Lincoln National (LNC) Q2 Earnings In Line, Revenues Miss

Lincoln National Corporation (NYSE:LNC) reported second-quarter 2016 operating net income of $1.56 per share that met the Zacks Consensus Estimate. The bottom line increased 6.8% year over year.

Including non-recurring items, Lincoln National’s net income was $1.35 per share, flat year over year.

Lincoln National’s total revenue declined 2.2% from the year-ago quarter to $3.3 billion due to a decrease in gross annuity deposits. Revenues also missed the Zacks Consensus Estimate of $3.5 billion by 6.1%.

Segment Analysis

Operating income from the Annuities segment decreased 8% year over year to $235 million. Lower fee income due to a 4% decline in average account values and lower variable investment income mainly resulted in the downside. Gross annuity deposits plunged 37% to $2.1 billion in the reported quarter.

Operating income from Retirement Plan Services was $31 million as against $30 million in the prior-year quarter. Lower expenses drove the upside. Total deposits were $1.7 billion, down 11% year over year due to mid-large market deposits. Total average account values of $55 billion remained flat with the prior-year quarter due to total net flows of $4 million.

Operating income from Life Insurance increased 14% to $120 million from $105 million in the year-ago quarter. The metric improved as mortality was in line with expectations. Notably, higher mortality resulted in lower income in the prior-year period. Individual Life insurance sales increased 6% year over year to $164 million. Life insurance average in-force amount improved 4% year over year to $675 billion, while account values inched up 3% to $44 billion.

Group Protection's operating income was $15 million, down 21.1% from $19 million in year-ago quarter. The decline was attributable to lower premiums and net investment income. Nonetheless, the downside was partially offset by improvement in non-medical loss ratio to 72.5% from 73.6% in the prior-year quarter. Sales in this segment increased 15% to $71 million due to an increase of Employee-paid product sales by 200 basis points, which accounted for 46% of the total revenue in the quarter.

Financial Update

As of Jun 30, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 8% year over year to $54.67 per share. Operating return on equity remained unchanged from the year-ago period at 11.7%.

Share Repurchase

Lincoln National spent $275 million to buy back 6.2 million shares during the reported quarter.

Zacks Rank

Lincoln National currently carries a Zacks Rank #4 (Sell).

LINCOLN NATL-IN Price, Consensus and EPS Surprise

LINCOLN NATL-IN Price, Consensus and EPS Surprise | LINCOLN NATL-IN Quote

Performance of Other Insurers

Among the other players in the insurance industry that have reported their second-quarter results so far, the bottom line at The Travelers Companies, Inc. (NYSE:TRV) and First American Financial Corporation (NYSE:FAF) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (NYSE:RLI) missed the same.