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Lincoln National's (LNC) Shares Up 1.5% Since Q1 Earnings Beat
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Shares of Lincoln National Corporation (LNC - Free Report) rose 1.5% since it reported first-quarter 2024 results on May 2, 2024. The quarterly earnings benefited on the back of solid contributions from the Group Protection business, positive flows in the Retirement Plan Services unit and lower expenses. However, the upside was partly offset by declining fee income and net investment income. Poor performance in the Life Insurance business continues to harm LNC’s results.
LNC reported first-quarter 2024 adjusted earnings of $1.37 per share, which beat the Zacks Consensus Estimate by 24.6%. However, the bottom line declined 9.9% year over year.
Adjusted operating revenues of $4.6 billion dropped 1.6% year over year in the quarter under review. The top line lagged the consensus mark by 1.3%.
Lincoln National Corporation Price, Consensus and EPS Surprise
Fee income declined 4% year over year to $1.3 billion, which missed the Zacks Consensus Estimate of $1.4 billion. Insurance premiums of $1.6 billion rose 1.4% year over year. The metric missed the consensus mark by 1%. Net investment income of $1.3 billion dipped 8.2% year over year and missed the consensus mark of $1.4 billion. Meanwhile, other revenues climbed 39.2% year over year.
Total expenses decreased 48.1% year over year to $2.6 billion in the first quarter. Benefits fell 12.6% year over year, while interest and debt expenses witnessed a year-over-year decrease of 2.4% during the same time frame.
Lincoln National incurred a net gain of $1.2 billion against the year-ago quarter’s net loss of $881 million.
Inside LNC’s Segments
The Annuities segment’s operating income of $259 million fell 5.5% year over year in the first quarter and missed the Zacks Consensus Estimate of $267 million. The unit's operating revenues were $1.3 billion, driven by 7.4% growth in fee income and a 73.7% rise in other revenues. This was partly offset by a 31.6% decline in insurance premiums and a 0.2% fall in net investment income. Total annuity deposits were $2.8 billion, which declined 10% year over year.
The Life Insurance segment incurred an operating loss of $35 million, wider than the year-ago quarter’s loss of $13 million and the Zacks Consensus Estimate of a loss of $25 million. Operating revenues declined 12.3% year over year to $1.5 billion in the first quarter and lagged the consensus mark of $1.6 billion. Total Life Insurance sales amounted to $91 million, which tumbled 30% year over year due to changes in the business mix. Total deposits fell 8.5% year over year to $1.2 billion.
Operating income in the Group Protection segment rose 12.7% year over year to $80 million in the quarter under review and surpassed the Zacks Consensus Estimate of $66 million. The unit benefited on the back of prudent pricing, growing premiums and improved Life mortality results. Operating revenues of $1.4 billion rose 2.7% year over year in the unit. Insurance premiums improved 2.7% year over year. Sales advanced 12.5% year over year to $144 million in the unit, attributable to growth across product and market segments.
The Retirement Plan Services segment recorded an operating income of $36 million in the quarter under review, which fell 16.3% year over year and missed the consensus mark of $38.4 million. The metric was hurt by escalating expenses and a decline in spread income. Operating revenues dipped 1.8% year over year to $322 million, lower than the Zacks Consensus Estimate of $328 million. Total deposits of $3.8 billion increased 18.5% year over year, driven by sales growth and strong recurring deposit growth.
Other Operations incurred an operating loss of $235 million in the first quarter, wider than the year-ago quarter’s loss of $87 million. The metric was also wider than the Zacks Consensus Estimate of a loss of $143 million.
Financial Update (As of Mar 31, 2024)
Lincoln National exited the first quarter with cash and invested cash of $4.1 billion, which increased 22.5% from 2023-end. Total assets of $383.4 billion increased 2.9% from 2023-end.
Long-term debt amounted to $5.7 billion, up 0.5% from 2023-end.
Stockholders’ equity climbed 9.5% year over year to $7.5 billion.
Book value per share, excluding accumulated other comprehensive income, was $61.63, up 11.4% from 2023-end. Adjusted income from operations return on equity of 2.6% deteriorated 670 basis points year over year in the quarter under review.
Capital Deployment Update
Lincoln National did not buy back shares in the first quarter. It paid out quarterly dividends of $76 million.
2024 Guidance
Management expects Annuities’ operating income to be in the range of $1-$1.2 billion in 2024, the midpoint implying growth of 2.5% year over year.
Group’s operating income is expected to be in the range of $300-$350 million in 2024, the midpoint implying 8.7% growth from the year ago figure.
The company expects Retirement Plan Service’s operating income to be in the range of $140-$180 million, indicating a decline of 6.4% year over year.
Life Insurance’s operating income is expected to be between $0 and $50 million, up from an operating loss of $159 million in 2023.
The Travelers Companies (TRV - Free Report) reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s (PGR - Free Report) first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
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Lincoln National's (LNC) Shares Up 1.5% Since Q1 Earnings Beat
Shares of Lincoln National Corporation (LNC - Free Report) rose 1.5% since it reported first-quarter 2024 results on May 2, 2024. The quarterly earnings benefited on the back of solid contributions from the Group Protection business, positive flows in the Retirement Plan Services unit and lower expenses. However, the upside was partly offset by declining fee income and net investment income. Poor performance in the Life Insurance business continues to harm LNC’s results.
LNC reported first-quarter 2024 adjusted earnings of $1.37 per share, which beat the Zacks Consensus Estimate by 24.6%. However, the bottom line declined 9.9% year over year.
Adjusted operating revenues of $4.6 billion dropped 1.6% year over year in the quarter under review. The top line lagged the consensus mark by 1.3%.
Lincoln National Corporation Price, Consensus and EPS Surprise
Lincoln National Corporation price-consensus-eps-surprise-chart | Lincoln National Corporation Quote
Q1 Operations
Fee income declined 4% year over year to $1.3 billion, which missed the Zacks Consensus Estimate of $1.4 billion. Insurance premiums of $1.6 billion rose 1.4% year over year. The metric missed the consensus mark by 1%. Net investment income of $1.3 billion dipped 8.2% year over year and missed the consensus mark of $1.4 billion. Meanwhile, other revenues climbed 39.2% year over year.
Total expenses decreased 48.1% year over year to $2.6 billion in the first quarter. Benefits fell 12.6% year over year, while interest and debt expenses witnessed a year-over-year decrease of 2.4% during the same time frame.
Lincoln National incurred a net gain of $1.2 billion against the year-ago quarter’s net loss of $881 million.
Inside LNC’s Segments
The Annuities segment’s operating income of $259 million fell 5.5% year over year in the first quarter and missed the Zacks Consensus Estimate of $267 million. The unit's operating revenues were $1.3 billion, driven by 7.4% growth in fee income and a 73.7% rise in other revenues. This was partly offset by a 31.6% decline in insurance premiums and a 0.2% fall in net investment income. Total annuity deposits were $2.8 billion, which declined 10% year over year.
The Life Insurance segment incurred an operating loss of $35 million, wider than the year-ago quarter’s loss of $13 million and the Zacks Consensus Estimate of a loss of $25 million. Operating revenues declined 12.3% year over year to $1.5 billion in the first quarter and lagged the consensus mark of $1.6 billion. Total Life Insurance sales amounted to $91 million, which tumbled 30% year over year due to changes in the business mix. Total deposits fell 8.5% year over year to $1.2 billion.
Operating income in the Group Protection segment rose 12.7% year over year to $80 million in the quarter under review and surpassed the Zacks Consensus Estimate of $66 million. The unit benefited on the back of prudent pricing, growing premiums and improved Life mortality results. Operating revenues of $1.4 billion rose 2.7% year over year in the unit. Insurance premiums improved 2.7% year over year. Sales advanced 12.5% year over year to $144 million in the unit, attributable to growth across product and market segments.
The Retirement Plan Services segment recorded an operating income of $36 million in the quarter under review, which fell 16.3% year over year and missed the consensus mark of $38.4 million. The metric was hurt by escalating expenses and a decline in spread income. Operating revenues dipped 1.8% year over year to $322 million, lower than the Zacks Consensus Estimate of $328 million. Total deposits of $3.8 billion increased 18.5% year over year, driven by sales growth and strong recurring deposit growth.
Other Operations incurred an operating loss of $235 million in the first quarter, wider than the year-ago quarter’s loss of $87 million. The metric was also wider than the Zacks Consensus Estimate of a loss of $143 million.
Financial Update (As of Mar 31, 2024)
Lincoln National exited the first quarter with cash and invested cash of $4.1 billion, which increased 22.5% from 2023-end. Total assets of $383.4 billion increased 2.9% from 2023-end.
Long-term debt amounted to $5.7 billion, up 0.5% from 2023-end.
Stockholders’ equity climbed 9.5% year over year to $7.5 billion.
Book value per share, excluding accumulated other comprehensive income, was $61.63, up 11.4% from 2023-end. Adjusted income from operations return on equity of 2.6% deteriorated 670 basis points year over year in the quarter under review.
Capital Deployment Update
Lincoln National did not buy back shares in the first quarter. It paid out quarterly dividends of $76 million.
2024 Guidance
Management expects Annuities’ operating income to be in the range of $1-$1.2 billion in 2024, the midpoint implying growth of 2.5% year over year.
Group’s operating income is expected to be in the range of $300-$350 million in 2024, the midpoint implying 8.7% growth from the year ago figure.
The company expects Retirement Plan Service’s operating income to be in the range of $140-$180 million, indicating a decline of 6.4% year over year.
Life Insurance’s operating income is expected to be between $0 and $50 million, up from an operating loss of $159 million in 2023.
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.
Performances of Other Insurers
The Travelers Companies (TRV - Free Report) reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s (PGR - Free Report) first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.