Lincoln National Corp. (NYSE: LNC) is in negotiations for a reinsurance transaction that would shift several billion dollars of life insurance reserves away from its balance sheet, according to people familiar with the discussions. The talks are private and participants asked not to be identified.
Those involved in the deliberations said the arrangement under consideration would cover roughly $5 billion of life policies. Sources indicated the reinsured blocks could include universal life policies featuring secondary guarantees - contracts designed to maintain coverage under specified conditions even when cash values fall below required levels.
Reinsurance deals like the one Lincoln National is exploring allow insurers to cede portions of their reserves to counterparties, thereby reducing the liabilities recorded on their balance sheets. By transferring reserve obligations, carriers can release capital that otherwise would remain tied to those in-force policies.
Executives commonly use freed capital to support sales and distribution efforts, and the potential transaction is framed within that context here - a mechanism to bolster capacity for new business. The reported discussions come as demand for annuities and life insurance products remains strong across the market.
Details remain limited while talks continue. It is not yet clear which peers might participate, the precise structure of the reinsurance arrangement, or the timeline for any definitive agreement. Parties involved have maintained confidentiality given the private nature of the negotiations.
Contextual note - The proposed reinsurance would be focused on life reserves and is reported to total about $5 billion in policies under consideration. Universal life with secondary guarantees is specifically mentioned among the types of business that might be reinsured.