UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 30, 2000
LINCOLN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 1-6028 35-1140070
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
1500 Market Street, Suite 3900, Centre Square West Tower, Philadelphia, PA
19102
(Address of principal executive offices)
Registrant's telephone number 215-448-1400
Item 9
Financial Report for the quarter ended September 30, 2000.
Lincoln |Statistical Report
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[LOGO OMITTED]
Lincoln
-------
Financial Group
<TABLE>
<CAPTION>
Recent Analysts Reports on LFG
3rd Quarter, 2000
FIRM ANALYST LATEST REPORT
---- ------- -------------
<S> <C> <C>
A.G. Edwards Jeff Hopson October 16, 2000
Bear, Stearns & Co. Inc. Andrew Kligerman September 29, 2000
Bear, Stearns & Co. Inc. Deanne Coyle August 17, 2000
Conning & Company Paul Goulekas September 28, 2000
Fox-Pitt Kelton Len Savage July 27, 2000
Goldman Sachs & Company Joan Zief September 28, 2000
J.P. Morgan Michelle Giordano September 29, 2000
Keefe, Bruyette & Woods Inc. Sabra Brinkmann September 29, 2000
Langen McAlenney Bob Glasspiegel July 26, 2000
Lehman Brothers Eric Berg July 26, 2000
McDonald & Co. Nancy C. Benacci October 8, 2000
Merrill Lynch Ed Spehar October 16, 2000
Morgan Stanley Nigel Dally October 4, 2000
Paine Webber, Inc. Robert Lee September 28, 2000
Prudential Securities John Hall October 13, 2000
Raymond James Steven Schwartz October 13, 2000
Robinson-Humphrey David Lewis October 20, 2000
Salomon Smith Barney Colin Devine October 17, 2000
Value Line Stephen Jones July 28, 2000
Questions regarding this Statistical Report may be referred to:
Priscilla Brown, Investor Relations Internet: [email protected]
---------------
Voice: (215) 448-1422
Fax: (215) 448-3962
Richard C. Vaughan, Chief Financial Officer Internet: [email protected]
----------------
Voice: (215) 448-1440
Casey Trumble, Chief Accounting Officer Internet: [email protected]
----------------
Voice: (215) 448-1408
Douglas N. Miller, Controller Internet: [email protected]
----------------
Voice: (215) 448-1430
** Statistical data will be available immediately after the release of earnings for each quarter by accessing
LNC's Investor Relations website http://www.lfg.com/investor/finance
-----------------------------------
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Unaudited [Amounts in Millions, except Percentages and Per Share]
For the Quarter Ended September 30 For the Nine Months Ended September 30
2000 1999 2000 1999
Amount Amount Change % Change Amount Amount Change % Change
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from Operations
Life Insurance 72.2 60.6 11.6 19.1% 208.3 174.0 34.3 19.7%
Annuities 98.5 71.1 27.4 38.5% 263.9 214.6 49.3 23.0%
Lincoln UK 10.6 16.2 (5.6) (34.6%) 45.5 53.3 (7.8) (14.6%)
Reinsurance 28.7 3.3 25.4 769.7% 87.8 62.3 25.5 40.9%
Investment Management 3.0 8.1 (5.1) (63.0%) 12.6 24.0 (11.4) (47.5%)
Corporate & Other (22.2) (27.9) 5.7 (83.8) (89.2) 5.4
------ ------ ---- ----- ------ ------ ----- -----
Total Income from Operations 190.7 131.4 59.3 45.1% 534.4 438.9 95.5 21.8%
Realized Gain on Investments (11.6) 4.1 (15.7) (18.7) 2.2 (20.9)
Restructuring Charges (40.5) (3.2) (37.3) (43.2) (15.3) (27.9)
------ ------ ---- ----- ------ ------ ----- -----
Net Income 138.6 132.3 6.3 4.8% 472.5 425.7 46.8 11.0%
====== ====== ==== ===== ====== ====== ===== =====
Earnings per share (diluted)
Income from Operations $0.98 $0.66 $0.32 48.5% $2.74 $2.18 $0.56 25.7%
Realized Gain (loss) on
Investments ($0.06) $0.02 ($0.08) ($0.10) $0.01 ($0.11)
Restructuring Charges ($0.21) ($0.02) ($0.19) ($0.22) ($0.08) ($0.14)
------ ------ ---- ----- ------ ------ ----- -----
Net Income $0.71 $0.66 $0.05 7.6% $2.42 $2.11 $0.31 14.7%
====== ====== ==== ===== ====== ====== ===== =====
Operating Revenue
Life Insurance 496.9 485.2 11.6 2.4% 1481.9 1434.0 47.8 3.3%
Annuities 507.3 490.0 17.3 3.5% 1507.2 1464.1 43.1 2.9%
Lincoln UK 112.8 110.3 2.6 2.3% 334.4 341.2 (6.8) (2.0%)
Reinsurance 457.8 405.1 52.7 13.0% 1311.5 1252.2 59.2 4.7%
Investment Management 116.2 111.3 5.0 4.5% 347.3 343.6 3.7 1.1%
Corporate & Other 42.0 34.9 7.1 124.1 157.4 (33.3)
------ ------ ---- ----- ------ ------ ----- -----
Total Operating Revenue 1733.1 1636.7 96.3 5.9% 5106.3 4992.5 113.8 2.3%
====== ====== ==== ===== ====== ====== ===== =====
Revenue (Including
Investment Gains/Losses)
Life Insurance 496.8 487.1 9.7 2.0% 1471.3 1428.6 42.7 3.0%
Annuities 494.1 479.5 14.6 3.0% 1499.0 1457.5 41.5 2.8%
Lincoln UK 112.8 110.5 2.3 2.1% 333.9 342.8 (8.9) (2.6%)
Reinsurance 454.4 405.5 48.9 12.0% 1308.3 1254.2 54.0 4.3%
Investment Management 115.9 110.7 5.1 4.6% 343.6 342.9 0.8 0.2%
Corporate & Other 42.0 48.7 (6.7) 121.9 169.8 (47.9)
------ ------ ---- ----- ------ ------ ----- -----
Total Revenue 1716.1 1642.1 74.0 4.5% 5078.0 4995.8 82.2 1.6%
====== ====== ==== ===== ====== ====== ===== =====
Operational Data by Segment:
(Billions)
Life Insurance Segment
Life Insurance First
Year Premium 0.145 0.121 0.024 19.8% 0.431 0.368 0.063 17.1%
Life Insurance In-force 211.308 188.908 22.400 11.9% 211.308 188.908 22.400 11.9%
Annuities Segment
Annuity Gross Deposits 1.201 1.238 (0.037) (3.0%) 3.763 3.527 0.236 6.7%
Annuity Net Cash Flows (0.672) (0.088) (0.584) (1.765) (0.405) (1.360)
Annuity Account Values 56.525 50.526 5.999 11.9% 56.525 50.526 5.999 11.9%
Lincoln UK
Net ICV (Millions) 9.472 13.459 (3.987) (29.6%) 31.339 37.832 (6.493) (17.2%)
Reinsurance
Individual Life
In-force Sales 37.2 28.8 8.4 29.2% 104.3 67.2 37.1 55.2%
Reinsurance Life
In-force 412.6 297.1 115.5 38.9% 412.6 297.1 115.5 38.9%
Investment Management
Retail Deposits 1.118 0.962 0.156 16.2% 3.505 3.190 0.315 9.9%
Retail Net Cash Flows (0.326) (0.301) (0.025) (1.575) (1.798) 0.223
Institutional In-flows 0.715 2.284 (1.569) (68.7%) 2.616 5.893 (3.277) (55.6%)
Institutional Net Cash Flows (0.983) 0.816 (1.799) (4.651) (0.762) (3.889)
Assets Under Management 55.527 58.869 (3.342) (5.7%) 55.527 58.869 (3.342) (5.7%)
Assets Under Management -
at Cost 34.981 36.820 (1.839) (5.0%) 34.981 36.820 (1.839) (5.0%)
Assets Under Management -
Total Segment 90.508 95.689 (5.181) (5.4%) 90.508 95.689 (5.181) (5.4%)
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Unaudited [Amounts in Millions, except Percentages and Per Share]
For the Quarter Ended September 30 For the Nine Months Ended September 30
----------------------------------------- -----------------------------------------
2000 1999 2000 1999
Amount Amount Change % Change Amount Amount Change % Change
------ ------ ------ -------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Operational
Data: (Billions)
Annuity Deposits
Annuities Segment 1.201 1.238 (0.037) (3.0%) 3.763 3.527 0.236 6.7%
Life Insurance Segment 0.041 0.074 (0.032) (44.0%) 0.148 0.214 (0.066) (31.0%)
-------- ------- ------ ----- -------- ------- ------ -----
Total Annuity Deposits 1.242 1.312 (0.069) (5.3%) 3.911 3.741 0.17 4.5%
======== ======= ====== ===== ======== ======= ====== =====
Annuity Net Cash Flows
Annuities Segment (0.672) (0.088) (0.584) (1.765) (0.405) (1.360)
Life Insurance Segment (0.140) (0.105) (0.035) (0.428) (0.270) (0.159)
-------- ------- ------ ----- -------- ------- ------ -----
Total Annuity Net Cash Flows (0.812) (0.193) (0.619) (2.193) (0.675) (1.519)
======== ======= ====== ===== ======== ======= ====== =====
Annuity Account Values
Annuities Segment 56.525 50.526 5.999 11.9% 56.525 50.526 5.999 11.9%
Life Insurance Segment 1.918 2.021 (0.103) (5.1%) 1.918 2.021 (0.103) (5.1%)
-------- ------- ------ ----- -------- ------- ------ -----
Total Annuity Account
Values 58.443 52.547 5.896 11.2% 58.443 52.547 5.896 11.2%
======== ======= ====== ===== ======== ======= ====== =====
Consolidated Retail
Deposits 2.827 2.707 0.120 4.4% 8.843 8.102 0.741 9.1%
Consolidated Retail
Account Balances 97.056 88.776 8.280 9.3% 97.056 88.776 8.280 9.3%
Total Assets Under
Management 136.271 133.172 3.099 2.3% 136.271 133.172 3.099 2.3%
Balance Sheet Assets -
End of Period 103243.1 96500.7 6742.4 7.0% 103243.1 96500.7 6742.4 7.0%
Shareholders' Equity
Beg of Period
(Securities at Market) 4223.7 4817.4 (593.7) 4263.9 5387.9 (1124.0)
End of Period
(Securities at Market) 4538.6 4662.2 (123.6) 4538.6 4662.2 (123.6)
End of Period
(Securities at Cost) 4876.3 4766.0 110.3 4876.3 4766.0 110.3
Average Equity
(Securities at Cost) 4867.2 4793.9 73.3 4803.9 4833.5 (29.6)
Return on Equity
Inc from Operations/
Average Equity 15.7% 11.0% 4.7% 14.8% 12.1% 2.7%
Net Income/Average
Equity 11.4% 11.0% 0.4% 13.1% 11.7% 1.4%
Adj Net Income/Adj
Average Equity 15.8% 14.1% 1.7%
Return on Capital
Inc from Operations/
Average Capital 12.7% 9.3% 3.5% 12.0% 10.1% 1.8%
Common Stock Outstanding
Average for the Period -
Diluted 195.6 199.0 (3.4) (1.7%) 194.9 201.5 (6.6) (3.3%)
End of Period - Assuming
Conv of Pref. 191.8 196.3 (4.5) (2.3%) 191.8 196.3 (4.5) (2.3%)
End of Period - Diluted 196.2 196.9 (0.7) (0.4%) 196.2 196.9 (0.7) (0.4%)
Book Value (Securities at
Market) $23.67 $23.76 (0.09) (0.4%) $23.67 $23.76 (0.09) (0.4%)
Book Value (Securities at
Cost) $25.43 $24.28 1.15 4.7% $25.43 $24.28 1.15 4.7%
Cash Returned to
Shareholders
Share Repurchase -
dollar amount 0.0 160.8 (160.8) 158.3 363.5 (205.2)
Dividend Declared on
Common Stock 55.8 53.6 2.2 165.9 162.8 3.1
-------- ------- ------ ----- -------- ------- ------ -----
Total Cash Returned
to Shareholders 55.8 214.4 (158.6) 324.2 526.3 (202.1)
======== ======= ====== ===== ======== ======= ====== =====
Share Repurchase -
number of shares 0.0 3.219 (3.219) 5.109 7.309 (2.200)
Dividend Declared on
Common Stock - per share $0.290 $0.275 $0.015 5.5% $0.870 $0.825 $0.045 5.5%
</TABLE>
<TABLE>
<CAPTION>
Eleven Year Summary
Unaudited [Millions of Dollars except Per Share Data]
For the Year Ended
December 31 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Life Insurance 350.9 371.7 417.3 444.4 477.5 466.2 741.1 769.6 747.8 1558.9 1945.3
Annuities 1210.9 1073.7 1216.7 1336.2 1603.8 1506.2 1677.3 1610.2 1835.1 1912.6 1958.4
Lincoln UK 152.7 161.1 169.6 180.6 174.9 216.0 351.5 393.2 427.3 439.7 446.6
Reinsurance 567.7 741.6 774.3 1074.6 1101.9 1267.4 1419.5 1564.4 1389.5 1580.3 1833.9
Investment
Management 276.1 389.9 440.0 467.3 461.0
Employee Life -
Health Benefits 2237.7 2454.2 2646.3 1241.6 1297.3 314.9
Corporate & Other 290.2 173.2 300.4 464.7 281.7 161.8 121.0 6.3 58.9 128.3 158.5
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Revenue 4810.1 4975.5 5524.6 4742.1 4937.1 3932.5 4586.5 4733.6 4898.5 6087.1 6803.7
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Income from
Operations (1)
Life Insurance 29.2 25.9 31.5 46.8 37.8 34.2 60.4 69.7 67.7 180.4 236.6
Annuities 44.3 55.2 58.3 89.4 127.1 142.4 157.6 155.8 200.7 243.8 285.8
Lincoln UK 10.6 13.3 14.3 9.2 11.9 17.2 45.9 66.0 (108.3) 70.9 (13.9)
Reinsurance 52.0 55.7 31.4 38.7 22.4 51.6 (69.2) 76.5 (148.4) 107.3 43.5
Investment
Management 11.1 2.8 (0.3) 20.7 32.9
Employee Life -
Health Benefits 4.6 53.2 43.5 40.8 54.3 14.1
Corporate & Other (85.6) (90.4) (70.7) (73.0) (55.8) (40.9) (64.8) (72.1) (62.1) (92.6) (109.5)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Income from
Cont Oper 55.1 112.9 108.3 151.9 197.6 218.6 140.8 298.8 (50.6) 530.4 475.5
Discontinued
Operations 140.5 100.9 69.4 88.7 145.9 171.1 165.6 135.3 110.1
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
Operations 195.6 213.8 177.7 240.6 343.5 389.7 306.5 434.1 59.4 530.4 475.5
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Net Income
Life Insurance 29.2 25.9 31.5 46.8 37.8 34.2 70.9 86.1 73.9 158.1 235.6
Annuities 44.3 55.2 58.3 89.4 127.1 142.4 225.9 179.6 234.0 255.6 278.4
Lincoln UK 10.6 13.3 14.3 9.2 12.6 18.5 45.7 66.0 (106.8) 71.7 (18.2)
Reinsurance 52.0 55.7 31.4 38.7 20.7 52.2 (58.3) 88.5 (132.1) 104.7 44.1
Investment
Management 17.8 9.2 6.7 21.2 23.6
Employee Life -
Health Benefits 4.6 53.2 43.5 40.8 55.3 14.4
Corporate & Other (25.1) (127.6) (46.5) 45.6 (177.1) (96.2) (0.6) (73.1) (53.5) (101.6) (103.1)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Net Inc from
Cont Oper 115.6 75.7 132.5 270.5 76.4 165.5 301.4 356.4 22.2 509.8 460.4
Discontinued
Operations 140.5 100.9 69.4 88.7 242.5 184.4 180.8 157.2 911.8
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Net Income 256.1 176.6 201.9 359.2 318.9 349.9 482.2 513.6 934.0 509.8 460.4
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
OTHER DATA
Assets 25070.1 27597.3 33660.3 39042.2 47825.1 48864.8 63257.7 71713.4 77174.7 93836.3 103095.7
Shareholders' Equity
Securities at Market 2095.7 2279.5 2655.8 2826.8 4072.3 3042.1 4378.1 4470.0 4982.9 5387.9 4263.9
Securities at Cost 2004.8 2213.2 2445.8 2664.1 3157.6 3353.1 3679.9 4057.1 4546.9 4835.6 4729.6
Average Equity
(Securities at Cost) 1936.9 2086.6 2335.3 2575.0 3009.0 3288.6 3550.5 3866.0 4214.1 4685.6 4818.7
Common Shares
Outstanding:
(millions)
End of Period -
Diluted 169.1 176.3 185.4 187.7 208.3 208.3 210.3 209.5 204.7 203.4 197.0
Average for the
Period - Diluted 169.4 175.2 189.2 186.8 206.1 208.7 209.5 210.7 208.0 203.3 200.4
Per Share Data
(Diluted) (2)
Income (Loss) from
Continuing
Operations $0.33 $0.64 $0.57 $0.81 $0.96 $1.05 $0.67 $1.42 ($0.24) $2.61 $2.37
Income from
Operations (1) $1.15 $1.22 $0.94 $1.29 $1.67 $1.87 $1.46 $2.06 $0.29 $2.61 $2.37
Net Income from
Continuing
Operations $0.68 $0.43 $0.70 $1.45 $0.37 $0.79 $1.44 $1.69 $0.11 $2.51 $2.30
Net Income $1.51 $1.01 $1.07 $1.92 $1.55 $1.68 $2.30 $2.44 $4.49 $2.51 $2.30
Shareholders'
Equity: (2)
Shareholders'
Equity (Sec at
Market) $12.46 $12.95 $14.35 $15.13 $19.69 $14.67 $20.95 $21.50 $24.63 $26.59 $21.76
Shareholders'
Equity (Securities
at Cost) $11.92 $12.57 $13.21 $14.26 $15.27 $16.17 $17.61 $19.51 $22.48 $23.86 $24.14
Dividends Declared
(Common Stock) $0.628 $0.658 $0.693 $0.738 $0.775 $0.830 $0.875 $0.935 $0.995 $1.055 $1.115
Return on Equity
(see page 30)
Net Income/Average
Equity 13.2% 8.5% 8.6% 13.9% 10.6% 10.6% 13.6% 13.3% 22.2% 10.9% 9.6%
Inc from Operations/
Average Equity 10.1% 10.2% 7.6% 9.3% 11.4% 11.8% 8.6% 11.2% 1.4% 11.3% 9.9%
Adj Net Income/
Adj Average Equity 11.1% 15.5% 12.8% 13.5% 14.3% 4.3% 14.1% 11.8%
Market Value of
Common Stock
Highest Price $15.719 $15.338 $13.813 $19.032 $24.125 $22.188 $26.875 $28.500 $39.063 $49.438 $57.500
Lowest Price $10.688 $7.688 $9.500 $12.625 $17.344 $17.313 $17.313 $20.375 $24.500 $33.500 $36.000
Closing Price $15.219 $10.750 $13.688 $18.500 $21.750 $17.500 $26.875 $26.250 $39.063 $40.907 $40.000
(1) "Income from Operations" is defined as "Net income less realized gain (loss) on investments and sale of
subsidiaries/discontinued operations, restructuring charges and accumulated accounting change, all net of taxes."
(2) Per share data reflects a June 1999 two-for-one stock split, prior year amounts have been restated.
</TABLE>
<TABLE>
<CAPTION>
Quarterly Revenue and Income by Segment
Unaudited [Millions of Dollars except Per Share Data]
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1997 1998 1998 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Revenue
Life Insurance 178.1 350.8 359.2 334.4 514.4 469.1
Annuities 482.3 486.1 493.8 457.0 475.7 485.6
Lincoln UK 112.5 103.5 124.2 102.8 109.2 119.1
Reinsurance 361.1 355.4 380.5 386.4 457.9 421.6
Investment Management 110.5 118.5 118.7 107.4 122.7 117.3
Corporate & Other 60.8 33.6 31.0 29.7 34.0 62.6
------- ------- ------- ------- ------- -------
Total Revenue 1305.3 1448.0 1507.5 1417.6 1714.0 1675.4
======= ======= ======= ======= ======= =======
Income from Operations
Life Insurance 18.9 32.2 44.3 44.5 59.3 54.5
Annuities 61.3 61.4 63.7 59.7 59.0 71.1
Lincoln UK (157.9) 17.2 17.2 17.7 18.8 18.1
Reinsurance (84.8) 27.7 24.1 29.6 26.0 34.6
Investment Management 3.0 3.3 5.5 2.8 9.0 8.4
Corporate & Other (7.2) (13.6) (22.7) (23.7) (32.7) (31.0)
------- ------- ------- ------- ------- -------
Income from Operations (166.6) 128.1 132.2 130.7 139.4 155.7
======= ======= ======= ======= ======= =======
Net Income
Life Insurance 14.5 14.0 49.7 41.3 53.1 52.6
Annuities 75.9 67.1 75.2 52.4 60.9 73.6
Lincoln UK (157.5) 17.4 17.4 17.8 19.2 18.0
Reinsurance (79.0) 30.4 25.2 24.5 24.6 35.3
Investment Management 3.9 5.3 6.0 (0.9) 10.8 (3.6)
Corporate & Other 4.6 (12.2) (24.8) (21.7) (42.9) (30.9)
------- ------- ------- ------- ------- -------
Total Net Inc from Cont Oper (137.7) 122.0 148.7 113.4 125.6 145.1
Discontinued Operations 776.9
------- ------- ------- ------- ------- -------
Total Net Income 639.2 122.0 148.7 113.4 125.6 145.1
======= ======= ======= ======= ======= =======
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
Revenue
Life Insurance 472.5 487.1 516.6 486.4 488.1 496.8
Annuities 492.3 479.5 500.9 511.1 493.7 494.1
Lincoln UK 113.1 110.5 103.8 112.8 108.2 112.8
Reinsurance 427.1 405.5 579.7 395.5 458.3 454.4
Investment Management 114.8 110.7 118.1 116.5 111.3 115.9
Corporate & Other 58.5 48.7 (11.2) 46.8 33.1 42.0
------- ------- ------- ------- ------- -------
Total Revenue 1678.3 1642.1 1807.9 1669.2 1692.7 1716.1
======= ======= ======= ======= ======= =======
Income from Operations
Life Insurance 58.8 60.6 62.6 67.1 69.0 72.2
Annuities 72.4 71.1 71.3 85.0 80.4 98.5
Lincoln UK 19.0 16.2 (67.1) 15.7 19.3 10.6
Reinsurance 24.4 3.3 (18.8) 32.8 26.4 28.7
Investment Management 7.5 8.1 8.9 5.3 4.4 3.0
Corporate & Other (30.3) (27.9) (20.3) (35.2) (26.4) (22.2)
------- ------- ------- ------- ------- -------
Income from Operations 151.8 131.4 36.6 170.6 173.0 190.7
======= ======= ======= ======= ======= =======
Net Income
Life Insurance 56.4 61.9 64.8 64.4 65.1 72.6
Annuities 72.3 64.3 68.1 88.1 80.5 89.9
Lincoln UK 20.0 16.4 (72.6) 15.5 19.1 (29.9)
Reinsurance 24.7 0.4 (16.4) 34.0 25.3 26.5
Investment Management 7.2 7.7 12.2 5.2 (0.3) 2.7
Corporate & Other (32.3) (18.4) (21.5) (36.8) (26.1) (23.2)
------- ------- ------- ------- ------- -------
Total Net Inc from Cont Oper 148.4 132.3 34.6 170.2 163.6 138.6
Discontinued Operations
------- ------- ------- ------- ------- -------
Total Net Income 148.4 132.3 34.6 170.2 163.6 138.6
======= ======= ======= ======= ======= =======
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1997 1998 1998 1998 1998 1999
OTHER DATA
Assets 77174.7 87884.5 88364.6 84606.2 93836.3 95350.3
Shareholders' Equity
Beg of Period (Securities at Market) 4641.1 4982.9 5054.2 5150.8 5527.6 5387.9
End of Period (Securities at Market) 4982.9 5054.2 5150.8 5527.6 5387.9 5107.4
End of Period (Securities at Cost) 4546.9 4579.2 4681.3 4753.9 4835.6 4852.8
Average Equity (Securities at Cost) 4633.0 4596.9 4632.0 4718.3 4795.4 4872.5
Common Shares Outstanding
Average for the Period - Diluted 205.7 204.3 203.9 203.9 203.3 203.6
End of Period - Diluted 204.7 204.2 204.5 203.9 203.4 203.2
Per Share Data (Diluted)
Income from Operations ($0.81) $0.63 $0.65 $0.64 $0.69 $0.76
Net Income from Continuing Operations ($0.67) $0.60 $0.73 $0.56 $0.62 $0.71
Net Income $3.11 $0.60 $0.73 $0.56 $0.62 $0.71
Shareholders' Equity
Shareholders' Equity (Sec at Market) $24.63 $25.12 $25.55 $27.28 $26.59 $25.30
Shareholders' Equity (Sec at Cost) $22.48 $22.76 $23.22 $23.47 $23.86 $24.04
Dividends Declared (Com Stk) $0.260 $0.260 $0.260 $0.260 $0.275 $0.275
Return on Equity (see page 30)
Net Income/Average Equity 55.2% 10.6% 12.8% 9.6% 10.5% 11.9%
Inc from Operations/Average Equity (14.4%) 11.2% 11.4% 11.1% 11.6% 12.8%
Market Value of Common Stock
Highest Price $39.065 $43.250 $47.063 $49.438 $43.344 $50.250
Lowest Price $32.315 $36.125 $41.844 $41.125 $33.500 $39.281
Closing Price $39.065 $42.625 $45.688 $41.125 $40.906 $49.438
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
OTHER DATA
Assets 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1
Shareholders' Equity
Beg of Period (Securities at Market) 5107.4 4817.4 4662.2 4263.9 4340.4 4223.7
End of Period (Securities at Market) 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6
End of Period (Securities at Cost) 4818.5 4766.0 4729.6 4751.6 4780.3 4876.3
Average Equity (Securities at Cost) 4834.2 4793.9 4774.2 4791.5 4753.0 4867.2
Common Shares Outstanding
Average for the Period - Diluted 201.9 199.0 197.1 195.8 194.0 195.6
End of Period - Diluted 200.9 196.9 197.0 195.1 193.7 196.2
Per Share Data (Diluted)
Income from Operations $0.75 $0.66 $0.19 $0.87 $0.89 $0.98
Net Income from Continuing Operations $0.73 $0.66 $0.18 $0.87 $0.84 $0.71
Net Income $0.73 $0.66 $0.18 $0.87 $0.84 $0.71
Shareholders' Equity
Shareholders' Equity (Sec at Market) $24.18 $23.76 $21.76 $22.45 $22.10 $23.67
Shareholders' Equity (Sec at Cost) $24.18 $24.28 $24.14 $24.58 $25.01 $25.43
Dividends Declared (Com Stk) $0.275 $0.275 $0.290 $0.290 $0.290 $0.290
Return on Equity (see page 30)
Net Income/Average Equity 12.3% 11.0% 2.9% 14.2% 13.8% 11.4%
Inc from Operations/Average Equity 12.6% 11.0% 3.1% 14.2% 14.6% 15.7%
Market Value of Common Stock
Highest Price $53.438 $57.500 $48.313 $41.375 $40.063 $56.375
Lowest Price $45.688 $36.000 $36.500 $22.625 $29.000 $35.625
Closing Price $52.313 $37.563 $40.000 $33.500 $36.125 $48.125
(1) "Income from Operations" is defined as "Net income less realized gain (loss) on investments and
sale of subsidiaries/discontinued operations, restructuring charges and accumulated accounting
change, all net of taxes."
(2) Per share data reflects a June 1999 two-for-one stock split, prior year amounts have been restated.
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
For the Quarter Ended September 30 Life Insurance Annuities Lincoln UK Reinsurance
--------------- --------------- --------------- ---------------
Sep Sep Sep Sep Sep Sep Sep Sep
2000 1999 2000 1999 2000 1999 2000 1999
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 50.9 52.4 18.0 13.1 31.2 32.1 238.9 166.2
Surrender charges 14.7 17.9 9.5 9.4 0.9 0.6
Mortality assessments 116.3 110.5 9.6 7.7 0.0 0.0
Expense assessments 47.0 42.8 163.3 142.6 52.6 49.3 0.0 0.0
Health premiums 0.0 0.0 1.3 1.3 116.5 148.3
Investment advisory fees
Other revenue and fees 4.1 8.5 4.4 (2.5) 2.0 3.6 22.5 7.5
Net investment income 263.8 253.1 312.1 327.5 16.1 16.2 78.8 81.2
Earnings in Unconsolidated Affiliates 0.2 1.2
----- ----- ----- ----- ----- ----- ----- -----
Operating Revenue 496.9 485.2 507.3 490.0 112.8 110.3 457.8 405.1
----- ----- ----- ----- ----- ----- ----- -----
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 95.8 105.4 68.3 55.0 48.1 24.9 178.0 108.8
Div accum & div to policyholders 16.4 19.2 1.8 1.9
Interest credited to policy bal. 160.1 148.9 179.2 204.0 12.8 6.0
Health policy benefits 0.0 0.0 3.9 2.4 119.0 187.4
Underwriting, acquisition,
insurance and other expenses 110.6 117.3 142.0 138.7 46.4 62.8 100.6 95.6
Interest 0.0 0.0 3.0 0.0
----- ----- ----- ----- ----- ----- ----- -----
Total Benefits and Expenses 383.0 390.9 389.6 397.6 98.3 90.1 415.2 399.7
----- ----- ----- ----- ----- ----- ----- -----
Income from Operations Before Tax 113.9 94.3 117.8 92.4 14.5 20.2 42.5 5.4
Federal income taxes 41.7 33.7 19.3 21.3 3.9 4.0 13.9 2.1
Income from Operations 72.2 60.6 98.5 71.1 10.6 16.2 28.7 3.3
----- ----- ----- ----- ----- ----- ----- -----
Restructuring charges (40.5) (3.2)
Realized gains on investments 0.4 1.3 (8.6) (6.8) 0.0 0.2 (2.2) 0.3
----- ----- ----- ----- ----- ----- ----- -----
Net Income 72.6 61.9 89.9 64.3 (29.9) 16.4 26.5 0.4
===== ===== ===== ===== ===== ===== ===== =====
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Investment Corporate and Consolidating
Management Other Operations Adjustments Consolidated
--------------- --------------- --------------- ---------------
Sep Sep Sep Sep Sep Sep Sep Sep
2000 1999 2000 1999 2000 1999 2000 1999
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 0.0 339.0 263.8
Surrender charges 0.7 0.5 25.9 28.4
Mortality assessments 125.9 118.2
Expense assessments 0.0 0.0 10.5 11.1 273.4 245.9
Health premiums 0.0 0.0 117.9 149.6
Investment advisory fees 69.3 69.3 (15.9) (14.7) 53.3 54.6
Other revenue and fees 28.5 27.9 57.7 46.5 (13.1) (13.6) 106.0 77.9
Net investment income 18.5 14.1 23.7 25.0 (23.0) (20.1) 690.0 697.1
Earnings in Unconsolidated Affiliates 1.4 1.6 1.2
----- ----- ----- ----- ----- ----- ----- -----
Operating Revenue 116.2 111.3 82.8 71.5 (40.8) (36.6) 1733.1 1636.7
----- ----- ----- ----- ----- ----- ----- -----
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits (0.1) 390.2 294.0
Div accum & div to policyholders 18.2 21.2
Interest credited to policy bal. 9.9 10.8 362.0 369.7
Health policy benefits 0.1 0.0 123.0 189.8
Underwriting, acquisition,
insurance and other expenses 110.8 99.1 61.6 60.3 (27.7) (27.4) 544.3 546.3
Interest 0.0 0.0 54.3 53.3 (23.0) (20.1) 34.4 33.3
----- ----- ----- ----- ----- ----- ----- -----
Total Benefits and Expenses 110.8 99.1 116.1 113.5 (40.8) (36.6) 1472.2 1454.1
----- ----- ----- ----- ----- ----- ----- -----
Income from Operations Before Tax 5.4 12.2 (33.3) (42.0) 0.0 260.8 182.6
Federal income taxes 2.5 4.1 (11.1) (14.0) 70.1 51.2
----- ----- ----- ----- ----- ----- ----- -----
Income from Operations 3.0 8.1 (22.2) (27.9) 0.0 190.7 131.4
Restructuring charges (40.5) (3.2)
Realized gains on investments (0.2) (0.3) 0.0 35.4 (1.0) (25.9) (11.6) 4.1
----- ----- ----- ----- ----- ----- ----- -----
Net Income 2.7 7.7 (22.2) 7.5 (1.0) (25.9) 138.6 132.3
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Business Segments to Consolidated Income Statement
Unaudited [Millions of Dollars]
For the Nine Months Ended September 30 Life Insurance Annuities Lincoln UK Reinsurance
---------------- ---------------- -------------- ----------------
Sep Sep Sep Sep Sep Sep Sep Sep
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 160.2 165.0 48.0 43.9 103.7 101.9 695.4 511.2
Surrender charges 49.2 50.4 30.0 25.9 2.9 2.2
Mortality assessments 343.0 330.7 23.9 22.1 0.0 0.8
Expense assessments 136.3 117.9 474.1 395.6 143.5 145.2 0.0 0.4
Health premiums 0.1 0.1 4.2 4.5 316.0 460.3
Investment advisory fees
Other revenue and fees 11.2 12.3 7.4 2.1 5.6 10.0 51.4 32.1
Net investment income 781.9 757.6 947.7 996.6 53.6 57.5 244.3 241.2
Earnings in Unconsolidated Affiliates 1.5 4.0
------ ------ ------ ------ ----- ----- ------ ------
Operating Revenue 1481.9 1434.0 1507.2 1464.1 334.4 341.2 1311.5 1252.2
------ ------ ------ ------ ----- ----- ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 290.6 318.0 195.5 181.5 113.4 85.5 516.9 356.1
Div accum & div to policyholders 55.5 60.5 4.6 4.7
Interest credited to policy bal. 468.3 449.7 573.5 612.9 30.3 25.8
Health policy benefits 0.1 0.0 11.0 8.9 346.5 492.6
Underwriting, acquisition,
insurance and other expenses 339.1 332.3 413.9 402.9 149.0 175.7 278.2 276.5
Interest 0.0 0.1 8.0 0.0
------ ------ ------ ------ ----- ----- ------ ------
Total Benefits and Expenses 1153.5 1160.8 1183.0 1197.3 273.4 270.1 1184.6 1155.7
------ ------ ------ ------ ----- ----- ------ ------
Income from Operations Before Tax 328.3 273.3 324.2 266.8 61.1 71.1 126.8 96.5
Federal income taxes 120.0 99.3 60.4 52.2 15.5 17.8 39.0 34.2
------ ------ ------ ------ ----- ----- ------ ------
Income from Operations 208.3 174.0 263.9 214.6 45.5 53.3 87.8 62.3
Restructuring charges (40.5) (3.2)
Realized gains on investments (6.2) (3.1) (5.4) (4.3) (0.4) 1.1 (2.1) 1.3
------ ------ ------ ------ ----- ----- ------ ------
Net Income 202.1 170.8 258.5 210.3 4.7 54.4 85.7 60.4
====== ====== ====== ====== ===== ===== ====== ======
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Investment Corporate and Consolidating
Management Other Operations Adjustments Consolidated
---------------- ---------------- -------------- ----------------
Sep Sep Sep Sep Sep Sep Sep Sep
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums (0.1) 1007.2 821.9
Surrender charges 2.3 2.5 84.4 81.0
Mortality assessments 24.0 366.9 377.7
Expense assessments 0.0 39.2 33.5 793.1 692.6
Health premiums 0.0 0.0 320.4 464.9
Investment advisory fees 207.4 214.9 (47.9) (45.2) 159.5 169.7
Other revenue and fees 95.2 84.9 177.2 173.3 (47.2) (41.4) 300.9 273.3
Net investment income 44.7 43.7 70.6 70.8 (67.7) (60.1) 2075.0 2107.4
Earnings in Unconsolidated Affiliates (2.4) (1.0) 4.0
------ ------ ------ ------ ----- ----- ------ ------
Operating Revenue 347.3 343.6 245.4 268.1 (121.3) (110.7) 5106.3 4992.5
------ ------ ------ ------ ----- ----- ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 33.0 1116.4 974.1
Div accum & div to policyholders 60.1 65.2
Interest credited to policy bal. 0.0 30.6 33.4 1102.7 1121.9
Health policy benefits (0.4) 0.4 357.2 501.9
Underwriting, acquisition,
insurance and other expenses 326.7 305.8 210.2 217.0 (87.3) (87.8) 1629.8 1622.5
Interest 0.0 0.0 165.8 159.0 (67.7) (60.1) 106.1 99.0
------ ------ ------ ------ ----- ----- ------ ------
Total Benefits and Expenses 326.7 305.8 375.6 409.4 (124.4) (114.5) 4372.4 4384.6
------ ------ ------ ------ ----- ----- ------ ------
Income from Operations Before Tax 20.6 37.8 (130.1) (141.2) 3.1 3.8 734.0 608.0
Federal income taxes 8.0 13.8 (43.3) (48.3) 0.0 199.6 169.1
------ ------ ------ ------ ----- ----- ------ ------
Income from Operations 12.6 24.0 (86.9) (93.0) 3.1 3.8 534.4 438.9
Restructuring charges (2.7) (12.1) (43.2) (15.3)
Realized gains on investments (2.4) (0.5) 9.2 16.5 (11.5) (8.9) (18.7) 2.2
------ ------ ------ ------ ----- ----- ------ ------
Net Income 7.6 11.4 (77.7) (76.4) (8.4) (5.2) 472.5 425.7
====== ====== ====== ====== ===== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Statement of Consolidated Income
Unaudited [Millions of Dollars]
For the Year Ended December 31 1995 1996 1997 1998 1999
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 707.0 728.7 756.2 985.6 1183.0
Surrender charges 31.5 40.9 45.4 91.5 110.2
Mortality assessments 171.7 180.8 186.4 380.1 496.4
Expense assessments 397.1 491.8 600.3 803.0 930.9
Health premiums 807.0 790.4 572.6 635.1 698.5
Investment advisory fees 125.6 180.8 204.9 227.1 223.8
Other revenue and fees 112.9 138.2 157.3 261.0 344.5
Net investment income 1979.7 2087.9 2250.8 2681.4 2807.5
Earnings in Unconsolidated Affiliates 13.9 1.4 2.1 3.3 5.8
------ ------ ------ ------ ------
Operating Revenue 4346.3 4641.1 4775.9 6068.0 6800.7
------ ------ ------ ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 868.5 835.7 1090.2 1237.7 1546.6
Div accum & div to policyholders 32.6 33.4 29.7 78.0 88.4
Interest credited to policy bal. 1130.1 1167.2 1238.7 1446.2 1510.4
Health policy benefits 820.1 673.6 833.1 566.9 659.7
Underwriting, acquisition,
insurance and other expenses 1247.0 1430.8 1572.9 1888.7 2267.6
Interest 72.5 84.7 92.5 117.1 133.7
------ ------ ------ ------ ------
Total Benefits and Expenses 4170.9 4225.4 4857.2 5334.6 6206.4
------ ------ ------ ------ ------
Income from Operations Before Tax 175.5 415.7 (81.3) 733.4 594.4
Federal income taxes 34.6 116.9 (30.6) 203.0 118.9
------ ------ ------ ------ ------
Income from Continuing Operations 140.8 298.8 (50.6) 530.4 475.5
Discontinued Operations 180.8 157.2 911.8
Restructuring charges (34.3) (18.9)
Realized gains on investments 102.2 57.6 72.9 13.7 3.8
------ ------ ------ ------ ------
Realized gains on sale of subsidiary 58.3
Net Income 482.2 513.6 934.0 509.8 460.4
------ ------ ------ ------ ------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Dec Mar Jun Sep Dec Mar Jun
1997 1998 1998 1998 1998 1999 1999
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 213.4 205.2 201.5 230.8 348.0 284.2 274.0
Surrender charges 11.1 21.8 21.3 21.5 26.9 25.5 27.1
Mortality assessments 48.9 89.0 93.4 67.7 130.0 137.3 122.2
Expense assessments 160.4 189.1 213.8 201.9 198.2 215.3 231.5
Health premiums 131.8 142.4 172.5 155.8 164.5 154.9 160.3
Investment advisory fees 52.6 58.0 59.0 52.5 57.5 58.8 56.3
Other revenue and fees 50.5 58.7 61.1 64.8 76.4 86.4 109.0
Net investment income 585.1 658.4 658.7 649.6 714.7 709.5 700.8
Earnings in Unconsolidated Affiliates 0.5 1.5 0.7 (0.2) 1.3 1.6 1.1
------ ------ ------ ------ ------ ------ ------
Operating Revenue 1254.3 1424.1 1482.0 1444.3 1717.6 1673.4 1682.4
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 442.4 254.8 278.6 264.3 440.0 344.6 335.5
Div accum & div to policyholders 4.6 19.6 9.8 20.7 27.9 21.5 22.5
Interest credited to policy bal. 305.0 378.6 348.5 338.5 380.6 375.1 377.1
Health policy benefits 290.2 134.3 158.9 142.6 131.0 145.5 166.6
Underwriting, acquisition,
insurance and other expenses 403.4 439.0 470.2 472.3 507.2 534.2 542.0
Interest 22.5 23.4 27.7 32.5 33.5 33.1 32.6
------ ------ ------ ------ ------ ------ ------
Total Benefits and Expenses 1468.1 1249.6 1293.8 1271.0 1520.3 1454.1 1476.3
------ ------ ------ ------ ------ ------ ------
Income from Operations Before Tax/Min Int. (213.8) 174.5 188.2 173.4 197.4 219.3 206.1
Federal income taxes (47.2) 46.4 56.0 42.6 58.0 63.6 54.2
------ ------ ------ ------ ------ ------ ------
Inc from Operations Before Min Int (166.6) 128.1 132.2 130.7 139.4 155.7 151.8
Minority Interest
------ ------ ------ ------ ------ ------ ------
Income from Operations (166.6) 128.1 132.2 130.7 139.4 155.7 151.8
Restructuring charges (20.0) (14.3) (12.1)
Realized gains on investments 28.9 13.9 16.5 (17.3) 0.5 1.5 (3.5)
------ ------ ------ ------ ------ ------ ------
Net Income (137.7) 122.0 148.7 113.4 125.6 145.1 148.4
====== ====== ====== ====== ====== ====== ======
<CAPTION>
Sep Dec Mar Jun Sep
1999 1999 2000 2000 2000
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 263.8 361.1 331.2 337.1 339.0
Surrender charges 28.4 29.2 28.7 29.8 25.9
Mortality assessments 118.2 118.7 118.5 122.5 125.9
Expense assessments 245.9 238.3 261.1 258.6 273.4
Health premiums 149.6 233.6 58.4 144.0 117.9
Investment advisory fees 54.6 54.1 54.0 52.2 53.3
Other revenue and fees 77.9 71.2 106.1 88.7 106.0
Net investment income 697.1 700.1 711.1 673.8 690.0
Earnings in Unconsolidated Affiliates 1.2 1.8 1.0 (3.6) 1.6
------ ------ ------ ------ ------
Operating Revenue 1636.7 1808.2 1670.2 1703.0 1733.1
------ ------ ------ ------ ------
Benefits and Expenses
Ins. benefits paid or provided:
Life and annuity policy benefits 294.0 572.5 356.1 370.1 390.2
Div accum & div to policyholders 21.2 23.3 21.7 20.2 18.2
Interest credited to policy bal. 369.7 388.5 373.9 366.8 362.0
Health policy benefits 189.8 157.8 114.3 119.9 123.0
Underwriting, acquisition,
insurance and other expenses 546.3 645.1 535.9 549.5 544.3
Interest 33.3 34.7 36.3 35.4 34.4
------ ------ ------ ------ ------
Total Benefits and Expenses 1454.1 1821.8 1438.2 1461.9 1472.2
------ ------ ------ ------ ------
Income from Operations Before Tax/Min Int. 182.6 (13.6) 232.0 241.1 260.8
Federal income taxes 51.2 (50.2) 61.6 67.9 70.1
------ ------ ------ ------ ------
Inc from Operations Before Min Int 131.4 36.6 170.4 173.2 190.7
Minority Interest (0.2) 0.2 0.0
------ ------ ------ ------ ------
Income from Operations 131.4 36.6 170.6 173.0 190.7
Restructuring charges (3.2) (3.6) (2.7) (40.5)
Realized gains on investments 4.1 1.6 (0.4) (6.7) (11.6)
------ ------ ------ ------ ------
Net Income 132.3 34.6 170.2 163.6 138.6
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Life Insurance Annuities Lincoln UK Reinsurance
------------------ ------------------ ----------------- ------------------
ASSETS Sep Dec Sep Dec Sep Dec Sep Dec
2000 1999 2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments
Corporate bonds 7,481.7 7,231.7 8,120.2 8,994.0 310.6 386.5 2,473.7 2,378.3
U.S. government bonds 86.7 83.7 19.9 21.1 248.0 226.2
Foreign government bonds 145.0 169.9 124.2 216.1 454.7 395.3 81.3 82.1
Asset/Mortgage backed securities 1,152.6 1,193.4 2,222.6 2,486.3 262.9 263.6
State and municipal bonds 7.8 7.7 6.2 6.6 0.3 0.3
Preferred stocks-redeemable 27.2 26.8 115.8 112.2 4.1 3.8
Common stocks 9.9 15.0 271.4 315.2 2.2 2.2
Preferred stocks-equity 10.8 13.7 44.9 44.1 0.0 0.0
Mortgage loans 1,929.9 1,987.9 2,134.3 2,275.9 0.3 0.4 348.7 315.3
Real estate 0.3 0.4
Policy loans 1,416.7 1,389.1 508.3 490.9 10.7 12.5
Other long-term investments 13.8 3.6 0.9 7.5 26.8 35.0
-------- -------- -------- -------- ------- ------- ------- -------
Total Investments 12,282.1 12,122.5 13,297.2 14,654.8 1,048.0 1,110.2 3,447.9 3,307.0
Intercompany investments 1,593.0 1,195.8 3,179.8 2,730.9 627.8 594.0
Invest in unconsol affiliates 5.8 25.8
Cash and invested cash (45.8) (14.4) (147.5) (130.8) 290.2 258.2 14.0 141.2
Property and equipment 5.1 3.0 0.2 52.0 56.7 12.7 10.2
Premium and fees receivable 10.4 26.0 0.1 0.1 185.7 190.3
Accrued investment income 213.1 193.1 194.8 202.5 19.9 20.4 51.8 52.3
Assets held in separate accounts 1,264.7 1,039.3 42,698.7 41,770.5 6,499.4 7,220.4
Federal income tax recoverable
Amount recoverable from reinsurers 2,164.3 2,291.0 137.1 133.5 1,651.1 1,710.3
Deferred acquisition costs 1,052.3 901.4 833.9 811.0 637.5 679.7 440.7 331.3
Other intangible assets 1,071.0 1,159.7 179.0 193.6 270.3 301.8 13.2 14.2
Goodwill 884.7 902.4 45.5 44.6 13.0 46.5 34.1 97.9
Other 214.4 121.4 107.5 3.4 36.1 18.9 317.3 283.1
-------- -------- -------- -------- ------- ------- ------- -------
Total Assets 20,709.1 19,941.3 60,526.5 60,414.0 8,866.6 9,712.8 6,802.1 6,757.7
======== ======== ======== ======== ======= ======= ======= =======
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Investment Corporate and Consolidating
Management Other Operations Adjustments Consolidated
------------------ ------------------ ----------------- ------------------
ASSETS Sep Dec Sep Dec Sep Dec Sep Dec
2000 1999 2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments
Corporate bonds 336.7 383.3 2,341.9 1,745.6 21,064.7 21,119.5
U.S. government bonds 0.2 0.3 220.6 206.9 575.5 538.3
Foreign government bonds 472.5 584.2 1,277.7 1,447.5
Asset/Mortgage backed securities 49.6 59.6 484.9 401.0 4,172.5 4,404.0
State and municipal bonds 14.3 14.7
Preferred stocks-redeemable 9.5 9.2 3.0 12.7 159.5 164.7
Common stocks 196.5 182.0 479.9 514.5
Preferred stocks-equity 2.3 2.0 32.3 29.7 90.3 89.5
Mortgage loans 97.5 113.9 256.5 42.1 4,767.3 4,735.4
Real estate 298.4 256.3 (1.1) (0.4) 297.6 256.2
Policy loans 1,935.6 1,892.4
Other long-term investments 5.4 1,679.1 1,601.6 (1,250.0) (1,251.3) 470.5 401.8
-------- -------- -------- -------- ------- ------- ------- -------
Total Investments 495.7 573.6 5,985.6 5,062.1 (1,251.2) (1,251.7) 35,305.4 35,578.4
Intercompany investments 220.9 208.4 (494.6) 310.1 (5,126.9) (5,039.2) 0.0 0.0
Invest in unconsol affiliates 5.8 25.8
Cash and invested cash 72.2 55.5 1,252.8 1,809.2 (223.0) 1,435.9 1,895.9
Property and equipment 21.6 21.5 122.2 112.4 213.8 203.8
Premium and fees receivable 43.8 52.2 0.8 1.3 0.0 (10.3) 240.8 259.6
Accrued investment income 8.3 8.4 81.2 56.4 569.2 533.2
Assets held in separate accounts 1.8 3,948.1 3,622.3 54,410.9 53,654.2
Federal income tax recoverable 267.3 345.0 267.3 345.0
Amount recoverable from reinsurers 31.3 28.8 (209.0) (209.3) 3,774.7 3,954.3
Deferred acquisition costs 3.0 3.4 80.5 73.5 3,048.0 2,800.3
Other intangible assets 64.9 77.1 1,598.4 1,746.5
Goodwill 320.9 333.2 0.2 (1.6) (1.7) 1,296.6 1,423.0
Other 195.3 153.2 515.2 327.4 (309.4) (231.8) 1,076.4 675.7
-------- -------- -------- -------- ------- ------- ------- -------
Total Assets 1,443.6 1,483.1 7,497.5 7,712.9 (2,602.3) (2,926.0)103,243.1 103,095.7
======== ======== ======== ======== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Business Segments to Consolidated Balance Sheets
Unaudited [Millions of Dollars]
Life Insurance Annuities Lincoln UK Reinsurance
--------------------- ------------------ ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES and SHAREHOLDERS' EQUITY Sep Dec Sep Dec Sep Dec Sep Dec
2000 1999 2000 1999 2000 1999 2000 1999
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 12671.2 12370.2 2531.5 2511.8 1519.9 1548.0 889.0 768.7
Premium deposit funds 2987.6 3249.1 13684.9 14844.7 34.0 55.2 790.3 839.6
Participating policyholders' funds 135.4 132.0
Other policyholders' funds 494.1 466.1 6.6 6.4
Unpaid claims - life and health 93.7 103.9 4.0 3.4 37.4 43.0 1067.3 1119.0
Health reserves 0.1 0.1 50.2 51.8 2440.7 2429.6
Unearned premiums 0.1 0.1 51.9 74.8
Liab related to separate accounts 1264.7 1039.3 42698.7 41770.5 6499.4 7220.4
-------- -------- -------- -------- -------- -------- -------- --------
Total Insurance and Inv Contract Liabilities 17646.8 17360.8 58919.0 59130.4 8140.9 8918.5 5245.7 5238.2
Federal income taxes (189.1) (272.1) (147.6) (203.0) 32.3 72.7 (11.0) (15.6)
Short-term debt 0.3 201.7 161.0
Long-term debt
Minority Interest in pref. securities of sub.
Other liabilities 499.1 110.9 327.5 285.7 179.5 154.1 286.5 328.7
-------- -------- -------- -------- -------- -------- -------- --------
Total Liabilities 17956.7 17199.9 59098.8 59213.1 8352.8 9145.3 5722.9 5712.3
-------- -------- -------- -------- -------- -------- -------- --------
Net unrealized gains on securities (119.6) (144.3) (83.0) (105.0) 43.5 46.4 (16.0) (40.1)
Other shareholders' equity 2872.0 2885.7 1510.7 1305.8 470.4 521.1 1095.2 1085.4
-------- -------- -------- -------- -------- -------- -------- --------
Shareholders' Equity 2752.4 2741.3 1427.6 1200.9 513.8 567.5 1079.2 1045.4
-------- -------- -------- -------- -------- -------- -------- --------
Total Liabilities and S/Hs' Equity 20709.1 19941.3 60526.5 60414.0 8866.6 9712.8 6802.1 6757.7
======== ======== ======== ======== ======== ======== ======== ========
-----------------------------------------------------------------------------------------------------------------------------------
Investment Corporate and Consolidating
Management Other Operations Adjustments Consolidated
--------------------- ------------------- ------------------ -------------------
LIABILITIES and SHAREHOLDERS' EQUITY Sep Dec Sep Dec Sep Dec Sep Dec
2000 1999 2000 1999 2000 1999 2000 1999
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves (111.5) (127.4) 17500.0 17071.4
Premium deposit funds 575.4 635.4 18072.1 19624.1
Participating policyholders' funds 135.4 132.0
Other policyholders' funds 500.7 472.6
Unpaid claims - life and health 0.4 0.5 (0.0) (0.0) 1202.8 1269.8
Health reserves 29.3 26.2 2520.2 2507.8
Unearned premiums (0.2) 1.0 51.8 75.8
Liab related to separate accounts 1.8 3948.1 3622.3 54410.9 53654.2
-------- -------- -------- -------- -------- -------- -------- --------
Total Insurance and Inv Contract Liabilities 29.6 29.5 4412.0 4130.4 94394.0 94807.7
Federal income taxes 34.6 33.4 3.5 27.8 277.4 356.8
Short-term debt 355.7 677.4 (227.1) (378.5) 330.3 460.2
Long-term debt 1962.2 1962.0 (1250.0) (1250.0) 712.2 712.0
Minority Interest in pref. securities of sub. 745.0 745.0 745.0 745.0
Other liabilities 853.5 886.2 1050.4 1069.5 (673.5) (728.3) 2522.9 2107.0
-------- -------- -------- -------- -------- -------- -------- --------
Total Liabilities 888.1 919.7 4146.5 4511.1 2538.7 2130.4 98704.5 98831.9
-------- -------- -------- -------- -------- -------- -------- --------
Net unrealized gains on securities (3.3) (3.2) (151.8) (201.8) (7.5) (17.8) (337.7) (465.7)
Other shareholders' equity 558.8 566.6 3502.8 3403.6 (5133.5) (5038.7) 4876.3 4729.6
-------- -------- -------- -------- -------- -------- -------- --------
Shareholders' Equity 555.5 563.4 3351.0 3201.8 (5141.0) (5056.5) 4538.6 4263.9
-------- -------- -------- -------- -------- -------- -------- --------
Total Liabilities and S/Hs' Equity 1443.6 1483.1 7497.5 7712.9 (2602.3) (2926.0) 103243.1 103095.7
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Five Year Comparative Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
ASSETS 1995 1996 1997 1998 1999
------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments
Corporate bonds 14492.5 15451.0 16633.3 22505.2 21119.5
U.S. government bonds 768.0 1305.1 662.4 1134.6 538.3
Foreign government bonds 1354.7 1781.4 1804.4 1321.2 1447.5
Mortgage backed securities 5248.5 5144.5 4529.3 5080.5 4404.0
State and municipal bonds 12.4 237.2 241.4 16.7 14.7
Preferred stocks-redeemable 42.2 177.4 195.5 174.6 164.7
Common stocks 665.5 486.3 572.3 463.1 514.5
Preferred stocks-equity 61.7 71.2 88.2 79.8 89.5
Mortgage loans 3153.6 3240.7 3288.1 4393.1 4735.4
Real estate 775.9 655.0 576.0 488.7 256.2
Policy loans 580.5 734.8 763.1 1840.0 1892.4
Other long-term investments 358.9 445.3 464.8 432.0 401.8
------- -------- ---------- ---------- ----------
Total Investments 27514.4 29730.0 29818.8 37929.5 35578.4
Invest in unconsol affiliates 5.4 21.0 21.0 18.8 25.8
Cash and invested cash 1452.2 1144.8 3794.7 2433.4 1895.9
Property and equipment 172.5 196.0 189.8 174.8 203.8
Premiums and fees receivable 160.0 237.3 197.5 246.2 259.6
Accrued investment income 395.5 417.6 423.0 528.5 533.2
Assets held in separate accounts 22769.1 28809.1 37138.8 43408.9 53654.2
Federal income taxes recoverable 204.1 345.0
Amounts recoverable from reinsurers 2261.7 2328.5 2350.8 3127.1 3954.3
Deferred acquisition costs 1237.5 1689.7 1623.8 1964.4 2800.3
Other intangible assets 528.9 708.4 613.9 1848.4 1746.5
Goodwill 365.4 351.7 457.7 1484.3 1423.0
Other 708.8 596.4 544.8 468.0 675.7
Discontinued operations - assets 5686.4 5482.7
------- -------- ---------- ---------- ----------
Total Assets 63257.7 71713.4 77174.7 93836.3 103095.7
======= ======== ========== ========== ==========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 7399.1 7812.4 8228.7 16434.2 17071.4
Health reserves 2089.0 2153.0 2300.4 2600.1 2507.8
Unpaid claims-life and health 426.2 438.8 682.0 1043.4 1269.8
Unearned premiums 93.1 53.7 55.3 62.3 75.8
Premium deposit funds 18489.4 20894.6 19803.0 20171.9 19624.1
Participating policyholders' funds 91.9 81.9 79.8 142.7 132.0
Other policyholders' funds 193.0 188.9 180.6 438.4 472.6
Liab related to separate accounts 22769.1 28809.1 37138.8 43408.9 53654.2
------- -------- ---------- ---------- ----------
Total Ins and Inv Contr Liabilities 51550.8 60432.4 68468.5 84301.9 94807.7
Federal income taxes 230.6 161.5 487.8
Short-term debt 426.8 189.0 297.2 314.6 460.2
Long-term debt 659.3 626.3 511.0 712.2 712.0
Minority Interest - pref sec of a sub 315.0 315.0 745.0 745.0
Other liabilities 2061.1 1417.4 2112.2 2374.6 2107.0
Discontinued operations - liabilities 3950.9 4101.9
------- -------- ---------- ---------- ----------
Total Liabilities 58879.6 67243.5 72191.8 88448.3 98831.9
------- -------- ---------- ---------- ----------
S/Hs' equity-unrealized gains-cont op. 485.2 276.4 436.0 552.4 (465.7)
S/Hs' equity-unrealized gains-disc op. 213.0 136.4
S/Hs' equity-foreign currency 13.4 66.4 46.2 49.9 30.0
S/Hs' equity-other 3666.5 3990.7 4500.8 4785.6 4699.6
------- -------- ---------- ---------- ----------
Total Shareholders' Equity 4378.1 4470.0 4982.9 5387.9 4263.9
------- -------- ---------- ---------- ----------
------- -------- ---------- ---------- ----------
Total Liabilities
and Shareholders' Equity 63257.7 71713.4 77174.7 93836.3 103095.7
======= ======== ========== ========== ==========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $17.61 $19.51 $22.48 $23.86 $24.14
Common shares outstanding 209.0 207.9 202.3 202.6 196.0
</TABLE>
<TABLE>
<CAPTION>
Quarterly Balance Sheet
Unaudited [Millions of Dollars except Common Share Data]
Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Corporate bonds 16633.3 19447.1 20034.2 20986.1 22505.2 22450.1
U.S. government bonds 662.4 764.9 812.3 968.1 1134.6 1489.4
Foreign government bonds 1804.4 1897.9 1681.4 1519.2 1321.2 1373.7
Mortgage backed securities 4529.3 5069.2 4908.3 4857.6 5080.5 5068.6
State and municipal bonds 241.4 163.4 162.8 62.9 16.7 16.2
Preferred stocks - redeemable 195.5 190.2 188.0 160.0 174.6 179.8
Common stocks 572.3 732.8 567.6 424.4 463.1 399.5
Preferred stocks-equity 88.2 91.9 81.3 80.5 79.8 81.3
Mortgage loans 3288.1 4556.6 4434.9 4329.3 4393.1 4344.6
Real estate 576.0 567.7 499.0 459.6 488.7 471.8
Policy loans 763.1 1404.8 1499.6 1517.1 1840.0 1842.4
Other long-term investments 464.8 343.5 402.6 399.1 432.0 411.9
------- ------- -------- ------- -------- --------
Total Investments 29818.8 35230 35271.8 35763.9 37929.5 38129.4
Invest in unconsol affiliates 21.0 22.5 23.1 17.4 18.8 20.5
Cash and invested cash 3794.7 2641.7 2414.1 2725.4 2433.4 2327.0
Property and equipment 189.8 191.0 191.7 200.9 174.8 178.0
Premiums and fees receivable 197.5 204.6 250.8 241.6 246.2 241.8
Accrued investment income 423.0 516.8 508.0 547.2 528.5 585.6
Assets held in separate accounts 37138.8 41741.3 42247.2 37559.0 43408.9 44339.4
Federal income taxes recoverable 78.5 188.9 204.1 286.0
Amount recoverable from reinsurers 2350.8 2290.3 2373.5 2454.5 3127.1 3124.5
Deferred acquisition costs 1623.8 1695.7 1749.3 1848.0 1964.4 2112.2
Other intangible assets 613.9 1536.6 1255.0 1241.8 1848.4 1845.4
Goodwill 457.7 1049.3 1168.7 1153.1 1484.3 1404.6
Other 544.8 686.3 722.5 853.5 468.0 755.8
------- ------- -------- ------- -------- --------
Total Assets 77174.7 87884.5 88364.6 84606.2 93836.3 95350.3
======= ======= ======== ======= ======== ========
<CAPTION>
Continued
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Corporate bonds 21888.5 21560.5 21119.5 21188.0 20719.1 21064.7
U.S. government bonds 1367.8 991.0 538.3 572.4 566.2 575.5
Foreign government bonds 1339.7 1369.6 1447.5 1416.4 1377.4 1277.7
Mortgage backed securities 4788.5 4601.2 4404.0 4393.4 4242.4 4172.5
State and municipal bonds 19.1 14.8 14.7 14.7 14.1 14.3
Preferred stocks - redeemable 175.8 171.3 164.7 159.7 159.2 159.5
Common stocks 419.0 423.9 514.5 496.4 467.8 479.9
Preferred stocks-equity 86.7 82.7 89.5 91.3 92.2 90.3
Mortgage loans 4570.5 4772.7 4735.4 4833.9 4783.8 4767.3
Real estate 449.8 280.3 256.2 283.4 282.1 297.6
Policy loans 1847.4 1863.2 1892.4 1896.3 1914.7 1935.6
Other long-term investments 409.9 401.2 401.8 428.8 438.2 470.5
Total Investments 37362.6 36532.4 35578.4 35774.6 35057.2 35305.4
------- ------- -------- -------- -------- --------
Invest in unconsol affiliates 22.3 23.4 25.8 (0.9) 5.8
Cash and invested cash 2151.1 2342.9 1895.9 1510.1 1619.3 1435.9
Property and equipment 180.7 191.9 203.8 207.7 205.5 213.8
Premiums and fees receivable 269.0 296.0 259.6 190.2 247.8 240.8
Accrued investment income 569.1 602.9 533.2 575.0 544.0 569.2
Assets held in separate accounts 47864.3 46228.8 53654.2 56907.6 54924.2 54410.9
Federal income taxes recoverable 478.4 457.3 345.0 300.4 246.1 267.3
Amount recoverable from reinsurers 3121.3 3315.6 3954.3 3851.0 3775.3 3774.7
Deferred acquisition costs 2398.3 2614.5 2800.3 2870.4 2968.0 3048.0
Other intangible assets 1764.9 1760.6 1746.5 1705.5 1646.7 1598.4
Goodwill 1428.3 1435.0 1423.0 1349.6 1335.4 1296.6
Other 651.1 699.3 675.7 1097.8 1279.1 1076.4
------- ------- -------- ------- -------- --------
Total Assets 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1
======= ======= ======== ======== ======== ========
<CAPTION>
Continued
Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 8228.7 12709.8 14103.3 12993.8 16434.2 16590.3
Health reserves 2300.4 2481.9 2547.5 2435.4 2600.1 2562.3
Unpaid claims-life and health 682.0 652.3 740.4 768.4 1043.4 1022.9
Unearned premiums 55.3 55.2 61.3 66.0 62.3 68.8
Premium deposit funds 19803.0 20715.0 19094.9 20210.3 20171.9 20027.8
Participating policyholders' funds 79.8 83.3 74.8 86.3 142.7 132.6
Other policyholders' funds 180.6 235.8 233.8 235.7 438.4 440.4
Liab related to separate accounts 37138.8 41741.3 42247.2 37559.0 43408.9 44339.4
------- ------- -------- ------- -------- --------
Total Ins and Inv Contr Liabilities 68468.5 78674.8 79103.1 74355.0 84301.9 85184.6
Federal income taxes 487.8 3
Short-term debt 297.2 364.9 277.1 354.4 314.6 281.8
Long-term debt 511.0 811.7 811.8 712.0 712.2 712.1
Minority Interest - pref sec of a sub 315.0 315.0 315.0 745.0 745.0 745.0
Other liabilities 2112.2 2663.9 2706.8 2909.2 2374.6 3319.3
------- ------- -------- ------- -------- --------
Total Liabilities 72191.8 82830.3 83213.8 79078.6 88448.3 90242.9
------- ------- -------- ------- -------- --------
S/Hs' equity-unrealized gains-cont. op. 436.0 475.0 469.5 773.7 552.4 254.6
S/Hs' equity-foreign currency 51.4 57.6 57.0 65.0 55.2 35.3
S/Hs' equity-other 4495.5 4521.6 4624.3 4688.9 4780.4 4817.5
------- ------- -------- ------- -------- --------
Total Shareholders' Equity 4982.9 5054.2 5150.8 5527.6 5387.9 5107.4
------- ------- -------- ------- -------- --------
Total Liabilities
and Shareholders' Equity 77174.7 87884.5 88364.6 84606.2 93836.3 95350.3
======= ======= ======== ======= ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $22.48 $22.76 $23.22 $23.47 $23.86 $24.04
Common shares outstanding 202.3 201.2 201.6 202.6 202.6 201.8
<CAPTION>
Continued
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Insurance and Inv Contract Liabilities:
Life and annuity reserves 16536.4 16760.5 17071.4 17172.1 17247.3 17500.0
Health reserves 2528.2 2511.3 2507.8 2547.4 2494.2 2520.2
Unpaid claims-life and health 1064.9 1162.6 1269.8 1177.3 1204.1 1202.8
Unearned premiums 68.7 62.5 75.8 57.1 52.8 51.8
Premium deposit funds 20012.6 19988.9 19624.1 18899.3 18407.2 18072.1
Participating policyholders' funds 125.7 120.2 132.0 130.7 130.4 135.4
Other policyholders' funds 441.2 445.9 472.6 478.9 490.6 500.7
Liab related to separate accounts 47864.3 46228.8 53654.2 56907.6 54924.2 54410.9
------- ------- -------- -------- -------- --------
Total Ins and Inv Contr Liabilities 88642.1 87280.8 94807.7 97370.5 94950.8 94394.0
Federal income taxes
Short-term debt 380.2 367.7 460.2 474.2 355.7 330.3
Long-term debt 712.1 712.0 712.0 712.0 712.1 712.2
Minority Interest - pref sec of a sub 745.0 745.0 745.0 745.0 745.0 745.0
Other liabilities 2964.7 2733.0 2107.0 2697.9 2860.3 2522.9
------- ------- -------- -------- -------- --------
Total Liabilities 93444.1 91838.5 98831.9 101999.6 99623.9 98704.5
------- ------- -------- -------- -------- --------
S/Hs' equity-unrealized gains-cont. op. (1.1) (103.8) (465.7) (411.2) (556.6) (337.7)
S/Hs' equity-foreign currency 25.9 45.4 35.2 28.0 27.1 25.1
S/Hs' equity-other 4792.6 4720.5 4694.3 4723.6 4753.2 4851.2
Total Shareholders' Equity 4817.4 4662.2 4263.9 4340.4 4223.7 4538.6
Total Liabilities
and Shareholders' Equity 98261.4 96500.7 103095.7 106340.0 103847.6 103243.1
======= ======= ======== ======== ======== ========
Shareholders' Equity Per Share
[Book Value, Securities at Cost] $24.18 $24.28 $24.14 $24.58 $25.01 $25.43
Common shares outstanding 199.3 196.3 196.0 193.3 191.1 191.8
</TABLE>
<TABLE>
<CAPTION>
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
1995 1996 1997 1998 1999
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 58.9 63.1 65.8 186.5 236.2
Surrender charges 13.7 14.6 13.1 55.2 69.1
Mortality assessments 152.9 159.7 161.2 350.1 444.6
Expense assessments 27.4 27.3 28.9 146.3 165.9
Other revenue and fees 19.5 18.0 11.3 3.9 16.3
Net investment income 451.3 456.1 453.3 818.6 1016.0
------ ------ ------ ------ ------
Operating Revenue 723.5 738.9 733.6 1560.6 1948.2
------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 128.0 137.3 144.9 372.0 431.0
Div accum & div to policyholders 22.8 24.1 20.4 70.7 81.5
Interest credited to policy bal. 278.6 278.4 270.6 499.9 599.1
Underwriting, acquisition,
insurance and other expenses 200.1 195.7 202.9 338.6 464.7
Interest expense 0.0 0.0 0.0 0.1 0.1
------ ------ ------ ------ ------
Total Benefits & Expenses 629.6 635.5 638.8 1281.3 1576.4
------ ------ ------ ------ ------
Income from Operations Before Tax 94.0 103.4 94.8 279.3 371.8
Federal income taxes 33.6 33.7 27.0 99.0 135.2
------ ------ ------ ------ ------
Income from Operations 60.4 69.7 67.7 180.4 236.6
------ ------ ------ ------ ------
Realized gain on investments 10.6 16.3 6.1 (2.2) (1.0)
Restructuring charges (20.0)
------ ------ ------ ------ ------
Net Income 70.9 86.1 73.9 158.1 235.6
====== ====== ====== ====== ======
Effective tax rate 35.7% 32.6% 28.5% 35.4% 36.4%
Operating Revenue 723.5 738.9 733.6 1560.6 1948.2
Realized gains on investments 17.6 30.7 14.1 (1.8) (2.9)
------ ------ ------ ------ ------
Total Revenue 741.1 769.6 747.8 1558.9 1945.3
====== ====== ====== ====== ======
Average capital 574.7 636.8 618.2 2141.8 2919.1
Return on average capital 10.5% 11.0% 11.0% 8.4% 8.1%
First Year Premiums by Product (Billions)
Lincoln Life
Universal Life 0.225
Variable Universal Life 0.129
Whole Life 0.024
Term 0.004
Subtotal 0.381
Corporate Owned Life Insurance (COLI) 0.015
------ ------ ------ ------ ------
Total Lincoln Life 0.167 0.082 0.071 0.238 0.396
------ ------ ------ ------ ------
First Penn-Pacific
Universal Life 0.114
Term 0.047
------ ------ ------ ------ ------
Total First Penn-Pacific 0.134 0.134 0.154 0.160
------ ------ ------ ------ ------
Total Segment by Product 0.167 0.216 0.205 0.391 0.556
====== ====== ====== ====== ======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.181
Lincoln Financial Distributors 0.215
------ ------ ------ ------ ------
Lincoln Life by Distribution 0.167 0.082 0.071 0.238 0.396
====== ====== ====== ====== ======
Individual Life Insurance In-Force (Billions)
Universal Life & Other 32.227 32.876 32.827 105.837 109.288
Term Insurance 3.824 16.284 30.337 67.076 85.701
------ ------ ------ ------- -------
Total Life Segment In-Force 36.051 49.160 63.164 172.914 194.988
====== ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 15.1 32.6 32.7 41.0 80.2 54.5
Surrender charges 3.4 12.9 12.4 11.8 18.1 15.4
Mortality assessments 42.8 82.6 85.3 60.4 121.8 108.8
Expense assessments 7.3 29.1 29.9 36.5 50.8 39.6
Other revenue and fees 1.8 5.6 (4.5) 0.1 2.8 2.0
Net investment income 112.7 184.8 194.5 188.7 250.6 252.4
------- ------- ------- ------- ------- -------
Operating Revenue 183.1 347.6 350.2 338.5 524.3 472.7
------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Benefits 38.1 77.1 87.7 72.2 135.0 103.6
Div accum & div to policyholders 2.3 17.8 8.3 18.4 26.3 20.3
Interest credited to policy bal. 66.6 132.5 118.3 101.0 148.1 151.6
Underwriting, acquisition,
insurance and other expenses 51.8 71.3 68.8 79.4 119.2 111.4
------- ------- ------- ------- ------- -------
Total Benefits & Expenses 158.8 298.6 283.1 271.0 428.6 386.9
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 24.3 49.0 67.1 67.5 95.8 85.8
Federal income taxes 5.4 16.8 22.8 23.0 36.4 31.3
------- ------- ------- ------- ------- -------
Income from Operations 18.9 32.2 44.3 44.5 59.3 54.5
Realized gain on investments (4.4) 1.8 5.4 (3.2) (6.2) (2.0)
Restructuring charges (20.0)
------- ------- ------- ------- ------- -------
Net Income 14.5 14.0 49.7 41.3 53.1 52.6
======= ======= ======= ======= ======= =======
Effective tax rate 22.1% 34.3% 33.9% 34.0% 38.0% 36.5%
Operating Revenue 183.1 347.6 350.2 338.5 524.3 472.7
Realized gains on investments (5.0) 3.2 9 (4.1) (9.9) (3.6)
------- ------- ------- ------- ------- -------
Total Revenue 178.1 350.8 359.2 334.4 514.4 469.1
======= ======= ======= ======= ======= =======
Average capital 619.7 1754.7 2012.4 2078.0 2722.2 2931.6
Return on average capital 12.2% 7.3% 8.8% 8.6% 8.7% 7.4%
Life Insurance Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 58.2 52.4 71.1 53.0 56.4 50.9
Surrender charges 17.2 17.9 18.7 17.1 17.3 14.7
Mortality assessments 111.4 110.5 113.9 112.2 114.5 116.3
Expense assessments 35.5 42.8 48.0 45.3 44.1 47.0
Other revenue and fees 1.7 8.5 4.0 3.8 3.3 4.1
Net investment income 252.2 253.1 258.4 259.5 258.5 263.8
------- ------- ------- ------- ------- -------
Operating Revenue 476.1 485.2 514.2 490.8 494.2 496.9
------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Benefits 109.0 105.5 112.9 98.4 96.4 95.8
Div accum & div to policyholders 21.0 19.2 21.0 20.4 18.7 16.4
Interest credited to policy bal. 149.2 148.9 149.4 152.8 155.4 160.1
Underwriting, acquisition,
insurance and other expenses 103.8 117.3 132.3 113.7 114.8 110.6
------- ------- ------- ------- ------- -------
Total Benefits & Expenses 383.0 390.9 415.6 385.3 385.3 383.0
------- ------- ------- ------- ------- -------
Income from Operations Before Tax 93.1 94.3 98.5 105.6 108.9 113.9
Federal income taxes 34.3 33.7 35.9 38.5 39.9 41.7
------- ------- ------- ------- ------- -------
Income from Operations 58.8 60.6 62.6 67.1 69.0 72.2
Realized gain on investments (2.4) 1.3 2.2 (2.7) (3.9) 0.4
------- ------- ------- ------- ------- -------
Restructuring charges
Net Income 56.4 61.9 64.8 64.4 65.1 72.6
======= ======= ======= ======= ======= =======
Effective tax rate 36.9% 35.7% 36.4% 36.4% 36.6% 36.6%
Operating Revenue 476.1 485.2 514.2 490.8 494.2 496.9
Realized gains on investments (3.7) 1.9 2.5 (4.4) (6.1) (0.0)
------- ------- ------- ------- ------- -------
Total Revenue 472.5 487.1 516.6 486.4 488.1 496.8
======= ======= ======= ======= ======= =======
Average capital 2959.1 2893.7 2891.9 2772.4 2796.0 2831.8
Return on average capital 7.9% 8.4% 8.7% 9.7% 9.9% 10.2%
First Year Premiums by Product (Billions) Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
------- ------- ------- ------- ------- -------
Lincoln Life
Universal Life 0.043
Variable Universal Life 0.027
Whole Life 0.004
Term 0.000
------- ------- ------- ------- ------- -------
Subtotal 0.075
Corporate Owned Life Insurance (COLI) 0.002
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.018 0.040 0.049 0.044 0.103 0.077
First Penn-Pacific
Universal Life 0.029
Term 0.013
Total First Penn-Pacific 0.034 0.031 0.039 0.040 0.043 0.042
------- ------- ------- ------- ------- -------
Total Segment by Product 0.052 0.072 0.088 0.084 0.147 0.119
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.039
Lincoln Financial Distributors 0.038
Lincoln Life by Distribution 0.018 0.040 0.049 0.044 0.103 0.077
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 32.827 68.799 69.249 69.785 105.837 105.09
Term Insurance 30.337 39.985 45.944 52.057 67.076 73.452
------- ------- ------- ------- ------- -------
Total Segment In-Force 63.164 108.784 115.193 121.842 172.914 178.542
======= ======= ======= ======= ======= =======
First Year Premiums by Product (Billions) Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- -------
Lincoln Life
Universal Life 0.051 0.044 0.086 0.046 0.042 0.047
Variable Universal Life 0.024 0.027 0.052 0.042 0.043 0.052
Whole Life 0.005 0.006 0.008 0.004 0.005 0.006
Term 0.001 0.001 0.001 0.001 0.001 0.000
------- ------- ------- ------- ------- -------
Subtotal 0.081 0.078 0.147 0.093 0.089 0.105
Corporate Owned Life Insurance (COLI) 0.007 0.002 0.004 0.013 0.019 0.006
------- ------- ------- ------- ------- -------
Total Lincoln Life 0.088 0.081 0.151 0.105 0.109 0.111
First Penn-Pacific
Universal Life 0.029 0.030 0.026 0.026 0.021 0.024
Term 0.012 0.011 0.011 0.013 0.013 0.010
Total First Penn-Pacific 0.040 0.041 0.037 0.039 0.034 0.035
------- ------- ------- ------- ------- -------
Total Segment by Product 0.128 0.121 0.188 0.144 0.142 0.145
======= ======= ======= ======= ======= =======
First Year Premiums by Distribution (Billions)
Lincoln Financial Advisors 0.033 0.038 0.071 0.044 0.035 0.050
Lincoln Financial Distributors 0.055 0.043 0.080 0.061 0.073 0.061
Lincoln Life by Distribution 0.088 0.081 0.151 0.105 0.109 0.111
======= ======= ======= ======= ======= =======
Individual Insurance In-Force (Billions)
Universal Life & Other 106.047 106.945 109.288 108.817 110.448 112.884
Term Insurance 78.431 81.963 85.701 92.857 97.039 98.424
------- ------- ------- ------- ------- -------
Total Segment In-Force 184.478 188.908 194.988 201.674 207.487 211.308
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Life Insurance Segment
Life Insurance Account Values
Unaudited [Billions of Dollars]
1995 1996 1997 1998 1999
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Lincoln Life
Universal Life-Beg of Year 1.539 1.591 1.618 1.557 5.169
Deposits 0.175 0.165 0.141 0.531 0.864
Withdrawals (including charges) & deaths (0.220) (0.234) (0.295) (0.586) (0.879)
---------- ---------- --------- --------- ---------
Net cash flows (including charges) (0.045) (0.069) (0.154) (0.055) (0.015)
Interest credited 0.096 0.097 0.093 0.289 0.304
Acq of new business/companies 0.000 0.000 0.000 3.378 0.000
---------- ---------- --------- --------- ---------
Universal Life-End of Year (1) 1.591 1.618 1.557 5.169 5.457
---------- ---------- --------- --------- ---------
Variable Universal Life-Beg of Year 0.155 0.239 0.339 0.480 1.200
Deposits 0.067 0.095 0.106 0.193 0.326
Withdrawals (including charges) & deaths (0.023) (0.030) (0.040) (0.100) (0.182)
---------- ---------- --------- --------- ---------
Net cash flows (including charges) 0.044 0.065 0.065 0.093 0.144
Invest inc & chg in mkt value 0.040 0.035 0.076 0.105 0.370
Acq of new business/transfers between segments 0.000 0.000 0.000 0.522 (0.110)
---------- ---------- --------- --------- ---------
Variable Universal Life -End of Year 0.239 0.339 0.480 1.200 1.605
---------- ---------- --------- --------- ---------
Interest Sensitive Whole Life - Beg of Year 1.784
Deposits 0.340 0.355
Withdrawals (including charges) & deaths (0.294) (0.285)
---------- ---------- --------- --------- ---------
Net cash flows (including charges) 0.046 0.070
Interest credited 0.096 0.109
Acq of new business/companies 1.642
---------- ---------- --------- --------- ---------
Int Sensitive Whole Life-End of Year 1.784 1.963
---------- ---------- --------- --------- ---------
Total Lincoln Life -Beg of Year 1.694 1.830 1.957 2.037 8.153
Deposits 0.241 0.260 0.247 1.064 1.546
Withdrawals (including charges) & deaths (0.242) (0.264) (0.336) (0.979) (1.346)
---------- ---------- --------- --------- ---------
Net cash flows (including charges) (0.001) (0.004) (0.089) 0.084 0.200
Invest inc & chg in mkt value 0.137 0.132 0.168 0.490 0.782
Acq of new business/transfers between segments 5.542 (0.110)
---------- ---------- --------- --------- ---------
Total Lincoln Life - End of Year 1.830 1.957 2.037 8.153 9.025
---------- ---------- --------- --------- ---------
VUL Under Agree -included above 0.631 0.704
First Penn-Pacific (FPP)
Universal Life-Beg of Year 0.699 0.800 0.911 1.001 1.090
Deposits 0.132 0.145 0.137 0.144 0.152
Withdrawals (including charges) & deaths (0.078) (0.085) (0.104) (0.116) (0.117)
---------- ---------- --------- --------- --------
Net cash flows (including charges) 0.054 0.060 0.033 0.028 0.035
Interest credited 0.046 0.051 0.056 0.061 0.067
---------- ---------- --------- --------- --------
FPP Universal Life-End of Year 0.800 0.911 1.001 1.090 1.192
---------- ---------- --------- --------- --------
Total Segment- Life Insurance Account Values--
Beg of Year 2.393 2.629 2.869 3.038 9.243
Deposits 0.373 0.405 0.384 1.207 1.698
Withdrawals (including charges) & deaths (0.320) (0.349) (0.439) (1.095) (1.463)
---------- ---------- --------- --------- --------
Net cash flows (including charges) 0.053 0.056 (0.056) 0.113 0.235
Invest inc & change in market value 0.183 0.183 0.225 0.551 0.849
Acq(sale) of new business/companies 5.542 (0.110)
---------- ---------- --------- --------- --------
Total Segment -End of Year 2.629 2.869 3.038 9.243 10.217
Life Insurance Segment
Annuity Account Values
Unaudited [Billions of Dollars]
1995 1996 1997 1998 1999
---------- ---------- --------- --------- --------
First Penn-Pacific Fixed Annuities
Beg of Year 3.797 4.177 4.148 3.879 3.626
Deposits 0.538 0.164 0.076 0.187 0.291
Withdrawals (incl charges) & deaths (0.384) (0.416) (0.557) (0.635) (0.653)
---------- ---------- --------- --------- --------
Net cash flows 0.154 (0.252) (0.481) (0.448) (0.362)
Interest credited 0.226 0.223 0.213 0.194 0.182
---------- ---------- --------- --------- --------
Fixed Annuities-Gross 4.177 4.148 3.879 3.626 3.446
Reinsurance Ceded (1.778) (1.816) (1.757) (1.606) (1.419)
---------- ---------- --------- --------- --------
End of Year (Net of Ceded) 2.399 2.332 2.123 2.020 2.027
========== ========== ========= ========= ========
(1) Includes fixed investment option of VUL products.
</TABLE>
<TABLE>
<CAPTION>
Life Insurance Segment
Life Insurance Account Values
Unaudited [Billions of Dollars]
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Lincoln Life
Universal Life-Beg of Quarter 1.554 1.557 2.984 3.015 3.089 5.169
Deposits 0.033 0.096 0.115 .0.097 0.223 0.195
Withdrawals (including charges) & deaths (0.054) (0.152) (0.130) (0.066) (0.238) (0.169)
Net cash flows (including charges) (0.020) (0.056) (0.015) 0.031 (0.015) 0.026
-------- -------- -------- -------- -------- --------
Interest credited 0.023 0.046 0.046 0.043 0.153 0.063
Acq of new business/companies 1.437 0.000 0.000 1.941
-------- -------- -------- -------- -------- --------
Universal Life-End of Quarter (1) 1.557 2.984 3.015 3.089 5.169 5.258
-------- -------- -------- -------- -------- --------
Variable Universal Life-Beg of Quarter 0.466 0.480 0.576 0.608 0.561 1.200
Deposits 0.028 0.028 0.035 0.035 0.095 0.077
Withdrawals (including charges) & deaths (0.012) (0.012) (0.013) (0.013) (0.063) (0.031)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.016 0.017 0.022 0.022 0.032 0.046
Invest inc & chg in mkt value (0.002) 0.061 0.010 (0.069) 0.103 0.040
Acq of new business/transfers between segments 0.018 0.000 0.504 (0.110)
-------- -------- -------- -------- -------- --------
Variable Universal Life -End of Quarter 0.480 0.576 0.608 0.561 1.200 1.177
-------- -------- -------- -------- -------- --------
Interest Sensitive Whole Life - Beg of Quarter 1.695 1.730 1.729 1.784
Deposits 0.065 0.073 0.086 0.116 0.083
Withdrawals (including charges) & deaths (0.033) (0.060) (0.116) (0.085) (0.032)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.032 0.013 (0.030) 0.031 0.051
Interest credited 0.021 0.022 0.029 0.024 0.030
Acq of new business/companies 1.642
-------- -------- -------- -------- -------- --------
Int Sensitive Whole Life-End of Quarter 1.695 1.730 1.729 1.784 1.865
-------- -------- -------- -------- -------- --------
Total Lincoln Life -Beg of Quarter 2.020 2.037 5.255 5.353 5.379 8.153
Deposits 0.062 0.189 0.223 0.217 0.434 0.355
Withdrawals (including charges) & deaths (0.066) (0.197) (0.203) (0.195) (0.386) (0.232)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) (0.004) (0.007) 0.020 0.023 0.049 0.123
Invest inc & chg in mkt value 0.020 0.129 0.078 0.004 0.280 0.133
Acq of new business/transfers between segments 3.097 0.000 2.445 (0.110)
-------- -------- -------- -------- -------- --------
Total Lincoln Life - End of Quarter 2.037 5.255 5.353 5.379 8.153 8.299
-------- -------- -------- -------- -------- --------
VUL Under Agree -included above 0.027 0.040 0.044 0.631 0.699
First Penn-Pacific (FPP)
Universal Life-Beg of Quarter 0.980 1.001 1.021 1.041 1.064 1.090
Deposits 0.034 0.031 0.036 0.037 0.040 0.039
Withdrawals (including charges) & deaths (0.027) (0.025) (0.031) (0.030) (0.030) (0.028)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.007 0.005 0.005 0.007 0.011 0.010
Interest credited 0.014 0.015 0.015 0.015 0.016 0.016
-------- -------- -------- -------- -------- --------
FPP Universal Life-End of Quarter 1.001 1.021 1.041 1.064 1.090 1.117
-------- -------- -------- -------- -------- --------
Total Segment- Life Insurance Account Values
Beg of Quarter 3.000 3.038 6.276 6.394 6.443 9.243
Deposits 0.095 0.220 0.259 0.254 0.475 0.394
Withdrawals (including charges) & deaths (0.093) (0.222) (0.233) (0.224) (0.415) (0.261)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.003 (0.002) 0.025 0.030 0.060 0.133
Invest inc & change in market value 0.035 0.143 0.093 0.019 0.295 0.149
Acq(sale) of new business/companies 0.000 3.097 0.000 0.000 2.445 (0.110)
-------- -------- -------- -------- -------- --------
Total Segment -End of Quarter 3.038 6.276 6.394 6.443 9.243 9.416
======== ======== ======== ======== ======== ========
<CAPTION>
Life Insurance Segment
Life Insurance Account Values
Unaudited [Billions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Lincoln Life
Universal Life-Beg of Quarter 5.258 5.295 5.352 5.457 5.521 5.557
Deposits 0.200 0.199 0.271 0.216 0.182 0.192
Withdrawals (including charges) & deaths (0.253) (0.216) (0.241) (0.229) (0.223) (0.195)
Net cash flows (including charges) (0.053) (0.017) 0.030 (0.012) (0.041) (0.003)
-------- -------- -------- -------- -------- --------
Interest credited 0.090 0.074 0.076 0.076 0.077 0.078
Acq of new business/companies 0.000
-------- -------- -------- -------- -------- --------
Universal Life-End of Quarter (1) 5.295 5.352 5.457 5.521 5.557 5.633
-------- -------- -------- -------- -------- --------
Variable Universal Life-Beg of Quarter 1.177 1.298 1.285 1.605 1.771 1.764
Deposits 0.068 0.074 0.107 0.112 0.128 0.123
Withdrawals (including charges) & deaths (0.033) (0.069) (0.049) (0.051) (0.061) (0.073)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.035 0.005 0.058 0.061 0.067 0.050
Invest inc & chg in mkt value 0.087 (0.018) 0.262 0.105 (0.074) (0.001)
Acq of new business/transfers between segments 0.000 0.000
-------- -------- -------- -------- -------- --------
Variable Universal Life -End of Quarter 1.298 1.285 1.605 1.771 1.764 1.812
-------- -------- -------- -------- -------- --------
Interest Sensitive Whole Life - Beg of Quarter 1.865 1.895 1.922 1.963 1.970 1.993
Deposits 0.073 0.086 0.113 0.060 0.071 0.079
Withdrawals (including charges) & deaths (0.069) (0.086) (0.098) (0.081) (0.077) (0.073)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.005 0.000 0.015 (0.021) (0.006) 0.005
Interest credited 0.025 0.027 0.026 0.028 0.028 0.027
Acq of new business/companies
-------- -------- -------- -------- -------- --------
Int Sensitive Whole Life-End of Quarter 1.895 1.922 1.963 1.970 1.993 2.026
-------- -------- -------- -------- -------- --------
Total Lincoln Life -Beg of Quarter 8.299 8.488 8.558 9.025 9.262 9.314
Deposits 0.341 0.359 0.491 0.388 0.381 0.394
Withdrawals (including charges) & deaths (0.355) (0.371) (0.388) (0.360) (0.360) (0.341)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) (0.014) (0.012) 0.103 0.028 0.021 0.052
Invest inc & chg in mkt value 0.202 0.083 0.364 0.209 0.031 0.105
Acq of new business/transfers between segments
-------- -------- -------- -------- -------- --------
Total Lincoln Life - End of Quarter 8.488 8.558 9.025 9.262 9.314 9.471
-------- -------- -------- -------- -------- --------
VUL Under Agree -included above 0.770 0.681 0.704 0.743 0.707 0.698
First Penn-Pacific (FPP)
Universal Life-Beg of Quarter 1.117 1.140 1.167 1.192 1.208 1.224
Deposits 0.038 0.040 0.035 0.035 0.030 0.034
Withdrawals (including charges) & deaths (0.031) (0.029) (0.028) (0.037) (0.032) (0.031)
-------- -------- -------- -------- -------- --------
Net cash flows (including charges) 0.007 0.011 0.008 (0.002) (0.002) 0.004
Interest credited 0.016 0.017 0.017 0.018 0.018 0.018
-------- -------- -------- -------- -------- --------
FPP Universal Life-End of Quarter 1.140 1.167 1.192 1.208 1.224 1.246
-------- -------- -------- -------- -------- --------
Total Segment- Life Insurance Account Values
Beg of Quarter 9.416 9.628 9.726 10.217 10.470 10.538
Deposits 0.379 0.399 0.526 0.424 0.411 0.428
Withdrawals (including charges) & deaths (0.386) (0.401) (0.415) (0.397) (0.392) (0.372)
-------- -------- -------- -------- -------- --------
(0.007) (0.002) 0.111 0.027 0.019 0.056
Net cash flows (including charges)
Invest inc & change in market value 0.219 0.100 0.381 0.227 0.048 0.123
Acq(sale) of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
-------- -------- -------- -------- -------- --------
Total Segment -End of Quarter 9.628 9.726 10.217 10.470 10.538 10.716
======== ======== ======== ======== ======== ========
<CAPTION>
Life Insurance Segment
Annuity Account Values
Unaudited [Billions of Dollars]
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
First Penn-Pacific Fixed Annuities
Beg of Quarter 3.960 3.879 3.814 3.736 3.667 3.626
Deposits 0.018 0.031 0.051 0.046 0.059 0.061
Withdrawals (incl charges) & deaths (0.151) (0.147) (0.177) (0.163) (0.148) (0.138)
-------- -------- -------- -------- -------- --------
Net cash flows (0.133) (0.116) (0.127) (0.117) (0.088) (0.078)
Interest credited 0.052 0.050 0.049 0.048 0.047 0.046
-------- -------- -------- -------- -------- --------
Fixed Annuities-Gross 3.879 3.814 3.736 3.667 3.626 3.594
-------- -------- -------- -------- -------- --------
Reinsurance Ceded (1.757) (1.727) (1.687) (1.647) (1.606) (1.569)
-------- -------- -------- -------- -------- --------
End of Quarter (Net of Ceded) 2.123 2.086 2.049 2.020 2.020 2.025
======== ======== ======== ======== ======== ========
(1) Includes fixed investment option of VUL products.
<CAPTION>
Life Insurance Segment
Annuity Account Values
Unaudited [Billions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Penn-Pacific Fixed Annuities
Beg of Quarter 3.594 3.553 3.493 3.446 3.367 3.246
Deposits 0.079 0.074 0.077 0.059 0.048 0.041
Withdrawals (incl charges) & deaths (0.166) (0.179) (0.170) (0.182) (0.212) (0.182)
-------- -------- -------- -------- -------- --------
Net cash flows (0.087) (0.105) (0.092) (0.124) (0.165) (0.140)
Interest credited 0.046 0.046 0.045 0.044 0.044 0.042
-------- -------- -------- -------- -------- --------
Fixed Annuities-Gross 3.553 3.493 3.446 3.367 3.246 3.148
-------- -------- -------- -------- -------- --------
Reinsurance Ceded (1.524) (1.473) (1.419) (1.363) (1.291) (1.230)
-------- -------- -------- -------- -------- --------
End of Quarter (Net of Ceded) 2.029 2.021 2.027 2.004 1.955 1.918
======== ======== ======== ======== ======== ========
(1) Includes fixed investment option of VUL products.
</TABLE>
<TABLE>
<CAPTION>
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1995 1996 1997 1998 1999
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 116.1 69.1 83.1 53.3 64.9
Surrender charges 16.7 22.1 26.5 30.4 35.0
Expense assessments 217.5 277.1 366.9 459.8 536.2
Other revenue and fees 0.6 0.5 0.1 1.1 8.4
Net investment income 1224.8 1204.7 1305.8 1349.8 1325.4
------ ------ ------ ------ ------
Operating Revenue 1575.7 1573.7 1782.5 1894.3 1969.8
------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 310.6 269.3 291.2 270.9 258.6
Interest credited to policy bal. 794.5 783.8 856.8 848.4 819.9
Underwriting, acquisition,
insurance and other expenses 268.5 317.7 390.8 480.6 531.0
Total Benefits & Expenses 1373.6 1370.8 1538.9 1599.9 1609.5
Income from Operations Before Tax 202.1 202.8 243.7 294.4 360.3
Federal income taxes 44.5 47.0 42.9 50.6 74.4
------ ------ ------ ------ ------
Income from Operations 157.6 155.8 200.7 243.8 285.8
Realized gain on investments 68.3 23.8 33.3 11.9 (7.4)
Restructuring charges 0.0 0.0
------ ------ ------ ------ ------
Net Income 225.9 179.6 234.0 255.6 278.4
====== ====== ====== ====== ======
Effective tax rate 22.0% 23.2% 17.6% 17.2% 20.7%
Operating Revenue 1575.7 1573.7 1782.5 1894.3 1969.8
Realized gains on investments 101.6 36.5 52.6 18.3 (11.4)
------ ------ ------ ------ ------
Total Revenue 1677.3 1610.2 1835.1 1912.6 1958.4
====== ====== ====== ====== ======
Average capital 1036.6 1086.1 1139.8 1397.4 1352.7
Return on average capital 15.2% 14.3% 17.6% 17.4% 21.1%
</TABLE>
<TABLE>
<CAPTION>
Annuities Segment
Income Statements & Operational Data
Unaudited [Millions of Dollars]
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
1997 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 29.8 14.5 11.9 10.6 16.3 14.9 15.9 13.1 21 13.3 16.7 18
Surrender charges 6.0 8.0 7.8 7.5 7.1 7.9 8.6 9.4 9.1 10.2 10.3 9.5
Expense assessments 101.5 112.3 119.3 115.6 112.6 119.8 133.3 142.6 140.5 155 155.7 163.3
Other revenue and fees 0.0 0.0 0.1 (0.1) 1.1 2.6 1.9 (2.5) 6.3 2.1 0.9 4.4
Net investment income 321.9 341 338.7 334.5 335.6 336.5 332.6 327.5 328.8 325.8 309.8 312.1
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Operating Revenue 459.3 475.8 477.6 468.2 472.7 481.7 492.4 490.0 505.7 506.4 493.5 507.3
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Benefits and Expenses
Benefits paid or provided:
Benefits 82.9 66.3 68.6 67.2 68.8 61.9 64.6 55 77.2 61.6 65.7 68.3
Interest credited to policy
balances 208.5 221.8 209.8 209.3 207.4 202.3 206.7 204 206.9 201.6 192.7 179.2
Underwriting, acquisition,
insurance and other expenses 99.5 114.8 119.7 121.0 125.0 130.9 133.3 138.7 128.1 136.9 135.0 142.0
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total Benefits & Expenses 390.8 403.0 398.2 397.5 401.3 395.1 404.7 397.6 412.2 400.1 393.3 389.6
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Income from Operations Before Tax 68.5 72.8 79.5 70.7 71.4 86.6 87.7 92.4 93.5 106.3 100.1 117.8
Federal income taxes 7.2 11.4 15.8 11.0 12.4 15.5 15.4 21.3 22.2 21.3 19.8 19.3
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Income from Operations 61.3 61.4 63.7 59.7 59.0 71.1 72.4 71.1 71.3 85.0 80.4 98.5
Realized gain on investments 14.6 5.7 11.5 (7.3) 1.9 2.5 0.0 (6.8) (3.1) 3.1 0.1 (8.6)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Net Income 75.9 67.1 75.2 52.4 60.9 73.6 72.3 64.3 68.1 88.1 80.5 89.9
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======
Effective tax rate 10.50% 15.70% 19.90% 15.50% 17.40% 17.90% 17.50% 23.10% 23.80% 20.10% 19.70% 16.40%
Operating Revenue 459.3 475.8 477.6 468.2 472.7 481.7 492.4 490.0 505.7 506.4 493.5 507.3
Realized gains on investments 23.0 10.4 16.2 (11.2) 2.9 3.9 0.0 (10.5) (4.8) 4.7 0.2 (13.2)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total Revenue 482.3 486.1 493.8 457 475.7 485.6 492.3 479.5 500.9 511.1 493.7 494.1
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======
Average capital 1170.4 1379.1 1394.5 1491.6 1324.5 1397.4 1379.9 1281.9 1351.5 1319.7 1466.0 1454.0
Return on average capital 21.0% 17.8% 18.3% 16.0% 17.8% 20.4% 21.0% 22.2% 21.1% 25.8% 21.9% 27.1%
</TABLE>
<TABLE>
<CAPTION>
Annuities Segment
Annuity Account Values
Unaudited [Billions of Dollars]
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Fixed Annuities-Beg of Year 9.781 10.468 13.486 13.335 14.485
Gross Deposits 1.844 1.689 1.556 1.265 2.271
Withdrawals (incl charges) & deaths (1.294) (1.500) (1.663) (1.833) (1.867)
-------- -------- -------- -------- --------
Net cash flows 0.550 0.189 (0.107) (0.568) 0.404
Transfer from (to) var annuities (0.462) (0.688) (1.336) (0.356) (0.783)
Interest credited 0.599 0.648 0.765 0.800 0.658
Acq of new business/companies 2.869 0.527 1.274
-------- -------- -------- -------- --------
Fixed Annuities-End of Year 10.468 13.486 13.335 14.485 14.764
-------- -------- -------- -------- --------
Fixed Annuities Incremental Deposits * 1.349 1.246 1.336 1.078 2.019
Variable Annuities-Beg of Year 11.028 15.673 20.383 27.346 33.358
Gross Deposits 1.873 2.746 2.695 2.791 2.553
Withdrawals (incl charges) & deaths (0.930) (1.454) (2.038) (3.019) (3.760)
-------- -------- -------- -------- --------
Net cash flows 0.943 1.292 0.657 (0.228) (1.207)
Transfer from (to) fixed annuities 0.462 0.689 1.335 0.389 0.787
Invest inc & change in mkt value 3.240 2.729 4.971 5.414 8.555
Acq(sale) of new business/companies 0.437
-------- -------- -------- -------- --------
Var Annuities-End of Year 15.673 20.383 27.346 33.358 41.493
-------- -------- -------- -------- --------
Variable Annuities Incremental Deposits * 1.821 2.626 2.585 2.641 2.409
Total Annuities-Beg of Year 20.809 26.141 33.869 40.681 47.843
Gross Deposits 3.717 4.434 4.251 4.056 4.825
Withdrawals (incl charges) & deaths (2.224) (2.953) (3.701) (4.852) (5.628)
-------- -------- -------- -------- --------
Net cash flows 1.493 1.481 0.55 (0.796) (0.803)
Transfers 0.001 (0.001) 0.033 0.004
Interest credited & change in mkt value 3.839 3.377 5.736 6.214 9.213
Acq of new business/companies 2.869 0.527 1.711
-------- -------- -------- -------- --------
Total Annuities-End of Year 26.141 33.869 40.681 47.843 56.257
======== ======== ======== ======== ========
Total Annuities Incremental Deposits * 3.170 3.872 3.921 3.719 4.428
Var Ann Under Agree - Included above 0.649 0.719
-------- -------- -------- -------- --------
Annuities Segment
Life Insurance Account Values
Unaudited [Billions of Dollars]
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
Variable Life-Beg of Year
Deposits 0.017
Withdrawals (including charges) & deaths (0.006)
-------- -------- -------- -------- --------
Net cash flows (including charges) 0.011
Invest inc & chg in mkt value 0.034
Acq of new business/transfers between segments 0.110
-------- -------- -------- -------- --------
Variable Life-End of Year 0.155
======== ======== ======== ======== ========
* Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
</TABLE>
<TABLE>
<CAPTION>
Annuities Segment
Annuity Account Values
Unaudited [Billions of Dollars]
Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Fixed Annuities-Beg of Quarter 13.422 13.335 14.492 14.365 14.456 14.485
Gross Deposits 0.389 0.333 0.357 0.299 0.276 0.428
Withdrawals (incl charges) & deaths (0.443) (0.425) (0.532) (0.415) (0.461) (0.440)
------- ------ ------ ------ ------ ------
Net cash flows (0.054) (0.092) (0.175) (0.116) (0.185) (0.012)
Transfer from (to) var annuities (0.249) (0.223) (0.153) 0.009 0.011 (0.034)
Interest credited 0.190 0.201 0.199 0.198 0.202 0.192
Acq of new business/companies 0.026 1.271 0.002 0.001
------- ------ ------ ------ ------ ------
Fixed Annuities-End of Quarter 13.335 14.492 14.365 14.456 14.485 14.631
------- ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 0.333 0.282 0.298 0.253 0.245 0.401
Variable Annuities-Beg of Quarter 27.055 27.346 32.933 33.458 29.476 33.358
Gross Deposits 0.685 0.701 0.810 0.647 0.633 0.635
Withdrawals (incl charges) & deaths (0.550) (0.694) (0.760) (0.764) (0.801) (0.827)
------- ------ ------ ------ ------ ------
Net cash flows 0.135 0.007 0.050 (0.117) (0.168) (0.192)
Transfer from (to) fixed annuities 0.250 0.226 0.151 (0.016) 0.028 0.034
Invest inc & change in mkt value (0.094) 3.534 0.324 (3.849) 5.405 0.948
Acq(sale) of new business/companies 1.820 (1.383)
------- ------ ------ ------ ------ ------
Var Annuities-End of Quarter 27.346 32.933 33.458 29.476 33.358 34.148
------- ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits 0.653 0.673 0.768 0.615 0.585 0.606
Total Annuities-Beg of Quarter 40.477 40.681 47.425 47.823 43.932 47.843
Gross Deposits 1.074 1.034 1.167 0.946 0.909 1.064
Withdrawals (incl charges) & deaths (0.993) (1.119) (1.292) (1.179) (1.262) (1.268)
------- ------ ------ ------ ------ ------
Net cash flows 0.081 (0.085) (0.125) (0.233) (0.353) (0.204)
Transfers 0.001 0.003 (0.002) (0.007) 0.039
Interest credited & change in mkt value 0.096 3.735 0.523 (3.651) 5.607 1.140
Acq of new business/companies 0.026 3.091 0.002 (1.382)
------- ------ ------ ------ ------ ------
Total Annuities-End of Quarter 40.681 47.425 47.823 43.932 47.843 48.779
======= ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 0.986 0.955 1.066 0.868 0.830 1.007
Var Ann Under Agree - Included above 2.033 2.116 1.836 0.649 0.651
<CAPTION>
Annuities Segment
Annuity Account Values
Unaudited [Billions of Dollars]
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Fixed Annuities-Beg of Quarter 14.631 14.750 14.913 14.764 14.248 13.954
Gross Deposits 0.575 0.604 0.664 0.530 0.442 0.472
Withdrawals (incl charges) & deaths (0.427) (0.388) (0.612) (0.693) (0.584) (0.620)
------- ------ ------ ------ ------ ------
Net cash flows 0.148 0.216 0.052 (0.163) (0.142) (0.148)
Transfer from (to) var annuities (0.211) (0.238) (0.300) (0.550) (0.346) (0.217)
Interest credited 0.182 0.185 0.099 0.197 0.194 0.193
------- ------ ------ ------ ------ ------
Acq of new business/companies
Fixed Annuities-End of Quarter 14.750 14.913 14.764 14.248 13.954 13.782
------- ------ ------ ------ ------ ------
Fixed Annuities Incremental Deposits * 0.543 0.570 0.505 0.501 0.399 0.423
Variable Annuities-Beg of Quarter 34.148 37.233 35.613 41.493 44.640 43.097
Gross Deposits 0.651 0.634 0.634 0.797 0.793 0.729
Withdrawals (incl charges) & deaths (0.912) (0.938) (1.084) (1.210) (1.168) (1.253)
------- ------ ------ ------ ------ ------
Net cash flows (0.261) (0.304) (0.450) (0.413) (0.375) (0.524)
Transfer from (to) fixed annuities 0.213 0.237 0.303 0.549 0.343 0.216
Invest inc & change in mkt value 3.133 (1.553) 6.027 3.011 (1.511) (0.046)
------- ------ ------ ------ ------ ------
Acq(sale) of new business/companies
Var Annuities-End of Quarter 37.233 35.613 41.493 44.640 43.097 42.743
------- ------ ------ ------ ------ ------
Variable Annuities Incremental Deposits 0.622 0.589 0.592 0.732 0.699 0.586
Total Annuities-Beg of Quarter 48.779 51.983 50.526 56.257 58.888 57.051
Gross Deposits 1.226 1.238 1.298 1.327 1.235 1.201
Withdrawals (incl charges) & deaths (1.339) (1.326) (1.696) (1.903) (1.752) (1.873)
------- ------ ------ ------ ------ ------
Net cash flows (0.113) (0.088) (0.398) (0.576) (0.517) (0.672)
Transfers 0.002 (0.001) 0.003 (0.001) (0.003) (0.001)
Interest credited & change in mkt value 3.315 (1.368) 6.126 3.208 (1.317) 0.147
------- ------ ------ ------ ------ ------
Acq of new business/companies
Total Annuities-End of Quarter 51.983 50.526 56.257 58.888 57.051 56.525
======= ====== ====== ====== ====== ======
Total Annuities Incremental Deposits * 1.165 1.159 1.097 1.233 1.098 1.009
Var Ann Under Agree - Included above 0.685 0.639 0.719 0.866 0.868 0.962
<CAPTION>
Annuities Segment
Life Insurance Account Values
Unaudited [Billions of Dollars]
Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Variable Life-Beg of Quarter
Deposits 0.003
Withdrawals (including charges) & deaths (0.002)
------- ------ ------ ------ ------ ------
Net cash flows (including charges) 0.002
Invest inc & chg in mkt value 0.004
Acq of new business/transfers between segments 0.110
------- ------ ------ ------ ------ ------
Variable Life-End of Quarter 0.115
======= ====== ====== ====== ====== ======
<CAPTION>
Annuities Segment
Life Insurance Account Values
Unaudited [Billions of Dollars]
Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Variable Life-Beg of Quarter 0.115 0.130 0.128 0.155 0.169 0.165
Deposits 0.005 0.004 0.005 0.003 0.003 0.004
Withdrawals (including charges) & deaths 0.001 (0.004) (0.001) (0.003) (0.002) (0.003)
------- ------ ------ ------ ------ ------
Net cash flows (including charges) 0.005 0.000 0.004 0.000 0.001 0.001
Invest inc & chg in mkt value 0.010 (0.002) 0.022 0.014 (0.004) (0.001)
------- ------ ------ ------ ------ ------
Acq of new business/transfers between segments
Variable Life-End of Quarter 0.130 0.128 0.155 0.169 0.165 0.166
======= ====== ====== ====== ====== ======
*Incremental Deposits represent gross deposits reduced by transfers from other Lincoln Annuity products.
</TABLE>
<TABLE>
<CAPTION>
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1995 1996 1997 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 122.9 131.8 145.4 156.6 145.1
Surrender charges
Mortality assessments 18.8 21.1 25.2 29.3 27.1
Expense assessments 131.0 153.4 166.1 153.6 182.3
Other revenue and fees 7.9 5.1 3.3 11.2 13.8
Net investment income 71.1 82.0 85.1 87.9 75.3
Equity earnings in unconsol affiliates
--------- --------- --------- --------- ---------
Operating Revenue 351.8 393.3 425.2 438.6 443.6
--------- --------- --------- --------- ---------
Benefits and Expenses
Benefits paid or provided:
Benefits 124.9 133.9 339.6 151.0 306.2
Underwriting, acquisition,
insurance and other expenses 154.0 157.7 184.5 181.9 230.5
--------- --------- --------- --------- ---------
Total Benefits & Expenses 278.9 291.7 524.1 332.9 536.7
--------- --------- --------- --------- ---------
Income from Operations Before Tax 72.8 101.7 (99.0) 105.8 (93.1)
Federal income taxes 27.0 35.7 9.3 34.8 (79.2)
--------- --------- --------- --------- ---------
Income from Operations 45.9 66.0 (108.3) 70.9 (13.9)
Realized gain on investments (0.2) 0.0 1.5 0.8 2.1
Restructuring charges (6.5)
--------- --------- --------- --------- ---------
Net Income 45.7 66.0 (106.8) 71.7 (18.2)
========= ========= ========= ========= =========
Effective tax rate 37.0% 35.1% (9.4%) 32.9% 85.1%
Operating Revenue 351.8 393.3 425.2 438.6 443.6
Realized gains on investments (0.3) (0.2) 2.1 1.1 3.0
--------- --------- --------- --------- ---------
Total Revenue 351.5 393.2 427.3 439.7 446.6
========= ========= ========= ========= =========
Average capital 517.7 601.1 618.1 517.7 551.2
Return on average capital 8.9% 11.0% (17.5%) 13.7% (2.5%)
-----------------------------------------------------------------------------------------------------------------
Unit Linked Assets - Beg of Year 1.320 4.307 5.074 5.643 6.265
Deposits 0.391 0.446 0.569 0.473 0.537
Withdrawals (incl. chgs) & Deaths (0.282) (0.420) (0.503) (0.547) (0.566)
--------- --------- --------- --------- ---------
Net Cash Flows 0.109 0.026 0.066 (0.074) (0.029)
Inv Inc & Chg in Mkt Val 0.488 0.269 0.682 0.662 1.154
Acq of new business/companies 2.472 0.000 0.000 0.000 0.000
Foreign currency adjustment (0.082) 0.472 (0.179) 0.035 (0.170)
========= ========= ========= ========= =========
Unit Linked Assets - End of Year 4.307 5.074 5.643 6.265 7.220
========= ========= ========= ========= =========
Net Initial Commision Values *(Millions) 39.4 47.3 55.4 54.9 51.4
Individual Life Sales (Billions) 2.503 2.704 1.983 2.154 2.274
Individual Life In-force (Billions) 23.509 23.835 25.026 25.002 25.698
Exchange Rate - Dollars to Pounds
For the Year 1.582 1.567 1.644 1.658 1.617
End of Year 1.553 1.713 1.651 1.660 1.615
Claims Paying Rating - S & P** A A BBB BBB-
*Net Initial Commission Value is a measure used by Lincoln UK to measure sales progress and future profitability.
**Prior to the fourth quarter of 1998 the Lincoln UK rating was based on its affiliation with Lincoln National
Corporation.
Subsequent to the fourth quarter of 1998 the rating, provided by S&P reflects Lincoln UK's rating on a stand
alone basis."
</TABLE>
<TABLE>
<CAPTION>
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 41.1 36.9 33.7 33.7 52.3 43.9
Surrender charges
Mortality assessments 6.1 6.3 8.1 7.3 7.6 6.7
Expense assessments 41.7 36.9 54.0 39.0 23.7 43.9
Other revenue and fees 0.2 1.4 7.0 1.2 1.6 2.9
Net investment income 22.9 21.6 21.3 21.4 23.6 21.7
Equity earnings in unconsol affiliates
------ ------ ------ ------ ------ ------
Operating Revenue 111.9 103.2 124.1 102.6 108.7 119.2
------ ------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 231.1 32.9 36.1 36.3 45.7 35.7
Underwriting, acquisition,
insurance and other expenses 53.3 43.7 56.2 44.7 37.3 56.5
------ ------ ------ ------ ------ ------
Total Benefits & Expenses 284.4 76.7 92.3 80.9 83.0 92.2
------ ------ ------ ------ ------ ------
Income from Operations Before Tax (172.5) 26.5 31.8 21.7 25.7 27.0
Federal income taxes (14.6) 9.4 14.6 4.0 6.9 8.9
------ ------ ------ ------ ------ ------
Income from Operations (157.9) 17.2 17.2 17.7 18.8 18.1
Realized gain on investments 0.4 0.2 0.1 0.1 0.4 0.0
Restructuring charges
------ ------ ------ ------ ------ ------
Net Income (157.5) 17.4 17.4 17.8 19.2 18.0
====== ====== ====== ====== ====== ======
Effective tax rate 8.4% 35.3% 45.8% 18.4% 27.0% 33.0%
Operating Revenue 111.9 103.2 124.1 102.6 108.7 119.2
Realized gains on investments 0.6 0.3 0.1 0.2 0.5 (0.1)
------ ------ ------ ------ ------ ------
Total Revenue 112.5 103.5 124.2 102.8 109.2 119.1
====== ====== ====== ====== ====== ======
Average capital 618.4 503.4 511.2 522.6 533.8 519.2
Return on average capital (102.2%) 13.7% 13.5% 13.6% 14.1% 13.9%
----------------------------------------------------------------------------------------------------------------
Unit Linked Assets
Balance-Beg of Quarter (Billions) 5.688 5.643 6.297 6.310 5.711 6.265
Deposits 0.177 0.122 0.100 0.115 0.136 0.131
Withdrawals (incl. chgs) & Deaths (0.180) (0.140) (0.136) (0.133) (0.139) (0.136)
------ ------ ------ ------ ------ ------
Net Cash Flows (0.003) (0.018) (0.035) (0.018) (0.003) (0.005)
Inv Inc & Chg in Mkt Val (0.152) 0.592 0.061 (0.687) 0.696 0.271
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment 0.110 0.080 (0.013) 0.107 (0.139) (0.184)
------ ------ ------ ------ ------ ------
Unit Linked Assets - End of Quarter 5.643 6.297 6.310 5.711 6.265 6.348
====== ====== ====== ====== ====== ======
Net Initial Commision Values *(Millions) 16.340 13.964 13.273 13.177 14.510 11.967
Individual Life Sales (Billions) 0.458 0.489 0.510 0.555 0.600 0.485
Individual Life In-force (Billions) 25.026 25.536 25.838 25.612 25.002 25.246
Exchange Rate - Dollars to Pounds
For the Quarter 1.666 1.646 1.658 1.666 1.661 1.631
End of Quarter 1.651 1.671 1.668 1.700 1.660 1.612
Claims Paying Rating - S & P** A A A A BBB BBB
<CAPTION>
Lincoln UK
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Premiums 29.0 33.5 38.7 39.0 36.3 32.5
Surrender charges
Mortality assessments 7.7 7.7 5.0 6.3 8.0 9.6
Expense assessments 51.9 49.3 37.2 46.5 44.3 52.6
Other revenue and fees 3.5 3.6 3.8 2.4 1.3 2.0
Net investment income 19.6 16.2 17.7 18.9 18.5 16.1
------ ------ ------ ------ ------ ------
Equity earnings in unconsol affiliates
Operating Revenue 111.8 110.3 102.4 113.2 108.4 112.8
------ ------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Benefits 31.5 27.2 211.8 35.0 37.4 51.9
Underwriting, acquisition,
insurance and other expenses 56.4 62.8 54.7 57.8 44.8 46.4
------ ------ ------ ------ ------ ------
Total Benefits & Expenses 87.9 90.1 266.6 92.8 82.2 98.3
------ ------ ------ ------ ------ ------
Income from Operations Before Tax 23.9 20.2 (164.2) 20.4 26.2 14.5
Federal income taxes 4.9 4.0 (97.1) 4.7 6.9 3.9
------ ------ ------ ------ ------ ------
Income from Operations 19.0 16.2 (67.1) 15.7 19.3 10.6
Realized gain on investments 1.0 0.2 1.0 (0.2) (0.1) (0.0)
Restructuring charges (6.5) (40.5)
------ ------ ------ ------ ------ ------
Net Income 20.0 16.4 (72.6) 15.5 19.1 (29.9)
====== ====== ====== ====== ====== ======
Effective tax rate 20.4% 20.0% 59.1% 22.9% 26.4% 27.2%
Operating Revenue 111.8 110.3 102.4 113.2 108.4 112.8
Realized gains on investments 1.4 0.3 1.4 (0.4) (0.2) (0.0)
------ ------ ------ ------ ------ ------
Total Revenue 113.1 110.5 103.8 112.8 108.2 112.8
====== ====== ====== ====== ====== ======
Average capital 526.9 573.5 585.0 516.4 500.8 486.5
Return on average capital 14.4% 11.3% (45.9%) 12.2% 15.4% 8.7%
----------------------------------------------------------------------------------------------------------------
Unit Linked Assets
Balance-Beg of Quarter (Billions) 6.348 6.503 6.568 7.220 7.031 6.726
Deposits 0.119 0.130 0.156 0.159 0.134 0.145
Withdrawals (incl. chgs) & Deaths (0.137) (0.136) (0.158) (0.170) (0.162) (0.159)
------ ------ ------ ------ ------ ------
Net Cash Flows (0.017) (0.005) (0.002) (0.011) (0.028) (0.014)
Inv Inc & Chg in Mkt Val 0.314 (0.214) 0.784 (0.077) 0.047 (0.025)
Acq of new business/companies 0.000 0.000 0.000 0.000 0.000 0.000
Foreign currency adjustment (0.141) 0.284 (0.130) (0.101) (0.324) (0.189)
------ ------ ------ ------ ------ ------
Unit Linked Assets - End of Quarter 6.503 6.568 7.220 7.031 6.726 6.499
====== ====== ====== ====== ====== ======
Net Initial Commision Values *(Millions) 12.407 13.459 13.556 11.522 10.345 9.472
Individual Life Sales (Billions) 0.555 0.571 0.663 0.655 0.581 0.434
Individual Life In-force (Billions) 25.107 26.235 25.698 26.514 25.225 24.535
Exchange Rate - Dollars to Pounds
For the Quarter 1.602 1.614 1.625 1.599 1.536 1.482
End of Quarter 1.577 1.647 1.615 1.591 1.517 1.475
Claims Paying Rating - S & P** BBB BBB BBB- BBB- BBB- BBB-
* Net Initial Commission Value is a measure used by Lincoln UK to measure sales progress and future profitability.
** Prior to the fourth quarter of 1998 the Lincoln UK rating was based on its affiliation with Lincoln National Corporation.
Subsequent to the fourth quarter of 1998 the rating, provided by S&P reflects Lincoln UK's rating on a stand alone basis.
</TABLE>
<TABLE>
<CAPTION>
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Year Ended December 31 1995 1996 1997 1998 1999
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 415.7 472.2 466.7 592.0 743.1
Health premiums 794.1 775.6 566.1 628.6 692.3
Surrender charges 0.0 2.7 3.4 3.3 2.8
Mortality assessments 0.0 0.0 0.0 0.7 0.7
Expense assessments 0.0 0.0 0.0 0.3 0.3
Other revenue and fees 11.3 28.7 35.5 39.3 64.6
Net investment income 182.1 266.8 290.6 316.2 318.6
Equity earnings in unconsol affiliates 0.0 0.0 2.1 3.3 5.8
------ ------ ------ ------ ------
Operating Revenue 1403.3 1545.9 1364.3 1583.7 1828.2
------ ------ ------ ------ ------
Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 308.4 305.7 321.4 452.2 530.6
Div accum & div to policyholders 9.8 9.3 9.3 7.3 6.9
Interest credited to policy bal. 5.4 40.3 50.3 44.1 47.3
Health policy benefits 811.4 658.6 824.4 556.3 646.5
Underwriting, acquisition,
insurance and other expenses 376.0 413.0 387.4 359.5 531.5
Interest on notes payable 0.2 2.9 0.0 1.0
------ ------ ------ ------ ------
Total Benefits & Expenses 1511.2 1429.7 1592.9 1419.3 1763.9
------ ------ ------ ------ ------
Income from Operations Before Tax (107.9) 116.1 (228.6) 164.4 64.3
Federal income taxes (38.7) 39.6 (80.2) 57.1 20.8
------ ------ ------ ------ ------
Income from Operations (1) (69.2) 76.5 (148.4) 107.3 43.5
Realized gain on investments 10.9 12.0 16.3 (2.6) 3.7
Restructuring charges (3.2)
------ ------ ------ ------ ------
Net Income (1) (58.3) 88.5 (132.1) 104.7 44.1
====== ====== ====== ====== ======
Effective tax rate 35.9% 34.1% 35.1% 34.7% 32.3%
Operating Revenue 1403.3 1545.9 1364.3 1583.7 1828.2
Realized gains on investments 16.2 18.5 25.2 (3.5) 5.7
------ ------ ------ ------ ------
Total Revenue 1419.5 1564.4 1389.5 1580.3 1833.9
====== ====== ====== ====== ======
-------------------------------------------------------------------------------------------------
Revenue by Source
Individual Markets 447.4 468.1 503.9 633.6 814.1
Group Markets 148.1 158.7 131.6 130.6 168.0
Financial Reinsurance 460.9 531.1 365.2 279.3 344.5
Other 15.2 22.6 29.2 12.2 (0.4)
------ ------ ------ ------ ------
Total Revenue, Excl Exited Businesses 1071.7 1180.5 1029.9 1055.7 1326.2
Exited Businesses Under Management (2) 347.8 383.9 359.6 524.6 507.7
------ ------ ------ ------ ------
Total Revenue 1419.5 1564.4 1389.5 1580.3 1833.9
====== ====== ====== ====== ======
Income from Operations by Source
Individual Markets 43.4 49.8 71.9 83.5 91.9
Group Markets 10.5 10.2 3.3 1.6 (1.6)
Financial Reinsurance 11.0 17.5 15.5 17.1 21.7
Other 0.7 (0.3) (0.3) (1.0) (1.4)
------ ------ ------ ------ ------
Inc from Oper, Excl Exited Businesses 65.6 77.3 90.5 101.3 110.5
Exited Businesses Under Management (2) (134.8) (0.8) (238.8) 6.1 (67.0)
------ ------ ------ ------ ------
Inc from Operations (1) (69.2) 76.5 (148.4) 107.3 43.5
====== ====== ====== ====== ======
Individual Life Sales
[Billions of Dollars] 22.7 26.6 39.5 78.1 116.8
Ind Life In-Force 118.9 130.8 153.1 213.6 306.6
Group Life In-Force 23.9 30.1 30.4 36.7 34.2
------ ------ ------ ------ ------
Total Life In-Force 142.8 160.9 183.5 250.3 340.8
====== ====== ====== ====== ======
[Billions of Dollars]
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 92.2 93.0 84.9 87.8 88.9
Employer Stop Loss-
Loss Ratio 63.2 67.6 52.8 77.7 84.3
Combined Ratio 88.0 93.3 84.7 108.4 115.0
Average Capital 519.9 651.7 788.4 950.3 1053.0
Average Capital, Excl Exited Business 310.1 389.6 459.1 486.1 603.1
Return on Average Capital, Excl Exited Business 21.1% 19.8% 19.7% 20.8% 18.3%
(1) Fourth quarter and full year 1999 income from operations and net income include a charge of
$40.4 million for Lincoln's participation in workers compensation carve-out business.Fourth
quarter and full year 1997 income from operations and net income include a change in estimate for
personal accident programs of $113.7 million.Also the years 1993, 1995 and 1997 include reserve
strengthening for the disability income business.
(2) Exited Businesses Under Management include disability income, HMO excess-of-loss, carrier
medical, personal accident and Lincoln's investment in Seguros Serfin Lincoln.
(3) LNC manages the relative mixture of debt and equity capital at the consolidated level.Because
consolidated debt is not allocated in arriving at the reported return on capital for LNC's
business segments, the return on capital calculation differs from a return on equity
calculation.For this business segment, allocating consolidated leverage would result in a higher
return on equity as compared to the return on capital reported above.
</TABLE>
<TABLE>
<CAPTION>
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 128.3 121.4 124.1 146.4 200.1 172.0
Health premiums 130.3 141.0 169.6 154.5 163.5 153.3
Surrender charges 1.0 0.5 0.3 1.6 0.9 1.2
Mortality assessments 0.7 0.7
Expense assessments 0.3 0.4
Other revenue and fees 17.6 9.4 4.4 13.2 12.3 11.0
Net investment income 74.4 77.3 78.8 79.4 80.7 80.2
Equity earnings in unconsol affiliates 0.5 1.5 0.7 (0.2) 1.3 1.6
--------- ------- ------- ------- ------- -------
Operating Revenue 352.2 351.1 378.1 394.8 459.8 420.4
--------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 91.4 80.9 87.8 91.1 192.4 124.3
Div accum & div to policyholders 2.3 1.8 1.6 2.3 1.6 1.3
Interest credited to policy bal. 15.5 10.1 7.1 14.6 12.2 8.9
Health policy benefits 288.6 131.2 156.4 139.7 129.0 143.5
Underwriting, acquisition,
insurance and other expenses 85.2 84.5 87.9 102.1 85.1 88.9
Interest on notes payable 0.0 0.0 0.0
--------- ------- ------- ------- ------- -------
Total Benefits & Expenses 483.1 308.4 340.9 349.7 420.3 366.9
--------- ------- ------- ------- ------- -------
Income from Operations Before Tax (130.8) 42.7 37.2 45.1 39.5 53.5
Federal income taxes (46.1) 15.0 13.1 15.5 13.5 18.8
--------- ------- ------- ------- ------- -------
Income from Operations (1) (84.8) 27.7 24.1 29.6 26.0 34.6
Realized gain on investments 5.7 2.8 1.2 (5.1) (1.4) 0.7
Restructuring charges
--------- ------- ------- ------- ------- -------
Net Income (1) (79.0) 30.4 25.2 24.5 24.6 35.3
========= ======= ======= ======= ======= =======
Effective tax rate 35.2% 35.1% 35.3% 34.3% 34.2% 35.3%
Operating Revenue 352.2 351.1 378.1 394.8 459.8 420.4
Realized gains on investments 8.8 4.4 2.5 (8.5) (1.8) 1.2
Total Revenue 361.1 355.4 380.5 386.4 457.9 421.6
========= ======= ======= ======= ======= =======
Revenue by Source (Including Investment Gains/Losses)
Individual Markets 138.3 134.0 131.4 153.8 214.3 187.9
Group Markets 36.1 29.3 32.4 35.9 33.0 36.5
Financial Reinsurance 70.6 72.6 73.3 75.0 58.4 80.6
Other 10.6 5.5 3.8 3.3 (0.3) (1.5)
--------- ------- ------- ------- ------- -------
Total Revenue, Excl Exited Businesses 255.6 241.3 241.0 268.0 305.4 303.5
Exited Businesses Under Management (2) 105.4 114.1 139.5 118.4 152.5 118.1
--------- ------- ------- ------- ------- -------
Total Revenue 361.1 355.4 380.5 386.4 457.9 421.6
========= ======= ======= ======= ======= =======
Income from Operations by Source
Individual Markets 17.7 18.8 15.0 23.2 26.6 25.4
Group Markets 1.3 0.6 (0.4) 1.4 0.1 0.9
Financial Reinsurance 6.3 3.5 3.5 4.7 5.5 7.3
Other 0.2 (0.4) (0.1) (0.6) 0.2 (0.3)
--------- ------- ------- ------- ------- -------
Inc from Oper, Excl Exited Businesses 25.5 22.4 17.9 28.6 32.3 33.3
Exited Businesses Under Management (2) (110.3) 5.3 6.2 1.0 (6.4) 1.3
--------- ------- ------- ------- ------- -------
Income from Operations (84.8) 27.7 24.1 29.6 26.0 34.6
========= ======= ======= ======= ======= =======
Individual Life Sales
[Billions of Dollars] 12.1 9.6 11.8 16.5 40.2 18.5
Ind Life In-Force 153.1 158.6 166.9 178.3 213.6 225.1
Group Life In-Force 30.4 31.4 33.1 35.3 36.7 38.3
--------- ------- ------- ------- ------- -------
Total Life In-Force 183.5 190.0 200.0 213.6 250.3 263.4
========= ======= ======= ======= ======= =======
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 82.4 86.0 90.6 78.0 94.3 85.8
Employer Stop Loss-
Loss Ratio 33.7 63.8 63.5 66.3 114.3 68.5
Combined Ratio 61.6 93.8 96.5 98.7 141.8 100.8
Average Capital 821.6 879.3 915.8 1002.7 1003.2 1078.4
Average Capital, Excl Exited Business (3) 466.7 474.1 474.3 488.3 507.8 571.4
Return on Average Capital,
Excluding Exited Business 21.8% 18.9% 15.1% 23.5% 25.5% 23.3%
</TABLE>
<TABLE>
<CAPTION>
Reinsurance
Income Statements & Operational Data
Unaudited [Millions of Dollars]
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Life and annuity premiums 173.1 166.2 231.9 227.4 229.1 238.9
Health premiums 158.7 148.3 232.0 57.0 142.6 116.5
Surrender charges 0.4 0.6 0.7 0.6 1.4 0.9
Mortality assessments 0.1 0.0 (0.2) 0.0 0.0 0.0
Expense assessments 0.0 0.0 (0.2) 0.0 0.0 0.0
Other revenue and fees 13.6 7.5 32.4 16.3 12.6 22.5
Net investment income 79.8 81.2 77.4 91.4 74.1 78.8
Equity earnings in unconsol affiliates 1.1 1.2 1.8 1.0 0.2 0.2
--------- ------- ------- ------- ------- -------
Operating Revenue 426.7 405.1 575.9 393.7 460.0 457.8
--------- ------- ------- ------- ------- -------
Benefits and Expenses
Benefits paid or provided:
Life and annuity policy benefits 123.0 108.8 174.5 165.4 173.5 178.0
Div accum & div to policyholders 1.5 1.9 2.2 1.3 1.5 1.8
Interest credited to policy bal. 10.9 6.0 21.5 9.0 8.6 12.8
Health policy benefits 161.7 187.4 153.9 110.0 117.5 119.0
Underwriting, acquisition,
insurance and other expenses 91.9 95.6 255.0 60.3 117.4 100.6
Interest on notes payable 0.0 0.0 1.0 2.3 2.7 3.0
--------- ------- ------- ------- ------- -------
Total Benefits & Expenses 389.1 399.7 608.2 348.3 421.1 415.2
--------- ------- ------- ------- ------- -------
Income from Operations Before Tax 37.7 5.4 (32.2) 45.4 38.9 42.5
Federal income taxes 13.2 2.1 (13.4) 12.6 12.5 13.9
--------- ------- ------- ------- ------- -------
Income from Operations (1) 24.4 3.3 (18.8) 32.8 26.4 28.7
Realized gain on investments 0.3 0.3 2.4 1.2 (1.1) (2.2)
Restructuring charges (3.2)
--------- ------- ------- ------- ------- -------
Net Income (1) 24.7 0.4 (16.4) 34.0 25.3 26.5
========= ======= ======= ======= ======= =======
Effective tax rate 35.2% 38.5% 41.6% 27.7% 32.2% 32.6%
Operating Revenue 426.7 405.1 575.9 393.7 460.0 457.8
Realized gains on investments 0.4 0.4 3.7 1.9 (1.7) (3.4)
--------- ------- ------- ------- ------- -------
Total Revenue 427.1 405.5 579.7 395.5 458.3 454.4
========= ======= ======= ======= ======= =======
Revenue by Source (Including Investment Gains/Losses)
Individual Markets 191.4 182.0 252.9 246.8 249.2 262.4
Group Markets 37.1 38.4 56.0 87.7 75.6 77.5
Financial Reinsurance 81.9 72.5 109.5 34.6 29.8 29.4
Other (0.4) 0.1 1.3 4.1 3.6 4.8
--------- ------- ------- ------- ------- -------
Total Revenue, Excl Exited Businesses 309.9 293.0 419.7 373.2 358.1 374.0
Exited Businesses Under Management (2) 117.2 112.5 159.9 22.4 100.2 80.3
--------- ------- ------- ------- ------- -------
Total Revenue 427.1 405.5 579.7 395.5 458.3 454.4
========= ======= ======= ======= ======= =======
Income from Operations by Source
Individual Markets 21.3 24.9 20.2 19.2 22.6 20.5
Group Markets 0.4 (1.3) (1.7) 1.0 1.2 1.5
Financial Reinsurance 4.7 4.2 5.5 7.2 4.0 4.5
Other (0.4) 0.0 (0.8) (1.0) (0.9) (0.5)
--------- ------- ------- ------- ------- -------
Inc from Oper, Excl Exited Businesses 26.1 27.8 23.3 26.3 26.9 26.0
Exited Businesses Under Management (2) (1.7) (24.4) (42.1) 6.4 (0.6) 2.7
--------- ------- ------- ------- ------- -------
Income from Operations 24.4 3.3 (18.8) 32.8 26.4 28.7
========= ======= ======= ======= ======= =======
Individual Life Sales
[Billions of Dollars] 20.0 28.8 49.6 30.0 37.2 37.2
Ind Life In-Force 240.0 261.5 306.6 325.9 354.0 381.4
Group Life In-Force 38.5 35.6 34.2 32.5 30.5 31.2
--------- ------- ------- ------- ------- -------
Total Life In-Force 278.5 297.1 340.8 358.4 384.4 412.6
[Billions of Dollars] ========= ======= ======= ======= ======= =======
Ratios [Percentages]
Individual Life Mortality
Actual to Expected Loss Ratio 88.9 81.7 97.2 99.5 96.9 101.2
Employer Stop Loss-
Loss Ratio 81.0 100.8 84.5 74.7 72.6 76.5
Combined Ratio 119.1 133.1 111.8 99.8 100.8 100.9
Average Capital 1048.6 1040.3 1044.5 1058.6 1022.7 1058.7
Average Capital, Excl Exited Business (3) 577.8 615.1 648 692.7 732.7 761.1
Return on Average Capital,
Excluding Exited Business 18.1% 18.1% 14.4% 15.2% 14.7% 13.6%
(1) Fourth quarter 1999 income from operations and net income include a charge of $40.4 million for
Lincoln's participation in workers compensation carve-out business.Fourth quarter and full year 1997
income from operations and net income include a change in estimate for personal accident programs of
$113.7 million.
(2) Exited Businesses Under Management include disability income, HMO excess-of-loss, carrier medical,
personal accident and Lincoln's investment in Seguros Serfin Lincoln.
(3) LNC manages the relative mixture of debt and equity capital at the consolidated level.Because
consolidated debt is not allocated in arriving at the reported return on capital for LNC's business
segments, the return on capital calculation differs from a return on equity calculation.For this business
segment, allocating consolidated leverage would result in a higher return on equity as compared to the
return on capital reported above.
</TABLE>
<TABLE>
<CAPTION>
Investment Management
Income Statements
Unaudited [Millions of Dollars]
For the Year Ended December 31 1995 1996 1997 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Investment advisory fees 134.7 199.8 229.9 249.0 248.6
Investment advisory fees - at cost (1) 32.2 43.7 46.2 47.9 37.7
Other revenue and fees 38.5 60.1 78.9 102.6 117.0
Net investment income 60.5 76.4 73.4 66.8 57.9
--------- --------- --------- --------- ---------
Operating Revenue 265.9 380.0 428.4 466.3 461.1
--------- --------- --------- --------- ---------
Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 242.8 367.7 421.1 429.2 409.5
Interest on notes payable 0.0 0.0 0.2 0.3 0.0
--------- --------- --------- --------- ---------
Total Benefits & Expenses 242.8 367.7 421.3 429.5 409.5
--------- --------- --------- --------- ---------
Income from Operations Before Tax 23.0 12.3 7.1 36.8 51.6
Federal income taxes 11.9 9.5 7.4 16.1 18.7
--------- --------- --------- --------- ---------
Income from Operations 11.1 2.8 (0.3) 20.7 32.9
Realized Gains (after-tax) 6.7 6.4 7.0 0.5 (0.1)
Restructuring Charge (9.2)
Net Income 17.8 9.2 6.7 21.2 23.6
========= ========= ========= ========= =========
Inc from Oper - Excl Intangible Amort 11.1 26.8 26.8 49.4 60.7
Operating Revenue 265.9 380.0 428.4 466.3 461.1
Realized gains on investments 10.2 9.9 11.6 0.9 (0.1)
-------- -------- -------- -------- --------
Total Revenue 276.1 389.9 440.0 467.3 461.0
========= ========= ========= ========= =========
Average Capital (Securities at Cost) 635.6 646.1 653.3 642.3 593.9
Return on Capital (2) 2.3% 0.4% 0.0% 3.2% 5.5%
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended Dec Mar Jun Sep Dec Mar
1997 1998 1998 1998 1998 1999
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Investment advisory fees 56.8 63.4 64.9 58.3 62.5 65.1
Investment advisory fees - at cost (1) 13.8 11.9 12.1 12.5 11.4 8.7
Other revenue and fees 20.9 23.1 23.8 26.9 28.8 28.1
Net investment income 17.6 16.7 17.1 16.0 17.0 15.2
--------- --------- --------- --------- -------- ---------
Operating Revenue 109.3 115.0 118.0 113.6 119.7 117.1
--------- --------- --------- --------- -------- ---------
Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 103.2 108.4 107.9 106.8 106.1 103.1
Interest on notes payable 0.0 0.1 0.1 0.1 0.0 0.0
--------- --------- --------- --------- -------- ---------
Total Benefits & Expenses 103.2 108.4 108.1 106.9 106.1 103.1
--------- --------- --------- --------- -------- ---------
Income from Operations Before Tax 6.1 6.6 9.9 6.7 13.6 14.0
Federal income taxes 3.0 3.3 4.4 3.9 4.6 5.6
--------- --------- --------- --------- -------- ---------
Income from Operations 3.0 3.3 5.5 2.8 9.0 8.4
Realized Gains (after-tax) 0.9 2.0 0.4 (3.7) 1.8 0.2
Restructuring Charge 0.0 0.0 0.0 0.0 0.0 (12.1)
--------- --------- --------- --------- -------- ---------
Net Income 3.9 5.3 6.0 (0.9) 10.8 (3.6)
========= ========= ========= ========= ======== =========
Inc from Oper
- Excl Intangible Amort 10.2 10.5 12.7 10.0 16.3 15.5
Operating Revenue 109.3 115.0 118.0 113.6 119.7 117.1
Realized gain on investments 1.3 3.5 0.7 (6.3) 3.0 0.2
--------- --------- --------- --------- -------- ---------
Total Revenue 110.5 118.5 118.7 107.4 122.7 117.3
========= ========= ========= ========= ======== =========
Average Capital (Securities at Cost) 665.8 647.8 644.7 641.4 635.3 612.6
Return on Capital (2) 1.8% 2.0% 3.4% 1.8% 5.7% 5.5%
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended Jun Sep Dec Mar Jun Sep
1999 1999 1999 2000 2000 2000
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue
Investment advisory fees 62.5 60.7 60.3 60.0 57.9 56.9
Investment advisory fees - at cost (1) 9.3 8.6 11.1 9.5 10.7 12.4
Other revenue and fees 29.0 27.9 32.0 33.8 32.9 28.5
Net investment income 14.4 14.1 14.2 13.3 12.9 18.5
--------- --------- --------- --------- --------- ---------
Operating Revenue 115.2 111.3 117.6 116.7 114.4 116.2
--------- --------- --------- --------- --------- ---------
Benefits and Expenses
Underwriting, acquisition,
insurance and other expenses 103.6 99.1 103.7 108.4 107.5 110.8
Interest on notes payable 0.0 0.0 0.0 0.0 0.0 0.0
--------- --------- --------- --------- --------- ---------
Total Benefits & Expenses 103.6 99.1 103.7 108.4 107.5 110.8
--------- --------- --------- --------- --------- ---------
Income from Operations Before Tax 11.7 12.2 13.8 8.3 6.9 5.4
Federal income taxes 4.2 4.1 4.9 3.0 2.5 2.5
--------- --------- --------- --------- --------- ---------
Income from Operations 7.5 8.1 8.9 5.3 4.4 3.0
Realized Gains (after-tax) (0.3) (0.3) 0.4 (0.1) (2.0) (0.2)
Restructuring Charge 0.0 0.0 2.9 0.0 (2.7) 0.0
--------- --------- --------- --------- --------- ---------
Net Income 7.2 7.7 12.2 5.2 (0.3) 2.7
========= ========= ========= ========= ========= =========
Inc from Oper
- Excl Intangible Amort 14.4 15.0 15.7 12.2 11.0 9.6
Operating Revenue 115.2 111.3 117.6 116.7 114.4 116.2
Realized gain on investments (0.4) (0.5) 0.6 (0.2) (3.1) (0.4)
--------- --------- --------- --------- --------- ---------
Total Revenue 114.8 110.7 118.1 116.5 111.3 115.9
========= ========= ========= ========= ========= =========
Average Capital (Securities at Cost) 591.6 587.2 584.2 581.5 593.0 567.7
Return on Capital (2) 5.1% 5.5% 6.1% 3.6% 2.9% 2.1%
(1) Fees labeled "at cost" are calculated on an expense sharing basis and do not include a profit margin.
(2) LNC manages the relative mixture of debt and equity capital at the consolidated level. Because
consolidated debt is not allocated in arriving at the reported return on capital for LNC's business
segments, the return on capital calculation differs from a return on equity calculation. For this
business segment, allocating consolidated leverage would result in a lower return on equity as
compared to the return on capital reported above.
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Assets Under Management
Unaudited [Billions of Dollars]
1995 1996 1997 1998 1999
------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C>
Retail Fixed - Bal Beg of Year 5.637 6.094 5.853 8.125 8.217
Fund Sales 0.767 0.764 0.961 1.165 0.991
Redemptions (0.829) (0.986) (1.271) (1.235) (1.424)
Net Money Market (0.074) (0.079) (0.069) (0.140) (0.110)
Transfers (0.022) (0.114) (0.220) 0.132 0.177
------ ------ ------ ------- ------
Net Cash Flows (0.157) (0.415) (0.599) (0.078) (0.366)
Income Retained 0.212 0.237 0.276 0.291 0.276
Market Apprec/Deprec 0.402 (0.062) 0.049 (0.121) (0.704)
Acq of New Company/Business 2.547
------ ------ ------ ------- ------
Balance at End of Year 6.094 5.853 8.125 8.217 7.424
------ ------ ------ ------- ------
Retail Equity - Bal Beg of Year 7.486 9.974 13.152 17.754 22.080
Fund Sales 1.100 2.175 2.953 3.581 3.271
Redemptions (0.882) (1.037) (1.926) (2.460) (4.971)
Net Money Market 0.000 (0.002) (0.001)
Transfers 0.041 0.188 0.209 0.730 (0.143)
------ ------ ------ ------- ------
Net Cash Flows 0.259 1.327 1.236 1.849 (1.844)
Income Retained 0.112 0.039 0.005 0.220 0.120
Market Apprec/Deprec 2.117 1.812 3.317 2.256 3.028
Acq of New Company/Business 0.043
------ ------ ------ ------- ------
Balance at End of Year 9.974 13.152 17.754 22.080 23.383
------ ------ ------ ------- ------
Total Retail - Bal Beg of Year 13.123 16.068 19.006 25.879 30.297
Retail Sales-Annuities 1.165 1.638 2.163 2.238 1.561
Retail Sales-Mutual Funds 0.675 0.849 1.218 1.913 2.153
Retail Sales-Wrap & Other 0.027 0.454 0.533 0.596 0.550
------ ------ ------ ------- ------
Total Retail Sales 1.867 2.940 3.914 4.745 4.264
Redemptions (1.710) (2.023) (3.197) (3.694) (6.396)
Net Money Market (0.074) (0.079) (0.068) (0.141) (0.111)
Transfers 0.020 0.074 (0.011) 0.862 0.034
------ ------ ------ ------- ------
Net Cash Flows 0.103 0.912 0.637 1.772 (2.209)
Income Retained 0.324 0.276 0.281 0.511 0.396
Market Apprec/Deprec 2.519 1.750 3.366 2.136 2.324
Acq of New Company/Business 2.590
------ ------ ------ ------- ------
Balance at End of Year 16.068 19.006 25.879 30.297 30.807
----------------------------------------------------------------------------------------------
Institutional Fixed - Bal Beg of Year 2.958 2.956 3.580 5.708 6.955
Inflows 0.723 1.516 2.509 2.169 2.000
Withdrawals/Terminations (0.985) (1.155) (0.787) (1.242) (1.699)
Transfers (0.121) 0.015 0.013 (0.074) (0.001)
------ ------ ------ ------- ------
Net Cash Flows (0.383) 0.376 1.735 0.853 0.300
Income Retained 0.133 0.145 0.225 0.333 0.346
Market Apprec/Deprec 0.248 0.104 0.118 0.061 (0.665)
Acq of New Company/Business 0.051
------ ------ ------ ------- ------
Balance at End of Year 2.956 3.580 5.708 6.955 6.937
------ ------ ------ ------- ------
Institutional Equity - Bal Beg of Year 18.446 21.619 22.886 24.871 24.235
Inflows 0.848 1.974 2.465 3.840 5.248
Withdrawals/Terminations (3.195) (4.772) (6.447) (7.441) (7.801)
Transfers 0.053 (0.007) (0.068) 0.047 0.011
------ ------ ------ ------- ------
Net Cash Flows (2.293) (2.805) (4.049) (3.555) (2.542)
Income Retained 0.395 0.557 0.491 0.473 0.482
Market Apprec/Deprec 5.072 3.514 5.544 2.446 1.453
Acq of New Company/Business
------ ------ ------ ------- ------
Balance at End of Year 21.619 22.886 24.871 24.235 23.630
------ ------ ------ ------- ------
Total Institutional - Bal Beg of Year 21.404 24.575 26.465 30.579 31.191
Inflows 1.571 3.490 4.975 6.009 7.249
Withdrawals/Terminations (4.180) (5.928) (7.234) (8.683) (9.500)
Transfers (0.068) 0.008 (0.055) (0.027) 0.011
------ ------ ------ ------- ------
Net Cash Flows (2.676) (2.429) (2.314) (2.702) (2.240)
Income Retained 0.528 0.702 0.716 0.806 0.829
Market Apprec/Deprec 5.319 3.618 5.662 2.508 0.789
Acq of New Company/Business 0.051
------ ------ ------ ------- ------
Balance at End of Year 24.575 26.465 30.579 31.191 30.567
------ ------ ------ ------- ------
Assets Under Management
------ ------ ------ ------- ------
At End of Year 40.643 45.471 56.458 61.488 61.374
Assets Under Management
At End of Year - At Cost Operations 36.429 37.453 35.684 39.432 35.934
Total Assets Under Management
------ ------ ------ ------- ------
At End of Year 77.072 82.924 92.142 100.920 97.308
====== ====== ====== ======= ======
NOTE: This segment was started in the second quarter of 1995 following
the completion of the acquisition of Delaware Management Holdings, Inc.
Data shown for 1995 reflects a full year of activity.
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Assets Under Management
Unaudited [Billions of Dollars]
Dec March June Sept Dec Mar
1997 1998 1998 1998 1998 1999
------ ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Retail Fixed - Bal Beg of Qtr 8.105 8.125 8.286 8.260 8.287 8.217
Fund Sales 0.247 0.298 0.241 0.381 0.246 0.316
Redemptions (0.296) (0.273) (0.272) (0.302) (0.387) (0.313)
Net Money Market (0.008) (0.055) (0.052) (0.034) 0.000 (0.019)
Transfers (0.115) 0.054 0.042 0.029 0.007 0.032
------ ------- ------ ------ ------- ------
Net Cash Flows (0.172) 0.024 (0.041) 0.074 (0.134) 0.016
Income Retained 0.078 0.075 0.063 0.076 0.076 0.066
Market Apprec/Deprec 0.114 0.061 (0.048) (0.122) (0.012) (0.067)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 8.125 8.286 8.260 8.287 8.217 8.233
------ ------- ------ ------ ------- ------
Retail Equity - Bal Beg of Qtr 17.304 17.754 20.448 21.456 18.785 22.080
Fund Sales 0.855 0.906 1.043 0.830 0.802 0.856
Redemptions (0.492) (0.479) (0.518) (0.547) (0.915) (1.030)
Net Money Market 0.000 (0.002) 0.000 0.000 0.000 0.000
Transfers 0.124 0.284 0.489 (0.032) (0.011) (0.034)
------ ------- ------ ------ ------- ------
Net Cash Flows 0.487 0.709 1.014 0.252 (0.124) (0.208)
Income Retained (0.054) 0.033 0.054 0.134 (0.001) 0.053
Market Apprec/Deprec 0.018 1.952 (0.059) (3.056) 3.420 (0.128)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 17.754 20.448 21.456 18.785 22.080 21.798
------ ------- ------ ------ ------- ------
Total Retail - Bal Beg of Qtr 25.409 25.879 28.734 29.716 27.072 30.297
Retail Sales-Annuities 0.587 0.592 0.598 0.541 0.507 0.428
Retail Sales-Mutual Funds 0.349 0.464 0.513 0.531 0.403 0.565
Retail Sales-Wrap & Other 0.165 0.147 0.173 0.139 0.136 0.182
------ ------- ------ ------ ------- ------
Total Retail Sales 1.102 1.203 1.284 1.211 1.046 1.175
Redemptions (0.788) (0.752) (0.791) (0.849) (1.302) (1.343)
Net Money Market (0.008) (0.055) (0.052) (0.034) 0.000 (0.019)
Transfers 0.008 0.338 0.531 (0.003) (0.004) (0.001)
------ ------- ------ ------ ------- ------
Net Cash Flows 0.314 0.734 0.972 0.325 (0.260) (0.188)
Income Retained 0.023 0.108 0.117 0.210 0.075 0.119
Market Apprec/Deprec 0.132 2.014 (0.108) (3.180) 3.409 (0.196)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 25.879 28.734 29.716 27.072 30.297 30.031
------ ------- ------ ------ ------- ------
<CAPTION>
June Sept Dec Mar Jun Sept
1999 1999 1999 2000 2000 2000
------ ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Retail Fixed - Bal Beg of Qtr 8.233 7.945 7.680 7.424 6.964 6.667
Fund Sales 0.263 0.231 0.181 0.146 0.152 0.213
Redemptions (0.366) (0.342) (0.403) (0.444) (0.328) (0.321)
Net Money Market (0.033) (0.029) (0.030) (0.067) (0.058) (0.031)
Transfers (0.043) 0.034 0.154 (0.095) (0.045) (0.033)
------ ------- ------ ------ ------- ------
Net Cash Flows (0.179) (0.106) (0.098) (0.460) (0.279) (0.171)
Income Retained 0.074 0.069 0.067 0.061 0.063 0.059
Market Apprec/Deprec (0.185) (0.228) (0.225) (0.062) (0.082) (0.023)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 7.945 7.680 7.424 6.964 6.667 6.531
------ ------- ------ ------ ------- ------
Retail Equity - Bal Beg of Qtr 21.798 22.340 20.873 23.383 24.102 23.129
Fund Sales 0.790 0.730 0.894 1.220 0.868 0.904
Redemptions (1.957) (0.865) (1.120) (1.550) (0.971) (1.027)
Net Money Market (0.001) 0.000 0.000 0.000 0.000 0.001
Transfers 0.036 (0.060) (0.086) (0.096) 0.018 (0.033)
------ ------- ------ ------ ------- ------
Net Cash Flows (1.132) (0.195) (0.312) (0.426) (0.085) (0.154)
Income Retained 0.061 0.007 0.000 0.033 0.021 0.005
Market Apprec/Deprec 1.614 (1.279) 2.822 1.112 (0.908) 0.701
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 22.340 20.873 23.383 24.102 23.129 23.680
------ ------- ------ ------ ------- ------
Total Retail - Bal Beg of Qtr 30.031 30.285 28.553 30.807 31.066 29.796
Retail Sales-Annuities 0.393 0.332 0.409 0.379 0.358 0.453
Retail Sales-Mutual Funds 0.487 0.514 0.587 0.840 0.556 0.521
Retail Sales-Wrap & Other 0.173 0.116 0.079 0.148 0.106 0.143
------ ------- ------ ------ ------- ------
Total Retail Sales 1.053 0.962 1.075 1.367 1.020 1.118
Redemptions (2.323) (1.207) (1.523) (1.995) (1.299) (1.348)
Net Money Market (0.033) (0.029) (0.030) (0.067) (0.058) (0.030)
Transfers (0.006) (0.027) 0.068 (0.191) (0.026) (0.065)
------ ------- ------ ------ ------- ------
Net Cash Flows (1.309) (0.301) (0.410) (0.886) (0.363) (0.326)
Income Retained 0.134 0.076 0.067 0.095 0.083 0.063
Market Apprec/Deprec 1.429 (1.507) 2.597 1.051 (0.989) 0.677
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 30.285 28.553 30.807 31.066 29.796 30.211
------ ------- ------ ------ ------- ------
<CAPTION>
Dec March June Sept Dec Mar
1997 1998 1998 1998 1998 1999
------ ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Institutional Fixed - Bal Beg of Qtr 4.496 5.708 6.216 6.400 6.769 6.955
Inflows 1.332 0.975 0.457 0.566 0.170 0.657
Withdrawals/Terminations (0.285) (0.387) (0.304) (0.325) (0.225) (0.415)
Transfers (0.008) (0.022) (0.013) (0.046) 0.008 (0.003)
------ ------- ------ ------ ------- ------
Net Cash Flows 1.039 0.566 0.139 0.195 (0.047) 0.239
Income Retained 0.065 0.080 0.092 0.101 0.060 0.089
Market Apprec/Deprec 0.108 (0.137) (0.047) 0.073 0.173 (0.300)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at end of Qtr 5.708 6.216 6.400 6.769 6.955 6.984
------ ------- ------ ------ ------- ------
Institutional Equity - Bal Beg of Qtr 26.271 24.871 27.868 26.064 21.702 24.235
Inflows 0.445 0.995 0.825 0.855 1.165 1.297
Withdrawals/Terminations (1.732) (1.200) (2.505) (1.663) (2.072) (2.540)
Transfers (0.020) 0.006 (0.021) 0.050 0.013 0.011
------ ------- ------ ------ ------- ------
Net Cash Flows (1.307) (0.200) (1.702) (0.759) (0.895) (1.232)
Income Retained 0.122 0.118 0.139 0.119 0.098 0.104
Market Apprec/Deprec (0.215) 3.079 (0.241) (3.721) 3.330 (0.180)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 24.871 27.868 26.064 21.702 24.235 22.927
------ ------- ------ ------ ------- ------
Total Institutional - Bal Beg of Qtr 30.768 30.579 34.084 32.463 28.471 31.191
Inflows 1.778 1.970 1.282 1.421 1.335 1.953
Withdrawals/Terminations (2.017) (1.588) (2.810) (1.988) (2.297) (2.955)
Transfers (0.028) (0.017) (0.035) 0.003 0.021 0.008
------ ------- ------ ------ ------- ------
Net Cash Flows (0.267) 0.366 (1.562) (0.564) (0.942) (0.994)
Income Retained 0.186 0.197 0.230 0.220 0.158 0.193
Market Apprec/Deprec (0.107) 2.941 (0.289) (3.649) 3.504 (0.480)
Acq of New Company/Business
------ ------ ------ ------ ------ ------
Balance at End of Qtr 30.579 34.084 32.463 28.471 31.191 29.910
------ ------- ------ ------ ------- ------
------ ------- ------ ------ ------- ------
Assets Under Management
At End of Qtr 56.458 62.818 62.179 55.543 61.488 59.941
Assets Under Management
At End of Qtr - At Cost Operations 35.684 37.846 37.714 38.471 39.432 38.516
------ ------- ------ ------ ------- ------
Total Assets Under Management
At End of Qtr 92.142 100.664 99.893 94.014 100.920 98.457
====== ======= ====== ====== ======= ======
<CAPTION>
June Sept Dec Mar Jun Sept
1999 1999 1999 2000 2000 2000
------ ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Institutional Fixed - Bal Beg of Qtr 6.984 7.264 7.218 6.937 6.873 6.484
Inflows 0.478 0.446 0.420 0.180 0.148 0.308
Withdrawals/Terminations (0.210) (0.294) (0.781) (0.353) (0.520) (0.532)
Transfers 0.003 (0.002) 0.001 (0.005) (0.001) 0.000
------ ------- ------ ------ ------- ------
Net Cash Flows 0.271 0.150 (0.360) (0.178) (0.373) (0.224)
Income Retained 0.079 0.110 0.068 0.090 0.066 0.089
Market Apprec/Deprec (0.070) (0.306) 0.011 0.024 (0.081) (0.074)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at end of Qtr 7.264 7.218 6.937 6.873 6.484 6.275
------ ------- ------ ------ ------- ------
Institutional Equity - Bal Beg of Qtr 22.927 23.962 23.098 23.630 20.303 20.239
Inflows 1.179 1.839 0.934 0.904 0.669 0.407
Withdrawals/Terminations (2.052) (1.165) (2.043) (3.333) (1.354) (1.154)
Transfers 0.019 (0.008) (0.010) (0.004) 0.002 (0.013)
------ ------- ------ ------ ------- ------
Net Cash Flows (0.854) 0.666 (1.119) (2.433) (0.683) (0.760)
Income Retained 0.118 0.167 0.093 0.109 0.132 0.108
Market Apprec/Deprec 1.771 (1.697) 1.559 (1.003) 0.488 (0.545)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 23.962 23.098 23.630 20.303 20.239 19.041
------ ------- ------ ------ ------- ------
Total Institutional - Bal Beg of Qtr 29.910 31.226 30.316 30.567 27.175 26.722
Inflows 1.656 2.284 1.354 1.084 0.817 0.715
Withdrawals/Terminations (2.262) (1.458) (2.825) (3.686) (1.874) (1.686)
Transfers 0.022 (0.010) (0.009) (0.009) 0.000 (0.012)
------ ------- ------ ------ ------- ------
Net Cash Flows (0.584) 0.816 (1.480) (2.611) (1.057) (0.983)
Income Retained 0.197 0.277 0.161 0.198 0.197 0.196
Market Apprec/Deprec 1.702 (2.003) 1.569 (0.979) 0.407 (0.619)
Acq of New Company/Business
------ ------- ------ ------ ------- ------
Balance at End of Qtr 31.226 30.316 30.567 27.175 26.722 25.316
------ ------- ------ ------ ------- ------
------ ------- ------ ------ ------- ------
Assets Under Management
At End of Qtr 61.511 58.869 61.374 58.242 56.518 55.527
Assets Under Management
At End of Qtr - At Cost Operations 37.391 36.820 35.934 35.541 34.891 34.981
------ ------- ------ ------ ------- ------
Total Assets Under Management
At End of Qtr 98.902 95.689 97.308 93.783 91.408 90.508
====== ======= ====== ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
Other Operations
Unaudited [Millions of Dollars]
For the Year Ended December 31 1995 1996 1997 1998 1999
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Revenue
Earnings from Unconsolidated
Affiliate (Life-Health Benefits) 13.9
Lincoln Investment Mgmt. - Corp. (1) 22.0
Lincoln Financial Advisors 94.8 111.0 130.1 292.9 325.2
Other [Including
Consolidating Adjustments] (104.5)(101.8) (88.1)(168.5)(175.3)
------ ------ ------ ------ ------
Operating Revenue 26.2 9.3 42.0 124.4 149.9
Realized gain on investments 94.8 (3.0) 16.9 4.0 8.6
------ ------ ------ ------ ------
Total Revenue 121.0 6.3 58.9 128.3 158.5
====== ====== ====== ====== ======
Income (Loss)
Earnings from Unconsolidated
Affiliate (Life-Health Benefits) 13.7
Lincoln Investment Mgmt. - Corp. (1) 0.3
LNC Financing (52.7) (49.7) (31.9) (52.5) (83.6)
LNC Operations (2) (19.5) (14.8) (18.4) (18.5)
Lincoln Financial Advisors (7.0) (10.2) (5.3) (23.7) (20.8)
Other Corporate 0.3 2.6 (6.5) 2.1 (5.2)
------ ------ ------ ------ ------
Inc (Loss) from Operations (64.8) (72.1) (62.1) (92.6)(109.5)
Realized Gain on Investments 5.9 (1.0) 8.6 5.3 6.4
Realized Gain on Sale of Subsidiaries 58.3
Restructuring Charge 14.3
------ ------ ------ ------ ------
Total Net Income (Loss) (0.6) (73.1) (53.5)(101.6)(103.1)
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1997 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Lincoln Financial Advisors 35.7 62.4 73.9 74.8 81.7 67.0 73.9 78.0 106.3 89.4 92.9 93.9
Other [Including
Consolidating Adjustments] 2.9 (31.0) (39.9) (48.3) (49.3) (4.6) (13.7) (43.1)(113.9) (40.0) (60.3) (51.9)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Revenue 38.6 31.4 34.0 26.5 32.4 62.4 60.2 34.9 (7.5) 49.4 32.7 42.0
Realized gain on investments 22.3 2.2 (3.0) 3.1 1.6 0.2 (1.7) 13.8 (3.7) (2.7) 0.4 0.0
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Revenue 60.8 33.6 31.0 29.7 34.0 62.6 58.5 48.7 (11.2) 46.8 33.1 42.0
Income (Loss)
LNC Financing 7.3 (5.0) (12.8) (15.3) (19.5) (20.9) (21.6) (19.8) (21.3) (21.6) (22.0) (21.9)
LNC Operations (2) (5.5) (4.2) (5.2) (4.2) (4.9) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Lincoln Financial Advisors (1.7) (6.0) (6.8) (4.6) (6.4) (8.4) (9.7) (5.3) 2.7 (7.4) (2.9) (3.1)
Other Corporate (7.3) 1.6 2.1 0.4 (1.9) (1.7) 1.0 (2.8) (1.7) (6.2) (1.5) 2.7
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Inc (Loss) from Oper (7.2) (13.6) (22.7) (23.7) (32.7) (31.0) (30.3) (27.9) (20.3) (35.2) (26.4) (22.2)
Realized Gain on Investments 11.8 1.4 (2.1) 1.9 4.1 0.1 (2.0) 9.5 (1.2) (1.6) 0.3 (1.0)
Restructuring Charge (14.3)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Net Income (Loss) 4.6 (12.2) (24.8) (21.7) (42.9) (30.9) (32.3) (18.4) (21.5) (36.8) (26.1) (23.2)
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
(1) Starting with the first quarter of 1999, Lincoln Investment Mgmt - Corp. was moved to the Investment Management segment.
Prior periods were restated for 1995-1998. The Investment Management segment was started in the second quarter of 1995.
(2) Starting with the first quarter of 1999, 100% of "LNC Operations" is allocated to the business segments. Prior periods
have not been restated.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Retail Deposits/Account Balances
Unaudited [Billions of Dollars]
1995 1996 1997 1998 1999
<S> ----- ----- ----- ----- -----
Deposits - For the Year <C> <C> <C> <C> <C>
Annuities Segment - Fixed Annuities 1.844 1.689 1.556 1.265 2.271
Annuities Segment - Variable Annuities 1.873 2.746 2.695 2.791 2.553
Annuities Segment - Life Insurance 0.000 0.000 0.000 0.000 0.017
Life Insurance Segment - Life Insurance 0.373 0.405 0.384 1.207 1.698
Life Insurance Segment - Fixed Annuities 0.538 0.164 0.076 0.187 0.291
Inv Mgmt - Annuities 1.165 1.638 2.163 2.238 1.561
Inv Mgmt - Mutual Funds 0.675 0.849 1.218 1.913 2.153
Inv Mgmt - Wrap Fee & Other 0.027 0.454 0.533 0.596 0.550
Consolidating Adjustments (0.450) (0.684) (0.966) (1.041) (0.499)
----- ----- ----- ----- -----
Deposits - U.S. 6.044 7.259 7.658 9.157 10.597
Lincoln UK 0.391 0.446 0.569 0.473 0.537
UK Consoldating Adjustment (0.022) (0.023) (0.019)
----- ----- ----- ----- -----
Gross Deposits 6.435 7.705 8.205 9.608 11.115
===== ===== ===== ===== =====
Account Balances - End of Year
Annuities Segment - Fixed Annuities 10.468 13.486 13.335 14.485 14.764
Annuities Segment - Variable Annuities 15.673 20.383 27.346 33.358 41.493
Annuities Segment - Life Insurance 0.155
Life Insurance Segment - Life Insurance 2.629 2.869 3.038 9.243 10.217
Life Insurance Segment - Fixed Annuities 2.399 2.332 2.123 2.020 2.027
Inv Mgmt - Annuities 5.994 7.915 10.991 14.257 15.526
Inv Mgmt - Mutual Funds 8.164 9.017 12.484 13.528 13.632
Inv Mgmt - Wrap Fee & Other 1.909 2.074 2.403 2.512 1.649
Consolidating Adjustments (3.700) (5.098) (6.806) (8.891) (9.175)
----- ----- ----- ----- -----
Account Balances - U.S. 43.537 52.978 64.914 80.512 90.288
Lincoln UK 4.307 5.074 5.643 6.265 7.220
UK Consoldating Adjustment (0.024) (0.447) (0.347)
----- ----- ----- ----- -----
Consolidated Account Balances 47.844 58.052 70.533 86.329 97.161
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
1997 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Deposits - For the Quarter
Annuities Segment -
Fixed Annuities 0.389 0.333 0.357 0.299 0.276 0.428 0.575 0.604 0.664 0.530 0.442 0.472
Annuities Segment -
Variable Annuities 0.685 0.701 0.810 0.647 0.633 0.635 0.651 0.634 0.634 0.797 0.793 0.729
Annuities Segment -
Life Insurance 0.003 0.005 0.004 0.005 0.003 0.003 0.004
Life Insurance Segment -
Life Insurance 0.095 0.220 0.259 0.254 0.475 0.394 0.379 0.399 0.526 0.424 0.411 0.428
Life Insurance Segment -
Fixed Annuities 0.018 0.031 0.051 0.046 0.059 0.061 0.079 0.074 0.077 0.059 0.048 0.041
Inv Mgmt - Annuities 0.587 0.592 0.598 0.541 0.507 0.428 0.393 0.332 0.409 0.379 0.358 0.453
Inv Mgmt - Mutual Funds 0.349 0.464 0.513 0.531 0.403 0.565 0.487 0.514 0.587 0.840 0.556 0.521
Inv Mgmt - Wrap Fee & Other 0.165 0.147 0.173 0.139 0.136 0.182 0.173 0.116 0.079 0.148 0.106 0.143
Consolidating Adjustments (0.298) (0.260) (0.294) (0.232) (0.254) (0.142) (0.143) (0.096) (0.118) (0.099) (0.062) (0.100)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Deposits - U.S. 1.991 2.228 2.466 2.226 2.234 2.554 2.599 2.581 2.864 3.081 2.655 2.691
Lincoln UK 0.177 0.122 0.100 0.115 0.136 0.131 0.119 0.130 0.156 0.159 0.134 0.145
UK Consoldating Adjustment (0.001) 0.000 (0.011) (0.007) (0.004) (0.004) (0.005) (0.004) (0.006) (0.006) (0.006) (0.010)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Gross Deposits 2.167 2.350 2.555 2.334 2.366 2.682 2.714 2.707 3.014 3.233 2.783 2.827
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Account Balances - End of Quarter
Annuities Segment -
Fixed Annuities 13.335 14.492 14.365 14.456 14.485 14.631 14.750 14.913 14.764 14.248 13.954 13.782
Annuities Segment -
Variable Annuities 27.346 32.933 33.458 29.476 33.358 34.148 37.233 35.613 41.493 44.640 43.097 42.743
Annuities Segment -
Life Insurance 0.115 0.130 0.128 0.155 0.169 0.165 0.166
Life Insurance Segment -
Life Insurance 3.038 6.276 6.394 6.443 9.243 9.416 9.628 9.726 10.217 10.470 10.538 10.716
Life Insurance Segment -
Fixed Annuities 2.123 2.086 2.049 2.020 2.020 2.025 2.029 2.021 2.027 2.004 1.955 1.918
Inv Mgmt - Annuities 10.991 12.947 13.829 12.270 14.257 14.166 14.981 14.004 15.526 15.531 14.861 14.824
Inv Mgmt - Mutual Funds 12.484 13.283 13.333 12.549 13.528 13.442 13.654 12.938 13.632 14.201 13.604 14.102
Inv Mgmt - Wrap Fee & Other 2.403 2.504 2.553 2.253 2.512 2.424 1.650 1.611 1.649 1.335 1.331 1.285
Consolidating Adjustments (6.806) (7.872) (8.611) (7.326) (8.891) (8.798) (9.050) (8.387) (9.175) (8.768) (8.419) (8.644)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Account Balances - U.S. 64.914 76.649 77.371 72.142 80.512 81.570 85.004 82.567 90.288 93.831 91.086 90.893
Lincoln UK 5.643 6.297 6.310 5.711 6.265 6.348 6.503 6.568 7.220 7.031 6.726 6.499
UK Consoldating Adjustment (0.024) (0.400) (0.415) (0.366) (0.447) (0.421) (0.414) (0.359) (0.347) (0.345) (0.338) (0.336)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Consolidated Account Balances 70.533 82.547 83.265 77.487 86.329 87.497 91.093 88.776 97.161 100.517 97.474 97.056
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
NOTE: Excludes amounts reported as Assets Under Management - At Cost Operations
</TABLE>
<TABLE>
<CAPTION>
Consolidated Information - Individual Life Insurance In-Force
Unaudited [Billions of Dollars]
December 31 1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Life Insurance Segment 36.1 49.2 63.2 172.9 195.0
Annuities Segment 0.6
Lincoln UK 23.5 23.8 25.0 25.0 25.7
Reinsurance 142.8 160.9 183.5 250.3 340.8
Consolidating Adjustment (5.6) (9.9) (11.3)
------- ------- ------- ------- -------
Total 202.4 233.9 266.1 438.3 550.7
======= ======= ======= ======= =======
<CAPTION>
December 31
Dec Mar Jun Sep Dec Mar Jun
End of Quarter 1997 1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Life Insurance Segment 63.2 108.8 115.2 121.8 172.9 178.5 184.5
Annuities Segment 0.8 0.5
Lincoln UK 25.0 25.5 25.8 25.6 25.0 25.2 25.1
Reinsurance 183.5 190.0 200.0 213.6 250.3 263.4 278.5
Consolidating Adjustment (5.6) (1.7) (1.9) (2.2) (9.9) (10.3) (10.6)
------- ------- ------- ------- ------- ------- -------
Total 266.1 322.6 339.1 358.8 438.3 457.6 478.0
======= ======= ======= ======= ======= ======= =======
<CAPTION>
Sep Dec Mar Jun Sep
End of Quarter 1999 1999 2000 2000 2000
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Life Insurance Segment 188.9 195.0 201.7 207.5 211.3
Annuities Segment 0.5 0.6 0.6 0.6 0.6
Lincoln UK 26.2 25.7 26.5 25.2 24.5
Reinsurance 297.1 340.8 358.4 384.4 412.6
Consolidating Adjustment (10.9) (11.3) (11.4) (11.5) (11.4)
------- ------- ------- ------- -------
Total 501.9 550.7 575.7 606.2 637.7
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Consolidated Investment Data - Assets Managed
Unaudited [Billions of Dollars]
December 31 1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 21.918 24.097 24.066 30.233 27.689
Equity securities 0.727 0.558 0.660 0.543 0.604
------- ------- ------- ------- -------
Other investments 4.869 5.076 5.092 7.154 7.286
Total LNC Investments 27.514 29.730 29.819 37.929 35.578
Separate accounts 22.769 28.809 37.139 43.409 53.654
Cash and Invested Cash 1.452 1.145 3.795 2.433 1.896
Discontinued Operations 4.543 4.402
------- ------- ------- ------- -------
Total LNC 56.279 64.086 70.752 83.772 91.128
Non-affiliate assets managed 38.566 40.968 48.331 50.061 49.314
------- ------- ------- ------- -------
Total Assets Managed 94.845 105.054 119.083 133.833 140.443
======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 40.645 45.471 56.457 61.488 61.374
(See page 24 for additional detail)
Lincoln Investment Management-Corp 36.429 37.453 35.684 39.432 35.934
(Assets managed internally-see page 24)
Lincoln (UK) 5.378 6.107 6.775 7.573 8.589
Policy Loans (within business units) 0.603 0.758 0.763 1.840 1.892
Non-LNC Affiliates 11.790 15.265 19.404 23.500 32.654
------- ------- ------- ------- -------
Total Assets Managed 94.845 105.054 119.083 133.833 140.443
======= ======= ======= ======= =======
<CAPTION>
Dec Mar Jun Sep Dec Mar
End of Quarter 1997 1998 1998 1998 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 24.066 27.533 27.787 28.554 30.233 30.578
Equity securities 0.660 0.825 0.649 0.505 0.543 0.481
Other investments 5.092 6.873 6.836 6.705 7.154 7.071
------- ------- ------- ------- ------- -------
Total LNC Investments 29.819 35.230 35.272 35.764 37.929 38.129
Separate accounts 37.139 41.741 42.247 37.559 43.409 44.339
Cash and invested cash 3.795 2.642 2.414 2.725 2.433 2.327
------- ------- ------- ------- ------- -------
Total LNC 70.752 79.613 79.933 76.048 83.772 84.796
Non-affiliate assets managed 48.331 52.963 51.772 46.842 50.061 48.690
------- ------- ------- ------- ------- -------
Total Assets Managed 119.083 132.576 131.705 122.890 133.833 133.486
======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 56.457 62.819 62.179 55.542 61.488 59.939
(See page 25 for additional detail)
Lincoln Investment Mgmt. - Corp. 35.684 37.846 37.714 38.471 39.432 38.516
(Assets managed internally-see page 25)
Lincoln (UK) 6.775 7.467 7.501 6.932 7.573 7.631
Policy Loans (within business units) 0.763 1.405 1.500 1.517 1.840 1.842
Non-LNC Affiliates 19.403 23.039 22.812 20.427 23.500 25.558
------- ------- ------- ------- ------- -------
Total Assets Managed 119.083 132.576 131.705 122.890 133.833 133.486
======= ======= ======= ======= ======= =======
<CAPTION>
Jun Sep Dec Mar Jun Sep
End of Quarter 1999 1999 1999 2000 2000 2000
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Assets Managed by Source
LNC's Investments and Cash:
Fixed maturity securities 29.579 28.708 27.689 27.745 27.078 27.264
Equity securities 0.506 0.507 0.604 0.588 0.560 0.570
Other investments 7.278 7.317 7.286 7.442 7.419 7.471
Total LNC Investments 37.363 36.532 35.578 35.775 35.057 35.305
Separate accounts 47.864 46.229 53.654 56.908 54.924 54.411
Cash and invested cash 2.151 2.343 1.896 1.510 1.619 1.436
------- ------- ------- ------- ------- -------
Total LNC 87.378 85.104 91.128 94.192 91.601 91.152
Non-affiliate assets managed 49.827 48.068 49.314 47.150 45.945 45.119
------- ------- ------- ------- ------- -------
Total Assets Managed 137.205 133.172 140.443 141.342 137.546 136.271
======= ======= ======= ======= ======= =======
Assets Managed by Advisor
Investment Management segment 61.511 58.868 61.374 58.243 56.518 55.527
(See page 25 for additional detail)
Lincoln Investment Mgmt. - Corp. 37.391 36.820 35.934 35.541 34.891 34.981
(Assets managed internally-see page 25)
Lincoln (UK) 7.746 7.849 8.589 8.423 8.058 7.838
Policy Loans (within business units) 1.847 1.863 1.892 1.896 1.915 1.936
Non-LNC Affiliates 28.710 27.772 32.654 37.239 36.165 35.989
------- ------- ------- ------- ------- -------
Total Assets Managed 137.205 133.172 140.443 141.342 137.546 136.271
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Consolidated Investment Data
Unaudited [Millions of Dollars except as noted]
For the Year Ended December 31 1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Investment Income
Fixed Maturity Securities 1,610.2 1,690.1 1,832.1 2,065.8 2,232.9
Equity Securities 11.9 14.4 19.1 22.8 20.1
Mortgage loans on real estate 268.5 292.7 279.2 383.6 369.2
Real estate 117.9 125.4 99.4 86.8 64.1
Policy loans 36.6 40.7 44.5 99.5 116.5
Invested cash 31.6 69.2 102.4 156.8 110.3
Other investments 52.0 14.7 20.6 88.4 51.8
Investment revenue 2,128.6 2,247.2 2,397.3 2,903.7 2,964.8
Investment expense 148.9 159.2 146.6 222.3 157.3
------- ------- ------- ------- -------
Net Investment Income 1,979.8 2,087.9 2,250.8 2,681.4 2,807.5
Grossup of Tax Exempt Income 5.0 9.7 12.7 11.6 8.1
------- ------- ------- ------- -------
Adjusted Net Invest Income 1,984.7 2,097.7 2,263.5 2,693.0 2,815.6
========= ========= ========= ========= =========
Mean Invested Assets (Cost Basis) 25,888.9 27,906.2 30,337.3 36,573.8 39,027.5
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.67% 7.52% 7.46% 7.36% 7.21%
Investment Gains
Realized Gain on Investments 102.8 57.6 72.9 13.7 3.8
Real Gain on Sale of Subsidiary 58.3
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 787.0 (208.8) 159.6 116.4 (1,018.1)
Incr (Decr) in Foreign Exchange 6.5 53.0 (20.3) 3.8 (19.9)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 21.918 24.097 24.066 30.233 27.689
Fixed Maturity Sec (Adjusted Cost) 20.292 23.200 22.624 28.640 28.357
Equity Securities (Market) 0.727 0.558 0.660 0.543 0.604
Equity Securities (Adjusted Cost) 0.562 0.434 0.518 0.437 0.482
% of Portfolio (Based on Market)
Treasuries and AAA 35.0% 32.8% 27.6% 25.6% 22.8%
AA or better 45.0% 41.9% 35.1% 32.6% 29.8%
BB or less 7.0% 7.0% 7.3% 7.0% 8.0%
<CAPTION>
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1997 1998 1998 1998 1998 1999
-------- -------- -------- -------- -------- --------
Net Investment Income
<S> <C> <C> <C> <C> <C> <C>
Fixed Maturity Securities 465.7 502.1 506.3 512.8 544.5 557.8
Equity Securities 6.4 5.6 4.2 4.1 8.9 4.4
Mortgage loans on real estate 70.4 94.2 90.7 91.3 107.4 94.5
Real estate 24.6 24.2 23.9 20.3 18.4 19.4
Policy loans 11.2 22.9 22.1 24.6 29.8 28.6
Invested cash 41.5 41.7 30.4 40.7 44.0 32.4
Other investments 4.0 20.1 29.4 19.5 19.3 7.5
Investment revenue 623.8 710.9 707.0 713.4 772.4 744.6
Investment expense 38.7 52.6 48.3 63.8 57.7 35.1
-------- -------- -------- -------- -------- --------
Net Investment Income 585.1 658.4 658.7 649.6 714.7 709.5
Grossup of Tax Exempt Income 3.8 3.5 2.9 2.3 3.0 1.8
-------- -------- -------- -------- -------- --------
Adjusted Net Invest Income 588.9 661.8 661.6 651.9 717.7 711.3
======== ======== ======== ======== ======== ========
Mean Invested Assets (Cost Basis) 31,760.0 35,827.3 36,094.5 36,445.0 37,619.5 39,174.2
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.42% 7.39% 7.33% 7.16% 7.63% 7.26%
Investment Gains
Realized Gain on Investments 28.9 13.9 16.5 (17.3) 0.5 1.5
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) 15.2 39.0 (5.5) 304.2 (221.4) (297.7)
Incr (Decr) in Foreign Exchange (0.6) 8.0 (9.8) (19.9)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 24.066 27.533 27.787 28.554 30.233 30.578
Fixed Maturity Sec (Adjusted Cost) 22.626 26.076 26.233 26.610 28.640 29.681
Equity Securities (Market) 0.660 0.825 0.649 0.505 0.543 0.481
Equity Securities (Adjusted Cost) 0.517 0.634 0.528 0.470 0.437 0.380
% of Portfolio (Based on Market)
Treasuries and AAA 27.6% 26.7% 26.4% 26.1% 25.6% 26.3%
AA or better 35.1% 33.6% 33.7% 33.3% 32.6% 33.2%
BB or less 7.3% 7.9% 7.2% 6.3% 7.0% 7.1%
<CAPTION>
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
Net Investment Income
<S> <C> <C> <C> <C> <C> <C>
Fixed Maturity Securities 575.8 551.2 548.0 541.3 544.4 525.3
Equity Securities 4.9 3.9 6.9 3.7 5.7 3.6
Mortgage loans on real estate 85.5 94.7 94.5 92.0 95.1 94.4
Real estate 18.4 13.7 12.5 11.2 12.5 11.8
Policy loans 28.6 29.4 29.9 30.7 30.9 30.5
Invested cash 23.4 32.4 22.0 27.2 15.1 26.5
Other investments 13.4 9.9 20.9 35.1 2.0 26.9
Investment revenue 750.1 735.2 734.9 741.1 705.7 719.1
Investment expense 49.3 38.1 34.8 30.0 31.8 29.0
-------- -------- -------- -------- -------- --------
Net Investment Income 700.8 697.1 700.1 711.1 673.8 690.0
Grossup of Tax Exempt Income 2.0 1.7 2.6 1.5 2.3 1.4
-------- -------- -------- -------- -------- --------
Adjusted Net Invest Income 702.8 698.7 702.7 712.6 676.1 691.5
======== ======== ======== ======== ======== ========
Mean Invested Assets (Cost Basis) 39,385.3 39,111.8 38,438.6 38,237.4 37,306.1 37,250.8
Ratio of Adjusted Net Invest Inc
Over Mean Invested Assets 7.14% 7.15% 7.31% 7.45% 7.25% 7.43%
Investment Gains
Realized Gain on Investments (3.5) 4.1 1.6 (0.4) (6.7) (11.6)
Incr (Decr) in Unreal Gains on Sec
Avail-for-Sale (after DAC/Tax) (255.8) (102.7) (361.9) 54.5 (145.4) 218.8
Incr (Decr) in Foreign Exchange (9.5) 19.6 (10.2) (7.3) (0.9) (2.0)
Securities Available-for-Sale
[Billions of Dollars at End of Year]
Fixed Maturity Sec (Market) 29.579 28.708 27.689 27.745 27.078 27.264
Fixed Maturity Sec (Adjusted Cost) 29.494 28.974 28.357 28.295 27.788 27.727
Equity Securities (Market) 0.506 0.507 0.604 0.588 0.560 0.570
Equity Securities (Adjusted Cost) 0.385 0.414 0.482 0.475 0.446 0.450
% of Portfolio (Based on Market)
Treasuries and AAA 25.5% 24.2% 22.8% 22.7% 22.1% 22.3%
AA or better 32.5% 31.1% 29.8% 29.5% 29.2% 29.4%
BB or less 7.0% 7.5% 8.0% 7.4% 8.2% 6.8%
</TABLE>
<TABLE>
<CAPTION>
Common Stock / Debt Information
Unaudited [Dollars per Share, except Percentages]
For the Year Ended December 31 1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Common Stock [1]
Highest Price 15.719 15.338 13.813 19.032 24.125
Lowest Price 10.688 7.688 9.500 12.625 17.344
Closing Price 15.219 10.750 13.688 18.500 21.750
Dividend Payout Ratio [2] 42.9% 63.4% 63.5% 38.9% 52.6%
Yield [3] 4.3% 6.3% 5.3% 4.1% 3.8%
Preferred Stock Dividend (Millions) 15.328 9.143 13.033 17.246 17.212
Debt: (End of Period)
Senior Debt Ratings
Duff & Phelps AA AA-
Moody's A2 A2
Standard and Poors A+ A+
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+
Lincoln Life - Duff & Phelps AAA AAA
Lincoln Life - Moody's A1 A1
Lincoln Life - Standard & Poors AA- AA-
First Penn - A.M. Best* A A+
First Penn - Moody's
First Penn - Standard & Poors* AA- AA-
LLA of New York - A.M. Best*
LLA of New York - Duff and Phelps*
LLA of New York - Moody's
LLA of New York - Standard & Poors*
Ratios
Debt to Total Capitalization [4] 25.7% 21.1%
Debt to Equity [4] 34.7% 26.7%
<CAPTION>
For the Year Ended December 31 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Common Stock [1]
Highest Price 22.188 26.875 28.500 39.063 49.438 57.500
Lowest Price 17.313 17.313 20.375 24.500 33.500 36.000
Closing Price 17.500 26.875 26.250 39.063 40.907 40.000
Dividend Payout Ratio [2] 51.0% 39.7% 38.2% 22.8% 43.9% 50.5%
Yield [3] 4.9% 3.4% 3.7% 2.7% 2.7% 2.9%
Preferred Stock Dividend (Millions) 17.119 8.644 0.112 0.106 0.100 0.089
Debt: (End of Period)
Senior Debt Ratings
Duff & Phelps AA- AA- AA- AA- A+ A+
Moody's A1 A2 A2 A2 A2 A2
Standard and Poors A+ A A A A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A+ A A
Lincoln Life - Duff & Phelps AAA AA+ AA+ AA+ AA+ AA+
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A+ A+ A+ A A
First Penn - Moody's A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A A
LLA of New York - Duff and Phelps* AA+ AA+ AA+
LLA of New York - Moody's A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 19.9% 22.8% 18.8% 17.0% 21.2% 23.2%
Debt to Equity [4] 24.9% 29.5% 23.1% 20.5% 26.9% 30.3%
<CAPTION>
Dec Mar Jun Sep Dec Mar
For the Quarter Ended 1997 1998 1998 1998 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Common Stock:
Highest Price 39.065 43.250 47.063 49.438 43.344 50.250
Lowest Price 32.315 36.125 41.844 41.125 33.500 39.281
Closing Price 39.065 42.625 45.688 41.125 40.906 49.438
Yield [3] 2.7% 2.4% 2.3% 2.5% 2.7% 2.2%
Preferred Stock Dividend 0.027 0.026 0.026 0.026 0.023 0.024
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best
Duff & Phelps AA- AA- AA- A+ A+ A+
Moody's A2 A2 A2 A2 A2 A2
Standard and Poors A A A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A+ A+ A+ A+ A A
Lincoln Life - Duff & Phelps AA+ AA+ AA+ AA+ AA+ AA+
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A+ A+ A+ A+ A A
First Penn - Moody's A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A+ A+ A+ A+ A A
LLA of New York - Duff and Phelps* AA+ AA+ AA+ AA+ AA+ AA+
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 17.0% 22.0% 20.5% 21.9% 21.2% 20.7%
Debt to Equity [4] 20.5% 28.2% 25.8% 28.1% 26.9% 26.2%
<CAPTION>
Jun Sep Dec Mar Jun Sep
For the Quarter Ended 1999 1999 1999 2000 2000 2000
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Common Stock:
Highest Price 53.438 57.500 48.313 41.375 40.063 56.375
Lowest Price 45.688 36.000 36.500 22.625 29.000 35.625
Closing Price 52.313 37.563 40.000 33.500 36.125 48.125
Yield [3] 2.1% 2.9% 2.9% 3.5% 3.2% 2.4%
Preferred Stock Dividend 0.024 0.027 0.014 0.022 0.022 0.021
(Millions)
Debt: (End of Period)
Senior Debt Ratings
A.M. Best a
Duff & Phelps A+ A+ A+ A+ A+ A+
Moody's A2 A2 A2 A2 A2 A3
Standard and Poors A- A- A- A- A- A-
Claims Paying Ratings:
Lincoln Life - A.M. Best A A A A A A
Lincoln Life - Duff & Phelps AA+ AA+ AA+ AA+ AA+ AA+
Lincoln Life - Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Aa3
Lincoln Life - Standard & Poors AA- AA- AA- AA- AA- AA-
First Penn - A.M. Best* A A A A A A
First Penn - Moody's A1 A1 A1 A1 A1 A1
First Penn - Standard & Poors* AA- AA- AA- AA- AA- AA-
LLA of New York - A.M. Best* A A A A A A
LLA of New York - Duff and Phelps* AA+ AA+ AA+ AA+ AA+ AA+
LLA of New York - Moody's A1 A1 A1 A1 A1 A1
LLA of New York - Standard & Poors* AA- AA- AA- AA- AA- AA-
Ratios
Debt to Total Capitalization [4] 22.0% 22.0% 23.2% 23.3% 21.8% 21.2%
Debt to Equity [4] 28.2% 28.3% 30.3% 30.4% 28.0% 27.0%
</TABLE>
* Rating based on affiliation with Lincoln Life
[1] Stock prices shown above include 2-for-1 splits in June 1993, and June 1999
[2] Indicated dividend divided by net income
[3] Indicated dividend divided by the closing price
[4] Equity used in calculation assumes securities at cost. Minority
interest-preferred securities of subsidiary companies (hybrid
securities) are considered 50% debt and 50% equity.
Return on Equity/Return on Capital:
In order to accommodate the various perspectives, LNC presents three
separate Return on Equity numbers on pages 2 and 3 of this Statistical
Report. "Net Income Divided by Average Shareholders' Equity" tends to
fluctuate from period to period due to the realization of gains on the
sale of investments or subsidiaries during one period and the planned
generation of losses in another period for purposes of recovering
Federal Taxes previously paid. "Income from Operations Divided by
Average Shareholders' Equity" is less volatile but leaves out an
important element of earnings for a company that has a long-term goal
of enhancing shareholder value by realizing investment gains.
"Adjusted Income from Operations Divided by Adjusted Shareholders'
Equity" amortizes: 1) realized security gains on investments 2)
unrealized gains on equity securities over approximately five years and
eliminates amortization of goodwill related to acquisitions.
Return on capital measures the effectiveness of LNC's use of its total
capital, which is made up of equity, debt and hybrid securities. Return
on capital is calculated by dividing income from operations (after
adding back after-tax interest expense) by average capital. The
difference between return on capital and return on equity presents the
effect of leveraging on LNC's consolidated results.
