Lincoln National Corporation (NYSE:LNC) reported third-quarter 2016 operating net income of $1.83 per share that surpassed the Zacks Consensus Estimate of $1.62 by 13%. The bottom line also increased 10.2% year over year.
Including non-recurring items like unlocking/reserve adjustments, legal expenses and tax adjustments, Lincoln National’s operating earnings soared 70% year over year to $1.89 per share.
Lincoln National’s operating revenues declined 5.4% from the year-ago quarter to $3.5 billion. However, revenues beat the Zacks Consensus Estimate of $3.4 billion by 3%.
Segment Analysis
Annuities
Operating income decreased 7% year over year to $240 million. Gross annuity deposits plunged 41% to $1.9 billion due to the negative impact of several market factors. Although fixed annuity sales decreased, the percentage of variable annuity sales from products without living benefits increased 400 basis points year over year to 31%.
Retirement Plan Services
Operating income declined 24% from the prior-year quarter to $32 million due to a decrease in spread income and an increase in amortization expenses. Total deposits were down 5% year over year to $1.8 billion due to the timing of first-year sales in the mid-large market.
Life Insurance
Operating income soared 368% to $167 million from $36 million in the year-ago quarter. The metric improved on strong variable investment income. Total Life insurance sales increased 12% year over year to $193 million. Life insurance in-force improved 5% year over year to $685 billion.
Group Protection
Operating income grew 64% to $28 million from $17 million in year-ago quarter. The upside was driven by loss ratio improvement as well as a net favorable impact from the review of disability reserves. Sales in this segment increased 28% to $78 million due to prior re-pricing actions.
LINCOLN NATL-IN Price, Consensus and EPS Surprise
Financial Update
As of Sep 30, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 10% year over year to $56.65 per share. Operating return on equity expanded 460 basis points to 13.7%.from the year-ago period.
Share Repurchase and Dividend Update
Lincoln National spent $200 million to buy back shares during the reported quarter.
In Nov 2016, the board of directors of Lincoln National approved a 16% year over year hike in its quarterly dividend to 29 cents per share. The increased dividend is payable on Feb 1, to shareholders on record at the close of business on Jan 10, 2017.
Zacks Rank and Performance of Other Insurers
Lincoln National currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other insurers that have reported their third-quarter earnings so far, the bottom line at Progressive Corp. (NYSE:PGR) and The Travelers Companies Inc. (NYSE:TRV) beat their respective Zacks Consensus Estimate, while earnings at RLI Corp. (NYSE:RLI) missed the same.
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LINCOLN NATL-IN (LNC): Free Stock Analysis Report
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PROGRESSIVE COR (PGR): Free Stock Analysis Report
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