Insurance and retirement company Lincoln National (NYSE: LNC) announced better-than-expected revenue in Q2 CY2025, with sales up 4.4% year on year to $4.73 billion. Its non-GAAP profit of $2.36 per share was 25.7% above analysts’ consensus estimates.

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StockStory’s Take

Lincoln Financial Group’s second quarter saw a notable positive market reaction, reflecting management’s disciplined execution on cost controls and product diversification. CEO Ellen Cooper attributed the quarter’s performance to “record earnings in Group Protection, double-digit sales growth across all four businesses, and a more profitable business mix.” The company’s focus on risk-adjusted returns, expense reduction, and investment in digital capabilities enabled a more efficient organization, while strategic shifts in product and segment focus generated resilient cash flows. Management also highlighted ongoing progress in shifting towards higher-margin products and segments.

Looking forward, management’s guidance is shaped by continued investment in digital capabilities, expansion of higher-margin product lines, and capital deployment toward growth areas. CFO Chris Neczypor noted that the company will “deploy excess capital over the next 18 months” to accelerate annuity and group business growth, while ongoing optimization of the legacy life portfolio remains a priority. Management emphasized that the product mix shift and operational improvements are expected to further enhance profitability and cash flow generation, with the impact of recent reinsurance partnerships and digital initiatives playing a key role in future results.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to increased operating efficiency, margin expansion in targeted segments, and successful execution on product and distribution strategies.

• Group Protection margin expansion: Group Protection delivered record earnings and its highest-ever margin, driven by disciplined pricing, growth in local markets, and an emphasis on higher-margin supplemental health products. Management noted that “about two-thirds of sales this quarter were voluntary benefits and from existing customers,” signaling effective cross-selling and enhanced persistency.
• Annuities product mix shift: The annuities business continued diversifying away from traditional variable products, with fixed annuity sales up 41% sequentially and Registered Index-Linked Annuity (RILA) products seeing ongoing momentum. CEO Ellen Cooper emphasized that the “second-generation RILA product continues to resonate with customers” thanks to unique features and improved crediting strategies.
• Life Insurance operational turnaround: The life segment posted positive earnings after prior losses, benefiting from improved mortality experience, alternative investment returns, and reduced expenses. Management highlighted that ongoing expense discipline and product repositioning are key to sustaining improvements.
• Retirement Plan Services pipeline growth: Retirement Plan Services reported strong year-over-year first-year sales growth, especially in stable value products, and management expects a “strong pipeline of known wins” to support positive net flows in the second half of the year.
• Capital deployment flexibility: With the Bain Capital transaction closed, Lincoln Financial has increased flexibility to direct excess capital toward accelerating growth in group benefits, diversifying annuities, and optimizing the life portfolio. Management stated that “a portion of the deployable excess capital we have today will be set aside to support this initiative.”

Drivers of Future Performance

Lincoln Financial’s outlook centers on continued margin expansion and growth from product mix shifts, disciplined capital deployment, and digital investment.

• Sustained margin improvements: Management expects the Group Protection business to maintain its higher margin profile, supported by continued focus on local markets and supplemental health products. While macroeconomic conditions could introduce volatility, current trends in disability and life loss ratios are favorable, providing a tailwind for earnings.
• Capital deployment to growth segments: Over the next 18 months, excess capital will be allocated to retain more fixed annuity business, grow RILA and group benefits, and optimize the legacy life block through potential reinsurance transactions or asset restructuring. These actions are aimed at improving risk-adjusted returns and free cash flow conversion.
• Digital and distribution enhancements: Strategic investments in digital tools, broker partnerships, and customer-facing technology are expected to improve efficiency and deepen market penetration, especially in retail life and annuities. Management believes these enhancements will facilitate product cross-sell and support sustained sales momentum.

Catalysts in Upcoming Quarters

As we look ahead, the StockStory team will be watching (1) continued margin expansion in Group Protection as product mix and pricing strategies evolve, (2) the impact of capital deployment on annuities and the legacy life block, and (3) progress in digital and distribution initiatives to drive revenue growth. Execution on reinsurance strategies and realization of the expected free cash flow benefits from the Bain Capital partnership will also be important to monitor.

Lincoln Financial Group currently trades at $39.70, up from $34.20 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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