Lincoln Financial has announced its financial results for the third quarter of 2026, reporting a net income of $1.3 billion, compared to a net loss of $699 million in the same period last year.
The firm explained that the rebound reflects an increasingly resilient business, diversified earnings mix and enhanced capital flexibility that enabled the company to resume share repurchases following the closing of a major reinsurance transaction.
Adjusted operating income available to common stockholders totalled $339 million, or $1.72 per diluted share, including a net unfavourable impact of $0.48 per diluted share related to the annual assumption review.
The difference between net income and adjusted operating income was primarily attributable to the non-economic impact of changes in market risk benefits.
Within the Retail Solutions segment, Annuities posted operating income of $304 million, up 6% sequentially, driven by higher spread income and favourable equity markets.
While year over year earnings moderated by $14 million due to variable annuity outflows and a previously disclosed $12 million net investment income reallocation, sales climbed 21% quarter over quarter to $4.3 billion as fixed annuity sales more than doubled. Spread-based products represented 67% of total sales, said the firm.
The Life Insurance segment delivered operating income of $130 million, a $76 million increase from the prior-year quarter, driven by higher alternative investment income, improved mortality, and the impact of the captive consolidation.
Total sales were $106 million, down 64% year over year, as the prior-year quarter benefited from several large executive benefits cases; core life sales grew 3% year over year, driven by indexed-universal life.
Performance across Workplace Solutions was mixed. Group Protection generated $77 million in operating income with a margin of 5.5%, declining year over year as unfavourable disability claim severity and normalising incidence pushed the disability loss ratio up six percentage points, partially offset by favourable group life underwriting. Premiums still increased 3% year over year, led by local markets growth of 5%, as supplemental health grew 32%.
In Retirement Plan Services, operating income reached $55 million in the quarter, up 20% year over year, driven by higher spread income, favourable equity markets, and a favourable one-time item.
Net outflows were $1.9 billion, compared to $755 million of net inflows in the prior-year quarter, and total deposits were $3.5 billion in the quarter, down 29%, driven by lower first-year sales in the mid-large market. Ending account balances were $128 billion, up 4% year over year.
Ellen Cooper, Chairman, President and CEO of Lincoln Financial, commented: “Our increasingly diversified earnings base continues to support Lincoln’s overall performance. Life Insurance and Retirement Plan Services were highlights of the quarter, both delivering strong year-over-year earnings growth and reinforcing the resilience of our business mix.
“In Annuities, return on average account balances improved for a second consecutive quarter, supported by our expanding spread-based businesses, a source of more stable earnings over time. Group Protection fell short of our expectations as the continued normalization of disability incidence was compounded by volatility in claims severity, while underlying fundamentals remain solid.”
Adding: “Closing our reinsurance transaction with Talcott in October marked one of the final milestones of the plan we laid out in 2023, further de-risking our balance sheet. With significantly improved financial flexibility, we resumed share repurchases, an important step in expanding durable capital returns. We also remain confident in our ability to drive disciplined, profitable growth, increase free cash flow and create long-term value for our shareholders.”
