Strong Annuity Sales Buoy Lincoln Financial Results

What You Need to Know

Sales of variable annuities without living benefits guarantees increased 48%, year-over-year.
Fixed annuity sales fell to $82 million, from $1.2 billion.

Lincoln Financial executives are celebrating the performance of the company’s retail annuity business.

Overall sales increased to $3 billion in the fourth quarter of 2021, up 20% from the total for the fourth quarter of 2020.

Sales of fixed annuities jumped to $413 million, from $82 million.

Total variable annuity sales rose 7%, to $2.6 billion.

In spite of Lincoln’s efforts to increase the prices of variable annuities with living benefits guarantees, to ensure that the company is getting paid well for assuming guarantee risk, sales of variable annuity contracts with those guarantees increased 65%, to $834 million.

The annuity operation produced $332 million in operating income on $1.3 billion in revenue, up from $289 million in operating income on $1.2 billion in revenue for the year-earlier quarter.

Dennis Glass, Lincoln’s CEO, today told securities analysts that the strong annuity sales results reflect the effects of the company’s shift toward variable annuities without living benefits guarantees, and toward fixed annuities priced to reflect the current low-interest-rate environment.

“I would say,” Glass said, “we’re getting excellent returns on the capital that we’re putting behind both the business with guaranteed living benefits and the business without guaranteed benefits. By staying in the market consistently, in good times and bad times, we have produced one of the best quality in-force books of business in the industry, and we expect that to continue and to help drive earnings over the next few years.”

Glass said more cash flowed out of fixed annuities than flowed in, mainly because Lincoln change annuity prices to ensure that the company was earning an appropriate return on capital.

Lincoln executives held the conference call to go over fourth-quarter earnings.