Lincoln National Corp. Slashes Dividend Amidst Financial Uncertainty

Strategic Insights -

Lincoln National Corp., a Philadelphia-based life insurer, has decided to reduce its quarterly common stock dividend from 21 cents to a penny a share. This move, combined with a prior reduction, is expected to save the company $400 million. The decision comes as the company, like others in the industry, grapples with investment losses tied to the global credit crisis and declining stock markets.

Key Takeaways:

  • Lincoln National Corp. is reducing its quarterly common stock dividend from 21 cents to a penny a share, a move that will save the company $400 million.
  • The dividend reduction is the second such move by the company, following a prior reduction, and is aimed at enhancing the company's capital and financial flexibility.
  • The company has posted a net loss of $506 million in the fourth quarter of 2008, with net realized losses on general account investments amounting to $283 million.
  • Lincoln National is one of several life insurers seeking financial aid under the U.S. Treasury Department's Capital Purchase Program.
  • The company has received approval from the Indiana Department of Insurance to receive approximately $300 million in regulatory relief concerning deferred tax assets.
  • Lincoln National Life Insurance Co. currently possesses a Best's Financial Strength Rating of A+ (Superior).

Statistics:

  • $506 million: Lincoln National's net loss in the fourth quarter of 2008.
  • $283 million: Lincoln National's net realized losses on general account investments in the fourth quarter of 2008.
  • $400 million: The estimated annualized reduction in dividend payouts resulting from the dividend reduction.
  • $10.63: The price of Lincoln National's stock on the afternoon of February 25, a 18.4% drop from the previous close.
  • 21 cents: The reduced quarterly common stock dividend.

Sources:

  • "Lincoln National Corp. is slashing its quarterly common stock dividend from 21 cents to a penny a share" (A. M. Best via COMTEX, Feb 25, 2009)
  • "Prudential Financial (BestWire, Nov. 13, 2008)" (A. M. Best, Nov. 13, 2008)
  • "Hartford Financial Services Group (BestWire, Feb. 6, 2009)" (A. M. Best, Feb 6, 2009)
  • "Recent announcements from Lincoln National Corp." (Comtex SmarTrend, 02-21-2009)
  • "Best's Financial Strength Rating of A+ (Superior) for Lincoln National Life Insurance Co." (A. M. Best Company, Inc., 2009)
  • "Indiana Department of Insurance approval for Lincoln National to receive $300 million in regulatory relief" (Comtex News Network, Inc., Feb 18, 2009)