Lincoln National Corporation (LNC - Free Report) reported second-quarter 2016 operating net income of $1.56 per share that met the Zacks Consensus Estimate. The bottom line increased 6.8% year over year.
Including non-recurring items, Lincoln National’s net income was $1.35 per share, flat year over year.
Lincoln National’s total revenue declined 2.2% from the year-ago quarter to $3.3 billion due to a decrease in gross annuity deposits. Revenues also missed the Zacks Consensus Estimate of $3.5 billion by 6.1%.
Segment Analysis
Operating income from the Annuities segment decreased 8% year over year to $235 million. Lower fee income due to a 4% decline in average account values and lower variable investment income mainly resulted in the downside. Gross annuity deposits plunged 37% to $2.1 billion in the reported quarter.
Operating income from Retirement Plan Services was $31 million as against $30 million in the prior-year quarter. Lower expenses drove the upside. Total deposits were $1.7 billion, down 11% year over year due to mid-large market deposits. Total average account values of $55 billion remained flat with the prior-year quarter due to total net flows of $4 million.
Operating income from Life Insurance increased 14% to $120 million from $105 million in the year-ago quarter. The metric improved as mortality was in line with expectations. Notably, higher mortality resulted in lower income in the prior-year period. Individual Life insurance sales increased 6% year over year to $164 million. Life insurance average in-force amount improved 4% year over year to $675 billion, while account values inched up 3% to $44 billion.
Group Protection's operating income was $15 million, down 21.1% from $19 million in year-ago quarter. The decline was attributable to lower premiums and net investment income. Nonetheless, the downside was partially offset by improvement in non-medical loss ratio to 72.5% from 73.6% in the prior-year quarter. Sales in this segment increased 15% to $71 million due to an increase of Employee-paid product sales by 200 basis points, which accounted for 46% of the total revenue in the quarter.
Financial Update
As of Jun 30, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 8% year over year to $54.67 per share. Operating return on equity remained unchanged from the year-ago period at 11.7%.
Share Repurchase
Lincoln National spent $275 million to buy back 6.2 million shares during the reported quarter.
Zacks Rank
Lincoln National currently carries a Zacks Rank #4 (Sell).
Performance of Other Insurers
Among the other players in the insurance industry that have reported their second-quarter results so far, the bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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Lincoln National Corporation (LNC - Free Report) reported second-quarter 2016 operating net income of $1.56 per share that met the Zacks Consensus Estimate. The bottom line increased 6.8% year over year.
Including non-recurring items, Lincoln National’s net income was $1.35 per share, flat year over year.
Lincoln National’s total revenue declined 2.2% from the year-ago quarter to $3.3 billion due to a decrease in gross annuity deposits. Revenues also missed the Zacks Consensus Estimate of $3.5 billion by 6.1%.
Segment Analysis
Operating income from the Annuities segment decreased 8% year over year to $235 million. Lower fee income due to a 4% decline in average account values and lower variable investment income mainly resulted in the downside. Gross annuity deposits plunged 37% to $2.1 billion in the reported quarter.
Operating income from Retirement Plan Services was $31 million as against $30 million in the prior-year quarter. Lower expenses drove the upside. Total deposits were $1.7 billion, down 11% year over year due to mid-large market deposits. Total average account values of $55 billion remained flat with the prior-year quarter due to total net flows of $4 million.
Operating income from Life Insurance increased 14% to $120 million from $105 million in the year-ago quarter. The metric improved as mortality was in line with expectations. Notably, higher mortality resulted in lower income in the prior-year period. Individual Life insurance sales increased 6% year over year to $164 million. Life insurance average in-force amount improved 4% year over year to $675 billion, while account values inched up 3% to $44 billion.
Group Protection's operating income was $15 million, down 21.1% from $19 million in year-ago quarter. The decline was attributable to lower premiums and net investment income. Nonetheless, the downside was partially offset by improvement in non-medical loss ratio to 72.5% from 73.6% in the prior-year quarter. Sales in this segment increased 15% to $71 million due to an increase of Employee-paid product sales by 200 basis points, which accounted for 46% of the total revenue in the quarter.
Financial Update
As of Jun 30, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 8% year over year to $54.67 per share. Operating return on equity remained unchanged from the year-ago period at 11.7%.
Share Repurchase
Lincoln National spent $275 million to buy back 6.2 million shares during the reported quarter.
Zacks Rank
Lincoln National currently carries a Zacks Rank #4 (Sell).
Performance of Other Insurers
Among the other players in the insurance industry that have reported their second-quarter results so far, the bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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