Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Conference Call, Webcast

Lincoln Financial Group Reports Third Quarter 2021 Results and Announces Increase to Dividend


Lincoln Financial Group (NYSE: LNC) today reported net income for the third quarter of 2021 of $318 million, or $1.68 per diluted share available to common stockholders, compared to net income in the third quarter of 2020 of $398 million, or $2.01 per diluted share available to common stockholders. Third quarter adjusted income from operations was $307 million, or $1.62 per diluted share available to common stockholders, compared to adjusted loss from operations of $(133) million, or $(0.72) per diluted share available to common stockholders, in the third quarter of 2020.1

The current quarter's adjusted operating results included net unfavorable notable items of $108 million, or $0.57 per share. These notable items were primarily related to legal expenses and also included impacts from the company's annual review of DAC and reserve assumptions. The prior-year quarter included net unfavorable notable items of $552 million, or $2.84 per share, primarily related to the company's annual review of DAC and reserve assumptions.

"Third quarter underlying results were solid, and our earnings power remains strong," said Dennis R. Glass, president and CEO of Lincoln Financial Group. "Lincoln continued to execute on its proven strategy to drive earnings growth including continued focus on increasing sales, pricing discipline, ongoing expense management and share buybacks. We completed $200 million in share repurchases this quarter and recently commenced incremental repurchases associated with our block transaction through an accelerated share repurchase program. This, combined with formally communicating our new cost savings initiative and the increase in the dividend approved by our board, reflects our ongoing commitment to our shareholders and confidence in the future."

____________________

(1) Due to reporting an adjusted loss from operations for the three months ended September 30, 2020, basic shares were used in the adjusted diluted EPS calculation for that period as the use of diluted shares would have resulted in a lower loss per share.

The board of directors of Lincoln National Corporation approved raising the quarterly dividend on its common shares to $0.45 per share. The dividend represents a 7% increase over the prior-year level. The increased dividend on common stock will be payable on February 1, 2022 to shareholders of record at the close of business on January 10, 2022.

As of or For the

Three Months Ended

September 30,

As of or For the

Nine Months Ended

September 30,

(in millions, except per share data)

 

2021

 

2020

 

2021

 

2020

Net Income (Loss)

$

318

$

398

$

1,185

$

356

Net Income (Loss) Available to Common Stockholders

 

318

 

393

 

1,185

 

340

Net Income (Loss) per Diluted Share Available to Common Stockholders

 

1.68

 

2.01

 

6.19

 

1.74

Revenues

 

5,241

 

5,361

 

14,627

 

13,303

Adjusted Income (Loss) from Operations

 

307

 

(133)

 

1,265

 

519

Adjusted Income (Loss) from Operations per Diluted Share Available to Common Stockholders (1)

 

1.62

 

(0.72)

 

6.62

 

2.57

Average Diluted Shares

 

189.1

 

195.4

 

191.3

 

195.9

Return on Equity (ROE), Including Accumulated Other Comprehensive Income (AOCI) (Net Income)

 

5.9%

 

7.5%

 

7.5%

 

2.5%

Adjusted Operating ROE, Excluding AOCI (Adjusted Income from Operations)

 

8.6%

 

-3.9%

 

12.0%

 

5.1%

Book Value per Share (BVPS), Including AOCI

$

113.77

$

111.51

$

113.77

$

111.51

Book Value per Share, Excluding AOCI

 

76.96

 

71.10

 

76.96

 

71.10

1 Due to reporting an adjusted loss from operations for the three months ended September 30, 2020, basic shares were used in the adjusted diluted EPS calculation for that period as the use of diluted shares would have resulted in a lower loss per share.

Operating Highlights ? Third Quarter 2021 vs. Third Quarter 2020

In addition to the net unfavorable notable items of $0.57, this quarter's adjusted operating EPS results included an estimated unfavorable impact of $0.95 related to the pandemic and a favorable impact of $0.47 from alternative investment income above targeted levels.

Third Quarter 2021 ? Segment Results

Annuities

Annuities reported income from operations of $338 million, up 72% compared to the prior-year quarter. Impacts from the company's annual review of DAC and reserve assumptions were unfavorable in both periods. Not including the impacts from the company's annual reviews of DAC and reserve assumptions, income from operations increased from the prior-year period primarily driven by higher account values from strong equity market performance.

Total annuity deposits of $2.7 billion were up 7% from the prior-year quarter as sales growth in fixed annuities and variable annuities with guaranteed living benefits more than offset a decline in variable annuity sales without guaranteed living benefits. Despite these movements in sales, the percentage of total annuities end-of-period account values from variable annuities without guaranteed living benefits continues to grow as it has done for the past several quarters.

Net outflows were $841 million in the quarter. Average account values for the quarter of $170 billion were up 17% over the prior-year quarter, with 49% of total annuities account values without guaranteed living benefits, up 2 percentage points over the prior-year period.

The current quarter included net unfavorable notable items of $5 million related to the company's annual review of DAC and reserve assumptions while prior-year results included net unfavorable notable items of $101 million related to the company's annual review of DAC and reserve assumptions.

Retirement Plan Services

Retirement Plan Services reported income from operations of $60 million, up 20% compared to the prior-year quarter with the increase driven by higher account values from strong equity market performance, favorable returns within the company's alternative investment portfolio, and continued expense efficiency.

Total deposits for the quarter of $2.4 billion were up 2% compared to the prior-year quarter driven by growth in recurring deposits that more than offset a decline in first-year sales.

Net outflows totaled $21 million for the quarter while over the trailing twelve months, net flows were positive $1.2 billion. Average account values for the quarter of $97 billion were up 21% over the prior-year quarter.

There were no notable items in the current quarter while prior-year results included net unfavorable notable items of $3 million related to the company's annual review of DAC and reserve assumptions.

Life Insurance

Life Insurance reported income from operations of $93 million compared to a loss from operations of $(311) million in the prior-year quarter. Impacts from the company's annual review of DAC and reserve assumptions were unfavorable in both periods, and the current quarter also included a legal expense. Not including the impacts from the company's annual reviews of DAC and reserve assumptions and the legal expense, income from operations increased from the prior-year period driven by favorable returns within the company's alternative investment portfolio, which were partially offset by unfavorable mortality results.

While total Life Insurance sales were $166 million compared to $186 million in the prior-year quarter, sales increased 32% sequentially.

Average Life Insurance in-force of $935 billion grew 7% over the prior-year quarter, and average account values of $60 billion increased 9% over the same period.

The current quarter included net unfavorable notable items of $45 million related to the company's annual review of DAC and reserve assumptions and legal expenses while prior-year results included net unfavorable notable items of $440 million related to the company's annual review of DAC and reserve assumptions.

Group Protection

Group Protection reported a loss from operations of $32 million in the quarter compared to income from operations of $6 million in the prior-year quarter. Not including the impact from the annual review of reserve assumptions, this decrease was primarily driven by higher mortality impacts related to the pandemic.

The total loss ratio was 88% in the current quarter compared to 83% in the prior-year quarter with the increase driven primarily by unfavorable pandemic-related life mortality.

Group Protection sales were $48 million in the quarter in line with $49 million in the prior-year quarter. Employee-paid sales represented 50% of total sales. Insurance premiums of $1.1 billion in the quarter were up 5% compared to the prior-year quarter.

The current quarter included net favorable notable items of $16 million related to the company's annual review of reserve assumptions while prior-year results included net unfavorable notable items of $3 million related to the company's annual review of reserve assumptions.

Other Operations

Other Operations reported a loss from operations of $(152) million versus a loss of $(74) million in the prior-year quarter.

The current quarter included net unfavorable notable items of $74 million related to legal expenses in the current quarter while the prior-year quarter included net unfavorable notable items of $5 million related to elevated expenses.

Realized Gains and Losses / Impacts to Net Income

Realized gains/losses and impacts to net income (after-tax) in the quarter were primarily driven by:

Unrealized Gains and Losses

The company reported a net unrealized gain of $14.6 billion, pre-tax, on its available-for-sale securities at September 30, 2021. This compares to a net unrealized gain of $16.4 billion, pre-tax, at September 30, 2020, with the year-over-year decrease primarily driven by higher treasury rates.

Share Count

The quarter's average diluted share count of 189.1 million was down 3% from the third quarter of 2020, the result of repurchasing 8.3 million shares of stock at a cost of $505 million since September 30, 2020.

Book Value

As of September 30, 2021, book value per share, including AOCI, increased 2% from the prior-year period to $113.77. Book value per share, excluding AOCI, increased 8% from the prior-year period to $76.96.

Spark Initiative

The company is formally communicating its new expense savings initiative, the Spark Initiative, this quarter, and projected net recurring benefits, one-time investments and net impact are outlined in the table below. These numbers reflect the combination of the Spark Initiative and the balance of our existing strategic digitization initiative as of the end of 2020. The strategic digitization initiative achieved net recurring benefits of $80 million pre-tax/pre-DAC as of year-end 2020.

 

Lincoln National Corporation
Spark Initiative & Balance of Strategic Digitization Initiative

 

(in millions, pre-tax/pre-DAC)

20211

 

20222

 

20233

 

2024

 

2025+
Run Rate

Net recurring benefits

$

50

 

$

100 ? 120

 

$

170 ? 190

 

$

260 ? 280

 

 

 

One-time investments

 

(75)

 

 

(145 ? 165)

 

 

(90 ? 110)

 

 

(40 ? 60)

 

 

 

Net impact

$

(25)

 

$

(25 - 65)

 

$

60 - 100

 

$

200 - 240

 

$

260 - 300

 

(1) 2021 includes ~$20M of net recurring benefits and ~$15M of one-time investments from the strategic digitization initiative.

(2) 2022 includes ~$30M of net recurring benefits and ~$5M of one-time investments from the strategic digitization initiative.
(3) 2023 and beyond includes ~$35M of net recurring benefits from the strategic digitization initiative.

The tables attached to this release define and reconcile the non-GAAP measures adjusted income from operations, adjusted operating ROE and BVPS, excluding AOCI, to net income, ROE and BVPS, including AOCI, calculated in accordance with GAAP.

This press release contains statements that are forward-looking, and actual results may differ materially. Please see the Forward-looking Statements ? Cautionary Language at the end of this release for factors that may cause actual results to differ materially from the company's current expectations.

For other financial information, please refer to the company's third quarter 2021 statistical supplement available on its website, http://www.lfg.com/investor.

Conference Call Information

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, November 4, 2021.

Webcast Participants

The conference call will be broadcast live through the company website at www.lfg.com/webcast. Please log on at least fifteen minutes prior to the call to register and download any necessary streaming media software.

Phone/Question and Answer Session Participants

Due to changes implemented by our conference call provider, you must now pre-register to participate via phone at http://www.directeventreg.com/registration/event/1045829. You will receive a confirmation email that includes a dial-in number and unique Registrant ID. For security purposes, please do not share your Registrant ID.

Replay

A replay of the call will be available by 1:00 p.m. Eastern Time on November 4, 2021 at www.lfg.com/webcast. Audio replay will be available from 1:00 p.m. Eastern Time on November 4, 2021 through 12:00 p.m. Eastern Time on November 11, 2021. To access the re-broadcast, dial: (855) 859-2056 (Domestic) or (404) 537-3406 (International). Enter conference code 1045829.

About Lincoln Financial Group

Lincoln Financial Group provides advice and solutions that help people 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, and 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 $322 billion in end-of-period account values as of September 30, 2021. Lincoln Financial Group is a committed corporate citizen included on major sustainability indices including the Dow Jones Sustainability Index North America and FTSE4Good. Dedicated to diversity and inclusion, we earned perfect 100 percent scores on the Corporate Equality Index and the Disability Equality Index, and rank among Newsweek's Most Responsible Companies. Learn more at: www.LincolnFinancial.com. Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for email alerts at http://newsroom.lfg.com.

Explanatory Notes on Use of Non-GAAP Measures

Management believes that adjusted income from operations (adjusted operating income), adjusted operating return on equity, adjusted operating revenues, and adjusted operating EPS better explain the results of the company's ongoing businesses in a manner that allows for a better understanding of the underlying trends in the company's current business 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. Management also believes that using book value excluding accumulated other comprehensive income ("AOCI") enables investors to analyze the amount of our net worth that is primarily attributable to our business operations. Book value per share excluding AOCI is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.

For the historical periods, reconciliations of non-GAAP measures used in this press release to the most directly comparable GAAP measure may be included in this Appendix to the press release and/or are included in the Statistical Reports for the corresponding periods contained in the Earnings section of the Investor Relations page on our website: www.lfg.com/investor.

Definitions of Non-GAAP Measures Used in this Press Release

Adjusted income (loss) from operations, adjusted operating revenues and adjusted operating return on equity (including and excluding average goodwill within average equity), excluding AOCI, using annualized adjusted income (loss) from operations are financial measures we use to evaluate and assess our results. Adjusted income (loss) from operations, adjusted operating revenues and adjusted operating return on equity ("ROE"), as used in the press release, are non-GAAP financial measures and do not replace GAAP net income (loss), revenues and ROE, the most directly comparable GAAP measures.

Adjusted Income (Loss) from Operations

Adjusted income (loss) from operations is GAAP net income (loss) excluding the after-tax effects of the following items, as applicable:

Adjusted Operating Revenues

Adjusted operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

Adjusted Operating Return on Equity

Adjusted operating return on equity measures how efficiently we generate profits from the resources provided by our net assets.

Definition of Notable Items

Adjusted income (loss) from operations, excluding notable items, is a non-GAAP measure that excludes items which, in management's view, do not reflect the company's normal, ongoing operations.

Book Value Per Share, Excluding AOCI

Book value per share, excluding AOCI is calculated based upon a non-GAAP financial measure.

Special Note

Sales

Sales as reported consist of the following:

 

Lincoln National Corporation

Reconciliation of Net Income to Adjusted Income from Operations

 

(in millions, except per share data)

For the

Three Months Ended

 

For the

Nine Months Ended

 

September 30,

 

September 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

$

5,241

 

$

5,361

 

$

14,627

 

$

13,303

Less:

 

 

 

 

 

 

 

 

 

 

 

Excluded realized gain (loss)

 

36

 

 

572

 

 

(245)

 

 

(198)

Amortization of DFEL associated with benefit ratio unlocking

 

-

 

 

1

 

 

2

 

 

(6)

Total Adjusted Operating Revenues

$

5,205

 

$

4,788

 

$

14,870

 

$

13,507

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Available to Common Stockholders ? Diluted

$

318

$

393

$

1,185

$

340

Less:

 

 

 

 

 

 

 

 

 

 

 

Adjustment for deferred units of LNC stock in our deferred compensation plans (1)

-

(5)

-

(16)

Net Income (Loss)

 

318

 

 

398

 

 

1,185

 

 

356

Less:

 

 

 

 

 

 

 

 

 

 

 

Excluded realized gain (loss), after-tax

 

29

 

 

452

 

 

(193)

 

 

(156)

Benefit ratio unlocking, after-tax

 

(12)

 

 

83

 

 

119

 

 

17

Acquisition and integration costs related to mergers and acquisitions, after-tax

-

(4)

-

(12)

Gain (loss) on modification or early extinguishment of debt, after-tax

 

(6)

 

 

-

 

 

(6)

 

 

(12)

Total adjustments

 

11

 

 

531

 

 

(80)

 

 

(163)

Adjusted Income (Loss) from Operations

$

307

 

$

(133)

 

$

1,265

 

$

519

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) Per Common Share ? Diluted (2)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

1.68

 

$

2.01

 

$

6.19

 

$

1.74

Adjusted income (loss) from operations

 

1.62

 

 

(0.72)

 

 

6.62

 

 

2.57

 

 

 

 

 

 

 

 

 

 

 

 

Average Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Average equity, including average AOCI

$

21,458

 

$

21,140

 

$

21,091

 

$

19,309

Average AOCI

 

7,164

 

 

7,566

 

 

7,043

 

 

5,689

Average equity, excluding AOCI

 

14,294

 

 

13,574

 

 

14,048

 

 

13,620

Average goodwill

 

1,778

 

 

1,778

 

 

1,778

 

 

1,778

Average equity, excluding AOCI and goodwill

$

12,516

 

$

11.796

 

$

12,270

 

$

11,842

 

 

 

 

 

 

 

 

 

 

 

 

Return on Equity, Including AOCI

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) with average equity including goodwill

 

5.9%

 

 

7.5%

 

 

7.5%

 

 

2.5%

 

Adjusted Operating Return on Equity, Excluding AOCI

Adjusted income (loss) from operations with average equity including goodwill

8.6%

-3.9%

12.0%

5.1%

Adjusted income (loss) from operations with average equity excluding goodwill

9.8%

-4.5%

13.7%

5.8%

(1)

If the effect of equity classification would result in a more dilutive 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.

(2)

In periods where a net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use of diluted shares would result in a lower loss per share.

 

Lincoln National Corporation

Reconciliation of Book Value per Share

 

 

 

As of September 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

Book value per share, including AOCI

 

$

113.77

 

$

111.51

Per share impact of AOCI

 

 

36.81

 

 

40.41

Book value per share, excluding AOCI

 

 

76.96

 

 

71.10

 

Lincoln National Corporation

Digest of Earnings

 

(in millions, except per share data)

 

 

For the

Three Months Ended

September 30,

 

 

2021

 

2020

 

 

 

 

 

 

Revenues

$

5,241

 

$

5,361

 

 

 

 

 

 

Net Income (Loss)

$

318

 

$

398

Adjustment for deferred units of LNC stock in our deferred compensation plans (1)

 

-

(5)

Net Income (Loss) Available to Common Stockholders ? Diluted

$

318

$

393

 

 

 

 

 

 

Earnings (Loss) Per Common Share ? Basic

$

1.70

 

$

2.06

Earnings (Loss) Per Common Share ? Diluted

 

1.68

 

 

2.01

 

 

 

 

 

 

Average Shares ? Basic

 

187,276,859

 

 

193,250,727

Average Shares ? Diluted

 

189,091,067

 

 

195,356,425

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

Nine Months Ended

September 30,

 

 

2021

 

2020

 

 

 

 

 

 

Revenues

$

14,627

 

$

13,303

 

 

 

 

 

 

Net Income (Loss)

$

1,185

 

$

356

Adjustment for deferred units of LNC stock in our deferred compensation plans (1)

-

 

 

(16)

Net Income (Loss) Available to Common Stockholders ? Diluted

$

1,185

$

340

 

 

 

 

 

 

Earnings (Loss) Per Common Share ? Basic

$

6.25

 

$

1.84

Earnings (Loss) Per Common Share ? Diluted (2)

 

6.19

 

 

1.74

 

 

 

 

 

 

Average Shares ? Basic

 

189,665,059

 

 

193,849,829

Average Shares ? Diluted

 

191,258,501

 

 

195,940,941

(1)

If the effect of equity classification would result in a more dilutive 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.

Forward Looking Statements ? Cautionary Language

Certain statements made in this press release and in other written or oral statements made by Lincoln or on Lincoln's behalf are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may contain words like: "anticipate," "believe," "estimate," "expect," "project," "shall," "will" and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in Lincoln's businesses, prospective services or products, future performance or financial results and the outcome of contingencies, such as legal proceedings. Lincoln claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those expressed in or implied by such forward-looking statements due to a variety of factors, including:

The risks and uncertainties included here are not exhaustive. Our most recent Form 10-K, as well as other reports that we file with the SEC, include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.

Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this press release.

The reporting of Risk Based Capital ("RBC") measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.


These press releases may also interest you

at 17:43
Supermax Healthcare Canada wishes to clarify the circumstances and facts surrounding the decision, made with the Canadian government, to terminate the two contracts for the supply of nitrile gloves. At the outset, it is important to specify that the...

at 17:40
Further to disclosure requirements of applicable securities laws, Mitchell Goldhar is issuing this news release to disclose recent changes in his holdings of securities of SmartCentres Real Estate Investment Trust (the "REIT"). As of the date hereof,...

at 17:35
Nutrien Ltd announced today plans to release fourth quarter earnings results on Wednesday, February 16, 2022, after market close. Nutrien will host a conference call the following day, Thursday, February 17, 2022 at 10:00 a.m. EST to discuss and...

at 17:34
IRS Enrolled Agent and CERTIFIED FINANCIAL PLANNERtm Eric Meermann of Palisades Hudson Financial Group, LLC has a message for those working from home: Be sure you know the impact on your taxes....

at 17:30
Titanium Corporation Inc. (the "Company" or "Titanium") announces that it has granted an aggregate of: (i) 4,500,000 stock options ("Options") to certain executive officers and directors of the Company in accordance with the Company's shareholder...

at 17:29
Effective today, we are excited to announce that Trillium Flow Technologies ("Trillium") and Termomeccanica Pompe S.p.A. ("Termomeccanica Pompe") have signed a joint agreement that will bring the Termomeccanica Pompe, Gabbioneta Pumps, and Begemann...



News published on 3 november 2021 at 16:30 and distributed by: