Lincoln National shares fall

Shares in Lincoln National Corp. plunged yesterday following the Radnor insurance company's notice Friday that it had withdrawn its application for a program to sell debt with a federal guarantee.

Lincoln's shares fell $3.96, or 38 percent, to $6.41 on the New York Stock Exchange. Since mid-September, they are down 87 percent on worries about the company's mounting investment losses.

Like several other life insurance companies, Lincoln bought a small savings and loan in order to qualify for federal bailout efforts, including the U.S. Treasury's Troubled Asset Relief Program and the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program.

Lincoln said late Friday in a regulatory filing: "We do not believe that we qualify under the current provisions of the TLGP." In its annual financial filing with the Securities and Exchange Commission last month, Lincoln said that if it qualified, it could raise up to $793 million by selling debt guaranteed by the FDIC.

That would have been a huge help for a company that has $500 million in previous debt due next month and is facing higher costs in the credit markets because of ratings downgrades.

Lincoln gave no further explanation for its withdrawal.

Brian Alprin, a partner in the Washington office of Duane Morris L.L.P., said the FDIC program allows banks to issue a certain amount of guaranteed debt based on historical debt levels.

For new banks, like Lincoln, the allowable amount has to be arrived at through discussions with the FDIC, according to Alprin, who said he had no specific knowledge about Lincoln. It may be that those discussions did not go well, Alprin said.

Separately, Lincoln said that it had struck a deal with a Goldman Sachs Group Inc. subsidiary to reinsure certain life insurance policies. The reinsursance shifts risk from Lincoln to Goldman, which will free $240 million of the capital Lincoln must keep to cover potential losses.