The paragraph is an introduction to a call by Lincoln National Corporation, presented by Tina Madon. It mentions that financial reconciliations and forward-looking statements will be discussed. These statements are subject to risks and uncertainties outlined in various reports and filings. Ellen Cooper and Chris Neczypor will provide remarks before taking questions. Ellen Cooper then starts by acknowledging the company's progress in 2024 towards long-term value creation.

The company reported its highest adjusted operating income in three years, surpassing financial goals and building momentum for future growth. Strategically, they focused on establishing a strong capital foundation, optimizing operations for scalable growth, and improving cash flow and profitability. The company achieved a significant milestone by ending 2024 with an RBC ratio over 430%, providing financial flexibility. They made progress in reducing expenses, investing in operations and technology, and enhancing their investment strategy, including launching a Bermuda-based reinsurance subsidiary. Overall, they advanced efforts to achieve profitable growth.

The paragraph outlines Lincoln National Corporation's successful efforts in transforming its business focus toward profitability and stable cash flows. The company has enhanced its group and annuity businesses, optimized its life insurance segment, and advanced its retirement services. Key achievements include record earnings in the group protection business, robust growth in annuities, a significant increase in retirement plan services' earnings, and steady life insurance sales. The corporation emphasizes a diversified product mix, especially in annuities, and maintains leadership in both fixed and variable annuities markets.

The paragraph highlights the strong performance and strategic strengths of the company in the annuities market. It emphasizes a holistic approach to offering solutions that adapt to customer preferences and notes a significant achievement in total annuity sales, reaching $3.7 billion in the fourth quarter and a 7% increase for the full year. Two-thirds of these sales came from spread-based products, supporting profitable growth through risk-adjusted returns and capital efficiency. The company experienced growth in RILA sales and maintained competitive strength in fixed annuities, despite lower quarterly sales compared to the previous year. Efforts in investment strategy optimization and distribution expansion, as well as utilizing a Bermuda reinsurance affiliate, aim to sustain and enhance their market position. The paragraph concludes by noting a near doubling of traditional variable annuity sales, driven by favorable market conditions and strong product offerings, thus underscoring their importance within the overall product suite.

The company has been strategically optimizing its investment strategy and reinsurance solutions to drive growth and efficiency in both its life insurance and workplace solutions sectors. They are transitioning their life insurance business to focus on products with risk sharing, enhancing product offerings, and reorganizing their distribution team for future growth. Though progress in 2024 was solid, the full impact of these changes will take time. In workplace solutions, there was significant earnings and margin growth due to successful execution of a targeted segment strategy to strengthen market presence and leadership, resulting in more than a 50% increase in earnings and 280 basis point margin improvement over the previous year.

The company made significant investments in operations, technology, and talent, resulting in a record fourth-quarter sales increase of 17% and an annual increase of 24%. This growth was due to a strategic product mix and increased lines of coverage. Supplemental health sales rose by 35%, contributing to a balanced portfolio. Premium growth was 3%, supported by new pricing strategies. In 2024, the group's strong position in disability and leave management set it apart. Progress was made in tailoring strategies and improving margins across local, regional, and national segments by transforming operating models and enhancing product offerings and technology.

The Group's performance exceeded expectations this year due to strong execution and favorable market conditions, leading to profitable growth. The retirement plan services (RPS) segment reported a 13% earnings growth and a significant increase in first-year sales and total deposits. Despite some planned terminations, RPS achieved its tenth consecutive year of positive net flows. In 2024, strategic focus on differentiating RPS in the marketplace and enhancing service offerings resulted in profitable sales growth and increased operational efficiency. Overall, Lincoln National Corporation surpassed its 2024 expectations and is well-positioned for long-term value creation and future financial objectives.

The paragraph discusses Lincoln National Corporation's strong financial performance and strategic execution in the fourth quarter. Ellen introduces the progress made and transitions to Christopher Neczypor, who highlights the company's solid results and momentum across its businesses. He outlines three focus areas: reviewing the quarterly results, discussing the investment portfolio, and updating on capital and cash flow against a multiyear outlook. The company reported a fourth-quarter adjusted operating income of $332 million or $1.91 per share, with notable returns from their alternative investments portfolio. Excluding annual assumption impacts, the full-year 2024 adjusted income saw a 16% increase over 2023, driven by growth in group and annuities businesses.

The company reported a net income of $1.7 billion, or $9.63 per diluted share, with notable contributions from non-operating income due to favorable market risk benefits from higher interest rates and gains from changes in the fair value of derivatives related to a Fortitude Re reinsurance transaction. The company's hedge program performed as expected. The group segment had a record fourth quarter, with operating income of $107 million and an 8.4% margin, driven by strategic priorities such as disciplined pricing, diversification, and operational performance. Favorable macroeconomic conditions also supported the growth, particularly in the disability results.

The paragraph discusses the company's favorable mortality and group product line results for the quarter. The disability loss ratio improved significantly from the previous year due to low incidence rates and strong recoveries, while the group life loss ratio also improved. Seasonal mortality trends may impact future results. For the full year, the group reported a substantial increase in operating income and margin. Looking ahead to 2025, despite strong strategic execution driving earnings growth in 2024, the company anticipates the favorable macroeconomic conditions contributing to margin expansion may not continue. A normalization of these conditions could lead to a slight increase in disability incidence, but the company still expects overall margin growth due to their strategic initiatives and improved mortality outcomes.

The paragraph discusses financial expectations and results related to earnings and annuities. It anticipates maintaining similar earnings in 2025 as in 2024, with growth expected in 2026 contributing to a margin of 8% or above. Annuities showed a fourth-quarter operating income of $303 million, up from $279 million the previous year, excluding a one-time $14 million benefit. Growth was due to higher account balances and increased spread income, despite higher expenses. Account balances rose 12% year over year. Expenses increased because of lower reinsurance benefits. Spread income growth was driven by an increase in RILA account balances. The company is transitioning towards more spread-based products and received approval for a new internal agreement with its reinsurer, Alpine, to focus on fixed annuities.

The company has established a flow agreement with Alpine and is focusing on optimizing its reinsurance mix for 2025 to enhance account balances and earnings while maintaining product returns. Annuities performed well in 2024, showing their importance in earnings and cash flow, despite a $2 billion decrease in account balances impacting first-quarter earnings. Retirement plan services reported a 13% increase in fourth-quarter income, driven by lower G&A expenses and higher equity markets, though stable value outflows increased due to higher interest rates. The base spread decreased but is expected to stabilize in early 2025 and expand later. Despite $732 million in net outflows due to plan terminations, the year saw favorable net flows for a decade. A significant outflow is expected in 2025 from another large plan termination.

The paragraph outlines the financial performance and outlook of an unspecified company, highlighting several key points. Account balances increased by 18% year-over-year, with end-of-period balances reaching nearly $113 billion, marking an 11% rise. Despite challenges from stable value outflows and spread compression, the company anticipates modest earnings growth in 2025 due to improving spreads, higher account balances, and disciplined expense management. In the life insurance segment, there was a fourth-quarter operating loss of $15 million, impacted by elevated mortality and the Fortitude Re transaction. However, alternative investment income and reduced net G&A expenses partially offset these losses. The company expects normalized mortality rates and ongoing cost reductions to drive earnings growth in the future. Net G&A expenses dropped by 10%, reflecting targeted actions taken in 2024, with this trend projected to continue into 2025, further supporting earnings growth. The company has strengthened its business fundamentals by right-sizing expenses and focusing on products with risk-sharing, thus reinforcing its confidence in achieving sustainable positive earnings moving forward.

In the fourth quarter, the company's performance remained strong due to its diverse and high-quality portfolio and strategic investment optimization. Throughout 2024, they focused on opportunities in less liquid assets, enhancing the portfolio's quality and maintaining 97% investment-grade status. Efforts to optimize the general account yielded higher returns, with new investments earning a 6.4% yield, benefiting from the current interest rate environment. Their commercial mortgage portfolio remains stable despite industry transitions. Alternative investments also exceeded expectations, delivering a 2.8% return for the quarter and 8.9% for the year. Additional details are available in their quarterly earnings supplements.

The paragraph highlights the company's positive performance in alternative investments throughout 2024 due to a diversified approach. It outlines their financial outlook across 2024, 2025, and beyond, emphasizing significant progress in strategic priorities like strengthening capital, optimizing operations, and focusing on profitable growth. In 2024, they expanded margins, improved efficiency, and undertook major initiatives like selling their wealth management business and launching a reinsurance affiliate. These actions resulted in a robust capital position, increased operating earnings, and improved free cash flow conversion. Looking forward to 2025, continued investments are anticipated to maintain business momentum.

The paragraph discusses the company's strategic focus for the year, which includes growing its franchise, increasing business profitability, and optimizing legacy blocks to enhance earnings and cash flow. Key initiatives mentioned are launching the FABN program, adjusting internal and external flow reinsurance, managing expenses, optimizing hedge programs, and refining general account strategies. The company expresses confidence in its 2026 outlook, citing two key changes: increasing the upper bound of free cash flow conversion expectations and improving expected leverage. Despite recognizing potential risks, the company remains optimistic about achieving its goals based on recent successes and momentum. The paragraph concludes by transitioning the discussion to a Q&A session.

The paragraph discusses the company's efforts to improve free cash flow and outlines its strategic priorities. Chris is responding to a question about raising the free cash flow outlook for 2026. He highlights the progress made in 2023 and 2024 through strategic priorities like building a strong capital foundation, optimizing the operating model, and focusing on profitable growth. Key actions included investing in the group business, achieving margin expansion, reducing expenses, and launching new initiatives like Bermuda and the FABN program. He anticipates continued momentum and investment in 2025, with positive outcomes seen in operating earnings and free cash flow conversion.

The paragraph discusses a company's financial strategies and goals, focusing on optimizing cash flow and investment strategies by 2026. It highlights progress in Bermuda with a flow deal on fixed annuities and mentions efforts to reduce expenses and enhance hedging programs. The company aims to boost free cash flow through three main strategies: shifting its business mix towards high cash flow areas like group protection, improving capital efficiency to grow earnings, and taking actions in legacy blocks to accelerate cash flow conversion. This includes better investment yields, managing expenses, and a natural reserve pattern improvement. Overall, the company emphasizes executing these priorities over the next two years.

In the paragraph, the speakers discuss their outlook and confidence in achieving their goals despite some risks. They address questions about their leverage ratio, emphasizing that strong performance in 2024 has allowed them to plan for further equity growth and deleveraging options. While opportunistic repurchasing is less attractive now due to narrowing spreads, they still consider it viable. The discussion also touches on the potential to deploy excess capital, particularly through share repurchases, contingent on achieving sustainable free cash flow levels by 2025 and 2026.

The paragraph discusses a financial discussion involving Ryan Krueger, Suneet Kamath from Jefferies, and Christopher Neczypor. They are focused on achieving a more accurate reflection of earnings by 2026 and reducing leverage to 25%. The conversation shifts to the strategy concerning Alpine, with a focus on maximizing capital efficiency for new businesses from 2025 onward. While in-force deals are considered, the primary goal is to enhance competitiveness in key markets using an economic capital framework. Alpine's role is viewed as crucial for growth in spread-based earnings and capital efficiency. Additionally, Suneet Kamath points out that while expenses were down year-over-year, the expense ratio for 2024 appears consistent, and seeks clarification on future expectations for this metric.

In the paragraph, Christopher Neczypor discusses the impact of the company's recent actions on expenses and margins, noting that the benefits will be more evident in 2025. He mentions that while some immediate cost reductions won't be fully realized in just one quarter, over time, improvements in group operating margins are expected. This may not necessarily translate to lower net G&A expenses as the focus is on growing overall margins and investing in the business. Following his remarks, Daniel Bergman questions Ellen G. Cooper about the subdued premium growth in the group protection line, despite a strong overall quarter, and seeks insights into the competitive pricing environment and expected top-line growth.

The company is pleased with its overall performance, particularly in the group protection business, emphasizing a 3% annual premium growth. They prioritize profitable growth over merely increasing premium volumes, focusing on ensuring appropriate margins for sustainability. The growth is driven by new business with adequate pricing and renewal pricing with improved margins, despite lower persistency due to non-renewals amid price increases. They aim to capture a significant market share through appropriate pricing, strong margins, and investments in infrastructure, technology, and capabilities to effectively meet customer needs.

In the paragraph, Ellen G. Cooper discusses the company's strong position and strategic focus in the annuity market, highlighting their long-standing leadership and competitive strength. The company offers a broad range of annuity products, including variable annuities with and without guaranteed living benefits, RILA (Registered Index-Linked Annuities), and fixed annuities. This diverse product lineup allows them to meet various customer preferences and adapt to different market conditions. Despite some competitors shifting away from these products, the company remains committed to growing its presence in spread-based products like fixed annuities and RILA, while maintaining their leadership in the variable annuity market. There's also an emphasis on the synergy between their product offerings and their robust distribution network.

The paragraph discusses the company's positive sales performance for the year, totaling $13.7 billion, which is a 7% increase from the previous year and marks the highest in five years. The product mix is significant, with spread-based products like RILA and fixed annuities making up two-thirds of sales, while variable annuities with guaranteed living benefits comprise less than 25%. Despite a general industry decline in fixed annuity sales, the company remains focused on growing its overall annuity business and strategically emphasizes spread-based products. Variable annuities continue to be an essential part of their offerings. Nick Lu from Wells Fargo inquires about the outlook on fixed annuity sales volatility and the flow agreement with Bermuda, prompting Christopher Neczypor to acknowledge the question.

The article discusses the strategic use of Bermuda to enhance capital efficiency and optimize investment strategies, particularly in the annuities market, over the next few years. The focus includes balancing internal and external flow reinsurance to increase competitiveness and retain more earnings. The company aims to refine this balance to improve overall returns. Key priorities in developing their fixed annuities capabilities have been expanding distribution, securing flow agreements, and optimizing investment strategies. The use of Bermuda is expected to support these objectives and enhance future performance.

The paragraph discusses Lincoln National Corporation's financial performance and expectations. The company experienced an increase in profit margins from 1% in 2022 to 8.3% in 2023, due to improved execution and a favorable economic backdrop. For 2024, they anticipate margins to be around 6.5%, factoring in the decrease of a 100 basis point uplift from current favorable conditions. In 2025, they expect earnings to remain relatively flat compared to 2024, due to the uncertainty of the favorable economic conditions persisting. The company's disability loss ratios are currently lower than expected, influenced by the economic environment, a factor mentioned by their industry peers as well.

The paragraph discusses the company's ongoing efforts to prioritize and improve its business operations, including repricing, adding products, and enhancing expense efficiency. The goal is to achieve a margin above 8% by 2026. The conversation includes Nick Lu expressing appreciation for the clarification provided. The operator notes that there are no more questions, and Tina Madon invites follow-up inquiries via email before concluding the conference call.

This summary was generated with AI and may contain some inaccuracies.