UPDATE 3-Lincoln National posts quarterly profit

By Lilla Zuill NEW YORK, Oct 28 (Reuters) - Lincoln National Corp, a large U.S. life insurer, recorded a quarterly profit on Wednesday after posting losses in the past three quarters, helped by a gain from the divestiture of a unit. Third-quarter net income rose to $153 million, or 44 cents a share, compared with $148.4 million, or 58 cents a share, in the year-ago quarter when there were fewer shares outstanding. The company's sale of a UK unit helped offset realized investment losses and a hedging losses related to its sale of variable annuities, a popular retirement product. Philadelphia-based Lincoln had been hurt in recent quarters by investment losses and a surge in costs for stock market-linked annuities. But its fortunes and those of the life insurance sector as a whole, have shown early signs of stabilization, as investment values and stock markets have risen. Lincoln, along with rival Hartford Financial Services Group Inc, got a helping hand. Both received cash injections from the U.S. Treasury earlier this year. Lincoln received $950 million to help shore up capita and raised additional funds through a share offering. "These results should make people feel better about LNC," Hexagon analyst David Havens said in an email after the results. "With a little (actually a lot) of help from Uncle Sam, and a receptive capital market, along with buyers of non-core assets, the company has been able to reposition itself pretty rapidly." On an operating basis, Lincoln's quarterly profit was $275.5 million, or 84 cents a share, in the quarter compared with $297.8 million, or $1.16 a share a year ago. Analysts on average expected the insurer to earn about 76 cents a share, according to Thomson Reuters I/B/E/S. In the latest quarter, Lincoln recorded realized investment losses of $42 million and also also had a loss of $151 million from its variable annuity hedging program, which it said was in line with expectations. But these losses were at least partially offset by a $55 million after-tax gain on the sale of Lincoln National (UK) Plc and the ability to free up $15 million it previously set aside to meet commitments on variable annuities it sold, thanks to recovery in equity markets. The company said it is on track to complete the sale of another unit, Delaware Investments, by year end, potentially giving it a boost in the fourth quarter. Lincoln's shares fell about 5.5 percent to $22.25 in the regular session and rose about 7.9 percent in trading after the bell to $24. The stock has traded as low as $4.76 and as high as $28.09 in the past year, according to Reuters data. (Reporting by Elinor Comlay and Lilla Zuill; editing by Matthew Lewis and Andre Grenon) Keywords: LINCOLNNATIONAL/ ([e-mail] [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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