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A.M. Best Affirms Ratings of Lincoln National Corporation.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of The Lincoln National Life Insurance Company and its subsidiaries--First Penn-Pacific Life Insurance Company (both of Fort Wayne, IN) and Lincoln Life & Annuity Company of New York (Syracuse, NY). Concurrently, A.M. Best has affirmed the issuer credit rating of "a-" and the existing debt ratings of Lincoln National Corporation (LNC) (NYSE: LNC) (Philadelphia, PA). All ratings have a stable outlook.

The ratings reflect LNC's strong business profile within the wealth management and asset accumulation markets, its diversified earnings sources, positively trending sales and net asset flows, solid investment performance and sophisticated asset/liability management practices. In recent years, LNC has enjoyed solid growth in its variable annuity platform and has developed comprehensive financial and risk management practices to address the secondary guarantees associated with these products. A.M. Best believes that LNC's broad product portfolio, encompassing both variable and fixed products, combined with its strategy of targeting the upper income market segment, will result in enhanced persistency and positive earnings momentum.

LNC has moderate financial leverage with a total debt-to-capital ratio--including preferreds--of approximately 24% as of September 30, 2004. A.M. Best does not expect LNC's financial leverage to exceed 30% in the near to medium term. LNC's interest coverage at over 10 times is strong and consistent with similarly rated peers.

Offsetting these strengths is LNC's high percentage of liabilities at guaranteed minimum rates, narrowing spreads (after adjusting for mortgage prepayments and bond makewhole provisions), the anticipated need for Regulation XXX and AXXX funding solutions and an earnings profile, which is subject to volatility due to its high correlation to the equity markets. A.M. Best also notes that LNC's statutory capitalization, on a risk-adjusted basis, is somewhat below similarly rated peers. Additionally, LNC's balance sheet reflects a modestly elevated level of intangibles relative to its consolidated GAAP capital base.

For a complete listing of Lincoln National Corporation's debt and financial strength ratings, please visit

For a list of A.M. Best's debt ratings, please visit

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at
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Publication:Business Wire
Date:Nov 19, 2004
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