Lincoln National Reports Q1 2025 Results Amid Rising Expenses
Shares of Lincoln National Corporation (LNC) fell 1.9% following its first-quarter 2025 results, announced on May 8. The financial performance was impacted by a substantial increase in total expenses. However, this decline was mitigated by improvements in insurance premiums, strong annuity deposits, and Group Protection performance. Additionally, higher net investment income and better mortality results contributed positively.
LNC posted adjusted earnings per share of $1.60, exceeding the Zacks Consensus Estimate by 3.9%. This figure represents a year-over-year increase of 31.1%.
Adjusted operating revenues grew 2.2% from the previous year, reaching $4.7 billion, although this was 0.5% below the consensus estimate.
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
As of the end of the first quarter, LNC’s estimated Risk-Based Capital (RBC) ratio increased to over 420%.
Insurance premiums rose 4.7% year over year to $1.68 billion, surpassing the Zacks Consensus Estimate of $1.66 billion.
Fee income reached $1.4 billion, a 3.1% increase year over year, although it slightly missed consensus expectations. In contrast, net investment income rose 8.2% year over year to $1.5 billion, exceeding the consensus estimate of $1.4 billion.
Other revenues fell significantly, down 34.8% year over year, totaling $182 million. Total expenses surged to $5.7 billion, more than doubling from the previous year.
Lincoln National recorded a net loss of $722 million, compared to a net income of $1.2 billion from the prior year.
Segmental Performance of Lincoln National
LNC’s Annuities and Life Insurance segments are part of its Retail Solutions business, while the Group Protection and Retirement Plan Services units fall under Workplace Solutions.
Annuities: This segment achieved an operating income of $290 million, a 12% rise year over year, but fell short of the Zacks consensus estimate of $291.8 million. The segment benefited from the absence of an unfavorable significant item of $31 million in the previous year. Nevertheless, operating revenues decreased 5.6% year over year to $1.2 billion, driven by a 19.2% decline in insurance premiums and a 50.6% drop in other revenues. Total annuity deposits rose significantly to $3.8 billion, marking a 33.3% increase year over year.
Life Insurance: This segment faced an operating loss of $16 million, an improvement from the loss of $35 million the previous year, and better than the consensus estimate of a $17 million loss. Revenue increased 3% year over year to $1.6 billion, with Life Insurance sales rising 7% to $97 million.
Group Protection: Operating income for this segment surged 26.3% year over year to $101 million, outperforming the Zacks Consensus Estimate of $88.9 million. The growth was fueled by strong long-term disability results and continued expansion in supplemental health. Revenues increased 6.7% year over year to $1.5 billion, propelled by a corresponding rise in insurance premiums.
Retirement Plan Services: Operating income decreased 5.6% to $34 million and fell short of the consensus estimate of $38 million due to a plan termination effect. Operating revenues inched up 1.6% year over year to $327 million, with total deposits reaching $4.1 billion—an 8.2% improvement.
Other Operations reported an operating loss of $95 million, a slight improvement from the loss of $96 million in the prior year, and also better than the estimate of $105.2 million.
Financial Update as of March 31, 2025
As of the end of the first quarter, Lincoln National held $4.3 billion in cash and invested cash, down 26.2% from the end of 2024. Total assets were reported at $382.9 billion, a decline of 2% from the previous year-end.
Long-term debt stood at $5.9 billion, reflecting a 0.2% increase from December 31, 2024. Total stockholders’ equity declined 0.9% to $8.2 billion. Book value per share, excluding accumulated other comprehensive income, reached $61.63, down 14.5% from the end of 2024. The adjusted income from operations ROE improved by 140 basis points year over year to 9%.
Dividend Update
Lincoln National declared quarterly dividends totaling $77 million.
Outlook for Lincoln National
The Group Protection unit is expected to face a seasonally higher loss ratio in the fourth quarter of 2025, while the second quarter may show a lower ratio. Management forecasts favorable mortality results for the Life Insurance segment in the latter half of 2025.
For 2026, projections indicate that the Annuities, Life Insurance, Group Protection, and Retirement Plan Services units will contribute 55-65%, 10-15%, 20-30%, and 5-15%, respectively, to the company’s total operating income. Over the long term, these units are expected to account for corresponding proportions of consolidated operating income.
Management aims for an RBC ratio exceeding 420% through both 2026 and into the future.
Lincoln National’s Zacks Rank
Currently, Lincoln National holds a Zacks Rank #3 (Hold).
Performance of Other Insurers
Among other insurance companies reporting their first-quarter 2025 results, Arch Capital Group Ltd.
Insurance Companies Report Strong Q1 Earnings, Yet Mixed Results
Arch Capital Group Ltd. (ACGL), The Hartford Insurance Group, Inc. (HIG), and The Allstate Corporation (ALL) all exceeded the Zacks Consensus Estimate for the first quarter of 2025, but the results show significant year-over-year declines in key metrics.
Arch Capital’s Q1 Performance
Arch Capital announced an operating income of $1.54 per share, surpassing the Zacks Consensus Estimate by 12.4%. However, this represented a decline of 37.1% compared to the same quarter in the previous year. Gross premiums written improved significantly by 8.9% to $6.4 billion, while net premiums written climbed 10.5% to $4.5 billion. Additionally, net investment income saw a 15.6% increase to $378 million. Operating revenues rose 21.2% year over year to $4.5 billion, although this fell short of the Zacks Consensus Estimate by 0.9%.
The company’s pre-tax current accident year catastrophic losses in its insurance and reinsurance segments reached $547 million, a notable increase from a loss of $58 million in the prior year. Arch Capital’s underwriting income decreased by 43.3% to $417 million, while the combined ratio, which reflects the percentage of premiums paid out as claims and expenses, worsened by 1,130 basis points to 90.1. The Insurance unit reported gross premiums written of $2.6 billion, up 24.4% year over year.
The Hartford’s Financial Results
The Hartford reported adjusted operating earnings of $2.20 per share, exceeding the Zacks Consensus Estimate of $2.13, despite a 6% decrease year over year. Total revenues were $6.8 billion, up from $6.4 billion last year. Earned premiums in the first quarter rose by 7.1% to $5.8 billion. Pre-tax net investment income increased by 10.6% year over year to $656 million.
Nevertheless, The Hartford’s pretax income dropped by 14.1% to $783 million. In the Business Insurance segment, revenues were $3.7 billion, reflecting an 8.3% year-over-year increase. Core earnings also saw a decline of 14% to $471 million. The underlying combined ratio remained consistent with the prior year’s 88.4%, while the loss and loss adjustment expense ratio increased by 450 basis points to 62.8%. The Personal Insurance unit’s revenues improved by 10.2% to $982 million.
Allstate’s Q1 Earnings Overview
Allstate reported adjusted net income of $3.53 per share, exceeding the Zacks Consensus Estimate by 56.2%, although this marked a 31.2% decline from last year. Operating revenues increased 8.9% year over year to $16.8 billion, but missed the consensus estimate by 1.9%. Property and casualty insurance premiums rose by 8.8% to $14.7 billion, while net investment income reached $854 million, an 11.8% year-over-year increase.
Allstate’s pretax income fell to $719 million, down from $1.2 billion in the prior year. By March 31, 2025, the total policies in force rose by 6.7% to 211 million. The Property-Liability segment’s earned premiums advanced by 8.7% year over year to $14 billion. Underwriting income in this segment was $360 million, a decrease from $898 million in the same quarter last year. The underlying combined ratio improved by 380 basis points to 83.1%.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
