Lincoln National Corporation, through its subsidiaries, operates multiple insurance and retirement businesses in the United States.
Segments
The company provides products and services and reports results through four business segments Annuities, Life Insurance, Group Protection, and Retirement Plan Services.
Through its business segments, the company sells a wide range of wealth accumulation, wealth protection, group protection and retirement income products and solutions.
The results of Lin...
Lincoln National Corporation, through its subsidiaries, operates multiple insurance and retirement businesses in the United States.
Segments
The company provides products and services and reports results through four business segments Annuities, Life Insurance, Group Protection, and Retirement Plan Services.
Through its business segments, the company sells a wide range of wealth accumulation, wealth protection, group protection and retirement income products and solutions.
The results of Lincoln Financial Distributors (LFD), the company’s wholesale distributor are included in the segments for which it distributes products. LFD distributes its individual life insurance and annuity products, retirement plan products and services and corporate-owned universal life insurance (UL) and variable universal life insurance (VUL) (COLI) and bank-owned universal life insurance and variable universal life insurance (BOLI) products and services. The distribution occurs through financial intermediaries, including consultants, brokers, planners, agents, financial advisers, third-party administrators (TPAs), financial institutions and other intermediaries. Group Protection distributes its products and services primarily through employee benefit brokers, TPAs and other employee benefit firms. As of December 31, 2024, LFD had approximately 440 internal and external wholesalers (including sales and relationship managers).
The results through May 6, 2024, of Lincoln Financial Network (LFN), the company’s former retail distributor, are included in the business segments for which it distributed products.
Sale of Wealth Management Business
On May 6, 2024, the company closed the sale of the subsidiaries of Lincoln that comprised its wealth management business operated through LFN to Osaic Holdings, Inc. (Osaic), pursuant to the Stock Purchase Agreement entered into between the company and Osaic on December 14, 2023 (the Agreement). Pursuant to the Agreement, the company sold its ownership interests in the following subsidiaries: Lincoln Financial Securities Corporation, Lincoln Financial Advisors Corporation, California Fringe Benefit and Insurance Marketing Corporation, LFA, Limited Liability Company and LFA Management Corporation.
Annuities
The Annuities segment provides tax-deferred investment growth and lifetime wealth accumulation and protection opportunities for its clients by offering variable annuities, fixed (including indexed) annuities and registered index-linked annuities (RILA).
Annuities have several features that are attractive to customers. Annuities are unique in that policyholders can select a variety of payout alternatives to provide an income flow for life. In addition, growth on the underlying principal in annuities is typically granted tax-deferred treatment, thereby deferring the tax consequences of the growth in value until withdrawals are made from the accumulation values, potentially at lower tax rates occurring during retirement.
Products
In general, an annuity is a contract between an insurance company and an individual in which the insurance company, after receipt of one or more premium payments, agrees to pay an amount of money either in one lump sum or on a periodic basis (i.e., annually, semi-annually, quarterly or monthly), beginning on a certain date and continuing for a period of time as specified in the contract or as requested. The payments may be made on either a guaranteed or non-guaranteed basis. Periodic payments can begin within 12 months after the premium is received (referred to as an immediate annuity) or at a future date in time (referred to as a deferred annuity). This retirement vehicle helps protect an individual from outliving their money.
The following discusses the company’s annuity product offerings:
Variable Annuities
A variable annuity provides the contract holder the ability to direct their account balance into one or more variable accounts (variable funds) offered through the separate accounts of the company’s insurance companies where the investment risk is borne entirely by the contract holder (separate account balance). The value of the variable portion of the contract holder’s account is driven by the performance of the underlying variable funds chosen by the contract holder. Certain variable annuity products permit a contract holder to allocate a portion of their account balance into a fixed account that is backed by the general account of the company’s insurance companies where the contract holder account balance is credited with an interest rate in accordance with the contract (general account balance). The company expects to earn a spread between what it earns on the underlying general account investments supporting the contract holders’ general account balance and what it credits to its contract holders’ general account balance.
The company’s variable funds include non-managed risk funds, as well as the Managed Risk Strategies fund options. The Managed Risk Strategies funds are a series of funds that embed volatility risk management and, with some funds, capital protection strategies inside the funds themselves. These funds seek to reduce equity market volatility risk for both the contract holder and the company.
The company charges contract holders mortality and expense assessments on their separate account balance to cover insurance and administrative expenses. These assessments are a function of the rates priced into the product and the average daily separate account balance. Average daily separate account balances are driven by net flows and variable fund returns. In addition, for some contracts, the company imposes surrender charges, which are typically applicable to withdrawals during the early years of the annuity contract, with a declining level of surrender charges over time.
The company offers guaranteed benefit riders with certain of its variable annuity products, such as a guaranteed death benefit (GDB), a guaranteed withdrawal benefit (GWB), a guaranteed income benefit (GIB) and a combination of such benefits.
The GDB features offered include those where the company contractually guarantees to the contract holder that upon death, depending on the particular product, it will return no less than: the current contract value; the total deposits made to the contract, adjusted to reflect any partial withdrawals or, for certain products, adjusted to only reflect partial withdrawals over the specified level rate; the highest contract value on a specified anniversary date adjusted to reflect any partial withdrawals following the contract anniversary; or an earnings enhancement on gains in the contract.
The company offers the optional Lincoln ProtectedPay lifetime income suite, which provides a GWB and includes: Secure Core, Secure Core with Estate Lock, Secure Plus and Secure Max, and Select Core, Select Core with Estate Lock, Select Plus and Select Max. All provide contract holders with protected lifetime income that is based on a maximum rate of the income base that grows annually for a specified period of time at the greater of a specified simple rate or account balance growth. The riders provide higher income if the contract holder delays withdrawals. The Secure Core and Select Core riders offer the option of GWBs and GIBs that provide a specified level rate of protected income. The Secure Plus and Secure Max riders and Select Plus and Select Max riders provide contract holders with protected lifetime income up to a specified maximum rate of the income base and a lower specified maximum rate of the income base if the account balance falls to zero. Contract holders under the Secure riders are subject to the allocation of their account balance to the company’s Managed Risk Strategies fund options and certain fixed-income options. Contract holders under the Select riders are subject to restrictions on the allocation of their account balance within the various investment choices. Secure Core with Estate Lock and Select Core with Estate Lock offer an integrated GDB where the death benefit of the total deposits made to the contract is only adjusted to reflect any amount of partial withdrawals that is over the specified level rate of protected GWB income. The death benefit is reduced to zero if the account balance is reduced to zero.
The company also offers the American Legacy Target Date Income variable annuity with an optional Target Date Income Benefit rider, which combines target date investing with a protected lifetime income. Contract holders who elect the Target Date Income Benefit are automatically allocated to the Target Date Fund based on their year of birth. The protected lifetime income is based on a percentage rate of income for their age at the time of purchase of the optional rider, which will grow at the greater of a specified simple rate (available each year a withdrawal is not taken for a specified period of time) or account balance growth.
In addition, the company offers the i4LIFE Advantage Select GIB and i4LIFE Advantage Secure GIB riders. These riders allow variable annuity contract holders access to and control over their account balance during a portion of the income distribution phase of their contract. In general, GIB is an optional feature available with the i4LIFE Advantage rider that guarantees regular income payments will not fall below the greater of a minimum income floor set at benefit issue and 65% (for the Select product) or 75% (for the Secure product) of the highest income payment on a specified anniversary date (reduced for any subsequent withdrawals). Contract holders under the i4LIFE Advantage Secure GIB rider are subject to the allocation of their account balance to the company’s Managed Risk Strategies fund options and certain fixed-income options.
The company also offers the 4LATER Select Advantage rider. This rider provides a minimum income base used to determine the GIB floor when a client begins income payments under the i4LIFE Advantage Select GIB rider. The 4LATER Select Advantage rider provides growth during the accumulation phase through both an enhancement to the income base each year a withdrawal is not taken for a specified period of time and an annual step-up of the income base to the current contract value. Contract holders under the 4LATER Select Advantage rider are subject to restrictions on the allocation of their account balance within the various investment choices.
The company designs and actively manages the features and structure of its guaranteed benefit riders to maintain a competitive suite of products consistent with profitability and risk management goals. The company uses a variety of hedging strategies to mitigate the risks to the statutory capital of its insurance subsidiaries associated with its guaranteed benefit riders.
Fixed Annuities
The company’s fixed annuity product offerings consist of traditional fixed-rate and fixed indexed deferred annuities, as well as fixed-rate immediate and deferred income annuities with various payment options, including lifetime income. Fixed annuity contracts are backed by the general account of its insurance companies where it bears the investment risk. To protect from premature withdrawals, the company imposes surrender charges. Surrender charges are typically applicable during the early years of the contract, with a declining level of surrender charges over time. On most policies, within the surrender charge period, the company also has a market value adjustment provision that protects it against disintermediation risk in the case of rapidly rising interest rates. The company expects to earn a spread between what it earns on the underlying general account investments supporting the fixed annuity product line and what it credits to its contract holders’ general account balance.
The company offers single and flexible premium fixed deferred annuities. Single premium fixed deferred annuities are contracts that allow only a single premium to be paid. Flexible premium fixed deferred annuities are contracts that allow multiple premium payments, subject to contractual limits, on either a scheduled or non-scheduled basis.
The company’s fixed indexed annuities allow the contract holder to choose between a fixed interest crediting rate and an indexed interest crediting rate, which is based on the performance of the S&P 500 Index, the S&P 500 Daily Risk Control 5% Index, the S&P 500 Daily Risk Control 10% Index, the J.P. Morgan First Trust Balanced Capital Strength 6 Index, the J.P. Morgan First Trust Balanced Capital Strength 5 Index, the BlackRock Dynamic Allocation Index, or the Fidelity AIM Dividend Index. The indexed interest credit is guaranteed never to be less than zero.
The company uses derivatives to hedge the equity market risk associated with its fixed indexed annuity products. For more information on its hedging program.
RILA
The company has two RILA products, Lincoln Level Advantage (LLA) and Lincoln Level Advantage 2 (LLA2). Lincoln Level Advantage provides the contract holder the ability to direct the investment of premium deposits into one or more indexed accounts and/or variable funds offered through the product. The index interest crediting rate for an indexed account is based, in part, on the performance of an index. The available indices are the S&P 500 Index, the Russell 2000 Index, the MSCI EAFE, the Capital Strength Net Fee IndexSM, the First Trust American Leadership Index and the NASDAQ-100 Index. A contract holder’s separate account balance varies with the performance of the underlying variable funds chosen by the contract holder.
In 2024, the company introduced LLA2, a new version of LLA that provides one or more indexed accounts. LLA2 offers the SecureLock+ feature, which enables the contract holder to capture gains and reset the growth potential and downside protection for an indexed account by locking in the interim value intra term. The available indices are the S&P 500 Index, the Russell 2000 Index, the MSCI EAFE, the Capital Strength Net Fee Index, the First Trust American Leadership Index, the Capital Group Growth ETF Index and the Capital Group Global Growth ETF Index.
The company charges contract holders mortality and expense assessments and administrative fees (for LLA) on their separate account balances to cover insurance and administrative expenses. These assessments are a function of the rates priced into the product and the average daily separate account balance. In addition, for some contracts, the company imposes surrender charges, which are typically applicable during the early years of the annuity contract, with a declining level of surrender charges over time.
The company offers a GDB rider where it contractually guarantees to the contract holder that upon death, depending on the particular product, it will return no less than the contract value or the total deposits made to the contract, adjusted to reflect any partial withdrawals.
The company also offers the i4LIFE Advantage rider on LLA. This rider allows annuity contract holders access and control during a portion of the income distribution phase of their contract. This added flexibility allows the contract holder to access the account balance for transfers and additional withdrawals.
The company uses derivatives to hedge the equity market risk associated with its indexed variable annuity products.
Distribution
The Annuities segment distributes its individual fixed and variable annuity products through LFD. LFD’s distribution channels give the Annuities segment access to its target markets. LFD distributes the segment’s products to a large number of financial intermediaries, including wire/regional firms, independent financial planners, financial institutions, registered investment advisers and managing general agents.
Life Insurance
The Life Insurance segment focuses on the creation and protection of wealth for its clients by providing life insurance products, including term insurance, both single (including universal life insurance (UL), COLI and BOLI) and survivorship versions of indexed universal life insurance (IUL) and variable universal life insurance (VUL) products, linked-benefit products (which are UL and VUL with riders providing for long-term care costs), and critical illness and long-term care riders, which can be attached to IUL or VUL policies. Some of the company’s products include secondary guarantees, which are discussed more fully below.
Products
The company offers four categories of life insurance products, consisting of:
UL and IUL
UL products provide life insurance with account balances that earn rates of return solely based on company-declared interest rates. Policyholder account balances are invested in the general account investment portfolio of the company’s insurance companies where it bears the investment risk. The ocmpany’s fixed IUL products function similarly to a traditional UL policy, with the added flexibility of allowing policyholders to have portions of their account balances earn credits based on the performance of indices such as the S&P 500 Index. These products include Lincoln WealthPreserve IUL and Lincoln WealthAccumulate IUL. In 2025, the company expects to replace these products with new IUL products that incorporate additional index options and features.
The company’s UL contracts assess surrender charges against the policies’ account balances for full or partial surrenders and certain policy changes that occur during the contractual surrender charge period. Depending on the product selected, surrender charge periods can range from 0 to 25 years.
The company’s Lincoln Premier BOLI UL product is a UL-type product purchased by a bank that insures the lives of the bank’s employees.
The company offers a survivorship version of its individual IUL products, Lincoln WealthPreserve SIUL. This product insures two lives with a single policy and pays death benefits upon the second death.
A UL policy with a lifetime secondary guarantee can stay in force, even if the base policy cash value is zero, as long as secondary guarantee requirements have been met. The secondary guarantee requirement is based on the payment of a required minimum premium or on the evaluation of a reference value within the policy, calculated in a manner similar to the base policy account balance. The parameters for the secondary guarantee requirement are listed in the contract. As long as the policyholder pays the minimum premium or funds the policy to a level that keeps this calculated reference value positive, the policy is guaranteed to stay in force.
VUL
VUL products are UL products that provide the policyholder the ability to direct their account balance into one or more variable funds offered through the separate accounts of the company’s insurance companies where the investment risk is borne entirely by the policyholder. The value of the variable portion of the policyholder’s account balance is driven by the performance of the underlying variable funds chosen by the policyholder. In addition, VUL products offer a fixed account option that is backed by the general account of the company’s insurance subsidiaries where the policyholder’s account balance is credited with interest rates as specified in the contract. As with fixed UL products, policyholders have access, within contractual maximums, to account balances through loans, withdrawals and surrenders. Surrender charges are assessed during the surrender charge period, ranging from 0 to 20 years depending on the product.
The company’s single life VUL offerings include the Lincoln AssetEdge VUL and Lincoln Premier Private Placement VUL products. Private Placement life insurance is individually owned by qualified purchasers or accredited investors.
The company also offers a survivorship version of its Lincoln AssetEdge VUL product. This product insures two lives with a single policy and pays death benefits upon the second death.
The company’s Lincoln Premier VUL BOLI and COLI products and Lincoln Corporate Exec COLI products are also VUL-type products. COLI products are owned by a corporation and insure the lives of the corporation’s employees.
During 2024, the company discontinued new sales of VUL products with lifetime secondary guarantees, but it still has an in-force block of such products that it continues to administer.
The company’s secondary guarantee benefits maintain the flexibility of a UL or VUL policy, which allow a policyholder to take loans or withdrawals.
Linked-Benefit Life Products and Products with Critical Illness Riders
Lincoln MoneyGuard, the company’s linked-benefit life product group, combines UL or VUL with long-term care insurance through the use of a rider or riders. The policy rider allows the policyholder to accelerate death benefits on a tax-free basis in the event of a qualified long-term care need, reducing the remaining death benefit, and, once the death benefit is exhausted, offers access to an additional pool of dollars that can be used for qualified long-term care expenses. Certain policies also provide a reduced death benefit to the policyholder’s beneficiary if the death benefit has been fully accelerated as long-term care benefits during the policyholder’s life. Riders on MoneyGuard products guarantee to the policyholder that upon death, as long as secondary guarantee requirements have been met, the death benefit or long-term care expenses will be payable even if the account balance equals zero. Some life products provide for critical illness or long-term care insurance by the use of riders attached to IUL or VUL policies. These riders allow the policyholder to accelerate death benefits on a tax-free basis in the event of a qualified condition.
Term Life Insurance
Term life insurance provides a fixed death benefit for a scheduled period of time. The company’s term life insurance products give the policyholder the option to convert into a UL, IUL or VUL product. Scheduled policy premiums are required to be paid at least annually. These products include Lincoln TermAccel Level Term and Lincoln LifeElements Level Term.
Distribution
The Life Insurance segment’s products are sold through LFD. LFD provides the Life Insurance segment with access to financial intermediaries in the following primary distribution channels: wire/regional firms; independent planner firms; financial institutions; and managing general agents/independent marketing organizations. LFD distributes BOLI/COLI products and services to banks and mid- to large-sized corporations, primarily through intermediaries who specialize in one or both of these markets and who are serviced through a network of internal and external LFD sales professionals.
Group Protection
The Group Protection segment offers group non-medical insurance products and services, including short- and long-term disability insurance and administration services, statutory disability and paid family medical leave administration and absence management services, term life, accident, critical illness and hospital indemnity products, and dental and vision products to the employer marketplace through various forms of employee-paid and employer-paid plans. Group Protection markets its products and services to employer groups of all sizes, from small companies with fewer than 100 employees to large employers with 10,000 or more employees.
Products
Disability Insurance and Administrative Services
The company offers insured coverage for, as well as administrative services for employer self-funded, short- and long-term employer-sponsored group and voluntary disability insurance, which protects an employee against loss of wages due to illness or injury. Short-term disability insurance generally provides weekly benefits for up to 26 weeks following a short waiting period, ranging from 1 to 30 days. Long-term disability insurance provides benefits following a longer waiting period, usually between 90 and 180 days, and provides benefits for a longer period, usually up to normal (Social Security) retirement age. The monthly benefits provided are subject to reduction when Social Security benefits are also paid. The company also provides insured coverage for, as well as administrative services for employer self-funded, state-specific statutory disability and paid family leave programs.
Absence Management
The company offers a robust portfolio of absence management services to help employers manage their state and federal family medical and company leave programs (paid and unpaid), as well as accommodation services that help employers identify accommodations that could be made to help claimants return to work (e.g., assistive devices, ergonomic assessments, etc.). The company’s comprehensive and compliant solutions, with ease of intake, provide coordinated and integrated management expertise to handle both leave and disability events.
Life Insurance
The company offers employer-sponsored group term life insurance products including basic, optional, and voluntary term life insurance to employees and their dependents. Additional benefits may be provided in the event of a covered individual’s accidental death or dismemberment.
Accident, Critical Illness and Hospital Indemnity Insurance
The company offers employer-sponsored group accident insurance products for employees and their covered dependents. This product is predominantly purchased on an employee-paid basis. Accident insurance provides scheduled benefits for over 30 types of benefit triggers related to accidental causes, including sports-related injuries, and is available for non-occupational accidents exclusively or on a 24-hour coverage basis.
The company also offers employer-sponsored group critical illness insurance to employees and their covered dependents. This product is also predominantly purchased on an employee-paid basis. The coverage provides for lump sum payouts upon the occurrence of one of the specified critical illness benefit triggers covered within a critical illness insurance policy. This product also includes benefits and services that assist employees and their family members in the prevention, early detection and treatment of critical illness events.
Finally, the company also offers hospital indemnity insurance as part of its suite of supplemental health solutions. Similar to the company’s employer-sponsored group accident and critical illness insurance, hospital indemnity is offered to employees and their covered dependents and is predominantly purchased on an employee-paid basis. Hospital indemnity insurance provides scheduled benefits for hospital admission and daily confinement, as well as over 20 benefit triggers related to hospitalization due to an accident and/or illness.
Dental and Vision
The company offers a variety of employer-sponsored group dental insurance plans, which cover a portion of the cost of eligible dental procedures for employees and their dependents. Products offered include indemnity coverage, which does not distinguish benefits based on a dental provider’s participation in a network arrangement; Preferred Provider Organization (PPO) products, on an insured and administrative services only basis, that do reflect the dental provider’s participation in the PPO network arrangement, including an agreement with network fee schedules; a Dental Health Maintenance Organization product that limits benefit coverage to a closed panel of network providers; an in-network-only option that limits benefit coverage to providers in certain states; and self-funded options for groups with more than 200 employees.
The company also offers comprehensive employer-sponsored fully insured vision plans with a wide range of benefits for protecting employees’ and their covered dependents’ sight and vision health. All plans provide access to a national network of providers, with in and out-of-network benefits.
Distribution
The Group Protection segment’s products are marketed primarily through a national distribution system. The managers and marketing representatives develop business through employee benefit brokers, consultants, and other employee benefit firms that work with employers to provide access to the company’s products.
Retirement Plan Services
The Retirement Plan Services segment provides employers with retirement plan products and services, primarily in the defined contribution retirement plan marketplace. Defined contribution plans are a popular employee benefit offered by employers large and small across a wide spectrum of industries. While the company’s focus is employer-sponsored defined contribution plans, it also serves the defined benefit plan and individual retirement account (IRA) markets on a limited basis. The company provides a variety of plan investment vehicles, including individual and group variable annuities, group fixed annuities and mutual fund-based programs. The company also offers a broad array of plan services, including plan recordkeeping, compliance testing, participant education and trust and custodial services through its affiliated trust company, Lincoln Financial Group Trust Company.
Products and Services
The Retirement Plan Services segment brings three primary offerings to the employer-sponsored market: LINCOLN DIRECTOR group variable annuity, LINCOLN ALLIANCE program and Multi-Fund variable annuity. The LINCOLN ALLIANCE program is a mutual fund-based record-keeping platform. These offerings primarily cover the 403(b), 401(k) and 457 plan marketplaces. The 403(b) plans are available to educational institutions, not-for-profit healthcare organizations and certain other not-for-profit entities. 401(k) plans are generally available to for-profit entities, and 457 plans are available to not-for-profit entities and state and local government entities. The investment options for the company’s products encompass the spectrum of asset classes with varying levels of risk and include both equity and fixed income.
LINCOLN DIRECTOR group variable annuity is primarily a 401(k) defined contribution retirement plan solution available to small businesses, typically those with plans having less than $10 million in account balances. The LINCOLN DIRECTOR product offers participants a broad array of investment options from several fund families and a fixed account backed by the general account of the company’s insurance companies where it bears the investment risk. Through the LINCOLN DIRECTOR product, as well the LINCOLN ALLIANCE product, the company also offers its proprietary YourPath portfolios, a series of target-date portfolios for employer-sponsored retirement plans. These target-date portfolios are managed along multiple risk-based paths to support a more personalized investment approach based upon financial circumstances and risk tolerance. These target-date portfolios are also available with an income solution in the form of a GWB.
The LINCOLN ALLIANCE program is a defined contribution retirement plan solution aimed at small, mid-large and large market employers, typically those that have defined contribution plans with $10 million or more in account balance. The target market is primarily healthcare providers, public sector employers, corporations and educational institutions. The program bundles the company’s traditional fixed annuity products with the employer’s choice of mutual funds, along with recordkeeping, plan compliance services and customized employee education services. The program allows the use of any mutual fund or collective investment trust (if applicable). The company earns fees for its recordkeeping and educational services and other services that it provides to plan sponsors and participants. The company also expects to earn a spread between what it earns on the underlying general account investments supporting the fixed account and what it credits to its contract holders’ account balances.
Multi-Fund variable annuity is a defined contribution retirement plan solution with fully bundled administrative services and investment choices for small- to mid-sized healthcare, education, governmental and not-for-profit employers sponsoring 403(b), 457(b) and 401(a)/(k) plans. The product is available to the employer through the Multi-Fund group variable annuity contract or directly to the individual participant through the Multi-Fund Select variable annuity contract. The company earns mortality and expense charges, investment income on the fixed account and surrender charges from this product. The company also receives fees for services that it provides to funds in the underlying separate accounts.
Additionally, the company offers other products and services that complement its primary offerings:
The Lincoln Next Step series of products is a suite of mutual fund-based IRAs available exclusively for participants in Lincoln-serviced retirement plans and their spouses. The products can accept rollovers and transfers from other providers as well as ongoing contributions. The Lincoln Next Step IRA product has an annual account charge and offers an array of mutual fund investment options provided by approximately 20 fund families all offered at net asset value. The Lincoln Next Step Select IRA has an annual record keeping charge and offers an even wider array of mutual fund investment options from over 20 families, all at net asset value. The company earns 12b-1 and service fees on the mutual funds within the product.
Through a group annuity contract, the company offers a series of products intended to fulfill future needs of retirement security for its clients. By offering a GWB inside a retirement plan, the company provides plan sponsors a solution that gives participants the ability to participate in the market and receive guaranteed income for life while still maintaining access to their plan account balance. These products are available both to retirement plans where the company provides plan recordkeeping services.
Through a group annuity contract, the company offers fixed return products to retirement plans and other institutional contract holders. The fixed annuity is used within small, mid-large and large employer plan sponsors or institutional investors. The contract provides a conservative investment option for those seeking stability. In certain contract designs, the company expects to earn a spread between what it earns on the underlying general account investments supporting the fixed account and what it credits to its contract holders’ account balances.
Distribution
Retirement Plan Services products are primarily distributed through the company’s internal wholesale distribution teams registered with LFD. These teams distribute these products primarily through unaffiliated advisers, consultants, banks, wirehouses and individual planners. The company remains focused on wholesaler productivity, increasing relationship management expertise and growing the number of broker-dealer relationships.
Reinsurance
The company’s reinsurance strategy is designed to protect its insurance subsidiaries against the severity of losses on individual claims and unusually serious occurrences in which a number of claims produce an aggregate extraordinary loss. The company also utilizes inter-company reinsurance agreements to manage its statutory capital position, as well as its hedge program for variable annuity guarantees.
In 2024, Lincoln Pinehurst Reinsurance Company (Bermuda) Limited (LPINE), a wholly owned subsidiary of the company, began operating as a Class E Bermuda-based life and annuity reinsurance company.
Some portions of the company’s annuity and life businesses have been reinsured on either a coinsurance or a modified coinsurance basis with other companies. In a coinsurance program, the reinsurer shares proportionally in all financial terms of the reinsured policies (i.e., premiums, expenses, claims, etc.) based on their respective percentage of the risk.
In addition, the company acquires other reinsurance to cover products other than as discussed above with retentions and limits that management believes are appropriate for the circumstances. For example, the company uses reinsurance to cover larger life and disability claims in its Group Protection business.
The company obtains reinsurance from a diverse group of reinsurers, and it monitors concentration and financial strength ratings of its principal reinsurers. Fortitude Reinsurance Company Ltd. (Fortitude Re), Protective Life Insurance Company, Security Life of Denver Insurance Company (a subsidiary of Resolution Life that it refers to herein as Resolution Life), Commonwealth Annuity and Life Insurance Company (a subsidiary of Global Atlantic) and Athene Holding Ltd. (Athene) represent its largest reinsurance exposures.
Regulatory
LNL and FPP are domiciled in Indiana and their principal insurance regulatory authority is the Indiana Department of Insurance (IDOI). LLANY is domiciled in New York and its principal insurance regulatory authority is the New York Department of Financial Services (NYDFS).
In addition to being registered under the Securities Act of 1933, some of the company’s separate accounts as well as mutual funds that it sponsors are registered as investment companies under the Investment Company Act of 1940, and the shares of certain of these entities are qualified for sale in some or all states and the District of Columbia. The company also has one subsidiary, LFD, that is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended (Exchange Act) and is subject to federal and state regulation, including but not limited to, the Financial Industry Regulation Authority’s (FINRA) net capital rules. In addition, the company has one subsidiary that is a registered investment adviser under the Investment Advisers Act of 1940.
The company is also subject to information security laws and regulations that impose governance and compliance obligations applicable to our business. For example, in 2017, the NYDFS enacted a regulation establishing cybersecurity requirements for financial services companies (the NYDFS Cybersecurity Regulation).
The company’s Bermuda-based reinsurance subsidiary, LPINE, and its Barbados-based reinsurance subsidiary, Lincoln National Reinsurance Company (Barbados) Limited, are regulated by the Bermuda Monetary Authority (BMA) and the Barbados Financial Services Commission, respectively, each of which enforces standards related to solvency, capital adequacy and other regulatory requirements. The company continues to monitor any efforts by the government to repeal or replace provisions of the Patient Protection and Affordable Care Act and the effect those efforts may have on our businesses. The Federal Insurance Office established under the Dodd-Frank Act issues annually a wide-ranging report on the state of insurance regulation in the U.S., together with a series of recommendations on ways to monitor and improve the regulatory environment. The ultimate impact of these recommendations on the company’s business is undeterminable at this time.
As a result of overlapping efforts by the Department of Labor (DOL), the NAIC, individual states and the SEC to impose fiduciary-like requirements in connection with the sale of annuities, life insurance policies and securities, there have been a number of proposed or adopted changes to the laws and regulations that govern the distribution of the company’s products.
Intellectual Property
The company owns several issued U.S. patents. The company has an extensive portfolio of trademarks and service marks that it considers important in the marketing of its products and services, including, among others, the trademarks of the Lincoln National and Lincoln Financial names, the Lincoln logo and the combination of these marks.
History
Lincoln National Corporation was founded in 1905. The company was incorporated under the laws of the state of Indiana in 1968.
