LNC - Earnings call transcript Q4 2020 | Lincoln National Corporation

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Operator

Good morning. And thank you for joining Lincoln Financial Group's Fourth Quarter 2020 Earnings Conference Call. At this time, all lines are in a listen-only mode. Later, we will announce the opportunity for questions and instructions will be given at that time. [Operator Instructions] I would now like to turn the conference over to the Vice President of Investor Relations Al Copersino. sir. ahead, go Please

Al Copersino

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

move now and the question-and-answer from President Individual begin, the on uncertainties those to have of SEC. turn deposits, time, Randal Chief in After reports quarterly involve in call. forward-looking adjusted we capital of Form where Securities update adjusted the and our yesterday, our release could your in to Head call, call forward-looking invite or as operations, reconciliations Before Litigation call I that full to Executive repurchases, and and to measures risks on resources call to include cautionary on no over adjusted And These differ non-GAAP to made from operations, described statement Any Officer the we share supplement, portion participation undertake used I any prepared with are made Glass, risks actual Dennis. to current of website, Chief We that them, this under cause regarding the statements remarks, recent Life. detailed find including and our revise or during circumstances measures. are comments as Reform today. most forward-looking of operating reflect expectations. on uncertainties future other the liquidity events in on to Act income and filings appreciate Lincoln's of visit Financial which would disclosures These only will statements include you their Form Freitag, those expectations, you income today's and our the occur GAAP Report like expenses, after most to as materially and issued the statements XXXX can from an obligation are Dennis www.lincolnfinancial.com, or XX-Q, date. comparable income statistical results Annual earnings and and today. important we Private the equity Presenting reminder. release These XX-K, time Officer press to well And the from return XXXX.

Dennis Glass

Good everyone. you, Thank morning, Al.

XXXX, to economic challenges. the During well responded capital Lincoln market health, and immediate

We new also by to investment alternative took quarter improve portfolio. by earnings strong balance add affected which Fourth partially offset cost-effectiveness, and of products, strengthen businesses, steps elevated distribution, our in our build pandemic-related sheet. another and claims, quarter and from Group were was returns Life the

circumstances, When view we review excluding third ROE, of quite experience. maximizing And are one, we level achieving off and improving the reprice the sheet growth a year's saw our current XX%. items which savings, three, strategy. EPS in our the poised Two, were our initiatives, our of year, and from at flexibility. our new XX% views, for product quarter customer executing EPS bit add approximately we a variability three several $X.XX, charges year expense earnings. and this during shift at Based pandemic-related to in annual this Focus the Given on long-term. over included normalizing AOCI, financial to XXXX for balance items deliver largest claims, while X% and strong maintaining the

Let touch these. me each on of

targeted, strategy, capital. achieving aggressive appropriate our our returns with product on and repricing and shift disciplined add new First, reprice actions

our businesses. return business quarter, XX% current fourth exited least the we the forward in curve at across based on generated on all we our a portfolio As new

competitors our add more repriced repricing Also, we as products new in XXXX. components strategy. most growth sales our expected shift several expected, followed course the over to decreased based businesses on the enter with re-emerge of actions, year competitive of our As the making and

increased that will strengthen choice our us year products new eight value and These introducing our to will that top our market customer expand and to Combining more are enable will We is in execute and participate product increase we the to sales growth. segments portfolio, drive part propositions. further of consumer opportunities. continue line our of on this breadth distribution historic product playbook during half capabilities actions first

Second, increase the efforts to our improving experience. efficiency, Expense is priority. a on while management customer key

across is the experience. further for focused further that we are distribution expense will Accelerated see reason and of partner the the opportunities. implementation actions organizations tools and and We and on customer part productivity increase of our enhance also acceptance potential savings manufacturing digital

triple savings expense Life program. management nearly start with is project As the we an later enabling policies capability We'll prior of year example, XX% the Successes quarter, opportunities. delivered quarter. another this, were us expense you the are update meaningful plan as the year this electronically, combined like and size finalized, overall during fourth our to

the on Third, sheet. balance

further on We the and balance have protecting successfully improving focused sheet.

targets. Our the RBC and company ratio cash have remain holding our and increased above at

capital financial contingent from various extending support debt out our capital The benefited and actions, through XXXX. programs. has and September portfolio including increased also actions investment We flexibility adding government until derisking maturities

downgrades As of expectations been losses and than pandemic. a have less the result, credit onset at the

generation face elevated near-term some capital headwinds will COVID-related from forward, claims. Looking

However, given our generation, and the quarter. during overall our cash strong we repurchasing in free shares remain the sheet balance flow first market,

deployment. and deals enhancing capital resources more with we energy potential into transfer have a risk goal the of Additionally, put

stimulus. note before continuing since of favorable is rollout important segment further of developments, markets including last number the November, gains seen that results, have in shifting a to COVID-XX vaccinations, in rates equity Lastly, increase it the conference and early an to in and we economic our call interest

Lincoln of bode All for well over these time.

of mortality levels, we this quarter and and building the year growth into are second peak I experts positioned COVID-XX that our are COVID forecast the and we intact, as in course impacts debts diminish. earnings noted, see ultimately half in over for received first will the underlying to medical return normal Many earnings claims When XXXX. momentum firmly As the year. just of

and unique fastest segments, the the marketplace, to sales indexed annuity Lincoln's we We year. selling which and Annuities, space of the the distribution for our with $X producers shelf IVA is in where expanded total, our which of were turning billion Now IVA position In business doubled number leveraged annuity leadership products the growing starting market. capabilities. successfully variable XXXX, manufacturing helped segment in the our cement

to protection XXXX. living products of in-force, than like sales shifts thirds IVA represented and Asset VAs sales more to are consumers These This is without on resonating contributing without with sales VA our two variable total in Based our annuities XX% producers. toward benefits. annuity the net sales, market benefits, continued first since combined other XXXX. annual flows represent living asset benefits protection and Growth demand and positive time in variable of for annuity with guaranteed non-guaranteed living led values. products account total for

return the the sales as in we generates to total In the we XXXX in of capital from expect year. consistent to expected, produced project course billed were the this and product As environment. sales business to continue book consistent recent we strong add benefit to products down and current the year plan with of due $X.X XXXX, begin to as annuity in-force year deemphasized returns. that annuity sales well We over as we billion quarters fixed rate from run as have high-quality benefit the challenges our we introductions, our

to digitally create expand a propositions enables products In focused high-touch, our portfolio. where us continues consumer broad virtual high-tech differentiate additional already Services, and model, on environment. Retirement product value in Our our new Plan

facilitate year Overall, momentum see we employers in strong reducing opportunities with year consecutive positioned uncertainty quarter year-over-year a was along positive and economic to this we the the and net to we of YourPath, our continue retention quarter. Near-term, have in and third the target business, with for a most markets. and well key decline further increase sales it While to performance retirement teams workforce expect are eliminating total seen or retirement deposits as growth protected and matching compete contributions multiple businesses quarter Americans our year SECURE Notably, reductions our pandemic-related receded, significant and our that some drove from we providing first recurring target funds, from X% solutions income have up alternative weighed deposits, term of to deposits, recurring employer sales strong slightly compared potential flows. in on both including worksite to headwinds working year, access date with Act positions longer the a fourth and address in to in that plans. from programs see and in we sixth

the Life eye was an Within focus business, in introducing on the on first XXXX our during innovation, product XXXX. Insurance repricing with solutions half of new and

returns. year-over-year, the alternative year our us combined prior sales declined remain sales to value we are sales quarter, at levels products growth Given for choice offer positioning until at repricing consumers expect long-term new and introduced. more These similar new sales in attractive products with and propositions, actions, record

potential our non-guaranteed these our solutions, investment guaranteed offering accounts, solutions. Examples our for expansion separate of consumers. VUL MoneyGuard providing and continue portfolio we benefit engine include products; the leverages While product as upside new

As this in the always, the we distribution us expanded and will product portfolio well couple platform XXXX strongest positioning industry, in beyond. with

over our closed. period Group due cases quarter prior strongest increased of on the Sales Lastly, timing Protection. when in year to seasonally

X% in which XXX offset full Strong Life XX% increase in offset full year. and for in by sales, X% persistency the to for While Dental. decreases of than were as premiums year, the basis sales more in of XXXX, gains points declined a disability led than more lower the

resumed, the both below pandemic the is in which are the of contraction premium were at Even positive the has target. stabilizing and growth. Importantly, premiums adjusting we activity margins pandemic, of for for quote experienced onset

enhancements, along our initiatives results. based towards We continuous action. are on And taking expect XXXX, target. Briefly began we with overtime, in focused on expense investment margin building improvement X% we pricing

As our volatile our manage our that highlighting yields. for as as construction allocation money portfolio. nature well markets, proactive derisking, and risk our period with portfolio defensively to investment assets We higher attractive of through match rated high-quality well adjusting performed the I portfolio this new mentioned at liabilities credit capital sound earlier, has

pre-pandemic actions, quality portfolio the is a line the of result with of credit levels. As these in

XX% Additionally, the challenges, closing, performed responded slightly to generated with quarter, long-term in Lincoln our for very including differentiate alternatives return, In and the investment year, full target. in further year's an product us annual unique am how pleased outcomes above portfolio marketplace. the this the that I well

at over to commitment returns, benefit entered well-positioned year XXXX stronger and extraordinary efforts We we attractive build from course as for last momentum of should unwavering want and our new a year. Sales franchise. I the introductions. product Importantly, recognize employees the their

and have enhance tools to productivity. digital and will enable never experience the improve capabilities customer which been us further stronger, Our

with free to over a deliver the a are sheet our X% I long-term, said have and underlying of power environment. generation we capital poised earlier, as rate businesses The interest portfolio earnings balance even and and growth current low strong in are XX% We intact, high-quality durable investment flow to ratios. cash the

drive to turn value. ability a our over to I will call shareholder Randy. now As am I result, optimistic about the

Randy Freitag

Thank current items income night, prior adjusted reported we million per share. quarter you, within Last or no or Dennis. year There the quarter. fourth $X.XX operating of notable were $XXX

impacted was result quarter's by a this items. number However, of

First, approximately pandemic-related million $X.XX $XXX from disability per by This million claims mortality $XXX million impact a and claims. $XX reduced included or earnings share.

from Second, return targeted strong portfolio results or relative $XX our by XX%, share. earnings million to the benefited of alternatives performance $X.XX annual per boosting in investment

$X.XX $XX the quarter. Third, Lincoln mostly share price costs, or there million from compensation segment, increase was resulting related Operations the elevated last unfavorable in to Other expense variability deferred of in share per

share million in loss program credit in with there And was drove experience annuity amortization seasonal $XXX XXX% this $X.XX million effectiveness Outside Life the was $XXX variable Protection. Group item, credit was or unfavorability improvements exceptionally the of in $X.XX of Insurance, non-economic or in spreads excellent. per hedge which risk. income by largely performed in well annuity favorable Net offset per share totaled variable quarter. Finally, non-performance million as $XX levels a

expense each key Moving revenue net financial four values quarter. revenue the to operating decreased business increased value combined our of an Other revenue XX operating to to increased amounts performance prior segments. variability G&A in high. compared X%, basis stands with And led improvement per the The X% X% in Total Operations. decline of the $XX.XX, operating when of growth X%. at or Adjusted with expense excluding year Average ratio. expenses, comp metrics point unfavorable AOCI, book share, capitalized excluding all-time growth X% in to

million the million Now segment increase higher the $XXX Average of account year-over-year starting basis. by primarily was values, to the with $XXX markets. Operating for due The sequential in to Annuities. comp increased and was results, year turning billion prior X% X% $XXX in income driven growth [ph] on quarter. quarter a compared to values equity

XXXX increased income the noise points year first return in XX at driven excluding by Risk fell for point on basis account leading amount of variable value that Earnings basis ago living very values. of in on rose net active of [ph] excellent was crediting G&A book XX in Continuing death quarter, remained at theme tailwind G&A excluding risk into And a account net expenses the the place were continue healthy metrics from and due XX%. Additionally, for amounts a unlocking, end-of-period a benefits in points the and account to basis the with metrics X%, rates year return the and the investment demonstrate quarter. exceeded benefits. X% the values on for Annuities business. basis of up some X providing the in the return improvement quarterly has quarter quarter. expenses equity Base fourth the to average the well at management VA points at typical by coming for strong, capitalized and in to XX equity to decade, full line coming on quarter, sequentially XX.X%. spreads, XX seasonality. was for a assets year values expense ratio grew another quarter, business, been basis as with quality to Return for points over

reported account expect the compared XXXX, compression. XX% Plan prior operating expense up equity the the over capitalized alternative more Retirement than amounts and G&A Services management million we investment on favorable variable the points quarter, expenses, average compression of quarter performance, adjusts to favorable driving year as prior into and million were the more year the a $XX Looking flat excluding liability drove spread income markets to normal, X% full year crediting quarter. Positive prior down higher same. of $XX with expense above quickly. in average less investment with Base values compared account of for spreads, net XXXX. versus combined flows, to values to prior due income was basis the Spread securities lower the in quarter. on XX compressed rate the ratio XXX in rate basis yields point year year, primarily floating matched offset improvement

the and expense XX in as basis and to a with with return momentum to to point going point ROA We in year business expect the moderate drivers more XXXX. range our strong this typical Retirement XX XX The ended positive basis including in serving quarter, forward. results, sales management

We Insurance. Turning reported of to $XXX income the million prior compared to $XXX in operating Life million year quarter.

of million up and the This pandemic-related $XX quarter's of X% alternative prior favorable and Underlying show mortality, results average I million partly year. insurance included account to in-force up $XXX continue average with drivers amortization growth, experience by earnings values X% over upfront. favorable investment the offset noted life

basis prior of the line of prior our expectations. year compared was in due previously a from outside declined XX% year, rate the in leading noted points full the to decreased annual pandemic, basis non-economic For Base crediting to expense XXX in the expenses, with quarter G&A XX net to mortality methodology. our change spreads point a year improvement ratio. capitalized, the amounts to quarter,

X return decline We more our expect base point to rate to XX in XXXX. of spreads to basis typical

items in $XX earnings claims quarter, number quarter, operating including million decrease to the during Group pandemic-related slowdown disability negatively by and of Looking Protection $XX mainly $XX higher ratio that million million mortality, total of This million elevated $XX resulted from remain offset to part The claims forward by sequentially. quarter impacted to disability and COVID-XX and experience. security be a million points months, from us expenses $X earnings the the Group pandemic-related quarter, COVID-XX Over results million direct and prior to loss impacted of seasonally fourth in mortality. a compared we of the in of in first drivers an X.X operations behind reported $XX social $X XX.X% $XX by worst earnings excess claims. partly in continue expect strong. million the in alternative driven of insurance should investment related pandemic, of of growth loss claims by including were which favorable and in life the increase hospitalizations, approvals to coming up quarter, reported year the was was key $XX the a mortality the driven by direct with million headwinds million million, $XX pandemic. of

as sequentially, were increase Life pandemic-related ratio. than Group the Excluding fourth prior in expenses, disability slowdown quarter disability well periods, and the loss G&A as year of X% typical decreased as approvals. both ratio claims full improvement previously from seasonality, net loss sequential year. X ratio percentage by XX.X%, points by for amounts from Dental driven X% in The quarter, and mentioned increase an up loss capitalized, more offset security the in total the was the in social was the

business I and items Excluding the pandemic other of the earnings were our expectations. mentioned, below the

However, get as we will margin. we have our us confident that Dennis over actions time, to taking been the are mentioned, targeted

capital our capital Liberty Turning surplus year associated at acquisition as million of $XXX end stands - at RBC $XXX of and that ratio to non-economic above with debt the million at million the with statutory XXXX our goodwill, an expect XXXX. the we XX $XXX holding will from away points our Cash $XX.X company, ended of we percentage management, billion XXX%, which and we maturity. the go have target pre-funded includes

This the year maturities share the company ago. repurchases. a $XX capital of new pre-funding position and of a million us quarter We we this debt stronger, resumed in puts capital, a contingent added company, at diversified towards life deployed in buybacks and capitalization, were fourth contingent than of $XXX sources million more facility XXXX, combination Additionally, year. until holding strong we earlier cash

our our the conference to earnings headwinds confidence buyback $XXX And from a year's the near-term. to conclude, To of to in in impact this we quarter. additional in our COVID-XX, the we'll large expect million a and call. position, As we capital pandemic, from on increase result provide first continue plan updates, our included result next

to across Looking forward. record and expense we that past including a record believe the we earnings to that, increase over ability us the sales see X% we deployment. values, solid over our a EPS underlying rate, me grow strong company, and With account looking growth, ability, discipline an Al. headwinds a EPS at grow end-of-period robust of the to of capital strong plan Pandemic-related XXXX, to of to capital of XX% back position, drivers providing the call decline pace And reiterate result, will let an that, long-term. as over the turn

Al Copersino

Dennis you, Thank and Randy.

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

we you have if begin call yourself Q&A. additional follow-up, re-queue limit reminder, one and to that, then a questions. to and please ask With me As question one turn you let that the Catherine, over to

Operator

comes Thank you. Suisse. Our Instructions] Kligerman [Operator from first Credit question with Andrew

open. is line Your

Andrew Kligerman

segment. with the understand rates life, sales for really were you and But wanted everyone. and off the big our the repriced aren't Hey. term in term growth, per a I Good products. your quarter, on of an digit interest with starting factor mid-single there quarter morning, off focus sales producer XX%. whereas expectation I fourth sales Life your survey, to Individual was in many And Life

So reprice did off in I'm And it might the kind dropped you sales? wondering, think product? of term why you

Randy Freitag

me for Lincoln. the morning to questions question. you on to going but published that a there Al, a Well, get know report Randy. this question, I'm were recently number is let of this thanks that concerning Andrew, Andrew, that

clear think that some been... And opportunity me I so up this hopefully, of though, confusion has the take let

Al Copersino

time. you long You about just told Wow, morning. it

Randy Freitag

created report. has that That been by

to points term make on sales So, your before question. that few me I sales, get let just your specific a

Andrew Kligerman

Sure.

Randy Freitag

our charges can and face portion was XXXX, that a charges taken. belief First, $XXX a sizable you from issues of since by correct Life of XXXX. And business, I estimate focused Including resolving our the billion filings, taken prior SEC that on the end this result here that covering peers on charges our million in $X of of mortality those of reflect have that have sit the charges mortality my for charges our we've future we find report charges in that we mortality, reserves with which Unfortunately, our have industry as are as aligned that been just assumptions the credible versus represents are the noting many taken actually a small mortality nearly today, charge and data latest expectations. that our standpoint, is experience we've only too industry business we is referenced. since

including that comfortable this to in other So we're I'd very just assumptions, in use say, try be I've short, seen to additionally, with I used areas. I mortality, our pertaining those think say all -

- as peers sole driving estimate the so really for using data and expectations a it's point You're blend Lincoln, approach.

every fact assumptions audit the I are and experience that of think review. internal for through that trued go significant and really ignores year external amount a up

confusion that clear to So that's the I up. first, think, want I

The second reserves. of thing, it's really just broadly on the adequacy

rates of every our statutory you an When As of that XXXX. XX% from by results the just those overall sufficiency. subtests cash XXXX. are FAS end reviewed billion have the small of you single updated new of amount And year. life little out, those specifics, that business, flow flow expect impact pertains turn there's the XX, remind end somewhat, at they've FAS I'll now of significant turn is review the into increased of When GAAP reserves note no reserves, I additionally, the indicate sufficiency we $XX to I'd but have every at to point lens it And getting without our cash factor a and with sufficiency testing And that note governed testing of that XX. we year. amount we governed everybody, to reserves to by been [ph]

second clear to confusion wanted that's up I So on. some item the

on large reinsurance extensively. around for is third discussion and price We've this on discussed recaptures. or The the this potential increases

annual part earnings. our out this we've noted of XXXX Day embedded headwind that million our than other company there, Investor think more $XXX I any this actually. that we is And in issue was that a discussed fact, in

today, XX%. reached I face all we've for meeting recent XX% As resolutions an remaining here that And treaties covering are of seated that our reinsurance note on. additional XX% we represents that sit expectations parties'

small for that For likely setting assumption our as XX%, part remaining outcomes we've of accounted process.

really The It's reinsurance. I FAS It's as it outcomes noted into I there. And on we're piece shape out one re-insurers come YRT in of the really XX% did to fourth also take [ph] that that relates think I and that might pretty Re. X%, - in it's XXXX both dig included in Scottish so as and GAAP a So item, of good specifically, that small I'd remaining. charges point we to likely Scottish. that account from for our

confusion on I this, really asked, know specific So clear I and up. but you there some wasn't a to I think was wanted it question that

So over with wrap-up in and these year. by over do discuss of the any meetings we years, them, really saying just from one of the we've fact, analysts facts talked and that the many investors maybe we'll issues Lincoln, course gladly the further, that that represent about any of these

clears hopefully, into that, that up the that with confusion So was put that marketplace. I believe

broadly let get to on question and Terms sales your me So specifically. Life around

I a is Term market. the where itself market think it's price-sensitive one

So we'll down. push movements sales a a by companies, little here, up and there little movements

in speaking, in have Terms, broadly increase marketplace. position continued that think, I our to we

digitally think, issue by the focused Our driven grow, continued share our I policies. and ability Term both deliver to of to market has

underwriting for especially capabilities, automated $X policies Our under million.

did have you quarter Broadly positioned. think We is impact. that fourth the we're I pricing quarter will some think was in the saw a favorable small with Life tweaks I where we a on So in sales, here first make what believe very what happy trough. we're

rates. that think at negatively first think we came environment, other repriced, on products. the of on think needed level We be sales. MoneyGuard. first I moved I low impacted that We that do our I we, given followed. others to it products Lincoln, think repricing to moved when believe specifically really And that

sales bit. fire bit impacted quarter, negatively going on probably And saw in little so the a peers our our you a and sale of at of some little that fourth

But value real out the the those and key we space quarter, to here we'd - expect year. about but think in variable sales we're space, and - are excuse to is what up the whole of me, I as MoneyGuard think create the speak You're I XXXX right? rolling slow, value. over in course props, things Life the a the excited to products accounts in of of were the usual, in products expect we'd the did really new those the really especially the that first to little XXXX, over of to those them environment, ramp products fourth start quarter work as separate using driver the

risk interest when to are Lincoln, You're that shifting consumer shifting products some and the that products doing negatively away by from from away you're and impacted rates.

what specifically say that's sales broadly I and Andrew, about about Life So Term.

Andrew Kligerman

part with term Number because there's no confusion just And our marked. we're this. I then Okay. from it one, the FAS does I guess for my question, on XX insurance follow-up think get I'll under reframe just absolutely,

- not could So that be does worked. get

million. XX-year looking of the it at over came in then you which outsized. of years, look Number comps be the and And stuff. terms saying mean, numbers other So widely was your assumption different a statutory There been don't your were you from didn't absolutely mention the just period XX that $XXX earnings out and issue. peers. regard a versus over all real I thirdly, two, could to reviews, with have could to

the small a with on but in-force be I a a company problematic. re-insured $XX ultimately mentioned you business the So everything the lot rehab money jump With our against and then recapturing get recapture and that's anti-selected stand-alone and the indication it's absolute over an you leaving have not business. most given I we think the because Lincoln's And blunt this the research that And did information the thirdly, basis. severe points basis exposure. re-insurers to relative of should to could that that That's over that of is on with out million re-insurers a recaptured outsized were long-haul companies in regard it data, Scottish, of given quite a had experience else, over XX-year don't that problems. period, were

I'll So no I absolutely And leave there's but end. our it your on appreciate confusion at feedback. that, just

Randy Freitag

say these me can $XXX let Andrew, and billion. add, $X factually, just I thoughts. can own of up you a add financial One, its statements. I couple I'm - telling you, million

the the its I at So financial statements. numbers, billion. on $X looked

continue $XXX LDTI amount significant of it's to you're can really it wrong, topic. whole million, end but business X% small of of of you on our reserves FAS XX, say, component comes issues that to reserves, again. when just its of sufficiency around this starting concept let again, period say once on our any Once So don't that me expect

going I'm just beg differ. So to

concept, In I what That's leading little terms me, you than look we're materially there earnings GAAP numbers which of of yours? different. would GAAP of of XX% by writers stat reserve. of what represent expect, if excuse the right? one earnings you'd you my different mean, a They those a and life you expect is what business, the It's issuing insurance. roughly GAAP earnings, would - our just are over to our XX% strain in expect, is It's years, stat fraction not and is way, at reserves, the

put at there. potential with did line financial in I Scottish. for I happens XXXX the anything me, statements the right our what in we up results, from would noted impacts So to on in expect look that impacts end,

you're from just points just confusion it's So correct companies think give any go assess some yes, are by Andrew, - some I to of to are with - the created in with to are any there. analyst, you trying you and open to I Lincoln tried opinion correct, But side. facts the don't I answer. want. job I'm you hope and come that your up and as the

And thanks, thoughts. Andrew. your appreciate I So

Andrew Kligerman

No, It's a billion, life as plays out, mean, I in-force. $XXX appreciate appreciate see is of I my end on the We'll $XXX again, well. I it billion term how lot money. but feedback. it

Randy Freitag

It's post-level who term. are. I'm interesting on your whole not this concept experts really sure of

with of by a post-level every re-insurers amount optimization. tell term Let we relief called interesting leading biggest me in you, around America, re-insurer huge some what's of done and there's research work the

a lot results. of around to not questions expert ask sure very those optimizing I'm yeah, term research your thank might interesting them you. So who you but there's want is, Well, because industry post-level

Andrew Kligerman

and there multiple concerns. were did We

Randy Freitag

Thanks, Andrew.

Operator

you. Thank

from comes Evercore. Tom Our next with Gallagher question

Your line is open.

Tom Gallagher

to question little probably be benign. more - tough will so I'll a That's mine Thanks. follow, a

annuities, you're you've a So a variable standpoint, you've Dennis, done more or transfer? modest? sizable risk thinking on something far? on Are transaction fixed from you on kind anticipating just of And on thinking work to likely insurance more like are far, life based on the what product based annuities the I'd so work or just so follow-up you done

Dennis Glass

Tom, thanks for question. the

it's is haven't when it's And from pretty saying couple players start industry market spectrums. me that just into it transfer, I the coming been Let at active that more active, the of active. the in not risk for And only capital a industry by before. across look but is

So overall, market. it's a pretty active

done have as fixed transactions, know, you includes management has includes on, activity, past, And kind both our variable terms asset Lincoln annuity we flow transactions strategic been of of companies. that In there annuity you block is again, done in it portfolio. on our It as portfolio been And one and those know. transactions. the going have some

dimensions it we'll components. So and in past, each the all those has active participated over of of keep looking market Lincoln at

terms transactions, I it. sort to respond the hard on In of of It's be what's I would way guess, big have that. But we'll to and see and small. looking we'll at to wait I sizing, what's - think is meaningful

there the quite opportunities encouraged of I'm be So time in the transacted that past for we've will Lincoln.

Tom Gallagher

Dennis. helpful, That's Okay.

flow XX% follow-up XX% I converted question cash level, you've know think. GAAP in Randy, free to historically, my Just is, distributable the to I

and product about in some the that those to get talking of back pandemic, the mix or has I conversion kind Lincoln and Are shift side now at? higher? other you kind do we that you're sales, what - recovery looking the be we're range? - know Or when we then, be through, Given to you likely think to expect in what lower it of XX-ish do gone

Randy Freitag

points, going the Tom. that update make couple of help. question. let Thanks Hey, right me now, for I'm but Yeah. hopefully not to a the range

you to the we and at taken pricing new capital look If that's that impacts had on, allocate the actions the business. we've

it's of of we to couple a a that we allocate of say capital I that today, of think amount mix And new little capital was about think business you If intensive. lower it than that sort the ago. the years fair sales less to is have today, being

So I think benefit. overtime, a that will definitely be

overtime. have over here, the have half And to new Thanks, positive we're I going capital, least distributable because business. think later. first And But impacts time, that is for Now through we'll give try some earnings the be more some less when to to XXXX to guidance at you distributable Tom. we're look yeah, pandemic think I to negative allocating I benefits think on about, providing how year. could allocating you think the earnings, of think I

Tom Gallagher

Okay. Thanks.

Operator

Thank you.

Autonomous Our next Erik from Bass comes with question Research.

Your open. line is

Erik Bass

bit wanted noted Thank even your And focus results Hi. you. this were I you that, Group think on ex-COVID, below quarter. I business. expectations a Group to the

was I improve about, some where hoping seeing I also think actions biggest variances? to could planned you're So you mentioned margins. the you talk

some into you there? hoping more So could go detail

Randy Freitag

it's Randy. Erik, Yeah.

reported the So if mid-XXs. loss - look a that the quarter, if quarter, at million. spiked to items I you let's you And script, XX totaled to XXs my with right, we $XX listen low out start of

If you'd we back its pandemic if we that, in, $XX to What a you really underwriting. be is I million expenses, to number really range, big - of last cycle? added kind and X% by four look of have And is and it's that range. start at year, our it's X.X% you over right vision X.X% we the elements, clear $XX X.X% that It's management pricing, its shifted. executing you a X% think X% which to million where exited the What of of year which driven really were a sort that XXXX on that last normalized X% in to growing little, is to claims of things. on sort that sort when at fours planning to belief,

today, inside year. as is Dennis shifted that clear X%, which X% were from a going sort of we it we where be to towards of ultimate last where COVID one our in from target, think Lincoln, range we, vision of have I to that sort caused X.X% year right are So mentioned. then And

as Erik. Group here So that's about today, sit the business we how we think

Erik Bass

little ratio maybe more And some detail you in into and well Thank go and a you claims, could bit mentioned security increase and as into the STD bit little then just seasonality, more a please. the bit, you higher dig the group I drivers maybe if that loss you. just of impacts disability some if could think social as some

Randy Freitag

I a XX.X%. ratio spiked two loss items. think reported about If the out disability of quarter, you And we

which we social in add social approval you items Specifically, COVID, two in which when we quarter And slowdowns year this then and fourth security X.X%. security year the - you the XX.X% to to and that last quarter quarter, you'd I we third to COVID. adjust fourth range XX.X% down the that the saw think get in quarter, in to in factor you XX% together slowdowns saw seasonality if typically see those about roughly that's roughly XX% for compares you when of fourth think a

year. one So COVID, think driven worse cetera would target I driven security did factor, and negative know bit a you be social lower what impact. that's above we seasonality, is the little noise of we but were, et being think we're by we're where LTV That's rate a a by and approvals I I which little our had this in that's discount our really just that big a than business underneath think little the the

of the we've do we price, all had was all point bids is a clear group there all to out year year, putting insight and we've that good so put into something lot we it the in the nature been were Now, and discount that, you which rate the good, early that us more the back first is in that from coming the is in price cases that into impacts range those the of quarter hopefully that's the January on put any negative outside will might feel of decrease COVID. hit can Xst, to normal so we see got cover that going

Erik Bass

Got it. Thank you. helpful. That's

Randy Freitag

Yeah.

Operator

you. Thank

Our Citi. comes Suneet question from with Kamath next

line Your open. is

Suneet Kamath

to to morning. X% the about. Thanks. to growth are guys just want Good XX% talking long-term EPS you I circle back

lot sort you think in know a with there's be then to get new they a about in back from and XXXX back it XXXX you motion to guess need five that get products. of talked four you your year net about, impact into something I from now I Investor impact, new XXXX, to business. four-to-five-point business? when Day But positive new I would a like that to points fair as had think transition as

Dennis Glass

of XX% sort as the amount new coming point sort to traditionally of of has a X% from business, versus improvement. Suneet, its Dennis. you some run-off out the X% business growth, margin The

management we X% to spread markets by So, and actions, X% from get XX%. up two I and all compression, market, and out equity net capital think we've to then offset one points, up buybacks and that to to share growth adds

we've some lower, And of some our in them success long because near the circumstances. higher, that, are are so of over and think those of that's term demonstrated term, I our bars accomplishing the in

a little higher. sales is as to So bit think bit margin and bar a improvement And that going I will rebuild be X%. the saving put be time of bar lower. little we And expense but

ourselves forth, And conditions, see management, XX%. bars find be that repeat, for X% the we there. over the given pandemics we to change both we to months, Randy next what And and ourselves get each of that $X.XX. but six So we can circumstances macroeconomic so that driving different, can in toward getting the have and I little off said, but a get might the bit how can, XX for again, there, months to

Suneet Kamath

way spread that it. you looking try to then imagine least it talked reduction compression spread I of would I in goal or as chart, is Got of at to the that probably that Is today offset expense maybe about it. the about the the guess XQ? to past, you in I new guys were I related in And about was to when was information, to offset, has think one more sort spreads same the guess XXXX. getting what think impact worse than compression what plan it compression, been, this we think

Randy Freitag

at end were how and It's we about XXXX. rates as about out sort about, X% a dipped moved back range low talked we Yeah, we think above this of that. when we talked might beginning little then we coming have a of And the that, year of significantly X% think of talked to we the me, Randy. I spread - while about compression,

XXXX. range, where that to we it it see as in I a were little think X% higher think we're range, the in think sit of but than over planning probably albeit upper we of we back and our in back X% range, that X% I today half I look inside to we out horizon, X%

Dennis Glass

job, It's spread compression, continuing amount. when Suneet. there's a pressure management's from Hello, lower this is of but at like, there sort

those You to replace earnings. know, our it's job

we the in so very financial into as as next years. much our plan, next we into couple move mind, this And get that's

Suneet Kamath

Okay, thanks.

Operator

you. Thank

comes Buehler from Jimmy Our with next question JPMorgan.

Your line is open.

Jimmy Buehler

Hi, good morning.

on changes do Randy for rolling just the what how have if first, out on couple years, of when do and you'll in and impact affected So of be you you might then, not, think accounting LDTI indications in be? coming better to guidance insight or you'll sort a start up

Randy Freitag

I I that today, middle see going little that XXXX, be XXXX large it's that don't don't any really maybe can the Jimmy. share start I before comments from the, numbers than component. sharing. with think other you earlier XX have in range, Jimmy, we of have a a to really insights we can Yeah, made I the we FAS impact really

by year, a the environment. to work. that work of FASB, from they back because lot somewhat implementation go you if work of there's, it's And differed was, influenced that a as think there's the LDTI everybody to I home reason there's shifting

I in start that be sharing sharing XX the data area, start data then. think So, - yeah, in with we're somewhere able we'll to

Jimmy Buehler

some makeup, on the businesses. your the how think not as just I up matching susceptible And it's and customer if in seeing to about just And been you're holding on better I or than business, have XXX(k) good. just you're of your of then And on talk pretty is there? that could contributions? trends Retirement flows business you what And about talk economy in susceptible terms deferrals guess, the segments your the

Dennis Glass

but the to later education, in has some improved and from over matches on are The in be contribution large year. so in the susceptible less that participate seems we from markets rates the forth and employers improving, Jimmy, part employees and that to statistics in the more areas. the mentioned, course stable health pandemic, early of and I those the government, and employment and of year year

a had it run expect we continue. good here, we've to yes, and So

Operator

Thank with all to those like turn you. questions. I we remarks. for over Management the That's closing to call Copersino the in queue later back follow-up the time will afternoon. would have this Al for

Al Copersino

joining Well, all morning. for this us thank you

questions always, you that any have. As happy follow-up we're to take

You can e-mail you a us at investor at relations all, lfg.com. great day. Thank have and

Operator

gentlemen, Thank you today's this Ladies call. for concludes participating. conference and

You may Speakers, please now by. stand disconnect. Everyone, have a great day.

Lincoln National (LNC) 4 Feb 212020 Q4 Earnings call transcript