Lincoln National reveals financial plans - Memphis Business Journal:

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Shares closed 11 percent lower Mondaat $15.83, on a day the marketzs lost more than 2 percent. Lincoln National said it will targetabout $950 million in preferred stocok from TARP’s Capital Purchaswe Program. It will also try and raise $600 million through a common stock offerinhgand $500 million in senior The underwriters of the offering will have a 30-daty option to buy up to an additional 15 percent of the offeredd amount of common shares from the company.
Lincolj National said it intends to contributeabout $1 billionb of the proceeds to its principal insurance subsidiary, , with the remaininb $1 billion held at the holding company for generalk corporate purposes, including the repayment of short-term debt and investment in the company’s core businesses. In a separate release Monday announcinfanother cost-cutting maneuver, Lincoln Nationa l said that it agreed to sell its British Lincoln National (UK) plc, to SLF of Canada UK Ltd. for an estimatedd 195 British pounds. Lincoln said the transaction, expected to closee on or around Sept.
30, should generater estimated proceeds ofbetween $280 million and $300 million, which will be used for core U.S. SLF is owned by Toronto-based Sun Life where former Lincoln CEO Jon Bosciqa isnow president. Lincoln National said thesew actions supplementdividend reductions, cost cuts, and other actions previousl y taken to strengthen its capital and and solidify the company’s capital position at both the subsidiary and holding companu levels. The Philadelphia-based company believes that TARP participatiomn provides additionalcapital flexibility.
The companuy expects to repay thisfinancing “ae soon as practicable, taking into consideration appropriatde balance sheet strength and capitakl markets conditions.” The finapl level of Lincoln’s participation is expected to be announced by the end of Last month, Lincoln National receivexd preliminary approval for up to $2.5 billion underd the program. It said the exact level of its participation will be determined by the end of this Lincoln is one of six insurance companiexs to receive such The $700 billion Troubled Asseft Relief Program, approved by Congresw last year, was originally intended to buy toxiv loans that were inhibiting bankxs from making additional loans.
But it was also used to make loand to General Motors Chrysler and insurance giant Lincoln National was one of several insurers that applied to becomwe thrift holding companies last fall so they could be consideredx forTARP funds. The insurers had concernzs about the rising number of bad assetxs ontheir books. Lincoln National and othe r insurers saw their stock prices drop in recen months as they waited forgovernmentr approval. As for the stoc k offering, and Merrill Lynch & Co. will serve as globaol coordinators and GoldmanSachs Co. and Morgan Stanley & Co. Inc. will serve as joint book-running managers.
In explaining its decision in aregulatorh filing, Lincoln National said that althougyh the capital and credit markets have show recent improvements, those markets have experience d extreme volatility and disruption for more than a year. “Givebn these conditions, our capitalo strategy is to have sufficient capital to offer downside protection in the event that the capitall and credit markets experience another downturn as well as to support growth in ouroperating businesses,” the company said. Lincoln National said it believes thatthe $2 billionm infusion will provide it with sufficient capital to offset a “stress scenario” analysis for 2009 and 2010.
That scenariol would include credit losses and impairments amountin g toapproximately $1.65 or 2.5 percent based on invested assetd as of March 31. Lincoln (NYSE:LNC), which markets itself as , offerss both insurance and investmentymanagement products.