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Lincoln National (LNC) Beats on Q4 Earnings and Revenues

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Lincoln National Corporation’s (LNC - Free Report) fourth-quarter 2016 operating net income of $1.77 per share surpassed the Zacks Consensus Estimate of $1.71 by 3.5%. The bottom line also increased 15% year over year on the back of higher revenues. For 2016, operating net income improved 19% year over year to $6.50 per share.

 

 

In the fourth quarter, Lincoln National’s operating revenues grew 5% year over year to $3.52 billion. The top line also beat the Zacks Consensus Estimate of $3.46 billion by 1.7%. However, for 2016, the metric has gone down nominally by 0.4% over the last year.

Quarterly Segment Details:

Annuities

Operating income remained flat year over year at $242 million. Gross annuity deposits plunged 40% to $1.8 billion due to a decrease in variable annuity sales. Variable annuity sales dropped 6.7% year over year due to the negative impact of various market factors. Variable annuity sales from products without living benefits increased 600 basis points (bps) to 34%.  Fixed annuity sales of $411 million also remained flat with the prior-year quarter.

Retirement Plan Services

Operating income inched up 3% from the prior-year quarter to $34 million driven by higher average account balances. Total deposits grew 15% year over year to $2.4 billion due to strong first-year sales in both the small and mid-large markets.

Life Insurance

Operating income grew 29% to $154 million from the year-ago quarter due to favorable mortality results and variable investment income. Total Life insurance sales jumped 17% year over year to $231 million. Life insurance in-force improved 5% year over year to $693 billion.

Group Protection

Operating income grew 23% from the year-ago quarter to $16 million. The upside was driven by loss ratio improvement across all product lines. Sales in this segment increased 18% to $263 million.

Lincoln National Corporation Price, Consensus and EPS Surprise

 

Lincoln National Corporation Price, Consensus and EPS Surprise | Lincoln National Corporation Quote

Financial Update

As of Dec 31, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 9% year over year to $57.05 per share.

Total capital returned to shareholders was $261 million in the fourth quarter and $1.1 billion in 2016.

 For 2016, operating return on equity, excluding accumulated other comprehensive income, grew 100 bps year over year to 12%.

Share Repurchase and Dividend Update

During the quarter, the company repurchased 3.2 million shares for $204 million. The quarter’s average diluted share count of 230.9 million was down 7% from the fourth quarter of 2015. This was due to the repurchase of 19.3 million shares at a cost of $879 million since December 31, 2015.

Zacks Rank and Performance of Other Insurers

Lincoln National currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the other players from the insurance industry that have reported their fourth-quarter earnings so far, the bottom line at Brown & Brown Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate.

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