LINCOLN NATIONAL CORPORATION

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS

(Parent Company Only) (in millions, except share data)



	As of December 31,
	2014		2013

ASSETS
Investments in subsidiaries (1)	$	18,488	$	15,782
Derivative investments		298		264
Other investments		5		55
Cash and invested cash		666		1,558
Loans and accrued interest to subsidiaries (1)		2,495		2,995
Other assets		47		54
Total assets	$	21,999	$	20,708

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Common dividends payable	$	51	$	42
Short-term debt		250		501
Long-term debt		5,021		5,571
Loans from subsidiaries (1)		453		460
Payables for collateral on investments		96		374
Other liabilities		388		308
Total liabilities		6,259		7,256

Contingencies and Commitments

Stockholders’ Equity
Preferred stock – 10,000,000 shares authorized		-		-
Common stock – 800,000,000 shares authorized		6,622		6,876
Retained earnings		6,022		5,013
Accumulated other comprehensive income (loss)		3,096		1,563
Total stockholders’ equity		15,740		13,452
Total liabilities and stockholders’ equity	$	21,999	$	20,708

⁽¹⁾

Eliminated in consolidation.

LINCOLN NATIONAL CORPORATION

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Parent Company Only) (in millions)



	For the Years Ended December 31,
	2014			2013			2012
Revenues
Dividends from subsidiaries (1)	$	791		$	725		$	635
Interest from subsidiaries (1)		125			128			128
Net investment income		1			-			1
Realized gain (loss)		1			(9	)		(6	)
Other revenues		-			5			25
Total revenues		918			849			783
Expenses
Operating and administrative		39			46			10
Interest – subsidiaries (1)		6			5			5
Interest – other		280			282			291
Total expenses		325			333			306
Income (loss) before federal income taxes, equity in income (loss) of
subsidiaries, less dividends		593			516			477
Federal income tax expense (benefit)		(77	)		(73	)		(85	)
Income (loss) before equity in income (loss) of subsidiaries, less dividends		670			589			562
Equity in income (loss) of subsidiaries, less dividends		845			655			751
Net income (loss)		1,515			1,244			1,313
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities		1,688			(2,457	)		1,119
Unrealized other-than-temporary impairment on available-for-sale securities		20			29			2
Unrealized gain (loss) on derivatives instruments		(117	)		93			44
Foreign currency translation adjustment		2			(1	)		(5	)
Funded status of employee benefit plans		(60	)		91			(32	)
Total other comprehensive income (loss), net of tax		1,533			(2,245	)		1,128
Comprehensive income (loss)	$	3,048		$	(1,001	)	$	2,441

⁽¹⁾

Eliminated in consolidation.

LINCOLN NATIONAL CORPORATION

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

STATEMENTS OF CASH FLOWS

(Parent Company Only) (in millions)



	For the Years Ended December 31,
	2014			2013			2012
Cash Flows from Operating Activities
Net income (loss)	$	1,515		$	1,244		$	1,313
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Equity in (income) loss of subsidiaries greater than distributions (1)		(845	)		(655	)		(751	)
Realized (gain) loss		(1	)		9			6
Change in federal income tax accruals		(32	)		63			170
(Gain) loss on early extinguishment of debt		-			-			5
Other		(1	)		(10	)		(13	)
Net cash provided by (used in) operating activities		636			651			730

Cash Flows from Investing Activities
Sales or maturities of investments		50			-			-
Investment acquisition		-			(25	)		-
Capital contribution to subsidiaries (1)		(5	)		(75	)		-
Increase (decrease) in payables for collateral on investments		(278	)		315			73
Net cash provided by (used in) investing activities		(233	)		215			73

Cash Flows from Financing Activities
Payment of long-term debt, including current maturities		(500	)		-			(320	)
Issuance of long-term debt, net of issuance costs		-			400			300
Increase (decrease) in loans from subsidiaries, net (1)		(7	)		405			(3	)
Increase (decrease) in loans to subsidiaries, net (1)		-			(410	)		20
Common stock issued for benefit plans and excess tax benefits		32			32			5
Repurchase of common stock		(650	)		(450	)		(493	)
Dividends paid to common and preferred stockholders		(170	)		(129	)		(90	)
Net cash provided by (used in) financing activities		(1,295	)		(152	)		(581	)
Net increase (decrease) in cash and invested cash		(892	)		714			222
Cash and invested cash as of beginning-of-year		1,558			844			622
Cash and invested cash as of end-of-year	$	666		$	1,558		$	844

⁽¹⁾

Eliminated in consolidation.