Lincoln advocates for “solid” life insurance products amid ongoing restructuring

It’s been a tough time for Lincoln Financial for a few quarters as the company transitions from a high-yielding investment to a risk-sharing one.

But the Radnor, Pa.-based insurer can turn the quarter around. In a second quarter call with analysts today, Lincoln executives spoke of life insurance sales rising 53% from the year-ago quarter, with growth of 16% in variable annuities and 40% in fixed annuities.

“Sales remain strong as we continue to benefit from price changes and add new products,” President and CEO Ellen Cooper said. “Innovative sales are bringing value at the desired level, while enabling a continuous shift to a variety of products that offer superior customer value propositions and away from long-term guarantees.”

Investors obviously want to see more. Lincoln stock fell 7% in response to the earnings report, and is down 31% for the year.

Lincoln reported second-quarter earnings of $238 million, or $1.34 per diluted share available to common stockholders, compared to net income in the second quarter of 2021 of $642 million, or $3.34 per diluted share available to common stockholders.

First quarterly report

It was the first call for CEO Cooper, who replaced Dennis Glass in May. He is leading a restructuring that includes combining the annuity and life insurance businesses into one department under one executive, Matthew Grove, who joined Lincoln in July as senior vice president of life and annuities.

Lincoln also added James Reid as senior vice president, executive solutions, to lead the Group’s Benefits and Retirement Plans businesses.

Lincoln’s life insurance business was marred by disappointing returns. The life insurer reported net income of $114 million compared to $255 million in the prior-year period driven by negative returns in other investment areas, the company said in a news release.

Total life insurance sales were $193 million, up 53% from the year-ago quarter.

“Sales for both retail and wholesale across all major distribution channels were up compared to the second quarter of 2021 and the first quarter of this year,” Cooper said. “All products are purchased to bring new business value in line with or above our target. Following the launch of seven new products and new products in 2021, we continue to develop and expand our offerings as part of our price changes and add new business strategies.”

The average life insurance business of $1 trillion grew 10% from the previous quarter. Average accounts for the quarter were $49 billion compared to $59 billion a year earlier, reflecting last year’s block reinsurance deal and lower market conditions, the release said.

Annuity Products

Annuities reported net income of $256 million, down from $323 million in the previous quarter. The decline was driven by lower capital markets and $14 million in one-time negative items, the release said.

Total annuity income of $2.7 billion was consistent. Growth of 16% in variable annuities and 40% in fixed annuities was offset by a decline in traditional variable annuities of 25%. Compared to the previous year’s quarter, total annuity income decreased by 16%.

The 185% growth in fixed annuities was greater than the 24% decline in variable annuities and 33% in traditional annuities, the release said.

Average accounts for the quarter of $152 billion were down 8% from the prior-year quarter, primarily due to weaker stock markets. Net outflow was $318 million for the quarter. Annuity account revenue excluding variable annuities with guaranteed benefits represented 53% of total annuity account revenue, up five percentage points from the previous year, the release said.

“For the eighth consecutive quarter, more than 70% of all annuity sales were for products other than annuities and life benefits,” Cooper explained. “This change helps improve our account value as items other than VAs with GLBs represent 53% of our total annuity account value, up five percentage points compared to the prior year.”

InsuranceNewsNet Editor-in-Chief John Hilton has written articles and articles in more than 20 years of daily journalism. John can be reached at [email protected] Follow him on Twitter @INNNJohnH.

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