Lincoln National (LNC) Q2 Earnings Beat on Annuities Strength

Core Viewpoint - Lincoln National Corporation (LNC) reported better-than-expected second-quarter earnings driven by strong contributions from Annuities and Group Protection businesses, alongside increasing insurance premiums, although higher expenses and weaker performance in Life Insurance partially offset these gains [1] Financial Performance - Adjusted earnings for Q2 2024 were $1.84 per share, exceeding the Zacks Consensus Estimate by 3.4%, but reflecting an 8.9% decline year over year [2] - Adjusted operating revenues were $4.5 billion, down 4.3% year over year, and fell short of the consensus estimate by 2.7% [2] - Total expenses surged 74.3% year over year to $4.1 billion, while net income increased by 75.1% year over year to $895 million [5] Segment Performance - The Annuities segment reported operating income of $297 million, a 9.6% increase year over year, with operating revenues rising 1.6% to $1.2 billion, despite a 37% decline in insurance premiums [6] - The Life Insurance segment experienced an operating loss of $35 million, with revenues declining 14.1% year over year to $1.5 billion, and total sales dropping 14.6% to $105 million [7] - The Group Protection segment's operating income rose 19.3% year over year to $130 million, with operating revenues increasing 2.9% to $1.4 billion [8] - The Retirement Plan Services segment saw operating income of $40 million, down 14.9% year over year, with revenues dipping 2.1% to $327 million [9] Financial Position - As of June 30, 2024, Lincoln National had cash and invested cash of $5.5 billion, up from $3.4 billion at the end of 2023, and total assets increased to $384.5 billion from $372.4 billion [10] - Long-term debt was $5.72 billion, slightly up from $5.7 billion at the end of 2023, while stockholders' equity rose to $7.9 billion from $6.9 billion [11] Capital Deployment - The company did not engage in share buybacks during the second quarter but paid out quarterly dividends of $77 million [13] Guidance - Management projected Annuities' operating income for 2024 to be between $1 billion and $1.2 billion, indicating a growth of 2.5% year over year, while Group Protection's operating income is expected to be between $300 million and $350 million, reflecting an 8.7% increase [14] - Retirement Plan Services' operating income is anticipated to be between $140 million and $180 million, indicating a decline of 6.4% year over year, and Life Insurance's operating income is expected to range from break-even to $50 million, improving from a loss of $159 million in 2023 [15]