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

BY Business Wire | CORPORATE | 11/22/22 11:22 AM EST

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright ? 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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