S&P raises its ratings on TARP recipients The Hartford, Lincoln National

Standard and Poor’s Ratings Services has raised its outlook on TARP recipients The Hartford (Conn.) Financial Services Group and Lincoln National Corp. The Hartford and its insurance operating companies, and Lincoln National, were brought up to “stable” from “negative.” In a research note, S&P analyst Shellie Stoddard attributed the ratings action to the insurers’ participation in the Capital Purchase Program, which is part of the Department of the Treasury’s Troubled Asset Relief Program. The Hartford received preliminary approval to take on $3.4 billion in federal aid. The money will serve as a low-cost cushion of capital to offset equity-linked liabilities costs, Ms. Stoddard noted. “Participation in the program enhances Hartford’s financial flexibility, which we had viewed as a considerable weakness because of significant asset impairments and our prospective asset stress analysis,” she wrote. Statutory capitalization at The Hartford’s life subsidiaries are at A levels, following S&P’s asset stress analysis. "Today’s announcement by S&P is confirmation that we are moving in a positive direction," said Ramani Ayer, chairman and chief executive of The Hartford. Radnor, Pa.-based Lincoln National and its operating companies also received an outlook revision. S&P affirmed its AA- counterparty credit and financial strength ratings on Lincoln’s insurance operations, as well as the A- counterparty credit rating on the parent. But S&P lowered ratings on the insurer’s preferred stock to BBB- from BBB to differentiate that stock from the company’s junior subordinated debt. Lincoln will be raising about $2 billion to bolster its capital, with $950 million coming from TARP and the remainder through stock and debt offerings. The proceeds will be divided in half, with $1 billion going toward Lincoln’s U.S. insurance subsidiary and the rest going toward the holding company. Still, S&P expects Lincoln to have some difficulties in the next 12 months, including continued weakness in equity-based business lines, higher credit losses and possible volatility in its hedging program. Phone calls to Debora Raymond, a spokeswoman for The Hartford, did not return calls immediately. Lauren Sammerson, a spokeswoman for Lincoln, declined to comment.