Press release·07/31/2026 00:50:57

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, primarily due to the positive impact of capital market movements. This more than offset higher investment losses and unfavorable changes in the fair value of certain reinsurance-related items.

Improved Life Insurance Earnings The 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.

Favorable Changes in Reinsurance Transactions LNC entered into a reinsurance transaction with Talcott Financial Group in the second quarter of 2026, which had a positive impact on the company’s financial results. This transaction is designed to shift LNC’s liability mix and grow sustainable free cash flow.

However, the increase in net income was partially offset by higher investment losses, the impact of certain legal accruals, and the absence of a gain on debt extinguishment that occurred in 2025.

Segment Performance Highlights

Annuities The Annuities segment’s income from operations remained flat compared to the prior year period. Higher fee income from increased separate account balances was offset by higher expenses, including commissions and DAC amortization, as well as lower net investment income.

Life Insurance Income from operations in the Life Insurance segment increased, driven by lower benefits and policyholder liability remeasurement, as well as reduced expenses associated with reserve financing. This was partially offset by lower fee income and net investment income.

Group Protection Income from operations in the Group Protection segment decreased, primarily due to higher benefits and policyholder liability remeasurement, as well as increased expenses. This was partially offset by higher insurance premiums and net investment income.

Retirement Plan Services Income from operations in the Retirement Plan Services segment increased, mainly due to higher net investment income and fee income, partially offset by higher expenses.

Investment Portfolio and Capital Management

LNC’s investment portfolio is well-diversified, with fixed maturity securities comprising the majority of the portfolio. The company’s investment objective is to generate sufficient current income, net of income tax, to meet its obligations to customers and other liabilities, while also managing risk.

LNC utilizes various hedging strategies to manage its exposure to interest rate, equity market, and other risks associated with its annuity and life insurance products. The company’s hedging program is designed to generate sufficient income to fund future claims and maximize distributable earnings, while also protecting capital.

As of June 30, 2026, LNC had a deferred tax asset of approximately $1.8 billion related to net unrealized losses on fixed maturity available-for-sale securities. Management believes it is more likely than not that this deferred tax asset will be realized, as the unrealized losses were caused by factors other than credit loss, and the company has the intent and ability to hold these securities to recovery.

Outlook and Key Risks

LNC’s management remains cautiously optimistic about the company’s future prospects, but also acknowledges several key risks and challenges that could impact its financial performance:

Macroeconomic Conditions Weak general economic and business conditions could affect demand for LNC’s products, investment results, and claims experience. Adverse global capital and credit market conditions could also impact the company’s ability to raise capital and lead to impairments on investments and intangible assets.

Interest Rate Environment Declines in or sustained low interest rates could reduce investment income and interest margins, while increasing interest rates could negatively affect profitability, the value of the investment portfolio, and lead to increased contract surrenders.

Regulatory and Legislative Changes Changes in tax laws, regulations related to the sale and delivery of products, and evolving rules around privacy, cybersecurity, and artificial intelligence could adversely affect LNC’s distribution model, sales, and compliance costs.

Operational and Strategic Risks Risks include the inability of subsidiaries to pay dividends, ineffective risk management, deviations in actual experience from assumptions, and challenges in realizing benefits from strategic initiatives and acquisitions/divestitures.

Conclusion

Overall, Lincoln National Corporation delivered strong financial results in the first half of 2026, driven by improved performance in its Annuities and Life Insurance segments, as well as a favorable reinsurance transaction. However, the company faces a range of macroeconomic, regulatory, and operational risks that could impact its future profitability and growth. LNC’s management remains focused on managing these risks, diversifying its business, and executing on strategic initiatives to position the company for long-term success.