LINCOLN NATIONAL CORP

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

(2)Includes 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)See Note 8 for more information.

(4)For information on the sale of our wealth management business, see Note 1.

(5)For the year ended December 31, 2024, includes certain legal accruals of $(129) million, primarily attributable to a first quarter 2024 accrual related to the settlement of cost of insurance litigation, and regulatory accruals of $(12) million related to estimated state guaranty fund assessments net of estimated state premium tax recoveries associated with the Bankers Life Insurance Company and Colorado Bankers Life Insurance Company insolvencies (see “State Guaranty Fund Assessments” in Note 17 for more information). For the years ended December 31, 2023 and 2022, includes certain legal accruals of $(12) million and $(147) million, respectively.

(6)Includes severance expense related to initiatives to realign the workforce of $(74) million and $(7) million for the years ended December 31, 2024 and 2023, respectively.

(7)Includes transaction and integration costs related to mergers, acquisitions and divestitures of $(40) million and $(34) million for the years ended December 31, 2024 and 2023, respectively.

(8)Includes deferred compensation mark-to-market adjustment of $(15) million, $(2) million and $38 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Net income increased due primarily to the following:

•Higher gain in net annuity product features driven by improvement in the fair value of GLB hedge instruments attributable to the effect of capital markets and higher gain in MRB-related impacts due to higher interest rates, partially offset by less favorable changes in equity markets.

•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 primarily by the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.

•Gain on other non-financial assets due to the sale of our wealth management business in 2024.

•Favorable impact from our annual assumption review in 2024 compared to unfavorable impact in 2023.

•Lower investment losses driven by losses in 2023 on fixed maturity AFS securities as part of the fourth quarter 2023 reinsurance transaction.

•Growth in average account balances and improvement in our total loss ratio in our Group Protection segment.

•Lower loss in net life insurance product features driven by mark-to-market changes on hedges associated with VUL products.

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

•Higher expenses in other items.

•Higher credit loss-related adjustments on our mortgage loans on real estate.

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 effect of capital markets and lower gain in MRB-related impacts due to the effect of capital markets.

•Investment losses in 2023 compared to gains in 2022 driven by losses in 2023 on fixed maturity AFS securities as part of the fourth quarter 2023 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 fourth quarter 2023 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, partially offset by lower expenses in other items.

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.

For information on the fourth quarter 2023 reinsurance transaction, see Notes 3 and 7.

For information on the sale of our wealth management business in 2024, see “Results of Annuities” below and Note 1.

For information on the impacts from our annual assumption review, see “Introduction – Summary of Critical Accounting Estimates – Annual Assumption Review” above.

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