Lincoln(US:LNC)2025-05-08 13:02Financial Data and Key Metrics Changes - Adjusted operating income increased by 14% year over year, demonstrating continued execution of strategic initiatives [7][22] - First quarter adjusted operating income available to common stockholders was $280 million, or $1.60 per diluted share [23] - Net loss available to common shareholders was $756 million, or $4.41 per diluted share, primarily due to negative movements in market risk benefits [23][24] Business Line Data and Key Metrics Changes - Group Protection business saw a 26% year-over-year increase in earnings and 120 basis points of margin expansion [10][24] - Annuities reported operating income of $290 million, consistent with the prior year quarter, with total sales of $3.8 billion increasing 33% year over year [11][29] - Life insurance segment reported an operating loss of $16 million, an improvement from a loss of $35 million in the prior year quarter [33] Market Data and Key Metrics Changes - Total deposits in Retirement Plan Services increased by 8%, driven by growth in recurring deposits [20][32] - Group sales grew 9% year over year, with all market segments contributing to this result [16] - Annuity account balances net of reinsurance ended the quarter 5% above the prior year period [29] Company Strategy and Development Direction - The company is focusing on diversifying its business mix and enhancing operational efficiency to manage through market turbulence [6][10] - A long-term partnership with Bain Capital is expected to enhance growth in spread-based products and improve capital deployment [9][39] - The strategic emphasis on growing group business has increased its contribution to operating earnings from less than 10% pre-COVID to over 25% today [45] Management's Comments on Operating Environment and Future Outlook - Management acknowledged high market volatility and an uncertain external backdrop but expressed confidence in the company's resilience and strategic positioning [5][6] - The company is well-prepared to navigate potential economic downturns, maintaining a capital buffer above its 400% target [7][44] - Management remains focused on disciplined execution and advancing strategic priorities to deliver long-term shareholder value [21][46] Other Important Information - The alternative investments portfolio delivered a 7.6% annualized return in the quarter, though it was below the target [23][38] - The company ended the quarter with an estimated RBC ratio well above 420%, consistent with its strategy [37] Q&A Session Summary Question: Insights on Bain partnership and expected free cash flow improvement - Management indicated that the improvement in free cash flow per share is driven by capital deployment into growth areas, not share repurchases [48] Question: Favorability of mortality in the life business - Management noted that mortality was favorable relative to expectations, with first quarter typically being seasonally higher [50] Question: Rationale for issuing new equity to Bain instead of open market purchase - Management emphasized the importance of alignment and the ability to utilize capital for growth, which would not be feasible through open market purchases [56][58] Question: Impact of large plan termination on Retirement Plan Services - Management confirmed that a large case termination affected net outflows but noted that excluding this, flows were positive [78] Question: Update on expense initiatives and their impact - Management confirmed that expense reductions are emerging from operational efficiencies and that reinvestments are being made in growth areas [83]