Lincoln National Gets $400 Million in Statutory Relief for Term Life Reserves

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January 8, 2010 Friday 04:40 PM EST

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Lincoln National Gets $400 Million in Statutory Relief for Term Life Reserves

Fran Lysiak

PHILADELPHIA

Lincoln National Corp. said it and some of its subsidiaries have inked a $550 million, 10-year letter of credit transaction with Credit Suisse A.G. to boost regulatory capital requirements for its life insurance business.

It expects the deal to provide about $400 million in initial statutory capital relief at Dec. 31, 2009, for Lincoln National Life Insurance Co., its main insurance business. The transaction is for reserves for term life insurance.

"This transaction represents a significant step forward on executing our long-term capital management plan supporting the life business and one of several actions taken in 2009 to fortify our overall capital position heading into 2010," said Fred Crawford, chief financial officer of the Philadelphia-based Lincoln National, in a statement.

The annual GAAP expense is about $10 million, after-tax, Lincoln National (NYSE: LNC) said.

Separately, last summer, Lincoln said it planned to sell its Delaware Investments asset-management unit to Macquarie Group, an Australian financial services company, for $428 million. Under the deal, Macquarie said it would pay Lincoln in cash to buy the businesses and assets of Delaware, subject to a purchase price adjustment at closing (BestWire, Aug. 19, 2009).

Earlier this week, Lincoln said Macquarie Group (ASX: MQG) completed its acquisition of Delaware for $451.8 million in cash, subject to customary post-closing adjustments.

After three consecutive quarterly net losses, Lincoln National posted a profit in the third quarter of 2009, helped by the sale of its operations in the United Kingdom. Third-quarter net income was $153.3 million, which was 3.3% higher from the same period a year ago.

Results were boosted by a $55 million positive adjustment, after tax, related to the sale of its Lincoln National UK subsidiary (BestWire, Oct. 29, 2009).

Lincoln National Life Insurance currently has a Best Financial Strength Rating of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

January 12, 2010

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