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 and its wholly owned subsidiary, Lincoln Life & Annuity Company of New York (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 Lincoln Financial Group (Lincoln). 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 of these Credit Ratings (ratings) is stable. A.M. Best also has assigned Long-Term IRs of “a-” to the $500 million 3.8% senior unsecured notes due 2028 and $450 million 4.35% senior unsecured notes due 2048 recently issued by LNC. The outlook assigned to these ratings 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 Lincoln’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

Lincoln maintains strong market positions in its core product lines, and is well-diversified by product type, source of earnings and distribution channels. Additionally, the recently announced acquisition of Liberty Life Assurance Company of Boston materially enhances the company’s position and capabilities within the Group Life and Disability markets. The company has consistently reported favorable premium trends and strong statutory and GAAP earnings, which support growth in capital and risk-adjusted capitalization. However, A.M. Best’s view of the quality of capital is somewhat diminished due to the utilization of captives and external reinsurance for its XXX and AXX reserves. Financial and operating leverage metrics within the organization are within guidelines for the current rating, and LNC maintains a high cash balance to support ongoing interest needs.

The ratings of FPP reflect the company’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and very strong ERM. The ratings also reflect the financial strength of its parent organization and its integration into Lincoln’s management and risk management functions. The company has been placed in runoff and maintains a large proportion of reserves related to interest-sensitive products with high guaranteed minimum crediting rates. However, the lack of new business strain and seasoning of its legacy blocks have supported profitability, which has been used to support capitalization and pay dividends to the parent organization.

The following Long-Term IRs have been assigned with a stable outlook:

Lincoln National Corporation—

— “a-” on $500 million 3.8% senior unsecured notes, due 2028

— “a-” on $450 million 4.35% senior unsecured notes, due 2048

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 $500 million 4.099% senior unsecured notes, due 2023

— “a-” on $300 million 3.35% senior unsecured notes, due 2025

— “a-” on $400 million 3.625% senior unsecured notes, due 2026

— “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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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