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| Lincoln Financial Group |
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| Table of Contents |
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| Analyst Coverage and Credit Ratings |
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| 1 |
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| Notes |
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| 2 |
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| Consolidated |
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| Consolidated Statements of Income (Loss) |
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| Consolidated Balance Sheets |
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| Earnings, Shares, and Return on Equity |
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| Key Stakeholder Metrics |
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| Segment and Sources of Earnings |
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| Select Earnings Drivers By Segment |
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| Sales By Segment |
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| Operating Revenues and General and Administrative Expenses By Segment |
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| Operating Commissions and Other Expenses |
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| Interest Rate Yields and Spreads By Segment |
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| Select Earnings and Operational Data from Business Segments |
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| Annuities |
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| Retirement Plan Services |
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| 14 |
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| Life Insurance |
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| 15 |
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| Group Protection |
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| 16 |
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| Other Operations |
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| 17 |
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| DAC & Account Value Rollforwards |
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| Consolidated DAC, VOBA, DSI and DFEL Roll Forwards |
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| 18 |
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| Account Value Roll Forwards: |
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| Annuities |
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| 19 |
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| Retirement Plan Services |
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| 20 |
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| Life Insurance |
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| 21 |
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| Other Information |
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| Select Investment Data |
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| 22 |
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| Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC |
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| 23 |
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| Select Non-GAAP to GAAP Reconciliations |
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| 24 |
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| Lincoln Financial Group |
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| Analyst Coverage |
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| Firm |
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| Analyst |
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| Phone Number |
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| Bank of America Merrill Lynch |
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| Seth Weiss |
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| 646-855-3783 |
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| Barclays Capital |
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| Jay Gelb |
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| 212-526-1561 |
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| Citi Research |
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| Erik Bass |
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| 212-816-5257 |
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| Deutsche Bank |
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| Yaron Kinar |
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| 212-250-7927 |
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| Dowling & Partners |
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| Humphrey Lee |
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| 860-676-7324 |
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| FBR Capital Markets |
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| Randy Binner |
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| 703-312-1890 |
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| Goldman Sachs |
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| Michael Kovac |
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| 212-902-2303 |
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| J.P. Morgan Securities |
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| Jimmy Bhullar |
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| 212-622-6397 |
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| Janney Montgomery Scott |
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| Bob Glasspiegel |
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| 860-724-1203 |
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| Keefe, Bruyette and Woods |
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| Ryan Krueger |
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| 860-722-5930 |
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| Macquarie Capital |
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| Sean Dargan |
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| 212-231-0663 |
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| Morgan Stanley |
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| Nigel Dally |
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| 212-761-4132 |
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| Piper Jaffray |
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| John Nadel |
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| 212-284-6123 |
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| Raymond James and Associates |
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| Steven Schwartz |
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| 312-612-7686 |
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| RBC Capital |
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| Eric Berg |
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| 212-618-7593 |
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| Sandler O’Neill & Partners, L.P. |
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| John Barnidge |
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| 312-281-3412 |
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| UBS |
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| Suneet Kamath |
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| 212-713-1355 |
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| Wells Fargo Securities |
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| John Hall |
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| 212-214-8032 |
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| 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 |
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| or any other analysts. |
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| Ratings as of May 4, 2016 |
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| Standard |
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| A.M Best |
| Fitch |
| Moody's |
| & Poor's |
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| Senior Debt Ratings |
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| a- |
| BBB+ |
| Baa1 |
| A- |
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| Financial Strength Ratings |
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| Lincoln National Life Insurance Company |
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| A+ |
| A+ |
| A1 |
| AA- |
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| First Penn-Pacific Life Insurance Company |
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| A |
| A+ |
| A1 |
| A- |
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| Lincoln Life & Annuity Company of New York |
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| A+ |
| A+ |
| A1 |
| AA- |
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| Investor Inquiries May Be Directed To: |
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| Chris Giovanni, Senior Vice President, Investor Relations |
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| Email: Christopher.Giovanni@lfg.com |
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| Phone: 484-583-1793 |
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Page 1 |
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| Lincoln Financial Group |
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| Notes |
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| Computations |
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| The quarterly financial information for the current year may not sum to the corresponding year-to-date amount as both are rounded to millions. |
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| The financial ratios reported herein are calculated using whole dollars instead of dollars rounded to millions. |
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| If the effect of equity classification would result in a more dilutive Earnings Per Share (“EPS”), the numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market |
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| adjustment for deferred units of LNC stock in our deferred compensation plans. In addition, for any period where a loss from continuing operations is experienced, shares used in the diluted EPS |
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| calculation represent basic shares, as using dilutive shares would be anti-dilutive to the calculation. In these periods, we would also exclude the deferred compensation adjustment. |
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| Return on equity (“ROE”) measures how efficiently we generate profits from the resources provided by our net assets. ROE is calculated by dividing annualized net income (loss) (or |
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| income (loss) from operations) by average equity, excluding accumulated other comprehensive income (loss) (“AOCI”). Management evaluates consolidated ROE by both including |
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| and excluding the effect of average goodwill. |
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| Book value per share, excluding AOCI, is calculated by dividing stockholders’ equity, excluding AOCI, by common shares outstanding. We provide book value |
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| per share, excluding AOCI, to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations. |
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| Pre-tax net margin is calculated by dividing income (loss) from operations before taxes by net revenue, which is defined as total operating revenues less interest credited. |
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| Definitions |
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| Holding company available liquidity consists of cash and invested cash, excluding cash held as collateral, and certain short-term investments that can be readily converted into cash, net of |
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| commercial paper outstanding. |
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| Sales as reported consist of the following: |
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| • MoneyGuard®, our linked-benefit product – 15% of total expected premium deposits; |
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| • Universal life (“UL”), indexed universal life ("IUL"), variable universal life (“VUL”) – first year commissionable premiums plus 5% of excess premiums received, including an adjustment |
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| for internal replacements of approximately 50% of commissionable premiums; |
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| • Executive Benefits - single premium bank-owned UL and VUL, 15% of single premium deposits, and corporate owned UL and VUL, first year commissionable premiums plus |
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| 5% of excess premium received, including an adjustment for internal replacements of approximately 50% of commissionable premiums; |
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| • Term – 100% of annualized first year premiums; |
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| • Annuities – deposits from new and existing customers; and |
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| • Group Protection – annualized first year premiums from new policies. |
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| Throughout the document, “after-DAC” refers to the associated amortization expense of deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales |
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| inducements (“DSI”) and deferred front-end loads (“DFEL”) and changes in other contract holder funds. |
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| Sources of Earnings are defined as follows: |
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| • Investment spread earnings consist primarily of net investment income, net of interest credited earned on the underlying general account investments supporting our fixed products |
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| less related expenses. |
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| • Mortality/morbidity earnings result from mortality margins, morbidity margins, and certain expense assessments and related fees that are a function of the rates priced into the product |
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| and level of insurance in force. |
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| • Fees on Assets Under Management (“AUM”) earnings results consist primarily of asset-based fees charged based on variable account values less associated benefits and related expenses. |
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| • Variable Annuity (“VA”) Riders earnings consist of fees charged to the contract holder related to guaranteed benefit rider features, less the net valuation premium and associated change in |
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| benefit reserves and related expenses. |
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Page 2a |
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| Lincoln Financial Group |
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| Notes |
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| Non-GAAP Performance Measures |
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| Non-GAAP measures do not replace the most directly comparable GAAP measures, and we have included detailed reconciliations herein. |
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| We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at income (loss) from operations: |
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| • Realized gains and losses associated with the following (“excluded realized gain (loss)”): |
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| ▪ Sales or disposals and impairments of securities; |
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| ▪ Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities (“gain (loss) on the mark-to-market on certain |
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| instruments”); |
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| ▪ Changes in the fair value of the derivatives we own to hedge our guaranteed death benefit (“GDB”) riders reflected within our variable annuities; |
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| ▪ Changes in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders reflected within variable annuity net derivative results accounted for at fair value; |
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| ▪ Changes in the fair value of the derivatives we own to hedge our guaranteed living benefit ("GLB") riders reflected within variable annuity net derivative results; |
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| ▪ 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 |
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| future reset periods for our indexed annuity products accounted for at fair value (“indexed annuity forward-starting option”); |
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| • Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders (“benefit ratio unlocking”); |
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| • Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance; |
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| • Gains (losses) on early extinguishment of debt; |
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| • Losses from the impairment of intangible assets; |
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| • Income (loss) from discontinued operations; and |
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| • Income (loss) from the initial adoption of new accounting standards. |
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| Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items: |
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| • Excluded realized gain (loss); |
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| • Revenue adjustments from the initial adoption of new accounting standards; |
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| • Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and |
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| • Amortization of deferred gains arising from reserve changes on business sold through reinsurance. |
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| We use our prevailing 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 |
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| when reconciling our non-GAAP measures to the most comparable GAAP measure. |
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| Management believes that the non-GAAP performance measures discussed above explain the results of our ongoing businesses in a manner that allows for a better understanding of the |
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| underlying trends in our current business as the excluded items are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the |
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| business segments, and, in many instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. In addition, we believe that our |
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| definitions of operating revenues and income from operations provide investors with more valuable measures of our performance as they better reveal trends in our business. |
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| Statistical Supplement is Dated |
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| The financial data in this document is dated May 4, 2016, and has not been updated since that date. Lincoln Financial Group does not intend to update this document. |
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Page 2b |
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| Lincoln Financial Group |
| ||||||||||||||||
| Consolidated Statements of Income (Loss) |
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| Unaudited (millions of dollars, except per share data) |
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| For the Three Months Ended |
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| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Revenues |
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|
|
| Insurance premiums | $ | 790 |
| $ | 782 |
| $ | 825 |
| $ | 848 |
| $ | 816 |
| 3.3% |
|
| Fee income |
| 1,222 |
|
| 1,239 |
|
| 1,469 |
|
| 1,116 |
|
| 1,235 |
| 1.1% |
|
| Net investment income |
| 1,187 |
|
| 1,187 |
|
| 1,254 |
|
| 1,200 |
|
| 1,172 |
| -1.3% |
|
| Realized gain (loss): |
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|
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|
|
| Other-than-temporary impairment (“OTTI”) |
| (13) |
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| (7) |
|
| (18) |
|
| (16) |
|
| (36) |
| NM |
|
| Realized gain (loss), excluding OTTI |
| (35) |
|
| 17 |
|
| 45 |
|
| (124) |
|
| (78) |
| NM |
|
| Total realized gain (loss) |
| (48) |
|
| 10 |
|
| 27 |
|
| (140) |
|
| (114) |
| NM |
|
| Amortization of deferred gains on business |
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|
| sold through reinsurance |
| 18 |
|
| 18 |
|
| 18 |
|
| 18 |
|
| 18 |
| 0.0% |
|
| Other revenues |
| 135 |
|
| 145 |
|
| 123 |
|
| 130 |
|
| 116 |
| -14.1% |
|
| Total revenues |
| 3,304 |
|
| 3,381 |
|
| 3,716 |
|
| 3,172 |
|
| 3,243 |
| -1.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 625 |
|
| 629 |
|
| 622 |
|
| 632 |
|
| 633 |
| 1.3% |
|
| Benefits |
| 1,236 |
|
| 1,220 |
|
| 1,327 |
|
| 1,262 |
|
| 1,331 |
| 7.7% |
|
| Commissions and other expenses |
| 1,013 |
|
| 1,014 |
|
| 1,432 |
|
| 859 |
|
| 976 |
| -3.7% |
|
| Interest and debt expense |
| 68 |
|
| 69 | �� |
| 67 |
|
| 68 |
|
| 68 |
| 0.0% |
|
| Total expenses |
| 2,942 |
|
| 2,932 |
|
| 3,448 |
|
| 2,821 |
|
| 3,008 |
| 2.2% |
|
| Income (loss) from continuing operations before taxes |
| 362 |
|
| 449 |
|
| 268 |
|
| 351 |
|
| 235 |
| -35.1% |
|
| Federal income tax expense (benefit) |
| 62 |
|
| 105 |
|
| 41 |
|
| 68 |
|
| 27 |
| -56.5% |
|
| Net income (loss) |
| 300 |
|
| 344 |
|
| 227 |
|
| 283 |
|
| 208 |
| -30.7% |
|
| Adjustment for LNC stock units in our |
|
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|
|
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|
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|
|
|
|
|
| deferred compensation plans |
| (1) |
|
| - |
|
| (7) |
|
| - |
|
| (7) |
| NM |
|
| Net income (loss) available to common |
|
|
|
|
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|
|
| stockholders – diluted | $ | 299 |
| $ | 344 |
| $ | 220 |
| $ | 283 |
| $ | 201 |
| -32.8% |
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| Earnings (Loss) Per Common Share – Diluted |
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| Net income (loss) | $ | 1.15 |
| $ | 1.35 |
| $ | 0.87 |
| $ | 1.14 |
| $ | 0.82 |
| -28.7% |
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Page 3 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Consolidated Balance Sheets |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
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| As of |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| ASSETS |
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| Investments: |
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|
|
| Available-for-sale (“AFS”) securities: |
|
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|
|
|
|
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|
|
|
|
| Corporate bonds | $ | 77,063 |
| $ | 74,169 |
| $ | 74,432 |
| $ | 74,032 |
| $ | 76,956 |
| -0.1% |
|
| U.S. government bonds |
| 452 |
|
| 428 |
|
| 438 |
|
| 429 |
|
| 450 |
| -0.4% |
|
| Foreign government bonds |
| 561 |
|
| 540 |
|
| 532 |
|
| 524 |
|
| 532 |
| -5.2% |
|
| Mortgage-backed securities |
| 4,674 |
|
| 4,476 |
|
| 4,252 |
|
| 4,104 |
|
| 4,028 |
| -13.8% |
|
| Asset-backed collateralized debt obligations |
| 423 |
|
| 499 |
|
| 515 |
|
| 589 |
|
| 628 |
| 48.5% |
|
| State and municipal bonds |
| 4,705 |
|
| 4,418 |
|
| 4,480 |
|
| 4,480 |
|
| 4,744 |
| 0.8% |
|
| Hybrid and redeemable preferred securities |
| 935 |
|
| 892 |
|
| 857 |
|
| 806 |
|
| 726 |
| -22.4% |
|
| VIEs' fixed maturity securities |
| 598 |
|
| 598 |
|
| 598 |
|
| 598 |
|
| 599 |
| 0.2% |
|
| Equity securities |
| 210 |
|
| 227 |
|
| 242 |
|
| 237 |
|
| 245 |
| 16.7% |
|
| Total AFS securities |
| 89,621 |
|
| 86,247 |
|
| 86,346 |
|
| 85,799 |
|
| 88,908 |
| -0.8% |
|
| Trading securities |
| 2,077 |
|
| 1,949 |
|
| 1,914 |
|
| 1,854 |
|
| 1,864 |
| -10.3% |
|
| Mortgage loans on real estate |
| 7,654 |
|
| 8,171 |
|
| 8,431 |
|
| 8,678 |
|
| 8,916 |
| 16.5% |
|
| Real estate |
| 19 |
|
| 24 |
|
| 21 |
|
| 17 |
|
| 17 |
| -10.5% |
|
| Policy loans |
| 2,664 |
|
| 2,654 |
|
| 2,647 |
|
| 2,545 |
|
| 2,533 |
| -4.9% |
|
| Derivative investments |
| 2,095 |
|
| 1,340 |
|
| 2,020 |
|
| 1,537 |
|
| 2,085 |
| -0.5% |
|
| Other investments |
| 1,885 |
|
| 1,624 |
|
| 1,820 |
|
| 1,778 |
|
| 2,048 |
| 8.6% |
|
| Total investments |
| 106,015 |
|
| 102,009 |
|
| 103,199 |
|
| 102,208 |
|
| 106,371 |
| 0.3% |
|
| Cash and invested cash |
| 3,487 |
|
| 2,327 |
|
| 3,772 |
|
| 3,146 |
|
| 3,177 |
| -8.9% |
|
| DAC and VOBA |
| 8,156 |
|
| 9,150 |
|
| 8,866 |
|
| 9,510 |
|
| 8,984 |
| 10.2% |
|
| Premiums and fees receivable |
| 452 |
|
| 415 |
|
| 383 |
|
| 376 |
|
| 401 |
| -11.3% |
|
| Accrued investment income |
| 1,129 |
|
| 1,064 |
|
| 1,116 |
|
| 1,070 |
|
| 1,108 |
| -1.9% |
|
| Reinsurance recoverables |
| 5,598 |
|
| 5,608 |
|
| 5,559 |
|
| 5,623 |
|
| 5,597 |
| 0.0% |
|
| Funds withheld reinsurance assets |
| 646 |
|
| 642 |
|
| 639 |
|
| 629 |
|
| 630 |
| -2.5% |
|
| Goodwill |
| 2,273 |
|
| 2,273 |
|
| 2,273 |
|
| 2,273 |
|
| 2,273 |
| 0.0% |
|
| Other assets |
| 2,869 |
|
| 3,617 |
|
| 3,420 |
|
| 3,454 |
|
| 3,671 |
| 28.0% |
|
| Separate account assets |
| 127,828 |
|
| 128,079 |
|
| 120,275 |
|
| 123,619 |
|
| 123,506 |
| -3.4% |
|
| Total assets | $ | 258,453 |
| $ | 255,184 |
| $ | 249,502 |
| $ | 251,908 |
| $ | 255,718 |
| -1.1% |
|
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Page 4a |
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| Lincoln Financial Group |
| ||||||||||||||||
| Consolidated Balance Sheets |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
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| As of |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
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| Liabilities |
|
|
|
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|
|
|
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|
|
|
| Future contract benefits | $ | 20,468 |
| $ | 20,166 |
| $ | 20,523 |
| $ | 20,708 |
| $ | 21,438 |
| 4.7% |
|
| Other contract holder funds |
| 75,663 |
|
| 76,243 |
|
| 76,451 |
|
| 77,362 |
|
| 77,475 |
| 2.4% |
|
| Short-term debt |
| 250 |
|
| - |
|
| - |
|
| - |
|
| - |
| -100.0% |
|
| Long-term debt by rating agency leverage definitions: |
|
|
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|
|
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|
|
|
|
|
|
|
|
| Operating (see note (2) on page 6 for details) |
| 1,115 |
|
| 1,115 |
|
| 1,115 |
|
| 1,115 |
|
| 1,115 |
| 0.0% |
|
| Financial |
| 4,480 |
|
| 4,384 |
|
| 4,459 |
|
| 4,438 |
|
| 4,535 |
| 1.2% |
|
| Reinsurance related embedded derivatives |
| 165 |
|
| 120 |
|
| 116 |
|
| 87 |
|
| 111 |
| -32.7% |
|
| Funds withheld reinsurance liabilities |
| 717 |
|
| 718 |
|
| 676 |
|
| 638 |
|
| 597 |
| -16.7% |
|
| Deferred gain on business sold through reinsurance |
| 153 |
|
| 134 |
|
| 116 |
|
| 98 |
|
| 79 |
| -48.4% |
|
| Payables for collateral on investments |
| 5,046 |
|
| 4,587 |
|
| 5,297 |
|
| 4,657 |
|
| 5,017 |
| -0.6% |
|
| VIEs' liabilities |
| 5 |
|
| 3 |
|
| 2 |
|
| 4 |
|
| - |
| -100.0% |
|
| Other liabilities |
| 6,340 |
|
| 4,936 |
|
| 6,071 |
|
| 5,565 |
|
| 7,187 |
| 13.4% |
|
| Separate account liabilities |
| 127,828 |
|
| 128,079 |
|
| 120,275 |
|
| 123,619 |
|
| 123,506 |
| -3.4% |
|
| Total liabilities |
| 242,230 |
|
| 240,485 |
|
| 235,101 |
|
| 238,291 |
|
| 241,060 |
| -0.5% |
|
|
|
|
|
|
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|
|
| Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock |
| 6,493 |
|
| 6,469 |
|
| 6,380 |
|
| 6,298 |
|
| 6,162 |
| -5.1% |
|
| Retained earnings |
| 6,077 |
|
| 6,286 |
|
| 6,358 |
|
| 6,474 |
|
| 6,565 |
| 8.0% |
|
| AOCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized investment gains (losses) |
| 3,929 |
|
| 2,220 |
|
| 1,940 |
|
| 1,149 |
|
| 2,235 |
| -43.1% |
|
| Foreign currency translation adjustment |
| (4) |
|
| 3 |
|
| (2) |
|
| (5) |
|
| (7) |
| -75.0% |
|
| Funded status of employee benefit plans |
| (272) |
|
| (279) |
|
| (275) |
|
| (299) |
|
| (297) |
| -9.2% |
|
| Total AOCI |
| 3,653 |
|
| 1,944 |
|
| 1,663 |
|
| 845 |
|
| 1,931 |
| -47.1% |
|
| Total stockholders’ equity |
| 16,223 |
|
| 14,699 |
|
| 14,401 |
|
| 13,617 |
|
| 14,658 |
| -9.6% |
|
| Total liabilities and stockholders’ equity | $ | 258,453 |
| $ | 255,184 |
| $ | 249,502 |
| $ | 251,908 |
| $ | 255,718 |
| -1.1% |
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Page 4b |
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| Lincoln Financial Group |
| ||||||||||||||||
| Earnings, Shares, and Return on Equity |
| ||||||||||||||||
| Unaudited (millions of dollars, except per share data) |
| ||||||||||||||||
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| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Income (Loss) |
|
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|
|
| Pre-tax income (loss) from operations | $ | 443 |
| $ | 490 |
| $ | 364 |
| $ | 504 |
| $ | 397 |
| -10.4% |
|
| After-tax income (loss) from operations |
| 352 |
|
| 371 |
|
| 289 |
|
| 382 |
|
| 314 |
| -10.8% |
|
| Operating tax rate |
| 20.5% |
|
| 24.3% |
|
| 20.6% |
|
| 24.2% |
|
| 20.9% |
|
|
|
| Net income (loss) |
| 300 |
|
| 344 |
|
| 227 |
|
| 283 |
|
| 208 |
| -30.7% |
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| Average Stockholders’ Equity |
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| Average equity, including AOCI | $ | 15,982 |
| $ | 15,461 |
| $ | 14,550 |
| $ | 14,009 |
| $ | 14,137 |
| -11.5% |
|
| Average AOCI |
| 3,374 |
|
| 2,799 |
|
| 1,804 |
|
| 1,254 |
|
| 1,388 |
| -58.9% |
|
| Average equity, excluding AOCI | $ | 12,608 |
| $ | 12,662 |
| $ | 12,746 |
| $ | 12,755 |
| $ | 12,749 |
| 1.1% |
|
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| ROE |
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| Income (loss) from operations |
| 11.2% |
|
| 11.7% |
|
| 9.1% |
|
| 12.0% |
|
| 9.8% |
|
|
|
| Net income (loss) |
| 9.5% |
|
| 10.9% |
|
| 7.1% |
|
| 8.9% |
|
| 6.5% |
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| Per Share |
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| Income (loss) from operations (diluted) | $ | 1.35 |
| $ | 1.46 |
| $ | 1.11 |
| $ | 1.54 |
| $ | 1.25 |
| -7.4% |
|
| Net income (loss) (diluted) |
| 1.15 |
|
| 1.35 |
|
| 0.87 |
|
| 1.14 |
|
| 0.82 |
| -28.7% |
|
| Dividends declared during the period |
| 0.20 |
|
| 0.20 |
|
| 0.20 |
|
| 0.25 |
|
| 0.25 |
| 25.0% |
|
| Book value, including AOCI |
| 64.14 |
|
| 58.58 |
|
| 58.19 |
|
| 55.85 |
|
| 61.33 |
| -4.4% |
|
| Book value, excluding AOCI |
| 49.70 |
|
| 50.83 |
|
| 51.47 |
|
| 52.38 |
|
| 53.25 |
| 7.1% |
|
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| Shares |
|
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|
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| Repurchased during the period |
| 6.0 |
|
| 2.6 |
|
| 3.7 |
|
| 3.7 |
|
| 5.5 |
| -8.7% |
|
| End-of-period – basic |
| 252.9 |
|
| 250.9 |
|
| 247.5 |
|
| 243.8 |
|
| 239.0 |
| -5.5% |
|
| End-of-period – diluted |
| 257.2 |
|
| 254.1 |
|
| 251.2 |
|
| 246.7 |
|
| 242.2 |
| -5.8% |
|
| Average for the period – diluted |
| 260.6 |
|
| 255.1 |
|
| 253.2 |
|
| 248.9 |
|
| 245.1 |
| -5.9% |
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Page 5 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Key Stakeholder Metrics |
| ||||||||||||||||
| Unaudited (millions of dollars, except per share data) |
| ||||||||||||||||
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| As of or For the Three Months Ended |
| |||||||||||||||
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| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
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| Cash Returned to Common Stockholders |
|
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|
| Shares repurchased | $ | 350 |
| $ | 150 |
| $ | 200 |
| $ | 200 |
| $ | 200 |
| -42.9% |
|
| Common dividends |
| 51 |
|
| 51 |
|
| 50 |
|
| 49 |
|
| 61 |
| 19.6% |
|
| Total cash returned to common stockholders | $ | 401 |
| $ | 201 |
| $ | 250 |
| $ | 249 |
| $ | 261 |
| -34.9% |
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| Leverage Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term debt | $ | 250 |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| -100.0% |
|
| Long-term debt |
| 5,595 |
|
| 5,499 |
|
| 5,574 |
|
| 5,553 |
|
| 5,650 |
| 1.0% |
|
| Total debt (1) |
| 5,845 |
|
| 5,499 |
|
| 5,574 |
|
| 5,553 |
|
| 5,650 |
| -3.3% |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term operating debt (2) |
| 1,115 |
|
| 1,115 |
|
| 1,115 |
|
| 1,115 |
|
| 1,115 |
| 0.0% |
|
| 25% of capital securities |
| 301 |
|
| 301 |
|
| 302 |
|
| 302 |
|
| 302 |
| 0.3% |
|
| Carrying value of fair value hedges |
| 315 |
|
| 217 |
|
| 292 |
|
| 270 |
|
| 365 |
| 15.9% |
|
| Total numerator | $ | 4,114 |
| $ | 3,866 |
| $ | 3,865 |
| $ | 3,866 |
| $ | 3,868 |
| -6.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ equity, excluding unrealized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| investment gains (losses) | $ | 12,294 |
| $ | 12,479 |
| $ | 12,461 |
| $ | 12,468 |
| $ | 12,423 |
| 1.0% |
|
| Add: 25% of capital securities |
| 301 |
|
| 301 |
|
| 302 |
|
| 302 |
|
| 302 |
| 0.3% |
|
| Total numerator |
| 4,114 |
|
| 3,866 |
|
| 3,865 |
|
| 3,866 |
|
| 3,868 |
| -6.0% |
|
| Total denominator | $ | 16,709 |
| $ | 16,646 |
| $ | 16,628 |
| $ | 16,636 |
| $ | 16,593 |
| -0.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leverage ratio |
| 24.6% |
|
| 23.2% |
|
| 23.2% |
|
| 23.2% |
|
| 23.3% |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
| Holding Company Available Liquidity | $ | 786 |
| $ | 545 |
| $ | 505 |
| $ | 608 |
| $ | 539 |
| -31.4% |
|
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|
|
| (1) Excludes obligations under capital leases of $130 million that are reported in other liabilities on our Consolidated Balance Sheets. |
| ||||||||||||||||
| (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. |
| ||||||||||||||||
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Page 6 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Segment and Sources of Earnings |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Income (Loss) from Operations, Pre-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities | $ | 293 |
| $ | 328 |
| $ | 328 |
| $ | 309 |
| $ | 272 |
| -7.2% |
|
| Retirement Plan Services |
| 48 |
|
| 39 |
|
| 57 |
|
| 45 |
|
| 41 |
| -14.6% |
|
| Life Insurance |
| 156 |
|
| 152 |
|
| 46 |
|
| 175 |
|
| 103 |
| -34.0% |
|
| Group Protection |
| (10) |
|
| 30 |
|
| 26 |
|
| 20 |
|
| 8 |
| 180.0% |
|
| Other Operations |
| (44) |
|
| (59) |
|
| (93) |
|
| (45) |
|
| (27) |
| 38.6% |
|
| Income (loss) from operations, before income taxes | $ | 443 |
| $ | 490 |
| $ | 364 |
| $ | 504 |
| $ | 397 |
| -10.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sources of Earnings, Pre-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment spread | $ | 164 |
| $ | 175 |
| $ | 136 |
| $ | 179 |
| $ | 139 |
| -15.2% |
|
| Mortality/morbidity |
| 74 |
|
| 110 |
|
| 48 |
|
| 115 |
|
| 65 |
| -12.2% |
|
| Fees on AUM |
| 205 |
|
| 218 |
|
| 282 |
|
| 219 |
|
| 191 |
| -6.8% |
|
| VA riders |
| 44 |
|
| 46 |
|
| (9) |
|
| 36 |
|
| 29 |
| -34.1% |
|
| Total sources of earnings, before income taxes |
| 487 |
|
| 549 |
|
| 457 |
|
| 549 |
|
| 424 |
| -12.9% |
|
| Other Operations |
| (44) |
|
| (59) |
|
| (93) |
|
| (45) |
|
| (27) |
| 38.6% |
|
| Income (loss) from operations, before income taxes | $ | 443 |
| $ | 490 |
| $ | 364 |
| $ | 504 |
| $ | 397 |
| -10.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sources of Earnings, Pre-Taxes, Percentage By Component |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Investment spread |
| 33.8% |
|
| 32.0% |
|
| 29.7% |
|
| 32.6% |
|
| 32.8% |
|
|
|
| Mortality/morbidity |
| 15.2% |
|
| 19.9% |
|
| 10.4% |
|
| 21.0% |
|
| 15.3% |
|
|
|
| Fees on AUM |
| 42.0% |
|
| 39.7% |
|
| 61.9% |
|
| 39.9% |
|
| 45.1% |
|
|
|
| VA riders |
| 9.0% |
|
| 8.4% |
|
| -2.0% |
|
| 6.5% |
|
| 6.8% |
|
|
|
| Total |
| 100.0% |
|
| 100.0% |
|
| 100.0% |
|
| 100.0% |
|
| 100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) from Operations, After-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities | $ | 239 |
| $ | 255 |
| $ | 259 |
| $ | 243 |
| $ | 218 |
| -8.8% |
|
| Retirement Plan Services |
| 35 |
|
| 30 |
|
| 42 |
|
| 33 |
|
| 31 |
| -11.4% |
|
| Life Insurance |
| 111 |
|
| 105 |
|
| 36 |
|
| 119 |
|
| 75 |
| -32.4% |
|
| Group Protection |
| (6) |
|
| 19 |
|
| 17 |
|
| 13 |
|
| 5 |
| 183.3% |
|
| Other Operations |
| (27) |
|
| (38) |
|
| (65) |
|
| (26) |
|
| (15) |
| 44.4% |
|
| Income (loss) from operations | $ | 352 |
| $ | 371 |
| $ | 289 |
| $ | 382 |
| $ | 314 |
| -10.8% |
|
|
|
|
|
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Page 7 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Select Earnings Drivers By Segment |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
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|
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|
|
|
|
|
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|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 989 |
| $ | 991 |
| $ | 1,060 |
| $ | 1,079 |
| $ | 1,039 |
| 5.1% |
|
| Deposits |
| 2,990 |
|
| 3,380 |
|
| 3,304 |
|
| 3,018 |
|
| 2,353 |
| -21.3% |
|
| Net flows |
| 196 |
|
| 397 |
|
| 536 |
|
| 435 |
|
| (35) |
| NM |
|
| Average account values |
| 122,877 |
|
| 125,820 |
|
| 122,668 |
|
| 122,330 |
|
| 118,189 |
| -3.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Retirement Plan Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 273 |
| $ | 270 |
| $ | 282 |
| $ | 276 |
| $ | 267 |
| -2.2% |
|
| Deposits |
| 1,704 |
|
| 1,862 |
|
| 1,884 |
|
| 2,095 |
|
| 1,791 |
| 5.1% |
|
| Net flows |
| 115 |
|
| 306 |
|
| 251 |
|
| (221) |
|
| 78 |
| -32.2% |
|
| Average account values |
| 54,018 |
|
| 55,264 |
|
| 54,184 |
|
| 54,396 |
|
| 52,999 |
| -1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 1,432 |
| $ | 1,443 |
| $ | 1,727 |
| $ | 1,348 |
| $ | 1,478 |
| 3.2% |
|
| Deposits |
| 1,311 |
|
| 1,344 |
|
| 1,400 |
|
| 1,542 |
|
| 1,238 |
| -5.6% |
|
| Net flows |
| 888 |
|
| 929 |
|
| 1,019 |
|
| 1,170 |
|
| 830 |
| -6.5% |
|
| Average account values |
| 42,468 |
|
| 42,891 |
|
| 42,963 |
|
| 43,269 |
|
| 43,795 |
| 3.1% |
|
| Average in-force face amount |
| 642,258 |
|
| 646,261 |
|
| 651,256 |
|
| 657,846 |
|
| 664,753 |
| 3.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Group Protection |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 605 |
| $ | 617 |
| $ | 570 |
| $ | 565 |
| $ | 534 |
| -11.7% |
|
| Non-medical earned premiums |
| 535 |
|
| 535 |
|
| 522 |
|
| 516 |
|
| 489 |
| -8.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 3,394 |
| $ | 3,417 |
| $ | 3,735 |
| $ | 3,354 |
| $ | 3,400 |
| 0.2% |
|
| Deposits |
| 6,005 |
|
| 6,586 |
|
| 6,588 |
|
| 6,655 |
|
| 5,382 |
| -10.4% |
|
| Net flows |
| 1,199 |
|
| 1,632 |
|
| 1,806 |
|
| 1,384 |
|
| 873 |
| -27.2% |
|
| Average account values |
| 219,363 |
|
| 223,975 |
|
| 219,815 |
|
| 219,995 |
|
| 214,983 |
| -2.0% |
|
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Page 8 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Sales By Segment |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| With guaranteed living benefits | $ | 1,982 |
| $ | 2,157 |
| $ | 1,991 |
| $ | 1,698 |
| $ | 1,248 |
| -37.0% |
|
| Without guaranteed living benefits |
| 715 |
|
| 858 |
|
| 747 |
|
| 664 |
|
| 437 |
| -38.9% |
|
| Variable |
| 2,697 |
|
| 3,015 |
|
| 2,738 |
|
| 2,362 |
|
| 1,685 |
| -37.5% |
|
| Fixed |
| 293 |
|
| 365 |
|
| 566 |
|
| 656 |
|
| 668 |
| 128.0% |
|
| Total Annuities | $ | 2,990 |
| $ | 3,380 |
| $ | 3,304 |
| $ | 3,018 |
| $ | 2,353 |
| -21.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Retirement Plan Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| First-year sales | $ | 382 |
| $ | 673 |
| $ | 706 |
| $ | 902 |
| $ | 393 |
| 2.9% |
|
| Recurring deposits |
| 1,322 |
|
| 1,189 |
|
| 1,178 |
|
| 1,193 |
|
| 1,398 |
| 5.7% |
|
| Total Retirement Plan Services | $ | 1,704 |
| $ | 1,862 |
| $ | 1,884 |
| $ | 2,095 |
| $ | 1,791 |
| 5.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UL | $ | 20 |
| $ | 22 |
| $ | 23 |
| $ | 25 |
| $ | 18 |
| -10.0% |
|
| MoneyGuard® |
| 40 |
|
| 46 |
|
| 52 |
|
| 54 |
|
| 42 |
| 5.0% |
|
| IUL |
| 15 |
|
| 23 |
|
| 21 |
|
| 27 |
|
| 18 |
| 20.0% |
|
| VUL |
| 45 |
|
| 43 |
|
| 47 |
|
| 58 |
|
| 29 |
| -35.6% |
|
| Term |
| 19 |
|
| 21 |
|
| 20 |
|
| 25 |
|
| 25 |
| 31.6% |
|
| Total individual life insurance |
| 139 |
|
| 155 |
|
| 163 |
|
| 189 |
|
| 132 |
| -5.0% |
|
| Executive Benefits |
| 14 |
|
| 46 |
|
| 10 |
|
| 9 |
|
| 7 |
| -50.0% |
|
| Total Life Insurance | $ | 153 |
| $ | 201 |
| $ | 173 |
| $ | 198 |
| $ | 139 |
| -9.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Group Protection: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life | $ | 25 |
| $ | 26 |
| $ | 24 |
| $ | 86 |
| $ | 27 |
| 8.0% |
|
| Disability |
| 22 |
|
| 23 |
|
| 22 |
|
| 94 |
|
| 22 |
| 0.0% |
|
| Dental |
| 9 |
|
| 13 |
|
| 15 |
|
| 43 |
|
| 10 |
| 11.1% |
|
| Total Group Protection | $ | 56 |
| $ | 62 |
| $ | 61 |
| $ | 223 |
| $ | 59 |
| 5.4% |
|
| Percent employee-paid |
| 61.0% |
|
| 44.2% |
|
| 49.5% |
|
| 47.4% |
|
| 54.5% |
|
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Page 9 |
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|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Operating Revenues and General and Administrative Expenses By Segment |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities | $ | 989 |
| $ | 991 |
| $ | 1,060 |
| $ | 1,079 |
| $ | 1,039 |
| 5.1% |
|
| Retirement Plan Services |
| 273 |
|
| 270 |
|
| 282 |
|
| 276 |
|
| 267 |
| -2.2% |
|
| Life Insurance |
| 1,432 |
|
| 1,443 |
|
| 1,727 |
|
| 1,348 |
|
| 1,478 |
| 3.2% |
|
| Group Protection |
| 605 |
|
| 617 |
|
| 570 |
|
| 565 |
|
| 534 |
| -11.7% |
|
| Other Operations |
| 95 |
|
| 96 |
|
| 96 |
|
| 86 |
|
| 82 |
| -13.7% |
|
| Total | $ | 3,394 |
| $ | 3,417 |
| $ | 3,735 |
| $ | 3,354 |
| $ | 3,400 |
| 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and Administrative Expenses, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net of Amounts Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities | $ | 109 |
| $ | 118 |
| $ | 113 |
| $ | 120 |
| $ | 114 |
| 4.6% |
|
| Retirement Plan Services |
| 71 |
|
| 78 |
|
| 77 |
|
| 80 |
|
| 74 |
| 4.2% |
|
| Life Insurance |
| 108 |
|
| 114 |
|
| 105 |
|
| 115 |
|
| 111 |
| 2.8% |
|
| Group Protection |
| 67 |
|
| 71 |
|
| 70 |
|
| 72 |
|
| 69 |
| 3.0% |
|
| Other Operations |
| 14 |
|
| 26 |
|
| 56 |
|
| 18 |
|
| - |
| -100.0% |
|
| Total | $ | 369 |
| $ | 407 |
| $ | 421 |
| $ | 405 |
| $ | 368 |
| -0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and Administrative Expenses, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net of Amounts Capitalized, as a Percentage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| of Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities |
| 11.1% |
|
| 11.9% |
|
| 10.6% |
|
| 11.1% |
|
| 11.0% |
|
|
|
| Retirement Plan Services |
| 25.9% |
|
| 28.9% |
|
| 27.2% |
|
| 29.0% |
|
| 27.7% |
|
|
|
| Life Insurance |
| 7.6% |
|
| 7.9% |
|
| 6.1% |
|
| 8.5% |
|
| 7.5% |
|
|
|
| Group Protection |
| 11.1% |
|
| 11.4% |
|
| 12.2% |
|
| 12.7% |
|
| 13.0% |
|
|
|
| Other Operations |
| 14.3% |
|
| 27.5% |
|
| 57.9% |
|
| 22.0% |
|
| 0.6% |
|
|
|
| Total |
| 10.9% |
|
| 11.9% |
|
| 11.3% |
|
| 12.1% |
|
| 10.8% |
|
|
|
|
|
|
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Page 10 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Operating Commissions and Other Expenses |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Operating Commissions and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Expenses Incurred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative expenses | $ | 416 |
| $ | 452 |
| $ | 468 |
| $ | 465 |
| $ | 410 |
| -1.4% |
|
| Commissions |
| 577 |
|
| 602 |
|
| 598 |
|
| 623 |
|
| 522 |
| -9.5% |
|
| Media expenses |
| 14 |
|
| 14 |
|
| - |
|
| - |
|
| - |
| -100.0% |
|
| Taxes, licenses and fees |
| 74 |
|
| 57 |
|
| 63 |
|
| 46 |
|
| 68 |
| -8.1% |
|
| Interest and debt expense |
| 68 |
|
| 69 |
|
| 67 |
|
| 68 |
|
| 68 |
| 0.0% |
|
| Expenses associated with reserve financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| and unrelated letters of credit |
| 19 |
|
| 18 |
|
| 18 |
|
| 18 |
|
| 18 |
| -5.3% |
|
| Total operating commissions and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| expenses incurred |
| 1,168 |
|
| 1,212 |
|
| 1,214 |
|
| 1,220 |
|
| 1,086 |
| -7.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less Amounts Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative expenses |
| (47) |
|
| (45) |
|
| (47) |
|
| (60) |
|
| (42) |
| 10.6% |
|
| Commissions |
| (296) |
|
| (313) |
|
| (320) |
|
| (340) |
|
| (251) |
| 15.2% |
|
| Taxes, licenses and fees |
| (8) |
|
| (8) |
|
| (8) |
|
| (7) |
|
| (8) |
| 0.0% |
|
| Total amounts capitalized |
| (351) |
|
| (366) |
|
| (375) |
|
| (407) |
|
| (301) |
| 14.2% |
|
| Total expenses incurred, net of amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| capitalized, excluding amortization |
| 817 |
|
| 846 |
|
| 839 |
|
| 813 |
|
| 785 |
| -3.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of DAC and VOBA |
| 261 |
|
| 237 |
|
| 674 |
|
| 110 |
|
| 258 |
| -1.1% |
|
| Amortization of intangibles |
| 1 |
|
| 1 |
|
| 1 |
|
| 1 |
|
| 1 |
| 0.0% |
|
| Total amortization |
| 262 |
|
| 238 |
|
| 675 |
|
| 111 |
|
| 259 |
| -1.1% |
|
| Total operating commissions and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| other expenses | $ | 1,079 |
| $ | 1,084 |
| $ | 1,514 |
| $ | 924 |
| $ | 1,044 |
| -3.2% |
|
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Page 11 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Interest Rate Yields and Spreads By Segment |
| ||||||||||||||||
| Unaudited |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earned rate on reserves |
| 4.24% |
|
| 4.20% |
|
| 4.19% |
|
| 4.12% |
|
| 4.12% |
| (12) |
|
| Variable investment income on reserves (1) |
| 0.20% |
|
| 0.06% |
|
| 0.18% |
|
| 0.15% |
|
| 0.06% |
| (14) |
|
| Net investment income yield on reserves |
| 4.44% |
|
| 4.26% |
|
| 4.37% |
|
| 4.27% |
|
| 4.18% |
| (26) |
|
| Interest rate credited to contract holders |
| 2.64% |
|
| 2.61% |
|
| 2.56% |
|
| 2.53% |
|
| 2.60% |
| (4) |
|
| Interest rate spread |
| 1.80% |
|
| 1.65% |
|
| 1.81% |
|
| 1.74% |
|
| 1.58% |
| (22) |
|
| Base spreads excluding variable investment income |
| 1.60% |
|
| 1.59% |
|
| 1.63% |
|
| 1.59% |
|
| 1.52% |
| (8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Retirement Plan Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earned rate on reserves |
| 4.65% |
|
| 4.61% |
|
| 4.71% |
|
| 4.62% |
|
| 4.58% |
| (7) |
|
| Variable investment income on reserves (1) |
| 0.18% |
|
| 0.03% |
|
| 0.19% |
|
| 0.12% |
|
| 0.05% |
| (13) |
|
| Net investment income yield on reserves |
| 4.83% |
|
| 4.64% |
|
| 4.90% |
|
| 4.74% |
|
| 4.63% |
| (20) |
|
| Interest rate credited to contract holders |
| 3.02% |
|
| 3.01% |
|
| 3.01% |
|
| 3.01% |
|
| 2.98% |
| (4) |
|
| Interest rate spread |
| 1.81% |
|
| 1.63% |
|
| 1.89% |
|
| 1.73% |
|
| 1.65% |
| (16) |
|
| Base spreads excluding variable investment income |
| 1.63% |
|
| 1.60% |
|
| 1.70% |
|
| 1.61% |
|
| 1.60% |
| (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earned rate on reserves |
| 5.33% |
|
| 5.31% |
|
| 5.33% |
|
| 5.33% |
|
| 5.26% |
| (7) |
|
| Variable investment income on reserves (1) |
| 0.22% |
|
| 0.19% |
|
| 0.42% |
|
| 0.08% |
|
| -0.01% |
| (23) |
|
| Net investment income yield on reserves |
| 5.55% |
|
| 5.50% |
|
| 5.75% |
|
| 5.41% |
|
| 5.25% |
| (30) |
|
| Interest rate credited to contract holders |
| 3.88% |
|
| 3.97% |
|
| 3.92% |
|
| 3.97% |
|
| 3.92% |
| 4 |
|
| Interest rate spread |
| 1.67% |
|
| 1.53% |
|
| 1.83% |
|
| 1.44% |
|
| 1.33% |
| (34) |
|
| Base spreads excluding variable investment income |
| 1.45% |
|
| 1.34% |
|
| 1.41% |
|
| 1.36% |
|
| 1.34% |
| (11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earned rate (3) |
| 4.84% |
|
| 4.80% |
|
| 4.86% |
|
| 4.85% |
|
| 4.78% |
| (6) |
|
| Variable investment income (1) (3) |
| 0.19% |
|
| 0.17% |
|
| 0.36% |
|
| 0.09% |
|
| -0.01% |
| (20) |
|
| Net investment income yield (3) |
| 5.03% |
|
| 4.97% |
|
| 5.22% |
|
| 4.94% |
|
| 4.77% |
| (26) |
|
| Interest rate credited to contract holders |
| 3.34% |
|
| 3.38% |
|
| 3.34% |
|
| 3.35% |
|
| 3.34% |
| - |
|
| Interest rate spread |
| 1.69% |
|
| 1.59% |
|
| 1.88% |
|
| 1.59% |
|
| 1.43% |
| (26) |
|
| Base spreads excluding variable investment income |
| 1.50% |
|
| 1.42% |
|
| 1.52% |
|
| 1.50% |
|
| 1.44% |
| (6) |
|
| (1) Variable investment income consists of commercial mortgage loan prepayment and bond make-whole premiums and investment income on alternative investments. |
|
|
| ||||||||||||||
| (2) Includes the results of all of our business segments and Other Operations. |
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
| (3) Includes investment yields on reserves and surplus. |
|
|
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Page 12 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Annuities – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 79 |
| $ | 55 |
| $ | 129 |
| $ | 154 |
| $ | 151 |
| 91.1% |
|
| Fee income |
| 510 |
|
| 531 |
|
| 520 |
|
| 517 |
|
| 493 |
| -3.3% |
|
| Net investment income |
| 247 |
|
| 247 |
|
| 257 |
|
| 252 |
|
| 251 |
| 1.6% |
|
| Operating realized gain (loss) |
| 43 |
|
| 45 |
|
| 45 |
|
| 44 |
|
| 44 |
| 2.3% |
|
| Other revenues |
| 110 |
|
| 113 |
|
| 109 |
|
| 112 |
|
| 100 |
| -9.1% |
|
| Total operating revenues |
| 989 |
|
| 991 |
|
| 1,060 |
|
| 1,079 |
|
| 1,039 |
| 5.1% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 143 |
|
| 139 |
|
| 134 |
|
| 135 |
|
| 140 |
| -2.1% |
|
| Benefits |
| 129 |
|
| 90 |
|
| 219 |
|
| 214 |
|
| 216 |
| 67.4% |
|
| Commissions incurred |
| 249 |
|
| 267 |
|
| 261 |
|
| 257 |
|
| 218 |
| -12.4% |
|
| Other expenses incurred |
| 222 |
|
| 231 |
|
| 220 |
|
| 227 |
|
| 218 |
| -1.8% |
|
| Amounts capitalized |
| (147) |
|
| (165) |
|
| (160) |
|
| (146) |
|
| (112) |
| 23.8% |
|
| Amortization |
| 100 |
|
| 101 |
|
| 58 |
|
| 83 |
|
| 87 |
| -13.0% |
|
| Total operating expenses |
| 696 |
|
| 663 |
|
| 732 |
|
| 770 |
|
| 767 |
| 10.2% |
|
| Income (loss) from operations before taxes |
| 293 |
|
| 328 |
|
| 328 |
|
| 309 |
|
| 272 |
| -7.2% |
|
| Federal income tax expense (benefit) |
| 54 |
|
| 73 |
|
| 69 |
|
| 66 |
|
| 54 |
| 0.0% |
|
| Income (loss) from operations | $ | 239 |
| $ | 255 |
| $ | 259 |
| $ | 243 |
| $ | 218 |
| -8.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 18.2% |
|
| 22.4% |
|
| 20.9% |
|
| 21.4% |
|
| 19.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Equity, Excluding Goodwill and AOCI | $ | 3,887 |
| $ | 4,073 |
| $ | 4,262 |
| $ | 4,335 |
| $ | 4,381 |
| 12.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROE, Excluding Goodwill |
| 24.6% |
|
| 25.0% |
|
| 24.3% |
|
| 22.4% |
|
| 19.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on Average Account Values |
| 78 |
|
| 81 |
|
| 84 |
|
| 79 |
|
| 74 |
| (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Account Values |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Variable annuity account values: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average | $ | 105,240 |
| $ | 108,051 |
| $ | 104,676 |
| $ | 104,052 |
| $ | 99,610 |
| -5.3% |
|
| End-of-period |
| 106,279 |
|
| 106,600 |
|
| 100,580 |
|
| 103,145 |
|
| 102,902 |
| -3.2% |
|
| Fixed annuity account values: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average |
| 17,637 |
|
| 17,769 |
|
| 17,992 |
|
| 18,278 |
|
| 18,579 |
| 5.3% |
|
| End-of-period |
| 17,975 |
|
| 17,935 |
|
| 18,027 |
|
| 18,451 |
|
| 18,829 |
| 4.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 13 |
|
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|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Retirement Plan Services – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fee income | $ | 62 |
| $ | 61 |
| $ | 60 |
| $ | 61 |
| $ | 55 |
| -11.3% |
|
| Net investment income |
| 208 |
|
| 206 |
|
| 219 |
|
| 213 |
|
| 207 |
| -0.5% |
|
| Other revenues |
| 3 |
|
| 3 |
|
| 3 |
|
| 2 |
|
| 5 |
| 66.7% |
|
| Total operating revenues |
| 273 |
|
| 270 |
|
| 282 |
|
| 276 |
|
| 267 |
| -2.2% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 123 |
|
| 123 |
|
| 124 |
|
| 126 |
|
| 125 |
| 1.6% |
|
| Benefits |
| - |
|
| 1 |
|
| - |
|
| - |
|
| - |
| NM |
|
| Commissions incurred |
| 20 |
|
| 20 |
|
| 19 |
|
| 19 |
|
| 19 |
| -5.0% |
|
| Other expenses incurred |
| 80 |
|
| 85 |
|
| 83 |
|
| 88 |
|
| 82 |
| 2.5% |
|
| Amounts capitalized |
| (7) |
|
| (7) |
|
| (6) |
|
| (9) |
|
| (6) |
| 14.3% |
|
| Amortization |
| 9 |
|
| 9 |
|
| 5 |
|
| 7 |
|
| 6 |
| -33.3% |
|
| Total operating expenses |
| 225 |
|
| 231 |
|
| 225 |
|
| 231 |
|
| 226 |
| 0.4% |
|
| Income (loss) from operations before taxes |
| 48 |
|
| 39 |
|
| 57 |
|
| 45 |
|
| 41 |
| -14.6% |
|
| Federal income tax expense (benefit) |
| 13 |
|
| 9 |
|
| 15 |
|
| 12 |
|
| 10 |
| -23.1% |
|
| Income (loss) from operations | $ | 35 |
| $ | 30 |
| $ | 42 |
| $ | 33 |
| $ | 31 |
| -11.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 26.8% |
|
| 24.1% |
|
| 27.3% |
|
| 25.4% |
|
| 25.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Equity, Excluding Goodwill and AOCI | $ | 1,006 |
| $ | 993 |
| $ | 1,010 |
| $ | 1,045 |
| $ | 1,067 |
| 6.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROE, Excluding Goodwill |
| 14.0% |
|
| 12.0% |
|
| 16.4% |
|
| 12.8% |
|
| 11.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax Net Margin |
| 32.1% |
|
| 26.8% |
|
| 36.2% |
|
| 29.8% |
|
| 29.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on Average Account Values |
| 26 |
|
| 22 |
|
| 31 |
|
| 25 |
|
| 23 |
| -11.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Flows by Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Small Market |
| (19) |
|
| 2 |
|
| 88 |
|
| 190 |
|
| 13 |
| 168.4% |
|
| Mid - Large Market |
| 387 |
|
| 555 |
|
| 359 |
|
| (185) |
|
| 215 |
| -44.4% |
|
| Multi-Fund® and Other |
| (253) |
|
| (251) |
|
| (196) |
|
| (226) |
|
| (150) |
| 40.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Flows – Trailing Twelve Months | $ | (405) |
| $ | (465) |
| $ | (264) |
| $ | 452 |
| $ | 415 |
| 202.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 14 |
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Life Insurance – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of or For the Three Months Ended |
| ||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 149 |
| $ | 160 |
| $ | 166 |
| $ | 174 |
| $ | 172 |
| 15.4% |
|
| Fee income |
| 649 |
|
| 647 |
|
| 890 |
|
| 538 |
|
| 687 |
| 5.9% |
|
| Net investment income |
| 626 |
|
| 626 |
|
| 662 |
|
| 628 |
|
| 611 |
| -2.4% |
|
| Operating realized gain (loss) |
| - |
|
| 2 |
|
| - |
|
| (1) |
|
| - |
| NM |
|
| Other revenues |
| 8 |
|
| 8 |
|
| 9 |
|
| 9 |
|
| 8 |
| 0.0% |
|
| Total operating revenues |
| 1,432 |
|
| 1,443 |
|
| 1,727 |
|
| 1,348 |
|
| 1,478 |
| 3.2% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 338 |
|
| 345 |
|
| 344 |
|
| 352 |
|
| 348 |
| 3.0% |
|
| Benefits |
| 650 |
|
| 673 |
|
| 578 |
|
| 661 |
|
| 740 |
| 13.8% |
|
| Commissions incurred |
| 162 |
|
| 160 |
|
| 175 |
|
| 199 |
|
| 147 |
| -9.3% |
|
| Other expenses incurred |
| 185 |
|
| 183 |
|
| 182 |
|
| 181 |
|
| 185 |
| 0.0% |
|
| Amounts capitalized |
| (179) |
|
| (182) |
|
| (193) |
|
| (224) |
|
| (165) |
| 7.8% |
|
| Amortization |
| 120 |
|
| 112 |
|
| 595 |
|
| 4 |
|
| 120 |
| 0.0% |
|
| Total operating expenses |
| 1,276 |
|
| 1,291 |
|
| 1,681 |
|
| 1,173 |
|
| 1,375 |
| 7.8% |
|
| Income (loss) from operations before taxes |
| 156 |
|
| 152 |
|
| 46 |
|
| 175 |
|
| 103 |
| -34.0% |
|
| Federal income tax expense (benefit) |
| 45 |
|
| 47 |
|
| 10 |
|
| 56 |
|
| 28 |
| -37.8% |
|
| Income (loss) from operations | $ | 111 |
| $ | 105 |
| $ | 36 |
| $ | 119 |
| $ | 75 |
| -32.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 28.8% |
|
| 31.4% |
|
| 22.5% |
|
| 31.6% |
|
| 27.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Equity, Excluding Goodwill and AOCI | $ | 6,226 |
| $ | 6,422 |
| $ | 6,506 |
| $ | 6,435 |
| $ | 6,405 |
| 2.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROE, Excluding Goodwill |
| 7.1% |
|
| 6.5% |
|
| 2.2% |
|
| 7.4% |
|
| 4.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Account Values | $ | 42,468 |
| $ | 42,891 |
| $ | 42,963 |
| $ | 43,269 |
| $ | 43,795 |
| 3.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In-Force Face Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UL and other | $ | 324,815 |
| $ | 326,026 |
| $ | 328,115 |
| $ | 331,299 |
| $ | 331,690 |
| 2.1% |
|
| Term insurance |
| 318,832 |
|
| 322,848 |
|
| 325,522 |
|
| 330,755 |
|
| 335,762 |
| 5.3% |
|
| Total in-force face amount | $ | 643,647 |
| $ | 648,874 |
| $ | 653,637 |
| $ | 662,054 |
| $ | 667,452 |
| 3.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 15 |
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Group Protection – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 561 |
| $ | 567 |
| $ | 519 |
| $ | 516 |
| $ | 489 |
| -12.8% |
|
| Net investment income |
| 43 |
|
| 47 |
|
| 48 |
|
| 45 |
|
| 42 |
| -2.3% |
|
| Other revenues |
| 1 |
|
| 3 |
|
| 3 |
|
| 4 |
|
| 3 |
| 200.0% |
|
| Total operating revenues |
| 605 |
|
| 617 |
|
| 570 |
|
| 565 |
|
| 534 |
| -11.7% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 1 |
|
| 1 |
|
| - |
|
| 1 |
|
| 1 |
| 0.0% |
|
| Benefits |
| 440 |
|
| 421 |
|
| 386 |
|
| 387 |
|
| 340 |
| -22.7% |
|
| Commissions incurred |
| 66 |
|
| 69 |
|
| 62 |
|
| 63 |
|
| 62 |
| -6.1% |
|
| Other expenses incurred |
| 94 |
|
| 93 |
|
| 95 |
|
| 104 |
|
| 93 |
| -1.1% |
|
| Amounts capitalized |
| (17) |
|
| (12) |
|
| (16) |
|
| (27) |
|
| (15) |
| 11.8% |
|
| Amortization |
| 31 |
|
| 15 |
|
| 17 |
|
| 17 |
|
| 45 |
| 45.2% |
|
| Total operating expenses |
| 615 |
|
| 587 |
|
| 544 |
|
| 545 |
|
| 526 |
| -14.5% |
|
| Income (loss) from operations before taxes |
| (10) |
|
| 30 |
|
| 26 |
|
| 20 |
|
| 8 |
| 180.0% |
|
| Federal income tax expense (benefit) |
| (4) |
|
| 11 |
|
| 9 |
|
| 7 |
|
| 3 |
| 175.0% |
|
| Income (loss) from operations | $ | (6) |
| $ | 19 |
| $ | 17 |
| $ | 13 |
| $ | 5 |
| 183.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 35.0% |
|
| 35.0% |
|
| 35.0% |
|
| 35.0% |
|
| 35.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Equity, Excluding Goodwill and AOCI | $ | 1,241 |
| $ | 1,238 |
| $ | 1,228 |
| $ | 1,217 |
| $ | 1,203 |
| -3.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROE, Excluding Goodwill |
| -2.1% |
|
| 6.3% |
|
| 5.4% |
|
| 4.4% |
|
| 1.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss Ratios by Product Line |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life |
| 77.7% |
|
| 72.0% |
|
| 70.5% |
|
| 72.3% |
|
| 71.1% |
|
|
|
| Disability |
| 79.7% |
|
| 75.4% |
|
| 79.3% |
|
| 79.5% |
|
| 67.2% |
|
|
|
| Dental |
| 73.0% |
|
| 72.3% |
|
| 70.3% |
|
| 69.1% |
|
| 73.5% |
|
|
|
| Total non-medical |
| 78.1% |
|
| 73.6% |
|
| 74.5% |
|
| 75.3% |
|
| 69.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 16 |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Other Operations – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
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|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Other Operations |
|
|
|
|
|
|
|
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|
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|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | - |
| $ | 1 |
| $ | 11 |
| $ | 4 |
| $ | 3 |
| NM |
|
| Net investment income |
| 63 |
|
| 61 |
|
| 67 |
|
| 62 |
|
| 61 |
| -3.2% |
|
| Amortization of deferred gain on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| business sold through reinsurance |
| 18 |
|
| 18 |
|
| 18 |
|
| 18 |
|
| 18 |
| 0.0% |
|
| Media revenues |
| 14 |
|
| 16 |
|
| - |
|
| - |
|
| - |
| -100.0% |
|
| Other revenues |
| - |
|
| - |
|
| - |
|
| 2 |
|
| - |
| NM |
|
| Total operating revenues |
| 95 |
|
| 96 |
|
| 96 |
|
| 86 |
|
| 82 |
| -13.7% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 21 |
|
| 20 |
|
| 20 |
|
| 19 |
|
| 20 |
| -4.8% |
|
| Benefits |
| 27 |
|
| 30 |
|
| 52 |
|
| 31 |
|
| 29 |
| 7.4% |
|
| Media expenses |
| 14 |
|
| 14 |
|
| - |
|
| - |
|
| - |
| -100.0% |
|
| Commissions and other expenses |
| 9 |
|
| 22 |
|
| 50 |
|
| 13 |
|
| (8) |
| NM |
|
| Interest and debt expenses |
| 68 |
|
| 69 |
|
| 67 |
|
| 68 |
|
| 68 |
| 0.0% |
|
| Total operating expenses |
| 139 |
|
| 155 |
|
| 189 |
|
| 131 |
|
| 109 |
| -21.6% |
|
| Income (loss) from operations before taxes |
| (44) |
|
| (59) |
|
| (93) |
|
| (45) |
|
| (27) |
| 38.6% |
|
| Federal income tax expense (benefit) |
| (17) |
|
| (21) |
|
| (28) |
|
| (19) |
|
| (12) |
| 29.4% |
|
| Income (loss) from operations | $ | (27) |
| $ | (38) |
| $ | (65) |
| $ | (26) |
| $ | (15) |
| 44.4% |
|
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Page 17 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| DAC, VOBA, and DSI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 8,447 |
| $ | 8,391 |
| $ | 9,394 |
| $ | 9,111 |
| $ | 9,766 |
| 15.6% |
|
| Business acquired (sold) through reinsurance |
| - |
|
| 15 |
|
| 2 |
|
| - |
|
| - |
| NM |
|
| Deferrals |
| 358 |
|
| 375 |
|
| 380 |
|
| 415 |
|
| 309 |
| -13.7% |
|
| Operating amortization |
| (270) |
|
| (246) |
|
| (681) |
|
| (117) |
|
| (265) |
| 1.9% |
|
| Deferrals, net of operating amortization |
| 88 |
|
| 129 |
|
| (301) |
|
| 298 |
|
| 44 |
| -50.0% |
|
| Amortization associated with benefit ratio unlocking |
| (2) |
|
| 1 |
|
| 15 |
|
| (3) |
|
| 2 |
| 200.0% |
|
| Adjustment related to realized (gains) losses |
| 4 |
|
| (15) |
|
| (26) |
|
| 20 |
|
| (4) |
| NM |
|
| Adjustment related to unrealized (gains) losses |
| (146) |
|
| 873 |
|
| 27 |
|
| 340 |
|
| (573) |
| NM |
|
| Balance as of end-of-period | $ | 8,391 |
| $ | 9,394 |
| $ | 9,111 |
| $ | 9,766 |
| $ | 9,235 |
| 10.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DFEL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 1,401 |
| $ | 1,322 |
| $ | 1,797 |
| $ | 1,593 |
| $ | 1,952 |
| 39.3% |
|
| Deferrals |
| 120 |
|
| 128 |
|
| 141 |
|
| 150 |
|
| 136 |
| 13.3% |
|
| Operating amortization |
| (76) |
|
| (73) |
|
| (306) |
|
| 78 |
|
| (84) |
| -10.5% |
|
| Deferrals, net of operating amortization |
| 44 |
|
| 55 |
|
| (165) |
|
| 228 |
|
| 52 |
| 18.2% |
|
| Amortization associated with benefit ratio unlocking |
| - |
|
| - |
|
| 2 |
|
| (1) |
|
| - |
| NM |
|
| Adjustment related to realized (gains) losses |
| - |
|
| (2) |
|
| (3) |
|
| 1 |
|
| (1) |
| NM |
|
| Adjustment related to unrealized (gains) losses |
| (123) |
|
| 422 |
|
| (38) |
|
| 131 |
|
| (307) |
| NM |
|
| Balance as of end-of-period | $ | 1,322 |
| $ | 1,797 |
| $ | 1,593 |
| $ | 1,952 |
| $ | 1,696 |
| 28.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DAC, VOBA, DSI, and DFEL Balance as of End-of-Period, After-Tax | $ | 4,595 |
| $ | 4,938 |
| $ | 4,887 |
| $ | 5,079 |
| $ | 4,900 |
| 6.6% |
|
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Page 18 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Annuities – Account Value Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
| ||||||||||||
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Fixed Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 18,661 |
| $ | 18,651 |
| $ | 18,597 |
| $ | 18,672 |
| $ | 19,082 |
| 2.3% |
|
| Gross deposits |
| 293 |
|
| 365 |
|
| 566 |
|
| 656 |
|
| 668 |
| 128.0% |
|
| Full surrenders and deaths |
| (305) |
|
| (377) |
|
| (357) |
|
| (276) |
|
| (285) |
| 6.6% |
|
| Other contract benefits |
| (149) |
|
| (166) |
|
| (168) |
|
| (176) |
|
| (127) |
| 14.8% |
|
| Net flows |
| (161) |
|
| (178) |
|
| 41 |
|
| 204 |
|
| 256 |
| 259.0% |
|
| Reinvested interest credited |
| 146 |
|
| 117 |
|
| 31 |
|
| 200 |
|
| 103 |
| -29.5% |
|
| Sales inducements deferred |
| 5 |
|
| 7 |
|
| 3 |
|
| 6 |
|
| 7 |
| 40.0% |
|
| Balance as of end-of-period, gross |
| 18,651 |
|
| 18,597 |
|
| 18,672 |
|
| 19,082 |
|
| 19,448 |
| 4.3% |
|
| Reinsurance ceded |
| (676) |
|
| (662) |
|
| (645) |
|
| (631) |
|
| (619) |
| 8.4% |
|
| Balance as of end-of-period, net | $ | 17,975 |
| $ | 17,935 |
| $ | 18,027 |
| $ | 18,451 |
| $ | 18,829 |
| 4.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Variable Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 104,073 |
| $ | 106,279 |
| $ | 106,600 |
| $ | 100,581 |
| $ | 103,146 |
| -0.9% |
|
| Gross deposits |
| 2,697 |
|
| 3,015 |
|
| 2,738 |
|
| 2,362 |
|
| 1,685 |
| -37.5% |
|
| Full surrenders and deaths |
| (1,402) |
|
| (1,501) |
|
| (1,299) |
|
| (1,122) |
|
| (1,030) |
| 26.5% |
|
| Other contract benefits |
| (938) |
|
| (939) |
|
| (944) |
|
| (1,009) |
|
| (946) |
| -0.9% |
|
| Net flows |
| 357 |
|
| 575 |
|
| 495 |
|
| 231 |
|
| (291) |
| NM |
|
| Change in market value and reinvestment |
| 1,849 |
|
| (254) |
|
| (6,514) |
|
| 2,334 |
|
| 48 |
| -97.4% |
|
| Balance as of end-of-period, gross |
| 106,279 |
|
| 106,600 |
|
| 100,581 |
|
| 103,146 |
|
| 102,903 |
| -3.2% |
|
| Reinsurance ceded |
| - |
|
| - |
|
| (1) |
|
| (1) |
|
| (1) |
| NM |
|
| Balance as of end-of-period, net | $ | 106,279 |
| $ | 106,600 |
| $ | 100,580 |
| $ | 103,145 |
| $ | 102,902 |
| -3.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 122,734 |
| $ | 124,930 |
| $ | 125,197 |
| $ | 119,253 |
| $ | 122,228 |
| -0.4% |
|
| Gross deposits |
| 2,990 |
|
| 3,380 |
|
| 3,304 |
|
| 3,018 |
|
| 2,353 |
| -21.3% |
|
| Full surrenders and deaths |
| (1,707) |
|
| (1,878) |
|
| (1,656) |
|
| (1,398) |
|
| (1,315) |
| 23.0% |
|
| Other contract benefits |
| (1,087) |
|
| (1,105) |
|
| (1,112) |
|
| (1,185) |
|
| (1,073) |
| 1.3% |
|
| Net flows |
| 196 |
|
| 397 |
|
| 536 |
|
| 435 |
|
| (35) |
| NM |
|
| Change in market value and reinvestment |
| 1,995 |
|
| (137) |
|
| (6,483) |
|
| 2,534 |
|
| 151 |
| -92.4% |
|
| Sales inducements deferred |
| 5 |
|
| 7 |
|
| 3 |
|
| 6 |
|
| 7 |
| 40.0% |
|
| Balance as of end-of-period, gross |
| 124,930 |
|
| 125,197 |
|
| 119,253 |
|
| 122,228 |
|
| 122,351 |
| -2.1% |
|
| Reinsurance ceded |
| (676) |
|
| (662) |
|
| (646) |
|
| (632) |
|
| (620) |
| 8.3% |
|
| Balance as of end-of-period, net | $ | 124,254 |
| $ | 124,535 |
| $ | 118,607 |
| $ | 121,596 |
| $ | 121,731 |
| -2.0% |
|
|
|
|
|
|
|
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|
Page 19 |
|
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|
|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Retirement Plan Services – Account Value Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| General Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at beginning-of-period | $ | 16,229 |
| $ | 16,288 |
| $ | 16,469 |
| $ | 16,649 |
| $ | 16,588 |
| 2.2% |
|
| Gross deposits |
| 418 |
|
| 452 |
|
| 425 |
|
| 562 |
|
| 420 |
| 0.5% |
|
| Withdrawals and deaths |
| (541) |
|
| (478) |
|
| (547) |
|
| (821) |
|
| (572) |
| -5.7% |
|
| Net flows |
| (123) |
|
| (26) |
|
| (122) |
|
| (259) |
|
| (152) |
| -23.6% |
|
| Transfers between fixed and variable accounts |
| 61 |
|
| 84 |
|
| 176 |
|
| 71 |
|
| 168 |
| 175.4% |
|
| Reinvestment interest credited |
| 121 |
|
| 123 |
|
| 126 |
|
| 127 |
|
| 123 |
| 1.7% |
|
| Balance at end-of-period |
| 16,288 |
|
| 16,469 |
|
| 16,649 |
|
| 16,588 |
|
| 16,727 |
| 2.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Separate Account and Mutual Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at beginning-of-period | $ | 37,310 |
|
| 38,344 |
|
| 38,520 |
|
| 36,195 |
|
| 37,512 |
| 0.5% |
|
| Gross deposits |
| 1,286 |
|
| 1,410 |
|
| 1,459 |
|
| 1,533 |
|
| 1,371 |
| 6.6% |
|
| Withdrawals and deaths |
| (1,048) |
|
| (1,078) |
|
| (1,086) |
|
| (1,495) |
|
| (1,141) |
| -8.9% |
|
| Net flows |
| 238 |
|
| 332 |
|
| 373 |
|
| 38 |
|
| 230 |
| -3.4% |
|
| Transfers between fixed and variable accounts |
| (74) |
|
| (81) |
|
| (161) |
|
| (62) |
|
| (149) |
| NM |
|
| Change in market value and reinvestment |
| 870 |
|
| (75) |
|
| (2,537) |
|
| 1,341 |
|
| 179 |
| -79.4% |
|
| Balance at end-of-period |
| 38,344 |
|
| 38,520 |
|
| 36,195 |
|
| 37,512 |
|
| 37,772 |
| -1.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 53,539 |
| $ | 54,632 |
| $ | 54,989 |
| $ | 52,844 |
| $ | 54,100 |
| 1.0% |
|
| Gross deposits |
| 1,704 |
|
| 1,862 |
|
| 1,884 |
|
| 2,095 |
|
| 1,791 |
| 5.1% |
|
| Withdrawals and deaths |
| (1,589) |
|
| (1,556) |
|
| (1,633) |
|
| (2,316) |
|
| (1,713) |
| -7.8% |
|
| Net flows |
| 115 |
|
| 306 |
|
| 251 |
|
| (221) |
|
| 78 |
| -32.2% |
|
| Transfers between fixed and variable accounts |
| (13) |
|
| 3 |
|
| 15 |
|
| 9 |
|
| 19 |
| 246.2% |
|
| Change in market value and reinvestment |
| 991 |
|
| 48 |
|
| (2,411) |
|
| 1,468 |
|
| 302 |
| -69.5% |
|
| Balance as of end-of-period | $ | 54,632 |
| $ | 54,989 |
| $ | 52,844 |
| $ | 54,100 |
| $ | 54,499 |
| -0.2% |
|
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Page 20 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Life Insurance – Account Value Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| General Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 34,612 |
| $ | 34,753 |
| $ | 34,930 |
| $ | 35,213 |
| $ | 35,545 |
| 2.7% |
|
| Deposits |
| 921 |
|
| 964 |
|
| 1,012 |
|
| 1,082 |
|
| 945 |
| 2.6% |
|
| Withdrawals and deaths |
| (299) |
|
| (299) |
|
| (214) |
|
| (208) |
|
| (317) |
| -6.0% |
|
| Net flows |
| 622 |
|
| 665 |
|
| 798 |
|
| 874 |
|
| 628 |
| 1.0% |
|
| Contract holder assessments |
| (814) |
|
| (830) |
|
| (855) |
|
| (882) |
|
| (868) |
| -6.6% |
|
| Reinvested interest credited |
| 333 |
|
| 342 |
|
| 340 |
|
| 340 |
|
| 335 |
| 0.6% |
|
| Balance as of end-of-period, gross |
| 34,753 |
|
| 34,930 |
|
| 35,213 |
|
| 35,545 |
|
| 35,640 |
| 2.6% |
|
| Reinsurance ceded |
| (782) |
|
| (773) |
|
| (770) |
|
| (763) |
|
| (763) |
| 2.4% |
|
| Balance as of end-of-period, net | $ | 33,971 |
| $ | 34,157 |
| $ | 34,443 |
| $ | 34,782 |
| $ | 34,877 |
| 2.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Separate Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 9,263 |
| $ | 9,635 |
| $ | 9,766 |
| $ | 9,213 |
| $ | 9,696 |
| 4.7% |
|
| Deposits |
| 390 |
|
| 380 |
|
| 388 |
|
| 460 |
|
| 293 |
| -24.9% |
|
| Withdrawals and deaths |
| (124) |
|
| (116) |
|
| (167) |
|
| (164) |
|
| (91) |
| 26.6% |
|
| Net flows |
| 266 |
|
| 264 |
|
| 221 |
|
| 296 |
|
| 202 |
| -24.1% |
|
| Contract holder assessments |
| (130) |
|
| (127) |
|
| (132) |
|
| (143) |
|
| (135) |
| -3.8% |
|
| Change in market value and reinvestment |
| 236 |
|
| (6) |
|
| (642) |
|
| 330 |
|
| 67 |
| -71.6% |
|
| Balance as of end-of-period, gross |
| 9,635 |
|
| 9,766 |
|
| 9,213 |
|
| 9,696 |
|
| 9,830 |
| 2.0% |
|
| Reinsurance ceded |
| (882) |
|
| (864) |
|
| (788) |
|
| (809) |
|
| (786) |
| 10.9% |
|
| Balance as of end-of-period, net | $ | 8,753 |
| $ | 8,902 |
| $ | 8,425 |
| $ | 8,887 |
| $ | 9,044 |
| 3.3% |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 43,875 |
| $ | 44,388 |
| $ | 44,696 |
| $ | 44,426 |
| $ | 45,241 |
| 3.1% |
|
| Deposits |
| 1,311 |
|
| 1,344 |
|
| 1,400 |
|
| 1,542 |
|
| 1,238 |
| -5.6% |
|
| Withdrawals and deaths |
| (423) |
|
| (415) |
|
| (381) |
|
| (372) |
|
| (408) |
| 3.5% |
|
| Net flows |
| 888 |
|
| 929 |
|
| 1,019 |
|
| 1,170 |
|
| 830 |
| -6.5% |
|
| Contract holder assessments |
| (944) |
|
| (957) |
|
| (987) |
|
| (1,025) |
|
| (1,003) |
| -6.3% |
|
| Change in market value and reinvestment |
| 569 |
|
| 336 |
|
| (302) |
|
| 670 |
|
| 402 |
| -29.3% |
|
| Balance as of end-of-period, gross |
| 44,388 |
|
| 44,696 |
|
| 44,426 |
|
| 45,241 |
|
| 45,470 |
| 2.4% |
|
| Reinsurance ceded |
| (1,664) |
|
| (1,637) |
|
| (1,558) |
|
| (1,572) |
|
| (1,549) |
| 6.9% |
|
| Balance as of end-of-period, net | $ | 42,724 |
| $ | 43,059 |
| $ | 42,868 |
| $ | 43,669 |
| $ | 43,921 |
| 2.8% |
|
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Page 21 |
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| Lincoln Financial Group |
| |||||||||||||||||
| Select Investment Data |
| |||||||||||||||||
| Unaudited (millions of dollars) |
| |||||||||||||||||
|
|
|
|
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|
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|
|
| As of 3/31/15 |
| As of 12/31/15 |
| As of 3/31/16 |
| ||||||||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
| ||||||
| AFS and Trading Securities, at Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| AFS securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate bonds | $ | 77,063 |
|
| 84.0% |
| $ | 74,032 |
|
| 84.5% |
| $ | 76,956 |
|
| 84.7% |
|
| U.S. government bonds |
| 452 |
|
| 0.5% |
|
| 429 |
|
| 0.5% |
|
| 450 |
|
| 0.5% |
|
| Foreign government bonds |
| 561 |
|
| 0.6% |
|
| 524 |
|
| 0.6% |
|
| 532 |
|
| 0.6% |
|
| Mortgage-backed securities |
| 4,674 |
|
| 5.1% |
|
| 4,104 |
|
| 4.7% |
|
| 4,028 |
|
| 4.4% |
|
| Asset-backed collateralized debt obligations |
| 423 |
|
| 0.5% |
|
| 589 |
|
| 0.7% |
|
| 628 |
|
| 0.7% |
|
| State and municipal bonds |
| 4,705 |
|
| 5.1% |
|
| 4,480 |
|
| 5.1% |
|
| 4,744 |
|
| 5.2% |
|
| Hybrid and redeemable preferred securities |
| 935 |
|
| 1.0% |
|
| 806 |
|
| 0.9% |
|
| 726 |
|
| 0.8% |
|
| VIEs’ fixed maturity securities |
| 598 |
|
| 0.7% |
|
| 598 |
|
| 0.7% |
|
| 599 |
|
| 0.7% |
|
| Equity securities |
| 210 |
|
| 0.2% |
|
| 237 |
|
| 0.3% |
|
| 245 |
|
| 0.3% |
|
| Total AFS securities |
| 89,621 |
|
| 97.7% |
|
| 85,799 |
|
| 98.0% |
|
| 88,908 |
|
| 97.9% |
|
| Trading securities |
| 2,077 |
|
| 2.3% |
|
| 1,854 |
|
| 2.0% |
|
| 1,864 |
|
| 2.1% |
|
| Total AFS and trading securities | $ | 91,698 |
|
| 100.0% |
| $ | 87,653 |
|
| 100.0% |
| $ | 90,772 |
|
| 100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| AFS and Trading Securities, at Amortized Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed maturity securities | $ | 82,579 |
|
| 99.8% |
| $ | 84,241 |
|
| 99.7% |
| $ | 84,853 |
|
| 99.7% |
|
| Equity securities |
| 192 |
|
| 0.2% |
|
| 226 |
|
| 0.3% |
|
| 231 |
|
| 0.3% |
|
| Total AFS and trading securities | $ | 82,771 |
|
| 100.0% |
| $ | 84,467 |
|
| 100.0% |
| $ | 85,084 |
|
| 100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Percentage of Fixed Maturity AFS Securities, at Amortized Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment grade |
|
|
|
| 94.9% |
|
|
|
|
| 95.1% |
|
|
|
|
| 94.6% |
|
| Below investment grade |
|
|
|
| 5.1% |
|
|
|
|
| 4.9% |
|
|
|
|
| 5.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||||||||||
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Page 22 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
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|
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|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
| |||||
| Realized Gain (Loss), Pre-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating realized gain (loss) | $ | 43 |
| $ | 47 |
| $ | 45 |
| $ | 43 |
| $ | 44 |
| 2.3% |
|
| Total excluded realized gain (loss) |
| (91) |
|
| (37) |
|
| (18) |
|
| (183) |
|
| (158) |
| -73.6% |
|
| Total realized gain (loss), pre-tax | $ | (48) |
| $ | 10 |
| $ | 27 |
| $ | (140) |
| $ | (114) |
| NM |
|
|
|
|
|
|
|
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|
|
|
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|
|
| Realized Gain (Loss) Net of Benefit Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unlocking, After-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Realized gain (loss) related to investments | $ | (10) |
| $ | (14) |
| $ | (26) |
| $ | (35) |
| $ | (64) |
| NM |
|
| Variable annuity net derivative results: |
|
|
|
|
|
|
|
|
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|
|
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|
|
| Hedge program performance, including unlocking |
|
|
|
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|
|
|
|
|
|
|
|
|
| for GLB reserves hedged |
| (35) |
|
| - |
|
| (102) |
|
| (13) |
|
| (94) |
| NM |
|
| GLB non-performance risk component |
| 7 |
|
| (8) |
|
| 84 |
|
| (43) |
|
| 67 |
| NM |
|
| Total variable annuity net derivative results |
| (28) |
|
| (8) |
|
| (18) |
|
| (56) |
|
| (27) |
| 3.6% |
|
| Indexed annuity forward-starting option |
| (13) |
|
| (4) |
|
| (18) |
|
| (8) |
|
| (15) |
| -15.4% |
|
| Gain (loss) on sale of subsidiaries/businesses |
| (1) |
|
| (1) |
|
| - |
|
| - |
|
| - |
| 100.0% |
|
| Excluded realized gain (loss) net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| benefit ratio unlocking, after-tax | $ | (52) |
| $ | (27) |
| $ | (62) |
| $ | (99) |
| $ | (106) |
| NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
| Components of Realized Gain (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Related to Investments, After-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTTI | $ | (8) |
| $ | (5) |
| $ | (12) |
| $ | (10) |
| $ | (23) |
| NM |
|
| Other realized gain (loss) related to certain investments |
| (9) |
|
| 4 |
|
| (4) |
|
| (12) |
|
| (46) |
| NM |
|
| Gain (loss) on the mark-to-market on certain instruments |
| 7 |
|
| (13) |
|
| (10) |
|
| (13) |
|
| 5 |
| -28.6% |
|
| Total realized gain (loss) related |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| to investments, after-tax | $ | (10) |
| $ | (14) |
| $ | (26) |
| $ | (35) |
| $ | (64) |
| NM |
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Page 23 |
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| Lincoln Financial Group |
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| Select Non-GAAP to GAAP Reconciliations |
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| Unaudited (millions of dollars) |
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| For the Three Months Ended |
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| 3/31/15 |
| 6/30/15 |
| 9/30/15 |
| 12/31/15 |
| 3/31/16 |
| Change |
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| Revenues |
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| Operating revenues | $ | 3,394 |
| $ | 3,417 |
| $ | 3,735 |
| $ | 3,354 |
| $ | 3,400 |
| 0.2% |
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| Excluded realized gain (loss) |
| (91) |
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| (37) |
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| (18) |
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| (183) |
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| (158) |
| -73.6% |
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| Amortization of DFEL on benefit ratio unlocking |
| - |
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| - |
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| (2) |
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| - |
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| - |
| NM |
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| Amortization of deferred gains arising from reserve |
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| changes on business sold through reinsurance |
| 1 |
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| 1 |
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| 1 |
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| 1 |
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| 1 |
| 0.0% |
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| Total revenues | $ | 3,304 |
| $ | 3,381 |
| $ | 3,716 |
| $ | 3,172 |
| $ | 3,243 |
| -1.8% |
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| Excluded Realized Gain (Loss) Net of |
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| Benefit Ratio Unlocking, After-Tax |
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| Total excluded realized gain (loss) | $ | (60) |
| $ | (23) |
| $ | (11) |
| $ | (118) |
| $ | (102) |
| -70.0% |
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| Benefit ratio unlocking |
| 8 |
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| (4) |
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| (51) |
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| 19 |
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| (4) |
| NM |
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| Net gain (loss), after-tax | $ | (52) |
| $ | (27) |
| $ | (62) |
| $ | (99) |
| $ | (106) |
| NM |
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| Net Income |
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| Income (loss) from operations | $ | 352 |
| $ | 371 |
| $ | 289 |
| $ | 382 |
| $ | 314 |
| -10.8% |
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| Excluded realized gain (loss) |
| (60) |
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| (23) |
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| (11) |
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| (118) |
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| (102) |
| -70.0% |
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| Benefit ratio unlocking |
| 8 |
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| (4) |
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| (51) |
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| 19 |
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| (4) |
| NM |
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| Net income (loss) | $ | 300 |
| $ | 344 |
| $ | 227 |
| $ | 283 |
| $ | 208 |
| -30.7% |
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| Earnings (Loss) Per Common Share – Diluted |
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| Income (loss) from operations | $ | 1.35 |
| $ | 1.46 |
| $ | 1.11 |
| $ | 1.54 |
| $ | 1.25 |
| -7.4% |
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| Excluded realized gain (loss) |
| (0.23) |
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| (0.09) |
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| (0.04) |
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| (0.48) |
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| (0.41) |
| -78.3% |
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| Benefit ratio unlocking |
| 0.03 |
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| (0.02) |
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| (0.20) |
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| 0.08 |
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| (0.02) |
| NM |
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| Net income (loss) | $ | 1.15 |
| $ | 1.35 |
| $ | 0.87 |
| $ | 1.14 |
| $ | 0.82 |
| -28.7% |
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Page 24 |