LNC’s operations are divided into four business segments: 1) Lincoln Retirement,
2) Life Insurance, 3) Investment Management and 4) Lincoln UK. Over the past
five years, segments have been redefined as follows. During the first quarter
of 2000, an internal reorganization resulted in the creation of a separate Lincoln
Retirement segment and a separate Life Insurance segment. At the end of 2000,
LNC established a new wholesaling distribution organization, Lincoln Financial
Distributors (“LFD”), to focus on the changing business needs of financial intermediaries.
The primary operating subsidiaries that comprise LNC are The Lincoln National
Life Insurance Company (“LNL”); First Penn-Pacific Life Insurance Company (“First
Penn”); Lincoln Life & Annuity Company of New York (“Lincoln Life New York”),
Delaware Management Holdings, Inc. (“Delaware”), Lincoln National (UK) plc (“Lincoln
UK”), LFA and LFD.
Through its business segments, LNC sells a wide range of wealth protection
and accumulation products. These products include fixed annuities, variable
annuities, universal life insurance, variable universal life insurance, term
life insurance, other individual insurance coverages, retail mutual funds, “529”
college savings plans, 401(k) savings products and managed account products.
LNC sells its products through an extensive distribution network that is designed
to meet the needs of a marketplace where consumers increasingly want to do business
on their own terms. LNC’s network consists of internally owned wholesaling and
retailing business units, LFD and LFA, respectively.
LFD, with principal operations in Philadelphia, Pennsylvania, consists of approximately
300 internal and external wholesalers that distribute life insurance, annuities
and investment products to a large number of financial intermediaries. LFD is
organized to penetrate multiple channels including the Wirehouse/Regional channel,
the Independent Financial Planner channel, the Marketing General Agent channel
and the Financial Institutions channel.
LFA is a retail broker/dealer and financial planning firm that offers a full
range of financial and estate planning services. LFA and its consolidated affiliate,
Sagemark, offer access to annuities, 401(k) plans, pensions, universal and variable
universal life insurance and other wealth accumulation and protection products
and services, and is a preferred distributor of LNC retail products. LFA and
Sagemark, with principal operations in Fort Wayne, Indiana, consist of nearly
2,100 planners in 38 offices across the United States.
Institutional investment products managed in the Investment Management segment
are marketed by a separate sales force in conjunction with pension consultants.
These products are offered primarily to defined benefit and defined contribution
plan sponsors, endowments and foundations.
Competition
All businesses LNC is involved in are highly competitive due to the market
structure and the large number of competitors. At the end of 2002, the latest
year for which data is available, there were approximately 1,171 life insurance
companies in the United States. Also, many of the products offered by LNC’s
operating companies are similar to products offered by non-insurance financial
services companies, such as banks. The Financial Services Modernization Act
was passed in November 1999 and repealed the Glass-Steagall Act of 1933 and
expands the Bank Holding Company Act of 1956. This act allows, among other things,
cross-ownership by banks, securities firms and insurance companies. In 2003
there were some cross-ownership activities in the financial services industry;
however, there was minimal impact on LNC’s operations.
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