Lincoln National ((LNC)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Lincoln National Corporation’s latest earnings call reflected a strong overall performance, particularly highlighting achievements in its group protection and annuities segments. Despite lingering challenges in the life insurance sector, the company’s robust capital position and improved free cash flow conversion indicate a promising outlook.
Record Fourth Quarter for Group Protection Business
The group protection business stood out with a record fourth-quarter performance. Earnings more than doubled year over year, achieving a margin of 8.4%. This culminated in a record year for the segment in terms of sales, earnings, and margin.
Annuities Business Growth
Lincoln National’s annuities business showcased robust growth, recording its highest full-year sales in five years. Full-year sales increased by 7% compared to the previous year, demonstrating strong earnings growth for both the quarter and the year.
Retirement Plan Services Success
Retirement plan services reported a 13% increase in quarterly earnings year over year, alongside full-year deposit growth of 25%. This marks a decade of consecutive years with positive flows, underlining the segment’s sustained success.
Strong Capital Position
Lincoln National ended 2024 with a robust capital position, boasting an estimated RBC ratio of over 430%, exceeding the target of 420%. This achievement reflects enhanced financial flexibility for the company.
Improved Free Cash Flow Conversion
The company’s free cash flow conversion saw a notable improvement, rising from 35% in 2023 to 39% in 2024, reflecting better operational efficiency and cash management.
Life Insurance Segment Challenges
Challenges persist in the life insurance segment, with a reported fourth-quarter operating loss of $15 million. This was attributed to elevated claim severity and impacts from the Fortitude Re transaction, partially mitigated by above-target alternative investment income.
Known Plan Terminations Impacting Retirement Plan Services
The retirement plan services faced net outflows of $732 million for the quarter, primarily due to several known plan terminations, applying pressure to the segment.
Elevated Mortality in Life Insurance
The life insurance sector experienced elevated mortality, driven by large claims, which significantly impacted the segment due to claim severity.
Guidance and Forward-Looking Statements
Lincoln National provided forward-looking guidance, highlighting their highest full-year adjusted operating income in three years. The company also exceeded its RBC ratio target, ending 2024 with a ratio over 430%. They revised their 2026 free cash flow conversion outlook to a range of 45% to 60%, indicating confidence in their long-term strategic goals.
In summary, Lincoln National’s recent earnings call was marked by strong performance across several segments, with group protection and annuities leading the charge. Despite challenges in the life insurance sector, the company’s financial fortitude and strategic outlook suggest continued growth and resilience in the future.
