Lincoln National (LNC) Q4 2024 earnings summary

Executive summary

• Achieved highest full-year adjusted operating income in three years, with Q4 2024 adjusted operating income up 39% year-over-year and full-year adjusted operating income rising 18% to $1.3B, surpassing financial objectives and building momentum across all business segments.

• Group Protection and Annuities delivered record sales, earnings, and margin, while Retirement Plan Services achieved its 10th consecutive year of positive net flows and 25% growth in full-year total deposits.

• Ended 2024 with an estimated RBC ratio above 430%, the highest in four years, and a leverage ratio of 27.8%, down 240bps year-over-year.

• Advanced strategy focused on capital strength, operating model optimization, and profitable growth, including sale of wealth management business and launch of Bermuda-based reinsurance.

• Sold wealth management business, generating ~$650M in statutory capital benefit, repaid $100M in debt, and pre-funded $300M 2025 debt maturity.

Financial highlights

• Fourth quarter adjusted operating income available to common stockholders was $332 million ($1.91 per share), up from $252 million prior year; full-year adjusted operating income was $1.25B, up 18% year-over-year.

• Full-year net income available to common stockholders was $3.2 billion ($18.41 per diluted share), rebounding from a loss in 2023.

• Annuities sales for 2024 reached $13.7B, the highest since 2019; Group Protection operating margin improved by ~280bps to 8.3% for the year.

• Free cash flow conversion improved to 39% in 2024.

• Book value per share (excluding AOCI) increased to $72.06 at year-end; adjusted book value per share rose to $72.34.

Outlook and guidance

• Expect continued investment and momentum in 2025, with focus on franchise growth, profitability, and optimizing legacy blocks.

• 2026 free cash flow conversion outlook raised to 45%-60%, and leverage target improved to 25%-26.5%.

• Group business margin expected to remain strong, with 2025 earnings flat to 2024 and margin at or above 8% by 2026.

• 2026 operating income mix expected: Annuities 55-65%, Group 20-30%, Retirement 5-15%, Life 10-15%.

• Anticipate modest earnings growth in Retirement Plan Services, supported by higher account balances and expense discipline.