Business Context and Reporting Period
Company: Lincoln National Corporation (LNC)
Filing Type: Form 8-K (Current Report)
Date of Report: June 29, 2026
Event: Completion of a registered public offering of $500 million aggregate principal amount of 6.800% Fixed-to-Fixed Reset Rate Subordinated Notes due 2056.
Key Financial Metrics and Transaction Details
- Offering Size: $500 million aggregate principal amount.
- Instrument: 6.800% Fixed-to-Fixed Reset Rate Subordinated Notes due 2056.
- Interest Rate: Fixed at 6.800% annually from June 29, 2026, to July 15, 2036. Thereafter, it resets every five years to the five-year Treasury rate plus 2.400%.
- Payment Terms: Interest payable semi-annually in arrears beginning January 15, 2027.
- Underwriting Discount: 1.000% of the principal amount.
- Price to Public: 100.000% of principal amount.
- Existing Debt Context: As of March 31, 2026, $250 million was outstanding under a Term Loan Agreement maturing March 30, 2031.
Material Changes and Use of Proceeds
The filing reports the successful completion of the debt offering on June 29, 2026. The Company intends to use the net proceeds for general corporate purposes. Specifically, management indicated the proceeds may be used to repurchase or redeem:
- Outstanding 9.250% Fixed Rate Reset Non-Cumulative Preferred Stock, Series C (stated amount: $500 million).
- Outstanding 9.000% Non-Cumulative Preferred Stock, Series D (stated amount: $500 million).
Both preferred stock series are redeemable at their stated value on or after December 1, 2027. This transaction represents a strategic refinancing opportunity to potentially replace higher-cost preferred equity with subordinated debt.
Terms, Risks, and Contingencies
- Ranking: The Notes are unsecured subordinated obligations. They rank senior to variable rate Capital Securities due 2066 and 2067, pari passu with existing unsecured subordinated debt, and junior to all senior indebtedness.
- Redemption:
- Par Call: Redeemable at 100% of principal during the three-month period prior to July 15, 2036, and subsequent reset dates.
- Make-Whole: Outside par call periods, redemption price is the greater of principal or present value of remaining payments discounted at the Treasury Rate plus 40 basis points.
- Special Events: Redeemable within 90 days of a "tax event," "regulatory capital event" (at 100%), or "rating agency event" (at 102%).
- Interest Deferral: The Company may defer interest payments for up to five consecutive years. During deferral, interest accrues and compounds. If interest is deferred, the Company is generally restricted from paying dividends on or redeeming equity or debt ranking pari passu or junior to the Notes.
- Events of Default: Limited to bankruptcy, insolvency, or receivership. There is no right of acceleration for payment defaults or covenant breaches, though holders may demand payment if a default continues for 30 days after a deferral period.
Investor Verification Checklist
- Verify the final redemption status of the Series C and Series D Preferred Stock to confirm if the proceeds were utilized for these redemptions.
- Review the Company's total leverage ratios post-issuance to assess the impact of the new $500 million subordinated debt on the capital structure.
- Monitor the five-year Treasury rate environment approaching July 2036 to estimate future interest expense resets.
- Confirm the Company's compliance with the restrictions on equity and junior debt payments should an interest deferral be elected.
- Check for any subsequent filings regarding the "rating agency event" or "regulatory capital event" triggers that could allow for early redemption.