8-K
Lincoln National Corp (LNC)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 8, 2025
Date of Report (Date of earliest event reported)
Lincoln National Corporation
(Exact name of registrant as specified in its charter)
| Indiana | 1-6028 | 35-1140070 |
|---|---|---|
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
150 N. Radnor Chester Road, Radnor, PA 19087
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (484) 583-1400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||
|---|---|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||
| --- | --- | |||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||
| --- | --- | ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| --- | --- |
__________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | LNC | New York Stock Exchange |
| Depositary Shares, each representing a 1/1000th interest in a share of 9.000% Non-Cumulative Preferred Stock, Series D | LNC PRD | New York Stock Exchange |
__________________________________
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2025, Lincoln National Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2025, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The Company’s statistical supplement for the quarter ended March 31, 2025, is attached as Exhibit 99.2 and is incorporated herein by reference.
The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as otherwise expressly stated in such filing.
Item 7.01. Regulation FD Disclosure.
On May 8, 2025, in connection with the Company’s first quarter 2025 earnings conference call scheduled for the same date, the Company made available on its website a first quarter 2025 earnings supplement presentation dated May 8, 2025, a copy of which is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
This presentation is being furnished under this Item 7.01 and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in Exhibit 99.3 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
The following exhibits are being furnished with this Form 8-K.
| Exhibit<br><br>Number | Description |
|---|---|
| 99.1 | Press release datedMaya1q2025lncearningspr.htm8, 2025, announcing Lincoln National Corporation’s financial results for the quarterendedMarch31, 2025. |
| 99.2 | Lincoln National Corporation Statistical Supplement for the quarter endedMarch31, 2025. |
| 99.3 | FirstQuarter 2025Earnings Supplement datedMay 8, 2025. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LINCOLN NATIONAL CORPORATION | |
|---|---|
| By | /s/ Adam Cohen |
| Name: | Adam Cohen |
| Title: | Senior Vice President, Chief Accounting Officer and Treasurer |
Date: May 8, 2025
Document
'
For Immediate Release
Lincoln Financial Reports 2025 First Quarter Results
____________________________________
Radnor, PA, May 8, 2025: Lincoln Financial (NYSE: LNC) today reported financial results for the first quarter ended March 31, 2025.
•Execution against strategic and financial objectives drove another quarter of strong performance.
•First quarter net income (loss) available to common stockholders was $(756) million, or $(4.41) per diluted share.
•First quarter adjusted operating income available to common stockholders was $280 million, or $1.60 per diluted share.
◦The primary difference between net income (loss) and adjusted operating income (loss) resulted from a $0.9 billion after-tax loss, or $(5.04) per diluted share, primarily due to changes in market risk benefits driven by the decrease in interest rates and lower equity markets, non-economic impacts.
•Estimated RBC ratio remains in excess of targeted buffer, reinforcing ability to navigate the dynamic macro environment and to support growth.
•Announced partnership with Bain Capital, including a minority investment expected to support acceleration of strategic priorities, which is expected to close in the second half of 2025.
"We delivered solid results in the first quarter of 2025 as we continued to execute on our strategy to transform Lincoln," said Ellen Cooper, Chairman, President and CEO of Lincoln Financial. "Year over year, Group Protection earnings increased 26% and margin expanded 120 basis points. Annuities generated significant sales in the quarter supported by a diversified product mix, underlying results in Life Insurance continued to improve, and Retirement Plan Services total deposits increased by 8%.
"Additionally, our recently announced long-term strategic partnership with Bain Capital is a pivotal milestone in advancing Lincoln’s vision, providing differentiated access to private asset origination, accelerating value creation across multiple value streams, and aligning our interests with a minority ownership stake. Against the current backdrop of macroeconomic uncertainty, the strategic actions we have taken over the past several years to strengthen our capital foundation, optimize our operating model, and shift to a more resilient and diversified business mix leave us well prepared to fulfill our commitments to shareholders and policyholders despite the ongoing volatility.”
Business Highlights
Our 2025 first-quarter results reflected further progress by each of our businesses on executing their strategic priorities.
Retail Solutions
•Annuities reported operating income of $290 million, essentially unchanged compared with the first quarter of 2024 (excluding the unfavorable impact of $31 million of significant items in the prior-year quarter) as market appreciation and spread expansion were offset by variable annuity outflows. Annuities generated first quarter sales of $3.8 billion, up 33% year over year, with spread-based products comprising approximately 60% of total sales. Our Annuities business continued to benefit from offering a diverse mix of products with features that address customer preferences.
•Life Insurance reported an operating loss of $16 million, a $19 million improvement from the prior-year quarter. This result was due to improved mortality and lower net G&A expenses, which resulted from actions taken in 2024 to improve operational efficiency, partially offset by lower alternative investment income. Total sales were $97 million, 7% higher than the prior-year period, as growth in risk-sharing products continued to gain momentum.
Workplace Solutions
•Group Protection reported operating income of $101 million in the quarter, up 26% compared to the 2024 first quarter, and an operating margin of 7.4%, a 120 basis point increase for the same period. These results were driven by continued favorable long-term disability results. Premiums were 7% higher year over year, reflecting strong persistency and prior-year sales. Sales of $157 million were 9% higher year over year, driven by continued growth in supplemental health.
•Retirement Plan Services reported operating income of $34 million in the quarter, down 6% year over year, primarily due to the impact of a plan termination. Excluding this impact, earnings were essentially unchanged year over year as continued stable value outflows were offset by market appreciation. Total deposits were $4.1 billion in the quarter, 8% higher than the prior-year period, driven by higher recurring deposits.
Earnings Summary
| (in millions, except per share data) | As of or For the Three Months Ended | |||
|---|---|---|---|---|
| 3/31/24(1) | 3/31/25 | |||
| Net income (loss) | $ | 1,222 | $ | (722) |
| Net income (loss) available to common stockholders — diluted | 1,191 | (756) | ||
| Net income (loss) per diluted share available to common stockholders(2) | $ | 6.93 | $ | (4.41) |
| Adjusted income (loss) from operations | 244 | 314 | ||
| Adjusted income (loss) from operations available to common stockholders | 210 | 280 | ||
| Adjusted income (loss) from operations per diluted share available to common stockholders | $ | 1.22 | $ | 1.60 |
(1) Prior period amounts have been recast to conform to the current period presentation.
(2) In periods where a net loss is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as using diluted shares would result in a lower loss per share.
Reconciliation of Net Income (Loss) to Adjusted Income (Loss) from Operations(1)
| (in millions) | For the Three Months Ended | |||
|---|---|---|---|---|
| 3/31/24(1) | 3/31/25 | |||
| Net income (loss) available to common stockholders — diluted | $ | 1,191 | $ | (756) |
| Less: | ||||
| Preferred stock dividends declared | (34) | (34) | ||
| Adjusted for deferred units of LNC stock in our deferred compensation plans | 3 | — | ||
| Net income (loss) | 1,222 | (722) | ||
| Less: | ||||
| Net annuity product features, pre-tax | 1,450 | (1,092) | ||
| Net life insurance product features, pre-tax | (130) | 42 | ||
| Credit loss-related adjustments, pre-tax | (1) | (28) | ||
| Investment gains (losses), pre-tax | (81) | (103) | ||
| Changes in the fair value of reinsurance-related embedded derivatives, | ||||
| trading securities and certain mortgage loans, pre-tax(2) | 194 | (90) | ||
| Other items, pre-tax(2) | (186) | (35) | ||
| Income tax benefit (expense) related to the above pre-tax items | (268) | 270 | ||
| Adjusted income (loss) from operations | $ | 244 | $ | 314 |
| Adjusted income (loss) from operations available to common stockholders | $ | 210 | $ | 280 |
(1) See the definition of Adjusted Income (Loss) from Operations at the back of this press release for revisions made to the definition in the third quarter of 2024 and further explanation of reconciliation line items. Prior period impacts have been recast to conform to the current period presentation.
(2) Refer to the full reconciliation at the back of this release for footnotes.
Variable Investment Income
| Alternative Investment Income, after-tax(1) | For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | |||||
| Annuities | $ | 2 | $ | 1 | $ | 3 | $ | 3 | $ | 2 |
| Life Insurance | 58 | 26 | 73 | 76 | 55 | |||||
| Group Protection | 1 | 1 | 1 | 1 | 1 | |||||
| Retirement Plan Services | 1 | — | 2 | 2 | 1 | |||||
| Other Operations | — | — | — | 1 | — | |||||
| Consolidated | $ | 62 | $ | 28 | $ | 79 | $ | 83 | $ | 59 |
(1) Excludes alternative investment income on investments supporting our modified coinsurance and coinsurance with funds withheld agreements as we have limited economic interest in those investments.
| Prepayment Income, after-tax | For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | |||||
| Annuities | $ | 1 | $ | — | $ | — | $ | 2 | $ | — |
| Life Insurance | — | 2 | 3 | 1 | 1 | |||||
| Group Protection | — | — | 1 | 1 | — | |||||
| Retirement Plan Services | 1 | — | — | 1 | — | |||||
| Other Operations | — | — | — | — | — | |||||
| Consolidated | $ | 2 | $ | 2 | $ | 4 | $ | 5 | $ | 1 |
Items Impacting Segment and Other Operations Results
| For the Three Months Ended March 31, 2025 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Annuities | Life Insurance | Group Protection | Retirement Plan Services | Other Operations | |||||
| After-tax impacts: | ||||||||||
| Alternative investment income compared to return target(1) | $ | (1) | $ | (16) | $ | — | $ | (1) | $ | — |
| Prepayment income(2) | — | 1 | — | — | — | |||||
| Annual assumption review | — | — | — | — | — | |||||
| Tax items | — | — | — | — | — | |||||
| Other | — | — | — | — | — | |||||
| Total impact | $ | (1) | $ | (15) | $ | — | $ | (1) | $ | — |
| For the Three Months Ended March 31, 2024 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in millions) | Annuities | Life Insurance | Group Protection | Retirement Plan Services | Other Operations | |||||
| After-tax impacts: | ||||||||||
| Alternative investment income compared to return target(1) | $ | (1) | $ | (5) | $ | — | $ | — | $ | — |
| Prepayment income(2) | 1 | — | — | 1 | — | |||||
| Annual assumption review | — | — | — | — | — | |||||
| Tax items | (12) | (1) | — | — | (3) | |||||
| Other(3) | (19) | — | — | — | — | |||||
| Total impact | $ | (31) | $ | (6) | $ | — | $ | 1 | $ | (3) |
(1) Alternative investment income comparison to return target assumes a 10% annual return on the alternative investment portfolio.
(2) Prepayment income is actual income reported in the quarter.
(3) Balance sheet true-up in preparation for the close of the sale of Lincoln's wealth management business.
Capital and Liquidity
| As of or For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except percent and per share data) | 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | ||||||
| Holding company available liquidity(1) | $ | 466 | $ | 463 | $ | 459 | $ | 463 | $ | 466 | |
| RBC ratio(2) | 400-410% | >420% | >420% | 433 | % | >420% | |||||
| Book value per share (BVPS), including AOCI | $ | 38.46 | $ | 40.78 | $ | 46.97 | $ | 42.60 | $ | 41.96 | |
| Book value per share, excluding AOCI(3) | $ | 61.63 | $ | 66.37 | $ | 62.67 | $ | 72.06 | $ | 67.04 | |
| Adjusted book value per share(3) | $ | 65.01 | $ | 68.51 | $ | 70.04 | $ | 72.34 | $ | 73.19 |
(1) Holding company available liquidity presented as of 3/31/24, 6/30/24, 9/30/24 and 12/31/24 does not include the $300 million prefunding of a 2025 maturity.
(2) The RBC ratio is calculated annually as of December 31, but is reported in the March statutory reporting, and as such, the quarterly ratios presented for 3/31/24, 6/30/24, 9/30/24 and 03/31/25 are considered estimates based on information known at the time of reporting.
(3) Refer to the reconciliation to book value per share, including AOCI, at the back of this release.
Annuities
| (in millions, except ROA data) | As of or For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Total operating revenues | $ | 1,269 | $ | 1,209 | $ | 1,195 | $ | 1,223 | $ | 1,198 | (5.6) | % |
| Total operating expenses | 952 | 858 | 836 | 864 | 858 | (9.9) | % | |||||
| Income (loss) from operations before taxes | 317 | 351 | 359 | 359 | 340 | 7.3 | % | |||||
| Federal income tax expense (benefit) | 58 | 54 | 58 | 56 | 50 | (13.8) | % | |||||
| Income (loss) from operations | $ | 259 | $ | 297 | $ | 301 | $ | 303 | $ | 290 | 12.0 | % |
| Income (loss) from operations, excluding impact of annual assumption review | $ | 259 | $ | 297 | $ | 300 | $ | 303 | $ | 290 | 12.0 | % |
| Total sales | $ | 2,847 | $ | 3,817 | $ | 3,375 | $ | 3,689 | $ | 3,789 | 33.1 | % |
| Net flows | $ | (1,993) | $ | (954) | $ | (1,637) | $ | (1,891) | $ | (1,676) | 15.9 | % |
| Average account balances, net of reinsurance | $ | 155,291 | $ | 158,370 | $ | 161,680 | $ | 165,424 | $ | 163,688 | 5.4 | % |
| Return on average account balances (bps) | 67 | 75 | 74 | 73 | 71 |
•Income from operations was $290 million for the first quarter, up 12% compared to the prior-year quarter. This result was driven by the non-recurrence of $31 million of unfavorable significant items in the prior-year quarter: $19 million related to a balance sheet true-up in preparation for the close of the sale of Lincoln's wealth management business and $12 million of tax-related expenses. Excluding the impact of these items, operating income was essentially unchanged year over year.
•Total sales were $3.8 billion in the quarter, increasing 33% compared to the prior year. Spread-based products comprised approximately 60% of total sales.
•Net outflows were approximately $1.7 billion in the quarter, compared to net outflows of $2.0 billion in the prior-year quarter, driven by strong sales momentum.
•Average account balances, net of reinsurance, were $164 billion, increasing 5% year over year. This result was primarily due to growth in RILA, which represented 21% of total Annuities ending account balances, net of reinsurance.
Life Insurance
| (in millions) | As for or For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Total operating revenues | $ | 1,541 | $ | 1,511 | $ | 1,589 | $ | 1,608 | $ | 1,587 | 3.0 | % |
| Total operating expenses | 1,591 | 1,562 | 1,568 | 1,634 | 1,619 | 1.8 | % | |||||
| Income (loss) from operations before taxes | (50) | (51) | 21 | (26) | (32) | 36.0 | % | |||||
| Federal income tax expense (benefit) | (15) | (16) | (1) | (11) | (16) | (6.7) | % | |||||
| Income (loss) from operations | $ | (35) | $ | (35) | $ | 22 | $ | (15) | $ | (16) | 54.3 | % |
| Income (loss) from operations, excluding the impact of annual assumption review | $ | (35) | $ | (35) | $ | 14 | $ | (15) | $ | (16) | 54.3 | % |
| Average account balances, net of reinsurance | $ | 42,280 | $ | 43,230 | $ | 44,055 | $ | 44,746 | $ | 44,390 | 5.0 | % |
| Total sales | $ | 91 | $ | 105 | $ | 122 | $ | 119 | $ | 97 | 6.6 | % |
•The loss from operations was $16 million, compared to a loss of $35 million in the prior-year quarter, resulting from improved mortality and lower net G&A expenses, partially offset by lower alternative investment income.
•Total sales were $97 million, up 7% compared to the 2024 first quarter, as growth in risk-sharing products continued to gain momentum.
•Average account balances, net of reinsurance, were $44 billion, up 5% versus the prior-year quarter.
Group Protection
| (in millions, except margin data) | As of or For the Three Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Total operating revenues | $ | 1,425 | $ | 1,441 | $ | 1,432 | $ | 1,418 | $ | 1,521 | 6.7 | % | |||||
| Total operating expenses | 1,324 | 1,276 | 1,295 | 1,282 | 1,393 | 5.2 | % | ||||||||||
| Income (loss) from operations before taxes | 101 | 165 | 137 | 136 | 128 | 26.7 | % | ||||||||||
| Federal income tax expense (benefit) | 21 | 35 | 28 | 29 | 27 | 28.6 | % | ||||||||||
| Income (loss) from operations | $ | 80 | $ | 130 | $ | 109 | $ | 107 | $ | 101 | 26.3 | % | |||||
| Income (loss) from operations, excluding the impact of annual assumption review | $ | 80 | $ | 130 | $ | 110 | $ | 107 | $ | 101 | 26.3 | % | |||||
| Insurance premiums | $ | 1,285 | $ | 1,298 | $ | 1,288 | $ | 1,274 | $ | 1,371 | 6.7 | % | |||||
| Total sales | $ | 144 | $ | 161 | $ | 84 | $ | 467 | $ | 157 | 9.0 | % | |||||
| Total loss ratio | 75.0 | % | 70.1 | % | 71.4 | % | 71.0 | % | 72.4 | % | |||||||
| Operating margin(1) | 6.2 | % | 10.0 | % | 8.4 | % | 8.4 | % | 7.4 | % | |||||||
| Operating margin, excluding the impact of annual assumption review | 6.2 | % | 10.0 | % | 8.5 | % | 8.4 | % | 7.4 | % |
(1) Operating margin is calculated by dividing income (loss) from operations by insurance premiums.
•Income from operations was $101 million in the quarter, 26% higher than the prior-year quarter, and the operating margin improved by 120 basis points to 7.4%. Continued favorable long-term disability results and continued growth in supplemental health drove the improvement in both measures.
•Insurance premiums were $1.4 billion in the quarter, increasing 7% year over year.
•Sales increased 9% year over year, driven by growth in supplemental health.
•The total loss ratio was 72.4%, 260 basis points lower than the prior-year quarter, driven by continued favorable long-term disability results.
Retirement Plan Services
| (in millions, except ROA data) | As of or For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Total operating revenues | $ | 322 | $ | 327 | $ | 335 | $ | 337 | $ | 327 | 1.6 | % |
| Total operating expenses | 281 | 281 | 286 | 288 | 289 | 2.8 | % | |||||
| Income (loss) from operations before taxes | 41 | 46 | 49 | 49 | 38 | (7.3) | % | |||||
| Federal income tax expense (benefit) | 5 | 6 | 5 | 6 | 4 | (20.0) | % | |||||
| Income (loss) from operations | $ | 36 | $ | 40 | $ | 44 | $ | 43 | $ | 34 | (5.6) | % |
| Deposits | $ | 3,802 | $ | 3,282 | $ | 4,180 | $ | 3,473 | $ | 4,115 | 8.2 | % |
| Net flows | $ | 391 | $ | (197) | $ | 651 | $ | (732) | $ | (2,184) | NM | |
| Average account balances | $ | 103,240 | $ | 106,374 | $ | 110,550 | $ | 113,711 | $ | 113,075 | 9.5 | % |
| Return on average account balances (bps) | 14 | 15 | 16 | 15 | 12 |
•Income from operations was $34 million in the quarter, down 6% compared to the prior year, primarily due to the impact of a plan termination. Excluding this impact, earnings were essentially unchanged as continued stable value outflows were offset by market appreciation.
•Net outflows were $2.2 billion, primarily due to a large plan termination in the quarter.
•Total deposits were $4.1 billion, 8% higher than the prior-year quarter, driven by higher recurring deposits.
•Average account balances were $113 billion, increasing 10% from the prior year.
Other Operations
| (in millions) | As of or For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Total operating revenues | $ | 27 | $ | 39 | $ | 52 | $ | 42 | $ | 52 | 92.6 | % |
| Total operating expenses | 146 | 161 | 157 | 160 | 164 | 12.3 | % | |||||
| Income (loss) from operations before taxes | (119) | (122) | (105) | (118) | (112) | 5.9 | % | |||||
| Federal income tax expense (benefit) | (23) | (25) | (21) | (23) | (17) | 26.1 | % | |||||
| Income (loss) from operations(1) | $ | (96) | $ | (97) | $ | (84) | $ | (95) | $ | (95) | 1.0 | % |
(1) Income (loss) from operations does not include preferred dividends.
Unrealized Gains and Losses
The Company reported a net unrealized loss of $9.4 billion (pre-tax) on its available-for-sale securities as of March 31, 2025, compared to a net unrealized loss of $9.8 billion (pre-tax) as of March 31, 2024. The year-over-year decrease was primarily due to lower Treasury rates.
The tables attached to this release define and reconcile the non-GAAP measures adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders, book value per share excluding AOCI, and adjusted book value per share to net income (loss), net income (loss) available to common stockholders, and book value per share including AOCI, calculated in accordance with GAAP.
This press release contains statements that are forward-looking, and actual results may differ materially. Please see the Forward-looking Statements – Cautionary Language at the end of this release for factors that may cause actual results to differ materially from the Company’s current expectations.
For other financial information, please refer to the Company’s first quarter 2025 statistical supplement and first quarter 2025 earnings supplement, which are available in the investor relations section of its website http://www.lincolnfinancial.com/investor.
Conference Call Information
Lincoln Financial will discuss the company’s first quarter results with the investment community in a call beginning at 8:00 a.m. Eastern Time on Thursday, May 8, 2025.
The call will be broadcast live through the company’s website at www.lincolnfinancial.com/webcast. Please log on to the webcast at least 15 minutes prior to the start of the call to download and install any necessary streaming media software. A replay of the call will be available by 10:30 a.m. Eastern Time on May 8, 2025, at www.lincolnfinancial.com/webcast.
About Lincoln Financial
Lincoln Financial helps people confidently plan for their vision of a successful financial future. As of December 31, 2024, approximately 17 million customers trust our guidance and solutions across four core businesses – annuities, life insurance, group protection, and retirement plan services. As of March 31, 2025, the company had $312 billion in end-of-period account balances, net of reinsurance. Headquartered in Radnor, PA., Lincoln Financial is the marketing name for Lincoln National Corporation (NYSE: LNC) and its affiliates. Learn more at LincolnFinancial.com.
| Contacts: | ||
|---|---|---|
| Tina Madon | Sarah Boxler | |
| Investor Relations | Media Relations | |
| Tina.Madon@LFG.com | Sarah.Boxler@LFG.com |
Non-GAAP Measures
Management believes that adjusted income (loss) from operations (or adjusted operating income), adjusted income (loss) from operations available to common stockholders, and adjusted income (loss) from operations per diluted share available to common stockholders better explain the results of the company’s ongoing businesses in a manner that allows for a better understanding of the underlying trends in the company’s current business as the excluded items are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in most instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. Management also believes that using book value, excluding accumulated other comprehensive income (“AOCI”), and adjusted book value per share enables investors to analyze the amount of our net worth that is primarily attributable to our business operations. Book value per share, excluding AOCI is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates. Adjusted book value per share is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates.
For the historical periods, reconciliations of non-GAAP measures used in this press release to the most directly comparable GAAP measure may be included in this Appendix to the press release and/or are included in the Statistical Supplements for the corresponding periods contained in the Earnings section of the Investor Relations page on our website: http://www.lincolnfinancial.com/investor.
Definitions of Non-GAAP Measures Used in this Press Release
Adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders, book value per share, excluding AOCI, and adjusted book value per share are financial measures we use to evaluate and assess our results. Adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders, book value per share, excluding AOCI, and adjusted book value per share, as used in the press release, are non-GAAP financial measures and do not replace GAAP net income (loss), net income (loss) available to common stockholders, and book value per share, including AOCI, the most directly comparable GAAP measures.
Adjusted Income (Loss) from Operations
In the third quarter of 2024, we revised our definition of adjusted income (loss) from operations to exclude the impact of certain additional items that are not indicative of the ongoing operations of the business and may obscure trends in the underlying performance of the Company. The presentation of prior period adjusted income (loss) from operations was recast for such third quarter 2024 revisions to conform to the current period presentation.
Adjusted income (loss) from operations is GAAP net income excluding the following items, as applicable:
•Items related to annuity product features, which include changes in MRBs, including gains and losses and benefit payments, changes in the fair value of the derivative instruments we hold to hedge GLB and GDB riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the embedded derivative liabilities of our indexed annuity contracts and the associated index options we hold to hedge them, including collateral expense associated with the hedge program (collectively, “net annuity product features”);
•Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of VUL hedging, changes in reserves resulting from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our IUL contracts and the associated index options we hold to hedge them (collectively, “net life insurance product features”);
•Credit loss-related adjustments on fixed maturity AFS securities, mortgage loans on real estate and reinsurance-related assets (“credit loss-related adjustments”);
•Changes in the fair value of equity securities, certain derivatives, certain other investments and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, “investment gains (losses)”);
•Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option (“changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans”);
•Income (loss) from the initial adoption of new accounting standards, accounting policy changes and new regulations, including changes in tax law;
•Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;
•Losses from the impairment of intangible assets and gains (losses) on other non-financial assets;
•Income (loss) from discontinued operations;
•Other items, which include the following: certain legal and regulatory accruals; severance expense related to initiatives that realign the workforce; transaction and integration costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business; mark-to-market adjustment related to the LNC stock component of our deferred compensation plans (“deferred compensation mark-to-market adjustment”); gains (losses) on modification or early extinguishment of debt; and impacts from settlement or curtailment of defined benefit obligations; and
•Income tax benefit (expense) related to the above pre-tax items, including the effect of tax adjustments such as changes to deferred tax valuation allowances.
Adjusted Income (Loss) from Operations Available to Common Stockholders
Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends.
Book Value Per Share, Excluding AOCI
Book value per share, excluding AOCI, is calculated based upon a non-GAAP financial measure.
•It is calculated by dividing (a) stockholders’ equity, excluding AOCI and preferred stock, by (b) common shares outstanding.
•We provide book value per share, excluding AOCI, to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations.
•Management believes book value per share, excluding AOCI, is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates.
•Book value per share is the most directly comparable GAAP measure.
Adjusted Book Value Per Share
Adjusted book value per share is calculated based upon a non-GAAP financial measure.
•It is calculated by dividing (a) stockholders’ equity, excluding AOCI, preferred stock, MRB-related impacts, GLB and GLB hedge instrument gains (losses), and the difference between amounts recognized in net income (loss) on reinsurance-related embedded derivatives and the underlying asset portfolios (“reinsurance-related embedded derivatives and portfolio gains (losses)”) by (b) common shares outstanding.
•We provide adjusted book value per share to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations.
•Management believes adjusted book value per share is useful to investors because it eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates.
•Book value per share is the most directly comparable GAAP measure.
Other Definitions
Holding Company Available Liquidity
Holding company available liquidity consists of cash and invested cash, excluding cash held as collateral, and certain short-term investments that can be readily converted into cash, net of commercial paper outstanding.
Sales
Sales as reported consist of the following:
•Annuities and Retirement Plan Services – deposits from new and existing customers;
•Universal life insurance (“UL”), indexed universal life insurance (“IUL”), variable universal life insurance (“VUL”) – first-year commissionable premiums plus 5% of excess premiums received;
•MoneyGuard® linked-benefit products – MoneyGuard® (UL) and MoneyGuard Market Advantage® (VUL), 150% of commissionable premiums;
•Executive Benefits – insurance and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess premium received, and single premium bank-owned UL and VUL, 15% of single premium deposits;
•Term – 100% of annualized first-year premiums; and
•Group Protection – annualized first-year premiums from new policies.
Lincoln National Corporation
Reconciliation of Net Income (Loss) to Adjusted Income (Loss) from Operations and
Average Stockholders' Equity to Adjusted Average Stockholders' Equity
| For the | |||||||
|---|---|---|---|---|---|---|---|
| (in millions, except per share data) | Three Months Ended | ||||||
| March 31, | |||||||
| 2025 | 2024 (1) | ||||||
| Net Income (Loss) Available to Common | |||||||
| Stockholders – Diluted | $ | (756) | $ | 1,191 | |||
| Less: | |||||||
| Preferred stock dividends declared | (34) | (34) | |||||
| Adjustment for deferred units of LNC stock in our | |||||||
| deferred compensation plans | — | 3 | |||||
| Net Income (Loss) | (722) | 1,222 | |||||
| Less: | |||||||
| Net annuity product features, pre-tax | (1,092) | 1,450 | |||||
| Net life insurance product features, pre-tax | 42 | (130) | |||||
| Credit loss-related adjustments, pre-tax | (28) | (1) | |||||
| Investment gains (losses), pre-tax | (103) | (81) | |||||
| Changes in the fair value of reinsurance-related | |||||||
| embedded derivatives, trading securities and certain | |||||||
| mortgage loans, pre-tax (2) | (90) | 194 | |||||
| Other items, pre-tax (3)(4)(5)(6) | (35) | (186) | |||||
| Income tax benefit (expense) related | |||||||
| to the above pre-tax items | 270 | (268) | |||||
| Total adjustments | (1,036) | 978 | |||||
| Adjusted Income (Loss) from Operations | $ | 314 | $ | 244 | |||
| Add: | |||||||
| Preferred stock dividends declared | (34) | (34) | |||||
| Adjusted Income (Loss) from Operations Available to Common Stockholders | $ | 280 | $ | 210 | |||
| Earnings (Loss) Per Common Share – Diluted (7) | |||||||
| Net income (loss) | $ | (4.41) | $ | 6.93 | |||
| Adjusted income (loss) from operations | 1.60 | 1.22 | |||||
| Stockholders’ Equity, Average | |||||||
| Stockholders' equity | $ | 8,231 | $ | 7,219 | |||
| Less: | |||||||
| Preferred stock | 986 | 986 | |||||
| AOCI | (4,671) | (3,714) | |||||
| Stockholders’ equity, excluding AOCI and preferred stock | 11,916 | 9,947 | |||||
| MRB-related impacts | 2,649 | 1,829 | |||||
| GLB and GDB hedge instruments gains (losses) | (3,027) | (2,380) | |||||
| Reinsurance-related embedded derivatives and portfolio gains (losses) | (173) | (557) | |||||
| Adjusted average stockholders' equity | $ | 12,467 | $ | 11,055 | (1) | Prior period impacts have been recast to conform to the current period presentation. See definitions of Non-GAAP measures earlier in this release. | |
| --- | --- | ||||||
| (2) | Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction. | ||||||
| (3) | Includes certain legal accruals of $(114) million, primarily related to the settlement of cost of insurance litigation in the first quarter of 2024. | ||||||
| (4) | Includes severance expense related to initiatives to realign the workforce of $(6) million and $(49) million in the first quarter of 2025 and | ||||||
| 2024, respectively. | |||||||
| (5) | Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(20) million and $(10) million in the first | ||||||
| quarter of 2025 and 2024, respectively. | |||||||
| (6) | Includes deferred compensation mark-to-market adjustment of $(9) million and $(13) million in the first quarter of 2025 and 2024, respectively. | ||||||
| --- | --- | ||||||
| (7) | In periods where a net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS | ||||||
| calculations, as the use of diluted shares would result in a lower loss per share. |
Lincoln National Corporation
Reconciliation of Book Value per Share
| As of the Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | ||||||
| Book Value Per Common Share | ||||||||||
| Book value per share | $ | 38.46 | $ | 40.78 | $ | 46.97 | $ | 42.60 | $ | 41.96 |
| Less: | ||||||||||
| AOCI | (23.17) | (25.59) | (15.70) | (29.46) | (25.08) | |||||
| Book value per share, excluding AOCI | 61.63 | 66.37 | 62.67 | 72.06 | 67.04 | |||||
| Less: | ||||||||||
| MRB-related gains (losses) | 15.10 | 15.66 | 12.56 | 18.51 | 12.42 | |||||
| GLB and GDB hedge instruments gains (losses) | (15.69) | (16.22) | (16.17) | (17.91) | (17.43) | |||||
| Reinsurance-related embedded derivatives and portfolio gains (losses) | (2.79) | (1.58) | (3.76) | (0.88) | (1.14) | |||||
| Adjusted book value per share | $ | 65.01 | $ | 68.51 | $ | 70.04 | $ | 72.34 | $ | 73.19 |
Lincoln National Corporation
Digest of Earnings
| For the | ||||
|---|---|---|---|---|
| (in millions, except per share data) | Three Months Ended | |||
| March 31, | ||||
| 2025 | 2024 | |||
| Revenues | $ | 4,691 | $ | 4,116 |
| Net Income (Loss) | $ | (722) | $ | 1,222 |
| Preferred stock dividends declared | (34) | (34) | ||
| Adjustment for deferred units of LNC stock in our | ||||
| deferred compensation plans (1) | — | 3 | ||
| Net Income (Loss) Available to Common | ||||
| Stockholders – Diluted | $ | (756) | $ | 1,191 |
| Net Income (Loss) Per Common Share – Basic | $ | (4.41) | $ | 6.98 |
| Net Income (Loss) Per Common Share – Diluted (2) | $ | (4.41) | $ | 6.93 |
| Average Shares – Basic | 171,321,440 | 170,049,994 | ||
| Average Shares – Diluted | 174,087,020 | 171,834,746 |
(1) We exclude deferred units of LNC stock that are antidilutive from our diluted earnings per share calculation.
(2) In periods where a net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use of diluted shares would result in a lower loss per share.
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 forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may contain words like: “anticipate,” “believe,” “estimate,” “expect,” “project,” “shall,” “will” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in Lincoln’s businesses, prospective services or products, future performance or financial results and the outcome of contingencies, such as legal proceedings. Lincoln claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.
Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those expressed in or implied by such forward-looking statements due to a variety of factors, including:
•Weak general economic and business conditions that may affect demand for our products, account balances, investment results, guaranteed benefit liabilities, premium levels and claims experience;
•Adverse global capital and credit market conditions that may affect our ability to raise capital, if necessary, and may cause us to realize impairments on investments and certain intangible assets, including goodwill and the valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures;
•The inability of our subsidiaries to pay dividends to the holding company in sufficient amounts, which could harm the holding company’s ability to meet its obligations;
•Legislative, regulatory or tax changes, both domestic and foreign, that affect: the cost of, or demand for, our subsidiaries’ products; the required amount of reserves and/or surplus; our ability to conduct business; our affiliate reinsurance arrangements; and restrictions on the payment of revenue sharing and 12b-1 distribution fees;
•Changes in tax law or the interpretation of or application of existing tax laws that could impact our tax costs and the products that we sell;
•The impact of regulations adopted by the Securities and Exchange Commission (“SEC”), the Department of Labor or other federal or state regulators or self-regulatory organizations that could adversely affect our distribution model and sales of our products and result in additional disclosure and other requirements related to the sale and delivery of our products;
•The impact of new and emerging rules, laws and regulations relating to privacy, cybersecurity and artificial intelligence that may lead to increased compliance costs, reputation risk and/or changes in business practices;
•Increasing scrutiny and evolving expectations and regulations regarding ESG matters that may adversely affect our reputation and our investment portfolio;
•Actions taken by reinsurers to raise rates on in-force business;
•Declines in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses and demand for our products;
•Rapidly increasing or sustained high interest rates that may negatively affect our profitability, value of our investment portfolio and capital position and may cause policyholders to surrender annuity and life insurance policies, thereby causing realized investment losses;
•The impact of the implementation of the provisions of the European Market Infrastructure Regulation relating to the regulation of derivatives transactions;
•The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as: adverse actions related to present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings;
•A decline or continued volatility in the equity markets causing a reduction in the sales of our subsidiaries’ products; a reduction of asset-based fees that our subsidiaries charge on various investment and insurance products; and an increase in liabilities related to guaranteed benefit riders, which are accounted for as market risk benefits, of our subsidiaries’ variable annuity products;
•Ineffectiveness of our risk management policies and procedures, including our various hedging strategies;
•A deviation in actual experience regarding future policyholder behavior, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries’ products and in establishing related insurance reserves, which may reduce future earnings;
•Changes in accounting principles that may affect our consolidated financial statements;
•Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on our ability to raise capital and on our liquidity and financial condition;
•Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the premium writings, policy retention, and profitability of our insurance subsidiaries and liquidity;
•Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain financial assets, as well as counterparties to which we are exposed to credit risk, requiring that we realize losses on financial assets;
•Interruption in or failure of the telecommunication, information technology or other operational systems of the company or the third parties on whom we rely or failure to safeguard the confidentiality or privacy of sensitive data on such systems, including from cyberattacks or other breaches in security of such systems;
•The effect of acquisitions and divestitures, including the inability to realize the anticipated benefits of acquisitions and dispositions of businesses and potential operating difficulties and unforeseen liabilities relating thereto, as well as the effect of restructurings, product withdrawals and other unusual items;
•The inability to complete our announced transaction with Bain Capital within the expected timeframe, or at all, and the possibility that the anticipated benefits related to the transaction may not materialize as expected;
•The inability to realize or sustain the benefits we expect from, greater than expected investments in, and the potential impact of efforts related to, our strategic initiatives;
•The adequacy and collectability of reinsurance that we have obtained;
•Pandemics, acts of terrorism, war or other man-made and natural catastrophes that may adversely impact liabilities for policyholder claims, and adversely affect our businesses and the cost and availability of reinsurance;
•Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that our subsidiaries can charge for their products;
•The unknown effect on our subsidiaries’ businesses resulting from evolving market preferences and the changing demographics of our client base; and
•The unanticipated loss of key management or wholesalers.
The risks and uncertainties included here are not exhaustive. Our most recent Form 10-K, as well as other reports that we file with the SEC, include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.
Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to correct or update any forward-looking statements to reflect events or circumstances that occur after the date of this press release.
The reporting of Risk-Based Capital (“RBC”) measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.
18
Document
Statistical Supplement
First Quarter 2025
| Lincoln Financial | |
|---|---|
| Table of Contents | |
| Notes ................................................................................................................................................................................................................................................................. | 1-3 |
| Credit Ratings ................................................................................................................................................................................................................................................... | 4 |
| Consolidated | |
| Consolidated Statements of Income (Loss) ................................................................................................................................................................................................ | 5 |
| Consolidated Balance Sheets ....................................................................................................................................................................................................................... | 6-7 |
| Earnings, Shares and Return on Equity ......................................................................................................................................................................................................... | 8 |
| Key Stakeholder Metrics ............................................................................................................................................................................................................................... | 9 |
| Select Earnings Drivers By Segment ............................................................................................................................................................................................................ | 10 |
| Sales By Segment .......................................................................................................................................................................................................................................... | 11 |
| Operating Revenues and General and Administrative Expenses By Segment and Other Operations...................................................................................................... | 12 |
| Operating Commissions and Other Expenses ............................................................................................................................................................................................. | 13 |
| Select Earnings and Operational Data from Business Segments and Other Operations | |
| Annuities ......................................................................................................................................................................................................................................................... | 14 |
| Life Insurance ................................................................................................................................................................................................................................................ | 15 |
| Group Protection ............................................................................................................................................................................................................................................ | 16 |
| Retirement Plan Services .............................................................................................................................................................................................................................. | 17 |
| Other Operations............................................................................................................................................................................................................................................ | 18 |
| DAC and Account Balance Roll Forwards | |
| Consolidated DAC, VOBA, DSI and DFEL Roll Forwards .............................................................................................................................................................................. | 19 |
| Account Balance Roll Forwards: | |
| Annuities ...................................................................................................................................................................................................................................................... | 20-21 |
| Life Insurance .............................................................................................................................................................................................................................................. | 22 |
| Retirement Plan Services ............................................................................................................................................................................................................................ | 23 |
| Investment Information | |
| Fixed-Income Asset Class ............................................................................................................................................................................................................................. | 24 |
| Fixed-Income Credit Quality .......................................................................................................................................................................................................................... | 25 |
| GAAP to Non-GAAP Reconciliations | |
| Select GAAP to Non-GAAP Reconciliations ................................................................................................................................................................................................. | 26-29 |
Table of Contents
| Lincoln Financial |
|---|
| Notes |
| Non-GAAP Performance Measures |
| Non-GAAP measures do not replace the most directly comparable GAAP measures, and we have included detailed reconciliations herein beginning on page 26. |
| Adjusted Income (Loss) From Operations |
| Adjusted income (loss) from operations is GAAP net income excluding the effects of the following items, as applicable: |
| • Items related to annuity product features, which include changes in market risk benefits (“MRBs”), including gains and losses and benefit payments (“MRB-related impacts”), changes in the fair |
| value of the derivative instruments we hold to hedge guaranteed living benefit (“GLB”) and guaranteed death benefit (“GDB”) riders, net of fee income allocated to support the cost of hedging them, |
| and changes in the fair value of the embedded derivative liabilities of our indexed annuity contracts and the associated index options we hold to hedge them, including collateral expense associated with |
| the hedge program (collectively, “net annuity product features”); |
| • Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of variable universal life insurance (“VUL”) hedging, changes in reserves resulting |
| from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our indexed universal life insurance (“IUL”) contracts |
| and the associated index options we hold to hedge them (collectively, “net life insurance product features”); |
| • Credit loss-related adjustments on fixed maturity available-for-sale (“AFS”) securities, mortgage loans on real estate and reinsurance-related assets (“credit loss-related adjustments”); |
| • Changes in the fair value of equity securities, certain derivatives, certain other investments and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, “investment |
| gains (losses)”); |
| • Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option (“changes in the fair value of reinsurance-related |
| embedded derivatives, trading securities and certain mortgage loans”); |
| • Income (loss) from the initial adoption of new accounting standards, accounting policy changes and new regulations, including changes in tax law; |
| • Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance; |
| • Losses from the impairment of intangible assets and gains (losses) on other non-financial assets; |
| • Income (loss) from discontinued operations. |
| • Other items, which include the following: certain legal and regulatory accruals; severance expense related to initiatives that realign the workforce; transaction and integration costs related to mergers and |
| acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business; mark-to-market adjustment related to the LNC stock component of our |
| deferred compensation plans (“deferred compensation mark-to-market adjustment”); gains (losses) on modification or early extinguishment of debt; and impacts from settlement or curtailment of |
| defined benefit obligations; and |
| • Income tax benefit (expense) related to the above pre-tax items, including the effect of tax adjustments such as changes to deferred tax valuation allowances. |
| Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends. |
| Adjusted Operating Revenues |
| Adjusted operating revenues represent GAAP revenues excluding the effects of the following items, as applicable: |
| • Changes in the fair value of the derivative instruments we hold to hedge GLB and GDB riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the |
| embedded derivative liabilities of our indexed annuity and indexed universal life insurance contracts and the associated index options we hold to hedge them (“revenue adjustments from annuity and |
| life insurance product features”); |
| • Credit loss-related adjustments; |
| • Investment gains (losses); |
| • Changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans; |
| • Revenue adjustments from the initial adoption of new accounting standards; |
| • Amortization of deferred gains arising from reserve changes on business sold through reinsurance; and |
| • Gains (losses) on other non-financial assets. |
Table of Contents
| Lincoln Financial |
|---|
| Notes |
| Non-GAAP Performance Measures, Continued |
| Management believes that the non-GAAP performance measures discussed above 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 not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in many instances, |
| decisions regarding these items do not necessarily relate to the operations of the individual segments. In addition, we believe that our definitions of adjusted operating revenues and adjusted income (loss) |
| from operations provide investors with more valuable measures of our performance as they better reveal trends in our business. |
| Stockholders’ Equity, Excluding AOCI and Preferred Stock |
| Stockholders’ equity, excluding accumulated other comprehensive income (loss) (“AOCI”) and preferred stock is stockholders’ equity, excluding AOCI and preferred stock. Management believes this metric is |
| useful to investors because it eliminates market movements that are unpredictable and can fluctuate significantly from period to period, primarily related to changes in interest rates. Stockholders’ equity |
| is the most directly comparable GAAP measure. |
| 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 reinsurance-related embedded derivatives and the underlying asset portfolios (“reinsurance-related embedded derivatives and portfolio gains (losses)”). |
| Management believes this metric is useful to investors because it eliminates the effect of market movements that are unpredictable and can fluctuate significantly from period to period, primarily related to |
| changes in equity markets and interest rates. Stockholders’ equity is the most directly comparable GAAP measure. |
| Book Value per Share, Excluding AOCI |
| Book value per share, excluding AOCI, is calculated by dividing stockholders’ equity, excluding AOCI and preferred stock, by common shares outstanding. We provide book value per share, excluding AOCI, to |
| enable investors to analyze the amount of our net worth that is attributable primarily to our business operations. Management believes book value per share, excluding AOCI, is useful to investors because it |
| eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per share is the most directly comparable GAAP |
| measure. |
| Adjusted Book Value per Share |
| Adjusted book value per share is calculated by dividing adjusted stockholders’ equity by common shares outstanding. We provide adjusted book value per share to enable investors to analyze the amount |
| of our net worth that is attributable primarily to our business operations. Management believes adjusted book value per share is useful to investors because it eliminates the effect of items that are |
| unpredictable and can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates. Book value per share is the most directly comparable GAAP measure. |
| Adjusted Income (Loss) From Operations Available to Common Stockholders, Excluding AOCI and Preferred Stock ROE |
| Adjusted income (loss) from operations available to common stockholders, excluding AOCI and preferred stock ROE is calculated by dividing annualized adjusted income (loss) from operations available |
| to common stockholders by average stockholders’ equity, excluding AOCI and preferred stock. Management believes this metric is useful to investors because it eliminates the effect of market movements |
| on ROE that are unpredictable and can fluctuate significantly from period to period, primarily related to changes in interest rates. Net income (loss) ROE is the most directly comparable GAAP measure. |
| Adjusted Income (Loss) From Operations ROE |
| Adjusted income (loss) from operations ROE is calculated by dividing annualized adjusted income (loss) from operations available to common stockholders by adjusted average stockholders’ equity. |
| Management believes this metric is useful to investors because it eliminates the effect of market movements on ROE that are unpredictable and can fluctuate significantly from period to period, primarily |
| related to changes in equity markets and interest rates. Net income (loss) ROE is the most directly comparable GAAP measure. |
Table of Contents
| Lincoln Financial |
|---|
| 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. |
| • We exclude deferred units of LNC stock that are antidilutive from our diluted net income (loss) earnings per share calculation. In addition, for any period where a net loss or adjusted loss from operations |
| is experienced, shares used in the diluted EPS calculation represent basic shares, as the use of diluted shares would result in a lower loss per share. |
| Definitions |
| Holding company available liquidity consists of cash and invested cash, excluding cash held as collateral, and certain short-term investments that can be readily converted into cash, net of commercial paper |
| outstanding. |
| Return on equity (“ROE”) measures how efficiently we generate profits from the resources provided by our net assets. See adjusted income (loss) from operations ROE and adjusted income (loss) from |
| operations available to common stockholders, excluding AOCI and preferred stock ROE metrics on page 2 for further information on how these metrics are calculated. Management evaluates consolidated |
| ROE by both including and excluding the effect of average goodwill. |
| Leverage ratio is a measure that we use to monitor the level of our debt relative to our total capitalization. Debt used in this metric reflects total debt and preferred stock adjusted for certain items. |
| Total capitalization reflects debt used in the numerator of this ratio and stockholders' equity adjusted for certain items. |
| Sales as reported consist of the following: |
| • Annuities and Retirement Plan Services – deposits from new and existing customers; |
| • Universal life insurance (“UL”), IUL, VUL – first-year commissionable premiums plus 5% of excess premiums received; |
| • MoneyGuard® linked-benefit products – MoneyGuard® (UL) and MoneyGuard Market AdvantageSM (VUL), 150% of commissionable premiums; |
| • Executive Benefits – insurance and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess premium received, and single premium bank-owned UL and VUL, 15% of |
| single premium deposits; |
| • Term – 100% of annualized first-year premiums; and |
| • Group Protection – annualized first-year premiums from new policies. |
| Statistical Supplement is Dated |
| This document is dated May 8, 2025, and has not been updated since that date. Lincoln Financial does not intend to update this document. |
Table of Contents
| Lincoln Financial | |||||
|---|---|---|---|---|---|
| Credit Ratings | |||||
| Ratings as of May 8, 2025 | |||||
| Standard | |||||
| AM Best | Fitch | Moody's | & Poor's | ||
| Senior Debt Ratings | bbb+ | BBB+ | Baa2 | BBB+ | |
| Financial Strength Ratings | |||||
| The Lincoln National Life Insurance Company | A | A+ | A2 | A+ | |
| First Penn-Pacific Life Insurance Company | A | A+ | A2 | A- | |
| Lincoln Life & Annuity Company of New York | A | A+ | A2 | A+ | |
| Investor Inquiries May Be Directed To: | |||||
| Tina Madon, Senior Vice President, | |||||
| Investor Relations | |||||
| Email: InvestorRelations@lfg.com | |||||
| Phone: 800-237-2920 |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Statements of Income (Loss) | ||||||||||||
| Unaudited (millions of dollars, except per share data) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Revenues | ||||||||||||
| Insurance premiums | $ | 1,601 | $ | 1,625 | $ | 1,614 | $ | 1,586 | $ | 1,676 | 4.7 | % |
| Fee income | 1,324 | 1,339 | 1,352 | 1,387 | 1,365 | 3.1 | % | |||||
| Net investment income | 1,346 | 1,332 | 1,411 | 1,435 | 1,457 | 8.2 | % | |||||
| Realized gain (loss) | (434) | 663 | (431) | 470 | 11 | 102.5 | % | |||||
| Other revenues | 279 | 194 | 165 | 185 | 182 | -34.8 | % | |||||
| Total revenues | 4,116 | 5,153 | 4,111 | 5,063 | 4,691 | 14.0 | % | |||||
| Expenses | ||||||||||||
| Benefits | 2,003 | 2,008 | 1,937 | 1,970 | 2,068 | 3.2 | % | |||||
| Interest credited | 822 | 853 | 880 | 888 | 890 | 8.3 | % | |||||
| Market risk benefit (gain) loss | (1,907) | (136) | 657 | (1,291) | 1,293 | 167.8 | % | |||||
| Policyholder liability remeasurement (gain) loss | (12) | (105) | (50) | (23) | (59) | NM | ||||||
| Commissions and other expenses | 1,601 | 1,351 | 1,304 | 1,336 | 1,368 | -14.6 | % | |||||
| Interest and debt expense | 81 | 86 | 86 | 83 | 80 | -1.2 | % | |||||
| Total expenses | 2,588 | 4,057 | 4,814 | 2,963 | 5,640 | 117.9 | % | |||||
| Income (loss) before taxes | 1,528 | 1,096 | (703) | 2,100 | (949) | NM | ||||||
| Federal income tax expense (benefit) | 306 | 201 | (175) | 414 | (227) | NM | ||||||
| Net income (loss) | 1,222 | 895 | (528) | 1,686 | (722) | NM | ||||||
| Preferred stock dividends declared | (34) | (11) | (34) | (11) | (34) | 0.0% | ||||||
| Adjustment for deferred units of LNC stock | ||||||||||||
| in our deferred compensation plans | 3 | — | — | — | — | -100.0 | % | |||||
| Net income (loss) available to common | ||||||||||||
| stockholders – diluted | $ | 1,191 | $ | 884 | $ | (562) | $ | 1,675 | $ | (756) | NM | |
| Earnings (Loss) Per Common Share – Diluted | ||||||||||||
| Net income (loss) | $ | 6.93 | $ | 5.11 | $ | (3.29) | $ | 9.63 | $ | (4.41) | NM |
Table of Contents
| Lincoln Financial | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Balance Sheets | |||||||||||
| Unaudited (millions of dollars) | |||||||||||
| As of | |||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||
| ASSETS | |||||||||||
| Investments: | |||||||||||
| Fixed maturity available-for-sale (“AFS”) securities, net of allowance for | |||||||||||
| credit losses: | |||||||||||
| Corporate bonds | $ | 68,533 | $ | 67,313 | $ | 70,234 | $ | 66,450 | $ | 66,885 | -2.4% |
| U.S. government bonds | 391 | 389 | 398 | 391 | 538 | 37.6% | |||||
| State and municipal bonds | 2,743 | 2,564 | 2,567 | 2,371 | 2,350 | -14.3% | |||||
| Foreign government bonds | 263 | 260 | 252 | 237 | 239 | -9.1% | |||||
| Residential mortgage-backed securities | 1,760 | 1,795 | 1,882 | 1,863 | 1,941 | 10.3% | |||||
| Commercial mortgage-backed securities | 1,484 | 1,542 | 1,643 | 1,665 | 1,830 | 23.3% | |||||
| Asset-backed securities | 12,349 | 13,072 | 13,444 | 13,880 | 14,241 | 15.3% | |||||
| Hybrid and redeemable preferred securities | 241 | 239 | 262 | 254 | 273 | 13.3% | |||||
| Total fixed maturity AFS securities, net of allowance for credit losses | 87,764 | 87,174 | 90,682 | 87,111 | 88,297 | 0.6% | |||||
| Trading securities | 2,227 | 2,201 | 2,206 | 2,025 | 1,984 | -10.9% | |||||
| Equity securities | 319 | 295 | 293 | 294 | 345 | 8.2% | |||||
| Mortgage loans on real estate, net of allowance for credit losses | 19,266 | 20,152 | 20,856 | 21,083 | 21,558 | 11.9% | |||||
| Policy loans | 2,476 | 2,513 | 2,510 | 2,476 | 2,529 | 2.1% | |||||
| Derivative investments | 8,394 | 8,608 | 9,522 | 9,677 | 7,849 | -6.5% | |||||
| Other investments | 5,256 | 5,652 | 5,743 | 6,588 | 6,653 | 26.6% | |||||
| Total investments | 125,702 | 126,595 | 131,812 | 129,254 | 129,215 | 2.8% | |||||
| Cash and invested cash | 4,122 | 5,475 | 6,013 | 5,801 | 4,284 | 3.9% | |||||
| Deferred acquisition costs, value of business acquired and deferred sales inducements | 12,405 | 12,435 | 12,475 | 12,537 | 12,563 | 1.3% | |||||
| Reinsurance recoverables, net of allowance for credit losses | 29,461 | 29,126 | 29,233 | 28,750 | 28,580 | -3.0% | |||||
| Deposit assets, net of allowance for credit losses | 29,355 | 30,330 | 30,938 | 30,776 | 31,048 | 5.8% | |||||
| Market risk benefit assets | 4,878 | 4,754 | 4,565 | 4,860 | 4,157 | -14.8% | |||||
| Accrued investment income | 1,127 | 1,135 | 1,160 | 1,108 | 1,134 | 0.6% | |||||
| Goodwill | 1,144 | 1,144 | 1,144 | 1,144 | 1,144 | 0.0% | |||||
| Other assets | 8,962 | 8,340 | 8,017 | 8,163 | 8,267 | -7.8% | |||||
| Separate account assets | 166,225 | 165,199 | 171,483 | 168,438 | 162,506 | -2.2% | |||||
| Total assets | $ | 383,381 | $ | 384,533 | $ | 396,840 | $ | 390,831 | $ | 382,898 | -0.1% |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Balance Sheets | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| As of | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Liabilities | ||||||||||||
| Policyholder account balances | $ | 122,300 | $ | 124,113 | $ | 125,968 | $ | 126,197 | $ | 125,262 | 2.4 | % |
| Future contract benefits | 38,848 | 38,560 | 41,169 | 39,807 | 40,665 | 4.7 | % | |||||
| Funds withheld reinsurance liabilities | 17,486 | 17,044 | 17,595 | 16,907 | 16,838 | -3.7 | % | |||||
| Market risk benefit liabilities | 1,266 | 1,275 | 1,272 | 1,046 | 1,306 | 3.2 | % | |||||
| Deferred front-end loads | 6,099 | 6,306 | 6,517 | 6,730 | 6,910 | 13.3 | % | |||||
| Payables for collateral on investments | 10,117 | 11,114 | 10,570 | 10,020 | 8,282 | -18.1 | % | |||||
| Short-term debt | 503 | 450 | 300 | 300 | — | -100.0 | % | |||||
| Long-term debt by rating agency leverage definitions: | ||||||||||||
| Operating (see note (1) on page 9 for details) | 867 | 867 | 867 | 868 | 868 | 0.1 | % | |||||
| Financial | 4,859 | 4,849 | 5,030 | 4,988 | 5,000 | 2.9 | % | |||||
| Other liabilities | 7,265 | 6,807 | 7,056 | 7,261 | 7,068 | -2.7 | % | |||||
| Separate account liabilities | 166,225 | 165,199 | 171,483 | 168,438 | 162,506 | -2.2 | % | |||||
| Total liabilities | 375,835 | 376,584 | 387,827 | 382,562 | 374,705 | -0.3 | % | |||||
| Stockholders’ Equity | ||||||||||||
| Preferred stock | 986 | 986 | 986 | 986 | 986 | 0.0% | ||||||
| Common stock | 4,624 | 4,641 | 4,660 | 4,674 | 4,703 | 1.7 | % | |||||
| Retained earnings | 5,887 | 6,691 | 6,049 | 7,645 | 6,810 | 15.7 | % | |||||
| Accumulated other comprehensive income (loss): | ||||||||||||
| Unrealized investment gain (loss) | (4,940) | (5,253) | (3,565) | (5,601) | (5,078) | -2.8 | % | |||||
| Market risk benefit non-performance risk gain (loss) | 606 | 409 | 781 | 146 | 464 | -23.4 | % | |||||
| Policyholder liability discount rate remeasurement gain (loss) | 703 | 795 | 422 | 744 | 633 | -10.0 | % | |||||
| Foreign currency translation adjustment | (27) | (27) | (18) | (29) | (24) | 11.1 | % | |||||
| Funded status of employee benefit plans | (293) | (293) | (302) | (296) | (301) | -2.7 | % | |||||
| Total accumulated other comprehensive income (loss) | (3,951) | (4,369) | (2,682) | (5,036) | (4,306) | -9.0 | % | |||||
| Total stockholders’ equity | 7,546 | 7,949 | 9,013 | 8,269 | 8,193 | 8.6 | % | |||||
| Total liabilities and stockholders’ equity | $ | 383,381 | $ | 384,533 | $ | 396,840 | $ | 390,831 | $ | 382,898 | -0.1 | % |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings, Shares and Return on Equity | |||||||||||||||||
| Unaudited (millions of dollars, except per share data) | |||||||||||||||||
| As of or For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Income (Loss) | |||||||||||||||||
| Net income (loss) | $ | 1,222 | $ | 895 | $ | (528) | $ | 1,686 | $ | (722) | NM | ||||||
| Pre-tax adjusted income (loss) from operations | 291 | 389 | 461 | 400 | 362 | 24.4 | % | ||||||||||
| After-tax adjusted income (loss) from operations (1) | 244 | 335 | 392 | 343 | 314 | 28.7 | % | ||||||||||
| Adjusted operating tax rate | 16.1 | % | 13.7 | % | 15.0 | % | 14.1 | % | 13.3 | % | |||||||
| Adjusted income (loss) from operations available to | |||||||||||||||||
| common stockholders | 210 | 324 | 358 | 332 | 280 | 33.3 | % | ||||||||||
| ROE | |||||||||||||||||
| Net income (loss) ROE | 67.7 | % | 46.2 | % | -24.9 | % | 78.1 | % | -35.1 | % | |||||||
| Adjusted income (loss) from operations available to common | |||||||||||||||||
| stockholders, excluding AOCI and preferred stock ROE | 8.4 | % | 11.9 | % | 13.0 | % | 11.5 | % | 9.4 | % | |||||||
| Adjusted income (loss) from operations ROE | 7.6 | % | 11.4 | % | 12.1 | % | 10.9 | % | 9.0 | % | |||||||
| Per Common Share | |||||||||||||||||
| Net income (loss) (diluted) | $ | 6.93 | $ | 5.11 | $ | (3.29) | $ | 9.63 | $ | (4.41) | NM | ||||||
| Adjusted income (loss) from operations (diluted) (2) | 1.22 | 1.87 | 2.06 | 1.91 | 1.60 | 31.1 | % | ||||||||||
| Dividends declared during the period | 0.45 | 0.45 | 0.45 | 0.45 | 0.45 | 0.0% | |||||||||||
| Book Value Per Common Share | |||||||||||||||||
| Book value per share | $ | 38.46 | $ | 40.78 | $ | 46.97 | $ | 42.60 | $ | 41.96 | 9.1 | % | |||||
| Book value per share, excluding AOCI (3) | 61.63 | 66.37 | 62.67 | 72.06 | 67.04 | 8.8 | % | ||||||||||
| Adjusted book value per share (3) | 65.01 | 68.51 | 70.04 | 72.34 | 73.19 | 12.6 | % | ||||||||||
| Common Shares | |||||||||||||||||
| End-of-period – basic | 170.5 | 170.7 | 170.9 | 171.0 | 171.7 | 0.7 | % | ||||||||||
| Average for the period – basic | 170.0 | 170.6 | 170.8 | 170.9 | 171.3 | 0.8 | % | ||||||||||
| End-of-period – diluted | 172.4 | 173.4 | 173.6 | 174.1 | 175.3 | 1.7 | % | ||||||||||
| Average for the period – diluted | 171.8 | 172.9 | 173.6 | 174.0 | 174.7 | 1.7 | % | ||||||||||
| (1) See reconciliation to net income (loss) on page 26. | |||||||||||||||||
| (2) See reconciliation to earnings (loss) per common share – diluted on page 28. | |||||||||||||||||
| (3) See reconciliation to stockholders’ equity and book value per common share on page 29. |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Key Stakeholder Metrics | |||||||||||||||||
| Unaudited (millions of dollars, except per share data) | |||||||||||||||||
| As of or For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Cash Returned to Common Stockholders – Common Dividends | $ | 76 | $ | 77 | $ | 77 | $ | 77 | $ | 77 | 1.3 | % | |||||
| Cash Returned to Preferred Stockholders – Preferred Dividends | $ | 34 | $ | 11 | $ | 34 | $ | 11 | $ | 34 | 0.0% | ||||||
| Leverage Ratio | |||||||||||||||||
| Short-term debt | $ | 503 | $ | 450 | $ | 300 | $ | 300 | $ | — | -100.0 | % | |||||
| Long-term debt | 5,726 | 5,716 | 5,897 | 5,856 | 5,868 | 2.5 | % | ||||||||||
| Total debt | 6,229 | 6,166 | 6,197 | 6,156 | 5,868 | -5.8 | % | ||||||||||
| Preferred stock | 986 | 986 | 986 | 986 | 986 | 0.0% | |||||||||||
| Total debt and preferred stock | 7,215 | 7,152 | 7,183 | 7,142 | 6,854 | -5.0 | % | ||||||||||
| Less: | |||||||||||||||||
| Operating debt (1) | 867 | 867 | 867 | 868 | 868 | 0.1 | % | ||||||||||
| Pre-funding of upcoming debt maturities | 300 | 300 | 300 | 300 | — | -100.0 | % | ||||||||||
| 25% of capital securities and subordinated notes | 302 | 302 | 302 | 302 | 302 | 0.0% | |||||||||||
| 50% of preferred stock | 493 | 493 | 493 | 493 | 493 | 0.0% | |||||||||||
| Carrying value of fair value hedges and other items | 133 | 123 | 153 | 111 | 122 | -8.3 | % | ||||||||||
| Total numerator | $ | 5,120 | $ | 5,067 | $ | 5,068 | $ | 5,068 | $ | 5,069 | -1.0 | % | |||||
| Adjusted stockholders’ equity (2) | $ | 11,087 | $ | 11,698 | $ | 11,967 | $ | 12,367 | $ | 12,569 | 13.4 | % | |||||
| Add: | |||||||||||||||||
| 25% of capital securities and subordinated notes | 302 | 302 | 302 | 302 | 302 | 0.0% | |||||||||||
| 50% of preferred stock | 493 | 493 | 493 | 493 | 493 | 0.0% | |||||||||||
| Total numerator | 5,120 | 5,067 | 5,068 | 5,068 | 5,069 | -1.0 | % | ||||||||||
| Total denominator | $ | 17,002 | $ | 17,560 | $ | 17,830 | $ | 18,230 | $ | 18,433 | 8.4 | % | |||||
| Leverage ratio | 30.1 | % | 28.9 | % | 28.4 | % | 27.8 | % | 27.5 | % | |||||||
| Holding Company Available Liquidity (3) | $ | 766 | $ | 763 | $ | 759 | $ | 763 | $ | 466 | -39.2 | % | |||||
| (1) We have categorized as operating debt the senior notes issued in October 2007 and June 2010 because the proceeds were used as a long-term structured solution to reduce | |||||||||||||||||
| the strain on increasing statutory reserves associated with secondary guarantee UL and term policies. | |||||||||||||||||
| (2) See reconciliation to stockholders’ equity on page 29. | |||||||||||||||||
| (3) Includes pre-funding of upcoming debt maturities. |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Select Earnings Drivers By Segment | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Annuities | ||||||||||||
| Operating revenues | $ | 1,269 | $ | 1,209 | $ | 1,195 | $ | 1,223 | $ | 1,198 | -5.6 | % |
| Deposits | 2,849 | 3,823 | 3,383 | 3,692 | 3,799 | 33.3 | % | |||||
| Net flows | (1,993) | (954) | (1,637) | (1,891) | (1,676) | 15.9 | % | |||||
| Average account balances, net of reinsurance | 155,291 | 158,370 | 161,680 | 165,424 | 163,688 | 5.4 | % | |||||
| Alternative investment income (1) | 2 | 1 | 4 | 4 | 2 | 0.0% | ||||||
| Life Insurance | ||||||||||||
| Operating revenues | $ | 1,541 | $ | 1,511 | $ | 1,589 | $ | 1,608 | $ | 1,587 | 3.0 | % |
| Deposits | 1,208 | 1,230 | 1,262 | 1,402 | 1,218 | 0.8 | % | |||||
| Net flows | 741 | 751 | 738 | 930 | 569 | -23.2 | % | |||||
| Average account balances, net of reinsurance | 42,280 | 43,230 | 44,055 | 44,746 | 44,390 | 5.0 | % | |||||
| Average in-force face amount | 1,087,405 | 1,085,383 | 1,083,176 | 1,080,074 | 1,074,858 | -1.2 | % | |||||
| Alternative investment income (1) | 74 | 32 | 92 | 96 | 70 | -5.4 | % | |||||
| Group Protection | ||||||||||||
| Operating revenues | $ | 1,425 | $ | 1,441 | $ | 1,432 | $ | 1,418 | $ | 1,521 | 6.7 | % |
| Insurance premiums | 1,285 | 1,298 | 1,288 | 1,274 | 1,371 | 6.7 | % | |||||
| Alternative investment income (1) | 1 | 1 | 1 | 2 | 1 | 0.0% | ||||||
| Retirement Plan Services | ||||||||||||
| Operating revenues | $ | 322 | $ | 327 | $ | 335 | $ | 337 | $ | 327 | 1.6 | % |
| Deposits | 3,802 | 3,282 | 4,180 | 3,473 | 4,115 | 8.2 | % | |||||
| Net flows | 391 | (197) | 651 | (732) | (2,184) | NM | ||||||
| Average account balances | 103,240 | 106,374 | 110,550 | 113,711 | 113,075 | 9.5 | % | |||||
| Alternative investment income (1) | 1 | 1 | 2 | 2 | 2 | 100.0 | % | |||||
| Consolidated | ||||||||||||
| Adjusted operating revenues (2) | $ | 4,584 | $ | 4,527 | $ | 4,603 | $ | 4,628 | $ | 4,685 | 2.2 | % |
| Deposits | 7,859 | 8,335 | 8,825 | 8,567 | 9,132 | 16.2 | % | |||||
| Net flows | (861) | (400) | (248) | (1,693) | (3,291) | NM | ||||||
| Average account balances, net of reinsurance | 300,811 | 307,974 | 316,285 | 323,881 | 321,153 | 6.8 | % | |||||
| Alternative investment income (1) | 78 | 36 | 100 | 105 | 75 | -3.8 | % | |||||
| (1) Excludes alternative investment income on investments supporting our modified coinsurance and coinsurance with funds withheld agreements as we have a limited | ||||||||||||
| economic interest in the investments. | ||||||||||||
| (2) See reconciliation to total revenues on page 27. |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales By Segment | |||||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||||
| For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Sales | |||||||||||||||||
| Annuities: | |||||||||||||||||
| RILA | $ | 942 | $ | 1,096 | $ | 1,203 | $ | 1,285 | $ | 1,292 | 37.2 | % | |||||
| Fixed | 971 | 1,667 | 1,009 | 560 | 863 | -11.1 | % | ||||||||||
| Traditional variable with GLBs | 546 | 634 | 691 | 1,243 | 1,099 | 101.3 | % | ||||||||||
| Traditional variable without GLBs | 388 | 420 | 472 | 601 | 535 | 37.9 | % | ||||||||||
| Total Annuities | $ | 2,847 | $ | 3,817 | $ | 3,375 | $ | 3,689 | $ | 3,789 | 33.1 | % | |||||
| Life Insurance: | |||||||||||||||||
| IUL/UL | $ | 18 | $ | 25 | $ | 32 | $ | 26 | $ | 24 | 33.3 | % | |||||
| MoneyGuard® | 24 | 34 | 35 | 35 | 28 | 16.7 | % | ||||||||||
| VUL | 23 | 19 | 22 | 21 | 15 | -34.8 | % | ||||||||||
| Term | 19 | 18 | 15 | 13 | 13 | -31.6 | % | ||||||||||
| Executive Benefits | 7 | 9 | 18 | 24 | 17 | 142.9 | % | ||||||||||
| Total Life Insurance | $ | 91 | $ | 105 | $ | 122 | $ | 119 | $ | 97 | 6.6 | % | |||||
| Group Protection: | |||||||||||||||||
| Life | $ | 85 | $ | 81 | $ | 42 | $ | 184 | $ | 101 | 18.8 | % | |||||
| Disability | 51 | 74 | 36 | 253 | 48 | -5.9 | % | ||||||||||
| Dental | 8 | 6 | 6 | 30 | 8 | 0.0% | |||||||||||
| Total Group Protection | $ | 144 | $ | 161 | $ | 84 | $ | 467 | $ | 157 | 9.0 | % | |||||
| Percent employee-paid | 70.4 | % | 50.0 | % | 52.8 | % | 34.3 | % | 72.3 | % | |||||||
| Retirement Plan Services: | |||||||||||||||||
| First-year sales | $ | 1,127 | $ | 821 | $ | 1,652 | $ | 1,273 | $ | 1,104 | -2.0 | % | |||||
| Recurring deposits | 2,675 | 2,461 | 2,528 | 2,200 | 3,011 | 12.6 | % | ||||||||||
| Total Retirement Plan Services | $ | 3,802 | $ | 3,282 | $ | 4,180 | $ | 3,473 | $ | 4,115 | 8.2 | % |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Revenues and General and Administrative Expenses By Segment and Other Operations | |||||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||||
| For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Operating Revenues | |||||||||||||||||
| Annuities | $ | 1,269 | $ | 1,209 | $ | 1,195 | $ | 1,223 | $ | 1,198 | -5.6 | % | |||||
| Life Insurance | 1,541 | 1,511 | 1,589 | 1,608 | 1,587 | 3.0 | % | ||||||||||
| Group Protection | 1,425 | 1,441 | 1,432 | 1,418 | 1,521 | 6.7 | % | ||||||||||
| Retirement Plan Services | 322 | 327 | 335 | 337 | 327 | 1.6 | % | ||||||||||
| Other Operations | 27 | 39 | 52 | 42 | 52 | 92.6 | % | ||||||||||
| Total adjusted operating revenues | $ | 4,584 | $ | 4,527 | $ | 4,603 | $ | 4,628 | $ | 4,685 | 2.2 | % | |||||
| General and Administrative Expenses, | |||||||||||||||||
| Net of Amounts Capitalized | |||||||||||||||||
| Annuities | $ | 134 | $ | 112 | $ | 103 | $ | 112 | $ | 108 | -19.4 | % | |||||
| Life Insurance | 130 | 125 | 126 | 129 | 119 | -8.5 | % | ||||||||||
| Group Protection | 187 | 193 | 195 | 195 | 202 | 8.0 | % | ||||||||||
| Retirement Plan Services | 81 | 80 | 81 | 82 | 81 | 0.0% | |||||||||||
| Other Operations | 57 | 64 | 67 | 70 | 65 | 14.0 | % | ||||||||||
| Total | $ | 589 | $ | 574 | $ | 572 | $ | 588 | $ | 575 | -2.4 | % | |||||
| General and Administrative Expenses, | |||||||||||||||||
| Net of Amounts Capitalized, as a Percentage | |||||||||||||||||
| of Operating Revenues | |||||||||||||||||
| Annuities | 10.6 | % | 9.3 | % | 8.6 | % | 9.2 | % | 9.0 | % | |||||||
| Life Insurance | 8.5 | % | 8.3 | % | 7.9 | % | 8.0 | % | 7.5 | % | |||||||
| Group Protection | 13.1 | % | 13.4 | % | 13.6 | % | 13.8 | % | 13.3 | % | |||||||
| Retirement Plan Services | 25.3 | % | 24.4 | % | 24.3 | % | 24.3 | % | 24.9 | % | |||||||
| Total | 12.8 | % | 12.7 | % | 12.4 | % | 12.7 | % | 12.3 | % |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Commissions and Other Expenses | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Operating Commissions and | ||||||||||||
| Other Expenses Incurred | ||||||||||||
| General and administrative expenses | $ | 640 | $ | 638 | $ | 632 | $ | 650 | $ | 629 | -1.7 | % |
| Commissions | 639 | 561 | 546 | 575 | 558 | -12.7 | % | |||||
| Taxes, licenses and fees | 92 | 76 | 80 | 75 | 98 | 6.5 | % | |||||
| Interest and debt expense | 81 | 86 | 86 | 83 | 80 | -1.2 | % | |||||
| Expenses associated with reserve financing | ||||||||||||
| and letters of credit | 30 | 28 | 32 | 36 | 32 | 6.7 | % | |||||
| Total adjusted operating commissions and | ||||||||||||
| other expenses incurred | 1,482 | 1,389 | 1,376 | 1,419 | 1,397 | -5.7 | % | |||||
| Less Amounts Capitalized | ||||||||||||
| General and administrative expenses | (51) | (64) | (60) | (62) | (54) | -5.9 | % | |||||
| Commissions | (205) | (224) | (236) | (263) | (238) | -16.1 | % | |||||
| Taxes, licenses and fees | (9) | (7) | (8) | (7) | (9) | 0.0% | ||||||
| Total amounts capitalized | (265) | (295) | (304) | (332) | (301) | -13.6 | % | |||||
| Total expenses incurred, net of amounts | ||||||||||||
| capitalized, excluding amortization | 1,217 | 1,094 | 1,072 | 1,087 | 1,096 | -9.9 | % | |||||
| Amortization | ||||||||||||
| Amortization of DAC, VOBA and other intangibles (1) | 271 | 274 | 299 | 302 | 309 | 14.0 | % | |||||
| Total operating commissions and | ||||||||||||
| other expenses (1) | $ | 1,488 | $ | 1,368 | $ | 1,371 | $ | 1,389 | $ | 1,405 | -5.6 | % |
| (1) Effective in the third quarter of 2024, we collapsed the amortization of deferred gain (loss) on business sold through reinsurance line item, reclassifying the deferred gain | ||||||||||||
| amortization to other revenues and presenting the amortization of deferred loss within operating expenses. For prior periods, the amortization of deferred gain (loss) | ||||||||||||
| on business sold through reinsurance is presented on a net basis within other revenues. |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annuities – Select Earnings and Operational Data | |||||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||||
| As of or For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Income (Loss) from Operations | |||||||||||||||||
| Operating revenues: | |||||||||||||||||
| Insurance premiums | $ | 26 | $ | 34 | $ | 38 | $ | 29 | $ | 21 | -19.2 | % | |||||
| Fee income (1) | 580 | 587 | 601 | 612 | 591 | 1.9 | % | ||||||||||
| Net investment income | 420 | 435 | 442 | 462 | 466 | 11.0 | % | ||||||||||
| Other revenues | 243 | 153 | 114 | 120 | 120 | -50.6 | % | ||||||||||
| Total operating revenues | 1,269 | 1,209 | 1,195 | 1,223 | 1,198 | -5.6 | % | ||||||||||
| Operating expenses: | |||||||||||||||||
| Benefits | 27 | 38 | 38 | 40 | 29 | 7.4 | % | ||||||||||
| Interest credited | 354 | 377 | 399 | 407 | 419 | 18.4 | % | ||||||||||
| Policyholder liability remeasurement (gain) loss | — | 2 | — | — | (1) | NM | |||||||||||
| Commissions incurred | 254 | 269 | 285 | 307 | 298 | 17.3 | % | ||||||||||
| Other expenses incurred | 309 | 180 | 136 | 157 | 145 | -53.1 | % | ||||||||||
| Amounts capitalized | (98) | (115) | (129) | (155) | (147) | -50.0 | % | ||||||||||
| Amortization | 106 | 107 | 107 | 108 | 115 | 8.5 | % | ||||||||||
| Total operating expenses | 952 | 858 | 836 | 864 | 858 | -9.9 | % | ||||||||||
| Income (loss) from operations before taxes | 317 | 351 | 359 | 359 | 340 | 7.3 | % | ||||||||||
| Federal income tax expense (benefit) | 58 | 54 | 58 | 56 | 50 | -13.8 | % | ||||||||||
| Income (loss) from operations | $ | 259 | $ | 297 | $ | 301 | $ | 303 | $ | 290 | 12.0 | % | |||||
| Effective Federal Income Tax Rate | 18.5 | % | 15.4 | % | 16.3 | % | 15.7 | % | 14.7 | % | |||||||
| Return on Average Account Balances, Net of | |||||||||||||||||
| Reinsurance (bps) | 67 | 75 | 74 | 73 | 71 | 4 | |||||||||||
| Account Balances, Net of Reinsurance – | |||||||||||||||||
| End-of-Period | |||||||||||||||||
| RILA account balances | $ | 30,100 | $ | 31,633 | $ | 33,245 | $ | 34,310 | $ | 33,527 | 11.4 | % | |||||
| Fixed account balances | 10,214 | 10,251 | 10,349 | 10,352 | 10,415 | 2.0 | % | ||||||||||
| Traditional variable account balances with GLBs | 71,822 | 70,664 | 72,664 | 70,756 | 67,101 | -6.6 | % | ||||||||||
| Traditional variable account balances without GLBs | 47,657 | 47,321 | 48,899 | 48,193 | 47,371 | -0.6 | % | ||||||||||
| Total account balances | $ | 159,793 | $ | 159,869 | $ | 165,157 | $ | 163,611 | $ | 158,414 | -0.9 | % | |||||
| Percent traditional variable account balances with GLBs | 44.9 | % | 44.2 | % | 44.0 | % | 43.2 | % | 42.4 | % | |||||||
| Fee Income, Gross of Hedge Allowance | $ | 780 | $ | 787 | $ | 802 | $ | 811 | $ | 790 | 1.3 | % | |||||
| Net Investment Income, Net of Reinsurance (2) | 390 | 403 | 412 | 438 | 443 | 13.6 | % | ||||||||||
| Interest Credited, Net of Reinsurance (2) | 245 | 254 | 270 | 282 | 290 | 18.4 | % | ||||||||||
| (1) Fee income is reported net of the hedge allowance, which represents fees allocated to net annuity product features to support the cost of hedging. | |||||||||||||||||
| (2) Net investment income and interest credited are both reported gross of reinsurance. Reinsurance impacts are settled through other revenues. |
Table of Contents
| Lincoln Financial | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Life Insurance – Select Earnings and Operational Data | ||||||||||||||||
| Unaudited (millions of dollars) | ||||||||||||||||
| As of or For the Three Months Ended | ||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||||||
| Income (Loss) from Operations | ||||||||||||||||
| Operating revenues: | ||||||||||||||||
| Insurance premiums | $ | 288 | $ | 293 | $ | 286 | $ | 283 | $ | 283 | -1.7 | % | ||||
| Fee income | 672 | 677 | 672 | 694 | 698 | 3.9 | % | |||||||||
| Net investment income | 581 | 533 | 597 | 593 | 571 | -1.7 | % | |||||||||
| Operating realized gain (loss) | (2) | (2) | (2) | (2) | (2) | 0.0% | ||||||||||
| Other revenues (1) | 2 | 10 | 36 | 40 | 37 | NM | ||||||||||
| Total operating revenues | 1,541 | 1,511 | 1,589 | 1,608 | 1,587 | 3.0 | % | |||||||||
| Operating expenses: | ||||||||||||||||
| Benefits | 928 | 948 | 895 | 961 | 994 | 7.1 | % | |||||||||
| Interest credited | 294 | 299 | 302 | 300 | 287 | -2.4 | % | |||||||||
| Policyholder liability remeasurement (gain) loss | 59 | 16 | 42 | 45 | 8 | -86.4 | % | |||||||||
| Commissions incurred | 113 | 113 | 120 | 115 | 99 | -12.4 | % | |||||||||
| Other expenses incurred | 204 | 193 | 198 | 198 | 194 | -4.9 | % | |||||||||
| Amounts capitalized | (133) | (133) | (140) | (137) | (115) | 13.5 | % | |||||||||
| Amortization of DAC and VOBA | 126 | 126 | 127 | 128 | 128 | 1.6 | % | |||||||||
| Amortization of deferred loss on business | ||||||||||||||||
| sold through reinsurance (1) | — | — | 24 | 24 | 24 | NM | ||||||||||
| Total operating expenses | 1,591 | 1,562 | 1,568 | 1,634 | 1,619 | 1.8 | % | |||||||||
| Income (loss) from operations before taxes | (50) | (51) | 21 | (26) | (32) | 36.0 | % | |||||||||
| Federal income tax expense (benefit) | (15) | (16) | (1) | (11) | (16) | -6.7 | % | |||||||||
| Income (loss) from operations | $ | (35) | $ | (35) | $ | 22 | $ | (15) | $ | (16) | 54.3 | % | ||||
| Effective Federal Income Tax Rate | 29.7 | % | 31.2 | % | NM | 41.2 | % | 47.9 | % | |||||||
| Average Account Balances, Net of Reinsurance | $ | 42,280 | $ | 43,230 | $ | 44,055 | $ | 44,746 | $ | 44,390 | 5.0 | % | ||||
| In-Force Face Amount | ||||||||||||||||
| UL and other | $ | 365,507 | $ | 365,030 | $ | 364,766 | $ | 363,950 | $ | 361,480 | -1.1 | % | ||||
| Term insurance | 720,745 | 719,485 | 717,071 | 714,362 | 709,924 | -1.5 | % | |||||||||
| Total in-force face amount | $ | 1,086,252 | $ | 1,084,515 | $ | 1,081,837 | $ | 1,078,312 | $ | 1,071,404 | -1.4 | % | ||||
| (1) Effective in the third quarter of 2024, we collapsed the amortization of deferred gain (loss) on business sold through reinsurance line item, reclassifying the deferred gain | ||||||||||||||||
| amortization to other revenues and presenting the amortization of deferred loss within operating expenses. For prior periods, the amortization of deferred gain (loss) | ||||||||||||||||
| on business sold through reinsurance is presented on a net basis within other revenues. |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group Protection – Select Earnings and Operational Data | |||||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||||
| As of or For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Income (Loss) from Operations | |||||||||||||||||
| Operating revenues: | |||||||||||||||||
| Insurance premiums | $ | 1,285 | $ | 1,298 | $ | 1,288 | $ | 1,274 | $ | 1,371 | 6.7 | % | |||||
| Net investment income | 85 | 88 | 87 | 87 | 89 | 4.7 | % | ||||||||||
| Other revenues | 55 | 55 | 57 | 57 | 61 | 10.9 | % | ||||||||||
| Total operating revenues | 1,425 | 1,441 | 1,432 | 1,418 | 1,521 | 6.7 | % | ||||||||||
| Operating expenses: | |||||||||||||||||
| Benefits | 1,030 | 1,032 | 1,007 | 970 | 1,064 | 3.3 | % | ||||||||||
| Interest credited | 1 | 1 | 1 | 3 | — | -100.0 | % | ||||||||||
| Policyholder liability remeasurement (gain) loss | (67) | (124) | (88) | (68) | (70) | -4.5 | % | ||||||||||
| Commissions incurred | 109 | 113 | 114 | 125 | 133 | 22.0 | % | ||||||||||
| Other expenses incurred | 246 | 260 | 255 | 249 | 261 | 6.1 | % | ||||||||||
| Amounts capitalized | (29) | (42) | (30) | (34) | (32) | -10.3 | % | ||||||||||
| Amortization | 34 | 36 | 36 | 37 | 37 | 8.8 | % | ||||||||||
| Total operating expenses | 1,324 | 1,276 | 1,295 | 1,282 | 1,393 | 5.2 | % | ||||||||||
| Income (loss) from operations before taxes | 101 | 165 | 137 | 136 | 128 | 26.7 | % | ||||||||||
| Federal income tax expense (benefit) | 21 | 35 | 28 | 29 | 27 | 28.6 | % | ||||||||||
| Income (loss) from operations | $ | 80 | $ | 130 | $ | 109 | $ | 107 | $ | 101 | 26.3 | % | |||||
| Effective Federal Income Tax Rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | |||||||
| Operating Margin (1) | 6.2 | % | 10.0 | % | 8.4 | % | 8.4 | % | 7.4 | % | |||||||
| Loss Ratios by Product Line | |||||||||||||||||
| Life | 76.1 | % | 75.6 | % | 68.1 | % | 64.7 | % | 75.2 | % | |||||||
| Disability | 74.2 | % | 65.9 | % | 73.2 | % | 75.0 | % | 70.1 | % | |||||||
| Dental | 76.5 | % | 78.9 | % | 79.0 | % | 73.3 | % | 79.0 | % | |||||||
| Total | 75.0 | % | 70.1 | % | 71.4 | % | 71.0 | % | 72.4 | % | |||||||
| (1) Operating margin is calculated by dividing income (loss) from operations by insurance premiums. |
Table of Contents
| Lincoln Financial | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Retirement Plan Services – Select Earnings and Operational Data | |||||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||||
| As of or For the Three Months Ended | |||||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||||
| Income (Loss) from Operations | |||||||||||||||||
| Operating revenues: | |||||||||||||||||
| Fee income | $ | 70 | $ | 72 | $ | 74 | $ | 76 | $ | 72 | 2.9 | % | |||||
| Net investment income | 244 | 247 | 253 | 253 | 251 | 2.9 | % | ||||||||||
| Other revenues | 8 | 8 | 8 | 8 | 4 | -50.0 | % | ||||||||||
| Total operating revenues | 322 | 327 | 335 | 337 | 327 | 1.6 | % | ||||||||||
| Operating expenses: | |||||||||||||||||
| Interest credited | 166 | 168 | 170 | 172 | 170 | 2.4 | % | ||||||||||
| Commissions incurred | 23 | 26 | 28 | 27 | 27 | 17.4 | % | ||||||||||
| Other expenses incurred | 92 | 87 | 88 | 90 | 91 | -1.1 | % | ||||||||||
| Amounts capitalized | (5) | (5) | (5) | (6) | (4) | 20.0 | % | ||||||||||
| Amortization | 5 | 5 | 5 | 5 | 5 | 0.0% | |||||||||||
| Total operating expenses | 281 | 281 | 286 | 288 | 289 | 2.8 | % | ||||||||||
| Income (loss) from operations before taxes | 41 | 46 | 49 | 49 | 38 | -7.3 | % | ||||||||||
| Federal income tax expense (benefit) | 5 | 6 | 5 | 6 | 4 | -20.0 | % | ||||||||||
| Income (loss) from operations | $ | 36 | $ | 40 | $ | 44 | $ | 43 | $ | 34 | -5.6 | % | |||||
| Effective Federal Income Tax Rate | 12.9 | % | 13.2 | % | 10.0 | % | 13.5 | % | 11.8 | % | |||||||
| Return on Average Account Balances (bps) | 14 | 15 | 16 | 15 | 12 | (2) | |||||||||||
| Net Flows by Market | |||||||||||||||||
| Small Market | $ | (32) | $ | 43 | $ | 11 | $ | (34) | $ | (79) | NM | ||||||
| Mid - Large Market | 847 | 206 | 1,069 | (178) | (1,732) | NM | |||||||||||
| Multi-Fund® and Other | (424) | (446) | (429) | (520) | (373) | 12.0 | % | ||||||||||
| Net Flows – Trailing Twelve Months | $ | (12) | $ | (410) | $ | 513 | $ | 112 | $ | (2,462) | NM | ||||||
| Base Spreads, Excluding Variable | |||||||||||||||||
| Investment Income (1) | 1.02 | % | 1.03 | % | 1.05 | % | 1.01 | % | 1.03 | % | 1 | ||||||
| (1) Variable investment income consists of commercial mortgage loan prepayment and bond make-whole premiums. |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Other Operations – Select Earnings and Operational Data | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| As of or For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Other Operations | ||||||||||||
| Operating revenues: | ||||||||||||
| Insurance premiums | $ | 2 | $ | 1 | $ | 1 | $ | — | $ | — | -100.0 | % |
| Net investment income | 16 | 27 | 34 | 33 | 41 | 156.3 | % | |||||
| Other revenues | 9 | 11 | 17 | 9 | 11 | 22.2 | % | |||||
| Total operating revenues | 27 | 39 | 52 | 42 | 52 | 92.6 | % | |||||
| Operating expenses: | ||||||||||||
| Benefits | 6 | 4 | (3) | 2 | 5 | -16.7 | % | |||||
| Interest credited | 9 | 8 | 8 | 7 | 13 | 44.4 | % | |||||
| Policyholder liability remeasurement (gain) loss | (1) | 1 | — | — | — | 100.0 | % | |||||
| Other expenses incurred | 51 | 62 | 66 | 68 | 66 | 29.4 | % | |||||
| Interest and debt expense | 81 | 86 | 86 | 83 | 80 | -1.2 | % | |||||
| Total operating expenses | 146 | 161 | 157 | 160 | 164 | 12.3 | % | |||||
| Income (loss) from operations before taxes | (119) | (122) | (105) | (118) | (112) | 5.9 | % | |||||
| Federal income tax expense (benefit) | (23) | (25) | (21) | (23) | (17) | 26.1 | % | |||||
| Income (loss) from operations | $ | (96) | $ | (97) | $ | (84) | $ | (95) | $ | (95) | 1.0 | % |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| DAC, VOBA and DSI | ||||||||||||
| Balance as of beginning-of-period | $ | 12,397 | $ | 12,405 | $ | 12,435 | $ | 12,475 | $ | 12,537 | 1.1 | % |
| Deferrals | 274 | 299 | 309 | 334 | 304 | 10.9 | % | |||||
| Operating amortization | (266) | (269) | (269) | (272) | (278) | -4.5 | % | |||||
| Balance as of end-of-period | $ | 12,405 | $ | 12,435 | $ | 12,475 | $ | 12,537 | $ | 12,563 | 1.3 | % |
| DFEL | ||||||||||||
| Balance as of beginning-of-period | $ | 5,901 | $ | 6,099 | $ | 6,306 | $ | 6,517 | $ | 6,730 | 14.0 | % |
| Deferrals | 272 | 284 | 289 | 295 | 284 | 4.4 | % | |||||
| Operating amortization | (74) | (77) | (78) | (82) | (104) | -40.5 | % | |||||
| Balance as of end-of-period | $ | 6,099 | $ | 6,306 | $ | 6,517 | $ | 6,730 | $ | 6,910 | 13.3 | % |
| DAC, VOBA, DSI and DFEL | ||||||||||||
| Balance as of End-of-Period, After-Tax | $ | 4,981 | $ | 4,842 | $ | 4,707 | $ | 4,588 | $ | 4,466 | -10.3 | % |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annuities – Account Balance Roll Forwards | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Traditional Variable Annuities | ||||||||||||
| Balance as of beginning-of-period | $ | 114,963 | $ | 119,485 | $ | 117,990 | $ | 121,568 | $ | 118,954 | 3.5 | % |
| Gross deposits | 934 | 1,054 | 1,163 | 1,844 | 1,634 | 74.9 | % | |||||
| Full surrenders and deaths | (2,142) | (2,303) | (2,382) | (2,185) | (2,165) | -1.1 | % | |||||
| Other contract benefits | (1,133) | (1,130) | (1,172) | (1,503) | (1,513) | -33.5 | % | |||||
| Net flows | (2,341) | (2,379) | (2,391) | (1,844) | (2,044) | 12.7 | % | |||||
| Policyholder assessments | (644) | (650) | (666) | (666) | (652) | -1.2 | % | |||||
| Change in market value and reinvestment | 7,507 | 1,534 | 6,635 | (104) | (1,781) | NM | ||||||
| Balance as of end-of-period, gross | 119,485 | 117,990 | 121,568 | 118,954 | 114,477 | -4.2 | % | |||||
| Account balances reinsured | (6) | (5) | (5) | (5) | (5) | 16.7 | % | |||||
| Balance as of end-of-period, net | $ | 119,479 | $ | 117,985 | $ | 121,563 | $ | 118,949 | $ | 114,472 | -4.2 | % |
| RILA | ||||||||||||
| Balance as of beginning-of-period | $ | 27,533 | $ | 30,100 | $ | 31,633 | $ | 33,245 | $ | 34,310 | 24.6 | % |
| Gross deposits | 942 | 1,096 | 1,203 | 1,285 | 1,292 | 37.2 | % | |||||
| Full surrenders and deaths | (115) | (138) | (326) | (671) | (721) | NM | ||||||
| Other contract benefits | (42) | (14) | (18) | (120) | (129) | NM | ||||||
| Net flows | 785 | 944 | 859 | 494 | 442 | -43.7 | % | |||||
| Policyholder assessments | (3) | (3) | (3) | (4) | (5) | -66.7 | % | |||||
| Change in market value and reinvestment | 247 | 288 | 325 | 375 | 346 | 40.1 | % | |||||
| Change in fair value of embedded derivative instruments and other | 1,538 | 304 | 431 | 200 | (1,566) | NM | ||||||
| Balance as of end-of-period, gross | $ | 30,100 | $ | 31,633 | $ | 33,245 | $ | 34,310 | $ | 33,527 | 11.4 | % |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annuities – Account Balance Roll Forwards | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Fixed Annuities | ||||||||||||
| Balance as of beginning-of-period | $ | 25,355 | $ | 25,162 | $ | 25,837 | $ | 26,359 | $ | 25,963 | 2.4 | % |
| Gross deposits | 973 | 1,673 | 1,017 | 563 | 873 | -10.3 | % | |||||
| Full surrenders and deaths | (1,213) | (1,020) | (949) | (873) | (743) | 38.7 | % | |||||
| Other contract benefits | (197) | (172) | (173) | (231) | (204) | -3.6 | % | |||||
| Net flows | (437) | 481 | (105) | (541) | (74) | 83.1 | % | |||||
| Policyholder assessments | (17) | (14) | (14) | (16) | (15) | 11.8 | % | |||||
| Reinvested interest credited | 183 | 199 | 211 | 209 | 210 | 14.8 | % | |||||
| Change in fair value of embedded derivative instruments | ||||||||||||
| and other | 78 | 9 | 430 | (48) | (45) | NM | ||||||
| Balance as of end-of-period, gross | 25,162 | 25,837 | 26,359 | 25,963 | 26,039 | 3.5 | % | |||||
| Account balances reinsured | (14,948) | (15,586) | (16,010) | (15,611) | (15,624) | -4.5 | % | |||||
| Balance as of end-of-period, net | $ | 10,214 | $ | 10,251 | $ | 10,349 | $ | 10,352 | $ | 10,415 | 2.0 | % |
| Total | ||||||||||||
| Balance as of beginning-of-period | $ | 167,851 | $ | 174,747 | $ | 175,460 | $ | 181,172 | $ | 179,227 | 6.8 | % |
| Gross deposits | 2,849 | 3,823 | 3,383 | 3,692 | 3,799 | 33.3 | % | |||||
| Full surrenders and deaths | (3,470) | (3,461) | (3,657) | (3,729) | (3,629) | -4.6 | % | |||||
| Other contract benefits | (1,372) | (1,316) | (1,363) | (1,854) | (1,846) | -34.5 | % | |||||
| Net flows | (1,993) | (954) | (1,637) | (1,891) | (1,676) | 15.9 | % | |||||
| Policyholder assessments | (664) | (667) | (683) | (686) | (672) | -1.2 | % | |||||
| Change in market value, reinvestment and interest credited | 7,937 | 2,021 | 7,171 | 480 | (1,225) | NM | ||||||
| Change in fair value of embedded derivative instruments | ||||||||||||
| and other | 1,616 | 313 | 861 | 152 | (1,611) | NM | ||||||
| Balance as of end-of-period, gross | 174,747 | 175,460 | 181,172 | 179,227 | 174,043 | -0.4 | % | |||||
| Account balances reinsured | (14,954) | (15,591) | (16,015) | (15,616) | (15,629) | -4.5 | % | |||||
| Balance as of end-of-period, net | $ | 159,793 | $ | 159,869 | $ | 165,157 | $ | 163,611 | $ | 158,414 | -0.9 | % |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Life Insurance – Account Balance Roll Forwards | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| General Account | ||||||||||||
| Balance as of beginning-of-period | $ | 37,180 | $ | 37,006 | $ | 36,848 | $ | 36,692 | $ | 36,599 | -1.6 | % |
| Gross deposits | 850 | 893 | 899 | 977 | 865 | 1.8 | % | |||||
| Withdrawals and deaths | (364) | (389) | (369) | (342) | (445) | -22.3 | % | |||||
| Net flows | 486 | 504 | 530 | 635 | 420 | -13.6 | % | |||||
| Transfers between general and separate accounts | 38 | 74 | 30 | 53 | 14 | -63.2 | % | |||||
| Policyholder assessments | (1,124) | (1,130) | (1,129) | (1,137) | (1,104) | 1.8 | % | |||||
| Reinvested interest credited | 365 | 368 | 375 | 365 | 356 | -2.5 | % | |||||
| Change in fair value of embedded derivative instruments | ||||||||||||
| and other | 61 | 26 | 38 | (9) | (65) | NM | ||||||
| Balance as of end-of-period, gross | 37,006 | 36,848 | 36,692 | 36,599 | 36,220 | -2.1 | % | |||||
| Account balances reinsured | (15,607) | (15,467) | (15,301) | (15,147) | (14,965) | 4.1 | % | |||||
| Balance as of end-of-period, net | $ | 21,399 | $ | 21,381 | $ | 21,391 | $ | 21,452 | $ | 21,255 | -0.7 | % |
| Separate Account | ||||||||||||
| Balance as of beginning-of-period | $ | 25,150 | $ | 27,007 | $ | 27,381 | $ | 28,921 | $ | 28,841 | 14.7 | % |
| Gross deposits | 358 | 337 | 363 | 425 | 353 | -1.4 | % | |||||
| Withdrawals and deaths | (103) | (90) | (155) | (130) | (204) | -98.1 | % | |||||
| Net flows | 255 | 247 | 208 | 295 | 149 | -41.6 | % | |||||
| Transfers between general and separate accounts | (37) | (76) | (30) | (53) | (14) | 62.2 | % | |||||
| Policyholder assessments | (246) | (247) | (248) | (253) | (246) | 0.0% | ||||||
| Change in market value and reinvestment | 1,885 | 450 | 1,610 | (69) | (624) | NM | ||||||
| Balance as of end-of-period, gross | 27,007 | 27,381 | 28,921 | 28,841 | 28,106 | 4.1 | % | |||||
| Account balances reinsured | (5,338) | (5,371) | (5,593) | (5,521) | (5,354) | -0.3 | % | |||||
| Balance as of end-of-period, net | $ | 21,669 | $ | 22,010 | $ | 23,328 | $ | 23,320 | $ | 22,752 | 5.0 | % |
| Total | ||||||||||||
| Balance as of beginning-of-period | $ | 62,330 | $ | 64,013 | $ | 64,229 | $ | 65,613 | $ | 65,440 | 5.0 | % |
| Gross deposits | 1,208 | 1,230 | 1,262 | 1,402 | 1,218 | 0.8 | % | |||||
| Withdrawals and deaths | (467) | (479) | (524) | (472) | (649) | -39.0 | % | |||||
| Net flows | 741 | 751 | 738 | 930 | 569 | -23.2 | % | |||||
| Transfers between general and separate accounts | 1 | (2) | — | — | — | -100.0 | % | |||||
| Policyholder assessments | (1,370) | (1,377) | (1,377) | (1,390) | (1,350) | 1.5 | % | |||||
| Change in market value and reinvestment | 2,250 | 818 | 1,985 | 296 | (268) | NM | ||||||
| Change in fair value of embedded derivative instruments | ||||||||||||
| and other | 61 | 26 | 38 | (9) | (65) | NM | ||||||
| Balance as of end-of-period, gross | 64,013 | 64,229 | 65,613 | 65,440 | 64,326 | 0.5 | % | |||||
| Account balances reinsured | (20,945) | (20,838) | (20,894) | (20,668) | (20,319) | 3.0 | % | |||||
| Balance as of end-of-period, net | $ | 43,068 | $ | 43,391 | $ | 44,719 | $ | 44,772 | $ | 44,007 | 2.2 | % |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Retirement Plan Services – Account Balance Roll Forwards | ||||||||||||
| Unaudited (millions of dollars) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| General Account | ||||||||||||
| Balance as of beginning-of-period | $ | 23,784 | $ | 23,586 | $ | 23,598 | $ | 23,727 | $ | 23,619 | -0.7 | % |
| Gross deposits | 790 | 846 | 944 | 826 | 811 | 2.7 | % | |||||
| Withdrawals | (1,203) | (1,072) | (1,095) | (1,125) | (1,330) | -10.6 | % | |||||
| Net flows | (413) | (226) | (151) | (299) | (519) | -25.7 | % | |||||
| Transfers between fixed and variable accounts | 50 | 69 | 110 | 22 | 211 | NM | ||||||
| Policyholder assessments | (3) | (3) | (4) | (4) | (4) | -33.3 | % | |||||
| Reinvested interest credited | 168 | 172 | 174 | 173 | 172 | 2.4 | % | |||||
| Balance as of end-of-period | $ | 23,586 | $ | 23,598 | $ | 23,727 | $ | 23,619 | $ | 23,479 | -0.5 | % |
| Separate Account and Mutual Funds | ||||||||||||
| Balance as of beginning-of-period | $ | 77,201 | $ | 83,226 | $ | 84,274 | $ | 90,069 | $ | 88,962 | 15.2 | % |
| Gross deposits | 3,012 | 2,436 | 3,236 | 2,647 | 3,304 | 9.7 | % | |||||
| Withdrawals | (2,208) | (2,407) | (2,434) | (3,080) | (4,969) | NM | ||||||
| Net flows | 804 | 29 | 802 | (433) | (1,665) | NM | ||||||
| Transfers between fixed and variable accounts | (34) | (69) | (106) | (19) | (200) | NM | ||||||
| Policyholder assessments | (64) | (66) | (70) | (72) | (69) | -7.8 | % | |||||
| Change in market value and reinvestment | 5,319 | 1,154 | 5,169 | (583) | (1,274) | NM | ||||||
| Balance as of end-of-period | $ | 83,226 | $ | 84,274 | $ | 90,069 | $ | 88,962 | $ | 85,754 | 3.0 | % |
| Total | ||||||||||||
| Balance as of beginning-of-period | $ | 100,985 | $ | 106,812 | $ | 107,872 | $ | 113,796 | $ | 112,581 | 11.5 | % |
| Gross deposits | 3,802 | 3,282 | 4,180 | 3,473 | 4,115 | 8.2 | % | |||||
| Withdrawals | (3,411) | (3,479) | (3,529) | (4,205) | (6,299) | -84.7 | % | |||||
| Net flows | 391 | (197) | 651 | (732) | (2,184) | NM | ||||||
| Transfers between fixed and variable accounts | 16 | — | 4 | 3 | 11 | -31.3 | % | |||||
| Policyholder assessments | (67) | (69) | (74) | (76) | (73) | -9.0 | % | |||||
| Change in market value and reinvestment | 5,487 | 1,326 | 5,343 | (410) | (1,102) | NM | ||||||
| Balance as of end-of-period | $ | 106,812 | $ | 107,872 | $ | 113,796 | $ | 112,581 | $ | 109,233 | 2.3 | % |
Table of Contents
| Lincoln Financial | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed-Income Asset Class | |||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||
| As of 03/31/24 | As of 12/31/24 | As of 03/31/25 | |||||||||||||
| Amount | % | Amount | % | Amount | % | ||||||||||
| Fixed Maturity AFS Securities, Net of Modified Coinsurance and Funds Withheld | |||||||||||||||
| Investments and Allowance for Credit Losses, at Amortized Cost (1) | |||||||||||||||
| Industry corporate bonds: | |||||||||||||||
| Financial services | $ | 12,695 | 14.9 | % | $ | 12,728 | 14.6 | % | $ | 12,804 | 14.6 | % | |||
| Basic industry | 2,870 | 3.4 | % | 2,840 | 3.3 | % | 2,822 | 3.2 | % | ||||||
| Capital goods | 5,364 | 6.3 | % | 5,490 | 6.3 | % | 5,454 | 6.2 | % | ||||||
| Communications | 2,827 | 3.3 | % | 2,798 | 3.2 | % | 2,800 | 3.2 | % | ||||||
| Consumer cyclical | 5,240 | 6.1 | % | 5,408 | 6.2 | % | 5,317 | 6.1 | % | ||||||
| Consumer non-cyclical | 12,613 | 14.8 | % | 12,485 | 14.4 | % | 12,571 | 14.4 | % | ||||||
| Energy | 2,569 | 3.0 | % | 2,472 | 2.8 | % | 2,488 | 2.8 | % | ||||||
| Technology | 4,124 | 4.8 | % | 3,882 | 4.5 | % | 3,993 | 4.5 | % | ||||||
| Transportation | 3,092 | 3.6 | % | 3,124 | 3.6 | % | 3,130 | 3.6 | % | ||||||
| Industrial other | 2,068 | 2.4 | % | 2,183 | 2.5 | % | 2,214 | 2.5 | % | ||||||
| Utilities | 11,099 | 13.0 | % | 11,194 | 12.9 | % | 11,240 | 12.8 | % | ||||||
| Government-related entities | 1,204 | 1.4 | % | 1,170 | 1.3 | % | 1,145 | 1.3 | % | ||||||
| Residential mortgage-backed securities ("RMBS") | |||||||||||||||
| Agency backed | 1,468 | 1.7 | % | 1,608 | 1.8 | % | 1,653 | 1.9 | % | ||||||
| Non-agency backed | 318 | 0.3 | % | 328 | 0.4 | % | 323 | 0.4 | % | ||||||
| Commercial mortgage-backed securities ("CMBS") | 1,557 | 1.8 | % | 1,724 | 2.0 | % | 1,868 | 2.1 | % | ||||||
| Asset-backed securities ("ABS") | |||||||||||||||
| Collateralized loan obligations ("CLOs") | 8,163 | 9.5 | % | 8,189 | 9.4 | % | 7,888 | 9.0 | % | ||||||
| Other ABS | 4,444 | 5.2 | % | 5,864 | 6.7 | % | 6,437 | 7.3 | % | ||||||
| Municipals | 2,777 | 3.2 | % | 2,647 | 3.0 | % | 2,591 | 2.9 | % | ||||||
| United States and foreign government | 724 | 1.0 | % | 711 | 0.8 | % | 849 | 0.9 | % | ||||||
| Hybrid & redeemable preferred securities | 226 | 0.3 | % | 235 | 0.3 | % | 253 | 0.3 | % | ||||||
| Total fixed maturity AFS securities, net of modified coinsurance and funds withheld | |||||||||||||||
| investments and allowance for credit losses, at amortized cost | 85,442 | 100.0 | % | 87,080 | 100.0 | % | 87,840 | 100.0 | % | ||||||
| Trading Securities, Net of Modified Coinsurance and Funds Withheld Investments | 540 | 511 | 507 | ||||||||||||
| Equity Securities, Net of Modified Coinsurance and Funds Withheld Investments | 277 | 264 | 322 | ||||||||||||
| Total fixed maturity AFS, trading and equity securities, net of modified coinsurance and funds | |||||||||||||||
| withheld investments and allowance for credit losses, at amortized cost | 86,259 | 87,855 | 88,669 | ||||||||||||
| Modified coinsurance and funds withheld investments | 13,988 | 11,992 | 11,587 | ||||||||||||
| Total fixed maturity AFS, trading and equity securities | $ | 100,247 | $ | 99,847 | $ | 100,256 | |||||||||
| (1) Net investment income and net gains (losses) related to assets held by us to support certain modified coinsurance and funds withheld agreements are included in periodic payments | |||||||||||||||
| to or from the reinsurers, resulting in the economic benefits of these assets flowing to the reinsurers. Accordingly, these assets have been excluded from summaries provided on | |||||||||||||||
| page 24 and page 25 as we have a limited economic interest in the assets. |
Table of Contents
| Lincoln Financial | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed-Income Credit Quality | |||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||
| As of 03/31/24 | As of 12/31/24 | As of 03/31/25 | |||||||||||||
| Amount | % | Amount | % | Amount | % | ||||||||||
| Fixed Maturity AFS Securities, Net of Modified Coinsurance and Funds Withheld Investments | |||||||||||||||
| and Allowance for Credit Losses, at Amortized Cost (1) | |||||||||||||||
| NAIC 1 (AAA-A) | $ | 50,246 | 58.5 | % | $ | 51,922 | 59.6 | % | $ | 52,563 | 59.9 | % | |||
| NAIC 2 (BBB) | 32,866 | 38.3 | % | 32,198 | 37.0 | % | 32,404 | 36.9 | % | ||||||
| Total investment grade | 83,112 | 96.8 | % | 84,120 | 96.6 | % | 84,967 | 96.8 | % | ||||||
| NAIC 3 (BB) | 1,028 | 1.2 | % | 907 | 1.1 | % | 830 | 0.9 | % | ||||||
| NAIC 4 (B) | 1,667 | 1.9 | % | 1,857 | 2.1 | % | 1,877 | 2.1 | % | ||||||
| NAIC 5 (CCC and lower) | 67 | 0.1 | % | 109 | 0.1 | % | 92 | 0.1 | % | ||||||
| NAIC 6 (in or near default) | 3 | 0.0 | % | 87 | 0.1 | % | 74 | 0.1 | % | ||||||
| Total below investment grade | 2,765 | 3.2 | % | 2,960 | 3.4 | % | 2,873 | 3.2 | % | ||||||
| Total | $ | 85,877 | 100.0 | % | $ | 87,080 | 100.0 | % | $ | 87,840 | 100.0 | % | |||
| Commercial Mortgage Loans, Net of Modified Coinsurance and Funds Withheld Investments, | |||||||||||||||
| at Amortized Cost (1)(2) | |||||||||||||||
| CM1 (AAA-A) | $ | 13,559 | 79.1 | % | $ | 13,450 | 77.2 | % | $ | 13,362 | 76.8 | % | |||
| CM2 (BBB) | 3,538 | 20.6 | % | 3,873 | 22.2 | % | 3,979 | 22.8 | % | ||||||
| CM3-7 (BB and lower) (3) | 43 | 0.3 | % | 99 | 0.6 | % | 77 | 0.4 | % | ||||||
| Total | $ | 17,140 | 100.0 | % | $ | 17,422 | 100.0 | % | $ | 17,418 | 100.0 | % | |||
| Total Fixed Maturity AFS Securities and Commercial Mortgage Loans, Net of Modified | |||||||||||||||
| Coinsurance and Funds Withheld Investments, at Amortized Cost (1)(2) | |||||||||||||||
| AAA-A | $ | 63,805 | 61.9 | % | $ | 65,372 | 62.6 | % | $ | 65,925 | 62.6 | % | |||
| BBB | 36,404 | 35.3 | % | 36,071 | 34.5 | % | 36,383 | 34.6 | % | ||||||
| BB and lower | 2,808 | 2.8 | % | 3,059 | 2.9 | % | 2,950 | 2.8 | % | ||||||
| Total | $ | 103,017 | 100.0 | % | $ | 104,502 | 100.0 | % | $ | 105,258 | 100.0 | % | |||
| (1) Ratings are based upon the designations determined and provided by the National Association of Insurance Commissioners (“NAIC”) or based upon ratings from credit rating | |||||||||||||||
| agencies to derive the NAIC designation. | |||||||||||||||
| (2) CM ratings reflect the risk-based capital risk category for commercial mortgage loans. Letter ratings are assumed NAIC equivalent ratings where NAIC 1 = CM1, NAIC 2 = CM2 | |||||||||||||||
| and NAIC 3-6 = CM3-7. | |||||||||||||||
| (3) Includes mortgage fund limited partnerships classified as CM3 that are included in "Other Investments" on the Consolidated Balance Sheets. |
Table of Contents
| Lincoln Financial | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Select GAAP to Non-GAAP Reconciliations | |||||||||||||||
| Unaudited (millions of dollars) | |||||||||||||||
| For the Three Months Ended | |||||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||||||
| Net Income | |||||||||||||||
| Net income (loss) available to common stockholders – diluted | $ | 1,191 | $ | 884 | $ | (562) | $ | 1,675 | $ | (756) | NM | ||||
| Less: | |||||||||||||||
| Preferred stock dividends declared | (34) | (11) | (34) | (11) | (34) | 0.0% | |||||||||
| Adjustment for deferred units of LNC stock | |||||||||||||||
| in our deferred compensation plans | 3 | — | — | — | — | -100.0 | % | ||||||||
| Net income (loss) | 1,222 | 895 | (528) | 1,686 | (722) | NM | |||||||||
| Less: | |||||||||||||||
| Net annuity product features, pre-tax | 1,450 | 252 | (381) | 1,187 | (1,092) | NM | |||||||||
| Net life insurance product features, pre-tax | (130) | 4 | (125) | 46 | 42 | 132.3 | % | ||||||||
| Credit loss-related adjustments, pre-tax | (1) | (34) | (88) | (28) | (28) | NM | |||||||||
| Investment gains (losses), pre-tax | (81) | (230) | (105) | (67) | (103) | -27.2 | % | ||||||||
| Changes in the fair value of reinsurance-related | |||||||||||||||
| embedded derivatives, trading securities and certain | |||||||||||||||
| mortgage loans, pre-tax (1) | 194 | 201 | (446) | 587 | (90) | NM | |||||||||
| Gains (losses) on other non-financial assets – sale of | |||||||||||||||
| subsidiaries/businesses, pre-tax (2) | — | 584 | (2) | — | — | NM | |||||||||
| Other items, pre-tax (3)(4)(5)(6) | (186) | (33) | (19) | (32) | (35) | 81.2 | % | ||||||||
| Income tax benefit (expense) related to the above pre-tax items | (268) | (184) | 246 | (350) | 270 | 200.7 | % | ||||||||
| Total adjustments | 978 | 560 | (920) | 1,343 | (1,036) | NM | |||||||||
| Adjusted income (loss) from operations | 244 | 335 | 392 | 343 | 314 | 28.7 | % | ||||||||
| Add: | |||||||||||||||
| Preferred stock dividends declared | (34) | (11) | (34) | (11) | (34) | 0.0% | |||||||||
| Adjusted income (loss) from operations available | |||||||||||||||
| to common stockholders | $ | 210 | $ | 324 | $ | 358 | $ | 332 | $ | 280 | 33.3 | % | (1) | Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction. | |
| --- | --- | ||||||||||||||
| (2) | Relates to the sale of our wealth management business, which provided approximately $650 million of statutory capital benefit. | ||||||||||||||
| (3) | For the first quarter of 2024, includes certain legal accruals of $(114) million primarily related to the settlement of cost of insurance litigation; for the fourth quarter of 2024, includes | ||||||||||||||
| certain legal accruals of $(15) million and regulatory accruals of $(12) million related to estimated state guaranty fund assessments net of estimated state premium tax recoveries. | |||||||||||||||
| (4) | Includes severance expense related to initiatives to realign the workforce of $(49) million, $(7) million, $(16) million, $(2) million and $(6) million in the first quarter of 2024, second | ||||||||||||||
| quarter of 2024, third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. | |||||||||||||||
| (5) | Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(10) million, $(27) million, $(2) million, $(1) million and $(20) million in the first quarter | ||||||||||||||
| of 2024, second quarter of 2024, third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. | |||||||||||||||
| (6) | Includes deferred compensation mark-to-market adjustment of $(13) million, $1 million, $(1) million, $(2) million and $(9) million in the first quarter of 2024, second quarter of 2024, | ||||||||||||||
| third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. |
Table of Contents
| Lincoln Financial | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Select GAAP to Non-GAAP Reconciliations | |||||||||||
| Unaudited (millions of dollars, except per share data) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | ||||||
| Revenues | |||||||||||
| Total revenues | 4,116 | $ | 5,153 | $ | 4,111 | $ | 5,063 | $ | 4,691 | 14.0 | % |
| Less: | |||||||||||
| Revenue adjustments from annuity | |||||||||||
| and life insurance product features | (580) | 105 | 149 | (57) | 227 | 139.1 | % | ||||
| Credit loss-related adjustments | (1) | (34) | (88) | (28) | (28) | NM | |||||
| Investment gains (losses) | (81) | (230) | (105) | (67) | (103) | -27.2 | % | ||||
| Changes in the fair value of reinsurance-related | |||||||||||
| embedded derivatives, trading securities and certain | |||||||||||
| mortgage loans (1) | 194 | 201 | (446) | 587 | (90) | NM | |||||
| Gains (losses) on other non-financial assets – sale of | |||||||||||
| subsidiaries/businesses (2) | — | 584 | (2) | — | — | NM | |||||
| Adjusted operating revenues | 4,584 | $ | 4,527 | $ | 4,603 | $ | 4,628 | $ | 4,685 | 2.2 | % |
| (1) Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction. | |||||||||||
| (2) Relates to the sale of our wealth management business, which provided approximately 650 million of statutory capital benefit. |
All values are in US Dollars.
Table of Contents
| Lincoln Financial | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Select GAAP to Non-GAAP Reconciliations | |||||||||||||||
| Unaudited (millions of dollars, except per share data) | |||||||||||||||
| For the Three Months Ended | |||||||||||||||
| Earnings (Loss) Per Common Share – Diluted | 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||||
| Net income (loss) | $ | 6.93 | $ | 5.11 | $ | (3.29) | $ | 9.63 | $ | (4.41) | NM | ||||
| Less: | |||||||||||||||
| Net annuity product features, pre-tax | 8.43 | 1.46 | (2.23) | 6.83 | (6.36) | NM | |||||||||
| Net life insurance product features, pre-tax | (0.75) | 0.02 | (0.73) | 0.27 | 0.25 | 133.3 | % | ||||||||
| Credit loss-related adjustments, pre-tax | — | (0.20) | (0.53) | (0.16) | (0.17) | NM | |||||||||
| Investment gains (losses), pre-tax | (0.47) | (1.33) | (0.61) | (0.38) | (0.60) | -27.7 | % | ||||||||
| Changes in the fair value of reinsurance-related | |||||||||||||||
| embedded derivatives, trading securities and certain | |||||||||||||||
| mortgage loans, pre-tax | 1.13 | 1.16 | (2.61) | 3.37 | (0.53) | NM | |||||||||
| Gains (losses) on other non-financial assets – sale of | |||||||||||||||
| subsidiaries/businesses, pre-tax | — | 3.38 | (0.01) | — | — | NM | |||||||||
| Other items, pre-tax (1)(2)(3)(4) | (1.08) | (0.19) | (0.11) | (0.19) | (0.20) | 81.5 | % | ||||||||
| Income tax benefit (expense) related | |||||||||||||||
| to the above pre-tax items | (1.55) | (1.06) | 1.44 | (2.02) | 1.57 | 201.3 | % | ||||||||
| Adjustment attributable to using different average | |||||||||||||||
| diluted shares for adjusted income (loss) from | |||||||||||||||
| operations as compared to net income (loss) (5) | — | — | 0.04 | — | 0.03 | NM | |||||||||
| Adjusted income (loss) from operations | $ | 1.22 | $ | 1.87 | $ | 2.06 | $ | 1.91 | $ | 1.60 | 31.1 | % | (1) | For the first quarter of 2024, includes certain legal accruals of $(0.65) primarily related to the settlement of cost of insurance litigation; for the fourth quarter of 2024, includes certain | |
| --- | --- | ||||||||||||||
| legal accruals of $(0.09) and regulatory accruals of $(0.07) related to estimated state guaranty fund assessments net of estimated state premium tax recoveries. | |||||||||||||||
| (2) | Includes severance expense related to initiatives to realign the workforce of $(0.29), $(0.04), $(0.09), $(0.01) and $(0.03) in the first quarter of 2024, second quarter of 2024, | ||||||||||||||
| third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. | |||||||||||||||
| (3) | Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(0.06), $(0.15), $(0.01), $(0.01) and $(0.12) in the first quarter of 2024, | ||||||||||||||
| second quarter of 2024, third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. | |||||||||||||||
| (4) | Includes deferred compensation mark-to-market adjustment of $(0.08), $(0.01), $(0.01) and $(0.05) in the first quarter of 2024, third quarter of 2024, fourth quarter of 2024 | ||||||||||||||
| and first quarter of 2025, respectively. | |||||||||||||||
| (5) | In periods where net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use | ||||||||||||||
| of diluted shares would result in a lower loss per share. Due to reporting adjusted income (loss) from operations per common share on a different share basis than net income (loss) | |||||||||||||||
| per common share, we have included an adjustment to reconcile the two metrics. |
Table of Contents
| Lincoln Financial | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Select GAAP to Non-GAAP Reconciliations | ||||||||||||
| Unaudited (millions of dollars, except per share data) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 | 3/31/25 | Change | |||||||
| Stockholders’ Equity, End-of-Period | ||||||||||||
| Stockholders’ equity | $ | 7,546 | $ | 7,949 | $ | 9,013 | $ | 8,269 | $ | 8,193 | 8.6 | % |
| Less: | ||||||||||||
| Preferred stock | 986 | 986 | 986 | 986 | 986 | 0.0% | ||||||
| AOCI | (3,951) | (4,369) | (2,682) | (5,036) | (4,306) | -9.0 | % | |||||
| Stockholders’ equity, excluding AOCI and preferred stock | 10,511 | 11,332 | 10,709 | 12,319 | 11,513 | 9.5 | % | |||||
| MRB-related impacts | 2,575 | 2,673 | 2,147 | 3,165 | 2,133 | -17.2 | % | |||||
| GLB and GDB hedge instruments gains (losses) | (2,675) | (2,770) | (2,763) | (3,062) | (2,993) | -11.9 | % | |||||
| Reinsurance-related embedded derivatives and portfolio gains (losses) | (476) | (269) | (642) | (151) | (196) | 58.8 | % | |||||
| Adjusted stockholders’ equity | $ | 11,087 | $ | 11,698 | $ | 11,967 | $ | 12,367 | $ | 12,569 | 13.4 | % |
| Stockholders’ Equity, Average | ||||||||||||
| Stockholders’ equity | $ | 7,219 | $ | 7,747 | $ | 8,481 | $ | 8,641 | $ | 8,231 | 14.0 | % |
| Less: | ||||||||||||
| Preferred stock | 986 | 986 | 986 | 986 | 986 | 0.0% | ||||||
| AOCI | (3,714) | (4,160) | (3,526) | (3,860) | (4,671) | -25.8 | % | |||||
| Stockholders’ equity, excluding AOCI and preferred stock | 9,947 | 10,921 | 11,021 | 11,515 | 11,916 | 19.8 | % | |||||
| MRB-related impacts | 1,829 | 2,624 | 2,410 | 2,656 | 2,649 | 44.8 | % | |||||
| GLB and GDB hedge instruments gains (losses) | (2,380) | (2,723) | (2,767) | (2,913) | (3,027) | -27.2 | % | |||||
| Reinsurance-related embedded derivatives and portfolio gains (losses) | (557) | (372) | (455) | (396) | (173) | 68.9 | % | |||||
| Adjusted average stockholders' equity | $ | 11,055 | $ | 11,392 | $ | 11,833 | $ | 12,168 | $ | 12,467 | 12.8 | % |
| Book Value Per Common Share | ||||||||||||
| Book value per share | $ | 38.46 | $ | 40.78 | $ | 46.97 | $ | 42.60 | $ | 41.96 | 9.1 | % |
| Less: | ||||||||||||
| AOCI | (23.17) | (25.59) | (15.70) | (29.46) | (25.08) | -8.2 | % | |||||
| Book value per share, excluding AOCI | 61.63 | 66.37 | 62.67 | 72.06 | 67.04 | 8.8 | % | |||||
| Less: | ||||||||||||
| MRB-related gains (losses) | 15.10 | 15.66 | 12.56 | 18.51 | 12.42 | -17.7 | % | |||||
| GLB and GDB hedge instruments gains (losses) | (15.69) | (16.22) | (16.17) | (17.91) | (17.43) | -11.1 | % | |||||
| Reinsurance-related embedded derivatives and portfolio gains (losses) | (2.79) | (1.58) | (3.76) | (0.88) | (1.14) | 59.1 | % | |||||
| Adjusted book value per share | $ | 65.01 | $ | 68.51 | $ | 70.04 | $ | 72.34 | $ | 73.19 | 12.6 | % |
29
a1q2025investorsupplemen
Earnings Supplement First Quarter 2025 May 8, 2025
2 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 forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may contain words like: “anticipate,” “believe,” “estimate,” “expect,” “project,” “shall,” “will” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in Lincoln’s businesses, prospective services or products, future performance or financial results and the outcome of contingencies, such as legal proceedings. Lincoln claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those expressed in or implied by such forward-looking statements due to a variety of factors, including: • Weak general economic and business conditions that may affect demand for our products, account balances, investment results, guaranteed benefit liabilities, premium levels and claims experience; • Adverse global capital and credit market conditions that may affect our ability to raise capital, if necessary, and may cause us to realize impairments on investments and certain intangible assets, including goodwill and the valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures; • The inability of our subsidiaries to pay dividends to the holding company in sufficient amounts, which could harm the holding company’s ability to meet its obligations; • Legislative, regulatory or tax changes, both domestic and foreign, that affect: the cost of, or demand for, our subsidiaries’ products; the required amount of reserves and/or surplus; our ability to conduct business; our affiliate reinsurance arrangements; and restrictions on the payment of revenue sharing and 12b-1 distribution fees; • Changes in tax law or the interpretation of or application of existing tax laws that could impact our tax costs and the products that we sell; • The impact of regulations adopted by the Securities and Exchange Commission (“SEC”), the Department of Labor or other federal or state regulators or self-regulatory organizations that could adversely affect our distribution model and sales of our products and result in additional disclosure and other requirements related to the sale and delivery of our products; • The impact of new and emerging rules, laws and regulations relating to privacy, cybersecurity and artificial intelligence that may lead to increased compliance costs, reputation risk and/or changes in business practices; • Increasing scrutiny and evolving expectations and regulations regarding ESG matters that may adversely affect our reputation and our investment portfolio; • Actions taken by reinsurers to raise rates on in-force business; • Declines in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses and demand for our products; • Rapidly increasing or sustained high interest rates that may negatively affect our profitability, value of our investment portfolio and capital position and may cause policyholders to surrender annuity and life insurance policies, thereby causing realized investment losses; • The impact of the implementation of the provisions of the European Market Infrastructure Regulation relating to the regulation of derivatives transactions; • The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as: adverse actions related to present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings; • A decline or continued volatility in the equity markets causing a reduction in the sales of our subsidiaries’ products; a reduction of asset-based fees that our subsidiaries charge on various investment and insurance products; and an increase in liabilities related to guaranteed benefit riders, which are accounted for as market risk benefits, of our subsidiaries’ variable annuity products; • Ineffectiveness of our risk management policies and procedures, including our various hedging strategies; • A deviation in actual experience regarding future policyholder behavior, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries’ products and in establishing related insurance reserves, which may reduce future earnings; • Changes in accounting principles that may affect our consolidated financial statements; • Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on our ability to raise capital and on our liquidity and financial condition; • Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the premium writings, policy retention, and profitability of our insurance subsidiaries and liquidity; • Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain financial assets, as well as counterparties to which we are exposed to credit risk, requiring that we realize losses on financial assets; • Interruption in or failure of the telecommunication, information technology or other operational systems of the company or the third parties on whom we rely or failure to safeguard the confidentiality or privacy of sensitive data on such systems, including from cyberattacks or other breaches in security of such systems; • The effect of acquisitions and divestitures, including the inability to realize the anticipated benefits of acquisitions and dispositions of businesses and potential operating difficulties and unforeseen liabilities relating thereto, as well as the effect of restructurings, product withdrawals and other unusual items; • The inability to complete our announced transaction with Bain Capital within the expected timeframe, or at all, and the possibility that the anticipated benefits related to the transaction may not materialize as expected; • The inability to realize or sustain the benefits we expect from, greater than expected investments in, and the potential impact of efforts related to, our strategic initiatives; • The adequacy and collectability of reinsurance that we have obtained; • Pandemics, acts of terrorism, war or other man-made and natural catastrophes that may adversely impact liabilities for policyholder claims and adversely affect our businesses and the cost and availability of reinsurance; • Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that our subsidiaries can charge for their products; • The unknown effect on our subsidiaries’ businesses resulting from evolving market preferences and the changing demographics of our client base; and • The unanticipated loss of key management or wholesalers. The risks and uncertainties included here are not exhaustive. Our most recent Form 10-K, as well as other reports that we file with the SEC, include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to correct or update any forward-looking statements to reflect events or circumstances that occur after the date of this press release. The reporting of Risk-Based Capital (“RBC”) measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.
3 Profitable growth Strategic shift toward businesses and products with more stable cash flows, focusing on maximizing risk-adjusted returns while decreasing sensitivity to equity markets Executing on our strategic priorities Long-term value creation built upon a strong capital foundation, an optimized operating model, and a strategy for profitable growth Foundational capital Build and maintain capital required to ensure enterprise stability across market cycles and to support investment for profitable growth and reduce sensitivity to equity markets Optimized operating model Advance a scalable framework for managing the enterprise’s resources and activities that maximizes cost efficiency, expands asset sourcing, and optimizes capital allocation Fortitude Re Transaction Sale of LFN to Osaic Launch of Bermuda Affiliate Company-wide Expense Actions Initial FABN Issuance Strategic Partnership with Bain Capital Execution of Affiliated Bermuda Flow Reinsurance Agreement 2023 2024 2025 Building a track record of strategic execution: Repositioned Business Unit Strategies
4 >420% Significant buffer above capital target 1 The RBC ratio is calculated as of December 31 annually, but is reported in the March statutory reporting, and as such, the ratio presented is considered an estimate based on information known at the time of reporting. 2 Represents Adjusted Operating Income Available to Common Stockholders, excluding significant items. See Non-GAAP Financial Measures Appendix for definition and reconciliations. 3 See Non-GAAP Financial Measures Appendix for definition and reconciliation. 1Q25 Scorecard -260bp YoY Continued reduction in balance sheet leverage +14% YoY Double digit earnings growth +7% YoY Continued growth driving fee income +120bp YoY Continued profitability improvement +33% YoY Strong growth driven by diversified product suite Adjusted Operating Income2 Leverage Ratio3 Average Account Balances (Net of Reinsurance) Annuities Sales Group Protection Operating Margin Estimated RBC Ratio1
5 • Annuities sales increased 33% YoY supported by a diversified product mix. • Group Protection sales were 9% higher YoY, driven by continued growth in supplemental health. • Life Insurance sales were up 7% YoY, reflecting continued momentum emphasizing risk-sharing products. Per share After- tax$ in millions $1.70$298Adjusted Operating Income, ex. normalizing items Normalizing item $0.10$18 Alternative investment income compared to our 10% long-term return target $1.60$280Adjusted Operating Income3 1Q25 Key Messages 1 Represents Adjusted Operating Income Available to Common Stockholders, excluding significant items. See Non-GAAP Financial Measures Appendix for definition and reconciliations. 2 Annuities: Excludes the impact of $(19)M balance sheet true-up in preparation for the close of the sale of the wealth management business and $(12)M tax-related items in 1Q24. 3 Represents Adjusted Operating Income Available to Common Stockholders. See Non-GAAP Financial Measures for definition and reconciliation. 4 The RBC ratio is calculated as of December 31 annually, but is reported in the March statutory reporting, and as such, the ratio presented is considered an estimate based on information known at the time of reporting. 5 See Non-GAAP Financial Measures Appendix for definition and reconciliations. Earnings growth as strategy to expand profitability delivered strong results • Adjusted operating income1 increased 14% YoY. • Group Protection earnings were up 26% YoY, and margin was 7.4%, expanding 120 bps. • Annuities2 and Retirement Plan Services earnings were generally in line with prior-year; Life Insurance operating loss improved. Sales growth supported by a diversified mix of products and segment strategies Capital position remained strong, supporting ongoing investment for growth • Estimated RBC ratio4 >420%, consistent with goal to hold capital buffer above 400% target. • Leverage ratio5 improved 260bps YoY to 27.5%, driven primarily by organic equity growth. • On April 9, announced partnership with Bain Capital, including a strategic minority investment expected to create growth capital to support acceleration of strategic priorities.
6 Group ProtectionAnnuities Primary DriversOperating IncomePrimary DriversOperating Income1 Life InsuranceRetirement Plan Services Primary DriversOperating Income1Primary DriversOperating Income • Favorable disability results • Continued growth in supplemental health 1 Excludes the following impacts: Annuities 1Q 2024: $(19)M balance sheet true-up in preparation for the close of the sale of the wealth management business and $(12)M tax-related items; Life 1Q24: $(1)M related to dividends-received deduction true-up. 1Q25 Earnings Drivers $ in millions • Market appreciation • Spread expansion driven by higher interest rates • Traditional variable annuity outflows • Fee income on higher average account balances • Item related to plan termination • Improved mortality • Lower expenses • Lower alternative investment returns $290 $290 1Q24 1Q25 $80 $101 1Q24 1Q25 $36 $34 1Q24 1Q25 $(34) $(16) 1Q24 1Q25
7 Annuities Sales ($B)Operating Income1 ($M)Key Highlights • Operating income1 was essentially unchanged YoY, as market appreciation and spread expansion were offset by the impact of traditional annuity outflows. • Sales increased 33% YoY, with spread-based products comprising ~60% of total sales. • Ending account balances2 were largely unchanged YoY as a diversified product mix drove growth in spread-based products. Return on Average Account Balances1Ending Account Balances2 ($B)Key Priorities • Grow our addressable market by extending reach to spread-based products. • Increase market competitiveness through development of new product features. • Optimize general account to support spread expansion. 6% 6% 6% 6% 7% 19% 20% 20% 21% 21% 30% 30% 30% 30% 30% 45% 44% 44% 43% 42% 1Q24 2Q24 3Q24 4Q24 1Q25 Fixed RILA VA w/o GLBs VA w/ GLBs 0.75% 0.75% 0.74% 0.73% 0.71% 1Q24 2Q24 3Q24 4Q24 1Q25 $290 $297 $300 $303 $290 1Q24 2Q24 3Q24 4Q24 1Q25 34% 44% 30% 15% 23% 33% 29% 36% 35% 34% 14% 11% 14% 16% 14%19% 16% 20% 34% 29% 1Q24 2Q24 3Q24 4Q24 1Q25 Fixed RILA VA w/o GLB VA w/ GLB $2.8 $3.8 $3.4 1 Excludes the following impacts: 1Q24: $(19)M balance sheet true-up in preparation for the close of the sale of the wealth management business and $(12)M tax-related items; 3Q24: $1M assumption review. 2 Net of reinsurance. $3.7 $3.8 $160 $160 $165 $164 $158
8 Group Protection Sales ($M)Operating Income1 ($M)Key Highlights • Operating income increased by 26% and margin by 120 bps YoY, primarily due to continued favorable LTD results. • Premiums were 7% higher YoY driven by strong persistency and prior-year sales. • Sales grew 9% YoY, driven by continued growth in supplemental health. Loss Ratios1,2 Premiums & Margin1,2 ($M)Key Priorities • Diversify across market segments with an emphasis on growing local markets. • Expand and deepen product portfolio with a focus on growth in supplemental health. • Continued pricing discipline focused on profitable growth while investing in capabilities to improve the customer experience. 35% 46% 43% 54% 31% 33% 34% 31% 37% 24% 32% 20% 26% 9% 45% 1Q24 2Q24 3Q24 4Q24 1Q25 Disability Life Supp Health / Dental 76% 76% 72% 65% 75%74% 70% 71% 75% 70% 1Q24 2Q24 3Q24 4Q24 1Q25 Life Disability $1,285 $1,298 $1,288 $1,274 $1,371 6.2% 10.0% 8.4% 7.4% 8.2% 8.5% 1Q24 2Q24 3Q24 4Q24 1Q25 Premiums Margin Margin, ex. Experience Refund $467 $144 $161 $84 1 Excludes $(1)M in 3Q24 related to annual assumption review. 2 Excludes the impact of the $23M experience refund timing in 2Q24. 3 Life loss ratio includes supplemental health. 3 1Q24 2Q24 3Q24 4Q24 1Q25 Operating Income Experience Refund $80 $130 $110 $107 $101 $157
9 Retirement Plan Services First-year Sales ($B)Operating Income ($M)Key Highlights • Operating income decreased by 6% YoY, primarily due to the impact of a plan termination. Excluding this impact, earnings were in line as continued stable value outflows were offset by market appreciation. • Total deposits increased 8%, driven by higher recurring deposits. • Ending account balances were relatively flat YoY, as favorable market conditions were partially offset by elevated outflows. Net G&A Expenses ($M)Ending Account Balances ($B)Key Priorities • Growth in core recordkeeping and institutional market segments through our differentiated service model. • Expand access to retirement solutions by leveraging distribution relationships and product innovation. • Increase operational and expense efficiencies to drive down our cost per participant and improve profitability. 78% 78% 79% 79% 79% 22% 22% 21% 21% 21% $107 $108 $114 $113 $109 1Q24 2Q24 3Q24 4Q24 1Q25 General Account Separate Account and Mutual Funds $36 $40 $44 $43 $34 1Q24 2Q24 3Q24 4Q24 1Q25 $81 $80 $81 $82 $81 1Q24 2Q24 3Q24 4Q24 1Q25 34% 49% 27% 45% 31% 48% 23% 62% 35% 44% 18% 28% 11% 20% 25% 1Q24 2Q24 3Q24 4Q24 1Q25 Sm. Market Mid-Large Market Stable Value/Other $1.7 $1.3$1.1 $0.8 $1.1
10 Sales ($M)Operating Income (Loss)1 ($M)Key Highlights • Operating loss1 improved by $18 million YoY as improved mortality and lower net G&A expenses were partially offset by lower alternative investment income. • Total sales increased 7% YoY as growth in products with more risk-sharing continued to gain momentum. • Net G&A expenses declined 8% YoY, reflecting expense actions taken in 2024 to improve operational efficiency. Net G&A Expenses ($M)Net Death Benefits ($M)Key Priorities • Optimize product portfolio to support pivot toward products with more stable cash flows and higher risk-adjusted returns. • Continue efforts to reduce expense base to drive cost efficiency and earnings growth. • Maintain focus on optimizing the legacy in force and increase earnings. 92% 91% 85% 80% 83% 8% 9% 15% 20% 17% 13% 8% 14% 19% 13% 19% 14% 1Q24 2Q24 3Q24 4Q24 1Q25 Underlying Earnings Alts Above Target Alts Below Target $130 $125 $126 $129 $119 1Q24 2Q24 3Q24 4Q24 1Q25 $(29) $4 $8 $(22) $(1) $(5) $(39) $6 $7 $(15) 1Q24 2Q24 3Q24 4Q24 1Q25 $664 $644 $638 $690 $684 $758 $608 $663 $706 $610 1Q24 2Q24 3Q24 4Q24 1Q25 Net death benefits Death claims ceded 92% 91% 85% 80% 82% 8% 9% 15% 20% 18% $91 $105 $122 $119 $97 1Q24 2Q24 3Q24 4Q24 1Q25 Core Life Executive Benefits $(15) $(34) $(35) $14 1 Excludes the following impacts: 1Q24: $(1)M related to dividends-received deduction true-up; 3Q24: $8M related to annual assumption review. $(16) Life Insurance
11 Interest Expense ($M)Operating Loss1 and Preferred Dividend ($M)Key Highlights • Operating loss1 was $95 million, essentially unchanged YoY. • Interest expense decreased $3 million sequentially, reflecting lower outstanding debt and a decline in rates on floating rate debt. • Leverage ratio improved by 260 basis points driven primarily by organic equity growth. Leverage Ratio3Net G&A Expenses2 ($M)Key Priorities • Reduce leverage ratio through continued growth in capital and opportunistic deleveraging. • Continued focus on operational efficiency, including the conclusion of Spark initiative-related projects in 2025. Other Operations ($93) ($97) ($84) ($95) ($95) ($34) ($11) ($34) ($11) ($34) 1Q24 2Q24 3Q24 4Q24 1Q25 Operating Loss Preferred Dividend $81 $86 $86 $83 $80 1Q24 2Q24 3Q24 4Q24 1Q25 30.1% 28.9% 28.4% 27.8% 27.5% 1Q24 2Q24 3Q24 4Q24 1Q25 $57 $62 $62 $66 $62 1Q24 2Q24 3Q24 4Q24 1Q25 1 Excludes the following impact: 1Q24: Excess tax true-up impact of $(3)M. 2 Excludes the impact of expenses related to Other Operations associated with the sale of the wealth management business. These expenses are directly offset in Other Revenues. 3 See Non-GAAP Financial Measures Appendix for definition and reconciliations.
12 Investment Portfolio Rated Assets Portfolio QualityInvestment Portfolio ($B)Key Highlights • Well-diversified portfolio with 97% investment grade rated assets. • Achieved a 6.0% new money yield; ~140bps above the portfolio yield, driven by the rate environment and our investment strategy optimization. • Diversified alternatives portfolio delivered a 1.9% quarterly return or 7.6% annualized return, below our long-term expectation of 10%. Alternative Investment Income ($M), Pre-TaxNew Money YieldsKey Priorities • Leveraging the sourcing capabilities and security selection of our multi-manager platform for portfolio construction. • Optimizing our new money strategy with focus on maintaining diversification and high quality while capitalizing on less liquid assets and structured asset class premiums. • Achieving attractive risk-adjusted alternative returns. 4.39% 4.50% 4.53% 4.55% 4.57% 6.1% 6.9% 6.4% 6.2% 6.0% 1Q24 2Q24 3Q24 4Q24 1Q25 Portfolio Yield New Money Yield $78 $36 $100 $105 $75 2.3% 1.0% 2.7% 2.8% 1.9% 1Q24 2Q24 3Q24 4Q24 1Q25 % Returns, Unannualized 62% 62% 62% 62% 62% 35% 35% 35% 35% 35% 3% 3% 3% 3% 3% 1Q24 2Q24 3Q24 4Q24 1Q25 NAIC 1/CM1 NAIC 2/CM2 NAIC 3-6/CM3-7 40% 38% 38% 38% 38% 18% 18% 18% 17% 18% 14% 14% 14% 15% 15% 17% 17% 18% 18% 18% 3% 3% 3% 3% 3%8% 10% 9% 9% 8% 1Q24 2Q24 3Q24 4Q24 1Q25 Public Corps Private Corps Structured Mortgage Loans Alts Other $119 $118 $119 1 Mortgage Loans include CMLs and RMLs. 2 Other includes cash, COLI, common and preferred stock, municipals, sovereign government and UST/agency. $119 1 2 $115
13 Appendix
14 Investment Portfolio High quality and well-diversified portfolio1 Industrial Other 2% Energy 2% Municipal 2% Communications 2% Basic Industry 2% Transportation 3% Alts 3% Technology 3% Consumer Cyclical 5% Capital Goods 5% Other2 6% Utilities 10% Consumer Non- Cyclical 11% Financials 6% Banking 5% Structured 15% CMLs 15% RMLs 3% The portfolio is well-positioned • Long-term investment strategy is tightly aligned with our liability profile and positioned for various economic cycles. • 97% investment grade, the portfolio remains high quality, providing flexibility to further add incremental yield. • Well positioned to further optimize the portfolio asset allocation given high-quality asset mix and shift toward shorter duration liabilities. $119B Average A- Rated Portfolio allocation by asset class 1 Data on slide is as of March 31, 2025. 2 Other asset classes primarily include quasi-sovereign, cash/collateral, and UST/agency. Note: All information regarding LNC’s investment portfolio in this earnings supplement excludes assets related to certain modified coinsurance and coinsurance with funds withheld transactions. The modified coinsurance and funds withheld reinsurance agreements investment portfolio has counterparty protections in place including investment guidelines, as well as additional support including trusts and letters of credit that were established to meet LNC’s risk management objectives.
15 Non-GAAP Financial Measures Appendix
16 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 18. Adjusted Income (Loss) From Operations Adjusted income (loss) from operations is GAAP net income excluding the effects of the following items, as applicable: • Items related to annuity product features, which include changes in market risk benefits (“MRBs”), including gains and losses and benefit payments (“MRB-related impacts”), changes in the fair value of the derivative instruments we hold to hedge guaranteed living benefit (“GLB”) and guaranteed death benefit (“GDB”) riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the embedded derivative liabilities of our indexed annuity contracts and the associated index options we hold to hedge them, including collateral expense associated with the hedge program (collectively, “net annuity product features”); • Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of variable universal life insurance (“VUL”) hedging, changes in reserves resulting from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our indexed universal life insurance (“IUL”) contracts and the associated index options we hold to hedge them (collectively, “net life insurance product features”); • Credit loss-related adjustments on fixed maturity available-for-sale (“AFS”) securities, mortgage loans on real estate and reinsurance-related assets (“credit loss-related adjustments”); • Changes in the fair value of equity securities, certain derivatives, certain other investments and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, “investment gains (losses)”); • Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option (“changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans”); • Income (loss) from the initial adoption of new accounting standards, accounting policy changes and new regulations, including changes in tax law; • Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance; • Losses from the impairment of intangible assets and gains (losses) on other non-financial assets; • Income (loss) from discontinued operations. • Other items, which include the following: certain legal and regulatory accruals; severance expense related to initiatives that realign the workforce; transaction and integration costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business; mark-to-market adjustment related to the LNC stock component of our deferred compensation plans (“deferred compensation mark-to-market adjustment”); gains (losses) on modification or early extinguishment of debt; and impacts from settlement or curtailment of defined benefit obligations; and • Income tax benefit (expense) related to the above pre-tax items, including the effect of tax adjustments such as changes to deferred tax valuation allowances. Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends.
17 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 reinsurance-related embedded derivatives and the underlying asset portfolios (“reinsurance-related embedded derivatives and portfolio gains (losses)”). Management believes this metric is useful to investors because it eliminates the effect of market movements that are unpredictable and can fluctuate significantly from period to period, primarily related to changes in equity markets and interest rates. Stockholders’ equity is the most directly comparable GAAP measure. Leverage Ratio Leverage ratio is a measure that we use to monitor the level of our debt relative to our total capitalization. Debt used in this metric reflects total debt and preferred stock adjusted for certain items. Total capitalization reflects debt used in the numerator of this ratio and stockholders’ equity adjusted for certain items.
18 Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Income (Loss) from Operations Available to Common Stockholders Unaudited (millions of dollars, except per share data) For the Three Months Ended 3/31/2512/31/249/30/246/30/243/31/24 Net Income $ (756)$ 1,675$ (562)$ 884$ 1,191Net income (loss) available to common stockholders – diluted Less: (34)(11)(34)(11)(34)Preferred stock dividends declared Adjustment for deferred units of LNC stock ————3in our deferred compensation plans (722)1,686(528)8951,222Net income (loss) Less: (1,092)1,187(381)2521,450Net annuity product features, pre-tax 4246(125)4(130)Net life insurance product features, pre-tax (28)(28)(88)(34)(1)Credit loss-related adjustments, pre-tax (103)(67)(105)(230)(81)Investment gains (losses), pre-tax Changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain (90)587(446)201194mortgage loans, pre-tax (1) Gains (losses) on other non-financial assets – sale of ——(2)584—subsidiaries/businesses, pre-tax (2) (35)(32)(19)(33)(186)Other items, pre-tax (3)(4)(5)(6) 270(350)246(184)(268)Income tax benefit (expense) related to the above pre-tax items (1,036)1,343(920)560978Total adjustments 314343392335244Adjusted income (loss) from operations Add: (34)(11)(34)(11)(34)Preferred stock dividends declared Adjusted income (loss) from operations available $ 280$ 332$ 358$ 324$ 210to common stockholders Earnings (Loss) Per Common Share – Diluted (4.41)9.63(3.29)5.116.93Net income (loss) (diluted) 1.601.912.061.871.22Adjusted income (loss) from operations (diluted) Refer to following slide 19 for footnotes to table.
19 Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Income (Loss) from Operations Available to Common Stockholders (continued from previous slide) Unaudited (millions of dollars) Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.(1) Relates to the sale of our wealth management business, which provided approximately $650 million of statutory capital benefit.(2) For the first quarter of 2024, includes certain legal accruals of $(114) million primarily related to the settlement of cost of insurance litigation; for the fourth quarter of 2024, includes(3) certain legal accruals of $(15) million and regulatory accruals of $(12) million related to estimated state guaranty fund assessments net of estimated state premium tax recoveries. Includes severance expense related to initiatives to realign the workforce of $(49) million, $(7) million, $(16) million, $(2) million and $(6) million in the first quarter of 2024, second(4) quarter of 2024, third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(10) million, $(27) million, $(2) million, $(1) million and $(20) million in the first quarter(5) of 2024, second quarter of 2024, third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively. Includes deferred compensation mark-to-market adjustment of $(13) million, $1 million, $(1) million, $(2) million and $(9) million in the first quarter of 2024, second quarter of 2024,(6) third quarter of 2024, fourth quarter of 2024 and first quarter of 2025, respectively.
20 Reconciliation of Adjusted Income (Loss) from Operations Available to Common Stockholders to Adjusted Income (Loss) from Operations Available to Common Stockholders, excluding Significant Items Unaudited (millions of dollars) For the Three Months Ended 3/31/2512/31/249/30/246/30/243/31/24 $280$332$358$324$210Adjusted income from operations available to common stockholders1 Significant items: ----16Tax-related items2 --(8)--Annual assumption review ----19Balance sheet true-up related to the sale of the wealth management business --(8)-35Total significant items $280$332$350$324$245Adjusted income from operations available to common stockholders, excluding significant items (1) See reconciliation to Net Income (Loss) Available to Common Stockholders on slide 18. (2) For the quarter ended 3/31/2024, primarily reflects a dividends-received deduction true-up, partially offset by an uncertain tax position release.
21 Leverage Ratio Unaudited (millions of dollars) As of or For the Three Months Ended 3/31/2512/31/249/30/246/30/243/31/24 Leverage Ratio $ —$ 300$ 300$ 450$ 503Short-term debt 5,8685,8565,8975,7165,726Long-term debt 5,8686,1566,1976,1666,229Total debt 986986986986986Preferred stock 6,8547,1427,1837,1527,215Total debt and preferred stock Less: 868868867867867Operating debt (1) —300300300300Pre-funding of upcoming debt maturities 30230230230230225% of capital securities and subordinated notes 49349349349349350% of preferred stock 122111153123133Carrying value of fair value hedges and other items $ 5,069$ 5,068$ 5,068$ 5,067$ 5,120Total numerator $ 12,569$ 12,367$ 11,967$ 11,698$ 11,087Adjusted stockholders’ equity (2) Add: 30230230230230225% of capital securities and subordinated notes 49349349349349350% of preferred stock 5,0695,0685,0685,0675,120Total numerator $ 18,433$ 18,230$ 17,830$ 17,560$ 17,002Total denominator 27.5 %27.8 %28.4 %28.9 %30.1 %Leverage ratio (1) We have categorized as operating debt the senior notes issued in October 2007 and June 2010 because the proceeds were used as a long-term structured solution to reduce the strain on increasing statutory reserves associated with secondary guarantee universal life insurance and term policies. (2) See reconciliation to stockholders’ equity on slide 22.
22 Reconciliation of Stockholders’ Equity to Adjusted Stockholders’ Equity Unaudited (millions of dollars) As of or For the Three Months Ended 3/31/2512/31/249/30/246/30/243/31/24 Stockholders’ Equity, End-of-Period $ 8,193$ 8,269$ 9,013$ 7,949$ 7,546Stockholders’ equity Less: 986986986986986Preferred stock (4,306)(5,036)(2,682)(4,369)(3,951)AOCI 11,51312,31910,70911,33210,511Stockholders’ equity, excluding AOCI and preferred stock 2,1333,1652,1472,6732,575MRB-related impacts (2,993)(3,062)(2,763)(2,770)(2,675)GLB and GDB hedge instruments gains (losses) (196)(151)(642)(269)(476)Reinsurance-related embedded derivatives and portfolio gains (losses) $ 12,569$ 12,367$ 11,967$ 11,698$ 11,087Adjusted stockholders’ equity