Moody's cuts Lincoln National

Moody's Investors Service said it downgraded Lincoln National Corp.'s senior debt rating to Baa1 from A3 and kept ratings on review for further downgrade, which began on Feb. 10.

The downgrade was driven by the company's reduced financial flexibility, weakened profitability, expected further investment losses and lower statutory capitalization, according to the agency.

In addition, dividend capacity from Lincoln's operating subsidiaries is expected to be constrained over the next one to two years, given the pressures on regulatory earnings and capital, the agency noted.

"The company's run-rate of earnings will be hurt for these equity-based businesses, and there could be additional impairments of goodwill and intangibles, as we saw in the fourth quarter," Moody's vice president Ann Perry said in a statement.

The agency said Lincoln's regulatory risk-based capital tends to be less sensitive to further declines in the equity markets than are other large variable annuity writers.

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