Ellen Gail Cooper
President, Chief Executive Officer & Director at Lincoln National
Thank you, Al, and good morning, everyone, and welcome. As you all know, Lincoln has been providing financial protection and security to millions of Americans and their families for 117 years through two pandemics and numerous recessions. Over those years, we have built a powerful franchise with a reputation and brand grounded in integrity and trust, and we are a destination employer known for our great culture, talent development and commitment to diversity, equity and inclusion. We pride ourselves on our many strengths, including innovative and agile product manufacturing, world-class distribution and industry-leading risk management capabilities.
We have consistently delivered on our financial performance objectives and we are committed to continuing to enhance shareholder, customer and employee value as we move into our next chapter, and we will do this as we always have, with the right strategy and consistent execution. Effective execution starts with leadership, ensuring we have the right people in place to drive the organization forward. I am pleased to share that we have assembled an incredibly experienced and talented senior leadership team, including the recent appointment of Matt Grove as Head of Individual Life, Annuity and Lincoln Financial Network. Matt joined us with deep experience running retail businesses, including all aspects of Individual Life, annuity and wealth management.
Bringing these businesses together enables us to leverage opportunities for synergies across product manufacturing best practices, in-force management optimization and enhancing the customer experience. Additionally, we recently announced the addition of James Reid as Head of Workplace Solutions which includes group protection and retirement plan services. James joins Lincoln as an established group protection leader with deep group experience, which is critical as we continue to deliver strong results and grow this integral part of our business. Chris Neczypor is our newly appointed Chief Strategy Officer and his organization is quarterbacking all aspects of the build-out of our longer-term strategic framework.
Jayson Bronchetti, as our new Chief Investment Officer; and of course, our long-standing CFO, and Randy Freitag is a key partner to me in this next chapter. I am confident in our senior team and excited about Lincoln's future. Regarding strategy, we are on the right path to continue to deliver shareholder value in the near term, and we are also focused on developing a longer-term strategy to accelerate the pace of value creation for all stakeholders. In addition to having the right people in the right roles, we also optimize our deployment of capital, balancing capital allocated to build long-term value to support new business, investing in our future, for example, direct investments in our Spark program and, of course, returning capital to shareholders.
And we also acknowledge the critical importance our investors place on cash flow generation and capital return as we evaluate deepening our strategic focus on distributable cash flow generation alongside our long-standing goal of generating strong ROE and growing operating earnings and sales. To that end, we have an excellent track record of setting strategy and executing against it as demonstrated in part by having delivered compounded underlying EPS of 11% over the past decade. Despite the recent market headwinds, as we look forward over the next few years, we continue to expect to grow underlying EPS in the 8% to 10% range.
I will touch on the key strategic initiatives that have and will continue to drive results. First, product strategy. Sales remain robust as we continue to benefit from our reprice, shift and add new product strategy. New sales are generating returns at or above targeted levels while contributing to an ongoing strategic shift to a broader diversified mix of products that provide a range of customer value propositions and away from traditional long-term guarantees. This shift has also contributed to a more capital-efficient new business mix as the capital per dollar of sales and overall capital to support new business have continued to decline. Second, Spark. We are on track and making substantial progress in the implementation of this enterprise-wide efforts.
In addition to the expense run rate saves of $260 million to $300 million we expect to achieve, Spark is designed to accelerate delivery of results with increased agility and innovation. We have made about 1/3 of our planned direct investments and will continue to deliver, to accelerate our execution capabilities, modernize our technology, improve operational processes and create expanded opportunities for our employees as well as further enhance our customer experience. Third, Group protection margins. We are making excellent progress, and in the quarter, achieved an underlying 6.8% margin and remain confident in sustaining the top end of our targeted 5% to 7% margin range through continued pricing actions, improved claims effectiveness and Spark expense savings. Fourth, balance sheet resilience.
As Randy will mention in his remarks, we did see a decline in our risk-based capital ratio in the quarter of about 15 points to approximately 400%, which was expected given the equity market downturn. We maintain a solid balance sheet, including our high-quality investment portfolio and remain comfortable with our RBC level. Turning to the quarter's results. Despite market headwinds, second quarter underlying earnings were solid, and we are seeing positive developments, improving group protection results, a significant sequential decline in pandemic claims and a meaningful rise in interest rates year-to-date, supporting future earnings growth and new business returns.
In Annuities, we saw flat sequential sales that included growth of indexed variable annuities and fixed annuities of 16% and 40%, respectively, offset by a drop in traditional VAs, not surprisingly during a stock market downturn. The combination of this downturn and higher interest rates are shifting customer preferences towards IVA and fixed products. This marks the third consecutive quarter of sequential IVA sales growth. This change in consumer preferences has been boosting a strategic mix shift that has been underway at Lincoln for several years. For the eighth consecutive quarter, more than 70% of total annuity sales were of products other than variable annuities with guaranteed living benefits.
This sales mix shift is in turn contributing to a shift in our account value mix as products other than VAs with GLBs represented 53% of our total annuity account value, up five percentage points compared to the prior year period. Retirement Plan Services continues to deliver as our proven strategy, competitive product offerings and differentiated high-touch, high-tech customer experience model drove another quarter of excellent results. Compared to the prior year period, total deposits grew 6% and withdrawals improved 11%, demonstrating our focus not only on sales, but also persistency. Net flows were again favorable this quarter at over $900 million.
In the Life Insurance business, second quarter life insurance sales grew 53% from the prior year period and 25% sequentially. Sales of all product categories and sales across all major distribution channels were up compared to both the second quarter of 2021 and the first quarter of this year. All products are priced to generate new business returns in line with or above target levels. Following the introduction of seven new products and features in 2021, we continue to innovate and expand our offerings as part of our reprice, shift and add new product strategy. Lastly, on group protection, as I mentioned, our margin expansion efforts are gaining traction, and I am pleased to report that group achieved strong earnings this quarter. Premiums were up 7%, driven by solid persistency, organic growth and price increases.
Most importantly, we remain disciplined in our pricing approach and are meeting or exceeding our targets for both new sales and renewals. In what is typically not a big seasonal quarter for sales, sales were up 61% over the prior year period with increases across all products and case sizes. We are also achieving a healthy mix of both employee paid sales and sales to existing customers. By continuing to focus on pricing discipline, claims management effectiveness and expense efficiency supported by our Spark program, I am confident that our margin expansion plan is on a solid path to achieve and sustain our margin expectations.
Across these four businesses, our broad and diversified set of products to meet a range of customer value propositions, expanded digital capabilities to enhance the customer experience and industry-leading distribution strength position us to continue to generate profitable growth in the quarters and years to come. Moving to investment results. Our credit performance and the quality of our investment portfolio remain excellent. You may recall that we began derisking our portfolio well before the onset of the pandemic. And today, fixed income assets are comprised of 97% investment grade holdings. Our credit outlook remains solid as net positive ratings migration continued for a fourth consecutive quarter and credit losses remain benign.
We recognize that the risk of recession has been increasing with the Federal Reserve tightening financial conditions. One of the many benefits of our multi-manager investment model is that we leverage our entire suite of managers to perform scenario analysis on a name-by-name basis across all asset classes in our portfolio. Based on our current views, we would expect any potential credit impacts from a near-term recession to have a modest impact on our balance sheet. New money yields have risen sharply as we invested new money at a rate of 4.2% in the second quarter, up 90 basis points sequentially and 20 basis points above our fixed income portfolio yield. In fact, our total fixed income portfolio yield rose five basis points sequentially.
At these levels, we expect to see spread compression shift to spread expansion and support EPS growth over the coming years. Briefly on our alternatives portfolio, despite declines in the public equity markets during the prior quarter, our highly diversified alternative investment portfolio delivered a positive 1.5% quarterly return. In closing, we are a financially strong organization that provides our customers' financial security and peace of mind. We have a long-standing, proven track record of discipline and consistent execution and are committed to continuing to achieve strong financial performance. Our leadership team is excited and energized to continue to deliver on our strategy with actions to continue to produce strong results while we also develop our vision for the longer-term business of tomorrow with the objective of accelerating growth and value creation for our shareholders, customers and employees. I will now turn the call over to Randy.