Lincoln National Corp (LNC) Q4 2025 Earnings Call Highlights: Record Operating Income and …

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Fri, February 13, 2026 at 4:04 AM GMT+9 5 min read

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**Adjusted Operating Income:** Increased 31% year-over-year for Q4 2025; full-year adjusted operating income reached its highest level in four years.

**Annuity Sales:** Total volumes up 25% in 2025; RILA sales increased 35%, fixed annuity sales up 11%, and variable annuity sales increased 27% year-over-year.

**Group Protection Operating Income:** $109 million for Q4 2025, with a margin of 7.9%.

**Net Income:** $745 million or $3.80 per diluted share for Q4 2025.

**Retirement Plan Services Operating Income:** $46 million for Q4 2025, up from $43 million in the prior year quarter.

**Life Insurance Operating Earnings:** $77 million for Q4 2025, compared to an operating loss of $15 million in the prior year quarter.

**Alternative Investments Return:** Nearly 12% annualized return for Q4 2025, above the target of 10%.

**Holding Company Liquidity:** Approximately $1.1 billion at year-end 2025.

**Free Cash Flow Conversion Ratio:** Increased to 45% in 2025, up from 35% in 2023.

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Release Date: February 12, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Lincoln National Corp (NYSE:LNC) reported a 31% year-over-year increase in adjusted operating income for the fourth quarter, marking the highest level in four years.

The company achieved its sixth consecutive quarter of year-over-year adjusted operating earnings growth, demonstrating strong performance across its business segments.

Annuity sales were strong in 2025, with total volumes up 25%, driven by a diversified product mix and strategic market positioning.

Group Protection segment delivered a record year with a 16% increase in full-year earnings, supported by premium growth and disciplined pricing.

The company has made significant progress in optimizing its operating model, creating a more efficient and scalable organization with sustained expense discipline.

Negative Points

The competitive landscape in the RILA market is intensifying, which may impact future sales growth in this segment.

Variable annuity net outflows continued, reflecting ongoing challenges in retaining business amidst higher equity markets.

Retirement Plan Services experienced net outflows of approximately $1 billion for the quarter, driven by participant withdrawals and plan terminations.

The company anticipates sequential pressure on annuities earnings in the first quarter of 2026 due to fewer fee days and resetting of favorable mortality experience.

Despite improvements, the Life Insurance segment still faces challenges in rebuilding sales momentum and optimizing free cash flow.

 






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Q & A Highlights

Q: Chris, regarding capital return, your medium-term guidance suggests $400 million to $600 million plus of capital return to shareholders. Does this imply at least $50 million of buyback in 2026? A: Christopher Neczypor, CFO: The guidance reflects a potential range over the next two years. Our first priority remains maintaining a buffer capital in our operating entities and investing incremental free cash flow where we see opportunities. As our free cash flow improves, we are moving more to the holding company, which provides flexibility. We are also preparing for the optimal way to handle the preferred securities becoming redeemable next year. After addressing the preferred, we aim to increase capital return to shareholders.

Q: If I take the remittances in the medium-term outlook less the holding company expenses, it implies $800 million to $900 million of excess cash. Is this primarily for managing the preferreds next year? A: Christopher Neczypor, CFO: Yes, your calculation is correct. The excess cash will be used to manage the preferreds in 2027 and to increase capital return to shareholders.

Q: Chris, regarding the redefinition of NII, what prompted this change? Is it due to RILA’s growth and materiality? A: Christopher Neczypor, CFO: Yes, as RILA has grown, the associated collateral balances have become more meaningful. We aim to provide a clearer view of annuities’ operating performance by reallocating net interest income from operating to nonoperating income. This change is part of our annual review of allocations and is not a significant driver of year-over-year growth.

Q: Can you elaborate on the captive consolidation in the Life insurance business and its impact on earnings and free cash flow? A: Christopher Neczypor, CFO: The captive consolidation simplifies our legal entity structure and reduces reserve financing costs. It resulted in a $10 million benefit to Life’s GAAP earnings in Q4. For 2026, we expect an additional $25 million to $30 million improvement in GAAP earnings and an incremental free cash flow benefit due to capital optimization.

Q: Ellen, regarding the annuities market, it seems RILA is becoming more competitive. Are you shifting focus to fixed and indexed annuities? A: Ellen Cooper, CEO: We are a leader in the annuity market with a broad product portfolio. We focus on balancing profitability, capital efficiency, and growth. RILA has become more competitive, and we are leveraging our differentiated products and distribution channels. We expect RILA sales growth to align with the past two to three years, while fixed annuities offer more growth potential.

Q: The medium-term subsidiary remittances suggest a significant increase from 2025. What drives this growth? A: Christopher Neczypor, CFO: The growth is due to our ability to move more free cash flow to the holding company, supported by strong capitalization at our operating entities. We have built a buffer and are now in a position to move excess capital to the holding company.

Q: Does the $1.2 billion to $1.3 billion remittance range include any reinsurance or external deals? A: Christopher Neczypor, CFO: The range reflects the natural evolution of our business and does not include any large external deals. If we pursue additional external risk transfer deals, they would be incremental to these numbers.

Q: Can you discuss the dynamics in the annuities market and your outlook for 2026? A: Ellen Cooper, CEO: We are focused on lowering market sensitivity and balancing profitability, capital efficiency, and growth. In RILA, we are leveraging differentiated products and distribution channels. We expect RILA sales to remain consistent with recent years, while fixed annuities offer more growth potential.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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