Another life insurance firm has decided to accept bailout funding from the federal government.
Lincoln National Corp. announced that it will sell $950 million dollars in stock to the Treasury Department under the Troubled Asset Relied Program. In an additional move to raise capital, it will also sell $600 million in common stock and $500 million in senior debt, and will sell a United Kingdom subsidiary for an additional $319 million.
Lincoln, like many other life insurers, made large investments in derivative products tied to the housing market. After their value collapsed and congress approved the $700 billion bailout package, some insurance companies bought banks in order to qualify. Lincoln purchased Indiana-based Newton County Loan and Savings.
After a long delay, the Treasury Department last month approved Lincoln for $2.5 billion in bailout funding. The firm said it would decide in the next few weeks whether to take the remaining $1.55 billion in aid.
Six other life insurers received approval to join the bailout program, but only Lincoln and The Hartford Financial Services Corp. have followed through. Ameriprise Financial Group, Allstate Corp., Prudential Financial Inc., and Principal Financial Group have all decided against participating.
Like many other financial services firms, the life insurers that declined bailout assistance have been deterred by restrictions imposed by Congress and Treasury on executive pay, the distribution of dividends, and other similar matters.
In an investor conference last month, Dennis Glass, Lincoln's chief executive, said the TARP option was part of a mix of options to raise capital and that the company could "handle the restrictions," Bloomberg News reported.
Lincoln National Corp. announced that it will sell $950 million dollars in stock to the Treasury Department under the Troubled Asset Relied Program. In an additional move to raise capital, it will also sell $600 million in common stock and $500 million in senior debt, and will sell a United Kingdom subsidiary for an additional $319 million.
Lincoln, like many other life insurers, made large investments in derivative products tied to the housing market. After their value collapsed and congress approved the $700 billion bailout package, some insurance companies bought banks in order to qualify. Lincoln purchased Indiana-based Newton County Loan and Savings.
After a long delay, the Treasury Department last month approved Lincoln for $2.5 billion in bailout funding. The firm said it would decide in the next few weeks whether to take the remaining $1.55 billion in aid.
Six other life insurers received approval to join the bailout program, but only Lincoln and The Hartford Financial Services Corp. have followed through. Ameriprise Financial Group, Allstate Corp., Prudential Financial Inc., and Principal Financial Group have all decided against participating.
Like many other financial services firms, the life insurers that declined bailout assistance have been deterred by restrictions imposed by Congress and Treasury on executive pay, the distribution of dividends, and other similar matters.
In an investor conference last month, Dennis Glass, Lincoln's chief executive, said the TARP option was part of a mix of options to raise capital and that the company could "handle the restrictions," Bloomberg News reported.
published June 15, 2009, 0 Comments
Leave a comment