Lincoln National Corp.’s lack of aggressiveness in the life market has led to soft sales and light earnings, says A.G. Edwards analyst Jeff Hopson. [@@]

Edwards has reduced its earnings per share estimates for Lincoln, Philadelphia, by $0.10, to $4.10, this year and by $0.13, to $4.50, for 2006.

Despite lighter earnings, Hopson says in a note to investors that he is encouraged overall.

“The company is bringing in assets that will eventually produce earnings, and they are remaining prudent in response to intense competition,” he says.

Hopson says the hiring of a large-cap growth team will hurt the profitability of the $90 billion asset management group, Delaware Investments, in the second quarter. “But this is a high quality team that should add capability and the potential for sales over time,” he says.

“Despite a mixed quarter, we are comfortable that Lincoln is making progress in building value over time, as two of its businesses are reporting solid growth, and one unit is staying conservative in an aggressive competitive environment,” Hopson writes.

While Hopson expects continued momentum in the company’s annuity flows, he does see a “blip-up” in fixed annuity withdrawals that will be a challenge to its short-term profitability.

“And while the Delaware earnings picture is testing the patience of investors, we do think they are reasonably close to turning the corner as they build assets and leverage the existing infrastructure,” Hopson writes.