[February 06, 2019] |
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Lincoln Financial Group Reports Fourth Quarter and Full Year 2018 Results
Lincoln Financial Group (NYSE: LNC) today reported net income for the
fourth quarter of 2018 of $399 million, or $1.80 per diluted share
available to common stockholders, compared to net income in the fourth
quarter of 2017 of $816 million, or $3.67 per diluted share available to
common stockholders. Fourth quarter adjusted income from operations was
$475 million, or $2.15 per diluted share available to common
stockholders, compared to $440 million, or $1.98 per diluted share
available to common stockholders, in the fourth quarter of 2017.
Net income for the full year of 2018 was $1.6 billion, or $7.40 per
diluted share available to common stockholders, compared to $2.1
billion, or $9.22 per diluted share available to common stockholders in
2017. Full year 2018 adjusted income from operations was $1.9 billion,
or $8.48 per diluted share available to common stockholders, compared to
$1.8 billion, or $7.79 per diluted share, available to common
stockholders, for the full year of 2017.
Net income in the prior-year quarter and full year 2017 included
non-recurring net favorable items of $417 million primarily related to
tax reform.
"Fourth quarter adjusted operating EPS growth of 9% and ROE of 13.5%
were strong and consistent with our record full-year results," said
Dennis R. Glass, president and CEO of Lincoln Financial Group.
"Significant accomplishments this past year include restoring positive
flows in the Annuities business, outperforming our expectations for the
Liberty acquisition, and executing on strategic transactions, which
resulted in $2.5 billion of capital deployment. Given our positive
momentum, we remain well positioned to drive long-term shareholder
value."
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As of or For the
Quarter Ended
December 31
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As of or For the
Year Ended
December 31
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(in millions, except per share data)
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2018
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2017
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2018
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2017
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Net Income (Loss)
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$
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399
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$
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816
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$
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1,641
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$
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2,079
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Net Income (Loss) Available to Common Stockholders
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387
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818
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1,623
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2,086
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Net Income (Loss) per Diluted Share Available to Common Stockholders
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1.80
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3.67
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7.40
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9.22
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Revenues
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4,531
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3,669
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16,424
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14,257
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Adjusted Income (Loss) from Operations
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475
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440
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1,880
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1,754
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Adjusted Income (Loss) from Operations per Diluted Share Available
to Common Stockholders
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2.15
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1.98
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8.48
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7.79
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Average Diluted Shares
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215.0
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221.9
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219.6
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226.2
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ROE, including AOCI (Net Income)
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10.9%
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19.4%
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10.6%
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13.2%
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Adjusted Operating ROE, excluding AOCI (Income from Operations)
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13.5%
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12.8%
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13.5%
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13.1%
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Book Value per Share, Including AOCI
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$
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69.71
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$
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79.43
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$
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69.71
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$
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79.43
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Book Value per Share, Excluding AOCI
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67.73
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64.62
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67.73
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64.62
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Operating Highlights - Full Year 2018 versus Full Year 2017
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Adjusted operating EPS up 9%, or 13% excluding notable items
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Adjusted operating ROE, excluding AOCI, of 13.5%, up 40 basis points
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Total Annuity sales of $12.4 billion, up 42%, and achieved positive
net flows in the fourth quarter
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Life insurance expense ratio of 6.8%, a 90 basis point improvement
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Retirement Plan Services net flows of $2.5 billion, up 76%
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Group Protection after-tax margin of 5.5%, up 30 basis points
There were no notable items within adjusted income from operations for
the current quarter while the full year included approximately $0.01 of
net unfavorable items per share primarily related to the company's
annual review of DAC and reserve assumptions. In the prior-year quarter,
there were no notable items within adjusted income from operations while
the full year included approximately $0.29 of net favorable items per
share related primarily to tax adjustments unrelated to tax reform.
Fourth Quarter 2018 - Segment Results
Annuities
The Annuities segment reported income from operations of $258 million
compared to $265 million in the prior-year quarter, as a lower reported
tax rate as a result of tax reform was more than offset by a decrease in
average account values driven primarily by the Athene reinsurance
transaction completed in the fourth quarter.
Total annuity deposits of $3.8 billion were up 35% from the prior-year
quarter as both variable and fixed annuities benefitted from product and
distribution expansion. Variable annuity sales were up 15% versus the
prior-year quarter and fixed annuity sales increased 102% over the same
period.
Net flows were $675 million in the quarter, which included positive
flows from both variable and fixed annuities, compared to net outflows
of $222 million in the prior-year period.
For the full year, total annuity sales of $12.4 billion increased 42%
versus the prior year. Net outflows of $139 million for the year
improved from $2.7 billion in 2017. As a result of the reinsurance
transaction in the fourth quarter, average account values decreased 8%
from the prior-year period but increased 2% for the full year.
Retirement Plan Services
Retirement Plan Services reported income from operations of $45 million,
up 10% compared to the prior-year quarter. The growth in earnings is
attributable to a lower reported tax rate as a result of tax reform and
lower expenses.
Total deposits for the quarter of $2.2 billion were down 11% while
deposits for the full year increased 18% to $10.1 billion driven by a
32% increase in first-year sales and 8% growth in recurring deposits.
Net flows totaled $173 million in the quarter compared to $440 million
in the prior-year period. For the full year, net flows totaled $2.5
billion, up 76% compared to the prior year. Average account values of
$70 billion were up 5% from the prior-year quarter primarily driven by
positive net flows.
Life Insurance
Life Insurance reported income from operations of $175 million, up 15%
versus the prior-year quarter. The increase in earnings is primarily
attributable to stronger variable investment income and a lower reported
tax rate as a result of tax reform, partially offset by unfavorable
mortality.
Total Life Insurance sales were $262 million, up 8% from the prior-year
quarter driven by growth in VUL, IUL, UL and term. For the full year,
sales were $764 million compared to $798 million in the prior year as a
2% increase in total individual life insurance sales was offset by a
decline in executive benefit sales, which can fluctuate.
Total Life Insurance in-force of $744 billion grew 3% over the
prior-year quarter, and average account values of $50 billion increased
3% over the prior-year quarter.
Group Protection
Group Protection income from operations was $50 million in the quarter
compared to $20 million in the prior-year period. The increase in
earnings was primarily attributable to the acquisition of the Liberty
Mutual group benefits business and a lower reported tax rate as a result
of tax reform.
The total loss ratio was 76% in the current quarter as underlying claims
results remained favorable even when including typical seasonality in
the disability product line. The quarterly and full-year loss ratios
increased year over year due to combining two blocks of business with
different loss characteristics.
Group Protection sales of $272 million in the quarter were up 3% versus
the prior-year quarter. Full year sales of $580 million were up 15%
primarily driven by the acquisition. Employee-paid sales were 42% of
total sales in 2018.
Insurance premiums were $1 billion in the quarter, up 100% from the
prior-year period, driven by both the acquisition and continued growth.
Other Operations
Other Operations reported a loss from operations of $53 million versus a
loss of $38 million in the prior-year quarter. The decrease in earnings
is primarily attributable to lower tax benefits on pre-tax losses as a
result of tax reform.
Realized Gains and Losses / Impacts to Net Income
Realized gains/losses and impacts to net income (after-tax) in the
quarter were predominantly driven by:
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A $37 million loss from general account investments, including $15
million from the mark-to-market on equity investments.
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A $20 million acquisition and integration expense.
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A $3 million variable annuity net derivative gain.
Unrealized Gains and Losses
The company reported a net unrealized gain of $1.6 billion, pre-tax, on
its available-for-sale securities at December 31, 2018. This compares to
a net unrealized gain of $7.8 billion at December 31, 2017, with the
year-over-year decrease primarily driven by higher rates and wider
spreads.
Capital
During the quarter, the company repurchased 9.1 million shares of stock
at a cost of $535 million. The quarter's average diluted share count of
215.0 million was down 3% from the fourth quarter of 2017, the result of
repurchasing 13.2 million shares of stock at a cost of $810 million
since December 31, 2017.
Book Value
As of December 31, 2018, book value per share, including accumulated
other comprehensive income ("AOCI"), of $69.71 decreased 12% from a year
ago. Book value per share, excluding AOCI, of $67.73 increased 5% from
the prior-year period.
The tables attached to this release define and reconcile the non-GAAP
measures adjusted income from operations, adjusted operating return on
equity ("ROE") and book value per share, excluding AOCI, to net income,
ROE and book value per share, including AOCI, calculated in accordance
with GAAP.
This press release may contain statements that are forward-looking, and
actual results may differ materially, especially given the current
economic and capital market conditions. Please see the Forward Looking
Statements - Cautionary Language at the end of this release for
additional factors that may cause actual results to differ materially
from our current expectations.
For other financial information, please refer to the company's fourth
quarter 2018 statistical supplement available on its website, www.lfg.com/earnings.
Lincoln Financial Group will discuss the company's fourth quarter
results with investors in a conference call beginning at 10:00 a.m.
Eastern Time on Thursday, February 7, 2019. The conference call will be
broadcast live through the company website at www.lfg.com/webcast.
Please log on at least fifteen minutes prior to the call to register and
download any necessary streaming media software. To participate via
phone: (866) 394-4575 (U.S./Canada) or (678) 509-7536 (International).
Ask for the Lincoln National Conference Call.
A replay of the call will be available by 1:00 p.m. Eastern Time on
February 7, 2019 at www.lfg.com/webcast.
Audio replay will be available from 1:00 p.m. Eastern Time on February
7, 2019 through 12:00 p.m. Eastern Time on February 14, 2019. To access
the re-broadcast, dial: (855) 859-2056 (Domestic) or (404) 537-3406
(International). Enter conference code: 5964129.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower
people to take charge of their financial lives with confidence and
optimism. Today, more than 17 million customers trust our retirement,
insurance and wealth protection expertise to help address their
lifestyle, savings and income goals, as well as to guard against
long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln
Financial Group is the marketing name for Lincoln National Corporation
(NYSE:LNC) and its affiliates. The company had $238 billion in assets
under management as of December 31, 2018. Lincoln Financial Group is a
committed corporate citizen included on major sustainability indices
including the Dow Jones Sustainability Index North America and
FTSE4Good. Additionally, Lincoln is dedicated to upholding a diverse and
inclusive organization and was recognized by Forbes as one of the Best
Large Employers, Best Employers for Diversity, and Best Employers for
Women and received a perfect score of 100 percent in 2018 on both the
Corporate Equality Index and Disability Equality Index. Learn more at: www.LincolnFinancial.com.
Follow us on Facebook,
Twitter,
LinkedIn,
and Instagram.
Sign up for email alerts at http://newsroom.lfg.com.
Explanatory Notes on Use of Non-GAAP Measures
Management believes that adjusted income from operations, adjusted
operating return on equity and adjusted operating revenues better
explain the results of the company's ongoing businesses in a manner that
allows for a better understanding of the underlying trends in the
company's current business because the excluded items are unpredictable
and not necessarily indicative of current operating fundamentals or
future performance of the business segments, and, in most instances,
decisions regarding these items do not necessarily relate to the
operations of the individual segments. Management also believes that
using book value excluding accumulated other comprehensive income (AOCI)
enables investors to analyze the amount of our net worth that is
primarily attributable to our business operations. Book value per share
excluding AOCI is useful to investors because it eliminates the effect
of items that can fluctuate significantly from period to period,
primarily based on changes in interest rates.
For the historical periods, reconciliations of non-GAAP measures used in
this press release to the most directly comparable GAAP measure may be
included in this Appendix to the press release and/or are included in
the Statistical Reports for the corresponding periods contained in the
Earnings section of the Investor Relations page on our website: www.lfg.com/investor.
Definitions of Non-GAAP Measures Used in this
Press Release
Adjusted income (loss) from operations, adjusted operating revenues and
adjusted operating return on equity (including and excluding average
goodwill within average equity), excluding AOCI, using annualized
adjusted income (loss) from operations are financial measures we use to
evaluate and assess our results. Adjusted income (loss) from operations,
adjusted operating revenues and adjusted operating return on equity
("ROE"), as used in the earnings release, are non-GAAP financial
measures and do not replace GAAP net income (loss), revenues and ROE,
the most directly comparable GAAP measures.
Adjusted Income (Loss) from Operations
We exclude the after-tax effects of the following items from GAAP net
income (loss) to arrive at adjusted income (loss) from operations:
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Realized gains and losses associated with the following ("excluded
realized gain (loss)"):
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Sale or disposal of securities;
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Impairments of securities;
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Change in the fair value of derivative investments, embedded
derivatives within certain reinsurance arrangements and our
trading securities;
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Change in the fair value of the derivatives we own to hedge our
guaranteed death benefit ("GDB") riders within our variable
annuities, which is referred to as "GDB derivatives results";
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Change in the fair value of the embedded derivatives of our
guaranteed living benefit ("GLB") riders within our variable
annuities accounted for under the Derivatives and Hedging and the
Fair Value Measurements and Disclosures Topics of the Financial
Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") ("embedded derivative reserves"), net of the
change in the fair value of the derivatives we own to hedge the
changes in the embedded derivative reserves, the net of which is
referred to as "GLB net derivative results";
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Changes in the fair value of the embedded derivative liabilities
related to index call options we may purchase in the future to
hedge contract holder index allocations applicable to future reset
periods for our indexed annuity products accounted for under the
Derivatives and Hedging and the Fair Value Measurements and
Disclosures Topics of the FASB ASC ("indexed annuity
forward-starting option");
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Changes in the fair value of equities securities;
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Change in reserves accounted for under the Financial Services -
Insurance - Claim Costs and Liabilities for Future Policy Benefits
Subtopic of the FASB ASC resulting from benefit ratio unlocking on our
GDB and GLB riders ("benefit ratio unlocking");
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Income (loss) from reserve changes (net of related amortization) on
business sold through reinsurance;
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Gain (loss) on early extinguishment of debt;
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Losses from the impairment of intangible assets;
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Income (loss) from discontinued operations;
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Acquisition and integration costs related to mergers and acquisitions;
and
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Income (loss) from the initial adoption of new accounting standards,
regulations and policy changes including the net impact from the Tax
Cuts and Jobs Act.
Adjusted Operating Revenues
Adjusted operating revenues represent GAAP revenues excluding the
pre-tax effects of the following items, as applicable:
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Excluded realized gain (loss);
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Amortization of deferred front-end loads ("DFEL") arising from changes
in GDB and GLB benefit ratio unlocking;
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Amortization of deferred gains arising from the reserve charges on
business sold through reinsurance; and
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Revenue adjustments from the initial adoption of new accounting
standards.
Adjusted Operating Return on Equity
Adjusted operating return on equity measures how efficiently we generate
profits from the resources provided by our net assets.
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It is calculated by dividing annualized adjusted income (loss) from
operations by average equity, excluding accumulated other
comprehensive income (loss) ("AOCI").
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Management evaluates return on equity by both including and excluding
average goodwill within average equity.
Definition of Notable Items
Adjusted income (loss) from operations, excluding notable items, is a
non-GAAP measure that excludes items which, in management's view, do not
reflect the company's normal, ongoing operations.
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We believe highlighting notable items included in adjusted income
(loss) from operations enables investors to better understand the
fundamental trends in its results of operations and financial
condition.
Book Value Per Share Excluding AOCI
Book value per share excluding AOCI is calculated based upon a non-GAAP
financial measure.
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It is calculated by dividing (a) stockholders' equity excluding AOCI
by (b) common shares outstanding.
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We provide book value per share excluding AOCI to enable investors to
analyze the amount of our net worth that is primarily attributable to
our business operations.
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Management believes book value per share excluding AOCI is useful to
investors because it eliminates the effect of items that can fluctuate
significantly from period to period, primarily based on changes in
interest rates.
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Book value per share is the most directly comparable GAAP measure.
Special Note
Sales
Sales as reported consist of the following:
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MoneyGuard® - 15% of total expected premium deposits;
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Universal life (UL), indexed universal life (IUL), variable universal
life (VUL) - first-year commissionable premiums plus 5% of excess
premiums received;
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Executive Benefits - single premium bank-owned UL and VUL, 15% of
single premium deposits, and corporate-owned UL and VUL, first-year
commissionable premiums plus 5% of excess premium received;
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Term - 100% of annualized first-year premiums;
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Annuities - deposits from new and existing customers; and
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Group Protection - annualized first-year premiums from new policies.
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Lincoln National Corporation
Reconciliation of Net Income to Adjusted Income from Operations
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(in millions, except per share data)
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For the Quarter Ended
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For the Year Ended
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December 31,
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December 31,
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2018
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2017
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2018
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2017
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Total Revenues
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$
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4,531
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$
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3,669
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$
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16,424
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$
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14,257
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Less:
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Excluded realized gain (loss)
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141
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(106)
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(46)
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(336)
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Amortization of DFEL on benefit ratio unlocking
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(4)
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-
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(5)
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3
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Amortization of deferred gains arising from reserve changes on
business sold through reinsurance
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-
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-
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-
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1
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Total Adjusted Operating Revenues
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$
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4,394
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$
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3,775
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$
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16,475
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$
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14,589
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Net Income (Loss) Available to Common Stockholders - Diluted
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$
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387
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$
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818
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$
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1,623
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$
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2,086
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Less:
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Adjustment for deferred units of LNC stock in our deferred
compensation plans (1)
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(12)
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2
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(18)
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7
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Net Income (Loss)
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399
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816
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1,641
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2,079
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Less (2):
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Excluded realized gain (loss)
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111
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(69)
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(37)
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(218)
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Benefit ratio unlocking
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(167)
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28
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(136)
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129
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Net impact from the Tax Cuts and Jobs Act
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-
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1,322
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19
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1,322
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Impairment of intangibles
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-
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(905)
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-
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(905)
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Acquisition and integration costs related to mergers and
acquisitions, after-tax
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(20)
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-
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(67)
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-
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Gain (loss) on early extinguishment of debt
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-
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-
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(18)
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(3)
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Adjusted Income (Loss) from Operations
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$
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475
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$
|
440
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$
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1,880
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$
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1,754
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Earnings (Loss) Per Common Share -- Diluted
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Net income (loss)
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$
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1.80
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$
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3.67
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$
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7.40
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$
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9.22
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Adjusted income (loss) from operations
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2.15
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1.98
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8.48
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7.79
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Average Stockholders' Equity
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Average equity, including average AOCI
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$
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14,710
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$
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16,818
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$
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15,517
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$
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15,796
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Average AOCI
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622
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3,044
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1,602
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2,454
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Average equity, excluding AOCI
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14,088
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13,774
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13,915
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13,342
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Average goodwill
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1,769
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1,820
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1,613
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2,160
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Average equity, excluding AOCI and goodwill
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$
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12,319
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$
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11,954
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$
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12,302
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$
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11,182
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|
|
|
|
|
|
Return on Equity, Including AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) with average equity including goodwill
|
|
|
|
10.9%
|
|
|
|
19.4%
|
|
|
|
10.6%
|
|
|
|
13.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Return on Equity, Excluding AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income (loss) from operations with average equity
including goodwill
|
|
|
|
13.5%
|
|
|
|
12.8%
|
|
|
|
13.5%
|
|
|
|
13.1%
|
Adjusted income (loss) from operations with average equity
excluding goodwill
|
|
|
|
15.4%
|
|
|
|
14.7%
|
|
|
|
15.3%
|
|
|
|
15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The numerator used in the calculation of our diluted EPS is adjusted
to remove the mark-to-market adjustment for deferred units of LNC
stock in our deferred compensation plans if the effect of equity
classification would result in a more dilutive EPS.
|
|
|
|
(2)
|
|
We use our prevailing federal income tax rates of 21% and 35%, where
applicable, while taking into account any permanent differences for
events recognized differently in our financial statements and
federal income tax returns when reconciling our non-GAAP measures to
the most comparable GAAP measure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lincoln National Corporation
Reconciliation of Notable Items
|
|
|
|
|
|
For the Quarter Ended
|
|
|
For the Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating EPS, as reported
|
|
|
$
|
2.15
|
|
|
$
|
1.98
|
|
|
$
|
8.48
|
|
|
$
|
7.79
|
Notable items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax adjustments
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.29
|
Reinsurance recapture
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
Unlocking/reserve adjustments
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.01)
|
Total notable items
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.01)
|
|
|
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating EPS, excluding notable items
|
|
|
$
|
2.15
|
|
|
$
|
1.98
|
|
|
$
|
8.49
|
|
|
$
|
7.50
|
|
|
|
Lincoln National Corporation
Reconciliation of Book Value per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share, including AOCI
|
|
|
|
|
|
|
|
|
|
|
$
|
69.71
|
|
|
$
|
79.43
|
Per share impact of AOCI
|
|
|
|
|
|
|
|
|
|
|
|
1.98
|
|
|
|
14.81
|
Book value per share, excluding AOCI
|
|
|
|
|
|
|
|
|
|
|
|
67.73
|
|
|
|
64.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lincoln National Corporation
Digest of Earnings
|
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended
|
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
4,531
|
|
|
$
|
3,669
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
$
|
399
|
|
|
$
|
816
|
Adjustment for deferred units of LNC stock in our deferred
compensation plans (1)
|
|
|
|
(12)
|
|
|
|
2
|
Net Income (Loss) Available to Common Stockholders - Diluted
|
|
|
$
|
387
|
|
|
$
|
818
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per Common Share - Basic
|
|
|
$
|
1.89
|
|
|
$
|
3.73
|
Earnings (Loss) Per Common Share - Diluted
|
|
|
|
1.80
|
|
|
|
3.67
|
|
|
|
|
|
|
|
|
|
Average Shares - Basic
|
|
|
|
211,553,516
|
|
|
|
218,617,352
|
Average Shares - Diluted
|
|
|
|
214,970,179
|
|
|
|
221,880,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
16,424
|
|
|
$
|
14,257
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
$
|
1,641
|
|
|
$
|
2,079
|
Adjustment for deferred units of LNC stock in our deferred
compensation plans (1)
|
|
|
|
(18)
|
|
|
|
7
|
Net Income (Loss) Available to Common Stockholders - Diluted
|
|
|
$
|
1,623
|
|
|
$
|
2,086
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per Common Share - Basic
|
|
|
$
|
7.60
|
|
|
$
|
9.36
|
Earnings (Loss) Per Common Share - Diluted
|
|
|
|
7.40
|
|
|
|
9.22
|
|
|
|
|
|
|
|
|
|
Average Shares - Basic
|
|
|
|
215,936,448
|
|
|
|
222,128,687
|
Average Shares - Diluted
|
|
|
|
219,552,106
|
|
|
|
226,220,980
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The numerator used in the calculation of our diluted EPS is adjusted
to remove the mark-to-market adjustment for deferred units of LNC
stock in our deferred compensation plans if the effect of equity
classification would be more dilutive to our diluted EPS.
|
|
|
|
Forward Looking Statements - Cautionary Language
Certain statements made in this press release and in other written or
oral statements made by Lincoln or on Lincoln's behalf are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 ("PSLRA"). A forward-looking
statement is a statement that is not a historical fact and, without
limitation, includes any statement that may predict, forecast, indicate
or imply future results, performance or achievements, and may contain
words like: "believe," "anticipate," "expect," "estimate," "project,"
"will," "shall" and other words or phrases with similar meaning in
connection with a discussion of future operating or financial
performance. In particular, these include statements relating to future
actions, trends in Lincoln's businesses, prospective services or
products, future performance or financial results, and the outcome of
contingencies, such as legal proceedings. Lincoln claims the protection
afforded by the safe harbor for forward-looking statements provided by
the PSLRA.
Forward-looking statements involve risks and uncertainties that may
cause actual results to differ materially from the results contained in
the forward-looking statements. Risks and uncertainties that may cause
actual results to vary materially, some of which are described within
the forward-looking statements, include, among others:
-
Deterioration in general economic and business conditions that may
affect account values, investment results, guaranteed benefit
liabilities, premium levels, claims experience and the level of
pension benefit costs, funding and investment results;
-
Adverse global capital and credit market conditions could affect our
ability to raise capital, if necessary, and may cause us to realize
impairments on investments and certain intangible assets, including
goodwill and the valuation allowance against deferred tax assets,
which may reduce future earnings and/or affect our financial condition
and ability to raise additional capital or refinance existing debt as
it matures;
-
Because of our holding company structure, the inability of our
subsidiaries to pay dividends to the holding company in sufficient
amounts could harm the holding company's ability to meet its
obligations;
-
Legislative, regulatory or tax changes, both domestic and foreign,
that affect: the cost of, or demand for, our subsidiaries' products;
the required amount of reserves and/or surplus; our ability to conduct
business and our captive reinsurance arrangements as well as
restrictions on the payment of revenue sharing and 12b-1 distribution
fees; the impact of U.S. Federal tax reform legislation on our
business, earnings and capital; and the impact of any "best interest"
standards of care adopted by the Securities and Exchange Commission
("SEC") or other regulations adopted by federal or state regulators or
self-regulatory organizations relating to the standard of care owed by
investment advisers and/or broker dealers;
-
Actions taken by reinsurers to raise rates on in-force business;
-
Declines in or sustained low interest rates causing a reduction in
investment income, the interest margins of our businesses, estimated
gross profits and demand for our products;
-
Rapidly increasing interest rates causing contract holders to
surrender life insurance and annuity policies, thereby causing
realized investment losses, and reduced hedge performance related to
variable annuities;
-
Uncertainty about the effect of continuing promulgation and
implementation of rules and regulations under the Dodd-Frank Wall
Street Reform and Consumer Protection Act on us, the economy and the
financial services sector in particular;
-
The initiation of legal or regulatory proceedings against us, and the
outcome of any legal or regulatory proceedings, such as: adverse
actions related to present or past business practices common in
businesses in which we compete; adverse decisions in significant
actions including, but not limited to, actions brought by federal and
state authorities and class action cases; new decisions that result in
changes in law; and unexpected trial court rulings;
-
A decline in the equity markets causing a reduction in the sales of
our subsidiaries' products; a reduction of asset-based fees that our
subsidiaries charge on various investment and insurance products; an
acceleration of the net amortization of deferred acquisition costs
("DAC"), value of business acquired ("VOBA"), deferred sales
inducements ("DSI") and deferred front-end loads ("DFEL"); and an
increase in liabilities related to guaranteed benefit features of our
subsidiaries' variable annuity products;
-
Ineffectiveness of our risk management policies and procedures,
including various hedging strategies used to offset the effect of
changes in the value of liabilities due to changes in the level and
volatility of the equity markets and interest rates;
-
A deviation in actual experience regarding future persistency,
mortality, morbidity, interest rates or equity market returns from the
assumptions used in pricing our subsidiaries' products, in
establishing related insurance reserves and in the net amortization of
DAC, VOBA, DSI and DFEL, which may reduce future earnings;
-
Changes in accounting principles generally accepted in the United
States ("GAAP"), that may result in unanticipated changes to our net
income;
-
Lowering of one or more of our debt ratings issued by nationally
recognized statistical rating organizations and the adverse effect
such action may have on our ability to raise capital and on our
liquidity and financial condition;
-
Lowering of one or more of the insurer financial strength ratings of
our insurance subsidiaries and the adverse effect such action may have
on the premium writings, policy retention, profitability of our
insurance subsidiaries and liquidity;
-
Significant credit, accounting, fraud, corporate governance or other
issues that may adversely affect the value of certain investments in
our portfolios, as well as counterparties to which we are exposed to
credit risk requiring that we realize losses on investments;
-
Inability to protect our intellectual property rights or claims of
infringement of the intellectual property rights of others;
-
Interruption in telecommunication, information technology or other
operational systems, or failure to safeguard the confidentiality or
privacy of sensitive data on such systems from cyberattacks or other
breaches of our data security systems;
-
The effect of acquisitions and divestitures, restructurings, product
withdrawals and other unusual items, including the successful
implementation of integration strategies or the achievement of
anticipated synergies and operational efficiencies related to an
acquisition;
-
The adequacy and collectability of reinsurance that we have purchased;
-
Acts of terrorism, a pandemic, war or other man-made and natural
catastrophes that may adversely affect our businesses and the cost and
availability of reinsurance;
-
Competitive conditions, including pricing pressures, new product
offerings and the emergence of new competitors, that may affect the
level of premiums and fees that our subsidiaries can charge for their
products;
-
The unknown effect on our subsidiaries' businesses resulting from
evolving market preferences and the changing demographics of our
client base; and
-
The unanticipated loss of key management, financial planners or
wholesalers.
The risks included here are not exhaustive. Our annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
other documents filed with the SEC include additional factors that could
affect our businesses and financial performance. Moreover, we operate in
a rapidly changing and competitive environment. New risk factors emerge
from time to time, and it is not possible for management to predict all
such risk factors.
Further, it is not possible to assess the effect of all risk factors on
our businesses or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. In
addition, Lincoln disclaims any obligation to update any forward-looking
statements to reflect events or circumstances that occur after the date
of this press release.
The reporting of Risk Based Capital ("RBC") measures is not intended for
the purpose of ranking any insurance company or for use in connection
with any marketing, advertising or promotional activities.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190206005684/en/
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