Lincoln National Corporation · NYSE:LNC
Lincoln National — Corporate Update (September 2022)
13 slides from Lincoln National's corporate update, Sep 21, 2022
Slide 1: LDTI Initial Disclosure
LDTI Initial Disclosure September 21, 2022 Randy Freitag EVP and Chief Financial Officer Ellen Cooper President and Chief Executive Officer Exhibit 99.1
Slide 2: Forward-looking statements – cautionary language
Forward-looking statements – cautionary language Certain statements made in this presentation and in other written or oral statements made by Lincoln or on Lincoln’s behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forwar
Slide 3: Forward-looking statements – cautionary language (contd.)
Forward-looking statements – cautionary language (contd.) Ineffectiveness of our risk management policies and procedures, including various hedging strategies used to offset the effect of changes in the value of liabilities due to changes in the level and volatility of the equity markets and interes
Slide 4: Key messages at 6/30/22
Key messages at 6/30/221 1 Lincoln will adopt ASU 2018-12, also known as Targeted Improvements for Long-Duration Contracts (“LDTI”) at 1/1/23. Our LDTI implementation program is progressing on schedule but is not yet complete. As such, our LDTI figures are estimates, have not yet been finalized and
Slide 5: LDTI impacts on book value versus current GAAP
LDTI impacts on book value versus current GAAP (in billions) 1 Amounts in the two columns represent the estimated increase or (decrease) to actual amounts at December 31, 2020, and June 30, 2022, respectively, assuming adoption of LDTI at each date.
Slide 6: Market risk benefits impacts and sensitivities
Market risk benefits impacts and sensitivities MRB under LDTI $1.0B MRB net liability at 6/30/22 Net liability of $1.0B under LDTI consistent with net liability under current GAAP $0.0B impact on total book value New accounting standard splits the MRB impact between $(2.2)B in book value ex-AOCI and
Slide 7: Minimal expected LDTI impact on earnings and ROE
Minimal expected LDTI impact on earnings and ROE Liability for Future Policyholder Benefits Minimal impact versus current GAAP accounting Amortization of Deferred Acquisition Costs Slightly negative impact, mostly in Life Insurance Negative impact declines over time Increased Net Income Volatility L
Slide 8: Updated VA hedge program
Updated VA hedge program Goals Annual cost (pre-tax) LUNBAR Present Value of Distributable Earnings Current Hedge Program Generate sufficient assets to fund future claims Match movements in the GAAP liability ‘~$800M of hedge costs GAAP regulatory accounting framework Updated Hedge Program Post-LDTI
Slide 9: LDTI in summary assuming 6/30/22 adoption
LDTI in summary assuming 6/30/22 adoption 1 See Appendix for a reconciliation of book value per share, excluding AOCI, to book value per share, including AOCI, the most directly comparable GAAP financial measure. 2 Amounts reflect adjusted operating income for the six months ended June 30, 2022 plus
Slide 10: Key messages at 6/30/22
Key messages at 6/30/22 Investor LDTI questions Immateri . > What is the impact on book value? eae = What is the impact on earnings? nge to hedge costs = What is the impact on hedge costs? € e mf distributable earnings = Does LOT! impact capital generation? No impact on
Slide 11: Appendix
Appendix
Slide 12: Reconciliation: Net income to adjusted income from operations
Reconciliation Net income to adjusted income from operations 1 Analyst FactSet consensus for 2H22 as of 9/20/22. 2 As the impact of LDTI on adjusted operating income is not expected to be meaningful, for purposes of this presentation, we have assumed that post-LDTI adjusted operating income is appro
Slide 13: Reconciliation: Book Value per Share and Return on Equity
Reconciliation Book Value per Share Return on Equity 1 For purposes of this presentation, calculated using adjusted operating income for the six months ended June 30, 2022 plus the analyst 9/20/22 FactSet consensus estimate for Lincoln’s adjusted operating income for the six months ending December 3