RADNOR, PA — Lincoln Financial Group (NYSE: LNC) has reported its results for the fourth quarter and full year 2023. Despite experiencing a net loss of $1.2 billion for common stockholders, the financial giant exhibited potency in their adjusted operating income, pulling in an impressive $246 million.
The most significant factors driving the variation between net income and adjusted operating income include changes in market risk benefits triggered by lower interest rates and a fluctuation in the fair value of a derivative associated with the Fortitude Re reinsurance transaction. These non-economic factors contributed to the net loss experienced by the corporation.
Yet Lincoln Financial Group remains optimistic about its financial future, with an expected year-end risk-based-capital (RBC) ratio hovering between 400-410%, which depicts more than a 20 percentage point increase from their third-quarter statistics.
Ellen Cooper, Lincoln Financial Group’s Chairman, President and CEO, shared, “The 2023 fourth quarter represented a significant stride in rebuilding capital, leading to improved operating performance, record annuity sales and more stable life earnings.”
The company has made notable progress in restructuring its businesses for profitable organic growth, optimizing product sales to a more capital-efficient and higher risk-adjusted return mix supported by leading distribution.
Lincoln Financial Group also reported closing a key reinsurance deal with Fortitude Re and a wealth management business procurement agreement with Osaic, Inc. Looking ahead, the corporation aims to strengthen its balance sheet, enhance free cash flow and grow profitably to deliver increasing shareholder value.
Further business highlights include a record sales quarter for the Annuities branch, surpassing the $2 billion mark for the first time, largely driven by the strategic positioning across fixed product categories. The Group Protection sector reported record full-year earnings and robust top-line growth and a margin growth of over 400 basis points, year over year, to 5.5%.
Meanwhile, Life Insurance sales experienced a slump for the fourth quarter and the full year due to the company’s shift in strategy toward more accumulation products. However, Retirement Plan Services witnessed its ninth consecutive year of positive flows, surpassing $100 billion in assets under management for the first time.
Annuity sales soared, standing at $4.4 billion for the quarter, reflecting an uptick of 36% from the prior-year quarter. The full fiscal year witnessed total annuity sales of $12.8 billion, up 8% from the previous year.
For investors, these results are a testament to the company’s strong financial performance and strategic focus on growth opportunities. With a diversified portfolio of products and services, coupled with efficient cost management, the company is well positioned for continued success in the future.
Furthermore, the record earnings and impressive top-line growth reflect not only the strength of their core businesses but also their ability to adapt to changing market conditions. By shifting towards more accumulation products in life insurance and capitalizing on the growing demand for annuities, they have successfully positioned themselves as a leader in both markets.
Overall, despite witnessing some loss in operations, Lincoln Financial Group holds a promising outlook for 2024. With strategic business realignment, major reinsurance transactions, and a commitment to improve free cash flow, the financial company is confident in delivering increasing shareholder value, setting an example for market watchers globally.
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