UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 31, 2000
LINCOLN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 1-6028 35-1140070
(State of Incorporation) (Commission File Number (I.R.S. Employer
Identification No.)
1500 Market Street, Suite 3900, Centre Square West Tower,
Philadelphia, PA 19102
(Address of principal executive offices)
Registrant's telephone number 219-448-1400
Item 9
Financial Report for the year ended December 31, 2000.
Lincoln Financial Group
Reporting Changes
2001
Below are the reporting changes that have resulted from the changes to
the segment reporting structure of Lincoln National Corporation and
changes in the inter-segment investment management asset management
fees. All noted changes have been reflected in the restated Statistical
Report for the quarter and year ended December 31, 2000. A
reconciliation of the changes by segment is located on pages 33 and 34
of the Statistical Report. The segments have been restated for the years
1995-2000.
1. The management of the First Penn-Annuities line of business has been
moved to the Annuities segment from the Life Insurance segment.
2. The wholesale distribution operation ("Lincoln Financial
Distributors") is now reported in Other Operations. Previously this
distribution system was reported as part of the Life Insurance and
Investment Management segments.
3. Prior to 2001, the general account assets and certain separate
account assets of LFG managed by Lincoln Investment Management, now known
as Delaware Lincoln Investment Advisers ("DLIA"), for LNC's U.S. based
insurance operations was generally priced on an "at cost" basis.
Effective January 1, 2001, substantially all of these internal
investment management services will be priced on an arms-length "profit"
basis. The results of DLIA are included in the Investment Management
segement. The following segments are affected by this change:
Annuities, Life Insurance, Reinsurance, Investment Management and Other
Operations. The fee revenue is reported on the "Investment Advisory
Fees" line for the Investment Management Segment and the corresponding
expense is reported on the "Net Investment Income" line for the other
business segments.
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended December 31 For the Year Ended December 31
-----------------------------------------------------------------------------
2000 1999 2000 1999
Amount Amount Change % Change Amount Amount Change % Change
------------------------------------- ------------------------------------
Income from Operations
Annuities 86.4 73.7 12.7 17.2% 362.0 299.4 62.6 20.9%
Life Insurance 70.6 57.0 13.6 23.9% 259.9 212.0 47.9 22.6%
Reinsurance 36.5 (19.5) 56.0 122.4 40.6 81.8 201.5%
Investment Management 8.7 16.5 (7.8) (47.3%) 44.1 61.0 (16.9) (27.7%)
Lincoln UK 15.5 (67.1) 82.6 61.0 (13.9) 74.9
Corporate & Other (33.0) (24.0) (9.0) (130.4) (123.7) (6.7)
------ ------- ------- ------- ------- ------- ------- ------
Total Income from Operations 184.7 36.6 148.1 404.6% 719.1 475.5 243.6 51.2%
Realized Gain on Investments 1.2 1.6 (0.4) (17.5) 3.8 (21.3)
Restructuring Charges (37.0) (3.6) (33.4) (80.2) (18.9) (61.3)
------ ------- ------- ------- ------- ------- ------- ------
Net Income 148.9 34.6 114.3 330.3% 621.4 460.4 161.0 35.0%
------ ------- ------- ------- ------- ------- ------- ------
Earnings per share (diluted)
Income from Operations $0.94 $0.19 $0.75 394.7% $3.69 $2.37 $1.32 55.7%
Realized Gain (loss) on Investments $0.01 $0.01 $0.00 ($0.09) $0.02 ($0.11)
Restructuring Charges ($0.19) ($0.02) ($0.17) ($0.41) ($0.09) ($0.32)
------ ------- ------- ------- ------- ------- ------- ------
Net Income $0.76 $0.18 $0.58 322.2% $3.19 $2.30 $0.89 38.7%
------ ------- ------- ------- ------- ------- ------- ------
- -------------------------------------------------------------------------------------------- -----------------------------------
Inc. from Oper.- Before Goodwill Amort.
Annuities 86.7 74.2 12.5 16.8% 361.4 301.5 59.9 19.9%
Life Insurance 76.5 63.0 13.5 21.4% 283.6 235.4 48.2 20.5%
Reinsurance 37.0 (19.0) 56.0 124.1 40.9 83.2 203.4%
Investment Management 12.7 20.6 (7.9) (38.3%) 60.3 77.2 (16.9) (21.9%)
Lincoln UK 15.7 (63.8) 79.5 65.1 (6.9) 72.0
Corporate & Other (33.0) (23.8) (9.2) 38.7% (130.4) (123.5) (6.9) 5.6%
------ ------- ------- ------- ------- ------- ------- ------
Total 195.6 51.2 144.4 282.0% 764.1 524.6 239.5 45.7%
------ ------- ------- ------- ------- ------- ------- ------
Earnings per share (diluted)
Inc. from Oper.- Before Goodwill Amort. $1.00 $0.26 $0.74 284.6% $3.92 $2.62 $1.30 49.6%
- -------------------------------------------------------------------------------------------- -----------------------------------
Operating Revenue
Annuities 518.1 543.7 (25.6) (4.7%) 2138.9 2128.0 10.9 0.5%
Life Insurance 488.0 469.6 18.3 3.9% 1836.4 1762.6 73.8 4.2%
Reinsurance 461.0 575.0 (114.0) (19.8%) 1769.4 1823.6 (54.2) (3.0%)
Investment Management 118.3 124.5 (6.1) (4.9%) 486.3 489.4 (3.1) (0.6%)
Lincoln UK 100.6 102.4 (1.8) (1.8%) 435.0 443.6 (8.6) (1.9%)
Corporate & Other 87.6 (7.0) 94.5 213.8 153.6 60.2
------ ------- ------- ------- ------- ------- ------- ------
Total Operating Revenue 1773.5 1808.2 (34.7) (1.9%) 6879.8 6800.7 79.1 1.2%
------ ------- ------- ------- ------- ------- ------- ------
- -------------------------------------------------------------------------------------------- ------------------------------------
Revenue (Including Investment Gains/Losses)
Annuities 522.3 538.0 (15.6) (2.9%) 2133.7 2115.8 17.8 0.8%
Life Insurance 479.9 473.1 6.8 1.4% 1819.0 1760.4 58.6 3.3%
Reinsurance 463.2 578.7 (115.5) (20.0%) 1768.5 1829.4 (60.9) (3.3%)
Investment Management 118.1 125.1 (7.0) (5.6%) 482.4 489.3 (6.9) (1.4%)
Lincoln UK 104.3 103.8 0.5 0.5% 438.2 446.6 (8.4) (1.9%)
Corporate & Other 85.7 (10.7) 96.4 209.7 162.2 47.5
------ ------- ------- ------- ------- ------- ------- ------
Total Revenue 1773.5 1807.9 (34.4) (1.9%) 6851.5 6803.7 47.8 0.7%
------ ------- ------- ------- ------- ------- ------- ------
- -------------------------------------------------------------------------------------------- -----------------------------------
Operational Data by Segment: (Billions)
Annuities Segment
Annuity Gross Deposits 1.328 1.375 (0.047) (3.4%) 5.239 5.116 0.123 2.4%
Annuity Net Cash Flows (0.681) (0.490) (0.191) (2.874) (1.165) (1.709)
Annuity Account Values 54.869 58.284 (3.415) (5.9%) 54.869 58.284 (3.415) (5.9%)
Life Insurance Segment
Life Insurance First Year Premium 0.218 0.188 0.030 16.0% 0.649 0.556 0.093 16.7%
Life Insurance In-force 216.002 194.988 21.014 10.8% 216.002 194.988 21.014 10.8%
Life Insurance Account Values 10.847 10.217 0.630 6.2% 10.847 10.217 0.630 6.2%
Reinsurance Segment
Individual Life In-force Sales 35.2 49.6 (14.4) (29.0%) 139.5 116.8 22.7 19.4%
Reinsurance Life In-force 436.7 340.8 95.9 28.1% 436.7 340.8 95.9 28.1%
Investment Management Segment
Retail Deposits 1.255 1.075 0.180 16.7% 4.760 4.264 0.496 11.6%
Retail Net Cash Flows 0.058 (0.410) 0.468 (1.517) (2.209) 0.692
Institutional In-flows 0.885 1.354 (0.469) (34.6%) 3.501 7.249 (3.748) (51.7%)
Institutional Net Cash Flows (1.043) (1.480) 0.437 (5.694) (2.240) (3.454)
Assets Under Management 52.895 61.374 (8.479) (13.8%) 52.895 61.374 (8.479) (13.8%)
Assets Under Management - Insurance Assets 35.686 35.934 (0.248) (0.7%) 35.686 35.934 (0.248) (0.7%)
Assets Under Management - Total Segment 88.581 97.308 (8.727) (9.0%) 88.581 97.308 (8.727) (9.0%)
Consolidated
Consolidated Retail Deposits 3.138 3.014 0.124 4.1% 11.981 11.115 0.866 7.8%
Consolidated Retail Account Balances 91.899 97.161 (5.262) (5.4%) 91.899 97.161 (5.262) (5.4%)
Total Assets Under Management 131.273 140.443 (9.170) (6.5%) 131.273 140.443 (9.170) (6.5%)
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended December 31 For the Year Ended December 31
--------------------------------------- ---------------------------------------
2000 1999 2000 1999
Amount Amount Change % Change Amount Amount Change % Change
------ ------- ------- ------- ------- ------- ------- -------
Consolidated Operational Data: (Billions)
Balance Sheet Assets - End of Period 99844.1 103095.7 (3251.6) (3.2%) 99844.1 103095.7 (3251.6) (3.2%)
Shareholders' Equity
Beg of Period (Securities at Market) 4538.6 4662.2 (123.6) 4263.9 5387.9 (1124.1)
End of Period (Securities at Market) 4954.1 4263.9 690.2 4954.1 4263.9 690.2
End of Period (Securities at Cost) 4942.0 4729.6 212.4 4942.0 4729.6 212.4
Average Equity (Securities at Cost) 4915.7 4774.2 141.5 4831.9 4818.7 13.2
Return on Equity
Inc from Operations/Average Equity 15.0% 3.1% 12.0% 14.9% 9.9% 5.0%
Net Income/Average Equity 12.1% 2.9% 9.2% 12.9% 9.6% 3.3%
Adj Net Income/Adj Average Equity 15.8% 11.8% 4.0%
Return on Capital
Inc from Operations/Average Capital 12.4% 3.6% 8.8% 12.1% 8.5% 3.6%
Common Stock Outstanding
Average for the Period - Diluted 195.6 197.1 (1.5) (0.8%) 194.9 200.4 (5.5) (2.7%)
End of Period - Assuming Conv of Pref. 191.2 196.0 (4.8) (2.4%) 191.2 196.0 (4.8) (2.4%)
End of Period - Diluted 195.2 197.0 (1.8) (0.9%) 195.2 197.0 (1.8) (0.9%)
Book Value (Securities at Market) $25.92 $21.76 4.16 19.1% $25.92 $21.76 4.16 19.1%
Book Value (Securities at Cost) $25.85 $24.14 1.71 7.1% $25.85 $24.14 1.71 7.1%
Cash Returned to Shareholders
Share Repurchase - dollar amount 51.7 14.2 37.5 210.0 377.7 (167.7)
Dividends Declared to Shareholders 58.5 56.7 1.8 224.4 219.5 4.9
------ ------- ------- ------- ------- ------- ------- -------
Total Cash Returned to Shareholders 110.2 70.9 39.3 434.4 597.2 (162.8)
====== ======= ======= ======= ======= ======= ======= =======
Share Repurchase - number of shares 1.114 0.366 0.748 6.223 7.675 (1.452)
Dividend Declared on Common Stock -
per share $0.305 $0.290 $0.015 5.2% $1.175 $1.115 $0.060 5.4%
- -----------------------------------------------------------------------------------------------------------------------------
Income from Operations-Excluding
Special Charges in 1999
Annuities 86.4 73.7 12.7 17.2% 362.0 299.4 62.6 20.9%
Life Insurance 70.6 57.0 13.6 23.9% 259.9 212.0 47.9 22.6%
Reinsurance 36.5 20.9 15.6 74.6% 122.4 106.0 16.4 15.5%
Investment Management 8.7 16.5 (7.8) (47.3%) 44.1 61.0 (16.9) (27.7%)
Lincoln UK 15.5 16.9 (1.4) (8.3%) 61.0 70.1 (9.1) (13.0%)
Corporate & Other (33.0) (24.0) (9.0) 37.5% (130.4) (123.7) (6.7) 5.4%
------ ------- ------- ------- ------- ------- ------- -------
Total Income from Operations 184.7 161.0 23.7 14.7% 719.1 624.9 94.2 15.1%
------ ------- ------- ------- ------- ------- ------- -------
Net Income-Excluding
Special Charges in 1999 148.9 159.0 (10.1) (6.4%) 621.4 609.8 11.6 1.9%
====== ======= ======= ======= ======= ======= ======= =======
Earnings per share (diluted)-Excluding
Special Charges in 1999
Income from Operations $0.94 $0.82 $0.12 14.6% $3.69 $3.12 $0.57 18.3%
Realized Gain (loss) on Investments $0.01 $0.01 $0.00 ($0.09) $0.02 ($0.11)
Restructuring Charges ($0.19) ($0.02) ($0.17) ($0.41) ($0.09) ($0.32)
------ ------- ------- ------- ------- ------- ------- -------
Net Income $0.76 $0.81 ($0.05) (6.2%) $3.19 $3.05 $0.14 4.6%
====== ======= ======= ======= ======= ======= ======= =======
Financial Highlights
Unaudited [Amounts in Millions]
For the Quarter Ended December 31 For the Year Ended December 31
-------------------------------------- ---------------------------------------
2000 1999 2000 1999
Amount Amount Change % Change Amount Amount Change % Change
------ ------- ------- ------- ------- ------- ------- -------
Consolidated Condensed
Statements of Income
Revenue:
Insurance Premiums and Fees 902.6 981.0 (78.4) (8.0%) 3,474.6 3,419.1 55.4 1.6%
Investment Advisory Fees 53.6 54.1 (0.5) (1.0%) 213.1 223.8 (10.7) (4.8%)
Net Investment Income 672.1 700.1 (28.0) (4.0%) 2,747.1 2,807.5 (60.4) (2.2%)
Realized Gain on Investments 0.0 (0.3) 0.4 (28.3) 3.0 (31.2)
Other 145.1 73.0 72.1 98.8% 445.1 350.3 94.8 27.1%
------ ------- ------- ------- ------- ------- ------- -------
Total Revenue 1,773.5 1,807.9 (34.4) (1.9%) 6,851.5 6,803.7 47.8 0.7%
Benefits and Expenses:
Benefits 920.7 1,142.0 (221.3) (19.4%) 3,557.2 3,805.0 (247.9) (6.5%)
Underwriting, Acquisition,
Insurance and Other Expenses 664.5 685.3 (20.8) (3.0%) 2,458.1 2,428.7 29.3 1.2%
------ ------- ------- ------- ------- ------- ------- -------
Total Benefits and Expenses 1,585.2 1,827.3 (242.1) (13.2%) 6,015.2 6,233.7 (218.5) (3.5%)
------ ------- ------- ------- ------- ------- ------- -------
Net Income
before Federal Taxes 188.3 (19.4) 207.7 836.3 570.0 266.3 46.7%
Federal Income Taxes 39.4 (54.0) 93.4 214.9 109.6 105.3 96.1%
------ ------- ------- ------- ------- ------- ------- -------
Net Income 148.9 34.6 114.3 330.2% 621.4 460.4 161.0 35.0%
====== ======= ======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------
Net Income Before Tax
By Segment
Annuities 106.6 91.4 15.2 438.0 368.7 69.3
Life Insurance 101.5 93.2 8.3 392.7 332.2 60.5
Reinsurance 56.3 (29.5) 85.8 176.9 60.6 116.3
Investment Management 9.9 30.7 (20.8) 58.2 82.5 (24.3)
Lincoln UK (30.8) (172.7) 141.9 (23.8) (100.1) 76.3
Corporate and Other (55.1) (32.5) (22.6) (205.7) (173.9) (31.8)
------ ------- ------- ------- ------- -------
Net Income before Tax 188.3 (19.4) 207.7 836.3 570.0 266.3
- ----------------------------------------------------------------------------------------------------------------------
Pre-Tax Realized Gains
by Segment
Annuities 4.2 (5.8) 10.0 (5.2) (12.1) 6.9
Life Insurance (8.1) 3.4 (11.5) (17.4) (2.2) (15.2)
Reinsurance 2.2 3.7 (1.5) (1.0) 5.7 (6.7)
Investment Management (0.3) 0.6 (0.9) (3.9) (0.1) (3.8)
Lincoln UK 3.8 1.4 2.4 3.2 3.0 0.2
Corporate and Other (1.8) (3.7) 1.9 (4.0) 8.6 (12.6)
------ ------- ------- ------- ------- -------
Pre-Tax Realized Gains
on Investments -- (0.3) 0.3 (28.3) 3.0 (31.3)
After-Tax Realized Gains
by Segment
Annuities 2.8 (3.7) 6.5 (3.4) (7.9) 4.5
Life Insurance (5.2) 2.8 (8.0) (10.7) (0.5) (10.2)
Reinsurance 1.4 2.4 (1.0) (0.7) 3.7 (4.4)
Investment Management (0.2) 0.4 (0.6) (2.5) (0.1) (2.4)
Lincoln UK 2.6 1.0 1.6 2.3 2.1 0.2
Corporate and Other (0.2) (1.2) 1.0 (2.5) 6.4 (8.9)
------ ------- ------- ------- ------- -------
After-Tax Realized Gains
on Investments 1.2 1.6 (0.4) (17.5) 3.8 (21.3)
Financial Highlights
Unaudited [Amounts in Millions, except Retail Account Balances and Assets Managed]
For the Quarter Ended December 31
------------------------------------------
2000 1999
Amount Amount Change % Change
-------- --------- --------- ---------
Consolidated Condensed Balance Sheets
Assets
Investments:
Securities Available for Sale:
Fixed Maturities 27,449.8 27,688.6 (238.8) (0.9%)
Equities 549.7 604.0 (54.2) (9.0%)
Mortgage Loans on Real Estate 4,663.0 4,735.4 (72.4) (1.5%)
Real Estate 282.0 256.2 25.8 10.1%
Policy Loans 1,960.9 1,892.4 68.5 3.6%
Other Long-Term Investments 463.3 401.8 61.4 15.3%
-------- --------- --------- ---------
Total Investments 35,368.6 35,578.4 (209.7) (0.6%)
Other Assets:
Assets Held in Separate Accounts 50,579.9 53,654.2 (3,074.3) (5.7%)
Other Assets 13,895.5 13,863.1 32.4 0.2%
-------- --------- --------- ---------
Total Assets 99,844.1 103,095.7 (3,251.7) (3.2%)
======== ========= ========= =========
Liabilities and Shareholders' Equity
Liabilities:
Insurance and Investment Contract Liabilities 40,105.2 41,153.5 (1,048.4) (2.5%)
Liabilities Related to Separate Accounts 50,579.9 53,654.2 (3,074.3) (5.7%)
Other Liabilities 4,204.9 4,024.1 180.8 4.5%
-------- --------- --------- ---------
Total Liabilities 94,890.0 98,831.9 (3,941.9) (4.0%)
Shareholders' Equity:
Net Unrealized Gains on Securities 12.0 (465.7) 477.7 (102.6%)
Other Shareholders' Equity 4,942.0 4,699.6 242.5 5.2%
-------- --------- --------- ---------
Total Shareholders' Equity 4,954.1 4,233.9 720.2 17.0%
-------- --------- --------- ---------
Total Liabilities and Shareholders' Equity 99,844.1 103,065.7 (3,221.7) (3.1%)
======== ========= ========= =========
As of December 31
-------------------------------------------
($ billions) 2000 1999
Amount Amount Change % Change
-------- --------- --------- ---------
Retail Account Balances:
Annuities Segment - Fixed Annuities 15.442 16.791 (1.349) (8.0%)
Annuities Segment - Variable Annuities 39.427 41.493 (2.066) (5.0%)
Annuities Segment - Life Insurance 0.160 0.155 0.005 3.4%
Life Insurance Segment - Life Insurance 10.847 10.217 0.630 6.2%
Investment Management - Annuities 13.494 15.526 (2.032) (13.1%)
Investment Management - Mutual Funds 12.805 13.632 (0.827) (6.1%)
Investment Management - Wrap Fee & Other 1.375 1.649 (0.274) (16.6%)
Lincoln UK 6.441 7.220 (0.779) (10.8%)
Consolidating Adjustments (8.092) (9.523) 1.430 (15.0%)
-------- --------- --------- ---------
Total Account Values 91.899 97.161 (5.262) (5.4%)
======== ========= ========= =========
Assets Managed by Advisor:
Investment Management Segment 52.895 61.374 (8.479) (13.8%)
Lincoln Investment Mgmt-Corporate 35.686 35.934 (0.247) (0.7%)
Lincoln UK 7.873 8.589 (0.716) (8.3%)
Policy Loans (within business units) 1.961 1.892 0.069 3.6%
Non-LNC Affiliates 32.857 32.654 0.203 0.6%
-------- --------- --------- ---------
Total Assets Managed 131.273 140.443 (9.170) (6.5%)
======== ========= ========= =========
Eleven-Year Summary
Unaudited [Millions of Dollars except Per Share Data]
For the Year Ended December 31 2000 1999 1998 1997 1996 1995
-------- --------- --------- --------- --------- ---------
Revenue
Annuities 2133.7 2115.8 2068.1 2023.0 1805.0 1877.1
Life Insurance 1819.0 1760.4 1378.5 544.8 549.2 514.9
Reinsurance 1768.5 1829.4 1576.5 1386.9 1561.8 1417.4
Investment Management 482.4 489.3 485.1 453.8 406.3 288.0
Lincoln UK 438.2 446.6 439.7 427.3 393.2 351.5
Employee Life - Health Benefits
Corporate & Other 209.7 162.2 139.1 62.8 18.1 137.5
-------- --------- --------- --------- --------- ---------
Total Revenue 6851.5 6803.7 6087.1 4898.5 4733.6 4586.5
======== ========= ========= ========= ========= =========
Income from Operations*
Annuities 362.0 299.4 262.4 223.0 174.6 175.2
Life Insurance 259.9 212.0 149.2 39.9 41.2 35.4
Reinsurance 122.4 40.6 104.9 (150.1) 74.8 (70.5)
Investment Management 44.1 61.0 43.9 18.1 18.6 20.6
Lincoln UK 61.0 (13.9) 70.9 (108.3) 66.0 45.9
Employee Life - Health Benefits
Corporate & Other (130.4) (123.7) (100.9) (73.2) (76.5) (65.7)
-------- --------- --------- --------- --------- ---------
Total Income from Cont Oper 719.1 475.5 530.4 (50.6) 298.8 140.8
Discontinued Operations 110.1 135.3 165.6
-------- --------- --------- --------- --------- ---------
Income from Operations 719.1 475.5 530.4 59.4 434.1 306.5
======== ========= ========= ========= ========= =========
Net Income
Annuities 358.6 291.5 273.8 263.3 204.3 248.8
Life Insurance 249.3 211.5 127.5 39.1 51.8 40.6
Reinsurance 122.4 41.1 102.3 (133.8) 86.8 (59.6)
Investment Management 37.0 51.6 44.4 25.1 25.0 27.4
Lincoln UK (13.2) (18.2) 71.7 (106.8) 66.0 45.7
Employee Life - Health Benefits
Corporate & Other (132.6) (117.2) (109.9) (64.6) (77.5) (1.4)
-------- --------- --------- --------- --------- ---------
Total Net Inc from Cont Oper 621.4 460.4 509.8 22.2 356.4 301.4
Discontinued Operations 911.8 157.2 180.8
-------- --------- --------- --------- --------- ---------
Total Net Income 621.4 460.4 509.8 934.0 513.6 482.2
======== ========= ========= ========= ========= =========
OTHER DATA
Assets 99844.1 103095.7 93836.3 77174.7 71713.4 63257.7
Shareholders' Equity:
Securities at Market 4954.1 4263.9 5387.9 4982.9 4470.0 4378.1
Securities at Cost 4942.0 4729.6 4835.6 4546.9 4057.1 3679.9
Average Equity (Securities at Cost) 4831.9 4818.7 4685.6 4214.1 3866.0 3550.5
Common Shares Outstanding: (millions)
End of Period - Diluted 195.2 197.0 203.4 204.7 209.5 210.3
Average for the Period - Diluted 194.9 200.4 203.3 208.0 210.7 209.5
Per Share Data (Diluted)
Income (Loss) from Continuing Operations $3.69 $2.37 $2.61 ($0.24) $1.42 $0.67
Income from Operations * $3.69 $2.37 $2.61 $0.29 $2.06 $1.46
Net Income from Continuing Operations $3.19 $2.30 $2.51 $0.11 $1.69 $1.44
Net Income $3.19 $2.30 $2.51 $4.49 $2.44 $2.30
Shareholders' Equity:
Shareholders' Equity (Sec at Market) $25.92 $21.76 $26.59 $24.63 $21.50 $20.95
Shareholders' Equity (Securities at Cost) $25.85 $24.14 $23.86 $22.48 $19.51 $17.61
Dividends Declared (Common Stock) $1.175 $1.115 $1.055 $0.995 $0.935 $0.875
Return on Equity (see page 30)
Net Income/Average Equity 12.9% 9.6% 10.9% 22.2% 13.3% 13.6%
Inc from Operations/Average Equity 14.9% 9.9% 11.3% 1.4% 11.2% 8.6%
Adj Net Income/Adj Average Equity 15.8% 11.8% 14.1% 4.3% 14.3% 13.5%
Market Value of Common Stock
High for the Year $56.375 $57.500 $49.438 $39.063 $28.500 $26.875
Low for the Year $22.625 $36.000 $33.500 $24.500 $20.375 $17.313
Close for the Year $47.313 $40.000 $40.907 $39.063 $26.250 $26.875
Eleven-Year Summary (Continued)
Unaudited [Millions of Dollars except Per Share Data]
Ten-year
compound
For the Year Ended December 31 1994 1993 1992 1991 1990 annual growth
-------- --------- --------- --------- --------- ---------
Revenue
Annuities 1506.2 1603.8 1336.2 1216.7 1073.7 7.1%
Life Insurance 466.2 477.5 444.4 417.3 371.7 17.2%
Reinsurance 1267.4 1101.9 1074.6 774.3 741.6 9.1%
Investment Management
Lincoln UK 216.0 174.9 180.6 169.6 161.1 10.5%
Employee Life - Health Benefits 314.9 1297.3 1241.6 2646.3 2454.2
Corporate & Other 161.8 281.7 464.7 300.4 173.2
-------- --------- --------- --------- --------- ---------
Total Revenue 3932.5 4937.1 4742.1 5524.6 4975.5 3.3%
======== ========= ========= ========= ========= =========
Income from Operations*
Annuities 142.4 127.1 89.4 58.3 55.2 20.7%
Life Insurance 34.2 37.8 46.8 31.5 25.9 25.9%
Reinsurance 51.6 22.4 38.7 31.4 55.7 14.0%
Investment Management
Lincoln UK 17.2 11.9 9.2 14.3 13.3 27.0%
Employee Life - Health Benefits 14.1 54.3 40.8 43.5 53.2
Corporate & Other (40.9) (55.9) (73.0) (70.7) (90.4)
-------- --------- --------- --------- --------- ---------
Total Income from Cont Oper 218.6 197.6 151.9 108.3 112.9 21.7%
Discontinued Operations 171.1 145.9 88.7 69.4 100.9
-------- --------- --------- --------- --------- ---------
Income from Operations 389.7 343.5 240.6 177.7 213.8 12.9%
======== ========= ========= ========= ========= =========
Net Income
Annuities 142.4 127.1 89.4 58.3 55.2 20.6%
Life Insurance 34.2 37.8 46.8 31.5 25.9 25.4%
Reinsurance 52.2 20.7 38.7 31.4 55.7 8.2%
Investment Management
Lincoln UK 18.5 12.6 9.2 14.3 13.3
Employee Life - Health Benefits 14.4 55.3 40.8 43.5 53.2
Corporate & Other (96.2) (177.1) 45.6 (46.5) (127.6)
-------- --------- --------- --------- --------- ---------
Total Net Inc from Cont Oper 165.5 76.4 270.5 132.5 75.7 23.4%
Discontinued Operations 184.4 242.5 88.7 69.4 100.9
-------- --------- --------- --------- --------- ---------
Total Net Income 349.9 318.9 359.2 201.9 176.6 13.4%
======== ========= ========= ========= ========= =========
OTHER DATA
Assets 48864.8 47825.1 39042.2 33660.3 27597.3 13.7%
Shareholders' Equity:
Securities at Market 3042.1 4072.3 2826.8 2655.8 2279.5 8.1%
Securities at Cost 3353.1 3157.6 2664.1 2445.8 2213.2 8.4%
Average Equity (Securities at Cost) 3288.6 3009.0 2575.0 2335.3 2086.6 8.8%
Common Shares Outstanding: (millions)
End of Period - Diluted 208.3 208.3 187.7 185.4 176.3
Average for the Period - Diluted 208.7 206.1 186.8 189.2 175.2
Per Share Data (Diluted)
Income (Loss) from Continuing Operations $1.05 $0.96 $0.81 $0.57 $0.64 19.1%
Income from Operations * $1.87 $1.67 $1.29 $0.94 $1.22 11.7%
Net Income from Continuing Operations $0.79 $0.37 $1.45 $0.70 $0.43 22.1%
Net Income $1.68 $1.55 $1.92 $1.07 $1.01 12.2%
Shareholders' Equity:
Shareholders' Equity (Sec at Market) $14.67 $19.69 $15.13 $14.35 $12.95 7.2%
Shareholders' Equity (Securities at Cost) $16.17 $15.27 $14.26 $13.21 $12.57 7.5%
Dividends Declared (Common Stock) $0.830 $0.775 $0.738 $0.693 $0.658 6.0%
Return on Equity (see page 30)
Net Income/Average Equity 10.6% 10.6% 13.9% 8.6% 8.5%
Inc from Operations/Average Equity 11.8% 11.4% 9.3% 7.6% 10.2%
Adj Net Income/Adj Average Equity 12.8% 15.5% 11.1%
Market Value of Common Stock
High for the Year $22.188 $24.125 $19.032 $13.813 $15.338
Low for the Year $17.313 $17.344 $12.625 $9.500 $7.688
Close for the Year $17.500 $21.750 $18.500 $13.688 $10.750 16.0%
* "Income from Operations" is defined as "Net income less realized gain (loss) on investments and associated items, gain
(loss) on sale of subsidiaries and restructuring charges, all net of taxes."
Quarterly Summary
Unaudited [Millions of Dollars except Per Share Data]
Mar Jun Sep Dec Mar Jun
For the Quarter Ended 1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- -------
Revenue
Annuities 525.8 536.0 493.3 512.9 524.4 533.0
Life Insurance 303.6 311.3 292.8 470.7 424.0 426.3
Reinsurance 354.5 379.6 385.6 456.9 420.3 425.9
Investment Management 125.8 124.2 108.9 126.1 125.4 121.8
Lincoln UK 103.5 124.2 102.8 109.2 119.1 113.1
Corporate & Other 34.8 32.1 34.1 38.0 62.2 58.2
------- ------- ------- ------- ------- -------
Total Revenue 1448.0 1507.5 1417.6 1714.0 1675.4 1678.3
======= ======= ======= ======= ======= =======
Income from Operations*
Annuities 64.5 69.3 65.5 63.2 74.4 75.9
Life Insurance 25.3 35.9 36.2 51.9 48.1 54.4
Reinsurance 27.0 23.5 29.1 25.3 33.8 23.7
Investment Management 10.2 11.7 7.4 14.6 15.4 14.3
Lincoln UK 17.2 17.2 17.7 18.8 18.1 19.0
Corporate & Other (16.0) (25.4) (25.1) (34.3) (34.0) (35.6)
------- ------- ------- ------- ------- -------
Income from Operations 128.1 132.2 130.7 139.4 155.7 151.8
======= ======= ======= ======= ======= =======
Net Income
Annuities 70.9 82.0 56.0 64.9 76.8 76.4
Life Insurance 6.4 40.0 35.2 45.8 46.3 51.5
Reinsurance 29.8 24.6 24.0 23.9 34.5 24.0
Investment Management 12.2 12.2 3.6 16.4 3.4 14.0
Lincoln UK 17.4 17.4 17.8 19.2 18.0 20.0
Corporate & Other (14.6) (27.5) (23.1) (44.6) (33.9) (37.6)
------- ------- ------- ------- ------- -------
Total Net Inc from Cont Oper 122.0 148.7 113.4 125.6 145.1 148.4
------- ------- ------- ------- ------- -------
Total Net Income 122.0 148.7 113.4 125.6 145.1 148.4
======= ======= ======= ======= ======= =======
OTHER DATA
Assets 87884.5 88364.6 84606.2 93836.3 95350.3 98261.4
Shareholders' Equity
Beg of Period (Securities at Market) 4641.1 5054.2 5150.8 5527.6 5387.9 5107.4
End of Period (Securities at Market) 5054.2 5150.8 5527.6 5387.9 5107.4 4817.4
End of Period (Securities at Cost) 4579.2 4681.3 4753.9 4835.6 4852.8 4818.5
Average Equity (Securities at Cost) 4596.9 4632.0 4718.3 4795.4 4872.5 4834.2
Common Shares Outstanding
Average for the Period - Diluted 204.3 203.9 203.9 203.3 203.6 201.9
End of Period - Diluted 204.2 204.5 203.9 203.4 203.2 200.9
Per Share Data (Diluted)
Income from Operations * $0.63 $0.65 $0.64 $0.69 $0.76 $0.75
Net Income from Continuing Operations $0.60 $0.73 $0.56 $0.62 $0.71 $0.73
Net Income $0.60 $0.73 $0.56 $0.62 $0.71 $0.73
Shareholders' Equity
Shareholders' Equity (Sec at Market) $25.12 $25.55 $27.28 $26.59 $25.30 $24.18
Shareholders' Equity (Sec at Cost) $22.76 $23.22 $23.47 $23.86 $24.04 $24.18
Dividends Declared (Com Stk) $0.260 $0.260 $0.260 $0.275 $0.275 $0.275
Return on Equity (see page 30)
Net Income/Average Equity 10.6% 12.8% 9.6% 10.5% 11.9% 12.3%
Inc from Operations/Average Equity 11.2% 11.4% 11.1% 11.6% 12.8% 12.6%
Market Value of Common Stock
Highest Price $43.250 $47.063 $49.438 $43.344 $50.250 $53.438
Lowest Price $36.125 $41.844 $41.125 $33.500 $39.281 $45.688
Closing Price $42.625 $45.688 $41.125 $40.906 $49.438 $52.313
Quarterly Summary (Continued)
Unaudited [Millions of Dollars except Per Share Data]
Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1999 1999 2000 2000 2000 2000
------- ------- ------- ------- ------- -------
Revenue
Annuities 520.5 538.0 548.7 530.5 532.1 522.3
Life Insurance 437.1 473.1 441.7 444.2 453.2 479.9
Reinsurance 404.4 578.7 394.5 457.3 453.5 463.2
Investment Management 117.1 125.1 123.8 118.8 121.7 118.1
Lincoln UK 110.5 103.8 112.8 108.2 112.8 104.3
Corporate & Other 52.5 (10.7) 47.7 33.6 42.7 85.7
------- ------- ------- ------- ------- -------
Total Revenue 1642.1 1807.9 1669.2 1692.7 1716.1 1773.5
Income from Operations*
Annuities 75.4 73.7 88.5 84.1 102.9 86.4
Life Insurance 52.6 57.0 60.4 62.4 66.5 70.6
Reinsurance 2.6 (19.5) 32.1 25.7 28.1 36.5
Investment Management 14.7 16.5 12.4 13.1 9.9 8.7
Lincoln UK 16.2 (67.1) 15.7 19.3 10.6 15.5
Corporate & Other (30.1) (24.0) (38.5) (31.6) (27.2) (33.0)
------- ------- ------- ------- ------- -------
Income from Operations 131.4 36.6 170.6 173.0 190.7 184.7
Net Income
Annuities 68.4 69.9 91.2 84.4 93.8 89.2
Life Insurance 54.0 59.7 58.1 58.4 67.4 65.4
Reinsurance (0.3) (17.0) 33.3 24.6 25.9 38.6
Investment Management 14.4 19.8 12.3 8.4 9.7 6.6
Lincoln UK 16.4 (72.6) 15.5 19.1 (29.9) (17.9)
Corporate & Other (20.6) (25.2) (40.1) (31.3) (28.2) (32.9)
------- ------- ------- ------- ------- -------
Total Net Inc from Cont Oper 132.3 34.6 170.2 163.6 138.6 148.9
Total Net Income 132.3 34.6 170.2 163.6 138.6 148.9
OTHER DATA
Assets 96500.7 103095.7 106340.0 103847.6 103243.1 99844.1
Shareholders' Equity
Beg of Period (Securities at Market) 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6
End of Period (Securities at Market) 4662.2 4263.9 4340.4 4223.7 4538.6 4954.1
End of Period (Securities at Cost) 4766.0 4729.6 4751.6 4780.3 4876.3 4942.0
Average Equity (Securities at Cost) 4793.9 4774.2 4791.5 4753.0 4867.2 4915.7
Common Shares Outstanding
Average for the Period - Diluted 199.0 197.1 195.8 194.0 195.6 195.6
End of Period - Diluted 196.9 197.0 195.1 193.7 196.2 195.2
Per Share Data (Diluted)
Income from Operations * $0.66 $0.19 $0.87 $0.89 $0.98 $0.94
Net Income from Continuing Operations $0.66 $0.18 $0.87 $0.84 $0.71 $0.76
Net Income $0.66 $0.18 $0.87 $0.84 $0.71 $0.76
Shareholders' Equity
Shareholders' Equity (Sec at Market) $23.76 $21.76 $22.45 $22.10 $23.67 $25.92
Shareholders' Equity (Sec at Cost) $24.28 $24.14 $24.58 $25.01 $25.43 $25.85
Dividends Declared (Com Stk) $0.275 $0.290 $0.290 $0.290 $0.290 $0.305
Return on Equity (see page 30)
Net Income/Average Equity 11.0% 2.9% 14.2% 13.8% 11.4% 12.1%
Inc from Operations/Average Equity 11.0% 3.1% 14.2% 14.6% 15.7% 15.0%
Market Value of Common Stock
Highest Price $57.500 $48.313 $41.375 $40.063 $56.375 $50.938
Lowest Price $36.000 $36.500 $22.625 $29.000 $35.625 $40.875
Closing Price $37.563 $40.000 $33.500 $36.125 $48.125 $47.313
* "Income from Operations" is defined as "Net income less realized gain (loss) on investments and associated
items, gain (loss) on sale of subsidiaries and restructuring charges, all net of taxes."
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
Investment
For the Quarter Ended December 31 Annuities Life Insurance Reinsurance Management
-----------------------------------------------------------------------------------------
Dec Dec Dec Dec Dec Dec Dec Dec
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------ ----- -----
Operating Revenue
Life and annuity premiums 16.2 21.0 67.1 71.1 273.2 231.9
Surrender charges 9.1 9.8 19.9 18.0 0.8 0.7
Mortality assessments 122.1 113.9 0.0 (0.2)
Expense assessments 154.2 140.5 55.5 48.0 (0.0) (0.2)
Health premiums 0.0 0.0 88.6 232.0
Investment advisory fees 78.0 80.8
Other revenue and fees 3.5 6.4 3.7 3.9 21.3 32.4 26.6 29.8
Net investment income 335.0 366.0 219.7 214.8 76.5 76.4 13.8 13.9
Earnings in Unconsolidated Affiliates 0.6 1.8
------ ------ ------ ------ ------ ------ ----- -----
Operating Revenue 518.1 543.7 488.0 469.6 461.0 575.0 118.3 124.5
------ ------ ------ ------ ------ ------ ----- -----
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 59.0 77.2 121.0 112.8 199.2 174.5
Div accum & div to policyholders 25.3 21.0 2.1 2.2
Interest credited to policy bal. 213.2 234.1 136.5 122.3 11.9 21.5
Health policy benefits 0.0 0.0 88.2 153.9
Underwriting, acquisition,
insurance and other expenses 143.2 134.7 89.6 117.8 102.9 254.6 101.2 94.8
Goodwill amortization 0.3 0.5 5.9 6.0 0.4 0.4 4.1 4.1
Interest 3.2 1.0 (0.0) 0.0
------ ------ ------ ------ ------ ------ ----- -----
Total Benefits and Expenses 415.7 446.5 378.4 379.9 407.9 608.2 105.2 98.8
------ ------ ------ ------ ------ ------ ----- -----
Income from Operations
Before Tax 102.3 97.2 109.6 89.8 53.0 (33.2) 13.1 25.7
Federal income taxes 15.9 23.5 39.0 32.8 16.5 (13.8) 4.4 9.1
------ ------ ------ ------ ------ ------ ----- -----
Income from Operations 86.4 73.7 70.6 57.0 36.5 (19.5) 8.7 16.5
------ ------ ------ ------ ------ ------ ----- -----
Restructuring charges 0.7 (1.9) 2.9
Realized gains on investments 2.8 (3.7) (5.2) 2.8 1.4 2.4 (0.2) 0.4
------ ------ ------ ------ ------ ------ ----- -----
Net Income 89.2 69.9 65.4 59.7 38.6 (17.0) 6.6 19.8
====== ====== ====== ====== ====== ====== ===== =====
Inc. from Oper.-Before Goodwill Amort. 86.7 74.2 76.5 63.0 37.0 (19.0) 12.7 20.6
------ ------ ------ ------ ------ ------ ----- -----
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
-----------------------------------------------------------------------------------------
Dec Dec Dec Dec Dec Dec Dec Dec
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------ ----- -----
Operating Revenue
Life and annuity premiums 39.7 37.2 396.1 361.1
Surrender charges 0.5 0.7 30.3 29.2
Mortality assessments 7.5 5.0 129.6 118.7
Expense assessments 34.6 37.2 0.0 12.8 12.8 257.1 238.3
Health premiums 0.8 1.6 0.0 0.0 89.4 233.6
Investment advisory fees (24.4) (26.7) 53.6 54.1
Other revenue and fees 1.3 3.8 140.1 42.2 (51.9) (47.3) 144.6 71.2
Net investment income 16.7 17.7 22.8 23.8 (12.3) (12.5) 672.1 700.1
Earnings in Unconsolidated Affiliates 0.6 1.8
------ ------ ------ ------ ------ ------ ----- -----
Operating Revenue 100.6 102.4 162.9 66.0 (75.4) (73.0) 1773.5 1808.2
------ ------ ------ ------ ------ ------ ----- -----
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 50.7 207.9 430.0 572.5
Div accum & div to policyholders 27.4 23.3
Interest credited to policy bal. 9.9 10.7 371.5 388.5
Health policy benefits 3.5 3.9 0.1 (0.0) 91.8 157.8
Underwriting, acquisition,
insurance and other expenses 34.9 51.4 168.3 44.2 (67.2) (67.0) 572.9 630.5
Goodwill amortization 0.2 3.3 0.3 (0.1) 10.9 14.6
Interest 53.5 54.0 (23.3) (20.3) 33.4 34.7
------ ------ ------ ------ ------ ------ ----- -----
Total Benefits and Expenses 89.3 266.6 221.9 98.5 (80.6) (76.7) 1537.9 1821.8
------ ------ ------ ------ ------ ------ ----- -----
Income from Operations
Before Tax 11.3 (164.2) (59.0) (32.5) 5.2 3.7 235.6 (13.6)
Federal income taxes (4.2) (97.1) (24.5) (6.0) 3.7 1.2 50.9 (50.2)
------ ------ ------ ------ ------ ------ ----- -----
Income from Operations 15.5 (67.1) (34.5) (26.5) 1.5 2.5 184.7 36.6
Restructuring charges (36.1) (6.5) 0.3 (37.0) (3.6)
Realized gains on investments 2.6 1.0 (0.8) (0.8) 0.6 (0.3) 1.2 1.6
------ ------ ------ ------ ------ ------ ----- -----
Net Income (17.9) (72.6) (35.0) (27.3) 2.1 2.1 148.9 34.6
====== ====== ====== ====== ====== ====== ===== =====
Inc. from Oper.-Before Goodwill Amort. 15.7 (63.8) (34.5) (26.2) 1.5 2.4 195.6 51.2
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
Investment
For the Year Ended December 31 Annuities Life Insurance Reinsurance Management
--------------------------------------------------------------------------------------------
Dec Dec Dec Dec Dec Dec Dec Dec
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------ ----- -----
Operating Revenue
Life and annuity premiums 64.3 65.2 227.2 235.7 968.5 743.1
Surrender charges 41.8 37.9 66.4 66.3 3.7 2.8
Mortality assessments 465.2 444.6 0.0 0.7
Expense assessments 628.4 536.2 191.8 165.8 (0.0) 0.3
Health premiums 0.1 0.1 404.6 692.3
Investment advisory fees 312.7 326.0
Other revenue and fees 11.0 14.5 14.2 9.8 72.7 64.6 115.9 106.6
Net investment income 1393.5 1474.2 871.5 840.1 317.8 314.1 57.7 56.9
Earnings in Unconsolidated Affiliates 2.1 5.8
------ ------ ------ ------ ------ ------ ----- -----
Operating Revenue 2138.9 2128.0 1836.4 1762.6 1769.4 1823.6 486.3 489.4
------ ------ ------ ------ ------ ------ ----- -----
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 254.7 259.1 411.5 430.4 716.1 530.6
Div accum & div to policyholders 80.8 81.5 6.7 6.9
Interest credited to policy bal. 866.1 925.2 525.4 493.8 42.2 47.3
Health policy benefits 0.1 0.1 434.8 646.5
Underwriting, acquisition,
insurance and other expenses 575.5 560.8 384.8 399.1 379.8 531.2 400.9 378.1
Goodwill amortization (0.6) 2.0 23.7 23.4 1.8 0.4 16.2 16.2
Interest 11.2 1.0 0.0 0.0
------ ------ ------ ------ ------ ------ ----- -----
Total Benefits and Expenses 1695.7 1747.1 1426.3 1428.2 1592.6 1763.9 417.1 394.4
------ ------ ------ ------ ------ ------ ----- -----
Income from Operations
Before Tax 443.2 380.9 410.1 334.3 176.8 59.8 69.2 95.1
Federal income taxes 81.2 81.4 150.1 122.3 54.4 19.2 25.1 34.1
------ ------ ------ ------ ------ ------ ----- -----
Income from Operations 362.0 299.4 259.9 212.0 122.4 40.6 44.1 61.0
Restructuring charges 0.7 (3.2) (4.6) (9.2)
Realized gains on investments (3.4) (7.9) (10.7) (0.5) (0.7) 3.7 (2.5) (0.1)
------ ------ ------ ------ ------ ------ ----- -----
Net Income 358.6 291.5 249.3 211.5 122.4 41.1 37.0 51.6
====== ====== ====== ====== ====== ====== ===== =====
Inc. from Oper.-Before Goodwill Amort. 361.4 301.5 283.6 235.4 124.1 40.9 60.3 77.2
------ ------ ------ ------ ------ ------ ----- -----
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
--------------------------------------------------------------------------------------------
Dec Dec Dec Dec Dec Dec Dec Dec
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------ ----- ------
Operating Revenue
Life and annuity premiums 143.3 139.1 (0.1) 1403.3 1183.0
Surrender charges 2.8 3.2 114.7 110.2
Mortality assessments 31.4 27.1 24.0 496.5 496.4
Expense assessments 178.1 182.3 0.1 52.0 46.3 1050.2 930.9
Health premiums 5.1 6.1 0.0 0.0 409.8 698.5
Investment advisory fees (99.6) (102.2) 213.1 223.8
Other revenue and fees 6.9 13.8 402.2 288.8 (177.6) (153.5) 445.4 344.5
Net investment income 70.3 75.3 93.2 94.5 (56.8) (47.5) 2747.1 2807.5
Earnings in Unconsolidated Affiliates (2.4) (0.4) 5.8
------ ------ ------ ------ ------ ------ ----- ------
Operating Revenue 435.0 443.6 493.1 407.2 (279.3) (253.7) 6879.8 6800.7
------ ------ ------ ------ ------ ------ ----- ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 164.1 293.5 33.0 1546.4 1546.6
Div accum & div to policyholders 87.6 88.4
Interest credited to policy bal. 0.0 40.5 44.1 1474.2 1510.4
Health policy benefits 14.4 12.8 (0.3) 0.4 449.0 659.7
Underwriting, acquisition,
insurance and other expenses 180.0 223.5 484.4 350.6 (237.0) (224.7) 2168.4 2218.5
Goodwill amortization 4.0 7.0 0.0 0.3 (0.1) 45.1 49.2
Interest 219.3 213.1 (91.0) (80.4) 139.5 133.7
------ ------ ------ ------ ------ ------ ----- ------
Total Benefits and Expenses 362.6 536.7 703.5 597.2 (287.5) (261.1) 5910.3 6206.4
------ ------ ------ ------ ------ ------ ----- ------
Income from Operations
Before Tax 72.4 (93.1) (210.4) (190.0) 8.3 7.4 969.6 594.4
Federal income taxes 11.3 (79.2) (75.5) (60.1) 3.7 1.2 250.5 118.9
------ ------ ------ ------ ------ ------ ----- ------
Income from Operations 61.0 (13.9) (134.9) (129.9) 4.5 6.2 719.1 475.5
Restructuring charges (76.5) (6.5) 0.3 (80.2) (18.9)
Realized gains on investments 2.3 2.1 8.4 15.7 (10.9) (9.3) (17.5) 3.8
------ ------ ------ ------ ------ ------ ----- ------
Net Income (13.2) (18.2) (126.3) (114.2) (6.3) (3.0) 621.4 460.4
====== ====== ====== ====== ====== ====== ===== ======
Statement of Consolidated Income
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
---- ---- ---- ---- -----
Operating Revenue
Life and annuity premiums 728.7 756.2 985.6 1183.0 1403.3
Surrender charges 40.9 45.4 91.5 110.2 114.7
Mortality assessments 180.8 186.4 380.1 496.4 496.5
Expense assessments 491.8 600.3 803.0 930.9 1050.2
Health premiums 790.4 572.6 635.1 698.5 409.8
Investment advisory fees 180.8 204.9 227.1 223.8 213.1
Other revenue and fees 138.2 157.3 261.0 344.5 445.4
Net investment income 2087.9 2250.8 2681.4 2807.5 2747.1
Earnings in Unconsolidated Affiliates 1.4 2.1 3.3 5.8 (0.4)
------ ------ ------ ------ ------
Operating Revenue 4641.1 4775.9 6068.0 6800.7 6879.8
------ ------ ------ ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 835.7 1090.2 1237.7 1546.6 1546.4
Div accum & div to policyholders 33.4 29.7 78.0 88.4 87.6
Interest credited to policy bal. 1167.2 1238.7 1446.2 1510.4 1474.2
Health policy benefits 673.6 833.1 566.9 659.7 449.0
Underwriting, acquisition,
insurance and other expenses 1417.0 1557.3 1844.2 2218.5 2168.4
Goodwill amortization 13.9 15.6 44.5 49.2 45.1
Interest 84.7 92.5 117.1 133.7 139.5
------ ------ ------ ------ ------
Total Benefits and Expenses 4225.4 4857.2 5334.6 6206.4 5910.3
------ ------ ------ ------ ------
Income from Operations Before Tax 415.7 (81.3) 733.4 594.4 969.6
Federal income taxes 116.9 (30.6) 203.0 118.9 250.5
------ ------ ------ ------ ------
Income from Continuing Operations 298.8 (50.6) 530.4 475.5 719.1
------ ------ ------ ------ ------
Discontinued Operations 157.2 911.8
Restructuring charges (34.3) (18.9) (80.2)
Realized gains on investments 57.6 72.9 13.7 3.8 (17.5)
------ ------ ------ ------ ------
Net Income 513.6 934.0 509.8 460.4 621.4
====== ====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------
For the Quarter Ended Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
---- ---- ---- ---- ---- ----
Operating Revenue
Life and annuity premiums 205.2 201.5 230.8 348.0 284.2 274.0
Surrender charges 21.8 21.3 21.5 26.9 25.5 27.1
Mortality assessments 89.0 93.4 67.7 130.0 137.3 122.2
Expense assessments 189.1 213.8 201.9 198.2 215.3 231.5
Health premiums 142.4 172.5 155.8 164.5 154.9 160.3
Investment advisory fees 58.0 59.0 52.5 57.5 58.8 56.3
Other revenue and fees 58.7 61.1 64.8 76.4 86.4 109.0
Net investment income 658.4 658.7 649.6 714.7 709.5 700.8
Earnings in Unconsolidated Affiliates 1.5 0.7 (0.2) 1.3 1.6 1.1
------ ------ ------ ------ ------ ------
Operating Revenue 1424.1 1482.0 1444.3 1717.6 1673.4 1682.4
------ ------ ------ ------ ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 254.8 278.6 264.3 440.0 344.6 335.5
Div accum & div to policyholders 19.6 9.8 20.7 27.9 21.5 22.5
Interest credited to policy bal. 378.6 348.5 338.5 380.6 375.1 377.1
Health policy benefits 134.3 158.9 142.6 131.0 145.5 166.6
Underwriting, acquisition,
insurance and other expenses 430.7 459.2 463.1 491.2 522.4 532.1
Goodwill amortization 8.3 11.0 9.2 16.0 11.8 9.9
Interest 23.4 27.7 32.5 33.5 33.1 32.6
------ ------ ------ ------ ------ ------
Total Benefits and Expenses 1249.6 1293.8 1271.0 1520.3 1454.1 1476.3
------ ------ ------ ------ ------ ------
Income from Operations
Before Tax/Min Int. 174.5 188.2 173.4 197.4 219.3 206.1
Federal income taxes 46.4 56.0 42.6 58.0 63.6 54.2
------ ------ ------ ------ ------ ------
Inc from Operations
Before Min Int 128.1 132.2 130.7 139.4 155.7 151.8
------ ------ ------ ------ ------ ------
Minority Interest
Income from Operations 128.1 132.2 130.7 139.4 155.7 151.8
Restructuring charges (20.0) (14.3) (12.1)
Realized gains on investments 13.9 16.5 (17.3) 0.5 1.5 (3.5)
------ ------ ------ ------ ------ ------
Net Income 122.0 148.7 113.4 125.6 145.1 148.4
====== ====== ====== ====== ====== ======
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
---- ---- ---- ---- ---- ----
Operating Revenue
Life and annuity premiums 263.8 361.1 331.2 337.1 339.0 396.1
Surrender charges 28.4 29.2 28.7 29.8 25.9 30.3
Mortality assessments 118.2 118.7 118.5 122.5 125.9 129.6
Expense assessments 245.9 238.3 261.1 258.6 273.4 257.1
Health premiums 149.6 233.6 58.4 144.0 117.9 89.4
Investment advisory fees 54.6 54.1 54.0 52.2 53.3 53.6
Other revenue and fees 77.9 71.2 106.1 88.7 106.0 144.6
Net investment income 697.1 700.1 711.1 673.8 690.0 672.1
Earnings in Unconsolidated Affiliates 1.2 1.8 1.0 (3.6) 1.6 0.6
------ ------ ------ ------ ------ ------
Operating Revenue 1636.7 1808.2 1670.2 1703.0 1733.1 1773.5
------ ------ ------ ------ ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 294.0 572.5 356.1 370.1 390.2 430.0
Div accum & div to policyholders 21.2 23.3 21.7 20.2 18.2 27.4
Interest credited to policy bal. 369.7 388.5 373.9 366.8 362.0 371.5
Health policy benefits 189.8 157.8 114.3 119.9 123.0 91.8
Underwriting, acquisition,
insurance and other expenses 533.4 630.5 525.7 537.5 532.4 572.9
Goodwill amortization 12.9 14.6 10.2 12.0 12.0 10.9
Interest 33.3 34.7 36.3 35.4 34.4 33.4
------ ------ ------ ------ ------ ------
Total Benefits and Expenses 1454.1 1821.8 1438.2 1461.9 1472.2 1537.9
------ ------ ------ ------ ------ ------
Income from Operations
Before Tax/Min Int. 182.6 (13.6) 232.0 241.1 260.8 235.6
Federal income taxes 51.2 (50.2) 61.6 67.9 70.1 50.9
------ ------ ------ ------ ------ ------
Inc from Operations
Before Min Int 131.4 36.6 170.4 173.2 190.7 184.7
------ ------ ------ ------ ------ ------
Minority Interest (0.2) 0.2 (0.0) 0.0
Income from Operations 131.4 36.6 170.6 173.0 190.7 184.7
Restructuring charges (3.2) (3.6) (2.7) (40.5) (37.0)
Realized gains on investments 4.1 1.6 (0.4) (6.7) (11.6) 1.2
------ ------ ------ ------ ------ ------
Net Income 132.3 34.6 170.2 163.6 138.6 148.9
====== ====== ====== ====== ====== ======
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Investment
Annuities Life Insurance Reinsurance Management
---------------------------------------------------------------------------------------------
ASSETS Dec Dec Dec Dec Dec Dec Dec Dec
2000 1999 2000 1999 2000 1999 2000 1999
------- ------- ------- ------- ------- ------- ------- -------
Investments
Corporate bonds 8892.4 10097.3 6353.6 6128.4 2554.1 2378.3 333.6 383.3
U.S. government bonds 25.8 26.5 86.4 78.2 259.6 226.2 0.2 0.3
Foreign government bonds 135.5 234.7 125.8 151.3 71.1 82.1
Asset/Mortgage backed securities 2299.7 2852.3 829.3 827.4 261.4 263.6 49.0 59.6
State and municipal bonds 6.3 6.6 7.9 7.7 0.3 0.3
Preferred stocks-redeemable 120.5 115.7 24.6 23.3 4.3 3.8 9.6 9.2
Common stocks 13.6 15.0 2.2 2.2
Preferred stocks-equity 45.8 44.1 9.2 13.7 1.1 0.0 2.4 2.0
Mortgage loans 2324.0 2451.5 1765.9 1812.2 360.9 315.3 95.5 113.9
Real estate
Policy loans 509.9 490.9 1440.5 1389.1
Other long-term investments 5.2 7.5 16.9 3.6 25.0 35.0 5.4
------- ------- ------- ------- ------- ------- ------- -------
Total Investments 14365.2 16327.2 10673.8 10450.1 3540.1 3307.0 490.4 573.6
------- ------- ------- ------- ------- ------- ------- -------
Intercompany investments 4039.2 3056.9 1598.4 869.8 532.7 594.0 249.1 208.4
Invest in unconsol affiliates 6.4 25.8
Cash and invested cash (108.8) (108.9) (67.2) (36.6) 145.7 141.2 68.6 55.5
Property and equipment 7.0 2.9 13.8 10.2 22.6 21.5
Premium and fees receivable (1.8) 0.1 45.6 26.0 214.2 190.3 34.4 52.2
Accrued investment income 210.8 228.5 169.5 167.2 51.9 52.3 7.8 8.4
Assets held in separate accounts 39322.1 41770.5 1270.1 1039.3
Federal income tax recoverable
Amount recoverable from reinsurers 1309.5 1556.3 989.1 868.2 1616.5 1710.3
Deferred acquisition costs 812.5 848.1 1079.3 864.4 459.6 331.3
Other intangible assets 169.2 193.6 1040.5 1159.7 12.8 14.2 60.9 77.1
Goodwill 45.2 44.6 878.7 902.4 33.7 97.9 316.9 333.2
Other 104.1 4.3 254.3 120.2 345.3 283.1 188.6 153.2
------- ------- ------- ------- ------- ------- ------- -------
Total Assets 60267.1 63921.0 17939.1 16433.5 6972.7 6757.7 1439.0 1483.1
======= ======= ======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
---------------------------------------------------------------------------------------------
ASSETS Dec Dec Dec Dec Dec Dec Dec Dec
2000 1999 2000 1999 2000 1999 2000 1999
------- ------- ------- ------- ------- ------- ------- --------
Investments
Corporate bonds 457.6 386.5 2658.3 1745.6 21249.7 21119.5
U.S. government bonds 170.8 206.9 542.9 538.3
Foreign government bonds 444.8 395.3 543.9 584.2 1321.1 1447.5
Asset/Mortgage backed securities 721.0 401.0 4160.4 4404.0
State and municipal bonds 14.6 14.7
Preferred stocks-redeemable 2.2 12.7 161.2 164.7
Common stocks 265.2 315.2 155.6 182.0 436.6 514.5
Preferred stocks-equity 54.5 29.7 113.1 89.5
Mortgage loans 0.3 0.4 116.3 42.1 4663.0 4735.4
Real estate 0.3 0.4 283.0 256.3 (1.3) (0.4) 282.0 256.2
Policy loans 10.5 12.5 1960.9 1892.4
Other long-term investments 1666.2 1601.6 (1250.0) (1251.3) 463.3 401.8
------- ------- ------- ------- ------- ------- ------- --------
Total Investments 1178.8 1110.2 6371.8 5062.1 (1251.3) (1251.7) 35368.6 35578.4
------- ------- ------- ------- ------- ------- ------- --------
Intercompany investments (1242.7) 310.1 (5176.7) (5039.2) (0.0) 0.0
Invest in unconsol affiliates 6.4 25.8
Cash and invested cash 253.5 258.2 1833.2 1809.5 (197.5) (223.0) 1927.4 1895.9
Property and equipment 50.8 56.7 134.0 112.5 228.2 203.8
Premium and fees receivable 1.4 1.3 3.0 (10.3) 296.7 259.6
Accrued investment income 22.8 20.4 83.6 56.4 546.4 533.2
Assets held in separate accounts 6440.9 7220.4 1.8 3546.7 3622.3 50579.9 53654.2
Federal income tax recoverable 207.5 345.0 207.5 345.0
Amount recoverable from reinsurers 33.0 28.8 (200.3) (209.3) 3747.7 3954.3
Deferred acquisition costs 635.0 679.7 2.9 3.4 81.1 73.5 3070.5 2800.3
Other intangible assets 273.6 301.8 1557.0 1746.5
Goodwill 13.0 46.5 0.2 (1.6) (1.7) 1286.0 1423.0
Other (104.9) 18.9 556.5 327.7 (322.2) (231.8) 1021.6 675.7
------- ------- ------- ------- ------- ------- ------- --------
Total Assets 8763.7 9712.8 7773.6 7713.6 (3311.2) (2926.0) 99844.1 103095.7
======= ======= ======= ======= ======= ======= ======= ========
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Annuities Life Insurance
LIABILITIES and SHAREHOLDERS' EQUITY Dec Dec Dec Dec
2000 1999 2000 1999
------- ------- ------- -------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 2686.4 2658.2 12783.9 12223.8
Health reserves 0.1 0.1
Unpaid claims - life and health 7.1 4.8 108.1 102.5
Unearned premiums 0.1 0.1
Premium deposit funds 16331.4 18078.0 13.9 15.8
Participating policyholders' funds 139.4 132.0
Other policyholders' funds 515.4 466.1
Liab related to separate accounts 39322.1 41770.5 1270.1 1039.3
------- ------- ------- -------
Total Insurance and Inv
Contract Liabilities 58347.0 62511.4 14830.9 13979.8
Federal income taxes (108.7) (216.3) (113.7) (258.5)
Short-term debt
Long-term debt
Minority Interest in pref.
securities of sub.
Other liabilities 274.4 265.8 567.9 127.0
------- ------- ------- -------
Total Liabilities 58512.7 62560.9 15285.2 13848.3
------- ------- ------- -------
Net unrealized gains on securities (44.7) (112.5) (44.9) (136.8)
Other shareholders' equity 1799.1 1472.7 2698.8 2722.0
------- ------- ------- -------
Shareholders' Equity 1754.4 1360.2 2653.9 2585.3
------- ------- ------- -------
Total Liabilities and S/Hs' Equity 60267.1 63921.0 17939.1 16433.5
======= ======= ======= =======
Investment
Reinsurance Management
LIABILITIES and SHAREHOLDERS' EQUITY Dec Dec Dec Dec
2000 1999 2000 1999
------- ------- ------- -------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 944.9 768.7
Health reserves 2442.1 2429.6
Unpaid claims - life and health 1154.4 1119.0
Unearned premiums 46.4 74.8
Premium deposit funds 753.2 839.6
Participating policyholders' funds
Other policyholders' funds 6.8 6.4
Liab related to separate accounts
------- ------- ------- -------
Total Insurance and Inv
Contract Liabilities 5347.8 5238.2
Federal income taxes 36.2 (15.6) 28.3 33.4
Short-term debt 224.0 161.0
Long-term debt
Minority Interest in pref.
securities of sub.
Other liabilities 262.0 328.7 859.1 886.2
------- ------- ------- -------
Total Liabilities 5870.0 5712.3 887.4 919.7
------- ------- ------- -------
Net unrealized gains on securities 4.8 (40.1) (0.5) (3.2)
Other shareholders' equity 1098.0 1085.4 552.2 566.6
------- ------- ------- -------
Shareholders' Equity 1102.8 1045.4 551.6 563.4
------- ------- ------- -------
Total Liabilities and S/Hs' Equity 6972.7 6757.7 1439.0 1483.1
======= ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------
Corporate and
Lincoln UK Other Operations
----------------------------------------------------------
LIABILITIES and SHAREHOLDERS' EQUITY Dec Dec Dec Dec
2000 1999 2000 1999
------- ------- ------- --------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 1529.1 1548.0 0.0
Health reserves 50.7 51.8 30.9 26.2
Unpaid claims - life and health 46.6 43.0 0.5 0.5
Unearned premiums (0.0) 1.0
Premium deposit funds 32.9 55.2
Participating policyholders' funds
Other policyholders' funds
Liab related to separate accounts 6440.9 7220.4 1.8
------- ------- ------- -------
Total Insurance and Inv
Contract Liabilities 8100.3 8918.5 31.4 29.5
Federal income taxes 3.1 72.7 (51.9) 27.5
Short-term debt 525.9 677.7
Long-term debt 1962.2 1962.0
Minority Interest in pref. securities of sub. 745.0 745.0
Other liabilities 167.4 154.1 982.6 1073.4
------- ------- ------- -------
Total Liabilities 8270.8 9145.3 4195.2 4515.0
------- ------- ------- -------
Net unrealized gains on securities 52.6 46.4 40.3 (201.8)
Other shareholders' equity 440.2 521.1 3538.1 3400.4
------- ------- ------- -------
Shareholders' Equity 492.8 567.5 3578.4 3198.6
------- ------- ------- -------
Total Liabilities and S/Hs' Equity 8763.7 9712.8 7773.6 7713.6
======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------
Consolidating
Adjustments Consolidated
-------------------------------------------------------
LIABILITIES and SHAREHOLDERS' EQUITY Dec Dec Dec Dec
2000 1999 2000 1999
------- ------- ------- --------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves (103.2) (127.4) 17841.2 17071.4
Health reserves 2523.8 2507.8
Unpaid claims - life and health (0.0) 1316.6 1269.8
Unearned premiums 46.5 75.8
Premium deposit funds 584.0 635.4 17715.5 19624.1
Participating policyholders' funds 139.4 132.0
Other policyholders' funds 522.2 472.6
Liab related to separate accounts 3546.7 3622.3 50579.9 53654.2
------- ------- ------- -------
Total Insurance and Inv
Contract Liabilities 4027.6 4130.4 90685.1 94807.7
Federal income taxes 206.7 356.8
Short-term debt (436.9) (378.5) 312.9 460.2
Long-term debt (1250.0) (1250.0) 712.2 712.0
Minority Interest in pref. securities of sub. 745.0 745.0
Other liabilities (678.7) (728.3) 2434.7 2107.0
------- ------- ------- -------
Total Liabilities 1868.7 2130.4 94890.0 98831.9
------- ------- ------- -------
Net unrealized gains on securities 4.5 (17.8) 12.0 (465.7)
Other shareholders' equity (5184.4) (5038.7) 4942.0 4729.6
------- ------- ------- -------
Shareholders' Equity (5179.9) (5056.5) 4954.1 4263.9
------- ------- ------- -------
Total Liabilities and S/Hs' Equity (3311.2) (2926.0) 99844.1 103095.7
======= ======= ======= =======
Five Year Comparative Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
ASSETS 1996 1997 1998 1999 2000
-------- ------- ------- -------- -------
Investments
Corporate bonds 15451.0 16633.3 22505.2 21119.5 21249.7
U.S. government bonds 1305.1 662.4 1134.6 538.3 542.9
Foreign government bonds 1781.4 1804.4 1321.2 1447.5 1321.1
Mortgage backed securities 5144.5 4529.3 5080.5 4404.0 4160.4
State and municipal bonds 237.2 241.4 16.7 14.7 14.6
Preferred stocks-redeemable 177.4 195.5 174.6 164.7 161.2
Common stocks 486.3 572.3 463.1 514.5 436.6
Preferred stocks-equity 71.2 88.2 79.8 89.5 113.1
Mortgage loans 3240.7 3288.1 4393.1 4735.4 4663.0
Real estate 655.0 576.0 488.7 256.2 282.0
Policy loans 734.8 763.1 1840.0 1892.4 1960.9
Other long-term investments 445.3 464.8 432.0 401.8 463.3
-------- ------- ------- -------- -------
Total Investments 29730.0 29818.8 37929.5 35578.4 35368.6
Invest in unconsol affiliates 21.0 21.0 18.8 25.8 6.4
Cash and invested cash 1144.8 3794.7 2433.4 1895.9 1927.4
Property and equipment 196.0 189.8 174.8 203.8 228.2
Premiums and fees receivable 237.3 197.5 246.2 259.6 296.7
Accrued investment income 417.6 423.0 528.5 533.2 546.4
Assets held in separate accounts 28809.1 37138.8 43408.9 53654.2 50579.9
Federal income taxes recoverable 204.1 345.0 207.5
Amounts recoverable from reinsurers 2328.5 2350.8 3127.1 3954.3 3747.7
Deferred acquisition costs 1689.7 1623.8 1964.4 2800.3 3070.5
Other intangible assets 708.4 613.9 1848.4 1746.5 1557.0
Goodwill 351.7 457.7 1484.3 1423.0 1286.0
Other 596.4 544.8 468.0 675.7 1021.6
Discontinued operations - assets 5482.7
-------- ------- ------- -------- -------
Total Assets 71713.4 77174.7 93836.3 103095.7 99844.1
======== ======= ======= ======== =======
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 7812.4 8228.7 16434.2 17071.4 17841.2
Health reserves 2153.0 2300.4 2600.1 2507.8 2523.8
Unpaid claims-life and health 438.8 682.0 1043.4 1269.8 1316.6
Unearned premiums 53.7 55.3 62.3 75.8 46.5
Premium deposit funds 20894.6 19803.0 20171.9 19624.1 17715.5
Participating policyholders' funds 81.9 79.8 142.7 132.0 139.4
Other policyholders' funds 188.9 180.6 438.4 472.6 522.2
Liab related to separate accounts 28809.1 37138.8 43408.9 53654.2 50579.9
-------- ------- ------- -------- -------
Total Ins and Inv Contr Liabilities 60432.4 68468.5 84301.9 94807.7 90685.1
Federal income taxes 161.5 487.8
Short-term debt 189.0 297.2 314.6 460.2 312.9
Long-term debt 626.3 511.0 712.2 712.0 712.2
Minority Interest - pref sec of a sub 315.0 315.0 745.0 745.0 745.0
Other liabilities 1417.4 2112.2 2374.6 2107.0 2434.7
Discontinued operations - liabilities 4101.9
-------- ------- ------- -------- -------
Total Liabilities 67243.5 72191.8 88448.3 98831.9 94890.0
-------- ------- ------- -------- -------
S/Hs' equity-unrealized gains-cont op. 276.4 436.0 552.4 (465.7) 12.0
S/Hs' equity-unrealized gains-disc op. 136.4
S/Hs' equity-foreign currency 66.4 46.2 50.0 30.0 21.9
S/Hs' equity-other 3990.7 4500.7 4785.6 4699.6 4920.2
-------- ------- ------- -------- -------
Total Shareholders' Equity 4470.0 4982.9 5387.9 4263.9 4954.1
-------- ------- ------- -------- -------
Total Liabilities
and Shareholders' Equity 71713.4 77174.7 93836.3 103095.7 99844.1
======== ======= ======= ======== =======
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $19.51 $22.48 $23.86 $24.14 $25.85
Common shares outstanding 207.9 202.3 202.6 196.0 191.2
Quarterly Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- -------
ASSETS
Investments
Corporate bonds 19447.1 20034.2 20986.1 22505.2 22450.1 21888.5
U.S. government bonds 764.9 812.3 968.1 1134.6 1489.4 1367.8
Foreign government bonds 1897.9 1681.4 1519.2 1321.2 1373.7 1339.7
Mortgage backed securities 5069.2 4908.3 4857.6 5080.5 5068.6 4788.5
State and municipal bonds 163.4 162.8 62.9 16.7 16.2 19.1
Preferred stocks - redeemable 190.2 188.0 160.0 174.6 179.8 175.8
Common stocks 732.8 567.6 424.4 463.1 399.5 419.0
Preferred stocks-equity 91.9 81.3 80.5 79.8 81.3 86.7
Mortgage loans 4556.6 4434.9 4329.3 4393.1 4344.6 4570.5
Real estate 567.7 499.0 459.6 488.7 471.8 449.8
Policy loans 1404.8 1499.6 1517.1 1840.0 1842.4 1847.4
Other long-term investments 343.5 402.6 399.1 432.0 411.9 409.9
------- ------- ------- ------- ------- -------
Total Investments 35230.0 35271.8 35763.9 37929.5 38129.4 37362.6
Invest in unconsol affiliates 22.5 23.1 17.4 18.8 20.5 22.3
Cash and invested cash 2641.7 2414.1 2725.4 2433.4 2327.0 2151.1
Property and equipment 191.0 191.7 200.9 174.8 178.0 180.7
Premiums and fees receivable 204.6 250.8 241.6 246.2 241.8 269.0
Accrued investment income 516.8 508.0 547.2 528.5 585.6 569.1
Assets held in separate accounts 41741.3 42247.2 37559.0 43408.9 44339.4 47864.3
Federal income taxes recoverable 78.5 188.9 204.1 286.0 478.4
Amount recoverable from reinsurers 2290.3 2373.5 2454.5 3127.1 3124.5 3121.3
Deferred acquisition costs 1695.7 1749.3 1848.0 1964.4 2112.2 2398.3
Other intangible assets 1536.6 1255.0 1241.8 1848.4 1845.4 1764.9
Goodwill 1049.3 1168.7 1153.1 1484.3 1404.6 1428.3
Other 686.3 722.5 853.5 468.0 755.8 651.1
------- ------- ------- ------- ------- -------
Total Assets 87884.5 88364.6 84606.2 93836.3 95350.3 98261.4
======= ======= ======= ======= ======= =======
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 12709.8 14103.3 12993.8 16434.2 16590.3 16536.4
Health reserves 2481.9 2547.5 2435.4 2600.1 2562.3 2528.2
Unpaid claims-life and health 652.3 740.4 768.4 1043.4 1022.9 1064.9
Unearned premiums 55.2 61.3 66.0 62.3 68.8 68.7
Premium deposit funds 20715.0 19094.9 20210.3 20171.9 20027.8 20012.6
Participating policyholders' funds 83.3 74.8 86.3 142.7 132.6 125.7
Other policyholders' funds 235.8 233.8 235.7 438.4 440.4 441.2
Liab related to separate accounts 41741.3 42247.2 37559.0 43408.9 44339.4 47864.3
------- ------- ------- ------- ------- -------
Total Ins and Inv Contr Liabilities 78674.8 79103.1 74355.0 84301.9 85184.6 88642.1
Federal income taxes 3.0
Short-term debt 364.9 277.1 354.4 314.6 281.8 380.2
Long-term debt 811.7 811.8 712.0 712.2 712.1 712.1
Minority Interest - pref sec of a sub 315.0 315.0 745.0 745.0 745.0 745.0
Other liabilities 2663.9 2706.8 2909.2 2374.6 3319.3 2964.7
------- ------- ------- ------- ------- -------
Total Liabilities 82830.3 83213.8 79078.6 88448.3 90242.9 93444.1
------- ------- ------- ------- ------- -------
S/Hs' equity-unrealized gains-cont op. 475.0 469.5 773.7 552.4 254.6 (1.1)
S/Hs' equity-foreign currency 52.4 51.8 59.8 50.0 30.1 20.7
S/Hs' equity-other 4526.8 4629.5 4694.1 4785.6 4822.7 4797.8
------- ------- ------- ------- ------- -------
Total Shareholders' Equity 5054.2 5150.8 5527.6 5387.9 5107.4 4817.4
------- ------- ------- ------- ------- -------
Total Liabilities
and Shareholders' Equity 87884.5 88364.6 84606.2 93836.3 95350.3 98261.4
======= ======= ======= ======= ======= =======
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $22.76 $23.22 $23.47 $23.86 $24.04 $24.18
Common shares outstanding 201.2 201.6 202.6 202.6 201.8 199.3
Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------- -------- -------- -------- -------- -------
ASSETS
Investments
Corporate bonds 21560.5 21119.5 21188.0 20719.1 21064.7 21249.7
U.S. government bonds 991.0 538.3 572.4 566.2 575.5 542.9
Foreign government bonds 1369.6 1447.5 1416.4 1377.4 1277.7 1321.1
Mortgage backed securities 4601.2 4404.0 4393.4 4242.4 4172.5 4160.4
State and municipal bonds 14.8 14.7 14.7 14.1 14.3 14.6
Preferred stocks - redeemable 171.3 164.7 159.7 159.2 159.5 161.2
Common stocks 423.9 514.5 496.4 467.8 479.9 436.6
Preferred stocks-equity 82.7 89.5 91.3 92.2 90.3 113.1
Mortgage loans 4772.7 4735.4 4833.9 4783.8 4767.3 4663.0
Real estate 280.3 256.2 283.4 282.1 297.6 282.0
Policy loans 1863.2 1892.4 1896.3 1914.7 1935.6 1960.9
Other long-term investments 401.2 401.8 428.8 438.2 470.5 463.3
------- -------- -------- -------- -------- -------
Total Investments 36532.4 35578.4 35774.6 35057.2 35305.4 35368.6
Invest in unconsol affiliates 23.4 25.8 (0.9) 5.8 6.4
Cash and invested cash 2342.9 1895.9 1510.1 1619.3 1435.9 1927.4
Property and equipment 191.9 203.8 207.7 205.5 213.8 228.2
Premiums and fees receivable 296.0 259.6 190.2 247.8 240.8 296.7
Accrued investment income 602.9 533.2 575.0 544.0 569.2 546.4
Assets held in separate accounts 46228.8 53654.2 56907.6 54924.2 54410.9 50579.9
Federal income taxes recoverable 457.3 345.0 300.4 246.1 267.3 207.5
Amount recoverable from reinsurers 3315.6 3954.3 3851.0 3775.3 3774.7 3747.7
Deferred acquisition costs 2614.5 2800.3 2870.4 2968.0 3048.0 3070.5
Other intangible assets 1760.6 1746.5 1705.5 1646.7 1598.4 1557.0
Goodwill 1435.0 1423.0 1349.6 1335.4 1296.6 1286.0
Other 699.3 675.7 1097.8 1279.1 1076.4 1021.6
------- -------- -------- -------- -------- -------
Total Assets 96500.7 103095.7 106340.0 103847.6 103243.1 99844.1
======= ======== ======== ======== ======== =======
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 16760.5 17071.4 17172.1 17247.3 17500.0 17841.2
Health reserves 2511.3 2507.8 2547.4 2494.2 2520.2 2523.8
Unpaid claims-life and health 1162.6 1269.8 1177.3 1204.1 1202.8 1316.6
Unearned premiums 62.5 75.8 57.1 52.8 51.8 46.5
Premium deposit funds 19988.9 19624.1 18899.3 18407.2 18072.1 17715.5
Participating policyholders' funds 120.2 132.0 130.7 130.4 135.4 139.4
Other policyholders' funds 445.9 472.6 478.9 490.6 500.7 522.2
Liab related to separate accounts 46228.8 53654.2 56907.6 54924.2 54410.9 50579.9
------- -------- -------- -------- -------- -------
Total Ins and Inv Contr Liabilities 87280.8 94807.7 97370.5 94950.8 94394.0 90685.1
Federal income taxes
Short-term debt 367.7 460.2 474.2 355.7 330.3 312.9
Long-term debt 712.0 712.0 712.0 712.1 712.2 712.2
Minority Interest - pref sec of a sub 745.0 745.0 745.0 745.0 745.0 745.0
Other liabilities 2733.0 2107.0 2697.9 2860.3 2522.9 2434.7
------- -------- -------- -------- -------- -------
Total Liabilities 91838.5 98831.9 101999.6 99623.9 98704.5 94890.0
------- -------- -------- -------- -------- -------
S/Hs' equity-unrealized gains-cont op. (103.8) (465.7) (411.2) (556.6) (337.7) 12.0
S/Hs' equity-foreign currency 40.2 30.0 22.8 21.9 19.9 21.9
S/Hs' equity-other 4725.7 4699.5 4728.8 4758.4 4856.4 4920.1
------- -------- -------- -------- -------- -------
Total Shareholders' Equity 4662.2 4263.9 4340.4 4223.7 4538.6 4954.1
------- -------- -------- -------- -------- -------
Total Liabilities
and Shareholders' Equity 96500.7 103095.7 106340.0 103847.6 103243.1 99844.1
======= ======== ======== ======== ======== =======
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $24.28 $24.14 $24.58 $25.01 $25.43 $25.85
Common shares outstanding 196.3 196.0 193.3 191.1 191.8 191.2
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
------ ------ ------ ------ ------
Operating Revenue
Premiums 69.8 84.2 53.9 65.2 64.3
Surrender charges 26.3 29.8 33.5 37.9 41.8
Expense assessments 276.7 367.2 459.9 536.2 628.4
Other revenue and fees 0.8 1.2 1.7 14.5 11.0
Net investment income 1385.9 1477.1 1501.6 1474.2 1393.5
------ ------ ------ ------ ------
Operating Revenue 1759.5 1959.5 2050.6 2128.0 2138.9
------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 270.1 292.6 271.6 259.1 254.7
Interest credited to policy bal. 910.3 974.4 955.2 925.2 866.1
Underwriting, acquisition,
insurance and other expenses 348.5 415.0 498.8 560.8 575.5
Goodwill amortization 0.0 0.0 2.2 2.0 (0.6)
------ ------ ------ ------ ------
Total Benefits and Expenses 1528.9 1682.0 1727.8 1747.1 1695.7
------ ------ ------ ------ ------
Income from Operations Before Tax 230.6 277.5 322.8 380.9 443.2
Federal income taxes 56.0 54.5 60.4 81.4 81.2
------ ------ ------ ------ ------
Income from Operations 174.6 223.0 262.4 299.4 362.0
Realized gain on investments 29.6 40.3 11.4 (7.9) (3.4)
------ ------ ------ ------ ------
Net Income 204.3 263.3 273.8 291.5 358.6
====== ====== ====== ====== ======
Inc from Oper -Before Goodwill Amort. 174.6 223.0 264.6 301.5 361.4
Effective tax rate 24.3% 19.6% 18.7% 21.4% 18.3%
Operating Revenue 1759.5 1959.5 2050.6 2128.0 2138.9
Realized gains on investments 45.6 63.5 17.5 (12.1) (5.2)
------ ------ ------ ------ ------
Total Revenue 1805.0 2023.0 2068.1 2115.8 2133.7
====== ====== ====== ====== ======
Average capital 1334.3 1373.0 1592.6 1562.0 1601.8
Return on average capital 13.1% 16.2% 16.5% 19.2% 22.6%
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Revenue
Premiums 14.9 11.9 10.8 16.3 14.9 16.2 13.1 21.0 13.3 16.8 18.0 16.2
Surrender charges 8.8 8.8 8.3 7.6 8.6 9.3 10.1 9.8 11.1 11.2 10.4 9.1
Expense assessments 112.4 119.3 115.6 112.6 119.8 133.3 142.6 140.5 155.1 155.7 163.4 154.2
Other revenue and fees (0.1) 0.6 (0.0) 1.2 3.9 3.2 0.9 6.4 2.2 0.6 4.6 3.5
Net investment income 378.3 377.4 373.3 372.5 373.4 370.2 364.5 366.0 362.9 345.8 349.8 335.0
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Revenue 514.3 518.0 508.0 510.2 520.7 532.3 531.2 543.7 544.6 530.1 546.2 518.1
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 66.6 68.7 67.5 68.9 61.9 65.0 55.0 77.2 61.6 65.7 68.4 59.0
Interest credited to
policy balances 249.3 236.8 235.6 233.6 228.2 232.9 230.1 234.1 228.2 219.4 205.4 213.2
Underwriting, acquisition,
insurance and other expenses 119.0 126.5 125.2 128.1 138.5 141.0 146.5 134.7 144.5 139.8 147.9 143.2
Goodwill amortization 2.2 (1.7) 0.5 1.1 0.5 0.4 0.6 0.5 (1.5) 0.3 0.3 0.3
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Benefits and Expenses 437.1 430.3 428.7 431.6 429.1 439.2 432.2 446.5 432.8 425.2 421.9 415.7
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Operations
Before 77.2 87.7 79.3 78.6 91.6 93.0 99.0 97.2 111.8 104.8 124.2 102.3
Federal income taxes 12.7 18.4 13.8 15.4 17.2 17.1 23.6 23.5 23.3 20.7 21.3 15.9
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Operations 64.5 69.3 65.5 63.2 74.4 75.9 75.4 73.7 88.5 84.1 102.9 86.4
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Realized gain on investments 6.4 12.7 (9.5) 1.8 2.4 0.5 (7.0) (3.7) 2.7 0.3 (9.1) 2.8
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income 70.9 82.0 56.0 64.9 76.8 76.4 68.4 69.9 91.2 84.4 93.8 89.2
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Inc from Oper-Before
Goodwill Amortization 66.7 67.6 66.0 64.3 75.0 76.3 76.0 74.2 87.0 84.4 103.2 86.7
Effective tax rate 16.5% 21.0% 17.4% 19.6% 18.8% 18.4% 23.8% 24.2% 20.8% 19.7% 17.1% 15.6%
Operating Revenue 514.3 518.0 508.0 510.2 520.7 532.3 531.2 543.7 544.6 530.1 546.2 518.1
Realized gains on investments 11.5 18.0 (14.7) 2.7 3.7 0.7 (10.7) (5.8) 4.2 0.4 (14.1) 4.2
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Revenue 525.8 536.0 493.3 512.9 524.4 533.0 520.5 538.0 548.7 530.5 532.1 522.3
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Average capital 1585.2 1587.5 1676.0 1521.5 1615.3 1602.4 1471.2 1559.0 1438.4 1647.7 1635.2 1686.0
Return on average capital 16.3% 17.5% 15.6% 16.6% 18.4% 19.0% 20.5% 18.9% 24.6% 20.4% 25.2% 20.5%
Annuities Segment
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars]
1996 1997 1998 1999 2000
------ ------ ------ ------ ------
Fixed Annuities- Bal Beg-of-Year 14.645 17.634 17.214 18.111 18.210
Gross Deposits 1.852 1.632 1.452 2.563 2.074
Withdrawals (incl charges) & deaths (1.916) (2.220) (2.468) (2.521) (3.283)
------ ------ ------ ------ ------
Net cash flows (0.063) (0.588) (1.016) 0.042 (1.209)
Transfer from (to) var annuities (0.688) (1.336) (0.356) (0.783) (1.329)
Interest credited 0.871 0.978 0.994 0.840 0.944
Acq of new business/companies 2.869 0.527 1.274
------ ------ ------ ------ ------
Fixed Annuities-Gross 17.634 17.214 18.111 18.210 16.615
Reinsurance Ceded (1.816) (1.757) (1.606) (1.419) (1.173)
------ ------ ------ ------ ------
Fixed Annuities-Bal End-of-Year 15.818 15.458 16.505 16.791 15.442
------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 1.410 1.412 1.265 2.310 1.918
Variable Annuities-Bal Beg-of-Year 15.673 20.383 27.346 33.358 41.493
Gross Deposits 2.746 2.695 2.791 2.553 3.165
Withdrawals (incl charges) & deaths (1.454) (2.038) (3.019) (3.760) (4.830)
------ ------ ------ ------ ------
Net cash flows 1.292 0.657 (0.228) (1.207) (1.665)
Transfer from (to) fixed annuities 0.689 1.335 0.389 0.787 1.320
Invest inc & change in mkt value 2.729 4.971 5.414 8.555 (1.721)
Acq(sale) of new business/companies 0.437
------ ------ ------ ------ ------
Var Annuities-Bal End-of-Year 20.383 27.346 33.358 41.493 39.427
------ ------ ------ ------ ------
Variable Annuities Incremental Deposits * 2.626 2.585 2.641 2.409 2.667
Total Annuities - Bal Beg-of-Year 30.318 38.017 44.561 51.469 59.704
Gross Deposits 4.598 4.327 4.244 5.116 5.239
Withdrawals (incl charges) & deaths (3.369) (4.258) (5.487) (6.281) (8.113)
------ ------ ------ ------ ------
Net cash flows 1.229 0.069 (1.244) (1.165) (2.874)
Transfers 0.001 (0.001) 0.033 0.004 (0.009)
Interest credited & change in mkt value 3.600 5.949 6.408 9.395 (0.777)
Acq of new business/companies 2.869 0.527 1.711
------ ------ ------ ------ ------
Total Gross Annuities-Bal End-of-Year 38.017 44.561 51.469 59.704 56.043
Reinsurance Ceded (1.816) (1.757) (1.606) (1.419) (1.173)
------ ------ ------ ------ ------
Total Annuities (Net of Ceded) - Bal End-of-Year 36.202 42.804 49.863 58.284 54.869
====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 4.036 3.997 3.906 4.719 4.585
Var Ann Under Agree - Included above 0.649 0.719 0.941
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
Annuities Segment
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars]
Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
------ ------ ------ ------ ------ ------
Fixed Annuities-Bal Beg of Quarter 17.214 18.305 18.101 18.123 18.111 18.225
Gross Deposits 0.364 0.407 0.346 0.335 0.489 0.654
Withdrawals (incl charges) & deaths (0.572) (0.709) (0.578) (0.608) (0.579) (0.593)
------ ------ ------ ------ ------ ------
Net cash flows (0.208) (0.302) (0.233) (0.273) (0.090) 0.061
Transfer from (to) var annuities (0.223) (0.153) 0.009 0.011 (0.034) (0.211)
Interest credited 0.251 0.249 0.246 0.249 0.238 0.228
Acq of new business/companies 1.271 0.002 0.001
------ ------ ------ ------ ------ ------
Fixed Annuities-Gross 18.305 18.101 18.123 18.111 18.225 18.303
Reinsurance Ceded (1.727) (1.687) (1.647) (1.606) (1.569) (1.524)
------ ------ ------ ------ ------ ------
Fixed Annuities-Bal End of Quarter 16.578 16.414 16.476 16.505 16.656 16.779
------ ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 0.313 0.348 0.299 0.304 0.462 0.622
Variable Annuities-Bal Beg of Quarter 27.346 32.933 33.458 29.476 33.358 34.148
Gross Deposits 0.701 0.810 0.647 0.633 0.635 0.651
Withdrawals (incl charges) & deaths (0.694) (0.760) (0.764) (0.801) (0.827) (0.912)
------ ------ ------ ------ ------ ------
Net cash flows 0.007 0.050 (0.117) (0.168) (0.192) (0.261)
Transfer from (to) fixed annuities 0.226 0.151 (0.016) 0.028 0.034 0.213
Invest inc & change in mkt value 3.534 0.324 (3.849) 5.405 0.948 3.133
Acq(sale) of new business/companies 1.820 (1.383)
------ ------ ------ ------ ------ ------
Var Annuities-Bal End of Quarter 32.933 33.458 29.476 33.358 34.148 37.233
------ ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits 0.673 0.768 0.615 0.585 0.606 0.622
Total Annuities -Bal Beg of Quarter 44.561 51.238 51.559 47.599 51.469 52.373
Gross Deposits 1.065 1.217 0.993 0.968 1.124 1.305
Withdrawals (incl charges) & deaths (1.266) (1.469) (1.343) (1.409) (1.406) (1.505)
------ ------ ------ ------ ------ ------
Net cash flows (0.201) (0.252) (0.350) (0.441) (0.282) (0.200)
Transfers 0.003 (0.002) (0.007) 0.039 0.002
Interest credited & change in mkt value 3.785 0.573 (3.603) 5.654 1.186 3.361
Acq of new business/companies 3.091 0.002 (1.382)
------ ------ ------ ------ ------ ------
Total Gross Annuities-Bal End of Quarter 51.238 51.559 47.599 51.469 52.373 55.536
Reinsurance Ceded (1.727) (1.687) (1.647) (1.606) (1.569) (1.524)
------ ------ ------ ------ ------ ------
Total Annuities (Net of Ceded) - Bal End of Quarter 49.511 49.873 45.953 49.863 50.804 54.012
====== ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 0.986 1.116 0.914 0.889 1.068 1.244
Var Ann Under Agree - Included above 2.033 2.116 1.836 0.649 0.651 0.685
Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------ ------ ------ ------ ------ ------
Fixed Annuities-Bal Beg of Quarter 18.303 18.406 18.210 17.615 17.200 16.930
Gross Deposits 0.678 0.741 0.589 0.490 0.513 0.482
Withdrawals (incl charges) & deaths (0.567) (0.782) (0.875) (0.796) (0.802) (0.810)
------ ------ ------ ------ ------ ------
Net cash flows 0.111 (0.040) (0.287) (0.307) (0.288) (0.328)
Transfer from (to) var annuities (0.238) (0.300) (0.550) (0.346) (0.217) (0.216)
Interest credited 0.231 0.144 0.241 0.238 0.235 0.230
Acq of new business/companies
------ ------ ------ ------ ------ ------
Fixed Annuities-Gross 18.406 18.210 17.615 17.200 16.930 16.615
Reinsurance Ceded (1.473) (1.419) (1.363) (1.291) (1.230) (1.173)
------ ------ ------ ------ ------ ------
Fixed Annuities-Bal End of Quarter 16.934 16.791 16.252 15.909 15.700 15.442
------ ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 0.644 0.582 0.560 0.447 0.464 0.447
Variable Annuities-Bal Beg of Quarter 37.233 35.613 41.493 44.640 43.097 42.743
Gross Deposits 0.634 0.634 0.797 0.793 0.729 0.846
Withdrawals (incl charges) & deaths (0.938) (1.084) (1.210) (1.168) (1.253) (1.199)
------ ------ ------ ------ ------ ------
Net cash flows (0.304) (0.450) (0.413) (0.375) (0.524) (0.353)
Transfer from (to) fixed annuities 0.237 0.303 0.549 0.343 0.216 0.212
Invest inc & change in mkt value (1.553) 6.027 3.011 (1.511) (0.046) (3.175)
Acq(sale) of new business/companies
------ ------ ------ ------ ------ ------
Var Annuities-Bal End of Quarter 35.613 41.493 44.640 43.097 42.743 39.427
------ ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits 0.589 0.592 0.732 0.699 0.586 0.650
Total Annuities -Bal Beg of Quarter 55.536 54.020 59.704 62.255 60.297 59.673
Gross Deposits 1.312 1.375 1.386 1.283 1.242 1.328
Withdrawals (incl charges) & deaths (1.505) (1.865) (2.085) (1.964) (2.055) (2.009)
------ ------ ------ ------ ------ ------
Net cash flows (0.193) (0.490) (0.700) (0.682) (0.812) (0.681)
Transfers (0.001) 0.003 (0.001) (0.003) (0.001) (0.004)
Interest credited & change in mkt value (1.322) 6.171 3.252 (1.273) 0.189 (2.945)
Acq of new business/companies
------ ------ ------ ------ ------ ------
Total Gross Annuities-Bal End of Quarter 54.020 59.704 62.255 60.297 59.673 56.043
Reinsurance Ceded (1.473) (1.419) (1.363) (1.291) (1.230) (1.173)
------ ------ ------ ------ ------ ------
Total Annuities (Net of Ceded) - Bal End of Quarter 52.547 58.284 60.892 59.006 58.443 54.869
====== ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 1.233 1.174 1.292 1.145 1.050 1.097
Var Ann Under Agree - Included above 0.639 0.719 0.866 0.868 0.962 0.941
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
1996 1997 1998 1999 2000
------ ----- ------ ------ ------
Operating Revenue
Premiums 62.4 64.8 185.9 235.8 227.3
Surrender charges 10.5 9.8 52.1 66.3 66.4
Mortality assessments 159.7 161.2 350.1 444.6 465.2
Expense assessments 27.8 28.6 146.2 165.8 191.8
Other revenue and fees 6.7 9.0 2.6 9.8 14.2
Net investment income 260.6 268.2 642.6 840.1 871.5
------ ----- ------ ------ ------
Operating Revenue 527.6 541.5 1379.5 1762.6 1836.4
------ ----- ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 136.5 143.6 371.2 430.5 411.5
Div accum & div to policyholders 24.1 20.4 70.7 81.5 80.8
Interest credited to policy bal. 151.9 153.0 393.1 493.8 525.4
Underwriting, acquisition,
insurance and other expenses 154.1 172.1 293.1 399.1 384.8
Goodwill amortization 0.1 0.1 19.7 23.4 23.7
Interest expense 0.0 0.0
------ ----- ------ ------ ------
Total Benefits and Expenses 466.8 489.3 1147.8 1428.2 1426.3
------ ----- ------ ------ ------
Income from Operations Before Tax 60.8 52.3 231.6 334.3 410.1
Federal income taxes 19.6 12.4 82.4 122.3 150.1
------ ----- ------ ------ ------
Income from Operations 41.2 39.9 149.2 212.0 259.9
Realized gain on investments 10.5 (0.8) (1.7) (0.5) (10.7)
Restructuring charges (20.0)
------ ----- ------ ------ ------
Net Income 51.8 39.1 127.5 211.5 249.3
====== ===== ====== ====== ======
Inc from Oper -Before Goodwill Amort. 41.4 40.0 168.9 235.4 283.6
Effective tax rate 32.2% 23.7% 35.6% 36.6% 36.6%
Operating Revenue 527.6 541.5 1,379.5 1762.6 1836.4
Realized gains on investments 21.6 3.2 (1.0) (2.2) (17.4)
------ ----- ------ ------ ------
Total Revenue 549.2 544.8 1,378.5 1760.4 1819.0
====== ===== ====== ====== ======
Average capital 388.2 384.9 1948.0 2712.3 2640.2
Return on average capital 10.6% 10.4% 7.7% 7.8% 9.8%
- ----------------------------------------------------------------------------------------------
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.225 0.190
Variable Universal Life 0.129 0.209
Whole Life 0.024 0.022
Term 0.004 0.003
------ ----- ------ ------ ------
Subtotal 0.381 0.423
Corporate Owned Life Insurance (COLI) 0.015 0.087
------ ----- ------ ------ ------
Total Lincoln Life 0.082 0.071 0.238 0.396 0.510
------ ----- ------ ------ ------
First Penn-Pacific
Universal Life 0.114 0.094
Term 0.047 0.045
------ ----- ------ ------ ------
Total First Penn-Pacific 0.134 0.134 0.154 0.160 0.139
------ ----- ------ ------ ------
Total Segment by Product 0.216 0.205 0.391 0.556 0.649
====== ===== ====== ====== ======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.181 0.195
Lincoln Financial Distributors 0.375 0.455
------ ----- ------ ------ ------
Total by Distribution 0.216 0.205 0.391 0.556 0.649
====== ===== ====== ====== ======
Individual Life Insurance In-Force (Billions)
Universal Life & Other 32.876 32.827 105.837 109.288 115.872
Term Insurance 16.284 30.337 67.076 85.701 100.130
------ ----- ------ ------ ------
Total Life Segment In-Force 49.160 63.164 172.914 194.988 216.002
====== ===== ====== ====== ======
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 32.3 32.6 40.8 80.2 54.5 57.8
Surrender charges 12.1 11.4 11.0 17.6 14.7 16.5
Mortality assessments 82.6 85.3 60.4 121.8 108.8 111.4
Expense assessments 29.0 29.8 36.5 50.8 39.6 35.4
Other revenue and fees 5.3 (5.2) (0.1) 2.5 1.9 1.6
Net investment income 140.3 150.1 144.8 207.5 207.9 207.8
------- ------- ------- ------- ------- -------
Operating Revenue 301.6 304.1 293.4 480.4 427.4 430.6
------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Benefits 76.7 87.6 72.0 134.9 103.6 108.7
Div accum & div to policyholders 17.8 8.3 18.4 26.3 20.3 21.0
Interest credited to policy bal. 105.1 91.3 74.7 122.0 125.8 123.0
Underwriting, acquisition,
insurance and other expenses 62.1 55.0 69.4 106.6 95.7 86.5
Goodwill amortization 1.2 7.4 4.0 7.1 5.9 5.0
------- ------- ------- ------- ------- -------
Total Benefits and Expenses 262.8 249.6 238.5 396.9 351.2 344.1
------- ------- ------- ------- ------- -------
Income from Operations
Before Tax 38.7 54.5 54.9 83.5 76.1 86.5
Federal income taxes 13.5 18.6 18.8 31.6 28.1 32.0
------- ------- ------- ------- ------- -------
Income from Operations 25.3 35.9 36.2 51.9 48.1 54.4
------- ------- ------- ------- ------- -------
Realized gain on investments 1.1 4.2 (1.0) (6.1) (1.8) (2.9)
Restructuring charges (20.0)
------- ------- ------- ------- ------- -------
Net Income 6.4 40.0 35.2 45.8 46.3 51.5
======= ======= ======= ======= ======= =======
Inc from Oper -Before
Goodwill Amortization 26.5 43.2 40.1 59.0 54.0 59.5
Effective tax rate 34.7% 34.2% 34.1% 37.9% 36.9% 37.0%
Operating Revenue 301.6 304.1 293.4 480.4 427.4 430.6
Realized gains on investments 2.1 7.2 (0.6) (9.7) (3.4) (4.4)
------- ------- ------- ------- ------- -------
Total Revenue 303.6 311.3 292.8 470.7 424.0 426.3
======= ======= ======= ======= ======= =======
Average capital 1549.4 1820.5 1895.1 2527.0 2716.6 2739.4
Return on average capital 6.5% 7.9% 7.6% 8.2% 7.1% 7.9%
- -------------------------------------------------------------------------------------------------------
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.043 0.051
Variable Universal Life 0.027 0.024
Whole Life 0.004 0.005
Term 0.000 0.001
------- -------
Subtotal 0.075 0.081
Corporate Owned Life Insurance (COLI) 0.002 0.007
------- -------
Total Lincoln Life 0.040 0.049 0.044 0.103 0.077 0.088
------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.029 0.029
Term 0.013 0.012
------- -------
Total First Penn-Pacific 0.031 0.039 0.040 0.043 0.042 0.040
------- ------- ------- ------- ------- -------
Total Segment by Product 0.072 0.088 0.084 0.147 0.119 0.128
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.039 0.033
Lincoln Financial Distributors 0.080 0.095
------- ------- ------- ------- ------- -------
Total by Distribution 0.072 0.088 0.084 0.147 0.119 0.128
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 68.799 69.249 69.785 105.837 105.090 106.047
Term Insurance 39.985 45.944 52.057 67.076 73.452 78.431
------- ------- ------- ------- ------- -------
Total Segment In-Force 108.784 115.193 121.842 172.914 178.542 184.478
======= ======= ======= ======= ======= =======
Life Insurance Segment (contunued)
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 52.4 71.1 53.0 56.3 50.9 67.1
Surrender charges 17.1 18.0 16.2 16.5 13.8 19.9
Mortality assessments 110.5 113.9 112.2 114.5 116.3 122.1
Expense assessments 42.8 48.0 45.3 44.1 46.9 55.5
Other revenue and fees 2.4 3.9 3.2 3.6 3.8 3.7
Net investment income 209.6 214.8 215.6 215.5 220.6 219.7
------- ------- ------- ------- ------- -------
Operating Revenue 434.9 469.6 445.5 450.5 452.4 488.0
------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Benefits 105.4 112.8 98.4 96.3 95.8 121.0
Div accum & div to policyholders 19.2 21.0 20.4 18.7 16.4 25.3
Interest credited to policy bal. 122.8 122.3 126.3 128.7 134.0 136.5
Underwriting, acquisition,
insurance and other expenses 99.1 117.8 99.4 100.9 94.9 89.6
Goodwill amortization 6.4 6.0 5.9 5.9 5.9 5.9
------- ------- ------- ------- ------- -------
Total Benefits and Expenses 353.0 379.9 350.3 350.6 347.0 378.4
------- ------- ------- ------- ------- -------
Income from Operations
Before Tax 82.0 89.8 95.2 99.9 105.4 109.6
Federal income taxes 29.4 32.8 34.8 37.4 38.9 39.0
------- ------- ------- ------- ------- -------
Income from Operations 52.6 57.0 60.4 62.4 66.5 70.6
------- ------- ------- ------- ------- -------
Realized gain on investments 1.4 2.8 (2.4) (4.0) 1.0 (5.2)
Restructuring charges
------- ------- ------- ------- ------- -------
Net Income 54.0 59.7 58.1 58.4 67.4 65.4
======= ======= ======= ======= ======= =======
Inc from Oper-Before
Goodwill Amortization 59.0 63.0 66.3 68.4 72.4 76.5
Effective tax rate 35.9% 36.5% 36.5% 37.5% 36.9% 35.6%
Operating Revenue 434.9 469.6 445.5 450.5 452.4 488.0
Realized gains on investments 2.1 3.4 (3.8) (6.3) 0.8 (8.1)
------- ------- ------- ------- ------- -------
Total Revenue 437.1 473.1 441.7 444.2 453.2 479.9
======= ======= ======= ======= ======= =======
Average capital 2707.4 2686.0 2655.3 2615.0 2650.5 2640.0
Return on average capital 7.8% 8.5% 9.1% 9.6% 10.0% 10.7%
- -------------------------------------------------------------------------------------------------------
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.044 0.086 0.046 0.042 0.047 0.056
Variable Universal Life 0.027 0.052 0.042 0.043 0.052 0.072
Whole Life 0.006 0.008 0.004 0.005 0.006 0.008
Term 0.001 0.001 0.001 0.001 0.000 0.001
------- ------- ------- ------- ------- -------
Subtotal 0.078 0.147 0.093 0.089 0.105 0.137
Corporate Owned Life Insurance (COLI) 0.002 0.004 0.013 0.019 0.006 0.049
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.081 0.151 0.105 0.109 0.111 0.186
------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.030 0.026 0.026 0.021 0.024 0.023
Term 0.011 0.011 0.013 0.013 0.010 0.009
------- ------- ------- ------- ------- -------
Total First Penn-Pacific 0.041 0.037 0.039 0.034 0.035 0.032
------- ------- ------- ------- ------- -------
Total Segment by Product 0.121 0.188 0.144 0.142 0.145 0.218
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.038 0.071 0.044 0.035 0.050 0.065
Lincoln Financial Distributors 0.084 0.117 0.100 0.107 0.095 0.153
------- ------- ------- ------- ------- -------
Total by Distribution 0.121 0.188 0.144 0.142 0.145 0.218
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 106.945 109.288 108.817 110.448 112.884 115.872
Term Insurance 81.963 85.701 92.857 97.039 98.424 100.130
------- ------- ------- ------- ------- -------
Total Segment In-Force 188.908 194.988 201.674 207.487 211.308 216.002
======= ======= ======= ======= ======= =======
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Lincoln Life
Universal Life-Bal Beg-of-Year 1.507 1.538 1.479 5.093 5.385
Deposits 0.160 0.136 0.527 0.861 0.819
Withdrawals & deaths (0.221) (0.284) (0.575) (0.385) (0.347)
------- ------- ------- ------- -------
Net cash flows (0.061) (0.148) (0.048) 0.475 0.472
Policyholder assessments (0.483) (0.518)
Interest credited 0.092 0.088 0.285 0.300 0.306
Acq of new business/companies 0.000 0.000 3.378 0.000 0.000
------- ------- ------- ------- -------
Universal Life-Bal End of Year (1) 1.538 1.479 5.093 5.385 5.645
------- ------- ------- ------- -------
Variable Universal Life-Bal Beg-of-Year 0.239 0.339 0.480 1.200 1.605
Deposits 0.095 0.106 0.193 0.326 0.607
Withdrawals & deaths (0.030) (0.040) (0.100) (0.099) (0.132)
------- ------- ------- ------- -------
Net cash flows 0.065 0.065 0.093 0.228 0.475
Policyholder assessments (0.084) (0.141)
Invest inc & chg in mkt value 0.035 0.076 0.105 0.370 (0.130)
Acq of new business/transfers between segments 0.000 0.000 0.522 (0.110) 0.000
------- ------- ------- ------- -------
Variable Universal Life -Bal End-of-Year 0.339 0.480 1.200 1.605 1.808
------- ------- ------- ------- -------
Interest Sensitive Whole Life - Bal Beg-of-Year 1.784 1.963
Deposits 0.340 0.355 0.322
Withdrawals & deaths (0.294) (0.162) (0.168)
------- ------- -------
Net cash flows 0.046 0.193 0.154
Policyholder assessments (0.168) (0.168)
Interest credited 0.096 0.109 0.113
Acq of new business/companies 1.642 0.045
------- ------- -------
Int Sensitive Whole Life-Bal End -of -Year 1.784 1.963 2.062
------- ------- -------
Total Lincoln Life -Bal Beg-of-Year 1.746 1.877 1.959 8.077 8.952
Deposits 0.255 0.242 1.059 1.542 1.749
Withdrawals & deaths (0.251) (0.324) (0.968) (0.646) (0.647)
------- ------- ------- ------- -------
Net cash flows 0.004 (0.082) 0.091 0.896 1.102
Policyholder assessments (0.734) (0.827)
Invest inc & chg in mkt value 0.127 0.164 0.486 0.778 0.289
Acq of new business/transfers between segments 5.542 (0.065)
------- ------- ------- ------- -------
Total Lincoln Life-Bal End-of-Year 1.877 1.959 8.077 8.952 9.516
------- ------- ------- ------- -------
VUL Under Agree -included above 0.631 0.704 0.609
------- ------- -------
- -----------------------------------------------------------------------------------------------
First Penn-Pacific (FPP)
Universal Life-Bal Beg-of-Year 0.883 0.992 1.079 1.166 1.265
Deposits 0.150 0.142 0.148 0.156 0.135
Withdrawals & deaths (0.098) (0.115) (0.126) (0.067) (0.079)
------- ------- ------- ------- -------
Net cash flows 0.052 0.027 0.022 0.089 0.056
Policyholder assessments (0.060) (0.065)
Interest credited 0.056 0.061 0.065 0.071 0.076
------- ------- ------- ------- -------
FPP Universal Life-Bal End-of-Year 0.992 1.079 1.166 1.265 1.331
------- ------- ------- ------- -------
- -----------------------------------------------------------------------------------------------
Total Segment- Life Insurance Account Values
Bal Beg-of-Year 2.629 2.869 3.038 9.243 10.217
Deposits 0.405 0.384 1.207 1.698 1.884
Withdrawals & deaths (0.349) (0.439) (1.095) (0.713) (0.727)
------- ------- ------- ------- -------
Net cash flows 0.056 (0.056) 0.113 0.985 1.158
Policyholder assessments (0.795) (0.893)
Invest inc & change in market value 0.183 0.225 0.551 0.849 0.364
Acq(sale) of new business/companies 5.542 (0.065)
------- ------- ------- ------- -------
Total Segment -Bal End-of-Year 2.869 3.038 9.243 10.217 10.847
======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------
(1) Includes fixed investment option of VUL products.
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
For the Quarter Ended Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
------ ------- ------- ------- ------- -------
Lincoln Life
Universal Life-Bal Beg of Quarter 1.479 2.907 2.939 3.013 5.093 5.183
Deposits 0.095 0.114 0.095 0.223 0.194 0.199
Withdrawals & deaths (0.149) (0.127) (0.063) (0.236) (0.050) (0.135)
------ ------- ------- ------- ------- -------
Net cash flows (0.054) (0.013) 0.032 (0.013) 0.144 0.064
Policyholder assessments (0.116) (0.118)
Interest credited 0.045 0.045 0.042 0.152 0.062 0.089
Acq of new business/companies 1.437 (0.000) 1.941
------ ------- ------- ------- ------- -------
Universal Life-Bal End of Quarter (1) 2.907 2.939 3.013 5.093 5.183 5.219
------ ------- ------- ------- ------- -------
Variable Universal Life-Bal Beg of Quarter 0.480 0.576 0.608 0.561 1.200 1.177
Deposits 0.028 0.035 0.035 0.095 0.077 0.068
Withdrawals & deaths (0.012) (0.013) (0.013) (0.063) (0.011) (0.013)
------ ------- ------- ------- ------- -------
Net cash flows 0.017 0.022 0.022 0.032 0.066 0.055
Policyholder assessments (0.020) (0.020)
Invest inc & chg in mkt value 0.061 0.010 (0.069) 0.103 0.040 0.087
Acq of new business/transfers between segments 0.018 0.504 (0.110)
------ ------- ------- ------- ------- -------
Variable Universal Life -Bal End of Quarter 0.576 0.608 0.561 1.200 1.177 1.298
------ ------- ------- ------- ------- -------
Interest Sensitive Whole Life - Bal Beg of Quarter 1.695 1.730 1.729 1.784 1.865
Deposits 0.065 0.073 0.086 0.116 0.083 0.073
Withdrawals & deaths (0.033) (0.060) (0.116) (0.085) (0.039) (0.030)
------ ------- ------- ------- ------- -------
Net cash flows 0.032 0.013 (0.030) 0.031 0.044 0.044
Policyholder assessments (0.039) (0.039)
Interest credited 0.021 0.022 0.029 0.024 0.030 0.025
Acq of new business/companies 1.642 0.045
------ ------- ------- ------- ------- -------
Int Sensitive Whole Life-Bal End of Quarter 1.695 1.730 1.729 1.784 1.865 1.895
------ ------- ------- ------- ------- -------
Total Lincoln Life -Bal Beg of Quarter 1.959 5.178 5.276 5.303 8.077 8.225
Deposits 0.188 0.222 0.216 0.433 0.354 0.340
Withdrawals & deaths (0.194) (0.200) (0.192) (0.383) (0.100) (0.178)
------ ------- ------- ------- ------- -------
Net cash flows (0.005) 0.022 0.024 0.050 0.254 0.163
Policyholder assessments (0.174) (0.176)
Invest inc & chg in mkt value 0.128 0.077 0.003 0.279 0.132 0.201
Acq of new business/transfers between segments 3.097 (0.000) 2.445 (0.065)
------ ------- ------- ------- ------- -------
Total Lincoln Life - Bal End of Quarter 5.178 5.276 5.303 8.077 8.225 8.412
------ ------- ------- ------- ------- -------
VUL Under Agree -included above 0.027 0.040 0.044 0.631 0.699 0.770
------ ------- ------- ------- ------- -------
- ---------------------------------------------------------------------------------------------------------
First Penn-Pacific (FPP)
Universal Life-Bal Beg of Quarter 1.079 1.098 1.118 1.140 1.166 1.191
Deposits 0.032 0.037 0.038 0.041 0.040 0.039
Withdrawals & deaths (0.028) (0.034) (0.032) (0.032) (0.017) (0.017)
------ ------- ------- ------- ------- -------
Net cash flows 0.004 0.003 0.006 0.009 0.023 0.022
Policyholder assessments (0.015) (0.015)
Interest credited 0.016 0.016 0.016 0.017 0.017 0.017
------ ------- ------- ------- ------- -------
FPP Universal Life-Bal End of Quarter 1.098 1.118 1.140 1.166 1.191 1.215
------ ------- ------- ------- ------- -------
- ---------------------------------------------------------------------------------------------------------
Total Segment- Life Insurance Account Values
Bal Beg of Quarter 3.038 6.276 6.394 6.443 9.243 9.416
Deposits 0.220 0.259 0.254 0.475 0.394 0.379
Withdrawals & deaths (0.222) (0.233) (0.224) (0.415) (0.117) (0.195)
------ ------- ------- ------- ------- -------
Net cash flows (0.002) 0.025 0.030 0.060 0.277 0.185
Policyholder assessments (0.189) (0.192)
Invest inc & change in market value 0.143 0.093 0.019 0.295 0.149 0.219
Acq(sale) of new business/companies 3.097 (0.000) 0.000 2.445 (0.065) 0.000
------ ------- ------- ------- ------- -------
Total Segment -Bal End of Quarter 6.276 6.394 6.443 9.243 9.416 9.628
====== ======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------
Life Insurance Segment (continued)
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------ ------- ------- ------- ------- -------
Lincoln Life
Universal Life-Bal Beg of Quarter 5.219 5.279 5.385 5.449 5.486 5.562
Deposits 0.198 0.270 0.216 0.181 0.192 0.231
Withdrawals & deaths (0.091) (0.110) (0.097) (0.093) (0.064) (0.093)
------ ------- ------- ------- ------- -------
Net cash flows 0.107 0.160 0.118 0.088 0.128 0.139
Policyholder assessments (0.121) (0.129) (0.129) (0.127) (0.129) (0.133)
Interest credited 0.073 0.075 0.075 0.076 0.077 0.078
Acq of new business/companies 0.000
------ ------- ------- ------- ------- -------
Universal Life-Bal End of Quarter (1) 5.279 5.385 5.449 5.486 5.562 5.645
------ ------- ------- ------- ------- -------
Variable Universal Life-Bal Beg of Quarter 1.298 1.285 1.605 1.771 1.764 1.812
Deposits 0.074 0.107 0.112 0.128 0.123 0.245
Withdrawals & deaths (0.049) (0.025) (0.019) (0.028) (0.037) (0.048)
------ ------- ------- ------- ------- -------
Net cash flows 0.025 0.082 0.093 0.100 0.085 0.197
Policyholder assessments (0.020) (0.024) (0.032) (0.033) (0.036) (0.041)
Invest inc & chg in mkt value (0.018) 0.262 0.105 (0.074) (0.001) (0.160)
Acq of new business/transfers between segments 0.000 0.000
------ ------- ------- ------- ------- -------
Variable Universal Life -Bal End of Quarter 1.285 1.605 1.771 1.764 1.812 1.808
------ ------- ------- ------- ------- -------
Interest Sensitive Whole Life - Bal Beg of Quarter 1.895 1.922 1.963 1.970 1.993 2.026
Deposits 0.086 0.113 0.060 0.071 0.079 0.113
Withdrawals & deaths (0.044) (0.050) (0.042) (0.037) (0.033) (0.056)
------ ------- ------- ------- ------- -------
Net cash flows 0.043 0.062 0.018 0.034 0.045 0.057
Policyholder assessments (0.042) (0.048) (0.039) (0.040) (0.040) (0.050)
Interest credited 0.027 0.026 0.028 0.028 0.027 0.029
Acq of new business/companies
------ ------- ------- ------- ------- -------
Int Sensitive Whole Life-Bal End of Quarter 1.922 1.963 1.970 1.993 2.026 2.062
------ ------- ------- ------- ------- -------
Total Lincoln Life -Bal Beg of Quarter 8.412 8.485 8.952 9.190 9.242 9.400
Deposits 0.358 0.490 0.387 0.380 0.393 0.589
Withdrawals & deaths (0.184) (0.185) (0.158) (0.158) (0.135) (0.196)
------ ------- ------- ------- ------- -------
Net cash flows 0.175 0.305 0.229 0.222 0.258 0.392
Policyholder assessments (0.183) (0.201) (0.199) (0.200) (0.205) (0.224)
Invest inc & chg in mkt value 0.082 0.363 0.208 0.030 0.104 (0.053)
Acq of new business/transfers between segments
------ ------- ------- ------- ------- -------
Total Lincoln Life - Bal End of Quarter 8.485 8.952 9.190 9.242 9.400 9.516
------ ------- ------- ------- ------- -------
VUL Under Agree -included above 0.681 0.704 0.743 0.707 0.698 0.609
------ ------- ------- ------- ------- -------
- ---------------------------------------------------------------------------------------------------------
First Penn-Pacific (FPP)
Universal Life-Bal Beg of Quarter 1.215 1.240 1.265 1.280 1.296 1.317
Deposits 0.041 0.036 0.036 0.031 0.035 0.033
Withdrawals & deaths (0.019) (0.014) (0.024) (0.018) (0.016) (0.021)
------ ------- ------- ------- ------- -------
Net cash flows 0.022 0.022 0.013 0.013 0.019 0.012
Policyholder assessments (0.015) (0.015) (0.016) (0.016) (0.017) (0.017)
Interest credited 0.018 0.018 0.019 0.019 0.019 0.019
------ ------- ------- ------- ------- -------
FPP Universal Life-Bal End of Quarter 1.240 1.265 1.280 1.296 1.317 1.331
------ ------- ------- ------- ------- -------
- ---------------------------------------------------------------------------------------------------------
Total Segment- Life Insurance Account Values
Bal Beg of Quarter 9.628 9.726 10.217 10.470 10.538 10.716
Deposits 0.399 0.526 0.424 0.411 0.428 0.622
Withdrawals & deaths (0.202) (0.199) (0.182) (0.176) (0.151) (0.218)
------ ------- ------- ------- ------- -------
Net cash flows 0.197 0.327 0.242 0.235 0.277 0.404
Policyholder assessments (0.198) (0.216) (0.215) (0.216) (0.221) (0.241)
Invest inc & change in market value 0.100 0.381 0.227 0.048 0.123 (0.033)
Acq(sale) of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
------ ------- ------- ------- ------- -------
Total Segment -Bal End of Quarter 9.726 10.217 10.470 10.538 10.716 10.847
====== ======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------
(1) Includes fixed investment option of VUL products.
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Operating Revenue
Life and annuity premiums 472.2 466.7 592.0 743.1 968.5
Health premiums 775.6 566.1 628.6 692.3 404.6
Surrender charges 2.7 3.4 3.3 2.8 3.7
Mortality assessments 0.0 0.0 0.7 0.7 0.0
Expense assessments 0.0 0.0 0.3 0.3 (0.0)
Other revenue and fees 28.7 35.5 39.3 64.6 72.7
Net investment income 264.2 287.9 312.5 314.1 317.8
Equity earnings in unconsol affiliates 0.0 2.1 3.3 5.8 2.1
------- ------- ------- ------- -------
Operating Revenue 1543.3 1361.6 1580.0 1823.6 1769.4
------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 305.7 321.4 452.2 530.6 716.1
Div accum & div to policyholders 9.3 9.3 7.3 6.9 6.7
Interest credited to policy bal. 40.3 50.3 44.1 47.3 42.2
Health policy benefits 658.6 824.4 556.3 646.5 434.8
Underwriting, acquisition,
insurance and other expenses 413.0 387.4 359.5 531.2 379.8
Goodwill amortization 0.0 0.0 0.0 0.4 1.8
Interest on notes payable 2.9 0.0 1.0 11.2
------- ------- ------- ------- -------
Total Benefits and Expenses 1429.7 1592.9 1419.3 1763.9 1592.6
------- ------- ------- ------- -------
Income from Operations Before Tax 113.5 (231.3) 160.7 59.8 176.8
Federal income taxes 38.7 (81.2) 55.8 19.2 54.4
------- ------- ------- ------- -------
Income from Operations (1) 74.8 (150.1) 104.9 40.6 122.4
------- ------- ------- ------- -------
Realized gain on investments 12.0 16.3 (2.6) 3.7 (0.7)
Restructuring charges (3.2) 0.7
------- ------- ------- ------- -------
Net Income (1) 86.8 (133.8) 102.3 41.1 122.4
------- ------- ------- ------- -------
Inc from Oper -Before Goodwill Amort. 74.8 (150.1) 104.9 40.9 124.1
Effective tax rate 34.1% 35.1% 34.7% 32.1% 30.8%
Operating Revenue 1543.3 1361.6 1580.0 1823.6 1769.4
Realized gains on investments 18.5 25.2 (3.5) 5.7 (1.0)
------- ------- ------- ------- -------
Total Revenue 1561.8 1386.9 1576.5 1829.4 1768.5
------- ------- ------- ------- -------
- -------------------------------------------------------------------------------------------------
Revenue by Source
Individual Markets 468.1 503.9 633.6 814.1 1,053.4
Group Markets 158.7 131.6 130.6 168.0 318.0
Financial Reinsurance 531.1 365.2 279.3 344.5 127.3
Other 20.0 26.5 8.5 (5.0) 12.7
------- ------- ------- ------- -------
Total Revenue, Excl Exited Businesses 1177.9 1027.2 1052.0 1321.6 1511.4
------- ------- ------- ------- -------
Exited Businesses Under Management (2) 383.9 359.6 524.6 507.7 257.1
------- ------- ------- ------- -------
Total Revenue 1561.8 1386.9 1576.5 1829.4 1768.5
------- ------- ------- ------- -------
Income from Operations by Source
Individual Markets 49.8 71.9 83.5 91.9 90.6
Group Markets 10.2 3.3 1.6 (1.6) 7.5
Financial Reinsurance 17.5 15.5 17.1 21.7 20.3
Other (2.0) (2.0) (3.4) (4.4) (7.7)
------- ------- ------- ------- -------
Inc from Oper, Excl Exited Businesses 75.6 88.7 98.8 107.6 110.7
------- ------- ------- ------- -------
Exited Businesses Under Management (2) (0.8) (238.8) 6.1 (67.0) 11.7
------- ------- ------- ------- -------
Inc from Operations (1) 74.8 (150.1) 104.9 40.6 122.4
------- ------- ------- ------- -------
Individual Life Sales
[Billions of Dollars] 26.6 39.5 78.1 116.8 139.5
Ind Life In-Force 130.8 153.1 213.6 306.6 407.4
Group Life In-Force 30.1 30.4 36.7 34.2 29.3
------- ------- ------- ------- -------
Total Life In-Force 160.9 183.5 250.3 340.8 436.7
------- ------- ------- ------- -------
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 93.0 84.9 87.8 88.9 97.8
Employer Stop Loss-
Loss Ratio 67.6 52.8 77.7 84.3 74.0
Combined Ratio 93.3 84.7 108.4 115.0 99.4
Average Capital 651.7 788.4 950.3 1053.0 1062.0
Average Capital, Excl Exited Business 389.6 459.1 486.1 603.1 744.2
Return on Average Capital, Excl Exited Business (3) 19.4% 19.3% 20.3% 17.8% 14.9%
- -------------------------------------------------------------------------------------------------
(1) Fourth quarter and full year 1999 income from operations and net income
include a charge of $40.4 million for Lincoln's participation in workers
compensation carve-out business. Fourth quarter and full year 1997 income
from operations and net income include a change in estimate for personal
accident programs of $113.7 million. Also, 1997 includes reserve
strengthening for the disability income business.
(2) Exited Businesses Under Management include disability income, HMO
excess-of-loss, carrier medical, personal accident and Lincoln's investment
in Seguros Serfin Lincoln (through first quarter of 2000).
(3) LNC manages the relative mixture of debt and equity capital at the
consolidated level. Because consolidated debt is not allocated in arriving
at the reported return on capital for LNC's business segments, the return
on capital calculation differs from a return on equity calculation. For
this business segment, allocating consolidated leverage would result in a
higher return on equity as compared to the return on capital reported
above.
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
-------- --------- --------- --------- --------- --------
Operating Revenue
Life and annuity premiums 121.4 124.1 146.4 200.1 172.0 173.1
Health premiums 141.0 169.6 154.5 163.5 153.3 158.7
Surrender charges 0.5 0.3 1.6 0.9 1.2 0.4
Mortality assessments 0.7 0.7 0.1
Expense assessments 0.3 0.4 (0.0)
Other revenue and fees 9.4 4.4 13.2 12.3 11.0 13.6
Net investment income 76.3 77.9 78.6 79.7 79.0 78.6
Equity earnings in unconsol affiliates 1.5 0.7 (0.2) 1.3 1.6 1.1
-------- --------- --------- --------- --------- --------
Operating Revenue 350.1 377.1 394.0 458.8 419.1 425.5
-------- --------- --------- --------- --------- --------
Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 80.9 87.8 91.1 192.4 124.3 123.0
Div accum & div to policyholders 1.8 1.6 2.3 1.6 1.3 1.5
Interest credited to policy bal. 10.1 7.1 14.6 12.2 8.9 10.9
Health policy benefits 131.2 156.4 139.7 129.0 143.5 161.7
Underwriting, acquisition,
insurance and other expenses 84.5 87.9 102.1 85.1 89.0 92.7
Goodwill amortization 0.0 0.0 0.0 0.0 (0.0) (0.8)
Interest on notes payable 0.0 0.0 0.0 0.0
-------- --------- --------- --------- --------- --------
Total Benefits and Expenses 308.4 340.9 349.7 420.3 366.9 389.1
-------- --------- --------- --------- --------- --------
Income from Operations Before Tax 41.7 36.2 44.3 38.4 52.2 36.5
Federal income taxes 14.6 12.8 15.2 13.1 18.4 12.8
-------- --------- --------- --------- --------- --------
Income from Operations (1) 27.0 23.5 29.1 25.3 33.8 23.7
Realized gain on investments 2.8 1.2 (5.1) (1.4) 0.7 0.3
-------- --------- --------- --------- --------- --------
Net Income (1) 29.8 24.6 24.0 23.9 34.5 24.0
-------- --------- --------- --------- --------- --------
Inc from Oper -Before
Goodwill Amortization 27.0 23.5 29.1 25.3 33.7 22.8
Effective tax rate 35.1% 35.3% 34.3% 34.2% 35.3% 35.2%
Operating Revenue 350.1 377.1 394.0 458.8 419.1 425.5
Realized gains on investments 4.4 2.5 (8.5) (1.8) 1.2 0.4
-------- --------- --------- --------- --------- --------
Total Revenue 354.5 379.6 385.6 456.9 420.3 425.9
-------- --------- --------- --------- --------- --------
- ---------------------------------------------------------------------------------------------------------------------
Revenue by Source (Including Investment Gains/Losses)
Individual Markets 134.0 131.4 153.8 214.3 187.9 191.4
Group Markets 29.3 32.4 35.9 33.0 36.5 37.1
Financial Reinsurance 72.6 73.3 75.0 58.4 80.6 81.9
Other 4.5 2.9 2.5 (1.4) (2.7) (1.6)
-------- --------- --------- --------- --------- --------
Total Revenue, Excl Exited Businesses 240.3 240.1 267.2 304.4 302.2 308.8
Exited Businesses Under Management (2) 114.1 139.5 118.4 152.5 118.1 117.2
-------- --------- --------- --------- --------- --------
Total Revenue 354.5 379.6 385.6 456.9 420.3 425.9
-------- --------- --------- --------- --------- --------
Income from Operations by Source
Individual Markets 18.8 15.0 23.2 26.6 25.4 21.3
Group Markets 0.6 (0.4) 1.4 0.1 0.9 0.4
Financial Reinsurance 3.5 3.5 4.7 5.5 7.3 4.7
Other (1.1) (0.7) (1.1) (0.5) (1.1) (1.1)
-------- --------- --------- --------- --------- --------
Inc from Oper, Excl Exited Businesses 21.8 17.3 28.1 31.6 32.5 25.4
Exited Businesses Under Management (2) 5.3 6.2 1.0 (6.4) 1.3 (1.7)
-------- --------- --------- --------- --------- --------
Income from Operations 27.0 23.5 29.1 25.3 33.8 23.7
-------- --------- --------- --------- --------- --------
Individual Life Sales
[Billions of Dollars] 9.6 11.8 16.5 40.2 18.5 20.0
Ind Life In-Force 158.6 166.9 178.3 213.6 225.1 240.0
Group Life In-Force 31.4 33.1 35.3 36.7 38.3 38.5
-------- --------- --------- --------- --------- --------
Total Life In-Force 190.0 200.0 213.6 250.3 263.4 278.5
-------- --------- --------- --------- --------- --------
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 86.0 90.6 78.0 94.3 85.8 88.9
Employer Stop Loss-
Loss Ratio 63.8 63.5 66.3 114.3 68.5 81.0
Combined Ratio 93.8 96.5 98.7 141.8 100.8 119.1
Average Capital 879.3 915.8 1002.7 1003.2 1078.4 1048.6
Average Capital, Excl Exited Business (3) 474.1 474.3 488.3 507.8 571.4 577.8
Return on Average Capital,
Excluding Exited Business 18.4% 14.6% 23.0% 24.9% 22.8% 17.6%
Reinsurance (Continued)
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
-------- --------- --------- --------- --------- --------
Operating Revenue
Life and annuity premiums 166.2 231.9 227.4 229.1 238.9 273.2
Health premiums 148.3 232.0 57.0 142.6 116.5 88.6
Surrender charges 0.6 0.7 0.6 1.4 0.9 0.8
Mortality assessments 0.0 (0.2) 0.0 0.0 0.0 0.0
Expense assessments 0.0 (0.2) (0.0) (0.0) (0.0) (0.0)
Other revenue and fees 7.5 32.4 16.3 12.6 22.5 21.3
Net investment income 80.1 76.4 90.4 73.0 77.9 76.5
Equity earnings in unconsol affiliates 1.2 1.8 1.0 0.2 0.2 0.6
-------- --------- --------- --------- --------- --------
Operating Revenue 404.0 575.0 392.6 459.0 456.9 461.0
-------- --------- --------- --------- --------- --------
Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 108.8 174.5 165.4 173.5 178.0 199.2
Div accum & div to policyholders 1.9 2.2 1.3 1.5 1.8 2.1
Interest credited to policy bal. 6.0 21.5 9.0 8.6 12.8 11.9
Health policy benefits 187.4 153.9 110.0 117.5 119.0 88.2
Underwriting, acquisition,
insurance and other expenses 94.9 254.6 59.8 116.9 100.1 102.9
Goodwill amortization 0.8 0.4 0.4 0.4 0.4 0.4
Interest on notes payable 0.0 1.0 2.3 2.7 3.0 3.2
-------- --------- --------- --------- --------- --------
Total Benefits and Expenses 399.7 608.2 348.3 421.1 415.2 407.9
-------- --------- --------- --------- --------- --------
Income from Operations Before Tax 4.3 (33.2) 44.4 37.8 41.6 53.0
Federal income taxes 1.7 (13.8) 12.2 12.2 13.6 16.5
-------- --------- --------- --------- --------- --------
Income from Operations (1) 2.6 (19.5) 32.1 25.7 28.1 36.5
-------- --------- --------- --------- --------- --------
Realized gain on investments 0.3 2.4 1.2 (1.1) (2.2) 1.4
Restructuring charges (3.2) 0.7
-------- --------- --------- --------- --------- --------
Net Income (1) (0.3) (17.0) 33.3 24.6 25.9 38.6
-------- --------- --------- --------- --------- --------
Inc from Oper -Before
Goodwill Amortization 3.4 (19.0) 32.5 26.1 28.5 37.0
Effective tax rate 39.5% 41.4% 27.6% 32.1% 32.6% 31.1%
Operating Revenue 404.0 575.0 392.6 459.0 456.9 461.0
Realized gains on investments 0.4 3.7 1.9 (1.7) (3.4) 2.2
-------- --------- --------- --------- --------- --------
Total Revenue 404.4 578.7 394.5 457.3 453.5 463.2
-------- --------- --------- --------- --------- --------
- ----------------------------------------------------------------------------------------------------------------------
Revenue by Source (Including Investment Gains/Losses)
Individual Markets 182.0 252.9 246.8 249.2 262.4 295.0
Group Markets 38.4 56.0 87.7 75.6 77.5 77.2
Financial Reinsurance 72.5 109.5 34.6 29.8 29.4 33.6
Other (1.0) 0.3 3.1 2.5 3.9 3.2
-------- --------- --------- --------- --------- --------
Total Revenue, Excl Exited Businesses 291.9 418.7 372.2 357.1 373.1 409.0
Exited Businesses Under Management (2) 112.5 159.9 22.4 100.2 80.3 54.2
-------- --------- --------- --------- --------- --------
Total Revenue 404.4 578.7 394.5 457.3 453.5 463.2
-------- --------- --------- --------- --------- --------
Income from Operations by Source
Individual Markets 24.9 20.2 19.2 22.6 20.5 28.3
Group Markets (1.3) (1.7) 1.0 1.2 1.5 3.7
Financial Reinsurance 4.2 5.5 7.2 4.0 4.5 4.6
Other (0.7) (1.4) (1.7) (1.6) (1.1) (3.3)
-------- --------- --------- --------- --------- --------
Inc from Oper, Excl Exited Businesses 27.1 22.6 25.7 26.3 25.4 33.4
Exited Businesses Under Management (2) (24.4) (42.1) 6.4 (0.6) 2.7 3.1
-------- --------- --------- --------- --------- --------
Income from Operations 2.6 (19.5) 32.1 25.7 28.1 36.5
-------- --------- --------- --------- --------- --------
Individual Life Sales
[Billions of Dollars] 28.8 49.6 30.0 37.2 37.2 35.2
Ind Life In-Force 261.5 306.6 325.9 354.0 381.4 407.4
Group Life In-Force 35.6 34.2 32.5 30.5 31.2 29.3
-------- --------- --------- --------- --------- --------
Total Life In-Force 297.1 340.8 358.4 384.4 412.6 436.7
-------- --------- --------- --------- --------- --------
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 81.7 97.2 99.5 96.9 101.2 93.9
Employer Stop Loss-
Loss Ratio 100.8 84.5 74.7 72.6 76.5 72.0
Combined Ratio 133.1 111.8 99.8 100.8 100.9 95.9
Average Capital 1040.3 1044.5 1058.6 1022.7 1058.7 1108.0
Average Capital, Excl Exited Business (3) 615.1 648.0 692.7 732.7 761.1 790.1
Return on Average Capital,
Excluding Exited Business 17.6% 14.0% 14.8% 14.3% 13.3% 16.9%
(1) Fourth quarter 1999 income from operations and net income include a charge of $40.4 million for Lincoln's
participation in workers compensation carve-out business. Fourth quarter and full year 1997 income from
operations and net income include a change in estimate for personal accident programs of $113.7 million.
(2) Exited Businesses Under Management include disability income, HMO excess-of-loss, carrier medical, personal
accident and Lincoln's investment in Seguros Serfin Lincoln (through first quarter of 2000).
(3) LNC manages the relative mixture of debt and equity capital at the consolidated level. Because consolidated
debt is not allocated in arriving at the reported return on capital for LNC's business segments, the return
on capital calculation differs from a return on equity calculation. For this business segment, allocating
consolidated leverage would result in a higher return on equity as compared to the return on capital reported
above.
Investment Management
Income Statements
Unaudited [Millions of Dollars]
For the Quarter Ended Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
-------- ------- ------- ------- ------- ------
Operating Revenue
Investment advisory fees - External 63.4 64.9 58.3 62.5 65.1 62.5
Investment advisory fees - Insurance Assets 19.0 18.9 18.7 19.0 19.5 19.3
Other revenue and fees 22.3 22.9 22.4 24.9 25.6 26.3
Net investment income 17.7 16.9 15.8 16.7 14.9 14.1
-------- ------- ------- ------- ------- ------
Operating Revenue 122.3 123.5 115.2 123.1 125.1 122.2
-------- ------- ------- ------- ------- ------
Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 100.9 99.8 97.3 96.7 96.3 95.9
Goodwill amortization 4.1 4.1 4.1 4.1 4.1 4.1
Interest on notes payable 0.1 0.1 0.1 0.0 0.0 0.0
-------- ------- ------- ------- ------- ------
Total Benefits & Expenses 105.1 104.0 101.5 100.8 100.4 100.0
-------- ------- ------- ------- ------- ------
Income from Operations Before Tax 17.3 19.5 13.8 22.3 24.7 22.2
Federal income taxes 7.1 7.8 6.4 7.7 9.4 7.9
-------- ------- ------- ------- ------- ------
Income from Operations 10.2 11.7 7.4 14.6 15.4 14.3
Realized Gains (after-tax) 2.0 0.4 (3.7) 1.8 0.2 (0.3)
Restructuring Charge 0.0 0.0 0.0 0.0 (12.1) 0.0
-------- ------- ------- ------- ------- ------
Net Income 12.2 12.2 3.6 16.4 3.4 14.0
-------- ------- ------- ------- ------- ------
Inc from Oper -Before
Goodwill Amortization 14.3 15.8 11.4 18.7 19.4 18.4
Inc from Oper -Before
Goodwill & Intang. Amort 17.3 18.9 14.5 21.9 22.4 21.3
Operating Revenue 122.3 123.5 115.2 123.1 125.1 122.2
Realized gain on investments 3.5 0.7 (6.3) 3.0 0.2 (0.4)
-------- ------- ------- ------- ------- ------
Total Revenue 125.8 124.2 108.9 126.1 125.4 121.8
-------- ------- ------- ------- ------- ------
Average Capital (Securities at Cost) 647.8 644.7 641.4 635.3 612.6 591.6
Return on Capital (1) 6.3% 7.3% 4.6% 9.2% 10.0% 9.7%
Investment Management (Continued)
Income Statements
Unaudited [Millions of Dollars]
Investment Management
Income Statements (Continued)
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- ------
Operating Revenue
Investment advisory fees - External 199.8 229.9 249.0 248.6 231.6
Investment advisory fees - Insurance Assets 61.5 63.1 75.7 77.4 81.1
Other revenue and fees 59.3 76.3 92.5 106.6 115.9
Net investment income 75.8 72.8 67.0 56.9 57.7
------- ------- ------- ------- ------
Operating Revenue 396.4 442.2 484.2 489.4 486.3
------- ------- ------- ------- ------
Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 345.8 390.7 394.7 378.1 400.9
Goodwill amortization 13.7 15.5 16.3 16.2 16.2
Interest on notes payable 0.0 0.1 0.4 0.0 0.0
------- ------- ------- ------- ------
Total Benefits and Expenses 359.6 406.4 411.4 394.4 417.1
------- ------- ------- ------- ------
Income from Operations Before Tax 36.8 35.8 72.8 95.1 69.2
Federal income taxes 18.2 17.7 28.9 34.1 25.1
------- ------- ------- ------- ------
Income from Operations 18.6 18.1 43.9 61.0 44.1
Realized Gains (after-tax) 6.4 7.0 0.5 (0.1) (2.5)
Restructuring Charge (9.2) (4.6)
------- ------- ------- ------- ------
Net Income 25.0 25.1 44.4 51.6 37.0
------- ------- ------- ------- ------
Income from Operations- Before Goodwill Amortization 32.4 33.6 60.3 77.2 60.3
Income from Operations - Before Goodwill & Intang. Amort 42.6 45.2 72.6 88.7 70.9
Operating Revenue 396.4 442.2 484.2 489.4 486.3
Realized gains on investments 9.9 11.6 0.9 (0.1) (3.9)
------- ------- ------- ------- ------
Total Revenue 406.3 453.8 485.1 489.3 482.4
------- ------- ------- ------- ------
Average Capital (Securities at Cost) 646.1 653.3 642.3 593.9 575.2
Return on Capital (1) 2.9% 2.8% 6.8% 10.3% 7.7%
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------ ------- ------- ------- ------- ------
Operating Revenue
Investment advisory fees - External 60.7 60.3 60.0 57.9 56.9 56.7
Investment advisory fees - Insurance Assets 18.1 20.5 19.0 20.4 20.5 21.2
Other revenue and fees 24.9 29.8 31.9 31.0 26.4 26.6
Net investment income 13.9 13.9 13.0 12.6 18.3 13.8
------ ------- ------- ------- ------- ------
Operating Revenue 117.6 124.5 124.0 121.9 122.1 118.3
------ ------- ------- ------- ------- ------
Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 91.1 94.8 100.5 97.4 101.8 101.2
Goodwill amortization 4.1 4.1 4.1 4.1 4.1 4.1
Interest on notes payable 0.0 0.0 0.0 0.0 0.0 (0.0)
------ ------- ------- ------- ------- ------
Total Benefits & Expenses 95.1 98.8 104.6 101.5 105.9 105.2
------ ------- ------- ------- ------- ------
Income from Operations Before Tax 22.5 25.7 19.4 20.5 16.2 13.1
Federal income taxes 7.7 9.1 7.0 7.4 6.3 4.4
------ ------- ------- ------- ------- ------
Income from Operations 14.7 16.5 12.4 13.1 9.9 8.7
Realized Gains (after-tax) (0.3) 0.4 (0.1) (2.0) (0.2) (0.2)
Restructuring Charge 0.0 2.9 0.0 (2.7) 0.0 (1.9)
------ ------- ------- ------- ------- ------
Net Income 14.4 19.8 12.3 8.4 9.7 6.6
------ ------- ------- ------- ------- ------
Inc from Oper -Before
Goodwill Amortization 18.8 20.6 16.5 17.1 14.0 12.7
Inc from Oper -Before
Goodwill & Intang. Amort 21.7 23.3 19.4 19.7 16.6 15.2
Operating Revenue 117.6 124.5 124.0 121.9 122.1 118.3
Realized gain on investments (0.5) 0.6 (0.2) (3.1) (0.4) (0.3)
------ ------- ------- ------- ------- ------
Total Revenue 117.1 125.1 123.8 118.8 121.7 118.1
------ ------- ------- ------- ------- ------
Average Capital (Securities at Cost) 587.2 584.2 581.5 593.0 567.7 558.5
Return on Capital (1) 10.0% 11.3% 8.6% 8.8% 7.0% 6.2%
(1) LNC manages the relative mixture of debt and equity capital at the consolidated level. Because consolidated debt
is not allocated in arriving at the reported return on capital for LNC's business segments, the return on capital
calculation differs from a return on equity calculation. For this business segment, allocating consolidated
leverage would result in a lower return on equity as compared to the return on capital reported above.
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Retail Fixed - Bal Beg-of-Year 6.094 5.853 8.125 8.217 7.424
Fund Sales 0.764 0.961 1.165 0.991 0.712
Redemptions (0.986) (1.271) (1.235) (1.424) (1.365)
Net Money Market (0.079) (0.069) (0.140) (0.110) (0.207)
Transfers (0.114) (0.220) 0.132 0.177 (0.159)
------- ------- ------- ------- -------
Net Cash Flows (0.415) (0.599) (0.078) (0.366) (1.019)
Income Retained 0.237 0.276 0.291 0.276 0.240
Market Apprec/Deprec (0.062) 0.049 (0.121) (0.704) (0.146)
Acq of New Company/Business 2.547
------- ------- ------- ------- -------
Balance End-of-Year 5.853 8.125 8.217 7.424 6.499
------- ------- ------- ------- -------
Retail Equity - Bal Beg-of-Year 9.974 13.152 17.754 22.080 23.383
Fund Sales 2.175 2.953 3.581 3.271 4.048
Redemptions (1.037) (1.926) (2.460) (4.971) (4.369)
Net Money Market 0.000 (0.002) (0.001) 0.001
Transfers 0.188 0.209 0.730 (0.143) (0.178)
------- ------- ------- ------- -------
Net Cash Flows 1.327 1.236 1.849 (1.844) (0.498)
Income Retained 0.039 0.005 0.220 0.120 0.083
Market Apprec/Deprec 1.812 3.317 2.256 3.028 (1.793)
Acq of New Company/Business 0.043
------- ------- ------- ------- -------
Balance at End-of-Year 13.152 17.754 22.080 23.383 21.174
------- ------- ------- ------- -------
Total Retail - Bal Beg of Year 16.068 19.006 25.879 30.297 30.807
Retail Sales-Annuities 1.638 2.163 2.238 1.561 1.726
Retail Sales-Mutual Funds 0.849 1.218 1.913 2.153 2.452
Retail Sales-Wrap & Other 0.454 0.533 0.596 0.550 0.581
------- ------- ------- ------- -------
Total Retail Sales 2.940 3.914 4.745 4.264 4.760
Redemptions (2.023) (3.197) (3.694) (6.396) (5.733)
Net Money Market (0.079) (0.068) (0.141) (0.111) (0.206)
Transfers 0.074 (0.011) 0.862 0.034 (0.337)
------- ------- ------- ------- -------
Net Cash Flows 0.912 0.637 1.772 (2.209) (1.517)
Income Retained 0.276 0.281 0.511 0.396 0.323
Market Apprec/Deprec 1.750 3.366 2.136 2.324 (1.939)
Acq of New Company/Business 2.590
------- ------- ------- ------- -------
Balance at End-of-Year 19.006 25.879 30.297 30.807 27.674
------- ------- ------- ------- -------
- --------------------------------------------------------------------------------------------
Institutional Fixed - Bal Beg-of-Year 2.956 3.580 5.708 6.955 6.937
Inflows 1.516 2.509 2.169 2.000 0.771
Withdrawals/Terminations (1.155) (0.787) (1.242) (1.699) (1.973)
Transfers 0.015 0.013 (0.074) (0.001) (0.005)
------- ------- ------- ------- -------
Net Cash Flows 0.376 1.735 0.853 0.300 (1.207)
Income Retained 0.145 0.225 0.333 0.346 0.294
Market Apprec/Deprec 0.104 0.118 0.061 (0.665) 0.087
Acq of New Company/Business 0.051
------- ------- ------- ------- -------
Balance at End-of-Year 3.580 5.708 6.955 6.937 6.111
------- ------- ------- ------- -------
Institutional Equity - Bal Beg-of-Year 21.619 22.886 24.871 24.235 23.630
Inflows 1.974 2.465 3.840 5.248 2.730
Withdrawals/Terminations (4.772) (6.447) (7.441) (7.801) (7.209)
Transfers (0.007) (0.068) 0.047 0.011 (0.008)
------- ------- ------- ------- -------
Net Cash Flows (2.805) (4.049) (3.555) (2.542) (4.487)
Income Retained 0.557 0.491 0.473 0.482 0.449
Market Apprec/Deprec 3.514 5.544 2.446 1.453 (0.481)
Acq of New Company/Business
------- ------- ------- ------- -------
Balance at End-of-Year 22.886 24.871 24.235 23.630 19.111
------- ------- ------- ------- -------
Total Institutional - Bal Beg-of-Year 24.575 26.465 30.579 31.191 30.567
Inflows 3.490 4.975 6.009 7.249 3.501
Withdrawals/Terminations (5.928) (7.234) (8.683) (9.500) (9.182)
Transfers 0.008 (0.055) (0.027) 0.011 (0.014)
------- ------- ------- ------- -------
Net Cash Flows (2.429) (2.314) (2.702) (2.240) (5.694)
Income Retained 0.702 0.716 0.806 0.829 0.743
Market Apprec/Deprec 3.618 5.662 2.508 0.789 (0.394)
Acq of New Company/Business 0.051
------- ------- ------- ------- -------
Balance at End-of-Year 26.465 30.579 31.191 30.567 25.222
------- ------- ------- ------- -------
Insurance Assets - At End-of-Year 37.453 35.684 39.432 35.934 35.686
------- ------- ------- ------- -------
Total Institutional - At End-of-Year 63.918 66.263 70.623 66.501 60.908
------- ------- ------- ------- -------
Total Assets Under Management
At End-of-Year 82.924 92.142 100.920 97.308 88.581
------- ------- ------- ------- -------
- --------------------------------------------------------------------------------------------
NOTE:This segment was started in the second quarter of 1995 following the completion of the
acquisition of Delaware Management Holdings, Inc.
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
March June Sept Dec Mar June
1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- -------
Retail Fixed - Bal Beg of Qtr 8.125 8.286 8.260 8.287 8.217 8.233
Fund Sales 0.298 0.241 0.381 0.246 0.316 0.263
Redemptions (0.273) (0.272) (0.302) (0.387) (0.313) (0.366)
Net Money Market (0.055) (0.052) (0.034) (0.000) (0.019) (0.033)
Transfers 0.054 0.042 0.029 0.007 0.032 (0.043)
------- ------- ------- ------- ------- -------
Net Cash Flows 0.024 (0.041) 0.074 (0.134) 0.016 (0.179)
Income Retained 0.075 0.063 0.076 0.076 0.066 0.074
Market Apprec/Deprec 0.061 (0.048) (0.122) (0.012) (0.067) (0.185)
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 8.286 8.260 8.287 8.217 8.233 7.945
------- ------- ------- ------- ------- -------
Retail Equity - Bal Beg of Qtr 17.754 20.448 21.456 18.785 22.080 21.798
Fund Sales 0.906 1.043 0.830 0.802 0.856 0.790
Redemptions (0.479) (0.518) (0.547) (0.915) (1.030) (1.957)
Net Money Market (0.002) 0.000 0.000 0.000 0.000 (0.001)
Transfers 0.284 0.489 (0.032) (0.011) (0.034) 0.036
------- ------- ------- ------- ------- -------
Net Cash Flows 0.709 1.014 0.252 (0.124) (0.208) (1.132)
Income Retained 0.033 0.054 0.134 (0.001) 0.053 0.061
Market Apprec/Deprec 1.952 (0.059) (3.056) 3.420 (0.128) 1.614
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 20.448 21.456 18.785 22.080 21.798 22.340
------- ------- ------- ------- ------- -------
Total Retail - Bal Beg of Qtr 25.879 28.734 29.716 27.072 30.297 30.031
Retail Sales-Annuities 0.592 0.598 0.541 0.507 0.428 0.393
Retail Sales-Mutual Funds 0.464 0.513 0.531 0.403 0.565 0.487
Retail Sales-Wrap & Other 0.147 0.173 0.139 0.136 0.182 0.173
------- ------- ------- ------- ------- -------
Total Retail Sales 1.203 1.284 1.211 1.046 1.175 1.053
Redemptions (0.752) (0.791) (0.849) (1.302) (1.343) (2.323)
Net Money Market (0.055) (0.052) (0.034) 0.000 (0.019) (0.033)
Transfers 0.338 0.531 (0.003) (0.004) (0.001) (0.006)
------- ------- ------- ------- ------- -------
Net Cash Flows 0.734 0.972 0.325 (0.260) (0.188) (1.309)
Income Retained 0.108 0.117 0.210 0.075 0.119 0.134
Market Apprec/Deprec 2.014 (0.108) (3.180) 3.409 (0.196) 1.429
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 28.734 29.716 27.072 30.297 30.031 30.285
------- ------- ------- ------- ------- -------
- ---------------------------------------------------------------------------------------------
Institutional Fixed - Bal Beg of Qtr 5.708 6.216 6.400 6.769 6.955 6.984
Inflows 0.975 0.457 0.566 0.170 0.657 0.478
Withdrawals/Terminations (0.387) (0.304) (0.325) (0.225) (0.415) (0.210)
Transfers (0.022) (0.013) (0.046) 0.008 (0.003) 0.003
------- ------- ------- ------- ------- -------
Net Cash Flows 0.566 0.139 0.195 (0.047) 0.239 0.271
Income Retained 0.080 0.092 0.101 0.060 0.089 0.079
Market Apprec/Deprec (0.137) (0.047) 0.073 0.173 (0.300) (0.070)
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at end of Qtr 6.216 6.400 6.769 6.955 6.984 7.264
------- ------- ------- ------- ------- -------
Institutional Equity - Bal Beg of Qtr 24.871 27.868 26.064 21.702 24.235 22.927
Inflows 0.995 0.825 0.855 1.165 1.297 1.179
Withdrawals/Terminations (1.200) (2.505) (1.663) (2.072) (2.540) (2.052)
Transfers 0.006 (0.021) 0.050 0.013 0.011 0.019
------- ------- ------- ------- ------- -------
Net Cash Flows (0.200) (1.702) (0.759) (0.895) (1.232) (0.854)
Income Retained 0.118 0.139 0.119 0.098 0.104 0.118
Market Apprec/Deprec 3.079 (0.241) (3.721) 3.330 (0.180) 1.771
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 27.868 26.064 21.702 24.235 22.927 23.962
------- ------- ------- ------- ------- -------
Total Institutional - Bal Beg of Qtr 30.579 34.084 32.463 28.471 31.191 29.910
Inflows 1.970 1.282 1.421 1.335 1.953 1.656
Withdrawals/Terminations (1.588) (2.810) (1.988) (2.297) (2.955) (2.262)
Transfers (0.017) (0.035) 0.003 0.021 0.008 0.022
------- ------- ------- ------- ------- -------
Net Cash Flows 0.366 (1.562) (0.564) (0.942) (0.994) (0.584)
Income Retained 0.197 0.230 0.220 0.158 0.193 0.197
Market Apprec/Deprec 2.941 (0.289) (3.649) 3.504 (0.480) 1.702
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 34.084 32.463 28.471 31.191 29.910 31.226
------- ------- ------- ------- ------- -------
Insurance Assets-End of Qtr 37.846 37.714 38.471 39.432 38.516 37.391
------- ------- ------- ------- ------- -------
Total Institutional - At End of Qtr 71.930 70.177 66.942 70.623 68.426 68.617
------- ------- ------- ------- ------- -------
Total Assets Under Management
------- ------- ------- ------- ------- -------
At End of Qtr 100.664 99.893 94.014 100.920 98.457 98.902
------- ------- ------- ------- ------- -------
Sept Dec Mar Jun Sept Dec
1999 1999 2000 2000 2000 2000
------- ------- ------- ------- ------- -------
Retail Fixed - Bal Beg of Qtr 7.945 7.680 7.424 6.964 6.667 6.531
Fund Sales 0.231 0.181 0.146 0.152 0.213 0.200
Redemptions (0.342) (0.403) (0.444) (0.328) (0.321) (0.272)
Net Money Market (0.029) (0.030) (0.067) (0.058) (0.031) (0.051)
Transfers 0.034 0.154 (0.095) (0.045) (0.033) 0.013
------- ------- ------- ------- ------- -------
Net Cash Flows (0.106) (0.098) (0.460) (0.279) (0.171) (0.109)
Income Retained 0.069 0.067 0.061 0.063 0.059 0.057
Market Apprec/Deprec (0.228) (0.225) (0.062) (0.082) (0.023) 0.021
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 7.680 7.424 6.964 6.667 6.531 6.499
------- ------- ------- ------- ------- -------
Retail Equity - Bal Beg of Qtr 22.340 20.873 23.383 24.102 23.129 23.680
Fund Sales 0.730 0.894 1.220 0.868 0.904 1.055
Redemptions (0.865) (1.120) (1.550) (0.971) (1.027) (0.820)
Net Money Market 0.000 0.000 0.000 0.000 0.001 0.000
Transfers (0.060) (0.086) (0.096) 0.018 (0.033) (0.068)
------- ------- ------- ------- ------- -------
Net Cash Flows (0.195) (0.312) (0.426) (0.085) (0.154) 0.167
Income Retained 0.007 0.000 0.033 0.021 0.005 0.025
Market Apprec/Deprec (1.279) 2.822 1.112 (0.908) 0.701 (2.698)
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 20.873 23.383 24.102 23.129 23.680 21.174
------- ------- ------- ------- ------- -------
Total Retail - Bal Beg of Qtr 30.285 28.553 30.807 31.066 29.796 30.211
Retail Sales-Annuities 0.332 0.409 0.379 0.358 0.453 0.536
Retail Sales-Mutual Funds 0.514 0.587 0.840 0.556 0.521 0.535
Retail Sales-Wrap & Other 0.116 0.079 0.148 0.106 0.143 0.184
------- ------- ------- ------- ------- -------
Total Retail Sales 0.962 1.075 1.367 1.020 1.118 1.255
Redemptions (1.207) (1.523) (1.995) (1.299) (1.348) (1.092)
Net Money Market (0.029) (0.030) (0.067) (0.058) (0.030) (0.051)
Transfers (0.027) 0.068 (0.191) (0.026) (0.065) (0.054)
------- ------- ------- ------- ------- -------
Net Cash Flows (0.301) (0.410) (0.886) (0.363) (0.326) 0.058
Income Retained 0.076 0.067 0.095 0.083 0.063 0.082
Market Apprec/Deprec (1.507) 2.597 1.051 (0.989) 0.677 (2.677)
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 28.553 30.807 31.066 29.796 30.211 27.674
------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------
Institutional Fixed - Bal Beg of Qtr 7.264 7.218 6.937 6.873 6.484 6.275
Inflows 0.446 0.420 0.180 0.148 0.308 0.135
Withdrawals/Terminations (0.294) (0.781) (0.353) (0.520) (0.532) (0.568)
Transfers (0.002) 0.001 (0.005) (0.001) 0.000 0.001
------- ------- ------- ------- ------- -------
Net Cash Flows 0.150 (0.360) (0.178) (0.373) (0.224) (0.433)
Income Retained 0.110 0.068 0.090 0.066 0.089 0.050
Market Apprec/Deprec (0.306) 0.011 0.024 (0.081) (0.074) 0.219
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at end of Qtr 7.218 6.937 6.873 6.484 6.275 6.111
------- ------- ------- ------- ------- -------
Institutional Equity - Bal Beg of Qtr 23.962 23.098 23.630 20.303 20.239 19.041
Inflows 1.839 0.934 0.904 0.669 0.407 0.750
Withdrawals/Terminations (1.165) (2.043) (3.333) (1.354) (1.154) (1.368)
Transfers (0.008) (0.010) (0.004) 0.002 (0.013) 0.007
------- ------- ------- ------- ------- -------
Net Cash Flows 0.666 (1.119) (2.433) (0.683) (0.760) (0.611)
Income Retained 0.167 0.093 0.109 0.132 0.108 0.102
Market Apprec/Deprec (1.697) 1.559 (1.003) 0.488 (0.545) 0.579
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 23.098 23.630 20.303 20.239 19.041 19.111
------- ------- ------- ------- ------- -------
Total Institutional - Bal Beg of Qtr 31.226 30.316 30.567 27.175 26.722 25.316
Inflows 2.284 1.354 1.084 0.817 0.715 0.885
Withdrawals/Terminations (1.458) (2.825) (3.686) (1.874) (1.686) (1.936)
Transfers (0.010) (0.009) (0.009) 0.000 (0.012) 0.008
------- ------- ------- ------- ------- -------
Net Cash Flows 0.816 (1.480) (2.611) (1.057) (0.983) (1.043)
Income Retained 0.277 0.161 0.198 0.197 0.196 0.151
Market Apprec/Deprec (2.003) 1.569 (0.979) 0.407 (0.619) 0.798
Acq of New Company/Business
------- ------- ------- ------- ------- -------
Balance at End of Qtr 30.316 30.567 27.175 26.722 25.316 25.222
------- ------- ------- ------- ------- -------
Insurance Assets-End of Qtr 36.820 35.934 35.541 34.891 34.981 35.686
------- ------- ------- ------- ------- -------
Total Institutional - At End of Qtr 67.136 66.501 62.716 61.613 60.297 60.908
------- ------- ------- ------- ------- -------
Total Assets Under Management
------- ------- ------- ------- ------- -------
At End of Qtr 95.689 97.308 93.782 91.409 90.508 88.581
------- ------- ------- ------- ------- -------
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
----- ----- ----- ----- -----
Operating Revenue
Premiums 131.8 145.4 156.6 145.1 148.4
Surrender charges
Mortality assessments 21.1 25.2 29.3 27.1 31.4
Expense assessments 153.4 166.1 153.6 182.3 178.1
Other revenue and fees 5.1 3.3 11.2 13.8 6.9
Net investment income 82.0 85.1 87.9 75.3 70.3
Equity earnings in unconsol affiliates
------ ------ ------ ------ ------
Operating Revenue 393.3 425.2 438.6 443.6 435.0
------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 133.9 339.6 151.0 306.2 178.5
Underwriting, acquisition,
insurance and other expenses 157.7 184.5 175.6 223.5 180.0
Goodwill amortization 0.0 0.0 6.3 7.0 4.0
------ ------ ------ ------ ------
Total Benefits and Expenses 291.7 524.1 332.9 536.7 362.6
------ ------ ------ ------ ------
Income from Operations Before Tax 101.7 (99.0) 105.8 (93.1) 72.4
Federal income taxes 35.7 9.3 34.8 (79.2) 11.3
------ ------ ------ ------ ------
Income from Operations 66.0 (108.3) 70.9 (13.9) 61.0
------ ------ ------ ------ ------
Realized gain on investments 0.0 1.5 0.8 2.1 2.3
Restructuring charges (6.5) (76.5)
Net Income 66.0 (106.8) 71.7 (18.2) (13.2)
====== ====== ====== ====== ======
Inc from Oper -Before Goodwill Amort. 66.0 (108.3) 77.2 (6.9) 65.1
Effective tax rate 35.1% (9.4%) 32.9% 85.1% 15.7%
Operating Revenue 393.3 425.2 438.6 443.6 435.0
Realized gains on investments (0.2) 2.1 1.1 3.0 3.2
------ ------ ------ ------ ------
Total Revenue 393.2 427.3 439.7 446.6 438.2
====== ====== ====== ====== ======
Average capital 601.1 618.1 517.7 551.2 488.2
Return on average capital 11.0% (17.5%) 13.7% (2.5%) 12.5%
- ---------------------------------------------------------------------------------------------------------------------------
Unit Linked Assets - Beg of Year 4.307 5.074 5.643 6.265 7.220
Deposits 0.446 0.569 0.473 0.537 0.554
Withdrawals (incl. chgs) & Deaths (0.420) (0.503) (0.547) (0.566) (0.644)
------ ------ ------ ------ ------
Net Cash Flows 0.026 0.066 (0.074) (0.029) (0.090)
Inv Inc & Chg in Mkt Val 0.269 0.682 0.662 1.154 (0.154)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment 0.472 (0.179) 0.035 (0.170) (0.536)
Unit Linked Assets - End of Year 5.074 5.643 6.265 7.220 6.441
====== ====== ====== ====== ======
Net Initial Commision Values *(Millions) 47.308 55.416 54.924 51.388 32.602
Individual Life Sales (Billions) 2.704 1.983 2.154 2.274 1.719
Individual Life In-force (Billions) 23.835 25.026 25.002 25.698 24.290
Exchange Rate - Dollars to Pounds
For the Year 1.567 1.644 1.658 1.617 1.518
End of Year 1.713 1.651 1.660 1.615 1.493
*Net Initial Commission Value is a measure used by Lincoln UK to measure sales progress and future profitability.
**Prior to the fourth quarter of 1998 the Lincoln UK rating was based on its affiliation with Lincoln National Corporation.
Subsequent to the fourth quarter of 1998 the rating, provided by S&P reflects Lincoln UK's rating on a stand alone basis.
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 36.9 33.7 33.7 52.3 43.9 29.0
Surrender charges
Mortality assessments 6.3 8.1 7.3 7.6 6.7 7.7
Expense assessments 36.9 54.0 39.0 23.7 43.9 51.9
Other revenue and fees 1.4 7.0 1.2 1.6 2.9 3.5
Net investment income 21.6 21.3 21.4 23.6 21.7 19.6
Equity earnings in unconsol affiliates
------- ------- ------- ------- ------- -------
Operating Revenue 103.2 124.1 102.6 108.7 119.2 111.8
------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Benefits 32.9 36.1 36.3 45.7 35.7 31.5
Underwriting, acquisition,
insurance and other expenses 43.0 55.0 44.1 33.6 55.3 55.2
Goodwill amortization 0.8 1.2 0.6 3.7 1.2 1.2
------- ------- ------- ------- ------- -------
Total Benefits and Expenses 76.7 92.3 80.9 83.0 92.2 87.9
------- ------- ------- ------- ------- -------
Income from Operations Before 26.5 31.8 21.7 25.7 27.0 23.9
Federal income taxes 9.4 14.6 4.0 6.9 8.9 4.9
------- ------- ------- ------- ------- -------
Income from Operations 17.2 17.2 17.7 18.8 18.1 19.0
------- ------- ------- ------- ------- -------
Realized gain on investments 0.2 0.1 0.1 0.4 (0.0) 1.0
Restructuring charges
------- ------- ------- ------- ------- -------
Net Income 17.4 17.4 17.8 19.2 18.0 20.0
======= ======= ======= ======= ======= =======
Inc from Oper -Before
Goodwill Amortization 18.0 18.4 18.3 22.5 19.3 20.2
Effective tax rate 35.3% 45.8% 18.4% 27.0% 33.0% 20.4%
Operating Revenue 103.2 124.1 102.6 108.7 119.2 111.8
Realized gains on investments 0.3 0.1 0.2 0.5 (0.1) 1.4
------- ------- ------- ------- ------- -------
Total Revenue 103.5 124.2 102.8 109.2 119.1 113.1
======= ======= ======= ======= ======= =======
Average capital 503.4 511.2 522.6 533.8 519.2 526.9
Return on average capital 13.7% 13.5% 13.6% 14.1% 13.9% 14.4%
- --------------------------------------------------------------------------------------------------
Unit Linked Assets
Balance-Beg of Quarter (Billions) 5.643 6.297 6.310 5.711 6.265 6.348
Deposits 0.122 0.100 0.115 0.136 0.131 0.119
Withdrawals (incl. chgs) & Deaths (0.140) (0.136) (0.133) (0.139) (0.136) (0.137)
------- ------- ------- ------- ------- -------
Net Cash Flows (0.018) (0.035) (0.018) (0.003) (0.005) (0.017)
Inv Inc & Chg in Mkt Val 0.592 0.061 (0.687) 0.696 0.271 0.314
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment 0.080 (0.013) 0.107 (0.139) (0.184) (0.141)
------- ------- ------- ------- ------- -------
Unit Linked Assets - End of Quarter 6.297 6.310 5.711 6.265 6.348 6.503
======= ======= ======= ======= ======= =======
Net Initial Commision Values *(Millions) 13.964 13.273 13.177 14.510 11.967 12.407
Individual Life Sales (Billions) 0.489 0.510 0.555 0.600 0.485 0.555
Individual Life In-force (Billions) 25.536 25.838 25.612 25.002 25.246 25.107
Exchange Rate - Dollars to Pounds
For the Quarter 1.646 1.658 1.666 1.661 1.631 1.602
End of Quarter 1.671 1.668 1.700 1.660 1.612 1.577
- --------------------------------------------------------------------------------------------------
Lincoln UK (continued)
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 33.5 38.7 39.0 36.3 32.5 40.5
Surrender charges
Mortality assessments 7.7 5.0 6.3 8.0 9.6 7.5
Expense assessments 49.3 37.2 46.5 44.3 52.6 34.6
Other revenue and fees 3.6 3.8 2.4 1.3 2.0 1.3
Net investment income 16.2 17.7 18.9 18.5 16.1 16.7
Equity earnings in unconsol affiliates
------- ------- ------- ------- ------- -------
Operating Revenue 110.3 102.4 113.2 108.4 112.8 100.6
------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Benefits 27.2 211.8 35.0 37.4 51.9 54.2
Underwriting, acquisition,
insurance and other expenses 61.6 51.4 56.4 43.5 45.2 34.9
Goodwill amortization 1.2 3.3 1.3 1.3 1.2 0.2
------- ------- ------- ------- ------- -------
Total Benefits and Expenses 90.1 266.6 92.8 82.2 98.3 89.3
------- ------- ------- ------- ------- -------
Income from Operations Before 20.2 (164.2) 20.4 26.2 14.5 11.3
Federal income taxes 4.0 (97.1) 4.7 6.9 3.9 (4.2)
------- ------- ------- ------- ------- -------
Income from Operations 16.2 (67.1) 15.7 19.3 10.6 15.5
------- ------- ------- ------- ------- -------
Realized gain on investments 0.2 1.0 (0.2) (0.1) (0.0) 2.6
Restructuring charges (6.5) (40.5) (36.1)
------- ------- ------- ------- ------- -------
Net Income 16.4 (72.6) 15.5 19.1 (29.9) (17.9)
======= ======= ======= ======= ======= =======
Inc from Oper -Before
Goodwill Amortization 17.4 (63.8) 17.1 20.5 11.8 15.7
Effective tax rate 20.0% 59.1% 22.9% 26.4% 27.2% (37.1%)
Operating Revenue 110.3 102.4 113.2 108.4 112.8 100.6
Realized gains on investments 0.3 1.4 (0.4) (0.2) (0.0) 3.8
------- ------- ------- ------- ------- -------
Total Revenue 110.5 103.8 112.8 108.2 112.8 104.3
======= ======= ======= ======= ======= =======
Average capital 573.5 585.0 516.4 500.8 486.5 448.9
Return on average capital 11.3% (45.9%) 12.2% 15.4% 8.7% 13.8%
- --------------------------------------------------------------------------------------------------
Unit Linked Assets
Balance-Beg of Quarter (Billions) 6.503 6.568 7.220 7.031 6.726 6.499
Deposits 0.130 0.156 0.159 0.134 0.145 0.116
Withdrawals (incl. chgs) & Deaths (0.136) (0.158) (0.170) (0.162) (0.159) (0.153)
------- ------- ------- ------- ------- -------
Net Cash Flows (0.005) (0.002) (0.011) (0.028) (0.014) (0.037)
Inv Inc & Chg in Mkt Val (0.214) 0.784 (0.077) 0.047 (0.025) (0.100)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment 0.284 (0.130) (0.101) (0.324) (0.189) 0.078
------- ------- ------- ------- ------- -------
Unit Linked Assets - End of Quarter 6.568 7.220 7.031 6.726 6.499 6.441
======= ======= ======= ======= ======= =======
Net Initial Commision Values *(Millions) 13.459 13.556 11.522 10.345 9.472 1.264
Individual Life Sales (Billions) 0.571 0.663 0.655 0.581 0.434 0.049
Individual Life In-force (Billions) 26.235 25.698 26.514 25.225 24.535 24.290
Exchange Rate - Dollars to Pounds
For the Quarter 1.614 1.625 1.599 1.536 1.482 1.454
End of Quarter 1.647 1.615 1.591 1.517 1.475 1.493
- --------------------------------------------------------------------------------------------------
*Net Initial Commission Value is a measure used by Lincoln UK to measure
sales progress and future profitability.
**Prior to the fourth quarter of 1998 the Lincoln UK rating was based on
its affiliation with Lincoln National Corporation. Subsequent to the fourth
quarter of 1998 the rating, provided by S&P reflects Lincoln UK's rating on
a stand alone basis.
Other Operations
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Revenue
Lincoln Financial Advisors 111.0 130.1 292.9 325.2 394.2
Lincoln Financial Distributors 25.1 20.5 33.5 107.5 119.9
------- ------- ------- ------- -------
Total Distribution 136.1 150.6 326.4 432.6 514.0
Other [Including
Consolidating Adjustments] (90.0) (84.2) (157.8) (171.6) (180.4)
------- ------- ------- ------- -------
Operating Revenue 21.1 45.9 135.1 153.6 213.8
------- ------- ------- ------- -------
Realized gain on investments (3.0) 16.9 4.0 8.6 (4.0)
------- ------- ------- ------- -------
Total Revenue 18.1 62.8 139.1 162.2 209.7
======= ======= ======= ======= =======
Income (Loss)
Lincoln Financial Advisors (10.2) (5.3) (23.7) (20.8) (11.7)
Lincoln Financial Distributors (4.3) (11.2) (8.2) (14.0) (18.5)
------- ------- ------- ------- -------
Total Distribution (14.5) (16.5) (31.9) (34.8) (30.2)
LNC Financing (49.9) (31.8) (52.6) (83.7) (85.6)
LNC Operations * (14.8) (18.4) (18.5)
Other Corporate 2.6 (6.5) 2.1 (5.2) (14.5)
------- ------- ------- ------- -------
Inc (Loss) from Operations (76.5) (73.2) (100.9) (123.7) (130.4)
------- ------- ------- ------- -------
Realized Gain on Investments (1.0) 8.6 5.3 6.4 (2.5)
Realized Gain on Sale of Subsidiaries
Restructuring Charge (14.3) (0.3)
------- ------- ------- ------- -------
Total Net Income (Loss) (77.5) (64.6) (109.9) (117.2) (132.6)
======= ======= ======= ======= =======
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Revenue
Lincoln Financial Advisors 62.4 73.9 74.8 81.7 67.0 73.9 78.0 106.3 89.4 92.9 93.9 117.9
Lincoln Financial
Distributors 6.6 6.9 10.2 9.8 20.7 26.2 26.4 34.2 29.3 28.1 27.5 35.0
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total Distribution 69.1 80.8 85.0 91.5 87.6 100.1 104.4 140.5 118.8 121.0 121.4 152.9
Other [Including
Consolidating Adjustments] (29.9) (38.9) (43.8) (45.3) (5.1) (14.0) (39.3) (113.3) (39.1) (59.7) (51.2) (30.3)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Operating Revenue 32.6 35.1 31.0 36.5 61.9 59.9 38.7 (7.0) 50.3 33.2 42.7 87.6
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Realized gain on investments 2.2 (3.0) 3.1 1.6 0.2 (1.7) 13.8 (3.7) (2.7) 0.4 0.0 (1.8)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total Revenue 34.8 32.1 34.1 38.0 62.2 58.2 52.5 (10.7) 47.7 33.6 42.7 85.7
====== ====== ====== ====== ====== ====== ====== ======= ======= ======= ======= =======
Income (Loss)
Lincoln Financial Advisors (6.0) (6.8) (4.6) (6.4) (8.4) (9.7) (5.3) 2.7 (7.4) (2.9) (3.1) 1.6
Lincoln Financial
Distributors (2.4) (2.7) (1.4) (1.6) (3.0) (5.3) (2.1) (3.7) (3.3) (5.2) (5.0) (5.1)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total Distribution (8.4) (9.5) (6.0) (8.0) (11.4) (15.0) (7.4) (1.0) (10.7) (8.1) (8.0) (3.4)
LNC Financing (5.0) (12.8) (15.3) (19.5) (20.9) (21.6) (19.9) (21.3) (21.7) (22.0) (21.9) (20.0)
LNC Operations * (4.2) (5.2) (4.2) (4.9) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Corporate 1.6 2.1 0.4 (1.9) (1.7) 1.0 (2.8) (1.7) (6.2) (1.5) 2.7 (9.6)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Inc (Loss) from Oper (16.0) (25.4) (25.1) (34.3) (34.0) (35.6) (30.1) (24.0) (38.5) (31.6) (27.2) (33.0)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Realized Gain on Investments 1.4 (2.1) 1.9 4.1 0.1 (2.0) 9.5 (1.2) (1.6) 0.3 (1.0) (0.2)
Restructuring Charge (14.3) 0.3
------ ------ ------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total Net Income
(Loss) (14.6) (27.5) (23.1) (44.6) (33.9) (37.6) (20.6) (25.2) (40.1) (31.3) (28.2) (32.9)
====== ====== ====== ====== ====== ====== ====== ======= ======= ======= ======= =======
* Starting with the first quarter of 1999, 100% of "LNC Operations" is
allocated to the business segments. Prior periods have not been restated.
Consolidated Retail Deposits/Account Balances
Unaudited [Billions of Dollars]
1996 1997 1998 1999 2000
------ ------ ------ ------ ------
Deposits - For the Year
Annuities Segment - Fixed Annuities 1.852 1.632 1.452 2.563 2.074
Annuities Segment - Variable Annuities 2.746 2.695 2.791 2.553 3.165
Annuities Segment - Life Insurance 0.000 0.000 0.000 0.017 0.014
Life Insurance Segment - Life Insurance 0.405 0.384 1.207 1.698 1.884
Inv Mgmt - Annuities 1.638 2.163 2.238 1.561 1.726
Inv Mgmt - Mutual Funds 0.849 1.218 1.913 2.153 2.452
Inv Mgmt - Wrap Fee & Other 0.454 0.533 0.596 0.550 0.581
Consolidating Adjustments (0.684) (0.966) (1.041) (0.499) (0.406)
------ ------ ------ ------ ------
Deposits - U.S. 7.259 7.658 9.157 10.597 11.491
Lincoln UK 0.446 0.569 0.473 0.537 0.554
UK Consoldating Adjustment (0.022) (0.023) (0.019) (0.064)
------ ------ ------ ------ ------
Gross Deposits 7.705 8.205 9.608 11.115 11.981
====== ====== ====== ====== ======
Account Balances - End of Year
Annuities Segment - Fixed Annuities 15.818 15.458 16.505 16.791 15.442
Annuities Segment - Variable Annuities 20.383 27.346 33.358 41.493 39.427
Annuities Segment - Life Insurance 0.155 0.160
Life Insurance Segment - Life Insurance 2.869 3.038 9.243 10.217 10.847
Inv Mgmt - Annuities 7.915 10.991 14.257 15.526 13.494
Inv Mgmt - Mutual Funds 9.017 12.484 13.528 13.632 12.805
Inv Mgmt - Wrap Fee & Other 2.074 2.403 2.512 1.649 1.375
Consolidating Adjustments (5.098) (6.806) (8.891) (9.175) (7.753)
------ ------ ------ ------ ------
Account Balances - U.S. 52.978 64.914 80.512 90.288 85.797
Lincoln UK 5.074 5.643 6.265 7.220 6.441
UK Consoldating Adjustment (0.024) (0.447) (0.347) (0.339)
------ ------ ------ ------ ------
Consolidated Account Balances 58.052 70.533 86.329 97.161 91.899
====== ====== ====== ====== ======
Mar Jun Sep Dec Mar Jun
1998 1998 1998 1998 1999 1999
------ ------ ------ ------ ------ ------
Deposits - For the Quarter
Annuities Segment - Fixed Annuities 0.364 0.407 0.346 0.335 0.489 0.654
Annuities Segment - Variable Annuities 0.701 0.810 0.647 0.633 0.635 0.651
Annuities Segment - Life Insurance 0.003 0.005
Life Insurance Segment - Life Insurance 0.220 0.259 0.254 0.475 0.394 0.379
Inv Mgmt - Annuities 0.592 0.598 0.541 0.507 0.428 0.393
Inv Mgmt - Mutual Funds 0.464 0.513 0.531 0.403 0.565 0.487
Inv Mgmt - Wrap Fee & Other 0.147 0.173 0.139 0.136 0.182 0.173
Consolidating Adjustments (0.260) (0.294) (0.232) (0.254) (0.142) (0.143)
------ ------ ------ ------ ------ ------
Deposits - U.S. 2.228 2.466 2.226 2.234 2.554 2.599
Lincoln UK 0.122 0.100 0.115 0.136 0.131 0.119
UK Consoldating Adjustment (0.000) (0.011) (0.007) (0.004) (0.004) (0.005)
------ ------ ------ ------ ------ ------
Gross Deposits 2.350 2.555 2.334 2.366 2.682 2.714
====== ====== ====== ====== ====== ======
Account Balances - End of Quarter
Annuities Segment - Fixed Annuities 16.578 16.414 16.476 16.505 16.656 16.779
Annuities Segment - Variable Annuities 32.933 33.458 29.476 33.358 34.148 37.233
Annuities Segment - Life Insurance 0.115 0.130
Life Insurance Segment - Life Insurance 6.276 6.394 6.443 9.243 9.416 9.628
Inv Mgmt - Annuities 12.947 13.829 12.270 14.257 14.166 14.981
Inv Mgmt - Mutual Funds 13.283 13.333 12.549 13.528 13.442 13.654
Inv Mgmt - Wrap Fee & Other 2.504 2.553 2.253 2.512 2.424 1.650
Consolidating Adjustments (7.872) (8.611) (7.326) (8.891) (8.798) (9.050)
------ ------ ------ ------ ------ ------
Account Balances - U.S. 76.649 77.371 72.142 80.512 81.570 85.004
Lincoln UK 6.297 6.310 5.711 6.265 6.348 6.503
UK Consoldating Adjustment (0.400) (0.415) (0.366) (0.447) (0.421) (0.414)
------ ------ ------ ------ ------ ------
Consolidated Account Balances 82.547 83.265 77.487 86.329 87.497 91.093
====== ====== ====== ====== ====== ======
Sep Dec Mar Jun Sep Dec
1999 1999 2000 2000 2000 2000
------ ------ ------ ------ ------ ------
Deposits - For the Quarter
Annuities Segment - Fixed Annuities 0.678 0.741 0.589 0.490 0.513 0.482
Annuities Segment - Variable Annuities 0.634 0.634 0.797 0.793 0.729 0.846
Annuities Segment - Life Insurance 0.004 0.005 0.003 0.003 0.004 0.004
Life Insurance Segment - Life Insurance 0.399 0.526 0.424 0.411 0.428 0.622
Inv Mgmt - Annuities 0.332 0.409 0.379 0.358 0.453 0.536
Inv Mgmt - Mutual Funds 0.514 0.587 0.840 0.556 0.521 0.535
Inv Mgmt - Wrap Fee & Other 0.116 0.079 0.148 0.106 0.143 0.184
Consolidating Adjustments (0.096) (0.118) (0.099) (0.062) (0.100) (0.145)
------ ------ ------ ------ ------ ------
Deposits - U.S. 2.581 2.864 3.081 2.655 2.691 3.064
Lincoln UK 0.130 0.156 0.159 0.134 0.145 0.116
UK Consoldating Adjustment (0.004) (0.006) (0.006) (0.006) (0.010) (0.042)
------ ------ ------ ------ ------ ------
Gross Deposits 2.707 3.014 3.233 2.783 2.827 3.138
====== ====== ====== ====== ====== ======
Account Balances - End of Quarter
Annuities Segment - Fixed Annuities 16.934 16.791 16.252 15.909 15.700 15.442
Annuities Segment - Variable Annuities 35.613 41.493 44.640 43.097 42.743 39.427
Annuities Segment - Life Insurance 0.128 0.155 0.169 0.165 0.166 0.160
Life Insurance Segment - Life Insurance 9.726 10.217 10.470 10.538 10.716 10.847
Inv Mgmt - Annuities 14.004 15.526 15.531 14.861 14.824 13.494
Inv Mgmt - Mutual Funds 12.938 13.632 14.201 13.604 14.102 12.805
Inv Mgmt - Wrap Fee & Other 1.611 1.649 1.335 1.331 1.285 1.375
Consolidating Adjustments (8.387) (9.175) (8.768) (8.419) (8.644) (7.753)
------ ------ ------ ------ ------ ------
Account Balances - U.S. 82.567 90.288 93.831 91.086 90.893 85.797
Lincoln UK 6.568 7.220 7.031 6.726 6.499 6.441
UK Consoldating Adjustment (0.359) (0.347) (0.345) (0.338) (0.336) (0.339)
------ ------ ------ ------ ------ ------
Consolidated Account Balances 88.776 97.161 100.517 97.474 97.056 91.899
====== ====== ====== ====== ====== ======
NOTE: Excludes amounts reported as Assets Under Management - At Cost Operations
Consolidated Information - Individual Life Insurance In-Force
Unaudited [Billions of Dollars]
December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Life Insurance Segment 49.2 63.2 172.9 195.0 216.0
Annuities Segment 0.6 0.7
Lincoln UK 23.8 25.0 25.0 25.7 24.3
Reinsurance 130.8 153.1 213.6 306.6 407.4
Consolidating Adjustment (5.6) (9.9) (11.3) (11.4)
------- ------- ------- ------- -------
Total 203.8 235.7 401.6 516.5 637.0
======= ======= ======= ======= =======
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
End of Quarter 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000
------ ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Life Insurance Segment 108.8 115.2 121.8 172.9 178.5 184.5 188.9 195.0 201.7 207.5 211.3 216.0
Annuities Segment 0.5 0.5 0.6 0.6 0.6 0.6 0.7
Lincoln UK 25.5 25.8 25.6 25.0 25.2 25.1 26.2 25.7 26.5 25.2 24.5 24.3
Reinsurance 158.6 166.9 178.3 213.6 225.1 240.0 261.5 306.6 325.9 354.0 381.4 407.4
Consolidating Adjustment (1.7) (1.9) (2.2) (9.9) (10.3) (10.6) (10.9) (11.3) (11.4) (11.5) (11.4) (11.4)
------ ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total 291.2 306.0 323.5 401.6 418.6 439.5 466.3 516.5 543.3 575.8 606.5 637.0
====== ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Consolidated Investment Data - Assets Managed
Unaudited [Billions of Dollars]
December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 24.097 24.066 30.233 27.689 27.450
Equity securities 0.558 0.660 0.543 0.604 0.550
Other investments 5.076 5.092 7.154 7.286 7.369
------- ------- ------- ------- -------
Total LNC Investments 29.730 29.819 37.929 35.578 35.369
Separate accounts 28.809 37.139 43.409 53.654 50.580
Cash and Invested Cash 1.145 3.795 2.433 1.896 1.927
Discontinued Operations 4.402
------- ------- ------- ------- -------
Total LNC 64.086 70.752 83.772 91.128 87.876
------- ------- ------- ------- -------
Non-affiliate assets managed 40.968 48.331 50.061 49.314 43.397
------- ------- ------- ------- -------
Total Assets Managed 105.054 119.083 133.833 140.443 131.273
======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 45.471 56.457 61.488 61.374 52.895
(See page 24 for additional detail)
Lincoln Investment Management-Corp 37.453 35.684 39.432 35.934 35.686
(Assets managed internally-see page 24)
Lincoln (UK) 6.107 6.775 7.573 8.589 7.873
Policy Loans (within business units) 0.758 0.763 1.840 1.892 1.961
Non-LNC Affiliates 15.265 19.404 23.500 32.654 32.857
------- ------- ------- ------- -------
Total Assets Managed 105.054 119.083 133.833 140.443 131.273
======= ======= ======= ======= =======
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
End of Quarter 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity
securities 27.533 27.787 28.554 30.233 30.578 29.579 28.708 27.689 27.745 27.078 27.264 27.450
Equity securities 0.825 0.649 0.505 0.543 0.481 0.506 0.507 0.604 0.588 0.560 0.570 0.550
Other investments 6.873 6.836 6.705 7.154 7.071 7.278 7.317 7.286 7.442 7.419 7.471 7.369
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total LNC
Investments 35.230 35.272 35.764 37.929 38.129 37.363 36.532 35.578 35.775 35.057 35.305 35.369
Separate accounts 41.741 42.247 37.559 43.409 44.339 47.864 46.229 53.654 56.908 54.924 54.411 50.580
Cash and invested cash 2.642 2.414 2.725 2.433 2.327 2.151 2.343 1.896 1.510 1.619 1.436 1.927
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total LNC 79.613 79.933 76.048 83.772 84.796 87.378 85.104 91.128 94.192 91.601 91.152 87.876
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Non-affiliate assets
managed 52.963 51.772 46.842 50.061 48.690 49.827 48.068 49.314 47.150 45.945 45.119 43.397
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Assets
Managed 132.576 131.705 122.890 133.833 133.486 137.205 133.172 140.443 141.342 137.546 136.271 131.273
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management
segment 62.819 62.179 55.542 61.488 59.939 61.511 58.868 61.374 58.243 56.518 55.527 52.895
(See page 25 for
additional detail)
Lincoln Investment
Mgmt. - Corp. 37.846 37.714 38.471 39.432 38.516 37.391 36.820 35.934 35.541 34.891 34.981 35.686
(Assets managed
internally-
see page 25)
Lincoln (UK) 7.467 7.501 6.932 7.573 7.631 7.746 7.849 8.589 8.423 8.058 7.838 7.873
Policy Loans
(within business
units) 1.405 1.500 1.517 1.840 1.842 1.847 1.863 1.892 1.896 1.915 1.936 1.961
Non-LNC Affiliates 23.039 22.812 20.427 23.500 25.558 28.710 27.772 32.654 37.239 36.165 35.989 32.857
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Assets
Managed 132.576 131.705 122.890 133.833 133.486 137.205 133.172 140.443 141.342 137.546 136.271 131.273
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Consolidated Investment Data
Unaudited [Millions of Dollars except as noted]
For the Year Ended December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Net Investment Income
Fixed Maturity Securities 1690.1 1832.1 2065.8 2232.9 2148.7
Equity Securities 14.4 19.1 22.8 20.1 19.5
Mortgage loans on real estate 292.7 279.2 383.6 369.2 373.8
Real estate 125.4 99.4 86.8 64.1 51.8
Policy loans 40.7 44.5 99.5 116.5 125.0
Invested cash 69.2 102.4 156.8 110.3 87.2
Other investments 14.7 20.6 88.4 51.8 66.8
------- ------- ------- ------- -------
Investment revenue 2247.2 2397.3 2903.7 2964.8 2872.8
Investment expense 159.2 146.6 222.3 157.3 125.7
------- ------- ------- ------- -------
Net Investment Income 2087.9 2250.8 2681.4 2807.5 2747.1
------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 9.7 12.7 11.6 8.1 7.8
------- ------- ------- ------- -------
Adjusted Net Invest Income 2097.7 2263.5 2693.0 2815.6 2754.9
------- ------- ------- ------- -------
Mean Invested Assets (Cost Basis) 27906.2 30337.3 36573.8 39027.5 37471.3
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.52% 7.46% 7.36% 7.21% 7.35%
Investment Gains
Realized Gain on Investments 57.6 72.9 13.7 3.8 (17.5)
Real Gain on Sale of Subsidiary
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) (208.8) 159.6 116.4 (1,018.1) 477.7
Incr (Decr) in Foreign Exchange 53.0 (20.3) 3.8 (19.9) (8.1)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 24.097 24.066 30.233 27.689 27.450
Fixed Maturity Sec (Adjusted Cost) 23.200 22.624 28.640 28.357 27.373
Equity Securities (Market) 0.558 0.660 0.543 0.604 0.550
Equity Securities (Adjusted Cost) 0.434 0.518 0.437 0.482 0.458
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 32.8% 27.6% 25.6% 22.8% 22.1%
AA or better 41.9% 35.1% 32.6% 29.8% 29.2%
BB or less 7.0% 7.3% 7.0% 8.0% 6.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment Income
Fixed Maturity
Securities 502.1 506.3 512.8 544.5 557.8 575.8 551.2 548.0 541.3 544.4 525.3 537.7
Equity Securities 5.6 4.2 4.1 8.9 4.4 4.9 3.9 6.9 3.7 5.7 3.6 6.5
Mortgage loans on
real estate 94.2 90.7 91.3 107.4 94.5 85.5 94.7 94.5 92.0 95.1 94.4 92.3
Real estate 24.2 23.9 20.3 18.4 19.4 18.4 13.7 12.5 11.2 12.5 11.8 16.3
Policy loans 22.9 22.1 24.6 29.8 28.6 28.6 29.4 29.9 30.7 30.9 30.5 32.9
Invested cash 41.7 30.4 40.7 44.0 32.4 23.4 32.4 22.0 27.2 15.1 26.5 18.4
Other investments 20.1 29.4 19.5 19.3 7.5 13.4 9.9 20.9 35.1 2.0 26.9 2.9
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Investment revenue 710.9 707.0 713.4 772.4 744.6 750.1 735.2 734.9 741.1 705.7 719.1 706.9
Investment expense 52.6 48.3 63.8 57.7 35.1 49.3 38.1 34.8 30.0 31.8 29.0 34.8
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment
Income 658.4 658.7 649.6 714.7 709.5 700.8 697.1 700.1 711.1 673.8 690.0 672.1
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Gross-up of Tax
Exempt Income 3.5 2.9 2.3 3.0 1.8 2.0 1.7 2.6 1.5 2.3 1.4 2.6
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Adjusted
Net Invest
Income 661.8 661.6 651.9 717.7 711.3 702.8 698.7 702.7 712.6 676.1 691.5 674.7
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Mean Invested Assets
(Cost Basis) 5827.3 36094.5 36445.0 37619.5 39174.2 39385.3 39111.8 38438.6 38237.4 37306.1 37250.8 37090.8
Ratio of Adjusted Net Invest Inc
Over Mean Invested
Assets 7.39% 7.33% 7.16% 7.63% 7.26% 7.14% 7.15% 7.31% 7.45% 7.25% 7.43% 7.28%
Investment Gains
Realized Gain on
Investments 13.9 16.5 (17.3) 0.5 1.5 (3.5) 4.1 1.6 (0.4) (6.7) (11.6) 1.2
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale
(after DAC/Tax) 39.0 (5.5) 304.2 (221.4) (297.7) (255.8) (102.7) (361.9) 54.5 (145.4) 218.8 349.8
Incr (Decr) in Foreign
Exchange 6.2 (0.6) 8.0 (9.8) (19.9) (9.5) 19.6 (10.2) (7.3) (0.9) (2.0) 2.0
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec
(Market) 27.533 27.787 28.554 30.233 30.578 29.579 28.708 27.689 27.745 27.078 27.264 27.450
Fixed Maturity Sec
(Adjusted Cost) 26.076 26.233 26.610 28.640 29.681 29.494 28.974 28.357 28.295 27.788 27.727 27.373
Equity Securities
(Market) 0.825 0.649 0.505 0.543 0.481 0.506 0.507 0.604 0.588 0.560 0.570 0.550
Equity Securities
(Adjusted Cost) 0.634 0.528 0.470 0.437 0.380 0.385 0.414 0.482 0.475 0.446 0.450 0.458
% of Fixed Maturity
Securities
(Based on Market)
Treasuries and AAA 26.7% 26.4% 26.1% 25.6% 26.3% 25.5% 24.2% 22.8% 22.7% 22.1% 22.3% 22.1%
AA or better 33.6% 33.7% 33.3% 32.6% 33.2% 32.5% 31.1% 29.8% 29.5% 29.2% 29.4% 29.2%
BB or less 7.9% 7.2% 6.3% 7.0% 7.1% 7.0% 7.5% 8.0% 7.4% 8.2% 6.8% 6.7%
Common Stock / Debt Information
Unaudited [Dollars per Share, except Percentages]
For the Year Ended December 31 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Common Stock [1]
Highest Price 15.338 13.813 19.032 24.125 22.188 26.875 28.500 39.063 49.438 57.500 56.375
Lowest Price 7.688 9.500 12.625 17.344 17.313 17.313 20.375 24.500 33.500 36.000 22.625
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Closing Price 10.750 13.688 18.500 21.750 17.500 26.875 26.250 39.063 40.907 40.000 47.313
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Dividend Payout Ratio [2] 63.4% 63.5% 38.9% 52.6% 51.0% 39.7% 38.2% 22.8% 43.9% 50.5% 38.3%
Yield [3] 6.3% 5.3% 4.1% 3.8% 4.9% 3.4% 3.7% 2.7% 2.7% 2.9% 2.6%
Preferred Stock Dividend (Millions) 9.143 13.033 17.246 17.212 17.119 8.644 0.112 0.106 0.100 0.089 0.078
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a
Fitch AA AA- AA- AA- AA- AA- A+ A+ A+
Moody's A2 A2 A1 A2 A2 A2 A2 A2 A3
Standard and Poors A+ A+ A+ A A A A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A+ A+ A+ A A A
Lincoln Life - Fitch AAA AAA AAA AA+ AA+ AA+ AA+ AA+ AA
Lincoln Life - Moody's A1 A1 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A A+ A+ A+ A+ A+ A A A
First Penn - Moody's A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA
LLA of New York - Moody's A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 25.7% 21.1% 19.9% 22.8% 18.8% 17.0% 21.2% 23.2% 20.8%
Debt to Equity [4] 34.7% 26.7% 24.9% 29.5% 23.1% 20.5% 26.9% 30.3% 26.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Common Stock:
Highest Price 43.250 47.063 49.438 43.344 50.250 53.438 57.500 48.313 41.375 40.063 56.375 50.938
Lowest Price 36.125 41.844 41.125 33.500 39.281 45.688 36.000 36.500 22.625 29.000 35.625 40.875
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Closing Price 42.625 45.688 41.125 40.906 49.438 52.313 37.563 40.000 33.500 36.125 48.125 47.313
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Yield [3] 2.4% 2.3% 2.5% 2.7% 2.2% 2.1% 2.9% 2.9% 3.5% 3.2% 2.4% 2.6%
Preferred Stock Dividend 0.026 0.026 0.026 0.023 0.024 0.024 0.027 0.014 0.022 0.022 0.021 0.013
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a a
Fitch AA- AA- A+ A+ A+ A+ A+ A+ A+ A+ A+ A+
Moody's A2 A2 A2 A2 A2 A2 A2 A2 A2 A2 A2 A3
Standard and Poors A A- A- A- A- A- A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A A A A A A A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A+ A+ A A A A A A A A A
First Penn - Moody's A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A+ A A A A A A A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA
LLA of New York - Moody's A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1
LLA of New York -
Standard & Poors* AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total
Capitalization [4] 22.0% 20.5% 21.9% 21.2% 20.7% 22.0% 22.0% 23.2% 23.3% 21.8% 21.2% 20.8%
Debt to Equity [4] 28.2% 25.8% 28.1% 26.9% 26.2% 28.2% 28.3% 30.3% 30.4% 28.0% 27.0% 26.3%
- ---------------------------------------------------------------------------------------------------------------------------------
* Rating based on affiliation with Lincoln Life
[1] Stock prices shown above include 2-for-1 splits in June 1993,
and June 1999
[2] Indicated dividend divided by net income
[3] Indicated dividend divided by the closing price
[4] Equity used in calculation assumes securities at cost. Minority
interest-preferred securities of subsidiary companies (hybrid
securities) are considered 50% debt and 50% equity.
Return on Equity/Return on Capital:
In order to accommodate the various perspectives, LNC presents
three separate Return on Equity numbers on pages 2 and 3 of this
Statistical Report. "Net Income Divided by Average
Shareholders' Equity" tends to fluctuate from period to period
due to the realization of gains on the sale of investments or
subsidiaries during one period and the planned generation of
losses in another period for purposes of recovering Federal
Taxes previously paid. "Income from Operations Divided by
Average Shareholders' Equity" is less volatile but leaves out an
important element of earnings for a company that has a long-term
goal of enhancing shareholder value by realizing investment
gains. "Adjusted Income from Operations Divided by Adjusted
Shareholders' Equity" amortizes: 1) realized security gains on
investments 2) unrealized gains on equity securities over
approximately five years and eliminates amortization of goodwill
related to acquisitions.
Return on capital measures the effectiveness of LNC's use of its
total capital, which is made up of equity, debt and hybrid
securities. Return on capital is calculated by dividing income
from operations (after adding back after-tax interest expense)
by average capital. The difference between return on capital and
return on equity presents the effect of leveraging on LNC's
consolidated results.
Restated Income from Operations by Segment
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996 1997 1998 1999 2000
------- ------- ------- ------- -------
Income From Operations
Annuities Segment - Before Restatement 155.8 200.7 243.8 285.8 344.9
Change in Asset Management Fees (8.6) (8.2) (12.9) (11.6) (10.2)
Distribution to LFD (0.2) 0.3 (0.2) 2.8 2.3
First Penn Annuities 27.6 30.2 31.7 22.4 24.9
------- ------- ------- ------- -------
Annuities Segment - Restated 174.6 223.0 262.4 299.4 362.0
------- ------- ------- ------- -------
Life Segment - Before Restatement 69.7 67.7 180.4 236.6 285.9
Change in Asset Management Fees (0.7) (0.8) (2.8) (6.0) (5.7)
Distribution to LFD (0.2) 3.1 3.4 3.9 4.7
First Penn Annuities (27.6) (30.2) (31.7) (22.4) (24.9)
------- ------- ------- ------- -------
Life Segment - Restated 41.2 39.9 149.2 212.0 259.9
------- ------- ------- ------- -------
Reinsurance Segment - Before Restatement 76.5 (148.4) 107.3 43.5 124.9
Change in Asset Management Fees (1.7) (1.7) (2.4) (2.9) (2.5)
------- ------- ------- ------- -------
Reinsurance - Restated 74.8 (150.1) 104.9 40.6 122.4
------- ------- ------- ------- -------
Inv Mgmt Segment - Before Restatement 2.8 (0.3) 20.7 32.9 14.0
Change in Asset Management Fees 11.5 11.0 18.1 21.4 19.2
Change in Asset Management Fees (401k) (0.4) (0.4) 0.1 (0.7) (0.6)
Distribution to LFD 4.7 7.8 5.0 7.3 11.5
------- ------- ------- ------- -------
Investment Management - Restated 18.6 18.1 43.9 61.0 44.1
------- ------- ------- ------- -------
Corp & Other Segment - Before Restatement (72.1) (62.1) (92.6) (109.5) (111.7)
Total Lincoln Financial Distributors (see below) (4.3) (11.2) (8.2) (14.0) (18.5)
Change in Asset Management Fees (0.1) 0.1 (0.1) (0.2) (0.2)
------- ------- ------- ------- -------
Total Corporate & Other - Restated (76.5) (73.2) (100.9) (123.7) (130.4)
------- ------- ------- ------- -------
Lincoln UK (Not affected by restatements) 66.0 (108.3) 70.9 (13.9) 61.0
Discontinued Oper. (Not affected by restatements) 135.3 110.1
------- ------- ------- ------- -------
Total Consolidated 434.1 59.4 530.4 475.5 719.1
======= ======= ======= ======= =======
Lincoln Financial Distributors
Annuities Segment 0.2 (0.3) 0.2 (2.8) (2.3)
Life Segment 0.2 (3.1) (3.4) (3.9) (4.7)
Investment Management (4.7) (7.8) (5.0) (7.3) (11.5)
------- ------- ------- ------- -------
Total Lincoln Financial Distributors (4.3) (11.2) (8.2) (14.0) (18.5)
======= ======= ======= ======= =======
Change in Asset Mgmt Fees
Annuities (8.6) (8.2) (12.9) (11.6) (10.2)
Lincoln Life (0.7) (0.8) (2.8) (6.0) (5.7)
Reinsurance (1.7) (1.7) (2.4) (2.9) (2.5)
Investment Management (401k) (0.4) (0.4) 0.1 (0.7) (0.6)
Other (0.1) 0.1 (0.1) (0.2) (0.2)
------- ------- ------- ------- -------
Total Change in Asset Mgmt Fees (11.5) (11.0) (18.1) (21.4) (19.2)
======= ======= ======= ======= =======
Restated Income from Operations by Segment
Unaudited [Millions of Dollars]
Mar Jun Sep Dec Mar Jun
For the Quarter Ended 1998 1998 1998 1998 1999 1999
------ ------ ------ ------ ------ ------
Income From Operations
Annuities Segment - Before Restatement 61.4 63.7 59.7 59.0 71.1 72.4
Change in Asset Management Fees (4.0) (3.0) (2.7) (3.2) (3.2) (2.9)
Distribution to LFD (0.0) (0.0) (0.0) (0.0) 0.7 0.7
First Penn Annuities 7.1 8.7 8.5 7.4 5.9 5.8
------ ------ ------ ------ ------ ------
Annuities Segment - Restated 64.5 69.3 65.5 63.2 74.4 75.9
------ ------ ------ ------ ------ ------
Life Segment - Before Restatement 32.2 44.3 44.5 59.3 54.5 58.8
Change in Asset Management Fees (0.7) (0.6) (0.7) (0.8) (1.6) (1.5)
Distribution to LFD 0.9 0.8 0.8 0.8 1.1 2.9
First Penn Annuities (7.1) (8.7) (8.5) (7.4) (5.9) (5.8)
------ ------ ------ ------ ------ ------
Life Segment - Restated 25.3 35.9 36.2 51.9 48.1 54.4
------ ------ ------ ------ ------ ------
Reinsurance Segment - Before Restatement 27.7 24.1 29.6 26.0 34.6 24.4
Change in Asset Management Fees (0.6) (0.6) (0.5) (0.7) (0.8) (0.8)
------ ------ ------ ------ ------ ------
Reinsurance - Restated 27.0 23.5 29.1 25.3 33.8 23.7
------ ------ ------ ------ ------ ------
Inv Mgmt Segment - Before Restatement 3.3 5.5 2.8 9.0 8.4 7.5
Change in Asset Management Fees 4.6 4.4 4.1 4.9 5.9 5.4
Change in Asset Management Fees (401k) 0.7 (0.2) (0.2) (0.2) (0.2) (0.2)
Distribution to LFD 1.6 1.9 0.6 0.9 1.2 1.6
------ ------ ------ ------ ------ ------
Investment Management - Restated 10.2 11.7 7.4 14.6 15.4 14.3
------ ------ ------ ------ ------ ------
Corp & Other Segment - Before Restatement (13.6) (22.7) (23.7) (32.7) (31.0) (30.3)
Total Lincoln Financial Distributors (see below) (2.4) (2.7) (1.4) (1.6) (3.0) (5.3)
Change in Asset Management Fees (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)
------ ------ ------ ------ ------ ------
Total Corporate & Other - Restated (16.0) (25.4) (25.1) (34.3) (34.0) (35.6)
------ ------ ------ ------ ------ ------
Lincoln UK (Not affected by restatements 17.2 17.2 17.7 18.8 18.1 19.0
------ ------ ------ ------ ------ ------
Total Consolidated 128.1 132.2 130.7 139.4 155.7 151.8
====== ====== ====== ====== ====== ======
Lincoln Financial Distributors
Annuities Segment 0.0 0.0 0.0 0.0 (0.7) (0.7)
Life Segment (0.9) (0.8) (0.8) (0.8) (1.1) (2.9)
Investment Management (1.6) (1.9) (0.6) (0.9) (1.2) (1.6)
------ ------ ------ ------ ------ ------
Total Lincoln Financial Distributors (2.4) (2.7) (1.4) (1.6) (3.0) (5.3)
====== ====== ====== ====== ====== ======
Change in Asset Mgmt Fees
Annuities (4.0) (3.0) (2.7) (3.2) (3.2) (2.9)
Lincoln Life (0.7) (0.6) (0.7) (0.8) (1.6) (1.5)
Reinsurance (0.6) (0.6) (0.5) (0.7) (0.8) (0.8)
Investment Management (401k) 0.7 (0.2) (0.2) (0.2) (0.2) (0.2)
Other (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)
------ ------ ------ ------ ------ ------
Total Change in Asset Mgmt Fees (4.6) (4.4) (4.1) (4.9) (5.9) (5.4)
====== ====== ====== ====== ====== ======
Restated Income from Operations by Segment (continued)
Unaudited [Millions of Dollars]
Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1999 1999 2000 2000 2000 2000
------ ------ ------ ------ ------ ------
Income From Operations
Annuities Segment - Before Restatement 71.1 71.3 85.0 80.4 98.5 81.1
Change in Asset Management Fees (2.7) (2.7) (2.9) (2.9) (2.3) (2.1)
Distribution to LFD 0.7 0.7 0.6 0.6 0.6 0.6
First Penn Annuities 6.4 4.4 5.8 6.1 6.1 6.9
------ ------ ------ ------ ------ ------
Annuities Segment - Restated 75.4 73.7 88.5 84.1 102.9 86.4
------ ------ ------ ------ ------ ------
Life Segment - Before Restatement 60.6 62.6 67.1 69.0 72.2 77.6
Change in Asset Management Fees (1.4) (1.4) (1.5) (1.6) (1.3) (1.3)
Distribution to LFD (0.3) 0.2 0.6 1.2 1.7 1.2
First Penn Annuities (6.4) (4.4) (5.8) (6.1) (6.1) (6.9)
------ ------ ------ ------ ------ ------
Life Segment - Restated 52.6 57.0 60.4 62.4 66.5 70.6
------ ------ ------ ------ ------ ------
Reinsurance Segment - Before Restatement 3.3 (18.8) 32.8 26.4 28.7 37.1
Change in Asset Management Fees (0.7) (0.6) (0.7) (0.7) (0.6) (0.6)
------ ------ ------ ------ ------ ------
Reinsurance - Restated 2.6 (19.5) 32.1 25.7 28.1 36.5
------ ------ ------ ------ ------ ------
Inv Mgmt Segment - Before Restatement 8.1 8.9 5.3 4.4 3.0 1.4
Change in Asset Management Fees 5.1 5.0 5.2 5.4 4.4 4.1
Change in Asset Management Fees (401k) (0.1) (0.2) (0.2) (0.2) (0.1) (0.1)
Distribution to LFD 1.7 2.8 2.1 3.5 2.7 3.3
------ ------ ------ ------ ------ ------
Investment Management - Restated 14.7 16.5 12.4 13.1 9.9 8.7
------ ------ ------ ------ ------ ------
Corp & Other Segment - Before Restatement (27.9) (20.3) (35.2) (26.4) (22.2) (27.9)
Total Lincoln Financial Distributors (see below) (2.1) (3.7) (3.3) (5.2) (5.0) (5.1)
Change in Asset Management Fees (0.1) (0.1) (0.0) (0.1) (0.0) (0.0)
------ ------ ------ ------ ------ ------
Total Corporate & Other - Restated (30.1) (24.0) (38.5) (31.6) (27.2) (33.0)
------ ------ ------ ------ ------ ------
Lincoln UK (Not affected by restatements 16.2 (67.1) 15.7 19.3 10.6 15.5
------ ------ ------ ------ ------ ------
Total Consolidated 131.4 36.6 170.6 173.0 190.7 184.7
====== ====== ====== ====== ====== ======
Lincoln Financial Distributors
Annuities Segment (0.7) (0.7) (0.6) (0.6) (0.6) (0.6)
Life Segment 0.3 (0.2) (0.6) (1.2) (1.7) (1.2)
Investment Management (1.7) (2.8) (2.1) (3.5) (2.7) (3.3)
------ ------ ------ ------ ------ ------
Total Lincoln Financial Distributors (2.1) (3.7) (3.3) (5.2) (5.0) (5.1)
====== ====== ====== ====== ====== ======
Change in Asset Mgmt Fees
Annuities (2.7) (2.7) (2.9) (2.9) (2.3) (2.1)
Lincoln Life (1.4) (1.4) (1.5) (1.6) (1.3) (1.3)
Reinsurance (0.7) (0.6) (0.7) (0.7) (0.6) (0.6)
Investment Management (401k) (0.1) (0.2) (0.2) (0.2) (0.1) (0.1)
Other (0.1) (0.1) (0.0) (0.1) (0.0) (0.0)
------ ------ ------ ------ ------ ------
Total Change in Asset Mgmt Fees (5.1) (5.0) (5.2) (5.4) (4.4) (4.1)
====== ====== ====== ====== ====== ======