Lincoln National Corporation

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Lincoln Financial Fourth Quarter 2025 Earnings Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star, then the number one on your telephone keypad. And if you'd like to withdraw that question, press star 1 again. Thank you. I would now like to turn the conference over to John Mewthing, head of investor relations. John, please go ahead.

Good morning, everyone, and welcome to our fourth quarter earnings call. We appreciate your interest in Lincoln. Our quarterly earnings specialties, earnings supplement, and statistical supplement can all be found on the investor relations page of our website, www.lincolnfinancial.com. These documents include reconciliations of the non-GAAP measures used on today's call, including adjusted income from operations and adjusted income from operations available to common stockholders, or adjusted operating income 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 cash flow conversion ratios, share repurchases, liquidity and capital resources, as well as any statements regarding our 2026 and medium-term outlook and future strategic initiatives are forward-booking 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 differ materially from our current expectations. These risks and uncertainties include those described in the cautionary statement disclosures 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 correct or update any of them to reflect events or circumstances that occur after today. Presenting this morning are Alan Cooper, Chairman, President, and CEO, and Chris Nezapur, Chief Financial Officer. After their prepared remarks, we'll address your questions. Let me turn the call over to Alan.

Alan? Thank you, John, and good morning, everyone. Thank you for joining our call today. Our fourth quarter performance was strong, with adjusted operating income increasing 31% year over year, and our full year adjusted operating income increasing to its highest level in four years, underscoring the progress we have made as we advance our strategy with discipline and focus across Lincoln. This was also our sixth consecutive quarter of year-over-year adjusted operating earnings growth with solid performance across the business aligned with our objective of further diversifying our mix. These results were supported by the continued advancement of our strategic realignment, operational execution, and a more resilient capital foundation. Before I walk through the quarter's highlights, I want to step back and reflect on what we have accomplished since we began this journey at the beginning of 2023. Over the course of the past several years, we remained focused on executing against the strategic priorities we laid out to evolve 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 franchise. The fundamental principles of foundational capital, a more efficient operating model, and our efforts to drive profitable growth are coming through in our results with clear evidence of building broad-based momentum balanced against a strategic awareness of where more work needs to be done. With that context, I'll briefly frame our progress against the three priorities that continue to guide our strategy. Following several years of strengthening the balance sheet, our capital foundation remains durable and resilient. Capital levels remain well above our established buffer, and our leverage ratio has meaningfully improved. With this foundation firmly in place, we remain focused on continuing to improve returns on capital and to manage capital with greater flexibility over time. We also made meaningful headway in optimizing our operating model, creating a more efficient and scalable organization. We have sustained expense discipline, combining prior firm-wide actions with continued targeted initiatives this year, and we see additional targeted opportunities ahead while continuing to invest strategically to support our long-term priorities. We are also making operational enhancements, streamlining processes to support employee productivity and efficiency, enhancing digital and automated capabilities to better serve our customers, and evolving our distribution strategy to strengthen our go-to-market approach. Our investment strategy has been further refined, expanding our asset sourcing capabilities and leveraging our external partnerships to enhance ongoing risk-adjusted yield. The role of our Bermuda affiliate expanded over the year, and we will continue to leverage it to enhance capital efficiency in support of our broader strategy. Collectively, these actions build upon the more stable foundation we have established, reinforcing more efficiency and sustainability of performance. Lastly, over the course of the year, we advanced profitable growth across the enterprise with clear progress across each business. Some businesses are further along in their strategic realignment and their performance reflects that, while others are at earlier stages. Across the company, our emphasis is on products and segments with higher risk-adjusted margins, more stable cash flows, and greater capital efficiency to strengthen the resilience of the business over time. The cumulative impact of these actions is translating into stronger core capital generation for the company, which in turn supports capital deployment that sharpens our competitive advantages, reinforces our strategic moat, and supports long-term free cash flow generation. Results may 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 continues to build, our progress is increasingly evident, and we remain focused on the path ahead. Let me turn to our businesses, where I will walk through our results and how we are positioning each to continue building on our progress in the years to come. Starting first with annuities. We are a leader in this market, offering a broad set of products across RILA fixed and variable annuities, both with and without living benefits, enabling us to meet customers across different needs and market environments. Our deep, longstanding distribution relationships and consultative approach continue to broaden our reach and strengthen our position. Over the past two years, we have built important infrastructure to support this business, including our Bermuda affiliate, expanded investment platform, and enhanced product features. These capabilities support our go-to-market strategy and position our annuities business for sustained success in an evolving market. In 2025, we delivered strong annuity sales with total volumes of 25%. Approximately two-thirds of those sales came from spread-based products consistent with our strategy to evolve toward a more balanced and less market-sensitive mix over time. Full-year RILA sales increased 35% in 2025, reflecting our differentiated product features that continue to resonate with customers. Fixed annuity sales increased 11%, underpinned by the capabilities we've built to support a consistent presence. Full-year variable annuity sales increased 27% year over year as our product offerings, coupled with the favorable market environment, supported sales growth in variable annuity with and without guaranteed living benefits. 2025 sales volumes, in part, reflected a strong market environment and customer demand. In 2026, we remain focused on balancing profitability, capital efficiency, and lower market sensitivity over time, prioritizing profitable growth over top-line sales growth. I'll speak to each of our annuity product segments to provide additional context. For variable annuities, we expect 2026 volumes to be intentionally lower and more closely aligned with pre-2025 levels as part of our effort to reduce exposure to market sensitivity over time. In fixed annuities, we are now retaining 100% of sales following the exit of the External Flow Reinsurance Treaty. Looking ahead, sales levels will continue to reflect market dynamics as we advance our profitable growth priorities and we expect our fixed annuity account values to increase relative to 2025. Within the fixed annuity category, we see attractive growth opportunities in fixed indexed annuities where differentiated crediting rate strategies and product features support our return objectives and allow us to compete beyond price. In RILAs, customer demand continues to expand alongside increasingly competitive dynamics. Our approach remains anchored in disciplined target return thresholds differentiated product features, and a deliberate focus on more profitable segments of this market, factors that directly inform where we choose to compete. As a result, sales levels may remain broadly consistent with the past two to three years as we see greater longer-term growth opportunity in fixed annuities relative to RILA. Importantly, Our position as a leading annuity provider with a diversified set of product capabilities supported by a broad distribution footprint gives us the flexibility to reallocate capital efficiently for the opportunity set offering the most attractive returns as market dynamics evolve. We also remain focused on broadening our distribution partnerships across the annuity market aligned with a disciplined focus on segments that support higher risk-adjusted returns on capital and profitable growth. At the same time, we're expanding our product offerings and continuing to build digital tools and capabilities that enhance the value we deliver to our partners, particularly in areas where we see the strongest opportunities and can compete beyond price. Taken together, these dynamics underscore a disciplined framework for allocating capital across the annuity platform toward higher risk-adjusted return opportunities supported by product breadth, distribution strength, and prudent capital deployment. Turning to life, we continue to make meaningful progress repositioning the business over the course of the year. Our efforts have been focused on improving the performance of the in-force block and pivoting the new business franchise toward accumulation and protection products with more balanced risk profiles that support stable cash flows. At the same time, we have advanced the modernization of our infrastructure and further optimized our distribution footprint to get closer to the point of sale. The strength of our distribution platform has enabled us to deepen relationships with key partners and expand our reach into markets where we see attractive growth opportunities. These actions are supporting both improved financial outcomes and stronger sales momentum. For the full year, excluding the impact of our annual assumption review, earnings improved meaningfully. Sales for the year were up approximately 50% versus the prior year. Full-year core life sales, which exclude executive benefits, increased 4% compared to the prior full year. It is worth noting that fourth quarter's core life sales included some larger cases, which can vary from period to period. We expect core life sales to grow in 2026, but from a baseline more in line with the earlier quarters of 2025, as we continue to prioritize profitable growth for the business. Executive benefits had a record year with sales of $265 million, up from $59 million in 2024, reflecting the foundational investments we have made in this business centered around product capabilities, distribution relationships, and our service model. While large case activity will naturally vary, we are encouraged by the trajectory we are building in this segment and expect to have a consistent presence in this market going forward. From a franchise perspective, we continue to strengthen the new business momentum across our targeted product lines. Execution against our strategy remains focused on repositioning sales towards solutions with more favorable risk characteristics, improving the financial professional experience through digital tools and operational excellence, and expanding distribution reach through targeted product launches. Together, these efforts are reinforcing the trajectory of the life business and supporting a more consistent contribution over time. Overall, we are pleased with the progress we made in life this year and where this business is positioned heading into 2026. In group protection, we continue to execute effectively against a targeted strategy to deliver value across three distinct market segments, local, regional, and national, with an emphasis on the fastest growing markets, local markets, and supplemental health. Group delivered another outstanding year with strong earnings and premium growth and full year sales largely in line with the prior year. Full-year earnings, excluding the impact of our annual assumption review, increased 16% year-over-year. Full-year premium growth of nearly 7% was broad-based, with growth across all products and segments driven by strong sales and persistency, along with disciplined pricing. Full-year sales, as mentioned previously, were roughly in line with last year's results, with growth in local and regional markets and supplemental health sales increasing over 40%, further diversifying the book. Overall, this strong performance reflects deliberate choices in how we are tailoring products and services by segment, supported by continued investment in the capabilities and infrastructure that support our customers to manage their benefits more effectively. As we look to 2026, we expect to build on this momentum as we continue to diversify the business with growth increasingly driven by strong persistency and disciplined premium growth. With that context, I'll walk through how this translates across our local, regional, and national segments. In local markets, where we see the strongest margin profile, We are focused on accelerating growth by delivering bundled solutions that emphasize ease of doing business, leveraging our focused local distribution footprint. In regional markets, we are reinforcing stronger strategic broker partnerships and expanding our technology integrations and digital capabilities to better support employers and their benefit decisions. In national accounts, where clients demand robust capabilities, we are tailoring products and services enabled by our integrated technology and streamlined processes, leveraging both our market-leading lead management expertise and deep broker relationships. And across all of our segments, supplemental health remains a key priority. Across each segment, the focus remains on disciplined execution and serving customers while supporting sustainable growth over time. Overall, the fundamentals of this business remain strong, and group is well positioned as we move forward. Turning to retirement plan services. For the full year, earnings were relatively steady, with modest pressure reflecting ongoing headwinds, including participant outflows. at the same time we continue to see strong sales and total deposits underscoring that our value proposition is resonating with customers and that our focus on participant outcomes is gaining traction as we begin the next phase of our realignment work our focus is on sharpening where and how we compete We see opportunity to build on our strengths in the more profitable parts of the market, including leveraging our distribution footprint and supporting growth in higher margin areas, such as the small market segment. Looking ahead, our priorities are centered on improving the earnings profile of the business over time by expanding revenue sources within the existing customer base, broadening products and services where customer demand is strongest, and taking targeted actions to improve operating efficiency. We also see opportunity to further optimize the investment strategy to support our stable value offerings. While this work will take time, the momentum we're seeing with customers reinforces our confidence in the strategic direction and our ability to steadily improve the quality and durability of earnings in this business over time. Stepping back, we're pleased with the progress we've made. Today's results demonstrate disciplined execution as we continue to shape the enterprise, strengthen the earnings profile, and improve the durability of the business. At the same time, we recognize there is more work ahead. We're operating from a position of strength which gives us the flexibility to invest where we see the greatest opportunities while remaining disciplined in how we deploy capital across the enterprise. As we enter 2026, we do so with clarity on our priorities, momentum in our results, and confidence in what we're building. We remain focused on delivering against our objectives and continuing to build long-term shareholder value over time. With that, let me turn the call over to Chris to discuss our fourth quarter and full year results and our outlook. Chris?