LINCOLN NATIONAL CORP [LNC] Filings

10-Q 1 lnc-20220331x10q.htm 10-Q lnc-20220331x10q

__________________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2022

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission File Number: 1-6028

_________________

LINCOLN NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

_________________



Indiana	35-1140070
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

150 N. Radnor-Chester Road, Suite A305, Radnor, Pennsylvania	19087
(Address of principal executive offices)	(Zip Code)

(484) 583-1400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

__________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	LNC	New York Stock Exchange

__________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer		Accelerated Filer	
Non-accelerated Filer		Smaller Reporting Company	
		Emerging Growth Company	

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨No x

As of May 2, 2022, there were 171,946,861 shares of the registrant’s common stock outstanding.

_________________________________________________________________________________________________________

Lincoln National Corporation

Table of Contents


		Page
PART I
Item 1.	Financial Statements:
	Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	1
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three months ended
	March 31, 2022 and 2021	2
	Unaudited Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022
	and 2021	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	4
	Notes to Unaudited Consolidated Financial Statements:
	Nature of Operations and Basis of Presentation	5
	New Accounting Standards	6
	Variable Interest Entities	7
	Investments	8
	Derivatives	17
	Federal Income Taxes	25
	Guaranteed Benefit Features	26
	Liability for Unpaid Claims	27
	Debt	28
	Contingencies and Commitments	28
	Shares and Stockholders’ Equity	30
	Realized Gain (Loss)	34
	Fair Value of Financial Instruments	35
	Segment Information	45
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	90
Item 4.	Controls and Procedures	91

PART II
Item 1.	Legal Proceedings	91
Item 1A.	Risk Factors	91
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 6.	Exhibits	92
	Exhibit Index for the Report on Form 10-Q	93
	Signatures	94

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

LINCOLN NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)



		As of			As of
	March 31,			December 31,
		2022			2021

	(Unaudited)
ASSETS
Investments:
Fixed maturity available-for-sale securities, at fair value
(amortized cost: 2022 - $107,622; 2021 - $105,177; allowance for credit losses: 2022 - $20; 2021 - $19)		$	110,695		$	118,746
Trading securities			4,385			4,482
Equity securities			346			318
Mortgage loans on real estate, net of allowance for credit losses
(portion at fair value: 2022 - $537; 2021 - $739)			17,892			17,991
Policy loans			2,339			2,364
Derivative investments			4,840			5,437
Other investments			4,127			4,292
Total investments			144,624			153,630
Cash and invested cash			1,960			2,612
Deferred acquisition costs and value of business acquired			8,810			6,081
Premiums and fees receivable			671			580
Accrued investment income			1,247			1,189
Reinsurance recoverables, net of allowance for credit losses			20,044			20,295
Funds withheld reinsurance assets			510			517
Goodwill			1,778			1,778
Other assets			17,406			18,036
Separate account assets			168,879			182,583
Total assets		$	365,929		$	387,301

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Future contract benefits		$	39,773		$	41,030
Other contract holder funds			112,901			111,702
Short-term debt			-			300
Long-term debt			6,561			6,325
Reinsurance-related embedded derivatives			-			206
Funds withheld reinsurance liabilities			2,164			2,118
Payables for collateral on investments			8,927			8,946
Other liabilities			12,012			13,819
Separate account liabilities			168,879			182,583
Total liabilities			351,217			367,029

Contingencies and Commitments (See Note 10)

Stockholders’ Equity
Preferred stock – 10,000,000 shares authorized			-			-
Common stock – 800,000,000 shares authorized; 171,890,974 and 177,193,515 shares
issued and outstanding as of March 31, 2022, and December 31, 2021, respectively			4,586			4,735
Retained earnings			8,876			9,096
Accumulated other comprehensive income (loss)			1,250			6,441
Total stockholders’ equity			14,712			20,272
Total liabilities and stockholders’ equity		$	365,929		$	387,301

‎

See accompanying Notes to Consolidated Financial Statements

Table of Contents

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in millions, except per share data)



	For the Three
	Months Ended
	March 31,
	2022			2021
Revenues
Insurance premiums	$	1,477		$	1,406
Fee income		1,568			1,592
Net investment income		1,412			1,510
Realized gain (loss)		29			(181	)
Amortization of deferred gain on business sold through reinsurance		19			9
Other revenues		182			198
Total revenues		4,687			4,534
Expenses
Interest credited		697			737
Benefits		2,565			2,226
Commissions and other expenses		1,236			1,231
Interest and debt expense		66			65
Spark program expense		31			13
Total expenses		4,595			4,272
Income (loss) before taxes		92			262
Federal income tax expense (benefit)		(12	)		37
Net income (loss)		104			225
Other comprehensive income (loss), net of tax		(5,191	)		(3,170	)
Comprehensive income (loss)	$	(5,087	)	$	(2,945	)

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