RADNOR, PA — Lincoln Financial Group (NYSE: LNC) announced robust financial results for the second quarter ending June 30, 2024, showcasing substantial gains in net income and a significant boost in capital.
The insurance and wealth management firm posted net income available to common stockholders of $884 million, or $5.11 per diluted share. Adjusted operating income stood at $319 million, or $1.84 per diluted share. The primary differences between net and adjusted operating income were due to a $436 million gain from the sale of Lincoln’s wealth management business and a $198 million increase driven by changes in market risk benefits.
“Our second quarter results were solid and exceeded our expectations as we continued to execute on our strategic priorities,” said Ellen Cooper, Chairman, President, and CEO of Lincoln Financial Group. “Our businesses’ results reflect steady progress as part of their strategic realignment. Group Protection delivered results in line with its record prior-year quarter. Annuities earnings grew by 10% while producing strong sales growth. Retirement Plan Services earnings improved sequentially, and our Life business sales are stabilizing.”
The company’s estimated RBC ratio surpassed 420%, marking a significant milestone in strengthening its capital position. “We also accomplished our goal of growing capital to an estimated RBC ratio above 420%, a significant milestone, and made further progress on optimizing our operating model, which included establishing our Bermuda reinsurance subsidiary,” Cooper added.
Business Highlights
Group Protection reported operating income of $130 million, up 19% year over year. Adjusted for the timing of a $23 million experience refund, operating income was $107 million, matching its record prior-year quarter. Premiums increased 3% year over year.
Annuities posted $297 million in operating income, a 10% increase from the previous year. Total sales hit $3.8 billion, driven by growth across all product categories. Ending account balances rose 5% compared to the prior-year quarter.
Life Insurance saw an operating loss of $(35) million, compared to $33 million in operating income the previous year. This was primarily due to lower alternative investment income and the impact of the Fortitude Re reinsurance transaction. Excluding these factors, operating income was $4 million, aligning with expectations. Sales grew 15% sequentially despite a 15% year-over-year decline.
Retirement Plan Services reported operating income of $40 million, down 15% year over year but up 11% sequentially. Ending account balances were $108 billion, a 12% increase compared to the second quarter of 2023. Total deposits rose 13%.
Capital and Liquidity
Lincoln Financial Group reported a net unrealized loss of $10.5 billion on its available-for-sale securities as of June 30, 2024, slightly higher than the $10.4 billion loss from the previous year, primarily due to higher treasury rates.
Navigating Success Amid Challenges
Lincoln Financial Group’s Q2 performance spotlights the company’s strategic resilience and effective capital management. The significant boost in net income and RBC ratio highlights strong operational execution. However, challenges in the Life Insurance segment and unrealized losses on available-for-sale securities suggest areas needing attention.
Given these factors, Lincoln Financial Group appears to be a Hold. Investors should watch for continued improvements in strategic realignment and capital optimization while monitoring potential headwinds in specific business segments.
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