Lincoln National Sheds $5.8B Block in Reinsurance Deal

Lincoln National has reported its second-quarter financial results, highlighting adjusted operating income of $439 million, or $2.24 per diluted share. This marks the eighth consecutive quarter of year-over-year growth in adjusted operating earnings, with a 3% increase from the previous year.

In parallel with its earnings announcement, Lincoln has agreed to reinsure a substantial portion of its legacy business. A subsidiary of Talcott Financial Group will reinsure approximately $5.8 billion in-force guaranteed universal life statutory reserves and about $500 million of funding agreement business. This transaction represents roughly 37% of Lincoln's remaining guaranteed universal life block.

This strategic reinsurance deal aims to mitigate long-term mortality, lapse, and interest-rate risks associated with the guaranteed universal life product line. Following this agreement and a prior transaction with Fortitude Re, approximately 60% of Lincoln's total in-force guaranteed universal life business will be reinsured.

The company anticipates the transaction will have an all-in statutory capital impact of about $200 million, which it plans to fund using proceeds from a prior transaction. Lincoln expects this deal to boost its annual free cash flow by $30 million to $40 million, while maintaining its RBC ratio well above the 420% buffer.