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: March 31, 2001
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 quarter ended March 31, 2001.
3/31/2001 PAGE 1
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended March 31
2001 2000
Amount Amount Change % Change
Income from Operations
Annuities 82.3 88.5 (6.2) (7.0%)
Life Insurance 68.6 60.4 8.2 13.6%
Reinsurance 46.8 32.1 14.7 45.8%
Investment Management 2.4 12.4 (10.0) (80.6%)
Lincoln UK 14.4 15.7 (1.3) (8.3%)
Corporate & Other (35.9) (38.5) 2.6 (6.8%)
------ ------ ------ ------
Total Income from Operations 178.6 170.6 8.0 4.7%
Realized gains (losses) on investments (13.4) (0.4) (13.0)
Gains (losses) on derivatives (0.1) 0.0 (0.1)
Restructuring charges (0.7) 0.0 (0.7)
------ ------ ------ ------
Net Income Before Accounting Change 164.5 170.2 (5.8) (3.5%)
Cumulative effect of accounting change* (4.3) 0.0 (19.6)
------ ------ ------ ------
Net Income 160.2 170.2 (10.0) (5.9%)
====== ====== ====== ======
Earnings per share (diluted)
Income from Operations $0.92 $0.87 $0.05 5.7%
Realized gain (losses) on investments ($0.07) $0.00 ($0.07)
Gains (losses) on derivatives $0.00 $0.00 $0.00
Restructuring charges $0.00 $0.00 $0.00
------ ------ ------ ------
Net Income Before Accounting Change $0.85 $0.87 ($0.02)
Cumulative effect of accounting change* ($0.02) $0.00 ($0.02)
------ ------ ------ ------
Net Income $0.83 $0.87 ($0.04) (4.6%)
====== ====== ====== ======
Inc. from Oper.- Before Goodwill Amort.
Annuities 82.6 87.0 (4.4) (5.1%)
Life Insurance 74.5 66.3 8.2 12.4%
Reinsurance 47.2 32.5 14.7 45.2%
Investment Management 6.5 16.5 (10.0) (60.6%)
Lincoln UK 14.5 17.1 (2.6) (15.2%)
Corporate & Other (35.9) (38.5) 2.6 (6.8%)
------ ------ ------ ------
Total 189.4 180.9 8.5 4.7%
====== ====== ====== ======
Earnings per share (diluted)
Inc. from Oper.- Before Goodwill Amort. $0.98 $0.92 $0.06 6.5%
Operating Revenue
Annuities 512.8 544.6 (31.8) (5.8%)
Life Insurance 467.9 445.5 22.4 5.0%
Reinsurance 514.8 392.6 122.1 31.1%
Investment Management 113.0 126.0 (13.0) (10.3%)
Lincoln UK 84.4 113.2 (28.8) (25.5%)
Corporate & Other 26.7 48.3 (21.6) (44.7%)
------ ------ ------ ------
Total Operating Revenue 1719.5 1670.2 49.3 2.9%
====== ====== ====== ======
Revenue (Including Investment Gains/Losses)
Annuities 510.4 548.7 (38.3) (7.0%)
Life Insurance 459.6 441.7 18.0 4.1%
Reinsurance 507.7 394.5 113.2 28.7%
Investment Management 112.3 125.8 (13.5) (10.8%)
Lincoln UK 84.9 112.8 (27.9) (24.7%)
Corporate & Other 23.8 45.6 (21.8) (47.7%)
------ ------ ------ ------
Total Revenue 1698.8 1669.2 29.6 1.8%
====== ====== ====== ======
Operational Data by Segment: (Billions)
Annuities Segment
Annuity Gross Deposits 1.447 1.386 0.061 4.4%
Annuity Net Cash Flows (0.590) (0.700) 0.110
Annuity Account Values 50.217 60.892 (10.675) (17.5%)
Life Insurance Segment
Life Insurance First Year Premium 0.129 0.144 (0.015) (10.4%)
Life Insurance In-force 219.214 201.674 17.540 8.7%
Life Insurance Account Values 10.764 10.470 0.294 2.8%
Reinsurance Segment
Individual Life In-force Sales 30.9 30.0 0.9 3.0%
Reinsurance Life In-force 453.4 358.4 95.0 26.5%
Investment Management Segment
Retail Deposits 1.124 1.367 (0.243) (17.8%)
Retail Net Cash Flows (0.047) (0.886) 0.839
Institutional In-flows 1.191 1.084 0.107 9.9%
Institutional Net Cash Flows (0.418) (2.611) 2.193
Assets Under Management - Retail/Institutional 47.765 58.241 (10.476) (18.0%)
Assets Under Management - Insurance Assets 36.324 35.541 0.783 2.2%
Assets Under Management - Total Segment 84.089 93.782 (9.693) (10.3%)
Consolidated
Consolidated Retail Deposits 2.847 3.233 (0.386) (11.9%)
Consolidated Retail Account Balances 84.258 100.517 (16.259) (16.2%)
Total Assets Under Management 124.170 141.342 (17.172) (12.1%)
* The cumulative effect of accounting change relates
to the adjustment recorded upon adoption of FAS No. 133,
"Accounting for Derviative Instruments and Hedging Activities".
3/31/2001 PAGE 2
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended March 31
2001 2000
Amount Amount Change % Change
Consolidated Operational Data: (Billions)
Balance Sheet Assets - End of Period 94,122.4 10,6340.0 (12,216.8) (11.5%)
Shareholders' Equity
Beg of Period (Securities at Market) 4954.1 4263.9 690.2
End of Period (Securities at Market) 5096.4 4340.4 756.8
End of Period (Securities at Cost) 4882.7 4751.6 131.1
Average Equity (Securities at Cost) 4953.7 4791.5 171.2
Return on Equity
Inc from Operations/Average Equity 14.4% 14.2% 0.2%
Net Income/Average Equity 12.9% 14.2% (1.3%)
Return on Capital
Inc from Operations/Average Capital 11.9% 11.5% 0.4%
Common Stock Outstanding
Average for the Period - Diluted 193.7 195.8 (2.1) (1.1%)
End of Period - Assuming Conv of Pref. 188.1 193.3 (5.2) (2.7%)
End of Period - Diluted 191.3 195.1 (3.8) (1.9%)
Book Value (Securities at Market) $27.09 $22.45 4.65 20.7%
Book Value (Securities at Cost) $25.96 $24.58 1.38 5.6%
Cash Returned to Shareholders
Share Repurchase - dollar amount 151.8 80.0 71.8
Dividends Declared to Shareholders 57.9 55.4 2.5
------ ------ ------
Total Cash Returned to Shareholders 209.7 135.4 74.3
====== ====== ======
Share Repurchase - number of shares 3.550 2.796 0.754
Dividend Declared on Common Stock - per share $0.305 $0.290 $0.015 5.2%
Comprehensive Income
Net Income 160.2 170.2
Foreign Currency Translation (17.8) (7.2)
Net Unrealized Gains (Losses) on Securities 178.4 54.5
Gains (Losses) on Derivatives 23.3
Cumulative Effect of Accounting Change
------ ------
Comprehensive Income $344.1 $217.5
====== ======
3/31/01 PAGE 3
Financial Highlights
Unaudited [Amounts in Millions]
For the Quarter Ended March 31
2001 2000
Amount Amount Change % Change
Consolidated Condensed Statements of Income
Revenue:
Insurance Premiums and Fees 913.4 797.9 115.5 14.5%
Investment Advisory Fees 49.4 54.0 (4.5) (8.4%)
Net Investment Income 673.7 711.1 (37.4) (5.3%)
Realized Gains (Losses) on Investments (20.5) (1.0) (19.6)
Gains (Losses) on Derivatives (0.2) --
Other 82.9 107.2 (24.3) (22.7%)
------ ------ ------ ------
Total Revenue 1698.8 1669.2 29.6 1.8%
Benefits and Expenses:
Benefits 906.7 866.0 40.7 4.7%
Underwriting, Acquisition,
Insurance and Other Expenses 571.1 572.2 (1.2) (0.2%)
------ ------ ------ ------
Total Benefits and Expenses 1477.7 1438.2 39.5 2.7%
------ ------ ------ ------
Net Income
before Federal Taxes 221.1 231.0 (9.9)
Federal Income Taxes 56.6 61.0 (4.4)
------ ------ ------ ------
Net Income Before Accounting Change
and Minority Interest 164.5 170.0 (5.5)
Cumulative Effect of Accounting Change (4.3) -- (4.3)
Minority Interest 0.0 (0.2) 0.2
------ ------ ------ ------
Net Income 160.2 170.2 (10.0) (5.9%)
====== ====== ====== ======
Net Income Before Tax and Cumulative Effect
of Accounting Change By Segment
Annuities 95.3 115.9 (20.6)
Life Insurance 99.2 91.4 7.8
Reinsurance 63.4 46.2 17.2
Investment Management 3.5 19.2 (15.7)
Lincoln UK 19.6 20.0 (0.4)
Corporate and Other (59.9) (61.8) 1.9
------ ------ ------
Net Income Before Tax and
Cumulative Effect of Accounting Change 221.1 231.0 (9.9)
Pre-Tax Realized Gains (Losses) by Segment*
Annuities (2.4) 4.2 (6.6)
Life Insurance (8.2) (3.8) (4.4)
Reinsurance (7.1) 1.9 (9.0)
Investment Management (0.7) (0.2) (0.5)
Lincoln UK 0.6 (0.4) 1.0
Corporate and Other (2.9) (2.7) (0.2)
------ ------ ------
Pre-Tax Realized Gains (Losses)
on Investments and Derivatives (20.6) (1.0) (19.6)
After-Tax Realized Gains (Losses) by Segment*
Annuities (1.5) 2.7 (4.2)
Life Insurance (5.4) (2.4) (3.0)
Reinsurance (4.6) 1.2 (5.8)
Investment Management (0.5) (0.1) (0.4)
Lincoln UK 0.4 (0.2) 0.6
Corporate and Other (1.9) (1.6) (0.3)
------ ------ ------
After-Tax Realized Gains (Losses)
on Investments and Derivatives (13.4) (0.4) (13.0)
* Includes both realized gains (losses) on investments and gains (losses) on derivatives.
3/31/01 PAGE 4
Financial Highlights
Unaudited [Amounts in Millions, except Retail Account Balances and Assets Managed]
As of
-----------------------------------------------------------
March December
2001 2000
Amount Amount Change % Change
-----------------------------------------------------------
Consolidated Condensed Balance Sheets
Assets:
Investments:
Securities Available for Sale:
Fixed Maturities 27,811.3 27,449.8 361.5 1.3%
Equities 559.6 549.7 9.9 1.8%
Mortgage Loans on Real Estate 4,641.2 4,663.0 (21.8) (0.5%)
Real Estate 308.1 282.0 26.1 9.3%
Policy Loans 1,947.0 1,960.9 (13.9) (0.7%)
Other Long-Term Investments 477.4 463.3 14.1 3.0%
-------- -------- -------- --------
Total Investments 35,744.5 35,368.6 375.8 1.1%
Other Assets:
Assets Held in Separate Accounts 44,506.2 50,579.9 (6,073.7) (12.0%)
Other Assets 13,871.7 13,895.5 (22.9) (0.2%)
-------- -------- -------- --------
Total Assets 94,122.4 99,844.1 (5,720.8) (5.7%)
======== ======== ======== ========
Liabilities and Shareholders' Equity
Liabilities:
Insurance and Investment Contract Liabilities 39,913.1 40,105.2 (192.1) (0.5%)
Liabilities Related to Separate Accounts 44,506.2 50,579.9 (6,073.7) (12.0%)
Other Liabilities 4,606.8 4,204.9 401.9 9.6%
-------- -------- -------- --------
Total Liabilities 89,026.0 94,890.0 (5,863.9) (6.2%)
Shareholders' Equity:
Net Unrealized Gains(Losses) on Securities 213.7 12.0 202.5 1680.7%
Other Shareholders' Equity 4,882.7 4,942.0 (59.4) (1.2%)
-------- -------- -------- --------
Total Shareholders' Equity 5,096.4 4,954.1 143.1 2.9%
-------- -------- -------- --------
Total Liabilities and Shareholders' Equity 94,122.4 99,844.1 (5,720.8) (5.7%)
======== ======== ======== ========
As of March 31
------------------------------------------------------------
($ billions) 2001 2000
Amount Amount Change % Change
------------------------------------------------------------
Retail Account Balances:
Annuities Segment - Fixed Annuities 15.484 16.252 (0.768) (4.7%)
Annuities Segment - Variable Annuities 34.733 44.640 (9.907) (22.2%)
Annuities Segment - Life Insurance 0.147 0.169 (0.022) (13.2%)
Life Insurance Segment - Life Insurance 10.764 10.470 0.294 2.8%
Investment Management - Annuities 11.787 15.531 (3.744) (24.1%)
Investment Management - Mutual Funds 11.091 14.201 (3.110) (21.9%)
Investment Management - Wrap Fee & Other 1.688 1.335 0.353 26.4%
Lincoln UK 5.677 7.031 (1.355) (19.3%)
Consolidating Adjustments (7.114) (9.113) 1.999 (21.9%)
-------- -------- -------- --------
Total Account Values 84.258 100.517 (16.260) (16.2%)
======== ======== ======== ========
Assets Managed by Advisor:
Investment Management Segment 84.089 93.784 (9.694) (10.3%)
Lincoln UK 7.012 8.423 (1.411) (16.8%)
Policy Loans (within business units) 1.947 1.896 0.051 2.7%
Non-LNC Affiliates 31.122 37.239 (6.117) (16.4%)
-------- -------- -------- --------
Total Assets Managed 124.170 141.342 (17.172) (12.1%)
======== ======== ======== ========
3/31/01 PAGE 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 490.3 495.5 491.9 459.1 410.5 290.5
Lincoln UK 438.2 446.6 439.7 427.3 393.2 351.5
Employee Life - Health Benefits
Corporate & Other 201.9 156.0 132.3 57.5 13.8 135.1
------- -------- ------- ------- ------- -------
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 and Derivatives at Market 4954.1 4263.9 5387.9 4982.9 4470.0 4378.1
Securities and Derivatives at Cost 4942.0 4729.6 4835.6 4546.9 4057.1 3679.9
Average Equity (Sec & Deriv 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 & Deriv at Market) $25.92 $21.76 $26.59 $24.63 $21.50 $20.95
Shareholders' Equity (Sec & Deriv 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 32)
Net Income/Average Equity 12.90% 9.60% 10.90% 22.20% 13.30% 13.60%
Inc from Operations/Average Equity 14.90% 9.90% 11.30% 1.40% 11.20% 8.60%
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
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 and Derivatives at Market 3042.1 4072.3 2826.8 2655.8 2279.5 8.1%
Securities and Derivatives at Cost 3353.1 3157.6 2664.1 2445.8 2213.2 8.4%
Average Equity (Sec & Deriv 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 & Deriv at Market) $14.67 $19.69 $15.13 $14.35 $12.95 7.2%
Shareholders' Equity (Sec & Deriv 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 32)
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%
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."
3/31/01 PAGE 6
Quarterly Summary
Unaudited [Millions of Dollars except Per Share Data]
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1998 1998 1998 1999 1999 1999
------ ------ ------ ------ ------ ------
Revenue
Annuities 536.0 493.3 512.9 524.4 533.0 520.5
Life Insurance 311.3 292.8 470.7 424.0 426.3 437.1
Reinsurance 379.6 385.6 456.9 420.3 425.9 404.4
Investment Management 126.0 110.7 127.9 126.8 123.2 118.8
Lincoln UK 124.2 102.8 109.2 119.1 113.1 110.5
Corporate & Other 30.3 32.4 36.3 60.7 56.8 50.8
------ ------ ------ ------ ------ ------
Total Revenue 1507.5 1417.6 1714.0 1675.4 1678.3 1642.1
====== ====== ====== ====== ====== ======
Income from Operations*
Annuities 69.3 65.5 63.2 74.4 75.9 75.4
Life Insurance 35.9 36.2 51.9 48.1 54.4 52.6
Reinsurance 23.5 29.1 25.3 33.8 23.7 2.6
Investment Management 11.7 7.4 14.6 15.4 14.3 14.7
Lincoln UK 17.2 17.7 18.8 18.1 19.0 16.2
Corporate & Other (25.4) (25.1) (34.3) (34.0) (35.6) (30.1)
------ ------ ------ ------ ------ ------
Income from Operations 132.2 130.7 139.4 155.7 151.8 131.4
====== ====== ====== ====== ====== ======
Net Income
Annuities 82.0 56.0 64.9 76.8 76.4 68.4
Life Insurance 40.0 35.2 45.8 46.3 51.5 54.0
Reinsurance 24.6 24.0 23.9 34.5 24.0 (0.3)
Investment Management 12.2 3.6 16.4 3.4 14.0 14.4
Lincoln UK 17.4 17.8 19.2 18.0 20.0 16.4
Corporate & Other (27.5) (23.1) (44.6) (33.9) (37.6) (20.6)
------ ------ ------ ------ ------ ------
Total Net Income 148.7 113.4 125.6 145.1 148.4 132.3
====== ====== ====== ====== ====== ======
OTHER DATA
Assets 88364.6 84606.2 93836.3 95350.3 98261.4 96500.7
Shareholders' Equity
Beg of Period (Sec & Deriv at Market) 5054.2 5150.8 5527.6 5387.9 5107.4 4817.4
End of Period (Sec & Deriv at Market) 5150.8 5527.6 5387.9 5107.4 4817.4 4662.2
End of Period (Sec & Deriv at Cost) 4681.3 4753.9 4835.6 4852.8 4818.5 4766.0
Average Equity (Sec & Deriv at Cost) 4632.0 4718.3 4795.4 4872.5 4834.2 4793.9
Common Shares Outstanding
Average for the Period - Diluted 203.9 203.9 203.3 203.6 201.9 199.0
End of Period - Diluted 204.5 203.9 203.4 203.2 200.9 196.9
Per Share Data (Diluted)
Income from Operations * $0.65 $0.64 $0.69 $0.76 $0.75 $0.66
Net Income $0.73 $0.56 $0.62 $0.71 $0.73 $0.66
Shareholders' Equity
Shareholders' Equity (Sec & Deriv at $25.55 $27.28 $26.59 $25.30 $24.18 $23.76
Market)
Shareholders' Equity (Sec & Deriv at $23.22 $23.47 $23.86 $24.04 $24.18 $24.28
Cost)
Dividends Declared (Com Stk) $0.260 $0.260 $0.275 $0.275 $0.275 $0.275
Return on Equity (see page 32)
Net Income/Average Equity 12.8% 9.6% 10.5% 11.9% 12.3% 11.0%
Inc from Operations/Average Equity 11.4% 11.1% 11.6% 12.8% 12.6% 11.0%
Market Value of Common Stock
Highest Price $47.063 $49.438 $43.344 $50.250 $53.438 $57.500
Lowest Price $41.844 $41.125 $33.500 $39.281 $45.688 $36.000
Closing Price $45.688 $41.125 $40.906 $49.438 $52.313 $37.563
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1999 2000 2000 2000 2000 2001
Revenue
Annuities 538.0 548.7 530.5 532.1 522.3 510.4
Life Insurance 473.1 441.7 444.2 453.2 479.9 459.6
Reinsurance 578.7 394.5 457.3 453.5 463.2 507.7
Investment Management 126.6 125.8 120.7 123.8 120.0 112.3
Lincoln UK 103.8 112.8 108.2 112.8 104.3 84.9
Corporate & Other (12.3) 45.6 31.8 40.7 83.9 23.8
------ ------ ------ ------ ------ ------
Total Revenue 1807.9 1669.2 1692.7 1716.1 1773.5 1698.8
====== ====== ====== ====== ====== ======
Income from Operations*
Annuities 73.7 88.5 84.1 102.9 86.4 82.3
Life Insurance 57.0 60.4 62.4 66.5 70.6 68.6
Reinsurance (19.5) 32.1 25.7 28.1 36.5 46.8
Investment Management 16.5 12.4 13.1 9.9 8.7 2.4
Lincoln UK (67.1) 15.7 19.3 10.6 15.5 14.4
Corporate & Other (24.0) (38.5) (31.6) (27.2) (33.0) (35.9)
------ ------ ------ ------ ------ ------
Income from Operations 36.6 170.6 173.0 190.7 184.7 178.6
====== ====== ====== ====== ====== ======
Net Income
Annuities 69.9 91.2 84.4 93.8 89.2 76.6
Life Insurance 59.7 58.1 58.4 67.4 65.4 62.9
Reinsurance (17.0) 33.3 24.6 25.9 38.6 42.0
Investment Management 19.8 12.3 8.4 9.7 6.6 2.0
Lincoln UK (72.6) 15.5 19.1 (29.9) (17.9) 14.8
Corporate & Other (25.2) (40.1) (31.3) (28.2) (32.9) (38.1)
------ ------ ------ ------ ------ ------
Total Net Income 34.6 170.2 163.6 138.6 148.9 160.2
====== ====== ====== ====== ====== ======
OTHER DATA
Assets 103095.7 106340.0 103847.6 103243.1 99844.1 94,122.4
Shareholders' Equity
Beg of Period (Sec & Deriv at Market) 4662.2 4263.9 4340.4 4223.7 4538.6 4954.1
End of Period (Sec & Deriv at Market) 4263.9 4340.4 4223.7 4538.6 4954.1 5096.4
End of Period (Sec & Deriv at Cost) 4729.6 4751.6 4780.3 4876.3 4942.0 4882.7
Average Equity (Sec & Deriv at Cost) 4774.2 4791.5 4753.0 4867.2 4915.7 4953.7
Common Shares Outstanding
Average for the Period - Diluted 197.1 195.8 194.0 195.6 195.6 193.7
End of Period - Diluted 197.0 195.1 193.7 196.2 195.2 191.3
Per Share Data (Diluted)
Income from Operations * $0.19 $0.87 $0.89 $0.98 $0.94 $0.92
Net Income $0.18 $0.87 $0.84 $0.71 $0.76 $0.83
Shareholders' Equity
Shareholders' Equity (Sec & Deriv at $21.76 $22.45 $22.10 $23.67 $25.92 $27.09
Market)
Shareholders' Equity (Sec & Deriv at $24.14 $24.58 $25.01 $25.43 $25.85 $25.96
Cost)
Dividends Declared (Com Stk) $0.290 $0.290 $0.290 $0.290 $0.305 $0.305
Return on Equity (see page 32)
Net Income/Average Equity 2.9% 14.2% 13.8% 11.4% 12.1% 12.9%
Inc from Operations/Average Equity 3.1% 14.2% 14.6% 15.7% 15.0% 14.4%
Market Value of Common Stock
Highest Price $48.313 $41.375 $40.063 $56.375 $50.938 $48.250
Lowest Price $36.500 $22.625 $29.000 $35.625 $40.875 $38.000
Closing Price $40.000 $33.500 $36.125 $48.125 $47.313 $42.470
* "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."
3/31/2001 PAGE 7
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
Investment
For the Quarter Ended March 31 Annuities Life Insurance Reinsurance Management
----------------------------------------------------------------------------
Mar Mar Mar Mar Mar Mar Mar Mar
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 19.1 13.3 50.9 52.9 320.0 227.4
Surrender charges 9.1 11.1 17.2 16.2 0.9 0.6
Mortality assessments 124.3 112.2 0.0 0.0
Expense assessments 141.6 155.1 47.4 45.3 (0.0) (0.0)
Health premiums 0.0 0.0 104.2 57.0
Investment advisory fees 72.6 81.0
Other revenue and fees 1.7 2.2 5.1 3.2 11.6 16.3 26.3 31.9
Net investment income 341.3 362.9 223.0 215.6 77.2 90.4 14.1 13.0
Earnings in Unconsolidated Affiliates 0.9 1.0
-------- -------- -------- -------- -------- -------- -------- --------
Operating Revenue 512.8 544.6 467.9 445.5 514.8 392.6 113.0 126.0
-------- -------- -------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 69.8 61.6 99.9 98.3 229.4 165.4
Div accum & div to policyholders 17.5 20.4 1.4 1.3
Interest credited to policy bal. 209.4 228.2 138.3 126.3 9.1 9.0
Health policy benefits 0.0 0.0 97.5 110.0
Underwriting, acquisition,
insurance and other expenses 134.6 144.5 98.8 99.4 103.7 59.8 104.7 102.5
Goodwill amortization 0.3 (1.5) 5.9 5.9 0.4 0.4 4.1 4.1
Interest 2.8 2.3
-------- -------- -------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 414.1 432.8 360.5 350.3 444.3 348.3 108.8 106.6
-------- -------- -------- -------- -------- -------- -------- --------
Income from Operations Before Tax 98.7 111.8 107.4 95.2 70.4 44.4 4.2 19.4
Federal income taxes 16.3 23.3 38.8 34.8 23.6 12.2 1.8 7.0
-------- -------- -------- -------- -------- -------- -------- --------
Income from Operations 82.3 88.5 68.6 60.4 46.8 32.1 2.4 12.4
-------- -------- -------- -------- -------- -------- -------- --------
Restructuring charges (0.7)
Realized gains (losses) on investments (1.4) 2.7 (5.4) (2.4) (4.6) 1.2 (0.5) (0.1)
Gains (losses) on derivatives (0.1) (0.0) 0.0
-------- -------- -------- -------- -------- -------- -------- --------
Net Inc Before Accounting Change 80.2 91.2 63.2 58.1 42.2 33.3 2.0 12.3
Cumulative effect of accounting change (3.6) (0.2) (0.1)
-------- -------- -------- -------- -------- -------- -------- --------
Net Income 76.6 91.2 62.9 58.1 42.0 33.3 2.0 12.3
======== ======== ======== ======== ======== ======== ======== ========
Inc. from Oper.-Before Goodwill Amort. 82.6 87.0 74.5 66.3 47.2 32.5 6.5 16.5
-------- -------- -------- -------- -------- -------- -------- --------
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
----------------------------------------------------------------------------
Mar Mar Mar Mar Mar Mar Mar Mar
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 12.1 37.6 402.1 331.2
Surrender charges 0.7 0.8 27.8 28.7
Mortality assessments 9.4 6.3 133.7 118.5
Expense assessments 43.7 46.5 12.2 14.2 244.9 261.1
Health premiums 0.6 1.5 0.0 0.0 104.8 58.4
Investment advisory fees (23.2) (27.1) 49.4 54.0
Other revenue and fees 0.6 2.4 74.6 94.0 (37.9) (44.0) 82.0 106.1
Net investment income 17.9 18.9 23.9 24.2 (23.7) (14.0) 673.7 711.1
Earnings in Unconsolidated Affiliates 0.9 1.0
-------- -------- -------- -------- -------- -------- -------- --------
Operating Revenue 84.4 113.2 98.5 118.3 (71.8) (70.0) 1719.5 1670.2
-------- -------- -------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 19.8 30.8 418.9 356.1
Div accum & div to policyholders 18.9 21.7
Interest credited to policy bal. 10.2 10.5 367.1 373.9
Health policy benefits 4.3 4.3 0.1 (0.0) 101.8 114.3
Underwriting, acquisition,
insurance and other expenses 41.1 56.4 104.4 121.4 (62.6) (58.4) 524.8 525.7
Goodwill amortization 0.2 1.3 (0.0) 10.9 10.2
Interest 55.3 56.1 (23.7) (22.0) 34.4 36.3
-------- -------- -------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 65.3 92.8 159.8 177.4 (76.1) (70.0) 1476.7 1438.2
-------- -------- -------- -------- -------- -------- -------- --------
Income from Operations Before Tax 19.1 20.4 (61.4) (59.2) 4.3 0.0 242.7 232.0
Federal income taxes 4.7 4.7 (22.4) (20.4) 1.3 64.1 61.6
-------- -------- -------- -------- -------- -------- -------- --------
Income from Operations 14.4 15.7 (38.9) (38.5) 3.0 0.0 178.6 170.6
Restructuring charges (0.7)
Realized gains (losses) on investments 0.4 (0.2) (1.9) (1.6) 0.0 0.0 (13.4) (0.4)
Gains (losses) on derivatives 0.0 (0.1)
-------- -------- -------- -------- -------- -------- -------- --------
Net Inc Before Accounting Change 14.8 15.5 (40.8) (40.2) 3.0 0.0 164.5 170.2
Cumulative effect of accounting change (0.3) (4.3)
-------- -------- -------- -------- -------- -------- -------- --------
Net Income 14.8 15.5 (41.1) (40.2) 3.0 0.0 160.2 170.2
======== ======== ======== ======== ======== ======== ======== ========
-------- -------- -------- -------- -------- -------- -------- --------
Inc. from Oper.-Before Goodwill Amort. 14.5 17.1 (38.9) (38.5) 3.0 0.0 189.5 180.9
-------- -------- -------- -------- -------- -------- -------- --------
3/31/2001 PAGE 8
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
------- ------- ------- ------- -------
Operating 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
------- ------- ------- ------- -------
Operating 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 (losses) 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 Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
Operating Revenue
Life and annuity premiums 201.5 230.8 348.0 284.2 274.0 263.8
Surrender charges 21.3 21.5 26.9 25.5 27.1 28.4
Mortality assessments 93.4 67.7 130.0 137.3 122.2 118.2
Expense assessments 213.8 201.9 198.2 215.3 231.5 245.9
Health premiums 172.5 155.8 164.5 154.9 160.3 149.6
Investment advisory fees 59.0 52.5 57.5 58.8 56.3 54.6
Other revenue and fees 61.1 64.8 76.4 86.4 109.0 77.9
Net investment income 658.7 649.6 714.7 709.5 700.8 697.1
Earnings in Unconsolidated
Affiliates 0.7 (0.2) 1.3 1.6 1.1 1.2
------- ------- ------- ------- ------- -------
Operating Revenue 1482.0 1444.3 1717.6 1673.4 1682.4 1636.7
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 278.6 264.3 440.0 344.6 335.5 294.0
Div accum & div to policyholders 9.8 20.7 27.9 21.5 22.5 21.2
Interest credited to policy bal. 348.5 338.5 380.6 375.1 377.1 369.7
Health policy benefits 158.9 142.6 131.0 145.5 166.6 189.8
Underwriting, acquisition,
insurance and other expenses 459.2 463.1 491.2 522.4 532.1 533.4
Goodwill amortization 11.0 9.2 16.0 11.8 9.9 12.9
Interest 27.7 32.5 33.5 33.1 32.6 33.3
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 1293.8 1271.0 1520.3 1454.1 1476.3 1454.1
------- ------- ------- ------- ------- -------
Income from Operations
Before Tax/Min Int. 188.2 173.4 197.4 219.3 206.1 182.6
Federal income taxes 56.0 42.6 58.0 63.6 54.2 51.2
------- ------- ------- ------- ------- -------
Inc from Operations Before Min Int 132.2 130.7 139.4 155.7 151.8 131.4
------- ------- ------- ------- ------- -------
Minority Interest
------- ------- ------- ------- ------- -------
Income from Operations 132.2 130.7 139.4 155.7 151.8 131.4
------- ------- ------- ------- ------- -------
Restructuring charges (14.3) (12.1) (3.2)
Realized gains (losses) on investments 16.5 (17.3) 0.5 1.5 (3.5) 4.1
Gains (losses) on derivatives
------- ------- ------- ------- ------- -------
Net Inc Before Accounting Change 148.7 113.4 125.6 145.1 148.4 132.3
Cumulative effect of accounting change
------- ------- ------- ------- ------- -------
Net Income 148.7 113.4 125.6 145.1 148.4 132.3
======= ======= ======= ======= ======= =======
For the Quarter Ended (CONTINUED) Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------ ------- ------- ------- ------- -------
Operating Revenue
Life and annuity premiums 361.1 331.2 337.1 339.0 396.1 402.1
Surrender charges 29.2 28.7 29.8 25.9 30.3 27.8
Mortality assessments 118.7 118.5 122.5 125.9 129.6 133.7
Expense assessments 238.3 261.1 258.6 273.4 257.1 244.9
Health premiums 233.6 58.4 144.0 117.9 89.4 104.8
Investment advisory fees 54.1 54.0 52.2 53.3 53.6 49.4
Other revenue and fees 71.2 106.1 88.7 106.0 144.6 82.0
Net investment income 700.1 711.1 673.8 690.0 672.1 673.7
Earnings in Unconsolidated
Affiliates 1.8 1.0 (3.6) 1.6 0.6 0.9
------ ------- ------- ------- ------- -------
Operating Revenue 1808.2 1670.2 1703.0 1733.1 1773.5 1719.5
------ ------- ------- ------- ------- -------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 572.5 356.1 370.1 390.2 430.0 418.9
Div accum & div to policyholders 23.3 21.7 20.2 18.2 27.4 18.9
Interest credited to policy bal. 388.5 373.9 366.8 362.0 371.5 367.1
Health policy benefits 157.8 114.3 119.9 123.0 91.8 101.8
Underwriting, acquisition,
insurance and other expenses 630.5 525.7 537.5 532.4 572.9 524.8
Goodwill amortization 14.6 10.2 12.0 12.0 10.9 10.9
Interest 34.7 36.3 35.4 34.4 33.4 34.4
------ ------- ------- ------- ------- -------
Operating Benefits and Expenses 1821.8 1438.2 1461.9 1472.2 1537.9 1476.7
------ ------- ------- ------- ------- -------
Income from Operations
Before Tax/Min Int. (13.6) 232.0 241.1 260.8 235.6 242.7
Federal income taxes (50.2) 61.6 67.9 70.1 50.9 64.1
------ ------- ------- ------- ------- -------
Inc from Operations Before Min Int 36.6 170.4 173.2 190.7 184.7 178.6
------ ------- ------- ------- ------- -------
Minority Interest (0.2) 0.2 (0.0) 0.0 (0.0)
------ ------- ------- ------- ------- -------
Income from Operations 36.6 170.6 173.0 190.7 184.7 178.6
------ ------- ------- ------- ------- -------
Restructuring charges (3.6) (2.7) (40.5) (37.0) (0.7)
Realized gains (losses) on investments 1.6 (0.4) (6.7) (11.6) 1.2 (13.4)
Gains (losses) on derivatives (0.1)
------ ------- ------- ------- ------- -------
Net Inc Before Accounting Change 34.6 170.2 163.6 138.6 148.9 164.5
Cumulative effect of accounting change (4.3)
------ ------- ------- ------- ------- -------
Net Income 34.6 170.2 163.6 138.6 148.9 160.2
====== ======= ======= ======= ======= =======
3/31/2001 PAGE 9
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Investment
Annuities Life Insurance Reinsurance Management
------------------------------------------------------------------------------
ASSETS Mar Dec Mar Dec Mar Dec Mar Dec
2001 2000 2001 2000 2001 2000 2001 2000
-------- -------- -------- --------- --------- --------- --------- ---------
Investments
Corporate bonds 8907.0 8892.4 6873.3 6353.6 2702.3 2554.1 331.7 333.6
U.S. government bonds 13.4 25.8 87.2 86.4 264.2 259.6 0.2 0.2
Foreign government bonds 120.7 135.5 126.2 125.8 62.2 71.1
Asset/Mortgage backed
securities 2167.5 2299.7 789.2 829.3 262.1 261.4 44.4 49.0
State and municipal bonds 6.3 6.3 8.0 7.9 0.3 0.3
Preferred stocks-redeemable 117.2 120.5 20.7 24.6 4.3 4.3 9.7 9.6
Common stocks 13.6 13.6 2.2 2.2
Preferred stocks-equity 48.5 45.8 7.0 9.2 1.1 1.1 2.5 2.4
Mortgage loans 2284.2 2324.0 1757.2 1765.9 370.4 360.9 91.4 95.5
Real estate
Policy loans 506.9 509.9 1430.8 1440.5
Other long-term investments 6.0 5.2 19.3 16.9 21.6 25.0
-------- -------- -------- --------- --------- --------- --------- ---------
Total Investments 14177.8 14365.2 11132.4 10673.8 3690.7 3540.1 480.0 490.4
-------- -------- -------- --------- --------- --------- --------- ---------
Intercompany investments 4457.3 4039.2 1487.9 1598.4 504.7 532.7 244.5 249.1
Invest in unconsol affiliates 7.3 6.4
Cash and invested cash (94.6) (108.8) (55.1) (67.2) 49.3 145.7 73.2 68.6
Property and equipment 7.2 7.0 14.3 13.8 28.0 22.6
Premium and fees receivable 0.0 (1.8) 19.4 45.6 214.9 214.2 39.5 34.4
Accrued investment income 204.3 210.8 186.0 169.5 52.8 51.9 7.8 7.8
Assets held in separate
accounts 34582.0 39322.1 1175.2 1270.1
Federal income tax recoverable
Amount recoverable from
reinsurers 1252.1 1309.5 1008.2 989.1 1608.8 1616.5
Deferred acquisition costs 762.6 812.5 1064.1 1079.3 467.5 459.6
Other intangible assets 164.6 169.2 1017.6 1040.5 12.4 12.8 56.9 60.9
Goodwill 44.9 45.2 872.8 878.7 33.3 33.7 312.9 316.9
Other 168.9 104.1 238.7 254.3 344.4 345.3 191.9 188.6
-------- -------- -------- --------- --------- --------- --------- ---------
Total Assets 55719.9 60267.1 18154.6 17939.1 7000.5 6972.7 1434.8 1439.0
======== ======== ======== ========= ========= ========= ========= =========
- ---------------------------------------------------------------------------------------------------------------
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
------------------------------------------------------------------------------
ASSETS Mar Dec Mar Dec Mar Dec Mar Dec
2001 2000 2001 2000 2001 2000 2001 2000
-------- -------- -------- --------- --------- --------- --------- ---------
Investments
Corporate bonds 463.6 457.6 2577.2 2658.3 21855.2 21249.7
U.S. government bonds 171.6 170.8 536.6 542.9
Foreign government bonds 384.8 444.8 547.0 543.9 1240.8 1321.1
Asset/Mortgage backed
securities 746.6 721.0 4009.8 4160.4
State and municipal bonds 14.7 14.6
Preferred stocks-redeemable 2.2 2.2 154.1 161.2
Common stocks 260.1 265.2 112.8 155.6 388.6 436.6
Preferred stocks-equity 111.7 54.5 170.9 113.1
Mortgage loans 0.3 0.3 137.7 116.3 4641.2 4663.0
Real estate 0.2 0.3 309.2 283.0 (1.3) (1.3) 308.1 282.0
Policy loans 9.2 10.5 1947.0 1960.9
Other long-term investments 1680.6 1666.2 (1250.0) (1250.0) 477.4 463.3
-------- -------- -------- --------- --------- --------- --------- ---------
Total Investments 1118.2 1178.8 6396.6 6371.8 (1251.3) (1251.3) 35744.5 35368.6
-------- -------- -------- --------- --------- --------- --------- ---------
Intercompany investments (1786.5) (1242.7) (4907.9) (5176.7) 0.0 (0.0)
Invest in unconsol affiliates 7.3 6.4
Cash and invested cash 217.0 253.5 1825.3 1833.2 (197.5) 2015.2 1927.4
Property and equipment 47.2 50.8 145.4 134.0 242.1 228.2
Premium and fees receivable 2.1 1.4 6.8 3.0 282.8 296.7
Accrued investment income 22.0 22.8 108.9 83.6 581.9 546.4
Assets held in separate
accounts 5676.8 6440.9 3072.1 3546.7 44506.2 50579.9
Federal income tax recoverable 106.6 207.5 106.6 207.5
Amount recoverable from
reinsurers 33.7 33.0 (196.4) (200.3) 3706.4 3747.7
Deferred acquisition costs 585.1 635.0 3.8 2.9 80.5 81.1 2963.4 3070.5
Other intangible assets 253.8 273.6 1505.3 1557.0
Goodwill 12.2 13.0 (0.0) (1.6) (1.6) 1274.5 1286.0
Other 46.5 (104.9) 587.4 556.5 (391.5) (322.2) 1186.3 1021.6
-------- -------- -------- --------- --------- --------- --------- ---------
Total Assets 7978.7 8763.7 7316.6 7773.6 (3482.7) (3311.2) 94,122.4 99844.1
======== ======== ======== ========= ========= ========= ========= =========
3/31/2001 PAGE 10
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Investment
Annuities Life Insurance Reinsurance Management
------------------------------------------------------------------------------
LIABILITIES and SHAREHOLDERS' EQUITY Mar Dec Mar Dec Mar Dec Mar Dec
2001 2000 2001 2000 2001 2000 2001 2000
-------- -------- -------- --------- --------- --------- --------- ---------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 2593.2 2686.4 12846.6 12783.9 1000.1 944.9
Health reserves 0.1 0.1 2456.2 2442.1
Unpaid claims - life and health 10.1 7.1 101.0 108.1 1098.5 1154.4
Unearned premiums 0.0 0.1 45.7 46.4
Premium deposit funds 16302.5 16331.4 15.0 13.9 725.7 753.2
Participating policyholders' funds 145.0 139.4
Other policyholders' funds 522.4 515.4 9.6 6.8
Liab related to separate accounts 34582.0 39322.1 1175.2 1270.1
Total Insurance and Inv -------- -------- -------- --------- --------- --------- --------- ---------
Contract Liabilities 53487.8 58347.0 14805.4 14830.9 5335.9 5347.8
Federal income taxes (20.4) (108.7) (49.8) (113.7) 62.3 36.2 34.7 28.3
Short-term debt 227.5 224.0 5.5
Long-term debt
Minority Interest in pref.
securities of sub.
Other liabilities 280.8 274.4 626.8 567.9 283.5 262.0 845.3 859.1
-------- -------- -------- --------- --------- --------- --------- ---------
Total Liabilities 53748.2 58512.7 15382.4 15285.2 5909.2 5870.0 885.5 887.4
-------- -------- -------- --------- --------- --------- --------- ---------
Net unrealized gains (losses) on
securities 105.5 (44.7) 23.8 (44.9) 22.7 4.8 2.2 (0.5)
Gains (losses) on derivatives (1.0) (7.3) 0.2
Other shareholders' equity 1864.4 1799.1 2744.8 2698.8 1068.2 1098.0 547.0 552.2
Cumulative effect of accounting change 2.8 10.9 0.1
-------- -------- -------- --------- --------- --------- --------- ---------
Shareholders' Equity 1971.8 1754.4 2772.1 2653.9 1091.3 1102.8 549.2 551.6
-------- -------- -------- --------- --------- --------- --------- ---------
Total Liabilities and S/Hs'
Equity 55719.9 60267.1 18154.6 17939.1 7000.5 6972.7 1434.8 1439.0
======== ======== ======== ========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
------------------------------------------------------------------------------
LIABILITIES and SHAREHOLDERS' EQUITY Mar Dec Mar Dec Mar Dec Mar Dec
2001 2000 2001 2000 2001 2000 2001 2000
-------- -------- -------- --------- --------- --------- --------- ---------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 1395.0 1529.1 0.0 (102.0) (103.2) 17733.0 17841.2
Health reserves 47.1 50.7 31.5 30.9 2534.8 2523.8
Unpaid claims - life and health 45.1 46.6 0.5 0.5 (0.0) 1255.3 1316.6
Unearned premiums 0.1 (0.0) 45.9 46.5
Premium deposit funds 30.3 32.9 593.6 584.0 17667.1 17715.5
Participating policyholders' funds 145.0 139.4
Other policyholders' funds 532.1 522.2
Liab related to separate accounts 5676.8 6440.9 3072.1 3546.7 44506.2 50579.9
-------- -------- -------- --------- --------- --------- --------- ---------
Total Insurance and Inv
Contract Liabilities 7194.3 8100.3 32.1 31.4 3563.7 4027.6 84419.3 90685.1
Federal income taxes 11.7 3.1 (145.1) (51.9) 105.8 206.7
Short-term debt 480.3 525.9 (298.0) (436.9) 415.3 312.9
Long-term debt 1962.3 1962.2 (1250.0) (1250.0) 712.3 712.2
Minority Interest in pref. securities
of sub. 745.0 745.0 745.0 745.0
Other liabilities 164.0 167.4 1227.2 982.6 (693.4) (678.7) 2734.2 2434.7
-------- -------- -------- --------- --------- --------- --------- ---------
Total Liabilities 7370.0 8270.8 4301.8 4195.2 1428.1 1868.7 89026.0 94890.0
-------- -------- -------- --------- --------- --------- --------- ---------
Net unrealized gains (losses) on
securities 43.0 52.6 (0.7) 40.3 2.1 4.5 190.4 12.0
Gains (losses) on derivatives 9.9 5.7
Other shareholders' equity 565.8 440.2 3005.3 3538.1 (4912.9) (5184.4) 4882.5 4942.0
Cumulative effect of accounting change 0.3 17.6
-------- -------- -------- --------- --------- --------- --------- ---------
Shareholders' Equity 608.8 492.8 3014.8 3578.4 (4910.8) (5179.9) 5,096.4 4954.1
-------- -------- -------- --------- --------- --------- --------- ---------
Total Liabilities and S/Hs'
Equity 7978.7 8763.7 7316.6 7773.6 (3482.7) (3311.2) 94,122.4 99844.1
======== ======== ======== ========= ========= ========= ========= =========
3/31/2001 PAGE 11
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
(losses)-cont. op. 276.4 436.0 552.4 (465.7) 12.0
S/Hs' equity-unrealized gains
(losses)-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
3/31/2001 PAGE 12
Quarterly Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
ASSETS
Investments
Corporate bonds 20034.2 20986.1 22505.2 22450.1 21888.5 21560.5
U.S. government bonds 812.3 968.1 1134.6 1489.4 1367.8 991.0
Foreign government bonds 1681.4 1519.2 1321.2 1373.7 1339.7 1369.6
Mortgage backed securities 4908.3 4857.6 5080.5 5068.6 4788.5 4601.2
State and municipal bonds 162.8 62.9 16.7 16.2 19.1 14.8
Preferred stocks - redeemable 188.0 160.0 174.6 179.8 175.8 171.3
Common stocks 567.6 424.4 463.1 399.5 419.0 423.9
Preferred stocks-equity 81.3 80.5 79.8 81.3 86.7 82.7
Mortgage loans 4434.9 4329.3 4393.1 4344.6 4570.5 4772.7
Real estate 499.0 459.6 488.7 471.8 449.8 280.3
Policy loans 1499.6 1517.1 1840.0 1842.4 1847.4 1863.2
Other long-term investments 402.6 399.1 432.0 411.9 409.9 401.2
------- ------- ------- ------- ------- -------
Total Investments 35271.8 35763.9 37929.5 38129.4 37362.6 36532.4
------- ------- ------- ------- ------- -------
Invest in unconsol affiliates 23.1 17.4 18.8 20.5 22.3 23.4
Cash and invested cash 2414.1 2725.4 2433.4 2327.0 2151.1 2342.9
Property and equipment 191.7 200.9 174.8 178.0 180.7 191.9
Premiums and fees receivable 250.8 241.6 246.2 241.8 269.0 296.0
Accrued investment income 508.0 547.2 528.5 585.6 569.1 602.9
Assets held in separate accounts 42247.2 37559.0 43408.9 44339.4 47864.3 46228.8
Federal income taxes recoverable 188.9 204.1 286.0 478.4 457.3
Amount recoverable from reinsurers 2373.5 2454.5 3127.1 3124.5 3121.3 3315.6
Deferred acquisition costs 1749.3 1848.0 1964.4 2112.2 2398.3 2614.5
Other intangible assets 1255.0 1241.8 1848.4 1845.4 1764.9 1760.6
Goodwill 1168.7 1153.1 1484.3 1404.6 1428.3 1435.0
Other 722.5 853.5 468.0 755.8 651.1 699.3
------- ------- ------- ------- ------- -------
Total Assets 88364.6 84606.2 93836.3 95350.3 98261.4 96500.7
======= ======= ======= ======= ======= =======
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 14103.3 12993.8 16434.2 16590.3 16536.4 16760.5
Health reserves 2547.5 2435.4 2600.1 2562.3 2528.2 2511.3
Unpaid claims-life and health 740.4 768.4 1043.4 1022.9 1064.9 1162.6
Unearned premiums 61.3 66.0 62.3 68.8 68.7 62.5
Premium deposit funds 19094.9 20210.3 20171.9 20027.8 20012.6 19988.9
Participating policyholders' fund 74.8 86.3 142.7 132.6 125.7 120.2
Other policyholders' funds 233.8 235.7 438.4 440.4 441.2 445.9
Liab related to separate accounts 42247.2 37559.0 43408.9 44339.4 47864.3 46228.8
------- ------- ------- ------- ------- -------
Total Ins and Inv Contr Liab 79103.1 74355.0 84301.9 85184.6 88642.1 87280.8
------- ------- ------- ------- ------- -------
Federal income taxes 3.0
Short-term debt 277.1 354.4 314.6 281.8 380.2 367.7
Long-term debt 811.8 712.0 712.2 712.1 712.1 712.0
Minority Interest - pref sec of a sub 315.0 745.0 745.0 745.0 745.0 745.0
Other liabilities 2706.8 2909.2 2374.6 3319.3 2964.7 2733.0
------- ------- ------- ------- ------- -------
Total Liabilities 83213.8 79078.6 88448.3 90242.9 93444.1 91838.5
------- ------- ------- ------- ------- -------
S/Hs' equity-unrealized gns (losses)-inv 469.5 773.7 552.4 254.6 (1.1) (103.8)
S/Hs' equity-gains (losses)-derivatives
S/Hs' equity-foreign currency 51.8 59.8 49.9 30.1 20.6 40.2
S/Hs' equity-other 4629.5 4694.1 4785.6 4822.7 4797.9 4725.8
Cumulative effect of accouting change
------- ------- ------- ------- ------- -------
Total Shareholders' Equity 5150.8 5527.6 5387.9 5107.4 4817.4 4662.2
------- ------- ------- ------- ------- -------
Total Liabilities
and Shareholders' Equity 88364.6 84606.2 93836.3 95350.3 98261.4 96500.7
======= ======= ======= ======= ======= =======
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $23.22 $23.47 $23.86 $24.04 $24.18 $24.28
------- ------- ------- ------- ------- -------
Common shares outstanding 201.6 202.6 202.6 201.8 199.3 196.3
3/31/2001
Quarterly Balance Sheet (continued)
Unaudited [Millions of Dollars except Common Share Data]
Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------- -------- ------- ------- ------- -------
ASSETS
Investments
Corporate bonds 21119.5 21188.0 20719.1 21064.7 21249.7 21855.2
U.S. government bonds 538.3 572.4 566.2 575.5 542.9 536.6
Foreign government bonds 1447.5 1416.4 1377.4 1277.7 1321.1 1240.8
Mortgage backed securities 4404.0 4393.4 4242.4 4172.5 4160.4 4009.8
State and municipal bonds 14.7 14.7 14.1 14.3 14.6 14.7
Preferred stocks - redeemable 164.7 159.7 159.2 159.5 161.2 154.1
Common stocks 514.5 496.4 467.8 479.9 436.6 388.6
Preferred stocks-equity 89.5 91.3 92.2 90.3 113.1 170.9
Mortgage loans 4735.4 4833.9 4783.8 4767.3 4663.0 4641.2
Real estate 256.2 283.4 282.1 297.6 282.0 308.1
Policy loans 1892.4 1896.3 1914.7 1935.6 1960.9 1947.0
Other long-term investments 401.8 428.8 438.2 470.5 463.3 477.4
------- ------- ------- ------- ------- -------
Total Investments 35578.4 35774.6 35057.2 35305.4 35368.6 35744.5
------- ------- ------- ------- ------- -------
Invest in unconsol affiliates 25.8 (0.9) 5.8 6.4 7.3
Cash and invested cash 1895.9 1510.1 1619.3 1435.9 1927.4 2015.2
Property and equipment 203.8 207.7 205.5 213.8 228.2 242.1
Premiums and fees receivable 259.6 190.2 247.8 240.8 296.7 282.8
Accrued investment income 533.2 575.0 544.0 569.2 546.4 581.9
Assets held in separate accounts 53654.2 56907.6 54924.2 54410.9 50579.9 44506.2
Federal income taxes recoverable 345.0 300.4 246.1 267.3 207.5 106.6
Amount recoverable from reinsurers 3954.3 3851.0 3775.3 3774.7 3747.7 3706.4
Deferred acquisition costs 2800.3 2870.4 2968.0 3048.0 3070.5 2963.4
Other intangible assets 1746.5 1705.5 1646.7 1598.4 1557.0 1505.3
Goodwill 1423.0 1349.6 1335.4 1296.6 1286.0 1274.5
Other 675.7 1097.8 1279.1 1076.4 1021.6 1186.3
-------- -------- -------- ------- ------- -------
Total Assets 103095.7 106340.0 103847.6 103243.1 99844.1 94,122.4
======== ======== ======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities
Life and annuity reserves 17071.4 17172.1 17247.3 17500.0 17841.2 17733.0
Health reserves 2507.8 2547.4 2494.2 2520.2 2523.8 2534.8
Unpaid claims-life and health 1269.8 1177.3 1204.1 1202.8 1316.6 1255.3
Unearned premiums 75.8 57.1 52.8 51.8 46.5 45.9
Premium deposit funds 19624.1 18899.3 18407.2 18072.1 17715.5 17667.1
Participating policyholders' fund 132.0 130.7 130.4 135.4 139.4 145.0
Other policyholders' funds 472.6 478.9 490.6 500.7 522.2 532.1
Liab related to separate accounts 53654.2 56907.6 54924.2 54410.9 50579.9 44506.2
------- -------- ------- ------- ------- -------
Total Ins and Inv Contr Liab 94807.7 97370.5 94950.8 94394.0 90685.1 84419.3
------- -------- ------- ------- ------- -------
Federal income taxes
Short-term debt 460.2 474.2 355.7 330.3 312.9 415.3
Long-term debt 712.0 712.0 712.1 712.2 712.2 712.3
Minority Interest - pref sec of a sub 745.0 745.0 745.0 745.0 745.0 745.0
Other liabilities 2107.0 2697.9 2860.3 2522.9 2434.7 2734.2
------- -------- ------- ------- ------- -------
Total Liabilities 98831.9 101999.6 99623.9 98704.5 94890.0 89026.0
------- -------- ------- ------- ------- -------
S/Hs' equity-unrealized gns (losses)-inv (465.7) (411.2) (556.6) (337.7) 12.0 190.4
S/Hs' equity-gains (losses)-derivativ 5.7
S/Hs' equity-foreign currency 30.0 22.8 21.8 19.9 21.9 4.1
S/Hs' equity-other 4699.6 4728.9 4758.5 4856.5 4920.1 4878.6
Cumulative effect of accouting change 17.6
------- -------- ------- ------- ------- -------
Total Shareholders' Equity 4263.9 4340.4 4223.7 4538.6 4954.1 5096.4
------- -------- ------- ------- ------- -------
Total Liabilities
and Shareholders' Equity 103095.7 106340.0 103847.6 103243.1 99844.1 94,122.4
======== ======== ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $24.14 $24.58 $25.01 $25.43 $25.85 $25.96
-------- -------- ------- ------- ------- -------
Common shares outstanding 196.0 193.3 191.1 191.8 191.2 188.1
3/31/2001 PAGE 13
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
-------- -------- -------- -------- --------
Operating 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)
-------- -------- -------- -------- --------
Operating 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 gains (losses) on investments 29.6 40.3 11.4 (7.9) (3.4)
Restructuring Charge
-------- -------- -------- -------- --------
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 (losses) on investments 45.6 63.5 17.5 (12.1) (5.2)
Gains(losses) on derivatives 0.0 0.0 0.0 0.0 0.0
-------- -------- -------- -------- --------
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%
3/31/2001
PAGE 14
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 11.9 10.8 16.3 14.9 16.2 13.1
Surrender charges 8.8 8.3 7.6 8.6 9.3 10.1
Expense assessments 119.3 115.6 112.6 119.8 133.3 142.6
Other revenue and fees 0.6 (0.0) 1.2 3.9 3.2 0.9
Net investment income 377.4 373.3 372.5 373.4 370.2 364.5
------- ------- ------- ------- ------- -------
Operating Revenue 518.0 508.0 510.2 520.7 532.3 531.2
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 68.7 67.5 68.9 61.9 65.0 55.0
Interest credited to policy balances 236.8 235.6 233.6 228.2 232.9 230.1
Underwriting, acquisition,
insurance and other expenses 126.5 125.2 128.1 138.5 141.0 146.5
Goodwill amortization (1.7) 0.5 1.1 0.5 0.4 0.6
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 430.3 428.7 431.6 429.1 439.2 432.2
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 87.7 79.3 78.6 91.6 93.0 99.0
------- ------- ------- ------- ------- -------
Federal income taxes 18.4 13.8 15.4 17.2 17.1 23.6
------- ------- ------- ------- ------- -------
Income from Operations 69.3 65.5 63.2 74.4 75.9 75.4
------- ------- ------- ------- ------- -------
Realized gains (losses) on investment 12.7 (9.5) 1.8 2.4 0.5 (7.0)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring charges 0.0 0.0 0.0 0.0 0.0 0.0
Net Inc before Accounting Change 82.0 56.0 64.9 76.8 76.4 68.4
Cumulative effect of accounting Change 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Net Income 82.0 56.0 64.9 76.8 76.4 68.4
======= ======= ======= ======= ======= =======
Inc from Oper-Before
Goodwill Amortization 67.6 66.0 64.3 75.0 76.3 76.0
Effective tax rate 21.0% 17.4% 19.6% 18.8% 18.4% 23.8%
Operating Revenue 518.0 508.0 510.2 520.7 532.3 531.2
Realized gains (losses) on investments 18.0 (14.7) 2.7 3.7 0.7 (10.7)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Total Revenue 536.0 493.3 512.9 524.4 533.0 520.5
======= ======= ======= ======= ======= =======
Average capital 1587.5 1676.0 1521.5 1615.3 1602.4 1471.2
Return on average capital 17.5% 15.6% 16.6% 18.4% 19.0% 20.5%
Annuities Segment
Income Statements & Operational Data (continued)
Unaudited [Millions of Dollars]
Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 21.0 13.3 16.8 18.0 16.2 19.1
Surrender charges 9.8 11.1 11.2 10.4 9.1 9.1
Expense assessments 140.5 155.1 155.7 163.4 154.2 141.6
Other revenue and fees 6.4 2.2 0.6 4.6 3.5 1.7
Net investment income 366.0 362.9 345.8 349.8 335.0 341.3
------- ------- ------- ------- ------- -------
Operating Revenue 543.7 544.6 530.1 546.2 518.1 512.8
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 77.2 61.6 65.7 68.4 59.0 69.8
Interest credited to policy balances 234.1 228.2 219.4 205.4 213.2 209.4
Underwriting, acquisition,
insurance and other expenses 134.7 144.5 139.8 147.9 143.2 134.6
Goodwill amortization 0.5 (1.5) 0.3 0.3 0.3 0.3
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 446.5 432.8 425.2 421.9 415.7 414.1
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 97.2 111.8 104.8 124.2 102.3 98.7
Federal income taxes 23.5 23.3 20.7 21.3 15.9 16.3
Income from Operations 73.7 88.5 84.1 102.9 86.4 82.3
Realized gains (losses) on investment (3.7) 2.7 0.3 (9.1) 2.8 (1.4)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 (0.1)
Restructuring charges 0.0 0.0 0.0 0.0 0.0 (0.7)
Net Inc before Accounting Change 69.9 91.2 84.4 93.8 89.2 80.2
Cumulative effect of accounting Change 0.0 0.0 0.0 0.0 0.0 (3.6)
------- ------- ------- ------- ------- -------
Net Income 69.9 91.2 84.4 93.8 89.2 76.6
======= ======= ======= ======= ======= =======
Inc from Oper-Before
Goodwill Amortization 74.2 87.0 84.4 103.2 86.7 82.6
Effective tax rate 24.2% 20.8% 19.7% 17.1% 15.6% 16.6%
Operating Revenue 543.7 544.6 530.1 546.2 518.1 512.8
Realized gains (losses) on investments (5.8) 4.2 0.4 (14.1) 4.2 (2.2)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 (0.1)
------- ------- ------- ------- ------- -------
Total Revenue 538.0 548.7 530.5 532.1 522.3 510.4
======= ======= ======= ======= ======= =======
Average capital 1559.0 1438.4 1647.7 1635.2 1686.0 1797.9
Return on average capital 18.9% 24.6% 20.4% 25.2% 20.5% 18.3%
3/31/2001 PAGE 15
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.
3/31/2001 PAGE 16
Annuities Segment
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars]
Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
Fixed Annuities-Bal Beg of Quarter 18.305 18.101 18.123 18.111 18.225 18.303
Gross Deposits 0.407 0.346 0.335 0.489 0.654 0.678
Withdrawals (incl charges) & deaths (0.709) (0.578) (0.608) (0.579) (0.593) (0.567)
------ ------ ------ ------ ------ ------
Net cash flows (0.302) (0.233) (0.273) (0.090) 0.061 0.111
Transfer from (to) var annuities (0.153) 0.009 0.011 (0.034) (0.211) (0.238)
Interest credited 0.249 0.246 0.249 0.238 0.228 0.231
Acq of new business/companies 0.002 0.001
Fixed Annuities-Gross 18.101 18.123 18.111 18.225 18.303 18.406
------ ------ ------ ------ ------ ------
Reinsurance Ceded (1.687) (1.647) (1.606) (1.569) (1.524) (1.473)
------ ------ ------ ------ ------ ------
Fixed Annuities-Bal End of Quarter 16.414 16.476 16.505 16.656 16.779 16.934
------ ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 0.348 0.299 0.304 0.462 0.622 0.644
Variable Annuities-Bal Beg of Quarter 32.933 33.458 29.476 33.358 34.148 37.233
Gross Deposits 0.810 0.647 0.633 0.635 0.651 0.634
Withdrawals (incl charges) & deaths (0.760) (0.764) (0.801) (0.827) (0.912) (0.938)
------ ------ ------ ------ ------ ------
Net cash flows 0.050 (0.117) (0.168) (0.192) (0.261) (0.304)
Transfer from (to) fixed annuities 0.151 (0.016) 0.028 0.034 0.213 0.237
Invest inc & change in mkt value 0.324 (3.849) 5.405 0.948 3.133 (1.553)
Acq(sale) of new business/companies (1.383)
------ ------ ------ ------ ------ ------
Var Annuities-Bal End of Quarter 33.458 29.476 33.358 34.148 37.233 35.613
------ ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits 0.768 0.615 0.585 0.606 0.622 0.589
Total Annuities -Bal Beg of Quarter 51.238 51.559 47.599 51.469 52.373 55.536
Gross Deposits 1.217 0.993 0.968 1.124 1.305 1.312
Withdrawals (incl charges) & deaths (1.469) (1.343) (1.409) (1.406) (1.505) (1.505)
------ ------ ------ ------ ------ ------
Net cash flows (0.252) (0.350) (0.441) (0.282) (0.200) (0.193)
Transfers (0.002) (0.007) 0.039 0.002 (0.001)
Interest credited & change in mkt value 0.573 (3.603) 5.654 1.186 3.361 (1.322)
Acq of new business/companies 0.002 (1.382)
------ ------ ------ ------ ------ ------
Total Gross Annuities-Bal End of Quarter 51.559 47.599 51.469 52.373 55.536 54.020
Reinsurance Ceded (1.687) (1.647) (1.606) (1.569) (1.524) (1.473)
Total Annuities (Net of Ceded) - Bal End of Qtr 49.873 45.953 49.863 50.804 54.012 52.547
====== ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 1.116 0.914 0.889 1.068 1.244 1.233
Var Ann Under Agree - Included above 2.116 1.836 0.649 0.651 0.685 0.639
Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
Fixed Annuities-Bal Beg of Quarter 18.406 18.210 17.615 17.200 16.930 16.615
Gross Deposits 0.741 0.589 0.490 0.513 0.482 0.560
Withdrawals (incl charges) & deaths (0.782) (0.875) (0.796) (0.802) (0.810) (0.787)
------ ------ ------ ------ ------ ------
Net cash flows (0.040) (0.287) (0.307) (0.288) (0.328) (0.227)
Transfer from (to) var annuities (0.300) (0.550) (0.346) (0.217) (0.216) (0.014)
Interest credited 0.144 0.241 0.238 0.235 0.230 0.225
Acq of new business/companies
Fixed Annuities-Gross 18.210 17.615 17.200 16.930 16.615 16.599
------ ------ ------ ------ ------ ------
Reinsurance Ceded (1.419) (1.363) (1.291) (1.230) (1.173) (1.115)
------ ------ ------ ------ ------ ------
Fixed Annuities-Bal End of Quarter 16.791 16.252 15.909 15.700 15.442 15.484
------ ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 0.582 0.560 0.447 0.464 0.447 0.536
Variable Annuities-Bal Beg of Quarter 35.613 41.493 44.640 43.097 42.743 39.427
Gross Deposits 0.634 0.797 0.793 0.729 0.846 0.887
Withdrawals (incl charges) & deaths (1.084) (1.210) (1.168) (1.253) (1.199) (1.250)
------ ------ ------ ------ ------ ------
Net cash flows (0.450) (0.413) (0.375) (0.524) (0.353) (0.363)
Transfer from (to) fixed annuities 0.303 0.549 0.343 0.216 0.212 0.011
Invest inc & change in mkt value 6.027 3.011 (1.511) (0.046) (3.175) (4.342)
Acq(sale) of new business/companies
------ ------ ------ ------ ------ ------
Var Annuities-Bal End of Quarter 41.493 44.640 43.097 42.743 39.427 34.733
------ ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits 0.592 0.732 0.699 0.586 0.650 0.683
Total Annuities -Bal Beg of Quarter 54.020 59.704 62.255 60.297 59.673 56.043
Gross Deposits 1.375 1.386 1.283 1.242 1.328 1.447
Withdrawals (incl charges) & deaths (1.865) (2.085) (1.964) (2.055) (2.009) (2.037)
------ ------ ------ ------ ------ ------
Net cash flows (0.490) (0.700) (0.682) (0.812) (0.681) (0.590)
Transfers 0.003 (0.001) (0.003) (0.001) (0.004) (0.003)
Interest credited & change in mkt value 6.171 3.252 (1.273) 0.189 (2.945) (4.117)
Acq of new business/companies
------ ------ ------ ------ ------ ------
Total Gross Annuities-Bal End of Quarter 59.704 62.255 60.297 59.673 56.043 51.332
Reinsurance Ceded (1.419) (1.363) (1.291) (1.230) (1.173) (1.115)
Total Annuities (Net of Ceded) - Bal End of Qtr 58.284 60.892 59.006 58.443 54.869 50.217
====== ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 1.174 1.292 1.145 1.050 1.097 1.219
Var Ann Under Agree - Included above 0.719 0.866 0.868 0.962 0.941 0.904
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
3/31/2001 PAGE 17
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
------ ------ ------ ------ ------
Operating 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
------ ------ ------ ------ ------
Operating 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 gains (losses) 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 (losses) 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 0.021 0.013 0.125 0.225 0.190
Variable Universal Life 0.054 0.053 0.086 0.129 0.209
Whole Life 0.007 0.005 0.020 0.024 0.022
Term 0.000 0.000 0.003 0.004 0.003
------ ------ ------ ------ ------
Subtotal 0.082 0.071 0.234 0.381 0.423
Corporate Owned Life Insurance (COLI) 0.000 0.000 0.004 0.015 0.087
------ ------ ------ ------ ------
Total Lincoln Life 0.082 0.071 0.238 0.396 0.510
------ ------ ------ ------ ------
First Penn-Pacific
Universal Life 0.111 0.101 0.108 0.114 0.094
Term 0.023 0.033 0.046 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
====== ====== ======= ======= =======
3/31/2001 PAGE 18
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 32.6 40.8 80.2 54.5 57.8 52.4
Surrender charges 11.4 11.0 17.6 14.7 16.5 17.1
Mortality assessments 85.3 60.4 121.8 108.8 111.4 110.5
Expense assessments 29.8 36.5 50.8 39.6 35.4 42.8
Other revenue and fees (5.2) (0.1) 2.5 1.9 1.6 2.4
Net investment income 150.1 144.8 207.5 207.9 207.8 209.6
------- ------- ------- ------- ------- -------
Operating Revenue 304.1 293.4 480.4 427.4 430.6 434.9
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 87.6 72.0 134.9 103.6 108.7 105.4
Div accum & div to policyholders 8.3 18.4 26.3 20.3 21.0 19.2
Interest credited to policy bal. 91.3 74.7 122.0 125.8 123.0 122.8
Underwriting, acquisition,
insurance and other expenses 55.0 69.4 106.6 95.7 86.5 99.1
Goodwill amortization 7.4 4.0 7.1 5.9 5.0 6.4
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 249.6 238.5 396.9 351.2 344.1 353.0
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 54.5 54.9 83.5 76.1 86.5 82.0
Federal income taxes 18.6 18.8 31.6 28.1 32.0 29.4
------- ------- ------- ------- ------- -------
Income from Operations 35.9 36.2 51.9 48.1 54.4 52.6
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments 4.2 (1.0) (6.1) (1.8) (2.9) 1.4
Gains (losses) on derivatives
Restructuring charges
Net Inc before Accounting Change 40.0 35.2 45.8 46.3 51.5 54.0
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Net Income 40.0 35.2 45.8 46.3 51.5 54.0
======= ======= ======= ======= ======= =======
Inc from Oper-Before
Goodwill Amortization 43.2 40.1 59.0 54.0 59.5 59.0
Effective tax rate 34.2% 34.1% 37.9% 36.9% 37.0% 35.9%
Operating Revenue 304.1 293.4 480.4 427.4 430.6 434.9
Realized gains (losses) on investments 7.2 (0.6) (9.7) (3.4) (4.4) 2.1
Gains (losses) on derivatives
------- ------- ------- ------- ------- -------
Total Revenue 311.3 292.8 470.7 424.0 426.3 437.1
======= ======= ======= ======= ======= =======
Average capital 1820.5 1895.1 2527.0 2716.6 2739.4 2707.4
Return on average capital 7.9% 7.6% 8.2% 7.1% 7.9% 7.8%
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.043 0.051 0.044
Variable Universal Life 0.027 0.024 0.027
Whole Life 0.004 0.005 0.006
Term 0.000 0.001 0.001
------- ------- ------- ------- ------- -------
Subtotal 0.075 0.081 0.078
Corporate Owned Life Insurance (COLI) 0.002 0.007 0.002
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.049 0.044 0.103 0.077 0.088 0.081
------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.029 0.029 0.030
Term 0.013 0.012 0.011
------- ------- ------- ------- ------- -------
Total First Penn-Pacific 0.039 0.040 0.043 0.042 0.040 0.041
------- ------- ------- ------- ------- -------
Total Segment by Product 0.088 0.084 0.147 0.119 0.128 0.121
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.039 0.033 0.038
Lincoln Financial Distributors 0.080 0.095 0.084
------- ------- ------- ------- ------- -------
Total by Distribution 0.088 0.084 0.147 0.119 0.128 0.121
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 69.249 69.785 105.837 105.090 106.047 106.945
Term Insurance 45.944 52.057 67.076 73.452 78.431 81.963
------- ------- ------- ------- ------- -------
Total Segment In-Force 115.193 121.842 172.914 178.542 184.478 188.908
======= ======= ======= ======= ======= =======
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 71.1 53.0 56.3 50.9 67.1 50.9
Surrender charges 18.0 16.2 16.5 13.8 19.9 17.2
Mortality assessments 113.9 112.2 114.5 116.3 122.1 124.3
Expense assessments 48.0 45.3 44.1 46.9 55.5 47.4
Other revenue and fees 3.9 3.2 3.6 3.8 3.7 5.1
Net investment income 214.8 215.6 215.5 220.6 219.7 223.0
------- ------- ------- ------- ------- -------
Operating Revenue 469.6 445.5 450.5 452.4 488.0 467.9
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 112.8 98.4 96.3 95.8 121.0 99.9
Div accum & div to policyholders 21.0 20.4 18.7 16.4 25.3 17.5
Interest credited to policy bal. 122.3 126.3 128.7 134.0 136.5 138.3
Underwriting, acquisition,
insurance and other expenses 117.8 99.4 100.9 94.9 89.6 98.8
Goodwill amortization 6.0 5.9 5.9 5.9 5.9 5.9
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 379.9 350.3 350.6 347.0 378.4 360.5
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 89.8 95.2 99.9 105.4 109.6 107.4
Federal income taxes 32.8 34.8 37.4 38.9 39.0 38.8
------- ------- ------- ------- ------- -------
Income from Operations 57.0 60.4 62.4 66.5 70.6 68.6
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments 2.8 (2.4) (4.0) 1.0 (5.2) (5.4)
Gains (losses) on derivatives (0.0)
Restructuring charges
Net Inc before Accounting Change 59.7 58.1 58.4 67.4 65.4 63.2
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 (0.2)
------- ------- ------- ------- ------- -------
Net Income 59.7 58.1 58.4 67.4 65.4 62.9
======= ======= ======= ======= ======= =======
Inc from Oper-Before
Goodwill Amortization 63.0 66.3 68.4 72.4 76.5 74.5
Effective tax rate 36.5% 36.5% 37.5% 36.9% 35.6% 36.1%
Operating Revenue 469.6 445.5 450.5 452.4 488.0 467.9
Realized gains (losses) on investments 3.4 (3.8) (6.3) 0.8 (8.1) (8.2)
Gains (losses) on derivatives (0.0)
------- ------- ------- ------- ------- -------
Total Revenue 473.1 441.7 444.2 453.2 479.9 459.6
======= ======= ======= ======= ======= =======
Average capital 2686.0 2655.3 2615.0 2650.5 2640.0 2729.8
Return on average capital 8.5% 9.1% 9.6% 10.0% 10.7% 10.1%
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.086 0.046 0.042 0.047 0.056 0.035
Variable Universal Life 0.052 0.042 0.043 0.052 0.072 0.053
Whole Life 0.008 0.004 0.005 0.006 0.008 0.004
Term 0.001 0.001 0.001 0.000 0.001 0.000
------- ------- ------- ------- ------- -------
Subtotal 0.147 0.093 0.089 0.105 0.137 0.093
Corporate Owned Life Insurance (COLI) 0.004 0.013 0.019 0.006 0.049 0.007
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.151 0.105 0.109 0.111 0.186 0.100
------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.026 0.026 0.021 0.024 0.023 0.022
Term 0.011 0.013 0.013 0.010 0.009 0.007
------- ------- ------- ------- ------- -------
Total First Penn-Pacific 0.037 0.039 0.034 0.035 0.032 0.029
------- ------- ------- ------- ------- -------
Total Segment by Product 0.188 0.144 0.142 0.145 0.218 0.129
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.071 0.044 0.035 0.050 0.065 0.035
Lincoln Financial Distributors 0.117 0.100 0.107 0.095 0.153 0.093
------- ------- ------- ------- ------- -------
Total by Distribution 0.188 0.144 0.142 0.145 0.218 0.129
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 109.288 108.817 110.448 112.884 115.872 116.747
Term Insurance 85.701 92.857 97.039 98.424 100.130 102.467
------- ------- ------- ------- ------- -------
Total Segment In-Force 194.988 201.674 207.487 211.308 216.002 219.214
======= ======= ======= ======= ======= =======
3/31/2001 PAGE 19
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.
3/31/2001 PAGE 20
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------ ------ ------ ------ ------ ------
Lincoln Life
Universal Life-Bal Beg of Quarter 2.907 2.939 3.013 5.093 5.183 5.219
Deposits 0.114 0.095 0.223 0.194 0.199 0.198
Withdrawals & deaths (0.127) (0.063) (0.236) (0.050) (0.135) (0.091)
------ ------ ------ ------ ------ ------
Net cash flows (0.013) 0.032 (0.013) 0.144 0.064 0.107
Policyholder assessments (0.116) (0.118) (0.121)
Interest credited 0.045 0.042 0.152 0.062 0.089 0.073
Acq of new business/companies (0.000) 1.941 0.000 0.000
------ ------ ------ ------ ------ ------
Universal Life-Bal End of Quarter (1) 2.939 3.013 5.093 5.183 5.219 5.279
------ ------ ------ ------ ------ ------
Variable Universal Life-Bal Beg of Quarter 0.576 0.608 0.561 1.200 1.177 1.298
Deposits 0.035 0.035 0.095 0.077 0.068 0.074
Withdrawals & deaths (0.013) (0.013) (0.063) (0.011) (0.013) (0.049)
------ ------ ------ ------ ------ ------
Net cash flows 0.022 0.022 0.032 0.066 0.055 0.025
Policyholder assessments (0.020) (0.020) (0.020)
Invest inc & chg in mkt value 0.010 (0.069) 0.103 0.040 0.087 (0.018)
Acq of new business/transfers between segments 0.504 (0.110)
------ ------ ------ ------ ------ ------
Variable Universal Life -Bal End of Quarter 0.608 0.561 1.200 1.177 1.298 1.285
------ ------ ------ ------ ------ ------
Interest Sensitive Whole Life - Bal Beg of Quarter 1.695 1.730 1.729 1.784 1.865 1.895
Deposits 0.073 0.086 0.116 0.083 0.073 0.086
Withdrawals & deaths (0.060) (0.116) (0.085) (0.039) (0.030) (0.044)
------ ------ ------ ------ ------ ------
Net cash flows 0.013 (0.030) 0.031 0.044 0.044 0.043
Policyholder assessments (0.039) (0.039) (0.042)
Interest credited 0.022 0.029 0.024 0.030 0.025 0.027
Acq of new business/companies 0.045
------ ------ ------ ------ ------ ------
Int Sensitive Whole Life-Bal End of Quarter 1.730 1.729 1.784 1.865 1.895 1.922
------ ------ ------ ------ ------ ------
Total Lincoln Life -Bal Beg of Quarter 5.178 5.276 5.303 8.077 8.225 8.412
Deposits 0.222 0.216 0.433 0.354 0.340 0.358
Withdrawals & deaths (0.200) (0.192) (0.383) (0.100) (0.178) (0.184)
------ ------ ------ ------ ------ ------
Net cash flows 0.022 0.024 0.050 0.254 0.163 0.175
Policyholder assessments (0.174) (0.176) (0.183)
Invest inc & chg in mkt value 0.077 0.003 0.279 0.132 0.201 0.082
Acq of new business/transfers between segments (0.000) 2.445 (0.065)
------ ------ ------ ------ ------ ------
Total Lincoln Life - Bal End of Quarter 5.276 5.303 8.077 8.225 8.412 8.485
------ ------ ------ ------ ------ ------
VUL Under Agree -included above 0.040 0.044 0.631 0.699 0.770 0.681
First Penn-Pacific (FPP)
Universal Life-Bal Beg of Quarter 1.098 1.118 1.140 1.166 1.191 1.215
Deposits 0.037 0.038 0.041 0.040 0.039 0.041
Withdrawals & deaths (0.034) (0.032) (0.032) (0.017) (0.017) (0.019)
------ ------ ------ ------ ------ ------
Net cash flows 0.003 0.006 0.009 0.023 0.022 0.022
Policyholder assessments (0.015) (0.015) (0.015)
Interest credited 0.016 0.016 0.017 0.017 0.017 0.018
------ ------ ------ ------ ------ ------
FPP Universal Life-Bal End of Quarter 1.118 1.140 1.166 1.191 1.215 1.240
------ ------ ------ ------ ------ ------
Total Segment- Life Insurance Account Values
Bal Beg of Quarter 6.276 6.394 6.443 9.243 9.416 9.628
Deposits 0.259 0.254 0.475 0.394 0.379 0.399
Withdrawals & deaths (0.233) (0.224) (0.415) (0.117) (0.195) (0.202)
------ ------ ------ ------ ------ ------
Net cash flows 0.025 0.030 0.060 0.277 0.185 0.197
Policyholder assessments (0.189) (0.192) (0.198)
Invest inc & change in market value 0.093 0.019 0.295 0.149 0.219 0.100
Acq(sale) of new business/companies (0.000) 0.000 2.445 (0.065) 0.000 0.000
------ ------ ------ ------ ------ ------
Total Segment -Bal End of Quarter 6.394 6.443 9.243 9.416 9.628 9.726
====== ====== ====== ====== ====== ======
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------ ------ ------ ------ ------ ------
Lincoln Life
Universal Life-Bal Beg of Quarter 5.279 5.385 5.449 5.486 5.562 5.645
Deposits 0.270 0.216 0.181 0.192 0.231 0.194
Withdrawals & deaths (0.110) (0.097) (0.093) (0.064) (0.093) (0.069)
------ ------ ------ ------ ------ ------
Net cash flows 0.160 0.118 0.088 0.128 0.139 0.125
Policyholder assessments (0.129) (0.129) (0.127) (0.129) (0.133) (0.131)
Interest credited 0.075 0.075 0.076 0.077 0.078 0.078
Acq of new business/companies 0.000
------ ------ ------ ------ ------ ------
Universal Life-Bal End of Quarter (1) 5.385 5.449 5.486 5.562 5.645 5.718
------ ------ ------ ------ ------ ------
Variable Universal Life-Bal Beg of Quarter 1.285 1.605 1.771 1.764 1.812 1.808
Deposits 0.107 0.112 0.128 0.123 0.245 0.136
Withdrawals & deaths (0.025) (0.019) (0.028) (0.037) (0.048) (0.049)
------ ------ ------ ------ ------ ------
Net cash flows 0.082 0.093 0.100 0.085 0.197 0.087
Policyholder assessments (0.024) (0.032) (0.033) (0.036) (0.041) (0.041)
Invest inc & chg in mkt value 0.262 0.105 (0.074) (0.001) (0.160) (0.221)
Acq of new business/transfers between segments 0.000 0.000
------ ------ ------ ------ ------ ------
Variable Universal Life -Bal End of Quarter 1.605 1.771 1.764 1.812 1.808 1.633
------ ------ ------ ------ ------ ------
Interest Sensitive Whole Life - Bal Beg of Quarter 1.922 1.963 1.970 1.993 2.026 2.062
Deposits 0.113 0.060 0.071 0.079 0.113 0.056
Withdrawals & deaths (0.050) (0.042) (0.037) (0.033) (0.056) (0.041)
------ ------ ------ ------ ------ ------
Net cash flows 0.062 0.018 0.034 0.045 0.057 0.014
Policyholder assessments (0.048) (0.039) (0.040) (0.040) (0.050) (0.037)
Interest credited 0.026 0.028 0.028 0.027 0.029 0.028
Acq of new business/companies
------ ------ ------ ------ ------ ------
Int Sensitive Whole Life-Bal End of Quarter 1.963 1.970 1.993 2.026 2.062 2.068
------ ------ ------ ------ ------ ------
Total Lincoln Life -Bal Beg of Quarter 8.485 8.952 9.190 9.242 9.400 9.516
Deposits 0.490 0.387 0.380 0.393 0.589 0.386
Withdrawals & deaths (0.185) (0.158) (0.158) (0.135) (0.196) (0.159)
------ ------ ------ ------ ------ ------
Net cash flows 0.305 0.229 0.222 0.258 0.392 0.226
Policyholder assessments (0.201) (0.199) (0.200) (0.205) (0.224) (0.209)
Invest inc & chg in mkt value 0.363 0.208 0.030 0.104 (0.053) (0.114)
Acq of new business/transfers between segments
------ ------ ------ ------ ------ ------
Total Lincoln Life - Bal End of Quarter 8.952 9.190 9.242 9.400 9.516 9.419
------ ------ ------ ------ ------ ------
VUL Under Agree -included above 0.704 0.743 0.707 0.698 0.609 0.527
First Penn-Pacific (FPP)
Universal Life-Bal Beg of Quarter 1.240 1.265 1.280 1.296 1.317 1.331
Deposits 0.036 0.036 0.031 0.035 0.033 0.032
Withdrawals & deaths (0.014) (0.024) (0.018) (0.016) (0.021) (0.022)
------ ------ ------ ------ ------ ------
Net cash flows 0.022 0.013 0.013 0.019 0.012 0.011
Policyholder assessments (0.015) (0.016) (0.016) (0.017) (0.017) (0.016)
Interest credited 0.018 0.019 0.019 0.019 0.019 0.020
------ ------ ------ ------ ------ ------
FPP Universal Life-Bal End of Quarter 1.265 1.280 1.296 1.317 1.331 1.345
------ ------ ------ ------ ------ ------
Total Segment- Life Insurance Account Values
Bal Beg of Quarter 9.726 10.217 10.470 10.538 10.716 10.847
Deposits 0.526 0.424 0.411 0.428 0.622 0.418
Withdrawals & deaths (0.199) (0.182) (0.176) (0.151) (0.218) (0.181)
------ ------ ------ ------ ------ ------
Net cash flows 0.327 0.242 0.235 0.277 0.404 0.237
Policyholder assessments (0.216) (0.215) (0.216) (0.221) (0.241) (0.225)
Invest inc & change in market value 0.381 0.227 0.048 0.123 (0.033) (0.094)
Acq(sale) of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
------ ------ ------ ------ ------ ------
Total Segment -Bal End of Quarter 10.217 10.470 10.538 10.716 10.847 10.764
====== ====== ====== ====== ====== ======
(1) Includes fixed investment option of VUL products.
3/31/2001 PAGE 21
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
------ ------ ------ ------ ------
Operating 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
------ ------ ------ ------ ------
Operating 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 gains (losses) 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 (losses) 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 1053.4
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
====== ====== ====== ====== ======
Risk Premium (3) 362.4 384.1 451.5 543.7 675.5
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 Exit Businesses 19.4% 19.3% 20.3% 17.8% 14.9%
(1) 1999 and 1997 income includes special charges of $65.4 million and $243.7 million, respectively.
(2) Exited Businesses Under Mgmt incl. disability inc., HMO excess-of-loss, carrier medical, personal
accident and Seguros Serfin Lincoln (through March 2000).
(3) Risk premium is an internal measure used to gauge the earnings power of the Individual Markets
segment and is equal to total operating revenue less commissions, investment income on surplus,
and that portion of revenue required to fund policy reserves.
3/31/2001 PAGE 22
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
---------------------------------------------------------
Operating Revenue
Life and annuity premiums 124.1 146.4 200.1 172.0 173.1 166.2
Health premiums 169.6 154.5 163.5 153.3 158.7 148.3
Surrender charges 0.3 1.6 0.9 1.2 0.4 0.6
Mortality assessments 0.7 0.7 0.1 0.0
Expense assessments 0.3 0.4 (0.0) 0.0
Other revenue and fees 4.4 13.2 12.3 11.0 13.6 7.5
Net investment income 77.9 78.6 79.7 79.0 78.6 80.1
Equity earnings in unconsol affiliates 0.7 (0.2) 1.3 1.6 1.1 1.2
------- -------- -------- -------- -------- --------
Operating Revenue 377.1 394.0 458.8 419.1 425.5 404.0
------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 87.8 91.1 192.4 124.3 123.0 108.8
Div accum & div to policyholders 1.6 2.3 1.6 1.3 1.5 1.9
Interest credited to policy bal. 7.1 14.6 12.2 8.9 10.9 6.0
Health policy benefits 156.4 139.7 129.0 143.5 161.7 187.4
Underwriting, acquisition,
insurance and other expenses 87.9 102.1 85.1 89.0 92.7 94.9
Goodwill amortization 0.0 0.0 0.0 (0.0) (0.8) 0.8
Interest on notes payable 0.0 0.0 0.0 0.0
------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 340.9 349.7 420.3 366.9 389.1 399.7
------- -------- -------- -------- -------- --------
Income from Operations Before Tax 36.2 44.3 38.4 52.2 36.5 4.3
Federal income taxes 12.8 15.2 13.1 18.4 12.8 1.7
------- -------- -------- -------- -------- --------
Income from Operations (1) 23.5 29.1 25.3 33.8 23.7 2.6
------- -------- -------- -------- -------- --------
Realized gains (losses) on investments 1.2 (5.1) (1.4) 0.7 0.3 0.3
Gains (losses) on derivatives
Restructuring charges (3.2)
Net Inc before Accounting Change 24.6 24.0 23.9 34.5 24.0 (0.3)
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 0.0
------- -------- -------- -------- -------- --------
Net Income (1) 24.6 24.0 23.9 34.5 24.0 (0.3)
======= ======== ======== ======== ======== ========
Inc from Oper -Before
Goodwill Amortization 23.5 29.1 25.3 33.7 22.8 3.4
Effective tax rate 35.3% 34.3% 34.2% 35.3% 35.2% 39.5%
Operating Revenue 377.1 394.0 458.8 419.1 425.5 404.0
Realized gains (losses) on investments 2.5 (8.5) (1.8) 1.2 0.4 0.4
Gains (losses) on derivatives
------- -------- -------- -------- -------- --------
Total Revenue 379.6 385.6 456.9 420.3 425.9 404.4
======= ======== ======== ======== ======== ========
Revenue by Source (Including Investment
Gains/Losses)
Individual Markets 131.4 153.8 214.3 187.9 191.4 182.0
Group Markets 32.4 35.9 33.0 36.5 37.1 38.4
Financial Reinsurance 73.3 75.0 58.4 80.6 81.9 72.5
Other 2.9 2.5 (1.4) (2.7) (1.6) (1.0)
------- -------- -------- -------- -------- --------
Total Revenue, Excl Exited Businesses 240.1 267.2 304.4 302.2 308.8 291.9
Exited Businesses Under Management (2) 139.5 118.4 152.5 118.1 117.2 112.5
------- -------- -------- -------- -------- --------
Total Revenue 379.6 385.6 456.9 420.3 425.9 404.4
======= ======== ======== ======== ======== ========
Income from Operations by Source
Individual Markets 15.0 23.2 26.6 25.4 21.3 24.9
Group Markets (0.4) 1.4 0.1 0.9 0.4 (1.3)
Financial Reinsurance 3.5 4.7 5.5 7.3 4.7 4.2
Other (0.7) (1.1) (0.5) (1.1) (1.1) (0.7)
------- -------- -------- -------- -------- --------
Inc from Oper, Excl Exited Businesses 17.3 28.1 31.6 32.5 25.4 27.1
Exited Businesses Under Management (2) 6.2 1.0 (6.4) 1.3 (1.7) (24.4)
------- -------- -------- -------- -------- --------
Income from Operations 23.5 29.1 25.3 33.8 23.7 2.6
======= ======== ======== ======== ======== ========
Risk Premium (3) 102.9 104.5 144.1 130.4 128.4 129.0
Individual Life Sales
[Billions of Dollars] 11.8 16.5 40.2 18.5 20.0 28.8
Ind Life In-Force 166.9 178.3 213.6 225.1 240.0 261.5
Group Life In-Force 33.1 35.3 36.7 38.3 38.5 35.6
------- -------- -------- -------- -------- --------
Total Life In-Force 200.0 213.6 250.3 263.4 278.5 297.1
======= ======== ======== ======== ======== ========
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 90.6 78.0 94.3 85.8 88.9 81.7
Employer Stop Loss-
Loss Ratio 63.5 66.3 114.3 68.5 81.0 100.8
Combined Ratio 96.5 98.7 141.8 100.8 119.1 133.1
Average Capital 915.8 1002.7 1003.2 1078.4 1048.6 1040.3
Average Capital, Excl Exited Business 474.3 488.3 507.8 571.4 577.8 615.1
Return on Average Capital,
Excluding Exited Business 14.6% 23.0% 24.9% 22.8% 17.6% 17.6%
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
-----------------------------------------------------------
>
Operating Revenue
Life and annuity premiums 231.9 227.4 229.1 238.9 273.2 320.0
Health premiums 232.0 57.0 142.6 116.5 88.6 104.2
Surrender charges 0.7 0.6 1.4 0.9 0.8 0.9
Mortality assessments (0.2) 0.0 0.0 0.0 0.0 0.0
Expense assessments (0.2) (0.0) (0.0) (0.0) (0.0) (0.0)
Other revenue and fees 32.4 16.3 12.6 22.5 21.3 11.6
Net investment income 76.4 90.4 73.0 77.9 76.5 77.2
Equity earnings in unconsol affiliates 1.8 1.0 0.2 0.2 0.6 0.9
-------- -------- -------- -------- -------- --------
Operating Revenue 575.0 392.6 459.0 456.9 461.0 514.8
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 174.5 165.4 173.5 178.0 199.2 229.4
Div accum & div to policyholders 2.2 1.3 1.5 1.8 2.1 1.4
Interest credited to policy bal. 21.5 9.0 8.6 12.8 11.9 9.1
Health policy benefits 153.9 110.0 117.5 119.0 88.2 97.5
Underwriting, acquisition,
insurance and other expenses 254.6 59.8 116.9 100.1 102.9 103.7
Goodwill amortization 0.4 0.4 0.4 0.4 0.4 0.4
Interest on notes payable 1.0 2.3 2.7 3.0 3.2 2.8
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 608.2 348.3 421.1 415.2 407.9 444.3
-------- -------- -------- -------- -------- --------
Income from Operations Before Tax (33.2) 44.4 37.8 41.6 53.0 70.4
Federal income taxes (13.8) 12.2 12.2 13.6 16.5 23.6
-------- -------- -------- -------- -------- --------
Income from Operations (1) (19.5) 32.1 25.7 28.1 36.5 46.8
-------- -------- -------- -------- -------- --------
Realized gains (losses) on investments 2.4 1.2 (1.1) (2.2) 1.4 (4.6)
Gains (losses) on derivatives 0.0
Restructuring charges 0.7
Net Inc before Accounting Change (17.0) 33.3 24.6 25.9 38.6 42.2
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 (0.1)
-------- -------- -------- -------- -------- --------
Net Income (1) (17.0) 33.3 24.6 25.9 38.6 42.0
======== ======== ======== ======== ======== ========
Inc from Oper -Before
Goodwill Amortization (19.0) 32.5 26.1 28.5 37.0 47.2
Effective tax rate 41.4% 27.6% 32.1% 32.6% 31.1% 33.6%
Operating Revenue 575.0 392.6 459.0 456.9 461.0 514.8
Realized gains (losses) on investments 3.7 1.9 (1.7) (3.4) 2.2 (7.1)
Gains (losses) on derivatives 0.0
-------- -------- -------- -------- -------- --------
Total Revenue 578.7 394.5 457.3 453.5 463.2 507.7
======== ======== ======== ======== ======== ========
Revenue by Source (Including Investment
Gains/Losses)
Individual Markets 252.9 246.8 249.2 262.4 295.0 340.7
Group Markets 56.0 87.7 75.6 77.5 77.2 84.9
Financial Reinsurance 109.5 34.6 29.8 29.4 33.6 24.8
Other 0.3 3.1 2.5 3.9 3.2 3.8
-------- -------- -------- -------- -------- --------
Total Revenue, Excl Exited Businesses 418.7 372.2 357.1 373.1 409.0 454.2
Exited Businesses Under Management (2) 159.9 22.4 100.2 80.3 54.2 53.5
-------- -------- -------- -------- -------- --------
Total Revenue 578.7 394.5 457.3 453.5 463.2 507.7
======== ======== ======== ======== ======== ========
Income from Operations by Source
Individual Markets 20.2 19.2 22.6 20.5 28.3 39.5
Group Markets (1.7) 1.0 1.2 1.5 3.7 2.5
Financial Reinsurance 5.5 7.2 4.0 4.5 4.6 3.7
Other (1.4) (1.7) (1.6) (1.1) (3.3) (1.1)
-------- -------- -------- -------- -------- --------
Inc from Oper, Excl Exited Businesses 22.6 25.7 26.3 25.4 33.4 44.6
Exited Businesses Under Management (2) (42.1) 6.4 (0.6) 2.7 3.1 2.2
-------- -------- -------- -------- -------- --------
Income from Operations (19.5) 32.1 25.7 28.1 36.5 46.8
======== ======== ======== ======== ======== ========
Risk Premium (3) 155.8 152.9 158.5 179.0 185.1 229.0
Individual Life Sales
[Billions of Dollars] 49.6 30.0 37.2 37.2 35.2 30.9
Ind Life In-Force 306.6 325.9 354.0 381.4 407.4 426.2
Group Life In-Force 34.2 32.5 30.5 31.2 29.3 27.2
-------- -------- -------- -------- -------- --------
Total Life In-Force 340.8 358.4 384.4 412.6 436.7 453.4
======== ======== ======== ======== ======== ========
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 97.2 99.5 96.9 101.2 93.9 88.7
Employer Stop Loss-
Loss Ratio 84.5 74.7 72.6 76.5 72.0 71.4
Combined Ratio 111.8 99.8 100.8 100.9 95.9 95.8
Average Capital 1044.5 1058.6 1022.7 1058.7 1108.0 1083.6
Average Capital, Excl Exited Business 648.0 692.7 732.7 761.1 790.1 778.3
Return on Average Capital,
Excluding Exited Business 14.0% 14.8% 14.3% 13.3% 16.9% 22.9%
(1) Third quarter 1999 and fourth quarter 1999 income includes special charges of $25.0 million and
$40.4 million, respectively. The first quarter 2001 includes $25.5 million for a change in estimate
of premiums receivable.
(2) Exited Businesses Under Mgmt incl. disability inc., HMO excess-of-loss, carrier medical, personal
accident and Seguros Serfin Lincoln (through March 2000).
(3) Risk premium is an internal measure used to gauge the earnings power of the Individual Markets
segment and is equal to total Revenue by Source (Including Investment operating revenue less
commissions, investment income on surplus, and that portion of revenue required to fund policy
reserves. Gains/Losses) The risk premium for the first quarter 2001, includes the effect of the
change in estimate for premiums receivable.
3/31/2001 PAGE 23
Investment Management
Income Statements
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 65.7 68.5 82.5 83.6 88.9
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 400.6 447.5 491.0 495.6 494.2
------- ------- ------- ------- -------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 350.1 396.1 401.5 384.3 408.7
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
------- ------- ------- ------- -------
Operating Benefits and Expenses 363.8 411.8 418.2 400.5 425.0
------- ------- ------- ------- -------
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 (losses) on investments 6.4 7.0 0.5 (0.1) (2.5)
Restructuring Charges (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 400.6 447.5 491.0 495.6 494.2
Realized gains (losses) on investments 9.9 11.6 0.9 (0.1) (3.9)
------- ------- ------- ------- -------
Total Revenue 410.5 459.1 491.9 495.5 490.3
======= ======= ======= ======= =======
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 Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
Operating Revenue
Investment advisory fees - External 64.9 58.3 62.5 65.1 62.5 60.7
Investment advisory fees - Insurance Assets 20.7 20.5 20.8 21.0 20.7 19.9
Other revenue and fees 22.9 22.4 24.9 25.6 26.3 24.9
Net investment income 16.9 15.8 16.7 14.9 14.1 13.9
------- ------- ------- ------- ------- -------
Operating Revenue 125.3 117.0 124.9 126.6 123.6 119.3
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 101.6 99.0 98.5 97.8 97.3 92.8
Goodwill amortization 4.1 4.1 4.1 4.1 4.1 4.1
Interest on notes payable 0.1 0.1 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Operating Benefits & Expenses 105.8 103.2 102.6 101.9 101.4 96.8
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 19.5 13.8 22.3 24.7 22.2 22.5
Federal income taxes 7.8 6.4 7.7 9.4 7.9 7.7
------- ------- ------- ------- ------- -------
Income from Operations 11.7 7.4 14.6 15.4 14.3 14.7
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments 0.4 (3.7) 1.8 0.2 (0.3) (0.3)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring Charges 0.0 0.0 0.0 (12.1) 0.0 0.0
------- ------- ------- ------- ------- -------
Net Inc before Accounting Change 12.2 3.6 16.4 3.4 14.0 14.4
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Net Income 12.2 3.6 16.4 3.4 14.0 14.4
======= ======= ======= ======= ======= =======
Inc from Oper -Before
Goodwill Amortization 15.8 11.4 18.7 19.4 18.4 18.8
Inc from Oper -Before
Goodwill & Intang. Amort 18.9 14.5 21.9 22.4 21.3 21.7
Operating Revenue 125.3 117.0 124.9 126.6 123.6 119.3
Realized gains (losses) on investments 0.7 (6.3) 3.0 0.2 (0.4) (0.5)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Total Revenue 126.0 110.7 127.9 126.8 123.2 118.8
======= ======= ======= ======= ======= =======
Average Capital (Securities at Cost) 644.7 641.4 635.3 612.6 591.6 587.2
Return on Capital 7.3% 4.6% 9.2% 10.0% 9.7% 10.0%
For the Quarter Ended (continued) Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------- ------- ------- ------- ------- -------
Operating Revenue
Investment advisory fees - External 60.3 60.0 57.9 56.9 56.7 49.3
Investment advisory fees - Insurance Assets 22.1 21.0 22.3 22.5 23.1 23.2
Other revenue and fees 29.8 31.9 31.0 26.4 26.6 26.3
Net investment income 13.9 13.0 12.6 18.3 13.8 14.1
------- ------- ------- ------- ------- -------
Operating Revenue 126.1 126.0 123.8 124.1 120.2 113.0
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 96.3 102.5 99.3 103.9 103.0 104.7
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
------- ------- ------- ------- ------- -------
Operating Benefits & Expenses 100.4 106.6 103.3 107.9 107.1 108.8
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 25.7 19.4 20.5 16.2 13.1 4.2
Federal income taxes 9.1 7.0 7.4 6.3 4.4 1.8
------- ------- ------- ------- ------- -------
Income from Operations 16.5 12.4 13.1 9.9 8.7 2.4
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments 0.4 (0.1) (2.0) (0.2) (0.2) (0.5)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring Charges 2.9 0.0 (2.7) 0.0 (1.9) 0.0
------- ------- ------- ------- ------- -------
Net Inc before Accounting Change 19.8 12.3 8.4 9.7 6.6 2.0
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Net Income 19.8 12.3 8.4 9.7 6.6 2.0
======= ======= ======= ======= ======= =======
Inc from Oper-Before
Goodwill Amortization 20.6 16.5 17.1 14.0 12.7 6.5
Inc from Oper-Before
Goodwill & Intang. Amort 23.3 19.4 19.7 16.6 15.2 9.1
Operating Revenue 126.1 126.0 123.8 124.1 120.2 113.0
Realized gains (losses) on investments 0.6 (0.2) (3.1) (0.4) (0.3) (0.7)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Total Revenue 126.6 125.8 120.7 123.8 120.0 112.3
======= ======= ======= ======= ======= =======
Average Capital (Securities at Cost) 584.2 581.5 593.0 567.7 558.5 548.3
Return on Capital 11.3% 8.6% 8.8% 7.0% 6.2% 1.8%
3/31/2001 PAGE 24
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
------- ------- ------- ------- -------
Total Retail/Institutional -At End-of-Year 45.471 56.458 61.488 61.374 52.895
Insurance Assets - At End-of-Year 37.453 35.684 39.432 35.934 35.686
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.
3/31/2001 PAGE 25
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------ ------- ------- ------- ------- -------
Retail Fixed - Bal Beg-of-Qtr 8.286 8.260 8.287 8.217 8.233 7.945
Fund Sales 0.241 0.381 0.246 0.316 0.263 0.231
Redemptions (0.272) (0.302) (0.387) (0.313) (0.366) (0.342)
Net Money Market (0.052) (0.034) (0.000) (0.019) (0.033) (0.029)
Transfers 0.042 0.029 0.007 0.032 (0.043) 0.034
------ ------- ------- ------- ------- -------
Net Cash Flows (0.041) 0.074 (0.134) 0.016 (0.179) (0.106)
Income Retained 0.063 0.076 0.076 0.066 0.074 0.069
Market Apprec/Deprec (0.048) (0.122) (0.012) (0.067) (0.185) (0.228)
Acq of New Company/Business ------ ------- ------- ------- ------- -------
Balance at End-of-Qtr 8.260 8.287 8.217 8.233 7.945 7.680
------ ------- ------- ------- ------- -------
Retail Equity - Bal Beg-of-Qtr 20.448 21.456 18.785 22.080 21.798 22.340
Fund Sales 1.043 0.830 0.802 0.856 0.790 0.730
Redemptions (0.518) (0.547) (0.915) (1.030) (1.957) (0.865)
Net Money Market 0.000 0.000 0.000 0.000 (0.001) 0.000
Transfers 0.489 (0.032) (0.011) (0.034) 0.036 (0.060)
------ ------- ------- ------- ------- -------
Net Cash Flows 1.014 0.252 (0.124) (0.208) (1.132) (0.195)
Income Retained 0.054 0.134 (0.001) 0.053 0.061 0.007
Market Apprec/Deprec (0.059) (3.056) 3.420 (0.128) 1.614 (1.279)
Acq of New Company/Business ------ ------- ------- ------- ------- -------
Balance at End-of-Qtr 21.456 18.785 22.080 21.798 22.340 20.873
------ ------- ------- ------- ------- -------
Total Retail - Bal Beg-of-Qtr 28.734 29.716 27.072 30.297 30.031 30.285
Retail Sales-Annuities 0.598 0.541 0.507 0.428 0.393 0.332
Retail Sales-Mutual Funds 0.513 0.531 0.403 0.565 0.487 0.514
Retail Sales-Wrap & Other 0.173 0.139 0.136 0.182 0.173 0.116
------ ------- ------- ------- ------- -------
Total Retail Sales 1.284 1.211 1.046 1.175 1.053 0.962
Redemptions (0.791) (0.849) (1.302) (1.343) (2.323) (1.207)
Net Money Market (0.052) (0.034) 0.000 (0.019) (0.033) (0.029)
Transfers 0.531 (0.003) (0.004) (0.001) (0.006) (0.027)
------ ------- ------- ------- ------- -------
Net Cash Flows 0.972 0.325 (0.260) (0.188) (1.309) (0.301)
Income Retained 0.117 0.210 0.075 0.119 0.134 0.076
Market Apprec/Deprec (0.108) (3.180) 3.409 (0.196) 1.429 (1.507)
Acq of New Company/Business ------ ------- ------- ------- ------- -------
Balance at End-of-Qtr 29.716 27.072 30.297 30.031 30.285 28.553
------ ------- ------- ------- ------- -------
Institutional Fixed - Bal Beg-of-Qtr 6.216 6.400 6.769 6.955 6.984 7.264
Inflows 0.457 0.566 0.170 0.657 0.478 0.446
Withdrawals/Terminations (0.304) (0.325) (0.225) (0.415) (0.210) (0.294)
Transfers (0.013) (0.046) 0.008 (0.003) 0.003 (0.002)
------ ------- ------- ------- ------- -------
Net Cash Flows 0.139 0.195 (0.047) 0.239 0.271 0.150
Income Retained 0.092 0.101 0.060 0.089 0.079 0.110
Market Apprec/Deprec (0.047) 0.073 0.173 (0.300) (0.070) (0.306)
Acq of New Company/Business ------ ------- ------- ------- ------- -------
Balance at End-of-Qtr 6.400 6.769 6.955 6.984 7.264 7.218
------ ------- ------- ------- ------- -------
Institutional Equity - Bal Beg-of-Qtr 27.868 26.064 21.702 24.235 22.927 23.962
Inflows 0.825 0.855 1.165 1.297 1.179 1.839
Withdrawals/Terminations (2.505) (1.663) (2.072) (2.540) (2.052) (1.165)
Transfers (0.021) 0.050 0.013 0.011 0.019 (0.008)
------ ------- ------- ------- ------- -------
Net Cash Flows (1.702) (0.759) (0.895) (1.232) (0.854) 0.666
Income Retained 0.139 0.119 0.098 0.104 0.118 0.167
Market Apprec/Deprec (0.241) (3.721) 3.330 (0.180) 1.771 (1.697)
Acq of New Company/Business ------ ------- ------- ------- ------- -------
Balance at End-of-Qtr 26.064 21.702 24.235 22.927 23.962 23.098
------ ------- ------- ------- ------- -------
Total Institutional - Bal Beg-of-Qtr 34.084 32.463 28.471 31.191 29.910 31.226
Inflows 1.282 1.421 1.335 1.953 1.656 2.284
Withdrawals/Terminations (2.810) (1.988) (2.297) (2.955) (2.262) (1.458)
Transfers (0.035) 0.003 0.021 0.008 0.022 (0.010)
------ ------- ------- ------- ------- -------
Net Cash Flows (1.562) (0.564) (0.942) (0.994) (0.584) 0.816
Income Retained 0.230 0.220 0.158 0.193 0.197 0.277
Market Apprec/Deprec (0.289) (3.649) 3.504 (0.480) 1.702 (2.003)
Acq of New Company/Business ------ ------- ------- ------- ------- -------
Balance at End-of-Qtr 32.463 28.471 31.191 29.910 31.226 30.316
------ ------- ------- ------- ------- -------
Total Retail/Inst. - End-of-Qtr 62.179 55.543 61.488 59.941 61.511 58.869
Insurance Assets - End-of-Qtr 37.714 38.471 39.432 38.516 37.391 36.820
Total Assets Under Management ------ ------- ------- ------- ------- -------
At End-of-Qtr 99.893 94.014 100.920 98.457 98.902 95.689
====== ======= ======= ======= ======= =======
Investment Management
Assets Under Management Roll Forward (continued)
Unaudited [Billions of Dollars]
Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------- ------- ------- ------- ------- -------
Retail Fixed - Bal Beg-of-Qtr 7.680 7.424 6.964 6.667 6.531 6.499
Fund Sales 0.181 0.146 0.152 0.213 0.200 0.235
Redemptions (0.403) (0.444) (0.328) (0.321) (0.272) (0.255)
Net Money Market (0.030) (0.067) (0.058) (0.031) (0.051) 0.010
Transfers 0.154 (0.095) (0.045) (0.033) 0.013 0.042
------- ------- ------- ------- ------- -------
Net Cash Flows (0.098) (0.460) (0.279) (0.171) (0.109) 0.032
Income Retained 0.067 0.061 0.063 0.059 0.057 0.054
Market Apprec/Deprec (0.225) (0.062) (0.082) (0.023) 0.021 0.046
Acq of New Company/Business ------- ------- ------- ------- ------- -------
Balance at End-of-Qtr 7.424 6.964 6.667 6.531 6.499 6.631
------- ------- ------- ------- ------- -------
Retail Equity - Bal Beg-of-Qtr 20.873 23.383 24.102 23.129 23.680 21.174
Fund Sales 0.894 1.220 0.868 0.904 1.055 0.888
Redemptions (1.120) (1.550) (0.971) (1.027) (0.820) (0.899)
Net Money Market 0.000 0.000 0.000 0.001 0.000 0.000
Transfers (0.086) (0.096) 0.018 (0.033) (0.068) (0.068)
------- ------- ------- ------- ------- -------
Net Cash Flows (0.312) (0.426) (0.085) (0.154) 0.167 (0.079)
Income Retained 0.000 0.033 0.021 0.005 0.025 0.007
Market Apprec/Deprec 2.822 1.112 (0.908) 0.701 (2.698) (3.168)
Acq of New Company/Business ------- ------- ------- ------- ------- -------
Balance at End-of-Qtr 23.383 24.102 23.129 23.680 21.174 17.934
------- ------- ------- ------- ------- -------
Total Retail - Bal Beg-of-Qtr 28.553 30.807 31.066 29.796 30.211 27.674
Retail Sales-Annuities 0.409 0.379 0.358 0.453 0.536 0.455
Retail Sales-Mutual Funds 0.587 0.840 0.556 0.521 0.535 0.442
Retail Sales-Wrap & Other 0.079 0.148 0.106 0.143 0.184 0.227
------- ------- ------- ------- ------- -------
Total Retail Sales 1.075 1.367 1.020 1.118 1.255 1.124
Redemptions (1.523) (1.995) (1.299) (1.348) (1.092) (1.154)
Net Money Market (0.030) (0.067) (0.058) (0.030) (0.051) 0.010
Transfers 0.068 (0.191) (0.026) (0.065) (0.054) (0.026)
------- ------- ------- ------- ------- -------
Net Cash Flows (0.410) (0.886) (0.363) (0.326) 0.058 (0.047)
Income Retained 0.067 0.095 0.083 0.063 0.082 0.061
Market Apprec/Deprec 2.597 1.051 (0.989) 0.677 (2.677) (3.122)
Acq of New Company/Business ------- ------- ------- ------- ------- -------
Balance at End-of-Qtr 30.807 31.066 29.796 30.211 27.674 24.566
------- ------- ------- ------- ------- -------
Institutional Fixed - Bal Beg-of-Qtr 7.218 6.937 6.873 6.484 6.275 6.111
Inflows 0.420 0.180 0.148 0.308 0.135 0.310
Withdrawals/Terminations (0.781) (0.353) (0.520) (0.532) (0.568) (0.432)
Transfers 0.001 (0.005) (0.001) 0.000 0.001 0.003
------- ------- ------- ------- ------- -------
Net Cash Flows (0.360) (0.178) (0.373) (0.224) (0.433) (0.119)
Income Retained 0.068 0.090 0.066 0.089 0.050 0.066
Market Apprec/Deprec 0.011 0.024 (0.081) (0.074) 0.219 (0.168)
Acq of New Company/Business ------- ------- ------- ------- ------- -------
Balance at End-of-Qtr 6.937 6.873 6.484 6.275 6.111 5.890
------- ------- ------- ------- ------- -------
Institutional Equity - Bal Beg-of-Qtr 23.098 23.630 20.303 20.239 19.041 19.111
Inflows 0.934 0.904 0.669 0.407 0.750 0.881
Withdrawals/Terminations (2.043) (3.333) (1.354) (1.154) (1.368) (1.199)
Transfers (0.010) (0.004) 0.002 (0.013) 0.007 0.019
------- ------- ------- ------- ------- -------
Net Cash Flows (1.119) (2.433) (0.683) (0.760) (0.611) (0.299)
Income Retained 0.093 0.109 0.132 0.108 0.102 0.094
Market Apprec/Deprec 1.559 (1.003) 0.488 (0.545) 0.579 (1.596)
Acq of New Company/Business ------- ------- ------- ------- ------- -------
Balance at End-of-Qtr 23.630 20.303 20.239 19.041 19.111 17.310
------- ------- ------- ------- ------- -------
Total Institutional - Bal Beg-of-Qtr 30.316 30.567 27.175 26.722 25.316 25.222
Inflows 1.354 1.084 0.817 0.715 0.885 1.191
Withdrawals/Terminations (2.825) (3.686) (1.874) (1.686) (1.936) (1.631)
Transfers (0.009) (0.009) 0.000 (0.012) 0.008 0.022
------- ------- ------- ------- ------- -------
Net Cash Flows (1.480) (2.611) (1.057) (0.983) (1.043) (0.418)
Income Retained 0.161 0.198 0.197 0.196 0.151 0.160
Market Apprec/Deprec 1.569 (0.979) 0.407 (0.619) 0.798 (1.764)
Acq of New Company/Business ------- ------- ------- ------- ------- -------
Balance at End-of-Qtr 30.567 27.175 26.722 25.316 25.222 23.200
------- ------- ------- ------- ------- -------
Total Retail/Inst. - End-of-Qtr 61.374 58.241 56.518 55.527 52.895 47.765
Insurance Assets - End-of-Qtr 35.934 35.541 34.891 34.981 35.686 36.324
Total Assets Under Management ------- ------- ------- ------- ------- -------
At End-of-Qtr 97.308 93.782 91.409 90.508 88.581 84.089
======= ======= ======= ======= ======= =======
3/31/2001
PAGE 26
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
------ ------- ------- ------- -------
Operating Revenue 393.3 425.2 438.6 443.6 435.0
------ ------- ------- ------- -------
Operating 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
------ ------- ------- ------- -------
Operating 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 gains (losses) 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 (losses) 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
====== ======= ======= ======= =======
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
3/31/2001
PAGE 27
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1998 1998 1998 1999 1999 1999
------ -------- -------- -------- -------- --------
Operating Revenue
Premiums 33.7 33.7 52.3 43.9 29.0 33.5
Surrender charges
Mortality assessments 8.1 7.3 7.6 6.7 7.7 7.7
Expense assessments 54.0 39.0 23.7 43.9 51.9 49.3
Other revenue and fees 7.0 1.2 1.6 2.9 3.5 3.6
Net investment income 21.3 21.4 23.6 21.7 19.6 16.2
------ -------- -------- -------- -------- --------
Operating Revenue 124.1 102.6 108.7 119.2 111.8 110.3
------ -------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 36.1 36.3 45.7 35.7 31.5 27.2
Underwriting, acquisition,
insurance and other expenses 55.0 44.1 33.6 55.3 55.2 61.6
Goodwill amortization 1.2 0.6 3.7 1.2 1.2 1.2
------ -------- -------- -------- -------- --------
Operating Benefits and Expenses 92.3 80.9 83.0 92.2 87.9 90.1
------ -------- -------- -------- -------- --------
Income from Operations Before Tax 31.8 21.7 25.7 27.0 23.9 20.2
Federal income taxes 14.6 4.0 6.9 8.9 4.9 4.0
------ -------- -------- -------- -------- --------
Income from Operations 17.2 17.7 18.8 18.1 19.0 16.2
------ -------- -------- -------- -------- --------
Realized gains (losses) on investments 0.1 0.1 0.4 (0.0) 1.0 0.2
Gains (losses) on derivatives
Restructuring charges
------ -------- -------- -------- -------- --------
Net Income Before Accounting Change 17.4 17.8 19.2 18.0 20.0 16.4
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 0.0
------ -------- -------- -------- -------- --------
Net Income 17.4 17.8 19.2 18.0 20.0 16.4
====== ======== ======== ======== ======== ========
Inc from Oper -Before
Goodwill Amortization 18.4 18.3 22.5 19.3 20.2 17.4
Effective tax rate 45.8% 18.4% 27.0% 33.0% 20.4% 20.0%
Operating revenue 124.1 102.6 108.7 119.2 111.8 110.3
Realized gains (losses) on investments 0.1 0.2 0.5 (0.1) 1.4 0.3
Gains (losses) on derivatives
------ -------- -------- -------- -------- --------
Total Revenue 124.2 102.8 109.2 119.1 113.1 110.5
====== ======== ======== ======== ======== ========
Average capital 511.2 522.6 533.8 519.2 526.9 573.5
Return on average capital 13.5% 13.6% 14.1% 13.9% 14.4% 11.3%
Unit Linked Assets
Balance-Beg of Quarter (Billions) 6.297 6.310 5.711 6.265 6.348 6.503
Deposits 0.100 0.115 0.136 0.131 0.119 0.130
Withdrawals (incl. chgs) & Deaths (0.136) (0.133) (0.139) (0.136) (0.137) (0.136)
------ -------- -------- -------- -------- --------
Net Cash Flows (0.035) (0.018) (0.003) (0.005) (0.017) (0.005)
Inv Inc & Chg in Mkt Val 0.061 (0.687) 0.696 0.271 0.314 (0.214)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment (0.013) 0.107 (0.139) (0.184) (0.141) 0.284
------ -------- -------- -------- -------- --------
Unit Linked Assets - End of Quarter 6.310 5.711 6.265 6.348 6.503 6.568
====== ======== ======== ======== ======== ========
Individual Life In-force (Billions) 25.838 25.612 25.002 25.246 25.107 26.235
Exchange Rate - Dollars to Pounds
For the Quarter 1.658 1.666 1.661 1.631 1.602 1.614
End of Quarter 1.668 1.700 1.660 1.612 1.577 1.647
Lincoln UK (continued)
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1999 2000 2000 2000 2000 2001
------ -------- -------- -------- -------- --------
Operating Revenue
Premiums 38.7 39.0 36.3 32.5 40.5 12.8
Surrender charges
Mortality assessments 5.0 6.3 8.0 9.6 7.5 9.4
Expense assessments 37.2 46.5 44.3 52.6 34.6 43.7
Other revenue and fees 3.8 2.4 1.3 2.0 1.3 0.6
Net investment income 17.7 18.9 18.5 16.1 16.7 17.9
------ -------- -------- -------- -------- --------
Operating Revenue 102.4 113.2 108.4 112.8 100.6 84.4
------ -------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 211.8 35.0 37.4 51.9 54.2 24.0
Underwriting, acquisition,
insurance and other expenses 51.4 56.4 43.5 45.2 34.9 41.1
Goodwill amortization 3.3 1.3 1.3 1.2 0.2 0.2
------ -------- -------- -------- -------- --------
Operating Benefits and Expenses 266.6 92.8 82.2 98.3 89.3 65.3
------ -------- -------- -------- -------- --------
Income from Operations Before Tax (164.2) 20.4 26.2 14.5 11.3 19.1
Federal income taxes (97.1) 4.7 6.9 3.9 (4.2) 4.7
------ -------- -------- -------- -------- --------
Income from Operations (67.1) 15.7 19.3 10.6 15.5 14.4
------ -------- -------- -------- -------- --------
Realized gains (losses) on investments 1.0 (0.2) (0.1) (0.0) 2.6 0.4
Gains (losses) on derivatives
Restructuring charges (6.5) (40.5) (36.1)
------ -------- -------- -------- -------- --------
Net Income Before Accounting Change (72.6) 15.5 19.1 (29.9) (17.9) 14.8
Cumulative effect of accounting change 0.0 0.0 0.0 0.0 0.0 0.0
------ -------- -------- -------- -------- --------
Net Income (72.6) 15.5 19.1 (29.9) (17.9) 14.8
====== ======== ======== ======== ======== ========
Inc from Oper -Before
Goodwill Amortization (63.8) 17.1 20.5 11.8 15.7 14.5
Effective tax rate 59.1% 22.9% 26.4% 27.2% (37.1%) 24.6%
Operating revenue 102.4 113.2 108.4 112.8 100.6 84.4
Realized gains (losses) on investments 1.4 (0.4) (0.2) (0.0) 3.8 0.6
Gains (losses) on derivatives
------ -------- -------- -------- -------- --------
Total Revenue 103.8 112.8 108.2 112.8 104.3 84.9
====== ======== ======== ======== ======== ========
Average capital 585.0 516.4 500.8 486.5 448.9 548.7
Return on average capital (45.9%) 12.2% 15.4% 8.7% 13.8% 10.5%
Unit Linked Assets
Balance-Beg of Quarter (Billions) 6.568 7.220 7.031 6.726 6.499 6.441
Deposits 0.156 0.159 0.134 0.145 0.116 0.132
Withdrawals (incl. chgs) & Deaths (0.158) (0.170) (0.162) (0.159) (0.153) (0.147)
------ -------- -------- -------- -------- --------
Net Cash Flows (0.002) (0.011) (0.028) (0.014) (0.037) (0.015)
Inv Inc & Chg in Mkt Val 0.784 (0.077) 0.047 (0.025) (0.100) (0.421)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment (0.130) (0.101) (0.324) (0.189) 0.078 (0.328)
------ -------- -------- -------- -------- --------
Unit Linked Assets - End of Quarter 7.220 7.031 6.726 6.499 6.441 5.677
====== ======== ======== ======== ======== ========
Individual Life In-force (Billions) 25.698 26.514 25.225 24.535 24.290 21.894
Exchange Rate - Dollars to Pounds
For the Quarter 1.625 1.599 1.536 1.482 1.454 1.455
End of Quarter 1.615 1.591 1.517 1.475 1.493 1.416
3/31/2001 PAGE 28
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] (119.3) (110.0) (198.0) (285.2) (308.1)
------ ------- ------- ------- -------
Operating Revenue 16.8 40.6 128.3 147.4 206.0
------ ------- ------- ------- -------
Realized gains (losses) on investments (3.0) 16.9 4.0 8.6 (4.0)
Total Revenue 13.8 57.5 132.3 156.0 201.9
====== ======= ======= ======= =======
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 gains (losses) on investments (1.0) 8.6 5.3 6.4 (2.5)
Gains(losses) on derivatives
Restructuring charges (14.3) 0.3
------ ------- ------- ------- -------
Net Income Before Accounting Change (77.5) (64.6) (109.9) (117.2) (132.6)
Cumulative effect of accounting change
Total Net Income (Loss) (77.5) (64.6) (109.9) (117.2) (132.6)
====== ======= ======= ======= =======
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Revenue
Lincoln Financial Advisors 73.9 74.8 81.7 67.0 73.9 78.0 106.3 89.4 92.9 93.9 117.9 81.2
Lincoln Financial Distributors 6.9 10.2 9.8 20.7 26.2 26.4 34.2 29.3 28.1 27.5 35.0 25.7
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Total Distribution 80.8 85.0 91.5 87.6 100.1 104.4 140.5 118.8 121.0 121.4 152.9 106.9
Other [Including
Consolidating Adjustments] (47.5) (55.8) (56.8) (27.2) (41.6) (67.4) (149.1) (70.5) (89.7) (80.7) (67.2) (80.2)
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Operating Revenue 33.3 29.2 34.7 60.4 58.5 37.0 (8.6) 48.3 31.3 40.7 85.7 26.7
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Realized gains (losses) on
investments (3.0) 3.1 1.6 0.2 (1.7) 13.8 (3.7) (2.7) 0.4 0.0 (1.8) (2.9)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Total Revenue 30.3 32.4 36.3 60.7 56.8 50.8 (12.3) 45.6 31.8 40.7 83.9 23.8
====== ======= ======= ======= ======= ====== ======= ======= ======= ======= ====== =======
Income (Loss)
Lincoln Financial Advisors (6.8) (4.6) (6.4) (8.4) (9.7) (5.3) 2.7 (7.4) (2.9) (3.1) 1.6 (6.8)
Lincoln Financial Distributors (2.7) (1.4) (1.6) (3.0) (5.3) (2.1) (3.7) (3.3) (5.2) (5.0) (5.1) (6.9)
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Total Distribution (9.5) (6.0) (8.0) (11.4) (15.0) (7.4) (1.0) 10.7) (8.1) (8.0) (3.4) (13.8)
LNC Financing (12.8) (15.3) (19.5) (20.9) (21.6) (19.9) (21.3) (21.7) (22.0) (21.9) (20.0) (22.4)
LNC Operations * (5.2) (4.2) (4.9) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Corporate 2.1 0.4 (1.9) (1.7) 1.0 (2.8) (1.7) (6.2) (1.5) 2.7 (9.6) 0.3
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Inc (Loss) from Operations (25.4) (25.1) (34.3) (34.0) (35.6) (30.1) (24.0) (38.5) (31.6) (27.2) (33.0) (35.9)
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Realized gains (losses) on
investments (2.1) 1.9 4.1 0.1 (2.0) 9.5 (1.2) (1.6) 0.3 (1.0) (0.2) (1.9)
Gains (losses) on derivatives 0.0
Restructuring charges (14.3) 0.3
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Net Inc before Accounting Change (27.5) (23.1) (44.6) (33.9) (37.6) (20.6) (25.2) (40.1) (31.3) (28.2) (32.9) (37.8)
Cumulative effect of accounting
change (0.3)
------ ------- ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
Total Net Income (Loss) (27.5) (23.1) (44.6) (33.9) (37.6) (20.6) (25.2) (40.1) (31.3) (28.2) (32.9) (38.1)
====== ======= ======= ======= ======= ====== ======= ======= ======= ======= ====== =======
* Starting with the first quarter of 1999, 100% of "LNC Operations" is allocated to the business segments. Prior periods have not
been restated.
3/31/2001 PAGE 29
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
====== ====== ====== ====== ======
Jun Sep Dec Mar Jun Sep Dec
1998 1998 1998 1999 1999 1999 1999
------ ------ ------ ------ ------ ------ ------
Deposits - For the Quarter
Annuities Segment - Fixed Annuities 0.407 0.346 0.335 0.489 0.654 0.678 0.741
Annuities Segment - Variable Annuities 0.810 0.647 0.633 0.635 0.651 0.634 0.634
Annuities Segment - Life Insurance 0.003 0.005 0.004 0.005
Life Insurance Segment - Life Insurance 0.259 0.254 0.475 0.394 0.379 0.399 0.526
Inv Mgmt - Annuities 0.598 0.541 0.507 0.428 0.393 0.332 0.409
Inv Mgmt - Mutual Funds 0.513 0.531 0.403 0.565 0.487 0.514 0.587
Inv Mgmt - Wrap Fee & Other 0.173 0.139 0.136 0.182 0.173 0.116 0.079
Consolidating Adjustments (0.294) (0.232) (0.254) (0.142) (0.143) (0.096) (0.118)
------ ------ ------ ------ ------ ------ ------
Deposits - U.S. 2.466 2.226 2.234 2.554 2.599 2.581 2.864
------ ------ ------ ------ ------ ------ ------
Lincoln UK 0.100 0.115 0.136 0.131 0.119 0.130 0.156
UK Consoldating Adjustment (0.011) (0.007) (0.004) (0.004) (0.005) (0.004) (0.006)
------ ------ ------ ------ ------ ------ ------
Gross Deposits 2.555 2.334 2.366 2.682 2.714 2.707 3.014
====== ====== ====== ====== ====== ====== ======
Account Balances - End of Quarter
Annuities Segment - Fixed Annuities 16.414 16.476 16.505 16.656 16.779 16.934 16.791
Annuities Segment - Variable Annuities 33.458 29.476 33.358 34.148 37.233 35.613 41.493
Annuities Segment - Life Insurance 0.115 0.130 0.128 0.155
Life Insurance Segment - Life Insurance 6.394 6.443 9.243 9.416 9.628 9.726 10.217
Inv Mgmt - Annuities 13.829 12.270 14.257 14.166 14.981 14.004 15.526
Inv Mgmt - Mutual Funds 13.333 12.549 13.528 13.442 13.654 12.938 13.632
Inv Mgmt - Wrap Fee & Other 2.553 2.253 2.512 2.424 1.650 1.611 1.649
Consolidating Adjustments (8.611) (7.326) (8.891) (8.798) (9.050) (8.387) (9.175)
------ ------ ------ ------ ------ ------ ------
Account Balances - U.S. 77.371 72.142 80.512 81.570 85.004 82.567 90.288
------ ------ ------ ------ ------ ------ ------
Lincoln UK 6.310 5.711 6.265 6.348 6.503 6.568 7.220
UK Consoldating Adjustment (0.415) (0.366) (0.447) (0.421) (0.414) (0.359) (0.347)
------ ------ ------ ------ ------ ------ ------
Consolidated Account Balances 83.265 77.487 86.329 87.497 91.093 88.776 97.161
====== ====== ====== ====== ====== ====== ======
Mar Jun Sep Dec Mar
2000 2000 2000 2000 2001
------- ------ ------ ------ ------
Deposits - For the Quarter
Annuities Segment - Fixed Annuities 0.589 0.490 0.513 0.482 0.560
Annuities Segment - Variable Annuities 0.797 0.793 0.729 0.846 0.887
Annuities Segment - Life Insurance 0.003 0.003 0.004 0.004 0.003
Life Insurance Segment - Life Insurance 0.424 0.411 0.428 0.622 0.418
Inv Mgmt - Annuities 0.379 0.358 0.453 0.536 0.455
Inv Mgmt - Mutual Funds 0.840 0.556 0.521 0.535 0.442
Inv Mgmt - Wrap Fee & Other 0.148 0.106 0.143 0.184 0.227
Consolidating Adjustments (0.099) (0.062) (0.100) (0.145) (0.262)
------- ------ ------ ------ ------
Deposits - U.S. 3.081 2.655 2.691 3.064 2.729
------- ------ ------ ------ ------
Lincoln UK 0.159 0.134 0.145 0.116 0.132
UK Consoldating Adjustment (0.006) (0.006) (0.010) (0.042) (0.014)
------- ------ ------ ------ ------
Gross Deposits 3.233 2.783 2.827 3.138 2.847
======= ====== ====== ====== ======
Account Balances - End of Quarter
Annuities Segment - Fixed Annuities 16.252 15.909 15.700 15.442 15.484
Annuities Segment - Variable Annuities 44.640 43.097 42.743 39.427 34.733
Annuities Segment - Life Insurance 0.169 0.165 0.166 0.160 0.147
Life Insurance Segment - Life Insurance 10.470 10.538 10.716 10.847 10.764
Inv Mgmt - Annuities 15.531 14.861 14.824 13.494 11.787
Inv Mgmt - Mutual Funds 14.201 13.604 14.102 12.805 11.091
Inv Mgmt - Wrap Fee & Other 1.335 1.331 1.285 1.375 1.688
Consolidating Adjustments (8.768) (8.419) (8.644) (7.753) (6.834)
------- ------ ------ ------ ------
Account Balances - U.S. 93.831 91.086 90.893 85.797 78.860
------- ------ ------ ------ ------
Lincoln UK 7.031 6.726 6.499 6.441 5.677
UK Consoldating Adjustment (0.345) (0.338) (0.336) (0.339) (0.279)
------- ------ ------ ------ ------
Consolidated Account Balances 100.517 97.474 97.056 91.899 84.258
======= ====== ====== ====== ======
NOTE: Excludes amounts reported as Assets Under Management - Insurance Assets.
3/31/2001 PAGE 30
Consolidated Information - Individual Life Insurance In-Force
Unaudited [Billions of Dollars]
December 31 1996 1997 1998 1999 2000
------ ------ ------ ------ ------
Annuities Segment 0.6 0.7
Life Insurance Segment 49.2 63.2 172.9 195.0 216.0
Reinsurance 130.8 153.1 213.6 306.6 407.4
Lincoln UK 23.8 25.0 25.0 25.7 24.3
Consolidating Adjustment (5.6) (9.9) (11.3) (11.4)
------ ------ ------ ------ ------
Total 203.8 235.7 401.6 516.5 637.0
====== ====== ====== ====== ======
Jun Sep Dec Mar Jun Sep Dec
End of Quarter 1998 1998 1998 1999 1999 1999 1999
----- ----- ----- ----- ----- ----- -----
Annuities Segment 0.5 0.6
Life Insurance Segment 115.2 121.8 172.9 178.5 184.5 188.9 195.0
Reinsurance 166.9 178.3 213.6 225.1 240.0 261.5 306.6
Lincoln UK 25.8 25.6 25.0 25.2 25.1 26.2 25.7
Consolidating Adjustment (1.9) (2.2) (9.9) (10.3) (10.6) (10.9) (11.3)
----- ----- ----- ----- ----- ----- -----
Total 306.0 323.5 401.6 418.6 439.0 466.3 516.5
===== ===== ===== ===== ===== ===== =====
Mar Jun Sep Dec Mar
End of Quarter 2000 2000 2000 2000 2001
------ ------ ------ ------ ------
Annuities Segment 0.6 0.6 0.6 0.7 0.7
Life Insurance Segment 201.7 207.5 211.3 216.0 219.2
Reinsurance 325.9 354.0 381.4 407.4 426.2
Lincoln UK 26.5 25.2 24.5 24.3 21.9
Consolidating Adjustment (11.4) (11.5) (11.4) (11.4) (13.1)
------ ------ ------ ------ ------
Total 543.3 575.8 606.5 637.0 654.9
====== ====== ====== ====== ======
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)
DLIA-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
======= ======= ======= ======= =======
Jun Sep Dec Mar Jun Sep Dec
End of Quarter 1998 1998 1998 1999 1999 1999 1999
------- ------- ------- ------- ------- ------- -------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 27.787 28.554 30.233 30.578 29.579 28.708 27.689
Equity securities 0.649 0.505 0.543 0.481 0.506 0.507 0.604
Other investments 6.836 6.705 7.154 7.071 7.278 7.317 7.286
------- ------- ------- ------- ------- ------- -------
Total LNC Investments 35.272 35.764 37.929 38.129 37.363 36.532 35.578
Separate accounts 42.247 37.559 43.409 44.339 47.864 46.229 53.654
Cash and invested cash 2.414 2.725 2.433 2.327 2.151 2.343 1.896
------- ------- ------- ------- ------- ------- -------
Total LNC 79.933 76.048 83.772 84.796 87.378 85.104 91.128
------- ------- ------- ------- ------- ------- -------
Non-affiliate assets managed 51.772 46.842 50.061 48.690 49.827 48.068 49.314
------- ------- ------- ------- ------- ------- -------
Total Assets Managed 131.705 122.890 133.833 133.486 137.205 133.172 140.443
======= ======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 62.179 55.542 61.488 59.939 61.511 58.868 61.374
(See page 25 for additional detail)
DLIA-Corp 37.714 38.471 39.432 38.516 37.391 36.820 35.934
(Assets managed internally-see page 25)
Lincoln (UK) 7.501 6.932 7.573 7.631 7.746 7.849 8.589
Policy Loans (within business units) 1.500 1.517 1.840 1.842 1.847 1.863 1.892
Non-LNC Affiliates 22.812 20.427 23.500 25.558 28.710 27.772 32.654
------- ------- ------- ------- ------- ------- -------
Total Assets Managed 131.705 122.890 133.833 133.486 137.205 133.172 140.443
======= ======= ======= ======= ======= ======= =======
Mar Jun Sep Dec Mar
End of Quarter 2000 2000 2000 2000 2001
------- ------- ------- ------- -------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 27.745 27.078 27.264 27.450 27.811
Equity securities 0.588 0.560 0.570 0.550 0.560
Other investments 7.442 7.419 7.471 7.369 7.374
------- ------- ------- ------- -------
Total LNC Investments 35.775 35.057 35.305 35.369 35.744
Separate accounts 56.908 54.924 54.411 50.580 44.506
Cash and invested cash 1.510 1.619 1.436 1.927 2.015
------- ------- ------- ------- -------
Total LNC 94.192 91.601 91.152 87.876 82.266
------- ------- ------- ------- -------
Non-affiliate assets managed 47.150 45.945 45.119 43.397 41.904
------- ------- ------- ------- -------
Total Assets Managed 141.342 137.546 136.271 131.273 124.170
======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 58.243 56.518 55.527 52.895 47.765
(See page 25 for additional detail)
DLIA-Corp 35.541 34.891 34.981 35.686 36.324
(Assets managed internally-see page 25)
Lincoln (UK) 8.423 8.058 7.838 7.873 7.012
Policy Loans (within business units) 1.896 1.915 1.936 1.961 1.947
Non-LNC Affiliates 37.239 36.165 35.989 32.857 31.122
------- ------- ------- ------- -------
Total Assets Managed 141.342 137.546 136.271 131.273 124.170
======= ======= ======= ======= =======
3/31/2001 PAGE 31
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 Gains (Losses) on Investments 57.6 72.9 13.7 3.8 (17.5)
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) (208.8) 159.6 116.4 (1018.1) 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%
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
Net Investment Income
Fixed Maturity Securities 506.3 512.8 544.5 557.8 575.8 551.2
Equity Securities 4.2 4.1 8.9 4.4 4.9 3.9
Mortgage loans on real estate 90.7 91.3 107.4 94.5 85.5 94.7
Real estate 23.9 20.3 18.4 19.4 18.4 13.7
Policy loans 22.1 24.6 29.8 28.6 28.6 29.4
Invested cash 30.4 40.7 44.0 32.4 23.4 32.4
Other investments 29.4 19.5 19.3 7.5 13.4 9.9
------- ------- ------- ------- ------- -------
Investment revenue 707.0 713.4 772.4 744.6 750.1 735.2
Investment expense 48.3 63.8 57.7 35.1 49.3 38.1
------- ------- ------- ------- ------- -------
Net Investment Income 658.7 649.6 714.7 709.5 700.8 697.1
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 2.9 2.3 3.0 1.8 2.0 1.7
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 661.6 651.9 717.7 711.3 702.8 698.7
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 36094.5 36445.0 37619.5 39174.2 39385.3 39111.8
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.33% 7.16% 7.63% 7.26% 7.14% 7.15%
Investment Gains
Realized Gains (Losses) on Investments 16.5 (17.3) 0.5 1.5 (3.5) 4.1
Gains (Losses) on Derivatives
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) (5.5) 304.2 (221.4) (297.7) (255.8) (102.7)
Incr (Decr) on Derivatives
Incr (Decr) in Foreign Exchange (0.6) 8.0 (9.8) (19.9) (9.5) 19.6
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 27.787 28.554 30.233 30.578 29.579 28.708
Fixed Maturity Sec (Adjusted Cost) 26.233 26.610 28.640 29.681 29.494 28.974
Equity Securities (Market) 0.649 0.505 0.543 0.481 0.506 0.507
Equity Securities (Adjusted Cost) 0.528 0.470 0.437 0.380 0.385 0.414
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 26.4% 26.1% 25.6% 26.3% 25.5% 24.2%
AA or better 33.7% 33.3% 32.6% 33.2% 32.5% 31.1%
BB or less 7.2% 6.3% 7.0% 7.1% 7.0% 7.5%
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1999 2000 2000 2000 2000 2001
------- ------- ------- ------- ------- -------
Net Investment Income
Fixed Maturity Securities 548.0 541.3 544.4 525.3 537.7 522.7
Equity Securities 6.9 3.7 5.7 3.6 6.5 1.0
Mortgage loans on real estate 94.5 92.0 95.1 94.4 92.3 95.7
Real estate 12.5 11.2 12.5 11.8 16.3 12.8
Policy loans 29.9 30.7 30.9 30.5 32.9 31.4
Invested cash 22.0 27.2 15.1 26.5 18.4 26.7
Other investments 20.9 35.1 2.0 26.9 2.9 19.6
------- ------- ------- ------- ------- -------
Investment revenue 734.9 741.1 705.7 719.1 706.9 709.9
Investment expense 34.8 30.0 31.8 29.0 34.8 36.1
------- ------- ------- ------- ------- -------
Net Investment Income 700.1 711.1 673.8 690.0 672.1 673.7
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 2.6 1.5 2.3 1.4 2.6 0.5
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 702.7 712.6 676.1 691.5 674.7 674.2
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 38438.6 38237.4 37306.1 37250.8 37090.8 37238.0
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.31% 7.45% 7.25% 7.43% 7.28% 7.24%
Investment Gains
Realized Gains (Losses) on Investments 1.6 (0.4) (6.7) (11.6) 1.2 (13.4)
Gains (Losses) on Derivatives (0.1)
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) (361.9) 54.5 (145.4) 218.8 349.8 178.4
Incr (Decr) on Derivatives 23.3
Incr (Decr) in Foreign Exchange (10.2) (7.2) (0.9) (2.0) 2.0 (17.8)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 27.689 27.745 27.078 27.264 27.450 27.811
Fixed Maturity Sec (Adjusted Cost) 28.357 28.295 27.788 27.727 27.373 27.367
Equity Securities (Market) 0.604 0.588 0.560 0.570 0.550 0.560
Equity Securities (Adjusted Cost) 0.482 0.475 0.446 0.450 0.458 0.507
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 22.8% 22.7% 22.1% 22.3% 22.1% 20.3%
AA or better 29.8% 29.5% 29.2% 29.4% 29.2% 27.1%
BB or less 8.0% 7.4% 8.2% 6.8% 6.7% 7.2%
3/31/2001 PAGE 32
Common Stock / Debt Information
Unaudited [Dollars per Share, except Percentages]
For the Year Ended December 31 1990 1991 1992 1993 1994
------- ------- ------- ------- -------
Common Stock [1]
Highest Price 15.338 13.813 19.032 24.125 22.188
Lowest Price 7.688 9.500 12.625 17.344 17.313
Closing Price 10.750 13.688 18.500 21.750 17.500
Dividend Payout Ratio [2] 63.4% 63.5% 38.9% 52.6% 51.0%
Yield [3] 6.3% 5.3% 4.1% 3.8% 4.9%
Preferred Stock Dividend (Millions) 9.143 13.033 17.246 17.212 17.119
Debt: (End of Period)
Senior Debt Ratings
A.M. Best
Fitch AA AA- AA-
Moody's A2 A2 A1
Standard and Poors A+ A+ A+
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+
Lincoln Life - Fitch AAA AAA AAA
Lincoln Life - Moody's A1 A1 Aa3
Lincoln Life - Standard & Poors AA- AA- AA-
First Penn - A.M. Best* A A+ A+
First Penn - Moody's
First Penn - Standard & Poors* AA- AA- AA-
LLA of New York - A.M. Best*
LLA of New York - Fitch*
LLA of New York - Moody's
LLA of New York - Standard & Poors*
Ratios
Debt to Total Capitalization [4] 25.7% 21.1% 19.9%
Debt to Equity [4] 34.7% 26.7% 24.9%
For the Year Ended December 31 (continued) 1995 1996 1997 1998 1999 2000
------- ------- ------- ------- ------- -------
Common Stock [1]
Highest Price 26.875 28.500 39.063 49.438 57.500 56.375
Lowest Price 17.313 20.375 24.500 33.500 36.000 22.625
Closing Price 26.875 26.250 39.063 40.907 40.000 47.313
Dividend Payout Ratio [2] 39.7% 38.2% 22.8% 43.9% 50.5% 38.3%
Yield [3] 3.4% 3.7% 2.7% 2.7% 2.9% 2.6%
Preferred Stock Dividend (Millions) 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- A+ A+ A+
Moody's A2 A2 A2 A2 A2 A3
Standard and Poors A A A A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA+ AA
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A+ A+ A A A
First Penn - Moody's A1 A1 A1 A1
First Penn - Standard & Poors* 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] 22.8% 18.8% 17.0% 21.2% 23.2% 20.8%
Debt to Equity [4] 29.5% 23.1% 20.5% 26.9% 30.3% 26.3%
- -------------------------------------------------------------------------------------------------------
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1998 1998 1998 1999 1999 1999
------- ------- ------- ------- ------- -------
Common Stock:
Highest Price 47.063 49.438 43.344 50.250 53.438 57.500
Lowest Price 41.844 41.125 33.500 39.281 45.688 36.000
------- ------- ------- ------- ------- -------
Closing Price 45.688 41.125 40.906 49.438 52.313 37.563
------- ------- ------- ------- ------- -------
Yield [3] 2.3% 2.5% 2.7% 2.2% 2.1% 2.9%
Preferred Stock Dividend 0.026 0.026 0.023 0.024 0.024 0.027
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best
Fitch AA- A+ A+ A+ A+ A+
Moody's A2 A2 A2 A2 A2 A2
Standard and Poors A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA+ AA+
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A+ A A A A
First Penn - Moody's A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA+ AA+ AA+
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 20.5% 21.9% 21.2% 20.7% 22.0% 22.0%
Debt to Equity [4] 25.8% 28.1% 26.9% 26.2% 28.2% 28.3%
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1999 2000 2000 2000 2000 2001
------- ------- ------- ------- ------- -------
Common Stock:
Highest Price 48.313 41.375 40.063 56.375 50.938 48.250
Lowest Price 36.500 22.625 29.000 35.625 40.875 38.000
Closing Price 40.000 33.500 36.125 48.125 47.313 42.470
Yield [3] 2.9% 3.5% 3.2% 2.4% 2.6% 2.9%
Preferred Stock Dividend 0.014 0.022 0.022 0.021 0.013 0.019
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a a a
Fitch A+ A+ A+ A+ A+ A+
Moody's A2 A2 A2 A2 A3 A3
Standard and Poors A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A A A A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA AA
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A A A A A A
First Penn - Moody's A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A A A A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA+ AA AA
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 23.2% 23.3% 21.8% 21.2% 20.8% 22.2%
Debt to Equity [4] 30.3% 30.4% 28.0% 27.0% 26.3% 28.5%
* 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.