Lincoln National to accept government funds

Insurer Lincoln National Corp. said Monday it will raise more than $2 billion through stock and debt offerings, as well as tapping the government's Troubled Asset Relief Program. The company, which markets itself under the name Lincoln Financial Group, said it will accept as much as $950 million in capital as part of the government's $700 billion program, which was launched last fall to help unclog the stagnant credit markets. It was not until last month that the government said it would allow Lincoln and five other major insurers to tap the program for additional capital. The other insurers included Hartford Financial Services Group Inc., Allstate Corp., Prudential Financial Inc., Ameriprise Financial Inc. and Principal Financial Group Inc. Lincoln had received preliminary approval to receive up to $2.5 billion from the government. It said it plans to determine the exact amount of government funds it will receive by the end of June. Aside from the government funds, Lincoln said it will raise $600 million though a common stock offering. Underwriters have a 30-day option to purchase up to an additional $90 million in stock. Lincoln will also raise $500 million through a senior debt offering. The insurer said it will contribute about $1 billion of the new cash to its primary insurance subsidiary, The Lincoln National Life Insurance Co. The remaining funds will be held at the holding company for general corporate purposes, including the repayment of short-term debt. As the banking industry accepted billions in government bailout funds last fall, life insurers aggressively lobbied for their own piece of the federal aid, worried about their balance sheets, which had been saddled by hefty investment losses from the declines in the stock market. But the government was slow to approve the requests. Subsequently, the stocks of most public insurance companies fell sharply before recently rebounding somewhat with the broader market. Allstate, Ameriprise and Prudential have all declined to accept the government funds. Banks that received funds as part of the program last fall have increasingly tried to repay the government because of the restrictions put in place on companies receiving the support, such as caps on compensation. Hartford Financial said it will participate in the government's program.