Lincoln National eyes selling divisions to shore up insurance businesses

Lincoln National Corp., which paid off a $500 million debt just yesterday, today said it is considering whether to sell assets in an effort to bolster its insurance businesses. Although the company didn’t indicate which units might be on the block, Delaware Investments, the company’s asset management firm, and Lincoln’s group protection business are possibilities, said Steven Schwartz, an analyst at Raymond James & Associates Inc. of St. Petersburg, Fla. Major players that could be in the running to acquire the group protection business, if the money is available, include Assurant Inc. in New York, MetLife Inc. of New York and Principal Financial Group Inc. of Des Moines, Iowa, he said. However, Mr. Schwartz doesn’t think that Lincoln Financial Advisors Corp. of Fort Wayne, Ind., the company’s broker-dealer, would be among the units for sale. “If you think about their core mission — asset accumulation and retirement income distribution — LFA would be very important,” he said. “I would think they’d want to keep it.” The Radnor, Pa.-based insurer used $400 million in ordinary cash dividends from Lincoln National Life Insurance Co. in Hartford, Conn., and another $300 million dividend from its reinsurance subsidiary to pay yesterday’s maturing debt and to cover $200 million in commercial paper that will mature over the next few weeks. Once those debts are covered, another $450 million in short-term debt will remain at the holding-company level, and the carrier said that it will use a combination of commercial paper and an intercompany borrowing facility of up to $1 billion to cover its cash needs. In order to bolster its insurance subsidiaries, Lincoln last week reinsured a block of policies with Commonwealth Annuity and Life Insurance Co. in Southborough, Mass. The deal provided Lincoln National Life with $240 million in statutory capital relief, thus raising its risk-based capital ratio by 20 percentage points.