Press release·07/31/2026 00:01:00

Overview of Lincoln National Corporation’s Financial Performance

Lincoln National Corporation (LNC) is a holding company that operates multiple insurance and retirement businesses through its subsidiary companies. The company sells a wide range of wealth accumulation, wealth protection, group protection and retirement products and solutions through four main business segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services.

In the first half of 2026, LNC reported strong financial results, with net income increasing significantly compared to the same period in 2025. This was driven by several key factors:

Higher Annuity Product Performance LNC’s Annuities segment saw a large gain in net annuity product features, driven by favorable capital market conditions. This more than offset higher investment losses and unfavorable changes in the fair value of certain reinsurance-related items.

Improved Life Insurance Earnings LNC’s Life Insurance segment reported higher income from operations, driven by lower benefits and policyholder liability remeasurement as well as reduced expenses associated with reserve financing.

Solid Group Protection Results LNC’s Group Protection segment remained profitable, though income from operations declined slightly due to higher benefits and expenses. The segment continued to see growth in insurance premiums and net investment income.

Steady Retirement Plan Services Performance LNC’s Retirement Plan Services segment increased income from operations, benefiting from higher net investment income and fee income, partially offset by higher expenses.

These positive results were partially offset by higher investment losses, certain legal accruals, and the impact of a gain on debt extinguishment in the prior year period.

Annuities Segment Analysis

LNC’s Annuities segment reported flat income from operations compared to the prior year period. Higher fee income from growth in separate account balances was offset by higher expenses, including commissions and other costs.

Net flows, which measure the difference between deposits and withdrawals/surrenders, were negative in the first half of 2026 as outflows exceeded new deposits. However, average separate account balances increased, driven by market appreciation.

The segment’s fixed annuity and registered index-linked annuity (RILA) products have discretionary crediting rates that are reset periodically. LNC expects to manage the impact of interest rate movements on profitability through portfolio management and, to a lesser extent, crediting rate adjustments.

Life Insurance Segment Analysis

LNC’s Life Insurance segment reported a significant increase in income from operations, driven by lower benefits and policyholder liability remeasurement as well as reduced expenses associated with reserve financing.

The segment saw a decline in insurance premiums, primarily due to the expiration of a reinsurance treaty. However, fee income remained stable, and net investment income improved due to growth in the investment portfolio.

Benefits and policyholder liability remeasurement decreased, reflecting a decline in reserves for universal life-type contracts with secondary guarantees and more favorable mortality experience. Commissions and other expenses also declined, partly due to the restructuring of certain captive reinsurance subsidiaries.

Group Protection Segment Analysis

LNC’s Group Protection segment saw a decline in income from operations, primarily due to higher benefits and expenses. Benefits and policyholder liability remeasurement increased, driven by higher incidence and less favorable claims experience in the disability business, partially offset by lower incidence in the life business.

Insurance premiums grew, reflecting an increase in the in-force business. Net investment income also improved, in line with the growth in the business.

The segment’s loss ratios, which measure the relationship between benefits and premiums, increased for the life and disability product lines but remained stable for the dental line.

Retirement Plan Services Segment Analysis

LNC’s Retirement Plan Services segment reported higher income from operations, benefiting from increased net investment income and fee income. Net investment income improved due to higher portfolio yields, a decrease in crediting rates, and higher income from commercial mortgage loan prepayments and bond make-whole premiums.

Fee income grew, driven by higher average daily separate account and mutual fund balances. However, commissions and other expenses also increased, partly due to higher costs related to business operations and higher trail commissions.

Net flows, which measure the difference between deposits and withdrawals/terminations, were negative in the first half of 2026, as outflows from the segment’s older, higher-margin annuity blocks exceeded new deposits. This shift in business mix towards lower-returning products has put pressure on earnings, underscoring the importance of new deposit production to maintain profitability.

Investment Portfolio and Consolidated Financials

LNC’s investment portfolio is well-diversified, with fixed maturity securities comprising the largest portion. The company follows a balanced approach to investing, focusing on both current income and prudent risk management.

As of June 30, 2026, LNC’s fixed maturity available-for-sale (AFS) securities portfolio had a net unrealized loss of $8.5 billion, primarily due to the rising interest rate environment. The company has concluded that these unrealized losses are not indicative of credit impairment and that it has the intent and ability to hold these securities to recovery.

LNC’s effective tax rate was 17% for the first half of 2026, lower than the prevailing corporate federal income tax rate of 21%, primarily due to the benefits of preferential tax items.

Subsequent to the reporting period, LNC entered into a reinsurance transaction with Talcott Financial Group to cede approximately $5.8 billion of in-force guaranteed universal life statutory reserves. This transaction is expected to close in the fourth quarter of 2026 and is part of LNC’s strategy to shift its liability mix and grow sustainable free cash flow.

Outlook and Key Risks

LNC’s strong financial performance in the first half of 2026 reflects the company’s diversified business model and disciplined risk management approach. However, the company faces several key risks that could impact future results:

• Weak economic conditions and adverse capital market movements that could affect product demand, investment performance, and policyholder behavior
• Legislative, regulatory, or tax changes that could impact the company’s products, operations, and financial position
• Continued low interest rates or rising interest rates that could pressure investment spreads and profitability
• Operational risks, such as cybersecurity threats and the ability to effectively manage emerging technologies like artificial intelligence
• Potential legal and regulatory proceedings that could result in adverse outcomes

Overall, LNC remains well-positioned to navigate these challenges and continue delivering value to its shareholders. The company’s focus on prudent risk management, product innovation, and operational efficiency should help it capitalize on growth opportunities in the insurance and retirement markets.