FOR IMMEDIATE RELEASE

OLDWICK – DECEMBER 08, 2015
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of The Lincoln National Life Insurance Company (LNL) and its wholly owned subsidiary, Lincoln Life & Annuity Company of New York (LLANY) (Syracuse, NY), which are the key life/health insurance subsidiaries ofLincoln National Corporation (LNC) (headquartered in Radnor, PA) [NYSE: LNC] and are marketed as the Lincoln Financial Group (LFG). Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a+” of LNC’s wholly owned subsidiary, First Penn-Pacific Life Insurance Company (FPP). Concurrently, A.M. Best has affirmed the ICR of “a-” and all existing shelf and issue ratings of LNC. All companies are domiciled in Fort Wayne, IN unless otherwise specified. The outlook for all ratings is stable. (Please see link below for a detailed listing of the companies and ratings).

The ratings reflect LFG’s leading market positions in its core Life and Annuity segments and continued progress in reducing its sales of longer-dated products with high exposure to interest rate or equity market volatility. The ratings also acknowledge strong enterprise risk management practices with respect to its in-force blocks to moderate its risk profile through strong product and investment cash flow hedging along with regular stress testing of risk-adjusted capital. Enterprise risk management practices have been further enhanced by utilization of external reinsurance for a portion of new variable annuity sales with living benefit guarantees.

Additionally, updates to LFG’s product portfolio and underwriting continue to address the changing economic and regulatory landscape, and as a result, consolidated operating performance remains favorable with stable statutory and GAAP earnings trends. Furthermore, the ratings reflect improvements in the diversification of earnings between investment spreads, fees and mortality on LFG’s new business. Finally, A.M. Best notes that financial leverage, operating leverage and interest coverage ratios are within guidelines for the current rating and the holding company maintains adequate cash holdings and access to additional cash sources to support its liquidity profile.

Partially offsetting these positive rating factors are LFG’s sizeable in-force blocks of secondary guarantee universal life, variable annuities with living benefit guarantees and interest sensitive fixed annuities, which A.M. Best considers as higher-risk product lines due to their elevated exposure to interest rate risk and equity market volatility. LFG’s Retirement Plan Services and Group Protection segments have been challenged in recent years due to increasing levels of competition. While the Group Protection segment’s profitability has benefited from lower incidence rates and recent pricing updates, its results have been partially offset by lower sales and persistency. Finally, while reported risk-adjusted capitalization remains strong, it has been enhanced by substantial utilization of reinsurance for its redundant XXX and AXXX reserves.

Positive rating factors would include continued execution of management’s strategic efforts to further improve the diversification of earnings between mortality and morbidity, investment spreads and fees along with a reduction in longer dated liabilities with high interest and equity market sensitivity.

Negative rating factors would include increased financial leverage at the holding company or operating leverage at the operating entities beyond A.M. Best’s guidelines for the current ratings or investment impairments that reduce capital and risk-adjusted capitalization materially. Additionally, a material increase in long-dated liabilities with high interest and equity market sensitivity could result in a negative rating action.

For a complete listing of the members of Lincoln National Corporation’s FSRs, ICRs and issue ratings, please visitLincoln National Corporation.

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

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