AM Best Affirms Credit Ratings of Lincoln National Corporation and Its Key Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A+
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of
“aa-” of The Lincoln National Life Insurance Company and its wholly
owned subsidiary, Lincoln Life & Annuity Company of New York (Syracuse,
NY), which are the key life/health insurance subsidiaries of Lincoln
National Corporation (LNC) (headquartered in Radnor, PA) [NYSE: LNC] and
are marketed as Lincoln Financial Group (Lincoln). Additionally, AM Best
has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of
Lincoln’s affiliates, Liberty Life Assurance Company of Boston (Dover,
NH) (LLAC) and First Penn-Pacific Life Insurance Company (FPP).
Concurrently, AM Best has affirmed the Long-Term ICR of “a-” and all
existing Long- and Short-Term Issue Credit Ratings (Long-Term IR;
Short-Term IR) of LNC. The outlook of these Credit Ratings (ratings) is
stable. All companies are domiciled in Fort Wayne, IN, unless otherwise
specified. (Please see below for a detailed listing of the Long- and
Short-Term IRs).

The ratings reflect Lincoln’s balance sheet strength, which AM Best
categorizes as very strong, as well as its strong operating performance,
favorable business profile and very strong enterprise risk management
(ERM). Lincoln maintains leading market positions in its core product
lines, and is well-diversified by product type, source of earnings and
distribution channels. The company has consistently reported favorable
premium trends and strong statutory and GAAP earnings, which support
growth in capital and risk-adjusted capitalization. However, AM Best’s
view of the quality of capital is somewhat diminished due to the
utilization of captives and external reinsurance for its XXX and AXX
reserves. Additionally, capital growth has been constrained by dividends
to the holding company, used for shareholder dividends and share buyback
programs. Financial and operating leverage metrics are within guidelines
for the current rating at the operating entities and the holding company
with strong interest coverage and LNC maintains a high cash balance to
support ongoing interest needs.

The ratings of LLAC reflect its balance sheet strength, which AM Best
categorizes as adequate, as well as its adequate operating performance,
limited business profile and appropriate ERM. As part of its earlier
acquisition, LLAC entered into reinsurance agreements to cede all
insurance reserves to Lincoln National Life and a non-affiliated
reinsurer, limiting its business profile to be a marketing entity for
Lincoln’s large case group life and accident and health business. The
ratings also reflect a capital maintenance guarantee from Lincoln to
support LLAC’s capital above regulatory minimums.

The ratings of FPP reflect its balance sheet strength, which AM Best
categorizes as very strong, as well as its adequate operating
performance, limited business profile and very strong ERM. The ratings
also reflect the financial strength of its parent organization and its
integration into Lincoln’s management and risk management functions.
However, the company has been placed in runoff and maintains a large
proportion of reserves related to interest-sensitive products with high
guaranteed minimum crediting rates.

The following Long-Term IRs have been affirmed with a stable outlook:

Lincoln National Corporation—

— “a-” on $300 million 6.25% senior unsecured notes, due 2020

— “a-” on $300 million 4.85% senior unsecured notes, due 2021

— “a-” on $300 million 4.20% senior unsecured notes, due 2022

— “a-” on $500 million 4.099% senior unsecured notes, due 2023

— “a-” on $300 million 3.35% senior unsecured notes, due 2025

— “a-” on $400 million 3.625% senior unsecured notes, due 2026

— “a-” on $500 million 3.8% senior unsecured notes, due 2028

— “a-” on $500 million 6.15% senior unsecured notes, due 2036

— “a-” on $375 million 6.30% senior unsecured notes, due 2037

— “a-” on $500 million 7.00% senior unsecured notes, due 2040

— “a-” on $450 million 4.35% senior unsecured notes, due 2048

— “bbb” on $800 million 7.00% junior subordinated capital securities,
due 2066

— “bbb” on $500 million 6.05% junior subordinated capital securities,
due 2067

The following Short-Term IR has been affirmed:

Lincoln National Corporation—

— AMB-1 on commercial paper

The following indicative Long-Term IRs on securities available under a
universal shelf registration have been affirmed with a stable outlook:

Lincoln National Corporation—

— “a-” on senior unsecured debt

— “bbb+” on subordinated debt

— “bbb” on junior subordinated debt

— “bbb” on preferred stock

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view
Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases
.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Keith Behrmann
Senior Financial Analyst
+1
908 439 2200, ext. 5733

keith.behrmann@ambest.com

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Rosemarie Mirabella
Director
+1 908 439 2200,
ext. 5892

rosemarie.mirabella@ambest.com

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644

james.peavy@ambest.com

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