Lincoln National Life Swings to Profit on Premium Surge

TL;DR

**LNL is back in the black with a massive premium jump, making it a solid buy for long-term growth.**

AI Summary

LINCOLN NATIONAL LIFE INSURANCE CO reported a significant turnaround in net income for the nine months ended September 30, 2025, reaching $463 million, compared to $818 million in the prior year period. Total revenues for the nine months ended September 30, 2025, increased to $10,737 million from $7,582 million in the same period of 2024, primarily driven by a substantial increase in insurance premiums to $3,698 million from $322 million. Net investment income also rose to $4,152 million from $3,775 million. However, the company experienced a higher realized loss of $740 million for the nine months ended September 30, 2025, compared to $345 million in 2024. Total assets grew to $431,158 million as of September 30, 2025, from $405,426 million at December 31, 2024, with total investments increasing to $130,120 million from $124,051 million. Policyholder account balances increased to $132,874 million from $125,818 million. The company's total stockholder's equity improved to $11,814 million from $10,512 million, partly due to a capital contribution of $962 million from Lincoln National Corporation.

Why It Matters

This filing reveals a strong financial rebound for Lincoln National Life Insurance Co, driven by a massive increase in insurance premiums and improved investment income. For investors, the return to profitability and increased stockholder's equity signals a more stable outlook, potentially boosting confidence in its parent company, Lincoln National Corporation. Employees and customers benefit from a financially healthier insurer, ensuring continued service and stability. In a competitive market, this performance could strengthen Lincoln National Life's position against rivals like Prudential or MetLife, especially in the annuities and life insurance segments, by demonstrating effective capital management and growth strategies.

Risk Assessment

Risk Level: medium — While net income improved significantly, the company reported substantial unrealized losses on fixed maturity AFS securities totaling $6,231 million as of September 30, 2025, with $3,002 million of these losses exceeding 20% of fair value. This indicates exposure to market volatility and potential future impairments, despite an allowance for credit losses of $97 million. Additionally, realized losses increased to $740 million for the nine months ended September 30, 2025, from $345 million in the prior year.

Analyst Insight

Investors should consider this filing a positive signal, given the strong net income turnaround and revenue growth. However, they should closely monitor the company's fixed maturity AFS securities portfolio for further unrealized losses and potential credit impairments, as these could impact future profitability. A deeper dive into the specific types of corporate bonds and ABS with significant unrealized losses is warranted.

Financial Highlights

revenue

$10,737M

total Assets

$431,158M

total Debt

$2,252M

net Income

$463M

cash Position

$9,944M

revenue Growth

+41.6%

Revenue Breakdown

Key Numbers

• $463M — Net Income (Turnaround from a loss of $600M in Q3 2024 to a profit of $275M in Q3 2025, and $463M for the nine months ended September 30, 2025, compared to $818M in 2024.)
• $10.74B — Total Revenues (Increased from $7.58B for the nine months ended September 30, 2024, to $10.74B for the same period in 2025, a 41.6% increase.)
• $3.70B — Insurance Premiums (Massive increase from $322M for the nine months ended September 30, 2024, to $3.70B for the same period in 2025.)
• $4.15B — Net Investment Income (Increased from $3.78B for the nine months ended September 30, 2024, to $4.15B for the same period in 2025.)
• $740M — Realized Loss (Increased from $345M for the nine months ended September 30, 2024, to $740M for the same period in 2025.)
• $431.16B — Total Assets (Increased from $405.43B at December 31, 2024, to $431.16B at September 30, 2025.)
• $11.81B — Total Stockholder's Equity (Increased from $10.51B at December 31, 2024, to $11.81B at September 30, 2025.)
• $962M — Capital Contribution (Received from Lincoln National Corporation for the nine months ended September 30, 2025.)
• $6.23B — Gross Unrealized Losses (On fixed maturity AFS securities as of September 30, 2025, with $3.00B of these losses exceeding 20% of fair value.)
• $132.87B — Policyholder Account Balances (Increased from $125.82B at December 31, 2024, to $132.87B at September 30, 2025.)

Key Players & Entities

• LINCOLN NATIONAL LIFE INSURANCE CO /IN/ (company) — registrant
• Lincoln National Corporation (company) — parent company and sole common stock owner
• Lincoln Life & Annuity Company of New York (company) — wholly owned insurance company subsidiary
• Lincoln Financial Distributors (company) — wholesale distributor subsidiary
• Protective Life Insurance Company (company) — reinsurance agreement counterparty
• Swiss Re Life & Health America, Inc (company) — reinsurance agreement counterparty
• $463 million (dollar_amount) — net income for nine months ended September 30, 2025
• $10,737 million (dollar_amount) — total revenues for nine months ended September 30, 2025
• $3,698 million (dollar_amount) — insurance premiums for nine months ended September 30, 2025
• $6,231 million (dollar_amount) — gross unrealized losses on fixed maturity AFS securities as of September 30, 2025

FAQ

Risk Factors

• Increased Realized Losses [medium — financial]: The company experienced a significant increase in realized losses on investments, rising to $740 million for the nine months ended September 30, 2025, from $345 million in the prior year period. This indicates potential challenges in managing investment portfolio performance or increased need to liquidate underperforming assets.
• Gross Unrealized Losses on Securities [medium — financial]: As of September 30, 2025, the company reported gross unrealized losses of $6.23 billion on fixed maturity available-for-sale securities. A substantial portion, $3.00 billion, of these losses exceeded 20% of the fair value, suggesting significant market value depreciation in a portion of the investment portfolio.
• Regulatory Compliance and Capital Requirements [medium — regulatory]: As a life insurance company, LNL is subject to extensive state and federal regulations. Changes in regulations, particularly those related to capital adequacy, solvency, and product approvals, could impact operations and profitability. Failure to comply could result in fines or restrictions.
• Interest Rate Sensitivity [high — market]: The company's investment portfolio and liabilities are sensitive to changes in interest rates. Fluctuations in interest rates can affect investment income, the fair value of fixed-income securities, and the profitability of certain insurance products.
• Cybersecurity and Data Breaches [medium — operational]: The company relies on technology to conduct its business and holds sensitive customer data. A cybersecurity breach or failure of IT systems could lead to financial losses, reputational damage, and regulatory penalties.

Industry Context

The life insurance industry is characterized by intense competition, evolving customer preferences for product features (e.g., indexed annuities, RILAs), and a highly regulated environment. Companies are navigating low interest rate environments, increasing demand for retirement solutions, and the need for robust digital capabilities. Consolidation and strategic partnerships are also common as firms seek scale and efficiency.

Regulatory Implications

Lincoln National Life Insurance Company operates under stringent state and federal insurance regulations. Changes in accounting standards, capital requirements (e.g., risk-based capital), and consumer protection laws can significantly impact financial reporting, operational strategies, and profitability. Compliance with these evolving regulations is a continuous challenge.

What Investors Should Do

1. Monitor the trend of realized losses and unrealized losses on investments.
2. Analyze the drivers of the substantial increase in insurance premiums.
3. Evaluate the impact of the capital contribution from the parent company.
4. Assess the company's ability to manage market risk, particularly interest rate sensitivity.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported net income of $463 million on total revenues of $10,737 million, with significant increases in insurance premiums and net investment income, but also higher realized losses.
• 2024-12-31: As of December 31, 2024 — Total assets were $405,426 million and total stockholder's equity was $10,512 million.
• 2024-09-30: Nine months ended September 30, 2024 — Reported net income of $818 million on total revenues of $7,582 million, with lower insurance premiums and net investment income compared to 2025.

Glossary

Fixed maturity available-for-sale securities

Debt securities that the company has the intent and ability to hold for an indefinite period but may be sold in response to needs for liquidity or changes in interest rates. They are reported at fair value, with unrealized gains and losses recorded in other comprehensive income. (A significant portion of the company's investment portfolio, with substantial unrealized losses noted in the filing.)

Realized gain (loss)

The profit or loss recognized when an investment is sold or matures. For insurance companies, this can be a significant factor in overall profitability. (The company reported a higher realized loss in the current period, impacting net income.)

Policyholder account balances

Represents the amounts held by the company on behalf of policyholders, typically related to annuity and life insurance contracts where the policyholder bears investment risk or has a right to surrender the contract. (These balances increased, indicating growth in the company's core insurance and annuity business.)

Accumulated other comprehensive income (loss)

A component of equity that includes unrealized gains and losses on certain investments (like available-for-sale securities), foreign currency translation adjustments, and other items not recognized in net income. (The company has a significant accumulated other comprehensive loss, primarily due to unrealized losses on investments.)

Deferred acquisition costs (DAC)

Costs incurred in acquiring insurance contracts that are capitalized and amortized over the expected life of the contracts. These include commissions, underwriting expenses, and other costs directly related to policy acquisition. (A significant asset on the balance sheet, reflecting the costs of acquiring future premium revenue.)

Market risk benefit assets/liabilities

Assets and liabilities related to guarantees or benefits that are sensitive to market performance, such as guaranteed minimum death benefits or living benefits in variable annuities. (These items can introduce volatility to earnings due to market fluctuations.)

Year-Over-Year Comparison

Lincoln National Life Insurance Company has shown a significant revenue increase of 41.6% for the nine months ended September 30, 2025, reaching $10.74 billion, primarily driven by a dramatic surge in insurance premiums. While net investment income also grew, the company experienced a substantial increase in realized losses, which negatively impacted net income compared to the prior year. Total assets and stockholder's equity have grown, with equity bolstered by a capital contribution, indicating a strengthening balance sheet despite increased investment volatility.

Key Financial Figures

• $2.50 — ares of common stock of the registrant ($2.50 par value) were outstanding, all of whi

Filing Documents

• cik0000726865-20250930.htm (10-Q) — 5633KB
• exhibit311-lnl10qx3q2025.htm (EX-31.1) — 9KB
• exhibit312-lnl10qx3q2025.htm (EX-31.2) — 9KB
• exhibit321-lnl10qx3q2025.htm (EX-32.1) — 4KB
• exhibit322-lnl10qx3q2025.htm (EX-32.2) — 4KB
• 0000726865-25-001139.txt ( ) — 30818KB
• cik0000726865-20250930.xsd (EX-101.SCH) — 127KB
• cik0000726865-20250930_cal.xml (EX-101.CAL) — 156KB
• cik0000726865-20250930_def.xml (EX-101.DEF) — 822KB
• cik0000726865-20250930_lab.xml (EX-101.LAB) — 1251KB
• cik0000726865-20250930_pre.xml (EX-101.PRE) — 1102KB
• cik0000726865-20250930_htm.xml (XML) — 9178KB

Financial Statements

Item 1. Financial Statements: Consolidated Bal ance Sheets as of September 30, 2025 (Unaudited ) and December 31, 2024 1 Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2025 and 2024 2 Unaudited Consolidated Statements of Stockholder's Equity for the three and nine months ended September 30, 2025 and 2024 3 Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 4 Notes to Unaudited Consolidated Financial Statements: Note 1 – Nature of Operations and Basis of Presentation 5 Note 2 – New Accounting Standards 6 Note 3 – Investments 7 Note 4 – Variable Interest Entities 17 Note 5 – Derivative Instruments 18 Note 6 – DAC, VOBA, DSI and DFEL 28 Note 7 – Reinsurance 31 Note 8 – MRBs 32 Note 9 – Separate Accounts 33 Note 1 0 – Policyholder Account Balances 34 Note 1 1 – Future Contract Benefits 38 Note 1 2 – Fair Value of Financial Instruments 45 Note 1 3 – Contingencies and Commitments 61 Note 1 4 – Shares and Stockholder's Equity 66 Note 1 5 – Segment Information 67 Note 1 6 – Realized Gain (Loss) 76 Note 1 7 – Federal Income Taxes 76 Note 18 – Supplemental Disclosures of Cash Flow Data 77

Management's Narrative Analysis of the Results of Operations

Item 2. Management's Narrative Analysis of the Results of Operations 78

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 96

Controls and Procedures

Item 4. Controls and Procedures 96 PART II

Legal Proceedings

Item 1. Legal Proceedings 98 Item 1A.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 98

Other Information

Item 5. Other Information 98

Exhibits

Item 6. Exhibits 98 Exhibit Index for the Report on Form 10-Q 99

Signatures

Signatures 100 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements THE LINCOLN NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS (in millions, except share data) As of As of September 30, December 31, 2025 2024 (Unaudited) ASSETS Investments: Fixed maturity available-for-sale securities, at fair value (amortized cost: 2025 - $ 90,371 ; 2024 - $ 88,978 ; allowance for credit losses: 2025 - $ 97 ; 2024 - $ 46 ) $ 85,186 $ 81,900 Trading securities 1,837 2,005 Equity securities 537 294 Mortgage loans on real estate, net of allowance for credit losses (portion at fair value: 2025 - $ 230 ; 2024 - $ 232 ) 22,092 20,940 Policy loans 2,574 2,465 Derivative investments 10,405 9,512 Other investments 7,489 6,935 Total investments 130,120 124,051 Cash and invested cash 9,944 4,505 Deferred acquisition costs, value of business acquired and deferred sales inducements 12,511 12,426 Reinsurance recoverables, net of allowance for credit losses 49,355 48,943 Deposit assets, net of allowance for credit losses 33,383 30,537 Market risk benefit assets 4,694 4,860 Accrued investment income 1,047 993 Goodwill 1,144 1,144 Other assets 9,100 9,529 Separate account assets 179,860 168,438 Total assets $ 431,158 $ 405,426 LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities Policyholder account balances $ 132,874 $ 125,818 Future contract benefits 42,128 40,002 Funds withheld reinsurance liabilities 29,610 26,810 Market risk benefit liabilities 1,190 1,046 Deferred front-end loads 7,368 6,750 Payables for collateral on investments 11,140 9,876 Short-term debt 105 24 Long-term debt 2,147 2,173 Other liabilities 12,922 13,977 Separate account liabilities 179,860 168,438 Total liabilities 419,344 394,914 Contingencies and Commitments (See Note 13) Stockholder's Equity Common stock – 10,000,000 shares authorized, issued and outstanding 14,028 13,015 Retained earnings (deficit) ( 482 ) ( 173 ) Accumulated other comprehensive income (loss) ( 1,732 ) ( 2,330 ) Total stockhold

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Nature of Operations and Basis of Presentation Nature of Operations The Lincoln National Life Insurance Company ("LNL" or the "Company," which also may be referred to as "we," "our" or "us"), a wholly owned subsidiary of Lincoln National Corporation ("LNC" or the "Parent Company"), is domiciled in the state of Indiana. We own 100% of the outstanding common stock of one insurance company subsidiary, Lincoln Life & Annuity Company of New York ("LLANY"). We also own several non-insurance companies, including Lincoln Financial Distributors, our wholesale distributor. LNL is licensed and sells its products throughout the U.S. and several U.S. territories. Through our business segments, we sell a wide range of wealth accumulation, wealth protection, group protection and retirement products and solutions. These products primarily include variable annuities, fixed annuities (including indexed), registered index-linked annuities ("RILA"), universal life insurance ("UL"), variable universal life insurance ("VUL"), linked-benefit UL and VUL, indexed universal life insurance ("IUL"), term life insurance, group life, disability and dental and employer-sponsored retirement plans and services. For more information on our segments and the products and solutions we provide, see Note 15 . Basis of Presentation The accompanying unaudited consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for the Securities and Exchange Commission ("SEC") Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The information contained in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31

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