Lincoln Statistical Report
Revised for New Segmentation
first Q U A R T E R
2006
The financial datea in this document is dated May 2, 2006 and has not been updated since that date, except for the impacts of re-segmentation and certain reclassifications. LNC does not intend to update this document.
Lincoln Financial Group | ||||
Statistical Report | ||||
First Quarter | ||||
2006 | ||||
Table of Contents | ||||
LFG Analyst Coverage | ||||
Notes | ||||
Financial Highlights | 1 - 4 | |||
Consolidated Expense Detail | 5 | |||
Operating Results Summary | 6 | |||
Consolidated Statements of Income | 7 | |||
Consolidating Statements of Income from Operations | 8-11 | |||
Consolidated Balance Sheet | 12 | |||
Balance Sheet Data - Segment Highlights | 13 | |||
Individual Markets | ||||
Individual Life Insurance | ||||
Income Statements & Operational Data | 14 | |||
Operational Data | 15 | |||
Account Value Rollforward | 16 | |||
Individual Annuities | ||||
Income Statements & Operational Data | 17 | |||
Account Value Rollforward | 18 | |||
Account Values | 19 | |||
Employer Markets | ||||
Retirement Products | ||||
Income Statements & Operational Data | 20 | |||
Account Value Rollforward | 21 | |||
Supplemental Data | 22 | |||
Benefit Partners | ||||
Income Statements & Operational Data | 23 | |||
Supplemental Data | 24 | |||
Executive Benefits & Other | ||||
Income Statements & Operational Data | 25 | |||
Account Value Roll Forward and Supplemental Data | 26 | |||
Investment Management | ||||
Income Statements | 27 | |||
Assets Under Management Roll Forward | 28 | |||
Lincoln UK | ||||
Income Statements | 29 | |||
Operational Data | 30 | |||
Lincoln Financial Media | 31 | |||
Other Operations | 31 | |||
Domestic Retail Deposits / Account Balances / Net Flows | 32 | |||
Investment Data | ||||
Assets Managed | 33 | |||
Other Investment Data | 34 | |||
ii | |||||||||||||
NOTES | |||||||||||||
On April 3, 2006, LNC completed its previously announced merger with Jefferson Pilot Corporation ("JP"). Beginning in the second quarter of 2006, we will report results through the following segments: Individual Markets - Annuities, Individual Markets - Life Insurance, Employer Markets - Retirement Products & Other, Employer Markets - Benefit Partners, Investment Management, Lincoln UK and Lincoln Financial Media. This first quarter 2006 statistical supplement is being reissued to provide historical information for LNC for the four quarters of 2005 and the first quarter of 2006 in the same format as will be used beginning with second quarter 2006. In addition, as described below, certain reclassifications have been made to historically reported items to reflect the new reporting practices of LNC. | |||||||||||||
Definitions and Presentation | |||||||||||||
"Income from Operations," "Operating Revenue," and "Return on Capital" are non-GAAP financial measures and do not replace GAAP net income (loss) and revenues. Detailed reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure are included in this statistical supplement. | |||||||||||||
* | We exclude the after-tax effects of the following items from GAAP net income to arrive at income from operations: | ||||||||||||
* | Realized gains and losses on investments and derivatives, | ||||||||||||
* | Gains and losses related to reinsurance embedded derivatives/trading account securities, | ||||||||||||
* | The cumulative effect of accounting changes, | ||||||||||||
* | Reserve changes on business sold through reinsurance net of related deferred gain amortization, | ||||||||||||
* | Gains and losses on the sale of subsidiaries and blocks of business, | ||||||||||||
* | Loss on early retirement of debt, including subordinated debt | ||||||||||||
NOTE: Income from operations is lower than previously reported as it now includes restructuring charges previously excluded in the determination of income from operations | |||||||||||||
* | Operating revenue represents revenue excluding the following, as applicable: | ||||||||||||
* | Realized gains or losses on investments and derivatives, | ||||||||||||
* | Gains and losses related to reinsurance embedded derivatives/trading account securities, | ||||||||||||
* | Gains and losses on the sale of subsidiaries and blocks of business, | ||||||||||||
* | Deferred gain amortization related to reserve changes on business sold through reinsurance, | ||||||||||||
* | Return on capital measures the effectiveness of LNC's use of its total capital, which includes equity (excluding accumulated other comprehensive income), debt and junior subordinated debentures issued to affiliated trusts. Return on capital is calculated by dividing income from operations (after adding back interest expense) by average capital. The difference between return on capital and return on shareholders' equity represents the effect of leveraging on LNC's consolidated results. | ||||||||||||
Income from operations, operating revenue, and return on capital are internal measures used by LNC in the management of its operations. Management believes that these performance measures explain the results of operations of LNC's ongoing operations in a manner that allows for a better understanding of the underlying trends in LNC's current business because the excluded items are either unpredictable and/or not related to decisions regarding the underlying businesses. | |||||||||||||
* | Certain operating and statistical measures are included in this report to provide supplemental data regarding the performance of LNC’s current business. These measures include deposits, sales, net flows, first year premium, inforce, spread, and assets under management. | ||||||||||||
* | Sales as reported consist of the following: | ||||||||||||
* Universal life ("UL"), including Moneyguard, and COLI - first year commissionable premium plus 5% of excess premium received, including UL internal replacements | |||||||||||||
* Whole life and term - first year paid premium | |||||||||||||
* Annuity - deposits from new and existing customers | |||||||||||||
* Benefit Partners - annualized first year premium | |||||||||||||
* Investment Management Retail Sales and Institutional Inflows - contributions, transfer in kind purchases, and reinvested dividends for new and existing accounts. | |||||||||||||
Reclassifications | |||||||||||||
Certain reclassifications have been made in the historical presentation of certain revenue and expenses. The principal reclassifications consist of the following: | |||||||||||||
* | Deferred Front End Loads ("DFEL") - capitalization and amortization of DFEL is reported as a component of expense assessments revenue. Depending on the segment, these had previously been reported as either other revenue, benefits expense or DAC amortization. | ||||||||||||
* | Investment Management Advisory Fees and Operating and Administrative Expenses - certain reclassifications have been made between revenue and expenses for such items as distribution fees and management fee waivers to conform to current industry practices. | ||||||||||||
3/31/2006 | PAGE 1 | ||||||||||||||||||||||||
Financial Highlights | |||||||||||||||||||||||||
Unaudited [Millions of Dollars, except Common Share Data] | |||||||||||||||||||||||||
For the Quarter Ended March 31 | For the Year-to-Date Period Ended March 31 | ||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||
Amount | Amount | Change | % Change | Amount | Amount | Change | % Change | ||||||||||||||||||
Income from Operations - By Segment | |||||||||||||||||||||||||
Individual Life Insurance | $ | 69.0 | $ | 58.2 | $ | 10.8 | 18.6 | % | $ | 69.0 | $ | 58.2 | $ | 10.8 | 18.6 | % | |||||||||
Individual Annuities | 66.4 | 49.7 | 16.7 | 33.7 | % | 66.4 | 49.7 | 16.7 | 33.7 | % | |||||||||||||||
Individual Markets | 135.4 | 107.9 | 27.6 | 25.5 | % | 135.4 | 107.9 | 27.6 | 25.5 | % | |||||||||||||||
Retirement Products | 52.4 | 43.2 | 9.2 | 21.3 | % | 52.4 | 43.2 | 9.2 | 21.3 | % | |||||||||||||||
Benefit Partners | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Executive Benefits & Other | 7.5 | 3.3 | 4.2 | 127.2 | % | 7.5 | 3.3 | 4.2 | 127.2 | % | |||||||||||||||
Employer Markets | 60.0 | 46.6 | 13.4 | 28.8 | % | 60.0 | 46.6 | 13.4 | 28.8 | % | |||||||||||||||
Investment Management | 15.3 | 4.5 | 10.8 | 239.9 | % | 15.3 | 4.5 | 10.8 | 239.9 | % | |||||||||||||||
Lincoln UK | 10.7 | 10.0 | 0.7 | 7.0 | % | 10.7 | 10.0 | 0.7 | 7.0 | % | |||||||||||||||
Lincoln Financial Media | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Other Operations | 0.1 | 2.4 | (2.3 | ) | -94.1 | % | 0.1 | 2.4 | (2.3 | ) | -94.1 | % | |||||||||||||
Total Income from Operations (1) | 221.6 | 171.3 | 50.3 | 29.3 | % | 221.6 | 171.3 | 50.3 | 29.3 | % | |||||||||||||||
Realized gains (losses) | (4.4 | ) | (4.7 | ) | 0.3 | 6.4 | % | (4.4 | ) | (4.7 | ) | 0.3 | 6.4 | % | |||||||||||
Net gain (loss) on reinsurance | |||||||||||||||||||||||||
derivative/trading account securities | 3.8 | 2.8 | 1.0 | 35.7 | % | 3.8 | 2.8 | 1.0 | 35.7 | % | |||||||||||||||
Gain on sale of subsidiaries/ businesses | - | 9.3 | (9.3 | ) | -100.0 | % | - | 9.3 | (9.3 | ) | -100.0 | % | |||||||||||||
Reserve development/ amortization of related deferred gain | 0.2 | 0.2 | - | - | 0.2 | 0.2 | - | - | |||||||||||||||||
Net Income | $ | 221.2 | $ | 178.9 | $ | 42.3 | 23.6 | % | $ | 221.2 | $ | 178.9 | $ | 42.3 | 23.6 | % | |||||||||
Earnings per share (diluted) | |||||||||||||||||||||||||
Income from Operations (1) | $ | 1.25 | $ | 0.97 | $ | 0.28 | 28.9 | % | $ | 1.25 | $ | 0.97 | $ | 0.28 | 28.9 | % | |||||||||
Realized gains (losses) | (0.03 | ) | (0.03 | ) | - | - | (0.03 | ) | (0.03 | ) | - | - | |||||||||||||
Net gain (loss) on reinsurance | |||||||||||||||||||||||||
derivative/trading account securities | 0.02 | 0.02 | - | - | 0.02 | 0.02 | - | - | |||||||||||||||||
Gain on sale of subsidiaries/ businesses | - | 0.05 | (0.05 | ) | -100.0 | % | - | 0.05 | (0.05 | ) | -100.0 | % | |||||||||||||
Reserve development/ amortization of related deferred gain | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Net Income | $ | 1.24 | $ | 1.01 | $ | 0.23 | 22.8 | % | $ | 1.24 | $ | 1.01 | $ | 0.23 | 22.7 | % | |||||||||
Operating Revenue- By Segment | |||||||||||||||||||||||||
Individual Life Insurance | $ | 500.6 | $ | 475.6 | $ | 25.1 | 5.3 | % | $ | 500.6 | $ | 475.6 | $ | 25.1 | 5.3 | % | |||||||||
Individual Annuities | 374.8 | 339.8 | 35.0 | 10.3 | % | 374.8 | 339.8 | 35.0 | 10.3 | % | |||||||||||||||
Individual Markets | 875.4 | 815.4 | 60.1 | 7.4 | % | 875.4 | 815.4 | 60.1 | 7.4 | % | |||||||||||||||
Retirement Products | 246.8 | 231.3 | 15.5 | 6.7 | % | 246.8 | 231.3 | 15.5 | 6.7 | % | |||||||||||||||
Benefit Partners | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Executive Benefits & Other | 57.2 | 53.2 | 4.0 | 7.5 | % | 57.2 | 53.2 | 4.0 | 7.5 | % | |||||||||||||||
Employer Markets | 304.0 | 284.5 | 19.5 | 6.9 | % | 304.0 | 284.5 | 19.5 | 6.9 | % | |||||||||||||||
Investment Management | 139.5 | 109.8 | 29.7 | 27.1 | % | 139.5 | 109.8 | 29.7 | 27.1 | % | |||||||||||||||
Lincoln UK | 69.5 | 74.6 | (5.2 | ) | -6.9 | % | 69.5 | 74.6 | (5.2 | ) | -6.9 | % | |||||||||||||
Lincoln Financial Media | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Other Operations | 31.7 | 21.2 | 10.5 | 49.6 | % | 31.7 | 21.2 | 10.5 | 49.6 | % | |||||||||||||||
Total Operating Revenue | 1,420.1 | 1,305.5 | 114.6 | 8.8 | % | 1,420.1 | 1,305.5 | 114.6 | 8.8 | % | |||||||||||||||
Realized gains (losses) | (6.9 | ) | (7.2 | ) | 0.3 | 4.2 | % | (6.9 | ) | (7.2 | ) | 0.3 | 4.2 | % | |||||||||||
Gain (loss) on reinsurance | |||||||||||||||||||||||||
derivative/trading account securities | 5.9 | 4.4 | 1.5 | 34.1 | % | 5.9 | 4.4 | 1.5 | 34.1 | % | |||||||||||||||
Gain on sale of subsidiaries/ businesses | - | 14.2 | (14.2 | ) | -100.0 | % | - | 14.2 | (14.2 | ) | -100.0 | % | |||||||||||||
Amortization of deferred gain-reserve development | 0.3 | 0.3 | - | - | 0.3 | 0.3 | - | - | |||||||||||||||||
Total Revenue | $ | 1,419.4 | $ | 1,317.2 | $ | 102.2 | 7.8 | % | $ | 1,419.4 | $ | 1,317.2 | $ | 102.2 | 7.8 | % | |||||||||
(1) Income from operations includes after-tax restructuring charges of $0.2 million, or -0- cents per share, and $1.3 million, or 1 cent per share, for the quarters ended March 31, 2006 and 2005, respectively. |
3/31/2006 | PAGE 2 | ||||||||||||||||||||||||
Financial Highlights | |||||||||||||||||||||||||
Unaudited (In Billions) | |||||||||||||||||||||||||
Operational Data by Segment | For the Quarter Ended March 31 | For the Year-to-Date Period Ended March 31 | |||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||
Amount | Amount | Change | % Change | Amount | Amount | Change | % Change | ||||||||||||||||||
Individual Markets | |||||||||||||||||||||||||
Individual Annuities | |||||||||||||||||||||||||
Gross deposits | $ | 2.136 | $ | 1.761 | $ | 0.375 | 21.3 | % | $ | 2.136 | $ | 1.761 | $ | 0.375 | 21.3 | % | |||||||||
Net flows | 0.769 | 0.644 | 0.125 | 19.5 | % | 0.769 | 0.644 | 0.125 | 19.5 | % | |||||||||||||||
Account values (gross) | 50.999 | 42.510 | 8.488 | 20.0 | % | 50.999 | 42.510 | 8.488 | 20.0 | % | |||||||||||||||
Account values (net of reinsurance) | 48.797 | 40.219 | 8.578 | 21.3 | % | 48.797 | 40.219 | 8.578 | 21.3 | % | |||||||||||||||
Individual Life Insurance | |||||||||||||||||||||||||
Sales (in millions) (1) | $ | 67.9 | $ | 65.4 | $ | 2.6 | 3.9 | % | $ | 67.9 | $ | 65.4 | $ | 2.6 | 3.9 | % | |||||||||
Life insurance in-force | 321.409 | 301.743 | 19.666 | 6.5 | % | 321.409 | 301.743 | 19.666 | 6.5 | % | |||||||||||||||
Account values | 14.268 | 13.328 | 0.941 | 7.1 | % | 14.268 | 13.328 | 0.941 | 7.1 | % | |||||||||||||||
Employer Markets | |||||||||||||||||||||||||
Retirement Products | |||||||||||||||||||||||||
Gross deposits | $ | 0.923 | $ | 0.860 | $ | 0.063 | 7.3 | % | $ | 0.923 | $ | 0.860 | $ | 0.063 | 7.3 | % | |||||||||
Net flows | (0.081 | ) | (0.111 | ) | 0.030 | 27.2 | % | (0.081 | ) | (0.111 | ) | 0.030 | 27.2 | % | |||||||||||
Account values | 27.547 | 25.034 | 2.513 | 10.0 | % | 27.547 | 25.034 | 2.513 | 10.0 | % | |||||||||||||||
Alliance Mutual Funds | 4.248 | 3.163 | 1.085 | 34.3 | % | 4.248 | 3.163 | 1.085 | 34.3 | % | |||||||||||||||
Account values including Alliance Mutual Funds | 31.795 | 28.197 | 3.597 | 12.8 | % | 31.795 | 28.197 | 3.597 | 12.8 | % | |||||||||||||||
Executive Benefits | |||||||||||||||||||||||||
COLI sales (in millions) | $ | 16.1 | $ | 19.0 | $ | (2.9 | ) | -15.3 | % | $ | 16.1 | $ | 19.0 | $ | (2.9 | ) | -15.3 | % | |||||||
Life insurance in-force | 7.979 | 7.234 | 0.745 | 10.3 | % | 7.979 | 7.234 | 0.745 | 10.3 | % | |||||||||||||||
Account values | 1.387 | 1.138 | 0.249 | 21.9 | % | 1.387 | 1.138 | 0.249 | 21.9 | % | |||||||||||||||
Benefit Partners | |||||||||||||||||||||||||
Annualized sales (in millions) | $ | - | $ | - | $ | - | NM | $ | - | $ | - | $ | - | NM | |||||||||||
Loss ratio | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Combined ratio | - | - | - | NM | - | - | - | NM | |||||||||||||||||
Investment Management Segment | |||||||||||||||||||||||||
Retail deposits | $ | 4.019 | $ | 3.566 | $ | 0.453 | 12.7 | % | $ | 4.019 | $ | 3.566 | $ | 0.453 | 12.7 | % | |||||||||
Retail net flows | 1.305 | 1.426 | (0.121 | ) | -8.5 | % | 1.305 | 1.426 | (0.121 | ) | -8.5 | % | |||||||||||||
Institutional in-flows | 5.044 | 2.193 | 2.851 | 130.0 | % | 5.044 | 2.193 | 2.851 | 130.0 | % | |||||||||||||||
Institutional net flows | 3.592 | 1.345 | 2.247 | 167.1 | % | 3.592 | 1.345 | 2.247 | 167.1 | % | |||||||||||||||
Total Deposits and In-flows | 9.063 | 5.759 | 3.305 | 57.4 | % | 9.063 | 5.759 | 3.305 | 57.4 | % | |||||||||||||||
Total Net Flows | 4.898 | 2.771 | 2.126 | 76.7 | % | 4.898 | 2.771 | 2.126 | 76.7 | % | |||||||||||||||
Assets Under Management- Retail and Institutional | 86.428 | 59.080 | 27.347 | 46.3 | % | 86.428 | 59.080 | 27.347 | 46.3 | % | |||||||||||||||
Assets Under Management - General Account | 41.995 | 42.992 | (0.997 | ) | -2.3 | % | 41.995 | 42.992 | (0.997 | ) | -2.3 | % | |||||||||||||
Assets Under Management - Total Segment | 128.423 | 102.073 | 26.351 | 25.8 | % | 128.423 | 102.073 | 26.351 | 25.8 | % | |||||||||||||||
Consolidated | |||||||||||||||||||||||||
Domestic Retail Deposits (2) | $ | 7.449 | $ | 6.596 | $ | 0.853 | 12.9 | % | $ | 7.449 | $ | 6.596 | $ | 0.853 | 12.9 | % | |||||||||
Domestic Retail Account Balances (2) | 129.226 | 104.990 | 24.236 | 23.1 | % | 129.226 | 104.990 | 24.236 | 23.1 | % | |||||||||||||||
Domestic Retail Net Flows (2) | 2.635 | 2.565 | 0.069 | 2.7 | % | 2.635 | 2.565 | 0.069 | 2.7 | % | |||||||||||||||
Domestic Deposits (3) | 12.236 | 8.414 | 3.822 | 45.4 | % | 12.236 | 8.414 | 3.822 | 45.4 | % | |||||||||||||||
Domestic Net Flows (3) | 6.188 | 3.787 | 2.401 | 63.4 | % | 6.188 | 3.787 | 2.401 | 63.4 | % | |||||||||||||||
Assets Under Management (3) | 182.995 | 145.907 | 37.088 | 25.4 | % | 182.995 | 145.907 | 37.088 | 25.4 | % | |||||||||||||||
(1) Sales for Individual Life Insurance consist of first year commissionable premium for Universal life ("UL"), including Moneyguard, and COLI plus 5% of excess premium received, including UL internal replacements, and first year paid premiums for Whole life and Term products. | |||||||||||||||||||||||||
(2) Includes amounts for the Individual Markets annuity and life insurance products and amounts for Investment Management's retail operations. | |||||||||||||||||||||||||
(3) Includes amounts for Employer Markets Retirement and Executive Benefits products and Investment Management's Institutional business. |
3/31/2006 | PAGE 3 | ||||||||||||||||||||||||
Financial Highlights | |||||||||||||||||||||||||
Unaudited [Millions of Dollars, except Common Share Data] | |||||||||||||||||||||||||
For the Quarter Ended March 31 | For the Year-to-date Period Ended March 31 | ||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||
Amount | Amount | Change | % Change | Amount | Amount | Change | % Change | ||||||||||||||||||
Balance Sheet Assets - End of Period | $ | 128,472.0 | $ | 116,407.4 | $ | 12,064.6 | 10.4 | % | $ | 128,472.0 | $ | 116,407.4 | $ | 12,064.6 | 10.4 | % | |||||||||
Shareholders' Equity | |||||||||||||||||||||||||
Beg of period (including AOCI) | $ | 6,384.4 | $ | 6,175.6 | $ | 208.8 | $ | 6,384.4 | $ | 6,175.6 | $ | 208.8 | |||||||||||||
End of period (including AOCI) | 6,338.2 | 6,043.0 | 295.3 | 6,338.2 | 6,043.0 | 295.3 | |||||||||||||||||||
End of period (excluding AOCI) | 6,053.2 | 5,365.8 | 687.4 | 6,053.2 | 5,365.8 | 687.4 | |||||||||||||||||||
Average equity (excluding AOCI) | 5,954.9 | 5,305.4 | 649.5 | 5,954.9 | 5,305.4 | 649.5 | |||||||||||||||||||
Return on Equity | |||||||||||||||||||||||||
Net income/average equity (excluding AOCI) | 14.9 | % | 13.5 | % | 14.9 | % | 13.5 | % | |||||||||||||||||
Inc from operations/average equity (excluding AOCI) | 14.9 | % | 12.9 | % | 14.9 | % | 12.9 | % | |||||||||||||||||
Return on Capital | |||||||||||||||||||||||||
Inc from operations/average capital | 12.8 | % | 10.8 | % | 12.8 | % | 10.8 | % | |||||||||||||||||
Common Stock Outstanding | |||||||||||||||||||||||||
Average for the period - diluted | 177.9 | 176.6 | 1.3 | 0.7 | % | 177.9 | 176.6 | 1.3 | 0.7 | % | |||||||||||||||
End of period - assuming conv of preferreds | 176.1 | 173.9 | 2.2 | 1.3 | % | 176.1 | 173.9 | 2.2 | 1.3 | % | |||||||||||||||
End of period - diluted | 178.5 | 176.5 | 1.9 | 1.1 | % | 178.5 | 176.5 | 1.9 | 1.1 | % | |||||||||||||||
Book value (including AOCI) | $ | 35.99 | $ | 34.74 | $ | 1.25 | 3.6 | % | $ | 35.99 | $ | 34.74 | $ | 1.25 | 3.6 | % | |||||||||
Book value (excluding AOCI) | $ | 34.37 | $ | 30.85 | $ | 3.52 | 11.4 | % | $ | 34.37 | $ | 30.85 | $ | 3.52 | 11.4 | % | |||||||||
Cash Returned to Shareholders | |||||||||||||||||||||||||
Share repurchase - dollar amount | $ | - | $ | 34.6 | $ | (34.6 | ) | $ | - | $ | 34.6 | $ | (34.6 | ) | |||||||||||
Dividends declared to shareholders | 67.5 | 63.7 | 3.7 | 67.5 | 63.7 | 3.7 | |||||||||||||||||||
Total Cash Returned to Shareholders | $ | 67.5 | $ | 98.4 | $ | (30.9 | ) | $ | 67.5 | $ | 98.4 | $ | (30.9 | ) | |||||||||||
Share repurchase - number of shares | - | 0.755 | (0.755 | ) | - | 0.755 | (0.755 | ) | |||||||||||||||||
Dividend declared on common stock - per share | $ | 0.380 | $ | 0.365 | $ | 0.015 | 4.1 | % | $ | 0.380 | $ | 0.365 | $ | 0.015 | 4.1 | % | |||||||||
Dividend payout ratio | 30.6 | % | 36.0 | % | 30.6 | % | 36.0 | % | |||||||||||||||||
Annualized yield | 2.8 | % | 3.2 | % | 2.8 | % | 3.2 | % | |||||||||||||||||
Comprehensive Income (Loss) | |||||||||||||||||||||||||
Net income | $ | 221.2 | $ | 178.9 | $ | 221.2 | $ | 178.9 | |||||||||||||||||
Net unrealized gains (losses) on securities | (276.4 | ) | (240.0 | ) | (276.4 | ) | (240.0 | ) | |||||||||||||||||
Losses on derivatives | 27.8 | (6.3 | ) | 27.8 | (6.3 | ) | |||||||||||||||||||
Foreign currency translation | 6.3 | (7.8 | ) | 6.3 | (7.8 | ) | |||||||||||||||||||
Minimum pension liability adjustment | (0.6 | ) | 0.6 | (0.6 | ) | 0.6 | |||||||||||||||||||
Comprehensive Income (Loss) | $ | (21.6 | ) | $ | (74.6 | ) | $ | (21.6 | ) | $ | (74.6 | ) | |||||||||||||
Ratios: | |||||||||||||||||||||||||
Debt to total capitalization | 15.9 | % | 20.3 | % | 15.9 | % | 20.3 | % | |||||||||||||||||
Debt to equity | 18.9 | % | 25.5 | % | 18.9 | % | 25.5 | % | |||||||||||||||||
Ratings as of July 7, 2006: | |||||||||||||||||||||||||
A.M. Best | Fitch | Moody's | Standard & Poors | ||||||||||||||||||||||
Senior Debt Ratings: | a | A | A3 | A+ | |||||||||||||||||||||
Claims Paying Ratings: | |||||||||||||||||||||||||
Lincoln National Life Insurance Company | A+ | AA | Aa3 | AA | |||||||||||||||||||||
First Penn-Pacific Life Insurance Company | A+ | AA | A1 | AA- | |||||||||||||||||||||
Lincoln Life & Annuity Company of New York | A+ | AA | Aa3 | AA | |||||||||||||||||||||
Jefferson-Pilot Life Insurance Company | A+ | AA | Aa3 | AA | |||||||||||||||||||||
Jefferson-Pilot Financial Insurance Company | A+ | AA | Aa3 | AA | |||||||||||||||||||||
Jefferson-Pilot LifeAmerica Insurance Company | A+ | AA | NR | AA | |||||||||||||||||||||
3/31/2006 | PAGE 4 | ||||||||||||||||||
Lincoln National Corporation | |||||||||||||||||||
Combined Production Data (1) | |||||||||||||||||||
Unaudited | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | ||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | ||||||||||||||
Individual Markets | |||||||||||||||||||
Individual Life Insurance | |||||||||||||||||||
(millions) | |||||||||||||||||||
Sales by Product | |||||||||||||||||||
Universal Life | |||||||||||||||||||
Excluding MoneyGuard | $ | 84.3 | $ | 101.9 | $ | 118.7 | $ | 118.4 | $ | 83.7 | -0.8 | % | |||||||
MoneyGuard | 7.4 | 8.0 | 9.1 | 9.4 | 7.7 | 4.4 | % | ||||||||||||
Total | 91.7 | 109.9 | 127.8 | 127.8 | 91.4 | -0.3 | % | ||||||||||||
Variable universal life | 18.3 | 17.1 | 14.5 | 20.6 | 16.4 | -10.0 | % | ||||||||||||
Whole life | 1.4 | 0.7 | 0.8 | 0.9 | 1.2 | -10.0 | % | ||||||||||||
Term | 11.3 | 10.7 | 10.5 | 11.1 | 11.5 | 1.5 | % | ||||||||||||
Total Sales by Product | $ | 122.7 | $ | 138.3 | $ | 153.5 | $ | 160.3 | $ | 120.6 | -1.7 | % | |||||||
Individual Annuity Deposits | |||||||||||||||||||
(billions) | |||||||||||||||||||
Fixed | $ | 0.731 | $ | 0.839 | $ | 0.784 | $ | 0.736 | $ | 0.722 | -1.2 | % | |||||||
Variable | 1.289 | 1.329 | 1.410 | 1.524 | 1.666 | 29.2 | % | ||||||||||||
Total Individual Markets | $ | 2.021 | $ | 2.168 | $ | 2.194 | $ | 2.260 | $ | 2.389 | 18.2 | % | |||||||
Employer Markets | |||||||||||||||||||
Annuities | |||||||||||||||||||
(billions) | |||||||||||||||||||
Fixed | $ | 0.298 | $ | 0.286 | $ | 0.259 | $ | 0.240 | $ | 0.257 | -13.8 | % | |||||||
Variable | 0.562 | 0.524 | 0.527 | 0.642 | 0.666 | 18.5 | % | ||||||||||||
0.860 | 0.810 | 0.786 | 0.882 | 0.923 | 7.3 | % | |||||||||||||
Alliance Mutual Funds Deposits | 0.421 | 0.222 | 0.200 | 0.223 | 0.318 | -24.5 | % | ||||||||||||
Total Annuity and Alliance Mutual Funds | $ | 1.281 | $ | 0.032 | $ | 0.986 | $ | 1.105 | $ | 1.241 | -3.1 | % | |||||||
Benefit Partners | |||||||||||||||||||
(millions) | |||||||||||||||||||
Annualized Sales | |||||||||||||||||||
Life | $ | 22.3 | $ | 15.6 | $ | 19.3 | $ | 29.4 | $ | 23.6 | 5.9 | % | |||||||
Disability | 38.8 | 27.2 | 30.5 | 44.5 | 34.2 | -11.8 | % | ||||||||||||
Dental | 9.5 | 9.4 | 8.0 | 6.9 | 6.2 | -34.4 | % | ||||||||||||
Executive Benefits | |||||||||||||||||||
COLI sales - millions | $ | 19.0 | $ | 7.8 | $ | 17.1 | $ | 10.1 | $ | 16.1 | -15.2 | % | |||||||
Investment Management | |||||||||||||||||||
Sales and Inflows | |||||||||||||||||||
(billions) | |||||||||||||||||||
Retail | |||||||||||||||||||
Annuities | $ | 0.713 | $ | 0.701 | $ | 0.642 | $ | 0.713 | $ | 0.885 | 24.1 | % | |||||||
Mutual funds | 1.520 | 1.487 | 1.331 | 1.657 | 1.329 | -12.6 | % | ||||||||||||
Managed accounts & other | 1.333 | 2.146 | 1.599 | 1.260 | 1.806 | 35.4 | % | ||||||||||||
3.566 | 4.334 | 3.572 | 3.629 | 4.019 | 12.7 | % | |||||||||||||
Institutional | 2.193 | 6.110 | 3.166 | 4.833 | 5.044 | 130.0 | % | ||||||||||||
Total Sales and Inflows | $ | 5.759 | $ | 10.444 | $ | 6.738 | $ | 8.462 | $ | 9.063 | 57.4 | % | |||||||
Total Annuity & Alliance | |||||||||||||||||||
Mutual Fund Deposits | |||||||||||||||||||
(billions) |
Fixed Annuities | |||||||||||||||||||
Individual | $ | 0.731 | $ | 0.839 | $ | 0.784 | $ | 0.736 | $ | 0.722 | -1.2 | % | |||||||
Employer Markets | 0.298 | 0.286 | 0.259 | 0.240 | 0.257 | -13.8 | % | ||||||||||||
1.029 | 1.125 | 1.043 | 0.976 | 0.979 | -4.9 | % | |||||||||||||
Variable Annuities | |||||||||||||||||||
Individual | 1.289 | 1.329 | 1.410 | 1.524 | 1.666 | 29.2 | % | ||||||||||||
Employer Markets | 0.562 | 0.524 | 0.527 | 0.642 | 0.666 | 18.5 | % | ||||||||||||
1.851 | 1.853 | 1.937 | 2.166 | 2.332 | 26.0 | % | |||||||||||||
Total Annuities | 2.881 | 2.978 | 2.980 | 3.142 | 3.312 | 15.0 | % | ||||||||||||
Alliance Mutual Funds | 0.421 | 0.222 | 0.200 | 0.223 | 0.318 | -24.5 | % | ||||||||||||
Total Annuity and Alliance Mutual Funds | $ | 3.302 | $ | 3.200 | $ | 3.180 | $ | 3.365 | $ | 3.630 | 9.9 | % | |||||||
3/31/2006 | PAGE 5 | |||||||||||||||||||||||||||
Consolidated Expense Detail | ||||||||||||||||||||||||||||
Unaudited (In Millions) | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Commissions | $ | 143.2 | $ | 161.3 | $ | 176.2 | $ | 176.9 | $ | 179.9 | 25.7 | % | $ | 143.2 | $ | 179.9 | 25.7 | % | ||||||||||
General and administrative expenses: | ||||||||||||||||||||||||||||
General and administrative expenses | 335.1 | 362.6 | 384.7 | 374.4 | 336.5 | 0.4 | % | 335.1 | 336.5 | 0.4 | % | |||||||||||||||||
Merger-related expenses | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Total general and administrative expenses | 335.1 | 362.6 | 384.7 | 374.4 | 336.5 | 0.0 | 335.1 | 336.5 | 0.0 | |||||||||||||||||||
Restructuring charges | 1.9 | 23.2 | 2.7 | 1.5 | 0.3 | -84.2 | % | 1.9 | 0.3 | -84.2 | % | |||||||||||||||||
Taxes, licenses and fees | 30.9 | 23.1 | 24.1 | 17.2 | 33.3 | 7.8 | % | 30.9 | 33.3 | 7.8 | % | |||||||||||||||||
Interest | 22.2 | 21.8 | 21.4 | 21.8 | 21.5 | -3.2 | % | 22.2 | 21.5 | -3.2 | % | |||||||||||||||||
Total commissions and expenses incurred | 533.3 | 592.0 | 609.1 | 591.8 | 571.5 | 7.2 | % | 533.3 | 571.5 | 7.2 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (211.4 | ) | (224.0 | ) | (239.3 | ) | (263.0 | ) | (244.5 | ) | 0.4 | % | (211.4 | ) | (244.5 | ) | 0.4 | % | ||||||||||
Amortization: | ||||||||||||||||||||||||||||
DAC/VOBA Amortization | 154.5 | 142.3 | 99.1 | 144.8 | 165.0 | 6.8 | % | 154.5 | 165.0 | 6.8 | % | |||||||||||||||||
Amortization of intangibles | 1.9 | 1.9 | 2.0 | 2.0 | 2.0 | 5.3 | % | 1.9 | 2.0 | 5.3 | % | |||||||||||||||||
Other | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Total amortization | 156.4 | 144.2 | 101.1 | 146.8 | 167.0 | 6.8 | % | 156.4 | 167.0 | 6.8 | % | |||||||||||||||||
Broker/Dealer Commissions | 29.7 | 32.5 | 29.9 | 31.2 | 28.8 | -3.2 | % | 29.7 | 28.8 | -3.2 | % | |||||||||||||||||
Total net expenses | $ | 508.0 | $ | 544.7 | $ | 500.9 | $ | 506.8 | $ | 522.7 | 2.9 | % | $ | 508.0 | $ | 522.7 | 2.9 | % | ||||||||||
General & administrative expenses | (Basis Points | ) | (Basis Points | ) | ||||||||||||||||||||||||
basis points on assets - Annualized | 7 | 8 | 8 | 8 | 7 | (1 | ) | 7 | 7 | (1 | ) | |||||||||||||||||
Merger-related expenses: | ||||||||||||||||||||||||||||
Severance and employee-related charges | $ | - | $ | - | $ | - | $ | - | $ | - | 0.0 | % | $ | - | $ | - | 0.0 | % | ||||||||||
Systems integration and related expenses | - | - | - | - | - | 0.0 | % | - | - | 0.0 | % | |||||||||||||||||
Other expenses | - | - | - | - | - | 0.0 | % | - | - | 0.0 | % | |||||||||||||||||
Total Merger-related expenses | $ | - | $ | - | $ | - | $ | - | $ | - | 0.0 | % | $ | - | $ | - | 0.0 | % |
3/31/2006 | PAGE 6 | |||||||||||||||||||||||||||
Operating Results Summary | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars, except Common Share Data] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Individual Life Insurance | $ | 475.6 | $ | 475.4 | $ | 458.5 | $ | 501.1 | $ | 500.6 | 5.3 | % | $ | 475.6 | $ | 500.6 | 5.3 | % | ||||||||||
Individual Annuities | 339.8 | 348.2 | 362.4 | 372.1 | 374.8 | 10.3 | % | 339.8 | 374.8 | 10.3 | % | |||||||||||||||||
Individual Markets | 815.4 | 823.6 | 820.9 | 873.2 | 875.4 | 7.4 | % | 815.4 | 875.4 | 7.4 | % | |||||||||||||||||
Retirement Products | 231.3 | 232.5 | 236.8 | 239.2 | 246.8 | 6.7 | % | 231.3 | 246.8 | 6.7 | % | |||||||||||||||||
Benefit Partners | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Executive Benefits & Other | 53.2 | 53.2 | 59.4 | 61.6 | 57.2 | 7.5 | % | 53.2 | 57.2 | 7.5 | % | |||||||||||||||||
Employer Markets | 284.5 | 285.7 | 296.2 | 300.8 | 304.0 | 6.9 | % | 284.5 | 304.0 | 6.9 | % | |||||||||||||||||
Investment Management | 109.8 | 114.4 | 123.2 | 127.9 | 139.5 | 27.1 | % | 109.8 | 139.5 | 27.1 | % | |||||||||||||||||
Lincoln UK | 74.6 | 78.4 | 102.8 | 62.5 | 69.5 | -6.9 | % | 74.6 | 69.5 | -6.9 | % | |||||||||||||||||
Lincoln Financial Media | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Other Operations | 21.2 | 79.2 | 45.9 | 28.9 | 31.7 | 49.6 | % | 21.2 | 31.7 | 49.6 | % | |||||||||||||||||
Total Operating Revenue | 1,305.5 | 1,381.4 | 1,389.1 | 1,393.4 | 1,420.1 | 8.8 | % | 1,305.5 | 1,420.1 | 8.8 | % | |||||||||||||||||
Realized gains (losses) on investments and derivatives | (7.2 | ) | (4.0 | ) | (1.6 | ) | (9.3 | ) | (6.9 | ) | 4.2 | % | (7.2 | ) | (6.9 | ) | 4.2 | % | ||||||||||
Net gain (loss) on reinsurance | ||||||||||||||||||||||||||||
derivative/trading account securities | 4.4 | (5.1 | ) | 5.3 | - | 5.9 | 34.1 | % | 4.4 | 5.9 | 34.1 | % | ||||||||||||||||
Gain on sale of subsidiaries/ businesses | 14.2 | - | - | - | - | -100.0 | % | 14.2 | - | -100.0 | % | |||||||||||||||||
Amortization of deferred gain-reserve development | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | - | 0.3 | 0.3 | - | |||||||||||||||||||
Total Revenue | $ | 1,317.2 | $ | 1,372.6 | $ | 1,393.1 | $ | 1,384.4 | $ | 1,419.4 | 7.8 | % | $ | 1,317.2 | $ | 1,419.4 | 7.8 | % | ||||||||||
Income from Operations (1) | ||||||||||||||||||||||||||||
Individual Life Insurance | $ | 58.2 | $ | 62.6 | $ | 64.9 | $ | 73.8 | $ | 69.0 | 18.6 | % | $ | 58.2 | $ | 69.0 | 18.6 | % | ||||||||||
Individual Annuities | 49.7 | 52.5 | 79.0 | 70.9 | 66.4 | 33.7 | % | 49.7 | 66.4 | 33.7 | % | |||||||||||||||||
Individual Markets | 107.9 | 115.1 | 144.0 | 144.7 | 135.4 | 25.5 | % | 107.9 | 135.4 | 25.5 | % | |||||||||||||||||
Retirement Products | 43.2 | 45.3 | 53.5 | 45.1 | 52.4 | 21.3 | % | 43.2 | 52.4 | 21.3 | % | |||||||||||||||||
Benefit Partners | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Executive Benefits & Other | 3.3 | 4.3 | 2.4 | 9.5 | 7.5 | 127.2 | % | 3.3 | 7.5 | 127.2 | % | |||||||||||||||||
Employer Markets | 46.5 | 49.6 | 55.9 | 54.6 | 60.0 | 29.0 | % | 46.5 | 60.0 | 29.0 | % | |||||||||||||||||
Investment Management | 4.5 | (1.4 | ) | 4.9 | 9.0 | 15.3 | 239.9 | % | 4.5 | 15.3 | 239.9 | % | ||||||||||||||||
Lincoln UK | 10.0 | 10.3 | 9.6 | 13.5 | 10.7 | 7.0 | % | 10.0 | 10.7 | 7.0 | % | |||||||||||||||||
Lincoln Financial Media | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Other Operations | 2.4 | 30.1 | 12.1 | 9.5 | 0.1 | -94.1 | % | 2.4 | 0.1 | -94.1 | % | |||||||||||||||||
Income from Operations (1) | 171.3 | 203.6 | 226.4 | 231.3 | 221.6 | 29.3 | % | 171.3 | 221.6 | 29.3 | % | |||||||||||||||||
Realized gains (losses) on investments and derivatives | (4.7 | ) | (2.7 | ) | (1.1 | ) | (6.1 | ) | (4.4 | ) | 6.4 | % | (4.7 | ) | (4.4 | ) | 6.4 | % | ||||||||||
Net gain (loss) on reinsurance | ||||||||||||||||||||||||||||
derivative/trading account securities | 2.8 | (3.3 | ) | 3.5 | - | 3.8 | 35.7 | % | 2.8 | 3.8 | 35.7 | % | ||||||||||||||||
Gain on sale of subsidiaries/ businesses | 9.3 | - | - | - | - | -100.0 | % | 9.3 | - | -100.0 | % | |||||||||||||||||
Reserve development/ amortization of related deferred gain | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | - | 0.2 | 0.2 | - | |||||||||||||||||||
Loss on early retirement of debt | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Income Before Cumulative Effect of | ||||||||||||||||||||||||||||
Accounting Change | 178.9 | 197.9 | 228.9 | 225.3 | 221.2 | 23.6 | % | 178.9 | 221.2 | 24 | % | |||||||||||||||||
Cumulative effect of accounting change, net of income tax | - | - | - | - | - | - | - | |||||||||||||||||||||
Net Income | $ | 178.9 | $ | 197.9 | $ | 228.9 | $ | 225.3 | $ | 221.2 | 23.6 | % | $ | 178.9 | $ | 221.2 | 24 | % | ||||||||||
OTHER DATA | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | Mar | Mar | ||||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||
Shareholders' Equity | ||||||||||||||||||||||||||||
Beg of period (including AOCI) | $ | 6,175.6 | $ | 6,042.9 | $ | 6,363.5 | $ | 6,284.4 | $ | 6,384.4 | $ | 6,175.6 | $ | 6,384.4 | ||||||||||||||
End of period (including AOCI) | 6,042.9 | 6,363.5 | 6,284.4 | 6,384.4 | 6,338.2 | 6,042.9 | 6,338.2 | |||||||||||||||||||||
End of period (excluding AOCI) | 5,365.8 | 5,448.3 | 5,663.5 | 5,856.6 | 6,053.2 | 5,365.8 | 6,053.2 | |||||||||||||||||||||
Average equity (excluding AOCI) | 5,305.4 | 5,407.1 | 5,555.9 | 5,760.0 | 5,954.9 | 5,305.4 | 5,954.9 | |||||||||||||||||||||
Common Shares Outstanding | ||||||||||||||||||||||||||||
Average for the period - diluted | 176.6 | 175.4 | 175.8 | 176.6 | 177.9 | 176.6 | 177.9 | |||||||||||||||||||||
End of period - diluted | 176.5 | 174.8 | 176.3 | 176.9 | 178.5 | 176.5 | 178.5 | |||||||||||||||||||||
Per Share Data (Diluted) | ||||||||||||||||||||||||||||
Net Income | $ | 1.01 | $ | 1.13 | $ | 1.30 | $ | 1.28 | $ | 1.24 | $ | 1.01 | $ | 1.24 | ||||||||||||||
Income from Operations (1) | 0.97 | 1.16 | 1.29 | 1.31 | $ | 1.25 | 0.97 | $ | 1.25 | |||||||||||||||||||
Shareholders' Equity Per Share | ||||||||||||||||||||||||||||
Shareholders' Equity (including AOCI) | 34.7 | 36.9 | 36.2 | 36.7 | 36.0 | 34.7 | 36.0 | |||||||||||||||||||||
Shareholders' Equity (excluding AOCI) | 30.8 | 31.6 | 32.6 | 33.7 | 34.4 | 30.8 | 34.4 | |||||||||||||||||||||
Dividends declared (Common Stock) | 0.365 | 0.365 | 0.365 | 0.380 | 0.380 | 0.365 | 0.380 | |||||||||||||||||||||
Return on Equity | ||||||||||||||||||||||||||||
Net Income/Average Equity | 13.5 | % | 14.6 | % | 16.5 | % | 15.6 | % | 14.9 | % | 13.5 | % | 14.9 | % | ||||||||||||||
Inc from Operations/Average Equity | 12.9 | % | 15.1 | % | 16.3 | % | 16.1 | % | 14.9 | % | 12.9 | % | 14.9 | % | ||||||||||||||
Market Value of Common Stock | ||||||||||||||||||||||||||||
Highest price | $ | 49.42 | $ | 47.77 | $ | 52.42 | $ | 54.41 | $ | 57.97 | $ | 49.42 | $ | 57.97 | ||||||||||||||
Lowest price | 44.36 | 41.59 | 46.59 | 46.94 | 52.00 | 44.36 | 52.00 | |||||||||||||||||||||
Closing price | $ | 45.14 | $ | 46.92 | $ | 52.02 | $ | 53.03 | $ | 54.59 | $ | 45.14 | $ | 54.59 |
(1) Income from operations includes after-tax restructuring charges of $1.3 million, or 1 cent per share, for the first quarter of 2005, $15.0 million, or 9 cents per share, for the second quarter of 2005, $1.8 million, or 1 cent per share, for the third quarter of 2005, $1.1 million, or 1 cent per share, for the fourth quarter of 2005 and $0.2 million, or -0- cents per share, for the first quarter of 2006 |
3/31/2006 | PAGE 7 | |||||||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||
Premiums | $ | 70.4 | $ | 72.6 | $ | 83.1 | $ | 82.4 | $ | 78.4 | 11.4 | % | $ | 70.4 | $ | 78.4 | 11.4 | % | ||||||||||
Surrender charges | 20.1 | 16.5 | 18.6 | 18.0 | 18.7 | -7.0 | % | 20.1 | 18.7 | -7.0 | % | |||||||||||||||||
Mortality assessments | 142.3 | 142.1 | 138.8 | 145.1 | 146.2 | 2.7 | % | 142.3 | 146.2 | 2.7 | % | |||||||||||||||||
Expense assessments | 259.7 | 269.4 | 292.9 | 296.0 | 310.8 | 19.7 | % | 259.7 | 310.8 | 19.7 | % | |||||||||||||||||
Investment advisory fees | 55.0 | 62.0 | 67.9 | 70.9 | 77.8 | 41.5 | % | 55.0 | 77.8 | 41.5 | % | |||||||||||||||||
Communications revenue | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Net investment income | 659.9 | 703.7 | 670.9 | 668.2 | 678.4 | 2.8 | % | 659.9 | 678.4 | 2.8 | % | |||||||||||||||||
Other revenue and fees | 79.1 | 96.2 | 97.8 | 93.7 | 91.1 | 15.2 | % | 79.1 | 91.1 | 15.2 | % | |||||||||||||||||
Amortization of deferred gain | 18.9 | 18.9 | 18.9 | 18.9 | 18.8 | -0.9 | % | 18.9 | 18.8 | -0.9 | % | |||||||||||||||||
Amortization of deferred gain-reserve development | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | - | 0.3 | 0.3 | - | |||||||||||||||||||
Realized gains (losses) | 11.4 | (9.1 | ) | 3.7 | (9.3 | ) | (1.0 | ) | NM | 11.4 | (1.0 | ) | NM | |||||||||||||||
Total Revenue | 1,317.1 | 1,372.6 | 1,393.1 | 1,384.3 | 1,419.4 | 7.8 | % | 1,317.1 | 1,419.4 | 7.8 | % | |||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||
Insurance benefits | 191.2 | 209.7 | 206.7 | 198.0 | 200.4 | 4.9 | % | 191.2 | 200.4 | 4.9 | % | |||||||||||||||||
Interest credited to contractholder funds | 380.1 | 380.1 | 382.6 | 383.4 | 381.3 | 0.3 | % | 380.1 | 381.3 | 0.3 | % | |||||||||||||||||
Communications expenses | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Operating and acquisition expenses | 454.9 | 499.9 | 455.3 | 467.9 | 467.9 | 2.8 | % | 454.9 | 467.9 | 2.8 | % | |||||||||||||||||
Taxes, licenses and fees | 30.9 | 23.1 | 24.1 | 17.2 | 33.3 | 7.8 | % | 30.9 | 33.3 | 7.8 | % | |||||||||||||||||
Interest and debt expense | 22.2 | 21.8 | 21.4 | 21.8 | 21.5 | -3.0 | % | 22.2 | 21.5 | -3.0 | % | |||||||||||||||||
Total Benefits and Expenses | 1,079.2 | 1,134.6 | 1,090.1 | 1,088.3 | 1,104.4 | 2.3 | % | 1,079.2 | 1,104.4 | 2.3 | % | |||||||||||||||||
Income Before Federal Income Tax | 237.8 | 237.9 | 302.9 | 296.0 | 315.0 | 32.5 | % | 237.8 | 315.0 | 32.5 | % | |||||||||||||||||
Federal income taxes | 58.9 | 40.1 | 74.0 | 70.6 | 93.9 | 59.4 | % | 58.9 | 93.9 | 59.4 | % | |||||||||||||||||
Net Income | $ | 178.9 | $ | 197.9 | $ | 228.9 | $ | 225.3 | $ | 221.2 | 23.6 | % | $ | 178.9 | $ | 221.2 | 23.6 | % | ||||||||||
Roll Forward of Deferred Acquisition Costs | Three Months Ended | Year-to-Date | ||||||||||||||||||||||||||
& Value of Business Acquired | Mar | Jun | Sep | Dec | Mar | Mar | Mar | |||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||
Balance at beginning of period | $ | 4,590.3 | $ | 4,841.0 | $ | 4,657.4 | $ | 4,989.1 | $ | 5,163.3 | $ | 4,590.3 | $ | 5,163.3 | ||||||||||||||
Deferral | 211.4 | 224.0 | 239.3 | 263.0 | 244.5 | 211.4 | 244.5 | |||||||||||||||||||||
Amortization | (154.5 | ) | (142.3 | ) | (99.1 | ) | (144.8 | ) | (165.0 | ) | (154.5 | ) | (165.0 | ) | ||||||||||||||
Included in Total Benefits and Expenses | 56.9 | 81.7 | 140.1 | 118.2 | 79.6 | 56.9 | 79.6 | |||||||||||||||||||||
Adjustment related to realized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | (11.7 | ) | (14.3 | ) | (13.8 | ) | (8.7 | ) | (10.9 | ) | (11.7 | ) | (10.9 | ) | ||||||||||||||
Adjustment related to unrealized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | 215.7 | (204.8 | ) | 217.4 | 84.7 | 194.2 | 215.7 | 194.2 | ||||||||||||||||||||
Foreign currency translation adjustment | (10.2 | ) | (46.2 | ) | (12.1 | ) | (20.0 | ) | 7.7 | (10.2 | ) | 7.7 | ||||||||||||||||
Other | - | - | - | - | - | - | - | |||||||||||||||||||||
Business acquired | - | - | - | - | - | - | - | |||||||||||||||||||||
Balance at end of period | $ | 4,841.0 | $ | 4,657.4 | $ | 4,989.1 | $ | 5,163.3 | $ | 5,433.8 | $ | 4,841.0 | $ | 5,433.8 | ||||||||||||||
Roll Forward of Deferred Front-End Load | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 814.2 | $ | 811.4 | $ | 792.5 | $ | 786.9 | $ | 795.7 | $ | 814.2 | $ | 795.7 | ||||||||||||||
Deferral | 30.5 | 31.0 | 30.2 | 33.2 | 31.1 | 30.5 | 31.1 | |||||||||||||||||||||
Amortization | (28.0 | ) | (26.7 | ) | (29.8 | ) | (15.0 | ) | (24.7 | ) | (28.0 | ) | (24.7 | ) | ||||||||||||||
Included in Expense Assessments | 2.4 | 4.4 | 0.4 | 18.2 | 6.4 | 2.4 | 6.4 | |||||||||||||||||||||
Foreign currency translation adjustment | (5.2 | ) | (23.3 | ) | (5.9 | ) | (9.5 | ) | 3.8 | (5.2 | ) | 3.8 | ||||||||||||||||
Balance at end of period | $ | 811.4 | $ | 792.5 | $ | 786.9 | $ | 795.7 | $ | 805.8 | $ | 811.4 | $ | 805.8 | ||||||||||||||
Roll Forward of Deferred Sales Inducements | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 85.5 | $ | 94.9 | $ | 106.6 | $ | 118.1 | $ | 129.4 | $ | 85.5 | $ | 129.4 | ||||||||||||||
Deferral | 13.3 | 15.5 | 15.1 | 15.6 | 15.7 | 13.3 | 15.7 | |||||||||||||||||||||
Amortization | (3.9 | ) | (3.8 | ) | (3.6 | ) | (4.4 | ) | (5.2 | ) | (3.9 | ) | (5.2 | ) | ||||||||||||||
Included in Income from Operations | 9.4 | 11.7 | 11.5 | 11.3 | 10.5 | 9.4 | 10.5 | |||||||||||||||||||||
Balance at end of period | $ | 94.9 | $ | 106.6 | $ | 118.1 | $ | 129.4 | $ | 139.9 | $ | 94.9 | $ | 139.9 | ||||||||||||||
3/31/2006 | PAGE 8 | ||||||||||||||||||||||||||||||||||||
Consolidating Statements of Income from Operations | |||||||||||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | |||||||||||||||||||||||||||||||||||||
For the Quarter Ended March 31, 2006 |
Individual Markets | Employer Markets | ||||||||||||||||||||||||||||||||||||
Life | Annuities | Retirement Products | Benefit Partners | Executive Benefits & Other | Invest-ment Manage- ment | Lincoln UK | Lincoln Financial Media | Other Operations | Consolid-ating Adjust-ments | Consolid-ated | |||||||||||||||||||||||||||
Operating Revenue | |||||||||||||||||||||||||||||||||||||
Premiums | $ | 51.1 | $ | 9.3 | $ | - | $ | - | $ | 1.1 | $ | - | $ | 16.5 | $ | - | $ | 0.3 | $ | - | $ | 78.4 | |||||||||||||||
Surrender charges | 10.3 | 6.2 | 2.3 | - | 0.0 | - | - | - | - | - | 18.7 | ||||||||||||||||||||||||||
Mortality assessments | 135.6 | - | - | 2.8 | - | 7.8 | - | - | - | 146.2 | |||||||||||||||||||||||||||
Expense assessments | 54.3 | 168.0 | 56.9 | - | 3.3 | - | 28.0 | - | 0.3 | - | 310.8 | ||||||||||||||||||||||||||
Investment advisory fees | - | - | - | - | - | 102.9 | - | - | - | (25.1 | ) | 77.8 | |||||||||||||||||||||||||
Communications revenue | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Net investment income | 239.5 | 148.0 | 185.7 | - | 48.7 | 0.1 | 17.0 | - | 40.1 | (0.8 | ) | 678.4 | |||||||||||||||||||||||||
Amortization of deferred gain | - | - | - | - | - | - | - | - | 18.8 | - | 18.8 | ||||||||||||||||||||||||||
Other revenue and fees | 9.7 | 43.4 | 1.9 | - | 1.4 | 36.6 | 0.1 | - | 1.2 | (3.1 | ) | 91.1 | |||||||||||||||||||||||||
Total Operating Revenue | 500.6 | 374.8 | 246.8 | - | 57.2 | 139.5 | 69.5 | - | 60.7 | (29.0 | ) | 1,420.1 | |||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||
Insurance benefits | 120.2 | 20.4 | - | - | 32.8 | - | 25.4 | - | 1.6 | - | 200.4 | ||||||||||||||||||||||||||
Interest credited to contractholder funds | 142.2 | 95.1 | 100.7 | - | 9.3 | - | - | - | 33.9 | - | 381.3 | ||||||||||||||||||||||||||
Communications cost of sales | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Operating and acquisition expenses | 116.5 | 167.1 | 68.0 | - | 3.5 | 111.3 | 27.6 | - | 2.4 | (28.5 | ) | 467.9 | |||||||||||||||||||||||||
Taxes, licenses and fees | 16.3 | 5.4 | 2.9 | - | 1.1 | 4.8 | 0.0 | - | 2.7 | - | 33.3 | ||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | - | - | 22.0 | (0.5 | ) | 21.5 | |||||||||||||||||||||||||
Total Operating Expenses | 395.3 | 288.1 | 171.7 | - | 46.7 | 116.1 | 52.9 | - | 62.7 | (29.0 | ) | 1,104.4 | |||||||||||||||||||||||||
Income (loss) from Operations before Federal income taxes | 105.3 | 86.7 | 75.2 | - | 10.5 | 23.5 | 16.5 | - | (2.0 | ) | - | 315.7 | |||||||||||||||||||||||||
Federal income taxes | 36.3 | 20.3 | 22.7 | - | 3.0 | 8.2 | 5.8 | - | (2.2 | ) | - | 94.1 | |||||||||||||||||||||||||
Income from Operations | $ | 69.0 | $ | 66.4 | $ | 52.4 | $ | - | $ | 7.5 | $ | 15.3 | $ | 10.7 | $ | - | $ | 0.1 | $ | - | $ | 221.6 |
3/31/2006 | PAGE 9 | ||||||||||||||||||||||||||||||||||||
Consolidating Statements of Income from Operations | |||||||||||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | |||||||||||||||||||||||||||||||||||||
For the Quarter Ended March 31, 2005 | |||||||||||||||||||||||||||||||||||||
Individual Markets | Employer Benefits | ||||||||||||||||||||||||||||||||||||
Life | Annuities | Retirement Products | Benefit Partners | Executive Benefits & Other | Invest- ment Manage- ment | Lincoln UK | Lincoln Financial Media | Other Operations | Consolid- ating Adjust- ments | Consolid- ated | |||||||||||||||||||||||||||
Operating Revenue | |||||||||||||||||||||||||||||||||||||
Premiums | $ | 45.5 | $ | 10.5 | $ | - | $ | - | $ | 0.0 | $ | - | $ | 14.6 | $ | - | $ | (0.3 | ) | $ | - | $ | 70.4 | ||||||||||||||
Surrender charges | 12.0 | 5.3 | 2.8 | - | 0.0 | - | - | - | - | - | 20.1 | ||||||||||||||||||||||||||
Mortality assessments | 131.1 | - | - | - | 2.2 | - | 9.0 | - | - | - | 142.3 | ||||||||||||||||||||||||||
Expense assessments | 50.1 | 124.5 | 50.0 | - | 4.4 | - | 30.7 | - | - | - | 259.7 | ||||||||||||||||||||||||||
Investment advisory fees | - | - | - | - | - | 79.8 | - | - | - | (24.8 | ) | 55.0 | |||||||||||||||||||||||||
Communications revenue | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Net investment income | 223.9 | 157.0 | 176.1 | - | 45.3 | 0.0 | 20.3 | - | 38.2 | (1.0 | ) | 659.9 | |||||||||||||||||||||||||
Amortization of deferred gain | - | - | - | - | - | - | - | - | 18.9 | - | 18.9 | ||||||||||||||||||||||||||
Other revenue and fees | 12.9 | 42.5 | 2.4 | - | 1.3 | 30.0 | 0.1 | - | 1.2 | (11.1 | ) | 79.2 | |||||||||||||||||||||||||
Total Operating Revenue | 475.6 | 339.8 | 231.3 | - | 53.2 | 109.8 | 74.6 | - | 58.1 | (36.9 | ) | 1,305.5 | |||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||
Insurance benefits | 113.8 | 21.2 | - | - | 31.8 | - | 25.1 | - | (0.8 | ) | - | 191.2 | |||||||||||||||||||||||||
Interest credited to contractholder funds | 138.9 | 100.1 | 99.6 | - | 9.3 | - | - | - | 32.1 | - | 380.1 | ||||||||||||||||||||||||||
Communications cost of sales | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Operating and acquisition expenses | 120.6 | 151.1 | 67.6 | - | 6.9 | 99.8 | 34.0 | - | 9.4 | (36.2 | ) | 453.3 | |||||||||||||||||||||||||
Taxes, licenses and fees | 16.1 | 6.0 | 4.2 | - | 1.1 | 3.1 | - | - | 1.8 | - | 32.4 | ||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | - | - | 22.9 | (0.7 | ) | 22.2 | |||||||||||||||||||||||||
Total Operating Expenses | 389.3 | 278.5 | 171.5 | - | 49.1 | 103.0 | 59.2 | - | 65.5 | (36.9 | ) | 1,079.2 | |||||||||||||||||||||||||
Income from Operations before Federal income taxes | 86.3 | 61.3 | 59.8 | - | 4.1 | 6.8 | 15.5 | - | (7.5 | ) | - | 226.3 | |||||||||||||||||||||||||
Federal income taxes | 28.1 | 11.7 | 16.6 | - | 0.7 | 2.3 | 5.4 | - | (10.0 | ) | - | 54.8 | |||||||||||||||||||||||||
Income from Operations | $ | 58.2 | $ | 49.7 | $ | 43.2 | $ | - | $ | 3.3 | $ | 4.5 | $ | 10.0 | $ | - | $ | 2.5 | $ | 0.0 | $ | 171.5 |
3/31/2006 | PAGE 10 | |||||||||||||||||||||||||||||||||
Consolidating Statements of Income from Operations | ||||||||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||||||||
Year-to-Date Period Ended March 31, 2006 | ||||||||||||||||||||||||||||||||||
Individual Markets | Employer Markets | |||||||||||||||||||||||||||||||||
Life | Annuities | Retirement Products | Benefit Partners | Executive Benefits & Other | Invest- ment Manage-ment | Lincoln UK | Lincoln Financial Media | Other Operations | Consolid- ating Adjust- ments | Consolid-ated | ||||||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||||||||
Premiums | $ | 51.1 | $ | 9.3 | $ | - | $ | - | $ | 1.1 | $ | - | $ | 16.5 | $ | - | $ | 0.3 | $ | - | $ | 78.4 | ||||||||||||
Surrender charges | 10.3 | 6.2 | 2.3 | - | 0.0 | - | - | - | - | - | 18.7 | |||||||||||||||||||||||
Mortality assessments | 135.6 | - | - | 2.8 | - | 7.8 | - | - | - | 146.2 | ||||||||||||||||||||||||
Expense assessments | 54.3 | 168.0 | 56.9 | - | 3.3 | - | 28.0 | - | 0.3 | - | 310.8 | |||||||||||||||||||||||
Investment advisory fees | - | - | - | - | - | 102.9 | - | - | - | (25.1 | ) | 77.8 | ||||||||||||||||||||||
Communications revenue | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Net investment income | 239.5 | 148.0 | 185.7 | - | 48.7 | 0.1 | 17.0 | - | �� | 40.1 | (0.8 | ) | 678.4 | |||||||||||||||||||||
Amortization of deferred gain | - | - | - | - | - | - | - | - | 18.8 | - | 18.8 | |||||||||||||||||||||||
Other revenue and fees | 9.7 | 43.4 | 1.9 | - | 1.4 | 36.6 | 0.1 | - | 1.2 | (3.1 | ) | 91.1 | ||||||||||||||||||||||
Total Operating Revenue | 500.6 | 374.8 | 246.8 | - | 57.2 | 139.5 | 69.5 | - | 60.7 | (29.0 | ) | 1,420.1 | ||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||||||
Insurance benefits | 120.2 | 20.4 | - | - | 32.8 | - | 25.4 | - | 1.6 | - | 200.4 | |||||||||||||||||||||||
Interest credited to contractholder funds | 142.2 | 95.1 | 100.7 | - | 9.3 | - | - | - | 33.9 | - | 381.3 | |||||||||||||||||||||||
Communications cost of sales | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Operating and acquisition expenses | 116.5 | 167.1 | 68.0 | - | 3.5 | 111.3 | 27.6 | - | 2.4 | (28.5 | ) | 467.9 | ||||||||||||||||||||||
Taxes, licenses and fees | 16.3 | 5.4 | 2.9 | - | 1.1 | 4.8 | 0.0 | - | 2.7 | - | 33.3 | |||||||||||||||||||||||
Interest | - | - | - | - | - | - | - | - | 22.0 | (0.5 | ) | 21.5 | ||||||||||||||||||||||
Total Operating Expenses | 395.3 | 288.1 | 171.7 | - | 46.7 | 116.1 | 52.9 | - | 62.7 | (29.0 | ) | 1,104.4 | ||||||||||||||||||||||
Income (loss) from Operations before Federal income taxes | 105.3 | 86.7 | 75.2 | - | 10.5 | 23.5 | 16.5 | - | (2.0 | ) | - | 315.7 | ||||||||||||||||||||||
Federal income taxes | 36.3 | 20.3 | 22.7 | - | 3.0 | 8.2 | 5.8 | - | (2.2 | ) | - | 94.1 | ||||||||||||||||||||||
Income from Operations | $ | 69.0 | $ | 66.4 | $ | 52.4 | $ | - | $ | 7.5 | $ | 15.3 | $ | 10.7 | $ | - | $ | 0.1 | $ | - | $ | 221.6 |
3/31/2006 | PAGE 11 | ||||||||||||||||||||||||||||||||||||
Consolidating Statements of Income from Operations | |||||||||||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | |||||||||||||||||||||||||||||||||||||
Year-to-Date Period Ended March 31, 2005 | |||||||||||||||||||||||||||||||||||||
Individual Markets | Employer Benefits | ||||||||||||||||||||||||||||||||||||
Life | Annuities | Retirement Products | Benefit Partners | Executive Benefits & Other | Invest- ment Manage- ment | Lincoln UK | Lincoln Financial Media | Other Operations | Consolid-ating Adjust- ments | Consolid-ated | |||||||||||||||||||||||||||
Operating Revenue | |||||||||||||||||||||||||||||||||||||
Premiums | $ | 45.5 | $ | 10.5 | $ | - | $ | - | $ | 0.0 | $ | - | $ | 14.6 | $ | - | $ | (0.3 | ) | $ | - | $ | 70.4 | ||||||||||||||
Surrender charges | 12.0 | 5.3 | 2.8 | - | 0.0 | - | - | - | - | - | 20.1 | ||||||||||||||||||||||||||
Mortality assessments | 131.1 | - | - | - | 2.2 | - | 9.0 | - | - | - | 142.3 | ||||||||||||||||||||||||||
Expense assessments | 50.1 | 124.5 | 50.0 | - | 4.4 | - | 30.7 | - | - | - | 259.7 | ||||||||||||||||||||||||||
Investment advisory fees | - | - | - | - | - | 79.8 | - | - | - | (24.8 | ) | 55.0 | |||||||||||||||||||||||||
Communications revenue | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Net investment income | 223.9 | 157.0 | 176.1 | - | 45.3 | 0.0 | 20.3 | - | 38.2 | (1.0 | ) | 659.9 | |||||||||||||||||||||||||
Amortization of deferred gain | - | - | - | - | - | - | - | - | 18.9 | - | 18.9 | ||||||||||||||||||||||||||
Other revenue and fees | 12.9 | 42.5 | 2.4 | - | 1.3 | 30.0 | 0.1 | - | 1.2 | (11.1 | ) | 79.2 | |||||||||||||||||||||||||
Total Operating Revenue | 475.6 | 339.8 | 231.3 | - | 53.2 | 109.8 | 74.6 | - | 58.1 | (36.9 | ) | 1,305.5 | |||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||
Insurance benefits | 113.8 | 21.2 | - | - | 31.8 | - | 25.1 | - | (0.8 | ) | - | 191.2 | |||||||||||||||||||||||||
Interest credited to contractholder funds | 138.9 | 100.1 | 99.6 | - | 9.3 | - | - | - | 32.1 | - | 380.1 | ||||||||||||||||||||||||||
Communications cost of sales | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Operating and acquisition expenses | 120.6 | 151.1 | 67.6 | - | 6.9 | 99.8 | 34.0 | - | 9.4 | (36.2 | ) | 453.3 | |||||||||||||||||||||||||
Taxes, licenses and fees | 16.1 | 6.0 | 4.2 | - | 1.1 | 3.1 | - | - | 1.8 | - | 32.4 | ||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | - | - | 22.9 | (0.7 | ) | 22.2 | |||||||||||||||||||||||||
Total Operating Expenses | 389.3 | 278.5 | 171.5 | - | 49.1 | 103.0 | 59.2 | - | 65.5 | (36.9 | ) | 1,079.2 | |||||||||||||||||||||||||
Income from Operations before Federal income taxes | 86.3 | 61.3 | 59.8 | - | 4.1 | 6.8 | 15.5 | - | (7.5 | ) | - | 226.3 | |||||||||||||||||||||||||
Federal income taxes | 28.1 | 11.7 | 16.6 | - | 0.7 | 2.3 | 5.4 | - | (10.0 | ) | - | 54.8 | |||||||||||||||||||||||||
Income from Operations | $ | 58.2 | $ | 49.7 | $ | 43.2 | $ | - | $ | 3.3 | $ | 4.5 | $ | 10.0 | $ | - | $ | 2.5 | $ | 0.0 | $ | 171.5 |
3/31/2006 | PAGE 12 | ||||||||||||||||||
Consolidated Balance Sheet | |||||||||||||||||||
Unaudited [Millions of Dollars, except Common Share Data] |
Mar | Jun | Sep | Dec | Mar | ||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | ||||||||||||
ASSETS | ||||||||||||||||
Investments | ||||||||||||||||
Corporate bonds | $ | 26,305.9 | $ | 26,757.7 | $ | 26,453.6 | $ | 25,860.7 | $ | 25,418.0 | ||||||
U.S. government bonds | 165.7 | 174.4 | 158.3 | 161.8 | 173.4 | |||||||||||
Foreign government bonds | 1,296.7 | 1,248.0 | 1,195.0 | 1,203.3 | 1,169.7 | |||||||||||
Mortgage backed securities | 6,193.8 | 6,503.0 | 6,237.1 | 5,951.2 | 5,868.8 | |||||||||||
State and municipal bonds | 156.3 | 160.8 | 157.9 | 128.8 | 126.0 | |||||||||||
Preferred stocks - redeemable | 106.5 | 131.2 | 123.0 | 137.4 | 136.9 | |||||||||||
Common stocks | 65.2 | 64.2 | 62.2 | 55.9 | 61.0 | |||||||||||
Preferred stocks-equity | 89.6 | 90.3 | 89.4 | 88.8 | 115.0 | |||||||||||
Total AFS Securities | 34,379.6 | 35,129.6 | 34,476.5 | 33,587.9 | 33,068.8 | |||||||||||
Trading securities | 3,206.5 | 3,345.1 | 3,287.0 | 3,246.0 | 3,190.1 | |||||||||||
Mortgage loans | 3,805.7 | 3,750.6 | 3,696.2 | 3,662.6 | 3,586.2 | |||||||||||
Real estate | 213.4 | 209.8 | 196.6 | 182.7 | 180.4 | |||||||||||
Policy loans | 1,860.5 | 1,866.9 | 1,856.4 | 1,862.2 | 1,860.4 | |||||||||||
Other long-term investments | 516.5 | 561.3 | 572.3 | 626.9 | 687.5 | |||||||||||
Total Investments | 43,982.2 | 44,863.3 | 44,085.0 | 43,168.4 | 42,573.2 | |||||||||||
Cash and invested cash | 1,499.1 | 1,658.9 | 1,601.9 | 2,311.7 | 1,974.0 | |||||||||||
Premiums and fees receivable | 299.3 | 222.8 | 332.6 | 343.2 | 363.2 | |||||||||||
Accrued investment income | 557.6 | 537.5 | 565.2 | 526.4 | 532.1 | |||||||||||
Amount recoverable from reinsurers | 7,336.5 | 7,241.6 | 7,211.0 | 6,926.3 | 6,899.4 | |||||||||||
Deferred acquisition costs and VOBA | 4,841.0 | 4,657.4 | 4,989.0 | 5,163.2 | 5,433.7 | |||||||||||
Goodwill | 1,195.7 | 1,194.8 | 1,194.6 | 1,194.2 | 1,194.4 | |||||||||||
Other | 1,308.8 | 1,398.3 | 1,379.5 | 1,479.3 | 1,517.7 | |||||||||||
Assets held in separate accounts | 55,387.2 | 57,240.0 | 60,811.5 | 63,746.8 | 67,984.2 | |||||||||||
Total Assets | $ | 116,407.4 | $ | 119,014.5 | $ | 122,170.2 | $ | 124,859.6 | $ | 128,472.0 | ||||||
LIABILITIES and SHAREHOLDERS' EQUITY | ||||||||||||||||
Liabilities | ||||||||||||||||
Insurance and Investment Contract Liabilities: | ||||||||||||||||
Reserves | $ | 11,126.3 | $ | 11,035.9 | $ | 10,981.4 | $ | 10,659.7 | $ | 10,657.2 | ||||||
Unpaid claims | 1,164.9 | 1,114.2 | 1,037.7 | 1,040.8 | 979.0 | |||||||||||
Unearned premiums | 3.1 | 1.9 | 1.2 | 2.1 | 2.3 | |||||||||||
Premium deposit funds | 22,026.0 | 22,075.8 | 21,932.7 | 21,713.3 | 21,448.6 | |||||||||||
Policyholders' funds | 13,271.3 | 13,444.7 | 13,637.9 | 13,878.8 | 13,991.5 | |||||||||||
Total Insurance and Investment Contract Liabilities | 47,591.6 | 47,672.6 | 47,590.9 | 47,294.8 | 47,078.6 | |||||||||||
Short-term debt | 194.0 | 222.5 | 165.1 | 119.9 | 10.6 | |||||||||||
Long-term debt - senior notes | 1,046.6 | 1,000.6 | 999.5 | 999.0 | 998.5 | |||||||||||
Long-term debt - subordinated | ||||||||||||||||
Capital securities | - | - | - | - | - | |||||||||||
Junior subordinated debentures issued to | ||||||||||||||||
affiliated trusts | 336.6 | 338.7 | 335.9 | 334.0 | 332.3 | |||||||||||
Embedded derivative - modco | 313.5 | 420.3 | 314.1 | 292.2 | 192.0 | |||||||||||
Deferred gain on indemnity reinsurance | 893.7 | 874.5 | 855.2 | 836.0 | 816.9 | |||||||||||
Federal income taxes | - | 160.8 | 31.5 | 19.8 | - | |||||||||||
Other liabilities | 4,601.3 | 4,721.0 | 4,782.1 | 4,832.8 | 4,720.7 | |||||||||||
Liabilities related to separate accounts | 55,387.2 | 57,240.0 | 60,811.5 | 63,746.8 | 67,984.2 | |||||||||||
Total Liabilities | 110,364.5 | 112,651.0 | 115,885.8 | 118,475.2 | 122,133.8 | |||||||||||
Preferred Stock | 0.6 | 0.5 | 0.5 | 0.5 | 0.5 | |||||||||||
Capital stock | 1,688.0 | 1,690.2 | 1,740.2 | 1,774.6 | 1,817.5 | |||||||||||
Retained earnings | 3,677.3 | 3,757.6 | 3,922.8 | 4,081.5 | 4,235.2 | |||||||||||
Unrealized gains on investments | 582.9 | 851.2 | 569.0 | 496.6 | 220.2 | |||||||||||
Gains - derivatives | 7.7 | 11.9 | 8.9 | 7.3 | 35.2 | |||||||||||
Foreign currency | 146.5 | 109.4 | 99.6 | 83.4 | 89.7 | |||||||||||
Minimum pension liability | (60.0 | ) | (57.3 | ) | (56.6 | ) | (59.5 | ) | (60.1 | ) | ||||||
Total Shareholders' Equity | 6,043.0 | 6,363.5 | 6,284.4 | 6,384.4 | 6,338.2 | |||||||||||
Total Liabilities | ||||||||||||||||
and Shareholders' Equity | $ | 116,407.4 | $ | 119,014.5 | $ | 122,170.2 | $ | 124,859.6 | $ | 128,472.0 | ||||||
Shareholders' Equity Per Share | $ | 34.74 | $ | 36.87 | $ | 36.23 | $ | 36.69 | $ | 35.99 | ||||||
Book Value, Excluding AOCI | $ | 30.85 | $ | 31.56 | $ | 32.65 | $ | 33.66 | $ | 34.37 | ||||||
Common shares outstanding (in millions) | 173.9 | 172.6 | 173.5 | 174.0 | 176.1 | |||||||||||
3/31/2006 | PAGE 13 | ||||||||||||||||||||||||
Balance Sheet Data - Segment Highlights | |||||||||||||||||||||||||
Unaudited [Millions of Dollars] | |||||||||||||||||||||||||
As of March 31, 2006 | |||||||||||||||||||||||||
Individual Markets | Employer Markets | ||||||||||||||||||||||||
Annuities | Life | Retirement Products | Benefit Partners | Executive Benefits & Other | Investment Management | Lincoln UK | Lincoln Financial Media | ||||||||||||||||||
Assets | |||||||||||||||||||||||||
Allocated Investments | $ | 7,438.5 | $ | 14,847.8 | $ | 13,932.2 | $ | - | $ | 2,831.0 | $ | - | $ | 1,002.6 | $ | - | |||||||||
DAC and VOBA | 1,336.8 | 2,643.8 | 517.2 | - | 119.0 | - | 747.2 | - | |||||||||||||||||
Goodwill | 43.9 | 855.1 | 20.2 | - | - | 260.8 | 14.4 | - | |||||||||||||||||
Other intangibles | 139.9 | - | - | - | - | 11.9 | - | - | |||||||||||||||||
Amounts recoverable from reinsurers | 1,017.5 | 1,297.4 | - | - | 2.0 | - | 69.7 | - | |||||||||||||||||
Assets held in separate accounts | 40,320.6 | 2,643.0 | 16,444.1 | - | 823.1 | - | 7,753.5 | - | |||||||||||||||||
Liabilities and Capital | |||||||||||||||||||||||||
Insurance and Investment Contract Liabilities: | |||||||||||||||||||||||||
Insurance policy & claim reserves | 436.3 | 3,920.2 | - | - | 1,930.3 | - | 1,384.7 | - | |||||||||||||||||
Contractholder funds | 10,253.0 | 12,613.0 | 11,003.6 | - | 743.5 | - | 30.5 | - | |||||||||||||||||
Total Insurance and Inv Contract Liabilities | 10,689.3 | 16,533.2 | 11,003.6 | - | 2,673.8 | - | 1,415.2 | - | |||||||||||||||||
Allocated equity (1) | 1,541.3 | 3,300.2 | 1,196.0 | - | 323.1 | 338.1 | 494.7 | - | |||||||||||||||||
As of December 31, 2005 | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Allocated Investments | $ | 8,104.7 | $ | 14,990.3 | $ | 13,666.6 | $ | - | $ | 2,879.4 | $ | - | $ | 996.6 | $ | - | |||||||||
DAC and VOBA | 1,559.3 | 2,543.9 | 151.6 | - | 113.6 | - | 743.4 | - | |||||||||||||||||
Goodwill | 43.9 | 855.1 | 20.2 | - | - | 260.8 | 14.3 | - | |||||||||||||||||
Other intangibles | 129.4 | - | - | - | - | 13.9 | - | - | |||||||||||||||||
Amounts recoverable from reinsurers | 1,085.9 | 1,270.2 | - | - | 2.8 | - | 67.4 | - | |||||||||||||||||
Assets held in separate accounts | 37,903.9 | 2,482.7 | 15,243.9 | - | 796.7 | - | 7,319.6 | - | |||||||||||||||||
Liabilities and Capital | |||||||||||||||||||||||||
Insurance and Investment Contract Liabilities: | |||||||||||||||||||||||||
Insurance policy & claim reserves | 517.7 | 3,905.5 | - | - | 1,933.8 | - | 1,386.5 | - | |||||||||||||||||
Contractholder funds | 8,541.7 | 12,523.7 | 11,033.4 | - | 733.5 | - | 31.9 | - | |||||||||||||||||
Total Insurance and Inv Contract Liabilities | 9,059.4 | 16,429.2 | 11,033.4 | - | 2,667.3 | - | 1,418.3 | - | |||||||||||||||||
Allocated equity (1) | 1,605.2 | 3,231.9 | 1,158.5 | - | 346.0 | 360.0 | 503.6 | - | |||||||||||||||||
(1) Allocated equity is based on internal economic capital models as of March 31, 2006, plus certain other items (principally intangibles including DAC and VOBA, goodwill and other items). |
3/31/2006 | PAGE 14 | ||||||||||||||||||||||||||||||
Individual Markets - Individual Life Insurance | |||||||||||||||||||||||||||||||
Income Statements & Operational Data | |||||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||||
Premiums | $ | 45.5 | $ | 47.8 | $ | 47.4 | $ | 57.7 | $ | 51.1 | 12.3 | % | $ | 45.5 | $ | 51.1 | 12.3 | % | ||||||||||||
Surrender charges | 12.0 | 9.4 | 10.9 | 11.6 | 10.3 | -13.9 | % | 12.0 | 10.3 | -13.9 | % | |||||||||||||||||||
Mortality assessments | 131.1 | 130.6 | 127.7 | 135.3 | 135.6 | 3.5 | % | 131.1 | 135.6 | 3.5 | % | |||||||||||||||||||
Expense assessments | 50.1 | 49.1 | 31.7 | 58.8 | 54.3 | 8.4 | % | 50.1 | 54.3 | 8.4 | % | |||||||||||||||||||
Net investment income | 223.9 | 227.8 | 229.5 | 227.5 | 239.5 | 7.0 | % | 223.9 | 239.5 | 7.0 | % | |||||||||||||||||||
Other revenue and fees | 12.9 | 10.7 | 11.2 | 10.3 | 9.7 | -24.8 | % | 12.9 | 9.7 | -24.8 | % | |||||||||||||||||||
Total Operating Revenue | 475.6 | 475.4 | 458.5 | 501.1 | 500.6 | 5.3 | % | 475.6 | 500.6 | 5.3 | % | |||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||
Insurance benefits | 113.8 | 119.1 | 109.9 | 118.6 | 120.2 | 5.7 | % | 113.8 | 120.2 | 5.7 | % | |||||||||||||||||||
Interest credited to contractholder funds | 138.9 | 138.0 | 140.9 | 142.1 | 142.2 | 2.4 | % | 138.9 | 142.2 | 2.4 | % | |||||||||||||||||||
Operating and acquisition expenses | 136.7 | 125.4 | 110.9 | 130.1 | 132.8 | -2.8 | % | 136.7 | 132.8 | -2.8 | % | |||||||||||||||||||
Total Operating Expenses | 389.3 | 382.5 | 361.8 | 390.8 | 395.3 | 1.5 | % | 389.3 | 395.3 | 1.5 | % | |||||||||||||||||||
Income from operations before Federal income taxes | 86.2 | 92.9 | 96.7 | 110.4 | 105.3 | 22.1 | % | 86.2 | 105.3 | 22.1 | % | |||||||||||||||||||
Federal income taxes | 28.1 | 30.3 | 31.8 | 36.5 | 36.3 | 29.3 | % | 28.1 | 36.3 | 29.3 | % | |||||||||||||||||||
Income from Operations | $ | 58.1 | $ | 62.6 | $ | 64.9 | $ | 73.8 | $ | 69.0 | 18.7 | % | $ | 58.1 | $ | 69.0 | 18.7 | % | ||||||||||||
Effective tax rate | 32.6 | % | 32.6 | % | 32.8 | % | 33.1 | % | 34.5 | % | 32.6 | % | 34.5 | % | ||||||||||||||||
Average equity | $ | 3,107.4 | $ | 3,227.9 | $ | 3,212.8 | $ | 3,278.0 | $ | 3,266.0 | $ | 3,107.4 | $ | 3,266.0 | ||||||||||||||||
Return on average equity | 7.5 | % | 7.8 | % | 8.1 | % | 9.0 | % | 8.5 | % | 7.5 | % | 8.5 | % | ||||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||||
Commissions | $ | 36.3 | $ | 36.5 | $ | 43.4 | $ | 50.3 | $ | 44.2 | 21.7 | % | $ | 36.3 | $ | 44.2 | 21.7 | % | ||||||||||||
General and administrative expenses | 91.8 | 94.5 | 105.3 | 105.6 | 88.9 | -3.1 | % | 91.8 | 88.9 | -3.1 | % | |||||||||||||||||||
Taxes, licenses and fees | 16.1 | 13.3 | 12.4 | 12.9 | 16.3 | 1.5 | % | 16.1 | 16.3 | 1.5 | % | |||||||||||||||||||
Total commissions and expenses incurred | 144.2 | 144.3 | 161.1 | 168.7 | 149.4 | 3.6 | % | 144.2 | 149.4 | 3.6 | % | |||||||||||||||||||
Less: commissions and expenses capitalized | (79.5 | ) | (85.7 | ) | (94.7 | ) | (113.8 | ) | (90.1 | ) | -13.3 | % | (79.5 | ) | (90.1 | ) | -13.3 | % | ||||||||||||
Amortization of DAC and VOBA | 72.1 | 66.9 | 44.6 | 75.2 | 73.6 | 2.0 | % | 72.1 | 73.6 | 2.0 | % | |||||||||||||||||||
Net Operating and Acquisition Expenses | $ | 136.7 | $ | 125.4 | $ | 110.9 | $ | 130.1 | $ | 132.8 | -2.8 | % | $ | 136.7 | $ | 132.8 | -2.8 | % | ||||||||||||
General and administrative expenses basis points on account values | (Basis points | ) | (Basis points | ) | ||||||||||||||||||||||||||
- Annualized | 276 | 282 | 309 | 304 | 251 | (24 | ) | 276 | 251 | (24 | ) | |||||||||||||||||||
Roll Forward of Deferred Acquisition Costs & Value of Business Acquired | ||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 2,359.0 | $ | 2,425.4 | $ | 2,350.0 | $ | 2,479.9 | $ | 2,543.9 | $ | 2,359.0 | $ | 2,543.9 | ||||||||||||||||
Deferral | 79.5 | 85.7 | 94.7 | 113.8 | 90.1 | 79.5 | 90.1 | |||||||||||||||||||||||
Amortization | (72.1 | ) | (66.9 | ) | (44.6 | ) | (75.2 | ) | (73.6 | ) | (72.1 | ) | (73.6 | ) | ||||||||||||||||
Included in Total Operating Expenses | 7.5 | 18.9 | 50.1 | 38.6 | 16.6 | 7.5 | 16.6 | |||||||||||||||||||||||
Adjustment related to realized (gains) losses | ||||||||||||||||||||||||||||||
on available-for-sale securities | (2.2 | ) | (5.9 | ) | (6.1 | ) | (1.2 | ) | (3.4 | ) | (2.2 | ) | (3.4 | ) | ||||||||||||||||
Adjustment related to unrealized (gains) | ||||||||||||||||||||||||||||||
losses on available-for-sale securities | 61.0 | (88.4 | ) | 85.9 | 26.5 | 86.7 | 61.0 | 86.7 | ||||||||||||||||||||||
Business acquired | - | - | ||||||||||||||||||||||||||||
Other | 0.1 | (0.1 | ) | 0.0 | 0.1 | 0.0 | 0.1 | 0.0 | ||||||||||||||||||||||
Balance at end of period | $ | 2,425.4 | $ | 2,350.0 | $ | 2,479.9 | $ | 2,543.9 | $ | 2,643.8 | $ | 2,425.4 | $ | 2,643.8 | ||||||||||||||||
Roll Forward of Deferred Front-End Loads | ||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 311.1 | $ | 312.5 | $ | 315.9 | $ | 338.5 | $ | 342.6 | $ | 311.1 | $ | 342.6 | ||||||||||||||||
Deferral | 20.2 | 20.0 | 19.0 | 21.8 | 19.7 | 20.2 | 19.7 | |||||||||||||||||||||||
Amortization | (18.8 | ) | (16.7 | ) | 3.6 | (17.6 | ) | (18.0 | ) | (18.8 | ) | (18.0 | ) | |||||||||||||||||
Included in Expense Assessments | 1.4 | 3.4 | 22.6 | 4.2 | 1.7 | 1.4 | 1.7 | |||||||||||||||||||||||
Balance at end of period | $ | 312.5 | $ | 315.9 | $ | 338.5 | $ | 342.6 | $ | 344.3 | $ | 312.5 | $ | 344.3 | ||||||||||||||||
3/31/2006 | PAGE 15 | |||||||||||||||||||||||||||
Individual Markets- Individual Life Insurance | ||||||||||||||||||||||||||||
Operational Data | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Sales by Product (1) (Millions) | ||||||||||||||||||||||||||||
Universal Life | ||||||||||||||||||||||||||||
Excluding MoneyGuard | $ | 37.7 | $ | 46.8 | $ | 45.8 | $ | 59.2 | $ | 41.0 | 8.6 | % | $ | 37.7 | $ | 41.0 | 8.6 | % | ||||||||||
MoneyGuard | 7.4 | 8.0 | 9.1 | 9.4 | 7.7 | 4.4 | % | 7.4 | 7.7 | 4.4 | % | |||||||||||||||||
Total | 45.2 | 54.8 | 54.9 | 68.6 | 48.7 | 7.9 | % | 45.2 | 48.7 | 7.9 | % | |||||||||||||||||
Variable universal life | 9.6 | 10.2 | 9.1 | 13.4 | 10.0 | 4.9 | % | 9.6 | 10.0 | 4.9 | % | |||||||||||||||||
Whole life | 0.8 | 0.2 | 0.4 | 0.4 | 0.7 | -14.8 | % | 0.8 | 0.7 | -14.8 | % | |||||||||||||||||
Term | 9.8 | 9.1 | 8.6 | 8.3 | 8.5 | -13.4 | % | 9.8 | 8.5 | -13.4 | % | |||||||||||||||||
Total | $ | 65.4 | $ | 74.3 | $ | 72.9 | $ | 90.7 | $ | 67.9 | 3.9 | % | $ | 65.4 | $ | 67.9 | 3.9 | % | ||||||||||
Sales by Distribution (Millions) | ||||||||||||||||||||||||||||
Retail (LFA) | $ | 17.0 | $ | 16.6 | $ | 16.8 | $ | 15.5 | $ | 14.0 | -17.7 | % | $ | 17.0 | $ | 14.0 | -17.7 | % | ||||||||||
Wholesale (LFD) | 44.8 | 54.3 | 53.0 | 69.7 | 48.8 | 9.0 | % | 44.8 | 48.8 | 9.0 | % | |||||||||||||||||
Other (2) | 3.6 | 3.5 | 3.1 | 5.5 | 5.1 | 41.7 | % | 3.6 | 5.1 | 41.7 | % | |||||||||||||||||
Total by Distribution | $ | 65.4 | $ | 74.3 | $ | 72.9 | $ | 90.7 | $ | 67.9 | 3.9 | % | $ | 65.4 | $ | 67.9 | 3.9 | % | ||||||||||
First-Year Paid Premiums (Millions) | ||||||||||||||||||||||||||||
Universal Life | ||||||||||||||||||||||||||||
Excluding MoneyGuard | $ | 86.4 | $ | 103.6 | $ | 102.3 | $ | 144.0 | $ | 108.2 | 25.2 | % | $ | 86.4 | $ | 108.2 | 25.2 | % | ||||||||||
MoneyGuard | 49.4 | 53.4 | 60.8 | 62.5 | 51.5 | 4.3 | % | 49.4 | 51.5 | 4.3 | % | |||||||||||||||||
Total | 135.8 | 157.0 | 163.1 | 206.5 | 159.7 | 17.6 | % | 135.8 | 159.7 | 17.6 | % | |||||||||||||||||
Variable universal life | 25.9 | 23.8 | 23.4 | 33.4 | 27.1 | 4.6 | % | 25.9 | 27.1 | 4.6 | % | |||||||||||||||||
Whole life | 7.8 | 8.3 | 10.2 | 14.4 | 8.3 | 6.4 | % | 7.8 | 8.3 | 6.4 | % | |||||||||||||||||
Term | 9.8 | 9.1 | 8.6 | 8.4 | 8.6 | -12.4 | % | 9.8 | 8.6 | -12.4 | % | |||||||||||||||||
Total | $ | 179.3 | $ | 198.2 | $ | 205.3 | $ | 262.7 | $ | 203.7 | 13.6 | % | $ | 179.3 | $ | 203.7 | 13.6 | % | ||||||||||
First-Year Paid Premiums (Millions) | ||||||||||||||||||||||||||||
Retail (LFA) | $ | 43.1 | $ | 44.3 | $ | 45.6 | $ | 50.1 | $ | 41.5 | -3.7 | % | $ | 43.1 | $ | 41.5 | -3.7 | % | ||||||||||
Wholesale (LFD) | 127.1 | 144.9 | 152.8 | 190.1 | 141.7 | 11.5 | % | 127.1 | 141.7 | 11.5 | % | |||||||||||||||||
Other* | 9.1 | 9.0 | 6.9 | 22.5 | 20.5 | 125.3 | % | 9.1 | 20.5 | 125.3 | % | |||||||||||||||||
Total by Distribution | $ | 179.3 | $ | 198.2 | $ | 205.3 | $ | 262.7 | $ | 203.7 | 13.6 | % | $ | 179.3 | $ | 203.7 | 13.6 | % | ||||||||||
Life Insurance In-Force (Billions) | ||||||||||||||||||||||||||||
Universal life & other | $ | 125.202 | $ | 126.069 | $ | 126.976 | $ | 128.791 | $ | 129.584 | 3.5 | % | $ | 125.202 | $ | 129.584 | 3.5 | % | ||||||||||
Term insurance | 176.541 | 180.659 | 184.334 | 187.850 | 191.825 | 8.7 | % | 176.541 | 191.825 | 8.7 | % | |||||||||||||||||
Total Life Segment In-Force | $ | 301.743 | $ | 306.727 | $ | 311.310 | $ | 316.641 | $ | 321.409 | 6.5 | % | $ | 301.743 | $ | 321.409 | 6.5 | % | ||||||||||
(1) Sales for Individual Life Insurance consist of first year commissionable premium for Universal life ("UL"), including Moneyguard, and COLI plus 5% of excess premium received, including UL internal replacements, and first year paid premiums for Whole life and Term products.
(2) Other consists of distibution arrangements with third-party intermediaries
3/31/2006 | PAGE 16 | ||||||||||
Individual Markets - Individual Life Insurance | |||||||||||
Account Value Roll Forward | |||||||||||
Unaudited [Billions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Interest Sensitive Life-Balance Beginning-of-Period | $ 11.232 | $ 11.325 | $ 11.443 | $ 11.591 | $11.809 | 5.1 | % | $ 11.232 | $11.809 | 5.1 | % | |||||||||||||||||
Deposits | 0.382 | 0.390 | 0.415 | 0.499 | 0.401 | 5.1 | % | 0.382 | 0.401 | 5.1 | % | |||||||||||||||||
Withdrawals & deaths | (0.188 | ) | (0.166 | ) | (0.161 | ) | (0.160 | ) | (0.182 | ) | 3.3 | % | (0.188 | ) | (0.182 | ) | 3.3 | % | ||||||||||
Net flows | 0.194 | 0.223 | 0.253 | 0.339 | 0.219 | 13.2 | % | 0.194 | 0.219 | 13.2 | % | |||||||||||||||||
Policyholder assessments | (0.238 | ) | (0.239 | ) | (0.242 | ) | (0.257 | ) | (0.250 | ) | -5.3 | % | (0.238 | ) | (0.250 | ) | -5.3 | % | ||||||||||
Interest credited | 0.137 | 0.134 | 0.136 | 0.136 | 0.135 | -1.6 | % | 0.137 | 0.135 | -1.6 | % | |||||||||||||||||
Business acquired | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Interest Sensitive Life-Balance End-of-Period (1) | $ 11.325 | $ 11.443 | $ 11.591 | $ 11.809 | $11.913 | 5.2 | % | $ 11.325 | $11.913 | 5.2 | % | |||||||||||||||||
Variable Universal Life-Balance Beginning of Period | $ 2.028 | $ 2.003 | $ 2.053 | $ 2.154 | $ 2.242 | 10.6 | % | $ 2.028 | $ 2.242 | 10.6 | % | |||||||||||||||||
Deposits | 0.086 | 0.081 | 0.082 | 0.097 | 0.087 | 0.9 | % | 0.086 | 0.087 | 0.9 | % | |||||||||||||||||
Withdrawals & deaths | (0.044 | ) | (0.041 | ) | (0.041 | ) | (0.036 | ) | (0.049 | ) | -12.5 | % | (0.044 | ) | (0.049 | ) | -12.5 | % | ||||||||||
Net flows | 0.042 | 0.040 | 0.041 | 0.061 | 0.038 | -10.9 | % | 0.042 | 0.038 | -10.9 | % | |||||||||||||||||
Policyholder assessments | (0.042 | ) | (0.042 | ) | (0.043 | ) | (0.044 | ) | (0.044 | ) | -4.1 | % | (0.042 | ) | (0.044 | ) | -4.1 | % | ||||||||||
Investment income and change in market value | (0.026 | ) | 0.052 | 0.103 | 0.071 | 0.119 | NM | (0.026 | ) | 0.119 | NM | |||||||||||||||||
Business acquired | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Variable Universal Life -Balance End-of-Period | $ 2.003 | $ 2.053 | $ 2.154 | $ 2.242 | $ 2.355 | 17.6 | % | $ 2.003 | $ 2.355 | 17.6 | % | |||||||||||||||||
Total Segment- Life Insurance Account Value Rollforward | ||||||||||||||||||||||||||||
Balance Beginning-of-Period | $ 13.259 | $ 13.328 | $ 13.496 | $ 13.745 | $14.051 | 6.0 | % | $ 13.259 | $14.051 | 6.0 | % | |||||||||||||||||
Deposits | 0.468 | 0.470 | 0.497 | 0.596 | 0.488 | 4.3 | % | 0.468 | 0.488 | 4.3 | % | |||||||||||||||||
Withdrawals & deaths | (0.231 | ) | (0.207 | ) | (0.202 | ) | (0.196 | ) | (0.231 | ) | 0.3 | % | (0.231 | ) | (0.231 | ) | 0.3 | % | ||||||||||
Net flows | 0.236 | 0.263 | 0.295 | 0.400 | 0.257 | 8.9 | % | 0.236 | 0.257 | 8.9 | % | |||||||||||||||||
Policyholder assessments | (0.279 | ) | (0.281 | ) | (0.285 | ) | (0.301 | ) | (0.294 | ) | -5.2 | % | (0.279 | ) | (0.294 | ) | -5.2 | % | ||||||||||
Investment income and change in market value | 0.112 | 0.187 | 0.239 | 0.206 | 0.254 | 127.5 | % | 0.112 | 0.254 | 127.5 | % | |||||||||||||||||
Business acquired | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Total Segment -Balance End-of-Period | $ 13.328 | $ 13.496 | $ 13.745 | $ 14.051 | $14.268 | 7.1 | % | $ 13.328 | $14.268 | 7.1 | % | |||||||||||||||||
Life Product Spread Information (2) | ||||||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||
Interest Sensitive Products | (Basis Points | ) | (Basis Points | ) | ||||||||||||||||||||||||
Net investment income (3)(4) | 6.32 | % | 6.35 | % | 6.35 | % | 6.26 | % | 6.47 | % | 15 | 6.32 | % | 6.47 | % | 15 | ||||||||||||
Interest credited to policyholders | 4.75 | % | 4.65 | % | 4.70 | % | 4.66 | % | 4.64 | % | (11 | ) | 4.75 | % | 4.64 | % | (11 | ) | ||||||||||
Spread (3)(4) | 1.57 | % | 1.71 | % | 1.65 | % | 1.60 | % | 1.83 | % | 26 | 1.57 | % | 1.83 | % | 26 | ||||||||||||
Traditional Products | ||||||||||||||||||||||||||||
Net investment income (3) | 6.59 | % | 6.59 | % | 6.62 | % | 6.42 | % | 6.72 | % | 13 | 6.59 | % | 6.72 | % | 13 |
(1) Includes universal life, interest sensitive life, and the fixed investment option of VUL products. | |||||||||||
(2) Interest Sensitive Products - For the life products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on life products divided by average fixed account values. Traditional Products - the yield on earning assets is calculated as net investment income on non-par investment portfolios divided by average earning assets. As of March 31, 2006, interest sensitive products represented 89% of total interest sensitive and traditional non-par earning assets. | |||||||||||
(3) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums. The impact of these premiums on investment income and spread for interest sensitive products was 7bps in the 1st quarter of 2006, 11 bps in the 4th quarter of 2005, 4 bps in the 3rd quarter of 2005, 12 bps in the 2nd quarter of 2005 and 0 bps in the 1st quarter of 2005. There was an impact on traditional products of 15 bps in the 1st quarter of 2006, 0 bps in the 4th quarter of 2005, 20 bps in the 3rd quarter of 2005, 11 bps in the 2nd quarter of 2005 and 10 bps in the 1st quarter of 2005. |
(4) The net investment income and spread for the first quarter of 2006 includes 17 basis points of incremental yield from special investments.
3/31/2006 | PAGE 17 | ||||||||||
Individual Markets - Individual Annuities | |||||||||||
Income Statements & Operational Data | |||||||||||
Unaudited [Millions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Jun | Jun | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Premiums | $ 10.5 | $ 7.3 | $ 10.7 | $ 8.5 | $ 9.3 | -12.2 | % | $ 10.5 | $ 9.3 | -12.2 | % | |||||||||||||||||
Surrender charges | 5.3 | 5.2 | 5.0 | 4.4 | 6.2 | 16.0 | % | 5.3 | 6.2 | 16.0 | % | |||||||||||||||||
Expense assessments | 124.5 | 131.7 | 147.7 | 155.5 | 168.0 | 34.9 | % | 124.5 | 168.0 | 34.9 | % | |||||||||||||||||
Net investment income | 157.0 | 154.8 | 151.7 | 150.4 | 148.0 | -5.7 | % | 157.0 | 148.0 | -5.7 | % | |||||||||||||||||
Other revenue and fees | 42.5 | 49.3 | 47.3 | 53.3 | 43.4 | 2.2 | % | 42.5 | 43.4 | 2.2 | % | |||||||||||||||||
Total Operating Revenue | 339.8 | 348.2 | 362.4 | 372.1 | 374.8 | 10.3 | % | 339.8 | 374.8 | 10.3 | % | |||||||||||||||||
- | ||||||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Insurance benefits | 21.2 | 31.4 | 20.5 | 21.2 | 20.4 | -3.7 | % | 21.2 | 20.4 | -3.7 | % | |||||||||||||||||
Interest credited to contractholder funds | 100.1 | 98.9 | 97.3 | 96.3 | 95.1 | -5.0 | % | 100.1 | 95.1 | -5.0 | % | |||||||||||||||||
Operating and acquisition expenses | 157.1 | 152.7 | 139.8 | 164.7 | 172.6 | 9.8 | % | 157.1 | 172.6 | 9.8 | % | |||||||||||||||||
Total Operating Expenses | 278.5 | 283.1 | 257.6 | 282.2 | 288.1 | 3.4 | % | 278.5 | 288.1 | 3.4 | % | |||||||||||||||||
Income from operations before Federal income taxes | 61.3 | 65.1 | 104.8 | 89.9 | 86.7 | 41.4 | % | 61.3 | 86.7 | 41.4 | % | |||||||||||||||||
Federal income taxes | 11.7 | 12.7 | 25.8 | 19.0 | 20.3 | 73.6 | % | 11.7 | 20.3 | 73.6 | % | |||||||||||||||||
Income from Operations | $ 49.6 | $ 52.5 | $ 79.0 | $ 70.9 | $ 66.4 | 33.8 | % | $ 49.6 | $ 66.4 | 33.8 | % | |||||||||||||||||
Effective tax rate | 19.1 | % | 19.4 | % | 24.6 | % | 21.1 | % | 23.4 | % | 19.1 | % | 23.4 | % | ||||||||||||||
Average equity | $ 1,476.3 | $ 1,525.7 | $ 1,539.7 | $ 1,596.0 | $1,549.5 | $1,476.3 | $1,549.5 | |||||||||||||||||||||
Return on average equity | 13.4 | % | 13.8 | % | 20.5 | % | 17.8 | % | 17.1 | % | 13.4 | % | 17.1 | % | ||||||||||||||
Basis points on average account values | 47 | 49 | 69 | 60 | 52 | 47 | 52 | |||||||||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||
Commissions | $ 119.8 | $ 124.2 | $ 131.7 | $ 131.6 | $ 140.0 | 16.9 | % | $ 119.8 | $ 140.0 | 16.9 | % | |||||||||||||||||
General and administrative expenses | 81.1 | 89.1 | 88.3 | 93.9 | 84.0 | 3.6 | % | 81.1 | 84.0 | 3.6 | % | |||||||||||||||||
Taxes, licenses and fees | 6.0 | 4.2 | 5.0 | (1.4 | ) | 5.4 | -9.3 | % | 6.0 | 5.4 | -9.3 | % | ||||||||||||||||
Total commissions and expenses incurred | 206.9 | 217.5 | 225.0 | 224.1 | 229.5 | 10.9 | % | 206.9 | 229.5 | 10.9 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (102.3 | ) | (108.6 | ) | (112.1 | ) | (118.9 | ) | (122.7 | ) | (102.3 | ) | (122.7 | ) | ||||||||||||||
Amortization of DAC and VOBA | 52.5 | 43.8 | 26.8 | 59.5 | 65.8 | 25.3 | % | 52.5 | 65.8 | 25.3 | % | |||||||||||||||||
Net Operating and Acquisition Expenses | $ 157.1 | $ 152.7 | $ 139.8 | $ 164.7 | $ 172.6 | 9.9 | % | $ 157.1 | $ 172.6 | 9.9 | % | |||||||||||||||||
(Basis Points) | (Basis Points) | |||||||||||||||||||||||||||
General and administrative expenses | ||||||||||||||||||||||||||||
basis points on gross account values - Annualized | 0.76 | % | 0.82 | % | 0.78 | % | 0.79 | % | 0.68 | % | (9) | 0.76 | % | 0.68 | % | (9) | ||||||||||||
Roll Forward of Deferred Acquisition Costs & Value of Business Acquired | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 999.4 | $ 1,097.6 | $ 1,118.5 | $ 1,250.6 | $1,328.0 | $ 999.4 | $1,328.0 | |||||||||||||||||||||
Deferral | 102.3 | 108.6 | 112.1 | 118.9 | 122.7 | 102.3 | 122.7 | |||||||||||||||||||||
Amortization | (52.5 | ) | (43.8 | ) | (26.8 | ) | (59.5 | ) | (65.8 | ) | (52.5 | ) | (65.8 | ) | ||||||||||||||
Included in Total Operating Expenses | 49.8 | 64.8 | 85.2 | 59.4 | 56.9 | 49.8 | 56.9 | |||||||||||||||||||||
Adjustment related to realized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | (7.1 | ) | (1.8 | ) | (4.7 | ) | (3.5 | ) | (2.7 | ) | (7.1 | ) | (2.7 | ) | ||||||||||||||
Adjustment related to unrealized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | 55.4 | (42.1 | ) | 51.7 | 21.5 | 32.7 | 55.4 | 32.7 | ||||||||||||||||||||
Business acquired | - | - | - | - | - | - | - | |||||||||||||||||||||
Other | - | - | - | - | - | - | - | |||||||||||||||||||||
Balance at end of period | $ 1,097.6 | $ 1,118.5 | $ 1,250.6 | $ 1,328.0 | $1,414.9 | $ 1,097.6 | $1,414.9 | |||||||||||||||||||||
Roll Forward of Deferred Front-End Loads | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 50.1 | $ 55.2 | $ 61.1 | $ 65.6 | $ 72.0 | $ 50.1 | $ 72.0 | |||||||||||||||||||||
Deferral | 7.9 | 9.0 | 9.4 | 9.5 | 9.4 | 7.9 | 9.4 | |||||||||||||||||||||
Amortization | (2.8 | ) | (3.1 | ) | (4.8 | ) | (3.1 | ) | (3.3 | ) | (2.8 | ) | (3.3 | ) | ||||||||||||||
Included in Income from Operations | 5.1 | 5.9 | 4.6 | 6.4 | 6.1 | 5.1 | 6.1 | |||||||||||||||||||||
Balance at end of period | $ 55.2 | $ 61.1 | $ 65.6 | $ 72.0 | $ 78.1 | $ 55.2 | $ 78.1 | |||||||||||||||||||||
Roll Forward of Deferred Sales Inducements | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 85.5 | $ 94.9 | $ 106.6 | $ 118.1 | $ 129.4 | $ 85.5 | $ 129.4 | |||||||||||||||||||||
Deferral | 13.3 | 15.5 | 15.1 | 15.6 | 15.7 | 13.3 | 15.7 | |||||||||||||||||||||
Amortization | (3.9 | ) | (3.8 | ) | (3.6 | ) | (4.4 | ) | (5.2 | ) | (3.9 | ) | (5.2 | ) | ||||||||||||||
Included in Income from Operations | 9.4 | 11.7 | 11.5 | 11.3 | 10.5 | 9.4 | 10.5 | |||||||||||||||||||||
Adjustment related to realized (gains) losses | - | - | ||||||||||||||||||||||||||
Business acquired | - | - | ||||||||||||||||||||||||||
Balance at end of period | $ 94.9 | $ 106.6 | $ 118.1 | $ 129.4 | $ 139.9 | $ 94.9 | $ 139.9 |
3/31/2006 | PAGE 18 | ||||||||||
Individual Markets - Individual Annuities | |||||||||||
Account Value Rollforward | |||||||||||
Unaudited [Billions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Fixed Annuities - Balance at Beginning of Period | $ 11.448 | $ 11.411 | $ 11.441 | $ 11.375 | $10.837 | -5.3 | % | $ 11.448 | $10.837 | -5.3 | % | |||||||||||||||||
Gross deposits | 0.472 | 0.534 | 0.494 | 0.486 | 0.471 | -0.3 | % | 0.472 | 0.471 | -0.3 | % | |||||||||||||||||
Withdrawals & deaths | (0.361 | ) | (0.339 | ) | (0.340 | ) | (0.370 | ) | (0.408 | ) | -12.9 | % | (0.361 | ) | (0.408 | ) | -12.9 | % | ||||||||||
Net flows | 0.111 | 0.196 | 0.155 | 0.116 | 0.063 | -43.1 | % | 0.111 | 0.063 | -43.1 | % | |||||||||||||||||
Transfer from (to) variable annuities | (0.264 | ) | (0.282 | ) | (0.338 | ) | (0.768 | ) | (0.454 | ) | -72.0 | % | (0.264 | ) | (0.454 | ) | -72.0 | % | ||||||||||
Interest credited | 0.116 | 0.117 | 0.117 | 0.115 | 0.112 | -3.4 | % | 0.116 | 0.112 | -3.4 | % | |||||||||||||||||
Business acquired | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Fixed Annuities - Gross | 11.411 | 11.441 | 11.375 | 10.837 | 10.559 | -7.5 | % | 11.411 | 10.559 | -7.5 | % | |||||||||||||||||
Reinsurance ceded | (2.291 | ) | (2.277 | ) | (2.257 | ) | (2.233 | ) | (2.202 | ) | 3.9 | % | (2.291 | ) | (2.202 | ) | 3.9 | % | ||||||||||
Fixed Annuities - Balance at End of Period* | $ 9.120 | $ 9.165 | $ 9.117 | $ 8.605 | $ 8.357 | -8.4 | % | $ 9.120 | $ 8.357 | -8.4 | % | |||||||||||||||||
Variable Annuities - Balance at Beginning of Period | $ 30.684 | $ 31.100 | $ 32.801 | $ 35.276 | $37.662 | 22.7 | % | $ 30.684 | $37.662 | 22.7 | % | |||||||||||||||||
Gross deposits | 1.289 | 1.327 | 1.410 | 1.513 | 1.665 | 29.2 | % | 1.289 | 1.665 | 29.2 | % | |||||||||||||||||
Withdrawals & deaths | (0.756 | ) | (0.775 | ) | (0.847 | ) | (0.862 | ) | (0.959 | ) | -26.8 | % | (0.756 | ) | (0.959 | ) | -26.8 | % | ||||||||||
Net flows | 0.533 | 0.552 | 0.563 | 0.651 | 0.706 | 32.5 | % | 0.533 | 0.706 | 32.5 | % | |||||||||||||||||
Transfer from (to) fixed annuities | 0.384 | 0.384 | 0.418 | 0.469 | 0.451 | 17.5 | % | 0.384 | 0.451 | 17.5 | % | |||||||||||||||||
Investment increase & change in market value | (0.501 | ) | 0.765 | 1.494 | 1.266 | 1.621 | NM | (0.501 | ) | 1.621 | NM | |||||||||||||||||
Business acquired | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Variable Annuities - Balance at End of Period ** | $ 31.100 | $ 32.801 | $ 35.276 | $ 37.662 | $40.440 | 30.0 | % | $ 31.100 | $40.440 | 30.0 | % | |||||||||||||||||
Total Annuities - Balance at Beginning of Period | $ 42.132 | $ 42.510 | $ 44.242 | $ 46.651 | $48.499 | 15.1 | % | $ 42.132 | $48.499 | 15.1 | % | |||||||||||||||||
Gross deposits | 1.761 | 1.862 | 1.904 | 1.999 | 2.136 | 21.3 | % | 1.761 | 2.136 | 21.3 | % | |||||||||||||||||
Withdrawals & deaths | (1.117 | ) | (1.114 | ) | (1.187 | ) | (1.232 | ) | (1.367 | ) | -22.3 | % | (1.117 | ) | (1.367 | ) | -22.3 | % | ||||||||||
Net flows | 0.644 | 0.748 | 0.717 | 0.767 | 0.769 | 19.5 | % | 0.644 | 0.769 | 19.5 | % | |||||||||||||||||
Transfers | 0.120 | 0.102 | 0.080 | (0.299 | ) | (0.002 | ) | NM | 0.120 | (0.002 | ) | NM | ||||||||||||||||
Interest credited & change in market value | (0.385 | ) | 0.882 | 1.611 | 1.381 | 1.733 | NM | (0.385 | ) | 1.733 | NM | |||||||||||||||||
Business acquired | - | - | - | - | - | NM | - | - | NM | |||||||||||||||||||
Total Annuities - Gross | 42.510 | 44.242 | 46.651 | 48.499 | 50.999 | 20.0 | % | 42.510 | 50.999 | 20.0 | % | |||||||||||||||||
Reinsurance ceded | (2.291 | ) | (2.277 | ) | (2.257 | ) | (2.233 | ) | (2.202 | ) | 3.9 | % | (2.291 | ) | (2.202 | ) | 3.9 | % | ||||||||||
Total Annuities (Net of Ceded) - Balance at End of Period | $ 40.219 | $ 41.966 | $ 44.393 | $ 46.266 | $48.797 | 21.3 | % | $ 40.219 | $48.797 | 21.3 | % | |||||||||||||||||
Variable Annuities Under Agreement - Included above | $ 0.225 | $ 0.213 | $225.981 | $ 0.197 | $ 0.190 | -15.7 | % | $ 0.225 | $ 0.190 | -15.7 | % | |||||||||||||||||
Incremental Deposits***: | ||||||||||||||||||||||||||||
Fixed annuities | $ 0.455 | $ 0.523 | $ 0.481 | $ 0.472 | $ 0.461 | 1.4 | % | 0.455 | $ 0.461 | 1.4 | % | |||||||||||||||||
Variable annuities | 1.259 | 1.293 | 1.383 | 1.481 | 1.650 | 31.1 | % | 1.259 | 1.650 | 31.1 | % | |||||||||||||||||
Total Incremental Deposits | $ 1.714 | $ 1.816 | $ 1.864 | $ 1.953 | $2.111 | 23.2 | % | $ 1.714 | $ 2.111 | 23.2 | % |
* Includes fixed portion of variable annuities. | |||||||||||
** Excludes the fixed portion of variable annuities. | |||||||||||
*** Incremental Deposits represent gross deposits reduced by transfers from other Lincoln products. |
3/31/2006 | PAGE 19 | ||||||||||
Individual Markets - Individual Annuities | |||||||||||
Account Values | |||||||||||
Unaudited [Billions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Fixed Annuities - excluding fixed portion of variable contracts | ||||||||||||||||||||||||||||
Deposits | $ 0.055 | $ 0.045 | $ 0.024 | $ 0.025 | $ 0.022 | -60.8 | % | $ 0.055 | $ 0.022 | -60.8 | % | |||||||||||||||||
Withdrawals | (0.250 | ) | (0.226 | ) | (0.172 | ) | (0.218 | ) | (0.244 | ) | 2.2 | % | (0.250 | ) | (0.244 | ) | 2.2 | % | ||||||||||
Net flows | $ (0.194 | ) | $ (0.180 | ) | $ (0.149 | ) | $ (0.193 | ) | $(0.222 | ) | -14.4 | % | $ (0.194 | ) | $(0.222 | ) | -14.4 | % | ||||||||||
Gross fixed contract account values | $ 8.157 | $ 8.089 | $ 8.019 | $ 7.823 | $ 7.676 | -5.9 | % | $ 8.157 | $ 7.676 | -5.9 | % | |||||||||||||||||
Reinsurance ceded | (2.291 | ) | (2.277 | ) | (2.257 | ) | (2.233 | ) | (2.202 | ) | 3.9 | % | (2.291 | ) | (2.202 | ) | 3.9 | % | ||||||||||
Net Fixed Contract Account Values | $ 5.866 | $ 5.812 | $ 5.761 | $ 5.590 | $ 5.474 | -6.7 | % | $ 5.866 | $ 5.474 | -6.7 | % | |||||||||||||||||
Equity-indexed Annuities | ||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||
Withdrawals | ||||||||||||||||||||||||||||
Net flows | ||||||||||||||||||||||||||||
Equity-indexed Contract Account Values | ||||||||||||||||||||||||||||
Fixed Portion of Variable Contracts | ||||||||||||||||||||||||||||
Deposits | $ 0.417 | $ 0.489 | $ 0.470 | $ 0.460 | $ 0.449 | 7.7 | % | $ 0.417 | $ 0.449 | 7.7 | % | |||||||||||||||||
Withdrawals | (0.112 | ) | (0.113 | ) | (0.164 | ) | (0.145 | ) | (0.164 | ) | -46.6 | % | (0.112 | ) | (0.164 | ) | -46.6 | % | ||||||||||
Net flows | $ 0.305 | $ 0.376 | $ 0.306 | $ 0.315 | $ 0.285 | -6.5 | % | $ 0.305 | $ 0.285 | -6.5 | % | |||||||||||||||||
Fixed Portion of Variable Contract Account Values | $ 3.012 | $ 3.111 | $ 3.115 | $ 2.773 | $ 2.642 | -12.3 | % | $ 3.012 | $ 2.642 | -12.3 | % | |||||||||||||||||
Variable Annuities - including fixed portion of variable contracts | ||||||||||||||||||||||||||||
Deposits | $ 1.706 | $ 1.817 | $ 1.880 | $ 1.973 | $ 2.114 | 23.9 | % | $ 1.706 | $ 2.114 | 23.9 | % | |||||||||||||||||
Withdrawals | (0.868 | ) | (0.889 | ) | (1.011 | ) | (1.007 | ) | (1.123 | ) | -29.4 | % | (0.868 | ) | (1.123 | ) | -29.4 | % | ||||||||||
Net Flows | $ 0.838 | $ 0.928 | $ 0.868 | $ 0.966 | $ 0.991 | 18.3 | % | $ 0.838 | $ 0.991 | 18.3 | % | |||||||||||||||||
Variable Contract Account Values | $ 34.112 | $ 35.912 | $ 38.391 | $ 40.435 | $43.082 | 26.3 | % | $ 34.112 | $43.082 | 26.3 | % | |||||||||||||||||
Average Daily Variable Annuity Account Values | $ 30.903 | $ 31.660 | $ 34.367 | $ 36.089 | $39.947 | 29.3 | % | $ 30.903 | $39.947 | 29.3 | % | |||||||||||||||||
Individual Annuity Product Spread Information | Change | Change | ||||||||||||||||||||||||||
(Basis Point | ) | (Basis Point | ) | |||||||||||||||||||||||||
Net investment income(1) (2) | 5.78 | % | 5.74 | % | 5.68 | % | 5.73 | % | 5.84 | % | 6 | 5.78 | % | 5.84 | % | 6 | ||||||||||||
Interest credited to policyholders | 3.96 | % | 3.95 | % | 3.93 | % | 3.92 | % | 3.93 | % | (3 | ) | 3.96 | % | 3.93 | % | (3 | ) | ||||||||||
Spread(1) (2) | 1.82 | % | 1.79 | % | 1.75 | % | 1.81 | % | 1.91 | % | 9 | 1.82 | % | 1.91 | % | 9 | ||||||||||||
Sales By Distribution | ||||||||||||||||||||||||||||
Retail (LFA) | $ | 0.213 | $ | 0.232 | $ | 0.183 | $ | 0.212 | $ | 0.219 | 2.8 | % | $ | 0.213 | $ | 0.219 | 2.8 | % | ||||||||||
Wholesale (LFD) | 1.549 | 1.630 | 1.721 | 1.797 | 1.917 | 23.8 | % | 1.549 | 1.917 | 23.8 | % |
Total by Distribution | $1.762 | $1.862 | $1.904 | $2.009 | $2.136 | 21.3 | % | $1.762 | $2.136 | 21.3 | % |
(1) For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products less bonus credits and excess DCA interest, divided by average fixed account values net of co-insured account values. Fixed account values reinsured under modified co-insurance agreements are included in account values for this calculation since assets (and therefore margin) are retained under these agreements.
(2) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums. The impact of these premiums on investment income and spread was 9 bps in the first quarter of 2006, 6 bps in the fourth quarter of 2005, 1 bp in the third quarter of 2005, 2 bps in the second quarter of 2005 and 6 bps in the first quarter of 2005.
3/31/2006 | PAGE 20 | ||||||||||
Employer Markets - Retirement Products | |||||||||||
Income Statements & Operational Data | |||||||||||
Unaudited [Millions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Surrender charges | $ 2.8 | $ 2.2 | $ 2.8 | $ 2.0 | $ 2.3 | -20.0 | % | $ 2.8 | $ 2.3 | -20.0 | % | |||||||||||||||||
Expense assessments | 50.0 | 51.1 | 53.9 | 53.6 | 56.9 | 13.7 | % | 50.0 | 56.9 | 13.7 | % | |||||||||||||||||
Net investment income | 176.1 | 176.7 | 177.5 | 181.3 | 185.7 | 5.5 | % | 176.1 | 185.7 | 5.5 | % | |||||||||||||||||
Other revenue and fees | 2.4 | 2.5 | 2.6 | 2.3 | 1.9 | -19.4 | % | 2.4 | 1.9 | -19.4 | % | |||||||||||||||||
Total Operating Revenue | 231.3 | 232.5 | 236.8 | 239.2 | 246.8 | 6.7 | % | 231.3 | 246.8 | 6.7 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Insurance benefits | NM | - | - | NM | ||||||||||||||||||||||||
Interest credited to contractholder funds | 99.6 | 100.4 | 100.7 | 101.1 | 100.7 | 1.1 | % | 99.6 | 100.7 | 1.1 | % | |||||||||||||||||
Operating and acquisition expenses | 71.9 | 69.4 | 60.2 | 75.3 | 70.9 | -1.3 | % | 71.9 | 70.9 | -1.3 | % | |||||||||||||||||
Total Operating Expenses | 171.5 | 169.9 | 160.9 | 176.4 | 171.7 | 0.1 | % | 171.5 | 171.7 | 0.1 | % | |||||||||||||||||
Income from operations before Federal income taxes | 59.8 | 62.7 | 75.9 | 62.8 | 75.2 | 25.7 | % | 59.8 | 75.2 | 25.7 | % | |||||||||||||||||
Federal income taxes | 16.6 | 17.4 | 22.4 | 17.7 | 22.7 | 37.1 | % | 16.6 | 22.7 | 37.1 | % | |||||||||||||||||
Income from Operations | $ 43.2 | $ 45.3 | $ 53.5 | $ 45.1 | $ 52.4 | 21.3 | % | $ 43.2 | $ 52.4 | 21.3 | % | |||||||||||||||||
Effective tax rate | 27.7 | % | 27.7 | % | 29.5 | % | 28.2 | % | 30.2 | % | 27.7 | % | 30.2 | % | ||||||||||||||
Average equity | $ 1,082.8 | $ 1,057.0 | $ 1,083.9 | $ 1,116.8 | $1,232.3 | $ 1,082.8 | $1,232.3 | |||||||||||||||||||||
Return on average equity | 16.0 | % | 17.1 | % | 19.7 | % | 16.2 | % | 17.0 | % | 16.0 | % | 17.0 | % | ||||||||||||||
Return on average account values | 61 | 64 | 73 | 60 | 67 | 61 | 67 | |||||||||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||
Commissions | $ 20.3 | $ 18.9 | $ 20.4 | $ 18.7 | $ 19.2 | -5.2 | % | $ 20.3 | $ 19.2 | -5.2 | % | |||||||||||||||||
General and administrative expenses | 53.0 | 53.0 | 64.7 | 61.8 | 54.3 | 2.5 | % | 53.0 | 54.3 | 2.5 | % | |||||||||||||||||
Taxes, licenses and fees | 4.2 | 3.1 | (0.8 | ) | 1.2 | 2.9 | -30.6 | % | 4.2 | 2.9 | -30.6 | % | ||||||||||||||||
Total commissions and expenses incurred | 77.5 | 75.0 | 84.3 | 81.8 | 76.4 | -1.4 | % | 77.5 | 76.4 | -1.4 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (24.7 | ) | (23.7 | ) | (24.5 | ) | (24.4 | ) | (25.5 | ) | -3.1 | % | (24.7 | ) | (25.5 | ) | -3.1 | % | ||||||||||
Amortization of DAC and VOBA | 19.1 | 18.1 | 0.5 | 17.9 | 20.0 | 4.7 | % | 19.1 | 20.0 | 4.7 | % | |||||||||||||||||
Net Operating and Acquisition Expenses | $ 71.9 | $ 69.4 | $ 60.2 | $ 75.2 | $ 71.0 | -1.3 | % | $ 71.9 | $ 71.0 | -1.3 | % | |||||||||||||||||
General and administrative expenses | (Basis Points | ) | (Basis Points | ) | ||||||||||||||||||||||||
basis points on account values - Annualized | 75 | 74 | 89 | 82 | 70 | (5 | ) | 75 | 70 | (5 | ) | |||||||||||||||||
Roll Forward of Deferred Acquisition Costs & Value of Business Acquired | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 304.1 | $ 395.6 | $ 332.0 | $ 420.1 | $ 454.9 | $ 304.1 | $ 454.9 | |||||||||||||||||||||
Deferral | 24.7 | 23.7 | 24.5 | 24.4 | 25.5 | 24.7 | 25.5 | |||||||||||||||||||||
Amortization | (19.1 | ) | (18.1 | ) | (0.5 | ) | (17.9 | ) | (20.0 | ) | (19.1 | ) | (20.0 | ) | ||||||||||||||
Included in Total Operating Expenses | 5.6 | 5.6 | 24.1 | 6.6 | 5.5 | 5.6 | 5.5 | |||||||||||||||||||||
Adjustment related to realized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | (2.6 | ) | (6.6 | ) | (3.7 | ) | (3.9 | ) | (4.4 | ) | (2.6 | ) | (4.4 | ) | ||||||||||||||
Adjustment related to unrealized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | 88.5 | (62.5 | ) | 67.7 | 32.1 | 61.2 | 88.5 | 61.2 | ||||||||||||||||||||
Business acquired | - | - | - | - | - | - | - | |||||||||||||||||||||
Other | - | - | - | - | - | - | - | |||||||||||||||||||||
Balance at end of period | $ 395.6 | $ 332.0 | $ 420.1 | $ 454.9 | $ 517.2 | $ 395.6 | $ 517.2 |
3/31/2006 | PAGE 21 | ||||||||||
Employer Markets - Retirement Products Account Value Rollforward | |||||||||||
Account Value Rollforward | |||||||||||
Unaudited [Billions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Fixed Annuities - Balance at Beginning of Period | $ 10.837 | $ 10.688 | $ 10.710 | $ 10.686 | $10.995 | 1.5 | % | $ 10.837 | $10.995 | 1.5 | % | |||||||||||||||||
Gross deposits | 0.298 | 0.286 | 0.259 | 0.240 | 0.257 | -13.7 | % | 0.298 | 0.257 | -13.7 | % | |||||||||||||||||
Withdrawals & deaths | (0.459 | ) | (0.332 | ) | (0.330 | ) | (0.342 | ) | (0.347 | ) | 24.3 | % | (0.459 | ) | (0.347 | ) | 24.3 | % | ||||||||||
Net flows | (0.161 | ) | (0.046 | ) | (0.071 | ) | (0.103 | ) | (0.090 | ) | 44.0 | % | (0.161 | ) | (0.090 | ) | 44.0 | % | ||||||||||
Transfer from (to) variable annuities | (0.086 | ) | (0.033 | ) | (0.055 | ) | 0.304 | 0.016 | 118.8 | % | (0.086 | ) | 0.016 | 118.8 | % | |||||||||||||
Interest credited | 0.098 | 0.100 | 0.102 | 0.108 | 0.094 | -4.4 | % | 0.098 | 0.094 | -4.4 | % | |||||||||||||||||
Fixed Annuities - Balance at End of Period* | $ 10.688 | $ 10.710 | $ 10.686 | $ 10.995 | $11.015 | 3.1 | % | $ 10.688 | $11.015 | 3.1 | % | |||||||||||||||||
Variable Annuities - Balance at Beginning of Period | $ 14.576 | $ 14.346 | $ 14.648 | $ 15.293 | $15.702 | 7.7 | % | $ 14.576 | $15.702 | 7.7 | % | |||||||||||||||||
Gross deposits | 0.562 | 0.524 | 0.527 | 0.642 | 0.666 | 18.5 | % | 0.562 | 0.666 | 18.5 | % | |||||||||||||||||
Withdrawals & deaths | (0.512 | ) | (0.497 | ) | (0.522 | ) | (0.579 | ) | (0.656 | ) | -28.2 | % | (0.512 | ) | (0.656 | ) | -28.2 | % | ||||||||||
Net flows | 0.050 | 0.026 | 0.005 | 0.062 | 0.009 | -81.1 | % | 0.050 | 0.009 | -81.1 | % | |||||||||||||||||
Transfer from (to) fixed annuities | (0.030 | ) | (0.066 | ) | (0.025 | ) | (0.001 | ) | (0.015 | ) | 51.6 | % | (0.030 | ) | (0.015 | ) | 51.6 | % | ||||||||||
Investment increase & change in market value | (0.249 | ) | 0.341 | 0.665 | 0.348 | 0.835 | NM | (0.249 | ) | 0.835 | NM | |||||||||||||||||
Variable Annuities - Balance at End of Period ** | $ 14.346 | $ 14.648 | $ 15.293 | $ 15.702 | $16.532 | 15.2 | % | $ 14.346 | $16.532 | 15.2 | % | |||||||||||||||||
Total Annuities - Balance at Beginning of Period | $ 25.413 | $ 25.034 | $ 25.358 | $ 25.979 | $26.697 | 5.1 | % | $ 25.413 | $26.697 | 5.1 | % | |||||||||||||||||
Gross Deposits | 0.860 | 0.810 | 0.786 | 0.882 | 0.923 | 7.3 | % | 0.860 | 0.923 | 7.3 | % | |||||||||||||||||
Withdrawals & deaths | (0.970 | ) | (0.829 | ) | (0.852 | ) | (0.922 | ) | (1.003 | ) | -3.4 | % | (0.970 | ) | (1.003 | ) | -3.4 | % | ||||||||||
Net flows | (0.111 | ) | (0.019 | ) | (0.066 | ) | (0.040 | ) | (0.081 | ) | 27.2 | % | (0.111 | ) | (0.081 | ) | 27.2 | % | ||||||||||
Transfers | (0.116 | ) | (0.099 | ) | (0.080 | ) | 0.302 | 0.002 | 101.3 | % | (0.116 | ) | 0.002 | 101.3 | % | |||||||||||||
Interest credited & change in market value | (0.152 | ) | 0.442 | 0.766 | 0.456 | 0.929 | NM | (0.152 | ) | 0.929 | NM | |||||||||||||||||
Total Annuities - Balance at End of Period | $ 25.034 | $ 25.358 | $ 25.979 | $ 26.697 | $27.547 | 10.0 | % | $ 25.034 | $27.547 | 10.0 | % | |||||||||||||||||
Alliance Mutual Funds - Balance at Beginning of Period | $ 2.861 | $ 3.163 | $ 3.432 | $ 3.672 | $ 3.772 | 31.8 | % | $ 2.861 | $ 3.772 | 31.8 | % | |||||||||||||||||
Plan/Participant Rollovers | 0.258 | 0.065 | 0.036 | 0.063 | 0.125 | -51.6 | % | 0.258 | 0.125 | -51.6 | % | |||||||||||||||||
Additional contributions | 0.163 | 0.157 | 0.164 | 0.160 | 0.193 | 18.5 | % | 0.163 | 0.193 | 18.5 | % | |||||||||||||||||
Gross deposits | 0.421 | 0.222 | 0.200 | 0.223 | 0.318 | -24.5 | % | 0.421 | 0.318 | -24.5 | % | |||||||||||||||||
Withdrawals & deaths | (0.074 | ) | (0.022 | ) | (0.107 | ) | (0.208 | ) | (0.056 | ) | 23.5 | % | (0.074 | ) | (0.056 | ) | 23.5 | % | ||||||||||
Net flows | 0.347 | 0.201 | 0.093 | 0.014 | 0.262 | -24.7 | % | 0.347 | 0.262 | -24.7 | % | |||||||||||||||||
Transfers | 0.002 | (0.006 | ) | (0.000 | ) | (0.003 | ) | 0.005 | 119.8 | % | 0.002 | 0.005 | 119.8 | % | ||||||||||||||
Interest credited & change in market value | (0.048 | ) | 0.075 | 0.147 | 0.088 | 0.209 | NM | (0.048 | ) | 0.209 | NM | |||||||||||||||||
Total Alliance Mutual Funds - Balance at End of Period | $ 3.163 | $ 3.432 | $ 3.672 | $ 3.772 | $ 4.248 | 34.3 | % | $ 3.163 | $ 4.248 | 34.3 | % | |||||||||||||||||
Total Retirement Products Segment Account Values- | ||||||||||||||||||||||||||||
including Alliance Mutual Funds | ||||||||||||||||||||||||||||
Balance at Beginning of Period | $ 28.274 | $ 28.197 | $ 28.790 | $ 29.651 | $30.469 | 7.8 | % | $ 28.274 | $30.469 | 7.8 | % | |||||||||||||||||
Gross deposits | 1.281 | 1.032 | 0.986 | 1.104 | 1.241 | -3.1 | % | 1.281 | 1.241 | -3.1 | % | |||||||||||||||||
Withdrawals & deaths | (1.044 | ) | (0.851 | ) | (0.958 | ) | (1.130 | ) | (1.060 | ) | -1.5 | % | (1.044 | ) | (1.060 | ) | -1.5 | % | ||||||||||
Net flows | 0.237 | 0.181 | 0.028 | (0.026 | ) | 0.181 | -23.5 | % | 0.237 | 0.181 | -23.5 | % | ||||||||||||||||
Transfers | (0.114 | ) | (0.105 | ) | (0.080 | ) | 0.300 | 0.007 | 106.1 | % | (0.114 | ) | 0.007 | 106.1 | % | |||||||||||||
Interest credited & change in market value | (0.199 | ) | 0.516 | 0.914 | 0.544 | 1.138 | NM | (0.199 | ) | 1.138 | NM | |||||||||||||||||
Total Retirement Products Segment Account Values- | ||||||||||||||||||||||||||||
Balance at End of Period | $ 28.197 | $ 28.790 | $ 29.651 | $ 30.469 | $31.795 | 12.8 | % | $ 28.197 | $31.795 | 12.8 | % | |||||||||||||||||
Variable Annuities Under Agreement - Included above | 0.019 | 0.019 | 0.019 | 0.019 | 0.018 | -3.3 | % | 0.019 | 0.018 | -3.3 | % | |||||||||||||||||
Incremental Deposits****: | ||||||||||||||||||||||||||||
Fixed Annuities | $ 0.294 | $ 0.284 | $ 0.243 | $ 0.200 | $ 0.254 | -13.8 | % | $ 0.294 | $ 0.254 | -13.8 | % | |||||||||||||||||
Variable Annuities | 0.556 | 0.521 | 0.553 | 0.614 | 0.654 | 17.7 | % | 0.556 | 0.654 | 17.7 | % | |||||||||||||||||
Total Annuities Incremental Deposits | 0.851 | 0.805 | 0.796 | 0.814 | 0.908 | 6.8 | % | 0.851 | 0.908 | 6.8 | % | |||||||||||||||||
Total Alliance Mutual Funds Incremental Deposits | 0.421 | 0.222 | 0.200 | 0.223 | 0.318 | -24.5 | % | 0.421 | 0.318 | -24.5 | % | |||||||||||||||||
Total Retirement Products Incremental Deposits | $ 1.272 | $ 1.028 | $ 0.996 | $ 1.036 | $ 1.226 | -3.6 | % | $ 1.272 | $ 1.226 | -3.6 | % |
* Includes Fixed Annuity products offered under the Alliance mutual funds and the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
** Excludes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
*** Represents amounts attributable to Alliance mutual fund net flows. Alliance mutual fund account values are not included in the separate accounts reported on our balance sheet. | ||||||||||||||||||||||||||||
**** Incremental Deposits represent gross deposits reduced by transfers from other Lincoln products. |
3/31/2006 | PAGE 22 | ||||||||||
Employer Markets - Retirement Products | |||||||||||
Supplemental Data | |||||||||||
Unaudited [Billions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Fixed Annuities - excluding fixed portion of variable contracts | ||||||||||||||||||||||||||||
Deposits | $ 0.143 | $ 0.135 | $ 0.121 | $ 0.133 | $ 0.140 | -1.7 | % | $ 0.143 | $ 0.140 | -1.7 | % | |||||||||||||||||
Withdrawals | (0.204 | ) | (0.077 | ) | (0.154 | ) | (0.156 | ) | (0.132 | ) | 35.3 | % | (0.204 | ) | (0.132 | ) | 35.3 | % | ||||||||||
Net Flows | $ (0.061 | ) | $ 0.058 | $ (0.033 | ) | $ (0.023 | ) | $ 0.008 | 113.6 | % | $ (0.061 | ) | $ 0.008 | 113.6 | % | |||||||||||||
Fixed Contract Account Values | $ 3.526 | $ 3.592 | $ 3.599 | $ 3.696 | $ 3.745 | 6.2 | % | $ 3.526 | $ 3.745 | 6.2 | % | |||||||||||||||||
Fixed Portion of Variable Contracts | ||||||||||||||||||||||||||||
Deposits | $ 0.155 | $ 0.151 | $ 0.139 | $ 0.108 | $ 0.117 | -24.7 | % | $ 0.155 | $ 0.117 | -24.7 | % | |||||||||||||||||
Withdrawals | (0.254 | ) | (0.254 | ) | (0.179 | ) | (0.194 | ) | (0.215 | ) | 15.4 | % | (0.254 | ) | (0.215 | ) | 15.4 | % | ||||||||||
Net Flows | $ (0.099 | ) | $ (0.103 | ) | $ (0.040 | ) | $ (0.086 | ) | $ (0.098 | ) | 0.9 | % | $ (0.099 | ) | $ (0.098 | ) | 0.9 | % | ||||||||||
Fixed Portion of Variable Contract Account Values | $ 6.679 | $ 6.625 | $ 6.587 | $ 6.797 | $ 6.767 | 1.3 | % | $ 6.679 | $ 6.767 | 1.3 | % | |||||||||||||||||
Variable Annuities - including fixed portion of variable contracts | ||||||||||||||||||||||||||||
Deposits | $ 0.717 | $ 0.675 | $ 0.692 | $ 0.724 | $ 0.782 | 9.1 | % | $ 0.717 | $ 0.782 | 9.1 | % | |||||||||||||||||
Withdrawals | (0.766 | ) | (0.752 | ) | (0.728 | ) | (0.747 | ) | (0.871 | ) | -13.7 | % | (0.766 | ) | (0.871 | ) | -13.7 | % | ||||||||||
Net Flows | $ (0.049 | ) | $ (0.077 | ) | $ (0.036 | ) | $ (0.023 | ) | $ (0.089 | ) | -80.5 | % | $ (0.049 | ) | $ (0.089 | ) | -80.5 | % | ||||||||||
Variable Contract Account Values | $ 21.750 | $ 22.007 | $ 22.621 | $ 23.242 | $ 24.043 | 10.5 | % | $ 21.750 | $ 24.043 | 10.5 | % | |||||||||||||||||
Average Daily Variable Annuity Account Values | $ 14.389 | $ 14.328 | $ 15.087 | $ 15.323 | $ 16.177 | 12.4 | % | $ 14.389 | $ 16.177 | 12.4 | % | |||||||||||||||||
Total Annuity based Retirement Plan Product Spread Information (1) | Change | Change | ||||||||||||||||||||||||||
(Basis Point | ) | (Basis Point | ) | |||||||||||||||||||||||||
Net investment income (2) | 6.28 | % | 6.25 | % | 6.25 | % | 6.36 | % | 6.34 | % | 6 | 6.28 | % | 6.34 | % | 6 | ||||||||||||
Interest credited to policyholders | 3.69 | % | 3.68 | % | 3.67 | % | 3.67 | % | 3.66 | % | (3 | ) | 3.69 | % | 3.66 | % | (3 | ) | ||||||||||
Spread (2) | 2.59 | % | 2.57 | % | 2.58 | % | 2.69 | % | 2.68 | % | 9 | 2.59 | % | 2.68 | % | 9 |
(1) For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products less bonus credits and excess DCA interest, divided by average fixed account values. | |||||||||||
(2) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums. The impact of these premiums on investment income and spread was 15 bps in the 1st quarter of 2006, 17 bps in the 4th quarter of 2005, 7 bps in the 3rd quarter of 2005, 13 bps in the 2nd quarter of 2005 and 12 bps in the 1st quarter of 2005. |
3/31/2006 | PAGE 23 | |||||||||||||||||||||||||||
Employer Markets - Benefit Partners | ||||||||||||||||||||||||||||
Income Statements & Operational Data | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Premiums | ||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||
Other revenue and fees | ||||||||||||||||||||||||||||
Total Operating Revenue | - | - | - | - | - | |||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Insurance benefits | ||||||||||||||||||||||||||||
Operating and acquisition expenses | �� | |||||||||||||||||||||||||||
Total Operating Expenses | - | - | - | - | ||||||||||||||||||||||||
Income from operations before Federal income taxes | - | - | - | - | - | |||||||||||||||||||||||
Federal income taxes | ||||||||||||||||||||||||||||
Income from Operations | $ - | $ - | $ - | $ - | $ - | |||||||||||||||||||||||
Effective tax rate | ||||||||||||||||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||
Commissions | ||||||||||||||||||||||||||||
General and administrative expenses | ||||||||||||||||||||||||||||
Taxes, licenses and fees | ||||||||||||||||||||||||||||
Total commissions and expenses incurred | $ - | $ - | $ - | $ - | $ - | |||||||||||||||||||||||
Less commissions and expenses capitalized | ||||||||||||||||||||||||||||
Amortization of DAC and VOBA | ||||||||||||||||||||||||||||
Net Operating and Acquisition Expenses | $ - | $ - | $ - | $ - | $ - | |||||||||||||||||||||||
General and administrative expenses as a | ||||||||||||||||||||||||||||
percentage of assets - Annualized | ||||||||||||||||||||||||||||
Roll Forward of Deferred Acquisition Costs & Value of Business Acquired | ||||||||||||||||||||||||||||
Balance at beginning of period | ||||||||||||||||||||||||||||
Deferral | ||||||||||||||||||||||||||||
Amortization | ||||||||||||||||||||||||||||
Included in Total Operating Expenses | - | - | - | - | - | |||||||||||||||||||||||
Adjustment related to realized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | ||||||||||||||||||||||||||||
Adjustment related to unrealized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | ||||||||||||||||||||||||||||
Business acquired | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Balance at end of period | $ - | $ - | $ - | $ - | $ - |
3/31/2006 | PAGE 24 | ||||||||||||||||||||||||||||||
Employer Markets - Benefit Partners | |||||||||||||||||||||||||||||||
Supplemental Data | |||||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | |||||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | |||||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | |||||||||||||||||||||||
Annualized Sales | |||||||||||||||||||||||||||||||
Life | |||||||||||||||||||||||||||||||
Disability | |||||||||||||||||||||||||||||||
Dental | |||||||||||||||||||||||||||||||
Premiums: | |||||||||||||||||||||||||||||||
Life | |||||||||||||||||||||||||||||||
Disability | |||||||||||||||||||||||||||||||
Dental | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||
Product Line Results: | |||||||||||||||||||||||||||||||
Life | |||||||||||||||||||||||||||||||
Disability | |||||||||||||||||||||||||||||||
Dental | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||
Loss Ratios: | |||||||||||||||||||||||||||||||
Life | |||||||||||||||||||||||||||||||
Disability | |||||||||||||||||||||||||||||||
Dental | |||||||||||||||||||||||||||||||
Combined |
3/31/2006 | PAGE 25 | ||||||||||
Employer Markets - Executive Benefits & Other | |||||||||||
Income Statements & Operational Data | |||||||||||
Unaudited [Millions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Premiums | $ 0.0 | $ 0.5 | $ 7.4 | $ 0.7 | $ 1.1 | NM | $ 0.0 | $ 1.1 | NM | |||||||||||||||||||
Surrender charges | 0.0 | (0.2 | ) | (0.1 | ) | 0.0 | 0.0 | -92.9 | % | 0.0 | 0.0 | -92.9 | % | |||||||||||||||
Mortality assessments | 2.2 | 2.1 | 2.0 | 2.5 | 2.8 | 26.7 | % | 2.2 | 2.8 | 26.7 | % | |||||||||||||||||
Expense assessments | 4.4 | 4.4 | 3.7 | 6.1 | 3.3 | -25.3 | % | 4.4 | 3.3 | -25.3 | % | |||||||||||||||||
Net investment income | 45.3 | 45.2 | 45.1 | 51.0 | 48.7 | 7.5 | % | 45.3 | 48.7 | 7.5 | % | |||||||||||||||||
Other revenue and fees | 1.3 | 1.2 | 1.3 | 1.3 | 1.4 | 4.9 | % | 1.3 | 1.4 | 4.9 | % | |||||||||||||||||
Total Operating Revenue | 53.2 | 53.2 | 59.4 | 61.6 | 57.2 | 7.5 | % | 53.2 | 57.2 | 7.5 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Insurance benefits | 31.8 | 30.7 | 39.9 | 31.2 | 32.8 | 3.1 | % | 31.8 | 32.8 | 3.1 | % | |||||||||||||||||
Interest credited to contractholder funds | 9.3 | 9.6 | 10.4 | 9.5 | 9.3 | -0.5 | % | 9.3 | 9.3 | -0.5 | % | |||||||||||||||||
Operating and acquisition expenses | 8.0 | 7.5 | 6.4 | 7.3 | 4.6 | -42.5 | % | 8.0 | 4.6 | -42.5 | % | |||||||||||||||||
Total Operating Expenses | 49.1 | 47.8 | 56.8 | 48.0 | 46.7 | -5.0 | % | 49.1 | 46.7 | -5.0 | % | |||||||||||||||||
Income from operations before Federal income taxes | 4.1 | 5.3 | 2.7 | 13.6 | 10.5 | 157.5 | % | 4.1 | 10.5 | 157.5 | % | |||||||||||||||||
Federal income taxes | 0.7 | 1.0 | 0.2 | 4.1 | 3.0 | NM | 0.7 | 3.0 | NM | |||||||||||||||||||
Income from Operations | $ 3.4 | $ 4.3 | $ 2.5 | $ 9.5 | $ 7.5 | 124.5 | % | $ 3.4 | $ 7.5 | 124.5 | % | |||||||||||||||||
Effective tax rate | 18.0 | % | 19.3 | % | 7.6 | % | 30.0 | % | 28.5 | % | 18.0 | % | 28.5 | % | ||||||||||||||
Average equity | $ 288.9 | $ 296.8 | $ 283.1 | $ 321.8 | $ 345.5 | $ 288.9 | $ 345.5 | |||||||||||||||||||||
Return on average equity | 4.6 | % | 5.8 | % | 3.5 | % | 11.8 | % | 8.7 | % | 4.6 | % | 8.7 | % | ||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||
Commissions | $ 4.8 | $ 5.4 | $ 6.7 | $ 5.1 | $ 5.1 | 7.3 | % | $ 4.8 | $ 5.1 | 7.3 | % | |||||||||||||||||
General and administrative expenses | 4.3 | 4.0 | 5.8 | 5.0 | 3.7 | -13.9 | % | 4.3 | 3.7 | -13.9 | % | |||||||||||||||||
Taxes, licenses and fees | 1.1 | 0.9 | 1.5 | 1.0 | 1.1 | -1.3 | % | 1.1 | 1.1 | -1.3 | % | |||||||||||||||||
Total commissions and expenses incurred | 10.2 | 10.2 | 14.0 | 11.1 | 9.9 | -2.5 | % | 10.2 | 9.9 | -2.5 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (5.5 | ) | (5.3 | ) | (7.3 | ) | (5.1 | ) | (5.7 | ) | -4.4 | % | (5.5 | ) | (5.7 | ) | -4.4 | % | ||||||||||
Amortization of DAC and VOBA | 3.3 | 2.6 | (0.3 | ) | 1.3 | 0.3 | -90.8 | % | 3.3 | 0.3 | -90.8 | % | ||||||||||||||||
Net Operating and Acquisition Expenses | $ 8.0 | $ 7.5 | $ 6.4 | $ 7.3 | $ 4.5 | -43.4 | % | $ 8.0 | $ 4.5 | -43.4 | % | |||||||||||||||||
General and administrative expenses basis | (Basis Points | ) | (Basis Points | ) | ||||||||||||||||||||||||
points on account values - Annualized | 151 | 136 | 189 | 155 | 109 | (42 | ) | 151 | 109 | (42 | ) | |||||||||||||||||
Roll Forward of Deferred Acquisition Costs & Value of Business Acquired | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 97.3 | $ 99.5 | $ 102.2 | $ 109.8 | $ 113.6 | $ 97.3 | $ 113.6 | |||||||||||||||||||||
Deferral | 5.5 | 5.3 | 7.3 | 5.1 | 5.7 | 5.5 | 5.7 | |||||||||||||||||||||
Amortization | (3.3 | ) | (2.6 | ) | 0.3 | (1.3 | ) | (0.3 | ) | (3.3 | ) | (0.3 | ) | |||||||||||||||
Included in Total Operating Expenses | 2.2 | 2.7 | 7.6 | 3.8 | 5.4 | 2.2 | 5.4 | |||||||||||||||||||||
Business acquired | - | - | - | - | - | - | - | |||||||||||||||||||||
Balance at end of period | $ 99.5 | $ 102.2 | $ 109.8 | $ 113.6 | $ 119.0 | $ 99.5 | $ 119.0 | |||||||||||||||||||||
Roll Forward of Deferred Front-End Loads | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 15.5 | $ 15.5 | $ 15.6 | $ 16.9 | $ 17.9 | $ 15.5 | $ 17.9 | |||||||||||||||||||||
Deferral | 0.9 | 0.9 | 1.0 | 1.2 | 1.0 | 0.9 | 1.0 | |||||||||||||||||||||
Amortization | (0.9 | ) | (0.7 | ) | 0.4 | (0.3 | ) | (0.0 | ) | (0.9 | ) | (0.0 | ) | |||||||||||||||
Included in Income from Operations | (0.0 | ) | 0.1 | 1.3 | 0.9 | 1.0 | (0.0 | ) | 1.0 | |||||||||||||||||||
Balance at end of period | $ 15.5 | $ 15.6 | $ 16.9 | $ 17.9 | $ 18.9 | $ 15.5 | $ 18.9 |
3/31/2006 | PAGE 26 | |||||||||||||||||||||||||||
Employer Markets - Executive Benefits & Other | ||||||||||||||||||||||||||||
Account Value Roll Forward and Supplemental Data | ||||||||||||||||||||||||||||
Unaudited [Billions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
COLI/BOLI- Balance Beginning-of-Period | $ 1.122 | $ 1.138 | $ 1.194 | $ 1.256 | $ 1.318 | 17.4 | % | $ 1.122 | $ 1.318 | 17.4 | % | |||||||||||||||||
Deposits | 0.044 | 0.056 | 0.057 | 0.052 | 0.047 | 5.4 | % | 0.044 | 0.047 | 5.4 | % | |||||||||||||||||
Withdrawals & deaths | (0.020 | ) | (0.011 | ) | (0.015 | ) | (0.002 | ) | (0.007 | ) | 63.4 | % | (0.020 | ) | (0.007 | ) | 63.4 | % | ||||||||||
Net flows | 0.024 | 0.045 | 0.042 | 0.049 | 0.039 | 63.2 | % | 0.024 | 0.039 | 63.2 | % | |||||||||||||||||
Policyholder assessments | (0.008 | ) | (0.008 | ) | (0.008 | ) | (0.011 | ) | (0.009 | ) | -11.0 | % | (0.008 | ) | (0.009 | ) | -11.0 | % | ||||||||||
Interest credited and change in market value | (0.001 | ) | 0.019 | 0.028 | 0.023 | 0.038 | NM | (0.001 | ) | 0.038 | NM | |||||||||||||||||
COLI/BOLI-Balance End-of-Period | $ 1.138 | $ 1.194 | $ 1.256 | $ 1.318 | $ 1.387 | 21.9 | % | $ 1.138 | $ 1.387 | 21.9 | % | |||||||||||||||||
Sales by Distribution (Millions) | ||||||||||||||||||||||||||||
Wholesale (LFD) | $ 17.4 | $ 6.6 | $ 15.8 | $ 7.2 | $ 13.5 | -22.4 | % | $ 17.4 | $ 13.5 | -22.4 | % | |||||||||||||||||
Other* | 1.6 | 1.2 | 1.3 | 2.9 | 2.6 | 62.5 | % | 1.6 | 2.6 | 62.5 | % | |||||||||||||||||
Total by Distribution | $ 19.0 | $ 7.8 | $ 17.1 | $ 10.1 | $ 16.1 | -15.3 | % | $ 19.0 | $ 16.1 | -15.3 | % | |||||||||||||||||
COLI In-Force | $ 7.234 | $ 7.278 | $ 7.506 | $ 7.729 | $ 7.979 | 10.3 | % | $ 7.234 | $ 7.979 | 10.3 | % | |||||||||||||||||
Run Off Institutional Pensions Account Values - | ||||||||||||||||||||||||||||
Balance at End of Period | $ 2.886 | $ 2.883 | $ 2.877 | $ 2.737 | $ 2.753 | -4.6 | % | $ 2.886 | $ 2.753 | -4.6 | % | |||||||||||||||||
* Other consists of distribution arrangements with third-party intermediaries. |
3/31/2006 | PAGE 27 | |||||||||||||||||||||||||||
Investment Management | ||||||||||||||||||||||||||||
Income Statements | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Investment advisory fees - External | $ 55.0 | $ 62.0 | $ 67.9 | $ 70.9 | $ 77.8 | 41.5 | % | $ 55.0 | $ 77.8 | 41.5 | % | |||||||||||||||||
Investment advisory fees - Insurance-related | 24.8 | 24.6 | 24.9 | 24.5 | 25.1 | 1.2 | % | 24.8 | 25.1 | 1.2 | % | |||||||||||||||||
Other revenue and fees | 30.0 | 27.8 | 30.4 | 32.5 | 36.7 | 22.3 | % | 30.0 | 36.7 | 22.3 | % | |||||||||||||||||
Operating Revenue | 109.8 | 114.4 | 123.2 | 127.9 | 139.6 | 27.1 | % | 109.8 | 139.6 | 27.1 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Operating and administrative expenses | 103.0 | 116.6 | 115.0 | 114.4 | 116.1 | 12.7 | % | 103.0 | 116.1 | 12.7 | % | |||||||||||||||||
Total Operating Expenses | 103.0 | 116.6 | 115.0 | 114.4 | 116.1 | 12.7 | % | 103.0 | 116.1 | 12.7 | % | |||||||||||||||||
Income from operations before Federal income taxes | 6.8 | (2.2 | ) | 8.2 | 13.5 | 23.5 | 245.6 | % | 6.8 | 23.5 | 245.6 | % | ||||||||||||||||
Federal income taxes | 2.3 | (0.8 | ) | 3.4 | 4.6 | 8.2 | 256.5 | % | 2.3 | 8.2 | 256.5 | % | ||||||||||||||||
Income from Operations | $ 4.5 | $ (1.4 | ) | $ 4.8 | $ 8.9 | $ 15.3 | 240.0 | % | $ 4.5 | $ 15.3 | 240.0 | % | ||||||||||||||||
Effective tax rate | 33.8 | % | 36.4 | % | 41.5 | % | 34.1 | % | 34.9 | % | 33.8 | % | 34.9 | % | ||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||
General and administrative expenses | $ 87.1 | $ 101.0 | $ 99.0 | $ 97.8 | $ 96.1 | 10.3 | % | $ 87.1 | $ 96.1 | 10.3 | % | |||||||||||||||||
Depreciation and amortization | 2.4 | 2.5 | 1.7 | 2.0 | 2.2 | -10.3 | % | 2.4 | 2.2 | -10.3 | % | |||||||||||||||||
Sub-advisory fees | 8.3 | 9.0 | 9.8 | 10.1 | 11.0 | 31.8 | % | 8.3 | 11.0 | 31.8 | % | |||||||||||||||||
Total general and administrative expenses | 97.9 | 112.5 | 110.5 | 109.9 | 109.3 | 11.6 | % | 97.9 | 109.3 | 11.6 | % | |||||||||||||||||
Taxes, licenses and fees | 3.1 | 2.2 | 2.5 | 2.6 | 4.8 | 54.8 | % | 3.1 | 4.8 | 54.8 | % | |||||||||||||||||
Total expenses incurred | 101.0 | 114.7 | 113.0 | 112.5 | 114.1 | 12.9 | % | 101.0 | 114.1 | 12.9 | % | |||||||||||||||||
Amortization of intangibles | 1.9 | 1.9 | 2.0 | 2.0 | 2.0 | 5.3 | % | 1.9 | 2.0 | 5.3 | % | |||||||||||||||||
Net expense | $ 103.0 | $ 116.6 | $ 115.0 | $ 114.4 | $ 116.1 | 12.7 | % | $ 103.0 | $ 116.1 | 12.7 | % | |||||||||||||||||
General and administrative expenses basis on points of assets under | (Basis Points | ) | (Basis Points | ) | ||||||||||||||||||||||||
management - Annualized | 35 | 38 | 35 | 33 | 31 | (4 | ) | 35 | 31 | (4 | ) |
3/31/2006 | PAGE 28 | ||||||||||
Investment Management | |||||||||||
Assets Under Management Roll Forward | |||||||||||
Unaudited [Billions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Retail Fixed - Balance-Beginning-of-Period | $ 8.457 | $ 8.638 | $ 9.095 | $ 9.371 | $ 9.625 | 13.8 | % | $ 8.457 | $ 9.625 | 13.8 | % | |||||||||||||||||
Sales * | 0.906 | 0.905 | 0.942 | 0.965 | 0.951 | 4.9 | % | 0.906 | 0.951 | 4.9 | % | |||||||||||||||||
Redemptions | (0.690 | ) | (0.632 | ) | (0.664 | ) | (0.779 | ) | (0.805 | ) | -16.6 | % | (0.690 | ) | (0.805 | ) | -16.6 | % | ||||||||||
Transfers | 0.025 | (0.063 | ) | 0.023 | 0.026 | (0.056 | ) | NM | 0.025 | (0.056 | ) | NM | ||||||||||||||||
Net Flows | 0.241 | 0.211 | 0.301 | 0.212 | 0.089 | -62.9 | % | 0.241 | 0.089 | -62.9 | % | |||||||||||||||||
Net investment gains and change in market value | (0.060 | ) | 0.246 | (0.025 | ) | 0.043 | 0.046 | 176.0 | % | (0.060 | ) | 0.046 | 176.0 | % | ||||||||||||||
Balance at End-of-Period | $ 8.638 | $ 9.095 | $ 9.371 | $ 9.625 | $ 9.761 | 13.0 | % | $ 8.638 | $ 9.761 | 13.0 | % | |||||||||||||||||
Retail Equity - Balance-Beginning-of-Period | $24.278 | $25.053 | $27.725 | $30.988 | $32.732 | 34.8 | % | $ 24.278 | $32.732 | 34.8 | % | |||||||||||||||||
Sales * | 2.660 | 3.429 | 2.630 | 2.664 | 3.069 | 15.4 | % | 2.660 | 3.069 | 15.4 | % | |||||||||||||||||
Redemptions | (1.456 | ) | (1.365 | ) | (1.186 | ) | (1.700 | ) | (1.840 | ) | -26.4 | % | (1.456 | ) | (1.840 | ) | -26.4 | % | ||||||||||
Transfers | (0.019 | ) | (0.127 | ) | (0.025 | ) | (0.027 | ) | (0.013 | ) | 30.6 | % | (0.019 | ) | (0.013 | ) | 30.6 | % | ||||||||||
Net Flows | 1.185 | 1.936 | 1.419 | 0.936 | 1.216 | 2.6 | % | 1.185 | 1.216 | 2.6 | % | |||||||||||||||||
Net investment gains and change in market value | (0.410 | ) | 0.736 | 1.844 | 0.807 | �� | 2.552 | NM | (0.410 | ) | 2.552 | NM | ||||||||||||||||
Balance at End-of-Period | $25.053 | $27.725 | $30.988 | $32.732 | $36.500 | 45.7 | % | $25.053 | $36.500 | 45.7 | % | |||||||||||||||||
Total Retail - Balance-Beginning-of-Period | $32.735 | $33.691 | $36.820 | $40.359 | $42.357 | 29.4 | % | $32.735 | $42.357 | 29.4 | % | |||||||||||||||||
Retail sales-Annuities | 0.713 | 0.701 | 0.642 | 0.713 | 0.885 | 24.1 | % | 0.713 | 0.885 | 24.1 | % | |||||||||||||||||
Retail sales-Mutual Funds | 1.520 | 1.487 | 1.331 | 1.657 | 1.329 | -12.6 | % | 1.520 | 1.329 | -12.6 | % | |||||||||||||||||
Retail sales-Managed Acct. & Other | 1.333 | 2.146 | 1.599 | 1.260 | 1.806 | 35.4 | % | 1.333 | 1.806 | 35.4 | % | |||||||||||||||||
Total Retail Sales | 3.566 | 4.334 | 3.572 | 3.629 | 4.019 | 12.7 | % | 3.566 | 4.019 | 12.7 | % | |||||||||||||||||
Redemptions | (2.146 | ) | (1.997 | ) | (1.850 | ) | (2.479 | ) | (2.645 | ) | -23.2 | % | (2.146 | ) | (2.645 | ) | -23.2 | % | ||||||||||
Transfers | 0.006 | (0.190 | ) | (0.002 | ) | (0.002 | ) | (0.069 | ) | NM | 0.006 | (0.069 | ) | NM | ||||||||||||||
Net Flows | 1.426 | 2.147 | 1.720 | 1.148 | 1.305 | -8.5 | % | 1.426 | 1.305 | -8.5 | % | |||||||||||||||||
Net investment gains and change in market value | (0.471 | ) | 0.982 | 1.819 | 0.850 | 2.598 | NM | (0.471 | ) | 2.598 | NM | |||||||||||||||||
Balance at End-of-Period | $33.691 | $36.820 | $40.359 | $42.357 | $46.261 | 37.3 | % | $33.691 | $46.261 | 37.3 | % | |||||||||||||||||
Institutional Fixed - Balance-Beginning-of-Period | $11.547 | $12.715 | $13.403 | $13.964 | $14.699 | 27.3 | % | $11.547 | $14.699 | 27.3 | % | |||||||||||||||||
Inflows * | 1.531 | 1.472 | 1.036 | 1.175 | 3.080 | 101.2 | % | 1.531 | 3.080 | 101.2 | % | |||||||||||||||||
Withdrawals/terminations | (0.317 | ) | (1.016 | ) | (0.393 | ) | (0.483 | ) | (0.447 | ) | -40.8 | % | (0.317 | ) | (0.447 | ) | -40.8 | % | ||||||||||
Transfers | 0.001 | (0.006 | ) | 0.001 | (0.001 | ) | 0.002 | 181.7 | % | 0.001 | 0.002 | 181.7 | % | |||||||||||||||
Net Flows | 1.214 | 0.450 | 0.643 | 0.691 | 2.636 | 117.1 | % | 1.214 | 2.636 | 117.1 | % | |||||||||||||||||
Net investment gains and change in market value | (0.046 | ) | 0.239 | (0.083 | ) | 0.044 | (0.074 | ) | -59.4 | % | (0.046 | ) | (0.074 | ) | -59.4 | % | ||||||||||||
Balance at End-of-Period | $12.715 | $13.403 | $13.964 | $ 14.699 | $17.262 | 35.8 | % | $12.715 | $17.262 | 35.8 | % | |||||||||||||||||
Institutional Equity - Balance-Beginning-of-Period | $12.849 | $12.674 | $16.627 | $ 18.951 | $20.576 | 60.1 | % | $12.849 | $20.576 | 60.1 | % | |||||||||||||||||
Inflows * | 0.662 | 4.638 | 2.131 | 3.658 | 1.964 | 196.7 | % | 0.662 | 1.964 | 196.7 | % | |||||||||||||||||
Withdrawals/terminations | (0.532 | ) | (1.069 | ) | (0.948 | ) | (2.617 | ) | (1.008 | ) | -89.3 | % | (0.532 | ) | (1.008 | ) | -89.3 | % | ||||||||||
Transfers | 0.001 | (0.144 | ) | (0.000 | ) | 0.001 | 0.000 | -88.0 | % | 0.001 | 0.000 | -88.0 | % | |||||||||||||||
Net Flows | 0.131 | 3.425 | 1.182 | 1.041 | 0.956 | NM | 0.131 | 0.956 | NM | |||||||||||||||||||
Net investment gains and change in market value | (0.306 | ) | 0.528 | 1.141 | 0.584 | 1.373 | NM | (0.306 | ) | 1.373 | NM | |||||||||||||||||
Balance at End-of-Period | $12.674 | $16.627 | $18.951 | $20.576 | $22.906 | 80.7 | % | $12.674 | $22.906 | 80.7 | % | |||||||||||||||||
Total Institutional - Balance-Beginning-of-Period | $24.396 | $25.390 | $30.031 | $32.915 | $35.276 | 44.6 | % | $24.396 | $35.276 | 44.6 | % | |||||||||||||||||
Inflows | 2.193 | 6.110 | 3.166 | 4.833 | 5.044 | 130.0 | % | 2.193 | 5.044 | 130.0 | % | |||||||||||||||||
Withdrawals/terminations | (0.850 | ) | (2.085 | ) | (1.342 | ) | (3.100 | ) | (1.454 | ) | -71.2 | % | (0.850 | ) | (1.454 | ) | -71.2 | % | ||||||||||
Transfers | 0.002 | (0.151 | ) | 0.000 | (0.001 | ) | 0.003 | 22.1 | % | 0.002 | 0.003 | 22.1 | % | |||||||||||||||
Net Flows | 1.345 | 3.875 | 1.825 | 1.733 | 3.592 | 167.1 | % | 1.345 | 3.592 | 167.1 | % | |||||||||||||||||
Net investment gains and change in market value | (0.352 | ) | 0.766 | 1.058 | 0.629 | 1.299 | NM | (0.352 | ) | 1.299 | NM | |||||||||||||||||
Balance at End-of-Period | $25.390 | $30.031 | $32.915 | $35.276 | $40.167 | 58.2 | % | $25.390 | $40.167 | 58.2 | % | |||||||||||||||||
Total Retail and Institutional - At End-of-Period | $59.080 | $66.851 | $73.274 | $77.633 | $86.428 | 46.3 | % | $59.080 | $86.428 | 46.3 | % | |||||||||||||||||
General Account Assets-End-of-Period | $42.992 | $43.917 | $43.095 | $43.086 | $41.995 | -2.3 | % | $42.992 | $41.995 | -2.3 | % | |||||||||||||||||
Total Assets Under Management | ||||||||||||||||||||||||||||
At End-of-Period | $102.073 | $110.768 | $116.369 | $120.719 | $128.423 | 25.8 | % | $102.073 | $128.423 | 25.8 | % | |||||||||||||||||
Total Retail and Institutional - Net Flows | $ 2.771 | $ 6.022 | $ 3.546 | $ 2.881 | $ 4.898 | 76.7 | % | $ 2.771 | $ 4.898 | 76.7 | % | |||||||||||||||||
Subadvised Assets, included in Assets | ||||||||||||||||||||||||||||
Under Management above | ||||||||||||||||||||||||||||
Retail | $10.846 | $12.202 | $14.319 | $15.388 | $17.320 | 59.7 | % | $10.846 | $17.320 | 59.7 | % | |||||||||||||||||
Institutional | 4.258 | 4.564 | 4.986 | 5.114 | 5.608 | 31.7 | % | 4.258 | 5.608 | 31.7 | % | |||||||||||||||||
Total Subadvised Assets | $15.104 | $16.766 | $19.305 | $20.503 | $22.928 | 51.8 | % | $15.104 | $22.928 | 51.8 | % | |||||||||||||||||
* Sales and in-flows include dividend reinvestments. |
3/31/2006 | PAGE 29 | ||||||||||
Lincoln UK | |||||||||||
Income Statements | |||||||||||
Unaudited [Millions of Dollars] |
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Premiums | $ 14.6 | $ 16.4 | $ 16.9 | $ 15.4 | $ 16.6 | 13.3 | % | $ 14.7 | $ 16.6 | 13.3 | % | |||||||||||||||||
Mortality assessments | 9.0 | 9.4 | 9.0 | 7.3 | 7.8 | -13.4 | % | 9.0 | 7.8 | -13.4 | % | |||||||||||||||||
Expense assessments | 30.6 | 33.0 | 56.0 | 22.0 | 28.0 | -8.8 | % | 30.7 | 28.0 | -8.8 | % | |||||||||||||||||
Net investment income | 20.3 | 19.6 | 20.9 | 17.8 | 17.0 | -16.1 | % | 20.3 | 17.0 | -16.1 | % | |||||||||||||||||
Total Operating Revenue | 74.6 | 78.4 | 102.9 | 62.6 | 69.5 | -7.0 | % | 74.7 | 69.5 | -7.0 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Insurance benefits | 25.1 | 27.9 | 35.5 | 27.5 | 25.4 | 1.2 | % | 25.1 | 25.4 | 1.2 | % | |||||||||||||||||
Operating and acquisition expenses | 34.0 | 34.7 | 52.7 | 14.3 | 27.6 | -18.8 | % | 34.0 | 27.6 | -18.8 | % | |||||||||||||||||
Total Operating Expenses | 59.2 | 62.6 | 88.2 | 41.8 | 53.0 | -10.3 | % | 59.1 | 53.0 | -10.3 | % | |||||||||||||||||
Income from operations before Federal income taxes | 15.5 | 15.8 | 14.7 | 20.8 | 16.5 | 5.5 | % | 15.6 | 16.5 | 5.5 | % | |||||||||||||||||
Federal income taxes | 5.4 | 5.6 | 5.1 | 7.2 | 5.8 | 7.4 | % | 5.4 | 5.8 | 7.4 | % | |||||||||||||||||
Income from Operations | $ 10.0 | $ 10.2 | $ 9.6 | $ 13.6 | $ 10.7 | 4.5 | % | $ 10.2 | $ 10.7 | 4.5 | % | |||||||||||||||||
Effective tax rate on | ||||||||||||||||||||||||||||
Income from Operations | 34.6 | % | 35.5 | % | 34.8 | % | 34.7 | % | 35.2 | % | 34.6 | % | 35.2 | % | ||||||||||||||
Average equity | $ 440.2 | $ 446.4 | $ 452.7 | $ 447.8 | $ 427.0 | $ 440.2 | $ 427.0 | |||||||||||||||||||||
Return on average equity | 9.3 | % | 9.1 | % | 8.4 | % | 12.1 | % | 10.0 | % | 9.3 | % | 10.0 | % | ||||||||||||||
Operating and Acquisition Expenses | ||||||||||||||||||||||||||||
Commissions | $ 0.6 | $ 0.7 | $ 0.9 | $ 0.1 | $ 0.9 | 58.5 | % | $ 0.6 | $ 0.9 | 58.5 | % | |||||||||||||||||
General and administrative expenses | 25.4 | 23.8 | 24.9 | 24.2 | 22.7 | -10.7 | % | 25.4 | 22.7 | -10.7 | % | |||||||||||||||||
Total commissions and expenses incurred | 25.9 | 24.5 | 25.8 | 24.3 | 23.6 | -9.2 | % | 25.9 | 23.6 | -9.2 | % | |||||||||||||||||
Less: commissions and expenses capitalized | (0.7 | ) | (0.7 | ) | (0.7 | ) | (0.7 | ) | (0.5 | ) | 27.1 | % | (0.7 | ) | (0.5 | ) | 27.1 | % | ||||||||||
Amortization of DAC and VOBA | 8.8 | 10.8 | 27.5 | (9.3 | ) | 4.5 | -48.7 | % | 8.8 | 4.5 | -48.7 | % | ||||||||||||||||
Net Operating and Acquisition Expenses | $ 34.0 | $ 34.7 | $ 52.7 | $ 14.3 | $ 27.6 | -19.0 | % | $ 34.0 | $ 27.6 | -19.0 | % | |||||||||||||||||
Roll Forward of Deferred Acquisition Costs & Value of Business Acquired | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 867.0 | $ 848.7 | $ 792.4 | $ 753.5 | $ 743.4 | $ 867.0 | $ 743.4 | |||||||||||||||||||||
Deferral | 0.7 | 0.7 | 0.7 | 0.7 | 0.5 | 0.7 | 0.5 | |||||||||||||||||||||
Amortization | (8.8 | ) | (10.8 | ) | (27.5 | ) | 9.3 | (4.5 | ) | (8.8 | ) | (4.5 | ) | |||||||||||||||
Included in Total Benefits and Expenses | (8.1 | ) | (10.1 | ) | (26.8 | ) | 10.0 | (4.0 | ) | (8.1 | ) | (4.0 | ) | |||||||||||||||
Adjustment related to realized (gains) losses | ||||||||||||||||||||||||||||
on available-for-sale securities | - | - | - | - | - | - | - | |||||||||||||||||||||
Foreign currency translation adjustment | (10.2 | ) | (46.2 | ) | (12.1 | ) | (20.0 | ) | 7.7 | (10.2 | ) | 7.7 | ||||||||||||||||
Balance at end of period | $ 848.7 | $ 792.4 | $ 753.5 | $ 743.4 | $ 747.2 | $ 848.7 | $ 747.2 | |||||||||||||||||||||
Roll Forward of Deferred Front-End Load | ||||||||||||||||||||||||||||
Balance at beginning of period | $ 437.5 | $ 428.3 | $ 399.8 | $ 365.8 | $ 363.1 | $ 437.5 | $ 363.1 | |||||||||||||||||||||
Deferral | 1.5 | 1.1 | 0.9 | 0.7 | 1.0 | 1.5 | 1.0 | |||||||||||||||||||||
Amortization | (5.5 | ) | (6.2 | ) | (29.0 | ) | 6.0 | (3.4 | ) | (5.5 | ) | (3.4 | ) | |||||||||||||||
Included in Income from Operations | (4.0 | ) | (5.1 | ) | (28.1 | ) | 6.7 | (2.4 | ) | (4.0 | ) | (2.4 | ) | |||||||||||||||
Foreign currency translation adjustment | (5.2 | ) | (23.3 | ) | (5.9 | ) | (9.5 | ) | 3.8 | (5.2 | ) | 3.8 | ||||||||||||||||
Balance at end of period | $ 428.3 | $ 399.8 | $ 365.8 | $ 363.1 | $ 364.5 | $ 428.3 | $ 364.5 |
3/31/2006 | PAGE 30 | |||||||||||||||||||||||||||
Lincoln UK | ||||||||||||||||||||||||||||
Operational Data | ||||||||||||||||||||||||||||
Unaudited [Billions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Unit Linked Assets | ||||||||||||||||||||||||||||
Balance-Beg-of-Period | $ | 7.186 | $ | 7.173 | $ | 6.903 | $ | 7.180 | $ | 7.320 | 1.9 | % | $ | 7.186 | $ | 7.320 | 1.9 | % | ||||||||||
Deposits | 0.075 | 0.070 | 0.088 | 0.156 | 0.069 | -8.6 | % | 0.075 | 0.069 | -8.6 | % | |||||||||||||||||
Withdrawals (including charges) and Deaths | (0.175 | ) | (0.183 | ) | (0.192 | ) | (0.178 | ) | (0.186 | ) | -6.7 | % | (0.175 | ) | (0.186 | ) | -6.7 | % | ||||||||||
Net Flows | (0.100 | ) | (0.113 | ) | (0.104 | ) | (0.023 | ) | (0.118 | ) | -18.3 | % | (0.100 | ) | (0.118 | ) | -18.3 | % | ||||||||||
Investment income and change in market value | 0.171 | 0.233 | 0.492 | 0.347 | 0.479 | 179.6 | % | 0.171 | 0.479 | 179.6 | % | |||||||||||||||||
Foreign Currency Adjustment | (0.085 | ) | (0.390 | ) | (0.111 | ) | (0.184 | ) | 0.072 | 184.9 | % | (0.085 | ) | 0.072 | 184.9 | % | ||||||||||||
Unit Linked Assets - End-of-Period | $ | 7.173 | $ | 6.903 | $ | 7.180 | $ | 7.320 | $ | 7.754 | 8.1 | % | $ | 7.173 | $ | 7.754 | 8.1 | % | ||||||||||
Individual Life In-force | $ | 19.820 | $ | 18.479 | $ | 18.175 | $ | 17.521 | $ | 17.744 | -10.5 | % | $ | 19.820 | $ | 17.744 | -10.5 | % | ||||||||||
Exchange Rate - Dollars to Pounds | ||||||||||||||||||||||||||||
For-the-Period | 1.904 | 1.855 | 1.779 | 1.747 | 1.754 | -7.9 | % | 1.904 | 1.754 | -7.9 | % | |||||||||||||||||
End-of-Period | 1.896 | 1.792 | 1.764 | 1.719 | 1.737 | -8.4 | % | 1.896 | 1.737 | -8.4 | % |
3/31/2006 | PAGE 31 | |||||||||||||||||||||||||||
Lincoln Financial Media | ||||||||||||||||||||||||||||
Income Statements | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Communications revenues, net | ||||||||||||||||||||||||||||
Total Operating Revenue | ||||||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||
Broadcast cash flow | ||||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||||
Operating and administrative expenses | ||||||||||||||||||||||||||||
Net interest expense and other | ||||||||||||||||||||||||||||
Total Operating Expenses | ||||||||||||||||||||||||||||
Income from operations before Federal Income Taxes | ||||||||||||||||||||||||||||
Federal income taxes | ||||||||||||||||||||||||||||
Income from Operations | ||||||||||||||||||||||||||||
Effective tax rate on | ||||||||||||||||||||||||||||
Income from Operations | ||||||||||||||||||||||||||||
Other Operations (1) | ||||||||||||||||||||||||||||
Unaudited [Millions of Dollars] | ||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||
Operating Revenue | ||||||||||||||||||||||||||||
Earnings on investments & other income | $ | 2.3 | $ | 60.3 | $ | 27.0 | $ | 10.0 | $ | 12.9 | NM | $ | 2.3 | $ | 12.9 | NM | ||||||||||||
Amortization of deferred gain on | ||||||||||||||||||||||||||||
indemnity reinsurance(2) | 18.9 | 18.9 | 18.9 | 18.9 | 18.8 | -0.9 | % | 18.9 | 18.8 | -0.9 | % | |||||||||||||||||
Total Operating Revenue | 21.2 | 79.2 | 45.9 | 28.9 | 31.7 | 49.6 | % | 21.2 | 31.7 | 49.6 | % | |||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Interest on debt | 22.2 | 21.8 | 21.4 | 21.8 | 21.5 | -3.0 | % | 22.2 | 21.5 | -3.0 | % | |||||||||||||||||
Operating expenses | 6.5 | 50.3 | 28.5 | 12.8 | 12.2 | 88.1 | % | 6.5 | 12.2 | 88.1 | % | |||||||||||||||||
Total Operating Expenses | 28.6 | 72.2 | 49.9 | 34.6 | 33.7 | 17.6 | % | 28.6 | 33.7 | 17.6 | % | |||||||||||||||||
Income from operations before Federal Income Taxes | (7.5 | ) | 7.0 | (4.0 | ) | (5.7 | ) | (2.0 | ) | 73.1 | % | (7.5 | ) | (2.0 | ) | 73.1 | % | |||||||||||
Federal income taxes(3) | (10.0 | ) | (22.9 | ) | (16.3 | ) | (15.4 | ) | (2.2 | ) | 78.5 | % | (10.0 | ) | (2.2 | ) | 78.5 | % | ||||||||||
Income from Operations | $ | 2.5 | $ | 30.0 | $ | 12.2 | $ | 9.6 | $ | 0.1 | -94.4 | % | $ | 2.5 | $ | 0.1 | -94.4 | % | ||||||||||
(1) Includes elimination of intercompany transactions. | ||||||||||||||||||||||||||||
(2) Represents the amortization of deferred gain recognized on the business sold through indemnity reinsurance to Swiss Re. | ||||||||||||||||||||||||||||
(3) Includes a reduction of the valuation allowance on the deferred tax asset of our foreign life reinsurance subsidiary of $5.7 million in the 1st quarter of 2005, $23.5 million in the 2nd quarter of 2005, $13.3 million in the 3rd quarter of 2005, $4.3 million in the 4th quarter of 2005, $46.8 million for the full year 2005 |
3/31/2006 | PAGE 32 | ||||||||||||||||||||||||||||||
Consolidated Domestic Deposits/Account Balances | |||||||||||||||||||||||||||||||
Unaudited [Billions of Dollars] | |||||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | |||||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | |||||||||||||||||||||||
Deposits - For the Period | |||||||||||||||||||||||||||||||
Individual Markets - Fixed Annuities | $ | 0.472 | $ | 0.534 | $ | 0.494 | $ | 0.486 | $ | 0.471 | -0.3 | % | $ | 0.472 | $ | 0.471 | -0.3 | % | |||||||||||||
Individual Markets - Variable Annuities | 1.289 | 1.327 | 1.410 | 1.513 | 1.665 | 29.2 | % | 1.289 | 1.665 | 29.2 | % | ||||||||||||||||||||
Individual Markets - Life Insurance | 0.468 | 0.470 | 0.497 | 0.596 | 0.488 | 4.3 | % | 0.468 | 0.488 | 4.3 | % | ||||||||||||||||||||
Employer Markets - Fixed Annuities | 0.298 | 0.286 | 0.259 | 0.240 | 0.257 | -13.7 | % | 0.298 | 0.257 | -13.7 | % | ||||||||||||||||||||
Employer Markets - Variable Products (1) | 0.983 | 0.746 | 0.726 | 0.865 | 0.983 | 0.1 | % | 0.983 | 0.983 | 0.1 | % | ||||||||||||||||||||
Employer Markets - Executive Benefits & Other | 0.044 | 0.056 | 0.057 | 0.052 | 0.047 | 5.4 | % | 0.044 | 0.047 | 5.4 | % | ||||||||||||||||||||
Inv Mgmt - Annuities | 0.713 | 0.701 | 0.642 | 0.713 | 0.885 | 24.1 | % | 0.713 | 0.885 | 24.1 | % | ||||||||||||||||||||
Inv Mgmt - Mutual Funds | 1.520 | 1.487 | 1.331 | 1.657 | 1.329 | -12.6 | % | 1.520 | 1.329 | -12.6 | % | ||||||||||||||||||||
Inv Mgmt - Managed Acct. & Other | 1.333 | 2.146 | 1.599 | 1.260 | 1.806 | 35.4 | % | 1.333 | 1.806 | 35.4 | % | ||||||||||||||||||||
Consolidating Adjustments | (0.524 | ) | (0.670 | ) | (0.624 | ) | (0.617 | ) | (0.481 | ) | 8.1 | % | (0.524 | ) | (0.481 | ) | 8.1 | % | |||||||||||||
Total Gross Retail Deposits | 6.596 | 7.085 | 6.391 | 6.763 | 7.449 | 12.9 | % | 6.596 | 7.449 | 12.9 | % | ||||||||||||||||||||
Inv Mgmt - Institutional | 2.193 | 6.110 | 3.166 | 4.833 | 5.044 | 130.0 | % | 2.193 | 5.044 | 130.0 | % | ||||||||||||||||||||
Consolidating Adjustments | (0.375 | ) | (0.173 | ) | (0.217 | ) | (0.265 | ) | (0.257 | ) | 31.4 | % | (0.375 | ) | (0.257 | ) | 31.4 | % | |||||||||||||
Total Gross Deposits | $ | 8.414 | $ | 13.023 | $ | 9.340 | $ | 11.331 | $ | 12.236 | 45.4 | % | $ | 8.414 | $ | 12.236 | 45.4 | % | |||||||||||||
Account Balances - End of Period | |||||||||||||||||||||||||||||||
Individual Markets - Fixed Annuities | $ | 9.120 | $ | 9.165 | $ | 9.117 | $ | 8.605 | $ | 8.357 | -8.4 | % | $ | 9.120 | $ | 8.357 | -8.4 | % | |||||||||||||
Individual Markets - Variable Annuities | 31.100 | 32.801 | 35.276 | 37.662 | 40.440 | 30.0 | % | 31.100 | 40.440 | 30.0 | % | ||||||||||||||||||||
Individual Markets - Life Insurance | 13.328 | 13.496 | 13.745 | 14.051 | 14.268 | 7.1 | % | 13.328 | 14.268 | 7.1 | % | ||||||||||||||||||||
Employer Markets - Fixed Annuities | 10.688 | 10.710 | 10.686 | 10.995 | 11.015 | 3.1 | % | 10.688 | 11.015 | 3.1 | % | ||||||||||||||||||||
Employer Markets - Variable Products (1) | 17.509 | 18.080 | 18.965 | 19.474 | 20.780 | 18.7 | % | 17.509 | 20.780 | 18.7 | % | ||||||||||||||||||||
Employer Markets - Executive Benefits & Other | 1.138 | 1.194 | 1.256 | 1.318 | 1.387 | 21.9 | % | 1.138 | 1.387 | 21.9 | % | ||||||||||||||||||||
Inv Mgmt - Annuities | 12.165 | 12.500 | 13.022 | 13.287 | 13.998 | 15.1 | % | 12.165 | 13.998 | 15.1 | % | ||||||||||||||||||||
Inv Mgmt - Mutual Funds | 14.040 | �� | 14.929 | 15.738 | 16.231 | 17.101 | 21.8 | % | 14.040 | 17.101 | 21.8 | % | |||||||||||||||||||
Inv Mgmt - Managed Acct. & Other | 7.486 | 9.392 | 11.599 | 12.839 | 15.162 | 102.5 | % | 7.486 | 15.162 | 102.5 | % | ||||||||||||||||||||
Consolidating Adjustments | (11.584 | ) | (11.790 | ) | (12.229 | ) | (12.602 | ) | (13.282 | ) | -14.7 | % | (11.584 | ) | (13.282 | ) | -14.7 | % | |||||||||||||
Total Retail Account Balances | 104.990 | 110.476 | 117.175 | 121.859 | 129.226 | 23.1 | % | 104.990 | 129.226 | 23.1 | % | ||||||||||||||||||||
Inv Mgmt - Institutional | 25.390 | 30.031 | 32.915 | 35.276 | 40.167 | 58.2 | % | 25.390 | 40.167 | 58.2 | % | ||||||||||||||||||||
Consolidating Adjustments | (3.431 | ) | (3.405 | ) | (3.559 | ) | (3.422 | ) | (3.573 | ) | -4.1 | % | (3.431 | ) | (3.573 | ) | -4.1 | % | |||||||||||||
Total Account Balances | $ | 126.948 | $ | 137.102 | $ | 146.530 | $ | 153.712 | $ | 165.820 | 30.6 | % | $ | 126.948 | $ | 165.820 | 30.6 | % | |||||||||||||
Total Domestic Net Flows | |||||||||||||||||||||||||||||||
Unaudited [Billions of Dollars] | |||||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | Mar | Mar | % | |||||||||||||||||||||||
For the Period Ended | 2005 | 2005 | 2005 | 2005 | 2006 | Change | 2005 | 2006 | Change | ||||||||||||||||||||||
Individual Markets | $ | 0.880 | $ | 1.011 | $ | 1.012 | $ | 1.167 | $ | 1.026 | 16.6 | % | $ | 0.880 | $ | 1.026 | 16.6 | % | |||||||||||||
Employer Markets | 0.261 | 0.227 | 0.070 | 0.024 | 0.220 | -15.5 | % | 0.261 | 0.220 | -15.5 | % | ||||||||||||||||||||
Investment Management - Retail | 1.426 | 2.147 | 1.720 | 1.148 | 1.305 | -8.5 | % | 1.426 | 1.305 | -8.5 | % | ||||||||||||||||||||
Consolidating Adjustments | (0.002 | ) | 0.090 | (0.053 | ) | 0.015 | 0.083 | NM | (0.002 | ) | 0.083 | NM | |||||||||||||||||||
Total Retail Net Flows | 2.565 | 3.476 | 2.749 | 2.354 | 2.635 | 2.7 | % | 2.565 | 2.635 | 2.7 | % | ||||||||||||||||||||
Investment Management - Institutional | 1.345 | 3.875 | 1.825 | 1.733 | 3.592 | 167.1 | % | 1.345 | 3.592 | 167.1 | % | ||||||||||||||||||||
Consolidating Adjustments | (0.123 | ) | 0.098 | (0.050 | ) | 0.198 | (0.039 | ) | 68.5 | % | (0.123 | ) | (0.039 | ) | 68.5 | % | |||||||||||||||
Total Net Flows | $ | 3.787 | $ | 7.449 | $ | 4.524 | $ | 4.285 | $ | 6.188 | 63.4 | % | $ | 3.787 | $ | 6.188 | 63.4 | % | |||||||||||||
(1) Includes amounts attributable to Alliance program mutual fund net flows. | |||||||||||||||||||||||||||||||
Account values for the Alliance program are not included in the separate accounts reported on our balance sheet. |
3/31/2006 | PAGE 33 | |||||||||||||||||||||
Consolidated Investment Data - Assets Managed | ||||||||||||||||||||||
Unaudited [Billions of Dollars] | ||||||||||||||||||||||
As of | ||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | |||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | |||||||||||||||||
Assets Managed by Source | ||||||||||||||||||||||
LNC's Investments and Cash: | ||||||||||||||||||||||
Fixed maturity securities - | ||||||||||||||||||||||
available for sale | $ | 34.225 | $ | 34.975 | $ | 34.325 | $ | 33.443 | $ | 32.893 | -3.9 | % | ||||||||||
Equity securities - available for sale | 0.155 | 0.155 | 0.152 | 0.145 | 0.176 | 13.7 | % | |||||||||||||||
Trading securities | 3.207 | 3.345 | 3.287 | 3.246 | 3.190 | -0.5 | % | |||||||||||||||
Other investments | 6.396 | 6.389 | 6.322 | 6.334 | 6.314 | -1.3 | % | |||||||||||||||
Total LNC Investments | 43.982 | 44.863 | 44.085 | 43.168 | 42.573 | -3.2 | % | |||||||||||||||
Separate accounts | 55.387 | 57.240 | 60.812 | 63.747 | 67.984 | 22.7 | % | |||||||||||||||
Cash and invested cash | 1.499 | 1.659 | 1.602 | 2.312 | 1.974 | 31.7 | % | |||||||||||||||
Total LNC | 100.868 | 103.762 | 106.498 | 109.227 | 112.531 | 11.6 | % | |||||||||||||||
Non-affiliate assets managed | 45.039 | 52.643 | 58.446 | 62.528 | 70.464 | 56.5 | % | |||||||||||||||
Total Assets Managed | $ | 145.907 | $ | 156.405 | $ | 164.944 | $ | 171.755 | $ | 182.995 | 25.4 | % | ||||||||||
Assets Managed by Advisor | ||||||||||||||||||||||
Investment Management segment | ||||||||||||||||||||||
(See page 28 for additional detail) | $ | 59.080 | $ | 66.851 | $ | 73.274 | $ | 77.633 | $ | 86.428 | 46.3 | % | ||||||||||
DLIA-Corp | ||||||||||||||||||||||
(Assets managed internally-see page --) | 42.992 | 43.917 | 43.095 | 43.086 | 41.995 | -2.3 | % | |||||||||||||||
Lincoln UK | 8.578 | 8.278 | 8.518 | 8.562 | 8.986 | 4.8 | % | |||||||||||||||
Domestic Policy Loans (excluding Lincoln UK) | 1.854 | 1.862 | 1.851 | 1.858 | 1.856 | 0.1 | % | |||||||||||||||
Non-LNC Affiliates | 33.402 | 35.497 | 38.205 | 40.617 | 43.729 | 30.9 | % | |||||||||||||||
Total Assets Managed | $ | 145.907 | $ | 156.405 | $ | 164.944 | $ | 171.755 | $ | 182.995 | 25.4 | % |
3/31/2006 | PAGE 34 | ||||||||||||||||||||||||
Consolidated Investment Data | |||||||||||||||||||||||||
Unaudited [Millions of Dollars] | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | ||||||||||||||||||||
Net Investment Income | |||||||||||||||||||||||||
Fixed maturity AFS securities | $ | 505.1 | $ | 509.8 | $ | 505.7 | $ | 509.7 | $ | 513.7 | 1.7 | % | |||||||||||||
Equity AFS securities | 1.8 | 2.0 | 2.4 | 3.3 | 2.1 | 16.3 | % | ||||||||||||||||||
Trading securities | 47.6 | 48.8 | 48.6 | 48.7 | 49.7 | 4.3 | % | ||||||||||||||||||
Mortgage loans on real estate | 70.9 | 70.7 | 70.9 | 75.1 | 67.2 | -5.3 | % | ||||||||||||||||||
Real estate | 4.3 | 31.7 | 8.5 | 5.6 | 9.1 | 110.8 | % | ||||||||||||||||||
Policy loans | 29.6 | 29.8 | 29.8 | 29.2 | 29.7 | 0.4 | % | ||||||||||||||||||
Invested cash | 12.7 | 14.0 | 17.0 | 19.2 | 22.8 | 79.4 | % | ||||||||||||||||||
Other investments | 13.5 | 24.2 | 16.4 | 7.0 | 14.6 | 7.9 | % | ||||||||||||||||||
Investment revenue | 685.6 | 731.1 | 699.3 | 697.9 | 708.8 | 3.4 | % | ||||||||||||||||||
Investment expense | (25.8 | ) | (27.5 | ) | (28.5 | ) | (29.8 | ) | (30.4 | ) | -18.0 | % | |||||||||||||
Net Investment Income | 659.8 | 703.6 | 670.8 | 668.1 | 678.3 | 2.8 | % | ||||||||||||||||||
Gross-up of Tax Exempt Income | 1.6 | 1.6 | 1.8 | 2.1 | 1.5 | -2.9 | % | ||||||||||||||||||
Adjusted Net Invest Income | $ | 661.4 | $ | 705.2 | $ | 672.6 | $ | 670.2 | $ | 679.9 | 101.4 | % | |||||||||||||
Mean Invested Assets (Amortized Cost) | $ | 43,851.9 | $ | 43,806.2 | $ | 44,040.1 | $ | 44,035.2 | $ | 44,363.6 | |||||||||||||||
Ratio of Adjusted Net Invest Income | |||||||||||||||||||||||||
Over Mean Invested Assets | 6.03 | % | 6.44 | % | 6.11 | % | 6.09 | % | 6.13 | % | |||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | ||||||||||||||||||||
Realized Investment Gains (Losses) | 2005 | 2005 | 2005 | 2005 | 2006 | Change | |||||||||||||||||||
Fixed maturities | $ | 6.0 | $ | 13.9 | $ | 8.2 | $ | (5.6 | ) | $ | 4.3 | -28.0 | % | ||||||||||||
Equity securities | 0.0 | 5.7 | (0.6 | ) | 2.2 | 0.3 | NM | ||||||||||||||||||
Other gains (losses), net | 1.0 | (2.7 | ) | 5.4 | 6.3 | (0.1 | ) | NM | |||||||||||||||||
Policyholders' interest | (1.8 | ) | 0.3 | 0.7 | (1.3 | ) | (1.8 | ) | -0.7 | % | |||||||||||||||
Capital gains expense | (2.4 | ) | (2.4 | ) | (2.4 | ) | (2.3 | ) | (2.4 | ) | -0.8 | % | |||||||||||||
Sale of affiliate | 14.2 | - | - | - | - | -100.0 | % | ||||||||||||||||||
Total pretax gains (losses) | 17.1 | 14.7 | 11.3 | (0.8 | ) | 0.3 | -98.1 | % | |||||||||||||||||
Amortization of DAC, VOBA and deferred | |||||||||||||||||||||||||
sales inducements | (11.5 | ) | (15.3 | ) | (14.0 | ) | (8.8 | ) | (10.8 | ) | 6.4 | % | |||||||||||||
Income taxes | 2.2 | (0.4 | ) | (0.7 | ) | (3.3 | ) | (3.3 | ) | NM | |||||||||||||||
Realized investment gains (losses), net of taxes | $ | 3.3 | $ | (0.2 | ) | $ | (2.0 | ) | $ | (6.2 | ) | $ | (7.2 | ) | NM | ||||||||||
As of March 31, 2006 | As of Dec 31, 2005 | ||||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||
Available-for-Sale and Trading Securities | |||||||||||||||||||||||||
Fixed Maturity Sec (Fair Value) | $ | 36,080.6 | 99.5 | % | $ | 36,687.0 | 99.6 | % | |||||||||||||||||
Fixed Maturity Sec (Amortized Cost) | 35,497.4 | 99.6 | % | 35,347.6 | 99.6 | % | |||||||||||||||||||
Equity Securities (Fair Value) | 178.2 | 0.5 | % | 146.9 | 0.4 | % | |||||||||||||||||||
Equity Securities (Amortized Cost) | 160.0 | 0.4 | % | 139.0 | 0.4 | % | |||||||||||||||||||
% of Available-for-Sale Fixed Maturity Securities (Based on Fair Value) | |||||||||||||||||||||||||
Treasuries and AAA | 23.4 | % | 23.4 | % | |||||||||||||||||||||
AA or better | 31.0 | % | 30.9 | % | |||||||||||||||||||||
BB or less | 7.5 | % | 7.4 | % | |||||||||||||||||||||
General Account Investments | As of March 31, 2006 | As of Dec 31, 2005 | |||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||
Fixed maturities- security sector: | |||||||||||||||||||||||||
Corporate bonds | $ | 25,418.0 | 77.3 | % | $ | 25,860.7 | 77.3 | % | |||||||||||||||||
U.S. government bonds | 173.4 | 0.5 | % | 161.8 | 0.5 | % | |||||||||||||||||||
Foreign government bonds | 1,169.7 | 3.6 | % | 1,203.3 | 3.6 | % | |||||||||||||||||||
Mortgage backed securities | 5,868.8 | 17.8 | % | 5,951.2 | 17.8 | % | |||||||||||||||||||
State and municipal bonds | 126.0 | 0.4 | % | 128.8 | 0.4 | % | |||||||||||||||||||
Preferred stocks - redeemable | 136.9 | 0.4 | % | 137.4 | 0.4 | % | |||||||||||||||||||
Total | $ | 32,892.8 | 100.0 | % | $ | 33,443.2 | 100.0 | % | |||||||||||||||||
As of | |||||||||||||||||||||||||
Mar | Jun | Sep | Dec | Mar | % | ||||||||||||||||||||
2005 | 2005 | 2005 | 2005 | 2006 | Change | ||||||||||||||||||||
Composition of Investment Portfolio: | |||||||||||||||||||||||||
Securities available-for-sale, at fair value: | |||||||||||||||||||||||||
Fixed Maturity | $ | 34,224.9 | $ | 34,975.1 | $ | 34,324.9 | $ | 33,443.2 | $ | 32,892.8 | -3.9 | % | |||||||||||||
Equity | 154.8 | 154.5 | 151.6 | 144.7 | 176.0 | 13.7 | % | ||||||||||||||||||
Trading securities | 3,206.5 | 3,345.1 | 3,287.0 | 3,246.0 | 3,190.1 | -0.5 | % | ||||||||||||||||||
Mortgage loans on real estate & real estate | 4,019.1 | 3,960.4 | 3,892.8 | 3,845.3 | 3,766.5 | -6.3 | % | ||||||||||||||||||
Policy loans | 1,860.5 | 1,866.9 | 1,856.4 | 1,862.2 | 1,860.4 | - | |||||||||||||||||||
Derivative Investments | 104.6 | 156.6 | 155.9 | 174.7 | 199.3 | 90.5 | % | ||||||||||||||||||
Other investments | 411.9 | 404.8 | 416.4 | 452.2 | 488.2 | 18.5 | % | ||||||||||||||||||
Total | $ | 43,982.2 | $ | 44,863.3 | $ | 44,085.0 | $ | 43,168.4 | $ | 42,573.2 | -3.2 | % |