Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies [Abstract]

Summary of Restated Consolidated Statements

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	As of December 31, 2021
	As
	Previously		Restatement			As
	Reported		Impacts			Restated
ASSETS
Investments:
Fixed maturity available-for-sale securities, at fair value
(amortized cost: 2021 - $104,491; allowance for credit losses: 2021 - $19)	$	117,511	$	(35	)	$	117,476
Trading securities		4,427		(22	)		4,405
Equity securities		314		57			371
Mortgage loans on real estate, net of allowance for credit losses
(portion at fair value: 2021 - $739)		17,893		-			17,893
Policy loans		2,349		-			2,349
Derivative investments		5,437		260			5,697
Other investments		3,449		(4	)		3,445
Total investments		151,380		256			151,636
Cash and invested cash		2,331		-			2,331
Deferred acquisition costs and value of business acquired		5,985		1			5,986
Accrued investment income		1,157		-			1,157
Reinsurance recoverables, net of allowance for credit losses		22,755		-			22,755
Goodwill		1,778		-			1,778
Other assets		24,046		(754	)		23,292
Separate account assets		182,583		-			182,583
Total assets	$	392,015	$	(497	)	$	391,518
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities
Future contract benefits	$	40,416	$	-		$	40,416
Other contract holder funds		111,174		9			111,183
Short-term debt		1,084		-			1,084
Long-term debt		2,334		-			2,334
Payables for collateral on investments		8,936		-			8,936
Other liabilities		23,108		(986	)		22,122
Separate account liabilities		182,583		-			182,583
Total liabilities		369,635		(977	)		368,658
Contingencies and Commitments (See Note 13)
Stockholder’s Equity
Common stock – 10,000,000 shares authorized, issued and outstanding		11,950		-			11,950
Retained earnings		3,886		480			4,366
Accumulated other comprehensive income (loss)		6,544		-			6,544
Total stockholder’s equity		22,380		480			22,860
Total liabilities and stockholder’s equity	$	392,015	$	(497	)	$	391,518

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	As of December 31, 2022
	As
	Previously			Restatement			As
	Reported			Impacts			Restated
ASSETS
Investments:
Fixed maturity available-for-sale securities, at fair value
(amortized cost: 2022 - $110,944; allowance for credit losses: 2022 - $21)	$	99,465		$	-		$	99,465
Trading securities		3,446			-			3,446
Equity securities		427			-			427
Mortgage loans on real estate, net of allowance for credit losses
(portion at fair value: 2022 - $487)		18,211			-			18,211
Policy loans		2,345			-			2,345
Derivative investments		3,662			(143	)		3,519
Other investments		3,577			-			3,577
Total investments		131,133			(143	)		130,990
Cash and invested cash		2,499			-			2,499
Deferred acquisition costs and value of business acquired		13,615			-			13,615
Accrued investment income		1,234			-			1,234
Reinsurance recoverables, net of allowance for credit losses		23,910			-			23,910
Goodwill		1,144			-			1,144
Other assets		21,523			(185	)		21,338
Separate account assets		143,536			-			143,536
Total assets	$	338,594		$	(328	)	$	338,266
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities
Future contract benefits	$	41,598		$	-		$	41,598
Other contract holder funds		120,360			-			120,360
Short-term debt		562			-			562
Long-term debt		2,269			-			2,269
Payables for collateral on investments		6,638			-			6,638
Other liabilities		15,833			(796	)		15,037
Separate account liabilities		143,536			-			143,536
Total liabilities		330,796			(796	)		330,000
Contingencies and Commitments (See Note 13)
Stockholder’s Equity
Common stock – 10,000,000 shares authorized, issued and outstanding		12,903			-			12,903
Retained earnings		1,968			468			2,436
Accumulated other comprehensive income (loss)		(7,073	)		-			(7,073	)
Total stockholder’s equity		7,798			468			8,266
Total liabilities and stockholder’s equity	$	338,594		$	(328	)	$	338,266

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

	For the Year Ended
	December 31, 2021
	As
	Previously			Restatement			As
	Reported			Impacts			Restated
Revenues
Insurance premiums	$	5,359		$	-		$	5,359
Fee income		6,612			18			6,630
Net investment income		5,844			(5	)		5,839
Realized gain (loss)		89			622			711
Amortization of deferred gain on business sold through reinsurance		40			(8	)		32
Other revenues		657			-			657
Total revenues		18,601			627			19,228
Expenses
Interest credited		2,893			18			2,911
Benefits		8,039			-			8,039
Commissions and other expenses		5,546			2			5,548
Interest and debt expense		114			-			114
Spark program expense		87			-			87
Total expenses		16,679			20			16,699
Income (loss) before taxes		1,922			607			2,529
Federal income tax expense (benefit)		293			127			420
Net income (loss)		1,629			480			2,109
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses)		(2,480	)		-			(2,480	)
Funded status of employee benefit plans		3			-			3
Total other comprehensive income (loss), net of tax		(2,477	)		-			(2,477	)
Comprehensive income (loss)	$	(848	)	$	480		$	(368	)

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

	For the Year Ended
	December 31, 2022
	As
	Previously			Restatement			As
	Reported			Impacts			Restated
Revenues
Insurance premiums	$	5,841		$	-		$	5,841
Fee income		5,783			-			5,783
Net investment income		5,270			4			5,274
Realized gain (loss)		201			13			214
Amortization of deferred gain on business sold through reinsurance		69			(32	)		37
Other revenues		621			-			621
Total revenues		17,785			(15	)		17,770
Expenses
Interest credited		2,849			-			2,849
Benefits		10,801			-			10,801
Commissions and other expenses		4,799			-			4,799
Interest and debt expense		137			-			137
Spark program expense		167			-			167
Impairment of intangibles		634			-			634
Total expenses		19,387			-			19,387
Income (loss) before taxes		(1,602	)		(15	)		(1,617	)
Federal income tax expense (benefit)		(329	)		(3	)		(332	)
Net income (loss)		(1,273	)		(12	)		(1,285	)
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses)		(13,613	)		-			(13,613	)
Funded status of employee benefit plans		(4	)		-			(4	)
Total other comprehensive income (loss), net of tax		(13,617	)		-			(13,617	)
Comprehensive income (loss)	$	(14,890	)	$	(12	)	$	(14,902	)

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in millions)

	For the Year Ended
	December 31, 2021
	As
	Previously			Restatement		As
	Reported			Impacts		Restated
Common Stock
Balance as of beginning-of-year	$	11,853		$	-	$	11,853
Capital contribution from Lincoln National Corporation		65			-		65
Stock compensation/issued for benefit plans		32			-		32
Balance as of end-of-year		11,950			-		11,950
Retained Earnings
Balance as of beginning-of-year		4,167			-		4,167
Net income (loss)		1,629			480		2,109
Dividends paid to Lincoln National Corporation		(1,910	)		-		(1,910	)
Balance as of end-of-year		3,886			480		4,366
Accumulated Other Comprehensive Income (Loss)
Balance as of beginning-of-year		9,021			-		9,021
Other comprehensive income (loss), net of tax		(2,477	)		-		(2,477	)
Balance as of end-of-year		6,544			-		6,544
Total stockholder’s equity as of end-of-year	$	22,380		$	480	$	22,860

	For the Year Ended
	December 31, 2022
	As
	Previously			Restatement			As
	Reported			Impacts			Restated
Common Stock
Balance as of beginning-of-year	$	11,950		$	-		$	11,950
Capital contribution from Lincoln National Corporation		925			-			925
Stock compensation/issued for benefit plans		28			-			28
Balance as of end-of-year		12,903			-			12,903
Retained Earnings
Balance as of beginning-of-year		3,886			480			4,366
Net income (loss)		(1,273	)		(12	)		(1,285	)
Dividends paid to Lincoln National Corporation		(645	)		-			(645	)
Balance as of end-of-year		1,968			468			2,436
Accumulated Other Comprehensive Income (Loss)
Balance as of beginning-of-year		6,544			-			6,544
Other comprehensive income (loss), net of tax		(13,617	)		-			(13,617	)
Balance as of end-of-year		(7,073	)		-			(7,073	)
Total stockholder’s equity as of end-of-year	$	7,798		$	468		$	8,266

‎

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	For the Year Ended
	December 31, 2021
	As
	Previously			Restatement			As
	Reported			Impacts			Restated
Cash Flows from Operating Activities
Net income (loss)	$	1,629		$	480		$	2,109
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Realized (gain) loss		(89	)		(622	)		(711	)
Sales and maturities (purchases) of trading securities, net		(108	)		21			(87	)
Amortization of deferred gain (loss) on business sold through reinsurance		(40	)		8			(32	)
Change in:
Deferred acquisition costs, value of business acquired, deferred sales
inducements and deferred front-end loads deferrals and interest, net
of amortization		292			(3	)		289
Premiums and fees receivable		(95	)		-			(95	)
Accrued investment income		8			-			8
Insurance liabilities and reinsurance-related balances		(585	)		1			(584	)
Accrued expenses		367			3			370
Federal income tax accruals		264			127			391
Cash management agreement		(1,286	)		-			(1,286	)
Other		(165	)		2			(163	)
Net cash provided by (used in) operating activities		192			17			209
Cash Flows from Investing Activities
Purchases of available-for-sale securities and equity securities		(16,834	)		(22	)		(16,856	)
Sales of available-for-sale securities and equity securities		2,341			-			2,341
Maturities of available-for-sale securities		9,417			-			9,417
Purchases of alternative investments		(754	)		-			(754	)
Sales and repayments of alternative investments		377			-			377
Issuance of mortgage loans on real estate		(3,062	)		5			(3,057	)
Repayment and maturities of mortgage loans on real estate		1,873			-			1,873
Repayment (issuance) of policy loans, net		61			-			61
Net change in collateral on investments, derivatives and related settlements		3,095			-			3,095
Other		(253	)		-			(253	)
Net cash provided by (used in) investing activities		(3,739	)		(17	)		(3,756	)
Cash Flows from Financing Activities
Capital contribution from Lincoln National Corporation		65			-			65
Payment of long-term debt, including current maturities		(60	)		-			(60	)
Issuance (payment) of short-term debt		587			-			587
Payment related to sale-leaseback transactions		(59	)		-			(59	)
Proceeds from certain financing arrangements		159			-			159
Deposits of fixed account values, including the fixed portion of variable		12,622			4			12,626
Withdrawals of fixed account values, including the fixed portion of variable		(6,575	)		53			(6,522	)
Transfers from (to) separate accounts, net		(340	)		(57	)		(397	)
Common stock issued for benefit plans		(13	)		-			(13	)
Dividends paid to Lincoln National Corporation		(1,910	)		-			(1,910	)
Other		(60	)		-			(60	)
Net cash provided by (used in) financing activities		4,416			-			4,416
Net increase (decrease) in cash, invested cash and restricted cash		869			-			869
Cash, invested cash and restricted cash as of beginning-of-year		1,462			-			1,462
Cash, invested cash and restricted cash as of end-of-year	$	2,331		$	-		$	2,331

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	For the Year Ended
	December 31, 2022
	As
	Previously			Restatement			As
	Reported			Impacts			Restated
Cash Flows from Operating Activities
Net income (loss)	$	(1,273	)	$	(12	)	$	(1,285	)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Realized (gain) loss		(201	)		(13	)		(214	)
Sales and maturities (purchases) of trading securities, net		301			-			301
Amortization of deferred gain (loss) on business sold through reinsurance		(69	)		32			(37	)
Impairment of intangibles		634			-			634
Change in:
Deferred acquisition costs, value of business acquired, deferred sales
inducements and deferred front-end loads deferrals and interest, net
of amortization		42			3			45
Premiums and fees receivable		(53	)		-			(53	)
Accrued investment income		(41	)		-			(41	)
Insurance liabilities and reinsurance-related balances		1,055			-			1,055
Accrued expenses		(98	)		-			(98	)
Federal income tax accruals		(268	)		(3	)		(271	)
Cash management agreement		3,730			-			3,730
Other		531			(4	)		527
Net cash provided by (used in) operating activities		4,290			3			4,293
Cash Flows from Investing Activities
Purchases of available-for-sale securities and equity securities		(14,768	)		-			(14,768	)
Sales of available-for-sale securities and equity securities		2,347			-			2,347
Maturities of available-for-sale securities		5,487			-			5,487
Purchases of alternative investments		(631	)		-			(631	)
Sales and repayments of alternative investments		441			-			441
Issuance of mortgage loans on real estate		(2,503	)		(4	)		(2,507	)
Repayment and maturities of mortgage loans on real estate		2,247			-			2,247
Repayment (issuance) of policy loans, net		4			-			4
Net change in collateral on investments, derivatives and related settlements		(4,654	)		1			(4,653	)
Other		(40	)		-			(40	)
Net cash provided by (used in) investing activities		(12,070	)		(3	)		(12,073	)
Cash Flows from Financing Activities
Capital contribution from Lincoln National Corporation		925			-			925
Payment of long-term debt, including current maturities		(40	)		-			(40	)
Issuance (payment) of short-term debt		(522	)		-			(522	)
Payment related to sale-leaseback transactions		(70	)		-			(70	)
Proceeds from certain financing arrangements		186			-			186
Deposits of fixed account values, including the fixed portion of variable		15,212			-			15,212
Withdrawals of fixed account values, including the fixed portion of variable		(6,880	)		-			(6,880	)
Transfers from (to) separate accounts, net		(195	)		-			(195	)
Common stock issued for benefit plans		(21	)		-			(21	)
Dividends paid to Lincoln National Corporation		(645	)		-			(645	)
Other		(2	)		-			(2	)
Net cash provided by (used in) financing activities		7,948			-			7,948
Net increase (decrease) in cash, invested cash and restricted cash		168			-			168
Cash, invested cash and restricted cash as of beginning-of-year		2,331			-			2,331
Cash, invested cash and restricted cash as of end-of-year	$	2,499		$	-		$	2,499