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Lincoln National (LNC) Q4 Earnings Beat on Group Protection Unit
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Lincoln National Corporation (LNC - Free Report) reported fourth-quarter 2023 adjusted earnings of $1.45 per share, which outpaced the Zacks Consensus Estimate by 9.9%. The bottom line surged 90.8% year over year.
Adjusted operating revenues of $2 billion dropped 56.6% year over year in the quarter under review. The top line lagged the consensus mark by 55.7%.
The quarterly results benefited on the back of solid contributions from the Group Protection business, a strong fixed annuity business and positive flows in the Retirement Plan Services unit. However, the upside was partly offset by changes in market risk benefits as a result of lower interest rates and a change in the fair value of an embedded derivative linked with the Fortitude Re reinsurance transaction.
Lincoln National Corporation Price, Consensus and EPS Surprise
Fee income inched up 0.5% year over year to $1.4 billion, which almost touched the Zacks Consensus Estimate. Insurance premiums were a negative figure of $1.1 billion. Net investment income of $1.4 billion dipped 0.1% year over year but beat the consensus mark of $1.3 billion. Meanwhile, other revenues climbed 32.1% year over year.
Total expenses decreased 19% year over year to $2.3 billion in the fourth quarter. Commissions and other expenses fell 1.2% year over year, while interest and debt expenses witnessed a year-over-year increase of 5.2% during the same time frame.
Lincoln National incurred a net loss of $1.2 billion against the year-ago quarter’s net income of $812 million.
Inside LNC’s Segments
The Annuities segment’s operating income of $279 million grew 1.5% year over year in the fourth quarter and also beat the Zacks Consensus Estimate of $261 million. The unit's operating revenues were a negative figure of $525 million due to negative insurance premiums, partly offset by a 9.3% rise in net investment income and a 54.1% surge in other revenues. Total annuity deposits were $4.4 billion, which climbed 36.3% year over year.
The Life Insurance segment incurred an operating loss of $6 million, narrower than the year-ago quarter’s loss of $9 million and the Zacks Consensus Estimate of a loss of $8 million. Operating revenues declined 1.2% year over year to $1.7 billion in the fourth quarter but surpassed the consensus mark of $1.4 billion. Total Life Insurance sales amounted to $144 million, which tumbled 22.6% year over year due to changes in the business mix. Total deposits fell 9.2% year over year to $1.5 billion.
Operating income in the Group Protection segment doubled year over year to $52 million in the quarter under review and also surpassed the Zacks Consensus Estimate of $49.3 million. The unit benefited on the back of prudent pricing, growing premiums and, improved Life mortality and disability results. Operating revenues of $1.4 billion rose 3% year over year in the unit. Insurance premiums improved 3.1% year over year. Sales advanced 12% year over year to $398 million in the unit, attributable to growth across product and market segments.
The Retirement Plan Services segment recorded an operating income of $38 million in the quarter under review, which fell 26.9% year over year and also missed the consensus mark of $45.1 million. The metric was hurt by escalating expenses and a decline in spread income. Operating revenues dipped 0.9% year over year to $322 million, lower than the Zacks Consensus Estimate of $331 million. Total deposits of $3 billion remained flat year over year.
Other Operations incurred an operating loss of $105 million in the fourth quarter, narrower than the year-ago quarter’s loss of $210 million and the consensus mark of a loss of $106 million.
Financial Update (As of Dec 31, 2023)
Lincoln National exited the fourth quarter with cash and invested cash of $3.4 billion, which inched up 0.7% year over year. Total assets of $372.4 billion increased 11.3% year over year.
Long-term debt amounted to $5.7 billion, down 4.3% year over year
Stockholders’ equity climbed 35.1% year over year to $6.9 billion.
Book value per share, excluding accumulated other comprehensive income, was $55.30, which slipped 10.6% year over year. Adjusted income from operations return on equity of 9.3% improved 470 basis points year over year in the quarter under review.
Capital Deployment Update
Lincoln National did not buy back shares in the fourth quarter. It also paid out quarterly dividends of $76 million.
Full-Year Update
Lincoln National reported an adjusted earnings per share of $5.22 in 2023. A loss of $6.90 per share was reported in 2022. Adjusted operating revenues of $16 billion decreased 10.8% year over year.
Operating revenues in the Life Insurance, Group Protection and Retirement Plan Services segments witnessed year-over-year improvements of 2.4%, 4.9% and 2.8%, respectively, in 2023. Meanwhile, operating revenues dropped 33% year over year in the Annuities unit.
Of the insurance industry players that have reported fourth-quarter 2023 results so far, the bottom-line results of CNO Financial Group, Inc. (CNO - Free Report) , Radian Group Inc. (RDN - Free Report) and Assurant, Inc. (AIZ - Free Report) beat the Zacks Consensus Estimate.
CNO Financial reported fourth-quarter 2023 adjusted earnings per share of $1.18, which beat the Zacks Consensus Estimate by 38.8%. Also, the bottom line jumped 66% year over year. Total revenues increased 20.2% year over year to $1.2 billion in the fourth quarter. The top line beat the consensus mark by 25.3%. Total insurance policy income of $625.7 million fell marginally year over year.
CNO’s net investment income increased 47% year over year to $465.2 million in the fourth quarter. General account assets grew 10.3% year over year to $325.1 million. Also, the policyholder and other special-purpose portfolios jumped nearly seven times to $140.1 million. Annuity collected premiums of $438.3 million increased 2% year over year. Annuity, Health and Life products accounted for 23%, 53% and 24%, respectively, of CNO’s insurance margin.
Radian Group’s fourth-quarter 2023 adjusted operating income of 96 cents per share beat the Zacks Consensus Estimate by 15.6%. The bottom line decreased 8.5% year over year. Operating revenues increased 4.4% year over year to $329 million. Net premiums earned of RDN were $232.6 million, which decreased 0.07% year over year.
Net investment income jumped 16.5% year over year to $68.8 million. Primary mortgage insurance in force totaled $270 billion as of Dec 31, 2023, up 3% year over year. Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 84% as of Dec 31, 2023, up 400 basis points year over year. The Mortgage segment’s total revenues of $282.9 million remained almost unchanged year over year.
Assurant reported fourth-quarter 2023 net operating income of $4.58 per share, which beat the Zacks Consensus Estimate by 23.4%. The bottom line surged 41.8% year over year. Total revenues increased 12.4% year over year to $3 billion due to higher net earned premiums, fees and other income and net investment income. The top line beat the consensus estimate by 7.9%.
Adjusted EBITDA, excluding reportable catastrophes, increased 29% to $382.4 million. Net earned premiums, fees and other income at the Global Housing segment of AIZ increased 7% to $545.8 million. Net earned premiums, fees and other income at the Global Lifestyle unit increased 13% to $2.3 billion. The segment’s adjusted EBITDA of $204.6 million increased 12% year over year.
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Lincoln National (LNC) Q4 Earnings Beat on Group Protection Unit
Lincoln National Corporation (LNC - Free Report) reported fourth-quarter 2023 adjusted earnings of $1.45 per share, which outpaced the Zacks Consensus Estimate by 9.9%. The bottom line surged 90.8% year over year.
Adjusted operating revenues of $2 billion dropped 56.6% year over year in the quarter under review. The top line lagged the consensus mark by 55.7%.
The quarterly results benefited on the back of solid contributions from the Group Protection business, a strong fixed annuity business and positive flows in the Retirement Plan Services unit. However, the upside was partly offset by changes in market risk benefits as a result of lower interest rates and a change in the fair value of an embedded derivative linked with the Fortitude Re reinsurance transaction.
Lincoln National Corporation Price, Consensus and EPS Surprise
Lincoln National Corporation price-consensus-eps-surprise-chart | Lincoln National Corporation Quote
Q4 Operations
Fee income inched up 0.5% year over year to $1.4 billion, which almost touched the Zacks Consensus Estimate. Insurance premiums were a negative figure of $1.1 billion. Net investment income of $1.4 billion dipped 0.1% year over year but beat the consensus mark of $1.3 billion. Meanwhile, other revenues climbed 32.1% year over year.
Total expenses decreased 19% year over year to $2.3 billion in the fourth quarter. Commissions and other expenses fell 1.2% year over year, while interest and debt expenses witnessed a year-over-year increase of 5.2% during the same time frame.
Lincoln National incurred a net loss of $1.2 billion against the year-ago quarter’s net income of $812 million.
Inside LNC’s Segments
The Annuities segment’s operating income of $279 million grew 1.5% year over year in the fourth quarter and also beat the Zacks Consensus Estimate of $261 million. The unit's operating revenues were a negative figure of $525 million due to negative insurance premiums, partly offset by a 9.3% rise in net investment income and a 54.1% surge in other revenues. Total annuity deposits were $4.4 billion, which climbed 36.3% year over year.
The Life Insurance segment incurred an operating loss of $6 million, narrower than the year-ago quarter’s loss of $9 million and the Zacks Consensus Estimate of a loss of $8 million. Operating revenues declined 1.2% year over year to $1.7 billion in the fourth quarter but surpassed the consensus mark of $1.4 billion. Total Life Insurance sales amounted to $144 million, which tumbled 22.6% year over year due to changes in the business mix. Total deposits fell 9.2% year over year to $1.5 billion.
Operating income in the Group Protection segment doubled year over year to $52 million in the quarter under review and also surpassed the Zacks Consensus Estimate of $49.3 million. The unit benefited on the back of prudent pricing, growing premiums and, improved Life mortality and disability results. Operating revenues of $1.4 billion rose 3% year over year in the unit. Insurance premiums improved 3.1% year over year. Sales advanced 12% year over year to $398 million in the unit, attributable to growth across product and market segments.
The Retirement Plan Services segment recorded an operating income of $38 million in the quarter under review, which fell 26.9% year over year and also missed the consensus mark of $45.1 million. The metric was hurt by escalating expenses and a decline in spread income. Operating revenues dipped 0.9% year over year to $322 million, lower than the Zacks Consensus Estimate of $331 million. Total deposits of $3 billion remained flat year over year.
Other Operations incurred an operating loss of $105 million in the fourth quarter, narrower than the year-ago quarter’s loss of $210 million and the consensus mark of a loss of $106 million.
Financial Update (As of Dec 31, 2023)
Lincoln National exited the fourth quarter with cash and invested cash of $3.4 billion, which inched up 0.7% year over year. Total assets of $372.4 billion increased 11.3% year over year.
Long-term debt amounted to $5.7 billion, down 4.3% year over year
Stockholders’ equity climbed 35.1% year over year to $6.9 billion.
Book value per share, excluding accumulated other comprehensive income, was $55.30, which slipped 10.6% year over year. Adjusted income from operations return on equity of 9.3% improved 470 basis points year over year in the quarter under review.
Capital Deployment Update
Lincoln National did not buy back shares in the fourth quarter. It also paid out quarterly dividends of $76 million.
Full-Year Update
Lincoln National reported an adjusted earnings per share of $5.22 in 2023. A loss of $6.90 per share was reported in 2022. Adjusted operating revenues of $16 billion decreased 10.8% year over year.
Operating revenues in the Life Insurance, Group Protection and Retirement Plan Services segments witnessed year-over-year improvements of 2.4%, 4.9% and 2.8%, respectively, in 2023. Meanwhile, operating revenues dropped 33% year over year in the Annuities unit.
Zacks Rank
Lincoln National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported fourth-quarter 2023 results so far, the bottom-line results of CNO Financial Group, Inc. (CNO - Free Report) , Radian Group Inc. (RDN - Free Report) and Assurant, Inc. (AIZ - Free Report) beat the Zacks Consensus Estimate.
CNO Financial reported fourth-quarter 2023 adjusted earnings per share of $1.18, which beat the Zacks Consensus Estimate by 38.8%. Also, the bottom line jumped 66% year over year. Total revenues increased 20.2% year over year to $1.2 billion in the fourth quarter. The top line beat the consensus mark by 25.3%. Total insurance policy income of $625.7 million fell marginally year over year.
CNO’s net investment income increased 47% year over year to $465.2 million in the fourth quarter. General account assets grew 10.3% year over year to $325.1 million. Also, the policyholder and other special-purpose portfolios jumped nearly seven times to $140.1 million. Annuity collected premiums of $438.3 million increased 2% year over year. Annuity, Health and Life products accounted for 23%, 53% and 24%, respectively, of CNO’s insurance margin.
Radian Group’s fourth-quarter 2023 adjusted operating income of 96 cents per share beat the Zacks Consensus Estimate by 15.6%. The bottom line decreased 8.5% year over year. Operating revenues increased 4.4% year over year to $329 million. Net premiums earned of RDN were $232.6 million, which decreased 0.07% year over year.
Net investment income jumped 16.5% year over year to $68.8 million. Primary mortgage insurance in force totaled $270 billion as of Dec 31, 2023, up 3% year over year. Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 84% as of Dec 31, 2023, up 400 basis points year over year. The Mortgage segment’s total revenues of $282.9 million remained almost unchanged year over year.
Assurant reported fourth-quarter 2023 net operating income of $4.58 per share, which beat the Zacks Consensus Estimate by 23.4%. The bottom line surged 41.8% year over year. Total revenues increased 12.4% year over year to $3 billion due to higher net earned premiums, fees and other income and net investment income. The top line beat the consensus estimate by 7.9%.
Adjusted EBITDA, excluding reportable catastrophes, increased 29% to $382.4 million. Net earned premiums, fees and other income at the Global Housing segment of AIZ increased 7% to $545.8 million. Net earned premiums, fees and other income at the Global Lifestyle unit increased 13% to $2.3 billion. The segment’s adjusted EBITDA of $204.6 million increased 12% year over year.