Posted on 15 Jun 2009
Lincoln National Corp., the insurer that announced two rounds of job cuts this year, plans to raise $2.05 billion by accepting U.S. rescue funds and selling shares and debt to private investors. The stock dropped 8.8 percent.
Lincoln expects to issue about $950 million of preferred stock to the government through the Treasury’s Troubled Asset Relief Program, the Philadelphia-based life insurer said today in a statement. It also announced plans to offer $600 million of common shares on the market, and $500 million in senior debt.
Lincoln and Hartford Financial Services Group Inc. are tapping taxpayers after investment losses and costs to protect savers from declines in the equity markets drained capital. Lincoln has slashed the dividend, purchased reinsurance and scaled back on money-losing retirement products called variable annuities. The insurer announced plans today to divert capital to U.S. operations by selling a U.K. unit at a loss.
Life insurers were left vulnerable to the financial crisis after taking “an ungodly amount of risk” on variable annuities, billionaire investor Warren Buffett said on May 3.