Lincoln National (LNC) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 results exceeded expectations, with net income available to common stockholders of $884–$895 million ($5.11 per diluted share), driven by the sale of the wealth management business and favorable market impacts.

• Adjusted operating income was $319 million ($1.84 per share), reflecting core business performance excluding notable items.

• Strategic priorities advanced, including capital growth to an estimated RBC ratio above 420% and the establishment of a Bermuda-based reinsurance subsidiary.

• Group Protection and Annuities delivered strong performance, with Group Protection matching or exceeding prior-year records and Annuities achieving a 10% earnings increase.

• Total revenues for Q2 2024 were $5.15 billion, a significant increase from $2.93 billion in Q2 2023, reflecting realized gains and higher fee income.

Financial highlights

• Adjusted operating income available to common stockholders was $319 million ($1.84 per share); net income was $884–$895 million ($5.11 per diluted share), driven by the wealth management sale and market impacts.

• Total annuity sales reached $3.8 billion, up 48% year-over-year and 34% sequentially; average account balances grew 5–7% year-over-year.

• Group Protection operating income was $130 million, up 19% year-over-year, with a 10% margin and premiums up 3%.

• Retirement Plan Services operating income was $40 million, down year-over-year but up sequentially; account balances increased 11–13% year-over-year.

• Book value per share (excluding AOCI) increased to $66.37; adjusted book value per share rose to $68.51.

Outlook and guidance

• On track to achieve 45%-55% free cash flow conversion by 2026, with progress in capital generation and expense management.

• Group Protection margins expected at the high end of 50-100 basis points expansion for 2024, with seasonality moderating results in the second half.

• Management expects continued progress on strategic realignment, capital optimization, and operating model transformation.

• The company expects an ongoing unfavorable impact to Life Insurance segment operating results of $25–$30 million per quarter due to the 2023 Fortitude Re reinsurance transaction.

• Continued focus on deleveraging, with a long-term leverage ratio target of 25%.