Lincoln National Corp.
) reported first-quarter 2014 operating earnings of $1.34 per
share. The results comfortably surpassed the Zacks Consensus
Estimate of $1.29 and the prior-year quarter number of $1.04 a
Further, Lincoln National's operating net income spiked 28.1%
year over year to $365 million. Meanwhile, reported net income,
including extraordinary items, stood at $328 million or $1.21 per
share against $239 million or 86 cents per share in the year-ago
The year-over-year improvement was driven by growth in account
balances and deposits across all of its operating segments.
Further, sales growth of re-priced products as well as change in
the business mix to higher return products also aided the upside.
These were partially offset by lower net flows and higher
Lincoln National's total operating revenue increased 11.9%
over the prior-year quarter to $3.18 billion, edging past the
Zacks Consensus Estimate of $3.17 billion. Consolidated account
balances of Lincoln National increased 12.5% year over year to
$185.9 billion, while net flow tumbled 44% to $1.16 billion,
reflecting underperformance across segments except the Group
Protection segment. Total deposits improved 4.5% to $6.4 billion.
Total expenses climbed 8.5% to $2.75 billion.
Operating income from the
segment stood at $216 million, surging 35.8% from $159 million in
the prior-year quarter, driven by higher fixed annuity deposit
sales. Even account values and gross deposits showcased
improvement, although net flows plunged 21.5% over the prior-year
Operating income from
Retirement Plan Services
was $39 million, up 11.4% from $35 million in the prior-year
period. The upside was driven by growth in deposits, equity
market appreciation, lower withdrawal rates and account balances.
However, termination of several large cases in the mid-large
market segment led to total net outflows of $361 million.
Operating income from
was $120 million, up 7.1% year over year, although life insurance
sales reduced 4% year over year to $145 million. Life insurance
in force improved 5% year over year to $620 billion, while
aggregate sales of higher return products, including indexed
universal life, variable universal life, flexible premium
MoneyGuard and term life insurance, increased 14% over the
prior-year quarter. These resulted in higher deposits although
net flows declined.
Operating income from
jumped to $20 million from $14 million in the prior-year period.
Non-medical loss ratio was in line with the year-ago quarter at
74.8%. Further, non-medical net earned premiums were $533
million, up 12.2% over the year-ago period, while Group
Protection sales declined 10% to $64 million.
Operating loss in
operations were $30 million, narrowing from a loss of $35 million
in the prior-year quarter.
Lincoln National's net realized losses included a net gain
from account investments of $17 million compared with loss of $4
million in the prior-year quarter. Additionally, net realized
losses included variable annuity net derivatives loss of $7
million during the reported quarter.
As of Mar 31, 2014, pre-tax net unrealized gain on Lincoln
National's available-for-sale securities was approximately $5.8
billion, down from $8.7 billion in the year-ago period, primarily
driven by higher Treasury rates.
At the end of Mar 2014, Lincoln National's book value per
share came in at $54.94, down 0.7% year-over- year. Excluding
accumulated other comprehensive income (AOCI), book value climbed
8.6% year over year to $45.63 per share. Operating ROE stood at
12.2% at the end of Mar 2014, up from 10.2% in the year-ago
Additionally, Lincoln National bought back 3.0 million shares
for $150 million during the reported quarter.
On May 1, the board of Lincoln National will pay a regular
quarterly dividend of 16 cents per share to shareholders of
record as on Apr 10.
On Feb 1, 2014, Lincoln National paid a regular quarterly
dividend of 16 cents per share to shareholders of record as on
Jan 10. This represented an increase of 33% from the prior 12
cents, marking the 4
dividend hike since 2007.
While Lincoln National carries a Zacks Rank #3 (Hold),some
better-ranked life insurers
Symetra Financial Corp.
Protective Life Corp.
), all bearing a Zacks Rank #2 (Buy), are worth reckoning.
LINCOLN NATL-IN (LNC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
PRIMERICA INC (PRI): Free Stock Analysis
SYMETRA FINL CP (SYA): Free Stock Analysis
To read this article on Zacks.com click here.