On August 1, 2024, Lincoln National Corp (LNC, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Lincoln National Corp operates multiple insurance and retirement businesses, including Annuities, Retirement Plan Services, Life Insurance, and Group Protection. The company's products range from fixed and indexed annuities to universal life insurance and employer-sponsored retirement plans.
Performance Overview
Lincoln National Corp reported net income available to common stockholders of $884 million, or $5.11 per diluted share, significantly surpassing the analyst estimate of $1.64 per share. Adjusted operating income was $319 million, or $1.84 per diluted share, also exceeding expectations. The company attributed $436 million of the net income to a gain from the sale of its wealth management business and $198 million to changes in market risk benefits driven by increased interest rates and equity markets.
Segment Highlights
Group Protection: Operating income grew 19% year-over-year to $130 million, including a $23 million experience refund. Adjusting for this, operating income was $107 million, in line with the prior-year quarter. Premiums increased by 3%, reflecting pricing discipline and persistency.
Annuities: Operating income rose 10% year-over-year to $297 million, driven by account balance growth, spread expansion, and expense discipline. Total sales reached $3.8 billion, with strong growth across all product categories.
Life Insurance: Reported an operating loss of $(35) million, compared to $33 million in the prior-year quarter, due to lower alternative investment income and the impact of the Fortitude Re reinsurance transaction. However, sales grew 15% sequentially.
Retirement Plan Services: Operating income was $40 million, down 15% year-over-year but up 11% sequentially. Total deposits increased by 13%, driven by strong sales momentum in the small market segment.
Financial Metrics and Achievements
Lincoln National Corp's estimated RBC ratio was above 420% at the quarter's end, a significant milestone. The company also established a Bermuda reinsurance subsidiary, further optimizing its operating model.
| Metric | Q2 2023 | Q2 2024 |
|---|---|---|
| Net Income (Loss) | $511 million | $884 million |
| Net Income (Loss) per Diluted Share | $2.94 | $5.11 |
| Adjusted Income from Operations | $354 million | $319 million |
| Adjusted Income per Diluted Share | $2.02 | $1.84 |
Commentary
"Our second quarter results were solid and exceeded our expectations as we continued to execute on our strategic priorities," said Ellen Cooper, Chairman, President, and CEO of Lincoln Financial Group. "Our businesses’ results reflect steady progress as part of their strategic realignment."
Analysis
Lincoln National Corp's strong performance in Q2 2024, particularly in the Annuities and Group Protection segments, underscores the effectiveness of its strategic initiatives. The significant gain from the sale of the wealth management business and the favorable market conditions contributed to the robust net income. However, challenges in the Life Insurance segment highlight the need for continued focus on strategic realignment and investment income stabilization.
For more detailed financial information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Lincoln National Corp for further details.
