Lincoln National Update Following $2.6 Billion Quarterly Loss

On November 2, 2022, Lincoln National Corporation (LNC) announced a $2.6 billion GAAP1 net loss for
the third quarter 2022, which followed its annual review of reserve assumptions and deferred acquisition
costs (DAC). The loss included the following:

U.S. Life Insurers’ Bermuda Reinsurance Exposure

The U.S. Life Insurance Industry has long utilized foreign reinsurance as part of its risk and capital
management strategies. In recent years the use of Bermuda reinsurance in particular has become
increasingly common among life insurers (especially for individual annuities), raising some concerns
among industry participants.

U.S. Life Insurer Exposure to Alternative (Schedule BA) Investments

Life insurance companies’ investment portfolios are heavily oriented to fixed income assets such as bonds (both “traditional” bonds and structured securities) and mortgage loans. These assets, together with policy loans and cash, comprised around 90% of total life insurance industry investments in each of the last five years.