Lincoln National (LNC) Q3 2024 earnings summary

Executive summary

• Achieved highest adjusted operating income in over two years at $358 million ($2.06 per share), while net loss was $(562) million, mainly due to non-operating impacts from derivatives, reinsurance, and market risk benefits.

• Strong performance and momentum across all business segments, with Group Protection and Annuities earnings more than doubling and rising 15% year-over-year, respectively.

• Strategic initiatives included a Bermuda reinsurance subsidiary launch, a brand refresh, and the sale of the wealth management business, which generated a $545 million pre-tax gain and $650 million in statutory capital benefit.

• Capital position strengthened with RBC ratio above 420% and declining leverage ratio, supported by organic equity growth and capital actions.

• Annual assumption review provided a net $8 million benefit to adjusted operating income.

Financial highlights

• Adjusted operating income available to common stockholders was $358 million, or $2.06 per share, up from $50 million in Q3 2023.

• Net loss available to common stockholders was $(562) million ($(3.29) per diluted share), compared to net income of $819 million in Q3 2023, mainly due to non-operating impacts.

• Revenues for the quarter were $4.1 billion, slightly down from $4.2 billion in Q3 2023; total assets reached $396.8 billion.

• Book value per share, excluding AOCI, was $66.37 at quarter-end, up from $63.03 a year ago.

• Alternative investments delivered an 11% annualized return, contributing $100 million to earnings.

Outlook and guidance

• Expect continued growth and diversification in group and retirement businesses, with targeted strategies for each segment and a focus on profitable growth and operational efficiency.

• Anticipate full-year annuity sales growth despite a projected sequential decline in Q4.

• Group segment positioned for over 200 basis points of margin expansion over 2023, with a long-term margin target at or above 7%.

• Free cash flow conversion is tracking above expectations, supporting the 2026 target of 45%-55%.

• Life Insurance operating results expected to be unfavorably impacted by $25–$30 million per quarter from the Fortitude Re reinsurance transaction.