Q4 2023 Earnings Summary
Reported on Jan 7, 2025 (Before Market Open)
Pre-Earnings Price$27.08Last close (Feb 7, 2024)
Post-Earnings Price$27.00Open (Feb 8, 2024)
Price Change
$-0.08(-0.30%)
- Lincoln Financial's Group Protection business has experienced strong growth, with supplemental health sales more than doubling in 2023 and small market sales increasing by 15%, driven by strategic realignment and tailored offerings for different employer levels.
- The company has significantly improved Group Protection margins from 1% to over 5%, a 400 basis point increase year-over-year, due to strategic investments and operational improvements, with confidence in further expansion towards peer levels above 10%.
- Lincoln is strengthening its balance sheet, increasing its RBC ratio from 377% to between 400% and 410%, with plans to delever and increase financial flexibility, which will support increasing shareholder returns in the future.
- Significant decline in Life Insurance segment earnings: The Life Insurance business saw earnings decrease from about $600 million a few years ago to nearly zero in 2023 due to factors like assumption resets, lower prepay income, and reinsurance impacts. While some improvement is expected, earnings are not anticipated to return to previous levels in the near term.
- Elevated debt levels and upcoming expensive capital obligations: The company acknowledges elevated leverage and the presence of an expensive preferred stock coming due in a couple of years, which could strain capital and liquidity despite plans to deleverage over time.
- Uncertainty around share buyback timing: Management is not providing any specific timing for the resumption of share buybacks, focusing instead on strengthening the balance sheet and improving free cash flow, which may limit shareholder returns in the near term.
Research analysts covering LINCOLN NATIONAL.