| Nature of Operations and Basis of Presentation | 1. N ature of Operations, Basis of Presentation and Summary of Significant Accounting Policies Nature of Operations Lincoln National Corporation and its subsidiaries (“LNC” or the “Company,” which also may be referred to as “we,” “our” or “us”) operate multiple insurance businesses through four business segments: Life Insurance, Annuities, Group Protection and Retirement Plan Services. In addition, we include financial data for operations that are not directly related to our business segments in Other Operations. The collective group of businesses uses “Lincoln Financial Group” as its marketing identity. Through our business segments, we sell a wide range of wealth protection, accumulation, group protection and retirement income products and solutions. These products primarily include universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL and VUL, indexed universal life insurance (“IUL”), term life insurance, fixed and indexed annuities, variable annuities, group life, disability and dental and employer-sponsored retirement plans and services. For more information on our segments and the products and solutions we provide, see Note 20. Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”). Certain GAAP policies, which significantly affect the determination of financial condition, results of operations and cash flows, are summarized below. On January 1, 2023, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts and related amendments (“ASU 2018-12”) with a transition date of January 1, 2021. ASU 2018-12 updated accounting and reporting requirements for long-duration contracts and certain investment contracts issued by insurance entities. We adopted ASU 2018-12 under the modified retrospective approach, except for market risk benefits (“MRBs”), which applied the full retrospective approach. Our consolidated financial statements are presented under the new guidance for reporting periods beginning January 1, 2021. Certain amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the presentation adopted in the current period. We present disaggregated disclosures in the Notes below for long-duration insurance balances, applying the level of aggregation by reportable segment as follows: Reportable Segment Level of Aggregation Life Insurance Traditional Life UL and Other Annuities Variable Annuities Fixed Annuities Payout Annuities Group Protection Group Protection Retirement Plan Services Retirement Plan Services The fixed annuities level of aggregation represents deferred fixed annuities. We have excluded amounts reported in Other Operations from our disaggregated disclosures that are attributable to the indemnity reinsurance agreements with Protective Life Insurance Company (“Protective”) and Swiss Re Life & Health America, Inc (“Swiss Re”) as these contracts are fully reinsured, run-off institutional pension business in the form of group annuity and the results of certain disability income business and not reflected in the results of the reportable segments listed above. Restatement of Previously Issued Consolidated Financial Statements Restatement Background Previously, we had entered into a block reinsurance agreement with Resolution Life to reinsure approximately $ 9.4 billion of in-force executive benefit and universal life reserves. A portion of the transaction was structured as coinsurance, and we paid as consideration investments with a book value of approximately $ 4.6 billion and a fair value of approximately $ 5.2 billion as of October 1, 2021, triggering a realized gain of $ 635 million. This contributed to a total deferred gain of $ 797 million. At the time of the transaction, we concluded that the $ 635 million realized gain would be deferred and amortized into income over the benefit period of the reinsurance treaty. The Company’s management has concluded that a gain or loss amount pertaining to the transfer of investments to the assuming company in a coinsurance transaction should be recorded as a realized gain or loss at the time of the transfer. As a result, it was determined that the $ 635 million deferred gain pertaining to the sale of investments should have been recognized immediately in the fourth quarter of 2021 when the investments were transferred to Resolution Life. This misstatement is described in more detail in “Description of Misstatements – Misstatement Associated with the Coinsurance Reinsurance Transaction” below. As part of the restatement, we also recorded adjustments to correct for previously identified other immaterial misstatements in the impacted periods that are described in more detail in “Description of Misstatements – Other Immaterial Misstatements” below. Accordingly, we restated the consolidated financial statements for the years ended December 31, 2022 and December 31, 2021, in accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections prior to the adoption of ASU 2018-12. The categories of misstatements and their impact on the previously issued consolidated financial statements are described in more detail below. Description of Misstatements Misstatement Associated with the Coinsurance Reinsurance Transaction We recorded adjustments to recognize the realized gain related to the transaction through net income in 2021 instead of deferring and amortizing this gain into net income. These adjustments, which are discussed below, are reflected in the restatement tables below. For the year ended December 31, 2021, the correction of the misstatement resulted in a $ 635 million increase to realized gain (loss), an $ 8 million decrease to amortization of deferred gain on business sold through reinsurance, a $ 4 million increase to commissions and other expenses related to state income taxes associated with the realized gain and a $ 131 million increase to federal income tax expense on our Consolidated Statements of Comprehensive Income (Loss). Additionally, the correction of the misstatement resulted in a $ 492 million decrease to other liabilities and a $ 492 million increase to retained earnings on our Consolidated Balance Sheets as of December 31, 2021. For the year ended December 31, 2022, the correction of the misstatement resulted in a $ 32 million decrease to amortization of deferred gain on business sold through reinsurance on our Consolidated Statements of Comprehensive Income (Loss). Additionally, the correction of the misstatement resulted in a $ 467 million increase to retained earnings on our Consolidated Balance Sheets as of December 31, 2022. Other Immaterial Misstatements As part of the restatement, we made corrections to previously identified errors that the Company determined to be immaterial, both individually and in the aggregate (the “Other Adjustments”) for the years ended December 31, 2022, and December 31, 2021. The Other Adjustments resulted in an increase of $ 12 million to income (loss) before taxes and a decrease of $ 12 million to income (loss) before taxes for the years ended December 31, 2022, and December 31, 2021, respectively. The Other Adjustments included adjustments and reclassifications on our Consolidated Balance Sheets as of December 31, 2022, and December 31, 2021, that had no impact on stockholders’ equity. We reclassified derivative investments that resulted in a decrease to derivative investments of $ 142 million, a decrease to other assets of $ 70 million and a decrease to other liabilities of $ 212 million as of December 31, 2022. We reclassified derivative investments that resulted in a decrease to other assets of $ 760 million, an increase to derivative investments of $ 260 million and a decrease to other liabilities of $ 500 million as of December 31, 2021. The combined impacts of the correction of the misstatement associated with the coinsurance reinsurance transaction and the Other Adjustments are reflected in the “restatement impacts” column of the restatement tables below. Impacts to our Consolidated Financial Statements Related to the Restatement of Previously Issued Consolidated Financial Statements and the Adoption of ASU 2018-12 The following tables present the amounts previously reported, restatement impacts, amounts as restated prior to the adoption of ASU 2018-12, adoption of new accounting standard impacts and as adjusted amounts reported on the Consolidated Balance Sheets as of December 31, 2022, and December 31, 2021, and the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Stockholders’ Equity and the Consolidated Statements of Cash Flows for the years ended December 31, 2022, and December 31, 2021. The amounts shown in the “As Previously Reported” column for the years ended December 31, 2022, and December 31, 2021, were derived from our Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 16, 2023. The amounts shown in the “As Restated” column for the years ended December 31, 2022, and December 31, 2021, were derived from our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed on March 30, 2023. LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except share data) As of December 31, 2022 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted ASSETS Investments: Fixed maturity available-for-sale securities, at fair value (amortized cost: 2022 - $ 111,707 ; allowance for credit losses: 2022 - $ 22 ) $ 99,736 $ - $ 99,736 $ - $ 99,736 Trading securities 3,498 - 3,498 - 3,498 Equity securities 427 - 427 - 427 Mortgage loans on real estate, net of allowance for credit losses (portion at fair value: 2022 - $ 487 ) 18,301 - 18,301 - 18,301 Policy loans 2,359 - 2,359 - 2,359 Derivative investments 3,736 ( 142 ) 3,594 - 3,594 Other investments 3,739 - 3,739 - 3,739 Total investments 131,796 ( 142 ) 131,654 - 131,654 Cash and invested cash 3,343 - 3,343 - 3,343 Deferred acquisition costs, value of business acquired and deferred sales inducements (1) 13,803 - 13,803 ( 1,568 ) 12,235 Reinsurance recoverables, net of allowance for credit losses 19,882 - 19,882 ( 439 ) 19,443 Market risk benefit assets - - - 2,807 2,807 Accrued investment income 1,253 - 1,253 - 1,253 Goodwill 1,144 - 1,144 - 1,144 Other assets (1) 20,680 ( 187 ) 20,493 ( 1,691 ) 18,802 Separate account assets 143,536 - 143,536 - 143,536 Total assets $ 335,437 $ ( 329 ) $ 335,108 $ ( 891 ) $ 334,217 (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (CONTINUED) (in millions, except share data) As of December 31, 2022 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Policyholder account balances (1) $ 114,435 $ - $ 114,435 $ - $ 114,435 Future contract benefits (1) 41,756 - 41,756 ( 2,930 ) 38,826 Market risk benefit liabilities - - - 2,078 2,078 Deferred front-end loads (1) 5,669 - 5,669 ( 617 ) 5,052 Payables for collateral on investments 6,712 - 6,712 - 6,712 Short-term debt 500 - 500 - 500 Long-term debt 5,955 - 5,955 - 5,955 Other liabilities (1) 12,773 ( 797 ) 11,976 45 12,021 Separate account liabilities 143,536 - 143,536 - 143,536 Total liabilities 331,336 ( 797 ) 330,539 ( 1,424 ) 329,115 Contingencies and Commitments (See Note 18) Stockholders’ Equity Preferred stock – 10,000,000 shares authorized: Series C preferred stock – 20,000 shares authorized, issued and outstanding as of December 31, 2022 493 - 493 - 493 Series D preferred stock – 20,000 shares authorized, issued and outstanding as of December 31, 2022 493 - 493 - 493 Common stock – 800,000,000 shares authorized; 169,220,511 shares issued and outstanding as of December 31, 2022 4,544 - 4,544 - 4,544 Retained earnings 6,239 468 6,707 ( 783 ) 5,924 Accumulated other comprehensive income (loss) ( 7,668 ) - ( 7,668 ) 1,316 ( 6,352 ) Total stockholders’ equity 4,101 468 4,569 533 5,102 Total liabilities and stockholders’ equity $ 335,437 $ ( 329 ) $ 335,108 $ ( 891 ) $ 334,217 (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except share data) As of December 31, 2021 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted ASSETS Investments: Fixed maturity available-for-sale securities, at fair value (amortized cost: 2021 - $ 105,142 ; allowance for credit losses: 2021 - $ 19 ) $ 118,746 $ ( 35 ) $ 118,711 $ - $ 118,711 Trading securities 4,482 ( 22 ) 4,460 - 4,460 Equity securities 318 57 375 - 375 Mortgage loans on real estate, net of allowance for credit losses (portion at fair value: 2021 - $ 739 ) 17,991 - 17,991 - 17,991 Policy loans 2,364 - 2,364 - 2,364 Derivative investments 5,437 260 5,697 - 5,697 Other investments 4,292 ( 4 ) 4,288 - 4,288 Total investments 153,630 256 153,886 - 153,886 Cash and invested cash 2,612 - 2,612 - 2,612 Deferred acquisition costs, value of business acquired and deferred sales inducements (1) 6,284 2 6,286 5,610 11,896 Reinsurance recoverables, net of allowance for credit losses 20,295 - 20,295 2,091 22,386 Market risk benefit assets - - - 1,888 1,888 Accrued investment income 1,189 - 1,189 - 1,189 Goodwill 1,778 - 1,778 - 1,778 Other assets (1) 18,930 ( 614 ) 18,316 ( 1,784 ) 16,532 Separate account assets 182,583 - 182,583 - 182,583 Total assets $ 387,301 $ ( 356 ) $ 386,945 $ 7,805 $ 394,750 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Policyholder account balances (1) $ 110,219 $ 8 $ 110,227 $ - $ 110,227 Future contract benefits (1) 40,687 - 40,687 738 41,425 Market risk benefit liabilities - - - 4,399 4,399 Deferred front-end loads (1) 415 - 415 3,810 4,225 Payables for collateral on investments 8,946 - 8,946 - 8,946 Short-term debt 300 - 300 - 300 Long-term debt 6,325 - 6,325 - 6,325 Other liabilities (1) 17,554 ( 846 ) 16,708 ( 303 ) 16,405 Separate account liabilities 182,583 - 182,583 - 182,583 Total liabilities 367,029 ( 838 ) 366,191 8,644 374,835 Contingencies and Commitments (See Note 18) Stockholders’ Equity Preferred stock – 10,000,000 shares authorized - - - - - Common stock – 800,000,000 shares authorized; 177,193,515 shares issued and outstanding as of December 31, 2021 4,735 - 4,735 - 4,735 Retained earnings 9,096 482 9,578 ( 4,382 ) 5,196 Accumulated other comprehensive income (loss) 6,441 - 6,441 3,543 9,984 Total stockholders’ equity 20,272 482 20,754 ( 839 ) 19,915 Total liabilities and stockholders’ equity $ 387,301 $ ( 356 ) $ 386,945 $ 7,805 $ 394,750 (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions, except per share data) For the Year Ended December 31, 2022 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Revenues Insurance premiums $ 6,087 $ - $ 6,087 $ - $ 6,087 Fee income 6,054 - 6,054 ( 451 ) 5,603 Net investment income 5,511 4 5,515 - 5,515 Realized gain (loss) 336 9 345 495 840 Amortization of deferred gain on business sold through reinsurance 74 ( 32 ) 42 - 42 Other revenues 722 1 723 - 723 Total revenues 18,784 ( 18 ) 18,766 44 18,810 Expenses Benefits 12,546 - 12,546 ( 4,067 ) 8,479 Interest credited 2,870 - 2,870 7 2,877 Market risk benefit (gain) loss - - - ( 3,246 ) ( 3,246 ) Policyholder liability remeasurement (gain) loss - - - 2,766 2,766 Commissions and other expenses 5,095 1 5,096 29 5,125 Interest and debt expense 283 - 283 - 283 Spark program expense 167 - 167 - 167 Impairment of intangibles 634 - 634 - 634 Total expenses 21,595 1 21,596 ( 4,511 ) 17,085 Income (loss) before taxes ( 2,811 ) ( 19 ) ( 2,830 ) 4,555 1,725 Federal income tax expense (benefit) ( 584 ) ( 5 ) ( 589 ) 956 367 Net income (loss) ( 2,227 ) ( 14 ) ( 2,241 ) 3,599 1,358 Other comprehensive income (loss), net of tax: Unrealized investment gains (losses) ( 14,030 ) - ( 14,030 ) ( 4,029 ) ( 18,059 ) Market risk benefit non-performance risk gain (loss) - - - ( 210 ) ( 210 ) Policyholder liability discount rate remeasurement gain (loss) - - - 2,012 2,012 Foreign currency translation adjustment ( 20 ) - ( 20 ) - ( 20 ) Funded status of employee benefit plans ( 59 ) - ( 59 ) - ( 59 ) Total other comprehensive income (loss), net of tax of tax ( 14,109 ) - ( 14,109 ) ( 2,227 ) ( 16,336 ) Comprehensive income (loss) $ ( 16,336 ) $ ( 14 ) $ ( 16,350 ) $ 1,372 $ ( 14,978 ) Net Income (Loss) Per Common Share Basic $ ( 13.02 ) $ ( 0.09 ) $ ( 13.11 ) $ 21.04 $ 7.93 Diluted $ ( 13.10 ) $ ( 0.09 ) $ ( 13.19 ) $ 20.97 $ 7.78 Cash Dividends Declared Per Common Share $ 1.80 $ - $ 1.80 $ - $ 1.80 LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions, except per share data) For the Year Ended December 31, 2021 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Revenues Insurance premiums $ 5,617 $ - $ 5,617 $ - $ 5,617 Fee income 6,887 18 6,905 ( 866 ) 6,039 Net investment income 6,115 ( 4 ) 6,111 - 6,111 Realized gain (loss) ( 212 ) 626 414 ( 1,281 ) ( 867 ) Amortization of deferred gain on business sold through reinsurance 46 ( 8 ) 38 - 38 Other revenues 777 - 777 - 777 Total revenues 19,230 632 19,862 ( 2,147 ) 17,715 Expenses Benefits 8,529 - 8,529 ( 26 ) 8,503 Interest credited 2,915 18 2,933 ( 4 ) 2,929 Market risk benefit (gain) loss - - - ( 3,753 ) ( 3,753 ) Policyholder liability remeasurement (gain) loss - - - ( 183 ) ( 183 ) Commissions and other expenses 5,791 3 5,794 ( 575 ) 5,219 Interest and debt expense 270 - 270 - 270 Spark program expense 87 - 87 - 87 Total expenses 17,592 21 17,613 ( 4,541 ) 13,072 Income (loss) before taxes 1,638 611 2,249 2,394 4,643 Federal income tax expense (benefit) 233 129 362 503 865 Net income (loss) 1,405 482 1,887 1,891 3,778 Other comprehensive income (loss), net of tax: Unrealized investment gains (losses) ( 2,535 ) - ( 2,535 ) ( 752 ) ( 3,287 ) Market risk benefit non-performance risk gain (loss) - - - ( 923 ) ( 923 ) Policyholder liability discount rate remeasurement gain (loss) - - - 591 591 Foreign currency translation adjustment ( 2 ) - ( 2 ) - ( 2 ) Funded status of employee benefit plans 47 - 47 - 47 Total other comprehensive income (loss), net of tax ( 2,490 ) - ( 2,490 ) ( 1,084 ) ( 3,574 ) Comprehensive income (loss) $ ( 1,085 ) $ 482 $ ( 603 ) $ 807 $ 204 Net Income (Loss) Per Common Share Basic $ 7.50 $ 2.57 $ 10.07 $ 10.10 $ 20.17 Diluted $ 7.43 $ 2.55 $ 9.98 $ 9.98 $ 19.96 Cash Dividends Declared Per Common Share $ 1.71 $ - $ 1.71 $ - $ 1.71 LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions) For the Year Ended December 31, 2022 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Preferred Stock Balance as of beginning-of-year $ - $ - $ - $ - $ - Issuance of Series C preferred stock 493 - 493 - 493 Issuance of Series D preferred stock 493 - 493 - 493 Balance as of end-of-year 986 - 986 - 986 Common Stock Balance as of beginning-of-year 4,735 - 4,735 - 4,735 Stock compensation/issued for benefit plans 40 - 40 - 40 Retirement of common stock/cancellation of shares ( 231 ) - ( 231 ) - ( 231 ) Balance as of end-of-year 4,544 - 4,544 - 4,544 Retained Earnings Balance as of beginning-of-year 9,096 482 9,578 ( 4,382 ) 5,196 Net income (loss) ( 2,227 ) ( 14 ) ( 2,241 ) 3,599 1,358 Retirement of common stock ( 319 ) - ( 319 ) - ( 319 ) Common stock dividends declared ( 311 ) - ( 311 ) - ( 311 ) Balance as of end-of-year 6,239 468 6,707 ( 783 ) 5,924 Accumulated Other Comprehensive Income (Loss) Balance as of beginning-of-year 6,441 - 6,441 3,543 9,984 Other comprehensive income (loss), net of tax ( 14,109 ) - ( 14,109 ) ( 2,227 ) ( 16,336 ) Balance as of end-of-year ( 7,668 ) - ( 7,668 ) 1,316 ( 6,352 ) Total stockholders’ equity as of end-of-year $ 4,101 $ 468 $ 4,569 $ 533 $ 5,102 LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions) For the Year Ended December 31, 2021 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Common Stock Balance as of beginning-of-year $ 5,082 $ - $ 5,082 $ - $ 5,082 Stock compensation/issued for benefit plans 85 - 85 - 85 Retirement of common stock/cancellation of shares ( 432 ) - ( 432 ) - ( 432 ) Balance as of end-of-year 4,735 - 4,735 - 4,735 Retained Earnings Balance as of beginning-of-year 8,686 - 8,686 - 8,686 Cumulative effect from adoption of new accounting standards - - - ( 6,273 ) ( 6,273 ) Net income (loss) 1,405 482 1,887 1,891 3,778 Retirement of common stock ( 673 ) - ( 673 ) - ( 673 ) Common stock dividends declared ( 322 ) - ( 322 ) - ( 322 ) Balance as of end-of-year 9,096 482 9,578 ( 4,382 ) 5,196 Accumulated Other Comprehensive Income (Loss) Balance as of beginning-of-year 8,931 - 8,931 - 8,931 Cumulative effect from adoption of new accounting standards - - - 4,627 4,627 Other comprehensive income (loss), net of tax ( 2,490 ) - ( 2,490 ) ( 1,084 ) ( 3,574 ) Balance as of end-of-year 6,441 - 6,441 3,543 9,984 Total stockholders’ equity as of end-of-year $ 20,272 $ 482 $ 20,754 $ ( 839 ) $ 19,915 LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) For the Year Ended December 31, 2022 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Cash Flows from Operating Activities Net income (loss) $ ( 2,227 ) $ ( 14 ) $ ( 2,241 ) $ 3,599 $ 1,358 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Realized (gain) loss ( 336 ) ( 9 ) ( 345 ) ( 495 ) ( 840 ) Market risk benefit (gain) loss - - - ( 3,246 ) ( 3,246 ) Sales and maturities (purchases) of trading securities, net 300 - 300 - 300 Amortization of deferred gain on business sold through reinsurance ( 74 ) 32 ( 42 ) - ( 42 ) Impairment of intangibles 634 - 634 - 634 Change in: Deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads 115 3 118 370 488 Accrued investment income ( 67 ) - ( 67 ) - ( 67 ) Insurance liabilities and reinsurance-related balances (1) 5,628 2 5,630 ( 1,211 ) 4,419 Accrued expenses ( 89 ) - ( 89 ) ( 2 ) ( 91 ) Federal income tax accruals ( 530 ) ( 5 ) ( 535 ) 956 421 Other (1) 252 ( 6 ) 246 29 275 Net cash provided by (used in) operating activities (1) 3,606 3 3,609 - 3,609 Cash Flows from Investing Activities Purchases of available-for-sale securities and equity securities ( 14,813 ) - ( 14,813 ) - ( 14,813 ) Sales of available-for-sale securities and equity securities 2,297 - 2,297 - 2,297 Maturities of available-for-sale securities 5,453 - 5,453 - 5,453 Purchases of alternative investments ( 664 ) - ( 664 ) - ( 664 ) Sales and repayments of alternative investments 446 - 446 - 446 Issuance of mortgage loans on real estate ( 2,503 ) ( 4 ) ( 2,507 ) - ( 2,507 ) Repayment and maturities of mortgage loans on real estate 2,255 - 2,255 - 2,255 Repayment (issuance) of policy loans, net 5 - 5 - 5 Net change in collateral on investments, derivatives and related settlements ( 4,071 ) 1 ( 4,070 ) - ( 4,070 ) Other ( 48 ) - ( 48 ) - ( 48 ) Net cash provided by (used in) investing activities ( 11,643 ) ( 3 ) ( 11,646 ) - ( 11,646 ) (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in millions) For the Year Ended December 31, 2022 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Cash Flows from Financing Activities Payment of long-term debt, including current maturities ( 300 ) - ( 300 ) - ( 300 ) Issuance of long-term debt, net of issuance costs 296 - 296 - 296 Payment related to sale-leaseback transactions ( 70 ) - ( 70 ) - ( 70 ) Proceeds from certain financing arrangements 186 - 186 - 186 Deposits of fixed account balances (1) 16,203 - 16,203 - 16,203 Withdrawals of fixed account balances (1) ( 7,674 ) - ( 7,674 ) - ( 7,674 ) Transfers from (to) separate accounts, net (1) 19 - 19 - 19 Common stock issued for benefit plans ( 16 ) - ( 16 ) - ( 16 ) Issuance of preferred stock, net of issuance costs 986 - 986 - 986 Repurchase of common stock ( 550 ) - ( 550 ) - ( 550 ) Dividends paid to common stockholders ( 310 ) - ( 310 ) - ( 310 ) Other ( 2 ) - ( 2 ) - ( 2 ) Net cash provided by (used in) financing activities (1) 8,768 - 8,768 - 8,768 Net increase (decrease) in cash, invested cash and restricted cash 731 - 731 - 731 Cash, invested cash and restricted cash as of beginning-of- year 2,612 - 2,612 - 2,612 Cash, invested cash and restricted cash as of end-of-year $ 3,343 $ - $ 3,343 $ - $ 3,343 (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) For the Year Ended December 31, 2021 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Cash Flows from Operating Activities Net income (loss) $ 1,405 $ 482 $ 1,887 $ 1,891 $ 3,778 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Realized (gain) loss 212 ( 626 ) ( 414 ) 1,281 867 Market risk benefit (gain) loss - - - ( 3,753 ) ( 3,753 ) Sales and maturities (purchases) of trading securities, net ( 108 ) 21 ( 87 ) - ( 87 ) Amortization of deferred gain on business sold through reinsurance ( 46 ) 8 ( 38 ) - ( 38 ) Change in: Deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads 315 ( 3 ) 312 163 475 Accrued investment income 16 - 16 - 16 Insurance liabilities and reinsurance-related balances (1) ( 2,232 ) ( 1 ) ( 2,233 ) ( 104 ) ( 2,337 ) Accrued expenses 389 3 392 7 399 Federal income tax accruals 232 129 361 503 864 Other (1) ( 417 ) 4 ( 413 ) 12 ( 401 ) Net cash provided by (used in) operating activities (1) ( 234 ) 17 ( 217 ) - ( 217 ) Cash Flows from Investing Activities Purchases of available-for-sale securities and equity securities ( 16,893 ) ( 22 ) ( 16,915 ) - ( 16,915 ) Sales of available-for-sale securities and equity securities 2,268 - 2,268 - 2,268 Maturities of available-for-sale securities 9,621 - 9,621 - 9,621 Purchases of alternative investments ( 757 ) - ( 757 ) - ( 757 ) Sales and repayments of alternative investments 377 - 377 - 377 Issuance of mortgage loans on real estate ( 3,084 ) 5 ( 3,079 ) - ( 3,079 ) Repayment and maturities of mortgage loans on real estate 1,881 - 1,881 - 1,881 Repayment (issuance) of policy loans, net 62 - 62 - 62 Net change in collateral on investments, derivatives and related settlements 3,261 - 3,261 - 3,261 Other ( 303 ) - ( 303 ) - ( 303 ) Net cash provided by (used in) investing activities ( 3,567 ) ( 17 ) ( 3,584 ) - ( 3,584 ) (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in millions) For the Year Ended December 31, 2021 Adoption As of New Previously Restatement As Accounting As Reported Impacts Restated Standard Adjusted Cash Flows from Financing Activities Payment related to modification or early extinguishment of debt ( 8 ) - ( 8 ) - ( 8 ) Payment related to sale-leaseback transactions ( 59 ) - ( 59 ) - ( 59 ) Proceeds from certain financing arrangements 159 - 159 - 159 Deposits of fixed account balances (1) 13,422 4 13,426 - 13,426 Withdrawals of fixed account balances (1) ( 7,227 ) 53 ( 7,174 ) - ( 7,174 ) Transfers from (to) separate accounts, net (1) ( 118 ) ( 57 ) ( 175 ) - ( 175 ) Common stock issued for benefit plans 20 - 20 - 20 Repurchase of common stock ( 1,105 ) - ( 1,105 ) - ( 1,105 ) Dividends paid to common stockholders ( 319 ) - ( 319 ) - ( 319 ) Other ( 60 ) - ( 60 ) - ( 60 ) Net cash provided by (used in) financing activities (1) 4,705 - 4,705 - 4,705 Net increase (decrease) in cash, invested cash and restricted cash 904 - 904 - 904 Cash, invested cash and restricted cash as of beginning-of- year 1,708 - 1,708 - 1,708 Cash, invested cash and restricted cash as of end-of-year $ 2,612 $ - $ 2,612 $ - $ 2,612 (1) Certain amounts have been reclassified to conform to the presentation adopted in the current period. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of LNC and all other entities in which we have a controlling financial interest and any variable interest entities (“VIEs”) in which we are the primary beneficiary. We use the equity method of accounting to recognize all of our investments in limited liability partnerships. All material inter-company accounts and transactions have been eliminated in consolidation. Our involvement with VIEs is primarily to invest in assets that allow us to gain exposure to a broadly diversified portfolio of asset classes. A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support or where investors lack certain characteristics of a controlling financial interest. We assess our contractual, ownership or other interests in a VIE to determine if our interest participates in the variability the VIE was designed to absorb and pass onto variable interest holders. We perform an ongoing qualitative assessment of our variable interests in VIEs to determine whether we have a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. If we determine we are the primary beneficiary of a VIE, we consolidate the assets and liabilities of the VIE in the consolidated financial statements. Accounting Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. In applying these estimates and assumptions, management makes subjective and complex judgments that frequently require assumptions about matters that are uncertain and inherently subject to change, including matters related to or impacted by the COVID-19 pandemic. Actual results could differ from these estimates and assumptions. Included among the material (or potentially material) reported amounts and disclosures that require use of estimates are: fair value of certain financial assets, derivatives, allowances for credit losses, deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), DSI, goodwill and other intangibles, market risk benefits (“MRBs”), future contract benefits, DFEL , pension plans, stock-based incentive compensation, income taxes including the recoverability of our deferred tax assets, and the potential effects of resolving litigated matters. Business Combinations We use the acquisition method of accounting for all business combination transactions, and accordingly, recognize the fair values of assets acquired, liabilities assumed and any noncontrolling interests in the consolidated financial statements. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The consolidated financial statements include the results of operations of any acquired company since the acquisition date. Fair Value Measurement Our measurement of fair value is based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset or non-performance risk, which would include our own credit risk. Our estimate of an exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous market in the absence |
