Lincoln National (LNC) Ties Up to Boost Variable Annuity Business
Lincoln National Corporation LNC expanded its longstanding ties with the asset management unit of JPMorgan Chase & Co. JPM — J.P. Morgan Asset Management. The underlying motive of the partnership is to integrate the portfolio management capabilities of JPMorgan’s subsidiary with the scale, resources and platform of LNC to devise an offering that would deliver solid investment returns to clients.
As a result of the partnership, shareholders of four JPMorgan Insurance Trust Portfolios (JPM VITs) will be required to approve the combination of the JPM VITs within four of the equivalent and newly built array of Lincoln Financial Variable Insurance Products Trust (LVIP Acquiring Funds). The transaction is likely to occur in May 2023.
Once the merger receives shareholder approval, J.P. Morgan Asset Management, with the help of its exceptional investment processes and portfolio management squad, will assume the role of sub-advisor for four of the LVIP Acquiring Funds. Meanwhile, the power to act as the investment adviser to each of the funds will remain with Lincoln Investment Advisors Corporation.
The latest tie-up reinforces Lincoln National’s sincere efforts to strengthen its insurance, retirement and variable annuity solutions suite. Taking the help of J.P. Morgan’s sub-advisory business seems to be a prudent move on the part of LNC to complement its endeavor. With the reputation of being one of the leading variable annuity subadvisors, the business is entrusted with assets under management of $75 billion pertaining to variable annuity and mutual fund products.
Lincoln National is active in constant product introductions and the enhancement of the existing ones across its variable annuity business. Variable annuities have been gaining popularity as the means to address retirement needs, owing to factors such as lifetime periodic payments, tax-deferred income growth and several guaranteed benefits often linked with these products.
An aging U.S. population also substantiates the keen eye that LNC keeps on providing a comprehensive retirement plan for individuals. Per the leading market and consumer data provider Statista, 16.9% of the American population was aged 65 years or above in 2020 and the percentage is anticipated to reach 22% by 2050.
The life insurer has also resorted to collaborations with numerous organizations to upgrade its capabilities and solidify its nationwide presence. In September 2022, keeping the ongoing trend of digitization across every sphere of life, Lincoln National formed an alliance with tech-powered life insurance brokerage Modern Life to widen its distribution reach and upgrade its virtual-first distribution strategy.
Shares of Lincoln National have lost 40.1% in the past six months against the industry’s 1.6% growth.
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Zacks Rank & Stocks to Consider
Lincoln National currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the insurance space are Employers Holdings, Inc. EIG and Reinsurance Group of America, Incorporated RGA. While Employers Holdings sports a Zacks Rank #1 (Strong Buy) at present, Reinsurance Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Employers Holdings outpaced estimates in three of the last four quarters and missed the mark once, the average beat being 25.31%. The Zacks Consensus Estimate for EIG’s 2022 earnings suggests a 3.4% improvement, while the same for revenues indicates a 7.3% rise from the prior-year reported figures. The consensus mark for EIG’s 2022 earnings has moved 14% north in the past 60 days.
Reinsurance Group’s bottom line outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 49.74%. The Zacks Consensus Estimate for RGA’s 2022 earnings is pegged at $14.97 per share, which indicates a 13-fold increase from the year-ago reported figure. The same for revenues indicates a 3.8% rise from the prior-year reported figure. The consensus mark for RGA’s 2022 earnings has moved 4.7% north in the past 30 days.
Shares of Employers Holdings and Reinsurance Group have gained 7.2% and 21%, respectively, in the past six months.
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