Lincoln Financial misses Q3 profit estimates on Group Protection

Lincoln Financial (LNC) missed third-quarter profit estimates as Group Protection weakened, while adjusted revenue beat consensus.

Shares fell 1.8% at 10:01 a.m. ET, from a $41.60 close.

Adjusted operating income available to common stockholders was $339 million, or $1.72 per diluted share, against the $1.98 consensus estimate.

Net income available to common stockholders was $1.3 billion, or $6.77 per diluted share, including a net unfavorable impact of $0.47 per diluted share from the annual assumption review.

Here's how the company did:

• Adjusted EPS: $1.72 vs. $1.98 expected, and $2.04 a year earlier
• Adjusted operating revenues: $5.06 billion vs. $5 billion expected, and $4.78 billion a year earlier
• Net income per diluted share: $6.77 vs. $2.12 a year earlier

Segment results

Group Protection income from operations was $46 million, versus $149 million a year earlier. Excluding the annual assumption review, it was $77 million, down $33 million.

The disability loss ratio rose 6 percentage points on higher claim severity, with incidence moderating from favorable levels.

Chairman, President and CEO Ellen Cooper said the “continued normalization of disability incidence was compounded by volatility in claims severity.”

Life Insurance income from operations was $105 million, compared to $25 million a year earlier. Excluding the assumption review, it was $130 million, up $76 million, driven by higher alternative investment income, improved mortality and the captive consolidation.

Life Insurance total sales were $106 million, down 64%, as the prior-year quarter included several large executive benefits cases. Core life sales grew 3%.

Annuities income from operations was $294 million, versus $310 million. Excluding the assumption review, it was $304 million, down $14 million, as a previously announced net investment income reallocation and variable annuity outflows offset higher spread income.

Annuity total sales were $4.3 billion, up 21% from the second quarter. Spread-based products were 67% of those sales.

Retirement Plan Services income from operations was $55 million, up 20% from a year earlier. Net outflows were $1.9 billion, compared with $755 million of net inflows a year earlier.

Cash and capital

Holding company available liquidity rose to $1.0 billion, net of prefunding, up about $350 million since year-end 2025.

The company resumed share repurchases with $50 million of common stock and retired $437 million of preferred stock through tender offers.

The company closed its reinsurance transaction with Talcott in October.

Charges and track record

Transaction, integration and other costs were $135 million, primarily for a reinsurance recapture. Legal accruals totaled $14 million.

The pre-tax net unrealized loss on available-for-sale securities was $12.4 billion at September 30, versus $7.9 billion a year earlier, mainly on higher treasury rates.

Net income swung from a profit of $754.0 million in the fourth quarter of 2025 to a loss of $172.0 million in the first quarter of 2026.