Lincoln National Corporation · NYSE:LNC
Lincoln National — Q1 2020 Earnings Presentation
33 slides from Lincoln National's earnings presentation, May 8, 2020
Slide 1: Statistical Supplement First Quarter 2020
Statistical Supplement First Quarter 2020
Slide 2: Table of Contents
Lincoln Financial Group Table of Contents Analyst Coverage and Credit Ratings 1 Notes 2 Consolidated Consolidated Statements of Income (Loss) 3 Consolidated Balance Sheets 4 Earnings, Shares and Return on Equity 5 Key Stakeholder Metrics 6 Segment and Sources of Earnings 7 Select Earnings Drivers By
Slide 3: Analyst Coverage and Credit Ratings
Lincoln Financial Group Analyst Coverage and Credit Ratings Firm Analyst Phone Number Autonomous Research U.S., L.P. Erik Bass 646-561-6248 B. Riley FBR Randy Binner 703-312-1890 Citi Research Suneet Kamath 212-816-3457 Credit Suisse Andrew Kligerman 212-325-5069 Dowling & Partners Humphrey Lee 860-
Slide 4: Notes
Lincoln Financial Group Notes Computations • The quarterly financial information for the current year may not sum to the corresponding year-to-date amount as both are rounded to millions. • The financial ratios reported herein are calculated using whole dollars instead of dollars rounded to millions
Slide 5: Notes
Lincoln Financial Group Notes Sources of earnings are defined as follows: • Investment spread earnings consist primarily of net investment income, net of interest credited earned on the underlying general account investments supporting our fixed products less related expenses. • Mortality/morbidity
Slide 6: Notes
Lincoln Financial Group Notes Management believes that the non-GAAP performance measures previously discussed explain the results of our ongoing businesses in a manner that allows for a better understanding of the underlying trends in our current business as the excluded items are unpredictable and
Slide 7: Consolidated
Consolidated 7 Lincoln Financial Group? You’re In Charge?
Slide 8: Consolidated Statements of Income (Loss)
Lincoln Financial Group Consolidated Statements of Income (Loss) Unaudited (millions of dollars, except per share data) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Revenues Insurance premiums $ 1,446 $ 1,398 $ 1,325 $ 1,344 $ 1,373 -5.0% Fee income 1,475 1,517 1,934 1,
Slide 9: Consolidated Balance Sheets
Lincoln Financial Group Consolidated Balance Sheets Unaudited (millions of dollars) As of 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change ASSETS Investments: Fixed maturity available-for-sale (“AFS”) securities, net of allowances for credit losses ("ACL"): Corporate bonds $ 83,208 $ 84,790 $ 87,910
Slide 10: Consolidated Balance Sheets
Lincoln Financial Group Consolidated Balance Sheets Unaudited (millions of dollars) As of 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Future contract benefits $ 34,009 $ 34,890 $ 36,108 $ 36,420 $ 37,100 9.1% Other contract holder funds 93,959 94,
Slide 11: Earnings, Shares and Return on Equity
Lincoln Financial Group Earnings, Shares and Return on Equity Unaudited (millions of dollars, except per share data) As of or For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Income (Loss) Net income (loss) $ 252 $ 363 $ (161) $ 431 $ 52 -79.4% Pre-tax adjusted income (loss
Slide 12: Key Stakeholder Metrics
Lincoln Financial Group Key Stakeholder Metrics Unaudited (millions of dollars, except per share data) As of or For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Cash Returned to Common Stockholders Shares repurchased $ 240 $ 150 $ 150 $ 100 $ 225 -6.3% Common dividends 76 7
Slide 13: Segment and Sources of Earnings
Lincoln Financial Group Segment and Sources of Earnings Unaudited (millions of dollars) For the Three Months Ended For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change 3/31/19 3/31/20 Change Income (Loss) from Operations, Pre-Tax Annuities $ 287 $ 309 $ 185 $ 312 $ 302 5.2% $ 2
Slide 14: Select Earnings Drivers By Segment
Lincoln Financial Group Select Earnings Drivers By Segment Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Annuities Operating revenues $ 1,174 $ 1,156 $ 1,117 $ 1,153 $ 1,129 -3.8% Deposits 3,508 3,654 3,461 3,902 3,697 5.4% Net flows 492 3
Slide 15: Sales By Segment
Lincoln Financial Group Sales By Segment Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Sales Annuities: With guaranteed living benefits $ 1,060 $ 1,241 $ 1,243 $ 1,428 $ 1,185 11.8% Without guaranteed living benefits 864 1,115 1,191 1,298
Slide 16: Operating Revenues and General and Administrative Expenses By Segment
Lincoln Financial Group Operating Revenues and General and Administrative Expenses By Segment Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Operating Revenues Annuities $ 1,174 $ 1,156 $ 1,117 $ 1,153 $ 1,129 -3.8% Retirement Plan Services
Slide 17: Operating Commissions and Other Expenses
Lincoln Financial Group Operating Commissions and Other Expenses Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Operating Commissions and Other Expenses Incurred General and administrative expenses $ 563 $ 593 $ 569 $ 663 $ 520 -7.6% Commis
Slide 18: Interest Rate Yields and Spreads By Segment
Lincoln Financial Group Interest Rate Yields and Spreads By Segment Unaudited For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Annuities Earned rate on reserves 3.97% 4.09% 4.04% 3.84% 3.73% (24) Variable investment income on reserves (1) 0.05% 0.09% 0.09% 0.20% 0.03% (2) N
Slide 19: Select Earnings and Operational Data from Business Segments
Select Earnings and Operational Data from Business Segments
Slide 20: Annuities – Select Earnings and Operational Data
Lincoln Financial Group Annuities – Select Earnings and Operational Data Unaudited (millions of dollars) As of or For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Income (Loss) from Operations Operating revenues: Insurance premiums $ 208 $ 137 $ 79 $ 78 $ 53 -74.5% Fee inco
Slide 21: Retirement Plan Services – Select Earnings and Operational Data
Lincoln Financial Group Retirement Plan Services – Select Earnings and Operational Data Unaudited (millions of dollars) As of or For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Income (Loss) from Operations Operating revenues: Fee income $ 61 $ 62 $ 63 $ 66 $ 61 0.0% Net i
Slide 22: Life Insurance – Select Earnings and Operational Data
Lincoln Financial Group Life Insurance – Select Earnings and Operational Data Unaudited (millions of dollars) As of or For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Income (Loss) from Operations Operating revenues: Insurance premiums $ 213 $ 224 $ 219 $ 228 $ 224 5.2% Fe
Slide 23: Group Protection – Select Earnings and Operational Data
Lincoln Financial Group Group Protection – Select Earnings and Operational Data Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Income (Loss) from Operations Operating revenues: Insurance premiums $ 1,023 $ 1,032 $ 1,024 $ 1,035 $ 1,094 6.9%
Slide 24: Other Operations – Select Earnings and Operational Data
Lincoln Financial Group Other Operations – Select Earnings and Operational Data Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Other Operations Operating revenues: Insurance premiums $ 2 $ 5 $ 3 $ 4 $ 2 0.0% Net investment income 51 50 46 4
Slide 25: DAC, VOBA, DSI, DFEL & Account Value Roll Forwards
DAC, VOBA, DSI, DFEL & Account Value Roll Forwards
Slide 26: Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards
Lincoln Financial Group Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change DAC, VOBA and DSI Balance as of beginning-of-period $ 10,512 $ 9,689 $ 8,832 $ 7,731 $ 7,928 -24.6% Business acquire
Slide 27: Annuities – Account Value Roll Forwards
Lincoln Financial Group Annuities – Account Value Roll Forwards Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Fixed Annuities Balance as of beginning-of-period $ 21,666 $ 22,941 $ 23,836 $ 24,448 $ 25,384 17.2% Gross deposits 1,584 1,298 1
Slide 28: Retirement Plan Services – Account Value Roll Forwards
Lincoln Financial Group Retirement Plan Services – Account Value Roll Forwards Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change General Account Balance as of beginning-of-period $ 19,766 $ 19,914 $ 20,076 $ 20,337 $ 20,558 4.0% Gross deposits
Slide 29: Life Insurance – Account Value Roll Forwards
Lincoln Financial Group Life Insurance – Account Value Roll Forwards Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change General Account Balance as of beginning-of-period $ 37,289 $ 37,275 $ 37,438 $ 37,582 $ 38,141 2.3% Deposits 1,027 1,117 1,1
Slide 30: Other Information
Other Information e Lincoln Financial Group* You're In Charge*
Slide 31: Select Investment Data
Lincoln Financial Group Select Investment Data Unaudited (millions of dollars) As of 3/31/19 As of 12/31/19 As of 3/31/20 Amount % Amount % Amount % Fixed Maturity AFS, Trading and Equity Securities, at Fair Value Fixed maturity AFS securities, net of ACL: Corporate bonds $ 83,208 82.0% $ 88,716 80.
Slide 32: Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC
Lincoln Financial Group Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Components of Realized Gain (Loss), Pre-Tax Total adjusted operating realized gain (loss) $ 38 $ 44 $ 50 $ 52
Slide 33: Select GAAP to Non-GAAP Reconciliations
Lincoln Financial Group Select GAAP to Non-GAAP Reconciliations Unaudited (millions of dollars) For the Three Months Ended 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 Change Revenues Total revenues $ 3,965 $ 4,310 $ 4,638 $ 4,344 $ 4,425 11.6% Less: Excluded realized gain (loss) (400) (161) (61) (171)