market purchases - Management emphasized the importance of alignment with Bain and the ability to utilize capital for growth, which would not be feasible through open market purchases [56][59] Question: Annuity business ROA trends - Management acknowledged that the decline in ROA is due to a shift in business mix, with a focus on growing RILA and fixed annuities [64] Question: RBC ratio sensitivity to macro volatility - Management clarified that the RBC ratio remains stable and is not materially affected by recent market conditions [69] Question: Impact of large plan termination on Retirement Plan Services - Management confirmed that a large case termination affected net outflows but overall flows were positive excluding this event [80]

Lincoln National (LNC) came out with quarterly earnings of $1.60 per share, beating the Zacks Consensus Estimate of $1.54 per share. This compares to earnings of $1.37 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.90%. A quarter ago, it was expected that this insurance and retirement business would post earnings of $1.74 per share when it actually produced earnings of $1.91, delivering a surprise of 9.77%.Over the last fou ...

Financial Performance - Adjusted operating income increased by 14% year-over-year[9,16] - Group Protection earnings increased by 26% year-over-year, with a margin of 74%, expanding 120 basis points[9,15,16] - Annuities sales increased by 33% year-over-year, supported by a diversified product mix[9,15,16] Sales Growth - Group Protection sales were up 9% year-over-year, driven by continued growth in supplemental health products[9,15,16] - Life Insurance sales increased by 7% year-over-year, reflecting continued momentum emphasizing risk-sharing products[9,15,16] Capital and Leverage - The estimated Risk-Based Capital (RBC) ratio is greater than 420%, consistent with the goal to hold a capital buffer above the 400% target[9,15,16] - The leverage ratio improved by 260 basis points year-over-year to 275%, primarily driven by organic equity growth[9,15,16,46] Strategic Initiatives - A strategic partnership with Bain Capital was announced on April 9, including a strategic minority investment expected to create growth capital to support the acceleration of strategic priorities[7,15,16]

Financial Performance - Total revenues for Q1 2025 were $4,691 million, an increase of 14.0% compared to Q4 2024[20] - Net loss available to common stockholders for Q1 2025 was $(756) million, a decrease from net income of $1,675 million in Q4 2024[20] - Net income for the three months ended 3/31/24 was $1,222 million, while for 3/31/25 it was a loss of $722 million, indicating a significant fluctuation[26] - Total adjusted operating revenues for Lincoln Financial increased by 2.2% to $4,685 million for the three months ended March 31, 2025, compared to $4,584 million in the same period of 2024[31] - Net income available to common stockholders for the three months ended March 31, 2024, was $1,191 million, a significant increase compared to the previous quarter's $884 million[47] Revenue Sources - Insurance premiums increased by 4.7% to $1,676 million in Q1 2025 from $1,586 million in Q4 2024[20] - Net investment income rose by 8.2% to $1,457 million in Q1 2025, up from $1,435 million in Q4 2024[20] - Total annuities sales increased by 33.1% to $3,789 million in Q1 2025, driven by strong RILA and traditional variable products[30] - Life insurance operating revenues increased by 3.0% to $1,541 million in Q1 2024, with average in-force face amount slightly declining by 1.2%[28] - Group protection operating revenues rose by 6.7% to $1,425 million in Q1 2024, with insurance premiums also increasing by 6.7%[28] Expenses and Losses - Total expenses surged by 117.9% to $5,640 million in Q1 2025, compared to $2,963 million in Q4 2024[20] - Adjusted income from operations available to common stockholders for 3/31/25 was $280 million, reflecting a 33.3% decrease from the previous quarter[26] - Pre-tax adjusted income from operations for 3/31/25 was $362 million, a 24.4% decrease from the previous quarter[26] - Total operating commissions and other expenses incurred decreased by 5.6% to $1,405 million for the three months ended March 31, 2025, down from $1,488 million in the same period of 2024[32] Assets and Liabilities - Total assets as of 3/31/25 decreased by 0.1% to $382,898 million compared to 12/31/24[21] - Total liabilities as of 3/31/25 decreased by 0.3% to $374,705 million compared to 12/31/24[23] - Total stockholders' equity as of 3/31/25 was $8,193 million, an 8.6% decrease from the previous quarter[24] - The average account balances, net of reinsurance, for Lincoln Financial increased by 5.0% to $44,390 million for the three months ended March 31, 2025, compared to $42,280 million for the same period in 2024[34] Market and Investment Outlook - Future outlook includes continued focus on annuities and retirement plan services, with deposits from new and existing customers expected to drive growth[17] - The company reported a leverage ratio to monitor debt relative to total capitalization, indicating financial health and risk management[14] - Credit ratings as of May 8, 2025, include a senior debt rating of bbb+ from AM Best and BBB+ from Fitch[18] - Investment gains (losses) decreased by 27.2% in Q1 2025 compared to the previous year, indicating a challenging investment environment[48] Shareholder Information - Cash returned to common stockholders through common dividends remained stable at $77 million for the next four quarters, reflecting a 1.3% increase[27] - Book value per share as of 3/31/25 was $41.96, a 9.1% increase from 12/31/24[26] - Stockholders' equity at the end of Q1 2025 was $8,193 million, showing an 8.6% increase year-over-year[50] - Adjusted stockholders' equity reached $12,569 million by Q1 2025, marking a 13.4% increase from the previous year[50] Operational Highlights - The effective federal income tax rate for the three months ended March 31, 2025, was 14.7%, down from 18.5% in the same period of 2024[33] - The loss ratio for Lincoln Financial's Life product line improved to 75.2% for the three months ended March 31, 2025, compared to 76.1% for the same period in 2024[36] - The balance of DAC, VOBA, and DSI at the end of the period increased by 1.3% from $12,475 million on 12/31/24 to $12,563 million on 3/31/25[39] - The company reported a significant increase in revenue adjustments from annuity and life insurance product features, with a change of 139.1% in Q1 2025[48]

Core Viewpoint - Lincoln National (LNC) is expected to report quarterly earnings of $1.54 per share, a 12.4% increase year-over-year, with revenues projected at $4.71 billion, reflecting a 2.7% increase from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 3.7% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts forecast 'Revenues- Net investment income' to reach $1.39 billion, a 3.5% increase year-over-year [5]. - 'Revenues- Fee income' is expected to be $1.37 billion, indicating a 3.8% increase from the previous year [5]. - 'Revenues- Insurance premiums' are projected to be $1.65 billion, reflecting a 3.4% year-over-year change [5]. - 'Revenues- Life Insurance- Net investment income' is estimated at $577.29 million, showing a slight decline of 0.6% year-over-year [6]. - 'Revenues- Group Protection' is expected to reach $1.47 billion, a 3% increase from the previous year [6]. - 'Revenues- Life Insurance' is projected at $1.60 billion, indicating a 3.6% increase year-over-year [6]. - 'Revenues- Retirement Plan Services' is expected to be $334.72 million, a 4% increase from the previous year [7]. - 'Revenues- Annuities- Insurance premiums' are projected at $33.76 million, reflecting a significant increase of 29.9% year-over-year [7]. - 'Revenues- Annuities- Fee income' is expected to be $602.05 million, indicating a 3.8% increase from the previous year [7]. Key Metrics - The 'Loss Ratio - Group Protection' is projected to be 74.4%, down from 75% year-over-year [8]. - 'Net Flows - Life Insurance' is estimated at $643.81 million, compared to $741 million in the previous year [8]. - 'Net Flows - Retirement Plan Services' is expected to be -$493.84 million, a decline from $391 million year-over-year [8]. - Over the past month, shares of Lincoln National have returned +13.9%, outperforming the Zacks S&P 500 composite's +10.6% change [8].

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Lincoln National (LNC) , which belongs to the Zacks Insurance - Life Insurance industry.This insurance and retirement business has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 17.69%.For the most recent quarter, Lincoln National was ...