8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

                   July 29, 2009                

Date of Report (Date of earliest event reported)

                  Lincoln National Corporation              

(Exact name of registrant as specified in its charter)

Indiana	1-6028	35-1140070
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

150 N. Radnor Chester Road, Radnor, PA 19087

(Address of principal executive offices)  (Zip Code)

(484) 583-1400

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On July 29, 2009, the registrant issued a press release announcing its financial results for the quarter ended June 30, 2009, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The registrant’s statistical supplement for the quarter ended June 30, 2009, is attached as Exhibit 99.2 and is incorporated herein by reference, and a general account supplement as of June 30, 2009, is attached as Exhibit 99.3 and is incorporated herein by reference.

The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

Item 9.01.  Financial Statements and Exhibits

(c)   Exhibits.

The following exhibits are being furnished with this Form 8-K.

Exhibit Number	Description
99.1	Press release dated July 29, 2009, announcing Lincoln National Corporation’s financial results for the quarter ended June 30, 2009.
99.2	Lincoln National Corporation Statistical Supplement for the quarter ended June 30, 2009.
99.3	Lincoln National Corporation General Account Supplement as of June 30, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

LINCOLN NATIONAL CORPORATION

Date:  July 29, 2009	By:	/s/ Douglas N. Miller
		Name:  Douglas N. Miller
		Title:  Vice President and Chief Accounting Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated July 29, 2009, announcing Lincoln National Corporation’s financial results for the quarter ended June 30, 2009.
99.2	Lincoln National Corporation Statistical Supplement for the quarter ended June 30, 2009.
99.3	Lincoln National Corporation General Account Supplement as of June 30, 2009.

EX-99.2

Lincoln Financial Group
Table of Contents
Second Quarter
2009
LFG Analyst Coverage	i
Notes	ii-iii
Financial Highlights	1 - 3
Consolidated Operating Expense Detail	4
Results Summary	5
Details Underlying Realized Loss, After-DAC	6
Consolidated Statements of Income	7
Consolidating Statements of Income from Operations - Current Year - Quarter	8
Consolidating Statements of Income from Operations - Prior Year - Quarter	9
Consolidating Statements of Income from Operations - Current Year - Year-to-Date	10
Consolidating Statements of Income from Operations - Prior Year - Year-to-Date	11
Consolidated Balance Sheets	12
Balance Sheet Data - Segment Highlights	13
Retirement Solutions
Annuities:
Income Statements and Operational Data	14
Roll Forwards of DAC, VOBA, DFEL and DSI	15
Account Value Roll Forward	16
Account Values, Spread Information, GLB Expense Assessments,
GLB Attributed Fee and GLB Account Values by Type	17
Defined Contribution:
Income Statements and Operational Data	18
Account Value Roll Forward	19
Account Value Roll Forward - By Product and Supplemental Data	20
Insurance Solutions
Life Insurance:
Income Statements and Operational Data	21
Operational Data and Account Value Roll Forward	22
Group Protection:
Income Statements and Operational Data	23
Investment Management
Income Statements and Operational Data	24
Assets Under Management Roll Forward	25-26
Other Operations	27
Discontinued Operations	27
Consolidated Domestic Deposits, Account Balances, and Net Flows	28
Consolidated Investment Data
Assets Managed	29
Other Investment Data	30

6/30/2009
LFG Analyst Coverage
Second Quarter, 2009
FIRM		ANALYST	PHONE NUMBER
Bank of America - Merrill Lynch		Ed Spehar	212-449-4245
Barclays Capital		Eric Berg	212-526-2805
Bernstein		Suneet Kamath	212-756-4587
Citigroup		Colin Devine	212-816-1682
Credit Suisse		Tom Gallagher	212-538-2010
Deutsche Bank		Darin Arita	212-250-7321
Dowling & Partners		Sean Rourke	860-676-8600
Fox-Pitt Kelton Cochran Caronia Waller		Mark Finkelstein	312-425-4079
Goldman Sachs & Company		Christopher Neczypor	212-357-8512
JP Morgan		Jimmy Bhullar	212-622-6397
Keefe, Bruyette & Woods		Jeff Schuman	860-722-5902
Langen McAlenney		Bob Glasspiegel	860-724-1203
Morgan Stanley		Nigel Dally	212-761-4132
Raymond James & Associates		Steven Schwartz	312-612-7686
Sandler O'Neil & Partners		Edward Shields	312-281-3487
Sterne, Agee & Leach		John Nadel	212-338-4717
Wachovia Securities		John Hall	212-214-8032
Investor inquiries may be directed to:
Jim Sjoreen, Vice President, Investor Relations
Email: Jim.Sjoreen@lfg.com
Voice: (484) 583-1420
Fax: (484) 593-3962
Note: This list is provided for informational purposes only.  LFG does not endorse the analyses,
conclusions, or recommendations contained in any report issued by these or any other analysts.
**Statistical data will be available immediately after the release of earnings for each quarter through
LNC’s Investor Relations website:	http://www.LincolnFinancial.com/investor

6/30/2009		ii
NOTES
Definitions and Presentation
"Income (loss) from operations," "operating revenues" and "return on capital" are non-GAAP financial measures and do not replace GAAP revenues,
net income (loss) and return on stockholders' equity.  Detailed reconciliations of these non-GAAP financial measures to the most directly
comparable GAAP financial measure are included in this statistical supplement.
*	We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at income (loss) from operations:
	*    Realized gains and losses associated with the following ("excluded realized gain (loss)"):
	*    Sale or disposal of securities;
	*    Impairments of securities;
	*    Change in the fair value of embedded derivatives within certain reinsurance arrangements and the change in the fair
	value of related trading securities;
	*    Change in the fair value of the embedded derivatives of our guaranteed living benefits within our variable annuities
	("GLB") net of the change in the fair value of the derivatives we own to hedge the changes in the embedded derivative
	("GLB net derivatives results");
	*    Net difference between the benefit ratio unlocking of SOP 03-1 reserves on our guaranteed death benefit ("GDB")
	riders within our variable annuities and the change in the fair value of the derivatives excluding our expected cost of the
	hedging instruments ("GDB derivatives results"); and
	*    Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the
	future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products as
	required under SFAS 133 and SFAS 157 ("indexed annuity forward-starting option");
	*    Income (loss) from the initial adoption of changes in accounting principles;
	*    Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance;
	*    Gains (losses) on early retirement of debt, including subordinated debt;
	*    Losses from the impairment of intangible assets; and
	*    Income (loss) from discontinued operations.
*	Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:
	*    Excluded realized gain (loss);
	*    Amortization of deferred gains arising from the reserve changes on business sold through reinsurance; and
	*    Revenue adjustments from the initial impact of the adoption of changes in accounting principles.
*	Return on capital measures the effectiveness of our use of total capital, which includes equity (excluding accumulated other
	comprehensive income), debt, capital securities and junior subordinated debentures issued to affiliated trusts.  Return on capital is
	calculated by dividing annualized income (loss) from operations (after adding back interest expense) by average capital.  The difference
	between return on capital and return on stockholders' equity represents the effect of leveraging on our consolidated results.
Income (loss) from operations, operating revenues and return on capital are financial measures we use to evaluate and assess our results.  Our
management and Board of Directors believe that these performance measures explain the results of our ongoing businesses in a manner that
allows for a better understanding of the underlying trends in our current business because the excluded items are unpredictable and not
necessarily indicative of current operating fundamentals or future performance of the business segments, and, in most instances, decisions
regarding these items do not necessarily relate to the operations of the individual segments.
*	Certain operating and statistical measures are included in this report to provide supplemental data regarding the performance of our
	current business.  These measures include deposits, sales, net flows, first-year premiums, in force, spreads and assets under
	management.
*	Sales as reported consist of the following:
	*    Universal life ("UL") (excluding linked-benefit products) and variable universal life ("VUL"), including corporate-owned life
	insurance ("COLI") and bank-owned life insurance ("BOLI") - first year commissionable premiums plus 5% of excess premiums
	received, including an adjustment for internal replacements at approximately 50% of target;
	*    Whole life and term - 100% of first year paid premiums;
	*    Linked-benefit - 15% of premium deposits;
	*    Annuities - deposits from new and existing customers;
	*    Group Protection - annualized first year premiums from new policies; and
	*    Investment Management retail sales and institutional inflows - contributions, transfer in kind purchases
	and reinvested dividends for new and existing accounts.

		iii
Our roll forwards of deferred acquisition costs ("DAC") and value of business acquired ("VOBA"), deferred sales inducements ("DSI") and deferred
front-end loads ("DFEL") disclose the net impact of prospective and retrospective unlocking on amortization for these accounts.  This information
helps explain a source of volatility in amortization.
*	Prospective unlocking - In the third quarter of each year, we review and update our assumptions used in projecting our future estimated
	gross profits ("EGPs") used to amortize DAC, VOBA, DFEL, DSI and the calculations of embedded derivatives and reserves for
	annuity and life insurance products with certain guarantees.  We may also have prospective unlocking if we experience long-term
	or significant deviations from expected equity market returns requiring a change to best estimate projections of EGPs and reversion
	to the mean ("RTM") prospective unlocking of DAC, VOBA, DFEL, DSI and other contract holder funds.  These updates to assumptions
	result in unlocking that represent an increase or decrease to our carrying value of DAC, VOBA, DFEL, DSI and other contract holder
	funds based upon our updated view of future EGPs.  The various assumptions that are reviewed include investment margins, mortality,
	retention and rider utilization.  In addition, in the third quarter of each year during our annual prospective unlocking review, we may
	identify and implement actuarial modeling refinements which can result in prospective and retrospective unlocking impacts that impact
	DAC, VOBA, DSI, DFEL and SOP 03-1, SFAS 133 and SFAS 157 reserves.
*	Retrospective unlocking - On a quarterly basis, we “true-up” our models for actual gross profits and in-force experience for the period.
	To the extent that actual experience differs from previously expected, a positive or negative retrospective adjustment to the
	amortization of DAC, VOBA, DSI and DFEL is recorded.  This update to the models may generate a change in the amortization rate
	which results in a catch-up to the cumulative amortization, by recalculating the DAC, VOBA, DSI and DFEL balances assuming that
	the revised amortization rate had been used since issue.
Book value per share excluding accumulated other comprehensive income ("AOCI") is calculated based upon a non-GAAP financial measure. It is
calculated by dividing (a) stockholders' equity excluding AOCI, by (b) common shares outstanding. We provide book value per share excluding
AOCI to enable investors to analyze the amount of our net worth that is primarily attributable to our business operations. We believe book value
per share excluding AOCI is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period,
primarily based on changes in interest rates.  Book value per share is the most directly comparable GAAP measure.
Pre-tax operating margin is calculated as income (loss) from operations before federal income taxes divided by operating revenues.  After-tax operating
margin is calculated as income (loss) from operations divided by operating revenues.
Inter-segment transfer refers to a transfer from Retirement Solutions - Annuities to Retirement Solutions - Defined Contribution.
Reclassifications
In addition to the items discussed above, certain amounts reported in prior periods have been reclassed to the presentation adopted in the current period.
These reclassifications had no effect on net income, income from operations or stockholders' equity in the prior period.

 

6/30/2009																						PAGE 1
Financial Highlights
Unaudited (in millions, except per share data)
	For the Three Months Ended June 30,												For the Six Months Ended June 30,
							Change												Change
	2009			2008			Amount			%			2009			2008			Amount			%
Income from Operations - By Segment
Annuities	$	65.4		$	116.2		$	(50.8	)		-43.7	%	$	139.3		$	234.0		$	(94.7	)		-40.5	%
Defined Contribution		27.7			41.2			(13.5	)		-32.8	%		57.5			81.6			(24.1	)		-29.5	%
Total Retirement Solutions		93.1			157.4			(64.3	)		-40.9	%		196.8			315.6			(118.8	)		-37.6	%
Life Insurance		132.9			163.6			(30.7	)		-18.8	%		275.1			320.9			(45.8	)		-14.3	%
Group Protection		33.6			32.2			1.4			4.3	%		59.3			58.5			0.8			1.4	%
Total Insurance Solutions		166.5			195.8			(29.3	)		-15.0	%		334.4			379.4			(45.0	)		-11.9	%
Investment Management		5.1			15.0			(9.9	)		-66.0	%		6.5			27.1			(20.6	)		-76.0	%
Other Operations		(52.3	)		(44.8	)		(7.5	)		-16.7	%		(160.8	)		(87.4	)		(73.4	)		-84.0	%
Income from Operations (1)		212.4			323.4			(111.0	)		-34.3	%		376.9			634.7			(257.8	)		-40.6	%
Excluded realized loss, after-tax  (2)		(214.5	)		(73.2	)		(141.3	)	NM				(401.5	)		(102.6	)		(298.9	)	NM
Income from reserve changes (net of related amortization) on business sold through  reinsurance, after-tax		0.4			0.4			-			-			0.8			0.8			-			-
Gain on early extinguishment of   debt, after-tax		-			-			-		NM				41.8			-			41.8		NM
Impairment of intangibles, after-tax		0.6			(139.0	)		139.6			100.4	%		(602.9	)		(139.0	)		(463.9	)	NM
Income (loss) from discontinued operations, after-tax (3)		(160.3	)		13.1			(173.4	)	NM				(155.4	)		19.9			(175.3	)	NM
Net Income (Loss)	$	(161.4	)	$	124.7		$	(286.1	)	NM			$	(740.3	)	$	413.8		$	(1,154.1	)	NM

Earnings Per Share (Diluted) (4)
Income from operations (1) (5)	$	0.81		$	1.24		$	(0.43	)		-34.7	%	$	1.45		$	2.43		$	(0.98	)		-40.3	%
Excluded realized loss, after-tax (2) (6)		(0.81	)		(0.28	)		(0.53	)	NM				(1.55	)		(0.39	)		(1.16	)	NM
Gain on early extinguishment of debt, after-tax (6)		-			-			-		NM				0.16			-			0.16		NM
Impairment of intangibles, after-tax (6)		-			(0.53	)		0.53			100.0	%		(2.33	)		(0.54	)		(1.79	)	NM
Income (loss) from discontinued operations, after-tax  (3) (6)		(0.62	)		0.05			(0.67	)	NM				(0.60	)		0.08			(0.68	)	NM
Net Income (Loss)	$	(0.62	)	$	0.48		$	(1.10	)	NM			$	(2.87	)	$	1.58		$	(4.45	)	NM

Operating Revenues - By Segment
Annuities	$	437.0		$	618.7		$	(181.7	)		-29.4	%	$	1,036.4		$	1,241.3		$	(204.9	)		-16.5	%
Defined Contribution		215.0			239.4			(24.4	)		-10.2	%		440.1			477.1			(37.0	)		-7.8	%
Total Retirement Solutions		652.0			858.1			(206.1	)		-24.0	%		1,476.5			1,718.4			(241.9	)		-14.1	%
Life Insurance		1,002.2			1,087.9			(85.7	)		-7.9	%		2,078.4			2,142.5			(64.1	)		-3.0	%
Group Protection		442.9			424.9			18.0			4.2	%		864.3			824.3			40.0			4.9	%
Total Insurance Solutions		1,445.1			1,512.8			(67.7	)		-4.5	%		2,942.7			2,966.8			(24.1	)		-0.8	%
Investment Management		91.6			124.3			(32.7	)		-26.3	%		173.5			244.6			(71.1	)		-29.1	%
Other Operations		92.5			110.1			(17.6	)		-16.0	%		175.5			228.0			(52.5	)		-23.0	%
Total Operating Revenues		2,281.2			2,605.3			(324.1	)		-12.4	%		4,768.2			5,157.8			(389.6	)		-7.6	%
Excluded realized loss, pre-tax (2)		(330.0	)		(112.8	)		(217.2	)	NM				(617.5	)		(157.8	)		(459.7	)	NM
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax		0.7			0.7			-			-			1.3			1.4			(0.1	)		-7.1	%
Total Revenues	$	1,951.9		$	2,493.2		$	(541.3	)		-21.7	%	$	4,152.0		$	5,001.4		$	(849.4	)		-17.0	%

(1) Income from operations includes restructuring charges. See page 5 for detail.

(2) See page 6 for detail.

(3) Includes discontinued operations and the loss on disposal. See Discontinued Operations on page 27 for details.

(4) The income used in the calculation of our diluted earnings per share is reduced by minority interest adjustments related to outstanding stock options under the Delaware Investments U.S., Inc. stock option incentive plan. See page 5 for detail of minority interest adjustments.

(5) As a result of income from operations in the second quarter and first six months of 2009, shares used in the earnings per share calculation represent diluted shares.

(6) As a result of the net loss in the second quarter and first six months of 2009, shares used in the earnings (loss) per share calculation represent basic shares since using diluted shares would have been anti-dilutive to the calculation. See page 3 for details.

6/30/2009																						PAGE 2
Financial Highlights (Continued)
Unaudited (billions of dollars)
Operational Data by Segment	For the Three Months Ended June 30,												For the Six Months Ended June 30,
							Change												Change
	2009			2008			Amount			%			2009			2008			Amount			%
Retirement Solutions - Annuities
Gross deposits	$	2.635		$	3.436		$	(0.801	)		-23.3	%	$	4.832		$	6.462		$	(1.630	)		-25.2	%
Net flows		1.043			1.589			(0.546	)		-34.4	%		1.473			2.770			(1.297	)		-46.8	%
Account values (gross)		64.119			73.653			(9.534	)		-12.9	%		64.119			73.653			(9.534	)		-12.9	%
Account values (net of reinsurance)		63.054			72.398			(9.344	)		-12.9	%		63.054			72.398			(9.344	)		-12.9	%
Retirement Solutions - Defined Contribution
Gross deposits (1)		1.238			1.421			(0.183	)		-12.9	%		2.813			2.972			(0.159	)		-5.3	%
Net flows		0.329			0.237			0.092			38.8	%		0.988			0.517			0.471			91.1	%
Account values - annuities		23.172			27.489			(4.317	)		-15.7	%		23.172			27.489			(4.317	)		-15.7	%
Alliance and Smart Future mutual funds		8.155			7.553			0.602			8.0	%		8.155			7.553			0.602			8.0	%
Total annuities and mutual fund account values		31.327			35.042			(3.715	)		-10.6	%		31.327			35.042			(3.715	)		-10.6	%
Insurance Solutions - Life Insurance
Sales (in millions)	$	123.7		$	165.7		$	(42.0	)		-25.3	%	$	268.9		$	339.4		$	(70.5	)		-20.8	%
Life insurance in force		527.533			537.716			(10.183	)		-1.9	%		527.533			537.716			(10.183	)		-1.9	%
Account values (net of reinsurance)		30.622			32.603			(1.981	)		-6.1	%		30.622			32.603			(1.981	)		-6.1	%
Insurance Solutions - Group Protection
Annualized sales (in millions)		59.5			64.6			(5.1	)		-7.9	%		113.8			118.7			(4.9	)		-4.1	%
Loss ratio (2)		68.2	%		70.2	%	NM			NM				69.5	%		70.6	%	NM			NM
Investment Management
Retail sales	$	2.759		$	2.596		$	0.163			6.3	%	$	5.177		$	6.091		$	(0.914	)		-15.0	%
Retail net flows		0.044			(0.937	)		0.981			104.7	%		(0.676	)		(1.592	)		0.916			57.5	%
Institutional inflows		1.108			0.910			0.198			21.8	%		3.820			2.140			1.680			78.5	%
Institutional net flows		0.029			(0.535	)		0.564			105.4	%		0.960			(1.045	)		2.005			191.9	%
Total sales and inflows		3.867			3.506			0.361			10.3	%		8.997			8.231			0.766			9.3	%
Total net flows		0.073			(1.472	)		1.545			105.0	%		0.284			(2.637	)		2.921			110.8	%
Assets under management - retail and institutional		57.867			75.691			(17.824	)		-23.5	%		57.867			75.691			(17.824	)		-23.5	%
Assets under management - general account		68.814			65.997			2.817			4.3	%		68.814			65.997			2.817			4.3	%
Assets under management - total segment		126.681			141.688			(15.007	)		-10.6	%		126.681			141.688			(15.007	)		-10.6	%
Consolidated
Domestic retail deposits	$	6.731		$	7.739		$	(1.008	)		-13.0	%	$	13.227		$	15.449		$	(2.222	)		-14.4	%
Domestic retail account balances		147.927			172.925			(24.998	)		-14.5	%		147.927			172.925			(24.998	)		-14.5	%
Domestic retail net flows		2.001			1.491			0.510			34.2	%		2.926			2.849			0.077			2.7	%
Domestic deposits		7.748			8.615			(0.867	)		-10.1	%		16.866			17.463			(0.597	)		-3.4	%
Domestic net flows		2.072			1.008			1.064			105.6	%		3.986			1.886			2.100			111.3	%
Assets under management		180.774			211.488			(30.714	)		-14.5	%		180.774			211.488			(30.714	)		-14.5	%

(1) Includes deposits for mutual funds. Mutual fund account values are not included in the separate accounts reported on our Consolidated Balance Sheets, as we do not have any

ownership interest in them.

(2) Represents combined loss ratio for life, disability and dental businesses.

6/30/2009																						PAGE 3
Financial Highlights (Continued)
Unaudited (millions of dollars)
	For the Three Months Ended June 30,												For the Six Months Ended June 30,
							Change												Change
	2009			2008			Amount			%			2009			2008			Amount			%
Balance Sheet Assets - End-of-Period	$	167,044.4		$	184,281.2		$	(17,236.8	)		-9.4	%	$	167,044.4		$	184,281.2		$	(17,236.8	)		-9.4	%
Stockholders' Equity
Beginning-of-period (including AOCI)	$	7,323.5		$	11,086.3		$	(3,762.8	)		-33.9	%	$	7,976.7		$	11,718.4		$	(3,741.7	)		-31.9	%
End-of-period (including AOCI)		9,074.9			10,497.7			(1,422.8	)		-13.6	%		9,074.9			10,497.7			(1,422.8	)		-13.6	%
End-of-period (excluding AOCI)		10,782.3			11,306.0			(523.7	)		-4.6	%		10,782.3			11,306.0			(523.7	)		-4.6	%
Average equity (excluding AOCI)		10,540.5			11,357.0			(816.5	)		-7.2	%		10,540.0			11,403.8			(863.8	)		-7.6	%
Return on Equity
Net income (loss)/average equity (excluding AOCI)		-6.1	%		4.4	%								-14.0	%		7.3	%
Income from operations/average equity (excluding AOCI)		8.1	%		11.4	%								7.2	%		11.1	%
Return on Capital
Income (loss) from operations/average capital		6.3	%		8.9	%								5.7	%		8.8	%
Common Stock Outstanding
Average for the period - diluted (1)		260.1			259.6			0.5			0.2	%		257.8			261.2			(3.4	)		-1.3	%
End-of-period - assuming conversion of preferreds		302.3			257.0			45.3			17.6	%		302.3			257.0			45.3			17.6	%
End-of-period - diluted (1)		304.2			257.8			46.4			18.0	%		304.2			257.8			46.4			18.0	%
Book value (including AOCI)	$	30.02		$	40.85		$	(10.83	)		-26.5	%	$	30.02		$	40.85		$	(10.83	)		-26.5	%
Book value (excluding AOCI)		35.67			43.99			(8.32	)		-18.9	%		35.67			43.99			(8.32	)		-18.9	%
Cash Returned to Shareholders
Share repurchase - dollar amount	$	-		$	139.8		$	(139.8	)		-100.0	%	$	-		$	425.5		$	(425.5	)		-100.0	%
Dividends declared		3.0			106.6			(103.6	)		-97.2	%		5.6			214.2			(208.6	)		-97.4	%
Total Cash Returned to Shareholders	$	3.0		$	246.4		$	(243.4	)		-98.8	%	$	5.6		$	639.7		$	(634.1	)		-99.1	%
Stock issuance - number of shares		46.0			0			46.00		NM				46.0			-			46.00		NM
Share repurchase - number of shares		-			2.631			(2.63	)		-100.0	%		-			8.08			(8.08	)		-100.0	%
Dividend declared on common stock - per share	$	0.010		$	0.415		$	(0.405	)		-97.6	%	$	0.020		$	0.830		$	(0.810	)		-97.6	%
Dividend payout ratio (2)		-1.6	%		86.5	%								-0.7	%		52.5	%
Annualized yield (3)		0.2	%		3.7	%								0.2	%		3.7	%
Comprehensive Income (Loss)
Net income (loss)	$	(161.4	)	$	124.7		$	(286.1	)	NM			$	(740.3	)	$	413.8		$	(1,154.1	)	NM
Net unrealized gain (loss) on available-for-sale securities		1,250.8			(487.2	)		1,738.0		NM				1,205.7			(1,025.3	)		2,231.0			217.6	%
Unrealized other-than-temporary impairment on available-for-sale securities		(42.5	)		-			(42.5	)	NM				(198.9	)		-			(198.9	)	NM
Net unrealized gain on derivative instruments		(4.1	)		(2.6	)		(1.5	)		-57.7	%		(73.4	)		(10.9	)		(62.5	)	NM
Foreign currency translation adjustment		68.3			2.8			65.5		NM				85.3			1.6			83.7		NM
Funded status of employee benefit plans		(4.7	)		0.4			(5.1	)	NM				(3.7	)		1.0			(4.7	)	NM
Comprehensive Income (Loss)	$	1,106.4		$	(361.9	)	$	1,468.3		NM			$	274.7		$	(619.8	)	$	894.5			144.3	%
Ratios
Debt to total capitalization (4)		23.9	%		21.7	%								23.9	%		21.7	%
Debt to equity (4)		31.5	%		27.6	%								31.5	%		27.6	%
	Ratings as of July 29, 2009
										Standard &
	A.M. Best			Fitch			Moody's			Poor's
Senior Debt Ratings		a-		BBB			Baa2				A-
Financial Strength Ratings
Lincoln National Life Insurance Company		A+			A	+		A2		AA-
First Penn-Pacific Life Insurance Company		A+			A	+		A2			A+
Lincoln Life & Annuity Company of New York		A+			A	+		A2		AA-

(1) As a result of the net loss in the second quarter and first six months of 2009, shares used represent basic shares, since using diluted shares would have been anti-dilutive to the calculation. In the absence of the net loss, weighted average diluted shares for the second quarter and first six months of 2009 would have totaled 262.4 million and 260.1 million, respectively.

(2) Indicated dividend divided by net income (loss) per share.

(3)  Indicated dividend divided by the closing price.

(4) Equity used in calculation excludes AOCI and $375 million of senior notes issued in October of 2007 because the proceeds were reinvested in a pool of long-term assets. Capital securities are considered 25% debt and 75% equity.

6/30/2009																									PAGE 4
Consolidated Operating Expense Detail
Unaudited (in millions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Commissions	$	429.8		$	430.8		$	405.5		$	361.8		$	359.9			-16.3	%	$	852.7		$	721.7			-15.4	%
General and Administrative Expenses
General and administrative expenses		379.6			377.8			411.9			357.6			365.1			-3.8	%		756.8			722.7			-4.5	%
Merger-related expenses		14.9			12.6			8.1			6.7			4.4			-70.5	%		28.7			11.1			-61.3	%
Total General and Administrative Expenses Excluding Broker-Dealer		394.5			390.4			420.0			364.3			369.5			-6.3	%		785.5			733.8			-6.6	%
Communications expenses		15.4			14.1			14.8			12.9			13.5			-12.3	%		30.9			26.4			-14.6	%
Restructuring charges associated with merger-related cost saving initiatives		1.2			0.4			0.1			-			-			-100.0	%		2.1			-			-100.0	%
Restructuring charges for expense initiatives		-			-			8.0			5.1			28.6		NM				-			33.7		NM
Taxes, licenses and fees		52.3			60.3			49.0			57.4			46.2			-11.7	%		114.6			103.6			-9.6	%
Interest and debt expense		64.8			68.6			72.3			64.7			60.9			-6.0	%		140.2			125.6			-10.4	%
TotalCommissions and Expenses Incurred		958.0			964.6			969.7			866.2			878.6			-8.3	%		1,926.0			1,744.8			-9.4	%
Less: Commissions and Expenses Capitalized		(464.0	)		(463.5	)		(470.4	)		(383.5	)		(385.4	)		16.9	%		(920.0	)		(768.9	)		16.4	%
Amortization
Amortization of DAC and VOBA, net of interest		295.1			207.3			644.1			222.2			249.5			-15.5	%		538.8			471.7			-12.5	%
Amortization of intangibles		1.6			1.4			1.4			1.1			1.1			-31.3	%		3.2			2.2			-31.3	%
Total Amortization		296.7			208.7			645.5			223.3			250.6			-15.5	%		542.0			473.9			-12.6	%
Broker-Dealer Commissions and G&A		85.1			78.5			73.3			64.1			69.2			-18.7	%		174.3			133.2			-23.6	%
Total	$	875.8		$	788.3		$	1,218.1		$	770.1		$	813.0			-7.2	%	$	1,722.3		$	1,583.0			-8.1	%
Merger-Related Expenses (1)
Severance and employee-related charges	$	2.5		$	1.2		$	1.7		$	0.7		$	0.6			-76.0	%	$	5.6		$	1.3			-76.8	%
Systems integration and related expenses		12.0			9.6			7.5			5.1			2.6			-78.3	%		21.3			7.7			-63.8	%
Other expenses		1.6			2.2			(1.0	)		0.9			1.2			-25.0	%		3.9			2.1			-46.2	%
Total Merger-Related Expenses	$	16.1		$	13.0		$	8.2		$	6.7		$	4.4			-72.7	%	$	30.8		$	11.1			-64.0	%

(1) Represents merger-related expenses included in general and administrative expenses and restructuring charges.

6/30/2009																						PAGE 5
Results Summary
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Annuities	$	618.7		$	675.2		$	693.7		$	599.4		$	437.0			-29.4	%	$	1,241.3		$	1,036.4			-16.5	%
Defined Contribution		239.4			240.8			217.9			225.1			215.0			-10.2	%		477.1			440.1			-7.8	%
Total Retirement Solutions		858.1			916.0			911.6			824.5			652.0			-24.0	%		1,718.4			1,476.5			-14.1	%
Life Insurance		1,087.9			1,073.8			1,042.8			1,076.2			1,002.2			-7.9	%		2,142.5			2,078.4			-3.0	%
Group Protection		424.9			402.8			412.5			421.4			442.9			4.2	%		824.3			864.3			4.9	%
Total Insurance Solutions		1,512.8			1,476.6			1,455.3			1,497.6			1,445.1			-4.5	%		2,966.8			2,942.7			-0.8	%
Investment Management		124.3			109.9			83.2			81.9			91.6			-26.3	%		244.6			173.5			-29.1	%
Other Operations		110.1			111.8			98.6			83.0			92.5			-16.0	%		228.0			175.5			-23.0	%
Total Operating Revenues		2,605.3			2,614.3			2,548.7			2,487.0			2,281.2			-12.4	%		5,157.8			4,768.2			-7.6	%
Excluded realized loss, pre-tax (1)		(112.8	)		(257.3	)		(334.3	)		(287.5	)		(330.0	)	NM				(157.8	)		(617.5	)	NM
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax		0.7			0.6			0.7			0.6			0.7			0.0	%		1.4			1.3			-7.1	%
Total Revenues	$	2,493.2		$	2,357.6		$	2,215.1		$	2,200.1		$	1,951.9			-21.7	%	$	5,001.4		$	4,152.0			-17.0	%
Income (Loss) from Operations
Annuities	$	116.2		$	130.9		$	(171.7	)	$	73.9		$	65.4			-43.7	%	$	234.0		$	139.3			-40.5	%
Defined Contribution		41.2			42.3			(1.1	)		29.8			27.7			-32.8	%		81.6			57.5			-29.5	%
Total Retirement Solutions		157.4			173.2			(172.8	)		103.7			93.1			-40.9	%		315.6			196.8			-37.6	%
Life Insurance		163.6			137.3			82.5			142.2			132.9			-18.8	%		320.9			275.1			-14.3	%
Group Protection		32.2			27.2			18.4			25.7			33.6			4.3	%		58.5			59.3			1.4	%
Total Insurance Solutions		195.8			164.5			100.9			167.9			166.5			-15.0	%		379.4			334.4			-11.9	%
Investment Management		15.0			5.3			(4.3	)		1.4			5.1			-66.0	%		27.1			6.5			-76.0	%
Other Operations		(44.8	)		(39.9	)		(55.2	)		(108.5	)		(52.3	)		-16.7	%		(87.4	)		(160.8	)		-84.0	%
Income (Loss) from Operations		323.4			303.1			(131.4	)		164.5			212.4			-34.3	%		634.7			376.9			-40.6	%
Excluded realized loss, after-tax (1)		(73.2	)		(167.3	)		(217.3	)		(187.0	)		(214.5	)	NM				(102.6	)		(401.5	)	NM
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax		0.4			0.4			0.4			0.4			0.4			0.0	%		0.8			0.8			0.0	%
Gain on early extinguishment of debt, after-tax		-			-			-			41.8			-		NM				-			41.8		NM
Impairment of intangibles, after-tax		(139.0	)		-			(157.7	)		(603.5	)		0.6			100.4	%		(139.0	)		(602.9	)	NM
Income (loss) from discontinued operations, after-tax (2)		13.1			12.2			0.5			4.9			(160.3	)	NM				19.9			(155.4	)	NM
Net Income (Loss)	$	124.7		$	148.4		$	(505.5	)	$	(578.9	)	$	(161.4	)	NM			$	413.8		$	(740.3	)	NM

	For the Three Months Ended															For the Six Months Ended
	June			Sept.			Dec.			March			June			June			June
		2008			2008			2008			2009			2009			2008			2009
Stockholders' Equity
Beginning-of-period (including AOCI)	$	11,086.3		$	10,497.7		$	9,500.1		$	7,976.8		$	7,323.5		$	11,718.4		$	7,976.7
End-of-period (including AOCI)		10,497.7			9,500.1			7,976.8			7,323.5			9,074.9			10,497.7			9,074.9
End-of-period (excluding AOCI)		11,306.0			11,310.4			10,780.3			10,298.6			10,782.3			11,306.0			10,782.3
Average equity (excluding AOCI)		11,357.0			11,308.2			11,045.3			10,539.5			10,540.5			11,403.8			10,540.0
Minority Interest Adjustment  (3)	$	0.2		$	0.1		$	-		$	0.1		$	-		$	0.5		$	0.1
Restructuring Charges, After-Tax	$	0.8		$	0.3		$	5.3		$	3.3		$	18.6		$	1.4		$	21.9
Common Shares Outstanding
Average for the period - diluted - income from operations (4)		259.6			257.6			255.4			257.8			262.4			259.6			260.1
Average for the period - diluted - net income (5)		259.6			257.6			255.4			255.6			260.1			261.2			257.8
End-of-period - diluted (4)		257.8			256.9			257.7			258.1			304.2			257.8			304.2
Per Share Data (Diluted) (3)
Net income (loss) (5)	$	0.48		$	0.58		$	(1.98	)	$	(2.27	)	$	(0.62	)	$	1.58		$	(2.87	)
Income (loss) from operations (4)		1.24			1.18			(0.51	)		0.63			0.81			2.43			1.45
Restructuring charges		0.00			0.00			0.02			0.01			0.07			0.01			0.08
Stockholders' Equity Per Share
Stockholders' equity (including AOCI)	$	40.85		$	37.11		$	31.15		$	28.59		$	30.02		$	40.85		$	30.02
Stockholders' equity (excluding AOCI)		43.99			44.18			42.09			40.20			35.67			43.99			35.67
Dividends declared (common stock)		0.415			0.415			0.210			0.010			0.010			0.830			0.020
Return on Equity
Net income (loss)/average equity		4.4	%		5.2	%		-18.3	%		-22.0	%		-6.1	%		7.3	%		-14.0	%
Income (loss) from operations/average equity		11.4	%		10.7	%		-4.8	%		6.2	%		8.1	%		11.1	%		7.2	%
Market Value of Common Stock
Highest price	$	56.80		$	59.99		$	45.50		$	25.59		$	19.99		$	58.11		$	25.59
Lowest price		45.18			39.83			4.76			4.90			5.52			45.18			4.90
Closing price		45.32			42.81			18.84			6.69			17.21			45.32			17.21

(1)  See page 6 for detail.

(2) Includes discontinued operations and the loss on disposition. See Discontinued Operations on page 27 for details.

(3) The income used in the calculation of our diluted earnings per share is reduced by minority interest adjustments related to outstanding stock options under the Delaware Investments U.S., Inc. stock option incentive plan.

(4) As a result of income from operations in the second quarter and the first six months of 2009, shares used represent diluted shares.

(5) As a result of the net loss in the second and first quarter of 2009 and fourth quarter of 2008, shares used represent basic shares, since using diluted shares would have been anti-dilutive to the calculation. In the absence of the net loss, weighted average diluted shares for the second and first quarter of 2009 and fourth quarter of 2008 would have totaled 262.4 million, 257.8 million and 257.6 million, respectively.

6/30/2009													PAGE 6
Details Underlying Realized Loss, After-DAC (1)
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Pre-Tax
Operating realized gain (loss) (2):
Indexed annuity net derivatives results (3)	$	(0.6	)	$	2.0		$	(0.5	)	$	(0.2	)	$	0.2			133.3	%	$	(2.0	)	$	-			100.0	%
GLB (4)		10.4			10.9			11.1			16.3			2.9			-72.1	%		16.2			19.2			18.5	%
GDB (5)		2.6			39.4			136.9			80.7			(113.4	)	NM				8.5			(32.7	)	NM
Total operating realized gain (loss)		12.4			52.3			147.5			96.8			(110.3	)	NM				22.7			(13.5	)	NM
Realized loss related to certain investments (6)		(117.1	)		(314.6	)		(566.7	)		(150.1	)		(158.3	)		-35.2	%		(157.9	)		(308.4	)		-95.3	%
Gain (loss) on certain reinsurance derivative/trading securities (7)		1.5			(1.8	)		3.4			21.7			(9.4	)	NM				1.9			12.3		NM
GLB net derivatives results (8)		1.4			88.7			314.5			(130.3	)		(141.1	)	NM				(5.3	)		(271.4	)	NM
GDB derivatives results(5)		(2.5	)		(33.4	)		(86.3	)		(31.6	)		(27.8	)	NM				(7.7	)		(59.4	)	NM
Indexed annuity forward-starting option (9)		2.1			1.6			(1.4	)		0.6			3.4			61.9	%		6.9			4.0			-42.0	%
Gain on sale of subsidiaries/businesses		1.8			2.2			2.2			2.2			3.2			77.8	%		4.3			5.4			25.6	%
Total excluded realized loss		(112.8	)		(257.3	)		(334.3	)		(287.5	)		(330.0	)	NM				(157.8	)		(617.5	)	NM
Total Realized Loss	$	(100.4	)	$	(205.0	)	$	(186.8	)	$	(190.7	)	$	(440.3	)	NM			$	(135.1	)	$	(631.0	)	NM
After-Tax
Operating realized gain (loss) (2):
Indexed annuity net derivatives results (3)	$	(0.4	)	$	1.3		$	(0.3	)	$	(0.1	)	$	0.1			125.00	%	$	(1.3	)	$	-			100.0	%
GLB (4)		6.8			7.1			7.2			10.6			1.9			-72.1	%		10.5			12.5			19.0	%
GDB (5)		1.7			25.6			89.0			52.5			(73.7	)	NM				5.5			(21.2	)	NM
Total operating realized gain (loss)		8.1			34.0			95.9			63.0			(71.7	)	NM				14.7			(8.7	)	NM
Realized loss related to certain investments (6)		(75.6	)		(204.5	)		(368.3	)		(97.6	)		(102.9	)		-36.1	%		(102.6	)		(200.5	)		-95.4	%
Gain (loss) on certain reinsurance derivative/trading securities (7)		0.6			(1.2	)		2.2			14.1			(6.1	)	NM				1.2			8.0		NM
GLB net derivatives results (8)		0.9			57.6			204.4			(84.8	)		(91.7	)	NM				(3.3	)		(176.5	)	NM
GDB derivatives results (5)		(1.6	)		(21.6	)		(56.1	)		(20.5	)		(18.1	)	NM				(5.0	)		(38.6	)	NM
Indexed annuity forward-starting option (9)		1.4			1.0			(0.9	)		0.4			2.2			57.1	%		4.5			2.6			-42.2	%
Gain on sale of subsidiaries/businesses		1.1			1.4			1.4			1.4			2.1			90.9	%		2.6			3.5			34.6	%
Total excluded realized loss		(73.2	)		(167.3	)		(217.3	)		(187.0	)		(214.5	)	NM				(102.6	)		(401.5	)	NM
Total Realized Loss	$	(65.1	)	$	(133.3	)	$	(121.4	)	$	(124.0	)	$	(286.2	)	NM			$	(87.9	)	$	(410.2	)	NM
Components of GLB Net Derivatives Results
Net valuation premium, net of reinsurance (10)	$	19.2		$	21.4		$	22.3		$	22.2		$	27.4			42.7	%	$	36.2		$	49.6			37.0	%
Change in reserves hedged (10):
Unlocking		-			79.6			84.3			-			-		NM				-			-		NM
Other		213.4			(650.9	)		(2,553.5	)		233.2			1,977.7		NM				(161.5	)		2,210.9		NM
Change in market value of derivative assets (10)		(245.8	)		318.4			2,989.0			(297.9	)		(1,846.3	)	NM				69.3			(2,144.2	)	NM
Hedge program ineffectiveness (10)		(32.4	)		(252.9	)		519.8			(64.7	)		131.4		NM				(92.2	)		66.7			172.3	%
Change in reserves not hedged (NPR component)(10)		16.4			372.0			55.3			(55.4	)		(333.0	)	NM				109.0			(388.4	)	NM
Change in derivative assets not hedged (NPR component)		-			-			(19.9	)		(11.9	)		17.0		NM				-			5.1		NM
Change in SOP 03-1 reserve not hedged		-			-			-			(6.3	)		12.7		NM				-			6.4		NM
Associated amortization expense of DAC, VOBA, DSI and DFEL:
Unlocking		(0.6	)		(100.7	)		297.7			(61.0	)		(80.6	)	NM				9.9			(141.6	)	NM
Other amortization		(1.2	)		48.9			(560.7	)		46.8			84.0		NM				(34.7	)		130.8		NM
Loss from the initial impact of adopting SFAS 157, after-DAC		-			-			-			-			-		NM				(33.5	)		-			100.0	%
GLB Net Derivatives Results (8)	$	1.4		$	88.7		$	314.5		$	(130.3	)	$	(141.1	)	NM			$	(5.3	)	$	(271.4	)	NM

(1)  DAC refers to the associated amortization expense of DAC, VOBA, DSI and DFEL and changes in other contract holder funds and funds withheld reinsurance liabilities.

(2)   We exclude from our definitions of income (loss) from operations and operating revenues any realized gains (losses) that are not necessarily indicative of current operating fundamentals or future performance of the business segments, and in many instances, decisions regarding these items do not necessarily relate to the operations of the individual segments.

(3)  Represents the net difference between the change in the fair value of the S&P 500 Index® call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity products.  The change in the fair value of the liability for the embedded derivative represents the amount that is credited to the indexed annuity contract.

(4)In bifurcating the embedded derivative for our GLBs, we attribute to the embedded derivative the portion of total fees collected from the contract holder  that relates to the GLB riders (the “attributed fees”).  These attributed fees represent the present value of future claims expected to be paid for the GLB at the inception of the contract (the “net valuation premium”) plus a margin that a theoretical market participant would include for risk/profit (the “risk/profit margin”).  We include the risk/profit margin portion of the GLB attributed rider fees as well as the benefit ratio unlocking of our SOP 03-1 reserves on GLB riders including expected cost of the hedging instruments in operating realized gain and include the net valuation premium of the GLB attributed rider fees in excluded realized gain (loss).  For our Retirement Solutions – Annuities and Retirement Solutions –  Defined Contribution segments, the excess total fees collected from the contract holders over the GLB attributed rider fees is reported in insurance fees.

(5)   Represents the change in the fair value of the derivatives that offsets the benefit ratio unlocking of our SOP 03-1 reserves on our GDB riders, including our expected cost of the hedging instruments.  These changes in reserves attributable to Retirement Solutions’ benefit ratio unlocking of its SOP 03-1 reserves for GDB riders and associated amortization of DAC, VOBA, DSI and DFEL is offset in benefits within income from operations.  This approach (as well as the one in (4) above) excludes the benefit ratio unlocking from income from operations according to our definition of income from operations and instead reflects it within GDB derivatives results, a component of excluded realized gain (loss).  On our Consolidated Statements of Income, the benefit ratio unlocking is reported within benefits.

(6)   See page 30 for detail.

(7)  Represents changes in the fair values of total return swaps (embedded derivatives) theoretically included in our various modified coinsurance and coinsurance with funds withheld reinsurance arrangements that have contractual returns related to various assets and liabilities associated with these arrangements.  Changes in the fair value of these derivatives are offset by the change in fair value of trading securities in the portfolios that support these arrangements.

(8) Represents the net valuation premium, the change in the fair value of the embedded derivative liabilities of our GLB products and the change in the fair value of the derivative instruments we own to hedge. This includes the cost of purchasing the hedging instruments.  Refer to the table above titled "Components of GLB Net Derivatives Results" for a detailed breakout of the GLB net derivatives results line item.

(9)  Represents changes in the fair value of embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products as required under SFAS 133 and SFAS 157.  These fair values represent an estimate of the cost of the options we will purchase in the future, discounted back to the date of the balance sheet, using current market indications of volatility and interest rates, which can vary significantly from period to period due to a number of factors and therefore can provide results that are not indicative of the underlying trends.

(10)  Amounts are before the associated amortization expense of DAC, VOBA, DSI and DFEL.

           

6/30/2009																						PAGE 7
Consolidated Statements of Income
Unaudited (in millions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Revenues
Insurance premiums	$	503.3		$	514.3		$	510.5		$	508.2		$	541.8			7.6	%	$	993.1		$	1,050.0			5.7	%
Surrender charges		27.8			32.4			33.0			31.8			36.8			32.4	%		56.6			68.6			21.2	%
Mortality assessments		327.9			331.7			339.2			344.1			320.0			-2.4	%		649.6			664.1			2.2	%
Expense assessments		436.8			389.8			381.2			328.2			332.1			-24.0	%		853.9			660.3			-22.7	%
Investment advisory fees		75.8			67.7			48.4			43.7			47.8			-36.9	%		152.0			91.5			-39.8	%
Net investment income		1,057.0			1,067.9			960.1			1,013.3			970.6			-8.2	%		2,102.1			1,983.9			-5.6	%
Realized loss:
Total other-than-temporary impairment losses on securities		(99.8	)		(236.9	)		(456.2	)		(210.6	)		(220.1	)	NM				(158.3	)		(430.7	)	NM
Portion of loss recognized in other comprehensive income		-			-			-			89.1			102.5		NM				-			191.6		NM
Net other-than-temporary impairment losses on securities recognized in earnings		(99.8	)		(236.9	)		(456.2	)		(121.5	)		(117.6	)		-17.8	%		(158.3	)		(239.1	)		-51.0	%
Realized gain (loss), excluding other-than-temporary impairment losses on securities		(0.6	)		31.9			269.4			(69.2	)		(322.7	)	NM				23.2			(391.9	)	NM
Total realized loss (1)		(100.4	)		(205.0	)		(186.8	)		(190.7	)		(440.3	)	NM				(135.1	)		(631.0	)	NM
Amortization of deferred gains on business sold through reinsurance		19.1			19.0			19.0			19.0			18.3			-4.2	%		38.2			37.3			-2.4	%
Other revenues and fees		145.9			139.9			110.5			102.6			124.7			-14.5	%		291.1			227.3			-21.9	%
Total Revenues		2,493.2			2,357.7			2,215.1			2,200.2			1,951.8			-21.7	%		5,001.5			4,152.0			-17.0	%
Benefits and Expenses
Interest credited		612.7			624.7			653.0			626.9			598.7			-2.3	%		1,224.4			1,225.6			0.1	%
Benefits		656.3			812.6			941.4			920.4			582.6			-11.2	%		1,304.6			1,503.0			15.2	%
Underwriting, acquisition, insurance and other expenses		805.4			719.8			1,138.8			705.5			752.2			-6.6	%		1,576.7			1,457.7			-7.5	%
Interest and debt expense		64.8			68.6			72.3			0.4			60.8			-6.2	%		140.2			61.2			-56.3	%
Impairment of intangibles		175.0			-			205.6			603.7			(0.6	)	NM				175.0			603.1			244.6	%
Total Benefits and Expenses		2,314.2			2,225.7			3,011.1			2,856.9			1,993.7			-13.8	%		4,420.9			4,850.6			9.7	%
Income (loss) from continuing operations before taxes		179.0			132.0			(796.0	)		(656.7	)		(41.9	)	NM				580.6			(698.6	)	NM
Federal income tax expense (benefit)		67.4			(4.2	)		(290.0	)		(72.9	)		(40.8	)	NM				186.7			(113.7	)	NM
Income (Loss) from Continuing Operations		111.6			136.2			(506.0	)		(583.8	)		(1.1	)	NM				393.9			(584.9	)	NM
Income (loss) from discontinued operations, net of federal income tax expense (benefit) (2)		13.1			12.2			0.5			4.9			(160.3	)	NM				19.9			(155.4	)	NM
Net Income (Loss)	$	124.7		$	148.4		$	(505.5	)	$	(578.9	)	$	(161.4	)	NM			$	413.8		$	(740.3	)	NM
Earnings (Loss) Per Share (Diluted) (3) (4)
Income (loss) from continuing operations	$	0.43		$	0.53		$	(1.98	)	$	(2.29	)	$	-			-100.0	%	$	1.50		$	(2.27	)	NM
Income (loss) from discontinued operations, net of federal income tax expense (benefit) (2)		0.05			0.05			-			0.02			(0.62	)	NM				0.08			(0.60	)	NM
Net Income (Loss)	$	0.48		$	0.58		$	(1.98	)	$	(2.27	)	$	(0.62	)	NM			$	1.58		$	(2.87	)	NM
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	9,235.1		$	9,858.1		$	10,993.3		$	11,403.3		$	11,399.4					$	8,807.7		$	11,403.3
Business sold through reinsurance		-			-			-			(292.9	)		-						-			(292.9	)
Deferrals		464.0			463.5			470.4			383.5			385.4						920.0			768.9
Amortization, net of interest:
Unlocking		(17.2	)		19.6			(557.1	)		(79.3	)		74.6						(29.4	)		(4.7	)
Other amortization		(277.9	)		(226.9	)		(87.0	)		(142.9	)		(324.1	)					(509.4	)		(467.0	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		168.9			256.2			(173.7	)		161.3			135.9						381.2			297.2
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		4.8			34.4			(142.6	)		12.8			69.4						3.3			82.2
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		449.3			844.6			726.3			114.9			(1,148.8	)					665.9			(1,033.9	)
Balance at End-of-Period	$	9,858.1		$	10,993.3		$	11,403.3		$	11,399.4		$	10,455.9					$	9,858.1		$	10,455.9
Roll Forward of DFEL
Balance at beginning-of-period	$	864.2		$	914.7		$	1,001.1		$	1,019.4		$	1,076.2					$	803.8		$	1,019.4
Business sold through reinsurance		-			-			-			(11.0	)		-						-			(11.0	)
Deferrals		103.5			109.7			114.0			107.5			112.5						204.6			220.1
Amortization, net of interest:
Unlocking		(11.6	)		14.7			(60.3	)		(10.1	)		16.0						(14.3	)		5.9
Other amortization		(40.9	)		(35.6	)		(20.1	)		(26.7	)		(43.3	)					(79.7	)		(70.0	)
Deferrals, net of amortization included in expense assessments		51.0			88.8			33.6			70.7			85.2						110.6			156.0
Adjustment related to realized gains (losses) on available-for-sale securities and derivatives		(0.5	)		(2.4	)		(15.3	)		(3.6	)		(0.8	)					0.3			(4.5	)
Adjustment related to unrealized gains (losses) on available-for-sale securities and derivatives		-			-			-			0.7			0.2						-			0.9
Balance at End-of-Period	$	914.7		$	1,001.1		$	1,019.4		$	1,076.2		$	1,160.8					$	914.7		$	1,160.8
Roll Forward of DSI
Balance at beginning-of-period	$	297.6		$	314.2		$	328.3		$	262.7		$	279.4					$	279.2		$	262.7
Deferrals		26.3			24.5			19.0			15.9			19.2						52.3			35.1
Amortization, net of interest:
Unlocking		(0.2	)		(2.7	)		(48.2	)		(5.7	)		7.4						0.3			1.7
Other amortization		(8.5	)		(5.5	)		4.6			1.1			(18.8	)					(14.7	)		(17.7	)
Deferrals, net of amortization included in insurance benefits or interest credited		17.6			16.3			(24.6	)		11.3			7.8						37.9			19.1
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		(1.0	)		(2.2	)		(41.0	)		5.2			2.6						(2.9	)		7.8
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		-			-			-			0.2			(0.7	)					-			(0.5	)
Balance at End-of-Period	$	314.2		$	328.3		$	262.7		$	279.4		$	289.1					$	314.2		$	289.1

(1)   See page 6 for detail.

(2)  Contains discontinued operations and the loss on disposition.  See Discontinued Operations on page 27 for additional details.

(3) The income used in the calculation of our diluted earnings per share is reduced by minority interest adjustments related to outstanding stock options under the Delaware Investments U.S., Inc. stock option incentive plan. See page 5 for detail of our minority interest adjustments.

(4) As a result of the net loss in the second and first quarter of 2009 and fourth quarter of 2008, shares used represent basic shares, since using diluted shares would have been anti-dilutive to the calculation.  In the absence of the net loss, weighted average diluted shares for the second and first quarter of 2009 and fourth quarter of 2008 would have totaled 262.4 million, 257.8 million and 257.6 million, respectively.

6/30/2009																	PAGE 8
Consolidating Statements of Income From Operations
Unaudited (in millions)
For the Quarter Ended June 30, 2009
	Retirement Solutions						Insurance Solutions
				Defined						Group		Investment		Other
	Annuities			Contribution			Life			Protection		Management		Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	32.5		$	-		$	93.3		$	413.3	$	-	$	2.7		$	541.8
Surrender charges		8.9			1.3			26.7			-		-		-			36.9
Mortality assessments		-			-			320.0			-		-		-			320.0
Expense assessments		185.3			43.4			103.0			-		-		-			331.7
Investment advisory fees - external		-			-			-			-		47.8		-			47.8
Investment advisory fees - inter-segment		-			-			-			-		20.0		(20.0	)		-
Net investment income		243.9			175.6			453.3			28.1		-		69.8			970.7
Operating realized loss (2)		(101.9	)		(8.4	)		-			-		-		-			(110.3	)
Amortization of deferred gain on business sold through reinsurance		-			-			(0.7	)		-		-		18.4			17.7
Other revenues and fees		68.3			3.1			6.6			1.5		23.8		21.6			124.9
Total Operating Revenues		437.0			215.0			1,002.2			442.9		91.6		92.5			2,281.2
Operating Expenses
Interest credited		164.0			112.0			290.8			0.5		-		31.4			598.7
Benefits		(57.5	)		(11.6	)		323.0			292.7		-		36.0			582.6
Underwriting, acquisition, insurance and other expenses		253.9			76.3			191.7			98.0		61.7		70.5			752.1
Expenses for investment advisory fees - inter-segment		-			-			-			-		20.0		(20.0	)		-
Interest and debt expense		-			-			-			-		-		60.9			60.9
Total Operating Expenses		360.4			176.7			805.5			391.2		81.7		178.8			1,994.3
Income (loss) from operations before federal income tax expense (benefit)		76.6			38.3			196.7			51.7		9.9		(86.3	)		286.9
Federal income tax expense (benefit)		11.2			10.6			63.8			18.1		4.8		(34.0	)		74.5
Income (Loss) from Operations	$	65.4		$	27.7		$	132.9		$	33.6	$	5.1	$	(52.3	)	$	212.4

(1) Includes inter-segment eliminations.

(2)  For detail, see pages 14 and 18.

6/30/2009														PAGE 9
Consolidating Statements of Income From Operations
Unaudited (in millions)
For the Quarter Ended June 30, 2008
	Retirement Solutions				Insurance Solutions
			Defined				Group		Investment		Other
	Annuities		Contribution		Life		Protection		Management		Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	19.0	$	-	$	89.5	$	393.0	$	-	$	1.7		$	503.2
Surrender charges		9.6		1.5		16.7		-		-		-			27.8
Mortality assessments		-		-		327.9		-		-		-			327.9
Expense assessments		247.6		59.3		129.6		-		-		-			436.5
Investment advisory fees - external		-		-		-		-		75.8		-			75.8
Investment advisory fees - inter-segment		-		-		-		-		20.6		(20.6	)		-
Net investment income		245.3		174.8		519.2		30.5		-		87.1			1,056.9
Operating realized gain (2)		12.4		-		-		-		-		-			12.4
Amortization of deferred gain on business sold through reinsurance		-		-		-		-		-		18.4			18.4
Other revenues and fees		84.8		3.8		5.0		1.4		27.9		23.5			146.4
Total Operating Revenues		618.7		239.4		1,087.9		424.9		124.3		110.1			2,605.3
Operating Expenses
Interest credited		163.0		107.0		300.6		0.3		-		41.8			612.7
Benefits		35.2		0.1		306.0		285.7		-		29.0			656.0
Underwriting, acquisition, insurance and other expenses		268.2		75.4		234.0		89.3		80.2		63.8			810.9
Expenses for investment advisory fees - inter-segment		-		-		-		-		20.6		(20.6	)		-
Interest and debt expense		-		-		-		-		-		64.8			64.8
Total Operating Expenses		466.4		182.5		840.6		375.3		100.8		178.8			2,144.4
Income (loss) from operations before federal income tax expense (benefit)		152.3		56.9		247.3		49.6		23.5		(68.7	)		460.9
Federal income tax expense (benefit)		36.1		15.7		83.7		17.4		8.5		(23.9	)		137.5
Income (Loss) from Operations	$	116.2	$	41.2	$	163.6	$	32.2	$	15.0	$	(44.8	)	$	323.4

(1) Includes inter-segment eliminations.

(2)  For detail, see page 14.

6/30/2009																	PAGE 10
Consolidating Statements of Income From Operations
Unaudited (in millions)
For the Six Months Ended June 30, 2009
	Retirement Solutions						Insurance Solutions
				Defined						Group		Investment		Other
	Annuities			Contribution			Life			Protection		Management		Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	59.6		$	-		$	183.8		$	803.1	$	-	$	3.5		$	1,050.0
Surrender charges		18.1			2.3			48.3			-		-		-			68.7
Mortality assessments		-			-			664.1			-		-		-			664.1
Expense assessments		356.8			83.0			219.5			-		-					659.3
Investment advisory fees - external		-			-			-			-		91.5		-			91.5
Investment advisory fees - inter-segment		-			-			-			-		39.9		(39.9	)		-
Net investment income		484.3			351.1			951.0			58.2		-		139.4			1,984.0
Operating realized loss (2)		(11.7	)		(1.8	)		-			-		-		-			(13.5	)
Amortization of deferred gain on business sold through reinsurance		-			-			(0.7	)		-		-		36.8			36.1
Other revenues and fees		129.3			5.5			12.4			3.0		42.1		35.7			228.0
Total Operating Revenues		1,036.4			440.1			2,078.4			864.3		173.5		175.5			4,768.2
Operating Expenses
Interest credited		325.1			223.5			593.6			1.1		-		82.3			1,225.6
Benefits		112.3			(5.2	)		678.7			574.7		-		142.6			1,503.1
Underwriting, acquisition, insurance and other expenses		459.8			147.1			415.7			197.3		120.2		117.4			1,457.5
Expenses for investment advisory fees - inter-segment		-			-			-			-		39.9		(39.9	)		-
Interest and debt expense		-			-			-			-		-		125.6			125.6
Total Operating Expenses		897.2			365.4			1,688.0			773.1		160.1		428.0			4,311.8
Income (loss) from operations before federal income tax expense (benefit)		139.2			74.7			390.4			91.2		13.4		(252.5	)		456.4
Federal income tax expense (benefit)		(0.1	)		17.2			115.3			31.9		6.9		(91.7	)		79.5
Income (Loss) from Operations	$	139.3		$	57.5		$	275.1		$	59.3	$	6.5	$	(160.8	)	$	376.9

(1) Includes inter-segment eliminations.

(2)  For detail, see pages 14 and 18.

6/30/2009														PAGE 11
Consolidating Statements of Income From Operations
Unaudited (in millions)
For the Six Months Ended June 30, 2008
	Retirement Solutions				Insurance Solutions
			Defined				Group		Investment		Other
	Annuities		Contribution		Life		Protection		Management		Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	50.6	$	-	$	175.9	$	763.4	$	-	$	3.1		$	993.0
Surrender charges		19.2		3.4		34.0		-		-		-			56.6
Mortality assessments		-		-		649.6		-		-		-			649.6
Expense assessments		483.6		118.6		250.9		-		-		-			853.1
Investment advisory fees - external		-		-		-		-		152.0		-			152.0
Investment advisory fees - inter-segment		-		-		-		-		40.6		(40.6	)		-
Net investment income		493.1		346.5		1,018.4		58.2		-		185.7			2,101.9
Operating realized gain (2)		22.6		0.1		-		-		-		-			22.7
Amortization of deferred gain on business sold through reinsurance		-		-		-		-		-		36.9			36.9
Other revenues and fees		172.2		8.5		13.7		2.7		52.0		42.9			292.0
Total Operating Revenues		1,241.3		477.1		2,142.5		824.3		244.6		228.0			5,157.8
Operating Expenses
Interest credited		326.2		212.9		597.3		0.5		-		87.6			1,224.5
Benefits		86.6		0.1		606.0		554.8		-		56.9			1,304.4
Underwriting, acquisition, insurance and other expenses		519.9		151.7		453.5		178.9		161.3		116.9			1,582.2
Expenses for investment advisory fees - inter-segment		-		-		-		-		40.6		(40.6	)		-
Interest and debt expense		-		-		-		-		-		140.2			140.2
Total Operating Expenses		932.7		364.7		1,656.8		734.2		201.9		361.0			4,251.3
Income (loss) from operations before federal income tax expense (benefit)		308.6		112.4		485.7		90.1		42.7		(133.0	)		906.5
Federal income tax expense (benefit)		74.6		30.8		164.8		31.6		15.6		(45.6	)		271.8
Income (Loss) from Operations	$	234.0	$	81.6	$	320.9	$	58.5	$	27.1	$	(87.4	)	$	634.7

(1) Includes inter-segment eliminations.

(2)  For detail, see page 14.

6/30/2009													PAGE 12
Consolidated Balance Sheets
Unaudited (millions of dollars)
	As of
	June			Sept.			Dec.			March			June
	2008			2008			2008			2009			2009
ASSETS
Investments:
Corporate bonds	$	41,667.0		$	39,164.9		$	36,055.6		$	37,076.2		$	42,489.5
U.S. Government bonds		203.9			217.0			245.9			233.4			221.2
Foreign government bonds		608.2			546.3			520.8			479.6			479.8
Asset and mortgage-backed securities		10,547.7			10,661.6			10,129.6			9,754.6			9,889.7
State and municipal bonds		245.9			233.5			226.4			226.6			906.6
Preferred stocks - redeemable		98.8			115.6			962.3			765.1			1,063.0
Common stocks		280.1			389.7			200.0			132.8			171.9
Preferred stocks - equity		133.9			59.1			54.1			42.9			64.4
Total available-for-sale securities		53,785.5			51,387.7			48,394.7			48,711.2			55,286.1
Trading securities		2,550.5			2,393.4			2,332.5			2,245.6			2,316.7
Mortgage loans on real estate		7,677.9			7,688.1			7,715.4			7,615.9			7,468.3
Real estate		135.4			126.6			125.2			129.2			159.2
Policy loans		2,849.2			2,867.2			2,921.1			2,905.6			2,896.9
Derivative investments		889.9			1,262.2			3,397.2			2,226.1			1,233.8
Other investments		1,163.5			1,193.0			1,624.1			1,476.2			1,187.1
Total investments		69,051.9			66,918.2			66,510.2			65,309.8			70,548.1
Cash and invested cash		1,774.6			2,009.4			5,754.2			5,510.2			2,539.2
DAC and VOBA		9,858.1			10,993.3			11,403.3			11,399.4			10,455.9
Premiums and fees receivable		399.3			463.2			481.4			488.8			429.2
Accrued investment income		847.3			891.1			814.1			865.0			881.5
Reinsurance recoverables		8,096.1			8,156.6			8,395.9			7,976.0			7,729.3
Reinsurance related derivative assets		-			9.2			31.2			106.9			45.8
Goodwill		4,028.5			4,026.6			3,944.1			3,344.1			3,344.1
Other assets		12,762.7			11,426.9			10,146.7			9,491.4			9,980.4
Separate account assets		77,462.7			68,385.4			55,654.7			52,935.3			61,090.9
Total Assets	$	184,281.2		$	173,279.9		$	163,135.8		$	157,426.9		$	167,044.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Future contract benefits	$	15,082.2		$	15,563.2		$	18,431.3		$	18,038.8		$	16,127.5
Other contract holder funds		59,973.7			60,044.1			60,569.7			61,254.8			62,427.2
Short-term debt		900.0			635.2			814.7			1,435.7			454.5
Long-term debt		4,101.8			4,569.4			4,731.0			4,344.9			4,775.1
Reinsurance related derivative liabilities		112.5			-			-			-			-
Funds withheld reinsurance liabilities		2,068.7			2,062.4			2,042.3			1,215.0			1,222.3
Deferred gain on indemnity reinsurance		657.6			638.5			619.5			547.7			529.1
Payables for collateral under securities loaned and derivatives		1,491.1			1,668.4			3,705.9			2,385.9			1,712.1
Other liabilities		11,933.2			10,213.1			8,589.9			7,945.3			9,630.8
Separate account liabilities		77,462.7			68,385.5			55,654.7			52,935.3			61,090.9
Total liabilities		173,783.5			163,779.8			155,159.0			150,103.4			157,969.5
Stockholders' Equity
Preferred stock		0.4			0.4			0.4			0.4			0.4
Common stock		7,023.1			7,006.4			7,035.3			7,033.5			7,681.5
Retained earnings		4,282.5			4,303.6			3,744.6			3,264.7			3,100.4
Accumulated other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale securities		(939.4	)		(1,903.7	)		(2,654.5	)		(2,699.5	)		(1,448.8	)
Unrealized other-than-temporary  on available-for-sale securities		-			-			-			(75.2	)		(117.7	)
Net unrealized gain on derivative instruments		41.4			53.5			127.1			57.8			53.7
Foreign currency translation adjustment		177.2			121.2			6.3			23.2			91.5
Funded status of employee benefit plans		(87.5	)		(81.3	)		(282.4	)		(281.4	)		(286.1	)
Total accumulated other comprehensive income (loss)		(808.3	)		(1,810.3	)		(2,803.5	)		(2,975.1	)		(1,707.4	)
Total stockholders' equity		10,497.7			9,500.1			7,976.8			7,323.5			9,074.9
Total Liabilities and Stockholders' Equity	$	184,281.2		$	173,279.9		$	163,135.8		$	157,426.9		$	167,044.4
Share Data
Stockholders' equity per share	$	40.85		$	37.11		$	31.15		$	28.59		$	30.02
Book value, excluding AOCI		43.99			44.18			42.09			40.20			35.67
Common shares outstanding - assuming conversion of preferred shares (in millions)		257.0			256.0			256.1			256.2			302.3

6/30/2009														PAGE 13
Balance Sheet Data - Segment Highlights
Unaudited (in millions)
	Retirement Solutions				Insurance Solutions
As of June 30, 2009	Annuities		Defined Contribution		Life		Group Protection		Investment Management		Other Operations (1)			Consolidated
Assets
Allocated investments and cash and invested cash (2)	$	20,092.0	$	12,120.7	$	32,979.6	$	2,135.7	$	147.2	$	5,612.1		$	73,087.3
DAC and VOBA		2,698.1		762.7		6,830.9		149.8		-		14.4			10,455.9
Goodwill		439.8		20.2		2,188.5		274.3		247.7		173.6			3,344.1
DSI and other intangibles		286.6		4.5		87.0		-		4.9		167.2			550.2
Reinsurance recoverables		593.3		-		2,862.0		38.9		-		4,235.1			7,729.3
Separate account assets		45,447.6		11,096.9		4,378.3		-		-		168.1			61,090.9
Liabilities and Capital
Future contract benefits		1,979.0		12.0		6,488.6		1,412.9		-		6,235.0			16,127.5
Other contract holder funds		18,183.3		12,064.4		30,466.8		174.6		-		1,538.1			62,427.2
Allocated capital (3)		3,137.7		1,030.1		7,953.3		1,055.3		365.2		(2,759.3	)		10,782.3
As of December 31, 2008
Assets
Allocated investments and cash and invested cash (2)	$	23,175.5	$	11,304.2	$	31,934.0	$	1,962.9	$	174.2	$	3,713.7		$	72,264.5
DAC and VOBA		2,976.9		883.3		7,383.5		145.9		-		13.7			11,403.3
Goodwill		1,039.8		20.2		2,188.5		274.3		247.7		173.6			3,944.1
DSI and other intangibles		260.7		4.6		89.0		-		5.1		169.4			528.8
Reinsurance recoverables		725.8		-		2,039.0		33.2		-		5,597.9			8,395.9
Separate accounts assets		40,849.5		10,579.7		4,063.5		-		-		162.0			55,654.7
Liabilities and Capital
Future contract benefits		3,958.0		24.8		6,379.9		1,378.4		-		6,690.2			18,431.3
Other contract holder funds		17,219.9		11,627.8		29,999.2		148.6		-		1,574.2			60,569.7
Allocated capital (3)		4,401.4		933.7		8,294.8		989.8		364.9		(4,204.3	)		10,780.3

(1) Includes inter-segment eliminations.

(2) Includes inter-segment cash management balances our segments utilize to borrow money to meet their short-term needs and also to invest short-term funds with other segments.  These balances eliminate in consolidation.

(3)  Allocated capital is based on internal economic capital models plus certain other items (principally intangibles, including DAC and VOBA, goodwill and other items).

6/30/2009																									PAGE 14
Retirement Solutions - Annuities
Income Statements and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Insurance premiums (1)	$	19.0		$	52.1		$	33.7		$	27.1		$	32.5			71.1	%	$	50.6		$	59.6			17.8	%
Surrender charges		9.6			13.0			13.2			9.2			8.9			-7.3	%		19.2			18.1			-5.7	%
Expense assessments		247.6			233.3			200.7			171.5			185.3			-25.2	%		483.6			356.8			-26.2	%
Net investment income		245.3			243.1			235.5			240.4			243.9			-0.6	%		493.1			484.3			-1.8	%
Operating realized gain (loss) (2)		12.4			52.1			144.0			90.2			(101.9	)	NM				22.6			(11.7	)	NM
Other revenues and fees (3)		84.8			81.6			66.6			61.0			68.3			-19.5	%		172.2			129.3			-24.9	%
Total Operating Revenues		618.7			675.2			693.7			599.4			437.0			-29.4	%		1,241.3			1,036.4			-16.5	%
Operating Expenses
Interest credited		163.0			170.0			201.4			161.1			164.0			0.6	%		326.2			325.1			-0.3	%
Benefits (1) (4)		35.2			112.9			253.2			169.8			(57.5	)	NM				86.6			112.3			29.7	%
Underwriting, acquisition, insurance and other expenses		268.2			253.7			548.0			205.9			253.9			-5.3	%		519.9			459.8			-11.6	%
Total Operating Expenses		466.4			536.6			1,002.6			536.8			360.4			-22.7	%		932.7			897.2			-3.8	%
Income (loss) from operations before federal income tax expense (benefit)		152.3			138.6			(308.9	)		62.6			76.6			-49.7	%		308.6			139.2			-54.9	%
Federal income tax expense (benefit)		36.1			7.7			(137.2	)		(11.3	)		11.2			-69.0	%		74.6			(0.1	)	NM
Income (Loss) from Operations	$	116.2		$	130.9		$	(171.7	)	$	73.9		$	65.4			-43.7	%	$	234.0		$	139.3			-40.5	%
Effective Tax Rate		23.7	%		5.6	%		44.4	%		-18.1	%		14.6	%					24.2	%		-0.1	%
Average Equity	$	3,519.2		$	3,646.9		$	4,113.7		$	4,348.0		$	3,716.2					$	3,540.4		$	4,032.1
Return on Average Equity		13.2	%		14.4	%		-16.7	%		6.8	%		7.0	%					13.2	%		6.9	%
Income (Loss) from Operations - Basis Points on Average Account Values - Annualized		62			72			(118	)		52			42			(20	)		63			47			(16	)
Operating Realized Gain (Loss)(2)
Indexed annuity net derivatives results (4)	$	(0.6	)	$	2.0		$	(0.5	)	$	(0.2	)	$	0.2			133.3	%	$	(2.0	)	$	-			100.0	%
GLB (5)		10.3			10.9			11.1			16.3			2.9			-71.8	%		16.1			19.2			19.3	%
GDB (6)		2.7			39.2			133.4			74.1			(104.9	)	NM				8.5			(30.8	)	NM
Total Operating Realized Gain (Loss)	$	12.4		$	52.1		$	144.0		$	90.2		$	(101.8	)	NM			$	22.6		$	(11.6	)	NM
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	186.4		$	160.9		$	132.7		$	124.6		$	157.2			-15.7	%	$	352.0		$	281.8			-19.9	%
General and administrative expenses		79.9			83.1			86.8			72.1			76.2			-4.6	%		160.1			148.3			-7.4	%
Broker-dealer commissions and general and administrative expenses		85.1			78.5			73.3			64.1			69.2			-18.7	%		174.3			133.2			-23.6	%
Taxes, licenses and fees		7.7			6.4			5.7			5.7			6.7			-13.0	%		18.1			12.4			-31.5	%
Total commissions and expenses incurred		359.1			328.9			298.5			266.5			309.3			-13.9	%		704.5			575.7			-18.3	%
Less: commissions and expenses capitalized		(191.7	)		(169.8	)		(151.2	)		(127.3	)		(158.3	)		17.4	%		(364.5	)		(285.5	)		21.7	%
Amortization of DAC and VOBA, net of interest		100.8			94.6			400.7			66.7			102.9			2.1	%		179.9			169.6			-5.7	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	268.2		$	253.7		$	548.0		$	205.9		$	253.9			-5.3	%	$	519.9		$	459.8			-11.6	%

General and Administrative Expenses - Basis Points on
Average Account Values - Annualized (7)	42	46	59	51	49	7	43	50	7

(1)   Includes our single premium immediate annuities, which have a corresponding offset to benefits for changes in reserves.

(2)   Included in income (loss) from operations.

(3)  Primarily broker-dealer revenues.

(4)  See note (3) on page 6 for details.

(5)  See note (4) on page 6 for details.

(6)  See note (5) on page 6 for details.

(7)  Includes distribution costs.

6/30/2009																			PAGE 15
Retirement Solutions - Annuities
Roll Forwards of DAC, VOBA, DFEL and DSI
Unaudited (millions of dollars)
	For the Three Months Ended															For the Six Months Ended
	June			Sept.			Dec.			March			June			June			June
Roll Forward of DAC and VOBA	2008			2008			2008			2009			2009			2008			2009
Balance at beginning-of-period	$	2,570.8		$	2,855.5		$	3,157.9		$	2,976.9		$	3,056.6		$	2,477.0		$	2,976.9
Inter-segment transfer		-			-			-			-			-			(6.9	)		-
Deferrals		191.7			169.8			151.2			127.3			158.2			364.5			285.5
Amortization, net of interest:
Unlocking		0.4			(32.8	)		(424.5	)		(62.6	)		77.4			(0.2	)		14.8
Other amortization		(101.2	)		(61.8	)		23.8			(4.1	)		(180.3	)		(179.7	)		(184.4	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		90.9			75.2			(249.5	)		60.6			55.3			184.6			115.9
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		(7.3	)		(25.4	)		(232.7	)		(12.2	)		21.1			(17.8	)		8.9
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		201.1			252.6			301.2			31.3			(434.9	)		218.6			(403.6	)
Balance at End-of-Period	$	2,855.5		$	3,157.9		$	2,976.9		$	3,056.6		$	2,698.1		$	2,855.5		$	2,698.1
Roll Forward of DFEL
Balance at beginning-of-period	$	141.6		$	151.0		$	160.5		$	130.3		$	134.5		$	130.9		$	130.3
Deferrals		13.4			13.0			11.4			10.6			12.3			25.3			22.9
Amortization, net of interest:
Unlocking		(0.5	)		(1.8	)		(36.4	)		(7.2	)		16.7			0.2			9.5
Other amortization		(3.0	)		0.7			10.1			5.4			(13.7	)		(5.7	)		(8.3	)
Deferrals, net of amortization included in expense assessments		9.9			11.9			(14.9	)		8.8			15.3			19.8			24.1
Adjustment related to realized gains (losses) on available-for-sale securities and derivatives		(0.5	)		(2.4	)		(15.3	)		(4.4	)		(3.3	)		0.3			(7.7	)
Adjustment related to unrealized gains (losses)on available-for-sale securities and derivatives		-			-			-			(0.2	)		-			-			(0.2	)
Balance at End-of-Period	$	151.0		$	160.5		$	130.3		$	134.5		$	146.5		$	151.0		$	146.5
Roll Forward of DSI
Balance at beginning-of-period	$	295.7		$	312.1		$	326.3		$	260.7		$	277.2		$	278.8		$	260.7
Inter-segment transfer		-			-			-			-			-			(1.3	)		-
Deferrals		26.1			24.6			18.8			15.7			18.7			51.8			34.4
Amortization, net of interest:
Unlocking		(0.2	)		(2.7	)		(48.0	)		(5.6	)		7.4			0.4			1.8
Other amortization		(8.5	)		(5.4	)		4.5			1.1			(18.7	)		(14.7	)		(17.6	)
Deferrals, net of amortization included in interest credited		17.4			16.5			(24.7	)		11.2			7.4			37.5			18.6
Adjustment related to realized (gains) losses on available-for-sale securities		(1.0	)		(2.3	)		(40.9	)		5.2			2.6			(2.9	)		7.8
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		-			-			-			0.1			(0.6	)		-			(0.5	)
Balance at End-of-Period	$	312.1		$	326.3		$	260.7		$	277.2		$	286.6		$	312.1		$	286.6

6/30/2009																						PAGE 16
Retirement Solutions - Annuities
Account Value Roll Forward
Unaudited (in billions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Fixed Annuities
Balance at beginning-of-period	$	17.701		$	17.799		$	17.689		$	17.655		$	17.854			0.9	%	$	17.822		$	17.655			-0.9	%
Gross deposits		1.371			1.276			1.233			1.363			1.778			29.7	%		2.531			3.141			24.1	%
Withdrawals and deaths		(0.618	)		(0.787	)		(0.836	)		(0.767	)		(0.642	)		-3.9	%		(1.204	)		(1.409	)		-17.0	%
Net flows		0.753			0.489			0.397			0.596			1.136			50.9	%		1.327			1.732			30.5	%
Transfers to variable annuities		(0.797	)		(0.742	)		(0.581	)		(0.558	)		(0.582	)		27.0	%		(1.477	)		(1.140	)		22.8	%
Inter-segment transfer		-			-			-			-			-		NM				(0.089	)		-			100.0	%
Interest credited		0.116			0.119			0.132			0.145			0.169			45.7	%		0.164			0.314			91.5	%
Sales inducements deferred		0.026			0.024			0.018			0.016			0.019			-26.9	%		0.052			0.035			-32.7	%
Balance at End-of-Period (Gross)		17.799			17.689			17.655			17.854			18.596			4.5	%		17.799			18.596			4.5	%
Reinsurance ceded		(1.255	)		(1.196	)		(1.125	)		(1.094	)		(1.065	)		15.1	%		(1.255	)		(1.065	)		15.1	%
Balance at End-of-Period (Net of Ceded) (1)	$	16.544		$	16.493		$	16.530		$	16.760		$	17.531			6.0	%	$	16.544		$	17.531			6.0	%
Variable Annuities
Balance at beginning-of-period	$	54.966		$	55.854		$	49.982		$	40.925		$	39.301			-28.5	%	$	58.643		$	40.925			-30.2	%
Gross deposits		2.065			1.672			1.087			0.834			0.857			-58.5	%		3.931			1.691			-57.0	%
Withdrawals and deaths		(1.229	)		(1.217	)		(1.108	)		(1.000	)		(0.950	)		22.7	%		(2.488	)		(1.950	)		21.6	%
Net flows		0.836			0.455			(0.021	)		(0.166	)		(0.093	)	NM				1.443			(0.259	)	NM
Transfers from fixed annuities		0.797			0.742			0.579			0.558			0.582			-27.0	%		1.476			1.140			-22.8	%
Inter-segment transfer		-			-			-			-			-		NM				(0.206	)		-			100.0	%
Investment increase and change in market value		(0.745	)		(7.069	)		(9.615	)		(2.016	)		5.733		NM				(5.502	)		3.717			167.6	%
Balance at End-of-Period (2)	$	55.854		$	49.982		$	40.925		$	39.301		$	45.523			-18.5	%	$	55.854		$	45.523			-18.5	%
Total Annuities
Balance at beginning-of-period	$	72.667		$	73.653		$	67.671		$	58.580		$	57.155			-21.3	%	$	76.465		$	58.580			-23.4	%
Gross deposits		3.436			2.948			2.320			2.197			2.635			-23.3	%		6.462			4.832			-25.2	%
Withdrawals and deaths		(1.847	)		(2.004	)		(1.944	)		(1.767	)		(1.592	)		13.8	%		(3.692	)		(3.359	)		9.0	%
Net flows		1.589			0.944			0.376			0.430			1.043			-34.4	%		2.770			1.473			-46.8	%
Transfers between fixed and variable accounts		-			-			(0.002	)		-			-		NM				(0.001	)		-			100.0	%
Inter-segment transfer		-			-			-			-			-		NM				(0.295	)		-			100.0	%
Interest credited and change in market value		(0.629	)		(6.950	)		(9.483	)		(1.871	)		5.902		NM				(5.338	)		4.031			175.5	%
Sales inducements deferred		0.026			0.024			0.018			0.016			0.019			-26.9	%		0.052			0.035			-32.7	%
Balance at End-of-Period (Gross)		73.653			67.671			58.580			57.155			64.119			-12.9	%		73.653			64.119			-12.9	%
Reinsurance ceded		(1.255	)		(1.196	)		(1.125	)		(1.094	)		(1.065	)		15.1	%		(1.255	)		(1.065	)		15.1	%
Balance at End-of-Period (Net of Ceded)	$	72.398		$	66.475		$	57.455		$	56.061		$	63.054			-12.9	%	$	72.398		$	63.054			-12.9	%
Variable Annuities Under Agreement - Included Above	$	0.120		$	0.099		$	0.076		$	0.069		$	0.076			-36.7	%	$	0.120		$	0.076			-36.7	%
Incremental Deposits: (3)
Fixed annuities	$	1.365		$	1.265		$	1.225		$	1.359		$	1.773			29.9	%	$	2.521		$	3.132			24.2	%
Variable annuities		2.043			1.651			1.076			0.822			0.848			-58.5	%		3.881			1.670			-57.0	%
Total Incremental Deposits	$	3.408		$	2.916		$	2.301		$	2.181		$	2.621			-23.1	%	$	6.402		$	4.802			-25.0	%

(1)  Includes the fixed portion of variable annuities.

(2) Excludes the fixed portion of variable annuities.

(3) Represents gross deposits reduced by transfers from other Lincoln products.

6/30/2009																									PAGE 17
Retirement Solutions - Annuities
Account Values, Spread Information, GLB Expense Assessments,
GLB Attributed Fee and GLB Account Values by Type
Unaudited (billions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Fixed Annuities - Excluding Fixed Portion of Variable Contracts
Deposits	$	0.137		$	0.164		$	0.142		$	0.236		$	0.249			81.8	%	$	0.223		$	0.485			117.5	%
Withdrawals and deaths		(0.406	)		(0.549	)		(0.504	)		(0.398	)		(0.321	)		20.9	%		(0.784	)		(0.719	)		8.3	%
Net flows	$	(0.269	)	$	(0.385	)	$	(0.362	)	$	(0.162	)	$	(0.072	)		73.2	%	$	(0.561	)	$	(0.234	)		58.3	%
Gross fixed contract account values	$	9.595		$	9.305		$	9.035		$	8.959		$	8.981			-6.4	%	$	9.595		$	8.981			-6.4	%
Reinsurance ceded		(1.255	)		(1.196	)		(1.125	)		(1.094	)		(1.065	)		15.1	%		(1.255	)		(1.065	)		15.1	%
Net fixed contract account values	$	8.340		$	8.109		$	7.910		$	7.865		$	7.916			-5.1	%	$	8.340		$	7.916			-5.1	%
Indexed Annuities
Deposits	$	0.356		$	0.215		$	0.289		$	0.367		$	0.651			82.9	%	$	0.574		$	1.018			77.4	%
Withdrawals and deaths		(0.102	)		(0.114	)		(0.142	)		(0.214	)		(0.187	)		-83.3	%		(0.186	)		(0.401	)	NM
Net flows	$	0.254		$	0.101		$	0.147		$	0.153		$	0.464			82.7	%	$	0.388		$	0.617			59.0	%
Indexed Annuity Account Values	$	4.726		$	4.836		$	5.003		$	5.195		$	5.716			20.9	%	$	4.726		$	5.716			20.9	%
Fixed Portion of Variable Contracts
Deposits	$	0.879		$	0.896		$	0.802		$	0.760		$	0.878			-0.1	%	$	1.735		$	1.638			-5.6	%
Withdrawals and deaths		(0.110	)		(0.124	)		(0.191	)		(0.156	)		(0.134	)		-21.8	%		(0.234	)		(0.290	)		-23.9	%
Net flows	$	0.769		$	0.772		$	0.611		$	0.604		$	0.744			-3.3	%	$	1.501		$	1.348			-10.2	%
Fixed Portion of Variable Contract Account Values	$	3.478		$	3.547		$	3.617		$	3.699		$	3.899			12.1	%	$	3.478		$	3.899			12.1	%
Variable Annuities - Including Fixed Portion of Variable Contracts
Deposits	$	2.944		$	2.568		$	1.890		$	1.594		$	1.735			-41.1	%	$	5.665		$	3.329			-41.2	%
Withdrawals and deaths		(1.339	)		(1.340	)		(1.300	)		(1.156	)		(1.084	)		19.0	%		(2.722	)		(2.240	)		17.7	%
Net flows	$	1.605		$	1.228		$	0.590		$	0.438		$	0.651			-59.4	%	$	2.943		$	1.089			-63.0	%
Variable Contract Account Values	$	59.333		$	53.530		$	44.542		$	43.000		$	49.422			-16.7	%	$	59.333		$	49.422			-16.7	%
Average Daily Variable Annuity Separate Account Values	$	57.763		$	54.717		$	40.743		$	39.035		$	43.828			-24.1	%	$	56.541		$	41.445			-26.7	%

											Change							Change
Interest Rate Spread (1)											(Basis Point)							(Basis Point)
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses (2)	5.88	%	5.82	%	5.65	%	5.28	%	5.44	%		(44	)	5.86	%	5.36	%		(50	)
Commercial mortgage loan prepayment and bond make whole premiums	0.00	%	0.02	%	0.02	%	0.00	%	0.01	%		1		0.02	%	0.01	%		(1	)
Alternative investments	-0.01	%	0.00	%	-0.04	%	-0.01	%	0.00	%		1		-0.01	%	-0.01	%		-
Net investment income yield on reserves	5.87	%	5.84	%	5.63	%	5.27	%	5.45	%		(42	)	5.87	%	5.36	%		(51	)
Interest rate credited to contract holders	3.73	%	3.95	%	3.87	%	3.84	%	3.63	%		(10	)	3.77	%	3.73	%		(4	)
Interest rate spread	2.14	%	1.89	%	1.76	%	1.43	%	1.82	%		(32	)	2.10	%	1.63	%		(47	)

Variable Annuity Expense Assessments (in millions) (3) $ 287.0 $ 276.0 $ 244.7 $ 212.9 $ 232.5 -19.0 % $ 558.4 $ 445.4 -20.2 %

GLB Expense Assessments (in millions) (4) $ 42.7 $ 45.5 $ 46.2 $ 47.9 $ 50.6 18.5 % $ 82.3 $ 98.5 19.7 %

Components of Attributed Fees on GLB (in millions)
Attributed fee included in operating revenues and income (loss) from operations (5)	$	17.0	$	17.9	$	18.3	$	16.2	$	16.9	-0.6	%	$	32.8	$	33.1	0.9	%
Attributed fee excluded from operating revenues and income (loss) from operations (6)		22.5		24.8		25.7		25.5		30.6	36.0	%		42.1		56.1	33.3	%
Total Attributed Fees on GLB	$	39.5	$	42.7	$	44.0	$	41.7	$	47.5	20.3	%	$	74.9	$	89.2	19.1	%

GLB Account Values by Type (7)
Guaranteed withdrawal benefits (8)	$	17.435	$	16.613	$	14.785	$	14.910	$	17.973	3.1	%	$	17.435	$	17.973	3.1	%
Guaranteed income benefits (9)		8.550		7.899		6.780		6.623		7.708	-9.8	%		8.550		7.708	-9.8	%
Total GLB Account Values	$	25.985	$	24.512	$	21.566	$	21.533	$	25.680	-1.2	%	$	25.985	$	25.680	-1.2	%

(1)   For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average invested assets on reserves.  We exclude net investment income earned on investments supporting statutory surplus, reverse repurchase agreement interest expense and inter-segment cash management account interest expense from our yield and spread calculations.  The average crediting rate is calculated using interest credited before DSI amortization, plus the immediate annuity reserve change (included within benefits), divided by average fixed account values net of co-insured account values.  Fixed account values reinsured under modified co-insurance agreements are included in account values for this calculation since assets (and therefore margin) are retained under these agreements.

(2)  Our yields on net investment income have been lowered due to holding higher cash balances related to our short-term liquidity strategy during recent volatile markets.  The increased cash and short-term investment balances for the three months ended March 2009 and June 2009, and the six months ended June 2009 reduced our yields by approximately 40 bps, 33 bps, and 37 bps, respectively.

(3) Comprised of the variable annuity expense assessments included in the expense assessments line item on page 14 and the amounts presented in the components of attributed fees on GLB, as described in footnotes 5 and 6 and disclosed above.

(4) Comprised of the GLB expense assessments included in the expense assessments line item on page 14 and the amounts presented in the components of attributed fees on GLB, as described in footnotes 5 and 6 and disclosed above.

(5) Includes the risk/profit margin portion of the GLB attributed rider fees in operating realized gain (loss) and the amount reported in expense assessments.  See note (4) on page 6 for further discussion.

(6)   Includes the net valuation premium of the GLB attributed rider fees in excluded realized gain (loss).  See note (8) on page 6 for further discussion.

(7)   As of March 31, 2009, we modified our presentation of these period end balances to reflect the amounts net of reinsurance and adjusted all prior periods accordingly.

(8)  Guaranteed withdrawal benefits include features that offer the contract holder a guarantee equal to the initial deposit (or contract value, if elected after issue), adjusted for any subsequent purchase payments or withdrawals.

(9)  For our guaranteed income benefits, we offer other product riders allowing variable annuity contract holders access and control during the income distribution phase of their contract.  This added flexibility allows the contract holder to access the account value for transfers, additional withdrawals and other service features, such as portfolio rebalancing.

6/30/2009																								PAGE 18
Retirement Solutions - Defined Contribution
Income Statements and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Surrender charges	$	1.5		$	1.3		$	1.5		$	1.0		$	1.3			-13.3	%	$	3.4		$	2.3			-32.4	%
Expense assessments		59.3			54.6			42.7			39.6			43.4			-26.8	%		118.6			83.0			-30.0	%
Net investment income		174.8			180.9			167.6			175.5			175.6			0.5	%		346.5			351.1			1.3	%
Operating realized gain (loss) (1)		-			0.2			3.5			6.6			(8.4	)	NM				0.1			(1.8	)	NM
Other revenues and fees		3.8			3.8			2.6			2.4			3.1			-18.4	%		8.5			5.5			-35.3	%
Total Operating Revenues		239.4			240.8			217.9			225.1			215.0			-10.2	%		477.1			440.1			-7.8	%
Operating Expenses
Interest credited		107.0			106.8			109.8			111.5			112.0			4.7	%		212.9			223.5			5.0	%
Benefits		0.1			0.2			13.5			6.4			(11.6	)	NM				0.1			(5.2	)	NM
Underwriting, acquisition, insurance and other expenses		75.4			76.8			111.9			70.8			76.3			1.2	%		151.7			147.1			-3.0	%
Total Operating Expenses		182.5			183.8			235.2			188.7			176.7			-3.2	%		364.7			365.4			0.2	%
Income (loss) from operations before federal income tax expense (benefit)		56.9			57.0			(17.3	)		36.4			38.3			-32.7	%		112.4			74.7			-33.5	%
Federal income tax expense (benefit)		15.7			14.7			(16.2	)		6.6			10.6			-32.5	%		30.8			17.2			-44.2	%
Income (Loss) from Operations	$	41.2		$	42.3		$	(1.1	)	$	29.8		$	27.7			-32.8	%	$	81.6		$	57.5			-29.5	%
Effective Tax Rate		27.6	%		25.8	%		93.6	%		18.1	%		27.7	%					27.4	%		23.0	%
Average Equity	$	933.7		$	961.9		$	952.2		$	983.3		$	1,031.5					$	920.0		$	1,007.4
Return on Average Equity		17.7	%		17.6	%		(0.5	%)		12.1	%		10.7	%					17.7	%		11.4	%
Income (Loss) from Operations - Basis Points on Average Account Values - Annualized		46			49			(1	)		42			37			(9	)		46			39			(7	)
Operating Realized Gain (Loss) (1)
GLB (2)	$	-		$	0.1		$	0.1		$	0.1		$	-		NM			$	0.1		$	0.1			0.0	%
GDB (3)		-			0.1			3.4			6.5			(8.4	)	NM				-			(1.9	)	NM
Total Operating Realized Gain (Loss)	$	-		$	0.2		$	3.5		$	6.6		$	(8.4	)	NM			$	0.1		$	(1.8	)	NM
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	19.4		$	17.2		$	16.0		$	14.0		$	15.5			-20.1	%	$	39.1		$	29.5			-24.6	%
General and administrative expenses		52.0			52.7			63.3			53.6			53.7			3.3	%		103.9			107.3			3.3	%
Taxes, licenses and fees		3.0			3.1			2.8			3.6			3.0			0.0	%		7.4			6.6			-10.8	%
Total commissions and expenses incurred		74.4			73.0			82.1			71.2			72.2			-3.0	%		150.4			143.4			-4.7	%
Less: commissions and expenses capitalized		(22.2	)		(19.7	)		(28.2	)		(18.3	)		(17.0	)		23.4	%		(45.8	)		(35.3	)		22.9	%
Amortization of DAC and VOBA, net of interest		23.2			23.5			58.0			17.9			21.1			-9.1	%		47.1			39.0			-17.2	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	75.4		$	76.8		$	111.9		$	70.8		$	76.3			1.2	%	$	151.7		$	147.1			-3.0	%

General and Administrative Expenses - Basis Points on Average Account Values - Annualized (4) 59 61 86 76 71 12 59 73 14

 

Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	564.2		$	629.7		$	744.8		$	883.3		$	918.2		$	513.8		$	883.3
Inter-segment transfer		-			-			-			-			-			6.9			-
Deferrals		22.2			19.7			28.2			18.3			17.0			45.8			35.3
Amortization, net of interest:
Unlocking		0.1			(2.8	)		(48.6	)		(4.1	)		2.7			(2.4	)		(1.4	)
Other amortization		(23.3	)		(20.7	)		(9.4	)		(13.8	)		(23.8	)		(44.7	)		(37.6	)
Deferrals, net of amortization included in underwriting,
acquisition, insurance and other expenses		(1.0	)		(3.8	)		(29.8	)		0.4			(4.1	)		(1.3	)		(3.7	)
Adjustment related to realized (gains) losses
on available-for-sale securities		1.0			4.6			5.6			2.5			6.0			1.6			8.5
Adjustment related to unrealized (gains) losses
on available-for-sale securities		65.5			114.3			162.7			32.0			(157.4	)		108.7			(125.4	)
Balance at End-of-Period	$	629.7		$	744.8		$	883.3		$	918.2		$	762.7		$	629.7		$	762.7

Roll Forward of DSI
Balance at beginning-of-period	$	1.9		$	2.0		$	2.0		$	2.0		$	2.2		$	0.4		$	2.0
Inter-segment transfer		-			-			-			-			-			1.3			-
Deferrals		0.2			-			0.2			0.2			0.4			0.4			0.6
Amortization, net of interest:
Unlocking		-			-			(0.2	)		(0.1	)		0.1			-			-
Other amortization		(0.1	)		(0.1	)		0.1			0.1			(0.2	)		(0.1	)		(0.1	)
Deferrals, net of amortization included in
interest credited		0.1			(0.1	)		0.1			0.2			0.3			0.3			0.5
Adjustment related to realized (gains) losses
on available-for-sale securities		-			0.1			(0.1	)		-			-			-			-
Balance at End-of-Period	$	2.0		$	2.0		$	2.0		$	2.2		$	2.5		$	2.0		$	2.5

(1)    Included in income (loss) from operations.

(2)  See note (4) on page 6 for details.

(3)  See note (5) on page 6 for details.

(4)  Includes distribution costs.

6/30/2009																						PAGE 19
Retirement Solutions - Defined Contribution
Account Value Roll Forward
Unaudited (in billions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Fixed Annuities
Balance at beginning-of-period	$	11.217		$	11.294		$	11.418		$	11.638		$	11.924			6.3	%	$	10.889		$	11.638			6.9	%
Gross deposits		0.280			0.290			0.279			0.416			0.429			53.2	%		0.612			0.845			38.1	%
Withdrawals and deaths		(0.380	)		(0.411	)		(0.387	)		(0.388	)		(0.354	)		6.8	%		(0.750	)		(0.742	)		1.1	%
Net flows		(0.100	)		(0.121	)		(0.108	)		0.028			0.075			175.0	%		(0.138	)		0.103			174.6	%
Transfers from variable annuities		0.073			0.136			0.214			0.148			(0.036	)	NM				0.245			0.112			-54.3	%
Inter-segment transfer		-			-			-			-			-		NM				0.089			-			-100.0	%
Interest credited		0.104			0.109			0.114			0.110			0.107			2.9	%		0.209			0.217			3.8	%
Balance at End-of-Period  (1)	$	11.294		$	11.418		$	11.638		$	11.924		$	12.070			6.9	%	$	11.294		$	12.070			6.9	%
Variable Annuities
Balance at beginning-of-period	$	16.292		$	16.195		$	13.480		$	10.588		$	9.721			-40.3	%	$	17.876		$	10.588			-40.8	%
Gross deposits		0.561			0.532			0.403			0.425			0.375			-33.2	%		1.235			0.800			-35.2	%
Withdrawals and deaths		(0.646	)		(0.723	)		(0.506	)		(0.419	)		(0.423	)		34.5	%		(1.479	)		(0.842	)		43.1	%
Net flows		(0.085	)		(0.191	)		(0.103	)		0.006			(0.048	)		43.5	%		(0.244	)		(0.042	)		82.8	%
Transfers to fixed annuities		(0.058	)		(0.117	)		(0.143	)		(0.166	)		(0.019	)		67.2	%		(0.201	)		(0.185	)		8.0	%
Inter-product transfer (2)		-			(0.553	)		-			-			-		NM				-			-		NM
Inter-segment transfer		-			-			-			-			-		NM				0.206			-			-100.0	%
Investment increase and change in market value		0.046			(1.854	)		(2.646	)		(0.707	)		1.448		NM				(1.442	)		0.741			151.4	%
Balance at End-of-Period (3)	$	16.195		$	13.480		$	10.588		$	9.721		$	11.102			-31.4	%	$	16.195		$	11.102			-31.4	%
Total Annuities
Balance at beginning-of-period	$	27.509		$	27.489		$	24.898		$	22.226		$	21.645			-21.3	%	$	28.765		$	22.226			-22.7	%
Gross deposits		0.841			0.822			0.682			0.841			0.804			-4.4	%		1.847			1.645			-10.9	%
Withdrawals and deaths		(1.026	)		(1.134	)		(0.893	)		(0.807	)		(0.777	)		24.3	%		(2.229	)		(1.584	)		28.9	%
Net flows		(0.185	)		(0.312	)		(0.211	)		0.034			0.027			114.6	%		(0.382	)		0.061			116.0	%
Transfers between fixed and variable accounts		0.015			0.019			0.071			(0.018	)		(0.055	)	NM				0.044			(0.073	)	NM
Inter-product transfer (2)		-			(0.553	)		-			-			-		NM				-			-		NM
Inter-segment transfer		-			-			-			-			-		NM				0.295			-			-100.0	%
Interest credited and change in market value		0.150			(1.745	)		(2.532	)		(0.597	)		1.555		NM				(1.233	)		0.958			177.7	%
Balance at End-of-Period	$	27.489		$	24.898		$	22.226		$	21.645		$	23.172			-15.7	%	$	27.489		$	23.172			-15.7	%
Alliance and Smart Future Mutual Funds
Balance at beginning-of-period	$	7.255		$	7.553		$	7.675		$	6.652		$	6.848			-5.6	%	$	7.293		$	6.652			-8.8	%
Plan/participant rollovers		0.285			0.215			0.249			0.338			0.071			-75.1	%		0.506			0.409			-19.2	%
Additional contributions		0.295			0.297			0.310			0.396			0.363			23.1	%		0.619			0.759			22.6	%
Gross deposits		0.580			0.512			0.559			0.734			0.434			-25.2	%		1.125			1.168			3.8	%
Withdrawals and deaths		(0.158	)		(0.107	)		(0.177	)		(0.109	)		(0.132	)		16.5	%		(0.226	)		(0.241	)		-6.6	%
Net flows		0.422			0.405			0.382			0.625			0.302			-28.4	%		0.899			0.927			3.1	%
Transfers		(0.026	)		(0.024	)		(0.079	)		-			(0.008	)		69.2	%		(0.096	)		(0.008	)		91.7	%
Inter-product transfer (2)		-			0.553			-			-			-		NM				-			-		NM
Interest credited and change in market value		(0.098	)		(0.812	)		(1.326	)		(0.429	)		1.013		NM				(0.543	)		0.584			207.6	%
Balance at End-of-Period (4)	$	7.553		$	7.675		$	6.652		$	6.848		$	8.155			8.0	%	$	7.553		$	8.155			8.0	%
Total Annuities and Mutual Funds
Balance at beginning-of-period	$	34.764		$	35.042		$	32.573		$	28.878		$	28.493			-18.0	%	$	36.058		$	28.878			-19.9	%
Gross deposits		1.421			1.334			1.241			1.575			1.238			-12.9	%		2.972			2.813			-5.3	%
Withdrawals and deaths		(1.184	)		(1.241	)		(1.070	)		(0.916	)		(0.909	)		23.2	%		(2.455	)		(1.825	)		25.7	%
Net flows		0.237			0.093			0.171			0.659			0.329			38.8	%		0.517			0.988			91.1	%
Transfers		(0.011	)		(0.005	)		(0.008	)		(0.018	)		(0.063	)	NM				(0.052	)		(0.081	)		-55.8	%
Inter-segment transfer		-			-			-			-			-		NM				0.295			-			-100.0	%
Interest credited and change in market value		0.052			(2.557	)		(3.858	)		(1.026	)		2.568		NM				(1.776	)		1.542			186.8	%
Balance at End-of-Period	$	35.042		$	32.573		$	28.878		$	28.493		$	31.327			-10.6	%	$	35.042		$	31.327			-10.6	%
Variable Annuities Under Agreement - Included Above	$	0.014		$	0.011		$	0.008		$	0.007		$	0.008			-42.9	%	$	0.014		$	0.008			-42.9	%
Incremental Deposits: (5)
Fixed annuities	$	0.258		$	0.225		$	0.361		$	0.379		$	0.391			51.6	%	$	0.543		$	0.770			41.8	%
Variable annuities		0.553			0.524			0.398			0.419			0.371			-32.9	%		1.220			0.790			-35.2	%
Total annuities incremental deposits		0.811			0.749			0.759			0.798			0.762			-6.0	%		1.763			1.560			-11.5	%
Total Alliance mutual funds incremental deposits		0.580			0.511			0.560			0.734			0.434			-25.2	%		1.125			1.168			3.8	%
Total Incremental Deposits	$	1.391		$	1.260		$	1.319		$	1.532		$	1.196			-14.0	%	$	2.888		$	2.728			-5.5	%

(1) Includes fixed annuity products offered under our mutual fund products and the fixed portion of variable annuities.

(2) On 9/30/08, the Lincoln Employee 401(k) Plan transferred from Director to Alliance in the amount of $653 million, of which $100 million transferred within fixed annuities and therefore is not depicted on this roll forward.

(3)  Excludes the fixed portion of variable annuities.

(4) Represents amounts attributable to mutual fund net flows.  Mutual fund account values are not included in the separate accounts reported on our Consolidated Balance Sheets, as we do not have any ownership interest in them.

(5)  Represents gross deposits reduced by transfers from other Lincoln products.

6/30/2009													PAGE 20
Retirement Solutions - Defined Contribution
Account Value Roll Forward - By Product and Supplemental Data
Unaudited (in billions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Total Micro - Small Segment
Balance at beginning-of-period	$	7.218		$	7.286		$	5.790		$	4.888		$	4.710			-34.7	%	$	7.798		$	4.888			-37.3	%
Gross deposits		0.389			0.389			0.255			0.306			0.256			-34.2	%		0.887			0.562			-36.6	%
Withdrawals and deaths		(0.395	)		(0.465	)		(0.311	)		(0.266	)		(0.268	)		32.2	%		(0.964	)		(0.534	)		44.6	%
Net flows		(0.006	)		(0.076	)		(0.056	)		0.040			(0.012	)		-100.0	%		(0.077	)		0.028			136.4	%
Transfers between fixed and variable accounts		-			-			0.004			(0.004	)		-		NM				(0.012	)		(0.004	)		66.7	%
Inter-product transfer (1)		-			(0.653	)		-			-			-		NM				-			-		NM
Investment increase and change in market value		0.074			(0.767	)		(0.850	)		(0.214	)		0.536		NM				(0.423	)		0.322			176.1	%
Balance at End-of-Period	$	7.286		$	5.790		$	4.888		$	4.710		$	5.234			-28.2	%	$	7.286		$	5.234			-28.2	%
Total Mid - Large Segment
Balance at beginning-of-period	$	9.621		$	9.985		$	10.310		$	9.540		$	9.920			3.1	%	$	9.463		$	9.540			0.8	%
Gross deposits		0.748			0.687			0.729			1.026			0.757			1.2	%		1.516			1.783			17.6	%
Withdrawals and deaths		(0.299	)		(0.222	)		(0.191	)		(0.233	)		(0.234	)		21.7	%		(0.458	)		(0.467	)		-2.0	%
Net flows		0.449			0.465			0.538			0.793			0.523			16.5	%		1.058			1.316			24.4	%
Transfers between fixed and variable accounts		(0.011	)		(0.004	)		(0.011	)		(0.013	)		(0.063	)	NM				(0.039	)		(0.076	)		-94.9	%
Inter-product transfer (1)		-			0.653			-			-			-		NM				-			-		NM
Investment increase and change in market value		(0.074	)		(0.789	)		(1.297	)		(0.400	)		1.045		NM				(0.497	)		0.645			229.8	%
Balance at End-of-Period	$	9.985		$	10.310		$	9.540		$	9.920		$	11.425			14.4	%	$	9.985		$	11.425			14.4	%
Total Multi-Fund® and Other Variable Annuities
Balance at beginning-of-period	$	17.925		$	17.771		$	16.473		$	14.450		$	13.863			-22.7	%	$	18.797		$	14.450			-23.1	%
Gross deposits		0.284			0.258			0.257			0.243			0.225			-20.8	%		0.569			0.468			-17.8	%
Withdrawals and deaths		(0.490	)		(0.554	)		(0.568	)		(0.417	)		(0.407	)		16.9	%		(1.033	)		(0.824	)		20.2	%
Net flows		(0.206	)		(0.296	)		(0.311	)		(0.174	)		(0.182	)		11.7	%		(0.464	)		(0.356	)		23.3	%
Transfers between fixed and variable accounts		(0.000	)		(0.001	)		(0.001	)		(0.001	)		-		NM				(0.001	)		(0.001	)		0.0	%
Inter-segment transfer		-			-			-			-			-		NM				0.295			-			-100.0	%
Investment increase and change in market value		0.052			(1.001	)		(1.711	)		(0.412	)		0.987		NM				(0.856	)		0.575			167.2	%
Balance at End-of-Period	$	17.771		$	16.473		$	14.450		$	13.863		$	14.668			-17.5	%	$	17.771		$	14.668			-17.5	%
Total Annuities and Mutual Funds
Balance at beginning-of-period	$	34.764		$	35.042		$	32.573		$	28.878		$	28.493			-18.0	%	$	36.058		$	28.878			-19.9	%
Gross deposits		1.421			1.334			1.241			1.575			1.238			-12.9	%		2.972			2.813			-5.3	%
Withdrawals and deaths		(1.184	)		(1.241	)		(1.070	)		(0.916	)		(0.909	)		23.2	%		(2.455	)		(1.825	)		25.7	%
Net flows		0.237			0.093			0.171			0.659			0.329			38.8	%		0.517			0.988			91.1	%
Transfers between fixed and variable accounts		(0.011	)		(0.005	)		(0.008	)		(0.018	)		(0.063	)	NM				(0.052	)		(0.081	)		-55.8	%
Inter-segment transfer		-			-			-			-			-		NM				0.295			-			-100.0	%
Investment increase and change in market value		0.052			(2.557	)		(3.858	)		(1.026	)		2.568		NM				(1.776	)		1.542			186.8	%
Balance at End-of-Period (2)	$	35.042		$	32.573		$	28.878		$	28.493		$	31.327			-10.6	%	$	35.042		$	31.327			-10.6	%
Fixed Annuities - Excluding Fixed Portion of Variable Contracts
Deposits	$	0.187		$	0.196		$	0.189		$	0.317		$	0.341			82.4	%	$	0.427		$	0.658			54.1	%
Withdrawals and deaths		(0.198	)		(0.183	)		(0.016	)		(0.187	)		(0.155	)		21.7	%		(0.358	)		(0.342	)		4.5	%
Net flows	$	(0.011	)	$	0.013		$	0.173		$	0.130		$	0.186		NM			$	0.069		$	0.316		NM
Fixed Contract Account Values	$	5.221		$	5.304		$	5.601		$	5.774		$	5.879			12.6	%	$	5.221		$	5.879			12.6	%
Fixed Portion of Variable Contracts
Deposits	$	0.092		$	0.094		$	0.090		$	0.099		$	0.088			-4.3	%	$	0.185		$	0.187			1.1	%
Withdrawals and deaths		(0.182	)		(0.228	)		(0.371	)		(0.202	)		(0.199	)		-9.3	%		(0.392	)		(0.401	)		-2.3	%
Net flows	$	(0.090	)	$	(0.134	)	$	(0.281	)	$	(0.103	)	$	(0.111	)		-23.3	%	$	(0.207	)	$	(0.214	)		-3.4	%
Fixed Portion of Variable Contract Account Values	$	6.073		$	6.114		$	6.037		$	6.150		$	6.191			1.9	%	$	6.073		$	6.191			1.9	%
Variable Annuities - Including Fixed Portion of Variable Contracts
Deposits	$	0.653		$	0.626		$	0.493		$	0.523		$	0.463			-29.1	%	$	1.420		$	0.986			-30.6	%
Withdrawals and deaths		(0.828	)		(0.951	)		(0.877	)		(0.621	)		(0.622	)		24.9	%		(1.870	)		(1.243	)		33.5	%
Net flows	$	(0.175	)	$	(0.325	)	$	(0.384	)	$	(0.098	)	$	(0.159	)		9.1	%	$	(0.450	)	$	(0.257	)		42.9	%
Variable Contract Account Values	$	22.268		$	19.594		$	16.625		$	15.871		$	17.293			-22.3	%	$	22.268		$	17.293			-22.3	%
Average Daily Variable Annuity Separate Account Values	$	16.892		$	15.582		$	10.666		$	9.846		$	10.768			-36.3	%	$	16.766		$	10.309			-38.5	%

											Change							Change
Interest Rate Spread (3)											(Basis Point)							(Basis Point)
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses (4)	5.89	%	5.94	%	5.84	%	5.70	%	5.79	%		(10	)	5.90	%	5.74	%		(16	)
Commercial mortgage loan prepayment and bond make whole premiums	0.05	%	0.17	%	0.00	%	0.00	%	0.01	%		(4	)	0.04	%	0.01	%		(3	)
Alternative investments	-0.03	%	-0.01	%	-0.14	%	-0.01	%	-0.02	%		1		-0.03	%	-0.01	%		2
Net investment income yield on reserves	5.91	%	6.10	%	5.70	%	5.69	%	5.78	%		(13	)	5.91	%	5.74	%		(17	)
Interest rate credited to contract holders	3.80	%	3.77	%	3.79	%	3.78	%	3.73	%		(7	)	3.80	%	3.76	%		(4	)
Interest rate spread	2.11	%	2.33	%	1.91	%	1.91	%	2.05	%		(6	)	2.11	%	1.98	%		(13	)

(1) On 9/30/08, the Lincoln Employee 401(k) Plan transferred from Director to Alliance in the amount of $653 million.

(2) Includes mutual fund account values.  Mutual fund account values are not included in the separate accounts reported on our Consolidated Balance Sheets, as we do not have any ownership interest in them.

(3)  For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average invested assets on reserves.  We exclude net investment income earned on investments supporting statutory surplus from our spread calculations.  The average crediting rate is calculated as interest credited before DSI amortization, plus the immediate annuity reserve change (included within benefits), divided by the average fixed account values, including the fixed portion of variable annuities.

(4)  Our yields on net investment income have been lowered due to holding higher cash balances related to our short-term liquidity strategy during recent volatile markets.  The  increased cash and short-term investment balances for the three months ended March 2009 and June 2009, and the six months ended June 2009 reduced our yields by approximately 16 bps, 18 bps, and 17 bps, respectively.

6/30/2009																									PAGE 21
Insurance Solutions - Life Insurance
Income Statements and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Insurance premiums	$	89.5		$	90.9		$	93.6		$	90.5		$	93.3			4.2	%	$	175.9		$	183.8			4.5	%
Surrender charges		16.7			18.0			18.1			21.6			26.7			59.9	%		34.0			48.3			42.1	%
Mortality assessments		327.9			331.8			339.1			344.1			320.0			-2.4	%		649.6			664.1			2.2	%
Expense assessments		129.6			101.4			137.6			116.5			103.0			-20.5	%		250.9			219.5			-12.5	%
Net investment income		519.2			522.4			446.9			497.7			453.3			-12.7	%		1,018.4			951.0			-6.6	%
Amortization of deferred loss on business sold throughreinsurance		-			-			-			-			(0.7	)		0.0	%		-			(0.7	)	NM
Other revenues and fees		5.0			9.3			7.5			5.8			6.6			32.0	%		13.7			12.4			-9.5	%
Total Operating Revenues		1,087.9			1,073.8			1,042.8			1,076.2			1,002.2			-7.9	%		2,142.5			2,078.4			-3.0	%
Operating Expenses
Interest credited		300.6			304.7			300.7			302.8			290.8			-3.3	%		597.3			593.6			-0.6	%
Benefits		306.0			399.9			365.9			355.7			323.0			5.6	%		606.0			678.7			12.0	%
Underwriting, acquisition, insurance and other expenses		234.0			167.4			255.7			224.0			191.7			-18.1	%		453.5			415.7			-8.3	%
Total Operating Expenses		840.6			872.0			922.3			882.5			805.5			-4.2	%		1,656.8			1,688.0			1.9	%
Income from operations before federal income tax expense		247.3			201.8			120.5			193.7			196.7			-20.5	%		485.7			390.4			-19.6	%
Federal income tax expense		83.7			64.5			38.0			51.5			63.8			-23.8	%		164.8			115.3			-30.0	%
Income from Operations	$	163.6		$	137.3		$	82.5		$	142.2		$	132.9			-18.8	%	$	320.9		$	275.1			-14.3	%
Effective Tax Rate		33.8	%		32.0	%		31.5	%		26.6	%		32.4	%					33.9	%		29.5	%
Average Equity	$	8,095.3		$	8,164.2		$	8,263.8		$	8,235.3		$	7,980.9					$	8,118.9		$	8,108.1
Return on Average Equity		8.1	%		6.7	%		4.0	%		6.9	%		6.7	%					7.9	%		6.8	%
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	180.5		$	209.1		$	210.5		$	176.9		$	141.9			-21.4	%	$	375.1		$	318.8			-15.0	%
General and administrative expenses		100.8			101.8			116.0			110.2			109.5			8.6	%		206.2			219.7			6.5	%
Taxes, licenses and fees		26.6			36.3			25.0			33.3			22.9			-13.9	%		58.3			56.2			-3.6	%
Amortization of sales force intangibles		1.0			1.0			1.0			1.0			1.0			0.0	%		2.0			2.0			0.0	%
Total commissions and expenses incurred		308.9			348.2			352.5			321.4			275.3			-10.9	%		641.6			596.7			-7.0	%
Less: commissions and expenses capitalized		(237.2	)		(260.7	)		(272.5	)		(224.5	)		(197.5	)		16.7	%		(483.0	)		(422.0	)		12.6	%
Amortization of DAC and VOBA, net of interest		162.3			79.9			175.7			127.1			113.9			-29.8	%		294.9			241.0			-18.3	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	234.0		$	167.4		$	255.7		$	224.0		$	191.7			-18.1	%	$	453.5		$	415.7			-8.3	%
General and Administrative Expenses - Basis Points on Average Account Values - Annualized		124			126			145			139			144			20			127			137			10
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	5,968.1		$	6,235.0		$	6,947.8		$	7,383.5		$	7,265.0					$	5,691.7		$	7,383.5
Business sold through reinsurance		-			-			-			(292.9	)		-						-			(292.9	)
Deferrals		237.2			260.7			272.5			224.5			197.5						483.0			422.0
Amortization, net of interest:
Unlocking		(17.7	)		55.2			(84.0	)		(12.6	)		(5.5	)					(26.8	)		(18.1	)
Other amortization		(144.6	)		(135.1	)		(91.7	)		(114.5	)		(108.4	)					(268.1	)		(222.9	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		74.9			180.8			96.8			97.4			83.6						188.1			181.0
Adjustment related to realized losses on available-for-sale securities and derivatives		9.3			54.2			76.3			20.0			41.1						16.6			61.1
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		182.7			477.8			262.6			57.0			(558.8	)					338.6			(501.8	)
Balance at End-of-Period	$	6,235.0		$	6,947.8		$	7,383.5		$	7,265.0		$	6,830.9					$	6,235.0		$	6,830.9
Roll Forward of DFEL
Balance at beginning-of-period	$	722.2		$	763.4		$	840.2		$	888.7		$	941.4					$	672.5		$	888.7
Business sold through reinsurance		-			-			-			(11.0	)		-						-			(11.0	)
Deferrals		90.1			96.6			102.6			96.9			100.3						179.4			197.2
Amortization, net of interest:
Unlocking		(11.1	)		16.5			(24.0	)		(2.9	)		(0.7	)					(14.5	)		(3.6	)
Other amortization		(37.8	)		(36.3	)		(30.1	)		(32.1	)		(29.6	)					(74.0	)		(61.7	)
Deferrals, net of amortization included in expense assessments		41.2			76.8			48.5			61.9			70.0						90.9			131.9
Adjustment related to realized losses on available-for-sale securities and derivatives		-			-			-			0.9			2.4						-			3.3
Adjustment related to unrealized gains (losses) on available-for-sale securities and derivatives		-			-			-			0.9			0.2						-			1.1
Balance at End-of-Period	$	763.4		$	840.2		$	888.7		$	941.4		$	1,014.0					$	763.4		$	1,014.0

6/30/2009																									PAGE 22
Insurance Solutions - Life Insurance
Operational Data and Account Value Roll Forward
Unaudited (billions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Sales by Product (in millions)
UL
Excluding MoneyGuard®	$	123.7		$	144.7		$	142.7		$	102.7		$	84.9			-31.4	%	$	237.4		$	187.6			-21.0	%
MoneyGuard®		12.4			13.7			12.8			11.0			14.3			15.3	%		23.4			25.3			8.1	%
Total		136.1			158.4			155.5			113.7			99.2			-27.1	%		260.8			212.9			-18.4	%
VUL		11.4			12.3			14.6			9.0			7.1			-37.7	%		27.0			16.1			-40.4	%
COLI and BOLI (1)		12.8			12.7			30.7			11.7			4.7			-63.3	%		41.1			16.4			-60.1	%
Term/Whole Life		5.4			6.9			10.6			10.8			12.7			135.2	%		10.5			23.5			123.8	%
Total	$	165.7		$	190.3		$	211.4		$	145.2		$	123.7			-25.3	%	$	339.4		$	268.9			-20.8	%
First Year Paid Premiums (in millions)
UL
Excluding MoneyGuard®	$	254.3		$	270.4		$	287.4		$	230.5		$	216.2			-15.0	%	$	499.7		$	446.7			-10.6	%
MoneyGuard®		82.5			91.6			85.1			73.1			94.9			15.0	%		156.1			168.0			7.6	%
Total		336.8			362.0			372.5			303.6			311.1			-7.6	%		655.8			614.7			-6.3	%
VUL		28.8			31.1			34.2			25.2			20.1			-30.2	%		65.8			45.3			-31.2	%
COLI and BOLI (1)		26.0			30.3			82.2			52.0			16.1			-38.1	%		83.9			68.1			-18.8	%
Term/Whole Life		16.2			20.2			29.5			18.8			23.0			42.0	%		30.2			41.8			38.4	%
Total	$	407.8		$	443.6		$	518.4		$	399.6		$	370.3			-9.2	%	$	835.7		$	769.9			-7.9	%
Life Insurance In Force
UL and other	$	303.607		$	306.293		$	310.198		$	288.826		$	288.632			-4.9	%	$	303.607		$	288.632			-4.9	%
Term insurance		234.109			233.671			235.023			236.408			238.901			2.0	%		234.109			238.901			2.0	%
Total	$	537.716		$	539.964		$	545.221		$	525.234		$	527.533			-1.9	%	$	537.716		$	527.533			-1.9	%
Interest-Sensitive Life
Balance at beginning-of-period	$	26.726		$	26.980		$	27.227		$	27.502		$	27.617			3.3	%	$	26.518		$	27.502			3.7	%
Deposits		0.846			0.875			0.951			0.815			0.840			-0.7	%		1.739			1.655			-4.8	%
Withdrawals and deaths		(0.277	)		(0.306	)		(0.325	)		(0.358	)		(0.391	)		-41.2	%		(0.675	)		(0.749	)		-11.0	%
Net flows		0.569			0.569			0.626			0.457			0.449			-21.1	%		1.064			0.906			-14.8	%
Contract holder assessments		(0.601	)		(0.613	)		(0.639	)		(0.631	)		(0.645	)		-7.3	%		(1.169	)		(1.276	)		-9.2	%
Interest credited		0.286			0.291			0.288			0.289			0.288			0.7	%		0.567			0.577			1.8	%
Balance at End-of-Period (Gross) (2)		26.980			27.227			27.502			27.617			27.709			2.7	%		26.980			27.709			2.7	%
Reinsurance ceded		-			-			-			(0.938	)		(0.930	)	NM				-			(0.930	)	NM
Balance at End-of-Period (Net of Ceded) (2)	$	26.980		$	27.227		$	27.502		$	26.679		$	26.779			-0.7	%	$	26.980		$	26.779			-0.7	%
VUL
Balance at beginning-of-period	$	5.615		$	5.623		$	5.056		$	4.251		$	3.992			-28.9	%	$	6.040		$	4.251			-29.6	%
Deposits		0.216			0.207			0.266			0.243			0.180			-16.7	%		0.455			0.423			-7.0	%
Withdrawals and deaths		(0.108	)		(0.086	)		(0.088	)		(0.143	)		(0.089	)		17.6	%		(0.192	)		(0.232	)		-20.8	%
Net flows		0.108			0.121			0.178			0.100			0.091			-15.7	%		0.263			0.191			-27.4	%
Contract holder assessments		(0.091	)		(0.092	)		(0.092	)		(0.094	)		(0.088	)		3.3	%		(0.185	)		(0.182	)		1.6	%
Investment income and change in market value		(0.009	)		(0.596	)		(0.891	)		(0.265	)		0.567		NM				(0.495	)		0.302			161.0	%
Balance at End-of-Period (Gross)		5.623			5.056			4.251			3.992			4.562			-18.9	%		5.623			4.562			-18.9	%
Reinsurance ceded		-			-			-			(0.640	)		(0.719	)	NM				-			(0.719	)	NM
Balance at End-of-Period (Net of Ceded)	$	5.623		$	5.056		$	4.251		$	3.352		$	3.843			-31.7	%	$	5.623		$	3.843			-31.7	%
Total Life Insurance
Balance at beginning-of-period	$	32.341		$	32.603		$	32.283		$	31.753		$	31.609			-2.3	%	$	32.558		$	31.753			-2.5	%
Deposits		1.062			1.082			1.217			1.058			1.020			-4.0	%		2.194			2.078			-5.3	%
Withdrawals and deaths		(0.385	)		(0.392	)		(0.413	)		(0.501	)		(0.480	)		-24.7	%		(0.867	)		(0.981	)		-13.1	%
Net flows		0.677			0.690			0.804			0.557			0.540			-20.2	%		1.327			1.097			-17.3	%
Contract holder assessments		(0.692	)		(0.705	)		(0.731	)		(0.725	)		(0.733	)		-5.9	%		(1.354	)		(1.458	)		-7.7	%
Investment income and change in market value		0.277			(0.305	)		(0.603	)		0.024			0.855			208.7	%		0.072			0.879		NM
Balance at End-of-Period (Gross)		32.603			32.283			31.753			31.609			32.271			-1.0	%		32.603			32.271
Reinsurance ceded		-			-			-			(1.578	)		(1.649	)	NM				-			(1.649	)
Balance at End-of-Period (Net of Ceded)	$	32.603		$	32.283		$	31.753		$	30.031		$	30.622			-6.1	%	$	32.603		$	30.622			-6.1	%

Interest Rate Yields and Spread
											Change							Change
Interest-Sensitive Products (3)											(Basis Points)							(Basis Points)
Fixed maturity securities, mortgage loans on real
estate and other, net of investment expenses (4)	5.89	%	5.92	%	5.86	%	5.83	%	6.03	%		14		5.94	%	5.93	%		(1	)
Commercial mortgage loan prepayment and bond make whole premiums	0.14	%	0.02	%	0.01	%	0.00	%	0.06	%		(8	)	0.09	%	0.03	%		(6	)
Alternative investments	0.21	%	0.31	%	-0.65	%	-0.06	%	-0.71	%		(92	)	0.11	%	-0.38	%		(49	)
Net investment income yield on reserves	6.24	%	6.25	%	5.22	%	5.77	%	5.38	%		(86	)	6.14	%	5.58	%		(56	)
Interest rate credited to contract holders	4.36	%	4.35	%	4.25	%	4.25	%	4.20	%		(16	)	4.36	%	4.22	%		(14	)
Interest rate spread	1.88	%	1.90	%	0.97	%	1.52	%	1.18	%		(70	)	1.78	%	1.36	%		(42	)
Traditional Products (5)
Fixed maturity securities, mortgage loans on real
estate and other, net of investment expenses	6.23	%	6.06	%	6.10	%	6.00	%	5.96	%		(27	)	6.17	%	5.98	%		(19	)
Commercial mortgage loan prepayment and bond make whole premiums	0.00	%	0.00	%	0.00	%	0.01	%	0.01	%		1		0.06	%	0.01	%		(5	)
Alternative investments	-0.02	%	-0.01	%	-0.08	%	-0.01	%	-0.01	%		1		-0.02	%	-0.01	%		1
Net investment income yield on reserves	6.21	%	6.05	%	6.02	%	6.00	%	5.96	%		(25	)	6.21	%	5.98	%		(23	)

 

(1)  COLI and BOLI are interest-sensitive and contain both UL and VUL products.

(2)  Includes UL, interest-sensitive whole life and the fixed investment option of VUL products.

(3)  For the interest-sensitive life products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets.  We exclude net investment income earned on investments supporting statutory surplus and reverse repurchase agreement interest expense from our yield and spread calculations.  The average crediting rate is calculated using interest credited on life products divided by average fixed account values.

(4)  Our yields on net investment income have been lowered due to holding higher cash balances related to our short-term liquidity strategy during recent volatile markets.  The increased cash and short-term investment balances for the three months ended March 2009 and the six months ended June 2009 reduced our yields by approximately 11 bps and 6 bps, respectively.  There was no impact for the three months ended June 2009.

(5)  For the traditional life products, the yield on earning assets is calculated as net investment income on traditional investment portfolios divided by average earning assets.  As of June 30, 2009, interest-sensitive products represented approximately 85% of total interest-sensitive and traditional earning assets.

6/30/2009																									PAGE 23
Insurance Solutions - Group Protection
Income Statements and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Insurance premiums	$	393.0		$	370.6		$	382.9		$	389.8		$	413.3			5.2	%	$	763.4		$	803.1			5.2	%
Mortality assessments		-			-			0.1			-			-		NM				-			-		NM
Net investment income		30.5			30.8			28.2			30.1			28.1			-7.9	%		58.2			58.2			0.0	%
Other revenues and fees		1.4			1.4			1.3			1.5			1.5			7.1	%		2.7			3.0			11.1	%
Total Operating Revenues		424.9			402.8			412.5			421.4			442.9			4.2	%		824.3			864.3			4.9	%
Operating Expenses
Interest credited		0.3			0.5			0.6			0.6			0.5			66.7	%		0.5			1.1			1.2
Benefits		285.7			268.8			283.1			282.0			292.7			2.5	%		554.8			574.7			3.6	%
Underwriting, acquisition, insurance and other expenses		89.3			91.8			100.4			99.3			98.0			9.7	%		178.9			197.3			10.3	%
Total Operating Expenses		375.3			361.1			384.1			381.9			391.2			4.2	%		734.2			773.1			5.3	%
Income from operations before federal income tax expense		49.6			41.7			28.4			39.5			51.7			4.2	%		90.1			91.2			1.2	%
Federal income tax expense		17.4			14.5			10.0			13.8			18.1			4.0	%		31.6			31.9			0.9	%
Income from Operations	$	32.2		$	27.2		$	18.4		$	25.7		$	33.6			4.3	%	$	58.5		$	59.3			1.4	%
Effective Tax Rate		35.1	%		34.8	%		35.2	%		34.9	%		35.0	%					35.1	%		35.0	%
Average Equity	$	985.3		$	1,001.0		$	1,002.3		$	1,014.7		$	1,047.5					$	980.5		$	1,031.1
Return on Average Equity		13.1	%		10.9	%		7.3	%		10.1	%		12.8	%					11.9	%		11.5	%
Underwriting, Acquisition, Insurance and Other Expenses
Commissions (1)	$	40.0		$	42.1		$	44.7		$	44.2		$	43.6			9.0	%	$	80.8		$	87.8			8.7	%
General and administrative expenses (1)		44.5			44.6			53.9			47.4			48.2			8.3	%		88.9			95.6			7.5	%
Taxes, licenses and fees		9.0			9.0			10.6			10.5			7.3			-18.9	%		19.0			17.8			-6.3	%
Total commissions and expenses incurred		93.5			95.7			109.2			102.1			99.1			6.0	%		188.7			201.2			6.6	%
Less: commissions and expenses capitalized		(13.0	)		(13.1	)		(18.5	)		(13.2	)		(12.5	)		3.8	%		(26.7	)		(25.7	)		3.7	%
Amortization of DAC and VOBA, net of interest		8.8			9.2			9.7			10.4			11.4			29.5	%		16.9			21.8			29.0	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	89.3		$	91.8		$	100.4		$	99.3		$	98.0			9.7	%	$	178.9		$	197.3			10.3	%

General and Administrative Expenses as a Percentage of Premiums (1) 11.3 % 12.0 % 14.1 % 12.2 % 11.7 % 11.6 % 11.9 %

Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	129.0		$	133.2		$	137.1		$	145.9		$	148.7		$	123.4		$	145.9
Deferrals		13.0			13.1			18.5			13.2			12.5			26.7			25.7
Amortization, net of interest		(8.8	)		(9.2	)		(9.7	)		(10.4	)		(11.4	)		(16.9	)		(21.8	)
Deferrals, net of amortization included in underwriting,
acquisition, insurance and other expenses		4.2			3.9			8.8			2.8			1.1			9.8			3.9
Balance at End-of-Period	$	133.2		$	137.1		$	145.9		$	148.7		$	149.8		$	133.2		$	149.8

Annualized Sales by Product Line
Life	$	23.4		$	30.6		$	49.9		$	22.7		$	21.1			-9.8	%	$	44.7		$	43.8			-2.0	%
Disability		29.9			29.8			63.6			23.5			29.3			-2.0	%		54.8			52.8			-3.6	%
Dental		11.3			8.0			15.5			8.1			9.1			-19.5	%		19.2			17.2			-10.4	%
Total	$	64.6		$	68.4		$	129.0		$	54.3		$	59.5			-7.9	%	$	118.7		$	113.8			-4.1	%
Insurance Premiums by Product Line
Life	$	133.8		$	135.7		$	138.8		$	142.4		$	147.4			10.2	%	$	266.7		$	289.8			8.7	%
Disability		167.0			168.4			173.1			174.0			171.1			2.5	%		330.2			345.1			4.5	%
Dental		37.4			38.0			37.9			37.5			37.2			-0.5	%		73.9			74.7			1.1	%
Other		54.8			28.5			33.1			35.9			57.6			5.1	%		92.6			93.5			1.0	%
Total	$	393.0		$	370.6		$	382.9		$	389.8		$	413.3			5.2	%	$	763.4		$	803.1			5.2	%
Income from Operations by Product Line
Life	$	11.4		$	8.9		$	3.8		$	0.6		$	12.5			9.6	%	$	21.5		$	13.1			-39.1	%
Disability		19.9			16.0			13.1			25.3			20.7			4.0	%		35.3			46.0			30.3	%
Dental		(0.4	)		1.2			0.8			(1.1	)		(1.5	)	NM				(0.7	)		(2.6	)	NM
Other		1.3			1.1			0.7			0.9			1.9			46.2	%		2.4			2.8			16.7	%
Total	$	32.2		$	27.2		$	18.4		$	25.7		$	33.6			4.3	%	$	58.5		$	59.3			1.4	%
Loss Ratios by Product Line
Life		72.3	%		74.0	%		77.3	%		81.6	%		70.3	%					72.1	%		75.8	%
Disability		66.1	%		68.6	%		68.7	%		59.1	%		62.4	%					67.1	%		60.8	%
Dental		81.1	%		75.9	%		75.6	%		84.2	%		86.1	%					81.0	%		85.2	%
Combined Loss Ratios		70.2	%		71.6	%		72.8	%		70.8	%		68.2	%					70.6	%		69.5	%

(1) Prior periods reflect a reclassification to general and administrative expenses from commissions for approximately $2.5 million a quarter as third party administrative fees were incorrectly reflected as commissions.

6/30/2009																						PAGE 24
Investment Management
Income Statements and Operational Data
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Investment advisory fees - external	$	75.8		$	67.7		$	48.4		$	43.7		$	47.8			-36.9	%	$	152.0		$	91.5			-39.8	%
Investment advisory fees - inter-segment		20.6			20.6			20.3			19.9			20.0			-2.9	%		40.6			39.9			-1.7	%
Other revenues and fees		27.9			21.6			14.5			18.3			23.8			-14.7	%		52.0			42.1			-19.0	%
Total Operating Revenues		124.3			109.9			83.2			81.9			91.6			-26.3	%		244.6			173.5			-29.1	%
Operating Expenses
Operating and administrative expenses		100.8			101.8			89.5			78.4			81.7			-18.9	%		201.9			160.1			-20.7	%
Total Operating Expenses		100.8			101.8			89.5			78.4			81.7			-18.9	%		201.9			160.1			-20.7	%
Income (loss) from operations before federal income tax expense (benefit)		23.5			8.1			(6.3	)		3.5			9.9			-57.9	%		42.7			13.4			-68.6	%
Federal income tax expense (benefit)		8.5			2.8			(2.0	)		2.1			4.8			-43.5	%		15.6			6.9			-55.8	%
Income (Loss) from Operations	$	15.0		$	5.3		$	(4.3	)	$	1.4		$	5.1			-66.0	%	$	27.1		$	6.5			-76.0	%
Effective Tax Rate		36.2	%		34.6	%		31.7	%		60.0	%		48.5	%					36.5	%		51.5	%
Pre-Tax Operating Margin		18.9	%		7.4	%		-7.6	%		4.3	%		10.8	%					17.5	%		7.7	%
After-Tax Operating Margin		12.1	%		4.8	%		-5.2	%		1.7	%		5.6	%					11.1	%		3.7	%
Operating and Administrative Expenses
General and administrative expenses	$	85.9		$	90.3		$	79.7		$	70.4		$	73.0			-15.0	%	$	173.5		$	143.4			-17.3	%
Depreciation and amortization		2.1			1.7			1.7			1.3			1.2			-42.9	%		4.3			2.5			-41.9	%
Sub-advisory fees		7.4			6.5			4.4			3.8			4.2			-43.2	%		14.6			8.0			-45.2	%
Total general and administrative expenses		95.4			98.5			85.8			75.5			78.4			-17.8	%		192.4			153.9			-20.0	%
Taxes, licenses and fees		4.9			2.9			3.3			2.8			3.2			-34.7	%		8.6			6.0			-30.2	%
Amortization of intangibles		0.5			0.4			0.4			0.1			0.1			-80.0	%		0.9			0.2			-77.8	%
Total Operating and Administrative Expenses	$	100.8		$	101.8		$	89.5		$	78.4		$	81.7			-18.9	%	$	201.9		$	160.1			-20.7	%

6/30/2009																						PAGE 25
Investment Management
Assets Under Management Roll Forward
Unaudited (in billions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Retail Fixed
Balance at beginning-of-period	$	14.168		$	14.398		$	14.335		$	13.662		$	14.158			-0.1	%	$	13.463		$	13.662			1.5	%
Sales (1)		1.533			1.618			1.844			1.809			1.972			28.6	%		3.514			3.781			7.6	%
Redemptions		(1.238	)		(1.292	)		(2.246	)		(1.531	)		(1.441	)		-16.4	%		(2.633	)		(2.972	)		-12.9	%
Exchanges		0.030			0.098			0.028			0.017			0.061			103.3	%		0.084			0.078			-7.1	%
Net flows		0.325			0.424			(0.374	)		0.295			0.592			82.2	%		0.965			0.887			-8.1	%
Net investment gains and change in market value		(0.095	)		(0.487	)		(0.299	)		0.201			1.033		NM				(0.030	)		1.234		NM
Transfer of assets from an inter-company manager (2)		-			-			-			-			0.072		NM				-			0.072		NM
Balance at End-of-Period (3)	$	14.398		$	14.335		$	13.662		$	14.158		$	15.855			10.1	%	$	14.398		$	15.855			10.1	%
Retail Equity
Balance at beginning-of-period	$	31.463		$	29.770		$	24.741		$	17.838		$	14.536			-53.8	%	$	36.250		$	17.838			-50.8	%
Sales (1)		1.063			1.080			0.750			0.609			0.787			-26.0	%		2.577			1.396			-45.8	%
Redemptions		(2.292	)		(2.832	)		(2.453	)		(1.607	)		(1.265	)		44.8	%		(5.044	)		(2.872	)		43.1	%
Exchanges		(0.033	)		0.002			(0.029	)		(0.017	)		(0.070	)	NM				(0.090	)		(0.087	)		3.3	%
Net flows		(1.262	)		(1.750	)		(1.732	)		(1.015	)		(0.548	)		56.6	%		(2.557	)		(1.563	)		38.9	%
Net investment gains and change in market value		(0.431	)		(3.279	)		(5.171	)		(2.287	)		2.573		NM				(3.923	)		0.286			107.3	%
Transfer of assets from an inter-company manager (2)		-			-			-			-			0.198		NM				-			0.198		NM
Balance at End-of-Period (3)	$	29.770		$	24.741		$	17.838		$	14.536		$	16.759			-43.7	%	$	29.770		$	16.759			-43.7	%
Total Retail
Balance at beginning-of-period	$	45.631		$	44.168		$	39.076		$	31.500		$	28.694			-37.1	%	$	49.713		$	31.500			-36.6	%
Retail sales - annuities		0.786			1.075			1.032			0.771			0.935			19.0	%		2.348			1.706			-27.3	%
Retail sales - mutual funds		1.407			1.303			1.337			1.382			1.524			8.3	%		2.999			2.906			-3.1	%
Retail sales - managed accounts and other		0.403			0.320			0.225			0.265			0.299			-25.8	%		0.744			0.564			-24.2	%
Total retail sales (1)		2.596			2.698			2.594			2.418			2.759			6.3	%		6.091			5.177			-15.0	%
Redemptions		(3.530	)		(4.124	)		(4.699	)		(3.138	)		(2.706	)		23.3	%		(7.677	)		(5.844	)		23.9	%
Exchanges		(0.003	)		0.100			(0.001	)		-			(0.009	)	NM				(0.006	)		(0.009	)		-50.0	%
Net flows		(0.937	)		(1.326	)		(2.106	)		(0.720	)		0.044			104.7	%		(1.592	)		(0.676	)		57.5	%
Net investment gains and change in market value		(0.526	)		(3.766	)		(5.470	)		(2.086	)		3.606		NM				(3.953	)		1.520			138.5	%
Transfer of assets from an inter-company manager (2)		-			-			-			-			0.270		NM				-			0.270		NM
Balance at End-of-Period (3)	$	44.168		$	39.076		$	31.500		$	28.694		$	32.614			-26.2	%	$	44.168		$	32.614			-26.2	%
Institutional Fixed
Balance at beginning-of-period	$	12.409		$	12.070		$	11.928		$	11.373		$	12.766			2.9	%	$	12.746		$	11.373			-10.8	%
Inflows (1)		0.330			0.592			0.432			2.332			0.678			105.5	%		0.573			3.010		NM
Withdrawals/terminations		(0.556	)		(1.152	)		(0.924	)		(0.720	)		(0.609	)		-9.5	%		(1.195	)		(1.329	)		-11.2	%
Exchanges		-			(0.108	)		0.001			0.001			0.012		NM				0.002			0.013		NM
Net flows		(0.226	)		(0.668	)		(0.491	)		1.613			0.081			135.8	%		(0.620	)		1.694		NM
Net investment gains and change in market value		(0.113	)		(0.258	)		(0.064	)		(0.220	)		0.352		NM				(0.056	)		0.132		NM
Transfer of assets from an inter-company manager (2)		-			0.784			-			-			0.016		NM				-			0.016		NM
Balance at End-of-Period (3)	$	12.070		$	11.928		$	11.373		$	12.766		$	13.215			9.5	%	$	12.070		$	13.215			9.5	%
Institutional Equity
Balance at beginning-of-period	$	20.498		$	19.453		$	15.595		$	11.669		$	10.350			-49.5	%	$	22.898		$	11.669			-49.0	%
Inflows (1)		0.580			0.698			0.754			0.380			0.430			-25.9	%		1.567			0.810			-48.3	%
Withdrawals/terminations		(0.889	)		(1.984	)		(1.457	)		(1.061	)		(0.478	)		46.2	%		(1.990	)		(1.539	)		22.7	%
Exchanges		-			(0.053	)		-			(0.001	)		(0.004	)	NM				(0.002	)		(0.005	)	NM
Net flows		(0.309	)		(1.339	)		(0.703	)		(0.682	)		(0.052	)		83.2	%		(0.425	)		(0.734	)		-72.7	%
Net investment gains and change in market value		(0.736	)		(2.470	)		(3.223	)		(0.637	)		1.740		NM				(3.020	)		1.103			136.5	%
Transfer of assets to a third-party		-			(0.065	)		-			-			-		NM				-			-		NM
Transfer of assets from an inter-company manager (2)		-			0.016			-			-			-		NM				-			-		NM
Balance at End-of-Period (3)	$	19.453		$	15.595		$	11.669		$	10.350		$	12.038			-38.1	%	$	19.453		$	12.038			-38.1	%
Total Institutional
Balance at beginning-of-period	$	32.907		$	31.523		$	27.523		$	23.042		$	23.116			-29.8	%	$	35.644		$	23.042			-35.4	%
Inflows (1)		0.910			1.290			1.186			2.712			1.108			21.8	%		2.140			3.820			78.5	%
Withdrawals/terminations		(1.445	)		(3.136	)		(2.381	)		(1.781	)		(1.087	)		24.8	%		(3.185	)		(2.868	)		10.0	%
Exchanges		-			(0.161	)		0.001			-			0.008		NM				-			0.008		NM
Net flows		(0.535	)		(2.007	)		(1.194	)		0.931			0.029			105.4	%		(1.045	)		0.960			191.9	%
Net investment gains and change in market value		(0.849	)		(2.728	)		(3.287	)		(0.857	)		2.092		NM				(3.076	)		1.235			140.1	%
Transfer of assets to a third-party		-			(0.065	)		-			-			-		NM				-			-		NM
Transfer of assets from an inter-company manager (2)		-			0.800			-			-			0.016		NM				-			0.016		NM
Balance at End-of-Period (3)	$	31.523		$	27.523		$	23.042		$	23.116		$	25.253			-19.9	%	$	31.523		$	25.253			-19.9	%
Total Retail and Institutional - At End-of-Period (3)	$	75.691		$	66.599		$	54.542		$	51.810		$	57.867			-23.5	%	$	75.691		$	57.867			-23.5	%
General Account Assets - At End-of-Period	$	65.997		$	63.531		$	65.680		$	64.824		$	68.814			4.3	%	$	65.997		$	68.814			4.3	%
Total Assets Under Management at End-of-Period	$	141.688		$	130.130		$	120.222		$	116.634		$	126.681			-10.6	%	$	141.688		$	126.681			-10.6	%
Total Retail and Institutional - Net Flows	$	(1.472	)	$	(3.333	)	$	(3.300	)	$	0.211		$	0.073			105.0	%	$	(2.637	)	$	0.284			110.8	%
Sub-Advised Assets, Included in Assets Under Management Above
Retail	$	13.651		$	11.168		$	8.047		$	6.076		$	6.831			-50.0	%	$	13.651		$	6.831			-50.0	%
Institutional		3.794			3.035			2.180			1.919			2.261			-40.4	%		3.794			2.261			-40.4	%
Total Sub-Advised Assets	$	17.445		$	14.203		$	10.227		$	7.995		$	9.092			-47.9	%	$	17.445		$	9.092			-47.9	%

(1)  Includes dividend reinvestments.

(2)  Reflects assets that were transferred to an inter-company manager, which did not impact Lincoln's consolidated assets under management.

(3)   Includes inter-segment and external assets under management.

6/30/2009													PAGE 26
Investment Management
Assets Under Management Roll Forward (Continued) (1)
Unaudited (in billions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Inter-Segment Assets - Retail and Institutional
Balance at beginning-of-period	$	9.191		$	8.995		$	8.937		$	7.968		$	7.505			-18.3	%	$	9.672		$	7.968			-17.6	%
Sales/inflows		0.375			0.812			0.829			0.536			0.545			45.3	%		1.093			1.081			-1.1	%
Redemptions/withdrawals/terminations		(0.543	)		(0.866	)		(0.973	)		(0.676	)		(0.654	)		-20.4	%		(1.222	)		(1.330	)		-8.8	%
Exchanges		-			(0.162	)		-			-			0.073		NM				-			0.073		NM
Net flows		(0.168	)		(0.216	)		(0.144	)		(0.140	)		(0.036	)		78.6	%		(0.129	)		(0.176	)		-36.4	%
Net investment gains and change in market value		(0.028	)		(0.551	)		(0.825	)		(0.323	)		0.717		NM				(0.548	)		0.394			171.9	%
Transfer of assets to a third-party		-			(0.075	)		-			-			-		NM				-			-		NM
Transfer of assets from an inter-company manager (2)		-			0.784			-			-			0.286		NM				-			0.286		NM
Balance at End-of-Period	$	8.995		$	8.937		$	7.968		$	7.505		$	8.472			-5.8	%	$	8.995		$	8.472			-5.8	%
Inter-Segment Assets - General Account at End-of-Period	$	65.997		$	63.531		$	65.680		$	64.824		$	68.814			4.3	%	$	65.997		$	68.814			4.3	%
Total Inter-Segment Assets at End-of-Period	$	74.992		$	72.468		$	73.648		$	72.329		$	77.286			3.1	%	$	74.992		$	77.286			3.1	%
Total External
Balance at beginning-of-period (3)	$	69.346		$	66.696		$	57.662		$	46.574		$	44.305			-36.1	%	$	75.686		$	46.574			-38.5	%
Sales/inflows		3.132			3.176			2.951			4.594			3.321			6.0	%		7.136			7.915			10.9	%
Redemptions/withdrawals/terminations		(4.433	)		(6.393	)		(6.107	)		(4.243	)		(3.139	)		29.2	%		(9.640	)		(7.382	)		23.4	%
Exchanges		(0.002	)		0.101			-			-			(0.073	)	NM				(0.005	)		(0.073	)	NM
Net flows		(1.303	)		(3.116	)		(3.156	)		0.351			0.109			108.4	%		(2.509	)		0.460			118.3	%
Net investment gains and change in market value		(1.347	)		(5.944	)		(7.932	)		(2.620	)		4.981		NM				(6.481	)		2.361			136.4	%
Transfer of assets from a third-party		-			0.010			-			-			-		NM				-			-		NM
Transfer of assets from an inter-company manager		-			0.016			-			-			-		NM				-			-		NM
Balance at End-of-Period	$	66.696		$	57.662		$	46.574		$	44.305		$	49.395			-25.9	%	$	66.696		$	49.395			-25.9	%

(1)  This roll forward breaks out total assets under management by inter-segment and external balances, which include both retail and institutional assets under management.

(2)  Reflects assets that were transferred to an inter-company manager, which did not impact Lincoln's consolidated assets under management.

(3)  Includes Delaware's VIP funds.  Lincoln Financial insurance subsidiaries, as well as unaffiliated insurers, participate in these funds.

6/30/2009																									PAGE 27
Other Operations (1)
Unaudited (in millions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Operating Revenues
Insurance premiums	$	1.7		$	0.6		$	0.3		$	0.8		$	2.7			58.8	%	$	3.1		$	3.5			12.9	%
Net investment income		87.1			90.8			81.9			69.7			69.8			-19.9	%		185.7			139.4			-24.9	%
Amortization of deferred gain on business sold through reinsurance (2)		18.4			18.4			18.4			18.4			18.4			0.0	%		36.9			36.8			-0.3	%
Other revenues and fees		0.6			1.1			(1.1	)		(0.8	)		2.5		NM				(1.7	)		1.8			205.9	%
Communications revenues		22.9			21.5			19.4			14.8			19.1			-16.6	%		44.6			33.9			-24.0	%
Inter-segment elimination of investment advisory fees		(20.6	)		(20.6	)		(20.3	)		(19.9	)		(20.0	)		2.9	%		(40.6	)		(39.9	)		1.7	%
Total Operating Revenues		110.1			111.8			98.6			83.0			92.5			-16.0	%		228.0			175.5			-23.0	%
Operating Expenses
Interest credited		41.8			42.6			40.7			50.9			31.4			-24.9	%		87.6			82.3			-6.1	%
Benefits		29.0			30.7			25.6			106.6			36.0			24.1	%		56.9			142.6			150.6	%
Underwriting, acquisition, insurance and other expenses		47.3			32.2			44.4			32.5			53.9			14.0	%		82.8			86.4			4.3	%
Taxes, licenses and fees		1.1			2.6			1.6			1.5			3.1			181.8	%		3.2			4.6			43.8	%
Interest and debt expenses		64.8			68.6			72.3			64.7			60.9			-6.0	%		140.2			125.6			-10.4	%
Communications expenses		15.4			14.2			14.7			12.9			13.5			-12.3	%		30.9			26.4			-14.6	%
Inter-segment elimination of investment advisory fees		(20.6	)		(20.6	)		(20.3	)		(19.9	)		(20.0	)		2.9	%		(40.6	)		(39.9	)		1.7	%
Total Operating Expenses		178.8			170.3			179.0			249.2			178.8			0.0	%		361.0			428.0			18.6	%
Loss from operations before federal income tax benefit		(68.7	)		(58.5	)		(80.4	)		(166.2	)		(86.3	)		-25.6	%		(133.0	)		(252.5	)		-89.8	%
Federal income tax benefit		(23.9	)		(18.6	)		(25.2	)		(57.7	)		(34.0	)		-42.3	%		(45.6	)		(91.7	)	NM
Loss From Operations	$	(44.8	)	$	(39.9	)	$	(55.2	)	$	(108.5	)	$	(52.3	)		-16.7	%	$	(87.4	)	$	(160.8	)		-84.0	%
Run Off Institutional Pensions Account Values -Balance at End-of-Period	$	2.051		$	2.010		$	1.941		$	1.931		$	1.928			-6.0	%	$	2.051		$	1.928			-6.0	%
Discontinued Operations
Unaudited (in millions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
		2008			2008			2008			2009			2009		Change				2008			2009		Change
Discontinued Operations Before Disposal
Income from discontinued operations before federal income tax expense	$	20.6		$	20.3		$	0.2		$	7.5		$	15.0			-27.2	%	$	45.0		$	22.5			-50.0	%
Federal income tax expense		7.2			7.1			0.1			2.6			5.3			-26.4	%		15.8			7.9			-50.0	%
Income From Discontinued Operations Before Disposal		13.4			13.2			0.1			4.9			9.7			-27.6	%		29.2			14.6			-50.0	%
Disposal
Gain (loss) on disposal before federal income tax expense (benefit)		(0.4	)		(0.2	)		0.6			-			(237.0	)	NM				(12.7	)		(237.0	)	NM
Federal income tax expense (benefit)		(0.1	)		0.8			0.2			-			(67.0	)	NM				(3.4	)		(67.0	)	NM
Gain (Loss) on Disposal		(0.3	)		(1.0	)		0.4			-			(170.0	)	NM				(9.3	)		(170.0	)	NM
Income (Loss) From Discontinued Operations	$	13.1		$	12.2		$	0.5		$	4.9		$	(160.3	)	NM			$	19.9		$	(155.4	)	NM

(1)   Includes inter-segment eliminations of transactions.

(2)   Represents the amortization of deferred gain recognized on the business sold through indemnity reinsurance to Swiss Re.

6/30/2009																									PAGE 28
Consolidated Domestic Deposits, Account Balances and Net Flows
Unaudited (in billions)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Deposits
Retirement Solutions:
Annuities - fixed annuities (1)	$	1.371		$	1.276		$	1.233		$	1.363		$	1.778			29.7	%	$	2.531		$	3.141			24.1	%
Defined Contribution - fixed annuities		0.280			0.290			0.279			0.416			0.429			53.2	%		0.612			0.845			38.1	%
Annuities - variable annuities		2.065			1.672			1.087			0.834			0.857			-58.5	%		3.931			1.691			-57.0	%
Defined Contribution - variable products (2)		1.141			1.044			0.962			1.159			0.809			-29.1	%		2.360			1.968			-16.6	%
Insurance Solutions - Life Insurance		1.062			1.082			1.217			1.058			1.020			-4.0	%		2.194			2.078			-5.3	%
Investment Management:
Annuities		0.786			1.075			1.032			0.771			0.935			19.0	%		2.348			1.706			-27.3	%
Mutual funds		1.407			1.303			1.337			1.382			1.524			8.3	%		2.999			2.906			-3.1	%
Managed accounts and other		0.403			0.320			0.225			0.265			0.299			-25.8	%		0.744			0.564			-24.2	%
Consolidating adjustments		(0.776	)		(1.061	)		(1.019	)		(0.752	)		(0.920	)		-18.6	%		(2.270	)		(1.672	)		26.3	%
Total Gross Retail Deposits		7.739			7.001			6.353			6.496			6.731			-13.0	%		15.449			13.227			-14.4	%
Investment Management - institutional		0.910			1.290			1.186			2.712			1.108			21.8	%		2.140			3.820			78.5	%
Consolidating adjustments		(0.034	)		(0.052	)		(0.109	)		(0.090	)		(0.091	)	NM				(0.126	)		(0.181	)		-43.7	%
Total Gross Deposits	$	8.615		$	8.239		$	7.430		$	9.118		$	7.748			-10.1	%	$	17.463		$	16.866			-3.4	%

	As of
	June			Sept.			Dec.			March			June			%
		2008			2008			2008			2009			2009		Change
Account Balances
Retirement Solutions:
Annuities - fixed annuities (1)	$	16.544		$	16.493		$	16.530		$	16.760		$	17.531			6.0	%
Defined Contribution - fixed annuities		11.294			11.418			11.638			11.924			12.070			6.9	%
Annuities - variable annuities		55.854			49.982			40.925			39.301			45.523			-18.5	%
Defined Contribution - variable products (2)		23.748			21.155			17.240			16.569			19.257			-18.9	%
Insurance Solutions - Life Insurance		32.603			32.283			31.753			30.031			30.622			-6.1	%
Investment Management:
Annuities		11.700			10.952			9.377			8.875			10.184			-13.0	%
Mutual funds		18.176			16.699			14.021			13.716			15.620			-14.1	%
Managed accounts and other		14.292			11.425			8.102			6.102			6.809			-52.4	%
Consolidating adjustments		(11.286	)		(10.590	)		(9.086	)		(8.607	)		(9.690	)		14.1	%
Total Retail Account Balances		172.925			159.817			140.500			134.671			147.927			-14.5	%
Investment Management - institutional		31.523			27.523			23.042			23.116			25.253			-19.9	%
Consolidating adjustments		(2.124	)		(2.423	)		(2.143	)		(2.034	)		(2.176	)		-2.4	%
Total Account Balances	$	202.324		$	184.917		$	161.399		$	155.753		$	171.004			-15.5	%

	For the Three Months Ended																	For the Six Months Ended
	June			Sept.			Dec.			March			June		%			June			June			%
		2008			2008			2008			2009			2009	Change				2008			2009		Change
Net Flows
Retirement Solutions:
Annuities	$	1.589		$	0.944		$	0.376		$	0.430		$	1.043		-34.4	%	$	2.770		$	1.473			-46.8	%
Defined Contribution		0.237			0.093			0.171			0.659			0.329		38.8	%		0.517			0.988			91.1	%
Insurance Solutions - Life Insurance		0.677			0.690			0.804			0.557			0.540		-20.2	%		1.327			1.097			-17.3	%
Investment Management - retail		(0.937	)		(1.326	)		(2.106	)		(0.720	)		0.044		104.7	%		(1.592	)		(0.676	)		57.5	%
Consolidating adjustments		(0.075	)		(0.025	)		0.071			(0.001	)		0.045		160.0	%		(0.173	)		0.044			125.4	%
Total Retail Net Flows		1.491			0.376			(0.684	)		0.925			2.001		34.2	%		2.849			2.926			2.7	%
Investment Management - institutional		(0.535	)		(2.007	)		(1.194	)		0.931			0.029		105.4	%		(1.045	)		0.960			191.9	%
Consolidating adjustments		0.052			0.253			0.130			0.057			0.043		-17.3	%		0.082			0.100			22.0	%
Total Net Flows	$	1.008		$	(1.378	)	$	(1.748	)	$	1.914		$	2.072		105.6	%	$	1.886		$	3.986			111.3	%

(1)  Includes fixed portion of variable annuities.

(2)  Includes amounts attributable to mutual fund net flows.  Mutual fund account values are not included in the separate accounts reported on our Consolidated Balance Sheets, as we do not have any ownership interest in them.

6/30/2009											PAGE 29
Consolidated Investment Data - Assets Managed
Unaudited (in billions)
	As of
	June		Sept.		Dec.		March		June		%
	2008		2008		2008		2009		2009		Change
Assets Managed by Source
LNC's investments and cash:
Available-for-sale fixed maturity securities	$	53.372	$	50.939	$	48.141	$	48.536	$	55.050		3.1	%
Available-for-sale equity securities		0.414		0.449		0.254		0.176		0.236		-43.0	%
Trading securities		2.551		2.393		2.333		2.246		2.317		-9.2	%
Other investments		12.716		13.137		15.783		14.353		12.945		1.8	%
Total LNC investments		69.053		66.918		66.511		65.311		70.548		2.2	%
Separate accounts		77.463		68.385		55.655		52.935		61.091		-21.1	%
Cash and invested cash		1.775		2.009		5.754		5.510		2.539		43.0	%
Total LNC		148.291		137.312		127.920		123.756		134.178		-9.5	%
Non-affiliate assets managed		63.197		54.419		44.107		41.953		46.596		-26.3	%
Total Assets Managed	$	211.488	$	191.731	$	172.027	$	165.709	$	180.774		-14.5	%
Assets Managed by Advisor
Investment Management segment (1)	$	75.691	$	66.599	$	54.542	$	51.810	$	57.867		-23.5	%
Delaware Investment Advisers (2)		65.997		63.531		65.680		64.824		68.814		4.3	%
Policy loans		2.849		2.867		2.921		2.906		2.897		1.7	%
Non-LNC affiliates		66.951		58.734		48.884		46.169		51.196		-23.5	%
Total Assets Managed	$	211.488	$	191.731	$	172.027	$	165.709	$	180.774		-14.5	%

(1)  See page 25 for additional detail.

(2)  Represents assets managed internally.  See page 25 for additional detail.

6/30/2009																						PAGE 30
Consolidated Investment Data - Other Investment Data
Unaudited (millions of dollars)
	For the Three Months Ended																		For the Six Months Ended
	June			Sept.			Dec.			March			June			%			June			June			%
	2008			2008			2008			2009			2009			Change			2008			2009			Change
Net Investment Income
Available-for-sale fixed maturity securities	$	839.1		$	840.1		$	827.5		$	824.9		$	854.6			1.8	%	$	1,680.8		$	1,679.5			-0.1	%
Available-for-sale equity securities		7.3			6.0			4.8			1.7			1.8			-75.3	%		15.5			3.5			-77.4	%
Trading securities		42.1			41.0			40.3			39.6			39.0			-7.4	%		84.7			78.6			-7.2	%
Mortgage loans on real estate		128.6			121.2			122.1			119.2			120.0			-6.7	%		250.2			239.2			-4.4	%
Real estate		5.8			5.1			4.7			3.8			3.5			-39.7	%		13.2			7.3			-44.7	%
Policy loans		43.1			46.0			45.3			44.3			42.2			-2.1	%		87.7			86.5			-1.4	%
Invested cash		12.8			9.1			13.8			8.3			4.1			-68.0	%		29.4			12.4			-57.8	%
Other investments		9.5			29.0			(68.4	)		(2.2	)		(67.4	)	NM				6.3			(69.6	)	NM
Investment income		1,088.3			1,097.5			990.1			1,039.6			997.8			-8.3	%		2,167.8			2,037.4			-6.0	%
Investment expense		(31.3	)		(29.6	)		(30.0	)		(26.3	)		(27.2	)		13.1	%		(65.7	)		(53.5	)		18.6	%
Net Investment Income	$	1,057.0		$	1,067.9		$	960.1		$	1,013.3		$	970.6			-8.2	%	$	2,102.1		$	1,983.9			-5.6	%
Average Invested Assets (Amortized Cost)	$	70,227.1		$	70,150.2		$	69,731.7		$	69,583.2		$	71,331.0					$	70,106.8		$	70,457.1
Ratio of Net Investment Income Over Average Invested Assets		6.02	%		6.09	%		5.51	%		5.82	%		5.44	%					6.00	%		5.63	%
Realized Loss Related to Investments
Available-for-sale fixed maturity securities:
Gross gains	$	16.8		$	18.9		$	16.1		$	53.7		$	32.8			95.2	%	$	25.1		$	86.5			244.6	%
Gross losses		(125.4	)		(372.1	)		(527.1	)		(241.3	)		(172.1	)		-37.2	%		(219.6	)		(413.4	)		-88.3	%
Equity securities:
Gross gains		-			1.0			-			3.1			0.5		NM				0.1			3.6		NM
Gross losses		(6.4	)		(25.4	)		(131.5	)		(2.6	)		(6.0	)		6.3	%		(6.4	)		(8.6	)		-34.4	%
Gain (loss) on other investments		3.1			0.7			8.5			(2.1	)		(57.9	)	NM				28.2			(60.0	)	NM
Associated amortization of DAC, VOBA, DSI, DFEL and changes in other contract holder funds and funds withheld reinsurance liabilities		23.9			92.2			117.4			55.6			48.4			102.5	%		46.9			104.0			121.7	%
Total realized loss on investments, excluding trading securities		(88.0	)		(284.7	)		(516.6	)		(133.6	)		(154.3	)		-75.3	%		(125.7	)		(287.9	)	NM
Loss on certain derivative instruments		(29.1	)		(29.9	)		(50.1	)		(16.5	)		(4.0	)		86.3	%		(32.2	)		(20.5	)		36.3	%
Total, pre-tax		(117.1	)		(314.6	)		(566.7	)		(150.1	)		(158.3	)		-35.2	%		(157.9	)		(308.4	)		-95.3	%
Income taxes		(41.5	)		(110.1	)		(198.4	)		(52.5	)		(55.4	)		-33.5	%		(55.3	)		(107.9	)		-95.1	%
Total, After-Tax	$	(75.6	)	$	(204.5	)	$	(368.3	)	$	(97.6	)	$	(102.9	)		-36.1	%	$	(102.6	)	$	(200.5	)		-95.4	%

	As of June 30, 2009					As of December 31, 2008
	Amount		% of Total			Amount		% of Total
Available-for-Sale and Trading Securities
Fixed maturity securities (fair value)	$	57,364.8		99.6	%	$	50,471.6		99.5	%
Fixed maturity securities (amortized cost)		60,859.4		99.3	%		56,686.3		99.2	%
Equity securities (fair value)		238.0		0.4	%		255.6		0.5	%
Equity securities (amortized cost)		402.1		0.7	%		429.8		0.8	%
% of Available-for-Sale Fixed Maturity Securities (Based on Fair Value)
Treasuries and AAA				18.8	%				24.5	%
AA or better				25.6	%				30.9	%
BB or less				7.0	%				4.5	%

General Account Investments	As of June 30, 2009					As of December 31, 2008
	Amount		% of Total			Amount		% of Total
Fixed Maturities - Security Sector:
Corporate bonds	$	42,489.5		77.2	%	$	36,055.6		74.9	%
U.S. Government bonds		221.2		0.4	%		245.9		0.5	%
Foreign government bonds		479.8		0.9	%		520.8		1.1	%
Mortgage-backed securities		9,889.7		18.0	%		10,129.6		21.0	%
State and municipal bonds		906.6		1.6	%		226.4		0.5	%
Preferred stocks - redeemable		1,063.0		1.9	%		962.3		2.0	%
Total	$	55,049.8		100.0	%	$	48,140.6		100.0	%

	As of
	June		Sept.		Dec.		March		June		%
Composition of Investment Portfolio		2008		2008		2008		2009		2009	Change
Available-for-sale securities, at fair value:
Fixed maturity	$	53,371.5	$	50,938.9	$	48,140.6	$	48,535.5	$	55,049.8		3.1	%
Equity		414.0		448.8		254.1		175.7		236.3		-42.9	%
Trading securities		2,550.5		2,393.4		2,332.5		2,245.6		2,316.7		-9.2	%
Mortgage loans on real estate and real estate		7,813.3		7,814.7		7,840.6		7,745.1		7,627.5		-2.4	%
Policy loans		2,849.2		2,867.2		2,921.1		2,905.6		2,896.9		1.7	%
Derivative investments		889.9		1,262.2		3,397.2		2,226.1		1,233.8		38.6	%
Other investments		1,163.5		1,193.0		1,624.1		1,476.2		1,187.1		2.0	%
Total	$	69,051.9	$	66,918.2	$	66,510.2	$	65,309.8	$	70,548.1		2.2	%

EX-99.3

Lincoln Financial Group
Available For Sale (AFS) by Industry Classifications
Amounts in Millions
	As of 6/30/2009												As of 3/31/2009
	Amortized		Unrealized		Unrealized			Fair		% Fair			Amortized		Unrealized		Unrealized			Fair		% Fair
AFS - Fixed Maturities	Cost		Gains		(Losses)			Value		Value			Cost		Gains		(Losses)			Value		Value
Corporate
Financial Services	$	8,420	$	80	$	(827	)	$	7,673	$	13.8	%	$	8,144	$	33	$	(1,403	)	$	6,774		14.0	%
Basic Industry		2,262		40		(179	)		2,123		3.9	%		2,200		11		(348	)		1,863		3.8	%
Capital Goods		2,899		67		(124	)		2,842		5.2	%		2,703		35		(220	)		2,518		5.2	%
Communications		2,924		99		(109	)		2,914		5.3	%		2,634		39		(208	)		2,465		5.1	%
Consumer Cyclical		2,891		75		(189	)		2,777		5.0	%		2,854		25		(360	)		2,519		5.2	%
Consumer Non-Cyclical		5,351		206		(79	)		5,478		10.0	%		4,838		86		(166	)		4,758		9.8	%
Energy		4,134		137		(87	)		4,184		7.6	%		3,086		40		(247	)		2,879		5.9	%
Technology		1,100		33		(19	)		1,114		2.0	%		1,038		13		(65	)		986		2.0	%
Transportation		1,165		24		(75	)		1,114		2.0	%		1,214		14		(119	)		1,109		2.3	%
Industrial Other		712		18		(19	)		711		1.3	%		704		9		(32	)		681		1.4	%
Utilities		8,618		230		(273	)		8,575		15.6	%		8,340		94		(544	)		7,890		16.2	%
ABS
CDO / CLN [1]		749		3		(444	)		308		0.6	%		796		4		(625	)		175		0.4	%
CRE CDO		56		-		(29	)		27		0.0	%		57		-		(31	)		26		0.1	%
Credit Card		180		-		(20	)		160		0.3	%		160		-		(34	)		126		0.3	%
Home Equity		1,166		-		(588	)		578		1.0	%		1,193		1		(588	)		606		1.2	%
Manufactured Housing		142		1		(30	)		113		0.2	%		145		-		(35	)		110		0.2	%
Auto Loan		122		1		-			123		0.2	%		-		-		-			-		0.0	%
Other		197		8		(10	)		195		0.4	%		192		9		(15	)		186		0.4	%
CMBS
Non-Agency Backed		2,520		16		(542	)		1,994		3.6	%		2,517		11		(621	)		1,907		3.9	%
CMOs
Agency Backed		4,712		248		(27	)		4,933		9.0	%		4,866		286		(24	)		5,128		10.5	%
Non-Agency Backed		1,865		3		(663	)		1,205		2.2	%		1,954		2		(756	)		1,200		2.5	%
Pass Throughs
Agency Backed		1,644		50		(7	)		1,687		3.1	%		1,374		65		-			1,439		3.0	%
Non-Agency Backed		133		-		(33	)		100		0.2	%		139		-		(41	)		98		0.2	%
Municipals
Taxable		809		11		(13	)		807		1.5	%		109		3		(1	)		111		0.2	%
Tax-Exempt		3		-		-			3		0.0	%		3		-		-			3		0.0	%
Government/Gov Agencies
United States		1,052		91		(28	)		1,115		2.0	%		1,047		131		(29	)		1,149		2.4	%
Foreign		1,177		38		(81	)		1,134		2.1	%		1,138		50		(123	)		1,065		2.2	%
Preferred Stock Redeemable & Hybrids		1,564		8		(509	)		1,063		1.9	%		1,564		3		(802	)		765		1.6	%
																					.
AFS - Fixed Maturities		58,567		1,487		(5,004	)		55,050		100.0	%		55,009		964		(7,437	)		48,536		100.0	%
AFS - Equities		400		9		(173	)		236					426		4		(254	)		176
Total AFS Securities		58,967		1,496		(5,177	)		55,286					55,435		968		(7,691	)		48,712
Trading Securities [2]		2,294		199		(176	)		2,317					2,279		222		(255	)		2,246
Total AFS & Trading Securities	$	61,261	$	1,695	$	(5,353	)	$	57,603				$	57,714	$	1,190	$	(7,946	)	$	50,958

[1]  Includes amortized cost of $600 million as of 6/30/09 and 3/31/2009 respectively, related to Credit-Linked Notes.  For additional information, see "Credit-Linked Notes (CLN)" disclosure starting on page 122 of the 2008 Form 10K.

[2] The trading securities support our Modco reinsurance agreements and the investment results are passed directly to the reinsurers.

Lincoln Financial Group
AFS - Exposure to Residential MBS ("RMBS") and Related Collateral
As of 6/30/2009
Amounts in Millions
	Total				Prime/Agency				Prime/Non-Agency				Alt-A				Subprime
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
Type	Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost
CMOs, Pass Throughs	$	7,925	$	8,354	$	6,549	$	6,263	$	886	$	1,343	$	490	$	748	$	-	$	-
ABS - Home Equity		578		1,166		-		-		-		-		219		414		359		752
Total	$	8,503	$	9,520	$	6,549	$	6,263	$	886	$	1,343	$	709	$	1,162	$	359	$	752
Rating
AAA	$	7,227	$	7,148	$	6,526	$	6,239	$	342	$	397	$	163	$	210	$	196	$	302
AA		233		346		5		6		82		117		114		162		32		61
A		115		157		18		17		38		45		46		60		13		35
BBB		112		222		-		-		39		70		37		66		36		86
BB and below		816		1,647		-		1		385		714		349		664		82		268
Total	$	8,503	$	9,520	$	6,549	$	6,263	$	886	$	1,343	$	709	$	1,162	$	359	$	752
Origination Year
2004 and prior	$	3,817	$	3,972	$	3,031	$	2,889	$	322	$	388	$	276	$	375	$	188	$	320
2005		1,420		1,717		916		877		183		269		196		307		125		264
2006		755		1,165		387		370		124		238		198		389		46		168
2007		1,618		1,785		1,322		1,246		257		448		39		91		-		-
2008		381		364		381		364		-		-		-		-		-		-
2009		512		517		512		517		-		-		-		-		-		-
Total	$	8,503	$	9,520	$	6,549	$	6,263	$	886	$	1,343	$	709	$	1,162	$	359	$	752

Note:  This table does not include the fair value of trading securities totaling $165 million which support our Modco reinsurance agreements since investment results for these agreements are passed directly to the reinsurers.  The $165 million in trading securities consisted of $139 million prime, $15 million Alt-A, and $11 million subprime.

Lincoln Financial Group
AFS - RMBS and Related Collateral
As of 6/30/2009
Amounts in Millions
Prime
	Total				AAA				AA				A				BBB					BB & Below
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
Origination Year	Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost
2004 and prior	$	3,353	$	3,277	$	3,308	$	3,210	$	23	$	32	$	19	$	18	$	2	$	4	$	1	$	13
2005		1,099		1,146		943		913		38		49		37		42		4		7		77		135
2006		511		608		401		389		6		11		1		1		33		58		70		149
2007		1,579		1,694		1,321		1,246		20		31		-		-		-		-		238		417
2008		381		364		381		364		-		-		-		-		-		-		-		-
2009		512		517		512		517		-		-		-		-		-		-		-		-
Total	$	7,435	$	7,606	$	6,866	$	6,639	$	87	$	123	$	57	$	61	$	39	$	69	$	386	$	714
Alt-A
	Total				AAA				AA					A			BBB				BB & Below
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
Origination Year	Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost
2004 and prior	$	276	$	375	$	129	$	156	$	81	$	113	$	44	$	58	$	9	$	22	$	13	$	26
2005		196		307		25		43		10		16		2		2		29		44		130		202
2006		198		389		9		11		23		33		-		-		-		-		166		345
2007		39		91		-		-		-		-		-		-		-		-		39		91
Total	$	709	$	1,162	$	163	$	210	$	114	$	162	$	46	$	60	$	38	$	66	$	348	$	664
Subprime
	Total				AAA				AA					A			BBB				BB & Below
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
Origination Year	Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost
2004 and prior	$	188	$	320	$	127	$	184	$	20	$	37	$	9	$	29	$	23	$	53	$	9	$	17
2005		125		264		69		118		12		24		1		1		4		7		39		114
2006		46		168		-		-		-		-		4		5		8		26		34		137
Total	$	359	$	752	$	196	$	302	$	32	$	61	$	14	$	35	$	35	$	86	$	82	$	268

Lincoln Financial Group
AFS - Asset-Backed Securities - Consumer Loan
As of 6/30/2009
Amounts in Millions
	Total				Credit Card [1]				Auto Loans
	Fair		Amortized		Fair		Amortized		Fair		Amortized
	Value		Cost		Value		Cost		Value		Cost
Rating
AAA	$	260	$	276	$	137	$	154	$	123	$	122
BBB		24		26		24		26		-		-
Total	$	284	$	302	$	161	$	180	$	123	$	122

[1] Additional indirect credit card exposure through structured securities is excluded from this table.

See "Credit-Linked Notes (CLN)" disclosure starting on page 122 of the 2008 Form 10K.

Note: This table does not include the fair value of trading securities totaling $2.5 million which support our Modco

reinsurance agreements since investment results for these agreements are passed directly to the reinsurers.

The $2.5 million in trading securities consisted of $2.3 million credit card securities and $0.2 million of auto loans.

Lincoln Financial Group
AFS - Commercial Mortgage-Backed Securities
As of 6/30/2009
Amounts in Millions
	Total				Multiple Property				Single Property				CRE CDOs
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
Type	Value		Cost		Value		Cost		Value		Cost		Value		Cost
CMBS	$	1,994	$	2,520	$	1,911	$	2,376	$	83	$	144	$	-	$	-
CRE CDOs		27		56		-		-		-		-		27		56
Total	$	2,021	$	2,576	$	1,911	$	2,376	$	83	$	144	$	27	$	56
Rating
AAA	$	1,503	$	1,615	$	1,444	$	1,548	$	51	$	52	$	8	$	15
AA		259		353		259		353		-		-		-		-
A		133		260		91		179		24		44		18		37
BBB		96		195		89		162		6		29		1		4
BB and below		30		153		28		134		2		19		-		-
Total	$	2,021	$	2,576	$	1,911	$	2,376	$	83	$	144	$	27	$	56
Origination Year
2004 and prior	$	1,398	$	1,612	$	1,317	$	1,519	$	68	$	75	$	13	$	18
2005		349		500		327		424		14		61		8		15
2006		129		261		122		230		1		8		6		23
2007		145		203		145		203		-		-		-		-
Total	$	2,021	$	2,576	$	1,911	$	2,376	$	83	$	144	$	27	$	56

Note: This table does not include the fair value of trading securities totaling $78 million which support

our Modco reinsurance agreements since investment results for these agreements are passed

directly to the reinsurers.  The $78 million in trading securities consisted of $77 million CMBS

and $1 million CRE CDOs.

Lincoln Financial Group
AFS - Commercial Mortgage-Backed Securities
As of 6/30/2009
Amounts in Millions
	Total				AAA				AA				A				BBB				BB & Below
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
Origination Year	Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost
2004 and prior	$	1,398	$	1,612	$	1,036	$	1,073	$	216	$	274	$	98	$	147	$	25	$	58	$	23	$	60
2005		349		500		289		324		21		37		15		44		20		44		4		51
2006		129		261		66		82		20		31		15		59		25		47		3		42
2007		145		203		113		135		2		11		4		10		26		47		-		-
Total	$	2,021	$	2,576	$	1,504	$	1,614	$	259	$	353	$	132	$	260	$	96	$	196	$	30	$	153

Lincoln Financial Group
Commercial Mortgage Loan Portfolio, Net of Reserves
As of 6/30/2009
Amounts in Millions
LNC MORTGAGE LOAN DISTRIBUTION
Property Type	Amt		%			State	Amt		%
Office Building	$	2,570		34	%	CA	$	1,561		21	%
Industrial		1,960		26	%	TX		637		9	%
Retail		1,756		24	%	MD		433		6	%
Apartment		670		9	%	FL		332		4	%
Hotel/Motel		280		4	%	VA		330		4	%
Mixed Use		133		2	%	TN		314		4	%
Other Commercial		99		1	%	AZ		308		4	%
Total	$	7,468		100	%	WA		292		4	%
						IL		274		4	%
						NC		268		4	%
						GA		246		3	%
Geographic Region	Amt		%			PA		229		3	%
Pacific	$	1,990		27	%	NV		206		3	%
South Atlantic		1,756		23	%	OH		198		2	%
East North Central		765		10	%	IN		180		2	%
Mountain		719		10	%	MA		157		2	%
West South Central		678		9	%	MN		154		2	%
Middle Atlantic		502		7	%	NJ		143		2	%
East South Central		447		6	%	SC		132		2	%
West North Central		398		5	%	NY		130		2	%
New England		213		3	%	Below 2%		944		13	%
Total	$	7,468		100	%		$	7,468		100	%

Lincoln Financial Group
Additional Disclosure of Insured Bonds and Direct Exposure
As of 6/30/2009
Amounts in Millions
	Direct		Insured		Total		Total		Total			Total
Monoline Name	Exposure [1]		Bonds [2]		Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
AMBAC	$	-	$	262	$	262	$	-	$	(81	)	$	181
ASSURED GUARANTY LTD		30		-		30		-		(16	)		14
FGIC		-		90		90		1		(37	)		54
FSA		-		67		67		1		(6	)		62
MBIA		12		149		161		3		(33	)		131
MGIC		12		7		19		-		(4	)		15
PMI GROUP INC		27		-		27		-		(9	)		18
RADIAN GROUP INC		19		-		19		-		(9	)		10
XL CAPITAL LTD		72		70		142		-		(23	)		119
Total	$	172	$	645	$	817	$	5	$	(218	)	$	604

[1] Additional direct exposure through Credit Default Swaps with a notional totaling $98 million is excluded from this table.

[2] Additional indirect insured exposure through structured securities is excluded from this table.   See

"Credit-Linked Notes (CLN)" disclosure starting on page 122 of the 2008 Form 10K.

Note: This table does not include the fair value of trading securities totaling $27 million, which support our Modco

reinsurance agreements since investment results for these agreements are passed directly to the reinsurers.

The $27 million in trading securities consisted of $9 million of Direct Exposure and $18 million of Insured Exposure.

This table also excludes insured exposure totaling $14 million for a guaranteed investment tax credit partnership.

EX-99.1

                         NEWS RELEASE

 

Lincoln Financial Group Reports Second Quarter 2009 Results

_____________________________________________

Net Flows Double Year-over-Year

Second Quarter Actions Strengthen Capital Position and Financial Flexibility

Philadelphia, PA, July 29, 2009 – Lincoln Financial Group (NYSE:LNC) today reported a net loss of $161 million, or $0.62 per share, for the second quarter of 2009, versus net income of $125 million, or $0.48 per diluted share in the prior-year quarter. The 2009 quarter included a loss of $170 million, after tax, or $0.65 per share, related to the sale of Lincoln National (UK) plc, realized investment losses of $109 million, after tax, or $0.42 per share, and positive variable annuity hedge program results which were more than offset by the FAS 157 non-performance risk factor resulting in a net loss of approximately $110 million, after tax, or $0.42 per share.

Income from operations for the second quarter of 2009 was $212 million, or $0.81 per diluted share, compared to $323 million, or $1.24 per diluted share, in the second quarter of 2008. The current quarter reflects the year-over-year decline in the equity markets and included a loss on alternative investments of $29 million, after tax, versus alternative investment income in the year-ago quarter of $5 million, after tax. The 2009 quarter also included a restructuring charge related to expense-save initiatives of approximately $19 million, after tax, or $0.07 per diluted share. As a result of the pending sale agreement for the Lincoln UK subsidiary, income from operations in the second quarter of 2009 excludes approximately $10 million of income from this segment, which is now included in discontinued operations.

Dennis R. Glass, president and CEO, said, “We have responded to the external challenges by taking aggressive steps including a diverse set of capital actions, expense-save initiatives, and product and distribution enhancements to accommodate changing client preferences and the economic realities. These actions have improved our capital position, better protect the company against further capital market fluctuations and support the continued growth of our businesses as we move forward.”

Second Quarter 2009 Highlights:

·   Consolidated net flows of $2.1 billion doubled versus the 2008 period and increased 8% sequentially, with stable retail deposits and improved lapse rates across all segments.

·   Issued $690 million of common equity and $500 million of senior debt and ended the quarter with holding company cash and cash equivalents of approximately $800 million.

·   Unrealized losses at the end of the quarter improved more than 40% sequentially, contributing to an overall increase of $1.8 billion in stockholders’ equity.

·   Completed expense reductions expected to yield run-rate savings $250 million, pre DAC and tax, by year-end 2009.

Glass added, “For the second consecutive quarter, we reported positive net flows and profits in each of our business segments. In addition to our core strengths, strong sales in our indexed annuities, term insurance and MoneyGuardÒ linked-benefit product highlighted our ability to adapt to market demands. These solid fundamentals underscored the resilience of Lincoln’s business model, our diverse product portfolio, and the quality of our distribution platforms.”

Capital and Liquidity

In the second quarter of 2009, Lincoln issued $690 million of common stock, or 46 million shares, and $500 million of senior notes in the public markets. On July 10, 2009, the company issued $950 million in Series B preferred shares, or 950,000 shares, pursuant to the U.S. Treasury’s Capital Purchase Program (CPP) and warrants to purchase approximately 13 million shares of LNC common stock. The CPP financing represents approximately 6% of the company’s total capitalization. The company retained approximately $1.1 billion of the proceeds at the holding company and contributed $1 billion to the insurance subsidiaries.

As of June 30, 2009, commercial paper outstanding was approximately $200 million, which the company expects to maintain in the near-term. The holding company reduced its borrowings under the inter-company cash management program to zero and held cash and cash equivalents of approximately $800 million at the end of the second quarter.

Lincoln Financial estimates a risk based capital (RBC) ratio at June 30, 2009, of approximately 350% for The Lincoln National Life Insurance Company and its affiliates. This estimate does not reflect the $1 billion contribution made to the insurance subsidiaries in the month of July, which would add approximately 70 percentage points to RBC.

Realized and Unrealized Gains and Losses on Investments

Total gross realized losses on general account investments were $236 million, pre DAC and tax, down modestly from the sequential quarter. At the end of the second quarter, the company reported a net unrealized loss position for available-for-sale securities, including unrealized gains, of $1.6 billion, after tax, an improvement of more than 40% from March 31, 2009.

Consolidated Retail Retirement and Insurance Deposits and Flows

Consolidated retail deposits into retirement and insurance products of $4.9 billion in the second quarter compared to $5.9 billion a year ago and were up modestly from the first quarter. Consolidated retail retirement and insurance product net flows of $1.9 billion compared to $2.5 billion in the 2008 quarter and were up 16% sequentially. Retirement and insurance account balances were $125.0 billion at June 30, 2009, down 11% year-over-year and up 9% sequentially.

Second Quarter 2009 Segment Results

Retirement Solutions

Individual Annuities

The Individual Annuities segment reported income from operations of $65 million in the second quarter of 2009 versus $116 million in the year-ago period, reflecting a $13.9 billion decline in average variable account balances compared to the prior year. The 2009 quarter included a loss on alternative investments of $5 million, after tax.

Gross annuity deposits were $2.6 billion, down 23% from the prior year but up 20% from the first quarter. Net flows were $1.0 billion versus $1.6 billion in the 2008 quarter, but more than doubled sequentially. Variable annuity product deposits of $1.7 billion and net flows of $651 million were down 41% and 59% year-over-year, respectively, reflecting depressed economic and market conditions. Variable annuity product deposits and net flows increased 9% and 49%, respectively, from the first quarter. Fixed and indexed annuity product deposits of $900 million were up 83% year-over-year and 49% sequentially, driving an improvement in net flows for both periods.

Defined Contribution

Defined Contribution reported income from operations of $28 million, versus $41 million for the same period a year ago, reflecting a $6.1 billion decline in average variable account balances compared to prior year. The 2009 quarter included a loss on alternative investments of $3 million, after tax.

Gross deposits of $1.2 billion were down 13% versus prior year. Total net flows increased 39% to $329 million compared to the year-ago quarter, reflecting continued strong persistency. Deposits and net flows were down sequentially, a result of normal seasonality in the first quarter.

Insurance Solutions

Life Insurance

Life Insurance income from operations was $133 million compared to $164 million in the second quarter of 2008. The 2009 quarter included a loss on alternative investments of $20 million, after tax. The current quarter’s results also included a net positive impact of approximately $10 million, after tax, primarily attributable to favorable mortality.

Life insurance sales were $124 million in the second quarter compared to $166 million in the 2008 period and $145 million in the first quarter. MoneyGuardÒ, a linked-benefit universal life insurance policy with a long term care rider, and term life insurance sales improved year-over-year and sequentially once again, as market demand shifted toward lower-cost protection products.

Group Protection

For the second quarter, Group Protection’s income from operations was $34 million, compared to $32 million in the prior-year period. The non-medical loss ratio in the current period was 68.2%, driven by favorable experience in group disability.

Net earned premiums were $413 million in the second quarter, up 5% over the year-ago period. Annualized sales of $59 million declined 8% compared to the 2008 quarter due primarily to weak economic conditions, but were up 10% sequentially.

Investment Management

Investment Management segment income from operations was $5 million in the second quarter of 2009, compared to $15 million in the prior year, reflecting weak equity markets. Assets under management of $126.7 billion as of June 30, 2009, were down $15.0 billion year-over-year, but up $10.0 billion sequentially.

Total deposits for the second quarter were $3.9 billion, up 10% versus the year-ago period, but down 25% versus the first quarter. Positive net flows were $73 million compared to a negative $1.5 billion in the prior-year and a positive $211 million in the sequential quarter. Year-over-year improvements were balanced across the retail and institutional businesses.

Other Operations

The operating loss in Other Operations was $52 million in the quarter, versus $45 million in the prior-year quarter. A charge of approximately $19 million, after tax, related to expense-save initiatives was included in the 2009 quarter’s results.

Book Value

As of June 30, 2009, the book value per share of common stock, including accumulated other comprehensive income (AOCI), was $30.02 compared to $40.85 a year ago. Book value per share, excluding AOCI, was $35.67, compared to $43.99 a year ago.

This press release may contain statements that are forward-looking, and actual results may differ materially, especially given the current economic and credit conditions. Please see the Forward-Looking Statements – Cautionary Language that follow for additional factors that may cause actual results to differ materially from our current expectations. The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

The tables attached to this release define and reconcile income from operations, ROE, and book value per share excluding AOCI, non-GAAP measures, to net income, ROE, and book value per share including AOCI calculated in accordance with GAAP.

Lincoln Financial Group will discuss the company’s second quarter results with investors in a conference call beginning at 11:00 a.m. (ET) on Thursday, July 30, 2009. Interested persons are invited to listen through the internet. Please go to www.LincolnFinancial.com/webcast at least fifteen minutes prior to the event to register, download and install any necessary streaming media software. Interested persons may also listen to the call by dialing the following numbers:

- Dial:           (877) 852-6543 (Domestic)

     (719) 325-4773 (International)

- Ask for the Lincoln National Conference Call.

The company will also post its second quarter 2009 statistical supplement and a general account supplement on its Web site, www.LincolnFinancial.com/investor.

Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. With headquarters in the Philadelphia region, the companies of Lincoln Financial Group had assets under management of $181 billion as of June 30, 2009. Through its affiliated companies, Lincoln Financial Group offers: annuities; life, group life and disability insurance; 401(k) and 403(b) plans; savings plans; mutual funds; managed accounts; institutional investments; and comprehensive financial planning and advisory services. Affiliates also include: Delaware Investments, the marketing name for Delaware Management Holdings, Inc. and its subsidiaries; and Lincoln UK. For more information, including a copy of our most recent SEC reports containing our balance sheets, please visit www.LincolnFinancial.com.

Contacts:                Jim Sjoreen                                                                   Laurel O’Brien

         484 583-1420                                                                484 583-1735

         Investor Relations                                                      Media Relations

         Investorrelations@LFG.com                                     mediarelations@LFG.com

Definition of Income (Loss) from Operations and ROE

Income (loss) from operations and ROE, as used in the earnings release, are non-GAAP financial measures and are not substitutes for net income (loss) and ROE, calculated using GAAP measures.  Income (loss) from operations represents after-tax results excluding, as applicable, realized gains and losses associated with the following: sale or disposal of securities; impairments of securities; change in the fair value of embedded derivatives within certain reinsurance arrangements and the change in the fair value of related trading securities; change in the fair value of the embedded derivatives of our guaranteed living benefits within our variable annuities net of the change in the fair value of the derivatives we own to hedge the changes in the embedded derivative; net difference between the benefit ratio unlocking of SOP 03-1 reserves on our guaranteed death benefit riders within our variable annuities and the change in the fair value of the derivatives excluding our expected cost of the hedging instruments; changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products as required under SFAS 133 and SFAS 157, income (loss) from the initial adoption of changes in accounting principles; income (loss) from reserve changes (net of related amortization) on business sold through reinsurance; losses on early retirement of debt, including subordinated debt; losses from the impairment of intangible assets and income (loss) from discontinued operations.

The earnings used to calculate ROE, as used in the earnings release, are income (loss) from operations.  Income (loss) from operations is an internal measure used by the company in the management of its operations.  Management believes that this performance measure explains the results of the company's ongoing businesses in a manner that allows for a better understanding of the underlying trends in the company's current business because the excluded items are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in most instances, decisions regarding these items do not necessarily relate to the operations of the individual segments.

($ in millions, except per share data)
	For the Three Months Ended		For the Six Months Ended
	June 30,		June 30,
	2009	2008	2009	2008
Net Income (Loss)	$       (161.4)	$          124.7	$     (740.3)	$     413.8
Less:
Excluded realized loss, after-tax	(214.5)	(73.2)	(401.5)	(102.6)
Income from reserve changes (net of related
amortization) on business sold through reinsurance, after-tax	0.4	0.4	0.8	0.8
Gain on early extinguishment of debt, after tax	-	-	41.8	-
Impairment of intangibles, after-tax	0.6	(139.0)	(602.9)	(139.0)
Income (loss) from discontinued operations, after-tax	(160.3)	13.1	(155.4)	19.9
Income from Operations	$         212.4	$           323.4	$       376.9	$     634.7
Earnings (Loss) Per Share (Diluted)
Net income (loss)	$          (0.62)	$             0.48	$       (2.87)	$        1.58
Income from operations	0.81	1.24	1.45	2.43
Average Equity
(Excluding AOCI)	$     10,540.5	$      11,357.0	$  10,540.0	$ 11,403.8
Return on Equity
Net income (loss)	-6.1%	4.4%	-14.0%	7.3%
Income from operations	8.1%	11.4%	7.2%	11.1%

Definition of Book Value Per Share Excluding AOCI

Book value per share excluding AOCI is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) stockholders' equity excluding AOCI, by (b) common shares outstanding. Management provides book value per share excluding AOCI to enable investors to analyze the amount of our net worth that is primarily attributable to our business operations. Management believes book value per share excluding AOCI is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily due to the affect of capital market conditions on our available-for-sale securities.  Book value per share is the most directly comparable GAAP measure.  A reconciliation of book value per share to book value per share excluding AOCI as of June 30, 2009 and 2008 is set forth below.

	As of June 30,
	2009	2008
Book value per share, including AOCI	$       30.02	$   40.85
Per share impact of AOCI	(5.65)	(3.14)
Book value per share, excluding AOCI	$       35.67	$   43.99

LINCOLN NATIONAL CORPORATION

DIGEST OF EARNINGS

($ in millions, except per share data)
	For the Three Months Ended
	June 30,
	2009	2008
Revenues	$                       1,951.9	$                           2,493.2
Net Income (Loss)	(161.4)	124.7
Earnings (Loss) per Share - Basic (1)	$                          (0.62)	$                               0.48
Earnings (Loss) per Share - Diluted (1)	(0.62)	0.48
Average Shares - Basic (1)	260,085,214	257,785,473
Average Shares - Diluted (1)	260,085,214	259,617,020
(1) As a result of the net loss in the second quarter of 2009, shares used in the earnings (loss) per share calculation represent basic shares since using diluted shares would have been anti-dilutive to the calculation.
	For the Six Months Ended
	June 30,
	2009	2008
Revenues	$                       4,152.0	$                           5,001.4
Net Income (Loss)	(740.3)	413.8
Earnings (Loss) per Share - Basic (2)	$                          (2.87)	$                               1.59
Earnings (Loss) per Share - Diluted (2)	(2.87)	1.58
Average Shares - Basic (2)	257,834,591	259,368,519
Average Shares - Diluted (2)	257,834,591	261,190,788
(2) As a result of the net loss in the first six months of 2009, shares used in the earnings (loss) per share calculation represent basic shares since using diluted shares would have been anti-dilutive to the calculation.

Forward Looking Statements — Cautionary Language

Certain statements made in this release and in other written or oral statements made by Lincoln or on Lincoln's behalf are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA").  A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: "believe", "anticipate", "expect", "estimate", "project", "will", "shall" and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance.  In particular, these include statements relating to future actions, trends in our businesses, prospective services or products, future performance or financial results, and the outcome of contingencies, such as legal proceedings.  Lincoln claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the results contained in the forward-looking statements.  Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements include, among others:

·   Continued deterioration in general economic and business conditions, both domestic and foreign, that may affect foreign exchange rates, premium levels, claims experience, the level of pension benefit costs and funding and investment results;

·   Continued economic declines and credit market illiquidity could cause us to realize additional impairments on investments and certain intangible assets, including goodwill and a valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures;

·   Uncertainty about the impact of the U.S. Treasury's Troubled Asset Relief Program on the economy;

·   The cost and other consequences of the existing regulation to which we are subject and potential regulations to which we would become subject as a result of our participation in the CPP;

·   Legislative, regulatory or tax changes, both domestic and foreign, that affect the cost of, or demand for, Lincoln's products, the required amount of reserves and/or surplus, or otherwise affect our ability to conduct business, including changes to statutory reserves and/or risk-based capital requirements related to secondary guarantees under universal life and variable annuity products such as Actuarial Guideline VACARVM; restrictions on revenue sharing and 12b-1 payments; and the potential for U.S. Federal tax reform;

·   The initiation of legal or regulatory proceedings against Lincoln or its subsidiaries, and the outcome of any legal or regulatory proceedings, such as:  adverse actions related to present or past business practices common in businesses in which Lincoln and its subsidiaries compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and extra-contractual and class action damage cases; new decisions that result in changes in law; and  unexpected trial court rulings;

·   Changes in interest rates causing a reduction of investment income, the margins of Lincoln's fixed annuity and life insurance businesses and demand for Lincoln's products;

·   A decline in the equity markets causing a reduction in the sales of Lincoln's products, a reduction of asset-based fees that Lincoln charges on various investment and insurance products, an acceleration of amortization of deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads and an increase in liabilities related to guaranteed benefit features of Lincoln's variable annuity products;

·   Ineffectiveness of Lincoln's various hedging strategies used to offset the impact of changes in the value of liabilities due to changes in the level and volatility of the equity markets and interest rates;

·   A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates or equity market returns from Lincoln's assumptions used in pricing its products, in establishing related insurance reserves and in the amortization of intangibles that may result in an increase in reserves and a decrease in net income, including as a result of stranger-originated life insurance business;

·   Changes in GAAP that may result in unanticipated changes to Lincoln's net income;

·   Lowering of one or more of Lincoln's debt ratings issued by nationally recognized statistical rating organizations and the adverse impact such action may have on Lincoln's ability to raise capital and on its liquidity and financial condition;

·   Lowering of one or more of the insurer financial strength ratings of Lincoln's insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability of its insurance subsidiaries and liquidity;

·   Significant credit, accounting, fraud or corporate governance issues that may adversely affect the value of certain investments in the portfolios of Lincoln's companies requiring that Lincoln realize losses on such investments;

·   The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Lincoln's ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;

·   The adequacy and collectibility of reinsurance that Lincoln has purchased;

·   Acts of terrorism, a pandemic, war or other man-made and natural catastrophes that may adversely affect Lincoln's businesses and the cost and availability of reinsurance;

·   Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that Lincoln can charge for its products;

·   The unknown impact on Lincoln's business resulting from changes in the demographics of Lincoln's client base, as aging baby-boomers move from the asset-accumulation stage to the asset-distribution stage of life; and

·   Loss of key management, portfolio managers in the Investment Management segment, financial planners or wholesalers.

The risks included here are not exhaustive. Lincoln's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC include additional factors which could impact Lincoln's business and financial performance. Moreover, Lincoln operates in a rapidly changing and competitive environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors.

Further, it is not possible to assess the impact of all risk factors on Lincoln's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, Lincoln disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of the release.