Lincoln pitches annuities to gov't workers as pensions fade

Shares of Radnor-based life insurance and investment seller and Eagles stadium sponsor Lincoln National Corp. rose as much as $1 a share, to nearly $36, in trading early today after stock analysts bought into the company's latest bullish presentation.

The stock is worth $39 a share in the near future, Paul Newsome of Sandler O'Neill + Partners and two colleagues told clients in a report today, after Lincoln's presentation in New York on Thursday. Sandler O urged clients to buy the stock, arguing it's worth more than its recent 8x earnings and that it trades at an undeserved discount to competitors.

The company has cut back on pushing guaranteed universal-life policies in favor of variable-yield products, which "have better profit margins." It's also hoping to sell more to state and municipal retirement plans, Newsome wrote. States and cities are under pressure to trim or end guaranteed pensions and repace them with investor-directed plans in Pennsylvania and other states.

Lincoln expects variable-annuity sales will jump in the second quarter, followed by slower sales later this year. The company has boosted sales through Merrill Lynch, which targets small business clients, and is recruiting independent broker-dealers to sell more of its annuities. 

Lincoln chief financial officer Randy Freitag also told investors the compnay plans to spend $150 million this quarter, more than expected, to buy back shares and shore up the company's stock price. Lincoln "could repurchase more shares than this amount if it is successful in executing a life insurance reserve financing transaction later this year," Newsome added.