LINCOLN NATIONAL CORP
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
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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, 2025 · Filed Jul 31, 2025
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Results of Consolidated Operations
Details underlying the consolidated results (in millions) were as follows:
| For the ThreeMonths Ended June 30, · For the Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 (1) | 2025 | 2024 (1) | |||
| Net Income (Loss) | ||||||
| Income (loss) from operations: | ||||||
| Annuities | $287 | $297 | $577 | $556 | ||
| Life Insurance | 32 | (35) | 16 | (70) | ||
| Group Protection | 173 | 130 | 274 | 210 | ||
| Retirement Plan Services | 37 | 40 | 71 | 76 | ||
| Other Operations | (91) | (97) | (186) | (192) | ||
| Net annuity product features, pre-tax (2) | 405 | 252 | (687) | 1,702 | ||
| Net life insurance product features, pre-tax | (58) | 4 | (15) | (128) | ||
| Credit loss-related adjustments, pre-tax | (25) | (34) | (53) | (36) | ||
| Investment gains (losses), pre-tax | (81) | (230) | (183) | (311) | ||
| Changes in the fair value of reinsurance-related | ||||||
| embedded derivatives, trading securities and | ||||||
| certain mortgage loans, pre-tax (3) | 14 | 201 | (76) | 395 | ||
| Gains (losses) on other non-financial assets – sale of | ||||||
| subsidiaries/businesses, pre-tax (4) | – | 584 | – | 584 | ||
| Other items, pre-tax (5) (6) (7) (8) (9) | 75 | (33) | 40 | (219) | ||
| Income tax benefit (expense) related to the | ||||||
| above pre-tax items | (69) | (184) | 199 | (451) | ||
| Net income (loss) | $699 | $895 | $(23) | $2,116 | ||
(2)For the three months ended June 30, 2025 and 2024, includes changes in MRBs of $932 million and $126 million, respectively; changes in the fair value of the related hedge instruments inclusive of income allocated to support the cost of hedging or future benefits of $(595) million and $50 million, respectively; and changes in the fair value of the embedded derivative liabilities and the associated index options for our indexed annuity products of $68 million and $76 million, respectively. For the six months ended June 30, 2025 and 2024, includes changes in MRBs of $(370) million and $2,021 million, respectively; changes in the fair value of the related hedge instruments inclusive of income allocated to support the cost of hedging or future benefits of $(321) million and $(537) million, respectively; and changes in the fair value of the embedded derivative liabilities and the associated index options for our indexed annuity products of $4 million and $218 million, respectively.
(3)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.
(4)For information on the sale of our wealth management business, see Note 1 in our 2024 Form 10-K.
(5)Includes $(114) million for the six months ended June 30, 2024, primarily related to the settlement of cost of insurance litigation in the first quarter of 2024.
(6)Includes severance expense related to initiatives to realign the workforce of $(2) million and $(7) million for the three months ended June 30, 2025 and 2024, respectively, and $(8) million and $(56) million for the six months ended June 30, 2025 and 2024, respectively.
(7)Includes transaction, integration and other costs related to mergers, acquisitions, divestitures and certain other corporate initiatives for the three months ended June 30, 2025 and 2024, respectively, of $(18) million primarily related to the Bain Capital transaction and $(27) million related to the sale of our wealth management business; and for the six months ended June 30, 2025 and 2024, respectively, of $(38) million related to the Bain Capital transaction and the sale of our wealth management business and $(37) million primarily related to the sale of our wealth management business.
(8)Includes deferred compensation mark-to-market adjustment of $1 million for the three months ended June 30, 2025 and 2024, and $(8) million and $(12) million for the six months ended June 30, 2025 and 2024, respectively.
(9)Includes gains (losses) on early extinguishment of debt of $94 million for the three and six months ended June 30, 2025.
Net income decreased due primarily to the following:
Gain on other non-financial assets in 2024 due to the sale of our wealth management business.
Less favorable 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 2025 compared to gain in 2024 driven by change in the fair value of hedges associated with VUL products attributable to the impact of capital markets.
The decrease in net income was partially offset by the following:
Higher gain in net annuity product features driven by the impact of capital markets.
Lower investment losses driven by lower losses on fixed maturity AFS securities.
Net favorable other items in 2025 compared to net unfavorable in 2024 driven by gain on extinguishment of debt in 2025.
Higher investment income on alternative investments.
Improvement in our total loss ratio in our Group Protection segment.
Net income decreased due primarily to the following:
Loss in net annuity product features in 2025 compared to gain in 2024 driven by the impact of capital markets.
Gain on other non-financial assets in 2024 due to the sale of our wealth management business.
Unfavorable changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans in 2025 compared to favorable changes in 2024 driven by the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.
The decrease in net income was partially offset by the following:
Net favorable other items in 2025 compared to net unfavorable in 2024 driven by gain on extinguishment of debt in 2025 and settlement of cost of reinsurance litigation in 2024.
Lower loss in net life insurance product features driven by change in the fair value of hedges associated with VUL products attributable to the impact of capital markets.
Improvement in our total loss ratio in our Group Protection segment.
Higher investment income on alternative investments.
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