After severe fourth-quarter losses, annuity provider Lincoln National has decided to enter a reinsurance agreement with Commonwealth Annuity and Life Insurance Co. The Wall Street Journal’s Kerry E. Grace writes that the plan will result in capital relief of around $240 million.
Details of the agreement between Lincoln and Goldman Sachs subsidiary Commonwealth are as follows:
- Lincoln will re-insure $1.5 billion of its reserves (solely a closed block of life insurance policies) to Commonwealth
- Commonwealth provides quota-share coinsurance of 55%
Last week, Lincoln (also known as Lincoln Financial) withdrew its application to issue debt under the FDIC Temporary Liquidity Guarantee Program. However, they may still receive some government assistance: Lincoln is now eligible for U.S. Treasury funds, since its’ application for a savings-and-loan charter has been approved.