Lincoln National Corporation · NYSE:LNC
Lincoln National — Merger or Acquisition (July 2001)
15 slides from Lincoln National's merger presentation, Jul 30, 2001
Slide 1: Sale of Lincoln Re to Swiss Re: Transaction Summary
Sale of Lincoln Re to Swiss Re Transaction Summary July 30, 2001 ALincoln
Slide 2: Table of Contents
Table of Contents Strategic Rationale Description of the Transaction Valuation Pro Forma Financial Impact Use of Proceeds Lincoln National Going Forward
Slide 3: Strategic Rationale
Strategic Rationale Why are we Selling Lincoln Re? Why is Swiss Re the Ideal Acquirer? ™ Sharpens our strategic focus on the affluent market Improves quality of earnings. Removes source of historic earnings volatility from Lincalris earnings stream m™ Caps future exposures ™ Exit business at an attr
Slide 4: Lincoln Financial Group 10-year earnings
Lincoln Financial Group 10-year earnings bar $ millions 7194 Total 5304 4755 3135 397 agg Mt a7q 2408 594 Exited Businesses 7355 2540 216A 1585 7A 110 1758 1835 . 1483 Current Focused Businesses 9355 3546 4492 tar 6321099 1357 1655 tag 2077 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Slide 5: Description of the Transaction
Description of the Transaction AVLincoln Franc Groat Swiss Re The transaction structure involves beth: m= Aseries of reinsurance transactions and = The sale of certain stock companies that comprise part of Lincoln Re ‘The taal valuation of Lincoln Re consists ofthe folowing components: $20 billion C
Slide 6: Transaction Valuation
Transaction Valuation Estimated Proceeds from Transaction Valuation (8 billions) Valuation as a multiple of: Purchase price $2.0 LTM Earnings (a) 20.8x Retained capital 05 2001E Earnings— Street (b) 16.6 Gross proceeds $25 6/30/2001 Book Value 2.3K Net after-tax proceeds $19 (2) Excludes $25.5 rillo
Slide 7: Pro Forma Financial Impact
Pro Forma Financial Impact ($ in millions, except per share data) Earnings EPS 20021 IBES median estimate -LNC (a) $791 $4.40 Analyst segment estimate- Lincoln Re (b) (153) (0.79) Sub-total 638 331 Reinvestment at 3.6% after-tax (c) 69 0.36 Lincoln Re overhead expenses oO) (0.04 Amortization of defe
Slide 8: Pro Forma Financial Impact
Pro Forma Financial Impact The transactior accretive as we reinvest proceeds 2002E EPS Impact $4.01 $4.20 3.6% 6% a% 10% After-Tax Reinvestment Rate 2002E EPS Accretion / (Dilution) 24% 6.1% os =r sd 3.6% 6% ay 10% After-Tax Reinvestment Rate
Slide 9: Pro Forma Financial Impact of Gain on Sale
Pro Forma Financial Impact of Gain on Sale ™ Sale of business structured as a reinsurance transaction and a sale of certain subsidiaries m™ Reinsurance structure gives rise to deferred gain treatment for Lincoln Estimated Impact $800 million $0 million immediate gain on sale of stack subsidiaries af
Slide 10: Use of Proceeds
Use of Proceeds Lincoln plans to use the proceeds in two primary ways ™ Prior successes in integrating acquisitions~ CIGNA, Aetna rategiong| §== Commitment to value enhancing acquisitions juisitions) Broad range of options identified Share Repurchase authorization increased by $500 million Repurcha
Slide 11: Use of Proceeds — Strategic Acquisitions
Use of Proceeds — Strategic Acquisitions Acquisition Criteria m™ Leverage expense management and integration skills m= Expand distribution eh ™ Contribute toward goal of attaining top 5 position in sales in life and pumulation} annuities Expand product/service suite to high net worth clients ™ Consi
Slide 12: Lincoln Going Forward
Lincoln Going Forward A Pure-Play with Leading Scale, Brand and Talent Focused Businesses 1990 Going Forward Toone rom opraions) o,,§ == i lees
Slide 13: Lincoln Going Forward: Key Components for Growth
Lincoln Going Forward Key Components for Growth Scale Brand High Performance Culture = Market leading manufacturing capability = Powerful distribution franchise © Alliance partner of choice aa Total domestic retail deposits of $11.5 bilion FY 2000) #7 variable annuities sales in 1@01 (up from #14 Fy
Slide 14: Lincoln Going Forward: Maintaining Momentum into 2002
Lincoln Going Forward Maintaining Momentum into 2002 Redeploy proceeds in compelling acquisitions Smoothly effect Lincoln Re transition Leverage considerable financial flexibility to eliminate dilution Continue to aggressively improve net flaws with innovative products, strong distribution and disti
Slide 15: Cautionary Statement
Cautionary Statement Please note that pursuant to the Private Securities Litigation Reform Act of 1995, statements made in the course of this investor discussion which state the company’s or management's intentions, hopes, beliefs, expectations, or predictions for the future are forward-looking stat