Lincoln Bailout Warrants Raise $214 Million for U.S.
Lincoln National Corp. bailout warrants raised $213.7 million for the U.S. Treasury Department, defraying costs of the government rescue program that helped the Philadelphia-based insurer return to profit.
The 13 million warrants to purchase Lincoln stock sold for $16.60 each, the Treasury announced today. The minimum bid price was $13.50, according to the Treasury’s offering statement. Lincoln purchased 2.9 million of the warrants from Treasury, the company said in a separate statement.
Lincoln, led by Chief Executive Officer Dennis Glass, has reported four straight quarterly profits since the company took $950 million from Treasury’s Troubled Asset Relief Program in 2009 to replace capital lost during the financial crisis. The insurer repaid the bailout in June.
“The auction results are a little disappointing,” said Linus Wilson, a finance professor at the University of Louisiana at Lafayette, who compiled data on TARP warrant sales and testified before the U.S. House Financial Services subcommittee. “But it’s hard to get investors to jump in when stocks are falling.”
The U.S. demanded warrants from TARP recipients to compensate taxpayers for taking the risk of saving the financial system during the credit crisis. The Lincoln warrants give holders the right to purchase the company’s common stock at $10.92 a share. Lincoln rose 21 cents to $24.93 at 9:33 a.m. in New York Stock Exchange composite trading, after closing at $24.72 yesterday, down 2.5 percent.
The 2.9 million warrants bought by Lincoln account for about 22 percent of the auction, the insurer said.
“Lincoln’s participation in Treasury’s successful auction of the warrants reflects our confidence in the strength of our balance sheet and the long-term value of the franchise,” Glass said in the statement.
Treasury had raised more than $7 billion as of Sept. 10 by selling warrants back to the companies or through public auctions. The biggest divestiture was for Bank of America Corp., the largest U.S. lender, whose bailout warrants sold at auction in March for $1.57 billion.
Lincoln joined U.S. banks and rival insurers Hartford Financial Services Group Inc. and American International Group Inc. in taking federal aid after the financial crisis lowered the value of investments. Lincoln slipped to $5.01 on March 9, 2009, as investment losses and the stock market decline eroded capital. The insurer has lost 0.6 percent this year.
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net
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