In this week’s Friday Focus, Ross Healy, Chairman of Strategic Analysis, applies Structural Valuation Analysis (SVA) to the insurance sector. Most U.S. and Canadian insurers are trading near their growth prices—leaving little room for bargains. But one name stands out: Lincoln National Corporation (LNC).

Lincoln’s story is dramatic. In 2022, the company took a massive $2.6 billion loss, including over $2 billion in deferred acquisition costs and a $634 million goodwill impairment. This collapse pushed the stock deep into the SVA “Blue Zone”—the so-called elephant’s graveyard where markets signal balance sheet trouble.

Unlike peers who routinely cleaned up issues, Lincoln let problems accumulate for years. Its exposure to long-dated guarantees and lack of flexibility in capital buffers made the eventual reckoning severe. But since then, management has been repairing the damage:

• Risk-based capital ratio above 400% by end of 2024
• Deleveraging efforts showing clear progress
• Q2 2025 adjusted operating income up 32% year-over-year

Yes, risks remain—including a recent $147M settlement—but the balance sheet is stronger and momentum is turning. At current levels in the Blue Zone, Lincoln has speculative appeal. A recovery to its Blue Price implies ~92% upside, while a return to its Normal Price could mean a 325% gain—in line with where peers trade.

Ross isn’t calling for a “fill your hat” strategy yet, but suggests a small allocation could be worth the risk.

👉 Watch the full breakdown here: https://www.youtube.com/watch?v=VQFSMtzxwC4