Lincoln National Warrants Surge to Twice 2010 Issue Price

Lincoln National Corp. (LNC) warrants rose to twice their issue price as shares rallied after the insurer posted profit that beat analysts’ estimates.

The warrants, which were sold for $16.60 in September 2010, surged 9 percent to $34.93 at 4:15 p.m. in New York. The contracts allow investors to buy Lincoln common stock at about $10.61 apiece by July 10, 2019, according to data compiled by Bloomberg. Lincoln shares gained 6.7 percent to $44.44, the most in the 22-company Standard & Poor’s 500 Insurance Index.

Operating profit, which excludes some investment results, was $1.27, beating by 12 cents the average estimate of 20 analysts in a Bloomberg survey, the Radnor Pennsylvania-based insurer said late yesterday. Net income was $317 million, or $1.15 a share. The insurer’s stock has rallied 72 percent this year as rising equity markets and bond yields limited risks on retirement products like annuities.

“The quarter reflected strength across all operating segments, but most notably in annuities,” Mark Finkelstein, an analyst at Evercore Partners Inc. (EVR), said in a research note.

Operating income from the annuities segment rose 23 percent to $195 million, according to the statement. Variable annuity deposits climbed 62 percent from a year earlier.

The U.S. Treasury Department acquired the warrants to compensate taxpayers for taking the risk of saving companies like Lincoln during the credit crisis.

Chief Executive Officer Dennis Glass sold stock and bonds to private investors in 2010 as he raised capital to repay a $950 million rescue. He has raised prices for some products and last year hired Ellen Cooper from Goldman Sachs Group Inc. as chief investment officer.

The second quarter “provided a good demonstration of the various actions we have taken to improve our operating results, including product pricing, claims management, risk management and distribution expansion,” Glass said in the statement.

To contact the reporter on this story: Megan Hickey in New York at Mhickey18@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at

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