Lincoln National reported first-quarter adjusted operating income of $326 million, or $1.66 per diluted share, as the insurer said the core business kept building momentum even as GAAP results stayed in the red. The company’s adjusted operating income rose 16% from a year earlier, marking the seventh straight quarter of year-over-year growth.
The quarter was powered by a sharp showing in alternatives, which produced an annualized return of 12.3% and about $129 million pre-tax, or roughly $19 million after tax above Lincoln National’s 10% annualized target. Life Insurance swung to $41 million in operating earnings from a $16 million loss a year earlier, while sales in that unit climbed more than 30% to $129 million. Core Life and MoneyGuard sales grew 20% to $96 million, and executive benefits sales nearly doubled.
Group Protection also contributed, with operating income rising 11% to $112 million as the margin improved by 60 basis points to 8%. Premium growth in the segment was 2% overall, but local market premiums rose more than 4% and supplemental health premiums surged 28%. Retirement Plan Services posted $43 million in operating income, up 26%, on first-year sales of $1.1 billion, nearly 3% higher than a year ago, while average account balances increased about 10% to $125 billion and base spreads widened to 116 basis points.
On the annuity side, total account balances net of reinsurance reached $169 billion, up 7% from a year earlier. Spread-based products made up 31% of those balances, compared with 28% a year earlier, as RILA balances grew 15% and fixed annuity balances jumped 24%. Fixed indexed annuity sales surged more than 90% from the prior year, underscoring the company’s push toward higher-return products.
That strength did not carry through to the bottom line under generally accepted accounting rules. Lincoln National reported a GAAP net loss available to common stockholders of $211 million, or $1.10 per diluted share, a shortfall the company attributed largely to adverse movement in market risk benefits tied to lower equity markets. Management also pointed to capital strength: the estimated RBC ratio has stayed well above the 420% buffer target for eight straight quarters, leverage improved to 25% in line with the long-term target, and holding company liquidity stood at about $1.2 billion including prefunding, or roughly $805 million net. The message from the call was clear enough: the turnaround is advancing, but market-driven hits, disability pressure and annuity outflows are still part of the job.
For Lincoln National, the question now is not whether the core franchise is improving — the quarter already answered that — but how long it can keep translating strong investment returns and better product mix into earnings while the accounting noise from equity markets continues to drag on reported results.
