AM Best Downgrades Credit Ratings of Lincoln National Corporation and its Subsidiaries - Seite 2

AM Best will continue to monitor Lincoln’s ability to execute on its capital management initiatives designed to rebuild its capital position. These initiatives include several opportunities such as a potential block reinsurance transaction, indefinitely pausing its share-buyback program, as well as a preferred equity capital raise. A failure to execute on these initiatives may result in a negative rating action.

Lincoln’s operating performance remains within the strong assessment category and AM Best notes that the unlocking charge also adversely impacted earnings, resulting in a significant third-quarter operating loss. The company has experienced favorable premium growth in recent periods and earnings are expected to benefit from a rising interest rate environment. However, earnings may continue to be pressured by a volatile equity market, which has reduced the level of fee income from assets under management in recent periods. 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, its appropriate ERM and the benefits it receives as a subsidiary of LNC. The downgrade and negative outlook reflect the reduced financial strength of its parent. AM Best notes that FPP’s liability profile primarily consists of term life and current assumption UL policies and believes that FPP will continue to contribute a moderate amount of earnings to Lincoln over the near to medium-term as it continues to operate in run-off.

The following Long-Term IRs have been downgraded with the outlooks revised to negative from stable:

Lincoln National Corporation—
— to “bbb” (Good) from “bbb+” (Good) on $562,034,000 million LIBOR + 236 bps subordinated notes, due 2066
— to “bbb” (Good) from “bbb+” (Good) on $432,743,000 million LIBOR + 204 bps subordinated notes, due 2067

The following Long-Term IRs have been downgraded with the outlooks revised to negative from stable:

Lincoln National Corporation—
— to “bbb+” (Good) from “a-” (Excellent) on $500 million 4.00% senior unsecured notes, due 2023
— to “bbb+” (Good) from “a-” (Excellent) on $300 million 3.35% senior unsecured notes, due 2025
— to “bbb+” (Good) from “a-” (Excellent) on $400 million 3.625% senior unsecured notes, due 2026
— to “bbb+” (Good) from “a-” (Excellent) on $500 million 3.8% senior unsecured notes, due 2028
— to “bbb+” (Good) from “a-” (Excellent) on $500 million 3.05% senior unsecured notes, due 2030
— to “bbb+” (Good) from “a-” (Excellent) on $500 million 3.40% senior unsecured notes, due 2031