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 7/22/22  Lincoln Life Var Annuity A… LMB-K N-VPFS     12/31/21    1:703K                                   Toppan Merrill/FA
          → Lincoln Life Variable Annuity Account LMB-K ⇒ New York Preferred Advisor

Document/Exhibit                   Description                      Pages   Size 

 1: N-VPFS      Financial Statements of a Variable Annuity/Life     HTML    697K 
                Contract                                                         

 

LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Net Assets
December 31, 2021

 

Investments at market value:		Net Asset			Investments			Payable (to) from			Net Assets
		Value						Company
Columbia Variable Insurance Trust
Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1 - 3,574 Shares (cost $57,998)		$	37.76		$	134,966		$	-		$	134,966
Columbia Variable Portfolio - Government Money Market Fund - Class 1 - 309,910 Shares (cost $309,910)		1.00			309,910			-			309,910
Columbia Variable Portfolio - Large Cap Growth Fund - Class 1 - 9,736 Shares (cost $99,489)		37.95			369,497			-			369,497
Columbia Variable Portfolio - Overseas Core Fund - Class 1 - 1,170 Shares (cost $15,674)		15.08			17,644			-			17,644
Columbia Variable Portfolio - Small Company Growth Fund - Class 1 - 20,615 Shares (cost $399,900)		24.39			502,798			-			502,798
Columbia Variable Portfolio - Strategic Income Fund - Class 1 - 12,524 Shares (cost $53,351)		4.25			53,229			-			53,229
Columbia Variable Portfolio - U.S. Government Mortgage Fund - Class 1 - 6,083 Shares (cost $62,870)		10.34			62,893			-			62,893
Net Assets					$	1,450,937		$	-		$	1,450,937

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Operations
For the Year Ended December 31, 2021

 

		Columbia Variable Portfolio -			Columbia Variable Portfolio -			Columbia Variable Portfolio -			Columbia Variable Portfolio -
		Dividend Opportunity			Government Money			Large Cap Growth			Overseas Core
		Fund - Class 1			Market Fund - Class 1			Fund - Class 1			Fund - Class 1
Income:
Dividends		$	-		$	34		$	-		$	235
Expenses:
Mortality and expense risk and distribution charges		1,562			4,298			4,535			231
Net investment income (loss)		(1,562		)	(4,264		)	(4,535		)	4
Net realized and change in unrealized gains (losses):
Realized gains (losses) on sale of fund shares		1,673			-			45,227			65
Realized gain distributions		-			-			-			377
Net realized gains (losses)		1,673			-			45,227			442
Net change in unrealized appreciation (depreciation)		26,962			-			44,974			1,013
Net realized and change in unrealized gains (losses)		28,635			-			90,200			1,455
Increase (decrease) in net assets from operations		$	27,073		$	(4,264	)	$	85,666		$	1,459

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Operations (concluded)
For the Year Ended December 31, 2021

 

		Columbia Variable Portfolio -			Columbia Variable Portfolio -			Columbia Variable Portfolio -
		Small Company Growth			Strategic Income			U.S. Government Mortgage
		Fund - Class 1			Fund - Class 1			Fund - Class 1
Income:
Dividends		$	-		$	2,898		$	1,324
Expenses:
Mortality and expense risk and distribution charges		7,745			745			841
Net investment income (loss)		(7,745)			2,153			483
Net realized and change in unrealized gains (losses):
Realized gains (losses) on sale of fund shares		38,422			385			144
Realized gain distributions		95,908			-			1,027
Net realized gains (losses)		134,330			385			1,171
Net change in unrealized appreciation (depreciation)		(145,202)			(2,177)			(3,085)
Net realized and change in unrealized gains (losses)		(10,872)			(1,792)			(1,914)
Increase (decrease) in net assets from operations		$	(18,617)		$	360		$	(1,431)

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Changes in Net Assets
For the Years Ended December 31, 2021 and 2020

 

		Columbia Variable Portfolio -						Columbia Variable Portfolio -
		Asset Allocation						Dividend Opportunity
		Fund - Class 1						Fund - Class 1
		2021			2020			2021			2020
Operations:
Net investment income (loss)		$	-		$	9,649		$	(1,562)		$	(1,415)
Net realized gains (losses)		-			(2,333)			1,673			1,705
Net change in unrealized appreciation (depreciation)		-			(37,463)			26,962			(1,261)
Increase (decrease) in net assets from operations		-			(30,147)			27,073			(971)
Contract Owner Transactions:
Purchase payments from contract owners		-			-			-			-
Transfers between accounts, net		-			(397,496)			(2,723)			585
Contract terminations, annuity payouts and contract charges		-			(9,391)			(645)			(3,214)
Net increase (decrease) in net assets from contract owner transactions		-			(406,887)			(3,368)			(2,629)
Total increase (decrease) in net assets		-			(437,034)			23,705			(3,600)
Net assets at beginning of year		-			437,034			111,261			114,861
Net assets at end of year		$	-		$	-		134,966			$	111,261

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Changes in Net Assets (continued)
For the Years Ended December 31, 2021 and 2020

 

		Columbia Variable Portfolio -						Columbia Variable Portfolio -
		Government Money Market						Large Cap Growth
		Fund - Class 1						Fund - Class 1
		2021			2020			2021			2020
Operations:
Net investment income (loss)		(4,264)			$	(3,590)		$	(4,535)		$	(4,425)
Net realized gains (losses)		-			-			45,227			80,562
Net change in unrealized appreciation (depreciation)		-			-			44,974			10,955
Increase (decrease) from operations		(4,264)			(3,590)			85,666			87,092
Contract Owner Transactions:
Purchase payments from contract owners		-			-			-			-
Transfers between accounts, net		2,897			387,182			(19,872)			20,954
Contract terminations, annuity payouts and contract charges		(49,501)			(76,984)			(32,117)			(111,260)
Net increase (decrease) in net assets from contract owner transactions		(46,604)			310,198			(51,988)			(90,306)
Total increase (decrease) in net assets		(50,868)			306,608			33,677			(3,214)
Net assets at beginning of year		360,778			54,170			335,820			339,034
Net assets at end of year		$	309,910		$	360,778		$	369,497		$	335,820

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

8

 

LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Changes in Net Assets (continued)
For the Years Ended December 31, 2021 and 2020

 

		Columbia Variable Portfolio -						Columbia Variable Portfolio -
		Overseas Core						Small Company Growth
		Fund - Class 1						Fund - Class 1
		2021			2020			2021			2020
Operations:
Net investment income (loss)		$	4		$	54		$	(7,745)		$	(5,607)
Net realized gains (losses)		442			68			134,330			11,473
Net change in unrealized appreciation (depreciation)		1,013			335			(145,202)			232,317
Increase (decrease) in net assets from operations		1,459			457			(18,617)			238,183
Contract Owner Transactions:
Purchase payments from contract owners		-			-			-			-
Transfers between accounts, net		(40)			(6,770)			(29,224)			2,765
Contract terminations, annuity payouts and contract charges		(950)			(978)			(23,046)			(27,259)
Net increase (decrease) in net assets from contract owner transactions		(990)			(7,748)			(52,270)			(24,494)
Total increase (decrease) in net assets		470			(7,291)			(70,887)			213,689
Net assets at beginning of year		17,174			24,465			573,685			359,996
Net assets at end of year		$	17,644		$	17,174		$	502,798		$	573,685

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Statements of Changes in Net Assets (concluded)
For the Years Ended December 31, 2021 and 2020

 

		Columbia Variable Portfolio -						Columbia Variable Portfolio -
		Strategic Income						U.S Government Mortgage
		Fund - Class 1						Fund - Class 1
		2021			2020			2021			2020
Operations:
Net investment income (loss)		$	2,153		$	1,039		$	483		$	674
Net realized gains (losses)		385			(10,410)			1,171			2,244
Net change in unrealized appreciation (depreciation)		(2,177)			11,458			(3,085)			293
Increase (decrease) in net assets from operations		360			2,087			(1,431)			3,211
Contract Owner Transactions:
Purchase payments from contract owners		-			-			-			-
Transfers between accounts, net		(1,504)			99			(93)			(5,554)
Contract terminations, annuity payouts and contract charges		(1,339)			(43,629)			(2,417)			(30,735)
Net increase (decrease) in net assets from contract owner transactions		(2,843)			(43,530)			(2,511)			(36,289)
Total increase (decrease) in net assets		(2,482)			(41,443)			(3,942)			(33,078)
Net assets at beginning of year		55,711			97,154			66,835			99,913
Net assets at end of year		$	53,229		$	55,711		$	62,893		$	66,835

 

Note: Totals may not appear to foot/crossfoot due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

10

 

LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Notes to Financial Statements and Financial Highlights
December 31, 2021

 

1.  Organization

 

Effective October 1, 2021, Lincoln Life Assurance Company of Boston, a wholly owned subsidiary of Lincoln National Life Insurance Company (“Lincoln Life”), merged with and into Lincoln Life (the “Company”). Also effective October 1, 2021, Variable Account K of Liberty Life Assurance Company of Boston is now known as Lincoln Life Variable Annuity Account LMB-K (the “Variable Account”). The Variable Account is a separate investment account of the Company and was established as a funding vehicle for the deferred and immediate variable annuity contracts issued by the Company. The Variable Account is registered with the Securities and Exchange Commission as a Unit Investment Trust under the Investment Company Act of 1940 and is an investment company.  Accordingly, the Variable Account follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services – Investment Companies.  The Variable Account invests in eligible mutual funds and is a funding vehicle for group and individual variable annuity contracts.

 

The assets of the Variable Account are divided into variable subaccounts, each of which may be invested in shares of one of seven mutual funds (“the Funds”) of the open-ended management investment company, each Fund with its own investment objective. The Funds are:

 

Columbia Funds Variable Insurance Trust:

Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1

Columbia Variable Portfolio - Government Money Market Fund - Class 1

Columbia Variable Portfolio - Large Cap Growth Fund - Class 1

Columbia Variable Portfolio - Overseas Core Fund - Class 1(a)

Columbia Variable Portfolio - Small Company Growth Fund - Class 1

Columbia Variable Portfolio - Strategic Income Fund - Class 1

Columbia Variable Portfolio - U.S. Government Mortgage Fund - Class 1   (a)           Formerly known as Columbia Variable Portfolio – Select International Equity Fund

 

Effective in 1997, the Variable Account discontinued writing new policies.

 

The following funds were merged in 2020: Columbia Variable Portfolio – Asset Allocation Fund – Class 1 merged into Columbia Variable Portfolio – Government Money Market Fund Class 1.

 

COVID-19 Risk

 

The novel coronavirus (COVID-19), which was first detected in 2020, has resulted in, among other things, stressors to healthcare service infrastructure, country border closings, business and school closings and disruptions to supply chains and customer activity. This pandemic risk could have a significant adverse impact on subaccount investments.

 

Administrative Services

 

Administrative services necessary for the operation of the Variable Account were provided by Delaware Life Insurance Company through October 31, 2021. Beginning November 1, 2021, administrative services necessary for the operation of the Variable Account are provided by Protective Life Insurance Company.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Notes to Financial Statements and Financial Highlights (continued)

 

2.  Significant Accounting Policies

 

General

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

 

Investment Valuation and Transactions

 

Investments in mutual funds are valued at their closing net asset values (“NAV”) as determined by the respective mutual fund.  Transactions are recorded on the trade date.  Realized gains and losses on sales of investments are computed on the basis of the identified cost of the investment sold.  Dividend income and realized gain distributions are reinvested in additional fund shares and recorded on the ex-dividend date.

 

Fair Value

 

Investments in the Funds are stated at fair value as determined by the closing NAV per share on December 31, 2021.  NAV is quoted by the Funds as derived by the fair value of the Funds’ underlying investments.  The difference between cost and NAV is reflected as unrealized appreciation or depreciation of investments.  There are no redemption restrictions on investment in the Funds.  Investments for which the fair value is measure at NAV using the practical expedient (investments in investees measured at NAV) are excluded from the fair value hierarchy.  Accordingly, the Variable Account’s investments in the Funds have not been classified in the fair value hierarchy.

 

Reserve for Variable Annuities

 

Annuity reserves are computed for contracts under which periodic benefit payments are being made according to the 2000 Individual Annuity Mortality Table for issues prior to 1/1/2015 and the 2012 Individual Annuity Reserve Table for issues thereafter.  The assumed investment rate is either 3.0% or 5.0%.  The mortality risk is fully borne by the Company and may result in additional amounts being transferred into the Variable Account by the Company.

 

Transfers

 

Contract holders may make transfers between sub-accounts.  Transfers will be executed based on the unit value of each sub-account on the day the transfer is initiated.  The Company may charge a transfer fee of up to $25.

 

If a contract holder’s financial transaction is not executed on the appropriate investment date, a correcting transaction is required by the Company in order to make the contract owner whole.  The resulting risk of a gain or loss from this correcting transaction has no effect on the contract holder’s account and is fully assumed by the Company.

 

Federal Income Taxes

 

The operations of the Variable Account are part of the operations of the Company and are not taxed separately. The Company qualifies for the federal income tax treatment granted to life insurance companies under Subchapter L of the Internal Revenue Code (the “Code”). Under existing federal income tax law, investment income and realized gain distributions earned by the Variable Account on contract owner reserves are not taxable, and therefore, no provision has been made for federal income taxes.  In the event of a change in applicable tax law, the Company will review this policy and if necessary a provision may be made in future years.

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Notes to Financial Statements and Financial Highlights (continued)

 

2.  Significant Accounting Policies (continued)

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets as of the date of the financial statements and the reported amounts of increases/ decreases in net assets from contract owner transactions during the reporting period.  Actual results could differ from amounts derived from management’s estimates.

 

3.  Expenses

 

Daily deductions are made from each contract owner’s account value for assumption of mortality and expense risk at an effective annual rate of 1.25% of contract value.  A deduction is also made from each contract owner’s account value, that has not reached the maximum cumulative annual sales charge limit, to compensate the Company for certain sales distribution expenses relating to a contract at an effective annual rate of 0.15% of average daily NAV. There are no deductions made from purchase payments for sales charges at the time of purchase.  In the event of a contract termination, a contingent deferred sales charge, based on a graded table of charges, is deducted.  An annual contract maintenance charge of $36 to cover the cost of contract administration is deducted from each contract holder’s account on the contract anniversary date and these charges are reported in the statement of changes in net assets.

 

4. Diversification Requirements

 

Under the provisions of Section 817(h) of the Code, a variable annuity contract, other than a pension plan contract, is not treated as an annuity contract for federal tax purposes for any period in which the investments of the segregated asset account on which the contract is based are not adequately diversified.  The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of Treasury.  The Company believes that the Variable Account satisfies the current requirements of the regulations, and it intends that the Variable Account will continue to meet such requirements.

 

13

 

LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Notes to Financial Statements and Financial Highlights (continued)

 

5. Purchases and Sales of Investments

 

The cost of shares purchased and proceeds from shares sold by the Variable Account during 2021 and 2020 are shown below:

 

2021	Aggregate Cost of Purchases	Aggregate Proceeds from Sales
Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1	2,239	6,941
Columbia Variable Portfolio - Government Money Market Fund - Class 1	21,125	81,225
Columbia Variable Portfolio - Large Cap Growth Fund - Class 1	5,505	62,161
Columbia Variable Portfolio - Overseas Core Fund - Class 1	612	1,220
Columbia Variable Portfolio - Small Company Growth Fund - Class 1	95,945	61,146
Columbia Variable Portfolio - Strategic Income Fund - Class 1	3,861	3,079
Columbia Variable Portfolio - U.S. Government Mortgage Fund - Class 1	2,351	3,349

 

2020	Aggregate Cost of Purchases	Aggregate Proceeds from Sales
Columbia Variable Portfolio - Asset Allocation Fund - Class 1	128,818	418,613
Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1	-	5,867
Columbia Variable Portfolio - Government Money Market Fund - Class 1	455,116	139,210
Columbia Variable Portfolio - Large Cap Growth Fund - Class 1	21,826	120,266
Columbia Variable Portfolio - Overseas Core Fund - Class 1	18,977	26,447
Columbia Variable Portfolio - Small Company Growth Fund - Class 1	7,563	30,354
Columbia Variable Portfolio - Strategic Income Fund - Class 1	2,277	44,092
Columbia Variable Portfolio - U.S. Government Mortgage Fund - Class 1	2,089	37,451

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Notes to Financial Statements and Financial Highlights (continued)

 

6. Changes in Units Outstanding

 

The changes in units outstanding for the years ended December 31, 2021 and 2020 are shown below:

 

			Net Increase
2021	Units Issued	Units Redeemed	(Decrease)
Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1	525	659	(134)
Columbia Variable Portfolio - Government Money Market Fund - Class 1	5,143	10,991	(5,848)
Columbia Variable Portfolio - Large Cap Growth Fund - Class 1	661	1,971	(1,310)
Columbia Variable Portfolio - Overseas Core Fund - Class 1	-	68	(68)
Columbia Variable Portfolio - Small Company Growth Fund - Class 1	-	239	(239)
Columbia Variable Portfolio - Strategic Income Fund - Class 1	550	586	(36)
Columbia Variable Portfolio - U.S. Government Mortgage Fund - Class 1	-	213	(213)

 

			Net Increase
2020	Units Issued	Units Redeemed	(Decrease)
Columbia Variable Portfolio - Asset Allocation Fund - Class 1	6	6,785	(6,779)
Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1	2	282	(280)
Columbia Variable Portfolio - Government Money Market Fund - Class 1	43,008	9,324	33,684
Columbia Variable Portfolio - Large Cap Growth Fund - Class 1	777	4,270	(3,493)
Columbia Variable Portfolio - Overseas Core Fund - Class 1	1,506	2,196	(690)
Columbia Variable Portfolio - Small Company Growth Fund - Class 1	3	193	(190)
Columbia Variable Portfolio - Strategic Income Fund - Class 1	157	1,393	(1,236)
Columbia Variable Portfolio - U.S. Government Mortgage Fund - Class 1	-	3,201	(3,201)

 

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LINCOLN LIFE VARIABLE ANNUITY ACCOUNT LMB-K

 

Notes to Financial Statements and Financial Highlights (continued)

 

7. Financial Highlights

 

A summary of unit values and units outstanding for variable life contracts by net investment income ratios and the expense ratios, excluding expenses of the underlying portfolios, and total returns for each of the five years in the period ended December 31, 2021 are as follows.

 

		December 31, 2021 through 2017													For the years ended December 31, 2021 through 2017
		Units		Unit Fair Value Lowest to Highest								Net Assets		Investment* Income Ratio			Expense Ratio** Lowest to Highest						Total Return*** Lowest to Highest
Columbia Variable Portfolio - Asset Allocation Fund - Class 1 (a)
2020		-		$	60.87		to		$	63.27		$	-		2.71	%	1.24	%	to		1.39	%	(6.83	)  %	to		(6.79	) %
2019		6,779		65.33			to		67.88			437,034			1.61		1.24		to		1.39		19.46		to		19.64
2018		12,786		54.69			to		56.73			702,208			1.54		1.24		to		1.39		(5.85	)	to		(5.71	)
2017		14,593		58.09			to		60.17			849,608			1.64		1.24		to		1.39		14.03		to		14.20
Columbia Variable Portfolio - Dividend Opportunity Fund - Class 1
2021		5,967		$	22.62							$	134,966		-	%			1.40	%				24.42		%
2020		6,101		18.18			to		18.44			111,261			-		1.24		to		1.39		(0.25	)	to		(0.10	)
2019		6,381		18.23			to		18.46			114,861			-		1.24		to		1.39		22.35		to		22.54
2018		7,668		14.90			to		15.07			114,328			-		1.24		to		1.39		(7.04	)	to		(6.90	)
2017		8,297		16.02			to		16.18			133,011			-		1.24		to		1.39		12.80		to		12.97
Columbia Variable Portfolio - Government Money Market Fund - Class 1
2021		33,546		$	9.24							$	309,910		0.01	%			1.40	%				(1.38		)  %
2020		39,394		9.37			to		9.47			360,778			0.11		1.24		to		1.39		(1.08	)	to		(0.93	)
2019		5,710		9.47			to		9.56			54,170			1.90		1.24		to		1.39		0.48		to		0.64
2018		6,826		9.42			to		9.50			64,350			1.78		1.24		to		1.39		0.11		to		0.26
2017		3,316		9.41			to		9.48			31,238			-		1.24		to		1.39		(0.96	)	to		(0.81	)
Columbia Variable Portfolio - Large Cap Growth Fund - Class 1
2021		8,505		$	43.44							$	369,497		-	%			1.40	%				26.94		%
2020		9,815		34.22			to		34.72			335,820			-		1.24		to		1.39		32.87		to		33.07
2019		13,308		25.75			to		26.09			339,034			-		1.24		to		1.39		34.02		to		34.23
2018		15,677		19.22			to		19.44			301,132			-		1.24		to		1.39		(5.27	)	to		(5.13	)
2017		16,841		20.29			to		20.49			341,737			-		1.24		to		1.39		26.37		to		26.56
Columbia Variable Portfolio - Overseas Core Fund - Class 1
2021		1,228		$	14.37							$	17,644		1.35	%			1.40	%				8.45		%
2020		1,296		13.25								17,174			1.69				1.39					7.61
2019		1,986		12.32								24,465			2.16				1.39					23.74
2018		3,711		9.95								36,937			2.83				1.39					(17.79		)
2017		4,049		12.11								49,024			2.23				1.39					25.77

 

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