Exhibit 99.1
Dennis R. Glass
President and Chief Executive Officer
Lincoln Financial Group
©2009 Lincoln National Corporation
2009 Conference for
Investors and Bankers
Investors and Bankers
Strategic Overview
2
Equity
and Debt
$1,190
Capital
Purchase
Program
$950
Dividend,
Expense
Cuts $650
Cuts $650
LNUK
$300
Reinsurance
$240
Delaware
Investments
Investments
$400
Actions Taken Over Past 12 Months to Focus on
Core Businesses and Support Franchise
Core Businesses and Support Franchise
3
Despite the weakened macro-
economy, demand characteristics for
Lincoln products are strong
economy, demand characteristics for
Lincoln products are strong
Increased risk aversion and consumer
demand for guarantees and advice
demand for guarantees and advice
Continued shift in consumer
demographics toward retirees
demographics toward retirees
Rising taxes at both the state and
federal levels
federal levels
DC,
individual
annuities,
individual life,
and Group
Protection
will likely
experience
tailwinds from
consumer
trends
individual
annuities,
individual life,
and Group
Protection
will likely
experience
tailwinds from
consumer
trends
Source: McKinsey Consumer Financial Health Survey (March 2009); 2009 Retirement Consumer Survey
Considerable Tailwinds from Consumer Trends
Post-Crisis and Demographics
Post-Crisis and Demographics
4
Individual Life
Variable Annuity
Group large case
Top 20+ player
No participation
Top 10 player
Top 11-20 player
Fixed Annuity
Based on sales rankings from
industry sources1 (data compiled
by McKinsey & Co.)
industry sources1 (data compiled
by McKinsey & Co.)
Asset Management
Group <500 lives2
DC 401(k)
DC 403(b)
Competitors
1 Metrics used to calculate rankings: Individual Life - New Sales; VA/FA - Sales; Group - Premiums; DC / Asset management - Total AUM
2 Approximates; actual rankings are not available for <500 lives
Source: Pensions and Investments, Plan Sponsors, Limra, Institutional Investor, AM Best, Conning, Bloomberg
LNC
C
D
A
B
E
H
F
G
I
Lincoln One of Four Competitors with
Significant Market Position in Core Businesses
Significant Market Position in Core Businesses
5
Lincoln’s share of volume and ranking for key strategic partners
Variable Annuities
Share of
partner volume
partner volume
(Percent)
Rank within
partner
partner
Major Wire / Bank
Major Wire / Bank
10
Major Wire / Bank
Top MGA
Top MGA
Top MGA
Top Regional
Top Independent BD
Top Independent BD
Major Wire / Bank
33
23
26
30
14
15
25
4
3
4
4
1
5
7
1
1
2
3
2
1
2
Strategic
partner
partner
Life (incl. MoneyGuard1)
1 MoneyGuard is included as normalized sales in share of LFD volume (15% of gross premium)
Share of
partner volume
partner volume
(Percent)
Rank within
partner
partner
10
29
9
9
7
5
Top Partner Status with Key Distribution Firms
6
Life
Insurance
Insurance
49%
Individual
Annuities
28%
Defined
Contribution
12%
Group
Protection
11%
1 Based on LFG after-tax third quarter of 2009 YTD income from operations, excluding Other Operations.
Earnings1
2010 Focus
Clearly Focused on Four Core Insurance
and Retirement Businesses
and Retirement Businesses
Mark Konen
President
Insurance Solutions and
Retirement Solutions
Retirement Solutions
Will Fuller
President
Lincoln Financial Distributors
©2009 Lincoln National Corporation
2009 Conference for
Investors and Bankers
Investors and Bankers
Life Insurance and
Individual Annuities
Individual Annuities
2
Product Innovation and
Responsiveness
Responsiveness
Securing
Financial Futures
Financial Futures
Operational Effectiveness
Comprehensive
Risk Management
Risk Management
Distribution Depth
and Breadth
and Breadth
Cornerstones of Our Success
3
Scale Fuels Market Leadership
Compelling - -
And competitive products, along with a distribution
organization that is both a differentiator and a value
creator for Lincoln
organization that is both a differentiator and a value
creator for Lincoln
Comprehensive - -
Suite of solutions and a multi-channel, multi-product
distribution model
distribution model
Consistent - -
Approach to product development, risk management and
our deep distribution relationships and wholesaler
execution
our deep distribution relationships and wholesaler
execution
4
1 Source: LIMRA, based on YTD sales as of June 30, 2009, except Life/LTC ranking which is based on FY 2008 sales
2 As of September 30, 2009
UL | # 1 | Life-LTC | # 1 |
VUL | # 4 | Term | # 16 |
Life Insurance Overview
Leveraging scale to drive value
#3 life insurance provider in 20091
$532 billion of life insurance in-force2
Multi-channel distribution
Comprehensive product suite1
Industry leading underwriting
Consistent, stable market presence year
after year
after year
5
1 Based on YTD sales as of September 30, 2009, specialty represents COLI/BOLI
Key Takeaways:
Driving sales through multiple channels
Leveraging presence in MGA to increase MoneyGuard sales
Lincoln ranked top 1, 2 or 3 Life
carrier in many key distribution
firms
carrier in many key distribution
firms
Expanded distribution
relationships
relationships
Increased advisor base by 11%
Sales by Channel1
2009 Channel Highlights
Leveraging Scale and Footprint to Grow
Life Insurance Sales Across Key Partners
Life Insurance Sales Across Key Partners
6
Key Takeaways:
Increasing market share
Shift to term life and lower face amount UL policies
Significant increase in number of policies sold (UL +26%, Term +107%)3
COLI / BOLI
VUL
UL
Term
$415
$530
1 As of September 30, 2009; 2 Source: LIMRA, based on YTD sales as of June 30, 2009; 3 YTD 3Q09 versus YTD 3Q08
2008
2009
YTD Sales by Product1
($ in millions)
Market Share2
Increasing Market Share in a Changing
Sales Environment
Sales Environment
7
Secondary Guarantee
UL Product Management
UL Product Management
Changing competitive landscape
New products earn 12 - 15% returns without
capital solution
capital solution
Pricing and compensation changes
Focus on less capital-intensive “cells”
Leverage underwriting expertise
Manage interest rate risk
Liability structure Æ long investment strategy
Pricing assumes very low lapses
8
2005
2006
2007
2008
2009
YTD2
YTD2
MoneyGuard Sales
(in PAP, millions)
3Q08 YTD MoneyGuard Sales
1 Source: LIMRA, based on sales
2 As of September 30, 2009
MoneyGuard
Product meets consumer preference for flexible
benefits solutions
benefits solutions
Simplified story and product processes (fall 2006)
70% market share in 20081
YTD 3Q 2009 sales up 18%
Product and distribution
enhancements create
new opportunities
enhancements create
new opportunities
9
Life Insurance
2010 Focus
2010 Focus
Maintain product leadership
Build on core distribution strength
Explore opportunities with financial advisors
who do not currently sell life insurance
who do not currently sell life insurance
10
Variable Annuities | # 7 |
Fixed Annuities | # 13 |
Indexed Annuities | # 4 |
1 Source: MARC and LIMRA, based on YTD sales as of June 30, 2009
2 As of September 30, 2009
Product mix + continuity in the market = diversified risk
Individual Annuities Overview
Leveraging scale, traditionally conservative
approach to drive value
approach to drive value
# 5 overall annuity provider1
$72 billion in account values2
Multi-channel distribution
Comprehensive product suite1
Multiple income solutions
11
1 Based on YTD sales as of September 30, 2009, VA includes fixed portion
Key Takeaways:
Leverage distribution strength and product mix
Expand distribution relationships
Increase wholesaler productivity
Sales by Channel1
Sales by Product1
VA
Indexed
Fixed
Leveraging Scale and Footprint to Grow
Annuity Sales Across Key Partners
Annuity Sales Across Key Partners
12
Key Takeaways:
Increasing wholesaler productivity
Broad product portfolio to meet shifting demand
Distribution relationships drive long-term value
1 Variable includes fixed portion
Variable1
Indexed/Fixed
$7.9
YTD Sales by Product
($ in billions)
YTD Total Net Flows
($ in billions)
$9.4
Resilient Business Model in a Changing
Sales Environment
Sales Environment
13
Move toward more conservative products & guarantees
Lincoln objective - be a consistent
market participant
market participant
Stayed at conservative end of the
spectrum of guarantees
spectrum of guarantees
Product Guarantees1, May 2008
1 Calculated as initial withdrawal as a percentage of principal, buying at 60 and holding to 65
Source: Variable Annuity Internal Competitive Intelligence
àOctober 2009
Recent actions taken:
Tightened investment restrictions
Increased rider fees
Reduced roll-up period
Removed “double” from Lincoln
Lifetime Advantage
Lifetime Advantage
Industry Redesign of VA Living Benefits
14
Writing business consistently through market
cycles improves risk profile
cycles improves risk profile
Did not add roll-up to GMWB until early 2008
No significant change in policyholder behavior
during crisis
during crisis
Conservative death benefit guarantees
Hedge Program covers all VA guarantees
Assets cover liabilities
9/30/09 GMWB Exposure (Net Amount at Risk1/Account Value) | |||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | Total |
1.5% | 5.3% | 16.6% | 21.6% | 25.4% | 8.1% | 0.3% | 11.6% |
1 Net amount at risk is calculated as the guaranteed amount minus account value, floored at zero
Inforce VA Risk Profile
15
VA
FA
Combined
1Q 09
VA
FA
Combined
2Q 09
VA
FA
Combined
3Q 09
1 Represents un-levered returns based on pricing assumptions and capital markets conditions during the quarter
New Business Profitability
Strong Indexed/Fixed returns in early 2009 help
balance VA returns
balance VA returns
VA product changes (removing “double”) would
push Q3 VA return to 15%
push Q3 VA return to 15%
Reduced “tail” risk on new GMWB design
16
Individual Annuities
2010 Focus
2010 Focus
Maintain product leadership
Build on core distribution strengths
Simplify and enhance advisor experience
Explore new opportunities for annuities
Bob Dineen
President and Chief Executive Officer
Lincoln Financial Network
©2009 Lincoln National Corporation
2009 Conference for
Investors and Bankers
Investors and Bankers
The Retail Model &
Consumer Behavior
Consumer Behavior
2
Lincoln Financial Network Overview
LFN Positioned for Growth
Investment in Recruiting Platform
Trend in the Industry towards Independence
3
2007: First year of new national recruiting effort |
Successfully recruiting experienced, productive advisors |
Independent
Full Service Support
A National Support Network for Advisors and their Clients |
Growth of Advisor Population
LFN Offers a Unique Value Proposition
For Planners and Producers
For Planners and Producers
4
* Defined as distribution revenues, less producer compensation and fully allocated expenses
** Reflects LFN percentage of total LFG production, YTD as of September 30, 2009
LFN Internal P&L*
26% life insurance PAP**
~$100 million
~50% in-force life
insurance block
insurance block
11% annuity deposits**
~$1 billion
Bottom Line Operating Results and
Significant Contributions to the Corporation
Significant Contributions to the Corporation
5
Pre-Crisis February 2008 | Post-Crisis April 2009 |
20% of retirees say that they are less financially secure than they thought they would be* | 49% of retirees say that they are less financially secure than they thought they would be* |
53% of retirees are risk- averse* (call themselves extremely or somewhat conservative) | 70% of retirees are risk- averse* (call themselves extremely or somewhat conservative) |
Post-crisis, 72% of pre-retirees are concerned about
taxes in retirement**
taxes in retirement**
* Society of Actuaries, LIMRA, InFRE study: What a Difference a Year Makes, April 2009 ** McKinsey Consumer Financial Health Survey, March, 2009
Consumer Sentiment Shift Post-Crisis…
6
* U.S. Census Bureau
The Need for Advice
Opportunity for Lincoln and the Industry
Opportunity for Lincoln and the Industry
Of 79 million baby boomers …
… only 20% have a clear plan for their retirement*
Consumers are more risk-averse
$3 trillion “on the sidelines” in minimal interest accounts
Implications: muted recovery plus low interest rates will
suppress individual wealth building
suppress individual wealth building
Advisors can build trust in this environment by
understanding new desire for downside protection and
income guarantees
understanding new desire for downside protection and
income guarantees
Taxes are expected to become more of a top-of-
mind issue as marginal tax rates increase and
Congress pursues estate tax legislation
mind issue as marginal tax rates increase and
Congress pursues estate tax legislation
Will Fuller
President and Chief Executive Officer
Lincoln Financial Distributors
©2009 Lincoln National Corporation
2009 Conference for
Investors and Bankers
Investors and Bankers
Executing and Evolving
the LFD Model
the LFD Model
8
Goal is to Build on LFD’s Strengths and Position in
the Industry to Increase Our Contribution to Lincoln
the Industry to Increase Our Contribution to Lincoln
Annuities 288
Life Insurance 223
Defined Contribution 44
LFD Sales Force
9
Client needs
and preferences
and preferences
Distribution
partnerships
partnerships
Execution
ACT III
Execute in the
Current
Environment
Current
Environment
Adjust to
Market
Realities
Market
Realities
Align to enterprise
structure
structure
Contain / reduce
expenses
expenses
Right-size sales force
for market opportunity
for market opportunity
Align sales structure
with consumer
demand
with consumer
demand
Protect and strengthen distribution
relationships
relationships
26 new or expanded distribution
relationships
relationships
Base of active advisors up 6%
Achieve Sales Targets
Gross sales
Diverse mix of sales
Net flows
Focus on wholesaler productivity
discipline
discipline
Focus on talent retention and
recruiting
recruiting
2009 was a Transitional Year - Focused on
Executing Through the Financial Crisis
Executing Through the Financial Crisis
ACT I
ACT II
10
Grow Sales in core products
Annuities
Life Insurance
Defined Contribution
Pursue natural cross-sell
synergies
synergies
Increase wholesaler
productivity
productivity
Core Focus
Drive Execution and Growth: Focus on
Core Strengths and Additive Opportunities
Core Strengths and Additive Opportunities
11
Financial Institutions |
General Agents |
Lincoln Financial Network |
Preeminent
Execution Focus
What We Will Do
To Benefit Our Clients
Driving Growth and Profitability in 2010 and Beyond
with A Client Centric Approach to Distribution
with A Client Centric Approach to Distribution
Establish a “360°view” of
distribution relationships with
shared goals
distribution relationships with
shared goals
Improve client experience with formalized
“Voice of the Customer” process
“Voice of the Customer” process
Implement firm-wide core skills &
productivity initiative
productivity initiative
Recruit & retain THE BEST industry talent
Continue to drive a diverse mix
of business
of business
Leverage cross-organization synergies
and promote cross-product sales
and promote cross-product sales
Maintain fiscal discipline
Essential
Partner
Program
Partner
Program
Client
Experience
Experience
Reputation
Sales Force
Productivity
Productivity
Productivity
Talent
Maximize
Distribution
Value to LFG
Distribution
Value to LFG
Profitability
©2009 Lincoln National Corporation
Mark Konen
President
Insurance Solutions and
Retirement Solutions
Retirement Solutions
2009 Conference for
Investors and Bankers
Investors and Bankers
Defined Contribution and
Group Protection
Group Protection
2
Small Case Market
(Director Program)
Large Case Market
(Alliance Program)
Multi-Fund and
Other
Sales3
AUM3
1 Source: LIMRA, as of June 30, 2009
2 Source: LIMRA, YTD as of June 30, 2009
3 YTD as of September 30, 2009
$3.8 billion
$34.3 billion
Defined Contribution Overview
Focus on 403(b) consolidation
#6 in 403(b) plan assets1
Top 3 in Healthcare and top 10 in K-12, based on
contributions2
contributions2
Focus 401(k) efforts on top strategic partners
3
Deposits
Outflows
Net Flows
Production Results
($ billions)
($ billions)
Key Takeaways:
Market “frozen” throughout much of 2009
Solid production despite economic pressures
Improved lapse experience driving increase in net flows
Total DC participants up 5% over last year
Defined Contribution
Increasing Net Flows
Increasing Net Flows
4
Mid-Large 403(b) and Corporate | Micro-Small 401(k) | |
Distribution Force | Plan Sponsor-Focused 10 external and 6 internal wholesalers 21 account executives Participant Focused 300 Retirement Consultants and Advisors | 16 external and 8 internal wholesalers Leverage LFD strategic relationships |
Participants | 1.2 million | 0.2 million |
AUM1 | $28.5 billion | $5.8 billion |
1 As of September 30, 2009
Defined Contribution
Distribution Depth and Breadth
Distribution Depth and Breadth
5
2010 Focus - Leveraging Participant
Relationships
Relationships
Untapped Opportunity
Over a million DC participants
Need for retirement planning guidance
Maximize participant lifecycle with Lincoln
Differentiated service models depending on
client needs
client needs
High-Touch model with Retirement Consultants and
Advisors
Advisors
Efficient-Touch model with Phone Team and Web
6
2010 Focus - Continued
Strengthen core service offering
Attract new assets and maintain existing plans
Key investments
UNIFIER enhancements
Website upgrades
Focus on key Strategic Partners and TPAs in
small 401(k) space
small 401(k) space
Leverage LFD relationships
Increase wholesaler productivity
7
Less than 500 Lives
501-1000 Lives
1000+ Lives
Sales by Product2
Short-Term Disability
Dental
Group Life/AD&D
Long-Term Disability
1 Source: LIMRA, YTD as of June 30, 2009
2 Based on YTD annualized sales as of September 30, 2009
$194 million
Group Protection Overview
Leveraging service expertise and distribution
strengths in core market of under 500 lives
strengths in core market of under 500 lives
#3 Group LTD and #7 Life carrier by new
contracts issued1
contracts issued1
Voluntary sales ~38% of total new sales2
8
1 As of September 30, 2009
2 YTD as of September 30, 2009 compared to YTD September 30, 2008
Group Protection
Distribution Depth and Breadth
Distribution Depth and Breadth
Distribution model
2 Regional VP’s
12 Regional Directors
122 sales reps (wholesalers)1
Focus on rep productivity
Number of reps down slightly from 2008
Cautious due to economic environment
Upgraded talent
Rep productivity up 7% versus last year2
Poised for growth
9
8% CAGR
Gaining momentum with a strong pipeline
Year-over-year third quarter 2009 sales up 17%
+4%
Group Protection
Sales Growth
Sales Growth
10
Net Earned Premium
Solid growth in spite of difficult environment
Case lapses consistent with recent history
Unemployment and wage actions depressing
inforce premium growth
inforce premium growth
11% CAGR
+5%
Group Protection
Non-Medical Premium Growth
Non-Medical Premium Growth
11
74%
71%
68%
Historic
Guidance
Guidance
Actual
Consistently strong loss ratios over several years
Disciplined risk selection and claims management expertise
Recent disability loss ratios extremely good
Expect near-term loss ratios to continue to trend
favorably to historic guidance
favorably to historic guidance
Significant investments in claims management
infrastructure
infrastructure
* YTD as of September 30, 2009
Group Protection
Strong, Consistent Loss Ratios
Strong, Consistent Loss Ratios
12
1 Source: Eastbridge Consulting Group, Inc., An Update on the Voluntary Industry, May 2008
2 Best’s Review, July 2009
2010 Focus - The Voluntary Opportunity
Compelling Industry Opportunity
Continued trend of employers shifting costs to employees
79% of employers with 101-500 lives offer at least one
voluntary product1
voluntary product1
2008 industry sales of $5.2 billion and growing2
Compelling LFG Opportunity
Proven success and momentum with YTD sales of
$73 million up 18% versus last year
$73 million up 18% versus last year
Attractive profit characteristics
2010 Initiatives
Expand penetration with brokers
Position for entry with classic worksite brokers
New product offerings (e.g. accident)
Expanded online enrollment
13
2010 Focus - Continued
Expansion of field force
Increase rep base to capitalize on opportunities
Continue to increase rep productivity
Complete reengineering of claims system and
processes
processes
Increased efficiency and effectiveness
Enhanced ability to manage claims
14
Product Innovation and
Responsiveness
Responsiveness
Securing
Financial Futures
Financial Futures
Operational Effectiveness
Comprehensive
Risk Management
Risk Management
Distribution Depth
and Breadth
and Breadth
Cornerstones of Our Success
©2009 Lincoln National Corporation
Fred Crawford
Chief Financial Officer
2009 Conference for
Investors and Bankers
Investors and Bankers
Financial Overview
Earnings and Capital
Earnings and Capital
2
S&P 500
Equity Markets
Market Dynamics:
Account values recovering - variable fees, NAR, DAC, statutory results
Rates rising & spreads tightening - portfolio yields flat and hedge volatility
Unrealized gains/losses recover - some trading account profits generated
Interest Rates & Spreads
Barclays Credit
OAS
OAS
10yr Treasury Rates
0
2009 Market Recovery
3
$228
$263
Life Insurance
Group Protection
Annuities
Defined Contrib.
Avg. diluted shares
257.8 262.4 310.0
1 See appendix at the end of this presentation for a definition and reconciliation of income from operations to net income and a schedule of notable items
3Q Income From Continuing Operations
Adjusted for Notable Items1
Adjusted for Notable Items1
($ in millions)
Earnings Drivers
UK and Delaware moved to
Discontinued Operations
Discontinued Operations
Insurance Solutions:
Reinsurance impact
Alternative investments
Strong group loss ratios
Retirement Solutions:
Positive and balanced flows
Market impact on account values
EPS impact from capital actions
$217
Third Quarter Results
Sequential Growth in Account Values and Earnings
Sequential Growth in Account Values and Earnings
4
Life
36%
36%
Dental
10%
10%
Disability
44%
44%
Group Net Earned Premium $1.6b
Medical
10%
10%
UL 43%
VUL 14%
UL SG
23%
23%
MG 7%
Life GAAP Reserves $42b
Whole Life
10%
10%
Term 3%
Return on Capital1
Life Segment 9%
Stable returns with building
in-force and account vales
in-force and account vales
Reinsurance transactions impact
on earnings and capital
on earnings and capital
Alternative investment income
expected to recover
expected to recover
Group Segment 16%
Favorable loss ratios below 70%
Steady but lower growth in
premium expected near-term
premium expected near-term
1 Reflects YTD reported un-leveraged returns excluding goodwill.
Note: Life Insurance GAAP reserves as of September 30, 2009. Group Protection net earned premium represents trailing 12 months.
Insurance and Protection Businesses
Stable and Building Returns
Stable and Building Returns
5
Current Reserve Financing
$1.8b LOC facility through 2012
$400mm long-term financing
$800mm of reserves held
Statutory Reserves
$25b of UL reserves
$6b of Whole Life & Term reserves
$2.5b of UL reserves
$500mm of Term reserves
Strategy:
Term-out a portion of LOC needs in next few years
Plans to execute on a $300mm term solution in 2009
Absorb natural growth in reserves through statutory earnings
Required Reserves Subject
to Capital Financing
Life Reserve Management
Executing on a Prudent Long-Term Plan Over 3 Years
Executing on a Prudent Long-Term Plan Over 3 Years
6
Retirement AUM = $105 billion
DC Mutual
Funds
DC Fixed
Annuities
DC
Variable
Annuities1
Variable
Annuities1
Individual Fixed Annuities
Individual
Variable
Annuities
14%
18%
6%
9%
49%
4%
Fixed Portion of Individual
Variable Annuities
Variable Annuities
1 Includes fixed portion of VA
2 Reflects year-to-date reported un-leveraged returns excluding goodwill.
Return on Capital2
Individual Annuities 10%
Average account values recovering
Liquidity fully invested in 3Q
Death benefit reserve and DAC
amortization elevated
amortization elevated
Defined Contribution 13%
Average account values recovering
Plans to invest in the platform
Retirement Returns
Diverse Portfolio Driving Balanced Returns
Diverse Portfolio Driving Balanced Returns
7
55%
Account
Value
Value
Step Up <1%
36%
Individual VA AUM1 = $56 billion
Hi-Water
Mark
8%
Return of
Premium
Individual VA Death Benefits
LB NAR3 $6.5b $3.1b
DB NAR3 $14.8b $7.3b
Hedge Target $3.7b $1.1b
Hedge Assets $4.3b $1.2b
GAAP Reserves $3.2b $1.2b
Statutory Reserves2 $1.1b $.8b
12/31/08 9/30/09
16%
46%
38%
No
Guarantee
Guaranteed
Income
Benefit
Income
Benefit
Guaranteed
Withdrawal
Benefit
Withdrawal
Benefit
1 Includes fixed portion of VA
2 Statutory reserves excludes adoption of VACARVM
3 Net amount at risk is calculated as the guaranteed amount minus account value, floored at zero
Reserve Metrics
Individual Variable Annuities
Proven Risk Management and Full Economic Hedge
Proven Risk Management and Full Economic Hedge
8
Realized Losses
($millions)
All data shown for available-for-sale securities. All realized loss data presented on a pre-DAC and tax basis; excludes losses on derivatives; includes losses
on sold securities.
on sold securities.
* Excludes the impairment on Bank of America common stock securities of $131 million, pre-tax, held at the holding company and does not impact insurance
subsidiary capital.
subsidiary capital.
Note: 2009 reflects the adoption of FASB Staff Position No. FAS 115-2 and 124-2.
General Account Investment Results
Unrealized Loss Conditions Improving
Unrealized Loss Conditions Improving
9
1 Represents statutory results of Lincoln National Life Insurance Company, Lincoln Life & Annuity of New York, and First-Penn Pacific Life Insurance Company;
The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or
promotional activities.
The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or
promotional activities.
Potential Headwinds - - asset impairments, ratings migration, and
adoption of VACARVM
adoption of VACARVM
Potential Tailwinds - - statutory earnings, securitization, and potential net
impact of various NAIC actions
impact of various NAIC actions
Est.
Total Adjusted Capital & RBC1
($billions)
Risk Based Capital Ratio1
Insurance Company Capitalization
Capital Positioned to Withstand Stressed Markets
Capital Positioned to Withstand Stressed Markets
10
$900mm of liquid
investments1
investments1
CP: $150mm issued under
A2/P2 program1
A2/P2 program1
Next maturity of $250mm due
March 2010
March 2010
Delaware sale on track with
$400mm in proceeds
$400mm in proceeds
Expect to push some capital
down into subsidiaries
down into subsidiaries
Considering refinancing
alternatives to pre-fund 2010
maturity
alternatives to pre-fund 2010
maturity
Holding Company
Year-end Outlook
Strategy:
Target 12-18 months of cash flow held at the holding company
Ladder maturities and pre-fund when markets are favorable
1 As of September 30, 2009
Financial Flexibility
Excess Holding Company Liquidity and Ready Capital
Excess Holding Company Liquidity and Ready Capital
Appendix
12
Income (loss) from operations and ROE, as used in the earnings release, are non-GAAP financial measures and
are not substitutes for net income (loss) and ROE, calculated using GAAP measures. Income (loss) from
operations represents after-tax results excluding, as applicable, realized gains and losses associated with the
following: sale or disposal of securities; impairments of securities; change in the fair value of embedded
derivatives within certain reinsurance arrangements and the change in the fair value of related trading securities;
change in the guaranteed living benefits embedded derivative reserves within our variable annuities net of the
change in the fair value of the derivatives we own to hedge the changes in the embedded derivative reserves,
the net of which is referred to as GLB net derivatives results; net difference between the benefit ratio reserves on
our guaranteed death benefit riders within our variable annuities and the change in the fair value of the
derivatives excluding our expected cost of the hedging instruments; and changes in the fair value of the
embedded derivative liabilities related to index call options we may purchase in the future to hedge contract
holder index allocations applicable to future reset periods for our indexed annuity products, income (loss) from
the initial adoption of changes in accounting standards, income (loss) from reserve changes (net of related
amortization) on business sold through reinsurance, losses on early retirement of debt, including subordinated
debt, losses from the impairment of intangible assets and income (loss) from discontinued operations.
are not substitutes for net income (loss) and ROE, calculated using GAAP measures. Income (loss) from
operations represents after-tax results excluding, as applicable, realized gains and losses associated with the
following: sale or disposal of securities; impairments of securities; change in the fair value of embedded
derivatives within certain reinsurance arrangements and the change in the fair value of related trading securities;
change in the guaranteed living benefits embedded derivative reserves within our variable annuities net of the
change in the fair value of the derivatives we own to hedge the changes in the embedded derivative reserves,
the net of which is referred to as GLB net derivatives results; net difference between the benefit ratio reserves on
our guaranteed death benefit riders within our variable annuities and the change in the fair value of the
derivatives excluding our expected cost of the hedging instruments; and changes in the fair value of the
embedded derivative liabilities related to index call options we may purchase in the future to hedge contract
holder index allocations applicable to future reset periods for our indexed annuity products, income (loss) from
the initial adoption of changes in accounting standards, income (loss) from reserve changes (net of related
amortization) on business sold through reinsurance, losses on early retirement of debt, including subordinated
debt, losses from the impairment of intangible assets and income (loss) from discontinued operations.
The earnings used to calculate ROE, as used in the earnings release, are income (loss) from operations.
Income (loss) from operations is an internal measure used by the company in the management of its operations.
Management believes that this performance measure explains the results of the company's ongoing businesses
in a manner that allows for a better understanding of the underlying trends in the company's current business
because the excluded items are unpredictable and not necessarily indicative of current operating fundamentals
or future performance of the business segments, and, in most instances, decisions regarding these items do not
necessarily relate to the operations of the individual segments.
Income (loss) from operations is an internal measure used by the company in the management of its operations.
Management believes that this performance measure explains the results of the company's ongoing businesses
in a manner that allows for a better understanding of the underlying trends in the company's current business
because the excluded items are unpredictable and not necessarily indicative of current operating fundamentals
or future performance of the business segments, and, in most instances, decisions regarding these items do not
necessarily relate to the operations of the individual segments.
Definition of Income From Operations
13
Net Income (Loss Available to Common Stockholders)
Less:
Preferred stock dividends and accretion of discount
Minority adjustment
Net Income
Less:
Excluded realized gain (loss)
Income from reserve changes (net of related
amortization) on business sold through reinsurance
amortization) on business sold through reinsurance
Gain on early extinguishment of debt
Impairment of intangibles
Income (loss) from discontinued operations
Income from Operations
Earnings per share (diluted)
Net Income (Loss)
Income from Operations
($ in millions, except per share data)
$(161.4)
(161.4)
(215.9)
0.4
0.6
(153.8)
$ 207.3
$(0.62)
$ 0.79
2Q 09
3Q 09
$(579.0)
(0.1)
(578.9)
(188.4)
0.4
41.8
(603.5)
7.7
$ 163.1
$(2.27)
$ 0.63
1Q 09
$137.0
(16.3)
153.3
(196.0)
0.4
1.4
72.0
$275.5
$0.44
$0.84
Net Income to Income from Operations
Reconciliation
Reconciliation
14
Reported
DAC Unlocking
Tax-related items
Expenses
Other (net)
Total*
Alternative
Investments**
($ in millions)
74
74
* Excludes alternative investment income
** Reflects actual income or (loss) on alternative investment portfolio
Retirement Solutions
Annuities
Insurance Solutions
Defined
Contrib.
Contrib.
Life
Insurance
Insurance
Group
Protection
Protection
Other
Operations
Operations
30
30
142
142
(2)
26
26
(108)
(64)
(44)
1Q 2009 Income From Operations
Schedule of Notable Items
Schedule of Notable Items
15
Reported
DAC Unlocking
Tax-related items
Expenses
Mortality
Other (net)
Total*
Alternative
Investments**
($ in millions)
65
65
(5)
Retirement Solutions
Annuities
Insurance Solutions
Defined
Contrib.
Contrib.
Life
Insurance
Insurance
Group
Protection
Protection
Other
Operations
Operations
28
28
(3)
133
2
5
3
123
(20)
34
34
(1)
(52)
(19)
(33)
* Excludes alternative investment income
** Reflects actual income or (loss) on alternative investment portfolio
2Q 2009 Income From Operations
Schedule of Notable Items
Schedule of Notable Items
16
Reported
DAC Unlocking
Tax-related items
Other
Total*
Alternative
Investments**
($ in millions)
95
11
3
1
80
2
Retirement Solutions
Annuities
Insurance Solutions
Defined
Contrib.
Contrib.
Life
Insurance
Insurance
Group
Protection
Protection
Other
Operations
Operations
43
5
38
1
137
(12)
6
143
(5)
35
35
(33)
(33)
1
* Excludes alternative investment income
** Reflects actual income or (loss) on alternative investment portfolio
3Q 2009 Income From Operations
Schedule of Notable Items
Schedule of Notable Items