The major ratings agencies; A.M. Best, Fitch and Moody's have
casted their ratings on
Lincoln National Corp.
) proposed issue of 10-year fixed rate notes worth $350 million.
These notes will yield an interest of 4.1%.
Accordingly, A.M. Best, Fitch and Moody's have assigned a
long-term debt rating of "a-", "BBB+" and "Baa1", respectively.
In Jun 2013, Moody's had raised its long-term debt rating to
"Baa1" from "Baa2" and also upped its financial strength rating
to "A1" from "A2" on Lincoln National and its subsidiaries.
Lincoln projects to utilize the proceeds of the notes to
partly fund the prepayment of debt worth $500 million, which is
slated to mature in the first quarter of 2014. Nonetheless, the
ratings agencies have shown confidence in the company's
Moreover, Lincoln's financial leverage of mid-20% range at the
end of Jun 2013 remains within the ratings agencies' benchmark of
30%. Further, the company has witnessed steady improvement in its
financials based on organic growth, which also instils confidence
among the ratings agencies.
Meanwhile, all the ratings bear a stable outlook, assuring
Lincoln's potential for improving capital position, which
exceeded the NAIC risk-based capital requirements over the last 3
The company's respectable statutory capital, capable
management and diverse distribution network have driven its
operating leverage, according to the rating agencies, who further
validate Lincoln's healthy growth outlook. However, lingering
concerns regarding economic volatility, competitive pressures and
low interest rate environment restrict desired growth in
investment income and variable annuities.
Overall, we believe that Lincoln is poised to consistently
return incremental capital to its shareholders, as reflected by
the consistent dividend hike, strong capital leverage and sound
While Lincoln carries a Zacks Rank #2 (Buy), other insurers
that are outperforming the peer group include
Everest Re Ltd.
HCI Group Inc.
EMC Insurance Group Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
EMC INSURANCE (EMCI): Free Stock Analysis
HCI GROUP INC (HCI): Free Stock Analysis
LINCOLN NATL-IN (LNC): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
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