Lincoln National Corp Reports 31% Income Surge in Q4 2025
Lincoln National Corp (NYSE:LNC) announced a significant 31% increase in adjusted operating income for Q4 2025, reaching its highest level in four years. This marks the sixth consecutive quarter of year-over-year earnings growth, underscoring robust performance across diverse insurance industry segments.
Annuity and Market Performance
In 2025, annuity sales surged by 25%, fueled by strategic market positioning and a diversified product mix. RILA (Registered Index-Linked Annuities) sales climbed 35%, while fixed and variable annuities saw annual growth of 11% and 27%, respectively.
Performance Across Insurance Segments
Group Protection's operating income reached $109 million in Q4 2025, achieving a margin of 7.9%. Meanwhile, the retirement plan services recorded an income of $46 million, up from $43 million the previous year. Significantly, Life Insurance rebounded with operating earnings of $77 million, reversing the previous year's $15 million loss.
Investment and Financial Outcomes
Lincoln National reported a net income of $745 million, equivalent to $3.80 per diluted share for Q4. On the investment front, alternative investments delivered an annualized return of nearly 12%, exceeding the 10% target. The company closed 2025 with $1.1 billion in holding company liquidity and boosted its free cash flow conversion ratio from 35% in 2023 to 45% in 2025.
Market Challenges and Competitive Strategies
The retirement plan services segment faced net outflows of $1 billion due to participant withdrawals and plan terminations. Persistent variable annuity net outflows indicated challenges in business retention amid high equity markets. Lincoln anticipates some earnings pressure in Q1 2026 within the annuities segment due to fewer fee-earning days and adjustments in mortality assumptions.
Future Strategies and Earnings Projections
During the earnings call, CFO Christopher Neczypor projected medium-term capital returns to shareholders between $400 million and $600 million. He highlighted the importance of capital buffers and potential reinvestment opportunities. Financial strategies aim to utilize excess cash flow to address maturing preferred securities and enhance shareholder returns.
Additionally, reforms in the Life Insurance segment, including captive consolidation, have streamlined regulatory compliance and reduced reserve financing costs, delivering a $10 million benefit to GAAP earnings in Q4. Expectations for 2026 point toward a further $25 million to $30 million improvement in GAAP earnings through capital optimization.
For further insights, Lincoln National Corp's full earnings call transcript is available for review, providing detailed accounts of the insurance carrier's strategic directions and financial outcomes.