Lincoln National Corp. plans to repurchase up to $500 million of its shares with proceeds from an agreement it completed last month with an Athene Holding Ltd. subsidiary to reinsure about $7.7 billion of in-force fixed and fixed indexed annuity products.
Capital generated from the transaction included a ceding commission paid by Athene combined with the release of capital. Lincoln said it expects the transaction to be accretive to its 2019 earnings per share. Most of the repurchases will be executed through an accelerated share repurchase program.
The company, which does business under the Lincoln Financial Group brand, has its headquarters in Philadelphia and its annuities operations based in Fort Wayne.
“As demonstrated by our record third quarter earnings, we remain focused on executing our business strategy, which includes manufacturing and distributing high-quality products,” Dennis Glass, Lincoln’s president and CEO, said in a statement.
“Organic growth momentum remains strong in the fourth quarter. At the same time, we are committed to identifying incremental opportunities, like this transaction, to maximize the value of our attractive in-force business to reward shareholders.”
LNC will retain account administration and recordkeeping of the annuity policies in the transaction, which the statement said would have no impact on Lincoln’s relationship with, and commitments to, its distribution partners and policyholders.
The company “remains focused on the continued growth of both its fixed and variable annuity businesses, with plans to introduce new products and further expand distribution partners to achieve successful long-term growth,” it said.
Goldman Sachs & Co. served as the company’s financial advisor in the transaction, which was structured as a modified coinsurance treaty with counterparty protections around investment guidelines and overcollateralization established to meet Lincoln’s risk management objectives.
Elkhart ATM skimming leads to indictment
A Romanian woman has been indicted for financial fraud involving credit union automatic teller machine skimming in northeast Indiana.
In addition to the charge of executing a scheme to defraud a financial institution, the 6-count indictment against 18-year-old Valentina Marinkovic included five counts of possessing access device making equipment, according to a Dec. 19 statement by the U.S. Attorney’s Office for the Northern District of Indiana.
Law enforcement including the Elkhart Police Department had been investigating several reports of skimming devices being attached to bank and credit union ATMs as well as gas pump credit card readers at service stations, U.S. Attorney Thomas Kirsch II said in the statement.
“The device captures and stores credit and debit card numbers of unsuspecting victims. The device is subsequently removed and the information from the skimming device is used to produce fraudulent credit/debit cards for unauthorized transactions,” the statement said.
In this alleged scheme to defraud a federally insured financial institution, “a credit union was victimized, having to reimburse members for losses exceeding $32,000,” it said. The investigation covered activity from Aug. 5 through Oct. 1.
In addition to the Elkhart Police, the case was investigated by the Federal Bureau of Investigation and the Indiana State Police Organized Crime and Corruption Unit, the statement said. It will be prosecuted by Stacey Speith, an assistant US attorney.
UBS settles LIBOR manipulation lawsuit
Indiana Attorney General Curtis Hill announced a $68 million, 40-state settlement with UBS last month for fraudulent conduct involving the manipulation of the London Interbank Offered Rate.
LIBOR is a benchmark interest rate the Indiana Attorney General’s Office said affects financial instruments worth trillions of dollars and has a far-reaching impact on global markets and consumers.
“This is yet another case in which my office has acted in concert with other states’ attorneys general to protect consumers from fraudulent business practices,” Hill said in a statement. “We will continue to remain watchful for other improprieties committed by those trying to take advantage of unsuspecting victims.”
The attorneys general allege UBS misrepresented the LIBOR’s integrity by concealing and failing to disclose that UBS at times made U.S. dollar LIBOR submissions to avoid negative publicity and protect the bank’s reputation, and that UBS made Yen LIBOR submissions to benefit its derivative trading positions.
“As a result of its fraudulent conduct, UBS made millions in unjust gains when government entities and not-for-profit organizations entered into swaps and other financial instruments with UBS without knowing that UBS and other banks on the USD-LIBOR-setting panel were manipulating their LIBOR submissions,” the statement said.
Governmental and nonprofit groups with LIBOR-linked swaps and other financial instruments with UBS will be notified if they are eligible to receive a distribution from the settlement fund, it said.
With the UBS settlement, the states have collected $488 million in payments from four LIBOR-setting panel banks. Almost all of that money will be distributed to state and local government entities and not-for-profits that have been harmed by these banks’ wrongful conduct, the statement said.