A major U.S. insurance and retirement company, Lincoln National sells annuities, life insurance, and employer-sponsored disability, dental, and vision benefits under the marketing name Lincoln Financial Group. Founded in 1905 in Fort Wayne, Indiana, it was named with the blessing of Abraham Lincoln's son Robert Todd, who granted permission to use his father's name and likeness — a nod to the integrity the founders wanted after an era of public distrust in insurers.
Lincoln National net income rose 91% to $1.3B as annuity market risk benefit gains returned and Life Insurance operating profit nearly doubled.
Annuity hedge gains returned, reversing the pattern of losses that had swung recent quarters. rose 91% to $1.3 billion on of $4.5 billion, driven by a $1.5 billion pre-tax gain in net annuity product features from favorable capital markets, while Life Insurance climbed to $57 million from $32 million. The company settled its remaining cost-of-insurance litigation and added $500 million in subordinated debt, leaving cash at $10.2 billion.
Key takeaways
Consolidated rose 91% to $1.3 billion, primarily because net annuity product features from market risk benefit changes swung to a $1.5 billion pre-tax gain from a $410 million gain in Q2 2025, as favorable capital markets drove the change.
Life Insurance rose to $57 million from $32 million a year ago, helped by lower benefits from reduced reserve changes for products and more favorable mortality.
Group Protection fell to $147 million from $173 million, as higher disability claims incidence and less favorable claims experience more than offset higher premiums from business growth.
Section summaries
Management's Discussion and Analysis
Q2 2026 net income rose to $1.3B driven by annuity product feature gains and improved Life Insurance results, partially offset by higher investment losses.
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Consolidated was $1,332M for Q2 2026, up from $699M in Q2 2025, primarily due to a $1,497M pre-tax gain in net annuity product features from favorable capital markets.
Annuities was flat at $287 million, as higher fee income from increased separate account balances was offset by higher commissions and lower net investment income.
The company issued $500 million of 6.800% Subordinated Notes due 2056 and refinanced a term loan, while holding company liquidity was supported by $310 million in dividends from its primary insurance subsidiary.
The EFG Bank, Brighton Trustees, and Crayne cost-of-insurance cases were dismissed by stipulation on May 22, 2026, following a final settlement agreement, resolving a significant portion of the multi-year litigation overhang.
What changed
The Life Insurance 's nearly doubled to $57 million from $32 million in Q2 2025 and rose from $41 million in Q1 2026, extending the swing to profitability that began in FY 2025 after years of losses. The prior watch item — whether the profit could be sustained when alternative investment income normalizes — remains open, though this quarter's improvement was driven by lower reserve changes and mortality rather than alternative investment income.
The Group Protection , which had improved steadily to 68.3% in Q3 2025 and 69.5% for FY 2025, showed signs of pressure this quarter as higher disability claims incidence drove down 15% . The Q1 2026 flag about less favorable disability claims experience has materialized into a clearer .
The cost-of-insurance litigation overhang flagged across multiple prior filings was substantially resolved with the May 2026 dismissal of the EFG Bank, Brighton Trustees, and Crayne cases, following the earlier Glover settlement. The Second Circuit appeal of the Glover settlement approval, flagged in Q2 and Q3 2025, is the remaining piece.
The Bermuda corporate income tax, flagged as an uncertain future cost since Q2 2024 and effective January 1, 2025, continues to be mentioned in risk factors without quantification, now more than 18 months after the effective date.
What to watch
Whether the Group Protection disability claims trend that drove the 15% decline in this quarter persists, and whether the 's reverts toward the mid-70s range seen in prior years.
The size and direction of the annuity market risk benefit adjustment next quarter, which remains the single largest swing factor in consolidated and drove the $1.5 billion pre-tax gain this period.
Whether the Life Insurance can sustain its at the $57 million level without the from reduced reserve changes for products, which may not recur at the same magnitude.
The outcome of the Second Circuit appeal of the Glover settlement approval, the last unresolved piece of the cost-of-insurance litigation overhang now that the EFG Bank, Brighton Trustees, and Crayne cases have been dismissed.
Annuities was flat at $287M as higher fee income from increased separate account balances was offset by higher commissions and lower net investment income.
Life Insurance improved to $57M from $32M, driven by lower benefits from reduced reserve changes for secondary guarantee products and more favorable mortality.
Group Protection decreased to $147M from $173M due to higher disability claims incidence and less favorable claims experience.
Retirement Plan Services increased to $49M from $37M, benefiting from higher net investment income and fee income on higher account balances.
The company issued $500M of 6.800% Subordinated Notes due 2056 and refinanced a term loan, while holding company liquidity was supported by $310M in dividends from its primary insurance subsidiary.
Quantitative and Qualitative Disclosures About Market Risk
We analyze and manage the risks arising from market exposures of financial instruments, as well as other risks, through an integrated asset-liability management process. We have exposures to several market risks including interest rate risk, equity market risk, credit risk and,…
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We analyze and manage the risks arising from market exposures of financial instruments, as well as other risks, through an integrated asset-liability management process. We have exposures to several market risks including interest rate risk, equity market risk, credit risk and, to a lesser extent, foreign currency exchange risk. For information on these market risks, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Form 10-K.
Reference is made to the consolidated civil actions captioned EFG Bank AG, Cayman Branch, et al. v. The Lincoln National Life Insurance Company; Brighton Trustees, LLC, et al. v. The Lincoln National Life Insurance Company; and Ryan K. Crayne, on behalf of and as trustee for Car…
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Reference is made to the consolidated civil actions captioned EFG Bank AG, Cayman Branch, et al. v. The Lincoln National Life Insurance Company; Brighton Trustees, LLC, et al. v. The Lincoln National Life Insurance Company; and Ryan K. Crayne, on behalf of and as trustee for Carlton Peak Trust v. The Lincoln National Life Insurance Company, previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”) and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. The parties fully executed a final settlement agreement and release dated May 19, 2026, in settlement of all claims in all three cases. The cases were dismissed by stipulation on May 22, 2026.
See Note 14 in “Part I – Item 1. Financial Statements” for further discussion regarding these matters and other contingencies.
In addition to the factors set forth in “Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements – Cautionary Language,” you should carefully consider the risks described under “Part I – Item 1A. Risk Fa…
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In addition to the factors set forth in “Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements – Cautionary Language,” you should carefully consider the risks described under “Part I – Item 1A. Risk Factors” in our 2025 Form 10-K. Such risks and uncertainties are not the only ones facing our Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks actually occur, our business, financial condition and results of operations could be materially affected. In that case, the value of our securities could decline substantially.