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Lincoln Retirement Exec Explains Name Change

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NU Online News Service, March 11, 4:33 p.m. – Lincoln Financial Corp. is changing the name of its the name of its Lincoln Annuity unit to “Lincoln Retirement” because that’s where the money is.

“There are 43 million baby boomers moving into retirement over the next 20 years, holding about $16 trillion in assets by the end of that time,” says Judimarie Thomas, a second vice president at Lincoln Retirement. “They’ve spent all this time building and accumulating and are now at the stage where they’re taking that money and are looking to invest it.”

Lincoln Retirement’s name change was spurred by the huge growth potential that Lincoln Financial foresees in the wealth accumulation and retirement income protection marketplace, Thomas says.

The Fort Wayne, Ind.-based parent company broke into the annuities market in a big way in 1997, when it bought the individual life insurance and annuities business from CIGNA Corp., Philadelphia, for $1.4 billion. The following year, it purchased the domestic individual life insurance business of another Hartford insurer, Aetna Inc., for $1 billion.

Since then, Lincoln has been making large strides. Although the company declines to cite specific variable annuity sales figures, it says VA sales for the fourth quarter of 2001 were 15% higher than VA sales for the fourth quarter of 2000. Industry figures show that most other VA manufacturers saw sales decline in late 2001 because of the stock market slump.

Thomas attributes her company’s continued success with VAs to introducing new products that consumers and brokers want, and also to developing partnerships with aggressive annuity vendors such as Wells Fargo & Company, San Francisco; American Funds Distributors, Los Angeles; and SEI Investments, Oaks, Pa.

Kenneth Kehrer Associates, the Princeton, N.J., research firm, reports that the company increased overall sales of annuities through banks 879% last year, jumping to fourth place in that channel at year end, from seventh place in the third quarter.

Much of that growth came from adding new banks to the distribution roster as well as from penetrating each bank’s customer base more deeply by adding more products, Thomas says. For instance, last year the company introduced StepFive, a fixed annuity with a five-year guarantee, just as the stock market began to become unsettled, Thomas notes.

Lincoln’s name change should help agents and other producers increase sales further by clarifying the company’s image in consumer’s minds, Thomas says.

“It increases our top-of-mind awareness among consumers, and shows we have the ability to offer a wide range of products,” Thomas says.

The company is also focusing on growth in sales of retirement plans to not-for-profits. Its Lincoln Alliance Program offers an unusually wide line of mutual funds for sponsors of 403(b) and 457 retirement plans, such as hospitals, universities, public school systems and the like.

“We allow employers to offer up to 3,000 mutual fund options, whereas many companies can only offer their employees 10 or so,” Thomas notes.

Among its own agents, Lincoln Financial spurred VA growth by introducing a new product, Income4Life Solution. Unlike other annuities, which provide a steady income stream to the consumer in retirement but doesn’t allow him to control investments of the principal, Income4Life lets the retiree shift investments among different funds, even after he starts receiving regular income from the annuity.

The advantage of the product for the producer is that it generates fee income when investors shift investment–even after the annuitant has started to collect on the annuity.

Introduced just last year, sales for Income4Life have already hit $50 million, Thomas says. Lincoln Retirement considers the product so innovative that it applied for a patent.

The company also recently made a blunt move to take VA assets away from competitors. In February, it offered a new ABE death-benefit option solely to customers who shift cash from VAs held with other companies into Lincoln ChoicePlus II and Multi-Fund 5 VA contracts.

Although it imposed some restrictions, Lincoln offered to match the guaranteed minimum death benefits promised by the old VA contracts.

Last year, the company reported income from annuities operations of $320 million, down from $262 million in 2000. However, Lincoln Annuities achieved a positive net cash flow of $105 million, up over $3 billion from its negative cash flow in 2000. All told in 2001, the company had annuity deposits of $6.4 billion, up 22% over the previous year.

As of the end of last year, Lincoln Financial Group reported assets under management of $126 billion.


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