Ratings Reaffirmed for Lincoln National Life Insurance and Subsidiaries

AM Best has reaffirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (ICR) of "a+" (Excellent) for The Lincoln National Life Insurance Company and its subsidiary, Lincoln Life & Annuity Company of New York. These entities are part of Lincoln Financial Insurance Group, owned by Lincoln National Corporation (LNC). First Penn-Pacific Life Insurance Company (FPP), another subsidiary, retains its FSR of A (Excellent) and Long-Term ICR of "a" (Excellent), despite being in run-off. AM Best maintains a stable outlook for all ratings, including LNC's Long-Term ICR.

These ratings reflect Lincoln’s robust balance sheet, favorable business standing, and effective enterprise risk management (ERM). For FPP, the ratings indicate strong balance sheet integrity and adequate operational results, supported by Lincoln. Lincoln's consistent management of risk-adjusted capitalization, using Best’s Capital Adequacy Ratio (BCAR), illustrates its recovery trajectory and strategic capital growth initiatives.

Lincoln Financial Group maintains financial flexibility via multiple liquidity sources, including bank credit lines, debt instruments, and Federal Home Loan Bank membership. An equity placement from Bain Capital Prairie LLC in 2025 further strengthens its financial base. The organization also utilizes diverse external asset management partnerships to enhance investment returns and operational earnings.

While Lincoln's strategy focuses on retaining liabilities through affiliate reinsurance, it plans to gradually cede segments to well-rated non-affiliate reinsurers. This approach aims for premium growth in competitive markets, supported by reinsurance capital relief. However, reliance on reinsurance is a consideration, as increased investments in private credit and real estate sectors introduce concentration and liquidity risks. Comprehensive risk management practices, like multi-scenario stress tests, are employed to maintain liquidity and capital stability.

Lincoln National Corporation's Long-Term Issue Credit Ratings include “bbb+” for senior unsecured notes maturing between 2027 and 2050, “bbb” for certain subordinated notes, and “bbb-” for specified junior subordinated securities and preferred stock. The Short-Term Issue Credit Rating of AMB-2 (Satisfactory) on commercial paper is also affirmed. Detailed ratings and disclosures are available on AM Best's website, known for its global ratings and data analysis in the insurance sector.