ex99-1.htm

EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Lincoln Distribution
Driving Enterprise Strategy and Value

Will Fuller
President, Lincoln Financial Group Distribution

Secular Trends Shaping the Market

Decumulation

Risk Management

Planning

Guaranteed Outcomes

Risk Tolerance

Transaction

Asset Management

A “State of Shift” Driven by the Consumer

Demographic

Behavioral

Economic

Innovation

Regulatory

Industry Leading Distribution

Enabling LFG Strategy by Growing Advisors
That Sell Our Products, On Our Terms

58,000
Advisors Selling
Lincoln Products

Wholesale

600 Sales Professionals

Largest Wholesale Operation

Retail

8300 Advisors

#2 Independent Retail Operation1

1 Source: Investment News Top Independent Broker Dealers, Dec. 2012

Strategic Partner Strategy

Key Expansions: RPS, Primerica, Fee based Annuities, RIA channel

Accelerated Growth in the Most Attractive Markets
Through the Leading Distributors in the Industry

1 Source: MARC/VARDS 2012

2 Source: LIMRA U.S. Individual Annuities Sales Participant’s Report 4Q 2012

3 Source: LIMRA U.S. Individual Life Insurance Sales 4Q 2012 (Excludes Whole Life), LIMRA 2012 Life Combination Products Survey

	Industry		Strategic Partners*
Product	Share	Rank	Rank	Share
Variable Annuity1	7.2%	#5	#3
Fixed Annuity2	4.2%	#7	#5
Life Insurance3	7.5%	#1	#1
MoneyGuard3	73.0%	#1	#1

Higher share than industry

Same share as industry

Lower share than industry

The Value of our Strategic Partner Model
RPS example

New RPS Partners
(2009-Present)

$877

$400

+48%

• Established Strategic Partnerships

• Established Advisor Relationships

• Cross Promotion/Referrals

• Attract Top Wholesaling Talent

Small Market Sales
(Millions)

The Value of Our Own Strategic Partner

LFN is Our #1 Strategic Partner and Competitive Advantage

LFN Rank in LFG Sales

2012

14%

32%

28%

#1 in Life

#1 in MoneyGuard

#1 in Small Market RPS

#2 in Annuities

• #2 Independent Broker Dealer

• Independent and Open Architecture

• Most Successful Pivot Partner

• Direct Advisor and Client Insight

• 5 Year Plan to Reach 10,000 Advisors

Proven Operating Model

We are Growing Advisors Selling Lincoln Products

We are Driving Consistent Results
Consolidated Deposits

Consistency

• 28 consecutive quarters
with $4B+ in Deposits

• 16 consecutive quarters
with $1.3B+ of Net Flows

RPS

Life

$18.9

$20.2

$21.0

$22.2

Product Pivot Strategy

1 Source: MARC/VARDS

2 Source: LIMRA U.S. Individual Life Insurance Sales (Excludes Whole Life, includes MoneyGuard)

3 Excludes MoneyGuard

Variable Annuity

Life

Mobilizing Distribution Enables a Shift in Product Mix

VA Market Share and Rankings1

Life Market Share and Rankings2

100%

3Q 2011

78%

22%

Traditional
Subaccounts

Managed
Risk Deposits

1Q 2013

GUL

Non-GUL3

65%

71%

29%

35%

3Q 2011

1Q 2013

Ranked
#5

Ranked
#2

Ranked
#1

PIVOT Initiatives

Consistency in the Market

Why We’ll Win

• Leading Wholesale and Retail Franchises

• Leading Industry Partners

• Actively Growing Advisors

• Demographics in Our Favor

• Singular Focus on Enabling LFG Product Strategy

Lincoln is Well Positioned for the Shift Towards Planning,
Risk Management and Guarantees

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Life Insurance
Protecting Margins and Leveraging Franchise

Mark Konen
President, Insurance & Retirement Solutions

Headwinds

Franchise Strength

• Alignment of distribution breadth
with diverse and innovative product
portfolio

• Product responsiveness

• Risk management track record

• Continued low interest rates

• Regulatory changes

• Economic uncertainty

Life insurance remains an important solution

Lincoln and the Life Insurance Industry Today

2011

Total Sales: $700M

Sales by Product

27%

42%

20%

2012

Total Sales: $588M

29%

25%

29%

10%

Pivot Products

Protect Products

IUL

VUL

Term

MoneyGuard

UL/GUL

Pivot Strategy Success

Pivot sales 31% of total 2011, 46% of total 2012, 51% of total 1Q 2013

	Lincoln	Industry1	Rank1 (vs. last year)
VUL	20%	2%	2(+2)
Term	11%	0%	9(+2)
IUL	96%	37%	12(+2)

GUL	-53%	0%	5(-4)
Life - LTC Combo	-9%	2%	1(+0)

Total (non-W.L.)	-16%	6%	1(+0)

2011-2012

Year-over-Year Sales Growth

Leading the Industry through Change

• Increased IUL, VUL and
Term share

1 Industry data based on LIMRA 12/31/12

• GUL share declined as
competitors slower to react

• Maintained top rank in our
markets

Interest Rate Assumption	Current Protect/Pivot	Hypothetical No Protect/Pivot
Forward Curve	10-12%	7-9%
Prolonged Low	8-10%	5-7%

New Business Returns

Strategic actions result in strong new business returns
even in stressed interest rate scenarios

Yield and spread history1

Effectively Managing Interest Spread

1 Yields and spreads exclude alternative investments

• Previous actions

– Credited rates

– Investment
strategies

• New business pricing
not reliant on
investment portfolio
yield

• In-force profitability
not eroded by new
sales

Mortality	2009	2010	2011	2012
Actual to benchmark mortality ratios	75%	79%	79%	78%

Lapses (% of Face Amt)	2009	2010	2011	2012
GUL	4.0%	4.3%	3.6%	3.2%

Key Assumptions Aligned with Experience

• GUL pricing averages 2%

• Actual experience validates
our conservative pricing

• Stable mortality experience

• Industry leading
underwriting

12%

10%

-2%

+1%

GUL IRR WALK

Pricing Target

Investment Yield

Other Experience Factors

-1%

Cost of Capital Solutions

In-Force GUL Profitability Weathers Challenges

• 18% of total Life business

• Dedicated investment portfolio

• 60-70% of product cash flows
already invested

Adjusted Returns

Protecting Margins with
Disciplined Management

– Pricing and management
actions

While Growing the Business

– Expanded reach with
comprehensive, innovative
suite of products

Leading the market on our terms

The Power of Lincoln’s Franchise

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Group Protection
Investing for Growth

Mark Konen
President, Insurance & Retirement Solutions

Targeting Growing Market Segments

• Top 10 carrier in most product offerings

Total Group

• Ranked #10 in 2012

Voluntary Products

• 2012 case count rank:

Small and Medium
Businesses
(<1,000 employees)

Market Growth
Expectations

– Life: #4

– LTD: #2

– STD: #4

Lincoln’s Strategic Focus:

Future sales
growth drivers

14% average increase in sales since 2010

• Sales force growth

• Industry leading productivity

• Voluntary capabilities

• Deepen broker penetration

Accelerating Sales Growth through Distribution

1 In millions

Impact
Employee
Group

Solutions

Market &
Sales

Education/
Enrollment

Onboard

Billing &
Service

Claims
Management

Economic Impact

Investments represent 2% of premium

Drive outsized revenue growth

Improved margins over time

Investing $150M Across the Value Chain

• 2012: increase in LTD severity

• 1Q13: elevated group life mortality

Drivers

Non Medical Loss Ratios

Growing Profitability

Expected Results

• Long term 12-15% ROE

• Top 3 in Disability/Life
market

• Top 5 in Voluntary sales

Profitable Growth while Transforming the Business

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Retirement Plan Services
Strategy Fueling Success

Chuck Cornelio
President, Retirement Plan Services

Headwinds

The Retirement Industry Today

• Participants view defined
contribution plan as largest and
primary retirement asset

• Government market switching from
defined benefit to defined
contribution

• Communication and education
services becoming differentiator

Tailwinds

• Continued low interest rates

• Possibility for regulatory
changes

2011 à Refocused strategy and began investing for growth

2012 à Expanded distribution and initiated platform change

2013 & beyond à Realizing benefits of investments; eg. sales pipeline up 100%

1 LIMRA not-for-profit survey as of Mar 31, 2013

2 As of Mar 31, 2013

3 Full year 2012 deposits

Snapshot

•Ranked #3 in Healthcare (by AUM)1

•1.4M participants2

•23,000 Plan Sponsors2

•$46B in AUM2

Mid-Large Market (62%)

Small Market (27%)

Multi-Fund & Other (11%)

Executing Strategy
Targeting Growing Market Segments

Market Positioning and Strategies

Market Growth
Expectations

1 Plan Sponsor Survey 2012

2 LIMRA not-for-profit survey as of Mar 31, 2013

3 Investments Company Institute, Cerulli, McKinsey Retirement Practice

4 McKinsey & Company: DC Model

4.6%3

6.0%4

8.0%4

8.1%4

Driving Growth through Value Added Services
More Than Just a Record Keeper

1 Net flows / beginning of period AUM

2 Plan sponsor terminations / average small and mid-large market AUM

Investments in Our Business Paying Dividends
Significant Growth in Leading Indicators

Total Deposits

Plan Sponsor Term Rate2	9.9%	5.9%	5.6%
Organic Growth Rate1	-0.82%	1.30%	2.52%

End of Period
AUM (Billions)

$39

$44

10% CAGR

2010 - 2012

+273%

+96%

Proactively Managing the Bottom Line

	Spread Compression
	Earned Rate1	Crediting Rate
2010	5.70%	3.49%
2011	5.53%	3.32%
2012	5.21%	3.20%

1 Excludes alternative investments and loan prepayment and bond make-whole premiums

2 General & administrative expenses, pre-DAC capitalization

Pressures

Actions

Investments in the Business
Total G&A2	Strategic Spend
$242M	$19M
$274M	$29M
$314M	$35M

• Proactive GMIR strategies on existing block

• Selling new product with a 1% GMIR

• Continued growth in assets helping offset
impact of compression

• 2012 - peak of strategic spend in
technology and distribution expansion

• 2013 - beginning to realize operational
efficiencies from technology upgrades

• 3% reduction in total G&A expenses
expected in 2013

Commitment to Meaningful Growth

Enhancing Top Line

•Building out enhanced capabilities to
grow within our target markets

•Focus on retirement income through
product innovation

•Deliver our high-touch model
effectively

Focusing on Bottom Line

•Ensure technology upgrade efficiencies
are realized

•Reducing unit costs

•Proactively managing spread
compression

Consistent Returns

• Pre-Tax Net Margin: 30% - 35%

• ROE: 12% - 15%

• ROA: 25bps - 30bps

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

General Account Investments

Ellen Cooper
EVP, Chief Investment Officer

General Account Investment Management

• Continued low rate environment

• Competition for limited supply of
quality credit assets

Tailwinds

Headwinds

• Well diversified, high quality portfolio with
significant unrealized gain position

• Capacity to take risk now…..substantially

de-risked from credit crisis

• Finding value in select core strategies and
yield-enhancing tactical strategies

Navigating through low yield environment via
prudent use of tactical investment strategies

Our Differentiated Investment Process……

Lincoln’s Internal Investment Team

Performance

Cost

Intellectual Capital

Customization

External

Internal

• Middle Market Loans

• Private Equity

• Hedge Funds

• Real Estate Mezzanine
Debt

• Fixed Income

‒ Public

‒ Private

• Mortgage Loans

• Cash/ Short Term

Yield Enhancing

Core

Security Selection

Best Execution

Surveillance

Multi-manager platform combines best-in-class core and specialty asset managers

Risk capacity further supported by…

Net Unrealized Gains1 vs. Peers2

1 AFS and HTM fixed income unrealized gain as % of amortized cost

2 Source: SNL

We are finding incremental value in…

Direct Middle Market Loans

Private Placements

Commercial Mortgage Loans

Enhanced yield and better covenants
compared to public bonds. Multiple
sourcing through direct origination and
syndication provides more flow and
greater diversification

Enhanced yield secured by commercial
real estate and better recoveries than
public bonds

Enhanced yield with better covenants and
higher recoveries than public BIG and
syndicated bank loans

Alternative Investments

Increase in private equity and hedge fund
program to provide additional returns;
opportunistic and well-diversified

Mezzanine Real Estate Loans

Capitalizing on core competency to
capture excess risk-adjusted return in
commercial real estate sector

Yield-enhancing tactical strategies add

15-20 bps to new money yield

Provides diversification with attractive spreads

Select Core Assets

Tactical Strategies

Disciplined and balanced approach to earn attractive risk-adjusted returns

Alternatives have produced strong results…

70%/30% allocation split between Private
Equity and Hedge Funds

Annualized Pre-Tax Return and NII on Alternative Investments

2011	2012	1Q13
11.3%	14.9%	2.7%
$90mm	$125mm	$6mm

Quarter

Year

Net Investment Income

Alternative Investments ($847M)

As of 1Q 2013

1Q11

2Q11

3Q11

4Q11

2011

1Q12

2Q12

3Q12

4Q12

2012

1Q13

Planned increase to program well
within our risk appetite

Alternatives have produced strong
returns historically albeit variable

Projecting new money yields conservatively…

Projected New Money Yield (~$10B Annually)

Forecasted

Actual

Enhanced New

Money Yield

Core New

Money Yield

10y UST

We expect our projected portfolio yield to hold up well….

Forecasted

Actual

Book Yield

on Invested Assets

w/o New Money

Book Yield

on Invested Assets

w/ New Money

Total Portfolio Book Yield (~$85B)

Portfolio book yield expected to drop only 15-20 bps per year for next 3 years

General Account Investment Management

• Differentiated investment process

• Capacity to take risk now

• Finding value in select core and yield-enhancing strategies

• Portfolio yield expected to hold up well in low rate
environment

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Mark Konen Randy Freitag

President, Insurance and Executive Vice President and
Retirement Solutions Chief Financial Officer

Annuities
Growth on Our Terms

• Fixed annuities are a significant portion of operating income

• Product mix meets shifting consumer demands

• Risk-managed funds drive over 75% of VA deposits

1 GLB = Guaranteed Living Benefit (rider)

Strong returns supported by strong capital

	ROE1	ROA
As reported	21%	64 bps
Including VA non-operating income items2	19%	59 bps

1 Equity excluding accumulated other comprehensive income and goodwill

2 VA hedge program performance, prospective unlocking, and non-performance risk

• 2012 Average GAAP Equity of $3.1B

– VA required capital set at 98CTE

• Strong ROE, even with non-operating

items

Three-Year Averages from 2010 - 2012

VA riders evolve as the market changes

	Lincoln Lifetime Income Advantage (June 2010)	Lincoln Lifetime Income Advantage 2.0 with Risk-Managed Funds (June 2013)
Rider Fee and Basis	0.90% (single & joint) on decreasing guaranteed amount	1.05% (single) / 1.25% (joint) on non-decreasing guaranteed amount
Lifetime Withdrawal Rate (single)	59.5+ = 5.0%	55 - 59.5 = 3.5% 59.5 - 64 = 4.0%	65+ = 5.0%
Lifetime Withdrawal Rate (joint)	65+ = 5.0%	55 - 59.5 = 3.5% 59.5 - 64 = 4.0%	65 -74 = 4.5% 75+ = 5.0%
Rollup	5% Compound for 10 years	5% Compound for 10 years
Investment Requirements1	minimum 30% in fixed income funds, maximum 70% in equity funds	minimum 30% in fixed income funds, maximum 70% in risk-managed funds

• GLB riders, including i4Life, refreshed as market changes

• Since June 2010, 28 VA product launches and actions

• Risk-managed funds benefit the client and reduce hedging costs

1 Can invest up to 100% in certain balanced funds, including some risk-managed funds, with guaranteed living benefit rider

VA riders less risky than most peers’

• Our focus on upside potential = less emphasis on downside guarantees

• Best-in-class distribution enables focus on strong consumer value, not
“best” features

Source: Oliver Wyman

1 Minimum guaranteed income level reflects the guaranteed payout rate, roll-up rate and other product rules per product specifications. Representative
issue age and utilization patterns reflect an equal weight of issue age/withdrawal age of: 65/65, 60/70, 65/70.

Oliver Wyman: VA riders more profitable than peers’

• Value of new business consistently above average compared to peer group

• Indicates disciplined risk management in product design

• Enables our consistent market presence

Source: Oliver Wyman

1 Based on market-consistent valuation of one or more GLB riders sold by each company, weighted by estimated sales and using a consistent set of capital
market and policyholder behavior assumptions at each valuation date. Peer group consists of the six leading sellers of VA GLB products since 2009.

• Diversification benefit from "dollar cost averaging" improves long-term ROE

– Selling through market cycles mitigates amount written at market highs

1 Companies listed in order of 4Q12 VA sales; black squares represent average quarterly sales over the five-year period

Net Amount at Risk (NAR) for VA guarantees is low

• Consistent presence, diversifying risk
over time, makes a difference

• High quality GMDB block = low risk

– 73% of GMDB account value is return
of premium

– Rollup GMDB, not sold since 2003, is
less than 0.2% of account value

• Less risky GLB block than peers

– 43% of GLB account value has no
rollup feature

– GLB annual rollup never above 5%

Note: See appendix for information about Net Amount of Risk sources and calculations

VA rider cash flow analysis - moderate scenario

• S&P returns of 5%, before all charges
and fees

• No material claims on inforce GLB
riders for more than ten years

Present Value at 4% ($B)
Rider Fees	$ (4.7)
Rider Claims	(2.3)
Rider Fees - Rider Claims	$ (2.4)
Base Contract Flows1	(3.8)
Total after Base Contract Flows	$ (6.2)

Current Value of Hedge Assets	$ (1.2)

Future rider fees far exceed future claims

1 Includes all charges, revenue sharing, trail commissions and maintenance
expenses

VA rider cash flow analysis - adverse scenario

Present Value at 4% ($B)
Rider Fees	$ (4.8)
Rider Claims	(6.1)
Rider Fees - Rider Claims	$ (1.3)
Base Contract Flows2	(2.9)
Total after Base Contract Flows	$ (1.6)

Hedge Assets after Drop in Equities	$ 4.4)

• Investment restrictions mitigate drop

• No material claims on inforce GLB
riders for more than five years

•Total remains positive with base
contract flows

1 Includes all charges, revenue sharing, trail commissions and maintenance
expenses

Industry-leading hedging program covers liabilities

• Hedge assets exceed economic and statutory reserves every quarter

• Excellent hedging program per S&P and Moody’s

• Risk-managed funds complement hedging program and reduce hedge costs

Lincoln has the right approach to policyholder behavior

VA LAPSES

•Predictive Modeling based on
experience since 2003

•Multiple Variable Interaction

– In-the-moneyness

– Policy size

– Attained age

– Gender

– Tax status

– Utilization state

•Collaborated with Towers Watson

VA GLB UTILIZATION

•Extensive experience study with
Attribution-Based Modeling

•Separates two key components

– Income start time

– Withdrawal amount

•Key variables

– Attained age

– Tax status

– Policy size

•Collaborated with Oliver Wyman

Lincoln is redefining industry best practices for modeling policyholder behavior

• Expected lapse rates fall quickly when the guarantee is at the money

• Minimum lapse rate assumption of 1%

Lapse assumption reflects experience

Average Expected Lapse Rates:

B-Share Class with GLB Rider

1 Data shown for products with a surrender charge (B-Share, L-Share, and N-Share (Bonus) Classes); products without a surrender charge are similarly tight

2 SC = Surrender Charge

Actual vs. Expected Lapse Rates

with GLB Riders1

(Jan 2010 - Mar 2012)

Manageable policyholder behavior risk

Robust current assumptions lead to small impacts on large sensitivities

• Sensitivities covered by $0.8B excess of hedge assets over rider liabilities

• Reduction in lapses produces operating income offset

1 Increase in Hedge Target in $ millions, pre-DAC, pre-tax; Increase/(Decrease) in GAAP Net Income in $ millions, after-DAC, after-tax

Annuities - A Quality Block of Business

þ Sustainable Product Solutions

• Risk-managed funds - good for consumer, good for Lincoln

• No rollup GMDB sold since 2003; GLB annual rollup never above 5%

þ Best-in-Class Distribution

• Experienced wholesalers “selling” consistent story, driving necessary changes

• Emphasis on upside potential, not downside guarantees

þ Disciplined Risk Management

• Recognized for excellent hedging program

• Redefining industry best practices for modeling policyholder behavior

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Financial Overview

Randy Freitag
Executive Vice President and Chief Financial Officer

What Have We Heard from Investors…

• Variable Annuities

• Earnings Mix

• Low Interest Rates

• Capital

Diversified Earnings Mix

1 2012 Income from Operations excluding Other Operations

By Line1

By Source1

RPS

Group

Life

Investment Spread

Mortality/Morbidity

RPS Fee Based

VA/VUL Base Contract

VA Riders

• Earnings of $1.3B - back
to pre-crisis levels

• Variable Annuities

– Not an outsized
component of earnings

– Majority of VA earnings
driven by base contract

– Riders covered by
industry leading hedge
program

• Focus on growing Group
Protection and RPS
contribution

• VA/VUL base contract
and RPS fees represent
32% of total

11%

32%

10%

42%

28%

38%

25%

ALM Matters: Consistent Value Across Interest Rate Levels

• Value protected by ALM

– Duration of assets: 7.4

– Duration of liabilities: 7.6

• Key ALM supported decisions

– Treasury locks

– Interest rate caps

• $8.7B unrealized gain reflects
liability “mark-to-market”

• ALM program key to supporting
statutory reserve adequacy

Present Value of Asset and
Liability Cash Flows

Target 10-year Rate

Strong Statutory Reserve Adequacy

Statutory Reserves

• Prescribed conservative assumptions
that are generally fixed at issue

• $8B of reserve sufficiency

• $4 - 6B in low rate scenarios

– Assumes rates unchanged for 40 years

– No additional reserves required from
new AG38 testing

• Sufficiency in 1.5% scenario is
primarily from annuities

1 Excludes financed reserves; assumes no regulatory or other assumption changes.

2 Assumed interest rates based on a 10-year U.S. Treasury.

Reserve Adequacy Testing Results1 (Billions)
	Base Case	2.0% Scenario2	1.5% Scenario2
2010	$8	$6	N/A
2012	$8	$6	$4

Significant statutory reserve adequacy in low rate environment

ST LOC

LT Financing

Captive Structures With a Focus on ALM

Life Reserve Financings

• Reserve financing shift from reliance on short-
term credit facility to long-term funded solutions

– 2009: 70% funded by short-term credit
facility

– 2012: 100% long-term structures

• Annual financing activity linked primarily to
new sales

1 Original term of LOC

Long Duration Solutions

• 12 years for Term, 20-30 for GUL

• Strong supply of counterparties

• Costs have decreased

– Cost of financing down 100-150 bps since
2009

• Captives well capitalized

– Domestic captives’ RBC > 400%

– Consolidating LNBar would increase LNL
RBC by ~25 RBC points at March 31, 2013

Life Reserve Funding

Structure Duration1

2009

2012

12 Years

20 Years

30 Years

5-year Average

• Statutory as % of GAAP

– Excluding net relief: 60%

– Including net relief: 83%

• Reserve Financing Driven by Sales of GUL/Term

– As sales fall, statutory earnings increase

• Dividends to Holding Co. ~75% of Statutory Earnings and net relief

– Balance funds growth in business

1 GAAP = Income from Operations - See appendix for reconciliation to GAAP net income

2 Statutory = Net Gain from Operations

3 Net Relief = Capital released from reserve financings net of amortization of reserve financings

GAAP1

Statutory2

Net Relief3

Dividends to Hold Co

2010

2011

2012

GUL/Term Sales

A Strong Statutory Story

Strong Statutory Capital and Free Cash Flow

Free Cash Flow since 12/31/10

$2.2

$0.6

$1.4

$0.2

Hold Co. Cash inflows

Shareholder dividends

Debt Expense

Free Cash Flow

• Strong Capital generation driven by
earnings and capital relief

• $0.4B increase in capital from
12/31/10

• ~480% RBC as of 3/31/2013 vs. 491%
at 12/31/10

• Avg. Free Cash Flow of $0.6B per year

• Free Cash Flow uses:

– $1.2B1 in Share Buybacks @ avg. price
of $24.08

– $0.2B Deleveraging

– Avg. Deployment of $0.6B per year

• $0.6B in Hold Co. cash of 3/31/13

Dividends to Hold Co.

12/31/10

3/31/13

$2.0

$7.1

$1.6

$7.5

Total adjusted capital

1 Excludes $150M of share repurchases completed in the second quarter of 2013

Confidence in the Future

• Earnings mix:

– Investing to grow Group Protection and RPS contributions

– VA hedge program covers guarantee risk

– Equity-linked components can offset negative impact of low interest rates

• Well positioned to withstand low interest rate environment

– Both Statutory and GAAP perspective

• Strong capital position:

– Allows for capital deployment with focus on buybacks

– Supports ability to fund growth in businesses

– Strengthened by shift to less capital intensive products

2013 Conference for Analysts,
Investors and Bankers

Thursday, June 6, 2013

Appendix

Forward Looking Statements — Cautionary Language

Certain statements made in this presentation and in other written or oral statements made by Lincoln or on Lincoln's behalf are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). A forward-looking statement is a statement that is not a
historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and
may contain words like: "believe", "anticipate", "expect", "estimate", "project", "will", "shall" and other words or phrases with similar meaning in connection
with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in Lincoln's
businesses, prospective services or products, future performance or financial results, and the outcome of contingencies, such as legal proceedings. Lincoln
claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the results contained in the forward-
looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking
statements include, among others:

• Deterioration in general economic and business conditions that may affect account values, investment results, guaranteed benefit liabilities, premium

levels, claims experience and the level of pension benefit costs, funding and investment results;

• Adverse global capital and credit market conditions could affect our ability to raise capital, if necessary, and may cause us to realize impairments on

investments and certain intangible assets, including goodwill and the valuation allowance against deferred tax assets, which may reduce
future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures;

• Because of our holding company structure, the inability of our subsidiaries to pay dividends to the holding company in sufficient amounts could harm the

holding Company’s ability to meet its obligations;

• Legislative, regulatory or tax changes, both domestic and foreign, that affect the cost of, or demand for, our subsidiaries' products, the required amount of

reserves and/or surplus, or otherwise affect our ability to conduct business, including changes to statutory reserve requirements related to secondary

guarantee universal life and annuities; regulations regarding captive reinsurance arrangements; restrictions on revenue sharing and 12b-1 payments;

and the potential for U.S. Federal tax reform;

• Declines in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses, estimated gross profits and

demand for our products;

• Uncertainty about the effect of rules and regulations to be promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act on us and

the economy and financial services sector in particular;

• The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as: adverse actions related to

present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to,

actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings;

• A decline in the equity markets causing a reduction in the sales of our subsidiaries' products, a reduction of asset-based fees that our subsidiaries charge

on various investment and insurance products, an acceleration of amortization of deferred acquisition costs, or "DAC," value of business acquired, or

"VOBA," deferred sales inducements, or "DSI," and deferred front end sales loads, or "DFEL," and an increase in liabilities related to guaranteed benefit

features of our subsidiaries' variable annuity products;

• Ineffectiveness of our risk management policies and procedures, including various hedging strategies used to offset the effect of changes in the value of

liabilities due to changes in the level and volatility of the equity markets and interest rates;

Forward Looking Statements — Cautionary Language (Con’t)

• A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates or equity market returns from the assumptions used in
pricing our subsidiaries' products, in establishing related insurance reserves and in the amortization of DAC, VOBA, DSI and DFEL, which may reduce future
earnings;

• Changes in accounting principles generally accepted in the United States, or "GAAP," including the potential incorporation of International Financial
Reporting Standards into the U.S Financial Reporting System that may result in unanticipated changes to our net income;

• Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on
our ability to raise capital and on our liquidity and financial condition;

• Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the
premium writings, policy retention, profitability of our insurance subsidiaries and liquidity;

• Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain investments in our portfolios as
well as counterparties to which we are exposed to credit risk requiring that we realize losses on investments;

• Inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others;

• Interruption in telecommunication, information technology or other operational systems or failure to safeguard the confidentiality or privacy of sensitive
data on such systems;

• The effect of acquisitions and divestitures, restructurings, product withdrawals and other unusual items;

• The adequacy and collectability of reinsurance that we have purchased;

• Acts of terrorism, a pandemic, war or other man-made and natural catastrophes that may adversely affect our businesses and the cost and availability of
reinsurance;

• Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums
and fees that our subsidiaries can charge for their products;

• The unknown effect on our subsidiaries' businesses resulting from changes in the demographics of their client base, as aging baby-boomers move from the
asset-accumulation stage to the asset-distribution stage of life; and

• Loss of key management, financial planners or wholesalers.

The risks included here are not exhaustive. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other

documents filed with the SEC include additional factors which could impact our business and financial performance. Moreover, we operate in a rapidly
changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.

Further, it is not possible to assess the impact of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place

undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to update any forward-looking

statements to reflect events or circumstances that occur after the date of this presentation.

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.

Explanatory Note on Use of Non-GAAP Measures

Management believes that income from operations, return on equity and operating revenues better explain 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. Management also believes that using book value excluding accumulated other
comprehensive income (AOCI) enables investors to analyze the amount of our net worth that is primarily attributable to our
business operations. Book value per share excluding AOCI is useful to investors because it eliminates the effect of items that can
fluctuate significantly from period to period, primarily based on changes in interest rates.

For the historical periods , reconciliations of non-GAAP measures used in this presentation to the most directly comparable GAAP
measure may be included in this Appendix to the presentation materials and/or are included in the Statistical Reports for the
corresponding periods contained in the Earning section of Investor Relations page on our website: www.lnc.com/investor.

The non-GAAP measures do not replace the most directly comparable GAAP measures.

The company uses its prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for
events recognized differently in its financial statements and federal income tax returns when reconciling non-GAAP measures to
the most comparable GAAP measure.

Definition of Income (Loss) From Operations, ROE and
Book Value (excluding AOCI)

Income (loss) from operations, operating revenues and return on equity (“ROE”), as used in this presentation, are non-GAAP financial
measures and do not replace GAAP revenues, net income (loss) and ROE. We exclude the after-tax effects of the following items
from GAAP net income (loss) to arrive at income (loss) from operations: realized gains and losses associated with the following
("excluded realized gain (loss)"): sale or disposal of securities; impairments of securities; change in the fair value of derivative
investments, embedded derivatives within certain reinsurance arrangements and our trading securities; change in the fair value of the
derivatives we own to hedge our guaranteed death benefit ("GDB") riders within our variable annuities, which is referred to as "GDB
derivatives results"; change in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders within our
variable annuities accounted for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) (“embedded derivative reserves”), 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 derivative results”; 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 accounted for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the
FASB ASC (“indexed annuity forward-starting option”); change in reserves accounted for under the Financial Services - Insurance -
Claim Costs and Liabilities for Future Policy Benefits Subtopic of the FASB ASC resulting from benefit ratio unlocking on our GDB and
GLB riders ("benefit ratio unlocking"); income (loss) from the initial adoption of new accounting standards; income (loss) from reserve
changes (net of related amortization) on business sold through reinsurance; gain (loss) on early extinguishment of debt; losses from
the impairment of intangible assets; and income (loss) from discontinued operations.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable: excluded realized
gain (loss); amortization of deferred front-end loads (“DFEL”) arising from changes in GDB and GLB benefit ratio unlocking;
amortization of deferred gains arising from the reserve changes on business sold through reinsurance; and revenue adjustments from
the initial adoption of new accounting standards.

Return on equity measures how efficiently we generate profits from the resources provided by our net assets. Return on equity is
calculated by dividing annualized income from operations(loss) by average equity, excluding accumulated other comprehensive
income (loss) ("AOCI"). Management evaluates return on equity by both including and excluding average goodwill within average
equity.

Income (loss) from operations, operating revenues, return on equity (including and excluding average goodwill within average equity),
excluding AOCI, using annualized income (loss) from operations and return on capital are financial measures we use to evaluate and
assess our results.

Definition of Income (Loss) From Operations, ROE and
Book Value (excluding AOCI)

Book value per share excluding AOCI is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a)
stockholders' equity excluding AOCI by (b) common shares outstanding, assuming conversion of Series A preferred shares. We
provide book value per share excluding AOCI to enable investors to analyze the amount of our net worth that is primarily
attributable to our business operations. Management believes book value per share excluding AOCI is useful to investors because
it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.
Book value per share is the most directly comparable GAAP measure. A reconciliation of book value per share to book value per
share excluding AOCI as of March 31, 2013 and 2012 and December 31, 2012 and 2011 is set forth below.

Reconciliation of Net Income to Income from Operations

Reconciliation of Book Value Per Share and Return on Equity

	As of March 31,		As of December 31,
	2013	2012	2012	2011
Book value per share, including AOCI	$55.33	$45.94	$55.14	$44.94
Per share impact of AOCI	13.33	9.18	14.03	9.19
Book value per share, excluding AOCI	42.00	36.76	41.11	35.75


	For the Three Months Ended		For the Twelve Months Ended
	March 31,		December 31,
	2013	2012	2012	2011
Return on Equity, Excluding AOCI
Net income (loss) with average equity including goodwill	8.5%	9.3%	12.2%	2.0%
Income (loss) from operations with average equity
including goodwill	10.2%	11.2%	12.0%	11.3%
Income (loss) from operations with average equity
excluding goodwill	12.7%	14.3%	15.2%	15.4%

Annuities Disclosures

Oliver Wyman Disclosures:

QUALIFICATIONS, ASSUMPTIONS & LIMITING CONDITIONS

All opinions, advice and materials provided by Oliver Wyman that are included, reflected or summarized herein (the “Oliver
Wyman Content”) are for the exclusive use of Oliver Wyman’s client, Lincoln Financial Group, and its professional advisers. There
are no third party beneficiaries with respect to the Oliver Wyman Content, and Oliver Wyman disclaims any and all liability to
any third party in respect of the Oliver Wyman Content. The Oliver Wyman Content does not represent investment advice or
provide an opinion regarding the fairness of any transaction to any and all parties. The opinions expressed in the Oliver Wyman
Content are valid only for the purpose stated herein and as of the date hereof. Information furnished by others, upon which all
or portions of the Oliver Wyman Content are based, is believed to be reliable but has not been verified. No warranty is given as
to the accuracy of such information. Public information and industry and statistical data are from sources Oliver Wyman deems
to be reliable; however, Oliver Wyman makes no representation as to the accuracy or completeness of such information and has
accepted the information without further verification. No responsibility is taken for changes in market conditions or laws or
regulations and no obligation is assumed to revise the Oliver Wyman Content to reflect changes, events or conditions, which
occur subsequent to the date hereof.

Calculation of Net Amount at Risk:

Calculations of Net Amount of Risk, especially GLB, vary from company to company, as described in sources. Sources:

    GMDB: Ameriprise, 2012 10-K, page 133; Lincoln, 2012 10-K, page 165; Prudential, 2012 10-K, page 267; AIG, 2012 10-K,
           page 287; MetLife, 2012 10-K, page 232; Jackson, Prudential (UK) 20-F, page F-125; Hartford, 4Q12 Financial Supplement, page
           28; Voya, Registration Statement (S-1/A) as of 4/29/13, page 233; AXA, 2012 Financial Supplement, page 8

    GLB:     Lincoln, 2012 10-K, page 50 for NAR, internal report for $55.1B associated account value; Ameriprise, 2012 10-K,
           page 133; Hartford, 4Q12 Financial Supplement, page 28; Prudential, 2012 10-K, page 267; MetLife, 2012 10-K, page 232; AIG,
           4Q12 Financial Supplement, page 42; Jackson, Prudential (UK) 20-F, page F-125; Voya, Registration Statement (S-1/A) as of
           4/29/13, page 233; AXA, 2012 Financial Supplement, page 8