Lincoln National Q2 2025 Earnings Beat Estimates with Strong Capital and Segment Growth
Lincoln National Corporation (LNC) reported strong second-quarter financial results for 2025, with adjusted earnings per share (EPS) of $2.36, marking a 28.3% increase year over year and surpassing consensus estimates by nearly 24%. Adjusted operating revenues rose 4.4% to $4.7 billion, driven by higher insurance premiums, increased annuity deposits, and solid Group Protection segment performance. The results also benefited from higher net investment income, improved mortality experience, and lower overall expenses, although declines were noted in the Annuity and Retirement Plan Services income streams.
LNC's Risk-Based Capital (RBC) ratio improved to more than 420%, reflecting a strong capital position as of June 30, 2025. Insurance premiums increased by 3.5% year over year to $1.7 billion, slightly outpacing expectations. Fee income grew marginally but fell short of projections, while net investment income saw a significant 10.1% rise, exceeding estimates. Total expenses declined sharply by 21.2%, contributing to profitability, despite a modest increase in interest credited to policyholders.
Segment-level performance varied, with the Annuities segment posting a 3% decrease in operating income due to outflows but maintaining operating revenue growth driven by net investment income. Life Insurance turned profitable compared to a prior loss, supported by improved mortality and higher alternative investment income, with sales and deposits advancing year over year. Group Protection experienced a substantial 33.1% rise in operating income attributed to favorable long-term disability trends and growth in supplemental health offerings. Retirement Plan Services saw a minor decline in operating income, affected by a plan termination, but continued revenue and deposit growth.
The company ended the quarter with $7.1 billion in cash and invested cash, up from $5.8 billion at year-end 2024, and total assets grew to $399.1 billion. Long-term debt decreased to $5.8 billion, while stockholders' equity increased to $9.5 billion. The return on equity from operations improved to 12.9%, though book value per share excluding accumulated other comprehensive income declined slightly. Quarterly dividends totaled $77 million.
Looking ahead, LNC projects segment contributions to operating income in 2026 with Annuities expected to contribute the majority share, followed by Group Protection, Life Insurance, and Retirement Plan Services. The company maintains a strategic target RBC ratio above 420% for 2026 and beyond. LNC's current market standing is rated as a Hold within the finance sector. This financial update highlights LNC's robust capital position and diversified segment performance, which bear significance for insurance market analysts monitoring capital adequacy, investment income trends, and operational efficiency.