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Slide 1: Lincoln Statistical Report first Q U A R T E R 2007 The financial data in this document is dated May 1, 2007 and has not been updated since that date. LNC does not intend to update this document.
Slide 2: Lincoln Financial Group Statistical Report First Quarter 2007 Table of Contents LFG Analyst Coverage Notes Financial Highlights Consolidated Expense Detail Operating Results Summary Consolidated Statements of Income Consolidating Statements of Income from Operations Consolidated Balance Sheet Balance Sheet Data - Segment Highlights Individual Markets Individual Life Insurance Income Statements & Operational Data Operational Data Account Value Roll Forward Individual Annuities Income Statements & Operational Data Account Value Roll Forward Account Values Employer Markets Defined Contribution Income Statements & Operational Data Account Value Roll Forward Supplemental Data Executive Benefits Income Statements & Operational Data Account Value Roll Forward and Supplemental Data Group Protection Income Statements & Operational Data Supplemental Data Investment Management Income Statements Assets Under Management Roll Forward Lincoln UK Income Statements Operational Data Lincoln Financial Media Other Operations Domestic Deposits / Account Balances / Net Flows Investment Data Assets Managed Other Investment Data 1-4 5 6 7 8-9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 29 30 31 32
Slide 3: LNC Analyst Coverage First Quarter 2007 FIRM A.G. Edwards Banc of America Securities Bear Stearns Bernstein Citigroup Credit Suisse Deutsche Bank Goldman Sachs & Company JP Morgan Keefe, Bruyette & Woods, Inc. Langen McAlenney Lehman Brothers Merrill Lynch Morgan Stanley Raymond James & Associates Inc. SunTrust Robinson Humphrey UBS Wachovia ANALYST Jeff Hopson Tamara Kravec Saul Martinez Suneet Kamath Colin Devine Tom Gallagher Darin Arita Joan Zief Jimmy Bhullar Jeff Schuman Bob Glasspiegel Eric Berg Ed Spehar Nigel Dally Steven Schwartz David Lewis Andrew Kligerman John Hall PHONE NUMBER 314-955-2639 212-583-8212 212-272-3528 212-756-4587 212-816-1682 212-538-2010 212-250-7321 212-902-6778 212-622-6397 860-722-5902 860-724-1203 212-526-2805 212-449-4245 212-761-6235 312-612-7686 404-926-5097 212-713-2492 212-214-8032 Investor inquiries may be directed to: Jim Sjoreen, Vice President, Investor Relations Email: jsjoreen@lfg.com Voice: (215) 448-1420 Fax: (215) 448-3962 Note: This list is provided for informational purposes only. Lincoln does not endorse the analyses, conclusions, or recommendations contained in any report issued by these or any other analysts. ** Statistical data will be available immediately after the release of earnings for each quarter through Lincoln’s Investor Relations Web site http://www.lfg.com/investor
Slide 4: 3/31/2007 NOTES ii On April 3, 2006, LNC completed its previously announced merger with Jefferson Pilot Corporation ("JP"). Beginning with the second quarter of 2006, we are reporting results through the following segments: Individual Markets - Annuities, Individual Markets - Life Insurance, Employer Markets - Retirement Products, Employer Markets - Group Protection, Investment Management, Lincoln UK and Lincoln Financial Media. Historical information presented in this report has been restated to reflect the new organizational structure. As described below, certain reclassifications have been made to historically reported items to reflect the new reporting practices of LNC. Definitions and Presentation "Income from Operations," "Operating Revenue," "Return on Capital," and "Station Operating Income" are non-GAAP financial measures and do not replace GAAP revenue and net income (loss). Detailed reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure are included in this statistical supplement. * We exclude the after-tax effects of the following items from GAAP net income to arrive at income from operations: * Realized gains and losses on investments and derivatives, * Gains and losses related to reinsurance embedded derivatives/trading account securities, * The cumulative effect of accounting changes, * Reserve changes on business sold through reinsurance net of related deferred gain amortization, * Gains and losses on the sale of subsidiaries and blocks of business, and * Loss on early retirement of debt, including subordinated debt NOTE: Income from operations is lower than previously reported as it now includes restructuring charges previously excluded in the determination of income from operations * Operating revenue represents revenue excluding the following, as applicable: * Realized gains or losses on investments and derivatives, * Gains and losses related to reinsurance embedded derivatives/trading account securities, * Gains and losses on the sale of subsidiaries and blocks of business, and * Deferred gain amortization related to reserve changes on business sold through reinsurance Return on capital measures the effectiveness of LNC's use of its total capital, which includes equity (excluding accumulated other comprehensive income), debt, capital securities and junior subordinated debentures issued to affiliated trusts. Return on capital is calculated by dividing annualized income from operations (after adding back interest expense) by average capital. The difference between return on capital and return on shareholders' equity represents the effect of leveraging on LNC's consolidated results. Station operating income is calculated as communications revenues less operating costs and expenses before depreciation and amortization. * * Income from operations, operating revenue, return on capital, and station operating income are internal measures used by LNC in the manageme of its operations. Management believes that these performance measures explain the results of operations of LNC's ongoing operations in a manner that allows for a better understanding of the underlying trends in LNC's current business because the excluded items are either unpredictable and/or not related to decisions regarding the underlying businesses. * Certain operating and statistical measures are included in this report to provide supplemental data regarding the performance of LNC’s current business. These measures include deposits, sales, net flows, first year premium, inforce, spreads, and assets under management. Sales as reported consist of the following: * Universal life ("UL"), including Moneyguard, and COLI - first year commissionable premium plus 5% of excess premium received, including UL internal replacements * Whole life and term - first year paid premium * Annuity - deposits from new and existing customers * Group Protection - annualized first year premium from new policies * Investment Management Retail Sales and Institutional Inflows - contributions, transfer in kind purchases, and reinvested dividends for new and existing accounts. * Reclassifications Certain reclassifications have been made in the historical presentation of certain revenue and expense items. The principal reclassifications consist of the following: * Deferred Front End Loads ("DFEL") - capitalization and amortization of DFEL is reported as a component of expense assessments revenue. Depending on the segment, these had previously been reported as a component of either other revenue, benefits expense or DAC amortization. Investment Management Advisory Fees and General and Administrative Expenses - certain reclassifications have been made between revenue and expenses for such items as distribution fees and management fee waivers to conform to current industry practices. Commissions and general & administrative expenses - we reclassified certain distribution expenses to commissions which had previously been reported in general & administrative expenses. This change impacted the Individual Markets Life segment and is also reflected in our consolidated presentation. We made several reclassifications within our Other Operations income statement to separately present intersegment eliminations affecting revenues and expenses and we have also disclosed some additional line items. These changes were incorporated into all pages that reference Other Operations. * * *
Slide 5: 3/31/2007 PAGE 1 Financial Highlights Unaudited [Millions of Dollars, except Common Share Data] For the Quarter Ended March 31 2007 2006 Amount Amount Change Income from Operations - By Segment Individual Life Insurance Individual Annuities Individual Markets Defined Contribution Executive Benefits Group Protection Employer Markets Investment Management Lincoln UK Lincoln Financial Media Other Operations (1) Total Income from Operations Realized gains (losses) Net gain (loss) on reinsurance derivative/trading account securities Reserve development/ amortization of related deferred gain Net Income Earnings per share (diluted) Income from Operations (1) Realized losses Net gain (loss) on reinsurance derivative/trading account securities Net Income $ 1.36 0.06 1.42 $ 1.25 $ (0.03) 0.02 1.24 0.11 0.09 (0.02) 0.18 $ 166.6 $ 121.0 287.6 49.7 14.4 23.1 87.3 16.2 10.9 12.4 (35.2) 379.1 (0.0) 17.1 0.2 396.5 $ 0.0 69.0 $ 66.4 135.4 52.5 7.5 60.0 15.3 10.7 0.1 221.4 0.1 (4.2) 3.8 0.2 221.2 97.6 54.6 152.2 (2.8) 6.9 23.1 27.3 0.9 0.2 12.4 (35.3) 157.7 21.3 (3.8) 175.3 % Change 141.4% 82.2% 112.4% -5.3% 92.0% NM 45.5% 5.9% 1.9% NM NM 71.2% NM -100.0% 79.2% $ $ 8.8% 300.0% -100.0% 14.5% $ $ $ Operating Revenue- By Segment Individual Life Insurance Individual Annuities Individual Markets Defined Contribution Executive Benefits Group Protection Employer Markets Investment Management Lincoln UK Lincoln Financial Media Other Operations Total Operating Revenue Realized losses Gain (loss) on reinsurance derivative/trading account securities Amortization of deferred gain-reserve development Total Revenue $ 971.4 605.1 1,576.5 246.8 111.7 360.4 718.9 150.2 90.7 67.5 40.0 2,643.8 26.4 $ 500.6 $ 374.8 875.4 249.2 57.2 306.4 139.6 69.5 31.7 1,422.6 (6.9) 470.8 230.3 701.1 (2.4) 54.5 360.4 412.5 10.6 21.2 67.5 8.3 1,221.2 33.3 94.0% 61.4% 80.1% -1.0% 95.3% NM 134.6% 7.6% 30.5% NM 26.2% 85.8% NM 5.9 (6.1) NM 0.3 $ 1,421.8 $ 1,248.6 87.8% 0.1 (1) Income from operations includes after-tax restructuring charges of $2.5 million, or 1 cent per share, and $0.2 million, or -0cents per share, for the quarters ended March 31, 2007 and 2006, respectively. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date. (0.2) 0.3 2,670.4 $
Slide 6: 3/31/2007 PAGE 2 Financial Highlights Unaudited [in Billions] Operational Data by Segment For the Quarter Ended March 31 2007 2006 Amount Amount Change % Change Individual Markets Individual Annuities Gross deposits Net flows Account values (gross) Account values (net of reinsurance) $ 2.821 0.754 68.438 66.749 203.5 508.411 26.924 $ 2.136 0.770 51.059 48.857 67.9 321.409 14.268 $ 0.685 (0.015) 17.380 17.892 135.6 187.002 12.655 32.1% -1.9% 34.0% 36.6% 199.7% 58.2% 88.7% Individual Life Insurance Sales (in millions) Life insurance in-force Account values (1) Employer Markets Defined Contribution Gross deposits (2) Net flows Account values - annuities Alliance Mutual Funds Account values including Alliance Mutual Funds $ 1.487 0.221 28.669 5.807 34.475 20.4 14.747 4.264 60.8 72.7% $ 3.603 $ 0.233 2.431 (0.321) 6.034 (0.088) 98.146 67.292 165.438 8.217 169.282 1.827 10.536 1.554 237.031 $ $ 1.241 0.181 27.487 4.248 31.735 16.9 7.979 1.387 4.019 1.305 5.044 3.592 9.063 4.898 86.428 41.995 128.423 7.449 129.225 2.635 12.236 6.188 182.995 $ $ 0.246 0.040 1.182 1.559 2.741 3.5 6.768 2.878 60.8 NM (0.416) (1.073) (2.613) (3.914) (3.029) (4.986) 11.718 25.296 37.014 0.767 40.057 (0.807) (1.700) (4.634) 54.036 19.8% 22.1% 4.3% 36.7% 8.6% 20.7% 84.8% 207.5% NM NM -10.4% -82.2% -51.8% NM -33.4% NM 13.6% 60.2% 28.8% 10.3% 31.0% -30.6% -13.9% -74.9% 29.5% Executive Benefits COLI/BOLI sales (in millions) Life insurance in-force Account values Group Protection Annualized sales (in millions) (3) Loss ratio Investment Management Segment Retail deposits Retail net flows Institutional in-flows Institutional net flows Total Deposits and In-flows Total Net Flows Assets Under Management- Retail and Institutional Assets Under Management - General Account Assets Under Management - Total Segment Consolidated Domestic Retail Deposits Domestic Retail Account Balances Domestic Retail Net Flows Domestic Deposits Domestic Net Flows Assets Under Management (1) $ $ Sales for Individual Life Insurance consist of first year commissionable premium for Universal life ("UL"), including Moneyguard, and COLI plus 5% of excess premium received, including UL internal replacements, and first year paid premiums for Whole life and Term products (2) Includes deposits for Alliance Mutual Funds which are not included in separate account liabilities on our balance sheet. (3) Represents combined loss ratio for Life, Disability and Dental business. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 7: 3/31/2007 PAGE 3 Financial Highlights Unaudited [Millions of Dollars, except Common Share Data] For the Quarter Ended March 31 2006 Amount Change % Change $ 128,472.0 $ 52,854.4 41.1% 2007 Amount Balance Sheet Assets - End of Period Shareholders' Equity Beg of period (including AOCI) End of period (including AOCI) End of period (excluding AOCI) Average equity (excluding AOCI) Return on Equity Net income/average equity (excluding AOCI) Inc from operations/average equity (excluding AOCI) Return on Capital Inc from operations/average capital Common Stock Outstanding Average for the period - diluted End of period - assuming conv of preferreds End of period - diluted Book value (including AOCI) Book value (excluding AOCI) Cash Returned to Shareholders Share repurchase - dollar amount Dividends declared to shareholders Total Cash Returned to Shareholders Share repurchase - number of shares Dividend declared on common stock - per share Dividend payout ratio (1) Annualized yield (2) Comprehensive Income (Loss) Net income Net unrealized gains (losses) on securities Gains (losses) on derivatives Foreign currency translation Minimum pension liability adjustment Funded status of employee benefit plans (4) Comprehensive Income Ratios: Debt to total capitalization (3) Debt to equity (3) $ $ 181,326.4 $ 12,201.0 12,032.2 11,372.5 11,480.2 $ 6,384.4 6,338.2 6,053.2 5,954.9 $ 5,816.6 5,694.0 5,319.3 5,525.3 13.8% 13.2% 14.9% 14.9% 10.6% 12.8% 279.5 270.9 274.0 44.42 41.98 $ 177.9 176.1 178.5 35.99 34.37 $ 101.5 94.8 95.5 8.43 7.61 57.1% 53.8% 53.5% 23.4% 22.2% $ $ 511.7 106.8 618.5 $ $ 67.5 67.5 $ $ 511.7 39.3 551.0 7.215 0.015 $ 7.215 0.395 $ 27.8% 2.3% 0.380 $ 30.6% 2.8% 3.9% $ $ 396.5 35.3 7.7 3.2 0.4 443.0 $ $ 221.2 (276.4) 27.8 6.3 (0.6) (21.7) 21.9% 28.1% 18.1% 22.2% Ratings as of April 30, 2007: A.M. Best Senior Debt Ratings: Financial Strength Ratings: Lincoln National Life Insurance Company First Penn-Pacific Life Insurance Company Lincoln Life & Annuity Company of New York Jefferson-Pilot Life Insurance Company Jefferson Pilot Financial Insurance Company Jefferson Pilot LifeAmerica Insurance Company [1] [2] Fitch A Moody's A3 Standard & Poors A+ a A+ A+ A+ A+ A+ A+ AA AA AA AA AA AA Aa3 A1 Aa3 Aa3 Aa3 N/R AA AAAA AA AA AA Indicated dividend divided by net income Indicated dividend divided by the closing price [3] Equity used in calculation excludes accumulated other comprehensive income (loss). Capital securities are considered 25% debt and 75% equity. (4) SFAS 158 was adopted effective December 31, 2006 which requires the disclosure of the funded status of our pension and post-retirement benefit plans on the balance sheet. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 8: 3/31/2007 PAGE 4 Combined Production Data Unaudited [in Billions] (1) March 2006 June 2006 Three Months Ended Sept. Dec. 2006 2006 March 2007 % Change Individual Markets Individual Life Insurance Sales by Product (millions) Universal Life Excluding MoneyGuard MoneyGuard Total Variable universal life Whole life Term Total Sales by Product Individual Annuity Deposits Fixed Variable Indexed annuities Total Individual Annuities $ $ 83.4 7.7 91.1 16.4 1.2 11.2 120.0 $ $ 97.5 7.5 105.0 15.7 0.4 11.3 132.3 $ $ 119.9 8.3 128.2 13.0 0.7 10.7 152.5 $ $ 177.6 7.8 185.4 22.1 0.6 10.0 218.1 $ $ $ $ 166.2 7.4 173.6 20.6 0.1 9.3 203.5 0.661 2.000 0.160 2.821 - 99.3% -3.9% 90.6% 25.6% -91.7% -17.0% 69.6% $ $ 0.560 1.666 0.173 2.399 $ $ 0.644 1.867 0.228 2.739 $ $ 0.818 1.658 0.244 2.720 $ $ 0.855 2.061 0.245 3.161 $ $ 18.0% 20.0% -7.5% 17.6% Employer Markets Defined Contribution Fixed Variable Alliance Mutual Funds Deposits Total Annuity and Alliance Mutual Funds Executive Benefits COLI/BOLI sales (millions) Group Protection Annualized Sales (millions) Life Disability Dental $ 0.253 0.669 0.923 0.318 1.241 $ 0.242 0.714 0.955 0.204 1.159 $ 0.268 0.583 0.851 0.235 1.086 $ 0.183 0.559 0.742 0.357 1.099 $ 0.299 0.655 0.953 0.533 1.487 18.2% -2.1% 3.3% 67.6% 19.8% $ $ $ $ $ $ 17.5 $ 17.2 $ 16.3 $ 32.5 $ 20.4 16.6% $ 23.6 34.2 6.2 $ 15.3 22.9 7.1 $ 19.4 24.7 6.1 $ 43.1 56.9 13.1 $ 22.7 28.6 9.4 -3.8% -16.4% 51.6% Investment Management Sales and Inflows Retail Annuities Mutual funds Managed accounts & other Institutional Total Sales and Inflows $ 0.885 1.329 1.806 4.019 5.044 9.063 $ 0.869 1.370 1.043 3.282 2.764 6.046 $ 0.960 1.151 0.386 2.497 2.406 4.904 $ 0.932 1.768 0.493 3.192 4.888 8.080 $ 1.300 1.753 0.550 3.603 2.431 6.034 46.9% 31.9% -69.5% -10.4% -51.8% -33.4% $ $ $ $ $ Total Annuity & Alliance Mutual Fund Deposits Fixed Annuities Individual Employer Markets Variable Annuities Individual Employer Markets Total Annuities Alliance Mutual Funds Total Annuity and Alliance Mutual Funds (1) $ 0.733 0.253 0.986 1.666 0.669 2.335 3.322 0.318 3.640 $ 0.872 0.242 1.114 1.867 0.714 2.581 3.695 0.204 3.898 $ 1.062 0.268 1.330 1.658 0.583 2.241 3.571 0.235 3.806 $ 1.100 0.183 1.283 2.061 0.559 2.619 3.903 0.357 4.259 $ 0.821 0.299 1.120 2.000 0.655 2.655 3.775 0.533 4.308 12.0% 18.2% 13.6% 20.0% -2.1% 13.7% 13.6% 67.6% 18.4% $ $ $ $ $ This schedule combines the previously reported data for LNC and JP and does not reflect any adjustments that may have resulted had the April 4, 2006 merger been completed prior to the periods presented. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 9: 3/31/2007 PAGE 5 Consolidated Expense Detail Unaudited (In Millions) Three Months Ended Sept. Dec. 2006 2006 $ 382.6 $ 464.7 $ March 2006 Commissions General and administrative expenses: General and administrative expenses Merger-related expenses Total general and administrative expenses excluding Broker/Dealer Restructuring charges Taxes, licenses and fees Interest (1) Total commissions and expenses incurred Less: commissions and expenses capitalized Amortization: DAC/VOBA Amortization Amortization of intangibles Total amortization Broker/Dealer commissions and G&A Total $ $ 212.9 $ June 2006 362.0 March 2007 446.5 % Change 109.7% 287.7 287.7 0.3 33.5 21.7 556.1 (244.5) 374.1 7.4 381.5 9.6 47.3 65.0 865.4 (391.6) 400.6 12.1 412.7 1.0 50.3 67.3 914.0 (424.3) 434.4 15.8 450.2 3.3 48.0 70.4 1,036.6 (517.9) 392.2 10.1 402.3 3.9 66.1 61.5 980.2 (487.4) 36.3% NM 39.8% NM 97.3% 183.4% 76.3% -99.3% 165.0 2.0 167.0 46.6 525.1 $ (0.0) 222.2 6.6 228.7 79.3 781.9 0.0 $ 225.9 3.1 229.0 76.6 795.3 $ (0.0) 278.5 4.4 282.8 80.0 881.5 $ 281.6 4.3 285.9 87.2 865.9 - 70.7% 115.0% 71.2% 87.1% 64.9% Merger-related expenses: (2) Severance and employee-related charges Systems integration and related expenses Other expenses Total merger-related expenses $ $ - $ $ 12.8 0.8 3.1 16.7 $ $ 8.4 1.5 3.2 13.1 $ $ 6.2 5.4 7.5 19.1 $ $ 3.0 5.6 5.4 14.0 NM NM NM NM Note: The Consolidated Expense Detail data is presented on a GAAP basis. Interest expense for the fourth quarter 2006 includes $5.6 million related to losses on early extinguishment of debt. (2) Represents merger-related expenses included in general and administrative expenses and restructuring charges. (1) This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 10: 3/31/2007 PAGE 6 Operating Results Summary Unaudited [Millions of Dollars, except Common Share Data] March 2006 Operating Revenue Individual Life Insurance Individual Annuities Individual Markets Defined Contribution Executive Benefits Group Protection Employer Markets Investment Management Lincoln UK Lincoln Financial Media Other Operations Total Operating Revenue Realized gains (losses) on investments and derivatives Net gain (loss) on reinsurance derivative/trading account securities Gain on sale of subsidiaries/ businesses Amortization of deferred gain-reserve development Total Revenue Income from Operations (1) Individual Life Insurance Individual Annuities Individual Markets Defined Contribution Executive Benefits Group Protection Employer Markets Investment Management Lincoln UK Lincoln Financial Media Other Operations Income from Operations $ 500.6 374.8 875.4 249.2 57.2 306.4 139.6 69.5 31.7 1,422.6 (6.9) 5.9 0.3 1,421.8 0.1 $ June 2006 901.4 552.6 1,454.0 248.9 101.2 354.9 704.9 134.7 81.4 57.7 67.6 2,500.3 (6.7) 1.8 0.3 2,495.6 0.1 $ Three Months Ended Sept. Dec. 2006 2006 895.3 596.5 1,491.8 245.1 104.3 332.1 681.5 140.4 72.3 60.0 51.4 2,497.4 (5.8) (4.7) 0.3 2,487.2 $ 122.8 $ 129.4 252.2 52.5 12.8 28.8 94.0 13.4 8.3 14.6 (11.5) 371.0 0.1 (4.1) (3.1) 0.2 364.1 $ (0.1) $ 958.4 637.3 1,595.7 245.0 109.1 344.8 698.9 148.9 84.8 70.2 45.6 2,644.1 12.8 1.2 0.3 2,658.4 $ (0.1) 157.4 $ 123.8 281.1 44.6 12.7 33.2 90.5 14.4 9.9 17.5 (38.4) 375.2 (0.1) 9.4 0.1 0.2 (3.6) 381.3 $ (0.0) $ March 2007 971.4 605.1 1,576.5 246.8 111.7 360.4 718.9 150.2 90.7 67.5 40.0 2,643.8 26.4 (0.2) 0.3 2,670.4 166.6 121.0 287.6 49.7 14.4 23.1 87.3 16.2 10.9 12.4 (35.2) 379.1 (0.0) 17.1 0.2 396.5 (0.0) % Change 94.0% 61.4% 80.1% -1.0% 95.3% NM 134.6% 7.6% 30.5% NM 26.2% 85.8% NM NM NM 87.8% $ $ $ $ (1) Realized gains (losses) on investments and derivatives Net gain (loss) on reinsurance derivative/trading account securities Gain on sale of subsidiaries/ businesses Reserve development/ amortization of related deferred gain Loss on early retirement of debt Net Income OTHER DATA 69.0 $ 66.4 135.4 52.5 7.5 60.0 15.3 10.7 0.1 221.4 0.1 (4.2) 3.8 0.2 221.2 0.0 147.1 $ 89.0 236.1 54.3 16.2 37.0 107.6 12.0 9.9 11.9 (26.1) 351.4 (3.8) 1.2 0.2 349.0 - 141.4% 82.2% 112.4% -5.3% 92.0% NM 45.5% 5.9% 1.9% NM NM 71.2% NM NM NM NM 79.2% $ $ $ March 2006 Shareholders' Equity Beg of period (including AOCI) End of period (including AOCI) End of period (excluding AOCI) Average equity (excluding AOCI) (2) Common Shares Outstanding Average for the period - diluted End of period - diluted Per Share Data (Diluted) Net Income Income from Operations $ 6,384.4 6,338.2 6,053.2 5,954.9 $ June 2006 Three Months Ended Sept. Dec. 2006 2006 $ 11,404.8 12,043.2 11,436.0 11,437.9 $ 12,043.2 12,201.0 11,587.9 11,512.0 March 2007 $ 12,201.0 12,032.2 11,372.5 11,480.2 6,338.2 11,404.8 11,439.8 11,311.3 177.9 178.5 282.6 285.0 282.4 281.3 280.4 280.2 279.5 274.0 $ (1) 1.24 1.25 $ 1.23 1.24 $ 1.29 1.31 $ 1.36 1.34 $ 1.42 1.36 Shareholders' Equity Per Share Shareholders' Equity (including AOCI) Shareholders' Equity (excluding AOCI) Dividends declared (Common Stock) Return on Equity Net Income/Average Equity Inc from Operations/Average Equity Market Value of Common Stock Highest price Lowest price Closing price (1) $ 35.99 34.37 0.380 $ 40.48 40.60 0.380 $ 43.39 41.20 0.380 $ 44.21 41.99 0.395 $ 44.42 41.98 0.395 14.9% 14.9% 12.3% 12.4% 12.7% 13.0% 13.2% 13.0% 13.8% 13.2% $ $ 57.97 52.00 54.59 $ $ 60.52 54.30 56.44 $ $ 63.47 53.94 62.08 $ $ 66.72 61.74 66.40 $ $ 71.18 64.29 67.79 Income from operations includes after-tax restructuring charges of $0.2 million, or -0- cents per share, for the first quarter of 2006, $6.2 million, or 2 cents per share, for the second quarter of 2006, $0.6 million, or -0- cents per share, for the third quarter of 2006, $2.1 million, or 1 cent per share, for the fourth quarter of 2006, and $2.5 million, or 1 cent per share, for the first quarter of 2007. (2) Average equity was adjusted to reflect the merger with Jefferson-Pilot effective April 3, 2006. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 11: 3/31/2007 PAGE 7 Consolidated Statements of Income Unaudited [Millions of Dollars] March 2006 Revenue Premiums Surrender charges Mortality assessments Expense assessments Investment advisory fees Communications revenue Net investment income Other revenue and fees Amortization of deferred gain Amortization of deferred gain-reserve development Realized gains (losses) Total Revenue Benefits and Expenses Insurance benefits Interest credited to contractholder funds Communications expenses Operating and acquisition expenses Taxes, licenses and fees Interest and debt expense Total Benefits and Expenses Income Before Federal Income Tax Federal income taxes Net Income $ 78.4 $ 18.7 146.2 309.5 77.8 678.4 94.8 18.8 0.3 (1.0) 1,421.8 June 2006 454.3 $ 27.3 294.7 370.1 81.2 57.5 1,068.2 128.2 18.8 0.3 (5.0) 2,495.6 Three Months Ended Sept. Dec. 2006 2006 425.7 $ 26.6 294.9 357.8 82.9 59.8 1,107.9 123.1 18.8 0.3 (10.5) 2,487.2 448.1 29.9 295.9 432.3 86.1 69.6 1,126.3 137.2 18.8 0.3 13.9 2,658.4 $ March 2007 458.9 26.9 311.2 441.0 90.3 67.2 1,089.5 140.1 18.6 0.3 26.2 2,670.4 - % Change NM 43.9% 112.9% 42.5% 16.1% NM 60.6% 47.8% -1.1% NM 87.8% 200.4 381.3 469.9 33.5 21.7 1,106.8 315.0 93.9 221.2 589.3 589.3 29.8 669.5 47.3 65.0 1,990.3 505.3 156.3 349.0 566.2 634.4 31.4 677.6 50.3 67.3 2,027.3 459.9 95.8 364.1 562.2 646.5 36.9 763.1 48.0 70.4 2,127.2 (0.0) 588.8 604.5 41.2 738.4 66.1 61.5 2,100.5 - 193.8% 58.5% NM 57.1% 97.3% 183.4% 89.8% 80.9% 84.7% 79.2% 531.3 149.9 381.3 569.9 173.4 396.5 0.0 $ $ $ $ $ Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Total Benefits and Expenses Adjustment related to realized (gains) losses on available-for-sale securities Adjustment related to unrealized (gains) losses on available-for-sale securities Foreign currency translation adjustment Business acquired Balance at end of period Roll Forward of Deferred Front-End Load Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Expense Assessments Adjustment related to realized (gains) losses on available-for-sale securities Foreign currency translation adjustment Balance at end of period Roll Forward of Deferred Sales Inducements Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Income from Operations Adjustment related to realized (gains) losses on available-for-sale securities Balance at end of period March 2006 $ 5,163.3 $ 244.5 (165.0) 79.6 (10.9) 194.2 7.7 5,433.8 Three Months Ended June Sept. Dec. 2006 2006 2006 5,433.8 $ 8,328.4 $ 8,171.6 $ 391.6 424.3 517.9 (222.2) (225.9) (278.5) 169.4 198.4 239.5 (18.9) 221.5 48.3 2,474.2 8,328.4 (0.0) March 2007 8,420.4 (66.1) 487.4 (281.6) 205.8 (17.9) (25.5) 4.1 14.0 8,534.7 0.0 (8.9) (359.8) 9.7 3.8 8,171.6 $ (0.0) (8.9) (17.4) 35.7 8,420.4 $ 0.0 $ $ $ $ 795.7 $ 31.1 (24.7) 6.4 3.8 805.8 805.8 $ 69.1 (37.4) 31.8 23.6 861.0 861.0 $ 71.0 (12.7) 58.3 923.9 $ 77.9 (42.8) 35.1 17.9 976.9 $ (0.0) 976.9 (2.0) 77.2 (36.1) 41.1 2.0 1,017.9 0.1 $ $ (0.1) 4.7 $ 923.9 $ (0.034148) $ 129.4 $ 15.7 (5.2) 10.5 139.9 $ 19.9 (5.2) 14.7 154.6 154.6 $ 22.2 (3.3) 18.9 (0.1) 173.4 $ -0.03736 173.4 $ 28.4 (7.9) 20.5 193.8 $ 0.068178 193.8 (2.8) 23.7 (8.2) 15.5 (0.1) 206.4 (0.0) $ 139.9 $ 2.84217E-14 $ This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 12: 3/31/2007 PAGE 8 Consolidating Statements of Income from Operations Unaudited [Millions of Dollars] For the Quarter Ended March 31, 2007 Individual Markets Defined Contribution Employer Markets Executive Benefits Group Protection Investment Management Lincoln Financial Media Other Operations Consolidating Adjustments Life Operating Revenue Premiums Surrender charges Mortality assessments Expense assessments Investment advisory fees Communications revenue Net investment income Amortization of deferred gain Other revenue and fees Total Operating Revenue Operating Expenses Insurance benefits Interest credited to contractholder funds Communications expenses Operating and acquisition expenses Taxes, licenses and fees Interest Total Operating Expenses Income (Loss) from Operations before Federal income taxes Federal income taxes Income from Operations $ Annuities Lincoln UK Consolidated $ 87.7 15.2 292.3 111.9 454.0 10.2 971.4 - $ 12.8 9.7 226.0 266.3 90.4 605.1 (0.0) $ 2.0 59.8 180.3 4.7 246.8 - $ 0.6 8.9 6.2 94.8 1.2 111.7 0.0 $ 331.3 27.9 1.1 360.4 (0.0) $ 114.9 35.3 150.2 - $ 24.2 10.0 37.1 19.3 0.1 90.7 0.0 $ 67.2 0.2 67.5 - $ 2.1 47.4 18.6 7.5 75.7 0.0 $ (24.5) (0.7) (10.4) (35.6) - $ 458.9 26.9 311.2 441.0 90.3 67.2 1,089.5 18.6 140.1 2,643.8 - 246.0 251.7 188.3 32.9 718.9 (0.0) 21.4 166.5 247.5 8.9 0.3 444.6 - 104.3 66.5 5.1 176.0 (0.0) 33.1 44.8 11.2 1.5 90.7 - 246.6 68.6 9.7 324.9 - 120.5 4.1 124.6 - 36.0 38.0 74.0 - 41.2 5.4 1.3 0.4 48.3 - 5.7 37.1 27.2 2.7 61.5 134.2 0.0 (34.9) (0.7) (35.6) - 588.8 604.5 41.2 738.4 66.1 61.5 2,100.5 - 252.5 85.9 166.6 0.0 160.5 - 70.8 - 21.1 - 35.5 - 25.6 - 16.7 - 19.2 - (58.5) - 0.0 543.4 - 39.5 $ 121.0 0.0 21.1 $ 49.7 $ 6.6 14.4 $ 12.4 23.1 (0.0) 9.3 $ 16.2 $ 5.9 10.9 $ 6.8 12.4 $ (23.3) (35.2) (0.0) $ $ 164.2 379.1 (0.0) This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 13: 3/31/2007 PAGE 9 Consolidating Statements of Income from Operations Unaudited [Millions of Dollars] For the Quarter Ended March 31, 2006 Individual Markets Defined Contribution Employer Markets Executive Benefits Group Protection Investment Management Lincoln Financial Media Other Operations Consolidating Adjustments Life Operating Revenue Premiums Surrender charges Mortality assessments Expense assessments Investment advisory fees Communications revenue Net investment income Amortization of deferred gain Other revenue and fees Total Operating Revenue Operating Expenses Insurance benefits Interest credited to contractholder funds Communications expenses Operating and acquisition expenses Taxes, licenses and fees Interest Total Operating Expenses Income (Loss) from Operations before Federal income taxes Federal income taxes Income from Operations $ Annuities Lincoln UK Consolidated $ 51.1 10.3 135.6 54.3 239.5 9.7 500.6 - $ 9.3 6.2 168.0 148.0 43.4 374.8 - $ 2.3 55.6 185.7 5.6 249.2 (0.0) $ 1.1 2.8 3.3 48.7 1.4 57.2 (0.0) $ - $ 102.9 36.7 139.6 - $ 16.6 7.8 28.0 17.0 0.1 69.5 - $ - $ 0.3 0.3 39.7 18.8 2.0 61.0 0.0 $ (25.1) (0.2) (4.0) (29.2) - $ 78.4 18.7 146.2 309.5 77.8 678.4 18.8 94.8 1,422.6 120.2 142.2 116.5 16.3 395.3 - 20.4 95.1 167.0 5.4 0.1 288.1 - 100.7 70.4 2.9 174.0 0.0 32.8 9.3 3.5 1.1 46.7 - - 111.3 4.8 116.1 - 25.4 27.6 53.0 - - 1.6 33.9 2.9 3.0 21.5 63.0 (0.0) (29.2) (29.2) - 200.4 381.3 469.9 33.5 21.7 1,106.9 (0.0) 105.3 - 86.7 - 75.2 - 10.5 - - 23.5 - 16.5 - - (2.0) 0.1 - 315.8 94.4 $ 221.4 (0.0) 36.3 69.0 $ 20.3 66.4 $ 22.7 52.5 (0.0) 3.0 $ 7.5 $ $ 8.2 15.3 $ 5.8 10.7 $ $ (2.2) 0.1 $ - This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 14: 3/31/2007 PAGE 10 Consolidated Balance Sheet Unaudited [Millions of Dollars, except Common Share Data] March 2006 ASSETS Investments Corporate bonds U.S. government bonds Foreign government bonds Mortgage backed securities State and municipal bonds Preferred stocks - redeemable Common stocks Preferred stocks-equity Total AFS Securities Trading securities Mortgage loans Real estate Policy loans Other long-term investments Total Investments Cash and invested cash Premiums and fees receivable Accrued investment income Amount recoverable from reinsurers Deferred acquisition costs and VOBA Goodwill Other Assets held in separate accounts Total Assets LIABILITIES and SHAREHOLDERS' EQUITY Liabilities Insurance and Investment Contract Liabilities: Reserves Unpaid claims Premium deposit funds Policyholders' funds Total Insurance and Investment Contract Liabilities Short-term debt Long-term debt - senior notes Long-term debt - subordinated Capital securities Junior subordinated debentures issued to affiliated trusts Embedded derivative - modco Deferred gain on indemnity reinsurance Federal income taxes Other liabilities Liabilities related to separate accounts Total Liabilities Preferred Stock Capital stock Retained earnings (excl. cumulative effect adjustments) Cumulative effect of adoption of FIN-48 Cumulative effect of adoption of SOP 05-1 Unrealized gains on investments Gains - derivatives Foreign currency Minimum pension liability Funded status of employee benefit plans Total Shareholders' Equity Total Liabilities and Shareholders' Equity Shareholders' Equity Per Share Book Value, Excluding AOCI Common shares outstanding -assuming conv of preferreds (in millions) June 2006 Sept. 2006 Dec. 2006 March 2007 $ 25,418.0 173.4 1,169.7 5,868.8 126.0 136.9 61.0 115.0 33,068.8 3,190.1 3,586.2 180.4 1,860.4 687.5 42,573.2 1,974.0 363.2 532.1 6,899.4 5,433.7 1,194.4 1,517.7 67,984.2 $ 128,472.0 $ 43,881.6 287.6 1,188.0 8,370.3 166.5 130.1 458.8 119.7 54,602.6 3,109.0 7,741.2 428.6 2,716.4 1,116.6 69,714.4 0.0 $ 45,345.3 291.6 1,144.4 8,765.1 160.7 117.8 506.3 155.7 56,486.9 3,172.5 7,580.5 424.0 2,724.9 1,218.7 71,607.5 0.0 $ 45,489.4 263.4 1,141.6 8,691.3 159.4 108.3 525.5 174.7 56,553.7 3,036.3 7,384.3 421.3 2,759.7 1,332.4 71,487.6 0.0 $ 45,484.0 244.3 1,077.1 9,186.2 155.5 108.4 503.8 210.1 56,969.5 2,909.7 7,416.0 406.2 2,766.8 1,381.2 71,849.3 0.0 1,499.8 343.9 879.0 7,967.2 8,328.4 4,502.6 3,049.6 71,095.2 $ 167,380.0 1,108.3 345.6 928.2 8,007.3 8,171.6 4,498.0 2,703.1 74,357.1 $ 171,726.6 $ 1,620.6 356.2 866.2 7,939.1 8,420.4 4,499.5 2,770.4 80,533.7 178,493.7 0.0 900.0 374.9 919.2 8,132.1 8,534.7 4,520.7 2,948.1 83,147.5 $ 181,326.4 (0.0) $ 10,657.2 981.3 21,448.6 13,991.5 47,078.6 10.6 998.5 332.3 192.0 816.9 4,720.7 67,984.2 122,133.8 0.5 1,817.5 4,235.2 220.2 35.2 89.7 (60.1) 6,338.2 $ 128,472.0 $ $ 35.99 34.37 176.1 $ 13,512.1 1,211.7 21,198.4 37,430.3 73,352.5 561.0 2,329.1 1,071.8 330.5 126.7 797.8 563.8 5,746.7 71,095.2 155,975.2 $ 13,513.4 1,206.9 20,708.6 37,808.3 73,237.2 559.2 2,330.4 1,071.9 332.5 232.5 778.7 911.1 5,872.8 74,357.1 159,683.5 $ 13,622.1 1,149.1 20,541.4 38,275.1 73,587.7 657.6 2,231.0 1,072.0 154.6 228.7 759.6 977.9 6,089.9 80,533.7 166,292.7 $ 13,864.9 1,149.5 20,115.8 38,612.7 73,743.0 492.8 2,483.4 1,570.7 154.6 229.8 740.7 1,147.6 5,584.0 83,147.5 169,294.2 - 0.5 0.5 7,425.7 7,448.7 4,013.7 3,986.7 (151.5) 478.0 51.5 55.9 128.5 136.5 (63.6) (63.2) 11,404.8 12,043.2 0.0 0.0 $ 167,380.0 $ 171,726.6 $ (0.0) (0.0) $ 40.48 $ 43.39 $ $ 40.60 281.8 $ 41.20 277.6 $ 0.5 0.5 7,450.7 7,318.5 4,136.7 4,109.8 (15.4) (40.9) 492.8 528.1 39.2 46.8 165.1 168.4 (84.0) (83.6) 12,201.0 12,032.2 0.0 0.0 178,493.7 $ 181,328.0 (0.0) (0.0) 44.21 $ 44.42 41.99 276.0 $ 41.98 270.9 This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 15: 3/31/2007 PAGE 11 Balance Sheet Data - Segment Highlights Unaudited [Millions of Dollars] Individual Markets Defined Contribution Employer Markets Executive Benefits Group Protection Investment Management Lincoln Financial Media Other (1) Operations As of March 31, 2007 Assets Allocated Investments DAC and VOBA Goodwill Other intangibles Amounts recoverable from reinsurers Assets held in separate accounts Liabilities and Capital Insurance and Investment Contract Liabilities: Insurance policy & claim reserves Contractholder funds Total Insurance and Inv Contract Liabilities Allocated capital (2) Annuities Life Lincoln UK Consolidated $ 18,388.4 2,082.0 1,044.9 206.2 810.7 50,151.7 $ 28,476.8 4,795.8 2,196.7 96.0 1,830.4 5,159.3 $ 11,873.0 489.4 20.2 0.2 17,661.0 $ 6,101.3 260.5 4.4 833.0 $ 1,871.0 103.7 273.3 27.4 - $ 261.7 7.9 - $ 1,171.5 802.6 16.3 72.7 8,906.3 $ 707.6 661.2 - $ 3,967.4 0.7 5,386.5 436.2 $ 71,849.3 8,534.7 4,520.7 971.5 8,132.1 83,147.5 409.7 17,800.8 18,210.4 3,452.0 5,793.0 23,701.3 29,494.3 7,770.5 10,969.3 10,969.3 (0.0) 917.1 1,767.2 3,981.1 5,748.3 546.9 1,207.2 15.4 1,222.6 907.1 303.6 1,127.4 428.5 1,555.9 384.6 1,157.7 4,710.0 1,832.1 6,542.2 (4,067.0) 15,014.4 58,728.6 73,743.0 11,372.5 As of December 31, 2006 Assets Allocated Investments DAC and VOBA Goodwill Other intangibles Amounts recoverable from reinsurers Assets held in separate accounts Liabilities and Capital Insurance and Investment Contract Liabilities: Insurance policy & claim reserves Contractholder funds Total Insurance and Inv Contract Liabilities Allocated capital (1) (2) (2) $ 18,686.2 2,050.4 1,031.6 193.7 836.9 48,014.7 $ 27,843.9 4,659.4 2,181.3 97.0 1,817.7 5,040.3 $ 11,762.6 497.6 20.2 0.1 17,459.2 $ 6,088.9 265.3 5.3 833.4 $ 1,833.6 137.6 281.0 27.5 - $ 261.7 9.3 - $ 1,101.1 809.0 16.2 70.2 8,756.9 $ 707.6 663.1 - $ 4,171.4 1.3 5,181.5 429.3 $ 71,487.6 8,420.4 4,499.5 963.2 7,939.1 80,533.7 438.1 18,206.0 18,644.1 3,432.5 5,640.7 23,433.9 29,074.6 7,345.1 10,982.9 10,982.9 959.8 1,778.3 4,025.5 5,803.8 531.7 1,183.4 16.8 1,200.2 923.1 307.8 1,118.8 435.6 1,554.4 385.0 1,161.9 4,611.8 1,715.9 6,327.7 (3,458.9) 14,771.2 58,816.5 73,587.7 11,587.9 Includes consolidating adjustments. Allocated capital is based on internal economic capital models plus certain other items (principally intangibles including DAC and VOBA, goodwill and other items). This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 16: 3/31/2007 PAGE 12 Individual Markets - Individual Life Insurance Income Statements & Operational Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 87.0 $ 18.3 278.9 86.1 414.4 10.6 895.3 - March 2006 June 2006 89.9 $ 15.5 277.3 93.0 415.9 9.7 901.4 March 2007 87.7 15.2 292.3 111.9 454.0 10.2 971.4 - % Change 71.6% 47.6% 115.6% 106.1% 89.6% 5.2% 94.0% Operating Revenue Premiums Surrender charges Mortality assessments Expense assessments Net investment income Other revenue and fees Total Operating Revenue $ 51.1 $ 10.3 135.6 54.3 239.5 9.7 500.6 93.5 $ 16.1 278.4 116.4 441.1 13.0 958.4 - Operating Expenses Insurance benefits Interest credited to contractholder funds Operating and acquisition expenses Total Operating Expenses Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate Average equity Return on average equity $ $ 120.2 142.2 132.8 395.3 105.3 36.3 69.0 - 256.0 241.5 182.9 680.4 221.0 0.0 261.1 247.1 207.6 715.7 - 249.1 251.3 219.0 719.4 0.0 246.0 251.7 221.2 718.9 (0.0) 104.7% 77.0% 66.6% 81.9% 139.8% 136.6% 141.4% 179.6 0.0 239.1 (0.0) 73.9 $ 147.1 $ 33.4% 7,051.8 $ 8.3% 56.8 122.8 $ - 81.7 157.4 $ - 252.5 85.9 166.6 0.0 34.5% 3,266.0 $ 8.5% 31.6% 7,223.9 $ 6.8% 34.2% 7,292.7 $ 8.6% 34.0% 7,557.8 8.8% Operating and Acquisition Expenses Commissions General and administrative expenses Taxes, licenses and fees Total commissions and expenses incurred Less: commissions and expenses capitalized Amortization of DAC and VOBA Net Operating and Acquisition Expenses General and administrative expenses basis points on account values - Annualized $ $ 66.8 $ 66.3 16.3 149.4 (90.1) 73.6 132.8 $ 187 151.2 $ 97.2 27.5 275.9 (199.8) 106.7 182.9 $ 153 167.1 $ 122.5 28.3 317.9 (226.6) 116.3 207.6 $ (0.0) 191 226.5 $ 116.3 27.0 369.8 (291.3) 140.5 219.0 $ 178 227.1 111.0 32.9 371.1 (288.9) 139.1 221.2 166 239.8% 67.5% 101.7% 148.3% NM 89.1% 66.5% (21) Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Deferral Amortization Included in Total Operating Expenses Adjustment related to realized (gains) losses on available-for-sale securities Adjustment related to unrealized (gains) losses on available-for-sale securities Business acquired Other Balance at end of period Roll Forward of Deferred Front-End Loads Balance at beginning of period Deferral Amortization Included in Expense Assessments Balance at end of period $ 342.6 $ 19.7 (18.0) 1.7 344.3 $ 344.3 $ 57.8 (26.8) 31.0 375.3 $ 375.3 $ 58.9 (18.3) 40.6 415.9 $ 0.0 415.9 $ 65.2 (31.6) 33.6 449.5 $ 449.5 65.5 (24.4) 41.0 490.6 (0.0) $ 2,543.9 $ 90.1 (73.6) 16.6 (3.4) 86.7 2,643.8 $ (0.1) 2,643.8 $ 199.8 (106.7) 93.0 (7.9) 96.7 1,766.6 4,592.2 $ 0.0 4,592.2 $ 226.6 (116.3) 110.3 (3.8) (174.0) 4,524.7 $ (0.0) 4,524.7 $ 291.3 (140.5) 150.8 (6.7) (9.5) 4,659.4 $ (0.0) 4,659.4 288.9 (139.1) 149.8 (12.5) (0.9) 4,795.8 0.0 $ $ This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 17: 3/31/2007 PAGE 13 Individual Markets- Individual Life Insurance Operational Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 March 2006 June 2006 March 2007 % Change Sales by Product (Millions) (1) Universal Life Excluding MoneyGuard MoneyGuard Total Variable universal life Whole life Term Total $ 41.3 7.7 49.0 10.0 0.7 8.2 67.9 $ 97.5 7.5 105.0 15.7 0.4 11.3 132.3 $ 119.9 8.3 128.2 13.0 0.7 10.7 152.5 $ 177.6 7.8 185.4 22.1 0.6 10.0 218.1 $ 166.2 7.4 173.6 20.6 0.1 9.3 203.5 NM -3.9% 254.3% 106.0% -85.7% 13.4% 199.7% $ $ $ $ $ First-Year Paid Premiums (Millions) Universal Life Excluding MoneyGuard MoneyGuard Total Variable universal life Whole life Term Total $ 108.2 51.5 159.7 27.1 8.3 8.6 203.7 $ 261.2 50.0 311.2 40.5 9.5 11.5 372.7 $ 269.0 54.8 323.9 34.4 12.0 10.4 380.6 $ 351.0 52.3 403.2 53.4 16.5 9.6 482.7 $ 367.9 49.2 417.1 52.5 8.4 9.1 487.0 240.0% -4.5% 161.2% 93.7% 1.2% 5.8% 139.1% $ $ $ $ $ Life Insurance In-Force (Billions) Universal life & other Term insurance Total Life Segment In-Force $ 129.584 191.825 $ 321.409 $ 260.945 229.082 $ 490.027 $ 263.485 232.214 $ 495.699 $ 267.228 234.148 $ 501.376 $ $ 272.921 235.491 508.411 - 110.6% 22.8% 58.2% (1) Sales for Individual Life Insurance consist of first year commissionable premium for Universal life ("UL"), including Moneyguard, including UL internal replacements, and first year paid premiums for Whole life and Term products. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 18: 3/31/2007 PAGE 14 Individual Markets - Individual Life Insurance Account Value Roll Forward Unaudited [Billions of Dollars] March 2006 Interest Sensitive Life-Balance Beginning-of-Period Business acquired Deposits Withdrawals & deaths Net flows Policyholder assessments Interest credited (1) Interest Sensitive Life-Balance End-of-Period Variable Universal Life-Balance Beginning of Period Business acquired Deposits Withdrawals & deaths Net flows Policyholder assessments Investment income and change in market value Variable Universal Life -Balance End-of-Period Total Segment- Life Insurance Account Value Roll Forward Balance Beginning-of-Period Business acquired Deposits Withdrawals & deaths Net flows Policyholder assessments Investment income and change in market value Total Segment -Balance End-of-Period $ 11.809 0.401 (0.182) 0.219 (0.248) 0.133 11.913 2.242 0.087 (0.049) 0.038 (0.044) 0.119 2.355 $ June 2006 11.913 9.150 0.799 (0.317) 0.482 (0.492) 0.232 21.285 2.355 1.918 0.224 (0.158) 0.066 (0.077) (0.068) 4.194 (0.000) $ Three Months Ended Sept. Dec. 2006 2006 21.285 0.717 (0.275) 0.442 (0.449) 0.239 21.516 0.000 4.194 0.036 0.013 0.049 (0.076) 0.137 4.305 0.000 $ 21.516 0.948 (0.301) 0.647 (0.516) 0.242 21.890 (0.000) 4.305 0.153 (0.073) 0.080 (0.079) 0.294 4.600 (0.000) $ March 2007 21.890 0.882 (0.264) 0.618 (0.523) 0.243 22.228 0.000 4.600 0.157 (0.077) 0.080 (0.079) 0.095 4.696 0.000 26.490 1.039 (0.341) 0.698 (0.602) 0.338 26.924 0.000 % Change 85.4% NM 120.0% -45.1% 182.2% NM 82.7% 86.6% 105.2% NM 80.5% NM 110.5% -79.5% -20.2% 99.4% $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 14.051 $ 0.488 (0.231) 0.257 (0.292) 0.252 14.268 $ 0.000 14.268 $ 11.068 1.023 (0.476) 0.548 (0.570) 0.164 25.479 $ (0.000) 25.479 $ 0.753 (0.262) 0.491 (0.524) 0.377 25.821 $ 0.000 25.821 $ 1.101 (0.374) 0.727 (0.595) 0.536 26.490 $ (0.000) 88.5% NM 112.9% -47.6% 171.6% NM 34.1% 88.7% Life Product Spread Information Interest Sensitive Products Net investment income (3) (4) Interest credited to policyholders Spread (3)(4) Traditional Products (3) Net investment income (2) 6.48% 4.60% 1.88% 6.22% 4.46% 1.76% 6.08% 4.52% 1.57% 6.44% 4.52% 1.92% Change (Basis Points) 6.48% 4.46% (14) 2.02% 14 6.72% 6.59% 6.60% 6.51% 6.41% (31) (1) (2) Includes universal life, interest sensitive life, and the fixed investment option of VUL products. Interest Sensitive Products - For the life products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on life products divided by average fixed account values. Traditional Products - the yield on earning assets is calculated as net investment income on traditional investment portfolios divided by average earning assets. As of March 31, 2007, interest sensitive products represented approximately 81% of total interest sensitive and traditional earning assets. (3) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums. The impact of these premiums on investment income and spread for interest sensitive products was 21 bps in the 1st quarter of 2007, 12 bps in the 4th quarter of 2006, 20 bps in the 3rd quarter of 2006, 13 bps in the 2nd quarter of 2006 and 7 bps in the 1st quarter of 2006. There was an impact on traditional products of 2 bps in the 1st quarter of 2007, 2 bps in the 4th quarter of 2006, 15 bps in the 3rd quarter of 2006, 14 bps in the 2nd quarter of 2006 and 15 bps in the 1st quarter of 2006. (4) The net investment income and spread above includes incremental yield from special investments. The impact on investment income spreads was 14 bps in the 1st quarter of 2007, 24 bps in the 4th quarter of 2006, -22 bps in the 3rd quarter of 2006, 2 bps in the 2nd quarter of 2006 and 17 bps in the 1st quarter of 2006. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 19: 3/31/2007 PAGE 15 Individual Markets - Individual Annuities Income Statements & Operational Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 $ 12.3 6.6 189.3 312.7 75.7 596.5 (0.0) March 2006 June 2006 $ 15.3 9.6 182.7 263.2 81.8 552.6 March 2007 $ 12.8 9.7 226.0 266.3 90.4 605.1 (0.0) % Change 37.6% 56.5% 34.5% 79.9% 108.3% 61.4% Operating Revenue Premiums Surrender charges Expense assessments Net investment income (1) Other revenue and fees Total Operating Revenue $ 9.3 6.2 168.0 148.0 43.4 374.8 $ 10.7 12.3 215.2 314.8 84.3 637.3 (0.0) Operating Expenses Insurance benefits Interest credited to contractholder funds Operating and acquisition expenses Total Operating Expenses Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate Average equity Return on average equity Income from Operations - basis points on average account values Operating and Acquisition Expenses Commissions General and administrative expenses Broker-dealer commissions and general and administrative expenses Taxes, licenses and fees Total commissions and expenses incurred Less: commissions and expenses capitalized Amortization of DAC and VOBA Net Operating and Acquisition Expenses General and administrative expenses - basis points on gross account values - Annualized (2) $ $ 20.4 95.1 172.6 288.1 - 45.3 168.8 216.9 431.0 - 27.4 208.2 227.3 462.9 - 11.7 211.7 252.6 476.0 0.0 21.4 166.5 256.7 444.6 - 4.9% 75.1% 48.7% 54.3% 85.1% 94.6% 82.2% 86.7 20.3 66.4 23.4% 1,744.1 15.2% $ $ 121.5 - 133.6 0.0 161.4 0.0 32.5 89.0 26.7% 3,269.2 10.9% $ $ 4.2 129.4 0.0 37.6 $ 123.8 0.0 160.5 39.5 $ 121.0 0.0 3.1% 3,310.4 15.6% $ 23.3% 3,388.1 14.6% $ 24.6% 3,442.3 14.1% 52 58 84 76 72 $ 111.3 66.2 46.6 5.4 229.5 (122.7) 65.8 $ 140.5 69.8 79.3 4.6 294.2 (150.0) 72.7 $ 146.2 81.8 76.6 4.8 309.4 (157.6) 75.6 $ 167.2 80.9 80.0 4.5 332.6 (181.8) 101.7 252.6 50 $ 152.1 69.5 87.2 8.9 317.7 (157.6) 96.6 36.7% 5.0% 87.1% 64.8% 38.4% -28.4% 46.8% 48.7% $ 172.6 $ 216.9 $ 227.3 $ 0.01586803 $ 53 $ 256.7 41 52 45 (11) Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Total Operating Expenses Adjustment related to realized (gains) losses on available-for-sale securities Adjustment related to unrealized (gains) losses on available-for-sale securities Business acquired Balance at end of period Roll Forward of Deferred Front-End Loads Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Income from Operations Adjustment related to realized (gains) losses on available-for-sale securities Balance at end of period Roll Forward of Deferred Sales Inducements Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Income from Operations Adjustment related to realized (gains) losses on available-for-sale securities Balance at end of period (1) (2) $ 1,328.0 $ 122.7 (65.8) 56.9 (2.7) 32.7 1,414.9 0.0 1,414.9 $ 150.0 (72.7) 77.3 (4.1) 57.3 448.9 1,994.4 $ (0.0) 1,994.4 $ 157.6 (75.6) 82.0 (2.4) (103.6) 3.8 1,974.1 $ (0.0) 1,974.1 $ 181.8 (101.7) 80.0 (1.1) (2.7) 2,050.4 $ 0.0 2,050.4 (27.2) 157.6 (96.6) 61.0 (2.2) (14.0) 14.0 2,082.0 0.0 $ $ $ 72.0 9.4 (3.3) 6.1 78.1 - $ 78.1 9.8 (3.0) 6.8 84.8 - $ 84.8 10.0 (0.1) 9.8 $ 94.6 10.6 (4.3) 6.3 100.9 0.1 $ 100.9 (2.0) 9.8 (3.9) 5.9 104.6 0.1 $ $ $ (0.1) 94.6 $ (0.0) $ $ 129.4 $ 15.7 (5.2) 10.5 139.9 139.9 $ 19.9 (5.2) 14.7 154.6 154.6 $ 22.2 (3.3) 18.9 (0.1) 173.4 $ -0.03736 173.4 $ 28.2 (7.9) 20.3 193.7 $ 0.068149 $ 193.7 (2.8) 23.7 (8.2) 15.4 (0.1) 206.2 (0.0) $ $ $ Primarily broker-dealer revenue. Includes distribution costs. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 20: 3/31/2007 PAGE 16 Individual Markets - Individual Annuities Account Value Roll Forward Unaudited [Billions of Dollars] March 2006 Fixed Annuities - Balance at Beginning of Period Business acquired Gross deposits Withdrawals & deaths Net flows Transfer from (to) variable annuities Interest credited Fixed Annuities - Gross Reinsurance ceded Fixed Annuities - Balance at End of Period $ 10.840 $ June 2006 10.563 $ Three Months Ended Sept. Dec. 2006 2006 19.533 $ 18.939 $ March 2007 18.545 0.040 0.821 (0.887) (0.066) (0.557) 0.177 18.139 (1.689) 16.449 0.000 % Change 71.1% NM 74.3% NM NM -23.5% 58.0% 71.7% 23.3% 96.7% (1) $ 0.471 (0.408) 0.063 (0.451) 0.112 10.563 (2.202) 8.362 $ - 9.343 0.872 (1.037) (0.164) (0.395) 0.186 19.533 (2.149) 17.384 $ - 1.062 (1.405) (0.344) (0.483) 0.233 18.939 (2.045) 16.894 $ (0.000) 1.100 (1.162) (0.062) (0.561) 0.229 18.545 (1.812) 16.733 $ 0.000 Variable Annuities - Balance at Beginning of Period Business acquired Gross deposits Withdrawals & deaths Net flows Transfer from (to) fixed annuities Investment increase & change in market value Variable Annuities - Balance at End of Period $ 37.655 $ 40.495 $ 41.537 $ 43.977 $ 48.169 2.000 (1.179) 0.821 0.556 0.754 50.300 (0.000) 66.714 0.040 2.821 (2.067) 0.754 (0.001) 0.930 68.438 (1.689) 66.749 0.000 27.9% NM 20.1% -22.9% 16.3% 23.3% -55.2% 24.2% (2) $ 1.665 (0.959) 0.706 0.451 1.682 40.495 $ 48.495 $ 0.250 1.867 (1.004) 0.864 0.395 (0.467) 41.537 $ 51.059 $ 1.658 (1.011) 0.648 0.483 1.309 43.977 $ (0.000) 61.070 $ 2.061 (1.107) 0.954 0.560 2.678 48.169 $ (0.000) 62.916 $ Total Annuities - Balance at Beginning of Period Business acquired Gross deposits Withdrawals & deaths Net flows Transfers Interest credited & change in market value Total Annuities - Gross Reinsurance ceded Total Annuities (Net of Ceded) - Balance at End of Period $ 37.6% NM 32.1% -51.3% -2.1% NM -48.2% 34.0% 23.3% 36.6% $ 2.136 (1.366) 0.770 1.794 51.059 (2.202) 48.857 $ - 9.593 2.740 (2.040) 0.699 (0.281) 61.070 (2.149) 58.921 $ - 2.720 (2.416) 0.304 1.542 62.916 (2.045) 60.872 $ (0.000) 3.161 (2.269) 0.892 (0.001) 2.907 66.714 (1.812) 64.902 $ (0.000) Variable Annuities Under Agreement - Included above : Incremental Deposits Fixed annuities Variable annuities Total Incremental Deposits (1) (2) (3) (3) $ 0.190 $ 0.173 $ 0.169 $ 0.170 $ 0.163 -14.2% $ $ 0.461 1.650 2.111 $ $ 0.861 1.850 2.711 $ $ 1.058 1.623 2.681 $ $ 1.086 2.036 3.122 $ $ $ 0.815 1.979 2.794 - 76.8% 19.9% 32.4% Includes fixed portion of variable annuities. Excludes the fixed portion of variable annuities. Incremental Deposits represent gross deposits reduced by transfers from other Lincoln products. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 21: 3/31/2007 PAGE 17 Individual Markets - Individual Annuities Account Values Unaudited [Billions of Dollars] March 2006 Fixed Annuities - excluding fixed portion of variable contracts Deposits Withdrawals Net flows Gross fixed contract account values Reinsurance ceded Net Fixed Contract Account Values $ $ $ $ $ 0.021 $ (0.243) (0.222) $ 6.745 $ (2.202) 4.543 $ - June 2006 0.137 $ (0.805) (0.668) $ 12.190 $ (2.149) 10.041 $ Three Months Ended Sept. Dec. 2006 2006 0.258 $ (1.148) (0.890) $ 11.766 $ (2.045) 9.721 $ 0.280 $ (0.943) (0.663) $ 11.221 $ (1.812) 9.409 $ March 2007 0.126 (0.674) (0.548) 10.818 (1.689) 9.129 % Change NM NM NM 60.4% 23.3% 100.9% Indexed Annuities Deposits Withdrawals Net flows Indexed Annuity Account Values $ $ $ - $ $ $ 0.228 $ (0.047) 0.181 $ 3.210 $ 0.244 $ (0.068) 0.177 $ 3.454 $ 0.245 $ (0.061) 0.184 $ 3.711 $ 0.160 (0.063) 0.098 3.844 NM NM NM NM Fixed Portion of Variable Contracts Deposits Withdrawals Net flows Fixed Portion of Variable Contract Account Values $ $ $ 0.449 $ (0.164) 0.285 $ 3.819 $ 0.507 $ (0.185) 0.322 $ 4.132 $ 0.559 $ (0.190) 0.370 $ 3.719 $ 0.575 $ (0.158) 0.417 $ 3.613 $ 0.535 (0.151) 0.384 3.476 19.2% 7.9% 34.7% -9.0% Variable Annuities - including fixed portion of variable contracts Deposits Withdrawals Net Flows Variable Contract Account Values Average Daily Variable Annuity Account Values $ $ $ $ 2.114 $ (1.123) 0.991 $ 44.314 39.947 $ $ 2.374 $ (1.188) 1.186 $ 45.669 41.214 $ $ 2.218 $ (1.200) 1.017 $ 47.697 42.342 $ $ 2.635 $ (1.265) 1.371 $ 51.782 46.514 $ $ 2.535 (1.330) 1.205 53.776 49.284 19.9% -18.4% 21.6% 21.4% 23.4% Individual Annuity Product Spread Information Net investment income (1) (2) (3) Change (Basis Point) 5.84% 3.93% 1.91% 5.67% 3.81% 1.86% 5.89% 3.81% 2.08% 5.87% 3.77% 2.10% 5.87% 3 3.75% (18) 2.12% 21 $ (1) For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products less bonus credits and excess DCA interest, divided by average fixed account values net of co-insured account values. Fixed account values reinsured under modified co-insurance agreements are included in account values for this calculation since assets (and therefore margin) are retained under these agreements. (2) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums. The impact of these premiums on investment income and spread was 5 bps in the first quarter of 2007, 10 bps in the fourth quarter of 2006, 7 bps in the third quarter of 2006, 2 bps in the second quarter of 2006 and 9 bps in the first quarter of 2006. (3) Interest credited to policyholders (4) (5) Spread (1) (2) (3) (4) We exclude the results of our indexed annuity hedge program from our calculation of spreads, the impact of which affects net investment income and interest credited in approximately equal and offsetting amounts. (4) The third quarter 2006 spreads have been updated to reflect a reclassification of surrender charges within interest credited. No income statement changes were made as a result of this reclassification because the impact was immaterial. (5) The first quarter 2007 spreads reflect a 9 basis point correction (a decrease) to interest credited to policyholders related to a correction to the opening balance of JP that was finalized in the first quarter of 2007. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 22: 3/31/2007 PAGE 18 Employer Markets - Defined Contribution Income Statements & Operational Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 1.7 $ 54.0 184.6 4.9 245.1 - March 2006 June 2006 2.1 $ 54.7 187.5 4.6 248.9 - March 2007 2.0 59.8 180.3 4.7 246.8 - % Change -13.0% 7.6% -2.9% -16.1% -1.0% Operating Revenue Surrender charges Expense assessments Net investment income Other revenue and fees Total Operating Revenue $ 2.3 $ 55.6 185.7 5.6 249.2 1.5 $ 58.4 180.6 4.5 245.0 0.0 Operating Expenses Interest credited to contractholder funds Operating and acquisition expenses Total Operating Expenses Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate Average equity Return on average equity Income from Operations - basis points on average account values Operating and Acquisition Expenses Commissions General and administrative expenses Taxes, licenses and fees Total commissions and expenses incurred Less: commissions and expenses capitalized Amortization of DAC and VOBA Net Operating and Acquisition Expenses General and administrative expenses - basis (1) points on account values - Annualized $ $ 100.7 73.3 174.0 75.2 22.7 52.5 30.2% 1,006.4 $ 20.9% $ 102.4 69.5 171.9 - 103.1 74.5 177.6 (0.0) 104.4 80.2 184.6 (0.0) 104.3 71.6 176.0 (0.0) 3.6% -2.3% 1.1% -5.9% -7.0% -5.3% 77.0 0.0 67.5 - 60.4 0.0 22.7 54.3 0.0 15.0 $ 52.5 - 15.8 $ 44.6 0.0 70.8 21.1 $ 49.7 - 29.4% 985.3 $ 22.0% 22.3% 945.7 $ 22.2% 26.2% 954.9 $ 18.7% 29.8% 938.5 21.2% 67 69 66 54 58 $ 26.2 $ 49.7 2.9 78.8 (25.5) 20.0 73.3 $ (0.1) 64 22.2 $ 47.2 2.8 72.3 (22.6) 19.8 69.5 60 $ 23.4 $ 56.4 1.3 81.1 (21.5) 14.9 74.5 71 $ 20.8 $ 56.5 1.9 79.2 (18.5) 19.4 80.2 68 $ 19.3 49.9 5.1 74.2 (22.2) 19.6 71.6 59 -26.3% 0.4% NM -5.8% 12.9% -2.0% -2.3% $ (5) Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Total Operating Expenses Adjustment related to realized (gains) losses on available-for-sale securities Adjustment related to unrealized (gains) losses on available-for-sale securities Business acquired Other Balance at end of period $ 454.9 $ 25.5 (20.0) 5.5 (4.4) 61.2 517.2 $ 3.6E-07 (0.0) 517.2 $ 22.6 (19.8) 2.7 (6.1) 50.2 564.0 $ -0.000491 564.0 $ 21.5 (14.9) 6.6 (2.0) (64.8) 503.8 $ 0.0117738 503.8 $ 18.5 (19.4) (0.9) (0.2) (5.1) 497.6 $ 497.6 (1.4) 22.2 (19.6) 2.6 (2.1) (7.2) 489.4 0.0 - $ (1) Includes distribution costs. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 23: 3/31/2007 PAGE 19 Employer Markets - Defined Contribution Account Value Roll Forward Unaudited [Billions of Dollars] March 2006 Fixed Annuities - Balance at Beginning of Period Gross deposits (1) Withdrawals & deaths Net flows Transfer from (to) variable annuities Interest credited (2) Fixed Annuities - Balance at End of Period $ 11.009 $ 0.253 (0.328) (0.075) 0.014 0.085 11.033 $ - June 2006 11.033 $ 0.242 (0.345) (0.103) 0.030 0.090 11.050 $ - Three Months Ended Sept. Dec. 2006 2006 11.050 $ 0.268 (0.426) (0.159) 0.049 0.121 11.061 $ 0.000 March 2007 11.006 0.299 (0.399) (0.101) (0.017) 0.104 10.993 - % Change 18.2% -21.6% -34.7% NM 22.4% -0.4% $ 11.061 $ 0.183 (0.340) (0.157) (0.011) 0.112 11.006 $ - Variable Annuities - Balance at Beginning of Period Gross deposits (1) Withdrawals & deaths Net flows Transfer from (to) fixed annuities Investment increase & change in market value (3) Variable Annuities - Balance at End of Period Total Annuities - Balance at Beginning of Period Gross Deposits (1) Withdrawals & deaths Net flows Transfers Interest credited & change in market value Total Annuities - Balance at End of Period Alliance Mutual Funds - Balance at Beginning of Period Plan/Participant Rollovers Additional contributions Gross deposits Withdrawals & deaths Net flows Transfers Interest credited & change in market value Total Alliance Mutual Funds - Balance at End of Period $ $ $ 15.692 $ 0.669 (0.676) (0.006) (0.015) 0.783 16.454 $ - 16.454 $ 0.714 (0.647) 0.067 (0.032) (0.345) 16.144 $ - 16.144 $ 0.583 (0.565) 0.018 (0.046) 0.414 16.530 $ (0.000) 16.530 $ 0.559 (0.669) (0.110) 0.008 1.047 17.475 $ - 17.475 0.655 (0.813) (0.158) 0.004 0.354 17.676 - 11.4% -2.1% -20.3% NM 126.7% -54.8% 7.4% 6.7% 3.3% -20.7% NM NM -47.2% 4.3% 37.2% 123.2% 31.6% 67.6% 3.6% 83.2% 0.0% -29.7% 36.7% $ $ (4) $ 26.701 0.923 (1.004) (0.081) (0.001) 0.867 27.487 3.772 0.125 0.193 0.318 (0.056) 0.262 0.005 0.209 4.248 - $ $ $ $ 27.487 0.955 (0.992) (0.036) (0.002) (0.255) 27.194 4.248 0.021 0.183 0.204 (0.054) 0.150 (0.068) 4.330 - $ $ $ $ 27.194 0.851 (0.992) (0.141) 0.003 0.535 27.591 (0.000) 4.330 0.057 0.178 0.235 (0.057) 0.178 (0.015) 0.143 4.636 - $ $ $ $ 27.591 0.742 (1.009) (0.267) (0.002) 1.160 28.482 4.636 0.168 0.189 0.357 (0.079) 0.277 0.003 0.259 5.175 - $ $ $ 28.482 0.953 (1.212) (0.259) (0.012) 0.458 28.669 - $ 5.175 0.279 0.254 0.533 (0.054) 0.480 0.005 0.147 5.807 - Total Defined Contribution Segment Account Valuesincluding Alliance Mutual Funds Balance at Beginning of Period (1) Gross deposits Withdrawals & deaths Net flows Transfers Interest credited & change in market value Total Defined Contribution Segment Account ValuesBalance at End of Period Variable Annuities Under Agreement - Included above - - - - $ 30.473 $ 1.241 (1.060) 0.181 0.005 1.077 31.735 0.018 $ 31.735 $ 1.159 (1.045) 0.114 (0.002) (0.322) 31.524 $ (0.000) 0.017 31.524 $ 1.086 (1.049) 0.037 (0.012) 0.677 32.227 $ (0.000) 0.017 32.227 $ 1.099 (1.089) 0.010 0.000 1.419 33.656 0.017 $ 33.656 1.487 (1.266) 0.221 (0.007) 0.606 34.475 - 10.4% 19.8% -19.4% 22.1% NM -43.7% 8.6% -11.1% $ 0.016 0.282 11.0% 0.581 -11.2% 0.862 -5.1% 0.533 67.6% $ $ $ $ $ 1.396 13.9% $0.000 (1) Gross deposits for the second quarter and full year 2006 include approximately $20 million and $110 million of fixed and variable annuity deposits, respectively, resulting from JP employee plan deposits into the LNC employee plan as a result of the merger. (2) Includes Fixed Annuity products offered under the Alliance mutual funds and the fixed portion of variable annuities. (3) Excludes the fixed portion of variable annuities. (4) Represents amounts attributable to Alliance mutual fund net flows. Alliance mutual fund account values are not included in the separate accounts reported on our balance sheet. (5) Incremental Deposits represent gross deposits reduced by transfers from other Lincoln products. : Incremental Deposits Fixed Annuities Variable Annuities Total Annuities Incremental Deposits Total Alliance Mutual Funds Incremental Deposits Total Defined Contribution Incremental Deposits (5) $ 0.254 0.654 0.908 0.318 1.226 $ 0.226 0.709 0.935 0.204 1.139 $ 0.253 0.576 0.829 0.235 1.064 $ 0.173 0.551 0.724 0.357 1.080 $ This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 24: 3/31/2007 PAGE 20 Employer Markets - Defined Contribution Supplemental Data Unaudited [Billions of Dollars] March 2006 Fixed Annuities - excluding fixed portion of variable contracts Deposits Withdrawals Net Flows Fixed Contract Account Values Fixed Portion of Variable Contracts Deposits Withdrawals Net Flows Fixed Portion of Variable Contract Account Values Variable Annuities - including fixed portion of variable contracts Deposits (1) Withdrawals Net Flows Variable Contract Account Values Average Daily Variable Annuity Account Values $ $ $ $ 0.788 $ (0.896) (0.108) $ 22.797 16.177 $ $ (1) June 2006 0.121 $ (0.114) 0.008 $ 4.717 $ Three Months Ended Sept. Dec. 2006 2006 0.157 $ (0.162) (0.005) $ 4.758 $ 0.093 $ (0.118) (0.024) $ 4.797 $ March 2007 0.198 (0.166) 0.032 - % Change 46.7% -53.7% 18.5% 3.8% $ $ $ 0.135 $ (0.108) 0.027 $ 4.690 $ 4.870 $ $ $ 0.118 $ (0.220) (0.102) $ 6.343 $ 0.120 $ (0.231) (0.111) $ 6.333 $ 0.111 $ (0.265) (0.154) $ 6.303 $ 0.090 $ (0.222) (0.132) $ 6.210 $ 0.100 (0.233) (0.133) 6.123 -15.3% -5.9% -30.4% -3.5% 0.834 $ (0.878) (0.044) $ 22.477 16.270 $ $ 0.694 $ (0.830) (0.136) $ 22.833 16.116 $ $ 0.649 $ (0.891) (0.242) $ 23.685 17.164 $ $ 0.755 (1.046) (0.291) 23.799 17.582 -4.2% -16.7% NM 4.4% 8.7% Total Annuity based Retirement Plan Product Spread Information (2) Net investment income (3) Interest credited to policyholders Spread (3) 6.34% 3.66% 2.68% 6.31% 3.73% 2.58% 6.39% 3.76% 2.63% 6.23% 3.79% 2.44% 6.20% 3.81% 2.39% Change (Basis Point) (14) 15 (29) (1) Gross deposits for the second quarter of 2006 include approximately $20 million and $110 million of fixed and variable annuity deposits, respectively, resulting from JP employee plan deposits into the LNC employee plan as a result of the merger. For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products less bonus credits and excess DCA interest, divided by average fixed account values. (3) The net investment income and spread reported above includes earnings from commercial mortgage loan prepayment and bond make-whole premiums. The impact of these premiums on investment income and spread was 3 bps in the 1st quarter of 2007, 4 bps in the 4th quarter of 2006, 13 bps in the 3rd quarter of 2006, 12 bps in the 2nd quarter of 2006 and 15 bps in the 1st quarter of 2006. (2) This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 25: 3/31/2007 PAGE 21 Employer Markets - Executive Benefits Income Statements & Operational Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 $ 0.3 0.0 7.2 4.5 91.0 1.3 104.3 - March 2006 June 2006 $ 0.0 0.0 8.5 4.9 86.5 1.3 101.2 - March 2007 $ 0.6 (0.0) 8.9 6.2 94.8 1.2 111.7 - % Change -45.5% NM 217.9% 87.9% 94.7% -14.3% 95.3% Operating Revenue Premiums Surrender charges Mortality assessments Expense assessments Net investment income Other revenue and fees Total Operating Revenue $ 1.1 0.0 2.8 3.3 48.7 1.4 57.2 $ 3.3 0.0 8.5 5.5 90.5 1.3 109.1 - Operating Expenses Insurance benefits Interest credited to contractholder funds Operating and acquisition expenses Total Operating Expenses Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate Average equity Return on average equity $ $ 32.8 9.3 4.6 46.7 10.5 3.0 7.5 28.5% 334.5 9.0% $ $ 30.4 40.2 7.2 77.7 - 35.6 39.9 11.7 87.2 - 39.7 42.0 9.1 90.8 - 33.1 44.8 12.7 90.7 - 0.9% NM 176.1% 94.2% 101.0% 120.0% 92.0% 23.5 - 17.1 0.0 18.3 - 7.3 16.2 - 4.3 $ 12.8 - 5.6 $ 12.7 - 21.1 0.0 6.6 $ 14.4 (0.0) 31.0% 524.8 12.4% $ 25.2% 519.8 9.8% $ 30.7% 528.2 9.6% $ 31.5% 539.3 10.7% Operating and Acquisition Expenses Commissions General and administrative expenses Taxes, licenses and fees Total commissions and expenses incurred Less: commissions and expenses capitalized Amortization of DAC and VOBA Net Operating and Acquisition Expenses General and administrative expenses - basis points on account values - Annualized (1) $ 5.1 $ 3.7 1.1 9.9 (5.7) 0.3 4.5 0.1 36 $ 8.1 $ 2.8 1.3 12.2 (8.0) 2.9 7.2 16 $ 7.1 $ 6.2 1.4 14.6 (6.7) 3.8 11.7 36 $ 11.2 $ 4.8 1.3 17.3 (10.9) 2.8 9.1 27 $ 6.5 4.0 1.5 11.9 (6.9) 7.7 12.7 23 27.5% 8.1% 36.4% 20.2% -21.1% NM 182.2% $ (13) Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Deferral Amortization Included in Total Operating Expenses Adjustment related to realized (gains) losses on available-for-sale securities Adjustment related to unrealized (gains) losses on available-for-sale securities Business acquired Other Balance at end of period Roll Forward of Deferred Front-End Loads Balance at beginning of period Deferral Amortization Included in Income from Operations Balance at end of period (1) $ 113.6 $ 5.7 (0.3) 5.4 119.0 0.0 119.0 $ 8.0 (2.9) 5.1 7.6 142.5 274.1 0.0 274.1 $ 6.7 (3.8) 2.9 (0.7) (18.3) 258.0 $ 0.0 258.0 $ 10.9 (2.8) 8.2 (0.8) (0.1) 265.3 $ 0.0 265.3 6.9 (7.7) (0.8) (0.5) (3.4) 260.5 0.0 $ $ $ $ $ 17.9 $ 1.0 (0.0) 1.0 18.9 $ - 18.9 $ 1.0 (0.2) 0.8 19.7 $ - 19.7 $ 0.9 (0.3) 0.6 20.3 $ - 20.3 $ 1.5 (0.2) 1.4 21.7 $ - 21.7 1.1 (0.8) 0.3 22.0 0.0 Includes distribution costs. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 26: 3/31/2007 PAGE 22 Employer Markets - Executive Benefits Account Value Roll Forward and Supplemental Data Unaudited [Billions of Dollars] COLI/BOLI- Balance Beginning-of-Period Business acquired Deposits Withdrawals & deaths Net flows Policyholder assessments Interest credited and change in market value COLI/BOLI-Balance End-of-Period Three Months Ended March June Sept. Dec. March 2006 2006 2006 2006 2007 $ 1.318 $ 1.387 $ 4.228 $ 4.252 $ 4.305 2.795 0.047 0.077 0.058 0.085 0.065 (0.007) (0.042) (0.069) (0.092) (0.140) 0.039 0.035 (0.011) (0.007) (0.075) (0.009) (0.017) (0.016) (0.019) (0.018) 0.038 0.028 0.051 0.079 0.052 $ 1.387 $ 4.228 $ 4.252 $ 4.305 $ 4.264 0.000 0.000 0.000 $ 7.979 $ 15.373 $ 15.342 $ 15.645 $ 14.747 % Change 226.6% NM 38.3% NM NM NM 36.8% 207.4% COLI/BOLI In-Force 84.8% Run Off Institutional Pensions Account Values Balance at End of Period $ 2.753 $ 2.707 $ 2.711 $ 2.720 $ 2.734 -0.7% This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 27: 3/31/2007 PAGE 23 Employer Markets - Group Protection Income Statements & Operational Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 304.1 $ 27.1 0.9 332.1 (0.0) March 2006 June 2006 $ 328.9 $ 25.1 0.8 354.9 (0.0) March 2007 331.3 27.9 1.1 360.4 (0.0) % Change NM NM NM NM Operating Revenue Premiums Net investment income Other revenue and fees Total Operating Revenue $ 315.9 $ 28.0 0.8 344.8 (0.0) Operating Expenses Insurance benefits Operating and acquisition expenses Total Operating Expenses Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate Average equity Return on average equity $ $ $ 226.0 72.0 297.9 - 213.3 74.6 287.9 (0.0) 224.0 69.6 293.6 0.0 246.6 78.3 324.9 - NM NM NM NM NM NM 56.9 - 44.2 0.0 51.2 - 19.9 37.0 $ 35.0% 861.0 $ 17.2% 15.5 28.8 - 17.9 $ 33.2 - 35.5 12.4 $ 23.1 (0.0) 35.0% 896.8 $ 12.8% 35.0% 913.4 $ 14.6% 35.0% 915.1 10.1% Operating and Acquisition Expenses Commissions General and administrative expenses Taxes, licenses and fees Total commissions and expenses incurred Less commissions and expenses capitalized Amortization of DAC and VOBA Net Operating and Acquisition Expenses General and administrative expenses as a percentage of premiums $ - $ 37.3 $ 31.9 8.0 77.1 (11.2) 6.0 72.0 $ 36.0 $ 35.5 7.8 79.3 (11.3) 6.6 74.6 11.7% $ 36.8 $ 37.5 6.9 81.2 (14.8) 3.2 69.6 11.9% $ 39.4 32.7 9.7 81.8 (11.2) 7.6 78.3 9.9% NM NM NM NM NM NM NM $ $ - 9.7% NM Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Cumulative effect of adoption of SOP 05-1 Deferral Amortization Included in Total Operating Expenses Adjustment related to realized (gains) losses on available-for-sale securities Adjustment related to unrealized (gains) losses on available-for-sale securities Business acquired Other Balance at end of period $ $ $ 11.2 (6.0) 5.2 116.2 121.4 $ 121.4 $ 11.3 (6.6) 4.7 126.1 $ 126.1 $ 14.8 (3.2) 11.5 137.6 $ 137.6 (37.5) 11.2 (7.6) 3.5 103.7 (0.0) $ $ This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 28: 3/31/2007 PAGE 24 Employer Markets - Group Protection Supplemental Data Unaudited [Millions of Dollars] March 2006 Annualized Sales Life Disability Dental Premiums: Life Disability Dental Other Total Product Line Results: Life Disability Dental Other Total Loss Ratios: Life Disability Dental Combined loss ratios June 2006 Three Months Ended Sept. Dec. 2006 2006 March 2007 % Change $ - $ 15.3 22.9 7.1 $ 19.4 24.7 6.1 $ 43.1 56.9 13.1 $ 22.7 28.6 9.4 NM NM NM $ - $ 111.6 134.0 31.4 51.9 328.9 $ 109.9 134.8 31.7 27.8 304.1 $ 112.5 138.5 31.8 33.2 315.9 0.0 13.6 15.5 3.0 1.1 33.2 0.0 69.0% 69.3% 68.7% 69.1% $ 118.6 144.8 32.9 35.0 331.3 0.0 NM NM NM NM NM $ $ $ $ $ $ - $ 13.5 21.1 1.4 1.0 37.0 $ 9.8 16.1 2.2 0.7 28.8 $ $ 8.6 13.3 0.2 0.9 23.1 0.0 NM NM NM NM NM $ $ $ $ $ - 67.8% 59.4% 76.3% 64.7% 72.3% 64.5% 71.7% 68.4% 75.0% 69.5% 79.2% 72.7% NM NM NM NM This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 29: 3/31/2007 PAGE 25 Investment Management Income Statements Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 $ 82.4 23.7 34.3 140.4 - March 2006 June 2006 $ 81.2 23.5 30.0 134.7 - March 2007 $ 89.9 24.9 35.3 150.2 - % Change 15.6% -0.8% -3.8% 7.6% Operating Revenue Investment advisory fees - External Investment advisory fees - Insurance-related Other revenue and fees Operating Revenue $ 77.8 25.1 36.7 139.6 $ 86.5 24.7 37.7 148.9 - Operating Expenses Operating and administrative expenses Total Operating Expenses Income (Loss) from operations before Federal income taxes Federal income taxes Income (Loss) from Operations Effective tax rate Pre-tax Operating Margin After-tax Operating Margin (1) (2) 116.1 116.1 23.5 8.2 $ 15.3 34.9% 16.8% 11.0% $ 116.4 116.4 - 120.3 120.3 - 126.2 126.2 - 124.6 124.6 - 7.3% 7.3% 8.9% 13.4% 5.9% 18.3 (0.0) 6.3 12.0 $ 34.4% 13.6% 8.9% 20.1 6.7 13.4 $ 33.1% 14.3% 9.6% 22.7 8.3 14.4 $ 36.5% 15.2% 9.7% 25.6 9.3 16.2 36.4% 17.0% 10.8% Operating and Acquisition Expenses General and administrative expenses Depreciation and amortization Sub-advisory fees Total general and administrative expenses Taxes, licenses and fees Amortization of intangibles Total expenses incurred $ $ 96.1 2.2 11.0 109.3 4.8 2.0 116.1 - $ $ 99.4 2.4 10.6 112.4 2.4 1.6 116.4 - $ $ 104.2 2.2 9.8 116.2 2.7 1.4 120.3 - $ $ 109.1 2.4 9.8 121.3 3.5 1.4 126.2 - $ $ 106.5 2.6 10.0 119.1 4.1 1.4 124.6 - 10.8% 18.2% -9.1% 9.0% -14.6% -30.0% 7.3% (1) (2) Pre-tax operating margin is calculated as Income (Loss) from Operations before Federal income taxes divided by Operating Revenue. After-tax operating margin is calculated as Income (Loss) from Operations divided by Operating Revenue. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 30: 3/31/2007 PAGE 26 Investment Management Assets Under Management Roll Forward Unaudited [Billions of Dollars] March 2006 Retail Fixed - Balance-Beginning-of-Period Sales (1) Redemptions Transfers Net Flows Net investment gains and change in market value Balance at End-of-Period Retail Equity - Balance-Beginning-of-Period Sales (1) Redemptions Transfers Net Flows Net investment gains and change in market value Balance at End-of-Period Total Retail - Balance-Beginning-of-Period Retail sales-Annuities Retail sales-Mutual Funds Retail sales-Managed Accounts & Other Total Retail Sales (1) Redemptions Transfers Net Flows Net investment gains and change in market value Balance at End-of-Period $ 9.625 0.951 (0.805) (0.056) 0.089 0.046 9.761 (0.000) 32.732 3.069 (1.840) (0.013) 1.216 2.552 36.500 (0.000) 42.357 0.885 1.329 1.806 4.019 (2.645) (0.069) 1.305 2.598 46.261 (0.000) 14.699 3.080 (0.447) 0.002 2.636 (0.074) 17.262 0.000 20.576 1.964 (1.008) 0.956 1.373 22.906 (0.000) 35.276 5.044 (1.454) 0.003 3.592 1.299 40.167 0.000 86.428 41.995 $ June 2006 9.761 $ 1.034 (0.824) 0.030 0.240 0.007 10.007 $ 36.500 $ 2.249 (2.134) (0.032) 0.082 (0.547) 36.035 $ 46.261 $ 0.869 1.370 1.043 3.282 (2.959) (0.002) 0.322 (0.540) 46.042 $ Three Months Ended Sept. Dec. 2006 2006 10.007 $ 0.981 (0.810) 0.012 0.183 0.332 10.522 $ 36.035 $ 1.516 (1.984) (0.016) (0.483) 1.402 36.954 $ 46.042 $ 0.960 1.151 0.386 2.497 (2.794) (0.003) (0.300) 1.733 47.476 $ 10.522 $ 1.091 (0.859) 0.028 0.261 0.211 10.993 $ 36.954 $ 2.101 (2.472) (0.030) (0.401) 3.074 39.627 $ 47.476 $ 0.932 1.768 0.493 3.192 (3.330) (0.002) (0.140) 3.285 50.620 $ March 2007 10.993 1.365 (0.910) 0.014 0.470 0.181 11.644 39.627 2.238 (2.455) (0.020) (0.237) 0.861 40.250 50.620 1.300 1.753 0.550 3.603 (3.365) (0.005) 0.233 1.041 51.895 - % Change 14.2% 43.5% -13.0% 125.0% NM 293.5% 19.3% 21.1% -27.1% -33.4% -53.8% NM -66.3% 10.3% 19.5% 46.9% 31.9% -69.5% -10.4% -27.2% 92.8% -82.1% -59.9% 12.2% $ $ $ $ $ $ $ $ $ $ Institutional Fixed - Balance-Beginning-of-Period Inflows (1) Withdrawals/terminations Transfers Net Flows Transfer of assets to an intercompany manager (3) Net investment gains and change in market value Balance at End-of-Period Institutional Equity - Balance-Beginning-of-Period Inflows (1) Withdrawals/terminations Transfers Net Flows Net investment gains and change in market value Balance at End-of-Period Total Institutional - Balance-Beginning-of-Period Inflows (1) Withdrawals/terminations Transfers Net Flows Transfer of assets to an intercompany manager (3) Net investment gains and change in market value Balance at End-of-Period Total Retail and Institutional - At End-of-Period General Account Assets-End-of-Period (2) Total Assets Under Management At End-of-Period Total Retail and Institutional - Net Flows Subadvised Assets, included in Assets Under Management above Retail Institutional Total Subadvised Assets $ $ $ $ $ $ 17.262 $ 1.634 (0.750) 0.008 0.892 0.001 18.154 $ 22.906 1.130 (1.327) (0.008) (0.205) (0.971) 21.729 (0.000) 40.167 2.764 (2.078) 0.000 0.687 (0.971) 39.883 (0.000) 85.926 65.637 $ 18.154 $ 1.133 (0.516) (0.002) 0.615 0.618 19.387 $ 21.729 $ 1.274 (0.844) 0.001 0.431 0.489 22.649 $ 39.883 $ 2.406 (1.360) (0.000) 1.046 1.107 42.035 $ 89.511 67.410 $ $ 19.387 $ 3.644 (0.487) 0.001 3.157 0.297 22.841 $ 22.649 $ 1.244 (1.734) (0.001) (0.490) 1.687 23.845 $ 42.035 $ 4.888 (2.221) (0.000) 2.666 1.984 46.686 $ 97.307 67.066 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 22.841 1.560 (0.480) 0.000 1.081 (0.780) 0.328 23.469 23.845 0.870 (2.273) 0.000 (1.402) 0.339 22.782 46.686 2.431 (2.753) 0.001 (0.321) (0.780) 0.667 46.251 98.146 67.292 55.4% -49.4% -7.4% NM -59.0% NM NM 36.0% 15.9% -55.7% NM NM NM -75.3% -0.5% 32.3% -51.8% -89.3% -66.7% NM NM -48.7% 15.1% 13.6% 60.2% $ $ 128.423 4.898 $ $ 151.563 1.008 $ $ 156.921 0.745 $ $ 164.373 2.526 $ $ 165.438 (0.088) 28.8% NM $ $ 17.320 5.608 22.928 $ $ 16.899 4.593 21.491 $ $ 16.421 4.560 20.982 $ $ 18.023 4.648 22.671 $ $ 18.466 4.645 23.111 6.6% -17.2% 0.8% (1) (2) Sales and in-flows include dividend reinvestments. Balances reflect $26.1 billion of assets assumed as a result of the merger with Jefferson-Pilot on April 4, 2006. (3) Transfer does not impact LFG consolidated assets under management . This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 31: 3/31/2007 PAGE 27 Lincoln UK Income Statements Unaudited [Millions of Dollars] March 2006 June 2006 $ 19.9 8.9 34.7 17.8 81.4 - Three Months Ended Sept. Dec. 2006 2006 $ 21.1 8.7 23.9 18.6 72.3 (0.0) March 2007 $ 24.2 10.0 37.1 19.3 0.1 90.7 0.0 % Change 45.8% 28.2% 32.5% 13.5% 30.5% Operating Revenue Premiums Mortality assessments Expense assessments Net investment income Other revenue and fees Total Operating Revenue $ 16.6 7.8 28.0 17.0 0.1 69.5 $ 21.0 9.0 36.8 18.0 84.8 (0.0) Operating Expenses Insurance benefits Operating and acquisition expenses Total Operating Expenses Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate on Income from Operations Average equity Return on average equity $ $ 25.4 27.6 53.0 16.5 5.8 10.7 $ 27.5 38.9 66.3 - 25.0 34.5 59.5 - 30.4 39.1 69.5 - 36.0 38.0 74.0 - 41.7% 37.7% 39.6% 1.2% 1.7% 1.9% 15.1 - 12.8 - 15.3 - 16.7 - 5.2 9.9 - 4.5 $ 8.3 - 5.4 $ 9.9 - 5.9 $ 10.9 - 35.1% 427.0 10.0% $ 34.4% 417.8 9.5% $ 35.2% 406.0 8.2% $ 35.3% 392.3 10.1% $ 35.3% 384.8 11.3% Operating and Acquisition Expenses Commissions General and administrative expenses Total commissions and expenses incurred Less: commissions and expenses capitalized Amortization of DAC and VOBA Net Operating and Acquisition Expenses $ 0.9 $ 22.7 23.6 (0.5) 4.5 27.6 $ 1.1 $ 23.9 25.0 (0.1) 13.9 38.9 $ 1.4 $ 25.1 26.4 (0.6) 8.7 34.5 $ 1.1 $ 27.9 29.0 (0.7) 10.8 39.1 $ 1.0 26.5 27.6 (0.6) 11.0 38.0 11.1% 16.7% 16.9% -20.0% 144.4% 37.7% $ Roll Forward of Deferred Acquisition Costs & Value of Business Acquired Balance at beginning of period Deferral Amortization Included in Total Benefits and Expenses Foreign currency translation adjustment Balance at end of period $ 743.4 $ 0.5 (4.5) (4.0) 7.7 747.2 $ 747.2 $ 0.1 (13.9) (13.8) 48.3 781.7 $ 781.7 $ 0.6 (8.7) (8.0) 9.7 783.4 $ 783.4 $ 0.7 (10.8) (10.1) 35.7 809.0 $ 809.0 0.6 (11.0) (10.4) 4.1 802.6 - $ Roll Forward of Deferred Front-End Load Balance at beginning of period Deferral Amortization Included in Income from Operations Foreign currency translation adjustment Balance at end of period $ 363.1 $ 1.0 (3.4) (2.4) 3.8 364.5 $ - $ 364.5 $ 0.5 (7.4) (6.9) 23.6 381.2 $ 0.0 381.2 0.8 6.1 6.9 4.7 392.8 - $ $ 392.8 $ 0.6 (6.8) (6.2) 17.9 404.5 $ - 404.5 0.9 (7.0) (6.1) 2.0 400.4 - This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 32: 3/31/2007 PAGE 28 Lincoln UK Operational Data Unaudited [Billions of Dollars] Three Months Ended Sept. Dec. 2006 2006 March 2006 Unit Linked Assets Balance-Beg-of-Period Deposits Withdrawals (including charges) and Deaths Net Flows Investment income and change in market value Foreign Currency Adjustment Unit Linked Assets - End-of-Period Individual Life In-force Exchange Rate - Dollars to Pounds For-the-Period End-of-Period June 2006 March 2007 % Change $ 7.320 $ 7.754 $ 7.857 $ 8.118 $ 8.757 0.068 (0.240) (0.172) 0.277 0.045 8.906 19.307 19.6% -1.4% -29.0% -45.8% -42.2% -37.5% 14.9% 8.8% $ $ 0.069 (0.186) (0.118) 0.479 0.072 7.754 $ - 0.073 (0.201) (0.128) (0.267) 0.500 7.857 $ 18.289 $ 0.105 (0.218) (0.113) 0.275 0.098 8.118 $ (0.001) 0.071 (0.232) (0.161) 0.424 0.376 8.757 $ 0.000 17.744 $ 18.464 $ 19.345 $ 1.754 1.737 1.829 1.849 1.878 1.872 1.930 1.958 1.964 1.968 12.0% 13.3% This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 33: 3/31/2007 PAGE 29 Lincoln Financial Media Income Statements Unaudited [Millions of Dollars] March 2006 June 2006 $ 57.5 $ 7.6 22.2 27.7 6.0 1.8 0.3 19.6 - Three Months Ended Sept. Dec. 2006 2006 59.8 $ 10.3 21.0 28.5 2.7 1.4 1.5 0.3 22.6 - March 2007 67.2 17.0 24.2 26.0 4.2 1.3 1.3 0.1 19.2 - % Change NM NM NM NM NM NM NM NM NM NM NM Operating Results Communications revenues, net Cost of sales Operating expenses Station operating income Depreciation and amortization General and administrative expenses Taxes, licenses and fees Net interest expense and other Income from operations before Federal income taxes Federal income taxes Income from Operations Effective tax rate on Income from Operations $ $ 70.0 $ 15.2 21.7 33.1 2.6 1.2 1.8 0.3 27.2 0.0 7.7 $ 11.9 $ - 8.0 14.6 - 9.6 $ 17.5 - 6.8 $ 12.4 - - 39.3% 35.4% 35.4% 35.5% Other Operations (1) Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 March 2006 June 2006 March 2007 % Change Operating Revenue Premiums Net investment income Amortization of deferred gain on indemnity reinsurance (2) Other revenue and fees Inter-segment elimination of investment advisory fees Total Operating Revenue $ 0.3 39.6 18.8 (1.8) (25.1) 31.7 0.1 1.6 33.9 (1.2) 3.0 21.5 (25.1) 33.7 0.1 $ 0.3 $ 72.1 18.8 (0.1) (23.5) 67.6 (0.0) 4.1 36.5 28.5 0.6 64.3 (23.5) 110.6 (0.0) 0.9 $ 59.6 18.8 (4.5) (23.3) 51.4 (0.0) 3.9 36.1 (7.3) 2.6 66.7 (23.3) 78.8 0.0 3.8 $ 53.1 18.8 (4.9) (25.2) 45.6 (0.0) 7.3 37.1 33.8 1.2 64.3 (25.2) 118.6 (0.0) 2.1 46.7 18.6 (2.9) (24.5) 40.0 0.0 5.7 37.1 16.9 2.7 60.8 (24.5) 98.6 0.0 NM 17.9% -1.1% -61.1% 2.4% 26.2% Operating Expenses Insurance benefits Interest credited to contractholder funds Operating and acquisition expenses Taxes, licenses and fees Interest Inter-segment elimination of investment advisory fees Total Operating Expenses Income (loss) from operations before Federal income taxes Federal income taxes Income (loss) from Operations $ 256.3% 9.4% NM -10.0% 182.8% 2.4% 192.6% NM NM NM (2.0) (2.2) 0.1 $ (43.1) 0.0 (27.4) (0.0) (73.0) - (58.5) 0.0 (17.0) (26.1) $ (15.9) (11.5) $ (34.5) (38.4) $ (23.3) (35.2) (0.0) (1) (2) Includes eliminations of intercompany transactions. Represents the amortization of deferred gain recognized on the business sold through indemnity reinsurance to Swiss Re. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 34: 3/31/2007 PAGE 30 Consolidated Domestic Deposits/Account Balances Unaudited [Billions of Dollars] Three Months Ended Sept. Dec. 2006 2006 1.062 $ 1.658 0.753 0.268 0.818 0.058 0.960 1.151 0.386 (0.817) 6.297 2.406 (0.202) 8.501 $ 1.100 $ 2.061 1.101 0.183 0.916 0.085 0.932 1.768 0.493 (0.833) 7.805 4.888 (0.109) 12.584 $ March 2006 Deposits - For the Period Individual Markets - Fixed Annuities Individual Markets - Variable Annuities Individual Markets - Life Insurance Employer Markets - Fixed Annuities Employer Markets - Variable Products (1) Employer Markets - Executive Benefits Inv Mgmt - Annuities Inv Mgmt - Mutual Funds Inv Mgmt - Managed Acct. & Other Consolidating Adjustments Total Gross Retail Deposits Inv Mgmt - Institutional Consolidating Adjustments Total Gross Deposits $ 0.471 $ 1.665 0.488 0.253 0.987 0.047 0.885 1.329 1.806 (0.481) 7.449 5.044 (0.257) 12.236 $ June 2006 0.872 $ 1.867 1.023 0.242 0.918 0.077 0.869 1.370 1.043 (0.773) 7.509 2.764 (0.365) 9.907 $ March 2007 0.821 2.000 1.039 0.299 1.188 0.065 1.300 1.753 0.550 (0.799) 8.217 2.431 (0.112) 10.536 % Change 74.3% 20.1% 112.9% 18.2% 20.4% 38.3% 46.9% 31.9% -69.5% -66.1% 10.3% -51.8% 56.4% -13.9% $ Account Balances - End of Period Individual Markets - Fixed Annuities Individual Markets - Variable Annuities Individual Markets - Life Insurance Employer Markets - Fixed Annuities Employer Markets - Variable Products (1) Employer Markets - Executive Benefits Inv Mgmt - Annuities Inv Mgmt - Mutual Funds Inv Mgmt - Managed Acct. & Other Consolidating Adjustments Total Retail Account Balances Inv Mgmt - Institutional Consolidating Adjustments Total Account Balances $ 8.362 $ 40.495 14.268 11.033 20.702 1.387 13.998 17.101 15.162 (13.282) 129.225 40.167 (3.573) 165.820 $ 17.384 $ 41.537 25.479 11.050 20.475 4.228 13.577 16.654 15.812 (13.057) 153.137 39.883 (3.557) 189.464 $ 16.894 $ 43.977 25.821 11.061 21.166 4.252 14.129 17.068 16.279 (13.649) 156.998 42.035 (3.510) 195.524 $ 16.733 $ 48.169 26.490 11.006 22.650 4.305 15.151 17.875 17.594 (14.687) 165.287 46.686 (3.604) 208.369 $ 16.449 50.300 26.924 10.993 23.482 4.264 15.467 18.747 17.681 (15.025) 169.282 46.251 (2.829) 212.704 96.7% 24.2% 88.7% -0.4% 13.4% 207.4% 10.5% 9.6% 16.6% -13.1% 31.0% 15.1% 20.8% 28.3% $ Total Domestic Net Flows Unaudited [Billions of Dollars] Three Months Ended Sept. Dec. 2006 2006 0.491 $ 0.304 0.037 (0.011) (0.300) 0.012 0.532 1.046 0.139 1.717 0.727 $ 0.892 0.010 (0.007) (0.140) (0.092) 1.390 2.666 0.068 4.125 For the Period Ended Individual Markets - Life Individual Markets - Annuities Employer Markets - Defined Contribution Employer Markets - Executive Benefits Investment Management - Retail Consolidating Adjustments Total Retail Net Flows Investment Management - Institutional Consolidating Adjustments Total Net Flows $ March 2006 0.257 0.770 0.181 0.039 1.305 0.083 2.635 $ June 2006 0.548 $ 0.699 0.114 0.035 0.322 (0.009) 1.709 0.687 (0.047) 2.349 $ March 2007 0.698 0.754 0.221 (0.075) 0.233 (0.004) 1.827 (0.321) 0.048 1.554 % Change 171.6% -2.1% 22.1% NM -82.1% NM -30.7% NM 223.1% -74.9% $ 3.592 (0.039) 6.188 $ $ $ (1) Includes amounts attributable to Alliance program mutual fund net flows. Account values for the Alliance program are not included in the separate accounts reported on our balance sheet. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 35: 3/31/2007 PAGE 31 Consolidated Investment Data - Assets Managed Unaudited [Billions of Dollars] As of March 2006 Assets Managed by Source LNC's Investments and Cash: Fixed maturity securities available for sale Equity securities - available for sale Trading securities Other investments Total LNC Investments Separate accounts Cash and invested cash Total LNC Non-affiliate assets managed Total Assets Managed Assets Managed by Advisor Investment Management segment (See page 26 for additional detail) DLIA-Corp (Assets managed internally-see page 26) Lincoln UK Domestic Policy Loans (excluding Lincoln UK) Non-LNC Affiliates Total Assets Managed $ June 2006 Sept. 2006 Dec. 2006 March 2007 % Change $ 32.893 0.176 3.190 6.314 42.573 67.984 1.974 112.531 70.464 182.995 $ 54.024 0.579 3.109 12.003 69.714 71.095 1.500 142.309 70.185 $ 55.825 0.662 3.172 11.948 71.608 74.357 1.108 147.073 73.227 $ 55.853 0.700 3.036 11.898 71.488 80.534 1.621 153.642 79.881 $ 56.256 0.714 2.910 11.970 71.849 83.147 0.900 155.897 81.134 71.0% NM -8.8% 89.6% 68.8% 22.3% -54.4% 38.5% 15.1% 29.5% $ 212.495 $ 220.300 $ 233.523 $ 237.031 $ 86.428 41.995 8.986 1.856 43.729 182.995 - $ 85.926 65.637 9.171 2.712 49.049 212.495 - $ 89.511 67.410 9.440 2.720 51.219 220.300 - $ 97.307 67.066 10.108 2.755 56.286 233.523 - $ 98.146 67.292 10.255 2.763 58.575 237.031 - 13.6% 60.2% 14.1% 48.9% 34.0% 29.5% $ $ $ $ $ This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
Slide 36: 3/31/2007 PAGE 32 Consolidated Investment Data Unaudited [Millions of Dollars] Three Months Ended Sept. Dec. 2006 2006 March 2006 Net Investment Income Fixed maturity AFS securities Equity AFS securities Trading securities Mortgage loans on real estate Real estate Policy loans Invested cash Other investments Investment revenue Investment expense Net Investment Income Mean Invested Assets (Amortized Cost) $ 513.7 $ 2.1 49.7 67.2 9.1 29.7 22.8 14.6 708.8 (30.4) 678.3 44,363.6 $ $ June 2006 March 2007 % Change 829.0 $ 8.6 49.4 135.0 13.2 42.5 22.2 10.2 1,110.1 (41.9) 1,068.2 70,933.3 $ $ 824.8 $ 7.9 49.2 137.8 13.3 43.0 33.0 41.3 1,150.3 (42.4) 1,107.9 70,646.9 $ $ 841.7 $ 8.5 48.6 128.5 20.6 43.7 15.6 71.8 1,179.0 (52.6) 1,126.3 70,451.4 $ $ 843.8 8.6 45.4 130.6 15.2 42.6 18.2 29.8 1,134.2 (44.6) 1,089.5 0.1 69,905.7 64.3% NM -8.7% 94.3% 67.0% 43.4% -20.2% 104.1% 60.0% -46.7% 60.6% $ $ Ratio of Net Investment Income Over Mean Invested Assets 6.12% 6.02% 6.27% 6.39% 6.23% March 2006 Realized Investment Gains (Losses) Fixed maturities Equity securities Other gains (losses), net Policyholders' interest Capital gains expense Sale of affiliate Total pretax gains (losses) Amortization of DAC, VOBA and deferred sales inducements Income taxes Realized investment gains (losses), net of taxes $ 4.4 $ 0.2 3.5 (1.8) (2.4) 3.9 (10.9) (2.9) (4.2) $ 0.1 June 2006 8.2 $ (1.1) 6.5 (1.4) 12.2 (18.9) (3.0) (3.8) $ 0.0 Three Months Ended Sept. Dec. 2006 2006 6.7 $ (5.5) 2.0 3.1 (8.9) (1.7) (4.1) $ 10.6 3.5 7.6 21.7 $ March 2007 44.2 2.2 (0.1) (1.9) 44.4 (17.9) 9.3 17.1 0.0 % Change NM NM NM -5.6% NM NM NM -64.2% NM NM $ (8.9) 3.4 9.4 $ As of March 31, 2007 Amount % of Total Available-for-Sale and Trading Securities [Millions of Dollars] Fixed Maturity Sec (Fair Value) Fixed Maturity Sec (Amortized Cost) Equity Securities (Fair Value) Equity Securities (Amortized Cost) % of Available-for-Sale Fixed Maturity Securities (Based on Fair Value) Treasuries and AAA AA or better BB or less General Account Investments Fixed maturities- security sector: Corporate bonds U.S. government bonds Foreign government bonds Mortgage backed securities State and municipal bonds Preferred stocks - redeemable Total $ 59,165.3 57,951.2 713.9 655.4 98.8% 98.9% 1.2% 1.1% As of December 31, 2006 Amount % of Total $ 58,889.8 57,725.8 700.2 656.8 98.8% 98.9% 1.2% 1.1% 19.9% 29.2% 5.6% As of March 31, 2007 Amount % of Total $ 45,484.0 244.3 1,077.1 9,186.2 155.5 108.4 56,255.6 80.9% 0.4% 1.9% 16.3% 0.3% 0.2% 100.0% $ 19.6% 28.1% 6.3% As of December 31, 2006 Amount % of Total 45,489.4 263.4 1,141.6 8,691.3 159.4 108.3 55,853.4 81.4% 0.5% 2.0% 15.6% 0.3% 0.2% 100.0% $ $ $ As of March 2006 Composition of Investment Portfolio: Securities available-for-sale, at fair value: Fixed Maturity Equity Trading securities Mortgage loans on real estate & real estate Policy loans Derivative Investments Other investments Total June 2006 Sept. 2006 Dec. 2006 March 2007 % Change $ $ 32,892.8 176.0 3,190.1 3,766.5 1,860.4 199.3 488.2 42,573.2 $ $ 54,024.1 578.5 3,109.0 8,169.7 2,716.4 279.6 837.0 69,714.4 0.000 $ $ 55,824.9 662.0 3,172.5 8,004.5 2,724.9 349.4 869.3 71,607.5 0.000 $ $ 55,853.4 700.2 3,036.3 7,805.6 2,759.7 415.3 917.1 71,487.6 0.000 $ $ $ 56,255.6 713.9 2,909.7 7,822.2 2,766.8 412.6 968.6 71,849.3 0.0 71.0% NM -8.8% 107.7% 48.7% 107.0% 98.4% 68.8% This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

   
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