Lincoln National's universal life reserves are 'more than adequate': CEO

Amid state insurance regulators' questions on whether carriers are properly reserving against a certain type of universal life insurance, Lincoln National Corp.'s CEO today stressed the insurer has sufficient reserves for its products. State insurance regulators in the National Association of Insurance Commissioners' Life Actuarial Task Force on Tuesday said some insurers are calculating reserves for their universal life with secondary guarantees based on assumptions that customers are paying higher premiums into their products. The regulators said that carriers should be basing their assumptions on policyholders paying the lowest amount of premiums needed to keep the policy and its secondary guarantee intact, which would require higher reserves. That assertion ran into opposition from insurers, including Lincoln National, who insist they have been following the law when reserving and that insurance regulators in their respective domiciliary states can testify to that. Indeed, the regulators' questions seem to be more a matter of reserving methodology rather than a question of insurers' financial strength. “I have full confidence that our reserves are more than adequate and that we comply with this particular regulation,” Lincoln chief executive Dennis Glass said on an earnings conference call today. “We have a lot of smart people in the NAIC who are practical and who want to do the right thing; we need to work through on this issue.” Indiana insurance commissioner Steve Robertson today released a letter stating that Lincoln is in “sound financial shape and at no time before or during the deliberation of this proposed guideline did the [department's] financial analysis of Lincoln change.” Referring to a Wall Street Journal article that ran Tuesday on the regulators' discussions, Mr. Robertson noted that the matter should not be interpreted as a question about Lincoln's solvency. “The deliberations on which this article was based should in no way be construed as a question about Lincoln's financial health from a solvency standpoint,” his note said. “The department's ongoing financial examinations and analyses, conducted both on an annual and quarterly bases, in addition to the company's five-year financial exam, have not noted any reserve issues.”