Lincoln National Corporation · NYSE:LNC
Lincoln National — Q4 2024 Earnings Presentation
29 slides from Lincoln National's earnings presentation, Feb 6, 2025
Slide 1: Earnings Supplement Fourth Quarter 2024
Earnings Supplement Fourth Quarter 2024 February 6, 2025
Slide 2: Forward-Looking Statements – Cautionary Language
Forward-Looking Statements – Cautionary Language Certain statements made in this press release 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 forwa
Slide 3: Outlook
Outlook 3
Slide 4: Our Outlook
Our Outlook 2024 2026 Outlook Longer-Term Outlook Group Group Group 20-30% 25% 25-35% Operating Income Earnings Mix1 Retirement Annuities Retirement Retirement Annuities 10% 5-15% Annuities 5-15% 55-65% 45-55% 70% Life Life 10-15% 10-15% Life NM RBC % >430% 420%+ 420%+ (Total Capital/Risk-Based Capi
Slide 5: 2024 Full-Year Summary
2024 Full-Year Summary ee
Slide 6: 2024 Scorecard
2024 Scorecard Build Foundational Capital • Sustained RBC above 420% buffer for three consecutive quarters. >430%1 $1.3B2 • Sold wealth management business, generating ~$650 million net statutory capital benefit. RBC Ratio, +18% increase in adjusted >30 bps above target operating income YOY2 • Repai
Slide 7: Full Year 2024 Earnings Drivers
Full Year 2024 Earnings Drivers $ in millions Annuities Group Protection Operating Income1 Primary Drivers Operating Income1 Primary Drivers • Fee income on higher account • Favorable incidence rates in balances disability results • Spread expansion driven by • Favorable underwriting trends higher i
Slide 8: 2024 Fourth Quarter Results
2024 Fourth Quarter Results 8
Slide 9: 4Q24 Key Messages
4Q24 Key Messages Strong earnings growth, driven by strategic initiatives to enhance profitability • Adjusted operating income, excluding significant items1, increased 39% YOY, reflecting accelerated momentum and broad-based execution. After- Per • Group Protection earnings more than doubled YOY to
Slide 10: 4Q24 Metrics
4Q24 Metrics Adjusted Income from Operations, Average Account Balances, Key Highlights Excluding Significant Items1 ($M) Net of Reinsurance ($B) • Adjusted income from operations, excluding significant items1, increased 39% YOY, reflecting strong execution on strategic initiatives. $350 $324 $332 •
Slide 11: Annuities
Annuities Key Highlights Operating Income1 ($M) Sales ($B) • Operating income1 increased 14% YOY, reflecting account balance growth and increased spread 13% income. 8% 16% 11% 20% 34% 23% • Ending account balances were 7% higher YOY, 19% 14% 14% 29% 16% supporting profitable growth in the quarter. 3
Slide 12: Group Protection
Group Protection Key Highlights Operating Income1 ($M) Sales ($M) • Operating income doubled YOY and margin $130 increased 430 bps, driven by favorable long-term $110 $107 9% disability results, improved mortality, and strong 9% operational execution. $80 37% 40% • Premiums grew 2% YOY, reflecting c
Slide 13: Retirement Plan Services
Retirement Plan Services Key Highlights Operating Income ($M) First-year Sales ($B) • Operating income increased 13% YOY, reflecting $1.7 higher account balances and lower net G&A 11% expenses. $1.3 18% • First-year sales grew nearly 50% YOY as our 62% 20% differentiated service model and product in
Slide 14: Life Insurance
Life Insurance Key Highlights Operating Income (Loss)1 ($M) Sales ($M) • Q4 operating loss was due to unfavorable mortality, $14 primarily driven by higher-than-expected severity. $144 $122 $119 • Total sales were essentially unchanged sequentially 17% $105 as we remained focused on growing our pres
Slide 15: Other Operations
Other Operations Key Highlights Operating Loss1 and Preferred Dividend ($M) Interest Expense ($M) • Operating loss1 was $95 million, a 5% YOY improvement. • Spark G&A expenses declined by 79% YOY, reflecting the planned reduction of program expenses. • Non-Spark G&A expenses YoY increase primarily d
Slide 16: Investment Portfolio
Investment Portfolio Key Highlights Investment Portfolio ($B) Portfolio Quality • Portfolio1 remained well-diversified with 97% $113 $115 $119 $118 $119 investment grade securities. 7% 8% 10% 9% 9% 3% 3% 3% 3% 3% 17% 17% 17% 18% 18% • Achieved an average +1.4% new money yield pick- 14% 14% 14% 14%
Slide 17: Appendix
Appendix 17
Slide 18: 2025 Expected Seasonality
2025 Expected Seasonality First Quarter Second Quarter Third Quarter Fourth Quarter Annuities 90 fee days 91 fee days 92 fee days 92 fee days Group Protection Seasonally higher loss ratio Seasonally lower loss ratio Seasonally higher loss ratio Retirement Plan Services1 Biannual crediting rate Biann
Slide 19: Investment Portfolio $119B
Investment Portfolio High quality and well-diversified portfolio1 Portfolio allocation by asset class The portfolio remains well-positioned • Long-term investment strategy is tightly aligned with our liability profile and positioned for various economic cycles. • 97% investment grade, the portfolio
Slide 20: Commercial mortgage loan portfolio
Commercial mortgage loan portfolio Conservatively positioned CML portfolio1 Overall CML exposure Property types Portfolio LTV & DSC • Disciplined portfolio construction delivering • Loan-to-values remain strong. consistent loan performance. • Robust surveillance process (e.g. loan level • Strong deb
Slide 21: Non-GAAP Financial Measures Appendix
Non-GAAP Financial Measures Appendix 21
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures Reconciliations of the following non-GAAP financial measures to the most directly comparable GAAP financial measures or calculations of such measures, as applicable, are presented herein beginning on slide 24. In the third quarter of 2024, we r
Slide 23: Non-GAAP Financial Measures, Cont’d
Non-GAAP Financial Measures, Cont’d Adjusted stockholders’ equity Adjusted stockholders’ equity is stockholders’ equity, excluding AOCI, preferred stock, MRB-related impacts, GLB and GDB hedge instruments gains (losses) and the difference between amounts recognized in net income (loss) on reinsuranc
Slide 24: Reconciliation of Net Income to Adjusted Income from Operations
Reconciliation of Net Income Available to Common Stockholders to Adjusted Income from Operations Available to Common Stockholders Unaudited (millions of dollars, except per share data) For the Three Months Ended For the Twelve Months Ended 12/31/23 3/31/24 6/30/24 9/30/24 12/31/24 12/31/23 (1) 12/31
Slide 25: Reconciliation of Net Income to Adjusted Income from Operations (continued)
Reconciliation of Net Income Available to Common Stockholders to Adjusted Income from Operations Available to Common Stockholders (continued from previous slide) Unaudited (millions of dollars) (1) The twelve month period ended December 31, 2023, has been recast to conform to the current period pres
Slide 26: Adjusted Income from Operations, excluding Significant Items
Reconciliation of Adjusted Income from Operations Available to Common Stockholders to Adjusted Income from Operations Available to Common Stockholders, excluding Significant Items Unaudited (millions of dollars) For the Three Months Ended For the Twelve Months Ended 12/31/23 3/31/24 6/30/24 9/30/24
Slide 27: Leverage Ratio
Leverage Ratio Unaudited (millions of dollars) As of or For the Three Months Ended 12/31/23 3/31/24 6/30/24 9/30/24 12/31/24 Leverage Ratio Short-term debt (1) $ 250 $ 503 $ 450 $ 300 $ 300 Long-term debt 5,699 5,726 5,716 5,897 5,856 Total debt (2) 5,949 6,229 6,166 6,197 6,156 Preferred stock 986
Slide 28: Reconciliation of Stockholders’ Equity to Adjusted Stockholders’ Equity
Reconciliation of Stockholders’ Equity to Adjusted Stockholders’ Equity Unaudited (millions of dollars) As of or For the Three Months Ended 12/31/23 3/31/24 6/30/24 9/30/24 12/31/24 Stockholders’ Equity, End-of-Period Stockholders' equity $ 6,893 $ 7,546 $ 7,949 $ 9,013 $ 8,269 Less: Preferred stock
Slide 29: Free Cash Flow Conversion Ratio
Free Cash Flow Conversion Ratio, Including Reconciliation of Holding Company Net Cash Provided by Operating Activities to Free Cash Flow Unaudited (millions of dollars) For the Year Ended 12/31/2024 Holding company net cash provided by operating activities $ 176 Adjustments: Preferred stock dividend