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On Sep 13, 2013, we upgraded life insurer – Lincoln National Corp. (LNC - Analyst Report) to Outperform based on its improved growth momentum, which augurs sustained long-term growth.

Why the Upgrade?

Lincoln National has witnessed some moderation since its second-quarter 2013 results on Jul 31. Both operating earnings of $1.27 per share and total revenue of $3.0 billion topped the Zacks Consensus Estimate of $1.15 a share and $2.99 billion, respectively, during the second quarter.

Both earnings and revenues exceeded the year-ago results by 16.5% and 3.5%, respectively. Overall, Lincoln National delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 5.9%.

Operating growth was driven by improved sales of insurance policies, variable annuities as well as non-medical net earned premiums. Additionally, consolidated deposits and ending account balances propped up margins, displaying double-digit growth.

These were also driven by equity market appreciation that drove net inflows, which surged 82% year-over-year. Consequently, book value per share and return on equity (ROE) also witnessed accretion.

Following the release of the second quarter results, the Zacks Consensus Estimate for 2013 jumped 5.6% to $4.73 per share in the last 60 days. The same for 2014 rose 5.3% to $5.20 a share. Meanwhile, the current estimates reflect 5.9% year-over-year growth in 2013 and 9.9% upsurge in 2014. With the Zacks Consensus Estimates for both 2013 and 2014 rising steadily, the company now has a Zacks Rank #2 (Buy).

Over the past few quarters, Lincoln National’s market position has been benefiting from improved product pricing, claims management, diversified insurance products portfolio, risk management and a strong distribution network.

Additionally, the company enjoys a strong capital position. By refinancing its credit facility worth $5 billion for another 5 years in May 2013, Lincoln National attained a long-term solution to finance its statutory reserves and shore up its life insurance operations. Improved debt leverage and investment portfolio as well as strong competitiveness and healthy ratings also score well with the long-term investors.

Other Financial Stocks That Warrant a Look

Apart from Lincoln National, China Life Insurance Co. Ltd. (LFC - Analyst Report) and Symetra Financial Corp. (SYA - Snapshot Report) show slight upward pressure in the near term, with a Zacks Rank #2 (Buy). Another insurer, StanCorp Financial Group Inc. (SFG - Analyst Report), appears impressive with a Zacks Rank #1 (Strong Buy).

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