Lincoln(US:LNC)2025-07-31 18:45Financial Performance - As of June 30, 2025, Lincoln National Corporation reported consolidated net income of $X million, reflecting a Y% increase compared to the same period in 2024[242]. - As of June 30, 2025, the company reported a net income of $699 million, a decrease from $895 million in the same period of 2024[294]. - For the three months ended June 30, 2025, annuity income was $287 million, down from $297 million in 2024, while life insurance income improved to $32 million from a loss of $35 million[294]. - For the three months ended June 30, 2025, total operating revenues increased to $1,602 million, up from $1,511 million in 2024, representing a growth of 6.0%[313]. - Net investment income for the six months ended June 30, 2025, was $1,172 million, compared to $1,114 million in 2024, reflecting a 5.2% increase driven by higher investment income on alternative investments[325]. - The company experienced a gain on extinguishment of debt amounting to $94 million for the three and six months ended June 30, 2025[295]. - Total operating revenues for the Annuities segment were $1.214 billion for the three months ended June 30, 2025, compared to $1.209 billion in 2024[298]. - Total operating expenses for the six months ended June 30, 2025, were $3,186 million, slightly up from $3,153 million in 2024, indicating a 1.0% increase[313]. Capital Management - The company sold approximately 18.8 million shares of its common stock for aggregate consideration of $825 million, representing 9.9% of its outstanding common stock[258]. - The company anticipates deploying capital from the stock sale towards strategic priorities, including growing spread-based earnings and optimizing its legacy life portfolio[258]. - LNC made capital contributions in cash to subsidiaries totaling $805 million for the six months ended June 30, 2025, including $800 million to LNL from the Bain Capital transaction[417]. - LNC's total long-term debt was $5.767 billion as of June 30, 2025, after accounting for repayments and changes in fair value[421]. - LNC issued $500 million of 2.330% Senior Notes due 2030, with a fair value of $418 million for the Trust I Eligible Assets received[430]. Investment Portfolio - Investments on the Consolidated Balance Sheets carried at fair value totaled $100,389 million, with 92% priced using observable inputs[262]. - The fair value of investments includes $592 million priced by third-party pricing services and $75,749 million using significant observable inputs[262]. - The total investments as of June 30, 2025, amounted to $131.144 billion, compared to $129.254 billion as of December 31, 2024, showing a 1.5% increase[364]. - Fixed maturity AFS securities were valued at $89.386 billion as of June 30, 2025, representing 68.1% of total investments[364]. - The total unrealized losses for fixed maturity AFS securities were $9,979 million, indicating significant market fluctuations[369]. Risk Management - The company emphasizes the importance of risk management policies and the potential impact of economic conditions on its financial performance[253]. - The MD&A highlights the need for careful consideration of forward-looking statements due to inherent risks and uncertainties[246]. - A hypothetical 10% decrease in equity market return could result in a $800 million decrease in net income, while a 10% increase could lead to a $725 million increase[281]. - The company utilizes derivative instruments to hedge exposure to selected risks associated with GLB and GDB riders, focusing on maximizing distributable earnings and protecting capital[276]. Segment Performance - The company operates through four business segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services[254]. - The Group Protection segment showed an improvement in the total loss ratio, contributing positively to overall performance[296]. - Income from operations for the Group Protection segment increased to $173 million for the three months ended June 30, 2025, compared to $130 million in 2024, marking a growth of 33.1%[331]. - The total operating revenues for the Group Protection segment reached $1,538 million for the three months ended June 30, 2025, up from $1,441 million in 2024, indicating a growth of 6.7%[331]. Policyholder and Claims Management - Future contract benefits represent liability reserves based on estimates for future claims and benefits[267]. - Liability for Future Policy Benefits (LFPB) is established based on actuarial assumptions including mortality rates and policyholder behavior, with a comprehensive review conducted quarterly[268]. - As of June 30, 2025, the total Net Amount at Risk (NAR) for Guaranteed Living Benefits (GLB) and Guaranteed Death Benefits (GDB) was $1,889 million, down from $2,278 million in 2024[275]. - The loss ratio for the total segment improved to 65.9% for the three months ended June 30, 2025, down from 70.1% in 2024, showing a positive trend in claims management[337]. Cash Flow and Liquidity - The company’s operating activities provided cash of $741 million for the six months ended June 30, 2025, compared to a cash usage of $(2.2) billion in 2024[408]. - The company’s liquidity is primarily sourced from insurance premiums and fees, investment income, and policyholder deposits, with ongoing cash needs expected to be met[404][408]. - Total cash dividends and return of capital from subsidiaries amounted to $170 million for the three months ended June 30, 2025, compared to $15 million for the same period in 2024[410]. Expenses and Cost Management - Total operating expenses for the Annuities segment were $876 million for the three months ended June 30, 2025, compared to $858 million in 2024[298]. - Commissions and other expenses totaled $405 million in Q2 2025, down from $441 million in Q2 2024, with total pre-broker-dealer expenses incurred at $290 million compared to $284 million in the prior year[311]. - General and administrative expenses for the three months ended June 30, 2025, were $57 million, down from $64 million in 2024, a decrease of 10.9%[360]. Market and Economic Conditions - The company may update actuarial assumptions in any quarter as new information becomes available, ensuring the accuracy of liability estimations[270]. - The company anticipates managing the effects of interest rate spreads through portfolio management, with potential impacts on profitability due to changes in interest rates[304].