Lincoln Financial To Reinsure $1.5 Billion In Estimated Reserves To Commonwealth Annuity

Lincoln Financial Group has entered into a reinsurance agreement with Commonwealth Annuity and Life Insurance Company on an in force block of universal life (UL) and variable universal life (VUL) insurance policies written by The Lincoln National Life Insurance Company

By None

Lincoln Financial Group has entered into a reinsurance agreement with Commonwealth Annuity and Life Insurance Company on an in-force block of universal life (UL) and variable universal life (VUL) insurance policies written by The Lincoln National Life Insurance Company and its predecessors. The transaction will be effective as of 31 March 2009.

Commonwealth Annuity is a wholly owned subsidiary of The Goldman Sachs Group, Inc. The agreement with Commonwealth Annuity represents the transfer of a closed block of life policies and does not include distribution or future new business value.

Under the terms of the agreement, Commonwealth Annuity will provide 55% quota share coinsurance and Lincoln will reinsure approximately $1.5 billion in estimated reserves to Commonwealth Annuity.

Including the release of capital required to support the block of business, Lincoln estimates the transaction will provide approximately $240 million in statutory capital relief, resulting in a risk-based capital (RBC) ratio benefit of approximately 20 percentage points for The Lincoln National Life Insurance Company. The company expects the transaction to reduce annual consolidated net income by approximately $20 million.

L.D.

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