LINCOLN NATIONAL CORPORATION

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS

(Parent Company Only) (in millions, except share data)



	As of December 31,
	2018		2017

ASSETS
Investments in subsidiaries (1)	$	18,251	$	20,488
Derivative investments		92		187
Other investments		90		77
Cash and invested cash		420		620
Loans and accrued interest to subsidiaries (1)		2,376		2,328
Other assets		59		16
Total assets	$	21,288	$	23,716

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Common dividends payable	$	76	$	72
Short-term debt		-		450
Long-term debt		5,839		4,894
Loans from subsidiaries (1)		553		476
Payables for collateral on investments		21		65
Other liabilities		449		437
Total liabilities		6,938		6,394

Contingencies and Commitments

Stockholders’ Equity
Preferred stock – 10,000,000 shares authorized		-		-
Common stock – 800,000,000 shares authorized		5,392		5,693
Retained earnings		8,551		8,399
Accumulated other comprehensive income (loss)		407		3,230
Total stockholders’ equity		14,350		17,322
Total liabilities and stockholders’ equity	$	21,288	$	23,716

⁽¹⁾

Eliminated in consolidation.

LINCOLN NATIONAL CORPORATION

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Parent Company Only) (in millions)



	For the Years Ended December 31,
	2018			2017			2016
Revenues
Dividends from subsidiaries (1)	$	1,025		$	1,069		$	1,035
Interest from subsidiaries (1)		148			133			123
Net investment income		7			2			3
Realized gain (loss)		3			(3	)		-
Total revenues		1,183			1,201			1,161
Expenses
Operating and administrative expenses		18			40			46
Interest – subsidiaries (1)		34			21			16
Interest – other		288			247			327
Total expenses		340			308			389
Income (loss) before federal income taxes, equity in income (loss) of
subsidiaries, less dividends		843			893			772
Federal income tax expense (benefit)		(42	)		(20	)		(95	)
Income (loss) before equity in income (loss) of subsidiaries, less dividends		885			913			867
Equity in income (loss) of subsidiaries, less dividends		756			1,166			325
Net income (loss)		1,641			2,079			1,192
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses)		(3,449	)		1,643			709
Foreign currency translation adjustment		(9	)		13			(22	)
Funded status of employee benefit plans		(7	)		8			34
Total other comprehensive income (loss), net of tax		(3,465	)		1,664			721
Comprehensive income (loss)	$	(1,824	)	$	3,743		$	1,913

⁽¹⁾

Eliminated in consolidation.

LINCOLN NATIONAL CORPORATION

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

STATEMENTS OF CASH FLOWS

(Parent Company Only) (in millions)



	For the Years Ended December 31,
	2018			2017			2016
Cash Flows from Operating Activities
Net income (loss)	$	1,641		$	2,079		$	1,192
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Equity in (income) loss of subsidiaries greater than distributions (1)		(756	)		(1,166	)		(325	)
Realized (gain) loss		(3	)		3			-
Change in federal income tax accruals		15			107			120
Other		(27	)		20			54
Net cash provided by (used in) operating activities		870			1,043			1,041

Cash Flows from Investing Activities
Capital contribution to subsidiaries (1)		(502	)		(60	)		-
Net change in collateral on investments, derivatives and related settlements		89			(42	)		(23	)
Net cash provided by (used in) investing activities		(413	)		(102	)		(23	)

Cash Flows from Financing Activities
Payment of long-term debt, including current maturities		(537	)		-			(350	)
Issuance of long-term debt, net of issuance costs		1,094			-			395
Payment related to early extinguishment of debt		(23	)		-			(59	)
Increase (decrease) in loans from subsidiaries, net (1)		52			(230	)		37
Increase (decrease) in loans to subsidiaries, net (1)		(48	)		239			(20	)
Common stock issued for benefit plans		(6	)		46			26
Repurchase of common stock		(900	)		(725	)		(879	)
Dividends paid to common stockholders		(289	)		(262	)		(238	)
Net cash provided by (used in) financing activities		(657	)		(932	)		(1,088	)
Net increase (decrease) in cash, invested cash and restricted cash		(200	)		9			(70	)
Cash, invested cash and restricted cash as of beginning-of-year		620			611			681
Cash, invested cash and restricted cash as of end-of-year	$	420		$	620		$	611

(1) Eliminated in consolidation.