Lincoln National's Firm Grip On Life

Insurance is hardly a knock-your-socks-off business. But at Lincoln National (LNC), the sixth-largest U.S. life insurer, the lure of improving profits and a demand for wealth-preserving insurance policies are sparking things up, says David Lewis of Robinson-Humphrey in Atlanta.

Lincoln National's Firm Grip on Life

The Philadelphia company has gone through big changes under CEO Jon Boscia, who has trimmed costs and unprofitable business lines. The result: Life insurance sales are up more than 20%, compared with an industry average of 2% to 4%, says Lewis. By catering to the rich, Lincoln's typical policy has a face value of more than $1 million, vs. the industry's $156,000. And with the company launching eight new variable annuities this year, Lincoln will beef up its roster in one of the fastest-selling financial products around. A $500 million stock buyback announced in November will also help achieve a 15% return on equity target for 2001, one year ahead of schedule and up from less than 9% five years ago. The bad news is that the stock slump will damage Lincoln's bottom line--by affecting fees earned on assets under management. The stock, trading around 47, is below Lewis' 12-month forecast of 58. But that could tick upward as markets improve and downward revisions for insurance subside.

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