Earnings Preview: Lincoln National

Oct.28.08 | About: Lincoln National (LNC)

Lincoln National Corp. (NYSE:LNC) is expected to report Q3 earnings after market close Tuesday Oct. 28, with a conference call scheduled for October 29 at 11:00 am.


Analysts are looking for EPS of $1.24 on revenue of $2.64B. The consensus range for EPS is $1.01 to $1.45, while the consensus range for revenue is $2.63B to $2.64B, according to First Call.

Analyst Views

Lincoln National reported that its Q3 EPS was $1.10 to $1.25, versus analysts' consensus estimate of $1.32. The insurer reduced its quarterly dividend to 21c per share from 41.5c per share. Lincoln National reported that the move would increase its capital by about $50M each quarter. In addition, the insurer said it estimates its excess capital position at the end of Q3 was $500M.

Meanwhile, Sterne Agee responded to Lincoln National's news by upgrading the company's shares to Buy from Hold. On the other hand, Keefe Bruyette recently downgraded Lincoln National to Market Perform from Outperform, as the firm believes that investors can find stocks with better risk/reward ratios than that of Lincoln National.

Fitch Ratings recently warned that U.S. life insurers such as Lincoln National face a "significant" risk of having their credit risk ratings downgraded. Fitch cited the insurers' investment losses as the main factor behind its warning. The ratings firm also predicted that insurers could have difficulty raising capital. While all insurers may have problems, life insurers are in the worst situation because of their extensive use of variable annuities which are linked to equities, Fitch contended.