Core Insights - Lincoln National Corporation (LNC) is well-positioned for growth, driven by strong performance in its Annuities and Group Protection segments, new product introductions, effective expense management, and a solid financial foundation [1][10] - LNC's stock has increased by 29.4% year-to-date, significantly outperforming the industry's average gain of 1.2% [1][11] Company Overview - Headquartered in Radnor, PA, Lincoln National has a market capitalization of $7.8 billion and operates in diversified life insurance and investment management, offering a range of products across four segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services [2] - The company's trailing 12-month price-to-book (P/B) ratio is 0.91X, lower than the industry average of 1.93X [2] Financial Performance and Estimates - The Zacks Consensus Estimate for LNC's 2025 earnings is $7.48 per share, reflecting a 5.8% year-over-year increase, with revenues estimated at $18.9 billion [4] - LNC has consistently beaten earnings estimates in the past four quarters, with an average surprise of 15.7% [4] Revenue Growth Drivers - LNC's revenue growth is supported by a balanced business mix, increased insurance premiums, and fee income [5] - The annuity segment's total sales grew by 17.2% year-over-year to $7.8 billion in the first half of 2025, with a shift towards a more balanced mix of spread-based products [6] - The Group Protection segment saw a 30.5% year-over-year increase in income from operations in the first half of 2025, with improved underwriting results and an operating margin increase of 180 basis points [7] Strategic Initiatives - Lincoln National aims to enhance future growth by strengthening distribution leadership and expanding into broader markets, focusing on a customer-first model [8] - The company is enhancing core capital generation by allocating resources to strengthen competitive advantages and drive long-term growth in free cash flow [9] Financial Stability - As of June 30, 2025, LNC had $7.1 billion in cash and invested cash, a 23.1% increase from the end of 2024, indicating a strong financial position [10] - The company's dividend yield stands at 4.4%, higher than the industry's average of 3.3% [10]

Financial Data and Key Metrics Changes - First quarter reported adjusted net earnings were $91 million or $0.72 per share, compared to $108 million or $0.86 per share in the first quarter of 2024, reflecting a decrease of $17 million primarily driven by margin compression and higher interest expense [27][28] - First quarter adjusted return on assets (ROA) was 68 basis points, pressured from near-term headwinds, with a last twelve-month adjusted ROA of 100 basis points, down six basis points from the previous quarter [29] - Reported adjusted return on equity (ROE), excluding AOCI, was 9.7%, up 2.3% over the first quarter of 2024 [29] Business Line Data and Key Metrics Changes - F&G reported record assets under management (AUM) before flow reinsurance of $67.4 billion as of March 31, reflecting a 169% increase compared to the first quarter of 2024 [21] - Gross sales were $2.9 billion, a 17% decrease from the first quarter of 2024, primarily due to lower MYGA sales, while indexed annuity sales remained strong at $1.5 billion [21][22] - Pension risk transfer (PRT) sales were $311 million, down from $584 million in the first quarter of 2024, with funding agreements at $525 million compared to $105 million in the prior year [23] Market Data and Key Metrics Changes - The investment portfolio is well matched to the liability profile, with 96% of fixed maturities being investment grade, and credit-related impairments averaging six basis points over the last five years [12][29] - The fixed income yield was 4.53% in the first quarter, a decrease of three basis points from the first quarter of 2024, reflecting the runoff of higher-yielding in-force assets [13] Company Strategy and Development Direction - The company continues to diversify earnings between spread-based and fee-based sources, with a focus on optimizing return on capital and maintaining pricing discipline [19][20] - F&G is committed to achieving its 2023 Investor Day targets while navigating near-term headwinds and macro uncertainty [31] Management's Comments on Operating Environment and Future Outlook - Management believes that the near-term headwinds are temporary and expects improvement in sales and profitability throughout 2025 [7][9] - The company remains confident in its business model's resilience and its ability to generate long-term shareholder value despite current market volatility [84] Other Important Information - The company has successfully completed recent capital markets activities, including issuing $375 million of junior subordinated notes and a public offering of 8 million shares of common stock [30][31] - The owned distribution portfolio is performing well, with double-digit annual growth of EBITDA expected over the medium term [19] Q&A Session Summary Question: Growth opportunity for the Ryla product - Management expressed excitement about the Ryla product, noting that it has taken time to get onto platforms but is now adding broker dealers consistently, with medium-term potential in the billions [35][38] Question: Impact of lower industry volume on own distribution - Management indicated that the slowdown in owned distribution was balanced between industry volume and investments supported by the company, with a rebound observed in April [39][40] Question: Thoughts on capital deployment after raising common equity - Management stated that the capital raised would be deployed thoughtfully into new business, maintaining a disciplined approach to pricing and capital allocation [43][44] Question: Cost of funds increase and market competition - Management acknowledged the increase in cost of funds and attributed it to lower surrender income and market volatility, but remains disciplined in pricing [47][48] Question: Performance of the alternatives portfolio - Management noted that the direct lending portfolio performed well, while the limited partnerships came in lower than expectations, impacting overall yield [75][76] Question: Surrender activity expectations - Management projected that surrender activity would remain similar in Q2 compared to Q1, with ongoing uncertainty regarding future surrenders [78][80]