Fitch Rates Lincoln National Corp.'s Senior Unsecured Notes 'BBB '
On Feb. 11, 2015, Fitch affirmed the ratings of LNC and its insurance operating subsidiaries with a Stable Outlook.
KEY RATING DRIVERS
Fitch expects proceeds from the debt issuance to be used to pre-fund the maturity of LNC's \$250 million of 4.3% senior unsecured notes due June 15, 2015. Given the near-term maturity of the 4.3% notes, Fitch views the new issuance as effectively neutral to LNC's financial leverage.
Lincoln National Corp., headquartered in Radnor, PA, markets a broad range of insurance and asset accumulation products and financial advisory services primarily to the affluent market segment. The company reported consolidated assets of \$253 billion and common equity of \$15.7 billion at Dec. 31, 2014.
RATING SENSITIVITIES
Key rating triggers that may precipitate a rating upgrade include:
--Prolonged strong operating performance generating EBIT interest coverage in excess of 10x;
--Reported RBC above 450%;
--Trend of holding-company liquidity managed at 12-18 months of debt service and common stock dividends;
--Leverage maintained below 25%.
Conversely, key rating triggers that may lead to a rating downgrade include:
--Capital below expectations for a prolonged period. Fitch would expect reported RBC of 400% under normal conditions and 325% under stressed conditions;
--Leverage maintained above 30% and Total Financing and Commitments ratio above 1.5x;
--LNC's GAAP-based interest coverage remains below 5x for an extended period of time;
--Cash coverage at holding company below 1.0x interest/dividend needs;
--A material reserve increase or impairment of intangibles.
Fitch has assigned the following rating:
Lincoln National Corporation
--\$300 million of 3.35% senior unsecured notes due 2025 'BBB+'.
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