Lincoln National And Swiss Re See Gains In Deal For Lincoln Re
Swiss Re’s proposed $2.5 billion acquisition of Lincoln National Corp.’s life reinsurance subsidiary is a deal that will allow them both to pursue their respective growth strategies, the companies say.
Philadelphia-based Lincoln National sees the proceeds from the deal as an opportunity to deepen its presence in the wealth accumulation business.
Jon Boscia, chairman and CEO of Lincoln National, says the sale will make it possible for LNC to buy life insurance and annuity business, distribution or trust capabilities.
Boscia says that although the mid- to upper-mid market is crowded in the wealth accumulation area, the very-high-wealth market is populated only by a few companies that include Lincoln, Manulife Financial in Toronto, and Pacific Life Insurance Company in Newport Beach, Calif.
That market is Lincoln’s “strategic direction,” he continues. The deal, he adds, also removes Lincoln from a line of business that carries risk and creates volatility, both negatives from a shareholder perspective.
Boscia thinks the sale will increase the value of Lincoln National shares. But there is nothing, he says, that currently prevents Lincoln from being acquired, noting that “it has been at the top of many companies’ wish lists.”
Andrew Kligerman, an insurance analyst with Bear Stearns in New York, calls the sale a “solid strategic move” for Lincoln National. Lincoln Re is a “quality operation,” but investors were concerned with the volatility the life reinsurance business could create for the stock.