Lincoln National Corporation · NYSE:LNC
Lincoln National — Q2 2020 Earnings Presentation
13 slides from Lincoln National's earnings presentation, Aug 5, 2020
Slide 1: Second Quarter 2020 Earnings & Investment Portfolio Supplement
This document may not be accurate after its date, and LNC does not undertake to update or keep it accurate after such date. Second Quarter 2020 Earnings & Investment Portfolio Supplement August 5, 2020
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 forward
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: Special note regarding data
Special note regarding data • All information regarding LNC’s investment portfolio excludes assets related to certain modified coinsurance (“Modco”) transactions. The Modco investment portfolio has counterparty protections in place including investment guidelines, as well as additional support throu
Slide 5: 2Q20 earnings summary
2Q20 earnings summary Item 2Q19 2Q20 Commentary Adjusted income from operations EPS ( 1 ) $2.36 $0.97 Impacts COVID-19 ( 2 ) - $(0.65-0.75) •Results slightly above previously communicated expectation of ~$9M after-tax impact for every 10K COVID-19 related deaths in the U.S. Alternative investment in
Slide 6: Continuing to maintain already strong balance sheet
Continuing to maintain already strong balance sheet Data as of 6/30/20. Strong RBC ratio of ~444% Prefunded debt maturities until 2023 High-quality portfolio 96% investment grade
Slide 7: Strong long-term alternative returns supported by diversification
Strong long-term alternative returns supported by diversification Diversified alternative investment strategy markets Mezzanine 15% Buyout -Large 14% Buyout -Medium 12% Growth Equity 11% Infrastructure 8% Buyout -Small 8% Energy 6% Real Estate 5% Power Generation 4% Other 4% Hedge Funds 13% (PE)–250
Slide 8: Managing credit risk more defensively
Managing credit risk more defensively New money allocation and de-risking actions reduced BBB-and BIG exposure BBB-as % of rated assets 9.3% 7.9% 7.4% 1Q15 1Q20 2Q20 BIG as % of rated assets 4.9% 4.3% 4.2% 1Q15 1Q20 2Q20 De-risking based on name by name scenario analysis Book value of sales since 1Q
Slide 9: Appendix
Appendix
Slide 10: Investment portfolio: Diversified and high-quality
Investment portfolio: Diversified and high-quality Diversified across asset classes, sectors and issuers Mortgage Loans 13% Financials 13% Consumer Non-Cyclical 12% Utilities 11% Structured 8% Other ( 1 ) 6% Capital Goods 6% Energy 5% Consumer Cyclical 4% Municipal 4% Basic Industry 4% Communication
Slide 11: Other asset classes in focus: Energy and consumer cyclical
Other asset classes in focus Energy: $5.6B Midstream 43% Independent 25% Integrated 21% Oil Field Services 8% Refining, 3% •4.7% of total invested assets with an average market value to book value of 108% •Approximately 65% in sub-sectors generally less impacted by energy prices Consumer cyclical: $
Slide 12: Other asset classes in focus: CLO and commercial mortgage loans
Other asset classes in focus Collateralized loan obligations (CLO): $4.2B AAA 70% AA 27% A 3% •100% of CLO holdings are NAIC 1; only 3% or ~$130M are A rated• Average market value to book value of 99% Commercial mortgage loans (CML): $15.3B Apartment 33% Office 25% Industrial 19% Retail 17% Mixed Us
Slide 13: Reconciliation Net income EPS to adjusted income from operations EPS
Reconciliation Net income EPS to adjusted income from operations EPS For the Quarter Ended June 30, 20 19 2020 Earnings (Loss) Per Common Share (Diluted) Net income (loss) EPS (1) 1.79$ (0.49)$ Less: Excluded realized gain (loss), after-tax (0.63) (2.85) Benefit ratio unlocking, after-tax 0.22 1.46