- Net loss available to common stockholders of $(5.37) per
diluted share includes unfavorable impacts from the new accounting
for market risk benefits (“MRBs”) as a result of the recent
adoption of Accounting Standards Update 2018-12 (“LDTI”)
- Adjusted operating income available to common stockholders of
$1.52 per diluted share
- Executing on our objectives to rebuild capital and increase
ongoing free cash flow
- Delivered robust level of sales while shifting to a more
capital-efficient product mix
- High-quality and diversified investment portfolio is
well-positioned
Lincoln Financial Group (NYSE: LNC) today reported a net loss
available to common stockholders for the first quarter of 2023 of
$(909) million, or $(5.37) per diluted share, compared to net
income available to common stockholders in the first quarter of
2022 of $1,481 million, or $8.39 per diluted share. The net loss
available to common stockholders this quarter was primarily driven
by unfavorable impacts from a portion of the MRB and hedge
instrument fair value changes. A favorable portion of the MRB fair
value change flowed through AOCI, approximately offsetting the
impact to total stockholders’ equity.
First quarter adjusted income from operations available to
common stockholders was $260 million, or $1.52 per diluted share,
compared to adjusted income from operations available to common
stockholders of $273 million, or $1.55 per diluted share, in the
first quarter of 2022.
“We are continuing to take swift action and I am pleased with
the substantial progress we have made to rebuild capital and
increase our ongoing pace of capital generation,” said Ellen
Cooper, president and CEO of Lincoln Financial Group. “We are
delivering profitable new-business growth with a more
capital-efficient product mix in 2023 across our retail and
workplace solutions businesses, while maintaining a robust level of
sales. Last week’s announcement of our $28 billion block
reinsurance transaction with Fortitude Re is an important step to
further advance our enterprise strategic objectives and continue
bolstering the balance sheet. While we are experiencing earnings
headwinds in 2023, as we continue to execute, I remain confident
that the earnings power of the business will begin to re-emerge
more materially in 2024 and beyond.”
As of or For the Three Months Ended March 31,
(in millions, except per share data)
2023
2022
Net Income (Loss) $
(881
)
$
1,482
Net Income (Loss) Available to Common Stockholders
(909
)
1,481
Net Income (Loss) per Diluted Share Available to Common
Stockholders (1)
(5.37
)
8.39
Revenues
3,814
4,720
Adjusted Income (Loss) from Operations
288
274
Adjusted Income (Loss) from Operations Available to Common
Stockholders
260
273
Adjusted Income (Loss) from Operations per Diluted Share Available
to Common Stockholders
1.52
1.55
Average Basic Shares
169.4
174.2
Average Diluted Shares
170.5
176.4
Net Income (Loss) Return on Equity ("ROE")
-59.6
%
34.7
%
Adjusted Income (Loss) from Operations Available to Common
Stockholders, Excluding AOCI and Preferred Stock ROE
10.4
%
10.5
%
Adjusted Income (Loss) from Operations ROE
9.5
%
8.4
%
Book Value per Share (BVPS), Including AOCI $
33.89
$
82.93
Book Value per Share, Excluding AOCI
56.04
63.64
Adjusted Book Value per Share
66.05
75.77
(1) 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.
Operating Highlights – First Quarter 2023
- Annuities deposits of $3.2 billion, up 17% from the prior-year
quarter
- Shifting and reducing Life Insurance sales, driven by a more
capital-efficient mix with sales down 16%
- Group Protection operating margin of 5.6%, with a loss ratio of
75%
- Retirement Plan Services trailing-twelve months positive net
flows of $2.3 billion
There were no notable items within adjusted income from
operations for the current quarter or the prior-year quarter. First
quarter 2023 adjusted operating income available to common stock
shareholders per diluted share included:
- A favorable impact of $0.06 in Annuities related to a dividends
received deduction true-up,
- Alternative investment income $(0.11) below a targeted 10%
long-term annualized return, and
- Prepayment income of $0.02.
Adjusted operating income available to common stock shareholders
per diluted share for the prior-year period included:
- An unfavorable impact of $(0.11) from one-time claims
adjustments in Group Protection,
- Alternative investment income in line with a targeted 10%
long-term annualized return, and
- Prepayment income of $0.23.
First Quarter 2023 – Segment Results
Annuities
Annuities reported income from operations of $274 million, down
14% compared to the prior-year quarter. The decrease was primarily
due to lower fee income driven by unfavorable capital markets,
partially offset by a favorable tax adjustment in the current
quarter.
Total annuity deposits of $3.2 billion were up 17% from the
prior-year quarter as sales growth in fixed annuities and indexed
variable annuities more than offset a decline in sales of
traditional variable annuities. Net outflows were $331 million in
the quarter compared to net outflows of $525 million in the
prior-year quarter.
Average account balances for the quarter of $146 billion were
down 9% from the prior-year quarter, primarily driven by
unfavorable capital markets. Variable annuities with living
benefits represented 46% of total annuity account balances, a
decrease of four percentage points compared to the prior-year
quarter.
Life Insurance
Life Insurance reported a loss from operations of $(13) million
compared to income of $23 million in the prior-year quarter. The
decrease was primarily driven by the run-rate impact from the
company’s third quarter 2022 annual review of DAC and reserve
assumptions and lower alternative investment income, prepayment
income and base spreads, partially offset by an improvement in
COVID-19 mortality experience.
Total Life sales for the quarter were $130 million compared to
$155 million in the prior-year quarter, driven primarily by the
shift to a more capital-efficient product mix with lower sales of
Variable Universal Life, Executive Benefits and Term products,
partially offset by increased sales of Indexed Universal Life
products.
Average Life Insurance in-force of $1.1 trillion increased 9%
over the prior-year quarter. For the quarter, average account
balances were $49 billion, down 4% compared to the prior-year
quarter.
Group Protection
Group Protection reported income from operations of $71 million
in the quarter compared to a loss from operations of $46 million in
the prior-year quarter. The increase was primarily driven by
improved disability underwriting results and lower COVID-19
mortality claims.
The total loss ratio was 75% in the current quarter compared to
89% in the prior-year quarter with the decrease driven primarily by
better disability incidence and resolutions and lower life claims.
The operating margin expanded 950 basis points from the prior-year
quarter to 5.6%.
Group Protection sales for the quarter were $128 million, up 22%
compared to the prior-year quarter. Supplemental Health products
represented 24% of total Group Protection sales, compared to 9% in
the prior-year quarter.
Insurance premiums of $1.3 billion in the quarter were up 7%
compared to the prior-year quarter.
Retirement Plan Services
Retirement Plan Services reported income from operations of $43
million, down 26% compared to the prior-year quarter. The decrease
was primarily driven by lower prepayment income and higher
expenses, partly offset by the earnings impact related to positive
net flows and higher base spreads.
Total deposits for the quarter of $3.2 billion were down 12%
compared to the prior-year quarter. Net flows totaled $535 million
for the quarter, contributing to trailing-twelve months’ net flows
of $2.3 billion.
Average account balances for the quarter of $91 billion were
down 5% from the prior-year quarter primarily driven by lower
equity markets.
Other Operations
Other Operations reported a loss from operations of $87 million
versus a loss of $78 million in the prior-year quarter.
First Quarter Highlights - Realized Gains and Losses /
Impacts to Net Income
Realized gains/losses and other impacts to net income
(after-tax) in the quarter were primarily driven by:
- A $506 million loss associated with unfavorable impacts from a
portion of the MRB fair value change, as a result of the adoption
of LDTI. A favorable portion of the MRB fair value change flowed
through AOCI more than offsetting the impact to total stockholders’
equity.
- A $377 million loss associated with changes in the fair value
of Guaranteed Living Benefits and Guaranteed Death Benefits hedge
instruments, net of hedge allowance.
- $49 million of net realized credit losses.
Unrealized Gains and Losses
The company reported a net unrealized loss of $(9.6) billion,
pre-tax, on its available-for-sale securities at March 31, 2023.
This compares to a net unrealized gain of $3.1 billion, pre-tax, at
March 31, 2022, with the year-over-year decrease primarily driven
by higher treasury rates.
Share Count
The quarter’s average diluted share count of 170.5 million was
down 3% from the first quarter of 2022, the result of repurchasing
2.8 million shares of stock at a cost of $150 million since March
31, 2022.
Book Value
Versus the prior-year period, as of March 31, 2023, book value
per share, including AOCI, decreased 59% to $33.89, book value per
share, excluding AOCI, decreased 12% to $56.04 and adjusted book
value per share decreased 13% to $66.05.
The tables attached to this release define and reconcile the
non-GAAP measures adjusted income (loss) from operations, adjusted
income (loss) from operations available to common stockholders,
adjusted income (loss) from operations available to common
stockholders, excluding AOCI and preferred stock ROE, adjusted
income from operations ROE, BVPS, excluding AOCI, and adjusted BVPS
to net income (loss), net income (loss) available to common
stockholders, net income (loss) 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
first quarter 2023 statistical supplement and investment portfolio
supplement available on its website
http://www.lincolnfinancial.com/investor.
Conference Call Information
Lincoln Financial Group will discuss the company’s first quarter
results with investors in a conference call beginning at 10:00 a.m.
Eastern Time on Wednesday, May 10, 2023.
The conference call will be broadcast live through the company
website at www.lincolnfinancial.com/webcast. Please log on to the
webcast at least 15 minutes prior to the start of the conference
call to download and install any necessary streaming media
software. A replay of the call will be available by 1:00 p.m.
Eastern Time on May 10, 2023 at
www.lincolnfinancial.com/webcast.
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, approximately 16 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 $290 billion in end-of-period account balances net of
reinsurance as of March 31, 2023. Lincoln Financial Group is a
committed corporate citizen included on major sustainability
indices including the Dow Jones Sustainability Index North America
and ranks among Newsweek’s Most Responsible Companies. Dedicated to
diversity, equity and inclusion, we are included on transparency
benchmarking tools such as the Corporate Equality Index, the
Disability Equality Index and the Bloomberg Gender-Equality Index.
Committed to providing our employees with flexible work
arrangements, we were named to FlexJobs’ list of the Top 100
Companies to Watch for Remote Jobs in 2022. With a long and rich
legacy of acting ethically, telling the truth and speaking up for
what is right, Lincoln was recognized as one of Ethisphere’s 2022
World’s Most Ethical Companies®. We create opportunities for early
career talent through our intern development program, which ranks
among WayUp and Yello’s annual list of Top 100 Internship Programs.
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 (or
adjusted operating income), adjusted income from operations
available to common stockholders, adjusted income from operations
available to common stockholders, excluding AOCI and preferred
stock ROE, adjusted income from operations ROE, adjusted operating
revenues, and adjusted income from operations per diluted share
available to common stockholders better explain the results of the
company’s ongoing businesses in a manner that allows for a better
understanding of the underlying trends in the company’s current
business 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”) , and adjusted book value per share enables
investors to analyze the amount of our net worth that is primarily
attributable to our business operations. Book value per share,
excluding AOCI is useful to investors because it eliminates the
effect of items that are unpredictable and can fluctuate
significantly from period to period, primarily based on changes in
interest rates. Adjusted book value per share is useful to
investors because it eliminates the effect of items that are
unpredictable and can fluctuate significantly from period to
period, primarily based on changes in equity markets and interest
rates.
For the historical periods, reconciliations of non-GAAP measures
used in this press release to the most directly comparable GAAP
measure may be included in this Appendix to the press release
and/or are included in the Statistical 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 income (loss)
from operations available to common stockholders, adjusted
operating revenues, adjusted income (loss) from operations
available to common stockholders, excluding AOCI and preferred
stock ROE and adjusted income (loss) from operations ROE (in each
case including and excluding the effect of average goodwill), BVPS,
excluding AOCI, and adjusted BVPS are financial measures we use to
evaluate and assess our results. Adjusted income (loss) from
operations, adjusted income (loss) from operations available to
common stockholders, adjusted operating revenues, adjusted income
(loss) from operations available to common stockholders, excluding
AOCI and preferred stock ROE, adjusted income (loss) from
operations ROE, BVPS, excluding AOCI, and adjusted BVPS, as used in
the press release, are non-GAAP financial measures and do not
replace GAAP net income (loss), net income (loss) available to
common stockholders, revenues, net income (loss) ROE and BVPS,
including AOCI, 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:
- Changes in market risk benefits (“MRBs”), including gains and
losses and benefit payments (“MRB-related impacts”);
- Investment and reinsurance-related realized gain (loss):
- Changes in the carrying value of mortgage loans on real estate
attributable to current expected credit losses (“CECL”) (“changes
in CECL reserve for mortgage loans on real estate”);
- Changes in the carrying value of reinsurance-related assets
attributable to CECL (“changes in CECL reserve for
reinsurance-related assets”);
- Changes in the carrying value of fixed maturity AFS securities
attributable to the estimation of credit losses (“changes in the
credit loss allowance for fixed maturity AFS securities”); and
- Changes in the fair value of investments, including trading
securities, equity securities, certain derivatives, and mortgage
loans on real estate electing the fair value option, and of
embedded derivatives within certain reinsurance arrangements, as
well as sales or disposals of investments (“changes in investments
and reinsurance-related embedded derivatives”);
- Changes in the fair value of the derivative instruments we hold
to hedge GLB and GDB riders, net of fee income allocated to support
the cost of hedging them (“changes in fair value of GLB and GDB
hedge instruments, net of hedge allowance”);
- Changes in the fair value of the embedded derivative
liabilities of our indexed annuity and indexed universal life
insurance contracts and the associated index options we hold to
hedge them, including collateral expense associated with hedge
programs; (“indexed product net derivative results”);
- Changes in reserves resulting from benefit ratio unlocking on
variable universal life insurance products with secondary
guarantees (“benefit ratio unlocking”);
- Income (loss) from the initial adoption of new accounting
standards, regulations and policy changes;
- Income (loss) from reserve changes, net of related
amortization, on business sold through reinsurance;
- Transaction and integration costs related to mergers and
acquisitions including the acquisition or divestiture, through
reinsurance or other means, of businesses or blocks of
business;
- Gains (losses) on modification or early extinguishment of
debt;
- Losses from the impairment of intangible assets and gains
(losses) on other non-financial assets; and
- Income (loss) from discontinued operations.
Adjusted Income (Loss) from Operations Available to Common
Stockholders
Adjusted income (loss) from operations available to common
stockholders is defined as after-tax adjusted income (loss) from
operations less preferred stock dividends and the adjustment for
deferred units of LNC stock in our deferred compensation plans.
Adjusted Operating Revenues
Adjusted operating revenues represent GAAP revenues excluding
the pre-tax effects of the following items, as applicable:
- Investment and reinsurance-related realized gain (loss);
- Changes in fair value of GLB and GDB hedge instruments, net of
hedge allowance;
- Indexed product net derivative results;
- Revenue adjustments from the initial adoption of new accounting
standards; and
- Amortization of deferred gains arising from reserve changes on
business sold through reinsurance.
Adjusted Income (Loss) From Operations Available to Common
Stockholders, Excluding AOCI and Preferred Stock ROE
Adjusted income (loss) from operations available to common
stockholders, excluding AOCI and preferred stock ROE measures how
efficiently we generate profits from the resources provided by our
net assets.
- It is calculated by dividing annualized adjusted income (loss)
from operations available to common stockholders by average
stockholders’ equity, excluding AOCI and preferred stock.
- Management believes this metric is useful to investors because
it eliminates the effect of market movements on ROE that are
unpredictable and can fluctuate significantly from period to
period, primarily related to changes in interest rates.
- Management evaluates ROE by both including and excluding the
effect of average goodwill.
Adjusted Income (Loss) from Operations ROE
Adjusted income (loss) from operations ROE is calculated based
upon a non-GAAP financial measure.
- It is calculated by dividing annualized adjusted income (loss)
from operations available to common stockholders by adjusted
average stockholders’ equity.
- Management believes this metric is useful to investors because
it eliminates the effect of market movements on ROE that are
unpredictable and can fluctuate significantly from period to
period, primarily related to changes in equity markets and interest
rates.
- Management evaluates ROE by both including and excluding the
effect of average goodwill.
Book Value Per Share, Excluding AOCI
Book value per share, excluding AOCI, is calculated based upon a
non-GAAP financial measure.
- It is calculated by dividing (a) stockholders’ equity,
excluding AOCI and preferred stock by (b) common shares
outstanding.
- We provide book value per share, excluding AOCI, to enable
investors to analyze the amount of our net worth that is primarily
attributable to our business operations.
- Management believes book value per share, excluding AOCI, is
useful to investors because it eliminates the effect of items that
can fluctuate significantly from period to period, primarily based
on changes in interest rates.
- Book value per share is the most directly comparable GAAP
measure.
Adjusted Book Value Per Share
Adjusted book value per share is calculated based upon a
non-GAAP financial measure.
- It is calculated by dividing (a) stockholders’ equity,
excluding AOCI, preferred stock and MRB-related impacts by (b)
common shares outstanding.
- We provide adjusted book value per share to enable investors to
analyze the amount of our net worth that is primarily attributable
to our business operations.
- Management believes adjusted book value per share is useful to
investors because it eliminates the effect of market movements that
are unpredictable that can fluctuate significantly from period to
period, primarily based on changes in equity markets and interest
rates.
- Book value per share is the most directly comparable GAAP
measure.
Definition of Notable Items
Notable items are items which, in management’s view, do not
reflect the company’s normal, ongoing operations.
- We believe highlighting notable items included in adjusted
income (loss) from operations enables investors to better
understand the fundamental trends in its results of operations and
financial condition.
Special Note
Sales
Sales as reported consist of the following:
- Universal life insurance (“UL”), indexed universal life
insurance (“IUL”), variable universal life insurance (“VUL”) –
first-year commissionable premiums plus 5% of excess premiums
received;
- MoneyGuard® linked-benefit products – MoneyGuard® (UL), 15% of
total expected premium deposits, and MoneyGuard Market AdvantageSM
(VUL), 150% of commissionable premiums;
- Executive Benefits – insurance and corporate-owned UL and VUL,
first-year commissionable premiums plus 5% of excess premium
received, and single premium bank-owned UL and VUL, 15% of single
premium deposits;
- Term – 100% of annualized first-year premiums;
- Annuities and Retirement Plan Services – deposits from new and
existing customers; and
- Group Protection – annualized first-year premiums from new
policies.
Lincoln National Corporation
Reconciliation of Net Income to Income from Operations
For the (in millions, except per share data)
Three Months
Ended March 31,
2023
2022
Net Income (Loss) Available to Common Stockholders
– Diluted $
(909
)
$
1,481
Less: Preferred stock dividends declared
(25
)
-
Adjustment for deferred units of LNC stock in our deferred
compensation plans (1)
(3
)
(1
)
Net Income (Loss)
(881
)
1,482
Less: MRB-related impacts, after-tax
(506
)
1,062
Investment and reinsurance-related realized gain (loss), after-tax
(154
)
1
Changes in fair value of GLB and GDB hedge instruments, net of
hedge allowance, after-tax
(377
)
58
Indexed product net derivative results, after-tax
(135
)
87
Benefit ratio unlocking, after-tax
3
-
Total adjustments
(1,169
)
1,208
Adjusted Income (Loss) from Operations $
288
$
274
Earnings (Loss) Per Common Share – Diluted (2) Net
income (loss) (2)
$
(5.37
)
$
8.39
Adjusted income (loss) from operations
1.52
1.55
Stockholders’ Equity, Average Stockholders' equity
$
5,917
$
17,085
Less: Preferred stock
986
-
AOCI
(5,053
)
6,650
Stockholders’ equity, excluding AOCI and preferred stock
9,984
10,435
MRB-related impacts
(905
)
(2,616
)
GLB and GDB hedge instruments gains (losses) (3)
(269
)
N/A
Adjusted average stockholders' equity
$
11,158
$
13,051
Return on Equity Net income (loss) ROE
-59.6
%
34.7
%
Adjusted income (loss) from operations available to common
stockholders, excluding AOCI and preferred stock ROE
10.4
%
10.5
%
Adjusted income (loss) from operations ROE
9.5
%
8.4
%
(1) We exclude deferred units of LNC stock that are
antidilutive from our diluted earnings per share calculation. (2)
In periods where a net loss or adjusted loss from operations is
presented, basic shares are used in the diluted EPS and adjusted
diluted EPS calculations, as the use of diluted shares would result
in a lower loss per share. (3) For periods beginning on or after
January 1, 2023, gains (losses) on our GLB and GDB hedge
instruments are excluded from adjusted stockholders' equity to
align to the updated hedge program.
Lincoln National Corporation
Reconciliation of Book Value per Share
As of March 31,
2023
2022
Book Value Per Common Share Book value per share
$
33.89
$
82.93
Less: AOCI
(22.15
)
19.29
Book value per share, excluding AOCI
56.04
63.64
Less: MRB-related gains (losses)
(6.83
)
(12.13
)
GLB and GDB hedge instruments gains (losses)(1)
(3.18
)
N/A
Adjusted book value per share
$
66.05
$
75.77
(1) For periods beginning on or after January 1, 2023, gains
(losses) on our GLB and GDB hedge instruments are excluded from
adjusted stockholders' equity to align to the updated hedge
program.
Lincoln National Corporation Digest
of Earnings
For the (in millions, except per share data)
Three Months
Ended March 31,
2023
2022
Revenues $
3,814
$
4,720
Net Income (Loss) $
(881
)
$
1,482
Preferred stock dividends declared
(25
)
-
Adjustment for deferred units of LNC stock in our deferred
compensation plans (1)
(3
)
(1
)
Net Income (Loss) Available to Common Stockholders –
Diluted $
(909
)
$
1,481
Earnings (Loss) Per Common Share – Basic $
(5.35
)
$
8.50
Earnings (Loss) Per Common Share – Diluted (2)
(5.37
)
8.39
Average Shares – Basic
169,357,846
174,153,475
Average Shares – Diluted
170,485,160
176,434,549
(1) We exclude deferred units of LNC stock that are
antidilutive from our diluted earnings per share calculation. (2)
In periods where a net loss or adjusted loss from operations is
presented, basic shares are used in the diluted EPS and adjusted
diluted EPS calculations, as the use of diluted shares would result
in a lower loss per share.
FORWARD-LOOKING STATEMENTS – CAUTIONARY LANGUAGE
Certain statements made in this press release and in other
written or oral statements made by Lincoln or on Lincoln’s behalf
are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 (“PSLRA”). A
forward-looking statement is a statement that is not a historical
fact and, without limitation, includes any statement that may
predict, forecast, indicate or imply future results, performance or
achievements. Forward-looking statements may contain words like:
“anticipate,” “believe,” “estimate,” “expect,” “project,” “shall,”
“will” and other words or phrases with similar meaning in
connection with a discussion of future operating or financial
performance. In particular, these include statements relating to
future actions, trends in Lincoln’s businesses, prospective
services or products, future performance or financial results and
the outcome of contingencies, such as legal proceedings. Lincoln
claims the protection afforded by the safe harbor for
forward-looking statements provided by the PSLRA.
Forward-looking statements are subject to risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by such forward-looking statements due to a
variety of factors, including:
- Weak general economic and business conditions that may affect
demand for our products, account balances, investment results,
guaranteed benefit liabilities, premium levels and claims
experience;
- Adverse global capital and credit market conditions that may
affect our ability to raise capital, if necessary, and may cause us
to realize impairments on investments and certain intangible
assets, including goodwill and the valuation allowance against
deferred tax assets, which may reduce future earnings and/or affect
our financial condition and ability to raise additional capital or
refinance existing debt as it matures;
- The inability of our subsidiaries to pay dividends to the
holding company in sufficient amounts, which could harm the holding
company’s ability to meet its obligations;
- Legislative, regulatory or tax changes, both domestic and
foreign, that affect: the cost of, or demand for, our subsidiaries’
products; the required amount of reserves and/or surplus; our
ability to conduct business and our captive reinsurance
arrangements as well as restrictions on the payment of revenue
sharing and 12b-1 distribution fees;
- The impact of U.S. federal tax reform legislation on our
business, earnings and capital;
- The impact of regulations adopted by the Securities and
Exchange Commission (“SEC”), the Department of Labor or other
federal or state regulators or self-regulatory organizations
relating to the standard of care owed by investment advisers and/or
broker-dealers that could affect our distribution model;
- The impact of new and emerging privacy regulations that may
lead to increased compliance costs and reputation risk;
- Increasing scrutiny and evolving expectations and regulations
regarding ESG matters that may adversely affect our reputation and
our investment portfolio;
- Actions taken by reinsurers to raise rates on in-force
business;
- Declines in or sustained low interest rates causing a reduction
in investment income, the interest margins of our businesses and
demand for our products;
- Rapidly increasing interest rates causing policyholders to
surrender life insurance and annuity policies, thereby causing
realized investment losses;
- The impact of the implementation of the provisions of the
European Market Infrastructure Regulation relating to the
regulation of derivatives transactions;
- The initiation of legal or regulatory proceedings against us,
and the outcome of any legal or regulatory proceedings, such as:
adverse actions related to present or past business practices
common in businesses in which we compete; adverse decisions in
significant actions including, but not limited to, actions brought
by federal and state authorities and class action cases; new
decisions that result in changes in law; and unexpected trial court
rulings;
- A decline or continued volatility in the equity markets causing
a reduction in the sales of our subsidiaries’ products; a reduction
of asset-based fees that our subsidiaries charge on various
investment and insurance products; and an increase in liabilities
related to guaranteed benefit riders, which are accounted for as
market risk benefits, of our subsidiaries’ variable annuity
products;
- Ineffectiveness of our risk management policies and procedures,
including our various hedging strategies;
- A deviation in actual experience regarding future policyholder
behavior, mortality, morbidity, interest rates or equity market
returns from the assumptions used in pricing our subsidiaries’
products and in establishing related insurance reserves, which may
reduce future earnings;
- Changes in accounting principles that may affect our
consolidated financial statements;
- Lowering of one or more of our debt ratings issued by
nationally recognized statistical rating organizations and the
adverse effect such action may have on our ability to raise capital
and on our liquidity and financial condition;
- Lowering of one or more of the insurer financial strength
ratings of our insurance subsidiaries and the adverse effect such
action may have on the premium writings, policy retention,
profitability of our insurance subsidiaries and liquidity;
- Significant credit, accounting, fraud, corporate governance or
other issues that may adversely affect the value of certain
financial assets, as well as counterparties to which we are exposed
to credit risk, requiring that we realize losses on financial
assets;
- Interruption in telecommunication, information technology or
other operational systems or failure to safeguard the
confidentiality or privacy of sensitive data on such systems,
including from cyberattacks or other breaches of our data security
systems;
- The effect of acquisitions and divestitures, restructurings,
product withdrawals and other unusual items;
- The inability to realize or sustain the benefits we expect
from, greater than expected investments in, and the potential
impact of efforts related to, our strategic initiatives, including
the Spark Initiative;
- The adequacy and collectability of reinsurance that we have
obtained;
- Pandemics, acts of terrorism, war or other man-made and natural
catastrophes that may adversely impact liabilities for policyholder
claims, affect our businesses and increase the cost and
availability of reinsurance;
- Competitive conditions, including pricing pressures, new
product offerings and the emergence of new competitors, that may
affect the level of premiums and fees that our subsidiaries can
charge for their products;
- The unknown effect on our subsidiaries’ businesses resulting
from evolving market preferences and the changing demographics of
our client base; and
- The unanticipated loss of key management, financial planners or
wholesalers.
The risks and uncertainties included here are not exhaustive.
Our most recent Form 10-K, as well as other reports that we file
with the SEC, include additional factors that could affect our
businesses and financial performance. Moreover, we operate in a
rapidly changing and competitive environment. New risk factors
emerge from time to time, and it is not possible for management to
predict all such risk factors.
Further, it is not possible to assess the effect of all risk
factors on our businesses or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of
actual results. In addition, Lincoln disclaims any obligation to
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230509006220/en/
Al Copersino (800) 237-2920 Investor Relations
InvestorRelations@LFG.com Kelly Capizzi (484) 583-7824 Media
Relations Kelly.Capizzi@LFG.com
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