Lincoln National Corp. SWOT and PESTLE Analysis

Strength

1. Innovative Technology advancement: Lincoln National Corporation has always enhanced its product line and continuously upgraded its existing product. LNC is known for the first one to come up with an innovative solution in the insurance sector of “Method and apparatus for providing retirement income benefits" and gain competitive advantage. On September 19, 2017, LNC has launched the Lincoln Finance app, which is compatible with Apple-watch. It enables users to check their account balance, retirement income projection and asset allocation on their Apple Watch. This will help the user to plan their retirement goal through proper actions accordingly.

2. Strong Brand equity and Market Reputation: Due to LNC’s honest and dependable services, the company has high brand equity for customers and new products attract customers. The Nationally Recognized Rating Organizations rate the financial strength of principal insurance subsidiaries. The company has a good rating from these agencies which attract more customers. Lincoln National Corporation has an excellent rating in most of the top rating agencies. Most of the primary rating agency like A.M. Best, Fitch, Moody and S&P has given it A and better rating in year 2017.

3. Mergers and Acquisition: Lincoln National Corporation is making various mergers and acquisition to increase its base. With the help of inorganic growth, the company is, increasing its portfolio and providing the customer with more customer choices and better flexibility. Recently in 2018, the LNC has acquired Liberty Life Assurance Co of Boston to boost its presence in the group benefits market. These M&A initiatives have helped the company gain market share due to more investment choices and flexibility to its customer, along with fee-based compensation options, new product launch and upgrade the existing products.

4. Strong distribution model: Distribution network plays an important role in market penetration and servicing the customer in the insurance industry. LNC has strong penetration in distribution due to its powerful retail franchises. This provides LNC with competitive advantage in terms of launching new product and reaching growing market. Due to high penetration, the company was able to grow 6 to 12% in every segment in year 2017.

Weakness

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Opportunity

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Threat

1. Dynamic market condition: The insurance sector has adversely affected by conditions in the global capital markets and the economy. Continued unconventional easing from the major banks, slowing of global growth, continued impact of falling global energy and other prices, and the ability of the U.S. government to proactively address the fiscal imbalance remain critical challenges for the insurance market. These macroeconomic conditions will adversely affect the LNC’s market because most of the LNC business is based in the US. The insurance sector is always at risk due to market volatility.

2. Global Competition: The insurance sector is very competitive and has many players from around the world. Lincoln National Corporation’s major competitors are Transamerica Life, Globe Life Insurance, and Jackson National Life. Major comparing factors in insurance sector are distribution channel access, quality of wholesalers, cost, product features and speed to market. With the new global entrant in the market, it has become difficult for LNC to maintain the differentiating factor in the industry.

3. Changes in interest rates: Lincoln National Corporation’s insurance business profitability is highly depended on Fed rate. Due to lowest unemployment in last decade and inflation reaching 2%, Fed is planning the increase in interest rate. The change in the interest rate hurts the profitability of the insurance business because liabilities are interest sensitive. Insurance companies earn margin on investment income and interest credited to contract holders. The change in rates change the cost of annuity and impact the overall profit.

Political

1. Policy Decision: The insurance sector is dependent on the political decisions, and current uncertainty will hamper the performance of the industry. Trump government is planning to reduce the corporate tax rate, and it will have a significant impact on insurance business. It will help in increasing economic activity in the US. The uncertainty of federal funding, as well as the future of the Social Security Disability Insurance ("SSDI") program, will have a substantial impact on the insurance sector.

2. Implementation of Health Care Legislation: Implementation of Heath care legislation ensures that everyone gets the benefit of health insurance. It will help the Lincoln National Corporation with the opportunity to increase the reach of the insurance sector. But Trump government is planning major changes in Obamacare, which will ease the regulatory norms for business. This will create instability for LNC in providing the new product and they have to modify the existing products.

Economical

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Social

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Technological

1. Digital integration in Insurance sector: A substantial shift in digitalization is forcing the insurance sector to have a more competitive price and increase the customer experience. The customer can access various plans and decide as per his requirement. The young companies are using the digital platform to give better customer experience at low cost and giving fierce competition in the insurance sector. LNC can leverage big data for Risk assessment, fraud detection, customer predictive modelling, improving customer experience and automation.

2. Blockchain to be a game changer in processing claims: Any business cannot sustain without customer-centric approach and the customers want hassle free services. Blockchain is the technology that can be leveraged in insurance business to improve the operation efficiency, minimizing risks and safer transaction across value chain. The success of block chain depends on the collaboration across all the players. To take benefit of blockchain, many industry leader including LNC, had created LIMRA’s Blockchain advisory group in 2017 to explore the future possibilities of block chain technology.

Legal

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Environmental

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