Life insurer Lincoln Financial Group, with operations in Hartford, recorded a quarterly profit after posting losses in the past three quarters, helped by a gain from the divestiture of a unit, Reuters reports.
Third-quarter net income rose to $153 million, or 44 cents a share, compared with $148.4 million, or 58 cents a share, in the year-ago quarter when there were fewer shares outstanding, Reuters reports.
The company’s sale of a United Kingdon unit helped offset realized investment losses and a hedging losses related to its sale of variable annuities, a popular retirement product.
Philadelphia-based Lincoln had been hurt in recent quarters by investment losses and a surge in costs for stock market-linked annuities.
But its fortunes and those of the life insurance sector as a whole, have shown early signs of stabilization, as investment values and stock markets have risen.
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Lincoln, along with rival Hartford Financial Services Group Inc., got a helping hand. Both received cash injections from the U.S. Treasury earlier this year. Lincoln received $950 million to help shore up capita and raised additional funds through a share offering.
“These results should make people feel better about LNC,” Hexagon analyst David Havens said in an email after the results. “With a little (actually a lot) of help from Uncle Sam, and a receptive capital market, along with buyers of non-core assets, the company has been able to reposition itself pretty rapidly.”
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On an operating basis, Lincoln’s quarterly profit was $275.5 million, or 84 cents a share, in the quarter compared with $297.8 million, or $1.16 a share a year ago.
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Analysts on average expected the insurer to earn about 76 cents a share, according to Thomson Reuters I/B/E/S.
In the latest quarter, Lincoln recorded realized investment losses of $42 million and also also had a loss of $151 million from its variable annuity hedging program, which it said was in line with expectations.
But these losses were at least partially offset by a $55 million after-tax gain on the sale of Lincoln National (UK) Plc and the ability to free up $15 million it previously set aside to meet commitments on variable annuities it sold, thanks to recovery in equity markets.
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The company said it is on track to complete the sale of another unit, Delaware Investments, by year end, potentially giving it a boost in the fourth quarter.
