8-K

UNITED STATES

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

                February 13, 2006                

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.)

1500 Market Street, West Tower, Suite 3900, Philadelphia, Pennsylvania 19102-2112

(Address of principal executive offices) (Zip Code)

(215) 448-1400

(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:

[X]	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 February 13, 2006, the registrant issued a press release announcing its financial results for the quarter ended December 31, 2005, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference, and supplemental financial information of the registrant for the quarter ended December 31, 2005 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 be deemed “filed” under the Securities Exchange Act of 1934, as amended.

Item 9.01. Financial Statements and Exhibits

(c)   Exhibits.

The following exhibits are included with this Form 8-K.

Exhibit Number	Description
99.1	Press release dated February 13, 2006, announcing Lincoln National Corporation’s financial results for the quarter ended December 31, 2005.
99.2	Lincoln National Corporation Supplemental Financial Information for the Quarter Ended December 31, 2005.

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: Vice President, Controller and

Chief Accounting Officer

Date: February 13, 2006

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated February 13, 2006, announcing Lincoln National Corporation’s financial results for the quarter ended December 31, 2005.
99.2	Lincoln National Corporation Supplemental Financial Information for the Quarter Ended December 31, 2005.

EX-99.1

NEWS RELEASE

Lincoln Financial Group Reports Fourth Quarter Earnings

Record Results in Deposits, Net Flows, and Income from Operations

Philadelphia, PA, February 13, 2006 - Lincoln National Corporation (NYSE:LNC) today reported net income of $225.3 million, or $1.28 per diluted share, for the fourth quarter of 2005. By comparison, net income for the fourth quarter of 2004 was $189.9 million, or $1.07 per diluted share. For the full year of 2005, net income was $831.1 million, or $4.72 per diluted share, versus $707.0 million, or $3.95 per diluted share, for 2004.

Income from operations for the fourth quarter of 2005 was a record $232.3 million, or $1.31 per diluted share, compared to fourth quarter 2004 income from operations of $189.9 million, or $1.07 per diluted share. For the full year of 2005, income from operations reached a record $851.6 million, or $4.83 per diluted share, compared to $724.8 million, or $4.05 per diluted share, in 2004. Return on equity (ROE), based on income from operations, was 15.4% for the year. The attached table defines and reconciles income from operations and ROE, non-GAAP measures, to net income and ROE calculated in accordance with GAAP.

Gross Deposits, Net Flows, and Life Sales Records Established

Fourth Quarter 2005 Records

·   First-year Retail Life Insurance Premiums

·   Variable Annuity Deposits and Net Flows

Full-year 2005 Records

·   Consolidated Domestic Retail Deposits and Net Flows

·   First-year Retail Life Insurance Premiums

·   Variable Annuity Deposits and Net Flows

·   Investment Management Retail Deposits and Net Flows

·   Investment Management Institutional Deposits and Net Flows

“Lincoln’s fourth quarter and full-year results are directly attributable to our dedication to differentiated products, strong distribution, and building brand awareness,” said Jon A. Boscia, chairman and chief executive officer of Lincoln Financial Group.

Consolidated Domestic Deposits and Net Flows

Lincoln reported total deposits for the quarter of $10.4 billion, up 29 % from the prior year quarter. For the full year, total deposits reached a record $40.0 billion, contributing to $20.2 billion in total net flows, a 39 % increase over the prior year.

Retail deposits, which include annuities, mutual funds, life insurance and other personal wealth accumulation products, reached $6.2 billion in the fourth quarter and a record $25.5 billion for the full year, increases of 17% and 32% over the respective prior-year periods. For the full year, retail net flows were a record $11.2 billion, up 53 % over 2004.

Institutional deposits were $4.2 billion in the current quarter, up 53 % over the fourth quarter of 2004. Full-year institutional deposits reached a record $14.6 billion, a 30 % increase over last year, driving institutional net flows to a record $8.9 billion.

Lincoln Retirement

Fourth Quarter Results

Income from operations for the Retirement segment was $117.3 million in the fourth quarter of 2005 versus $100.5 million in the year ago period. The segment’s current quarter results were positively impacted by approximately $8 million, after tax, of better than expected investment income and hedge program performance.

In the quarter, gross deposits were $2.6 billion and net flows for the segment were $621 million. Variable annuity net flows reached a record $823 million in the quarter, fueled by record deposits of $2.3 billion. Lincoln SmartSecurity^SM Advantage, a guaranteed minimum withdrawal rider, was elected on 55 % of fourth quarter deposits, consistent with prior quarters, and accounted for 15% of variable annuity account values at year end.

Full-year Results

Full-year income from operations for the Retirement segment was a record $471.5 million, compared to $414.6 million for 2004. Income from operations in 2005 benefited from strong flows and favorable markets leading to growth in account value, while both periods were positively impacted by prospective DAC unlocking and better than expected investment income.

For the year, gross deposits were a record $10.3 billion and net flows were $2.9 billion. The retirement segment’s gross account value was $72.5 billion at the end of 2005, a 12 % increase over year-end 2004.

Lincoln’s i4LIFE^®Advantage, a patented retirement income management tool, recorded elections of $1.0 billion in 2005, more than doubling the full-year 2004 level of $410 million and elevating total assets under management to $1.6 billion.

“Our variable annuity business continued to take market share, positioning Lincoln as a retirement income leader and a top provider for consumers striving to protect their assets and insure against longevity risk,” said Boscia.

Life Insurance

Fourth Quarter Results

Income from operations for the Life Insurance segment was a record $80.2 million, compared to $74.0 million in the fourth quarter of 2004. The 2005 period benefited from approximately $3 million in additional fees from seasonally higher renewal premiums and favorable mortality experience.

First year premiums from retail life insurance reached a record $262.6 million in the fourth quarter, up 14% over the same period last year. Results were driven by continued strength in variable universal life sales and improved universal life sales in the quarter.

Full-year Results

Income from operations for the Life Insurance segment was a record $298.9 million in 2005 versus $280.3 million a year ago. Full-year 2005 results benefited from growth in account value and in-force, while income from operations in 2004 was negatively impacted by prospective DAC unlocking.

Retail first year life premiums were a record $845.4 million for the full year, up 4% over 2004. “The life segment persevered in an aggressive and sometimes irrational marketplace to produce a steady, solid earnings stream in 2005,” said Boscia.

Investment Management

Fourth Quarter Results

The Investment Management segment reported income from operations of $14.6 million in the fourth quarter of 2005, which compares to $5.2 million in the prior year period. The 2005 quarter benefited from strong net flows, driving growth in assets under management. The fourth quarter of 2004 included approximately $4 million of higher

than anticipated expenses and represented the first full period without the results of Delaware International Advisors Ltd. (DIAL), which was sold in September, 2004.

Total net flows for the quarter reached $3.3 billion, fueled by total deposits of $7.4 billion, a 40 % increase over the prior year period.

Full-year Results

For 2005, the Investment Management segment reported income from operations of $36.0 million, versus $43.6 million in 2004. Income from operations in 2004 included $12.4 million from DIAL.

Total deposits for the year were a record $28.7 billion and total net flows were up 55% over 2004 levels, reaching a record $16.0 billion. Results were balanced with strong flows generated in both the retail and institutional divisions.

“Delaware’s full-year retail mutual fund sales increased 50 % over 2004 levels, while comparable industry growth rates reached 8 %,” said Boscia. “Delaware’s performance has driven record deposits and net flows in 2005 and has them well-positioned heading into 2006.”

Lincoln UK

Fourth Quarter Results

For the fourth quarter, the UK segment’s income from operations was $13.5 million for the quarter, versus $16.6 million in the same year ago period. The current quarter’s results included partially offsetting items, resulting in a net positive impact of approximately $2 million, after tax. The 2004 quarter was positively impacted by an insurance recovery of approximately $6 million, after tax.

Full-year Results

For the year, the UK segment reported income from operations of $43.4 million, versus $43.5 million in 2004.

Corporate and Other

Fourth Quarter Results

Corporate and Other recorded income from operations in the fourth quarter of $6.7 million, versus an operating loss of $6.3 million in the fourth quarter of 2004. Distribution losses were $0.3 million in the current quarter versus $6.6 million a year ago. Distribution results in the current period experienced a net positive impact of approximately $2 million from mostly offsetting items in Lincoln Financial Advisors.  Both retail and wholesale distribution benefited from improved productivity and expense management. The 2005 quarter included a positive tax adjustment of approximately $7 million

related to the company’s 401(k) plan. The fourth quarters of 2005 and 2004 also included reductions in the deferred tax asset valuation allowance previously established in the company’s Barbados subsidiary in the amount of $4.3 and $4.4 million, respectively.

Full-year Results

Income from operations in Corporate and Other for the full year 2005 was $1.8 million compared to an operating loss of $57.2 million in 2004. Results in 2005 were driven by favorable tax benefits recognized throughout the year in the amount of $46.8 million, while distribution losses improved from $41.5 million a year ago to $36.1 million in 2005.

Lincoln Financial Group and Jefferson Pilot Financial Merger

Lincoln and Jefferson Pilot continue to work diligently on integration planning and remain on target to complete the merger in the beginning of the second quarter of 2006. This work has increased Lincoln’s confidence that the combined entity can add to shareholder value through the following strategic benefits:

·   ROE expansion over time driven by increased scale, expense and capital efficiencies, and a larger investment portfolio;

·   Diversified and complementary product and distribution mix that will expand reach and provide enhanced growth opportunities;

·   A consolidated Employer Markets segment that will facilitate greater leverage of the retirement income market and provide cross-selling opportunities with Jefferson Pilot’s Benefit Partners; and

·   A more stable earnings base resulting from a better balance of equity and interest-sensitive drivers.

Boscia commented on the progress of the Jefferson Pilot merger, “Lincoln’s robust fourth quarter results across business segments demonstrate our ability to execute while making significant progress on integration planning. We expect to leverage Lincoln’s distribution strength, Jefferson-Pilot’s operational efficiencies and the merged company’s scale to achieve market share gains.”

Capital and Share Repurchase

As of December 31, 2005, the book value per share of Lincoln National Corporation common stock, excluding accumulated other comprehensive income, increased 11.5% to $33.66, compared with $30.17 a year ago. Book value per share,

 including accumulated other comprehensive income, was $36.69, compared with $35.53 a year ago. Lincoln did not repurchase shares during the quarter; however, 2.3 million shares were repurchased year-to-date, at a total cost of $103.6 million. Through a combination of share repurchase and dividends, a total of $361 million was returned to shareholders in 2005.

Lincoln National Corporation will discuss the company’s fourth quarter results with investors in a conference call beginning at 11:00 a.m. (ET) on Tuesday, February 14, 2006. The company will also post its fourth quarter 2005 statistical supplement on its Web site, www.LFG.com.

Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. With headquarters in Philadelphia, Lincoln Financial Group had consolidated assets of $125 billion as of December 31, 2005, and had consolidated revenues of $5.5 billion in 2005. Through its wealth accumulation, retirement income and wealth protection businesses, the company provides annuities, life insurance, 401(k) and 403(b) plans, savings plans, mutual funds, managed accounts, institutional investment, and comprehensive financial planning and advisory services. For more information please visit www.LFG.com.

Contacts:	Priscilla Brown
	215 448-1422
	Vice President, Investor Relations and Strategic Communications
	investorrelations@LFG.com
	Jim Sjoreen
	215 448-1420
	Vice President, Investor Relations
	investorrelations@LFG.com
	Tom Johnson
	215 448-1454
	Second Vice President, Media Relations
	mediarelations@LFG.com

Definition of Income (Loss) from Operations and ROE

Income (loss) from operations and ROE, as used in the earnings release, are non-GAAP financial measures and are not substitutes for net income (loss) and ROE, calculated using GAAP measures. Income (loss) from operations represents after tax results excluding, as applicable, realized gains or losses on investments and derivatives, cumulative effect of accounting changes, restructuring charges, reserve changes on business sold through reinsurance, gain on sale of subsidiaries and book of business and loss on early retirement of debt. The earnings used to calculate ROE, as used in the earnings release, are income (loss) from operations. Income (loss) from operations is an internal measure used by the company in the management of its operations. Management believes that this performance measure explains the results of the company's ongoing operations in a manner that allows for a better understanding of the underlying trends in the company's current business because the excluded items are either unpredictable and/or not related to decisions regarding the underlying businesses.

	For the Quarter						For the Year
($ in millions, except per share data)	Ended December 31,						Ended December 31,
	2005			2004			2005			2004
Net Income	$	225.3		$	189.9		$	831.1		$	707.0
Less:
Net realized gain/loss on investments and derivatives		(6.1	)		3.5			(11.6	)		(38.1	)
Restructuring charges		(1.1	)					(19.1	)		(13.9	)
Reserve development and related amortization
on business sold through reinsurance		0.2			0.2			0.9			0.9
Loss on early retirement of subordinated debt					(4.1	)					(4.1	)
Gain on sale of subsidiaries/ businesses					0.4			9.3			61.9
Cumulative effect of accounting change											(24.5	)
Income from Operations	$	232.3		$	189.9		$	851.6		$	724.8
Earnings per share (diluted)
Net Income	$	1.28		$	1.07		$	4.72		$	3.95
Income from Operations	$	1.31		$	1.07		$	4.83		$	4.05
Average Equity
(Excluding accumulated other comprehensive income)	$	5,757.7		$	5,185.0		$	5,512.2		$	5,075.5
Return on Equity
Net Income		15.7	%		14.6	%		15.1	%		13.9	%
Income from Operations		16.1	%		14.7	%		15.4	%		14.3	%

 

LINCOLN NATIONAL CORPORATION

DIGEST OF EARNINGS

	For the Quarter Ended December 31
	2005		2004
Revenue	$	1,388,422,422	$	1,347,466,087
Net Income	$	225,310,318	$	189,871,774
EPS -Basic	$	1.30	$	1.09
EPS - Diluted	$	1.28	$	1.07
Avg. Shares - Basic		173,220,352		173,994,562
Avg. Shares - Diluted		176,603,149		176,707,436
		For the Year Ended December 31
		2005		2004
Revenue	$	5,487,938,109	$	5,371,274,165
Net Income	$	831,055,130	$	707,009,384
EPS -Basic	$	4.80	$	4.01
EPS - Diluted	$	4.72	$	3.95
Avg. Shares - Basic		173,069,552		176,190,662
Avg. Shares - Diluted		176,144,243		179,017,125

********

In connection with the proposed transaction, Lincoln National Corporation has filed with the SEC a Registration Statement on Form S-4 (Registration No. 333-130226), including a joint proxy statement/prospectus, and other materials. WE URGE INVESTORS TO READ THE DEFINITIVE JOINT PROXY  STATEMENT/PROSPECTUS AND THESE OTHER DOCUMENTS CAREFULLY AND BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors can obtain free copies of these materials, as well as other filings containing information about Lincoln and Jefferson-Pilot, without charge, at the Securities and Exchange Commission’s website (www.sec.gov). In addition, free copies of the definitive joint proxy statement/prospectus and Lincoln’s other SEC filings are also available on Lincoln’s website (www.lfg.com). Free copies of the registration statement and joint proxy statement/prospectus and Jefferson-Pilot‘s other SEC filings are also available on Jefferson-Pilot’s website (www.jpfinancial.com).

Lincoln, Jefferson-Pilot, their respective directors and officers and other persons may be deemed, under SEC rules, to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Lincoln’s directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2004 and in its proxy statement filed with the SEC on April 8, 2005, and information regarding Jefferson-Pilot’s directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2004 and in its proxy statement filed with the SEC on March 24, 2005. More detailed information regarding the identity of potential participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is available in the joint proxy statement/prospectus contained in the above-referenced Registration Statement on Form S-4.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made in this release and in other written or oral statements made by LNC or on LNC’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. LNC 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:

• Legislative, regulatory or tax changes, both domestic and foreign, that affect the cost of, or demand for, LNC’s products, the required amount of reserves and/or surplus, or otherwise affect our ability to conduct business, including changes to statutory reserves and/or risk-based capital requirements related to secondary guarantees under universal life and variable annuity products such as Actuarial Guideline 38; restrictions on revenue sharing and 12b-1 payments; and the potential for tax reform;

• The institution of legal or regulatory proceedings against LNC or its subsidiaries and the outcome of any legal or regulatory proceedings, such as: (a) adverse actions related to present or past business practices common in businesses in which LNC and its subsidiaries compete; (b) adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities, and extra-contractual and class action damage cases; (c) new decisions which change the law; and (d) unexpected trial court rulings;

• Changes in interest rates causing a reduction of investment income, the margins of LNC’s fixed annuity and life insurance businesses and demand for LNC’s products;

• A decline in the equity markets causing a reduction in the sales of LNC’s products, a reduction of asset fees that LNC charges on various investment and insurance products, an acceleration of amortization of deferred acquisition costs (DAC) and an increase in liabilities related to guaranteed benefit features of LNC’s variable annuity products;

• Ineffectiveness of LNC’s various hedging strategies used to offset the impact of declines in the equity markets;

• A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates and equity market returns from LNC’s assumptions used in pricing its products, in establishing related insurance reserves, and in the amortization of intangibles that may result in an increase in reserves and a decrease in net income;

• Changes in GAAP that may result in unanticipated changes to LNC’s net income;

• Lowering of one or more of LNC’s debt ratings issued by nationally recognized statistical rating organizations, and the adverse impact such action may have on LNC’s ability to raise capital and on its liquidity and financial condition;

• Lowering of one or more of the insurer financial strength ratings of LNC’s insurance subsidiaries, and the adverse impact such action may have on the premium writings, policy retention, and profitability of its insurance subsidiaries;

• The adequacy and collectibility of reinsurance that LNC has purchased;

• Acts of terrorism or war that may adversely affect LNC’s businesses and the cost and availability of reinsurance;

• Competitive conditions that may affect the level of premiums and fees that LNC can charge for its products;

• The unknown impact on LNC’s business resulting from changes in the demographics of LNC’s client base, as aging baby-boomers move from the asset-accumulation stage to the asset-distribution stage of life;

• Loss of key management, portfolio managers in the Investment Management segment, financial planners in Lincoln Financial Advisors (LFA) or wholesalers in Lincoln Financial Distributors (LFD);

• Changes in general economic or business conditions, both domestic and foreign, that may be less favorable than expected and may affect foreign exchange rates, premium levels, claims experience, the level of pension benefit costs and funding, and investment results; and

•   In connection with the merger: (1) the Lincoln shareholders may not approve the issuance of shares in connection with the merger and/or the Jefferson-Pilot shareholders may not approve and adopt the merger agreement and the transactions contemplated by the merger agreement at the special shareholder meetings; (2) we may be unable to obtain regulatory approvals required for the merger, or required regulatory approvals may delay the merger or result in the imposition of conditions that could have a material adverse effect on the combined company or cause us to abandon the merger; (3) we may be unable to complete the merger or completing the merger may be more costly than expected because, among other reasons, conditions to the closing of the merger may not be satisfied; (4) problems may arise with the ability to successfully integrate Lincoln’s and Jefferson-Pilot’s businesses, which may result in the combined company not operating as effectively and efficiently as expected; (5) the combined company may not be able to achieve the expected synergies from the merger or it may take longer than expected to achieve those synergies; and (6) the merger may involve unexpected costs or unexpected liabilities, or the effects of purchase accounting may be different from our expectations.

The risks included here are not exhaustive. LNC’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the Securities and Exchange Commission include additional factors which could impact LNC’s business and financial performance. For additional risks concerning our merger with Jefferson-Pilot Corporation, see our Form S-4 (Registration No. 333-130226) filed with the Securities and Exchange Commission on February 9, 2006. Moreover, LNC operates 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 LNC’s business 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 undo reliance on forward-looking statements as a prediction of actual results. In addition, LNC disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this release.

EX-99.2

This document is dated February 13, 2006. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2005 ii

NOTES

Definitions and Presentation

"Income from Operations," "Operating Revenue," and "Return on Capital" are non-GAAP financial measures and do not replace GAAP net income (loss) and revenues. Detailed reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure are included in this statistical supplement.

* We exclude the after-tax effects of the following items from GAAP net income to arrive at income from operations:

*	Realized gains and losses on investments and derivatives,
*	Restructuring charges,
*	Gains and losses related to reinsurance embedded derivatives/trading account securities,
*	The cumulative effect of accounting changes,
*	Reserve changes on business sold through reinsurance net of related deferred gain amortization,
*	Gains and losses on the sale of subsidiaries and blocks of business,
*	Loss on early retirement of debt, including subordinated debt

* Operating revenue represents revenue excluding the following, as applicable:

*	Realized gains or losses on investments and derivatives,
*	Gains and losses related to reinsurance embedded derivatives/trading account securities,
*	Gains and losses on the sale of subsidiaries and blocks of business,
*	Deferred gain amortization related to reserve changes on business sold through reinsurance,

* Return on capital measures the effectiveness of LNC's use of its total capital, which includes equity (excluding accumulated other comprehensive income), debt and junior subordinated debentures issued to affiliated trusts. Return on capital is calculated by dividing income from operations (after adding back interest expense) by average capital. The difference between return on capital and return on shareholders' equity represents the effect of leveraging on LNC's consolidated results.

Income from operations, operating revenue, and return on capital are internal measures used by LNC in the management of its operations. Management believes that these performance measures explain the results of operations of LNC's ongoing operations in a manner that allows for a better understanding of the underlying trends in LNC's current business because the excluded items are either unpredictable and/or not related to decisions regarding the underlying businesses.

*	Certain operating and statistical measures are included in this report to provide supplemental data regarding the performance of LNC’s current business. These measures include deposits, sales, net flows, first year premium, inforce, spread, and assets under management.
*	On September 24, 2004, LNC completed the sale of its London-based international investment unit to its management. Certain metrics pages (2 and 14A) have been presented excluding the investment assets managed by the London-based international investment unit to provide more consistent comparisons between periods.
*	Certain reclassifications have been made to the prior periods presented to conform to the December 31, 2005 presentation.

Accounting Changes

* Effective January 1, 2004 LNC Implemented Statement of Position 03-1, "Accounting and reporting by Insurance Enterprises for certain nontraditional long-duration contracts and for Separate Accounts" ("the SOP"). Among other things, the SOP establishes standards for computing reserves for products with guaranteed benefits such as GMDB and for certain riders for Universal Life contracts. The effects of implementing the SOP, including any related effects on DAC from changes in estimated gross profits resulting from implementing the provisions of the SOP were recorded as a cumulative effect adjustment of $24.5 million in the first quarter of 2004.

12/31/2005										PAGE 1
Financial Highlights
Unaudited [Millions of Dollars, except Common Share Data]
	For the Quarter Ended						For the Year Ended
	December 31						December 31
	2005			2004			2005			2004
	Amount			Amount			Amount			Amount
Income from Operations - By Segment
Lincoln Retirement	$	117.3		$	100.5		$	471.5		$	414.6
Life Insurance		80.2			74.0			298.9			280.3
Investment Management		14.6			5.2			36.0			43.6
Lincoln UK		13.5			16.6			43.4			43.5
Corporate & Other		6.7			(6.3	)		1.8			(57.2	)
Total Income from Operations		232.3			189.9			851.6			724.8
Realized gains (losses) on investments and derivatives		(6.1	)		4.3			(14.5	)		(37.4	)
Net gain (loss) on reinsurance
derivative/trading account securities		-			(0.8	)		3.0			(0.6	)
Gain on sale of subsidiaries/ businesses		-			0.4			9.3			61.9
Reserve development/ amortization of related deferred gain		0.2			0.2			0.9			0.9
Loss on early retirement of subordinated debt		-			(4.1	)		-			(4.1	)
Restructuring charges		(1.1	)		(0.0	)		(19.1	)		(13.9	)
Cumulative effect of accounting change		-			-			-			(24.5	)
Net Income	$	225.3		$	189.9		$	831.1		$	707.0
Earnings per share (diluted)
Income from Operations	$	1.31		$	1.07		$	4.83		$	4.05
Realized gains (losses) on investments and derivatives		(0.03	)		0.02			(0.08	)		(0.21	)
Net gain (loss) on reinsurance
derivative/trading account securities		-			-			0.02			-
Gain on sale of subsidiaries/ businesses		-			-			0.05			0.35
Reserve development/ amortization of related deferred gain		-			-			-			-
Loss on early retirement of subordinated debt		-			(0.02	)		-			(0.02	)
Restructuring charges		-			-			(0.11	)		(0.08	)
Cumulative effect of accounting change		-			-			-			(0.14	)
Net Income	$	1.28		$	1.07		$	4.72		$	3.95
Operating Revenue- By Segment
Lincoln Retirement	$	573.3		$	539.4		$	2,258.0		$	2,128.0
Life Insurance		519.6			503.7			1,993.5			1,952.9
Investment Management		152.7			127.7			567.8			534.9
Lincoln UK		62.5			89.3			318.4			342.2
Corporate & Other		89.2			81.1			352.1			335.1
Total Operating Revenue		1,397.4			1,341.2			5,489.8			5,293.2
Realized gains (losses) on investments		(9.6	)		7.2			(21.7	)		(45.7	)
Gains (losses) on derivatives		0.2			(0.4	)		(0.5	)		(11.6	)
Gain (loss) on reinsurance
derivative/trading account securities		0.0			(1.4	)		4.7			(1.0	)
Gain on sale of subsidiaries/ businesses		-			0.6			14.2			135.0
Amortization of deferred gain-reserve development		0.3			0.3			1.3			1.3
Total Revenue	$	1,388.4		$	1,347.5		$	5,487.9		$	5,371.3

12/31/2005							PAGE 2
Financial Highlights
Unaudited [Billions of Dollars]
	For the Quarter Ended				For the Year Ended
Operational Data by Segment	December 31				December 31
	2005		2004		2005		2004
	Amount		Amount		Amount		Amount
Lincoln Retirement
Gross Deposits	$	2.639	$	2.387	$	10.310	$	9.020
Net Flows		0.621		0.794		2.887		2.922
Account Values (Gross)		72.462		64.788		72.462		64.788
Account Values (Net of Reinsurance)		70.229		62.491		70.229		62.491
Life Insurance Segment
First Year Premium- Retail (in millions)	$	262.644	$	231.160	$	845.428	$	812.565
First Year Premium- COLI (in millions)		13.113		20.376		70.481		73.657
First Year Premium- Total (in millions)		275.757		251.537		915.910		886.222
In-force		324.369		304.579		324.369		304.579
Account Values		15.368		14.382		15.368		14.382
Investment Management Segment
Retail Deposits	$	3.158	$	2.519	$	14.056	$	8.992
Retail Net Flows		1.347		1.170		7.098		3.136
Institutional In-flows		4.217		2.750		14.633		11.289
Institutional Net Flows		1.930		2.095		8.861		7.178
Total Deposits and In-flows		7.375		5.269		28.689		20.281
Total Net Flows		3.277		3.265		15.959		10.314
Assets Under Management- Retail and Inst'l		77.093		56.029		77.093		56.029
Assets Under Management - Insurance-related Assets		44.483		43.980		44.483		43.980
Assets Under Management - Total Segment		121.576		100.009		121.576		100.009
Consolidated
Domestic Retail Deposits	$	6.188	$	5.290	$	25.494	$	19.280
Domestic Retail Account Balances		122.004		103.784		122.004		103.784
Domestic Retail Net Flows		2.348		2.527		11.207		7.335
Domestic Deposits		10.386		8.038		40.041		30.479
Domestic Net Flows		4.368		4.622		20.238		14.545
Assets Under Management		171.718		144.340		171.718		144.340
Operational Data (excluding Assets Managed by
Delaware's London-based International Investment Unit)
Investment Management Segment
Retail Deposits	$	3.158	$	2.519	$	14.056	$	8.987
Retail Net Flows		1.347		1.170		7.098		3.160
Institutional In-flows		4.217		2.750		14.633		6.637
Institutional Net Flows		1.930		2.095		8.861		3.884
Total Deposits and In-flows		7.375		5.269		28.689		15.624
Total Net Flows		3.277		3.265		15.959		7.045
Assets Under Management- Retail and Inst'l		77.093		56.029		77.093		56.029
Assets Under Management - Insurance-related Assets		44.483		43.980		44.483		43.980
Assets Under Management - Total Segment		121.576		100.009		121.576		100.009
Consolidated
Domestic Retail Deposits	$	6.188	$	5.290	$	25.494	$	19.274
Domestic Retail Account Balances		122.004		103.784		122.004		103.784
Domestic Retail Net Flows		2.348		2.527		11.207		7.359
Domestic Deposits		10.386		8.038		40.041		25.823
Domestic Net Flows		4.368		4.622		20.238		11.274
Assets Under Management		171.718		144.340		171.718		144.340

12/31/2005										PAGE 3
Financial Highlights
Unaudited [Millions of Dollars, except Common Share Data]
	For the Quarter Ended						For the Year Ended
	December 31						December 31
	2005			2004			2005			2004
	Amount			Amount			Amount			Amount
Balance Sheet Assets - End of Period	$	124,787.6		$	116,219.3		$	124,787.6		$	116,219.3
Shareholders' Equity
Beg of Period (including AOCI)	$	6,284.4		$	5,970.8		$	6,175.6		$	5,811.6
End of Period (including AOCI)		6,384.4			6,175.6			6,384.4			6,175.6
End of Period (excluding AOCI)		5,856.6			5,244.9			5,856.6			5,244.9
Average Equity (excluding AOCI)		5,757.7			5,185.0			5,512.2			5,075.5
Return on Equity
Net Income/Average Equity (excluding AOCI)		15.7	%		14.6	%		15.1	%		13.9	%
Inc from Operations/Average Equity (excluding AOCI)		16.1	%		14.7	%		15.4	%		14.3	%
Return on Capital
Inc from Operations/Average Capital		13.5	%		12.1	%		12.9	%		11.7	%
Common Stock Outstanding
Average for the Period - Diluted		176.6			176.7			176.1			179.0
End of Period - Assuming Conv of Pref.		174.0			173.8			174.0			173.8
End of Period - Diluted		176.9			176.1			176.9			176.1
Book Value (including AOCI)	$	36.69		$	35.53		$	36.69		$	35.53
Book Value (excluding AOCI)	$	33.66		$	30.17		$	33.66		$	30.17
Cash Returned to Shareholders
Share Repurchase - dollar amount	$	-		$	64.0		$	103.6		$	350.2
Dividends Declared to Shareholders		66.6			63.8			257.7			250.1
Total Cash Returned to Shareholders	$	66.6		$	127.8		$	361.3		$	600.3
Share Repurchase - number of shares		-			1.379			2.331			7.612
Dividend Declared on Common Stock - per share	$	0.380		$	0.365		$	1.475		$	1.415
		For the Quarter Ended						For the Year Ended
		December 31						December 31
		2005			2004			2005			2004
		Amount			Amount			Amount			Amount
Comprehensive Income (Loss)
Net Income	$	225.3		$	189.9		$	831.1		$	707.0
Foreign Currency Translation		(16.1	)		37.4			(70.9	)		45.3
Net Unrealized Gains (Losses) on Securities		(72.4	)		42.8			(326.3	)		29.8
Losses on Derivatives		(1.5	)		(5.8	)		(6.7	)		(8.1	)
Minimum Pension Liability Adjustment		(2.9	)		(4.8	)		1.0			(5.4	)
Comprehensive Income	$	132.3		$	259.5		$	428.2		$	768.6

12/31/2005										PAGE 4
Consolidated Statements of Income
Unaudited [Millions of Dollars]
	For the Quarter Ended December 31						For the Year Ended December 31
	2005			2004			2005			2004
Revenue
Premiums	$	82.4		$	78.7		$	308.4		$	298.9
Surrender charges		18.0			21.1			73.3			78.7
Mortality assessments		145.1			140.4			568.3			558.3
Expense assessments		308.5			258.5			1,120.6			949.3
Investment advisory fees		79.0			56.0			279.0			252.5
Amortization of deferred gain		18.9			19.1			75.7			87.0
Amortization of deferred gain-reserve development		0.3			0.3			1.3			1.3
Other revenue and fees		77.3			93.4			362.3			364.4
Net investment income		668.1			674.1			2,702.3			2,704.1
Realized gains (losses) on investments		(9.6	)		7.2			(21.7	)		(45.7	)
Gains (losses) on derivatives		0.2			(0.4	)		(0.5	)		(11.6	)
Net gain (loss) on reinsurance
derivative/trading account securities		0.0			(1.4	)		4.7			(1.0	)
Gain on sale of subsidiaries/ businesses		-			0.6			14.2			135.0
Total Revenue		1,388.4			1,347.5			5,487.9			5,371.3
Benefits and Expenses
Ins. benefits paid or provided:
Policy benefits		179.5			171.4			761.6			696.2
Div accum & div to policyholders		23.6			23.6			77.7			77.4
Interest credited to policy bal.		394.7			397.4			1,570.1			1,570.6
Def. sales inducements net of amortization		(11.3	)		(11.5	)		(43.9	)		(40.6	)
Total insurance benefits		586.5			580.9			2,365.6			2,303.7
Underwriting, acquisition,
insurance and other expenses:
Commissions and other volume related expenses		357.2			331.3			1,287.2			1,133.1
Operating and administrative expenses		217.3			193.1			914.1			897.4
Restructuring charges		1.7			0.1			29.5			21.4
Taxes, licenses and fees		17.2			21.3			95.3			103.6
Subtotal		593.4			545.8			2,326.1			2,155.5
DAC deferral net of amortization		(125.4	)		(84.9	)		(442.1	)		(354.1	)
PVIF amortization		13.6			24.2			67.2			120.3
Other intangibles amortization		2.0			3.8			7.8			9.7
Total underwriting, acquisition,
insurance and other expenses		483.6			488.9			1,959.0			1,931.5
Interest		22.4			22.2			88.7			94.1
Loss on early retirement of debt					6.3						6.3
Total Benefits and Expenses		1,092.5			1,098.4			4,413.3			4,335.6
Income (Loss) Before Federal Income Tax and
Cumulative Effect of Accounting Change		295.9			249.1			1,074.6			1,035.7
Federal income taxes		70.6			59.2			243.6			304.1
Income Before Cumulative Effect of
Accounting Change		225.3			189.9			831.1			731.5
Cumulative effect of accounting change		-			-			-			(24.5	)
Net Income	$	225.3		$	189.9		$	831.1		$	707.0
Roll Forward of Deferred Acquisition Costs
Balance at beginning of period	$	3,904.0		$	3,326.8		$	3,445.0		$	3,147.1
Deferral		253.5			238.1			903.2			844.8
Amortization		(128.1	)		(153.2	)		(461.1	)		(490.8	)
Included in Total Benefits and Expenses		125.4			84.9			442.1			354.1
Adjustment related to realized (gains) losses
on available-for-sale securities		(8.7	)		(15.8	)		(48.5	)		(45.7	)
Adjustment related to unrealized (gains) losses
on available-for-sale securities		84.7			14.7			313.1			(14.8	)
Foreign currency translation adjustment		(13.2	)		33.8			(59.5	)		42.9
Other		-			0.5			-			(38.7	)
Balance at end of period	$	4,092.2		$	3,445.0		$	4,092.2		$	3,445.0
Roll Forward of Present Value of In-Force
Balance at beginning of period	$	1,019.4		$	1,103.9		$	1,095.2		$	1,196.5
Amortization		(13.6	)		(24.2	)		(67.2	)		(120.3	)
Foreign currency translation adjustment		(6.9	)		15.6			(29.0	)		19.6
Other		-			-			-			(0.6	)
Balance at end of period	$	998.9		$	1,095.2		$	998.9		$	1,095.2
Roll Forward of Deferred Front-End Load*
Balance at beginning of period	$	721.2		$	744.4		$	764.1		$	750.6
Deferral		23.7			28.6			89.1			104.6
Amortization		(11.9	)		(34.0	)		(85.8	)		(122.8	)
Included in Income from Operations		11.8			(5.3	)		3.3			(18.2	)
Foreign currency translation adjustment		(9.5	)		25.0			(43.9	)		31.7
Balance at end of period	$	723.6		$	764.1		$	723.6		$	764.1
* Included in Insurance and Investment Contract Liabilities on the Balance Sheet

12/31/2005																						PAGE 5
Consolidating Statements of Income from Operations
Unaudited [Millions of Dollars]
													Investment
For the Quarter Ended December 31	Lincoln Retirement						Life Insurance						Management						Lincoln UK
	Dec			Dec			Dec			Dec			Dec			Dec			Dec			Dec
	2005			2004			2005			2004			2005			2004			2005			2004
Operating Revenue
Premiums	$	9.2		$	9.9		$	57.8		$	53.6		$	-		$	-		$	15.4		$	14.9
Surrender charges		5.9			6.4			11.6			14.2			0.5			0.5			-			-
Mortality assessments		-			-			137.8			130.5			-			-			7.3			9.8
Expense assessments		199.6			157.1			62.3			58.0			17.6			15.5			29.1			28.3
Investment advisory fees		-			-			-			-			103.5			82.8			-			-
Other revenue and fees		(1.9	)		(2.0	)		8.9			8.1			17.8			16.7			(7.1	)		16.0
Net investment income		360.6			368.0			241.2			239.4			13.2			12.3			17.8			20.2
Total Operating Revenue		573.3			539.4			519.6			503.7			152.7			127.7			62.5			89.3
Operating Expenses
Ins. benefits paid or provided:
Policy benefits		49.9			43.4			102.1			106.4			-			-			27.5			21.3
Div accum & div to policyholders		-			-			23.6			23.6			-			-			-			-
Interest credited to policy bal.		202.9			210.4			150.2			147.1			7.1			6.8			-			-
Def. sales inducements net of amortization		(11.3	)		(11.5	)		-			-			-			-			-			-
Total insurance benefits		241.6			242.2			275.9			277.2			7.1			6.8			27.5			21.3
Underwriting, acquisition,
insurance and other expenses:
Commissions and other volume related expenses		162.8			156.7			109.2			99.4			15.9			11.7			0.1			1.0
Operating and administrative expenses		69.8			59.6			43.3			42.9			109.5			100.2			24.2			14.1
Taxes, licenses and fees		1.5			2.5			14.7			12.5			2.8			3.1			0.0			-
Subtotal		234.0			218.8			167.3			154.7			128.2			114.9			24.3			15.1
Net DAC (deferral) amortization		(58.0	)		(49.0	)		(56.1	)		(54.0	)		(3.9	)		(3.9	)		(7.4	)		21.9
PVIF amortization		2.4			2.3			13.8			16.4			-			-			(2.5	)		5.6
Other intangibles amortization		-			-			-			-			2.0			3.8			-			-
Total underwriting, acquisition,
insurance and other expenses		178.4			172.1			124.9			117.1			126.3			114.8			14.3			42.5
Total Operating Expenses		420.0			414.3			400.8			394.3			133.3			121.7			41.8			63.8
Income from Operations before federal taxes		153.4			125.1			118.8			109.5			19.4			6.0			20.7			25.5
Federal income taxes		36.1			24.7			38.6			35.5			4.8			0.8			7.2			8.9
Income from Operations	$	117.3		$	100.5		$	80.2		$	74.0		$	14.6		$	5.2		$	13.5		$	16.6

12/31/2005																PAGE 5A
Consolidating Statements of Income from Operations
Unaudited [Millions of Dollars]
	Corporate and						Consolidating
For the Quarter Ended December 31	Other Operations						Adjustments						Consolidated *
	Dec			Dec			Dec			Dec			Dec			Dec
	2005			2004			2005			2004			2005			2004
Operating Revenue
Premiums	$	-		$	0.3		$	-		$	-		$	82.4		$	78.7
Surrender charges		-			-			-			-			18.0			21.1
Mortality assessments		-			-			-			-			145.1			140.4
Expense assessments		-			(0.5	)		-			-			308.5			258.5
Investment advisory fees		-			-			(24.5	)		(26.8	)		79.0			56.0
Amortization of deferred gain		18.9			19.1			-			-			18.9			19.1
Other revenue and fees		220.7			172.4			(161.1	)		(117.7	)		77.3			93.4
Net investment income		36.5			34.8			(1.3	)		(0.6	)		668.1			674.1
Total Operating Revenue		276.1			226.2			(186.9	)		(145.1	)		1,397.4			1,341.2
Operating Expenses
Ins. benefits paid or provided:
Policy benefits		(0.0	)		0.4			-			-			179.5			171.4
Div accum & div to policyholders		-			-			-			-			23.6			23.6
Interest credited to policy bal.		34.5			33.1			-			-			394.7			397.4
Def. sales inducements net of amortization		-			-			-			-			(11.3	)		(11.5	)
Total insurance benefits		34.4			33.4			-			-			586.5			580.9
Underwriting, acquisition,
insurance and other expenses:
Commissions and other volume related expenses		137.8			87.7			(68.6	)		(25.2	)		357.2			331.3
Operating and administrative expenses		88.4			95.8			(117.3	)		(119.3	)		217.9			193.2
Taxes, licenses and fees		(1.7	)		3.3			-			-			17.2			21.3
Subtotal		224.5			186.9			(185.9	)		(144.5	)		592.3			545.9
Net DAC (deferral) amortization		0.1			0.1			-			-			(125.4	)		(84.9	)
PVIF amortization		-			-			-			-			13.6			24.2
Other intangibles amortization		-			-			-			-			2.0			3.8
Total underwriting, acquisition,
insurance and other expenses		224.6			186.9			(185.9	)		(144.5	)		482.5			489.0
Interest		22.9			22.8			(1.0	)		(0.6	)		21.8			22.1
Foreign exchange adjustment		-			(0.0	)		-			-			-			(0.0	)
Total Operating Expenses		281.8			243.1			(186.9	)		(145.1	)		1,090.9			1,092.0
Income (Loss) from Operations before federal taxes		(5.7	)		(16.9	)								306.5			249.2
Federal income taxes		(12.5	)		(10.6	)								74.3			59.3
Income (Loss) from Operations	$	6.7		$	(6.3	)							$	232.3		$	189.9
* See page 1 for a reconciliation of Income from Operations to consolidated Net Income

12/31/2005																						PAGE 6
Consolidating Statements of Income from Operations
Unaudited [Millions of Dollars]
													Investment
For the Year Ended December 31	Lincoln Retirement						Life Insurance						Management						Lincoln UK
	Dec			Dec			Dec			Dec			Dec			Dec			Dec			Dec
	2005			2004			2005			2004			2005			2004			2005			2004
Operating Revenue
Premiums	$	45.7		$	33.0		$	198.7		$	194.0		$	-		$	-		$	63.3		$	70.3
Surrender charges		27.4			25.0			43.6			51.8			2.3			1.9			-			-
Mortality assessments		-			-			533.6			518.7			-			-			34.8			39.5
Expense assessments		727.1			580.5			213.1			208.6			68.9			56.8			111.5			103.9
Investment advisory fees		-			-			-			-			377.8			358.3			-			-
Other revenue and fees		(6.2	)		(6.3	)		34.0			31.4			65.8			66.2			30.3			52.8
Net investment income		1,463.9			1,495.9			970.7			948.4			53.0			51.7			78.6			75.7
Total Operating Revenue		2,258.0			2,128.0			1,993.5			1,952.9			567.8			534.9			318.4			342.2
Operating Expenses
Ins. benefits paid or provided:
Policy benefits		223.0			189.9			422.3			404.1			-			-			116.0			100.4
Div accum & div to policyholders		-			-			77.7			77.4			-			-			-			-
Interest credited to policy bal.		819.0			836.0			590.2			579.7			27.9			26.9			-			-
Def. sales inducements net of amortization		(43.9	)		(40.6	)		-			-			-			-			-			-
Total insurance benefits		998.1			985.2			1,090.3			1,061.2			27.9			26.9			116.0			100.4
Underwriting, acquisition,
insurance and other expenses:
Commissions and other volume related expenses		626.3			586.7			362.6			331.1			60.1			53.0			2.3			2.9
Operating and administrative expenses		259.2			231.8			176.4			168.6			430.3			392.9			98.3			81.0
Taxes, licenses and fees		10.5			14.6			53.9			49.1			10.7			17.0			0.0			-
Subtotal		895.9			833.1			592.9			548.9			501.1			462.9			100.6			83.9
Net DAC (deferral) amortization		(275.8	)		(247.9	)		(191.9	)		(152.2	)		(19.8	)		(27.1	)		45.1			72.8
PVIF amortization		16.6			20.0			60.6			82.2			-			-			(10.1	)		18.1
Other intangibles amortization		-			-			-			-			7.8			9.7			-			-
Total underwriting, acquisition,
insurance and other expenses		636.7			605.2			461.6			478.9			489.0			445.5			135.7			174.8
Total Operating Expenses		1,634.8			1,590.5			1,551.9			1,540.0			516.9			472.5			251.7			275.2
Income from Operations before federal taxes		623.2			537.6			441.6			412.9			50.9			62.4			66.7			67.0
Federal income taxes		151.7			123.0			142.7			132.6			14.9			18.9			23.4			23.4
Income from Operations	$	471.5		$	414.6		$	298.9		$	280.3		$	36.0		$	43.6		$	43.4		$	43.5

12/31/2005																PAGE 6A
Consolidating Statements of Income from Operations
Unaudited [Millions of Dollars]
	Corporate and						Consolidating
For the Year Ended December 31	Other Operations						Adjustments						Consolidated *
	Dec			Dec			Dec			Dec			Dec			Dec
	2005			2004			2005			2004			2005			2004
Operating Revenue
Premiums	$	0.7		$	1.6		$	-		$	-		$	308.4		$	298.9
Surrender charges		-			-			-			-			73.3			78.7
Mortality assessments		-			-			-			-			568.3			558.3
Expense assessments		-			(0.5	)		-			-			1,120.6			949.3
Investment advisory fees		-			-			(98.8	)		(105.8	)		279.0			252.5
Amortization of deferred gain		75.7			87.0			-			-			75.7			87.0
Other revenue and fees		803.0			629.9			(564.7	)		(409.6	)		362.3			364.4
Net investment income		140.4			134.4			(4.2	)		(1.8	)		2,702.3			2,704.1
Total Operating Revenue		1,019.8			852.3			(667.7	)		(517.2	)		5,489.8			5,293.2
Operating Expenses
Ins. benefits paid or provided:
Policy benefits		0.3			1.9			-			-			761.6			696.2
Div accum & div to policyholders		-			-			-			-			77.7			77.4
Interest credited to policy bal.		133.0			128.0			-			-			1,570.1			1,570.6
Def. sales inducements net of amortization		-			-			-			-			(43.9	)		(40.6	)
Total insurance benefits		133.3			129.9			-			-			2,365.6			2,303.7
Underwriting, acquisition,
insurance and other expenses:
Commissions and other volume related expenses		501.3			317.2			(265.3	)		(157.8	)		1,287.2			1,133.1
Operating and administrative expenses		350.5			380.9			(399.2	)		(357.6	)		915.5			897.5
Taxes, licenses and fees		20.1			22.8			-			-			95.3			103.6
Subtotal		872.0			720.9			(664.5	)		(515.4	)		2,298.0			2,134.3
Net DAC (deferral) amortization		0.4			0.4			-			-			(442.1	)		(354.1	)
PVIF amortization		-			-			-			-			67.2			120.3
Other intangibles amortization		-			-			-			-			7.8			9.7
Total underwriting, acquisition,
insurance and other expenses		872.4			721.3			(664.5	)		(515.4	)		1,930.9			1,910.2
Interest		90.5			95.9			(3.2	)		(1.8	)		87.3			94.0
Foreign Exchange		-			-			-			-			-			-
Total Operating Expenses		1,096.2			947.0			(667.7	)		(517.2	)		4,383.8			4,307.9
Income (Loss) from Operations before federal taxes		(76.4	)		(94.7	)		-			-			1,106.1			985.2
Federal income taxes		(78.1	)		(37.4	)		-			-			254.5			260.5
Income (Loss) from Operations	$	1.8		$	(57.2	)	$	-		$	-		$	851.6		$	724.8
* See page 1 for a reconciliation of Income from Operations to consolidated Net Income

12/31/2005				PAGE 7
Comparative Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
ASSETS	2005			2004
Investments
Corporate bonds	$	25,860.7		$	26,889.0
U.S. government bonds		161.8			163.0
Foreign government bonds		1,203.3			1,285.9
Mortgage backed securities		5,951.2			6,090.5
State and municipal bonds		128.8			166.0
Preferred stocks-redeemable		137.4			106.1
Common stocks		55.9			69.8
Preferred stocks-equity		88.8			91.3
Total AFS Securities		33,587.9			34,861.7
Trading securities		3,246.0			3,237.4
Mortgage loans		3,662.6			3,856.9
Real estate		182.7			191.4
Policy loans		1,862.2			1,870.6
Other long-term investments		626.9			489.3
Total Investments		43,168.4			44,507.3
Cash and invested cash		2,311.7			1,661.7
Premiums and fees receivable		343.2			232.9
Accrued investment income		526.4			525.1
Amounts recoverable from reinsurers		6,926.3			7,067.5
Deferred acquisition costs		4,092.2			3,445.0
Other intangible assets		143.3			106.4
Present value of in-force		998.9			1,095.2
Goodwill		1,194.2			1,195.9
Other		1,336.0			1,177.6
Assets held in separate accounts		63,746.8			55,204.6
Total Assets	$	124,787.6		$	116,219.3
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Investment Contract Liabilities:
Reserves	$	23,609.2		$	23,242.1
Unpaid claims		1,040.8			1,080.3
Unearned premiums		2.1			5.8
Premium deposit funds		21,713.3			22,215.1
Participating policyholders' funds		111.2			145.3
Other policyholders' funds		746.1			714.0
Total Ins and Inv Contr Liabilities		47,222.8			47,402.5
Federal income tax liabilities		19.8			77.6
Short-term debt		119.9			214.4
Long-term debt		999.0			1,048.6
Junior subordinated debentures issued to affiliated trusts		334.0			339.8
Embedded derivative - modco		292.2			375.3
Other liabilities		4,832.8			4,467.8
Deferred gain on indemnity reinsurance		836.0			913.0
Liability related to separate accounts		63,746.8			55,204.6
Total Liabilities		118,403.2			110,043.7
Unrealized gains		503.9			836.9
Foreign currency		83.4			154.3
Minimum pension liability adjustment		(59.5	)		(60.5	)
Shareholders' equity- other		5,856.6			5,244.9
Total Shareholders' Equity		6,384.4			6,175.6
Total Liabilities
and Shareholders' Equity	$	124,787.6		$	116,219.3
Shareholders' Equity Per Share
Book Value, Excluding AOCI	$	33.66		$	30.17
Common shares outstanding (in millions)		174.0			173.8

12/31/2005																			PAGE 8
Consolidating Balance Sheets
Unaudited [Millions of Dollars]
													Investment
	Lincoln Retirement						Life Insurance						Management				Lincoln UK
ASSETS	Dec			Dec			Dec			Dec			Dec		Dec		Dec		Dec
	2005			2004			2005			2004			2005		2004		2005		2004
Investments
Corporate bonds	$	12,688.1		$	13,504.1		$	9,038.9		$	8,887.9		$	515.9	$	533.3	$	646.7	$	739.2
U.S. government bonds		11.3			11.9			71.0			63.8			-		-		-		-
Foreign government bonds		275.9			304.5			176.6			184.7			6.8		6.8		302.2		337.6
Asset/mortgage backed securities		3,277.3			3,332.3			1,901.1			1,739.5			91.9		99.6		-		-
State and municipal bonds		67.2			95.3			42.7			52.4			1.1		1.2		-		-
Preferred stocks-redeemable		61.2			37.6			28.4			25.7			-		-		-		-
Common stocks		-			0.2			0.0			0.2			-		-		43.0		46.4
Preferred stocks-equity		42.2			43.1			14.2			14.8			2.7		2.7		-		-
Total AFS Securities		16,423.1			17,329.1			11,273.0			10,968.9			618.4		643.7		991.9		1,123.3
Trading Securities		1,130.6			1,169.6			-			-			-		-		-		-
Mortgage loans		1,720.6			1,936.3			1,621.4			1,554.2			44.1		62.6		0.0		0.1
Real estate		-			-			-			-			-		-		0.2		0.2
Policy loans		431.7			438.7			1,426.0			1,426.0			-		-		4.4		5.9
Allocated investments		3,645.9			3,891.1			1,545.0			1,442.7			159.5		139.9		-		-
Other long-term investments		155.0			61.8			3.3			9.1			-		-		-		-
Total Investments		23,507.0			24,826.6			15,868.8			15,400.9			822.1		846.3		996.6		1,129.5
Notes receivable from LNC		423.3			107.8			56.8			130.7			76.3		44.4		-		-
Cash and invested cash		(113.3	)		(73.9	)		(40.7	)		18.0			95.3		51.1		245.5		282.9
Premium and fees receivable		(0.0	)		0.2			32.3			25.8			56.7		45.4		-		-
Accrued investment income		236.5			243.3			179.2			173.8			8.2		8.6		20.2		22.1
Amount recoverable from reinsurers		937.2			1,030.7			1,273.0			1,183.4			-		-		59.9		-
Deferred acquisition costs		1,480.5			1,040.4			1,970.0			1,691.9			154.5		120.4		486.3		590.9
Other intangible assets		129.4			85.5			-			-			13.9		20.9		-		-
Present value of in-force		76.0			92.6			665.8			726.5			-		-		257.2		276.1
Goodwill		64.1			64.1			855.1			855.1			260.8		260.8		14.3		15.9
Other		183.0			145.2			507.9			468.0			127.3		96.4		113.9		80.3
Assets held in separate accounts		48,182.0			40,990.1			2,482.7			2,131.1			5,762.5		4,897.2		7,319.6		7,186.2
Total Assets	$	75,105.6		$	68,552.7		$	23,850.9		$	22,805.0		$	7,377.6	$	6,391.5	$	9,513.3	$	9,583.9
		Corporate and						Consolidating
		Other Operations						Adjustments										Consolidated
ASSETS		Dec			Dec			Dec			Dec							Dec		Dec
		2005			2004			2005			2004							2005		2004
Investments
Corporate bonds	$	2,971.1		$	3,224.5		$	-		$	-						$	25,860.7	$	26,889.0
U.S. government bonds		79.5			87.4			-			-							161.8		163.0
Foreign government bonds		441.8			452.3			-			-							1,203.3		1,285.9
Asset/mortgage backed securities		680.9			919.0			-			-							5,951.2		6,090.5
State and municipal bonds		17.7			17.1			-			-							128.8		166.0
Preferred stocks-redeemable		47.9			42.8			-			-							137.4		106.1
Common stocks		13.0			22.9			-			-							55.9		69.8
Preferred stocks-equity		29.6			30.7			-			-							88.8		91.3
Total AFS Securities		4,281.4			4,796.7			-			-							33,587.9		34,861.7
Trading securities		2,115.4			2,067.8			-			-							3,246.0		3,237.4
Mortgage loans		276.5			303.6			-			-							3,662.6		3,856.9
Real estate		182.5			191.1			-			-							182.7		191.4
Policy loans		-			-			-			-							1,862.2		1,870.6
Allocated investments		(5,350.5	)		(5,473.7	)		-			-							-		-
Other long-term investments		468.6			418.4			-			-							626.9		489.3
Total Investments		1,974.0			2,304.0			(0.0	)		(0.0	)						43,168.4		44,507.3
Investments In Consolidated Subs		6,077.7			5,545.6			(6,077.7	)		(5,545.6	)						-		-
Notes receivable from LNC		(521.6	)		(152.9	)		(34.8	)		(130.0	)						-		-
Cash and invested cash		2,124.9			1,383.6			-			-							2,311.7		1,661.7
Premium and fees receivable		254.3			161.5			-			-							343.2		232.9
Accrued investment income		82.2			77.4			-			-							526.4		525.1
Amount recoverable from reinsurers		4,656.2			4,853.5			-			-							6,926.3		7,067.5
Deferred acquisition costs		1.0			1.4			-			-							4,092.2		3,445.0
Other intangible assets		-			-			-			-							143.3		106.4
Present value of in-force		-			-			-			-							998.9		1,095.2
Goodwill		-			-			-			-							1,194.2		1,195.9
Other		414.8			398.8			(10.9	)		(11.0	)						1,336.1		1,177.7
Assets held in separate accounts		-			-			-			-							63,746.8		55,204.6
Total Assets	$	15,063.7		$	14,572.8		$	(6,123.5	)	$	(5,686.7	)					$	124,787.6	$	116,219.3

12/31/2005																				PAGE 9
Consolidating Balance Sheets
Unaudited [Millions of Dollars]
													Investment
	Lincoln Retirement						Life Insurance						Management				Lincoln UK
LIABILITIES and SHAREHOLDERS' EQUITY	Dec			Dec			Dec			Dec			Dec		Dec		Dec			Dec
	2005			2004			2005			2004			2005		2004		2005			2004
Liabilities
Insurance and Inv Contract Liabilities:
Reserves	$	2,251.7		$	2,268.9		$	16,149.7		$	15,411.7		$	-	$	-	$	1,332.0		$	1,491.8
Unpaid claims		29.0			38.4			129.5			158.0			-		-		44.8			51.9
Unearned premiums		-			-			-			-			-		-		-			-
Premium deposit funds		20,816.8			21,336.8			17.3			17.1			739.9		716.0		31.9			29.7
Participating policyholders' funds		-			-			111.2			145.3			-		-		-			-
Other policyholders' funds		-			-			741.1			706.1			-		-		-			-
Total Insurance and Inv Contract Liabilities		23,097.6			23,644.0			17,148.9			16,438.2			739.9		716.0		1,408.6			1,573.5
Federal income taxes		284.3			387.0			92.9			208.3			11.8		6.2		86.9			58.6
Notes payable to LNC		0.8			51.4			-			-			-		-		-			-
Embedded derivative - modco		40.5			80.5			2.8			2.5			-		-		-			-
Other liabilities		154.2			157.1			498.8			520.8			308.3		227.5		209.8			215.0
Deferred gain on indemnity reinsurance		-			-			-			-			-		-		-			-
Liability related to separate accounts		48,182.0			40,990.1			2,482.7			2,131.1			5,762.5		4,897.2		7,319.6			7,186.2
Total Liabilities		71,759.4			65,310.1			20,226.0			19,300.9			6,822.5		5,846.9		9,025.0			9,033.4
Net unrealized gains (losses) on securities		274.3			474.8			140.6			244.2			2.1		3.1		45.2			36.2
Net gains (losses) on derivatives		1.2			4.8			5.9			7.7			-		-		-			-
Foreign currency translation adjustment		-			-			-			-			-		-		65.8			136.4
Minimum pension liability adjustment		-			-			-			-			0.5		-		(53.3	)		(48.6	)
Other shareholders' equity		3,070.7			2,762.9			3,478.4			3,252.3			552.4		541.5		430.6			426.6
Shareholders' Equity		3,346.2			3,242.5			3,624.9			3,504.1			555.1		544.6		488.3			550.6
Total Liabilities and Shareholders' Equity	$	75,105.6		$	68,552.7		$	23,850.9		$	22,805.0		$	7,377.6	$	6,391.5	$	9,513.3		$	9,583.9
		Corporate and						Consolidating
		Other Operations						Adjustments										Consolidated
LIABILITIES and SHAREHOLDERS' EQUITY		Dec			Dec			Dec			Dec							Dec			Dec
		2005			2004			2005			2004							2005			2004
Liabilities
Insurance and Inv Contract Liabilities:
Reserves	$	3,875.9		$	4,069.7		$	-		$	-						$	23,609.2		$	23,242.1
Unpaid claims		837.5			832.0			-			-							1,040.8			1,080.3
Unearned premiums		2.1			5.7			-			-							2.1			5.8
Premium deposit funds		107.4			115.6			-			-							21,713.3			22,215.1
Participating policyholders' funds		-			-			-			-							111.2			145.3
Other policyholders' funds		5.0			7.9			-			-							746.1			714.0
Total Insurance and Inv Contract Liabilities		4,827.8			5,030.9			-			-							47,222.8			47,402.5
Federal income taxes		(456.2	)		(583.3	)		-			0.8							19.8			77.6
Short-term debt		119.9			214.4			-			-							119.9			214.4
Long-term debt		999.0			1,048.6			-			-							999.0			1,048.6
Junior subordinated debentures issued to affiliated trusts		334.0			339.8			-			-							334.0			339.8
Notes payable to LNC		33.9			78.6			(34.8	)		(130.0	)						-			-
Embedded derivative - modco		248.9			292.3			-			-							292.2			375.3
Other liabilities		3,672.6			3,358.4			(10.9	)		(11.0	)						4,832.8			4,467.8
Deferred gain on indemnity reinsurance		836.0			913.0			-			-							836.0			913.0
Liability related to separate accounts		(0.0	)		-			-			-							63,746.8			55,204.6
Total Liabilities		10,615.9			10,692.7			(45.7	)		(140.3	)						118,403.2			110,043.7
Net unrealized gains (losses) on securities		35.8			64.4			(1.4	)		-							496.6			822.9
Gains (losses) on derivatives		0.2			1.6			-			-							7.3			14.0
Foreign currency translation adjustment		10.1			10.4			7.5			7.5							83.4			154.3
Minimum pension liability adjustment		(6.7	)		(11.9	)		-			-							(59.5	)		(60.5	)
Other shareholders' equity		4,408.3			3,815.5			(6,083.9	)		(5,553.9	)						5,856.6			5,244.9
Shareholders' Equity		4,447.8			3,880.1			(6,077.8	)		(5,546.4	)						6,384.4			6,175.6
Total Liabilities and Shareholders' Equity	$	15,063.7		$	14,572.8		$	(6,123.5	)	$	(5,686.7	)					$	124,787.6		$	116,219.3

12/31/2005										PAGE 10
Lincoln Retirement
Account Value Rollforward
Unaudited [Billions of Dollars]
	Fourth Quarter						Full Year
	2005			2004			2005			2004
Fixed Annuities - Balance at Beginning of Period	$	21.319		$	21.633		$	21.565		$	21.220
Gross Deposits		0.696			0.732			2.947			3.110
Withdrawals & deaths		(0.676	)		(0.587	)		(2.714	)		(2.227	)
Net flows		0.021			0.145			0.234			0.884
Transfer from (to) var annuities		(0.460	)		(0.429	)		(1.548	)		(1.395	)
Interest credited		0.209			0.216			0.838			0.856
Fixed Annuities-Gross		21.089			21.565			21.089			21.565
Reinsurance Ceded		(2.233	)		(2.297	)		(2.233	)		(2.297	)
Fixed Annuities - Balance at End of Period*	$	18.856		$	19.268		$	18.856		$	19.268
Variable Annuities - Balance at Beginning of Period	$	45.059		$	36.268		$	40.362		$	33.930
Gross Deposits		1.720			1.433			6.296			5.082
Withdrawals & deaths		(1.134	)		(0.990	)		(4.299	)		(3.797	)
Net flows		0.586			0.443			1.997			1.285
Transfer from (to) fixed annuities		0.464			0.427			1.559			1.387
Invest inc & change in mkt value		1.493			3.224			3.683			3.760
Var Annuities - Balance at End of Period**	$	47.601		$	40.362		$	47.601		$	40.362
Total Annuities - Balance at Beginning of Period	$	66.378		$	57.901		$	61.927		$	55.150
Gross Deposits		2.416			2.164			9.244			8.192
Withdrawals & deaths		(1.809	)		(1.576	)		(7.013	)		(6.023	)
Net flows		0.607			0.588			2.231			2.169
Transfers		0.003			(0.002	)		0.011			(0.008	)
Interest credited & change in mkt value		1.702			3.440			4.521			4.616
Total Gross Annuities- Balance at End of Period		68.690			61.927			68.690			61.927
Reinsurance Ceded		(2.233	)		(2.297	)		(2.233	)		(2.297	)
Total Annuities (Net of Ceded) - Balance at End of Period	$	66.457		$	59.630		$	66.457		$	59.629
Alliance Mutual Funds - Balance at Beg of Period***	$	3.672		$	2.430		$	2.861		$	1.856
Gross Deposits		0.223			0.223			1.066			0.828
Withdrawals & deaths		(0.208	)		(0.017	)		(0.410	)		(0.075	)
Net flows		0.014			0.206			0.656			0.753
Transfers		(0.003	)		0.000			(0.007	)		(0.031	)
Interest credited & change in mkt value		0.088			0.225			0.262			0.282
Total Alliance Mutual Funds - Balance at End of Period	$	3.772		$	2.861		$	3.772		$	2.861
Total Annuities and Alliance Mutual Funds -
Balance Beginning of Period	$	70.050		$	60.331		$	64.788		$	57.006
Gross Deposits		2.639			2.387			10.310			9.020
Withdrawals & deaths		(2.018	)		(1.593	)		(7.423	)		(6.098	)
Net flows		0.621			0.794			2.887			2.922
Transfers		0.000			(0.002	)		0.004			(0.039	)
Interest credited & change in mkt value		1.790			3.665			4.783			4.898
Total Gross Annuities and Alliance -         Balance End of Period		72.462			64.788			72.462			64.788
Reinsurance Ceded		(2.233	)		(2.297	)		(2.233	)		(2.297	)
Total Annuities and Alliance Mutual Funds
Balance at End of Period - (net of ceded)	$	70.229		$	62.491		$	70.229		$	62.491
Run-off Group Pension Accounts - Not Included above		2.737			2.906			2.737			2.906
Total Retirement Segment Account Values - (net of ceded)	$	72.966		$	65.397		$	72.966		$	65.397
Var Ann Under Agreement - Included above		0.216			0.266			0.216			0.266
Incremental Deposits****:
Fixed Annuities Incremental Deposits	$	0.642		$	0.718		$	2.828		$	3.046
Variable Annuities Incremental Deposits		1.687			1.402			6.164			4.928
Total Annuities Incremental Deposits		2.328			2.120			8.992			7.974
Total Alliance Mutual Funds Incremental Deposits		0.223			0.223			1.066			0.828
Total Annuities and Alliance Mutual Funds
Incremental Deposits	$	2.551		$	2.342		$	10.058		$	8.802

* Includes Fixed Annuity products offered under the Alliance program and the fixed portion of variable annuities.

** Excludes the fixed portion of variable annuities.

*** Represents amounts attributable to Alliance program mutual fund net flows. Alliance program mutual fund account values are not included in the separate accounts reported on our balance sheet.

**** Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Retirement products.

12/31/2005										PAGE 11
Lincoln Retirement
Account Values
Unaudited [Billions of Dollars]
	Fourth Quarter						Full Year
	2005			2004			2005			2004
Fixed Annuities - excluding fixed portion of variable contracts
Deposits	$	0.158		$	0.192		$	0.681		$	1.026
Withdrawals		(0.374	)		(0.302	)		(1.456	)		(1.119	)
Net Flows	$	(0.216	)	$	(0.110	)	$	(0.776	)	$	(0.093	)
Gross Fixed Contract Account Values	$	11.519		$	11.820		$	11.519		$	11.820
Reinsurance Ceded		(2.233	)		(2.297	)		(2.233	)		(2.297	)
Net Fixed Contract Account Values	$	9.286		$	9.522		$	9.286		$	9.522
Fixed Portion of Variable Contracts
Deposits	$	0.539		$	0.540		$	2.267		$	2.085
Withdrawals		(0.302	)		(0.284	)		(1.257	)		(1.108	)
Net Flows	$	0.237		$	0.255		$	1.010		$	0.977
Fixed Portion of Variable Contract Account Values	$	9.570		$	9.746		$	9.570		$	9.746
Variable Annuities - including fixed portion of variable contracts
Deposits	$	2.258		$	1.972		$	8.563		$	7.166
Withdrawals		(1.436	)		(1.274	)		(5.556	)		(4.904	)
Net Flows	$	0.823		$	0.698		$	3.007		$	2.262
Variable Contract Account Values	$	57.171		$	50.108		$	57.171		$	50.108
Average Daily Variable Annuity Account Values	$	45.828		$	38.269		$	42.816		$	36.018
Alliance Mutual Funds Contracts
Deposits	$	0.223		$	0.223		$	1.066		$	0.828
Withdrawals		(0.208	)		(0.017	)		(0.410	)		(0.075	)
Net Flows	$	0.014		$	0.206		$	0.656		$	0.753
Alliance Mutual Funds Contract Account Values*	$	3.772		$	2.861		$	3.772		$	2.861
Average Daily Alliance Mutual Funds Acct Vals*	$	3.728		$	2.620		$	3.401		$	2.304
* Alliance program mutual fund account values are not included in the separate accounts reported on our balance sheet
Total Annuity Product Spread Information (1)
Net investment income (2) (3)		6.13	%		6.23	%		6.07	%		6.28	%
Interest credited to policyholders		3.79	%		3.87	%		3.81	%		3.92	%
Spread (2) (3)		2.34	%		2.36	%		2.26	%		2.37	%

(1) For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products less bonus credits and excess DCA interest, divided by average fixed account values net of co-insured account values. Fixed account values reinsured under modified co-insurance agreements are included in account values for this calculation since assets (and therefore margin) are retained under these agreements.

(2) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums.  The impact of these premiums on investment income and spread was 11 bps and 17 bps for the 4th quarters of 2005 and 2004, respectively, and 8 bps and 20 bps in for the full year 2005 and 2004, respectively.

(3) 2004 includes income from contingent interest received, which contributed $13 million to net investment income or 6 bps to the yield and spread for for the full year.

12/31/2005							PAGE 12
Life Insurance Segment
Operational Data
Unaudited [Millions of Dollars]
	Fourth Quarter				Full Year
	2005		2004		2005		2004
First Year Premiums by Product (Millions)
Universal Life
Excluding MoneyGuard	$	144.4	$	114.5	$	438.4	$	401.1
MoneyGuard		62.5		66.6		226.0		244.5
Total		206.9		181.1		664.4		645.6
Variable Universal Life		33.4		27.5		106.6		84.8
Whole Life		14.4		13.1		40.7		41.2
Term		8.0		9.4		33.8		41.0
Total Retail		262.6		231.2		845.4		812.6
Corporate Owned Life Insurance (COLI)		13.1		20.4		70.5		73.7
Total	$	275.8	$	251.5	$	915.9	$	886.2
First Year Premiums by Distribution (Millions)
Lincoln Financial Advisors	$	50.1	$	66.1	$	183.1	$	209.3
Lincoln Financial Distributors		200.0		167.4		676.2		623.7
Other*		25.7		18.0		56.6		53.2
Total by Distribution	$	275.8	$	251.5	$	915.9	$	886.2
Life Insurance In-Force (Billions)
Universal Life & Other	$	136.519	$	132.120	$	136.519	$	132.120
Term Insurance		187.850		172.459		187.850		172.459
Total Life Segment In-Force	$	324.369	$	304.579	$	324.369	$	304.579
*Other consists of distribution arrangements with third-party intermediaries.

12/31/2005													PAGE 13
Life Insurance Segment
Life Insurance Account Value Rollforward
Unaudited [Billions of Dollars]
	Fourth Quarter						Full Year
	2005			2004			2005			2004
Universal Life-Bal Beg-of-Period	$	10.053		$	9.444		$	9.648		$	9.030
Deposits		0.429			0.413			1.432			1.433
Withdrawals & deaths		(0.105	)		(0.117	)		(0.422	)		(0.474	)
Net flows		0.324			0.296			1.010			0.959
Policyholder assessments		(0.213	)		(0.196	)		(0.804	)		(0.753	)
Interest credited		0.107			0.105			0.418			0.413
Universal Life-Bal End of Period (1)	$	10.271		$	9.648		$	10.271		$	9.648
Variable Universal Life-Bal Beg-of-Period	$	2.734		$	2.275		$	2.520		$	2.195
Deposits		0.136			0.192			0.535			0.560
Withdrawals & deaths		(0.045	)		(0.111	)		(0.242	)		(0.315	)
Net flows		0.091			0.081			0.294			0.245
Policyholder assessments		(0.054	)		(0.050	)		(0.202	)		(0.194	)
Invest inc & chg in mkt value		0.089			0.214			0.249			0.273
Variable Universal Life -Bal end of Period	$	2.861		$	2.520		$	2.861		$	2.520
Interest Sensitive Whole Life - Bal Beg-of-Period	$	2.213		$	2.193		$	2.214		$	2.195
Deposits		0.083			0.082			0.272			0.250
Withdrawals & deaths		(0.048	)		(0.050	)		(0.220	)		(0.207	)
Net flows		0.035			0.032			0.052			0.043
Policyholder assessments		(0.045	)		(0.041	)		(0.176	)		(0.149	)
Interest credited		0.034			0.030			0.146			0.126
Int Sensitive Whole Life-Bal End -of -Period	$	2.236		$	2.214		$	2.236		$	2.214
Total Segment- Life Insurance Account Values
Bal Beg-of-Period	$	15.001		$	13.912		$	14.382		$	13.420
Deposits		0.648			0.686			2.240			2.243
Withdrawals & deaths		(0.198	)		(0.278	)		(0.884	)		(0.996	)
Net flows		0.450			0.408			1.356			1.247
Policyholder assessments		(0.312	)		(0.287	)		(1.182	)		(1.096	)
Invest inc & change in market value		0.230			0.348			0.813			0.812
Total Segment -Bal end of year	$	15.368		$	14.382		$	15.368		$	14.382
Life Product Spread Information (2)
Interest Sensitive Products
Net investment income (3)(4)		6.26	%		6.50	%		6.32	%		6.67	%
Interest credited to policyholders		4.66	%		4.80	%		4.69	%		4.85	%
Spread (3)(4)		1.60	%		1.69	%		1.63	%		1.81	%
Traditional Products
Net investment income (3)(4)		6.36	%		6.60	%		6.43	%		6.90	%
(1) Includes fixed investment option of VUL products.
(2) Interest Sensitive Products - For the life products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on life products divided by average fixed account values. Traditional Products - the yield on earning assets is calculated as net investment income on non-par investment portfolios divided by average earning assets. As of year ends 2004 and 2005, interest sensitive products represented 88% and 89%, respectively, of total interest sensitive and traditional non-par earning assets.
(3) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums.  The impact of these premiums on investment income and spread for interest sensitive products was 11 bps and 13 bps for the 4th quarter of 2005 and 2004, respectively, and 7 bps and 20 bps for the full year of 2005 and 2004, respectively. The impact for traditional products was 7 bps for the 4th quarter of 2004 and 6 bps and 18 bps for the full year of 2005 and 2004, respectively. There was no impact for the 4th quarter of 2005.
(4) 2004 includes income from contingent interest received, which contributed $6.5 million to net investment income or 6 bps to the yield and spread on Interest Sensitive Products and $2.4 million to net investment income or 17 bps to the yield and spread on Traditional Products.

12/31/2005										PAGE 14
Investment Management
Assets Under Management Rollforward
Unaudited [Billions of Dollars]
	Fourth Quarter						Full Year
	2005			2004			2005			2004
Retail Fixed - Bal Beg-of-Period	$	9.061		$	8.060		$	8.257		$	8.186
Fund Sales		0.661			0.493			2.483			1.882
Redemptions		(0.432	)		(0.299	)		(1.476	)		(1.520	)
Net Money Market		(0.010	)		(0.020	)		(0.060	)		(0.113	)
Transfers		(0.102	)		(0.040	)		(0.082	)		(0.212	)
Net Flows		0.117			0.134			0.865			0.037
Market		0.021			0.125			0.079			0.290
Transfer of Assets Under Administration(1)		-			(0.062	)		(0.001	)		(0.256	)
Balance end of period	$	9.199		$	8.257		$	9.199		$	8.257
Retail Equity - Bal Beg-of-Period	$	33.449		$	22.620		$	26.130		$	20.887
Fund Sales		2.497			2.026			11.573			7.110
Redemptions		(1.310	)		(0.953	)		(5.138	)		(4.054	)
Transfers		0.042			(0.037	)		(0.203	)		0.042
Net Flows		1.229			1.036			6.233			3.099
Market		0.796			2.685			3.114			3.256
Sale of subsidiary/Transfer of Assets Under
Administration (1) (2)		-			(0.211	)		(0.003	)		(1.112	)
Balance at end of period	$	35.474		$	26.130		$	35.474		$	26.130
Total Retail - Bal Beg-of-Period	$	42.509		$	30.680		$	34.387		$	29.073
Retail Sales-Annuities		0.815			0.737			2.957			2.757
Retail Sales-Mutual Funds		1.110			0.922			4.860			3.235
Retail Sales-Managed Acct. & Other		1.232			0.860			6.239			2.999
Total Retail Sales		3.158			2.519			14.056			8.992
Redemptions		(1.741	)		(1.252	)		(6.613	)		(5.574	)
Net Money Market		(0.010	)		(0.020	)		(0.060	)		(0.113	)
Transfers		(0.060	)		(0.077	)		(0.285	)		(0.170	)
Net Flows		1.347			1.170			7.098			3.136
Market		0.817			2.810			3.193			3.546
Sale of subsidiary/Transfer of Assets Under
Administration (1) (2)		-			(0.273	)		(0.004	)		(1.368	)
Balance at end of period(1) (2)	$	44.673		$	34.387		$	44.673		$	34.387
Institutional Fixed - Bal Beg-of-Period	$	12.219		$	7.906		$	9.960		$	8.399
Inflows		0.937			2.100			4.277			5.134
Withdrawals/Terminations		(0.132	)		(0.077	)		(1.300	)		(0.593	)
Transfers		(0.001	)		0.001			0.000			0.009
Net Flows (2)		0.803			2.024			2.977			4.549
Market		0.019			0.031			0.104			0.135
Sale of Subsidiary (2)		-			-			-			(3.124	)
Balance at end of period (2)	$	13.042		$	9.960		$	13.042		$	9.960
Institutional Equity - Bal Beg-of-Period	$	17.760		$	10.490		$	11.682		$	25.322
Inflows		3.280			0.650			10.356			6.155
Withdrawals/Terminations		(2.160	)		(0.607	)		(4.520	)		(3.583	)
Transfers		0.006			0.029			0.048			0.057
Net Flows		1.127			0.072			5.884			2.629
Market		0.492			1.120			1.813			2.394
Sale of Subsidiary (2)		-			-			-			(18.664	)
Balance at end of period	$	19.379		$	11.682		$	19.379		$	11.682
Total Institutional - Bal Beg-of-Period	$	29.979		$	18.396		$	21.643		$	33.722
Inflows		4.217			2.750			14.633			11.289
Withdrawals/Terminations		(2.292	)		(0.684	)		(5.820	)		(4.176	)
Transfers		0.005			0.030			0.048			0.066
Net Flows		1.930			2.095			8.861			7.178
Market		0.511			1.151			1.917			2.530
Sale of Subsidiary (2)		-			-			-			(21.787	)
Balance at end of period	$	32.420		$	21.643		$	32.420		$	21.643
Total Retail/Institutional - At end of period	$	77.093		$	56.029		$	77.093		$	56.029
Insurance-related Assets - At end of period	$	44.483		$	43.980		$	44.483		$	43.980
Total Retail/Inst - Net Flows	$	3.277		$	3.265		$	15.959		$	10.314
Total Assets Under Management
At end of period	$	121.576		$	100.009		$	121.576		$	100.009
Subadvised Assets, included in Assets Under Management above
Retail	$	17.162		$	10.740		$	17.162		$	10.740
Institutional		4.782			3.740			4.782			3.740
Total Subadvised Assets	$	21.945		$	14.480		$	21.945		$	14.480
(1) Retail assets under management include assets under administration related to the mutual fund-based 401(k) business. In the third quarter of 2004, this business was outsourced to Bisys. As a result, the third and fourth quarter of 2004 had net outflows of assets under administration of approximately $0.776 billion and $0.273 billion, respectively.
(2) In the third quarter of 2004, the Investment Management segment sold its London-based international investment unit. Assets under management transferred as a result of the sale were $22.1 billion. See page 16A for assets under management without the London-based international investment unit. In addition, the London-based international investment unit began subadvising certain retail and institutional assets in the third quarter of 2004.

12/31/2005								PAGE 14A
Investment Management (excluding Assets Managed by
Delaware's London-based International Investment Unit)
Assets Under Management Rollforward
Unaudited [Billions of Dollars]
	Full Year
			2005			2004
Retail Fixed - Bal Beg-of-Period		$	8.257		$	8.186
Fund Sales			2.483			1.882
Redemptions			(1.476	)		(1.520	)
Net Money Market			(0.060	)		(0.113	)
Transfers			(0.082	)		(0.212	)
Net Flows			0.865			0.037
Market			0.079			0.290
Transfer of Assets Under Administration (1)			(0.001	)		(0.256	)
Balance end of period		$	9.199		$	8.257
Retail Equity - Bal Beg-of-Period		$	26.130		$	20.564
Fund Sales			11.573			7.105
Redemptions			(5.138	)		(4.024	)
Transfers			(0.203	)		0.042
Net Flows			6.233			3.123
Market			3.114			3.236
Transfer of Assets Under Administration (1)			(0.003	)		(0.793	)
Balance at end of period		$	35.474		$	26.130
Total Retail - Bal Beg-of-Period		$	34.387		$	28.750
Retail Sales-Annuities			2.957			2.752
Retail Sales-Mutual Funds			4.860			3.235
Retail Sales-Managed Acct. & Other			6.239			2.999
Total Retail Sales			14.056			8.987
Redemptions			(6.613	)		(5.544	)
Net Money Market			(0.060	)		(0.113	)
Transfers			(0.285	)		(0.170	)
Net Flows			7.098			3.160
Market			3.193			3.526
Transfer of Assets Under Administration (1)			(0.004	)		(1.049	)
Balance at end of period		$	44.673		$	34.387
Institutional Fixed - Bal Beg-of-Period		$	9.960		$	5.981
Inflows			4.277			4.356
Withdrawals/Terminations			(1.300	)		(0.452	)
Transfers			0.000			0.009
Net Flows			2.977			3.913
Market			0.104			0.067
Balance at end of period		$	13.042		$	9.960
Institutional Equity - Bal Beg-of-Period		$	11.682		$	10.318
Inflows			10.356			2.281
Withdrawals/Terminations			(4.520	)		(2.428	)
Transfers			0.048			0.118
Net Flows			5.884			(0.029	)
Market			1.813			1.393
Balance at end of period		$	19.379		$	11.682
Total Institutional - Bal Beg-of-Period		$	21.643		$	16.299
Inflows			14.633			6.637
Withdrawals/Terminations			(5.820	)		(2.880	)
Transfers			0.048			0.127
Net Flows			8.861			3.884
Market			1.917			1.459
Balance at end of period		$	32.420		$	21.643
Total Retail/Institutional - At end of period		$	77.093		$	56.029
Insurance-related Assets - At end of period		$	44.483		$	43.980
Total Retail/Inst - Net Flows		$	15.959		$	7.045
Total Assets Under Management
At end of period		$	121.576		$	100.009
Subadvised Assets, included in Assets Under Management above
Retail		$	17.162		$	10.740
Institutional			4.782			3.740
Total Subadvised Assets		$	21.945		$	14.480
(1) Retail assets under management include assets under administration related to the mutual fund-based 401(k) business. In the third quarter of 2004, this business was outsourced to Bisys. As a result, the third and fourth quarter of 2004 had net outflows of assets under administration of approximately $0.776 billion and $0.273 billion, respectively.
(2) This page presents the assets under management roll-forward without the Investment Management segment's London-based international investment unit, which was sold in the third quarter of 2004 and resulted in the transfer of assets under management of $22.1 billion.

12/31/2005										PAGE 15
Lincoln UK
Operational Data
Unaudited [Billions of Dollars]
	Fourth Quarter						Full Year
	2005			2004			2005			2004
Unit Linked Assets - Beg-of-Period	$	7.180		$	6.468		$	7.186		$	6.390
Deposits		0.156			0.108			0.389			0.378
Withdrawals (incl. chgs) & Deaths		(0.178	)		(0.188	)		(0.728	)		(0.712	)
Net Flows		(0.023	)		(0.080	)		(0.339	)		(0.335	)
Inv Inc & Chg in Mkt Val		0.347			0.411			1.243			0.648
Foreign Currency Adjustment		(0.184	)		0.387			(0.770	)		0.482
Unit Linked Assets - end of Period	$	7.320		$	7.186		$	7.320		$	7.186
Individual Life In-force	$	17.521		$	20.378		$	17.521		$	20.378
Exchange Rate - Dollars to Pounds
For-the-Period		1.747			1.875			1.821			1.834
End-of-Period		1.719			1.919			1.719			1.919

12/31/2005										PAGE 16
Other Operations
Unaudited [Millions of Dollars]
	Fourth Quarter						Full Year
For the Year Ended December 31	2005			2004			2005			2004
Operating Revenue by Source:
Lincoln Financial Advisors	$	136.2		$	103.9		$	514.0		$	383.6
Lincoln Financial Distributors		85.1			69.4			290.7			245.2
Total Distribution		221.3			173.2			804.7			628.8
Amortization of deferred gain on indemnity reinsurance*		18.9			19.1			75.7			87.0
Other [Including
Consolidating Adjustments]		(151.0	)		(111.3	)		(528.3	)		(380.7	)
Total Operating Revenue	$	89.2		$	81.1		$	352.1		$	335.1
Income (Loss) from Operations by Source:
Lincoln Financial Advisors	$	3.2		$	(0.3	)	$	(13.2	)	$	(17.8	)
Lincoln Financial Distributors		(3.5	)		(6.3	)		(22.8	)		(23.7	)
Total Distribution		(0.3	)		(6.6	)		(36.1	)		(41.5	)
Amortization of deferred gain on indemnity reinsurance*		12.3			12.4			49.2			56.5
LNC Financing		(14.4	)		(14.6	)		(57.6	)		(61.0	)
Other Corporate (1)		9.1			2.5			46.3			(11.3	)
Income (Loss) from Operations	$	6.7		$	(6.3	)	$	1.8		$	(57.2	)

* Represents the amortization of deferred gain recognized on the business sold through indemnity reinsurance to Swiss Re.

⁽¹⁾ Includes a reduction of the valuation allowance on the deferred tax asset of our foreign life reinsurance subsidiary of $4.3 million and $46.8 million in fourth quarter and full year 2005, respectively and $4.4 million in the fourth quarter of 2004.

12/31/2005										PAGE 17
Consolidated Investment Data
Unaudited [Millions of Dollars]
	Fourth Quarter						Full Year
For the Year Ended December 31	2005			2004			2005			2004
Net Investment Income
Fixed maturity AFS securities	$	509.7		$	514.8		$	2,030.5		$	2,005.7
Equity AFS securities		3.3			4.4			9.6			10.9
Trading securities		48.7			49.7			193.7			193.5
Mortgage loans on real estate		75.1			73.8			287.6			350.1
Real estate		5.6			5.4			50.1			26.9
Policy loans		29.2			31.3			118.4			119.8
Invested cash		19.2			17.9			63.0			32.2
Other investments		7.0			2.4			61.1			55.3
Investment revenue		697.9			699.8			2,813.9			2,794.4
Investment expense		(29.8	)		(25.7	)		(111.6	)		(90.3	)
Net Investment Income		668.1			674.1			2,702.3			2,704.1
Gross-up of Tax Exempt Income		2.1			2.6			7.1			7.7
Adjusted Net Investment Income	$	670.2		$	676.6		$	2,709.4		$	2,711.8
Mean Invested Assets (Amortized Cost)	$	44,035.2		$	43,763.4		$	43,933.3		$	43,216.4
Ratio of Adjusted Net Invest Income
Over Mean Invested Assets		6.09	%		6.18	%		6.17	%		6.27	%
Investment Gains (Losses)
Realized Gains (Losses) on Investments	$	(6.2	)	$	3.9		$	(14.5	)	$	(30.0	)
Gains(Losses) on Derivatives		0.1			0.3			(0.0	)		(7.4	)
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax)		(72.4	)		42.8			(326.3	)		29.8
Incr (Decr) on Derivatives		(1.5	)		(5.8	)		(6.7	)		(8.1	)
Securities Available-for-Sale
[Billions of Dollars]
Fixed Maturity Sec (Fair Value)		36.687			37.936			36.687			37.936
Fixed Maturity Sec (Amortized Cost)		35.348			35.692			35.348			35.692
Equity Securities (Fair Value)		0.147			0.163			0.147			0.163
Equity Securities (Amortized Cost)		0.139			0.148			0.139			0.148
% of Fixed Maturity Securities (Based on Fair Value)
Treasuries and AAA		23.4	%		23.5	%		23.4	%		23.5	%
AA or better		30.9	%		29.9	%		30.9	%		29.9	%
BB or less		7.4	%		7.0	%		7.4	%		7.0	%