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RADNOR, Pa.--(BUSINESS WIRE)--Lincoln Financial (NYSE: LNC) today reported financial results for the second quarter ended June 30, 2026.


“The second quarter marked a significant step forward in the execution of our long-term strategy and reflects the strength of the franchise we have built," said Ellen Cooper, Chairman, President and CEO of Lincoln Financial. "We delivered another quarter of year-over-year earnings growth, supported by strength across all businesses. Life Insurance and Retirement Plan Services reported strong earnings growth, Group Protection extended its track record of excellent operating performance, and our Annuities business remained well positioned as we continue to diversify our earnings mix toward spread-based products.”
"Our progress this quarter demonstrates the continued momentum on our strategic priorities. In addition to the prefunding amounts related to our preferred stock, available liquidity at the holding company continues to grow, positioning us well to execute on our stated priorities over the next year and create durable, long-term value for shareholders."
Business Highlights
Our 2026 second quarter performance demonstrated continued execution against our financial and strategic objectives.
Retail Solutions
Workplace Solutions
Earnings Summary
(in millions, except per share data) | For the Three Months Ended |
| For the Six Months Ended | |||||||||
| 6/30/25 | 6/30/26 |
| 6/30/25 | 6/30/26 | |||||||
Net income (loss) | $ | 699 | $ | 1,332 |
| $ | (23 | ) | $ | 1,160 | ||
Net income (loss) available to common stockholders — diluted |
| 688 |
| 1,321 |
|
| (69 | ) |
| 1,109 | ||
Net income (loss) per diluted share available to common stockholders | $ | 3.80 | $ | 6.72 |
| $ | (0.39 | ) | $ | 5.65 | ||
Adjusted income (loss) from operations |
| 438 |
| 450 |
|
| 752 |
|
| 810 | ||
Adjusted income (loss) from operations available to common stockholders |
| 427 |
| 439 |
|
| 706 |
|
| 764 | ||
Adjusted income (loss) from operations per diluted share available to common stockholders | $ | 2.36 | $ | 2.24 |
| $ | 3.97 |
| $ | 3.89 | ||
Reconciliation of Net Income (Loss) to Adjusted Income (Loss) from Operations(1)
(in millions) | For the Three Months Ended |
| For the Six Months Ended | ||||||||||||
| 6/30/25 | 6/30/26 |
| 6/30/25 | 6/30/26 | ||||||||||
Net income (loss) available to common stockholders — diluted | $ | 688 |
| $ | 1,321 |
|
| $ | (69 | ) | $ | 1,109 |
| ||
Less: |
|
|
|
|
| ||||||||||
Preferred stock dividends declared |
| (11 | ) |
| (11 | ) |
|
| (46 | ) |
| (46 | ) | ||
Adjustment for deferred units of LNC stock in our deferred compensation plans |
| — |
|
| — |
|
|
| — |
|
| (5 | ) | ||
Net income (loss) |
| 699 |
|
| 1,332 |
|
|
| (23 | ) |
| 1,160 |
| ||
Less: |
|
|
|
|
| ||||||||||
Net annuity product features, pre-tax(1) |
| 405 |
|
| 1,497 |
|
|
| (687 | ) |
| 802 |
| ||
Net life insurance product features, pre-tax |
| (58 | ) |
| (50 | ) |
|
| (15 | ) |
| (28 | ) | ||
Credit loss-related adjustments, pre-tax |
| (25 | ) |
| (37 | ) |
|
| (53 | ) |
| (57 | ) | ||
Investment gains (losses), pre-tax |
| (81 | ) |
| (197 | ) |
|
| (183 | ) |
| (239 | ) | ||
Changes in the fair value of reinsurance-related embedded derivatives, |
|
|
|
|
| ||||||||||
trading securities and certain mortgage loans, pre-tax(1) |
| 14 |
|
| (85 | ) |
|
| (76 | ) |
| 94 |
| ||
Gains (losses) on other non-financial assets, pre-tax |
| — |
|
| — |
|
|
| — |
|
| (6 | ) | ||
Other items, pre-tax(1) |
| 75 |
|
| (12 | ) |
|
| 40 |
|
| (123 | ) | ||
Income tax benefit (expense) related to the above pre-tax items |
| (69 | ) |
| (234 | ) |
|
| 199 |
|
| (93 | ) | ||
Adjusted income (loss) from operations | $ | 438 |
| $ | 450 |
|
| $ | 752 |
| $ | 810 |
| ||
Adjusted income (loss) from operations available to common stockholders | $ | 427 |
| $ | 439 |
|
| $ | 706 |
| $ | 764 |
| ||
| (1) Refer to the full reconciliation at the back of this release for footnotes. |
Variable Investment Income
Alternative Investment Income, after-tax(1) | For the Three Months Ended |
| For the Six Months Ended | |||||||||||||||||
(in millions) | 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 |
| 6/30/25 | 6/30/26 | ||||||||||||
Annuities | $ | 3 | $ | 2 | $ | 3 | $ | 3 | $ | 1 |
| $ | 5 | $ | 4 | |||||
Life Insurance |
| 74 |
| 75 |
| 90 |
| 95 |
| 38 |
|
| 129 |
| 133 | |||||
Group Protection |
| 1 |
| 2 |
| 2 |
| 2 |
| 1 |
|
| 2 |
| 3 | |||||
Retirement Plan Services |
| 2 |
| 1 |
| 3 |
| 2 |
| 1 |
|
| 3 |
| 3 | |||||
Other Operations |
| — |
| — |
| — |
| — |
| — |
|
| — |
| — | |||||
Consolidated | $ | 80 | $ | 80 | $ | 98 | $ | 102 | $ | 41 |
| $ | 139 | $ | 143 | |||||
(1) Excludes alternative investment income on investments supporting our modified coinsurance and coinsurance with funds withheld agreements as we have limited economic interest in those investments. |
| Prepayment Income, after-tax | For the Three Months Ended |
| For the Six Months Ended | |||||||||||||||||
(in millions) | 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 |
| 6/30/25 | 6/30/26 | ||||||||||||
Annuities | $ | 3 | $ | 3 | $ | 5 | $ | 1 | $ | 2 |
| $ | 3 | $ | 3 | |||||
Life Insurance |
| — |
| 1 |
| 1 |
| 2 |
| 2 |
|
| 1 |
| 4 | |||||
Group Protection |
| 1 |
| — |
| — |
| 1 |
| 1 |
|
| 1 |
| 2 | |||||
Retirement Plan Services |
| — |
| 1 |
| 1 |
| — |
| 3 |
|
| — |
| 3 | |||||
Other Operations |
| — |
| — |
| — |
| — |
|
|
| — |
| — | ||||||
Consolidated | $ | 4 | $ | 5 | $ | 7 | $ | 4 | $ | 8 |
| $ | 5 | $ | 12 | |||||
Items Impacting Segment and Other Operations Results
| For the Three Months Ended June 30, 2026 | |||||||||||||
(in millions, after-tax) | Annuities | Life Insurance |
Group
|
Retirement Plan
|
Other
| |||||||||
Alternative investment income compared to return target(1) | $ | (1 | ) | $ | (40 | ) | $ | (1 | ) | $ | (1 | ) | $ | — |
Prepayment income(2) |
| 2 |
|
| 2 |
|
| 1 |
|
| 3 |
|
| — |
Annual assumption review |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Tax items(3) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Other |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Total impact | $ | 1 |
| $ | (38 | ) | $ | — |
| $ | 2 |
| $ | — |
| For the Three Months Ended June 30, 2025 | |||||||||||||
(in millions, after-tax) | Annuities | Life Insurance |
Group
|
Retirement Plan
|
Other
| |||||||||
Alternative investment income compared to return target(1) | $ | — | $ | — | $ | — | $ | — | $ | — | ||||
Prepayment income(2) |
| 3 |
| — |
| 1 |
| — |
| — | ||||
Annual assumption review |
| — |
| — |
| — |
| — |
| — | ||||
Tax items |
| — |
| — |
| — |
| — |
| — | ||||
Other |
| — |
| — |
| — |
| — |
| — | ||||
Total impact | $ | 3 | $ | — | $ | 1 | $ | — | $ | — | ||||
| (1) Alternative investment income comparison to return target assumes a 10% annual return on the alternative investment portfolio. |
| (2) Prepayment income is actual income reported in the quarter. |
| (3) Tax-related items including dividends-received deduction and foreign tax credit true-ups. |
Capital and Liquidity
| As of or For the Three Months Ended | |||||||||||||
(in millions, except percent and per share data) | 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 | |||||||||
Holding company available liquidity(1) | $ | 466 | $ | 461 | $ | 1,055 | $ | 1,205 | $ | 1,803 | ||||
Holding company available liquidity, net of prefunding | $ | 466 | $ | 461 | $ | 655 | $ | 805 | $ | 903 | ||||
RBC ratio(2) | >420% | >420% | >420% | >420% | >420% | |||||||||
Book value per share (BVPS), including AOCI | $ | 44.91 | $ | 49.56 | $ | 51.88 | $ | 47.87 | $ | 53.68 | ||||
Book value per share, excluding AOCI(3) | $ | 67.95 | $ | 69.66 | $ | 73.10 | $ | 71.06 | $ | 77.39 | ||||
Adjusted book value per share(3) | $ | 72.77 | $ | 74.23 | $ | 76.33 | $ | 77.77 | $ | 79.45 | ||||
| (1) Holding company available liquidity presented as of December 31, 2025, March 31, 2026, and June 30, 2026 includes the $400 million prefunding of a 2026 maturity; amounts presented as of June 30, 2026 also include the $500 million prefunding of the repurchase and/or redemption of our outstanding preferred stock. |
| (2) The RBC ratio is calculated annually as of December 31, but is reported in the March statutory reporting, and as such, the quarterly ratios presented for 6/30/25, 9/30/25, 3/31/26, and 6/30/26 are considered estimates based on information known at the time of reporting. |
| (3) Refer to the reconciliation to book value per share, including AOCI, at the back of this release. |
Annuities
(in millions, except ROA data) | As of or For the Three Months Ended |
| As of or For the Six Months Ended | ||||||||||||||||||||||||||||||
| 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 | Change |
| 6/30/25 | 6/30/26 | Change | |||||||||||||||||||||||
Total operating revenues | $ | 1,214 |
| $ | 1,270 |
| $ | 1,308 |
| $ | 1,283 |
| $ | 1,341 |
| 10.5 | % |
| $ | 2,412 |
| $ | 2,624 |
| 8.8 | % | |||||||
Total operating expenses |
| 876 |
|
| 902 |
|
| 939 |
|
| 949 |
|
| 1,002 |
| 14.4 | % |
|
| 1,734 |
|
| 1,951 |
| 12.5 | % | |||||||
Income (loss) from operations before taxes |
| 338 |
|
| 368 |
|
| 369 |
|
| 334 |
|
| 339 |
| 0.3 | % |
|
| 678 |
|
| 673 |
| (0.7 | )% | |||||||
Federal income tax expense (benefit) |
| 51 |
|
| 58 |
|
| 58 |
|
| 59 |
|
| 52 |
| 2.0 | % |
|
| 101 |
|
| 111 |
| 9.9 | % | |||||||
Income (loss) from operations | $ | 287 |
| $ | 310 |
| $ | 311 |
| $ | 275 |
| $ | 287 |
| 0.0 | % |
| $ | 577 |
| $ | 562 |
| (2.6 | )% | |||||||
Income (loss) from operations, excluding impact of annual assumption review | $ | 287 |
| $ | 318 |
| $ | 311 |
| $ | 275 |
| $ | 287 |
| 0.0 | % |
| $ | 577 |
| $ | 562 |
| (2.6 | )% | |||||||
Total sales | $ | 4,019 |
| $ | 4,467 |
| $ | 4,889 |
| $ | 3,939 |
| $ | 3,515 |
| (12.5 | )% |
| $ | 7,807 |
| $ | 7,454 |
| (4.5 | )% | |||||||
Net flows | $ | (1,162 | ) | $ | (1,143 | ) | $ | (1,227 | ) | $ | (2,196 | ) | $ | (2,917 | ) | N | M |
| $ | (2,838 | ) | $ | (5,114 | ) | (80.2 | )% | |||||||
Average account balances, net of reinsurance | $ | 159,806 |
| $ | 170,318 |
| $ | 174,668 |
| $ | 175,173 |
| $ | 178,812 |
| 11.9 | % |
| $ | 161,877 |
| $ | 177,240 |
| 9.5 | % | |||||||
Return on average account balances (bps) |
| 72 |
|
| 73 |
|
| 71 |
|
| 63 |
|
| 64 |
|
|
|
| 71 |
|
| 63 |
|
| |||||||||
Return on average account balances (bps), excluding impact of annual assumption review |
| 72 |
|
| 75 |
|
| 71 |
|
| 63 |
|
| 64 |
|
|
|
| 71 |
|
| 63 |
|
| |||||||||
Life Insurance
(in millions) | As of or For the Three Months Ended |
| As of or For the Six Months Ended | |||||||||||||||||||||||||
| 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 | Change |
| 6/30/25 | 6/30/26 | Change | ||||||||||||||||||
Total operating revenues | $ | 1,602 | $ | 1,610 |
| $ | 1,643 | $ | 1,628 | $ | 1,572 | (1.9 | )% |
| $ | 3,188 |
| $ | 3,200 | 0.4 | % | |||||||
Total operating expenses |
| 1,568 |
| 1,586 |
|
| 1,555 |
| 1,586 |
| 1,508 | (3.8 | )% |
|
| 3,186 |
|
| 3,094 | (2.9 | )% | |||||||
Income (loss) from operations before taxes |
| 34 |
| 24 |
|
| 88 |
| 42 |
| 64 | 88.2 | % |
|
| 2 |
|
| 106 | N | M | |||||||
Federal income tax expense (benefit) |
| 2 |
| (1 | ) |
| 11 |
| 1 |
| 7 | 250.0 | % |
|
| (14 | ) |
| 8 | 157.1 | % | |||||||
Income (loss) from operations | $ | 32 | $ | 25 |
| $ | 77 | $ | 41 | $ | 57 | 78.1 | % |
| $ | 16 |
| $ | 98 | N | M | |||||||
Income (loss) from operations, excluding impact of annual assumption review | $ | 32 | $ | 54 |
| $ | 77 | $ | 41 | $ | 57 | 78.1 | % |
| $ | 16 |
| $ | 98 | N | M | |||||||
Average account balances, net of reinsurance | $ | 45,147 | $ | 47,503 |
| $ | 49,150 | $ | 49,232 | $ | 50,981 | 12.9 | % |
| $ | 44,769 |
| $ | 50,107 | 11.9 | % | |||||||
Total sales | $ | 121 | $ | 298 |
| $ | 142 | $ | 129 | $ | 216 | 78.5 | % |
| $ | 218 |
| $ | 345 | 58.3 | % | |||||||
Group Protection
(in millions, except margin data) | As of or For the Three Months Ended |
| As of or For the Six Months Ended | ||||||||||||||||||||||||||||||
| 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 | Change |
| 6/30/25 | 6/30/26 | Change | |||||||||||||||||||||||
Total operating revenues | $ | 1,538 |
| $ | 1,507 |
| $ | 1,535 |
| $ | 1,554 |
| $ | 1,576 |
| 2.5 | % |
| $ | 3,059 |
| $ | 3,129 |
| 2.3 | % | |||||||
Total operating expenses |
| 1,319 |
|
| 1,319 |
|
| 1,397 |
|
| 1,412 |
|
| 1,390 |
| 5.4 | % |
|
| 2,712 |
|
| 2,801 |
| 3.3 | % | |||||||
Income (loss) from operations before taxes |
| 219 |
|
| 188 |
|
| 138 |
|
| 142 |
|
| 186 |
| (15.1 | )% |
|
| 347 |
|
| 328 |
| (5.5 | )% | |||||||
Federal income tax expense (benefit) |
| 46 |
|
| 39 |
|
| 29 |
|
| 30 |
|
| 39 |
| (15.2 | )% |
|
| 73 |
|
| 69 |
| (5.5 | )% | |||||||
Income (loss) from operations | $ | 173 |
| $ | 149 |
| $ | 109 |
| $ | 112 |
| $ | 147 |
| (15.0 | )% |
| $ | 274 |
| $ | 259 |
| (5.5 | )% | |||||||
Income (loss) from operations, excluding impact of annual assumption review | $ | 173 |
| $ | 110 |
| $ | 109 |
| $ | 112 |
| $ | 147 |
| (15.0 | )% |
| $ | 274 |
| $ | 259 |
| (5.5 | )% | |||||||
Insurance premiums | $ | 1,386 |
| $ | 1,352 |
| $ | 1,380 |
| $ | 1,399 |
| $ | 1,420 |
| 2.5 | % |
| $ | 2,757 |
| $ | 2,819 |
| 2.2 | % | |||||||
Total sales | $ | 187 |
| $ | 116 |
| $ | 391 |
| $ | 150 |
| $ | 155 |
| (17.1 | )% |
| $ | 344 |
| $ | 305 |
| (11.3 | )% | |||||||
Total loss ratio |
| 65.9 | % |
| 68.3 | % |
| 71.4 | % |
| 71.1 | % |
| 68.4 | % |
|
|
| 69.2 | % |
| 69.8 | % |
| |||||||||
Total loss ratio, excluding the impact of the annual assumption review |
| 65.9 | % |
| 72.2 | % |
| 71.4 | % |
| 71.1 | % |
| 68.4 | % |
|
|
| 69.2 | % |
| 69.8 | % |
| |||||||||
Operating margin(1) |
| 12.5 | % |
| 11.0 | % |
| 7.9 | % |
| 8.0 | % |
| 10.4 | % |
|
|
| 9.9 | % |
| 9.2 | % |
| |||||||||
Operating margin, excluding the impact of annual assumption review |
| 12.5 | % |
| 8.1 | % |
| 7.9 | % |
| 8.0 | % |
| 10.4 | % |
|
|
| 9.9 | % |
| 9.2 | % |
| |||||||||
(1) Operating margin is calculated by dividing income (loss) from operations by insurance premiums.
Retirement Plan Services
(in millions, except ROA data) | As of or For the Three Months Ended |
| As of or For the Six Months Ended | |||||||||||||||||||||||||||||
| 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 | Change |
| 6/30/25 | 6/30/26 | Change | ||||||||||||||||||||||
Total operating revenues | $ | 331 |
| $ | 343 | $ | 352 |
| $ | 346 |
| $ | 353 |
| 6.6 | % |
| $ | 658 |
| $ | 699 |
| 6.2 | % | |||||||
Total operating expenses |
| 289 |
|
| 290 |
| 298 |
|
| 295 |
|
| 296 |
| 2.4 | % |
|
| 578 |
|
| 591 |
| 2.2 | % | |||||||
Income (loss) from operations before taxes |
| 42 |
|
| 53 |
| 54 |
|
| 51 |
|
| 57 |
| 35.7 | % |
|
| 80 |
|
| 108 |
| 35.0 | % | |||||||
Federal income tax expense (benefit) |
| 5 |
|
| 7 |
| 8 |
|
| 8 |
|
| 8 |
| 60.0 | % |
|
| 9 |
|
| 16 |
| 77.8 | % | |||||||
Income (loss) from operations | $ | 37 |
| $ | 46 | $ | 46 |
| $ | 43 |
| $ | 49 |
| 32.4 | % |
| $ | 71 |
| $ | 92 |
| 29.6 | % | |||||||
Deposits | $ | 3,594 |
| $ | 5,008 | $ | 3,939 |
| $ | 4,142 |
| $ | 3,736 |
| 4.0 | % |
| $ | 7,709 |
| $ | 7,878 |
| 2.2 | % | |||||||
Net flows | $ | (585 | ) | $ | 755 | $ | (998 | ) | $ | (213 | ) | $ | (2,425 | ) | N | M |
| $ | (2,768 | ) | $ | (2,638 | ) | 4.7 | % | |||||||
Average account balances | $ | 111,734 |
| $ | 119,259 | $ | 123,533 |
| $ | 124,766 |
| $ | 128,344 |
| 14.9 | % |
| $ | 112,772 |
| $ | 127,049 |
| 12.7 | % | |||||||
Return on average account balances (bps) |
| 13 |
|
| 15 |
| 15 |
|
| 14 |
|
| 15 |
|
|
|
| 13 |
|
| 14 |
|
| |||||||||
Other Operations
(in millions) | As of or For the Three Months Ended |
| As of or For the Six Months Ended | ||||||||||||||||||||||||||||||
| 6/30/25 | 9/30/25 | 12/31/25 | 3/31/26 | 6/30/26 | Change |
| 6/30/25 | 6/30/26 | Change | |||||||||||||||||||||||
Total operating revenues | $ | 41 |
| $ | 50 |
| $ | 56 |
| $ | 57 |
| $ | 84 |
| 104.9 | % |
| $ | 94 |
| $ | 142 |
| 51.1 | % | |||||||
Total operating expenses |
| 157 |
|
| 177 |
|
| 181 |
|
| 199 |
|
| 202 |
| 28.7 | % |
|
| 322 |
|
| 402 |
| 24.8 | % | |||||||
Income (loss) from operations before taxes |
| (116 | ) |
| (127 | ) |
| (125 | ) |
| (142 | ) |
| (118 | ) | (1.7 | )% |
|
| (228 | ) |
| (260 | ) | (14.0 | )% | |||||||
Federal income tax expense (benefit) |
| (25 | ) |
| (28 | ) |
| (27 | ) |
| (31 | ) |
| (28 | ) | (12.0 | )% |
|
| (42 | ) |
| (59 | ) | (40.5 | )% | |||||||
Income (loss) from operations(1) | $ | (91 | ) | $ | (99 | ) | $ | (98 | ) | $ | (111 | ) | $ | (90 | ) | 1.1 | % |
| $ | (186 | ) | $ | (201 | ) | (8.1 | )% | |||||||
| (1) Income (loss) from operations does not include preferred dividends. |
Unrealized Gains and Losses
The company reported a net unrealized loss of $8.5 billion (pre-tax) on its available-for-sale securities as of June 30, 2026, compared to a net unrealized loss of $9.1 billion (pre-tax) as of June 30, 2025. The year-over-year decrease was primarily due to tighter spreads.
The tables attached to this release define and reconcile the non-GAAP measures adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders, book value per share excluding AOCI, and adjusted book value per share to net income (loss), net income (loss) available to common stockholders, and book value per share including AOCI, calculated in accordance with GAAP.
This press release contains statements that are forward-looking, and actual results may differ materially. Please see the Forward-looking Statements – Cautionary Language at the end of this release for factors that may cause actual results to differ materially from the company’s current expectations.
For other financial information, please refer to the company’s second quarter 2026 statistical supplement and second quarter 2026 earnings supplement, which are available in the investor relations section of its website http://www.lincolnfinancial.com/investor.
Conference Call Information
Lincoln Financial will discuss the company’s second quarter results with the investment community in a call beginning at 8:00 a.m. Eastern Time on Thursday, July 30, 2026.
The call will be broadcast live through the company’s website at www.lincolnfinancial.com/webcast. Please log on to the webcast at least 15 minutes prior to the start of the call to download and install any necessary streaming media software. A replay of the call will be available by 10:30 a.m. Eastern Time on July 30, 2026, at www.lincolnfinancial.com/webcast.
About Lincoln Financial
Lincoln Financial helps people confidently plan for their vision of a successful financial future. As of December 31, 2025, approximately 17 million customers trust our guidance and solutions across four core businesses – annuities, life insurance, group protection, and retirement plan services. As of June 30, 2026, the company had $366 billion in end-of-period account balances, net of reinsurance. Headquartered in Radnor, PA., Lincoln Financial is the marketing name for Lincoln National Corporation (NYSE: LNC) and its affiliates. Learn more at LincolnFinancial.com.
Non-GAAP Measures
Management believes that the use of the non-GAAP financial measures adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders (or adjusted operating income (loss)) and adjusted income (loss) from operations per diluted share available to common stockholders is helpful to investors in evaluating the company’s performance.
Management believes that excluding the following items from adjusted income (loss) from operations enhances understanding of the underlying trends and long-term performance of the company’s business. Management excludes “net annuity product features” as this adjustment primarily represents the difference between the valuation of reserves and the valuation of derivatives utilized for hedging our variable annuity and indexed annuity products, which can fluctuate significantly from period to period based on changes in equity markets and interest rates. This difference is due to the hedge focus on managing risks to statutory capital as opposed to the GAAP reserves. Management excludes “net life insurance product features” for similar reasons. In addition, management excludes “credit loss-related adjustments” and “investment gains (losses)” as the timing of changes in allowances or sales of credit-impaired investments depends largely on market credit cycles and can vary considerably from period to period and the timing of other sales of investments that would result in gains or losses is driven by market conditions, including interest rates, and other factors. Management excludes “changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans” as this adjustment represents the economics of investments in underlying funds withheld portfolios supporting reinsurance agreements that have been transferred to third-party reinsurers, which is not indicative of our ongoing results.
Finally, management excludes from adjusted income (loss) from operations certain additional items (as set forth in the definition below) that are not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in most instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. Management believes excluding these items better explains the results of the company’s ongoing businesses in a manner that allows for enhanced understanding of underlying trends, company performance and business fundamentals.
Management also believes that the use of the non-GAAP financial measures book value per share, excluding accumulated other comprehensive income (“AOCI”), and adjusted book value per share enables investors to analyze the amount of our net worth that is attributable to our business operations. Book value per share, excluding AOCI is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Adjusted book value per share is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in equity markets and interest rates.
For the historical periods, reconciliations of non-GAAP measures used in this press release to the most directly comparable GAAP m
John Muething
Investor Relations
Investorrelations@LFG.com
Karyn Baldwin
Media Relations
Media@LFG.com
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