Lincoln National Corporation

Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I'd like to welcome everyone to the Lincoln Financial second quarter 2026 earnings webcast and conference call. 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'd like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star 1 again. I'd now like to turn the conference over to John Muething, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to our second quarter earnings call. We appreciate your interest in Lincoln. Our quarterly earnings press release, earnings supplement, 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 relating to the closing of the GUL reinsurance transaction announced this morning and the expected timing thereof and the expected impact of the transaction on our risk profile, RBC ratio and free cash flow 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 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 2025 annual report on Form 10-K, most recent quarterly reports on Form 10-Q, and from time to time in our 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. In addition, please note that the reporting of risk-based capital or RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising, or promotional activities. Presenting this morning are Ellen Cooper, Chairman, President, and CEO, and Chris Nezypor, Chief Financial Officer. After their prepared remarks, we'll address your questions. Let me now turn the call over to Ellen. Ellen.

Thank you, John, and good morning, everyone. Thank you for joining our call today. This morning, alongside our second quarter results, we announced an agreement with Talcott to reinsure approximately $6 billion of our legacy life reserves. The transaction marks one more important milestone in shifting the liability mix and enhancing the ongoing durability of enterprise-free cash flow. reaching this agreement in a quarter that added to our track record of solid operating results speaks to the financial and operating strength we have built and our ability to execute consistently. Chris will take you through the details shortly. This transaction reflects the deliberate strategy we've been delivering over the past several years. From the outset, We laid out a clear path to build a strong balance sheet, optimize our operating model and drive more profitable, durable growth across our businesses. Since then, we have followed through on each of these priorities. We have grown earnings, improved the quality of those earnings, increased free cash flow and built a more resilient, better positioned company. With the business performing well and our capital position strengthened, there was one remaining priority to address. This quarter, we pre-funded the repurchase and or redemption of half of the preferred stock that becomes callable next year, bringing greater certainty to our capital plans. Together with the growth in holding company cash net of pre-funding, we are entering a new phase with greater flexibility to advance our capital priorities while investing in the long term growth of the business. As I reflect on what we've accomplished, I'm deeply grateful for the dedication, resilience and commitment our team has demonstrated every step of the way. Every day, they make a difference in the financial lives of more than 17 million customers, helping them plan, protect and prepare for their future. Together, we've built a better Lincoln, one with a stronger foundation, a better business mix and growing earnings and free cash flow. While our work is never complete, I believe we have reached an important inflection point in our journey. That progress has expanded our opportunities and flexibility, positioning us to create greater value for our shareholders in the years ahead. Against that backdrop, our second quarter results demonstrate the consistent execution that has brought us to this point. Adjusted operating income increased 3% year-over-year, marking our eighth consecutive quarter of year-over-year growth. Just as importantly, each of our four businesses advanced its strategy this quarter, and together, they are building toward a more balanced, higher quality, and more predictable earnings profile. In group protection, earnings were among the highest in the segment's history, even as they moderated from a record one year ago. In annuities, earnings remained solid as spread-based products again represented about two-thirds of sales. Life Insurance produced a good quarter supported by favorable mortality while sales increased meaningfully year over year. And in retirement plan services, earnings grew at a double digit rate driven by favorable markets and spread expansion as the strategic realignment of the business is in its early stages. Taken together, these results demonstrate that the strategic choices we have made are producing a more balanced earnings profile and creating multiple pathways for future growth. I will now take a few minutes to discuss each of our businesses in more detail, starting with annuities. As a holistic annuity provider, our competitive advantage lies in the breadth of our product portfolio and the depth of our distribution relationships. We offer a full range of solutions across RILA fixed and variable annuities with and without living benefits, allowing us to meet customers' needs across a wide range of market environments. Our strategy is straightforward. Grow where we can differentiate beyond price, achieve target returns, and steadily expand the spread-based earnings power of the business. Total annuity sales were $3.5 billion in the quarter, with spread-based products representing 63% of sales as we shift toward a less market-sensitive business. Ryla sales rose 10% year-over-year, a more measured increase than we generated in the first quarter, as we prioritize profitability over volume in a competitive market. We remain selective and disciplined, concentrating on the sources of growth where our distinctive capabilities complement customer needs and our return objectives. Fixed annuity sales were lower this quarter, but that does not change our view of the potential ahead. We believe this product category offers the longest runway for growth within our annuity business with capacity to extend our competitive position over time. The investments we've made in our platform, including through our partnership with Bain Capital, broaden our toolkit and position us to meaningfully increase fixed annuity sales over the remainder of the year. As we've said previously, with fixed annuity flows now fully retained, we expect fixed annuity account values to rise this year, supporting future earnings and cash flow. Variable annuity sales met our expectations as volumes normalized from the elevated levels we saw in 2025. Within that, sales of variable annuities without living benefit guarantees rose more than 60% year over year and for the first time exceeded those with guarantees. This is a capital efficient part of our business that generates attractive earnings and cash flow without the guarantee and an area where we see room for expansion. Across the portfolio, we are intentional about how to grow. As spread based products scale, we expect them to contribute a larger share of earnings and free cash flow. Now turning to life insurance. We have been deliberately reshaping the earnings profile of this business. We have improved the performance of the Inforce portfolio while shifting new business toward expanding segments and products that meet our long-term objectives. Just as importantly, we have enhanced our value proposition by investing in the technology, underwriting, and distribution footprint needed to compete and grow over the long term. Those efforts produced results again this quarter. Life earnings increased year over year, driven by favorable mortality, partially offset by lower alternative investment returns. Total life sales increased nearly 80% year over year, with core life sales up 18% to $103 million, led by MoneyGuard and VUL with limited guarantees. Executive benefits also performed well supported by one large case. As we've noted, sales of this product can vary from quarter to quarter based on the timing and size of individual cases. The life business is moving in the direction we intended. We are seeing the benefits of the actions we've taken across the enforce block while the new business we're writing advances our strategic priorities. Together, those actions are building a durable foundation for future earnings and free cash flow. Turning to group protection. Our targeted segment strategy shapes how we compete across the local, regional, and national markets. We tailor how we serve each customer segment with dedicated distribution, underwriting, technology, and service models built around the distinct needs of each market while emphasizing the areas with the most attractive long-term returns. In keeping with that strategy, we are deepening our presence in the local market segment and supplemental health products, which are the fastest growing. That emphasis is showing up in our results. Overall premium growth was 2.5% year over year and concentrated in the areas we have prioritized. Supplemental health premium rose 28% year-over-year and now represents 7% of our in-force premium, up from 5% a year ago, consistent with the outlook we shared at the beginning of the year. Local market premium again increased more than 3%, supported by our tailored operating model and deep local market relationships. This reflects focused execution, pricing rigor across both new business and renewals, and expansion into higher return markets and products. Sales declined from last year's record second quarter but were solid, and we held firm on our pricing discipline throughout. Our efforts are concentrated on the segments and products with the greatest long-term opportunity, along with the margins that have set our performance apart. We are also modernizing the business. This includes advancing our claims platform, expanding the use of AI and automation across underwriting and claims, and enhancing the digital tools available for brokers, employers and employees. Together, these initiatives improve responsiveness, simplify the customer experience, and reinforce our position. Today, group protection contributes more to Lincoln's earnings than it did just a few years ago, and the momentum behind it gives us confidence it will become an increasingly meaningful part of Lincoln's higher quality earnings profile. Now turning to retirement plan services, we are applying the same discipline framework that has guided our strategy across Lincoln, making deliberate choices that improve the profitability of the business. While this work is earlier in its evolution than in some of our other businesses, we have organized the business around distinct market segments with products, distribution, and service models designed for the unique needs of each segment. RPS earnings increased year over year, and total deposits also grew, driven by steady demand for our retirement solutions. Net flows remain negative, primarily due to the planned transition of several large cases that don't meet our profitability objectives. These actions support the direction we have established for the business and our objective of improving its overall economic profile. As we execute, we will build on our strengths while emphasizing opportunities with more favorable economics. The work is still in its early stages, but we believe it will steadily improve the profile of the business and its contribution to Lincoln's earnings growth. In closing, the actions we have taken over the past several years have reshaped Lincoln into a stronger, more diversified company with greater financial flexibility. Every one of our businesses now has room to accelerate earnings and grow free cash flow. We have reached an important inflection point. The next chapter is no longer about repositioning Lincoln. It is about building on what we have created, making disciplined, deliberate choices, that expand our businesses and improve the quality and durability of our earnings. Lincoln today is a fundamentally different company than it was four years ago. And what matters most is what that now enables us to achieve. We will be defined not by the journey behind us, but by the opportunities ahead and the value we create from here. With that, let me turn the call over to Chris.