Lincoln National Eyes Growth Opportunities Amid Macro Risks

On Aug 23, we issued an updated research report on Lincoln National Corporation (NYSE:LNC) .

During the recently reported second quarter, Lincoln National’s earnings of $1.56 per share met the Zacks Consensus Estimate. Earnings, however, increased 6.8% year over year.

Lincoln National holds a leading market position in Life and Annuity businesses. The company continuously strives to de-risk its product portfolio by curtailing the sale of longer-dated products that expose it to involuntary forces such as interest rate or equity market volatility. This strategy of the company is also reflected in the second-quarter earnings, wherein two-thirds of life sales were from products without long-term guarantees. Apart from this, the company is raising prices of certain products to proactively respond to low interest rates.

The company's Group Protection segment has underperformed in recent years due to increasing competition, which resulted in declining sales declining in both 2014 and 2015. Nevertheless, sales have been encouraging so far this year on the back of efficient repricing actions undertaken. Premium growth is expected be flat in the back half of the year but increase in 2017.

The company is also effectively managing its expenses to cushion its bottom line even in a period of slower revenue growth to drive margin improvement.

Lincoln National also remains exposed to the restrictions imposed on the sale of variable annuity products by the Department of Labor (DOL). Hence, the company has been emphasizing on the sale of products not impacted by the DOL’s proposal.

Lincoln National has been taking steps to build and protect its capital base and mitigate balance sheet risks by adopting strong asset and liability management practices. The company executes efficient capital management as is reflected by share buybacks, dividend payments as well as investments for growth opportunities at attractive returns.

Lincoln National presently carries a Zacks Rank #3 (Hold)

Stocks to Consider

Investors can also look at some better-ranked stocks from the life insurance industry like Sun Life Financial Inc. (TO:SLF) , Primerica Inc. (NYSE:PRI) and Universal American Corp. (NYSE:UAM) . All of them hold Zacks Rank #2 (Buy).