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Lincoln National (LNC) Beats on Q4 Earnings and Revenues

Lincoln National Corporation'sLNC fourth-quarter 2016 operating net income of $1.77 per share surpassed the Zacks Consensus Estimate of $1.71 by 3.5%. The bottom line also increased 15% year over year on the back of higher revenues. For 2016, operating net income improved 19% year over year to $6.50 per share.

In the fourth quarter, Lincoln National's operating revenues grew 5% year over year to $3.52 billion. The top line also beat the Zacks Consensus Estimate of $3.46 billion by 1.7%. However, for 2016, the metric has gone down nominally by 0.4% over the last year.

Quarterly Segment Details:

Annuities

Operating income remained flat year over year at $242 million. Gross annuity deposits plunged 40% to $1.8 billion due to a decrease in variable annuity sales. Variable annuity sales dropped 6.7% year over year due to the negative impact of various market factors. Variable annuity sales from products without living benefits increased 600 basis points (bps) to 34%. Fixed annuity sales of $411 million also remained flat with the prior-year quarter.

Retirement Plan Services

Operating income inched up 3% from the prior-year quarter to $34 million driven by higher average account balances. Total deposits grew 15% year over year to $2.4 billion due to strong first-year sales in both the small and mid-large markets.

Life Insurance

Operating income grew 29% to $154 million from the year-ago quarter due to favorable mortality results and variable investment income. Total Life insurance sales jumped 17% year over year to $231 million. Life insurance in-force improved 5% year over year to $693 billion.

Group Protection

Operating income grew 23% from the year-ago quarter to $16 million. The upside was driven by loss ratio improvement across all product lines. Sales in this segment increased 18% to $263 million.

Lincoln National Corporation Price, Consensus and EPS Surprise

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

Financial Update

As of Dec 31, 2016, Lincoln National's book value per share, excluding accumulated other comprehensive income, climbed 9% year over year to $57.05 per share.

Total capital returned to shareholders was $261 million in the fourth quarter and $1.1 billion in 2016.

For 2016, operating return on equity, excluding accumulated other comprehensive income, grew 100 bps year over year to 12%.

Share Repurchase and Dividend Update

During the quarter, the company repurchased 3.2 million shares for $204 million. The quarter's average diluted share count of 230.9 million was down 7% from the fourth quarter of 2015. This was due to the repurchase of 19.3 million shares at a cost of $879 million since December 31, 2015.

Zacks Rank and Performance of Other Insurers

Lincoln National currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Among the other players from the insurance industry that have reported their fourth-quarter earnings so far, the bottom line at Brown & Brown Inc. BRO , MGIC Investment Corporation MTG and The Travelers Companies, Inc. TRV beat their respective Zacks Consensus Estimate.

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Brown & Brown, Inc. (BRO): Free Stock Analysis Report

Lincoln National Corporation (LNC): Free Stock Analysis Report

MGIC Investment Corporation (MTG): Free Stock Analysis Report

The Travelers Companies, Inc. (TRV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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