LINCOLN NATIONAL CORP

Details underlying the consolidated results (in millions) were as follows:

(1)The coinsurance with funds withheld investment portfolio includes fixed maturity securities classified as AFS with changes in fair value recorded in OCI. Since the corresponding and offsetting changes in fair value of the embedded derivative related to the coinsurance with funds withheld investment portfolio are recorded in realized gain (loss), volatility can occur within net income (loss). See Note 8 for more information.

Net income decreased due primarily to the following:

•Lower gain in net annuity product features driven by unfavorable changes in the fair value of GLB and GDB hedge instruments in 2023 compared to favorable changes in 2022 attributable to the impact of capital markets and lower gain in MRB-related impacts due to the impact of capital markets.

•Higher investment losses driven by losses on fixed maturity AFS securities as part of the Fortitude Re reinsurance transaction.

•Higher unfavorable changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans driven by the fair value of the embedded derivative related to the Fortitude Re reinsurance transaction.

•Loss in net life insurance product features in 2023 compared to gain in 2022 driven by mark-to-market losses on hedges associated with VUL products.

•Higher compensation-related expenses and other costs pertaining to business operations.

•Transaction costs pertaining to the Fortitude Re reinsurance transaction and the planned sale of our wealth management business.

The decrease in net income was partially offset by the following:

•Less unfavorable impact from our annual assumption review.

•Goodwill impairment in 2022 in our Life Insurance segment.

•Lower total loss ratio in our Group Protection segment.

•Higher investment income on alternative investments, partially offset by lower prepayment and bond make-whole premiums.

In November 2023, we closed our reinsurance agreements with Fortitude Re, with an effective date of October 1, 2023. For more information on the Fortitude Re reinsurance transaction, see Notes 4 and 8.

In December 2023, we announced we had entered into an agreement to sell our wealth management business operated through LFN. For additional information, see “Introduction – Executive Summary – Significant Operational Matters – Protect and Rebuild Statutory Capital” above, “Results of Annuities” below and Note 1.

See “Summary of Critical Accounting Estimates – Annual Assumption Review” above for information on the impacts from our annual assumption review.

For a discussion of the 2022 goodwill impairment, see “Introduction – Summary of Critical Accounting Estimates – Goodwill” above.