Lincoln More Likely To Buy Than Sell

- Lincoln National remains committed to achieving a 15% return on equity.

- Lincoln National may be carrying as much as $500 million more capital than it needs to maintain a risk-based capital ratio of 325% and a debt-to-capital ratio of 25%. That capital cushion is meant to satisfy rating agencies’ concerns about variable annuity guarantees and universal life policies with secondary guarantees, “but building confidence in LNC’s risk management could lower agency capital requirements,” Kligerman writes. The company has tried to increase rating agencies’ comfort with lower capital levels by investing in hedging strategies and risk-management systems.

- Lincoln National succeeded at saving about $104 million before taxes through the life and annuity realignment announced 2 years ago, according to Fred Crawford, Lincoln National’s chief financial officer. “But the savings were absorbed by corporate expenses related to Sarbanes-Oxley compliance, responses to industry-wide regulatory inquiries and investments in risk-management systems,” Kligerman writes.