- Net income EPS of $1.68 and adjusted operating EPS of
$1.62
- Adjusted operating EPS included $(1.05) from notable items,
elevated pandemic-related claims experience and above targeted
alternative investment income
- BVPS, including AOCI, of $113.77, up 2%; BVPS, excluding AOCI,
of $76.96, up 8%
- $279 million of capital returned to shareholders, including
$200 million in share repurchases
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
- Operating revenues increased in all four business segments
- Annuities sales of $2.7 billion, up 7%
- Retirement Plan Services average account values of $97 billion,
up 21%
- Life Insurance average account values of $60 billion, up
9%
- Group Protection insurance premiums of $1.1 billion, up 5%
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:
- A $26 million realized gain related to financial assets.
- A $6 million loss from variable annuity net derivative
results.
- A $6 million loss on modifications or early extinguishment of
debt.
- A $3 million loss from indexed annuity forward-starting
options.
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:
- Realized gains and losses associated with the following
(“excluded realized gain (loss)”):
- Sales or disposals and impairments of financial assets;
- Changes in the fair value of equity securities;
- Changes in the fair value of derivatives, embedded derivatives
within certain reinsurance arrangements and trading securities
(“gain (loss) on the mark-to-market on certain instruments”);
- Changes in the fair value of the derivatives we own to hedge
our guaranteed death benefit (“GDB”) riders within our variable
annuities;
- Changes in the fair value of the embedded derivatives of our
guaranteed living benefit (“GLB”) riders reflected within variable
annuity net derivative results accounted for at fair value;
- Changes in the fair value of the derivatives we own to hedge
our GLB riders reflected within variable annuity net derivative
results; and
- Changes in the fair value of the embedded derivative
liabilities related to index options we may purchase or sell in the
future to hedge contract holder index allocations applicable to
future reset periods for our indexed annuity products accounted for
at fair value (“indexed annuity forward-starting options”);
- Changes in reserves resulting from benefit ratio unlocking on
our GDB and GLB riders (“benefit ratio unlocking”);
- Income (loss) from reserve changes, net of related
amortization, on business sold through reinsurance;
- Gains (losses) on modification or early extinguishment of
debt;
- Losses from the impairment of intangible assets;
- Income (loss) from discontinued operations;
- Acquisition and integration costs related to mergers and
acquisitions; and
- Income (loss) from the initial adoption of new accounting
standards, regulations and policy changes including the net impact
from the Tax Cuts and Jobs Act.
Adjusted Operating Revenues
Adjusted operating revenues represent GAAP revenues excluding
the pre-tax effects of the following items, as applicable:
- Excluded realized gain (loss);
- Revenue adjustments from the initial adoption of new accounting
standards;
- Amortization of deferred front-end loads (“DFEL”) arising from
changes in GDB and GLB benefit ratio unlocking; and
- Amortization of deferred gains arising from reserve changes on
business sold through reinsurance.
Adjusted Operating Return on Equity
Adjusted operating return on equity 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 by average equity, excluding accumulated other
comprehensive income (loss) ("AOCI").
- Management evaluates return on equity by both including and
excluding average goodwill within average equity.
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.
- 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.
Book Value Per Share, Excluding AOCI
Book value per share, excluding AOCI is calculated based upon a
non-GAAP financial measure.
- It is calculated by dividing (a) stockholders' equity,
excluding AOCI by (b) common shares outstanding.
- We provide book value per share excluding AOCI to enable
investors to analyze the amount of our net worth that is primarily
attributable to our business operations.
- Management believes book value per share, excluding AOCI is
useful to investors because it eliminates the effect of items that
can fluctuate significantly from period to period, primarily based
on changes in interest rates.
- Book value per share is the most directly comparable GAAP
measure.
Special Note
Sales
Sales as reported consist of the following:
- Annuities and Retirement Plan Services – deposits from new and
existing customers;
- 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 – single premium bank-owned UL and VUL, 15%
of single premium deposits, and corporate-owned UL and VUL,
first-year commissionable premiums plus 5% of excess premium
received;
- Term – 100% of annualized first-year premiums; and
- Group Protection – annualized first-year premiums from new
policies.
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 continuation of the COVID-19 pandemic, or future outbreaks
of COVID-19, and uncertainty surrounding the length and severity of
future impacts on the global economy and on our business, results
of operations and financial condition;
- Further deterioration in general economic and business
conditions that may affect account values, 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 Regulation Best Interest or other 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;
- Actions taken by reinsurers to raise rates on in-force
business;
- Further declines in or sustained low interest rates causing a
reduction in investment income, the interest margins of our
businesses, estimated gross profits and demand for our
products;
- Rapidly increasing interest rates causing contract holders to
surrender life insurance and annuity policies, thereby causing
realized investment losses, and reduced hedge performance related
to variable annuities;
- The impact of the implementation of the provisions of the
Dodd-Frank Wall Street Reform and Consumer Protection Act 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; an acceleration of the net
amortization of deferred acquisition costs (“DAC”), value of
business acquired (“VOBA”), deferred sales inducements (“DSI”) and
deferred front-end loads (“DFEL”); and an increase in liabilities
related to guaranteed benefit features of our subsidiaries’
variable annuity products;
- Ineffectiveness of our risk management policies and procedures,
including various hedging strategies used to offset the effect of
changes in the value of liabilities due to changes in the level and
volatility of the equity markets and interest rates;
- A deviation in actual experience regarding future persistency,
mortality, morbidity, interest rates or equity market returns from
the assumptions used in pricing our subsidiaries’ products, in
establishing related insurance reserves and in the net amortization
of DAC, VOBA, DSI and DFEL, which may reduce future earnings;
- Changes in accounting principles that may affect our business,
results of operations and financial condition;
- 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 adequacy and collectability of reinsurance that we have
obtained;
- Future pandemics, acts of terrorism, war or other man-made and
natural catastrophes that may adversely affect our businesses and
the cost and availability of reinsurance;
- Competitive conditions, including pricing pressures, new
product offerings and the emergence of new competitors, that may
affect the level of premiums and fees that our subsidiaries can
charge for their products;
- The unknown effect on our subsidiaries’ businesses resulting
from 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/20211103006231/en/
Al Copersino (203) 257-4493 Investor Relations
InvestorRelations@LFG.com
Holly Fair (484) 583-1632 Media Relations Holly.Fair@LFG.com
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