AM Best Information Services

MARCH 03, 2020 03:49 PM (EST)

AM Best Affirms Credit Ratings of Lincoln National Corp. and Most Subs.; Upgrades Ratings of Lincoln Life Assur. Co. of Boston

 Bruno Caron
Senior Financial Analyst
+1 908 439 2200, ext. 5144

Rosemarie Mirabella
+1 908 439 2200, ext. 5892

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

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


OLDWICK - MARCH 03, 2020 03:49 PM (EST)
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). Concurrently, AM Best has upgraded the FSR to A+ (Superior) from A (Excellent) and the Long-Term ICR to “aa-” from “a+” of Lincoln Life Assurance Company of Boston (LLAC) (Dover, NH). Collectively, these companies are the key life/health insurance subsidiaries of Lincoln National Corporation (LNC) (headquartered in Radnor, PA) [NYSE: LNC] and are marketed 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 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 of Lincoln reflect its 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. While product risk has decreased moderately over time, the company remains highly sensitive to the macro-economic environment. The company has reported favorable premium trends consistently, 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 diminished somewhat 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. Financial and operating leverage metrics are within guidelines for the current ratings with strong interest coverage, and LNC maintains sufficient liquidity at the holding company level.

The ratings of LLAC have been upgraded as a result of it being grouped into Lincoln’s rating unit, which reflects its strategic importance to LNC as a leading provider of group disability and life products.

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 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 risk management functions.

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

Lincoln National Corporation—

— “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 4.00% 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 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 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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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