Lincoln(US:LNC)2025-10-30 17:32Financial Performance - As of September 30, 2025, Lincoln National Corporation reported a total investment fair value of $103.813 billion, with 92% priced using observable inputs[288]. - As of September 30, 2025, the net income was $445 million, compared to a net loss of $528 million for the same period in 2024[324]. - Income from operations is emphasized as a key profitability measure, reflecting ongoing business performance[276]. - Income from operations for the nine months ended September 30, 2025, was $886 million, compared to $857 million for the same period in 2024, indicating a growth of 3.4%[329]. - Operating revenues for the three months ended September 30, 2025, were $1,270 million, compared to $1,195 million for the same period in 2024, reflecting an increase of 6.3%[329]. - The company experienced a credit loss-related adjustment of $(38) million for the three months ended September 30, 2025[324]. - The annual assumption review resulted in a net income impact of $(50) million for the three months ended September 30, 2025, driven by updates to policyholder behavior assumptions[314]. Investment and Asset Management - The company maintains its investment holdings throughout credit cycles due to its strong capital position and the long-term nature of its liabilities[401]. - The investment portfolio is diversified across asset classes, including fixed maturity securities, mortgage loans, and other long-term investments, which are aligned with the liabilities of the products supported[400]. - The company emphasizes a balanced investment approach focusing on generating sufficient current income net of income tax to meet obligations to customers and general liabilities[399]. - Total investments as of September 30, 2025, reached $136,102 million, an increase from $129,918 million as of December 31, 2024, representing a growth of approximately 4.5%[398]. - The estimated fair value for all private placement securities was $22.4 billion as of September 30, 2025, representing 16% of total investments[413]. - The company’s investment strategy includes evaluating expected returns and risks of each asset class to support effective asset-liability management[399]. Business Segments - The company operates through four business segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services[278]. - Annuities segment reported income of $310 million for the three months ended September 30, 2025, up from $301 million in 2024[324]. - Group Protection segment income increased to $149 million for the three months ended September 30, 2025, compared to $109 million in 2024[324]. - Total operating revenues for Life Insurance reached $1,610 million for the three months ended September 30, 2025, compared to $1,589 million in 2024, reflecting a growth of 1.3%[344]. - Operating revenues for Retirement Plan Services for the three months ended September 30, 2025, totaled $343 million, up from $335 million in 2024[373]. Risk Management - The company faces risks from adverse economic conditions, including low interest rates that could reduce investment income and profitability[270]. - The company has identified various risks related to changes in interest rates, which could affect profitability and capital position[285]. - The company conducts a comprehensive review of actuarial assumptions quarterly, with significant assumptions including mortality rates, morbidity, and policyholder behavior[292]. - The company utilizes derivative instruments to hedge exposure to equity market and interest rate changes associated with GLB and GDB riders[304]. Capital and Liquidity - The company’s liquidity and capital resources are influenced by the ability of subsidiaries to pay dividends, which is critical for meeting obligations[270]. - LNC's long-term debt stood at $5.772 billion as of September 30, 2025, after accounting for various repayments and issuances[453]. - Total cash dividends and return of capital from subsidiaries amounted to $615 million for the nine months ended September 30, 2025, up from $410 million in 2024[443]. - LNC made capital contributions of $967 million to subsidiaries for the nine months ended September 30, 2025, including $800 million to LNL in Q2 2025[450]. Market Conditions - The Federal Reserve reduced the federal funds rate target range to 3.75% to 4.00% in October 2025, impacting the interest rate environment[284]. - A decrease of 25 basis points in interest rates could lead to a hypothetical effect on net income of $(400) million, whereas an increase of 25 basis points would result in a $375 million increase[308]. - The hypothetical effect on net income from a -10% equity market return is estimated at $(825) million, while a +10% return would result in a $725 million increase[308]. Shareholder Returns - Total cash returned to common stockholders, including dividends, was $239 million for the nine months ended September 30, 2025, compared to $229 million in 2024[459]. - Preferred stock dividends totaled $80 million for the nine months ended September 30, 2025, consistent with the same period in 2024[456]. - The company issued approximately 18.8 million shares of common stock for $825 million as part of a transaction with Bain Capital, aimed at supporting strategic priorities[457].