AM Best Assigns Issue Credit Ratings to Lincoln National Corporation’s New Preferred Stock

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “bbb-” (Good) to the $500 million, 9%, non-cumulative preferred stock and “bbb-” (Good) to the $500 million, 9.25% non-cumulative preferred stock issued by Lincoln National Corporation (LNC) (headquartered in Radnor, PA). The outlook assigned to these Credit Ratings (ratings) is negative. LNC’s existing Long-Term Issuer Credit Rating and Long-Term IRs remain unchanged.

LNC intends to use a portion of the proceeds from the issuance of its Series C and Series D preferred stock to repay at maturity a portion of the outstanding principal amount of the $500 million, 4.00% senior unsecured notes due September 2023. The remaining portion of the 4.00% notes due September 2023 was prefunded with LNC’s February 2022 issuance of $300 million, 3.40% senior unsecured notes due March 2032. The balance of the net proceeds from the Series C and Series D preferred stock offerings may be used for general corporate purposes, which may include distribution to the operating insurance entities to increase capital metrics.

AM Best notes that, for the interim period, LNC’s financial leverage ratio is elevated but remains within tolerance. LNC’s fixed-coverage ratio is unfavorable but earnings are expected to rebound over the near to medium term from the substantial net loss in the third quarter primarily due to reserve charges in the universal life insurance block of business. Additionally, AM Best anticipates that any potential investment gains from the possible investment of the proceeds may offset the dividends on the preferred stock offerings.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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