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Lincoln National (LNC) Beats on Q1 Earnings, Lags Revenues

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Lincoln National Corporation’s (LNC - Free Report) first-quarter 2019 earnings of $2.14 per share beat the Zacks Consensus Estimate by 2.9%. Moreover, the bottom line improved about 8.6% year over year, mainly led by increase in revenues and share buyback.

Operating revenues of $4 billion increased 9.9% year over year but missed the Zacks Consensus Estimate by 8.5%.

Total expenses rose 16.5% year over year to $3.7 billion, due to higher benefits and commission and other expenses.

Lincoln National Corporation Price, Consensus and EPS Surprise

Strong Segment Results

Operating income in the Annuities segment was down 6.4% year over year to $250 million. This was mainly due to decline in lower account from Athene reinsurance transaction, completed in the fourth quarter of 2018.

Total annuity deposits soared 39% from the year-ago quarter to $3.5 billion, driven by growth in fixed annuities sales, partly offset by 5% decline in variable annuity sales.

Operating income in Retirement Plan Services decreased 9.3% year over year to $39 million, primarily due to lower variable investment income and spread income, which more than offset an increase in account values. Total deposits increased 6% year over year to $2.5 billion.

Operating income in Life Insurance segment was up 9% year over year to $157 million, as a result of favorable mortality and lower amortization expense, partially offset by a decrease in alternative investment income.

Operating income in Group Protection increased 90% year over year to $55 million. This increase was driven by the buyout of the Liberty Mutual Group benefits business.

The Other operations segment incurred a loss of $60 million, wider than $42 million suffered in the prior-year quarter.

Financial Update

As of Mar 31, 2019, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 9% year over year to $68.79.

Operating return on equity (ROE), excluding accumulated other comprehensive income and goodwill, was up just 10 bps year over year to 14.5%.

The company’s long term debt declined 1.6% year over year to $4.7 billion.
Average shareholders’ equity (excluding AOCI and goodwill) of $12.2 billion declined 0.5% year over year.

Zacks Rank and Peer Releases

Lincoln National has a Zacks Rank #3 (Hold). 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 first-quarter earnings so far, the bottom line of Torchmark Corporation (TMK - Free Report) , RLI Corporation (RLI - Free Report) and W.R. Berkley Corp. (WRB - Free Report) beat the respective Zacks Consensus Estimate by 3.14%, 20.3% and 54%.

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