Lincoln National (LNC) 8-K Results of Operations and Financial Condition

Lincoln Financial Group
Table of Contents
Analyst Coverage and Credit Ratings	1
Notes	2
Consolidated
Consolidated Statements of Income (Loss)	3
Consolidated Balance Sheets	4
Earnings, Shares and Return on Equity	5
Key Stakeholder Metrics	6
Segment and Sources of Earnings	7
Select Earnings Drivers By Segment	8
Sales By Segment	9
Operating Revenues and General and Administrative Expenses By Segment	10
Operating Commissions and Other Expenses	11
Interest Rate Yields and Spreads By Segment	12
Select Earnings and Operational Data from Business Segments
Annuities	13
Retirement Plan Services	14
Life Insurance	15
Group Protection	16
Other Operations	17
DAC & Account Value Rollforwards
Consolidated DAC, VOBA, DSI and DFEL Roll Forwards	18
Account Value Roll Forwards:
Annuities	19
Retirement Plan Services	20
Life Insurance	21
Other Information
Select Investment Data	22
Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC	23
Select GAAP to Non-GAAP Reconciliations	24

Lincoln Financial Group
Analyst Coverage and Credit Ratings
Firm	Analyst				Phone Number
Autonomous Research U.S., L.P.	Erik Bass					646-561-6248
B. Riley FBR	Randy Binner					703-312-1890
Bank of America Merrill Lynch	Jay Cohen					646-855-5716
Barclays Capital	Jay Gelb					212-526-1561
Citi Research	Suneet Kamath					212-816-3457
Credit Suisse	Andrew Kligerman					212-325-5069
Deutsche Bank	Joshua Shanker					212-250-7127
Dowling & Partners	Humphrey Lee					860-676-7324
Evercore	Thomas Gallagher					212-446-9439
Goldman Sachs	Alex Scott					917-343-7160
J.P. Morgan Securities	Jimmy Bhullar					212-622-6397
Janney Montgomery Scott	Bob Glasspiegel					860-724-1203
Keefe, Bruyette & Woods, Inc.	Ryan Krueger					860-722-5930
Morgan Stanley	Nigel Dally					212-761-4132
RBC Capital Markets	Mark Dwelle					804-782-4008
Sandler O’Neill & Partners, L.P.	John Barnidge					312-281-3412
UBS	John Nadel					212-713-4299
Wells Fargo	Elyse Greenspan					212-214-8031
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.
		Ratings as of February 6th, 2019
						Standard
		A.M Best	Fitch	Moody's		& Poor's
Senior Debt Ratings		a-	BBB+	Baa1		A-
Financial Strength Ratings
Lincoln National Life Insurance Company		A+	A+	A1		AA-
First Penn-Pacific Life Insurance Company		A	A+	A1		A-
Lincoln Life & Annuity Company of New York		A+	A+	A1		AA-
Liberty Life Assurance Company of Boston		A				AA-
Investor Inquiries May Be Directed To:
Chris Giovanni, Senior Vice President, Investor Relations
Email:  Christopher.Giovanni@lfg.com
Phone:  484-583-1793
Page 1

Lincoln Financial Group

Notes

Computations

• The quarterly financial information for the current year may not sum to the corresponding year-to-date amount as both are rounded to millions.

• The financial ratios reported herein are calculated using whole dollars instead of dollars rounded to millions.

• 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

 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

 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.

• 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 adjusted income (loss)

 from operations) by average equity, excluding accumulated other comprehensive income (loss) (“AOCI”).  Management evaluates consolidated ROE by both including and excluding the effect

 of average goodwill.

• Book value per share, excluding AOCI, is calculated by dividing stockholders’ equity, excluding AOCI, by common shares outstanding.  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.  Management believes book value per share excluding AOCI is useful to investors because

 it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.  Book value per share is the most directly comparable GAAP measure.

• Pre-tax net margin is calculated by dividing adjusted income (loss) from operations before taxes by net revenue, which is defined as total adjusted operating revenues less interest credited.

Definitions

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 commercial

paper outstanding.

Sales as reported consist of the following:

•  MoneyGuard®, our linked-benefit product – 15% of total expected premium deposits;

• Universal life (“UL”), indexed universal life ("IUL"), variable universal life (“VUL”) – first-year commissionable premiums plus 5% of excess premiums received;

• Executive Benefits – single premium bank-owned UL and VUL, 15% of single premium deposits, and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess

     premium received;

• Term – 100% of annualized first-year premiums;

• Annuities – deposits from new and existing customers; and

• Group Protection – annualized first-year premiums from new policies.

Throughout the document, “after-DAC” refers to the associated amortization expense of deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales inducements (“DSI”)

and deferred front-end loads (“DFEL”) and changes in other contract holder funds.

Page 2a

Lincoln Financial Group

Notes

Sources of Earnings are defined as follows:

• Investment spread earnings consist primarily of net investment income, net of interest credited earned on the underlying general account investments supporting our fixed products less related

 expenses.

• 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 and level

 of insurance in force.

• 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.

• 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

  benefit reserves and related expenses.

Non-GAAP Performance Measures

Non-GAAP measures do not replace the most directly comparable GAAP measures, and we have included detailed reconciliations herein.

We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at adjusted income (loss) from operations:

• Realized gains and losses associated with the following (“excluded realized gain (loss)”):

▪ Sales or disposals and impairments of securities;

▪ Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities (“gain (loss) on the mark-to-market on certain instruments”);

▪ Changes in the fair value of the derivatives we own to hedge our guaranteed death benefit (“GDB”) riders reflected within our variable annuities;

▪ Changes in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders reflected within variable annuity net derivative results accounted for at fair value;

▪ Changes in the fair value of the derivatives we own to hedge our guaranteed living benefit ("GLB") riders reflected within variable annuity net derivative results;

▪ 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 at fair value (“indexed annuity forward-starting option”);

▪ Changes in the fair value of equity securities

• Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders (“benefit ratio unlocking”);

• Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;

• Gains (losses) on early extinguishment of debt;

• Losses from the impairment of intangible assets;

• Income (loss) from discontinued operations;

• Acquisition and integration costs related to mergers and acquisitions; and

• Income (loss) from the initial adoption of new accounting standards, regulations and policy changes including the net impact from the Tax Cuts and Jobs Act.

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

• Excluded realized gain (loss);

• Revenue adjustments from the initial adoption of new accounting standards;

• Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and

• Amortization of deferred gains arising from reserve changes on business sold through reinsurance.

Page 2b

Lincoln Financial Group

Notes

We use our prevailing federal income tax rates of 21% and 35%, where applicable, 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.

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 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 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 definitions of adjusted operating revenues and adjusted

income from operations provide investors with more valuable measures of our performance as they better reveal trends in our business.

Prior year net flows have been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

Statistical Supplement is Dated

The financial data in this document is dated February 6, 2019, and has not been updated since that date.  Lincoln Financial Group does not intend to update this document.

Page 2c

Lincoln Financial Group
Consolidated Statements of Income (Loss)
Unaudited (millions of dollars, except per share data)
	For the Three Months Ended												For the Twelve Months Ended
	12/31/17			3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Revenues
Insurance premiums	$	874		$	777	$	1,165	$	1,323	$	1,336	52.9%	$	3,256	$	4,601	41.3%
Fee income		1,471			1,456		1,470		1,550		1,511	2.7%		5,619		5,986	6.5%
Net investment income		1,252			1,233		1,232		1,271		1,349	7.7%		4,990		5,085	1.9%
Realized gain (loss):
Other-than-temporary impairment (“OTTI”)		(2)			(2)		(1)		(2)		(2)	0.0%		(18)		(7)	61.1%
Realized gain (loss), excluding OTTI		(63)			14		(6)		(53)		193	NM		(152)		148	197.4%
Total realized gain (loss)		(65)			12		(7)		(55)		191	NM		(170)		141	182.9%
Amortization of deferred gains on business
sold through reinsurance		-			-		-		-		8	NM		23		9	-60.9%
Other revenues		137			131		160		175		136	-0.7%		539		602	11.7%
Total revenues		3,669			3,609		4,020		4,264		4,531	23.5%		14,257		16,424	15.2%
Expenses
Interest credited		650			653		647		652		663	2.0%		2,590		2,617	1.0%
Benefits		1,321			1,358		1,661		1,626		2,142	62.1%		5,160		6,786	31.5%
Commissions and other expenses		1,108			1,057		1,177		1,367		1,162	4.9%		4,176		4,763	14.1%
Interest and debt expense		63			91		68		69		69	9.5%		253		297	17.4%
Strategic digitization expense		10			15		16		18		28	180.0%		43		76	76.7%
Impairment of intangibles		905			-		-		-		-	-100.0%		905		-	-100.0%
Total expenses		4,057			3,174		3,569		3,732		4,064	0.2%		13,127		14,539	10.8%
Income (loss) from continuing operations before taxes		(388)			435		451		532		467	220.4%		1,130		1,885	66.8%
Federal income tax expense (benefit)		(1,204)			68		66		42		68	105.6%		(949)		244	125.7%
Net income (loss)		816			367		385		490		399	-51.1%		2,079		1,641	-21.1%
Adjustment for LNC stock units in our
deferred compensation plans		2			(2)		(8)		-		(12)	NM		7		(18)	NM
Net income (loss) available to common
stockholders – diluted	$	818		$	365	$	377	$	490	$	387	-52.7%	$	2,086	$	1,623	-22.2%
			��
Earnings (Loss) Per Common Share – Diluted
Net income (loss)	$	3.67		$	1.64	$	1.70	$	2.24	$	1.80	-51.0%	$	9.22	$	7.40	-19.7%
ROE, including AOCI
Net income (loss)		19.4%			8.8%		9.9%		13.0%		10.9%			13.2%		10.6%
Page 3

Lincoln Financial Group
Consolidated Balance Sheets
Unaudited (millions of dollars)
	As of
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change
ASSETS
Investments:
Available-for-sale (“AFS”) securities:
Corporate bonds	$	83,190	$	80,680	$	81,059	$	81,065	$	81,314	-2.3%
U.S. government bonds		567		401		422		409		417	-26.5%
Foreign government bonds		451		440		471		459		448	-0.7%
Mortgage-backed securities		4,065		4,037		4,121		4,035		4,177	2.8%
Asset-backed collateralized debt obligations		808		875		1,119		1,362		1,730	114.1%
State and municipal bonds		5,119		5,000		5,248		5,218		5,345	4.4%
Hybrid and redeemable preferred securities		640		626		620		613		593	-7.3%
AFS equity securities		246		-		-		-		-	-100.0%
Total AFS securities		95,086		92,059		93,060		93,161		94,024	-1.1%
Trading securities		1,620		1,553		1,450		1,440		1,950	20.4%
Equity securities		-		112		112		112		99	NM
Mortgage loans on real estate		10,762		11,047		12,217		12,561		13,260	23.2%
Real estate		11		11		11		12		12	9.1%
Policy loans		2,399		2,389		2,508		2,490		2,509	4.6%
Derivative investments		915		827		584		706		1,107	21.0%
Other investments		2,296		2,049		2,065		2,204		2,255	-1.8%
Total investments		113,089		110,047		112,007		112,686		115,216	1.9%
Cash and invested cash		1,628		2,257		1,775		1,460		2,345	44.0%
DAC and VOBA		8,403		9,289		9,904		10,014		10,264	22.1%
Premiums and fees receivable		396		480		574		592		570	43.9%
Accrued investment income		1,078		1,137		1,119		1,168		1,119	3.8%
Reinsurance recoverables		4,907		5,009		17,979		18,271		17,748	261.7%
Funds withheld reinsurance assets		593		576		572		566		557	-6.1%
Goodwill		1,368		1,368		1,750		1,757		1,782	30.3%
Other assets		6,082		6,313		8,921		9,644		15,713	158.4%
Separate account assets		144,219		142,761		144,231		147,692		132,833	-7.9%
Total assets	$	281,763	$	279,237	$	298,832	$	303,850	$	298,147	5.8%
Page 4a

Lincoln Financial Group
Consolidated Balance Sheets
Unaudited (millions of dollars)
	As of
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Future contract benefits	$	22,887	$	22,923	$	33,718	$	33,988	$	34,648	51.4%
Other contract holder funds		80,209		80,710		88,698		89,906		91,233	13.7%
Short-term debt		450		250		-		-		-	-100.0%
Long-term debt by rating agency leverage definitions:
Operating (see note (2) on page 6 for details)		865		865		865		865		866	0.1%
Financial		4,029		4,783		4,961		4,939		4,973	23.4%
Reinsurance related embedded derivatives		57		34		25		20		3	-94.7%
Funds withheld reinsurance liabilities		1,761		1,726		1,711		1,733		1,740	-1.2%
Payables for collateral on investments		4,417		4,265		4,699		4,212		4,805	8.8%
Other liabilities		5,547		4,935		4,747		5,425		12,696	128.9%
Separate account liabilities		144,219		142,761		144,231		147,692		132,833	-7.9%
Total liabilities		264,441		263,252		283,655		288,780		283,797	7.3%
Stockholders’ Equity
Common stock		5,693		5,700		5,674		5,619		5,392	-5.3%
Retained earnings		8,399		8,052		8,302		8,615		8,551	1.8%
AOCI:
Unrealized investment gains (losses)		3,501		2,533		1,502		1,138		729	-79.2%
Foreign currency translation adjustment		(14)		(9)		(18)		(20)		(23)	-64.3%
Funded status of employee benefit plans		(257)		(291)		(283)		(282)		(299)	-16.3%
Total AOCI		3,230		2,233		1,201		836		407	-87.4%
Total stockholders’ equity		17,322		15,985		15,177		15,070		14,350	-17.2%
Total liabilities and stockholders’ equity	$	281,763	$	279,237	$	298,832	$	303,850	$	298,147	5.8%
Page 4b

Lincoln Financial Group
Earnings, Shares and Return on Equity
Unaudited (millions of dollars, except per share data)
	As of or For the Three Months Ended											As of or For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Income (Loss)
Net income (loss)	$	816	$	367	$	385	$	490	$	399	-51.1%	$	2,079	$	1,641	-21.1%
Pre-tax adjusted income (loss) from operations		581		512		540		599		563	-3.1%		2,177		2,212	1.6%
After-tax adjusted income (loss) from operations (1)		440		441		454		510		475	8.0%		1,754		1,880	7.2%
Adjusted operating tax rate		24.3%		13.9%		15.9%		14.9%		15.6%			19.4%		15.0%
Average Stockholders’ Equity
Average equity, including AOCI	$	16,818	$	16,653	$	15,581	$	15,124	$	14,710	-12.5%	$	15,796	$	15,517	-1.8%
Average AOCI		3,044		3,052		1,717		1,019		622	-79.6%		2,454		1,602	-34.7%
Average equity, excluding AOCI	$	13,774	$	13,601	$	13,864	$	14,105	$	14,088	2.3%	$	13,342	$	13,915	4.3%
ROE, excluding AOCI
Net income (loss)		23.7%		10.8%		11.1%		13.9%		11.3%			15.6%		11.8%
Adjusted income (loss) from operations		12.8%		13.0%		13.1%		14.5%		13.5%			13.1%		13.5%
Per Share
Net income (loss) (diluted)	$	3.67	$	1.64	$	1.70	$	2.24	$	1.80	-51.0%	$	9.22	$	7.40	-19.7%
Adjusted income (loss) from operations (diluted)		1.98		1.97		2.02		2.34		2.15	8.6%		7.79		8.48	8.9%
Dividends declared during the period		0.33		0.33		0.33		0.33		0.37	12.1%		1.20		1.36	13.3%
Book value, including AOCI	$	79.43	$	73.09	$	69.85	$	70.17	$	69.71	-12.2%	$	79.43	$	69.71	-12.2%
Per share impact of AOCI		14.81		10.21		5.53		3.90		1.98	-86.6%		14.81		1.98	-86.6%
Book value, excluding AOCI	$	64.62	$	62.88	$	64.32	$	66.27	$	67.73	4.8%	$	64.62	$	67.73	4.8%
Shares
Repurchased during the period		1.7		-		1.5		2.7		9.1	NM		10.4		13.2	26.9%
End-of-period – basic		218.1		218.7		217.3		214.8		205.9	-5.6%		218.1		205.9	-5.6%
End-of-period – diluted		221.3		222.4		220.7		217.4		209.0	-5.6%		221.3		209.0	-5.6%
Average for the period – diluted		221.9		222.3		221.6		218.5		215.0	-3.1%		226.2		219.6	-2.9%
(1) See reconciliation to net income (loss) on page 24.
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Lincoln Financial Group
Key Stakeholder Metrics
Unaudited (millions of dollars, except per share data)
	As of or For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Cash Returned to Common Stockholders
Shares repurchased	$	125	$	-	$	100	$	175	$	535	NM	$	725	$	810	11.7%
Common dividends		64		72		72		72		70	9.4%		259		286	10.4%
Total cash returned to common stockholders	$	189	$	72	$	172	$	247	$	605	220.1%	$	984	$	1,096	11.4%
Leverage Ratio
Short-term debt	$	450	$	250	$	-	$	-	$	-	-100.0%
Long-term debt		4,894		5,648		5,826		5,804		5,839	19.3%
Total debt (1)		5,344		5,898		5,826		5,804		5,839	9.3%
Less:
Operating debt (2)		865		865		865		865		866	0.1%
25% of capital securities		302		302		302		302		302	0.0%
Carrying value of fair value hedges and other items		254		200		178		155		189	-25.6%
Total numerator	$	3,923	$	4,531	$	4,481	$	4,482	$	4,482	14.2%
Stockholders’ equity, excluding unrealized
investment gains (losses)	$	13,821	$	13,452	$	13,675	$	13,932	$	13,621	-1.4%
Add:  25% of capital securities		302		302		302		302		302	0.0%
Total numerator		3,923		4,531		4,481		4,482		4,482	14.2%
Total denominator	$	18,046	$	18,285	$	18,458	$	18,716	$	18,405	2.0%
Leverage ratio		21.7%		24.8%		24.3%		23.9%		24.4%
Holding Company Available Liquidity	$	605	$	1,063	$	484	$	465	$	465	-23.1%
(1) Excludes obligations under capital leases of $364 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.
Page 6

Lincoln Financial Group
Segment and Sources of Earnings
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Income (Loss) from Operations, Pre-Tax
Annuities	$	333	$	313	$	322	$	350	$	300	-9.9%	$	1,273	$	1,285	0.9%
Retirement Plan Services		57		48		51		47		54	-5.3%		204		200	-2.0%
Life Insurance		223		172		185		217		218	-2.2%		780		792	1.5%
Group Protection		31		37		57		79		64	106.5%		158		237	50.0%
Other Operations		(63)		(58)		(75)		(94)		(73)	-15.9%		(238)		(302)	-26.9%
Adjusted income (loss) from operations, before
income taxes	$	581	$	512	$	540	$	599	$	563	-3.1%	$	2,177	$	2,212	1.6%
Income (Loss) from Operations, After-Tax
Annuities	$	265	$	267	$	275	$	302	$	258	-2.6%	$	1,074	$	1,102	2.6%
Retirement Plan Services		41		43		43		40		45	9.8%		149		171	14.8%
Life Insurance		152		144		150		176		175	15.1%		536		645	20.3%
Group Protection		20		29		45		63		50	150.0%		103		187	81.6%
Other Operations		(38)		(42)		(59)		(71)		(53)	-39.5%		(108)		(225)	NM
Adjusted income (loss) from operations	$	440	$	441	$	454	$	510	$	475	8.0%	$	1,754	$	1,880	7.2%
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Sources of Earnings, Pre-Tax
Investment spread	$	202	$	161	$	172	$	169	$	161	-20.3%	$	749	$	664	-11.3%
Mortality/morbidity		156		132		159		198		182	16.7%		587		669	14.0%
Fees on AUM		249		247		256		264		274	10.0%		967		1,042	7.8%
VA riders		37		30		28		62		19	-48.6%		112		139	24.1%
Total sources of earnings, before income taxes		644		570		615		693		636	-1.2%		2,415		2,514	4.1%
Other Operations		(63)		(58)		(75)		(94)		(73)	-15.9%		(238)		(302)	-26.9%
Adjusted income (loss) from operations, before
income taxes	$	581	$	512	$	540	$	599	$	563	-3.1%	$	2,177	$	2,212	1.6%
Sources of Earnings, Pre-Taxes, Percentage By Component
Investment spread		31.4%		28.2%		28.0%		24.4%		25.4%			31.0%		26.4%
Mortality/morbidity		24.2%		23.1%		26.0%		28.5%		28.5%			24.3%		26.7%
Fees on AUM		38.6%		43.4%		41.5%		38.2%		43.0%			40.1%		41.4%
VA riders		5.8%		5.3%		4.5%		8.9%		3.1%			4.6%		5.5%
Total		100.0%		100.0%		100.0%		100.0%		100.0%			100.0%		100.0%
Page 7

Lincoln Financial Group
Select Earnings Drivers By Segment
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Annuities
Operating revenues	$	1,167	$	1,073	$	1,106	$	1,118	$	1,086	-6.9%	$	4,378	$	4,383	0.1%
Deposits		2,787		2,526		2,983		3,080		3,774	35.4%		8,710		12,363	41.9%
Net flows		(222)		(606)		(126)		(81)		675	NM		(2,707)		(139)	94.9%
Average account values		135,417		138,290		136,741		138,639		124,869	-7.8%		131,515		134,186	2.0%
Retirement Plan Services
Operating revenues	$	302	$	292	$	292	$	294	$	300	-0.7%	$	1,165	$	1,178	1.1%
Deposits		2,426		2,360		2,217		3,328		2,163	-10.8%		8,563		10,068	17.6%
Net flows		440		463		499		1,411		173	-60.7%		1,443		2,546	76.4%
Average account values		66,212		68,249		68,534		71,293		69,518	5.0%		62,796		69,325	10.4%
Life Insurance
Operating revenues	$	1,684	$	1,660	$	1,680	$	1,766	$	1,815	7.8%	$	6,558	$	6,922	5.6%
Deposits		1,896		1,534		1,517		1,523		1,863	-1.7%		6,317		6,438	1.9%
Net flows		1,443		1,076		1,084		1,080		1,439	-0.3%		4,532		4,679	3.2%
Average account values		48,481		49,165		49,548		50,201		50,088	3.3%		47,254		49,751	5.3%
Average in-force face amount		715,924		722,585		727,577		733,216		740,047	3.4%		705,356		730,856	3.6%
Group Protection
Operating revenues	$	554	$	553	$	937	$	1,128	$	1,139	105.6%	$	2,201	$	3,757	70.7%
Insurance premiums		509		508		846		1,011		1,018	100.0%		1,998		3,383	69.3%
Consolidated
Adjusted operating revenues (1)	$	3,775	$	3,645	$	4,073	$	4,362	$	4,394	16.4%	$	14,589	$	16,475	12.9%
Deposits		7,109		6,420		6,717		7,931		7,800	9.7%		23,590		28,869	22.4%
Net flows		1,661		933		1,457		2,410		2,287	37.7%		3,268		7,086	116.8%
Average account values		250,110		255,704		254,823		260,133		244,475	-2.3%		241,565		253,262	4.8%
(1) See reconciliation to total revenues on page 24.
Page 8

Lincoln Financial Group
Sales By Segment
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Sales
Annuities:
With guaranteed living benefits	$	1,504	$	1,447	$	1,496	$	1,416	$	1,347	-10.4%	$	4,376	$	5,707	30.4%
Without guaranteed living benefits		638		587		598		774		1,122	75.9%		2,366		3,080	30.2%
Variable		2,142		2,034		2,094		2,190		2,469	15.3%		6,742		8,787	30.3%
Fixed		645		492		889		890		1,305	102.3%		1,968		3,576	81.7%
Total Annuities	$	2,787	$	2,526	$	2,983	$	3,080	$	3,774	35.4%	$	8,710	$	12,363	41.9%
Retirement Plan Services:
First-year sales	$	1,166	$	800	$	841	$	1,977	$	835	-28.4%	$	3,375	$	4,453	31.9%
Recurring deposits		1,260		1,560		1,376		1,351		1,328	5.4%		5,188		5,615	8.2%
Total Retirement Plan Services	$	2,426	$	2,360	$	2,217	$	3,328	$	2,163	-10.8%	$	8,563	$	10,068	17.6%
Life Insurance:
UL	$	11	$	10	$	10	$	9	$	14	27.3%	$	52	$	43	-17.3%
MoneyGuard®		64		56		57		53		58	-9.4%		268		226	-15.7%
IUL		17		14		14		13		22	29.4%		70		62	-11.4%
VUL		63		58		46		62		103	63.5%		194		268	38.1%
Term		30		25		29		26		33	10.0%		114		113	-0.9%
Total individual life insurance		185		163		156		163		230	24.3%		698		712	2.0%
Executive Benefits		57		10		6		4		32	-43.9%		100		52	-48.0%
Total Life Insurance	$	242	$	173	$	162	$	167	$	262	8.3%	$	798	$	764	-4.3%
Group Protection:
Life	$	95	$	23	$	31	$	69	$	100	5.3%	$	179	$	222	24.0%
Disability		108		21		38		73		123	13.9%		199		257	29.1%
Dental		62		11		25		16		49	-21.0%		126		101	-19.8%
Total Group Protection	$	265	$	55	$	94	$	158	$	272	2.6%	$	504	$	580	15.1%
Percent employee-paid		48.0%		53.4%		39.9%		40.0%		42.1%			46.7%		42.2%
Page 9

Lincoln Financial Group
Operating Revenues and General and Administrative Expenses By Segment
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Operating Revenues
Annuities	$	1,167	$	1,073	$	1,106	$	1,118	$	1,086	-6.9%	$	4,378	$	4,383	0.1%
Retirement Plan Services		302		292		292		294		300	-0.7%		1,165		1,178	1.1%
Life Insurance		1,684		1,660		1,680		1,766		1,815	7.8%		6,558		6,922	5.6%
Group Protection		554		553		937		1,128		1,139	105.6%		2,201		3,757	70.7%
Other Operations		68		67		58		56		54	-20.6%		287		235	-18.1%
Total adjusted operating revenues	$	3,775	$	3,645	$	4,073	$	4,362	$	4,394	16.4%	$	14,589	$	16,475	12.9%
General and Administrative Expenses,
Net of Amounts Capitalized (1)
Annuities		121	$	116	$	111	$	116	$	120	-0.8%	$	467	$	463	-0.9%
Retirement Plan Services		80		76		75		75		78	-2.5%		311		304	-2.3%
Life Insurance		133		118		113		119		121	-9.0%		504		471	-6.5%
Group Protection		90		80		140		174		166	84.4%		325		559	72.0%
Other Operations		31		28		28		34		33	6.5%		108		122	13.0%
Total	$	455	$	418	$	467	$	518	$	518	13.8%	$	1,715	$	1,919	11.9%
General and Administrative Expenses,
Net of Amounts Capitalized, as a Percentage
of Operating Revenues
Annuities		10.3%		10.8%		10.0%		10.4%		11.1%			10.7%		10.6%
Retirement Plan Services		26.5%		25.9%		25.7%		25.6%		25.8%			26.7%		25.8%
Life Insurance		7.9%		7.1%		6.7%		6.8%		6.7%			7.7%		6.8%
Group Protection		16.2%		14.5%		14.9%		15.3%		14.6%			14.7%		14.9%
Other Operations		47.7%		42.0%		50.2%		59.9%		59.8%			37.8%		52.4%
Total		12.1%		11.5%		11.5%		11.9%		11.8%			11.8%		11.6%
(1) See page 11 for general and administrative expenses capitalized.
Page 10

Lincoln Financial Group
Operating Commissions and Other Expenses
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Operating Commissions and
Other Expenses Incurred
General and administrative expenses	$	519	$	460	$	515	$	572	$	591	13.9%	$	1,919	$	2,137	11.4%
Commissions		623		596		623		650		737	18.3%		2,308		2,606	12.9%
Taxes, licenses and fees		60		78		79		82		80	33.3%		251		320	27.5%
Interest and debt expense		63		68		68		69		69	9.5%		253		274	8.3%
Expenses associated with reserve financing
and unrelated letters of credit		21		20		21		21		22	4.8%		83		84	1.2%
Total adjusted operating commissions and other
expenses incurred		1,286		1,222		1,306		1,394		1,499	16.6%		4,814		5,421	12.6%
Less Amounts Capitalized
General and administrative expenses		(64)		(42)		(48)		(54)		(73)	-14.1%		(204)		(218)	-6.9%
Commissions		(308)		(289)		(292)		(313)		(406)	-31.8%		(1,104)		(1,300)	-17.8%
Taxes, licenses and fees		(16)		(11)		(10)		(9)		(59)	NM		(47)		(88)	-87.2%
Total amounts capitalized		(388)		(342)		(350)		(376)		(538)	-38.7%		(1,355)		(1,606)	-18.5%
Total expenses incurred, net of amounts
capitalized, excluding amortization		898		880		956		1,018		961	7.0%		3,459		3,815	10.3%
Amortization
Amortization of DAC, VOBA and other intangibles		276		259		262		420		308	11.6%		980		1,250	27.6%
Total adjusted operating commissions and
other expenses	$	1,174	$	1,139	$	1,218	$	1,438	$	1,269	8.1%	$	4,439	$	5,065	14.1%
Page 11

Lincoln Financial Group
Interest Rate Yields and Spreads By Segment
Unaudited
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Annuities
Earned rate on reserves		3.93%		3.87%		3.84%		3.89%		3.92%	(1)		3.98%		3.88%	(10)
Variable investment income on reserves (1)		0.31%		0.08%		0.13%		0.13%		0.07%	(24)		0.24%		0.10%	(14)
Net investment income yield on reserves		4.24%		3.95%		3.97%		4.02%		3.99%	(25)		4.22%		3.98%	(24)
Interest rate credited to contract holders		2.27%		2.32%		2.23%		2.24%		2.31%	4		2.34%		2.27%	(7)
Interest rate spread		1.97%		1.63%		1.74%		1.78%		1.68%	(29)		1.88%		1.71%	(17)
Base spreads excluding variable investment income		1.66%		1.55%		1.61%		1.65%		1.61%	(5)		1.64%		1.61%	(3)
Retirement Plan Services
Earned rate on reserves		4.33%		4.28%		4.25%		4.19%		4.20%	(13)		4.32%		4.23%	(9)
Variable investment income on reserves (1)		0.33%		0.09%		0.12%		0.10%		0.06%	(27)		0.19%		0.09%	(10)
Net investment income yield on reserves		4.66%		4.37%		4.37%		4.29%		4.26%	(40)		4.51%		4.32%	(19)
Interest rate credited to contract holders		2.91%		2.90%		2.90%		2.90%		2.89%	(2)		2.92%		2.90%	(2)
Interest rate spread		1.75%		1.47%		1.47%		1.39%		1.37%	(38)		1.59%		1.42%	(17)
Base spreads excluding variable investment income		1.42%		1.38%		1.35%		1.29%		1.31%	(11)		1.40%		1.33%	(7)
Life Insurance – Interest-Sensitive
Earned rate on reserves		5.06%		4.98%		4.98%		4.85%		4.92%	(14)		5.07%		4.93%	(14)
Variable investment income on reserves (1)		0.27%		0.27%		0.16%		0.38%		0.61%	34		0.33%		0.36%	3
Net investment income yield on reserves		5.33%		5.25%		5.14%		5.23%		5.53%	20		5.40%		5.29%	(11)
Interest rate credited to contract holders		3.87%		3.83%		3.80%		3.81%		3.83%	(4)		3.84%		3.82%	(2)
Interest rate spread		1.46%		1.42%		1.34%		1.42%		1.70%	24		1.56%		1.47%	(9)
Base spreads excluding variable investment income		1.19%		1.15%		1.18%		1.04%		1.09%	(10)		1.23%		1.11%	(12)
Total (2)
Earned rate (3)		4.53%		4.50%		4.46%		4.37%		4.43%	(10)		4.55%		4.44%	(11)
Variable investment income (1) (3)		0.29%		0.23%		0.17%		0.29%		0.43%	14		0.30%		0.28%	(2)
Net investment income yield (3)		4.82%		4.73%		4.63%		4.66%		4.86%	4		4.85%		4.72%	(13)
Interest rate credited to contract holders		3.21%		3.20%		3.16%		3.17%		3.19%	(2)		3.22%		3.18%	(4)
Interest rate spread		1.61%		1.53%		1.47%		1.49%		1.67%	6		1.63%		1.54%	(9)
Base spreads excluding variable investment income		1.32%		1.30%		1.30%		1.20%		1.24%	(8)		1.33%		1.26%	(7)
(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.
(3) Includes investment yields on reserves and surplus.
Page 12

Lincoln Financial Group
Annuities – Select Earnings and Operational Data
Unaudited (millions of dollars)
	As of or For the Three Months Ended											As of or For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Income (Loss) from Operations
Operating revenues:
Insurance premiums	$	162	$	70	$	109	$	102	$	108	-33.3%	$	475	$	390	-17.9%
Fee income		585		586		587		598		571	-2.4%		2,244		2,342	4.4%
Net investment income		258		249		244		251		261	1.2%		1,038		1,005	-3.2%
Operating realized gain (loss)		44		48		48		46		50	13.6%		179		192	7.3%
Amortization of deferred gain		-		-		-		-		8	NM		-		8	NM
Other revenues		118		120		118		121		88	-25.4%		442		446	0.9%
Total operating revenues		1,167		1,073		1,106		1,118		1,086	-6.9%		4,378		4,383	0.1%
Operating expenses:
Interest credited		144		148		144		145		150	4.2%		581		587	1.0%
Benefits		224		145		183		149		196	-12.5%		726		673	-7.3%
Commissions incurred		254		244		265		278		291	14.6%		916		1,078	17.7%
Other expenses incurred		234		232		222		233		241	3.0%		892		928	4.0%
Amounts capitalized		(126)		(120)		(134)		(147)		(176)	-39.7%		(411)		(578)	-40.6%
Amortization		104		111		104		110		84	-19.2%		401		410	2.2%
Total operating expenses		834		760		784		768		786	-5.8%		3,105		3,098	-0.2%
Income (loss) from operations before taxes		333		313		322		350		300	-9.9%		1,273		1,285	0.9%
Federal income tax expense (benefit)		68		46		47		48		42	-38.2%		199		183	-8.0%
Income (loss) from operations	$	265	$	267	$	275	$	302	$	258	-2.6%	$	1,074	$	1,102	2.6%
Effective Federal Income Tax Rate		20.3%		14.7%		14.6%		13.6%		13.8%			15.6%		14.2%
Average Equity, Excluding Goodwill and AOCI	$	5,093	$	4,954	$	5,002	$	5,045	$	5,000	-1.8%	$	4,855	$	5,000	3.0%
ROE, Excluding Goodwill and AOCI		20.9%		21.6%		22.0%		23.9%		20.7%			22.1%		22.0%
Return on Average Account Values		78		77		81		87		83	5		82		82	-
Income (Loss) from Operations
Variable annuity		217		220		225		264		232	6.9%		886		940	6.1%
Fixed annuity		48		47		50		38		26	-45.8%		188		162	-13.8%
Account Values
Variable annuity account values:
Average	$	115,981	$	118,782	$	117,177	$	118,838	$	112,615	-2.9%	$	112,089	$	116,840	4.2%
End-of-period		117,479		116,172		116,901		119,430		108,536	-7.6%		117,479		108,536	-7.6%
Fixed annuity account values:
Average		19,436		19,508		19,564		19,801		12,254	-37.0%		19,426		17,346	-10.7%
End-of-period		19,537		19,457		19,655		19,855		12,743	-34.8%		19,537		12,743	-34.8%
Page 13

Lincoln Financial Group
Retirement Plan Services – Select Earnings and Operational Data
Unaudited (millions of dollars)
	As of or For the Three Months Ended											As of or For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Income (Loss) from Operations
Operating revenues:
Fee income	$	64	$	64	$	64	$	65	$	62	-3.1%	$	248	$	256	3.2%
Net investment income		233		222		222		223		232	-0.4%		899		899	0.0%
Other revenues		5		6		6		6		6	20.0%		18		23	27.8%
Total operating revenues		302		292		292		294		300	-0.7%		1,165		1,178	1.1%
Operating expenses:
Interest credited		136		137		137		140		142	4.4%		537		555	3.4%
Benefits		-		-		-		-		-	NM		1		2	100.0%
Commissions incurred		20		19		21		20		18	-10.0%		77		78	1.3%
Other expenses incurred		89		85		83		83		86	-3.4%		348		337	-3.2%
Amounts capitalized		(7)		(4)		(6)		(5)		(6)	14.3%		(29)		(22)	24.1%
Amortization		7		7		6		9		6	-14.3%		27		28	3.7%
Total operating expenses		245		244		241		247		246	0.4%		961		978	1.8%
Income (loss) from operations before taxes		57		48		51		47		54	-5.3%		204		200	-2.0%
Federal income tax expense (benefit)		16		5		8		7		9	-43.8%		55		29	-47.3%
Income (loss) from operations	$	41	$	43	$	43	$	40	$	45	9.8%	$	149	$	171	14.8%
Effective Federal Income Tax Rate		28.5%		11.4%		15.1%		15.9%		15.9%			26.7%		14.6%
Average Equity, Excluding Goodwill and AOCI	$	1,227	$	1,312	$	1,302	$	1,316	$	1,356	10.5%	$	1,213	$	1,322	9.0%
ROE, Excluding Goodwill and AOCI		13.3%		13.0%		13.3%		12.1%		13.3%			12.3%		12.9%
Pre-tax Net Margin		34.4%		31.0%		32.8%		30.7%		34.0%			32.5%		32.1%
Return on Average Account Values		25		25		25		22		26	1		24		25	1
Net Flows by Market
Small Market		279		(79)		12		110		248	-11.1%	$	232	$	290	25.0%
Mid - Large Market		455		834		730		1,573		264	-42.0%		2,243		3,401	51.6%
Multi-Fund® and Other		(294)		(292)		(243)		(272)		(339)	-15.3%		(1,031)		(1,145)	-11.1%
Net Flows – Trailing Twelve Months	$	1,444	$	1,766	$	1,844	$	2,813	$	2,546	76.3%	$	1,444	$	2,546	76.3%
Page 14

Lincoln Financial Group
Life Insurance – Select Earnings and Operational Data
Unaudited (millions of dollars)
	As of or For the Three Months Ended											As of or For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Income (Loss) from Operations
Operating revenues:
Insurance premiums	$	199	$	196	$	205	$	205	$	210	5.5%	$	773	$	817	5.7%
Fee income		821		805		819		886		881	7.3%		3,122		3,392	8.6%
Net investment income		659		658		650		671		719	9.1%		2,643		2,697	2.0%
Operating realized gain (loss)		(3)		(1)		(2)		(3)		-	100.0%		(13)		(5)	61.5%
Other revenues		8		2		8		7		5	-37.5%		33		21	-36.4%
Total operating revenues		1,684		1,660		1,680		1,766		1,815	7.8%		6,558		6,922	5.6%
Operating expenses:
Interest credited		355		354		351		352		357	0.6%		1,404		1,414	0.7%
Benefits		779		849		840		742		913	17.2%		3,189		3,345	4.9%
Commissions incurred		193		180		166		173		241	24.9%		734		760	3.5%
Other expenses incurred		216		201		198		202		210	-2.8%		830		811	-2.3%
Amounts capitalized		(228)		(204)		(193)		(199)		(318)	-39.5%		(847)		(914)	-7.9%
Amortization		146		108		133		279		194	32.9%		468		714	52.6%
Total operating expenses		1,461		1,488		1,495		1,549		1,597	9.3%		5,778		6,130	6.1%
Income (loss) from operations before taxes		223		172		185		217		218	-2.2%		780		792	1.5%
Federal income tax expense (benefit)		71		28		35		41		43	-39.4%		244		147	-39.8%
Income (loss) from operations	$	152	$	144	$	150	$	176	$	175	15.1%	$	536	$	645	20.3%
Effective Federal Income Tax Rate		32.0%		16.2%		18.9%		18.7%		19.8%			31.2%		18.5%
Average Equity, Excluding Goodwill and AOCI	$	6,804	$	7,826	$	7,954	$	8,047	$	8,147	19.7%	$	6,736	$	7,994	18.7%
ROE, Excluding Goodwill and AOCI		8.9%		7.4%		7.5%		8.8%		8.6%			8.0%		8.1%
Average Account Values	$	48,481	$	49,165	$	49,548	$	50,201	$	50,088	3.3%	$	47,254	$	49,751	5.3%
In-Force Face Amount
UL and other	$	341,044	$	340,862	$	341,663	$	342,455	$	343,922	0.8%	$	341,044	$	343,922	0.8%
Term insurance		379,108		384,154		388,475		393,839		399,877	5.5%		379,108		399,877	5.5%
Total in-force face amount	$	720,152	$	725,016	$	730,138	$	736,294	$	743,799	3.3%	$	720,152	$	743,799	3.3%
Page 15

Lincoln Financial Group
Group Protection – Select Earnings and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Income (Loss) from Operations
Operating revenues:
Insurance premiums	$	509	$	508	$	846	$	1,011	$	1,018	100.0%	$	1,998	$	3,383	69.3%
Net investment income		41		40		63		76		80	95.1%		168		260	54.8%
Other revenues		4		5		28		41		41	NM		35		114	225.7%
Total operating revenues		554		553		937		1,128		1,139	105.6%		2,201		3,757	70.7%
Operating expenses:
Interest credited		1		1		1		1		2	100.0%		2		5	150.0%
Benefits		341		326		617		744		769	125.5%		1,351		2,455	81.7%
Commissions incurred		69		66		83		89		101	46.4%		257		339	31.9%
Other expenses incurred		120		105		176		218		218	81.7%		423		717	69.5%
Amounts capitalized		(26)		(13)		(17)		(25)		(39)	-50.0%		(69)		(94)	-36.2%
Amortization		18		31		20		22		24	33.3%		79		98	24.1%
Total operating expenses		523		516		880		1,049		1,075	105.5%		2,043		3,520	72.3%
Income (loss) from operations before taxes		31		37		57		79		64	106.5%		158		237	50.0%
Federal income tax expense (benefit)		11		8		12		16		14	27.3%		55		50	-9.1%
Income (loss) from operations	$	20	$	29	$	45	$	63	$	50	150.0%	$	103	$	187	81.6%
Effective Federal Income Tax Rate		35.0%		21.0%		21.0%		21.0%		21.0%			35.0%		21.0%
Average Equity, Excluding Goodwill and AOCI	$	1,078	$	1,102	$	1,610	$	2,105	$	2,082	93.1%	$	1,060	$	1,725	62.7%
ROE, Excluding Goodwill and AOCI		7.5%		10.5%		11.2%		11.9%		9.6%			9.7%		10.8%
Loss Ratios by Product Line
Life		66.2%		63.2%		68.0%		70.6%		70.8%			65.1%		68.8%
Disability		67.8%		61.9%		76.4%		75.8%		79.6%			67.9%		75.4%
Dental		67.5%		74.7%		73.4%		72.2%		70.6%			69.3%		72.7%
Total		67.1%		64.3%		73.1%		73.6%		75.8%			66.9%		72.7%
Page 16

Lincoln Financial Group
Other Operations – Select Earnings and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Other Operations
Operating revenues:
Insurance premiums	$	3	$	3	$	5	$	4	$	-	-100.0%	$	10	$	11	10.0%
Net investment income		61		64		53		50		57	-6.6%		242		224	-7.4%
Amortization of deferred gain on
business sold through reinsurance		-		-		-		-		-	NM		22		1	-95.5%
Other revenues		4		-		-		2		(3)	NM		13		(1)	NM
Total operating revenues		68		67		58		56		54	-20.6%		287		235	-18.1%
Operating expenses:
Interest credited		14		15		14		14		13	-7.1%		65		56	-13.8%
Benefits		26		19		28		38		20	-23.1%		117		106	-9.4%
Commissions and other expenses		18		8		7		11		(3)	NM		47		25	-46.8%
Interest and debt expenses		63		68		68		69		69	9.5%		253		274	8.3%
Strategic digitization expense		10		15		16		18		28	180.0%		43		76	76.7%
Total operating expenses		131		125		133		150		127	-3.1%		525		537	2.3%
Income (loss) from operations before taxes		(63)		(58)		(75)		(94)		(73)	-15.9%		(238)		(302)	-26.9%
Federal income tax expense (benefit)		(25)		(16)		(16)		(23)		(20)	20.0%		(130)		(77)	40.8%
Income (loss) from operations	$	(38)	$	(42)	$	(59)	$	(71)	$	(53)	-39.5%	$	(108)	$	(225)	NM
Page 17

Lincoln Financial Group
Consolidated – DAC, VOBA, DSI and DFEL Roll Forwards
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
DAC, VOBA and DSI
Balance as of beginning-of-period	$	8,779	$	8,641	$	9,538	$	10,162	$	10,278	17.1%	$	9,377	$	8,641	-7.8%
Deferrals		397		353		363		387		550	38.5%		1,384		1,654	19.5%
Operating amortization		(284)		(267)		(269)		(424)		(311)	-9.5%		(1,010)		(1,270)	-25.7%
Deferrals, net of operating amortization		113		86		94		(37)		239	111.5%		374		384	2.7%
Amortization associated with benefit ratio unlocking		(6)		5		1		(5)		36	NM		(29)		37	227.6%
Business acquired		-		-		30		-		-	NM		-		30	NM
Business sold through reinsurance		-		-		-		-		(278)	NM		-		(278)	NM
Adjustment related to realized gains (losses)		(1)		(5)		(7)		-		(38)	NM		(14)		(50)	NM
Adjustment related to unrealized gains (losses)		(244)		811		506		158		275	212.7%		(1,067)		1,748	263.8%
Balance as of end-of-period	$	8,641	$	9,538	$	10,162	$	10,278	$	10,512	21.7%	$	8,641	$	10,512	21.7%
DFEL
Balance as of beginning-of-period	$	1,545	$	1,445	$	1,877	$	2,294	$	2,442	58.1%	$	1,874	$	1,445	-22.9%
Deferrals		203		203		207		214		251	23.6%		755		875	15.9%
Operating amortization		(118)		(107)		(121)		(165)		(146)	-23.7%		(391)		(540)	-38.1%
Deferrals, net of operating amortization		85		96		86		49		105	23.5%		364		335	-8.0%
Amortization associated with benefit ratio unlocking		(1)		1		-		(1)		4	NM		(4)		5	225.0%
Adjustment related to realized (gains) losses		(2)		(4)		(4)		(3)		(10)	NM		(14)		(20)	-42.9%
Adjustment related to unrealized (gains) losses		(182)		339		335		103		228	225.3%		(775)		1,004	229.5%
Balance as of end-of-period	$	1,445	$	1,877	$	2,294	$	2,442	$	2,769	91.6%	$	1,445	$	2,769	91.6%
DAC, VOBA, DSI and DFEL
Balance as of End-of-Period, After-Tax	$	4,677	$	6,052	$	6,216	$	6,190	$	6,117	30.8%	$	4,677	$	6,117	30.8%
Page 18

Lincoln Financial Group
Annuities – Account Value Roll Forwards
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Fixed Annuities
Balance as of beginning-of-period	$	20,014	$	20,305	$	20,315	$	20,722	$	21,116	5.5%	$	19,723	$	20,305	3.0%
Gross deposits		645		492		889		890		1,305	102.3%		1,968		3,576	81.7%
Full surrenders and deaths		(396)		(399)		(490)		(555)		(501)	-26.5%		(1,563)		(1,946)	-24.5%
Other contract benefits		(167)		(152)		(157)		(161)		(186)	-11.4%		(588)		(655)	-11.4%
Net flows		82		(59)		242		174		618	NM		(183)		975	NM
Contract holder assessments		(8)		(7)		(8)		(8)		(9)	-12.5%		(28)		(31)	-10.7%
Reinvested interest credited		217		76		173		228		(59)	NM		793		417	-47.4%
Balance as of end-of-period, gross		20,305		20,315		20,722		21,116		21,666	6.7%		20,305		21,666	6.7%
Reinsurance ceded		(768)		(858)		(1,067)		(1,261)		(8,923)	NM		(768)		(8,923)	NM
Balance as of end-of-period, net	$	19,537	$	19,457	$	19,655	$	19,855	$	12,743	-34.8%	$	19,537	$	12,743	-34.8%
Variable Annuities
Balance as of beginning-of-period	$	114,270	$	117,479	$	116,172	$	116,901	$	119,430	4.5%	$	105,766	$	117,479	11.1%
Gross deposits		2,142		2,034		2,094		2,190		2,469	15.3%		6,742		8,787	30.3%
Full surrenders and deaths		(1,492)		(1,614)		(1,545)		(1,523)		(1,414)	5.2%		(5,779)		(6,095)	-5.5%
Other contract benefits		(954)		(967)		(917)		(922)		(998)	-4.6%		(3,487)		(3,806)	-9.1%
Net flows		(304)		(547)		(368)		(255)		57	118.8%		(2,524)		(1,114)	55.9%
Contract holder assessments		(615)		(619)		(620)		(629)		(617)	-0.3%		(2,381)		(2,484)
Change in market value and reinvestment		4,128		(141)		1,717		3,413		(10,334)	NM		16,618		(5,345)	NM
Balance as of end-of-period, gross and net	$	117,479	$	116,172	$	116,901	$	119,430	$	108,536	-7.6%	$	117,479	$	108,536	-7.6%
Total
Balance as of beginning-of-period	$	134,284	$	137,784	$	136,487	$	137,623	$	140,546	4.7%	$	125,489	$	137,784	9.8%
Gross deposits		2,787		2,526		2,983		3,080		3,774	35.4%		8,710		12,363	41.9%
Full surrenders and deaths		(1,888)		(2,013)		(2,035)		(2,078)		(1,915)	-1.4%		(7,342)		(8,041)	-9.5%
Other contract benefits		(1,121)		(1,119)		(1,074)		(1,083)		(1,184)	-5.6%		(4,075)		(4,461)	-9.5%
Net flows		(222)		(606)		(126)		(81)		675	NM		(2,707)		(139)	94.9%
Contract holder assessments		(623)		(626)		(628)		(637)		(626)	-0.5%		(2,409)		(2,515)	-4.4%
Change in market value and reinvestment		4,345		(65)		1,890		3,641		(10,393)	NM		17,411		(4,928)	NM
Balance as of end-of-period, gross		137,784		136,487		137,623		140,546		130,202	-5.5%		137,784		130,202	-5.5%
Reinsurance ceded		(768)		(858)		(1,067)		(1,261)		(8,923)	NM		(768)		(8,923)	NM
Balance as of end-of-period, net	$	137,016	$	135,629	$	136,556	$	139,285	$	121,279	-11.5%	$	137,016	$	121,279	-11.5%
Page 19

Lincoln Financial Group
Retirement Plan Services – Account Value Roll Forwards
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
General Account
Balance as of beginning-of-period	$	18,626	$	18,724	$	18,856	$	19,046	$	19,511	4.8%	$	17,883	$	18,724	4.7%
Gross deposits		494		459		394		704		489	-1.0%		2,175		2,046	-5.9%
Withdrawals		(545)		(520)		(443)		(442)		(544)	0.2%		(1,901)		(1,949)	-2.5%
Net flows		(51)		(61)		(49)		262		(55)	-7.8%		274		97	-64.6%
Transfers between fixed and variable accounts		14		60		104		65		169	NM		34		398	NM
Contract holder assessments		(2)		(3)		(3)		(3)		(3)	-50.0%		(9)		(11)	-22.2%
Reinvestment interest credited		137		136		138		141		144	5.1%		542		558	3.0%
Balance as of end-of-period	$	18,724	$	18,856	$	19,046	$	19,511	$	19,766	5.6%	$	18,724	$	19,766	5.6%
Separate Account and Mutual Funds
Balance as of beginning-of-period	$	46,203	$	48,645	$	48,854	$	50,137	$	52,994	14.7%	$	40,551	$	48,645	20.0%
Gross deposits		1,932		1,901		1,823		2,624		1,674	-13.4%		6,388		8,022	25.6%
Withdrawals		(1,441)		(1,377)		(1,275)		(1,475)		(1,446)	-0.3%		(5,219)		(5,573)	-6.8%
Net flows		491		524		548		1,149		228	-53.6%		1,169		2,449	109.5%
Transfers between fixed and variable accounts		(61)		(119)		(112)		(134)		(170)	NM		(180)		(535)	NM
Contract holder assessments		(52)		(52)		(52)		(53)		(52)	0.0%		(198)		(210)	-6.1%
Change in market value and reinvestment		2,064		(144)		899		1,895		(5,711)	NM		7,303		(3,060)	NM
Balance as of end-of-period	$	48,645	$	48,854	$	50,137	$	52,994	$	47,289	-2.8%	$	48,645	$	47,289	-2.8%
Total
Balance as of beginning-of-period	$	64,829	$	67,369	$	67,710	$	69,183	$	72,505	11.8%	$	58,434	$	67,369	15.3%
Gross deposits		2,426		2,360		2,217		3,328		2,163	-10.8%		8,563		10,068	17.6%
Withdrawals		(1,986)		(1,897)		(1,718)		(1,917)		(1,990)	-0.2%		(7,120)		(7,522)	-5.6%
Net flows		440		463		499		1,411		173	-60.7%		1,443		2,546	76.4%
Transfers between fixed and variable accounts		(47)		(59)		(8)		(69)		(1)	97.9%		(146)		(137)	6.2%
Contract holder assessments		(54)		(55)		(55)		(56)		(55)	-1.9%		(207)		(221)	-6.8%
Change in market value and reinvestment		2,201		(8)		1,037		2,036		(5,567)	NM		7,845		(2,502)	NM
Balance as of end-of-period	$	67,369	$	67,710	$	69,183	$	72,505	$	67,055	-0.5%	$	67,369	$	67,055	-0.5%
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Lincoln Financial Group
Life Insurance – Account Value Roll Forwards
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
General Account
Balance as of beginning-of-period	$	36,576	$	36,791	$	36,855	$	36,955	$	37,054	1.3%	$	36,272	$	36,791	1.4%
Deposits		1,152		1,040		1,073		1,024		1,133	-1.6%		4,380		4,271	-2.5%
Withdrawals and deaths		(281)		(318)		(312)		(266)		(197)	29.9%		(1,311)		(1,093)	16.6%
Net flows		871		722		761		758		936	7.5%		3,069		3,178	3.6%
Contract holder assessments		(1,030)		(1,019)		(1,018)		(1,024)		(1,051)	-2.0%		(3,993)		(4,114)	-3.0%
Reinvested interest credited		374		361		357		365		350	-6.4%		1,443		1,434	-0.6%
Balance as of end-of-period, gross		36,791		36,855		36,955		37,054		37,289	1.4%		36,791		37,289	1.4%
Reinsurance ceded		(719)		(700)		(693)		(683)		(677)	5.8%		(719)		(677)	5.8%
Balance as of end-of-period, net	$	36,072	$	36,155	$	36,262	$	36,371	$	36,612	1.5%	$	36,072	$	36,612	1.5%
Separate Account
Balance as of beginning-of-period	$	12,916	$	13,851	$	13,987	$	14,420	$	15,102	16.9%	$	11,058	$	13,851	25.3%
Deposits		744		494		444		499		730	-1.9%		1,937		2,167	11.9%
Withdrawals and deaths		(172)		(140)		(121)		(177)		(227)	-32.0%		(474)		(666)	-40.5%
Net flows		572		354		323		322		503	-12.1%		1,463		1,501	2.6%
Contract holder assessments		(174)		(179)		(179)		(187)		(210)	-20.7%		(654)		(755)	-15.4%
Change in market value and reinvestment		537		(39)		289		547		(1,660)	NM		1,984		(862)	NM
Balance as of end-of-period, gross		13,851		13,987		14,420		15,102		13,735	-0.8%		13,851		13,735	-0.8%
Reinsurance ceded		(875)		(861)		(868)		(886)		(758)	13.4%		(875)		(758)	13.4%
Balance as of end-of-period, net	$	12,976	$	13,126	$	13,552	$	14,216	$	12,977	0.0%	$	12,976	$	12,977	0.0%
Total
Balance as of beginning-of-period	$	49,492	$	50,642	$	50,842	$	51,375	$	52,156	5.4%	$	47,330	$	50,642	7.0%
Deposits		1,896		1,534		1,517		1,523		1,863	-1.7%		6,317		6,438	1.9%
Withdrawals and deaths		(453)		(458)		(433)		(443)		(424)	6.4%		(1,785)		(1,759)	1.5%
Net flows		1,443		1,076		1,084		1,080		1,439	-0.3%		4,532		4,679	3.2%
Contract holder assessments		(1,204)		(1,198)		(1,197)		(1,211)		(1,261)	-4.7%		(4,647)		(4,869)	-4.8%
Change in market value and reinvestment		911		322		646		912		(1,310)	NM		3,427		572	-83.3%
Balance as of end-of-period, gross		50,642		50,842		51,375		52,156		51,024	0.8%		50,642		51,024	0.8%
Reinsurance ceded		(1,594)		(1,561)		(1,561)		(1,569)		(1,435)	10.0%		(1,594)		(1,435)	10.0%
Balance as of end-of-period, net	$	49,048	$	49,281	$	49,814	$	50,587	$	49,589	1.1%	$	49,048	$	49,589	1.1%
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Lincoln Financial Group
Select Investment Data
Unaudited (millions of dollars)
	As of 12/31/17				As of 12/31/18
	Amount		%		Amount		%
AFS, Equity and Trading Securities, at Fair Value
AFS securities:
Corporate bonds	$	83,190		85.9%	$	81,314		84.7%
U.S. government bonds		567		0.6%		417		0.4%
Foreign government bonds		451		0.5%		448		0.5%
Mortgage-backed securities		4,065		4.2%		4,177		4.3%
Asset-backed collateralized debt obligations		808		0.8%		1,730		1.8%
State and municipal bonds		5,119		5.3%		5,345		5.6%
Hybrid and redeemable preferred securities		640		0.7%		593		0.6%
AFS equity securities		246		0.3%		-		0.0%
Total AFS securities		95,086		98.3%		94,024		97.9%
Trading securities		1,620		1.7%		1,950		2.0%
Equity securities		-		0.0%		99		0.1%
Total AFS, equity and trading securities	$	96,706		100.0%	$	96,073		100.0%
AFS and Trading Securities, at Amortized Cost
Fixed maturity securities	$	88,418		99.7%	$	94,252		99.9%
Equity securities		247		0.3%		116		0.1%
Total AFS and trading securities	$	88,665		100.0%	$	94,368		100.0%
Percentage of Fixed Maturity AFS Securities, at Amortized Cost
Investment grade				95.6%				96.2%
Below investment grade				4.4%				3.8%
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Lincoln Financial Group
Realized Gain (Loss) and Benefit Ratio Unlocking, After-DAC
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Realized Gain (Loss), Pre-Tax
Total adjusted operating realized gain (loss)	$	41	$	47	$	46	$	43	$	50	22.0%	$	166	$	187	12.7%
Total excluded realized gain (loss)		(106)		(35)		(53)		(98)		141	233.0%		(336)		(46)	86.3%
Total realized gain (loss), pre-tax	$	(65)	$	12	$	(7)	$	(55)	$	191	NM	$	(170)	$	141	182.9%
Excluded Realized Gain (Loss) Net of
Benefit Ratio Unlocking, After-Tax
Total excluded realized gain (loss)	$	(69)	$	(28)	$	(41)	$	(77)	$	111	260.9%	$	(218)	$	(37)	83.0%
Benefit ratio unlocking		28		(10)		7		33		(167)	NM		129		(136)	NM
Net gain (loss), after-tax	$	(41)	$	(38)	$	(34)	$	(44)	$	(56)	-36.6%	$	(89)	$	(173)	-94.4%
Realized Gain (Loss) Net of Benefit Ratio
Unlocking, After-Tax
Realized gain (loss) related to investments	$	(23)	$	(15)	$	9	$	(15)	$	(37)	-60.9%	$	(50)	$	(59)	-18.0%
Variable annuity net derivative results:
Hedge program performance, including unlocking
for GLB reserves hedged		(7)		(25)		(42)		(19)		(53)	NM		14		(137)	NM
GLB non-performance risk component		(9)		5		2		(5)		56	NM		(43)		57	232.6%
Total variable annuity net derivative results		(16)		(20)		(40)		(24)		3	118.8%		(29)		(80)	NM
Indexed annuity forward-starting option		(2)		(3)		(3)		(5)		(22)	NM		(10)		(34)	NM
Excluded realized gain (loss) net of
benefit ratio unlocking, after-tax	$	(41)	$	(38)	$	(34)	$	(44)	$	(56)	-36.6%	$	(89)	$	(173)	-94.4%
Components of Realized Gain (Loss)
Related to Investments, After-Tax
OTTI	$	(1)	$	(2)	$	(1)	$	(2)	$	(2)	-21.5%	$	(12)	$	(6)	50.0%
Other realized gain (loss) related to certain investments		(14)		(15)		(11)		(7)		(13)	2.0%		(35)		(47)	-34.3%
Gain (loss) on the mark-to-market on equity investments		-		-		2		-		(15)	NM		-		(13)	NM
Gain (loss) on the mark-to-market on certain instruments		(8)		2		19		(6)		(7)	12.5%		(3)		7	NM
Total realized gain (loss) related
to investments, after-tax	$	(23)	$	(15)	$	9	$	(15)	$	(37)	-60.9%	$	(50)	$	(59)	-18.0%
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Lincoln Financial Group
Select GAAP to Non-GAAP Reconciliations
Unaudited (millions of dollars)
	For the Three Months Ended											For the Twelve Months Ended
	12/31/17		3/31/18		6/30/18		9/30/18		12/31/18		Change	12/31/17		12/31/18		Change
Revenues
Total revenues	$	3,669	$	3,609	$	4,020	$	4,264	$	4,531	23.5%	$	14,257	$	16,424	15.2%
Less:
Excluded realized gain (loss)		(106)		(35)		(53)		(98)		141	233.0%		(336)		(46)	86.3%
Amortization of DFEL on benefit ratio unlocking		-		(1)		-		-		(4)	NM		3		(5)	NM
Amortization of deferred gains arising from reserve
changes on business sold through reinsurance		-		-		-		-		-	NM		1		-	-100.0%
Adjusted operating revenues	$	3,775	$	3,645	$	4,073	$	4,362	$	4,394	16.4%	$	14,589	$	16,475	12.9%
Net Income
Net income (loss)	$	816	$	367	$	385	$	490	$	399	-51.1%	$	2,079	$	1,641	-21.1%
Less:
Excluded realized gain (loss)		(69)		(28)		(41)		(77)		111	260.9%		(218)		(37)	83.0%
Benefit ratio unlocking		28		(10)		7		33		(167)	NM		129		(136)	NM
Net impact from the Tax Cuts and Jobs Act		1,322		(13)		-		32		-	-100.0%		1,322		19	-98.6%
Impairment of intangibles		(905)		-		-		-		-	100.0%		(905)		-	100.0%
Acquisition and integration costs related to
mergers and acquisitions, after-tax		-		(4)		(35)		(8)		(20)	NM		-		(67)	NM
Gain (loss) on early extinguishment of debt		-		(19)		-		-		-	NM		(3)		(18)	NM
Adjusted income (loss) from operations	$	440	$	441	$	454	$	510	$	475	8.0%	$	1,754	$	1,880	7.2%
Earnings (Loss) Per Common Share – Diluted
Net income (loss)	$	3.67	$	1.64	$	1.70	$	2.24	$	1.80	-51.0%	$	9.22	$	7.40	-19.7%
Less:
Excluded realized gain (loss)		(0.31)		(0.13)		(0.19)		(0.36)		0.53	271.0%		(0.97)		(0.16)	83.5%
Benefit ratio unlocking		0.13		(0.04)		0.03		0.15		(0.78)	NM		0.57		(0.62)	NM
Net impact from the Tax Cuts and Jobs Act		5.96		(0.06)		-		0.15		-	-100.0%		5.84		0.09	-98.5%
Impairment of intangibles		(4.08)		-		-		-		-	100.0%		(4.00)		-	100.0%
Acquisition and integration costs related to mergers
and acquisitions, after-tax		-		(0.02)		(0.16)		(0.04)		(0.10)	NM		-		(0.31)	NM
Gain (loss) on early extinguishment of debt		-		(0.08)		-		-		-	NM		(0.01)		(0.08)	NM
Adjustment attributable to using different average
diluted shares for adjusted income from operations
as compared to net income		(0.01)		-		-		-		-	100.0%		-		-	NM
Adjusted income (loss) from operations	$	1.98	$	1.97	$	2.02	$	2.34	$	2.15	8.6%	$	7.79	$	8.48	8.9%
Page 24