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Lincoln National (LNC) Beats on Q4 Earnings, Revenues Miss

Zacks Equity Research

Lincoln National Corporation’s LNC fourth-quarter 2018 earnings of $2.15 per share beat the Zacks Consensus Estimate by 0.94%. Moreover, the bottom line improved about 8.6% year over year, mainly led by increase in revenues and a very low rise in expense.

Operating revenues of $4.5 billion increased 20% year over year but missed the Zacks Consensus Estimate by 10.6%.

Strong Segment Results

Operating income in the Annuities segment was down 2.6% year over year to $258 million. This was mainly due to lower account value growth, partly offset by a lower reported tax rate.

Total annuity deposits soared 35% from the year-ago quarter to $3.8 billion, driven by growth in variable and fixed annuities owing to product and distribution expansion.

Lincoln National Corporation Price, Consensus and EPS Surprise

Lincoln National Corporation Price, Consensus and EPS Surprise | Lincoln National Corporation Quote


Operating income in Retirement Plan Services increased 10% year over year to $45 million, led by lower expenses and a slashed tax rate. Total deposits declined 11% year over year to $2.2 billion.

Operating income in Life Insurance segment was up 15% year over year to $175 million as a result of stronger variable investment income and a lower reported tax rate.

Operating income in Group Protection increased 150% year over year to $50 million. This increase was driven by the buyout of the Liberty Mutual Group benefits business and a lower tax rate.

The Other operations segment incurred a loss of $53 million, wider than $38 million suffered in the prior-year quarter, quarter. The decrease in earnings is primarily attributable to lower tax benefits on pre-tax losses as a result of tax reform.

Financial Update

As of Dec 31, 2018, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 4.8% year over year to $67.73.

Operating return on equity (ROE) excluding accumulated other comprehensive income and goodwill, improved 70 bps from the year-ago quarter’s number to 13.5%.

The company ended the quarter with long-term debt of $5.9 billion, up 23.4% year over year.

Total shareholders’ equity of $14.3 billion declined 17.2% year over year.

Zacks Rank and Peer Releases

Lincoln National has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of MGIC Investment Corp. MTG, Chubb Ltd. CB and The Travelers Companies, Inc. TRV beat the respective Zacks Consensus Estimate.

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