Analyst's Disclosure: I/we have a beneficial long position in the shares of LNC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice ...

Core Viewpoint - The market anticipates Lincoln National (LNC) to report a year-over-year increase in earnings despite a decline in revenues, with the actual results being crucial for stock price movement [1] Earnings Expectations - Lincoln National is expected to post quarterly earnings of $1.64 per share, reflecting a significant year-over-year increase of +613% [2] - Revenues are projected to be $4.62 billion, which is a decrease of 1.1% compared to the same quarter last year [2] Estimate Revisions - The consensus EPS estimate has been revised 0.65% higher in the last 30 days, indicating a positive reassessment by analysts [3] Earnings Surprise Prediction - The Zacks Earnings ESP model shows that the Most Accurate Estimate for Lincoln National is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +2.16% [4][6] - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [5] Historical Performance - In the last reported quarter, Lincoln National exceeded the expected earnings of $1.78 per share by delivering $1.84, resulting in a surprise of +3.37% [7] - Over the past four quarters, the company has beaten consensus EPS estimates three times [7] Conclusion - Lincoln National is positioned as a compelling candidate for an earnings beat, although other factors should also be considered before making investment decisions [8]

Core Viewpoint - Lincoln National Corporation (LNC) is experiencing growth driven by a strong Group Protection segment, improved fee income, and effective cost management, alongside a solid financial position [1]. Financial Performance - LNC's stock has increased by 14.1% over the past year [2]. - The Zacks Consensus Estimate for LNC's 2024 earnings is $5.74 per share, reflecting a 10% increase from 2023, with revenues projected at $18.4 billion, a 15% rise from 2023 [2]. - For 2025, earnings are estimated at $7.54 per share, indicating a 31.3% improvement from 2024, with revenues expected to reach $19.1 billion, a 3.5% increase from 2024 [3]. - The return on equity for LNC is currently 17.1%, surpassing the industry average of 15.5% [3]. Business Segments - The Annuities and Group Protection segments are expected to drive revenue growth, supported by higher fee income from variable annuities [4]. - The Annuities segment has seen growth due to increased account values and a strong alternative investment portfolio, with key products contributing to success [5]. - The Group Protection unit is anticipated to benefit from increased scale, broader distribution channels, and acquisitions, with operating income growing by 16.7% year over year in the first half of 2024 [5]. - Lincoln National serves approximately 17 million customers, positioning the company for future sales growth [6]. Strategic Focus - The company is shifting its business mix towards products without long-term guarantees, which are less sensitive to interest rates [6]. - Expense management initiatives have supported margin expansion, while advanced technologies have improved operational scale and customer experience [6]. - A strong financial position, characterized by a rising cash balance, enables Lincoln National to pursue growth initiatives and allocate capital strategically [7]. Challenges - The Life Insurance segment has faced challenges due to elevated mortality and morbidity claims related to the COVID pandemic, leading to a 22.1% year-over-year decline in sales in the first half of 2024 [8]. - The company has a debt-laden balance sheet, with a total debt-to-capital ratio of 43.7%, significantly higher than the industry average of 14.5% [9].

Core Insights - Lincoln National Corporation (LNC) has launched Empathy's grief support services for customers with Group Life insurance policies and their beneficiaries, aiming to provide comprehensive assistance during difficult times [1][4]. Company Initiatives - Beneficiaries must file a claim to access Empathy's services, which include on-demand assistance and personalized care plans tailored to their needs [2]. - A care manager will be assigned to help beneficiaries navigate emotional, legal, and financial challenges after the loss of a loved one [2][3]. - The personalized care plan will include actionable steps for managing probate and settling estates, as well as support for closing accounts and creating obituaries [3]. Strategic Implications - The initiative is designed to expedite claims settlement and provide support beyond financial aspects, enhancing LNC's Group Life offerings [4]. - By integrating these services, LNC aims to attract more customers to its life insurance policies, which could lead to increased premium revenue [4]. Market Context - The launch of these services is timely, as families often spend over a year settling affairs after a loss, dedicating an average of 20 hours per week to these tasks [5]. - According to a survey, 75% of beneficiaries face challenges with estate-related financial matters, impacting their work performance [5]. Performance Metrics - LNC's shares have increased by 15.1% year-to-date, outperforming the industry average growth of 12% [6]. - The company currently holds a Zacks Rank 3 (Hold) [7]. Competitor Analysis - CNO Financial Group, Brighthouse Financial, and Reinsurance Group of America are better-ranked stocks in the insurance sector, with CNO Financial holding a Zacks Rank 1 (Strong Buy) [8]. - CNO Financial's earnings have surpassed estimates in three of the last four quarters, with a consensus estimate indicating an 11% improvement for 2024 [9]. - Brighthouse Financial and Reinsurance Group have also shown positive earnings trends, with respective improvements of 27.7% and 8.2% for 2024 [10][11]. - Year-to-date stock performance shows CNO Financial and Reinsurance Group gaining 17.3% and 29.6%, while Brighthouse Financial has declined by 16.8% [12].

Core Viewpoint - Lincoln National's stock has experienced volatility, with a 10% decline since Q2 earnings report, as management indicated that increased capital returns are several years away [1][6] Financial Performance - In Q2, Lincoln National reported earnings of $1.84, exceeding consensus by $0.07, but alternatives underperformed, costing $41 million with returns just over 4% annualized [2][4] - Group protection operating earnings increased by 19% to $130 million, aided by a $23 million refund, but adjusted income was flat at $107 million [2][4] - Annuities segment earned $297 million, up 10% year-over-year, with sales rising 48% to $3.8 billion due to strong demand [2][3] Investment Strategy - Lincoln National invested in less-liquid asset classes, achieving new money yields at 6.9%, 240 basis points above its portfolio yield [3][6] - The investment portfolio maintains a conservative average A rating, with 14% in structured products and 15% in commercial mortgages [3][4] Capital Management - The company sold its wealth management business for $650 million, increasing its risk-based capital (RBC) ratio to 420% and reducing debt to capital by 1.2% to 28.9% [4][5] - Management aims for a free cash flow conversion of 45-55% by 2026, currently at 35% [5][6] Future Outlook - The company is focused on improving operating efficiency and investing for long-term growth, with a dividend yield of 6.2% costing about $310 million [5][6] - Despite recent progress, Lincoln National is viewed as a turnaround story requiring patience, with better investment opportunities available in the insurance sector [6]

Lincoln Financial Group (LNC) recently announced the expansion of its Lincoln PathBuilder Income product powered by YourPath. This expansion introduces a lifetime income guarantee to an asset allocation investment fund, marking a significant enhancement to its portfolio of in-plan guaranteed lifetime income solutions. This move is a time opportune one aiming to respond to a growing demand for guaranteed retirement income options. Moves like this are expected to boost LNC's Annuities segment, whose operating ...

Financial Data and Key Metrics Changes - The company reported second quarter adjusted operating income available to common stockholders of $319 million or $1.84 per share, with net income available to common stockholders of $884 million or $5.11 per diluted share [19][20] - The estimated Risk-Based Capital (RBC) ratio ended the quarter above 420%, providing a buffer above the 400% target [5][33] - The leverage ratio improved by 120 basis points sequentially to 28.9% [33] Business Line Data and Key Metrics Changes - Annuities business grew earnings by 10% year-over-year, achieving its highest earnings quarter in two years with total annuity sales of $3.8 billion, up 48% from the prior year quarter [8][9] - Group Protection delivered earnings in line with its record prior year quarter, with premium growth of 3% and an operating income of $130 million, reflecting a margin of 10% [21][13] - Life insurance reported an operating loss of $35 million compared to operating income of $33 million in the prior year quarter, impacted by below-target alternative investment income [29][30] Market Data and Key Metrics Changes - Total deposits in Retirement Plan Services increased by 13%, with end-of-period account balances nearly reaching $108 billion, up 12% year-over-year [27][28] - Fixed annuity sales more than doubled year-over-year, reflecting strong demand and operational capabilities built over the past year [10][51] Company Strategy and Development Direction - The company aims to grow and diversify its group business across products and market segments while evolving its annuity business with a balanced product mix [7][16] - The strategic focus includes enhancing free cash flow generation and optimizing the operating model to support profitable growth [6][39] - The establishment of a Bermuda-based reinsurance subsidiary, Alpine, is expected to improve free cash flow and ensure a competitive presence in key markets [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver results that will drive long-term value creation for shareholders, despite potential moderation in results in the second half of the year [17][24] - The company anticipates continued strong demand for annuities driven by demographic trends and higher interest rates [57] Other Important Information - The company successfully closed the sale of its wealth management business, contributing to a significant capital benefit [20][33] - The alternative investments portfolio delivered a 4% annualized return, which was below the target, primarily due to lower merger and acquisition activity [19][38] Q&A Session Summary Question: Free cash flow for the first half of the year - Management indicated that free cash flow conversion is on track to reach 45% to 55% by 2026, with progress being made [41][43] Question: Capital contribution to Bermuda entity - The Bermuda entity was established with approximately $7 billion in fixed annuities and disability reserves to create scale and free cash flow [44][45] Question: Pricing adequacy in group protection sales - Management noted that the market remains competitive but rational, with a focus on maintaining pricing discipline [46][49] Question: Drivers behind strong annuity sales - The increase in annuity sales was attributed to operational capabilities built over the past year and strong distribution relationships [50][51] Question: Expense improvement metrics - Management highlighted the need for optimization in G&A expenses, with a focus on business unit-level metrics to track progress [54][55] Question: Group business margin expectations - Management expects to maintain margins within the previously communicated range, with potential moderation in the second half of the year [62][63] Question: Higher mortality trends in younger age groups - Management explained that volatility in mortality can occur, but it should not be interpreted as a long-term trend [66] Question: Capital return strategy and M&A opportunities - Management reiterated a focus on using capital for operational efficiency and investments needed for long-term growth, rather than immediate capital returns [68]

Financial Performance - Total revenues for Lincoln Financial Group increased by 75.9% to $4,203 million for the three months ended September 30, 2023, compared to $2,929 million for the same period in 2022[8]. - Net income available to common stockholders for the three months ended September 30, 2023, was $502 million, a 76.1% increase from $284 million in the same period last year[8]. - Net income for the quarter was $511 million, a decrease of 75.1% compared to the previous year[14]. - Adjusted income from operations available to common stockholders was $343 million, a decrease of 7.0% year-over-year[14]. - The company reported a realized gain of $663 million for the three months ended September 30, 2023, a significant increase of 137.2% compared to a loss of $453 million in the same period last year[8]. - Adjusted operating revenues for the consolidated entity were $4,673 million, a decrease of 1.2% from $4,730 million[18]. - The company reported a significant increase in investment gains, with losses reduced to $230 million from $668 million year-over-year, reflecting a 65.6% improvement[50]. Adjusted Metrics - Adjusted income from operations (diluted) was $2.02, a decrease of 8.9% year-over-year[14]. - Adjusted operating revenues represent GAAP revenues excluding the pre-tax effects of certain items, including changes in the fair value of derivative instruments and credit loss-related adjustments[2]. - Management believes that non-GAAP measures provide a better understanding of underlying trends in the business, as excluded items are unpredictable and not indicative of current fundamentals[4]. - 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[4]. Stockholders' Equity and Book Value - Stockholders' equity increased to $7,949 million, reflecting a 36.6% change from $5,819 million year-over-year[52]. - Book value per share reached $40.78, representing a 43.1% increase from $28.49[52]. - Adjusted book value per share is calculated by dividing adjusted stockholders' equity by common shares outstanding, providing insight into net worth attributable to business operations[4]. - The book value per share, excluding AOCI, was $66.37, a 13.3% increase from $58.58[52]. Revenue Streams - Insurance premiums for the six months ended June 30, 2024, rose by 1.1% to $3,226 million compared to $3,191 million for the same period in 2023[8]. - Fee income for the six months ended June 30, 2024, decreased by 3.0% to $2,662 million compared to $2,744 million for the same period in 2023[8]. - Total Annuities for the quarter ended 9/30/23 reached $2,728 million, a 5.7% increase from $2,582 million in the previous quarter[20]. - Total variable annuities increased by 9.8% to $2,150 million for the quarter ended 9/30/23, compared to $1,958 million in the same period last year[20]. - Life Insurance total for the quarter was $144 million, a decrease of 14.6% from $123 million in the previous quarter[20]. Expenses and Liabilities - Total expenses for the three months ended September 30, 2023, were $3,169 million, reflecting a 74.3% increase from $2,327 million in the same period in 2022[8]. - Total liabilities increased by 9.8% from $342,984 million on 6/30/23 to $376,584 million on 6/30/24[12]. - General and administrative expenses for the six months ended 6/30/24 were $1,457 million, an increase of 13.0% compared to $1,289 million for the same period last year[24]. Investment Performance - Net investment income decreased by 11.7% to $1,332 million for the three months ended September 30, 2023, compared to $1,494 million for the same period in 2022[8]. - Total investments decreased by 5.9% from $134,469 million on 6/30/23 to $126,595 million on 6/30/24[10]. - The total gross balance as of September 30, 2023, was $174,747 million, an 11.9% increase from $156,124 million at the beginning of the period[39]. Market Position and Strategy - The company aims to enhance its market position through new product development and strategic acquisitions in the insurance and financial services sectors[6]. - The company is focusing on market expansion and new product development to drive future growth[50]. - The company anticipates continued growth in annuities and group protection segments in the upcoming quarters[20].

Core Viewpoint - Lincoln National reported a significant net loss of $2.6 billion for Q3 2022, a stark contrast to a net income of $318 million in Q3 2021, primarily due to unfavorable adjustments and a goodwill impairment in its life insurance business [1]. Financial Performance - The company’s adjusted operating results included net unfavorable notable items amounting to $2.0 billion, equating to $11.62 per share, linked to the annual review of Deferred Acquisition Costs (DAC) and reserve assumptions [1]. - A goodwill impairment of $634 million was specifically noted for the life insurance segment [1]. Stockholder Actions - Following the financial results announcement, Lincoln's stock price plummeted by $17.27, or 33.2%, closing at $34.83 per share on November 3, 2022, amid unusually high trading volume [6]. Legal Investigations - A class action complaint was filed against Lincoln National on April 23, 2024, concerning potential breaches of fiduciary duties by the board of directors during the Class Period from November 4, 2020, to November 2, 2022 [3]. - The complaint alleges that the company made materially false and misleading statements and failed to disclose critical adverse facts regarding its business operations, particularly in its Variable Universal Life (VUL) business and the overstatement of goodwill and reserves [4].

Attorney Advertising. Prior results do not guarantee a similar outcome. Contact Information: Laurence Rosen, Esq. Phillip Kim, Esq. The Rosen Law Firm, P.A. 275 Madison Avenue, 40th Floor New York, NY 10016 Tel: (212) 686-1060 Toll Free: (866) 767-3653 Fax: (212) 202-3827 case@rosenlegal.com www.rosenlegal.com To join the Lincoln National class action, go to https://rosenlegal.com/submit-form/?case_id=24462 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on t ...