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OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has assigned a debt rating of aa-a to the $300 million 4.20% unsecured senior notes due March 15, 2022 issued by Lincoln National Corporation (Lincoln) (headquartered in Radnor, PA) (NYSE: LNC). The assigned outlook is stable. The notes were drawn down from Lincolnas universal shelf registration effective January 12, 2012, and the proceeds are expected to be used for pre-financing the upcoming debt maturity in August 2012 for the same amount. All other ratings of Lincoln and its affiliates remain unchanged.

"A.M. Bestas Ratings & the Treatment of Debt"

The rating reflects Lincolnas consistent presence in its core business lines, supported by a dedicated distribution focus, which has helped the company maintain its leadership ranking in its major lines of business. As a result of this debt issuance, Lincolnas financial leverage is projected to increase in the short term until the upcoming debt maturity of the same amount in August 2012 is paid off. In addition, Lincolnas shareholdersa equity has been reduced by two reductions related to intangible assets. In December 2011, the company took a non-cash charge to write down goodwill primarily associated with its life insurance business. Early in 2012, similar to its peers, Lincoln took a retrospective accounting charge to write down a portion of its deferred acquisition cost balance. Both accounting actions resulted in a reduction in shareholdersa equity. When combined with the new debt issuance, financial leverage has increased, but Lincoln remains well within the guidelines for its current rating level.

However, as a result of the goodwill write-down, calculated interest expense coverage has dipped below guidelines, but A.M. Best believes this is mitigated through the solid liquidity currently maintained at the holding company level, which includes cash coverage of two times current needs.

The methodology used in determining these ratings is Bestas Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestas rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: aA.M. Bestas Perspective on Operating Leveragea; aA.M. Bestas Ratings & the Treatment of Debta; and aEquity Credit for Hybrid Securities.a Bestas Credit Rating Methodology can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit [ www.ambest.com ].

Copyright 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.