Lincoln National Corp. (LNC) is gearing up to repay the bailout money. Dennis Glass, the company’s President and CEO, said at an investor presentation yesterday that this acceleration follows a successful alignment with internal guidelines.
 
Lincoln issued $950 million of preferred stock and a common stock warrant through the U.S. Treasury’s Troubled Asset Relief Program (TARP) in the third quarter of 2009. Initially, the company expected to repay the TARP money in the second half of 2010 or in the first half of 2011 after strengthening its reserves level.
 
However, according to Lincoln, with an improvement in the economy and capital markets since the beginning of the year coupled with the strength in its business model and capital position, the company is preponing its repayment of the TARP money prior to the second half of 2010.
 
Lincoln’s management mentioned that the company has $1.1 billion of cash at the holding company in reserve. Additionally, an improvement in the market for acquiring new letters of credit was also observed.
 
Last year, the Treasury approved six life insurers for capital infusion under TARP. Hartford Financial Services Group Inc. (HIG) and Lincoln National received federal aid. The other four insurers – Prudential Financial (PRU), Principal Financial Group (PFG), Allstate Corporation (ALL) and Ameriprise Financial (AMP) – decided not to accept bailout funds. Prior to this, American International Group (AIG) had also received federal support worth $182.5 billion that helped prevent its collapse in September 2008.
 
However, in March 2010, Hartford managed to repay its $3.4 billion TARP loan. The complete repayment of TARP money frees the life and property insurer from government involvement in its affairs and pays restrictions, even though the Treasury still holds Hartford’s warrants. Following Hartford’s payment, the only two insurers now left to repay the bailout money are AIG and Lincoln.
 
Shares of Lincoln increased 20 cents or 0.68% to $29.71 during Wednesday’s regular trading session on the New York Stock Exchange.
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Read the full analyst report on “ALL”
Read the full analyst report on “AMP”
Read the full analyst report on “AIG”
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