Lincoln Financial Group Receives Regulatory Approval for Reinsurance Transaction With Fortitude Re
02 Novembro 2023 - 8:00AM
Business Wire
Transaction expected to close later this month
and marks significant progress on efforts to de-risk and strengthen
the company’s balance sheet and maximize free cash flow
Lincoln Financial Group (NYSE:LNC) announced that it received
regulatory approval late yesterday for its previously announced
reinsurance transaction with Fortitude Reinsurance Company Ltd.
(“Fortitude Re”). The transaction will have an effective date of
October 1, 2023, and is expected to close later this month. Under
the terms of the agreement, upon closing Lincoln will cede
approximately $28 billion of in-force universal life with secondary
guarantees (“ULSG”), MoneyGuard® and fixed annuity statutory
reserves to Fortitude Re.
Ellen Cooper, Chairman, President and CEO of Lincoln Financial
Group stated, “This significant milestone is the culmination of
months of hard work on behalf of our teams and marks a big step
forward in our efforts to de-risk, strengthen the company’s balance
sheet and improve ongoing free cash flow. We expect economic
benefits of this transaction to be in line with what we originally
communicated.”
About Lincoln Financial Group
Lincoln Financial Group helps people to plan, protect and retire
with confidence. As of Dec. 31, 2022, approximately 16 million
customers trust our guidance and solutions across four core
businesses – annuities, life insurance, group protection and
retirement plan services. As of September 30, 2023, the company had
$290 billion in end-of-period account balances, net of reinsurance.
Headquartered in Radnor, Pa., Lincoln Financial Group is the
marketing name for Lincoln National Corporation (NYSE: LNC) and its
affiliates. Learn more at LincolnFinancial.com.
FORWARD-LOOKING STATEMENTS – CAUTIONARY LANGUAGE
Certain statements made in this press release and in other
written or oral statements made by Lincoln or on Lincoln’s behalf
are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 (“PSLRA”). A
forward-looking statement is a statement that is not a historical
fact and, without limitation, includes any statement that may
predict, forecast, indicate or imply future results, performance or
achievements. Forward-looking statements may contain words like:
“anticipate,” “believe,” “estimate,” “expect,” “project,” “shall,”
“will” and other words or phrases with similar meaning in
connection with a discussion of future operating or financial
performance. In particular, these include statements relating to
future actions, trends in Lincoln’s businesses, prospective
services or products, future performance or financial results and
the outcome of contingencies, such as legal proceedings. Lincoln
claims the protection afforded by the safe harbor for
forward-looking statements provided by the PSLRA.
Forward-looking statements are subject to risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by such forward-looking statements due to a
variety of factors, including:
- Weak general economic and business conditions that may affect
demand for our products, account balances, investment results,
guaranteed benefit liabilities, premium levels and claims
experience;
- Adverse global capital and credit market conditions that may
affect our ability to raise capital, if necessary, and may cause us
to realize impairments on investments and certain intangible
assets, including goodwill and the valuation allowance against
deferred tax assets, which may reduce future earnings and/or affect
our financial condition and ability to raise additional capital or
refinance existing debt as it matures;
- The inability of our subsidiaries to pay dividends to the
holding company in sufficient amounts, which could harm the holding
company’s ability to meet its obligations;
- Legislative, regulatory or tax changes, both domestic and
foreign, that affect: the cost of, or demand for, our subsidiaries’
products; the required amount of reserves and/or surplus; our
ability to conduct business and our captive reinsurance
arrangements as well as restrictions on the payment of revenue
sharing and 12b-1 distribution fees;
- The impact of U.S. federal tax reform legislation on our
business, earnings and capital;
- The impact of regulations adopted by the Securities and
Exchange Commission (“SEC”), the Department of Labor or other
federal or state regulators or self-regulatory organizations
relating to the standard of care owed by investment advisers and/or
broker-dealers that could affect our distribution model;
- The impact of new and emerging privacy regulations that may
lead to increased compliance costs and reputation risk;
- Increasing scrutiny and evolving expectations and regulations
regarding ESG matters that may adversely affect our reputation and
our investment portfolio;
- Actions taken by reinsurers to raise rates on in-force
business;
- Declines in or sustained low interest rates causing a reduction
in investment income, the interest margins of our businesses and
demand for our products;
- Rapidly increasing interest rates causing policyholders to
surrender life insurance and annuity policies, thereby causing
realized investment losses;
- The impact of the implementation of the provisions of the
European Market Infrastructure Regulation relating to the
regulation of derivatives transactions;
- The initiation of legal or regulatory proceedings against us,
and the outcome of any legal or regulatory proceedings, such as:
adverse actions related to present or past business practices
common in businesses in which we compete; adverse decisions in
significant actions including, but not limited to, actions brought
by federal and state authorities and class action cases; new
decisions that result in changes in law; and unexpected trial court
rulings;
- A decline or continued volatility in the equity markets causing
a reduction in the sales of our subsidiaries’ products; a reduction
of asset-based fees that our subsidiaries charge on various
investment and insurance products; and an increase in liabilities
related to guaranteed benefit riders, which are accounted for as
market risk benefits, of our subsidiaries’ variable annuity
products;
- Ineffectiveness of our risk management policies and procedures,
including our various hedging strategies;
- A deviation in actual experience regarding future policyholder
behavior, mortality, morbidity, interest rates or equity market
returns from the assumptions used in pricing our subsidiaries’
products and in establishing related insurance reserves, which may
reduce future earnings;
- Changes in accounting principles that may affect our
consolidated financial statements;
- Lowering of one or more of our debt ratings issued by
nationally recognized statistical rating organizations and the
adverse effect such action may have on our ability to raise capital
and on our liquidity and financial condition;
- Lowering of one or more of the insurer financial strength
ratings of our insurance subsidiaries and the adverse effect such
action may have on the premium writings, policy retention,
profitability of our insurance subsidiaries and liquidity;
- Significant credit, accounting, fraud, corporate governance or
other issues that may adversely affect the value of certain
financial assets, as well as counterparties to which we are exposed
to credit risk, requiring that we realize losses on financial
assets;
- Interruption in telecommunication, information technology or
other operational systems or failure to safeguard the
confidentiality or privacy of sensitive data on such systems,
including from cyberattacks or other breaches of our data security
systems;
- The effect of acquisitions and divestitures, restructurings,
product withdrawals and other unusual items;
- The inability to realize or sustain the benefits we expect
from, greater than expected investments in, and the potential
impact of efforts related to, our strategic initiatives, including
the Spark Initiative;
- The adequacy and collectability of reinsurance that we have
obtained;
- Pandemics, acts of terrorism, war or other man-made and natural
catastrophes that may adversely impact liabilities for policyholder
claims, affect our businesses and increase the cost and
availability of reinsurance;
- Competitive conditions, including pricing pressures, new
product offerings and the emergence of new competitors, that may
affect the level of premiums and fees that our subsidiaries can
charge for their products;
- The unknown effect on our subsidiaries’ businesses resulting
from evolving market preferences and the changing demographics of
our client base; and
- The unanticipated loss of key management, financial planners or
wholesalers.
The risks and uncertainties included here are not exhaustive.
Our most recent Form 10-K, as well as other reports that we file
with the SEC, include additional factors that could affect our
businesses and financial performance. Moreover, we operate in a
rapidly changing and competitive environment. New risk factors
emerge from time to time, and it is not possible for management to
predict all such risk factors.
Further, it is not possible to assess the effect of all risk
factors on our businesses or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of
actual results. In addition, Lincoln disclaims any obligation to
update any forward-looking statements to reflect events or
circumstances that occur after the date of this press release.
The reporting of Risk-Based Capital (“RBC”) measures is not
intended for the purpose of ranking any insurance company or for
use in connection with any marketing, advertising or promotional
activities.
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version on businesswire.com: https://www.businesswire.com/news/home/20231102932740/en/
Adam Cohen 800-237-2920 Investor Relations
InvestorRelations@LFG.com
Sarah Boxler 215-495-8439 Media Relations
Sarah.Boxler@LFG.com
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