LINCOLN NATIONAL CORP
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
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Results of Consolidated Operations
Details underlying the consolidated results (in millions) were as follows:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Net Income (Loss) | ||||
| Income (loss) from operations: | ||||
| Annuities | $297 | $271 | $556 | $545 |
| Life Insurance | (35) | 33 | (70) | 20 |
| Group Protection | 130 | 109 | 210 | 180 |
| Retirement Plan Services | 40 | 47 | 76 | 90 |
| Other Operations | (102) | (106) | (336) | (193) |
| Net annuity product features, after-tax | 198 | 822 | 1,337 | (195) |
| Net life insurance product features, after-tax | 3 | (123) | (102) | (218) |
| Credit loss-related adjustments, after-tax | (28) | (3) | (28) | (21) |
| Investment gains (losses), after-tax (1) | (181) | (528) | (246) | (574) |
| Changes in the fair value of reinsurance-related | ||||
| embedded derivatives, trading securities and | ||||
| certain mortgage loans, after-tax (2) | 158 | (4) | 312 | 3 |
| Transaction and integration costs related to mergers, | ||||
| acquisitions and divestitures, after-tax (3) | (21) | (7) | (29) | (7) |
| Gains (losses) on other non-financial assets – sale of | ||||
| subsidiaries/businesses, after-tax (4) | 436 | – | 436 | – |
| Net income (loss) | $895 | $511 | $2,116 | $(370) |
(1)The three and six months ended June 30, 2023, include impairments of certain fixed maturity AFS securities in an unrealized loss position, resulting from the Company’s intent to sell these securities as part of the fourth quarter 2023 reinsurance transaction. See Notes 3 and 7 for additional information.
(2)The three and six months ended June 30, 2024, include primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction. 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 7 for more information.
(3)Includes costs pertaining to the sale of our wealth management business and the fourth quarter 2023 reinsurance transaction. For more information, see Notes 1 and 7, respectively.
(4)For information on the sale of our wealth management business, including the statutory capital benefit, see Note 1.
Comparison of the Three Months Ended June 30, 2024 to 2023
Net income increased due primarily to the following:
Gain on other non-financial assets due to the sale of our wealth management business in the second quarter of 2024.
Lower investment losses driven by intent to sell impairment in 2023 on fixed maturity AFS securities as part of the fourth quarter 2023 reinsurance transaction.
Favorable changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans in 2024 compared to unfavorable changes in 2023 driven by the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.
Gain in net life insurance product features in 2024 compared to loss in 2023 driven by lower mark-to-market losses on hedges associated with VUL products.
The increase in net income was partially offset by the following:
Lower gain in net annuity product features due to less favorable changes in equity markets and interest rates driving MRB-related impacts, partially offset by favorable changes in the fair value of GLB hedge instruments in 2024 compared to unfavorable changes in 2023 attributable to the impact of capital markets.
Loss from operations in our Life Insurance segment in 2024 compared to income from operations in 2023 driven by the run-rate impact of the fourth quarter 2023 reinsurance transaction.
Lower investment income on alternative investments.
Comparison of the Six Months Ended June 30, 2024 to 2023
Net income increased due primarily to the following:
Gain in net annuity product features in 2024 compared to loss in 2023 driven by improvement in the fair value of GLB hedge instruments attributable to the impact of capital markets and higher gain in MRB-related impacts due to higher interest rates, partially offset by less favorable changes in equity markets.
Gain on other non-financial assets due to the sale of our wealth management business in the second quarter of 2024.
Lower investment losses driven by intent to sell impairment in 2023 on fixed maturity AFS securities as part of the fourth quarter 2023 reinsurance transaction.
More favorable changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans in 2024 driven by the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.
Lower loss in net life insurance product features driven by lower mark-to-market losses on hedges associated with VUL products.
The increase in net income was partially offset by the following:
Higher expenses driven by a legal accrual in the first quarter of 2024 and higher compensation-related expenses.
Loss from operations in our Life Insurance segment in 2024 compared to income from operations in 2023 driven by the run-rate impact of the fourth quarter 2023 reinsurance transaction.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.