AM Best Affirms Credit Ratings of Lincoln National Corporation and Its Subsidiaries
March 26 2021 - 3:23PM
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 subsidiaries, Lincoln Life & Annuity Company
of New York (Syracuse, NY) and Lincoln Life Assurance Company of
Boston (LLAC) (Dover, NH). These companies are the key life/health
insurance subsidiaries of Lincoln National Corporation (LNC)
(headquartered in Radnor, PA) [NYSE: LNC] and collectively referred
to as Lincoln Financial Insurance Group (Lincoln).
Additionally, AM Best has affirmed the FSR of A (Excellent) and
the Long-Term ICR of “a+” of Lincoln’s affiliate, First
Penn-Pacific Life Insurance Company (FPP). Concurrently, AM Best
has affirmed the Long-Term ICR of “a-” and all 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 of Lincoln reflect its balance sheet strength, which
AM Best assesses as very strong, as well as its strong operating
performance, favorable business profile and very strong enterprise
risk management. Lincoln maintains leading market positions in its
core product lines, and is well-diversified by product type, source
of earnings and distribution channels. While product risk has
decreased moderately over time, the company remains highly
sensitive to the macroeconomic environment. The company has
reported favorable core trends consistently, although earnings have
suffered from elevated pandemic-related claims experience and lower
interest rates. The impact on earnings due to unfavorable mortality
impacted the Life Insurance and Group Protection segments. Despite
these headwinds, the company posted stable earnings for all
segments except its group business in 2020. Earnings headwinds from
elevated pandemic mortality, GAAP assumption updates and interest
rates were partially offset by strong equity markets and a rebound
of alternative asset income. AM Best’s view of the quality of
Lincoln’s capital is somewhat low due to the utilization of
captives and external reinsurance for its XXX and AXXX reserves.
Recently, capital growth has been constrained by dividends to the
holding company, used for shareholder dividends and share buyback
programs, although the share buyback program was on hold for a good
part of 2020. Financial and operating leverage metrics are within
guidelines for the ratings with strong interest coverage, and LNC
maintains sufficient balance sheet liquidity at the holding company
level, with additional financial flexibility from a recent
contingent capital facility that is undrawn.
The ratings of FPP reflect its balance sheet strength, which AM
Best assesses as very strong, as well as its adequate operating
performance, limited business profile due to its runoff status, and
very strong ERM. The ratings also reflect the financial strength of
its parent organization and its integration into Lincoln’s
management and ERM functions.
The following Long-Term IRs have been affirmed with stable
outlooks:
Lincoln National Corporation— -- “a-” on $300 million 4.20%
senior unsecured notes, due 2022 -- “a-” on $500 million 4.00%
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 3.05%
senior unsecured notes, due 2030 -- “a-” on $500 million 3.40%
senior unsecured notes, due 2031 -- “a-” on $500 million 6.15%
senior unsecured notes, due 2036 ($243 million outstanding) -- “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 -- “a-” on $300
million 4.375% senior unsecured notes, due 2050 -- “bbb” on $800
million 7.00% junior subordinated capital securities, due 2066
($722 million outstanding) -- “bbb” on $500 million 6.05% junior
subordinated capital securities, due 2067 ($491 million
outstanding)
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 stable
outlooks:
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 Guide to 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 credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Bruno Caron Associate Director +1 908 439 2200, ext.
5144 bruno.caron@ambest.com
Rosemarie Mirabella Director +1 908 439 2200,
ext. 5892 rosemarie.mirabella@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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