What Lincoln National (LNC) Said on Its Q3 Earnings Call

Key Points

• Lincoln National reported Q3 adjusted operating income of $339 million, or $1.72 per share. Excluding a $95 million after-tax assumption-review charge, income rose 10% year over year, helped by life insurance results and strong alternative investment returns.
• The company repurchased $50 million of common stock after retiring more than 40% of its preferred stock. It expects Q4 buybacks to be about double Q3’s level, while remaining above its risk-based capital target.
• Results diverged across businesses: Group Protection earnings and margins fell as disability claims increased, while annuity sales rose 21% sequentially to $4.3 billion. Lincoln expects Group Protection’s full-year margin to be at or modestly below the low end of its prior forecast.

Lincoln National NYSE: LNC reported third-quarter 2026 adjusted operating income of $339 million, or $1.72 per diluted share, as stronger life insurance and retirement plan results helped offset weaker earnings in Group Protection.

The result included a $95 million after-tax charge from the insurer’s annual assumption review. Excluding that impact, adjusted operating income rose 10% from a year earlier, supported in part by strong alternative investment returns, Chairman, President and CEO Ellen Cooper said.

Net income available to common stockholders was $1.3 billion, or $6.77 per diluted share. Interim Chief Financial Officer Adam Cohen said the difference from adjusted operating income was driven primarily by a favorable change in market risk benefits as interest rates rose and a change in the fair value of an embedded derivative related to the Fortitude Re transaction.

Cooper said Lincoln had substantially achieved the financial targets in the three-year outlook it introduced in early 2024. The company plans to provide further details on its next phase, including its 2027 outlook, on its fourth-quarter earnings call.

Buybacks resume after preferred stock actions

Lincoln repurchased $50 million of common stock during the quarter after retiring $437 million, or more than 40%, of its outstanding preferred stock through tender offers. The company also completed building cash at the holding company earmarked for redemption of the remaining $563 million of preferred stock.

Cohen said the preferred-stock actions would reduce financing costs and give Lincoln more capacity to return capital. Based on expected subsidiary remittances and typical holding-company cash uses, he said fourth-quarter repurchases could be about double the third-quarter amount. He described that as a way to think about the run rate heading into 2027, while saying the company would provide more detail with its outlook.

Lincoln’s estimated risk-based capital ratio remained well above its 400% target and additional 20-point buffer, Cohen said, while leverage was at its long-term target of 25%. Subsidiary remittances totaled $990 million through the first nine months, putting the company on track toward the high end of its $1.2 billion to $1.3 billion full-year outlook.

Cooper also said the Talcott reinsurance transaction closed on Oct. 1. Together with the Fortitude Re transaction, it transferred roughly 60% of Lincoln’s guaranteed universal life reserves to reinsurance partners, she said.

Life earnings rise; group margins weaken

Life insurance operating income, excluding the assumption review, rose to $130 million from $54 million a year earlier. Cohen attributed the increase primarily to stronger alternative investment income, favorable mortality and continued benefits from captive consolidation.

After adjusting for favorable mortality, above-target alternative investment returns and other quarterly items, life earnings were approximately $60 million, Cohen said. He cautioned that the company was not relying on continued favorable mortality in assessing the business’s underlying earnings power.

Lincoln’s alternative investment portfolio returned an annualized 16.5% in the quarter, above its 10% target. The excess represented $55 million in after-tax income above target across the portfolio.

Group Protection operating earnings fell to $77 million from $110 million a year earlier, excluding the assumption review. Its margin declined to 5.5% from 8.1%, as the disability loss ratio rose 670 basis points to 83.4%.

Cohen said roughly half of the increase in the disability loss ratio reflected higher severity, including elevated reserves on a relatively small group of claims involving higher-salaried employees. He said severity moderated toward the end of the quarter and early in the fourth quarter. A rise in claim incidence, by contrast, appeared more durable and reflected a move away from historically favorable levels.

Lincoln expects Group Protection earnings to improve sequentially in the fourth quarter, but it now forecasts a full-year margin at or modestly below the low end of its previously stated 8% to 9% range.

Annuity sales grow as retirement plans face outflows

Total annuity sales rose 21% from the second quarter to $4.3 billion. Fixed annuity sales more than doubled sequentially to $1.4 billion, while registered index-linked annuity sales were $1.5 billion and variable annuity sales were $1.4 billion. Cooper said Lincoln expected fixed annuity sales momentum to continue into the fourth quarter.

Excluding the assumption review, annuities operating income was $304 million, up $17 million sequentially but down $14 million from a year earlier. Cohen said the annual decline largely reflected a change in the classification of certain investment income. The segment recorded approximately $2.7 billion in net outflows, driven by traditional variable annuities, while fixed annuities generated approximately $725 million in net inflows.

Retirement Plan Services operating income increased to $55 million from $46 million, helped by wider spreads and higher equity markets. The business recorded approximately $1.9 billion in net outflows and expects about $3 billion in fourth-quarter outflows, primarily from one large plan termination.

Cooper said a strategic realignment of the retirement business is in its early stages and that sales and flows could remain uneven as Lincoln adjusts its distribution, services and technology.

About Lincoln National (NYSE:LNC)

Lincoln National Corporation, operating under the Lincoln Financial Group brand, is a financial services company that provides insurance and retirement products primarily in the United States. Its businesses are designed to help individuals, employers and institutions manage financial protection, income and long-term savings needs.

The company offers life insurance and annuities, including products intended to provide death-benefit protection, retirement income and asset accumulation. Through its group protection business, Lincoln also provides employer-sponsored disability, dental, vision and leave-management solutions, as well as related workplace benefits and services.

Lincoln traces its history to the founding of The Lincoln National Life Insurance Company in Fort Wayne, Indiana, in 1905.

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