Lincoln Financial to Exit TARP With Stock Sale

PHILADELPHIA -- Lincoln Financial Group on Monday said it will issue shares and sell new debt to raise funds to pay back the $950 million in federal government bailout aide it received.

The insurer said it will sell $335 million of common stock and up to $750 million in senior notes. The proceeds of the share sale plus a $250 million notes offering will go toward the repurchase of the $950 million in preferred shares issued to the U.S. Treasury under the Capital Purchase Program in May 2009. The company needs approval from Treasury before it can repurchase the shares.

The company will use the proceeds from a notes offering of up to $500 million as part of a long-term financing plan to support reserves for the life insurance policies issued by its insurance subsidiaries.

At the height of the financial crisis in fall 2008, the government committed $700 billion of taxpayer funds to help financial services companies under the so-called Troubled Asset Relief Program, or TARP. Hundreds of U.S. banks and insurance companies participated and received cash investments from the Treasury Department in exchange for preferred stock.

"We appreciate the critical role the government and the American taxpayers have played in stabilizing the financial markets," said Dennis R. Glass, president and CEO, who said the buyback is coming sooner than expected. "Lincoln Financial always viewed this investment as temporary capital and intended to return it as soon as it was prudent."

Following the repayment, the U.S. Treasury Department will continue to hold warrants to purchase approximately 13 million common shares of Lincoln Financial at an exercise price of $10.92 per share. The company does not intend to repurchase the warrants.

In morning trading, Lincoln Financial shares added $1.60, or 6.1 percent, to $27.96.