Lincoln Financial Group Reports First Quarter 2011 Results
Total Consolidated Deposits Rise 13% to $5.3 Billion Driving $1.4 Billion in Positive Net Flows
Account Values of $162 Billion Reach Record Level
First Quarter 2011 Segment Results
| Retirement Solutions
| Insurance Solutions
| Other Operations
| Realized Gains and Losses
| Unrealized Gains and Losses
| Stock Repurchase
| Book Value
| Reconciliation Table
| Digest of Earnings
| General Account Supplement
PHILADELPHIA, April 27, 2011 — Lincoln Financial Group (NYSE:LNC) today reported net income for the first quarter of 2011 of $339 million, or $1.05 per diluted share, compared to net income in the first quarter of 2010 of $283 million, or $0.85 per diluted share available to common stockholders.
First quarter income from operations was $349 million, or $1.08 per diluted share, compared to $276 million, or $0.83 per diluted share available to common stockholders, in the first quarter of 2010.
|($ in millions except per share data)
||For the Quarter Ended
|Net Income (Loss)
|Net Income (Loss) Available to Common Stockholders
|Net Income (Loss) Per Diluted Share Available to Common Stockholders
|Income (Loss) from Operations
|Income (Loss) from Operations Per Diluted Share Available to Common Stockholders
|Average Diluted Shares
"First quarter operating results continued our quarterly trend of strong sales and margins, and growing account balances stemming from positive net flows and rising equity markets," said President and CEO Dennis R. Glass. "The increased base of ongoing operating income was added to by extra investment earnings and positive mortality fluctuations, resulting in a very good earnings start for the year."
First Quarter 2011 Operating Highlights:
Consolidated deposits of $5.3 billion up 13%
Consolidated net flows of $1.4 billion up 12%
Total account balances of $162 billion up 11%
Annuity deposits of $2.6 billion up 16%
Life insurance sales of $159 million up 12%
Group Protection non-medical loss ratio improves to 74%
The quarter included better than expected investment income of $26 million from alternative investments and prepayment premiums, $13 million of favorable mortality fluctuations and $7 million of other items.
First Quarter 2011 — Segment Results
The Individual Annuities segment reported income from operations of $147 million in the first quarter of 2011 versus income from operations of $119 million in the year-ago period, reflecting a 14% increase in annuity account values.
Total annuity deposits of $2.6 billion were up 16% over the prior-year quarter reflecting strong double digit sales increases in both variable and fixed indexed annuities. Total net flows in the current quarter were $483 million as compared to $575 million in the 2010 quarter.
The quarter included better than expected investment income of $6 million from alternative investments and prepayment premiums, $7 million of favorable mortality and $5 million of other items.
Defined Contribution reported income from operations of $49 million, versus income from operations of $36 million for the same period a year ago, reflecting a 10% increase in account values.
Gross deposits of $1.3 billion were up 3% versus the prior-year quarter. Total net flows in the current quarter were $134 million as compared to $109 million in the 2010 quarter.
The quarter included better than expected investment income of $7 million from alternative investments and prepayment premiums and $2 million of other items.
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Life Insurance income from operations was $166 million, compared to $137 million in the first quarter of 2010.
Life insurance sales of $159 million increased 12% over the prior-year quarter. Life insurance in force of $567 billion grew 4% and account values of $34 billion increased 7% over the prior-year quarter.
The quarter included better than expected investment income of $8 million primarily from alternative investments and a $6 million favorable mortality fluctuation.
For the first quarter, Group Protection's income from operations was $24 million, compared to $21 million in the prior-year period.
The non-medical loss ratio of 74% in the current quarter declined from 75% in the first quarter of 2010 and 76% in the fourth quarter 2010.
Non-medical net earned premiums were $403 million in the first quarter, up 7% over the year-ago period. Annualized sales of $45 million decreased 28% year-over-year due to challenging market conditions.
The current quarter benefited from $5 million of several favorable items relative to expectations.
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The operating loss in Other Operations of $37 million in the quarter was flat compared to the prior-year quarter.
Realized Gains and Losses
In the quarter, net realized losses and impairments totaled $6 million, pre-DAC and pre tax, compared to a loss of $59 million in prior-year quarter.
Unrealized Gains and Losses
The company reported a net unrealized gain of approximately $2.8 billion, pre tax, on its available-for-sale securities at March 31, 2011. This compares to a net unrealized gain of $1.2 billion at March 31, 2010.
During the quarter the company repurchased 2.4 million shares of stock at a cost of $75 million.
As of March 31, 2011, the book value per share of common stock, including accumulated other comprehensive income ("AOCI"), was $41.74 up 9% from $38.19 a year ago. Book value per share, excluding AOCI, was $39.24 up 6% from $37.19 a year ago.
This press release may contain statements that are forward looking, and actual results may differ materially, especially given the current economic and credit conditions. Please see the Forward Looking Statements Cautionary Language that follow for additional factors that may cause actual results to differ materially from our current expectations.
The tables attached to this release define and reconcile income from operations, return on equity ("ROE"), and book value per share excluding AOCI, non-GAAP measures, to net income, ROE, and book value per share including AOCI calculated in accordance with GAAP.
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Lincoln Financial Group will discuss the company's first quarter results with investors in a conference call beginning at 11:00 a.m. (ET) on Thursday, April 28, 2011. Interested persons are invited to listen through the internet. Please go to www.LincolnFinancial.com/webcast at least fifteen minutes prior to the event to register, download and install any necessary streaming media software. Interested persons may also listen to the call by dialing the following numbers:
Dial: 877 776-4049 (Domestic)
914 495-8602 (International)
Ask for the Lincoln National Conference Call.
The company will also post its first quarter 2011 statistical supplement and a general account supplement on its Web site, www.LincolnFinancial.com/earnings.
Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. With headquarters in the Philadelphia region, the companies of Lincoln Financial Group had assets under management of $162 billion as of March 31, 2011. Through its affiliated companies, Lincoln Financial Group offers: annuities; life, group life, disability and dental insurance; 401(k) and 403(b) plans; savings plans; and comprehensive financial planning and advisory services. For more information, including a copy of our most recent SEC reports containing our balance sheets, please visit www.LincolnFinancial.com.
Financial data will be posted at www.LincolnFinancial.com/earnings