SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8‑K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 28, 2015
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)
(484) 583-1400
(Registrant’s telephone number, including area code)
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))
Item 2.02. Results of Operations and Financial Condition.
On October 28, 2015, Lincoln National Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2015, 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 September 30, 2015, 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, 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, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits
(c) |
Exhibits. |
The following exhibits are being furnished with this Form 8-K.
Exhibit Number |
Description |
99.1 |
Press release dated October 28, 2015, announcing Lincoln National Corporation’s financial results for the quarter ended September 30, 2015. |
99.2 |
Lincoln National Corporation Statistical Supplement for the quarter ended September 30, 2015. |
|
|
|
|
|
|
|
|
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/ Douglas N. Miller |
||||
Name: |
Douglas N. Miller |
||||
Title: |
Senior Vice President and |
||||
Chief Accounting Officer |
Date: October 28, 2015
EXHIBIT INDEX
Exhibit Number |
Description |
99.1 |
Press release dated October 28, 2015, announcing Lincoln National Corporation’s financial results for the quarter ended September 30, 2015. |
99.2 |
Lincoln National Corporation Statistical Supplement for the quarter ended September 30, 2015. |
|
|
|
|
|
|
|
|
FOR IMMEDIATE RELEASE
Lincoln Financial Group Reports Third Quarter 2015 Results and announces increase in dividend
_______________________________________
Consolidated net flows of $1.8 billion up 17%
Book Value per Share, excluding AOCI, of $51.47 up 7%
Share buybacks of $200 million
Common Stock Dividend increases 25%
Radnor, PA, October 28, 2015 – Lincoln Financial Group (NYSE: LNC) today reported net income for the third quarter of 2015 of $227 million, or $0.87 per diluted share available to common stockholders, compared to net income in the third quarter of 2014 of $439 million, or $1.65 per diluted share available to common stockholders. Third quarter income from operations was $289 million, or $1.11 per diluted share available to common stockholders, compared to $414 million, or $1.56 per diluted share available to common stockholders, in the third quarter of 2014.
The board of directors of Lincoln National Corporation approved raising the quarterly dividend on its common shares to $0.25 per share. The dividend represents a 25% increase over the prior-year level. The increased dividend on the common stock will be payable February 1, 2016, to shareholders of record at the close of business on January 11, 2016.
“Our franchise remains strong as we delivered double-digit growth in consolidated net flows, which is helping drive underlying earnings growth in all our businesses,” said Dennis R. Glass, president and CEO of Lincoln Financial Group. “Our annual assumption review reduced earnings per share without compromising steady growth in book value per share, highlighting the overall strength of our balance sheet.”
As of or For the |
As of or For the |
|||
Quarter Ended |
Nine Months Ended |
|||
(in millions, except per share data) |
2015 |
2014 |
2015 |
2014 |
Net Income (Loss) |
$ 227
|
$ 439
|
$ 871
|
$ 1,166
|
Net Income (Loss) Available to Common Stockholders |
220 | 441 | 865 | 1,168 |
Net Income (Loss) Per Diluted Share Available to Common Stockholders |
0.87 | 1.65 | 3.37 | 4.34 |
Revenues |
3,716 | 3,411 | 10,400 | 9,869 |
Income (Loss) from Operations |
289 | 414 | 1,013 | 1,173 |
Income (Loss) from Operations Per Diluted Share Available to Common Stockholders |
1.11 | 1.56 | 3.92 | 4.36 |
Average Diluted Shares |
253.2 | 266.8 | 256.6 | 269.3 |
ROE (Income from Operations) |
9.1% | 13.4% | 10.7% | 12.9% |
ROE (Net Income) |
7.1% | 14.2% | 9.2% | 12.8% |
Book Value Per Share, Including AOCI |
$ 58.19 |
$ 59.48 |
$ 58.19 |
$ 59.48 |
Book Value Per Share, Excluding AOCI |
51.47 |
48.23 |
51.47 |
48.23 |
Operating Highlights – Third Quarter 2015 versus Third Quarter 2014
· |
Excluding notable items in both periods (described below), income from operations per share up 10% |
· |
Total average account balances of $220 billion up 2% |
· |
Positive net flows in all segments led to consolidated net flows of $1.8 billion up 17% |
· |
Life Insurance sales of $173 million up 8% |
· |
Share repurchases of $200 million up 33% versus both prior year and prior quarter |
Notable items in the current quarter included net unfavorable items of approximately $0.55 per share related primarily to the company’s annual review of DAC and reserve assumptions and legal expenses. The prior-year quarter included net favorable items of approximately $0.05 per share related primarily to the company’s annual review of DAC and reserve assumptions.
Third Quarter 2015 – Segment Results
Annuities
The Annuities segment reported income from operations of $259 million in the quarter, up 6% from $245 million in the prior-year quarter. Increased fees on assets under management due to positive net flows and better spread income resulted in higher earnings compared to the prior-year period.
Gross annuity deposits in the third quarter were $3.3 billion, contributing to net flows of $536 million. Net flows increased 35% from the second quarter, but decreased 5% from the prior year. Average account values increased to $123 billion compared to the prior-year period as positive net flows in each quarter more than offset weak equity market performance. The percentage of variable annuity deposits from products without living benefits increased to 27% from 24% in the prior-year period.
The quarter included net favorable items of $5 million related to the company’s annual review of DAC and reserve assumptions and taxes. The prior-year quarter included net favorable items of $12 million related to the company’s annual review of DAC and reserve assumptions.
Retirement Plan Services
Retirement Plan Services reported income from operations of $42 million compared to $40 million in the prior-year quarter.
Total deposits for the quarter of $1.9 billion were up 17% versus the prior-year quarter, reflecting growth in both the small and mid-large markets. First-year sales totaled $706 million, 65% above the prior-year period, while recurring deposits, representing deposits on business in-force for more than 12 months, were stable.
Total net flows of $251 million in the quarter increased year-to-date net flows to $673 million, compared to $55 million in the prior year. Total average account values of $54 billion are up 1% compared to prior-year period.
The quarter included net favorable items of $2 million related to the company’s annual review of DAC assumptions.
Life Insurance
Life Insurance income from operations was $36 million compared to $150 million in the prior-year quarter. This decrease was entirely driven by an unfavorable unlocking of $117 million related to the company’s annual review of DAC and reserve assumptions. Excluding notable items, earnings increased 2% over the prior-year period driven by growth in underlying drivers. Mortality experience was in line with our expectations following elevated mortality in the first half of 2015.
Life insurance sales in the quarter of $173 million were up 8%. Individual life insurance sales, which exclude COLI and BOLI, increased 5% from the prior-year quarter driven by growth in MoneyGuard®, IUL, and VUL.
Total life insurance in-force grew 3% to $654 billion and average account values of $43 billion increased 4%, both over the prior-year quarter.
The only notable item included in the quarter was the aforementioned $117 million of net unfavorable items.
Group Protection
For the third quarter, Group Protection income from operations was $17 million compared to $8 million in the prior-year period. The non-medical loss ratio improved to 74.5% compared to 77.6% in the prior-year quarter with declines in the life insurance, disability and dental loss ratios.
Group Protection third quarter sales of $61 million were down 35% from the same period last year. The decrease in sales is primarily due to pricing changes. Employee-paid product sales as a percentage of total sales were 49% compared to 45% in the prior-year quarter.
Non-medical net earned premiums were $522 million in the third quarter, a 1% decrease from the prior-year quarter.
Other Operations
Other Operations reported a loss from operations of $65 million in the quarter versus a loss of $29 million in the prior-year quarter.
The quarter’s results included net unfavorable items of $30 million related to legal expenses.
Realized Gains and Losses
Realized gains/losses (after-tax) in the quarter included:
· |
A net loss from general account investments of $26 million compared to a $16 million net loss in the prior-year quarter. |
· |
An $18 million variable annuity net derivatives loss as negative hedge program performance was partially offset by gains associated with the non-performance risk component. |
Unrealized Gains and Losses
The company reported a net unrealized gain of $4.6 billion, pre-tax, on its available-for-sale securities at September 30, 2015. This compares to a net unrealized gain of $6.9 billion at September 30, 2014.
Capital
During the quarter, the company repurchased 3.7 million shares of stock at a cost of $200 million. Year-to-date, the company has repurchased 12.3 million shares at a cost of $700 million. The quarter’s average diluted share count of 253.2 million shares was down 5% from the third quarter of 2014, the result of repurchasing 15.9 million shares of stock at a cost of $900 million since September 30, 2014.
Book Value
As of September 30, 2015, book value per share, including accumulated other comprehensive income (“AOCI”), of $58.19 decreased 2% from a year ago. Book value per share, excluding AOCI, of $51.47 increased 7% from the prior-year period.
This press release may contain statements that are forward-looking, and actual results may differ materially, especially given the current economic and capital markets conditions. Please see the Forward Looking Statements – Cautionary Language that follow for additional factors that may cause actual results to differ materially from our current expectations.
The tables attached to this release define and reconcile income from operations, return on equity (“ROE”), and book value per share excluding AOCI, non-GAAP measures, to net income, ROE, and book value per share including AOCI calculated in accordance with GAAP.
For definitions of sales metrics and other financial information, please refer to the company’s third quarter 2015 statistical supplement available on its website, www.LincolnFinancial.com/earnings.
Lincoln Financial Group will discuss the company’s third quarter results with investors in a conference call beginning at 10:00 a.m. Eastern Time on Thursday, October 29, 2015. Interested persons are invited to listen through the internet. Please go to www.LincolnFinancial.com/webcast at least fifteen minutes prior to the event to register, download and install any necessary streaming media software. Interested persons may also listen to the call by dialing the following numbers:
Dial:(877) 776-4049 (Domestic)
(914) 495-8602 (International)
Ask for the Lincoln National Conference Call.
Audio replay will begin by 1 p.m. Eastern Time on October 29, 2015, and it will remain available through midnight Eastern Time on November 5, 2015. To access the re-broadcast:
(855) 859-2056 (Domestic)
(404) 537-3406 (International)
Enter conference code: 38349807
A replay of the call will also be available by 1 p.m. Eastern Time on October 29, 2015 at www.LincolnFinancial.com/webcast.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower Americans to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-
term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $214 billion in assets under management as of September 30, 2015. Learn more at: www.LincolnFinancial.com. Find us on Facebook, Twitter, LinkedIn and YouTube. To sign up for email alerts, please visit our Newsroom at http://newsroom.lfg.com.
Contacts: |
Chris Giovanni (484) 583-1793 Investor Relations InvestorRelations@LFG.com |
Michael Arcaro (484) 583-1799 Media Relations michael.arcaro@LFG.com |
Definition of Income (Loss) from Operations, Operating Revenues and Return on Equity
Income (loss) from operations, operating revenues and return on equity (“ROE”), as used in the earnings release, are non-GAAP financial measures and do not replace GAAP revenues, net income (loss) and ROE. We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at income (loss) from operations: realized gains and losses associated with the following ("excluded realized gain (loss)"): sale or disposal of securities; impairments of securities; change in the fair value of derivative investments, embedded derivatives within certain reinsurance arrangements and our trading securities; change in the fair value of the derivatives we own to hedge our guaranteed death benefit ("GDB") riders within our variable annuities, which is referred to as "GDB derivatives results"; change in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders within our variable annuities accounted for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) (“embedded derivative reserves”), net of the change in the fair value of the derivatives we own to hedge the changes in the embedded derivative reserves, the net of which is referred to as “GLB net derivative results”; and changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the FASB ASC (“indexed annuity forward-starting option”); change in reserves accounted for under the Financial Services - Insurance - Claim Costs and Liabilities for Future Policy Benefits Subtopic of the FASB ASC resulting from benefit ratio unlocking on our GDB and GLB riders ("benefit ratio unlocking"); income (loss) from the initial adoption of new accounting standards; income (loss) from reserve changes (net of related amortization) on business sold through reinsurance; gain (loss) on early extinguishment of debt; losses from the impairment of intangible assets; and income (loss) from discontinued operations.
Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable: excluded realized gain (loss); amortization of deferred front-end loads (“DFEL”) arising from changes in GDB and GLB benefit ratio unlocking; amortization of deferred gains arising from the reserve changes on business sold through reinsurance; and revenue adjustments from the initial adoption of new accounting standards.
Return on equity measures how efficiently we generate profits from the resources provided by our net assets. Return on equity is calculated by dividing annualized income (loss) from operations by average equity, excluding accumulated other comprehensive income (loss) ("AOCI"). Management evaluates return on equity by both including and excluding average goodwill within average equity.
Income (loss) from operations, operating revenues and return on equity (including and excluding average goodwill within average equity), excluding AOCI, using annualized income (loss) from operations are financial measures we use to evaluate and assess our results. Management believes that these performance measures 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 because 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.
The company uses its prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in its financial statements and federal income tax returns when reconciling non-GAAP measures to the most comparable GAAP measure.
Lincoln National Corporation
Reconciliation of Net Income to Income from Operations
(in millions, except share data)
For the Three |
For the Nine |
|||||||
Months Ended |
Months Ended |
|||||||
September 30, |
September 30, |
|||||||
2015 |
2014 |
2015 |
2014 |
|||||
Total Revenues |
$ 3,716
|
$ 3,411
|
$ 10,400
|
$ 9,869
|
||||
Less: |
||||||||
Excluded realized gain (loss) |
(18) | 47 | (146) | (15) | ||||
Amortization of DFEL on benefit ratio unlocking |
(2) |
- |
(2) |
- |
||||
Amortization of deferred gains arising from reserve |
||||||||
changes on business sold through reinsurance |
1 | 1 | 2 | 2 | ||||
Total Operating Revenues |
$ 3,735
|
$ 3,363
|
$ 10,546
|
$ 9,882
|
||||
Net Income (Loss) Available to Common |
||||||||
Stockholders – Diluted |
$ 220
|
$ 441
|
$ 865
|
$ 1,168
|
||||
Less: |
||||||||
Adjustment for deferred units of LNC stock in our |
||||||||
deferred compensation plans (1) |
(7) | 2 | (6) | 2 | ||||
Net Income (Loss) |
227 | 439 | 871 | 1,166 | ||||
Less (2): |
||||||||
Excluded realized gain (loss) |
(11) | 31 | (95) | (10) | ||||
Benefit ratio unlocking |
(51) | (6) | (48) | 2 | ||||
Income (loss) from reserve changes (net of related |
||||||||
amortization) on business sold through reinsurance |
- |
- |
1 | 1 | ||||
Income (Loss) from Operations |
$ 289
|
$ 414
|
$ 1,013
|
$ 1,173
|
||||
Earnings (Loss) Per Common Share – Diluted |
||||||||
Income (loss) from operations |
$ 1.11
|
$ 1.56
|
$ 3.92
|
$ 4.36
|
||||
Net income (loss) |
0.87 | 1.65 | 3.37 | 4.34 | ||||
Average Stockholders' Equity |
||||||||
Average equity, including average AOCI |
$ 14,550
|
$ 15,452
|
$ 15,331
|
$ 14,796
|
||||
Average AOCI |
1,804 | 3,061 | 2,659 | 2,631 | ||||
Average equity, excluding AOCI |
12,746 | 12,391 | 12,672 | 12,165 | ||||
Average goodwill |
2,273 | 2,273 | 2,273 | 2,273 | ||||
Average equity, excluding AOCI and goodwill |
$ 10,473
|
$ 10,118
|
$ 10,399
|
$ 9,892
|
||||
Return on Equity, Excluding AOCI |
||||||||
Net income (loss) with average equity including goodwill |
7.1% | 14.2% | 9.2% | 12.8% | ||||
Income (loss) from operations with average equity |
||||||||
including goodwill |
9.1% | 13.4% | 10.7% | 12.9% | ||||
Income (loss) from operations with average equity |
||||||||
excluding goodwill |
11.0% | 16.4% | 13.0% | 15.8% | ||||
(1) |
The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our deferred compensation plans if the effect of equity classification would result in a more dilutive EPS. |
|||||||
(2) |
We use our prevailing federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. |
|||||||
Definition of 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 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 primarily attributable to our business operations. Management believes book value per share excluding AOCI is useful to investors because it eliminates the effect of items that 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. A reconciliation of book value per share to book value per share excluding AOCI as of September 30, 2015 and 2014 is set forth below.
As of September 30, |
|||
2015 |
2014 |
||
Book value per share, including AOCI |
$ 58.19 |
$ 59.48 |
|
Per share impact of AOCI |
6.72 |
11.25 |
|
Book value per share, excluding AOCI |
51.47 |
48.23 |
Lincoln National Corporation
Digest of Earnings
(in millions, except share data)
For the Three |
|||||
Months Ended |
|||||
September 30, |
|||||
2015 |
2014 |
||||
Revenues |
$ 3,716
|
$ 3,411
|
|||
Net Income (Loss) |
$ 227 |
$ 439
|
|||
Adjustment for deferred units of LNC stock in our |
|||||
deferred compensation plans (1) |
(7) | 2 | |||
Net Income (Loss) Available to Common |
|||||
Stockholders – Diluted |
$ 220
|
$ 441
|
|||
Earnings (Loss) Per Common Share – Basic |
$ 0.91
|
$ 1.69
|
|||
Earnings (Loss) Per Common Share – Diluted |
0.87 | 1.65 | |||
Average Shares – Basic |
249,227,641 | 260,371,956 | |||
Average Shares – Diluted |
253,210,611 | 266,785,111 | |||
For the Nine |
|||||
Months Ended |
|||||
September 30, |
|||||
2015 |
2014 |
||||
Revenues |
$ 10,400
|
$ 9,869
|
|||
Net Income (Loss) |
$ 871
|
$ 1,166
|
|||
Adjustment for deferred units of LNC stock in our |
|||||
deferred compensation plans (1) |
(6) | 2 | |||
Net Income (Loss) Available to Common |
|||||
Stockholders - Diluted |
$ 865
|
$ 1,168
|
|||
Earnings (Loss) Per Common Share – Basic |
$ 3.45
|
$ 4.45
|
|||
Earnings (Loss) Per Common Share – Diluted |
3.37 | 4.34 | |||
Average Shares – Basic |
252,167,909 | 261,785,387 | |||
Average Shares – Diluted |
256,617,260 | 269,269,892 | |||
(1) |
The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our deferred compensation plans if the effect of equity classification would be more dilutive to our diluted EPS. |
||||
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, and may contain words like: "believe", "anticipate", "expect", "estimate", "project", "will", "shall" 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 involve risks and uncertainties that may cause actual results to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements include, among others:
" |
Deterioration in general economic and business conditions that may affect account values, investment results, guaranteed benefit liabilities, premium levels, claims experience and the level of pension benefit costs, funding and investment results; |
" |
Adverse global capital and credit market conditions could 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; |
" |
Because of our holding company structure, the inability of our subsidiaries to pay dividends to the holding company in sufficient amounts 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 and our captive reinsurance arrangements as well as restrictions on revenue sharing and 12b-1 payments, the potential for U.S. Federal tax reform and the effect of the Department of Labor’s proposed regulation defining fiduciary; |
" |
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, estimated gross profits and demand for our products; |
" |
Rapidly increasing interest rates causing contract holders to surrender life insurance and annuity policies, thereby causing realized investment losses, and reduced hedge performance related to variable annuities; |
" |
Uncertainty about the effect of rules and regulations to be promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act on us and the economy and financial services sector in particular; |
" |
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 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, an acceleration of the net amortization of deferred acquisition costs, or "DAC," value of business acquired, or "VOBA," deferred sales inducements, or "DSI," and deferred front end sales loads, or "DFEL," and an increase in liabilities related to guaranteed benefit features of our subsidiaries' variable annuity products; |
" |
Ineffectiveness of our risk management policies and procedures, including various hedging strategies used to offset the effect of changes in the value of liabilities due to changes in the level and volatility of the equity markets and interest rates; |
" |
A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries' products, in establishing related insurance reserves and in the net amortization of DAC, VOBA, DSI and DFEL, which may reduce future earnings; |
" |
Changes in accounting principles generally accepted in the United States, or "GAAP," including convergence with International Financial Reporting Standards (“IFRS”), that may result in unanticipated changes to our net income; |
" |
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, profitability of our insurance subsidiaries and liquidity; |
" |
Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain investments in our portfolios as well as counterparties to which we are exposed to credit risk requiring that we realize losses on investments; |
" |
Inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; |
" |
Interruption in telecommunication, information technology or other operational systems or failure to safeguard the confidentiality or privacy of sensitive data on such systems from cyberattacks or other breaches of our data security systems; |
" |
The effect of acquisitions and divestitures, restructurings, product withdrawals and other unusual items; |
" |
The adequacy and collectability of reinsurance that we have purchased; |
" |
Acts of terrorism, a pandemic, war or other man-made and natural catastrophes that may 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 changes in the demographics of their client base, as aging baby-boomers move from the asset-accumulation stage to the asset-distribution stage of life; and |
" |
Loss of key management, financial planners or wholesalers. |
The risks included here are not exhaustive. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC include additional factors which could impact our business 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 impact 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 update any forward-looking statements to reflect events or circumstances that occur after the date of this presentation.
The reporting of 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.
Lincoln Financial Group |
|||||||||||||||||||
Table of Contents |
|||||||||||||||||||
Analyst Coverage |
1 | ||||||||||||||||||
Notes |
2 | ||||||||||||||||||
Consolidated Statements of Income (Loss) |
3 | ||||||||||||||||||
Consolidated Balance Sheets |
4 | ||||||||||||||||||
Earnings, Shares, Return on Equity and Return to Stockholder Highlights |
5 | ||||||||||||||||||
Income (Loss) from Operations, Average Equity and ROE By Segment |
6 | ||||||||||||||||||
Sources of Earnings |
7 | ||||||||||||||||||
Select Earnings Drivers By Segment |
8 | ||||||||||||||||||
Deposits, Net Flows and Account Balances By Segment |
9 | ||||||||||||||||||
Sales By Segment |
10 | ||||||||||||||||||
Operating Revenues and General and Administrative Expenses By Segment |
11 | ||||||||||||||||||
Operating Commissions and Other Expenses |
12 | ||||||||||||||||||
Interest Rate Yields and Spreads By Segment |
13 | ||||||||||||||||||
Select Investment Data |
14 | ||||||||||||||||||
Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC |
15 | ||||||||||||||||||
Select Liquidity and Ratings Agency Data |
16 | ||||||||||||||||||
Select Earnings and Operational Data: |
|||||||||||||||||||
Annuities |
17 | ||||||||||||||||||
Retirement Plan Services |
18 | ||||||||||||||||||
Life Insurance |
19 | ||||||||||||||||||
Group Protection |
20 | ||||||||||||||||||
Other Operations and Discontinued Operations |
21 | ||||||||||||||||||
DAC, VOBA, DSI and DFEL Roll Forwards: |
|||||||||||||||||||
Consolidated |
22 | ||||||||||||||||||
Annuities |
23 | ||||||||||||||||||
Retirement Plan Services, Life Insurance and Group Protection |
24 | ||||||||||||||||||
Account Value Roll Forwards: |
|||||||||||||||||||
Annuities |
25 | ||||||||||||||||||
Retirement Plan Services |
26 | ||||||||||||||||||
Life Insurance |
27 | ||||||||||||||||||
Select Non-GAAP to GAAP Reconciliations |
28 | ||||||||||||||||||
Lincoln Financial Group |
|||||||||||||||
Analyst Coverage |
|||||||||||||||
Firm |
Analyst |
Phone Number |
|||||||||||||
Bank of America Merrill Lynch |
Seth Weiss |
646-855-3783 |
|||||||||||||
Barclays Capital |
Jay Gelb |
212-526-1561 |
|||||||||||||
Citi Research |
Erik Bass |
212-816-5257 |
|||||||||||||
Credit Suisse |
Tom Gallagher |
212-538-2010 |
|||||||||||||
Deutsche Bank |
Yaron Kinar |
212-250-7927 |
|||||||||||||
Dowling & Partners |
Humphrey Lee |
860-676-7351 |
|||||||||||||
FBR Capital Markets |
Randy Binner |
703-312-1890 |
|||||||||||||
Goldman Sachs |
Michael Kovac |
212-902-2303 |
|||||||||||||
J.P. Morgan Securities |
Jimmy Bhullar |
212-622-6397 |
|||||||||||||
Janney Capital Markets |
Bob Glasspiegel |
860-724-1203 |
|||||||||||||
Keefe, Bruyette and Woods |
Ryan Krueger |
860-722-5930 |
|||||||||||||
Macquarie Capital |
Sean Dargan |
212-231-0663 |
|||||||||||||
Morgan Stanley |
Nigel Dally |
212-761-4132 |
|||||||||||||
Piper Jaffray |
John Nadel |
212-284-6123 |
|||||||||||||
Raymond James and Associates |
Steven Schwartz |
312-612-7686 |
|||||||||||||
RBC Capital |
Eric Berg |
212-618-7593 |
|||||||||||||
Sandler O’Neill & Partners, L.P. |
John Barnidge |
312-281-3412 |
|||||||||||||
UBS |
Suneet Kamath |
212-713-1355 |
|||||||||||||
Wells Fargo Securities |
John Hall |
212-214-8032 |
|||||||||||||
Investor Inquiries May Be Directed To |
|||||||||||||||
Chris Giovanni, Senior Vice President, Investor Relations |
|||||||||||||||
Email: Christopher.Giovanni@lfg.com |
|||||||||||||||
Voice: 484-583-1793 |
|||||||||||||||
Notes |
|||||||||||||||
This list is provided for informational purposes only. Lincoln Financial Group does not endorse the analyses, conclusions or recommendations contained in any report issued by these |
|||||||||||||||
or any other analysts. |
|||||||||||||||
Lincoln Financial Group's Statistical Supplement will be available immediately after the release of earnings for each quarter through our Investor Relations website: |
|||||||||||||||
https://www.lfg.com/public/aboutus/investorrelations |
|||||||||||||||
Page 1 |
Lincoln Financial Group |
||
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. |
||
If the effect of equity classification would result in a more dilutive Earnings Per Share (“EPS”), the numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market |
||
adjustment for deferred units of LNC stock in our deferred compensation plans. In addition, for any period where a loss from continuing operations is experienced, shares used in the diluted EPS |
||
calculation represent basic shares, as using dilutive shares would be anti-dilutive to the calculation. In these periods, we would also exclude the deferred compensation adjustment. |
||
Return on equity (“ROE”) measures how efficiently we generate profits from the resources provided by our net assets. ROE is calculated by dividing annualized net income (loss) (or |
||
income (loss) from operations) by average equity, excluding accumulated other comprehensive income (loss) (“AOCI”). Management evaluates consolidated ROE by both including |
||
and excluding the effect of average goodwill. |
||
Book value per share, excluding AOCI, is calculated by dividing stockholders’ equity, excluding AOCI, by common shares outstanding assuming the conversion of our Series A preferred |
||
shares. 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. |
||
Pre-tax net margin is calculated by dividing income (loss) from operations before taxes by net revenue, which is defined as total operating revenues less interest credited. |
||
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. |
||
Sales as reported consist of the following: |
||
• MoneyGuard®, our linked-benefit product – 15% of total expected premium deposits; |
||
• Single premium bank-owned universal life and variable universal life (“BOLI”) – 15% of single premium deposits; |
||
• Universal life (“UL”), indexed universal life ("IUL"), variable universal life (“VUL”), and corporate-owned UL and VUL (“COLI”) – first year commissionable |
||
premiums plus 5% of excess premiums received, including an adjustment for internal replacements of approximately 50% of commissionable premiums; |
||
• Term – 100% of annualized first year premiums; |
||
• Annuities – deposits from new and existing customers; and |
||
• Group Protection – annualized first year premiums from new policies. |
||
Throughout the document, “after-DAC” refers to the associated amortization expense of deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales |
||
inducements (“DSI”) and deferred front-end loads (“DFEL”) and changes in other contract holder funds. |
||
Sources of Earnings are defined as follows: |
||
• Investment spread earnings consist primarily of net investment income, net of interest credited earned on the underlying general account investments supporting our fixed products |
||
less related expenses. |
||
• Mortality/morbidity earnings result from mortality margins, morbidity margins, and certain expense assessments and related fees that are a function of the rates priced into the product |
||
and level of insurance in force. |
||
• Fees on Assets Under Management (“AUM”) earnings results consist primarily of asset-based fees charged based on variable account values less associated benefits and related expenses. |
||
• Variable Annuity (“VA”) Riders earnings consist of fees charged to the contract holder related to guaranteed benefit rider features, less the net valuation premium and associated change in |
||
benefit reserves and related expenses. |
||
Page 2a |
Lincoln Financial Group |
||
Notes |
||
Non-GAAP Performance Measures |
||
Non-GAAP measures do not replace the most directly comparable GAAP measures, and we have included detailed reconciliations herein. |
||
We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at income (loss) from operations: |
||
• Realized gains and losses associated with the following (“excluded realized gain (loss)”): |
||
▪ Sales or disposals and impairments of securities; |
||
▪ Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities (“gain (loss) on the mark-to-market on certain |
||
instruments”); |
||
▪ Changes in the fair value of the derivatives we own to hedge our guaranteed death benefit (“GDB”) riders reflected within variable annuity net derivative results; |
||
▪ Changes in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders accounted for at fair value, net of the change in the fair value of the derivatives |
||
we own to hedge them reflected within variable annuity net derivative results; and |
||
▪ Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to |
||
future reset periods for our indexed annuity products accounted for at fair value (“indexed annuity forward-starting option”); |
||
• Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders (“benefit ratio unlocking”) reflected within variable annuity net derivative results; |
||
• Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance; |
||
• Gains (losses) on early extinguishment of debt; |
||
• Losses from the impairment of intangible assets; |
||
• Income (loss) from discontinued operations; and |
||
• Income (loss) from the initial adoption of new accounting standards. |
||
Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items: |
||
• Excluded realized gain (loss); |
||
• Revenue adjustments from the initial adoption of new accounting standards; |
||
• Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and |
||
• Amortization of deferred gains arising from reserve changes on business sold through reinsurance. |
||
We use our prevailing federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns |
||
when reconciling our non-GAAP measures to the most comparable GAAP measure. |
||
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 operating revenues and income from operations provide investors with more valuable measures of our performance as they better reveal trends in our business. |
||
Statistical Supplement is Dated |
||
The financial data in this document is dated October 28, 2015, and has not been updated since that date. Lincoln Financial Group does not intend to update this document. |
||
Page 2b |
Lincoln Financial Group |
||||||||||||||||||||||||||
Consolidated Statements of Income (Loss) |
||||||||||||||||||||||||||
Unaudited (millions of dollars, except per share data) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Revenues |
||||||||||||||||||||||||||
Insurance premiums |
$ |
741 |
$ |
753 |
$ |
790 |
$ |
782 |
$ |
825 | 11.3% |
$ |
2,236 |
$ |
2,398 | 7.2% | ||||||||||
Fee income |
1,216 | 1,224 | 1,222 | 1,239 | 1,469 | 20.8% | 3,448 | 3,929 | 14.0% | |||||||||||||||||
Net investment income |
1,212 | 1,232 | 1,187 | 1,187 | 1,254 | 3.5% | 3,627 | 3,627 | 0.0% | |||||||||||||||||
Realized gain (loss): |
||||||||||||||||||||||||||
Other-than-temporary impairment (“OTTI”) |
(4) | (5) | (13) | (7) | (18) |
NM |
(11) | (38) |
NM |
|||||||||||||||||
Realized gain (loss), excluding OTTI |
93 | (101) | (35) | 17 | 45 |
-71.0% |
117 | 27 |
-76.9% |
|||||||||||||||||
Total realized gain (loss) |
89 | (106) | (48) | 10 | 27 |
-69.7% |
106 | (11) |
NM |
|||||||||||||||||
Amortization of deferred gains on business |
||||||||||||||||||||||||||
sold through reinsurance |
18 | 18 | 18 | 18 | 18 | 0.0% | 55 | 55 | 0.0% | |||||||||||||||||
Other revenues |
135 | 565 | 135 | 145 | 123 |
-8.9% |
397 | 402 | 1.3% | |||||||||||||||||
Total revenues |
3,411 | 3,686 | 3,304 | 3,381 | 3,716 | 8.9% | 9,869 | 10,400 | 5.4% | |||||||||||||||||
Expenses |
||||||||||||||||||||||||||
Interest credited |
631 | 632 | 625 | 629 | 622 |
-1.4% |
1,900 | 1,876 |
-1.3% |
|||||||||||||||||
Benefits |
1,117 | 1,403 | 1,236 | 1,220 | 1,327 | 18.8% | 3,275 | 3,783 | 15.5% | |||||||||||||||||
Commissions and other expenses |
995 | 1,150 | 1,013 | 1,014 | 1,432 | 43.9% | 2,929 | 3,459 | 18.1% | |||||||||||||||||
Interest and debt expense |
67 | 67 | 68 | 69 | 67 | 0.0% | 201 | 204 | 1.5% | |||||||||||||||||
Total expenses |
2,810 | 3,252 | 2,942 | 2,932 | 3,448 | 22.7% | 8,305 | 9,322 | 12.2% | |||||||||||||||||
Income (loss) from continuing operations before taxes |
601 | 434 | 362 | 449 | 268 |
-55.4% |
1,564 | 1,078 |
-31.1% |
|||||||||||||||||
Federal income tax expense (benefit) |
162 | 87 | 62 | 105 | 41 |
-74.7% |
398 | 207 |
-48.0% |
|||||||||||||||||
Income (loss) from continuing operations |
439 | 347 | 300 | 344 | 227 |
-48.3% |
1,166 | 871 |
-25.3% |
|||||||||||||||||
Income (loss) from discontinued operations |
- |
1 |
- |
- |
- |
NM |
- |
- |
NM |
|||||||||||||||||
Net income (loss) |
439 | 348 | 300 | 344 | 227 |
-48.3% |
1,166 | 871 |
-25.3% |
|||||||||||||||||
Adjustment for LNC stock units in our |
||||||||||||||||||||||||||
deferred compensation plans |
2 |
- |
(1) |
- |
(7) |
NM |
2 | (6) |
NM |
|||||||||||||||||
Net income (loss) available to common |
||||||||||||||||||||||||||
stockholders – diluted |
$ |
441 |
$ |
348 |
$ |
299 |
$ |
344 |
$ |
220 |
-50.1% |
$ |
1,168 |
$ |
865 |
-25.9% |
||||||||||
Earnings (Loss) Per Common Share – Diluted |
||||||||||||||||||||||||||
Net income (loss) |
$ |
1.65 |
$ |
1.32 |
$ |
1.15 |
$ |
1.35 |
$ |
0.87 |
-47.3% |
$ |
4.34 |
$ |
3.37 |
-22.4% |
||||||||||
Page 3 |
Lincoln Financial Group |
||||||||||||||||||
Consolidated Balance Sheets |
||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||
As of |
||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
|||||||||||||
ASSETS |
||||||||||||||||||
Investments: |
||||||||||||||||||
Available-for-sale (“AFS”) securities: |
||||||||||||||||||
Corporate bonds |
$ |
73,799 |
$ |
74,546 |
$ |
77,063 |
$ |
74,169 |
$ |
74,432 | 0.9% | |||||||
U.S. government bonds |
402 | 435 | 452 | 428 | 438 | 9.0% | ||||||||||||
Foreign government bonds |
551 | 541 | 561 | 540 | 532 |
-3.4% |
||||||||||||
Mortgage-backed securities |
4,931 | 4,796 | 4,674 | 4,476 | 4,252 |
-13.8% |
||||||||||||
Asset-backed collateralized debt obligations |
286 | 375 | 423 | 499 | 515 | 80.1% | ||||||||||||
State and municipal bonds |
4,419 | 4,593 | 4,705 | 4,418 | 4,480 | 1.4% | ||||||||||||
Hybrid and redeemable preferred securities |
960 | 954 | 935 | 892 | 857 |
-10.7% |
||||||||||||
VIEs' fixed maturity securities |
598 | 598 | 598 | 598 | 598 | 0.0% | ||||||||||||
Equity securities |
234 | 231 | 210 | 227 | 242 | 3.4% | ||||||||||||
Total AFS securities |
86,180 | 87,069 | 89,621 | 86,247 | 86,346 | 0.2% | ||||||||||||
Trading securities |
2,134 | 2,065 | 2,077 | 1,949 | 1,914 |
-10.3% |
||||||||||||
Mortgage loans on real estate |
7,466 | 7,574 | 7,654 | 8,171 | 8,431 | 12.9% | ||||||||||||
Real estate |
20 | 20 | 19 | 24 | 21 | 5.0% | ||||||||||||
Policy loans |
2,677 | 2,670 | 2,664 | 2,654 | 2,647 |
-1.1% |
||||||||||||
Derivative investments |
1,439 | 1,860 | 2,095 | 1,340 | 2,020 | 40.4% | ||||||||||||
Other investments |
1,469 | 1,709 | 1,885 | 1,624 | 1,820 | 23.9% | ||||||||||||
Total investments |
101,385 | 102,967 | 106,015 | 102,009 | 103,199 | 1.8% | ||||||||||||
Cash and invested cash |
1,821 | 3,919 | 3,487 | 2,327 | 3,772 | 107.1% | ||||||||||||
DAC and VOBA |
8,372 | 8,207 | 8,156 | 9,150 | 8,866 | 5.9% | ||||||||||||
Premiums and fees receivable |
448 | 473 | 452 | 415 | 383 |
-14.5% |
||||||||||||
Accrued investment income |
1,129 | 1,049 | 1,129 | 1,064 | 1,116 |
-1.2% |
||||||||||||
Reinsurance recoverables |
5,906 | 5,730 | 5,598 | 5,608 | 5,559 |
-5.9% |
||||||||||||
Funds withheld reinsurance assets |
761 | 649 | 646 | 642 | 639 |
-16.0% |
||||||||||||
Goodwill |
2,273 | 2,273 | 2,273 | 2,273 | 2,273 | 0.0% | ||||||||||||
Other assets |
3,414 | 2,845 | 2,901 | 3,647 | 3,450 | 1.1% | ||||||||||||
Separate account assets |
122,937 | 125,265 | 127,828 | 128,079 | 120,275 |
-2.2% |
||||||||||||
Total assets |
$ |
248,446 |
$ |
253,377 |
$ |
258,485 |
$ |
255,214 |
$ |
249,532 | 0.4% | |||||||
Page 4a |
Lincoln Financial Group |
||||||||||||||||||
Consolidated Balance Sheets |
||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||
As of |
||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
|||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||||
Liabilities |
||||||||||||||||||
Future contract benefits |
$ |
19,553 |
$ |
20,057 |
$ |
20,468 |
$ |
20,166 |
$ |
20,523 | 5.0% | |||||||
Other contract holder funds |
74,893 | 75,512 | 75,663 | 76,243 | 76,451 | 2.1% | ||||||||||||
Short-term debt |
250 | 250 | 250 |
- |
- |
-100.0% |
||||||||||||
Long-term debt by rating agency leverage definitions: |
||||||||||||||||||
Operating (see note (2) on page 16 for details) |
1,122 | 1,123 | 1,123 | 1,123 | 1,123 | 0.1% | ||||||||||||
Financial |
4,064 | 4,147 | 4,504 | 4,406 | 4,481 | 10.3% | ||||||||||||
Reinsurance related embedded derivatives |
141 | 150 | 165 | 120 | 116 |
-17.7% |
||||||||||||
Funds withheld reinsurance liabilities |
806 | 764 | 717 | 718 | 676 |
-16.1% |
||||||||||||
Deferred gain on business sold through reinsurance |
190 | 171 | 153 | 134 | 116 |
-38.9% |
||||||||||||
Payables for collateral on investments |
3,853 | 4,409 | 5,046 | 4,587 | 5,297 | 37.5% | ||||||||||||
VIEs' liabilities |
17 | 13 | 5 | 3 | 2 |
-88.2% |
||||||||||||
Other liabilities |
5,168 | 5,776 | 6,340 | 4,936 | 6,071 | 17.5% | ||||||||||||
Separate account liabilities |
122,937 | 125,265 | 127,828 | 128,079 | 120,275 |
-2.2% |
||||||||||||
Total liabilities |
232,994 | 237,637 | 242,262 | 240,515 | 235,131 | 0.9% | ||||||||||||
Stockholders’ Equity |
||||||||||||||||||
Common stock |
6,696 | 6,622 | 6,493 | 6,469 | 6,380 |
-4.7% |
||||||||||||
Retained earnings |
5,834 | 6,022 | 6,077 | 6,286 | 6,358 | 9.0% | ||||||||||||
AOCI: |
||||||||||||||||||
Unrealized gain (loss) on AFS securities |
2,872 | 3,175 | 3,655 | 1,945 | 1,725 |
-39.9% |
||||||||||||
Unrealized OTTI on AFS securities |
56 | 64 | 56 | 66 | 63 | 12.5% | ||||||||||||
Unrealized gain (loss) on derivative instruments |
221 | 139 | 218 | 209 | 152 |
-31.2% |
||||||||||||
Foreign currency translation adjustment |
(10) | (3) | (4) | 3 | (2) | 80.0% | ||||||||||||
Funded status of employee benefit plans |
(217) | (279) | (272) | (279) | (275) |
-26.7% |
||||||||||||
Total AOCI |
2,922 | 3,096 | 3,653 | 1,944 | 1,663 |
-43.1% |
||||||||||||
Total stockholders’ equity |
15,452 | 15,740 | 16,223 | 14,699 | 14,401 |
-6.8% |
||||||||||||
Total liabilities and stockholders’ equity |
$ |
248,446 |
$ |
253,377 |
$ |
258,485 |
$ |
255,214 |
$ |
249,532 | 0.4% | |||||||
Page 4b |
Lincoln Financial Group |
||||||||||||||||||||||||||
Earnings, Shares, Return on Equity and Return to Stockholder Highlights |
||||||||||||||||||||||||||
Unaudited (millions of dollars, except per share data) |
||||||||||||||||||||||||||
As of or For the Three Months Ended |
As of or For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Income (Loss) |
||||||||||||||||||||||||||
Income (loss) from operations |
$ |
414 |
$ |
439 |
$ |
352 |
$ |
371 |
$ |
289 |
-30.2% |
$ |
1,173 |
$ |
1,013 |
-13.6% |
||||||||||
Net income (loss) |
439 | 348 | 300 | 344 | 227 |
-48.3% |
1,166 | 871 |
-25.3% |
|||||||||||||||||
Earnings (Loss) Per Diluted Share |
||||||||||||||||||||||||||
Income (loss) from operations |
$ |
1.56 |
$ |
1.67 |
$ |
1.35 |
$ |
1.46 |
$ |
1.11 |
-28.8% |
$ |
4.36 |
$ |
3.92 |
-10.1% |
||||||||||
Net income (loss) |
1.65 | 1.32 | 1.15 | 1.35 | 0.87 |
-47.3% |
4.34 | 3.37 |
-22.4% |
|||||||||||||||||
Average Stockholders’ Equity |
||||||||||||||||||||||||||
Average equity, including AOCI |
$ |
15,452 |
$ |
15,596 |
$ |
15,982 |
$ |
15,461 |
$ |
14,550 |
-5.8% |
$ |
14,796 |
$ |
15,331 | 3.6% | ||||||||||
Average AOCI |
3,061 | 3,009 | 3,374 | 2,799 | 1,804 |
-41.1% |
2,631 | 2,659 | 1.1% | |||||||||||||||||
Average equity, excluding AOCI |
$ |
12,391 |
$ |
12,587 |
$ |
12,608 |
$ |
12,662 |
$ |
12,746 | 2.9% |
$ |
12,165 |
$ |
12,672 | 4.2% | ||||||||||
ROE |
||||||||||||||||||||||||||
Income (loss) from operations |
13.4% | 13.9% | 11.2% | 11.7% | 9.1% | 12.9% | 10.7% | |||||||||||||||||||
Net income (loss) |
14.2% | 11.1% | 9.5% | 10.9% | 7.1% | 12.8% | 9.2% | |||||||||||||||||||
Per Share |
||||||||||||||||||||||||||
Dividends declared during the period |
$ |
0.16 |
$ |
0.20 |
$ |
0.20 |
$ |
0.20 |
$ |
0.20 | 25.0% |
$ |
0.48 |
$ |
0.60 | 25.0% | ||||||||||
Book value, including AOCI |
59.48 | 61.35 | 64.14 | 58.58 | 58.19 |
-2.2% |
59.48 | 58.19 |
-2.2% |
|||||||||||||||||
Book value, excluding AOCI |
48.23 | 49.29 | 49.70 | 50.83 | 51.47 | 6.7% | 48.23 | 51.47 | 6.7% | |||||||||||||||||
Shares |
||||||||||||||||||||||||||
Repurchased during the period |
2.8 | 3.6 | 6.0 | 2.6 | 3.7 | 29.4% | 8.9 | 12.3 | 37.9% | |||||||||||||||||
Average for the period – diluted |
266.8 | 263.0 | 260.6 | 255.1 | 253.2 |
-5.1% |
269.3 | 256.6 |
-4.7% |
|||||||||||||||||
End-of-period – basic |
259.8 | 256.6 | 252.9 | 250.9 | 247.5 |
-4.7% |
259.8 | 247.5 |
-4.7% |
|||||||||||||||||
End-of-period – diluted |
265.5 | 261.5 | 257.2 | 254.1 | 251.2 |
-5.4% |
265.5 | 251.2 |
-5.4% |
|||||||||||||||||
Cash Returned to Common Stockholders |
||||||||||||||||||||||||||
Shares repurchased |
$ |
150 |
$ |
200 |
$ |
350 |
$ |
150 |
$ |
200 | 33.3% |
$ |
450 |
$ |
700 | 55.6% | ||||||||||
Common dividends |
42 | 42 | 51 | 51 | 50 | 19.0% | 126 | 152 | 20.6% | |||||||||||||||||
Total cash returned to common stockholders |
$ |
192 |
$ |
242 |
$ |
401 |
$ |
201 |
$ |
250 | 30.2% |
$ |
576 |
$ |
852 | 47.9% | ||||||||||
Page 5 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Income (Loss) from Operations, Average Equity and ROE By Segment |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Income (Loss) from Operations |
||||||||||||||||||||||||||
Annuities |
$ |
245 |
$ |
237 |
$ |
239 |
$ |
255 |
$ |
259 | 5.7% |
$ |
688 |
$ |
753 | 9.4% | ||||||||||
Retirement Plan Services |
40 | 42 | 35 | 30 | 42 | 5.0% | 118 | 107 |
-9.3% |
|||||||||||||||||
Life Insurance |
150 | 193 | 111 | 105 | 36 |
-76.0% |
418 | 251 |
-40.0% |
|||||||||||||||||
Group Protection |
8 | (7) | (6) | 19 | 17 | 112.5% | 29 | 29 | 0.0% | |||||||||||||||||
Other Operations |
(29) | (26) | (27) | (38) | (65) |
NM |
(80) | (127) |
-58.8% |
|||||||||||||||||
Income (loss) from operations |
$ |
414 |
$ |
439 |
$ |
352 |
$ |
371 |
$ |
289 |
-30.2% |
$ |
1,173 |
$ |
1,013 |
-13.6% |
||||||||||
Average Equity, Excluding AOCI |
||||||||||||||||||||||||||
Segment equity, excluding goodwill: |
||||||||||||||||||||||||||
Annuities |
$ |
3,632 |
$ |
3,786 |
$ |
3,887 |
$ |
4,073 |
$ |
4,262 | 17.3% |
$ |
3,418 |
$ |
4,074 | 19.2% | ||||||||||
Retirement Plan Services |
966 | 1,002 | 1,006 | 993 | 1,010 | 4.6% | 961 | 1,003 | 4.4% | |||||||||||||||||
Life Insurance |
6,226 | 6,204 | 6,226 | 6,422 | 6,506 | 4.5% | 6,101 | 6,384 | 4.6% | |||||||||||||||||
Group Protection |
1,208 | 1,227 | 1,241 | 1,238 | 1,228 | 1.7% | 1,183 | 1,236 | 4.5% | |||||||||||||||||
Total segment equity, excluding goodwill |
12,032 | 12,219 | 12,360 | 12,726 | 13,006 | 8.1% | 11,663 | 12,697 | 8.9% | |||||||||||||||||
Other Operations and goodwill |
359 | 368 | 248 | (64) | (260) |
NM |
502 | (25) |
NM |
|||||||||||||||||
Total average equity, excluding AOCI |
$ |
12,391 |
$ |
12,587 |
$ |
12,608 |
$ |
12,662 |
$ |
12,746 | 2.9% |
$ |
12,165 |
$ |
12,672 | 4.2% | ||||||||||
ROE |
||||||||||||||||||||||||||
Segment ROE, excluding goodwill: |
||||||||||||||||||||||||||
Annuities |
27.0% | 25.1% | 24.6% | 25.0% | 24.3% | 26.8% | 24.6% | |||||||||||||||||||
Retirement Plan Services |
16.6% | 16.6% | 14.0% | 12.0% | 16.4% | 16.4% | 14.2% | |||||||||||||||||||
Life Insurance |
9.7% | 12.5% | 7.1% | 6.5% | 2.2% | 9.1% | 5.2% | |||||||||||||||||||
Group Protection |
2.6% |
-2.1% |
-2.1% |
6.3% | 5.4% | 3.3% | 3.2% | |||||||||||||||||||
Consolidated ROE – income (loss) from operations |
13.4% | 13.9% | 11.2% | 11.7% | 9.1% | 12.9% | 10.7% | |||||||||||||||||||
Page 6 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Sources of Earnings |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Twelve Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
12/31/13 |
12/31/14 |
Change |
||||||||||||||||||
Income (Loss) from Operations, Before Income Taxes |
||||||||||||||||||||||||||
Annuities |
$ |
315 |
$ |
297 |
$ |
293 |
$ |
328 |
$ |
328 | 4.1% |
$ |
927 |
$ |
1,163 | 25.5% | ||||||||||
Retirement Plan Services |
55 | 49 | 48 | 39 | 57 | 3.6% | 190 | 211 | 11.1% | |||||||||||||||||
Life Insurance |
226 | 280 | 156 | 152 | 46 |
-79.6% |
812 | 907 | 11.7% | |||||||||||||||||
Group Protection |
12 | (10) | (10) | 30 | 26 | 116.7% | 109 | 35 |
-67.9% |
|||||||||||||||||
Other Operations |
(45) | (40) | (44) | (59) | (93) |
NM |
(192) | (166) | 13.5% | |||||||||||||||||
Income (loss) from operations, before income taxes |
$ |
563 |
$ |
576 |
$ |
443 |
$ |
490 |
$ |
364 |
-35.3% |
$ |
1,846 |
$ |
2,150 | 16.5% | ||||||||||
Sources of Earnings, Before Income Taxes |
||||||||||||||||||||||||||
Investment spread |
$ |
195 |
$ |
202 |
$ |
164 |
$ |
175 |
$ |
136 |
-30.3% |
$ |
772 |
$ |
778 | 0.8% | ||||||||||
Mortality/morbidity |
127 | 167 | 74 | 110 | 48 |
-62.2% |
507 | 528 | 4.1% | |||||||||||||||||
Fees on AUM |
251 | 205 | 205 | 218 | 282 | 12.4% | 649 | 846 | 30.4% | |||||||||||||||||
VA riders |
35 | 42 | 44 | 46 | (9) |
NM |
110 | 164 | 49.1% | |||||||||||||||||
Total sources of earnings, before income taxes |
608 | 616 | 487 | 549 | 457 |
-24.8% |
2,038 | 2,316 | 13.6% | |||||||||||||||||
Other Operations |
(45) | (40) | (44) | (59) | (93) |
NM |
(192) | (166) | 13.5% | |||||||||||||||||
Income (loss) from operations, before income taxes |
$ |
563 |
$ |
576 |
$ |
443 |
$ |
490 |
$ |
364 |
-35.3% |
$ |
1,846 |
$ |
2,150 | 16.5% | ||||||||||
Sources of Earnings, Before Income Taxes, % By Component |
||||||||||||||||||||||||||
Investment spread |
32.1% | 32.8% | 33.8% | 32.0% | 29.7% | 37.8% | 33.6% | |||||||||||||||||||
Mortality/morbidity |
20.9% | 27.1% | 15.2% | 19.9% | 10.4% | 24.9% | 22.8% | |||||||||||||||||||
Fees on AUM |
41.3% | 33.3% | 42.0% | 39.7% | 61.9% | 31.9% | 36.5% | |||||||||||||||||||
VA riders |
5.7% | 6.8% | 9.0% | 8.4% |
-2.0% |
5.4% | 7.1% | |||||||||||||||||||
Total |
100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | |||||||||||||||||||
Page 7 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Select Earnings Drivers By Segment |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Annuities |
||||||||||||||||||||||||||
Operating revenues |
$ |
944 |
$ |
966 |
$ |
989 |
$ |
991 |
$ |
1,060 | 12.3% |
$ |
2,779 |
$ |
3,041 | 9.4% | ||||||||||
Average account values |
121,260 | 121,079 | 122,877 | 125,820 | 122,668 | 1.2% | 118,296 | 123,968 | 4.8% | |||||||||||||||||
Net flows |
565 | 555 | 196 | 397 | 536 |
-5.1% |
2,091 | 1,129 |
-46.0% |
|||||||||||||||||
Retirement Plan Services |
||||||||||||||||||||||||||
Operating revenues |
$ |
272 |
$ |
277 |
$ |
273 |
$ |
270 |
$ |
282 | 3.7% |
$ |
813 |
$ |
826 | 1.6% | ||||||||||
Average account values |
53,618 | 53,739 | 54,018 | 55,264 | 54,184 | 1.1% | 52,534 | 54,387 | 3.5% | |||||||||||||||||
Net flows |
50 | (936) | 115 | 306 | 251 |
NM |
55 | 673 |
NM |
|||||||||||||||||
Life Insurance |
||||||||||||||||||||||||||
Operating revenues |
$ |
1,446 |
$ |
1,858 |
$ |
1,432 |
$ |
1,443 |
$ |
1,727 | 19.4% |
$ |
4,146 |
$ |
4,600 | 11.0% | ||||||||||
Average account values |
41,371 | 41,858 | 42,468 | 42,891 | 42,963 | 3.8% | 40,866 | 42,774 | 4.7% | |||||||||||||||||
Average in-force face amount |
632,154 | 637,935 | 642,258 | 646,261 | 651,256 | 3.0% | 625,944 | 646,592 | 3.3% | |||||||||||||||||
Net flows |
934 | 1,096 | 888 | 929 | 1,019 | 9.1% | 2,682 | 2,836 | 5.7% | |||||||||||||||||
Group Protection |
||||||||||||||||||||||||||
Operating revenues |
$ |
598 |
$ |
616 |
$ |
605 |
$ |
617 |
$ |
570 |
-4.7% |
$ |
1,829 |
$ |
1,792 |
-2.0% |
||||||||||
Non-medical earned premiums |
528 | 541 | 535 | 535 | 522 |
-1.1% |
1,588 | 1,592 | 0.3% | |||||||||||||||||
Consolidated |
||||||||||||||||||||||||||
Operating revenues |
$ |
3,363 |
$ |
3,834 |
$ |
3,394 |
$ |
3,417 |
$ |
3,735 | 11.1% |
$ |
9,882 |
$ |
10,546 | 6.7% | ||||||||||
Average account values |
216,249 | 216,676 | 219,363 | 223,975 | 219,815 | 1.6% | 211,696 | 221,129 | 4.5% | |||||||||||||||||
Net flows |
1,549 | 715 | 1,199 | 1,632 | 1,806 | 16.6% | 4,828 | 4,638 |
-3.9% |
|||||||||||||||||
Page 8 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Deposits, Net Flows and Account Balances By Segment |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
As of or For the Three Months Ended |
As of or For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Deposits |
||||||||||||||||||||||||||
Annuities |
$ |
3,453 |
$ |
3,381 |
$ |
2,990 |
$ |
3,380 |
$ |
3,304 |
-4.3% |
$ |
10,398 |
$ |
9,675 |
-7.0% |
||||||||||
Retirement Plan Services |
1,611 | 2,332 | 1,704 | 1,862 | 1,884 | 16.9% | 5,183 | 5,450 | 5.2% | |||||||||||||||||
Life Insurance |
1,285 | 1,474 | 1,311 | 1,344 | 1,400 | 8.9% | 3,859 | 4,055 | 5.1% | |||||||||||||||||
Total deposits |
$ |
6,349 |
$ |
7,187 |
$ |
6,005 |
$ |
6,586 |
$ |
6,588 | 3.8% |
$ |
19,440 |
$ |
19,180 |
-1.3% |
||||||||||
Net Flows |
||||||||||||||||||||||||||
Annuities |
$ |
565 |
$ |
555 |
$ |
196 |
$ |
397 |
$ |
536 |
-5.1% |
$ |
2,091 |
$ |
1,129 |
-46.0% |
||||||||||
Retirement Plan Services |
50 | (936) | 115 | 306 | 251 |
NM |
55 | 673 |
NM |
|||||||||||||||||
Life Insurance |
934 | 1,096 | 888 | 929 | 1,019 | 9.1% | 2,682 | 2,836 | 5.7% | |||||||||||||||||
Total net flows |
$ |
1,549 |
$ |
715 |
$ |
1,199 |
$ |
1,632 |
$ |
1,806 | 16.6% |
$ |
4,828 |
$ |
4,638 |
-3.9% |
||||||||||
Account Balances as of End-of-Period |
||||||||||||||||||||||||||
Annuities |
$ |
120,270 |
$ |
122,041 |
$ |
124,254 |
$ |
124,535 |
$ |
118,607 |
-1.4% |
$ |
120,270 |
$ |
118,607 |
-1.4% |
||||||||||
Retirement Plan Services |
53,362 | 53,539 | 54,632 | 54,989 | 52,844 |
-1.0% |
53,362 | 52,844 |
-1.0% |
|||||||||||||||||
Life Insurance |
41,504 | 42,213 | 42,724 | 43,059 | 42,868 | 3.3% | 41,504 | 42,868 | 3.3% | |||||||||||||||||
Total account balances |
$ |
215,136 |
$ |
217,793 |
$ |
221,610 |
$ |
222,583 |
$ |
214,319 |
-0.4% |
$ |
215,136 |
$ |
214,319 |
-0.4% |
||||||||||
Average Account Balances |
||||||||||||||||||||||||||
Annuities |
$ |
121,260 |
$ |
121,079 |
$ |
122,877 |
$ |
125,820 |
$ |
122,668 | 1.2% |
$ |
118,296 |
$ |
123,968 | 4.8% | ||||||||||
Retirement Plan Services |
53,618 | 53,739 | 54,018 | 55,264 | 54,184 | 1.1% | 52,534 | 54,387 | 3.5% | |||||||||||||||||
Life Insurance |
41,371 | 41,858 | 42,468 | 42,891 | 42,963 | 3.8% | 40,866 | 42,774 | 4.7% | |||||||||||||||||
Total average account balances |
$ |
216,249 |
$ |
216,676 |
$ |
219,363 |
$ |
223,975 |
$ |
219,815 | 1.6% |
$ |
211,696 |
$ |
221,129 | 4.5% | ||||||||||
Page 9 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Sales By Segment |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Sales |
||||||||||||||||||||||||||
Annuities: |
||||||||||||||||||||||||||
Variable |
$ |
3,226 |
$ |
3,175 |
$ |
2,697 |
$ |
3,015 |
$ |
2,738 |
-15.1% |
$ |
9,346 |
$ |
8,451 |
-9.6% |
||||||||||
Fixed |
227 | 206 | 293 | 365 | 566 | 149.3% | 1,052 | 1,224 | 16.3% | |||||||||||||||||
Total Annuities |
$ |
3,453 |
$ |
3,381 |
$ |
2,990 |
$ |
3,380 |
$ |
3,304 |
-4.3% |
$ |
10,398 |
$ |
9,675 |
-7.0% |
||||||||||
Retirement Plan Services: |
||||||||||||||||||||||||||
First year sales |
$ |
429 |
$ |
1,190 |
$ |
382 |
$ |
673 |
$ |
706 | 64.6% |
$ |
1,522 |
$ |
1,761 | 15.7% | ||||||||||
Recurring deposits |
1,182 | 1,142 | 1,322 | 1,189 | 1,178 |
-0.3% |
3,661 | 3,689 | 0.8% | |||||||||||||||||
Total Retirement Plan Services |
$ |
1,611 |
$ |
2,332 |
$ |
1,704 |
$ |
1,862 |
$ |
1,884 | 16.9% |
$ |
5,183 |
$ |
5,450 | 5.2% | ||||||||||
Life Insurance: |
||||||||||||||||||||||||||
UL: |
||||||||||||||||||||||||||
Excluding MoneyGuard® and IUL |
$ |
27 |
$ |
26 |
$ |
20 |
$ |
22 |
$ |
23 |
-14.8% |
$ |
72 |
$ |
66 |
-8.3% |
||||||||||
MoneyGuard® |
43 | 47 | 40 | 46 | 52 | 20.9% | 116 | 137 | 18.1% | |||||||||||||||||
IUL |
18 | 24 | 15 | 23 | 21 | 16.7% | 52 | 59 | 13.5% | |||||||||||||||||
Total UL |
88 | 97 | 75 | 91 | 96 | 9.1% | 240 | 262 | 9.2% | |||||||||||||||||
VUL |
44 | 52 | 45 | 43 | 47 | 6.8% | 145 | 134 |
-7.6% |
|||||||||||||||||
Term |
23 | 21 | 19 | 21 | 20 |
-13.0% |
69 | 61 |
-11.6% |
|||||||||||||||||
Total individual life insurance |
155 | 170 | 139 | 155 | 163 | 5.2% | 454 | 457 | 0.7% | |||||||||||||||||
COLI and BOLI |
5 | 22 | 14 | 46 | 10 | 100.0% | 23 | 70 | 204.3% | |||||||||||||||||
Total Life Insurance |
$ |
160 |
$ |
192 |
$ |
153 |
$ |
201 |
$ |
173 | 8.1% |
$ |
477 |
$ |
527 | 10.5% | ||||||||||
Group Protection: |
||||||||||||||||||||||||||
Life |
$ |
34 |
$ |
112 |
$ |
25 |
$ |
26 |
$ |
24 |
-29.4% |
$ |
92 |
$ |
75 |
-18.5% |
||||||||||
Disability |
41 | 103 | 22 | 23 | 22 |
-46.3% |
97 | 68 |
-29.9% |
|||||||||||||||||
Dental |
19 | 35 | 9 | 13 | 15 |
-21.1% |
40 | 36 |
-10.0% |
|||||||||||||||||
Total Group Protection |
$ |
94 |
$ |
250 |
$ |
56 |
$ |
62 |
$ |
61 |
-35.1% |
$ |
229 |
$ |
179 |
-21.8% |
||||||||||
Page 10 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Operating Revenues and General and Administrative Expenses By Segment |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Operating Revenues |
||||||||||||||||||||||||||
Annuities |
$ |
944 |
$ |
966 |
$ |
989 |
$ |
991 |
$ |
1,060 | 12.3% |
$ |
2,779 |
$ |
3,041 | 9.4% | ||||||||||
Retirement Plan Services |
272 | 277 | 273 | 270 | 282 | 3.7% | 813 | 826 | 1.6% | |||||||||||||||||
Life Insurance |
1,446 | 1,858 | 1,432 | 1,443 | 1,727 | 19.4% | 4,146 | 4,600 | 11.0% | |||||||||||||||||
Group Protection |
598 | 616 | 605 | 617 | 570 |
-4.7% |
1,829 | 1,792 |
-2.0% |
|||||||||||||||||
Other Operations |
103 | 117 | 95 | 96 | 96 |
-6.8% |
315 | 287 |
-8.9% |
|||||||||||||||||
Total |
$ |
3,363 |
$ |
3,834 |
$ |
3,394 |
$ |
3,417 |
$ |
3,735 | 11.1% |
$ |
9,882 |
$ |
10,546 | 6.7% | ||||||||||
General and Administrative Expenses, |
||||||||||||||||||||||||||
Net of Amounts Capitalized |
||||||||||||||||||||||||||
Annuities |
$ |
109 |
$ |
126 |
$ |
109 |
$ |
118 |
$ |
113 | 3.7% |
$ |
329 |
$ |
339 | 3.0% | ||||||||||
Retirement Plan Services |
73 | 82 | 71 | 78 | 77 | 5.5% | 212 | 226 | 6.6% | |||||||||||||||||
Life Insurance |
99 | 124 | 108 | 114 | 105 | 6.1% | 311 | 327 | 5.1% | |||||||||||||||||
Group Protection |
66 | 75 | 67 | 71 | 70 | 6.1% | 191 | 208 | 8.9% | |||||||||||||||||
Other Operations |
18 | 35 | 14 | 26 | 56 | 211.1% | 48 | 96 | 100.0% | |||||||||||||||||
Total |
$ |
365 |
$ |
442 |
$ |
369 |
$ |
407 |
$ |
421 | 15.3% |
$ |
1,091 |
$ |
1,196 | 9.6% | ||||||||||
General and Administrative Expenses, |
||||||||||||||||||||||||||
Net of Amounts Capitalized, As a Percentage |
||||||||||||||||||||||||||
of Operating Revenues |
||||||||||||||||||||||||||
Annuities |
11.5% | 13.0% | 11.1% | 11.9% | 10.6% | 11.8% | 11.2% | |||||||||||||||||||
Retirement Plan Services |
26.7% | 29.6% | 25.9% | 28.9% | 27.2% | 26.1% | 27.3% | |||||||||||||||||||
Life Insurance |
6.8% | 6.7% | 7.6% | 7.9% | 6.1% | 7.5% | 7.1% | |||||||||||||||||||
Group Protection |
11.0% | 12.3% | 11.1% | 11.4% | 12.2% | 10.4% | 11.6% | |||||||||||||||||||
Other Operations |
17.8% | 29.7% | 14.3% | 27.5% | 57.9% | 15.3% | 33.3% | |||||||||||||||||||
Total |
10.9% | 11.5% | 10.9% | 11.9% | 11.3% | 11.0% | 11.3% | |||||||||||||||||||
Page 11 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Operating Commissions and Other Expenses |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Operating Commissions and |
||||||||||||||||||||||||||
Other Expenses Incurred |
||||||||||||||||||||||||||
General and administrative expenses |
$ |
411 |
$ |
501 |
$ |
416 |
$ |
452 |
$ |
468 | 13.9% |
$ |
1,233 |
$ |
1,336 | 8.4% | ||||||||||
Commissions |
602 | 617 | 577 | 602 | 598 |
-0.7% |
1,781 | 1,776 |
-0.3% |
|||||||||||||||||
Media expenses |
15 | 16 | 14 | 14 |
- |
-100.0% |
44 | 28 |
-36.4% |
|||||||||||||||||
Taxes, licenses and fees |
66 | 52 | 74 | 57 | 63 |
-4.5% |
194 | 194 | 0.0% | |||||||||||||||||
Interest and debt expense |
67 | 67 | 68 | 69 | 67 | 0.0% | 201 | 204 | 1.5% | |||||||||||||||||
Expenses associated with reserve financing |
||||||||||||||||||||||||||
and unrelated letters of credit |
18 | 16 | 19 | 18 | 18 | 0.0% | 53 | 55 | 3.8% | |||||||||||||||||
Total operating commissions and other |
||||||||||||||||||||||||||
expenses incurred |
1,179 | 1,269 | 1,168 | 1,212 | 1,214 | 3.0% | 3,506 | 3,593 | 2.5% | |||||||||||||||||
Less Amounts Capitalized |
||||||||||||||||||||||||||
General and administrative expenses |
(46) | (59) | (47) | (45) | (47) |
-2.2% |
(142) | (140) | 1.4% | |||||||||||||||||
Commissions |
(329) | (345) | (296) | (313) | (320) | 2.7% | (969) | (928) | 4.2% | |||||||||||||||||
Taxes, licenses and fees |
(7) | (8) | (8) | (8) | (8) |
-14.3% |
(22) | (24) |
-9.1% |
|||||||||||||||||
Total amounts capitalized |
(382) | (412) | (351) | (366) | (375) | 1.8% | (1,133) | (1,092) | 3.6% | |||||||||||||||||
Total expenses incurred, net of amounts |
||||||||||||||||||||||||||
capitalized, excluding amortization |
797 | 857 | 817 | 846 | 839 | 5.3% | 2,373 | 2,501 | 5.4% | |||||||||||||||||
Amortization |
||||||||||||||||||||||||||
Amortization of DAC and VOBA |
265 | 358 | 261 | 237 | 674 | 154.3% | 754 | 1,174 | 55.7% | |||||||||||||||||
Amortization of intangibles |
1 | 1 | 1 | 1 | 1 | 0.0% | 3 | 3 | 0.0% | |||||||||||||||||
Total amortization |
266 | 359 | 262 | 238 | 675 | 153.8% | 757 | 1,177 | 55.5% | |||||||||||||||||
Total operating commissions and |
||||||||||||||||||||||||||
other expenses |
$ |
1,063 |
$ |
1,216 |
$ |
1,079 |
$ |
1,084 |
$ |
1,514 | 42.4% |
$ |
3,130 |
$ |
3,678 | 17.5% | ||||||||||
Page 12 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Interest Rate Yields and Spreads By Segment |
||||||||||||||||||||||||||
Unaudited |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Annuities |
||||||||||||||||||||||||||
Earned rate on reserves |
4.43% | 4.31% | 4.24% | 4.20% | 4.19% | (24) | 4.49% | 4.21% | (28) | |||||||||||||||||
Prepayment and make whole premiums |
0.11% | 0.37% | 0.20% | 0.06% | 0.18% | 7 | 0.10% | 0.15% | 5 | |||||||||||||||||
Net investment income yield on reserves |
4.54% | 4.68% | 4.44% | 4.26% | 4.37% | (17) | 4.59% | 4.36% | (23) | |||||||||||||||||
Interest rate credited to contract holders |
2.81% | 2.75% | 2.64% | 2.61% | 2.56% | (25) | 2.80% | 2.60% | (20) | |||||||||||||||||
Interest rate spread |
1.73% | 1.93% | 1.80% | 1.65% | 1.81% | 8 | 1.79% | 1.76% | (3) | |||||||||||||||||
Retirement Plan Services |
||||||||||||||||||||||||||
Earned rate on reserves |
4.77% | 4.67% | 4.65% | 4.61% | 4.71% | (6) | 4.81% | 4.66% | (15) | |||||||||||||||||
Prepayment and make whole premiums |
0.15% | 0.33% | 0.18% | 0.03% | 0.19% | 4 | 0.13% | 0.13% |
- |
|||||||||||||||||
Net investment income yield on reserves |
4.92% | 5.00% | 4.83% | 4.64% | 4.90% | (2) | 4.94% | 4.79% | (15) | |||||||||||||||||
Interest rate credited to contract holders |
3.04% | 3.00% | 3.02% | 3.01% | 3.01% | (3) | 3.05% | 3.01% | (4) | |||||||||||||||||
Interest rate spread |
1.88% | 2.00% | 1.81% | 1.63% | 1.89% | 1 | 1.89% | 1.78% | (11) | |||||||||||||||||
Life Insurance |
||||||||||||||||||||||||||
Attributable to interest-sensitive products: |
||||||||||||||||||||||||||
Earned rate on reserves |
5.39% | 5.37% | 5.34% | 5.33% | 5.33% | (6) | 5.43% | 5.34% | (9) | |||||||||||||||||
Prepayment and make whole premiums |
0.07% | 0.29% | 0.18% | 0.03% | 0.14% | 7 | 0.09% | 0.12% | 3 | |||||||||||||||||
Alternative investments |
0.28% | 0.06% | 0.05% | 0.18% | 0.33% | 5 | 0.20% | 0.18% | (2) | |||||||||||||||||
Net investment income yield on reserves |
5.74% | 5.72% | 5.57% | 5.54% | 5.80% | 6 | 5.72% | 5.64% | (8) | |||||||||||||||||
Interest rate credited to contract holders |
3.94% | 3.96% | 3.89% | 3.97% | 3.92% | (2) | 3.95% | 3.92% | (3) | |||||||||||||||||
Interest rate spread |
1.80% | 1.76% | 1.68% | 1.57% | 1.88% | 8 | 1.77% | 1.72% | (5) | |||||||||||||||||
Attributable to traditional products: |
||||||||||||||||||||||||||
Earned rate on reserves |
5.23% | 5.54% | 5.24% | 5.08% | 5.15% | (8) | 5.53% | 5.15% | (38) | |||||||||||||||||
Prepayment and make whole premiums |
0.18% | 0.17% | 0.15% | 0.04% | 0.10% | (8) | 0.25% | 0.10% | (15) | |||||||||||||||||
Alternative investments |
0.00% |
-0.04% |
0.00% | 0.00% | 0.00% |
- |
0.00% | 0.00% |
- |
|||||||||||||||||
Net investment income yield on reserves |
5.41% | 5.67% | 5.39% | 5.12% | 5.25% | (16) | 5.78% | 5.25% | (53) | |||||||||||||||||
Page 13 |
Lincoln Financial Group |
||||||||||||||||||||||||||||
Select Investment Data |
||||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||||
As of 9/30/14 |
As of 12/31/14 |
As of 9/30/15 |
||||||||||||||||||||||||||
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||||||||||||||||
AFS and Trading Securities, at Fair Value |
||||||||||||||||||||||||||||
AFS securities: |
||||||||||||||||||||||||||||
Corporate bonds |
$ |
73,798 | 83.6% |
$ |
74,545 | 83.6% |
$ |
74,432 | 84.3% | |||||||||||||||||||
U.S. government bonds |
402 | 0.5% | 435 | 0.5% | 438 | 0.5% | ||||||||||||||||||||||
Foreign government bonds |
551 | 0.6% | 541 | 0.6% | 532 | 0.6% | ||||||||||||||||||||||
Mortgage-backed securities |
4,931 | 5.6% | 4,796 | 5.4% | 4,252 | 4.8% | ||||||||||||||||||||||
Asset-backed collateralized debt obligations |
286 | 0.3% | 375 | 0.4% | 515 | 0.6% | ||||||||||||||||||||||
State and municipal bonds |
4,420 | 5.0% | 4,594 | 5.2% | 4,480 | 5.1% | ||||||||||||||||||||||
Hybrid and redeemable preferred securities |
960 | 1.1% | 954 | 1.1% | 857 | 1.0% | ||||||||||||||||||||||
VIEs’ fixed maturity securities |
598 | 0.7% | 598 | 0.7% | 598 | 0.7% | ||||||||||||||||||||||
Equity securities |
234 | 0.3% | 231 | 0.3% | 242 | 0.3% | ||||||||||||||||||||||
Total AFS securities |
86,180 | 97.7% | 87,069 | 97.8% | 86,346 | 97.9% | ||||||||||||||||||||||
Trading securities |
2,134 | 2.3% | 2,065 | 2.2% | 1,914 | 2.1% | ||||||||||||||||||||||
Total AFS and trading securities |
$ |
88,314 | 100.0% |
$ |
89,134 | 100.0% |
$ |
88,260 | 100.0% | |||||||||||||||||||
AFS and Trading Securities, at Amortized Cost |
||||||||||||||||||||||||||||
Fixed maturity securities |
$ |
80,910 | 99.7% |
$ |
80,960 | 99.7% |
$ |
83,164 | 99.7% | |||||||||||||||||||
Equity securities |
217 | 0.3% | 216 | 0.3% | 231 | 0.3% | ||||||||||||||||||||||
Total AFS and trading securities |
$ |
81,127 | 100.0% |
$ |
81,176 | 100.0% |
$ |
83,395 | 100.0% | |||||||||||||||||||
Percentage of Fixed Maturity AFS Securities, at Amortized Cost |
||||||||||||||||||||||||||||
Investment grade |
94.8% | 95.0% | 95.0% | |||||||||||||||||||||||||
Below investment grade |
5.2% | 5.0% | 5.0% | |||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||||
Net Investment Income |
$ |
1,212 |
$ |
1,232 |
$ |
1,187 |
$ |
1,187 |
$ |
1,254 | 3.5% |
$ |
3,627 |
$ |
3,627 | 0.0% | ||||||||||||
Average Invested Assets, at Amortized Cost |
92,704 | 93,251 | 94,379 | 95,496 | 96,121 | 3.7% | 91,870 | 95,332 | 3.8% | |||||||||||||||||||
Net Investment Income Yield |
5.23% | 5.29% | 5.03% | 4.97% | 5.22% | (1) | 5.26% | 5.07% | (19) | |||||||||||||||||||
Page 14 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Realized Gain (Loss), Pre-Tax |
||||||||||||||||||||||||||
Total operating realized gain (loss) |
$ |
42 |
$ |
43 |
$ |
43 |
$ |
47 |
$ |
45 | 7.1% |
$ |
121 |
$ |
135 | 11.6% | ||||||||||
Total excluded realized gain (loss) |
47 | (149) | (91) | (37) | (18) |
NM |
(15) | (146) |
NM |
|||||||||||||||||
Total realized gain (loss), pre-tax |
$ |
89 |
$ |
(106) |
$ |
(48) |
$ |
10 |
$ |
27 |
-69.7% |
$ |
106 |
$ |
(11) |
NM |
||||||||||
Realized Gain (Loss) Net of Benefit Ratio |
||||||||||||||||||||||||||
Unlocking, After-Tax |
||||||||||||||||||||||||||
Realized gain (loss) related to investments |
$ |
(16) |
$ |
(19) |
$ |
(10) |
$ |
(14) |
$ |
(26) |
-62.5% |
$ |
(27) |
$ |
(51) |
-88.9% |
||||||||||
Variable annuity net derivative results: |
||||||||||||||||||||||||||
Hedge program performance, including unlocking |
||||||||||||||||||||||||||
for GLB reserves hedged |
26 | (52) | (35) |
- |
(102) |
NM |
26 | (136) |
NM |
|||||||||||||||||
GLB non-performance risk component |
6 | 16 | 7 | (8) | 84 |
NM |
4 | 83 |
NM |
|||||||||||||||||
Total variable annuity net derivative results |
32 | (36) | (28) | (8) | (18) |
NM |
30 | (53) |
NM |
|||||||||||||||||
Indexed annuity forward-starting option |
9 | (9) | (13) | (4) | (18) |
NM |
(11) | (37) |
NM |
|||||||||||||||||
Gain (loss) on sale of subsidiaries/businesses |
- |
(28) | (1) | (1) |
- |
NM |
- |
(2) |
NM |
|||||||||||||||||
Excluded realized gain (loss) net of |
||||||||||||||||||||||||||
benefit ratio unlocking, after-tax |
$ |
25 |
$ |
(92) |
$ |
(52) |
$ |
(27) |
$ |
(62) |
NM |
$ |
(8) |
$ |
(143) |
NM |
||||||||||
Components of Realized Gain (Loss) |
||||||||||||||||||||||||||
Related to Investments, After-Tax |
||||||||||||||||||||||||||
OTTI |
$ |
(3) |
$ |
(3) |
$ |
(8) |
$ |
(5) |
$ |
(12) |
NM |
$ |
(7) |
$ |
(25) |
NM |
||||||||||
Other realized gain (loss) related to |
||||||||||||||||||||||||||
certain investments |
(1) | (1) | (9) | 4 | (4) |
NM |
(1) | (10) |
NM |
|||||||||||||||||
Gain (loss) on the mark-to-market |
||||||||||||||||||||||||||
on certain instruments |
(12) | (15) | 7 | (13) | (10) | 16.7% | (19) | (16) | 15.8% | |||||||||||||||||
Total realized gain (loss) related |
||||||||||||||||||||||||||
to investments, after-tax |
$ |
(16) |
$ |
(19) |
$ |
(10) |
$ |
(14) |
$ |
(26) |
-62.5% |
$ |
(27) |
$ |
(51) |
-88.9% |
||||||||||
Page 15 |
Lincoln Financial Group |
||||||||||||||||||
Select Liquidity and Rating Agency Data |
||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||
As of |
||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
|||||||||||||
Leverage Ratio |
||||||||||||||||||
Short-term debt |
$ |
250 |
$ |
250 |
$ |
250 |
$ |
- |
$ |
- |
-100.0% |
|||||||
Long-term debt |
5,186 | 5,270 | 5,627 | 5,529 | 5,604 | 8.1% | ||||||||||||
Total debt (1) |
5,436 | 5,520 | 5,877 | 5,529 | 5,604 | 3.1% | ||||||||||||
Less: |
||||||||||||||||||
Long-term operating debt (2) |
1,122 | 1,123 | 1,123 | 1,123 | 1,123 | 0.1% | ||||||||||||
75% of capital securities |
909 | 909 | 909 | 909 | 909 | 0.0% | ||||||||||||
Carrying value of fair value hedges |
175 | 259 | 315 | 217 | 292 | 66.9% | ||||||||||||
Total numerator |
$ |
3,230 |
$ |
3,229 |
$ |
3,530 |
$ |
3,280 |
$ |
3,280 | 1.5% | |||||||
Stockholders’ equity, excluding AOCI |
$ |
12,530 |
$ |
12,644 |
$ |
12,570 |
$ |
12,755 |
$ |
12,738 | 1.7% | |||||||
Total debt (1) |
5,436 | 5,520 | 5,877 | 5,529 | 5,604 | 3.1% | ||||||||||||
Total denominator |
$ |
17,966 |
$ |
18,164 |
$ |
18,447 |
$ |
18,284 |
$ |
18,342 | 2.1% | |||||||
Leverage ratio |
18.0% | 17.8% | 19.1% | 17.9% | 17.9% | |||||||||||||
Holding Company Available Liquidity |
$ |
572 |
$ |
554 |
$ |
786 |
$ |
545 |
$ |
505 |
-11.7% |
|||||||
Ratings as of October 28, 2015 |
||||||||||||||||||
Standard |
||||||||||||||||||
A.M. Best |
Fitch |
Moody’s |
& Poor’s |
|||||||||||||||
Senior Debt Ratings |
a- |
BBB+ |
Baa1 |
A- |
||||||||||||||
Financial Strength Ratings |
||||||||||||||||||
Lincoln National Life Insurance Company |
A+ |
A+ |
A1 |
AA- |
||||||||||||||
First Penn-Pacific Life Insurance Company |
A |
A+ |
A1 |
A- |
||||||||||||||
Lincoln Life & Annuity Company of New York |
A+ |
A+ |
A1 |
AA- |
||||||||||||||
(1) Excludes obligations under capital leases of $83 million that are reported in other liabilities on our Consolidated Balance Sheets. |
||||||||||||||||||
(2) 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 and the senior note issued in September 2008 by our primary insurance subsidiary. |
||||||||||||||||||
Page 16 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Annuities – Select Earnings and Operational Data |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
As of or For the Three Months Ended |
As of or For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Income (Loss) from Operations |
||||||||||||||||||||||||||
Operating revenues: |
||||||||||||||||||||||||||
Insurance premiums |
$ |
39 |
$ |
47 |
$ |
79 |
$ |
55 |
$ |
129 | 230.8% |
$ |
126 |
$ |
264 | 109.5% | ||||||||||
Fee income |
503 | 507 | 510 | 531 | 520 | 3.4% | 1,452 | 1,561 | 7.5% | |||||||||||||||||
Net investment income |
257 | 260 | 247 | 247 | 257 | 0.0% | 774 | 751 |
-3.0% |
|||||||||||||||||
Operating realized gain (loss) |
42 | 42 | 43 | 45 | 45 | 7.1% | 119 | 133 | 11.8% | |||||||||||||||||
Other revenues |
103 | 110 | 110 | 113 | 109 | 5.8% | 308 | 332 | 7.8% | |||||||||||||||||
Total operating revenues |
944 | 966 | 989 | 991 | 1,060 | 12.3% | 2,779 | 3,041 | 9.4% | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||
Interest credited |
152 | 150 | 143 | 139 | 134 |
-11.8% |
460 | 416 |
-9.6% |
|||||||||||||||||
Benefits |
101 | 92 | 129 | 90 | 219 | 116.8% | 267 | 437 | 63.7% | |||||||||||||||||
Commissions incurred |
270 | 266 | 249 | 267 | 261 |
-3.3% |
791 | 777 |
-1.8% |
|||||||||||||||||
Other expenses incurred |
215 | 234 | 222 | 231 | 220 | 2.3% | 642 | 674 | 5.0% | |||||||||||||||||
Amounts capitalized |
(175) | (168) | (147) | (165) | (160) | 8.6% | (514) | (471) | 8.4% | |||||||||||||||||
Amortization |
66 | 95 | 100 | 101 | 58 |
-12.1% |
267 | 259 |
-3.0% |
|||||||||||||||||
Total operating expenses |
629 | 669 | 696 | 663 | 732 | 16.4% | 1,913 | 2,092 | 9.4% | |||||||||||||||||
Income (loss) from operations before taxes |
315 | 297 | 293 | 328 | 328 | 4.1% | 866 | 949 | 9.6% | |||||||||||||||||
Federal income tax expense (benefit) |
70 | 60 | 54 | 73 | 69 |
-1.4% |
178 | 196 | 10.1% | |||||||||||||||||
Income (loss) from operations |
$ |
245 |
$ |
237 |
$ |
239 |
$ |
255 |
$ |
259 | 5.7% |
$ |
688 |
$ |
753 | 9.4% | ||||||||||
Effective Federal Income Tax Rate |
22.1% | 20.1% | 18.2% | 22.4% | 20.9% | 20.6% | 20.6% | |||||||||||||||||||
Average Equity, Excluding Goodwill and AOCI |
$ |
3,632 |
$ |
3,786 |
$ |
3,887 |
$ |
4,073 |
$ |
4,262 | 17.3% |
$ |
3,418 |
$ |
4,074 | 19.2% | ||||||||||
ROE, Excluding Goodwill |
27.0% | 25.1% | 24.6% | 25.0% | 24.3% | 26.8% | 24.6% | |||||||||||||||||||
Return on Average Account Values |
81 | 78 | 78 | 81 | 84 | 3 | 78 | 81 | 3 | |||||||||||||||||
Account Values |
||||||||||||||||||||||||||
Separate account values: |
||||||||||||||||||||||||||
Average |
$ |
99,892 |
$ |
99,827 |
$ |
101,970 |
$ |
104,794 |
$ |
101,515 | 1.6% |
$ |
96,976 |
$ |
102,758 | 6.0% | ||||||||||
End-of-period |
98,997 | 100,823 | 102,976 | 103,408 | 97,409 |
-1.6% |
98,997 | 97,409 |
-1.6% |
|||||||||||||||||
General account values: |
||||||||||||||||||||||||||
Average |
21,368 | 21,252 | 20,907 | 21,026 | 21,153 |
-1.0% |
21,320 | 21,210 |
-0.5% |
|||||||||||||||||
End-of-period |
21,273 | 21,218 | 21,278 | 21,127 | 21,198 |
-0.4% |
21,273 | 21,198 |
-0.4% |
|||||||||||||||||
Page 17 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Retirement Plan Services – Select Earnings and Operational Data |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
As of or For the Three Months Ended |
As of or For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Income (Loss) from Operations |
||||||||||||||||||||||||||
Operating revenues: |
||||||||||||||||||||||||||
Fee income |
$ |
62 |
$ |
62 |
$ |
62 |
$ |
61 |
$ |
60 |
-3.2% |
$ |
184 |
$ |
182 |
-1.1% |
||||||||||
Net investment income |
207 | 213 | 208 | 206 | 219 | 5.8% | 618 | 634 | 2.6% | |||||||||||||||||
Other revenues |
3 | 2 | 3 | 3 | 3 | 0.0% | 11 | 10 |
-9.1% |
|||||||||||||||||
Total operating revenues |
272 | 277 | 273 | 270 | 282 | 3.7% | 813 | 826 | 1.6% | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||
Interest credited |
118 | 119 | 123 | 123 | 124 | 5.1% | 354 | 370 | 4.5% | |||||||||||||||||
Benefits |
- |
- |
- |
1 |
- |
NM |
- |
1 |
NM |
|||||||||||||||||
Commissions incurred |
17 | 18 | 20 | 20 | 19 | 11.8% | 54 | 59 | 9.3% | |||||||||||||||||
Other expenses incurred |
81 | 91 | 80 | 85 | 83 | 2.5% | 236 | 248 | 5.1% | |||||||||||||||||
Amounts capitalized |
(8) | (9) | (7) | (7) | (6) | 25.0% | (21) | (20) | 4.8% | |||||||||||||||||
Amortization |
9 | 9 | 9 | 9 | 5 |
-44.4% |
29 | 23 |
-20.7% |
|||||||||||||||||
Total operating expenses |
217 | 228 | 225 | 231 | 225 | 3.7% | 652 | 681 | 4.4% | |||||||||||||||||
Income (loss) from operations before taxes |
55 | 49 | 48 | 39 | 57 | 3.6% | 161 | 145 |
-9.9% |
|||||||||||||||||
Federal income tax expense (benefit) |
15 | 7 | 13 | 9 | 15 | 0.0% | 43 | 38 |
-11.6% |
|||||||||||||||||
Income (loss) from operations |
$ |
40 |
$ |
42 |
$ |
35 |
$ |
30 |
$ |
42 | 5.0% |
$ |
118 |
$ |
107 |
-9.3% |
||||||||||
Effective Federal Income Tax Rate |
26.7% | 16.0% | 26.8% | 24.1% | 27.3% | 26.6% | 26.3% | |||||||||||||||||||
Average Equity, Excluding Goodwill and AOCI |
$ |
966 |
$ |
1,002 |
$ |
1,006 |
$ |
993 |
$ |
1,010 | 4.6% |
$ |
961 |
$ |
1,003 | 4.4% | ||||||||||
ROE, Excluding Goodwill |
16.6% | 16.6% | 14.0% | 12.0% | 16.4% | 16.4% | 14.2% | |||||||||||||||||||
Pre-tax Net Margin |
35.5% | 31.3% | 32.1% | 26.8% | 36.2% | 35.1% | 31.8% | |||||||||||||||||||
Return on Average Account Values |
30 | 31 | 26 | 22 | 31 | 1 | 30 | 26 | (4) | |||||||||||||||||
Average Account Values |
||||||||||||||||||||||||||
Separate account |
$ |
15,471 |
$ |
15,218 |
$ |
15,275 |
$ |
15,391 |
$ |
14,529 |
-6.1% |
$ |
15,273 |
$ |
15,062 |
-1.4% |
||||||||||
Mutual fund |
22,582 | 22,732 | 22,499 | 23,505 | 23,103 | 2.3% | 21,791 | 22,940 | 5.3% | |||||||||||||||||
General account |
15,565 | 15,789 | 16,244 | 16,368 | 16,552 | 6.3% | 15,470 | 16,385 | 5.9% | |||||||||||||||||
Net Flows – Trailing Twelve Months |
$ |
(52) |
$ |
(881) |
$ |
(405) |
$ |
(465) |
$ |
(264) |
NM |
$ |
(52) |
$ |
(264) |
NM |
||||||||||
Page 18 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Life Insurance – Select Earnings and Operational Data |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
As of or For the Three Months Ended |
As of or For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Income (Loss) from Operations |
||||||||||||||||||||||||||
Operating revenues: |
||||||||||||||||||||||||||
Insurance premiums |
$ |
153 |
$ |
133 |
$ |
149 |
$ |
160 |
$ |
166 | 8.5% |
$ |
424 |
$ |
475 | 12.0% | ||||||||||
Fee income |
651 | 656 | 649 | 647 | 890 | 36.7% | 1,810 | 2,187 | 20.8% | |||||||||||||||||
Net investment income |
636 | 639 | 626 | 626 | 662 | 4.1% | 1,892 | 1,913 | 1.1% | |||||||||||||||||
Operating realized gain (loss) |
- |
1 |
- |
2 |
- |
NM |
2 | 2 | 0.0% | |||||||||||||||||
Other revenues |
6 | 429 | 8 | 8 | 9 | 50.0% | 18 | 23 | 27.8% | |||||||||||||||||
Total operating revenues |
1,446 | 1,858 | 1,432 | 1,443 | 1,727 | 19.4% | 4,146 | 4,600 | 11.0% | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||
Interest credited |
337 | 341 | 338 | 345 | 344 | 2.1% | 1,008 | 1,026 | 1.8% | |||||||||||||||||
Benefits |
550 | 825 | 650 | 673 | 578 | 5.1% | 1,610 | 1,901 | 18.1% | |||||||||||||||||
Commissions incurred |
172 | 182 | 162 | 160 | 175 | 1.7% | 508 | 497 |
-2.2% |
|||||||||||||||||
Other expenses incurred |
173 | 196 | 185 | 183 | 182 | 5.2% | 532 | 550 | 3.4% | |||||||||||||||||
Amounts capitalized |
(189) | (206) | (179) | (182) | (193) |
-2.1% |
(554) | (555) |
-0.2% |
|||||||||||||||||
Amortization |
177 | 240 | 120 | 112 | 595 | 236.2% | 416 | 827 | 98.8% | |||||||||||||||||
Total operating expenses |
1,220 | 1,578 | 1,276 | 1,291 | 1,681 | 37.8% | 3,520 | 4,246 | 20.6% | |||||||||||||||||
Income (loss) from operations before taxes |
226 | 280 | 156 | 152 | 46 |
-79.6% |
626 | 354 |
-43.5% |
|||||||||||||||||
Federal income tax expense (benefit) |
76 | 87 | 45 | 47 | 10 |
-86.8% |
208 | 103 |
-50.5% |
|||||||||||||||||
Income (loss) from operations |
$ |
150 |
$ |
193 |
$ |
111 |
$ |
105 |
$ |
36 |
-76.0% |
$ |
418 |
$ |
251 |
-40.0% |
||||||||||
Effective Federal Income Tax Rate |
33.4% | 31.0% | 28.8% | 31.4% | 22.5% | 33.2% | 29.1% | |||||||||||||||||||
Average Equity, Excluding Goodwill and AOCI |
$ |
6,226 |
$ |
6,204 |
$ |
6,226 |
$ |
6,422 |
$ |
6,506 | 4.5% |
$ |
6,101 |
$ |
6,384 | 4.6% | ||||||||||
ROE, Excluding Goodwill |
9.7% | 12.5% | 7.1% | 6.5% | 2.2% | 9.1% | 5.2% | |||||||||||||||||||
Average Account Values |
$ |
41,371 |
$ |
41,858 |
$ |
42,468 |
$ |
42,891 |
$ |
42,963 | 3.8% |
$ |
40,866 |
$ |
42,774 | 4.7% | ||||||||||
In-Force Face Amount |
||||||||||||||||||||||||||
UL and other |
$ |
322,416 |
$ |
324,356 |
$ |
324,815 |
$ |
326,026 |
$ |
328,115 | 1.8% |
$ |
322,416 |
$ |
328,115 | 1.8% | ||||||||||
Term insurance |
312,584 | 316,513 | 318,832 | 322,848 | 325,522 | 4.1% | 312,584 | 325,522 | 4.1% | |||||||||||||||||
Total in-force face amount |
$ |
635,000 |
$ |
640,869 |
$ |
643,647 |
$ |
648,874 |
$ |
653,637 | 2.9% |
$ |
635,000 |
$ |
653,637 | 2.9% | ||||||||||
Page 19 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Group Protection – Select Earnings and Operational Data |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Income (Loss) from Operations |
||||||||||||||||||||||||||
Operating revenues: |
||||||||||||||||||||||||||
Insurance premiums |
$ |
550 |
$ |
567 |
$ |
561 |
$ |
567 |
$ |
519 |
-5.6% |
$ |
1,685 |
$ |
1,647 |
-2.3% |
||||||||||
Net investment income |
45 | 46 | 43 | 47 | 48 | 6.7% | 134 | 138 | 3.0% | |||||||||||||||||
Other revenues |
3 | 3 | 1 | 3 | 3 | 0.0% | 10 | 7 |
-30.0% |
|||||||||||||||||
Total operating revenues |
598 | 616 | 605 | 617 | 570 |
-4.7% |
1,829 | 1,792 |
-2.0% |
|||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||
Interest credited |
1 | 1 | 1 | 1 |
- |
-100.0% |
4 | 2 |
-50.0% |
|||||||||||||||||
Benefits |
428 | 460 | 440 | 421 | 386 |
-9.8% |
1,314 | 1,248 |
-5.0% |
|||||||||||||||||
Commissions incurred |
68 | 70 | 66 | 69 | 62 |
-8.8% |
202 | 197 |
-2.5% |
|||||||||||||||||
Other expenses incurred |
87 | 111 | 94 | 93 | 95 | 9.2% | 266 | 282 | 6.0% | |||||||||||||||||
Amounts capitalized |
(11) | (30) | (17) | (12) | (16) |
-45.5% |
(45) | (46) |
-2.2% |
|||||||||||||||||
Amortization |
13 | 14 | 31 | 15 | 17 | 30.8% | 43 | 64 | 48.8% | |||||||||||||||||
Total operating expenses |
586 | 626 | 615 | 587 | 544 |
-7.2% |
1,784 | 1,747 |
-2.1% |
|||||||||||||||||
Income (loss) from operations before taxes |
12 | (10) | (10) | 30 | 26 | 116.7% | 45 | 45 | 0.0% | |||||||||||||||||
Federal income tax expense (benefit) |
4 | (3) | (4) | 11 | 9 | 125.0% | 16 | 16 | 0.0% | |||||||||||||||||
Income (loss) from operations |
$ |
8 |
$ |
(7) |
$ |
(6) |
$ |
19 |
$ |
17 | 112.5% |
$ |
29 |
$ |
29 | 0.0% | ||||||||||
Effective Federal Income Tax Rate |
35.0% | 35.0% | 35.0% | 35.0% | 35.0% | 35.0% | 35.0% | |||||||||||||||||||
Average Equity, Excluding Goodwill and AOCI |
$ |
1,208 |
$ |
1,227 |
$ |
1,241 |
$ |
1,238 |
$ |
1,228 | 1.7% |
$ |
1,183 |
$ |
1,236 | 4.5% | ||||||||||
ROE, Excluding Goodwill |
2.6% |
-2.1% |
-2.1% |
6.3% | 5.4% | 3.3% | 3.2% | |||||||||||||||||||
Loss Ratios by Product Line |
||||||||||||||||||||||||||
Life |
75.9% | 75.5% | 77.7% | 72.0% | 70.5% | 77.3% | 73.4% | |||||||||||||||||||
Disability |
80.8% | 89.2% | 79.7% | 75.4% | 79.3% | 79.0% | 78.1% | |||||||||||||||||||
Dental |
70.8% | 68.6% | 73.0% | 72.3% | 70.3% | 72.0% | 71.9% | |||||||||||||||||||
Total non-medical |
77.6% | 81.0% | 78.1% | 73.6% | 74.5% | 77.5% | 75.4% | |||||||||||||||||||
Medical |
90.6% | 87.7% | 89.5% | 90.0% | 78.7% | 88.9% | 90.3% | |||||||||||||||||||
Page 20 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Other Operations and Discontinued Operations - Select Earnings and Operational Data |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Other Operations |
||||||||||||||||||||||||||
Operating revenues: |
||||||||||||||||||||||||||
Insurance premiums |
$ |
- |
$ |
5 |
$ |
- |
$ |
1 |
$ |
11 |
NM |
$ |
- |
$ |
11 |
NM |
||||||||||
Net investment income |
68 | 75 | 63 | 61 | 67 |
-1.5% |
211 | 192 |
-9.0% |
|||||||||||||||||
Amortization of deferred gain on |
||||||||||||||||||||||||||
business sold through reinsurance |
18 | 18 | 18 | 18 | 18 | 0.0% | 54 | 53 |
-1.9% |
|||||||||||||||||
Media revenues |
17 | 19 | 14 | 16 |
- |
-100.0% |
49 | 31 |
-36.7% |
|||||||||||||||||
Other revenues |
- |
- |
- |
- |
- |
NM |
1 |
- |
-100.0% |
|||||||||||||||||
Total operating revenues |
103 | 117 | 95 | 96 | 96 |
-6.8% |
315 | 287 |
-8.9% |
|||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||
Interest credited |
22 | 20 | 21 | 20 | 20 |
-9.1% |
74 | 61 |
-17.6% |
|||||||||||||||||
Benefits |
28 | 34 | 27 | 30 | 52 | 85.7% | 87 | 108 | 24.1% | |||||||||||||||||
Media expenses |
15 | 16 | 14 | 14 |
- |
-100.0% |
44 | 28 |
-36.4% |
|||||||||||||||||
Commissions and other expenses |
16 | 20 | 9 | 22 | 50 | 212.5% | 33 | 81 | 145.5% | |||||||||||||||||
Interest and debt expenses |
67 | 67 | 68 | 69 | 67 | 0.0% | 201 | 204 | 1.5% | |||||||||||||||||
Total operating expenses |
148 | 157 | 139 | 155 | 189 | 27.7% | 439 | 482 | 9.8% | |||||||||||||||||
Income (loss) from operations before taxes |
(45) | (40) | (44) | (59) | (93) |
NM |
(124) | (195) |
-57.3% |
|||||||||||||||||
Federal income tax expense (benefit) |
(16) | (14) | (17) | (21) | (28) |
-75.0% |
(44) | (68) |
-54.5% |
|||||||||||||||||
Income (loss) from operations |
$ |
(29) |
$ |
(26) |
$ |
(27) |
$ |
(38) |
$ |
(65) |
NM |
$ |
(80) |
$ |
(127) |
-58.8% |
||||||||||
Discontinued Operations |
||||||||||||||||||||||||||
Gain (loss) on disposal before taxes |
$ |
- |
$ |
1 |
$ |
- |
$ |
- |
$ |
- |
NM |
$ |
- |
$ |
- |
NM |
||||||||||
Federal income tax expense (benefit) |
- |
- |
- |
- |
- |
NM |
- |
- |
NM |
|||||||||||||||||
Gain (loss) on disposal |
$ |
- |
$ |
1 |
$ |
- |
$ |
- |
$ |
- |
NM |
$ |
- |
$ |
- |
NM |
||||||||||
Page 21 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
DAC and VOBA |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
8,149 |
$ |
8,372 |
$ |
8,207 |
$ |
8,156 |
$ |
9,150 | 12.3% |
$ |
8,886 |
$ |
8,207 |
-7.6% |
||||||||||
Business acquired (sold) through reinsurance |
2 |
- |
- |
15 | 2 | 0.0% | 2 | 16 |
NM |
|||||||||||||||||
Deferrals |
382 | 412 | 351 | 366 | 375 |
-1.8% |
1,133 | 1,092 |
-3.6% |
|||||||||||||||||
Operating amortization |
(265) | (358) | (261) | (237) | (675) |
NM |
(754) | (1,173) |
-55.6% |
|||||||||||||||||
Deferrals, net of operating amortization |
117 | 54 | 90 | 129 | (300) |
NM |
379 | (81) |
NM |
|||||||||||||||||
Amortization associated with benefit ratio unlocking |
1 | (1) | (2) | 1 | 14 |
NM |
(1) | 14 |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(27) | 4 | 3 | (15) | (24) | 11.1% | (36) | (35) | 2.8% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
130 | (222) | (142) | 864 | 24 |
-81.5% |
(858) | 745 | 186.8% | |||||||||||||||||
Balance as of end-of-period |
$ |
8,372 |
$ |
8,207 |
$ |
8,156 |
$ |
9,150 |
$ |
8,866 | 5.9% |
$ |
8,372 |
$ |
8,866 | 5.9% | ||||||||||
DSI |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
244 |
$ |
242 |
$ |
240 |
$ |
235 |
$ |
244 | 0.0% |
$ |
267 |
$ |
240 |
-10.1% |
||||||||||
Deferrals |
3 | 3 | 7 | 8 | 5 | 66.7% | 9 | 20 | 122.2% | |||||||||||||||||
Operating amortization |
(8) | (9) | (9) | (8) | (6) | 25.0% | (27) | (24) | 11.1% | |||||||||||||||||
Deferrals, net of operating amortization |
(5) | (6) | (2) |
- |
(1) | 80.0% | (18) | (4) | 77.8% | |||||||||||||||||
Amortization associated with benefit ratio unlocking |
- |
- |
- |
- |
1 |
NM |
- |
1 |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(3) |
- |
- |
(1) | (1) | 66.7% | (4) | (1) | 75.0% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
6 | 4 | (3) | 10 | 2 |
-66.7% |
(3) | 9 |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
242 |
$ |
240 |
$ |
235 |
$ |
244 |
$ |
245 | 1.2% |
$ |
242 |
$ |
245 | 1.2% | ||||||||||
DFEL |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
1,520 |
$ |
1,523 |
$ |
1,401 |
$ |
1,322 |
$ |
1,797 | 18.2% |
$ |
1,938 |
$ |
1,401 |
-27.7% |
||||||||||
Deferrals |
108 | 123 | 120 | 128 | 141 | 30.6% | 279 | 389 | 39.4% | |||||||||||||||||
Operating amortization |
(125) | (121) | (76) | (73) | (306) |
NM |
(263) | (455) |
-73.0% |
|||||||||||||||||
Deferrals, net of operating amortization |
(17) | 2 | 44 | 55 | (165) |
NM |
16 | (66) |
NM |
|||||||||||||||||
Amortization associated with benefit ratio unlocking |
- |
- |
- |
- |
2 |
NM |
- |
2 |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(1) |
- |
- |
(2) | (3) |
NM |
(6) | (6) | 0.0% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
21 | (124) | (123) | 422 | (38) |
NM |
(425) | 262 | 161.6% | |||||||||||||||||
Balance as of end-of-period |
$ |
1,523 |
$ |
1,401 |
$ |
1,322 |
$ |
1,797 |
$ |
1,593 | 4.6% |
$ |
1,523 |
$ |
1,593 | 4.6% | ||||||||||
Page 22 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Annuities – DAC, VOBA, DSI and DFEL Roll Forwards |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
DAC and VOBA |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
2,810 |
$ |
2,951 |
$ |
3,063 |
$ |
3,088 |
$ |
3,248 | 15.6% |
$ |
2,770 |
$ |
3,063 | 10.6% | ||||||||||
Deferrals |
175 | 168 | 147 | 165 | 160 |
-8.6% |
514 | 471 |
-8.4% |
|||||||||||||||||
Operating amortization |
(66) | (95) | (100) | (101) | (58) | 12.1% | (267) | (259) | 3.0% | |||||||||||||||||
Deferrals, net of operating amortization |
109 | 73 | 47 | 64 | 102 |
-6.4% |
247 | 212 |
-14.2% |
|||||||||||||||||
Amortization associated with benefit ratio unlocking |
1 | (1) | (2) | 1 | 14 |
NM |
(1) | 14 |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(23) | 9 | 7 | (9) | (21) | 8.7% | (21) | (22) |
-4.8% |
|||||||||||||||||
Adjustment related to unrealized (gains) losses |
54 | 31 | (27) | 104 | 31 |
-42.6% |
(44) | 107 |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
2,951 |
$ |
3,063 |
$ |
3,088 |
$ |
3,248 |
$ |
3,374 | 14.3% |
$ |
2,951 |
$ |
3,374 | 14.3% | ||||||||||
DSI |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
234 |
$ |
231 |
$ |
227 |
$ |
221 |
$ |
228 |
-2.6% |
$ |
259 |
$ |
227 |
-12.4% |
||||||||||
Deferrals |
1 | 2 | 5 | 7 | 3 | 200.0% | 4 | 15 | 275.0% | |||||||||||||||||
Operating amortization |
(7) | (9) | (9) | (8) | (6) | 14.3% | (26) | (22) | 15.4% | |||||||||||||||||
Deferrals, net of operating amortization |
(6) | (7) | (4) | (1) | (3) | 50.0% | (22) | (7) | 68.2% | |||||||||||||||||
Amortization associated with benefit ratio unlocking |
- |
- |
- |
- |
1 |
NM |
- |
1 |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(3) |
- |
- |
(1) | (1) | 66.7% | (4) | (1) | 75.0% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
6 | 3 | (2) | 9 | 3 |
-50.0% |
(2) | 8 |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
231 |
$ |
227 |
$ |
221 |
$ |
228 |
$ |
228 |
-1.3% |
$ |
231 |
$ |
228 |
-1.3% |
||||||||||
DFEL |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
262 |
$ |
263 |
$ |
266 |
$ |
266 |
$ |
265 | 1.1% |
$ |
265 |
$ |
266 | 0.4% | ||||||||||
Deferrals |
9 | 10 | 8 | 10 | 10 | 11.1% | 25 | 28 | 12.0% | |||||||||||||||||
Operating amortization |
(6) | (7) | (8) | (9) | (8) |
-33.3% |
(22) | (26) |
-18.2% |
|||||||||||||||||
Deferrals, net of operating amortization |
3 | 3 |
- |
1 | 2 |
-33.3% |
3 | 2 |
-33.3% |
|||||||||||||||||
Amortization associated with benefit ratio unlocking |
- |
- |
- |
- |
2 |
NM |
- |
2 |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(2) |
- |
- |
(2) | (3) |
-50.0% |
(5) | (5) | 0.0% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
- |
- |
- |
- |
- |
NM |
- |
1 |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
263 |
$ |
266 |
$ |
266 |
$ |
265 |
$ |
266 | 1.1% |
$ |
263 |
$ |
266 | 1.1% | ||||||||||
Page 23 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Retirement Plan Services, Life Insurance and Group Protection – DAC, VOBA and DFEL Roll Forwards |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
DAC and VOBA – Retirement Plan Services |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
135 |
$ |
147 |
$ |
148 |
$ |
148 |
$ |
183 | 35.6% |
$ |
173 |
$ |
148 |
-14.5% |
||||||||||
Deferrals |
8 | 9 | 7 | 7 | 6 |
-25.0% |
21 | 20 |
-4.8% |
|||||||||||||||||
Operating amortization |
(9) | (9) | (9) | (9) | (5) | 44.4% | (29) | (23) | 20.7% | |||||||||||||||||
Deferrals, net of operating amortization |
(1) |
- |
(2) | (2) | 1 | 200.0% | (8) | (3) | 62.5% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
13 | 1 | 2 | 37 | 1 |
-92.3% |
(18) | 40 |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
147 |
$ |
148 |
$ |
148 |
$ |
183 |
$ |
185 | 25.9% |
$ |
147 |
$ |
185 | 25.9% | ||||||||||
DAC and VOBA – Life Insurance |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
4,970 |
$ |
5,043 |
$ |
4,749 |
$ |
4,686 |
$ |
5,489 | 10.4% |
$ |
5,713 |
$ |
4,749 |
-16.9% |
||||||||||
Business acquired (sold) through reinsurance |
2 |
- |
- |
15 | 2 | 0.0% | 2 | 16 |
NM |
|||||||||||||||||
Deferrals |
189 | 206 | 179 | 182 | 193 | 2.1% | 554 | 555 | 0.2% | |||||||||||||||||
Operating amortization |
(177) | (240) | (120) | (112) | (595) |
NM |
(416) | (827) |
-98.8% |
|||||||||||||||||
Deferrals, net of operating amortization |
12 | (34) | 59 | 70 | (402) |
NM |
138 | (272) |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(4) | (4) | (4) | (5) | (3) | 25.0% | (14) | (12) | 14.3% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
63 | (256) | (118) | 723 | (8) |
NM |
(796) | 597 | 175.0% | |||||||||||||||||
Balance as of end-of-period |
$ |
5,043 |
$ |
4,749 |
$ |
4,686 |
$ |
5,489 |
$ |
5,078 | 0.7% |
$ |
5,043 |
$ |
5,078 | 0.7% | ||||||||||
DFEL – Life Insurance |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
1,258 |
$ |
1,259 |
$ |
1,135 |
$ |
1,056 |
$ |
1,532 | 21.8% |
$ |
1,673 |
$ |
1,135 |
-32.2% |
||||||||||
Deferrals |
100 | 114 | 111 | 119 | 131 | 31.0% | 255 | 361 | 41.6% | |||||||||||||||||
Operating amortization |
(119) | (115) | (67) | (64) | (298) |
NM |
(241) | (429) |
-78.0% |
|||||||||||||||||
Deferrals, net of operating amortization |
(19) | (1) | 44 | 55 | (167) |
NM |
14 | (68) |
NM |
|||||||||||||||||
Adjustment related to realized (gains) losses |
(1) | (1) | (1) | (1) |
- |
100.0% | (3) | (2) | 33.3% | |||||||||||||||||
Adjustment related to unrealized (gains) losses |
21 | (122) | (122) | 422 | (38) |
NM |
(425) | 262 | 161.6% | |||||||||||||||||
Balance as of end-of-period |
$ |
1,259 |
$ |
1,135 |
$ |
1,056 |
$ |
1,532 |
$ |
1,327 | 5.4% |
$ |
1,259 |
$ |
1,327 | 5.4% | ||||||||||
DAC and VOBA – Group Protection |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
234 |
$ |
232 |
$ |
248 |
$ |
234 |
$ |
231 |
-1.3% |
$ |
230 |
$ |
248 | 7.8% | ||||||||||
Deferrals |
11 | 30 | 17 | 12 | 16 | 45.5% | 45 | 46 | 2.2% | |||||||||||||||||
Operating amortization |
(13) | (14) | (31) | (15) | (17) |
-30.8% |
(43) | (64) |
-48.8% |
|||||||||||||||||
Deferrals, net of operating amortization |
(2) | 16 | (14) | (3) | (1) | 50.0% | 2 | (18) |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
232 |
$ |
248 |
$ |
234 |
$ |
231 |
$ |
230 |
-0.9% |
$ |
232 |
$ |
230 |
-0.9% |
||||||||||
Page 24 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Annuities – Account Value Roll Forwards |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Fixed Annuities |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
18,875 |
$ |
18,746 |
$ |
18,661 |
$ |
18,651 |
$ |
18,597 |
-1.5% |
$ |
18,552 |
$ |
18,661 | 0.6% | ||||||||||
Gross deposits |
227 | 206 | 293 | 365 | 566 | 149.3% | 1,052 | 1,224 | 16.3% | |||||||||||||||||
Withdrawals and deaths |
(475) | (481) | (454) | (543) | (525) |
-10.5% |
(1,359) | (1,522) |
-12.0% |
|||||||||||||||||
Net flows |
(248) | (275) | (161) | (178) | 41 | 116.5% | (307) | (298) | 2.9% | |||||||||||||||||
Reinvested interest credited |
118 | 188 | 146 | 117 | 31 |
-73.7% |
497 | 294 |
-40.8% |
|||||||||||||||||
Sales inducements deferred |
1 | 2 | 5 | 7 | 3 | 200.0% | 4 | 15 | 275.0% | |||||||||||||||||
Balance as of end-of-period, gross |
18,746 | 18,661 | 18,651 | 18,597 | 18,672 |
-0.4% |
18,746 | 18,672 |
-0.4% |
|||||||||||||||||
Reinsurance ceded |
(714) | (693) | (676) | (662) | (645) | 9.7% | (714) | (645) | 9.7% | |||||||||||||||||
Balance as of end-of-period, net |
$ |
18,032 |
$ |
17,968 |
$ |
17,975 |
$ |
17,935 |
$ |
18,027 | 0.0% |
$ |
18,032 |
$ |
18,027 | 0.0% | ||||||||||
Variable Annuities |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
103,043 |
$ |
102,238 |
$ |
104,073 |
$ |
106,279 |
$ |
106,600 | 3.5% |
$ |
97,298 |
$ |
104,073 | 7.0% | ||||||||||
Gross deposits |
3,226 | 3,175 | 2,697 | 3,015 | 2,738 |
-15.1% |
9,346 | 8,451 |
-9.6% |
|||||||||||||||||
Withdrawals and deaths |
(2,413) | (2,345) | (2,340) | (2,440) | (2,243) | 7.0% | (6,948) | (7,024) |
-1.1% |
|||||||||||||||||
Net flows |
813 | 830 | 357 | 575 | 495 |
-39.1% |
2,398 | 1,427 |
-40.5% |
|||||||||||||||||
Change in market value and reinvestment |
(1,618) | 1,005 | 1,849 | (254) | (6,514) |
NM |
2,542 | (4,919) |
NM |
|||||||||||||||||
Balance as of end-of-period, gross |
102,238 | 104,073 | 106,279 | 106,600 | 100,581 |
-1.6% |
102,238 | 100,581 |
-1.6% |
|||||||||||||||||
Reinsurance ceded |
- |
- |
- |
- |
(1) |
NM |
- |
(1) |
NM |
|||||||||||||||||
Balance as of end-of-period, net |
$ |
102,238 |
$ |
104,073 |
$ |
106,279 |
$ |
106,600 |
$ |
100,580 |
-1.6% |
$ |
102,238 |
$ |
100,580 |
-1.6% |
||||||||||
Total |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
121,918 |
$ |
120,984 |
$ |
122,734 |
$ |
124,930 |
$ |
125,197 | 2.7% |
$ |
115,850 |
$ |
122,734 | 5.9% | ||||||||||
Gross deposits |
3,453 | 3,381 | 2,990 | 3,380 | 3,304 |
-4.3% |
10,398 | 9,675 |
-7.0% |
|||||||||||||||||
Withdrawals and deaths |
(2,888) | (2,826) | (2,794) | (2,983) | (2,768) | 4.2% | (8,307) | (8,546) |
-2.9% |
|||||||||||||||||
Net flows |
565 | 555 | 196 | 397 | 536 |
-5.1% |
2,091 | 1,129 |
-46.0% |
|||||||||||||||||
Change in market value and reinvestment |
(1,500) | 1,193 | 1,995 | (137) | (6,483) |
NM |
3,039 | (4,625) |
NM |
|||||||||||||||||
Sales inducements deferred |
1 | 2 | 5 | 7 | 3 | 200.0% | 4 | 15 | 275.0% | |||||||||||||||||
Balance as of end-of-period, gross |
120,984 | 122,734 | 124,930 | 125,197 | 119,253 |
-1.4% |
120,984 | 119,253 |
-1.4% |
|||||||||||||||||
Reinsurance ceded |
(714) | (693) | (676) | (662) | (646) | 9.5% | (714) | (646) | 9.5% | |||||||||||||||||
Balance as of end-of-period, net |
$ |
120,270 |
$ |
122,041 |
$ |
124,254 |
$ |
124,535 |
$ |
118,607 |
-1.4% |
$ |
120,270 |
$ |
118,607 |
-1.4% |
||||||||||
Page 25 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Retirement Plan Services – Account Value Roll Forwards |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Small Market |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
8,521 |
$ |
8,459 |
$ |
8,574 |
$ |
8,676 |
$ |
8,643 | 1.4% |
$ |
8,203 |
$ |
8,574 | 4.5% | ||||||||||
Gross deposits |
449 | 485 | 453 | 451 | 530 | 18.0% | 1,328 | 1,433 | 7.9% | |||||||||||||||||
Withdrawals and deaths |
(376) | (505) | (472) | (449) | (442) |
-17.6% |
(1,275) | (1,362) |
-6.8% |
|||||||||||||||||
Net flows |
73 | (20) | (19) | 2 | 88 | 20.5% | 53 | 71 | 34.0% | |||||||||||||||||
Transfers between fixed and variable accounts |
1 | 7 | 2 | (10) | 1 | 0.0% | 1 | (7) |
NM |
|||||||||||||||||
Change in market value and reinvestment |
(136) | 128 | 119 | (25) | (482) |
NM |
202 | (388) |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
8,459 |
$ |
8,574 |
$ |
8,676 |
$ |
8,643 |
$ |
8,250 |
-2.5% |
$ |
8,459 |
$ |
8,250 |
-2.5% |
||||||||||
Mid – Large Market |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
28,107 |
$ |
28,062 |
$ |
28,067 |
$ |
29,040 |
$ |
29,622 | 5.4% |
$ |
26,468 |
$ |
28,067 | 6.0% | ||||||||||
Gross deposits |
1,023 | 1,716 | 1,116 | 1,279 | 1,214 | 18.7% | 3,394 | 3,610 | 6.4% | |||||||||||||||||
Withdrawals and deaths |
(799) | (2,370) | (729) | (724) | (855) |
-7.0% |
(2,709) | (2,307) | 14.8% | |||||||||||||||||
Net flows |
224 | (654) | 387 | 555 | 359 | 60.3% | 685 | 1,303 | 90.2% | |||||||||||||||||
Transfers between fixed and variable accounts |
(13) | (6) | (15) | 13 | 14 | 207.7% | 3 | 11 | 266.7% | |||||||||||||||||
Change in market value and reinvestment |
(256) | 665 | 601 | 14 | (1,398) |
NM |
906 | (784) |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
28,062 |
$ |
28,067 |
$ |
29,040 |
$ |
29,622 |
$ |
28,597 | 1.9% |
$ |
28,062 |
$ |
28,597 | 1.9% | ||||||||||
Multi-Fund® and Other |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
17,120 |
$ |
16,841 |
$ |
16,898 |
$ |
16,916 |
$ |
16,724 |
-2.3% |
$ |
16,947 |
$ |
16,898 |
-0.3% |
||||||||||
Gross deposits |
139 | 131 | 135 | 132 | 140 | 0.7% | 461 | 407 |
-11.7% |
|||||||||||||||||
Withdrawals and deaths |
(386) | (393) | (388) | (383) | (336) | 13.0% | (1,144) | (1,108) | 3.1% | |||||||||||||||||
Net flows |
(247) | (262) | (253) | (251) | (196) | 20.6% | (683) | (701) |
-2.6% |
|||||||||||||||||
Change in market value and reinvestment |
(32) | 319 | 271 | 59 | (531) |
NM |
577 | (200) |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
16,841 |
$ |
16,898 |
$ |
16,916 |
$ |
16,724 |
$ |
15,997 |
-5.0% |
$ |
16,841 |
$ |
15,997 |
-5.0% |
||||||||||
Total |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
53,748 |
$ |
53,362 |
$ |
53,539 |
$ |
54,632 |
$ |
54,989 | 2.3% |
$ |
51,618 |
$ |
53,539 | 3.7% | ||||||||||
Gross deposits |
1,611 | 2,332 | 1,704 | 1,862 | 1,884 | 16.9% | 5,183 | 5,450 | 5.2% | |||||||||||||||||
Withdrawals and deaths |
(1,561) | (3,268) | (1,589) | (1,556) | (1,633) |
-4.6% |
(5,128) | (4,777) | 6.8% | |||||||||||||||||
Net flows |
50 | (936) | 115 | 306 | 251 |
NM |
55 | 673 |
NM |
|||||||||||||||||
Transfers between fixed and variable accounts |
(12) | 1 | (13) | 3 | 15 | 225.0% | 4 | 4 | 0.0% | |||||||||||||||||
Change in market value and reinvestment |
(424) | 1,112 | 991 | 48 | (2,411) |
NM |
1,685 | (1,372) |
NM |
|||||||||||||||||
Balance as of end-of-period |
$ |
53,362 |
$ |
53,539 |
$ |
54,632 |
$ |
54,989 |
$ |
52,844 |
-1.0% |
$ |
53,362 |
$ |
52,844 |
-1.0% |
||||||||||
Page 26 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Life Insurance – Account Value Roll Forwards |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Interest-Sensitive Life |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
34,094 |
$ |
34,315 |
$ |
34,612 |
$ |
34,753 |
$ |
34,930 | 2.5% |
$ |
33,721 |
$ |
34,612 | 2.6% | ||||||||||
Deposits |
934 | 1,029 | 921 | 964 | 1,012 | 8.4% | 2,693 | 2,897 | 7.6% | |||||||||||||||||
Withdrawals and deaths |
(259) | (256) | (299) | (299) | (214) | 17.4% | (804) | (812) |
-1.0% |
|||||||||||||||||
Net flows |
675 | 773 | 622 | 665 | 798 | 18.2% | 1,889 | 2,085 | 10.4% | |||||||||||||||||
Contract holder assessments |
(791) | (819) | (814) | (830) | (855) |
-8.1% |
(2,296) | (2,499) |
-8.8% |
|||||||||||||||||
Reinvested interest credited |
337 | 343 | 333 | 342 | 340 | 0.9% | 1,001 | 1,015 | 1.4% | |||||||||||||||||
Balance as of end-of-period, gross |
34,315 | 34,612 | 34,753 | 34,930 | 35,213 | 2.6% | 34,315 | 35,213 | 2.6% | |||||||||||||||||
Reinsurance ceded |
(793) | (784) | (782) | (773) | (770) | 2.9% | (793) | (770) | 2.9% | |||||||||||||||||
Balance as of end-of-period, net |
$ |
33,522 |
$ |
33,828 |
$ |
33,971 |
$ |
34,157 |
$ |
34,443 | 2.7% |
$ |
33,522 |
$ |
34,443 | 2.7% | ||||||||||
VUL |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
8,842 |
$ |
8,854 |
$ |
9,263 |
$ |
9,635 |
$ |
9,766 | 10.5% |
$ |
8,094 |
$ |
9,263 | 14.4% | ||||||||||
Deposits |
351 | 445 | 390 | 380 | 388 | 10.5% | 1,166 | 1,158 |
-0.7% |
|||||||||||||||||
Withdrawals and deaths |
(92) | (122) | (124) | (116) | (167) |
-81.5% |
(373) | (407) |
-9.1% |
|||||||||||||||||
Net flows |
259 | 323 | 266 | 264 | 221 |
-14.7% |
793 | 751 |
-5.3% |
|||||||||||||||||
Contract holder assessments |
(119) | (128) | (130) | (127) | (132) |
-10.9% |
(349) | (390) |
-11.7% |
|||||||||||||||||
Change in market value and reinvestment |
(128) | 214 | 236 | (6) | (642) |
NM |
316 | (411) |
NM |
|||||||||||||||||
Balance as of end-of-period, gross |
8,854 | 9,263 | 9,635 | 9,766 | 9,213 | 4.1% | 8,854 | 9,213 | 4.1% | |||||||||||||||||
Reinsurance ceded |
(872) | (878) | (882) | (864) | (788) | 9.6% | (872) | (788) | 9.6% | |||||||||||||||||
Balance as of end-of-period, net |
$ |
7,982 |
$ |
8,385 |
$ |
8,753 |
$ |
8,902 |
$ |
8,425 | 5.5% |
$ |
7,982 |
$ |
8,425 | 5.5% | ||||||||||
Total |
||||||||||||||||||||||||||
Balance as of beginning-of-period |
$ |
42,936 |
$ |
43,169 |
$ |
43,875 |
$ |
44,388 |
$ |
44,696 | 4.1% |
$ |
41,815 |
$ |
43,875 | 4.9% | ||||||||||
Deposits |
1,285 | 1,474 | 1,311 | 1,344 | 1,400 | 8.9% | 3,859 | 4,055 | 5.1% | |||||||||||||||||
Withdrawals and deaths |
(351) | (378) | (423) | (415) | (381) |
-8.5% |
(1,177) | (1,219) |
-3.6% |
|||||||||||||||||
Net flows |
934 | 1,096 | 888 | 929 | 1,019 | 9.1% | 2,682 | 2,836 | 5.7% | |||||||||||||||||
Contract holder assessments |
(910) | (947) | (944) | (957) | (987) |
-8.5% |
(2,645) | (2,889) |
-9.2% |
|||||||||||||||||
Change in market value and reinvestment |
209 | 557 | 569 | 336 | (302) |
NM |
1,317 | 604 |
-54.1% |
|||||||||||||||||
Balance as of end-of-period, gross |
43,169 | 43,875 | 44,388 | 44,696 | 44,426 | 2.9% | 43,169 | 44,426 | 2.9% | |||||||||||||||||
Reinsurance ceded |
(1,665) | (1,662) | (1,664) | (1,637) | (1,558) | 6.4% | (1,665) | (1,558) | 6.4% | |||||||||||||||||
Balance as of end-of-period, net |
$ |
41,504 |
$ |
42,213 |
$ |
42,724 |
$ |
43,059 |
$ |
42,868 | 3.3% |
$ |
41,504 |
$ |
42,868 | 3.3% | ||||||||||
Page 27 |
Lincoln Financial Group |
||||||||||||||||||||||||||
Select Non-GAAP to GAAP Reconciliations |
||||||||||||||||||||||||||
Unaudited (millions of dollars) |
||||||||||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||
9/30/14 |
12/31/14 |
3/31/15 |
6/30/15 |
9/30/15 |
Change |
9/30/14 |
9/30/15 |
Change |
||||||||||||||||||
Revenues |
||||||||||||||||||||||||||
Operating revenues |
$ |
3,363 |
$ |
3,834 |
$ |
3,394 |
$ |
3,417 |
$ |
3,735 | 11.1% |
$ |
9,882 |
$ |
10,546 | 6.7% | ||||||||||
Excluded realized gain (loss) |
47 | (149) | (91) | (37) | (18) |
NM |
(15) | (146) |
NM |
|||||||||||||||||
Amortization of DFEL on benefit ratio unlocking |
- |
- |
- |
- |
(2) |
NM |
- |
(2) |
NM |
|||||||||||||||||
Amortization of deferred gains arising from reserve |
||||||||||||||||||||||||||
changes on business sold through reinsurance |
1 | 1 | 1 | 1 | 1 | 0.0% | 2 | 2 | 0.0% | |||||||||||||||||
Total revenues |
$ |
3,411 |
$ |
3,686 |
$ |
3,304 |
$ |
3,381 |
$ |
3,716 | 8.9% |
$ |
9,869 |
$ |
10,400 | 5.4% | ||||||||||
Excluded Realized Gain (Loss) Net of |
||||||||||||||||||||||||||
Benefit Ratio Unlocking, After-Tax |
||||||||||||||||||||||||||
Total excluded realized gain (loss) |
$ |
31 |
$ |
(96) |
$ |
(60) |
$ |
(23) |
$ |
(11) |
NM |
$ |
(10) |
$ |
(95) |
NM |
||||||||||
Benefit ratio unlocking |
(6) | 4 | 8 | (4) | (51) |
NM |
2 | (48) |
NM |
|||||||||||||||||
Net gain (loss), after-tax |
$ |
25 |
$ |
(92) |
$ |
(52) |
$ |
(27) |
$ |
(62) |
NM |
$ |
(8) |
$ |
(143) |
NM |
||||||||||
Net Income |
||||||||||||||||||||||||||
Income (loss) from operations |
$ |
414 |
$ |
439 |
$ |
352 |
$ |
371 |
$ |
289 |
-30.2% |
$ |
1,173 |
$ |
1,013 |
-13.6% |
||||||||||
Excluded realized gain (loss) |
31 | (96) | (60) | (23) | (11) |
NM |
(10) | (95) |
NM |
|||||||||||||||||
Benefit ratio unlocking |
(6) | 4 | 8 | (4) | (51) |
NM |
2 | (48) |
NM |
|||||||||||||||||
Income (loss) from reserve changes (net of related |
||||||||||||||||||||||||||
amortization) on business sold through reinsurance |
- |
- |
- |
- |
- |
NM |
1 | 1 | 0.0% | |||||||||||||||||
Income (loss) from discontinued operations |
- |
1 |
- |
- |
- |
NM |
- |
- |
NM |
|||||||||||||||||
Net income (loss) |
$ |
439 |
$ |
348 |
$ |
300 |
$ |
344 |
$ |
227 |
-48.3% |
$ |
1,166 |
$ |
871 |
-25.3% |
||||||||||
Earnings (Loss) Per Common Share – Diluted |
||||||||||||||||||||||||||
Income (loss) from operations |
$ |
1.56 |
$ |
1.67 |
$ |
1.35 |
$ |
1.46 |
$ |
1.11 |
-28.8% |
$ |
4.36 |
$ |
3.92 |
-10.1% |
||||||||||
Excluded realized gain (loss) |
0.11 | (0.36) | (0.23) | (0.09) | (0.04) |
NM |
(0.03) | (0.36) |
NM |
|||||||||||||||||
Benefit ratio unlocking |
(0.02) | 0.01 | 0.03 | (0.02) | (0.20) |
NM |
0.01 | (0.19) |
NM |
|||||||||||||||||
Net income (loss) |
$ |
1.65 |
$ |
1.32 |
$ |
1.15 |
$ |
1.35 |
$ |
0.87 |
-47.3% |
$ |
4.34 |
$ |
3.37 |
-22.4% |
||||||||||
Page 28 |
R$[11NR,UPG[3WQ+NO@
MY^S_ .+/$]C##/>Z-I[W%NLP)C#\!6<#JJD[B.,@'D5QOBW]G6PTKX6WNLP^
M,/%$/BNRTZ2]7Q.VMS9\Y8V?S6A+FW\GKF/9LV<#& : /;0VX<4N:^0O#>OZ
MA\9/B#IFN>(?"WC#Q%#>^ -$O9]/T'4_LB:;>SM'/C=IOA&Y\7>!
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M((.,9.: .R^'WP.T/X9Z[J>HZ7]L2YU:SL+&
^%7C2;3O"T&B7)S>[F=;1IE1((0K
MKB9HUN)
KBSM8C
MYUYIJZ+'9B:WCX\X1NV=J\GRVV@G KLO%?B#7/BM\7- UC0_#GB2/1?!6EZK
M
\76]CMC2;>2V^.!88L9P!$ .!7>^%/BQX1\
M9WC66A^)_#^L7.SS&AL=2BN90O3=A&)QSUKHD18$XX% %#Q?I#^(?"^H6"2-
M"]];R6PE7K$74KO[=,YX]*\5^#'Q+U3X.?"/0?!^M^"?%Y\1>%+"+3/)TG27
MN;+4_)38DL-RN(5615#8D9"I8A@,<^O:_P#%/PSX4U6"QU3Q%H6FWUU@PV]W
M?Q0RS9Z;59@3^ K0LM5L-8O;F*VN[>YGL9!'<)%,&:W
M&?%L^O016MRT$EMX>=7O+EU.#\OE7$UIM& 2P'2O?O@#I5M\1_B#JOQ$BA4:
M2D1\.>%E4 1Q:= ^)9D7MYTZG'_3.&+UKTR\\&Z)=ZS/>3Z98RW]Y:?8)KB2
M!6EFM\D^2S$9,>23M/'/2KVB:)9^&M(MM/T^U@LK&SC6&WMX4"1PHHPJJHX
M & !0!E_%#78_#'PVU_4IP[0Z?IMSR1QA6NG"",-(1]XA%"Y/8 =!0!YC\9;3P'X0_9N\3W6F6_AJ
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M;HIM^2L2IM$:YV>7MV\-=
)+W6_AW]A\2^,=:U&+38IO'<>IW3W-A )K 2QA"X $S2O$R^
M5D;"^>*]2;]F2'5;O5K_ %KQ%XBUW7-5TBXT1-2N'AB.FV\XQ(+:*)%CC
RY& <\A\9=,US]G#PE%XTT3Q;XEU,Z??6<6IZ7KEZ+N
MVU.WFN8H7"94&&8>9N5H\+D8*D' ]8^*GPDT;XO^%#I.KQ3^6MQ%>6\]O.T%
MQ97,3!HIXI!RLB, 0?P((XKEX_V=)M8U72+GQ/XL\1^+H]!O([^RM+O[/:VX
MGCYCEE6WC3SF0X*[R0&&[&<8 /-/@C?7/BCQYJ