Lincoln National stock rises as its bailout plan advances
Shares in Lincoln National Corp. continued their volatile ride on Wall Street yesterday, surging 33 percent on news that its application for federal bailout money is under review by the U.S. Treasury.
Shares in Lincoln National Corp. continued their volatile ride on Wall Street yesterday, surging 33 percent on news that its application for federal bailout money is under review by the U.S. Treasury.
The stock closed at $9.15, up $2.26, on the New York Stock Exchange. The gain pulled the shares close to the $10.36 level of March 27, the day the Radnor life insurer said it had withdrawn its application for a debt-guarantee program under the Federal Deposit Insurance Corp.
Lincoln was one of several life insurers yesterday whose shares spiked after a Treasury Department official affirmed that certain life insurers were eligible for aid under financial rescue legislation.
Like several other life insurers, Lincoln had bought a small savings and loan in order to qualify for federal bailout efforts, such as the Troubled Asset Relief Program's Capital Purchase Program. Lincoln applied for the program in November, pending the approval of its application to become a thrift holding company, but has not gotten a decision.
Treasury spokesman Andrew Williams said "there are a number of life insurers who met the requirements for the Capital Purchase Program because of their thrift or bank holding company status," Bloomberg News reported. "These are among the hundreds of financial institutions in the CPP pipeline that will be reviewed and funded as appropriate on a rolling basis," he said.
Lincoln and other life insurers have been hammered by investment losses and have been under pressure to build stronger capital positions in order to avoid ratings downgrades.
That can lead to a squeeze in which customers flee for stronger rivals and it gets more expensive to operate because creditors charge more.
Lincoln, which has already slashed its dividend to a penny, has said it is exploring other ways to boost its capital position, such as additional reinsurance deals and asset sales. Some speculation has centered on a possible sale of the Center City asset management firm Delaware Investments.