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: March 31, 2002
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 5
Financial Report for the quarter ended March 31, 2002.
3/31/02 PAGE 1
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended March 31
--------------------------------------------------------
2002 2001
Amount Amount Change % Change
-------- -------- -------- --------
Income from Operations
Lincoln Retirement* 80.4 82.3 (1.9) (2.3%)
Life Insurance 71.1 68.6 2.5 3.6%
Investment Management 8.0 2.4 5.6 233.3%
Lincoln UK 14.4 14.4 0.0
Corporate & Other** (12.0) 10.9 (22.9)
-------- -------- -------- --------
Total Income from Operations 162.0 178.6 (16.6) (9.3%)
Realized gains (losses) on investments (67.6) (13.3) (54.3)
Gains (losses) on derivatives 0.1 (0.1) 0.2
Restructuring charges 0.0 (0.7) 0.7
-------- -------- -------- --------
Income before Accounting Changes 94.5 164.5 (70.0)
Cumulative effect of accounting changes*** 0.0 (4.3) 4.3
-------- -------- -------- --------
Net Income 94.5 160.2 (65.7) (41.0%)
======== ======== ======== ========
Earnings per share (diluted)
Income from Operations $0.84 $0.92 ($0.08) (8.7%)
Realized gain (losses) on investments ($0.35) ($0.07) ($0.28)
Gains (losses) on derivatives $0.00 $0.00 $0.00
Restructuring charges $0.00 $0.00 $0.00
-------- -------- -------- --------
Income before Accounting Changes $0.49 $0.85 ($0.36)
Cumulative effect of accounting changes*** $0.00 ($0.02) --
-------- -------- -------- --------
Net Income $0.49 $0.83 ($0.34) (41.0%)
======== ======== ======== ========
Inc. from Oper.- before Goodwill Amort.
Lincoln Retirement* 80.4 82.6 (2.2) (2.7%)
Life Insurance 71.1 74.5 (3.4) (4.6%)
Investment Management 8.0 6.5 1.5 22.9%
Lincoln UK 14.4 14.5 (0.1) (0.8%)
Corporate & Other** (12.0) 11.3 (23.2)
-------- -------- -------- --------
Total 162.0 189.5 (27.5) (14.5%)
======== ======== ======== ========
Earnings per share (diluted)
Inc. from Oper.- before Goodwill Amort. $0.84 $0.98 ($0.14) (14.3%)
Net Income - before Goodwill Amort.
Lincoln Retirement* 47.6 76.9 (29.3) (38.1%)
Life Insurance 44.2 68.9 (24.6) (35.8%)
Investment Management 7.0 6.0 1.0 16.1%
Lincoln UK 10.8 14.9 (4.1) (27.4%)
Corporate & Other** (15.2) 4.4 (19.6)
-------- -------- -------- --------
Total 94.5 171.1 (76.6) (44.8%)
======== ======== ======== ========
Earnings per share (diluted)
Net Income - before Goodwill Amort. $0.49 $0.88 ($0.39) (44.3%)
Operating Revenue
Lincoln Retirement* 503.5 512.8 (9.2) (1.8%)
Life Insurance 465.3 467.9 (2.6) (0.5%)
Investment Management 105.1 113.0 (7.9) (7.0%)
Lincoln UK 58.8 84.4 (25.6) (30.4%)
Corporate & Other** 97.1 541.5 (444.3) (82.1%)
-------- -------- -------- --------
Total Operating Revenue 1229.8 1719.5 (489.7) (28.5%)
======== ======== ======== ========
Total Revenue
Lincoln Retirement* 453.0 510.4 (57.4) (11.2%)
Life Insurance 423.9 459.6 (35.7) (7.8%)
Investment Management 103.5 112.3 (8.7) (7.8%)
Lincoln UK 53.6 84.9 (31.3) (36.8%)
Corporate & Other** 92.3 531.6 (439.3) (82.6%)
-------- -------- -------- --------
Total Revenue 1126.4 1698.8 (572.4) (33.7%)
======== ======== ======== ========
Operational Data by Segment: (Billions except where noted)
Lincoln Retirement*
Gross Deposits 1.714 1.447 0.267 18.5%
Net Cash Flows 0.088 (0.590) 0.678
Account Values (Gross) 53.329 51.332 1.997 3.9%
Account Values (Net of Reinsurance) 51.684 50.163 1.521 3.0%
Life Insurance Segment
First Year Premium- Retail (in millions) 139.377 124.240 15.137 12.2%
First Year Premium- COLI (in millions) 6.873 7.055 (0.182) (2.6%)
First Year Premium- Total (in millions) 146.251 131.296 14.955 11.4%
In-force 240.068 219.214 20.854 9.5%
Account Values 11.667 10.764 0.903 8.4%
Investment Management Segment
Retail Deposits 1.093 1.124 (0.031) (2.8%)
Retail Net Cash Flows (0.001) (0.047) 0.046
Institutional In-flows 1.476 1.191 0.285 23.9%
Institutional Net Cash Flows 0.731 (0.418) 1.149
Total Net Cash Flows 0.730 (0.465) 1.195
Assets Under Management- Retail and Inst'l 49.415 47.765 1.651 3.5%
Assets Under Management- Insurance Assets 37.171 36.324 0.847 2.3%
Assets Under Management- Total Segment 86.586 84.089 2.498 3.0%
Consolidated
Consolidated Domestic Retail Deposits 2.938 2.729 0.209 7.7%
Consolidated Domestic Retail Account Balances 81.420 78.806 2.614 3.3%
Total Retail Net Cash Flows 0.287 (0.382) 0.668 (175.0%)
Total Net Cash Flows 1.018 (0.800) 1.817 (227.2%)
Total Assets Under Management 126.687 124.170 2.517 2.0%
* Effective March 7, 2002, the Annuities segment became known as Lincoln Retirement.
** Upon the closing of Swiss Re's acquisition of LNC's reinsurance business on December 7, 2001, all historical
financial data for the former Reinsurance segment was moved into "Other Operations." In addition, ongoing
amortization of the deferred gain on indemnity reinsurance is shown in "Other Operations."
*** The cumulative effect of accounting changes relates to the adjustment recorded upon adoption of FAS #133
in the 1st qtr. 2001.
3/31/2002 PAGE 2
Financial Highlights
Unaudited [Amounts in Millions, except Per Share]
For the Quarter Ended March 31
--------------------------------------------------
2002 2001
Amount Amount Change % Change
-------- -------- -------- --------
Consolidated Operational Data: (Millions)
Balance Sheet Assets - End of Period 97846.4 94122.4 3724.0 4.0%
Shareholders' Equity
Beg of Period (Securities at Market) 5263.5 4954.1 309.4
End of Period (Securities at Market) 5131.1 5096.4 34.7
End of Period (Securities at Cost) 5076.6 4882.7 193.9
Average Equity (Securities at Cost) 5083.3 4953.7 129.6
Return on Equity
Inc from Operations/Average Equity 12.7% 14.4% (1.7%)
Net Income/Average Equity 7.4% 12.9% (5.5%)
Return on Capital
Inc from Operations/Average Capital 10.5% 11.9% (1.4%)
Common Stock Outstanding
Average for the Period - Diluted 191.7 193.7 (2.0) (1.0%)
End of Period - Assuming Conv of Pref. 187.9 188.1 (0.2) (0.1%)
End of Period - Diluted 191.7 191.3 0.4 0.2%
Book Value (Securities at Market) $27.30 $27.09 0.21 0.8%
Book Value (Securities at Cost) $27.02 $25.96 1.06 4.1%
Cash Returned to Shareholders
Share Repurchase - dollar amount 50.9 151.8 (100.9)
Dividends Declared to Shareholders 60.1 57.9 2.2
-------- -------- -------- --------
Total Cash Returned to Shareholders 111.0 209.7 (98.7)
======== ======== ======== ========
Share Repurchase - number of shares 1.000 3.550 (2.550)
Dividend Declared on Common Stock - per share $0.320 $0.305 $0.015 4.9%
For the Quarter Ended March 31
------------------------------
Comprehensive Income 2002 2001
(millions) Amount Amount
-------- --------
Net Income 94.5 160.2
Foreign Currency Translation (12.8) (17.8)
Net Unrealized Gains (Losses) on Securities (163.9) 178.4
Gains (Losses) on Derivatives 1.1 5.7
Cumulative Effect of Accounting Change 0.0 17.6
Minimum Pension Liability Adjustment 0.7 0.0
-------- --------
Comprehensive Income (80.4) 344.1
======== ========
3/31/02 PAGE 3
Financial Highlights
Unaudited [Amounts in Millions]
For the Quarter Ended March 31
--------------------------------------------------
2002 2001
Amount Amount Change % Change
-------- -------- -------- --------
Consolidated Condensed Statements of Income
Revenue:
Insurance Premiums and Fees 438.2 913.4 (475.2) (52.0%)
Investment Advisory Fees 48.0 49.4 (1.4) (2.9%)
Net Investment Income 648.1 673.7 (25.6) (3.8%)
Realized Gains (Losses) on Investments (103.5) (20.5) (82.9)
Gains (Losses) on Derivatives 0.1 (0.2) 0.4
Other 95.5 82.9 12.6 15.2%
-------- -------- -------- --------
Total Revenue 1,126.4 1,698.8 (572.4) (33.7%)
Benefits and Expenses:
Benefits 603.4 906.7 (303.3) (33.4%)
Underwriting, Acquisition,
Insurance and Other Expenses 417.0 571.1 (154.1) (27.0%)
-------- -------- -------- --------
Total Benefits and Expenses 1,020.4 1,477.7 (457.3) (30.9%)
-------- -------- -------- --------
Net Income
before Federal Taxes 106.0 221.1 (115.0)
Federal Income Taxes 11.6 56.6 (45.0)
-------- -------- -------- --------
Income before Accounting Changes 94.5 164.5 (70.0)
Cumulative Effect of Accounting Changes 0.0 (4.3) 4.3
-------- -------- -------- --------
Net Income 94.5 160.2 (65.8) (41.0%)
======== ======== ======== ========
Income before Tax and Cumulative Effect
of Accounting Changes By Segment
Lincoln Retirement 46.7 95.3 (48.6)
Life Insurance 63.7 99.2 (35.5)
Investment Management 8.1 3.5 4.6
Lincoln UK 10.4 19.6 (9.2)
Corporate and Other (22.9) 3.5 (26.4)
-------- -------- --------
Income before Tax and
Cumulative Effect of Accounting Changes 106.0 221.1 (115.1)
Pre-Tax Realized Gains (Losses) by Segment*
Lincoln Retirement (50.4) (2.4) (48.0)
Life Insurance (41.4) (8.2) (33.2)
Investment Management (1.5) (0.7) (0.8)
Lincoln UK (5.1) 0.6 (5.7)
Corporate and Other (4.9) (9.9) 5.0
-------- -------- --------
Pre-Tax Realized Gains (Losses)
on Investments and Derivatives (103.3) (20.6) (82.7)
After-Tax Realized Gains (Losses) by Segment*
Lincoln Retirement (32.7) (1.5) (31.2)
Life Insurance (26.9) (5.4) (21.5)
Investment Management (1.0) (0.5) (0.5)
Lincoln UK (3.6) 0.4 (4.0)
Corporate and Other (3.2) (6.4) 3.2
-------- -------- --------
After-Tax Realized Gains (Losses)
on Investments and Derivatives (67.4) (13.4) (54.0)
* Includes both realized gains (losses) on investments and gains (losses) on derivatives.
3/31/02 PAGE 4
Financial Highlights
Unaudited [Amounts in Millions, except Retail Account Balances and Assets Managed]
As of
----------------------------------------------------------
March December
2002 2001
Amount Amount Change % Change
----------- ----------- ----------- -----------
Consolidated Condensed Balance Sheets
Assets:
Investments:
Securities Available for Sale:
Fixed Maturities 28,840.6 28,345.7 495.0 1.7%
Equities 438.6 470.5 (31.9) (6.8%)
Mortgage Loans on Real Estate 4,448.2 4,535.5 (87.4) (1.9%)
Real Estate 258.2 267.9 (9.7) (3.6%)
Policy Loans 1,918.0 1,939.7 (21.7) (1.1%)
Other Long-Term Investments 459.6 553.8 (94.2) (17.0%)
----------- ----------- ----------- -----------
Total Investments 36,363.1 36,113.1 250.1 0.7%
Other Assets:
Assets Held in Separate Accounts 44,916.7 44,833.4 83.3 0.2%
Other Assets 16,566.5 17,054.8 (488.3) (2.9%)
----------- ----------- ----------- -----------
Total Assets 97,846.4 98,001.3 (154.9) (0.2%)
=========== =========== =========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Insurance and Investment Contract Liabilities 41,067.2 40,857.2 210.0 0.5%
Liabilities Related to Separate Accounts 44,916.7 44,833.4 83.3 0.2%
Other Liabilities 6,731.4 7,047.2 (315.9) (4.5%)
----------- ----------- ----------- -----------
Total Liabilities 92,715.3 92,737.8 (22.6) (0.0%)
Shareholders' Equity:
Net Unrealized Gains(Losses) on Securities
and Derivatives 54.5 217.2 (162.7) (74.9%)
Other Shareholders' Equity 5,076.6 5,046.3 30.3 0.6%
----------- ----------- ----------- -----------
Total Shareholders' Equity 5,131.1 5,263.5 (132.4) (2.5%)
----------- ----------- ----------- -----------
Total Liabilities and Shareholders' Equity 97,846.4 98,001.3 (154.9) (0.2%)
=========== =========== =========== ===========
As of March 31
----------------------------------------------------------
($ billions) 2002 2001
Amount Amount Change % Change
----------- ----------- ----------- -----------
Domestic Retail Account Balances:
Lincoln Retirement - Fixed Annuities 16.533 15.430 1.104 7.2%
Lincoln Retirement - Variable Annuities 35.150 34.733 0.417 1.2%
Lincoln Retirement - Life Insurance 0.000 0.147 (0.147) (100.0%)
Life Insurance Segment - Life Insurance 11.667 10.764 0.903 8.4%
Investment Management - Annuities 11.838 11.787 0.051 0.4%
Investment Management - Mutual Funds 11.012 11.091 (0.079) (0.7%)
Investment Management - Wrap Fee & Other 1.903 1.688 0.215 12.7%
Consolidating Adjustments (6.684) (6.834)
----------- ----------- ----------- -----------
Total Domestic Account Balance 81.420 78.806 2.614 3.3%
=========== =========== =========== ===========
Assets Managed by Advisor:
Investment Management Segment 86.586 84.089 2.497 3.0%
Lincoln UK 6.772 7.012 (0.240) (3.4%)
Policy Loans (within business units) 1.918 1.947 (0.029) (1.5%)
Non-LNC Affiliates 31.411 31.122 0.289 0.9%
----------- ----------- ----------- -----------
Total Assets Managed 126.687 124.170 2.517 2.0%
=========== =========== =========== ===========
PAGE 5
Eleven-Year Summary
Unaudited [Millions of Dollars except Per Share Data]
For the Year Ended December 31 2001 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------
Revenue
Lincoln Retirement 1968.3 2133.7 2115.8 2068.1 2023.0 1805.0
Life Insurance 1840.6 1819.0 1760.4 1378.5 544.8 549.2
Investment Management 433.7 490.3 495.5 491.9 459.1 410.5
Lincoln UK 293.3 438.2 446.6 439.7 427.3 393.2
Corporate & Other 1844.7 1970.4 1985.4 1708.9 1444.3 1575.6
------ ------ ------ ------ ------ ------
Total Revenue 6380.6 6851.5 6803.7 6087.1 4898.5 4733.6
====== ====== ====== ====== ====== ======
Income from Operations*
Lincoln Retirement 320.3 362.0 299.4 262.4 223.0 174.6
Life Insurance 279.0 259.9 212.0 149.2 39.9 41.2
Investment Management 14.6 44.1 61.0 43.9 18.1 18.6
Lincoln UK 60.2 61.0 (13.9) 70.9 (108.3) 66.0
Corporate & Other 14.8 (8.0) (83.1) 4.0 (223.3) (1.7)
------ ------ ------ ------ ------ ------
Total Income from Cont Oper 689.0 719.1 475.5 530.4 (50.6) 298.8
Discontinued Operations 110.1 135.3
------ ------ ------ ------ ------ ------
Income from Operations 689.0 719.1 475.5 530.4 59.4 434.1
====== ====== ====== ====== ====== ======
Net Income
Lincoln Retirement 269.2 358.6 291.5 273.8 263.3 204.3
Life Insurance 233.1 249.3 211.5 127.5 39.1 51.8
Investment Management 11.8 37.0 51.6 44.4 25.1 25.0
Lincoln UK 68.9 (13.2) (18.2) 71.7 (106.8) 66.0
Corporate & Other 7.2 (10.2) (76.1) (7.6) (198.4) 9.3
------ ------ ------ ------ ------ ------
Total Net Inc from Cont Oper 590.2 621.4 460.4 509.8 22.2 356.4
Discontinued Operations 911.8 157.2
------ ------ ------ ------ ------ ------
Total Net Income 590.2 621.4 460.4 509.8 934.0 513.6
====== ====== ====== ====== ====== ======
OTHER DATA
Assets 98001.3 99844.1 103095.7 93836.3 77174.7 71713.4
Shareholders' Equity:
Securities and Derivatives at Market 5263.5 4954.1 4263.9 5387.9 4982.9 4470.0
Securities and Derivatives at Cost 5046.3 4942.0 4729.6 4835.6 4546.9 4057.1
Average Equity (Sec & Deriv at Cost) 5022.6 4831.9 4818.7 4685.6 4214.1 3866.0
Common Shares Outstanding: (millions)
End of Period - Diluted 191.1 195.2 197.0 203.4 204.7 209.5
Average for the Period - Diluted 193.3 194.9 200.4 203.3 208.0 210.7
Per Share Data (Diluted)
Income (Loss) from Continuing Operations $3.56 $3.69 $2.37 $2.61 ($0.24) $1.42
Income from Operations * $3.56 $3.69 $2.37 $2.61 $0.29 $2.06
Net Income from Continuing Operations $3.05 $3.19 $2.30 $2.51 $0.11 $1.69
Net Income $3.05 $3.19 $2.30 $2.51 $4.49 $2.44
Shareholders' Equity:
Shareholders' Equity (Sec & Deriv at Market) $28.10 $25.92 $21.76 $26.59 $24.63 $21.50
Shareholders' Equity (Sec & Deriv at Cost) $26.94 $25.85 $24.14 $23.86 $22.48 $19.51
Dividends Declared (Common Stock) $1.235 $1.175 $1.115 $1.055 $0.995 $0.935
Return on Equity (see page 30)
Net Income/Average Equity 11.8% 12.9% 9.6% 10.9% 22.2% 13.3%
Inc from Operations/Average Equity 13.7% 14.9% 9.9% 11.3% 1.4% 11.2%
Market Value of Common Stock
High for the Year $52.750 $56.375 $57.500 $49.438 $39.063 $28.500
Low for the Year $38.000 $22.625 $36.000 $33.500 $24.500 $20.375
Close for the Year $48.570 $47.313 $40.000 $40.907 $39.063 $26.250
Ten-year
compound
For the Year Ended December 31 1995 1994 1993 1992 1991 annual growth
------ ------ ------ ------ ------ -------------
Revenue
Lincoln Retirement 1877.1 1506.2 1603.8 1336.2 1216.7 4.9%
Life Insurance 514.9 466.2 477.5 444.4 417.3 16.0%
Investment Management 290.5
Lincoln UK 351.5 216.0 174.9 180.6 169.6 5.6%
Corporate & Other 1552.5 1744.1 2680.9 2780.9 3721.0
------ ------ ------ ------ ------ ------
Total Revenue 4586.5 3932.5 4937.1 4742.1 5524.6 1.5%
====== ====== ====== ====== ====== ======
Income from Operations*
Lincoln Retirement 175.2 142.4 127.1 89.4 58.3 18.6%
Life Insurance 35.4 34.2 37.8 46.8 31.5 24.4%
Investment Management 20.6
Lincoln UK 45.9 17.2 11.9 9.2 14.3 15.5%
Corporate & Other (136.2) 24.8 20.8 6.5 4.2
------ ------ ------ ------ ------ ------
Total Income from Cont Oper 140.8 218.6 197.6 151.9 108.3 20.3%
Discontinued Operations 165.6 171.1 145.9 88.7 69.4
------ ------ ------ ------ ------ ------
Income from Operations 306.5 389.7 343.5 240.6 177.7 14.5%
====== ====== ====== ====== ====== ======
Net Income
Lincoln Retirement 248.8 142.4 127.1 89.4 58.3 16.5%
Life Insurance 40.6 34.2 37.8 46.8 31.5 22.2%
Investment Management 27.4
Lincoln UK 45.7 18.5 12.6 9.2 14.3
Corporate & Other (61.1) (29.6) (101.1) 125.1 28.4
------ ------ ------ ------ ------ ------
Total Net Inc from Cont Oper 301.4 165.5 76.4 270.5 132.5 16.1%
Discontinued Operations 180.8 184.4 242.5 88.7 69.4
------ ------ ------ ------ ------ ------
Total Net Income 482.2 349.9 318.9 359.2 201.9 11.3%
====== ====== ====== ====== ====== ======
OTHER DATA
Assets 63257.7 48864.8 47825.1 39042.2 33660.3 11.3%
Shareholders' Equity:
Securities and Derivatives at Market 4378.1 3042.1 4072.3 2826.8 2655.8 7.1%
Securities and Derivatives at Cost 3679.9 3353.1 3157.6 2664.1 2445.8 7.5%
Average Equity (Sec & Deriv at Cost) 3550.5 3288.6 3009.0 2575.0 2335.3 8.0%
Common Shares Outstanding: (millions)
End of Period - Diluted 210.3 208.3 208.3 187.7 185.4
Average for the Period - Diluted 209.5 208.7 206.1 186.8 189.2
Per Share Data (Diluted)
Income (Loss) from Continuing Operations $0.67 $1.05 $0.96 $0.81 $0.57 20.1%
Income from Operations * $1.46 $1.87 $1.67 $1.29 $0.94 14.3%
Net Income from Continuing Operations $1.44 $0.79 $0.37 $1.45 $0.70 15.9%
Net Income $2.30 $1.68 $1.55 $1.92 $1.07 11.1%
Shareholders' Equity:
Shareholders' Equity (Sec & Deriv at Market) $20.95 $14.67 $19.69 $15.13 $14.35 7.0%
Shareholders' Equity (Sec & Deriv at Cost) $17.61 $16.17 $15.27 $14.26 $13.21 7.4%
Dividends Declared (Common Stock) $0.875 $0.830 $0.775 $0.738 $0.693 5.9%
Return on Equity (see page 30)
Net Income/Average Equity 13.6% 10.6% 10.6% 13.9% 8.6%
Inc from Operations/Average Equity 8.6% 11.8% 11.4% 9.3% 7.6%
Market Value of Common Stock
High for the Year $26.875 $22.188 $24.125 $19.032 $13.813
Low for the Year $17.313 $17.313 $17.344 $12.625 $9.500
Close for the Year $26.875 $17.500 $21.750 $18.500 $13.688 13.5%
* "Income from Operations" is defined as "Net income less realized gain (loss) on investments,
derivative instruments and associated items, gain (loss) on sale of subsidiaries,
restructuring charges, and cumulative effect of accounting changes, all net of taxes."
Income from operations also excludes the recognition of losses and related
changes to the deferred gain amortization under indemnity reinsurance resulting
from future developments in the business reinsured.
PAGE 6
Quarterly Summary
Unaudited [Millions of Dollars except Per Share Data]
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
Revenue
Lincoln Retirement 533.0 520.5 538.0 548.7 530.5 532.1
Life Insurance 426.3 437.1 473.1 441.7 444.2 453.2
Investment Management 123.2 118.8 126.6 125.8 120.7 123.8
Lincoln UK 113.1 110.5 103.8 112.8 108.2 112.8
Corporate & Other 482.8 455.2 566.4 440.2 489.0 494.1
------ ------ ------ ------ ------ ------
Total Revenue 1678.3 1642.1 1807.9 1669.2 1692.7 1716.1
====== ====== ====== ====== ====== ======
Income from Operations*
Lincoln Retirement 75.9 75.4 73.7 88.5 84.1 102.9
Life Insurance 54.4 52.6 57.0 60.4 62.4 66.5
Investment Management 14.3 14.7 16.5 12.4 13.1 9.9
Lincoln UK 19.0 16.2 (67.1) 15.7 19.3 10.6
Corporate & Other (11.9) (27.5) (43.5) (6.5) (5.9) 0.9
------ ------ ------ ------ ------ ------
Income from Operations 151.8 131.4 36.6 170.6 173.0 190.7
====== ====== ====== ====== ====== ======
Net Income
Lincoln Retirement 76.4 68.4 69.9 91.2 84.4 93.8
Life Insurance 51.5 54.0 59.7 58.1 58.4 67.4
Investment Management 14.0 14.4 19.8 12.3 8.4 9.7
Lincoln UK 20.0 16.4 (72.6) 15.5 19.1 (29.9)
Corporate & Other (13.6) (20.9) (42.2) (6.8) (6.8) (2.3)
------ ------ ------ ------ ------ ------
Total Net Income 148.4 132.3 34.6 170.2 163.6 138.6
====== ====== ====== ====== ====== ======
OTHER DATA
Assets 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1
Shareholders' Equity
Beg of Period (Sec & Deriv at Market) 5107.4 4817.4 4662.2 4263.9 4340.4 4223.7
End of Period (Sec & Deriv at Market) 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6
End of Period (Sec & Deriv at Cost) 4818.5 4766.0 4729.6 4751.6 4780.3 4876.3
Average Equity (Sec & Deriv at Cost) 4834.2 4793.9 4774.2 4791.5 4753.0 4867.2
Common Shares Outstanding
Average for the Period - Diluted 201.9 199.0 197.1 195.8 194.0 195.6
End of Period - Diluted 200.9 196.9 197.0 195.1 193.7 196.2
Per Share Data (Diluted)
Income from Operations * $0.75 $0.66 $0.19 $0.87 $0.89 $0.98
Net Income $0.73 $0.66 $0.18 $0.87 $0.84 $0.71
Shareholders' Equity
Shareholders' Equity (Sec & Deriv at Market) $24.18 $23.76 $21.76 $22.45 $22.10 $23.67
Shareholders' Equity (Sec & Deriv at Cost) $24.18 $24.28 $24.14 $24.58 $25.01 $25.43
Dividends Declared (Com Stk) $0.275 $0.275 $0.290 $0.290 $0.290 $0.290
Return on Equity (see page 30)
Net Income/Average Equity 12.3% 11.0% 2.9% 14.2% 13.8% 11.4%
Inc from Operations/Average Equity 12.6% 11.0% 3.1% 14.2% 14.6% 15.7%
Market Value of Common Stock
Highest Price $53.438 $57.500 $48.313 $41.375 $40.063 $56.375
Lowest Price $45.688 $36.000 $36.500 $22.625 $29.000 $35.625
Closing Price $52.313 $37.563 $40.000 $33.500 $36.125 $48.125
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 2000 2001 2001 2001 2001 2002
------ ------ ------ ------ ------ ------
Revenue
Lincoln Retirement 522.3 510.4 512.1 478.2 467.5 453.0
Life Insurance 479.9 459.6 455.7 460.6 464.7 423.9
Investment Management 120.0 112.3 110.3 104.7 106.5 103.5
Lincoln UK 104.3 84.9 68.9 76.3 63.2 53.6
Corporate & Other 547.0 531.6 452.0 489.5 371.7 92.3
------ ------ ------ ------ ------ ------
Total Revenue 1773.5 1698.8 1599.0 1609.3 1473.6 1126.4
====== ====== ====== ====== ====== ======
Income from Operations*
Lincoln Retirement 86.4 82.3 90.8 72.4 74.8 80.4
Life Insurance 70.6 68.6 67.1 70.1 73.2 71.1
Investment Management 8.7 2.4 3.7 3.5 5.1 8.0
Lincoln UK 15.5 14.4 16.2 10.1 19.5 14.4
Corporate & Other 3.5 10.9 (9.7) (12.9) 26.5 (12.0)
------ ------ ------ ------ ------ ------
Income from Operations 184.7 178.6 168.1 143.2 199.1 162.0
====== ====== ====== ====== ====== ======
Net Income
Lincoln Retirement 89.2 76.6 79.9 58.6 54.2 47.6
Life Insurance 65.4 62.9 53.5 64.7 51.9 44.2
Investment Management 6.6 2.0 2.9 2.9 4.0 7.0
Lincoln UK (17.9) 14.8 17.6 14.0 22.5 10.8
Corporate & Other 5.7 4.0 (12.2) (21.2) 36.7 (15.2)
------ ------ ------ ------ ------ ------
Total Net Income 148.9 160.2 141.7 119.1 169.2 94.5
====== ====== ====== ====== ====== ======
OTHER DATA
Assets 99844.1 94122.4 96431.2 90206.0 98001.3 97846.4
Shareholders' Equity
Beg of Period (Sec & Deriv at Market) 4538.6 4954.1 5096.4 5055.9 5368.6 5263.5
End of Period (Sec & Deriv at Market) 4954.1 5096.4 5055.9 5368.6 5263.5 5131.1
End of Period (Sec & Deriv at Cost) 4942.0 4882.7 4952.8 5100.4 5046.3 5076.6
Average Equity (Sec & Deriv at Cost) 4915.7 4953.7 4920.2 5085.0 5131.4 5083.3
Common Shares Outstanding
Average for the Period - Diluted 195.6 193.7 192.0 194.8 192.8 191.7
End of Period - Diluted 195.2 191.3 192.9 193.3 191.1 191.7
Per Share Data (Diluted)
Income from Operations * $0.94 $0.92 $0.88 $0.74 $1.03 $0.84
Net Income $0.76 $0.83 $0.74 $0.61 $0.88 $0.49
Shareholders' Equity
Shareholders' Equity (Sec & Deriv at Market) $25.92 $27.09 $26.87 $28.29 $28.10 $27.30
Shareholders' Equity (Sec & Deriv at Cost) $25.85 $25.96 $26.32 $26.87 $26.94 $27.02
Dividends Declared (Com Stk) $0.305 $0.305 $0.305 $0.305 $0.320 $0.320
Return on Equity (see page 30)
Net Income/Average Equity 12.1% 12.9% 11.5% 9.4% 13.2% 7.4%
Inc from Operations/Average Equity 15.0% 14.4% 13.7% 11.3% 15.5% 12.7%
Market Value of Common Stock
Highest Price $50.938 $48.250 $52.300 $52.750 $49.450 $53.650
Lowest Price $40.875 $38.000 $41.280 $41.000 $40.000 $47.200
Closing Price $47.313 $42.470 $51.750 $46.630 $48.570 $50.730
* "Income from Operations" is defined as "Net income less realized gain
(loss) on investments, derivative instruments and associated items, gain
(loss) on sale of subsidiaries, restructuring charges, and cumulative
effect of accounting changes, all net of taxes." Income from operations
also excludes the recognition of losses and related changes to the
deferred gain amortization under indemnity reinsurance resulting from
future developments in the business reinsured.
PAGE 7
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
Investment
For the Quarter Ended March 31 Lincoln Retirement Life Insurance Management Lincoln UK
------------------- ------------------- -------------------- -------------------
Mar Mar Mar Mar Mar Mar Mar Mar
2002 2001 2002 2001 2002 2001 2002 2001
-------- -------- -------- --------- -------- -------- -------- --------
Operating Revenue
Life and annuity premiums 12.2 19.1 51.1 50.9 11.4 12.1
Surrender charges 7.9 9.1 11.7 17.2
Mortality assessments 123.9 124.3 6.5 9.4
Expense assessments 127.7 141.6 46.9 47.4 25.3 43.7
Health premiums 0.0 0.0 0.7 0.6
Investment advisory fees 69.2 72.6
Other revenue and fees 5.8 1.7 5.7 5.1 23.0 26.3 0.3 0.6
Net investment income 349.9 341.3 226.0 223.0 12.8 14.1 14.7 17.9
Earnings in Unconsolidated Affiliates
-------- -------- -------- --------- -------- -------- -------- --------
Operating Revenue 503.5 512.8 465.3 467.9 105.1 113.0 58.8 84.4
-------- -------- -------- --------- -------- -------- -------- --------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 55.4 69.8 104.1 99.9 15.0 19.8
Div accum & div to policyholders 17.8 17.5
Interest credited to policy bal. 226.1 209.4 146.3 138.3
Health policy benefits 0.0 0.0 3.3 4.3
Underwriting, acquisition,
insurance and other expenses 124.9 134.6 92.1 98.8 95.4 104.7 24.9 41.1
Goodwill amortization 0.3 5.9 4.1 0.2
Interest 0.0
-------- -------- -------- --------- -------- -------- -------- --------
Operating Benefits and Expenses 406.4 414.1 360.2 360.5 95.4 108.8 43.2 65.3
-------- -------- -------- --------- -------- -------- -------- --------
Income from Operations Before Tax 97.1 98.7 105.1 107.4 9.7 4.2 15.6 19.1
Federal income taxes 16.7 16.3 34.0 38.8 1.7 1.8 1.1 4.7
-------- -------- -------- --------- -------- -------- -------- --------
Income from Operations 80.4 82.3 71.1 68.6 8.0 2.4 14.4 14.4
-------- -------- -------- --------- -------- -------- -------- --------
Restructuring charges (0.7)
Realized gains (losses) on investments (32.8) (1.4) (26.9) (5.4) (1.0) (0.5) (3.6) 0.4
Gains (losses) on derivatives 0.0 (0.1) 0.0 (0.0)
Gain on sale of subsidiaries
-------- -------- -------- --------- -------- -------- -------- --------
Income before Accounting Changes 47.6 80.2 44.2 63.2 7.0 2.0 10.8 14.8
Cumulative effect of accounting changes (3.6) (0.2)
-------- -------- -------- --------- -------- -------- -------- --------
Net Income 47.6 76.6 44.2 62.9 7.0 2.0 10.8 14.8
======== ======== ======== ======== ======== ======== ======== ========
Inc. from Oper.-before Goodwill Amort. 80.4 82.6 71.1 74.5 8.0 6.5 14.4 14.5
-------- -------- -------- --------- -------- -------- -------- --------
Net Income-before Goodwill Amort. 47.6 76.9 44.2 68.9 7.0 6.0 10.8 14.9
-------- -------- -------- --------- -------- -------- -------- --------
Corporate and Consolidating
Other Operations Adjustments Consolidated
------------------- ------------------- -------------------
Mar Mar Mar Mar Mar Mar
2002 2001 2002 2001 2002 2001
-------- -------- -------- -------- -------- --------
Operating Revenue
Life and annuity premiums 320.0 74.7 402.1
Surrender charges 0.9 0.5 0.7 20.2 27.8
Mortality assessments 0.0 130.4 133.7
Expense assessments (0.0) 10.6 12.2 210.5 244.9
Health premiums 1.8 104.2 2.4 104.8
Investment advisory fees (21.2) (23.2) 48.0 49.4
Other revenue and fees 101.4 86.2 (40.7) (37.9) 95.5 82.0
Net investment income 66.4 101.1 (21.7) (23.7) 648.1 673.7
Earnings in Unconsolidated Affiliates 0.9 0.9
-------- -------- -------- -------- -------- --------
Operating Revenue 169.6 613.2 (72.4) (71.8) 1229.8 1719.5
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 1.6 229.4 176.1 418.9
Div accum & div to policyholders 1.4 17.8 18.9
Interest credited to policy bal. 25.7 9.1 8.1 10.2 406.2 367.1
Health policy benefits 0.1 97.5 3.3 101.8
Underwriting, acquisition,
insurance and other expenses 113.8 208.1 (58.9) (62.6) 392.2 524.8
Goodwill amortization 0.4 (0.0) 10.9
Interest 46.5 58.1 (21.7) (23.7) 24.8 34.4
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 187.6 604.2 (72.4) (76.1) 1020.4 1476.7
-------- -------- -------- -------- -------- --------
Income from Operations Before Tax (18.1) 9.0 4.3 209.4 242.7
Federal income taxes (6.1) 1.2 1.3 47.4 64.1
-------- -------- -------- -------- --------
Income from Operations (12.0) 7.9 3.0 162.0 178.6
Restructuring charges (0.7)
Realized gains (losses) on investments (3.3) (6.5) 0.0 (67.6) (13.4)
Gains (losses) on derivatives 0.1 0.1 0.1 (0.1)
Gain on sale of subsidiaries
-------- -------- -------- -------- --------
Income before Accounting Changes (15.2) 1.4 3.0 94.5 164.5
Cumulative effect of accounting changes (0.4) (4.3)
-------- -------- -------- -------- --------
Net Income (15.2) 0.9 3.0 94.5 160.2
======== ======== ======== ======== ========
Inc. from Oper.-before Goodwill Amort. (12.0) 8.3 3.0 162.0 189.5
-------- -------- -------- -------- --------
Net Income-before Goodwill Amort. (15.2) 1.4 3.0 94.5 171.1
-------- -------- -------- -------- --------
PAGE 8
Statement of Consolidated Income
Unaudited [Millions of Dollars]
For the Year Ended December 31 1997 1998 1999 2000 2001
------ ------ ------ ------ ------
Operating Revenue
Life and annuity premiums 756.2 985.6 1183.0 1403.3 1363.4
Surrender charges 45.4 91.5 110.2 114.7 101.5
Mortality assessments 186.4 380.1 496.4 496.5 533.3
Expense assessments 600.3 803.0 930.9 1050.2 909.2
Health premiums 572.6 635.1 698.5 409.8 340.6
Investment advisory fees 204.9 227.1 223.8 213.1 197.2
Other revenue and fees 157.3 261.0 344.5 445.4 351.8
Net investment income 2250.8 2681.4 2807.5 2747.1 2679.6
Earnings in Unconsolidated Affiliates 2.1 3.3 5.8 (0.4) 5.7
------ ------ ------ ------ ------
Operating Revenue 4775.9 6068.0 6800.7 6879.8 6482.2
------ ------ ------ ------ ------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 1090.2 1237.7 1546.6 1546.4 1517.9
Div accum & div to policyholders 29.7 78.0 88.4 87.6 83.7
Interest credited to policy bal. 1238.7 1446.2 1510.4 1474.2 1506.0
Health policy benefits 833.1 566.9 659.7 449.0 302.1
Underwriting, acquisition,
insurance and other expenses 1557.3 1844.2 2218.5 2168.4 2004.5
Goodwill amortization 15.6 44.5 49.2 45.1 43.4
Interest 92.5 117.1 133.7 139.5 121.0
------ ------ ------ ------ ------
Operating Benefits and Expenses 4857.2 5334.6 6206.4 5910.3 5578.6
------ ------ ------ ------ ------
Income from Operations Before Tax (81.3) 733.4 594.4 969.6 903.6
Federal income taxes (30.6) 203.0 118.9 250.5 214.7
------ ------ ------ ------ ------
Income from Continuing Operations (50.6) 530.4 475.5 719.1 689.0
------ ------ ------ ------ ------
Discontinued Operations 911.8
Restructuring charges (34.3) (18.9) (80.2) (24.7)
Realized gains (losses) on investments 72.9 13.7 3.8 (17.5) (68.7)
Gains (losses) on derivatives (4.9)
Gain on sale of subsidiaries 15.0
------ ------ ------ ------ ------
Income before Accounting Changes 934.0 509.8 460.4 621.4 605.8
Cumulative Effect of Accounting Changes (15.6)
------ ------ ------ ------ ------
Net Income 934.0 509.8 460.4 621.4 590.2
====== ====== ====== ====== ======
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
Operating Revenue
Life and annuity premiums 274.0 263.8 361.1 331.2 337.1 339.0
Surrender charges 27.1 28.4 29.2 28.7 29.8 25.9
Mortality assessments 122.2 118.2 118.7 118.5 122.5 125.9
Expense assessments 231.5 245.9 238.3 261.1 258.6 273.4
Health premiums 160.3 149.6 233.6 58.4 144.0 117.9
Investment advisory fees 56.3 54.6 54.1 54.0 52.2 53.3
Other revenue and fees 109.0 77.9 71.2 106.1 88.7 106.0
Net investment income 700.8 697.1 700.1 711.1 673.8 690.0
Earnings in Unconsolidated Affiliates 1.1 1.2 1.8 1.0 (3.6) 1.6
------ ------ ------ ------ ------ ------
Operating Revenue 1682.4 1636.7 1808.2 1670.2 1703.0 1733.1
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 335.5 294.0 572.5 356.1 370.1 390.2
Div accum & div to policyholders 22.5 21.2 23.3 21.7 20.2 18.2
Interest credited to policy bal. 377.1 369.7 388.5 373.9 366.8 362.0
Health policy benefits 166.6 189.8 157.8 114.3 119.9 123.0
Underwriting, acquisition,
insurance and other expenses 532.1 533.4 630.5 525.7 537.5 532.4
Goodwill amortization 9.9 12.9 14.6 10.2 12.0 12.0
Interest 32.6 33.3 34.7 36.3 35.4 34.4
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 1476.3 1454.1 1821.8 1438.2 1461.9 1472.2
------ ------ ------ ------ ------ ------
Income from Operations before Tax/Min Int. 206.1 182.6 (13.6) 232.0 241.1 260.8
Federal income taxes 54.2 51.2 (50.2) 61.6 67.9 70.1
------ ------ ------ ------ ------ ------
Inc from Operations before Min Int 151.8 131.4 36.6 170.4 173.2 190.7
------ ------ ------ ------ ------ ------
Minority Interest (0.2) 0.2 (0.0)
------ ------ ------ ------ ------ ------
Income from Operations 151.8 131.4 36.6 170.6 173.0 190.7
------ ------ ------ ------ ------ ------
Restructuring charges (3.2) (3.6) (2.7) (40.5)
Realized gains (losses) on investments (3.5) 4.1 1.6 (0.4) (6.7) (11.6)
Gains (losses) on derivatives
Gain on sale of subsidiaries
------ ------ ------ ------ ------ ------
Income before Accounting Changes 148.4 132.3 34.6 170.2 163.6 138.6
Cumulative Effect of Accounting Changes
------ ------ ------ ------ ------ ------
Net Income 148.4 132.3 34.6 170.2 163.6 138.6
====== ====== ====== ====== ====== ======
3/31/02 PAGE 9
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Investment
Lincoln Retirement Life Insurance Management Lincoln UK
------------------- ------------------- ------------------- -------------------
ASSETS Mar Dec Mar Dec Mar Dec Mar Dec
2002 2001 2002 2001 2002 2001 2002 2001
-------- -------- -------- -------- -------- -------- -------- --------
Investments
Corporate bonds 11223.9 10956.5 7012.0 7088.2 432.5 424.2 503.0 512.3
U.S. government bonds 30.0 13.2 75.9 78.2 0.1 0.2
Foreign government bonds 172.8 145.8 121.6 114.6 2.0 1.9 275.6 326.2
Asset/Mortgage backed securities 1920.0 1945.8 754.6 779.1 37.3 42.5
State and municipal bonds 24.6 24.3 22.8 17.4
Preferred stocks-redeemable 61.6 62.7 12.8 13.0 8.8 8.8
Common stocks 6.5 7.6 178.7 211.3
Preferred stocks-equity 36.4 38.5 0.6 5.6 2.6 2.6
Mortgage loans 2323.1 2378.1 1674.7 1701.6 93.4 92.4 0.3 0.3
Real estate 0.2 0.2
Policy loans 481.5 491.4 1428.5 1439.7 7.9 8.6
Other long-term investments 12.1 11.7 19.9 20.9
-------- -------- -------- -------- -------- -------- -------- --------
Total Investments 16286.1 16068.0 11129.9 11265.9 576.6 572.6 965.6 1058.8
-------- -------- -------- -------- -------- -------- -------- --------
Allocated investments 3862.5 3481.0 1304.2 1154.7 121.1 102.4
Notes receivable from LNC 362.8 333.3 83.6 27.6 30.7 82.9
Invest in unconsol affiliates
Cash and invested cash (19.7) (24.7) (89.1) (36.4) 42.6 55.4 188.3 181.2
Property and equipment 8.3 8.5 44.4 36.5 37.9 39.3
Premium and fees receivable 0.1 0.0 (10.7) 8.2 36.0 38.5
Accrued investment income 245.6 245.0 192.4 187.6 10.0 8.9 22.2 20.9
Assets held in separate accounts 34672.2 34324.6 1423.3 1491.0 5618.1 5607.2
Federal income tax recoverable
Amount recoverable from reinsurers 1180.0 1211.6 859.3 859.5
Deferred acquisition costs 1031.0 912.8 1385.3 1265.6 569.4 587.3
Other intangible assets 150.7 154.5 947.1 964.0 47.9 50.1 238.3 244.0
Goodwill 43.9 43.9 855.1 855.1 300.7 300.7 11.8 12.1
Other 148.3 138.1 361.8 358.4 203.1 212.5 64.5 37.9
-------- -------- -------- -------- -------- -------- -------- --------
Total Assets 57963.6 56888.2 18450.5 18409.7 1413.2 1460.5 7716.1 7788.8
======== ======== ======== ======== ======== ======== ======== ========
Corporate and Consolidating
Other Operations Adjustments Consolidated
------------------- ------------------- -------------------
ASSETS Mar Dec Mar Dec Mar Dec
2002 2001 2002 2001 2002 2001
-------- -------- -------- -------- -------- --------
Investments
Corporate bonds 4299.1 4123.9 23470.4 23105.1
U.S. government bonds 323.0 318.9 429.1 410.5
Foreign government bonds 608.1 586.2 1180.1 1174.7
Asset/Mortgage backed securities 902.0 757.3 3613.9 3524.7
State and municipal bonds 15.2 3.0 62.6 44.7
Preferred stocks-redeemable 1.5 1.4 84.6 85.9
Common stocks 99.2 100.5 284.4 319.3
Preferred stocks-equity 114.7 104.5 154.2 151.2
Mortgage loans 356.6 363.0 4448.2 4535.5
Real estate 259.3 269.0 (1.3) (1.3) 258.2 267.9
Policy loans 1918.0 1939.7
Other long-term investments 1677.7 1771.3 (1250.0) (1250.0) 459.6 553.8
-------- -------- -------- -------- -------- --------
Total Investments 8656.3 8399.1 (1251.3) (1251.3) 36363.1 36113.1
-------- -------- -------- -------- -------- --------
Allocated investments (42.7) 50.0 (5245.0) (4788.2)
Notes receivable from LNC (476.4) (443.7) (0.7) (0.1) 0.0 0.0
Invest in unconsol affiliates 8.1 8.1 8.1 8.1
Cash and invested cash 1577.4 3130.5 (210.5) 1699.5 3095.5
Property and equipment 175.8 173.2 266.4 257.5
Premium and fees receivable 365.0 365.6 (14.2) (12.2) 376.3 400.1
Accrued investment income 126.3 101.0 (19.5) 577.1 563.5
Assets held in separate accounts 3203.1 3410.5 44916.7 44833.4
Federal income tax recoverable 551.3 15.1 551.3 15.1
Amount recoverable from reinsurers 4239.9 4150.6 (182.8) (191.4) 6096.3 6030.4
Deferred acquisition costs 38.4 33.9 90.9 85.6 3114.9 2885.3
Other intangible assets 1384.0 1412.6
Goodwill (0.0) (0.0) 1211.5 1211.8
Other 1113.5 1032.7 (610.4) (604.7) 1280.9 1174.9
-------- -------- -------- -------- -------- --------
Total Assets 15,781.7 17001.1 (3478.7) (3547.1) 97846.4 98001.3
======== ======== ======== ======== ======== ========
3/31/2002 PAGE 10
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Lincoln Retirement Life Insurance
-------------------- --------------------
LIABILITIES and SHAREHOLDERS' EQUITY Mar Dec Mar Dec
2002 2001 2002 2001
-------- -------- -------- --------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 2665.6 2622.7 13066.1 12955.8
Health reserves 0.3 0.3
Unpaid claims - life and health 38.5 31.3 90.5 92.9
Unearned premiums 0.0 0.0
Premium deposit funds 18016.1 17838.9 10.1 13.9
Participating policyholders' funds 98.6 100.2
Other policyholders' funds 564.4 555.2
Liab related to separate accounts 34672.2 34324.6 1423.3 1491.0
-------- -------- -------- --------
Total Insurance and Inv Contract Liabilities 55392.5 54817.5 15253.3 15209.5
Federal income taxes (1.1) (5.7) (35.1) (13.5)
Short-term debt (0.1) 10.0
Long-term debt
Minority Interest in pref. securities of sub.
Notes payable to LNC
Other liabilities 188.5 168.4 357.4 436.3
Deferred gain on indemnity reinsurance
-------- -------- -------- --------
Total Liabilities 55579.9 54980.3 15575.5 15642.2
-------- -------- -------- --------
Net unrealized gains (losses) on securities 2.7 79.9 (30.7) 13.6
Gains (losses) on derivatives* 3.8 0.3 14.8 4.5
Other shareholders' equity 2377.2 1824.9 2890.9 2738.5
S/Hs' equity-minimum pension liability adjustment
Cumulative effect of accounting change 2.8
-------- -------- -------- --------
Shareholders' Equity 2383.7 1907.9 2875.0 2767.5
-------- -------- -------- --------
Total Liabilities and S/Hs' Equity 57963.6 56888.2 18450.5 18409.7
======== ======== ======== ========
Corporate and Consolidating
Other Operations Adjustments
-------------------- --------------------
LIABILITIES and SHAREHOLDERS' EQUITY Mar Dec Mar Dec
2002 2001 2002 2001
-------- -------- -------- --------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 1120.4 1122.8 (118.3) (122.4)
Health reserves 2447.1 2491.5
Unpaid claims - life and health 980.0 920.9
Unearned premiums 66.5 66.9
Premium deposit funds 36.5 105.5 578.7 597.5
Participating policyholders' funds
Other policyholders' funds 7.4 7.4
Liab related to separate accounts 3203.1 3410.5
-------- -------- -------- --------
Total Insurance and Inv Contract Liabilities 4657.8 4715.0 3663.5 3885.6
Federal income taxes (556.5) (26.3) 550.5 14.3
Short-term debt 510.3 550.7
Long-term debt 2111.8 2111.8 (1250.0) (1250.0)
Minority Interest in pref. securities of sub. 376.2 474.7
Notes payable to LNC 344.8 335.0 (344.8) (344.3)
Other liabilities 3157.6 3392.6 (835.4) (839.5)
Deferred gain on indemnity reinsurance 1118.6 1144.5
-------- -------- -------- --------
Total Liabilities 11720.6 12698.0 1783.8 1255.7
-------- -------- -------- --------
Net unrealized gains (losses) on securities 40.2 77.2 8.2 8.2
Gains (losses) on derivatives* 4.0 (0.8)
Other shareholders' equity 4016.9 4222.9 (5270.7) (4811.0)
S/Hs' equity-minimum pension liability adjustment
Cumulative effect of accounting change 3.9
-------- -------- -------- --------
Shareholders' Equity 4061.1 4303.1 (5262.5) (4802.8)
-------- -------- -------- --------
Total Liabilities and S/Hs' Equity 15781.7 17001.1 (3478.7) (3547.1)
======== ======== ======== ========
Investment
Management Lincoln UK
-------------------- --------------------
LIABILITIES and SHAREHOLDERS' EQUITY Mar Dec Mar Dec
2002 2001 2002 2001
-------- -------- -------- --------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 1280.8 1338.1
Health reserves 45.0 46.0
Unpaid claims - life and health 44.7 42.4
Unearned premiums
Premium deposit funds 28.1 29.2
Participating policyholders' funds
Other policyholders' funds
Liab related to separate accounts 5618.1 5607.2
-------- --------
Total Insurance and Inv Contract Liabilities 7016.7 7063.0
Federal income taxes 42.6 43.3 (0.3) (12.2)
Short-term debt
Long-term debt
Minority Interest in pref. securities of sub.
Notes payable to LNC
Other liabilities 807.6 866.2 188.9 192.0
Deferred gain on indemnity reinsurance
-------- -------- -------- --------
Total Liabilities 850.2 918.8 7205.3 7242.8
-------- -------- -------- --------
Net unrealized gains (losses) on securities (1.6) 1.5 13.0 15.3
Gains (losses) on derivatives*
Other shareholders' equity 564.6 540.3 533.0 566.7
S/Hs' equity-minimum pension liability adjustment (35.2) (36.0)
Cumulative effect of accounting change
-------- -------- -------- --------
Shareholders' Equity 563.0 541.7 510.8 546.0
-------- -------- -------- --------
Total Liabilities and S/Hs' Equity 1413.2 1460.5 7716.1 7788.8
======== ======== ======== ========
Consolidated
--------------------
LIABILITIES and SHAREHOLDERS' EQUITY Mar Dec
2002 2001
-------- --------
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 18014.6 17917.0
Health reserves 2492.4 2537.9
Unpaid claims - life and health 1153.6 1087.5
Unearned premiums 66.5 66.9
Premium deposit funds 18669.6 18585.0
Participating policyholders' funds 98.5 100.2
Other policyholders' funds 571.9 562.7
Liab related to separate accounts 44916.7 44833.4
-------- --------
Total Insurance and Inv Contract Liabilities 85983.9 85690.6
Federal income taxes
Short-term debt 510.2 350.2
Long-term debt 861.8 861.8
Minority Interest in pref. securities of sub. 376.2 474.7
Notes payable to LNC (0.0) 0.0
Other liabilities 3864.6 4216.1
Deferred gain on indemnity reinsurance 1118.6 1144.5
-------- --------
Total Liabilities 92715.3 92737.8
-------- --------
Net unrealized gains (losses) on securities 31.8 195.7
Gains (losses) on derivatives* 22.6 3.9
Other shareholders' equity 5111.8 5082.2
S/Hs' equity-minimum pension liability adjustment (35.2) (36.0)
Cumulative effect of accounting change 17.6
-------- --------
Shareholders' Equity 5131.1 5263.5
-------- --------
Total Liabilities and S/Hs' Equity 97846.4 98001.3
======== ========
* Cumulative effect of accounting change recorded upon the adoption of FAS 133 in the 1st quarter of
2001 is a component of gains (losses) on derivatives in the 1st quarter of 2002.
3/31/2002 PAGE 11
Five Year Comparative Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
ASSETS 1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
Investments
Corporate bonds 16633.3 22505.2 21119.5 21249.7 23105.1
U.S. government bonds 662.4 1134.6 538.3 542.9 410.5
Foreign government bonds 1804.4 1321.2 1447.5 1321.1 1174.7
Mortgage backed securities 4529.3 5080.5 4404.0 4160.4 3524.7
State and municipal bonds 241.4 16.7 14.7 14.6 44.7
Preferred stocks-redeemable 195.5 174.6 164.7 161.2 85.9
Common stocks 572.3 463.1 514.5 436.6 319.3
Preferred stocks-equity 88.2 79.8 89.5 113.1 151.2
Mortgage loans 3288.1 4393.1 4735.4 4663.0 4535.5
Real estate 576.0 488.7 256.2 282.0 267.9
Policy loans 763.1 1840.0 1892.4 1960.9 1939.7
Other long-term investments 464.8 432.0 401.8 463.3 553.8
-------- -------- -------- -------- --------
Total Investments 29818.8 37929.5 35578.4 35368.6 36113.1
-------- -------- -------- -------- --------
Invest in unconsol affiliates 21.0 18.8 25.8 6.4 8.1
Cash and invested cash 3794.7 2433.4 1895.9 1927.4 3095.5
Property and equipment 189.8 174.8 203.8 228.2 257.5
Premiums and fees receivable 197.5 246.2 259.6 296.7 400.1
Accrued investment income 423.0 528.5 533.2 546.4 563.5
Assets held in separate accounts 37138.8 43408.9 53654.2 50579.9 44833.4
Federal income taxes recoverable 204.1 345.0 207.5 15.1
Amounts recoverable from reinsurers 2350.8 3127.1 3954.3 3747.7 6030.4
Deferred acquisition costs 1623.8 1964.4 2800.3 3070.5 2885.3
Other intangible assets 613.9 1848.4 1746.5 1557.0 1412.6
Goodwill 457.7 1484.3 1423.0 1286.0 1211.8
Other 544.8 468.0 675.7 1021.6 1174.9
-------- -------- -------- -------- --------
Total Assets 77174.7 93836.3 103095.7 99844.1 98001.3
======== ======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 8228.7 16434.2 17071.4 17841.2 17917.0
Health reserves 2300.4 2600.1 2507.8 2523.8 2537.9
Unpaid claims-life and health 682.0 1043.4 1269.8 1316.6 1087.5
Unearned premiums 55.3 62.3 75.8 46.5 66.9
Premium deposit funds 19803.0 20171.9 19624.1 17715.5 18585.0
Participating policyholders' funds 79.8 142.7 132.0 139.4 100.2
Other policyholders' funds 180.6 438.4 472.6 522.2 562.7
Liab related to separate accounts 37138.8 43408.9 53654.2 50579.9 44833.4
-------- -------- -------- -------- --------
Total Ins and Inv Contr Liabilities 68468.5 84301.9 94807.7 90685.1 85690.6
Federal income taxes 487.8
Short-term debt 297.2 314.6 460.2 312.9 350.2
Long-term debt 511.0 712.2 712.0 712.2 861.8
Minority Interest - pref sec of a sub 315.0 745.0 745.0 745.0 474.7
Other liabilities 2112.2 2374.6 2107.0 2434.7 4216.1
Deferred gain on indemnity reinsurance 1144.5
-------- -------- -------- -------- --------
Total Liabilities 72191.8 88448.3 98831.9 94890.0 92737.8
-------- -------- -------- -------- --------
S/Hs' equity-unrealized gains (losses)-cont op. 436.0 552.4 (465.7) 12.0 199.6
S/Hs' equity-foreign currency 46.2 50.0 30.0 21.9 (8.1)
S/Hs' equity-minimum pension liability adjustment (36.0)
S/Hs' equity-other 4500.7 4785.5 4699.6 4920.2 5090.4
Cumulative effect of accounting change 17.6
-------- -------- -------- -------- --------
Total Shareholders' Equity 4982.9 5387.9 4263.9 4954.1 5263.5
-------- -------- -------- -------- --------
Total Liabilities
and Shareholders' Equity 77174.7 93836.3 103095.7 99844.1 98001.3
======== ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $22.48 $23.86 $24.14 $25.85 $26.94
Common shares outstanding 202.3 202.6 196.0 191.2 187.3
3/31/2002 PAGE 12
Quarterly Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
ASSETS
Investments
Corporate bonds 21888.5 21560.5 21119.5 21188.0 20719.1 21064.7
U.S. government bonds 1367.8 991.0 538.3 572.4 566.2 575.5
Foreign government bonds 1339.7 1369.6 1447.5 1416.4 1377.4 1277.7
Mortgage backed securities 4788.5 4601.2 4404.0 4393.4 4242.4 4172.5
State and municipal bonds 19.1 14.8 14.7 14.7 14.1 14.3
Preferred stocks - redeemable 175.8 171.3 164.7 159.7 159.2 159.5
Common stocks 419.0 423.9 514.5 496.4 467.8 479.9
Preferred stocks-equity 86.7 82.7 89.5 91.3 92.2 90.3
Mortgage loans 4570.5 4772.7 4735.4 4833.9 4783.8 4767.3
Real estate 449.8 280.3 256.2 283.4 282.1 297.6
Policy loans 1847.4 1863.2 1892.4 1896.3 1914.7 1935.6
Other long-term investments 409.9 401.2 401.8 428.8 438.2 470.5
-------- -------- -------- -------- -------- --------
Total Investments 37362.6 36532.4 35578.4 35774.6 35057.2 35305.4
-------- -------- -------- -------- -------- --------
Invest in unconsol affiliates 22.3 23.4 25.8 (0.9) 5.8
Cash and invested cash 2151.1 2342.9 1895.9 1510.1 1619.3 1435.9
Property and equipment 180.7 191.9 203.8 207.7 205.5 213.8
Premiums and fees receivable 269.0 296.0 259.6 190.2 247.8 240.8
Accrued investment income 569.1 602.9 533.2 575.0 544.0 569.2
Assets held in separate accounts 47864.3 46228.8 53654.2 56907.6 54924.2 54410.9
Federal income taxes recoverable 478.4 457.3 345.0 300.4 246.1 267.3
Amount recoverable from reinsurers 3121.3 3315.6 3954.3 3851.0 3775.3 3774.7
Deferred acquisition costs 2398.3 2614.5 2800.3 2870.4 2968.0 3048.0
Other intangible assets 1764.9 1760.6 1746.5 1705.5 1646.7 1598.4
Goodwill 1428.3 1435.0 1423.0 1349.6 1335.4 1296.6
Other 651.1 699.3 675.7 1097.8 1279.1 1076.4
-------- -------- -------- -------- -------- --------
Total Assets 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1
======== ======== ======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 16536.4 16760.5 17071.4 17172.1 17247.3 17500.0
Health reserves 2528.2 2511.3 2507.8 2547.4 2494.2 2520.2
Unpaid claims-life and health 1064.9 1162.6 1269.8 1177.3 1204.1 1202.8
Unearned premiums 68.7 62.5 75.8 57.1 52.8 51.8
Premium deposit funds 20012.6 19988.9 19624.1 18899.3 18407.2 18072.1
Participating policyholders' funds 125.7 120.2 132.0 130.7 130.4 135.4
Other policyholders' funds 441.2 445.9 472.6 478.9 490.6 500.7
Liab related to separate accounts 47864.3 46228.8 53654.2 56907.6 54924.2 54410.9
-------- -------- -------- -------- -------- --------
Total Ins and Inv Contr Liabilities 88642.1 87280.8 94807.7 97370.5 94950.8 94394.0
Federal income taxes
Short-term debt 380.2 367.7 460.2 474.2 355.7 330.3
Long-term debt 712.1 712.0 712.0 712.0 712.1 712.2
Minority Interest - pref sec of a sub 745.0 745.0 745.0 745.0 745.0 745.0
Notes payable to LNC
Other liabilities 2964.7 2733.0 2107.0 2697.9 2860.3 2522.9
Deferred gain on indemnity reinsurance
-------- -------- -------- -------- -------- --------
Total Liabilities 93444.1 91838.5 98831.9 101999.6 99623.9 98704.5
-------- -------- -------- -------- -------- --------
S/Hs' equity-unrealized gns (losses)- inv. (1.1) (103.8) (465.7) (411.2) (556.6) (337.7)
S/Hs' equity- gains (losses)-derivatives*
S/Hs' equity-foreign currency 20.6 40.2 30.0 22.8 21.8 19.9
S/Hs' equity-minimum pension liability adj
S/Hs' equity-other 4797.9 4725.8 4699.6 4728.9 4758.5 4856.4
Cumulative effect of accounting change
-------- -------- -------- -------- -------- --------
Total Shareholders' Equity 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6
-------- -------- -------- -------- -------- --------
Total Liabilities
and Shareholders' Equity 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1
======== ======== ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $24.18 $24.28 $24.14 $24.58 $25.01 $25.43
Common shares outstanding 199.3 196.3 196.0 193.3 191.1 191.8
Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
-------- -------- -------- -------- -------- --------
ASSETS
Investments
Corporate bonds 21249.7 21855.2 22116.6 23424.3 23105.1 23470.4
U.S. government bonds 542.9 536.6 510.0 467.7 410.5 429.1
Foreign government bonds 1321.1 1240.8 1236.3 1160.3 1174.7 1180.1
Mortgage backed securities 4160.4 4009.8 3844.6 3765.6 3524.7 3613.9
State and municipal bonds 14.6 14.7 14.1 14.4 44.7 62.6
Preferred stocks - redeemable 161.2 154.1 152.2 99.3 85.9 84.6
Common stocks 436.6 388.6 373.3 311.2 319.3 284.4
Preferred stocks-equity 113.1 170.9 160.8 166.5 151.2 154.2
Mortgage loans 4663.0 4641.2 4652.8 4663.1 4535.5 4448.2
Real estate 282.0 308.1 306.9 288.8 267.9 258.2
Policy loans 1960.9 1947.0 1947.4 1943.4 1939.7 1918.0
Other long-term investments 463.3 477.4 480.9 483.4 553.8 459.6
-------- -------- -------- -------- -------- --------
Total Investments 35368.6 35744.5 35796.0 36788.0 36113.1 36363.1
-------- -------- -------- -------- -------- --------
Invest in unconsol affiliates 6.4 7.3 6.1 6.5 8.1 8.1
Cash and invested cash 1927.4 2015.2 1501.9 1996.3 3095.5 1699.5
Property and equipment 228.2 242.1 251.4 261.0 257.5 266.4
Premiums and fees receivable 296.7 282.8 303.7 264.5 400.1 376.3
Accrued investment income 546.4 581.9 573.2 615.1 563.5 577.1
Assets held in separate accounts 50579.9 44506.2 47140.2 39479.8 44833.4 44916.7
Federal income taxes recoverable 207.5 106.6 177.5 35.3 15.1 551.3
Amount recoverable from reinsurers 3747.7 3706.4 3662.0 3818.3 6030.4 6096.3
Deferred acquisition costs 3070.5 2963.4 3129.1 3087.2 2885.3 3114.9
Other intangible assets 1557.0 1505.3 1479.0 1451.5 1412.6 1384.0
Goodwill 1286.0 1274.5 1263.6 1253.2 1211.8 1211.5
Other 1021.6 1186.3 1147.7 1149.4 1174.9 1280.9
-------- -------- -------- -------- -------- --------
Total Assets 99844.1 94122.4 96431.2 90206.0 98001.3 97846.4
======== ======== ======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 17841.2 17733.0 17865.3 17990.8 17917.0 18014.6
Health reserves 2523.8 2534.8 2533.9 2573.2 2537.9 2492.4
Unpaid claims-life and health 1316.6 1255.3 1136.5 1206.6 1087.5 1153.6
Unearned premiums 46.5 45.9 19.0 8.1 66.9 66.5
Premium deposit funds 17715.5 17667.1 17715.9 18509.7 18585.0 18669.6
Participating policyholders' funds 139.4 145.0 135.2 118.3 100.2 98.6
Other policyholders' funds 522.2 532.1 541.4 554.3 562.7 571.9
Liab related to separate accounts 50579.9 44506.2 47140.2 39479.8 44833.4 44916.7
-------- -------- -------- -------- -------- --------
Total Ins and Inv Contr Liabilities 90685.1 84419.3 87087.2 80440.8 85690.6 85983.9
Federal income taxes
Short-term debt 312.9 415.3 351.3 539.0 350.2 510.2
Long-term debt 712.2 712.3 712.4 712.4 861.8 861.8
Minority Interest - pref sec of a sub 745.0 745.0 745.0 305.0 474.7 376.2
Notes payable to LNC
Other liabilities 2434.7 2734.2 2479.4 2840.2 4216.1 3864.6
Deferred gain on indemnity reinsurance 1144.5 1118.6
-------- -------- -------- -------- -------- --------
Total Liabilities 94890.0 89026.0 91375.3 84837.4 92737.8 92715.3
-------- -------- -------- -------- -------- --------
S/Hs' equity-unrealized gns (losses)- inv. 12.0 190.4 76.2 247.9 195.7 31.8
S/Hs' equity- gains (losses)-derivatives* 5.7 9.4 2.8 3.9 22.6
S/Hs' equity-foreign currency 21.9 4.1 (15.3) 6.9 (8.1) (20.9)
S/Hs' equity-minimum pension liability adj (36.0) (35.2)
S/Hs' equity-other 4920.1 4878.5 4968.2 5093.4 5090.4 5132.7
Cumulative effect of accounting change 17.6 17.6 17.6 17.6
-------- -------- -------- -------- -------- --------
Total Shareholders' Equity 4954.1 5096.4 5055.9 5368.6 5263.5 5131.1
-------- -------- -------- -------- -------- --------
Total Liabilities
and Shareholders' Equity 99844.1 94122.4 96431.2 90206.0 98001.3 97846.4
======== ======== ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $25.85 $25.96 $26.32 $26.87 $26.94 $27.02
Common shares outstanding 191.2 188.1 188.2 189.8 187.3 187.9
* Cumulative effect of accounting change recorded upon the adoption of FAS 133
in the 1st quarter of 2001 is a component of gains (losses) on derivatives in the 1st quarter of 2002.
3/31/2002 PAGE 13
Lincoln Retirement
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Dec Dec Dec Dec Dec
For the Year Ended December 31 1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
Operating Revenue
Premiums 84.2 53.9 65.2 64.3 77.5
Surrender charges 29.8 33.5 37.9 41.8 31.2
Expense assessments 367.2 459.9 536.2 628.4 537.7
Other revenue and fees 1.2 1.7 14.5 11.0 16.7
Net investment income 1477.1 1501.6 1474.2 1393.5 1370.0
-------- -------- -------- -------- --------
Operating Revenue 1959.5 2050.6 2128.0 2138.9 2033.1
-------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 292.6 271.6 259.1 254.7 263.9
Interest credited to policy bal. 974.4 955.2 925.2 866.1 863.8
Underwriting, acquisition,
insurance and other expenses 415.0 498.8 560.8 575.5 524.5
Goodwill amortization 0.0 2.2 2.0 (0.6) 1.2
-------- -------- -------- -------- --------
Operating Benefits and Expenses 1682.0 1727.8 1747.1 1695.7 1653.5
-------- -------- -------- -------- --------
Income from Operations Before Tax 277.5 322.8 380.9 443.2 379.6
Federal income taxes 54.5 60.4 81.4 81.2 59.3
-------- -------- -------- -------- --------
Income from Operations 223.0 262.4 299.4 362.0 320.3
-------- -------- -------- -------- --------
Realized gains (losses) on investments 40.3 11.4 (7.9) (3.4) (42.3)
Gains (losses) on derivatives (0.2)
Restructuring charges (1.3)
-------- -------- -------- -------- --------
Income before Accounting Changes 263.3 273.8 291.5 358.6 276.5
Cumulative effect of accounting changes (7.3)
-------- -------- -------- -------- --------
Net Income 263.3 273.8 291.5 358.6 269.2
======== ======== ======== ======== ========
Inc from Oper -before Goodwill Amort. 223.0 264.6 301.5 361.4 321.5
Net Income -before Goodwill Amort. 263.3 276.0 293.6 358.0 270.5
Effective tax rate 19.6% 18.7% 21.4% 18.3% 15.6%
Operating Revenue 1959.5 2050.6 2128.0 2138.9 2033.1
Realized gains (losses) on investments 63.5 17.5 (12.1) (5.2) (64.5)
Gains (losses) on derivatives (0.3)
-------- -------- -------- -------- --------
Total Revenue 2023.0 2068.1 2115.8 2133.7 1968.3
======== ======== ======== ======== ========
Average capital 1373.0 1592.6 1562.0 1601.8 1828.2
Return on average capital 16.2% 16.5% 19.2% 22.6% 17.5%
PAGE 14
Lincoln Retirement
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
Operating Revenue
Premiums 16.2 13.1 21.0 13.3 16.8 18.0
Surrender charges 9.3 10.1 9.8 11.1 11.2 10.4
Expense assessments 133.3 142.6 140.5 155.1 155.7 163.4
Other revenue and fees 3.2 0.9 6.4 2.2 0.6 4.6
Net investment income 370.2 364.5 366.0 362.9 345.8 349.8
------ ------ ------ ------ ------ ------
Operating Revenue 532.3 531.2 543.7 544.6 530.1 546.2
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 65.0 55.0 77.2 61.6 65.7 68.4
Interest credited to policy balances 232.9 230.1 234.1 228.2 219.4 205.4
Underwriting, acquisition,
insurance and other expenses 141.0 146.5 134.7 144.5 139.8 147.9
Goodwill amortization 0.4 0.6 0.5 (1.5) 0.3 0.3
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses 439.2 432.2 446.5 432.8 425.2 421.9
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 93.0 99.0 97.2 111.8 104.8 124.2
Federal income taxes 17.1 23.6 23.5 23.3 20.7 21.3
------ ------ ------ ------ ------ ------
Income from Operations 75.9 75.4 73.7 88.5 84.1 102.9
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 0.5 (7.0) (3.7) 2.7 0.3 (9.1)
Gains (losses) on derivatives
Restructuring charges
------ ------ ------ ------ ------ ------
Income before Accounting Changes 76.4 68.4 69.9 91.2 84.4 93.8
Cumulative effect of accounting changes
------ ------ ------ ------ ------ ------
Net Income 76.4 68.4 69.9 91.2 84.4 93.8
====== ====== ====== ====== ====== ======
Inc from Oper -before Goodwill Amort. 76.3 76.0 74.2 87.0 84.4 103.2
Net Income -before Goodwill Amort. 76.8 69.1 70.4 89.7 84.7 94.1
Effective tax rate 18.4% 23.8% 24.2% 20.8% 19.7% 17.1%
Operating Revenue 532.3 531.2 543.7 544.6 530.1 546.2
Realized gains (losses) on investments 0.7 (10.7) (5.8) 4.2 0.4 (14.1)
Gains (losses) on derivatives
------ ------ ------ ------ ------ ------
Total Revenue 533.0 520.5 538.0 548.7 530.5 532.1
====== ====== ====== ====== ====== ======
Average capital 1602.4 1471.2 1559.0 1438.4 1647.7 1635.2
Return on average capital 19.0% 20.5% 18.9% 24.6% 20.4% 25.2%
Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
----- ------ ------ ------ ------ ------
C>
Operating Revenue
Premiums 16.2 19.1 32.5 13.2 12.7 12.2
Surrender charges 9.1 9.1 8.5 6.5 7.2 7.9
Expense assessments 154.2 141.6 138.0 132.0 126.2 127.7
Other revenue and fees 3.5 1.7 3.9 1.2 10.0 5.8
Net investment income 335.0 341.3 339.3 346.6 342.6 349.9
----- ------ ------ ------ ------ ------
Operating Revenue 518.1 512.8 522.1 499.5 498.7 503.5
----- ------ ------ ------ ------ ------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 59.0 69.8 72.6 66.3 55.3 55.4
Interest credited to policy balances 213.2 209.4 209.7 217.2 227.5 226.1
Underwriting, acquisition,
insurance and other expenses 143.2 134.6 126.0 132.8 131.1 124.9
Goodwill amortization 0.3 0.3 0.3 0.3 0.3
----- ------ ------ ------ ------ ------
Operating Benefits and Expenses 415.7 414.1 408.6 416.6 414.2 406.4
----- ------ ------ ------ ------ ------
Income from Operations Before Tax 102.3 98.7 113.6 82.9 84.5 97.1
Federal income taxes 15.9 16.3 22.8 10.4 9.7 16.7
----- ------ ------ ------ ------ ------
Income from Operations 86.4 82.3 90.8 72.4 74.8 80.4
----- ------ ------ ------ ------ ------
Realized gains (losses) on investments 2.8 (1.4) (6.7) (13.5) (20.7) (32.8)
Gains (losses) on derivatives (0.1) 0.1 (0.3) 0.1 0.0
Restructuring charges (0.7) (0.6) 0.0 0.0 0.0
----- ------ ------ ------ ------ ------
Income before Accounting Changes 89.2 80.2 83.6 58.6 54.2 47.6
Cumulative effect of accounting changes (3.6) (3.7) 0.0 0.0 0.0
----- ------ ------ ------ ------ ------
Net Income 89.2 76.6 79.9 58.6 54.2 47.6
===== ====== ====== ====== ====== ======
Inc from Oper -before Goodwill Amort. 86.7 82.6 91.1 72.7 75.1 80.4
Net Income -before Goodwill Amort. 89.5 76.9 80.2 58.9 54.5 47.6
Effective tax rate 15.6% 16.6% 20.1% 12.6% 11.5% 17.2%
Operating Revenue 518.1 512.8 522.1 499.5 498.7 503.5
Realized gains (losses) on investments 4.2 (2.2) (10.3) (20.8) (31.3) (50.5)
Gains (losses) on derivatives (0.2) 0.2 (0.5) 0.2 0.0
----- ------ ------ ------ ------ ------
Total Revenue 522.3 510.4 512.1 478.2 467.5 453.0
===== ====== ====== ====== ====== ======
Average capital 1686.0 1797.9 1787.1 1902.9 1824.9 2041.6
Return on average capital 20.5% 18.3% 20.3% 15.2% 16.4% 15.8%
----- ------ ------ ------ ------ ------
PAGE 15
Lincoln Retirement
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars]
1997 1998 1999 2000 2001
------- ------ ------ ------ ------
Fixed Annuities- Bal Beg-of-Year 17.634 17.214 18.111 18.210 16.615
Gross Deposits 1.632 1.452 2.563 2.074 3.342
Withdrawals (incl charges) & deaths (2.220) (2.468) (2.521) (3.283) (2.448)
------- ------ ------ ------ ------
Net cash flows (0.588) (1.016) 0.042 (1.209) 0.894
Transfer from (to) var annuities (1.336) (0.356) (0.783) (1.329) (0.428)
Interest credited 0.978 0.994 0.840 0.944 0.923
Acq of new business/companies 0.527 1.274
------- ------ ------ ------ ------
Fixed Annuities-Gross 17.214 18.111 18.210 16.615 18.004
------- ------ ------ ------ ------
Reinsurance Ceded (1.757) (1.606) (1.419) (1.221) (1.514)
------- ------ ------ ------ ------
Fixed Annuities-Bal End -of-Year 15.458 16.505 16.791 15.394 16.491
------- ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 1.412 1.265 2.310 1.918 3.213
Variable Annuities-Bal Beg-of-Year 20.383 27.346 33.358 41.493 39.427
Gross Deposits 2.695 2.791 2.553 3.165 3.067
Withdrawals (incl charges) & deaths (2.038) (3.019) (3.760) (4.830) (3.856)
------- ------ ------ ------ ------
Net cash flows 0.657 (0.228) (1.207) (1.665) (0.789)
Transfer from (to) fixed annuities 1.335 0.389 0.787 1.320 0.428
Invest inc & change in mkt value 4.971 5.414 8.555 (1.721) (4.428)
Acq(sale) of new business/companies 0.437
------- ------ ------ ------ ------
Var Annuities-Bal End-of-Year 27.346 33.358 41.493 39.427 34.638
------- ------ ------ ------ ------
Variable Annuities Incremental Deposits * 2.585 2.641 2.409 2.667 2.624
Total Annuities - Bal Beg-of-Year 38.017 44.561 51.469 59.704 56.043
Gross Deposits 4.327 4.244 5.116 5.239 6.409
Withdrawals (incl charges) & deaths (4.258) (5.487) (6.281) (8.113) (6.304)
------- ------ ------ ------ ------
Net cash flows 0.069 (1.244) (1.165) (2.874) 0.105
Transfers (0.001) 0.033 0.004 (0.009) 0.000
Interest credited & change in mkt value 5.949 6.408 9.395 (0.777) (3.505)
Acq of new business/companies 0.527 1.711
------- ------ ------ ------ ------
Total Gross Annuities-Bal End-of-Year 44.561 51.469 59.704 56.043 52.643
Reinsurance Ceded (1.757) (1.606) (1.419) (1.221) (1.514)
------- ------ ------ ------ ------
Total Annuities (Net of Ceded) - Bal End-of-Year 42.804 49.863 58.284 54.821 51.129
======= ====== ====== ====== ======
Total Annuities Incremental Deposits * 3.997 3.906 4.719 4.585 5.837
Var Ann Under Agree - Included above 0.649 0.719 0.941 1.077
Fixed Annuities - excluding fixed portion of variable contracts
Deposits 0.709 0.134 1.712
Withdrawals (1.367) (0.612) (1.604)
Net Flows (0.658) (0.479) 0.108
Variable Annuities - including fixed portion of variable contracts
Deposits 4.407 1.252 4.697
Withdrawals (4.915) (1.473) (4.700)
Net Flows (0.508) (0.221) (0.003)
Fixed Portion of Variable Contracts
Deposits 1.853 1.543 1.630
Withdrawals (1.154) (0.873) (0.844)
Net Flows 0.699 0.670 0.786
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
3/31/02 PAGE 16
Lincoln Retirement
Annuity Account Value Roll Forward
Unaudited [Billions of Dollars]
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
Fixed Annuities-Bal Beg-of-Quarter 18.225 18.303 18.406 18.210 17.615 17.200
Gross Deposits 0.654 0.678 0.741 0.589 0.490 0.513
Withdrawals (incl charges) & deaths (0.593) (0.567) (0.782) (0.875) (0.796) (0.802)
-------- -------- -------- -------- -------- --------
Net cash flows 0.061 0.111 (0.040) (0.287) (0.307) (0.288)
Transfer from (to) var annuities (0.211) (0.238) (0.300) (0.550) (0.346) (0.217)
Interest credited 0.228 0.231 0.144 0.241 0.238 0.235
Acq of new business/companies
-------- -------- -------- -------- -------- --------
Fixed Annuities-Gross 18.303 18.406 18.210 17.615 17.200 16.930
Reinsurance Ceded (1.524) (1.473) (1.419) (1.371) (1.316) (1.270)
-------- -------- -------- -------- -------- --------
Fixed Annuities-Bal End-of-Quarter 16.779 16.934 16.791 16.244 15.884 15.660
-------- -------- -------- -------- -------- --------
Fixed Annuities Incremental Deposits * 0.622 0.644 0.582 0.560 0.447 0.464
Variable Annuities-Bal Beg-of-Quarter 34.148 37.233 35.613 41.493 44.640 43.097
Gross Deposits 0.651 0.634 0.634 0.797 0.793 0.729
Withdrawals (incl charges) & deaths (0.912) (0.938) (1.084) (1.210) (1.168) (1.253)
-------- -------- -------- -------- -------- --------
Net cash flows (0.261) (0.304) (0.450) (0.413) (0.375) (0.524)
Transfer from (to) fixed annuities 0.213 0.237 0.303 0.549 0.343 0.216
Invest inc & change in mkt value 3.133 (1.553) 6.027 3.011 (1.511) (0.046)
Acq(sale) of new business/companies
-------- -------- -------- -------- -------- --------
Var Annuities-Bal End-of-Quarter 37.233 35.613 41.493 44.640 43.097 42.743
-------- -------- -------- -------- -------- --------
Variable Annuities Incremental Deposits 0.622 0.589 0.592 0.732 0.699 0.586
Total Annuities -Bal Beg-of-Quarter 52.373 55.536 54.020 59.704 62.255 60.297
Gross Deposits 1.305 1.312 1.375 1.386 1.283 1.242
Withdrawals (incl charges) & deaths (1.505) (1.505) (1.865) (2.085) (1.964) (2.055)
-------- -------- -------- -------- -------- --------
Net cash flows (0.200) (0.193) (0.490) (0.700) (0.682) (0.812)
Transfers 0.002 (0.001) 0.003 (0.001) (0.003) (0.001)
Interest credited & change in mkt value 3.361 (1.322) 6.171 3.252 (1.273) 0.189
Acq of new business/companies
-------- -------- -------- -------- -------- --------
Total Gross Annuities-Bal End-of-Quarter 55.536 54.020 59.704 62.255 60.297 59.673
-------- -------- -------- -------- -------- --------
Reinsurance Ceded (1.524) (1.473) (1.419) (1.371) (1.316) (1.270)
-------- -------- -------- -------- -------- --------
Total Annuities (Net of Ceded) - Bal End-of-Qtr 54.012 52.547 58.284 60.884 58.981 58.403
======== ======== ======== ======== ======== ========
Total Annuities Incremental Deposits * 1.244 1.233 1.174 1.292 1.145 1.050
Var Ann Under Agree - Included above 0.685 0.639 0.719 0.866 0.868 0.962
Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
-------- -------- -------- -------- -------- --------
Fixed Annuities-Bal Beg-of-Quarter 16.930 16.615 16.599 16.697 17.317 18.004
Gross Deposits 0.482 0.560 0.668 0.896 1.218 0.906
Withdrawals (incl charges) & deaths (0.810) (0.787) (0.574) (0.525) (0.562) (0.730)
-------- -------- -------- -------- -------- --------
Net cash flows (0.328) (0.227) 0.094 0.372 0.656 0.176
Transfer from (to) var annuities (0.216) (0.014) (0.222) 0.021 (0.213) (0.232)
Interest credited 0.230 0.225 0.226 0.228 0.244 0.230
Acq of new business/companies
-------- -------- -------- -------- -------- --------
Fixed Annuities-Gross 16.615 16.599 16.697 17.317 18.004 18.178
Reinsurance Ceded (1.221) (1.169) (1.146) (1.266) (1.514) (1.645)
-------- -------- -------- -------- -------- --------
Fixed Annuities-Bal End-of-Quarter 15.394 15.430 15.551 16.051 16.491 16.533
-------- -------- -------- -------- -------- --------
Fixed Annuities Incremental Deposits * 0.447 0.536 0.611 0.873 1.193 0.881
Variable Annuities-Bal Beg-of-Quarter 42.743 39.427 34.733 36.961 30.506 34.638
Gross Deposits 0.846 0.887 0.703 0.684 0.793 0.808
Withdrawals (incl charges) & deaths (1.199) (1.250) (0.993) (0.795) (0.818) (0.896)
-------- -------- -------- -------- -------- --------
Net cash flows (0.353) (0.363) (0.290) (0.111) (0.025) (0.088)
Transfer from (to) fixed annuities 0.212 0.011 0.227 (0.023) 0.213 0.234
Invest inc & change in mkt value (3.175) (4.342) 2.291 (6.321) 3.944 0.366
Acq(sale) of new business/companies
-------- -------- -------- -------- -------- --------
Var Annuities-Bal End-of-Quarter 39.427 34.733 36.961 30.506 34.638 35.150
-------- -------- -------- -------- -------- --------
Variable Annuities Incremental Deposits 0.650 0.683 0.612 0.604 0.725 0.725
Total Annuities -Bal Beg-of-Quarter 59.673 56.043 51.332 53.658 47.824 52.643
Gross Deposits 1.328 1.447 1.371 1.580 2.011 1.714
Withdrawals (incl charges) & deaths (2.009) (2.037) (1.567) (1.320) (1.380) (1.626)
-------- -------- -------- -------- -------- --------
Net cash flows (0.681) (0.590) (0.196) 0.261 0.631 0.088
Transfers (0.004) (0.003) 0.005 (0.002) 0.002
Interest credited & change in mkt value (2.945) (4.117) 2.517 (6.093) 4.188 0.596
Acq of new business/companies
-------- -------- -------- -------- -------- --------
Total Gross Annuities-Bal End-of-Quarter 56.043 51.332 53.658 47.824 52.643 53.329
Reinsurance Ceded (1.221) (1.169) (1.146) (1.266) (1.514) (1.645)
-------- -------- -------- -------- -------- --------
Total Annuities (Net of Ceded) - Bal End-of-Qtr 54.821 50.163 52.512 46.558 51.129 51.684
======== ======== ======== ======== ======== ========
Total Annuities Incremental Deposits * 1.097 1.219 1.223 1.477 1.918 1.606
Var Ann Under Agree - Included above 0.941 0.904 0.975 0.907 1.077 1.207
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
Fixed Annuities - excluding fixed
portion of variable contracts
Deposits 0.151 0.147 0.275 0.134 0.126 0.114
Withdrawals (0.318) (0.329) (0.428) (0.612) (0.557) (0.532)
Net Flows (0.167) (0.182) (0.152) (0.479) (0.431) (0.417)
Variable Annuities - including
fixed portion of variable contracts
Deposits 1.154 1.165 1.100 1.252 1.157 1.128
Withdrawals (1.187) (1.176) (1.438) (1.473) (1.408) (1.523)
Net Flows (0.033) (0.011) (0.338) (0.221) (0.251) (0.395)
Fixed Portion of Variable Contracts
Deposits 0.503 0.531 0.466 0.455 0.364 0.399
Withdrawals (0.275) (0.238) (0.354) (0.263) (0.240) (0.270)
Net Flows 0.228 0.293 0.112 0.192 0.124 0.129
Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
-------- -------- -------- -------- -------- --------
Fixed Annuities - excluding fixed
portion of variable contracts
Deposits 0.085 0.160 0.329 0.489 0.734 0.505
Withdrawals (0.570) (0.556) (0.356) (0.340) (0.352) (0.463)
Net Flows (0.485) (0.396) (0.027) 0.149 0.382 0.042
Variable Annuities - including
fixed portion of variable contracts
Deposits 1.243 1.287 1.042 1.091 1.277 1.209
Withdrawals (1.439) (1.481) (1.211) (0.979) (1.028) (1.163)
Net Flows (0.196) (0.194) (0.169) 0.112 0.249 0.046
Fixed Portion of Variable Contracts
Deposits 0.397 0.400 0.339 0.407 0.484 0.401
Withdrawals (0.240) (0.231) (0.218) (0.184) (0.210) (0.267)
Net Flows 0.157 0.169 0.121 0.223 0.274 0.134
3/31/2002 PAGE 17
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Dec Dec Dec Dec Dec
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
Operating Revenue
Premiums 64.8 185.9 235.8 227.3 212.4
Surrender charges 9.8 52.1 66.3 66.4 66.1
Mortality assessments 161.2 350.1 444.6 465.2 499.4
Expense assessments 28.6 146.2 165.8 191.8 191.4
Other revenue and fees 9.0 2.6 9.8 14.2 17.9
Net investment income 268.2 642.6 840.1 871.5 910.2
-------- -------- -------- -------- --------
Operating Revenue 541.5 1379.5 1762.6 1836.4 1897.5
-------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 143.6 371.2 430.5 411.5 418.5
Div accum & div to policyholders 20.4 70.7 81.5 80.8 78.5
Interest credited to policy bal. 153.0 393.1 493.8 525.4 569.9
Underwriting, acquisition,
insurance and other expenses 172.1 293.1 399.1 384.8 374.7
Goodwill amortization 0.1 19.7 23.4 23.7 23.7
-------- -------- -------- -------- --------
Operating Benefits and Expenses 489.3 1147.8 1428.2 1426.3 1465.4
-------- -------- -------- -------- --------
Income from Operations Before Tax 52.3 231.6 334.3 410.1 432.1
Federal income taxes 12.4 82.4 122.3 150.1 153.0
-------- -------- -------- -------- --------
Income from Operations 39.9 149.2 212.0 259.9 279.0
-------- -------- -------- -------- --------
Realized gains (losses) on investments (0.8) (1.7) (0.5) (10.7) (38.5)
Gains (losses) on derivatives 1.6
Restructuring charges 0.0 (20.0) 0.0 0.0 (3.5)
-------- -------- -------- -------- --------
Income before Accounting Changes 39.1 127.5 211.5 249.3 238.6
Cumulative effect of accounting changes (5.5)
-------- -------- -------- -------- --------
Net Income 39.1 127.5 211.5 249.3 233.1
======== ======== ======== ======== ========
Inc from Oper -before Goodwill Amort. 40.0 168.9 235.4 283.6 302.7
Net Income -before Goodwill Amort. 39.2 147.1 234.9 273.0 256.7
Effective tax rate 23.7% 35.6% 36.6% 36.6% 35.4%
Operating Revenue 541.5 1,379.5 1,762.6 1836.4 1897.5
Realized gains (losses) on investments 3.2 (1.0) (2.2) (17.4) (57.6)
Gains (losses) on derivatives 0.7
-------- -------- -------- -------- --------
Total Revenue 544.8 1378.5 1760.4 1819.0 1840.6
======== ======== ======== ======== ========
Average capital 384.9 1948.0 2712.3 2640.2 2731.5
Return on average capital 10.4% 7.7% 7.8% 9.8% 10.2%
First Year Premiums by Product (Millions)
Universal Life 114.0 233.0 342.9 289.3 292.7
Variable Universal Life 52.9 101.3 142.2 218.7 228.6
Whole Life 5.4 20.0 23.9 22.4 26.3
Term 33.0 48.0 45.9 41.9 30.8
-------- -------- -------- -------- --------
Total Retail 205.3 402.3 555.0 572.3 578.4
Corporate Owned Life Insurance (COLI) 0.0 4.0 14.7 87.0 47.3
-------- -------- -------- -------- --------
Total 205.3 406.3 569.7 659.3 625.6
-------- -------- -------- -------- --------
First Year Premiums by Distribution (Millions)
Lincoln Financial Advisors 71.0 35.0 188.3 200.6 196.1
Lincoln Financial Distributors 134.3 356.3 367.9 444.7 413.0
Other* 0.0 15.0 13.5 14.0 16.6
-------- -------- -------- -------- --------
Total by Distribution 205.3 406.3 569.7 659.3 625.6
======== ======== ======== ======== ========
Life Insurance In-Force (Billions)
Universal Life & Other 32.827 105.837 109.288 115.872 121.168
Term Insurance 30.337 67.076 85.701 100.130 113.226
-------- -------- -------- -------- --------
Total Life Segment In-Force 63.164 172.914 194.988 216.002 234.394
======== ======== ======== ======== ========
*Other consists of distribution arrangements with third-party intermediaries.
3/31/2002 PAGE 18
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 57.8 52.4 71.1 53.0 56.3 50.9
Surrender charges 16.5 17.1 18.0 16.2 16.5 13.8
Mortality assessments 111.4 110.5 113.9 112.2 114.5 116.3
Expense assessments 35.4 42.8 48.0 45.3 44.1 46.9
Other revenue and fees 1.6 2.4 3.9 3.2 3.6 3.8
Net investment income 207.8 209.6 214.8 215.6 215.5 220.6
-------- ------- ------- ------- ------- -------
Operating Revenue 430.6 434.9 469.6 445.5 450.5 452.4
-------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 108.7 105.4 112.8 98.4 96.3 95.8
Div accum & div to policyholders 21.0 19.2 21.0 20.4 18.7 16.4
Interest credited to policy bal. 123.0 122.8 122.3 126.3 128.7 134.0
Underwriting, acquisition,
insurance and other expenses 86.5 99.1 117.8 99.4 100.9 94.9
Goodwill amortization 5.0 6.4 6.0 5.9 5.9 5.9
-------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 344.1 353.0 379.9 350.3 350.6 347.0
-------- ------- ------- ------- ------- -------
Income from Operations Before Tax 86.5 82.0 89.8 95.2 99.9 105.4
Federal income taxes 32.0 29.4 32.8 34.8 37.4 38.9
-------- ------- ------- ------- ------- -------
Income from Operations 54.4 52.6 57.0 60.4 62.4 66.5
-------- ------- ------- ------- ------- -------
Realized gains (losses) on investments (2.9) 1.4 2.8 (2.4) (4.0) 1.0
Gains (losses) on derivatives
Restructuring charges
-------- ------- ------- ------- ------- -------
Income before Accounting Changes 51.5 54.0 59.7 58.1 58.4 67.4
Cumulative effect of accounting changes
Net Income 51.5 54.0 59.7 58.1 58.4 67.4
======== ======= ======= ======= ======= =======
Inc from Oper -before Goodwill Amort. 59.5 59.0 63.0 66.3 68.4 72.4
Net Income -before Goodwill Amort. 56.6 60.4 65.8 64.0 64.4 73.4
Effective tax rate 37.0% 35.9% 36.5% 36.5% 37.5% 36.9%
Operating Revenue 430.6 434.9 469.6 445.5 450.5 452.4
Realized gains (losses) on investments (4.4) 2.1 3.4 (3.8) (6.3) 0.8
Gains (losses) on derivatives
-------- ------- ------- ------- ------- -------
Total Revenue 426.3 437.1 473.1 441.7 444.2 453.2
======== ======= ======= ======= ======= =======
Average capital 2739.4 2707.4 2686.0 2655.3 2615.0 2650.5
Return on average capital 7.9% 7.8% 8.5% 9.1% 9.6% 10.0%
First Year Premiums by Product (Millions)
Universal Life 81.2 75.6 113.2 72.3 63.7 72.4
Variable Universal Life 26.9 30.0 55.6 44.0 44.5 55.1
Whole Life 5.2 6.4 8.0 3.9 4.5 6.0
Term 11.9 10.5 11.0 13.1 12.1 9.1
-------- ------- ------- ------- ------- -------
Total Retail 125.2 122.5 187.8 133.3 124.8 142.6
Corporate Owned Life Insurance (COLI) 6.6 2.3 4.0 12.7 19.5 5.8
-------- ------- ------- ------- ------- -------
Total 131.8 124.8 191.9 146.0 144.3 148.4
-------- ------- ------- ------- ------- -------
First Year Premiums by Distribution
(Millions)
Lincoln Financial Advisors 35.1 39.4 72.8 46.1 37.0 51.3
Lincoln Financial Distributors 93.3 82.0 115.0 96.8 104.4 92.9
Other* 3.3 3.4 4.1 3.0 2.9 4.2
-------- ------- ------- ------- ------- -------
Total by Distribution 131.8 124.8 191.9 146.0 144.3 148.4
======== ======= ======= ======= ======= =======
Insurance In-Force (Billions)
Universal Life & Other 106.047 106.945 109.288 108.817 110.448 112.884
Term Insurance 78.431 81.963 85.701 92.857 97.039 98.424
-------- ------- ------- ------- ------- -------
Total Segment In-Force 184.478 188.908 194.988 201.674 207.487 211.308
======== ======= ======= ======= ======= =======
For the Quarter Ended Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
-------- ------- ------- ------- ------- -------
Operating Revenue
Premiums 67.1 50.9 50.7 46.4 64.4 51.1
Surrender charges 19.9 17.2 13.5 15.6 19.9 11.7
Mortality assessments 122.1 124.3 124.8 124.7 125.5 123.9
Expense assessments 55.5 47.4 45.3 46.0 52.8 46.9
Other revenue and fees 3.7 5.1 3.8 3.0 6.0 5.7
Net investment income 219.7 223.0 227.4 233.2 226.6 226.0
------- ------- ------- ------- ------- -------
Operating Revenue 488.0 467.9 465.5 468.9 495.2 465.3
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 121.0 99.9 103.5 102.3 112.9 104.1
Div accum & div to policyholders 25.3 17.5 19.0 16.5 25.4 17.8
Interest credited to policy bal. 136.5 138.3 141.2 143.5 146.9 146.3
Underwriting, acquisition,
insurance and other expenses 89.6 98.8 92.0 92.5 91.4 92.1
Goodwill amortization 5.9 5.9 5.9 5.9 5.9
------- ------- ------- ------- ------- -------
Operating Benefits and Expenses 378.4 360.5 361.7 360.8 382.5 360.2
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 109.6 107.4 103.8 108.1 112.7 105.1
Federal income taxes 39.0 38.8 36.7 38.1 39.5 34.0
------- ------- ------- ------- ------- -------
Income from Operations 70.6 68.6 67.1 70.1 73.2 71.1
------- ------- ------- ------- ------- -------
Realized gains (losses) on investments (5.2) (5.4) (6.4) (5.3) (21.3) (26.9)
Gains (losses) on derivatives (0.0) 0.1 (0.0) 1.5 0.0
Restructuring charges (2.0) (1.5)
------- ------- ------- ------- ------- -------
Income before Accounting Changes 65.4 63.2 58.8 64.7 51.9 44.2
Cumulative effect of accounting changes (0.2) (5.3) 0.0 (0.0) 0.0
Net Income 65.4 62.9 53.5 64.7 51.9 44.2
======= ======= ======= ======= ======= =======
Inc from Oper -before Goodwill Amort. 76.5 74.5 73.0 76.0 79.1 71.1
Net Income -before Goodwill Amort. 71.3 68.9 59.5 70.6 57.8 44.2
Effective tax rate 35.6% 36.1% 35.3% 35.2% 35.0% 32.3%
Operating Revenue 488.0 467.9 465.5 468.9 495.2 465.3
Realized gains (losses) on investments (8.1) (8.2) (10.0) (8.2) (31.1) (41.4)
Gains (losses) on derivatives (0.0) 0.2 (0.1) 0.6 0.0
------- ------- ------- ------- ------- -------
Total Revenue 479.9 459.6 455.7 460.6 464.7 423.9
======= ======= ======= ======= ======= =======
Average capital 2640.0 2729.8 2715.7 2736.3 2744.4 2801.9
Return on average capital 10.7% 10.1% 9.9% 10.2% 10.7% 10.2%
First Year Premiums by Product (Millions)
Universal Life 80.9 57.7 70.0 67.4 97.5 86.4
Variable Universal Life 75.1 56.0 52.2 50.1 70.2 39.0
Whole Life 8.0 4.1 5.1 6.7 10.4 5.2
Term 7.6 6.5 7.2 8.1 9.1 8.7
-------- ------- ------- ------- ------- -------
Total Retail 171.6 124.2 134.6 132.4 187.2 139.4
Corporate Owned Life Insurance (COLI) 49.0 7.1 21.0 5.1 14.2 6.9
------- ------- ------- ------- ------- -------
Total 220.7 131.3 155.6 137.4 201.3 146.3
------- ------- ------- ------- ------- -------
First Year Premiums by Distribution
(Millions)
Lincoln Financial Advisors 66.2 38.1 48.2 41.8 68.0 41.5
Lincoln Financial Distributors 150.6 89.1 104.0 90.4 129.5 100.9
Other* 3.9 4.2 3.4 5.2 3.8 3.8
------- ------- ------- ------- ------- -------
Total by Distribution 220.7 131.3 155.6 137.4 201.3 146.3
======= ======= ======= ======= ======= =======
Insurance In-Force (Billions)
Universal Life & Other 115.872 116.747 118.007 119.029 121.168 122.316
Term Insurance 100.130 102.467 105.265 108.723 113.226 117.752
------- ------- ------- ------- ------- -------
Total Segment In-Force 216.002 219.214 223.272 227.751 234.394 240.068
======= ======= ======= ======= ======= =======
*Other consists of distribution arrangements with third-party intermediaries.
3/31/2002 PAGE 19
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
Universal Life-Bal Beg-of-Year 2.530 2.558 6.259 6.650 6.976
Deposits 0.278 0.675 1.017 0.955 1.043
Withdrawals & deaths (0.399) (0.701) (0.452) (0.426) (0.319)
-------- -------- -------- -------- --------
Net cash flows (0.121) (0.026) 0.564 0.528 0.724
Policyholder assessments (0.544) (0.584) (0.598)
Interest credited 0.149 0.350 0.370 0.382 0.405
Acq of new business/transfers between segments 0.000 3.378 0.000 0.000 0.000
-------- -------- -------- -------- --------
Universal Life-Bal End of Year (1) 2.558 6.259 6.650 6.976 7.508
-------- -------- -------- -------- --------
Variable Universal Life-Bal Beg-of-Year 0.339 0.480 1.200 1.605 1.808
Deposits 0.106 0.193 0.326 0.607 0.584
Withdrawals & deaths (0.040) (0.100) (0.099) (0.132) (0.251)
-------- -------- -------- -------- --------
Net cash flows 0.065 0.093 0.228 0.475 0.332
Policyholder assessments 0.000 (0.084) (0.141) (0.170)
Invest inc & chg in mkt value 0.076 0.105 0.370 (0.130) (0.225)
Acq of new business/transfers between segments 0.000 0.522 (0.110) 0.000 0.000
-------- -------- -------- -------- --------
Variable Universal Life-Bal End-of-Year 0.480 1.200 1.605 1.808 1.746
-------- -------- -------- -------- --------
Interest Sensitive Whole Life-Bal Beg-of-Year 1.784 1.963 2.062
Deposits 0.340 0.355 0.322 0.307
Withdrawals & deaths (0.294) (0.162) (0.168) (0.200)
-------- -------- -------- -------- --------
Net cash flows 0.046 0.193 0.154 0.107
Policyholder assessments (0.168) (0.168) (0.164)
Interest credited 0.096 0.109 0.113 0.118
Acq of new business/transfers between segments 1.642 0.045
-------- -------- -------- -------- --------
Int Sensitive Whole Life-Bal End-of-Year 1.784 1.963 2.062 2.123
Total Segment- Life Insurance Account Values
Bal Beg-of-Year 2.869 3.038 9.243 10.217 10.847
Deposits 0.384 1.207 1.698 1.884 1.934
Withdrawals & deaths (0.439) (1.095) (0.713) (0.727) (0.771)
-------- -------- -------- -------- --------
Net cash flows (0.056) 0.113 0.985 1.158 1.163
Policyholder assessments (0.795) (0.893) (0.931)
Invest inc & change in market value 0.225 0.551 0.849 0.364 0.299
Acq of new business/transfers between segments 5.542 (0.065)
-------- -------- -------- -------- --------
Total Segment-Bal End-of-Year 3.038 9.243 10.217 10.847 11.377
======== ======== ======== ======== ========
(1) Includes fixed investment option of VUL products.
3/31/2002 PAGE 20
Life Insurance Segment
Life Insurance Account Value Roll Forward
Unaudited [Billions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- -------
Universal Life-Bal Beg-of-Quarter 6.374 6.434 6.519 6.650 6.729 6.782
Deposits 0.238 0.239 0.306 0.252 0.212 0.227
Withdrawals & deaths (0.152) (0.109) (0.124) (0.121) (0.111) (0.080)
------- ------- ------- ------- ------- -------
Net cash flows 0.086 0.129 0.182 0.131 0.101 0.146
Policyholder assessments (0.133) (0.136) (0.145) (0.145) (0.143) (0.146)
Interest credited 0.107 0.091 0.093 0.093 0.095 0.096
Acq of new business/transfers between segments 0.000 0.000
------- ------- ------- ------- ------- -------
Universal Life-Bal End-of-Quarter (1) 6.434 6.519 6.650 6.729 6.782 6.878
------- ------- ------- ------- ------- -------
Variable Universal Life-Bal Beg of Quarter 1.177 1.298 1.285 1.605 1.771 1.764
Deposits 0.068 0.074 0.107 0.112 0.128 0.123
Withdrawals & deaths (0.013) (0.049) (0.025) (0.019) (0.028) (0.037)
------- ------- ------- ------- ------- -------
Net cash flows 0.055 0.025 0.082 0.093 0.100 0.085
Policyholder assessments (0.020) (0.020) (0.024) (0.032) (0.033) (0.036)
Invest inc & chg in mkt value 0.087 (0.018) 0.262 0.105 (0.074) (0.001)
Acq of new business/transfers between segments 0.000
------- ------- ------- ------- ------- -------
Variable Universal Life-Bal End-of-Quarter 1.298 1.285 1.605 1.771 1.764 1.812
------- ------- ------- ------- ------- -------
Interest Sensitive Whole Life-Bal Beg-of-Quarter 1.865 1.895 1.922 1.963 1.970 1.993
Deposits 0.073 0.086 0.113 0.060 0.071 0.079
Withdrawals & deaths (0.030) (0.044) (0.050) (0.042) (0.037) (0.033)
------- ------- ------- ------- ------- -------
Net cash flows 0.044 0.043 0.062 0.018 0.034 0.045
Policyholder assessments (0.039) (0.042) (0.048) (0.039) (0.040) (0.040)
Interest credited 0.025 0.027 0.026 0.028 0.028 0.027
Acq of new business/transfers between segments
------- ------- ------- ------- ------- -------
Int Sensitive Whole Life-Bal End-of-Quarter 1.895 1.922 1.963 1.970 1.993 2.026
------- ------- ------- ------- ------- -------
Total Segment-Life Insurance Account Values
Bal Beg-of-Quarter 9.416 9.628 9.726 10.217 10.470 10.538
Deposits 0.379 0.399 0.526 0.424 0.411 0.428
Withdrawals & deaths (0.195) (0.202) (0.199) (0.182) (0.176) (0.151)
------- ------- ------- ------- ------- -------
Net cash flows 0.185 0.197 0.327 0.242 0.235 0.277
Policyholder assessments (0.192) (0.198) (0.216) (0.215) (0.216) (0.221)
Invest inc & change in market value 0.219 0.100 0.381 0.227 0.048 0.123
Acq of new business/transfers between segments 0.000 0.000 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- -------
Total Segment-Bal End-of-Quarter 9.628 9.726 10.217 10.470 10.538 10.716
======= ======= ======= ======= ======= =======
For the Quarter Ended Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
------- ------- ------- ------- ------- -------
Universal Life-Bal Beg-of-Quarter 6.878 6.976 7.063 7.216 7.315 7.508
Deposits 0.265 0.227 0.270 0.233 0.314 0.248
Withdrawals & deaths (0.114) (0.091) (0.071) (0.085) (0.073) (0.098)
------- ------- ------- ------- ------- -------
Net cash flows 0.151 0.136 0.199 0.147 0.241 0.150
Policyholder assessments (0.150) (0.147) (0.147) (0.150) (0.153) (0.158)
Interest credited 0.097 0.098 0.100 0.102 0.105 0.104
Acq of new business/transfers between segments 0.000 0.018
------- ------- ------- ------- ------- -------
Universal Life-Bal End-of-Quarter (1) 6.976 7.063 7.216 7.315 7.508 7.622
------- ------- ------- ------- ------- -------
Variable Universal Life-Bal Beg of Quarter 1.812 1.808 1.633 1.766 1.527 1.746
Deposits 0.245 0.136 0.138 0.124 0.186 0.129
Withdrawals & deaths (0.048) (0.049) (0.060) (0.055) (0.088) (0.055)
------- ------- ------- ------- ------- -------
Net cash flows 0.197 0.087 0.078 0.069 0.098 0.074
Policyholder assessments (0.041) (0.041) (0.041) (0.042) (0.045) (0.047)
Invest inc & chg in mkt value (0.160) (0.221) 0.096 (0.266) 0.166 0.013
Acq of new business/transfers between segments 0.000 0.000 0.132
------- ------- ------- ------- ------- -------
Variable Universal Life-Bal End-of-Quarter 1.808 1.633 1.766 1.527 1.746 1.919
------- ------- ------- ------- ------- -------
Interest Sensitive Whole Life-Bal Beg-of-Quarter 2.026 2.062 2.068 2.084 2.096 2.123
Deposits 0.113 0.056 0.069 0.077 0.105 0.063
Withdrawals & deaths (0.056) (0.041) (0.043) (0.054) (0.061) (0.051)
------- ------- ------- ------- ------- -------
Net cash flows 0.057 0.014 0.027 0.022 0.044 0.012
Policyholder assessments (0.050) (0.037) (0.040) (0.041) (0.047) (0.042)
Interest credited 0.029 0.028 0.030 0.030 0.030 0.033
Acq of new business/transfers between segments
------- ------- ------- ------- ------- -------
Int Sensitive Whole Life-Bal End-of-Quarter 2.062 2.068 2.084 2.096 2.123 2.126
------- ------- ------- ------- ------- -------
Total Segment- Life Insurance Account Values
Bal Beg-of-Quarter 10.716 10.847 10.764 11.066 10.939 11.377
Deposits 0.622 0.418 0.477 0.434 0.605 0.440
Withdrawals & deaths (0.218) (0.181) (0.173) (0.195) (0.222) (0.204)
------- ------- ------- ------- ------- -------
Net cash flows 0.404 0.237 0.304 0.239 0.383 0.236
Policyholder assessments (0.241) (0.225) (0.228) (0.232) (0.246) (0.246)
Invest inc & change in market value (0.033) (0.094) 0.226 (0.134) 0.301 0.151
Acq of new business/transfers between segments 0.000 0.000 0.000 0.000 0.000 0.150
------- ------- ------- ------- ------- -------
Total Segment-Bal End-of-Quarter 10.847 10.764 11.066 10.939 11.377 11.667
======= ======= ======= ======= ======= =======
(1) Includes fixed investment option of VUL products.
PAGE 21
Investment Management
Income Statements
Unaudited [Millions of Dollars]
For the Year Ended December 31 1997 1998 1999 2000 2001
------ ------ ------ ------ ------
Operating Revenue
Investment advisory fees - External 229.9 249.0 248.6 231.6 197.2
Investment advisory fees - Insurance Assets 68.5 82.5 83.6 88.9 87.5
Other revenue and fees 76.3 92.5 106.6 115.9 99.2
Net investment income 72.8 67.0 56.9 57.7 53.6
------ ------ ------ ------ ------
Operating Revenue 447.5 491.0 495.6 494.2 437.4
------ ------ ------ ------ ------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 396.1 401.5 384.3 408.7 397.8
Goodwill amortization 15.5 16.3 16.2 16.2 16.2
Interest on notes payable 0.1 0.4 0.0 0.0 0.0
------ ------ ------ ------ ------
Operating Benefits and Expenses 411.8 418.2 400.5 425.0 414.1
------ ------ ------ ------ ------
Income from Operations Before Tax 35.8 72.8 95.1 69.2 23.4
Federal income taxes 17.7 28.9 34.1 25.1 8.7
------ ------ ------ ------ ------
Income from Operations 18.1 43.9 61.0 44.1 14.6
------ ------ ------ ------ ------
Realized gains (losses) on investments 7.0 0.5 (0.1) (2.5) (2.4)
Gains (losses) on derivatives 0.0
Restructuring charges 0.0 0.0 (9.2) (4.6) (0.4)
------ ------ ------ ------ ------
Income before Accounting Changes 25.1 44.4 51.6 37.0 11.9
Cumulative effect of accounting changes (0.1)
------ ------ ------ ------ ------
Net Income 25.1 44.4 51.6 37.0 11.8
====== ====== ====== ====== ======
Income from Operations - before Goodwill Amortization 33.6 60.3 77.2 60.3 30.9
Income from Operations - before Goodwill & Intang. Amort 45.2 72.6 88.7 70.9 37.9
Net Income - before Goodwill Amortization 40.6 60.8 67.9 53.2 28.0
Net Income - before Goodwill & Intang. Amort. 52.2 73.1 79.4 63.8 35.0
Operating Revenue 447.5 491.0 495.6 494.2 437.4
Realized gains (losses) on investments 11.6 0.9 (0.1) (3.9) (3.7)
Gains (losses) on derivatives
------ ------ ------ ------ ------
Total Revenue 459.1 491.9 495.5 490.3 433.7
====== ====== ====== ====== ======
Average Capital (Securities at Cost) 653.3 642.3 593.9 575.2 543.7
Return on Capital 2.8% 6.8% 10.3% 7.7% 2.7%
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
Operating Revenue
Investment advisory fees - External 62.5 60.7 60.3 60.0 57.9 56.9
Investment advisory fees - Insurance Assets 20.7 19.9 22.1 21.0 22.3 22.5
Other revenue and fees 26.3 24.9 29.8 31.9 31.0 26.4
Net investment income 14.1 13.9 13.9 13.0 12.6 18.3
------ ------ ------ ------ ------ ------
Operating Revenue 123.6 119.3 126.1 126.0 123.8 124.1
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 97.3 92.8 96.3 102.5 99.3 103.9
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 101.4 96.8 100.4 106.6 103.3 107.9
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 22.2 22.5 25.7 19.4 20.5 16.2
Federal income taxes 7.9 7.7 9.1 7.0 7.4 6.3
------ ------ ------ ------ ------ ------
Income from Operations 14.3 14.7 16.5 12.4 13.1 9.9
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments (0.3) (0.3) 0.4 (0.1) (2.0) (0.2)
Gains (losses) on derivatives
Restructuring charges 0.0 0.0 2.9 0.0 (2.7) 0.0
------ ------ ------ ------ ------ ------
Income before Accounting Changes 14.0 14.4 19.8 12.3 8.4 9.7
Cumulative effect of accounting changes
------ ------ ------ ------ ------ ------
Net Income 14.0 14.4 19.8 12.3 8.4 9.7
====== ====== ====== ====== ====== ======
Inc from Oper - before
Goodwill Amortization 18.4 18.8 20.6 16.5 17.1 14.0
Inc from Oper - before
Goodwill & Intang. Amort 21.3 21.7 23.3 19.4 19.7 16.6
Net Income - before
Goodwill Amortization 18.1 18.5 23.9 16.4 12.4 13.7
Net Income - before
Goodwill & Intang. Amort 21.0 21.3 26.6 19.2 15.0 16.3
Operating Revenue 123.6 119.3 126.1 126.0 123.8 124.1
Realized gains (losses) on investments (0.4) (0.5) 0.6 (0.2) (3.1) (0.4)
Gains (losses) on derivatives
------ ------ ------ ------ ------ ------
Total Revenue 123.2 118.8 126.6 125.8 120.7 123.8
====== ====== ====== ====== ====== ======
Average Capital (Securities at Cost) 591.6 587.2 584.2 581.5 593.0 567.7
Return on Capital 9.7% 10.0% 11.3% 8.6% 8.8% 7.0%
For the Quarter Ended Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
------ ------ ------ ------ ------ ------
Operating Revenue
Investment advisory fees - External 56.7 50.5 51.1 46.2 49.3 48.0
Investment advisory fees - Insurance Assets 23.1 22.1 21.6 21.8 22.0 21.2
Other revenue and fees 26.6 26.3 25.7 23.9 23.4 23.0
Net investment income 13.8 14.1 13.0 13.6 12.8 12.8
------ ------ ------ ------ ------ ------
Operating Revenue 120.2 113.0 111.4 105.5 107.6 105.1
------ ------ ------ ------ ------ ------
Operating Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 103.0 104.7 101.6 95.1 96.4 95.4
Goodwill amortization 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 107.1 108.8 105.7 99.2 100.4 95.4
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 13.1 4.2 5.7 6.3 7.1 9.7
Federal income taxes 4.4 1.8 2.0 2.9 2.1 1.7
------ ------ ------ ------ ------ ------
Income from Operations 8.7 2.4 3.7 3.5 5.1 8.0
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments (0.2) (0.5) (0.7) (0.5) (0.7) (1.0)
Gains (losses) on derivatives 0.0 0.0 0.0 0.0
Restructuring charges (1.9) 0.0 0.0 0.0 (0.4) 0.0
------ ------ ------ ------ ------ ------
Income before Accounting Changes 6.6 2.0 3.0 2.9 4.0 7.0
Cumulative effect of accounting changes (0.1) 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Net Income 6.6 2.0 2.9 2.9 4.0 7.0
====== ====== ====== ====== ====== ======
Inc from Oper - before
Goodwill Amortization 12.7 6.5 7.7 7.5 9.1 8.0
Inc from Oper - before
Goodwill & Intang. Amort 15.2 9.1 9.2 9.0 10.6 9.4
Net Income - before
Goodwill Amortization 10.6 6.0 6.9 7.0 8.1 7.0
Net Income - before
Goodwill & Intang. Amort 13.1 8.6 8.4 8.5 9.5 8.4
Operating Revenue 120.2 113.0 111.4 105.5 107.6 105.1
Realized gains (losses) on investments (0.3) (0.7) (1.1) (0.8) (1.1) (1.5)
Gains (losses) on derivatives 0.0
------ ------ ------ ------ ------ ------
Total Revenue 120.0 112.3 110.3 104.7 106.5 103.5
====== ====== ====== ====== ====== ======
Average Capital (Securities at Cost) 558.5 548.3 542.8 543.1 540.6 546.1
Return on Capital 6.2% 1.8% 2.7% 2.5% 3.8% 5.8%
PAGE 22
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
1997 1998 1999 2000 2001
------ ------ ------ ------ ------
Retail Fixed - Bal Beg-of-Year 5.853 8.125 8.217 7.424 6.499
Fund Sales 0.961 1.165 0.991 0.712 0.825
Redemptions (1.271) (1.235) (1.424) (1.365) (1.024)
Net Money Market (0.069) (0.140) (0.110) (0.207) (0.047)
Transfers (0.220) 0.132 0.177 (0.159) 0.394
------ ------ ------ ------ ------
Net Cash Flows (0.599) (0.078) (0.366) (1.019) 0.148
Income Retained 0.276 0.291 0.276 0.240 0.223
Market Apprec/Deprec 0.049 (0.121) (0.704) (0.146) 0.103
Acq of New Company/Business 2.547
------ ------ ------ ------ ------
Balance End-of-Year 8.125 8.217 7.424 6.499 6.973
------ ------ ------ ------ ------
Retail Equity - Bal Beg-of-Year 13.152 17.754 22.080 23.383 21.174
Fund Sales 2.953 3.581 3.271 4.048 2.702
Redemptions (1.926) (2.460) (4.971) (4.369) (2.780)
Net Money Market 0.000 (0.002) (0.001) 0.001 0.000
Transfers 0.209 0.730 (0.143) (0.178) (0.530)
------ ------ ------ ------ ------
Net Cash Flows 1.236 1.849 (1.844) (0.498) (0.608)
Income Retained 0.005 0.220 0.120 0.083 0.093
Market Apprec/Deprec 3.317 2.256 3.028 (1.793) (3.013)
Acq of New Company/Business 0.043
------ ------ ------ ------ ------
Balance at End-of-Year 17.754 22.080 23.383 21.174 17.646
------ ------ ------ ------ ------
Total Retail - Bal Beg-of-Year 19.006 25.879 30.297 30.807 27.674
Retail Sales-Annuities 2.163 2.238 1.561 1.726 1.449
Retail Sales-Mutual Funds 1.218 1.913 2.153 2.452 1.357
Retail Sales-Wrap & Other 0.533 0.596 0.550 0.581 0.721
------ ------ ------ ------ ------
Total Retail Sales 3.914 4.745 4.264 4.760 3.527
Redemptions (3.197) (3.694) (6.396) (5.733) (3.805)
Net Money Market (0.068) (0.141) (0.111) (0.206) (0.047)
Transfers (0.011) 0.862 0.034 (0.337) (0.136)
------ ------ ------ ------ ------
Net Cash Flows 0.637 1.772 (2.209) (1.517) (0.461)
Income Retained 0.281 0.511 0.396 0.323 0.316
Market Apprec/Deprec 3.366 2.136 2.324 (1.939) (2.910)
Acq of New Company/Business 2.590
------ ------ ------ ------ ------
Balance at End-of-Year 25.879 30.297 30.807 27.674 24.619
------ ------ ------ ------ ------
Institutional Fixed - Bal Beg-of-Year 3.580 5.708 6.955 6.937 6.111
Inflows 2.509 2.169 2.000 0.771 0.643
Withdrawals/Terminations (0.787) (1.242) (1.699) (1.973) (1.228)
Transfers 0.013 (0.074) (0.001) (0.005) 0.017)
------ ------ ------ ------ ------
Net Cash Flows 1.735 0.853 0.300 (1.207) (0.568)
Income Retained 0.225 0.333 0.346 0.294 0.185
Market Apprec/Deprec 0.118 0.061 (0.665) 0.087 (0.238)
Acq of New Company/Business 0.051
------ ------ ------ ------ ------
Balance at End-of-Year 5.708 6.955 6.937 6.111 5.490
------ ------ ------ ------ ------
Institutional Equity - Bal Beg-of-Year 22.886 24.871 24.235 23.630 19.111
Inflows 2.465 3.840 5.248 2.730 3.182
Withdrawals/Terminations (6.447) (7.441) (7.801) (7.209) (2.878)
Transfers (0.068) 0.047 0.011 (0.008) 0.036
------ ------ ------ ------ ------
Net Cash Flows (4.049) (3.555) (2.542) (4.487) 0.340
Income Retained 0.491 0.473 0.482 0.449 0.376
Market Apprec/Deprec 5.544 2.446 1.453 (0.481) (2.014)
Acq of New Company/Business
------ ------ ------ ------ ------
Balance at End-of-Year 24.871 24.235 23.630 19.111 17.813
------ ------ ------ ------ ------
Total Institutional - Bal Beg-of-Year 26.465 30.579 31.191 30.567 25.222
Inflows 4.975 6.009 7.249 3.501 3.825
Withdrawals/Terminations (7.234) (8.683) (9.500) (9.182) (4.106)
Transfers (0.055) (0.027) 0.011 (0.014) 0.053
------ ------ ------ ------ ------
Net Cash Flows (2.314) (2.702) (2.240) (5.694) (0.228)
Income Retained 0.716 0.806 0.829 0.743 0.561
Market Apprec/Deprec 5.662 2.508 0.789 (0.394) (2.252)
Acq of New Company/Business 0.051
------ ------ ------ ------ ------
Balance at End-of-Year 30.579 31.191 30.567 25.222 23.303
------ ------ ------ ------ ------
Total Retail/Institutional - At End-of-Year 56.458 61.488 61.374 52.895 47.922
------ ------ ------ ------ ------
Insurance Assets - At End-of-Year 35.684 39.432 35.934 35.686 38.119
------ ------ ------ ------ ------
Total Assets Under Management
------ ------ ------ ------ ------
At End-of-Year 92.142 100.920 97.308 88.581 86.041
------ ------ ------ ------ ------
3/31/2002 PAGE 23
Investment Management
Assets Under Management Roll Forward
Unaudited [Billions of Dollars]
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
Retail Fixed - Bal-Beg-of-Qtr 8.233 7.945 7.680 7.424 6.964 6.667
Fund Sales 0.263 0.231 0.181 0.146 0.152 0.213
Redemptions (0.366) (0.342) (0.403) (0.444) (0.328) (0.321)
Net Money Market (0.033) (0.029) (0.030) (0.067) (0.058) (0.031)
Transfers (0.043) 0.034 0.154 (0.095) (0.045) (0.033)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.179) (0.106) (0.098) (0.460) (0.279) (0.171)
Income Retained 0.074 0.069 0.067 0.061 0.063 0.059
Market Apprec/Deprec (0.185) (0.228) (0.225) (0.062) (0.082) (0.023)
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 7.945 7.680 7.424 6.964 6.667 6.531
-------- -------- -------- -------- -------- --------
Retail Equity - Bal-Beg-of-Qtr 21.798 22.340 20.873 23.383 24.102 23.129
Fund Sales 0.790 0.730 0.894 1.220 0.868 0.904
Redemptions (1.957) (0.865) (1.120) (1.550) (0.971) (1.027)
Net Money Market (0.001) 0.000 0.000 0.000 0.000 0.001
Transfers 0.036 (0.060) (0.086) (0.096) 0.018 (0.033)
-------- -------- -------- -------- -------- --------
Net Cash Flows (1.132) (0.195) (0.312) (0.426) (0.085) (0.154)
Income Retained 0.061 0.007 0.000 0.033 0.021 0.005
Market Apprec/Deprec 1.614 (1.279) 2.822 1.112 (0.908) 0.701
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 22.340 20.873 23.383 24.102 23.129 23.680
-------- -------- -------- -------- -------- --------
Total Retail - Bal-Beg-of-Qtr 30.031 30.285 28.553 30.807 31.066 29.796
Retail Sales-Annuities 0.393 0.332 0.409 0.379 0.358 0.453
Retail Sales-Mutual Funds 0.487 0.514 0.587 0.840 0.556 0.521
Retail Sales-Wrap & Other 0.173 0.116 0.079 0.148 0.106 0.143
-------- -------- -------- -------- -------- --------
Total Retail Sales 1.053 0.962 1.075 1.367 1.020 1.118
Redemptions (2.323) (1.207) (1.523) (1.995) (1.299) (1.348)
Net Money Market (0.033) (0.029) (0.030) (0.067) (0.058) (0.030)
Transfers (0.006) (0.027) 0.068 (0.191) (0.026) (0.065)
-------- -------- -------- -------- -------- --------
Net Cash Flows (1.309) (0.301) (0.410) (0.886) (0.363) (0.326)
Income Retained 0.134 0.076 0.067 0.095 0.083 0.063
Market Apprec/Deprec 1.429 (1.507) 2.597 1.051 (0.989) 0.677
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 30.285 28.553 30.807 31.066 29.796 30.211
-------- -------- -------- -------- -------- --------
Institutional Fixed - Bal-Beg-of-Qtr 6.984 7.264 7.218 6.937 6.873 6.484
Inflows 0.478 0.446 0.420 0.180 0.148 0.308
Withdrawals/Terminations (0.210) (0.294) (0.781) (0.353) (0.520) (0.532)
Transfers 0.003 (0.002) 0.001 (0.005) (0.001) 0.000
-------- -------- -------- -------- -------- --------
Net Cash Flows 0.271 0.150 (0.360) (0.178) (0.373) (0.224)
Income Retained 0.079 0.110 0.068 0.090 0.066 0.089
Market Apprec/Deprec (0.070) (0.306) 0.011 0.024 (0.081) (0.074)
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 7.264 7.218 6.937 6.873 6.484 6.275
-------- -------- -------- -------- -------- --------
Institutional Equity - Bal-Beg-of-Qtr 22.927 23.962 23.098 23.630 20.303 20.239
Inflows 1.179 1.839 0.934 0.904 0.669 0.407
Withdrawals/Terminations (2.052) (1.165) (2.043) (3.333) (1.354) (1.154)
Transfers 0.019 (0.008) (0.010) (0.004) 0.002 (0.013)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.854) 0.666 (1.119) (2.433) (0.683) (0.760)
Income Retained 0.118 0.167 0.093 0.109 0.132 0.108
Market Apprec/Deprec 1.771 (1.697) 1.559 (1.003) 0.488 (0.545)
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 23.962 23.098 23.630 20.303 20.239 19.041
-------- -------- -------- -------- -------- --------
Total Institutional - Bal-Beg-of-Qtr 29.910 31.226 30.316 30.567 27.175 26.722
Inflows 1.656 2.284 1.354 1.084 0.817 0.715
Withdrawals/Terminations (2.262) (1.458) (2.825) (3.686) (1.874) (1.686)
Transfers 0.022 (0.010) (0.009) (0.009) 0.000 (0.012)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.584) 0.816 (1.480) (2.611) (1.057) (0.983)
Income Retained 0.197 0.277 0.161 0.198 0.197 0.196
Market Apprec/Deprec 1.702 (2.003) 1.569 (0.979) 0.407 (0.619)
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 31.226 30.316 30.567 27.175 26.722 25.316
-------- -------- -------- -------- -------- --------
Total Retail/Inst - At End-of-Qtr 61.511 58.869 61.374 58.241 56.518 55.527
Insurance Assets-End-of-Qtr 37.391 36.820 35.934 35.541 34.891 34.981
Total Assets Under Management
-------- -------- -------- -------- -------- --------
At End-of-Qtr 98.902 95.689 97.308 93.782 91.409 90.508
======== ======== ======== ======== ======== ========
Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
-------- -------- -------- -------- -------- --------
Retail Fixed - Bal-Beg-of-Qtr 6.531 6.499 6.631 6.643 7.066 6.973
Fund Sales 0.200 0.235 0.195 0.192 0.203 0.261
Redemptions (0.272) (0.255) (0.280) (0.255) (0.235) (0.281)
Net Money Market (0.051) 0.010 (0.030) 0.005 (0.031) (0.003)
Transfers 0.013 0.042 (0.002) 0.382 (0.027) (0.040)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.109) 0.032 (0.117) 0.324 (0.090) (0.063)
Income Retained 0.057 0.054 0.050 0.049 0.070 0.044
Market Apprec/Deprec 0.021 0.046 0.080 0.051 (0.073) (0.037)
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 6.499 6.631 6.643 7.066 6.973 6.917
-------- -------- -------- -------- -------- --------
Retail Equity - Bal-Beg-of-Qtr 23.680 21.174 17.935 19.411 15.584 17.646
Fund Sales 1.055 0.888 0.660 0.609 0.546 0.832
Redemptions (0.820) (0.899) (0.657) (0.626) (0.598) (0.777)
Net Money Market 0.000 0.000 0.000 0.000 0.000 0.000
Transfers (0.068) (0.068) (0.046) (0.433) 0.017 0.009
-------- -------- -------- -------- -------- --------
Net Cash Flows 0.167 (0.079) (0.043) (0.450) (0.035) 0.064
Income Retained 0.025 0.007 0.015 0.028 0.043 0.039
Market Apprec/Deprec (2.698) (3.168) 1.504 (3.405) 2.055 0.089
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 21.174 17.935 19.411 15.584 17.646 17.838
-------- -------- -------- -------- -------- --------
Total Retail - Bal-Beg-of-Qtr 30.211 27.674 24.566 26.054 22.650 24.619
Retail Sales-Annuities 0.536 0.455 0.373 0.340 0.281 0.343
Retail Sales-Mutual Funds 0.535 0.442 0.324 0.292 0.299 0.587
Retail Sales-Wrap & Other 0.184 0.227 0.157 0.168 0.169 0.163
-------- -------- -------- -------- -------- --------
Total Retail Sales 1.255 1.124 0.854 0.800 0.749 1.093
Redemptions (1.092) (1.154) (0.938) (0.880) (0.833) (1.059)
Net Money Market (0.051) 0.010 (0.030) 0.005 (0.031) (0.003)
Transfers (0.054) (0.026) (0.048) (0.051) (0.010) (0.032)
-------- -------- -------- -------- -------- --------
Net Cash Flows 0.058 (0.047) (0.160) (0.126) (0.125) (0.001)
Income Retained 0.082 0.061 0.066 0.078 0.112 0.084
Market Apprec/Deprec (2.677) (3.122) 1.584 (3.354) 1.982 0.052
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 27.674 24.566 26.054 22.650 24.619 24.754
-------- -------- -------- -------- -------- --------
Institutional Fixed - Bal-Beg-of-Qtr 6.275 6.111 5.890 5.809 5.639 5.490
Inflows 0.135 0.310 0.233 0.020 0.080 0.804
Withdrawals/Terminations (0.568) (0.432) (0.112) (0.493) (0.191) (0.239)
Transfers 0.001 0.003 0.010 0.001 0.002 (0.001)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.433) (0.119) 0.131 (0.472) (0.109) 0.564
Income Retained 0.050 0.066 0.047 0.029 0.043 0.056
Market Apprec/Deprec 0.219 (0.168) (0.259) 0.273 (0.084) (0.092)
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 6.111 5.890 5.809 5.639 5.490 6.018
-------- -------- -------- -------- -------- --------
Institutional Equity - Bal-Beg-of-Qtr 19.041 19.111 17.311 18.405 16.240 17.813
Inflows 0.750 0.881 0.823 0.863 0.615 0.672
Withdrawals/Terminations (1.368) (1.199) (0.501) (0.555) (0.624) (0.512)
Transfers 0.007 0.019 (0.008) 0.009 0.016 0.006
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.611) (0.299) 0.314 0.317 0.007 0.166
Income Retained 0.102 0.094 0.117 0.094 0.071 0.086
Market Apprec/Deprec 0.579 (1.596) 0.663 (2.576) 1.495 0.575
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 19.111 17.311 18.405 16.240 17.813 18.642
-------- -------- -------- -------- -------- --------
Total Institutional - Bal-Beg-of-Qtr 25.316 25.222 23.201 24.214 21.880 23.304
Inflows 0.885 1.191 1.056 0.883 0.696 1.476
Withdrawals/Terminations (1.936) (1.631) (0.613) (1.047) (0.814) (0.750)
Transfers 0.008 0.022 0.002 0.010 0.018 0.006
-------- -------- -------- -------- -------- --------
Net Cash Flows (1.043) (0.418) 0.445 (0.155) (0.102) 0.731
Income Retained 0.151 0.160 0.164 0.123 0.114 0.142
Market Apprec/Deprec 0.798 (1.764) 0.404 (2.303) 1.411 0.483
-------- -------- -------- -------- -------- --------
Balance at End-of-Qtr 25.222 23.201 24.214 21.880 23.303 24.660
-------- -------- -------- -------- -------- --------
Total Retail/Inst - At End-of-Qtr 52.895 47.766 50.268 44.530 47.922 49.415
Insurance Assets-End-of-Qtr 35.686 36.324 36.018 37.337 38.119 37.171
Total Assets Under Management
-------- -------- -------- -------- -------- --------
At End-of-Qtr 88.581 84.090 86.286 81.867 86.041 86.586
======== ======== ======== ======== ======== ========
3/31/2002 PAGE 24
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
Operating Revenue
Premiums 145.4 156.6 145.1 148.4 46.1
Mortality assessments 25.2 29.3 27.1 31.4 33.9
Expense assessments 166.1 153.6 182.3 178.1 134.8
Other revenue and fees 3.3 11.2 13.8 6.9 1.3
Net investment income 85.1 87.9 75.3 70.3 64.8
-------- -------- -------- -------- --------
Operating Revenue 425.2 438.6 443.6 435.0 280.9
-------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 339.6 151.0 306.2 178.5 83.4
Underwriting, acquisition,
insurance and other expenses 184.5 175.6 223.5 180.0 147.6
Goodwill amortization 0.0 6.3 7.0 4.0 0.6
-------- -------- -------- -------- --------
Operating Benefits and Expenses 524.1 332.9 536.7 362.6 231.7
-------- -------- -------- -------- --------
Income from Operations Before Tax (99.0) 105.8 (93.1) 72.4 49.2
Federal income taxes 9.3 34.8 (79.2) 11.3 (11.1)
-------- -------- -------- -------- --------
Income from Operations (108.3) 70.9 (13.9) 61.0 60.2
-------- -------- -------- -------- --------
Realized gains (losses) on investments 1.5 0.8 2.1 2.3 8.7
Restructuring charges 0.0 0.0 (6.5) (76.5) 0.0
-------- -------- -------- -------- --------
Income before Accounting Changes (106.8) 71.7 (18.2) (13.2) 68.9
Cumulative effect of accounting changes 0.0
-------- -------- -------- -------- --------
Net Income (106.8) 71.7 (18.2) (13.2) 68.9
======== ======== ======== ======== ========
Inc from Oper - before Goodwill Amort. (108.3) 77.2 (6.9) 65.1 60.9
Net Income - before Goodwill Amort. (106.8) 78.0 (11.3) (9.2) 69.6
Effective tax rate (9.4%) 32.9% 85.1% 15.7% (22.5%)
Operating revenue 425.2 438.6 443.6 435.0 280.9
Realized gains (losses) on investments 2.1 1.1 3.0 3.2 12.4
-------- -------- -------- -------- --------
Total Revenue 427.3 439.7 446.6 438.2 293.3
======== ======== ======== ======== ========
Average capital 618.1 517.7 551.2 488.2 559.7
Return on average capital (17.5%) 13.7% (2.5%) 12.5% 10.8%
Unit Linked Assets - Beg-of-Year 5.074 5.643 6.265 7.220 6.441
Deposits 0.569 0.473 0.537 0.554 0.481
Withdrawals (incl. chgs) & Deaths (0.503) (0.547) (0.566) (0.644) (0.529)
-------- -------- -------- -------- --------
Net Cash Flows 0.066 (0.074) (0.029) (0.090) (0.048)
Inv Inc & Chg in Mkt Val 0.682 0.662 1.154 (0.154) (0.617)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment (0.179) 0.035 (0.170) (0.536) (0.169)
-------- -------- -------- -------- --------
Unit Linked Assets - End-of-Year 5.643 6.265 7.220 6.441 5.607
======== ======== ======== ======== ========
Individual Life In-force (Billions) 25.026 25.002 25.698 24.290 20.878
Exchange Rate - Dollars to Pounds
For-the-Year 1.644 1.658 1.617 1.518 1.441
End-of-Year 1.651 1.660 1.615 1.493 1.456
3/31/2002 PAGE 25
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
Operating Revenue
Premiums 29.0 33.5 38.7 39.0 36.3 32.5
Mortality assessments 7.7 7.7 5.0 6.3 8.0 9.6
Expense assessments 51.9 49.3 37.2 46.5 44.3 52.6
Other revenue and fees 3.5 3.6 3.8 2.4 1.3 2.0
Net investment income 19.6 16.2 17.7 18.9 18.5 16.1
-------- -------- -------- -------- -------- --------
Operating Revenue 111.8 110.3 102.4 113.2 108.4 112.8
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 31.5 27.2 211.8 35.0 37.4 51.9
Underwriting, acquisition,
insurance and other expenses 55.2 61.6 51.4 56.4 43.5 45.2
Goodwill amortization 1.2 1.2 3.3 1.3 1.3 1.2
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 87.9 90.1 266.6 92.8 82.2 98.3
-------- -------- -------- -------- -------- --------
Income from Operations Before Tax 23.9 20.2 (164.2) 20.4 26.2 14.5
Federal income taxes 4.9 4.0 (97.1) 4.7 6.9 3.9
-------- -------- -------- -------- -------- --------
Income from Operations 19.0 16.2 (67.1) 15.7 19.3 10.6
-------- -------- -------- -------- -------- --------
Realized gains (losses) on investments 1.0 0.2 1.0 (0.2) (0.1) (0.0)
Restructuring charges 0.0 0.0 (6.5) 0.0 0.0 (40.5)
-------- -------- -------- -------- -------- --------
Income before Accounting Changes 20.0 16.4 (72.6) 15.5 19.1 (29.9)
Cumulative effect of accounting changes
-------- -------- -------- -------- -------- --------
Net Income 20.0 16.4 (72.6) 15.5 19.1 (29.9)
======== ======== ======== ======== ======== ========
Inc from Oper -before Goodwill Amort. 20.2 17.4 (63.8) 17.1 20.5 11.8
Net Income -before Goodwill Amort. 21.2 17.6 (69.3) 16.8 20.4 (28.7)
Effective tax rate 20.4% 20.0% 59.1% 22.9% 26.4% 27.2%
Operating revenue 111.8 110.3 102.4 113.2 108.4 112.8
Realized gains (losses) on investments 1.4 0.3 1.4 (0.4) (0.2) (0.0)
-------- -------- -------- -------- -------- --------
Total Revenue 113.1 110.5 103.8 112.8 108.2 112.8
======== ======== ======== ======== ======== ========
Average capital 526.9 573.5 585.0 516.4 500.8 486.5
Return on average capital 14.4% 11.3% (45.9%) 12.2% 15.4% 8.7%
Unit Linked Assets
Balance-Beg-of-Quarter (Billions) 6.348 6.503 6.568 7.220 7.031 6.726
Deposits 0.119 0.130 0.156 0.159 0.134 0.145
Withdrawals (incl. chgs) & Deaths (0.137) (0.136) (0.158) (0.170) (0.162) (0.159)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.017) (0.005) (0.002) (0.011) (0.028) (0.014)
Inv Inc & Chg in Mkt Val 0.314 (0.214) 0.784 (0.077) 0.047 (0.025)
Acq of new business/companies
Foreign currency adjustment (0.141) 0.284 (0.130) (0.101) (0.324) (0.189)
-------- -------- -------- -------- -------- --------
Unit Linked Assets - End-of-Quarter 6.503 6.568 7.220 7.031 6.726 6.499
======== ======== ======== ======== ======== ========
Individual Life In-force (Billions) 25.107 26.235 25.698 26.514 25.225 24.535
Exchange Rate - Dollars to Pounds
For-the-Quarter 1.602 1.614 1.625 1.599 1.536 1.482
End-of-Quarter 1.577 1.647 1.615 1.591 1.517 1.475
For the Quarter Ended Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
-------- -------- -------- -------- -------- --------
Operating Revenue
Premiums 40.5 12.8 9.6 11.8 11.9 12.1
Mortality assessments 7.5 9.4 8.9 8.5 7.1 6.5
Expense assessments 34.6 43.7 31.4 35.5 24.1 25.3
Other revenue and fees 1.3 0.6 0.1 0.0 0.6 0.3
Net investment income 16.7 17.9 16.9 14.8 15.2 14.7
-------- -------- -------- -------- -------- --------
Operating Revenue 100.6 84.4 66.9 70.7 58.9 58.8
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses
Benefits paid or provided:
Benefits 54.2 24.0 17.9 20.7 20.8 18.3
Underwriting, acquisition,
insurance and other expenses 34.9 41.1 29.7 40.3 36.5 24.9
Goodwill amortization 0.2 0.2 0.2 0.2 0.2
-------- -------- -------- -------- -------- --------
Operating Benefits and Expenses 89.3 65.3 47.7 61.1 57.5 43.2
-------- -------- -------- -------- -------- --------
Income from Operations Before Tax 11.3 19.1 19.1 9.6 1.4 15.6
Federal income taxes (4.2) 4.7 2.9 (0.5) (18.1) 1.1
-------- -------- -------- -------- -------- --------
Income from Operations 15.5 14.4 16.2 10.1 19.5 14.4
-------- -------- -------- -------- -------- --------
Realized gains (losses) on investments 2.6 0.4 1.4 3.9 3.0 (3.6)
Restructuring charges (36.1) 0.0 0.0 0.0 0.0 0.0
-------- -------- -------- -------- -------- --------
Income before Accounting Changes (17.9) 14.8 17.6 14.0 22.5 10.8
Cumulative effect of accounting changes 0.0
-------- -------- -------- -------- -------- --------
Net Income (17.9) 14.8 17.6 14.0 22.5 10.8
======== ======== ======== ======== ======== ========
Inc from Oper - before Goodwill Amort. 15.7 14.5 16.4 10.3 19.7 14.4
Net Income - before Goodwill Amort. (17.8) 14.9 17.8 14.2 22.7 10.8
Effective tax rate (37.1%) 24.6% 15.3% (5.7%) (1337.4%) 7.3%
Operating revenue 100.6 84.4 66.9 70.7 58.9 58.8
Realized gains (losses) on investments 3.8 0.6 2.0 5.5 4.3 (5.1)
-------- -------- -------- -------- -------- --------
Total Revenue 104.3 84.9 68.9 76.3 63.2 53.6
======== ======== ======== ======== ======== ========
Average capital 448.9 548.7 553.2 575.4 561.3 510.0
Return on average capital 13.8% 10.5% 11.7% 7.0% 13.9% 11.3%
Unit Linked Assets
Balance-Beg-of-Quarter (Billions) 6.499 6.441 5.677 5.768 5.218 5.607
Deposits 0.116 0.132 0.111 0.128 0.111 0.114
Withdrawals (incl. chgs) & Deaths (0.153) (0.147) (0.131) (0.136) (0.115) (0.127)
-------- -------- -------- -------- -------- --------
Net Cash Flows (0.037) (0.015) (0.020) (0.009) (0.004) (0.013)
Inv Inc & Chg in Mkt Val (0.100) (0.421) 0.115 (0.768) 0.457 0.141
Acq of new business/companies
Foreign currency adjustment 0.078 (0.328) (0.004) 0.226 (0.063) (0.117)
-------- -------- -------- -------- -------- --------
Unit Linked Assets - End-of-Quarter 6.441 5.677 5.768 5.218 5.607 5.618
======== ======== ======== ======== ======== ========
Individual Life In-force (Billions) 24.290 21.894 21.519 21.299 20.878 20.010
Exchange Rate - Dollars to Pounds
For-the-Quarter 1.454 1.455 1.421 1.442 1.448 1.423
End-of-Quarter 1.493 1.416 1.415 1.474 1.456 1.426
PAGE 26
Other Operations
Unaudited [Millions of Dollars]
For the Year Ended December 31 1997 1998 1999 2000 2001
------ ------ ------ ------ ------
Revenue
Lincoln Financial Advisors 125.3 286.4 317.0 377.5 360.7
Lincoln Financial Distributors 20.5 33.5 107.5 119.9 126.0
------ ------ ------ ------ ------
Total Distribution 145.8 319.9 424.4 497.4 486.6
Reinsurance 1362.3 1581.2 1824.1 1770.6 1699.4
Amortization of deferred gain on indemnity reinsurance* 20.4
Other [Including
Consolidating Adjustments] (105.9) (192.7) (277.5) (292.6) (373.0)
------ ------ ------ ------ ------
Operating Revenue 1402.2 1708.3 1971.0 1975.4 1833.4
------ ------ ------ ------ ------
Realized gains (losses) on investments 42.1 0.5 14.4 (5.0) 8.2
Gains (losses) on derivatives (9.7)
Gain on sale of reinsurance subsidiaries 12.8
------ ------ ------ ------ ------
Total Revenue 1444.3 1708.9 1985.4 1970.4 1844.7
====== ====== ====== ====== ======
Income (Loss)
Lincoln Financial Advisors (5.3) (23.7) (20.8) (11.7) (15.9)
Lincoln Financial Distributors (11.2) (8.2) (14.0) (18.5) (30.7)
------ ------ ------ ------ ------
Total Distribution (16.5) (31.9) (34.8) (30.2) (46.6)
Reinsurance (150.1) 104.9 40.1 122.5 128.8
Amortization of deferred gain on indemnity reinsurance* 12.9
LNC Financing (31.6) (51.5) (83.5) (84.9) (77.9)
Other Corporate (25.1) (17.5) (5.0) (15.4) (2.4)
------ ------ ------ ------ ------
Inc (Loss) from Operations (223.3) 4.0 (83.1) (8.0) 14.8
------ ------ ------ ------ ------
Realized gains (losses) on investments 24.9 2.7 10.2 (3.2) 5.9
Gains (losses) on derivatives (6.3)
Gain on sale of reinsurance subsidiaries 15.0
Restructuring charges 0.0 (14.3) (3.2) 1.0 (19.5)
------ ------ ------ ------ ------
Income before Accounting Changes (198.4) (7.6) (76.1) (10.2) 9.9
Cumulative effect of accounting changes (2.7)
------ ------ ------ ------ ------
Total Net Income (Loss) (198.4) (7.6) (76.1) (10.2) 7.2
====== ====== ====== ====== ======
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
------- ------ ------ ------ ------ ------
Revenue
Lincoln Financial Advisors 71.8 75.7 104.0 86.4 90.0 91.3
Lincoln Financial Distributors 26.2 26.4 34.2 29.3 28.1 27.5
------- ------ ------ ------ ------ ------
Total Distribution 98.0 102.1 138.2 115.8 118.1 118.8
Reinsurance 425.8 403.7 575.1 392.7 458.9 457.9
Amortization of deferred gain on
indemnity reinsurance*
Other [Including
Consolidating Adjustments] (39.8) (64.8) (147.0) (67.6) (86.7) (79.2)
------- ------ ------ ------ ------ ------
Operating Revenue 484.1 441.0 566.4 440.9 490.3 497.5
------- ------ ------ ------ ------ ------
Realized gains (losses) on investments (1.3) 14.2 0.0 (0.8) (1.3) (3.4)
Gains (losses) on derivatives
Gain on sale of reinsurance subsidiaries
------- ------ ------ ------ ------ ------
Total Revenue 482.8 455.2 566.4 440.2 489.0 494.1
======= ====== ====== ====== ====== ======
Income (Loss)
Lincoln Financial Advisors (9.7) (5.3) 2.7 (7.4) (2.9) (3.1)
Lincoln Financial Distributors (5.3) (2.1) (3.7) (3.3) (5.2) (5.0)
------- ------ ------ ------ ------ ------
Total Distribution (15.0) (7.4) (1.0) (10.7) (8.1) (8.0)
Reinsurance 23.7 2.2 (19.5) 31.9 25.8 28.2
Amortization of deferred gain on
indemnity reinsurance*
LNC Financing (21.4) (19.9) (21.6) (21.9) (22.2) (20.9)
Other Corporate 0.9 (2.4) (1.4) (5.7) (1.5) 1.6
------- ------ ------ ------ ------ ------
Inc (Loss) from Oper (11.9) (27.5) (43.5) (6.5) (5.9) 0.9
------- ------ ------ ------ ------ ------
Realized gains (losses) on investments (1.7) 9.8 1.3 (0.4) (0.8) (3.2)
Gains (losses) on derivatives
Gain on sale of reinsurance subsidiaries
Restructuring charges 0.0 (3.2) 0.0 0.0 0.0 0.0
------- ------ ------ ------ ------ ------
Income before Accounting Changes (13.6) (20.9) (42.2) (6.8) (6.8) (2.3)
Cumulative effect of accounting changes
======= ====== ====== ====== ====== ======
Total Net Income (Loss) (13.6) (20.9) (42.2) (6.8) (6.8) (2.3)
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 2000 2001 2001 2001 2001 2002
------ ------ ------ ------ ------ ------
Revenue
Lincoln Financial Advisors 109.8 81.2 83.8 78.9 116.7 76.2
Lincoln Financial Distributors 35.0 25.7 32.1 30.8 37.4 32.8
------- ------ ------ ------ ------ ------
Total Distribution 144.8 106.9 115.9 109.8 154.1 109.0
Reinsurance 461.0 515.1 451.4 467.4 265.6
Amortization of deferred gain on
indemnity reinsurance* 20.4 24.1
Other [Including
Consolidating Adjustments] (59.2) (80.5) (116.6) (74.8) (101.1) (36.0)
------ ------ ------ ------ ------ ------
Operating Revenue 546.6 541.5 450.7 502.3 339.0 97.1
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 0.4 (10.0) 1.4 (12.8) 29.5 (4.9)
Gains (losses) on derivatives 0.1 (0.1) (0.0) (9.7) 0.1
Gain on sale of reinsurance subsidiaries 12.8
------ ------ ------ ------ ------ ------
Total Revenue 547.0 531.6 452.0 489.5 371.7 92.3
====== ====== ====== ====== ====== ======
Income (Loss)
Lincoln Financial Advisors 1.6 (6.8) (12.3) (4.2) 7.4 (9.1)
Lincoln Financial Distributors (5.1) (6.9) (11.5) (7.8) (4.5) (6.2)
------- ------ ------ ------ ------ ------
Total Distribution (3.4) (13.8) (23.8) (12.0) 3.0 (15.4)
Reinsurance 36.6 46.8 34.1 17.2 30.7
Amortization of deferred gain on
indemnity reinsurance* 12.9 15.7
LNC Financing (19.8) (21.7) (22.0) (19.5) (14.7) (8.2)
Other Corporate (9.8) (0.5) 2.0 1.5 (5.3) (4.1)
------ ------ ------ ------ ------ ------
Inc (Loss) from Oper 3.5 10.9 (9.7) (12.9) 26.5 (12.0)
------ ------ ------ ------ ------ ------
Realized gains (losses) on investments 1.2 (6.5) 1.0 (8.3) 19.7 (3.3)
Gains (losses) on derivatives 0.1 (0.1) (0.0) (6.3) 0.1
Gain on sale of reinsurance subsidiaries 0.0 0.0 0.0 15.0
Restructuring charges 1.0 0.0 (1.2) 0.0 (18.3)
------ ------ ------ ------ ------ ------
Income before Accounting Changes 5.7 4.4 (10.0) (21.2) 36.7 (15.2)
Cumulative effect of accounting changes (0.4) (2.2) 0.0 (0.0)
====== ====== ====== ====== ====== ======
Total Net Income (Loss) 5.7 4.0 (12.2) (21.2) 36.7 (15.2)
* The amortization of deferred gain on sale of reinsurance business
represents the amortization of deferred gain recognized on the indemnity
reinsurance portion of the transaction with Swiss Re along with the
recognition of amortization of gain on reinsurance business to Swiss Re
that was novated after December 7, 2001. Included in the amount for the
fourth quarter of 2001 and first quarter of 2002 was $7.9 million
after-tax and $1.3 million after-tax, respectively, of amortization of
gain on reinsurance business to Swiss Re that was novated after
December 7, 2001.
PAGE 27
Consolidated Domestic Retail Deposits/Account Balances
Unaudited [Billions of Dollars]
1997 1998 1999 2000 2001
------ ------ ------ ------ ------
Deposits - For the Year
Lincoln Retirement - Fixed Annuities 1.632 1.452 2.563 2.074 3.342
Lincoln Retirement - Variable Annuities 2.695 2.791 2.553 3.165 3.067
Lincoln Retirement - Life Insurance 0.000 0.000 0.017 0.014 0.012
Life Insurance Segment - Life Insurance 0.384 1.207 1.698 1.884 1.934
Inv Mgmt - Annuities 2.163 2.238 1.561 1.726 1.449
Inv Mgmt - Mutual Funds 1.218 1.913 2.153 2.452 1.357
Inv Mgmt - Wrap Fee & Other 0.533 0.596 0.550 0.581 0.721
Consolidating Adjustments (0.966) (1.041) (0.499) (0.406) (1.039)
------ ------ ------ ------ ------
Gross Deposits 7.658 9.157 10.597 11.491 10.843
Account Balances - End of Year
Lincoln Retirement - Fixed Annuities 15.458 16.505 16.791 15.394 16.491
Lincoln Retirement - Variable Annuities 27.346 33.358 41.493 39.427 34.638
Lincoln Retirement - Life Insurance 0.155 0.160 0.149
Life Insurance Segment - Life Insurance 3.038 9.243 10.217 10.847 11.377
Inv Mgmt - Annuities 10.991 14.257 15.526 13.494 11.772
Inv Mgmt - Mutual Funds 12.484 13.528 13.632 12.805 11.065
Inv Mgmt - Wrap Fee & Other 2.403 2.512 1.649 1.375 1.782
Consolidating Adjustments (6.806) (8.891) (9.175) (7.753) (6.717)
------ ------ ------ ------ ------
Account Balances 64.914 80.512 90.288 85.749 80.557
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
Deposits - For the Quarter
Lincoln Retirement - Fixed Annuities 0.654 0.678 0.741 0.589 0.490 0.513
Lincoln Retirement - Variable Annuities 0.651 0.634 0.634 0.797 0.793 0.729
Lincoln Retirement - Life Insurance 0.005 0.004 0.005 0.003 0.003 0.004
Life Insurance Segment - Life Insurance 0.379 0.399 0.526 0.424 0.411 0.428
Inv Mgmt - Annuities 0.393 0.332 0.409 0.379 0.358 0.453
Inv Mgmt - Mutual Funds 0.487 0.514 0.587 0.840 0.556 0.521
Inv Mgmt - Wrap Fee & Other 0.173 0.116 0.079 0.148 0.106 0.143
Consolidating Adjustments (0.143) (0.096) (0.118) (0.099) (0.062) (0.100)
------ ------ ------ ------ ------ ------
Gross Deposits 2.599 2.581 2.864 3.081 2.655 2.691
------ ------ ------ ------ ------ ------
Account Balances - End of Quarter
Lincoln Retirement - Fixed Annuities 16.779 16.934 16.791 16.244 15.884 15.660
Lincoln Retirement - Variable Annuities 37.233 35.613 41.493 44.640 43.097 42.743
Lincoln Retirement - Life Insurance 0.130 0.128 0.155 0.169 0.165 0.166
Life Insurance Segment - Life Insurance 9.628 9.726 10.217 10.470 10.538 10.716
Inv Mgmt - Annuities 14.981 14.004 15.526 15.531 14.861 14.824
Inv Mgmt - Mutual Funds 13.654 12.938 13.632 14.201 13.604 14.102
Inv Mgmt - Wrap Fee & Other 1.650 1.611 1.649 1.335 1.331 1.285
Consolidating Adjustments (9.050) (8.387) (9.175) (8.768) (8.419) (8.644)
------ ------ ------ ------ ------ ------
Account Balances 85.004 82.567 90.288 93.822 91.061 90.853
------ ------ ------ ------ ------ ------
Dec Mar Jun Sep Dec Mar
2000 2001 2001 2001 2001 2002
------ ------ ------ ------ ------ ------
Deposits - For the Quarter
Lincoln Retirement - Fixed Annuities 0.482 0.560 0.668 0.896 1.218 0.906
Lincoln Retirement - Variable Annuities 0.846 0.887 0.703 0.684 0.793 0.808
Lincoln Retirement - Life Insurance 0.004 0.003 0.004 0.003 0.002
Life Insurance Segment - Life Insurance 0.622 0.418 0.477 0.434 0.605 0.440
Inv Mgmt - Annuities 0.536 0.455 0.373 0.340 0.281 0.343
Inv Mgmt - Mutual Funds 0.535 0.442 0.324 0.292 0.299 0.587
Inv Mgmt - Wrap Fee & Other 0.184 0.227 0.157 0.168 0.169 0.163
Consolidating Adjustments (0.145) (0.262) (0.202) (0.295) (0.279) (0.309)
------ ------ ------ ------ ------ ------
Gross Deposits 3.064 2.729 2.504 2.522 3.088 2.938
------ ------ ------ ------ ------ ------
Account Balances - End of Quarter
Lincoln Retirement - Fixed Annuities 15.394 15.430 15.551 16.051 16.491 16.533
Lincoln Retirement - Variable Annuities 39.427 34.733 36.961 30.506 34.638 35.150
Lincoln Retirement - Life Insurance 0.160 0.147 0.157 0.134 0.149
Life Insurance Segment - Life Insurance 10.847 10.764 11.066 10.939 11.377 11.667
Inv Mgmt - Annuities 13.494 11.787 12.483 10.665 11.772 11.838
Inv Mgmt - Mutual Funds 12.805 11.091 11.748 10.301 11.065 11.012
Inv Mgmt - Wrap Fee & Other 1.375 1.688 1.823 1.684 1.782 1.903
Consolidating Adjustments (7.753) (6.834) (7.007) (6.023) (6.717) (6.684)
------ ------ ------ ------ ------ ------
Account Balances 85.749 78.806 82.783 74.257 80.557 81.420
------ ------ ------ ------ ------ ------
Total Domestic Net Flows
Unaudited [Billions of Dollars]
For the Year 1998 1999 2000 2001
------ ------ ------ ------
Lincoln Retirement (1.244) (1.165) (2.874) 0.105
Life Insurance Segment 0.113 0.985 1.158 1.163
Investment Management Segment- Retail 1.772 (2.209) (1.517) (0.461)
Consolidating Adjustments (0.158) 1.276 1.406 (0.150)
------ ------ ------ ------
Total Retail Net Flows 0.483 (1.114) (1.828) 0.657
Investment Management Segment- Institutional (2.702) (2.240) (5.694) (0.228)
------ ------ ------ ------
Total Net Flows (2.219) (3.354) (7.522) 0.429
------ ------ ------ ------
Jun Sep Dec Mar Jun Sep
For the Quarter 1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
Lincoln Retirement (0.200) (0.193) (0.490) (0.700) (0.682) (0.812)
Life Insurance Segment 0.185 0.197 0.327 0.242 0.235 0.277
Investment Management Segment- Retail (1.309) (0.301) (0.410) (0.886) (0.363) (0.326)
Consolidating Adjustments 0.295 0.313 0.463 0.717 0.342 0.194
------ ------ ------ ------ ------ ------
Total Retail Net Flows (1.030) 0.015 (0.111) (0.627) (0.469) (0.667)
Investment Management Segment- Instit. (0.584) 0.816 (1.480) (2.611) (1.057) (0.983)
------ ------ ------ ------ ------ ------
Total Net Flows (1.614) 0.831 (1.591) (3.238) (1.526) (1.650)
------ ------ ------ ------ ------ ------
Dec Mar Jun Sep Dec Mar
For the Quarter 2000 2001 2001 2001 2001 2002
------ ------ ------ ------ ------ ------
Lincoln Retirement (0.681) (0.590) (0.196) 0.261 0.631 0.088
Life Insurance Segment 0.404 0.237 0.304 0.239 0.383 0.236
Investment Management Segment- Retail 0.058 (0.047) (0.160) (0.126) (0.125) (0.001)
Consolidating Adjustments 0.152 0.019 (0.034) (0.081) (0.053) (0.037)
------ ------ ------ ------ ------ ------
Total Retail Net Flows (0.066) (0.382) (0.086) 0.293 0.836 0.287
Investment Management Segment- Instit. (1.043) (0.418) 0.445 (0.155) (0.102) 0.731
------ ------ ------ ------ ------ ------
Total Net Flows (1.110) (0.800) 0.359 0.138 0.734 1.018
------ ------ ------ ------ ------ ------
NOTE: Excludes amounts reported as Assets Under Management - Insurance Assets
3/31/2002 PAGE 28
Consolidated Investment Data - Assets Managed
Unaudited [Billions of Dollars]
December 31 1997 1998 1999 2000 2001
------- ------- ------- ------- ------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 24.066 30.233 27.689 27.450 28.346
Equity securities 0.660 0.543 0.604 0.550 0.470
Other investments 5.092 7.154 7.286 7.369 7.297
------- ------- ------- ------- -------
Total LNC Investments 29.819 37.929 35.578 35.369 36.113
Separate accounts 37.139 43.409 53.654 50.580 44.833
Cash and Invested Cash 3.795 2.433 1.896 1.927 3.095
Discontinued Operations
------- ------- ------- ------- -------
Total LNC 70.752 83.772 91.128 87.876 84.042
------- ------- ------- ------- -------
Non-affiliate assets managed 48.331 50.061 49.314 43.397 42.199
------- ------- ------- ------- -------
Total Assets Managed 119.083 133.833 140.443 131.273 126.241
======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 56.457 61.488 61.374 52.895 47.922
(See page 22 for additional detail)
DLIA-Corp 35.684 39.432 35.934 35.686 38.119
(Assets managed internally-see page 22)
Lincoln (UK) 6.775 7.573 8.589 7.873 6.847
Policy Loans (within business units) 0.763 1.840 1.892 1.961 1.940
Non-LNC Affiliates 19.404 23.500 32.654 32.858 31.413
------- ------- ------- ------- -------
Total Assets Managed 119.083 133.833 140.443 131.273 126.241
======= ======= ======= ======= =======
Jun Sep Dec Mar Jun Sep
End of Quarter 1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- -------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 29.579 28.708 27.689 27.745 27.078 27.264
Equity securities 0.506 0.507 0.604 0.588 0.560 0.570
Other investments 7.278 7.317 7.286 7.442 7.419 7.471
------- ------- ------- ------- ------- -------
Total LNC Investments 37.363 36.532 35.578 35.775 35.057 35.305
Separate accounts 47.864 46.229 53.654 56.908 54.924 54.411
Cash and invested cash 2.151 2.343 1.896 1.510 1.619 1.436
------- ------- ------- ------- ------- -------
Total LNC 87.378 85.104 91.128 94.192 91.601 91.152
------- ------- ------- ------- ------- -------
Non-affiliate assets managed 49.827 48.068 49.314 47.150 45.945 45.119
------- ------- ------- ------- ------- -------
Total Assets Managed 137.205 133.172 140.443 141.342 137.546 136.271
======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 61.511 58.869 61.374 58.241 56.518 55.527
(See page 23 for additional detail)
DLIA-Corp 37.391 36.820 35.934 35.541 34.891 34.981
(Assets managed internally-see page 23)
Lincoln (UK) 7.746 7.849 8.589 8.423 8.058 7.838
Policy Loans (within business units) 1.847 1.863 1.892 1.896 1.915 1.936
Non-LNC Affiliates 28.710 27.771 32.654 37.241 36.164 35.989
------- ------- ------- ------- ------- -------
Total Assets Managed 137.205 133.172 140.443 141.342 137.546 136.271
======= ======= ======= ======= ======= =======
Dec Mar Jun Sep Dec Mar
End of Quarter 2000 2001 2001 2001 2001 2002
------- ------- ------- ------- ------- -------
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 27.450 27.811 27.874 28.932 28.346 28.841
Equity securities 0.550 0.560 0.534 0.478 0.470 0.439
Other investments 7.369 7.374 7.388 7.379 7.297 7.084
------- ------- ------- ------- ------- -------
Total LNC Investments 35.369 35.744 35.796 36.788 36.113 36.363
Separate accounts 50.580 44.506 47.140 39.480 44.833 44.917
Cash and invested cash 1.927 2.015 1.502 1.996 3.095 1.700
------- ------- ------- ------- ------- -------
Total LNC 87.876 82.266 84.438 78.264 84.042 82.979
------- ------- ------- ------- ------- -------
Non-affiliate assets managed 43.397 41.904 44.069 39.198 42.199 43.708
------- ------- ------- ------- ------- -------
Total Assets Managed 131.273 124.170 128.507 117.462 126.241 126.687
======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 52.895 47.766 50.268 44.530 47.922 49.415
(See page 23 for additional detail)
DLIA-Corp 35.686 36.324 36.018 37.337 38.119 37.171
(Assets managed internally-see page 23)
Lincoln (UK) 7.873 7.012 7.027 6.474 6.847 6.772
Policy Loans (within business units) 1.961 1.947 1.947 1.943 1.940 1.918
Non-LNC Affiliates 32.858 31.122 33.246 27.177 31.413 31.411
------- ------- ------- ------- ------- -------
Total Assets Managed 131.273 124.170 128.507 117.462 126.241 126.687
======= ======= ======= ======= ======= =======
3/31/2002 PAGE 29
Consolidated Investment Data
Unaudited [Millions of Dollars except as noted]
For the Year Ended December 31 1997 1998 1999 2000 2001
------- ------ ------ ------ ------
Net Investment Income
Fixed Maturity Securities 1832.1 2065.8 2232.9 2148.7 2121.0
Equity Securities 19.1 22.8 20.1 19.5 17.6
Mortgage loans on real estate 279.2 383.6 369.2 373.8 374.5
Real estate 99.4 86.8 64.1 51.8 49.5
Policy loans 44.5 99.5 116.5 125.0 125.3
Invested cash 102.4 156.8 110.3 87.2 68.4
Other investments 20.6 88.4 51.8 66.8 69.5
------- ------ ------ ------ ------
Investment revenue 2397.3 2903.7 2964.8 2872.8 2825.8
Investment expense 146.6 222.3 157.3 125.7 146.2
------- ------ ------ ------ ------
Net Investment Income 2250.8 2681.4 2807.5 2747.1 2679.6
------- ------ ------ ------ ------
Gross-up of Tax Exempt Income 12.7 11.6 8.1 7.8 7.2
------- ------ ------ ------ ------
Adjusted Net Invest Income 2263.5 2693.0 2815.6 2754.9 2686.8
======= ====== ====== ====== ======
Mean Invested Assets (Cost Basis) 30337.3 36573.8 39027.5 37471.3 37616.9
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.46% 7.36% 7.21% 7.35% 7.14%
Investment Gains
Realized Gains (Losses) on Investments 72.9 13.7 3.8 (17.5) (68.7)
Gains(Losses) on Derivatives 0.0 0.0 0.0 0.0 (4.9)
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 159.6 116.4 (1018.1) 477.7 183.7
Incr (Decr) on Derivatives 3.9
Incr (Decr) in Foreign Exchange (20.3) 3.8 (19.9) (8.1) (30.0)
Incr (Decr) in minimum pension liability (36.0)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 24.066 30.233 27.689 27.450 28.346
Fixed Maturity Sec (Adjusted Cost) 22.624 28.640 28.357 27.373 27.956
Equity Securities (Market) 0.660 0.543 0.604 0.550 0.470
Equity Securities (Adjusted Cost) 0.518 0.437 0.482 0.458 0.444
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 27.6% 25.6% 22.8% 22.1% 17.2%
AA or better 35.1% 32.6% 29.8% 29.2% 23.6%
BB or less 7.3% 7.0% 8.0% 6.7% 8.3%
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- -------
Net Investment Income
Fixed Maturity Securities 575.8 551.2 548.0 541.3 544.4 525.3
Equity Securities 4.9 3.9 6.9 3.7 5.7 3.6
Mortgage loans on real estate 85.5 94.7 94.5 92.0 95.1 94.4
Real estate 18.4 13.7 12.5 11.2 12.5 11.8
Policy loans 28.6 29.4 29.9 30.7 30.9 30.5
Invested cash 23.4 32.4 22.0 27.2 15.1 26.5
Other investments 13.4 9.9 20.9 35.1 2.0 26.9
------- ------- ------- ------- ------- -------
Investment revenue 750.1 735.2 734.9 741.1 705.7 719.1
Investment expense 49.3 38.1 34.8 30.0 31.8 29.0
------- ------- ------- ------- ------- -------
Net Investment Income 700.8 697.1 700.1 711.1 673.8 690.0
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 2.0 1.7 2.6 1.5 2.3 1.4
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 702.8 698.7 702.7 712.6 676.1 691.5
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 39385.3 39111.8 38438.6 38237.4 37306.1 37250.8
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.14% 7.15% 7.31% 7.45% 7.25% 7.43%
Investment Gains
Realized Gains (Losses) on Investments (3.5) 4.1 1.6 (0.4) (6.7) (11.6)
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) (255.8) (102.7) (361.9) 54.5 (145.4) 218.8
Incr (Decr) on Derivatives
Incr (Decr) in Foreign Exchange (9.5) 19.6 (10.2) (7.3) (0.9) (2.0)
Incr (Decr) in minimum pension liability
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 29.579 28.708 27.689 27.745 27.078 27.264
Fixed Maturity Sec (Adjusted Cost) 29.494 28.974 28.357 28.295 27.788 27.727
Equity Securities (Market) 0.506 0.507 0.604 0.588 0.560 0.570
Equity Securities (Adjusted Cost) 0.385 0.414 0.482 0.475 0.446 0.450
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 25.5% 24.2% 22.8% 22.7% 22.3% 22.3%
AA or better 32.5% 31.1% 29.8% 29.5% 29.3% 29.4%
BB or less 7.0% 7.5% 8.0% 7.4% 7.4% 6.8%
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 2000 2001 2001 2001 2001 2002
------- ------- ------- ------- ------- -------
Net Investment Income
Fixed Maturity Securities 537.7 526.9 527.0 536.9 530.1 522.5
Equity Securities 6.5 1.0 7.8 3.7 5.1 3.4
Mortgage loans on real estate 92.3 95.7 92.4 94.2 92.4 89.5
Real estate 16.3 12.8 13.1 12.7 10.9 12.3
Policy loans 32.9 31.4 31.4 31.0 31.6 30.2
Invested cash 18.4 22.5 19.8 14.8 11.3 12.4
Other investments 2.9 19.6 18.2 28.2 3.5 7.8
------- ------- ------- ------- ------- -------
Investment revenue 706.9 709.9 709.7 721.4 684.8 678.0
Investment expense 34.8 36.1 36.6 35.2 38.2 29.9
------- ------- ------- ------- ------- -------
Net Investment Income 672.1 673.7 673.1 686.2 646.6 648.1
------- ------- ------- ------- ------- -------
Gross-up of Tax Exempt Income 2.6 0.5 3.0 1.5 2.1 1.5
------- ------- ------- ------- ------- -------
Adjusted Net Invest Income 674.7 674.2 676.1 687.7 648.7 649.7
======= ======= ======= ======= ======= =======
Mean Invested Assets (Cost Basis) 37090.8 37238.0 37094.5 37685.8 38449.3 38154.8
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.28% 7.24% 7.29% 7.30% 6.75% 6.81%
Investment Gains
Realized Gains (Losses) on Investments 1.2 (13.4) (11.5) (23.8) (20.0) (67.6)
Gains (Losses) on Derivatives 0.0 (0.1) 0.2 (0.4) (4.6) 0.1
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 349.8 178.4 (114.2) 171.8 (52.2) (163.9)
Incr (Decr) on Derivatives 23.3 3.7 (6.7) 1.2 1.2
Incr (Decr) in Foreign Exchange 2.0 (17.8) (19.5) 22.2 (14.9) (12.8)
Incr (Decr) in minimum pension liability (36.0) 0.7
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 27.450 27.811 27.874 28.932 28.346 28.841
Fixed Maturity Sec (Adjusted Cost) 27.373 27.367 27.681 28.253 27.956 28.831
Equity Securities (Market) 0.550 0.560 0.534 0.478 0.470 0.439
Equity Securities (Adjusted Cost) 0.458 0.507 0.477 0.453 0.444 0.398
% of Fixed Maturity Securities (Based on Market)
Treasuries and AAA 22.1% 20.3% 19.3% 17.9% 17.2% 17.8%
AA or better 29.2% 27.1% 26.0% 24.3% 23.6% 24.7%
BB or less 6.7% 7.2% 7.8% 7.2% 8.3% 7.5%
3/31/2002 PAGE 30
Common Stock / Debt Information
Unaudited [Dollars per Share, except Percentages]
For the Year Ended December 31 1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Common Stock [1]
Highest Price 13.813 19.032 24.125 22.188 26.875
Lowest Price 9.500 12.625 17.344 17.313 17.313
Closing Price 13.688 18.500 21.750 17.500 26.875
Dividend Payout Ratio [2] 63.5% 38.9% 52.6% 51.0% 39.7%
Yield [3] 5.3% 4.1% 3.8% 4.9% 3.4%
Preferred Stock Dividend (Millions) 13.033 17.246 17.212 17.119 8.644
Debt: (End of Period)
Senior Debt Ratings
A.M. Best
Fitch AA AA- AA- AA-
Moody's A2 A2 A1 A2
Standard and Poors A+ A+ A+ A
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A+
Lincoln Life - Fitch AAA AAA AAA AA+
Lincoln Life - Moody's A1 A1 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA-
First Penn - A.M. Best* A A+ A+ A+
First Penn - Fitch
First Penn - Moody's
First Penn - Standard & Poors* AA- AA- AA- AA-
LLA of New York - A.M. Best*
LLA of New York - Fitch*
LLA of New York - Moody's
LLA of New York - Standard & Poors*
Ratios
Debt to Total Capitalization [4] 25.7% 21.1% 19.9% 22.8
Debt to Equity [4] 34.7% 26.7% 24.9% 29.5
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
---- ---- ---- ---- ---- ----
Common Stock:
Highest Price 53.438 57.500 48.313 41.375 40.063 56.375
Lowest Price 45.688 36.000 36.500 22.625 29.000 35.625
Closing Price 52.313 37.563 40.000 33.500 36.125 48.125
Yield [3] 2.1% 2.9% 2.9% 3.5% 3.2% 2.4%
Preferred Stock Dividend 0.024 0.027 0.014 0.022 0.022 0.021
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a
Fitch A+ A+ A+ A+ A+ A+
Moody's A2 A2 A2 A2 A2 A2
Standard and Poors A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A A A A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA+ AA+
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A A A A A A
First Penn - Fitch AA+ AA+ AA+ AA+ AA+ AA+
First Penn - Moody's A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A A A A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA+ AA+ AA+
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 22.0% 22.0% 23.2% 23.3% 21.8% 21.2%
Debt to Equity [4] 28.2% 28.3% 30.3% 30.4% 28.0% 27.0%
For the Year Ended December 31 1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Common Stock [1]
Highest Price 28.500 39.063 49.438 57.500 56.375 52.750
Lowest Price 20.375 24.500 33.500 36.000 22.625 38.000
Closing Price 26.250 39.063 40.907 40.000 47.313 48.570
Dividend Payout Ratio [2] 38.2% 22.8% 43.9% 50.5% 38.3% 41.9%
Yield [3] 3.7% 2.7% 2.7% 2.9% 2.6% 2.6%
Preferred Stock Dividend (Millions) 0.112 0.106 0.100 0.089 0.078 0.071
Debt: (End of Period)
Senior Debt Ratings
A.M. Best
Fitch AA- AA- A+ A+ A+ A+
Moody's A2 A2 A2 A2 A3 A3
Standard and Poors A A A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A A A A
Lincoln Life - Fitch AA+ AA+ AA+ AA+ AA AA
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A+ A A A A
First Penn - Fitch AA+ AA+ AA+ AA AA
First Penn - Moody's A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A A A A
LLA of New York - Fitch* AA+ AA+ AA+ AA AA
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 18.8% 17.0% 21.2% 23.2% 20.8% 21.4%
Debt to Equity [4] 23.1% 20.5% 26.9% 30.3% 26.3% 27.2%
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 2000 2001 2001 2001 2001 2002
---- ---- ---- ---- ---- ----
Common Stock:
Highest Price 50.938 48.250 52.300 52.750 49.450 53.650
Lowest Price 40.875 38.000 41.280 41.000 40.000 47.200
Closing Price 47.313 42.470 51.750 46.630 48.570 50.730
Yield [3] 2.6% 2.9% 2.4% 2.6% 2.6% 2.5%
Preferred Stock Dividend 0.013 0.019 0.018 0.017 0.017 0.017
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a a a a a a
Fitch A+ A+ A+ A+ A+ A+
Moody's A3 A3 A3 A3 A3 A3
Standard and Poors A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A A A A A A
Lincoln Life - Fitch AA AA AA AA AA AA
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A A A A A A
First Penn - Fitch AA AA AA AA AA AA
First Penn - Moody's A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A A A A A A
LLA of New York - Fitch* AA AA AA AA AA AA
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 20.8% 22.2% 21.2% 21.1% 21.4% 22.7%
Debt to Equity [4] 26.3% 28.5% 27.0% 26.7% 27.2% 29.4%
* 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 two 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.
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.