OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. 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 (LNL) and its wholly owned subsidiary, Lincoln Life & Annuity Company of New York (LLANY) (Syracuse, NY), which are the key life/health insurance subsidiaries of Lincoln National Corporation (LNC) (headquartered in Radnor, PA) [NYSE:LNC] and are marketed as the Lincoln Financial Group (LFG). Additionally, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of LNC’s wholly owned subsidiary, First Penn-Pacific Life Insurance Company (FPP). Concurrently, A.M. 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 for these Credit Ratings (ratings) is stable. A.M. Best also has assigned a Long-Term IR of “a-” to the $400 million 3.625% senior unsecured notes due 2026 recently issued by LNC. The outlook assigned to this rating 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 reflect LFG’s market position as a leading provider of individual life and annuity products, consistently favorable statutory and GAAP operating performance and strong enterprise risk management practices. Additionally, A.M. Best notes that financial and operating leverage ratios are within guidelines for the current ratings with good interest coverage ratios, and the holding company maintains adequate cash holdings and access to additional cash resources to support its liquidity needs.
Partially offsetting these positive rating factors are the high level of competition that may challenge the company’s ability to sustain favorable growth trends and its elevated risk profile due to sensitivity to interest rates and equity market volatility from its large in-force blocks of secondary guarantee universal life insurance business, variable annuities with guaranteed benefits and fixed annuities with high minimum guaranteed crediting rates. Additionally, although LFG's risk-adjusted capitalization is viewed as strong, it is supported by the utilization of captives and external reinsurance for its redundant XXX and AXXX reserves that somewhat diminishes A.M. Best's view of the quality of capital.
The ratings of FPP reflect its strategic position within LFG, its strong risk-adjusted capitalization and generally favorable operating performance. Offsetting these positive rating factors are its run-off business profile and large proportion of reserves related to interest-sensitive products with high guaranteed interest rates.
The following Long-Term IR has been assigned with a stable outlook:
Lincoln National Corporation—
-- “a-” on $400 million 3.625%
senior unsecured notes, due 2026
The following Long-Term IRs have been affirmed with a stable outlook:
Lincoln National Corporation—
-- “a-” on $200 million 7.00%
senior unsecured notes, due 2018
-- “a-” on $500 million 8.75%
senior unsecured notes, due 2019
-- “a-” on $300 million 6.25%
senior unsecured notes, due 2020
-- “a-” on $300 million 4.85%
senior unsecured notes, due 2021
-- “a-” on $300 million 4.20%
senior unsecured notes, due 2022
-- “a-” on $350 million 4.099%
senior unsecured notes, due 2023
-- “a-” on $300 million 3.35%
senior unsecured notes, due 2025
-- “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
-- “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 a stable outlook:
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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
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