Lincoln National (LNC) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 results exceeded expectations, with net income rising to $895 million, driven by the sale of the wealth management business and lower investment losses, and continued momentum across key business lines.

• Adjusted operating income was $319 million ($1.84 per share), reflecting strong annuities and group protection performance, but Life Insurance posted a loss due to the Fortitude Re reinsurance impact.

• Strategic priorities advanced, including capital growth to an estimated RBC ratio above 420% and the establishment of a Bermuda-based reinsurance subsidiary.

• Group Protection maintained strong performance, matching a record-setting prior-year quarter, with operating income up 19% year-over-year.

• Annuities delivered a 10% earnings increase, marking the highest quarterly earnings in two years, with sales up 48% year-over-year to $3.8 billion.

Financial highlights

• Q2 2024 revenues were $5.15 billion, up from $2.93 billion in Q2 2023; net income was $895 million ($5.11 per share), and adjusted operating income was $319 million ($1.84 per share).

• Net income benefited from a $436 million to $558 million gain on the wealth management sale, $198 million in non-operating income, and $158 million from the Fortitude Re embedded derivative.

• Book value per share (excluding AOCI) increased to $66.37; adjusted book value per share rose to $68.51.

• Holding company available liquidity was $463 million at quarter-end.

• Total assets as of June 30, 2024, were $384.5 billion, up from $372.4 billion at year-end 2023.

Outlook and guidance

• On track to achieve 45%-55% free cash flow conversion by 2026, up from 35% in 2023, with continued progress in expense reduction and capital optimization.

• Group margin expansion expected at the high end of the 50-100 basis point improvement range for 2024.

• Management expects ongoing unfavorable impact to Life Insurance segment operating results of $25–$30 million per quarter due to the Fortitude Re reinsurance transaction.

• Focus remains on maintaining foundational capital, advancing a scalable framework, and shifting toward businesses with more stable cash flows.

• Anticipates moderation in Group and disability results in the second half due to seasonality.