CFO Sees Opportunity in Annuities.

Lincoln Financial Group sees opportunity in the mushrooming of retirement income that will come from baby boomers in the near future, and the company is betting that aggressive product development and marketing in its annuity business will capture a good share of that income.

Lorry J. Stensrud, executive vice president and chief financial officer for annuities, pointed out that the gap between net cash flows and total annuity sales for the industry in the United States has been widening considerably since 1996. That gap--representing surrenders, exchanges and withdrawals--is an opportunity, he said.

"That trend shows that companies in the business are not training and educating their brokers and agents," he said. "Basically, they are just trying to grab each others' business."

Lincoln Financial has done no better, said Stensrud, who has helped turn the company around in the 11 months he has been there. While gross deposits in its annuity segment rose from $1.1 billion in the first quarter of 1999 to $1.4 billion in the first quarter this year, net cash flows went from a $300 million deficit to a $600 million deficit.

To turn the business around, Lincoln Financial intends to launch a "multifaceted attack on net flows," through exemptive relief, new products and alliances and an aggressive sales strategy, Stensrud said.

For exemptive relief, Lincoln Financial will need permission from the Securities and Exchange Commission to reimpose surrenders. "We've got a gigantic block of old annuities," he said. "Exemptive relief would allow us to go back to the customer, offer them new features and give something to the brokers at the same time." Lincoln Financial plans seven different exemptive-relief products.

Lincoln National Corp.

A.M. Best #: 70351

Rating: Subsidiaries rated A

Headquarters: Philadelphia

Lines of Business: Annuities, life insurance, 401(k) plans, life/health reinsurance, mutual funds, financial planning, institutional investment management.