Lincoln Financial Group | |
Table of Contents | |
Fourth Quarter 2011 | |
Lincoln Financial Group Analyst Coverage | i |
Notes | ii-iii |
Financial Highlights | 1 - 3 |
Consolidated Operating Expense Detail | 4 |
Selected Financial Results Summary | 5 |
Details Underlying Realized Gain (Loss), After-DAC and Benefit Ratio Unlocking | 6 |
Consolidated Statements of Income (Loss) | 7 |
Consolidated Roll Forwards of DAC, VOBA, DSI and DFEL | 8 |
Consolidating Statements of Income (Loss) from Operations - Current Year - Quarter | 9 |
Consolidating Statements of Income (Loss) from Operations - Prior Year - Quarter | 10 |
Consolidating Statements of Income (Loss) from Operations - Current Year - Year-to-Date | 11 |
Consolidating Statements of Income (Loss) from Operations - Prior Year - Year-to-Date | 12 |
Consolidated Balance Sheets and Selected Share Data | 13 |
Balance Sheet Data - Segment Highlights | 14 |
Annuities: | |
Income (Loss) from Operations and Operational Data | 15 |
DAC, VOBA, DSI and DFEL Roll Forwards | 16 |
Account Value Roll Forwards and Information | 17 |
Account Value Information | 18 |
Interest Rate Spread Information, GLB Expense Assessments, GLB Attributed Fee | |
and GLB Account Values by Type | 19 |
Retirement Plan Services (formerly known as the "Defined Contribution Segment"): | |
Income (Loss) from Operations, Operational Data and DAC, VOBA and DSI Roll Forwards | 20 |
Account Value Roll Forwards and Information | 21 |
Account Value Roll Forwards by Product | 22 |
Account Value and Interest Rate Spread Information | 23 |
Life Insurance: | |
Income (Loss) from Operations, Operational Data and DAC, VOBA and DFEL Roll Forwards | 24 |
Additional Operational Data | 25 |
Account Value Roll Forwards | 26 |
Group Protection: | |
Income (Loss) from Operations and Operational Data | 27 |
Other Operations | 28 |
Discontinued Operations | 28 |
Consolidated Deposits, Net Flows and Account Balances | 29 |
Consolidated Investment Data | 30 |
12/31/2011 | i | ||
Lincoln Financial Group Analyst Coverage | |||
Fourth Quarter 2011 | |||
Firm | Analyst | Phone Number | |
Barclays Capital | Jay Gelb | 212-526-1561 | |
Bank of America - Merrill Lynch | Ed Spehar | 212-449-4245 | |
Credit Suisse | Tom Gallagher | 212-538-2010 | |
Dowling and Partners | Ryan Krueger | 860-676-8600 | |
Evercore Partners | Mark Finkelstein | 312-445-6440 | |
FBR Capital Markets | Randy Binner | 703-312-1890 | |
Goldman Sachs and Company | Christopher Giovanni | 212-357-3560 | |
JP Morgan Securities | Jimmy Bhullar | 212-622-6397 | |
Keefe, Bruyette and Woods | Jeff Schuman | 860-722-5902 | |
Langen McAlenney | Bob Glasspiegel | 860-724-1203 | |
Morgan Stanley | Nigel Dally | 212-761-4132 | |
Raymond James and Associates | Steven Schwartz | 312-612-7686 | |
RBC Capital | Eric Berg | 212-618-7593 | |
Sandler O'Neil and Partners | Edward Shields | 312-281-3487 | |
Sanford C. Bernstein & Co. | Suneet Kamath | 212-756-4587 | |
Scotia Capital | Joanne Smith | 212-225-5071 | |
Sterne, Agee and Leach, Inc. | John Nadel | 212-338-4717 | |
UBS | Andrew Kligerman | 212-713-2492 | |
Wells Fargo Securities | John Hall | 212-214-8032 | |
Investor Inquiries May Be Directed To | |||
Jim Sjoreen, Senior Vice President, Investor Relations | |||
Email: Jim.Sjoreen@lfg.com | |||
Voice: (484) 583-1420 | |||
Fax: (484) 583-3962 | |||
Notes | |||
This list is provided for informational purposes only. Lincoln Financial Group does not endorse the analyses, conclusions, or recommendations contained in any report issued by these or any other analysts. | |||
Lincoln Financial Group's Statistical Report will be available immediately after the release of earnings for each quarter through our Investor Relations website: www.LincolnFinancial.com/investor |
12/31/2011 | ii | |||
NOTES | ||||
Definitions and Presentation | ||||
"Income (loss) from operations," "operating revenues" and "return on capital" are non-GAAP financial measures and do not replace GAAP | ||||
revenues, net income (loss) and return on stockholders' equity. Detailed reconciliations of these non-GAAP financial measures to the most directly | ||||
comparable GAAP financial measure are included in this statistical supplement. | ||||
• | We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at income (loss) from operations: | |||
• | Realized gains and losses associated with the following ("excluded realized gain (loss)"): | |||
• | Sale or disposal of securities; | |||
• | Impairments of securities; | |||
• | Change in the fair value of derivative investments, embedded derivatives within certain reinsurance arrangements and our trading securities; | |||
• | Change in the fair value of the derivatives we own to hedge our guaranteed death benefit ("GDB") riders within our variable annuities, which | |||
is referred to as "GDB derivatives results;" | ||||
• | Change in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders within our variable annuities accounted | |||
for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the Financial Accounting Standards Board | ||||
("FASB") Accounting Standards Codification ("ASC") (“embedded derivative reserves”), net of the change in the fair value of the derivatives | ||||
we own to hedge the changes in the embedded derivative reserves, the net of which is referred to as “GLB net derivative results;” and | ||||
• | Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract | |||
holder index allocations applicable to future reset periods for our indexed annuity products accounted for under the Derivatives and Hedging | ||||
and the Fair Value Measurements and Disclosures Topics of the FASB ASC (“indexed annuity forward-starting option”). | ||||
• | Change in reserves accounted for under the Financial Services - Insurance - Claim Costs and Liabilities for Future Policy Benefits Subtopic of | |||
the FASB ASC resulting from benefit ratio unlocking on our GDB and GLB riders ("benefit ratio unlocking"); | ||||
• | Income (loss) from the initial adoption of new accounting standards; | |||
• | Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance; | |||
• | Gain (loss) on early extinguishment of debt; | |||
• | Losses from the impairment of intangible assets; and | |||
• | Income (loss) from discontinued operations. | |||
Income (loss) from operations available to common stockholders is net income (loss) available to common stockholders (used in the calculation of | ||||
earnings (loss) per share) in accordance with GAAP, excluding the after-tax effects of the items above and the acceleration of our Series B preferred | ||||
stock discount as a result of redemption prior to five years from the date of issuance. | ||||
• | Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable: | |||
• | Excluded realized gain (loss); | |||
• | Amortization of deferred front-end loads ("DFEL") arising from changes in GDB and GLB benefit ratio unlocking; | |||
• | Amortization of deferred gains arising from the reserve changes on business sold through reinsurance; and | |||
• | Revenue adjustments from the initial adoption of new accounting standards. | |||
• | Return on equity measures how efficiently we generate profits from the resources provided by our net assets. Return on equity is calculated | |||
by dividing annualized net income (loss) 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. | ||||
• | Return on capital measures the effectiveness of our use of total capital, which includes equity (excluding accumulated other | |||
comprehensive income), debt, capital securities and junior subordinated debentures issued to affiliated trusts. Return on capital is | ||||
calculated by dividing annualized income (loss) from operations (after adding back interest expense) by average capital. The difference | ||||
between return on capital and return on stockholders' equity represents the effect of leveraging on our consolidated results. | ||||
Income (loss) from operations, operating revenues, return on equity (including and excluding average goodwill within average equity), excluding AOCI, | ||||
using annualized income (loss) from operations and return on capital are financial measures we use to evaluate and assess our results. Our management | ||||
and Board of Directors believe that these performance measures explain the results of our ongoing businesses in a manner that allows for a better | ||||
understanding of the underlying trends in our 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. In addition, we believe that our definitions of operating revenues and income (loss) from operations | ||||
will provide investors with a more valuable measure of our performance because it better reveals trends in our business. | ||||
• | Certain operating and statistical measures are included in this report to provide supplemental data regarding the performance of our | |||
current business. These measures include deposits, sales, net flows, first-year premiums, in force and spreads. | ||||
• | Sales as reported consist of the following: | |||
• | Universal life ("UL") (excluding linked-benefit products) and variable universal life ("VUL"), including corporate-owned life | |||
insurance ("COLI") and bank-owned life insurance ("BOLI") - first year commissionable premiums plus 5% of excess premiums | ||||
received, including an adjustment for internal replacements at approximately 50% of target; | ||||
• | Whole life and term - 100% of first year paid premiums; | |||
• | Linked-benefit - 15% of premium deposits; | |||
• | Annuities - deposits from new and existing customers; and | |||
• | Group Protection - annualized first year premiums from new policies; | |||
Our roll forwards of deferred acquisition costs ("DAC") and value of business acquired ("VOBA"), deferred sales inducements ("DSI") and DFEL | ||||
disclose the net impact of prospective and retrospective unlocking on amortization for these items. This information helps explain a | ||||
source of volatility in amortization. |
iii | |||
• | Prospective unlocking - In the third quarter of each year, we review and update our assumptions used in projecting our future estimated | ||
gross profits ("EGPs") used to amortize DAC, VOBA, DSI, DFEL and the calculations of embedded derivatives and reserves for | |||
annuity and life insurance products with certain guarantees. We may also have prospective unlocking if we experience long-term | |||
or significant deviations from expected equity market returns requiring a change to best estimate projections of EGPs and reversion | |||
to the mean ("RTM") prospective unlocking of DAC, VOBA, DSI, DFEL and other contract holder funds. We may also have prospective | |||
unlocking in other quarters as we become aware of information that warrants updating prospective assumptions outside of our annual | |||
comprehensive review. These updates to assumptions result in unlocking that represent an increase or decrease to our carrying value of DAC, | |||
VOBA, DSI and DFEL based upon our updated view of future EGPs. The various assumptions that are reviewed include investment margins, | |||
mortality, retention and rider utilization. In addition, in the third quarter of each year during our annual prospective unlocking review, we may | |||
identify and implement actuarial modeling refinements which can result in prospective and retrospective unlocking impacts that impact DAC, | |||
VOBA, DSI, DFEL and embedded derivatives and reserves for annuity and life products with living and death benefit guarantee reserves. | |||
• | Retrospective unlocking - On a quarterly basis, we “true-up” our models for actual gross profits and in-force experience for the period. | ||
To the extent that actual experience differs from previously expected, a positive or negative retrospective adjustment to the | |||
amortization of DAC, VOBA, DSI and DFEL is recorded. This update to the models may generate a change in the amortization rate | |||
which results in a catch-up to the cumulative amortization, by recalculating the DAC, VOBA, DSI and DFEL balances assuming that | |||
the revised amortization rate had been used since issue. | |||
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, assuming conversion of Series A preferred shares. We provide book value per share excluding | |||
AOCI to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations. We believe 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. | |||
Pre-tax operating margin is calculated as income (loss) from operations before federal income taxes divided by operating revenues. After-tax operating | |||
margin is calculated as income (loss) from operations divided by operating revenues. | |||
We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently | |||
in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. | |||
Effective April 30, 2010, we amended our non-director deferred compensation plans to allow participants the option to diversify from LNC stock to | |||
other investment alternatives and to be settled in shares or cash at the participant’s discretion. As a result of the amendment, we reclassified the cost | |||
basis of deferred units of LNC stock from common stock to other liabilities on our Consolidated Balance Sheet. Consequently changes in the value of | |||
our stock are recorded in underwriting, acquisition, insurance and other expenses on our Consolidated Statement of Income (Loss). When calculating | |||
our weighted-average dilutive shares, we presume the investment option will be settled in cash and exclude the shares from our calculation, unless the | |||
effect of assuming it will be settled in shares ("equity classification") would be more dilutive to our diluted 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 non-director deferred compensation | |||
plans if the effect of equity classification would be more dilutive to our diluted EPS. | |||
Effective November 9, 2011, we amended our non-employee directors' deferred compensation plans to allow participants the option to diversify from | |||
LNC stock to other investment alternatives and to be settled in shares or cash at the participant’s discretion. As a result of the amendment, the | |||
non-employee directors' deferred compensation plans now receive the same treatment discussed above. | |||
Throughout the document, "after-DAC" refers to the associated amortization expense of DAC, VOBA, DSI and DFEL and changes in other contract | |||
holder funds and funds withheld reinsurance liabilities. | |||
Reclassifications | |||
In addition to the items discussed above, certain amounts reported in prior periods have been reclassed to the presentation adopted in the current period. | |||
These reclassifications had no effect on net income, income from operations or stockholders' equity in the prior period. |
12/31/2011 | PAGE 1 | |||||||||||||||||||||||||
Financial Highlights | ||||||||||||||||||||||||||
Unaudited (in millions, except per share data) | ||||||||||||||||||||||||||
For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||
2011 | 2010 | Amount | % | 2011 | 2010 | Amount | % | |||||||||||||||||||
Income (Loss) from Operations - By Segment | ||||||||||||||||||||||||||
Annuities | $ | 133.5 | $ | 123.2 | $ | 10.3 | 8.4 | % | $ | 592.5 | $ | 484.4 | $ | 108.1 | 22.3 | % | ||||||||||
Retirement Plan Services | 35.4 | 32.5 | 2.9 | 8.9 | % | 166.9 | 154.3 | 12.6 | 8.2 | % | ||||||||||||||||
Life Insurance | 154.0 | 165.5 | (11.5 | ) | -6.9 | % | 604.3 | 513.3 | 91.0 | 17.7 | % | |||||||||||||||
Group Protection | 22.5 | 18.0 | 4.5 | 25.0 | % | 100.8 | 71.6 | 29.2 | 40.8 | % | ||||||||||||||||
Other Operations | (42.8 | ) | (73.7 | ) | 30.9 | 41.9 | % | (146.3 | ) | (186.1 | ) | 39.8 | 21.4 | % | ||||||||||||
Income (Loss) from Operations (1) | 302.6 | 265.5 | 37.1 | 14.0 | % | 1,318.2 | 1,037.5 | 280.7 | 27.1 | % | ||||||||||||||||
Excluded realized gain (loss), after-tax (2) (3) | (94.4 | ) | (77.8 | ) | (16.6 | ) | -21.3 | % | (252.1 | ) | (95.1 | ) | (157.0 | ) | NM | |||||||||||
Benefit ratio unlocking, after-tax (2) (3) | 23.7 | 10.7 | 13.0 | 121.5 | % | (13.5 | ) | 10.4 | (23.9 | ) | NM | |||||||||||||||
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax (3) | 0.5 | 0.3 | 0.2 | 67 | % | 1.8 | 1.7 | 0.1 | 5.9 | % | ||||||||||||||||
Gain (loss) on early extinguishment of debt, after-tax (3) | - | (3.1 | ) | 3.1 | 100.0 | % | (5.5 | ) | (3.1 | ) | (2.4 | ) | -77.4 | % | ||||||||||||
Impairment of intangibles, after-tax (3) | (746.7 | ) | - | (746.7 | ) | NM | (746.7 | ) | - | (746.7 | ) | NM | ||||||||||||||
Income (loss) from discontinued operations, after-tax (4) | - | - | - | NM | (8.4 | ) | 28.9 | (37.3 | ) | NM | ||||||||||||||||
Net Income (Loss) | (514.3 | ) | 195.6 | (709.9 | ) | NM | 293.8 | 980.3 | (686.5 | ) | -70.0 | % | ||||||||||||||
Preferred stock dividends and accretion of discount | - | - | - | NM | - | (36.7 | ) | 36.7 | 100.0 | % | ||||||||||||||||
Write-off of unamortized discount on preferred stock at liquidation | - | - | - | NM | - | (130.6 | ) | 130.6 | 100.0 | % | ||||||||||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (5) | 0.6 | - | 0.6 | NM | (4.1 | ) | (1.3 | ) | (2.8 | ) | NM | |||||||||||||||
Net Income (Loss) Available to Common Stockholders - Diluted | $ | (513.7 | ) | $ | 195.6 | $ | (709.3 | ) | NM | $ | 289.7 | $ | 811.7 | $ | (522.0 | ) | -64.3 | % | ||||||||
Earnings Per Common Share - Diluted | ||||||||||||||||||||||||||
Income (loss) from operations (1) (5) (6) | $ | 1.00 | $ | 0.82 | $ | 0.18 | 22.0 | % | $ | 4.17 | $ | 3.13 | $ | 1.04 | 33.2 | % | ||||||||||
Excluded realized gain (loss), after-tax (2) (3) | (0.32 | ) | (0.24 | ) | (0.08 | ) | -33.3 | % | (0.80 | ) | (0.30 | ) | (0.50 | ) | NM | |||||||||||
Benefit ratio unlocking, after-tax (2) (3) | 0.08 | 0.03 | 0.05 | 166.7 | % | (0.04 | ) | 0.03 | (0.07 | ) | NM | |||||||||||||||
Income from reserve changes (net of related amortization) on business sold through reinsurance, after-tax (3) | - | - | - | NM | 0.01 | 0.01 | - | - | ||||||||||||||||||
Gain (loss) on early extinguishment of debt, after-tax (3) | - | (0.01 | ) | 0.01 | 100.0 | % | (0.02 | ) | (0.01 | ) | (0.01 | ) | -100.0 | % | ||||||||||||
Impairment of intangibles, after-tax (3) | (2.51 | ) | - | (2.51 | ) | NM | (2.37 | ) | - | (2.37 | ) | NM | ||||||||||||||
Write-off of unamortized discount on preferred stock at liquidation | - | - | - | NM | - | (0.41 | ) | 0.41 | 100.0 | % | ||||||||||||||||
Income (loss) from discontinued operations, after-tax (4) | - | - | - | NM | (0.03 | ) | 0.09 | (0.12 | ) | NM | ||||||||||||||||
Adjustment attributable to using different average diluted shares for income from operations as compared to net income | 0.02 | - | 0.03 | NM | - | - | - | NM | ||||||||||||||||||
Net Income (Loss) (5) (6) | $ | (1.73 | ) | $ | 0.60 | $ | (2.32 | ) | NM | $ | 0.92 | $ | 2.54 | $ | (1.62 | ) | -63.8 | % | ||||||||
Operating Revenues - By Segment | ||||||||||||||||||||||||||
Annuities | $ | 690.3 | $ | 719.9 | $ | (29.6 | ) | -4.1 | % | $ | 2,865.3 | $ | 2,654.7 | $ | 210.6 | 7.9 | % | |||||||||
Retirement Plan Services | 246.3 | 257.3 | (11.0 | ) | -4.3 | % | 1,017.1 | 987.7 | 29.4 | 3.0 | % | |||||||||||||||
Life Insurance | 1,186.8 | 1,217.4 | (30.6 | ) | -2.5 | % | 4,738.8 | 4,589.6 | 149.2 | 3.3 | % | |||||||||||||||
Group Protection | 481.0 | 464.3 | 16.7 | 3.6 | % | 1,938.9 | 1,831.1 | 107.8 | 5.9 | % | ||||||||||||||||
Other Operations | 109.4 | 121.6 | (12.2 | ) | -10.0 | % | 461.1 | 487.2 | (26.1 | ) | -5.4 | % | ||||||||||||||
Total Operating Revenues | 2,713.8 | 2,780.5 | (66.7 | ) | -2.4 | % | 11,021.2 | 10,550.3 | 470.9 | 4.5 | % | |||||||||||||||
Excluded realized gain (loss), pre-tax (2) | (145.3 | ) | (119.8 | ) | (25.5 | ) | -21.3 | % | (387.9 | ) | (146.3 | ) | (241.6 | ) | NM | |||||||||||
Amortization income of DFEL associated with benefit ratio unlocking, pre-tax | 1.0 | 0.5 | 0.5 | 100.0 | % | (0.4 | ) | (0.1 | ) | (0.3 | ) | NM | ||||||||||||||
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax | 0.7 | 0.6 | 0.1 | 16.7 | % | 2.7 | 2.6 | 0.1 | 3.8 | % | ||||||||||||||||
Total Revenues | $ | 2,570.2 | $ | 2,661.8 | $ | (91.6 | ) | -3.4 | % | $ | 10,635.6 | $ | 10,406.5 | $ | 229.1 | 2.2 | % | |||||||||
(1) | Income (loss) from operations includes restructuring charges. See page 5 for detail. | |||||||||||||||||||||||||
(2) | See page 6 for detail. | |||||||||||||||||||||||||
(3) | We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our | |||||||||||||||||||||||||
financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. | ||||||||||||||||||||||||||
(4) | Includes discontinued operations and the gain (loss) on disposal. See Discontinued Operations on page 28 for details. | |||||||||||||||||||||||||
(5) | 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 non-director | |||||||||||||||||||||||||
deferred compensation plans if the effect of equity classification would be more dilutive to our diluted EPS. | ||||||||||||||||||||||||||
(6) | For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation represent basic shares since using diluted | |||||||||||||||||||||||||
shares would be anti-dilutive to the calculation. In these periods we would also exclude the adjustment discussed in footnote (5) above when arriving at EPS. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 2 | |||||||||||||||||||||||||
Financial Highlights (Continued) | ||||||||||||||||||||||||||
Unaudited (in billions) | ||||||||||||||||||||||||||
For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||
2011 | 2010 | Amount | % | 2011 | 2010 | Amount | % | |||||||||||||||||||
Annuities | ||||||||||||||||||||||||||
Gross deposits | $ | 2.375 | $ | 2.590 | $ | (0.215 | ) | -8.3 | % | $ | 10.650 | $ | 10.667 | $ | (0.017 | ) | -0.2 | % | ||||||||
Net flows | 0.345 | 0.543 | (0.198 | ) | -36.5 | % | 2.191 | 3.555 | (1.364 | ) | -38.4 | % | ||||||||||||||
Account values (gross) | 86.436 | 85.810 | 0.626 | 0.7 | % | 86.436 | 85.810 | 0.626 | 0.7 | % | ||||||||||||||||
Account values (net of reinsurance) | 85.534 | 84.848 | 0.686 | 0.8 | % | 85.534 | 84.848 | 0.686 | 0.8 | % | ||||||||||||||||
Retirement Plan Services | ||||||||||||||||||||||||||
Gross deposits (1) | $ | 1.570 | $ | 1.358 | $ | 0.212 | 15.6 | % | $ | 5.566 | $ | 5.301 | $ | 0.265 | 5.0 | % | ||||||||||
Net flows | 0.219 | (0.304 | ) | 0.523 | 172.0 | % | 0.504 | (0.291 | ) | 0.795 | 273.2 | % | ||||||||||||||
Account values - annuities | 26.497 | 26.706 | (0.209 | ) | -0.8 | % | 26.497 | 26.706 | (0.209 | ) | -0.8 | % | ||||||||||||||
Alliance and Smart Future mutual funds | 12.636 | 12.118 | 0.518 | 4.3 | % | 12.636 | 12.118 | 0.518 | 4.3 | % | ||||||||||||||||
Total annuities and mutual fund account values | 39.133 | 38.824 | 0.309 | 0.8 | % | 39.133 | 38.824 | 0.309 | 0.8 | % | ||||||||||||||||
Life Insurance | ||||||||||||||||||||||||||
Sales (in millions) | $ | 228.8 | $ | 205.8 | $ | 23.0 | 11.2 | % | $ | 699.6 | $ | 636.6 | $ | 63.0 | 9.9 | % | ||||||||||
Life insurance in force | 579.831 | 562.991 | 16.840 | 3.0 | % | 579.831 | 562.991 | 16.840 | 3.0 | % | ||||||||||||||||
Gross deposits | 1.506 | 1.564 | (0.058 | ) | -3.7 | % | 5.393 | 4.934 | 0.459 | 9.3 | % | |||||||||||||||
Net flows | 1.031 | 1.080 | (0.049 | ) | -4.5 | % | 3.683 | 3.057 | 0.626 | 20.5 | % | |||||||||||||||
Account values (net of reinsurance) | 35.278 | 33.585 | 1.693 | 5.0 | % | 35.278 | 33.585 | 1.693 | 5.0 | % | ||||||||||||||||
Group Protection | ||||||||||||||||||||||||||
Annualized sales (in millions) | $ | 207.4 | $ | 156.0 | $ | 51.4 | 32.9 | % | $ | 394.6 | $ | 352.7 | $ | 41.9 | 11.9 | % | ||||||||||
Loss ratio (2) | 72.2 | % | 75.5 | % | NM | NM | 72.9 | % | 76.2 | % | NM | NM | ||||||||||||||
Consolidated | ||||||||||||||||||||||||||
Total deposits | $ | 5.451 | $ | 5.512 | $ | (0.061 | ) | -1.1 | % | $ | 21.609 | $ | 20.902 | $ | 0.707 | 3.4 | % | |||||||||
Total account balances | 159.945 | 157.257 | 2.688 | 1.7 | % | 159.945 | 157.257 | 2.688 | 1.7 | % | ||||||||||||||||
Total net flows | 1.595 | 1.319 | 0.276 | 20.9 | % | 6.378 | 6.321 | 0.057 | 0.9 | % | ||||||||||||||||
(1) | Includes deposits for mutual funds. Mutual fund account values are not included in the separate accounts reported on our Consolidated Balance Sheets, | |||||||||||||||||||||||||
as we do not have any ownership interest in them. | ||||||||||||||||||||||||||
(2) | Represents combined loss ratio for life, disability and dental businesses. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 3 | |||||||||||||||||||||||||
Financial Highlights (Continued) | ||||||||||||||||||||||||||
Unaudited (in millions) | ||||||||||||||||||||||||||
For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||
2011 | 2010 | Amount | % | 2011 | 2010 | Amount | % | |||||||||||||||||||
Balance Sheet Assets - End-of-Period | $ | 202,905.5 | $ | 193,823.7 | $ | 9,081.8 | 4.7 | % | $ | 202,905.5 | $ | 193,823.7 | $ | 9,081.8 | 4.7 | % | ||||||||||
Stockholders' Equity | ||||||||||||||||||||||||||
Beginning-of-period, including AOCI | $ | 14,919.1 | $ | 13,557.5 | $ | 1,361.6 | 10.0 | % | $ | 12,805.8 | $ | 11,700.2 | $ | 1,105.6 | 9.4 | % | ||||||||||
End-of-period, including AOCI | 14,163.7 | 12,805.8 | 1,357.9 | 10.6 | % | 14,163.7 | 12,805.8 | 1,357.9 | 10.6 | % | ||||||||||||||||
End-of-period, excluding AOCI | 11,716.3 | 12,058.1 | (341.8 | ) | -2.8 | % | 11,716.3 | 12,058.1 | (341.8 | ) | -2.8 | % | ||||||||||||||
Average equity, excluding AOCI | 12,086.1 | 11,977.1 | 109.0 | 0.9 | % | 12,281.0 | 11,917.9 | 363.1 | 3.0 | % | ||||||||||||||||
Return on Equity, Excluding AOCI | ||||||||||||||||||||||||||
Income (loss) from operations with average equity: | ||||||||||||||||||||||||||
Including goodwill | 10.0 | % | 8.9 | % | 10.7 | % | 8.7 | % | ||||||||||||||||||
Excluding goodwill | 12.8 | % | 11.9 | % | 14.1 | % | 11.7 | % | ||||||||||||||||||
Return on Capital | ||||||||||||||||||||||||||
Income (loss) from operations/average capital | 7.8 | % | 7.0 | % | 8.3 | % | 6.9 | % | ||||||||||||||||||
Common Shares Outstanding | ||||||||||||||||||||||||||
Average for the period - basic | 297.9 | 316.4 | (18.5 | ) | -5.8 | % | 307.2 | 310.0 | (2.8 | ) | -0.9 | % | ||||||||||||||
Average for the period - diluted | 304.4 | 323.4 | (19.0 | ) | -5.9 | % | 315.0 | 319.2 | (4.2 | ) | -1.3 | % | ||||||||||||||
End-of-period - assuming conversion of preferreds | 291.5 | 315.9 | (24.4 | ) | -7.7 | % | 291.5 | 315.9 | (24.4 | ) | -7.7 | % | ||||||||||||||
End-of-period - diluted | 298.2 | 324.0 | (25.8 | ) | -8.0 | % | 298.2 | 324.0 | (25.8 | ) | -8.0 | % | ||||||||||||||
Book value per common share, including AOCI | $ | 48.59 | $ | 40.54 | $ | 8.05 | 19.9 | % | $ | 48.59 | $ | 40.54 | $ | 8.05 | 19.9 | % | ||||||||||
Book value per common share, excluding AOCI | 40.19 | 38.17 | 2.02 | 5.3 | % | 40.19 | 38.17 | 2.02 | 5.3 | % | ||||||||||||||||
Cash Returned to Common Stockholders | ||||||||||||||||||||||||||
Warrant repurchase - dollar amount | $ | - | $ | - | $ | - | NM | $ | - | $ | 48.13 | $ | (48.13 | ) | -100.0 | % | ||||||||||
Share repurchase - dollar amount | 200.00 | 25.00 | 175.00 | NM | 575.30 | 25.00 | 550.30 | NM | ||||||||||||||||||
Common dividends declared | 23.30 | 15.80 | 7.50 | 47.5 | % | 69.50 | 25.20 | 44.30 | 175.8 | % | ||||||||||||||||
Total cash returned to common stockholders | $ | 223.30 | $ | 40.80 | $ | 182.50 | NM | $ | 644.80 | $ | 98.33 | $ | 546.47 | NM | ||||||||||||
Stock issuance - number of shares | - | - | - | NM | - | 14.14 | (14.14 | ) | -100.0 | % | ||||||||||||||||
Share repurchase - number of shares | 10.39 | 1.05 | 9.34 | NM | 24.66 | 1.05 | 23.61 | NM | ||||||||||||||||||
Dividend declared on common stock - per share | $ | 0.080 | $ | 0.050 | $ | 0.030 | 60.0 | % | $ | 0.230 | $ | 0.080 | $ | 0.150 | 187.5 | % | ||||||||||
Dividend payout ratio | -4.6 | % | 8.3 | % | 25.0 | % | 3.1 | % | ||||||||||||||||||
Annualized yield (1) | 1.6 | % | 0.7 | % | 1.2 | % | 0.3 | % | ||||||||||||||||||
Comprehensive Income (Loss) | ||||||||||||||||||||||||||
Net income (loss) | $ | (514.3 | ) | $ | 195.6 | $ | (709.9 | ) | NM | $ | 293.8 | $ | 980.3 | $ | (686.5 | ) | -70.0 | % | ||||||||
Net unrealized gain (loss) on available-for-sale securities | 73.3 | (988.3 | ) | 1,061.6 | 107.4 | % | 1,644.0 | 1,022.4 | 621.6 | 60.8 | % | |||||||||||||||
Unrealized other-than-temporary impairment on available-for-sale securities | 0.3 | 2.8 | (2.5 | ) | -89.3 | % | 22.2 | (13.8 | ) | 36.0 | 260.9 | % | ||||||||||||||
Net unrealized gain (loss) on derivative instruments | 7.6 | 46.0 | (38.4 | ) | -83.5 | % | 130.1 | (25.9 | ) | 156.0 | NM | |||||||||||||||
Foreign currency translation adjustment | (2.2 | ) | (1.8 | ) | (0.4 | ) | -22.2 | % | (0.2 | ) | (2.3 | ) | 2.1 | 91.3 | % | |||||||||||
Funded status of employee benefit plans | (94.8 | ) | 27.5 | (122.3 | ) | NM | (96.5 | ) | 28.7 | (125.2 | ) | NM | ||||||||||||||
Comprehensive income (loss) | $ | (530.1 | ) | $ | (718.2 | ) | $ | 188.1 | 26.2 | % | $ | 1,993.4 | $ | 1,989.4 | $ | 4.0 | 0.2 | % | ||||||||
As of December 31, | ||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||
2011 | 2010 | Amount | % | |||||||||||||||||||||||
�� | ||||||||||||||||||||||||||
Leverage Ratio | ||||||||||||||||||||||||||
Short-term debt | $ | 299.9 | $ | 351.4 | $ | (51.5 | ) | -14.7 | % | |||||||||||||||||
Long-term debt | 5,391.4 | 5,399.0 | (7.6 | ) | -0.1 | % | ||||||||||||||||||||
Total debt | 5,691.3 | 5,750.4 | (59.1 | ) | -1.0 | % | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Long-term operating debt (2) | 1,122.3 | 1,122.2 | 0.1 | 0.0 | % | |||||||||||||||||||||
75% of capital securities | 908.0 | 1,114.1 | (206.1 | ) | -18.5 | % | ||||||||||||||||||||
Carrying value of fair value hedge | 319.7 | 55.3 | 264.4 | NM | ||||||||||||||||||||||
Total numerator | $ | 3,341.3 | $ | 3,458.8 | $ | (117.5 | ) | -3.4 | % | |||||||||||||||||
Stockholders' equity, excluding AOCI | $ | 11,716.3 | $ | 12,058.1 | $ | (341.8 | ) | -2.8 | % | |||||||||||||||||
Total debt | 5,691.3 | 5,750.4 | (59.1 | ) | -1.0 | % | ||||||||||||||||||||
Total denominator | $ | 17,407.6 | $ | 17,808.5 | $ | (400.9 | ) | -2.3 | % | |||||||||||||||||
Leverage Ratio | 19.2 | % | 19.4 | % | ||||||||||||||||||||||
Ratings as of February 7, 2012 | ||||||||||||||||||||||||||
Standard & | ||||||||||||||||||||||||||
A.M. Best | Fitch | Moody's | Poor's | |||||||||||||||||||||||
Senior Debt Ratings | a- | BBB+ | Baa2 | A- | ||||||||||||||||||||||
Financial Strength Ratings | ||||||||||||||||||||||||||
Lincoln National Life Insurance Company | A+ | A+ | A2 | AA- | ||||||||||||||||||||||
First Penn-Pacific Life Insurance Company | A+ | A+ | A2 | A- | ||||||||||||||||||||||
Lincoln Life & Annuity Company of New York | A+ | A+ | A2 | AA- | ||||||||||||||||||||||
(1) | Indicated dividend divided by the closing price. | |||||||||||||||||||||||||
(2) | We have categorized as operating debt the senior notes issued in October 2007 and June 2010 because the proceeds were used as a long-term structured solution to reduce the strain on increasing | |||||||||||||||||||||||||
statutory reserves associated with secondary guarantee UL and term policies and the senior note issued in September 2008 by our primary insurance subsidiary. | ||||||||||||||||||||||||||
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 4 | |||||||||||||||||||||||||||
Consolidated Operating Expense Detail | ||||||||||||||||||||||||||||
Unaudited (in millions) | ||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | |||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | ||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | ||||||||||||||||||||
Commissions and Expenses Incurred | ||||||||||||||||||||||||||||
General and administrative expenses | $ | 464.6 | $ | 365.0 | $ | 366.1 | $ | 368.4 | $ | 409.4 | -11.9 | % | $ | 1,503.8 | $ | 1,508.9 | 0.3 | % | ||||||||||
Commissions | 500.4 | 484.3 | 491.9 | 474.2 | 482.8 | -3.5 | % | 1,847.9 | 1,933.2 | 4.6 | % | |||||||||||||||||
Media expenses | 16.0 | 16.7 | 16.9 | 17.3 | 18.3 | 14.4 | % | 59.2 | 69.2 | 16.9 | % | |||||||||||||||||
Taxes, licenses and fees | 53.3 | 61.8 | 52.8 | 75.2 | 62.3 | 16.9 | % | 200.3 | 252.1 | 25.9 | % | |||||||||||||||||
Interest and debt expense | 74.3 | 71.6 | 72.0 | 71.0 | 70.5 | -5.1 | % | 285.9 | 285.1 | -0.3 | % | |||||||||||||||||
Expenses associated with reserve financing and unrelated letters of credit ("LOCs") | 9.7 | 11.4 | 12.4 | 10.7 | 12.9 | 33.0 | % | 34.0 | 47.4 | 39.4 | % | |||||||||||||||||
Total Commissions and Expenses Incurred | 1,118.3 | 1,010.8 | 1,012.1 | 1,016.8 | 1,056.2 | -5.6 | % | 3,931.1 | 4,095.9 | 4.2 | % | |||||||||||||||||
Less: Commissions and Expenses Capitalized | ||||||||||||||||||||||||||||
General and administrative expenses capitalized | (130.0 | ) | (103.6 | ) | (112.0 | ) | (113.4 | ) | (134.1 | ) | -3.2 | % | (440.0 | ) | (463.1 | ) | -5.3 | % | ||||||||||
Commissions capitalized | (318.4 | ) | (290.7 | ) | (301.8 | ) | (287.1 | ) | (296.2 | ) | 7.0 | % | (1,173.3 | ) | (1,175.8 | ) | -0.2 | % | ||||||||||
Taxes, licenses and fees capitalized | (19.9 | ) | (17.3 | ) | (15.0 | ) | (14.6 | ) | (14.8 | ) | 25.6 | % | (53.4 | ) | (61.7 | ) | -15.5 | % | ||||||||||
Total Commissions and Expenses Capitalized | (468.3 | ) | (411.6 | ) | (428.8 | ) | (415.1 | ) | (445.1 | ) | 5.0 | % | (1,666.7 | ) | (1,700.6 | ) | -2.0 | % | ||||||||||
Total Expenses Incurred, Net of Amounts Capitalized, Excluding Amortization | 650.0 | 599.2 | 583.3 | 601.7 | 611.1 | -6.0 | % | 2,264.4 | 2,395.3 | 5.8 | % | |||||||||||||||||
Amortization | ||||||||||||||||||||||||||||
Amortization of DAC and VOBA, net of interest | 332.5 | 195.6 | 125.0 | 515.6 | 214.3 | -35.5 | % | 1,081.8 | 1,050.5 | -2.9 | % | |||||||||||||||||
Amortization of intangibles | 1.1 | 1.0 | 1.1 | 1.0 | 1.0 | -9.1 | % | 4.2 | 4.1 | -2.4 | % | |||||||||||||||||
Total Amortization | 333.6 | 196.6 | 126.1 | 516.6 | 215.3 | -35.5 | % | 1,086.0 | 1,054.6 | -2.9 | % | |||||||||||||||||
Total | $ | 983.6 | $ | 795.8 | $ | 709.4 | $ | 1,118.3 | $ | 826.4 | -16.0 | % | $ | 3,350.4 | $ | 3,449.9 | 3.0 | % | ||||||||||
General and Administrative Expenses, Net of Amounts Capitalized - As a Percentage of Operating Revenues | 12.0 | % | 9.6 | % | 9.0 | % | 9.3 | % | 10.1 | % | 10.1 | % | 9.5 | % | ||||||||||||||
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 5 | ||||||||||||||||||||||||||||
Selected Financial Results Summary | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Operating Revenues | |||||||||||||||||||||||||||||
Annuities | $ | 719.9 | $ | 731.9 | $ | 733.5 | $ | 709.6 | $ | 690.3 | -4.1 | % | $ | 2,654.7 | $ | 2,865.3 | 7.9 | % | |||||||||||
Retirement Plan Services | 257.3 | 263.3 | 259.7 | 247.8 | 246.3 | -4.3 | % | 987.7 | 1,017.1 | 3.0 | % | ||||||||||||||||||
Life Insurance | 1,217.4 | 1,147.0 | 1,228.9 | 1,176.1 | 1,186.8 | -2.5 | % | 4,589.6 | 4,738.8 | 3.3 | % | ||||||||||||||||||
Group Protection | 464.3 | 477.9 | 500.6 | 479.4 | 481.0 | 3.6 | % | 1,831.1 | 1,938.9 | 5.9 | % | ||||||||||||||||||
Other Operations | 121.6 | 116.4 | 115.2 | 120.1 | 109.4 | -10.0 | % | 487.2 | 461.1 | -5.4 | % | ||||||||||||||||||
Total Operating Revenues | 2,780.5 | 2,736.5 | 2,837.9 | 2,733.0 | 2,713.8 | -2.4 | % | 10,550.3 | 11,021.2 | 4.5 | % | ||||||||||||||||||
Excluded realized gain (loss), pre-tax (1) | (119.8 | ) | (23.5 | ) | (34.7 | ) | (184.4 | ) | (145.3 | ) | -21.3 | % | (146.3 | ) | (387.9 | ) | NM | ||||||||||||
Amortization of DFEL associated with benefit ratio unlocking, pre-tax | 0.5 | 0.2 | - | (1.6 | ) | 1.0 | 100.0 | % | (0.1 | ) | (0.4 | ) | NM | ||||||||||||||||
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax | 0.6 | 0.7 | 0.6 | 0.7 | 0.7 | 16.7 | % | 2.6 | 2.7 | 3.8 | % | ||||||||||||||||||
Total Revenues | $ | 2,661.8 | $ | 2,713.9 | $ | 2,803.8 | $ | 2,547.7 | $ | 2,570.2 | -3.4 | % | $ | 10,406.5 | $ | 10,635.6 | 2.2 | % | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||||||||||
Annuities | $ | 123.2 | $ | 147.0 | $ | 150.4 | $ | 161.6 | $ | 133.5 | 8.4 | % | $ | 484.4 | $ | 592.5 | 22.3 | % | |||||||||||
Retirement Plan Services | 32.5 | 48.7 | 42.3 | 40.5 | 35.4 | 8.9 | % | 154.3 | 166.9 | 8.2 | % | ||||||||||||||||||
Life Insurance | 165.5 | 166.3 | 152.4 | 131.6 | 154.0 | -6.9 | % | 513.3 | 604.3 | 17.7 | % | ||||||||||||||||||
Group Protection | 18.0 | 24.4 | 26.1 | 27.8 | 22.5 | 25.0 | % | 71.6 | 100.8 | 40.8 | % | ||||||||||||||||||
Other Operations | (73.7 | ) | (36.9 | ) | (22.4 | ) | (44.2 | ) | (42.8 | ) | 41.9 | % | (186.1 | ) | (146.3 | ) | 21.4 | % | |||||||||||
Income (Loss) from Operations | 265.5 | 349.5 | 348.8 | 317.3 | 302.6 | 14.0 | % | 1,037.5 | 1,318.2 | 27.1 | % | ||||||||||||||||||
Excluded realized gain (loss), after-tax (1) (2) | (77.8 | ) | (15.3 | ) | (22.5 | ) | (119.9 | ) | (94.4 | ) | -21.3 | % | (95.1 | ) | (252.1 | ) | NM | ||||||||||||
Benefit ratio unlocking, after-tax (1) (2) | 10.7 | 4.8 | (1.3 | ) | (40.7 | ) | 23.7 | 121.5 | % | 10.4 | (13.5 | ) | NM | ||||||||||||||||
Income (loss) from reserve changes (net of related amortization) on business | |||||||||||||||||||||||||||||
sold through reinsurance, after-tax (2) | 0.3 | 0.4 | 0.4 | 0.5 | 0.5 | 66.7 | % | 1.7 | 1.8 | 5.9 | % | ||||||||||||||||||
Gain (loss) on early extinguishment of debt, after-tax (2) | (3.1 | ) | - | - | (5.5 | ) | - | 100.0 | % | (3.1 | ) | (5.5 | ) | -77.4 | % | ||||||||||||||
Impairment of intangibles, after-tax (2) | - | - | - | - | (746.7 | ) | NM | - | (746.7 | ) | NM | ||||||||||||||||||
Income (loss) from discontinued operations, after-tax (3) | - | - | - | (8.4 | ) | - | NM | 28.9 | (8.4 | ) | NM | ||||||||||||||||||
Net Income (Loss) | 195.6 | 339.4 | 325.4 | 143.3 | (514.3 | ) | NM | 980.3 | 293.8 | -70.0 | % | ||||||||||||||||||
Preferred stock dividends and accretion of discount | - | - | - | - | - | NM | (36.7 | ) | - | 100.0 | % | ||||||||||||||||||
Write-off of unamortized discount on preferred stock at redemption | - | - | - | - | - | NM | (130.6 | ) | - | 100.0 | % | ||||||||||||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (4) | - | - | (1.0 | ) | (4.8 | ) | 0.6 | NM | (1.3 | ) | (4.1 | ) | NM | ||||||||||||||||
Net Income (Loss) Available to Common Stockholders - Diluted | $ | 195.6 | $ | 339.4 | $ | 324.4 | $ | 138.5 | $ | (513.7 | ) | NM | $ | 811.7 | $ | 289.7 | -64.3 | % | |||||||||||
Stockholders' Equity | |||||||||||||||||||||||||||||
Beginning-of-period, including AOCI | $ | 13,557.5 | $ | 12,805.8 | $ | 13,089.7 | $ | 13,585.7 | $ | 14,919.1 | $ | 11,700.2 | $ | 12,805.8 | |||||||||||||||
End-of-period, including AOCI | 12,805.8 | 13,089.7 | 13,585.7 | 14,919.1 | 14,163.7 | 12,805.8 | 14,163.7 | ||||||||||||||||||||||
End-of-period, excluding AOCI | 12,058.1 | 12,307.1 | 12,473.7 | 12,455.9 | 11,716.3 | 12,058.1 | 11,716.3 | ||||||||||||||||||||||
Average Stockholders' Equity | |||||||||||||||||||||||||||||
Average equity, including average AOCI | $ | 13,181.7 | $ | 12,947.8 | $ | 13,337.7 | $ | 14,252.4 | $ | 14,541.4 | $ | 12,704.1 | $ | 13,769.8 | |||||||||||||||
Average AOCI | 1,204.6 | 765.2 | 947.3 | 1,787.6 | 2,455.3 | 786.2 | 1,488.9 | ||||||||||||||||||||||
Average equity, excluding AOCI | 11,977.1 | 12,182.6 | 12,390.4 | 12,464.8 | 12,086.1 | 11,917.9 | 12,281.0 | ||||||||||||||||||||||
Average goodwill | 3,019.4 | 3,019.4 | 3,019.4 | 3,019.4 | 2,646.1 | 3,015.7 | 2,926.1 | ||||||||||||||||||||||
Average equity, excluding AOCI and goodwill | $ | 8,957.7 | $ | 9,163.2 | $ | 9,371.0 | $ | 9,445.4 | $ | 9,440.0 | $ | 8,902.2 | $ | 9,354.9 | |||||||||||||||
Restructuring Charges (Recoveries), After-Tax | $ | (0.8 | ) | $ | - | $ | - | $ | - | $ | - | $ | (0.8 | ) | $ | - | |||||||||||||
Common Shares Outstanding | |||||||||||||||||||||||||||||
Average for the period - basic | 316.4 | 315.0 | 311.4 | 304.8 | 297.9 | 310.0 | 307.2 | ||||||||||||||||||||||
Average for the period - diluted | 323.4 | 322.9 | 319.9 | 312.0 | 304.4 | 319.2 | 315.0 | ||||||||||||||||||||||
End-of-period - diluted | 324.0 | 321.3 | 316.8 | 306.9 | 298.2 | 324.0 | 298.2 | ||||||||||||||||||||||
Earnings (Loss) Per Common Share - Diluted | |||||||||||||||||||||||||||||
Income (loss) from operations (5) | $ | 0.82 | $ | 1.08 | $ | 1.09 | $ | 1.00 | $ | 1.00 | $ | 3.13 | $ | 4.17 | |||||||||||||||
Net income (loss) (5) | 0.60 | 1.05 | 1.01 | 0.44 | (1.73 | ) | 2.54 | 0.92 | |||||||||||||||||||||
Stockholders' Equity Per Common Share | |||||||||||||||||||||||||||||
Stockholders' equity, including AOCI | $ | 40.54 | $ | 41.74 | $ | 44.04 | $ | 49.43 | $ | 48.59 | $ | 40.54 | $ | 48.59 | |||||||||||||||
Stockholders' equity, excluding AOCI | 38.17 | 39.24 | 40.43 | 41.27 | 40.19 | 38.17 | 40.19 | ||||||||||||||||||||||
Dividends declared (common stock) | 0.050 | 0.050 | 0.050 | 0.050 | 0.080 | 0.080 | 0.230 | ||||||||||||||||||||||
Return on Equity, Excluding AOCI | |||||||||||||||||||||||||||||
Net income (loss) with average equity including goodwill | 6.5 | % | 11.1 | % | 10.5 | % | 4.6 | % | -17.0 | % | 8.2 | % | 2.4 | % | |||||||||||||||
Income (loss) from operations with average equity including goodwill | 8.9 | % | 11.5 | % | 11.3 | % | 10.2 | % | 10.0 | % | 8.7 | % | 10.7 | % | |||||||||||||||
Income (loss) from operations with average equity excluding goodwill | 11.9 | % | 15.3 | % | 14.9 | % | 13.4 | % | 12.8 | % | 11.7 | % | 14.1 | % | |||||||||||||||
Market Value of Common Shares | |||||||||||||||||||||||||||||
Highest price | $ | 29.12 | $ | 32.68 | $ | 32.39 | $ | 29.67 | $ | 21.88 | $ | 33.55 | $ | 32.68 | |||||||||||||||
Lowest price | 23.17 | 28.00 | 25.97 | 15.00 | 13.75 | 20.65 | 13.75 | ||||||||||||||||||||||
Closing price | 27.81 | 30.04 | 28.49 | 15.63 | 19.42 | 27.81 | 19.42 | ||||||||||||||||||||||
(1) | See page 6 for detail. | ||||||||||||||||||||||||||||
(2) | We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income | ||||||||||||||||||||||||||||
tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. | |||||||||||||||||||||||||||||
(3) | Includes discontinued operations and the gain (loss) on disposal. See Discontinued Operations on page 28 for details. | ||||||||||||||||||||||||||||
(4) | 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 non-director deferred compensation plans if | ||||||||||||||||||||||||||||
the effect of equity classification would be more dilutive to our diluted EPS. | |||||||||||||||||||||||||||||
(5) | For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation represent basic shares since using diluted shares would be anti-dilutive to the | ||||||||||||||||||||||||||||
calculation. In these periods we would also exclude the adjustment discussed in footnote (4) above when arriving at EPS. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 6 | ||||||||||||||||||||||||||||
Details Underlying Realized Gain (Loss), After-DAC and Benefit Ratio Unlocking | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Components of Realized Gain (Loss), Pre-Tax | |||||||||||||||||||||||||||||
Total operating realized gain (loss) (1)(2) | $ | 20.0 | $ | 21.6 | $ | 22.1 | $ | 21.8 | $ | 23.5 | 17.5 | % | $ | 69.2 | $ | 89.0 | 28.6 | % | |||||||||||
Total excluded realized gain (loss) (3)(4)(5)(6)(7) | (119.8 | ) | (23.5 | ) | (34.7 | ) | (184.4 | ) | (145.3 | ) | -21.3 | % | (146.3 | ) | (387.9 | ) | NM | ||||||||||||
Total realized gain (loss), pre-tax | $ | (99.8 | ) | $ | (1.9 | ) | $ | (12.6 | ) | $ | (162.6 | ) | $ | (121.8 | ) | -22.0 | % | $ | (77.1 | ) | $ | (298.9 | ) | NM | |||||
Reconciliation of Excluded Realized Gain (Loss) Net of Benefit Ratio Unlocking, After-Tax (8) | |||||||||||||||||||||||||||||
Total excluded realized gain (loss) (3)(4)(5)(6)(7) | $ | (77.8 | ) | $ | (15.3 | ) | $ | (22.5 | ) | $ | (119.9 | ) | $ | (94.4 | ) | -21.3 | % | $ | (95.1 | ) | $ | (252.1 | ) | NM | |||||
Benefit ratio unlocking (9) | 10.7 | 4.8 | (1.3 | ) | (40.7 | ) | 23.7 | 121.5 | % | 10.4 | (13.5 | ) | NM | ||||||||||||||||
Excluded realized gain (loss) net of benefit ratio unlocking, after-tax | $ | (67.1 | ) | $ | (10.5 | ) | $ | (23.8 | ) | $ | (160.6 | ) | $ | (70.7 | ) | -5.4 | % | $ | (84.7 | ) | $ | (265.6 | ) | NM | |||||
Components of Excluded Realized Gain (Loss) Net of Benefit Ratio Unlocking, After-Tax (8) | |||||||||||||||||||||||||||||
Realized gain (loss) related to certain investments (3) | $ | (61.2 | ) | $ | (11.1 | ) | $ | (22.2 | ) | $ | (28.3 | ) | $ | (37.1 | ) | 39.4 | % | $ | (117.2 | ) | $ | (98.7 | ) | 15.8 | % | ||||
Gain (loss) on the mark-to-market on certain instruments (4) | 1.6 | 6.7 | (0.6 | ) | (68.7 | ) | 8.7 | NM | 48.7 | (53.9 | ) | NM | |||||||||||||||||
Variable annuity net derivatives results: (5)(6)(9) | |||||||||||||||||||||||||||||
Hedge program performance | 13.4 | (19.0 | ) | (9.8 | ) | (82.6 | ) | 5.1 | -61.9 | % | (26.7 | ) | (106.3 | ) | NM | ||||||||||||||
Unlocking for GLB reserves hedged | 18.1 | - | - | (71.6 | ) | - | -100.0 | % | 18.2 | (71.6 | ) | NM | |||||||||||||||||
GLB NPR component | (47.3 | ) | 11.3 | 8.5 | 92.2 | (46.9 | ) | 0.8 | % | (19.4 | ) | 65.1 | NM | ||||||||||||||||
Total variable annuity net derivatives results | (15.8 | ) | (7.7 | ) | (1.3 | ) | (62.0 | ) | (41.8 | ) | NM | (27.9 | ) | (112.8 | ) | NM | |||||||||||||
Indexed annuity forward-starting option (7) | 8.3 | 1.6 | 0.3 | (1.6 | ) | (0.5 | ) | NM | 11.8 | (0.2 | ) | NM | |||||||||||||||||
Excluded realized gain (loss) net of benefit ratio unlocking, after-tax | $ | (67.1 | ) | $ | (10.5 | ) | $ | (23.8 | ) | $ | (160.6 | ) | $ | (70.7 | ) | -5.4 | % | $ | (84.6 | ) | $ | (265.6 | ) | NM | |||||
(1) | Includes the net difference between the change in the fair value of the S&P 500 Index® call options that we hold and the change in the fair value of the | ||||||||||||||||||||||||||||
embedded derivative liabilities of our indexed annuity products. The change in the fair value of the liability for the embedded derivative represents the | |||||||||||||||||||||||||||||
amount that is credited to the indexed annuity contract. | |||||||||||||||||||||||||||||
(2) | Includes the "risk/profit margin" portion of the attributed GLB rider fees. We have certain GLB variable annuity riders with GWB and GIB features that | ||||||||||||||||||||||||||||
are embedded derivatives. We attribute to the embedded derivative the portion of total fees collected from the contract holder that relates to the GLB | |||||||||||||||||||||||||||||
riders (the “attributed fees”). These attributed fees represent the present value of future claims expected to be paid for the GLB at the inception of the | |||||||||||||||||||||||||||||
contract (the “net valuation premium”) plus a margin that a theoretical market participant would include for risk/profit (the “risk/profit margin”). We | |||||||||||||||||||||||||||||
include the net valuation premium of the GLB attributed rider fees in excluded realized gain (loss). For our Annuities and Retirement Plan Services | |||||||||||||||||||||||||||||
segments, the total fees collected from the contract holders in excess of the GLB attributed fees are reported in insurance fees. | |||||||||||||||||||||||||||||
(3) | See page 30 for detail. | ||||||||||||||||||||||||||||
(4) | Includes changes in the fair values of certain derivative investments (including the credit default swaps and contingent forwards associated with consolidated | ||||||||||||||||||||||||||||
VIEs), total return swaps (embedded derivatives that are theoretically included in our various modified coinsurance and coinsurance with funds withheld | |||||||||||||||||||||||||||||
reinsurance arrangements that have contractual returns related to various assets and liabilities associated with these arrangements) and trading securities. | |||||||||||||||||||||||||||||
(5) | Includes the net valuation premium, the change in GLB embedded derivative reserves and the change in the fair value of the derivative instruments we | ||||||||||||||||||||||||||||
own to hedge them, including the cost of purchasing the hedging instruments. In addition, these results include the changes in reserves not accounted | |||||||||||||||||||||||||||||
for at fair value and resulting benefit ration unlocking on our GDB and GLB riders and the change in the fair value of the derivative instruments we | |||||||||||||||||||||||||||||
own to hedge them. | |||||||||||||||||||||||||||||
(6) | Includes the change in the fair value of the derivatives we own to hedge the change in the GDB riders. | ||||||||||||||||||||||||||||
(7) | Includes changes in the fair value of embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder | ||||||||||||||||||||||||||||
index allocations applicable to future reset periods for our indexed annuity products. | |||||||||||||||||||||||||||||
(8) | We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in | ||||||||||||||||||||||||||||
our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. | |||||||||||||||||||||||||||||
(9) | Represents or includes changes in reserves not accounted for at fair value and resulting from benefit ratio unlocking on our GDB and GLB riders. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 7 | ||||||||||||||||||||||||||||
Consolidated Statements of Income (Loss) | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Insurance premiums | $ | 555.4 | $ | 567.8 | $ | 594.1 | $ | 559.0 | $ | 573.1 | 3.2 | % | $ | 2,176.3 | $ | 2,294.0 | 5.4 | % | |||||||||||
Surrender charges | 30.6 | 34.2 | 40.2 | 29.5 | 29.2 | -4.6 | % | 139.9 | 133.1 | -4.9 | % | ||||||||||||||||||
Mortality assessments | 324.4 | 324.7 | 326.7 | 335.1 | 325.1 | 0.2 | % | 1,287.5 | 1,311.6 | 1.9 | % | ||||||||||||||||||
Expense assessments | 528.1 | 458.8 | 533.2 | 499.8 | 500.0 | -5.3 | % | 1,806.5 | 1,991.8 | 10.3 | % | ||||||||||||||||||
Net investment income | 1,182.7 | 1,191.2 | 1,180.6 | 1,150.7 | 1,129.2 | -4.5 | % | 4,540.9 | 4,651.7 | 2.4 | % | ||||||||||||||||||
Realized gain (loss): | |||||||||||||||||||||||||||||
Total other-than-temporary impairment losses on securities | (53.7 | ) | (44.8 | ) | (45.1 | ) | (42.3 | ) | (32.8 | ) | 38.9 | % | (239.7 | ) | (165.0 | ) | 31.2 | % | |||||||||||
Portion of loss recognized in other comprehensive income | 11.6 | 6.0 | 15.4 | 17.1 | 8.2 | -29.3 | % | 88.1 | 46.7 | -47.0 | % | ||||||||||||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | (42.1 | ) | (38.8 | ) | (29.7 | ) | (25.2 | ) | (24.6 | ) | 41.6 | % | (151.6 | ) | (118.3 | ) | 22.0 | % | |||||||||||
Realized gain (loss), excluding other-than-temporary impairment losses on securities | (57.7 | ) | 36.9 | 17.1 | (137.4 | ) | (97.2 | ) | NM | 74.5 | (180.6 | ) | NM | ||||||||||||||||
Total realized gain (loss) (1) | (99.8 | ) | (1.9 | ) | (12.6 | ) | (162.6 | ) | (121.8 | ) | -22.0 | % | (77.1 | ) | (298.9 | ) | NM | ||||||||||||
Amortization of deferred gains on business sold through reinsurance | 18.8 | 18.7 | 18.7 | 18.7 | 18.7 | -0.5 | % | 75.1 | 74.8 | -0.4 | % | ||||||||||||||||||
Other revenues and fees | 121.7 | 120.4 | 122.9 | 117.5 | 116.7 | -4.1 | % | 457.5 | 477.5 | 4.4 | % | ||||||||||||||||||
Total Revenues | 2,661.9 | 2,713.9 | 2,803.8 | 2,547.7 | 2,570.2 | -3.4 | % | 10,406.6 | 10,635.6 | 2.2 | % | ||||||||||||||||||
Benefits and Expenses | |||||||||||||||||||||||||||||
Interest credited | 632.9 | 614.7 | 624.7 | 624.8 | 623.6 | -1.5 | % | 2,487.8 | 2,487.8 | 0.0 | % | ||||||||||||||||||
Benefits | 786.2 | 833.5 | 1,028.2 | 664.8 | 819.0 | 4.2 | % | 3,327.2 | 3,345.5 | 0.6 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses | 911.4 | 725.4 | 637.1 | 1,038.6 | 761.9 | -16.4 | % | 3,066.7 | 3,163.0 | 3.1 | % | ||||||||||||||||||
Interest and debt expense | 79.1 | 71.6 | 72.0 | 79.4 | 70.5 | -10.9 | % | 290.7 | 293.5 | 1.0 | % | ||||||||||||||||||
Impairment of intangibles | - | - | - | - | 746.7 | NM | - | 746.7 | NM | ||||||||||||||||||||
Total Benefits and Expenses | 2,409.6 | 2,245.2 | 2,362.0 | 2,407.6 | 3,021.7 | 25.4 | % | 9,172.4 | 10,036.5 | 9.4 | % | ||||||||||||||||||
Income (loss) from continuing operations before taxes | 252.3 | 468.7 | 441.8 | 140.1 | (451.5 | ) | NM | 1,234.2 | 599.1 | -51.5 | % | ||||||||||||||||||
Federal income tax expense (benefit) | 56.7 | 129.3 | 116.4 | (11.6 | ) | 62.8 | 10.8 | % | 282.8 | 296.9 | 5.0 | % | |||||||||||||||||
Income (Loss) from Continuing Operations | 195.6 | 339.4 | 325.4 | 151.7 | (514.3 | ) | NM | 951.4 | 302.2 | -68.2 | % | ||||||||||||||||||
Income (loss) from discontinued operations, net of federal income taxes (2) | - | - | - | (8.4 | ) | - | NM | 28.9 | (8.4 | ) | NM | ||||||||||||||||||
Net Income (Loss) | 195.6 | 339.4 | 325.4 | 143.3 | (514.3 | ) | NM | 980.3 | 293.8 | -70.0 | % | ||||||||||||||||||
Preferred stock dividends and accretion of discount | - | - | - | - | - | NM | (36.7 | ) | - | 100.0 | % | ||||||||||||||||||
Write-off of unamortized discount on preferred stock at liquidation | - | - | - | - | - | NM | (130.6 | ) | - | 100.0 | % | ||||||||||||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (3) | - | - | (1.0 | ) | (4.8 | ) | 0.6 | NM | (1.3 | ) | (4.1 | ) | NM | ||||||||||||||||
Net Income (Loss) Available to Common Stockholders - Diluted | $ | 195.6 | $ | 339.4 | $ | 324.4 | $ | 138.5 | $ | (513.7 | ) | NM | $ | 811.7 | $ | 289.7 | 156.4 | % | |||||||||||
Earnings (Loss) Per Common Share (Diluted) | |||||||||||||||||||||||||||||
Income (loss) from continuing operations (4) | $ | 0.60 | $ | 1.05 | $ | 1.01 | $ | 0.47 | $ | (1.73 | ) | NM | $ | 2.45 | $ | 0.95 | -61.3 | % | |||||||||||
Income (loss) from discontinued operations, net of federal income taxes (2) | - | - | - | (0.03 | ) | - | NM | 0.09 | (0.03 | ) | NM | ||||||||||||||||||
Net Income (Loss) (4) | $ | 0.60 | $ | 1.05 | $ | 1.01 | $ | 0.44 | $ | (1.73 | ) | NM | $ | 2.54 | $ | 0.92 | -63.8 | % | |||||||||||
(1) | See page 6 for detail. | ||||||||||||||||||||||||||||
(2) | Includes discontinued operations and the gain (loss) on disposal. See Discontinued Operations on page 28 for details. | ||||||||||||||||||||||||||||
(3) | 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 non-director deferred | ||||||||||||||||||||||||||||
compensation plans if the effect of equity classification would be more dilutive to our diluted EPS. | |||||||||||||||||||||||||||||
(4) | For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation represent basic shares since using diluted shares would be | ||||||||||||||||||||||||||||
anti-dilutive to the calculation. In these periods we would also exclude the adjustment discussed in footnote (3) above when arriving at EPS. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 8 | |||||||||||||||||||||
Consolidated Roll Forwards of DAC, VOBA, DSI and DFEL | ||||||||||||||||||||||
Unaudited (in millions) | ||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | |||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | Dec. | Dec. | ||||||||||||||||
DAC and VOBA | 2010 | 2011 | 2011 | 2011 | 2011 | 2010 | 2011 | |||||||||||||||
Balance as of beginning-of-period | $ | 7,918.5 | $ | 8,930.3 | $ | 9,272.2 | $ | 9,271.1 | $ | 8,129.5 | $ | 9,509.6 | $ | 8,930.3 | ||||||||
Business acquired through reinsurance | - | - | - | 1.7 | 10.6 | - | 12.3 | |||||||||||||||
Deferrals | 468.3 | 411.6 | 428.8 | 415.1 | 445.1 | 1,666.7 | 1,700.6 | |||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||
Unlocking | (9.7 | ) | 109.7 | 179.3 | (236.3 | ) | 77.8 | 118.1 | 130.5 | |||||||||||||
Amortization, net of interest, excluding unlocking | (322.8 | ) | (305.3 | ) | (304.3 | ) | (279.3 | ) | (292.1 | ) | (1,199.9 | ) | (1,181.0 | ) | ||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 135.8 | 216.0 | 303.8 | (100.5 | ) | 230.8 | 584.9 | 650.1 | ||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (2.2 | ) | (1.1 | ) | 0.2 | 8.6 | (5.9 | ) | (2.1 | ) | 1.8 | |||||||||||
Adjustment related to realized (gains) losses | (27.1 | ) | (25.7 | ) | (21.5 | ) | 3.8 | 14.8 | (57.5 | ) | (28.6 | ) | ||||||||||
Adjustment related to unrealized (gains) losses | 905.3 | 152.7 | (283.6 | ) | (1,055.2 | ) | (188.7 | ) | (1,104.6 | ) | (1,374.8 | ) | ||||||||||
Balance as of End-of-Period | $ | 8,930.3 | $ | 9,272.2 | $ | 9,271.1 | $ | 8,129.5 | $ | 8,191.1 | $ | 8,930.3 | $ | 8,191.1 | ||||||||
DSI | ||||||||||||||||||||||
Balance as of beginning-of-period | $ | 268.7 | $ | 285.6 | $ | 285.9 | $ | 276.1 | $ | 267.6 | $ | 323.3 | $ | 285.6 | ||||||||
Deferrals | 12.1 | 9.8 | 8.6 | 10.5 | 10.5 | 65.5 | 39.4 | |||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||
Unlocking | (3.8 | ) | 2.8 | 3.7 | 2.9 | 6.5 | 4.0 | 15.9 | ||||||||||||||
Amortization, net of interest, excluding unlocking | (14.4 | ) | (15.6 | ) | (14.8 | ) | (13.5 | ) | (11.8 | ) | (57.5 | ) | (55.7 | ) | ||||||||
Deferrals, net of amortization included in operating insurance benefits or interest credited | (6.1 | ) | (3.0 | ) | (2.5 | ) | (0.1 | ) | 5.2 | 12.0 | (0.4 | ) | ||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (0.3 | ) | (0.2 | ) | - | 1.2 | (0.9 | ) | (0.4 | ) | 0.1 | |||||||||||
Adjustment related to realized (gains) losses | (0.3 | ) | (0.7 | ) | (1.4 | ) | (0.7 | ) | 1.5 | (8.7 | ) | (1.3 | ) | |||||||||
Adjustment related to unrealized (gains) losses | 23.6 | 4.2 | (5.9 | ) | (8.9 | ) | (2.2 | ) | (40.6 | ) | (12.8 | ) | ||||||||||
Balance as of End-of-Period | $ | 285.6 | $ | 285.9 | $ | 276.1 | $ | 267.6 | $ | 271.2 | $ | 285.6 | $ | 271.2 | ||||||||
DFEL | ||||||||||||||||||||||
Balance as of beginning-of-period | $ | 1,301.7 | $ | 1,502.1 | $ | 1,640.1 | $ | 1,694.1 | $ | 1,337.9 | $ | 1,337.6 | $ | 1,502.1 | ||||||||
Deferrals | 135.6 | 142.7 | 134.2 | 134.4 | 132.3 | 546.3 | 543.6 | |||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||
Unlocking | (19.3 | ) | 31.1 | (9.4 | ) | 7.1 | 16.3 | (24.3 | ) | 45.1 | ||||||||||||
Amortization, net of interest, excluding unlocking | (46.3 | ) | (36.4 | ) | (44.8 | ) | (47.2 | ) | (52.1 | ) | (173.0 | ) | (180.5 | ) | ||||||||
Deferrals, net of amortization included in operating expense assessments | 70.0 | 137.4 | 80.0 | 94.3 | 96.5 | 349.0 | 408.2 | |||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (0.5 | ) | (0.2 | ) | - | 1.6 | (1.0 | ) | 0.1 | 0.4 | ||||||||||||
Adjustment related to realized (gains) losses | (3.6 | ) | (3.7 | ) | (2.0 | ) | (4.2 | ) | 1.4 | (7.5 | ) | (8.5 | ) | |||||||||
Adjustment related to unrealized (gains) losses | 134.5 | 4.5 | (24.0 | ) | (447.9 | ) | (66.2 | ) | (177.1 | ) | (533.6 | ) | ||||||||||
Balance as of End-of-Period | $ | 1,502.1 | $ | 1,640.1 | $ | 1,694.1 | $ | 1,337.9 | $ | 1,368.6 | $ | 1,502.1 | $ | 1,368.6 | ||||||||
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 9 | ||||||||||||||||||
Consolidating Statements of Income (Loss) From Operations | |||||||||||||||||||
For the Quarter Ended December 31, 2011 | |||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||
Retirement | |||||||||||||||||||
Plan | Life | Group | Other | ||||||||||||||||
Annuities | Services | Insurance | Protection | Operations (1) | Consolidated | ||||||||||||||
Operating Revenues | |||||||||||||||||||
Insurance premiums | $ | 14.2 | $ | - | $ | 117.1 | $ | 441.8 | $ | - | $ | 573.1 | |||||||
Surrender charges | 5.9 | 0.4 | 22.8 | - | - | 29.1 | |||||||||||||
Mortality assessments | - | - | 325.1 | - | - | 325.1 | |||||||||||||
Expense assessments | 293.0 | 48.7 | 157.1 | - | - | 498.8 | |||||||||||||
Net investment income | 269.6 | 194.1 | 558.1 | 36.7 | 70.7 | 1,129.2 | |||||||||||||
Operating realized gain (loss) (2) | 23.4 | 0.1 | - | - | - | 23.5 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance | - | - | - | - | 18.1 | 18.1 | |||||||||||||
Other revenues and fees | 84.2 | 3.0 | 6.6 | 2.5 | 20.6 | 116.9 | |||||||||||||
Total Operating Revenues | 690.3 | 246.3 | 1,186.8 | 481.0 | 109.4 | 2,713.8 | |||||||||||||
Operating Expenses | |||||||||||||||||||
Interest credited | 168.9 | 111.0 | 313.5 | 0.9 | 28.5 | 622.8 | |||||||||||||
Benefits | 47.1 | - | 460.1 | 322.8 | 31.1 | 861.1 | |||||||||||||
Underwriting, acquisition, insurance and other expenses | 315.9 | 86.8 | 184.6 | 122.7 | 46.0 | 756.0 | |||||||||||||
Interest and debt expense | - | - | - | - | 70.5 | 70.5 | |||||||||||||
Total Operating Expenses | 531.9 | 197.8 | 958.2 | 446.4 | 176.1 | 2,310.4 | |||||||||||||
Income (loss) from operations before federal income taxes | 158.4 | 48.5 | 228.6 | 34.6 | (66.7 | ) | 403.4 | ||||||||||||
Federal income tax expense (benefit) | 24.9 | 13.1 | 74.6 | 12.1 | (23.9 | ) | 100.8 | ||||||||||||
Income (Loss) from Operations | $ | 133.5 | $ | 35.4 | $ | 154.0 | $ | 22.5 | $ | (42.8 | ) | $ | 302.6 | ||||||
(1) | Includes inter-segment eliminations. | ||||||||||||||||||
(2) | For detail, see pages 15 and 20. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 10 | ||||||||||||||||||
Consolidating Statements of Income (Loss) From Operations | |||||||||||||||||||
For the Quarter Ended December 31, 2010 | |||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||
Retirement | |||||||||||||||||||
Plan | Life | Group | Other | ||||||||||||||||
Annuities | Services | Insurance | Protection | Operations (1) | Consolidated | ||||||||||||||
Operating Revenues | |||||||||||||||||||
Insurance premiums | $ | 17.6 | $ | - | $ | 112.1 | $ | 424.2 | $ | 1.4 | $ | 555.3 | |||||||
Surrender charges | 7.2 | 0.7 | 22.6 | - | - | 30.5 | |||||||||||||
Mortality assessments | - | - | 324.3 | - | - | 324.3 | |||||||||||||
Expense assessments | 292.2 | 52.3 | 183.1 | - | - | 527.6 | |||||||||||||
Net investment income | 295.1 | 199.9 | 567.9 | 38.1 | 81.7 | 1,182.7 | |||||||||||||
Operating realized gain (loss) (2) | 19.9 | 0.1 | - | - | - | 20.0 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance | - | - | - | - | 18.2 | 18.2 | |||||||||||||
Other revenues and fees | 87.9 | 4.3 | 7.4 | 2.0 | 20.3 | 121.9 | |||||||||||||
Total Operating Revenues | 719.9 | 257.3 | 1,217.4 | 464.3 | 121.6 | 2,780.5 | |||||||||||||
Operating Expenses | |||||||||||||||||||
Interest credited | 188.9 | 109.4 | 302.9 | 0.9 | 30.3 | 632.4 | |||||||||||||
Benefits | 47.2 | 0.1 | 400.7 | 322.9 | 34.0 | 804.9 | |||||||||||||
Underwriting, acquisition, insurance and other expenses | 328.9 | 102.9 | 267.8 | 112.8 | 96.7 | 909.1 | |||||||||||||
Interest and debt expense | - | - | - | - | 74.3 | 74.3 | |||||||||||||
Total Operating Expenses | 565.0 | 212.4 | 971.4 | 436.6 | 235.3 | 2,420.7 | |||||||||||||
Income (loss) from operations before federal income taxes | 154.9 | 44.9 | 246.0 | 27.7 | (113.7 | ) | 359.8 | ||||||||||||
Federal income tax expense (benefit) | 31.7 | 12.4 | 80.5 | 9.7 | (40.0 | ) | 94.3 | ||||||||||||
Income (Loss) from Operations | $ | 123.2 | $ | 32.5 | $ | 165.5 | $ | 18.0 | $ | (73.7 | ) | $ | 265.5 | ||||||
(1) | Includes inter-segment eliminations. | ||||||||||||||||||
(2) | For detail, see pages 15 and 20. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 11 | ||||||||||||||||||
Consolidating Statements of Income (Loss) From Operations | |||||||||||||||||||
For the Year Ended December 31, 2011 | |||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||
Retirement | |||||||||||||||||||
Plan | Life | Group | Other | ||||||||||||||||
Annuities | Services | Insurance | Protection | Operations (1) | Consolidated | ||||||||||||||
Operating Revenues | |||||||||||||||||||
Insurance premiums | $ | 73.7 | $ | - | $ | 441.1 | $ | 1,778.3 | $ | 0.9 | $ | 2,294.0 | |||||||
Surrender charges | 34.5 | 2.3 | 96.3 | - | - | 133.1 | |||||||||||||
Mortality assessments | - | - | 1,311.5 | - | - | 1,311.5 | |||||||||||||
Expense assessments | 1,212.6 | 207.8 | 570.7 | - | - | 1,991.1 | |||||||||||||
Net investment income | 1,106.4 | 792.2 | 2,293.9 | 152.1 | 307.1 | 4,651.7 | |||||||||||||
Operating realized gain (loss) (2) | 88.6 | 0.4 | - | - | - | 89.0 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance | - | - | - | - | 72.2 | 72.2 | |||||||||||||
Other revenues and fees | 349.5 | 14.4 | 25.3 | 8.5 | 80.9 | 478.6 | |||||||||||||
Total Operating Revenues | 2,865.3 | 1,017.1 | 4,738.8 | 1,938.9 | 461.1 | 11,021.2 | |||||||||||||
Operating Expenses | |||||||||||||||||||
Interest credited | 698.5 | 437.5 | 1,235.0 | 3.4 | 113.6 | 2,488.0 | |||||||||||||
Benefits | 212.1 | 1.6 | 1,669.2 | 1,313.9 | 126.4 | 3,323.2 | |||||||||||||
Underwriting, acquisition, insurance and other expenses | 1,247.7 | 344.0 | 947.6 | 466.5 | 158.8 | 3,164.6 | |||||||||||||
Interest and debt expense | - | - | - | - | 285.1 | 285.1 | |||||||||||||
Total Operating Expenses | 2,158.3 | 783.1 | 3,851.8 | 1,783.8 | 683.9 | 9,260.9 | |||||||||||||
Income (loss) from operations before federal income taxes | 707.0 | 234.0 | 887.0 | 155.1 | (222.8 | ) | 1,760.3 | ||||||||||||
Federal income tax expense (benefit) | 114.5 | 67.1 | 282.7 | 54.3 | (76.5 | ) | 442.1 | ||||||||||||
Income (Loss) from Operations | $ | 592.5 | $ | 166.9 | $ | 604.3 | $ | 100.8 | $ | (146.3 | ) | $ | 1,318.2 | ||||||
(1) | Includes inter-segment eliminations. | ||||||||||||||||||
(2) | For detail, see pages 15 and 20. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 12 | ||||||||||||||||||
Consolidating Statements of Income (Loss) From Operations | |||||||||||||||||||
For the Year Ended December 31, 2010 | |||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||
Retirement | |||||||||||||||||||
Plan | Life | Group | Other | ||||||||||||||||
Annuities | Services | Insurance | Protection | Operations (1) | Consolidated | ||||||||||||||
Operating Revenues | |||||||||||||||||||
Insurance premiums | $ | 53.0 | $ | - | $ | 439.4 | $ | 1,682.3 | $ | 1.5 | $ | 2,176.2 | |||||||
Surrender charges | 36.7 | 3.2 | 100.0 | - | - | 139.9 | |||||||||||||
Mortality assessments | - | - | 1,287.4 | - | - | 1,287.4 | |||||||||||||
Expense assessments | 1,061.4 | 197.5 | 546.7 | - | - | 1,805.6 | |||||||||||||
Net investment income | 1,119.3 | 769.2 | 2,185.8 | 141.0 | 325.6 | 4,540.9 | |||||||||||||
Operating realized gain (loss) (2) | 68.8 | 0.4 | - | - | - | 69.2 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance | - | - | - | - | 72.5 | 72.5 | |||||||||||||
Other revenues and fees | 315.5 | 17.4 | 30.3 | 7.8 | 87.6 | 458.6 | |||||||||||||
Total Operating Revenues | 2,654.7 | 987.7 | 4,589.6 | 1,831.1 | 487.2 | 10,550.3 | |||||||||||||
Operating Expenses | |||||||||||||||||||
Interest credited | 725.5 | 440.0 | 1,198.8 | 3.3 | 119.8 | 2,487.4 | |||||||||||||
Benefits | 174.7 | 2.1 | 1,734.1 | 1,296.3 | 138.6 | 3,345.8 | |||||||||||||
Underwriting, acquisition, insurance and other expenses | 1,168.2 | 331.4 | 907.7 | 421.6 | 235.6 | 3,064.5 | |||||||||||||
Interest and debt expense | - | - | - | - | 285.9 | 285.9 | |||||||||||||
Total Operating Expenses | 2,068.4 | 773.5 | 3,840.6 | 1,721.2 | 779.9 | 9,183.6 | |||||||||||||
Income (loss) from operations before federal income taxes | 586.3 | 214.2 | 749.0 | 109.9 | (292.7 | ) | 1,366.7 | ||||||||||||
Federal income tax expense (benefit) | 101.9 | 59.9 | 235.7 | 38.3 | (106.6 | ) | 329.2 | ||||||||||||
Income (Loss) from Operations | $ | 484.4 | $ | 154.3 | $ | 513.3 | $ | 71.6 | $ | (186.1 | ) | $ | 1,037.5 | ||||||
(1) | Includes inter-segment eliminations. | ||||||||||||||||||
(2) | For detail, see pages 15 and 20. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 13 | ||||||||||||||
Consolidated Balance Sheets and Selected Share Data | |||||||||||||||
Unaudited (in millions) | |||||||||||||||
As of | |||||||||||||||
Dec. | March | June | Sept. | Dec. | |||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | |||||||||||
ASSETS | |||||||||||||||
Investments: | |||||||||||||||
Corporate bonds | $ | 51,740.5 | $ | 53,174.8 | $ | 54,830.4 | $ | 58,262.0 | $ | 59,261.1 | |||||
U.S. Government bonds | 164.8 | 161.8 | 239.7 | 286.0 | 494.6 | ||||||||||
Foreign government bonds | 508.3 | 516.0 | 592.6 | 641.9 | 732.4 | ||||||||||
Mortgage-backed securities | 10,890.4 | 10,541.6 | 10,334.3 | 10,119.5 | 9,638.7 | ||||||||||
Asset-backed securities | 173.8 | 136.8 | 126.1 | 110.4 | 101.6 | ||||||||||
State and municipal bonds | 3,155.4 | 3,280.0 | 3,479.3 | 3,969.7 | 4,047.2 | ||||||||||
Hybrid and redeemable preferred securities | 1,397.0 | 1,420.0 | 1,317.8 | 1,202.0 | 1,157.2 | ||||||||||
VIEs' fixed maturity securities | 583.7 | 586.8 | 592.6 | 699.5 | 700.1 | ||||||||||
Equity securities | 197.2 | 144.6 | 143.7 | 137.4 | 138.8 | ||||||||||
Total available-for-sale securities | 68,811.1 | 69,962.4 | 71,656.5 | 75,428.4 | 76,271.7 | ||||||||||
Trading securities | 2,596.4 | 2,598.0 | 2,624.7 | 2,726.2 | 2,674.7 | ||||||||||
Mortgage loans on real estate | 6,752.1 | 6,748.7 | 6,870.5 | 6,893.3 | 6,942.6 | ||||||||||
Real estate | 202.1 | 188.9 | 149.9 | 135.8 | 136.8 | ||||||||||
Policy loans | 2,864.7 | 2,837.1 | 2,877.1 | 2,873.5 | 2,884.6 | ||||||||||
Derivative investments | 1,076.0 | 945.7 | 1,097.0 | 3,028.7 | 3,151.0 | ||||||||||
Other investments | 1,037.7 | 1,029.4 | 1,002.3 | 1,104.7 | 1,068.6 | ||||||||||
Total investments | 83,340.1 | 84,310.2 | 86,278.0 | 92,190.6 | 93,130.0 | ||||||||||
Cash and invested cash | 2,741.4 | 2,216.4 | 2,911.8 | 4,832.7 | 4,510.2 | ||||||||||
DAC and VOBA | 8,930.3 | 9,272.2 | 9,271.1 | 8,129.5 | 8,191.1 | ||||||||||
Premiums and fees receivable | 334.6 | 400.8 | 370.3 | 383.4 | 407.5 | ||||||||||
Accrued investment income | 932.8 | 988.9 | 994.2 | 1,023.3 | 981.4 | ||||||||||
Reinsurance recoverables | 6,526.8 | 6,580.0 | 6,556.2 | 6,658.8 | 6,526.0 | ||||||||||
Funds withheld reinsurance assets | 910.9 | 889.0 | 884.9 | 881.2 | 874.1 | ||||||||||
Goodwill | 3,019.4 | 3,019.4 | 3,019.4 | 3,019.4 | 2,272.8 | ||||||||||
Other assets | 2,457.3 | 2,403.9 | 2,422.5 | 2,433.3 | 2,535.9 | ||||||||||
Separate account assets | 84,630.1 | 88,236.3 | 88,845.6 | 78,194.6 | 83,476.5 | ||||||||||
Total Assets | $ | 193,823.7 | $ | 198,317.1 | $ | 201,554.0 | $ | 197,746.8 | $ | 202,905.5 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||
Liabilities | |||||||||||||||
Future contract benefits | $ | 17,526.6 | $ | 17,333.3 | $ | 17,873.9 | $ | 19,988.5 | $ | 19,813.4 | |||||
Other contract holder funds | 66,406.8 | 67,098.8 | 67,838.1 | 68,552.3 | 69,465.5 | ||||||||||
Short-term debt | 351.4 | 351.6 | 251.3 | 549.9 | 299.9 | ||||||||||
Long-term debt categorized by standard rating agency leverage definitions: | |||||||||||||||
Operating (see note (4) on page 3 for details) | 1,122.2 | 1,122.2 | 1,122.2 | 1,122.3 | 1,122.3 | ||||||||||
Financial | 4,276.8 | 4,247.4 | 4,606.5 | 4,226.1 | 4,269.1 | ||||||||||
Reinsurance related embedded derivatives | 101.5 | 91.0 | 119.1 | 177.3 | 167.5 | ||||||||||
Funds withheld reinsurance liabilities | 1,149.5 | 1,134.7 | 1,107.1 | 1,072.0 | 1,044.8 | ||||||||||
Deferred gain on indemnity reinsurance | 468.3 | 449.6 | 430.9 | 412.2 | 393.5 | ||||||||||
Payables for collateral on investments | 1,659.0 | 1,554.2 | 1,805.5 | 3,855.1 | 3,733.3 | ||||||||||
VIEs' liabilities | 132.1 | 130.0 | 129.5 | 203.0 | 193.4 | ||||||||||
Other liabilities | 3,193.6 | 3,478.3 | 3,838.6 | 4,474.4 | 4,762.6 | ||||||||||
Separate account liabilities | 84,630.1 | 88,236.3 | 88,845.6 | 78,194.6 | 83,476.5 | ||||||||||
Total liabilities | 181,017.9 | 185,227.4 | 187,968.3 | 182,827.7 | 188,741.8 | ||||||||||
Stockholders' Equity | |||||||||||||||
Series A preferred stock | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | ||||||||||
Common stock | 8,124.2 | 8,063.5 | 7,937.6 | 7,791.5 | 7,589.6 | ||||||||||
Retained earnings | 3,933.5 | 4,243.2 | 4,535.7 | 4,664.0 | 4,126.3 | ||||||||||
AOCI: | |||||||||||||||
Net unrealized gain (loss) on available-for-sale securities | 1,071.8 | 1,093.8 | 1,440.7 | 2,642.5 | 2,715.8 | ||||||||||
Unrealized other-than-temporary impairment on available-for-sale securities | (128.9 | ) | (108.5 | ) | (107.7 | ) | (107.0 | ) | (106.7 | ) | |||||
Net unrealized gain (loss) on derivative instruments | (14.5 | ) | (22.2 | ) | (40.0 | ) | 108.0 | 115.6 | |||||||
Foreign currency translation adjustment | 0.6 | 1.6 | (2.6 | ) | 2.7 | 0.5 | |||||||||
Funded status of employee benefit plans | (181.3 | ) | (182.1 | ) | (178.4 | ) | (183.0 | ) | (277.8 | ) | |||||
Total accumulated other comprehensive income (loss) | 747.7 | 782.6 | 1,112.0 | 2,463.2 | 2,447.4 | ||||||||||
Total stockholders' equity | 12,805.8 | 13,089.7 | 13,585.7 | 14,919.1 | 14,163.7 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 193,823.7 | $ | 198,317.1 | $ | 201,554.0 | $ | 197,746.8 | $ | 202,905.5 | |||||
Share Data Per Common Share | |||||||||||||||
Stockholders' equity per share | $ | 40.54 | $ | 41.74 | $ | 44.04 | $ | 49.43 | $ | 48.59 | |||||
Book value, excluding AOCI | 38.17 | 39.24 | 40.43 | 41.27 | 40.19 | ||||||||||
Common shares outstanding - assuming conversion of Series A preferred shares | 315.9 | 313.6 | 308.5 | 301.8 | 291.5 |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 14 | ||||||||||||||||||
Balance Sheet Data - Segment Highlights | |||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||
As of December 31, 2011 | Retirement | ||||||||||||||||||
Plan | Life | Group | Other | ||||||||||||||||
Annuities | Services | Insurance | Protection | Operations (1) | Consolidated | ||||||||||||||
Assets | |||||||||||||||||||
Allocated investments and cash and invested cash (2) | $ | 28,466.8 | $ | 15,395.1 | $ | 43,628.0 | $ | 2,854.9 | $ | 7,295.4 | $ | 97,640.2 | |||||||
DAC and VOBA | 2,318.0 | 330.8 | 5,347.8 | 194.5 | - | 8,191.1 | |||||||||||||
Goodwill | 439.8 | 20.2 | 1,538.5 | 274.3 | - | 2,272.8 | |||||||||||||
DSI and other intangibles | 269.5 | 3.6 | 77.0 | - | 118.3 | 468.4 | |||||||||||||
Reinsurance recoverables | 560.5 | - | 2,069.6 | 48.8 | 3,847.1 | 6,526.0 | |||||||||||||
Separate account assets | 64,946.5 | 12,858.3 | 5,508.6 | - | 163.1 | 83,476.5 | |||||||||||||
Liabilities and Capital | |||||||||||||||||||
Future contract benefits | 3,642.4 | 7.4 | 7,983.8 | 1,741.7 | 6,438.1 | 19,813.4 | |||||||||||||
Other contract holder funds | 20,701.3 | 13,623.8 | 34,065.6 | 236.1 | 838.7 | 69,465.5 | |||||||||||||
Allocated capital (3) | 3,549.0 | 1,040.8 | 7,885.6 | 1,191.7 | (1,950.8 | ) | 11,716.3 | ||||||||||||
As of December 31, 2010 | |||||||||||||||||||
Assets | |||||||||||||||||||
Allocated investments and cash and invested cash (2) | $ | 22,957.0 | $ | 14,131.6 | $ | 38,248.2 | $ | 2,684.3 | $ | 8,060.4 | $ | 86,081.5 | |||||||
DAC and VOBA | 2,250.5 | 359.9 | 6,144.8 | 175.0 | 0.1 | 8,930.3 | |||||||||||||
Goodwill | 439.8 | 20.2 | 2,188.5 | 274.3 | 96.6 | 3,019.4 | |||||||||||||
DSI and other intangibles | 283.6 | 3.9 | 81.0 | - | 118.1 | 486.6 | |||||||||||||
Reinsurance recoverables | 495.7 | - | 2,014.0 | 45.1 | 3,972.0 | 6,526.8 | |||||||||||||
Separate account assets | 64,782.4 | 13,916.9 | 5,749.3 | - | 181.5 | 84,630.1 | |||||||||||||
Liabilities and Capital | |||||||||||||||||||
Future contract benefits | 1,707.2 | 1.5 | 7,605.7 | 1,620.0 | 6,592.3 | 17,526.7 | |||||||||||||
Other contract holder funds | 20,134.3 | 12,773.1 | 32,386.0 | 255.9 | 857.5 | 66,406.8 | |||||||||||||
Allocated capital (3) | 2,989.7 | 1,076.6 | 8,385.0 | 1,180.3 | (1,573.5 | ) | 12,058.1 | ||||||||||||
(1) | Includes inter-segment eliminations. | ||||||||||||||||||
(2) | Includes inter-segment cash management balances our segments utilize to borrow money to meet their short-term needs and also to invest short-term funds with | ||||||||||||||||||
other segments. These balances eliminate in consolidation. | |||||||||||||||||||
(3) | Allocated capital is based on internal economic capital models plus certain other items (principally intangibles, including DAC and VOBA, goodwill and other items). |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 15 | ||||||||||||||||||||||||||||
Annuities | |||||||||||||||||||||||||||||
Income (Loss) from Operations and Operational Data | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Operating Revenues | |||||||||||||||||||||||||||||
Insurance premiums (1) | $ | 17.6 | $ | 23.1 | $ | 21.8 | $ | 14.6 | $ | 14.2 | -19.3 | % | $ | 53.0 | $ | 73.7 | 39.1 | % | |||||||||||
Surrender charges | 7.2 | 10.5 | 10.0 | 8.1 | 5.9 | -18.1 | % | 36.7 | 34.5 | -6.0 | % | ||||||||||||||||||
Expense assessments | 292.2 | 299.4 | 311.5 | 308.7 | 293.0 | 0.3 | % | 1,061.4 | 1,212.6 | 14.2 | % | ||||||||||||||||||
Net investment income | 295.1 | 288.1 | 277.7 | 271.0 | 269.6 | -8.6 | % | 1,119.3 | 1,106.4 | -1.2 | % | ||||||||||||||||||
Operating realized gain (loss) (2) | 19.9 | 21.5 | 22.1 | 21.6 | 23.4 | 17.6 | % | 68.8 | 88.6 | 28.8 | % | ||||||||||||||||||
Other revenues and fees (3) | 87.9 | 89.3 | 90.4 | 85.6 | 84.2 | -4.2 | % | 315.5 | 349.5 | 10.8 | % | ||||||||||||||||||
Total Operating Revenues | 719.9 | 731.9 | 733.5 | 709.6 | 690.3 | -4.1 | % | 2,654.7 | 2,865.3 | 7.9 | % | ||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||
Interest credited | 188.9 | 174.5 | 178.0 | 177.1 | 168.9 | -10.6 | % | 725.5 | 698.5 | -3.7 | % | ||||||||||||||||||
Benefits (1) | 47.2 | 35.4 | 42.6 | 87.0 | 47.1 | -0.2 | % | 174.7 | 212.1 | 21.4 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses | 328.9 | 333.4 | 325.6 | 272.8 | 315.9 | -4.0 | % | 1,168.2 | 1,247.7 | 6.8 | % | ||||||||||||||||||
Total Operating Expenses | 565.0 | 543.3 | 546.2 | 536.9 | 531.9 | -5.9 | % | 2,068.4 | 2,158.3 | 4.3 | % | ||||||||||||||||||
Income (loss) from operations before federal income taxes | 154.9 | 188.6 | 187.3 | 172.7 | 158.4 | 2.3 | % | 586.3 | 707.0 | 20.6 | % | ||||||||||||||||||
Federal income tax expense (benefit) | 31.7 | 41.6 | 36.9 | 11.1 | 24.9 | -21.5 | % | 101.9 | 114.5 | 12.4 | % | ||||||||||||||||||
Income (Loss) from Operations | $ | 123.2 | $ | 147.0 | $ | 150.4 | $ | 161.6 | $ | 133.5 | 8.4 | % | $ | 484.4 | $ | 592.5 | 22.3 | % | |||||||||||
Effective Tax Rate | 20.5 | % | 22.1 | % | 19.7 | % | 6.4 | % | 15.7 | % | 17.4 | % | 16.2 | % | |||||||||||||||
Average Stockholders' Equity, Excluding AOCI | |||||||||||||||||||||||||||||
Average equity, including goodwill | $ | 2,949.9 | $ | 2,987.6 | $ | 3,012.3 | $ | 3,255.6 | $ | 3,510.4 | $ | 2,939.2 | $ | 3,191.5 | |||||||||||||||
Average goodwill | 439.8 | 439.8 | 439.8 | 439.8 | 439.8 | �� | 439.8 | 439.8 | |||||||||||||||||||||
Average equity, excluding goodwill | $ | 2,510.1 | $ | 2,547.8 | $ | 2,572.5 | $ | 2,815.8 | $ | 3,070.6 | $ | 2,499.4 | $ | 2,751.7 | |||||||||||||||
Return on Equity, Excluding AOCI | |||||||||||||||||||||||||||||
Including goodwill | 16.7 | % | 19.7 | % | 20.0 | % | 19.9 | % | 15.2 | % | 16.5 | % | 18.6 | % | |||||||||||||||
Excluding goodwill | 19.6 | % | 23.1 | % | 23.4 | % | 23.0 | % | 17.4 | % | 19.4 | % | 21.5 | % | |||||||||||||||
Income (Loss) from Operations - Basis Points on Average Account Values - Annualized | 59 | 68 | 68 | 75 | 63 | 4 | 62 | 69 | 7 | ||||||||||||||||||||
Operating Realized Gain (Loss) (2) | |||||||||||||||||||||||||||||
Indexed annuity net derivatives results (4) | $ | 0.8 | $ | 1.1 | $ | 0.4 | $ | (1.0 | ) | $ | 0.5 | -37.5 | % | $ | 1.2 | $ | 1.0 | -16.7 | % | ||||||||||
GLB (5) | 19.1 | 20.4 | 21.7 | 22.6 | 22.9 | 19.9 | % | 67.6 | 87.6 | 29.6 | % | ||||||||||||||||||
Total Operating Realized Gain (Loss) | $ | 19.9 | $ | 21.5 | $ | 22.1 | $ | 21.6 | $ | 23.4 | 17.6 | % | $ | 68.8 | $ | 88.6 | 28.8 | % | |||||||||||
Underwriting, Acquisition, Insurance and Other Expenses | |||||||||||||||||||||||||||||
Commissions | $ | 180.9 | $ | 176.6 | $ | 193.4 | $ | 182.3 | $ | 173.2 | -4.3 | % | $ | 696.7 | $ | 725.5 | 4.1 | % | |||||||||||
General and administrative expenses | 90.8 | 86.9 | 93.1 | 85.5 | 94.6 | 4.2 | % | 336.5 | 360.1 | 7.0 | % | ||||||||||||||||||
Inter-segment reimbursement associated with reserve financing and LOC expenses (6) | (1.0 | ) | (0.5 | ) | 0.4 | (0.9 | ) | 0.2 | 120.0 | % | (0.8 | ) | (0.8 | ) | 0.0 | % | |||||||||||||
Broker-dealer commissions and general and administrative expenses | 87.2 | 90.8 | 88.5 | 85.0 | 83.2 | -4.6 | % | 315.7 | 347.5 | 10.1 | % | ||||||||||||||||||
Taxes, licenses and fees | 5.6 | 9.4 | 8.2 | 6.7 | 2.7 | -51.8 | % | 24.2 | 27.0 | 11.6 | % | ||||||||||||||||||
Total commissions and expenses incurred | 363.5 | 363.2 | 383.6 | 358.6 | 353.9 | -2.6 | % | 1,372.3 | 1,459.3 | 6.3 | % | ||||||||||||||||||
Less: commissions and expenses capitalized | (156.1 | ) | (149.8 | ) | (165.5 | ) | (160.5 | ) | (142.5 | ) | 8.7 | % | (623.5 | ) | (618.3 | ) | 0.8 | % | |||||||||||
Amortization of DAC and VOBA, net of interest | 121.5 | 120.0 | 107.5 | 74.7 | 104.5 | -14.0 | % | 419.4 | 406.7 | -3.0 | % | ||||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 328.9 | $ | 333.4 | $ | 325.6 | $ | 272.8 | $ | 315.9 | -4.0 | % | $ | 1,168.2 | $ | 1,247.7 | 6.8 | % | |||||||||||
General and Administrative Expenses - Basis Points on Average Account Values - Annualized (7) | 44 | 40 | 42 | 40 | 44 | - | 43 | 41 | (2 | ) | |||||||||||||||||||
(1) | Includes our single premium immediate annuities, which have a corresponding offset to benefits for changes in reserves. | ||||||||||||||||||||||||||||
(2) | Included in income (loss) from operations. | ||||||||||||||||||||||||||||
(3) | Other revenues and fees consists primarily of fees attributable to broker-dealer services that are subject to market volatility. | ||||||||||||||||||||||||||||
(4) | See note (1) on page 6 for details. | ||||||||||||||||||||||||||||
(5) | See note (2) on page 6 for details. | ||||||||||||||||||||||||||||
(6) | Represents reimbursements to Annuities from the Life Insurance segment for reserve financing, net of expenses incurred by Annuities for its use of LOCs. The inter-segment amounts are not | ||||||||||||||||||||||||||||
reported on our Consolidated Statements of Income (Loss). | |||||||||||||||||||||||||||||
(7) | Includes distribution costs. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 16 | |||||||||||||||||||||
Annuities | ||||||||||||||||||||||
DAC, VOBA, DSI and DFEL Roll Forwards | ||||||||||||||||||||||
Unaudited (in millions) | ||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | |||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | Dec. | Dec. | ||||||||||||||||
DAC and VOBA | 2010 | 2011 | 2011 | 2011 | 2011 | 2010 | 2011 | |||||||||||||||
Balance as of beginning-of-period | $ | 1,934.2 | $ | 2,250.5 | $ | 2,327.9 | $ | 2,299.2 | $ | 2,276.6 | $ | 2,381.0 | $ | 2,250.5 | ||||||||
Deferrals | 156.1 | 149.8 | 165.5 | 160.5 | 142.5 | 623.5 | 618.3 | |||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||
Unlocking | 12.8 | 29.0 | 33.0 | 53.9 | 11.5 | 115.9 | 127.4 | |||||||||||||||
Amortization, net of interest, excluding unlocking | (134.3 | ) | (149.0 | ) | (140.5 | ) | (128.6 | ) | (116.0 | ) | (535.3 | ) | (534.1 | ) | ||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 34.6 | 29.8 | 58.0 | 85.8 | 38.0 | 204.1 | 211.6 | |||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (2.2 | ) | (1.1 | ) | 0.1 | 8.4 | (5.6 | ) | (1.6 | ) | 1.8 | |||||||||||
Adjustment related to realized (gains) losses | (4.9 | ) | (8.4 | ) | (10.1 | ) | 0.8 | 15.3 | (55.7 | ) | (2.4 | ) | ||||||||||
Adjustment related to unrealized (gains) losses | 288.8 | 57.1 | (76.7 | ) | (117.6 | ) | (6.3 | ) | (277.3 | ) | (143.5 | ) | ||||||||||
Balance as of End-of-Period | $ | 2,250.5 | $ | 2,327.9 | $ | 2,299.2 | $ | 2,276.6 | $ | 2,318.0 | $ | 2,250.5 | $ | 2,318.0 | ||||||||
DSI | ||||||||||||||||||||||
Balance as of beginning-of-period | $ | 266.7 | $ | 283.6 | $ | 283.8 | $ | 274.2 | $ | 265.7 | $ | 320.6 | $ | 283.6 | ||||||||
Deferrals | 12.0 | 9.7 | 8.7 | 10.5 | 10.4 | 65.2 | 39.3 | |||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||
Unlocking | (3.7 | ) | 2.8 | 3.6 | 2.7 | 6.5 | 4.1 | 15.6 | ||||||||||||||
Amortization, net of interest, excluding unlocking | (14.1 | ) | (15.5 | ) | (14.7 | ) | (13.3 | ) | (11.7 | ) | (57.0 | ) | (55.2 | ) | ||||||||
Deferrals, net of amortization included in operating interest credited | (5.8 | ) | (3.0 | ) | (2.4 | ) | (0.1 | ) | 5.2 | 12.3 | (0.3 | ) | ||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (0.3 | ) | (0.2 | ) | - | 1.2 | (0.9 | ) | (0.4 | ) | 0.1 | |||||||||||
Adjustment related to realized (gains) losses | (0.4 | ) | (0.7 | ) | (1.4 | ) | (0.7 | ) | 1.5 | (8.7 | ) | (1.3 | ) | |||||||||
Adjustment related to unrealized (gains) losses | 23.4 | 4.1 | (5.8 | ) | (8.9 | ) | (2.0 | ) | (40.2 | ) | (12.6 | ) | ||||||||||
Balance as of End-of-Period | $ | 283.6 | $ | 283.8 | $ | 274.2 | $ | 265.7 | $ | 269.5 | $ | 283.6 | $ | 269.5 | ||||||||
DFEL | ||||||||||||||||||||||
Balance as of beginning-of-period | $ | 210.0 | $ | 222.0 | $ | 234.2 | $ | 246.9 | $ | 249.2 | $ | 182.1 | $ | 222.0 | ||||||||
Deferrals | 18.9 | 16.8 | 18.6 | 15.7 | 9.9 | 74.6 | 61.0 | |||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||
Unlocking | (3.8 | ) | 0.2 | 1.0 | (3.7 | ) | 8.0 | 0.1 | 5.5 | |||||||||||||
Amortization, net of interest, excluding unlocking | (5.7 | ) | (5.9 | ) | (5.7 | ) | (5.4 | ) | (4.5 | ) | (22.7 | ) | (21.5 | ) | ||||||||
Deferrals, net of amortization included in operating expense assessments | 9.4 | 11.1 | 13.9 | 6.6 | 13.4 | 52.0 | 45.0 | |||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (0.5 | ) | (0.2 | ) | - | 1.6 | (1.0 | ) | 0.1 | 0.4 | ||||||||||||
Adjustment related to realized (gains) losses | 1.8 | (1.7 | ) | (0.7 | ) | (4.7 | ) | 1.6 | (7.3 | ) | (5.5 | ) | ||||||||||
Adjustment related to unrealized (gains) losses | 1.3 | 3.0 | (0.5 | ) | (1.2 | ) | (0.6 | ) | (4.9 | ) | 0.7 | |||||||||||
Balance as of End-of-Period | $ | 222.0 | $ | 234.2 | $ | 246.9 | $ | 249.2 | $ | 262.6 | $ | 222.0 | $ | 262.6 |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 17 | ||||||||||||||||||||||||||||
Annuities | |||||||||||||||||||||||||||||
Account Value Roll Forwards and Information | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Fixed Annuities (1) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 21.075 | $ | 20.952 | $ | 20.947 | $ | 21.224 | $ | 21.375 | 1.4 | % | $ | 19.940 | $ | 20.952 | 5.1 | % | |||||||||||
Gross deposits | 1.155 | 1.116 | 1.307 | 1.294 | 1.062 | -8.1 | % | 5.568 | 4.779 | -14.2 | % | ||||||||||||||||||
Withdrawals and deaths | (0.593 | ) | (0.513 | ) | (0.525 | ) | (0.590 | ) | (0.564 | ) | 4.9 | % | (2.020 | ) | (2.192 | ) | -8.5 | % | |||||||||||
Net flows | 0.562 | 0.603 | 0.782 | 0.704 | 0.498 | -11.4 | % | 3.548 | 2.587 | -27.1 | % | ||||||||||||||||||
Transfers to variable annuities | (0.942 | ) | (0.832 | ) | (0.699 | ) | (0.609 | ) | (0.704 | ) | 25.3 | % | (3.397 | ) | (2.844 | ) | 16.3 | % | |||||||||||
Interest credited | 0.245 | 0.214 | 0.186 | 0.046 | 0.247 | 0.8 | % | 0.796 | 0.693 | -12.9 | % | ||||||||||||||||||
Sales inducements deferred | 0.012 | 0.010 | 0.008 | 0.010 | 0.010 | -16.7 | % | 0.065 | 0.038 | -41.5 | % | ||||||||||||||||||
Balance as of End-of-Period (Gross) | 20.952 | 20.947 | 21.224 | 21.375 | 21.426 | 2.3 | % | 20.952 | 21.426 | 2.3 | % | ||||||||||||||||||
Reinsurance ceded | (0.962 | ) | (0.949 | ) | (0.935 | ) | (0.920 | ) | (0.902 | ) | 6.2 | % | (0.962 | ) | (0.902 | ) | 6.2 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 19.990 | $ | 19.998 | $ | 20.289 | $ | 20.455 | $ | 20.524 | 2.7 | % | $ | 19.990 | $ | 20.524 | 2.7 | % | |||||||||||
Variable Annuities (2) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 60.132 | $ | 64.858 | $ | 67.787 | $ | 68.551 | $ | 60.774 | 1.1 | % | $ | 55.368 | $ | 64.858 | 17.1 | % | |||||||||||
Gross deposits | 1.435 | 1.523 | 1.620 | 1.415 | 1.313 | -8.5 | % | 5.099 | 5.871 | 15.1 | % | ||||||||||||||||||
Withdrawals and deaths | (1.454 | ) | (1.643 | ) | (1.702 | ) | (1.456 | ) | (1.466 | ) | -0.8 | % | (5.092 | ) | (6.267 | ) | -23.1 | % | |||||||||||
Net flows | (0.019 | ) | (0.120 | ) | (0.082 | ) | (0.041 | ) | (0.153 | ) | NM | 0.007 | (0.396 | ) | NM | ||||||||||||||
Transfers from fixed annuities | 0.942 | 0.832 | 0.699 | 0.609 | 0.704 | -25.3 | % | 3.396 | 2.844 | -16.3 | % | ||||||||||||||||||
Investment increase and change in market value | 3.803 | 2.217 | 0.147 | (8.345 | ) | 3.685 | -3.1 | % | 6.087 | (2.296 | ) | NM | |||||||||||||||||
Balance as of End-of-Period | $ | 64.858 | $ | 67.787 | $ | 68.551 | $ | 60.774 | $ | 65.010 | 0.2 | % | $ | 64.858 | $ | 65.010 | 0.2 | % | |||||||||||
Total Annuities | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 81.207 | $ | 85.810 | $ | 88.734 | $ | 89.775 | $ | 82.149 | 1.2 | % | $ | 75.308 | $ | 85.810 | 13.9 | % | |||||||||||
Gross deposits | 2.590 | 2.639 | 2.927 | 2.709 | 2.375 | -8.3 | % | 10.667 | 10.650 | -0.2 | % | ||||||||||||||||||
Withdrawals and deaths | (2.047 | ) | (2.156 | ) | (2.227 | ) | (2.046 | ) | (2.030 | ) | 0.8 | % | (7.112 | ) | (8.459 | ) | -18.9 | % | |||||||||||
Net flows | 0.543 | 0.483 | 0.700 | 0.663 | 0.345 | -36.5 | % | 3.555 | 2.191 | -38.4 | % | ||||||||||||||||||
Transfers between fixed and variable accounts | - | - | - | - | - | NM | (0.001 | ) | - | 100.0 | % | ||||||||||||||||||
Interest credited and change in market value | 4.048 | 2.431 | 0.333 | (8.299 | ) | 3.932 | -2.9 | % | 6.883 | (1.603 | ) | NM | |||||||||||||||||
Sales inducements deferred | 0.012 | 0.010 | 0.008 | 0.010 | 0.010 | -16.7 | % | 0.065 | 0.038 | -41.5 | % | ||||||||||||||||||
Balance as of End-of-Period (Gross) | 85.810 | 88.734 | 89.775 | 82.149 | 86.436 | 0.7 | % | 85.810 | 86.436 | 0.7 | % | ||||||||||||||||||
Reinsurance ceded | (0.962 | ) | (0.949 | ) | (0.935 | ) | (0.920 | ) | (0.902 | ) | 6.2 | % | (0.962 | ) | (0.902 | ) | 6.2 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 84.848 | $ | 87.785 | $ | 88.840 | $ | 81.229 | $ | 85.534 | 0.8 | % | $ | 84.848 | $ | 85.534 | 0.8 | % | |||||||||||
Variable Annuities Under Agreement - Included Above | $ | 0.076 | $ | 0.076 | $ | 0.073 | $ | 0.060 | $ | 0.062 | -18.4 | % | $ | 0.076 | $ | 0.062 | -18.4 | % | |||||||||||
Incremental Deposits (3) | |||||||||||||||||||||||||||||
Fixed annuities | $ | 1.154 | $ | 1.114 | $ | 1.306 | $ | 1.292 | $ | 1.062 | -8.0 | % | $ | 5.563 | $ | 4.774 | -14.2 | % | |||||||||||
Variable annuities | 1.431 | 1.515 | 1.614 | 1.411 | 1.309 | -8.5 | % | 5.082 | 5.849 | 15.1 | % | ||||||||||||||||||
Total Incremental Deposits | $ | 2.585 | $ | 2.629 | $ | 2.920 | $ | 2.703 | $ | 2.371 | -8.3 | % | $ | 10.645 | $ | 10.623 | -0.2 | % | |||||||||||
(1) | Includes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(2) | Excludes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(3) | Represents gross deposits reduced by transfers from other Lincoln products. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 18 | ||||||||||||||||||||||||||||
Annuities | |||||||||||||||||||||||||||||
Account Value Information | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Fixed Annuities, Excluding Fixed Portion of Variable Contracts | |||||||||||||||||||||||||||||
Deposits | $ | 0.068 | $ | 0.077 | $ | 0.091 | $ | 0.092 | $ | 0.052 | -23.5 | % | $ | 0.374 | $ | 0.312 | -16.6 | % | |||||||||||
Withdrawals and deaths | (0.336 | ) | (0.266 | ) | (0.284 | ) | (0.318 | ) | (0.272 | ) | 19.0 | % | (1.099 | ) | (1.140 | ) | -3.7 | % | |||||||||||
Net flows | $ | (0.268 | ) | $ | (0.189 | ) | $ | (0.193 | ) | $ | (0.226 | ) | $ | (0.220 | ) | 17.9 | % | $ | (0.725 | ) | $ | (0.828 | ) | -14.2 | % | ||||
Gross fixed contract account values | $ | 8.740 | $ | 8.627 | $ | 8.517 | $ | 8.375 | $ | 8.231 | -5.8 | % | $ | 8.740 | $ | 8.231 | -5.8 | % | |||||||||||
Reinsurance ceded | (0.962 | ) | (0.947 | ) | (0.933 | ) | (0.918 | ) | (0.899 | ) | 6.5 | % | (0.962 | ) | (0.899 | ) | 6.5 | % | |||||||||||
Net fixed contract account values | $ | 7.778 | $ | 7.680 | $ | 7.584 | $ | 7.457 | $ | 7.332 | -5.7 | % | $ | 7.778 | $ | 7.332 | -5.7 | % | |||||||||||
Indexed Annuities | |||||||||||||||||||||||||||||
Deposits | $ | 0.327 | $ | 0.378 | $ | 0.480 | $ | 0.462 | $ | 0.295 | -9.8 | % | $ | 2.027 | $ | 1.615 | -20.3 | % | |||||||||||
Withdrawals and deaths | (0.167 | ) | (0.158 | ) | (0.153 | ) | (0.190 | ) | (0.203 | ) | -21.6 | % | (0.532 | ) | (0.704 | ) | -32.3 | % | |||||||||||
Net flows | $ | 0.160 | $ | 0.220 | $ | 0.327 | $ | 0.272 | $ | 0.092 | -42.5 | % | $ | 1.495 | $ | 0.911 | -39.1 | % | |||||||||||
Gross indexed contract account values | $ | 8.680 | $ | 9.016 | $ | 9.421 | $ | 9.634 | $ | 9.875 | 13.8 | % | $ | 8.680 | $ | 9.875 | 13.8 | % | |||||||||||
Reinsurance ceded | - | (0.002 | ) | (0.002 | ) | (0.002 | ) | (0.002 | ) | NM | - | (0.002 | ) | NM | |||||||||||||||
Net indexed contract account values | $ | 8.680 | $ | 9.014 | $ | 9.419 | $ | 9.632 | $ | 9.873 | 13.7 | % | $ | 8.680 | $ | 9.873 | 13.7 | % | |||||||||||
Fixed Portion of Variable Contracts | |||||||||||||||||||||||||||||
Deposits | $ | 0.759 | $ | 0.661 | $ | 0.736 | $ | 0.740 | $ | 0.715 | -5.8 | % | $ | 3.167 | $ | 2.852 | -9.9 | % | |||||||||||
Withdrawals and deaths | (0.090 | ) | (0.089 | ) | (0.088 | ) | (0.082 | ) | (0.089 | ) | 1.1 | % | (0.389 | ) | (0.348 | ) | 10.5 | % | |||||||||||
Net flows | $ | 0.669 | $ | 0.572 | $ | 0.648 | $ | 0.658 | $ | 0.626 | -6.4 | % | $ | 2.778 | $ | 2.504 | -9.9 | % | |||||||||||
Gross fixed portion of variable contract account values | $ | 3.532 | $ | 3.304 | $ | 3.286 | $ | 3.366 | $ | 3.320 | -6.0 | % | $ | 3.532 | $ | 3.320 | -6.0 | % | |||||||||||
Reinsurance ceded | - | - | - | - | (0.001 | ) | NM | - | (0.001 | ) | NM | ||||||||||||||||||
Net fixed portion of variable contract account values | $ | 3.532 | $ | 3.304 | $ | 3.286 | $ | 3.366 | $ | 3.319 | -6.0 | % | $ | 3.532 | $ | 3.319 | -6.0 | % | |||||||||||
Variable Annuities, Including Fixed Portion of Variable Contracts | |||||||||||||||||||||||||||||
Deposits | $ | 2.194 | $ | 2.184 | $ | 2.356 | $ | 2.155 | $ | 2.028 | -7.6 | % | $ | 8.266 | $ | 8.723 | 5.5 | % | |||||||||||
Withdrawals and deaths | (1.544 | ) | (1.732 | ) | (1.790 | ) | (1.538 | ) | (1.555 | ) | -0.7 | % | (5.481 | ) | (6.615 | ) | -20.7 | % | |||||||||||
Net flows | $ | 0.650 | $ | 0.452 | $ | 0.566 | $ | 0.617 | $ | 0.473 | -27.2 | % | $ | 2.785 | $ | 2.108 | -24.3 | % | |||||||||||
Variable Contract Account Values | $ | 68.390 | $ | 71.091 | $ | 71.837 | $ | 64.140 | $ | 68.329 | -0.1 | % | $ | 68.390 | $ | 68.329 | -0.1 | % | |||||||||||
Average Daily Variable Annuity Separate Account Values | $ | 62.832 | $ | 66.459 | $ | 68.262 | $ | 65.169 | $ | 64.173 | 2.1 | % | $ | 58.188 | $ | 66.007 | 13.4 | % |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 19 | ||||||||||||||||||||||||||||
Annuities | |||||||||||||||||||||||||||||
Interest Rate Spread Information, GLB Expense Assessments, | |||||||||||||||||||||||||||||
GLB Attributed Fee and GLB Account Values by Type | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
(Basis Point) | (Basis Point) | ||||||||||||||||||||||||||||
Interest Rate Spread (1) | Change | Change | |||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses | 5.46 | % | 5.27 | % | 5.19 | % | 5.08 | % | 4.98 | % | (48 | ) | 5.50 | % | 5.13 | % | (37 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make whole premiums | 0.26 | % | 0.26 | % | 0.11 | % | 0.12 | % | 0.09 | % | (17 | ) | 0.13 | % | 0.14 | % | 1 | ||||||||||||
Alternative investments | 0.01 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | (1 | ) | 0.01 | % | 0.00 | % | (1 | ) | |||||||||||
Net investment income yield on reserves | 5.73 | % | 5.54 | % | 5.30 | % | 5.20 | % | 5.07 | % | (66 | ) | 5.64 | % | 5.27 | % | (37 | ) | |||||||||||
Interest rate credited to contract holders | 3.47 | % | 3.31 | % | 3.38 | % | 3.33 | % | 3.26 | % | (21 | ) | 3.52 | % | 3.33 | % | (19 | ) | |||||||||||
Interest rate spread | 2.26 | % | 2.23 | % | 1.92 | % | 1.87 | % | 1.81 | % | (45 | ) | 2.12 | % | 1.94 | % | (18 | ) | |||||||||||
Variable Annuity Expense Assessments (in millions) (2) | $ | 354.4 | $ | 365.7 | $ | 380.9 | $ | 381.2 | $ | 367.9 | 3.8 | % | $ | 1,288.0 | $ | 1,495.7 | 16.1 | % | |||||||||||
GLB Expense Assessments (in millions) (3) | $ | 76.5 | $ | 81.7 | $ | 86.8 | $ | 91.0 | $ | 94.2 | 23.1 | % | $ | 279.3 | $ | 353.7 | 26.6 | % | |||||||||||
Components of Attributed Fees on GLB (in millions) | |||||||||||||||||||||||||||||
Attributed fee included in operating revenues and income from operations (4) | $ | 26.6 | $ | 28.1 | $ | 29.4 | $ | 30.6 | $ | 31.2 | 17.3 | % | $ | 98.7 | $ | 119.3 | 20.9 | % | |||||||||||
Attributed fee excluded from operating revenues and income from operations (5) | 35.7 | 38.3 | 40.1 | 42.0 | 43.9 | 23.0 | % | 128.2 | 164.3 | 28.2 | % | ||||||||||||||||||
Total Attributed Fees on GLB | $ | 62.3 | $ | 66.4 | $ | 69.5 | $ | 72.6 | $ | 75.1 | 20.5 | % | $ | 226.9 | $ | 283.6 | 25.0 | % | |||||||||||
GLB Account Values by Type | |||||||||||||||||||||||||||||
Guaranteed withdrawal benefits (6) | $ | 30.339 | $ | 31.920 | $ | 32.606 | $ | 29.554 | $ | 31.786 | 4.8 | % | $ | 30.339 | $ | 31.786 | 4.8 | % | |||||||||||
Guaranteed income benefits (7) | 11.379 | 12.131 | 12.605 | 11.513 | 12.450 | 9.4 | % | 11.379 | 12.450 | 9.4 | % | ||||||||||||||||||
Total GLB Account Values | $ | 41.718 | $ | 44.051 | $ | 45.211 | $ | 41.067 | $ | 44.237 | 6.0 | % | $ | 41.718 | $ | 44.237 | 6.0 | % | |||||||||||
(1) | For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average invested | ||||||||||||||||||||||||||||
assets on reserves. We exclude net investment income earned on investments supporting statutory surplus, reverse repurchase agreement interest expense and inter- | |||||||||||||||||||||||||||||
segment cash management account interest expense from our yield and spread calculations. The average crediting rate is calculated using interest credited before DSI | |||||||||||||||||||||||||||||
amortization, plus the immediate annuity reserve change (included within benefits), divided by average fixed account values net of co-insured account values. Fixed | |||||||||||||||||||||||||||||
account values reinsured under modified co-insurance agreements are included in account values for this calculation since assets (and therefore margin) are retained | |||||||||||||||||||||||||||||
under these agreements. | |||||||||||||||||||||||||||||
(2) | Comprised of the variable annuity expense assessments included in the expense assessments line item on page 15 and the amounts presented in the components of | ||||||||||||||||||||||||||||
attributed fees on GLB, as described in note (4) and note (5) and disclosed above. | |||||||||||||||||||||||||||||
(3) | Comprised of the GLB expense assessments included in the expense assessments line item on page 15 and the amounts presented in the components of attributed fees | ||||||||||||||||||||||||||||
on GLB, as described in note (4) and note (5) and disclosed above. | |||||||||||||||||||||||||||||
(4) | Includes the risk/profit margin portion of the GLB attributed rider fees in operating realized gain (loss) and the amount reported in expense assessments. See note (2) on | ||||||||||||||||||||||||||||
page 6 for further discussion. | |||||||||||||||||||||||||||||
(5) | Includes the net valuation premium of the GLB attributed rider fees in excluded realized gain (loss). See note (6) on page 6 for further discussion. | ||||||||||||||||||||||||||||
(6) | Guaranteed withdrawal benefits include features that offer the contract holder a guarantee equal to the initial deposit (or contract value, if elected after issue), adjusted | ||||||||||||||||||||||||||||
for any subsequent purchase payments or withdrawals. | |||||||||||||||||||||||||||||
(7) | For our guaranteed income benefits, we offer other product riders allowing variable annuity contract holders access and control during the income distribution phase | ||||||||||||||||||||||||||||
of their contract. This added flexibility allows the contract holder to access the account value for transfers, additional withdrawals and other service features, such as | |||||||||||||||||||||||||||||
portfolio rebalancing. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 20 | ||||||||||||||||||||||||||||
Retirement Plan Services | |||||||||||||||||||||||||||||
Income (Loss) from Operations, Operational Data and DAC, VOBA and DSI Roll Forwards | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Operating Revenues | |||||||||||||||||||||||||||||
Surrender charges | $ | 0.7 | $ | 0.7 | $ | 0.7 | $ | 0.5 | $ | 0.4 | -42.9 | % | $ | 3.2 | $ | 2.3 | -28.1 | % | |||||||||||
Expense assessments | 52.3 | 53.9 | 54.7 | 50.5 | 48.7 | -6.9 | % | 197.5 | 207.8 | 5.2 | % | ||||||||||||||||||
Net investment income | 199.9 | 204.9 | 199.9 | 193.3 | 194.1 | -2.9 | % | 769.2 | 792.2 | 3.0 | % | ||||||||||||||||||
Operating realized gain (loss) (1) | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 | % | 0.4 | 0.4 | 0.0 | % | ||||||||||||||||||
Other revenues and fees (2) | 4.3 | 3.7 | 4.3 | 3.4 | 3.0 | -30.2 | % | 17.4 | 14.4 | -17.2 | % | ||||||||||||||||||
Total Operating Revenues | 257.3 | 263.3 | 259.7 | 247.8 | 246.3 | -4.3 | % | 987.7 | 1,017.1 | 3.0 | % | ||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||
Interest credited | 109.4 | 108.3 | 108.7 | 109.5 | 111.0 | 1.5 | % | 440.0 | 437.5 | -0.6 | % | ||||||||||||||||||
Benefits | 0.1 | - | - | 1.6 | - | -100.0 | % | 2.1 | 1.6 | -23.8 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses | 102.9 | 84.8 | 91.3 | 81.1 | 86.8 | -15.6 | % | 331.4 | 344.0 | 3.8 | % | ||||||||||||||||||
Total Operating Expenses | 212.4 | 193.1 | 200.0 | 192.2 | 197.8 | -6.9 | % | 773.5 | 783.1 | 1.2 | % | ||||||||||||||||||
Income (loss) from operations before federal income taxes | 44.9 | 70.2 | 59.7 | 55.6 | 48.5 | 8.0 | % | 214.2 | 234.0 | 9.2 | % | ||||||||||||||||||
Federal income tax expense (benefit) | 12.4 | 21.5 | 17.4 | 15.1 | 13.1 | 5.6 | % | 59.9 | 67.1 | 12.0 | % | ||||||||||||||||||
Income (Loss) from Operations | $ | 32.5 | $ | 48.7 | $ | 42.3 | $ | 40.5 | $ | 35.4 | 8.9 | % | $ | 154.3 | $ | 166.9 | 8.2 | % | |||||||||||
Effective Tax Rate | 27.6 | % | 30.6 | % | 29.1 | % | 27.2 | % | 27.0 | % | 28.0 | % | 28.7 | % | |||||||||||||||
Average Stockholders' Equity, Excluding AOCI | |||||||||||||||||||||||||||||
Average equity, including goodwill | $ | 1,047.8 | $ | 1,073.7 | $ | 1,060.8 | $ | 1,041.0 | $ | 1,035.9 | $ | 1,046.0 | $ | 1,052.9 | |||||||||||||||
Average goodwill | 20.2 | 20.2 | 20.2 | 20.2 | 20.2 | 20.2 | 20.2 | ||||||||||||||||||||||
Average equity, excluding goodwill | $ | 1,027.6 | $ | 1,053.5 | $ | 1,040.6 | $ | 1,020.8 | $ | 1,015.7 | $ | 1,025.8 | $ | 1,032.7 | |||||||||||||||
Return on Equity, Excluding AOCI | |||||||||||||||||||||||||||||
Including goodwill | 12.4 | % | 18.1 | % | 16.0 | % | 15.6 | % | 13.7 | % | 14.8 | % | 15.9 | % | |||||||||||||||
Excluding goodwill | 12.7 | % | 18.5 | % | 16.3 | % | 15.9 | % | 13.9 | % | 15.0 | % | 16.2 | % | |||||||||||||||
Income (Loss) from Operations - Basis Points on Average Account Values - Annualized | 34 | 49 | 42 | 42 | 37 | 3 | 42 | 43 | 1 | ||||||||||||||||||||
Operating Realized Gain (Loss) (1) | |||||||||||||||||||||||||||||
GLB (3) | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | 0.0 | % | $ | 0.4 | $ | 0.4 | 0.0 | % | |||||||||||
Total Operating Realized Gain (Loss) | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | 0.0 | % | $ | 0.4 | $ | 0.4 | 0.0 | % | |||||||||||
Underwriting, Acquisition, Insurance and Other Expenses | |||||||||||||||||||||||||||||
Commissions | $ | 17.2 | $ | 17.0 | $ | 16.9 | $ | 15.8 | $ | 17.4 | 1.2 | % | $ | 64.5 | $ | 67.1 | 4.0 | % | |||||||||||
General and administrative expenses | 71.3 | 63.3 | 71.4 | 65.4 | 73.3 | 2.8 | % | 241.9 | 273.4 | 13.0 | % | ||||||||||||||||||
Taxes, licenses and fees | 3.2 | 4.8 | 3.8 | 3.4 | 1.2 | -62.5 | % | 13.0 | 13.2 | 1.5 | % | ||||||||||||||||||
Total commissions and expenses incurred | 91.7 | 85.1 | 92.1 | 84.6 | 91.9 | 0.2 | % | 319.4 | 353.7 | 10.7 | % | ||||||||||||||||||
Less: commissions and expenses capitalized | (20.8 | ) | (16.5 | ) | (18.8 | ) | (15.6 | ) | (18.5 | ) | 11.1 | % | (66.8 | ) | (69.4 | ) | -3.9 | % | |||||||||||
Amortization of DAC and VOBA, net of interest | 32.0 | 16.2 | 18.0 | 12.1 | 13.4 | -58.1 | % | 78.8 | 59.7 | -24.2 | % | ||||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 102.9 | $ | 84.8 | $ | 91.3 | $ | 81.1 | $ | 86.8 | -15.6 | % | $ | 331.4 | $ | 344.0 | 3.8 | % | |||||||||||
General and Administrative Expenses - Basis Points on Average Account Values - Annualized (4) | 75 | 64 | 71 | 68 | 76 | 1 | 66 | 70 | 4 | ||||||||||||||||||||
DAC and VOBA | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 277.4 | $ | 359.9 | $ | 420.1 | $ | 394.5 | $ | 339.3 | $ | 537.7 | $ | 359.9 | |||||||||||||||
Deferrals | 20.8 | 16.5 | 18.8 | 15.6 | 18.5 | 66.8 | 69.4 | ||||||||||||||||||||||
Amortization, net of interest: | |||||||||||||||||||||||||||||
Unlocking | (8.2 | ) | 3.3 | (0.3 | ) | 5.6 | 2.6 | 4.1 | 11.2 | ||||||||||||||||||||
Amortization, net of interest, excluding unlocking | (23.8 | ) | (19.5 | ) | (17.7 | ) | (17.7 | ) | (16.0 | ) | (82.9 | ) | (70.9 | ) | |||||||||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | (11.2 | ) | 0.3 | 0.8 | 3.5 | 5.1 | (12.0 | ) | 9.7 | ||||||||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | - | - | - | 0.2 | (0.3 | ) | (0.4 | ) | (0.1 | ) | |||||||||||||||||||
Adjustment related to realized (gains) losses | 0.9 | - | (0.5 | ) | (0.6 | ) | 0.2 | 0.2 | (0.9 | ) | |||||||||||||||||||
Adjustment related to unrealized (gains) losses | 92.8 | 59.9 | (25.9 | ) | (58.3 | ) | (13.5 | ) | (165.6 | ) | (37.8 | ) | |||||||||||||||||
Balance as of End-of-Period | $ | 359.9 | $ | 420.1 | $ | 394.5 | $ | 339.3 | $ | 330.8 | $ | 359.9 | $ | 330.8 | |||||||||||||||
DSI | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 1.9 | $ | 2.0 | $ | 2.1 | $ | 2.0 | $ | 2.0 | $ | 2.7 | $ | 2.0 | |||||||||||||||
Deferrals | 0.1 | - | - | - | - | 0.2 | - | ||||||||||||||||||||||
Amortization, net of interest: | |||||||||||||||||||||||||||||
Unlocking | (0.2 | ) | 0.1 | - | 0.2 | - | (0.2 | ) | 0.3 | ||||||||||||||||||||
Amortization, net of interest, excluding unlocking | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.4 | ) | (0.4 | ) | |||||||||||||||
Deferrals, net of amortization included in operating interest credited | (0.2 | ) | - | (0.1 | ) | 0.1 | (0.1 | ) | (0.4 | ) | (0.1 | ) | |||||||||||||||||
Adjustment related to unrealized (gains) losses | 0.3 | 0.1 | - | (0.1 | ) | (0.2 | ) | (0.3 | ) | (0.2 | ) | ||||||||||||||||||
Balance as of End-of-Period | $ | 2.0 | $ | 2.1 | $ | 2.0 | $ | 2.0 | $ | 1.7 | $ | 2.0 | $ | 1.7 | |||||||||||||||
(1) | Included in income (loss) from operations. | ||||||||||||||||||||||||||||
(2) | Other revenues and fees consist primarily of mutual fund account program fees for mid-to-large employers. | ||||||||||||||||||||||||||||
(3) | See note (2) on page 6 for details. | ||||||||||||||||||||||||||||
(4) | Includes distribution costs. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 21 | ||||||||||||||||||||||||||||
Retirement Plan Services | |||||||||||||||||||||||||||||
Account Value Roll Forwards and Information | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Fixed Annuities (1) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 12.734 | $ | 12.779 | $ | 12.956 | $ | 13.025 | $ | 13.395 | 5.2 | % | $ | 12.246 | $ | 12.779 | 4.4 | % | |||||||||||
Gross deposits | 0.340 | 0.346 | 0.318 | 0.378 | 0.394 | 15.9 | % | 1.332 | 1.436 | 7.8 | % | ||||||||||||||||||
Withdrawals and deaths | (0.477 | ) | (0.336 | ) | (0.437 | ) | (0.356 | ) | (0.413 | ) | 13.4 | % | (1.679 | ) | (1.542 | ) | 8.2 | % | |||||||||||
Net flows | (0.137 | ) | 0.010 | (0.119 | ) | 0.022 | (0.019 | ) | 86.1 | % | (0.347 | ) | (0.106 | ) | 69.5 | % | |||||||||||||
Transfers from variable annuities | 0.072 | 0.060 | 0.080 | 0.237 | 0.142 | 97.2 | % | 0.440 | 0.519 | 18.0 | % | ||||||||||||||||||
Interest credited | 0.110 | 0.107 | 0.108 | 0.111 | 0.112 | 1.8 | % | 0.440 | 0.438 | -0.5 | % | ||||||||||||||||||
Balance as of End-of-Period | $ | 12.779 | $ | 12.956 | $ | 13.025 | $ | 13.395 | $ | 13.630 | 6.7 | % | $ | 12.779 | $ | 13.630 | 6.7 | % | |||||||||||
Variable Annuities (2) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 12.956 | $ | 13.927 | $ | 14.400 | $ | 14.254 | $ | 12.122 | -6.4 | % | $ | 12.953 | $ | 13.927 | 7.5 | % | |||||||||||
Gross deposits | 0.443 | 0.415 | 0.393 | 0.391 | 0.416 | -6.1 | % | 1.614 | 1.615 | 0.1 | % | ||||||||||||||||||
Withdrawals and deaths | (0.521 | ) | (0.587 | ) | (0.516 | ) | (0.511 | ) | (0.498 | ) | 4.4 | % | (2.158 | ) | (2.112 | ) | 2.1 | % | |||||||||||
Net flows | (0.078 | ) | (0.172 | ) | (0.123 | ) | (0.120 | ) | (0.082 | ) | -5.1 | % | (0.544 | ) | (0.497 | ) | 8.6 | % | |||||||||||
Transfers to fixed annuities | (0.021 | ) | (0.050 | ) | (0.040 | ) | (0.124 | ) | (0.069 | ) | NM | (0.169 | ) | (0.283 | ) | -67.5 | % | ||||||||||||
Investment increase and change in market value | 1.070 | 0.695 | 0.017 | (1.888 | ) | 0.896 | -16.3 | % | 1.687 | (0.280 | ) | NM | |||||||||||||||||
Balance as of End-of-Period | $ | 13.927 | $ | 14.400 | $ | 14.254 | $ | 12.122 | $ | 12.867 | -7.6 | % | $ | 13.927 | $ | 12.867 | -7.6 | % | |||||||||||
Total Annuities | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 25.690 | $ | 26.706 | $ | 27.356 | $ | 27.279 | $ | 25.517 | -0.7 | % | $ | 25.199 | $ | 26.706 | 6.0 | % | |||||||||||
Gross deposits | 0.783 | 0.761 | 0.711 | 0.769 | 0.810 | 3.4 | % | 2.946 | 3.051 | 3.6 | % | ||||||||||||||||||
Withdrawals and deaths | (0.998 | ) | (0.923 | ) | (0.953 | ) | (0.867 | ) | (0.911 | ) | 8.7 | % | (3.837 | ) | (3.654 | ) | 4.8 | % | |||||||||||
Net flows | (0.215 | ) | (0.162 | ) | (0.242 | ) | (0.098 | ) | (0.101 | ) | 53.0 | % | (0.891 | ) | (0.603 | ) | 32.3 | % | |||||||||||
Transfers between fixed and variable accounts | 0.051 | 0.010 | 0.040 | 0.113 | 0.073 | 43.1 | % | 0.271 | 0.236 | -12.9 | % | ||||||||||||||||||
Interest credited and change in market value | 1.180 | 0.802 | 0.125 | (1.777 | ) | 1.008 | -14.6 | % | 2.127 | 0.158 | -92.6 | % | |||||||||||||||||
Balance as of End-of-Period | $ | 26.706 | $ | 27.356 | $ | 27.279 | $ | 25.517 | $ | 26.497 | -0.8 | % | $ | 26.706 | $ | 26.497 | -0.8 | % | |||||||||||
Alliance and Smart Future Mutual Funds (3) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 11.398 | $ | 12.118 | $ | 12.952 | $ | 13.008 | $ | 11.503 | 0.9 | % | $ | 10.103 | $ | 12.118 | 19.9 | % | |||||||||||
Plan/participant rollovers | 0.188 | 0.097 | 0.061 | 0.277 | 0.369 | 96.3 | % | 0.705 | 0.804 | 14.0 | % | ||||||||||||||||||
Additional contributions | 0.387 | 0.483 | 0.427 | 0.410 | 0.391 | 1.0 | % | 1.650 | 1.711 | 3.7 | % | ||||||||||||||||||
Gross deposits | 0.575 | 0.580 | 0.488 | 0.687 | 0.760 | 32.2 | % | 2.355 | 2.515 | 6.8 | % | ||||||||||||||||||
Withdrawals and deaths | (0.664 | ) | (0.284 | ) | (0.424 | ) | (0.260 | ) | (0.440 | ) | 33.7 | % | (1.755 | ) | (1.408 | ) | 19.8 | % | |||||||||||
Net flows | (0.089 | ) | 0.296 | 0.064 | 0.427 | 0.320 | NM | 0.600 | 1.107 | 84.5 | % | ||||||||||||||||||
Transfers | (0.058 | ) | (0.037 | ) | (0.057 | ) | (0.132 | ) | (0.073 | ) | -25.9 | % | (0.251 | ) | (0.299 | ) | -19.1 | % | |||||||||||
Other (4) | - | - | - | - | - | NM | 0.186 | - | -100.0 | % | |||||||||||||||||||
Interest credited and change in market value | 0.867 | 0.575 | 0.049 | (1.800 | ) | 0.886 | 2.2 | % | 1.480 | (0.290 | ) | NM | |||||||||||||||||
Balance as of End-of-Period | $ | 12.118 | $ | 12.952 | $ | 13.008 | $ | 11.503 | $ | 12.636 | 4.3 | % | $ | 12.118 | $ | 12.636 | 4.3 | % | |||||||||||
Total Annuities and Mutual Funds | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 37.088 | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | -0.2 | % | $ | 35.302 | $ | 38.824 | 10.0 | % | |||||||||||
Gross deposits | 1.358 | 1.341 | 1.199 | 1.456 | 1.570 | 15.6 | % | 5.301 | 5.566 | 5.0 | % | ||||||||||||||||||
Withdrawals and deaths | (1.662 | ) | (1.207 | ) | (1.377 | ) | (1.127 | ) | (1.351 | ) | 18.7 | % | (5.592 | ) | (5.062 | ) | 9.5 | % | |||||||||||
Net flows | (0.304 | ) | 0.134 | (0.178 | ) | 0.329 | 0.219 | 172.0 | % | (0.291 | ) | 0.504 | 273.2 | % | |||||||||||||||
Transfers | (0.007 | ) | (0.027 | ) | (0.017 | ) | (0.019 | ) | - | 100.0 | % | 0.020 | (0.063 | ) | NM | ||||||||||||||
Other (4) | - | - | - | - | - | NM | 0.186 | - | -100.0 | % | |||||||||||||||||||
Interest credited and change in market value | 2.047 | 1.377 | 0.174 | (3.577 | ) | 1.894 | -7.5 | % | 3.607 | (0.132 | ) | NM | |||||||||||||||||
Balance as of End-of-Period | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | $ | 39.133 | 0.8 | % | $ | 38.824 | $ | 39.133 | 0.8 | % | |||||||||||
Variable Annuities Under Agreement - Included Above | $ | 0.010 | $ | 0.010 | $ | 0.010 | $ | 0.008 | $ | 0.009 | -10.0 | % | $ | 0.010 | $ | 0.009 | -10.0 | % | |||||||||||
(1) | Includes fixed annuity products offered under our mutual fund products and the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(2) | Excludes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(3) | Includes mutual fund account values and other third party trustee-held assets. These items are not included in the separate accounts reported on our Consolidated | ||||||||||||||||||||||||||||
Balance Sheets, as we do not have any ownership interest in them. | |||||||||||||||||||||||||||||
(4) | Represents LINCOLN ALLIANCE® program assets held by a third-party trustee that were not previously included in the account value roll forward. Effective | ||||||||||||||||||||||||||||
January 1, 2010, all such LINCOLN ALLIANCE® program activity was included in the account value roll forward. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 22 | ||||||||||||||||||||||||||||
Retirement Plan Services | |||||||||||||||||||||||||||||
Account Value Roll Forwards by Product | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Total Micro - Small Segment | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 5.954 | $ | 6.396 | $ | 6.594 | $ | 6.566 | $ | 5.856 | -1.6 | % | $ | 5.863 | $ | 6.396 | 9.1 | % | |||||||||||
Gross deposits | 0.358 | 0.326 | 0.315 | 0.312 | 0.348 | -2.8 | % | 1.242 | 1.301 | 4.8 | % | ||||||||||||||||||
Withdrawals and deaths | (0.330 | ) | (0.384 | ) | (0.325 | ) | (0.336 | ) | (0.357 | ) | -8.2 | % | (1.377 | ) | (1.402 | ) | -1.8 | % | |||||||||||
Net flows | 0.028 | (0.058 | ) | (0.010 | ) | (0.024 | ) | (0.009 | ) | NM | (0.135 | ) | (0.101 | ) | 25.2 | % | |||||||||||||
Transfers between fixed and variable accounts | 0.006 | (0.006 | ) | - | - | 0.011 | 83.3 | % | 0.004 | 0.005 | 25.0 | % | |||||||||||||||||
Investment increase and change in market value | 0.408 | 0.262 | (0.018 | ) | (0.686 | ) | 0.303 | -25.7 | % | 0.664 | (0.139 | ) | NM | ||||||||||||||||
Balance as of End-of-Period | $ | 6.396 | $ | 6.594 | $ | 6.566 | $ | 5.856 | $ | 6.161 | -3.7 | % | $ | 6.396 | $ | 6.161 | -3.7 | % | |||||||||||
Total Mid - Large Segment | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 15.398 | $ | 16.207 | $ | 17.224 | $ | 17.333 | $ | 16.106 | 4.6 | % | $ | 13.653 | $ | 16.207 | 18.7 | % | |||||||||||
Gross deposits | 0.819 | 0.831 | 0.704 | 0.969 | 1.059 | 29.3 | % | 3.308 | 3.563 | 7.7 | % | ||||||||||||||||||
Withdrawals and deaths | (0.895 | ) | (0.398 | ) | (0.657 | ) | (0.408 | ) | (0.632 | ) | 29.4 | % | (2.558 | ) | (2.095 | ) | 18.1 | % | |||||||||||
Net flows | (0.076 | ) | 0.433 | 0.047 | 0.561 | 0.427 | NM | 0.750 | 1.468 | 95.7 | % | ||||||||||||||||||
Transfers between fixed and variable accounts | (0.013 | ) | (0.021 | ) | (0.017 | ) | (0.019 | ) | (0.011 | ) | 15.4 | % | 0.016 | (0.068 | ) | NM | |||||||||||||
Other (1) | - | - | - | - | - | NM | 0.186 | - | -100.0 | % | |||||||||||||||||||
Investment increase and change in market value | 0.898 | 0.605 | 0.079 | (1.769 | ) | 0.919 | 2.3 | % | 1.602 | (0.166 | ) | NM | |||||||||||||||||
Balance as of End-of-Period | $ | 16.207 | $ | 17.224 | $ | 17.333 | $ | 16.106 | $ | 17.441 | 7.6 | % | $ | 16.207 | $ | 17.441 | 7.6 | % | |||||||||||
Total Multi-Fund® and Other Variable Annuities | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 15.736 | $ | 16.221 | $ | 16.490 | $ | 16.388 | $ | 15.058 | -4.3 | % | $ | 15.786 | $ | 16.221 | 2.8 | % | |||||||||||
Gross deposits | 0.181 | 0.184 | 0.180 | 0.175 | 0.163 | -9.9 | % | 0.751 | 0.702 | -6.5 | % | ||||||||||||||||||
Withdrawals and deaths | (0.437 | ) | (0.425 | ) | (0.395 | ) | (0.383 | ) | (0.362 | ) | 17.2 | % | (1.657 | ) | (1.565 | ) | 5.6 | % | |||||||||||
Net flows | (0.256 | ) | (0.241 | ) | (0.215 | ) | (0.208 | ) | (0.199 | ) | 22.3 | % | (0.906 | ) | (0.863 | ) | 4.7 | % | |||||||||||
Investment increase and change in market value | 0.741 | 0.510 | 0.113 | (1.122 | ) | 0.672 | -9.3 | % | 1.341 | 0.173 | -87.1 | % | |||||||||||||||||
Balance as of End-of-Period | $ | 16.221 | $ | 16.490 | $ | 16.388 | $ | 15.058 | $ | 15.531 | -4.3 | % | $ | 16.221 | $ | 15.531 | -4.3 | % | |||||||||||
Total Annuities and Mutual Funds (2) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 37.088 | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | -0.2 | % | $ | 35.302 | $ | 38.824 | 10.0 | % | |||||||||||
Gross deposits | 1.358 | 1.341 | 1.199 | 1.456 | 1.570 | 15.6 | % | 5.301 | 5.566 | 5.0 | % | ||||||||||||||||||
Withdrawals and deaths | (1.662 | ) | (1.207 | ) | (1.377 | ) | (1.127 | ) | (1.351 | ) | 18.7 | % | (5.592 | ) | (5.062 | ) | 9.5 | % | |||||||||||
Net flows | (0.304 | ) | 0.134 | (0.178 | ) | 0.329 | 0.219 | 172.0 | % | (0.291 | ) | 0.504 | 273.2 | % | |||||||||||||||
Transfers between fixed and variable accounts | (0.007 | ) | (0.027 | ) | (0.017 | ) | (0.019 | ) | - | 100.0 | % | 0.020 | (0.063 | ) | NM | ||||||||||||||
Other (1) | - | - | - | - | - | NM | 0.186 | - | -100.0 | % | |||||||||||||||||||
Investment increase and change in market value | 2.047 | 1.377 | 0.174 | (3.577 | ) | 1.894 | -7.5 | % | 3.607 | (0.132 | ) | NM | |||||||||||||||||
Balance as of End-of-Period | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | $ | 39.133 | 0.8 | % | $ | 38.824 | $ | 39.133 | 0.8 | % | |||||||||||
(1) | Represents LINCOLN ALLIANCE® program assets held by a third-party trustee that were not previously included in the account value roll forward. | ||||||||||||||||||||||||||||
Effective January 1, 2010, all such LINCOLN ALLIANCE® program activity was included in the account value roll forward. | |||||||||||||||||||||||||||||
(2) | Includes mutual fund account values and other third party trustee-held assets. These items are not included in the separate accounts reported on our | ||||||||||||||||||||||||||||
Consolidated Balance Sheets, as we do not have any ownership interest in them. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 23 | ||||||||||||||||||||||||||||
Retirement Plan Services | |||||||||||||||||||||||||||||
Account Value and Interest Rate Spread Information | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Fixed Annuities, Excluding Fixed Portion of Variable Contracts | |||||||||||||||||||||||||||||
Deposits | $ | 0.259 | $ | 0.269 | $ | 0.233 | $ | 0.301 | $ | 0.314 | 21.2 | % | $ | 1.017 | $ | 1.117 | 9.8 | % | |||||||||||
Withdrawals and deaths | (0.300 | ) | (0.160 | ) | (0.285 | ) | (0.194 | ) | (0.251 | ) | 16.3 | % | (1.010 | ) | (0.890 | ) | 11.9 | % | |||||||||||
Net flows | $ | (0.041 | ) | $ | 0.109 | $ | (0.052 | ) | $ | 0.107 | $ | 0.063 | 253.7 | % | $ | 0.007 | $ | 0.227 | NM | ||||||||||
Fixed Contract Account Values | $ | 6.629 | $ | 6.807 | $ | 6.847 | $ | 7.122 | $ | 7.301 | 10.1 | % | $ | 6.629 | $ | 7.301 | 10.1 | % | |||||||||||
Fixed Portion of Variable Contracts | |||||||||||||||||||||||||||||
Deposits | $ | 0.081 | $ | 0.077 | $ | 0.085 | $ | 0.077 | $ | 0.080 | -1.2 | % | $ | 0.315 | $ | 0.319 | 1.3 | % | |||||||||||
Withdrawals and deaths | (0.177 | ) | (0.176 | ) | (0.152 | ) | (0.162 | ) | (0.162 | ) | 8.5 | % | (0.669 | ) | (0.652 | ) | 2.5 | % | |||||||||||
Net flows | $ | (0.096 | ) | $ | (0.099 | ) | $ | (0.067 | ) | $ | (0.085 | ) | $ | (0.082 | ) | 14.6 | % | $ | (0.354 | ) | $ | (0.333 | ) | 5.9 | % | ||||
Fixed Portion of Variable Contract Account Values | $ | 6.150 | $ | 6.149 | $ | 6.178 | $ | 6.273 | $ | 6.329 | 2.9 | % | $ | 6.150 | $ | 6.329 | 2.9 | % | |||||||||||
Variable Annuities, Including Fixed Portion of Variable Contracts | |||||||||||||||||||||||||||||
Deposits | $ | 0.524 | $ | 0.492 | $ | 0.478 | $ | 0.468 | $ | 0.496 | -5.3 | % | $ | 1.929 | $ | 1.934 | 0.3 | % | |||||||||||
Withdrawals and deaths | (0.698 | ) | (0.763 | ) | (0.668 | ) | (0.673 | ) | (0.660 | ) | 5.4 | % | (2.827 | ) | (2.764 | ) | 2.2 | % | |||||||||||
Net flows | $ | (0.174 | ) | $ | (0.271 | ) | $ | (0.190 | ) | $ | (0.205 | ) | $ | (0.164 | ) | 5.7 | % | $ | (0.898 | ) | $ | (0.830 | ) | 7.6 | % | ||||
Variable Contract Account Values | $ | 20.077 | $ | 20.549 | $ | 20.432 | $ | 18.395 | $ | 19.196 | -4.4 | % | $ | 20.077 | $ | 19.196 | -4.4 | % | |||||||||||
Average Daily Variable Annuity Separate Account Values | $ | 13.485 | $ | 14.178 | $ | 14.284 | $ | 13.217 | $ | 12.783 | -5.2 | % | $ | 12.930 | $ | 13.611 | 5.3 | % | |||||||||||
(Basis Point) | (Basis Point) | ||||||||||||||||||||||||||||
Interest Rate Spread (1) | Change | Change | |||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses | 5.68 | % | 5.61 | % | 5.55 | % | 5.53 | % | 5.40 | % | (28 | ) | 5.70 | % | 5.53 | % | (17 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make whole premiums | 0.20 | % | 0.35 | % | 0.23 | % | 0.04 | % | 0.05 | % | (15 | ) | 0.08 | % | 0.16 | % | 8 | ||||||||||||
Alternative investments | 0.04 | % | 0.03 | % | 0.01 | % | 0.00 | % | 0.01 | % | (3 | ) | 0.02 | % | 0.01 | % | (1 | ) | |||||||||||
Net investment income yield on reserves | 5.92 | % | 5.99 | % | 5.79 | % | 5.57 | % | 5.46 | % | (46 | ) | 5.80 | % | 5.70 | % | (10 | ) | |||||||||||
Interest rate credited to contract holders | 3.42 | % | 3.36 | % | 3.34 | % | 3.31 | % | 3.28 | % | (14 | ) | 3.49 | % | 3.32 | % | (17 | ) | |||||||||||
Interest rate spread | 2.50 | % | 2.63 | % | 2.45 | % | 2.26 | % | 2.18 | % | (32 | ) | 2.31 | % | 2.38 | % | 7 | ||||||||||||
(1) | For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average | ||||||||||||||||||||||||||||
invested assets on reserves. We exclude net investment income earned on investments supporting statutory surplus from our spread calculations. The | |||||||||||||||||||||||||||||
average crediting rate is calculated as interest credited before DSI amortization, plus the immediate annuity reserve change (included within benefits), divided | |||||||||||||||||||||||||||||
by the average fixed account values, including the fixed portion of variable annuities. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 24 | |||||||||||||||||||||||||||
Life Insurance | ||||||||||||||||||||||||||||
Income (Loss) from Operations, Operational Data and DAC, VOBA and DFEL Roll Forwards | ||||||||||||||||||||||||||||
Unaudited (in millions) | ||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | |||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | ||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | ||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||||||
Insurance premiums | $ | 112.1 | $ | 108.1 | $ | 112.0 | $ | 103.9 | $ | 117.1 | 4.5 | % | $ | 439.4 | $ | 441.1 | 0.4 | % | ||||||||||
Surrender charges | 22.6 | 23.0 | 29.6 | 20.9 | 22.8 | 0.9 | % | 100.0 | 96.3 | -3.7 | % | |||||||||||||||||
Mortality assessments | 324.3 | 324.7 | 326.7 | 335.0 | 325.1 | 0.2 | % | 1,287.4 | 1,311.5 | 1.9 | % | |||||||||||||||||
Expense assessments | 183.1 | 104.7 | 166.7 | 142.2 | 157.1 | -14.2 | % | 546.7 | 570.7 | 4.4 | % | |||||||||||||||||
Net investment income | 567.9 | 579.1 | 588.0 | 568.7 | 558.1 | -1.7 | % | 2,185.8 | 2,293.9 | 4.9 | % | |||||||||||||||||
Other revenues and fees | 7.4 | 7.4 | 5.9 | 5.4 | 6.6 | -10.8 | % | 30.3 | 25.3 | -16.5 | % | |||||||||||||||||
Total Operating Revenues | 1,217.4 | 1,147.0 | 1,228.9 | 1,176.1 | 1,186.8 | -2.5 | % | 4,589.6 | 4,738.8 | 3.3 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Interest credited | 302.9 | 302.1 | 307.5 | 311.9 | 313.5 | 3.5 | % | 1,198.8 | 1,235.0 | 3.0 | % | |||||||||||||||||
Benefits | 400.7 | 447.2 | 609.4 | 152.5 | 460.1 | 14.8 | % | 1,734.1 | 1,669.2 | -3.7 | % | |||||||||||||||||
Underwriting, acquisition, insurance and other expenses | 267.8 | 150.3 | 86.0 | 526.7 | 184.6 | -31.1 | % | 907.7 | 947.6 | 4.4 | % | |||||||||||||||||
Total Operating Expenses | 971.4 | 899.6 | 1,002.9 | 991.1 | 958.2 | -1.4 | % | 3,840.6 | 3,851.8 | 0.3 | % | |||||||||||||||||
Income (loss) from operations before federal income taxes | 246.0 | 247.4 | 226.0 | 185.0 | 228.6 | -7.1 | % | 749.0 | 887.0 | 18.4 | % | |||||||||||||||||
Federal income tax expense (benefit) | 80.5 | 81.1 | 73.6 | 53.4 | 74.6 | -7.3 | % | 235.7 | 282.7 | 19.9 | % | |||||||||||||||||
Income (Loss) from Operations | $ | 165.5 | $ | 166.3 | $ | 152.4 | $ | 131.6 | $ | 154.0 | -6.9 | % | $ | 513.3 | $ | 604.3 | 17.7 | % | ||||||||||
Effective Tax Rate | 32.7 | % | 32.8 | % | 32.6 | % | 28.9 | % | 32.6 | % | 31.5 | % | 31.9 | % | ||||||||||||||
Average Stockholders' Equity, Excluding AOCI | ||||||||||||||||||||||||||||
Average equity, including goodwill | $ | 8,403.4 | $ | 8,445.6 | $ | 8,557.8 | $ | 8,550.1 | $ | 8,188.3 | $ | 8,374.1 | $ | 8,435.5 | ||||||||||||||
Average goodwill | 2,188.5 | 2,188.5 | 2,188.5 | 2,188.5 | 1,863.5 | 2,188.5 | 2,107.3 | |||||||||||||||||||||
Average equity, excluding goodwill | $ | 6,214.9 | $ | 6,257.1 | $ | 6,369.3 | $ | 6,361.6 | $ | 6,324.8 | $ | 6,185.6 | $ | 6,328.2 | ||||||||||||||
Return on Equity, Excluding AOCI | ||||||||||||||||||||||||||||
Including goodwill | 7.9 | % | 7.9 | % | 7.1 | % | 6.2 | % | 7.5 | % | 6.1 | % | 7.2 | % | ||||||||||||||
Excluding goodwill | 10.7 | % | 10.6 | % | 9.6 | % | 8.3 | % | 9.7 | % | 8.3 | % | 9.5 | % | ||||||||||||||
Underwriting, Acquisition, Insurance and Other Expenses | ||||||||||||||||||||||||||||
Commissions | $ | 190.4 | $ | 172.7 | $ | 166.4 | $ | 160.7 | $ | 178.7 | -6.1 | % | $ | 664.2 | $ | 678.5 | 2.2 | % | ||||||||||
General and administrative expenses | 132.4 | 112.8 | 114.1 | 116.3 | 130.2 | -1.7 | % | 451.3 | 473.4 | 4.9 | % | |||||||||||||||||
Expenses associated with reserve financing | 12.1 | 13.8 | 14.4 | 13.9 | 15.3 | 26.4 | % | 37.2 | 57.4 | 54.3 | % | |||||||||||||||||
Taxes, licenses and fees | 37.6 | 36.1 | 34.0 | 39.7 | 34.0 | -9.6 | % | 128.1 | 143.8 | 12.3 | % | |||||||||||||||||
Amortization of sales force intangibles | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 | 0.0 | % | 4.0 | 4.0 | 0.0 | % | |||||||||||||||||
Total commissions and expenses incurred | 373.5 | 336.4 | 329.9 | 331.6 | 359.2 | -3.8 | % | 1,284.8 | 1,357.1 | 5.6 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (270.7 | ) | (234.4 | ) | (232.3 | ) | (223.3 | ) | (257.6 | ) | 4.8 | % | (914.9 | ) | (947.6 | ) | -3.6 | % | ||||||||||
Amortization of DAC and VOBA, net of interest | 165.0 | 48.3 | (11.6 | ) | 418.4 | 83.0 | -49.7 | % | 537.8 | 538.1 | 0.1 | % | ||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 267.8 | $ | 150.3 | $ | 86.0 | $ | 526.7 | $ | 184.6 | -31.1 | % | $ | 907.7 | $ | 947.6 | 4.4 | % | ||||||||||
General and Administrative Expenses - Basis Points on Average Account Values - Annualized | 160 | 133 | 134 | 135 | 149 | (10 | ) | 140 | 138 | (2 | ) | |||||||||||||||||
DAC and VOBA | ||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 5,538.6 | $ | 6,144.8 | $ | 6,349.3 | $ | 6,401.3 | $ | 5,332.3 | $ | 6,427.9 | $ | 6,144.8 | ||||||||||||||
Business acquired through reinsurance | - | - | - | 1.7 | 10.6 | - | 12.3 | |||||||||||||||||||||
Deferrals | 270.7 | 234.4 | 232.3 | 223.3 | 257.6 | 914.9 | 947.6 | |||||||||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||||||||
Unlocking | (14.2 | ) | 77.5 | 146.5 | (295.8 | ) | 63.7 | (1.8 | ) | (8.1 | ) | |||||||||||||||||
Other amortization, net of interest, excluding unlocking | (150.8 | ) | (125.8 | ) | (134.9 | ) | (122.6 | ) | (146.7 | ) | (536.0 | ) | (530.0 | ) | ||||||||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 105.7 | 186.1 | 243.9 | (195.1 | ) | 174.6 | 377.1 | 409.5 | ||||||||||||||||||||
Adjustment related to realized (gains) losses | (23.0 | ) | (17.3 | ) | (10.9 | ) | 3.5 | (0.7 | ) | (1.9 | ) | (25.4 | ) | |||||||||||||||
Adjustment related to unrealized (gains) losses | 523.5 | 35.7 | (181.0 | ) | (879.1 | ) | (169.0 | ) | (658.3 | ) | (1,193.4 | ) | ||||||||||||||||
Balance as of End-of-Period | $ | 6,144.8 | $ | 6,349.3 | $ | 6,401.3 | $ | 5,332.3 | $ | 5,347.8 | $ | 6,144.8 | $ | 5,347.8 | ||||||||||||||
DFEL | ||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 1,091.4 | $ | 1,279.9 | $ | 1,405.6 | $ | 1,446.9 | $ | 1,088.4 | $ | 1,155.2 | $ | 1,279.9 | ||||||||||||||
Deferrals | 116.6 | 125.9 | 115.7 | 118.7 | 122.3 | 471.7 | 482.6 | |||||||||||||||||||||
Amortization, net of interest: | ||||||||||||||||||||||||||||
Unlocking | (15.4 | ) | 30.9 | (10.3 | ) | 10.7 | 8.3 | (24.3 | ) | 39.6 | ||||||||||||||||||
Other amortization, net of interest, excluding unlocking | (40.7 | ) | (30.5 | ) | (39.1 | ) | (41.8 | ) | (47.6 | ) | (150.4 | ) | (159.0 | ) | ||||||||||||||
Deferrals, net of amortization included in operating expense assessments | 60.5 | 126.3 | 66.3 | 87.6 | 83.0 | 297.0 | 363.2 | |||||||||||||||||||||
Adjustment related to realized (gains) losses | (5.3 | ) | (2.0 | ) | (1.4 | ) | 0.5 | (0.2 | ) | (0.3 | ) | (3.1 | ) | |||||||||||||||
Adjustment related to unrealized (gains) losses | 133.3 | 1.4 | (23.6 | ) | (446.6 | ) | (65.5 | ) | (172.0 | ) | (534.3 | ) | ||||||||||||||||
Balance as of End-of-Period | $ | 1,279.9 | $ | 1,405.6 | $ | 1,446.9 | $ | 1,088.4 | $ | 1,105.7 | $ | 1,279.9 | $ | 1,105.7 |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 25 | ||||||||||||||||||||||||||||
Life Insurance | |||||||||||||||||||||||||||||
Additional Operational Data | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Sales by Product (in millions) | |||||||||||||||||||||||||||||
UL | |||||||||||||||||||||||||||||
Excluding MoneyGuard® | $ | 107.1 | $ | 84.9 | $ | 82.9 | $ | 74.2 | $ | 74.9 | -30.1 | % | $ | 352.7 | $ | 316.9 | -10.2 | % | |||||||||||
MoneyGuard® | 40.5 | 34.3 | 38.5 | 48.0 | 65.4 | 61.5 | % | 108.5 | 186.2 | 71.6 | % | ||||||||||||||||||
Total | 147.6 | 119.2 | 121.4 | 122.2 | 140.3 | -4.9 | % | 461.2 | 503.1 | 9.1 | % | ||||||||||||||||||
VUL | 14.8 | 10.0 | 11.4 | 12.8 | 16.2 | 9.5 | % | 43.0 | 50.4 | 17.2 | % | ||||||||||||||||||
COLI and BOLI (1) | 28.0 | 17.0 | 10.0 | 7.5 | 57.1 | 103.9 | % | 62.9 | 91.6 | 45.6 | % | ||||||||||||||||||
Term | 15.4 | 12.8 | 14.1 | 12.4 | 15.2 | -1.3 | % | 69.5 | 54.5 | -21.6 | % | ||||||||||||||||||
Total | $ | 205.8 | $ | 159.0 | $ | 156.9 | $ | 154.9 | $ | 228.8 | 11.2 | % | $ | 636.6 | $ | 699.6 | 9.9 | % | |||||||||||
First Year Paid Premiums (in millions) | |||||||||||||||||||||||||||||
UL | |||||||||||||||||||||||||||||
Excluding MoneyGuard® | $ | 339.2 | $ | 301.8 | $ | 300.9 | $ | 286.0 | $ | 251.0 | -26.0 | % | $ | 1,068.7 | $ | 1,139.7 | 6.6 | % | |||||||||||
MoneyGuard® | 259.9 | 225.8 | 251.2 | 313.0 | 427.0 | 64.3 | % | 713.6 | 1,217.0 | 70.5 | % | ||||||||||||||||||
Total | 599.1 | 527.6 | 552.1 | 599.0 | 678.0 | 13.2 | % | 1,782.3 | 2,356.7 | 32.2 | % | ||||||||||||||||||
VUL | 37.5 | 24.2 | 32.0 | 33.0 | 37.9 | 1.1 | % | 108.2 | 127.1 | 17.5 | % | ||||||||||||||||||
COLI and BOLI (1) | 164.0 | 40.3 | 21.5 | 27.5 | 62.9 | -61.6 | % | 259.5 | 152.2 | -41.3 | % | ||||||||||||||||||
Term | 15.4 | 12.8 | 14.1 | 12.4 | 15.2 | -1.3 | % | 69.5 | 54.5 | -21.6 | % | ||||||||||||||||||
Total | $ | 816.0 | $ | 604.9 | $ | 619.7 | $ | 671.9 | $ | 794.0 | -2.7 | % | $ | 2,219.5 | $ | 2,690.5 | 21.2 | % | |||||||||||
Life Insurance In Force | |||||||||||||||||||||||||||||
UL and other | $ | 297.837 | $ | 299.920 | $ | 302.205 | $ | 304.475 | $ | 307.900 | 3.4 | % | $ | 297.837 | $ | 307.900 | 3.4 | % | |||||||||||
Term insurance | 265.154 | 266.764 | 268.520 | 269.969 | 271.931 | 2.6 | % | 265.154 | 271.931 | 2.6 | % | ||||||||||||||||||
Total | $ | 562.991 | $ | 566.684 | $ | 570.725 | $ | 574.444 | $ | 579.831 | 3.0 | % | $ | 562.991 | $ | 579.831 | 3.0 | % | |||||||||||
(Basis Point) | (Basis Point) | ||||||||||||||||||||||||||||
Interest-Sensitive Products Interest Rate Spreads(2) | Change | Change | |||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses (3) | 5.84 | % | 5.91 | % | 5.82 | % | 5.74 | % | 5.71 | % | (13 | ) | 5.87 | % | 5.79 | % | (8 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make-whole premiums | 0.21 | % | 0.04 | % | 0.14 | % | 0.06 | % | 0.03 | % | (18 | ) | 0.09 | % | 0.07 | % | (2 | ) | |||||||||||
Alternative investments | 0.18 | % | 0.32 | % | 0.29 | % | 0.16 | % | 0.00 | % | (18 | ) | 0.17 | % | 0.19 | % | 2 | ||||||||||||
Net investment income yield on reserves | 6.23 | % | 6.27 | % | 6.25 | % | 5.96 | % | 5.74 | % | (49 | ) | 6.13 | % | 6.05 | % | (8 | ) | |||||||||||
Interest rate credited to contract holders | 4.14 | % | 4.09 | % | 4.09 | % | 4.10 | % | 4.05 | % | (9 | ) | 4.16 | % | 4.08 | % | (8 | ) | |||||||||||
Interest rate spread | 2.09 | % | 2.18 | % | 2.16 | % | 1.86 | % | 1.69 | % | (40 | ) | 1.97 | % | 1.97 | % | - | ||||||||||||
Traditional Products Interest Rate Spreads(4) | |||||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses | 6.17 | % | 5.89 | % | 6.00 | % | 5.90 | % | 5.81 | % | (36 | ) | 6.12 | % | 5.90 | % | (22 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make-whole premiums | 0.12 | % | 0.10 | % | 0.00 | % | 0.03 | % | 0.01 | % | (11 | ) | 0.07 | % | 0.03 | % | (4 | ) | |||||||||||
Alternative investments | 0.03 | % | 0.02 | % | 0.00 | % | 0.00 | % | 0.01 | % | (2 | ) | 0.02 | % | 0.01 | % | (1 | ) | |||||||||||
Net investment income yield on reserves | 6.32 | % | 6.01 | % | 6.00 | % | 5.93 | % | 5.83 | % | (49 | ) | 6.21 | % | 5.94 | % | (27 | ) | |||||||||||
(1) | COLI and BOLI are interest-sensitive and contain both UL and VUL products. | ||||||||||||||||||||||||||||
(2) | For the interest-sensitive life products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. | ||||||||||||||||||||||||||||
We exclude net investment income earned on investments supporting statutory surplus and reverse repurchase agreement interest expense from our yield and spread calculations. The | |||||||||||||||||||||||||||||
average crediting rate is calculated using interest credited on life products divided by average fixed account values. | |||||||||||||||||||||||||||||
(3) | Our yields on net investment income have been lowered due to holding higher cash balances related to our short-term liquidity strategy during recent volatile markets. The increased | ||||||||||||||||||||||||||||
cash and short-term investment balances for the three months ended December 31, 2010 and March 31, 2011 reduced our yields by approximately 1 bp and 2 bps, respectively. | |||||||||||||||||||||||||||||
There was no impact for the three months ended June 30, 2011, September 30, 2011 and December 31, 2011, or the year ended December 31, 2011. | |||||||||||||||||||||||||||||
(4) | For the traditional life products, the yield on earning assets is calculated as net investment income on traditional investment portfolios divided by average earning assets. As of December | ||||||||||||||||||||||||||||
31, 2011, interest-sensitive products represented approximately 89% of total interest-sensitive and traditional earning assets. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 26 | ||||||||||||||||||||||||||||
Life Insurance | |||||||||||||||||||||||||||||
Account Value Roll Forwards | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Interest-Sensitive Life (1) | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 28.794 | $ | 29.365 | $ | 29.739 | $ | 30.148 | $ | 30.638 | 6.4 | % | $ | 28.192 | $ | 29.365 | 4.2 | % | |||||||||||
Deposits | 1.324 | 1.085 | 1.126 | 1.165 | 1.297 | -2.0 | % | 4.128 | 4.673 | 13.2 | % | ||||||||||||||||||
Withdrawals and deaths | (0.318 | ) | (0.295 | ) | (0.296 | ) | (0.232 | ) | (0.268 | ) | 15.7 | % | (1.383 | ) | (1.091 | ) | 21.1 | % | |||||||||||
Net flows | 1.006 | 0.790 | 0.830 | 0.933 | 1.029 | 2.3 | % | 2.745 | 3.582 | 30.5 | % | ||||||||||||||||||
Contract holder assessments | (0.734 | ) | (0.715 | ) | (0.724 | ) | (0.726 | ) | (0.751 | ) | -2.3 | % | (2.757 | ) | (2.916 | ) | -5.8 | % | |||||||||||
Interest credited | 0.299 | 0.299 | 0.303 | 0.283 | 0.303 | 1.3 | % | 1.185 | 1.188 | 0.3 | % | ||||||||||||||||||
Balance as of End-of-Period (Gross) | 29.365 | 29.739 | 30.148 | 30.638 | 31.219 | 6.3 | % | 29.365 | 31.219 | 6.3 | % | ||||||||||||||||||
Reinsurance ceded | (0.888 | ) | (0.885 | ) | (0.881 | ) | (0.877 | ) | (0.870 | ) | 2.0 | % | (0.888 | ) | (0.870 | ) | 2.0 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 28.477 | $ | 28.854 | $ | 29.267 | $ | 29.761 | $ | 30.349 | 6.6 | % | $ | 28.477 | $ | 30.349 | 6.6 | % | |||||||||||
VUL | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 5.562 | $ | 5.962 | $ | 6.171 | $ | 6.157 | $ | 5.375 | -3.4 | % | $ | 5.287 | $ | 5.962 | 12.8 | % | |||||||||||
Deposits | 0.240 | 0.185 | 0.148 | 0.178 | 0.209 | -12.9 | % | 0.806 | 0.720 | -10.7 | % | ||||||||||||||||||
Withdrawals and deaths | (0.166 | ) | (0.154 | ) | (0.110 | ) | (0.148 | ) | (0.207 | ) | -24.7 | % | (0.494 | ) | (0.619 | ) | -25.3 | % | |||||||||||
Net flows | 0.074 | 0.031 | 0.038 | 0.030 | 0.002 | -97.3 | % | 0.312 | 0.101 | -67.6 | % | ||||||||||||||||||
Contract holder assessments | (0.092 | ) | (0.092 | ) | (0.091 | ) | (0.093 | ) | (0.093 | ) | -1.1 | % | (0.361 | ) | (0.369 | ) | -2.2 | % | |||||||||||
Investment income and change in market value | 0.418 | 0.270 | 0.039 | (0.719 | ) | 0.403 | -3.6 | % | 0.724 | (0.007 | ) | NM | |||||||||||||||||
Balance as of End-of-Period (Gross) | 5.962 | 6.171 | 6.157 | 5.375 | 5.687 | -4.6 | % | 5.962 | 5.687 | -4.6 | % | ||||||||||||||||||
Reinsurance ceded | (0.854 | ) | (0.876 | ) | (0.857 | ) | (0.717 | ) | (0.758 | ) | 11.2 | % | (0.854 | ) | (0.758 | ) | 11.2 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 5.108 | $ | 5.295 | $ | 5.300 | $ | 4.658 | $ | 4.929 | -3.5 | % | $ | 5.108 | $ | 4.929 | -3.5 | % | |||||||||||
Total Life Insurance | |||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 34.356 | $ | 35.327 | $ | 35.910 | $ | 36.305 | $ | 36.013 | 4.8 | % | $ | 33.479 | $ | 35.327 | 5.5 | % | |||||||||||
Deposits | 1.564 | 1.270 | 1.274 | 1.343 | 1.506 | -3.7 | % | 4.934 | 5.393 | 9.3 | % | ||||||||||||||||||
Withdrawals and deaths | (0.484 | ) | (0.449 | ) | (0.406 | ) | (0.380 | ) | (0.475 | ) | 1.9 | % | (1.877 | ) | (1.710 | ) | 8.9 | % | |||||||||||
Net flows | 1.080 | 0.821 | 0.868 | 0.963 | 1.031 | -4.5 | % | 3.057 | 3.683 | 20.5 | % | ||||||||||||||||||
Contract holder assessments | (0.826 | ) | (0.807 | ) | (0.815 | ) | (0.819 | ) | (0.844 | ) | -2.2 | % | (3.118 | ) | (3.285 | ) | -5.4 | % | |||||||||||
Investment income and change in market value | 0.717 | 0.569 | 0.342 | (0.436 | ) | 0.706 | -1.5 | % | 1.909 | 1.181 | -38.1 | % | |||||||||||||||||
Balance as of End-of-Period (Gross) | 35.327 | 35.910 | 36.305 | 36.013 | 36.906 | 4.5 | % | 35.327 | 36.906 | 4.5 | % | ||||||||||||||||||
Reinsurance ceded | (1.742 | ) | (1.761 | ) | (1.738 | ) | (1.594 | ) | (1.628 | ) | 6.5 | % | (1.742 | ) | (1.628 | ) | 6.5 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 33.585 | $ | 34.149 | $ | 34.567 | $ | 34.419 | $ | 35.278 | 5.0 | % | $ | 33.585 | $ | 35.278 | 5.0 | % | |||||||||||
(1) | Includes UL, interest-sensitive whole life and the fixed investment option of VUL products. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 27 | |||||||||||||||||||||||||||
Group Protection | ||||||||||||||||||||||||||||
Income (Loss) from Operations and Operational Data | ||||||||||||||||||||||||||||
Unaudited (in millions) | ||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | |||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | ||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | ||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||||||
Insurance premiums | $ | 424.2 | $ | 436.6 | $ | 460.2 | $ | 439.7 | $ | 441.8 | 4.1 | % | $ | 1,682.3 | $ | 1,778.3 | 5.7 | % | ||||||||||
Net investment income | 38.1 | 39.1 | 38.5 | 37.8 | 36.7 | -3.7 | % | 141.0 | 152.1 | 7.9 | % | |||||||||||||||||
Other revenues and fees | 2.0 | 2.2 | 1.9 | 1.9 | 2.5 | 25.0 | % | 7.8 | 8.5 | 9.0 | % | |||||||||||||||||
Total Operating Revenues | 464.3 | 477.9 | 500.6 | 479.4 | 481.0 | 3.6 | % | 1,831.1 | 1,938.9 | 5.9 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Interest credited | 0.9 | 0.9 | 0.8 | 0.8 | 0.9 | 0.0 | % | 3.3 | 3.4 | 0.0 | ||||||||||||||||||
Benefits | 322.9 | 326.7 | 345.1 | 319.3 | 322.8 | 0.0 | % | 1,296.3 | 1,313.9 | 1.4 | % | |||||||||||||||||
Underwriting, acquisition, insurance and other expenses | 112.8 | 112.7 | 114.6 | 116.5 | 122.7 | 8.8 | % | 421.6 | 466.5 | 10.6 | % | |||||||||||||||||
Total Operating Expenses | 436.6 | 440.3 | 460.5 | 436.6 | 446.4 | 2.2 | % | 1,721.2 | 1,783.8 | 3.6 | % | |||||||||||||||||
Income (loss) from operations before federal income taxes | 27.7 | 37.6 | 40.1 | 42.8 | 34.6 | 24.9 | % | 109.9 | 155.1 | 41.1 | % | |||||||||||||||||
Federal income tax expense (benefit) | 9.7 | 13.2 | 14.0 | 15.0 | 12.1 | 24.7 | % | 38.3 | 54.3 | 41.8 | % | |||||||||||||||||
Income (Loss) from Operations | $ | 18.0 | $ | 24.4 | $ | 26.1 | $ | 27.8 | $ | 22.5 | 25.0 | % | $ | 71.6 | $ | 100.8 | 40.8 | % | ||||||||||
Effective Tax Rate | 35.0 | % | 35.1 | % | 34.9 | % | 35.0 | % | 35.0 | % | 34.8 | % | 35.0 | % | ||||||||||||||
Average Stockholders' Equity, Excluding AOCI | ||||||||||||||||||||||||||||
Average equity, including goodwill | $ | 1,163.2 | $ | 1,177.6 | $ | 1,168.4 | $ | 1,166.2 | $ | 1,181.1 | $ | 1,121.0 | $ | 1,173.3 | ||||||||||||||
Average goodwill | 274.3 | 274.3 | 274.3 | 274.3 | 274.3 | 274.3 | 274.3 | |||||||||||||||||||||
Average equity, excluding goodwill | $ | 888.9 | $ | 903.3 | $ | 894.1 | $ | 891.9 | $ | 906.8 | $ | 846.7 | $ | 899.0 | ||||||||||||||
Return on Equity, Excluding AOCI | ||||||||||||||||||||||||||||
Including goodwill | 6.2 | % | 8.3 | % | 8.9 | % | 9.5 | % | 7.6 | % | 6.4 | % | 8.6 | % | ||||||||||||||
Excluding goodwill | 8.1 | % | 10.8 | % | 11.7 | % | 12.5 | % | 9.9 | % | 8.5 | % | 11.2 | % | ||||||||||||||
Underwriting, Acquisition, Insurance and Other Expenses | ||||||||||||||||||||||||||||
Commissions | $ | 48.7 | $ | 50.4 | $ | 49.4 | $ | 50.0 | $ | 51.2 | 5.1 | % | $ | 190.0 | $ | 201.0 | 5.8 | % | ||||||||||
General and administrative expenses | 61.0 | 51.4 | 56.4 | 60.1 | 75.6 | 23.9 | % | 208.3 | 243.5 | 16.9 | % | |||||||||||||||||
Taxes, licenses and fees | 9.8 | 10.7 | 10.1 | 11.7 | 9.0 | -8.2 | % | 38.9 | 41.5 | 6.7 | % | |||||||||||||||||
Total commissions and expenses incurred | 119.5 | 112.5 | 115.9 | 121.8 | 135.8 | 13.6 | % | 437.2 | 486.0 | 11.2 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (20.6 | ) | (11.0 | ) | (12.1 | ) | (15.7 | ) | (26.4 | ) | -28.2 | % | (61.4 | ) | (65.2 | ) | -6.2 | % | ||||||||||
Amortization of DAC and VOBA, net of interest | 13.9 | 11.2 | 10.8 | 10.4 | 13.3 | -4.3 | % | 45.8 | 45.7 | -0.2 | % | |||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 112.8 | $ | 112.7 | $ | 114.6 | $ | 116.5 | $ | 122.7 | 8.8 | % | $ | 421.6 | $ | 466.5 | 10.6 | % | ||||||||||
General and Administrative Expenses as a Percentage of Premiums | 14.4 | % | 11.8 | % | 12.3 | % | 13.7 | % | 17.1 | % | 12.4 | % | 13.7 | % | ||||||||||||||
DAC and VOBA | ||||||||||||||||||||||||||||
Balance as of beginning-of-period | $ | 168.3 | $ | 175.0 | $ | 174.8 | $ | 176.1 | $ | 181.4 | $ | 159.5 | $ | 175.0 | ||||||||||||||
Deferrals | 20.6 | 11.0 | 12.1 | 15.7 | 26.4 | 61.4 | 65.2 | |||||||||||||||||||||
Amortization, net of interest | (13.9 | ) | (11.2 | ) | (10.8 | ) | (10.4 | ) | (13.3 | ) | (45.9 | ) | (45.7 | ) | ||||||||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 6.7 | (0.2 | ) | 1.3 | 5.3 | 13.1 | 15.5 | 19.5 | ||||||||||||||||||||
Balance as of End-of-Period | $ | 175.0 | $ | 174.8 | $ | 176.1 | $ | 181.4 | $ | 194.5 | $ | 175.0 | $ | 194.5 | ||||||||||||||
Annualized Sales by Product Line | ||||||||||||||||||||||||||||
Life | $ | 60.7 | $ | 17.4 | $ | 23.6 | $ | 30.8 | $ | 89.6 | 47.6 | % | $ | 132.0 | $ | 161.4 | 22.3 | % | ||||||||||
Disability | 68.6 | 18.0 | 30.7 | 34.3 | 92.8 | 35.3 | % | 153.9 | 175.8 | 14.2 | % | |||||||||||||||||
Dental | 26.7 | 10.0 | 12.8 | 9.6 | 25.0 | -6.4 | % | 66.8 | 57.4 | -14.1 | % | |||||||||||||||||
Total | $ | 156.0 | $ | 45.4 | $ | 67.1 | $ | 74.7 | $ | 207.4 | 32.9 | % | $ | 352.7 | $ | 394.6 | 11.9 | % | ||||||||||
Insurance Premiums by Product Line | ||||||||||||||||||||||||||||
Life | $ | 163.2 | $ | 170.4 | $ | 173.6 | $ | 173.5 | $ | 175.5 | 7.5 | % | $ | 639.1 | $ | 693.0 | 8.4 | % | ||||||||||
Disability | 184.8 | 186.2 | 189.8 | 190.5 | 190.7 | 3.2 | % | 726.7 | 757.2 | 4.2 | % | |||||||||||||||||
Dental | 44.2 | 46.1 | 45.3 | 45.9 | 46.2 | 4.5 | % | 167.1 | 183.5 | 9.8 | % | |||||||||||||||||
Other | 32.0 | 33.9 | 51.5 | 29.8 | 29.4 | -8.1 | % | 149.4 | 144.6 | -3.2 | % | |||||||||||||||||
Total | $ | 424.2 | $ | 436.6 | $ | 460.2 | $ | 439.7 | $ | 441.8 | 4.1 | % | $ | 1,682.3 | $ | 1,778.3 | 5.7 | % | ||||||||||
Income (Loss) from Operations by Product Line | ||||||||||||||||||||||||||||
Life | $ | 12.4 | $ | 8.4 | $ | 8.9 | $ | 11.5 | $ | 5.4 | -56.5 | % | $ | 36.7 | $ | 34.2 | -6.8 | % | ||||||||||
Disability | 4.5 | 16.5 | 17.2 | 15.1 | 14.5 | 222.2 | % | 33.7 | 63.3 | 87.8 | % | |||||||||||||||||
Dental | (0.2 | ) | (1.9 | ) | (1.4 | ) | 0.1 | 1.6 | NM | (4.0 | ) | (1.6 | ) | 60.0 | % | |||||||||||||
Other | 1.3 | 1.4 | 1.4 | 1.1 | 1.0 | -23.1 | % | 5.2 | 4.9 | -5.8 | % | |||||||||||||||||
Total | $ | 18.0 | $ | 24.4 | $ | 26.1 | $ | 27.8 | $ | 22.5 | 25.0 | % | $ | 71.6 | $ | 100.8 | 40.8 | % | ||||||||||
Loss Ratios by Product Line | ||||||||||||||||||||||||||||
Life | 72.0 | % | 75.9 | % | 76.1 | % | 72.1 | % | 75.1 | % | 75.8 | % | 74.8 | % | ||||||||||||||
Disability | 78.2 | % | 70.1 | % | 69.4 | % | 70.4 | % | 69.6 | % | 75.4 | % | 69.9 | % | ||||||||||||||
Dental | 76.8 | % | 83.7 | % | 79.9 | % | 76.2 | % | 71.6 | % | 81.5 | % | 77.9 | % | ||||||||||||||
Combined Loss Ratios | 75.5 | % | 74.1 | % | 73.4 | % | 71.8 | % | 72.2 | % | 76.2 | % | 72.9 | % |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 28 | ||||||||||||||||||||||||||||
Other Operations | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Operating Revenues | |||||||||||||||||||||||||||||
Insurance premiums | $ | 1.4 | $ | 0.1 | $ | - | $ | 0.8 | $ | - | -100.0 | % | $ | 1.5 | $ | 0.9 | -40.0 | % | |||||||||||
Net investment income | 81.7 | 80.1 | 76.4 | 79.9 | 70.7 | -13.5 | % | 325.6 | 307.1 | -5.7 | % | ||||||||||||||||||
Amortization of deferred gain on business sold through reinsurance (1) | 18.2 | 18.0 | 18.0 | 18.1 | 18.1 | -0.5 | % | 72.5 | 72.2 | -0.4 | % | ||||||||||||||||||
Other revenues and fees | (1.4 | ) | 1.7 | 1.5 | 1.4 | (0.7 | ) | 50.0 | % | 12.7 | 3.9 | -69.3 | % | ||||||||||||||||
Media revenues | 21.7 | 16.5 | 19.3 | 19.9 | 21.3 | -1.8 | % | 74.9 | 77.0 | 2.8 | % | ||||||||||||||||||
Total Operating Revenues | 121.6 | 116.4 | 115.2 | 120.1 | 109.4 | -10.0 | % | 487.2 | 461.1 | -5.4 | % | ||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||
Interest credited | 30.3 | 28.8 | 29.8 | 26.5 | 28.5 | -5.9 | % | 119.8 | 113.6 | -5.2 | % | ||||||||||||||||||
Benefits | 34.0 | 32.5 | 29.1 | 33.7 | 31.1 | -8.5 | % | 138.6 | 126.4 | -8.8 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses | 85.0 | 27.6 | 8.4 | 21.6 | 14.7 | -82.7 | % | 182.7 | 72.3 | -60.4 | % | ||||||||||||||||||
Inter-segment reimbursement associated with reserve financing and LOC expenses (2) | (1.4 | ) | (2.0 | ) | (2.3 | ) | (2.4 | ) | (2.5 | ) | -78.6 | % | (2.4 | ) | (9.2 | ) | NM | ||||||||||||
Taxes, licenses and fees | (2.9 | ) | 0.7 | (3.3 | ) | 13.7 | 15.5 | NM | (3.9 | ) | 26.6 | NM | |||||||||||||||||
Interest and debt expenses | 74.3 | 71.6 | 72.0 | 71.0 | 70.5 | -5.1 | % | 285.9 | 285.1 | -0.3 | % | ||||||||||||||||||
Media expenses | 16.0 | 16.7 | 16.8 | 17.3 | 18.3 | 14.4 | % | 59.2 | 69.1 | 16.7 | % | ||||||||||||||||||
Total Operating Expenses | 235.3 | 175.9 | 150.5 | 181.4 | 176.1 | -25.2 | % | 779.9 | 683.9 | -12.3 | % | ||||||||||||||||||
Income (Loss) from operations before federal income taxes | (113.7 | ) | (59.5 | ) | (35.3 | ) | (61.3 | ) | (66.7 | ) | 41.3 | % | (292.7 | ) | (222.8 | ) | 23.9 | % | |||||||||||
Federal income tax expense (benefit) | (40.0 | ) | (22.6 | ) | (12.9 | ) | (17.1 | ) | (23.9 | ) | 40.3 | % | (106.6 | ) | (76.5 | ) | 28.2 | % | |||||||||||
Income (Loss) From Operations | $ | (73.7 | ) | $ | (36.9 | ) | $ | (22.4 | ) | $ | (44.2 | ) | $ | (42.8 | ) | 41.9 | % | $ | (186.1 | ) | $ | (146.3 | ) | 21.4 | % | ||||
Run Off Institutional Pensions Account Values - Balance at End-of-Period | $ | 1.869 | $ | 1.867 | $ | 1.845 | $ | 1.822 | $ | 1.809 | -3.2 | % | $ | 1.869 | $ | 1.809 | -3.2 | % | |||||||||||
Discontinued Operations | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Discontinued Operations Before Disposal | |||||||||||||||||||||||||||||
Income (loss) from discontinued operations before federal income taxes | $ | - | $ | - | $ | - | $ | - | $ | - | NM | $ | (12.7 | ) | $ | - | 100.0 | % | |||||||||||
Federal income tax expense (benefit) | - | - | - | - | - | NM | (1.1 | ) | - | 100.0 | % | ||||||||||||||||||
Income (Loss) From Discontinued Operations Before Disposal | - | - | - | - | - | NM | (11.6 | ) | - | 100.0 | % | ||||||||||||||||||
Disposal | |||||||||||||||||||||||||||||
Gain (loss) on disposal before federal income taxes | - | - | - | (2.9 | ) | - | NM | 66.0 | (2.9 | ) | NM | ||||||||||||||||||
Federal income tax expense (benefit) | - | - | - | 5.5 | - | NM | 25.5 | 5.5 | -78.4 | % | |||||||||||||||||||
Gain (Loss) on Disposal | - | - | - | (8.4 | ) | - | NM | 40.5 | (8.4 | ) | NM | ||||||||||||||||||
Income (Loss) From Discontinued Operations | $ | - | $ | - | $ | - | $ | (8.4 | ) | $ | - | NM | $ | 28.9 | $ | (8.4 | ) | NM | |||||||||||
(1) | Represents the amortization of deferred gain recognized on the business sold through indemnity reinsurance to Swiss Re. | ||||||||||||||||||||||||||||
(2) | Represents reimbursements to Other Operations from the Life Insurance segment for the use of proceeds from certain issuances of senior notes that were used as long-term structured | ||||||||||||||||||||||||||||
solutions, net of expenses incurred by Other Operations for its use of LOCs. The inter-segment amounts are not reported on our Consolidated Statements of Income (Loss). |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 29 | ||||||||||||||||||||||||||||
Consolidated Deposits, Net Flows and Account Balances | |||||||||||||||||||||||||||||
Unaudited (in billions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Annuities - fixed annuities (1) | $ | 1.155 | $ | 1.116 | $ | 1.307 | $ | 1.294 | $ | 1.062 | -8.1 | % | $ | 5.568 | $ | 4.779 | -14.2 | % | |||||||||||
Retirement Plan Services - fixed annuities | 0.340 | 0.346 | 0.318 | 0.378 | 0.394 | 15.9 | % | 1.332 | 1.436 | 7.8 | % | ||||||||||||||||||
Annuities - variable annuities | 1.435 | 1.523 | 1.620 | 1.415 | 1.313 | -8.5 | % | 5.099 | 5.871 | 15.1 | % | ||||||||||||||||||
Retirement Plan Services - variable products (2) | 1.018 | 0.995 | 0.881 | 1.078 | 1.176 | 15.5 | % | 3.969 | 4.130 | 4.1 | % | ||||||||||||||||||
Life Insurance: | |||||||||||||||||||||||||||||
Interest-Sensitive Life | 1.324 | 1.085 | 1.126 | 1.165 | 1.297 | -2.0 | % | 4.128 | 4.673 | 13.2 | % | ||||||||||||||||||
VUL | 0.240 | 0.185 | 0.148 | 0.178 | 0.209 | -12.9 | % | 0.806 | 0.720 | -10.7 | % | ||||||||||||||||||
Total Deposits | $ | 5.512 | $ | 5.250 | $ | 5.400 | $ | 5.508 | $ | 5.451 | -1.1 | % | $ | 20.902 | $ | 21.609 | 3.4 | % | |||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Net Flows | |||||||||||||||||||||||||||||
Annuities - fixed annuities (1) | $ | 0.562 | $ | 0.603 | $ | 0.782 | $ | 0.704 | $ | 0.498 | -11.4 | % | $ | 3.548 | $ | 2.587 | -27.1 | % | |||||||||||
Retirement Plan Services - fixed annuities | (0.137 | ) | 0.010 | (0.119 | ) | 0.022 | (0.019 | ) | 86.1 | % | (0.347 | ) | (0.106 | ) | 69.5 | % | |||||||||||||
Annuities - variable annuities | (0.019 | ) | (0.120 | ) | (0.082 | ) | (0.041 | ) | (0.153 | ) | NM | 0.007 | (0.396 | ) | NM | ||||||||||||||
Retirement Plan Services - variable products (2) | (0.167 | ) | 0.124 | (0.059 | ) | 0.307 | 0.238 | 242.5 | % | 0.056 | 0.610 | NM | |||||||||||||||||
Life Insurance: | |||||||||||||||||||||||||||||
Interest-Sensitive Life | 1.006 | 0.790 | 0.830 | 0.933 | 1.029 | 2.3 | % | 2.745 | 3.582 | 30.5 | % | ||||||||||||||||||
VUL | 0.074 | 0.031 | 0.038 | 0.030 | 0.002 | -97.3 | % | 0.312 | 0.101 | -67.6 | % | ||||||||||||||||||
Total Net Flows | $ | 1.319 | $ | 1.438 | $ | 1.390 | $ | 1.955 | $ | 1.595 | 20.9 | % | $ | 6.321 | $ | 6.378 | 0.9 | % | |||||||||||
As of | |||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | ||||||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | ||||||||||||||||||||||||
Account Balances | |||||||||||||||||||||||||||||
Annuities - fixed annuities (1) | $ | 19.990 | $ | 19.998 | $ | 20.289 | $ | 20.455 | $ | 20.524 | 2.7 | % | |||||||||||||||||
Retirement Plan Services - fixed annuities | 12.779 | 12.956 | 13.025 | 13.395 | 13.630 | 6.7 | % | ||||||||||||||||||||||
Annuities - variable annuities | 64.858 | 67.787 | 68.551 | 60.774 | 65.010 | 0.2 | % | ||||||||||||||||||||||
Retirement Plan Services - variable products (2) | 26.045 | 27.352 | 27.262 | 23.625 | 25.503 | -2.1 | % | ||||||||||||||||||||||
Life Insurance: | |||||||||||||||||||||||||||||
Interest-Sensitive Life | 28.477 | 28.854 | 29.267 | 29.761 | 30.349 | 6.6 | % | ||||||||||||||||||||||
VUL | 5.108 | 5.295 | 5.300 | 4.658 | 4.929 | -3.5 | % | ||||||||||||||||||||||
Total Account Balances | $ | 157.257 | $ | 162.242 | $ | 163.694 | $ | 152.668 | $ | 159.945 | 1.7 | % | |||||||||||||||||
(1) | Includes fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(2) | Includes amounts attributable to mutual fund net flows. Mutual fund account values are not included in the separate accounts reported on our Consolidated | ||||||||||||||||||||||||||||
Balance Sheets, as we do not have any ownership interest in them. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
12/31/2011 | PAGE 30 | ||||||||||||||||||||||||||||
Consolidated Investment Data | |||||||||||||||||||||||||||||
Unaudited (in millions) | |||||||||||||||||||||||||||||
For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | Dec. | Dec. | % | |||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 | Change | 2010 | 2011 | Change | |||||||||||||||||||||
Net Investment Income | |||||||||||||||||||||||||||||
Available-for-sale fixed maturity securities | $ | 972.6 | $ | 984.8 | $ | 982.5 | $ | 972.7 | $ | 972.0 | -0.1 | % | $ | 3,742.9 | $ | 3,912.0 | 4.5 | % | |||||||||||
Available-for-sale equity securities | 1.5 | 1.2 | 1.1 | 1.2 | 1.7 | 13.3 | % | 5.7 | 5.2 | -8.8 | % | ||||||||||||||||||
Available-for-sale VIEs' fixed maturity securities | 3.1 | 3.1 | 3.1 | 3.6 | 3.9 | 25.8 | % | 14.2 | 13.7 | -3.5 | % | ||||||||||||||||||
Trading securities | 39.4 | 38.6 | 38.7 | 38.4 | 38.1 | -3.3 | % | 157.1 | 153.8 | -2.1 | % | ||||||||||||||||||
Mortgage loans on real estate | 111.6 | 104.1 | 106.1 | 106.9 | 103.2 | -7.5 | % | 441.4 | 420.3 | -4.8 | % | ||||||||||||||||||
Real estate | 6.4 | 7.7 | 5.5 | 5.0 | 4.4 | -31.3 | % | 24.6 | 22.6 | -8.1 | % | ||||||||||||||||||
Policy loans | 42.0 | 40.6 | 43.1 | 41.7 | 40.1 | -4.5 | % | 168.9 | 165.5 | -2.0 | % | ||||||||||||||||||
Invested cash | 1.8 | 1.4 | 0.8 | 1.0 | 0.5 | -72.2 | % | 7.3 | 3.7 | -49.3 | % | ||||||||||||||||||
Other investments | 33.3 | 38.0 | 27.3 | 9.8 | (9.0 | ) | NM | 98.4 | 66.1 | -32.8 | % | ||||||||||||||||||
Investment income | 1,211.7 | 1,219.5 | 1,208.2 | 1,180.3 | 1,154.9 | -4.7 | % | 4,660.5 | 4,762.9 | 2.2 | % | ||||||||||||||||||
Investment expense | (29.0 | ) | (28.3 | ) | (27.6 | ) | (29.6 | ) | (25.7 | ) | 11.4 | % | (119.6 | ) | (111.2 | ) | 7.0 | % | |||||||||||
Net Investment Income | $ | 1,182.7 | $ | 1,191.2 | $ | 1,180.6 | $ | 1,150.7 | $ | 1,129.2 | -4.5 | % | $ | 4,540.9 | $ | 4,651.7 | 2.4 | % | |||||||||||
Average Invested Assets (Amortized Cost) | $ | 79,278.9 | $ | 79,995.7 | $ | 81,101.9 | $ | 82,253.8 | $ | 83,210.5 | $ | 77,558.2 | $ | 81,640.5 | |||||||||||||||
Net investment income yield on invested assets Invested Assets | 5.97 | % | 5.96 | % | 5.82 | % | 5.60 | % | 5.43 | % | 5.85 | % | 5.70 | % | |||||||||||||||
Realized Gain (Loss) Related to Investments | |||||||||||||||||||||||||||||
Available-for-sale fixed maturity securities: | |||||||||||||||||||||||||||||
Gross gains | $ | 10.9 | $ | 36.1 | $ | 30.6 | $ | 17.5 | $ | 1.5 | -86.2 | % | $ | 107.1 | $ | 85.7 | -20.0 | % | |||||||||||
Gross losses | (73.7 | ) | (62.7 | ) | (50.8 | ) | (63.1 | ) | (50.4 | ) | 31.6 | % | (248.0 | ) | (227.0 | ) | 8.5 | % | |||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Gross gains | - | 8.3 | 1.1 | 0.2 | 2.1 | NM | 8.8 | 11.7 | 33.0 | % | |||||||||||||||||||
Gross losses | - | (0.2 | ) | - | - | (0.1 | ) | NM | (3.5 | ) | (0.3 | ) | 91.4 | % | |||||||||||||||
Gain (loss) on other investments | (19.8 | ) | 12.8 | (8.2 | ) | (3.3 | ) | (9.9 | ) | 50.0 | % | (52.7 | ) | (8.6 | ) | 83.7 | % | ||||||||||||
Associated amortization of DAC, VOBA, DSI, DFEL and changes in other contract holder funds and funds withheld | |||||||||||||||||||||||||||||
reinsurance liabilities | (11.6 | ) | (11.4 | ) | (6.9 | ) | 5.2 | (0.3 | ) | 97.4 | % | 7.9 | (13.4 | ) | NM | ||||||||||||||
Total realized gain (loss) on investments, pre-tax | (94.2 | ) | (17.1 | ) | (34.2 | ) | (43.5 | ) | (57.1 | ) | 39.4 | % | (180.4 | ) | (151.9 | ) | 15.8 | % | |||||||||||
Federal income tax expense (benefit) (1) | (33.0 | ) | (6.0 | ) | (12.0 | ) | (15.2 | ) | (20.0 | ) | 39.4 | % | (63.2 | ) | (53.2 | ) | 15.8 | % | |||||||||||
Total, After-Tax | $ | (61.2 | ) | $ | (11.1 | ) | $ | (22.2 | ) | $ | (28.3 | ) | $ | (37.1 | ) | 39.4 | % | $ | (117.2 | ) | $ | (98.7 | ) | 15.8 | % | ||||
As of December 31, 2010 | As of December 31, 2011 | ||||||||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||||||
Available-for-Sale and Trading Securities | |||||||||||||||||||||||||||||
Fixed maturity securities (fair value) | $ | 71,208.1 | 99.7 | % | $ | 78,805.4 | 99.8 | % | |||||||||||||||||||||
Fixed maturity securities (amortized cost) | 68,084.2 | 99.7 | % | 71,959.8 | 99.8 | % | |||||||||||||||||||||||
Equity securities (fair value) | 199.3 | 0.3 | % | 141.0 | 0.2 | % | |||||||||||||||||||||||
Equity securities (amortized cost) | 180.9 | 0.3 | % | 136.9 | 0.2 | % | |||||||||||||||||||||||
% of Available-for-Sale Fixed Maturity Securities, Based on Amortized Cost | |||||||||||||||||||||||||||||
Investment grade | 93.7 | % | 94.4 | % | |||||||||||||||||||||||||
Below investment grade | 6.3 | % | 5.6 | % | |||||||||||||||||||||||||
General Account Investments at Amortized Cost | As of December 31, 2010 | As of December 31, 2011 | |||||||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||||||
Available-for-Sale Fixed Maturities Securities: | |||||||||||||||||||||||||||||
Corporate bonds | $ | 48,863.9 | 74.3 | % | $ | 53,661.5 | 77.0 | % | |||||||||||||||||||||
U.S. Government bonds | 149.7 | 0.2 | % | 439.2 | 0.6 | % | |||||||||||||||||||||||
Foreign government bonds | 472.8 | 0.7 | % | 667.7 | 1.0 | % | |||||||||||||||||||||||
Mortgage-backed securities | 10,817.3 | 16.5 | % | 9,331.3 | 13.4 | % | |||||||||||||||||||||||
ABS CDOs | 173.9 | 0.3 | % | 120.8 | 0.2 | % | |||||||||||||||||||||||
State and municipal bonds | 3,221.8 | 4.9 | % | 3,490.0 | 5.0 | % | |||||||||||||||||||||||
Hybrid and redeemable preferred securities | 1,476.3 | 2.2 | % | 1,277.2 | 1.8 | % | |||||||||||||||||||||||
VIEs' fixed maturity securities | 569.8 | 0.9 | % | 673.3 | 1.0 | % | |||||||||||||||||||||||
Total | $ | 65,745.5 | 100.0 | % | $ | 69,661.0 | 100.0 | % | |||||||||||||||||||||
As of | |||||||||||||||||||||||||||||
Dec. | March | June | Sept. | Dec. | % | ||||||||||||||||||||||||
Composition of Investment Portfolio | 2010 | 2011 | 2011 | 2011 | 2011 | Change | |||||||||||||||||||||||
Available-for-sale securities, at fair value: | |||||||||||||||||||||||||||||
Fixed maturity | $ | 68,030.2 | $ | 69,231.0 | $ | 70,920.2 | $ | 74,591.5 | $ | 75,432.8 | 10.9 | % | |||||||||||||||||
Equity | 197.2 | 144.6 | 143.7 | 137.4 | 138.8 | -29.6 | % | ||||||||||||||||||||||
VIEs' fixed maturity | 583.7 | 586.8 | 592.6 | 699.5 | 700.1 | 19.9 | % | ||||||||||||||||||||||
Trading securities | 2,596.4 | 2,598.0 | 2,624.7 | 2,726.2 | 2,674.7 | 3.0 | % | ||||||||||||||||||||||
Mortgage loans on real estate and real estate | 6,954.2 | 6,937.6 | 7,020.4 | 7,029.1 | 7,079.4 | 1.8 | % | ||||||||||||||||||||||
Policy loans | 2,864.7 | 2,837.1 | 2,877.1 | 2,873.5 | 2,884.6 | 0.7 | % | ||||||||||||||||||||||
Derivative investments | 1,076.0 | 945.7 | 1,097.0 | 3,028.7 | 3,151.0 | 192.8 | % | ||||||||||||||||||||||
Other investments | 1,037.7 | 1,029.4 | 1,002.3 | 1,104.7 | 1,068.6 | 3.0 | % | ||||||||||||||||||||||
Total | $ | 83,340.1 | $ | 84,310.2 | $ | 86,278.0 | $ | 92,190.6 | $ | 93,130.0 | 11.7 | % | |||||||||||||||||
(1) | We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and | ||||||||||||||||||||||||||||
federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. |
This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.