Moody's may still cut Lincoln National

Moody's Investors Service said that the debt ratings of Lincoln National Corp. (senior debt at Baa2) and the A2 insurance financial strength ratings of its operating subsidiaries remain under review for possible downgrade following the company's announcement of its plans to raise $2 billion of capital.

Moody's said that it would likely confirm Lincoln National's ratings if the company successfully executes its plan to raise common equity of about $600 million, senior debt of up to $500 million, and about $950 million of preferred stock which would be issued pursuant to the U.S. Treasury's Capital Purchase Program.

However, if the company is unable to successfully raise the public debt or equity components, and needed to rely entirely on the CPP for the $2 billion capital raise, Moody's said that it would likely downgrade the ratings by one notch.

The rating agency said that it was concerned about the company's diminished financial flexibility and the negative perception in the marketplace if the company was not able to successfully execute on the public market portion of its capital plans.

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