Lincoln National Corporation

at that time. If you need assistance at any time during the call, please press the star key followed by the zero and someone will assist you. Now I would like to turn the call over to the senior vice president head of investor relations, Tina Madden. Please go ahead.

Thank you. Good morning everyone and welcome to our second quarter earnings call. We appreciate your interest in Lincoln. Our quarterly press release, earnings supplement and statistical supplement can all be found on the investor relations page of our website, .lincolnfinancial.com. These documents include reconciliations of the non-GAAP measures used in today's call, including adjusted income from operations or adjusted operating income and adjusted income from operations available to stockholders to their most comparable GAAP measures. Before we begin, I want to remind you that any statements made during today's call regarding expectations, future actions, trends in our businesses, prospective services or products, future performance or financial results, including those relating to deposits, expenses, income from operations, free cash flow or free liquidity and capital resources are forward-looking statements under the private securities litigation reform act of 1995. These forward-looking statements involve risks and uncertainties that could cause our actual results to do differ materially from our current expectations. These risks and uncertainties include those described in the cautionary statement disclosure in our earnings release issued earlier this morning, as well as those detailed in our 2024 annual report on form 10-K, most recent quarterly reports on form 10-Q and from time to time in our other filings with the SEC. These forward-looking statements are made only as of today and we undertake no obligation to update or revise any of them to reflect events or circumstances that occur after today. Presenting this morning are Ellen Cooper, Chairman, President and CEO and Chris Nezepore, Chief Financial Officer. After their prepared remarks, we'll address your questions. Let me now turn the call over to

Ellen. Ellen? Thank you, Tina, and good morning, everyone. We appreciate you joining our call today. Our second quarter performance was strong, with adjusted operating income increasing 32% year over year, underscoring the progress we have made as we advance our growth strategy with discipline and focus across Lincoln. Before I walk through the quarter's highlights, I wanted to step back and reflect on what we have accomplished since we began this journey at the beginning of 2023. The fundamental principles of foundational capital, an optimized operating model, and a strategy for profitable growth are coming through in our results with clear evidence of building momentum balanced against a strategic awareness of where more work needs to be done. We have evolved the direction of the company with a focus on increasing our risk-adjusted return on capital, reducing the volatility of our results, and growing our and we're starting to see the benefit of those actions. A few highlights worth noting. This marks the fourth consecutive quarter of year over year adjusted operating income growth. It's the seventh consecutive quarter with an estimated RBC ratio in excess of our target of 400% and the fifth quarter in a row with an estimated RBC ratio exceeding our 20 percentage point buffer. Over the past several years, we have also made significant progress in optimizing our operating model, creating a more efficient and scalable organization. We have reduced expenses, streamlined processes, and enhanced our digital capabilities while strategically investing in talent and infrastructure in each of our businesses. We have also advanced our investment strategy and launched Bermuda-based reinsurance subsidiary. Becoming a leaner, more efficient organization strengthens our ability to deploy capital more effectively, elevate the customer experience, and respond to market opportunities with greater agility. At the same time, each of our businesses has made progress on strategies to shift to products and segments with higher margins, more stable cash flow profiles, and greater capital efficiency. The first half of this year saw all four businesses deliver double-digit sales growth, a portion of which came from products that have historically not been key drivers for Lincoln. Underneath the surface, we continue to increase the core capital generation of the company, investing that capital in areas that are expected to sharpen our competitive advantages, broaden our strategic moat, and drive growth in our free cash flow over the longer term. Results will not be linear. Markets can be volatile and the economic backdrop could change, but we remain steadfast in our commitment to deliver results that drive long-term value. Our momentum is building, our track record is increasingly evident, and we're excited about the next quarter. Now turning to the highlights for the quarter. Our results this quarter demonstrate that the strategic repositioning of each of our businesses is beginning to translate into improved fundamentals supported by a more diverse and profitable business mix. Key highlights at the segment level included our group protection business, which delivered a record quarter for earnings and its highest ever margin. Annuities generated its third highest sales quarter, supported by a more diverse and balanced product mix. Retirement plan services saw a -over-year increase in total deposits, resulting from strong first-year sales growth. Life insurance achieved positive earnings driven by favorable mortality and improved expenses. Now turning to our business results, starting with retail solutions, which includes annuities and life insurance. Annuities produced robust sales of four billion, a six percent sequential increase supported by our ongoing focus on building and sustaining a diversified product mix. Spread-based products comprised two-thirds of the overall mix with fixed annuity sequential growth of 41 percent and RILA sequential growth of 12 percent. Each of our three major product categories exceeded one billion in sales and additionally all sales in the quarter supported our strategic and financial goals with strong profitability and capital efficiency. We continue to lean into our distribution leadership where we have the reach and scale to leverage our long-standing relationships, offer a compelling value proposition and broaden our addressable markets, enabling us to reach more customers seeking to retire with confidence and financial security. Our distribution partners deeply appreciate our customer-centric approach, which is designed to equip producers with the insights, tools and capabilities to enhance productivity and ease of doing business. Our scalable support model helps partners grow their businesses through marketing and training assistance, a smooth and automated sales process and ongoing high-quality customer service. The breadth of products we offer in fixed RILA and variable annuities is also a key competitive strength, reinforcing Lincoln as a holistic solutions provider that can adapt to customer preferences in various market environments. As I previously mentioned, our fixed annuity sales increased by 41 percent sequentially as we continue to leverage the foundational capabilities we build to sustain a consistent and growing presence in the fixed marketplace, including investment strategy enhancements, distribution expansion and capital efficient reinsurance. Optimizing our mix of internal and external reinsurance and retaining a greater portion of our spread-based earnings will further accelerate the profitability and risk-adjusted returns of our overall annuities business. RILA generated a fifth consecutive quarter of sales in excess of one billion and the fifth consecutive quarter of sequential growth as we maintained momentum with a strong competitive position in this market. The continued growth in sales was driven by our ability to differentiate through unique features and crediting rate strategies as our second-generation RILA product continues to resonate with customers. We also benefited from further leveraging our distribution leadership to expand in targeted channels to drive additional market penetration and growth. Finally, traditional variable annuities remain integral to the diversification of our product suite, producing strong free cash flows and risk-adjusted returns while delivering a compelling customer value proposition. In summary, these results reflect the success we are achieving in delivering a diversified product mix that meets customers where they are across different life stages, risk tolerances, and economic environments. This strategy to diversify our mix to more spread-based earnings translates into more predictable and resilient cash flows over time while meeting our risk-adjusted return targets and balancing the financial contribution across products. We remain confident in our strategic trajectory and our ability to leverage our competitive strengths to achieve our profitability and return objectives. Now turning to life insurance. In our retail life business, we've taken decisive steps to reposition the franchise for long-term value creation. We have intentionally been pivoting towards accumulation and protection products with more risk sharing and have been building out product features to expand our solution set positioning us for future growth. A key part of this transformation is our distribution evolution. We focused on building a distribution footprint that sits closer to the financial professional. This proximity better positions us to provide support to our customers by giving us sharper insights, more streamlined connectivity, and enhanced efficiency in reaching our target segments which is expected to support durable growth. Sales increased 15% year over year and 25% sequentially with broad-based momentum across our products as our actions over the last several years begin to take hold. On a year over year basis, we saw executive benefits which can vary from period to period continue to gain traction with sales in this segment tripling. We value this business as a product category where we have strong competitive positioning and one that also generates more predictable cash flows. We're also seeing continued momentum in IUL where we're our addressable market through enhanced products, expanded distribution access, and new digital tools to enhance the client experience. It's another area where we're leaning in to capture future growth while staying disciplined on achieving risk adjusted returns. Overall, our retail life strategy is grounded in a clear focus. Shift our mix towards products and channels that support our long-term enterprise objectives including compelling value propositions for our customers, efficient capital deployment, and focused future growth. As I have previously highlighted, the repositioning of our life business will continue to take time. However, we are confident that leveraging our strengths in product, distribution, and underwriting to support our customers will increase our competitive differentiation and drive higher earnings growth. Next, turning to workplace solutions which includes our group protection and retirement plan services for our business. As I mentioned earlier, Group delivered another record quarter and we are very pleased with the strategic momentum of this business. Earnings grew by 33% year over year and the margin increased by 250 basis points to 12.5%. These results highlight our disciplined execution in diversifying this business through targeted segment and product strategies while prioritizing profitable growth as we position Group to become a sustained larger portion of Lincoln's overall earnings mix. Premiums grew 7% year over year supported by robust sales and continued strong persistency. These outcomes reflect our disciplined approach to pricing which is a cornerstone of our strategy for growth in competitive markets both for new business and They also reflect the benefits of the investments we have made in our operating service and claims models as well as the execution of our segment level strategy which has resulted in an expanded market presence. Sales increased by 16% year over year. At a segment level, local markets drove most of this growth as our momentum in the space continues to accelerate. Building a consistent presence in this market represents a significant growth opportunity while supporting our profitability objectives. Central to the success we are achieving are the targeted investments we have made over the last two years to grow this segment and deepen our ability to deliver on what customers consider most important, integrated solutions that emphasize ease, access and efficiency. We have also invested in a broader, more comprehensive product suite that deepens our value proposition to local market employers. Additionally, we continue to make consistent progress in our other segments, growing and retaining our customers which reinforces the durability of the strategy that we have been implementing over the last few years. In our regional segment, we are sustaining a strong position by deepening strategic broker partnerships to better support employers and their benefit decisions. We are making ongoing investments in improved customer experience through expanded digital capabilities and a deeper product portfolio with a focus on supplemental health and lead management. In our national segment, we are leveraging our expertise in combining product breadth including supplemental health products, consultative guidance and more digital engagement tools to provide high quality customer service, strengthen our competitive differentiation and drive sustained and profitable growth. On a product basis, sales of supplemental health products to both new and existing customers increased meaningfully this quarter, supported by the investments in our distribution and service models as well as enhancements to our product features. Our suite of supplemental health products is a key focus given its strong customer value proposition, attractive margins and significant growth potential compared to our traditional offerings. This quarter's results reinforce our confidence in the sustained growth and earnings potential of our group business. With a strong foundation, disciplined execution including pricing and meaningful opportunities to further expand in its addressable markets, Group is positioned to continue to be an increasingly meaningful driver of our earnings and free cash flow growth. Now turning to retirement plan services or RPS. RPS's first year sales increased by nearly 50 percent year over year driven by stable value sales and total deposits increased by 10 percent. As we look ahead, we have a strong pipeline of known wins which we anticipate will materialize in the second half of this year. This sales momentum demonstrates that the offerings in our core record keeping and institutional market segments are resonating with customers. We remain focused on initiatives to strengthen our operational and service capabilities in RPS as we advance our objective to build sustainable and profitable growth in this business over the long term. In closing, we remain steadfast in our commitment to deliver sustainable long-term value for our shareholders. The progress we've made is not only reflected in our financial performance but also in the strategic clarity with which we are executing. The strength of our operating model and the resilience of our capital position. We are deepening our strategic mode shifting to higher margin capital efficient growth investing in areas that sharpen our competitive edge and evolving into a more agile scalable organization. We are building a stronger Lincoln grounded in a more resilient foundation and positioned to realize greater potential. A market leading franchise shaped by discipline transformation. We are better positioned to operate in a dynamic environment, align capital deployment with strategic priorities, and unlock value where we've built momentum and scale. We are energized by our strong trajectory and confident in our path forward. And with that, I will turn the call over to Chris.