LNC - Earnings call transcript Q3 2018 | Lincoln National Corporation

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Operator

Good morning and thank you for joining Lincoln Financial Group's Third Quarter 2018 Earnings Conference Call. At this time, all lines are in listen-only mode. Later we will announce the opportunity for questions, and instructions will be given at that time.

Now I would like to turn the conference over to the Senior Vice President of Investor Relations, Chris Giovanni. Please go ahead, sir.

Christopher A. Giovanni

Crystal. you, Thank welcome and Financial's quarter third Good to call. earnings morning Lincoln

the conditions, Presenting important Officer over After I and Act future to today's comments today used portion their from expectations. include XXXX. website, market our Head return repurchases, sales and begin, Chief are to Officer; release operations, we Freitag, and Individual most call call and Financial you differ Reform uncertainties capital appreciate statements statistical risks call. can And on statements These measures. operations of to the Chief of risks like that to capable described income current Glass, SEC. reminder. deposits, your involve we are turn Randy non-GAAP where actual earnings to expectations, comments and release expenses, are now on invite President reconciliation Life. statement materially will and remarks, to find which have visit cause including participation their equity uncertainties income in our issued you the Executive from question-and-answer full liquidity call, the press Lincoln's regarding supplement, and cautionary yesterday and Before prepared and GAAP of move Litigation www.lincolnfinancial.com, X-K share call and in Dennis the would We with disclosures I These a under measures XX-Q an Dennis. Forms Any our the could and of from Securities the about the made results the and trends resources forward-looking and in including forward-looking on during filed reports in Private

Dennis R. Glass

EPS as good and with operating quarter adjusted share XX% year, quarter. and third morning, continues from Chris, outstanding were prior-year you, earnings everyone. records, per up the be earnings XXXX an to Well, Thank

was and share book return increased per on X% value XX.X%. equity Additionally,

results along growth and enhancing broad-based actions our further highlight benefiting group ever brings Targeted comprehensive net also capital future franchise, which acquisition, were from expense a results strong expanding together and opportunities, retail portfolio, close of turning positive, management the quarter's our This to with power distribution. product growing are remaining strategic and with investments our efficiencies important. deployment results annuity improving Liberty flows and

the to which sheet know, nature impact balance had review, also on of you of consistently past As financials, with earnings comprehensive and assumption flow. during of the and a consistent quarter, annual strong a generate cash significant complementary us sources our negligible our enable we Overall, our amount years. completed the remains businesses free

growth to night's We the common are program dividends, active announced share stock and last buyback returning this XX% capital increase in an through in shareholders dividend. including

continued strong we Now, sales to robust our meaningful results with from starting predictable business high-quality equity distribution turning as to business were of in-force progress. Annuities. strategy as and to show new expanding Earnings continues products tailwinds. combined were Annuity adding and our with benefit our segments, market

seasonality, and billion, annuity represented This quarter, typically since increased time quarter weaker XX% third and annuity to XXXX. due of sales. which $X.X for new XX% improved the Total products distribution sales, expanded sequentially sales first to are

the improving totaled positive just higher we optimistic net in will stronger and return we million improvement quarter. the quarter. environment. return a new to fourth sales, remain further also interest showed rate given business, getting I to outflows of addition on In Net the $XX are in flows rate

XX%, of also product expansion highlighting VA prior-year than diversification This sales at guaranteed quarter non-guaranteed XX% increased the compared sales, represented products least annuity total all broad-based, our and to less Guaranteed XX% sales the strong, but of quarter's and half were delivering up and distribution increased with and variable portfolio. channels annuity growth.

annuity, of variable continue has Our ever. newest indexed ramp the to product, and Advantage most in new and resulting channels. annuity totaled than been Advantage, in with Fixed successful significant nearly million quarter product Level the the up distribution sales from we sales partners. broker-dealer $XXX $XXX launch our addition Lincoln sales Level an growth (sic) million bank more doubled [$XXX million], to

recently than new organizations, further we strategy In distribution should This that, relationship marketing and channel, seeing distribution the addition, initially new are fixed casualty selling suite relationship and independent sales by This to and we additional property to our via also annuity channel, X% announce growth. in approximately a another early happy more distribution yet January, entered scale success. add XX,XXX access annuity agents gives channel Allstate. I'm entering a of will variable with we to advance Allstate's Lincoln's solutions.

that versus from than XXXX remains given which under-XX-year sales to in growth product annuities, for creates are believe older by XX XX% in age compelling. assets positive, a sweet in income, distribution survey of A is four nearly strategy spot forecast ago. expected X% with the that combined over years with more double The projected growth and forward, the percentage XX% up advisers demographic to term, also expansion, XX%, investable sales cohort, olds. underinvested our to the and grow opportunities backdrop for just clients advisers and lifetime showed considerable continue Longer industry years significant of period the financial outlook their doubled recent Looking growth are to XXXX. prospects of LIMRA's

and as Without to prior-year increases XX%. rates result Recurring plan, $X.X $X Annuity tripled. quarter. year healthcare results. and XX% also million In totaled a are So, Services, deposits increased included of higher of promising. a in billion plan increased from $X.X Plan near- long-term first-year billion earnings prospects is in very nearly the prior-year in up business sales strong the sales these The employee quarter. Retirement X% quarter quarter this growth still were in sale over flows contribution billion of Net Deposits a $X $XXX and billion for ago, the increased compared the participation. of XX% and

and which exceeded quarters. the flows straight net Over of compete be in flows high-touch $X.X RPS high-tech and billion positions achieved lumpy these impressive markets. strength business positive remain results have XX effectively but model, flows for and our net are We quarter-to-quarter, past XX confident business. can being months, Sales the for we to by driven opportunities have our target us growth in the

to Life Turning Total down $XXX Insurance, earnings quarter the XX%. of Insurance million X%. sales in increased Life were

in side, This Benefits also we the sales. growth lumpy led positive sales, and a life, quarter. Executive which MoneyGuard by quarter VUL can On saw offset in core X% was decline by be strong to of aggregate, returns expected the X%, last exceeded target made consistent levels. On new year. comments a pointing sales second to the our sales In business half sequential quarter, expected with improved momentum basis, in

have marketplace. returns, to the and our initiatives sales the interest strong higher This well-positioned distribution these diversification, business in growth as and ability and place leaves Life competitive in industry-leading product we improve XXXX. to Given position, capabilities, rates enter we leverage

Turning to by a Protections, sales Group acquisition, growth, increased Premiums and strong significantly, continued in $XX than results. million earnings doubled, persistency which of driven resulted margin. the X.X% more after-tax

employer- the Disability to Life increased attributable and During in quarter, in in sales lines resulted XX%, again, the growth employee-paid sales. and both which the product primarily the acquisition,

premiums we the enter and trends, X also persistency modest are quarter as while achieving grow the As we ability season, to fourth optimistic renewal sustain January rate about our we important increases.

scale, return we solid we capabilities. new results, given and was our pleased as for to opportunities expect key from performance of track remains announced. quarter distribution, compete strong investment portfolio case to integration results alternative with summary, across In broader financial on to sizes, business equity upside the on the all when focus increased and we Additionally, Shifting access, expanded another delivering a are led to pre-tax acquisition on investments. annualized the metrics XX% highlighted private effectively

are the and declined new the X the of fixed near X.X% the X.X% average is point investing money portfolio currently also new in second worth money quarter. We quarter basis yield income have an that rate. invested noting It from yield at portfolio we

we While higher-yield rate in spread will have largely through at assets still abate interest XXXX. compression running levels, current XXXX, off some

to recall represent than removing losses be this the help. a X% EPS years, remains income spread compression big will our below-investment-grade of has assets growth may minimal a recent portfolio. so investment been fixed annual Credit shape. headwind great that You and in to in less X% are portfolio X% Overall,

While have well investment greater that credit not change a been the deterioration have we securities forecasting within of we portfolio environment, remains are current and a doing are and confident some risk balance stressed in the sheet positioned. sectors benign I'm in proactive derisking environment. and

strong. comments to that Before a five business to and observations and I'd our Randy, over of metrics turning effectiveness been has believe have few years, would remains past demonstrated the regarding underappreciated. resiliency financial retail-centric I success that I which track a model, make very record of note the over like

notable $XXX in after at grown and has EPS with compression. have These items. annual rate come results spread million year of few: XX% a excluding every than more each growth Just a growth EPS, absorbing

Additionally, and have to or income. cumulative our has value of XX% of share has per of annual during $XXX been than assumption non-events, with at value. ROE million has grown X% reviews this less book impact XX.X% represented Book operating under just period income X% a a rate year-to-date. expanded Net

deployed management, we of M&A, operating and Looking XXXX, dividends, of $X.X represents have capital through which a buybacks, since earnings. billion XX% at capital

balance achieved taking risk of position. and capital improving we on sheet the while less all our Importantly, these results, strength have and

the business portion products risks. with earnings new We have away increased of our coming from tilted insurance and long-term guarantees traditional from

balance declined. of investment terms decreased has debt X has points sheet In and leverage quality, leverage

such remain strategy, We meantime, our top enable environment sustain good. ultimately an generate reinsurance nearly use if would be are results. a buyback for Finally, the proven some flow opportunities continue it to has track valuation, and to statutory $X enable to record as normal increased our a capital makes ability to program And us at business. free our performance. the take portion share of free on the up looking to us which guidance. on in-force to current In our solid executing billion. of transactions capital our price for will will to advantage low share sense, financial and of The cash looks we report reflect deal significant monetizing believe focused We block

we our momentum, the closing, over significant financial to and the with quarter's current upside, call proven success, pleased our and Randy. are valuation long-term positive I in outlook. given turn earnings now So, record has will believe

Randal J. Freitag

from of per $X.XX income adjusted reported we for XX% a operations night, prior Last year. $XXX Dennis. quarter, from share the or million the increase you, third Thank

the to DAC earnings As related prior we noted year benefited from current assumptions, while in unfavorable the quarter items $X.XX of net of quarter release, $X.XX our review reserve annual included the tax adjustments. and

RPS. and to EPS favorable including by competitors. impacts a the many plusses minuses, the viewed and continue This in declines still total, sound had series that underlying Lincoln impacts of a unfavorable financial balance the we review and and impacts in our items, cushion slightly XX% annual of Life Protection, worth which our be modest notable corridor, to markets. assumptions provides sheet in mean and year's Excluding is It Annuities of When not offset modest reserve DAC year-over-year. increased Group in assumptions the from the our did unlock the noting in-force business, reversion against equity also differentiates which quality of highlight

key metrics. performance businesses strong segments resulted Moving revenue increases which, reform, and when earnings. double-digit reporting benefits as expense trends tax Insurance of financial Life generated operating to good RPS, our all Group, with four combined in growth, were with management in Underlying from coupled the

when billion equity Annuities average while operating value values X%. to also and market excluding notable X% reported was continue Book net XX.X%. Excluding of at $X.X per growth. on to with adjusted return growth, increase, grew AOCI, account items, Consolidated flows increased strong $XX, share, combined double-digit over equity

of to continue sources and be sheet $XXX the return million generation capital us in Our strength, quarter. balance to to enabling shareholders

$XXX of million of highlights income the strength of XX% income quarter. operating net Lastly, the further or

Annuity million $XX the for is in This up starting to year assumption benefited $XXX business to as of last higher past earnings with variation $XXX earnings and the X% due quarter this year. review, X% year's impacts unlocking market year were more fee Annuity Now, strength turning annual billion, million, $XX the modest favorable income and up million flows. little growth experience. driven actual very long average from prior segment results, between was net negative the account over from to Reported equity offset compared than in the quarter. values by assumptions to string a latest Earnings with Annuities.

XX%, total completely that believe the sum by net unprecedented underappreciated it Not million earnings over of over only In flows fact, or turning net $XX G&A Total million capitalized, the X.X%. the of is positive $XXX reported the of decade, is with ROA than increased close death the performance, with at operating same with last in have has but just quarter. positive an ROE at both annuity just revenue to while that quarter remains were I the expenses, to year living compared outflows operating $X.X of XX basis of earnings were our period. net amounts metrics risk the marketplace. low Annuity X%. less $XX risk one-third Return X% of benefits impact below billion in points and for we and that net been million, prior profile increased of strong X%, while amount to

Retirement million increase of X trailing capitalized expense modest positive, net expense reform, months, values us point fee Services, XX account high-quality basis for million XX impact in while year. the to attributable decreased $XX leaving year, quarter income well improvement excluding Base was resulting markets, X% points, results the income, of favorable excluding expenses flows spreads the a another XX%. compressed annuity prior an net great ratio. Net combined on benefits management. variable success. to amounts build to investment $X in In basis the points earnings XX in So, with we turn $XX the annual that basis over is versus earnings ROA billion, and approximate to drove review. assumption from of from to prior the average set business positioned $XX up negative reported with Plan flows G&A year-over-year, equity tax are million earnings $X.X billion and of The compared higher this

for So, revenue the result expense robust and solid highlighted are flows, growth, with continued a Retirement by asset which business, strong helping net coupled management. drive

annual and Insurance increased in by Turning our Insurance prior driven to $XXX in-force of included in basis. the revenue, net consistent excluding earnings largely current million prior-year average combined quarter decrease XXX review, favorable a improvement a Life X%. point in of G&A of drivers The expenses, growth, $XXX a expenses assumption tax X% up $XX expense on income. quarter, the and near-term, X policy million mortality, revenue due negative with year-over-year steady, Life reform. spreads amounts Base impact benefits segment. X% remained and from A In from a Earnings solid X% variable Growth with spreads, basis million values on the one-time XX account annualized average to down up expect increase year. points in were to with negative points operating income, basis approximately ratio. impact basis the drove loan the we compress lower capitalized, an investment

benefit earnings $X This the from million the great remained Overall, highlighted in of was namely reserve review. after-tax excluding were of and increase billion, a the growth continued is the $XX momentum premium $XX consistent the $X favorable. loss acquisition the full results XX.X% and X.X% from for The X.X%, Liberty. growth. from experience results. ratio quarter. reported a million quarter prior-year both in with Group risk or in quarter, with favorable result year of business, compared in margin drivers, up increase factoring premiums second acquisition Non-medical earnings Liberty The when a million by of the So, quarter Life strong and quarter sales when XXX% persistency. prior mortality primarily earned was non-medical earnings to Protection in annual the the key

that combined reminder, quarter increase of on business the as compared reflects sizes. with the impact merely loss two blocks case in a acquisition different the based ratio As the to ratios are the loss from we prior-year

margin upside to very are deliver our within range, time repricing is targeted So, on already our was execute we Group business. about margin another optimistic for further and the The we ability our provide and strong savings. expense after-tax quarter it as program over

cash $XXX XXX%. target. Turning remains $X.X Holding capital Statutory approximately and and to came quarter million company ended capital surplus our ratio at at in the RBC above management. billion, the

returned billion share buybacks, be $X repurchases, nearly million with shareholders, we During expect flow million fourth we M&A, Year-to-date, our allocated towards $XXX active guidance. including to dividends, $XXX the and in free and the of to have quarter. quarter, cash consistent

up, was per in value combined came things XX.X%. reform and we a delivered EPS from the let back call from Chris. record as ROE This as another quality earnings. impact the prior of solid once earnings sheet, as drive benefits earnings, over With wrapping growth So, XX% again, reported EPS on capital in the High-quality businesses turn to there results, X% We annual me management, tax book excellent as our no to balance And four metrics at and share review, pre-tax quarter. the key increase revenue confirmed and year's year. all underlying finally, in shareholder increased almost that, were assumptions growth.

Christopher A. Giovanni

Randy. and Dennis you, Thank

We of begin portion question-and-answer will now the the call.

we follow-up, one to reminder, that, to only a ask As Q&A. to limit questions. turn With over Crystal yourself and me let requeue it with that you additional then begin question please and one

Operator

Thank you.

Bhullar JPMorgan. Our first from question from comes Jimmy

Your line is open.

Jamminder Singh Bhullar

Hi. process. potentially first something sort and Is buybacks. on comments in question of monetizing blocks of part consider sort the block into some Good I morning. just that a are looked you'd And Dennis' what preliminary in on thoughts for you've the and where this using of in proceeds reinsuring around are stages? you in-force just the the or whole detail had you

Dennis R. Glass

anything the Jimmy, this just we're aware me into sale aware the going – in it blocks. of say of marketplace just We're for not let M&A, specific. get to details about like the of we're way,

means being parties. different talked course, Of to we've aware

I the we understanding general say, would So, have of potential. the

sense general to understanding that happen. has to a is a made from what going Of course, deal specific

then product, execution. although we One the there fixed liability of would that that think terms are be the price, example better I think simpler the sales would easier blocks, that possible. of In the are block other type what of annuities,

Jamminder Singh Bhullar

block one the on into if there? you'd the savings block, Liberty Okay. the you've as Group achieve the And your of just pricing and about Mutual Benefits market. overall in how And competitive to the you previously? guided more on expense ask – adequacy view talk that could looked is to ability of what's just then environment your more just I terms Could

Dennis R. Glass

levels. the environment, anyone is at would unrealistic I be seem that's There Yeah, say, competitive doesn't market pricing Group solid. to

that, started good. of on the say they on and that slightly and would which me, be as overall, discussed, Liberty – I think bit may some large, would fewer had ago, the block ahead the were our that's our we're a we're we're having movement results there means line But respect that the block. say small, months initiative terms and And little to a in renewal persistency opportunities. pretty marketplace, in and With we of repricing excuse little terms has pretty of in been mid, also less a that XX across of evidence the I they're sales about I there's premium optimistic, a good itself, this year. increases results in getting markets; expectations

So, it's going very well.

Randal J. Freitag

your talked on our the to ability last synergies part about. we Jimmy, confident expense those we're very of in question, deliver

we reminder, about a $XXX talked As million.

though not a expect going little time, we'd to think to, I yet. fact, move specific In number we're that, highlight a above over even

expense in savings. deliver ability So, to very those we're our confident

about see a in you in but We've upper the And them are I'd this reasons margin. continue seeing think of range the longer-term about of already, business, really half you'll expense XXXX, business. very as supportive and over synergies of X% you're term, over into the X% to profitability to one I'd longer say always I when that think time. us should the which it talked I think see be those those

business, So, about yeah, feeling that very good Jimmy.

Jamminder Singh Bhullar

you. Thank

Operator

you. Thank

next comes from Erik Research. question Autonomous Our from Bass

line Your open. is

Erik James Bass

benefit a Hi. you're business bit of there higher I on that to that I Thank typically annuities. growth, rates particularly but on new any you're seeing higher from guess, I you. impact spreads, also rates in we little want the – know seeing interest most new evidence And benefits is business margins? the your to are boosting focus on rates. focus

Dennis R. Glass

each Life Well, now the products. is drive mentioned by the business, of biggest And the ability is context and help some the this rates business but for more my this to will to I consumer the pricing is pointed us saying Lincoln answer right Erik, have remarks that for also annuity in rates improve value for that interest the out, business. been time industry that as clearest of our rising you business, in the into for at benefit we higher of moment the in

And shareholders. makes get it also makes a I'd go sales, for And to it to so, be say sense to on results the sense that'll get positive. better higher that but

And for. two looking so, it's that a combination outcomes of those we're

Randal J. Freitag

the Erik, lower portfolio just Life little we environment. repriced to business, had expand in much our a on entire rate a bit

And as at we're been in factually, returns you if so, getting today, ever they've business. high they're look just the as Insurance Life the

value So new portfolio definitely of consumer. proposition stronger interest environment, we into be that's the that as rate a to going for expect this I reprice that supportive entire

good feel rates sales what Life mean for So, forward. going Insurance very about

Erik James Bass

And XXXX? you. Thank move your sales in expectation and for strain, the cash your in change growth new any is free we associated flow there into as Annuities strong given business

Randal J. Freitag

Erik. No, at none all,

a hundred saw strong growth ratio one that's capital But when capital of had the up premium. make, very growth a billion. of relatively contribution that I'd flat, tend still couple and I you because you think million reflective this large annuity quarter, year, point percentage year the we put get on first annuity really business I you RBC first $X.X to growth. strong know the in of as to

we that were to capital-generating despite growth, strong of maintain the of our able capabilities RBC ratio an So, business. because

Erik James Bass

you. Thank Great.

Randal J. Freitag

bet. You

Operator

you. Thank

Krueger KBW. Ryan from comes from question next Our

line Your open. is

Ryan Krueger

give Insurance point? at Good earnings you of the sense quarterly view rate some where Life morning. run Could this thanks. you us Hi, for

Randal J. Freitag

we those an of didn't made look on Ryan, each two There We million. about experience. that good had up unlocking sort side, some pan million. the are at in But other. we against there out had items match we about, $XX other negative I'd let's mortality $XXX things quarter. this talked of

one-time our hand, I my in performance we of good had But match items up income, a as on portfolio. together. we in script, the and Additionally, from those I'd headwind loan sort a alternative mentioned and policy other two had

$XXX Very where the think look it. number. should I good in of about at when Life feel the reflective I Insurance So million, business. we was good quarter, It be a the it's quarter,

Ryan Krueger

Thanks. laid And it then, on Day of And Could line then, digital year, trajectory net expenses. initiatives that last update impact would more terms in you Investor the breakeven? few At out you on expected? an just in XXXX the the give still over your years. you Is what tracking of you expect with to XXXX? in be

Randal J. Freitag

Ryan. absolutely, Yeah,

million the this said. really benefits So, seeing the we're year at lower of a in line we that. that businesses. And about you're million excuse and about expenses, range, savings of million the benefits what right talked we Looks spend running of $XX to end me, of are $XX with in $XX of like – range tracking but

outright mentioned, I businesses, actual the decreases they're fact expenses in despite growing. you As in all see the that

So, spot-on this similar as next breakeven into proposition said look to should be before, very we of year, next year. year. what we And with more a we

off start the see investments to benefits and the grow. to continue you'll that, trail Beyond

So, bottom million to million $XX benefit that of to line. we ultimate get the to net $XXX

Ryan Krueger

lot. a Great, thanks

Randal J. Freitag

bet. You

Operator

you. Thank

question next Tom from Our Evercore. from Gallagher comes

open. line Your is

Thomas Gallagher

Good morning.

in-force double-digit your you back you up, Dennis. question Like, because see on a could opportunity arbitrage – Just want currently? to PE. get big Is to of to process back the stock, get some buy Jimmy's you you'd a between monetizing freed capital would behind that price the come thought potentially

a it that that not the You'd able Is X be or buy back times. today your there like or else? market is case? the opportunity at to in Is stock big something X

Dennis R. Glass

some Tom, understand, at the without level, fact that market there to trading combined couple for idea at of is the for that hard days we're now. $XX, company, evolving performance it's given which getting with the a into the candidly been sales better ago, block that's specifics, time is a low

favorable of that two that and extent a to for the now. So thinking can that's we're low on makes cross block have right sell basis it sort share over, those we we shareholders, sense and a the our can price what

In some accretive transaction terms EPS, any think what are is to of value do things considerations, like like we we'd the that book and of ROE. to other

of that's the sort our what's back in of So, mind.

in do just the just quarter the main – build continue for to to and, the focus seen I'd on quiver shareholder-positive us of I as I'd the sort arrow that ongoing to-date. of another activities. it's it's that positive results years, main an But team's and is five management it opportunity results characterize focus of company possibility last another for basis kind of you've the say think and the course, of best in my history the

Thomas Gallagher

where you're to or good annuity reform in Understood. And of about quarter, likely just comment new finalized Randy. LNC. then, – it's feel you get the up end that ending for a how also, quantitative or follow-up I last you terms where any standards now? impact know Randy, qualitative said where it you up. about had Can you comments And guess can is might I variable on

Randal J. Freitag

that haven't changed for to the area at make going through process whole seeing an NEIC to applaud that fixed, on thoughts very I a needed that and improved, our all. Tom, disciplined happen. process be

terms In that are the of the final supportive. we things very think proposal,

better think and I alignment there's calculation. your your reserve between capital a

derivative the instruments the are very standard more outcomes. for very the targeted. accounting all scenario favorable, hedge the and Those fact positive is think that think I is much I

little some are out a I'd prefer there came course, that Of things different.

example. for in as all around move move very good an for some the think revenue-sharing, But the in, I those are standard industry, I assumptions instance, good little policyholder this for conservative, scenario So, communities. behavior, very a of just the think sorts is regulatory a a of things the

for on So, sides. impact supportive, it's both continue see a Lincoln. an I think it not We're having win-win to

Thomas Gallagher

Got it.

any Randy, So, the cash no that of flow to metrics experiencing been or for that you've changes business?

Randal J. Freitag

No change whatsoever.

Thomas Gallagher

you. Thank

Operator

you. Thank

Our question next Citi. comes from Kamath from Suneet

open. Your line is

Suneet Kamath

there you being Thanks. VAs simpler thought valuation, out any you Good on more but are morning. the block time. more of some the MoneyGuard? proving have that back it Dennis, to blocks is on one be about transaction or more blocks talked value wanted potentially complicated that the ideas weighing circle I your of to likely, probably

Dennis R. Glass

on to of this catch our of little results. terms guess mean, a I the what I'd that. sense table good company, going market's we've Again, got everything's of Suneet, but, to to prove the each the say want eventually strength businesses. in market sell I for might to hard-pressed make to up The be I the

rather think us. that necessarily would a So, I don't I'd just... be objective good for

Suneet Kamath

then... And it. Got

Dennis R. Glass

ahead. Yeah, go

Suneet Kamath

I I wasn't thinking Liberty, now – point. been guess Separately, your was pieces margin in above it, whole the quarters has two on just the business row a your but I we've target. been where had That's has thinking overall the Understood. understand fine. thing, I of

So the anything Is on? pretty you set think to conservative it too what's highlight you much back particular can out, were give sense expectations hindsight the just original us way? in that across a you as there the of or you'd of benefit board breaking right is we the with that

Randal J. Freitag

Suneet, Randy. it's

having we're experience. I loss very think good

bring together. these thought. mentioned, also additional save we incremental expense we is as great businesses I And better see two we persistency running As possibilities than as noted, we

the earlier, to X.X%. drops bottom-line, said a So of when that had repeat I margin to quarter normalized this what we all

little in we would where a XXXX, loss this in strong I perform the into to synergies very supportive move level, level. Should – world sort a upside range. even you experience Even at margin bit. degrade that that XXXX As of there's expense that continue think very to losses of loss incremental of level experience X.X% in get are

into to for synergy range, things ability for I us half the we've this the of that term, like expense very move upper X% see, upon Over once time. to period long X% longer with again, we that which the of talked based strong about outlook see the a business

So, And things have favorable, seen good a dissimilar been group you've loss a that running not what to Suneet, opportunity for other from standpoint I continue. from there's too think very from players.

Suneet Kamath

Thanks. right. All

Randal J. Freitag

bet. You

Operator

you. Thank

Riley next question from comes Our B. from Randy Binner FBR.

open. is line Your

Randy Binner

the that's know to a as Thanks. I that long-term Hi. that wanted review result the assumption answer unchanged quarter. think had no, to I call no review a confirm prior as items part that around but MoneyGuard. sensitivities, for this out to the in the Good wanted of morning. confirm laid I of you are mean, there's also I Randy, that care changes just

Randal J. Freitag

There's XX%, Even lapses in Randy, incidence all. the in significant very reserves. changed every amount in My a increasing there's of inputs way, answer not sufficiency significant recollection to gave is $X.X about to stressed billion. as zero, that the sufficiency taking of major has such at before you the still had one reserve. you by we the a if

that was part assumption review, As say, of validated. I'd the

of the MoneyGuard Life So, that we positive assumptions. updated when result, a all was small actually very inside

So, has great Randy, nothing is from a profile. It we've before. product risk/reward high-return changed with product what about a high-quality, that said

Randy Binner

change it? and When the repriced they products been in And mean, But mean, year? forward market? that comments those are press as any I is, little I product that I so this the do that backburner kind mean, bit in I about LTC you it's to sales follow-up, going this in are pricing the quarter, of in distribution, how more think up normal a in differently you or the LTC's now received think have other look at but fluctuation. a happens

Randal J. Freitag

marketplace. entrants into a the seeing lot actually more We're

I think the more been have couple there that actually have entered companies space. a

think, space consumer sell seeing companies there's you're very lot more where So, this possibilities other product. return there's of a a that attractive demand this competition, I to realized strong and as is

year. repriced very how will all means did is, think and entire can low, very, on overall we rates I sales were So, my XXXX, of in this actions last pricing business. see Life and principles-based to when an supportive reserves little we The which take comment very with at we our are Life any implement that we as that think to we returns similar again product we of along we about getting reprice sales, be as Life this that our bit once portfolio all-time year-over-year, robust we pressure today, of a this fact repriced product across look

Randy Binner

That's great.

kind on kind Just or of in area, they more new protection one entrants using products? more quick like MoneyGuard product they are a the are entering UL-based though, traditional one, of the LTC with

Randal J. Freitag

seeing space. you're it all think I the over

saw product. it the actually an on IUL think I of putting back entrance I an

all you're seeing it So, I think over.

Randy Binner

Thanks.

Randal J. Freitag

bet. You

Operator

Thank you.

Our next O'Neill. Barnidge comes question from Sandler from John

open. is Your line

John Bakewell Barnidge

in in this come three towards Taxes the of you. guidance it the of Thank quarters end year. low two actually and below was

almost I on term? that see thoughts any reform, And wonky completing Now you it post-tax updated we're year you quarter-to-quarter. do be can a longer have where get it

Randal J. Freitag

No, I think XX% the to XX% is the beginning. range we gave at

range. still just tick a it represents think I reasonable below We're a that.

for quarter. XX.X% I came at think we the in

a reasonable think time to still over expectation. I XX% range XX% reflects So,

John Bakewell Barnidge

follow-up. Okay. And then a

end there that from Your we're been be like from as understatement. Are a bit or the an from inflation strong and depth of It may and in product know of they're you there's sales counter benefits think much general you any that distribution show seeing of cycle. lift economy? we is client has volume a wage has How a do been the the well, Clearly, win strong breadth. that can this coming that and you strengthening? concern at of sales I are, fantastic.

Randal J. Freitag

is a a that single is a... that specific to or John, business question

John Bakewell Barnidge

No, generally.

Randal J. Freitag

...broad.

John Bakewell Barnidge

Broad.

Dennis R. Glass

Yeah.

the you're can I economy. lower the Group to some stronger somewhat think a – results in the ratios can business of to the tied related be that loss seeing be

percentage I and in participation a employee of more we're business seeing plans XXX(k) in savings think plans. XXX(k) into RPS higher the going our

think and products. driving the anything I of pieces margin. So, margin. can at benefit at I our think in the it really see sort across economy it's you of just bits don't so we than see the stronger the more But

John Bakewell Barnidge

you. Thank

Operator

you. Thank

Deutsche Our next Josh Shanker Bank. from question comes from

open. is line Your

Christopher A. Giovanni

is Josh, your line I mute. think

Operator

Please next caller. check we'll line our on that is your mute. move on not And to

Humphrey from Dowling Our question & Lee comes from Partners. next

open. is line Your

Humphrey Hung Fai Lee

my economy than persistency for questions. be strong Good is based better on little talked the morning Group comments, a sales about you taking you In expected, Protection, strong, your thank being continue to and and you've helping.

So, all least should premium about of maybe expectation, we how at kind of these a think for we when top-line the XXXX? growth, put into

Dennis R. Glass

all And your question. the predicates to correct. good question a are Yes,

in XXXX, but some it. yet, premium part we're year As premium to excuse we right digits, assume our way – we it, comment not or get continue it to that that so we're and in back part, X% We has the seen is our lower-single And a we're lapses upside to thinking about into our me, premium because in haven't X% that to the growth growth look assuming we growth in expectations. now. is out shop probably

Humphrey Hung Fai Lee

Okay. net take should how then and turn with of to Got expect the it. flows annuity as like in net while And then, moving to expected continue. how think momentum product about positive we channel in new on stronger the kind is indexed we product to quarter, being and for Allstate flows expectation shape kind you new Annuities, XXXX the also should continue the but new – coming then the you through? to fourth But talked variable – of the relationship new with the about

Dennis R. Glass

add growth. XXXX to ordinarily sales distribution we Well, wouldn't trying being from factually, results expect to predict everything VA kind growth XX% the would Allstate something this equal, indexed is we sales the and that do. continues, else that year's But for the if see we that the just of if in

so, we positive. pretty And think that's

relationships of two the gives a are. math sense Now, based expectations. these those it are just But on of our how you important sort

Humphrey Hung Fai Lee

to that's you at you. going think it. Yeah. Got how me that, kind least think but to XXXX. I'm of helped Thank about not to to hold Yeah. about

Dennis R. Glass

(XX:XX). Sure

Operator

comes Deutsche Thank Shanker question And Bank. Josh next our you. from from

open. line is Your

Joshua Shanker

Let's try time. Hi it this there.

Dennis R. Glass

Hi, Josh.

Joshua Shanker

Sorry.

Bass' So, I wanted question. to follow-up on Erik

margins, enough given looking the different, years future segment on consumption, ratio the portion the pieces that into I How guess, becomes of to moving an we the for as the for the fees sold the for capital the be annuities are we're generated of annuity change? despite portfolio, going looked talked three, the portfolio? same growth. overall years out go composition what You as the does living increasing four, staying without mean five RBC about benefits If

Dennis R. Glass

guarantees, you look reasonable selling inside little period without years. in but continue annuity very Yes, it, over the return, of you see we to metrics out that's the is a three profile. are have supportive when ROEs, time, the $XXX reality little reasonable a more which business, VAs period similar over is I lower which in-force, call we billion ROAs the term. whether of of But ROA think let's of or a a time, over Josh, expect that a we longer has

that feel levels I an years like standpoint supported the two, ROA/ROE from So, think next three that. by over are the we both return

Joshua Shanker

was just enter product, share? sale? that you're that Or the room to annuity, there like have be who another on variable to growth there, market indexed they'll taking It people as to indexed out the the sold sold It's do a and Lincoln annuity that people everybody. one buy able know and needs it. you And feel there's market make you there's you do would variable for

Dennis R. Glass

the indexed think rate. what marketplace growing, variable I is I know Yeah, by annuity don't

because we and think pretty get I a wholesalers. every just as of significant in quality our share the enter time we our of distribution marketplace, the strength business a annuity of

unique of and So, a a fixed a I a also is And product. think both. halfway VA think very between this product, index it's product sort I

markets, floor I and And well, equity to incremental side, on annuity is it's have product. being of think the have It's between. downside. you a very the from this VA the And in the or great upside and complete it's On marketplace. guaranteed I the fixed zero products, we on received index right fixed think a

Joshua Shanker

very you Thank much. Okay.

Operator

Thank you.

comes Kligerman next from from Andrew Credit Our question Suisse.

is morning. open. line Kligerman by Good transactions. very Andrew Your Credit I'm Dennis, Suisse (USA) block intrigued about - reinsurance Securities comment LLC your Hey. the

as us You mentioned you on you sounds would color fixed size like annuities, Life consider of give potential a Maybe little a could it well. transaction.

Dennis R. Glass

Securities (XX:XX). on call. Andrew if course we (USA) – Yeah, LLC going extra Of first get come back to could this Credit on some Andrew, the we I questions Kligerman - were to Suisse knew

Dennis R. Glass

we to be And like may But about. point place, sense, that by we do transaction XXX% time the results start talking makes are that on. a have where that spending our the appropriately model the in are want things so. in reminding there we're are that But I everybody getting, something we attention

meaningful. probably To again, million think we be future, focused that's your specifically range, job that raise So, could as number in the sort we $XXX we're building would thought business, this, we've one. answer the if of about to million, that $XXX on question,

has could LLC thought that's be on sales. we're creative insurance it, I Lincoln that, then relationships (USA) been Suisse And annuity XXX-plus the strong in from an this - But as by do percent. Andrew one's developing see company helpful, it new maybe the for That's the what Dennis. different Kligerman but about annuities. – you about. nervous fixed about probably distribution Credit anytime that's thinking like driver I very we've It of deposits So, fixed get Randy grow Securities sounds and

little of give you you the annuity generating, on So, on spreads Randy, returns expect is sales can question, those types you're products. of that a terms color fixed the the in the new

Dennis R. Glass

- LLC to to going that you've Randy opportunity that correct an answer I'm but maybe... Credit given Okay. Kligerman me let Suisse Andrew question, Andrew, Securities (USA)

Dennis R. Glass

Right, fixed correct right. than Credit To sales something - sales that to my nearly nearly to fixed said I (USA) doubled Kligerman I meant annuity million. Suisse say doubled to annuity in more more than $XXX remarks. $XXX LLC I million. Securities said Andrew

Dennis R. Glass

to talk get So, to that do want just that? corrected. Randy, you about

Randal J. Freitag

we here the variable one things did Andrew, supp. out stat is of recently and our fixed inside Sure. that annuity earnings split we

And we've been actually six been the strong on us over last earnings can this see fixed environment. delivering side. very very getting in has business strong years five, the the the for economic you So, returns fixed

the So, I we've business from profitability think the that today past. is with consistent the a fixed in sold we're selling annuities standpoint of profitability

do did supportive flow You Athene, returns which a on has of been fixed business. the with reinsurance we know annuity deal

we'd LLC we've getting Andrew I and Sounds Kligerman in we'll our (USA) and fixed to think I Suisse to Credit returns we're the on yeah, - sell expect So, strong, today business continue future. good, been strong selling think what returns the Securities good. annuity get on book consistent

Dennis R. Glass

the businesses. just quarter little what We – Let sales return broaden bit. question in on a our of calculate every we're to your add that each getting actually me our

your expectations, across calculate just board, and business are. what and businesses the the So, that's all at our across we're hedge in costs that business in are of the level into your returns at board the go the predicated things on to what all total. target trying mix the And new

that new ballpark Securities annuity AOCI, - you're Annuities ROE, And Credit that. Andrew and mean, so, XX%. mention fixed Kligerman Suisse to I I is over sales? I is (USA) where the wanted mean ex-goodwill seeing LLC Yeah,

Dennis R. Glass

ends That's in higher that of of result ended market levels and through market with pricing up participation return than good return staying of times. the and the the levels And expectations. in – bad up times long-term with our the has

Andrew middle LLC Kligerman Our thanks pricing expectations Suisse would teens. lot. be higher Securities the (USA) to Credit - in Hey, Perfect. a

Randal J. Freitag

Andrew. Thanks,

Operator

And for today's question-and-answer session you. our conclude Thank does conference. this

a ask For anyone with up like any unable conference question to remarks. for to turn now the I'd during back over that was call, closing And the company follow to the you. will Giovanni Chris

Christopher A. Giovanni

this joining morning. for you us Thank

always, As line email at you your via will day. Relations investorrelations@LFG.com. at we take our on Investor have good XXX-XXX-XXXX questions or Thank and a

Operator

disconnect. conclude please and have conference. day. stand by. and participating program a all thank you you in wonderful Speakers, for This does today's Ladies may gentlemen, the Everyone,

Christopher A. Giovanni	Lincoln National Corp.
Dennis R. Glass	Lincoln National Corp.
Randal J. Freitag	Lincoln National Corp.
Jamminder Singh Bhullar	JPMorgan Securities LLC
Erik James Bass	Autonomous Research US LP
Ryan Krueger	Keefe, Bruyette & Woods, Inc.
Thomas Gallagher	Evercore ISI
Suneet Kamath	Citigroup Global Markets, Inc.
Randy Binner	B. Riley FBR, Inc.
John Bakewell Barnidge	Sandler O'Neill & Partners LP
Humphrey Hung Fai Lee	Dowling & Partners Securities LLC
Joshua Shanker	Deutsche Bank Securities, Inc.
Andrew Kligerman	Credit Suisse Securities (NYSE:USA) LLC

Lincoln National (LNC) 2 Nov 182018 Q3 Earnings call transcript