LINCOLN NATIONAL CORP
For the period ended Sep 30, 2025. Filed Oct 30, 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.
Sep 30, 2025 · Filed Oct 30, 2025
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Results of Consolidated Operations
Details underlying the consolidated results (in millions) were as follows:
| For the ThreeMonths Ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Net Income (Loss) | ||||
| Income (loss) from operations: | ||||
| Annuities | $310 | $301 | $886 | $857 |
| Life Insurance | 25 | 22 | 40 | (48) |
| Group Protection | 149 | 109 | 423 | 318 |
| Retirement Plan Services | 46 | 44 | 116 | 120 |
| Other Operations | (99) | (84) | (282) | (276) |
| Net annuity product features, pre-tax (1) | 410 | (381) | (277) | 1,319 |
| Net life insurance product features, pre-tax | (22) | (125) | (37) | (253) |
| Credit loss-related adjustments, pre-tax | (38) | (88) | (91) | (124) |
| Investment gains (losses), pre-tax | (35) | (105) | (218) | (416) |
| Changes in the fair value of reinsurance-related | ||||
| embedded derivatives, trading securities and | ||||
| certain mortgage loans, pre-tax (2) | (191) | (446) | (266) | (51) |
| Gains (losses) on other non-financial assets – sale of | ||||
| subsidiaries/businesses, pre-tax (3) | – | (2) | – | 582 |
| Other items, pre-tax (4)(5)(6)(7)(8) | (105) | (19) | (65) | (238) |
| Income tax benefit (expense) related to the | ||||
| above pre-tax items | (5) | 246 | 194 | (202) |
| Net income (loss) | $445 | $(528) | $423 | $1,588 |
(1)For the three months ended September 30, 2025 and 2024, includes changes in MRBs of $337 million and $(666) 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 $30 million and $188 million, respectively; and changes in the fair value of the embedded derivative liabilities and the associated index options for our indexed annuity products of $43 million and $97 million, respectively. For the nine months ended September 30, 2025 and 2024, includes changes in MRBs of $(33) million and $1,354 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 $(307) million and $(350) million, respectively; and changes in the fair value of the embedded derivative liabilities and the associated index options for our indexed annuity products of $63 million and $315 million, respectively.
(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)For information on the sale of our wealth management business, see Note 1 in our 2024 Form 10-K.
(4)Includes certain legal accruals of $(9) million for the three and nine months ended September 30, 2025; and $(114) million for the nine months ended September 30, 2024, primarily related to the settlement of cost of insurance litigation in the first quarter of 2024.
(5)Includes severance expense related to initiatives to realign the workforce of $(5) million and $(16) million for the three months ended September 30, 2025 and 2024, respectively, and $(13) million and $(72) million for the nine months ended September 30, 2025 and 2024, respectively.
(6)Includes transaction, integration and other costs related to mergers, acquisitions, divestitures and certain other corporate initiatives consisting of $(55) million of transaction costs related to restructuring certain captive reinsurance subsidiaries and $(22) million related to Life Insurance segment persistency optimization for the three months ended September 30, 2025; $(2) million related to the sale of our wealth management business for the three months ended September 30, 2024; for the nine months ended September 30, 2025, includes $(55) million of transaction costs related to restructuring certain captive reinsurance subsidiaries, $(22) million related to Life Insurance segment persistency optimization, $(20) million related to the sale of our wealth management business and $(18) million primarily related to the Bain Capital transaction; for the nine months ended September 30, 2024, includes $(39) million primarily related to the sale of our wealth management business.
(7)Includes deferred compensation mark-to-market adjustment of $(14) million and $(1) million for the three months ended September 30, 2025 and 2024, respectively, and $(22) million and $(13) million for the nine months ended September 30, 2025 and 2024, respectively.
(8)Includes gains on early extinguishment of debt of $94 million for the nine months ended September 30, 2025.
Net income increased due primarily to the following:
Gain in net annuity product features in 2025 compared to loss in 2024 driven by the impact of capital markets.
Lower 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.
Lower loss in net life insurance product features driven by the change in the fair value of hedges associated with VUL products attributable to the impact of capital markets.
Lower investment losses driven by gains in 2025 on certain investments associated with the fourth quarter 2023 reinsurance transaction compared to losses in 2024 and lower realized losses on certain investments.
Lower credit loss-related adjustments on our mortgage loans on real estate.
The increase in net income was partially offset by the following:
Unfavorable impact from our annual assumption review in 2025 compared to favorable impact in 2024.
Higher net unfavorable other items driven by transaction costs related to restructuring certain captive reinsurance subsidiaries and persistency optimization in our Life Insurance segment in 2025.
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 impact from our annual assumption review in 2025 compared to favorable impact in 2024.
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.
The decrease in net income was partially offset by the following:
Lower loss in net life insurance product features driven by the change in the fair value of hedges associated with VUL products attributable to the impact of capital markets.
Lower investment losses driven by favorable changes in the fair value of certain derivatives, higher gains on certain investments associated with the fourth quarter 2023 reinsurance transaction and lower realized losses on certain investments.
Lower net unfavorable other items driven by gain on extinguishment of debt in 2025 and settlement of cost of reinsurance litigation in 2024, partially offset by transaction costs related to restructuring certain captive reinsurance subsidiaries and persistency optimization in our Life Insurance segment in 2025.
Improvement in our total loss ratio in our Group Protection segment and growth in average account balances.
Higher investment income on alternative investments.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.