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Third-quarter net income was $153.3 million, which was 3.3% higher from the same period a year ago. Results were boosted by a $55 million positive adjustment, after tax, related to the sale of its Lincoln National UK subsidiary. The company said it completed the sale on Oct. 1.
Net income included a $151 million loss, which it blamed on a "nonperformance" risk factor on its variable annuity hedge program, as well as $42 million in realized investment losses.
At the end of the quarter, though, Lincoln (NYSE: LNC | Quote | Chart | News | PowerRating) reported a net unrealized gain on available-for-sale securities of $5 million, compared with a net unrealized loss of $1.6 billion at the end of the second.
Dennis R. Glass, president and chief executive officer of the Philadelphia-based Lincoln, was upbeat. "The strategic actions taken over the last 10 months have reaffirmed Lincoln's position as a strong competitor," Glass said in a statement.
"We have strengthened our capital position, sharpened our focus on the core insurance and retirement businesses, reinforced our distribution relationships, and updated our product portfolios to better align consumer value, risk management and profitability in today's environment."
Consolidated deposits of $5.3 billion were down 2% from last year's third quarter but up 10% from the prior quarter.
In July, Lincoln issued $950 million in preferred shares under the U.S. Treasury Department's Capital Purchase Program, which it said completed its plan to raise $2.1 billion (BestWire, July 13, 2009).
It was among a list of major insurance companies receiving preliminary approval in May for the federal government's bailout money, though others chose not to take it.
Total revenues fell 8% to $2.1 billion.
In August, Lincoln National said it planned to sell its Delaware Investments asset-management unit to Macquarie Group, an Australian financial services company, for US $428 million. Under the terms of the deal, Macquarie said it will pay Lincoln in cash to buy the businesses and assets of Delaware, subject to a purchase price adjustment at closing (BestWire, Aug. 19, 2009).
Lincoln said it remains on track to complete the Delaware Investments transaction around the end of the year.
Lincoln National Life Insurance Co. currently has a Best's Financial Strength Rating of A+ (Superior).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
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