Lincoln National Corporation LNC reported fourth-quarter 2024 adjusted earnings per share of $1.91, which beat the Zacks Consensus Estimate by 9.8%. The bottom line advanced nearly 30% year over year.
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Adjusted operating revenues were $4.6 billion, which more than doubled year over year. However, the top line fell short of the consensus mark by 1%.
The quarterly results benefited on the back of record sales achieved in Group Protection segment. The Annuities unit also reaped the benefits of a diversified product portfolio, while increased deposits in Retirement Plan Services segment aided the overall results. However, the upside was partly offset by an elevated expense level resulting from a significant surge in benefits expense.
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 Q4 Results
LNC’s estimated RBC ratio rose to more than 430% at the fourth-quarter end.
Insurance premiums totaled $1.59 billion, while the metric was recorded at a negative figure of $1.1 billion. However, the metric was lower than the Zacks Consensus Estimate of $1.62 billion.
Fee income inched up 1.9% year over year to $1.39 billion, which almost touched the consensus mark. Net investment income of $1.44 billion grew 1.7% year over year, higher than the consensus mark of $1.39 billion.
Meanwhile, other revenues of $185 million tumbled 28.6% year over year.
Total expenses escalated 28.1% year over year to $3 billion. Interest and debt expenses increased 2.5% year over year.
Lincoln National reported a net income of $1.7 billion in the fourth quarter against the prior-year quarter’s net loss 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 advanced 14% year over year to $303 million, which beat the Zacks Consensus Estimate of $299 million. The metric gained from higher account balance and improved spread income. The unit's operating revenues were $1.2 billion on the back of a significant surge in insurance premiums, a 10.9% increase in fee income and 8.7% growth in net investment income, partly offset by a 39.4% fall in other revenues. Total annuity deposits decreased 15.3% year over year to $3.7 billion.
The Life Insurance unit incurred an operating loss of $15 million, wider than the prior-year quarter’s loss of $6 million. Higher-than-expected severity leading to unfavorable mortality results hurt the unit’s results. Operating revenues slipped 3.5% year over year to $1.6 billion. Total Life Insurance sales of $119 million dropped 17.4% year over year. Total deposits slipped 3.8% year over year to $1.4 billion.
The Group Protection segment recorded an operating income of $107 million, which more than doubled year over year and surpassed the Zacks Consensus Estimate of $73 million. The unit gained from prudent pricing, new business growth and strong renewal rates. Operating revenues rose 2.2% year over year to $1.4 billion, driven by a 1.9% rise in insurance premiums. Sales of $467 million improved 17.3% year over year.
The Retirement Plan Services segment’s operating income advanced 13% year over year to $43 million, higher than the Zacks Consensus Estimate of $40.3 million. The unit was aided by higher account balances and reduced general and administrative expenses. Operating revenues grew 4.7% year over year to $337 million. Total deposits of $3.5 billion rose 16.9% year over year.
Other Operations incurred an operating loss of $95 million, narrower than the year-ago quarter’s loss of $100 million and in line with the consensus mark.
Lincoln National’s Financial Update (As of Dec. 31, 2024)
Lincoln National exited the fourth quarter with cash and invested cash of $5.8 billion, which soared 72.4% from 2023-end level. Total assets of $390.8 billion increased 4.9% from the figure at 2023-end.
Long-term debt amounted to $5.9 billion, up 2.8% from the figure as of Dec. 31, 2023. Short-term debt totaled $300 million.
Total stockholders’ equity of $8.3 billion improved 20% from the 2023-end level.
Book value per share, excluding accumulated other comprehensive income, was $72.06, which advanced 30.3% from the 2023-end level. Adjusted income from operations ROE improved 170 basis points year over year to 10.9%.
LNC’s Dividend Update
Lincoln National paid out quarterly dividends of $77 million.
Lincoln National’s Full-Year Update
Lincoln National reported adjusted earnings per share of $7.07 in 2024, which climbed 32.9% year over year. Adjusted operating revenues improved 14.4% year over year to $18.3 billion.
Operating revenues in the Annuities, Group Protection and Retirement Plan Services segments witnessed year-over-year improvements of 63.1%, 2.8% and 0.8%, respectively, in 2024. Meanwhile, operating revenues fell 9.5% year over year in the Life Insurance unit.
LNC’s Outlook
The Group Protection unit is anticipated to witness a seasonally higher loss ratio in the first and fourth quarters of 2025, while the metric is likely to be seasonally lower in the second quarter. The Life Insurance segment is forecasted to witness unfavorable mortality results in the first quarter. Mortality results are expected to be favorable in the third and fourth quarters of 2025.
In 2026, the Annuities, Life Insurance, Group Protection and Retirement Plan Services units are 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 are likely to make up for 45-55%, 10-15%, 25-35% and 5-15%, respectively, of consolidated operating income over the long term.
Management targets to achieve an RBC ratio of more than 420% in both 2026 and long term.
Lincoln National’s Zacks Rank
LNC 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 fourth-quarter 2024 results so far, the bottom-line results of Marsh & McLennan Companies, Inc. MMC, Brown & Brown, Inc. BRO and AXIS Capital Holdings Limited AXS beat the respective Zacks Consensus Estimate.
Marsh & McLennan reported fourth-quarter 2024 adjusted earnings per share of $1.87, which beat the Zacks Consensus Estimate by 6.9%. The bottom line increased 11% year over year. Consolidated revenues rose 9.4% year over year to $6.1 billion. The figure also improved 7% on an underlying basis. The top line surpassed the consensus mark by 2.5%. Marsh & McLennan’s adjusted operating income was $1.3 billion, up 8.6% year over year. Adjusted operating margin remained unchanged year over year at 23.3%.
Revenues in the Risk and Insurance Services segment were $3.6 billion, which rose 11% year over year and 8% on an underlying basis. Adjusted operating income increased 13% year over year to $893 million. In the United States/Canada operations, revenues grew 21% year over year. Among the international operations, Asia Pacific and EMEA’s revenues grew 9% year over year. The Consulting unit recorded revenues of $2.44 billion, which increased 6% year over year and 6% on an underlying basis.
Brown & Brown’s fourth-quarter 2024 adjusted earnings of 86 cents per share beat the Zacks Consensus Estimate by 14.7%. The bottom line increased 48.3% year over year. Total revenues of $1.2 billion beat the consensus estimate by 6.4%. The top line improved 15.4% year over year. The upside can be primarily attributed to commission and fees, which grew 15.4% year over year to $1.1 billion.
Organic revenues improved 13.8% to $1.1 billion. Investment income increased 22.2% year over year to $22 million. Adjusted EBITDAC was $390 million, up 22.6% year over year. EBITDAC margin expanded 190 bps year over year to 32.9%.
AXIS Capital posted fourth-quarter 2024 operating income of $2.97 per share, which beat the Zacks Consensus Estimate by 10.8%. The bottom line increased 1% year over year. Total operating revenues of $1.6 billion missed the consensus estimate by 2.8%. The top line rose 6.7% year over year. Net premiums written increased 14% to $1.2 billion, attributable to a 9% increase in the Insurance segment and a 64% surge in the Reinsurance segment. Net investment income increased 5% year over year to $195.8 million.
AXIS Capital’s underwriting income was $129.5 million against a loss of $274 million in the year-ago quarter. The combined ratio improved 3040 bps to 94.2%. The Insurance segment’s gross premiums written improved 7.4% year over year to $1.7 billion. Net premiums earned increased 11.9% to $1 billion. In the Reinsurance unit, gross premiums written increased 36.9% year over year to $275 million. Underwriting income was $0.4 million against a loss of $212.4 million in the year-ago quarter.
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