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| Lincoln Financial Group |
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| Table of Contents |
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| Notes | 1 |
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| Credit Ratings | 2 |
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| Consolidated |
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| Consolidated Statements of Income (Loss) | 3 |
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| Consolidated Balance Sheets | 4 |
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| Earnings, Shares and Return on Equity | 5 |
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| Key Stakeholder Metrics | 6 |
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| Select Earnings Drivers By Segment | 7 |
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| Sales By Segment | 8 |
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| Operating Revenues and General and Administrative Expenses By Segment | 9 |
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| Operating Commissions and Other Expenses | 10 |
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| Interest Rate Yields and Spreads By Segment | 11 |
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| Select Earnings and Operational Data from Business Segments |
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| Income (Loss) from Operations Summary | 12 |
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| Life Insurance | 13 |
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| Annuities | 14 |
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| Group Protection | 15 |
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| Retirement Plan Services | 16 |
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| Other Operations | 17 |
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| DAC & Account Balance Roll Forwards |
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| Consolidated DAC, VOBA, DSI and DFEL Roll Forwards | 18 |
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| Account Balance Roll Forwards: |
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| Life Insurance | 19 |
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| Annuities | 20 |
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| Retirement Plan Services | 21 |
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| Investment Information |
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| Fixed-Income Asset Class | 22 |
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| Fixed-Income Credit Quality | 23 |
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| GAAP to Non-GAAP Reconciliations |
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| Select GAAP to Non-GAAP Reconciliations | 24-26 |
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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 beginning on page 24. |
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| Adjusted Income (Loss) From Operations |
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| Adjusted income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable: |
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| • Changes in market risk benefits (“MRBs”), including gains and losses and benefit payments (“MRB-related impacts”); |
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| • Investment and reinsurance-related realized gain (loss): |
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| ▪ Changes in the carrying value of mortgage loans on real estate attributable to current expected credit losses (“CECL”) (“changes in CECL reserve for mortgage loans on real estate”); |
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| ▪ Changes in the carrying value of reinsurance-related assets attributable to CECL (“changes in CECL reserve for reinsurance-related assets”); |
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| ▪ Changes in the carrying value of fixed maturity AFS securities attributable to the estimation of credit losses (“changes in the credit loss allowance for fixed maturity AFS securities”); and |
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| ▪ Changes in the fair value of investments, including trading securities, equity securities, certain derivatives, and mortgage loans on real estate electing the fair value option, and of |
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| embedded derivatives within certain reinsurance arrangements, as well as sales or disposals of investments (“changes in investments and reinsurance-related embedded derivatives”); |
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| • Changes in the fair value of the derivative instruments we hold to hedge GLB and GDB, net of fee income allocated to support the cost of hedging them (“changes in fair value of GLB and GDB |
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| hedge instruments, net of hedge allowance”); |
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| • Changes in the fair value of the embedded derivative liabilities of our indexed annuity and indexed universal life insurance contracts and the associated index options we hold to hedge them, including |
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| collateral expense associated with hedge programs (“indexed product net derivative results”); |
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| • Changes in reserves resulting from benefit ratio unlocking on variable universal life insurance products with secondary guarantees (“benefit ratio unlocking”); |
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| • Income (loss) from the initial adoption of new accounting standards, regulations and policy changes; |
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| • Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance; |
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| • Transaction and integration costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business; |
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| • Gains (losses) on modification or early extinguishment of debt; |
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| • Losses from the impairment of intangible assets and gains (losses) on other non-financial assets; and |
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| • Income (loss) from discontinued operations. |
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| Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends and the adjustment for deferred |
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| units of LNC stock in our deferred compensation plans. |
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| Adjusted Operating Revenues |
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| Adjusted operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable: |
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| • Investment and reinsurance-related realized gain (loss); |
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| • Changes in fair value of GLB and GDB hedge instruments, net of hedge allowance; |
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| • Indexed product net derivative results; |
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| • Revenue adjustments from the initial adoption of new accounting standards; and |
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| • Amortization of deferred gains arising from reserve changes on business sold through reinsurance. |
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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 underlying trends |
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| 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, |
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| 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 (loss) |
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| from operations provide investors with more valuable measures of our performance as they better reveal trends in our business. |
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| Page 1a |
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| Lincoln Financial Group |
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| Notes |
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| Non-GAAP Performance Measures, Continued |
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| Stockholders’ Equity, Excluding AOCI and Preferred Stock |
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| Stockholders’ equity, excluding AOCI is stockholders’ equity, excluding AOCI and preferred stock. Management believes this metric is useful to investors because it eliminates market movements that are |
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| unpredictable and can fluctuate significantly from period to period, primarily related to changes in interest rates. Stockholders’ equity is the most directly comparable GAAP measure. |
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| Adjusted Stockholders’ Equity |
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| For presented periods prior to January 1, 2023, adjusted stockholders’ equity is stockholders’ equity, excluding AOCI, preferred stock and MRB-related impacts. For periods beginning on or after January 1, 2023, |
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| adjusted stockholders’ equity is stockholders’ equity, excluding AOCI, preferred stock, MRB-related impacts and GLB and GDB hedged instruments gains (losses), to align to updates made to our variable |
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| annuity hedge program effective January 1, 2023. Management believes this metric is useful to investors because it eliminates the effect of market movements that are unpredictable and can fluctuate significantly |
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| from period to period, primarily related to changes in equity markets and interest rates. Stockholders’ equity is the most directly comparable GAAP measure. |
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| Book Value per Share, Excluding AOCI |
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| Book value per share, excluding AOCI, is calculated by dividing stockholders’ equity, excluding AOCI and preferred stock, by common shares outstanding. We provide book value per share, excluding AOCI, to |
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| 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 |
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| eliminates the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per share is the most directly comparable GAAP |
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| measure. |
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| Adjusted Book Value per Share |
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| Adjusted book value per share is calculated by dividing stockholders’ equity, excluding AOCI, preferred stock and MRB-related impacts, by common shares outstanding. We provide adjusted book value per share |
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| to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations. Management believes adjusted book value per share is useful to investors because it eliminates |
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| the effect of items that are unpredictable and can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates. Stockholders’ equity is the most directly comparable |
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| GAAP measure. |
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| Adjusted Income (Loss) From Operations Available to Common Stockholders, Excluding AOCI and Preferred Stock ROE |
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| Adjusted income (loss) from operations available to common stockholders, excluding AOCI and preferred stock ROE is calculated by dividing annualized adjusted income (loss) from operations available |
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| to common stockholders by average stockholders’ equity, excluding AOCI and preferred stock. Management believes this metric is useful to investors because it eliminates the effect of market movements |
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| on ROE that are unpredictable and can fluctuate significantly from period to period, primarily related to changes in interest rates. Net income (loss) ROE is the most directly comparable GAAP measure. |
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| Adjusted Income (Loss) From Operations ROE |
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| Adjusted income (loss) from operations ROE is calculated by dividing annualized adjusted income (loss) from operations available to common stockholders by adjusted average stockholders’ equity. |
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| Management believes this metric is useful to investors because it eliminates the effect of market movements on ROE that are unpredictable and can fluctuate significantly from period to period, primarily |
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| related to changes in equity markets and interest rates. Net income (loss) ROE is the most directly comparable GAAP measure. |
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| Management believes that the non-GAAP measures discussed above allow for a better understanding of the underlying trends in our current business as the excluded items are unpredictable and not necessarily |
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| indicative of current operating fundamentals or future performance of the business. |
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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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| • We exclude deferred units of LNC stock that are antidilutive from our diluted earnings per share calculation. In addition, for any period where a net loss or adjusted loss from operations is experienced, shares |
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| used in the diluted EPS calculation represent basic shares, as the use of diluted shares would result in a lower loss per share. |
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| • 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. |
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| Page 1b |
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| Lincoln Financial Group |
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| Notes |
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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 commercial paper |
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| outstanding. |
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| Return on equity (“ROE”) measures how efficiently we generate profits from the resources provided by our net assets. See adjusted income (loss) from operations ROE and adjusted income (loss) from |
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| operations available to common stockholders, excluding AOCI and preferred stock ROE metrics on page 1b for further information on how these metrics are calculated. Management evaluates consolidated |
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| ROE by both including and excluding the effect of average goodwill. |
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| Sales as reported consist of the following: |
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| • Universal life insurance (“UL”), indexed universal life insurance (“IUL”), variable universal life insurance (“VUL”) – first-year commissionable premiums plus 5% of excess premiums received; |
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| • MoneyGuard® linked-benefit products – MoneyGuard® (UL), 15% of total expected premium deposits, and MoneyGuard Market AdvantageSM (VUL), 150% of commissionable premiums; |
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| • Executive Benefits – insurance and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess premium received, and single premium bank-owned UL and VUL, 15% of |
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| single premium deposits; |
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| • Term – 100% of annualized first-year premiums; |
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| • Annuities and Retirement Plan Services – deposits from new and existing customers; and |
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| • Group Protection – annualized first-year premiums from new policies. |
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| Statistical Supplement is Dated |
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| This document is dated May 9, 2023, and has not been updated since that date. Lincoln Financial Group does not intend to update this document. |
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| Page 1c |
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| Lincoln Financial Group |
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| Credit Ratings |
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| Ratings as of May 9, 2023 |
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| Standard |
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| AM Best |
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| Fitch |
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| & Poor's |
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| bbb+ |
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| BBB+ |
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| Baa1 |
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| The Lincoln National Life Insurance Company |
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| A |
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| A+ |
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| First Penn-Pacific Life Insurance Company |
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| A |
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| Lincoln Life & Annuity Company of New York |
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| A |
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| A+ |
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| A1 |
| A+ |
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| Investor Inquiries May Be Directed To: |
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| Albert Copersino, Vice President, Investor Relations |
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| Email: InvestorRelations@lfg.com |
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| Phone: 800-237-2920 |
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| Page 2 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Consolidated Statements of Income (Loss) |
| ||||||||||||||||
| Unaudited (millions of dollars, except per share data) |
| ||||||||||||||||
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Revenues |
|
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| Insurance premiums | $ | 1,477 |
| $ | 1,498 |
| $ | 1,548 |
| $ | 1,564 |
| $ | 1,579 |
| 6.9% |
|
| Fee income |
| 1,458 |
|
| 1,409 |
|
| 1,381 |
|
| 1,354 |
|
| 1,379 |
| -5.4% |
|
| Net investment income |
| 1,411 |
|
| 1,398 |
|
| 1,295 |
|
| 1,412 |
|
| 1,466 |
| 3.9% |
|
| Realized gain (loss) |
| 181 |
|
| 1,101 |
|
| 249 |
|
| (692) |
|
| (828) |
| NM |
|
| Amortization of deferred gain on business |
|
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| sold through reinsurance |
| 11 |
|
| 11 |
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| 10 |
|
| 10 |
|
| 9 |
| -18.2% |
|
| Other revenues |
| 182 |
|
| 160 |
|
| 189 |
|
| 193 |
|
| 209 |
| 14.8% |
|
| Total revenues |
| 4,720 |
|
| 5,577 |
|
| 4,672 |
|
| 3,841 |
|
| 3,814 |
| -19.2% |
|
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| Expenses |
|
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|
|
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| Benefits |
| 2,156 |
|
| 1,954 |
|
| 2,149 |
|
| 2,220 |
|
| 2,291 |
| 6.3% |
|
| Interest credited |
| 697 |
|
| 710 |
|
| 726 |
|
| 744 |
|
| 785 |
| 12.6% |
|
| Market risk benefit (gain) loss |
| (1,359) |
|
| 477 |
|
| (798) |
|
| (1,567) |
|
| 619 |
| 145.5% |
|
| Policyholder liability remeasurement (gain) loss |
| 41 |
|
| 85 |
|
| 2,692 |
|
| (52) |
|
| (118) |
| NM |
|
| Commissions and other expenses |
| 1,253 |
|
| 1,208 |
|
| 1,280 |
|
| 1,385 |
|
| 1,300 |
| 3.8% |
|
| Interest and debt expense |
| 66 |
|
| 68 |
|
| 71 |
|
| 77 |
|
| 83 |
| 25.8% |
|
| Spark program expense |
| 31 |
|
| 43 |
|
| 44 |
|
| 49 |
|
| 24 |
| -22.6% |
|
| Impairment of intangibles |
| - |
|
| - |
|
| 634 |
|
| - |
|
| - |
| NM |
|
| Total expenses |
| 2,885 |
|
| 4,545 |
|
| 6,798 |
|
| 2,856 |
|
| 4,984 |
| 72.8% |
|
| Income (loss) before taxes |
| 1,835 |
|
| 1,032 |
|
| (2,126) |
|
| 985 |
|
| (1,170) |
| NM |
|
| Federal income tax expense (benefit) |
| 353 |
|
| 192 |
|
| (351) |
|
| 173 |
|
| (289) |
| NM |
|
| Net income (loss) |
| 1,482 |
|
| 840 |
|
| (1,775) |
|
| 812 |
|
| (881) |
| NM |
|
| Preferred stock dividends declared |
| - |
|
| - |
|
| - |
|
| - |
|
| (25) |
| NM |
|
| Adjustment for deferred units of LNC stock |
|
|
|
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|
|
| in our deferred compensation plans |
| (1) |
|
| (7) |
|
| (1) |
|
| (5) |
|
| (3) |
| NM |
|
| Net income (loss) available to common |
|
|
|
|
|
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|
|
|
|
|
| stockholders – diluted | $ | 1,481 |
| $ | 833 |
| $ | (1,776) |
| $ | 807 |
| $ | (909) |
| NM |
|
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|
| Earnings (Loss) Per Common Share – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) | $ | 8.39 |
| $ | 4.83 |
| $ | (10.47) |
| $ | 4.73 |
| $ | (5.37) |
| NM |
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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 |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| ASSETS |
|
|
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|
|
| Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed maturity available-for-sale (“AFS”) securities, net of allowance for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate bonds | $ | 90,561 |
| $ | 83,158 |
| $ | 77,446 |
| $ | 79,023 |
| $ | 80,448 |
| -11.2% |
|
| U.S. government bonds |
| 418 |
|
| 415 |
|
| 384 |
|
| 379 |
|
| 383 |
| -8.4% |
|
| State and municipal bonds |
| 6,001 |
|
| 5,523 |
|
| 5,089 |
|
| 5,070 |
|
| 5,257 |
| -12.4% |
|
| Foreign government bonds |
| 383 |
|
| 348 |
|
| 338 |
|
| 318 |
|
| 309 |
| -19.3% |
|
| Residential mortgage-backed securities |
| 2,338 |
|
| 2,181 |
|
| 2,048 |
|
| 2,009 |
|
| 2,050 |
| -12.3% |
|
| Commercial mortgage-backed securities |
| 1,592 |
|
| 1,557 |
|
| 1,549 |
|
| 1,674 |
|
| 1,671 |
| 5.0% |
|
| Asset-backed securities |
| 8,929 |
|
| 9,711 |
|
| 10,347 |
|
| 10,904 |
|
| 11,458 |
| 28.3% |
|
| Hybrid and redeemable preferred securities |
| 441 |
|
| 423 |
|
| 371 |
|
| 359 |
|
| 360 |
| -18.4% |
|
| Total fixed maturity AFS securities, net of allowance for credit losses |
| 110,663 |
|
| 103,316 |
|
| 97,572 |
|
| 99,736 |
|
| 101,936 |
| -7.9% |
|
| Trading securities |
| 4,364 |
|
| 3,803 |
|
| 3,580 |
|
| 3,498 |
|
| 3,266 |
| -25.2% |
|
| Equity securities |
| 399 |
|
| 412 |
|
| 427 |
|
| 427 |
|
| 414 |
| 3.8% |
|
| Mortgage loans on real estate, net of allowance for credit losses |
| 17,892 |
|
| 17,922 |
|
| 18,066 |
|
| 18,301 |
|
| 18,327 |
| 2.4% |
|
| Policy loans |
| 2,339 |
|
| 2,368 |
|
| 2,347 |
|
| 2,359 |
|
| 2,383 |
| 1.9% |
|
| Derivative investments |
| 4,574 |
|
| 3,167 |
|
| 3,456 |
|
| 3,594 |
|
| 4,005 |
| -12.4% |
|
| Other investments |
| 4,121 |
|
| 4,078 |
|
| 3,812 |
|
| 3,739 |
|
| 3,892 |
| -5.6% |
|
| Total investments |
| 144,352 |
|
| 135,066 |
|
| 129,260 |
|
| 131,654 |
|
| 134,223 |
| -7.0% |
|
| Cash and invested cash |
| 1,960 |
|
| 1,567 |
|
| 1,472 |
|
| 3,343 |
|
| 3,766 |
| 92.1% |
|
| Deferred acquisition costs, value of business acquired and deferred sales inducements |
| 11,965 |
|
| 12,050 |
|
| 12,140 |
|
| 12,235 |
|
| 12,277 |
| 2.6% |
|
| Reinsurance recoverables, net of allowance for credit losses |
| 21,158 |
|
| 19,874 |
|
| 19,460 |
|
| 19,443 |
|
| 19,309 |
| -8.7% |
|
| Market risk benefit assets |
| 2,291 |
|
| 2,205 |
|
| 2,428 |
|
| 2,807 |
|
| 3,445 |
| 50.4% |
|
| Accrued investment income |
| 1,247 |
|
| 1,226 |
|
| 1,283 |
|
| 1,253 |
|
| 1,277 |
| 2.4% |
|
| Goodwill |
| 1,778 |
|
| 1,778 |
|
| 1,144 |
|
| 1,144 |
|
| 1,144 |
| -35.7% |
|
| Other assets |
| 16,493 |
|
| 16,708 |
|
| 18,435 |
|
| 18,802 |
|
| 19,280 |
| 16.9% |
|
| Separate account assets |
| 168,879 |
|
| 145,791 |
|
| 137,295 |
|
| 143,536 |
|
| 148,421 |
| -12.1% |
|
| Total assets | $ | 370,123 |
| $ | 336,265 |
| $ | 322,917 |
| $ | 334,217 |
| $ | 343,142 |
| -7.3% |
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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 |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Liabilities |
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|
|
|
|
|
|
|
|
|
|
|
|
|
| Policyholder account balances | $ | 110,606 |
| $ | 110,202 |
| $ | 111,732 |
| $ | 114,435 |
| $ | 116,167 |
| 5.0% |
|
| Future contract benefits |
| 38,887 |
|
| 36,453 |
|
| 38,087 |
|
| 38,826 |
|
| 39,757 |
| 2.2% |
|
| Market risk benefit liabilities |
| 3,312 |
|
| 3,195 |
|
| 2,756 |
|
| 2,078 |
|
| 1,976 |
| -40.3% |
|
| Deferred front-end loads |
| 4,416 |
|
| 4,623 |
|
| 4,834 |
|
| 5,052 |
|
| 5,250 |
| 18.9% |
|
| Payables for collateral on investments |
| 8,927 |
|
| 7,524 |
|
| 6,865 |
|
| 6,712 |
|
| 6,803 |
| -23.8% |
|
| Short-term debt |
| - |
|
| - |
|
| 500 |
|
| 500 |
|
| 500 |
| NM |
|
| Long-term debt by rating agency leverage definitions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating (see note (2) on page 6 for details) |
| 867 |
|
| 867 |
|
| 867 |
|
| 867 |
|
| 867 |
| 0.0% |
|
| Financial |
| 5,694 |
|
| 5,631 |
|
| 5,092 |
|
| 5,088 |
|
| 5,107 |
| -10.3% |
|
| Other liabilities |
| 14,280 |
|
| 12,648 |
|
| 12,106 |
|
| 12,021 |
|
| 11,562 |
| -19.0% |
|
| Separate account liabilities |
| 168,879 |
|
| 145,791 |
|
| 137,295 |
|
| 143,536 |
|
| 148,421 |
| -12.1% |
|
| Total liabilities |
| 355,868 |
|
| 326,934 |
|
| 320,134 |
|
| 329,115 |
|
| 336,410 |
| -5.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock |
| - |
|
| - |
|
| - |
|
| 986 |
|
| 986 |
| NM |
|
| Common stock |
| 4,586 |
|
| 4,546 |
|
| 4,534 |
|
| 4,544 |
|
| 4,560 |
| -0.6% |
|
| Retained earnings |
| 6,354 |
|
| 7,065 |
|
| 5,189 |
|
| 5,924 |
|
| 4,940 |
| -22.3% |
|
| Accumulated other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized investment gain (loss) |
| 2,033 |
|
| (4,623) |
|
| (9,677) |
|
| (8,528) |
|
| (6,754) |
| NM |
|
| Market risk benefit non-performance risk gain (loss) |
| 1,971 |
|
| 2,325 |
|
| 2,175 |
|
| 1,741 |
|
| 2,766 |
| 40.3% |
|
| Policyholder liability discount rate remeasurement gain (loss) |
| (454) |
|
| 257 |
|
| 806 |
|
| 747 |
|
| 545 |
| 220.0% |
|
| Foreign currency translation adjustment |
| (19) |
|
| (33) |
|
| (47) |
|
| (34) |
|
| (31) |
| -63.2% |
|
| Funded status of employee benefit plans |
| (216) |
|
| (206) |
|
| (197) |
|
| (278) |
|
| (280) |
| -29.6% |
|
| Total accumulated other comprehensive income (loss) |
| 3,315 |
|
| (2,280) |
|
| (6,940) |
|
| (6,352) |
|
| (3,754) |
| NM |
|
| Total stockholders’ equity |
| 14,255 |
|
| 9,331 |
|
| 2,783 |
|
| 5,102 |
|
| 6,732 |
| -52.8% |
|
| Total liabilities and stockholders’ equity | $ | 370,123 |
| $ | 336,265 |
| $ | 322,917 |
| $ | 334,217 |
| $ | 343,142 |
| -7.3% |
|
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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 |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Income (Loss) |
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
| Net income (loss) | $ | 1,482 |
| $ | 840 |
| $ | (1,775) |
| $ | 812 |
| $ | (881) |
| NM |
|
| Pre-tax adjusted income (loss) from operations |
| 307 |
|
| 441 |
|
| (2,513) |
|
| 127 |
|
| 310 |
| 1.0% |
|
| After-tax adjusted income (loss) from operations (1) |
| 274 |
|
| 374 |
|
| (1,949) |
|
| 134 |
|
| 288 |
| 5.1% |
|
| Adjusted operating tax rate |
| 10.7% |
|
| 15.3% |
|
| 22.5% |
|
| -5.5% |
|
| 7.2% |
|
|
|
| Adjusted income (loss) from operations available to common stockholders |
| 273 |
|
| 367 |
|
| (1,950) |
|
| 129 |
|
| 260 |
| -4.8% |
|
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| ROE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) ROE |
| 34.7% |
|
| 28.5% |
|
| NM |
|
| 82.3% |
|
| -59.6% |
|
|
|
| Adjusted income (loss) from operations available to common stockholders, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| excluding AOCI and preferred stock ROE |
| 10.5% |
|
| 13.0% |
|
| -73.1% |
|
| 5.1% |
|
| 10.4% |
|
|
|
| Adjusted income (loss) from operations ROE |
| 8.4% |
|
| 10.8% |
|
| -60.7% |
|
| 4.6% |
|
| 9.5% |
|
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| Per Common Share |
|
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|
|
|
| Net income (loss) (diluted) | $ | 8.39 |
| $ | 4.83 |
| $ | (10.47) |
| $ | 4.73 |
| $ | (5.37) |
| NM |
|
| Adjusted income (loss) from operations (diluted) (2) |
| 1.55 |
|
| 2.13 |
|
| (11.49) |
|
| 0.76 |
|
| 1.52 |
| -1.9% |
|
| Dividends declared during the period |
| 0.45 |
|
| 0.45 |
|
| 0.45 |
|
| 0.45 |
|
| 0.45 |
| 0.0% |
|
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|
|
| Book Value Per Common Share |
|
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|
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|
|
| Book value per share | $ | 82.93 |
| $ | 54.81 |
| $ | 16.45 |
| $ | 24.32 |
| $ | 33.89 |
| -59.1% |
|
| Book value per share, excluding AOCI (3) |
| 63.64 |
|
| 68.21 |
|
| 57.46 |
|
| 61.86 |
|
| 56.04 |
| -11.9% |
|
| Adjusted book value per share (3) |
| 75.77 |
|
| 82.78 |
|
| 68.53 |
|
| 65.72 |
|
| 66.05 |
| -12.8% |
|
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| Common Shares |
|
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|
|
| Repurchased during the period |
| 5.8 |
|
| 1.8 |
|
| 1.0 |
|
| - |
|
| - |
| -100.0% |
|
| End-of-period – basic |
| 171.9 |
|
| 170.2 |
|
| 169.2 |
|
| 169.2 |
|
| 169.5 |
| -1.4% |
|
| Average for the period – basic |
| 174.2 |
|
| 171.1 |
|
| 169.7 |
|
| 169.2 |
|
| 169.4 |
| -2.8% |
|
| End-of-period – diluted |
| 173.8 |
|
| 171.6 |
|
| 170.7 |
|
| 170.5 |
|
| 170.5 |
| -1.9% |
|
| Average for the period – diluted |
| 176.4 |
|
| 172.7 |
|
| 171.1 |
|
| 170.6 |
|
| 170.5 |
| -3.3% |
|
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|
|
|
| (1) See reconciliation to net income (loss) on page 24. |
|
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|
|
|
|
|
|
|
|
| (2) See reconciliation to earnings (loss) per common share - diluted on page 25. |
|
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|
|
| (3) See reconciliation to stockholders’ equity and book value per common share on page 26. |
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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 |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Cash Returned to Common Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares repurchased | $ | 400 |
| $ | 100 |
| $ | 50 |
| $ | - |
| $ | - |
| -100.0% |
|
| Common dividends |
| 80 |
|
| 77 |
|
| 77 |
|
| 76 |
|
| 76 |
| -5.0% |
|
| Total cash returned to common stockholders | $ | 480 |
| $ | 177 |
| $ | 127 |
| $ | 76 |
| $ | 76 |
| -84.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Returned to Preferred Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred dividends | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 25 |
| NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leverage Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term debt | $ | - |
| $ | - |
| $ | 500 |
| $ | 500 |
| $ | 500 |
| NM |
|
| Long-term debt |
| 6,561 |
|
| 6,498 |
|
| 5,959 |
|
| 5,955 |
|
| 5,974 |
| -8.9% |
|
| Total debt (1) |
| 6,561 |
|
| 6,498 |
|
| 6,459 |
|
| 6,455 |
|
| 6,474 |
| -1.3% |
|
| Preferred stock |
| - |
|
| - |
|
| - |
|
| 986 |
|
| 986 |
| NM |
|
| Total debt and preferred stock |
| 6,561 |
|
| 6,498 |
|
| 6,459 |
|
| 7,441 |
|
| 7,460 |
| 13.7% |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating debt (2) |
| 867 |
|
| 867 |
|
| 867 |
|
| 867 |
|
| 867 |
| 0.0% |
|
| Pre-funding of upcoming debt maturities |
| 300 |
|
| 300 |
|
| 300 |
|
| 500 |
|
| 500 |
| 66.7% |
|
| 25% of capital securities and subordinated notes |
| 302 |
|
| 302 |
|
| 302 |
|
| 302 |
|
| 302 |
| 0.0% |
|
| 50% of preferred stock |
| - |
|
| - |
|
| - |
|
| 493 |
|
| 493 |
| NM |
|
| Carrying value of fair value hedges and other items |
| 273 |
|
| 209 |
|
| 169 |
|
| 164 |
|
| 182 |
| -33.3% |
|
| Total numerator | $ | 4,819 |
| $ | 4,820 |
| $ | 4,821 |
| $ | 5,115 |
| $ | 5,116 |
| 6.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted stockholders’ equity (3) | $ | 13,025 |
| $ | 14,094 |
| $ | 11,595 |
| $ | 11,120 |
| $ | 11,197 |
| -14.0% |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 25% of capital securities and subordinated notes |
| 302 |
|
| 302 |
|
| 302 |
|
| 302 |
|
| 302 |
| 0.0% |
|
| 50% of preferred stock |
| - |
|
| - |
|
| - |
|
| 493 |
|
| 493 |
| NM |
|
| Total numerator |
| 4,819 |
|
| 4,820 |
|
| 4,821 |
|
| 5,115 |
|
| 5,116 |
| 6.2% |
|
| Total denominator | $ | 18,146 |
| $ | 19,216 |
| $ | 16,718 |
| $ | 17,030 |
| $ | 17,108 |
| -5.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leverage ratio |
| 26.6% |
|
| 25.1% |
|
| 28.8% |
|
| 30.0% |
|
| 29.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Holding Company Available Liquidity | $ | 755 |
| $ | 756 |
| $ | 756 |
| $ | 960 |
| $ | 954 |
| 26.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Excludes obligations under finance leases and certain financing arrangements of $649 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. |
| ||||||||||||||||
| (3) See reconciliation to stockholders’ equity on page 26. |
|
|
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| Page 6 |
|
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|
|
|
|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Select Earnings Drivers By Segment |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 1,729 |
| $ | 1,705 |
| $ | 1,623 |
| $ | 1,688 |
| $ | 1,757 |
| 1.6% |
|
| Deposits |
| 1,351 |
|
| 1,459 |
|
| 1,406 |
|
| 1,605 |
|
| 1,320 |
| -2.3% |
|
| Net flows |
| 911 |
|
| 1,063 |
|
| 1,002 |
|
| 1,149 |
|
| 852 |
| -6.5% |
|
| Average account balances, net of reinsurance |
| 51,203 |
|
| 49,316 |
|
| 47,663 |
|
| 47,963 |
|
| 49,100 |
| -4.1% |
|
| Average in-force face amount |
| 985,286 |
|
| 1,010,659 |
|
| 1,037,952 |
|
| 1,061,415 |
|
| 1,075,614 |
| 9.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues | $ | 1,147 |
| $ | 1,097 |
| $ | 1,113 |
| $ | 1,125 |
| $ | 1,141 |
| -0.5% |
|
| Deposits |
| 2,704 |
|
| 2,701 |
|
| 3,232 |
|
| 3,198 |
|
| 3,164 |
| 17.0% |
|
| Net flows |
| (525) |
|
| (285) |
|
| 322 |
|
| 152 |
|
| (331) |
| 37.0% |
|
| Average account balances, net of reinsurance |
| 161,411 |
|
| 149,824 |
|
| 144,858 |
|
| 142,099 |
|
| 146,331 |
| -9.3% |
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| Group Protection |
|
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|
|
| Operating revenues | $ | 1,303 |
| $ | 1,323 |
| $ | 1,333 |
| $ | 1,346 |
| $ | 1,388 |
| 6.5% |
|
| Insurance premiums |
| 1,169 |
|
| 1,187 |
|
| 1,200 |
|
| 1,213 |
|
| 1,251 |
| 7.0% |
|
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| Retirement Plan Services |
|
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|
|
|
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|
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|
|
|
|
| Operating revenues | $ | 318 |
| $ | 315 |
| $ | 316 |
| $ | 325 |
| $ | 328 |
| 3.1% |
|
| Deposits |
| 3,637 |
|
| 3,200 |
|
| 3,091 |
|
| 2,973 |
|
| 3,209 |
| -11.8% |
|
| Net flows |
| 927 |
|
| 913 |
|
| 805 |
|
| 51 |
|
| 535 |
| -42.3% |
|
| Average account balances |
| 95,798 |
|
| 90,628 |
|
| 88,196 |
|
| 87,987 |
|
| 91,457 |
| -4.5% |
|
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| Consolidated |
|
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|
| Adjusted operating revenues (1) | $ | 4,537 |
| $ | 4,474 |
| $ | 4,421 |
| $ | 4,531 |
| $ | 4,657 |
| 2.6% |
|
| Deposits |
| 7,692 |
|
| 7,360 |
|
| 7,729 |
|
| 7,776 |
|
| 7,693 |
| 0.0% |
|
| Net flows |
| 1,313 |
|
| 1,691 |
|
| 2,129 |
|
| 1,352 |
|
| 1,056 |
| -19.6% |
|
| Average account balances, net of reinsurance |
| 308,412 |
|
| 289,768 |
|
| 280,717 |
|
| 278,049 |
|
| 286,888 |
| -7.0% |
|
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|
| (1) See reconciliation to total revenues on page 25. |
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| Page 7 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Sales By Segment |
| ||||||||||||||||
| Unaudited (millions of dollars) |
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Sales |
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| Life Insurance: |
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| IUL/UL | $ | 26 |
| $ | 27 |
| $ | 40 |
| $ | 41 |
| $ | 34 |
| 30.8% |
|
| MoneyGuard® |
| 22 |
|
| 24 |
|
| 22 |
|
| 26 |
|
| 21 |
| -4.5% |
|
| VUL |
| 34 |
|
| 44 |
|
| 36 |
|
| 49 |
|
| 30 |
| -11.8% |
|
| Term |
| 43 |
|
| 48 |
|
| 47 |
|
| 39 |
|
| 30 |
| -30.2% |
|
| Executive Benefits |
| 30 |
|
| 50 |
|
| 26 |
|
| 31 |
|
| 15 |
| -50.0% |
|
| Total Life Insurance | $ | 155 |
| $ | 193 |
| $ | 171 |
| $ | 186 |
| $ | 130 |
| -16.1% |
|
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| Annuities: |
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|
|
| Indexed variable | $ | 1,048 |
| $ | 1,220 |
| $ | 1,246 |
| $ | 1,211 |
| $ | 1,147 |
| 9.4% |
|
| Other variable without GLBs |
| 605 |
|
| 422 |
|
| 374 |
|
| 303 |
|
| 255 |
| -57.9% |
|
| Other variable with GLBs |
| 678 |
|
| 536 |
|
| 475 |
|
| 432 |
|
| 445 |
| -34.4% |
|
| Total variable |
| 2,331 |
|
| 2,178 |
|
| 2,095 |
|
| 1,946 |
|
| 1,847 |
| -20.8% |
|
| Fixed |
| 374 |
|
| 524 |
|
| 1,167 |
|
| 1,264 |
|
| 1,317 |
| 252.1% |
|
| Total Annuities | $ | 2,705 |
| $ | 2,702 |
| $ | 3,262 |
| $ | 3,210 |
| $ | 3,164 |
| 17.0% |
|
| Percent with GLBs |
| 25.1% |
|
| 19.8% |
|
| 14.6% |
|
| 13.5% |
|
| 14.1% |
|
|
|
| Percent with GLBs, including the impact of VA reinsurance |
| 17.9% |
|
| 14.0% |
|
| 11.4% |
|
| 11.0% |
|
| 12.0% |
|
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|
| Group Protection: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life | $ | 53 |
| $ | 62 |
| $ | 41 |
| $ | 141 |
| $ | 82 |
| 54.7% |
|
| Disability |
| 47 |
|
| 59 |
|
| 37 |
|
| 195 |
|
| 40 |
| -14.9% |
|
| Dental |
| 5 |
|
| 6 |
|
| 10 |
|
| 20 |
|
| 6 |
| 20.0% |
|
| Total Group Protection | $ | 105 |
| $ | 127 |
| $ | 88 |
| $ | 356 |
| $ | 128 |
| 21.9% |
|
| Percent employee-paid |
| 57.0% |
|
| 48.5% |
|
| 49.4% |
|
| 35.7% |
|
| 70.3% |
|
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| Retirement Plan Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| First-year sales | $ | 1,198 |
| $ | 1,210 |
| $ | 991 |
| $ | 1,059 |
| $ | 736 |
| -38.6% |
|
| Recurring deposits |
| 2,439 |
|
| 1,990 |
|
| 2,100 |
|
| 1,914 |
|
| 2,473 |
| 1.4% |
|
| Total Retirement Plan Services | $ | 3,637 |
| $ | 3,200 |
| $ | 3,091 |
| $ | 2,973 |
| $ | 3,209 |
| -11.8% |
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| Page 8 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Operating Revenues and General and Administrative Expenses By Segment |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance | $ | 1,729 |
| $ | 1,705 |
| $ | 1,623 |
| $ | 1,688 |
| $ | 1,757 |
| 1.6% |
|
| Annuities |
| 1,147 |
|
| 1,097 |
|
| 1,113 |
|
| 1,125 |
|
| 1,141 |
| -0.5% |
|
| Group Protection |
| 1,303 |
|
| 1,323 |
|
| 1,333 |
|
| 1,346 |
|
| 1,388 |
| 6.5% |
|
| Retirement Plan Services |
| 318 |
|
| 315 |
|
| 316 |
|
| 325 |
|
| 328 |
| 3.1% |
|
| Other Operations |
| 40 |
|
| 34�� |
|
| 36 |
|
| 47 |
|
| 43 |
| 7.5% |
|
| Total segment operating revenues | $ | 4,537 |
| $ | 4,474 |
| $ | 4,421 |
| $ | 4,531 |
| $ | 4,657 |
| 2.6% |
|
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|
| General and Administrative Expenses, |
|
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|
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|
|
| Net of Amounts Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance | $ | 117 |
| $ | 115 |
| $ | 132 |
| $ | 123 |
| $ | 134 |
| 14.5% |
|
| Annuities |
| 112 |
|
| 108 |
|
| 118 |
|
| 110 |
|
| 123 |
| 9.8% |
|
| Group Protection |
| 165 |
|
| 166 |
|
| 182 |
|
| 173 |
|
| 191 |
| 15.8% |
|
| Retirement Plan Services |
| 69 |
|
| 69 |
|
| 75 |
|
| 75 |
|
| 79 |
| 14.5% |
|
| Other Operations |
| 48 |
|
| 48 |
|
| 70 |
|
| 212 |
|
| 38 |
| -20.8% |
|
| Total | $ | 511 |
| $ | 506 |
| $ | 577 |
| $ | 693 |
| $ | 565 |
| 10.6% |
|
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|
| General and Administrative Expenses, |
|
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|
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|
|
| Net of Amounts Capitalized, as a Percentage |
|
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|
| of Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance |
| 6.8% |
|
| 6.8% |
|
| 8.2% |
|
| 7.3% |
|
| 7.6% |
|
|
|
| Annuities |
| 9.8% |
|
| 9.9% |
|
| 10.6% |
|
| 9.8% |
|
| 10.8% |
|
|
|
| Group Protection |
| 12.7% |
|
| 12.5% |
|
| 13.7% |
|
| 12.9% |
|
| 13.8% |
|
|
|
| Retirement Plan Services |
| 21.8% |
|
| 21.9% |
|
| 23.7% |
|
| 23.2% |
|
| 24.0% |
|
|
|
| Other Operations |
| 115.7% |
|
| 140.2% |
|
| 193.6% |
|
| 457.7% |
|
| 90.0% |
|
|
|
| Total |
| 11.3% |
|
| 11.3% |
|
| 13.1% |
|
| 15.3% |
|
| 12.1% |
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| Page 9 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Operating Commissions and Other Expenses |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Operating Commissions and |
|
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| Other Expenses Incurred |
|
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|
|
| General and administrative expenses | $ | 562 |
| $ | 559 |
| $ | 634 |
| $ | 750 |
| $ | 617 |
| 9.8% |
|
| Commissions |
| 655 |
|
| 652 |
|
| 660 |
|
| 654 |
|
| 615 |
| -6.1% |
|
| Taxes, licenses and fees |
| 97 |
|
| 79 |
|
| 81 |
|
| 88 |
|
| 94 |
| -3.1% |
|
| Interest and debt expense |
| 66 |
|
| 68 |
|
| 71 |
|
| 77 |
|
| 83 |
| 25.8% |
|
| Expenses associated with reserve financing |
|
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|
| and letters of credit |
| 26 |
|
| 27 |
|
| 27 |
|
| 28 |
|
| 30 |
| 15.4% |
|
| Total adjusted operating commissions and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| expenses incurred |
| 1,406 |
|
| 1,385 |
|
| 1,473 |
|
| 1,597 |
|
| 1,439 |
| 2.3% |
|
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|
| Less Amounts Capitalized |
|
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|
|
| General and administrative expenses |
| (51) |
|
| (53) |
|
| (57) |
|
| (57) |
|
| (52) |
| -2.0% |
|
| Commissions |
| (265) |
|
| (281) |
|
| (283) |
|
| (287) |
|
| (242) |
| 8.7% |
|
| Taxes, licenses and fees |
| (11) |
|
| (10) |
|
| (9) |
|
| (10) |
|
| (9) |
| 18.2% |
|
| Total amounts capitalized |
| (327) |
|
| (344) |
|
| (349) |
|
| (354) |
|
| (303) |
| 7.3% |
|
| Total expenses incurred, net of amounts |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
| capitalized, excluding amortization |
| 1,079 |
|
| 1,041 |
|
| 1,124 |
|
| 1,243 |
|
| 1,136 |
| 5.3% |
|
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|
|
| Amortization |
|
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|
|
| Amortization of DAC, VOBA and other intangibles |
| 263 |
|
| 265 |
|
| 265 |
|
| 266 |
|
| 268 |
| 1.9% |
|
| Total operating commissions and other expenses | $ | 1,342 |
| $ | 1,306 |
| $ | 1,389 |
| $ | 1,509 |
| $ | 1,404 |
| 4.6% |
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| Page 10 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Interest Rate Yields and Spreads By Segment |
| ||||||||||||||||
| Unaudited |
| ||||||||||||||||
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Life Insurance – Interest-Sensitive |
|
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| Earned rate on reserves |
| 4.60% |
|
| 4.50% |
|
| 4.49% |
|
| 4.47% |
|
| 4.43% |
| (17) |
|
| Variable investment income on reserves (1) |
| 0.54% |
|
| 0.36% |
|
| -0.35% |
|
| 0.12% |
|
| 0.39% |
| (15) |
|
| Net investment income yield on reserves |
| 5.14% |
|
| 4.86% |
|
| 4.14% |
|
| 4.59% |
|
| 4.82% |
| (32) |
|
| Interest rate credited to contract holders |
| 3.76% |
|
| 3.74% |
|
| 3.80% |
|
| 3.75% |
|
| 3.77% |
| 1 |
|
| Interest rate spread |
| 1.38% |
|
| 1.12% |
|
| 0.34% |
|
| 0.84% |
|
| 1.05% |
| (33) |
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| Base spreads excluding alternative investment income |
| 1.07% |
|
| 0.99% |
|
| 0.93% |
|
| 0.95% |
|
| 0.90% |
| (17) |
|
| Base spreads assuming 10% annualized yield on alternative investments |
| 1.31% |
|
| 1.25% |
|
| 1.18% |
|
| 1.21% |
|
| 1.18% |
| (13) |
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| Annuities |
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| Earned rate on reserves |
| 2.99% |
|
| 3.08% |
|
| 3.25% |
|
| 3.59% |
|
| 3.75% |
| 76 |
|
| Variable investment income on reserves (1) |
| 0.23% |
|
| 0.11% |
|
| 0.01% |
|
| 0.01% |
|
| 0.01% |
| (22) |
|
| Net investment income yield on reserves |
| 3.22% |
|
| 3.19% |
|
| 3.26% |
|
| 3.60% |
|
| 3.76% |
| 54 |
|
| Interest rate credited to contract holders |
| 1.85% |
|
| 1.90% |
|
| 1.93% |
|
| 2.09% |
|
| 2.25% |
| 40 |
|
| Interest rate spread |
| 1.37% |
|
| 1.29% |
|
| 1.33% |
|
| 1.51% |
|
| 1.51% |
| 14 |
|
| Base spreads excluding variable investment income |
| 1.14% |
|
| 1.18% |
|
| 1.32% |
|
| 1.50% |
|
| 1.50% |
| 36 |
|
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| Retirement Plan Services |
|
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|
|
| Earned rate on reserves |
| 3.45% |
|
| 3.49% |
|
| 3.62% |
|
| 3.74% |
|
| 3.81% |
| 36 |
|
| Variable investment income on reserves (1) |
| 0.19% |
|
| 0.14% |
|
| 0.03% |
|
| 0.01% |
|
| 0.00% |
| (19) |
|
| Net investment income yield on reserves |
| 3.64% |
|
| 3.63% |
|
| 3.65% |
|
| 3.75% |
|
| 3.81% |
| 17 |
|
| Interest rate credited to contract holders |
| 2.56% |
|
| 2.55% |
|
| 2.57% |
|
| 2.56% |
|
| 2.67% |
| 11 |
|
| Interest rate spread |
| 1.09% |
|
| 1.08% |
|
| 1.08% |
|
| 1.19% |
|
| 1.14% |
| 5 |
|
| Base spreads excluding variable investment income |
| 0.89% |
|
| 0.94% |
|
| 1.05% |
|
| 1.18% |
|
| 1.14% |
| 25 |
|
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| Total (2) |
|
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|
| Earned rate (3) |
| 3.80% |
|
| 3.77% |
|
| 4.01% |
|
| 3.98% |
|
| 4.08% |
| 28 |
|
| Variable investment income (1) (3) |
| 0.36% |
|
| 0.30% |
|
| -0.13% |
|
| 0.06% |
|
| 0.16% |
| (20) |
|
| Net investment income yield (3) |
| 4.16% |
|
| 4.07% |
|
| 3.88% |
|
| 4.04% |
|
| 4.24% |
| 8 |
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| (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. |
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| Page 11 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Income (Loss) from Operations Summary |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Income (Loss) from Operations, Pre-Tax |
|
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|
|
| Life Insurance | $ | 21 |
| $ | 74 |
| $ | (2,758) |
| $ | (18) |
| $ | (23) |
| NM |
|
| Annuities |
| 371 |
|
| 343 |
|
| 313 |
|
| 319 |
|
| 300 |
| -19.1% |
|
| Group Protection |
| (58) |
|
| 62 |
|
| 15 |
|
| 33 |
|
| 89 |
| 253.4% |
|
| Retirement Plan Services |
| 67 |
|
| 66 |
|
| 53 |
|
| 61 |
|
| 51 |
| -23.9% |
|
| Other Operations |
| (94) |
|
| (104) |
|
| (136) |
|
| (268) |
|
| (107) |
| -13.8% |
|
| Adjusted income (loss) from operations, before |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| income taxes | $ | 307 |
| $ | 441 |
| $ | (2,513) |
| $ | 127 |
| $ | 310 |
| 1.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) from Operations, After-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance | $ | 23 |
| $ | 63 |
| $ | (2,171) |
| $ | (9) |
| $ | (13) |
| NM |
|
| Annuities |
| 317 |
|
| 294 |
|
| 275 |
|
| 275 |
|
| 274 |
| -13.6% |
|
| Group Protection |
| (46) |
|
| 49 |
|
| 12 |
|
| 26 |
|
| 71 |
| 254.3% |
|
| Retirement Plan Services |
| 58 |
|
| 55 |
|
| 47 |
|
| 52 |
|
| 43 |
| -25.9% |
|
| Other Operations |
| (78) |
|
| (87) |
|
| (112) |
|
| (210) |
|
| (87) |
| -11.5% |
|
| Adjusted income (loss) from operations, after income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| taxes | $ | 274 |
| $ | 374 |
| $ | (1,949) |
| $ | 134 |
| $ | 288 |
| 5.1% |
|
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| Page 12 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Life Insurance – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
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| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 277 |
| $ | 283 |
| $ | 289 |
| $ | 297 |
| $ | 285 |
| 2.9% |
|
| Fee income |
| 761 |
|
| 754 |
|
| 745 |
|
| 735 |
|
| 776 |
| 2.0% |
|
| Net investment income |
| 688 |
|
| 664 |
|
| 585 |
|
| 650 |
|
| 687 |
| -0.1% |
|
| Operating realized gain (loss) |
| (2) |
|
| (2) |
|
| (2) |
|
| (2) |
|
| (2) |
| 0.0% |
|
| Amortization of deferred gain on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| business sold through reinsurance |
| 4 |
|
| 4 |
|
| 4 |
|
| 4 |
|
| 4 |
| 0.0% |
|
| Other revenues |
| 1 |
|
| 2 |
|
| 2 |
|
| 4 |
|
| 7 |
| NM |
|
| Total operating revenues |
| 1,729 |
|
| 1,705 |
|
| 1,623 |
|
| 1,688 |
|
| 1,757 |
| 1.6% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefits |
| 1,025 |
|
| 926 |
|
| 1,041 |
|
| 1,079 |
|
| 1,152 |
| 12.4% |
|
| Interest credited |
| 325 |
|
| 329 |
|
| 329 |
|
| 325 |
|
| 328 |
| 0.9% |
|
| Policyholder liability remeasurement (gain) loss |
| 62 |
|
| 85 |
|
| 2,708 |
|
| (2) |
|
| (13) |
| NM |
|
| Commissions incurred |
| 156 |
|
| 176 |
|
| 177 |
|
| 189 |
|
| 148 |
| -5.1% |
|
| Other expenses incurred |
| 202 |
|
| 199 |
|
| 208 |
|
| 210 |
|
| 216 |
| 6.9% |
|
| Amounts capitalized |
| (182) |
|
| (204) |
|
| (202) |
|
| (217) |
|
| (174) |
| 4.4% |
|
| Amortization |
| 120 |
|
| 120 |
|
| 120 |
|
| 122 |
|
| 123 |
| 2.5% |
|
| Total operating expenses |
| 1,708 |
|
| 1,631 |
|
| 4,381 |
|
| 1,706 |
|
| 1,780 |
| 4.2% |
|
| Income (loss) from operations before taxes |
| 21 |
|
| 74 |
|
| (2,758) |
|
| (18) |
|
| (23) |
| NM |
|
| Federal income tax expense (benefit) |
| (2) |
|
| 11 |
|
| (587) |
|
| (9) |
|
| (10) |
| NM |
|
| Income (loss) from operations | $ | 23 |
| $ | 63 |
| $ | (2,171) |
| $ | (9) |
| $ | (13) |
| NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| -8.7% |
|
| 14.7% |
|
| 21.3% |
|
| 52.0% |
|
| 45.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Account Balances, Net of Reinsurance | $ | 51,203 |
| $ | 49,316 |
| $ | 47,663 |
| $ | 47,963 |
| $ | 49,100 |
| -4.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In-Force Face Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UL and other | $ | 361,490 |
| $ | 361,565 |
| $ | 362,098 |
| $ | 363,884 |
| $ | 364,101 |
| 0.7% |
|
| Term insurance |
| 635,123 |
|
| 663,140 |
|
| 689,101 |
|
| 707,747 |
|
| 715,495 |
| 12.7% |
|
| Total in-force face amount | $ | 996,613 |
| $ | 1,024,705 |
| $ | 1,051,199 |
| $ | 1,071,631 |
| $ | 1,079,596 |
| 8.3% |
|
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| Page 13 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Annuities – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
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| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Income (Loss) from Operations |
|
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|
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|
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| Operating revenues: |
|
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|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 30 |
| $ | 25 |
| $ | 57 |
| $ | 52 |
| $ | 38 |
| 26.7% |
|
| Fee income (1) |
| 628 |
|
| 591 |
|
| 574 |
|
| 556 |
|
| 540 |
| -14.0% |
|
| Net investment income |
| 359 |
|
| 367 |
|
| 348 |
|
| 389 |
|
| 421 |
| 17.3% |
|
| Amortization of deferred gain on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| business sold through reinsurance |
| 6 |
|
| 6 |
|
| 6 |
|
| 6 |
|
| 5 |
| -16.7% |
|
| Other revenues |
| 124 |
|
| 108 |
|
| 128 |
|
| 122 |
|
| 137 |
| 10.5% |
|
| Total operating revenues |
| 1,147 |
|
| 1,097 |
|
| 1,113 |
|
| 1,125 |
|
| 1,141 |
| -0.5% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefits |
| 52 |
|
| 48 |
|
| 79 |
|
| 72 |
|
| 63 |
| 21.2% |
|
| Interest credited |
| 207 |
|
| 215 |
|
| 224 |
|
| 248 |
|
| 278 |
| 34.3% |
|
| Policyholder liability remeasurement (gain) loss |
| 1 |
|
| 1 |
|
| 1 |
|
| - |
|
| (1) |
| NM |
|
| Commissions incurred |
| 269 |
|
| 254 |
|
| 254 |
|
| 240 |
|
| 240 |
| -10.8% |
|
| Other expenses incurred |
| 259 |
|
| 239 |
|
| 251 |
|
| 242 |
|
| 251 |
| -3.1% |
|
| Amounts capitalized |
| (118) |
|
| (110) |
|
| (117) |
|
| (103) |
|
| (98) |
| 16.9% |
|
| Amortization |
| 106 |
|
| 107 |
|
| 108 |
|
| 107 |
|
| 108 |
| 1.9% |
|
| Total operating expenses |
| 776 |
|
| 754 |
|
| 800 |
|
| 806 |
|
| 841 |
| 8.4% |
|
| Income (loss) from operations before taxes |
| 371 |
|
| 343 |
|
| 313 |
|
| 319 |
|
| 300 |
| -19.1% |
|
| Federal income tax expense (benefit) |
| 54 |
|
| 49 |
|
| 38 |
|
| 44 |
|
| 26 |
| -51.9% |
|
| Income (loss) from operations | $ | 317 |
| $ | 294 |
| $ | 275 |
| $ | 275 |
| $ | 274 |
| -13.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 14.3% |
|
| 14.2% |
|
| 12.3% |
|
| 13.7% |
|
| 8.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on Average Account Balances |
| 79 |
|
| 79 |
|
| 76 |
|
| 77 |
|
| 75 |
| (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Variable annuity |
| 279 |
|
| 264 |
|
| 256 |
|
| 238 |
|
| 238 |
| -14.7% |
|
| Fixed annuity |
| 38 |
|
| 30 |
|
| 19 |
|
| 37 |
|
| 36 |
| -5.3% |
|
| Account Balances, Net of Reinsurance – End-of-Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Variable account balances without GLBs | $ | 66,538 |
| $ | 59,128 |
| $ | 57,720 |
| $ | 61,872 |
| $ | 64,824 |
| -2.6% |
|
| Variable account balances with GLBs |
| 78,837 |
|
| 68,468 |
|
| 64,057 |
|
| 65,877 |
|
| 67,274 |
| -14.7% |
|
| Fixed account balances |
| 14,557 |
|
| 14,469 |
|
| 14,810 |
|
| 14,989 |
|
| 15,053 |
| 3.4% |
|
| Total account balances | $ | 159,932 |
| $ | 142,065 |
| $ | 136,587 |
| $ | 142,738 |
| $ | 147,151 |
| -8.0% |
|
| Percent variable account balances with GLBs |
| 49.3% |
|
| 48.2% |
|
| 46.9% |
|
| 46.2% |
|
| 45.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Presented net of GLB and GDB hedge allowance of $161 million, $152 million, $148 million, $143 million and $162 million for the periods ended March 31, 2022, June 30, 2022, |
| ||||||||||||||||
| September 30, 2022, December 31, 2022 and March 31, 2023, respectively. |
| ||||||||||||||||
|
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| Page 14 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Group Protection – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
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|
| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 1,169 |
| $ | 1,187 |
| $ | 1,200 |
| $ | 1,213 |
| $ | 1,251 |
| 7.0% |
|
| Net investment income |
| 85 |
|
| 86 |
|
| 83 |
|
| 81 |
|
| 85 |
| 0.0% |
|
| Other revenues |
| 49 |
|
| 50 |
|
| 50 |
|
| 52 |
|
| 52 |
| 6.1% |
|
| Total operating revenues |
| 1,303 |
|
| 1,323 |
|
| 1,333 |
|
| 1,346 |
|
| 1,388 |
| 6.5% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefits |
| 1,060 |
|
| 952 |
|
| 994 |
|
| 1,030 |
|
| 1,037 |
| -2.2% |
|
| Interest credited |
| 1 |
|
| 2 |
|
| 1 |
|
| 1 |
|
| 1 |
| 0.0% |
|
| Policyholder liability remeasurement (gain) loss |
| (22) |
|
| (11) |
|
| (22) |
|
| (48) |
|
| (100) |
| NM |
|
| Commissions incurred |
| 94 |
|
| 96 |
|
| 101 |
|
| 103 |
|
| 106 |
| 12.8% |
|
| Other expenses incurred |
| 217 |
|
| 214 |
|
| 235 |
|
| 223 |
|
| 248 |
| 14.3% |
|
| Amounts capitalized |
| (21) |
|
| (24) |
|
| (23) |
|
| (29) |
|
| (25) |
| -19.0% |
|
| Amortization |
| 32 |
|
| 32 |
|
| 32 |
|
| 33 |
|
| 32 |
| 0.0% |
|
| Total operating expenses |
| 1,361 |
|
| 1,261 |
|
| 1,318 |
|
| 1,313 |
|
| 1,299 |
| -4.6% |
|
| Income (loss) from operations before taxes |
| (58) |
|
| 62 |
|
| 15 |
|
| 33 |
|
| 89 |
| 253.4% |
|
| Federal income tax expense (benefit) |
| (12) |
|
| 13 |
|
| 3 |
|
| 7 |
|
| 18 |
| 250.0% |
|
| Income (loss) from operations | $ | (46) |
| $ | 49 |
| $ | 12 |
| $ | 26 |
| $ | 71 |
| 254.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 21.0% |
|
| 21.0% |
|
| 21.0% |
|
| 21.0% |
|
| 21.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss Ratios by Product Line |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Life |
| 91.1% |
|
| 80.6% |
|
| 71.8% |
|
| 74.8% |
|
| 80.4% |
|
|
|
| Disability |
| 88.8% |
|
| 78.7% |
|
| 87.7% |
|
| 85.7% |
|
| 71.4% |
|
|
|
| Dental |
| 71.1% |
|
| 76.9% |
|
| 72.0% |
|
| 74.0% |
|
| 76.4% |
|
|
|
| Total |
| 88.9% |
|
| 79.3% |
|
| 81.0% |
|
| 81.1% |
|
| 75.0% |
|
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| Page 15 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Retirement Plan Services – Select Earnings and Operational Data |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
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| As of or For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fee income | $ | 70 |
| $ | 65 |
| $ | 64 |
| $ | 63 |
| $ | 64 |
| -8.6% |
|
| Net investment income |
| 238 |
|
| 241 |
|
| 244 |
|
| 253 |
|
| 255 |
| 7.1% |
|
| Other revenues |
| 10 |
|
| 9 |
|
| 8 |
|
| 9 |
|
| 9 |
| -10.0% |
|
| Total operating revenues |
| 318 |
|
| 315 |
|
| 316 |
|
| 325 |
|
| 328 |
| 3.1% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest credited |
| 152 |
|
| 155 |
|
| 161 |
|
| 161 |
|
| 167 |
| 9.9% |
|
| Commissions incurred |
| 20 |
|
| 18 |
|
| 20 |
|
| 21 |
|
| 21 |
| 5.0% |
|
| Other expenses incurred |
| 79 |
|
| 75 |
|
| 83 |
|
| 83 |
|
| 89 |
| 12.7% |
|
| Amounts capitalized |
| (5) |
|
| (5) |
|
| (6) |
|
| (5) |
|
| (5) |
| 0.0% |
|
| Amortization |
| 5 |
|
| 6 |
|
| 5 |
|
| 4 |
|
| 5 |
| 0.0% |
|
| Total operating expenses |
| 251 |
|
| 249 |
|
| 263 |
|
| 264 |
|
| 277 |
| 10.4% |
|
| Income (loss) from operations before taxes |
| 67 |
|
| 66 |
|
| 53 |
|
| 61 |
|
| 51 |
| -23.9% |
|
| Federal income tax expense (benefit) |
| 9 |
|
| 11 |
|
| 6 |
|
| 9 |
|
| 8 |
| -11.1% |
|
| Income (loss) from operations | $ | 58 |
| $ | 55 |
| $ | 47 |
| $ | 52 |
| $ | 43 |
| -25.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective Federal Income Tax Rate |
| 14.0% |
|
| 15.6% |
|
| 12.3% |
|
| 15.0% |
|
| 16.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on Average Account Balances |
| 24 |
|
| 24 |
|
| 21 |
|
| 24 |
|
| 19 |
| (5) |
|
|
|
|
|
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|
|
|
|
|
|
|
|
| Pre-tax Net Margin |
| 40.4% |
|
| 41.1% |
|
| 34.2% |
|
| 37.1% |
|
| 31.8% |
|
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|
| Net Flows by Market |
|
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|
|
|
|
| Small Market | $ | (116) |
| $ | 80 |
| $ | 157 |
| $ | 174 |
| $ | 148 |
| 227.6% |
|
| Mid - Large Market |
| 1,331 |
|
| 1,073 |
|
| 899 |
|
| 298 |
|
| 711 |
| -46.6% |
|
| Multi-Fund® and Other |
| (288) |
|
| (240) |
|
| (251) |
|
| (421) |
|
| (324) |
| -12.5% |
|
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|
|
| Net Flows – Trailing Twelve Months | $ | 931 |
| $ | 1,394 |
| $ | 2,199 |
| $ | 2,696 |
| $ | 2,304 |
| 147.5% |
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| 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 |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Other Operations |
|
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| Operating revenues: |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| Insurance premiums | $ | 1 |
| $ | 3 |
| $ | 2 |
| $ | 2 |
| $ | 5 |
| NM |
|
| Net investment income |
| 41 |
|
| 40 |
|
| 35 |
|
| 39 |
|
| 35 |
| -14.6% |
|
| Other revenues |
| (2) |
|
| (9) |
|
| (1) |
|
| 6 |
|
| 3 |
| 250.0% |
|
| Total operating revenues |
| 40 |
|
| 34 |
|
| 36 |
|
| 47 |
|
| 43 |
| 7.5% |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefits |
| 12 |
|
| 14 |
|
| 20 |
|
| 19 |
|
| 20 |
| 66.7% |
|
| Interest credited |
| 12 |
|
| 9 |
|
| 9 |
|
| 8 |
|
| 10 |
| -16.7% |
|
| Policyholder liability remeasurement (gain) loss |
| 1 |
|
| 2 |
|
| - |
|
| 2 |
|
| - |
| -100.0% |
|
| Commissions and other expenses |
| 12 |
|
| 2 |
|
| 28 |
|
| 160 |
|
| 13 |
| 8.3% |
|
| Interest and debt expense |
| 66 |
|
| 68 |
|
| 71 |
|
| 77 |
|
| 83 |
| 25.8% |
|
| Spark program expense |
| 31 |
|
| 43 |
|
| 44 |
|
| 49 |
|
| 24 |
| -22.6% |
|
| Total operating expenses |
| 134 |
|
| 138 |
|
| 172 |
|
| 315 |
|
| 150 |
| 11.9% |
|
| Income (loss) from operations before taxes |
| (94) |
|
| (104) |
|
| (136) |
|
| (268) |
|
| (107) |
| -13.8% |
|
| Federal income tax expense (benefit) |
| (16) |
|
| (17) |
|
| (24) |
|
| (58) |
|
| (20) |
| -25.0% |
|
| Income (loss) from operations | $ | (78) |
| $ | (87) |
| $ | (112) |
| $ | (210) |
| $ | (87) |
| -11.5% |
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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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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| DAC, VOBA and DSI |
|
|
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|
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| Balance as of beginning-of-period | $ | 11,896 |
| $ | 11,965 |
| $ | 12,050 |
| $ | 12,140 |
| $ | 12,235 |
| 2.8% |
|
| Deferrals |
| 328 |
|
| 345 |
|
| 350 |
|
| 357 |
|
| 306 |
| -6.7% |
|
| Operating amortization |
| (259) |
|
| (260) |
|
| (260) |
|
| (262) |
|
| (264) |
| -1.9% |
|
| Balance as of end-of-period | $ | 11,965 |
| $ | 12,050 |
| $ | 12,140 |
| $ | 12,235 |
| $ | 12,277 |
| 2.6% |
|
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| DFEL |
|
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| Balance as of beginning-of-period | $ | 4,225 |
| $ | 4,416 |
| $ | 4,623 |
| $ | 4,834 |
| $ | 5,052 |
| 19.6% |
|
| Deferrals |
| 256 |
|
| 270 |
|
| 273 |
|
| 284 |
|
| 267 |
| 4.3% |
|
| Operating amortization |
| (65) |
|
| (63) |
|
| (62) |
|
| (66) |
|
| (69) |
| -6.2% |
|
| Balance as of end-of-period | $ | 4,416 |
| $ | 4,623 |
| $ | 4,834 |
| $ | 5,052 |
| $ | 5,250 |
| 18.9% |
|
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| DAC, VOBA, DSI and DFEL |
|
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| Balance as of End-of-Period, After-Tax | $ | 5,964 |
| $ | 5,867 |
| $ | 5,772 |
| $ | 5,675 |
| $ | 5,551 |
| -6.9% |
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| Page 18 |
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|
| Lincoln Financial Group |
| ||||||||||||||||
| Life Insurance – Account Balance Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
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|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| General Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 38,200 |
| $ | 38,005 |
| $ | 37,791 |
| $ | 37,691 |
| $ | 37,694 |
| -1.3% |
|
| Gross deposits |
| 913 |
|
| 935 |
|
| 963 |
|
| 1,110 |
|
| 926 |
| 1.4% |
|
| Withdrawals and deaths |
| (331) |
|
| (300) |
|
| (284) |
|
| (328) |
|
| (393) |
| -18.7% |
|
| Net flows |
| 582 |
|
| 635 |
|
| 679 |
|
| 782 |
|
| 533 |
| -8.4% |
|
| Transfers between general and separate accounts |
| (6) |
|
| 34 |
|
| (12) |
|
| (14) |
|
| 32 |
| NM |
|
| Policyholder assessments |
| (1,113) |
|
| (1,121) |
|
| (1,123) |
|
| (1,138) |
|
| (1,128) |
| -1.3% |
|
| Reinvested interest credited |
| 371 |
|
| 373 |
|
| 377 |
|
| 374 |
|
| 373 |
| 0.5% |
|
| Change in fair value of embedded derivative instruments |
| (29) |
|
| (135) |
|
| (21) |
|
| (1) |
|
| 29 |
| 200.0% |
|
| Balance as of end-of-period, gross |
| 38,005 |
|
| 37,791 |
|
| 37,691 |
|
| 37,694 |
|
| 37,533 |
| -1.2% |
|
| Account balances reinsured |
| (5,572) |
|
| (5,584) |
|
| (5,575) |
|
| (5,558) |
|
| (5,525) |
| 0.8% |
|
| Balance as of end-of-period, net | $ | 32,433 |
| $ | 32,207 |
| $ | 32,116 |
| $ | 32,136 |
| $ | 32,008 |
| -1.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Separate Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 24,785 |
| $ | 23,376 |
| $ | 20,327 |
| $ | 19,382 |
| $ | 20,920 |
| -15.6% |
|
| Gross deposits |
| 438 |
|
| 524 |
|
| 443 |
|
| 495 |
|
| 394 |
| -10.0% |
|
| Withdrawals and deaths |
| (109) |
|
| (96) |
|
| (120) |
|
| (128) |
|
| (75) |
| 31.2% |
|
| Net flows |
| 329 |
|
| 428 |
|
| 323 |
|
| 367 |
|
| 319 |
| -3.0% |
|
| Transfers between general and separate accounts |
| 7 |
|
| (34) |
|
| 12 |
|
| 14 |
|
| (32) |
| NM |
|
| Policyholder assessments |
| (225) |
|
| (233) |
|
| (236) |
|
| (244) |
|
| (238) |
| -5.8% |
|
| Change in market value and reinvestment |
| (1,520) |
|
| (3,210) |
|
| (1,044) |
|
| 1,401 |
|
| 1,193 |
| 178.5% |
|
| Balance as of end-of-period, gross |
| 23,376 |
|
| 20,327 |
|
| 19,382 |
|
| 20,920 |
|
| 22,162 |
| -5.2% |
|
| Account balances reinsured |
| (5,215) |
|
| (4,498) |
|
| (4,209) |
|
| (4,421) |
|
| (4,606) |
| 11.7% |
|
| Balance as of end-of-period, net | $ | 18,161 |
| $ | 15,829 |
| $ | 15,173 |
| $ | 16,499 |
| $ | 17,556 |
| -3.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 62,985 |
| $ | 61,381 |
| $ | 58,118 |
| $ | 57,073 |
| $ | 58,614 |
| -6.9% |
|
| Gross deposits |
| 1,351 |
|
| 1,459 |
|
| 1,406 |
|
| 1,605 |
|
| 1,320 |
| -2.3% |
|
| Withdrawals and deaths |
| (440) |
|
| (396) |
|
| (404) |
|
| (456) |
|
| (468) |
| -6.4% |
|
| Net flows |
| 911 |
|
| 1,063 |
|
| 1,002 |
|
| 1,149 |
|
| 852 |
| -6.5% |
|
| Policyholder assessments |
| (1,338) |
|
| (1,354) |
|
| (1,359) |
|
| (1,382) |
|
| (1,366) |
| -2.1% |
|
| Change in market value and reinvestment |
| (1,149) |
|
| (2,837) |
|
| (667) |
|
| 1,775 |
|
| 1,566 |
| 236.3% |
|
| Change in fair value of embedded derivative instruments |
| (29) |
|
| (135) |
|
| (21) |
|
| (1) |
|
| 29 |
| 200.0% |
|
| Balance as of end-of-period, gross |
| 61,381 |
|
| 58,118 |
|
| 57,073 |
|
| 58,614 |
|
| 59,695 |
| -2.7% |
|
| Account balances reinsured |
| (10,787) |
|
| (10,082) |
|
| (9,784) |
|
| (9,979) |
|
| (10,131) |
| 6.1% |
|
| Balance as of end-of-period, net | $ | 50,594 |
| $ | 48,036 |
| $ | 47,289 |
| $ | 48,635 |
| $ | 49,564 |
| -2.0% |
|
|
|
|
|
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| Page 19 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Annuities – Account Balance Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Fixed Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 22,552 |
| $ | 22,307 |
| $ | 22,099 |
| $ | 22,670 |
| $ | 23,365 |
| 3.6% |
|
| Gross deposits |
| 373 |
|
| 523 |
|
| 1,137 |
|
| 1,252 |
|
| 1,317 |
| 253.1% |
|
| Full surrenders and deaths |
| (420) |
|
| (457) |
|
| (489) |
|
| (547) |
|
| (728) |
| -73.3% |
|
| Other contract benefits |
| (143) |
|
| (144) |
|
| (134) |
|
| (181) |
|
| (161) |
| -12.6% |
|
| Net flows |
| (190) |
|
| (78) |
|
| 514 |
|
| 524 |
|
| 428 |
| NM |
|
| Policyholder assessments |
| (15) |
|
| (13) |
|
| (10) |
|
| (12) |
|
| (15) |
| 0.0% |
|
| Reinvested interest credited |
| 124 |
|
| 131 |
|
| 134 |
|
| 143 |
|
| 154 |
| 24.2% |
|
| Change in fair value of embedded derivative instruments |
| (164) |
|
| (248) |
|
| (67) |
|
| 40 |
|
| 87 |
| 153.0% |
|
| Balance as of end-of-period, gross |
| 22,307 |
|
| 22,099 |
|
| 22,670 |
|
| 23,365 |
|
| 24,019 |
| 7.7% |
|
| Account balances reinsured |
| (7,750) |
|
| (7,630) |
|
| (7,860) |
|
| (8,376) |
|
| (8,966) |
| -15.7% |
|
| Balance as of end-of-period, net | $ | 14,557 |
| $ | 14,469 |
| $ | 14,810 |
| $ | 14,989 |
| $ | 15,053 |
| 3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Variable Annuities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 155,813 |
| $ | 145,382 |
| $ | 127,604 |
| $ | 121,785 |
| $ | 127,757 |
| -18.0% |
|
| Gross deposits |
| 2,331 |
|
| 2,178 |
|
| 2,095 |
|
| 1,946 |
|
| 1,847 |
| -20.8% |
|
| Full surrenders and deaths |
| (1,567) |
|
| (1,366) |
|
| (1,302) |
|
| (1,210) |
|
| (1,592) |
| -1.6% |
|
| Other contract benefits |
| (1,099) |
|
| (1,019) |
|
| (985) |
|
| (1,108) |
|
| (1,014) |
| 7.7% |
|
| Net flows |
| (335) |
|
| (207) |
|
| (192) |
|
| (372) |
|
| (759) |
| NM |
|
| Policyholder assessments |
| (692) |
|
| (655) |
|
| (638) |
|
| (619) |
|
| (624) |
| 9.8% |
|
| Change in market value and reinvestment |
| (9,007) |
|
| (14,974) |
|
| (4,650) |
|
| 5,804 |
|
| 5,191 |
| 157.6% |
|
| Change in fair value of embedded derivative instruments |
| (397) |
|
| (1,942) |
|
| (339) |
|
| 1,159 |
|
| 540 |
| 236.0% |
|
| Balance as of end-of-period, gross |
| 145,382 |
|
| 127,604 |
|
| 121,785 |
|
| 127,757 |
|
| 132,105 |
| -9.1% |
|
| Account balances reinsured |
| (7) |
|
| (8) |
|
| (8) |
|
| (8) |
|
| (7) |
| 0.0% |
|
| Balance as of end-of-period, net | $ | 145,375 |
| $ | 127,596 |
| $ | 121,777 |
| $ | 127,749 |
| $ | 132,098 |
| -9.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 178,365 |
| $ | 167,689 |
| $ | 149,703 |
| $ | 144,455�� |
| $ | 151,122 |
| -15.3% |
|
| Gross deposits |
| 2,704 |
|
| 2,701 |
|
| 3,232 |
|
| 3,198 |
|
| 3,164 |
| 17.0% |
|
| Full surrenders and deaths |
| (1,987) |
|
| (1,823) |
|
| (1,791) |
|
| (1,757) |
|
| (2,320) |
| -16.8% |
|
| Other contract benefits |
| (1,242) |
|
| (1,163) |
|
| (1,119) |
|
| (1,289) |
|
| (1,175) |
| 5.4% |
|
| Net flows |
| (525) |
|
| (285) |
|
| 322 |
|
| 152 |
|
| (331) |
| 37.0% |
|
| Policyholder assessments |
| (707) |
|
| (668) |
|
| (648) |
|
| (631) |
|
| (639) |
| 9.6% |
|
| Change in market value, reinvestment and interest credited |
| (8,883) |
|
| (14,843) |
|
| (4,516) |
|
| 5,947 |
|
| 5,345 |
| 160.2% |
|
| Change in fair value of embedded derivative instruments |
| (561) |
|
| (2,190) |
|
| (406) |
|
| 1,199 |
|
| 627 |
| 211.8% |
|
| Balance as of end-of-period, gross |
| 167,689 |
|
| 149,703 |
|
| 144,455 |
|
| 151,122 |
|
| 156,124 |
| -6.9% |
|
| Account balances reinsured |
| (7,757) |
|
| (7,638) |
|
| (7,868) |
|
| (8,384) |
|
| (8,973) |
| -15.7% |
|
| Balance as of end-of-period, net | $ | 159,932 |
| $ | 142,065 |
| $ | 136,587 |
| $ | 142,738 |
| $ | 147,151 |
| -8.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Page 20 |
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|
|
| Lincoln Financial Group |
| ||||||||||||||||
| Retirement Plan Services – Account Balance Roll Forwards |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| General Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 23,579 |
| $ | 23,958 |
| $ | 24,917 |
| $ | 25,276 |
| $ | 25,138 |
| 6.6% |
|
| Gross deposits |
| 842 |
|
| 1,389 |
|
| 994 |
|
| 787 |
|
| 701 |
| -16.7% |
|
| Withdrawals |
| (844) |
|
| (743) |
|
| (873) |
|
| (1,119) |
|
| (1,113) |
| -31.9% |
|
| Net flows |
| (2) |
|
| 646 |
|
| 121 |
|
| (332) |
|
| (412) |
| NM |
|
| Transfers between fixed and variable accounts |
| 234 |
|
| 161 |
|
| 79 |
|
| 36 |
|
| 103 |
| -56.0% |
|
| Policyholder assessments |
| (3) |
|
| (3) |
|
| (3) |
|
| (3) |
|
| (3) |
| 0.0% |
|
| Reinvested interest credited |
| 150 |
|
| 155 |
|
| 162 |
|
| 161 |
|
| 168 |
| 12.0% |
|
| Balance as of end-of-period | $ | 23,958 |
| $ | 24,917 |
| $ | 25,276 |
| $ | 25,138 |
| $ | 24,994 |
| 4.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Separate Account and Mutual Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 75,465 |
| $ | 71,376 |
| $ | 61,782 |
| $ | 59,064 |
| $ | 63,592 |
| -15.7% |
|
| Gross deposits |
| 2,795 |
|
| 1,811 |
|
| 2,097 |
|
| 2,186 |
|
| 2,508 |
| -10.3% |
|
| Withdrawals |
| (1,866) |
|
| (1,544) |
|
| (1,413) |
|
| (1,803) |
|
| (1,561) |
| 16.3% |
|
| Net flows |
| 929 |
|
| 267 |
|
| 684 |
|
| 383 |
|
| 947 |
| 1.9% |
|
| Transfers between fixed and variable accounts |
| (231) |
|
| (166) |
|
| (42) |
|
| (55) |
|
| (104) |
| 55.0% |
|
| Policyholder assessments |
| (64) |
|
| (60) |
|
| (57) |
|
| (57) |
|
| (58) |
| 9.4% |
|
| Change in market value and reinvestment |
| (4,723) |
|
| (9,635) |
|
| (3,303) |
|
| 4,257 |
|
| 3,608 |
| 176.4% |
|
| Balance as of end-of-period | $ | 71,376 |
| $ | 61,782 |
| $ | 59,064 |
| $ | 63,592 |
| $ | 67,985 |
| -4.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of beginning-of-period | $ | 99,044 |
| $ | 95,334 |
| $ | 86,699 |
| $ | 84,340 |
| $ | 88,730 |
| -10.4% |
|
| Gross deposits |
| 3,637 |
|
| 3,200 |
|
| 3,091 |
|
| 2,973 |
|
| 3,209 |
| -11.8% |
|
| Withdrawals |
| (2,710) |
|
| (2,287) |
|
| (2,286) |
|
| (2,922) |
|
| (2,674) |
| 1.3% |
|
| Net flows |
| 927 |
|
| 913 |
|
| 805 |
|
| 51 |
|
| 535 |
| -42.3% |
|
| Transfers between fixed and variable accounts |
| 3 |
|
| (5) |
|
| 37 |
|
| (19) |
|
| (1) |
| NM |
|
| Policyholder assessments |
| (67) |
|
| (63) |
|
| (60) |
|
| (60) |
|
| (61) |
| 9.0% |
|
| Change in market value and reinvestment |
| (4,573) |
|
| (9,480) |
|
| (3,141) |
|
| 4,418 |
|
| 3,776 |
| 182.6% |
|
| Balance as of end-of-period | $ | 95,334 |
| $ | 86,699 |
| $ | 84,340 |
| $ | 88,730 |
| $ | 92,979 |
| -2.5% |
|
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| Page 21 |
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|
| Lincoln Financial Group |
| |||||||||||||||||
| Fixed-Income Asset Class |
| |||||||||||||||||
| Unaudited (millions of dollars) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| As of 3/31/22 |
| As of 12/31/22 |
| As of 3/31/23 |
| ||||||||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
| ||||||
| Fixed Maturity AFS Securities, Net of Allowance for Credit Losses, at Amortized Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Industry corporate bonds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial services | $ | 16,969 |
|
| 15.8% |
| $ | 17,762 |
|
| 15.9% |
| $ | 17,615 |
|
| 15.8% |
|
| Basic industry |
| 4,532 |
|
| 4.2% |
|
| 4,353 |
|
| 3.9% |
|
| 4,200 |
|
| 3.8% |
|
| Capital goods |
| 7,400 |
|
| 6.9% |
|
| 7,374 |
|
| 6.6% |
|
| 7,227 |
|
| 6.5% |
|
| Communications |
| 4,234 |
|
| 3.9% |
|
| 4,239 |
|
| 3.8% |
|
| 4,236 |
|
| 3.8% |
|
| Consumer cyclical |
| 6,070 |
|
| 5.6% |
|
| 6,056 |
|
| 5.4% |
|
| 5,890 |
|
| 5.3% |
|
| Consumer non-cyclical |
| 17,082 |
|
| 15.9% |
|
| 17,080 |
|
| 15.3% |
|
| 16,930 |
|
| 15.2% |
|
| Energy |
| 4,871 |
|
| 4.5% |
|
| 4,776 |
|
| 4.3% |
|
| 4,735 |
|
| 4.2% |
|
| Technology |
| 5,242 |
|
| 4.9% |
|
| 5,581 |
|
| 5.0% |
|
| 5,724 |
|
| 5.1% |
|
| Transportation |
| 3,536 |
|
| 3.3% |
|
| 3,665 |
|
| 3.3% |
|
| 3,639 |
|
| 3.3% |
|
| Industrial other |
| 2,283 |
|
| 2.1% |
|
| 2,330 |
|
| 2.1% |
|
| 2,341 |
|
| 2.1% |
|
| Utilities |
| 14,036 |
|
| 13.1% |
|
| 14,204 |
|
| 12.8% |
|
| 14,342 |
|
| 12.9% |
|
| Government-related entities |
| 1,820 |
|
| 1.7% |
|
| 1,820 |
|
| 1.6% |
|
| 1,807 |
|
| 1.6% |
|
| Residential mortgage-backed securities ("RMBS") |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency backed |
| 1,921 |
|
| 1.8% |
|
| 1,845 |
|
| 1.7% |
|
| 1,852 |
|
| 1.7% |
|
| Non-agency backed |
| 367 |
|
| 0.3% |
|
| 364 |
|
| 0.3% |
|
| 365 |
|
| 0.3% |
|
| Commercial mortgage-backed securities ("CMBS") |
| 1,656 |
|
| 1.5% |
|
| 1,917 |
|
| 1.7% |
|
| 1,905 |
|
| 1.7% |
|
| Asset-backed securities ("ABS") |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Collateralized loan obligations ("CLOs") |
| 6,646 |
|
| 6.2% |
|
| 8,498 |
|
| 7.6% |
|
| 8,721 |
|
| 7.8% |
|
| Other ABS |
| 2,399 |
|
| 2.2% |
|
| 3,294 |
|
| 2.9% |
|
| 3,479 |
|
| 3.1% |
|
| Municipals |
| 5,380 |
|
| 5.0% |
|
| 5,410 |
|
| 4.8% |
|
| 5,386 |
|
| 4.8% |
|
| Government: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| United States |
| 392 |
|
| 0.4% |
|
| 405 |
|
| 0.4% |
|
| 399 |
|
| 0.4% |
|
| Foreign |
| 358 |
|
| 0.3% |
|
| 348 |
|
| 0.3% |
|
| 334 |
|
| 0.3% |
|
| Hybrid & redeemable preferred securities |
| 408 |
|
| 0.4% |
|
| 364 |
|
| 0.3% |
|
| 362 |
|
| 0.3% |
|
| Total fixed maturity AFS securities, net of allowance for credit losses, at amortized cost |
| 107,602 |
|
| 100.0% |
|
| 111,685 |
|
| 100.0% |
|
| 111,489 |
|
| 100.0% |
|
| Trading Securities |
| 4,348 |
|
|
|
|
| 3,833 |
|
|
|
|
| 3,546 |
|
|
|
|
| Equity Securities |
| 307 |
|
|
|
|
| 383 |
|
|
|
|
| 383 |
|
|
|
|
| Total fixed maturity AFS, trading and equity securities | $ | 112,257 |
|
|
|
| $ | 115,901 |
|
|
|
| $ | 115,418 |
|
|
|
|
|
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| Page 22 |
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|
| Lincoln Financial Group |
| |||||||||||||||||
| Fixed-Income Credit Quality |
| |||||||||||||||||
| Unaudited (millions of dollars) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of 3/31/22 |
| As of 12/31/22 |
| As of 3/31/23 |
| ||||||||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
| ||||||
| Fixed Maturity AFS Securities, Net of Allowance for Credit Losses, at Amortized Cost (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NAIC 1 (AAA-A) | $ | 59,694 |
|
| 55.5% |
| $ | 63,741 |
|
| 57.1% |
| $ | 64,244 |
|
| 57.6% |
|
| NAIC 2 (BBB) |
| 44,120 |
|
| 41.0% |
|
| 44,103 |
|
| 39.5% |
|
| 43,664 |
|
| 39.2% |
|
| Total investment grade |
| 103,814 |
|
| 96.5% |
|
| 107,844 |
|
| 96.6% |
|
| 107,908 |
|
| 96.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NAIC 3 (BB) |
| 2,148 |
|
| 1.9% |
|
| 2,101 |
|
| 1.9% |
|
| 1,900 |
|
| 1.7% |
|
| NAIC 4 (B) |
| 1,479 |
|
| 1.4% |
|
| 1,679 |
|
| 1.4% |
|
| 1,591 |
|
| 1.4% |
|
| NAIC 5 (CCC and lower) |
| 95 |
|
| 0.1% |
|
| 59 |
|
| 0.1% |
|
| 70 |
|
| 0.1% |
|
| NAIC 6 (in or near default) |
| 66 |
|
| 0.1% |
|
| 2 |
|
| 0.0% |
|
| 20 |
|
| 0.0% |
|
| Total below investment grade |
| 3,788 |
|
| 3.5% |
|
| 3,841 |
|
| 3.4% |
|
| 3,581 |
|
| 3.2% |
|
| Total | $ | 107,602 |
|
| 100.0% |
| $ | 111,685 |
|
| 100.0% |
| $ | 111,489 |
|
| 100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial Mortgage Loans, at Amortized Cost (1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CM1 (AAA-A) | $ | 13,912 |
|
| 82.4% |
| $ | 13,361 |
|
| 78.5% |
| $ | 13,195 |
|
| 77.5% |
|
| CM2 (BBB) |
| 2,695 |
|
| 16.0% |
|
| 3,382 |
|
| 19.9% |
|
| 3,540 |
|
| 20.8% |
|
| CM3-7 (BB and lower) |
| 263 |
|
| 1.6% |
|
| 271 |
|
| 1.6% |
|
| 284 |
|
| 1.7% |
|
| Total | $ | 16,870 |
|
| 100.0% |
| $ | 17,014 |
|
| 100.0% |
| $ | 17,019 |
|
| 100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Fixed Maturity AFS Securities and Commercial Mortgage Loans, at Amortized Cost (1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| AAA-A | $ | 73,606 |
|
| 59.1% |
| $ | 77,102 |
|
| 59.9% |
| $ | 77,439 |
|
| 60.3% |
|
| BBB |
| 46,815 |
|
| 37.6% |
|
| 47,485 |
|
| 36.9% |
|
| 47,204 |
|
| 36.7% |
|
| BB and lower |
| 4,051 |
|
| 3.3% |
|
| 4,112 |
|
| 3.2% |
|
| 3,865 |
|
| 3.0% |
|
| Total | $ | 124,472 |
|
| 100.0% |
| $ | 128,699 |
|
| 100.0% |
| $ | 128,508 |
|
| 100.0% |
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| (1) Ratings are based upon the designations determined and provided by the National Association of Insurance Commissioners (“NAIC”) or based upon ratings from credit rating |
| |||||||||||||||||
| agencies to derive the NAIC designation. |
| |||||||||||||||||
| (2) CM ratings reflect the risk-based capital risk category for commercial mortgage loans. Letter ratings are assumed NAIC equivalent ratings where NAIC 1 = CM1, NAIC 2 = CM2 |
| |||||||||||||||||
| and NAIC 3-6 = CM3-7. |
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| Page 23 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Select GAAP to Non-GAAP Reconciliations |
| ||||||||||||||||
| Unaudited (millions of dollars) |
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Net Income |
|
|
|
|
|
|
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|
| Net income (loss) | $ | 1,482 |
| $ | 840 |
| $ | (1,775) |
| $ | 812 |
| $ | (881) |
| NM |
|
| Less: |
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|
|
| MRB-related impacts, after-tax |
| 1,062 |
|
| (399) |
|
| 612 |
|
| 1,219 |
|
| (506) |
| NM |
|
| Investment and reinsurance-related realized gain (loss), after-tax: |
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| Changes in CECL reserve for mortgage loans on real estate |
| 14 |
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| (3) |
|
| (7) |
|
| (6) |
|
| (3) |
| NM |
|
| Changes in CECL reserve for reinsurance-related assets |
| (1) |
|
| 3 |
|
| (93) |
|
| 2 |
|
| (1) |
| 0.0% |
|
| Changes in the credit loss allowance for fixed maturity AFS securities |
| (1) |
|
| (3) |
|
| (4) |
|
| (4) |
|
| (14) |
| NM |
|
| Total credit loss adjustments |
| 12 |
|
| (3) |
|
| (104) |
|
| (8) |
|
| (18) |
| NM |
|
| Changes in investments and reinsurance-related embedded derivatives (1) |
| (11) |
|
| (17) |
|
| 20 |
|
| 10 |
|
| (136) |
| NM |
|
| Total investment and reinsurance-related realized gain (loss), after-tax |
| 1 |
|
| (20) |
|
| (84) |
|
| 2 |
|
| (154) |
| NM |
|
| Changes in fair value of GLB and GDB hedge instruments, net of hedge allowance, after-tax |
| 58 |
|
| 868 |
|
| 302 |
|
| (516) |
|
| (377) |
| NM |
|
| Indexed product net derivative results, after-tax |
| 87 |
|
| 23 |
|
| (20) |
|
| (31) |
|
| (135) |
| NM |
|
| Benefit ratio unlocking, after-tax |
| - |
|
| (6) |
|
| (2) |
|
| 4 |
|
| 3 |
| NM |
|
| Impairment of intangibles |
| - |
|
| - |
|
| (634) |
|
| - |
|
| - |
| NM |
|
| Total adjustments |
| 1,208 |
|
| 466 |
|
| 174 |
|
| 678 |
|
| (1,169) |
| NM |
|
| Adjusted income (loss) from operations | $ | 274 |
| $ | 374 |
| $ | (1,949) |
| $ | 134 |
| $ | 288 |
| 5.1% |
|
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| (1) Includes net losses on disposals of $(31) million on fixed maturity AFS securities, after-tax, and mark-to-market adjustments of $(11) million on equity securities, after-tax, for the quarter |
| ||||||||||||||||
| ended March 31, 2023. |
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| Page 24 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Select GAAP to Non-GAAP Reconciliations |
| ||||||||||||||||
| Unaudited (millions of dollars) |
| ||||||||||||||||
|
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Revenues |
|
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| Total revenues | $ | 4,720 |
| $ | 5,577 |
| $ | 4,672 |
| $ | 3,841 |
| $ | 3,814 |
| -19.2% |
|
| Less: |
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|
|
| Investment and reinsurance-related realized gain (loss) |
| 1 |
|
| (25) |
|
| (105) |
|
| 3 |
|
| (196) |
| NM |
|
| Changes in fair value of GLB and GDB hedge instruments, net of hedge allowance |
| 73 |
|
| 1,099 |
|
| 382 |
|
| (653) |
|
| (476) |
| NM |
|
| Indexed product net derivative results |
| 109 |
|
| 29 |
|
| (25) |
|
| (39) |
|
| (171) |
| NM |
|
| Adjusted operating revenues | $ | 4,537 |
| $ | 4,474 |
| $ | 4,421 |
| $ | 4,531 |
| $ | 4,657 |
| 2.6% |
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| Earnings (Loss) Per Common Share – Diluted |
|
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|
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|
|
|
| Net income (loss) | $ | 8.39 |
| $ | 4.83 |
| $ | (10.47) |
| $ | 4.73 |
| $ | (5.37) |
| NM |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MRB-related impacts, after-tax |
| 6.02 |
|
| (2.30) |
|
| 3.60 |
|
| 7.14 |
|
| (3.00) |
| NM |
|
| Investment and reinsurance-related realized gain (loss), after-tax |
| - |
|
| (0.12) |
|
| (0.49) |
|
| 0.01 |
|
| (0.91) |
| NM |
|
| Changes in fair value of GLB and GDB hedge instruments, net of hedge allowance, after-tax |
| 0.33 |
|
| 5.03 |
|
| 1.77 |
|
| (3.02) |
|
| (2.23) |
| NM |
|
| Indexed product net derivative results, after-tax |
| 0.49 |
|
| 0.13 |
|
| (0.11) |
|
| (0.18) |
|
| (0.79) |
| NM |
|
| Benefit ratio unlocking, after-tax |
| - |
|
| (0.04) |
|
| (0.02) |
|
| 0.02 |
|
| 0.02 |
| NM |
|
| Impairment of intangibles |
| - |
|
| - |
|
| (3.73) |
|
| - |
|
| - |
| NM |
|
| Adjustment attributable to using different average |
|
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| diluted shares for adjusted income from operations |
|
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|
|
|
|
|
|
|
|
| as compared to net loss (1) |
| - |
|
| - |
|
| - |
|
| - |
|
| 0.02 |
| NM |
|
| Adjusted income (loss) from operations | $ | 1.55 |
| $ | 2.13 |
| $ | (11.49) |
| $ | 0.76 |
| $ | 1.52 |
| -1.9% |
|
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|
| (1) In periods where a net loss or adjusted loss from operations is presented, basic shares are used in the diluted EPS and adjusted diluted EPS calculations, as the use of diluted shares |
| ||||||||||||||||
| would result in a lower loss per share. Due to reporting adjusted income from operations per common share on a different share basis than net loss per common share, we have |
| ||||||||||||||||
| included an adjustment to reconcile the two metrics. |
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| Page 25 |
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| Lincoln Financial Group |
| ||||||||||||||||
| Select GAAP to Non-GAAP Reconciliations |
| ||||||||||||||||
| Unaudited (millions of dollars, except per share data) |
| ||||||||||||||||
|
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| For the Three Months Ended |
| |||||||||||||||
|
| 3/31/22 |
| 6/30/22 |
| 9/30/22 |
| 12/31/22 |
| 3/31/23 |
| Change |
| |||||
| Stockholders’ Equity, End-of-Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' equity | $ | 14,255 |
| $ | 9,331 |
| $ | 2,783 |
| $ | 5,102 |
| $ | 6,732 |
| -52.8% |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock |
| - |
|
| - |
|
| - |
|
| 986 |
|
| 986 |
| NM |
|
| AOCI |
| 3,315 |
|
| (2,280) |
|
| (6,940) |
|
| (6,352) |
|
| (3,754) |
| NM |
|
| Stockholders’ equity, excluding AOCI and preferred stock |
| 10,940 |
|
| 11,611 |
|
| 9,723 |
|
| 10,468 |
|
| 9,500 |
| -13.2% |
|
| MRB-related impacts |
| (2,085) |
|
| (2,483) |
|
| (1,872) |
|
| (652) |
|
| (1,158) |
| 44.5% |
|
| GLB and GDB hedge instruments gains (losses)(1) |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| (539) |
|
|
|
| Adjusted stockholders' equity | $ | 13,025 |
| $ | 14,094 |
| $ | 11,595 |
| $ | 11,120 |
| $ | 11,197 |
| -14.0% |
|
|
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| Stockholders’ Equity, Average |
|
|
|
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|
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|
|
|
|
|
| Stockholders' equity | $ | 17,085 |
| $ | 11,793 |
| $ | 6,057 |
| $ | 3,943 |
| $ | 5,917 |
| -65.4% |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock |
| - |
|
| - |
|
| - |
|
| 493 |
|
| 986 |
| NM |
|
| AOCI |
| 6,650 |
|
| 518 |
|
| (4,610) |
|
| (6,646) |
|
| (5,053) |
| NM |
|
| Stockholders’ equity, excluding AOCI and preferred stock |
| 10,435 |
|
| 11,275 |
|
| 10,667 |
|
| 10,096 |
|
| 9,984 |
| -4.3% |
|
| MRB-related impacts |
| (2,616) |
|
| (2,284) |
|
| (2,177) |
|
| (1,262) |
|
| (905) |
| 65.4% |
|
| GLB and GDB hedge instruments gains (losses)(1) |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| (269) |
|
|
|
| Adjusted average stockholders' equity | $ | 13,051 |
| $ | 13,559 |
| $ | 12,844 |
| $ | 11,358 |
| $ | 11,158 |
| -14.5% |
|
|
|
|
|
|
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|
|
|
| Book Value Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Book value per share | $ | 82.93 |
| $ | 54.81 |
| $ | 16.45 |
| $ | 24.32 |
| $ | 33.89 |
| -59.1% |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| AOCI |
| 19.29 |
|
| (13.40) |
|
| (41.01) |
|
| (37.54) |
|
| (22.15) |
| NM |
|
| Book value per share, excluding AOCI |
| 63.64 |
|
| 68.21 |
|
| 57.46 |
|
| 61.86 |
|
| 56.04 |
| -11.9% |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MRB-related gains (losses) |
| (12.13) |
|
| (14.57) |
|
| (11.07) |
|
| (3.86) |
|
| (6.83) |
| 43.7% |
|
| GLB and GDB hedge instruments gains (losses)(1) |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| (3.18) |
|
|
|
| Adjusted book value per share | $ | 75.77 |
| $ | 82.78 |
| $ | 68.53 |
| $ | 65.72 |
| $ | 66.05 |
| -12.8% |
|
|
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|
|
| (1) For periods beginning on or after January 1, 2023, gains (losses) on our GLB and GDB hedge instruments are excluded from adjusted stockholders' equity to align to the |
| ||||||||||||||||
| updated hedge program. |
| ||||||||||||||||
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| Page 26 |
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