Lincoln National (LNC) 1 Aug 24 2024 Q2 Earnings call transcript

Lincoln Financial Group held its second quarter 2024 earnings call, highlighting a steady progression towards its strategic objectives. The company's focus on building a solid capital foundation, optimizing its operating model, and delivering profitable growth across its businesses has shown significant signs of success.

Capital Foundation and Operating Model Optimization

Lincoln Financial Group reported an estimated RBC ratio of over 420%, surpassing its 400% target. This achievement is a result of the successful sale of its wealth management business and strategic actions aimed at increasing free cash flow generation. The company also received a license for its affiliated Bermuda subsidiary, which will support its financial objectives and enhance its free cash flow.

Profitable Growth and Strategic Alignment

The company's annuities business delivered its highest earnings quarter in 2 years, with a 10% year-over-year growth. Group Protection continued its momentum, delivering earnings in line with its record prior year quarter and strong sales growth across all products and segments. Life business, excluding below-target alternative investment income, achieved earnings in line with expectations and sequential increase in sales. Retirement plan services produced sequential earnings growth and sales within the range of the last few quarters.

Annuities Business and Sales

The annuities business saw a 48% year-over-year increase in sales, with a focus on expanding the addressable market and optimizing capabilities. The strong earnings delivered this quarter reflect the company's commitment to a balanced product mix and providing customers with a broad range of solutions. Fixed sales more than doubled year-over-year and increased more than 70% sequentially, indicating a successful application of capabilities to sustain a consistent and growing competitive presence in the fixed marketplace.

Group Protection and Life Business

Group Protection saw a 15% sequential sales growth, reflecting the company's strategic realignment to focus on products with more stable cash flows and higher risk-adjusted returns. Life business, excluding below-target alternative investment income, achieved earnings in line with expectations and a sequential increase in sales. The company is optimizing its life distribution team to better enable and accelerate its product shift.

Retirement Plan Services

Retirement Plan Services reported results in line with expectations, despite a decline in year-over-year earnings due to lower spread income. The company is investing in enhancing the products and services it offers to customers and increasing operational efficiency.

Looking Ahead

Lincoln Financial Group is well-positioned for future growth, with a strong capital foundation and a strategic focus on leveraging its competitive advantages. The company's commitment to delivering sustainable results and long-term value creation for shareholders sets the stage for continued momentum.