EX-12 6 dex12.htm HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES Historical Ratio of Earnings to Fixed Charges

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

EXHIBIT 12—HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES

 

     Twelve Months Ended December 31,  

(dollars in millions)

    2006    2005    2004    2003    2002  

Income before Federal income taxes and cumulative effect of accounting changes

    $ 1,811    $ 1,075    $ 1,036    $ 1,047    $ (54 )

Equity in losses (earnings) of unconsolidated affiliates

      —        —        —        —        1  

Sub-total of fixed charges

      240      110      116      112      119  
                                    

Sub-total of adjusted net income

      2,051      1,185      1,152      1,159      66  

Interest on annuities and financial products

      2,316      1,570      1,571      1,617      1,617  
                                    

Adjusted income base

    $ 4,367    $ 2,755    $ 2,723    $ 2,776    $ 1,683  
                                    

Fixed Charges

               

Interest and debt expense

    $ 220    $ 89    $ 94    $ 90    $ 97  

Portion of rent expense representing interest

      21      21      22      22      22  
                                    

Sub-total of fixed charges

      241      110      116      112      119  

Interest on annuities & financial products

      2,316      1,570      1,571      1,617      1,617  
                                    

Sub-total of fixed charges

      2,557      1,680      1,687      1,729      1,736  

Preferred dividends (pre-tax)

      *      *      *      *      *  
                                    

Total fixed charges

    $ 2,557    $ 1,680    $ 1,687    $ 1,729    $ 1,736  
                                    

*  Less than $100,000

               

Ratio of Earnings to Fixed Charges

               

Ratio of earnings to fixed charges (including interest on annuities and financial products) (1)

      1.71      1.64      1.61      1.61      0.97  

Excluding interest on annuities and financial products (2)

      8.51      10.75      9.91      10.37      0.55  

Ratio of earnings to combined fixed charges and preferred stock dividends (3)

      1.71      1.64      1.61      1.61      0.97  
1. For purposes of determining this ratio, earnings consist of income before Federal income taxes, cumulative effect of accounting change, if any, and minority interests adjusted for the difference between income or losses from unconsolidated equity investments and cash distributions from such investments, plus fixed charges. Fixed charges consist of 1) interest and debt expense on short and long-term debt and junior subordinated debentures issued to affiliated trusts; 2) interest on annuities and financial products and; 3) the portion of operating leases that are representative of the interest factor.
2. Same as the ratio of earnings to fixed charges, except fixed charges and earnings in this calculation do not include interest on annuities and financial products. This coverage ratio is not required, but is provided as additional information. This ratio is commonly used by individuals who analyze LNC’s results.
3. Same as the ratio of earnings to fixed charges, including interest on annuities and financial products, except that fixed charges include the pre-tax earnings required to cover preferred stock dividend requirements.