Lincoln(LNC)2025-02-06 16:13Financial Data and Key Metrics Changes - Full-year adjusted operating income increased to its highest level in three years, with a 16% improvement compared to 2023, reaching over 332 million, or 1.7 billion, or 303 million, a 14% increase year over year, driven by higher account balances and increased spread income [114] - Retirement plan services (RPS) saw a 13% increase in quarterly earnings year over year, with total deposits up 25% for the full year [26][95] Market Data and Key Metrics Changes - Total annuity sales reached $3.7 billion in the fourth quarter, with full-year sales increasing by 7% compared to the prior year, marking the highest level since 2019 [83] - Group sales increased by 17% year over year in the fourth quarter, achieving a new record, while full-year sales were up 24% [91] - RPS delivered its tenth consecutive year of positive net flows, with first-year sales growing by nearly 70% for the full year [95][96] Company Strategy and Development Direction - The company aims to build a strong capital foundation, optimize its operating model, and improve free cash flow while expanding its franchise [5][76] - Strategic initiatives include the sale of the wealth management business and the launch of a Bermuda-based reinsurance subsidiary [6][65] - The focus is on delivering profitable growth by evolving the annuity business to a more balanced mix and optimizing the life insurance product portfolio [9][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving longer-term financial and strategic objectives, supported by strong execution and favorable macro conditions [29][68] - The company anticipates some moderation in the record low disability incidence experienced in 2024, but expects year-over-year margin expansion driven by strategic actions [42][112] - The outlook for 2026 has been improved, with expectations for free cash flow conversion widened to 45% to 60% [67] Other Important Information - The company ended 2024 with an estimated RBC ratio of over 430%, providing added financial flexibility [6][77] - The alternative investments portfolio delivered over an 11% annualized return in the fourth quarter [32][102] - The company is focused on optimizing its investment strategy and enhancing the quality of its portfolio assets [57][58] Q&A Session Summary Question: What are the expectations for the group business in 2025? - Management expects year-over-year margin expansion driven by strategic actions and ongoing improvement in mortality, sustaining a similar level of earnings in 2025 compared to 2024 [42][112] Question: How is the company addressing the challenges in the life insurance segment? - The company is focusing on right-sizing the expense base and targeting growth in products with more risk sharing, which are expected to strengthen the underlying fundamentals of the business [56][88] Question: What is the outlook for annuities moving forward? - The annuities business is expected to continue its momentum, supported by a diversified product mix and the growth of spread-based products [16][49]