UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: June 30, 2001
LINCOLN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 1-6028 35-1140070
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
1500 Market Street, Suite 3900, Centre Square West Tower, Philadelphia, PA 19102
(Address of principal executive offices)
Registrant's telephone number 219-448-1400
Item 9
Financial Report for the year ended June 30, 2001.
PAGE 1
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended June 30 For the Six Months Ended June 30
2001 2000 2001 2000
Amount Amount Change % Change Amount Amount Change % Change
Income from Operations
Annuities 90.8 84.1 6.7 8.0% 173.1 172.6 0.5 0.3%
Life Insurance 67.1 62.4 4.7 7.5% 135.7 122.9 12.8 10.4%
Reinsurance 34.1 25.8 8.3 32.2% 80.9 57.7 23.2 40.2%
Investment Management 3.7 13.1 (9.4) (71.8%) 6.1 25.5 (19.4) (76.1%)
Lincoln UK 16.2 19.3 (3.1) (16.1%) 30.6 35.0 (4.4) (12.6%)
Corporate & Other (43.8) (31.7) (12.1) (79.7) (70.1) (9.6)
----- ----- ----- ----- ----- ----- ----- ------
Total Income from Operations 168.1 173.0 (4.9) (2.8%) 346.7 343.6 3.1 0.9%
----- ----- ----- ----- ----- ----- ----- ------
Realized gains (losses) on investments (11.5) (6.7) (4.8) (24.8) (7.1) (17.7)
Gains (losses) on derivatives 0.2 0.0 0.2 0.1 0.0 0.1
Restructuring charges (3.9) (2.7) (1.2) (4.5) (2.7) (1.8)
----- ----- ----- ----- ----- -----
Income before Accounting Changes 153.0 163.6 (10.7) 317.5 333.8 (16.3)
Cumulative effect of accounting changes* (11.3) 0.0 (11.3) (15.6) 0.0 (15.6)
----- ----- ----- ----- ----- ----- -----
Net Income 141.7 163.6 (21.9) (13.4%) 301.9 333.8 (31.9) (9.6%)
===== ===== ===== ===== ===== ===== ===== ======
Earnings per share (diluted)
Income from Operations $0.88 $0.89 ($0.01) (1.1%) $1.80 $1.77 $0.03 1.7%
Realized gain (losses) on investments ($0.06) ($0.04) ($0.02) ($0.13) ($0.04) ($0.09)
Gains (losses) on derivatives $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Restructuring charges ($0.02) ($0.01) ($0.01) ($0.02) ($0.01) ($0.01)
----- ----- ----- ----- ----- ----- ----- ------
Income before Accounting Changes $0.80 $0.84 ($0.04) $1.65 $1.72 ($0.07)
Cumulative effect of accounting changes* ($0.06) $0.00 -- ($0.08) $0.00 ($0.08)
----- ----- ----- ----- ----- ----- ----- ------
Net Income $0.74 $0.84 ($0.10) (11.9%) $1.57 $1.72 ($0.15) (8.7%)
===== ===== ===== ===== ===== ===== ===== ======
Inc. from Oper.- before Goodwill Amort.
Annuities 91.1 84.4 6.7 7.9% 173.7 171.4 2.3 1.3%
Life Insurance 73.0 68.4 4.7 6.8% 147.6 134.7 12.9 9.6%
Reinsurance 34.6 26.3 8.3 31.7% 81.8 58.6 23.2 39.6%
Investment Management 7.7 17.1 (9.4) (55.0%) 14.2 33.6 (19.4) (57.8%)
Lincoln UK 16.4 20.5 (4.2) (20.3%) 30.9 37.6 (6.7) (17.8%)
Corporate & Other (43.8) (31.7) (12.1) (79.8) (70.1) (9.7)
----- ----- ----- ----- ----- ----- ----- ------
Total 179.0 185.0 (6.0) (3.3%) 368.5 365.9 2.6 0.7%
===== ===== ===== ===== ===== ===== ===== ======
Earnings per share (diluted)
Inc. from Oper.- before Goodwill Amort. $0.93 $0.95 ($0.02) (2.1%) $1.91 $1.88 $0.03 1.6%
Operating Revenue
Annuities 522.1 530.1 (7.9) (1.5%) 1034.9 1074.6 (39.7) (3.7%)
Life Insurance 465.5 450.5 15.0 3.3% 933.4 896.0 37.4 4.2%
Reinsurance 451.4 458.9 (7.5) (1.6%) 966.5 851.6 114.8 13.5%
Investment Management 111.4 123.8 (12.4) (10.0%) 224.4 249.8 (25.4) (10.2%)
Lincoln UK 66.9 108.4 (41.5) (38.3%) 151.2 221.6 (70.3) (31.7%)
Corporate & Other (0.7) 31.4 (32.1) (102.4%) 25.7 79.6 (53.9) (67.7%)
------ ------ ----- ----- ------ ----- ----- ------
Total Operating Revenue 1616.5 1703.0 (86.5) (5.1%) 3336.0 3373.2 (37.3) (1.1%)
====== ====== ===== ===== ====== ===== ===== ======
Revenue (Including Investment Gains/Losses)
Annuities 512.1 530.5 (18.4) (3.5%) 1022.5 1079.2 (56.7) (5.3%)
Life Insurance 455.7 444.2 11.4 2.6% 915.3 885.9 29.4 3.3%
Reinsurance 448.7 457.2 (8.4) (1.8%) 956.8 851.6 105.1 12.3%
Investment Management 110.3 120.7 (10.4) (8.6%) 222.6 246.5 (24.0) (9.7%)
Lincoln UK 68.9 108.2 (39.3) (36.3%) 153.8 221.0 (67.2) (30.4%)
Corporate & Other 3.3 31.9 (28.6) (89.8%) 26.8 77.6 (50.8) (65.5%)
------ ------ ----- ----- ------ ----- ----- ------
Total Revenue 1599.0 1692.7 (93.7) (5.5%) 3297.8 3361.9 (64.1) (1.9%)
====== ====== ===== ===== ====== ===== ===== ======
Operational Data by Segment: (Billions)
Annuities Segment
Annuity Gross Deposits 1.371 1.283 0.088 6.9% 2.818 2.669 0.149 5.6%
Annuity Net Cash Flows (0.196) (0.682) 0.486 (0.786) (1.382) 0.596
Annuity Account Values 52.589 59.006 (6.417) (10.9%) 52.589 59.006 (6.417) (10.9%)
Life Insurance Segment
Life Insurance First Year Premium 0.154 0.142 0.012 8.5% 0.282 0.286 (0.004) (1.4%)
Life Insurance In-force 223.272 207.487 15.785 7.6% 223.272 207.487 15.785 7.6%
Life Insurance Account Values 11.066 10.538 0.528 5.0% 11.066 10.538 0.528 5.0%
Reinsurance Segment
Individual Life In-force Sales 28.3 37.2 (8.9) (23.9%) 59.2 67.2 (8.0) (11.9%)
Reinsurance Life In-force 475.7 384.4 91.3 23.8% 475.7 384.4 91.3 23.8%
Investment Management Segment
Retail Deposits 0.854 1.020 (0.166) (16.3%) 1.978 2.387 (0.409) (17.1%)
Retail Net Cash Flows (0.160) (0.363) 0.203 (0.208) (1.249) 1.041
Institutional In-flows 1.056 0.817 0.239 29.3% 2.247 1.901 0.346 18.2%
Institutional Net Cash Flows 0.445 (1.057) 1.502 0.027 (3.668) 3.695
Total Net Cash Flows 0.285 (1.420) 1.705 (0.181) (4.917) 4.736
Assets Under Management 50.267 56.518 (6.251) (11.1%) 50.267 56.518 (6.251) (11.1%)
Assets Under Management - Insurance Assets 36.018 34.891 1.127 3.2% 36.018 34.891 1.127 3.2%
Assets Under Management - Total Segment 86.286 91.409 (5.123) (5.6%) 86.286 91.409 (5.123) (5.6%)
Consolidated
Consolidated Domestic Retail Deposits 2.504 2.655 (0.151) (5.7%) 5.233 5.736 (0.503) (8.8%)
Consolidated Domestic Retail Account Balances 82.860 91.086 (8.226) (9.0%) 82.860 91.086 (8.226) (9.0%)
Annuities & Investment Management Net Flows 0.055 (1.760) 1.815 (0.980) (5.240) 4.260
Total Assets Under Management 128.507 137.546 (9.039) (6.6%) 128.507 137.546 (9.039) (6.6%)
* The cumulative effect of accounting changes relates to the adjustment recorded upon adoption of FAS #133 in the 1st qtr. 2001
and the adjustment recorded upon the adoption of EITF 99-20 in the 2nd qtr. 2001.
PAGE 2
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended June 30 For the Six Months Ended June 30
2001 2000 2001 2000
Amount Amount Change % Change Amount Amount Change % Change
Consolidated Operational Data: (Billions)
Balance Sheet Assets - End of Period 96431.2 103847.6 (7416.4) (7.1%) 96431.2 103847.6 (7416.4) (7.1%)
Shareholders' Equity
Beg of Period (Securities at Market) 5096.4 4340.4 756.0 4954.1 4263.9 690.2
End of Period (Securities at Market) 5055.9 4223.7 832.2 5055.9 4223.7 832.2
End of Period (Securities at Cost) 4952.8 4780.3 172.5 4952.8 4780.3 172.5
Average Equity (Securities at Cost) 4920.2 4753.0 167.2 4936.9 4772.2 164.7
Return on Equity
Inc from Operations/Average Equity 13.7% 14.6% (0.9%) 14.0% 14.4% (0.4%)
Net Income/Average Equity 11.5% 13.8% (2.2%) 12.2% 14.0% (1.8%)
Return on Capital
Inc from Operations/Average Capital 11.3% 11.8% (0.5%) 11.6% 11.6% 0.0%
Common Stock Outstanding
Average for the Period - Diluted 192.0 194.0 (2.0) (1.0%) 192.8 194.6 (1.8) (0.9%)
End of Period - Assuming Conv of Pref. 188.2 191.1 (2.9) (1.5%) 188.2 191.1 (2.9) (1.5%)
End of Period - Diluted 192.9 193.7 (0.8) (0.4%) 192.9 193.7 (0.8) (0.4%)
Book Value (Securities at Market) $26.87 $22.10 4.77 21.6% $26.87 $22.10 4.77 21.6%
Book Value (Securities at Cost) $26.32 $25.01 1.31 5.2% $26.32 $25.01 1.31 5.2%
Cash Returned to Shareholders
Share Repurchase - dollar amount 35.1 78.2 (43.1) 186.8 158.3 28.5
Dividends Declared to Shareholders 56.2 54.8 1.4 114.2 110.1 4.1
------ ------ ----- ------ ------ -----
Total Cash Returned to Shareholders 91.3 133.0 (41.7) 301.0 268.4 32.6
====== ====== ===== ====== ====== =====
Share Repurchase - number of shares 0.750 2.313 (1.563) 4.300 5.109 (0.809)
Dividend Declared on Common Stock -
per share $0.305 $0.290 $0.015 5.2% $0.610 $0.580 $0.030 5.2%
For the Quarter Ended June 30 For the Six Months Ended June 30
Comprehensive Income 2001 2000 2001 2000
(millions) Amount Amount Amount Amount
Net Income 141.7 163.6 301.9 333.8
Foreign Currency Translation (19.5) (0.9) (37.3) (8.2)
Net Unrealized Gains (Losses) on Securitiies (114.2) (145.4) 64.2 (90.9)
Gains (Losses) on Derivatives 3.7 0.0 9.4 0.0
Cumulative Effect of Accounting Change 0.0 0.0 17.6 0.0
------ ------ ------ -----
Comprehensive Income 11.7 17.3 355.8 234.7
------ ------ ------ -----
6/30/01 PAGE 3
Financial Highlights
Unaudited [Amounts in Millions]
For the Quarter Ended June 30 For the Six Months Ended June 30
-------------------------------------------- --------------------------------------------
2001 2000 2001 2000
Amount Amount Change % Change Amount Amount Change % Change
Consolidated Condensed
Statements of Income
Revenue:
Insurance Premiums and Fees 833.5 892.0 (58.4) (6.6%) 1,746.9 1,689.9 57.0 3.4%
Investment Advisory Fees 49.6 52.2 (2.6) (4.9%) 99.0 106.1 (7.1) (6.7%)
Net Investment Income 673.1 673.8 (0.8) (0.1%) 1,346.8 1,385.0 (38.2) (2.8%)
Realized Gains (Losses) on
Investments (17.9) (10.4) (7.5) (38.4) (11.4) (27.1)
Gains (Losses) on Derivatives 0.2 -- 0.2 0.1 -- 0.1
Other 60.4 85.1 (24.7) (29.1%) 143.2 192.2 (49.0) (25.5%)
------- ------- ------- ------- ------- ------- ------- -------
Total Revenue 1,599.0 1,692.7 (93.7) (5.5%) 3,297.8 3,361.9 (64.1) (1.9%)
Benefits and Expenses:
Benefits 855.0 877.0 (22.0) (2.5%) 1,761.7 1,743.0 18.7 1.1%
Underwriting, Acquisition,
Insurance and Other Expenses 540.3 589.0 (48.8) (8.3%) 1,111.3 1,161.3 (49.9) (4.3%)
------- ------- ------- ------- ------- ------- ------- -------
Total Benefits and Expenses 1,395.3 1,466.0 (70.8) (4.8%) 2,873.0 2,904.3 (31.3) (1.1%)
------- ------- ------- ------- ------- ------- ------- -------
Net Income
before Federal Taxes 203.7 226.6 (22.9) 424.8 457.6 (32.8) (7.2%)
Federal Income Taxes 50.7 62.8 (12.1) 107.3 123.8 (16.5) (13.3%)
------- ------- ------- ------- ------- ------- ------- -------
Income before Accounting Changes
and Minority Interest 153.0 163.8 (10.9) 317.5 333.8 (16.4)
Cumulative Effect of Accounting
Changes (11.3) -- (11.3) (15.6) -- (15.6)
Minority Interest (0.0) 0.2 (0.3) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net Income 141.7 163.6 (21.9) (13.4%) 301.9 333.8 (31.9) (9.6%)
======= ======= ======= ======= ======= ======= ======= =======
Income before Tax and Cumulative
Effect of Accounting Changes By
Segment
Annuities 102.6 105.3 (2.7) 197.9 221.2 (23.3)
Life Insurance 90.9 93.6 (2.7) 190.0 185.0 5.0
Reinsurance 49.0 36.5 12.5 112.6 82.4 30.2
Investment Management 4.6 13.2 (8.6) 8.1 32.5 (24.4)
Lincoln UK 21.2 26.0 (4.8) 40.8 46.0 (5.2)
Corporate and Other (64.6) (48.0) (16.6) (124.6) (109.5) (15.1)
------- ------- ------- ------- ------- ------- -------
Income before Tax and
Cumulative Effect of
Accounting Changes 203.7 226.6 (22.9) 424.8 457.6 (32.8)
Pre-Tax Realized Gains (Losses)
by Segment*
Annuities (10.0) 0.4 (10.4) (12.3) 4.6 (16.9)
Life Insurance (9.8) (6.3) (3.5) (18.0) (10.1) (7.9)
Reinsurance (2.7) (1.7) (1.0) (9.7) -- (9.7)
Investment Management (1.1) (3.1) 2.0 (1.8) (3.3) 1.5
Lincoln UK 2.0 (0.2) 2.2 2.6 (0.5) 3.1
Corporate and Other 4.0 0.4 3.6 1.1 (2.0) 3.1
------- ------- ------- ------- ------- ------- -------
Pre-Tax Realized Gains (Losses)
on Investments and
Derivatives (17.5) (10.4) (7.1) (38.2) (11.4) (26.8)
After-Tax Realized Gains (Losses)
by Segment*
Annuities (6.5) 0.3 (6.8) (8.0) 3.0 (11.0)
Life Insurance (6.3) (4.0) (2.3) (11.7) (6.4) (5.3)
Reinsurance (1.7) (1.1) (0.6) (6.4) 0.1 (6.5)
Investment Management (0.7) (2.0) 1.3 (1.2) (2.1) 0.9
Lincoln UK 1.4 (0.1) 1.5 1.8 (0.4) 2.2
Corporate and Other 2.6 0.3 2.3 0.7 (1.3) 2.0
------- ------- ------- ------- ------- ------- -------
After-Tax Realized Gains (Losses)
on Investments and
Derivatives (11.2) (6.7) (4.5) (24.7) (7.1) (17.6)
* Includes both realized gains (losses) on investments and gains (losses) on derivatives.
6/30/01 PAGE 4
Financial Highlights
Unaudited [Amounts in Millions, except Retail Account Balances and Assets Managed]
As of
-----------------------------------------------------------------
June December
2001 2000
Amount Amount Change % Change
-----------------------------------------------------------------
Consolidated Condensed Balance Sheets
Assets:
Investments:
Securities Available for Sale:
Fixed Maturities 27,873.9 27,449.8 424.1 1.5%
Equities 534.1 549.7 (15.6) (2.8%)
Mortgage Loans on Real Estate 4,652.8 4,663.0 (10.1) (0.2%)
Real Estate 306.9 282.0 24.9 8.8%
Policy Loans 1,947.4 1,960.9 (13.5) (0.7%)
Other Long-Term Investments 480.9 463.3 17.6 3.8%
--------- --------- --------- ---------
Total Investments 35,796.0 35,368.6 427.3 1.2%
Other Assets:
Assets Held in Separate Accounts 47,140.2 50,579.9 (3,439.8) (6.8%)
Other Assets 13,495.1 13,895.5 (400.4) (2.9%)
--------- --------- --------- ---------
Total Assets 96,431.2 99,844.1 (3,412.8) (3.4%)
========= ========= ========= =========
Liabilities and Shareholders' Equity
Liabilities:
Insurance and Investment Contract Liabilities 39,947.1 40,105.2 (158.1) (0.4%)
Liabilities Related to Separate Accounts 47,140.2 50,579.9 (3,439.8) (6.8%)
Other Liabilities 4,288.0 4,204.9 83.1 2.0%
--------- --------- --------- ---------
Total Liabilities 91,375.3 94,890.0 (3,514.7) (3.7%)
Shareholders' Equity:
Net Unrealized Gains(Losses) on Securities 103.1 12.0 91.1 756.0%
Other Shareholders' Equity 4,952.8 4,942.0 10.8 0.2%
--------- --------- --------- ---------
Total Shareholders' Equity 5,055.9 4,954.1 101.9 2.1%
--------- --------- --------- ---------
Total Liabilities and Shareholders' Equity 96,431.2 99,844.1 (3,412.8) (3.4%)
========= ========= ========= =========
-----------------------------------------------------------------
As of June 30
-----------------------------------------------------------------
($ billions) 2001 2000
Amount Amount Change % Change
-----------------------------------------------------------------
Domestic Retail Account Balances:
Annuities Segment - Fixed Annuities 15.628 15.909 (0.281) (1.8%)
Annuities Segment - Variable Annuities 36.961 43.097 (6.136) (14.2%)
Annuities Segment - Life Insurance 0.157 0.165 (0.008) (5.1%)
Life Insurance Segment - Life Insurance 11.066 10.538 0.528 5.0%
Investment Management - Annuities 12.483 14.861 (2.378) (16.0%)
Investment Management - Mutual Funds 11.748 13.604 (1.856) (13.6%)
Investment Management - Wrap Fee & Other 1.823 1.331 0.492 37.0%
--------- --------- --------- ---------
Total Domestic Account Balance 89.866 99.505 (9.639) (9.7%)
========= ========= ========= =========
Assets Managed by Advisor:
Investment Management Segment 86.286 89.867 (3.580) (4.0%)
Lincoln UK 7.027 8.058 (1.031) (12.8%)
Policy Loans (within business units) 1.947 1.915 0.033 1.7%
Non-LNC Affiliates 33.246 37.706 (4.460) (11.8%)
--------- --------- --------- ---------
Total Assets Managed 128.507 137.546 (9.039) (6.6%)
========= ========= ========= =========
Eleven-Year Summary
Unaudited [Millions of Dollars except Per Share Data]
For the Year Ended December 31 2000 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------------
Revenue
Annuities 2133.7 2115.8 2068.1 2023.0 1805.0 1877.1
Life Insurance 1819.0 1760.4 1378.5 544.8 549.2 514.9
Reinsurance 1769.3 1829.7 1577.7 1387.5 1561.8 1417.4
Investment Management 490.3 495.5 491.9 459.1 410.5 290.5
Lincoln UK 438.2 446.6 439.7 427.3 393.2 351.5
Employee Life - Health Benefits
Corporate & Other 201.1 155.7 131.1 56.8 13.8 135.1
------- ------- ------- ------- ------- -------
Total Revenue 6851.5 6803.7 6087.1 4898.5 4733.6 4586.5
======= ======= ======= ======= ======= =======
Income from Operations*
Annuities 362.0 299.4 262.4 223.0 174.6 175.2
Life Insurance 259.9 212.0 149.2 39.9 41.2 35.4
Reinsurance 122.5 40.1 104.9 (150.1) 74.8 (70.5)
Investment Management 44.1 61.0 43.9 18.1 18.6 20.6
Lincoln UK 61.0 (13.9) 70.9 (108.3) 66.0 45.9
Employee Life - Health Benefits
Corporate & Other (130.5) (123.2) (100.9) (73.2) (76.5) (65.7)
------- ------- ------- ------- ------- -------
Total Income from Cont Oper 719.1 475.5 530.4 (50.6) 298.8 140.8
Discontinued Operations 110.1 135.3 165.6
------- ------- ------- ------- ------- -------
Income from Operations 719.1 475.5 530.4 59.4 434.1 306.5
======= ======= ======= ======= ======= =======
Net Income
Annuities 358.6 291.5 273.8 263.3 204.3 248.8
Life Insurance 249.3 211.5 127.5 39.1 51.8 40.6
Reinsurance 122.3 40.6 102.3 (133.8) 86.8 (59.6)
Investment Management 37.0 51.6 44.4 25.1 25.0 27.4
Lincoln UK (13.2) (18.2) 71.7 (106.8) 66.0 45.7
Employee Life - Health Benefits
Corporate & Other (132.5) (116.7) (109.9) (64.6) (77.5) (1.4)
------- ------- ------- ------- ------- -------
Total Net Inc from Cont Oper 621.4 460.4 509.8 22.2 356.4 301.4
Discontinued Operations 911.8 157.2 180.8
------- ------- ------- ------- ------- -------
Total Net Income 621.4 460.4 509.8 934.0 513.6 482.2
------- ------- ------- ------- ------- -------
Cumulative effect of accounting change
Total Net Income 621.4 460.4 509.8 934.0 513.6 482.2
======= ======= ======= ======= ======= =======
OTHER DATA
Assets 99844.1 103095.7 93836.3 77174.7 71713.4 63257.7
Shareholders' Equity:
Securities and Derivatives at Market 4954.1 4263.9 5387.9 4982.9 4470.0 4378.1
Securities and Derivatives at Cost 4942.0 4729.6 4835.6 4546.9 4057.1 3679.9
Average Equity (Sec & Deriv at Cost) 4831.9 4818.7 4685.6 4214.1 3866.0 3550.5
Common Shares Outstanding: (millions)
End of Period - Diluted 195.2 197.0 203.4 204.7 209.5 210.3
Average for the Period - Diluted 194.9 200.4 203.3 208.0 210.7 209.5
Per Share Data (Diluted)
Income (Loss) from Continuing
Operations $3.69 $2.37 $2.61 ($0.24) $1.42 $0.67
Income from Operations * $3.69 $2.37 $2.61 $0.29 $2.06 $1.46
Net Income from Continuing Operations $3.19 $2.30 $2.51 $0.11 $1.69 $1.44
Net Income $3.19 $2.30 $2.51 $4.49 $2.44 $2.30
Shareholders' Equity:
Shareholders' Equity
(Sec & Deriv at Market) $25.92 $21.76 $26.59 $24.63 $21.50 $20.95
Shareholders' Equity
(Sec & Deriv at Cost) $25.85 $24.14 $23.86 $22.48 $19.51 $17.61
Dividends Declared (Common Stock) $1.175 $1.115 $1.055 $0.995 $0.935 $0.875
Return on Equity (see page 32)
Net Income/Average Equity 12.9% 9.6% 10.9% 22.2% 13.3% 13.6
Inc from Operations/Average Equity 14.9% 9.9% 11.3% 1.4% 11.2% 8.6
Market Value of Common Stock
High for the Year $56.375 $57.500 $49.438 $39.063 $28.500 $26.875
Low for the Year $22.625 $36.000 $33.500 $24.500 $20.375 $17.313
Close for the Year $47.313 $40.000 $40.907 $39.063 $26.250 $26.875
Ten-year
compound
growth
For the Year Ended December 31 1994 1993 1992 1991 1990 annual
--------------------------------------------------------------------------------------------------
Revenue
Annuities 1506.2 1603.8 1336.2 1216.7 1073.7 7.1%
Life Insurance 466.2 477.5 444.4 417.3 371.7 17.2%
Reinsurance 1267.4 1101.9 1074.6 774.3 741.6 9.1%
Investment Management
Lincoln UK 216.0 174.9 180.6 169.6 161.1 10.5%
Employee Life - Health Benefits 314.9 1297.3 1241.6 2646.3 2454.2
Corporate & Other 161.8 281.7 464.7 300.4 173.2
------- ------- ------- ------- ------- -------
Total Revenue 3932.5 4937.1 4742.1 5524.6 4975.5 3.3%
======= ======= ======= ======= ======= =======
Income from Operations*
Annuities 142.4 127.1 89.4 58.3 55.2 20.7%
Life Insurance 34.2 37.8 46.8 31.5 25.9 25.9%
Reinsurance 51.6 22.4 38.7 31.4 55.7 14.0%
Investment Management
Lincoln UK 17.2 11.9 9.2 14.3 13.3 27.0%
Employee Life - Health Benefits 14.1 54.3 40.8 43.5 53.2
Corporate & Other (40.9) (55.9) (73.0) (70.7) (90.4)
------- ------- ------- ------- ------- -------
Total Income from Cont Oper 218.6 197.6 151.9 108.3 112.9 21.7%
Discontinued Operations 171.1 145.9 88.7 69.4 100.9
------- ------- ------- ------- ------- -------
Income from Operations 389.7 343.5 240.6 177.7 213.8 12.9%
======= ======= ======= ======= ======= =======
Net Income
Annuities 142.4 127.1 89.4 58.3 55.2 20.6%
Life Insurance 34.2 37.8 46.8 31.5 25.9 25.4%
Reinsurance 52.2 20.7 38.7 31.4 55.7 8.2%
Investment Management
Lincoln UK 18.5 12.6 9.2 14.3 13.3
Employee Life - Health Benefits 14.4 55.3 40.8 43.5 53.2
Corporate & Other (96.2) (177.1) 45.6 (46.5) (127.6)
------- ------- ------- ------- ------- -------
Total Net Inc from Cont Oper 165.5 76.4 270.5 132.5 75.7 23.4%
Discontinued Operations 184.4 242.5 88.7 69.4 100.9
------- ------- ------- ------- ------- -------
Total Net Income 349.9 318.9 359.2 201.9 176.6 13.4%
------- ------- ------- ------- ------- -------
Cumulative effect of accounting change
Total Net Income 349.9 318.9 359.2 201.9 176.6 13.4%
======= ======= ======= ======= ======= =======
OTHER DATA
Assets 48864.8 47825.1 39042.2 33660.3 27597.3 13.7%
Shareholders' Equity:
Securities and Derivatives at Market 3042.1 4072.3 2826.8 2655.8 2279.5 8.1%
Securities and Derivatives at Cost 3353.1 3157.6 2664.1 2445.8 2213.2 8.4%
Average Equity (Sec & Deriv at Cost) 3288.6 3009.0 2575.0 2335.3 2086.6 8.8%
Common Shares Outstanding: (millions)
End of Period - Diluted 208.3 208.3 187.7 185.4 176.3
Average for the Period - Diluted 208.7 206.1 186.8 189.2 175.2
Per Share Data (Diluted)
Income (Loss) from Continuing
Operations $1.05 $0.96 $0.81 $0.57 $0.64 19.1%
Income from Operations * $1.87 $1.67 $1.29 $0.94 $1.22 11.7%
Net Income from Continuing Operations $0.79 $0.37 $1.45 $0.70 $0.43 22.1%
Net Income $1.68 $1.55 $1.92 $1.07 $1.01 12.2%
Shareholders' Equity:
Shareholders' Equity
(Sec & Deriv at Market) $14.67 $19.69 $15.13 $14.35 $12.95 7.2%
Shareholders' Equity
(Sec & Deriv at Cost) $16.17 $15.27 $14.26 $13.21 $12.57 7.5%
Dividends Declared (Common Stock) $0.830 $0.775 $0.738 $0.693 $0.658 6.0%
Return on Equity (see page 32)
Net Income/Average Equity 10.6% 10.6% 13.9% 8.6% 8.5%
Inc from Operations/Average Equity 11.8% 11.4% 9.3% 7.6% 10.2%
Market Value of Common Stock
High for the Year $22.188 $24.125 $19.032 $13.813 $15.338
Low for the Year $17.313 $17.344 $12.625 $9.500 $7.688
Close for the Year $17.500 $21.750 $18.500 $13.688 $10.750 16.0%
* "Income from Operations" is defined as "Net income less realized gain (loss) on investments and
associated items, gain (loss) on sale of subsidiaries, restructuring charges, and cumulative effect
of accounting changes, all net of taxes."
PAGE 6
Quarterly Summary
Unaudited [Millions of Dollars except Per Share Data]
Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
For the Quarter Ended 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001
Revenue
Annuities 493.3 512.9 524.4 533.0 520.5 538.0 548.7 530.5 532.1 522.3 510.4 512.1
Life Insurance 292.8 470.7 424.0 426.3 437.1 473.1 441.7 444.2 453.2 479.9 459.6 455.7
Reinsurance 385.9 457.2 420.6 426.2 404.1 578.8 394.4 457.2 454.4 463.2 508.0 448.7
Investment Management 110.7 127.9 126.8 123.2 118.8 126.6 125.8 120.7 123.8 120.0 112.3 110.3
Lincoln UK 102.8 109.2 119.1 113.1 110.5 103.8 112.8 108.2 112.8 104.3 84.9 68.9
Corporate & Other 32.1 35.9 60.4 56.6 51.1 (12.4) 45.7 31.9 39.7 83.8 23.5 3.3
------ ------ ------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Total Revenue 1417.6 1714.0 1675.4 1678.3 1642.1 1807.9 1669.2 1692.7 1716.1 1773.5 1698.8 1599.0
====== ====== ======= ======= ======= ====== ====== ====== ====== ====== ====== ======
Income from Operations*
Annuities 65.5 63.2 74.4 75.9 75.4 73.7 88.5 84.1 102.9 86.4 82.3 90.8
Life Insurance 36.2 51.9 48.1 54.4 52.6 57.0 60.4 62.4 66.5 70.6 68.6 67.1
Reinsurance 29.1 25.3 33.8 23.7 2.2 (19.5) 31.9 25.8 28.2 36.6 46.8 34.1
Investment Management 7.4 14.6 15.4 14.3 14.7 16.5 12.4 13.1 9.9 8.7 2.4 3.7
Lincoln UK 17.7 18.8 18.1 19.0 16.2 (67.1) 15.7 19.3 10.6 15.5 14.4 16.2
Corporate & Other (25.1) (34.3) (34.0) (35.6) (29.7) (23.9) (38.3) (31.7) (27.3) (33.1) (35.9) (43.8)
------ ------ ------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Income from
Operations 130.7 139.4 155.7 151.8 131.4 36.6 170.6 173.0 190.7 184.7 178.6 168.1
====== ====== ======= ======= ======= ====== ====== ====== ====== ====== ====== ======
Net Income
Annuities 56.0 64.9 76.8 76.4 68.4 69.9 91.2 84.4 93.8 89.2 76.6 79.9
Life Insurance 35.2 45.8 46.3 51.5 54.0 59.7 58.1 58.4 67.4 65.4 62.9 53.5
Reinsurance 24.0 23.9 34.5 24.0 (0.7) (17.1) 33.1 24.7 26.0 38.5 42.0 30.2
Investment Management 3.6 16.4 3.4 14.0 14.4 19.8 12.3 8.4 9.7 6.6 2.0 2.9
Lincoln UK 17.8 19.2 18.0 20.0 16.4 (72.6) 15.5 19.1 (29.9) (17.9) 14.8 17.6
Corporate & Other (23.1) (44.6) (33.9) (37.6) (20.2) (25.1) (39.9) (31.4) (28.3) (32.8) (38.1) (42.4)
------ ------ ------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Total Net Income 113.4 125.6 145.1 148.4 132.3 34.6 170.2 163.6 138.6 148.9 160.2 141.7
====== ====== ======= ======= ======= ====== ====== ====== ====== ====== ====== ======
OTHER DATA
Assets 84606.2 93836.3 95350.3 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1 99844.1 94122.4 96431.2
Shareholders' Equity
Beg of Period (Sec &
Deriv at Market) 5054.2 5527.6 5387.9 5107.4 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6 4954.1 5096.4
End of Period (Sec &
Deriv at Market) 5527.6 5387.9 5107.4 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6 4954.1 5096.4 5055.9
End of Period (Sec &
Deriv at Cost) 4753.9 4835.6 4852.8 4818.5 4766.0 4729.6 4751.6 4780.3 4876.3 4942.0 4882.7 4952.8
Average Equity (Sec &
Deriv at Cost) 4718.3 4795.4 4872.5 4834.2 4793.9 4774.2 4791.5 4753.0 4867.2 4915.7 4953.7 4920.2
Common Shares
Outstanding
Average for the
Period - Diluted 203.9 203.3 203.6 201.9 199.0 197.1 195.8 194.0 195.6 195.6 193.7 192.0
End of Period -
Diluted 203.9 203.4 203.2 200.9 196.9 197.0 195.1 193.7 196.2 195.2 191.3 192.9
Per Share Data (Diluted)
Income from Operations * $0.64 $0.69 $0.76 $0.75 $0.66 $0.19 $0.87 $0.89 $0.98 $0.94 $0.92 $0.88
Net Income $0.56 $0.62 $0.71 $0.73 $0.66 $0.18 $0.87 $0.84 $0.71 $0.76 $0.83 $0.74
Shareholders' Equity
Shareholders' Equity
(Sec & Deriv
at Market $27.28 $26.59 $25.30 $24.18 $23.76 $21.76 $22.45 $22.10 $23.67 $25.92 $27.09 $26.87
Shareholders' Equity
(Sec & Deriv at Cost) $23.47 $23.86 $24.04 $24.18 $24.28 $24.14 $24.58 $25.01 $25.43 $25.85 $25.96 $26.32
Dividends Declared
(Com Stk) $0.260 $0.275 $0.275 $0.275 $0.275 $0.290 $0.290 $0.290 $0.290 $0.305 $0.305 $0.305
Return on Equity
(see page 32)
Net Income/
Average Equity 9.6% 10.5% 11.9% 12.3% 11.0% 2.9% 14.2% 13.8% 11.4% 12.1% 12.9% 11.5%
Inc from Operations/
Average Equity 11.1% 11.6% 12.8% 12.6% 11.0% 3.1% 14.2% 14.6% 15.7% 15.0% 14.4% 13.7%
Market Value of
Common Stock
Highest Price $49.438 $43.344 $50.250 $53.438 $57.500 $48.313 $41.375 $40.063 $56.375 $50.938 $48.250 $52.300
Lowest Price $41.125 $33.500 $39.281 $45.688 $36.000 $36.500 $22.625 $29.000 $35.625 $40.875 $38.000 $41.280
------- ------ ------- ------- ------- ------ ------ ------ ------ ------ ------ -------
Closing Price $41.125 $40.906 $49.438 $52.313 $37.563 $40.000 $33.500 $36.125 $48.125 $47.313 $42.470 $51.750
------- ------ ------- ------- ------- ------ ------ ------ ------ ------ ------ -------
* "Income from Operations" is defined as "net income less realized gain (loss) on investments and associated items, gain (loss)
on sale of subsidiaries, restructuring charges, and cumulative effect of accounting changes, all net of taxes."
6/30/2001 PAGE 7
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
Investment
For the Quarter Ended June 30 Annuities Life Insurance Reinsurance Management
Jun Jun Jun Jun Jun Jun Jun Jun
2001 2000 2001 2000 2001 2000 2001 2000
Operating Revenue
Life and annuity premiums 32.5 16.8 50.7 56.3 261.9 229.1
Surrender charges 8.5 11.2 13.5 16.5 0.4 1.4
Mortality assessments 124.8 114.5 0.0 0.0
Expense assessments 138.0 155.7 45.3 44.1 (0.0) (0.0)
Health premiums 0.0 0.0 94.9 142.6
Investment advisory fees 72.7 80.2
Other revenue and fees 3.9 0.6 3.8 3.6 15.0 11.9 25.7 31.0
Net investment income 339.3 345.8 227.4 215.5 79.2 73.7 13.0 12.6
Earnings in Unconsolidated
Affiliates 0.0 0.2
----- ----- ----- ------ ------ ----- ----- -----
Operating Revenue 522.1 530.1 465.5 450.5 451.4 458.9 111.4 123.8
----- ----- ----- ------ ------ ----- ----- -----
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 72.6 65.7 103.5 96.3 181.6 173.5
Div accum & div to policyholders 19.0 18.7 1.2 1.5
Interest credited to policy bal. 209.7 219.4 141.2 128.7 8.7 8.6
Health policy benefits 0.0 0.0 89.6 116.8
Underwriting, acquisition,
insurance and other expenses 126.0 139.8 92.0 100.9 115.8 117.2 101.6 99.3
Goodwill amortization 0.3 0.3 5.9 5.9 0.4 0.4 4.1 4.1
Interest 2.3 2.7 0.0
----- ----- ----- ------ ------ ----- ----- -----
Operating Benefits and Expenses 408.6 425.2 361.7 350.6 399.7 420.6 105.7 103.3
----- ----- ----- ------ ------ ----- ----- -----
Income from Operations Before 113.6 104.8 103.8 99.9 51.7 38.2 5.7 20.5
Tax
Federal income taxes 22.8 20.7 36.7 37.4 17.6 12.4 2.0 7.4
----- ----- ----- ------ ------ ----- ----- -----
Income from Operations 90.8 84.1 67.1 62.4 34.1 25.8 3.7 13.1
----- ----- ----- ------ ------ ----- ----- -----
Restructuring charges (0.6) (2.0) (2.7)
Realized gains (losses) on investments (6.7) 0.3 (6.4) (4.0) (1.7) (1.1) (0.7) (2.0)
Gains (losses) on derivatives 0.1 0.1 (0.0)
----- ----- ----- ------ ------ ----- ----- -----
Income before Accounting Changes 83.6 84.4 58.8 58.4 32.4 24.7 3.0 8.4
Cumulative effect of accounting (3.7) (5.3) (2.2) (0.1)
changes ----- ----- ----- ------ ------ ----- ----- -----
Net Income 79.9 84.4 53.5 58.4 30.2 24.7 2.9 8.4
===== ===== ===== ====== ====== ===== ===== =====
Inc. from Oper.-before Goodwill Amort. 91.1 84.4 73.0 68.4 34.6 26.3 7.7 17.1
----- ----- ----- ------ ------ ----- ----- -----
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
Jun Jun Jun Jun Jun Jun Jun Jun
2001 2000 2001 2000 2001 2000 2001 2000
Operating Revenue
Life and annuity premiums 8.8 34.8 353.9 337.1
Surrender charges 0.5 0.7 22.8 29.8
Mortality assessments 8.9 8.0 133.7 122.5
Expense assessments 31.4 44.3 12.8 14.5 227.5 258.6
Health premiums 0.7 1.5 0.0 0.0 95.7 144.0
Investment advisory fees (23.1) (28.0) 49.6 52.2
Other revenue and fees 0.1 1.3 68.2 83.6 (56.3) (43.2) 60.3 88.7
Net investment income 16.9 18.5 22.7 21.9 (25.6) (14.3) 673.1 673.8
Earnings in Unconsolidated Affiliates (3.8) 0.0 (3.6)
----- ----- ----- ------ ------ ----- ----- ------
Operating Revenue 66.9 108.4 91.0 101.7 (91.7) (70.3) 1616.5 1703.0
----- ----- ----- ------ ------ ----- ----- ------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 15.9 34.6 373.6 370.1
Div accum & div to policyholders 20.2 20.2
Interest credited to policy bal. 10.0 10.2 369.7 366.8
Health policy benefits 2.0 2.9 (0.1) 0.2 91.5 119.9
Underwriting, acquisition,
insurance and other expenses 29.7 43.5 102.5 97.6 (76.1) (60.9) 491.4 537.5
Goodwill amortization 0.2 1.3 (0.0) 10.9 12.0
Interest 55.3 55.4 (25.6) (22.7) 32.0 35.4
----- ----- ----- ------ ------ ----- ------ ------
Operating Benefits and Expenses 47.7 82.2 157.7 153.2 (91.7) (73.4) 1389.3 1461.9
----- ----- ----- ------ ------ ----- ------ ------
Income from Operations Before 19.1 26.2 (66.7) (51.5) 0.0 3.1 227.2 241.1
Tax
Federal income taxes 2.9 6.9 (22.9) (17.0) (0.0) 59.1 67.9
----- ----- ----- ------ ------ ----- ------ ------
Income from Operations 16.2 19.3 (43.8) (34.8) 0.0 3.1 168.1 173.0
----- ----- ----- ------ ------ ----- ------ ------
Restructuring charges (1.2) (3.9) (2.7)
Realized gains (losses) on investments 1.4 (0.1) 1.9 10.8 0.8 (10.5) (11.5) (6.7)
Gains (losses) on derivatives (0.1) 0.2
----- ----- ----- ------ ------ ----- ------ ------
Income before Accounting Changes 17.6 19.1 (43.2) (24.0) 0.8 (7.4) 153.0 163.6
Cumulative effect of accounting
changes (11.3)
----- ----- ----- ------ ------ ----- ------ ------
Net Income 17.6 19.1 (43.2) (24.0) 0.8 (7.4) 141.7 163.6
===== ===== ===== ====== ====== ===== ====== ======
Inc. from Oper.-before Goodwill Amort. 16.4 20.5 (43.8) (34.8) 3.1 179.0 185.0
----- ----- ----- ------ ------ ----- ------ ------
6/30/2001 PAGE 7 A
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
Investment
For the Six Months Ended June 30 Annuities Life Insurance Reinsurance Management
Jun Jun Jun Jun Jun Jun Jun Jun
2001 2000 2001 2000 2001 2000 2001 2000
Operating Revenue
Life and annuity premiums 51.6 30.0 101.5 109.2 581.9 456.5
Surrender charges 17.5 22.3 30.6 32.7 1.2 2.0
Mortality assessments 249.1 226.7 0.0 0.0
Expense assessments 279.5 310.8 92.7 89.4 (0.0) (0.0)
Health premiums 0.1 0.1 199.1 199.5
Investment advisory fees 145.3 161.2
Other revenue and fees 5.6 2.8 8.9 6.8 26.2 27.7 52.0 62.9
Net investment income 680.7 708.7 450.4 431.2 157.1 164.7 27.1 25.6
Earnings in Unconsolidated
Affiliates 0.9 1.2
------ ------ ----- ----- ----- ----- ----- -----
Operating Revenue 1034.9 1074.6 933.4 896.0 966.5 851.6 224.4 249.8
------ ------ ----- ----- ----- ----- ----- -----
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 142.4 127.3 203.4 194.6 411.1 338.9
Div accum & div to policyholders 36.6 39.1 2.5 2.8
Interest credited to policy bal. 419.1 447.5 279.5 255.0 17.9 17.5
Health policy benefits 0.0 0.1 187.1 226.9
Underwriting, acquisition,
insurance and other expenses 260.6 284.4 190.8 200.3 219.6 177.3 206.4 201.8
Goodwill amortization 0.6 (1.2) 11.8 11.8 0.9 0.9 8.1 8.1
Interest 5.1 5.0 0.0
------ ------ ----- ----- ----- ----- ----- -----
Operating Benefits and Expenses 822.7 858.0 722.1 700.9 844.2 769.2 214.5 209.9
------ ------ ----- ----- ----- ----- ----- -----
Income from Operations Before 212.2 216.6 211.2 195.1 122.3 82.4 9.9 39.9
Tax
Federal income taxes 39.1 44.0 75.5 72.2 41.4 24.7 3.8 14.3
------ ------ ----- ----- ----- ----- ----- -----
Income from Operations 173.1 172.6 135.7 122.9 80.9 57.7 6.1 25.5
------ ------ ----- ----- ----- ----- ----- -----
Restructuring charges (1.3) (2.0) (2.7)
Realized gains (losses) on investments (8.1) 3.0 (11.8) (6.4) (6.4) 0.1 (1.2) (2.1)
Gains (losses) on derivatives 0.0 0.1 0.0
------ ------ ----- ----- ----- ----- ----- -----
Income before Accounting Changes 163.8 175.6 122.0 116.5 74.6 57.8 4.9 20.7
Cumulative effect of accounting (7.3) (5.5) (2.4) (0.1)
changes ------ ------ ----- ----- ----- ----- ----- -----
Net Income 156.5 175.6 116.5 116.5 72.2 57.8 4.8 20.7
====== ====== ===== ===== ===== ===== ===== =====
Inc. from Oper.-before Goodwill Amort. 173.7 171.4 147.6 134.7 81.8 58.6 14.2 33.6
------ ------ ----- ----- ----- ----- ----- -----
Corporate and Consolidating
Lincoln UK Other Operations Adjustments Consolidated
Jun Jun Jun Jun Jun Jun Jun Jun
2001 2000 2001 2000 2001 2000 2001 2000
Operating Revenue
Life and annuity premiums 21.0 72.4 756.0 668.2
Surrender charges 1.2 1.5 50.6 58.5
Mortality assessments 18.3 14.2 267.4 241.0
Expense assessments 75.1 90.9 25.0 28.7 472.4 519.7
Health premiums 1.4 2.9 0.0 0.0 200.5 202.5
Investment advisory fees (46.2) (55.1) 99.0 106.1
Other revenue and fees 0.7 3.7 143.2 178.2 (94.2) (87.2) 142.3 194.8
Net investment income 34.8 37.4 46.0 45.5 (49.3) (28.2) 1346.8 1385.0
Earnings in Unconsolidated
Affiliates (3.8) 0.9 (2.6)
------ ------ ----- ----- ----- ----- ----- -----
Operating Revenue 151.2 221.6 189.1 219.9 (163.5) (140.3) 3336.0 3373.2
------ ------ ----- ----- ----- ----- ----- -----
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 35.7 65.3 792.5 726.2
Div accum & div to policyholders 39.1 41.9
Interest credited to policy bal. 20.2 20.6 736.7 740.7
Health policy benefits 6.2 7.1 (0.1) 0.2 193.3 234.2
Underwriting, acquisition,
insurance and other expenses 70.8 99.9 206.8 218.7 (138.8) (119.3) 1016.2 1063.2
Goodwill amortization 0.3 2.6 (0.0) 21.7 22.2
Interest 110.7 111.5 (49.3) (44.7) 66.5 71.7
------ ------ ----- ----- ----- ----- ----- -----
Operating Benefits and Expenses 113.0 175.0 317.4 330.4 (167.8) (143.3) 2866.1 2900.1
------ ------ ----- ----- ----- ----- ----- -----
Income from Operations Before 38.2 46.5 (128.3) (110.5) 4.3 3.1 469.9 473.1
Tax
Federal income taxes 7.6 11.6 (45.5) (37.4) 1.3 (0.0) 123.2 129.5
------ ------ ----- ----- ----- ----- ----- -----
Income from Operations 30.6 35.0 (82.7) (73.1) 3.0 3.1 346.7 343.6
------ ------ ----- ----- ----- ----- ----- -----
Restructuring charges (1.2) (4.5) (2.7)
Realized gains (losses) on
investments 1.8 (0.4) 0.0 9.2 0.8 (10.5) (24.8) (7.1)
Gains (losses) on derivatives 0.1
------ ------ ----- ----- ----- ----- ----- -----
Income before Accounting Changes 32.4 34.6 (83.9) (63.9) 3.8 (7.4) 317.5 333.8
Cumulative effect of
accounting changes (0.3) (15.6)
------ ------ ----- ----- ----- ----- ----- -----
Net Income 32.4 34.6 (84.3) (63.9) 3.8 (7.4) 301.9 333.8
====== ====== ===== ===== ===== ===== ===== =====
Inc. from Oper.-before Goodwill Amort 30.9 37.6 (82.7) (73.1) 3.0 3.1 368.5 365.9
------ ------ ----- ----- ----- ----- ----- -----
Statement of Consolidated Income
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996
--------------------------------------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 728.7
Surrender charges 40.9
Mortality assessments 180.8
Expense assessments 491.8
Health premiums 790.4
Investment advisory fees 180.8
Other revenue and fees 138.2
Net investment income 2087.9
Earnings in Unconsolidated Affiliates 1.4
-------
Operating Revenue 4641.1
-------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 835.7
Div accum & div to policyholders 33.4
Interest credited to policy bal. 1167.2
Health policy benefits 673.6
Underwriting, acquisition,
insurance and other expenses 1417.0
Goodwill amortization 13.9
Interest 84.7
-------
Operating Benefits and Expenses 4225.4
-------
Income from Operations Before Tax 415.7
Federal income taxes 116.9
-------
Income from Continuing Operations 298.8
-------
Discontinued Operations 157.2
Restructuring charges
Realized gains (losses) on investments 57.6
Gains(losses) on derivatives
-------
Income before Accounting Changes 513.6
Cumulative Effect of Accounting Changes
-------
Net Income 513.6
=======
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
--------------------------------------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 230.8 348.0 284.2 274.0 263.8 361.1
Surrender charges 21.5 26.9 25.5 27.1 28.4 29.2
Mortality assessments 67.7 130.0 137.3 122.2 118.2 118.7
Expense assessments 201.9 198.2 215.3 231.5 245.9 238.3
Health premiums 155.8 164.5 154.9 160.3 149.6 233.6
Investment advisory fees 52.5 57.5 58.8 56.3 54.6 54.1
Other revenue and fees 64.8 76.4 86.4 109.0 77.9 71.2
Net investment income 649.6 714.7 709.5 700.8 697.1 700.1
Earnings in Unconsolidated Affiliates (0.2) 1.3 1.6 1.1 1.2 1.8
------- ------- ------- ------- ------- -------
Operating Revenue 1444.3 1717.6 1673.4 1682.4 1636.7 1808.2
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 264.3 440.0 344.6 335.5 294.0 572.5
Div accum & div to policyholders 20.7 27.9 21.5 22.5 21.2 23.3
Interest credited to policy bal. 338.5 380.6 375.1 377.1 369.7 388.5
Health policy benefits 142.6 131.0 145.5 166.6 189.8 157.8
Underwriting, acquisition,
insurance and other expenses 463.1 491.2 522.4 532.1 533.4 630.5
Goodwill amortization 9.2 16.0 11.8 9.9 12.9 14.6
Interest 32.5 33.5 33.1 32.6 33.3 34.7
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 1271.0 1520.3 1454.1 1476.3 1454.1 1821.8
------- ------- ------- ------- ------- -------
Income from Operations before
Tax/Min Int. 173.4 197.4 219.3 206.1 182.6 (13.6)
Federal income taxes 42.6 58.0 63.6 54.2 51.2 (50.2)
------- ------- ------- ------- ------- -------
Inc from Operations before Min Int 130.7 139.4 155.7 151.8 131.4 36.6
------- ------- ------- ------- ------- -------
Minority Interest
------- ------- ------- ------- ------- -------
Income from Operations 130.7 139.4 155.7 151.8 131.4 36.6
------- ------- ------- ------- ------- -------
Restructuring charges (14.3) (12.1) (3.2) (3.6)
Realized gains (losses) on investments (17.3) 0.5 1.5 (3.5) 4.1 1.6
Gains (losses) on derivatives
------- ------- ------- ------- ------- -------
Income before Accounting Changes 113.4 125.6 145.1 148.4 132.3 34.6
Cumulative Effect of Accounting Changes
------- ------- ------- ------- ------- -------
Net Income 113.4 125.6 145.1 148.4 132.3 34.6
======= ======= ======= ======= ======= =======
YTD YTD
Jun Jun
For the Year Ended December 31 1997 1998 1999 2000 2000 2001
-------------------------------------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 756.2 985.6 1183.0 1403.3 668.2 756.0
Surrender charges 45.4 91.5 110.2 114.7 58.5 50.6
Mortality assessments 186.4 380.1 496.4 496.5 241.0 267.4
Expense assessments 600.3 803.0 930.9 1050.2 519.7 472.4
Health premiums 572.6 635.1 698.5 409.8 202.5 200.5
Investment advisory fees 204.9 227.1 223.8 213.1 106.1 99.0
Other revenue and fees 157.3 261.0 344.5 445.4 194.8 142.3
Net investment income 2250.8 2681.4 2807.5 2747.1 1385.0 1346.8
Earnings in Unconsolidated Affiliates 2.1 3.3 5.8 (0.4) (2.6) 0.9
------- ------- ------- ------- ------- -------
Operating Revenue 4775.9 6068.0 6800.7 6879.8 3373.2 3336.0
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 1090.2 1237.7 1546.6 1546.4 726.2 792.5
Div accum & div to policyholders 29.7 78.0 88.4 87.6 41.9 39.1
Interest credited to policy bal. 1238.7 1446.2 1510.4 1474.2 740.7 736.7
Health policy benefits 833.1 566.9 659.7 449.0 234.2 193.3
Underwriting, acquisition,
insurance and other expenses 1557.3 1844.2 2218.5 2168.4 1063.2 1016.2
Goodwill amortization 15.6 44.5 49.2 45.1 22.2 21.7
Interest 92.5 117.1 133.7 139.5 71.7 66.5
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 4857.2 5334.6 6206.4 5910.3 2900.1 2866.1
------- ------- ------- ------- ------- -------
Income from Operations Before Tax (81.3) 733.4 594.4 969.6 473.1 469.9
Federal income taxes (30.6) 203.0 118.9 250.5 129.5 123.2
------- ------- ------- ------- ------- -------
Income from Continuing Operations (50.6) 530.4 475.5 719.1 343.6 346.7
------- ------- ------- ------- ------- -------
Discontinued Operations 911.8
Restructuring charges (34.3) (18.9) (80.2) (2.7) (4.5)
Realized gains (losses) on investments 72.9 13.7 3.8 (17.5) (7.1) (24.8)
Gains(losses) on derivatives 0.1
------- ------- ------- ------- ------- -------
Income before Accounting Changes 934.0 509.8 460.4 621.4 333.8 317.5
Cumulative Effect of Accounting Changes (15.6)
------- ------- ------- ------- ------- -------
Net Income 934.0 509.8 460.4 621.4 333.8 301.9
======= ======= ======= ======= ======= =======
For the Quarter Ended Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
-------------------------------------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 331.2 337.1 339.0 396.1 402.1 353.9
Surrender charges 28.7 29.8 25.9 30.3 27.8 22.8
Mortality assessments 118.5 122.5 125.9 129.6 133.7 133.7
Expense assessments 261.1 258.6 273.4 257.1 244.9 227.5
Health premiums 58.4 144.0 117.9 89.4 104.8 95.7
Investment advisory fees 54.0 52.2 53.3 53.6 49.4 49.6
Other revenue and fees 106.1 88.7 106.0 144.6 82.0 60.3
Net investment income 711.1 673.8 690.0 672.1 673.7 673.1
Earnings in Unconsolidated Affiliates 1.0 (3.6) 1.6 0.6 0.9 0.0
------- ------- ------- ------- ------- -------
Operating Revenue 1670.2 1703.0 1733.1 1773.5 1719.5 1616.5
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 356.1 370.1 390.2 430.0 418.9 373.6
Div accum & div to policyholders 21.7 20.2 18.2 27.4 18.9 20.2
Interest credited to policy bal. 373.9 366.8 362.0 371.5 367.1 369.7
Health policy benefits 114.3 119.9 123.0 91.8 101.8 91.5
Underwriting, acquisition,
insurance and other expenses 525.7 537.5 532.4 572.9 524.8 491.4
Goodwill amortization 10.2 12.0 12.0 10.9 10.9 10.9
Interest 36.3 35.4 34.4 33.4 34.4 32.0
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 1438.2 1461.9 1472.2 1537.9 1476.7 1389.3
------- ------- ------- ------- ------- -------
Income from Operations before
Tax/Min Int. 232.0 241.1 260.8 235.6 242.7 227.2
Federal income taxes 61.6 67.9 70.1 50.9 64.1 59.1
------- ------- ------- ------- ------- -------
Inc from Operations before Min Int 170.4 173.2 190.7 184.7 178.6 168.1
------- ------- ------- ------- ------- -------
Minority Interest (0.2) 0.2 (0.0) 0.0 (0.0) (0.0)
------- ------- ------- ------- ------- -------
Income from Operations 170.6 173.0 190.7 184.7 178.6 168.1
------- ------- ------- ------- ------- -------
Restructuring charges (2.7) (40.5) (37.0) (0.7) (3.9)
Realized gains (losses) on investments (0.4) (6.7) (11.6) 1.2 (13.4) (11.5)
Gains (losses) on derivatives (0.1) 0.2
------- ------- ------- ------- ------- -------
Income before Accounting Changes 170.2 163.6 138.6 148.9 164.5 153.0
Cumulative Effect of Accounting Changes (4.3) (11.3)
------- ------- ------- ------- ------- -------
Net Income 170.2 163.6 138.6 148.9 160.2 141.7
======= ======= ======= ======= ======= =======
6/30/2001 PAGE 9
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Investment
Annuities Life Insurance Reinsurance Management
ASSETS Jun Dec Jun Dec Jun Dec Jun Dec
2001 2000 2001 2000 2001 2000 2001 2000
Investments
Corporate bonds 9346.8 8892.4 6885.6 6353.6 2647.1 2573.3 372.6 333.6
U.S. government bonds 13.1 25.8 76.0 86.4 271.9 275.5 0.2 0.2
Foreign government bonds 116.4 135.5 122.8 125.8 62.0 71.1
Asset/Mortgage backed
securities 2104.8 2299.7 752.9 829.3 253.6 262.3 40.1 49.0
State and municipal bonds 5.8 6.3 8.0 7.9 0.3 0.3
Preferred stocks-redeemable 117.4 120.5 20.8 24.6 4.3 4.3 9.8 9.6
Common stocks 13.4 13.6 2.2
Preferred stocks-equity 38.8 45.8 7.1 9.2 1.1 1.1 2.6 2.4
Mortgage loans 2270.4 2324.0 1761.5 1765.9 369.5 360.9 89.7 95.5
Real estate
Policy loans 505.1 509.9 1433.5 1440.5
Other long-term investments 7.7 5.2 17.2 16.9 20.5 25.0
------- ------- ------- ------- ------ ------ ------- -------
Total Investments 14526.3 14365.2 11098.7 10673.8 3630.2 3576.1 515.0 490.4
======= ======= ======= ======= ====== ====== ======= =======
Intercompany investments 3977.6 4039.2 1327.6 1598.4 455.4 535.8 213.7 249.1
Invest in unconsol affiliates 6.1 6.4
Cash and invested cash (0.9) (108.8) (140.8) (67.2) 67.1 148.3 60.3 68.6
Property and equipment 7.1 7.0 15.1 13.8 32.1 22.6
Premium and fees receivable (1.0) (1.8) 23.0 45.6 240.1 214.2 41.1 34.4
Accrued investment income 221.8 210.8 191.2 169.5 54.8 52.7 7.7 7.8
Assets held in separate
accounts 36722.0 39322.1 1318.7 1270.1
Federal income tax recoverable
Amount recoverable from
reinsurers 1204.8 1309.5 1007.2 989.1 1611.3 1616.5
Deferred acquisition costs 831.3 812.5 1151.1 1079.3 476.6 459.6
Other intangible assets 160.4 169.2 999.9 1040.5 12.1 12.8 54.6 60.9
Goodwill 44.6 45.2 866.9 878.7 32.8 33.7 308.8 316.9
Other 165.5 104.1 277.9 254.3 371.2 356.7 191.5 188.6
------- ------- ------- ------- ------ ------ ------- -------
Total Assets 57852.4 60267.1 18128.6 17939.1 6972.8 7026.6 1424.9 1439.0
======= ======= ======= ======= ====== ====== ======= =======
Consolidating
Lincoln UK Other Operations Adjustments Consolidated
ASSETS Jun Dec Jun Dec Jun Dec Jun Dec
2001 2000 2001 2000 2001 2000 2001 2000
Investments
Corporate bonds 375.3 457.6 2489.3 2639.1 22116.6 21249.7
U.S. government bonds 148.8 154.9 510.0 542.9
Foreign government bonds 380.7 444.8 554.4 543.9 1236.3 1321.1
Asset/Mortgage backed
securities 693.2 720.1 3844.6 4160.4
State and municipal bonds 14.1 14.6
Preferred stocks-redeemable 2.2 152.2 161.2
Common stocks 251.8 265.2 108.1 155.6 373.3 436.6
Preferred stocks-equity 111.3 54.5 160.8 113.1
Mortgage loans 0.3 0.3 161.5 116.3 4652.8 4663.0
Real estate 0.2 0.3 308.0 283.0 (1.3) (1.3) 306.9 282.0
Policy loans 8.8 10.5 1947.4 1960.9
Other long-term investments 1685.5 1666.2 (1250.0) (1250.0) 480.9 463.3
------- ------- ------- ------- ------ ------ ------- -------
Total Investments 1017.0 1178.8 6260.0 6335.8 (1251.3) (1251.3) 35796.0 35368.6
======= ======= ======= ======= ====== ====== ======= =======
Intercompany investments (1085.3) (1245.8) (4889.0) (5176.7) 0.1 (0.0)
Invest in unconsol affiliates 6.1 6.4
Cash and invested cash 241.7 253.5 1274.5 1830.5 (197.5) 1501.9 1927.4
Property and equipment 40.6 50.8 156.4 134.0 251.4 228.2
Premium and fees receivable 7.1 1.4 (6.7) 3.0 303.7 296.7
Accrued investment income 16.8 22.8 80.9 82.8 573.2 546.4
Assets held in separate
accounts 5768.4 6440.9 3331.1 3546.7 47140.2 50579.9
Federal income tax recoverable 177.5 207.5 177.5 207.5
Amount recoverable from
reinsurers 33.1 33.0 (194.4) (200.3) 3662.0 3747.7
Deferred acquisition costs 583.4 635.0 2.7 2.9 84.0 81.1 3129.1 3070.5
Other intangible assets 251.9 273.6 1479.0 1557.0
Goodwill 12.1 13.0 (1.6) (1.6) 1263.6 1286.0
Other 57.3 (104.9) 661.1 545.1 (576.9) (322.2) 1147.6 1021.6
------- ------- ------- ------- ------ ------ ------- -------
Total Assets 7989.2 8763.7 7390.7 7719.7 (3327.3) (3311.2) 96431.2 99844.1
======= ======= ======= ======= ====== ====== ======= =======
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Investment
Annuities Life Insurance Reinsurance Management
--------------------------------------------------------------------------------
LIABILITIES and SHAREHOLDERS' EQUITY Jun Dec Jun Dec Jun Dec Jun Dec
2001 2000 2001 2000 2001 2000 2001 2000
------------------------------------------------------------------------------------------------------------------------------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 2598.2 2686.4 13000.0 12783.9 1018.1 944.9
Health reserves 0.1 0.1 2455.6 2442.1
Unpaid claims - life and health 8.7 7.1 61.2 108.1 1017.3 1154.4
Unearned premiums 0.0 0.1 19.2 46.4
Premium deposit funds 16403.2 16331.4 14.9 13.9 685.7 753.2
Participating policyholders' funds 135.2 139.4
Other policyholders' funds 532.7 515.4 8.7 6.8
Liab related to separate accounts 36722.0 39322.1 1318.7 1270.1
------- ------- -------- ------- ------- ------- -------- -------
Total Insurance and Inv Contract
Liabilities 55732.1 58347.0 15062.8 14830.9 5204.5 5347.8
Federal income taxes 23.3 (108.7) (54.7) (113.7) 58.9 31.7 37.1 28.3
Short-term debt 225.7 224.0 5.8
Long-term debt
Minority Interest in pref. securities of sub.
Other liabilities 272.4 274.4 414.1 567.9 409.0 303.5 839.2 859.1
------- ------- -------- ------- ------- ------- -------- -------
Total Liabilities 56027.8 58512.7 15422.2 15285.2 5898.1 5906.9 882.0 887.4
------- ------- -------- ------- ------- ------- -------- -------
Net unrealized gains (losses) on securities 30.6 (44.7) (21.4) (44.9) 11.5 5.3 0.9 (0.5)
Gains (losses) on derivatives (1.1) 4.6 0.1
Other shareholders' equity 1792.2 1799.1 2712.3 2698.8 1063.0 1114.3 541.9 552.2
Cumulative effect of accounting change 2.8 10.9 0.1
------- ------- -------- ------- ------- ------- -------- -------
Shareholders' Equity 1824.6 1754.4 2706.4 2653.9 1074.7 1119.7 542.9 551.6
------- ------- -------- ------- ------- ------- -------- -------
Total Liabilities and S/Hs' Equity 57852.4 60267.1 18128.6 17939.1 6972.8 7026.6 1424.9 1439.0
======= ======= ======== ======= ======= ======= ======== =======
Consolidating Consolidated
Lincoln UK Other Operations Adjustments Consolidated
--------------------------------------------------------------------------------
LIABILITIES and SHAREHOLDERS' EQUITY Jun Dec Jun Dec Jun Dec Jun Dec
2001 2000 2001 2000 2001 2000 2001 2000
------------------------------------------------------------------------------------------------------------------------------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 1364.5 1529.1 0.0 (115.6) (103.2) 17865.3 17841.2
Health reserves 47.1 50.7 31.1 30.9 2533.9 2523.8
Unpaid claims - life and health 48.7 46.6 0.6 0.5 (0.0) 1136.5 1316.6
Unearned premiums (0.2) (0.0) 19.0 46.5
Premium deposit funds 29.8 32.9 0.0 582.3 584.0 17715.9 17715.5
Participating policyholders' funds 135.2 139.4
Other policyholders' funds 541.4 522.2
Liab related to separate accounts 5768.4 6440.9 3331.1 3546.7 47140.2 50579.9
------- ------- -------- ------- ------- ------- -------- -------
Total Insurance and Inv
Contract Liabilities 7258.5 8100.3 31.5 31.4 3797.8 4027.6 87087.2 90685.1
Federal income taxes (0.6) 3.1 (240.6) (47.5) 176.7 206.7
Short-term debt 437.6 525.9 (317.8) (436.9) 351.3 312.9
Long-term debt 1962.4 1962.2 (1250.0) (1250.0) 712.4 712.2
Minority Interest in pref. securities of sub.
of sub. 745.0 745.0 745.0 745.0
Other liabilities 148.6 167.4 1217.8 941.2 (821.7) (678.7) 2479.4 2434.7
------- ------- -------- ------- ------- ------- -------- -------
Total Liabilities 7406.5 8270.8 4153.6 4158.2 1585.1 1868.7 91375.3 94890.0
------- ------- -------- ------- ------- ------- -------- -------
Net unrealized gains (losses) on securities 22.5 52.6 30.7 39.7 1.3 4.5 76.2 12.0
Gains (losses) on derivatives 5.8 9.4
Other shareholders' equity 560.2 440.2 3196.8 3521.8 (4913.7) (5184.4) 4952.8 4942.0
Cumulative effect of accounting change 3.7 17.6
------- ------- -------- ------- ------- ------- -------- -------
Shareholders' Equity 582.7 492.8 3237.1 3561.5 (4912.4) (5179.9) 5055.9 4954.1
------- ------- -------- ------- ------- ------- -------- -------
Total Liabilities and S/Hs' Equity 7989.2 8763.7 7390.7 7719.7 (3327.3) (3311.2) 96431.2 99844.1
======= ======= ======== ======= ======= ======= ======== =======
6/30/2001 PAGE 11
Five Year Comparative Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
ASSETS 1996 1997 1998 1999 2000
Investments
Corporate bonds 15451.0 16633.3 22505.2 21119.5 21249.7
U.S. government bonds 1305.1 662.4 1134.6 538.3 542.9
Foreign government bonds 1781.4 1804.4 1321.2 1447.5 1321.1
Mortgage backed securities 5144.5 4529.3 5080.5 4404.0 4160.4
State and municipal bonds 237.2 241.4 16.7 14.7 14.6
Preferred stocks-redeemable 177.4 195.5 174.6 164.7 161.2
Common stocks 486.3 572.3 463.1 514.5 436.6
Preferred stocks-equity 71.2 88.2 79.8 89.5 113.1
Mortgage loans 3240.7 3288.1 4393.1 4735.4 4663.0
Real estate 655.0 576.0 488.7 256.2 282.0
Policy loans 734.8 763.1 1840.0 1892.4 1960.9
Other long-term investments 445.3 464.8 432.0 401.8 463.3
------- ------- ------- ------- -------
Total Investments 29730.0 29818.8 37929.5 35578.4 35368.6
------- ------- ------- ------- -------
Invest in unconsol affiliates 21.0 21.0 18.8 25.8 6.4
Cash and invested cash 1144.8 3794.7 2433.4 1895.9 1927.4
Property and equipment 196.0 189.8 174.8 203.8 228.2
Premiums and fees receivable 237.3 197.5 246.2 259.6 296.7
Accrued investment income 417.6 423.0 528.5 533.2 546.4
Assets held in separate accounts 28809.1 37138.8 43408.9 53654.2 50579.9
Federal income taxes recoverable 204.1 345.0 207.5
Amounts recoverable from reinsurers 2328.5 2350.8 3127.1 3954.3 3747.7
Deferred acquisition costs 1689.7 1623.8 1964.4 2800.3 3070.5
Other intangible assets 708.4 613.9 1848.4 1746.5 1557.0
Goodwill 351.7 457.7 1484.3 1423.0 1286.0
Other 596.4 544.8 468.0 675.7 1021.6
Discontinued operations - assets 5482.7
------- ------- ------- ------- -------
Total Assets 71713.4 77174.7 93836.3 103095.7 99844.1
======= ======= ======= ======== =======
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 7812.4 8228.7 16434.2 17071.4 17841.2
Health reserves 2153.0 2300.4 2600.1 2507.8 2523.8
Unpaid claims-life and health 438.8 682.0 1043.4 1269.8 1316.6
Unearned premiums 53.7 55.3 62.3 75.8 46.5
Premium deposit funds 20894.6 19803.0 20171.9 19624.1 17715.5
Participating policyholders' funds 81.9 79.8 142.7 132.0 139.4
Other policyholders' funds 188.9 180.6 438.4 472.6 522.2
Liab related to separate accounts 28809.1 37138.8 43408.9 53654.2 50579.9
------- ------- ------- ------- -------
Total Ins and Inv Contr
Liabilities 60432.4 68468.5 84301.9 94807.7 90685.1
Federal income taxes 161.5 487.8
Short-term debt 189.0 297.2 314.6 460.2 312.9
Long-term debt 626.3 511.0 712.2 712.0 712.2
Minority Interest - pref sec of a sub 315.0 315.0 745.0 745.0 745.0
Other liabilities 1417.4 2112.2 2374.6 2107.0 2434.7
Discontinued operations - liabilities 4101.9
------- ------- ------- ------- -------
Total Liabilities 67243.5 72191.8 88448.3 98831.9 94890.0
------- ------- ------- ------- -------
S/Hs' equity-unrealized gains
(losses)-cont op. 276.4 436.0 552.4 (465.7) 12.0
S/Hs' equity-unrealized gains
(losses)-disc op. 136.4
S/Hs' equity-foreign currency 66.4 46.2 50.0 30.0 21.9
S/Hs' equity-other 3990.7 4500.7 4785.6 4699.6 4920.2
------- ------- ------- ------- -------
Total Shareholders' Equity 4470.0 4982.9 5387.9 4263.9 4954.1
------- ------- ------- ------- -------
Total Liabilities
and Shareholders' Equity 71713.4 77174.7 93836.3 103095.7 99844.1
======= ======= ======= ======== =======
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $19.51 $22.48 $23.86 $24.14 $25.85
Common shares outstanding 207.9 202.3 202.6 196.0 191.2
Quarterly Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
-------------------------------------------------------------------------------------------------------
ASSETS
Investments
Corporate bonds 20986.1 22505.2 22450.1 21888.5 21560.5 21119.5
U.S. government bonds 968.1 1134.6 1489.4 1367.8 991.0 538.3
Foreign government bonds 1519.2 1321.2 1373.7 1339.7 1369.6 1447.5
Mortgage backed securities 4857.6 5080.5 5068.6 4788.5 4601.2 4404.0
State and municipal bonds 62.9 16.7 16.2 19.1 14.8 14.7
Preferred stocks - redeemable 160.0 174.6 179.8 175.8 171.3 164.7
Common stocks 424.4 463.1 399.5 419.0 423.9 514.5
Preferred stocks-equity 80.5 79.8 81.3 86.7 82.7 89.5
Mortgage loans 4329.3 4393.1 4344.6 4570.5 4772.7 4735.4
Real estate 459.6 488.7 471.8 449.8 280.3 256.2
Policy loans 1517.1 1840.0 1842.4 1847.4 1863.2 1892.4
Other long-term investments 399.1 432.0 411.9 409.9 401.2 401.8
-------- -------- -------- -------- -------- --------
Total Investments 35763.9 37929.5 38129.4 37362.6 36532.4 35578.4
-------- -------- -------- -------- -------- --------
Invest in unconsol affiliates 17.4 18.8 20.5 22.3 23.4 25.8
Cash and invested cash 2725.4 2433.4 2327.0 2151.1 2342.9 1895.9
Property and equipment 200.9 174.8 178.0 180.7 191.9 203.8
Premiums and fees receivable 241.6 246.2 241.8 269.0 296.0 259.6
Accrued investment income 547.2 528.5 585.6 569.1 602.9 533.2
Assets held in separate accounts 37559.0 43408.9 44339.4 47864.3 46228.8 53654.2
Federal income taxes recoverable 204.1 286.0 478.4 457.3 345.0
Amount recoverable from reinsurers 2454.5 3127.1 3124.5 3121.3 3315.6 3954.3
Deferred acquisition costs 1848.0 1964.4 2112.2 2398.3 2614.5 2800.3
Other intangible assets 1241.8 1848.4 1845.4 1764.9 1760.6 1746.5
Goodwill 1153.1 1484.3 1404.6 1428.3 1435.0 1423.0
Other 853.5 468.0 755.8 651.1 699.3 675.7
-------- -------- -------- -------- -------- --------
Total Assets 84606.2 93836.3 95350.3 98261.4 96500.7 103095.7
======== ======== ======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 12993.8 16434.2 16590.3 16536.4 16760.5 17071.4
Health reserves 2435.4 2600.1 2562.3 2528.2 2511.3 2507.8
Unpaid claims-life and health 768.4 1043.4 1022.9 1064.9 1162.6 1269.8
Unearned premiums 66.0 62.3 68.8 68.7 62.5 75.8
Premium deposit funds 20210.3 20171.9 20027.8 20012.6 19988.9 19624.1
Participating policyholders' funds 86.3 142.7 132.6 125.7 120.2 132.0
Other policyholders' funds 235.7 438.4 440.4 441.2 445.9 472.6
Liab related to separate accounts 37559.0 43408.9 44339.4 47864.3 46228.8 53654.2
-------- -------- -------- -------- -------- --------
Total Ins and Inv Contr Liabilies 74355.0 84301.9 85184.6 88642.1 87280.8 94807.7
Federal income taxes 3.0
Short-term debt 354.4 314.6 281.8 380.2 367.7 460.2
Long-term debt 712.0 712.2 712.1 712.1 712.0 712.0
Minority Interest - pref sec of a sub 745.0 745.0 745.0 745.0 745.0 745.0
Other liabilities 2909.2 2374.6 3319.3 2964.7 2733.0 2107.0
-------- -------- -------- -------- -------- --------
Total Liabilities 79078.6 88448.3 90242.9 93444.1 91838.5 98831.9
-------- -------- -------- -------- -------- --------
S/Hs' equity-unrealized gns (losses)-inv. 773.7 552.4 254.6 (1.1) (103.8) (465.7)
S/Hs' equity- gains (losses)-derivatives
S/Hs' equity-foreign currency 59.8 50.0 30.1 20.6 40.2 30.0
S/Hs' equity-other 4694.1 4785.6 4822.7 4797.9 4725.8 4699.5
Cumulative effect of accouting change
-------- -------- -------- -------- -------- --------
Total Shareholders' Equity 5527.6 5387.9 5107.4 4817.4 4662.2 4263.9
-------- -------- -------- -------- -------- --------
Total Liabilities
and Shareholders' Equity 84606.2 93836.3 95350.3 98261.4 96500.7 103095.7
======== ======== ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $23.47 $23.86 $24.04 $24.18 $24.28 $24.14
Common shares outstanding 202.6 202.6 201.8 199.3 196.3 196.0
Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
-------------------------------------------------------------------------------------------------------
ASSETS
Investments
Corporate bonds 21188.0 20719.1 21064.7 21249.7 21855.2 22116.6
U.S. government bonds 572.4 566.2 575.5 542.9 536.6 510.0
Foreign government bonds 1416.4 1377.4 1277.7 1321.1 1240.8 1236.3
Mortgage backed securities 4393.4 4242.4 4172.5 4160.4 4009.8 3844.6
State and municipal bonds 14.7 14.1 14.3 14.6 14.7 14.1
Preferred stocks - redeemable 159.7 159.2 159.5 161.2 154.1 152.2
Common stocks 496.4 467.8 479.9 436.6 388.6 373.3
Preferred stocks-equity 91.3 92.2 90.3 113.1 170.9 160.8
Mortgage loans 4833.9 4783.8 4767.3 4663.0 4641.2 4652.8
Real estate 283.4 282.1 297.6 282.0 308.1 306.9
Policy loans 1896.3 1914.7 1935.6 1960.9 1947.0 1947.4
Other long-term investments 428.8 438.2 470.5 463.3 477.4 480.9
-------- -------- -------- -------- -------- --------
Total Investments 35774.6 35057.2 35305.4 35368.6 35744.5 35796.0
-------- -------- -------- -------- -------- --------
Invest in unconsol affiliates (0.9) 5.8 6.4 7.3 6.1
Cash and invested cash 1510.1 1619.3 1435.9 1927.4 2015.2 1501.9
Property and equipment 207.7 205.5 213.8 228.2 242.1 251.4
Premiums and fees receivable 190.2 247.8 240.8 296.7 282.8 303.7
Accrued investment income 575.0 544.0 569.2 546.4 581.9 573.2
Assets held in separate accounts 56907.6 54924.2 54410.9 50579.9 44506.2 47140.2
Federal income taxes recoverable 300.4 246.1 267.3 207.5 106.6 177.5
Amount recoverable from reinsurers 3851.0 3775.3 3774.7 3747.7 3706.4 3662.0
Deferred acquisition costs 2870.4 2968.0 3048.0 3070.5 2963.4 3129.1
Other intangible assets 1705.5 1646.7 1598.4 1557.0 1505.3 1479.0
Goodwill 1349.6 1335.4 1296.6 1286.0 1274.5 1263.6
Other 1097.8 1279.1 1076.4 1021.6 1186.3 1147.7
-------- -------- -------- -------- -------- --------
Total Assets 106340.0 103847.6 103243.1 99844.1 94122.4 96431.2
======== ======== ======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 17172.1 17247.3 17500.0 17841.2 17733.0 17865.3
Health reserves 2547.4 2494.2 2520.2 2523.8 2534.8 2533.9
Unpaid claims-life and health 1177.3 1204.1 1202.8 1316.6 1255.3 1136.5
Unearned premiums 57.1 52.8 51.8 46.5 45.9 19.0
Premium deposit funds 18899.3 18407.2 18072.1 17715.5 17667.1 17715.9
Participating policyholders' funds 130.7 130.4 135.4 139.4 145.0 135.2
Other policyholders' funds 478.9 490.6 500.7 522.2 532.1 541.4
Liab related to separate accounts 56907.6 54924.2 54410.9 50579.9 44506.2 47140.2
-------- -------- -------- -------- -------- --------
Total Ins and Inv Contr Liabilies 97370.5 94950.8 94394.0 90685.1 84419.3 87087.2
Federal income taxes
Short-term debt 474.2 355.7 330.3 312.9 415.3 351.3
Long-term debt 712.0 712.1 712.2 712.2 712.3 712.4
Minority Interest - pref sec of a sub 745.0 745.0 745.0 745.0 745.0 745.0
Other liabilities 2697.9 2860.3 2522.9 2434.7 2734.2 2479.4
-------- -------- -------- -------- -------- --------
Total Liabilities 101999.6 99623.9 98704.5 94890.0 89026.0 91375.3
-------- -------- -------- -------- -------- --------
S/Hs' equity-unrealized gns (losses)-inv. (411.2) (556.6) (337.7) 12.0 190.4 76.2
S/Hs' equity- gains (losses)-derivatives 5.7 9.4
S/Hs' equity-foreign currency 22.8 21.8 19.9 21.9 4.1 (15.3)
S/Hs' equity-other 4728.9 4758.5 4856.5 4920.1 4878.5 4968.2
Cumulative effect of accouting change 17.6 17.6
-------- -------- -------- -------- -------- --------
Total Shareholders' Equity 4340.4 4223.7 4538.6 4954.1 5096.4 5055.9
-------- -------- -------- -------- -------- --------
Total Liabilities
and Shareholders' Equity 106340.0 103847.6 103243.1 99844.1 94122.4 96431.2
======== ======== ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $24.58 $25.01 $25.43 $25.85 $25.96 $26.32
Common shares outstanding 193.3 191.1 191.8 191.2 188.1 188.2
6/30/2001 PAGE 13
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
YTD YTD
Jun Jun
For the Year Ended December 31 1996 1997 1998 1999 2000 2000 2001
Operating Revenue
Premiums 69.8 84.2 53.9 65.2 64.3 30.0 51.6
Surrender charges 26.3 29.8 33.5 37.9 41.8 22.3 17.5
Expense assessments 276.7 367.2 459.9 536.2 628.4 310.8 279.5
Other revenue and fees 0.8 1.2 1.7 14.5 11.0 2.8 5.6
Net investment income 1385.9 1477.1 1501.6 1474.2 1393.5 708.7 680.7
------ ------ ------ ------ ------ ------ ------
Operating Revenue 1759.5 1959.5 2050.6 2128.0 2138.9 1074.6 1034.9
------ ------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 270.1 292.6 271.6 259.1 254.7 127.3 142.4
Interest credited to policy bal. 910.3 974.4 955.2 925.2 866.1 447.5 419.1
Underwriting, acquisition,
insurance and other expenses 348.5 415.0 498.8 560.8 575.5 284.4 260.6
Goodwill amortization 0.0 0.0 2.2 2.0 (0.6) (1.2) 0.6
------ ------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 1528.9 1682.0 1727.8 1747.1 1695.7 858.0 822.7
------ ------ ------ ------ ------ ------ ------
Income from Operations
Before Tax 230.6 277.5 322.8 380.9 443.2 216.6 212.2
Federal income taxes 56.0 54.5 60.4 81.4 81.2 44.0 39.1
------ ------ ------ ------ ------ ------ ------
Income from Operations 174.6 223.0 262.4 299.4 362.0 172.6 173.1
------ ------ ------ ------ ------ ------ ------
Realized gains (losses)
on investments 29.6 40.3 11.4 (7.9) (3.4) 3.0 (8.1)
Gains(losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring Charge 0.0 0.0 0.0 0.0 0.0 0.0 (1.3)
Income before
Accounting Changes 204.3 263.3 273.8 291.5 358.6 175.6 163.8
Cumulative effect of
accounting changes 0.0 0.0 0.0 0.0 0.0 0.0 (7.3)
------ ------ ------ ------ ------ ------ ------
Net Income 204.3 263.3 273.8 291.5 358.6 175.6 156.5
====== ====== ====== ====== ====== ====== ======
Inc from Oper - before Goodwill Amort. 174.6 223.0 264.6 301.5 361.4 171.4 173.7
Effective tax rate 24.3% 19.6% 18.7% 21.4% 18.3% 20.3% 18.4%
Operating Revenue 1759.5 1959.5 2050.6 2128.0 2138.9 1074.6 1034.9
Realized gains (losses)
on investments 45.6 63.5 17.5 (12.1) (5.2) 4.6 (12.4)
Gains(losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ------
Total Revenue 1805.0 2023.0 2068.1 2115.8 2133.7 1079.2 1022.5
====== ====== ====== ====== ====== ====== ======
Average capital 1334.3 1373.0 1592.6 1562.0 1601.8 1543.1 1792.5
Return on average capital 13.1% 16.2% 16.5% 19.2% 22.6% 22.4% 19.3%
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
-----------------------------------------------------------------------------------------------
Operating Revenue
Premiums 10.8 16.3 14.9 16.2 13.1 21.0
Surrender charges 8.3 7.6 8.6 9.3 10.1 9.8
Expense assessments 115.6 112.6 119.8 133.3 142.6 140.5
Other revenue and fees (0.0) 1.2 3.9 3.2 0.9 6.4
Net investment income 373.3 372.5 373.4 370.2 364.5 366.0
------- ------- ------- ------- ------- -------
Operating Revenue 508.0 510.2 520.7 532.3 531.2 543.7
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 67.5 68.9 61.9 65.0 55.0 77.2
Interest credited to policy balances 235.6 233.6 228.2 232.9 230.1 234.1
Underwriting, acquisition,
insurance and other expenses 125.2 128.1 138.5 141.0 146.5 134.7
Goodwill amortization 0.5 1.1 0.5 0.4 0.6 0.5
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 428.7 431.6 429.1 439.2 432.2 446.5
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 79.3 78.6 91.6 93.0 99.0 97.2
Federal income taxes 13.8 15.4 17.2 17.1 23.6 23.5
------- ------- ------- ------- ------- -------
Income from Operations 65.5 63.2 74.4 75.9 75.4 73.7
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments (9.5) 1.8 2.4 0.5 (7.0) (3.7)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring charges 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Income before Accounting Changes 56.0 64.9 76.8 76.4 68.4 69.9
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Net Income 56.0 64.9 76.8 76.4 68.4 69.9
======= ======= ======= ======= ======= =======
Inc from Oper -before
Goodwill Amortization 66.0 64.3 75.0 76.3 76.0 74.2
Effective tax rate 17.4% 19.6% 18.8% 18.4% 23.8% 24.2%
Operating Revenue 508.0 510.2 520.7 532.3 531.2 543.7
Realized gains (losses) on investments (14.7) 2.7 3.7 0.7 (10.7) (5.8)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Total Revenue 493.3 512.9 524.4 533.0 520.5 538.0
======= ======= ======= ======= ======= =======
Average capital 1676.0 1521.5 1615.3 1602.4 1471.2 1559.0
Return on average capital 15.6% 16.6% 18.4% 19.0% 20.5% 18.9%
Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
----------------------------------------------------------------------------------------------
Operating Revenue
Premiums 13.3 16.8 18.0 16.2 19.1 32.5
Surrender charges 11.1 11.2 10.4 9.1 9.1 8.5
Expense assessments 155.1 155.7 163.4 154.2 141.6 138.0
Other revenue and fees 2.2 0.6 4.6 3.5 1.7 3.9
Net investment income 362.9 345.8 349.8 335.0 341.3 339.3
------- ------- ------- ------- ------- -------
Operating Revenue 544.6 530.1 546.2 518.1 512.8 522.1
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 61.6 65.7 68.4 59.0 69.8 72.6
Interest credited to policy balances 228.2 219.4 205.4 213.2 209.4 209.7
Underwriting, acquisition,
insurance and other expenses 144.5 139.8 147.9 143.2 134.6 126.0
Goodwill amortization (1.5) 0.3 0.3 0.3 0.3 0.3
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 432.8 425.2 421.9 415.7 414.1 408.6
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 111.8 104.8 124.2 102.3 98.7 113.6
Federal income taxes 23.3 20.7 21.3 15.9 16.3 22.8
------- ------- ------- ------- ------- -------
Income from Operations 88.5 84.1 102.9 86.4 82.3 90.8
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments 2.7 0.3 (9.1) 2.8 (1.4) (6.7)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 (0.1) 0.1
Restructuring charges 0.0 0.0 0.0 0.0 (0.7) (0.6)
------- ------- ------- ------- ------- -------
Income before Accounting Changes 91.2 84.4 93.8 89.2 80.2 83.6
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 (3.6) (3.7)
------- ------- ------- ------- ------- -------
Net Income 91.2 84.4 93.8 89.2 76.6 79.9
======= ======= ======= ======= ======= =======
Inc from Oper -before
Goodwill Amortization 87.0 84.4 103.2 86.7 82.6 91.1
Effective tax rate 20.8% 19.7% 17.1% 15.6% 16.6% 20.1%
Operating Revenue 544.6 530.1 546.2 518.1 512.8 522.1
Realized gains (losses) on investments 4.2 0.4 (14.1) 4.2 (2.2) (10.3)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 (0.2) 0.2
------- ------- ------- ------- ------- -------
Total Revenue 548.7 530.5 532.1 522.3 510.4 512.1
======= ======= ======= ======= ======= =======
Average capital 1438.4 1647.7 1635.2 1686.0 1797.9 1787.1
Return on average capital 24.6% 20.4% 25.2% 20.5% 18.3% 20.3%
6/30/2001 Page 15
Annuities Segment
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars] YTD YTD
Jun Jun
1996 1997 1998 1999 2000 2000 2001
---------------------------------------------------------------------
Fixed Annuities- Bal Beg-of-Year 14.645 17.634 17.214 18.111 18.210 18.210 16.615
Gross Deposits 1.852 1.632 1.452 2.563 2.074 1.078 1.228
Withdrawals (incl charges) & deaths (1.916) (2.220) (2.468) (2.521) (3.283) (1.671) (1.361)
------ ------ ------ ------ ------ ------ ------
Net cash flows (0.063) (0.588) (1.016) 0.042 (1.209) (0.593) (0.134)
Transfer from (to) var annuities (0.688) (1.336) (0.356) (0.783) (1.329) (0.896) (0.236)
Interest credited 0.871 0.978 0.994 0.840 0.944 0.479 0.451
Acq of new business/companies 2.869 0.527 1.274
------ ------ ------ ------ ------ ------ ------
Fixed Annuities-Gross 17.634 17.214 18.111 18.210 16.615 17.200 16.697
Reinsurance Ceded (1.816) (1.757) (1.606) (1.419) (1.173) (1.291) (1.069)
------ ------ ------ ------ ------ ------ ------
Fixed Annuities-Bal End -of-Year 15.818 15.458 16.505 16.791 15.442 15.909 15.628
------ ------ ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 1.410 1.412 1.265 2.310 1.918 1.006 1.147
Variable Annuities-Bal Beg-of-Year 15.673 20.383 27.346 33.358 41.493 41.493 39.427
Gross Deposits 2.746 2.695 2.791 2.553 3.165 1.590 1.590
Withdrawals (incl charges) & deaths (1.454) (2.038) (3.019) (3.760) (4.830) (2.378) (2.243)
------ ------ ------ ------ ------ ------ ------
Net cash flows 1.292 0.657 (0.228) (1.207) (1.665) (0.788) (0.653)
Transfer from (to) fixed annuities 0.689 1.335 0.389 0.787 1.320 0.892 0.238
Invest inc & change in mkt value 2.729 4.971 5.414 8.555 (1.721) 1.500 (2.051)
Acq(sale) of new business/companies
------ ------ ------ ------ ------ ------ ------
Var Annuities-Bal End-of-Year 20.383 27.346 33.358 41.493 39.427 43.097 36.961
------ ------ ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits * 2.626 2.585 2.641 2.409 2.667 1.431 1.295
Total Annuities - Bal Beg-of-Year 30.318 38.017 44.561 51.469 59.704 59.704 56.043
Gross Deposits 4.598 4.327 4.244 5.116 5.239 2.668 2.818
Withdrawals (incl charges) & deaths (3.369) (4.258) (5.487) (6.281) (8.113) (4.049) (3.604)
------ ------ ------ ------ ------ ------ ------
Net cash flows 1.229 0.069 (1.244) (1.165) (2.874) (1.381) (0.787)
Transfers 0.001 (0.001) 0.033 0.004 (0.009) (0.004) 0.002
Interest credited & change in mkt value 3.600 5.949 6.408 9.395 (0.777) 1.979 (1.600)
Acq of new business/companies 2.869 0.527 1.711
------ ------ ------ ------ ------ ------ ------
Total Gross Annuities-Bal End-of-Year 38.017 44.561 51.469 59.704 56.043 60.297 53.658
Reinsurance Ceded (1.816) (1.757) (1.606) (1.419) (1.173) (1.291) (1.069)
------ ------ ------ ------ ------ ------ ------
Total Annuities (Net of Ceded) - Bal End-of-Year 36.202 42.804 49.863 58.284 54.869 59.006 52.589
====== ====== ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 4.036 3.997 3.906 4.719 4.585 2.437 2.442
Var Ann Under Agree - Included above 0.649 0.719 0.941 0.868 0.975
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
Annuities Segment
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars]
Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
------------------------------------------------------------------------------------------------------
Fixed Annuities-Bal Beg-of-Quarter 18.101 18.123 18.111 18.225 18.303 18.406
Gross Deposits 0.346 0.335 0.489 0.654 0.678 0.741
Withdrawals (incl charges) & deaths (0.578) (0.608) (0.579) (0.593) (0.567) (0.782)
------ ------- ------ ------- ------- -------
Net cash flows (0.233) (0.273) (0.090) 0.061 0.111 (0.040)
Transfer from (to) var annuities 0.009 0.011 (0.034) (0.211) (0.238) (0.300)
Interest credited 0.246 0.249 0.238 0.228 0.231 0.144
Acq of new business/companies 0.001
------ ------- ------ ------- ------- -------
Fixed Annuities-Gross 18.123 18.111 18.225 18.303 18.406 18.210
Reinsurance Ceded (1.647) (1.606) (1.569) (1.524) (1.473) (1.419)
------ ------- ------ ------- ------- -------
Fixed Annuities-Bal End-of-Quarter 16.476 16.505 16.656 16.779 16.934 16.791
------ ------- ------ ------- ------- -------
Fixed Annuities Incremental Deposits * 0.299 0.304 0.462 0.622 0.644 0.582
Variable Annuities-Bal Beg-of-Quarter 33.458 29.476 33.358 34.148 37.233 35.613
Gross Deposits 0.647 0.633 0.635 0.651 0.634 0.634
Withdrawals (incl charges) & deaths (0.764) (0.801) (0.827) (0.912) (0.938) (1.084)
------ ------- ------ ------- ------- -------
Net cash flows (0.117) (0.168) (0.192) (0.261) (0.304) (0.450)
Transfer from (to) fixed annuities (0.016) 0.028 0.034 0.213 0.237 0.303
Invest inc & change in mkt value (3.849) 5.405 0.948 3.133 (1.553) 6.027
Acq(sale) of new business/companies (1.383)
------ ------- ------ ------- ------- -------
Var Annuities-Bal End-of-Quarter 29.476 33.358 34.148 37.233 35.613 41.493
------ ------- ------ ------- ------- -------
Variable Annuities Incremental Deposits 0.615 0.585 0.606 0.622 0.589 0.592
Total Annuities -Bal Beg-of-Quarter 51.559 47.599 51.469 52.373 55.536 54.020
Gross Deposits 0.993 0.968 1.124 1.305 1.312 1.375
Withdrawals (incl charges) & deaths (1.343) (1.409) (1.406) (1.505) (1.505) (1.865)
------ ------- ------ ------- ------- -------
Net cash flows (0.350) (0.441) (0.282) (0.200) (0.193) (0.490)
Transfers (0.007) 0.039 0.002 (0.001) 0.003
Interest credited & change in mkt value (3.603) 5.654 1.186 3.361 (1.322) 6.171
Acq of new business/companies (1.382)
------ ------- ------ ------- ------- -------
Total Gross Annuities-Bal End-of-Quarter 47.599 51.469 52.373 55.536 54.020 59.704
------ ------- ------ ------- ------- -------
Reinsurance Ceded (1.647) (1.606) (1.569) (1.524) (1.473) (1.419)
------ ------- ------ ------- ------- -------
Total Annuities (Net of Ceded) - Bal End-of-Qtr 45.953 49.863 50.804 54.012 52.547 58.284
====== ======= ====== ======= ======= =======
Total Annuities Incremental Deposits * 0.914 0.889 1.068 1.244 1.233 1.174
Var Ann Under Agree - Included above 1.836 0.649 0.651 0.685 0.639 0.719
Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
------------------------------------------------------------------------------------------------------
Fixed Annuities-Bal Beg-of-Quarter 18.210 17.615 17.200 16.930 16.615 16.599
Gross Deposits 0.589 0.490 0.513 0.482 0.560 0.668
Withdrawals (incl charges) & deaths (0.875) (0.796) (0.802) (0.810) (0.787) (0.574)
------ ------- ------ ------- ------- -------
Net cash flows (0.287) (0.307) (0.288) (0.328) (0.227) 0.094
Transfer from (to) var annuities (0.550) (0.346) (0.217) (0.216) (0.014) (0.222)
Interest credited 0.241 0.238 0.235 0.230 0.225 0.226
Acq of new business/companies
------ ------- ------ ------- ------- -------
Fixed Annuities-Gross 17.615 17.200 16.930 16.615 16.599 16.697
Reinsurance Ceded (1.363) (1.291) (1.230) (1.173) (1.115) (1.069)
------ ------- ------ ------- ------- -------
Fixed Annuities-Bal End-of-Quarter 16.252 15.909 15.700 15.442 15.484 15.628
------ ------- ------ ------- ------- -------
Fixed Annuities Incremental Deposits * 0.560 0.447 0.464 0.447 0.536 0.611
Variable Annuities-Bal Beg-of-Quarter 41.493 44.640 43.097 42.743 39.427 34.733
Gross Deposits 0.797 0.793 0.729 0.846 0.887 0.703
Withdrawals (incl charges) & deaths (1.210) (1.168) (1.253) (1.199) (1.250) (0.993)
------ ------- ------ ------- ------- -------
Net cash flows (0.413) (0.375) (0.524) (0.353) (0.363) (0.290)
Transfer from (to) fixed annuities 0.549 0.343 0.216 0.212 0.011 0.227
Invest inc & change in mkt value 3.011 (1.511) (0.046) (3.175) (4.342) 2.291
Acq(sale) of new business/companies
Var Annuities-Bal End-of-Quarter 44.640 43.097 42.743 39.427 34.733 36.961
------ ------- ------ ------- ------- -------
Variable Annuities Incremental Deposits 0.732 0.699 0.586 0.650 0.683 0.612
Total Annuities -Bal Beg-of-Quarter 59.704 62.255 60.297 59.673 56.043 51.332
Gross Deposits 1.386 1.283 1.242 1.328 1.447 1.371
Withdrawals (incl charges) & deaths (2.085) (1.964) (2.055) (2.009) (2.037) (1.567)
------ ------- ------ ------- ------- -------
Net cash flows (0.700) (0.682) (0.812) (0.681) (0.590) (0.196)
Transfers (0.001) (0.003) (0.001) (0.004) (0.003) 0.005
Interest credited & change in mkt value 3.252 (1.273) 0.189 (2.945) (4.117) 2.517
Acq of new business/companies
Total Gross Annuities-Bal End-of-Quarter 62.255 60.297 59.673 56.043 51.332 53.658
------ ------- ------ ------- ------- -------
Reinsurance Ceded (1.363) (1.291) (1.230) (1.173) (1.115) (1.069)
------ ------- ------ ------- ------- -------
Total Annuities (Net of Ceded) - Bal End-of-Qtr 60.892 59.006 58.443 54.869 50.217 52.589
====== ======= ====== ======= ======= =======
Total Annuities Incremental Deposits * 1.292 1.145 1.050 1.097 1.219 1.223
Var Ann Under Agree - Included above 0.866 0.868 0.962 0.941 0.904 0.975
Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
YTD YTD
Jun Jun
1996 1997 1998 1999 2000 2000 2001
---------------------------------------------------------------------------------------------------------------------------------
Operating Revenue
Premiums 62.4 64.8 185.9 235.8 227.3 109.3 101.6
Surrender charges 10.5 9.8 52.1 66.3 66.4 32.7 30.6
Mortality assessments 159.7 161.2 350.1 444.6 465.2 226.7 249.1
Expense assessments 27.8 28.6 146.2 165.8 191.8 89.4 92.7
Other revenue and fees 6.7 9.0 2.6 9.8 14.2 6.8 8.9
Net investment income 260.6 268.2 642.6 840.1 871.5 431.2 450.4
------- ------- ------- ------- ------- ------- -------
Operating Revenue 527.6 541.5 1379.5 1762.6 1836.4 896.0 933.4
------- ------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 136.5 143.6 371.2 430.5 411.5 194.7 203.4
Div accum & div to policyholders 24.1 20.4 70.7 81.5 80.8 39.1 36.6
Interest credited to policy bal. 151.9 153.0 393.1 493.8 525.4 255.0 279.5
Underwriting, acquisition,
insurance and other expenses 154.1 172.1 293.1 399.1 384.8 200.3 190.8
Goodwill amortization 0.1 0.1 19.7 23.4 23.7 11.8 11.8
Interest expense 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 466.8 489.3 1147.8 1428.2 1426.3 700.9 722.1
------- ------- ------- ------- ------- ------- -------
Income from Operations Before Tax 60.8 52.3 231.6 334.3 410.1 195.1 211.2
Federal income taxes 19.6 12.4 82.4 122.3 150.1 72.2 75.5
------- ------- ------- ------- ------- ------- -------
Income from Operations 41.2 39.9 149.2 212.0 259.9 122.9 135.7
------- ------- ------- ------- ------- ------- -------
Realized gains (losses) on investments 10.5 (0.8) (1.7) (0.5) (10.7) (6.4) (11.8)
Gains(losses) on derivatives 0.1
Restructuring charges (20.0) (2.0)
------- ------- ------- ------- ------- ------- -------
Income before Accounting Changes 51.8 39.1 127.5 211.5 249.3 116.5 122.0
======= ======= ======= ======= ======= ======= =======
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 0.0 (5.5)
Net Income 51.8 39.1 127.5 211.5 249.3 116.5 116.5
======= ======= ======= ======= ======= ======= =======
Inc from Oper -before Goodwill Amort. 41.4 40.0 168.9 235.4 283.6 134.7 147.6
Effective tax rate 32.2% 23.7% 35.6% 36.6% 36.6% 37.0% 35.7%
Operating Revenue 527.6 541.5 1,379.5 1762.6 1836.4 896.0 933.4
Realized gains (losses) on investments 21.6 3.2 (1.0) (2.2) (17.4) (10.1) (18.2)
Gains(losses) on derivatives 0.1
------- ------- ------- ------- ------- ------- -------
Total Revenue 549.2 544.8 1,378.5 1760.4 1819.0 885.9 915.3
======= ======= ======= ======= ======= ======= =======
Average capital 388.2 384.9 1948.0 2712.3 2640.2 2635.1 2722.7
Return on average capital 10.6% 10.4% 7.7% 7.8% 9.8% 9.3% 10.0%
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.021 0.013 0.125 0.225 0.190 0.087 0.080
Variable Universal Life 0.054 0.053 0.086 0.129 0.209 0.084 0.104
Whole Life 0.007 0.005 0.020 0.024 0.022 0.008 0.009
Term 0.000 0.000 0.003 0.004 0.003 0.002 0.001
------- ------- ------- ------- ------- ------- -------
Subtotal 0.082 0.071 0.234 0.381 0.423 0.182 0.194
Corporate Owned Life Insurance (COLI) 0.000 0.000 0.004 0.015 0.087 0.032 0.028
------- ------- ------- ------- ------- ------- -------
Total Lincoln Life 0.082 0.071 0.238 0.396 0.510 0.214 0.222
------- ------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.111 0.101 0.108 0.114 0.094 0.046 0.045
Term 0.023 0.033 0.046 0.047 0.045 0.026 0.016
------- ------- ------- ------- ------- ------- -------
Total First Penn-Pacific 0.134 0.134 0.154 0.160 0.139 0.072 0.060
------- ------- ------- ------- ------- ------- -------
Total Segment by Product 0.216 0.205 0.391 0.556 0.649 0.286 0.282
======= ======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.181 0.195 0.080 0.081
Lincoln Financial Distributors 0.375 0.455 0.207 0.201
------- ------- ------- ------- ------- ------- -------
Total by Distribution 0.216 0.205 0.391 0.556 0.649 0.286 0.282
======= ======= ======= ======= ======= ======= =======
Individual Life Insurance In-Force (Billions)
Universal Life & Other 32.876 32.827 105.837 109.288 115.872 110.448 118.007
Term Insurance 16.284 30.337 67.076 85.701 100.130 97.039 105.265
------- ------- ------- ------- ------- ------- -------
Total Life Segment In-Force 49.160 63.164 172.914 194.988 216.002 207.487 223.272
======= ======= ======= ======= ======= ======= =======
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
----------------------------------------------------------------------------------------------------------
Operating Revenue
Premiums 40.8 80.2 54.5 57.8 52.4 71.1
Surrender charges 11.0 17.6 14.7 16.5 17.1 18.0
Mortality assessments 60.4 121.8 108.8 111.4 110.5 113.9
Expense assessments 36.5 50.8 39.6 35.4 42.8 48.0
Other revenue and fees (0.1) 2.5 1.9 1.6 2.4 3.9
Net investment income 144.8 207.5 207.9 207.8 209.6 214.8
------- ------- ------- ------- ------- -------
Operating Revenue 293.4 480.4 427.4 430.6 434.9 469.6
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 72.0 134.9 103.6 108.7 105.4 112.8
Div accum & div to policyholders 18.4 26.3 20.3 21.0 19.2 21.0
Interest credited to policy bal. 74.7 122.0 125.8 123.0 122.8 122.3
Underwriting, acquisition,
insurance and other expenses 69.4 106.6 95.7 86.5 99.1 117.8
Goodwill amortization 4.0 7.1 5.9 5.0 6.4 6.0
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 238.5 396.9 351.2 344.1 353.0 379.9
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 54.9 83.5 76.1 86.5 82.0 89.8
Federal income taxes 18.8 31.6 28.1 32.0 29.4 32.8
------- ------- ------- ------- ------- -------
Income from Operations 36.2 51.9 48.1 54.4 52.6 57.0
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments (1.0) (6.1) (1.8) (2.9) 1.4 2.8
Gains (losses) on derivatives
Restructuring charges
------- ------- ------- ------- ------- -------
Income before Accounting Changes 35.2 45.8 46.3 51.5 54.0 59.7
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- -------
Net Income 35.2 45.8 46.3 51.5 54.0 59.7
======= ======= ======= ======= ======= =======
Inc from Oper -before
Goodwill Amortization 40.1 59.0 54.0 59.5 59.0 63.0
Effective tax rate 34.1% 37.9% 36.9% 37.0% 35.9% 36.5%
Operating Revenue 293.4 480.4 427.4 430.6 434.9 469.6
Realized gains (losses) on investments (0.6) (9.7) (3.4) (4.4) 2.1 3.4
Gains (losses) on derivatives
------- ------- ------- ------- ------- -------
Total Revenue 292.8 470.7 424.0 426.3 437.1 473.1
======= ======= ======= ======= ======= =======
Average capital 1895.1 2527.0 2716.6 2739.4 2707.4 2686.0
Return on average capital 7.6% 8.2% 7.1% 7.9% 7.8% 8.5%
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.043 0.051 0.044 0.086
Variable Universal Life 0.027 0.024 0.027 0.052
Whole Life 0.004 0.005 0.006 0.008
Term 0.000 0.001 0.001 0.001
Subtotal 0.075 0.081 0.078 0.147
Corporate Owned Life Insurance (COLI) 0.002 0.007 0.002 0.004
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.044 0.103 0.077 0.088 0.081 0.151
------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.029 0.029 0.030 0.026
Term 0.013 0.012 0.011 0.011
------- ------- ------- ------- ------- -------
Total First Penn-Pacific 0.040 0.043 0.042 0.040 0.041 0.037
------- ------- ------- ------- ------- -------
Total Segment by Product 0.084 0.147 0.119 0.128 0.121 0.188
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.010 0.006 0.039 0.033 0.038 0.071
Lincoln Financial Distributors 0.074 0.141 0.080 0.095 0.084 0.117
------- ------- ------- ------- ------- -------
Total by Distribution 0.084 0.147 0.119 0.128 0.121 0.188
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 69.785 105.837 105.090 106.047 106.945 109.288
Term Insurance 52.057 67.076 73.452 78.431 81.963 85.701
Total Segment In-Force 121.842 172.914 178.542 184.478 188.908 194.988
======= ======= ======= ======= ======= =======
For the Quarter Ended Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
---------------------------------------------------------------------------------------------------------
Operating Revenue
Premiums 53.0 56.3 50.9 67.1 50.9 50.7
Surrender charges 16.2 16.5 13.8 19.9 17.2 13.5
Mortality assessments 112.2 114.5 116.3 122.1 124.3 124.8
Expense assessments 45.3 44.1 46.9 55.5 47.4 45.3
Other revenue and fees 3.2 3.6 3.8 3.7 5.1 3.8
Net investment income 215.6 215.5 220.6 219.7 223.0 227.4
------- ------- ------- ------- ------- -------
Operating Revenue 445.5 450.5 452.4 488.0 467.9 465.5
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 98.4 96.3 95.8 121.0 99.9 103.5
Div accum & div to policyholders 20.4 18.7 16.4 25.3 17.5 19.0
Interest credited to policy bal. 126.3 128.7 134.0 136.5 138.3 141.2
Underwriting, acquisition,
insurance and other expenses 99.4 100.9 94.9 89.6 98.8 92.0
Goodwill amortization 5.9 5.9 5.9 5.9 5.9 5.9
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 350.3 350.6 347.0 378.4 360.5 361.7
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 95.2 99.9 105.4 109.6 107.4 103.8
Federal income taxes 34.8 37.4 38.9 39.0 38.8 36.7
------- ------- ------- ------- ------- -------
Income from Operations 60.4 62.4 66.5 70.6 68.6 67.1
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments (2.4) (4.0) 1.0 (5.2) (5.4) (6.4)
Gains (losses) on derivatives (0.0) 0.1
Restructuring charges (2.0)
------- ------- ------- ------- ------- -------
Income before Accounting Changes 58.1 58.4 67.4 65.4 63.2 58.8
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 (0.2) (5.3)
------- ------- ------- ------- ------- -------
Net Income 58.1 58.4 67.4 65.4 62.9 53.5
======= ======= ======= ======= ======= =======
Inc from Oper -before
Goodwill Amortization 66.3 68.4 72.4 76.5 74.5 73.0
Effective tax rate 36.5% 37.5% 36.9% 35.6% 36.1% 35.3%
Operating Revenue 445.5 450.5 452.4 488.0 467.9 465.5
Realized gains (losses) on investments (3.8) (6.3) 0.8 (8.1) (8.2) (10.0)
Gains (losses) on derivatives (0.0) 0.2
------- ------- ------- ------- ------- -------
Total Revenue 441.7 444.2 453.2 479.9 459.6 455.7
======= ======= ======= ======= ======= =======
Average capital 2655.3 2615.0 2650.5 2640.0 2729.8 2715.7
Return on average capital 9.1% 9.6% 10.0% 10.7% 10.1% 9.9%
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.046 0.042 0.047 0.056 0.035 0.045
Variable Universal Life 0.042 0.043 0.052 0.072 0.053 0.050
Whole Life 0.004 0.005 0.006 0.008 0.004 0.005
Term 0.001 0.001 0.000 0.001 0.000 0.000
------- ------- ------- ------- ------- -------
Subtotal 0.093 0.089 0.105 0.137 0.093 0.101
Corporate Owned Life Insurance (COLI) 0.013 0.019 0.006 0.049 0.007 0.021
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.105 0.109 0.111 0.186 0.100 0.122
------- ------- ------- ------- ------- -------
First Penn-Pacific
Universal Life 0.026 0.021 0.024 0.023 0.022 0.023
Term 0.013 0.013 0.010 0.009 0.007 0.008
------- ------- ------- ------- ------- -------
Total First Penn-Pacific 0.039 0.034 0.035 0.032 0.029 0.031
------- ------- ------- ------- ------- -------
Total Segment by Product 0.144 0.142 0.145 0.218 0.129 0.154
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.044 0.035 0.050 0.065 0.035 0.046
Lincoln Financial Distributors 0.100 0.107 0.095 0.153 0.093 0.108
------- ------- ------- ------- ------- -------
Total by Distribution 0.144 0.142 0.145 0.218 0.129 0.154
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 108.817 110.448 112.884 115.872 116.747 118.007
Term Insurance 92.857 97.039 98.424 100.130 102.467 105.265
Total Segment In-Force 201.674 207.487 211.308 216.002 219.214 223.272
======= ======= ======= ======= ======= =======
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
YTD YTD
Jun Jun
1996 1997 1998 1999 2000 2000 2001
--------------------------------------------------------------------------------------------------------------------------
Lincoln Life
Universal Life-Bal Beg-of-Year 1.507 1.538 1.479 5.093 5.385 5.385 5.645
Deposits 0.160 0.136 0.527 0.861 0.819 0.396 0.431
Withdrawals & deaths (0.221) (0.284) (0.575) (0.385) (0.347) (0.190) (0.125)
------- ------- ------- ------- ------- ------- -------
Net cash flows (0.061) (0.148) (0.048) 0.475 0.472 0.206 0.306
Policyholder assessments (0.483) (0.518) (0.256) (0.262)
Interest credited 0.092 0.088 0.285 0.300 0.306 0.151 0.159
Acq of new business/companies 0.000 0.000 3.378 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- ------- -------
Universal Life-Bal End of Year (1) 1.538 1.479 5.093 5.385 5.645 5.486 5.848
------- ------- ------- ------- ------- ------- -------
Variable Universal Life-Bal Beg-of-Year 0.239 0.339 0.480 1.200 1.605 1.605 1.808
Deposits 0.095 0.106 0.193 0.326 0.607 0.240 0.273
Withdrawals & deaths (0.030) (0.040) (0.100) (0.099) (0.132) (0.047) (0.108)
------- ------- ------- ------- ------- ------- -------
Net cash flows 0.065 0.065 0.093 0.228 0.475 0.193 0.165
Policyholder assessments (0.084) (0.141) (0.065) (0.082)
Invest inc & chg in mkt value 0.035 0.076 0.105 0.370 (0.130) 0.031 (0.125)
Acq of new business/transfers between segments 0.000 0.000 0.522 (0.110) 0.000 0.000 0.000
------- ------- ------- ------- ------- ------- -------
Variable Universal Life -Bal End-of-Year 0.339 0.480 1.200 1.605 1.808 1.764 1.766
------- ------- ------- ------- ------- ------- -------
Interest Sensitive Whole Life - Bal Beg-of-Year 1.784 1.963 1.963 2.062
Deposits 0.340 0.355 0.322 0.131 0.125
Withdrawals & deaths (0.294) (0.162) (0.168) (0.079) (0.084)
------- ------- ------- ------- ------- ------- -------
Net cash flows 0.046 0.193 0.154 0.052 0.041
Policyholder assessments (0.168) (0.168) (0.078) (0.076)
Interest credited 0.096 0.109 0.113 0.056 0.058
Acq of new business/companies 1.642 0.045
------- ------- ------- ------- ------- ------- -------
Int Sensitive Whole Life-Bal End -of -Year 1.784 1.963 2.062 1.993 2.084
------- ------- ------- ------- ------- ------- -------
Total Lincoln Life -Bal Beg-of-Year 1.746 1.877 1.959 8.077 8.952 8.952 9.516
Deposits 0.255 0.242 1.059 1.542 1.749 0.767 0.829
Withdrawals & deaths (0.251) (0.324) (0.968) (0.646) (0.647) (0.316) (0.317)
------- ------- ------- ------- ------- ------- -------
Net cash flows 0.004 (0.082) 0.091 0.896 1.102 0.451 0.512
Policyholder assessments (0.734) (0.827) (0.399) (0.421)
Invest inc & chg in mkt value 0.127 0.164 0.486 0.778 0.289 0.238 0.092
Acq of new business/transfers between segments 5.542 (0.065)
------- ------- ------- ------- ------- ------- -------
Total Lincoln Life - Bal End -of -Year 1.877 1.959 8.077 8.952 9.516 9.242 9.698
------- ------- ------- ------- ------- ------- -------
VUL Under Agree -included above 0.631 0.704 0.609 0.707 0.549
First Penn-Pacific (FPP)
Universal Life-Bal Beg-of-Year 0.883 0.992 1.079 1.166 1.265 1.265 1.331
Deposits 0.150 0.142 0.148 0.156 0.135 0.067 0.066
Withdrawals & deaths (0.098) (0.115) (0.126) (0.067) (0.079) (0.042) (0.036)
------- ------- ------- ------- ------- ------- -------
Net cash flows 0.052 0.027 0.022 0.089 0.056 0.025 0.029
Policyholder assessments (0.060) (0.065) (0.032) (0.032)
Interest credited 0.056 0.061 0.065 0.071 0.076 0.037 0.040
------- ------- ------- ------- ------- ------- -------
FPP Universal Life-Bal End-of-Year 0.992 1.079 1.166 1.265 1.331 1.296 1.368
------- ------- ------- ------- ------- ------- -------
Total Segment- Life Insurance Account Values
Bal Beg-of-Year 2.629 2.869 3.038 9.243 10.217 10.217 10.847
Deposits 0.405 0.384 1.207 1.698 1.884 0.835 0.895
Withdrawals & deaths (0.349) (0.439) (1.095) (0.713) (0.727) (0.358) (0.354)
------- ------- ------- ------- ------- ------- -------
Net cash flows 0.056 (0.056) 0.113 0.985 1.158 0.477 0.541
Policyholder assessments (0.795) (0.893) (0.431) (0.453)
Invest inc & change in market value 0.183 0.225 0.551 0.849 0.364 0.275 0.132
Acq(sale) of new business/companies 5.542 (0.065)
------- ------- ------- ------- ------- ------- -------
Total Segment -Bal End-of-Year 2.869 3.038 9.243 10.217 10.847 10.538 11.066
======= ======= ======= ======= ======= ======= =======
6/30/2001 PAGE 20
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1998 1998 1998 1999 1999 1999
------ ------ ------ ------ ------ ------
Lincoln Life
Universal Life-Bal
Beg-of-Quarter 2.939 3.013 5.093 5.183 5.219 5.279
Deposits 0.095 0.223 0.194 0.199 0.198 0.270
Withdrawals & deaths (0.063) (0.236) (0.050) (0.135) (0.091) (0.110)
------ ------ ------ ------ ------ ------
Net cash flows 0.032 (0.013) 0.144 0.064 0.107 0.160
Policyholder assessments 0.000 0.000 (0.116) (0.118) (0.121) (0.129)
Interest credited 0.042 0.152 0.062 0.089 0.073 0.075
Acq of new business/
companies 1.941 0.000 0.000
------ ------ ------ ------ ------ ------
Universal Life-Bal
End-of-Quarter (1) 3.013 5.093 5.183 5.219 5.279 5.385
------ ------ ------ ------ ------ ------
Variable Universal Life-Bal
Beg of Quarter 0.608 0.561 1.200 1.177 1.298 1.285
Deposits 0.035 0.095 0.077 0.068 0.074 0.107
Withdrawals & deaths (0.013) (0.063) (0.011) (0.013) (0.049) (0.025)
------ ------ ------ ------ ------ ------
Net cash flows 0.022 0.032 0.066 0.055 0.025 0.082
Policyholder assessments 0.000 0.000 (0.020) (0.020) (0.020) (0.024)
Invest inc & chg in mkt
value (0.069) 0.103 0.040 0.087 (0.018) 0.262
Acq of new business/
transfers between segments 0.504 (0.110) 0.000
------ ------ ------ ------ ------ ------
Variable Universal Life
-Bal End-of-Quar 0.561 1.200 1.177 1.298 1.285 1.605
------ ------ ------ ------ ------ ------
Interest Sensitive Whole Life
- Bal Beg-of-Qua 1.730 1.729 1.784 1.865 1.895 1.922
Deposits 0.086 0.116 0.083 0.073 0.086 0.113
Withdrawals & deaths (0.116) (0.085) (0.039) (0.030) (0.044) (0.050)
------ ------ ------ ------ ------ ------
Net cash flows (0.030) 0.031 0.044 0.044 0.043 0.062
Policyholder assessments (0.039) (0.039) (0.042) (0.048)
Interest credited 0.029 0.024 0.030 0.025 0.027 0.026
Acq of new business/
companies 0.045
------ ------ ------ ------ ------ ------
Int Sensitive Whole
Life-Bal End-of-Quart 1.729 1.784 1.865 1.895 1.922 1.963
------ ------ ------ ------ ------ ------
Total Lincoln Life -Bal
Beg-of-Quarter 5.276 5.303 8.077 8.225 8.412 8.485
Deposits 0.216 0.433 0.354 0.340 0.358 0.490
Withdrawals & deaths (0.192) (0.383) (0.100) (0.178) (0.184) (0.185)
------ ------ ------ ------ ------ ------
Net cash flows 0.024 0.050 0.254 0.163 0.175 0.305
Policyholder assessments (0.174) (0.176) (0.183) (0.201)
Invest inc & chg in mkt
value 0.003 0.279 0.132 0.201 0.082 0.363
Acq of new business/
transfers between segments 2.445 (0.065)
------ ------ ------ ------ ------ ------
Total Lincoln Life -
Bal End-of-Quarter 5.303 8.077 8.225 8.412 8.485 8.952
------ ------ ------ ------ ------ ------
VUL Under Agree -
included above 0.044 0.631 0.699 0.770 0.681 0.704
------ ------ ------ ------ ------ ------
First Penn-Pacific (FPP)
Universal Life-Bal
Beg-of-Quarter 1.118 1.140 1.166 1.191 1.215 1.240
Deposits 0.038 0.041 0.040 0.039 0.041 0.036
Withdrawals & deaths (0.032) (0.032) (0.017) (0.017) (0.019) (0.014)
------ ------ ------ ------ ------ ------
Net cash flows 0.006 0.009 0.023 0.022 0.022 0.022
Policyholder assessments (0.015) (0.015) (0.015)
Interest credited 0.016 0.017 0.017 0.017 0.018 0.018
------ ------ ------ ------ ------ ------
FPP Universal Life-Bal
End-of-Quarter 1.140 1.166 1.191 1.215 1.240 1.265
------ ------ ------ ------ ------ ------
Total Segment- Life Insurance
Account Values
Bal Beg-of-Quarter 6.394 6.443 9.243 9.416 9.628 9.726
Deposits 0.254 0.475 0.394 0.379 0.399 0.526
Withdrawals & deaths (0.224) (0.415) (0.117) (0.195) (0.202) (0.199)
------ ------ ------ ------ ------ ------
Net cash flows 0.030 0.060 0.277 0.185 0.197 0.327
Policyholder assessments (0.192) (0.198) (0.216)
Invest inc & change in
market value 0.019 0.295 0.149 0.219 0.100 0.381
Acq(sale) of new business/
companies 0.000 2.445 (0.065) 0.000 0.000 0.000
------ ------ ------ ------ ------ ------
Total Segment -Bal
End-of-Quarter 6.443 9.243 9.416 9.628 9.726 10.217
------ ------ ------ ------ ------ ------
For the Quarter Ended Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
------ ------ ------ ------ ------ ------
Lincoln Life
Universal Life-Bal
Beg-of-Quarter 5.385 5.449 5.486 5.562 5.645 5.718
Deposits 0.216 0.181 0.192 0.231 0.194 0.236
Withdrawals & deaths (0.097) (0.093) (0.064) (0.093) (0.069) (0.056)
------ ------ ------ ------ ------ ------
Net cash flows 0.118 0.088 0.128 0.139 0.125 0.181
Policyholder assessments (0.129) (0.127) (0.129) (0.133) (0.131) (0.131)
Interest credited 0.075 0.076 0.077 0.078 0.078 0.080
Acq of new business/
companies 0.000
------ ------ ------ ------ ------ ------
Universal Life-Bal
End-of-Quarter (1) 5.449 5.486 5.562 5.645 5.718 5.848
------ ------ ------ ------ ------ ------
Variable Universal Life-Bal
Beg of Quarter 1.605 1.771 1.764 1.812 1.808 1.633
Deposits 0.112 0.128 0.123 0.245 0.136 0.138
Withdrawals & deaths (0.019) (0.028) (0.037) (0.048) (0.049) (0.060)
------ ------ ------ ------ ------ ------
Net cash flows 0.093 0.100 0.085 0.197 0.087 0.078
Policyholder assessments (0.032) (0.033) (0.036) (0.041) (0.041) (0.041)
Invest inc & chg in mkt
value 0.105 (0.074) (0.001) (0.160) (0.221) 0.096
Acq of new business/
transfers between segments 0.000 0.000
------ ------ ------ ------ ------ ------
Variable Universal Life
-Bal End-of-Quar 1.771 1.764 1.812 1.808 1.633 1.766
------ ------ ------ ------ ------ ------
Interest Sensitive Whole Life
- Bal Beg-of-Qua 1.963 1.970 1.993 2.026 2.062 2.068
Deposits 0.060 0.071 0.079 0.113 0.056 0.069
Withdrawals & deaths (0.042) (0.037) (0.033) (0.056) (0.041) (0.043)
------ ------ ------ ------ ------ ------
Net cash flows 0.018 0.034 0.045 0.057 0.014 0.027
Policyholder assessments (0.039) (0.040) (0.040) (0.050) (0.037) (0.040)
Interest credited 0.028 0.028 0.027 0.029 0.028 0.030
Acq of new business/
companies
------ ------ ------ ------ ------ ------
Int Sensitive Whole
Life-Bal End-of-Quart 1.970 1.993 2.026 2.062 2.068 2.084
------ ------ ------ ------ ------ ------
Total Lincoln Life -Bal
Beg-of-Quarter 8.952 9.190 9.242 9.400 9.516 9.419
Deposits 0.387 0.380 0.393 0.589 0.386 0.443
Withdrawals & deaths (0.158) (0.158) (0.135) (0.196) (0.159) (0.158)
------ ------ ------ ------ ------ ------
Net cash flows 0.229 0.222 0.258 0.392 0.226 0.285
Policyholder assessments (0.199) (0.200) (0.205) (0.224) (0.209) (0.212)
Invest inc & chg in mkt
value 0.208 0.030 0.104 (0.053) (0.114) 0.206
Acq of new business/
transfers between segments
------ ------ ------ ------ ------ ------
Total Lincoln Life -
Bal End-of-Quarter 9.190 9.242 9.400 9.516 9.419 9.698
------ ------ ------ ------ ------ ------
VUL Under Agree -
included above 0.743 0.707 0.698 0.609 0.527 0.549
------ ------ ------ ------ ------ ------
First Penn-Pacific (FPP)
Universal Life-Bal
Beg-of-Quarter 1.265 1.280 1.296 1.317 1.331 1.345
Deposits 0.036 0.031 0.035 0.033 0.032 0.034
Withdrawals & deaths (0.024) (0.018) (0.016) (0.021) (0.022) (0.015)
------ ------ ------ ------ ------ ------
Net cash flows 0.013 0.013 0.019 0.012 0.011 0.019
Policyholder assessments (0.016) (0.016) (0.017) (0.017) (0.016) (0.016)
Interest credited 0.019 0.019 0.019 0.019 0.020 0.020
------ ------ ------ ------ ------ ------
FPP Universal Life-Bal
End-of-Quarter 1.280 1.296 1.317 1.331 1.345 1.368
------ ------ ------ ------ ------ ------
Total Segment- Life Insurance
Account Values
Bal Beg-of-Quarter 10.217 10.470 10.538 10.716 10.847 10.764
Deposits 0.424 0.411 0.428 0.622 0.418 0.477
Withdrawals & deaths (0.182) (0.176) (0.151) (0.218) (0.181) (0.173)
------ ------ ------ ------ ------ ------
Net cash flows 0.242 0.235 0.277 0.404 0.237 0.304
Policyholder assessments (0.215) (0.216) (0.221) (0.241) (0.225) (0.228)
Invest inc & change in
market value 0.227 0.048 0.123 (0.033) (0.094) 0.226
Acq(sale) of new business/
companies 0.000 0.000 0.000 0.000 0.000 0.000
------ ------ ------ ------ ------ ------
Total Segment -Bal
End-of-Quarter 10.470 10.538 10.716 10.847 10.764 11.066
------ ------ ------ ------ ------ ------
(1) Includes fixed investment option of VUL products.
6/30/2001 PAGE 21
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
YTD YTD
Jun Jun
For the Year Ended December 31 1996 1997 1998 1999 2000 2000 2001
------ ------ ------ ------ ------ ------ ------
Operating Revenue
Life and annuity premiums 472.2 466.7 592.0 743.1 968.5 456.5 581.9
Health premiums 775.6 566.1 628.6 692.3 404.6 199.5 199.1
Surrender charges 2.7 3.4 3.3 2.8 3.7 2.0 1.2
Mortality assessments 0.0 0.0 0.7 0.7 0.0 0.0 0.0
Expense assessments 0.0 0.0 0.3 0.3 (0.0) (0.0) (0.0)
Other revenue and fees 28.7 35.5 37.9 62.5 71.3 27.7 26.2
Net investment income 264.2 288.6 315.0 316.6 320.3 164.7 157.1
Equity earnings in unconsol affiliates 0.0 2.1 3.3 5.8 2.1 1.2 0.9
------ ------ ------ ------ ------ ------ ------
Operating Revenue 1543.3 1362.3 1581.2 1824.1 1770.6 851.6 966.5
------ ------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 305.7 321.4 452.2 530.6 716.1 338.9 411.1
Div accum & div to policyholders 9.3 9.3 7.3 6.9 6.7 2.8 2.5
Interest credited to policy bal. 40.3 50.3 44.1 47.3 42.2 17.5 17.9
Health policy benefits 658.6 824.4 556.3 646.5 434.8 226.9 187.1
Underwriting, acquisition,
insurance and other expenses 413.0 388.0 359.9 531.7 380.5 177.3 219.6
Goodwill amortization 0.0 0.0 0.0 0.4 1.8 0.9 0.9
Interest on notes payable 2.9 0.0 1.0 11.2 5.0 5.1
------ ------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 1429.7 1593.6 1419.7 1764.4 1593.2 769.2 844.2
------ ------ ------ ------ ------ ------ ------
Income from Operations Before Tax 113.5 (231.3) 161.4 59.7 177.3 82.4 122.3
Federal income taxes 38.7 (81.2) 56.5 19.6 54.8 24.7 41.4
------ ------ ------ ------ ------ ------ ------
Income from Operations (1) 74.8 (150.1) 104.9 40.1 122.5 57.7 80.9
Realized gains (losses) on investments 12.0 16.3 (2.6) 3.7 (0.9) 0.1 (6.4)
Gains(losses) on derivatives 0.0
Restructuring charges (3.2) 0.7
------ ------ ------ ------ ------ ------ ------
Income before Accounting Changes 86.8 (133.8) 102.3 40.6 122.3 57.8 74.6
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 0.0 (2.4)
------ ------ ------ ------ ------ ------ ------
Net Income (1) 86.8 (133.8) 102.3 40.6 122.3 57.8 72.2
====== ====== ====== ====== ====== ====== ======
Inc from Oper -before Goodwill Amort. 74.8 (150.1) 104.9 40.5 124.2 58.6 81.8
Effective tax rate 34.1% 35.1% 35.0% 32.8% 30.9% 30.0% 33.9%
Operating Revenue 1543.3 1362.3 1581.2 1824.1 1770.6 851.6 966.5
Realized gains (losses) on investments 18.5 25.3 (3.5) 5.7 (1.3) (0.0) (9.7)
Gains(losses) on derivatives
------ ------ ------ ------ ------ ------ ------
Total Revenue 1561.8 1387.5 1577.7 1829.7 1769.3 851.6 956.8
====== ====== ====== ====== ====== ====== ======
Revenue by Source
Individual Markets 468.1 503.9 633.6 814.1 1053.4 496.0 625.6
Group Markets 158.7 131.6 130.6 168.0 318.0 163.3 172.0
Financial Reinsurance 531.1 365.2 279.3 344.5 127.3 64.3 53.5
Other 20.0 26.5 8.5 (5.0) 12.7 5.6 6.7
------ ------ ------ ------ ------ ------ ------
Total Revenue, Excl Exited Businesses 1177.9 1027.2 1052.0 1321.6 1511.4 729.2 857.7
Exited Businesses Under Management (2) 383.9 360.3 525.7 508.1 257.9 122.4 99.0
------ ------ ------ ------ ------ ------ ------
Total Revenue 1561.8 1387.5 1577.7 1829.7 1769.3 851.6 956.8
====== ====== ====== ====== ====== ====== ======
Income from Operations by Source
Individual Markets 49.8 71.9 83.5 91.9 90.6 41.8 64.3
Group Markets 10.2 3.3 1.6 (1.6) 7.5 2.2 5.6
Financial Reinsurance 17.5 15.5 17.1 21.7 20.3 11.2 10.5
Other (2.0) (2.0) (3.4) (4.4) (7.7) (3.3) (2.4)
------ ------ ------ ------ ------ ------ ------
Inc from Oper, Excl Exited Businesses 75.6 88.7 98.8 107.6 110.7 51.9 78.0
Exited Businesses Under Management (2) (0.8) (238.8) 6.1 (67.4) 11.8 5.8 2.9
------ ------ ------ ------ ------ ------ ------
Inc from Operations (1) 74.8 (150.1) 104.9 40.1 122.5 57.7 80.9
====== ====== ====== ====== ====== ====== ======
Risk Premium (3) 362.4 384.1 451.5 543.7 675.5 311.4 423.3
Individual Life Sales
[Billions of Dollars] 26.6 39.5 78.1 116.8 139.5 67.2 59.2
Ind Life In-Force 130.8 153.1 213.6 306.6 407.4 354.0 447.8
Group Life In-Force 30.1 30.4 36.7 34.2 29.3 30.5 27.9
------ ------ ------ ------ ------ ------ ------
Total Life In-Force 160.9 183.5 250.3 340.8 436.7 384.4 475.7
====== ====== ====== ====== ====== ====== ======
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 93.0 84.9 87.8 88.9 97.8 98.1 92.5
Employer Stop Loss-
Loss Ratio 67.6 52.8 77.7 84.3 74.0 73.7 72.6
Combined Ratio 93.3 84.7 108.4 115.0 99.4 100.3 96.4
Average Capital 651.7 791.8 966.6 1069.3 1078.3 1057.0 1081.3
Average Capital, Excl Exited Business 389.6 459.1 486.1 603.1 744.2 712.7 782.3
Return on Average Capital, Excl Exited Business 19.4% 19.3% 20.3% 17.8% 14.9% 14.6% 19.9%
(1) 1999 and 1997 income includes special charges of $65.4 million and $243.7 million, respectively.
(2) Exited Businesses Under Mgmt incl. disability inc., HMO excess-of-loss, carrier medical, personal accident and Seguros
Serfin Lincoln (through March 2000).
(3) Risk premium is an internal measure used to gauge the earnings power of the Individual Markets segment and is equal to
total operating revenue less commissions, investment income on surplus, and that portion of revenue required to fund
policy reserves.
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
------------------------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 146.4 200.1 172.0 173.1 166.2 231.9
Health premiums 154.5 163.5 153.3 158.7 148.3 232.0
Surrender charges 1.6 0.9 1.2 0.4 0.6 0.7
Mortality assessments 0.7 0.7 0.1 0.0 (0.2)
Expense assessments 0.3 0.4 (0.0) 0.0 (0.2)
Other revenue and fees 12.9 12.0 10.6 13.3 6.6 32.0
Net investment income 79.2 80.3 79.6 79.2 80.8 77.0
Equity earnings in unconsol affiliates (0.2) 1.3 1.6 1.1 1.2 1.8
------ ------ ------ ------ ------ ------
Operating Revenue 394.3 459.1 419.4 425.8 403.7 575.1
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 91.1 192.4 124.3 123.0 108.8 174.5
Div accum & div to policyholders 2.3 1.6 1.3 1.5 1.9 2.2
Interest credited to policy bal. 14.6 12.2 8.9 10.9 6.0 21.5
Health policy benefits 139.7 129.0 143.5 161.7 187.4 153.9
Underwriting, acquisition,
insurance and other expenses 102.2 85.2 89.1 92.9 94.9 254.8
Goodwill amortization 0.0 0.0 (0.0) (0.8) 0.8 0.4
Interest on notes payable 0.0 0.0 0.0 0.0 1.0
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 349.8 420.5 367.1 389.2 399.7 608.4
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 44.5 38.6 52.4 36.7 3.9 (33.3)
Federal income taxes 15.4 13.3 18.6 13.0 1.7 (13.7)
------ ------ ------ ------ ------ ------
Income from Operations (1) 29.1 25.3 33.8 23.7 2.2 (19.5)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments (5.1) (1.4) 0.7 0.3 0.3 2.4
Gains (losses) on derivatives
Restructuring charges (3.2)
------ ------ ------ ------ ------ ------
Income before Accounting Changes 24.0 23.9 34.5 24.0 (0.7) (17.1)
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Net Income (1) 24.0 23.9 34.5 24.0 (0.7) (17.1)
====== ====== ====== ====== ====== ======
Inc from Oper -before
Goodwill Amortization 29.1 25.3 33.7 22.8 3.0 (19.1)
Effective tax rate 34.6% 34.5% 35.5% 35.5% 43.3% 41.3%
Operating Revenue 394.3 459.1 419.4 425.8 403.7 575.1
Realized gains (losses) on investments (8.5) (1.8) 1.2 0.4 0.4 3.6
Gains (losses) on derivatives
------ ------ ------ ------ ------ ------
Total Revenue 385.9 457.2 420.6 426.2 404.1 578.8
====== ====== ====== ====== ====== ======
Revenue by Source (Including Investment
Gains/Losses)
Individual Markets 153.8 214.3 187.9 191.4 182.0 252.9
Group Markets 35.9 33.0 36.5 37.1 38.4 56.0
Financial Reinsurance 75.0 58.4 80.6 81.9 72.5 109.5
Other 2.5 (1.4) (2.7) (1.6) (1.0) 0.3
------ ------ ------ ------ ------ ------
Total Revenue, Excl Exited Businesses 267.2 304.4 302.2 308.8 291.9 418.7
Exited Businesses Under Management (2) 118.7 152.9 118.4 117.4 112.2 160.0
------ ------ ------ ------ ------ ------
Total Revenue 385.9 457.2 420.6 426.2 404.1 578.8
====== ====== ====== ====== ====== ======
Income from Operations by Source
Individual Markets 23.2 26.6 25.4 21.3 24.9 20.2
Group Markets 1.4 0.1 0.9 0.4 (1.3) (1.7)
Financial Reinsurance 4.7 5.5 7.3 4.7 4.2 5.5
Other (1.1) (0.5) (1.1) (1.1) (0.7) (1.4)
------ ------ ------ ------ ------ ------
Inc from Oper, Excl Exited Businesses 28.1 31.6 32.5 25.4 27.1 22.6
Exited Businesses Under Management (2) 1.0 (6.3) 1.3 (1.7) (24.8) (42.2)
------ ------ ------ ------ ------ ------
Income from Operations 29.1 25.3 33.8 23.7 2.2 (19.5)
====== ====== ====== ====== ====== ======
Risk Premium (3) 104.5 144.1 130.4 128.4 129.0 155.8
Individual Life Sales
[Billions of Dollars] 16.5 40.2 18.5 20.0 28.8 49.6
Ind Life In-Force 178.3 213.6 225.1 240.0 261.5 306.6
Group Life In-Force 35.3 36.7 38.3 38.5 35.6 34.2
------ ------ ------ ------ ------ ------
Total Life In-Force 213.6 250.3 263.4 278.5 297.1 340.8
====== ====== ====== ====== ====== ======
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 78.0 94.3 85.8 88.9 81.7 97.2
Employer Stop Loss-
Loss Ratio 66.3 114.3 68.5 81.0 100.8 84.5
Combined Ratio 98.7 141.8 100.8 119.1 133.1 111.8
Average Capital 1019.0 1019.6 1094.8 1064.9 1056.6 1060.9
Average Capital, Excl Exited Business 488.3 507.8 571.4 577.8 615.1 648.0
Return on Average Capital,
Excluding Exited Business 23.0% 24.9% 22.8% 17.6% 17.6% 14.0%
For the Quarter Ended Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
------------------------------------------------------------------------------------------
Operating Revenue
Life and annuity premiums 227.4 229.1 238.9 273.2 320.0 261.9
Health premiums 57.0 142.6 116.5 88.6 104.2 94.9
Surrender charges 0.6 1.4 0.9 0.8 0.9 0.4
Mortality assessments 0.0 0.0 0.0 0.0 0.0 0.0
Expense assessments (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)
Other revenue and fees 15.8 11.9 22.9 20.8 11.3 15.0
Net investment income 91.0 73.7 78.5 77.2 77.9 79.2
Equity earnings in unconsol affiliates 1.0 0.2 0.2 0.6 0.9 0.0
------ ------ ------ ------ ------ ------
Operating Revenue 392.7 458.9 457.9 461.0 515.1 451.4
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 165.4 173.5 178.0 199.2 229.4 181.6
Div accum & div to policyholders 1.3 1.5 1.8 2.1 1.4 1.2
Interest credited to policy bal. 9.0 8.6 12.8 11.9 9.1 8.7
Health policy benefits 110.0 116.8 119.7 88.2 97.5 89.6
Underwriting, acquisition,
insurance and other expenses 60.1 117.2 100.1 103.1 103.7 115.8
Goodwill amortization 0.4 0.4 0.4 0.4 0.4 0.4
Interest on notes payable 2.3 2.7 3.0 3.2 2.8 2.3
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 348.6 420.6 415.9 408.1 444.5 399.7
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 44.2 38.2 42.0 52.9 70.6 51.7
Federal income taxes 12.2 12.4 13.8 16.3 23.8 17.6
------ ------ ------ ------ ------ ------
Income from Operations (1) 31.9 25.8 28.2 36.6 46.8 34.1
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 1.2 (1.1) (2.2) 1.2 (4.6) (1.7)
Gains (losses) on derivatives 0.0 (0.0)
Restructuring charges 0.7
------ ------ ------ ------ ------ ------
Income before Accounting Changes 33.1 24.7 26.0 38.5 42.2 32.4
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 (0.1) (2.2)
------ ------ ------ ------ ------ ------
Net Income (1) 33.1 24.7 26.0 38.5 42.0 30.2
====== ====== ====== ====== ====== ======
Inc from Oper -before
Goodwill Amortization 32.3 26.3 28.6 37.0 47.2 34.6
Effective tax rate 27.7% 32.5% 32.9% 30.8% 33.8% 34.0%
Operating Revenue 392.7 458.9 457.9 461.0 515.1 451.4
Realized gains (losses) on investments 1.7 (1.7) (3.5) 2.2 (7.1) (2.7)
Gains (losses) on derivatives 0.0 0.0
------ ------ ------ ------ ------ ------
Total Revenue 394.4 457.2 454.4 463.2 508.0 448.7
====== ====== ====== ====== ====== ======
Revenue by Source (Including Investment
Gains/Losses)
Individual Markets 246.8 249.2 262.4 295.0 340.7 284.9
Group Markets 87.7 75.6 77.5 77.2 84.9 87.1
Financial Reinsurance 34.6 29.8 29.4 33.6 24.8 28.7
Other 3.1 2.5 3.9 3.2 3.8 2.9
------ ------ ------ ------ ------ ------
Total Revenue, Excl Exited Businesses 372.2 357.1 373.1 409.0 454.2 403.5
Exited Businesses Under Management (2) 22.3 100.1 81.3 54.2 53.8 45.2
------ ------ ------ ------ ------ ------
Total Revenue 394.4 457.2 454.4 463.2 508.0 448.7
====== ====== ====== ====== ====== ======
Income from Operations by Source
Individual Markets 19.2 22.6 20.5 28.3 39.5 24.8
Group Markets 1.0 1.2 1.5 3.7 2.5 3.2
Financial Reinsurance 7.2 4.0 4.5 4.6 3.7 6.8
Other (1.7) (1.6) (1.1) (3.3) (1.1) (1.3)
------ ------ ------ ------ ------ ------
Inc from Oper, Excl Exited Businesses 25.7 26.3 25.4 33.4 44.6 33.4
Exited Businesses Under Management (2) 6.2 (0.4) 2.8 3.2 2.2 0.7
------ ------ ------ ------ ------ ------
Income from Operations 31.9 25.8 28.2 36.6 46.8 34.1
====== ====== ====== ====== ====== ======
Risk Premium (3) 152.9 158.5 179.0 185.1 229.0 194.3
Individual Life Sales
[Billions of Dollars] 30.0 37.2 37.2 35.2 30.9 28.3
Ind Life In-Force 325.9 354.0 381.4 407.4 426.2 447.8
Group Life In-Force 32.5 30.5 31.2 29.3 27.2 27.9
------ ------ ------ ------ ------ ------
Total Life In-Force 358.4 384.4 412.6 436.7 453.4 475.7
====== ====== ====== ====== ====== ======
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 99.5 96.9 101.2 93.9 88.7 97.4
Employer Stop Loss-
Loss Ratio 74.7 72.6 76.5 72.0 71.4 73.8
Combined Ratio 99.8 100.8 100.9 95.9 95.8 96.9
Average Capital 1075.0 1039.0 1075.0 1124.3 1100.0 1062.7
Average Capital, Excl Exited Business 692.7 732.7 761.1 790.1 773.5 791.1
Return on Average Capital,
Excluding Exited Business 14.8% 14.3% 13.3% 16.9% 23.0% 16.9%
(1) Third quarter 1999 and fourth quarter 1999 income includes special charges of $25.0 million and $40.4 million, respectively.
The first quarter 2001 includes $25.5 million for a change in estimate of premiums receivable.
(2) Exited Businesses Under Mgmt incl. disability inc., HMO excess-of-loss, carrier medical, personal accident and Seguros
Serfin Lincoln (through March 2000).
(3) Risk premium is an internal measure used to gauge the earnings power of the Individual Markets segment and is equal to total
operating revenue less commissions, investment income on surplus, and that portion of revenue required to fund policy
reserves. The risk premium for the first quarter 2001, includes the effect of the change in estimate for premiums
receivable.
Investment Management
Income Statements
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996
---------------------------------------------------------------------------------------------
Operating Revenue
Investment advisory fees - External 199.8
Investment advisory fees - Insurance Assets 65.7
Other revenue and fees 59.3
Net investment income 75.8
------
Operating Revenue 400.6
------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 350.1
Goodwill amortization 13.7
Interest on notes payable 0.0
------
Operating Benefits and Expenses 363.8
------
Income from Operations Before Tax 36.8
Federal income taxes 18.2
------
Income from Operations 18.6
------
Realized gains (losses) on investments 6.4
Gains(losses) on derivatives
Restructuring Charges 0.0
------
Income before Accounting Changes 25.0
Cumulative effect of accounting changes
------
Net Income 25.0
======
Income from Operations- before Goodwill
Amortization 32.4
Income from Operations - before Goodwill &
Intang. Amort 42.6
Operating Revenue 400.6
Realized gains (losses) on investments 9.9
Gains(losses) on derivatives
------
Total Revenue 410.5
======
Average Capital (Securities at Cost) 646.1
Return on Capital 2.9%
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
---------------------------------------------------------------------------------------------
Operating Revenue
Investment advisory fees - External 58.3 62.5 65.1 62.5 60.7 60.3
Investment advisory fees - Insurance Assets 20.5 20.8 21.0 20.7 19.9 22.1
Other revenue and fees 22.4 24.9 25.6 26.3 24.9 29.8
Net investment income 15.8 16.7 14.9 14.1 13.9 13.9
------ ------ ------ ------ ------ ------
Operating Revenue 117.0 124.9 126.6 123.6 119.3 126.1
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 99.0 98.5 97.8 97.3 92.8 96.3
Goodwill amortization 4.1 4.1 4.1 4.1 4.1 4.1
Interest on notes payable 0.1 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Operating Benefits & Expenses 103.2 102.6 101.9 101.4 96.8 100.4
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 13.8 22.3 24.7 22.2 22.5 25.7
Federal income taxes 6.4 7.7 9.4 7.9 7.7 9.1
------ ------ ------ ------ ------ ------
Income from Operations 7.4 14.6 15.4 14.3 14.7 16.5
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments (3.7) 1.8 0.2 (0.3) (0.3) 0.4
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring Charges 0.0 0.0 (12.1) 0.0 0.0 2.9
------ ------ ------ ------ ------ ------
Income before Accounting Changes 3.6 16.4 3.4 14.0 14.4 19.8
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Net Income 3.6 16.4 3.4 14.0 14.4 19.8
====== ====== ====== ====== ====== ======
Inc from Oper -before
Goodwill Amortization 11.4 18.7 19.4 18.4 18.8 20.6
Inc from Oper -before
Goodwill & Intang. Amort 14.5 21.9 22.4 21.3 21.7 23.3
Operating Revenue 117.0 124.9 126.6 123.6 119.3 126.1
Realized gains (losses) on investments (6.3) 3.0 0.2 (0.4) (0.5) 0.6
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Total Revenue 110.7 127.9 126.8 123.2 118.8 126.6
====== ====== ====== ====== ====== ======
Average Capital (Securities at Cost) 641.4 635.3 612.6 591.6 587.2 584.2
Return on Capital 4.6% 9.2% 10.0% 9.7% 10.0% 11.3%
YTD YTD
Jun Jun
For the Year Ended December 31 1997 1998 1999 2000 2000 2001
---------------------------------------------------------------------------------------------
Operating Revenue
Investment advisory fees - External 229.9 249.0 248.6 231.6 117.9 99.0
Investment advisory fees - Insurance Assets 68.5 82.5 83.6 88.9 43.3 46.2
Other revenue and fees 76.3 92.5 106.6 115.9 62.9 52.0
Net investment income 72.8 67.0 56.9 57.7 25.6 27.1
------ ------ ------ ------ ------ ------
Operating Revenue 447.5 491.0 495.6 494.2 249.8 224.4
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 396.1 401.5 384.3 408.7 201.8 206.4
Goodwill amortization 15.5 16.3 16.2 16.2 8.1 8.1
Interest on notes payable 0.2 0.3 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 411.8 418.2 400.5 425.0 209.9 214.5
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 35.8 72.8 95.1 69.2 39.9 9.9
Federal income taxes 17.7 28.9 34.1 25.1 14.3 3.8
------ ------ ------ ------ ------ ------
Income from Operations 18.1 43.9 61.0 44.1 25.5 6.1
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 7.0 0.5 (0.1) (2.5) (2.1) (1.2)
Gains(losses) on derivatives
Restructuring Charges 0.0 0.0 (9.2) (4.6) (2.7) 0.0
------ ------ ------ ------ ------ ------
Income before Accounting Changes 25.1 44.4 51.6 37.0 20.7 4.9
Cumulative effect of accounting changes (0.1)
------ ------ ------ ------ ------ ------
Net Income 25.1 44.4 51.6 37.0 20.7 4.8
====== ====== ====== ====== ====== ======
Income from Operations- before Goodwill
Amortization 33.6 60.3 77.2 60.3 33.6 14.2
Income from Operations - before Goodwill &
Intang. Amort 45.2 72.6 88.7 70.9 39.1 18.3
Operating Revenue 447.5 491.0 495.6 494.2 249.8 224.4
Realized gains (losses) on investments 11.6 0.9 (0.1) (3.9) (3.3) (1.8)
Gains(losses) on derivatives
------ ------ ------ ------ ------ ------
Total Revenue 459.1 491.9 495.5 490.3 246.5 222.6
====== ====== ====== ====== ====== ======
Average Capital (Securities at Cost) 653.3 642.3 593.9 575.2 587.2 545.6
Return on Capital 2.8% 6.8% 10.3% 7.7% 8.7% 2.2%
For the Quarter Ended Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
--------------------------------------------------------------------------------------------
Operating Revenue
Investment advisory fees - External 60.0 57.9 56.9 56.7 49.3 49.7
Investment advisory fees - Insurance Assets 21.0 22.3 22.5 23.1 23.2 23.0
Other revenue and fees 31.9 31.0 26.4 26.6 26.3 25.7
Net investment income 13.0 12.6 18.3 13.8 14.1 13.0
------ ------ ------ ------ ------ ------
Operating Revenue 126.0 123.8 124.1 120.2 113.0 111.4
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 102.5 99.3 103.9 103.0 104.7 101.6
Goodwill amortization 4.1 4.1 4.1 4.1 4.1 4.1
Interest on notes payable 0.0 0.0 0.0 (0.0) 0.0 0.0
------ ------ ------ ------ ------ -----
Operating Benefits & Expenses 106.6 103.3 107.9 107.1 108.8 105.7
------ ------ ------ ------ ------ -----
Income from Operations Before Tax 19.4 20.5 16.2 13.1 4.2 5.7
Federal income taxes 7.0 7.4 6.3 4.4 1.8 2.0
------ ------ ------ ------ ------ -----
Income from Operations 12.4 13.1 9.9 8.7 2.4 3.7
------ ------ ------ ------ ------ -----
Realized gains (losses) on investments (0.1) (2.0) (0.2) (0.2) (0.5) (0.7)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring Charges 0.0 (2.7) 0.0 (1.9) 0.0 0.0
------ ------ ------ ------ ------ -----
Income before Accounting Changes 12.3 8.4 9.7 6.6 2.0 3.0
Cumulative effect of accounting changes 0.0 0.0 0.0 0.0 0.0 (0.1)
------ ------ ------ ------ ------ -----
Net Income 12.3 8.4 9.7 6.6 2.0 2.9
====== ====== ====== ====== ====== =====
Inc from Oper -before
Goodwill Amortization 16.5 17.1 14.0 12.7 6.5 7.7
Inc from Oper -before
Goodwill & Intang. Amort 19.4 19.7 16.6 15.2 9.1 9.2
Operating Revenue 126.0 123.8 124.1 120.2 113.0 111.4
Realized gains (losses) on investments (0.2) (3.1) (0.4) (0.3) (0.7) (1.1)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ -----
Total Revenue 125.8 120.7 123.8 120.0 112.3 110.3
====== ====== ====== ====== ====== =====
Average Capital (Securities at Cost) 581.5 593.0 567.7 558.5 548.3 542.8
Return on Capital 8.6% 8.8% 7.0% 6.2% 1.8% 2.7%
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
YTD YTD
JUN JUN
1996 1997 1998 1999 2000 2000 2001
---------------------------------------------------------------------------------------------------------------
Retail Fixed - Bal Beg-of-Year 6.094 5.853 8.125 8.217 7.424 7.424 6.499
Fund Sales 0.764 0.961 1.165 0.991 0.712 0.298 0.430
Redemptions (0.986) (1.271) (1.235) (1.424) (1.365) (0.772) (0.535)
Net Money Market (0.079) (0.069) (0.140) (0.110) (0.207) (0.125) (0.020)
Transfers (0.114) (0.220) 0.132 0.177 (0.159) (0.140) 0.040
------- ------- ------- ------- ------- ------- -------
Net Cash Flows (0.415) (0.599) (0.078) (0.366) (1.019) (0.739) (0.085)
Income Retained 0.237 0.276 0.291 0.276 0.240 0.124 0.104
Market Apprec/Deprec (0.062) 0.049 (0.121) (0.704) (0.146) (0.144) 0.126
Acq of New Company/Business 2.547
------- ------- ------- ------- ------- ------- -------
Balance End-of-Year 5.853 8.125 8.217 7.424 6.499 6.667 6.643
------- ------- ------- ------- ------- ------- -------
Retail Equity - Bal Beg-of-Year 9.974 13.152 17.754 22.080 23.383 23.383 21.174
Fund Sales 2.175 2.953 3.581 3.271 4.048 2.088 1.548
Redemptions (1.037) (1.926) (2.460) (4.971) (4.369) (2.521) (1.556)
Net Money Market 0.000 (0.002) (0.001) 0.001
Transfers 0.188 0.209 0.730 (0.143) (0.178) (0.078) (0.114)
------- ------- ------- ------- ------- ------- -------
Net Cash Flows 1.327 1.236 1.849 (1.844) (0.498) (0.511) (0.122)
Income Retained 0.039 0.005 0.220 0.120 0.083 0.054 0.022
Market Apprec/Deprec 1.812 3.317 2.256 3.028 (1.793) 0.204 (1.664)
Acq of New Company/Business 0.043
------- ------- ------- ------- ------- ------- -------
Balance at End-of-Year 13.152 17.754 22.080 23.383 21.174 23.129 19.411
------- ------- ------- ------- ------- ------- -------
Total Retail - Bal Beg-of-Year 16.068 19.006 25.879 30.297 30.807 30.807 27.674
Retail Sales-Annuities 1.638 2.163 2.238 1.561 1.726 0.737 0.828
Retail Sales-Mutual Funds 0.849 1.218 1.913 2.153 2.452 1.396 0.766
Retail Sales-Wrap & Other 0.454 0.533 0.596 0.550 0.581 0.254 0.384
------- ------- ------- ------- ------- ------- -------
Total Retail Sales 2.940 3.914 4.745 4.264 4.760 2.387 1.978
Redemptions (2.023) (3.197) (3.694) (6.396) (5.733) (3.294) (2.092)
Net Money Market (0.079) (0.068) (0.141) (0.111) (0.206) (0.125) (0.020)
Transfers 0.074 (0.011) 0.862 0.034 (0.337) (0.217) (0.074)
------- ------- ------- ------- ------- ------- -------
Net Cash Flows 0.912 0.637 1.772 (2.209) (1.517) (1.249) (0.208)
Income Retained 0.276 0.281 0.511 0.396 0.323 0.178 0.127
Market Apprec/Deprec 1.750 3.366 2.136 2.324 (1.939) 0.062 (1.538)
Acq of New Company/Business 2.590
------- ------- ------- ------- ------- ------- -------
Balance at End-of-Year 19.006 25.879 30.297 30.807 27.674 29.796 26.054
------- ------- ------- ------- ------- ------- -------
Institutional Fixed - Bal Beg-of-Year 2.956 3.580 5.708 6.955 6.937 6.937 6.111
Inflows 1.516 2.509 2.169 2.000 0.771 0.328 0.543
Withdrawals/Terminations (1.155) (0.787) (1.242) (1.699) (1.973) (0.873) (0.544)
Transfers 0.015 0.013 (0.074) (0.001) (0.005) (0.006) 0.013
------- ------- ------- ------- ------- ------- -------
Net Cash Flows 0.376 1.735 0.853 0.300 (1.207) (0.551) 0.012
Income Retained 0.145 0.225 0.333 0.346 0.294 0.156 0.113
Market Apprec/Deprec 0.104 0.118 0.061 (0.665) 0.087 (0.057) (0.427)
Acq of New Company/Business 0.051
------- ------- ------- ------- ------- ------- -------
Balance at End-of-Year 3.580 5.708 6.955 6.937 6.111 6.484 5.809
------- ------- ------- ------- ------- ------- -------
Institutional Equity - Bal Beg-of-Year 21.619 22.886 24.871 24.235 23.630 23.630 19.111
Inflows 1.974 2.465 3.840 5.248 2.730 1.573 1.704
Withdrawals/Terminations (4.772) (6.447) (7.441) (7.801) (7.209) (4.687) (1.700)
Transfers (0.007) (0.068) 0.047 0.011 (0.008) (0.002) 0.011
------- ------- ------- ------- ------- ------- -------
Net Cash Flows (2.805) (4.049) (3.555) (2.542) (4.487) (3.116) 0.015
Income Retained 0.557 0.491 0.473 0.482 0.449 0.241 0.211
Market Apprec/Deprec 3.514 5.544 2.446 1.453 (0.481) (0.515) (0.933)
Acq of New Company/Business
------- ------- ------- ------- ------- ------- -------
Balance at End-of-Year 22.886 24.871 24.235 23.630 19.111 20.239 18.405
------- ------- ------- ------- ------- ------- -------
Total Institutional - Bal Beg-of-Year 24.575 26.465 30.579 31.191 30.567 30.567 25.222
Inflows 3.490 4.975 6.009 7.249 3.501 1.901 2.247
Withdrawals/Terminations (5.928) (7.234) (8.683) (9.500) (9.182) (5.560) (2.244)
Transfers 0.008 (0.055) (0.027) 0.011 (0.014) (0.009) 0.024
------- ------- ------- ------- ------- ------- -------
Net Cash Flows (2.429) (2.314) (2.702) (2.240) (5.694) (3.668) 0.027
Income Retained 0.702 0.716 0.806 0.829 0.743 0.395 0.324
Market Apprec/Deprec 3.618 5.662 2.508 0.789 (0.394) (0.572) (1.360)
Acq of New Company/Business 0.051
------- ------- ------- ------- ------- ------- -------
Balance at End-of-Year 26.465 30.579 31.191 30.567 25.222 26.722 24.214
------- ------- ------- ------- ------- ------- -------
Total Retail/Institutional - At End- 45.471 56.458 61.488 61.374 52.895 56.518 50.268
of-Year ------- ------- ------- ------- ------- ------- -------
Insurance Assets - At End-of-Year 37.453 35.684 39.432 35.934 35.686 34.891 36.018
------- ------- ------- ------- ------- ------- -------
Total Assets Under Management
------- ------- ------- ------- ------- ------- -------
At End-of-Year 82.924 92.142 100.920 97.308 88.581 91.409 86.286
======= ======= ======= ======= ======= ======= =======
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
---------------------------------------------------------------------------------------
Retail Fixed - Bal-Beg-of-Qtr 8.260 8.287 8.217 8.233 7.945 7.680
Fund Sales 0.381 0.246 0.316 0.263 0.231 0.181
Redemptions (0.302) (0.387) (0.313) (0.366) (0.342) (0.403)
Net Money Market (0.034) (0.000) (0.019) (0.033) (0.029) (0.030)
Transfers 0.029 0.007 0.032 (0.043) 0.034 0.154
------ ------ ------- ------- ------- -------
Net Cash Flows 0.074 (0.134) 0.016 (0.179) (0.106) (0.098)
Income Retained 0.076 0.076 0.066 0.074 0.069 0.067
Market Apprec/Deprec (0.122) (0.012) (0.067) (0.185) (0.228) (0.225)
------ ------ ------- ------- ------- -------
Balance at End-of-Qtr 8.287 8.217 8.233 7.945 7.680 7.424
------ ------ ------- ------- ------- -------
Retail Equity - Bal-Beg-of-Qtr 21.456 18.785 22.080 21.798 22.340 20.873
Fund Sales 0.830 0.802 0.856 0.790 0.730 0.894
Redemptions (0.547) (0.915) (1.030) (1.957) (0.865) (1.120)
Net Money Market 0.000 0.000 0.000 (0.001) 0.000 0.000
Transfers (0.032) (0.011) (0.034) 0.036 (0.060) (0.086)
------ ------ ------- ------- ------- -------
Net Cash Flows 0.252 (0.124) (0.208) (1.132) (0.195) (0.312)
Income Retained 0.134 (0.001) 0.053 0.061 0.007 0.000
Market Apprec/Deprec (3.056) 3.420 (0.128) 1.614 (1.279) 2.822
------ ------ ------- ------- ------- -------
Balance at End-of-Qtr 18.785 22.080 21.798 22.340 20.873 23.383
------ ------ ------- ------- ------- -------
Total Retail - Bal-Beg-of-Qtr 29.716 27.072 30.297 30.031 30.285 28.553
Retail Sales-Annuities 0.541 0.507 0.428 0.393 0.332 0.409
Retail Sales-Mutual Funds 0.531 0.403 0.565 0.487 0.514 0.587
Retail Sales-Wrap & Other 0.139 0.136 0.182 0.173 0.116 0.079
------ ------ ------- ------- ------- -------
Total Retail Sales 1.211 1.046 1.175 1.053 0.962 1.075
Redemptions (0.849) (1.302) (1.343) (2.323) (1.207) (1.523)
Net Money Market (0.034) 0.000 (0.019) (0.033) (0.029) (0.030)
Transfers (0.003) (0.004) (0.001) (0.006) (0.027) 0.068
------ ------ ------- ------- ------- -------
Net Cash Flows 0.325 (0.260) (0.188) (1.309) (0.301) (0.410)
Income Retained 0.210 0.075 0.119 0.134 0.076 0.067
Market Apprec/Deprec (3.180) 3.409 (0.196) 1.429 (1.507) 2.597
------ ------ ------- ------- ------- -------
Balance at End-of-Qtr 27.072 30.297 30.031 30.285 28.553 30.807
------ ------ ------- ------- ------- -------
Institutional Fixed -
Bal-Beg-of-Qtr 6.400 6.769 6.955 6.984 7.264 7.218
Inflows 0.566 0.170 0.657 0.478 0.446 0.420
Withdrawals/Terminations (0.325) (0.225) (0.415) (0.210) (0.294) (0.781)
Transfers (0.046) 0.008 (0.003) 0.003 (0.002) 0.001
------ ------ ------- ------- ------- -------
Net Cash Flows 0.195 (0.047) 0.239 0.271 0.150 (0.360)
Income Retained 0.101 0.060 0.089 0.079 0.110 0.068
Market Apprec/Deprec 0.073 0.173 (0.300) (0.070) (0.306) 0.011
------ ------ ------- ------- ------- -------
Balance at End-of-Qtr 6.769 6.955 6.984 7.264 7.218 6.937
------ ------ ------- ------- ------- -------
Institutional Equity -
Bal-Beg-of-Qtr 26.064 21.702 24.235 22.927 23.962 23.098
Inflows 0.855 1.165 1.297 1.179 1.839 0.934
Withdrawals/Terminations (1.663) (2.072) (2.540) (2.052) (1.165) (2.043)
Transfers 0.050 0.013 0.011 0.019 (0.008) (0.010)
------ ------ ------- ------- ------- -------
Net Cash Flows (0.759) (0.895) (1.232) (0.854) 0.666 (1.119)
Income Retained 0.119 0.098 0.104 0.118 0.167 0.093
Market Apprec/Deprec (3.721) 3.330 (0.180) 1.771 (1.697) 1.559
------ ------ ------- ------- ------- -------
Balance at End-of-Qtr 21.702 24.235 22.927 23.962 23.098 23.630
------ ------ ------- ------- ------- -------
Total Institutional -
Bal-Beg-of-Qtr 32.463 28.471 31.191 29.910 31.226 30.316
Inflows 1.421 1.335 1.953 1.656 2.284 1.354
Withdrawals/Terminations (1.988) (2.297) (2.955) (2.262) (1.458) (2.825)
Transfers 0.003 0.021 0.008 0.022 (0.010) (0.009)
------ ------ ------- ------- ------- -------
Net Cash Flows (0.564) (0.942) (0.994) (0.584) 0.816 (1.480)
Income Retained 0.220 0.158 0.193 0.197 0.277 0.161
Market Apprec/Deprec (3.649) 3.504 (0.480) 1.702 (2.003) 1.569
------ ------ ------- ------- ------- -------
Balance at End-of-Qtr 28.471 31.191 29.910 31.226 30.316 30.567
------ ------ ------- ------- ------- -------
Total Retail/Inst - At End-of-Qtr 55.543 61.488 59.941 61.511 58.869 61.374
Insurance Assets-End-of-Qtr 38.471 39.432 38.516 37.391 36.820 35.934
Total Assets Under Management
------ ------ ------- ------- ------- -------
At End-of-Qtr 94.014 100.920 98.457 98.902 95.689 97.308
====== ====== ======= ======= ======= =======
Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
--------------------------------------------------------------------------------------
Retail Fixed - Bal-Beg-of-Qtr 7.424 6.964 6.667 6.531 6.499 6.631
Fund Sales 0.146 0.152 0.213 0.200 0.235 0.195
Redemptions (0.444) (0.328) (0.321) (0.272) (0.255) (0.280)
Net Money Market (0.067) (0.058) (0.031) (0.051) 0.010 (0.030)
Transfers (0.095) (0.045) (0.033) 0.013 0.042 (0.002)
------- ------- ------ ------- ------- -------
Net Cash Flows (0.460) (0.279) (0.171) (0.109) 0.032 (0.117)
Income Retained 0.061 0.063 0.059 0.057 0.054 0.050
Market Apprec/Deprec (0.062) (0.082) (0.023) 0.021 0.046 0.080
------- ------- ------ ------- ------- -------
Balance at End-of-Qtr 6.964 6.667 6.531 6.499 6.631 6.643
------- ------- ------ ------- ------- -------
Retail Equity - Bal-Beg-of-Qtr 23.383 24.102 23.129 23.680 21.174 17.935
Fund Sales 1.220 0.868 0.904 1.055 0.888 0.660
Redemptions (1.550) (0.971) (1.027) (0.820) (0.899) (0.657)
Net Money Market 0.000 0.000 0.001 0.000 0.000 0.000
Transfers (0.096) 0.018 (0.033) (0.068) (0.068) (0.046)
------- ------- ------ ------- ------- -------
Net Cash Flows (0.426) (0.085) (0.154) 0.167 (0.079) (0.043)
Income Retained 0.033 0.021 0.005 0.025 0.007 0.015
Market Apprec/Deprec 1.112 (0.908) 0.701 (2.698) (3.168) 1.504
------- ------- ------ ------- ------- -------
Balance at End-of-Qtr 24.102 23.129 23.680 21.174 17.935 19.411
------- ------- ------ ------- ------- -------
Total Retail - Bal-Beg-of-Qtr 30.807 31.066 29.796 30.211 27.673 24.566
Retail Sales-Annuities 0.379 0.358 0.453 0.536 0.455 0.373
Retail Sales-Mutual Funds 0.840 0.556 0.521 0.535 0.442 0.324
Retail Sales-Wrap & Other 0.148 0.106 0.143 0.184 0.227 0.157
------- ------- ------ ------- ------- -------
Total Retail Sales 1.367 1.020 1.118 1.255 1.124 0.854
Redemptions (1.995) (1.299) (1.348) (1.092) (1.154) (0.938)
Net Money Market (0.067) (0.058) (0.030) (0.051) 0.010 (0.030)
Transfers (0.191) (0.026) (0.065) (0.054) (0.026) (0.048)
------- ------- ------ ------- ------- -------
Net Cash Flows (0.886) (0.363) (0.326) 0.058 (0.047) (0.160)
Income Retained 0.095 0.083 0.063 0.082 0.061 0.066
Market Apprec/Deprec 1.051 (0.989) 0.677 (2.677) (3.122) 1.584
------- ------- ------ ------- ------- -------
Balance at End-of-Qtr 31.066 29.796 30.211 27.674 24.566 26.054
------- ------- ------ ------- ------- -------
Institutional Fixed -
Bal-Beg-of-Qtr 6.937 6.873 6.484 6.275 6.111 5.890
Inflows 0.180 0.148 0.308 0.135 0.310 0.233
Withdrawals/Terminations (0.353) (0.520) (0.532) (0.568) (0.432) (0.112)
Transfers (0.005) (0.001) 0.000 0.001 0.003 0.010
------- ------- ------ ------- ------- -------
Net Cash Flows (0.178) (0.373) (0.224) (0.433) (0.119) 0.131
Income Retained 0.090 0.066 0.089 0.050 0.066 0.047
Market Apprec/Deprec 0.024 (0.081) (0.074) 0.219 (0.168) (0.259)
------- ------- ------ ------- ------- -------
Balance at End-of-Qtr 6.873 6.484 6.275 6.111 5.890 5.809
------- ------- ------ ------- ------- -------
Institutional Equity -
Bal-Beg-of-Qtr 23.630 20.303 20.239 19.041 19.111 17.311
Inflows 0.904 0.669 0.407 0.750 0.881 0.823
Withdrawals/Terminations (3.333) (1.354) (1.154) (1.368) (1.199) (0.501)
Transfers (0.004) 0.002 (0.013) 0.007 0.019 (0.008)
------- ------- ------ ------- ------- -------
Net Cash Flows (2.433) (0.683) (0.760) (0.611) (0.299) 0.314
Income Retained 0.109 0.132 0.108 0.102 0.094 0.117
Market Apprec/Deprec (1.003) 0.488 (0.545) 0.579 (1.596) 0.663
------- ------- ------ ------- ------- -------
Balance at End-of-Qtr 20.303 20.239 19.041 19.111 17.311 18.405
------- ------- ------ ------- ------- -------
Total Institutional -
Bal-Beg-of-Qtr 30.567 27.175 26.722 25.316 25.222 23.201
Inflows 1.084 0.817 0.715 0.885 1.191 1.056
Withdrawals/Terminations (3.686) (1.874) (1.686) (1.936) (1.631) (0.613)
Transfers (0.009) 0.000 (0.012) 0.008 0.022 0.002
------- ------- ------ ------- ------- -------
Net Cash Flows (2.611) (1.057) (0.983) (1.043) (0.418) 0.445
Income Retained 0.198 0.197 0.196 0.151 0.160 0.164
Market Apprec/Deprec (0.979) 0.407 (0.619) 0.798 (1.764) 0.404
------- ------- ------ ------- ------- -------
Balance at End-of-Qtr 27.175 26.722 25.316 25.222 23.201 24.214
------- ------- ------ ------- ------- -------
Total Retail/Inst - At End-of-Qtr 58.241 56.518 55.527 52.895 47.766 50.268
Insurance Assets-End-of-Qtr 35.541 34.891 34.981 35.686 36.324 36.018
Total Assets Under Management ------- ------- ------ ------- ------- -------
At End-of-Qtr 93.782 91.409 90.508 88.581 84.090 86.286
======= ======= ====== ======= ======= =======
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
YTD YTD
Jun Jun
For the Year Ended December 31 1996 1997 1998 1999 2000 2000 2001
-------------------------------------------------------------------------------------------------------
Operating Revenue
Premiums 131.8 145.4 156.6 145.1 148.4 75.3 22.3
Surrender charges
Mortality assessments 21.1 25.2 29.3 27.1 31.4 14.2 18.3
Expense assessments 153.4 166.1 153.6 182.3 178.1 90.9 75.1
Other revenue and fees 5.1 3.3 11.2 13.8 6.9 3.7 0.7
Net investment income 82.0 85.1 87.9 75.3 70.3 37.4 34.8
------ ------ ------ ------ ------ ------ ------
Operating Revenue 393.3 425.2 438.6 443.6 435.0 221.6 151.2
------ ------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 133.9 339.6 151.0 306.2 178.5 72.5 41.9
Underwriting, acquisition,
insurance and other expenses 157.7 184.5 175.6 223.5 180.0 99.9 70.8
Goodwill amortization 0.0 0.0 6.3 7.0 4.0 2.6 0.3
------ ------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 291.7 524.1 332.9 536.7 362.6 175.0 113.0
------ ------ ------ ------ ------ ------ ------
Income from Operations
Before Tax 101.7 (99.0) 105.8 (93.1) 72.4 46.5 38.2
Federal income taxes 35.7 9.3 34.8 (79.2) 11.3 11.6 7.6
------ ------ ------ ------ ------ ------ ------
Income from Operations 66.0 (108.3) 70.9 (13.9) 61.0 35.0 30.6
------ ------ ------ ------ ------ ------ ------
Realized gains (losses)
on investments 0.0 1.5 0.8 2.1 2.3 (0.4) 1.8
Gains(losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring charges (6.5) (76.5) 0.0 0.0
------ ------ ------ ------ ------ ------ ------
Income before Accounting Changes 66.0 (106.8) 71.7 (18.2) (13.2) 34.6 32.4
Cumulative effect of
accounting changes 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ------
Net Income 66.0 (106.8) 71.7 (18.2) (13.2) 34.6 32.4
====== ====== ====== ====== ====== ====== ======
Inc from Oper -before Goodwill Amort. 66.0 (108.3) 77.2 (6.9) 65.1 37.6 30.9
Effective tax rate 35.1% (9.4%) 32.9% 85.1% 15.7% 24.9% 20.0%
Operating revenue 393.3 425.2 438.6 443.6 435.0 221.6 151.2
Realized gains (losses)
on investments (0.2) 2.1 1.1 3.0 3.2 (0.5) 2.6
Gains(losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ------
Total Revenue 393.2 427.3 439.7 446.6 438.2 221.0 153.8
====== ====== ====== ====== ====== ====== ======
Average capital 601.1 618.1 517.7 551.2 488.2 508.6 550.9
Return on average capital 11.0% (17.5%) 13.7% (2.5%) 12.5% 13.8% 11.1%
Unit Linked Assets - Beg-of-Year 4.307 5.074 5.643 6.265 7.220 7.220 6.441
Deposits 0.446 0.569 0.473 0.537 0.554 0.293 0.242
Withdrawals (incl. chgs) & Deaths (0.420) (0.503) (0.547) (0.566) (0.644) (0.331) (0.277)
------ ------ ------ ------ ------ ------ ------
Net Cash Flows 0.026 0.066 (0.074) (0.029) (0.090) (0.039) (0.035)
Inv Inc & Chg in Mkt Val 0.269 0.682 0.662 1.154 (0.154) (0.030) (0.306)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment 0.472 (0.179) 0.035 (0.170) (0.536) (0.426) (0.332)
------ ------ ------ ------ ------ ------ ------
Unit Linked Assets - End-of-Year 5.074 5.643 6.265 7.220 6.441 6.726 5.768
====== ====== ====== ====== ====== ====== ======
Individual Life In-force (Billions) 23.835 25.026 25.002 25.698 24.290 25.225 21.519
Exchange Rate - Dollars to Pounds
For-the-Year 1.567 1.644 1.658 1.617 1.518 1.568 1.438
End-of-Year 1.713 1.651 1.660 1.615 1.493 1.517 1.415
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
-----------------------------------------------------------------------------------
Operating Revenue
Premiums 33.7 52.3 43.9 29.0 33.5 38.7
Surrender charges
Mortality assessments 7.3 7.6 6.7 7.7 7.7 5.0
Expense assessments 39.0 23.7 43.9 51.9 49.3 37.2
Other revenue and fees 1.2 1.6 2.9 3.5 3.6 3.8
Net investment income 21.4 23.6 21.7 19.6 16.2 17.7
----- ------ ------ ------ ------ ------
Operating Revenue 102.6 108.7 119.2 111.8 110.3 102.4
----- ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 36.3 45.7 35.7 31.5 27.2 211.8
Underwriting, acquisition,
insurance and other expenses 44.1 33.6 55.3 55.2 61.6 51.4
Goodwill amortization 0.6 3.7 1.2 1.2 1.2 3.3
----- ------ ------ ------ ------ ------
Operating Benefits and Expenses 80.9 83.0 92.2 87.9 90.1 266.6
----- ------ ------ ------ ------ ------
Income from Operations
Before Tax 21.7 25.7 27.0 23.9 20.2 (164.2)
Federal income taxes 4.0 6.9 8.9 4.9 4.0 (97.1)
----- ------ ------ ------ ------ ------
Income from Operations 17.7 18.8 18.1 19.0 16.2 (67.1)
----- ------ ------ ------ ------ ------
Realized gains (losses) on
investments 0.1 0.4 (0.0) 1.0 0.2 1.0
Gains (losses) on derivatives
Restructuring charges (6.5)
----- ------ ------ ------ ------ ------
Income before Accounting Changes 17.8 19.2 18.0 20.0 16.4 (72.6)
Cumulative effect of accounting 0.0 0.0 0.0 0.0 0.0 0.0
Changes ----- ------ ------ ------ ------ ------
Net Income 17.8 19.2 18.0 20.0 16.4 (72.6)
===== ====== ====== ====== ====== ======
Inc from Oper -before
Goodwill Amortization 18.3 22.5 19.3 20.2 17.4 (63.8)
Effective tax rate 18.4% 27.0% 33.0% 20.4% 20.0% 59.1%
Operating revenue 102.6 108.7 119.2 111.8 110.3 102.4
Realized gains (losses) on
investments 0.2 0.5 (0.1) 1.4 0.3 1.4
Gains (losses) on derivatives
----- ------ ------ ------ ------ ------
Total Revenue 102.8 109.2 119.1 113.1 110.5 103.8
===== ====== ====== ====== ====== ======
Average capital 522.6 533.8 519.2 526.9 573.5 585.0
Return on average capital 13.6% 14.1% 13.9% 14.4% 11.3% (45.9%)
Unit Linked Assets
Balance-Beg-of-Quarter (Billions) 6.310 5.711 6.265 6.348 6.503 6.568
Deposits 0.115 0.136 0.131 0.119 0.130 0.156
Withdrawals (incl. chgs) &
Deaths (0.133) (0.139) (0.136) (0.137) (0.136) (0.158)
Net Cash Flows (0.018) (0.003) (0.005) (0.017) (0.005) (0.002)
Inv Inc & Chg in Mkt Val (0.687) 0.696 0.271 0.314 (0.214) 0.784
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment 0.107 (0.139) (0.184) (0.141) 0.284 (0.130)
----- ------ ------ ------ ------ ------
Unit Linked Assets - End-of-Quarter 5.711 6.265 6.348 6.503 6.568 7.220
===== ====== ====== ====== ====== ======
Individual Life In-force
(Billions) 25.612 25.002 25.246 25.107 26.235 25.698
Exchange Rate - Dollars to Pounds
For-the-Quarter 1.666 1.661 1.631 1.602 1.614 1.625
End-of-Quarter 1.700 1.660 1.612 1.577 1.647 1.615
For the Quarter Ended Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
-----------------------------------------------------------------------------------
Operating Revenue
Premiums 39.0 36.3 32.5 40.5 12.8 9.6
Surrender charges
Mortality assessments 6.3 8.0 9.6 7.5 9.4 8.9
Expense assessments 46.5 44.3 52.6 34.6 43.7 31.4
Other revenue and fees 2.4 1.3 2.0 1.3 0.6 0.1
Net investment income 18.9 18.5 16.1 16.7 17.9 16.9
------ ------ ------ ------ ------ ------
Operating Revenue 113.2 108.4 112.8 100.6 84.4 66.9
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 35.0 37.4 51.9 54.2 24.0 17.9
Underwriting, acquisition,
insurance and other expenses 56.4 43.5 45.2 34.9 41.1 29.7
Goodwill amortization 1.3 1.3 1.2 0.2 0.2 0.2
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 92.8 82.2 98.3 89.3 65.3 47.7
------ ------ ------ ------ ------ ------
Income from Operations
Before Tax 20.4 26.2 14.5 11.3 19.1 19.1
Federal income taxes 4.7 6.9 3.9 (4.2) 4.7 2.9
------ ------ ------ ------ ------ ------
Income from Operations 15.7 19.3 10.6 15.5 14.4 16.2
------ ------ ------ ------ ------ ------
Realized gains (losses) on
investments (0.2) (0.1) (0.0) 2.6 0.4 1.4
Gains (losses) on derivatives
Restructuring charges (40.5) (36.1)
------ ------ ------ ------ ------ ------
Income before Accounting Changes 15.5 19.1 (29.9) (17.9) 14.8 17.6
Cumulative effect of accounting 0.0 0.0 0.0 0.0 0.0 0.0
Changes ------ ------ ------ ------ ------ ------
Net Income 15.5 19.1 (29.9) (17.9) 14.8 17.6
====== ====== ====== ====== ====== ======
Inc from Oper -before
Goodwill Amortization 17.1 20.5 11.8 15.7 14.5 16.4
Effective tax rate 22.9% 26.4% 27.2% (37.1%) 24.6% 15.3%
------ ------ ------ ------ ------ ------
Operating revenue 113.2 108.4 112.8 100.6 84.4 66.9
Realized gains (losses) on
investments (0.4) (0.2) (0.0) 3.8 0.6 2.0
Gains (losses) on derivatives
Total Revenue 112.8 108.2 112.8 104.3 84.9 68.9
====== ====== ====== ====== ====== ======
Average capital 516.4 500.8 486.5 448.9 548.7 553.2
Return on average capital 12.2% 15.4% 8.7% 13.8% 10.5% 11.7%
Unit Linked Assets
Balance-Beg-of-Quarter (Billions) 7.220 7.031 6.726 6.499 6.441 5.677
Deposits 0.159 0.134 0.145 0.116 0.132 0.111
Withdrawals (incl. chgs) &
Deaths (0.170) (0.162) (0.159) (0.153) (0.147) (0.131)
Net Cash Flows (0.011) (0.028) (0.014) (0.037) (0.015) (0.020)
Inv Inc & Chg in Mkt Val (0.077) 0.047 (0.025) (0.100) (0.421) 0.115
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment (0.101) (0.324) (0.189) 0.078 (0.328) (0.004)
------ ------ ------ ------ ------ ------
Unit Linked Assets - End-of-Quarter 7.031 6.726 6.499 6.441 5.677 5.768
====== ====== ====== ====== ====== ======
Individual Life In-force
(Billions) 26.514 25.225 24.535 24.290 21.894 21.519
Exchange Rate - Dollars to Pounds
For-the-Quarter 1.599 1.536 1.482 1.454 1.455 1.421
End-of-Quarter 1.591 1.517 1.475 1.493 1.416 1.415
Other Operations
Unaudited [Millions of Dollars]
For the Year Ended December 31 1996
----------------------------------------------------------------------------------------------
Revenue
Lincoln Financial Advisors 111.0
Lincoln Financial Distributors 25.1
------
Total Distribution 136.1
Other [Including
Consolidating Adjustments] (119.3)
------
Operating Revenue 16.8
------
Realized gains (losses) on investments (3.0)
------
Total Revenue 13.8
======
Income (Loss)
Lincoln Financial Advisors (10.2)
Lincoln Financial Distributors (4.3)
------
Total Distribution (14.5)
LNC Financing (49.4)
LNC Operations * (14.8)
Other Corporate 2.1
------
Inc (Loss) from Operations (76.5)
------
Realized gains (losses) on investments (1.0)
Gains(losses) on derivatives
Restructuring charges
------
Income before Accounting Changes (77.5)
Cumulative effect of accounting changes
------
Total Net Income (Loss) (77.5)
======
Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1998 1998 1999 1999 1999 1999
----------------------------------------------------------------------------------------------
Revenue
Lincoln Financial Advisors 74.8 81.7 67.0 73.9 78.0 106.3
Lincoln Financial Distributors 10.2 9.8 20.7 26.2 26.4 34.2
------ ------ ------ ------ ------ ------
Total Distribution 85.0 91.5 87.6 100.1 104.4 140.5
Other [Including
Consolidating Adjustments] (56.1) (57.2) (27.5) (41.9) (67.1) (149.2)
------ ------ ------ ------ ------ ------
Operating Revenue 28.9 34.3 60.1 58.2 37.3 (8.7)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 3.1 1.6 0.2 (1.7) 13.8 (3.6)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Total Revenue 32.1 35.9 60.4 56.6 51.1 (12.4)
====== ====== ====== ====== ====== ======
Income (Loss)
Lincoln Financial Advisors (4.6) (6.4) (8.4) (9.7) (5.3) 2.7
Lincoln Financial Distributors (1.4) (1.6) (3.0) (5.3) (2.1) (3.7)
------ ------ ------ ------ ------ ------
Total Distribution (6.0) (8.0) (11.4) (15.0) (7.4) (1.0)
LNC Financing (15.2) (19.3) (20.5) (21.4) (19.9) (21.6)
LNC Operations * (4.2) (4.9) 0.0 0.0 0.0 0.0
Other Corporate 0.3 (2.1) (2.1) 0.9 (2.4) (1.4)
------ ------ ------ ------ ------ ------
Inc (Loss) from Oper (25.1) (34.3) (34.0) (35.6) (29.7) (23.9)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 1.9 4.1 0.1 (2.0) 9.5 (1.1)
Gains (losses) on derivatives
Restructuring charges (14.3)
------ ------ ------ ------ ------ ------
Income before Accounting Changes (23.1) (44.6) (33.9) (37.6) (20.2) (25.1)
Cumulative effect of accounting changes
------ ------ ------ ------ ------ ------
Total Net Income (Loss) (23.1) (44.6) (33.9) (37.6) (20.2) (25.1)
====== ====== ====== ====== ====== ======
YTD YTD
Jun Jun
For the Year Ended December 31 1997 1998 1999 2000 2000 2001
----------------------------------------------------------------------------------------------
>
Revenue
Lincoln Financial Advisors 130.1 292.9 325.2 394.2 182.4 165.0
Lincoln Financial Distributors 20.5 33.5 107.5 119.9 57.4 57.8
------ ------ ------ ------ ------ ------
Total Distribution 150.6 326.4 432.6 514.0 239.8 222.8
Other [Including
Consolidating Adjustments] (110.7) (199.2) (285.7) (309.2) (160.2) (197.1)
------ ------ ------ ------ ------ ------
Operating Revenue 39.9 127.2 147.0 204.8 79.6 25.7
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 16.9 4.0 8.7 (3.7) (2.0) 1.2
------ ------ ------ ------ ------ ------
Total Revenue 56.8 131.1 155.7 201.1 77.6 26.8
====== ====== ====== ====== ====== ======
Income (Loss)
Lincoln Financial Advisors (5.3) (23.7) (20.8) (11.7) (10.3) (19.1)
Lincoln Financial Distributors (11.2) (8.2) (14.0) (18.5) (8.5) (18.4)
------ ------ ------ ------ ------ ------
Total Distribution (16.5) (31.9) (34.8) (30.2) (18.8) (37.5)
LNC Financing (31.6) (51.5) (83.5) (84.9) (44.1) (43.7)
LNC Operations * (18.4) (18.5)
Other Corporate (6.7) 1.0 (5.0) (15.4) (7.2) 1.5
------ ------ ------ ------ ------ ------
Inc (Loss) from Operations (73.2) (100.9) (123.2) (130.5) (70.1) (79.7)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 8.6 5.3 6.5 (2.3) (1.3) 0.8
Gains(losses) on derivatives (0.0)
Restructuring charges (14.3) 0.3 (1.2)
------ ------ ------ ------ ------ ------
Income before Accounting Changes (64.6) (109.9) (116.7) (132.5) (71.4) (80.2)
Cumulative effect of accounting changes (0.3)
------ ------ ------ ------ ------ ------
Total Net Income (Loss) (64.6) (109.9) (116.7) (132.5) (71.4) (80.5)
====== ====== ====== ====== ====== ======
Mar Jun Sep Dec Mar Jun
For the Quarter Ended 2000 2000 2000 2000 2001 2001
----------------------------------------------------------------------------------------------
Revenue
Lincoln Financial Advisors 89.4 92.9 93.9 117.9 81.2 83.8
Lincoln Financial Distributors 29.3 28.1 27.5 35.0 25.7 32.1
------ ------ ------ ------ ------ ------
Total Distribution 118.8 121.0 121.4 152.9 106.9 115.9
Other [Including
Consolidating Adjustments] (70.6) (89.6) (81.8) (67.2) (80.5) (116.6)
------ ------ ------ ------ ------ ------
Operating Revenue 48.2 31.4 39.6 85.6 26.4 (0.7)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments (2.5) 0.4 0.1 (1.8) (2.9) 4.1
Gains (losses) on derivatives 0.0 0.0 0.0 0.0 0.0 (0.1)
------ ------ ------ ------ ------ ------
Total Revenue 45.7 31.9 39.7 83.8 23.5 3.3
====== ====== ====== ====== ====== ======
Income (Loss)
Lincoln Financial Advisors (7.4) (2.9) (3.1) 1.6 (6.8) (12.3)
Lincoln Financial Distributors (3.3) (5.2) (5.0) (5.1) (6.9) (11.5)
------ ------ ------ ------ ------ ------
Total Distribution (10.7) (8.1) (8.0) (3.4) (13.8) (23.8)
LNC Financing (21.9) (22.2) (20.9) (19.8) (21.7) (22.0)
LNC Operations * 0.0 0.0 0.0 0.0 0.0 0.0
Other Corporate (5.7) (1.5) 1.6 (9.8) (0.5) 2.0
------ ------ ------ ------ ------ ------
Inc (Loss) from Oper (38.3) (31.7) (27.3) (33.1) (35.9) (43.8)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments (1.6) 0.3 (1.0) 0.0 (1.9) 2.7
Gains (losses) on derivatives 0.0 (0.1)
Restructuring charges 0.3 (1.2)
------ ------ ------ ------ ------ ------
Income before Accounting Changes (39.9) (31.4) (28.3) (32.8) (37.8) (42.4)
Cumulative effect of accounting changes (0.3)
------ ------ ------ ------ ------ ------
Total Net Income (Loss) (39.9) (31.4) (28.3) (32.8) (38.1) (42.4)
====== ====== ====== ====== ====== ======
* Starting with the first quarter of 1999, 100% of "LNC Operations" is allocated to the business
segments. Prior periods have not been restated.
Consolidated Domestic Retail Deposits/Account Balances
Unaudited [Billions of Dollars]
1996
Deposits - For the Year
----------------------------------------------------------------------------------------------------
Annuities Segment - Fixed Annuities 1.852
Annuities Segment - Variable Annuities 2.746
Annuities Segment - Life Insurance 0.000
Life Insurance Segment - Life Insurance 0.405
Inv Mgmt - Annuities 1.638
Inv Mgmt - Mutual Funds 0.849
Inv Mgmt - Wrap Fee & Other 0.454
Consolidating Adjustments (0.684)
------
Gross Deposits 7.259
Account Balances - End of Year
Annuities Segment - Fixed Annuities 15.818
Annuities Segment - Variable Annuities 20.383
Annuities Segment - Life Insurance
Life Insurance Segment - Life Insurance 2.869
Inv Mgmt - Annuities 7.915
Inv Mgmt - Mutual Funds 9.017
Inv Mgmt - Wrap Fee & Other 2.074
Consolidating Adjustments (5.098)
------
Account Balances 52.978
Sep Dec Mar Jun Sep Dec
1998 1998 1999 1999 1999 1999
----------------------------------------------------------------------------------------------------
Deposits - For the Quarter
Annuities Segment - Fixed Annuities 0.346 0.335 0.489 0.654 0.678 0.741
Annuities Segment - Variable Annuities 0.647 0.633 0.635 0.651 0.634 0.634
Annuities Segment - Life Insurance 0.003 0.005 0.004 0.005
Life Insurance Segment - Life Insurance 0.254 0.475 0.394 0.379 0.399 0.526
Inv Mgmt - Annuities 0.541 0.507 0.428 0.393 0.332 0.409
Inv Mgmt - Mutual Funds 0.531 0.403 0.565 0.487 0.514 0.587
Inv Mgmt - Wrap Fee & Other 0.139 0.136 0.182 0.173 0.116 0.079
Consolidating Adjustments (0.232) (0.254) (0.142) (0.143) (0.096) (0.118)
------ ------ ------ ------ ------ ------
Gross Deposits 2.226 2.234 2.554 2.599 2.581 2.864
------ ------ ------ ------ ------ ------
Account Balances - End of Quarter
Annuities Segment - Fixed Annuities 16.476 16.505 16.656 16.779 16.934 16.791
Annuities Segment - Variable Annuities 29.476 33.358 34.148 37.233 35.613 41.493
Annuities Segment - Life Insurance 0.115 0.130 0.128 0.155
Life Insurance Segment - Life Insurance 6.443 9.243 9.416 9.628 9.726 10.217
Inv Mgmt - Annuities 12.270 14.257 14.166 14.981 14.004 15.526
Inv Mgmt - Mutual Funds 12.549 13.528 13.442 13.654 12.938 13.632
Inv Mgmt - Wrap Fee & Other 2.253 2.512 2.424 1.650 1.611 1.649
Consolidating Adjustments (7.326) (8.891) (8.798) (9.050) (8.387) (9.175)
------ ------ ------ ------ ------ ------
Account Balances 72.142 80.512 81.570 85.004 82.567 90.288
------ ------ ------ ------ ------ ------
[STUB COLUMN OMITTED: SEE "Annuities & Investment Management, Net Flows" TABLE APPENDED BELOW.]
YTD YTD
Jun Jun
1997 1998 1999 2000 2000 2001
Deposits - For the Year
-------------------------------------------------------------------------------------------------
Annuities Segment - Fixed Annuities 1.632 1.452 2.563 2.074 1.078 1.228
Annuities Segment - Variable Annuities 2.695 2.791 2.553 3.165 1.590 1.590
Annuities Segment - Life Insurance 0.000 0.000 0.017 0.014 0.006 0.007
Life Insurance Segment - Life Insurance 0.384 1.207 1.698 1.884 0.835 0.895
Inv Mgmt - Annuities 2.163 2.238 1.561 1.726 0.737 0.828
Inv Mgmt - Mutual Funds 1.218 1.913 2.153 2.452 1.396 0.766
Inv Mgmt - Wrap Fee & Other 0.533 0.596 0.550 0.581 0.254 0.384
Consolidating Adjustments (0.966) (1.041) (0.499) (0.406) (0.160) (0.465)
------ ------ ------ ------ ------ ------
Gross Deposits 7.658 9.157 10.597 11.491 5.736 5.233
Account Balances - End of Year
Annuities Segment - Fixed Annuities 15.458 16.505 16.791 15.442
Annuities Segment - Variable Annuities 27.346 33.358 41.493 39.427
Annuities Segment - Life Insurance 0.155 0.160
Life Insurance Segment - Life Insurance 3.038 9.243 10.217 10.847
Inv Mgmt - Annuities 10.991 14.257 15.526 13.494
Inv Mgmt - Mutual Funds 12.484 13.528 13.632 12.805
Inv Mgmt - Wrap Fee & Other 2.403 2.512 1.649 1.375
Consolidating Adjustments (6.806) (8.891) (9.175) (7.753)
------ ------ ------ ------
Account Balances 64.914 80.512 90.288 85.797
Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
-------------------------------------------------------------------------------------------------
Deposits - For the Quarter
Annuities Segment - Fixed Annuities 0.589 0.490 0.513 0.482 0.560 0.668
Annuities Segment - Variable Annuities 0.797 0.793 0.729 0.846 0.887 0.703
Annuities Segment - Life Insurance 0.003 0.003 0.004 0.004 0.003 0.004
Life Insurance Segment - Life Insurance 0.424 0.411 0.428 0.622 0.418 0.477
Inv Mgmt - Annuities 0.379 0.358 0.453 0.536 0.455 0.373
Inv Mgmt - Mutual Funds 0.840 0.556 0.521 0.535 0.442 0.324
Inv Mgmt - Wrap Fee & Other 0.148 0.106 0.143 0.184 0.227 0.157
Consolidating Adjustments (0.099) (0.062) (0.100) (0.145) (0.262) (0.202)
------ ------ ------ ------ ------ ------
Gross Deposits 3.081 2.655 2.691 3.064 2.729 2.504
------ ------ ------ ------ ------ ------
Account Balances - End of Quarter
Annuities Segment - Fixed Annuities 16.252 15.909 15.700 15.442 15.484 15.628
Annuities Segment - Variable Annuities 44.640 43.097 42.743 39.427 34.733 36.961
Annuities Segment - Life Insurance 0.169 0.165 0.166 0.160 0.147 0.157
Life Insurance Segment - Life Insurance 10.470 10.538 10.716 10.847 10.764 11.066
Inv Mgmt - Annuities 15.531 14.861 14.824 13.494 11.787 12.483
Inv Mgmt - Mutual Funds 14.201 13.604 14.102 12.805 11.091 11.748
Inv Mgmt - Wrap Fee & Other 1.335 1.331 1.285 1.375 1.688 1.823
Consolidating Adjustments (8.768) (8.419) (8.644) (7.753) (6.834) (7.007)
------ ------ ------ ------ ------ ------
Account Balances 93.831 91.086 90.893 85.797 78.860 82.860
------ ------ ------ ------ ------ ------
Annuities & Investment Management
Net Flows
Unaudited [Billions of Dollars]
Mar Jun Sep Dec Mar Jun
2000 2000 2000 2000 2001 2001
-------------------------------------------------------------------------------------------------
Annuities Segment (0.700) (0.682) (0.812) (0.681) (0.590) (0.196)
Investment Management Segment (3.497) (1.420) (1.309) (0.985) (0.465) 0.285
Consolidating Adjustments 0.717 0.342 0.194 0.152 0.019 (0.034)
------ ------ ------ ------ ------ ------
Total Net Flows (3.480) (1.760) (1.927) (1.514) (1.036) 0.055
====== ====== ====== ====== ====== ======
NOTE: Excludes amounts reported as Assets Under Management - Insurance Assets
Consolidated Information - Individual Life Insurance In-Force
Unaudited [Billions of Dollars]
December 31
---------------------------------------------------------------------------------------------
Annuities Segment
Life Insurance Segment
Reinsurance
Lincoln UK
Consolidating Adjustment
Total
Sep Dec Mar Jun Sep Dec
End of Quarter 1998 1998 1999 1999 1999 1999
---------------------------------------------------------------------------------------------
Annuities Segment 0.5 0.6
Life Insurance Segment 121.8 172.9 178.5 184.5 188.9 195.0
Reinsurance 178.3 213.6 225.1 240.0 261.5 306.6
Lincoln UK 25.6 25.0 25.2 25.1 26.2 25.7
Consolidating Adjustment (2.2) (9.9) (10.3) (10.6) (10.9) (11.3)
------- ------- ------- ------- ------- -------
Total 323.5 401.6 418.6 439.0 466.3 516.5
======= ======= ======= ======= ======= =======
Consolidated Investment Data - Assets Managed
Unaudited [Billions of Dollars]
December 31
---------------------------------------------------------------------------------------------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities
Equity securities
Other investments
Total LNC Investments
Separate accounts
Cash and Invested Cash
Discontinued Operations
Total LNC
Non-affiliate assets managed
Total Assets Managed
Assets Managed by Advisor
Investment Management segment
(See page 24 for additional detail)
DLIA-Corp
(Assets managed internally-see page 24)
Lincoln (UK)
Policy Loans (within business units)
Non-LNC Affiliates
Total Assets Managed
Sep Dec Mar Jun Sep Dec
End of Quarter 1998 1998 1999 1999 1999 1999
---------------------------------------------------------------------------------------------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 28.554 30.233 30.578 29.579 28.708 27.689
Equity securities 0.505 0.543 0.481 0.506 0.507 0.604
Other investments 6.705 7.154 7.071 7.278 7.317 7.286
------- ------- ------- ------- ------- -------
Total LNC Investments 35.764 37.929 38.129 37.363 36.532 35.578
Separate accounts 37.559 43.409 44.339 47.864 46.229 53.654
Cash and invested cash 2.725 2.433 2.327 2.151 2.343 1.896
------- ------- ------- ------- ------- -------
Total LNC 76.048 83.772 84.796 87.378 85.104 91.128
------- ------- ------- ------- ------- -------
Non-affiliate assets managed 46.842 50.061 48.690 49.827 48.068 49.314
------- ------- ------- ------- ------- -------
Total Assets Managed 122.890 133.833 133.486 137.205 133.172 140.443
======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 55.543 61.488 59.941 61.511 58.869 61.374
(See page 25 for additional
detail)
DLIA-Corp 38.471 39.432 38.516 37.391 36.820 35.934
(Assets managed internally-see
page 25)
Lincoln (UK) 6.932 7.573 7.631 7.746 7.849 8.589
Policy Loans (within business
units) 1.517 1.840 1.842 1.847 1.863 1.892
Non-LNC Affiliates 20.426 23.499 25.555 28.710 27.771 32.654
------- ------- ------- ------- ------- -------
Total Assets Managed 122.890 133.833 133.486 137.205 133.172 140.443
======= ======= ======= ======= ======= =======
December 31 1996 1997 1998 1999 2000
--------------------------------------------------------------------------------------------
Annuities Segment 0.6 0.7
Life Insurance Segment 49.2 63.2 172.9 195.0 216.0
Reinsurance 130.8 153.1 213.6 306.6 407.4
Lincoln UK 23.8 25.0 25.0 25.7 24.3
Consolidating Adjustment (5.6) (9.9) (11.3) (11.4)
------- ------- ------- ------- -------
Total 203.8 235.7 401.6 516.5 637.0
======= ======= ======= ======= =======
Mar Jun Sep Dec Mar Jun
End of Quarter 2000 2000 2000 2000 2001 2001
--------------------------------------------------------------------------------------------
Annuities Segment 0.6 0.6 0.6 0.7 0.7 0.7
Life Insurance Segment 201.7 207.5 211.3 216.0 219.2 223.3
Reinsurance 325.9 354.0 381.4 407.4 426.2 447.8
Lincoln UK 26.5 25.2 24.5 24.3 21.9 21.5
Consolidating Adjustment (11.4) (11.5) (11.4) (11.4) (13.1) (12.7)
------- ------- ------- ------- ------- -------
Total 543.3 575.8 606.5 637.0 654.9 680.5
======= ======= ======= ======= ======= =======
Dec Dec Dec Dec Dec
December 31 1996 1997 1998 1999 2000
--------------------------------------------------------------------------------------------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 24.097 24.066 30.233 27.689 27.450
Equity securities 0.558 0.660 0.543 0.604 0.550
Other investments 5.076 5.092 7.154 7.286 7.369
------- ------- ------- ------- -------
Total LNC Investments 29.730 29.819 37.929 35.578 35.369
Separate accounts 28.809 37.139 43.409 53.654 50.580
Cash and Invested Cash 1.145 3.795 2.433 1.896 1.927
Discontinued Operations 4.402
------- ------- ------- ------- -------
Total LNC 64.086 70.752 83.772 91.128 87.876
------- ------- ------- ------- -------
Non-affiliate assets managed 40.968 48.331 50.061 49.314 43.397
------- ------- ------- ------- -------
Total Assets Managed 105.054 119.083 133.833 140.443 131.273
======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 45.471 56.457 61.488 61.374 54.294
(See page 24 for additional detail)
DLIA-Corp 37.453 35.684 39.432 35.934 34.287
(Assets managed internally-see page 24)
Lincoln (UK) 6.107 6.775 7.573 8.589 7.873
Policy Loans (within business units) 0.758 0.763 1.840 1.892 1.961
Non-LNC Affiliates 15.265 19.404 23.500 32.654 32.857
------- ------- ------- ------- -------
Total Assets Managed 105.054 119.083 133.833 140.443 131.273
======= ======= ======= ======= =======
Mar Jun Sep Dec Mar Jun
End of Quarter 2000 2000 2000 2000 2001 2001
--------------------------------------------------------------------------------------------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 27.745 27.078 27.264 27.450 27.811 27.874
Equity securities 0.588 0.560 0.570 0.550 0.560 0.534
Other investments 7.442 7.419 7.471 7.369 7.374 7.388
------- ------- ------- ------- ------- -------
Total LNC Investments 35.775 35.057 35.305 35.369 35.744 35.796
Separate accounts 56.908 54.924 54.411 50.580 44.506 47.140
Cash and invested cash 1.510 1.619 1.436 1.927 2.015 1.502
------- ------- ------- ------- ------- -------
Total LNC 94.192 91.601 91.152 87.876 82.266 84.438
------- ------- ------- ------- ------- -------
Non-affiliate assets managed 47.150 45.945 45.119 43.397 41.904 44.069
------- ------- ------- ------- ------- -------
Total Assets Managed 141.342 137.546 136.271 131.273 124.170 128.507
======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 58.241 56.518 55.527 52.895 47.766 50.268
(See page 25 for additional
detail)
DLIA-Corp 33.934 33.349 33.468 34.287 36.324 36.018
(Assets managed internally-see
page 25)
Lincoln (UK) 8.423 8.058 7.838 7.873 7.012 7.027
Policy Loans (within business
units) 1.896 1.915 1.936 1.961 1.947 1.947
Non-LNC Affiliates 38.848 37.706 37.503 34.257 31.121 33.246
------- ------- ------- ------- ------- -------
Total Assets Managed 141.342 137.546 136.271 131.273 124.170 128.507
======= ======= ======= ======= ======= =======
Consolidated Investment Data
Unaudited [Millions of Dollars except as noted]
For the Year Ended December 31 1996
-----------------------------------------------------------------------------------------------
Net Investment Income
Fixed Maturity Securities 1690.1
Equity Securities 14.4
Mortgage loans on real estate 292.7
Real estate 125.4
Policy loans 40.7
Invested cash 69.2
Other investments 14.7
-------
Investment revenue 2247.2
Investment expense 159.2
-------
Net Investment Income 2087.9
-------
Gross-up of Tax Exempt Income 9.7
-------
Adjusted Net Invest Income 2097.7
=======
Mean Invested Assets (Cost Basis) 27906.2
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.52%
Investment Gains
Realized Gains (Losses) on Investments 57.6
Gains(Losses) on Derivatives
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) (208.8)
Incr (Decr) in Foreign Exchange 53.0
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 24.097
Fixed Maturity Sec (Adjusted Cost) 23.200
Equity Securities (Market) 0.558
Equity Securities (Adjusted Cost) 0.434
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 32.8%
AA or better 41.9%
BB or less 7.0%
Sep Dec Mar Jun Sep Dec
For the Quarter Ended 1998 1998 1999 1999 1999 1999
-----------------------------------------------------------------------------------------------
Net Investment Income
Fixed Maturity Securities 512.8 544.5 557.8 575.8 551.2 548.0
Equity Securities 4.1 8.9 4.4 4.9 3.9 6.9
Mortgage loans on real estate 91.3 107.4 94.5 85.5 94.7 94.5
Real estate 20.3 18.4 19.4 18.4 13.7 12.5
Policy loans 24.6 29.8 28.6 28.6 29.4 29.9
Invested cash 40.7 44.0 32.4 23.4 32.4 22.0
Other investments 19.5 19.3 7.5 13.4 9.9 20.9
------- ------- ------- ------- ------- -------
Investment revenue 713.4 772.4 744.6 750.1 735.2 734.9
Investment expense 63.8 57.7 35.1 49.3 38.1 34.8
------- ------- ------- ------- ------- -------
Net Investment Income 649.6 714.7 709.5 700.8 697.1 700.1
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 2.3 3.0 1.8 2.0 1.7 2.6
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 651.9 717.7 711.3 702.8 698.7 702.7
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 36445.0 37619.5 39174.2 39385.3 39111.8 38438.6
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.16% 7.63% 7.26% 7.14% 7.15% 7.31%
Investment Gains
Realized Gains (Losses) on Investments (17.3) 0.5 1.5 (3.5) 4.1 1.6
Gains (Losses) on Derivatives 0.0 0.0 0.0 0.0 0.0 0.0
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 304.2 (221.4) (297.7) (255.8) (102.7) (361.9)
Incr (Decr) on Derivatives
Incr (Decr) in Foreign Exchange 8.0 (9.8) (19.9) (9.5) 19.6 (10.2)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 28.554 30.233 30.578 29.579 28.708 27.689
Fixed Maturity Sec (Adjusted Cost) 26.610 28.640 29.681 29.494 28.974 28.357
Equity Securities (Market) 0.505 0.543 0.481 0.506 0.507 0.604
Equity Securities (Adjusted Cost) 0.470 0.437 0.380 0.385 0.414 0.482
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 26.1% 25.6% 26.3% 25.5% 24.2% 22.8%
AA or better 33.3% 32.6% 33.2% 32.5% 31.1% 29.8%
BB or less 6.3% 7.0% 7.1% 7.0% 7.5% 8.0%
YTD YTD
Jun Jun
For the Year Ended December 31 1997 1998 1999 2000 2000 2001
-----------------------------------------------------------------------------------------------
Net Investment Income
Fixed Maturity Securities 1832.1 2065.8 2232.9 2148.7 1085.7 1053.3
Equity Securities 19.1 22.8 20.1 19.5 9.4 8.8
Mortgage loans on real estate 279.2 383.6 369.2 373.8 187.1 188.0
Real estate 99.4 86.8 64.1 51.8 23.6 25.9
Policy loans 44.5 99.5 116.5 125.0 61.6 62.8
Invested cash 102.4 156.8 110.3 87.2 42.3 42.9
Other investments 20.6 88.4 51.8 66.8 37.1 37.8
------- ------- ------- ------- ------- -------
Investment revenue 2397.3 2903.7 2964.8 2872.8 1446.8 1419.6
Investment expense 146.6 222.3 157.3 125.7 61.8 72.8
------- ------- ------- ------- ------- -------
Net Investment Income 2250.8 2681.4 2807.5 2747.1 1385.0 1346.8
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 12.7 11.6 8.1 7.8 3.8 3.5
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 2263.5 2693.0 2815.6 2754.9 1388.7 1350.3
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 30337.3 36573.8 39027.5 37471.3 37771.8 37166.3
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.46% 7.36% 7.21% 7.35% 7.35% 7.27%
Investment Gains
Realized Gains (Losses) on Investments 72.9 13.7 3.8 (17.5) (7.1) (24.8)
Gains(Losses) on Derivatives 0.0 0.0 0.0 0.0 0.0 0.1
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 159.6 116.4 (1018.1) 477.7 (568.6) 659.7
Incr (Decr) in Foreign Exchange (20.3) 3.8 (19.9) (8.1) (8.2) (37.3)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 24.066 30.233 27.689 27.450 27.078 27.874
Fixed Maturity Sec (Adjusted Cost) 22.624 28.640 28.357 27.373 27.788 27.681
Equity Securities (Market) 0.660 0.543 0.604 0.550 0.560 0.534
Equity Securities (Adjusted Cost) 0.518 0.437 0.482 0.458 0.446 0.477
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 27.6% 25.6% 22.8% 22.1% 22.1% 19.3%
AA or better 35.1% 32.6% 29.8% 29.2% 29.2% 26.0%
BB or less 7.3% 7.0% 8.0% 6.7% 8.2% 7.8%
Mar Jun Sep Dec Mar Jun
For the Quarter Ended 2000 2000 2000 2000 2001 2001
-----------------------------------------------------------------------------------------------
Net Investment Income
Fixed Maturity Securities 541.3 544.4 525.3 537.7 522.7 530.6
Equity Securities 3.7 5.7 3.6 6.5 1.0 7.8
Mortgage loans on real estate 92.0 95.1 94.4 92.3 95.7 92.4
Real estate 11.2 12.5 11.8 16.3 12.8 13.1
Policy loans 30.7 30.9 30.5 32.9 31.4 31.4
Invested cash 27.2 15.1 26.5 18.4 26.7 16.2
Other investments 35.1 2.0 26.9 2.9 19.6 18.2
------- ------- ------- ------- ------- -------
Investment revenue 741.1 705.7 719.1 706.9 709.9 709.7
Investment expense 30.0 31.8 29.0 34.8 36.1 36.6
------- ------- ------- ------- ------- -------
Net Investment Income 711.1 673.8 690.0 672.1 673.7 673.1
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 1.5 2.3 1.4 2.6 0.5 3.0
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 712.6 676.1 691.5 674.7 674.2 676.1
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 38237.4 37306.1 37250.8 37090.8 37238.0 37094.5
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.45% 7.25% 7.43% 7.28% 7.24% 7.29%
Investment Gains
Realized Gains (Losses) on Investments (0.4) (6.7) (11.6) 1.2 (13.4) (11.5)
Gains (Losses) on Derivatives 0.0 0.0 0.0 0.0 (0.1) 0.2
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 54.5 (145.4) 218.8 349.8 178.3 (137.5)
Incr (Decr) on Derivatives 23.3 27.0
Incr (Decr) in Foreign Exchange (7.3) (0.9) (2.0) 2.0 (17.8) (19.5)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 27.745 27.078 27.264 27.450 27.811 27.874
Fixed Maturity Sec (Adjusted Cost) 28.295 27.788 27.727 27.373 27.367 27.681
Equity Securities (Market) 0.588 0.560 0.570 0.550 0.560 0.534
Equity Securities (Adjusted Cost) 0.475 0.446 0.450 0.458 0.507 0.477
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 22.7% 22.1% 22.3% 22.1% 20.3% 19.3%
AA or better 29.5% 29.2% 29.4% 29.2% 27.1% 26.0%
BB or less 7.4% 8.2% 6.8% 6.7% 7.2% 7.8%
Common Stock / Debt Information
Unaudited [Dollars per Share, except Percentages]
For the Year Ended December 31 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
----------------------------------------------------------------------------------------------------------------------------------
Common Stock [1]
Highest Price 15.338 13.813 19.032 24.125 22.188 26.875 28.500 39.063 49.438 57.500 56.375
Lowest Price 7.688 9.500 12.625 17.344 17.313 17.313 20.375 24.500 33.500 36.000 22.625
Closing Price 10.750 13.688 18.500 21.750 17.500 26.875 26.250 39.063 40.907 40.000 47.313
Dividend Payout Ratio [2] 63.4% 63.5% 38.9% 52.6% 51.0% 39.7% 38.2% 22.8% 43.9% 50.5% 38.3%
Yield [3] 6.3% 5.3% 4.1% 3.8% 4.9% 3.4% 3.7% 2.7% 2.7% 2.9% 2.6%
Preferred Stock Dividend (Millions) 9.143 13.033 17.246 17.212 17.119 8.644 0.112 0.106 0.100 0.089 0.078
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a
Fitch AA AA- AA- AA- AA- AA- A+ A+ A+
Moody's A2 A2 A1 A2 A2 A2 A2 A2 A3
Standard and Poors A+ A+ A+ A A A A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A+ A+ A+ A A A
Lincoln Life - Fitch AAA AAA AAA AA+ AA+ AA+ AA+ AA+ AA
Lincoln Life - Moody's A1 A1 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A A+ A+ A+ A+ A+ A A A
First Penn - Moody's A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA
LLA of New York - Moody's A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 25.7% 21.1% 19.9% 22.8% 18.8% 17.0% 21.2% 23.2% 20.8%
Debt to Equity [4] 34.7% 26.7% 24.9% 29.5% 23.1% 20.5% 26.9% 30.3% 26.3%
Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
For the Quarter Ended 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001
---------------------------------------------------------------------------------------------------------------------------------
Common Stock:
Highest Price 49.438 43.344 50.250 53.438 57.500 48.313 41.375 40.063 56.375 50.938 48.250 52.300
Lowest Price 41.125 33.500 39.281 45.688 36.000 36.500 22.625 29.000 35.625 40.875 38.000 41.280
Closing Price 41.125 40.906 49.438 52.313 37.563 40.000 33.500 36.125 48.125 47.313 42.470 51.750
Yield [3] 2.5% 2.7% 2.2% 2.1% 2.9% 2.9% 3.5% 3.2% 2.4% 2.6% 2.9% 2.4%
Preferred Stock Dividend 0.026 0.023 0.024 0.024 0.027 0.014 0.022 0.022 0.021 0.013 0.019 0.017
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a a a a
Fitch A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+
Moody's A2 A2 A2 A2 A2 A2 A2 A2 A2 A3 A3 A3
Standard and Poors A- A- A- A- A- A- A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A A A A A A A A A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA AA AA
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A A A A A A A A A A A
First Penn - Moody's A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A A A A A A A A A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA AA AA
LLA of New York - Moody's A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total
Capitalization [4] 21.9% 21.2% 20.7% 22.0% 22.0% 23.2% 23.3% 21.8% 21.2% 20.8% 22.2% 21.2%
Debt to Equity [4] 28.1% 26.9% 26.2% 28.2% 28.3% 30.3% 30.4% 28.0% 27.0% 26.3% 28.5% 27.0%
* Rating based on affiliation with Lincoln Life
[1] Stock prices shown above include 2-for-1 splits in June 1993, and June 1999
[2] Indicated dividend divided by net income
[3] Indicated dividend divided by the closing price
[4] Equity used in calculation assumes securities at cost. Minority interest-preferred securities
of subsidiary companies (hybrid securities) are considered 50% debt and 50% equity.
Return on Equity/Return on Capital:
In order to accommodate the various perspectives, LNC presents three separate Return on Equity numbers on pages 2 and 3
of this Statistical Report. "Net Income Divided by Average Shareholders' Equity" tends to fluctuate from period to period
due to the realization of gains on the sale of investments or subsidiaries during one period and the planned generation of
losses in another period for purposes of recovering Federal Taxes previously paid. "Income from Operations Divided by Average
Shareholders' Equity" is less volatile but leaves out an important element of earnings for a company that has a long-term goal
of enhancing shareholder value by realizing investment gains. "Adjusted Income from Operations Divided by Adjusted
Shareholders' Equity" amortizes:
1) realized security gains on investments 2) unrealized gains on equity securities over approximately five years and
eliminates amortization of goodwill related to acquisitions.
Return on capital measures the effectiveness of LNC's use of its total capital, which is made up of equity, debt and hybrid
securities. Return on capital is calculated by dividing income from operations (after adding back after-tax interest expense)
by average capital. The difference between return on capital and return on equity presents the effect of leveraging on LNC's
consolidated results.