LNC
#Yes, <UNK>, I think of the year as almost perfectly in line with what I've said in the past, which is that this business is about $125 million a year business, or $500 million for a full year ---+
Yes, excuse me.
And if you think about the year, we made $550 million and that included $17 million positive unlocking.
So right at that $125 million guidance.
In terms of the quarter, the $154 million, we had strong variable investment income.
That was largely offset, as I mentioned, by expenses.
So at the end of the day, what you just had was mortality, really good mortality driving the $154 million of earnings; which, just coincidentally, was almost an exact mirror of the first quarter of the year.
As I said in the first quarter of the year, about $20 million of expected seasonality.
We had about $10 million of additional; total of $30 million this quarter.
About $29 million of benefit overall, compared to an average quarter, from good, strong mortality which we expect to happen in that quarter of the year.
It was strong across all areas.
So the PE and hedge funds, I think as <UNK> might have mentioned in his script, the return was about 12% for the quarter.
And we expect 10%, long term.
So we had good, strong performance from the alts portfolio.
And then, prepayment income was above what we've experienced over the last 4 to 5 years, and was over what I would expect over a much longer cycle.
In total, it came up to about $13 million after tax, as I mentioned in my script.
I would say that was fairly evenly split, maybe a little skewed towards prepayment income.
If you broaden this out, and you think about alternatives and prepayment income over a longer cycle, and you look at the last couple of years, what you've seen is that alternatives in both of those years were a little below our long-term expectations.
So for the full year, we were about $40 million lower than we would expect on the alternative side, whereas prepayment income was a little stronger.
When you add them together, I don't think we are materially different from what a longer-term expectation might be for the sum of those two items.
M&A is always a tool.
And over the last 22 (laughter) 20 years or so, we've used it pretty effectively to really achieve what would otherwise would be our plan anyway.
And so whenever we do M&A, it's because we're trying to accelerate a strategy; not to do it for the sake of doing it.
You are correct; we have said that we have a longer-term strategy of increasing the percentage of our income that comes from mortality and morbidity; and that sort of in terms of our businesses, we would probably think the group business as the top priority.
So, that's the strategy.
Deals coming into market come episodically.
We'll continue to look at things.
We've looked at some properties in the last 24 months, and back to our allocating capital to the best use, it was way more expensive.
Properties sold for way more than what we think would make sense for our use of capital.
But it made a lot of good sense for the people who bought it.
I don't know what their strategies were.
So, prices would probably have to come down a little bit before we got real interested in a deal.
But we'll keep looking.
We are good at assessing M&A.
We are good at integrating M&A.
And if something comes along that fits with our long-term strategy, all of which points we have articulated, we would take a look.
I will say that we wouldn't do anything that would materially affect our share buyback program over time.
Maybe let's back up a little bit as I answer that question.
We have, over the past four months, have had an internal team at Lincoln; the core team, eight or 10 people.
We have had another 25 or 30 people from our outside consultant, and then we've involved overall probably another 100 people from Lincoln.
And what we've spent our time doing is really trying to understand where the best opportunities are to both improve the customer experience ---+ I don't want to lose that concept ---+ improve the customer experience; and then as we are doing that, make sure that we find ways to finance that investment.
And so the numbers that we are talking about are not just pulled out of the pocket.
But they are the consequences of four months of pretty hard work and detail and math.
Now, having said that, as we move into the execution, and repeating what <UNK> said, we're going to have to pay attention to short-term earnings as well as long-term opportunity.
And the execution phase is very important.
And I think it would be pretty premature to try to identify exactly what line of business is going to get the most benefit.
Thank you all for joining us this morning.
As always, we will take your questions at our investor relations line.
And we'll follow up with those that were remaining in the queue.
You can reach us at 800-237-2920, or via email at investorrelations@lfg.com.
Thank you again for your participation, and have a great day.
