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Lincoln National (LNC) Q4 Earnings Miss, Revenues Decrease
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Lincoln National Corporation (LNC - Free Report) reported fourth-quarter 2022 adjusted profit of 97 cents per share, missing the Zacks Consensus Estimate of $1.89 by 0.9%. The bottom line also declined from earnings of $1.56 per share in the prior-year quarter.
Adjusted operating revenues amounted to $4,676 million, which dropped 2% year over year. Yet, the top line beat the consensus mark by 3.4%.
In the fourth quarter, profits suffered a blow from an unfavorable item related to legal expenses. Quarterly results were also affected by unfavorable equity markets, hampering Annuities and Retirement Plan Services results. However, reduced pandemic-linked claims of the Group Protection Segment and lower overall costs and expenses partially offset the downside.
Costs and Expenses
Lincoln National’s expenses of $4,231 million decreased 3.1% year over year in the quarter under review, primarily due to lower costs related to benefits. Benefits account for 46.9% of the quarter’s total expenses.
Lincoln National Corporation Price, Consensus and EPS Surprise
The Annuities segment’s operating income plunged 28% year over year to $238 million in the fourth quarter due to unfavorable equity markets lowering account values. Operating revenues fell 7.2% year over year to $1,190 million but beat the consensus mark by 1.1%. Total annuity deposits of $3,210 million grew 6.6% year over year, thanks to sales growth in fixed and indexed variable annuities, which offset the lower traditional variable annuities.
Operating income in the Retirement Plan Services segment amounted to $49 million, which tumbled 14% year over year, mainly due to lower equity markets partially offset by higher spread income. The figure came lower than the consensus mark of $55 million.Operating revenues of $324 million decreased 3.3% year over year but beat the consensus mark of $318 million. Total deposits deteriorated 7.4% year over year to $2,777 million in the quarter under review due to a decrease in first-year sales and recurring deposits.
The Life Insurance segment recorded an operating profit of $46 million in the fourth quarter compared to the prior-year quarter’s operating income of $80 million. Lower returns from the insurer’s alternative investment portfolio were one of the factors hampering the performance of the segment. Operating revenues plunged 4.1% year over year to $1.769 million but beat the Zacks Consensus Estimate by 8.9%. Total Life Insurance sales of $186 million decreased 27% year over year on the back of lower universal life insurance, term life insurance, executive benefits and money guard-linked benefit products. Total deposits of $1,575 million decreased 15.9% year over year.
The Group Protection segment reported an operating income of $47 million in the fourth quarter against the prior-year quarter’s loss of $115 million. This significant growth came from reduced pandemic-linked claims and improved disability results.Operating revenues of $1,344 million improved 7.3% year over year and beat the consensus mark by 2.8%. Insurance premiums advanced 8.6% year over year to $1,213 million. Total sales in the segment plunged 7.5% year over year to $356 million.
Other Operations reported a loss of $210 million, which widened year over year from $68 million in fourth-quarter 2021.
Financial Update (as of Dec 31, 2022)
Lincoln National exited December 2022 with cash and invested cash of $3,343 million, which increased from $2,612 million at 2021-end. Total assets of $335.4 billion fell from $387.3 billion at 2021-end.
Long-term debt amounted to $5,955 million, which decreased from $6,561 million as of December 2021. It had short-term debt of $500 million at the fourth-quarter end. As of Feb 8, 2022, its senior debt received ‘BBB+’ ratings from Standard & Poor’s and Fitch.
Shareholders’ equity of $4,101 million plunged from $20,272 million at 2021-end.
Book value per share, excluding accumulated other comprehensive income (AOCI), decreased 18.3% year over year to $63.7. Adjusted operating return on equity, excluding AOCI, came in at a positive figure of 6% during the fourth quarter.
Full-Year Highlights
Adjusted operating revenue was $18,665 million, down 5% from 2021. Adjusted operating loss per share was $5.22 per share against the year-ago income of $8.20.
Capital Deployment Update
Lincoln National returned $76 million to its shareholders in the fourth quarter through common dividend payments.
Zacks Rank
Lincoln National currently carries a Zacks Rank #5 (Strong Sell).
Some of the insurance industry players like Reinsurance Group (RGA - Free Report) , Voya Financial (VOYA - Free Report) and Sun Life Financial (SLF - Free Report) have also reported fourth-quarter results so far. Let’s see how they have performed.
Reinsurance Group reported fourth-quarter 2022 adjusted operating income of $2.99 per share, which missed the Zacks Consensus Estimate by 14.8%. RGA had reported an operating loss of 56 cents per share in the prior-year quarter.
Voya Financial reported fourth-quarter 2022 adjusted operating income of $2.18 per share, beating the Zacks Consensus Estimate by 42.5%. VOYA’s bottom line increased 14.7% year over year. Adjusted operating revenues amounted to $1.5 billion.
Sun Life Financial reported fourth-quarter 2022 adjusted operating income of $1.25 per share, beating the Zacks Consensus Estimate by 7.8%. The bottom line increased 3.3% year over year. The underlying net income of $729 million (C$990 million) was up 10% year over year, which was driven by earnings growth in the United States and Canada.Insurance sales increased 14.8% year over year to $1.3 billion (C$1.8 billion), driven by increased sales in Canada, Asia and the United States. Wealth sales were $33.6 billion (C$45.6 billion), down 17% year over year. The value of the new business decreased 5.3% to $345 million (C$468 million).
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Lincoln National (LNC) Q4 Earnings Miss, Revenues Decrease
Lincoln National Corporation (LNC - Free Report) reported fourth-quarter 2022 adjusted profit of 97 cents per share, missing the Zacks Consensus Estimate of $1.89 by 0.9%. The bottom line also declined from earnings of $1.56 per share in the prior-year quarter.
Adjusted operating revenues amounted to $4,676 million, which dropped 2% year over year. Yet, the top line beat the consensus mark by 3.4%.
In the fourth quarter, profits suffered a blow from an unfavorable item related to legal expenses. Quarterly results were also affected by unfavorable equity markets, hampering Annuities and Retirement Plan Services results. However, reduced pandemic-linked claims of the Group Protection Segment and lower overall costs and expenses partially offset the downside.
Costs and Expenses
Lincoln National’s expenses of $4,231 million decreased 3.1% year over year in the quarter under review, primarily due to lower costs related to benefits. Benefits account for 46.9% of the quarter’s total expenses.
Lincoln National Corporation Price, Consensus and EPS Surprise
Lincoln National Corporation price-consensus-eps-surprise-chart | Lincoln National Corporation Quote
Segmental Update
The Annuities segment’s operating income plunged 28% year over year to $238 million in the fourth quarter due to unfavorable equity markets lowering account values. Operating revenues fell 7.2% year over year to $1,190 million but beat the consensus mark by 1.1%. Total annuity deposits of $3,210 million grew 6.6% year over year, thanks to sales growth in fixed and indexed variable annuities, which offset the lower traditional variable annuities.
Operating income in the Retirement Plan Services segment amounted to $49 million, which tumbled 14% year over year, mainly due to lower equity markets partially offset by higher spread income. The figure came lower than the consensus mark of $55 million.Operating revenues of $324 million decreased 3.3% year over year but beat the consensus mark of $318 million. Total deposits deteriorated 7.4% year over year to $2,777 million in the quarter under review due to a decrease in first-year sales and recurring deposits.
The Life Insurance segment recorded an operating profit of $46 million in the fourth quarter compared to the prior-year quarter’s operating income of $80 million. Lower returns from the insurer’s alternative investment portfolio were one of the factors hampering the performance of the segment. Operating revenues plunged 4.1% year over year to $1.769 million but beat the Zacks Consensus Estimate by 8.9%. Total Life Insurance sales of $186 million decreased 27% year over year on the back of lower universal life insurance, term life insurance, executive benefits and money guard-linked benefit products. Total deposits of $1,575 million decreased 15.9% year over year.
The Group Protection segment reported an operating income of $47 million in the fourth quarter against the prior-year quarter’s loss of $115 million. This significant growth came from reduced pandemic-linked claims and improved disability results.Operating revenues of $1,344 million improved 7.3% year over year and beat the consensus mark by 2.8%. Insurance premiums advanced 8.6% year over year to $1,213 million. Total sales in the segment plunged 7.5% year over year to $356 million.
Other Operations reported a loss of $210 million, which widened year over year from $68 million in fourth-quarter 2021.
Financial Update (as of Dec 31, 2022)
Lincoln National exited December 2022 with cash and invested cash of $3,343 million, which increased from $2,612 million at 2021-end. Total assets of $335.4 billion fell from $387.3 billion at 2021-end.
Long-term debt amounted to $5,955 million, which decreased from $6,561 million as of December 2021. It had short-term debt of $500 million at the fourth-quarter end. As of Feb 8, 2022, its senior debt received ‘BBB+’ ratings from Standard & Poor’s and Fitch.
Shareholders’ equity of $4,101 million plunged from $20,272 million at 2021-end.
Book value per share, excluding accumulated other comprehensive income (AOCI), decreased 18.3% year over year to $63.7. Adjusted operating return on equity, excluding AOCI, came in at a positive figure of 6% during the fourth quarter.
Full-Year Highlights
Adjusted operating revenue was $18,665 million, down 5% from 2021. Adjusted operating loss per share was $5.22 per share against the year-ago income of $8.20.
Capital Deployment Update
Lincoln National returned $76 million to its shareholders in the fourth quarter through common dividend payments.
Zacks Rank
Lincoln National currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Life Insurers
Some of the insurance industry players like Reinsurance Group (RGA - Free Report) , Voya Financial (VOYA - Free Report) and Sun Life Financial (SLF - Free Report) have also reported fourth-quarter results so far. Let’s see how they have performed.
Reinsurance Group reported fourth-quarter 2022 adjusted operating income of $2.99 per share, which missed the Zacks Consensus Estimate by 14.8%. RGA had reported an operating loss of 56 cents per share in the prior-year quarter.
Voya Financial reported fourth-quarter 2022 adjusted operating income of $2.18 per share, beating the Zacks Consensus Estimate by 42.5%. VOYA’s bottom line increased 14.7% year over year. Adjusted operating revenues amounted to $1.5 billion.
Sun Life Financial reported fourth-quarter 2022 adjusted operating income of $1.25 per share, beating the Zacks Consensus Estimate by 7.8%. The bottom line increased 3.3% year over year. The underlying net income of $729 million (C$990 million) was up 10% year over year, which was driven by earnings growth in the United States and Canada.Insurance sales increased 14.8% year over year to $1.3 billion (C$1.8 billion), driven by increased sales in Canada, Asia and the United States. Wealth sales were $33.6 billion (C$45.6 billion), down 17% year over year. The value of the new business decreased 5.3% to $345 million (C$468 million).