Lincoln National Corp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Lincoln National Corp (LNC) Q3 2025 earnings call highlighted strong financial results with year-over-year growth in adjusted operating income, progress in strategic priorities, and a well-maintained capital position. The company discussed segment performance, capital deployment, and provided insights into their strategic objectives and market opportunities.
Key Financial Results
Q3 2025 adjusted operating income available to common stockholders was $397 million, or $2.04 per share.
The annual assumption review had a minimal impact, increasing adjusted operating income by $2 million, or $0.01 per share.
Alternative investment returns delivered an annualized return of just under 10%, or $101 million.
Net income available to common stockholders was $411 million, or $2.12 per diluted share.
Business Segment Results
Annuities reported earnings growth driven by higher account balances and strong sales.
Life Insurance posted improved earnings, supported by stable mortality and operational efficiencies, with higher sales driven by executive benefits.
Group Protection delivered earnings in line with the prior-year record, with healthy premium growth and broad-based sales growth.
Retirement Plan Services delivered higher earnings attributable to increased account balances and produced positive net flows.
Excluding the assumption review impact, Group Protection operating earnings were $110 million, consistent with the prior year.
Excluding the assumption review impact, Life delivered operating earnings of $54 million compared to $14 million in the prior-year quarter.
Excluding the assumption review impact, Annuities delivered operating earnings of $318 million, up $18 million year-over-year.
Retirement Plan Services reported operating income of $46 million, up slightly from $44 million in the prior-year quarter.
Capital Allocation
The company ended the quarter with an estimated RBC ratio well above the 420% buffer.
Lincoln National fully transitioned to retaining all fixed annuity business by exiting an external flow reinsurance agreement.
The company continues to scale its institutional funding agreement program, with $1.9 billion in issuance completed year-to-date.
The company is evaluating actions to enhance long-term free cash flow from its legacy life block.
Industry Trends and Dynamics
The businesses operate in attractive, expanding markets.
The company focuses on increasing its risk-adjusted return on capital and reducing the volatility of results.
There is a shift to products and segments with higher margins, more stable cash flow profiles, and greater capital efficiency.
Competitive Landscape
Lincoln National competes from a position of strength, grounded in its trusted brand, leading franchise, and competitive advantages in distribution, product manufacturing, and customer service.
The company is focused on building a market-leading franchise equipped to thrive in a dynamic environment.
The company's distribution partners value their customer-centric approach.
Macroeconomic Environment
The change in fair value of the GAAP embedded derivative related to the Fortitude Re reinsurance transaction was primarily driven by the impact of lower interest rates.
The company benefited from a positive movement in market risk benefits amid a stable interest rate environment and higher equity markets.
Growth Opportunities and Strategies
The company is evolving the direction of the organization with a clear focus on increasing risk-adjusted return on capital, reducing the volatility of results, and growing the franchise.
Lincoln National is investing for future growth.
The company is repositioning the Life Insurance business for long-term value creation.
The company is executing a targeted strategy of delivering value across market segments in Group Protection.
Lincoln National is focusing on initiatives to enhance operational and service capabilities in Retirement Plan Services.
The company is pivoting toward higher-margin, capital-efficient growth.
Financial Guidance and Outlook
The company expects to end the full year with a Group Protection margin in the range of mid to upper 8%.
The actions taken this year have positioned Lincoln for a strong 2025, and the company remains on track to achieve the objectives outlined in its 2026 outlook.
The company remains committed to a disciplined and balanced approach to deploying excess capital, aimed at enhancing risk-adjusted returns.
