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What changed in LINCOLN NATIONAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LINCOLN NATIONAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+1010 added−944 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-22)

Top changes in LINCOLN NATIONAL CORP's 2024 10-K

1010 paragraphs added · 944 removed · 732 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

143 edited+56 added−42 removed109 unchanged
Biggest changeFor eligible employees, such programs include: • a subsidized medical plan with domestic partner eligibility, plus optional dental and vision, a health savings account with a company contribution and a healthcare flexible spending account; • a well-being program that provides access to personal health coaches, health screenings and flu shots, discounts and reimbursements for programs that promote health; • an employee assistance program (“EAP”) that provides counseling, work/life resources and tools to manage well-being; • paid parental leave and adoption assistance programs; • fertility, pregnancy and parenting support; • a dependent care flexible spending account; • access to Homework Connection which, provides one-on-one, on-demand homework help to students at no cost to employees; • dedicated Lincoln Financial Retirement Consultants to evaluate employee retirement readiness and help them map out ways to improve their readiness; in addition to an independent financial wellness advisor for complete financial well-being assistance; • our employee 401(k) plan with a core company contribution, company matching contribution and other convenient features; and • hospital indemnity, accident and critical illness insurance coverages, short- and long-term disability plans and company-provided life insurance.
Biggest changeFor eligible employees, such programs include: • a subsidized medical plan with domestic partner eligibility, plus optional dental and vision, a health savings account with a company contribution and a healthcare flexible spending account; • a well-being program that provides access to personal health coaches, health screenings and flu shots, discounts and reimbursements for programs that promote health; • an employee assistance program that provides counseling, work/life resources and tools to manage well-being; • our employee 401(k) plan with a non-discretionary core company contribution, company matching contribution and other convenient features; • dedicated Lincoln Financial Retirement Consultants to evaluate employee retirement readiness and help them map out ways to improve their readiness, in addition to an independent financial wellness advisor for complete financial well-being assistance; • hospital indemnity, accident and critical illness insurance coverages, short- and long-term disability plans and company-provided life insurance; • fertility, pregnancy and parenting support, plus paid parental leave and adoption assistance programs; • a dependent care flexible spending account and back-up dependent care; • access to Homework Connection, which provides one-on-one, on-demand homework help to students at no cost to employees; • weight management, diabetes and hypertension prevention and care; and • virtual care for musculoskeletal conditions or telemedicine.
Short-term disability insurance generally provides weekly benefits for up to 26 weeks following a short waiting period, ranging from 1 to 30 days. Long-term disability insurance provides benefits following a longer waiting period, usually between 90 and 180 days, and provides benefits for a longer period, up to normal (Social Security) retirement age.
Short-term disability insurance generally provides weekly benefits for up to 26 weeks following a short waiting period, ranging from 1 to 30 days. Long-term disability insurance provides benefits following a longer waiting period, usually between 90 and 180 days, and provides benefits for a longer period, usually up to normal (Social Security) retirement age.
Accident insurance provides scheduled benefits for over 30 types of benefit triggers related to accidental causes, including sports-related injuries, and is available for non-occupational accidents exclusively or on a 24-hour coverage basis. We also offer employer-sponsored group critical illness insurance to employees and their covered dependents. This product is predominantly purchased on an employee-paid basis.
Accident insurance provides scheduled benefits for over 30 types of benefit triggers related to accidental causes, including sports-related injuries, and is available for non-occupational accidents exclusively or on a 24-hour coverage basis. We also offer employer-sponsored group critical illness insurance to employees and their covered dependents. This product is also predominantly purchased on an employee-paid basis.
Risk Factors – Operational 10 Table of Contents Matters – We face risks of non-collectability of reinsurance and increased reinsurance rates, which could materially affect our results of operations.” INVESTMENTS An important component of our financial results is the return on investments.
Risk Factors – Operational Matters – We face risks of non-collectability of reinsurance and increased reinsurance rates, which could materially affect our results of operations.” 10 Table of Contents INVESTMENTS An important component of our financial results is the return on investments.
Standard of Conduct Regulation As a result of overlapping efforts by the Department of Labor (“DOL”), the NAIC, individual states and the SEC to impose fiduciary-like requirements in connection with the sale of annuities, life insurance policies and securities, which are each discussed in more detail below, there have been a number of proposed or adopted changes to the laws and regulations that govern the conduct of our business and the distribution of our products.
Standard of Conduct Regulation As a result of overlapping efforts by the Department of Labor (“DOL”), the NAIC, individual states and the SEC to impose fiduciary-like requirements in connection with the sale of annuities, life insurance policies and securities, which are each discussed in more detail below, there have been a number of proposed or adopted changes to the laws and regulations that govern the distribution of our products.
Surrender charges are typically applicable during the early years of the annuity contract, with a declining level of surrender charges over time. On most policies, within the surrender charge period, we also have a market value adjustment provision that protects us against disintermediation risk in the case of rapidly rising interest rates.
Surrender charges are typically applicable during the early years of the contract, with a declining level of surrender charges over time. On most policies, within the surrender charge period, we also have a market value adjustment provision that protects us against disintermediation risk in the case of rapidly rising interest rates.
GROUP PROTECTION Overview The Group Protection segment offers group non-medical insurance products and services, including short- and long-term disability, statutory disability and paid family medical leave administration and absence management services, term life, dental, vision and accident, critical illness and hospital indemnity benefits and services to the employer marketplace through various forms of employee-paid and employer-paid plans.
GROUP PROTECTION Overview The Group Protection segment offers group non-medical insurance products and services, including short- and long-term disability insurance and administration services, statutory disability and paid family medical leave administration and absence management services, term life, accident, critical illness and hospital indemnity products, and dental and vision products to the employer marketplace through various forms of employee-paid and employer-paid plans.
We have an extensive portfolio of trademarks and service marks that we consider important in the marketing of our products and services, including, among others, the trademarks of the Lincoln National and Lincoln Financial names, the Lincoln silhouette logo and the combination of these marks. Trademark registrations may be renewed indefinitely subject to continued use and registration requirements.
We have an extensive portfolio of trademarks and service marks that we consider important in the marketing of our products and services, including, among others, the trademarks of the Lincoln National and Lincoln Financial names, the Lincoln logo and the combination of these marks. Trademark registrations may be renewed indefinitely subject to continued use and registration requirements.
We offer a GDB rider where we contractually guarantee to the contract holder that upon death, depending on the particular product, we will return no less than the current contract value or the total deposits made to the contract, adjusted to reflect any partial withdrawals. We also offer the i4LIFE® Advantage rider.
We offer a GDB rider where we contractually guarantee to the contract holder that upon death, depending on the particular product, we will return no less than the current contract value or the total deposits made to the contract, adjusted to reflect any partial withdrawals. We also offer the i4LIFE ® Advantage rider on LLA.
Our investment strategy is to balance the need for current income with prudent risk management, with an emphasis on generating sufficient current income to meet our obligations. This approach requires the evaluation of risk and expected return of each asset class utilized, while still meeting our income objectives.
Our investment strategy is to balance the need for current income with prudent risk and capital management, with an emphasis on generating sufficient current income to meet our obligations. This approach requires the evaluation of risk and expected return of each asset class utilized, while still meeting our income objectives.
We also offer hospital indemnity insurance as part of our suite of supplemental health solutions. Similar to our employer-sponsored group accident and critical illness insurance, hospital indemnity is offered to employees and their covered dependents and is predominantly purchased on an employee-paid basis.
Finally, we also offer hospital indemnity insurance as part of our suite of supplemental health solutions. Similar to our employer-sponsored group accident and critical illness insurance, hospital indemnity is offered to employees and their covered dependents and is predominantly purchased on an employee-paid basis.
The insurer financial strength rating scales of AM Best, Fitch Ratings (“Fitch”), Moody’s Investors Service (“Moody’s”) and S&P Global Ratings (“S&P”) are characterized as follows: • AM Best – A++ to D • Fitch – AAA to C • Moody’s – Aaa to C • S&P – AAA to D As of February 16, 2024, the financial strength ratings of our principal insurance subsidiaries, as published by the principal rating agencies that rate us, were as follows: AM Best Fitch Moody's S&P The Lincoln National Life Insurance Company (“LNL”) A A+ A2 A+ (3rd highest of 16) (5th highest of 19) (6th highest of 21) (5th highest of 21) Lincoln Life & Annuity Company of New York (“LLANY”) A A+ A2 A+ (3rd highest of 16) (5th highest of 19) (6th highest of 21) (5th highest of 21) First Penn-Pacific Life Insurance Company (“FPP”) A A+ A2 A- (3rd highest of 16) (5th highest of 19) (6th highest of 21) (7th highest of 21) A downgrade of the financial strength rating of one of our principal insurance subsidiaries could affect our competitive position in the insurance industry and make it more difficult for us to market our products, as potential customers may select companies with higher financial strength ratings.
The insurer financial strength rating scales of AM Best, Fitch Ratings (“Fitch”), Moody’s Investors Service (“Moody’s”) and S&P Global Ratings (“S&P”) are characterized as follows: • AM Best – A++ to D • Fitch – AAA to C • Moody’s – Aaa to C • S&P – AAA to D As of February 13, 2025, the financial strength ratings of our insurance subsidiaries, as published by the principal rating agencies that rate us, were as follows: AM Best Fitch Moody's S&P The Lincoln National Life Insurance Company (“LNL”) A A+ A2 A+ (3rd highest of 16) (5th highest of 19) (6th highest of 21) (5th highest of 21) Lincoln Life & Annuity Company of New York (“LLANY”) A A+ A2 A+ (3rd highest of 16) (5th highest of 19) (6th highest of 21) (5th highest of 21) First Penn-Pacific Life Insurance Company (“FPP”) A A+ A2 A- (3rd highest of 16) (5th highest of 19) (6th highest of 21) (7th highest of 21) A downgrade of the financial strength rating of one of our insurance subsidiaries could affect our competitive position in the insurance industry and make it more difficult for us to market our products, as potential customers may select companies with higher financial strength ratings.
However, no assurances can be given that developments affecting the insurance subsidiaries, many of which could be outside of our control, will not cause the RBC ratios to fall below the “company action level” or below our targeted levels, which are significantly higher than the “company action level.” These developments may include, but may not be limited to: changes to the manner in which the RBC ratio is calculated; new regulatory requirements for calculating reserves, such as principles-based reserving; economic conditions leading to higher levels of impairments of securities in our insurance subsidiaries’ general accounts; and an inability to finance life reserves such as through the issuance of letters of credit (“LOCs”) supporting inter-company reinsurance structures.
However, no assurances can be given that developments affecting the insurance subsidiaries, many of which could be outside of our control, will not cause the RBC 14 Table of Contents ratios to fall below the “company action level” or below our targeted levels, which are significantly higher than the “company action level.” These developments may include, but may not be limited to: changes to the manner in which the RBC ratio is calculated; new regulatory requirements for calculating reserves, such as principles-based reserving; economic conditions leading to higher levels of impairments of securities in our insurance subsidiaries’ general accounts; and an inability to finance life reserves such as through the issuance of letters of credit (“LOCs”) supporting inter-company reinsurance structures.
The extent of regulation by the states varies, but, in general, most jurisdictions have laws and regulations governing standards of solvency, adequacy of reserves, reinsurance, capital adequacy, licensing of companies and agents to transact business, prescribing and approving policy forms, regulating premium rates for some lines of business, prescribing the form and content of financial statements and reports, regulating the type and amount of investments permitted and standards of business conduct.
The extent of regulation by the jurisdiction varies, but, in general, most jurisdictions have laws and regulations governing standards of solvency, adequacy of reserves, reinsurance, capital adequacy, licensing of companies and agents to transact business, prescribing and approving policy forms, regulating premium rates for some lines of business, prescribing the form and content of financial statements and reports, regulating the type and amount of investments permitted and standards of business conduct.
As of December 31, 2023, the RBC ratios of LNL, LLANY and FPP reported to their respective states of domicile and the NAIC all exceeded the “company action level.” We believe that we will be able to maintain the RBC ratios of our insurance subsidiaries in excess of “company action level” through prudent underwriting, claims handling, investing and capital management.
As of December 31, 2024, the RBC ratios of LNL, LLANY and FPP reported to their respective states of domicile and the NAIC all exceeded the “company action level.” We believe that we will be able to maintain the RBC ratios of our insurance subsidiaries in excess of “company action level” through prudent underwriting, claims handling, investing and capital management.
For additional information on our investments, including carrying values by category, quality ratings and net investment income, see “Consolidated Investments” in the MD&A, as well as Notes 1 and 4. For additional information on our variable annuity hedging program, see “ Introduction – Summary of Critical Accounting Estimates – Market Risk Benefits” in the MD&A.
For additional information on our investments, including carrying values by category, quality ratings and net investment income, see “Consolidated Investments” in the MD&A, as well as Notes 1 and 3 . For additional information on our variable annuity hedging program, see “ Introduction – Summary of Critical Accounting Estimates – Market Risk Benefits” in the MD&A.
Products offered include: indemnity coverage, which does not distinguish benefits based on a dental provider’s participation in a network arrangement; Preferred Provider Organization (“PPO”) products, on an insured and administrative services only basis, that do reflect the dental provider’s participation in the PPO network arrangement, including an agreement with network fee schedules; a Dental Health Maintenance Organization product that limits benefit coverage to a closed panel of network providers; an in-network-only option that limits benefit coverage to providers in certain states; and self-funded options for groups with more than 200 employees.
Products offered include: indemnity coverage, which does not distinguish benefits based on a dental provider’s participation in a network arrangement; Preferred Provider Organization (“PPO”) products, on an insured and administrative services only basis, that do reflect the dental provider’s participation in the PPO network arrangement, including an agreement with 7 Table of Contents network fee schedules; a Dental Health Maintenance Organization product that limits benefit coverage to a closed panel of network providers; an in-network-only option that limits benefit coverage to providers in certain states; and self-funded options for groups with more than 200 employees.
If finalized as proposed, these revisions would potentially apply to almost all sales to retirement plan participants and IRA investors, resulting in more extensive disclosure and other compliance obligations as well as increased potential legal exposure for those involved in sales activities that would be newly treated as fiduciary advice.
As finalized, these revisions would potentially apply to almost all sales to retirement plan participants and IRA investors, resulting in more extensive disclosure and other compliance obligations as well as increased potential legal exposure for those involved in sales activities that would be newly treated as fiduciary advice.
Insurance Holding Company Regulation LNC and its primary insurance subsidiaries are subject to regulation pursuant to the insurance holding company laws of the states of Indiana and New York.
Insurance Holding Company Regulation LNC and its insurance subsidiaries are subject to regulation pursuant to the insurance holding company laws of the states of Indiana and New York.
We expect to earn a spread between what we earn on the underlying general account investments supporting the fixed annuity product line and what we credit to our fixed annuity contract holders’ accounts. We offer single and flexible premium fixed deferred annuities. Single premium fixed deferred annuities are contracts that allow only a single premium to be paid.
We expect to earn a spread between what we earn on the underlying general account investments supporting the fixed annuity product line and what we credit to our contract holders’ general account balance. We offer single and flexible premium fixed deferred annuities. Single premium fixed deferred annuities are contracts that allow only a single premium to be paid.
The investment options for our products encompass the spectrum of asset classes with varying levels of risk and include both equity and fixed-income. 8 Table of Contents LINCOLN DIRECTOR SM group variable annuity is primarily a 401(k) defined contribution retirement plan solution available to small businesses, typically those with plans having less than $10 million in account balances.
The investment options for our products encompass the spectrum of asset classes with varying levels of risk and include both equity and fixed income. LINCOLN DIRECTOR SM group variable annuity is primarily a 401(k) defined contribution retirement plan solution available to small businesses, typically those with plans having less than $10 million in account balances.
ERISA also provides for a scheme of civil and criminal penalties and enforcement. Our insurance, asset management, plan administrative services and other businesses provide services to employee benefit plans subject to ERISA, including services where we may act as an ERISA fiduciary.
ERISA also provides for a scheme of civil and criminal penalties and enforcement. Our insurance, plan administrative services and other businesses provide services to employee benefit plans subject to ERISA, including services where we may act as an ERISA fiduciary.
The parameters for the secondary guarantee requirement are listed in the contract. As long as the contract holder pays the minimum premium or funds the policy to a level that keeps this calculated reference value positive, the policy is guaranteed to stay in force.
The parameters for the secondary guarantee requirement are listed in the contract. As long as the policyholder pays the minimum premium or funds the policy to a level that keeps this calculated reference value positive, the policy is guaranteed to stay in force.
LFD provides the Life Insurance segment with access to financial intermediaries in the following primary distribution channels: wire/regional firms; independent planner firms (including LFN); financial institutions; and managing general agents/independent marketing organizations.
LFD provides the Life Insurance segment with access to financial intermediaries in the following primary distribution channels: wire/regional firms; independent planner firms; financial institutions; and managing general agents/independent marketing organizations.
Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards. We routinely conduct environmental assessments for real estate we acquire for investment and before taking title through foreclosure to real property collateralizing mortgages that we hold.
Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards. 18 Table of Contents We routinely conduct environmental assessments for real estate we acquire for investment and before taking title through foreclosure to real property collateralizing mortgages that we hold.
The policy rider allows the contract holder to accelerate death benefits on a tax-free basis in the event of a qualified long-term care need, reducing the remaining death benefit, and, once the death benefit is exhausted, offers access to an additional pool of dollars that can be used for qualified long-term care expenses.
The policy rider allows the policyholder to accelerate death benefits on a tax-free basis in the event of a qualified long-term care need, reducing the remaining death benefit, and, once the death benefit is exhausted, offers access to an additional pool of dollars that can be used for qualified long-term care expenses.
These riders allow the contract holder to accelerate death benefits on a tax-free basis in the event of a qualified condition. Term Life Insurance Term life insurance provides a fixed death benefit for a scheduled period of time. Our term life insurance products give the contract holder the option to convert into a UL, IUL or VUL product.
These riders allow the policyholder to accelerate death benefits on a tax-free basis in the event of a qualified condition. Term Life Insurance Term life insurance provides a fixed death benefit for a scheduled period of time. Our term life insurance products give the policyholder the option to convert into a UL, IUL or VUL product.
Their collaborative efforts are backed by a variety of resources we make available, which provide tools and resources to help employees discover, assess, plan and invest in their careers. In 2022, we launched Get CAREER FIT, an enterprise-wide program to support all employees in creating a specific and targeted development plan.
Their collaborative efforts are backed by a variety of resources we make available, which provide tools and resources to help employees discover, assess, plan and invest in their careers. Get CAREER FIT is an enterprise-wide program to support all employees in creating a specific and targeted development plan.
We have partnered with Harvard Business Publishing, a subsidiary of Harvard Business School, to offer courses specifically designed for our mid-level employees and senior level leaders. All Lincoln employees can also access open online courses offered through third-party providers, including TED@Work and Harvard Business Publishing.
We have partnered with Harvard Business Publishing, a subsidiary of Harvard Business School, to offer 19 Table of Contents courses specifically designed for our mid-level employees and senior level leaders. All Lincoln employees can also access open online courses offered through third-party providers, including TED@Work and Harvard Business Publishing.
Our secondary guarantee benefits maintain the flexibility of a UL or VUL policy, which allow a contract holder to take loans or withdrawals. Although loans and withdrawals are likely to shorten the time period of the secondary guarantee, the guarantee is not automatically or completely forfeited. Additional premium may be deposited to extend the length of the guarantee.
Our secondary guarantee benefits maintain the flexibility of a UL or VUL policy, which allow a policyholder to take loans or withdrawals. Although loans and withdrawals are likely to shorten the time period of the secondary guarantee, the guarantee is not automatically or completely forfeited. Additional premium may be deposited to extend the length of the guarantee.
Our captive reinsurance and reinsurance subsidiaries are subject to periodic financial examinations by their respective domiciliary state insurance regulators. We have not received any material adverse findings resulting from state insurance department examinations of our insurance, reinsurance and captive reinsurance subsidiaries conducted during the three-year period ended December 31, 2023.
Our captive reinsurance and reinsurance subsidiaries are subject to periodic financial examinations by their respective domiciliary insurance regulators. We have not received any material adverse findings resulting from insurance department examinations of our insurance, reinsurance and captive reinsurance subsidiaries conducted during the three-year period ended December 31, 2024.
All provide contract holders with protected lifetime income that is based on a maximum rate of the income base that grows annually for a specified period of time at the greater of a specified simple rate or account balance growth. The riders provide higher income if the contract holder delays withdrawals.
All provide contract holders with protected lifetime income that is based on a maximum rate of the income base that grows annually for a specified period of time at the greater of a specified simple rate or account balance growth. The riders provide higher income if the contract holder delays 2 Table of Contents withdrawals.
A special team of claims examiners, in conjunction with claims management, focus on more complex claims matters such as claims incurred during the contestable period, beneficiary disputes and litigated claims. Long-term care claims are handled primarily by a third-party administrator.
A special team of 6 Table of Contents claims examiners, in conjunction with claims management, focus on more complex claims matters such as claims incurred during the contestable period, beneficiary disputes and litigated claims. Long-term care claims are handled primarily by a third-party administrator.
Form CRS is intended to provide retail investors with information about the nature of their relationship with their investment professional and supplements other more detailed disclosures, including existing Form ADV for advisers and the new disclosures under Regulation Best Interest for broker-dealers.
Form CRS is intended to provide retail investors with information about the nature of their relationship with their investment professional and 16 Table of Contents supplements other more detailed disclosures, including existing Form ADV for advisers and the new disclosures under Regulation Best Interest for broker-dealers.
This rider provides a minimum income base used to determine the GIB floor when a client begins income payments under the i4LIFE Advantage Select Guaranteed Income Benefit rider.
This rider provides a minimum income base used to determine the GIB floor when a client begins income payments under the i4LIFE Advantage Select GIB rider.
The Company conducts a comprehensive, company-wide engagement survey every two years, and often conducts department-specific pulse surveys in the alternate years, to inform our human resources strategy, measure 18 Table of Contents progress and adjust plans, as necessary. We focus on equipping our managers to foster employee development and strengthen their voices.
The Company conducts a comprehensive, company-wide engagement survey every two years, and often conducts department-specific pulse surveys in the alternate years, to inform our human resources strategy, measure progress and adjust plans, as necessary. We focus on equipping our managers to foster employee development and strengthen their voices.
In 2022, we launched a new Learner Experience Platform that serves as the front door to all of our learning content, courses and programs. Total Rewards and Employee Well-Being We invest in our employees’ futures by offering market-competitive compensation and a broad range of health and wellness programs as well as retirement savings, financial health and protection plans.
Our Learner Experience Platform serves as the front door to all of our learning content, courses and programs. Total Rewards and Employee Well-Being We invest in our employees’ futures by offering market-competitive compensation and a broad range of health and wellness programs as well as retirement savings, financial health and protection plans.
The information contained on our website is not included as part of, or incorporated by reference into, this report. 19 Table of Contents
The information contained on our website is not included as part of, or incorporated by reference into, this report. 20 Table of Contents
Contract holders under 2 Table of Contents the Secure riders are subject to the allocation of their account balance to our Managed Risk Strategies fund options and certain fixed-income options. Contract holders under the Select riders are subject to restrictions on the allocation of their account balance within the various investment choices.
Contract holders under the Secure riders are subject to the allocation of their account balance to our Managed Risk Strategies fund options and certain fixed-income options. Contract holders under the Select riders are subject to restrictions on the allocation of their account balance within the various investment choices.
The products can accept rollovers and transfers from other providers as well as ongoing contributions. The Lincoln Next Step IRA product has no annual account charges and offers an array of mutual fund investment options provided by 20 fund families all offered at net asset value.
The products can accept rollovers and transfers from other providers as well as ongoing contributions. The Lincoln Next Step IRA product has an annual account charge and offers an array of mutual fund investment options provided by approximately 20 fund families all offered at net asset value.
For more information regarding our reinsurance arrangements and exposure, see “Reinsurance” in the MD&A and Note 8. For risks involving reinsurance, see “Item 1A.
For more information regarding our reinsurance arrangements and exposure, see “Reinsurance” in the MD&A and Note 7 . For risks involving reinsurance, see “Item 1A.
For example, in 2017, the New York Department of Financial Services (“NYDFS”) enacted a regulation establishing cybersecurity requirements for financial services companies (the “NYDFS Cybersecurity Regulation”). The NYDFS Cybersecurity Regulation included specific technical safeguards as well as requirements regarding governance, incident planning, training, data management, system testing and regulator notification in the event of certain cybersecurity events.
For example, in 2017, the NYDFS enacted a regulation establishing cybersecurity requirements for financial services companies (the “NYDFS Cybersecurity Regulation”). The NYDFS Cybersecurity Regulation included specific technical safeguards as well as requirements regarding governance, incident planning, training, data management, system testing and regulator notification in the event of certain cybersecurity events.
LNC was organized under the laws of the state of Indiana in 1968. We currently maintain our principal executive offices in Radnor, Pennsylvania. “Lincoln Financial Group” is the marketing name for LNC and its subsidiary companies.
LNC was organized under the laws of the state of Indiana in 1968. We currently maintain our principal executive offices in Radnor, Pennsylvania. “Lincoln Financial” is the marketing name for LNC and its subsidiary companies.
These products are available both to retirement plans where we provide plan recordkeeping services and those where we do not. • Through a group annuity contract or funding agreement, we offer fixed return products to retirement plans and other institutional contract holders where we do not provide plan recordkeeping services.
These products are available both to retirement plans where we provide plan recordkeeping services and those where we do not. • Through a group annuity contract, we offer fixed return products to retirement plans and other institutional contract holders where we do not provide plan recordkeeping services.
All of our ratings are subject to revision or withdrawal at any time by the rating agencies, and therefore, no assurance can be given that our principal insurance subsidiaries can maintain these ratings. Each rating should be evaluated independently of any other rating. Ratings are not recommendations to buy our securities.
All of our ratings are subject to revision or withdrawal at any time by the rating agencies, and therefore, no assurance can be given that our insurance subsidiaries can maintain these ratings. Each rating should be 11 Table of Contents evaluated independently of any other rating. Ratings are not recommendations to buy our securities.
The reference value has no actual monetary value to the contract holder; it is only a calculated value used to determine whether or not the policy will lapse should the base policy cash value be less than zero.
The reference value has no actual monetary value to the policyholder; it is only a calculated value used to determine whether or not the policy will lapse should the base policy cash value be less than zero.
FINANCIAL STRENGTH RATINGS The Nationally Recognized Statistical Ratings Organizations rate the financial strength of our principal insurance subsidiaries. Rating agencies rate insurance companies based on financial strength and the ability to pay claims, factors more relevant to contract holders than investors. We believe that the ratings assigned by nationally recognized, independent rating agencies are material to our operations.
FINANCIAL STRENGTH RATINGS The Nationally Recognized Statistical Ratings Organizations rate the financial strength of our insurance subsidiaries. Rating agencies rate insurance companies based on financial strength and the ability to pay claims, factors more relevant to policyholders than investors. We believe that the ratings assigned by nationally recognized, independent rating agencies are material to our operations.
Federal legislation provides for a safe harbor from CERCLA liability for secured lenders that foreclose and sell the mortgaged real estate, provided that certain requirements are met. However, there are circumstances in which actions taken could still expose us to 17 Table of Contents CERCLA liability.
Federal legislation provides for a safe harbor from CERCLA liability for secured lenders that foreclose and sell the mortgaged real estate, provided that certain requirements are met. However, there are circumstances in which actions taken could still expose us to CERCLA liability.
Although reinsurance does not discharge the insurance subsidiaries from their primary liabilities to their contract holders for losses insured under the insurance policies, it does make the assuming reinsurer liable to the insurance subsidiaries for the reinsured portion of the risk.
Although reinsurance does not discharge the insurance subsidiaries from their primary liabilities to their policyholders for losses insured under the insurance policies, it does make the assuming reinsurer liable to the insurance subsidiaries for the reinsured portion of the risk.
SEC Regulation Best Interest In 2019, the SEC approved “Regulation Best Interest,” including a new standard of conduct for broker-dealers under the Securities Exchange Act of 1934, as amended (“Exchange Act”), which requires broker-dealers and their representatives to act in the best interest of retail customers when making recommendations of any securities transaction, without putting their financial interests ahead of the interests of retail customers.
SEC Regulation Best Interest In 2019, the SEC approved “Regulation Best Interest,” including a new standard of conduct for broker-dealers under the Exchange Act, which requires broker-dealers and their representatives to act in the best interest of retail customers when making recommendations of any securities transaction, without putting their financial interests ahead of the interests of retail customers.
Contract holders under the i4LIFE Advantage Guaranteed Income Benefit (Managed Risk) rider are subject to the allocation of their account balance to our Managed Risk Strategies fund options and certain fixed-income options. We also offer the 4LATER® Select Advantage rider.
Contract holders under the i4LIFE Advantage Secure GIB rider are subject to the allocation of their account balance to our Managed Risk Strategies fund options and certain fixed-income options. We also offer the 4LATER ® Select Advantage rider.
We offer the optional Lincoln ProtectedPay SM lifetime income suite, which provides a GWB and includes: Secure Core, Secure Plus and Secure Max, and Select Core, Select Plus and Select Max.
We offer the optional Lincoln ProtectedPay SM lifetime income suite, which provides a GWB and includes: Secure Core, Secure Core with Estate Lock, Secure Plus and Secure Max, and Select Core, Select Core with Estate Lock, Select Plus and Select Max.
The GDB features offered include those where we contractually guarantee to the contract holder that upon death, depending on the particular product, we will return no less than: the current contract value; the total deposits made to the contract, adjusted to reflect any partial withdrawals; the highest contract value on a specified anniversary date adjusted to reflect any partial withdrawals following the contract anniversary; or an earnings enhancement on gains in the contract.
The GDB features offered include those where we contractually guarantee to the contract holder that upon death, depending on the particular product, we will return no less than: the current contract value; the total deposits made to the contract, adjusted to reflect any partial withdrawals or, for certain products, adjusted to only reflect partial withdrawals over the specified level rate; the highest contract value on a specified anniversary date adjusted to reflect any partial withdrawals following the contract anniversary; or an earnings enhancement on gains in the contract.
For additional information on our reserves on UL and VUL products with secondary guarantees, see Note 13 . 5 Table of Contents Linked-Benefit Life Products and Products with Critical Illness Riders Lincoln MoneyGuard ®, our linked-benefit life product group, combines UL or VUL with long-term care insurance through the use of a rider or riders.
For additional information on our reserves on UL and VUL products with secondary guarantees, see Note 1 2 . Linked-Benefit Life Products and Products with Critical Illness Riders Lincoln MoneyGuard ® , our linked-benefit life product group, combines UL or VUL with long-term care insurance through the use of a rider or riders.
Our U.S. insurance companies prepare statutory financial statements in accordance with accounting practices and procedures prescribed or permitted by these departments. The NAIC has approved a series of statutory accounting principles (“SAP”) that have been adopted, in some cases with minor modifications, by virtually all state insurance departments.
Our U.S. insurance companies prepare statutory financial statements in accordance with accounting practices and procedures prescribed or permitted by these departments. The NAIC has approved a series of statutory accounting principles (“SAP”) that have been adopted, in some cases with minor modifications, by virtually all state insurance departments. Changes in these SAP can significantly affect our capital and surplus.
Accordingly, each of our employees has access to important resources designed to, among other things, help them improve their well-being, understand the value of their work, develop their careers and thrive in a diverse and inclusive environment.
Accordingly, each of our employees has access to important resources designed to, among other things, help them improve their well-being, understand the value of their work, develop their careers and thrive.
Congress alleviated some of this uncertainty by passing the Bipartisan Budget Act of 2015. As a result, the 2023 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, published by the Social Security Administration, projects that the SSDI reserves will not be depleted until 2034.
Congress alleviated some of this uncertainty by passing the Bipartisan Budget Act of 2015. The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, published by the Social Security Administration, projects that the SSDI reserves will not be depleted until 2035.
For more information on our hedging program, see “Summary of Critical Accounting Estimates – Derivatives” in the MD&A. Distribution The Annuities segment distributes its individual fixed and variable annuity products through LFD. LFD’s distribution channels give the Annuities segment access to its target markets. LFD distributes the segment’s products to a large number of financial intermediaries, including LFN.
For more information on our hedging program, see “Summary of Critical Accounting Estimates – Derivatives” in the MD&A. Distribution The Annuities segment distributes its individual fixed and variable annuity products through LFD. LFD’s distribution channels give the Annuities segment access to its target markets.
We also earn investment spreads on fixed annuities. Multi-Fund® variable annuity is a defined contribution retirement plan solution with fully bundled administrative services and investment choices for small- to mid-sized healthcare, education, governmental and not-for-profit employers sponsoring 403(b), 457(b) and 401(a)/(k) plans.
Multi-Fund ® variable annuity is a defined contribution retirement plan solution with fully bundled administrative services and investment choices for small- to mid-sized healthcare, education, governmental and not-for-profit employers sponsoring 403(b), 457(b) and 401(a)/(k) plans.
Our fixed annuity product offerings consist of traditional fixed-rate and fixed indexed deferred annuities, as well as fixed-rate immediate and deferred income annuities with various payment options, including lifetime incomes. Fixed annuity contracts are general account obligations. We bear the investment risk for fixed annuity contracts. To protect from premature withdrawals, we impose surrender charges.
Our fixed annuity product offerings consist of traditional fixed-rate and fixed indexed deferred annuities, as well as fixed-rate immediate and deferred income annuities with various payment options, including lifetime income. Fixed annuity contracts are backed by the general account of our insurance companies where we bear the investment risk. To protect from premature withdrawals, we impose surrender charges.
If the final DOL fiduciary rule or any additional new rules that are implemented are more onerous than Regulation Best Interest, or are not coordinated with Regulation Best Interest, the impact on our business could be substantial.
If any new rules are implemented that are more onerous than Regulation Best Interest, or are not coordinated with Regulation Best Interest, the impact on our business could be substantial.
In general, GIB is an optional feature available with the i4LIFE Advantage rider and a non-optional feature on the i4LIFE Advantage Guaranteed Income Benefit (Managed Risk) rider that guarantees regular income payments will not fall below the greater of a minimum income floor set at benefit issue and 75% of the highest income payment on a specified anniversary date (reduced for any subsequent withdrawals).
In general, GIB is an optional feature available with the i4LIFE Advantage rider that guarantees regular income payments will not fall below the greater of a minimum income floor set at benefit issue and 65% (for the Select product) or 75% (for the Secure product) of the highest income payment on a specified anniversary date (reduced for any subsequent withdrawals).
The NAIC is also considering modifications to the economic scenario generator used to calculate life and annuity reserves according to the Valuation Manual (e.g., VM-20 and VM-21) and the required capital for these life and annuity contracts, as well as certain fixed annuity and single premium life insurance products, which could affect the level and volatility of statutory reserves and required capital for products in scope.
Life and Annuities Reserves The NAIC is also considering modifications to the economic scenario generator used to calculate life and annuity reserves according to the Valuation Manual (e.g., VM-20 and VM-21) and the required capital for these life and annuity contracts, which could affect the level and volatility of statutory reserves and required capital for products in scope.
Periodic payments can begin within 12 months after the premium is received (referred to as an immediate annuity) or at a future date in time (referred to as a deferred annuity). This retirement vehicle helps protect an individual from outliving their money.
The payments may be made on either a guaranteed or non-guaranteed basis. Periodic payments can begin within 12 months after the premium is received (referred to as an immediate annuity) or at a future date in time (referred to as a deferred annuity). This retirement vehicle helps protect an individual from outliving their money.
The financial intermediaries include wire/regional firms, independent financial planners, financial institutions, registered investment advisers and managing general agents. Competition The annuities market is very competitive and consists of many companies, with no one company dominating the market for all products. The Annuities segment competes with numerous other financial services companies.
LFD distributes the segment’s products to a large number of financial intermediaries, including wire/regional firms, independent financial planners, financial institutions, registered investment advisers and managing general agents. Competition The annuities market is very competitive and consists of many companies, with no one company dominating the market for all products. The Annuities segment competes with numerous other financial services companies.
For more information about regulatory and litigation matters generally, see Note 1 8 .
For more information about regulatory and litigation matters generally, see Note 17 .
From the moment our employees become part of Lincoln, they’re empowered to “Be Lincoln” by living and acting with integrity, accountability and passion in their communities, relationships and daily interactions with colleagues and clients.
From the moment our employees become part of Lincoln, they’re empowered to live and act with integrity, accountability and passion in their communities, relationships and daily interactions with colleagues and clients.
We also offer comprehensive employer-sponsored fully insured vision plans with a wide range of benefits for protecting employees’ and their covered dependents’ sight and vision health. All plans provide access to a national network of providers, with in and out-of-network benefits.
We also offer comprehensive employer-sponsored fully insured vision plans with a wide range of benefits for protecting employees’ and their covered dependents’ sight and vision health. All plans provide access to a national network of providers, with in and out-of-network benefits. Distribution The Group Protection segment’s products are marketed primarily through a national distribution system.
Competition The retirement plan marketplace is very competitive and comprised of many providers with no one company dominating the market for all products. As stated above, we compete with numerous other financial services corporations in the small, mid and large employer-size markets.
We remain focused on wholesaler productivity, increasing relationship management expertise and growing the number of broker-dealer relationships. Competition The retirement plan marketplace is very competitive and comprised of many providers with no one company dominating the market for all products. As stated above, we compete with numerous other financial services corporations in the small, mid and large employer-size markets.
For additional information, see Note 1. 1 Table of Contents BUSINESS SEGMENTS AND OTHER OPERATIONS ANNUITIES Overview The Annuities segment provides tax-deferred investment growth and lifetime income opportunities for its clients by offering variable annuities, fixed (including indexed) annuities and indexed variable annuities, also referred to as registered index-linked annuities (“RILA”).
For additional information, see Note 1 . 1 Table of Contents BUSINESS SEGMENTS AND OTHER OPERATIONS ANNUITIES Overview The Annuities segment provides tax-deferred investment growth and lifetime wealth accumulation and protection opportunities for its clients by offering variable annuities, fixed (including indexed) annuities and registered index-linked annuities (“RILA”). Annuities have several features that are attractive to customers.
We regard our trademarks as valuable assets in marketing our products and services and intend to protect them against infringement and dilution. HUMAN CAPITAL MANAGEMENT As of December 31, 2023, we had a total of 11,024 employees, all based in the United States.
We regard our trademarks as valuable assets in marketing our products and services and intend to protect them against infringement and dilution. HUMAN CAPITAL MANAGEMENT As of December 31, 2024, we had a total of 9,783 employees.
Under RBC requirements, regulatory compliance is determined by the ratio of a company’s total adjusted capital, as defined by the NAIC, to its company action level of RBC (known as the RBC ratio), also as defined by the NAIC.
Regulators can then measure adequacy of a company’s statutory surplus by comparing it to the RBC determined by the formula. Under RBC requirements, regulatory compliance is determined by the ratio of a company’s total adjusted capital, as defined by the NAIC, to its company action level of RBC (known as the RBC ratio), also as defined by the NAIC.
Our mission is to help people to plan, protect and retire with confidence by offering products and services across our four core businesses. We believe that every move we make, including how we manage talent, shapes the future we share with our customers, communities and investors.
Our mission is to provide financial protection and security to our customers and their families by offering products and services across our four core businesses. We believe that every move we make, including how we manage talent, shapes the future we share with our customers, communities and investors.
For example, in March 2022, the SEC proposed extensive rule changes that would require companies to include certain climate-related disclosures in their registration statements and periodic reports filed with the SEC, and in October 2023, the Governor of California signed two bills into law that will require significant climate-related disclosures (in some cases beyond the disclosures proposed by the SEC’s rule) by large entities doing business in that state.
For example, in March 2024, the SEC adopted extensive rule changes, which have been stayed pending the outcome of litigation challenges, that would require companies to include certain climate-related disclosures in their registration statements and periodic reports filed with the SEC, and in October 2023, the Governor of California signed two bills into law that were further amended in September 2024 and, beginning in 2026, will require significant climate-related disclosures (in some cases beyond the disclosures required by the SEC’s rule) by large entities doing business in that state.
We provide products and services and report results through four segments as follows: Business Segments Annuities Life Insurance Group Protection Retirement Plan Services We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments The results of Lincoln Financial Network (“LFN”) and Lincoln Financial Distributors (“LFD”), our retail and wholesale distributors, respectively, are included in the segments for which they distribute products.
We provide products and services and report results through four business segments as follows: • Annuities • Life Insurance • Group Protection • Retirement Plan Services We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments.
The guidance indicates that investment advisers have a fiduciary duty to their clients that includes both a duty of care and a duty of loyalty and further describes an investment adviser’s responsibilities under these fiduciary duties. 15 Table of Contents State Law Standard of Conduct Rules and Regulations In addition to the SEC and DOL rules, the NAIC and several states, including Massachusetts, Nevada, New Jersey and New York, have either enacted or proposed laws and regulations requiring investment advisers, broker-dealers and/or agents to meet a higher standard of care and provide additional disclosures when providing advice to their clients.
State Law Standard of Conduct Rules and Regulations In addition to the SEC and DOL rules, the NAIC and several states, including Massachusetts, Nevada, New Jersey and New York, have either enacted or proposed laws and regulations requiring investment advisers, broker-dealers and/or agents to meet a higher standard of care and provide additional disclosures when providing advice to their clients.
In supervising and regulating insurance companies, state insurance departments, charged primarily with protecting contract holders and the public rather than investors, enjoy broad authority and discretion in applying applicable insurance laws and regulation for that purpose. Our principal insurance subsidiaries, LNL, LLANY and FPP, are domiciled in the states of Indiana, New York and Indiana, respectively.
In supervising and regulating insurance companies, state insurance departments, charged primarily with protecting policyholders and the public rather than investors, enjoy broad authority and discretion in applying applicable insurance laws and regulation for that purpose. LNL and FPP are domiciled in Indiana and their principal insurance regulatory authority is the Indiana Department of Insurance (“IDOI”).
Employee Feedback and Employee Engagement We actively listen to our employees in a variety of ways, including enterprise-wide and department-specific engagement surveys and focus groups, and we gather feedback on an ongoing basis.
Our enterprise strategy is driven by continued focus on this unique employee culture, including the following key areas: Employee Feedback and Employee Engagement We actively listen to our employees in a variety of ways, including enterprise-wide and department-specific engagement surveys and focus groups, and we gather feedback on an ongoing basis.
REINSURANCE Our reinsurance strategy is designed to protect our insurance subsidiaries against the severity of losses on individual claims and unusually serious occurrences in which a number of claims produce an aggregate extraordinary loss.
See “Introduction – Executive Summary – Significant Operational Matters” in the MD&A for additional information on our FABN program. REINSURANCE Our reinsurance strategy is designed to protect our insurance subsidiaries against the severity of losses on individual claims and unusually serious occurrences in which a number of claims produce an aggregate extraordinary loss.
Environmental Considerations Federal, state and local environmental laws and regulations apply to our ownership and operation of real property. Inherent in owning and operating real property are the risks of hidden environmental liabilities and the costs of any required clean-up.
See also “Securities, Broker-Dealer and Investment Adviser Regulation – DOL Fiduciary Advice Rule” above. Environmental Considerations Federal, state and local environmental laws and regulations apply to our ownership and operation of real property. Inherent in owning and operating real property are the risks of hidden environmental liabilities and the costs of any required clean-up.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor more information, see “Legislative, Regulatory and Tax – State Regulation – Compliance with existing and emerging privacy laws and regulations could result in increased compliance costs and/or lead to changes in business practices and policies, and any failure to protect the confidentiality of personal information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations.” Although we conduct due diligence, negotiate contractual provisions and, in many cases, conduct periodic reviews of our vendors and other third party suppliers with whom we contract and who we believe may pose a cybersecurity threat to the Company, our customers or our business partners due to the type of services they provide and/or confidential information they may be handling to confirm compliance with our information security standards, the failure of such third parties’ computer systems and/or their disaster recovery plans for any reason might cause significant interruptions in our operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to our customers.
Biggest changeFor more information, see “Legislative, Regulatory and Tax – State Regulation – Compliance with existing and emerging privacy laws and regulations could result in increased compliance costs and/or lead to changes in business practices and policies, and any failure to protect the confidentiality of personal information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations.” Finally, our cyber liability insurance may not be sufficient to protect us against all losses resulting from any cyberattack or other interruption, breach in security or failure of our disaster recovery systems.
In addition, we have at times experienced, and in the future could experience, an elevated incidence of claims, and we could experience changes in the rate of lapses or surrenders of policies or other changes in consumer behavior as a result of financial stress. Our contract holders may choose to defer paying insurance premiums or stop paying insurance premiums altogether.
In addition, we have at times experienced, and in the future could experience, an elevated incidence of claims and/or changes in the rate of lapses or surrenders of policies or other changes in consumer behavior as a result of financial stress. Our contract holders may choose to defer paying insurance premiums or stop paying insurance premiums altogether.
If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or impose substantial fines.
If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some of or all our activities or impose substantial fines.
During periods of market disruption or rapidly-changing market conditions, such as significantly rising or high interest rates, rapidly widening credit spreads or illiquidity, or infrequent trading, or when market data is limited, our investments may become less liquid and we may base our valuations on less-observable and more subjective inputs, assumptions, or methods that may result in estimated fair values that significantly vary by period, and may exceed the investment’s sale price.
During periods of market disruption or rapidly-changing market conditions, such as significantly rising or sustained high interest rates, rapidly widening credit spreads or illiquidity, or infrequent trading, or when market data is limited, our investments may become less liquid and we may base our valuations on less-observable and more subjective inputs, assumptions, or methods that may result in estimated fair values that significantly vary by period, and may exceed the investment’s sale price.
In addition, our failure to comply with the covenants in the credit facilities or fulfill the conditions to borrowings, or the failure of lenders to fund their lending commitments (whether due to insolvency, illiquidity or other reasons) in the amounts provided for under the terms of the facilities, would restrict our ability to access these credit facilities when needed and, consequently, could have a material adverse effect on our financial condition and results of operations.
In addition, our failure to comply with the covenants in the facilities or fulfill the conditions to borrowings, or the failure of lenders to fund their lending commitments (whether due to insolvency, illiquidity or other reasons) in the amounts provided for under the terms of the facilities, would restrict our ability to access these facilities when needed and, consequently, could have a material adverse effect on our financial condition and results of operations.
A sudden demand among consumers to change product types or withdraw funds could lead us to sell assets at a loss to meet the demand for funds. Furthermore, unanticipated increases in withdrawals and terminations may accelerate amortization of our deferred acquisition costs (“DAC”) and value of business acquired (“VOBA”) assets, which would reduce net income.
A sudden demand among consumers to change product types or withdraw funds could lead us to sell assets at a loss to meet the demand for funds. Furthermore, unanticipated increases in terminations may accelerate amortization of our deferred acquisition costs (“DAC”) and value of business acquired (“VOBA”) assets, which would reduce net income.
A downgrade of the financial strength rating of one of our principal insurance subsidiaries could affect our competitive position in the insurance industry by making it more difficult for us to market our products, as potential customers may select companies with higher financial strength ratings, and by leading to increased withdrawals by current customers seeking companies with higher financial strength ratings.
A downgrade of the financial strength rating of one of our insurance subsidiaries could affect our competitive position in the insurance industry by making it more difficult for us to market our products, as potential customers may select companies with higher financial strength ratings, and by leading to increased withdrawals by current customers seeking companies with higher financial strength ratings.
In extreme scenarios of equity market declines, the amount of additional statutory reserves that we are required to hold for our VUL insurance guarantees and variable annuity guarantees may increase at a rate greater than the rate of change of the markets. Increases in reserves reduce the statutory surplus used in calculating our RBC ratios.
In extreme scenarios of equity market declines, the amount of additional statutory reserves that we are required to hold for our VUL guarantees and variable annuity guarantees may increase at a rate greater than the rate of change of the markets. Increases in reserves reduce the statutory surplus used in calculating our RBC ratios.
We compete with other financial institutions primarily on the basis of our products, compensation, support services and financial condition. Sales in our businesses and our results of operations and financial condition could be materially adversely affected if we are unsuccessful in attracting and retaining employees, including financial advisers, wholesalers and other employees, as well as independent distributors of our products.
We compete with other financial institutions primarily on the basis of our products, compensation, support services and financial condition. Sales in our businesses and our results of operations and financial condition could be materially adversely affected if we are unsuccessful in attracting and retaining employees, including wholesalers, as well as independent distributors of our products.
In addition, in our group insurance operations, an event that affects the workplace of one or more of our group insurance customers, such as a pandemic or a natural disaster, could also cause a significant loss due to mortality or morbidity claims.
In addition, in our group insurance operations, an event that affects the workplace of one or more of our group insurance customers, such as a pandemic or a natural disaster, could also cause a significant loss due to concentrated mortality or morbidity claims.
Our ratings and the ratings of our principal insurance subsidiaries are subject to revision or withdrawal at any time by the rating agencies, and therefore, no assurance can be given that our principal insurance subsidiaries or we can maintain our current ratings. See “Item 1.
Our ratings and the ratings of our insurance subsidiaries are subject to revision or withdrawal at any time by the rating agencies, and therefore, no assurance can be given that our insurance subsidiaries or we can maintain our current ratings. See “Item 1.
In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including the amount of statutory income or losses generated by our insurance subsidiaries (which itself is sensitive to equity market and credit market conditions), the amount of additional capital our insurance subsidiaries must hold to support business growth, changes in reserving requirements, such as principles-based reserving, our inability to obtain reserve relief, changes in equity market levels, the value of certain fixed-income and equity securities in our investment portfolio, the value of certain derivative instruments that do not get hedge accounting treatment, changes in interest rates and foreign currency exchange rates, as well as changes to the NAIC RBC formulas.
In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including the amount of statutory income or losses generated by our insurance subsidiaries (which itself is sensitive to equity market and credit market conditions), the amount of additional capital our insurance subsidiaries must hold to support business growth, changes in reserving requirements, such as principles-based reserving, our inability to obtain reserve relief, changes in equity market levels, the value of certain 27 Table of Contents fixed-income and equity securities in our investment portfolio, the value of certain derivative instruments that do not get hedge accounting treatment, changes in interest rates and foreign currency exchange rates, as well as changes to the NAIC RBC formulas.
In recent years, we have faced a number of rate increase actions on in-force business, and reinsurers have initiated, and may in the future initiate, legal proceedings against us.
In recent years, we have faced a number of rate increase actions on in-force business, and reinsurers have in the past initiated, and may in the future initiate, legal proceedings against us.
The extent of regulation by the states varies, but, in general, most jurisdictions have laws and regulations governing standards of solvency, adequacy of reserves, reinsurance, capital adequacy, licensing of companies and agents to transact business, prescribing and approving policy forms, regulating premium rates for some lines of business, prescribing the form and content of statutory financial statements and reports, regulating the type and amount of investments permitted, and standards of business conduct.
The extent of regulation by the jurisdiction varies, but, in general, most jurisdictions have laws and regulations governing standards of solvency, adequacy of reserves, reinsurance, capital adequacy, licensing of companies and agents to transact business, prescribing and approving policy forms, regulating premium rates for some lines of business, prescribing the form and content of statutory financial statements and reports, regulating the type and amount of investments permitted, and standards of business conduct.
While we employ a robust and tested information security program, the preventative actions we take to reduce the incidence and severity of cyber incidents and protect our information technology may be insufficient to prevent physical and electronic break-ins, cyberattacks, including ransomware and malware attacks, attacks targeting remote workers, compromised credentials, fraud, other security breaches or other unauthorized access to our computer systems, and, given the increasing sophistication of cyberattacks, in some cases, such incidents could occur and persist for an extended period of time without detection.
While we employ a robust and tested information security program, the preventative actions we take to reduce the incidence and severity of cyber incidents and protect our information technology may be insufficient to prevent physical and electronic break-ins, cyberattacks, including ransomware, malware and enhanced-AI attacks, attacks targeting or impersonating remote workers, compromised credentials, fraud, other security breaches or other unauthorized access to our computer systems, and, given the increasing sophistication of cyberattacks, in some cases, such incidents could occur and persist for an extended period of time without detection.
Although reinsurance does not discharge our subsidiaries from their primary obligation to pay contract holders for losses insured under the policies we issue, reinsurance does make the assuming reinsurer liable to the insurance subsidiaries for the reinsured portion of the risk. For more information regarding our reinsurance arrangements and exposure, see “Reinsurance” in the MD&A and Note 8 .
Although reinsurance does not discharge our subsidiaries from their primary obligation to pay contract holders for losses insured under the policies we issue, reinsurance does make the assuming reinsurer liable to the insurance subsidiaries for the reinsured portion of the risk. For more information regarding our reinsurance arrangements and exposure, see “Reinsurance” in the MD&A and Note 7 .
Prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs and, ultimately, reinsurers being unwilling to offer future coverage.
Prolonged or severe adverse mortality experience could result in increased reinsurance costs and, ultimately, reinsurers being unwilling to offer future coverage.
We reinsure a portion of the mortality risk on fully underwritten, newly issued, individual life insurance contracts. We regularly review retention limits for continued appropriateness, and they may be changed in the future. In the event that we experience adverse mortality or morbidity experience, a significant portion of that is reimbursed by our reinsurers.
We reinsure a portion of the mortality risk on fully underwritten, newly issued, individual life insurance contracts. We regularly review retention limits for continued appropriateness, and they may be changed in the future. In the event that we experience adverse mortality experience, a significant portion of that is reimbursed by our reinsurers.
Despite these measures, the insolvency, inability or unwillingness to make payments under the terms of a reinsurance contract by a large reinsurer or multiple reinsurers could have a material adverse effect on our results of operations and financial condition. For information on reinsurance-related credit losses, see Note 8 .
Despite these measures, the insolvency, inability or unwillingness to make payments under the terms of a reinsurance contract by a large reinsurer or multiple reinsurers could have a material adverse effect on our results of operations and financial condition. For information on reinsurance-related credit losses, see Note 7 .
Changes in the equity markets, interest rates and/or volatility affect the profitability of our products with guaranteed benefits; therefore, such changes may have a material adverse effect on our business and profitability. Certain of our variable annuity and fixed indexed annuity products include optional guaranteed benefit riders, including GDB (variable annuity only) and GLB riders.
Changes in the equity markets, interest rates and/or volatility affect the profitability of our products with guaranteed benefits; therefore, such changes may have a material adverse effect on our business and profitability. Certain of our variable annuity and fixed indexed annuity products include optional guaranteed benefit riders, including GDB (variable annuity only) and guaranteed living benefit riders.
Such valuation allowance could have a material adverse effect on our results of operations and financial condition. For more information on our deferred income tax assets, see Note 23 . The determination of the amount of allowance for credit losses and impairments taken on our investments is highly subjective and could materially impact our results of operations or financial condition.
Such valuation allowance could have a material adverse effect on our results of operations and financial condition. For more information on our deferred income tax assets, see Note 22. The determination of the amount of allowance for credit losses and impairments taken on our investments is highly subjective and could materially impact our results of operations or financial condition.
Although such third parties’ computer systems have in the past been, and will likely in the future be, subject to or targets of unauthorized or fraudulent access, to date, our business, financial condition and results of operations have not been materially affected by such a cybersecurity incident at a third party.
Such third parties’ computer systems have in the past been, and will likely in the future be, subject to or targets of unauthorized or fraudulent access; however, to date, our business, financial condition and results of operations have not been materially affected by such a cybersecurity incident at a third party.
See Note 18 for a description of legal and regulatory proceedings and actions. Climate change and climate change regulation may adversely affect our investment portfolio and financial condition. Climate change and climate change regulation may affect the prospects of companies and other entities whose securities we hold or our willingness to continue to hold their securities.
See Note 17 for a description of legal and regulatory proceedings and actions. Climate change and climate change regulation may adversely affect our investment portfolio and financial condition. Climate change and climate change regulation may affect the prospects of companies and other entities whose securities we hold or our willingness to continue to hold their securities.
Because strong equity markets result in higher account balances, strong equity markets positively affect our net income through increased fee income. Conversely, a weakening of the equity markets results in lower fee income and may have a material adverse effect on our results of operations and capital resources.
Because strong equity markets result in higher account balances, strong equity markets positively affect our net income through increased fee income. Conversely, a weakening of the equity markets results in lower fee income, which in turn may have a material adverse effect on our results of operations and capital resources.
Our enterprise risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our businesses or result in losses. Our policies and procedures to identify, monitor and manage risks may not be fully effective.
Operational Matters Our enterprise risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our businesses or result in losses. Our policies and procedures to identify, monitor and manage risks may not be fully effective.
Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our customer data, we may also have obligations to notify affected individuals about the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.
Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our customer data, we may also have obligations to notify affected individuals about the incident, and we may need to provide some form of remedy, 31 Table of Contents such as a subscription to a credit monitoring service, for the individuals affected by the incident.
While we continue to monitor and evaluate the various proposals, we cannot predict what other proposals may be made, or what new legislation or regulation may be introduced or become law. Therefore, until such time as final rules or laws are in place, the potential impact on our business is uncertain.
While we continue to monitor and evaluate the various proposals, we cannot predict what other proposals may be made, or what new legislation or regulation may be introduced or become law. Therefore, until such time as final rules or laws are in place, the potential impact on our business is uncertain. See “Item 1.
As a result, to the extent our subsidiaries are unable or are materially restricted from being able to pay dividends to us in sufficient amounts, our ability to meet our obligations could be materially affected. 26 Table of Contents A decrease in the capital and surplus of our insurance subsidiaries may result in a downgrade to our credit and insurer financial strength ratings.
As a result, to the extent our subsidiaries are unable or are materially restricted from being able to pay dividends to us in sufficient amounts, our ability to meet our obligations could be materially affected. A decrease in the capital and surplus of our insurance subsidiaries may result in a downgrade to our credit and insurer financial strength ratings.
However, the hedging strategies may not be fully effective to offset the changes in the carrying value of these guarantees, as our hedging strategies hedge risks on a basis that does not correspond to their anticipated or actual impact upon our results of operations or financial condition under GAAP.
However, the hedging strategies may not be fully effective to offset the changes in the carrying value of these guarantees, as our hedging strategies hedge risks on a basis that does not correspond to their anticipated or actual 22 Table of Contents impact upon our results of operations or financial condition under GAAP.
An increase in interest rates could also result in decreased fee income associated with a decline in the value of variable annuity account balances invested in fixed-income funds.
An increase in interest rates could also result in decreased fee income associated with a decline in the value of variable annuity and VUL account balances invested in fixed-income funds.
State and federal laws and regulations also require us to disclose our data collection and sharing practices to individuals who interact with us and to provide certain individuals with access to 22 Table of Contents certain pieces of their personal information, the right to request correction of their information, the right to request deletion of their information, and the right to opt out of certain tracking, sharing and processing.
State and federal laws and regulations also require us to disclose our data collection and sharing practices to individuals who interact with us and to provide certain individuals with access to certain pieces of their personal information, the right to request correction of their information, the right to request deletion of their information, and the right to opt out of certain tracking, sharing and processing.
Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be 29 Table of Contents accurate, complete, up-to-date or properly evaluated.
Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.
We follow the insurance practice of reinsuring with other insurance and reinsurance companies a portion of the risks under the policies written by our insurance subsidiaries (known as “ceding”). As of December 31, 2023, we ceded $1.1 trillion of life insurance in force to reinsurers for reinsurance protection.
We follow the insurance practice of reinsuring with other insurance and reinsurance companies a portion of the risks under the policies written by our insurance subsidiaries (known as “ceding”). As of December 31, 2024, we ceded $1.0 trillion of life insurance in force to reinsurers for reinsurance protection.
For example, in November 2023, S&P implemented changes to its insurer RBC capital adequacy model, which could increase the amount of statutory capital we are required to hold in certain scenarios in order to maintain our current ratings.
For example, in November 2023, S&P implemented changes to its insurer RBC capital adequacy model, which altered the amount of statutory capital we are required to hold in certain scenarios in order to maintain our current ratings.
In addition, the actions of key employees of the business to be divested could adversely affect the success of such disposition as they may be more focused on obtaining employment, or the terms of their employment, than on maximizing the value of the business to be divested.
In addition, the actions of key employees of the business to be divested could adversely affect the success of such disposition as they may be more focused on obtaining employment, or the terms of their 32 Table of Contents employment, than on maximizing the value of the business to be divested.
As of December 31, 2023, no state insurance regulatory authority had imposed on us any material fines or revoked or suspended any of our licenses to conduct insurance business in any state or issued an order of supervision with respect to our insurance subsidiaries that would have a material adverse effect on our results of operations or financial condition.
As of December 31, 2024, no insurance regulatory authority had imposed on us any material fines or revoked or suspended any of our licenses to conduct insurance business in any jurisdiction or issued an order of supervision with respect to our insurance subsidiaries that would have a material adverse effect on our results of operations or financial condition.
Changes from period to period in the valuation of these guarantees, and in the amount of our obligations effectively hedged, will result in volatility in our results of operations and financial 21 Table of Contents condition under GAAP and in the capital levels of our insurance and reinsurance subsidiaries.
Changes from period to period in the valuation of these guarantees, and in the amount of our obligations effectively hedged, will result in volatility in our results of operations and financial condition under GAAP and in the capital levels of our insurance and reinsurance subsidiaries.
Decreases in the estimated fair value of our securities may harm our results of operations or financial condition. See “Summary of Critical Accounting Estimates – Investments” in the MD&A for additional information. 28 Table of Contents Significant adverse mortality experience may result in the loss of, or higher prices for, reinsurance, which could adversely affect our profitability.
Decreases in the estimated fair value of our securities may harm our results of operations or financial condition. See “Summary of Critical Estimates – Investments” in the MD&A for additional information. Significant adverse mortality experience may result in the loss of, or higher prices for, reinsurance, which could adversely affect our profitability.
To meet these requirements, we may be required to post asset adequacy reserves, which, depending on the size of the reserve, could materially affect our financial results. 20 Table of Contents Increases in interest rates may negatively affect our profitability, capital position and the value of our investment portfolio and may also result in increased contract withdrawals.
To meet these requirements, we may be required to post asset adequacy reserves, which, depending on the size of the reserve, could materially affect our financial results. 21 Table of Contents Increases in interest rates and sustained high interest rates may negatively affect our profitability, capital position and the value of our investment portfolio and may also result in increased contract withdrawals and surrenders.
If these ratings or capital ratios are not maintained, depending upon the reinsurance agreement, the cedent may recapture the business, or require us to place assets in trust or provide LOCs at least equal to the relevant statutory reserves. See “ Item 1.
If these ratings or capital ratios are not maintained, depending upon the reinsurance agreement, the cedent may recapture the business, or require us to place assets in trust or provide LOCs at least equal to the relevant statutory reserves.
We may fail to meet our ESG-related commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not prove completely effective or satisfy investors, customers, regulators or others.
We may fail to meet our ESG-related commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not prove 24 Table of Contents completely effective or satisfy investors, customers, regulators or others.
Business – Regulatory – Privacy and Cybersecurity Regulation.” Many of the employees and associates who conduct our business have access to, and routinely process, personal information (including confidential information from consumers, clients and individuals with whom we have a business relationship) through a variety of media, including information technology systems.
Business – Regulatory – Privacy, Artificial Intelligence and Cybersecurity Regulation.” Many of the employees and associates who conduct our business have access to, and routinely process, personal information (including confidential information from consumers, clients and individuals with whom we have a business relationship) through a variety of media, 23 Table of Contents including information technology systems.
Our customers and clients may engage other financial service providers, and the resulting loss of business may harm our results of operations or financial condition. Our sales representatives are not captive and may sell products of our competitors. We sell our annuity and life insurance products through independent sales representatives.
Our customers and clients may engage other financial service providers, and the resulting loss of business may harm our results of operations or financial condition. The sales representatives through which LFD distributes our products are not captive and may sell products of our competitors. We distribute our annuity and life insurance products through independent sales representatives and other intermediaries.
These representatives are not captive, which means they may also sell our competitors’ products. If our competitors offer products that are more attractive than ours or pay higher commission rates to the sales representatives than we do, these representatives may concentrate their efforts in selling our competitors’ products instead of ours. Item 1B. Unresolved Staff Comments None.
These representatives are not captive, which means they may also sell our competitors’ products. If our competitors offer products that are more 34 Table of Contents attractive than ours or pay higher commission rates to the sales representatives than we do, these representatives may concentrate their efforts in selling our competitors’ products instead of ours. Item 1B.
The foregoing regulatory or governmental bodies, as well as the DOL and others, have the authority to review our products and business practices and those of our agents, advisers, registered representatives, associated persons and employees.
The foregoing regulatory or governmental bodies, as well as state insurance regulators, the DOL and others, have the authority to review our products and business practices and those of agents and advisers that distribute our products, as well as of our registered representatives, associated persons and employees.
In periods of increasing or high interest rates, such as that we are experiencing currently, while higher interest rates will lead to higher yields on our asset portfolios, such increases in yield may be more than offset by increases in crediting rates necessary to keep our interest-sensitive products competitive and potentially higher borrowing costs, thus lowering our spreads.
In periods of increasing or high interest rates, such as that we have been experiencing the last couple of years, while higher interest rates will lead to higher yields on our asset portfolios, such increases in yield may be more than offset by increases in crediting rates necessary to keep our interest-sensitive products competitive and potentially higher borrowing costs, thus lowering our spreads.
Business – Regulatory – Privacy and Cybersecurity Regulation.” Acquisitions and dispositions of businesses may not produce anticipated benefits and could result in operating difficulties, unforeseen liabilities or asset impairments, which may adversely affect our operating results and financial condition. We may from time to time engage in acquisitions of businesses.
Acquisitions and dispositions of businesses may not produce anticipated benefits and could result in operating difficulties, unforeseen liabilities or asset impairments, which may adversely affect our operating results and financial condition. We may from time to time engage in acquisitions of businesses.
Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm our businesses. We are, and in the future may be, subject to legal and regulatory actions in the ordinary course of our business.
Business – Regulatory – Other Federal Legislation – Tax Legislation.” Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm our businesses. We are, and in the future may be, subject to legal and regulatory actions in the ordinary course of our business.
Cybersecurity.” We are also subject to information security laws and regulations that impose governance and compliance obligations applicable to our business. For more information, see “Item 1.
For more information on our cybersecurity risk management and strategy and governance, see “Item 1C. Cybersecurity.” We are also subject to information security laws and regulations that impose governance and compliance obligations applicable to our business. For more information, see “Item 1.
Our insurance subsidiaries are subject to extensive supervision and regulation in the states in which we do business. The insurance departments of the domiciliary states exercise principal regulatory jurisdiction over our insurance subsidiaries.
Our insurance subsidiaries are subject to extensive supervision and regulation in the states, territories and countries in which they are licensed to do business. The insurance departments of the domiciliary jurisdiction exercise principal regulatory jurisdiction over our insurance subsidiaries.
For example, the NAIC is considering modifications to the economic scenario generator used to calculate annuity and life reserves according to the Valuation Manual (e.g., VM-20 and VM-21) and the required capital for these annuity and life contracts, as well as certain fixed annuity and single premium life insurance products, which could affect the level and volatility of statutory reserves and required capital for products in scope.
In addition, the NAIC is considering modifications to the economic scenario generator used to calculate annuity and life reserves according to the Valuation Manual (e.g., VM-20 and VM-21) and the required capital for these annuity and life contracts, which could affect the level and volatility of statutory reserves and required capital for products in scope.
In addition, state insurance holding company laws impose restrictions on certain inter-company transactions and limitations on the amount of dividends that insurance subsidiaries can pay. State insurance regulators and the NAIC regularly re-examine existing laws and regulations applicable to insurance companies and their products.
In addition, state insurance holding company laws impose restrictions on certain inter-company transactions and limitations on the amount of dividends that insurance subsidiaries can pay. See “Item 1. Business – Regulatory – Insurance Regulation” for more information. Insurance regulators and the NAIC regularly re-examine existing laws and regulations applicable to insurance companies and their products.
For more information on goodwill, see “Summary of Critical Accounting Estimates – Goodwill and Other Intangible Assets ” in the MD&A and Note 9 .
For more information on goodwill, see “Summary of Critical Accounting Estimates – Goodwill and Other Intangible Assets” in the MD&A and Note 8.
In addition, statutory capital requirements for certain fixed annuity and single premium life insurance products incorporate stochastic projections that can result in increased capital requirements, particularly as interest rates increase, which may affect our reported RBC ratio. Increases in interest rates have in the past and may in the future, cause increased surrenders and withdrawals of insurance products.
In addition, statutory capital requirements for certain fixed annuity and single premium life insurance products incorporate stochastic projections that can result in increased capital requirements, particularly as interest rates increase, which may affect our reported RBC ratio.
Our information systems or the information systems of third parties on which we rely may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expense.
Our information systems may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expense. Our information systems are critical to the operation of our business.
If the final DOL fiduciary rule or any additional new rules that are implemented are more onerous than Regulation Best Interest, or are not coordinated with Regulation Best Interest, the impact on our business could be substantial.
For example, if any new rules are implemented that are more onerous than Regulation Best Interest, or are not coordinated with Regulation Best Interest, the impact on our business could be substantial.
It is possible that future accounting standards we are required to adopt could change the current accounting treatment that we apply to the consolidated financial statements and that such changes could have a material adverse effect on our financial condition and results of operations. In addition, our domestic insurance subsidiaries are subject to SAP and specific state insurance regulations.
It is possible that future accounting standards we are required to adopt could change the current accounting treatment that we apply to the consolidated financial statements and that such changes could have a material adverse effect on our financial condition and results of operations.
One statutory provision prohibits, except under 25 Table of Contents specified circumstances, LNC from engaging in any business combination with any shareholder who owns 10% or more of our common stock (which shareholder, under the statute, would be considered an “interested shareholder”) for a period of five years following the time that such shareholder became an interested shareholder, unless such business combination is approved by the Board of Directors prior to such person becoming an interested shareholder.
One statutory provision prohibits, except under specified circumstances, LNC from engaging in any business combination with any shareholder who owns 10% or more of our common stock (which shareholder, under the statute, would be considered an “interested shareholder”) for a period of five years following the time that such shareholder became an interested shareholder, unless such business combination is approved by the Board of Directors prior to such person becoming an interested shareholder. 26 Table of Contents In addition to the anti-takeover provisions of Indiana law, there are other factors that may delay, deter or prevent our change in control.
Compliance with existing and emerging rules and regulations governing the use of artificial intelligence (“AI”) could result in increased compliance costs and/or lead to changes in business practices and policies, and challenges with properly managing the use of AI could result in reputational harm, competitive harm and legal liability. We analyze personal information to better manage our business.
Compliance with existing and emerging rules and regulations governing the use of AI could result in increased compliance costs and/or lead to changes in business practices and policies, and challenges with properly managing the use of AI could result in reputational harm, competitive harm and legal liability.
We also may not realize the anticipated profit on a disposition or incur a loss on the disposition. In anticipation of any disposition, we may need to restructure our operations, which could disrupt such operations and affect our ability to recruit key personnel needed to operate and grow such business pending the completion of such transaction.
In anticipation of any disposition, we may need to restructure our operations, which could disrupt such operations and affect our ability to recruit key personnel needed to operate and grow such business pending the completion of such transaction.
Due to the COVID-19 pandemic that emerged in the first quarter of 2020, we experienced higher mortality claim payments due to an elevation in claim incidence. In addition, we experienced an increase in short-term and long-term disability claims related to the pandemic that negatively impacted our earnings. We expect COVID-19-related mortality to continue to follow U.S. death trends.
For example, due to the COVID-19 29 Table of Contents pandemic that emerged in the first quarter of 2020, we experienced higher mortality claim payments due to an elevation in claim incidence. In addition, we experienced an increase in short-term and long-term disability claims related to the pandemic that negatively impacted our earnings.
For additional information regarding cybersecurity risks, see “Operational Matters – Our information systems or the information systems of third parties on which we rely may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expenses,” below.
For additional information regarding cybersecurity risks, see “Operational Matters – Our information systems may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expenses,” and “– We are subject to third-party information system and other operational risks due to our reliance on third-party vendors and suppliers and the outsourcing of certain of our business operations” below.
The amount and timing of income from such investment funds tends to be uneven as a result of the performance of the underlying investments, including private equity investments.
We invest a portion of our investments in investment funds, many of which make private equity investments. The amount and timing of income from such investment funds tends to be uneven as a result of the performance of the underlying investments, including private equity investments.
See “ Item 1. Business – Regulatory – Insurance Regulation .” Anti-takeover provisions could delay, deter or prevent our change in control, even if the change in control would be beneficial to LNC shareholders. We are an Indiana corporation subject to Indiana state law.
Business – Regulatory – Insurance Regulation.” Anti-takeover provisions could delay, deter or prevent our change in control, even if the change in control would be beneficial to LNC shareholders. We are an Indiana corporation subject to Indiana state law. Certain provisions of Indiana law could interfere with or restrict takeover bids or other change in control events affecting us.
Most of these factors are outside of our control. Our credit and insurer financial strength ratings are significantly influenced by the statutory surplus amounts and RBC ratios of our insurance company subsidiaries. The RBC ratio of LNL is an important factor in the determination of the credit and financial strength ratings of LNC and its subsidiaries.
Most of these factors are outside of our control. Our credit and insurer financial strength ratings are significantly influenced by the statutory surplus amounts and RBC ratios of our insurance company subsidiaries.
For example, in March 2022, the SEC proposed extensive rule changes that would require companies to include certain climate-related disclosures in their registration statements and periodic reports filed with the SEC, and in October 2023, the Governor of California signed two bills into law that will require significant climate-related disclosures (in some cases beyond the disclosures proposed by the SEC’s rule) by large entities doing business in that state.
For example, in March 2024, the SEC adopted extensive rule changes, which have been stayed pending the outcome of litigation challenges, that would require companies to include certain climate-related disclosures in their registration statements and periodic reports filed with the SEC, and in October 2023, the Governor of California signed two bills into law that were further amended in September 2024 and, beginning in 2026, will require significant climate-related disclosures (in some cases beyond the disclosures required by the SEC’s rule) by large entities doing business in that state.
See also “Operational Matters – Our information systems or the information systems of third parties on which we rely may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expense,” below.
See also “Operational Matters – Our information systems may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expense,” and “– We are subject to third-party information system and other operational risks due to our reliance on third-party vendors and suppliers and the outsourcing of certain of our business operations” below.
The assumptions and estimates we use in connection with establishing and carrying our reserves are inherently uncertain. Accordingly, we cannot determine with precision the ultimate amount or the timing of the payment of actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level we assume prior to payment of benefits or claims.
Accordingly, we cannot determine with precision the ultimate amount or the timing of the payment of actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level we assume prior to payment of benefits or claims.
Implementation of the provisions of the European Market Infrastructure Regulation relating to the regulation of derivatives transactions subjects us to margin requirements, the impact of which remains uncertain.
Implementation of the provisions of the European Market Infrastructure Regulation relating to the regulation of derivatives transactions subjects us to margin requirements, the impact of which remains uncertain. We use derivatives transactions to mitigate many types of risk in our business.
For our insurance products, we calculate these reserves based on many assumptions and estimates, including, but not limited to, estimated premiums we will receive over the assumed life of the policies, the timing of the events covered by the insurance policies, the lapse rate of the policies, the amount of benefits or claims to be paid and the investment returns on the assets we purchase with the premiums we receive. 27 Table of Contents The sensitivity of our statutory reserves and surplus established for our variable annuity base contracts and riders and VUL contracts to changes in the equity markets will vary depending on the magnitude of the decline.
For our insurance products, we calculate these reserves based on many assumptions and estimates, including, but not limited to, estimated premiums we will receive over the assumed life of the policies, the timing of the events covered by the insurance policies, the lapse rate of the policies, the amount of benefits or claims to be paid and the investment returns on the assets we purchase with the premiums we receive.
We may face adverse regulatory, investor, customer, media or public scrutiny leading to business, reputational or legal challenges, which could adversely affect our reputation or otherwise adversely affect our business and results of operations, including but not limited to the ability to sell products, policyholder retention and increased cost of financing. 23 Table of Contents Federal or state regulatory actions could result in substantial fines, penalties or prohibitions or restrictions on our business activities that could materially adversely affect our business, results of operations or financial condition.
We may face adverse regulatory, investor, customer, media or public scrutiny leading to business, reputational or legal challenges, which could adversely affect our reputation or otherwise adversely affect our business and results of operations, including but not limited to the ability to sell products, policyholder retention and increased cost of financing.
In addition, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of statutory capital we must hold in order to maintain our current ratings.
Business – Financial Strength Ratings” and “Liquidity and Capital Resources – Ratings” in the MD&A for more information on our ratings and ratings outlooks. In addition, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of statutory capital we must hold in order to maintain our current ratings.
If we were unable to access our facility in such circumstances, it could materially impact LNL’s capital position. The availability of these facilities could be critical to our credit and financial strength ratings and our ability to meet our obligations as they come due in a market when alternative sources of credit are tight.
The availability of these facilities could be critical to our credit and financial strength ratings and our ability to meet our obligations as they come due in a market when alternative sources of credit are tight.
In August 2022, the Inflation Reduction Act of 2022 was passed by the U.S. Congress and signed into law by President Biden. The Inflation Reduction Act of 2022 established a new 15% corporate alternative minimum tax for corporations whose average adjusted net income for any consecutive three-year period beginning after December 31, 2022, exceeds $1.0 billion.
In August 2022, the Inflation Reduction Act of 2022 established a new 15% corporate alternative minimum tax for corporations whose average adjusted net income for any consecutive three-year period beginning after December 31, 2022, exceeds $1.0 billion. This provision became effective for tax years beginning after December 31, 2022.
This provision is effective for tax years beginning after December 31, 2022. While we have determined that we were not within the scope of the corporate alternative minimum tax for 2023, we will continue to evaluate the potential impact of this new alternative minimum tax on our business, results of operations and financial condition in future periods.
While we have determined that we were not within the scope 25 Table of Contents of the corporate alternative minimum tax for 2023 or 2024, we will continue to evaluate the potential impact of this new alternative minimum tax on our business, results of operations and financial condition in future periods. See also “Item 1.
Our information systems are critical to the operation of our business. We collect, process, maintain, retain and distribute large amounts of personal financial and health information and other confidential and sensitive data about individuals with whom we interact in the 30 Table of Contents ordinary course of our business.
We collect, process, maintain, retain and distribute large amounts of personal financial and health information and other confidential and sensitive data about individuals with whom we interact in the ordinary course of our business. Our business therefore depends on the public’s willingness to entrust us with their personal information.
We compete based on a number of factors, including name recognition, service, the quality of investment advice, investment performance, product features, price, perceived financial strength and claims-paying and credit ratings. Our competitors include insurers, broker-dealers, investment advisers, asset managers, hedge funds and other financial institutions.
Competition Intense competition could negatively affect our ability to maintain or increase our profitability. Our businesses are intensely competitive. We compete based on a number of factors, including name recognition, service, investment performance, product features, price, perceived financial strength and claims-paying and credit ratings. Our competitors include insurers, broker-dealers, asset managers, hedge funds and other financial institutions.
In periods of high or increasing interest rates, policy loans and surrenders and withdrawals of life insurance policies and annuity contracts may increase as contract holders seek to buy products with perceived higher returns. This process may lead to a flow of cash out of our businesses.
Increases in interest rates or sustained high interest rates, have in the past and may in the future, cause increased surrenders and withdrawals of insurance products. In periods of high or increasing interest rates, policy loans and surrenders and withdrawals of life insurance policies and annuity contracts may increase as contract holders seek to buy products with perceived higher returns.
Changes in U.S. federal income tax law could impact our tax costs and the products that we sell. Changes in tax laws or interpretations of such laws could increase our corporate taxes and negatively impact our results of operations and financial condition.
Changes in tax laws or interpretations of such laws could increase our corporate taxes and negatively impact our results of operations and financial condition.
The insurance holding company acts and regulations restrict the ability of any person to obtain control of an insurance company without prior regulatory approval.
As an insurance holding company, we are regulated as an insurance holding company and are subject to the insurance holding company acts of the states in which our insurance company subsidiaries are domiciled. The insurance holding company acts and regulations restrict the ability of any person to obtain control of an insurance company without prior regulatory approval.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+1 added−1 removed22 unchanged
Biggest changeIn addition, as discussed above, the Company’s Internal Audit team reports to the Audit Committee the results of its annual security audit focused on cybersecurity risks. The Company’s Chief Compliance Officer reports key Privacy risk indicators and statistics (including those related to cybersecurity risks) to the Audit Committee on a quarterly basis.
Biggest changeThe Company’s Chief Compliance Officer reports key Privacy risk indicators and statistics (including those related to cybersecurity risks) to the Audit Committee on a quarterly basis. Our current CISO has over 20 years of experience in the field of cybersecurity and holds a Certified Information Security Systems Professional designation.
The team follows documented processes for investigation, research, assessment, notification, regulatory reporting and, if necessary, escalation to management, and such processes have been integrated into our Information Security incident response program. The Information Security team works closely with our Privacy team to respond to any cybersecurity incidents involving personal information.
The team follows documented processes for investigation, research, assessment, notification, regulatory reporting and, if necessary, escalation to management, and such processes have 35 Table of Contents been integrated into our Information Security incident response program. The Information Security team works closely with our Privacy team to respond to any cybersecurity incidents involving personal information.
We also have a Corporate Enterprise Risk and Capital Committee, made up of members of 35 Table of Contents senior management and the Company’s Chief Risk Officer, which provides oversight of our enterprise-wide risk structure and of our processes to identify, measure, monitor and manage significant risks, including, but not limited to, cybersecurity risk.
We also have a Corporate Enterprise Risk and Capital Committee, made up of members of senior management and the Company’s Chief Risk Officer, which provides oversight of our enterprise-wide risk structure and of our processes to identify, measure, monitor and manage significant risks, including, but not limited to, cybersecurity risk. The Information Security organization is led by our CISO.
Risk Factors – Operational Matters – Our information systems or the information systems of third parties on which we rely may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expenses” and ‘Item 1A.
Risk Factors – Operational Matters – Our information systems may experience interruptions, breaches in security and/or a failure of disaster recovery systems that could result in a loss or disclosure of confidential information, damage to our reputation, impairment of our ability to conduct business effectively and increased expenses,” “Item 1A.
The Information Security organization is led by our CISO. The head of each of the four divisions of our Information Security team reports directly to the CISO. The CISO reports directly to the Company’s Chief Information Officer and Head of IT (“CIO”), who is a member of the Company’s Senior Management Committee.
The head of each of the four divisions of our Information Security team reports directly to the CISO. The CISO reports directly to the Company’s Chief Information Officer (“CIO”), who is a member of the Company’s Senior Management Committee. As a result, all information security personnel report into the CISO, and ultimately the CIO.
In addition, the Company’s Internal Audit team performs an annual security audit that focuses on cybersecurity risks, the results of which are reported to the Company’s IT leadership team and the 34 Table of Contents Audit Committee of the Company’s Board of Directors.
In addition, the Company’s Internal Audit team performs an annual security audit that focuses on cybersecurity risks, the results of which are reported to the Company’s IT leadership team and the Audit Committee of the Company’s Board of Directors. This audit process provides an additional layer of support to help ensure that cybersecurity risks are managed and responded to appropriately.
Our current CISO has over 20 years of experience in the field of cybersecurity and holds a Certified Information Security Systems Professional designation. The CISO has a staff of more than 100 employees dedicated to protecting the data and systems belonging to the Company, our customers, business partners and consumers.
The CISO has a staff of more than 100 employees dedicated to protecting the data and systems belonging to the Company, our customers, business partners and consumers. 36 Table of Contents
As a result, all information security personnel report into the CISO, and ultimately the CIO. The CISO also reports indirectly to the Audit Committee of the Board of Directors. Biannually, the CISO reports to the Audit Committee on the cybersecurity risks facing the Company and cybersecurity developments generally.
The CISO also reports indirectly to the Audit Committee of the Board of Directors. Biannually, the CISO reports to the Audit Committee on the cybersecurity risks facing the Company and cybersecurity developments generally. In addition, as discussed above, the Company’s Internal Audit team reports to the Audit Committee the results of its annual security audit focused on cybersecurity risks.
Removed
This audit process provides an additional layer of support to help ensure that cybersecurity risks are managed and responded to appropriately.
Added
Risk Factors – Operational Matters – We are subject to third-party information system and other operational risks due to our reliance on third-party vendors and suppliers and the outsourcing of certain of our business operations” and “Item 1A.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed0 unchanged
Biggest changeWe owned 0 .8 million square feet of office space in Greensboro, North Carolina, primarily for our Life Insurance segment. We owned or leased 0.3 million square feet of office space in Omaha, Nebraska, 0.2 million square feet of office space in Atlanta, Georgia, and 0.1 million square feet in Dover, New Hampshire, primarily for our Group Protection segment.
Biggest changeWe owned or leased 0.3 million square feet of office space in Omaha, Nebraska, and 0.1 million square feet in Dover, New Hampshire, primarily for our Group Protection segment. An additional 0.3 million square feet of office space is leased in other U.S. cities for branch offices.
Item 2. Properties As of December 31, 2023, LNC and our subsidiaries owned or leased 2 .5 million square feet of office and other space. We leased less than 0.1 million square feet of office space in Philadelphia, Pennsylvania, which includes space for LFN.
Item 2. Properties As of December 31, 2024, LNC and our subsidiaries owned or leased 2.3 million square feet of office and other space. We leased 0.2 million square feet of office space in Radnor, Pennsylvania, for our corporate center and for LFD.
We leased 0.2 million square feet of office space in Radnor, Pennsylvania, for our corporate center and for LFD. We leased 0.6 million square feet of office space in Fort Wayne, Indiana, primarily for our Annuities and Retirement Plan Services segments.
We leased 0.6 million square feet of office space in Fort Wayne, Indiana, primarily for our Annuities and Retirement Plan Services segments. We owned 0.8 million square feet of office space in Greensboro, North Carolina, primarily for our Life Insurance segment.
Removed
An additional 0.3 million square feet of office space is leased in other U.S. cities for branch offices. This discussion regarding properties does not include information on field offices and investment properties.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

15 edited+3 added−5 removed3 unchanged
Biggest changeChristopher Neczypor 43 Executive Vice President and Chief Financial Officer (since February 2023). Until February 2023, Executive Vice President and Chief Strategy Officer (since November 2021). Senior Vice President and Head of Alternatives, Structured Credit and Investment Strategy (2020 - November 2021). Senior Vice President and Head of Investment Risk and Strategy (April 2018 - 2020). Andrew D.
Biggest changeSenior Vice President and Head of Alternatives, Structured Credit and Investment Strategy (2020 - November 2021). Senior Vice President and Head of Investment Risk and Strategy (April 2018 - 2020). Andrew D. Rallis 62 Executive Vice President and Chief Risk Officer (since May 2023). Executive Vice President and Global Chief Actuary (July 2012 - May 2023), MetLife, Inc.
For the quarter ended December 31, 2023, there were no shares purchased as part of publicly announced plans or programs. (2) On November 10, 2021, our Board of Directors authorized an increase in our securities repurchase authorization, bringing the total aggregate repurchase authorization to $1.5 billion. As of December 31, 2023, our remaining security repurchase authorization was $714 million.
For the quarter ended December 31, 2024, there were no shares purchased as part of publicly announced plans or programs. (2) On November 10, 2021, our Board of Directors authorized an increase in our securities repurchase authorization, bringing the total aggregate repurchase authorization to $1.5 billion. As of December 31, 2024, our remaining security repurchase authorization was $714 million.
Our stock repurchases may be effected from time to time through open market purchases or in privately negotiated transactions and may be made pursuant to an accelerated share repurchase agreement or Rule 10b5-1 plan. Item 6. [Reserved] 38 Table of Contents Item 7.
Our stock repurchases may be effected from time to time through open market purchases or in privately negotiated transactions and may be made pursuant to an accelerated share repurchase agreement or Rule 10b5-1 plan. Item 6. [Reserved] 39 Table of Contents Item 7.
(b) Not Applicable (c) Issuer Purchases of Equity Securities The following summarizes purchases of equity securities by the issuer during the quarter ended December 31, 2023 (dollars in millions, except per share data): (c) Total Number (d) Approximate Dollar (a) Total of Shares Value of Shares Number (b) Average Purchased as Part of that May Yet Be of Shares Price Paid Publicly Announced Purchased Under the Period Purchased (1) per Share Plans or Programs (2) Plans or Programs (2) 10/1/23 – 10/31/23 – $ – – $ 714 11/1/23 – 11/30/23 – – – 714 12/1/23 – 12/31/23 – – – 714 (1) Of the total number of shares purchased, no shares were received in connection with the exercise of stock options and related taxes.
(b) Not Applicable (c) Issuer Purchases of Equity Securities The following summarizes purchases of equity securities by the issuer during the quarter ended December 31, 2024 (dollars in millions, except per share data): (c) Total Number (d) Approximate Dollar (a) Total of Shares Value of Shares Number (b) Average Purchased as Part of that May Yet Be of Shares Price Paid Publicly Announced Purchased Under the Period Purchased (1) per Share Plans or Programs (2) Plans or Programs (2) 10/1/24 – 10/31/24 – $ – – $ 714 11/1/24 – 11/30/24 – – – 714 12/1/24 – 12/31/24 – – – 714 (1) Of the total number of shares purchased, no shares were received in connection with the exercise of stock options and related taxes.
Bronchetti 44 Executive Vice President (since May 2022), Chief Investment Officer (since November 2021) and Head of Hedging (since May 2023) and Sustainability (since May 2022), and President, Lincoln Investment Advisors Corporation (2) (since March 2016). Head of Risk (May 2022 - May 2023). Head of Corporate Fixed Income (February 2020 - November 2021).
Bronchetti 45 Executive Vice President (since May 2022), Chief Investment Officer (since November 2021) and Head of Hedging (since May 2023) and Sustainability (since May 2022), and President, Lincoln Investment Advisors Corporation (2) (since March 2016). Head of Risk (May 2022 - May 2023). Head of Corporate Fixed Income (February 2020 - November 2021).
John C. Kennedy 57 Executive Vice President (since March 2021) and Chief Distribution and Brand Officer (assuming the role of head of distribution in March 2021 and the role of head of brand in March 2022), and President, LFD (2) (since March 2021). Senior Vice President and Head of Retirement Solutions Distribution for LFD (September 2009 - March 2021).
Kennedy 58 Executive Vice President (since March 2021) and Chief Distribution and Brand Officer (assuming the role of head of distribution in March 2021 and the role of head of brand in March 2022), and President, LFD (2) (since March 2021). Senior Vice President and Head of Retirement Solutions Distribution for LFD (September 2009 - March 2021).
For potential restrictions on our ability to pay dividends, see “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Restrictions on Subsidiaries’ Dividends ” and Note 19 in the accompanying notes to the consolidated financial statements presented in “ Item 8.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Restrictions on Subsidiaries’ Dividends ” and Note 23 in the accompanying notes to the consolidated financial statements presented in “ Item 8.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations Page Forward-Looking Statements – Cautionary Language 40 Introduction 41 Executive Summary 41 Summary of C ritical Accounting Estimates 43 Results of Consolidated Operations 54 Results of Annuities 55 Results of Life Insurance 60 Results of Group Protection 66 Results of Retirement Plan Services 69 Results of Other Operations 73 Consolidated Investments 75 Reinsurance 87 Liquidity and Capital Resources 88 39 Table of Contents The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the financial condition as of December 31, 2023, compared with December 31, 2022, and the results of operations in 2023 compared to 2022 of Lincoln National Corporation and its consolidated subsidiaries.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations Page Forward-Looking Statements – Cautionary Language 41 Introduction 42 Executive Summary 42 Summary of C ritical Accounting Estimates 44 Results of Consolidated Operations 55 Results of Annuities 57 Results of Life Insurance 62 Results of Group Protection 68 Results of Retirement Plan Services 72 Results of Other Operations 76 Consolidated Investments 78 Reinsurance 90 Liquidity and Capital Resources 91 40 Table of Contents The following Management’s Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”) is intended to help the reader understand the financial condition as of December 31, 2024, compared with December 31, 2023, and the results of operations in 2024 and 2023 compared with the immediately preceding year of Lincoln National Corporation and its consolidated subsidiaries.
Item 4. Mine Safety Disclosures Not applicable. 36 Table of Contents Information About our Executive Officers Our Executive Officers as of February 16, 2024, were as follows: Name Age (1) Position with LNC and Business Experience During the Past Five Years Ellen G. Cooper 59 President, Chief Executive Officer and Director (since May 2022).
Item 4. Mine Safety Disclosures Not applicable. 37 Table of Contents Information About our Executive Officers Our Executive Officers as of February 13, 2025, were as follows: Name Age (1) Position with LNC and Business Experience During the Past Five Years Ellen G.
Until May 2022, Executive Vice President (since August 2012), Head of Enterprise Risk (since 2019) and Head of Annuity Solutions Group (since March 2021). Chief Investment Officer (August 2012 - November 2021). Craig T. Beazer 56 Executive Vice President and General Counsel (since December 2020).
Cooper 60 President, Chief Executive Officer and Director (since May 2022); Chairman of the Board of Directors (since May 2023). Until May 2022, Executive Vice President (since August 2012), Head of Enterprise Risk (since 2019) and Head of Annuity Solutions Group (since March 2021). Chief Investment Officer (August 2012 - November 2021). Craig T.
Executive Vice President, General Counsel (January 2020 - December 2020) and Secretary (July 2019 - December 2020), KeyCorp, a bank-based financial services company. Deputy General Counsel, KeyCorp (July 2018 - January 2020). Deputy General Counsel and Corporate Secretary, The Bank of New York Mellon Corporation, a global investments company (July 2015 - July 2018). Jayson R.
Beazer 57 Executive Vice President and General Counsel (since December 2020). Executive Vice President, General Counsel (January 2020 - December 2020) and Secretary (July 2019 - December 2020), KeyCorp, a bank-based financial services company. Deputy General Counsel, KeyCorp (July 2018 - January 2020). Jayson R.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Stock Market and Dividend Information Our common stock is traded on the New York stock exchange under the symbol LNC. As of February 16, 2024, the number of shareholders of record of our common stock was 5,260.
(2) Denotes an affiliate of LNC. 38 Table of Contents PART II Item 5 . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Stock Market and Dividend Information Our common stock is traded on the New York stock exchange under the symbol LNC.
Rallis 61 Executive Vice President and Chief Risk Officer (since May 2023). Executive Vice President and Global Chief Actuary (July 2012 - May 2023), MetLife, Inc. James Reid 57 Executive Vice President and President, Workplace Solutions (since August 2022). President and Chief Executive Officer (April 2021 - August 2022), Versant Health, a managed vision care company.
James Reid 58 Executive Vice President and President, Workplace Solutions (since August 2022). President and Chief Executive Officer (April 2021 - August 2022), Versant Health, a managed vision care company. Executive Vice President and Head of Global Employee Benefits (January 2016 - March 2021), MetLife, Inc. Sean N.
The dividend on our common stock is declared each quarter by our Board of Directors if we are eligible to pay dividends and the Board determines that we will pay dividends. In determining dividends, the Board takes into consideration items such as our financial condition, including current and expected earnings, projected cash flows and anticipated financing needs.
In determining dividends, the Board takes into consideration items such as our financial condition, including current and expected earnings, projected cash flows and anticipated financing needs. For potential restrictions on our ability to pay dividends, see “ Item 7.
Senior Vice President, Head of Technology (March 2015 - December 2015). Senior Vice President, Head of Shared Services and Technology (January 2010 - March 2015). Sean N. Woodroffe 60 Executive Vice President and Chief People, Culture and Communications Officer (since May 2023). Senior Executive Vice President and Chief People Officer (March 2018 - April 2023), TIAA, a financial service provider.
Woodroffe 61 Executive Vice President and Chief People, Culture and Communications Officer (since May 2023). Senior Executive Vice President and Chief People Officer (March 2018 - April 2023), TIAA, a financial service provider. (1) Age shown is based on the officer’s age as of February 13, 2025.
Removed
Managing Director, Head of Manager Selection & Research (July 2015 - March 2016). Matthew Grove 48 Executive Vice President and President of Retail Solutions (since July 2022). Chief Executive Officer and President (January 2021 - July 2022), Resolution Life USA, a global life insurance company. Co-Chief Operating Officer and Executive Vice President (2017 - 2020), New York Life Insurance Company.
Added
Managing Director, Head of Manager Selection & Research (July 2015 - March 2016). Jennifer Charters 52 Executive Vice President and Chief Information Officer (since November 2024). Executive Vice President and Chief Information Officer, Flagstar Bank (June 2018 - August 2024). John C.
Removed
Executive Vice President and Head of Global Employee Benefits (January 2016 - March 2021), MetLife, Inc. Kenneth S. Solon 63 Executive Vice President, Chief Information Officer, Head of IT and Digital (since July 2018) and Head of Enterprise Services (since March 2021). Executive Vice President, Chief Information Officer and Head of Administrative Services (January 2016 - July 2018).
Added
Brian Kroll 63 Executive Vice President, Head of Retail Life and Annuity Solutions (since May 2024). Senior Vice President, Head of Annuity Solutions (April 2011 - July 2022). Christopher Neczypor 44 Executive Vice President and Chief Financial Officer (since February 2023). Until February 2023, Executive Vice President and Chief Strategy Officer (since November 2021).
Removed
Senior Vice President and Head of HR, Client Services & Technology (July 2017 - February 2018), TIAA. (1) Age shown is based on the officer’s age as of February 16, 2024. (2) Denotes an affiliate of LNC. 37 Table of Contents PART II Item 5 .
Added
As of February 13, 2025, the number of shareholders of record of our common stock was 4,985. The dividend on our common stock is declared each quarter by our Board of Directors if we are eligible to pay dividends and the Board determines that we will pay dividends.
Removed
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “ Part II – Item 7.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K/A for the year ended December 31, 2022, as updated by our Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on May 22, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

330 edited+132 added−117 removed373 unchanged
Biggest changePhiladelphia, Pennsylvania February 22, 2024 106 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except share data) As of December 31, 2023 2022 ASSETS Investments: Fixed maturity available-for-sale securities, at fair value (amortized cost: 2023 - $97,433 ; 2022 - $111,707; allowance for credit losses: 2023 - $19 ; 2022 - $22) $ 88,738 $ 99,736 Trading securities 2,359 3,498 Equity securities 306 427 Mortgage loans on real estate, net of allowance for credit losses (portion at fair value: 2023 - $288; 2022 - $487) 18,963 18,301 Policy loans 2,476 2,359 Derivative investments 6,474 3,594 Other investments 5,015 3,739 Total investments 124,331 131,654 Cash and invested cash 3,365 3,343 Deferred acquisition costs, value of business acquired and deferred sales inducements 12,397 12,235 Reinsurance recoverables, net of allowance for credit losses 29,843 19,953 Deposit assets, net of allowance for credit losses 28,789 11,628 Market risk benefit assets 3,894 2,807 Accrued investment income 1,082 1,253 Goodwill 1,144 1,144 Other assets 9,311 6,778 Separate account assets 158,257 143,536 Total assets $ 372,413 $ 334,331 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Policyholder account balances $ 120,737 $ 114,435 Future contract benefits 39,864 38,826 Funds withheld reinsurance liabilities 17,641 5,740 Market risk benefit liabilities 1,716 2,078 Deferred front-end loads 5,901 5,091 Payables for collateral on investments 8,105 6,712 Short-term debt 250 500 Long-term debt 5,699 5,955 Other liabilities 7,350 6,356 Separate account liabilities 158,257 143,536 Total liabilities 365,520 329,229 Contingencies and Commitments (See Note 18) Stockholders’ Equity Preferred stock – 10,000,000 shares authorized: Series C preferred stock – 20,000 shares authorized, issued and outstanding as of December 31, 2023 493 493 Series D preferred stock – 20,000 shares authorized, issued and outstanding as of December 31, 2023 493 493 Common stock – 800,000,000 shares authorized; 169,666,137 and 169,220,511 shares issued and outstanding as of December 31, 2023, and December 31, 2022, respectively 4,605 4,544 Retained earnings 4,778 5,924 Accumulated other comprehensive income (loss) (3,476) (6,352) Total stockholders’ equity 6,893 5,102 Total liabilities and stockholders’ equity $ 372,413 $ 334,331 See accompanying Notes to Consolidated Financial Statements 107 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions, except per share data) For the Years Ended December 31, 2023 2022 2021 Revenues Insurance premiums $ 3,672 $ 6,087 $ 5,617 Fee income 5,467 5,603 6,039 Net investment income 5,879 5,515 6,111 Realized gain (loss) (4,311) 840 (867) Amortization of deferred gain (loss) on business sold through reinsurance 38 42 38 Other revenues 900 723 777 Total revenues 11,645 18,810 17,715 Expenses Benefits 6,138 8,479 8,503 Interest credited 3,248 2,877 2,929 Market risk benefit (gain) loss (2,264) (3,246) (3,753) Policyholder liability remeasurement (gain) loss (152) 2,766 (183) Commissions and other expenses 5,339 5,125 5,219 Interest and debt expense 331 283 270 Spark program expense 153 167 87 Impairment of intangibles – 634 – Total expenses 12,793 17,085 13,072 Income (loss) before taxes (1,148) 1,725 4,643 Federal income tax expense (benefit) (396) 367 865 Net income (loss) (752) 1,358 3,778 Other comprehensive income (loss), net of tax: Unrealized investment gain (loss) 3,715 (18,059) (3,287) Market risk benefit non-performance risk gain (loss) (671) (210) (923) Policyholder liability discount rate remeasurement gain (loss) (160) 2,012 591 Foreign currency translation adjustment 8 (20) (2) Funded status of employee benefit plans (16) (59) 47 Total other comprehensive income (loss), net of tax 2,876 (16,336) (3,574) Comprehensive income (loss) $ 2,124 $ (14,978) $ 204 Net Income (Loss) Per Common Share Basic $ (4.92) $ 7.93 $ 20.17 Diluted (4.92) 7.78 19.96 Cash Dividends Declared Per Preferred Share Series C preferred stock $ 1,792.19 $ – $ – Series D preferred stock 2,306.25 – – Cash Dividends Declared Per Common Share $ 1.80 $ 1.80 $ 1.71 See accompanying Notes to Consolidated Financial Statements 108 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions) For the Years Ended December 31, 2023 2022 2021 Preferred Stock Balance as of beginning-of-year $ 986 $ – $ – Issuance of Series C preferred stock – 493 – Issuance of Series D preferred stock – 493 – Balance as of end-of-year 986 986 – Common Stock Balance as of beginning-of-year 4,544 4,735 5,082 Stock compensation/issued for benefit plans 61 40 85 Retirement of common stock/cancellation of shares – (231) (432) Balance as of end-of-year 4,605 4,544 4,735 Retained Earnings Balance as of beginning-of-year 5,924 5,196 8,686 Cumulative effect from adoption of new accounting standards – – (6,273) Net income (loss) (752) 1,358 3,778 Retirement of common stock – (319) (673) Preferred stock dividends declared (82) – – Common stock dividends declared (312) (311) (322) Balance as of end-of-year 4,778 5,924 5,196 Accumulated Other Comprehensive Income (Loss) Balance as of beginning-of-year (6,352) 9,984 8,931 Cumulative effect from adoption of new accounting standards – – 4,627 Other comprehensive income (loss), net of tax 2,876 (16,336) (3,574) Balance as of end-of-year (3,476) (6,352) 9,984 Total stockholders’ equity as of end-of-year $ 6,893 $ 5,102 $ 19,915 See accompanying Notes to Consolidated Financial Statements 109 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) For the Years Ended December 31, 2023 2022 2021 Cash Flows from Operating Activities Net income (loss) $ (752) $ 1,358 $ 3,778 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Realized (gain) loss 4,311 (840) 867 Market risk benefit (gain) loss (2,264) (3,246) (3,753) Sales and maturities (purchases) of trading securities, net 1,301 300 (87) Amortization of deferred gain (loss) on business sold through reinsurance (38) (42) (38) Impairment of intangibles – 634 – Net operating cash payments related to closing Fortitude Re reinsurance transaction (1,438) – – Change in: Deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads 637 488 475 Accrued investment income 4 (67) 16 Insurance liabilities and reinsurance-related balances (3,681) 4,419 (2,337) Accrued expenses 109 (91) 399 Federal income tax accruals (396) 421 864 Other 133 275 (401) Net cash provided by (used in) operating activities (2,074) 3,609 (217) Cash Flows from Investing Activities Purchases of available-for-sale securities and equity securities (11,131) (14,813) (16,915) Sales of available-for-sale securities and equity securities 4,013 2,297 2,268 Maturities of available-for-sale securities 5,670 5,453 9,621 Purchases of alternative investments (630) (664) (757) Sales and repayments of alternative investments 111 446 377 Issuance of mortgage loans on real estate (1,946) (2,507) (3,079) Repayment and maturities of mortgage loans on real estate 1,268 2,255 1,881 Repayment (issuance) of policy loans, net (119) 5 62 Net change in collateral on investments, certain derivatives and related settlements (260) (4,070) 3,261 Other (310) (48) (303) Net cash provided by (used in) investing activities (3,334) (11,646) (3,584) Cash Flows from Financing Activities Payment of long-term debt, including current maturities (500) (300) – Issuance of long-term debt, net of issuance costs – 296 – Payment related to modification or early extinguishment of debt – – (8) Payment related to sale-leaseback transactions (79) (70) (59) Proceeds from certain financing arrangements 86 186 159 Payment related to certain financing arrangements (49) – – Net financing cash proceeds related to closing Fortitude Re reinsurance transaction 1,246 – – Deposits of fixed account balances 16,404 16,203 13,426 Withdrawals of fixed account balances (10,660) (7,674) (7,174) Transfers from (to) separate accounts, net (624) 19 (175) Common stock issued for benefit plans (7) (16) 20 Issuance of preferred stock, net of issuance costs – 986 – Repurchase of common stock – (550) (1,105) Dividends paid to preferred stockholders (82) – – Dividends paid to common stockholders (305) (310) (319) Other – (2) (60) Net cash provided by (used in) financing activities 5,430 8,768 4,705 Net increase (decrease) in cash, invested cash and restricted cash 22 731 904 Cash, invested cash and restricted cash as of beginning-of-year 3,343 2,612 1,708 Cash, invested cash and restricted cash as of end-of-year $ 3,365 $ 3,343 $ 2,612 See accompanying Notes to Consolidated Financial Statements 110 Table of Contents LINCOLN NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
Biggest changePhiladelphia, Pennsylvania February 21, 2025 110 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except share data) As of December 31, 2024 2023 ASSETS Investments: Fixed maturity available-for-sale securities, at fair value (amortized cost: 2024 - $97,415 ; 2023 - $97,433; allowance for credit losses: 2024 - $46 ; 2023 - $19) $ 87,111 $ 88,738 Trading securities 2,025 2,359 Equity securities 294 306 Mortgage loans on real estate, net of allowance for credit losses (portion at fair value: 2024 - $232; 2023 - $288) 21,083 18,963 Policy loans 2,476 2,476 Derivative investments 9,677 6,474 Other investments 6,588 5,015 Total investments 129,254 124,331 Cash and invested cash 5,801 3,365 Deferred acquisition costs, value of business acquired and deferred sales inducements 12,537 12,397 Reinsurance recoverables, net of allowance for credit losses 28,750 29,843 Deposit assets, net of allowance for credit losses 30,776 29,247 Market risk benefit assets 4,860 3,894 Accrued investment income 1,108 1,082 Goodwill 1,144 1,144 Other assets 8,163 8,853 Separate account assets 168,438 158,257 Total assets $ 390,831 $ 372,413 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Policyholder account balances $ 126,197 $ 120,737 Future contract benefits 39,807 39,864 Funds withheld reinsurance liabilities 16,907 17,641 Market risk benefit liabilities 1,046 1,716 Deferred front-end loads 6,730 5,901 Payables for collateral on investments 10,020 8,105 Short-term debt 300 250 Long-term debt 5,856 5,699 Other liabilities 7,261 7,350 Separate account liabilities 168,438 158,257 Total liabilities 382,562 365,520 Contingencies and Commitments (See Note 17) Stockholders’ Equity Preferred stock – 10,000,000 shares authorized: Series C preferred stock – 20,000 shares authorized, issued and outstanding as of December 31, 2024, and December 31, 2023 493 493 Series D preferred stock – 20,000 shares authorized, issued and outstanding as of December 31, 2024, and December 31, 2023 493 493 Common stock – 800,000,000 shares authorized; 170,380,646 and 169,666,137 shares issued and outstanding as of December 31, 2024, and December 31, 2023, respectively 4,674 4,605 Retained earnings 7,645 4,778 Accumulated other comprehensive income (loss) (5,036) (3,476) Total stockholders’ equity 8,269 6,893 Total liabilities and stockholders’ equity $ 390,831 $ 372,413 See accompanying Notes to Consolidated Financial Statements 111 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions, except per share data) For the Years Ended December 31, 2024 2023 2022 Revenues Insurance premiums $ 6,425 $ 3,672 $ 6,087 Fee income 5,402 5,467 5,603 Net investment income 5,525 5,879 5,515 Realized gain (loss) 269 (4,311) 840 Other revenues 821 938 765 Total revenues 18,442 11,645 18,810 Expenses Benefits 7,918 6,138 8,479 Interest credited 3,443 3,248 2,877 Market risk benefit (gain) loss (2,677) (2,264) (3,246) Policyholder liability remeasurement (gain) loss (190) (152) 2,766 Commissions and other expenses 5,590 5,492 5,292 Interest and debt expense 336 331 283 Impairment of intangibles – – 634 Total expenses 14,420 12,793 17,085 Income (loss) before taxes 4,022 (1,148) 1,725 Federal income tax expense (benefit) 747 (396) 367 Net income (loss) 3,275 (752) 1,358 Other comprehensive income (loss), net of tax: Unrealized investment gain (loss) (788) 3,715 (18,059) Market risk benefit non-performance risk gain (loss) (924) (671) (210) Policyholder liability discount rate remeasurement gain (loss) 157 (160) 2,012 Foreign currency translation adjustment (3) 8 (20) Funded status of employee benefit plans (2) (16) (59) Total other comprehensive income (loss), net of tax (1,560) 2,876 (16,336) Comprehensive income (loss) $ 1,715 $ 2,124 $ (14,978) Net Income (Loss) Available to Common Stockholders Net income (loss) $ 3,275 (752) 1,358 Preferred stock dividends declared (91) (82) – Net income (loss) available to common stockholders $ 3,184 $ (834) $ 1,358 Net Income (Loss) Per Common Share Basic $ 18.66 $ (4.92) $ 7.93 Diluted 18.41 (4.92) 7.78 Cash Dividends Declared Per Common Share $ 1.80 $ 1.80 $ 1.80 See accompanying Notes to Consolidated Financial Statements 112 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions) For the Years Ended December 31, 2024 2023 2022 Preferred Stock Balance as of beginning-of-year $ 986 $ 986 $ – Issuance of Series C preferred stock – – 493 Issuance of Series D preferred stock – – 493 Balance as of end-of-year 986 986 986 Common Stock Balance as of beginning-of-year 4,605 4,544 4,735 Stock compensation/issued for benefit plans 69 61 40 Retirement of common stock/cancellation of shares – – (231) Balance as of end-of-year 4,674 4,605 4,544 Retained Earnings Balance as of beginning-of-year 4,778 5,924 5,196 Net income (loss) 3,275 (752) 1,358 Retirement of common stock – – (319) Preferred stock dividends declared (91) (82) – Common stock dividends declared (317) (312) (311) Balance as of end-of-year 7,645 4,778 5,924 Accumulated Other Comprehensive Income (Loss) Balance as of beginning-of-year (3,476) (6,352) 9,984 Other comprehensive income (loss), net of tax (1,560) 2,876 (16,336) Balance as of end-of-year (5,036) (3,476) (6,352) Total stockholders’ equity as of end-of-year $ 8,269 $ 6,893 $ 5,102 See accompanying Notes to Consolidated Financial Statements 113 Table of Contents LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) For the Years Ended December 31, 2024 2023 2022 Cash Flows from Operating Activities Net income (loss) $ 3,275 $ (752) $ 1,358 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Realized (gain) loss (269) 4,311 (840) Market risk benefit (gain) loss (2,677) (2,264) (3,246) Sales and maturities (purchases) of trading securities, net 343 1,301 300 Impairment of intangibles – – 634 Net operating cash payments related to closing Fortitude Re reinsurance transaction – (1,438) – Change in: Deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads 689 637 488 Accrued investment income (39) 4 (67) Insurance liabilities and reinsurance-related balances (3,322) (3,719) 4,377 Accrued expenses 251 109 (91) Federal income tax accruals 747 (396) 421 Other (1,005) 133 275 Net cash provided by (used in) operating activities (2,007) (2,074) 3,609 Cash Flows from Investing Activities Purchases of available-for-sale securities and equity securities (11,442) (11,131) (14,813) Sales of available-for-sale securities and equity securities 1,965 4,013 2,297 Maturities of available-for-sale securities 9,442 5,670 5,453 Purchases of alternative investments (1,390) (630) (664) Sales and repayments of alternative investments 352 111 446 Issuance of mortgage loans on real estate (4,146) (1,946) (2,507) Repayment and maturities of mortgage loans on real estate 1,673 1,268 2,255 Repayment (issuance) of policy loans, net – (119) 5 Net change in collateral on investments, certain derivatives and related settlements 4,052 (260) (4,070) Cash received from disposition, net of cash transferred 619 – – Other (304) (310) (48) Net cash provided by (used in) investing activities 821 (3,334) (11,646) Cash Flows from Financing Activities Payment of long-term debt, including current maturities (100) (500) (300) Issuance of long-term debt, net of issuance costs 346 – 296 Payment related to sale-leaseback transactions (17) (79) (70) Proceeds from certain financing arrangements 53 86 186 Payment related to certain financing arrangements (137) (49) – Net financing cash proceeds related to closing Fortitude Re reinsurance transaction – 1,246 – Deposits of fixed account balances 16,060 16,404 16,203 Withdrawals of fixed account balances (12,153) (10,660) (7,674) Transfers from (to) separate accounts, net (27) (624) 19 Common stock issued for benefit plans (5) (7) (16) Issuance of preferred stock, net of issuance costs – – 986 Repurchase of common stock – – (550) Dividends paid to preferred stockholders (91) (82) – Dividends paid to common stockholders (307) (305) (310) Other – – (2) Net cash provided by (used in) financing activities 3,622 5,430 8,768 Net increase (decrease) in cash, invested cash and restricted cash 2,436 22 731 Cash, invested cash and restricted cash as of beginning-of-year 3,365 3,343 2,612 Cash, invested cash and restricted cash as of end-of-year $ 5,801 $ 3,365 $ 3,343 See accompanying Notes to Consolidated Financial Statements 114 Table of Contents LINCOLN NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
We issued a long-term senior note to the non-affiliated VIE in exchange for a corporate bond AFS security of like principal and duration that was assigned to one of our subsidiaries.
We issued a long-term senior note to the non-affiliated VIE in exchange for a corporate bond AFS security of like principal and duration that was assigned to one of our subsidiaries.
In addition, the terms of the senior note provide us with a set-off right with the corporate bond AFS security we purchased from the VIE; therefore, neither appears on the Consolidated Balance Sheets.
In addition, the terms of the senior note provide us with a set-off right with the corporate bond AFS security we purchased from the VIE; therefore, neither appears on the Consolidated Balance Sheets.
We issued a long-term senior note to the non-affiliated VIE in exchange for a corporate bond AFS security of like principal and duration that was assigned to one of our subsidiaries.
We issued a long-term senior note to the non-affiliated VIE in exchange for a corporate bond AFS security of like principal and duration that was assigned to one of our subsidiaries.
We have concluded that we are not the primary beneficiary of the non-affiliated VIE due to our lack of power over the activities that most significantly affect its economic performance as well as the extent of our obligation to absorb its losses.
We have concluded that we are not the primary beneficiary of the non-affiliated VIE due to our lack of power over the activities that most significantly affect its economic performance as well as the extent of our obligation to absorb its losses.
We have concluded that we are not the primary beneficiary of the non-affiliated VIE due to our lack of power over the activities that most significantly affect its economic performance as well as the extent of our obligation to absorb its losses.
We have concluded that we are not the primary beneficiary of the non-affiliated VIE due to our lack of power over the activities that most significantly affect its economic performance as well as the extent of our obligation to absorb its losses.
Segment Information We provide products and services and report results through our Annuities, Life Insurance, Group Protection and Retirement Plan Services segments. We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments.
Segment Information We provide products and services and report results through our Annuities, Life Insurance, Group Protection and Retirement Plan Services business segments. We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments.
To determine the values of in-force and new business, we use a discounted cash flows technique that applies a discount rate reflecting the market expected, weighted-average rate of return adjusted for the risk factors associated with operations to the projected future cash flows for each reporting unit. 2023 Analysis As of October 1, 2023, we performed our annual quantitative goodwill impairment test for our Annuities, Group Protection and Retirement Plan Services reporting units, and, as of such date, the fair value was in excess of each reporting unit’s carrying value. 2022 Analysis As a result of the capital market environment during the third quarter of 2022, including (i) declining equity markets and (ii) the impact of rising interest rates on our discount rate assumption, we accelerated our quantitative goodwill impairment test for our Life Insurance reporting unit as we concluded that there were indicators of impairment.
To determine the values of in-force and new business, we use a discounted cash flows technique that applies a discount rate reflecting the market expected, weighted-average rate of return adjusted for the risk factors associated with operations to the projected future cash flows for each reporting unit. 2024 and 2023 Analysis As of October 1, 2024 and 2023, we performed our annual quantitative goodwill impairment test for our Annuities, Group Protection and Retirement Plan Services reporting units, and, as of each such date, the fair value was in excess of each reporting unit’s carrying value. 2022 Analysis As a result of the capital market environment during the third quarter of 2022, including (i) declining equity markets and (ii) the impact of rising interest rates on our discount rate assumption, we accelerated our quantitative goodwill impairment test for our Life Insurance reporting unit as we concluded that there were indicators of impairment.
Actuarial assumptions include, but are not limited to, mortality, morbidity and certain policyholder behaviors such as persistency, which are adjusted for emerging experience and expected trends of the related long-duration insurance contracts and certain investment contracts by each reportable segment. During the third quarter of each year, we conduct our comprehensive review and update these actuarial assumptions.
Actuarial assumptions include, but are not limited to, mortality, morbidity and certain policyholder behaviors such as persistency, which are adjusted for emerging experience and expected trends of the related long-duration insurance contracts and certain investment contracts by segment. During the third quarter of each year, we conduct our comprehensive review and update these actuarial assumptions.
Other liabilities consist primarily of other policyholder liabilities, pension and other employee benefit liabilities, certain financing arrangements, payables resulting from purchases of securities that had not yet settled as of the balance sheet date, derivative instrument liabilities, ceded MRB assets, certain reinsurance payables, deferred gain on business sold through reinsurance, long-term operating lease liabilities, finance lease liabilities and other accrued expenses.
Other liabilities consist primarily of other policyholder liabilities, pension and other employee benefit liabilities, certain reinsurance payables, certain financing arrangements, ceded MRB assets, derivative instrument liabilities, deferred gain on business sold through reinsurance, long-term operating lease liabilities, payables resulting from purchases of securities that had not yet settled as of the balance sheet date and other accrued expenses.
For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input would not have affected the other inputs. As part of our ongoing valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary. For more information, see Note 1. 16.
For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input would not have affected the other inputs. As part of our ongoing valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary. For more information, see Note 1 .
Based on the assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year due to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with United States of America generally accepted accounting principles.
Based on the assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with United States of America generally accepted accounting principles.
Consumer price index swaps are contracts entered into at no cost and whose payoff is the difference between the consumer price index inflation rate and the fixed-rate determined as of inception. Equity Futures We use equity futures contracts to hedge the liability exposure on certain options in variable annuity products.
Consumer price index swaps are contracts entered into at no cost and whose payoff is the difference between the consumer price index inflation rate and the fixed-rate determined as of inception. Equity Futures We use equity futures contracts to hedge the liability exposure on certain options in variable annuity and RILA products.
To determine the recovery period of a debt security, we consider the facts and circumstances surrounding the underlying issuer including, but not limited to, the following: • Historical and implied volatility of the security; • The extent to which the fair value has been less than amortized cost; • Adverse conditions specifically related to the security or to specific conditions in an industry or geographic area; • Failure, if any, of the issuer of the security to make scheduled payments; and • Recoveries or additional declines in fair value subsequent to the balance sheet date. 114 Table of Contents In periods subsequent to the recognition of a credit loss impairment through a credit loss allowance, we continue to reassess the expected cash flows of the debt security at each subsequent measurement date as necessary.
To determine the recovery period of a debt security, we consider the facts and circumstances surrounding the underlying issuer including, but not limited to, the following: • Historical and implied volatility of the security; • The extent to which the fair value has been less than amortized cost; • Adverse conditions specifically related to the security or to specific conditions in an industry or geographic area; • Failure, if any, of the issuer of the security to make scheduled payments; and • Recoveries or additional declines in fair value subsequent to the balance sheet date. 118 Table of Contents In periods subsequent to the recognition of a credit loss impairment through a credit loss allowance, we continue to reassess the expected cash flows of the debt security at each subsequent measurement date as necessary.
Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.
Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown above are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.
Depending on the achievement level of performance measures pre-determined by the Compensation Committee for the three-year performance period, payouts could range from 0% to 200% of the target award for performance shares granted prior to 2021, 0% to 240% of the target award for performance shares granted in 2021 and 0% to 232% of the target award for performance shares granted in 2022 and 2023.
Depending on the achievement level of performance measures pre-determined by the Compensation Committee for the three-year performance period, payouts could range from 0% to 200% of the target award for performance shares granted prior to 2021, 0% to 240% of the target award for performance shares granted in 2021, and 0% to 232% of the target award for performance shares granted in 2022, 2023 and 2024.
Where warranted, we establish or increase a credit loss allowance for a specific loan based upon this analysis. We measure and assess the credit quality of our commercial mortgage loans by using loan-to-value and debt-service coverage ratios.
Where warranted, we establish or increase a credit loss allowance for a specific loan based upon this analysis. We measure and assess the credit quality of our commercial mortgage loans by using loan-to-value (“LTV”) and debt-service coverage ratios.
These futures contracts require payment between our counterparty and us on a daily basis for changes in the futures index price. Interest Rate Swap Agreements We use interest rate swap agreements to hedge the liability exposure on certain options in variable annuity products.
These futures contracts require payment between our counterparty and us on a daily basis for changes in the futures index price. Interest Rate Swap Agreements We use interest rate swap agreements to hedge the liability exposure on certain options in variable annuity and RILA products.
Pursuant to the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification TM (“ASC”), we categorize our financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique.
Pursuant to the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification TM , we categorize our financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique.
DAC, VOBA, DSI and DFEL Acquisition costs directly related to successful contract acquisitions or renewals of annuities, UL, VUL, traditional life insurance, group life and disability insurance and other investment contracts have been deferred (i.e., DAC).
DAC, VOBA, DSI and DFEL Acquisition costs directly related to successful contract acquisitions or renewals of annuities, UL, VUL, traditional life insurance, group life and disability insurance and other investment contracts have been deferred (i.e., deferred acquisition costs (“DAC”)).
The net operating losses arose in tax years 2018 and 2021 and, under the Tax Cuts and Jobs Act changes, have an unlimited carryforward period. The capital losses arose in tax year 2023 and can be carried back three years and forward five years.
The net operating losses arose in tax years 2018, 2021 and 2024 and, under the Tax Cuts and Jobs Act changes, have an unlimited carryforward period. The capital losses arose in tax year 2023 and can be carried back three years and forward five years.
The loan-to-value ratio compares the principal amount of the loan to the fair value at origination of the underlying property collateralizing the loan and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the principal amount is greater than the collateral value.
The LTV ratio compares the principal amount of the loan to the fair value at origination of the underlying property collateralizing the loan and is commonly expressed as a percentage. LTV ratios greater than 100% indicate that the principal amount is greater than the collateral value.
We may, at our option, redeem the Series D Preferred Stock, (a) in whole but not in part, at any time prior to December 1, 2027, within 90 days after the occurrence of a rating agency event at a redemption price equal to 102% of the stated amount of a share of Series D Preferred Stock (initially, $25,500 per share of Series D Preferred Stock, equivalent to $25.50 per Depositary Share), plus an amount equal to any dividends per share that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such 204 Table of Contents redemption date, and (b)(i) in whole but not in part, at any time prior to December 1, 2027, within 90 days after the occurrence of a regulatory capital event; or (ii) in whole or in part, at any time or from time to time on or after December 1, 2027, in each case, at a redemption price equal to the stated amount of a share of Series D Preferred Stock (initially, $25,000 per share of Series D Preferred Stock, equivalent to $25.00 per Depositary Share), plus an amount equal to any dividends per share that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such redemption date.
We may, at our option, redeem the Series D Preferred Stock, (a) in whole but not in part, at any time prior to December 1, 2027, within 90 days after the occurrence of a rating agency event at a redemption price equal to 102% of the stated amount of a share of Series D Preferred Stock (initially, $25,500 per share of Series D Preferred Stock, equivalent to $25.50 per Depositary Share), plus an amount equal to any dividends per share that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such redemption date, and (b)(i) in whole but not in part, at any time prior to December 1, 2027, within 90 days after the occurrence of a regulatory capital event; or (ii) in whole or in part, at any time or from time to time on or after December 1, 2027, in each case, at a redemption price equal to the stated amount of a share of Series D Preferred Stock (initially, $25,000 per share of Series D Preferred Stock, equivalent to $25.00 per Depositary Share), plus an amount equal to any dividends per share that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such redemption date.
For more information on our segments and the products and solutions we provide, see Note 20 . Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”). Certain GAAP policies, which significantly affect the determination of financial condition, results of operations and cash flows, are summarized below.
For more information on our segments and the products and solutions we provide, see Note 19 . Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”). Certain GAAP policies, which significantly affect the determination of financial condition, results of operations and cash flows, are summarized below.
These agreements take into consideration the counterparties’ credit rating as compared to ours, the fair value of the derivative investments and specified thresholds that if exceeded result in the receipt of cash that is typically invested in cash and invested cash or fixed maturity AFS securities. This also includes interest payable on collateral. See Note 6 for additional information.
These agreements take into consideration the counterparties’ credit rating as compared to ours, the fair value of the derivative investments and specified thresholds that if exceeded result in the receipt of cash that is typically invested in cash and invested cash or fixed maturity AFS securities. This also includes interest payable on collateral. See Note 5 for additional information.
Securities rated investment grade (those rated BBB- or higher by S&P Global Ratings (“S&P”) or Baa3 or higher by Moody’s Investors Service (“Moody’s”)) are generally considered by the rating agencies and market participants to be low credit risk. As of December 31, 2023 and 2022, 96% of the fair value of our corporate bond portfolio was rated investment grade.
Securities rated investment grade (those rated BBB- or higher by S&P Global Ratings (“S&P”) or Baa3 or higher by Moody’s Investors Service (“Moody’s”)) are generally considered by the rating agencies and market participants to be low credit risk. As of December 31, 2024 and 2023, 96% of the fair value of our corporate bond portfolio was rated investment grade.
The carrying values of VOCRA and VODA are amortized using a straight-line basis over their weighted average life of 20 years and 13 years, respectively. See Note 9 for more information regarding specifically identifiable intangible assets. Property and equipment owned for company use is carried at cost less allowances for depreciation.
The carrying values of VOCRA and VODA are amortized using a straight-line basis over their weighted average life of 20 years and 13 years, respectively. See Note 8 for more information regarding specifically identifiable intangible assets. Property and equipment owned for company use is carried at cost less allowances for depreciation.
Diluted EPS is computed assuming the conversion or exercise of non-vested stock, stock options and performance share units outstanding during the year. For any period where a net loss is experienced, shares used in the diluted EPS calculation represent basic shares, as the use of diluted shares would result in a lower loss per share. 126 Table of Contents 2.
Diluted EPS is computed assuming the conversion or exercise of non-vested stock, stock options and performance share units outstanding during the year. For any period where a net loss is experienced, shares used in the diluted EPS calculation represent basic shares, as the use of diluted shares would result in a lower loss per share. 130 Table of Contents 2.
The non-performance risk is based upon assumptions for each counterparty’s credit spread over the estimated weighted average life of the counterparty exposure, less collateral held. As of December 31, 2023, the non-performance risk adjustment was zero. The credit risk associated with such agreements is minimized by entering into agreements with financial institutions with long-standing, superior performance records.
The non-performance risk is based upon assumptions for each counterparty’s credit spread over the estimated weighted average life of the counterparty exposure, less collateral held. As of December 31, 2024, the non-performance risk adjustment was zero. The credit risk associated with such agreements is minimized by entering into agreements with financial institutions with long-standing, superior performance records.
It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of December 31, 2023. For some matters, the Company is able to estimate a reasonably possible range of loss. For such matters in which a loss is probable, an accrual has been made.
It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of December 31, 2024. For some matters, the Company is able to estimate a reasonably possible range of loss. For such matters in which a loss is probable, an accrual has been made.
Based upon this evaluation as of December 31, 2023, management believes we have the ability to generate adequate amounts of cash from our normal operations (e.g., insurance premiums, fee income and investment income) to meet cash requirements with a prudent margin of safety without requiring the sale of our impaired securities.
Based upon this evaluation as of December 31, 2024, management believes we have the ability to generate adequate amounts of cash from our normal operations (e.g., insurance premiums, fee income and investment income) to meet cash requirements with a prudent margin of safety without requiring the sale of our impaired securities.
Statutory capital and surplus, net gain (loss) from operations, after-tax, net income (loss) and dividends to the LNC holding company amounts (in millions) below consist of all or a combination of the following entities: LNL, LLANY, FPP, Lincoln Reinsurance Company of South Carolina, Lincoln Reinsurance Company of Vermont I, Lincoln Reinsurance Company of Vermont III, Lincoln Reinsurance Company of Vermont IV, Lincoln Reinsurance Company of Vermont V, Lincoln Reinsurance Company of Vermont VI and Lincoln Reinsurance Company of Vermont VII.
Statutory capital and surplus, net gain (loss) from operations, after-tax, net income (loss) and dividends paid to the LNC holding company (in millions) below consist of all or a combination of the following entities: LNL, LLANY, FPP, Lincoln Reinsurance Company of South Carolina, Lincoln Reinsurance Company of Vermont I, Lincoln Reinsurance Company of Vermont III, Lincoln Reinsurance Company of Vermont IV, Lincoln Reinsurance Company of Vermont V, Lincoln Reinsurance Company of Vermont VI and Lincoln Reinsurance Company of Vermont VII.
Based upon the analysis discussed above, we believe that as of December 31, 2023 and 2022, we would have recovered the amortized cost of each corporate bond. As of December 31, 2023, the unrealized losses associated with our MBS and ABS were attributable primarily to rising interest rates and widening credit spreads since purchase.
Based upon the analysis discussed above, we believe that as of December 31, 2024 and 2023, we would have recovered the amortized cost of each corporate bond. As of December 31, 2024, the unrealized losses associated with our MBS and ABS were attributable primarily to rising interest rates and widening credit spreads since purchase.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the future contract benefits liability estimation processes, including, among others, controls related to the review and approval processes that management has in place for the assumptions used in estimating the benefit ratio related to the future contract benefits liability.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the future contract benefits liability estimation processes, including, among others, controls related to the review and approval processes that management has in place for the assumptions used in estimating the future contract benefits liability.
We present disaggregated disclosures in the Notes below for long-duration insurance balances, applying the level of aggregation by reportable segment as follows: Reportable Segment Level of Aggregation Annuities Variable Annuities Fixed Annuities Payout Annuities Life Insurance Traditional Life UL and Other Group Protection Group Protection Retirement Plan Services Retirement Plan Services The variable annuities level of aggregation includes RILA products, which are indexed variable annuities.
We present disaggregated disclosures in the Notes below for long-duration insurance balances, applying the level of aggregation by segment as follows: Business Segment Level of Aggregation Annuities Variable Annuities Fixed Annuities Payout Annuities Life Insurance Traditional Life UL and Other Group Protection Group Protection Retirement Plan Services Retirement Plan Services The variable annuities level of aggregation includes RILA products, which are indexed variable annuities.
The loan’s estimated value is based on: the present value of expected future cash flows discounted at the loan’s effective interest rate; the loan’s observable market price; or the fair value of the loan’s collateral. 116 Table of Contents Allowance for credit losses are maintained at a level we believe is adequate to absorb current expected lifetime credit losses.
The loan’s estimated value is based on: the present value of expected future cash flows discounted at the loan’s effective interest rate; the loan’s observable market price; or the fair value of the loan’s collateral. 120 Table of Contents Allowance for credit losses are maintained at a level we believe is adequate to absorb current expected lifetime credit losses.
Therefore, all else being equal, a lower loan-to-value ratio generally indicates a higher quality loan. The debt-service coverage ratio compares a property’s net operating income to its debt-service payments. Debt-service coverage ratios of less than 1.0 indicate that property operations do not generate enough income to cover its current debt payments.
Therefore, all else being equal, a lower LTV ratio generally indicates a higher quality loan. The debt-service coverage ratio compares a property’s net operating income to its debt-service payments. Debt-service coverage ratios of less than 1.0 indicate that property operations do not generate enough income to cover its current debt payments.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
If it is not recoverable, we record an impairment through a credit loss allowance for the security. 115 Table of Contents Trading Securities Trading securities consist of fixed maturity securities in designated portfolios, some of which support modified coinsurance and coinsurance with funds withheld reinsurance agreements.
If it is not recoverable, we record an impairment through a credit loss allowance for the security. 119 Table of Contents Trading Securities Trading securities consist of fixed maturity securities in designated portfolios, some of which support modified coinsurance and coinsurance with funds withheld reinsurance agreements.
As of December 31, 2023 and 2022, we did not have any exposure related to CDSs for which we are the seller. Credit Risk We are exposed to credit losses in the event of non-performance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or non-performance risk.
As of December 31, 2024 and 2023, we did not have any exposure related to CDSs for which we are the seller. Credit Risk We are exposed to credit losses in the event of non-performance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or non-performance risk.
For the years ended December 31, 2023, 2022 and 2021, transfers in and out of Level 3 were attributable primarily to the financial instruments’ observable market information no longer being available or becoming available. In 2022, transfers out of Level 3 included corporate bonds and ABS for which we changed valuation techniques.
For the years ended December 31, 2024, 2023 and 2022, transfers in and out of Level 3 were attributable primarily to the financial instruments’ observable market information no longer being available or becoming available. In 2022, transfers out of Level 3 included corporate bonds and ABS for which we changed valuation techniques.
With few exceptions for limited scope review, we are no longer subject to U.S. federal examinations for years before 2019. In the first quarter of 2021, the Internal Revenue Service commenced an examination of our 2014, 2015, 2016 and 2017 refund claims.
With few exceptions for limited scope review, we are no longer subject to U.S. federal examinations for years before 2020. In the first quarter of 2021, the Internal Revenue Service commenced an examination of our 2014, 2015, 2016 and 2017 refund claims.
Amounts are reported in derivative investments and other liabilities on the Consolidated Balance Sheets after the evaluation for right of offset subject to master netting agreements as described in Note 1. (2) Reported in funds withheld reinsurance liabilities on the Consolidated Balance Sheets. (3) Reported in policyholder account balances and deposit accounts on the Consolidated Balance Sheets.
Amounts are reported in derivative investments and other liabilities on the Consolidated Balance Sheets after the evaluation for right of offset subject to master netting agreements as described in Note 1. (2) Reported in funds withheld reinsurance liabilities on the Consolidated Balance Sheets. (3) Reported in policyholder account balances and deposit assets on the Consolidated Balance Sheets.
One permitted practice involves accounting for the lesser of the face amount of all amounts outstanding under an LOC and the value of the Valuation of Life Insurance Policies Model Regulation (“XXX”) additional statutory reserves as an admitted asset and a form of surplus as of December 31, 2023 and 2022.
One permitted practice involves accounting for the lesser of the face amount of all amounts outstanding under an LOC and the value of the Valuation of Life Insurance Policies Model Regulation (“XXX”) additional statutory reserves as an admitted asset and a form of surplus as of December 31, 2024 and 2023.
Effect of Assumption Review For the year ended December 31, 2023, Variable Annuities had a favorable impact to net income (loss) attributable to the annual assumption review from updates to volatility and policyholder GLB utilization behavior assumptions, partially offset by unfavorable impacts from updates to mortality and policyholder lapse behavior assumptions.
For the year ended December 31, 2023, Variable Annuities had a favorable impact to net income (loss) attributable to the annual assumption review from updates to volatility and policyholder GLB utilization behavior assumptions, partially offset by unfavorable impacts from updates to mortality and policyholder lapse behavior assumptions.
Upon an event of default, the credit agreement, as currently in effect, provides that, among other things, the commitments may be terminated and the loans then outstanding may be declared due and payable. As of December 31, 2023, we were in compliance with all such covenants.
Upon an event of default, the credit agreement, as currently in effect, provides that, among other things, the commitments may be terminated and the loans then outstanding may be declared due and payable. As of December 31, 2024, we were in compliance with all such covenants.
These concentrations include fixed maturity AFS, trading and equity securities. 5. Variable Interest Entities Consolidated VIEs Reinsurance-Related Notes We are the sole equity owner of Lincoln Financial Limited Liability Company I (“LFLLCI”), which we formed in July 2013.
These concentrations include fixed maturity AFS, trading and equity securities. 4. Variable Interest Entities Consolidated VIEs Reinsurance-Related Notes We are the sole equity owner of Lincoln Financial Limited Liability Company I (“LFLLCI”), which we formed in July 2013.
For the years ended December 31, 2023 and 2022, there were no material reclassifications to earnings due to hedged firm commitments no longer deemed probable or due to hedged forecasted transactions that had not occurred by the end of the originally specified time period.
For the years ended December 31, 2024 and 2023, there were no material reclassifications to earnings due to hedged firm commitments no longer deemed probable or due to hedged forecasted transactions that had not occurred by the end of the originally specified time period.
Plaintiffs Henry Morgan, Susan Smith, Charles Smith, Laura Seale, Terri Cogburn, Laura Baesel, Kathleen Walton, Terry Warner, and Toni Hale (“Plaintiffs”) allege on behalf of a putative class that Lincoln National Corporation d/b/a Lincoln Financial Group, LNL and LLANY (together, “Lincoln”), FMR, LLC, and Fidelity Product Services, LLC (“Fidelity”) created and marketed misleading and deceptive insurance products with attributes of investment products.
Plaintiffs Henry Morgan, Susan Smith, Charles Smith, Laura Seale, Terri Cogburn, Laura Baesel, Kathleen Walton, Terry Warner, and Toni Hale (“Plaintiffs”) allege on 196 Table of Contents behalf of a putative class that Lincoln National Corporation d/b/a Lincoln Financial Group, LNL and LLANY (together, “Lincoln”), FMR, LLC, and Fidelity Product Services, LLC (“Fidelity”) created and marketed misleading and deceptive insurance products with attributes of investment products.
The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. The summary schedule excludes changes to MRB assets and MRB liabilities as these balances are rolled forward in Note 10.
The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. The summary schedule excludes changes to MRB assets and MRB liabilities as these balances are rolled forward in Note 9 .
For the years ended December 31, 2023, 2022 and 2021, we recognized no interest and penalty expense (benefit), and there was no accrued interest and penalty expense related to the unrecognized tax benefits as of December 31, 2023 and 2022. In August 2022, the Inflation Reduction Act of 2022 was passed by the U.S.
For the years ended December 31, 2024, 2023 and 2022, we recognized no interest and penalty expense (benefit), and there was no accrued interest and penalty expense related to the unrecognized tax benefits as of December 31, 2024 and 2023. In August 2022, the Inflation Reduction Act of 2022 was passed by the U.S.
Treasury and Reverse Treasury Locks We use treasury locks designated and qualifying as cash flow hedges to hedge the interest rate exposure related to our issuance of fixed-rate securities or the anticipated future cash flows of floating-rate fixed maturity securities due to changes in interest rates.
Bond Forwards and Treasury and Reverse Treasury Locks We use treasury locks designated and qualifying as cash flow hedges to hedge the interest rate exposure related to our issuance of fixed-rate securities or the anticipated future cash flows of floating-rate fixed maturity securities due to changes in interest rates.
In addition, we use reverse treasury locks designated and qualifying as cash flow hedges to hedge the interest rate exposure related to the anticipated purchase of fixed-rate securities or the anticipated future cash flows of floating-rate fixed maturity securities due to changes in interest rates.
In addition, we use bond forwards and reverse treasury locks designated and qualifying as cash flow hedges to hedge the interest rate exposure related to the anticipated purchase of fixed-rate securities or the anticipated future cash flows of floating-rate fixed maturity securities due to changes in interest rates.
Management assessed our internal control over financial reporting as of December 31, 2023, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
Management assessed our internal control over financial reporting as of December 31, 2024, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
As of December 31, 2023, the unrealized losses associated with our corporate bond, U.S. government bond, state and municipal bond and foreign government bond securities were attributable primarily to rising interest rates and widening credit spreads since purchase.
As of December 31, 2024, the unrealized losses associated with our corporate bond, U.S. government bond, state and municipal bond and foreign government bond securities were attributable primarily to rising interest rates and widening credit spreads since purchase.
Our maximum exposure to loss on these structured securities is limited to the amortized cost for these investments. We recognize our variable interest in these VIEs at fair value on the Consolidated Balance Sheets. For information about these structured securities, see Note 4.
Our maximum exposure to loss on these structured securities is limited to the amortized cost for these investments. We recognize our variable interest in these VIEs at fair value on the Consolidated Balance Sheets. For information about these structured securities, see Note 3 .
Our insurance companies cede insurance to other companies. The portion of our annuity and life insurance risks exceeding each of our insurance companies’ retention limit is reinsured with other insurers. We seek reinsurance coverage to limit our exposure to mortality losses and to enhance our capital management.
Our insurance companies cede insurance to other companies. The portion of our life insurance risks exceeding each of our insurance companies’ retention limit is reinsured with other insurers. We seek annuity and life reinsurance coverage to limit our exposure to mortality losses and/or to enhance our capital and risk management.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Philadelphia, Pennsylvania February 22, 2024 103 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Lincoln National Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lincoln National Corporation (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Philadelphia, Pennsylvania February 21, 2025 107 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Lincoln National Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lincoln National Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).
The effectiveness of our internal control over financial reporting as of December 31, 2023, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included on the following page. 102 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Lincoln National Corporation Opinion on Internal Control Over Financial Reporting We have audited Lincoln National Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included on the following page. 106 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Lincoln National Corporation Opinion on Internal Control Over Financial Reporting We have audited Lincoln National Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated February 22, 2024 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated February 21, 2025 expressed an unqualified opinion thereon.
For those derivative instruments that are designated and 117 Table of Contents qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged: as a cash flow hedge or a fair value hedge.
For those derivative instruments that are designated and 121 Table of Contents qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged: as a cash flow hedge or a fair value hedge.
(3) Transitioned from London Interbank Offered Rate (“LIBOR”)-based to Secured Overnight Financing Rate (“SOFR”)-based interest rates, plus an applicable transition spread of 10 basis points due to the discontinued publication of LIBOR effective after June 30, 2023. Our applicable credit spread was 112.5 basis points as of December 31, 2023 and 2022, respectively.
(3) Transitioned from London Interbank Offered Rate (“LIBOR”)-based to Secured Overnight Financing Rate (“SOFR”)-based interest rates, plus an applicable transition spread of 10 basis points due to the discontinued publication of LIBOR effective after June 30, 2023. Our applicable credit spread was 137.5 and 112.5 basis points as of December 31, 2024 and 2023, respectively.
Lastly, the state of Vermont has permitted a practice to account for certain excess of loss reinsurance agreements with unaffiliated reinsurers as an asset and form of surplus as of December 31, 2023 and 2022.
Lastly, the state of Vermont has permitted a practice to account for certain excess of loss reinsurance agreements with unaffiliated reinsurers as an asset and form of surplus as of December 31, 2024 and 2023.
Asset-based fees and contract administration charges (collectively referred to as “policyholder assessments”) are assessed against the accounts and included within fee income on the 121 Table of Contents Consolidated Statements of Comprehensive Income (Loss). An amount equivalent to the separate account assets is recorded as separate account liabilities, representing the account balance obligated to be returned to the policyholder.
Asset-based fees and contract administration charges (collectively referred to as “policyholder assessments”) are assessed against the accounts and included within fee income on the Consolidated Statements of Comprehensive Income (Loss). An amount equivalent to the separate account assets is recorded as separate account liabilities, representing the account balance obligated to be returned to the policyholder.
As we are not relieved of our liability to the ceding companies for this business, the liabilities and obligations associated with the reinsured policies remain on the Consolidated Balance Sheets with a corresponding reinsurance recoverable from Swiss Re, which totaled $1.6 billion as of December 31, 2023 and 2022, respectively.
As we are not relieved of our liability to the ceding companies for this business, the liabilities and obligations associated with the reinsured policies remain on the Consolidated Balance Sheets with a corresponding reinsurance recoverable from Swiss Re, which totaled $1.3 billion and $1.6 billion as of December 31, 2024 and 2023, respectively.
As discussed further below, we believe the unrealized loss position as of December 31, 2023, did not require an impairment recognized in earnings as (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis; and (iii) the difference in the fair value compared to the amortized cost was due to factors other than credit loss.
As discussed further below, we do not believe the unrealized loss position as of December 31, 2024, required an impairment recognized in earnings as: (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis; and (iii) the difference in the fair value compared to the amortized cost was due to factors other than credit loss.
An adverse outcome in one or more of these matters may have a material impact on the consolidated financial statements, but, based on information currently known, management does not believe those cases are likely to have such an impact. Cost of Insurance and Other Litigation Cost of Insurance Litigation Glover v.
An adverse outcome in one or more of these matters may have a material impact on the consolidated financial statements, but, based on information currently known, management does not believe those cases are likely to have such an impact. 194 Table of Contents Cost of Insurance and Other Litigation Cost of Insurance Litigation Glover v.
Another permitted practice involves the acquisition of an LLC note in exchange for a variable value surplus note that is recognized as an admitted asset and a form of surplus as of December 31, 2023 and 2022.
Another permitted practice involves the acquisition of an LLC note in exchange for a variable value surplus note that is recognized as an admitted asset and a form of surplus as of December 31, 2024 and 2023.
Cash collateral a counterparty has posted is recorded within payables for collateral on investments. We also have investments in FHLB common stock, carried at cost, that enable access to the FHLB lending program. For more information on our collateralized financing arrangements, see “Payables for Collateral on Investments” below.
Cash collateral a counterparty has posted is recorded within payables for collateral on investments on the Consolidated Balance Sheets. We also have investments in FHLB common stock, carried at cost, that enable access to the FHLB lending program. For more information on our collateralized financing arrangements, see “Payables for Collateral on Investments” below.
We 149 Table of Contents use call options that are highly correlated to the portfolio allocation decisions of our policyholders, such that we are economically hedged with respect to equity returns for the current reset period. Consumer Price Index Swaps We use consumer price index swaps to hedge the liability exposure on certain options in fixed annuity products.
We use call options that are highly correlated to the portfolio allocation decisions of our policyholders, such that we are economically hedged with respect to equity returns for the current reset period. Consumer Price Index Swaps We use consumer price index swaps to hedge the liability exposure on certain options in fixed annuity products.
In our opinion, Lincoln National Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
In our opinion, Lincoln National Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2024 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.
The total fair value of stock options with performance conditions that vested during the years ended December 31, 2023, 2022 and 2021, was less than $1 million, $1 million and less than $1 million, respectively.
The total fair value of stock options with performance conditions that vested during the years ended December 31, 2024, 2023 and 2022, was less than $1 million, less than $1 million and $1 million, respectively.
This reinsurance-related embedded derivative is valued as a total return swap with reference to the fair value of the investments held by us. Accordingly, the unobservable inputs utilized in the valuation of the reinsurance-related embedded derivative are a component of the investments supporting the reinsurance agreement that are reported on our Consolidated Balance Sheet.
This reinsurance-related embedded derivative is valued as a total return swap with reference to the fair value of the investments held by us. Accordingly, the unobservable inputs utilized in the valuation of the reinsurance-related embedded derivative are a component of the investments supporting the reinsurance agreement that are reported on the Consolidated Balance Sheets.
Certain assets on the Consolidated Balance Sheets are related to finance leases and certain financing arrangements and are depreciated in a manner consistent with our current depreciation policy for owned assets.
Certain assets on the Consolidated Balance Sheets are related to certain financing arrangements and are depreciated in a manner consistent with our current depreciation policy for owned assets.
The total fair value of stock options with service conditions that vested during the years ended December 31, 2023, 2022 and 2021 was $6 million, $8 million and $8 million, respectively.
The total fair value of stock options with service conditions that vested during the years ended December 31, 2024, 2023 and 2022, was $6 million, $6 million and $8 million, respectively.
Goodwill is not amortized, but is reviewed for impairment annually as of October 1 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.
Goodwill is not amortized, but is reviewed for impairment annually as of October 1 and more 124 Table of Contents frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.
The outstanding principal balance of this long-term senior note was $1.0 billion as of December 31, 2023, and it is variable in nature; moving concurrently with any variability in the face amount of the corporate bond AFS security up to a maximum amount of $1.1 billion.
The outstanding principal balance of this long-term senior note was $1.1 billion as of December 31, 2024, and it is variable in nature; moving concurrently with any variability in the face amount of the corporate bond AFS security up to a maximum amount of $1.1 billion.
The outstanding principal balance of this long-term senior note was $400 million as of December 31, 2023, and it is variable in nature, moving concurrently with any variability in the face amount of the corporate bond AFS security up to a maximum amount of $400 million.
The outstanding principal balance of this long-term senior note was $399 million as of December 31, 2024, and it is variable in nature, moving concurrently with any variability in the face amount of the corporate bond AFS security up to a maximum amount of $400 million.
The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, and is recognized as an increase to common stock in stockholders’ equity. We apply an estimated forfeiture rate to our accrual of compensation cost. We classify certain stock awards as liabilities.
The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, and is recognized as an increase to common stock in stockholders’ equity. We apply an estimated forfeiture rate to our accrual of compensation cost.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese are important considerations that should be included in any evaluation of the potential effect of securities in an unrealized loss position on our future earnings. 82 Table of Contents The composition by industry categories of all fixed maturity AFS securities in an unrealized loss position (in millions) as of December 31, 2023, was as follows: Net Amortized Cost % Net Amortized Cost Gross Unrealized Losses % Gross Unrealized Losses Fair Value % Fair Value Healthcare $ 4,833 6.8 % $ 1,053 10.8 % $ 3,780 6.1 % Electric 6,183 8.6 % 1,009 10.3 % 5,174 8.4 % ABS 9,368 13.1 % 569 5.8 % 8,799 14.2 % Technology 3,610 5.0 % 500 5.1 % 3,110 5.0 % Banking 4,804 6.7 % 491 5.1 % 4,313 7.0 % Food and beverage 3,018 4.2 % 453 4.6 % 2,565 4.2 % Local authorities 1,673 2.3 % 423 4.3 % 1,250 2.0 % Industrial – other 1,875 2.6 % 376 3.8 % 1,499 2.4 % Diversified manufacturing 1,910 2.7 % 255 2.6 % 1,655 2.7 % Natural gas 1,434 2.0 % 238 2.4 % 1,196 1.9 % Brokerage asset management 1,602 2.2 % 236 2.4 % 1,366 2.2 % Pharmaceuticals 1,809 2.5 % 235 2.4 % 1,574 2.6 % Chemicals 1,515 2.1 % 211 2.2 % 1,304 2.1 % Retail 1,429 2.0 % 205 2.1 % 1,224 2.0 % Transportation services 2,029 2.8 % 203 2.1 % 1,826 2.8 % Non-agency CMBS 1,364 1.9 % 202 2.1 % 1,162 1.9 % Life insurance 961 1.4 % 187 1.9 % 774 1.2 % Property and casualty 1,244 1.7 % 187 1.9 % 1,057 1.7 % Utility – other 1,032 1.4 % 155 1.6 % 877 1.4 % Aerospace and defense 1,119 1.6 % 151 1.6 % 968 1.6 % Midstream 1,257 1.8 % 142 1.5 % 1,115 1.8 % Consumer products 927 1.3 % 135 1.4 % 792 1.3 % Government-sponsored 484 0.7 % 122 1.2 % 362 0.6 % Wirelines 670 0.9 % 117 1.2 % 553 0.9 % Automotive 1,195 1.7 % 114 1.2 % 1,081 1.7 % Railroads 663 0.9 % 107 1.1 % 556 0.9 % Wireless 645 0.9 % 101 1.0 % 544 0.9 % Integrated 512 0.7 % 93 1.0 % 419 0.7 % Industries with unrealized losses less than $100 million 12,537 17.5 % 1,497 15.3 % 11,040 17.8 % Total by industry $ 71,702 100.0 % $ 9,767 100.0 % $ 61,935 100.0 % Total by industry as a percentage of total fixed maturity AFS securities 73.6 % 100.0 % 69.8 % 83 Table of Contents Mortgage Loans on Real Estate The following tables summarize key information on mortgage loans on real estate (in millions): As of December 31, 2023 Commercial Residential Total % Credit Quality Indicator Current $ 17,273 $ 1,742 $ 19,015 99.7 % Delinquent (1) – 21 21 0.1 % Foreclosure (2) – 41 41 0.2 % Total mortgage loans on real estate before allowance 17,273 1,804 19,077 100.0 % Allowance for credit losses (86) (28) (114) Total mortgage loans on real estate $ 17,187 $ 1,776 $ 18,963 As of December 31, 2022 Commercial Residential Total % Credit Quality Indicator Current $ 16,987 $ 1,379 $ 18,366 99.8 % Delinquent (1) – 13 13 0.1 % Foreclosure (2) – 21 21 0.1 % Total mortgage loans on real estate before allowance 16,987 1,413 18,400 100.0 % Allowance for credit losses (84) (15) (99) Total mortgage loans on real estate $ 16,903 $ 1,398 $ 18,301 (1) As of December 31, 2023 and 2022, no commercial mortgage loans and 34 and 24 residential mortgage loans, respectively, were delinquent.
Biggest changeThe composition by industry categories of all fixed maturity AFS securities in an unrealized loss position (in millions) as of December 31, 2024, was as follows: 84 Table of Contents Net Amortized Cost % Net Amortized Cost Gross Unrealized Losses % Gross Unrealized Losses Fair Value % Fair Value Healthcare $ 5,802 7.5 % $ 1,255 11.3 % $ 4,547 6.8 % Electric 7,301 9.4 % 1,187 10.8 % 6,114 9.2 % Technology 3,988 5.1 % 621 5.6 % 3,367 5.1 % Food and beverage 3,603 4.6 % 556 5.1 % 3,047 4.6 % Industrial – other 2,086 2.7 % 451 4.1 % 1,635 2.5 % Local authorities 2,306 3.0 % 451 4.1 % 1,855 2.8 % Banking 5,015 6.5 % 419 3.8 % 4,596 6.9 % ABS 6,807 8.8 % 406 3.7 % 6,401 9.6 % Pharmaceuticals 2,267 2.9 % 335 3.0 % 1,932 2.9 % Diversified manufacturing 2,262 2.9 % 323 2.9 % 1,939 2.9 % Natural gas 1,634 2.1 % 285 2.6 % 1,349 2.0 % Retail 1,565 2.0 % 261 2.4 % 1,304 2.1 % Chemicals 1,893 2.4 % 248 2.3 % 1,645 2.5 % Brokerage asset management 1,658 2.1 % 239 2.2 % 1,419 2.1 % Property and casualty 1,376 1.8 % 216 2.0 % 1,160 1.6 % Transportation services 1,922 2.5 % 215 2.0 % 1,707 2.6 % Life insurance 1,274 1.7 % 213 1.9 % 1,061 1.6 % Aerospace and defense 1,357 1.8 % 212 1.9 % 1,145 1.7 % Utility – other 1,164 1.5 % 192 1.7 % 972 1.5 % Consumer products 1,071 1.4 % 173 1.6 % 898 1.4 % Midstream 1,383 1.8 % 163 1.5 % 1,220 1.8 % Non-agency CMBS 1,503 1.9 % 155 1.4 % 1,348 2.0 % Wirelines 857 1.1 % 154 1.4 % 703 1.1 % Railroads 846 1.1 % 149 1.4 % 697 1.0 % Government-sponsored 459 0.6 % 144 1.3 % 315 0.5 % Integrated 682 0.9 % 125 1.1 % 557 0.8 % Automotive 1,463 1.9 % 123 1.1 % 1,340 2.0 % Wireless 712 0.9 % 120 1.1 % 592 0.9 % Industries with unrealized losses less than $100 million 13,260 17.1 % 1,614 14.7 % 11,646 17.5 % Total by industry $ 77,516 100.0 % $ 11,005 100.0 % $ 66,511 100.0 % Total by industry as a percentage of total fixed maturity AFS securities 79.6 % 100.0 % 76.4 % Mortgage Loans on Real Estate The following tables summarize key information on mortgage loans on real estate (in millions): As of December 31, 2024 Commercial Residential Total % Credit Quality Indicator Current $ 17,546 $ 3,572 $ 21,118 99.4 % Delinquent (1) 25 33 58 0.3 % Foreclosure – 59 59 0.3 % Total mortgage loans on real estate before allowance 17,571 3,664 21,235 100.0 % Allowance for credit losses (99) (53) (152) Total mortgage loans on real estate $ 17,472 $ 3,611 $ 21,083 85 Table of Contents As of December 31, 2023 Commercial Residential Total % Credit Quality Indicator Current $ 17,273 $ 1,742 $ 19,015 99.7 % Delinquent (1) – 21 21 0.1 % Foreclosure – 41 41 0.2 % Total mortgage loans on real estate before allowance 17,273 1,804 19,077 100.0 % Allowance for credit losses (86) (28) (114) Total mortgage loans on real estate $ 17,187 $ 1,776 $ 18,963 (1) Includes certain mortgage loans on real estate that support our modified coinsurance agreements where the investment results are passed directly to the reinsurers.
Holding Company Sources and Uses of Liquidity and Capital The primary sources of liquidity and capital at the holding company level are dividends and interest payments from subsidiaries, augmented by holding company short-term investments, bank lines of credit and the ongoing availability of long-term public financing under an effective shelf registration statement, which allows us to issue, in unlimited amounts, securities, including debt securities, preferred stock, common stock, warrants, stock purchase contracts, stock purchase units and depository shares.
Holding Company Sources and Uses of Liquidity and Capital The primary sources of liquidity and capital at the holding company level are dividends, return of capital and interest payments from subsidiaries, augmented by holding company short-term investments, bank lines of credit and the ongoing availability of long-term public financing under an effective shelf registration statement, which allows us to issue, in unlimited amounts, securities, including debt securities, preferred stock, common stock, warrants, stock purchase contracts, stock purchase units and depository shares.
We manage our exposure to market risks created by these fluctuations through a combination of product design elements and our hedge program. In addition, we utilize reinsurance to mitigate risk. For additional information, see Note 8 and “ Item 7.
We manage our exposure to market risks created by these fluctuations through a combination of product design elements and our hedge program. In addition, we utilize reinsurance to mitigate risk. For additional information, see Note 7 and “ Item 7.
Moreover, borrowers may prepay fixed-income securities, commercial mortgages and MBS in our general accounts in order to borrow at lower market rates, which exacerbates this risk.
Moreover, borrowers may prepay fixed-income securities, commercial mortgages, residential mortgages and MBS in our general accounts in order to borrow at lower market rates, which exacerbates this risk.
Investment results for these certain portfolios, including gains and losses from sales, are passed directly to the reinsurers through the contractual terms of the reinsurance arrangements. Offsetting these amounts in certain cases are corresponding changes in fair value of the embedded derivative liability associated with the underlying reinsurance arrangement. See Notes 1 and 8 for more information regarding modified coinsurance.
Investment results for these certain portfolios, including gains and losses from sales, are passed directly to the reinsurers through the contractual terms of the reinsurance arrangements. Offsetting these amounts in certain cases are corresponding changes in fair value of the embedded derivative liability associated with the underlying reinsurance arrangement. See Notes 1 and 7 for more information regarding modified coinsurance.
We are also required to exercise the issuance right in full if our consolidated stockholders’ equity (excluding AOCI) falls below a minimum threshold (which was $2.75 billion as of December 31, 2023, and is subject to adjustment from time to time in certain cases) and upon certain other events described in the facility agreement.
We are also required to exercise the issuance right in full if our consolidated stockholders’ equity (excluding AOCI) falls below a minimum threshold (which was $2.75 billion as of December 31, 2024, and is subject to adjustment from time to time in certain cases) and upon certain other events described in the facility agreement.
See “Trading Securities” below for more information. 77 Table of Contents Fixed Maturity AFS Securities In accordance with the fixed maturity AFS accounting guidance, we reflect stockholders’ equity as if unrealized gains and losses were actually recognized and consider all related accounting adjustments that would occur upon such a hypothetical recognition of unrealized gains and losses.
See “Trading Securities” below for more information. 80 Table of Contents Fixed Maturity AFS Securities In accordance with the fixed maturity AFS accounting guidance, we reflect stockholders’ equity as if unrealized gains and losses were actually recognized and consider all related accounting adjustments that would occur upon such a hypothetical recognition of unrealized gains and losses.
LLANY is a member of the Federal Home Loan Bank of New York (“FHLBNY”) with an estimated maximum borrowing capacity of $750 million. Borrowings under this facility are subject to the FHLBNY’s discretion and require the availability of qualifying assets at LLANY. As of December 31, 2023, LLANY had no outstanding borrowings under this facility.
LLANY is a member of the Federal Home Loan Bank of New York (“FHLBNY”) with an estimated maximum borrowing capacity of $750 million. Borrowings under this facility are subject to the FHLBNY’s discretion and require the availability of qualifying assets at LLANY. As of December 31, 2024, LLANY had no outstanding borrowings under this facility.
New business issued or acquired, business ceded or sold, changes to or variances from actuarial assumptions and economic conditions will cause these amounts to change over time, possibly materially. See Note 1 for details of what these liabilities include and represent. (2) Represents principal amounts of debt only. See Note 14 for additional information.
New business issued or acquired, business ceded or sold, changes to or variances from actuarial assumptions and economic conditions will cause these amounts to change over time, possibly materially. See Note 1 for details of what these liabilities include and represent. (2) Represents principal amounts of debt only. See Note 1 3 for additional information.
NAIC designations 3 through 6 include bonds generally considered below investment grade (rated Ba1 or lower by Moody’s, or rated BB+ or lower by S&P and Fitch). As of December 31, 2023 and 2022, 97% of the total fixed maturity AFS securities in an unrealized loss position were investment grade.
NAIC designations 3 through 6 include bonds generally considered below investment grade (rated Ba1 or lower by Moody’s, or rated BB+ or lower by S&P and Fitch). As of December 31, 2024 and 2023, 97% of the total fixed maturity AFS securities in an unrealized loss position were investment grade.
The amount and timing of share repurchases depends on key capital ratios, rating agency expectations, the generation of dividends from our subsidiaries and an evaluation of the costs and benefits associated with alternative uses of capital. We did not repurchase any shares of common stock under our buyback program during 2023.
The amount and timing of share repurchases depends on key capital ratios, rating agency expectations, the generation of dividends from our subsidiaries and an evaluation of the costs and benefits associated with alternative uses of capital. We did not repurchase any shares of common stock under our buyback program during 2024.
For information on these long-term notes issued by our captive reinsurance and reinsurance subsidiaries, see Note 5 . We have also used the proceeds from senior note issuances of $875 million to execute long-term structured solutions primarily supporting reinsurance of UL products containing secondary guarantees.
For information on these long-term notes issued by our captive reinsurance and reinsurance subsidiaries, see Note 4 . We have also used the proceeds from senior note issuances of $875 million to execute long-term structured solutions primarily supporting reinsurance of UL products containing secondary guarantees.
We have the ability to maintain our investment holdings throughout credit cycles because of our capital position, the long-term nature of our liabilities and the matching of our portfolios of investment assets with the liabilities of our various products. 75 Table of Contents Fixed Maturity and Equity Securities Portfolios Fixed maturity securities consist of portfolios classified as AFS and trading.
We have the ability to maintain our investment holdings throughout credit cycles because of our capital position, the long-term nature of our liabilities and the matching of our portfolios of investment assets with the liabilities of our various products. 78 Table of Contents Fixed Maturity and Equity Securities Portfolios Fixed maturity securities consist of portfolios classified as AFS and trading.
Derivatives See Note 6 for information on our derivatives used to hedge our exposure to changes in interest rates. Equity Market Risk Equity market risk is the risk of financial loss due to changes in the value of equity securities or equity indices. Our revenues, assets and liabilities are exposed to equity market risk that we often hedge with derivatives.
Derivatives See Note 5 for information on our derivatives used to hedge our exposure to changes in interest rates. Equity Market Risk Equity market risk is the risk of financial loss due to changes in the value of equity securities or equity indices. Our revenues, assets and liabilities are exposed to equity market risk that we often hedge with derivatives.
Market Risk Related to Certain Variable Annuity and Fixed Indexed Annuity Products Our variable annuity and fixed indexed annuity contracts are exposed to market risks related to changes in the assumptions used in the original pricing of these products, including equity market, interest rate, and non-market actuarial assumptions. For additional information, see Note 10 .
Market Risk Related to Certain Variable Annuity and Fixed Indexed Annuity Products Our variable annuity and fixed indexed annuity contracts are exposed to market risks related to changes in the assumptions used in the original pricing of these products, including equity market, interest rate, and non-market actuarial assumptions. For additional information, see Note 9 .
See “Interest Rate Risk – Significant Interest Rate Exposures” above for our notional amounts in U.S. dollar equivalents (in millions) by year of maturity for our foreign currency swaps. See Note 6 for additional information on our foreign currency swaps used to hedge our exposure to foreign currency exchange risk.
See “Interest Rate Risk – Significant Interest Rate Exposures” above for our notional amounts in U.S. dollar equivalents (in millions) by year of maturity for our foreign currency swaps. See Note 5 for additional information on our foreign currency swaps used to hedge our exposure to foreign currency exchange risk.
Details underlying our fixed maturity AFS securities by industry classification (in millions) are presented in the tables below. These tables agree in total with the presentation of fixed maturity AFS securities in Note 4 ; however, the categories below represent a more detailed breakout of the fixed maturity AFS portfolio.
Details underlying our fixed maturity AFS securities by industry classification (in millions) are presented in the tables below. These tables agree in total with the presentation of fixed maturity AFS securities in Note 3 ; however, the categories below represent a more detailed breakout of the fixed maturity AFS portfolio.
Effect of Equity Market Sensitivity If the level of the equity markets were to have instantaneously increased or decreased by 1% immediately after December 31, 2023, we estimate the effect on income (loss) from operations for the next 12-month period from the change in asset-based fees and related expenses would be approximately $12 million .
Effect of Equity Market Sensitivity If the level of the equity markets were to have instantaneously increased or decreased by 1% immediately after December 31, 2024, we estimate the effect on income (loss) from operations for the next 12-month period from the change in asset-based fees and related expenses would be approximately $10 million.
We also sell CDSs to offer credit protection to our contract holders and investors with respect to a single entity or referenced index. See Note 6 for additional information on our use of credit derivatives.
We also sell CDSs to offer credit protection to our contract holders and investors with respect to a single entity or referenced index. See Note 5 for additional information on our use of credit derivatives.
The degree to which a security is susceptible to either gains or losses is influenced by: the difference between its amortized cost and par; the relative sensitivity of the underlying mortgages 79 Table of Contents backing the assets to prepayment in a changing interest rate environment; and the repayment priority of the securities in the overall securitization structure.
The degree to which a security is susceptible to either gains or losses is influenced by: the difference between its amortized cost and par; the relative sensitivity of the underlying mortgages backing the assets to prepayment in a changing interest rate environment; and the repayment priority of the securities in the overall securitization structure.
For purposes of this guidance, the change in account balances is assumed to correlate with the change in the relevant index. Credit Risk Credit risk is the risk to earnings and capital that arises from uncertainty of an obligor’s or counterparty’s ability or willingness to meet its obligations in accordance with contractually agreed upon terms.
For purposes of this guidance, the change in account balances is assumed to correlate with the change in the relevant index. 102 Table of Contents Credit Risk Credit risk is the risk to earnings and capital that arises from uncertainty of an obligor’s or counterparty’s ability or willingness to meet its obligations in accordance with contractually agreed upon terms.
We believe the unrealized loss position as of December 31, 2023, did not require an impairment recognized in earnings as: (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis; and (iii) the difference in the fair value compared to the amortized cost was due to factors other than credit loss.
We do not believe the unrealized loss position as of December 31, 2024, required an impairment recognized in earnings as: (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis; and (iii) the difference in the fair value compared to the amortized cost was due to factors other than credit loss.
The current statutory limitation is the greater of 10% of the insurer’s contract holders’ surplus, as shown on its last annual statement on file with the 89 Table of Contents Commissioner or the insurer’s statutory net gain from operations for the previous 12 months, but in no event to exceed statutory unassigned surplus.
The current statutory limitation is the greater of 10% of the insurer’s contract holders’ surplus, as shown on its last annual statement on file with the Commissioner or the insurer’s statutory net gain from operations for the previous 12 months, but in no event to exceed statutory unassigned surplus.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reinsurance .” Certain variable annuity GLB and GDB riders are accounted for as MRBs and recorded at fair value. For more information on the market risk sensitivities associated with MRBs, see “
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reinsurance .” Certain variable annuity GLB and GDB riders are accounted for as MRBs and recorded at fair value. For more information on the market risk sensitivities associated 103 Table of Contents with MRBs, see “
The profitability of our fixed annuity and life insurance products is affected by our ability to achieve target spreads, or margins, between the interest income earned on the general account assets and the interest credited to the contract holder on our average fixed account balances, including the fixed portion of variable.
The profitability of our fixed annuity and life insurance products is affected by our ability to achieve target spreads, or margins, between the interest income earned on the general account assets and the interest credited to the policyholder on our average general account balances, including the fixed portion of variable.
Risk Factors – Market Conditions – Changes in interest rates and sustained low interest rates may cause interest rate spreads to decrease, impacting our profitability, and make it more challenging to meet certain statutory requirements” for additional information on low interest rate risks. 97 Table of Contents See Note 12 for information on excess crediting rates over contract minimums.
Risk Factors – Market Conditions – Changes in interest rates and sustained low interest rates may cause interest 100 Table of Contents rate spreads to decrease, impacting our profitability, and make it more challenging to meet certain statutory requirements” for additional information on low interest rate risks. See Note 1 1 for information on excess crediting rates over contract minimums.
Short-Term and Long-Term Debt We manage the timing of maturities and the mixture of fixed-rate and floating-rate debt as part of the process of integrated management of interest rate risk for the entire enterprise. See Note 14 for additional information on our debt.
Short-Term and Long-Term Debt We manage the timing of maturities and the mixture of fixed-rate and floating-rate debt as part of the process of integrated management of interest rate risk for the entire enterprise. See Note 1 3 for additional information on our debt.
For more information about reinsurance, see Notes 8 and 18 and “Liquidity and Capital Resources – Holding Company Sources and Uses of Liquidity and Capital –Subsidiaries’ Capital” below. For factors that could cause actual results to differ materially from those set forth in this section, see “ Part I – Item 1A.
For more information about reinsurance, see Notes 7 and 1 7 and “Liquidity and Capital Resources – Holding Company Sources and Uses of Liquidity and Capital –Subsidiaries’ Capital” below. For factors that could cause actual results to differ materially from those set forth in this section, see “ Part I – Item 1A.
These premiums are designed to make investors indifferent to prepayment. REINSURANCE Our insurance companies cede insurance to other companies. The portion of our life insurance risks exceeding each of our insurance companies’ retention limit is reinsured with other insurers.
These premiums are designed to make investors indifferent to prepayment. 89 Table of Contents REINSURANCE Our insurance companies cede insurance to other companies. The portion of our life insurance risks exceeding each of our insurance companies’ retention limit is reinsured with other insurers.
These sources support the general corporate needs of the holding company, including its common and preferred stock dividends, common stock repurchases, interest and debt service, funding of callable securities, acquisitions and investment in core businesses.
These sources 91 Table of Contents support the general corporate needs of the holding company, including its common and preferred stock dividends, common stock repurchases, interest and debt service, funding of callable securities, acquisitions and investment in core businesses.
We use foreign currency swaps to hedge the foreign exchange risk related to our investment in fixed maturity securities denominated in foreign currencies.
We use foreign currency swaps and foreign currency forwards to hedge the foreign exchange risk related to our investment in fixed maturity securities denominated in foreign currencies.
Our captive reinsurance and reinsurance subsidiaries have also issued long-term notes of $3.8 billion to finance a portion of the excess reserves associated with our term and UL products with secondary guarantees as of December 31, 2023; of this amount, $3.1 billion involve exposure to VIEs.
Our captive reinsurance and reinsurance subsidiaries have also issued long-term notes of $3.7 billion to finance a portion of the excess reserves associated with our term and UL products with secondary guarantees as of December 31, 2024; of this amount, $3.1 billion involve exposure to VIEs.
Business – Financial Strength Ratings .” If our current financial strength ratings or credit ratings were downgraded in the future, terms in our derivative agreements may be triggered, which could negatively affect overall liquidity.
Business – Financial Strength Ratings .” If our current financial strength ratings or credit ratings were downgraded in the future, terms in our derivative agreements and/or certain repurchase agreements may be triggered, which could negatively affect overall liquidity.
(3) Estimates are based on the level of capacity we expect to utilize during the life of the LOCs and other reserve financing arrangements. See Note 14 for additional information. (4) Excludes collateral payable held for derivative investments. See Note 4 for additional information. (5) See Note 4 for additional information. (6) See Note 18 for additional information.
(3) Estimates are based on the level of capacity we expect to utilize during the life of the LOCs and other reserve financing arrangements. See Note 1 3 for additional information. (4) Excludes collateral payable held for derivative investments. See Note 3 for additional information. (5) See Note 3 for additional information. (6) See Note 1 7 for additional information.
As a result of our modified coinsurance and coinsurance with funds withheld agreements, we reported deposit assets, net of allowances for credit losses of $28.8 billion on the Consolidated Balance Sheets as of December 31, 2023. For additional information, see Note 8 . Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers.
As a result of our modified coinsurance and coinsurance with funds withheld agreements, we reported deposit assets, net of allowances for credit losses of $30.8 billion on the Consolidated Balance Sheets as of December 31, 2024. For additional information, see Note 7 . Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers.
Under the LNL reinsurance arrangement, we held approximately $2.6 billion of statutory reserves as of December 31, 2023. LNL must maintain an AM Best financial strength rating of at least B++, an S&P financial strength rating of at least BBB- and a Moody’s financial strength rating of at least Baa3.
Under the LNL reinsurance arrangement, we held approximately $2.5 billion of statutory reserves as of December 31, 2024. LNL must maintain an AM Best financial strength rating of at least B++, an S&P financial strength rating of at least BBB- and a Moody’s financial strength rating of at least Baa3.
The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged. As of December 31, 2023, we were in a net collateral payable position of $5.0 billion compared to $3.1 billion as of December 31, 2022.
The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged. As of December 31, 2024, we were in a net collateral payable position of $7.1 billion compared to $5.0 billion as of December 31, 2023.
The total outstanding principal and interest on commercial mortgage loans on real estate that were two or more payments delinquent, excluding foreclosures, as of December 31, 2023 and 2022, was less than $1 million.
The total outstanding principal and interest on commercial mortgage loans on real estate that were two or more payments delinquent, excluding foreclosures, as of December 31, 2024 and 2023, was $34 million and less than $1 million, respectively, or less than 1% of total mortgage loans on real estate.
(2) See “Alternative Investments” above for additional information. 86 Table of Contents For the Years Ended December 31, 2023 2022 2021 Interest Rate Yield Fixed maturity AFS securities, mortgage loans on real estate and other, net of investment expenses 4.04 % 3.87 % 3.92 % Commercial mortgage loan prepayment and bond make-whole premiums 0.01 % 0.08 % 0.15 % Alternative investments 0.17 % 0.05 % 0.51 % Net investment income yield on invested assets 4.22 % 4.00 % 4.58 % We earn investment income on our general account assets supporting fixed annuity, term life, whole life, UL, interest-sensitive whole life and the fixed portion of retirement plan and VUL products.
(2) See “Alternative Investments” above for additional information. 88 Table of Contents For the Years Ended December 31, 2024 2023 2022 Interest Rate Yield Fixed maturity AFS securities, mortgage loans on real estate and other, net of investment expenses 4.04 % 4.04 % 3.87 % Commercial mortgage loan prepayment and bond make-whole premiums 0.01 % 0.01 % 0.08 % Alternative investments 0.25 % 0.17 % 0.05 % Net investment income yield on invested assets 4.30 % 4.22 % 4.00 % We earn investment income on our general account assets supporting fixed annuity, term life, whole life, UL, interest-sensitive whole life and the fixed portion of retirement plan and VUL products.
Risk Factors – Covenants and Ratings – A downgrade in our financial strength or credit ratings could limit our ability to market products, increase the number or value of policies being surrendered and/or hurt our relationships with creditors” for more information. Item 7A.
See “ Part I – Item 1A. Risk Factors – Covenants and Ratings – A downgrade in our financial strength or credit ratings could limit our ability to market products, increase the number or value of policies being surrendered and/or hurt our relationships with creditors” for more information. Item 7A.
If it were necessary to liquidate fixed maturity AFS securities prior to maturity or call to meet cash flow needs, we would first look to those fixed maturity AFS securities that are in an unrealized gain position, which had a fair value of $26.8 billion as of December 31, 2023, rather than selling fixed maturity AFS securities in an unrealized loss position.
If it were necessary to liquidate fixed maturity AFS securities prior to maturity or call to meet cash flow needs, we would first look to those fixed maturity AFS securities that are in an unrealized gain position, which had a fair value of $20.6 billion as of December 31, 2024, rather than selling fixed maturity AFS securities in an unrealized loss position.
Therefore, the investment classifications listed below do not agree to the investment categories provided in Note 4 .
Therefore, the investment classifications listed below do not agree to the investment categories provided in Note 3 .
AM Best Fitch Moody's S&P “aaa to c” “AAA to D” “Aaa to C” “AAA to D” bbb+ BBB+ Baa2 BBB+ (8th of 22) (8th of 23) (9th of 21) (8th of 22) 94 Table of Contents As of February 16, 2024, our indicative short-term credit ratings as published by the principal rating agencies that rate our short-term credit are indicated in the following table.
AM Best Fitch Moody's S&P “aaa to c” “AAA to D” “Aaa to C” “AAA to D” bbb+ BBB+ Baa2 BBB+ (8th of 22) (8th of 23) (9th of 21) (8th of 22) 97 Table of Contents As of February 13, 2025, our indicative short-term credit ratings as published by the principal rating agencies that rate our short-term credit are indicated in the following table.
Risk Factors – Market Conditions – Increases in interest rates may negatively affect our profitability, capital position and the value of our investment portfolio and may also result in increased contract withdrawals” for more information on the risks related to rising interest rates.
Risk Factors – Market Conditions – Increases in interest rates and sustained high interest rates may negatively affect our profitability, capital position and the value of our investment portfolio and may also result in increased contract withdrawals and surrenders” for more information on the risks related to rising interest rates.
Such related balance sheet effects include adjustments to future contract benefits, policyholder account balances and deferred income taxes. Adjustments to each of these balances are charged or credited to AOCI. For instance, deferred income tax balances are adjusted because unrealized gains or losses do not affect actual taxes currently paid.
Such related balance sheet effects include adjustments to future contract benefits, policyholder account balances and deferred income taxes. Adjustments to each of these balances are charged or credited to accumulated other comprehensive income (loss) (“AOCI”). For instance, deferred income tax balances are adjusted because unrealized gains or losses do not affect actual taxes currently paid.
In addition, we may incur reinvestment risks if market yields are lower than the book yields earned on the securities. Prepayments occurring slower than expected have the opposite effect.
In addition, we may incur reinvestment risks if market yields are lower than the book yields earned on the 82 Table of Contents securities. Prepayments occurring slower than expected have the opposite effect.
The cash received in our securities lending programs and repurchase agreements is typically invested in cash and invested cash or fixed maturity AFS securities. For additional information, see “Payables for Collateral on Investments” in Note 4 .
The cash received in our securities lending programs is typically invested in cash and invested cash or fixed maturity AFS securities. For additional information, see “Payables for Collateral on Investments” in Note 3 .
Effect of Interest Rate Sensitivity The following table presents our estimate of the effect on income (loss) from operations by segment (in millions) for the next 12-month period if the level of interest rates were to instantaneously increase or decrease by 1% and remain at those levels immediately after December 31, 2023, relative to interest rates remaining flat: 1% Increase 1% Decrease Annuities (1) $ (20) $ 21 Life Insurance 7 (7) Group Protection 5 (5) Retirement Plan Services – (5) Other Operations (9) 9 Income (loss) from operations $ (17) $ 13 (1) Includes the impact on bond funds in our separate accounts, which move in the opposite direction of interest rates.
Effect of Interest Rate Sensitivity The following table presents our estimate of the effect on income (loss) from operations by business segment and Other Operations (in millions) for the next 12-month period if the level of interest rates were to instantaneously increase or decrease by 1% and remain at those levels immediately after December 31, 2024, relative to interest rates remaining flat: 1% Increase 1% Decrease Annuities (1) $ (21) $ 21 Life Insurance 6 (6) Group Protection 4 (4) Retirement Plan Services 6 (6) Other Operations (13) 13 Income (loss) from operations $ (18) $ 18 (1) Includes the impact on bond funds in our separate accounts, which move in the opposite direction of interest rates.
As of December 31, 2023, LNL had an estimated maximum borrowing capacity of $7.0 billion under the FHLBI facility and maximum available borrowing based on qualifying assets of $5.1 billion. As of December 31, 2023, LNL had outstanding borrowings of $2.7 billion under this facility reported within payables for collateral on investments on the Consolidated Balance Sheets.
As of December 31, 2024, LNL had an estimated maximum borrowing capacity of $7.0 billion under the FHLBI facility and maximum available borrowing based on qualifying assets of $4.9 billion. As of December 31, 2024, LNL had outstanding borrowings of $2.7 billion under this facility reported within payables for collateral on investments on the Consolidated Balance Sheets.
We recognized $(22) million and $(15) million of credit loss benefit (expense) on our fixed maturity AFS securities for the years ended December 31, 2023 and 2022, respectively.
We recognized $(42) million and $(22) million of credit loss benefit (expense) on our fixed maturity AFS securities for the years ended December 31, 2024 and 2023, respectively.
See Note 6 for additional information on managing the credit risk of our counterparties. We are also exposed to credit risk through the use of certain derivatives. We buy CDSs to minimize our exposure to credit-related events with respect to a single entity or referenced index.
See Note 5 for additional information on managing the credit risk of our counterparties. We are also exposed to credit risk through the use of certain derivatives. We buy credit default swaps (“CDSs”) to minimize our exposure to credit-related events with respect to a single entity or referenced index.
Taxes have been eliminated from the analysis due to a tax sharing agreement among our primary subsidiaries resulting in a modest effect on net cash flows at the holding company.
These activities are discussed below. Taxes have been eliminated from the analysis due to a tax sharing agreement among our primary subsidiaries resulting in a modest effect on net cash flows at the holding company.
The $125 million in trading securities consisted of $85 million of multiple property CMBS and $40 million of single property CMBS. (2) Does not include the fair value of trading securities totaling $104 million that primarily support our reinsurance funds withheld and modified coinsurance agreements because investment results for these agreements are passed directly to the reinsurers.
The $126 million in trading securities consisted of $77 million of multiple property CMBS and $49 million of single property CMBS. (2) Does not include the fair value of trading securities totaling $109 million that primarily support our reinsurance funds withheld and modified coinsurance agreements because investment results for these agreements are passed directly to the reinsurers.
We are exposed to credit risk primarily by our investments in corporate bonds and mortgage loans on real estate and through our use of derivatives. 99 Table of Contents Investments The majority of our credit risk is concentrated in investment holdings. Our portfolio of investments was $124.3 billion and $131.7 billion as of December 31, 2023 and 2022, respectively.
We are exposed to credit risk primarily by our investments in corporate bonds and mortgage loans on real estate and through our use of derivatives. Investments The majority of our credit risk is concentrated in investment holdings. Our portfolio of investments was $129.3 billion and $124.3 billion as of December 31, 2024 and 2023, respectively.
Under two other LLANY arrangements, by which we established $585 million of statutory reserves as of December 31, 2023, LLANY must maintain an AM Best financial strength rating of at least B++, an S&P financial strength rating of at least BBB- and a Moody’s financial strength rating of at least Baa3.
Under two other LLANY arrangements, by which we established $551 million of statutory reserves as of December 31, 2024, LLANY must maintain an AM Best financial strength rating of at 90 Table of Contents least B++, an S&P financial strength rating of at least BBB- and a Moody’s financial strength rating of at least Baa3.
For additional information, see Note 14 . 92 Table of Contents Federal Home Loan Bank Our primary insurance subsidiary, LNL, is a member of the Federal Home Loan Bank (“FHLB”) of Indianapolis (“FHLBI”).
For additional information, see Note 1 3 . 95 Table of Contents Federal Home Loan Bank Our primary insurance subsidiary, LNL, is a member of the Federal Home Loan Bank (“FHLB”) of Indianapolis (“FHLBI”).
For additional discussion, see “Fixed Maturity AFS Securities – Evaluation for Recovery of Amortized Cost” in Note 1 and “ Liquidity and Capital Resources ” below. As of December 31, 2023 and 2022, the estimated fair value for all private placement securities was $20.6 billion and $19.0 billion, respectively, representing 17% and 14% of total investments, respectively.
For additional information, see “Fixed Maturity AFS Securities – Evaluation for Recovery of Amortized Cost” in Note 1 and “ Liquidity and Capital Resources ” below. As of December 31, 2024 and 2023, the estimated fair value for all private placement securities was $20.9 billion and $20.6 billion, respectively, representing 16% and 17% of total investments, respectively.
As of December 31, 2023, 86%, or $25.6 billion, of our total reinsurance recoverable was secured by collateral for our benefit.
As of December 31, 2024, 86%, or $24.6 billion, of our total reinsurance recoverable was secured by collateral for our benefit.
As a holding company with no operations of its own, LNC is largely dependent upon the dividend capacity of its insurance subsidiaries as well as their ability to advance or repay funds to it through inter-company borrowing arrangements, which may be affected by factors influencing the insurance subsidiaries’ RBC and statutory earnings performance.
As a holding company with no operations of its own, LNC is largely dependent upon the dividend capacity of its insurance and other subsidiaries as well as their ability to advance or repay funds to it through inter-company borrowing arrangements, which may be affected by factors influencing the subsidiaries’ capital position, as discussed further below.
Details underlying our debt activities (in millions) for the year ended December 31, 2023, were as follows: Beginning Balance Issuance Maturities, Repayments and Refinancing Change in Fair Value Hedges Other Changes (1) Ending Balance Short-Term Debt Current maturities of long-term debt (2) $ 500 $ – $ (500) $ – $ 250 $ 250 Long-Term Debt Senior notes $ 4,497 $ – $ – $ 5 $ (11) $ 4,491 Term loans 250 – – – (250) – Subordinated notes (3) 995 – – – – 995 Capital securities (3) 213 – – – – 213 Total long-term debt $ 5,955 $ – $ – $ 5 $ (261) $ 5,699 (1) Includes the non-cash reclassification of long-term debt to current maturities of long-term debt, accretion (amortization) of discounts and premiums, amortization of debt issuance costs and amortization of adjustments from discontinued hedges, as applicable.
Details underlying our debt activities (in millions) for the year ended December 31, 2024, were as follows: Beginning Balance Issuance Maturities, Repayments and Refinancing Change in Fair Value Hedges Other Changes (1) Ending Balance Short-Term Debt Current maturities of long-term debt (2) $ 250 $ – $ (100) $ – $ 150 $ 300 Long-Term Debt Senior notes $ 4,491 $ 350 $ – $ (27) $ (316) $ 4,498 Term loans – – – – 150 150 Subordinated notes (3) 995 – – – – 995 Capital securities (3) 213 – – – – 213 Total long-term debt $ 5,699 $ 350 $ – $ (27) $ (166) $ 5,856 (1) Includes the non-cash reclassification of long-term debt to current maturities of long-term debt, accretion (amortization) of discounts and premiums, amortization of debt issuance costs and amortization of adjustments from discontinued hedges, as applicable.
For the majority of our derivative counterparties, there is a termination event with respect to LNC if its long-term senior debt ratings drop below BBB-/Baa3 (S&P/Moody’s); or with respect to LNL if its financial strength ratings drop below BBB-/Baa3 (S&P/Moody’s).
For the majority of our derivative counterparties, there is a termination event if the long-term credit ratings of LNC drop below BBB-/Baa3 (S&P/Moody’s) or if the financial strength ratings of LNL drop below BBB-/Baa3 (S&P/Moody’s).
Disruptions, uncertainty or volatility in the capital and credit markets may materially affect our business operations and results of operations and may adversely affect our insurance subsidiaries’ statutory surplus and RBC. 88 Table of Contents Reductions to our subsidiaries’ statutory surplus and RBC may cause them to retain more capital, which may pressure their ability to pay dividends to LNC, which may lead us to take steps to preserve or raise additional capital.
Disruptions, uncertainty or volatility in the capital and credit markets may materially affect our business operations and results of operations and may adversely affect our subsidiaries’ capital position that may cause them to retain more capital, which may pressure their ability to pay dividends to LNC, which may lead us to take steps to preserve or raise additional capital.
For more information, see “Results of Annuities” above and Note 1 . Debt Although our subsidiaries currently generate adequate cash flow to meet the needs of our normal operations, periodically LNC may issue debt to maintain ratings and increase liquidity, as well as to fund internal growth, acquisitions and the retirement of its debt.
Debt Although our subsidiaries currently generate adequate cash flow to meet the needs of our normal operations, periodically LNC may issue debt to maintain ratings and increase liquidity, as well as to fund internal growth, acquisitions and the retirement of its debt.
Net Investment Income Details underlying net investment income (in millions) and our investment yield were as follows: For the Years Ended December 31, 2023 2022 2021 Net Investment Income Fixed maturity AFS securities $ 4,819 $ 4,469 $ 4,351 Trading securities 161 182 167 Equity securities 13 11 3 Mortgage loans on real estate 755 689 680 Policy loans 103 101 115 Cash and invested cash 129 13 – Commercial mortgage loan prepayment and bond make-whole premiums (1) 10 105 199 Alternative investments (2) 243 66 679 Consent fees 3 8 10 Other investments (33) 79 64 Investment income 6,203 5,723 6,268 Investment expense (324) (208) (157) Net investment income $ 5,879 $ 5,515 $ 6,111 (1) See “Commercial Mortgage Loan Prepayment and Bond Make-Whole Premiums” below for additional information.
Net Investment Income Details underlying net investment income (in millions) and our investment yield were as follows: For the Years Ended December 31, 2024 2023 2022 Net Investment Income Fixed maturity AFS securities $ 4,222 $ 4,819 $ 4,469 Trading securities 118 161 182 Equity securities 21 13 11 Mortgage loans on real estate 887 755 689 Policy loans 95 103 101 Cash and invested cash 194 129 13 Commercial mortgage loan prepayment and bond make-whole premiums (1) 15 10 105 Alternative investments (2) 319 243 66 Consent fees – 3 8 Other investments (30) (33) 79 Investment income 5,841 6,203 5,723 Investment expense (316) (324) (208) Net investment income $ 5,525 $ 5,879 $ 5,515 (1) See “Commercial Mortgage Loan Prepayment and Bond Make-Whole Premiums” below for additional information.
We believe we have adequate capital to operate our business as we replenish statutory capital back to our targeted levels. For more information, see “Subsidiaries’ Capital” below. For factors that could cause actual results to differ materially from those set forth in this section and that could affect our expectations for liquidity and capital, see “Part I – Item 1A.
We believe we have appropriate capital to operate our business in accordance with our strategy. For more information, see “Subsidiaries’ Capital” below. For factors that could cause actual results to differ materially from those set forth in this section and that could affect our expectations for liquidity and capital, see “Part I – Item 1A.
Of this amount, $24.7 billion was held by 87 Table of Contents reinsurers in reserve credit trusts (such reserve credit trusts are held by non-affiliated reinsurers; therefore, they are not reflected on the Consolidated Balance Sheets), $121 million was held in our funds withheld portfolios and $813 million was secured by LOCs for which we are the beneficiary, an off-balance sheet arrangement.
Of this amount, $22.9 billion was held by reinsurers in reserve credit trusts (such reserve credit trusts are held by non-affiliated reinsurers; therefore, they are not reflected on the Consolidated Balance Sheets), $1.6 billion was held in our funds withheld portfolios and $171 million was secured by LOCs for which we are the beneficiary, an off-balance sheet arrangement.
As a result, the relationship between reserve changes and equity market performance is non-linear during any given reporting period. Our insurance subsidiaries’ cede a portion of the guaranteed benefit riders to Lincoln National Reinsurance Company (Barbados) Limited (“LNBAR”) through a modified coinsurance agreement.
As a result, the relationship between reserve changes and equity market performance is non-linear during any given reporting period. Our insurance subsidiaries’ cede a portion of the variable annuity guaranteed benefit riders to LNBAR through a modified coinsurance agreement.
As of December 31, 2022, there were 2 specifically identified impaired commercial mortgage loans on real estate with an aggregate carrying value of less than $1 million and 37 specifically identified impaired residential mortgage loans on real estate with an aggregate carrying value of $16 million.
As of December 31, 2023, there were specifically identified impaired commercial and residential mortgage loans with an aggregate carrying value of $2 million and $47 million, respectively, or less than 1% of total mortgage loans on real estate.
(7) Represents certain financing arrangements that did not meet the requirements to be classified as a sale-leaseback arrangement. See Note 18 for additional information. (8) Includes anticipated funding for benefit payments for our retirement and postretirement plans through 2033 and known payments under deferred compensation arrangements. In addition to these benefit payments, we periodically fund the employees’ defined benefit plans.
(7) Represents certain financing arrangements that did not meet the requirements to be classified as a sale-leaseback arrangement. See Note 1 7 for additional information. (8) Includes anticipated funding for benefit payments for our retirement and postretirement plans through 2034 and known payments under deferred compensation arrangements.
This arrangement may require LNL to place assets in trust equal to the relevant statutory reserves. Under LLANY’s largest indemnity reinsurance arrangement, we held approximately $1.0 billion of statutory reserves as of December 31, 2023.
This arrangement may require LNL to place assets in trust equal to the relevant statutory reserves. Under LLANY’s largest indemnity reinsurance arrangement, we held $913 million of statutory reserves as of December 31, 2024.
The RBC ratio is an important factor in the determination of the credit and financial strength ratings of LNC and its subsidiaries, as a reduction in our insurance subsidiaries’ surplus will affect their RBC ratios and dividend-paying capacity.
The RBC ratio is an important factor in the determination of the credit and financial strength ratings of LNC and its subsidiaries, as a reduction in our insurance subsidiaries’ surplus will affect their RBC ratios and dividend-paying capacity. For additional information on RBC ratios, see “ Part I – Item 1.
The quality of our fixed maturity AFS securities portfolio, as measured at estimated fair value and by the percentage of fixed maturity AFS securities invested in various ratings categories, relative to the entire fixed maturity AFS security portfolio (in millions) was as follows: As of December 31, 2023 As of December 31, 2022 Rating Agency Net Net NAIC Equivalent Amortized Fair % of Amortized Fair % of Designation (1) Designation (1) Cost Value Total Cost Value Total Investment Grade Securities 1 AAA / AA / A $ 56,557 $ 51,234 57.7 % $ 63,741 $ 56,892 57.0 % 2 BBB 37,832 34,614 39.0 % 44,103 39,230 39.4 % Total investment grade securities 94,389 85,848 96.7 % 107,844 96,122 96.4 % Below Investment Grade Securities 3 BB 1,176 1,090 1.2 % 2,101 1,938 1.9 % 4 B 1,760 1,719 2.0 % 1,679 1,620 1.6 % 5 CCC and lower 86 78 0.1 % 59 53 0.1 % 6 In or near default 3 3 0.0 % 2 3 0.0 % Total below investment grade securities 3,025 2,890 3.3 % 3,841 3,614 3.6 % Total fixed maturity AFS securities $ 97,414 $ 88,738 100.0 % $ 111,685 $ 99,736 100.0 % Total securities below investment grade as a percentage of total fixed maturity AFS securities 3.1 % 3.3 % 3.4 % 3.6 % (1) Based upon the rating designations determined and provided by the National Association of Insurance Commissioners (“NAIC”) or the major credit rating agencies (Fitch Ratings (“Fitch”), Moody’s Investors Service (“Moody’s”) and S&P Global Ratings (“S&P”)).
The quality of our fixed maturity AFS securities portfolio, as measured at estimated fair value and by the percentage of fixed maturity AFS securities invested in various ratings categories, relative to the entire fixed maturity AFS security portfolio (in millions) was as follows: As of December 31, 2024 As of December 31, 2023 Rating Agency Net Net NAIC Equivalent Amortized Fair % of Amortized Fair % of Designation (1) Designation (1) Cost Value Total Cost Value Total Investment Grade Securities 1 AAA / AA / A $ 58,103 $ 51,596 59.2 % $ 56,557 $ 51,234 57.7 % 2 BBB 36,224 32,583 37.4 % 37,832 34,614 39.0 % Total investment grade securities 94,327 84,179 96.6 % 94,389 85,848 96.7 % Below Investment Grade Securities 3 BB 960 910 1.0 % 1,176 1,090 1.2 % 4 B 1,857 1,826 2.1 % 1,760 1,719 2.0 % 5 CCC and lower 138 124 0.2 % 86 78 0.1 % 6 In or near default 87 72 0.1 % 3 3 0.0 % Total below investment grade securities 3,042 2,932 3.4 % 3,025 2,890 3.3 % Total fixed maturity AFS securities $ 97,369 $ 87,111 100.0 % $ 97,414 $ 88,738 100.0 % Total securities below investment grade as a percentage of total fixed maturity AFS securities 3.1 % 3.4 % 3.1 % 3.3 % (1) Based upon the rating designations determined and provided by the National Association of Insurance Commissioners (“NAIC”) or the major credit rating agencies (Fitch Ratings (“Fitch”), Moody’s Investors Service (“Moody’s”) and S&P Global Ratings (“S&P”)).
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – (c) Issuer Purchases of Equity Securities .” Details underlying return of capital to common stockholders (in millions) were as follows: For the Years Ended December 31, 2023 2022 2021 Dividends to common stockholders $ 305 $ 310 $ 319 Repurchase of common stock – 550 1,105 Total cash returned to common stockholders $ 305 $ 860 $ 1,424 Number of shares repurchased – 8.7 16.2 Alternative Sources of Liquidity Inter-Company Cash Management Program To promote effective short-term cash management strategies, we utilize an inter-company cash management program between LNC and participating subsidiaries under which each entity can lend to or borrow from the holding company to meet short-term borrowing needs.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – (c) Issuer Purchases of Equity Securities .” Details underlying return of capital to common stockholders (in millions) were as follows: For the Years Ended December 31, 2024 2023 2022 Dividends to common stockholders $ 306 $ 305 $ 310 Repurchase of common stock – – 550 Total cash returned to common stockholders $ 306 $ 305 $ 860 Number of shares repurchased – – 8.7 Alternative Sources of Liquidity Inter-Company Cash Management Program To meet short-term liquidity needs that arise in the ordinary course of business, we utilize an inter-company cash management program between LNC and participating subsidiaries whereby participating subsidiaries can borrow cash from or lend cash to LNC.
Securities are rated at the time of issuance so actual ratings may differ from the indicative ratings. There may be other rating agencies that also provide credit ratings, which we do not disclose in our reports. Each rating should be evaluated independently of any other rating.
Credit Ratings Our indicative credit ratings published by the primary rating agencies are set forth below. Securities are rated at the time of issuance so actual ratings may differ from the indicative ratings. There may be other rating agencies that also provide credit ratings, which we do not disclose in our reports.
Of this total, $71.3 billion and $81.3 billion consisted of corporate bonds and $19.0 billion and $18.3 billion consisted of mortgage loans on real estate a s of December 31, 2023 and 2022, respectively.
Of this total, $67.9 billion and $71.3 billion consisted of corporate bonds and $21.1 billion and $19.0 billion consisted of mortgage loans on real estate a s of December 31, 2024 and 2023, respectively.
We use long-dated LOCs and debt financing as well as other financing strategies to finance those reserves. Included in the LOCs issued as of December 31, 2023, was $1.9 billion of long-dated LOCs issued to support inter-company reinsurance agreements for UL products containing secondary guarantees. For information on the LOCs, see the credit facilities table in Note 14 .
We use long-dated LOCs and debt financing as well as other financing strategies to finance those reserves. Included in the LOCs issued as of December 31, 2024, was $1.8 billion of long-dated LOCs issued to support inter-company reinsurance agreements for term products and UL products containing secondary guarantees.
For information on credit loss impairment on fixed maturity AFS securities, see Notes 1 , 4 and 21.
For information on credit loss impairment on fixed maturity AFS securities, see Notes 1 , 3 and 2 0 .
Our credit ratings assigned by Moody’s and S&P are on outlook stable, and our credit ratings assigned by AM Best and Fitch are on outlook negative As of February 16, 2024, our indicative long-term credit ratings as published by the principal rating agencies that rate our long-term credit are indicated in the following table.
Each rating should be evaluated independently of any other rating. Our credit ratings assigned by AM Best, Fitch, Moody’s and S&P are on outlook stable. As of February 13, 2025, our indicative long-term credit ratings as published by the principal rating agencies that rate our long-term credit are indicated in the following table.
As of December 31, 2023 and 2022, our unhedged positions consiste d of $1 million and zero, respectively, of principal in U.S. dollar equivalents of foreign-denominated investments with maturity dates up to 2049 and an average interest rate of 3%.
As of December 31, 2024 and 2023, our unhedged positions consisted of less than $1 million and $1 million, respectively, of principal in U.S. dollar equivalents of foreign-denominated investments with maturity dates up to 2048 and 2049, respectively, and an average interest rate of 3% as of each such date.
As of the same dates, our modified coinsurance portfolios were partially hedged and consisted of $156 million and $164 million, respectively, of principal in U.S. dollar equivalents of foreign denominated investments with maturity dates up to 2063 and an average interest rate of 6%. Investment results for our modified coinsurance agreements are passed directly to the reinsurers.
As of the same dates, our modified coinsurance portfolios were partially hedged and consisted of $136 million and $156 million, respectively, of principal in U.S. dollar equivalents of foreign denominated investments with maturity dates up to 2063 as of each such date and an average interest rate of 5% and 6%, respectively.

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