Lincoln National Corporation · NYSE:LNC

Lincoln National — Investor Presentation (November 2022)

30 slides from Lincoln National's investor presentation, Nov 21, 2022

  1. Slide 1: Investor presentation

    Investor presentation November 21, 2022 Al Copersino Head of Investor Relations 203-257-4493 Albert.Copersino@LFG.com This document may not be accurate after its date, and LNC does not undertake to update or keep it accurate after such date. ©2022 Lincoln National Corporation 1

  2. 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

  3. 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 inter

  4. Slide 4: Lincoln story

    Lincoln story ©2022 Lincoln National Corporation 4

  5. Slide 5: Lincoln’s Strategic Objectives

    Lincoln’s Strategic Objectives Lincoln Financial has introduced new key strategic objectives focused on maximizing distributable earnings and capital generation Strategic Objectives Reducing Capital Sensitivity Maximize Distributable Earnings Diversify Sources of Earnings to Market Volatility Shift

  6. Slide 6: Focused on Achieving Capital Targets

    Focused on Achieving Capital Targets Actions Accelerating the Return to Capital Targets 1) Pausing share buybacks, maintaining common dividend 2) Diversifying the capital structure beyond the current mix of debt and equity including our recent offerings of preferred shares 3) Evaluating strategic al

  7. Slide 7: 3Q22 annual review of actuarial assumptions

    3Q22 annual review of actuarial assumptions 2022 Impacts by business unit ($M, after-tax) GAAP Impact Life​ $(2,197) $2.1B GAAP unlocking charge Annuities​ 217 • Includes $2.2B operating and $0.1B non-operating Group Protection​ 1 impacts in Life Insurance Retirement Plan Services​ 6 o Main driver i

  8. Slide 8: Policyholder behavior impacts driven by lower lapses, particularly at older ages

    Policyholder behavior impacts driven by lower lapses, particularly at older ages • Graph displays the cumulative policy count at Minimum funding experience time of each year’s annual review of the 8,000 Large amount of industry numbers of GUL customers age 75+ who 7,000 study data gave confidence fa

  9. Slide 9: Distribution Franchise is Broad & Differentiated Across Four Business Segments

    Distribution Franchise is Broad & Differentiated Across Four Business Segments Scalable National Channelized Broad Best-In-Class Market Presence Distribution Product Portfolio Marketing & Technology National footprint; large wholesale force Wholesalers aligned with various industry Multiple solution

  10. Slide 10: Solid Credit Ratings Supported by HoldCo Excess Liquidity

    Solid Credit Ratings Supported by HoldCo Excess Liquidity1 Debt Maturity Schedule2 ($M) Financial Strength and Credit Ratings Ratings as of November 9, 2022 $3,381 A.M Standard & Fitch Moody’s Best Poor’s Senior Debt Ratings bbb+ BBB+ Baa1 BBB+ $300mm of 2023 debt maturity prefunded3 Financial Stren

  11. Slide 11: Driving Capital Efficiency and Higher Margins Through Organic Initiatives

    3 Driving Capital Efficiency and Higher Margins Through Organic Initiatives Executing our Reprice, Shift, and Spark Delivers Sustainable Run-Rate Achieve and Sustain Top-End of 5-7% Add New Product Strategy Efficiencies and Enhanced Productivity Target Margin for Group Protection Reprice, shift & ad

  12. Slide 12: Industry-leading risk management programs

    Industry-leading risk management programs Minimal historic hedge breakage $20B Hedge target roundtrip¹ Change in hedge target Hedge program performance (net breakage) $16B $12B $123.4B $126.2B $127.6B $8B $4B $0B 1Q1 1Q1 1Q1 1Q2 1Q2 1Q2 $(4)B 2017 2018 2019 2020 2021 2022 7 8 9 0 1 2 High-quality, d

  13. Slide 13: Annuities

    Annuities ©2022 Lincoln National Corporation 13

  14. Slide 14: Annuities: Solid earnings despite unfavorable markets

    Annuities Solid earnings despite unfavorable markets $1,254M $1,200 $814M $1,400 $934M $949M $900 $700 $1,283 $951M $1,007M $400 $935 $200 $(100) 2016 2021 $(300) YTD 2021 YTD 2022 Income from operations Notable and one-time items Alternative investment portfolio overperformance or underperformance

  15. Slide 15: Organic and inorganic actions driving quality book

    Organic and inorganic actions driving quality book Track record of executing on strategy Adding value through reinsurance block and flow deals 2003 Emphasized product design & realistic assumptions VA flow reinsurance Never participated in the living benefits arms race • On specific living benefit r

  16. Slide 16: High-quality book is a strategic advantage

    High-quality book is a strategic advantage Account values are diverse by product and risk, with net amount at risk consistently below peer average 9/30/2022 Annuity account value by issue year VA with GLB Fixed VA without GLB¹ Indexed VA GLB NAR2 GMDB NAR3 GLB NAR / GLB AV Prior 4.7% 6.7% 19.8% 2007

  17. Slide 17: Life Insurance

    Life Insurance ©2022 Lincoln National Corporation 17

  18. Slide 18: Life Insurance: Solid underlying earnings drivers

    Life Insurance Solid underlying earnings drivers $623M $3,000 $407M $900 $2,000 $600 $515M $500M $1,000 $535M $0 $455M $300 $515M $(1,000) -$1,988M $0 $(2,000) ($300) $(3,000) 2016 2021 YTD 2021 YTD 2022 Income from operations Notable items Alternative investment portfolio overperformance and underp

  19. Slide 19: Robust In-force Business

    Robust In-force Business Stable long-term mortality results 115% 115% Actual/annual expectations 109% 106% Average A/E 100% of 100% over past 5 years1 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD ‘22 Actual Results excluding Mortality within +/- 1% of expected Actual Results pandemic-related imp

  20. Slide 20: New Business Results and Strategy

    New Business Results and Strategy Third quarter sales grew 3% year-over-year and continue to achieve target returns of 12%+ Executive Benefits Term IUL/UL VUL MoneyGuard 16% 21% 13% 15% $166M 21% $171M 24% 3Q 2021 3Q 2022 28% 25% 14% 23% Strategic areas of focus Increase free cash flow Decrease capi

  21. Slide 21: Retirement Plan Services

    Retirement Plan Services ©2022 Lincoln National Corporation 21

  22. Slide 22: Retirement Plan Services: Solid earnings despite unfavorable equity markets

    Retirement Plan Services Solid earnings despite unfavorable equity markets $250M $215M $200M $159M $160M $200M $160M $150M $131M $120M $100M $235M $80M $178M $161M $50M $127M $40M $0M $0M $(50)M $(40)M 2016 2021 YTD 2021 YTD 2022 Income from operations Notable items Alternative investment portfolio

  23. Slide 23: Long-term and recent growth in first-year sales and recurring deposits

    Long-term and recent growth in first-year sales and recurring deposits 89% First-year sales Recurring deposits $7.0B $3.8B $3.4B $5.7B $5.0B $5.3B $2.6B $2.5B 2016 2021 YTD 2021 YTD 2022 2016 2021 YTD 2021 YTD 2022 ©2022 Lincoln National Corporation 23

  24. Slide 24: Expense management is a key driver of earnings growth

    Expense management is a key driver of earnings growth  Creating efficiencies while delivering a digitally-enabled customer experience  Leveraging technology to increase scalability of business  Re-engineering processes to streamline operations Track record of driving efficiencies in cost per part

  25. Slide 25: Group Protection

    Group Protection ©2021 Lincoln National Corporation 25

  26. Slide 26: Group Protection: Solid underlying earnings despite recent pandemic impacts

    Group Protection Solid underlying earnings despite recent pandemic impacts $204M $190M $208M $250 $200 $150 $150 $62M $50 $100 $65M $50 -$50 $55 $0 $(12) $(127)M -$150 $(50) 2016 2021 YTD21 YTD22 Income from operations Notable and unusual items Alternative investment portfolio overperformance and un

  27. Slide 27: Sustaining strong underlying drivers

    Sustaining strong underlying drivers Premiums, persistency, and leave management services driving sustained growth 93% $3.6B 6M 4M $3.3B 89% $3.6B 91% 2M 4.4M $3.3B 89% 4.0M $3.0B 85% 0M YTD21 YTD22 YTD21 YTD22 YTD21 YTD22 Premiums Persistency Number of employees covered with our leave management se

  28. Slide 28: Leadership position driven by diversification and scale

    Leadership position driven by diversification and scale Broad reach to Partnerships with Diversified all employer sizes 7K+ brokers product offerings Short & 58% <500 Broker segment % of total sales1 long-term 19% disability Top 3 national partners 5K+ (Mercer, Aon & 20% $4.5B 48% Willis Towers Wats

  29. Slide 29: Appendix

    Appendix ©2022 Lincoln National Corporation 29

  30. Slide 30: Reconciliation

    Reconciliation Net income to adjusted income from operations (in millions, except per share data) For the Three Months Ended September 30, 2022 Total Revenues $ 4,798 Less: Excluded realized gain (loss) 171 Amortization of DFEL associated with benefit ratio unlocking (3) Total Adjusted Operating Rev

Lincoln National — Investor Presentation (November 2022) on 6ix