A.M. Best Rates Lincoln National Corporation's New Trust Preferred Securities

Business Wire, Nov 21, 2001

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 21, 2001

A.M. Best Co. has assigned an "a-"rating to $172.5 million of trust preferred securities TRUPS issued by Lincoln National Capital V, a statutory business trust, wholly owned and guaranteed on a subordinated basis by Lincoln National Corporation (NYSE:LNC), Philadelphia.

The ratings on LNC's existing senior debt and preferred securities have been affirmed. The A (Excellent) group financial strength rating on LNC's core life/health insurance subsidiaries' is unaffected.

As part of the company's overall capital management plan, proceeds of the issue will be used to repay a portion of outstanding commercial paper. From a financial leverage perspective, pro forma debt plus trust preferred securities to total capital at September 30, 2001, remains unchanged at approximately 22%. A.M. Best expects LNC to maintain a capital structure with at least 70% common equity weighting and fixed charge coverage in the mid to upper single digits.

LNC's ratings reflect its strong nationwide franchise in the individual life insurance and annuities markets, improved operating results in its core life insurance business and sound risk-adjusted capitalization. Management continues to focus on streamlining the corporation's businesses to concentrate on providing retail financial services products to the high net worth market. The company has made significant improvements to the underlying operating fundamentals of its life, annuity and asset management businesses, which are expected to provide enhanced revenue and earnings streams going forward. In July 2001, LNC also announced its plan to sell its reinsurance operations to Swiss Re in a cash transaction valued at approximately $2 billion. The transaction is scheduled to close by year-end. While A.M. Best takes a positive view of this pending sale and the strong overall progress the organization has made, it will continue to monitor the impact that recent estate tax reform may have on LNC's life insurance business as well as the impact of continued equity market volatility on its annuity and asset management segments. Additionally, A.M. Best will monitor the company's ability to effectively deploy the net proceeds of the sale of its reinsurance business.

Lincoln National Corp. is a publicly traded financial services holding company offering a broad range of products and services, including life insurance, annuities, 401(k) plans, life-health reinsurance, mutual funds, institutional investment management, financial planning and estate planning. Operating under the name Lincoln Financial Group, the group reported consolidated assets and shareholders' equity of $90.2 billion and $5.4 billion, respectively, as of September 30, 2001.

The following new rating is assigned:

Lincoln National Capital V --

-- "a-" on $172.5 million 7.65% trust preferred securities

("TRUPS"), guaranteed by Lincoln National Corporation

The following debt ratings have been affirmed:

Lincoln National Corp. --

-- "a" on $200 million 7.25% senior unsecured debentures, due May 2005

-- "a" on $200 million 9.125% senior unsecured debentures, due October 2024

-- "a" on $100 million 6.50% senior unsecured notes, due March 2008

-- "a" on $200 million 7.00% senior unsecured notes, due March 2018

-- "a" on $100 million 7.625% senior unsecured notes, due July 2002

Lincoln National Capital II --

-- "a-" on $100 million 8.35% Trust Originated Preferred

Securities (TOPrS), backed by junior subordinated debentures

Lincoln National Capital III --

-- "a-" on $200 million 7.40% Trust Originated Preferred

Securities (TOPrS), backed by junior subordinated debentures

The following indicative ratings available under shelf registration have also been affirmed:

Lincoln National Corp. --

-- "a" on senior debt securities

Lincoln National Capital VI --

-- "a-" on trust preferred securities

The following debt securities were called and converted and the ratings have been withdrawn:

Lincoln National Capital I --

-- "a-" on $215 million 8.75% Quarterly Income Preferred

Securities (QUIPS)

Lincoln National Capital IV--

-- "a-" on $230 million capital securities (FELINE PRIDES)

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 www.ambest.com.