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Lincoln National (LNC) Q1 Earnings Beat, Revenues Up Y/Y

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Lincoln National Corporation’s (LNC - Free Report) first-quarter 2020 earnings of $2.24 per share outpaced the Zacks Consensus Estimate by 5.2%. Further, the bottom line improved 4.7% year over year.

The company’s results benefited from improvement in top-line growth, partly offset by rise in expenses.

Adjusted operating revenues of $4.5 billion improved 3% year over year. The upside can be attributed to strong performance at its Annuities, Retirement Plan Services and Life Insurance segments. However, the top line missed the Zacks Consensus Estimate by 1.6%.

Total expenses increased 18.8% year over year to $4.4 billion, primarily due to costs related to interest credited and benefits expenses.

Segmental Performance

Operating income in the Annuities segment rose 4% year over year to $261 million. This can primarily be attributed to higher average account values. Total annuity deposits improved 5% from the year-ago quarter to $3.7 billion, driven by growth in variable annuity sales.

Operating income in Retirement Plan Services increased 2.6% year over year to $40 million due to improved expense management.  Total deposits improved 11% from the prior-year quarter’s value to $2.8 billion, owing to growth in recurring deposits and strong first-year sales.

Operating income in Life Insurance segment was up 9% year over year to $171 million on the back of favorable mortality and consistent business growth. However, operating revenues in this segment declined 11.5% year over year to $169 million.

Operating income in Group Protection declined 27.3% from the year-ago quarter’s figure to $40 million.  This downside was owing to unfavorable risk results. Operating revenues slipped 14.3% year over year to $102 million.

The Other Operations segment incurred a loss of $47 million, narrower than the loss of $60 million in the prior-year quarter.

Financial Update

As of Mar 31, 2020, Lincoln National’s book value per share, excluding accumulated other comprehensive income, improved 2.1% year over year to $70.24.

Adjusted operating return on equity (ROE), excluding accumulated other comprehensive income and goodwill, improved 90 bps from the year-ago quarter’s number to 13.5%.

The company ended the quarter with long-term debt of $6.7 billion, up 21.1% year over year.

As of Mar 31, 2020, the company had assets worth $318.6 billion, up 1.4% from the year-ago quarter’s number. Shareholders’ equity also inched up 1% year over year to $16.6 billion.

Zacks Rank & Performance of Other Insurers

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 other insurance industry players, which have reported first-quarter earnings so far, the bottom lines of Radian Group Inc. (RDN - Free Report) , Voya Financial, Inc. (VOYA - Free Report) and Sun Life Financial Inc. (SLF - Free Report) outpaced the Zacks Consensus Estimate.

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