Shares of Lincoln National Corporation LNC dipped 1.9% since it reported first-quarter 2025 results on May 8. The quarterly results were hurt by a significant rise in total expenses. Nevertheless, the downside was partly offset by higher insurance premiums, strong annuity deposits and solid Group Protection performance. Higher net investment income and improved mortality results also contributed to the upside.
LNC reported adjusted earnings per share of $1.60, which surpassed the Zacks Consensus Estimate by 3.9%. The bottom line climbed 31.1% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Adjusted operating revenues grew 2.2% year over year to $4.7 billion. However, the top line missed the consensus mark by 0.5%.
Lincoln National Corporation Price, Consensus and EPS Surprise
Lincoln National Corporation Price, Consensus and EPS Surprise
Lincoln National Corporation price-consensus-eps-surprise-chart | Lincoln National Corporation Quote
Key Takeaways From LNC’s Q1 Results
LNC’s estimated RBC ratio rose to more than 420% at the first-quarter end.
Insurance premiums advanced 4.7% year over year to $1.68 billion, higher than the Zacks Consensus Estimate of $1.66 billion.
Fee income was $1.4 billion, which improved 3.1% year over year but marginally missed the consensus mark. Net investment income advanced 8.2% year over year to $1.5 billion, which beat the consensus mark of $1.4 billion.
Meanwhile, other revenues of $182 million dropped 34.8% year over year in the quarter under review.
Total expenses more than doubled year over year to $5.7 billion. Interest and debt expenses dipped 1.2% year over year.
Lincoln National incurred a net loss of $722 million against the prior-year quarter’s net income of $1.2 billion.
Lincoln National’s Segmental Performances
The Annuities and Life Insurance segments form part of LNC’s Retail Solutions business, while Group Protection and Retirement Plan Services units make up the Workplace Solutions business.
The Annuities segment’s operating income totaled $290 million in the first quarter, which rose 12% year over year but fell short of the Zacks Consensus Estimate of $291.8 million. The metric benefited on the back of non-recurrence of an unfavorable significant item of $31 million in the prior-year quarter. The unit's operating revenues tumbled 5.6% year over year to $1.2 billion due to a 19.2% decline in insurance premiums and a 50.6% drop in other revenues, partly offset by a 1.9% increase in fee income and 11% growth in net investment income. Total annuity deposits were $3.8 billion, which climbed 33.3% year over year.
The Life Insurance unit incurred an operating loss of $16 million, narrower than the prior-year quarter’s loss of $35 million and the consensus mark of a loss of $17 million. The loss narrowed as a result of improved mortality and reduced net general and administrative expenses. Operating revenues grew 3% year over year to $1.6 billion. Total Life Insurance sales of $97 million advanced 7% year over year. Total deposits inched up 0.8% year over year to $1.2 billion.
The Group Protection segment’s operating income climbed 26.3% year over year to $101 million, higher than the Zacks Consensus Estimate of $88.9 million. The unit was supported by persistent, favorable long-term disability results and continued growth in supplemental health. Operating revenues totaled $1.5 billion in the quarter under review, which improved 6.7% year over year. The metric was driven by a 6.7% rise in insurance premiums. Sales of $157 million rose 9% year over year.
The Retirement Plan Services segment recorded an operating income of $34 million, which declined 5.6% year over year and lagged the consensus mark of $38 million. The metric suffered a blow due to a plan termination effect. Operating revenues inched up 1.6% year over year to $327 million. Total deposits were $4.1 billion, which advanced 8.2% year over year.
Other Operations incurred an operating loss of $95 million, narrower than the year-ago quarter’s loss of $96 million and the Zacks Consensus Estimate of $105.2 million.
Lincoln National’s Financial Update (As of March 31, 2025)
Lincoln National exited the first quarter with cash and invested cash of $4.3 billion, which dropped 26.2% from the 2024-end level. Total assets of $382.9 billion slipped 2% from the figure at 2024-end.
Long-term debt amounted to $5.9 billion, up 0.2% from the figure as of Dec. 31, 2024.
Total stockholders’ equity of $8.2 billion slipped 0.9% from the 2024-end level.
Book value per share, excluding accumulated other comprehensive income, was $61.63, which tumbled 14.5% from the 2024-end level. Adjusted income from operations ROE improved 140 basis points year over year to 9%.
LNC’s Dividend Update
Lincoln National paid out quarterly dividends of $77 million.
LNC’s Outlook
Earlier, the Group Protection unit was anticipated to witness a seasonally higher loss ratio in the fourth quarter of 2025, while the metric is likely to be seasonally lower in the second quarter. The Life Insurance segment was forecasted to witness favorable mortality results in the third and fourth quarters of 2025.
In 2026, the Annuities, Life Insurance, Group Protection and Retirement Plan Services units were projected to account for 55-65%, 10-15%, 20-30% and 5-15%, respectively, of the company’s total operating income earnings. The four units were likely to make up for 45-55%, 10-15%, 25-35% and 5-15%, respectively, of consolidated operating income over the long term.
Management targeted to achieve an RBC ratio of more than 420% in both 2026 and the long term.
Lincoln National’s Zacks Rank
Lincoln National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported first-quarter 2025 results so far, the bottom-line results of Arch Capital Group Ltd. ACGL, The Hartford Insurance Group, Inc. HIG and The Allstate Corporation ALL beat the respective Zacks Consensus Estimate.
Arch Capital reported first-quarter 2025 operating income of $1.54 per share, which beat the Zacks Consensus Estimate by 12.4%. The bottom line, however, declined 37.1% year over year. Gross premiums written improved 8.9% year over year to $6.4 billion. Net premiums written climbed 10.5% year over year to $4.5 billion. Net investment income grew 15.6% year over year to $378 million. Operating revenues of $4.5 billion rose 21.2% year over year. It missed the Zacks Consensus Estimate by 0.9%.
Pre-tax current accident year catastrophic losses for the company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $547 million, wider than the year-ago period’s loss of $58 million. Arch Capital’s underwriting income declined 43.3% year over year to $417 million. The combined ratio — the percentage of premiums paid out as claims and expenses — deteriorated 1,130 basis points (bps) to 90.1. In the Insurance unit, gross premiums written increased 24.4% year over year to $2.6 billion.
Hartford Insurance reported first-quarter 2025 adjusted operating earnings of $2.20 per share, which beat the Zacks Consensus Estimate of $2.13. However, the bottom line decreased 6% year over year. HIG's total revenues amounted to $6.8 billion, which improved from $6.4 billion in the prior year. Earned premiums of Hartford Financial rose 7.1% year over year to $5.8 billion in the first quarter. Pre-tax net investment income of $656 million grew 10.6% year over year.
Pretax income of $783 million decreased 14.1% year over year in the first quarter. Revenues in the Business Insurance segment amounted to $3.7 billion in the first quarter, which rose 8.3% year over year. However, core earnings of $471 million declined 14% year over year. The underlying combined ratio remained in line with the year-ago level of 88.4%. The loss and loss adjustment expense ratio increased 450 bps year over year to 62.8%. The Personal Insurance unit recorded revenues of $982 million, which improved 10.2% year over year
Allstate reported a first-quarter 2025 adjusted net income of $3.53 per share, which outpaced the Zacks Consensus Estimate by 56.2%. However, the bottom line plunged 31.2% year over year. Operating revenues advanced 8.9% year over year to $16.8 billion but missed the consensus mark by 1.9% Property and casualty insurance premiums increased 8.8% year over year to $14.7 billion. Net investment income was $854 million, which rose 11.8% year over year.
Allstate’s pretax income was $719 million in the first quarter, down from the year-ago figure of $1.2 billion. As of March 31, 2025, total policies in force were 211 million, which grew 6.7% year over year. The Property-Liability segment’s premiums earned advanced 8.7% year over year to $14 billion. Underwriting income in the unit amounted to $360 million compared with the prior-year quarter’s figure of $898 million. The underlying combined ratio improved 380 basis points year over year to 83.1%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
