LINCOLN NATIONAL CORP Q3 FY2024 earnings call

• Strategic execution: Building a strong capital foundation with RBC in excess of 420% buffer, optimizing operating model with focus on expense efficiencies and launching Bermuda Reinsurance subsidiary, and advancing towards delivering profitable growth by transforming into an organization with more stable cash flows and higher risk - adjusted returns. - Annuities business: Annuity strategy is taking hold with growing and diversifying earnings mix to more spread - based products. Total annuity sales up nearly 25% year - over - year, RILA sales strong with second - generation product launch, fixed annuity sales up over 30% year - over - year, and variable annuity sales up 31% year - over - year. - Life business: Achieved sequential sales growth of 16% for a second quarter, realigning product portfolio to target growth in accumulation and protection products with more risk sharing, and repositioning life distribution team to optimize wholesaler footprint. - Workplace Solutions: Groups earnings more than doubled year - over - year, with premium growth at 3% in third quarter, group sales up 18% year - over - year and supplemental health sales doubled, and strategically investing in capabilities to improve customer experience. - Retirement Plan Services: Sustained momentum with strong sales, net flows of $651 million, and average account balances up 21% year - over - year, and continuing to innovate and build capabilities in the retirement business.

1. Group Protection: Record third - quarter results with earnings more than doubling year - over - year. 2. Annuities: Earnings increased by 15% for the period and delivered substantial sales growth. Total annuity sales for the quarter were $3.4 billion, up nearly 25% from the prior year quarter, with spread - based products representing two - thirds of total sales. 3. Retirement Plan Services: Sustained momentum with another quarter of sequential earnings growth and first - year sales that more than tripled year - over - year. Net flows were $651 million, and average account balances for the quarter increased 15% year - over - year. 4. Life Insurance: Achieved sequential sales growth of 16% for a second consecutive quarter. Life reported operating income of $14 million compared to $23 million in the prior year quarter, excluding assumption review impacts in both periods and $40 million of significant items in the prior year quarter.

• Expect to continue to grow and diversify Group and retirement businesses with targeted segment strategies. - Evolve annuity business with a diversified product mix including expansion of spread - based products. - Realign life business to emphasize more risk sharing with accumulation and protection products. - Anticipate sales in fourth quarter of annuities to be lower than record 2023 fourth quarter but expect full - year sales growth. - Expect group sales to have year - over - year growth in fourth quarter while maintaining focus on profitability. - Expect retirement plan services spread to stabilize at around 100 basis points in fourth quarter.

Forward - looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. These include risks described in the cautionary statement disclosures in the earnings release and detailed in 2023 Annual Report on Form 10 - K, most recent quarterly reports on Form 10 - Q, and other SEC filings. Risks related to market cycles, operational model optimization, and business growth uncertainties.

Q: Please give a sense of year - to - date free cash flow and thoughts on the 2026 guide.

A: We're tracking well to the 2026 targets. We've generated free cash flow above expectations, used it to build capital, optimize operating model, and invest for the business. We repaid about $100 million this year, spent on expenses and legal charges, and are on track to pay $300 million of a dividend.

Q: Do you think there was pull forward in annuities sales due to advisers expecting lower rates in 2025 and comments on growth source?

A: We feel good about annuity sales. Rates are higher now and we see continued strong demand due to demographics. Growth is from broad - based annuity sales with unique holistic capability and more advisers focusing on annuities as a solution.

Q: Walk through assumptions in life business and why confident no significant change this year.

A: We had a $8 million positive impact for operating income in life. It's a rigorous process looking at industry studies and experience. Policyholder behavior and mortality assumptions are in line with our experience and expectations.

Q: Thoughts on improved free cash flow conversion balanced against paying down debt and return to share buyback?

A: Priorities are to invest in business, delever, and focus on leveraging Alpine. We're tracking well to the earlier - given outlook, but no update on share buyback relative to that guidance.

Q: Update on remaining ULSG exposure and possibility of a deal?

A: We're always looking at what's right for Lincoln. The outlook doesn't rely on another deal, but we'll look at all options. Priorities are getting Alpine up and running, executing on initiatives, and delevering.

Q: Detail on second - generation RILA product reception and market conditions?

A: We had strong RILA sales in the quarter. We've been in the market since 2018, refreshed the product (Lincoln Level Advantage 2.0) with new features, saw nice traction, and expect the addressable market to grow despite more competition.