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Lincoln National's Solution to Serve Retirees Amid Volatility

Lincoln National Corporation LNC recently rolled out a retirement solution — Lincoln PathBuilder — which is an in-plan guaranteed income option. The new solution aims to provide benefit to retirement savers across the United States, who are investing in employer-sponsored retirement plans.

Lincoln PathBuilder has been primarily designed to convert defined contribution retirement plan savings into a lifetime source of monthly income. Per a study conducted by Secure Retirement Institute, 61% of workforce presently saving in employer’s defined contribution plan is likely to contribute to a guaranteed lifetime income investment option. We believe the new solution has also been launched keeping this picture in mind.

For their participants, plan sponsors will now find it easier to provide guaranteed income schemes with the SECURE Act being passed in 2019.

The launch comes at an opportune time as the entire United States is currently grappling with COVID-19 pandemic induced financial woes. Retirement savers are currently more concerned with savings than prior to the pandemic, which in turn, has led to rise in demand for investment products that provide guaranteed income.

Lincoln PathBuilder is equipped to safeguard retirement savings in case of market downturns. Participants will also benefit from the investment option when the market rallies by virtue of its Income Base calculation. The Income Base, which is how much the participants have invested, will be reset once in a year to take advantage if the market improves.

Moreover, the new solution also offers the flexibility through which participants can decide the time when they would start receiving lifetime payments. While being under this guaranteed income investment option, participants can also change their job or retirement plans.

Shares of this Zacks Rank #3 (Hold) life insurer have lost 43.3% in a year compared with the industry’s decline of 16.5%.

We believe Lincoln National has taken every effort to provide a comprehensive financial planning for retirees. Notably, the company utilizes its retirement, insurance and wealth protection expertise to serve financial goals of more than 17 million customers. Last month, the company launched the next generation of Lincoln AssetEdge Variable Universal Life (VUL) that intends to offer a supplemental source of income for retirees while protecting their savings from market downturns.

Lincoln National rolled out a Multi-Manager solution last month in order to cater to the diverse needs of its small business clients. This innovative solution is intended for assisting investment and retirement decisions of small business owners.

The company has also enhanced the Lincoln Level Advantage, which is its indexed variable annuity solution, this May in a bid to make its annuity business more strong. The solution will also aid investors in planning long-term retirement goals. These initiatives are intended to protect investors from the prevailing market uncertainties induced by the COVID-19 pandemic.

We believe these consistent efforts undertaken by the company have definitely provided an impetus to retirement business. This, in turn, is likely to drive results in second-quarter 2020, which is scheduled to release on Aug 5.

Stocks to Consider

Some better-ranked stocks in the insurance space include Brighthouse Financial, Inc. BHF, Fidelity National Financial, Inc. FNF and First American Financial Corporation FAF. While Fidelity National sports a Zacks Rank #1 (Strong Buy), Brighthouse and First American carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Brighthouse, Fidelity National and First American have a trailing four-quarter earnings surprise of 14.38%, 21.13% and 18.47%, respectively.

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