Lincoln Financial: A Strong Finish to 2024, Setting the Stage for Future Growth

Lincoln Financial (NYSE: LNC) wrapped up 2024 with a bang, reporting robust fourth-quarter and full-year results that showcased the company's strategic prowess and resilience in the face of market fluctuations. The insurer's diversified business model and commitment to operational efficiency have positioned it well for sustained long-term value creation. Let's dive into the key highlights and analyze the implications for investors.



Strong Across the Board

Lincoln Financial's 2024 fourth-quarter and full-year results were driven by the substantial progress of each of its businesses in executing their strategic priorities. The company reported net income of $1.7 billion ($9.63 per diluted share) and adjusted operating income of $332 million ($1.91 per diluted share) for the quarter. The RBC ratio exceeded 430% at year-end, reflecting the company's strong capital adequacy.

Annuities: Resilience in Higher Rate Environments

The Annuities segment delivered a 14% increase in operating income, reaching $303 million, driven by account balance growth and higher spread income. Sales hit $3.7 billion, rounding out a strong year with a 7% increase compared to the prior year and the highest level since 2019. The diversified product mix, with spread-based products comprising approximately two-thirds of sales, has contributed to the segment's resilience in higher rate environments.



Group Protection: Stellar Performance

The Group Protection segment reported a record fourth quarter and full year for sales, earnings, and margin, driven by favorable long-term disability results, improved mortality, and strong operational execution. Operating income more than doubled year over year, with a margin expansion to 8.4%. This outcome was reflected in nearly 300 basis points of margin expansion year over year (excluding the impact of the annual assumption review in both periods).

Life Insurance: Refocusing for Long-Term Success

The Life Insurance segment reported an operating loss of $15 million, primarily due to unfavorable mortality driven by higher-than-expected severity. However, the company continues to focus on growth in accumulation and protection products with more risk sharing, which are expected to generate more stable cash flows and higher risk-adjusted returns over time.

Retirement Plan Services: Positive Net Flows and Strong Sales

The Retirement Plan Services segment reported operating income of $43 million in the quarter, up 13% year over year, due to higher account balances and lower net G&A expenses. First-year sales were $1.3 billion in the quarter, 46% higher than the prior-year period, and full-year total deposits increased 25% compared to 2023. Net inflows were positive for a tenth consecutive year.

Looking Ahead

Lincoln Financial's strong performance in 2024 sets the stage for future success in positioning the company for sustained long-term value creation. The company's broad-based execution, diversified product mix, and commitment to operational efficiency have positioned it well to navigate market fluctuations and capitalize on growth opportunities.

Investors should monitor the company's progress in executing its strategic priorities, particularly in the Life Insurance segment, as it refocuses towards risk-sharing products. As Lincoln Financial continues to leverage its competitive advantages, it is well-positioned to deliver long-term value creation for shareholders.