Lincoln National : IR - Earnings 1Q2026 Conference - earnings supplement - PDF

Published: 2026-05-07 06:16:44 ET LNC

Published on 05/07/2026 at 06:16 am EDT

First Quarter 2026

May 7, 2026

Earnings Supplement

1Q26 Key Messages

$ in millions

After-tax

Per share

Adjusted Operating Income1

$326

$1.66

Normalizing items

Higher alternative investment income compared to our 10% annual return target

$19

$0.10

Tax-related items3

$(7)

$(0.04)

Life Insurance earnings of $41M, up $57M YoY, driven by strong alternative investment income.

Group Protection earnings up 11% YoY, driven by favorable life experience.

Annuities earnings of $275M, down 5% versus prior year, as tax-related normalizing items and the previously disclosed NII allocation refinement pressured YoY results.

Retirement Plan Services YoY earnings growth reflected favorable markets and spread expansion.

Life Insurance sales up 33% YoY, with growth across all product lines.

Annuities total sales of $3.9B, up 4% YoY, with spread-based products comprising 64% of total sales.

Retirement Plan Services first-year sales grew 3% YoY, driven by growth in the Core Market.

Holding Company available liquidity increased to $805M, net of prefunding amounts, up $150M from YE 2025.

Leverage ratio2 improved 250bps YoY to 25.0%.

1 Represents Adjusted Operating Income Available to Common Stockholders. See Non-GAAP Financial Measures Appendix for definition and reconciliations. 2 See Non-GAAP Financial Measures Appendix for definition and reconciliations. 3 Tax-

related items includes dividends-received deduction and foreign tax credit true-ups.

1Q26 Earnings Drivers

$ in millions

Annuities Group Protection

Operating Income Primary Drivers Operating Income Primary Drivers

$275

$290

1Q25 1Q26

Favorable equity markets

NII allocation refinement

Variable annuity outflows

Tax-related items

$112

$101

1Q25 1Q26

Favorable life experience

LTD resolution severity

Retirement Plan Services Life Insurance

Operating Income Primary Drivers Operating Income Primary Drivers

$43

$34

Favorable equity markets

Spread expansion

Outflows

$(16)

$41

Higher alternative investment income

Impact of 4Q25 captive consolidation

1Q25 1Q26

Annuities

Key Highlights Operating Income2 ($M) Sales ($B)

Operating income declined 5% YoY, driven by

the previously disclosed NII allocation refinement1, outflows, and tax-related items, partially offset by favorable equity markets.

Total sales of $3.9B increased 4% YoY, with spread-based products comprising nearly two-thirds of total sales.

Ending account balances3 grew 7% YoY, driven by favorable equity markets and growth in spread-based products.

$318 $311

$290

$287

$275

1Q25 2Q25 3Q25 4Q25 1Q26

$4.5 $4.9

$3.8

29%

14%

34%

$4.0

23%

11%

36%

24%

13%

23%

12%

$3.9

22%

14%

32%

40%

46%

23%

30%

31%

25%

18%

1Q25 2Q25 3Q25 4Q25 1Q26

Key Priorities Ending Account Balances3 ($B) Return on Average Account Balances2,4

Diversify source of earnings mix by growing spread-based account balances over time.

Maximize capital efficiency and achieve attractive new business returns.

Expand product set to target a larger

addressable market.

$158 $168

$174 $175 $169

0.75%

28%

41%

22%

21%

23%

22%

30%

29%

42%

43%

29%

0.71%

0.72%

0.71%

0.63%

1Q25 2Q25 3Q25 4Q25 1Q26

1 Previously disclosed reallocation of certain net investment income ("NII") from operating results to non-operating results. 2 Excludes $(8)M in 3Q25 related to annual assumption review. 3 Net of reinsurance. 4 Return on Average Account Balances, net of reinsurance.

Group Protection

Key Highlights Operating Income1 ($M) Sales ($M)

Operating income increased by $11M Y0Y, driven by favorable life experience.

Premiums were up 2% Y0Y, driven by strong prior-period sales. Adjusting for a large case lapse, premium growth was 3.4%.

59%

38%

30%

32%

29%

41%

$101

$110

$109

$112

Life loss ratio was down 8 percentage pts YoY driven by favorable incidence and severity; the disability loss ratio increased 3 percentage pts

$173

$157

45%

24%

31%

$187

$116

35%

25%

40%

$391

$150

30%

due to resolution severity.

1Q25 2Q25 3Q25 4Q25 1Q26

Key Priorities Premiums and Margin1,2 ($M) Loss Ratios1,2

Diversify book of business across segments and

products, with focus on strong persistency and growing Local Markets and Supplemental Health.

Optimize capital efficiency by leveraging Bermuda entity.

Execute technology roadmap, including modernization of claims platform.

$1,371 $1,386 $1,357 $1,380 $1,399

12.5%

11.4%

8.1%

7.9%

8.0%

7.4%

1Q25 2Q25 3Q25 4Q25 1Q26

77%

75%

70%

74%

73%

67% 67% 65%

68%

67%

1Q25 2Q25 3Q25 4Q25 1Q26

Retirement Plan Services

Key Highlights Operating Income ($M) First-year Sales ($B)

Operating income increased by 26% YoY, driven by spread expansion and favorable equity markets, partially offset by outflows.

Total deposits were up 1%, with first-year sales up 3% YoY.

Ending account balances were $122B,

up 12% YoY, supported by favorable equity

$34 $37

$46 $46

$43

$1.1 $1.2

25%

$2.4

32%

31%

40%

33%

22%

26%

44%

43%

33%

42%

34%

62%

16%

$1.7

$1.1

17%

markets.

1Q25 2Q25 3Q25 4Q25 1Q26

Key Priorities Ending Account Balances ($B) Return on Average Account Balances

Continued profitable growth with an

emphasis on market segments with higher returns.

Expand revenue sources for existing account base.

Increase profitability through lowering operating costs and optimizing investment sourcing.

0.15% 0.15%

$109

21%

$116

20%

$123

19%

$124

19%

$122

19%

79%

80%

81%

0.12%

0.13%

0.14%

1Q25 2Q25 3Q25 4Q25 1Q26 1Q25 2Q25 3Q25 4Q25 1Q26

Life Insurance

Key Highlights Operating Income (Loss)1 ($M) Sales ($M)

Operating income improved by $57M YoY, driven by higher alternative investment income and the impact of the 4Q25 captive consolidation.

Total sales of $129M were up 33% YoY, with growth across all product lines, most notably in Executive Benefits.

Revenues were 3% higher YoY driven by higher alternative investment income.

$77

8% 13% 14%

15%

193%%19% 20% 14%

8% 17%

92% 91% 85% 80% 83%

1Q24 2Q24 3Q24 4Q24 1Q25

$54

$14

$32

$63

$41

$19

$22

$(1)

$(15)

$(16)

$(2)

1Q25

2Q25

3Q25

4Q25

1Q26

$32

$56

$298

67%

$97

18%

82%

$121

28%

$142

11%

$129

26%

33%

89%

72%

74%

1Q25 2Q25 3Q25 4Q25 1Q26

Key Priorities Operating Revenue ($M) and Margin2 (%) Net G&A Expenses ($M)

Continued growth in accumulation and risk-

sharing sales, focused on a more stable cash flow product suite.

Maximize capital efficiency and achieve attractive new business returns.

Continued optimization of legacy block free

cash flow opportunities.

$1,587 $1,602 $1,610

3.4%

2.0%

0 -1.0%

$1,643

4.7%

$1,628

2.5%

$130

$119

$122

$121

$119

1Q25 2Q25 3Q25 4Q25 1Q26

Other Operations

$66

$64

$56

Key Highlights Operating Loss and Preferred Dividend ($M) Other Expenses ($M)

($95)

($91)

($99)

($98)

($111)

($34)

($11)

($34)

($11)

($34)

Operating loss of $(111)M is $16M higher YoY due to lower NII, net of interest credited, and lower other revenues related to a legacy block with market sensitivity.

Holding Company available liquidity increased to $805M at quarter-end, net of prefunding amounts, an increase of $150M since year-end 2025.

$72

$68

Leverage ratio improved by 250 basis points YoY driven by equity growth.

1Q25 2Q25 3Q25 4Q25 1Q26

Key Priorities Holding Company Available Liquidity1 ($M) Leverage Ratio2

Continue to scale the funding agreement program after successful 2025 launch.

Build Holding Company liquidity to maximize capital flexibility.

Maintain leverage ratio at the 25% target.

$805

$655

$466

$461

1Q25 2Q25 3Q25 4Q25 1Q26

27.5%

25.6%

25.2%

25.1%

25.0%

1Q25 2Q25 3Q25 4Q25 1Q26

1 Holding Company available liquidity presented as of 12/31/25 and 3/31/2026 do not include the $400 million prefunding of a 2026 maturity.

Investment Portfolio

Key Highlights Investment Portfolio ($B) Rated Assets Portfolio Quality

Portfolio grew $12B YoY to $131B, reflecting strategic shift toward spread-based earnings.

Portfolio yield expanded 10bps YoY to 4.67%, with new money yield continuing to exceed portfolio yield.

Diversified alternatives portfolio delivered a 3.1% quarterly return, or 12% annualized return, above our annual expectation of 10%.

$119 $122 $126

$129 $131

11%

11% 10%

18%

17%

18%

15%

16%

15%

16%

18%

17%

16%

38%

37%

36%

35%

1Q25

2Q25

3Q25

4Q25

1Q26

Public Corps Private Corps Structured Mortgage Loans1 Alts Other2

3% 3%

35%

34%

35%

62%

63%

62%

1Q25 2Q25 3Q25 4Q25 1Q26

Key Priorities New Money Yields Alternative Investment Income ($M), Pre-Tax

Leverage sourcing capabilities and security

selection of our multi-manager platform for portfolio construction.

Optimize new money strategy with focus on maintaining diversification and high quality while capitalizing on less liquid assets and structured asset class premiums.

Achieve attractive long-term alternative investment returns.

1 Mortgage Loans include CMLs and RMLs.

6.0%

6.1%

5.3%

5.5%

5.9%

4.57%

4.61%

4.64%

4.65%

4.67%

1Q25 2Q25 3Q25 4Q25 1Q26

$124 $129

$101

$75

1.9%

2.5%

3.0%

3.1%

1Q25 2Q25 3Q25 4Q25 1Q26

% Returns, Unannualized

2 Other includes municipals, cash, COLI assets, common and preferred stock, sovereign government and UST/agency.

Appendix

Investment Portfolio

High quality and well-diversified portfolio1

Portfolio allocation by asset class

Private Credit is ~20% of the General Account

Public Corporate 35%

Direct Lending 1.4%

Private Structured 3.6%

Other 13%2

$131B

Average A Rated

Private Credit 20%

RML 4%

CML 13%

Public Structured 15%

Private Corporates 15.0%

The portfolio is well positioned…

Long-term investment strategy is tightly aligned with our liability profile and positioned for various economic cycles.

97% investment grade, the portfolio remains high quality, providing flexibility to further add incremental yield.

Well positioned to further optimize the portfolio asset allocation given high-quality asset mix and shift toward shorter duration liabilities.

… with a high-quality private credit portfolio

Private credit is a key part of the investment strategy, enhancing yield and diversification while emphasizing disciplined risk management.

Private credit portfolio is highly-diversified and 91% investment grade.

Private Letter Ratings (PLRs) account for ~7% of the Lincoln General Account.

1 Data on slide is as of March 31, 2026.2 Other includes cash/collateral, COLI assets, common and preferred stock, sovereign government, alternatives, and UST/agency. 12

Note: All information regarding LNC's investment portfolio in this earnings supplement excludes assets related to certain modified coinsurance and coinsurance with funds withheld transactions. The modified coinsurance and funds withheld

reinsurance agreements investment portfolio has counterparty protections in place including investment guidelines, as well as additional support including trusts and letters of credit that were established to meet LNC's risk management objectives.

Non-GAAP Financial Measures Appendix

Non-GAAP Financial Measures

Non-GAAP financial measures do not replace the most directly comparable GAAP measures. Reconciliations of the following non-GAAP financial measures to the most directly comparable GAAP financial measures or calculations of such measures, as applicable, are presented herein beginning on slide 16.

Adjusted Income (Loss) From Operations

Adjusted income (loss) from operations is GAAP net income (loss) excluding the effects of the following items, as applicable:

Items related to annuity product features, which include changes in market risk benefits ("MRBs"), changes in the fair value of the related hedge instruments inclusive of income allocated to support the cost of hedging or future benefits, and changes in the fair value of the embedded derivative liabilities and the associated index options for our indexed annuity products (collectively, "net annuity product features");

Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of variable universal life insurance ("VUL") hedging, changes in reserves resulting from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our indexed universal life insurance ("IUL") contracts and the associated index options we hold to hedge them (collectively, "net life insurance product features");

Credit loss-related adjustments on fixed maturity available-for-sale ("AFS") securities, mortgage loans on real estate and reinsurance-related assets ("credit loss-related adjustments");

Changes in the fair value of equity securities and certain other investments, the impact of certain derivatives, and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, "investment

gains (losses)");

Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option ("changes in the fair value of reinsurance-related embedded

derivatives, trading securities and certain mortgage loans");

Income (loss) from the initial adoption of new accounting standards, accounting policy changes and new regulations, including changes in tax law;

Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;

Losses from the impairment of intangible assets and gains (losses) on other non-financial assets;

Income (loss) from discontinued operations;

Other items, which include the following: certain legal and regulatory accruals; severance expense related to initiatives that realign the workforce; transaction, integration and other costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business, and certain other corporate initiatives; mark-to-market adjustment related to the LNC stock component of our deferred compensation plans ("deferred compensation mark-to-market adjustment"); gains (losses) on modification or early extinguishment of debt; and impacts from settlement or curtailment of defined benefit obligations; and

Income tax benefit (expense) related to the above pre-tax items, including the effect of tax adjustments such as changes to deferred tax valuation allowances.

Adjusted income (loss) from operations available to common stockholders is defined as after-tax adjusted income (loss) from operations less preferred stock dividends.

Non-GAAP Financial Measures, Cont'd

Management believes that the use of the non-GAAP financial measures adjusted income (loss) from operations, adjusted income (loss) from operations available to common stockholders (or adjusted operating income) and adjusted income (loss) from operations per diluted share available to common stockholders is helpful to investors in evaluating the company's performance.

Management believes that excluding the following items from adjusted income (loss) from operations enhances understanding of the underlying trends and long-term performance of the company's business. Management excludes "net annuity product features" as this adjustment primarily represents the difference between the valuation of reserves and the valuation of derivatives utilized for hedging our variable annuity and indexed annuity products, which can fluctuate significantly from period to period based on changes in equity markets and interest rates. This difference is due to the hedge focus on managing risks to statutory capital as opposed to the

GAAP reserves. Management excludes "net life insurance product features" for similar reasons. In addition, management excludes "credit loss-related adjustments" and "investment gains (losses)" as the timing of changes in allowances or sales of credit-impaired investments depends largely on market credit cycles and can vary considerably from period to period and the timing of other sales of investments that would result in gains or losses is driven by market conditions, including interest rates, and other factors. Management excludes "changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans" as this adjustment represents the economics of investments in underlying funds withheld portfolios supporting reinsurance agreements that have been transferred to third-party reinsurers, which is not indicative of our ongoing results.

Finally, management excludes from adjusted income (loss) from operations certain additional items (as set forth in the definition above) that are not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in most instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. Management believes excluding these items better explains the results of the company's ongoing businesses in a manner that allows for enhanced understanding of underlying trends, company performance and business fundamentals.

Adjusted Stockholders' Equity

Adjusted stockholders' equity is stockholders' equity, excluding AOCI, preferred stock, changes in MRBs, guaranteed living benefit ("GLB") and guaranteed death benefit ("GDB") hedge instruments gains (losses), and the difference between amounts recognized in net income (loss) on reinsurance-related embedded derivatives and the underlying asset portfolios ("reinsurance-related embedded derivatives and portfolio gains (losses)"). Management believes this metric is useful to investors to analyze our net worth because it eliminates the effect of market movements that can fluctuate significantly from period to period, primarily related to changes in equity markets and interest rates. Stockholders' equity is the most directly comparable GAAP measure.

Leverage Ratio

Leverage ratio is a measure that we use to monitor the level of our debt relative to our total capitalization. Debt used in this metric reflects total debt and preferred stock adjusted for certain items. Total capitalization reflects debt used in the numerator of this ratio and stockholders' equity adjusted for certain items.

Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Income (Loss) from Operations Available to Common Stockholders

Unaudited (millions of dollars, except per share data)

Net Income

For the Three Months Ended

3/31/26

$ (211)

(34)

(5)

(172)

(695)

(20)

(42)

179

(6)

(111)

141

(532)

360

(34)

$ 326

$ (1.10)

1.66

Net income (loss) available to common stockholders - diluted $ (756)

$ 688

$ 411

$ 745

Preferred stock dividends declared (34)

(11)

(34)

(11)

Adjustment for deferred units of LNC stock

in our deferred compensation plans

Net income (loss)

(722)

699

445

754

Less:

Net annuity product features, pre-tax (1)

(1,092)

405

410

515

Net life insurance product features, pre-tax

(58)

(22)

(5)

Credit loss-related adjustments, pre-tax

(28)

(25)

(38)

(43)

Investment gains (losses), pre-tax

(103)

(81)

(35)

(101)

Changes in the fair value of reinsurance-related

embedded derivatives, trading securities and certain

mortgage loans, pre-tax (2)

(90)

(191)

Gains (losses) on other non-financial assets, pre-tax

(14)

Other items, pre-tax (3)(4)(5)(6)(7)

(35)

(105)

(27)

Income tax benefit (expense) related to the above pre-tax items

270

(69)

(5)

(81)

Total adjustments

(1,036)

261

309

Adjusted income (loss) from operations

314

438

431

445

Add:

Preferred stock dividends declared

Adjusted income (loss) from operations available

(34)

(11)

(34)

(11)

to common stockholders

$ 280

$ 427

$ 397

$ 434

Earnings (Loss) Per Common Share - Diluted

Net income (loss) (diluted)

$ (4.41)

$ 3.80

$ 2.12

$ 3.80

Adjusted income (loss) from operations (diluted)

1.60

2.36

2.04

2.21

Less:

Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Income (Loss) from Operations Available to Common Stockholders (continued from previous slide)

Unaudited (millions of dollars)

(1) Includes changes in MRBs of $(1,302) million, $932 million, $337 million, $374 million and $(997) million; changes in the fair value of the related hedge instruments inclusive of income allocated to support the cost of hedging or future benefits of $268 million, $(605) million, $30 million, $44 million and $177 million; and changes in the fair value of the embedded derivative liabilities and the associated index options for our indexed annuity products of $(58) million, $78 million, $43 million, $97 million and $125 million for the first quarter of 2025, second quarter of 2025, third quarter of 2025, fourth quarter of 2025 and first quarter of 2026.

(2) Includes primarily changes in the fair value of the embedded derivative related to the fourth quarter 2023 reinsurance transaction.

(3) For the third quarter of 2025, includes certain legal accruals of $(9) million; for the fourth quarter of 2025, includes certain regulatory accruals of $2 million; for the first quarter of 2026, includes certain legal accruals of $(122) million.

(4) Includes severance expense related to initiatives to realign the workforce of $(6) million, $(2) million, $(5) million, $(11) million and $(7) million in the first quarter of 2025, second quarter of 2025, third quarter of 2025, fourth quarter of 2025 and first quarter of 2026, respectively.

(5) Includes transaction, integration and other costs related to mergers, acquisitions, divestitures and certain other corporate initiatives consisting of $(20) million and $(5) million in the first quarter of 2025 and fourth quarter of 2025, respectively, related to the sale of our wealth management business; $(18) million and $(3) million in the second quarter of 2025 and fourth quarter of 2025, respectively, primarily related to the Bain Capital transaction; $(55) million in the third quarter of 2025 of transaction costs related to restructuring certain captive reinsurance subsidiaries; and

$(22) million in the third quarter of 2025 related to Life Insurance segment persistency optimization.

(6) Includes deferred compensation mark-to-market adjustment of $(9) million, $1 million, $(14) million, $(10) million and $18 million in the first quarter of 2025, second quarter of 2025, third quarter of 2025, fourth quarter of 2025 and first quarter of 2026, respectively.

(7) Includes gains on early extinguishment of debt of $94 million in the second quarter of 2025.

Reconciliation of Adjusted Income (Loss) from Operations Available to Common Stockholders to Adjusted Income (Loss) from Operations Available to Common Stockholders, excluding Significant Items

Unaudited (millions of dollars)

Adjusted income from operations available to common stockholders(1) $ 280 $ 427 $ 397 $ 434 $ 326

Less significant items:

Annual assumption review - - (2) - -

Total significant items - - (2) - -

Adjusted income from operations available to common stockholders, excluding

significant items

$ 280 $ 427 $ 395 $ 434 $ 326

(1) See reconciliation to Net Income (Loss) Available to Common Stockholders on slide 16.

Leverage Ratio

Unaudited (millions of dollars)

3/31/26

$ 400

5,969

6,369

986

7,355

868

400

247

493

112

$ 5,235

$ 14,987

247

493

5,235

$ 20,962

25.0%

Leverage Ratio

Short-term debt (1) $ - $ - $ - $ 400

Long-term debt 5,868 5,767 5,772 5,866

Total debt 5,868 5,767 5,772 6,266

Preferred stock 986 986 986 986

Total debt and preferred stock 6,854 6,753 6,758 7,252 Less:

Operating debt (2) 868 868 868 868

Prefunding of upcoming debt maturities - - - 400

25% of capital securities and subordinated notes 302 247 247 247

50% of preferred stock 493 493 493 493

Carrying value of fair value hedges and other items 122 119 119 114

Total numerator $ 5,069 $ 5,026 $ 5,031 $ 5,130

Adjusted stockholders' equity (3) $ 12,569 $ 13,873 $ 14,180 $ 14,595 Add:

25% of capital securities and subordinated notes 302 247 247 247

50% of preferred stock 493 493 493 493

Total numerator 5,069 5,026 5,031 5,130

Total denominator $ 18,433 $ 19,639 $ 19,951 $ 20,465

Leverage ratio 27.5% 25.6% 25.2% 25.1%

(1) As of March 31, 2026, consists of $400 million principal amount of our 3.625% Senior Notes due December 12, 2026.

(2) We have categorized as operating debt the senior notes issued in October 2007 and June 2010 because the proceeds were used as a long-term structured solution to reduce the strain on increasing statutory reserves associated with secondary guarantee universal life insurance and term policies.

(3) See reconciliation to stockholders' equity on slide 20.

Reconciliation of Stockholders' Equity to Adjusted Stockholders' Equity

Unaudited (millions of dollars)

3/31/26

$ 10,212

986

(4,467)

13,693

2,643

(3,829)

(108)

$ 14,987

Stockholders' Equity, End-of-Period

Stockholders' equity $ 8,193 $ 9,548 $ 10,452 $ 10,906 Less:

Preferred stock 986 986 986 986

AOCI (4,306) (4,392) (3,839) (4,058)

Stockholders' equity, excluding AOCI and preferred stock 11,513 12,954 13,305 13,978

Changes in MRBs 2,133 2,869 3,136 3,431

GLB and GDB hedge instruments gains (losses) (2,993) (3,602) (3,706) (3,812)

Reinsurance-related embedded derivatives and portfolio gains (losses) (196) (186) (305) (236)

Adjusted stockholders' equity $ 12,569 $ 13,873 $ 14,180 $ 14,595

Disclaimer

Lincoln National Corporation published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 07, 2026 at 10:11 UTC.