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

February 9, 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 of incorporation)	(Commission File Number)	(IRS Employer 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 February 9, 2009, the registrant issued a press release announcing its financial results for the quarter ended December 31, 2008, 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 December 31, 2008 is attached as Exhibit 99.2 and is incorporated herein by reference, and a general account supplement as of December 31, 2008, 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 February 9, 2009, announcing Lincoln National Corporation’s financial results for the quarter ended December 31, 2008.
99.2	Lincoln National Corporation Statistical Supplement for the Quarter Ended December 31, 2008.
99.3	Lincoln National Corporation General Account Supplement as of December 31, 2008.

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
By	/s/ Douglas N. Miller
Name:	Douglas N. Miller
Title:	Vice President and Chief Accounting Officer

Date: February 9, 2009

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated February 9, 2009, announcing Lincoln National Corporation’s financial results for the quarter ended December 31, 2008.
99.2	Lincoln National Corporation Statistical Supplement for the Quarter Ended December 31, 2008.
99.3	Lincoln National Corporation General Account Supplement as of December 31, 2008.

EX-99.1

Exhibit 99.1

NEWS RELEASE

Lincoln Financial Group Reports Fourth Quarter and Full Year 2008 Results

Loss in the Quarter Driven by Market-Related Impairments and Non-Cash Charges

Positive Insurance and Retirement Net Flows Despite Challenging Environment

Annualized 2009 Expense Saves of $125-150 Million

Philadelphia, PA, February 9, 2009 – Lincoln Financial Group (NYSE:LNC) today reported a net loss of $506 million, or $1.98 per share, for the fourth quarter of 2008 and net income of $57 million, or $0.22 per diluted share, for the full year of 2008. The fourth quarter loss from operations was $122 million, or $0.48 per share, and full-year income from operations was $858 million, or $3.31 per diluted share.

($ in millions except per share data)

	For the Quarter Ended					For the Year Ended
	2007		2008*			2007		2008
Net Income (Loss)	$	113	$	(506	)	$	1,215	$	57
Net Income (Loss) per diluted share		0.41		(1.98	)		4.43		0.22
Income (Loss) from Operations		341		(122	)		1,447		858
Income (Loss) from Operations per diluted share		1.26		(0.48	)		5.28		3.31
Average Diluted Shares		269.4		255.4			273.9		259.4

* As a result of the net loss in the fourth quarter of 2008, shares used in the per share calculation represent basic shares throughout this release.

Significant Items Impacting Fourth Quarter 2008 Net Loss:

• Net realized losses on general account investments of $283 million, after DAC and tax, or $1.11 per share, partially offset by a net realized gain on the variable annuity hedge program results of $147 million, after DAC and tax, or $0.58 per share.

• A non-cash impairment to the Bank of America stock held at the corporate level of $85 million, after tax, or $0.33 per share.

• A non-cash charge of $166 million, after tax, or $0.65 per share, for the impairment of

intangibles primarily related to the company’s media assets.

1

Significant Items Impacting Fourth Quarter 2008 Loss from Operations:

• A $320 million, after tax, DAC unlocking charge, including prospective DAC unlocking of $263 million related to the company’s revision of future estimated gross profits due to the decline in equity markets and account balances.

• A loss of $35 million, after DAC and tax, on alternative investments compared to income of $6 million in the year-ago quarter and $12 million in the third quarter of 2008.

Dennis R. Glass, President and CEO, said, “This quarter’s disappointing results reflect the volatile financial markets and deteriorating economy. We have made prudent decisions regarding capital, liquidity and core earnings to maintain financial flexibility. In recognition of the market environment, we took steps during the fourth quarter and first quarter to reduce run-rate expenses by approximately $75 million and expect to achieve total annualized savings of $125-150 million by the end of 2009.”

Glass added, “Our product solutions and distribution expertise provided a strong defense against the challenging external climate, and our retirement and insurance net flows were positive in the quarter and full year. Actions have been taken to reduce the risk profile of our variable annuity products, and as we look forward to 2009, we remain confident in our competitive position and our ability to adapt to an evolving landscape.”

Capital and Liquidity

Lincoln Financial estimates a year-end risk based capital (RBC) position in the range of 380-390% for its principal insurance subsidiary, The Lincoln National Life Insurance Company.

Lincoln Financial maintains liquidity in its principal insurance subsidiaries in the form of cash and cash equivalents of approximately $3 billion. In addition, the insurance company maintains borrowing capacity from the Federal Home Loan Bank and has less than $400 million in securities out on loan with collateral invested in short-term, liquid investments. Lincoln Financial has a $500 million senior debt maturity in April 2009 and currently has sufficient internal resources to retire the debt. The company has diverse sources of liquidity, including unused revolving credit facilities of over $1 billion and an active commercial paper program. Earnings

2

and cash flow from insurance and non-insurance subsidiaries also support holding company liquidity needs.

As of December 31, 2008, the book value per share of Lincoln National Corporation common stock, including accumulated other comprehensive income (AOCI), was $31.15, compared with $44.32 a year ago. Book value per share, excluding AOCI, was $42.09, compared with $43.47 a year ago.

Expense Initiatives

Lincoln initiated actions in the fourth quarter to reduce expenses across the company, focusing on workforce reductions and corporate-wide capital and discretionary spending. The company estimates these actions resulted in annualized pre-DAC and tax savings of approximately $75 million at an estimated cost of $15 million in severance and related expenses. Recognizing market conditions have continued to deteriorate in the first quarter, the company is reviewing its expense base and targeting an additional $50-75 million, pre DAC and tax, in annualized savings by the end of 2009.

Consolidated Retail Retirement and Insurance Deposits and Flows

Consolidated retail deposits into retirement and insurance products, which include individual annuities, defined contribution plans, individual life insurance, and other wealth accumulation and protection products, were $4.8 billion in the fourth quarter of 2008, compared to $6.3 billion a year ago and $5.4 billion in the third quarter of 2008. Consolidated retail net flows in retirement and insurance products were $1.4 billion versus $2.5 billion in the 2007 quarter and $1.7 billion in the sequential quarter. Retirement and insurance account balances were $118 billion as of December 31, 2008.

For the full year, consolidated retail retirement and insurance deposits were $21.8 billion, down 7% versus 2007, while net flows of $7.7 billion were down 4%.

3

Fourth Quarter 2008 Segment Results

Notable Items by Segment Affecting 4Q 2008 Income (Loss) from Operations**

($ in millions except per share data)

	After-tax Amount			EPS
Individual Annuities (DAC Unlocking, GMDB, Tax-related Items)	$	(247	)	$	(0.97	)
Life Insurance (DAC Unlocking, Mortality)		(51	)		(0.20	)
Defined Contribution (DAC Unlocking, GMDB, Tax-related Items)		(26	)		(0.10	)
Other Operations (Expenses)		(14	)		(0.05	)
Group Protection (Expenses)		(3	)		(0.01	)

** Excludes total after-DAC and tax losses on alternative investments of $35 million

Retirement Solutions

Individual Annuities

The Individual Annuities segment reported a loss from operations of $172 million in the fourth quarter of 2008 versus income from operations of $119 million in the year-ago period. The current quarter’s results included a net negative impact of approximately $247 million, after tax, primarily attributable to DAC unlocking related to equity market depreciation. Favorable tax-related items in the 2008 quarter were partially offset by an increase in guaranteed minimum death benefit reserves. Losses in the alternative investment portfolio impacted the segment’s earnings by approximately $8 million, after DAC and tax, in the current quarter.

In the quarter, gross deposits were $2.3 billion, down 40% from the year-ago period. Net flows for the segment were a positive $376 million, down from $1.8 billion in the 2007 quarter, driven by the decline in deposits. Variable annuity product deposits were $1.9 billion, reflecting overall weakness in the industry, and net flows of $590 million remained positive, with outflows in line with the prior three quarters. Average variable annuity account balances were down $14.0 billion sequentially in the 2008 quarter.

For the full year, gross deposits of $11.7 billion were down 13% and net flows of $4.1 billion were down 18% with an improvement in outflows versus 2007.

Defined Contribution

Defined Contribution reported a loss from operations of $1 million, versus income from operations of $43 million for the same period a year ago. The fourth quarter of 2008 included a net negative impact of approximately $26 million, after tax, primarily attributable to DAC

4

unlocking related to equity market depreciation. Favorable tax-related items in the 2008 quarter were partially offset by an increase in guaranteed minimum death benefit reserves. Losses in the alternative investment portfolio impacted the segment’s earnings by approximately $3 million, after DAC and tax, in the current quarter.

In the quarter, overall deposits of $1.2 billion were down 2% versus the 2007 quarter. Total net flows were $171 million, reflecting an improvement in persistency versus prior-year and sequential periods. In the mid-to-large market, deposits of $729 million and net flows of $538 million were up 20% and 36%, respectively, compared to the 2007 quarter. In the micro-to-small market, deposits of $255 million were down from $365 million in 2007 and net outflows of $56 million improved versus the year-ago period. In the current quarter, average variable account balances were down sequentially $5.7 billion.

For the full year, overall defined contribution deposits were flat with the prior year, while net flows more than doubled to almost $800 million.

Insurance Solutions

Life Insurance

Life Insurance income from operations was $83 million in the fourth quarter of 2008, compared to $171 million in the fourth quarter of 2007. The current quarter’s results were negatively impacted by approximately $51 million, after tax, primarily attributable to prospective DAC unlocking related to variable universal life insurance, unfavorable mortality and retrospective DAC unlocking related to negative returns in the alternative investment portfolio. Losses in the alternative investment portfolio impacted the segment’s earnings by approximately $21 million, after DAC and tax, in the 2008 quarter.

Life insurance sales, reported as paid annualized premiums, were $211 million in the fourth quarter, down 5% from the year-ago quarter, but up 11% over the third quarter of 2008.

For the full year, life insurance sales were $741 million, compared to $837 million last year. Life insurance in force of $545 billion, grew 2% in 2008, driven by a 4% increase in the interest-sensitive in force.

5

Group Protection

For the fourth quarter, Group Protection’s income from operations was $18 million, versus $28 million in the prior-year period. The 2008 quarter’s results included unfavorable expenses of approximately $3 million, after tax. The non-medical loss ratio in the current period was 72.8% versus 70.7% in the 2007 quarter, and remained within the expected range of 71-74%. Losses in the alternative investment portfolio impacted the segment’s earnings by approximately $3 million, after DAC and tax, in the current quarter.

Net earned premiums were $383 million in the fourth quarter, up 10% over the year-ago period, driven by continued strong persistency. Annualized sales were $129 million, down 10% from a record 2007 quarter.

Full-year net earned premiums were up 10% to $1.5 billion. Group Protection finished the year strong with record annualized sales in December and reported full-year results of $316 million, down 3% compared to a record 2007.

Investment Management

The Investment Management segment reported a loss from operations of $4 million in the fourth quarter of 2008, compared to income from operations of $27 million in the prior-year period. Fourth quarter 2008 earnings continued to be impacted by deteriorating equity markets and economic conditions. The current quarter included negative returns on seed capital which were partially offset by favorable expense items.

Total deposits for the quarter were $3.8 billion, compared to $5.8 billion a year ago and $4.0 billion in the third quarter of 2008. Negative net flows of $3.3 billion compared to a negative $1.0 billion in the prior-year period, but were flat with the third quarter of 2008. In the current quarter, assets under management declined sequentially $12.1 billion, primarily due to equity markets and negative net flows.

Retail mutual fund performance in the fourth quarter improved for all time periods and 68% of the funds beat their Lipper peer group average in the 1-year, 5-year, and 10-year time horizons as of December 31, 2008.

6

Lincoln UK

For the fourth quarter, the UK segment’s income from operations was $9 million, compared to $13 million in the fourth quarter of 2007. The current period benefited from a reserve release and reflected the impact of an unfavorable foreign currency exchange rate.

Other Operations

The operating loss in Other Operations was $55 million in the quarter, versus $59 million in the prior-year quarter. The 2008 quarter included net negative items of approximately $14 million, after tax, primarily related to unfavorable expenses. The 2007 quarter included approximately $18 million, after tax, of unfavorable expense items primarily related to non-qualified benefit plan changes. Merger-related expenses were $5 million, after tax, in the current quarter versus $18 million in the prior-year period.

Realized and Unrealized Gains and Losses on Investments

Total gross realized losses on general account investments were $568 million, pre DAC and tax, including losses of $223 million related to residential mortgage backed securities and $105 million related to financial institutions. In addition, the company realized a non-cash impairment of $131 million, pre tax, related to Bank of America common stock, which does not affect statutory capital. The company reported a net unrealized loss position for available-for-sale securities, including unrealized gains, of $2.7 billion, after DAC and tax, at the end of the fourth quarter.

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 table attached to this release defines and reconciles 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.

7

Lincoln Financial Group will discuss the company’s fourth quarter results with investors in a conference call beginning at 11:00 a.m. (ET) on Tuesday, February 10, 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) 675-4749 (Domestic)
	(719) 325-4852 (International)
- Ask for the Lincoln National Conference Call.

The company will also post its fourth quarter 2008 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 $178 billion as of December 31, 2008. 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

8

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 December 31,						For the Years Ended December 31,
	2008			2007			2008			2007
Net Income (Loss)	$	(505.5	)	$	112.5		$	56.8		$	1,214.6
Less:
Excluded realized loss, after-tax		(219.1	)		(102.3	)		(493.6	)		(119.8	)
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax		0.4			0.4			1.7			(6.6	)
Impairment of intangibles, after-tax		(165.6	)		—			(304.6	)		—
Income (loss) from discontinued operations, after-tax		0.4			(126.8	)		(5.0	)		(106.2	)
Income (Loss) from Operations	$	(121.6	)	$	341.2		$	858.3		$	1,447.2
Earnings (Loss) Per Share (Diluted)
Net income (loss)	$	(1.98	)	$	0.41		$	0.22		$	4.43
Income (loss) from operations		(0.48	)		1.26			3.31			5.28
Average Equity
(Excluding AOCI)	$	11,045.3		$	11,629.6		$	11,290.3		$	11,591.4
Return on Equity
Net income (loss)		-18.3	%		3.9	%		0.5	%		10.5	%
Income (loss) from operations		-4.4	%		11.7	%		7.6	%		12.5	%

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

9

measure. A reconciliation of book value per share to book value per share excluding AOCI as of December 31, 2008 and 2007 is set forth below.

	As of December 31,
	2008			2007
Book value per share, including AOCI	$	31.15		$	44.32
Per share impact of AOCI		(10.94	)		0.85
Book value per share, excluding AOCI	$	42.09		$	43.47

LINCOLN NATIONAL CORPORATION

DIGEST OF EARNINGS

($ in millions, except per share data)

	For the Three Months Ended December 31,
	2008			2007
Revenues	$	2,273.3		$	2,582.5
Net Income (Loss)		(505.5	)		112.5
Earnings (Loss) per Share—Basic	$	(1.98	)	$	0.42
Earnings (Loss) per Share—Diluted		(1.98	)		0.41
Average Shares—Basic		255,432,685			266,446,119
Average Shares—Diluted		255,432,685			269,382,569
	For the Years Ended December 31,
	2008			2007
Revenues	$	9,883.0		$	10,475.3
Net Income		56.8			1,214.6
Earnings per Share—Basic	$	0.22		$	4.49
Earnings per Share—Diluted		0.22			4.43
Average Shares—Basic		257,498,535			270,298,843
Average Shares—Diluted		259,390,811			273,905,502

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

10

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; and Lincoln’s ability to participate in the program;

• 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: (a) adverse actions related to present or past business practices common in businesses in which Lincoln and its subsidiaries compete; (b) 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; (c) new decisions that result in changes in law; and (d) 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, 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.

11

EX-99.2

The financial data in this document is dated February 9, 2009 and has not been updated since that date. LNC does not intend to update this document.

Lincoln Financial Group

Table of Contents

Fourth Quarter

2008

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
Lincoln UK
Income Statements and Operational Data	27
Other Operations	28
Discontinued Operations	28
Domestic Deposits, Account Balances, and Net Flows	29
Consolidated Investment Data
Assets Managed	30
Other Investment Data	31

12/31/2008 i

LFG Analyst Coverage

Fourth Quarter, 2008

FIRM	ANALYST	PHONE NUMBER
Barclays Capital	Eric Berg	212-526-2805
Citigroup	Colin Devine	212-816-1682
Credit Suisse	Tom Gallagher	212-538-2010
Deutsche Bank	Darin Arita	212-250-7321
Dowling & Partners	Paul Goulekas	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
Merrill Lynch	Ed Spehar	212-449-4245
Morgan Stanley	Nigel Dally	914-225-4836
Raymond James & Associates	Steven Schwartz	312-612-7686
Sanford C. Bernstein	Suneet Kamath	212-756-4587
Sterne, Agee & Leach	John Nadel	212-338-4717
UBS	Andrew Kligerman	212-713-2492
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

12/31/2008 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 derivative 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;

• 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.

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 represents 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.

iii

In the fourth quarter of 2008, we updated our RTM process for equity market performance, which resulted in an unfavorable $223 million, after-tax, impact to income (loss) from continuing operations. Details underlying the decrease were as follows (in millions):

Insurance fees:
Retirement Solutions - Annuities	$	26
Insurance Solutions - Life Insurance		16
Total insurance fees		42
Realized gain:
GLB		70
Total realized gain		70
Total revenues		112
Interest credited:
Retirement Solutions - Annuities		37
Total interest credited		37
Benefits:
Retirement Solutions - Annuities		8
Retirement Solutions - Defined Contribution		1
Total benefits		9
Underwriting, acquisition, insurance and other expenses:
Retirement Solutions - Annuities		305
Retirement Solutions - Defined Contribution		39
Insurance Solutions - Life Insurance		65
Total underwriting, acquisition, insurance and other expenses		409
Total benefits and expenses		455
Loss from continuing operations before taxes		(343	)
Federal income tax benefit		(120	)
Loss from continuing operations	$	(223	)

• 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.

• Our unlocking process also includes our reserves for our guaranteed benefit features and is described more fully in “Part II - Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” of our 2007 Form 10-K.

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.

During the fourth quarter of 2007, we entered into definitive agreements to sell our television broadcasting, Charlotte radio and sports programming businesses. The divestiture of the sports programming business closed on November 30, 2007, the Charlotte radio station business closed on January 31, 2008 and the television broadcasting closed on March 31, 2008. Accordingly, in the periods prior to the closings, the assets and liabilities of these businesses not sold have been reclassified as held-for-sale for all periods presented, and are reported within other assets and other liabilities on our Consolidated Balance Sheets. The results of operations of these businesses have been reclassified into income (loss) from discontinued operations for all periods presented on the Financial Highlights, Results Summary and Consolidated Statements of Income pages.

Inter-segment transfer refers to a transfer from Retirement Solutions - Annuities to Retirement Solutions - Defined Contribution.

Reclassifications

Subsequent to the second quarter of 2008, we announced the realignment of our segments under our former Individual Markets and Employer Markets operating businesses into two new operating businesses - Retirement Solutions and Insurance Solutions. In addition to the realignment, the results of our Executive Benefits business are no longer reported separately, but are included in our Life Insurance segment. We have restated all periods presented to conform to the new alignment of our businesses and segments. We view the changes to the existing segments as immaterial.

12/31/2008 PAGE 1

Financial Highlights

Unaudited (in millions, except per share data)

	For the Three Months Ended December 31,											For the Years Ended December 31,
							Change											Change
	2008			2007			Amount			%		2008			2007			Amount			%
Income (Loss) from Operations - By Segment
Annuities	$	(171.7	)	$	118.9		$	(290.6	)	NM		$	193.2		$	484.8		$	(291.6	)	-60.1	%
Defined Contribution		(1.1	)		43.1			(44.2	)	NM			122.8			181.3			(58.5	)	-32.3	%
Total Retirement Solutions		(172.8	)		162.0			(334.8	)	NM			316.0			666.1			(350.1	)	-52.6	%
Life Insurance		82.5			170.6			(88.1	)	-51.6	%		540.8			718.9			(178.1	)	-24.8	%
Group Protection		18.4			28.2			(9.8	)	-34.8	%		104.1			113.5			(9.4	)	-8.3	%
Total Insurance Solutions		100.9			198.8			(97.9	)	-49.2	%		644.9			832.4			(187.5	)	-22.5	%
Investment Management		(4.3	)		27.0			(31.3	)	NM			28.1			76.4			(48.3	)	-63.2	%
Lincoln UK		9.4			12.7			(3.3	)	-26.0	%		50.4			45.6			4.8		10.5	%
Other Operations		(54.8	)		(59.3	)		4.5		7.6	%		(181.1	)		(173.3	)		(7.8	)	-4.5	%
Income (Loss) from Operations (1)		(121.6	)		341.2			(462.8	)	NM			858.3			1,447.2			(588.9	)	-40.7	%
Excluded realized loss, after-tax (2)		(219.1	)		(102.3	)		(116.8	)	NM			(493.6	)		(119.8	)		(373.8	)	NM
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax		0.4			0.4			—		—			1.7			(6.6	)		8.3		125.8	%
Impairment of intangibles, after-tax (3)		(165.6	)		—			(165.6	)	NM			(304.6	)		—			(304.6	)	NM
Income (loss) from discontinued operations, after-tax (4)		0.4			(126.8	)		127.2		100.3	%		(5.0	)		(106.2	)		101.2		95.3	%
Net Income (Loss)	$	(505.5	)	$	112.5		$	(618.0	)	NM		$	56.8		$	1,214.6		$	(1,157.8	)	-95.3	%
Earnings Per Share (Diluted) (5) (6)
Income (loss) from operations (1)	$	(0.48	)	$	1.26		$	(1.74	)	NM		$	3.31		$	5.28		$	(1.97	)	-37.3	%
Excluded realized loss, after-tax (2)		(0.85	)		(0.38	)		(0.47	)	NM			(1.91	)		(0.43	)		(1.48	)	NM
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax		—			—			—		NM			0.01			(0.03	)		0.04		133.3	%
Impairment of intangibles, after-tax (3)		(0.65	)		—			(0.65	)	NM			(1.17	)		—			(1.17	)	NM
Loss from discontinued operations, after-tax (4)		—			(0.47	)		0.47		100.0	%		(0.02	)		(0.39	)		0.37		94.9	%
Net Income (Loss)	$	(1.98	)	$	0.41		$	(2.39	)	NM		$	0.22		$	4.43		$	(4.21	)	-95.0	%
Operating Revenues - By Segment
Annuities	$	693.7		$	672.3		$	21.4		3.2	%	$	2,610.2		$	2,533.3		$	76.9		3.0	%
Defined Contribution		217.9			243.3			(25.4	)	-10.4	%		935.8			985.5			(49.7	)	-5.0	%
Total Retirement Solutions		911.6			915.6			(4.0	)	-0.4	%		3,546.0			3,518.8			27.2		0.8	%
Life Insurance		1,039.4			1,068.2			(28.8	)	-2.7	%		4,250.1			4,188.8			61.3		1.5	%
Group Protection		412.5			380.6			31.9		8.4	%		1,639.6			1,499.6			140.0		9.3	%
Total Insurance Solutions		1,451.9			1,448.8			3.1		0.2	%		5,889.7			5,688.4			201.3		3.5	%
Investment Management		83.2			139.0			(55.8	)	-40.1	%		437.7			590.2			(152.5	)	-25.8	%
Lincoln UK		64.4			98.3			(33.9	)	-34.5	%		327.7			370.2			(42.5	)	-11.5	%
Other Operations		98.6			128.0			(29.4	)	-23.0	%		438.4			473.3			(34.9	)	-7.4	%
Total Operating Revenues		2,609.7			2,729.7			(120.0	)	-4.4	%		10,639.5			10,640.9			(1.4	)	—
Excluded realized loss, pre-tax (2)		(337.1	)		(147.9	)		(189.2	)	NM			(759.2	)		(175.0	)		(584.2	)	NM
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax		0.7			0.7			—		—			2.7			9.4			(6.7	)	-71.3	%
Total Revenues	$	2,273.3		$	2,582.5		$	(309.2	)	-12.0	%	$	9,883.0		$	10,475.3		$	(592.3	)	-5.7	%

⁽¹⁾ Income (loss) from operations included restructuring charges, after-tax, of $5.3 million, or 2 cents per share, and $1.9 million, or 1 cent per share, for the quarters ended December 31, 2008 and 2007, respectively, and $6.9 million, or 3 cents per share, and $13.2 million, or 5 cents per share, for the years ended December 31, 2008 and 2007, respectively.

⁽²⁾ See page 6 for detail.

⁽³⁾ During the second and fourth quarters of 2008, we recorded goodwill impairment of $83.4 million and $80.7 million, respectively, and FCC license intangible impairment of $91.6 million, pre-tax, $55.6 million, after-tax, and $124.6 million, pre-tax, $76.9 million, after-tax, respectively, for our media business. During the fourth quarter of 2008, we also recorded goodwill impairment on our Lincoln UK segment of $12.1 million, pre-tax, $7.9 million, after-tax. In addition, we recorded other intangible asset impairment of $0.2 million, pre-tax, $0.1 million, after-tax, in the fourth quarter of 2008.

⁽⁴⁾ Includes discontinued operations and the loss on disposal. See Discontinued Operations on page 28 for details.

⁽⁵⁾ 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.

⁽⁶⁾ As a result of the net loss in the fourth quarter of 2008, shares used in the earnings (loss) per share calculation 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 fourth quarter of 2008 would have totaled 257.6 million.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 2

Financial Highlights (Continued)

Unaudited (billions of dollars)

Operational Data by Segment

	For the Three Months Ended December 31,											For the Years Ended December 31,
							Change											Change
	2008			2007			Amount			%		2008			2007			Amount			%
Retirement Solutions - Annuities
Gross deposits	$	2.320		$	3.882		$	(1.562	)	-40.2	%	$	11.730		$	13.457		$	(1.727	)	-12.8	%
Net flows		0.376			1.809			(1.433	)	-79.2	%		4.090			4.991			(0.901	)	-18.1	%
Account values (gross)		58.580			76.465			(17.885	)	-23.4	%		58.580			76.465			(17.885	)	-23.4	%
Account values (net of reinsurance)		57.455			75.113			(17.658	)	-23.5	%		57.455			75.113			(17.658	)	-23.5	%
Retirement Solutions - Defined Contribution
Gross deposits (1)		1.241			1.264			(0.023	)	-1.8	%		5.547			5.549			(0.002	)	—
Net flows		0.171			(0.091	)		0.262		287.9	%		0.781			0.337			0.444		131.8	%
Account values - annuities		22.226			28.765			(6.539	)	-22.7	%		22.226			28.765			(6.539	)	-22.7	%
Alliance and Smart Future mutual funds		6.652			7.293			(0.641	)	-8.8	%		6.652			7.293			(0.641	)	-8.8	%
Total annuities and mutual fund account values		28.878			36.058			(7.180	)	-19.9	%		28.878			36.058			(7.180	)	-19.9	%
Insurance Solutions - Life Insurance
Sales (in millions) (2)	$	211.4		$	221.6		$	(10.2	)	-4.6	%	$	741.0		$	837.0		$	(96.0	)	-11.5	%
Life insurance in force		545.221			535.517			9.704		1.8	%		545.221			535.517			9.704		1.8	%
Account values		31.753			32.558			(0.805	)	-2.5	%		31.753			32.558			(0.805	)	-2.5	%
Insurance Solutions - Group Protection
Annualized sales (in millions)		129.0			142.6			(13.6	)	-9.5	%		316.1			326.1			(10.0	)	-3.1	%
Loss ratio (3)		72.8	%		70.7	%		NM		NM			71.4	%		70.7	%		NM		NM
Investment Management
Retail sales	$	2.594		$	3.592		$	(0.998	)	-27.8	%	$	11.383		$	13.279		$	(1.896	)	-14.3	%
Retail net flows		(2.106	)		(0.649	)		(1.457	)	NM			(5.024	)		(1.027	)		(3.997	)	NM
Institutional inflows		1.186			2.230			(1.044	)	-46.8	%		4.614			10.472			(5.858	)	-55.9	%
Institutional net flows		(1.194	)		(0.302	)		(0.892	)	NM			(4.246	)		(0.346	)		(3.900	)	NM
Total sales and inflows		3.780			5.822			(2.042	)	-35.1	%		15.997			23.751			(7.754	)	-32.6	%
Total net flows		(3.300	)		(0.951	)		(2.349	)	NM			(9.270	)		(1.373	)		(7.897	)	NM
Assets under management - retail and institutional		54.542			85.357			(30.815	)	-36.1	%		54.542			85.357			(30.815	)	-36.1	%
Assets under management - general account		65.680			67.417			(1.737	)	-2.6	%		65.680			67.417			(1.737	)	-2.6	%
Assets under management - total segment		120.222			152.774			(32.552	)	-21.3	%		120.222			152.774			(32.552	)	-21.3	%
Consolidated
Domestic retail deposits	$	6.353		$	9.006		$	(2.653	)	-29.5	%	$	28.803		$	33.205		$	(4.402	)	-13.3	%
Domestic retail account balances		140.500			181.645			(41.145	)	-22.7	%		140.500			181.645			(41.145	)	-22.7	%
Domestic retail net flows		(0.684	)		1.991			(2.675	)	NM			2.542			7.483			(4.941	)	-66.0	%
Domestic deposits		7.430			11.044			(3.614	)	-32.7	%		33.130			43.156			(10.026	)	-23.2	%
Domestic net flows		(1.748	)		1.821			(3.569	)	NM			(1.239	)		7.419			(8.658	)	NM
Assets under management		178.008			236.727			(58.719	)	-24.8	%		178.008			236.727			(58.719	)	-24.8	%

⁽¹⁾ Includes deposits for mutual funds, which are not included on our Consolidated Balance Sheets.

⁽²⁾ Sales consist of first year commissionable premiums of UL and VUL, including COLI and BOLI, plus 5% of excess premiums received, including an adjustment for internal replacements at approximately 50% of target; first year paid premiums for whole life and term products; and 15% of premium deposits for linked-benefit products.

⁽³⁾ Represents combined loss ratio for life, disability and dental businesses.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 3

Financial Highlights (Continued)

Unaudited (millions of dollars)

	For the Three Months Ended December 31,											For the Years Ended December 31,
							Change											Change
	2008			2007			Amount			%		2008			2007			Amount			%
Balance Sheet Assets - End-of-Period	$	163,135.8		$	191,435.1		$	(28,299.3	)	-14.8	%	$	163,135.8		$	191,435.1		$	(28,299.3	)	-14.8	%
Stockholders’ Equity
Beginning-of-period (including AOCI)	$	9,500.1		$	11,962.9		$	(2,462.8	)	-20.6	%	$	11,718.4		$	12,201.0		$	(482.6	)	-4.0	%
End-of-period (including AOCI)		7,976.8			11,718.4			(3,741.6	)	-31.9	%		7,976.8			11,718.4			(3,741.6	)	-31.9	%
End-of-period (excluding AOCI)		10,780.3			11,493.1			(712.8	)	-6.2	%		10,780.3			11,493.1			(712.8	)	-6.2	%
Average equity (excluding AOCI)		11,045.3			11,629.6			(584.3	)	-5.0	%		11,290.3			11,591.4			(301.1	)	-2.6	%
Return on Equity
Net income (loss)/average equity (excluding AOCI)		-18.3	%		3.9	%							0.5	%		10.5	%
Income (loss) from operations/average equity (excluding AOCI)		-4.4	%		11.7	%							7.6	%		12.5	%
Return on Capital
Income (loss) from operations/average capital		-1.8	%		9.5	%							6.3	%		10.1	%
Common Stock Outstanding
Average for the period - diluted (1)		255.4			269.4			(14.0	)	-5.2	%		259.4			273.9			(14.5	)	-5.3	%
End-of-period - assuming conversion of preferreds		256.1			264.4			(8.3	)	-3.1	%		256.1			264.4			(8.3	)	-3.1	%
End-of-period - diluted		257.7			266.2			(8.5	)	-3.2	%		257.7			266.2			(8.5	)	-3.2	%
Book value (including AOCI)	$	31.15		$	44.32		$	(13.17	)	-29.7	%	$	31.15		$	44.32		$	(13.17	)	-29.7	%
Book value (excluding AOCI)		42.09			43.47			(1.37	)	-3.2	%		42.09			43.47			(1.37	)	-3.2	%
Cash Returned to Shareholders
Share repurchase - dollar amount	$	—		$	299.9		$	(299.9	)	-100.0	%	$	475.5		$	986.2		$	(510.7	)	-51.8	%
Dividends declared		53.7			109.8			(56.1	)	-51.1	%		373.7			430.2			(56.5	)	-13.1	%
Total Cash Returned to Shareholders	$	53.7		$	409.7		$	(356.0	)	-86.9	%	$	849.2		$	1,416.4		$	(567.2	)	-40.0	%
Share repurchase - number of shares		—			5.07			(5.07	)	-100.0	%		9.09			15.38			(6.29	)	-40.9	%
Dividend declared on common stock - per share	$	0.210		$	0.415		$	(0.205	)	-49.4	%	$	1.455		$	1.600		$	(0.145	)	-9.1	%
Dividend payout ratio (2)		-10.6	%		101.2	%							661.4	%		36.1	%
Annualized yield (3)		4.5	%		2.9	%							7.7	%		2.7	%
Comprehensive Income (Loss)
Net income (loss)	$	(505.5	)	$	112.5		$	(618.0	)	NM		$	56.8		$	1,214.6		$	(1,157.8	)	-95.3	%
Net unrealized gain (loss) on available-for-sale securities		(750.8	)		30.0			(780.8	)	NM			(2,740.5	)		(407.2	)		(2,333.3	)	NM
Net unrealized gain on derivative instruments		73.6			20.4			53.2		260.8	%		74.9			13.4			61.5		NM
Foreign currency translation adjustment		(114.9	)		(18.0	)		(96.9	)	NM			(169.3	)		10.5			(179.8	)	NM
Funded status of employee benefit plans		(201.1	)		(3.9	)		(197.2	)	NM			(193.8	)		(4.6	)		(189.2	)	NM
Comprehensive Income (Loss)	$	(1,498.7	)	$	141.0		$	(1,639.7	)	NM		$	(2,971.9	)	$	826.7		$	(3,798.6	)	NM
Ratios
Debt to total capitalization (4)		25.0	%		22.2	%							25.0	%		22.2	%
Debt to equity (4)		33.4	%		28.6	%							33.4	%		28.6	%

	Ratings as of February 9, 2009
	A.M. Best	Fitch	Moody's	Standard & Poor's
Senior Debt Ratings	a	A	A3	A+
Financial Strength Ratings
Lincoln National Life Insurance Company	A+	AA	Aa3	AA
First Penn-Pacific Life Insurance Company	A+	AA	A1	AA-
Lincoln Life & Annuity Company of New York	A+	AA	Aa3	AA

⁽¹⁾ As a result of the net loss in the fourth quarter of 2008, shares used in the earnings (loss) per share calculation 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 fourth quarter of 2008 would have totaled 257.6 million.

⁽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.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 4

Consolidated Operating Expense Detail

Unaudited (in millions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Commissions	$	501.9		$	426.6		$	434.4		$	434.1		$	409.1		-18.5	%	$	1,882.1		$	1,704.2		-9.5	%
General and Administrative Expenses
General and administrative expenses		432.7			400.6			401.1			396.9			430.4		-0.5	%		1,674.2			1,629.0		-2.7	%
Merger-related expenses		23.6			13.8			14.9			12.6			8.1		-65.7	%		79.4			49.4		-37.8	%
Total General and Administrative Expenses Excluding Broker-Dealer		456.3			414.4			416.0			409.5			438.5		-3.9	%		1,753.6			1,678.4		-4.3	%
Communications expenses		13.5			15.5			15.4			14.1			14.8		9.6	%		56.5			59.8		5.8	%
Restructuring charges associated with merger-related cost saving initiatives		4.3			0.9			1.2			0.4			0.1		-97.7	%		21.7			2.6		-88.0	%
Restructuring charges for expense initiatives		(1.4	)		—			—			—			8.0		NM			(1.4	)		8.0		NM
Taxes, licenses and fees		48.6			62.3			52.3			60.3			49.0		0.8	%		218.1			223.9		2.7	%
Interest and debt expense		80.3			75.4			64.8			68.6			72.3		-10.0	%		284.0			281.1		-1.0	%
Total Commissions and Expenses Incurred		1,103.5			995.1			984.1			987.0			991.8		-10.1	%		4,214.6			3,958.0		-6.1	%
Less: Commissions and Expenses Capitalized		(554.4	)		(456.5	)		(464.7	)		(464.2	)		(471.2	)	15.0	%		(2,058.1	)		(1,856.6	)	9.8	%
Amortization
Amortization of DAC and VOBA, net of interest		273.0			255.2			309.0			219.6			652.4		139.0	%		1,064.9			1,436.2		34.9	%
Amortization of intangibles		2.5			1.6			1.6			1.4			1.4		-44.0	%		10.2			6.0		-41.2	%
Total Amortization		275.5			256.8			310.6			221.0			653.8		137.3	%		1,075.1			1,442.2		34.1	%
Broker-Dealer Commissions and G&A		100.5			89.2			85.1			78.5			73.3		-27.1	%		372.4			326.1		-12.4	%
Total	$	925.1		$	884.6		$	915.1		$	822.3		$	1,247.7		34.9	%	$	3,604.0		$	3,869.7		7.4	%
Merger-Related Expenses (1)
Severance and employee-related charges	$	6.2		$	3.1		$	2.5		$	1.2		$	1.7		-72.6	%	$	21.3		$	8.5		-60.1	%
Systems integration and related expenses		15.1			9.3			12.0			9.6			7.5		-50.3	%		56.3			38.4		-31.8	%
Other expenses		6.6			2.3			1.6			2.2			(1.0	)	NM			23.5			5.1		-78.3	%
Total Merger-Related Expenses	$	27.9		$	14.7		$	16.1		$	13.0		$	8.2		-70.6	%	$	101.1		$	52.0		-48.6	%

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

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate such date.

12/31/2008 PAGE 5

Results Summary

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Operating Revenues
Annuities	$	672.3		$	622.6		$	618.7		$	675.2		$	693.7		3.2	%	$	2,533.3		$	2,610.2		3.0	%
Defined Contribution		243.3			237.7			239.4			240.8			217.9		-10.4	%		985.5			935.8		-5.0	%
Total Retirement Solutions		915.6			860.3			858.1			916.0			911.6		-0.4	%		3,518.8			3,546.0		0.8	%
Life Insurance		1,068.2			1,053.1			1,086.0			1,071.6			1,039.4		-2.7	%		4,188.8			4,250.1		1.5	%
Group Protection		380.6			399.4			424.9			402.8			412.5		8.4	%		1,499.6			1,639.6		9.3	%
Total Insurance Solutions		1,448.8			1,452.5			1,510.9			1,474.4			1,451.9		0.2	%		5,688.4			5,889.7		3.5	%
Investment Management		139.0			120.3			124.3			109.9			83.2		-40.1	%		590.2			437.7		-25.8	%
Lincoln UK		98.3			85.6			97.9			79.8			64.4		-34.5	%		370.2			327.7		-11.5	%
Other Operations		128.0			117.9			110.1			111.8			98.6		-23.0	%		473.3			438.4		-7.4	%
Total Operating Revenues		2,729.7			2,636.6			2,701.3			2,691.9			2,609.7		-4.4	%		10,640.9			10,639.5		0.0	%
Excluded realized loss, pre-tax (1)		(147.9	)		(45.3	)		(120.3	)		(256.5	)		(337.1	)	NM			(175.0	)		(759.2	)	NM
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax		0.7			0.7			0.7			0.6			0.7		0.0	%		9.4			2.7		-71.3	%
Total Revenues	$	2,582.5		$	2,592.0		$	2,581.7		$	2,436.0		$	2,273.3		-12.0	%	$	10,475.3		$	9,883.0		-5.7	%
Income (Loss) from Operations (2)
Annuities	$	118.9		$	117.8		$	116.2		$	130.9		$	(171.7	)	NM		$	484.8		$	193.2		-60.1	%
Defined Contribution		43.1			40.4			41.2			42.3			(1.1	)	NM			181.3			122.8		-32.3	%
Total Retirement Solutions		162.0			158.2			157.4			173.2			(172.8	)	NM			666.1			316.0		-52.6	%
Life Insurance		170.6			157.4			163.6			137.3			82.5		-51.6	%		718.9			540.8		-24.8	%
Group Protection		28.2			26.3			32.2			27.2			18.4		-34.8	%		113.5			104.1		-8.3	%
Total Insurance Solutions		198.8			183.7			195.8			164.5			100.9		-49.2	%		832.4			644.9		-22.5	%
Investment Management		27.0			12.1			15.0			5.3			(4.3	)	NM			76.4			28.1		-63.2	%
Lincoln UK		12.7			10.7			18.0			12.3			9.4		-26.0	%		45.6			50.4		10.5	%
Other Operations		(59.3	)		(42.3	)		(44.4	)		(39.5	)		(54.8	)	7.6	%		(173.3	)		(181.1	)	-4.5	%
Income (Loss) from Operations (2)		341.2			322.4			341.8			315.8			(121.6	)	NM			1,447.2			858.3		-40.7	%
Excluded realized loss, after-tax (1)		(102.3	)		(29.5	)		(78.2	)		(166.8	)		(219.1	)	NM			(119.8	)		(493.6	)	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	%		(6.6	)		1.7		125.8	%
Impairment of intangibles, after-tax (3)		—			—			(139.0	)		—			(165.6	)	NM			—			(304.6	)	NM
Income (loss) from discontinued operations, after-tax (4)		(126.8	)		(4.2	)		(0.3	)		(1.0	)		0.4		100.3	%		(106.2	)		(5.0	)	95.3	%
Net Income (Loss)	$	112.5		$	289.1		$	124.7		$	148.4		$	(505.5	)	NM		$	1,214.6		$	56.8		-95.3	%

	For the Three Months Ended															For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			Dec. 2007			Dec. 2008
Stockholders’ Equity
Beginning-of-period (including AOCI)	$	11,962.9		$	11,718.4		$	11,086.3		$	10,497.7		$	9,500.1		$	12,201.0		$	11,718.4
End-of-period (including AOCI)		11,718.4			11,086.3			10,497.7			9,500.1			7,976.8			11,718.4			7,976.8
End-of-period (excluding AOCI)		11,493.1			11,408.0			11,306.0			11,310.4			10,780.3			11,493.1			10,780.3
Average equity (excluding AOCI)		11,629.6			11,450.5			11,357.0			11,308.2			11,045.3			11,591.4			11,290.3
Minority Interest Adjustment (5)	$	0.9		$	0.3		$	0.2		$	0.1		$	—		$	2.1		$	0.6
Common Shares Outstanding
Average for the period - diluted (6)		269.4			262.8			259.6			257.6			255.4			273.9			259.4
End-of-period - diluted		266.2			260.5			257.8			256.9			257.7			266.2			257.7
Per Share Data (Diluted) (5) (6)
Net income (loss)	$	0.41		$	1.10		$	0.48		$	0.58		$	(1.98	)	$	4.43		$	0.22
Income (loss) from operations (2)		1.26			1.23			1.32			1.23			(0.48	)		5.28			3.31
Stockholders’ Equity Per Share
Stockholders’ equity (including AOCI)	$	44.32		$	42.74		$	40.85		$	37.11		$	31.15		$	44.32		$	31.15
Stockholders’ equity (excluding AOCI)		43.47			43.98			43.99			44.18			42.09			43.47			42.09
Dividends declared (common stock)		0.415			0.415			0.415			0.415			0.210			1.600			1.455
Return on Equity
Net income (loss)/average equity		3.9	%		10.1	%		4.4	%		5.2	%		-18.3	%		10.5	%		0.5	%
Income (loss) from operations/average equity		11.7	%		11.3	%		12.0	%		11.2	%		-4.4	%		12.5	%		7.6	%
Market Value of Common Stock
Highest price	$	70.66		$	58.11		$	56.80		$	59.99		$	45.50		$	74.72		$	59.99
Lowest price		55.84			45.50			45.18			39.83			4.76			54.40			4.76
Closing price		58.22			52.00			45.32			42.81			18.84			58.22			18.84

⁽¹⁾ See page 6 for detail.

⁽²⁾ Income (loss) from operations included after-tax restructuring charges of $5.3 million, or 2 cents per share, for the fourth quarter of 2008, $0.3 million, or -0- cents per share, for the third quarter of 2008, $0.8 million, or -0- cents per share, for the second quarter of 2008, $0.6 million or, -0- cents per share, for the first quarter of 2008 and $1.9 million, or 1 cent per share, for the fourth quarter of 2007.

⁽³⁾ See page 1 for detail.

⁽⁴⁾ Includes discontinued operations and the loss on disposition. See Discontinued Operations on page 28 for details.

⁽⁵⁾ 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.

⁽⁶⁾ As a result of the net loss in the fourth quarter of 2008, shares used in the earnings (loss) per share calculation 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 fourth quarter of 2008 would have totaled 257.6 million.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate such date.

12/31/2008 PAGE 6

Details Underlying Realized Loss, After-DAC ⁽¹⁾

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Pre-Tax
Operating realized gain (2):
Indexed annuity net derivatives results (3)	$	(0.1	)	$	(1.4	)	$	(0.6	)	$	2.0		$	(0.5	)	NM		$	2.2		$	(0.5	)	NM
GLB (4)		1.8			5.8			10.4			10.9			11.1		NM			5.5			38.2		NM
GDB hedge cost (5)		0.5			5.8			2.6			39.4			136.9		NM			(2.0	)		184.7		NM
Total operating realized gain		2.2			10.2			12.4			52.3			147.5		NM			5.7			222.4		NM
Realized loss related to certain investments (6)		(108.8	)		(41.1	)		(124.6	)		(313.9	)		(569.5	)	NM			(126.5	)		(1,049.1	)	NM
Gain (loss) on certain reinsurance derivative/trading securities (7)		(0.8	)		0.4			1.5			(1.8	)		3.4		NM			1.8			3.5		94.4	%
GLB net derivatives results (8)		(37.4	)		(6.7	)		1.4			88.8			314.5		NM			(47.3	)		398.0		NM
GDB derivative results (5)		(0.2	)		(5.2	)		(2.5	)		(33.4	)		(86.3	)	NM			0.8			(127.4	)	NM
Indexed annuity forward-starting option (9)		(6.9	)		4.8			2.1			1.6			(1.4	)	79.7	%		(10.0	)		7.1		171.0	%
Gain on sale of subsidiaries/businesses		6.2			2.5			1.8			2.2			2.2		-64.5	%		6.2			8.7		40.3	%
Total excluded realized loss		(147.9	)		(45.3	)		(120.3	)		(256.5	)		(337.1	)	NM			(175.0	)		(759.2	)	NM
Total Realized Loss	$	(145.7	)	$	(35.1	)	$	(107.9	)	$	(204.2	)	$	(189.6	)	-30.1	%	$	(169.3	)	$	(536.8	)	NM
After-Tax
Operating realized gain (2):
Indexed annuity net derivatives results (3)	$	(0.1	)	$	(0.9	)	$	(0.4	)	$	1.3		$	(0.3	)	NM		$	1.4		$	(0.3	)	NM
GLB (4)		1.2			3.8			6.8			7.1			7.2		NM			3.6			24.9		NM
GDB hedge cost (5)		0.3			3.8			1.7			25.6			89.0		NM			(1.3	)		120.1		NM
Total operating realized gain		1.4			6.7			8.1			34.0			95.9		NM			3.7			144.7		NM
Realized loss related to certain investments (6)		(71.4	)		(27.1	)		(80.6	)		(204.0	)		(370.1	)	NM			(82.4	)		(681.8	)	NM
Gain (loss) on certain reinsurance derivative/trading securities (7)		(0.3	)		0.6			0.6			(1.2	)		2.2		NM			1.3			2.2		69.2	%
GLB net derivatives results (8)		(24.2	)		(4.2	)		0.9			57.6			204.4		NM			(30.8	)		258.7		NM
GDB derivative results (5)		(0.1	)		(3.4	)		(1.6	)		(21.6	)		(56.1	)	NM			0.5			(82.7	)	NM
Indexed annuity forward-starting option (9)		(4.5	)		3.1			1.4			1.0			(0.9	)	80.0	%		(6.6	)		4.6		169.7	%
Gain (loss) on sale of subsidiaries/businesses		(1.8	)		1.5			1.1			1.4			1.4		177.8	%		(1.8	)		5.4		NM
Total excluded realized loss		(102.3	)		(29.5	)		(78.2	)		(166.8	)		(219.1	)	NM			(119.8	)		(493.6	)	NM
Total Realized Loss	$	(100.9	)	$	(22.8	)	$	(70.1	)	$	(132.8	)	$	(123.2	)	-22.1	%	$	(116.1	)	$	(348.9	)	NM
Components of GLB Net Derivatives Results
Net valuation premium, net of reinsurance (10)	$	15.1		$	17.0		$	19.2		$	21.4		$	22.3		47.7	%	$	51.3		$	79.9		55.8	%
Change in reserves hedged (10):
Unlocking		—			—			—			79.6			84.3		NM			1.9			163.9		NM
Other		(256.5	)		(374.5	)		213.4			(650.9	)		(2,657.0	)	NM			(305.2	)		(3,469.0	)	NM
Change in market value of derivative assets (10)		173.3			315.1			(245.8	)		318.4			2,969.1		NM			167.4			3,356.8		NM
Hedge program ineffectiveness (10)		(83.2	)		(59.4	)		(32.4	)		(252.9	)		396.4		NM			(135.9	)		51.7		138.0	%
Change in reserves not hedged (10)		—			92.3			16.4			372.0			158.8		NM			—			639.5		NM
Associated amortization expense of DAC, VOBA, DSI and DFEL:
Unlocking		(11.9	)		10.5			(0.6	)		(100.7	)		297.7		NM			(13.1	)		206.9		NM
Other amortization		42.6			(33.6	)		(1.2	)		49.0			(560.7	)	NM			50.4			(546.5	)	NM
Loss from the initial impact of adopting SFAS 157, after-DAC		—			(33.5	)		—			—			—		NM			—			(33.5	)	NM
GLB Net Derivatives Results (8)	$	(37.4	)	$	(6.7	)	$	1.4		$	88.8		$	314.5		NM		$	(47.3	)	$	398.0		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 annuities 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⁾ Represents the portion of the GLB rider fees calculated as the attributed fees in excess of the net valuation premium. Net valuation premium represents a level portion of rider fees required to fund potential living benefit claims. The attributed fees are the fees used in the calculation of the embedded derivative and represent net valuation premium plus a margin for risk/profit, as well as the non-performance risk factor required by SFAS 157 benefit costs.

⁽⁵⁾ We include 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 in operating realized gain. We exclude from our definition of income (loss) from operations the net difference between the benefit ratio unlocking of SOP 03-1 reserves on our GDB riders and the change in the fair value of the derivatives excluding our expected cost of the hedging instruments.

⁽⁶⁾ See page 31 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 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, including the cost of hedging. 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 may 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. In addition, $9.6 million, pre-tax, and $6.3 million, after-tax, is included in the first quarter of 2008 due to the initial impact of adopting SFAS 157.

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

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 7

Consolidated Statements of Income

Unaudited (in millions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Revenues
Insurance premiums	$	508.2		$	508.8		$	529.7		$	533.2		$	524.5		3.2	%	$	1,947.1		$	2,096.2		7.7	%
Surrender charges		25.1			27.3			25.6			30.0			29.0		15.5	%		105.7			111.9		5.9	%
Mortality assessments		328.4			330.8			337.3			340.4			347.1		5.7	%		1,259.9			1,355.6		7.6	%
Expense assessments (1)		495.1			454.1			479.4			421.0			407.4		-17.7	%		1,824.6			1,761.9		-3.4	%
Investment advisory fees		87.7			76.2			75.8			67.7			48.4		-44.8	%		359.7			268.1		-25.5	%
Net investment income		1,093.7			1,065.4			1,076.8			1,089.0			976.9		-10.7	%		4,378.2			4,208.1		-3.9	%
Realized loss (2)		(145.7	)		(35.1	)		(107.9	)		(204.2	)		(189.6	)	-30.1	%		(169.3	)		(536.8	)	NM
Amortization of deferred gains on business sold through reinsurance		19.3			19.1			19.1			19.1			19.0		-1.6	%		83.9			76.3		-9.1	%
Other revenues and fees		170.7			145.4			145.9			139.8			110.6		-35.2	%		685.5			541.7		-21.0	%
Total Revenues		2,582.5			2,592.0			2,581.7			2,436.0			2,273.3		-12.0	%		10,475.3			9,883.0		-5.7	%
Benefits and Expenses
Interest credited		618.7			611.7			612.7			624.7			653.1		5.6	%		2,435.3			2,502.2		2.7	%
Benefits (1)		696.2			677.5			684.6			836.8			957.8		37.6	%		2,562.4			3,156.7		23.2	%
Underwriting, acquisition, insurance and other expenses (1)		844.8			809.1			844.8			753.7			1,168.3		38.3	%		3,320.0			3,575.9		7.7	%
Interest and debt expense		80.3			75.4			64.8			68.6			72.3		-10.0	%		284.0			281.1		-1.0	%
Impairment of intangibles (3)		—			—			175.0			—			217.7		NM			—			392.7		NM
Total Benefits and Expenses		2,240.0			2,173.7			2,381.9			2,283.8			3,069.2		37.0	%		8,601.7			9,908.6		15.2	%
Income (loss) from continuing operations before taxes		342.5			418.3			199.8			152.2			(795.9	)	NM			1,873.6			(25.6	)	NM
Federal income tax expense (benefit) (1)		103.2			125.0			74.8			2.8			(290.0	)	NM			552.8			(87.4	)	NM
Income (Loss) from Continuing Operations		239.3			293.3			125.0			149.4			(505.9	)	NM			1,320.8			61.8		-95.3	%
Income (loss) from discontinued operations, net of federal income tax expense (benefit) (4)		(126.8	)		(4.2	)		(0.3	)		(1.0	)		0.4		100.3	%		(106.2	)		(5.0	)	95.3	%
Net Income (Loss)	$	112.5		$	289.1		$	124.7		$	148.4		$	(505.5	)	NM		$	1,214.6		$	56.8		-95.3	%
Earnings (Loss) Per Share (Diluted) (5) (6)
Income (loss) from continuing operations	$	0.88		$	1.12		$	0.48		$	0.58		$	(1.98	)	NM		$	4.82		$	0.24		-95.0	%
Loss from discontinued operations, net of federal income tax expense (benefit) (4)		(0.47	)		(0.02	)		—			—			—		100.0	%		(0.39	)		(0.02	)	94.9	%
Net Income (Loss)	$	0.41		$	1.10		$	0.48		$	0.58		$	(1.98	)	NM		$	4.43		$	0.22		-95.0	%
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	9,337.0		$	9,579.8		$	9,995.5		$	10,608.1		$	11,651.7				$	8,420.4		$	9,579.8
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—					(66.1	)		—
Deferrals		554.4			456.5			464.7			464.2			471.2					2,058.1			1,856.6
Amortization, net of interest:
Unlocking		17.1			(10.9	)		(17.5	)		18.1			(556.1	)				64.7			(566.4	)
Other amortization		(290.1	)		(244.3	)		(291.5	)		(237.7	)		(96.3	)				(1,129.6	)		(869.8	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		281.4			201.3			155.7			244.6			(181.2	)				993.2			420.4
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		95.6			(1.4	)		4.8			34.4			(142.6	)				79.6			(104.8	)
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		(111.3	)		216.6			449.5			844.7			726.2					126.2			2,237.0
Foreign currency translation adjustment		(22.9	)		(0.8	)		2.6			(80.1	)		(117.3	)				12.5			(195.6	)
Business acquired		—			—			—			—			—					14.0			—
Balance at End-of-Period	$	9,579.8		$	9,995.5		$	10,608.1		$	11,651.7		$	11,936.8				$	9,579.8		$	11,936.8
Roll Forward of DFEL
Balance at beginning-of-period	$	1,128.1		$	1,183.1		$	1,235.6		$	1,281.5		$	1,324.9				$	976.9		$	1,183.1
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—					(2.0	)		—
Deferrals		112.5			102.0			104.1			110.5			114.9					412.4			431.5
Amortization, net of interest:
Unlocking		(0.4	)		(3.2	)		(10.4	)		15.1			(60.6	)				(20.7	)		(59.1	)
Other amortization		(47.8	)		(46.6	)		(48.7	)		(40.5	)		(24.8	)				(191.7	)		(160.6	)
Deferrals, net of amortization included in expense assessments		64.3			52.2			45.0			85.1			29.5					200.0			211.8
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		2.0			0.8			(0.5	)		(2.4	)		(15.3	)				1.8			(17.4	)
Foreign currency translation adjustment		(11.3	)		(0.5	)		1.4			(39.3	)		(57.5	)				6.4			(95.9	)
Balance at End-of-Period	$	1,183.1		$	1,235.6		$	1,281.5		$	1,324.9		$	1,281.6				$	1,183.1		$	1,281.6
Roll Forward of DSI
Balance at beginning-of-period	$	249.1		$	279.2		$	297.6		$	314.2		$	328.3				$	193.8		$	279.2
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—					(2.8	)		—
Deferrals		35.5			26.0			26.3			24.5			19.0					116.4			95.8
Amortization, net of interest:
Unlocking		(0.9	)		0.5			(0.2	)		(2.7	)		(48.2	)				2.1			(50.6	)
Other amortization		(10.1	)		(6.2	)		(8.5	)		(5.5	)		4.6					(35.1	)		(15.6	)
Deferrals, net of amortization included in insurance benefits or interest credited		24.5			20.3			17.6			16.3			(24.6	)				83.4			29.6
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		5.6			(1.9	)		(1.0	)		(2.2	)		(41.0	)				4.8			(46.1	)
Balance at End-of-Period	$	279.2		$	297.6		$	314.2		$	328.3		$	262.7				$	279.2		$	262.7

⁽¹⁾ See pages 14 and 21 for details about fluctuations in the third quarter of 2008 for the following line items: expense assessments, benefits, underwriting, acquisition, insurance and other expenses and federal income tax expense.

⁽²⁾ See page 6 for detail.

⁽³⁾ See page 1 for detail.

⁽⁴⁾ Contains discontinued operations and the loss on disposition. See Discontinued Operations on page 28 for additional details.

⁽⁵⁾ 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.

⁽⁶⁾ As a result of the net loss in the fourth quarter of 2008, shares used in the earnings (loss) per share calculation 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 fourth quarter of 2008 would have totaled 257.6 million.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 8

Consolidating Statements of Income From Operations

Unaudited (in millions)

For the Quarter Ended December 31, 2008

	Retirement Solutions						Insurance Solutions
	Annuities			Defined Contribution			Life		Group Protection		Investment Management			Lincoln UK		Other Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	33.7		$	—		$	93.6	$	382.9	$	—		$	14.0	$	0.3		$	524.5
Surrender charges		13.2			1.5			14.2		—		—			—		—			28.9
Mortality assessments		—			—			339.6		0.1		—			7.4		—			347.1
Expense assessments		200.7			42.7			137.6		—		—			26.2		—			407.2
Investment advisory fees—external		—			—			—		—		48.4			—		—			48.4
Investment advisory fees—inter-segment		—			—			—		—		20.3			—		(20.3	)		—
Net investment income		235.5			167.6			446.9		28.2		—			16.8		81.9			976.9
Operating realized gain (2)		144.0			3.5			—		—		—			—		—			147.5
Amortization of deferred gain on business sold through reinsurance		—			—			—		—		—			—		18.4			18.4
Other revenues and fees		66.6			2.6			7.5		1.3		14.5			—		18.3			110.8
Total Operating Revenues		693.7			217.9			1,039.4		412.5		83.2			64.4		98.6			2,609.7
Operating Expenses
Interest credited		201.4			109.8			300.7		0.6		—			—		40.7			653.2
Benefits		253.2			13.5			362.5		283.1		—			19.9		25.7			957.9
Underwriting, acquisition, insurance and other expenses		548.0			111.9			255.7		100.4		69.2			30.0		60.1			1,175.3
Expenses for investment advisory fees—inter-segment		—			—			—		—		20.3			—		(20.3	)		—
Interest and debt expense		—			—			—		—		—			—		72.3			72.3
Total Operating Expenses		1,002.6			235.2			918.9		384.1		89.5			49.9		178.5			2,858.7
Income (loss) from operations before federal income tax expense (benefit)		(308.9	)		(17.3	)		120.5		28.4		(6.3	)		14.5		(79.9	)		(249.0	)
Federal income tax expense (benefit)		(137.2	)		(16.2	)		38.0		10.0		(2.0	)		5.1		(25.1	)		(127.4	)
Income (Loss) from Operations	$	(171.7	)	$	(1.1	)	$	82.5	$	18.4	$	(4.3	)	$	9.4	$	(54.8	)	$	(121.6	)

⁽¹⁾ Includes inter-segment eliminations.

⁽²⁾ For detail, see pages 14 and 18.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 9

Consolidating Statements of Income From Operations

Unaudited (in millions)

For the Quarter Ended December 31, 2007

	Retirement Solutions				Insurance Solutions
	Annuities		Defined Contribution		Life		Group Protection		Investment Management		Lincoln UK		Other Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	46.5	$	—	$	90.1	$	349.7	$	—	$	21.2	$	0.7		$	508.2
Surrender charges		9.1		1.8		14.2		—		—		—		—			25.1
Mortality assessments		—		—		319.3		—		—		9.1		—			328.4
Expense assessments		265.2		64.7		117.6		—		—		46.5		—			494.0
Investment advisory fees—external		—		—		—		—		87.7		—		—			87.7
Investment advisory fees—inter-segment		—		—		—		—		20.3		—		(20.3	)		—
Net investment income		251.8		173.3		516.3		29.5		—		21.5		101.3			1,093.7
Operating realized gain (2)		2.2		—		—		—		—		—		—			2.2
Amortization of deferred gain on business sold through reinsurance		—		—		—		—		—		—		18.6			18.6
Other revenues and fees		97.5		3.5		10.7		1.4		31.0		—		27.7			171.8
Total Operating Revenues		672.3		243.3		1,068.2		380.6		139.0		98.3		128.0			2,729.7
Operating Expenses
Interest credited		167.9		104.8		298.2		—		—		—		47.8			618.7
Benefits		62.0		—		308.9		252.1		—		36.9		36.4			696.3
Underwriting, acquisition, insurance and other expenses		287.3		77.3		202.7		85.1		76.5		41.9		73.8			844.6
Expenses for investment advisory fees—inter-segment		—		—		—		—		20.3		—		(20.3	)		—
Interest and debt expense		—		—		—		—		—		—		80.3			80.3
Total Operating Expenses		517.2		182.1		809.8		337.2		96.8		78.8		218.0			2,239.9
Income (loss) from operations before federal income tax expense (benefit)		155.1		61.2		258.4		43.4		42.2		19.5		(90.0	)		489.8
Federal income tax expense (benefit)		36.2		18.1		87.8		15.2		15.2		6.8		(30.7	)		148.6
Income (Loss) from Operations	$	118.9	$	43.1	$	170.6	$	28.2	$	27.0	$	12.7	$	(59.3	)	$	341.2

⁽¹⁾ Includes inter-segment eliminations.

⁽²⁾ For detail, see page 14.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 10

Consolidating Statements of Income From Operations

Unaudited (in millions)

For the Year Ended December 31, 2008

	Retirement Solutions					Insurance Solutions
	Annuities			Defined Contribution		Life		Group Protection		Investment Management		Lincoln UK		Other Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	136.4		$	—	$	360.4	$	1,516.9	$	—	$	78.3	$	4.0		$	2,096.0
Surrender charges		45.4			6.2		60.2		—		—		—		—			111.8
Mortality assessments		—			—		1,321.3		0.1		—		34.3		—			1,355.7
Expense assessments		917.6			215.9		489.9		—		—		137.0					1,760.4
Investment advisory fees—external		—			—		—		—		268.1		—		—			268.1
Investment advisory fees—inter-segment		—			—		—		—		81.5		—		(81.5	)		—
Net investment income		971.7			695.0		1,987.8		117.2		—		78.0		358.4			4,208.1
Operating realized gain (2)		218.7			3.7		—		—		—		—		—			222.4
Amortization of deferred gain on business sold through reinsurance		—			—		—		—		—		—		73.7			73.7
Other revenues and fees		320.4			15.0		30.5		5.4		88.1		0.1		83.8			543.3
Total Operating Revenues		2,610.2			935.8		4,250.1		1,639.6		437.7		327.7		438.4			10,639.5
Operating Expenses
Interest credited		697.6			429.5		1,202.5		1.6		—		—		170.9			2,502.1
Benefits		452.7			13.8		1,362.9		1,106.7		—		107.3		113.2			3,156.6
Underwriting, acquisition, insurance and other expenses		1,321.6			340.4		876.6		371.1		311.7		142.9		224.2			3,588.5
Expenses for investment advisory fees—inter-segment		—			—		—		—		81.5		—		(81.5	)		—
Interest and debt expense		—			—		—		—		—		—		281.1			281.1
Total Operating Expenses		2,471.9			783.7		3,442.0		1,479.4		393.2		250.2		707.9			9,528.3
Income (loss) from operations before federal income tax expense (benefit)		138.3			152.1		808.1		160.2		44.5		77.5		(269.5	)		1,111.2
Federal income tax expense (benefit)		(54.9	)		29.3		267.3		56.1		16.4		27.1		(88.4	)		252.9
Income (Loss) from Operations	$	193.2		$	122.8	$	540.8	$	104.1	$	28.1	$	50.4	$	(181.1	)	$	858.3

⁽¹⁾ Includes inter-segment eliminations.

⁽²⁾ For detail, see pages 14 and 18.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 11

Consolidating Statements of Income From Operations

Unaudited (in millions)

For the Year Ended December 31, 2007

	Retirement Solutions				Insurance Solutions
	Annuities		Defined Contribution		Life		Group Protection		Investment Management		Lincoln UK		Other Operations (1)			Consolidated
Operating Revenues
Insurance premiums	$	118.5	$	—	$	350.6	$	1,379.2	$	—	$	95.3	$	3.5		$	1,947.1
Surrender charges		38.7		7.9		59.1		—		—		—		—			105.7
Mortality assessments		—		—		1,222.8		0.1		—		37.1		—			1,260.0
Expense assessments		959.4		250.9		452.5		—		—		156.6		—			1,819.4
Investment advisory fees—external		—		—		—		—		359.7		—		—			359.7
Investment advisory fees—inter-segment		—		—		—		—		87.1		—		(87.1	)		—
Net investment income		1,031.8		708.7		2,068.9		115.3		—		81.1		372.5			4,378.3
Operating realized gain (2)		5.7		—		—		—		—		—		—			5.7
Amortization of deferred gain on business sold through reinsurance		—		—		—		—		—		—		74.5			74.5
Other revenues and fees		379.2		18.0		34.9		5.0		143.4		0.1		109.9			690.5
Total Operating Revenues		2,533.3		985.5		4,188.8		1,499.6		590.2		370.2		473.3			10,640.9
Operating Expenses
Interest credited		659.4		418.4		1,173.1		0.2		—		—		184.4			2,435.5
Benefits		170.3		—		1,088.9		999.2		—		137.5		146.4			2,542.3
Underwriting, acquisition, insurance and other expenses		1,059.8		314.2		841.6		325.4		383.4		162.6		232.9			3,319.9
Expenses for investment advisory fees—inter-segment		—		—		—		—		87.1		—		(87.1	)		—
Interest and debt expense		—		—		—		—		—		—		284.0			284.0
Total Operating Expenses		1,889.5		732.6		3,103.6		1,324.8		470.5		300.1		760.6			8,581.7
Income (loss) from operations before federal income tax expense (benefit)		643.8		252.9		1,085.2		174.8		119.7		70.1		(287.3	)		2,059.2
Federal income tax expense (benefit)		159.0		71.6		366.3		61.3		43.3		24.5		(114.0	)		612.0
Income (Loss) from Operations	$	484.8	$	181.3	$	718.9	$	113.5	$	76.4	$	45.6	$	(173.3	)	$	1,447.2

⁽¹⁾ Includes inter-segment eliminations.

⁽²⁾ For detail, see page 14.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 12

Consolidated Balance Sheets

Unaudited (millions of dollars)

	As of
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008
ASSETS
Investments:
Corporate bonds	$	44,147.9		$	43,535.4		$	42,618.0		$	40,020.7		$	36,710.4
U.S. Government bonds		222.0			231.9			203.9			217.0			245.9
Foreign government bonds		1,037.5			1,037.4			907.5			786.5			760.8
Asset and mortgage-backed securities		10,604.6			10,568.8			10,547.7			10,661.6			10,129.6
State and municipal bonds		153.1			153.0			141.7			129.7			125.4
Preferred stocks—redeemable		110.7			97.5			98.8			115.6			962.3
Common stocks		413.9			384.2			330.7			433.5			234.4
Preferred stocks—equity		104.1			90.2			133.9			59.1			54.1
Total available-for-sale securities		56,793.8			56,098.4			54,982.2			52,423.7			49,222.9
Trading securities		2,730.2			2,713.6			2,550.5			2,393.4			2,332.5
Mortgage loans on real estate		7,422.7			7,531.9			7,677.9			7,688.1			7,715.4
Real estate		258.3			175.3			135.7			126.9			125.4
Policy loans		2,885.4			2,854.8			2,852.5			2,870.1			2,923.3
Derivative investments		807.1			1,091.1			889.9			1,262.2			3,397.2
Other investments		1,075.0			1,141.0			1,163.5			1,193.0			1,624.2
Total investments		71,972.5			71,606.1			70,252.2			67,957.4			67,340.9
Cash and invested cash		1,665.5			2,446.8			1,921.4			2,159.7			5,926.4
DAC and VOBA		9,579.8			9,995.5			10,608.1			11,651.7			11,936.8
Premiums and fees receivable		400.6			468.1			399.3			463.2			481.4
Accrued investment income		843.3			917.3			875.9			921.2			831.8
Reinsurance recoverables		8,186.6			8,356.4			8,168.9			8,222.5			8,450.4
Reinsurance related derivative assets		—			—			—			9.2			31.2
Goodwill		4,143.7			4,128.4			4,045.0			4,041.3			3,944.1
Other assets		3,529.8			2,727.6			2,715.0			2,882.9			3,560.2
Separate account assets		91,113.3			84,703.1			85,295.4			74,970.8			60,632.6
Total Assets	$	191,435.1		$	185,349.3		$	184,281.2		$	173,279.9		$	163,135.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Future contract benefits	$	16,006.3		$	16,501.0		$	16,218.1		$	16,572.0		$	19,259.7
Other contract holder funds		59,640.6			60,175.8			60,362.5			60,387.2			60,847.1
Short-term debt		550.2			410.6			900.0			635.2			814.7
Long-term debt		4,618.3			4,627.0			4,101.8			4,569.4			4,731.0
Reinsurance related derivative liabilities		219.5			205.2			112.5			—			—
Funds withheld reinsurance liabilities		2,117.4			2,117.0			2,068.7			2,062.4			2,042.3
Deferred gain on indemnity reinsurance		695.8			676.6			657.6			638.5			619.5
Payables for collateral under securities loaned and derivatives		1,135.1			1,796.2			1,491.1			1,668.4			3,705.9
Other liabilities		3,620.2			3,050.5			2,575.8			2,275.9			2,506.2
Separate account liabilities		91,113.3			84,703.1			85,295.4			74,970.8			60,632.6
Total liabilities		179,716.7			174,263.0			173,783.5			163,779.8			155,159.0
Stockholders’ Equity
Preferred stock		0.4			0.4			0.4			0.4			0.4
Common stock		7,200.5			7,074.8			7,023.1			7,006.4			7,035.3
Retained earnings		4,292.2			4,332.8			4,282.5			4,303.6			3,744.6
Accumulated other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale securities		86.0			(452.1	)		(939.4	)		(1,903.7	)		(2,654.5	)
Net unrealized gain on derivative instruments		52.2			43.9			41.4			53.5			127.1
Foreign currency translation adjustment		175.6			174.4			177.2			121.2			6.3
Funded status of employee benefit plans		(88.5	)		(87.9	)		(87.5	)		(81.3	)		(282.4	)
Total accumulated other comprehensive income (loss)		225.3			(321.7	)		(808.3	)		(1,810.3	)		(2,803.5	)
Total stockholders’ equity		11,718.4			11,086.3			10,497.7			9,500.1			7,976.8
Total Liabilities and Stockholders’ Equity	$	191,435.1		$	185,349.3		$	184,281.2		$	173,279.9		$	163,135.8
Share Data
Stockholders’ equity per share	$	44.32		$	42.74		$	40.85		$	37.11		$	31.15
Book value, excluding AOCI		43.47			43.98			43.99			44.18			42.09
Common shares outstanding—assuming conversion of preferred shares (in millions)		264.4			259.4			257.0			256.0			256.1

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 13

Balance Sheet Data - Segment Highlights

Unaudited (in millions)

	Retirement Solutions				Insurance Solutions				Investment Management		Lincoln UK		Other Operations (1)			Consolidated
	Annuities		Defined Contribution		Life		Group Protection
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	$	1,002.8	$	3,713.7		$	73,267.3
DAC and VOBA		2,976.9		883.3		7,383.5		145.9		—		533.5		13.7			11,936.8
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		—		54.5		5,597.9			8,450.4
Separate account assets		40,849.5		10,579.7		4,063.5		—		—		4,977.9		162.0			60,632.6
Liabilities and Capital
Future contract benefits		3,958.0		24.8		6,379.9		1,378.4		—		828.4		6,690.2			19,259.7
Other contract holder funds		17,219.9		11,627.8		29,999.2		148.6		—		277.4		1,574.2			60,847.1
Allocated capital (3)		4,401.4		993.7		8,294.8		989.8		364.9		392.4		(4,596.7	)		10,780.3
As of December 31, 2007
Assets
Allocated investments and cash and invested cash (2)	$	18,080.5	$	11,671.5	$	32,972.1	$	1,934.2	$	187.8	$	1,396.1	$	7,395.7		$	73,637.9
DAC and VOBA		2,477.0		513.8		5,691.7		123.4		—		772.1		1.8			9,579.8
Goodwill		1,045.6		20.2		2,201.0		274.3		247.0		16.5		339.1			4,143.7
DSI and other intangibles		278.8		3.4		93.0		—		5.4		—		385.7			766.3
Reinsurance recoverables		744.4		—		1,914.1		31.3		—		69.8		5,427.0			8,186.6
Separate accounts assets		58,508.4		17,845.2		5,648.2		—		—		8,850.4		261.1			91,113.3
Liabilities and Capital
Future contract benefits		816.9		—		6,254.9		1,273.0		—		1,146.9		6,514.6			16,006.3
Other contract holder funds		17,749.7		10,891.7		28,427.7		17.2		—		402.9		2,151.4			59,640.6
Allocated capital (3)		3,552.7		898.7		8,189.7		968.3		348.5		361.8		(2,826.6	)		11,493.1

⁽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).

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 14

Retirement Solutions - Annuities

Income Statements and Operational Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Operating Revenues
Insurance premiums (1)	$	46.5		$	31.6		$	19.0		$	52.1		$	33.7		-27.5	%	$	118.5		$	136.4		15.1	%
Surrender charges		9.1			9.6			9.6			13.0			13.2		45.1	%		38.7			45.4		17.3	%
Expense assessments		265.2			236.0			247.6			233.3			200.7		-24.3	%		959.4			917.6		-4.4	%
Net investment income		251.8			247.8			245.3			243.1			235.5		-6.5	%		1,031.8			971.7		-5.8	%
Operating realized gain (2)		2.2			10.2			12.4			52.1			144.0		NM			5.7			218.7		NM
Other revenues and fees (3)		97.5			87.4			84.8			81.6			66.6		-31.7	%		379.2			320.4		-15.5	%
Total Operating Revenues		672.3			622.6			618.7			675.2			693.7		3.2	%		2,533.3			2,610.2		3.0	%
Operating Expenses
Interest credited		167.9			163.2			163.0			170.0			201.4		20.0	%		659.4			697.6		5.8	%
Benefits (1) (4)		62.0			51.4			35.2			112.9			253.2		NM			170.3			452.7		165.8	%
Underwriting, acquisition, insurance and other expenses		287.3			251.7			268.2			253.7			548.0		90.7	%		1,059.8			1,321.6		24.7	%
Total Operating Expenses		517.2			466.3			466.4			536.6			1,002.6		93.9	%		1,889.5			2,471.9		30.8	%
Income (loss) from operations before federal income tax expense (benefit)		155.1			156.3			152.3			138.6			(308.9	)	NM			643.8			138.3		-78.5	%
Federal income tax expense (benefit) (5)		36.2			38.5			36.1			7.7			(137.2	)	NM			159.0			(54.9	)	NM
Income (Loss) from Operations	$	118.9		$	117.8		$	116.2		$	130.9		$	(171.7	)	NM		$	484.8		$	193.2		-60.1	%
Effective Tax Rate (5)		23.3	%		24.6	%		23.7	%		5.6	%		44.4	%				24.7	%		-39.7	%
Average Equity	$	3,549.1		$	3,561.6		$	3,519.2		$	3,646.9		$	4,113.7				$	3,506.2		$	3,710.3
Return on Average Equity		13.4	%		13.2	%		13.2	%		14.4	%		-16.7	%				13.8	%		5.2	%
Income (Loss) from Operations—Basis Points on Average Account Values—Annualized		62			64			62			72			(118	)	(180	)		67			28		(39	)
Operating Realized Gain (2)
Indexed annuity net derivatives results (6)	$	(0.1	)	$	(1.4	)	$	(0.6	)	$	2.0		$	(0.5	)	NM		$	2.2		$	(0.5	)	NM
GLB risk and profit charges (7)		1.8			5.8			10.3			10.9			11.1		NM			5.5			38.1		NM
GDB hedging offset (4)		0.5			5.8			2.7			39.2			133.4		NM			(2.0	)		181.1		NM
Total Operating Realized Gain	$	2.2		$	10.2		$	12.4		$	52.1		$	144.0		NM		$	5.7		$	218.7		NM
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	212.3		$	165.6		$	186.4		$	160.9		$	132.7		-37.5	%	$	732.1		$	645.6		-11.8	%
General and administrative expenses		96.7			80.2			79.9			83.1			86.8		-10.2	%		329.0			330.0		0.3	%
Broker-dealer commissions and general and administrative expenses		100.5			89.2			85.1			78.5			73.3		-27.1	%		372.4			326.1		-12.4	%
Taxes, licenses and fees		6.1			10.4			7.7			6.4			5.7		-6.6	%		26.7			30.2		13.1	%
Total commissions and expenses incurred		415.6			345.4			359.1			328.9			298.5		-28.2	%		1,460.2			1,331.9		-8.8	%
Less: commissions and expenses capitalized		(230.6	)		(172.8	)		(191.7	)		(169.8	)		(151.2	)	34.4	%		(773.5	)		(685.5	)	11.4	%
Amortization of DAC and VOBA, net of interest		102.3			79.1			100.8			94.6			400.7		291.7	%		373.1			675.2		81.0	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	287.3		$	251.7		$	268.2		$	253.7		$	548.0		90.7	%	$	1,059.8		$	1,321.6		24.7	%
General and Administrative Expenses—Basis Points on Average Account Values—Annualized (8)		51			44			42			46			59		8			46			47		1

⁽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⁾ Change in the fair value of the derivatives that offsets the benefit ratio unlocking of our SOP 03-1 reserves on our GMDB riders (included in benefits), including our expected cost of the hedging instruments.

⁽⁵⁾ The third quarter of 2008 included $21.1 million in tax return true-ups and other items. The fourth quarter of 2008 had favorable audit adjustments of $13.5 million.

⁽⁶⁾ Changes 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 annuities products excluding the indexed annuity forward-starting option.

⁽⁷⁾ The portion of the rider fee revenue for GLB calculated as the attributed fee in excess of net valuation premium. See page 17 for additional details.

⁽⁸⁾ Includes distribution costs.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 15

Retirement Solutions - Annuities

Roll Forwards of DAC, VOBA, DFEL and DSI

Unaudited (millions of dollars)

	For the Three Months Ended															For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			Dec. 2007			Dec. 2008
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	2,347.4		$	2,477.0		$	2,570.8		$	2,855.5		$	3,157.9		$	2,050.4		$	2,477.0
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—			(27.2	)		—
Inter-segment transfer		—			(6.9	)		—			—			—			—			(6.9	)
Deferrals		230.6			172.8			191.7			169.8			151.2			773.5			685.5
Amortization, net of interest:
Unlocking		10.7			(0.6	)		0.4			(32.8	)		(424.5	)		44.2			(457.5	)
Other amortization		(113.0	)		(78.5	)		(101.2	)		(61.8	)		23.8			(417.3	)		(217.7	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		128.3			93.7			90.9			75.2			(249.5	)		400.4			10.3
Adjustment related to realized (gains) losses on available-for-sale securities and derivatives		34.8			(10.5	)		(7.3	)		(25.4	)		(232.7	)		37.2			(275.9	)
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		(33.5	)		17.5			201.1			252.6			301.2			2.2			772.4
Business acquired		—			—			—			—			—			14.0			—
Balance at End-of-Period	$	2,477.0		$	2,570.8		$	2,855.5		$	3,157.9		$	2,976.9		$	2,477.0		$	2,976.9
Roll Forward of DFEL
Balance at beginning-of-period	$	122.0		$	130.9		$	141.6		$	151.0		$	160.5		$	100.9		$	130.9
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—			(2.0	)		—
Deferrals		11.9			11.9			13.4			13.0			11.4			45.0			49.7
Amortization, net of interest:
Unlocking		(0.4	)		0.7			(0.5	)		(1.8	)		(36.4	)		1.8			(38.0	)
Other amortization		(4.6	)		(2.7	)		(3.0	)		0.7			10.1			(16.6	)		5.1
Deferrals, net of amortization included in expense assessments		6.9			9.9			9.9			11.9			(14.9	)		30.2			16.8
Adjustment related to realized gains (losses) on available-for-sale securities and derivatives		2.0			0.8			(0.5	)		(2.4	)		(15.3	)		1.8			(17.4	)
Balance at End-of-Period	$	130.9		$	141.6		$	151.0		$	160.5		$	130.3		$	130.9		$	130.3
Roll Forward of DSI
Balance at beginning-of-period	$	248.7		$	278.8		$	295.7		$	312.1		$	326.3		$	193.7		$	278.8
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—			(2.8	)		—
Inter-segment transfer		—			(1.3	)		—			—			—			—			(1.3	)
Deferrals		35.5			25.7			26.1			24.6			18.8			116.1			95.2
Amortization, net of interest:
Unlocking		(0.9	)		0.5			(0.2	)		(2.7	)		(48.0	)		2.1			(50.4	)
Other amortization		(10.1	)		(6.1	)		(8.5	)		(5.4	)		4.5			(35.1	)		(15.5	)
Deferrals, net of amortization included in interest credited		24.5			20.1			17.4			16.5			(24.7	)		83.1			29.3
Adjustment related to realized (gains) losses on available-for-sale securities		5.6			(1.9	)		(1.0	)		(2.3	)		(40.9	)		4.8			(46.1	)
Balance at End-of-Period	$	278.8		$	295.7		$	312.1		$	326.3		$	260.7		$	278.8		$	260.7

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 16

Retirement Solutions - Annuities

Account Value Roll Forward

Unaudited (in billions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Fixed Annuities
Balance at beginning-of-period	$	17.813		$	17.822		$	17.701		$	17.799		$	17.689		-0.7	%	$	18.545		$	17.822		-3.9	%
Business acquired		—			—			—			—			—		NM			0.040			—		-100.0	%
Gross deposits		1.288			1.160			1.371			1.276			1.233		-4.3	%		4.322			5.040		16.6	%
Withdrawals and deaths		(0.706	)		(0.586	)		(0.618	)		(0.787	)		(0.836	)	-18.4	%		(3.377	)		(2.827	)	16.3	%
Net flows		0.582			0.574			0.753			0.489			0.397		-31.8	%		0.945			2.213		134.2	%
Transfers to variable annuities		(0.734	)		(0.680	)		(0.797	)		(0.742	)		(0.581	)	20.8	%		(2.440	)		(2.800	)	-14.8	%
Inter-segment transfer		—			(0.089	)		—			—			—		NM			—			(0.089	)	NM
Interest credited		0.126			0.048			0.116			0.118			0.132		4.8	%		0.616			0.414		-32.8	%
Sales inducements deferred		0.035			0.026			0.026			0.025			0.018		-48.6	%		0.116			0.095		-18.1	%
Balance at End-of-Period (Gross)		17.822			17.701			17.799			17.689			17.655		-0.9	%		17.822			17.655		-0.9	%
Reinsurance ceded		(1.352	)		(1.306	)		(1.255	)		(1.196	)		(1.125	)	16.8	%		(1.352	)		(1.125	)	16.8	%
Balance at End-of-Period (Net of Ceded) (1)	$	16.470		$	16.395		$	16.544		$	16.493		$	16.530		0.4	%	$	16.470		$	16.530		0.4	%
Variable Annuities
Balance at beginning-of-period	$	58.293		$	58.643		$	54.966		$	55.854		$	49.982		-14.3	%	$	48.169		$	58.643		21.7	%
Gross deposits		2.594			1.866			2.065			1.672			1.087		-58.1	%		9.135			6.690		-26.8	%
Withdrawals and deaths		(1.367	)		(1.259	)		(1.229	)		(1.217	)		(1.108	)	18.9	%		(5.089	)		(4.813	)	5.4	%
Net flows		1.227			0.607			0.836			0.455			(0.021	)	NM			4.046			1.877		-53.6	%
Transfers from fixed annuities		0.734			0.680			0.797			0.742			0.579		-21.1	%		2.440			2.798		14.7	%
Inter-segment transfer		—			(0.206	)		—			—			—		NM			—			(0.206	)	NM
Investment increase and change in market value		(1.611	)		(4.758	)		(0.745	)		(7.069	)		(9.615	)	NM			3.988			(22.187	)	NM
Balance at End-of-Period (2)	$	58.643		$	54.966		$	55.854		$	49.982		$	40.925		-30.2	%	$	58.643		$	40.925		-30.2	%
Total Annuities
Balance at beginning-of-period	$	76.106		$	76.465		$	72.667		$	73.653		$	67.671		-11.1	%	$	66.714		$	76.465		14.6	%
Business acquired		—			—			—			—			—		NM			0.040			—		-100.0	%
Gross deposits		3.882			3.026			3.436			2.948			2.320		-40.2	%		13.457			11.730		-12.8	%
Withdrawals and deaths		(2.073	)		(1.845	)		(1.847	)		(2.004	)		(1.944	)	6.2	%		(8.466	)		(7.640	)	9.8	%
Net flows		1.809			1.181			1.589			0.944			0.376		-79.2	%		4.991			4.090		-18.1	%
Transfers between fixed and variable accounts		—			—			—			—			(0.002	)	NM			—			(0.002	)	NM
Inter-segment transfer		—			(0.295	)		—			—			—		NM			—			(0.295	)	NM
Interest credited and change in market value		(1.485	)		(4.710	)		(0.629	)		(6.951	)		(9.483	)	NM			4.604			(21.773	)	NM
Sales inducements deferred		0.035			0.026			0.026			0.025			0.018		-48.6	%		0.116			0.095		-18.1	%
Balance at End-of-Period (Gross)		76.465			72.667			73.653			67.671			58.580		-23.4	%		76.465			58.580		-23.4	%
Reinsurance ceded		(1.352	)		(1.306	)		(1.255	)		(1.196	)		(1.125	)	16.8	%		(1.352	)		(1.125	)	16.8	%
Balance at End-of-Period (Net of Ceded)	$	75.113		$	71.361		$	72.398		$	66.475		$	57.455		-23.5	%	$	75.113		$	57.455		-23.5	%
Variable Annuities Under Agreement—Included Above	$	0.149		$	0.128		$	0.120		$	0.099		$	0.076		-49.0	%	$	0.149		$	0.076		-49.0	%
Incremental Deposits: (3)
Fixed annuities	$	1.282		$	1.156		$	1.365		$	1.265		$	1.225		-4.4	%	$	4.297		$	5.011		16.6	%
Variable annuities		2.558			1.838			2.043			1.651			1.076		-57.9	%		9.019			6.608		-26.7	%
Total Incremental Deposits	$	3.840		$	2.994		$	3.408		$	2.916		$	2.301		-40.1	%	$	13.316		$	11.619		-12.7	%

⁽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.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 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 Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Fixed Annuities—Excluding Fixed Portion of Variable Contracts
Deposits	$	0.231		$	0.086		$	0.137		$	0.164		$	0.142		-38.5	%	$	0.772		$	0.529		-31.5	%
Withdrawals and deaths		(0.486	)		(0.378	)		(0.406	)		(0.549	)		(0.504	)	-3.7	%		(2.488	)		(1.837	)	26.2	%
Net flows	$	(0.255	)	$	(0.292	)	$	(0.269	)	$	(0.385	)	$	(0.362	)	-42.0	%	$	(1.716	)	$	(1.308	)	23.8	%
Gross fixed contract account values	$	9.960		$	9.767		$	9.595		$	9.305		$	9.035		-9.3	%	$	9.960		$	9.035		-9.3	%
Reinsurance ceded		(1.352	)		(1.306	)		(1.255	)		(1.196	)		(1.125	)	16.8	%		(1.352	)		(1.125	)	16.8	%
Net fixed contract account values	$	8.608		$	8.461		$	8.340		$	8.109		$	7.910		-8.1	%	$	8.608		$	7.910		-8.1	%
Indexed Annuities
Deposits	$	0.204		$	0.218		$	0.356		$	0.215		$	0.289		41.7	%	$	0.755		$	1.078		42.8	%
Withdrawals and deaths		(0.062	)		(0.083	)		(0.102	)		(0.114	)		(0.142	)	NM			(0.244	)		(0.441	)	-80.7	%
Net flows	$	0.142		$	0.135		$	0.254		$	0.101		$	0.147		3.5	%	$	0.511		$	0.637		24.7	%
Indexed Annuity Account Values	$	4.392		$	4.465		$	4.726		$	4.836		$	5.003		13.9	%	$	4.392		$	5.003		13.9	%
Fixed Portion of Variable Contracts
Deposits	$	0.853		$	0.856		$	0.879		$	0.896		$	0.802		-6.0	%	$	2.795		$	3.433		22.8	%
Withdrawals and deaths		(0.158	)		(0.124	)		(0.110	)		(0.124	)		(0.191	)	-20.9	%		(0.645	)		(0.549	)	14.9	%
Net flows	$	0.695		$	0.732		$	0.769		$	0.772		$	0.611		-12.1	%	$	2.150		$	2.884		34.1	%
Fixed Portion of Variable Contract Account Values	$	3.470		$	3.469		$	3.478		$	3.547		$	3.617		4.2	%	$	3.470		$	3.617		4.2	%
Variable Annuities—Including Fixed Portion of Variable Contracts
Deposits	$	3.445		$	2.721		$	2.944		$	2.568		$	1.890		-45.1	%	$	11.931		$	10.123		-15.2	%
Withdrawals and deaths		(1.525	)		(1.383	)		(1.339	)		(1.340	)		(1.300	)	14.8	%		(5.734	)		(5.362	)	6.5	%
Net flows	$	1.920		$	1.338		$	1.605		$	1.228		$	0.590		-69.3	%	$	6.197		$	4.761		-23.2	%
Variable Contract Account Values	$	62.112		$	58.435		$	59.333		$	53.530		$	44.542		-28.3	%	$	62.112		$	44.542		-28.3	%
Average Daily Variable Annuity Separate Account Values	$	58.628		$	55.318		$	57.763		$	54.717		$	40.743		-30.5	%	$	54.210		$	52.111		-3.9	%
																Change (Basis Point)								Change (Basis Point)
Interest Rate Spread (1)
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses		5.85	%		5.85	%		5.88	%		5.82	%		5.65	%	(20	)		5.87	%		5.79	%	(8	)
Commercial mortgage loan prepayment and bond make whole premiums		0.08	%		0.03	%		0.00	%		0.02	%		0.02	%	(6	)		0.06	%		0.02	%	(4	)
Alternative investments		0.00	%		-0.01	%		-0.01	%		0.00	%		-0.04	%	(4	)		0.00	%		-0.01	%	(1	)
Net investment income yield on reserves		5.93	%		5.87	%		5.87	%		5.84	%		5.63	%	(30	)		5.93	%		5.80	%	(13	)
Interest rate credited to contract holders		3.76	%		3.81	%		3.73	%		3.95	%		3.87	%	11			3.72	%		3.84	%	12
Interest rate spread		2.17	%		2.06	%		2.14	%		1.89	%		1.76	%	(41	)		2.21	%		1.96	%	(25	)
Variable Annuity Expense Assessments (in millions) (2)	$	286.6		$	271.4		$	287.0		$	276.0		$	244.7		-14.6	%	$	1,028.3		$	1,079.1		4.9	%
GLB Expense Assessments (in millions) (3)	$	37.1		$	39.6		$	42.7		$	45.5		$	46.2		24.5	%	$	120.3		$	174.0		44.6	%
Components of Attributed Fees on GLB (in millions)
Attributed fee included in operating revenues and income (loss) from operations (4)	$	4.4		$	15.8		$	17.0		$	17.9		$	18.3		NM		$	14.8		$	69.0		NM
Attributed fee excluded from operating revenues and income (loss) from operations (5)		17.0			19.6			22.5			24.8			25.7		51.2	%		54.3			92.6		70.5	%
Total Attributed Fees on GLB	$	21.4		$	35.4		$	39.5		$	42.7		$	44.0		105.6	%	$	69.1		$	161.6		133.9	%
GLB Account Values by Type
Guaranteed withdrawal benefits (6)	$	18.935		$	18.255		$	19.301		$	18.163		$	16.037		-15.3	%	$	18.935		$	16.037		-15.3	%
Guaranteed income benefits (7)		8.372			8.632			9.370			8.358			6.921		-17.3	%		8.372			6.921		-17.3	%
Total GLB Account Values	$	27.307		$	26.887		$	28.671		$	26.521		$	22.958		-15.9	%	$	27.307		$	22.958		-15.9	%

⁽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⁾ 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 4 and 5 and disclosed above.

⁽³⁾ 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 4 and 5 and disclosed above.

⁽⁴⁾ Represents the portion of the GLB rider fees calculated as the attributed fees in excess of the net valuation premium. Net valuation premium represents a level portion of rider fees required to fund potential claims for living benefits. The attributed fees are the fees used in the calculation of the embedded derivative and represent net valuation premium plus a margin that a theoretical market participant would include for risk/profit, as well as non-performance risk factor required by SFAS 157 benefit costs. This portion of the attributed fee is reported in realized gain and is included in income (loss) from operations and operating revenues.

⁽⁵⁾ Represents the portion of rider fee revenue for GLB required to fund the net valuation premium. This portion of the attributed fee is reported in realized gain and is excluded in income (loss) from operations and operating revenues.

⁽⁶⁾ 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.

⁽⁷⁾ 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.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 18

Retirement Solutions - Defined Contribution

Income Statements and Operational Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Operating Revenues
Surrender charges	$	1.8		$	1.9		$	1.5		$	1.3		$	1.5		-16.7	%	$	7.9		$	6.2		-21.5	%
Expense assessments		64.7			59.3			59.3			54.6			42.7		-34.0	%		250.9			215.9		-13.9	%
Net investment income		173.3			171.7			174.8			180.9			167.6		-3.3	%		708.7			695.0		-1.9	%
Operating realized gain (1)		—			—			—			0.2			3.5		NM			—			3.7		NM
Other revenues and fees		3.5			4.8			3.8			3.8			2.6		-25.7	%		18.0			15.0		-16.7	%
Total Operating Revenues		243.3			237.7			239.4			240.8			217.9		-10.4	%		985.5			935.8		-5.0	%
Operating Expenses
Interest credited		104.8			105.9			107.0			106.8			109.8		4.8	%		418.4			429.5		2.7	%
Benefits		—			—			0.1			0.2			13.5		NM			—			13.8		NM
Underwriting, acquisition, insurance and other expenses		77.3			76.3			75.4			76.8			111.9		44.8	%		314.2			340.4		8.3	%
Total Operating Expenses		182.1			182.2			182.5			183.8			235.2		29.2	%		732.6			783.7		7.0	%
Income (loss) from operations before federal income tax expense (benefit)		61.2			55.5			56.9			57.0			(17.3	)	NM			252.9			152.1		-39.9	%
Federal income tax expense (benefit) (2)		18.1			15.1			15.7			14.7			(16.2	)	NM			71.6			29.3		-59.1	%
Income (Loss) from Operations	$	43.1		$	40.4		$	41.2		$	42.3		$	(1.1	)	NM		$	181.3		$	122.8		-32.3	%
Effective Tax Rate		29.6	%		27.2	%		27.6	%		25.8	%		93.6	%				28.3	%		19.3	%
Average Equity	$	902.7		$	906.4		$	933.7		$	961.9		$	952.2				$	911.7		$	938.5
Return on Average Equity		19.1	%		17.8	%		17.7	%		17.6	%		(0.5	)%				19.9	%		13.1	%
Income (Loss) from Operations—Basis Points on Average Account Values—Annualized		47			46			46			49			(1	)	(48	)		51			37		(14	)
Operating Realized Gain (1)
GLB risk and profit charges (3)	$	—		$	—		$	—		$	0.1		$	0.1		NM		$	—		$	0.2		NM
GDB hedging offset (4)		—			—			—			0.1			3.4		NM			—			3.5		NM
Total Operating Realized Gain	$	—		$	—		$	—		$	0.2		$	3.5		NM		$	—		$	3.7		NM
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	20.3		$	19.7		$	19.4		$	17.2		$	16.0		-21.2	%	$	80.8		$	72.3		-10.5	%
General and administrative expenses		53.7			51.9			52.0			52.7			63.3		17.9	%		218.2			219.9		0.8	%
Taxes, licenses and fees		2.1			4.4			3.0			3.1			2.8		33.3	%		13.8			13.3		-3.6	%
Total commissions and expenses incurred		76.1			76.0			74.4			73.0			82.1		7.9	%		312.8			305.5		-2.3	%
Less: commissions and expenses capitalized		(23.7	)		(23.6	)		(22.2	)		(19.7	)		(28.2	)	-19.0	%		(92.0	)		(93.7	)	-1.8	%
Amortization of DAC and VOBA, net of interest		24.9			23.9			23.2			23.5			58.0		132.9	%		93.4			128.6		37.7	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	77.3		$	76.3		$	75.4		$	76.8		$	111.9		44.8	%	$	314.2		$	340.4		8.3	%
General and Administrative Expenses—Basis Points on Average Account Values—Annualized (5)		59			59			59			61			86		27			62			65		3
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	531.8		$	513.8		$	564.2		$	629.7		$	744.8				$	497.6		$	513.8
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—					(1.4	)		—
Inter-segment transfer		—			6.9			—			—			—					—			6.9
Deferrals		23.7			23.6			22.2			19.7			28.2					92.0			93.7
Amortization, net of interest:
Unlocking		(1.2	)		(2.5	)		0.1			(2.8	)		(48.6	)				(8.7	)		(53.8	)
Other amortization		(23.7	)		(21.4	)		(23.3	)		(20.7	)		(9.4	)				(84.7	)		(74.8	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		(1.2	)		(0.3	)		(1.0	)		(3.8	)		(29.8	)				(1.4	)		(34.9	)
Adjustment related to realized (gains) losses on available-for-sale securities		3.4			0.6			1.0			4.6			5.6					(0.2	)		11.8
Adjustment related to unrealized (gains) losses on available-for-sale securities		(20.2	)		43.2			65.5			114.3			162.7					19.2			385.7
Balance at End-of-Period	$	513.8		$	564.2		$	629.7		$	744.8		$	883.3				$	513.8		$	883.3
Roll Forward of DSI
Balance at beginning-of-period	$	0.4		$	0.4		$	1.9		$	2.0		$	2.0				$	0.1		$	0.4
Inter-segment transfer		—			1.3			—			—			—					—			1.3
Deferrals		—			0.2			0.2			—			0.2					0.3			0.6
Amortization, net of interest:
Unlocking		—			—			—			—			(0.2	)				—			(0.2	)
Other amortization		—			—			(0.1	)		(0.1	)		0.1					—			(0.1	)
Deferrals, net of amortization included in interest credited		—			0.2			0.1			(0.1	)		0.1					0.3			0.3
Adjustment related to realized (gains) losses on available-for-sale securities		—			—			—			0.1			(0.1	)				—			—
Balance at End-of-Period	$	0.4		$	1.9		$	2.0		$	2.0		$	2.0				$	0.4		$	2.0

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

⁽²⁾ The fourth quarter of 2008 had favorable audit adjustments of $8.4 million.

⁽³⁾ The portion of the rider fee revenue for GLB calculated as the attributed fee in excess of net valuation premium.

⁽⁴⁾ Change in the fair value of the derivatives that offsets the benefit ratio unlocking of our SOP 03-1 reserves on our GMDB riders, including our expected cost of the hedging instruments.

⁽⁵⁾ Includes distribution costs.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 19

Retirement Solutions - Defined Contribution

Account Value Roll Forward

Unaudited (in billions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Fixed Annuities
Balance at beginning-of-period	$	10.891		$	10.889		$	11.217		$	11.294		$	11.418		4.8	%	$	11.006		$	10.889		-1.1	%
Gross deposits		0.267			0.332			0.280			0.290			0.279		4.5	%		1.104			1.181		7.0	%
Withdrawals and deaths		(0.411	)		(0.370	)		(0.380	)		(0.411	)		(0.387	)	5.8	%		(1.635	)		(1.548	)	5.3	%
Net flows		(0.144	)		(0.038	)		(0.100	)		(0.121	)		(0.108	)	25.0	%		(0.531	)		(0.367	)	30.9	%
Transfers from (to) variable annuities		0.031			0.172			0.073			0.136			0.214		NM			(0.008	)		0.595		NM
Inter-segment transfer		—			0.089			—			—			—		NM			—			0.089		NM
Interest credited		0.111			0.105			0.104			0.109			0.114		2.7	%		0.422			0.432		2.4	%
Balance at End-of-Period (1)	$	10.889		$	11.217		$	11.294		$	11.418		$	11.638		6.9	%	$	10.889		$	11.638		6.9	%
Variable Annuities
Balance at beginning-of-period	$	18.581		$	17.876		$	16.292		$	16.195		$	13.480		-27.5	%	$	17.475		$	17.876		2.3	%
Gross deposits		0.560			0.674			0.561			0.532			0.403		-28.0	%		2.355			2.170		-7.9	%
Withdrawals and deaths		(0.842	)		(0.833	)		(0.646	)		(0.723	)		(0.506	)	39.9	%		(3.212	)		(2.708	)	15.7	%
Net flows		(0.282	)		(0.159	)		(0.085	)		(0.191	)		(0.103	)	63.5	%		(0.857	)		(0.538	)	37.2	%
Transfers to fixed annuities		(0.012	)		(0.143	)		(0.058	)		(0.117	)		(0.143	)	NM			(0.029	)		(0.461	)	NM
Inter-product transfer (2)		—			—			—			(0.553	)		—		NM			—			(0.553	)	NM
Inter-segment transfer		—			0.206			—			—			—		NM			—			0.206		NM
Investment increase and change in market value		(0.411	)		(1.488	)		0.046			(1.854	)		(2.646	)	NM			1.287			(5.942	)	NM
Balance at End-of-Period (3)	$	17.876		$	16.292		$	16.195		$	13.480		$	10.588		-40.8	%	$	17.876		$	10.588		-40.8	%
Total Annuities
Balance at beginning-of-period	$	29.472		$	28.765		$	27.509		$	27.489		$	24.898		-15.5	%	$	28.481		$	28.765		1.0	%
Gross deposits		0.827			1.006			0.841			0.822			0.682		-17.5	%		3.459			3.351		-3.1	%
Withdrawals and deaths		(1.253	)		(1.203	)		(1.026	)		(1.134	)		(0.893	)	28.7	%		(4.847	)		(4.256	)	12.2	%
Net flows		(0.426	)		(0.197	)		(0.185	)		(0.312	)		(0.211	)	50.5	%		(1.388	)		(0.905	)	34.8	%
Transfers between fixed and variable accounts		0.019			0.029			0.015			0.019			0.071		273.7	%		(0.037	)		0.134		NM
Inter-product transfer (2)		—			—			—			(0.553	)		—		NM			—			(0.553	)	NM
Inter-segment transfer		—			0.295			—			—			—		NM			—			0.295		NM
Interest credited and change in market value		(0.300	)		(1.383	)		0.150			(1.745	)		(2.532	)	NM			1.709			(5.510	)	NM
Balance at End-of-Period	$	28.765		$	27.509		$	27.489		$	24.898		$	22.226		-22.7	%	$	28.765		$	22.226		-22.7	%
Alliance and Smart Future Mutual Funds
Balance at beginning-of-period	$	7.165		$	7.293		$	7.255		$	7.553		$	7.675		7.1	%	$	5.175		$	7.293		40.9	%
Plan/participant rollovers		0.168			0.221			0.285			0.215			0.249		48.2	%		1.075			0.970		-9.8	%
Additional contributions		0.269			0.324			0.295			0.297			0.310		15.2	%		1.015			1.226		20.8	%
Gross deposits		0.437			0.545			0.580			0.512			0.559		27.9	%		2.090			2.196		5.1	%
Withdrawals and deaths		(0.102	)		(0.068	)		(0.158	)		(0.107	)		(0.177	)	-73.5	%		(0.365	)		(0.510	)	-39.7	%
Net flows		0.335			0.477			0.422			0.405			0.382		14.0	%		1.725			1.686		-2.3	%
Transfers		(0.023	)		(0.070	)		(0.026	)		(0.024	)		(0.079	)	NM			0.009			(0.199	)	NM
Inter-product transfer (2)		—			—			—			0.553			—		NM			—			0.553		NM
Interest credited and change in market value		(0.184	)		(0.445	)		(0.098	)		(0.812	)		(1.326	)	NM			0.384			(2.681	)	NM
Balance at End-of-Period (4)	$	7.293		$	7.255		$	7.553		$	7.675		$	6.652		-8.8	%	$	7.293		$	6.652		-8.8	%
Total Annuities and Mutual Funds
Balance at beginning-of-period	$	36.637		$	36.058		$	34.764		$	35.042		$	32.573		-11.1	%	$	33.656		$	36.058		7.1	%
Gross deposits		1.264			1.551			1.421			1.334			1.241		-1.8	%		5.549			5.547		0.0	%
Withdrawals and deaths		(1.355	)		(1.271	)		(1.184	)		(1.241	)		(1.070	)	21.0	%		(5.212	)		(4.766	)	8.6	%
Net flows		(0.091	)		0.280			0.237			0.093			0.171		287.9	%		0.337			0.781		131.8	%
Transfers		(0.004	)		(0.041	)		(0.011	)		(0.005	)		(0.008	)	-100.0	%		(0.028	)		(0.065	)	NM
Inter-segment transfer		—			0.295			—			—			—		NM			—			0.295		NM
Interest credited and change in market value		(0.484	)		(1.828	)		0.052			(2.557	)		(3.858	)	NM			2.093			(8.191	)	NM
Balance at End-of-Period	$	36.058		$	34.764		$	35.042		$	32.573		$	28.878		-19.9	%	$	36.058		$	28.878		-19.9	%
Variable Annuities Under Agreement - Included Above	$	0.017		$	0.015		$	0.014		$	0.011		$	0.008		-52.9	%	$	0.017		$	0.008		-52.9	%
Incremental Deposits: (5)
Fixed annuities	$	0.197		$	0.285		$	0.258		$	0.225		$	0.361		83.2	%	$	0.922		$	1.129		22.5	%
Variable annuities		0.551			0.667			0.553			0.524			0.398		-27.8	%		2.318			2.142		-7.6	%
Total annuities incremental deposits		0.748			0.952			0.811			0.749			0.759		1.5	%		3.240			3.271		1.0	%
Total Alliance mutual funds incremental deposits		0.437			0.545			0.580			0.511			0.560		28.1	%		2.090			2.196		5.1	%
Total Incremental Deposits	$	1.185		$	1.497		$	1.391		$	1.260		$	1.319		11.3	%	$	5.330		$	5.467		2.6	%

⁽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 $0.653 billion, of which $0.100 billion transferred within fixed annuities and therefore is not depicted on this rollforward.

⁽³⁾ Excludes the fixed portion of variable annuities.

⁽⁴⁾ Represents amounts attributable to mutual fund net flows. Mutual fund account values are not included on our Consolidated Balance Sheets.

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

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 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 Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Total Micro - Small Segment
Balance at beginning-of-period	$	8.077		$	7.798		$	7.218		$	7.286		$	5.790		-28.3	%	$	7.535		$	7.798		3.5	%
Gross deposits		0.365			0.498			0.389			0.389			0.255		-30.1	%		1.594			1.531		-4.0	%
Withdrawals and deaths		(0.565	)		(0.569	)		(0.395	)		(0.465	)		(0.311	)	45.0	%		(1.931	)		(1.740	)	9.9	%
Net flows		(0.200	)		(0.071	)		(0.006	)		(0.076	)		(0.056	)	72.0	%		(0.337	)		(0.209	)	38.0	%
Transfers between fixed and variable accounts		—			(0.012	)		—			—			0.004		NM			(0.005	)		(0.008	)	-60.0	%
Inter-product transfer (1)		—			—			—			(0.653	)		—		NM			—			(0.653	)	NM
Investment increase and change in market value		(0.079	)		(0.497	)		0.074			(0.767	)		(0.850	)	NM			0.605			(2.040	)	NM
Balance at End-of-Period	$	7.798		$	7.218		$	7.286		$	5.790		$	4.888		-37.3	%	$	7.798		$	4.888		-37.3	%
Total Mid - Large Segment
Balance at beginning-of-period	$	9.232		$	9.463		$	9.621		$	9.985		$	10.310		11.7	%	$	6.975		$	9.463		35.7	%
Gross deposits		0.609			0.769			0.748			0.687			0.729		19.7	%		2.771			2.933		5.8	%
Withdrawals and deaths		(0.212	)		(0.159	)		(0.299	)		(0.222	)		(0.191	)	9.9	%		(0.724	)		(0.871	)	-20.3	%
Net flows		0.397			0.610			0.449			0.465			0.538		35.5	%		2.047			2.062		0.7	%
Transfers between fixed and variable accounts		(0.003	)		(0.029	)		(0.011	)		(0.004	)		(0.011	)	NM			(0.017	)		(0.055	)	NM
Inter-product transfer (1)		—			—			—			0.653			—		NM			—			0.653		NM
Investment increase and change in market value		(0.163	)		(0.423	)		(0.074	)		(0.789	)		(1.297	)	NM			0.458			(2.583	)	NM
Balance at End-of-Period	$	9.463		$	9.621		$	9.985		$	10.310		$	9.540		0.8	%	$	9.463		$	9.540		0.8	%
Total Multi-Fund® and Other Variable Annuities
Balance at beginning-of-period	$	19.328		$	18.797		$	17.925		$	17.771		$	16.473		-14.8	%	$	19.146		$	18.797		-1.8	%
Gross deposits		0.290			0.284			0.284			0.258			0.257		-11.4	%		1.184			1.083		-8.5	%
Withdrawals and deaths		(0.578	)		(0.543	)		(0.490	)		(0.554	)		(0.568	)	1.7	%		(2.557	)		(2.155	)	15.7	%
Net flows		(0.288	)		(0.259	)		(0.206	)		(0.296	)		(0.311	)	-8.0	%		(1.373	)		(1.072	)	21.9	%
Transfers between fixed and variable accounts		(0.001	)		—			(0.000	)		(0.001	)		(0.001	)	0.0	%		(0.006	)		(0.002	)	66.7	%
Inter-segment transfer		—			0.295			—			—			—		NM			—			0.295		NM
Investment increase and change in market value		(0.242	)		(0.908	)		0.052			(1.001	)		(1.711	)	NM			1.030			(3.568	)	NM
Balance at End-of-Period	$	18.797		$	17.925		$	17.771		$	16.473		$	14.450		-23.1	%	$	18.797		$	14.450		-23.1	%
Total Annuities and Mutual Funds
Balance at beginning-of-period	$	36.637		$	36.058		$	34.764		$	35.042		$	32.573		-11.1	%	$	33.656		$	36.058		7.1	%
Gross deposits		1.264			1.551			1.421			1.334			1.241		-1.8	%		5.549			5.547		0.0	%
Withdrawals and deaths		(1.355	)		(1.271	)		(1.184	)		(1.241	)		(1.070	)	21.0	%		(5.212	)		(4.766	)	8.6	%
Net flows		(0.091	)		0.280			0.237			0.093			0.171		287.9	%		0.337			0.781		131.8	%
Transfers between fixed and variable accounts		(0.004	)		(0.041	)		(0.011	)		(0.005	)		(0.008	)	-100.0	%		(0.028	)		(0.065	)	NM
Inter-segment transfer		—			0.295			—			—			—		NM			—			0.295		NM
Investment increase and change in market value		(0.484	)		(1.828	)		0.052			(2.557	)		(3.858	)	NM			2.093			(8.191	)	NM
Balance at End-of-Period (2)	$	36.058		$	34.764		$	35.042		$	32.573		$	28.878		-19.9	%	$	36.058		$	28.878		-19.9	%
Fixed Annuities - Excluding Fixed Portion of Variable Contracts
Deposits	$	0.189		$	0.240		$	0.187		$	0.196		$	0.189		0.0	%	$	0.754		$	0.812		7.7	%
Withdrawals and deaths		(0.203	)		(0.160	)		(0.198	)		(0.183	)		(0.016	)	92.1	%		(0.724	)		(0.557	)	23.1	%
Net flows	$	(0.014	)	$	0.080		$	(0.011	)	$	0.013		$	0.173		NM		$	0.030		$	0.255		NM
Fixed Contract Account Values	$	4.996		$	5.166		$	5.221		$	5.304		$	5.601		12.1	%	$	4.996		$	5.601		12.1	%
Fixed Portion of Variable Contracts
Deposits	$	0.079		$	0.093		$	0.092		$	0.094		$	0.090		13.9	%	$	0.351		$	0.369		5.1	%
Withdrawals and deaths		(0.208	)		(0.210	)		(0.182	)		(0.228	)		(0.371	)	-78.4	%		(0.912	)		(0.991	)	-8.7	%
Net flows	$	(0.129	)	$	(0.117	)	$	(0.090	)	$	(0.134	)	$	(0.281	)	NM		$	(0.561	)	$	(0.622	)	-10.9	%
Fixed Portion of Variable Contract Account Values	$	5.893		$	6.051		$	6.073		$	6.114		$	6.037		2.4	%	$	5.893		$	6.037		2.4	%
Variable Annuities - Including Fixed Portion of Variable Contracts
Deposits	$	0.639		$	0.767		$	0.653		$	0.626		$	0.493		-22.8	%	$	2.706		$	2.539		-6.2	%
Withdrawals and deaths		(1.050	)		(1.043	)		(0.828	)		(0.951	)		(0.877	)	16.5	%		(4.124	)		(3.699	)	10.3	%
Net flows	$	(0.411	)	$	(0.276	)	$	(0.175	)	$	(0.325	)	$	(0.384	)	6.6	%	$	(1.418	)	$	(1.160	)	18.2	%
Variable Contract Account Values	$	23.769		$	22.343		$	22.268		$	19.594		$	16.625		-30.1	%	$	23.769		$	16.625		-30.1	%
Average Daily Variable Annuity Separate Account Values	$	18.235		$	16.640		$	16.892		$	15.582		$	10.666		-41.5	%	$	18.043		$	14.935		-17.2	%
																Change (Basis Point)								Change (Basis Point)
Interest Rate Spread (3)
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses		6.00	%		5.93	%		5.89	%		5.94	%		5.84	%	(16	)		6.03	%		5.89	%	(14	)
Commercial mortgage loan prepayment and bond make whole premiums		0.05	%		0.02	%		0.05	%		0.17	%		0.00	%	(5	)		0.06	%		0.06	%	—
Alternative investments		0.00	%		-0.03	%		-0.03	%		-0.01	%		-0.14	%	(14	)		0.02	%		-0.05	%	(7	)
Net investment income yield on reserves		6.05	%		5.92	%		5.91	%		6.10	%		5.70	%	(35	)		6.11	%		5.90	%	(21	)
Interest rate credited to contract holders		3.84	%		3.81	%		3.80	%		3.77	%		3.79	%	(5	)		3.83	%		3.79	%	(4	)
Interest rate spread		2.21	%		2.11	%		2.11	%		2.33	%		1.91	%	(30	)		2.28	%		2.11	%	(17	)

⁽¹⁾ On 9/30/08, the Lincoln Employee 401(k) Plan transferred from Director to Alliance in the amount of $0.653 billion.

⁽²⁾ Includes mutual fund account values. Mutual funds are not included on our Consolidated Balance Sheets.

⁽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.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 21

Insurance Solutions - Life Insurance

Income Statements and Operational Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec.			March			June			Sept.			Dec.			%		Dec.			Dec.			%
	2007			2008			2008			2008			2008			Change		2007			2008			Change
Operating Revenues
Insurance premiums	$	90.1		$	86.4		$	89.5		$	90.9		$	93.6		3.9	%	$	350.6		$	360.4		2.8	%
Surrender charges		14.2			15.7			14.6			15.7			14.2		0.0	%		59.1			60.2		1.9	%
Mortality assessments		319.3			321.7			328.1			331.9			339.6		6.4	%		1,222.8			1,321.3		8.1	%
Expense assessments (1) (2)		117.6			121.3			129.6			101.4			137.6		17.0	%		452.5			489.9		8.3	%
Net investment income		516.3			499.3			519.2			522.4			446.9		-13.4	%		2,068.9			1,987.8		-3.9	%
Other revenues and fees		10.7			8.7			5.0			9.3			7.5		-29.9	%		34.9			30.5		-12.6	%
Total Operating Revenues		1,068.2			1,053.1			1,086.0			1,071.6			1,039.4		-2.7	%		4,188.8			4,250.1		1.5	%
Operating Expenses
Interest credited		298.2			296.5			300.6			304.7			300.7		0.8	%		1,173.1			1,202.5		2.5	%
Benefits (1) (2)		308.9			298.6			304.1			397.7			362.5		17.4	%		1,088.9			1,362.9		25.2	%
Underwriting, acquisition, insurance and other expenses (1) (2)		202.7			219.5			234.0			167.4			255.7		26.1	%		841.6			876.6		4.2	%
Total Operating Expenses		809.8			814.6			838.7			869.8			918.9		13.5	%		3,103.6			3,442.0		10.9	%
Income from operations before federal income tax expense		258.4			238.5			247.3			201.8			120.5		-53.4	%		1,085.2			808.1		-25.5	%
Federal income tax expense		87.8			81.1			83.7			64.5			38.0		-56.7	%		366.3			267.3		-27.0	%
Income from Operations	$	170.6		$	157.4		$	163.6		$	137.3		$	82.5		-51.6	%	$	718.9		$	540.8		-24.8	%
Effective Tax Rate		34.0	%		34.0	%		33.8	%		32.0	%		31.5	%				33.8	%		33.1	%
Average Equity	$	8,271.4		$	8,142.5		$	8,095.3		$	8,164.2		$	8,263.8				$	8,145.4		$	8,166.5
Return on Average Equity		8.3	%		7.7	%		8.1	%		6.7	%		4.0	%				8.8	%		6.6	%
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	225.8		$	194.6		$	180.5		$	209.1		$	210.5		-6.8	%	$	897.6		$	794.7		-11.5	%
General and administrative expenses		110.6			105.3			100.8			101.9			116.0		4.9	%		445.3			424.0		-4.8	%
Taxes, licenses and fees		25.0			31.8			26.6			36.3			25.0		0.0	%		115.1			119.7		4.0	%
Amortization of sales force intangibles		1.0			1.0			1.0			1.0			1.0		0.0	%		4.0			4.0		0.0	%
Total commissions and expenses incurred		362.4			332.7			308.9			348.3			352.5		-2.7	%		1,462.0			1,342.4		-8.2	%
Less: commissions and expenses capitalized		(282.2	)		(245.8	)		(237.2	)		(260.8	)		(272.5	)	3.4	%		(1,134.2	)		(1,016.3	)	10.4	%
Amortization of DAC and VOBA, net of interest (1) (2)		122.5			132.6			162.3			79.9			175.7		43.4	%		513.8			550.5		7.1	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	202.7		$	219.5		$	234.0		$	167.4		$	255.7		26.1	%	$	841.6		$	876.6		4.2	%
General and Administrative Expenses - Basis Points on Average Account Values - Annualized		136			130			124			126			145		8			140			131		(9	)
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	5,532.9		$	5,691.7		$	5,968.1		$	6,235.0		$	6,947.8				$	4,924.6		$	5,691.7
Deferrals		282.2			245.8			237.2			260.8			272.5					1,134.2			1,016.3
Amortization, net of interest:
Unlocking		8.5			(9.1	)		(17.7	)		55.2			(84.0	)				30.4			(55.6	)
Other amortization		(131.0	)		(123.5	)		(144.6	)		(135.1	)		(91.7	)				(544.2	)		(494.9	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		159.7			113.2			74.9			180.9			96.8					620.4			465.8
Adjustment related to realized losses on available-for-sale securities and derivatives		56.7			7.3			9.3			54.2			76.3					41.9			147.1
Adjustment related to unrealized (gains) losses on available-for-sale securities and derivatives		(57.6	)		155.9			182.7			477.7			262.6					104.8			1,078.9
Balance at End-of-Period	$	5,691.7		$	5,968.1		$	6,235.0		$	6,947.8		$	7,383.5				$	5,691.7		$	7,383.5
Roll Forward of DFEL
Balance at beginning-of-period	$	607.6		$	672.6		$	722.2		$	763.4		$	840.2				$	471.2		$	672.6
Deferrals		99.7			89.2			90.1			96.6			102.6					364.2			378.5
Amortization, net of interest:
Unlocking		1.0			(3.4	)		(11.1	)		16.5			(24.0	)				(17.3	)		(22.0	)
Other amortization		(35.7	)		(36.2	)		(37.8	)		(36.3	)		(30.1	)				(145.5	)		(140.4	)
Deferrals, net of amortization included in expense assessments		65.0			49.6			41.2			76.8			48.5					201.4			216.1
Balance at End-of-Period	$	672.6		$	722.2		$	763.4		$	840.2		$	888.7				$	672.6		$	888.7

⁽¹⁾ The third quarter of 2008 included prospective unlocking model refinements that resulted in a $24.9 million decrease to expense assessments, a $76.4 million increase to benefits and a $49.4 million decrease to underwriting, acquisition, insurance and other expenses.

⁽²⁾ During the third quarter of 2008, model refinements attributable to our SOP 03-1 secondary guarantees resulted in increases to benefits and decreases to amortization of DAC and VOBA, net of interest, reported within underwriting, acquisition, insurance and other expenses and decreases to DFEL amortization, net of interest, reported within expense assessments.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 22

Insurance Solutions - Life Insurance

Operational Data and Account Value Roll Forward

Unaudited (billions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec.			March			June			Sept.			Dec.			%		Dec.			Dec.			%
	2007			2008			2008			2008			2008			Change		2007			2008			Change
Sales by Product (1) (in millions)
UL
Excluding MoneyGuard®	$	141.3		$	113.7		$	123.7		$	144.7		$	142.7		1.0	%	$	596.3		$	524.8		-12.0	%
MoneyGuard®		12.1			11.0			12.4			13.7			12.8		5.8	%		40.2			49.9		24.1	%
Total		153.4			124.7			136.1			158.4			155.5		1.4	%		636.5			574.7		-9.7	%
VUL		21.9			15.6			11.4			12.3			14.6		-33.3	%		77.4			53.9		-30.4	%
COLI and BOLI (2)		39.4			28.2			12.8			12.7			30.7		-22.1	%		91.4			84.4		-7.7	%
Term/Whole Life		6.9			5.1			5.4			6.9			10.6		53.6	%		31.7			28.0		-11.7	%
Total	$	221.6		$	173.6		$	165.7		$	190.3		$	211.4		-4.6	%	$	837.0		$	741.0		-11.5	%
First Year Paid Premiums (in millions)
UL
Excluding MoneyGuard®	$	304.6		$	245.4		$	254.3		$	270.4		$	287.4		-5.6	%	$	1,292.0		$	1,057.5		-18.2	%
MoneyGuard®		80.4			73.6			82.5			91.6			85.1		5.8	%		267.8			332.8		24.3	%
Total		385.0			319.0			336.8			362.0			372.5		-3.2	%		1,559.8			1,390.3		-10.9	%
VUL		48.9			37.0			28.8			31.1			34.2		-30.1	%		195.5			131.1		-32.9	%
COLI and BOLI (2)		72.8			57.9			26.0			30.3			82.2		12.9	%		156.2			196.4		25.7	%
Term/Whole Life		24.4			14.0			16.2			20.2			29.5		20.9	%		79.2			79.9		0.9	%
Total	$	531.1		$	427.9		$	407.8		$	443.6		$	518.4		-2.4	%	$	1,990.7		$	1,797.7		-9.7	%
Life Insurance In Force
UL and other	$	299.598		$	302.013		$	303.607		$	306.293		$	310.198		3.5	%	$	299.598		$	310.198		3.5	%
Term insurance		235.919			234.860			234.109			233.671			235.023		-0.4	%		235.919			235.023		-0.4	%
Total	$	535.517		$	536.873		$	537.716		$	539.964		$	545.221		1.8	%	$	535.517		$	545.221		1.8	%
Interest-Sensitive Life
Balance at beginning-of-period	$	26.162		$	26.518		$	26.726		$	26.980		$	27.227		4.1	%	$	25.362		$	26.518		4.6	%
Deposits		0.977			0.893			0.846			0.875			0.951		-2.7	%		3.581			3.565		-0.4	%
Withdrawals and deaths		(0.320	)		(0.398	)		(0.277	)		(0.306	)		(0.325	)	-1.6	%		(1.385	)		(1.306	)	5.7	%
Net flows		0.657			0.495			0.569			0.569			0.626		-4.7	%		2.196			2.259		2.9	%
Contract holder assessments (3)		(0.583	)		(0.568	)		(0.601	)		(0.613	)		(0.639	)	-9.6	%		(2.160	)		(2.421	)	-12.1	%
Interest credited		0.282			0.281			0.286			0.291			0.288		2.1	%		1.120			1.146		2.3	%
Balance at End-of-Period (3)	$	26.518		$	26.726		$	26.980		$	27.227		$	27.502		3.7	%	$	26.518		$	27.502		3.7	%
VUL
Balance at beginning-of-period	$	6.104		$	6.040		$	5.615		$	5.623		$	5.056		-17.2	%	$	5.433		$	6.040		11.2	%
Deposits		0.217			0.239			0.216			0.207			0.266		22.6	%		0.832			0.928		11.5	%
Withdrawals and deaths		(0.092	)		(0.083	)		(0.108	)		(0.086	)		(0.088	)	4.3	%		(0.383	)		(0.365	)	4.7	%
Net flows		0.125			0.156			0.108			0.121			0.178		42.4	%		0.449			0.563		25.4	%
Contract holder assessments		(0.093	)		(0.095	)		(0.091	)		(0.092	)		(0.092	)	1.1	%		(0.361	)		(0.370	)	-2.5	%
Investment income and change in market value		(0.096	)		(0.486	)		(0.009	)		(0.596	)		(0.891	)	NM			0.519			(1.982	)	NM
Balance at End-of-Period	$	6.040		$	5.615		$	5.623		$	5.056		$	4.251		-29.6	%	$	6.040		$	4.251		-29.6	%
Total Life Insurance
Balance at beginning-of-period	$	32.266		$	32.558		$	32.341		$	32.603		$	32.283		0.1	%	$	30.795		$	32.558		5.7	%
Deposits		1.194			1.132			1.062			1.082			1.217		1.9	%		4.413			4.493		1.8	%
Withdrawals and deaths		(0.412	)		(0.481	)		(0.385	)		(0.392	)		(0.413	)	-0.2	%		(1.768	)		(1.671	)	5.5	%
Net flows		0.782			0.651			0.677			0.690			0.804		2.8	%		2.645			2.822		6.7	%
Contract holder assessments (3)		(0.676	)		(0.663	)		(0.692	)		(0.705	)		(0.731	)	-8.1	%		(2.521	)		(2.791	)	-10.7	%
Investment income and change in market value		0.186			(0.205	)		0.277			(0.305	)		(0.603	)	NM			1.639			(0.836	)	NM
Balance at End-of-Period	$	32.558		$	32.341		$	32.603		$	32.283		$	31.753		-2.5	%	$	32.558		$	31.753		-2.5	%
Interest Rate Yields and Spread
																Change								Change
																(Basis Points)								(Basis Points)
Interest-Sensitive Products (4)
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses		6.04	%		6.00	%		5.89	%		5.92	%		5.86	%	(18	)		6.06	%		5.91	%	(15	)
Commercial mortgage loan prepayment and bond makewhole premiums		0.13	%		0.04	%		0.14	%		0.02	%		0.01	%	(12	)		0.13	%		0.05	%	(8	)
Alternative investments		0.09	%		0.00	%		0.21	%		0.31	%		-0.65	%	(74	)		0.21	%		-0.03	%	(24	)
Net investment income yield on reserves		6.26	%		6.04	%		6.24	%		6.25	%		5.22	%	(104	)		6.40	%		5.93	%	(47	)
Interest rate credited to contract holders		4.43	%		4.37	%		4.36	%		4.35	%		4.25	%	(18	)		4.45	%		4.35	%	(10	)
Interest rate spread		1.83	%		1.67	%		1.88	%		1.90	%		0.97	%	(86	)		1.95	%		1.58	%	(37	)
Traditional Products (5)
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses		6.21	%		6.12	%		6.23	%		6.06	%		6.10	%	(11	)		6.25	%		6.13	%	(12	)
Commercial mortgage loan prepayment and bond makewhole premiums		0.02	%		0.11	%		0.00	%		0.00	%		0.00	%	(2	)		0.07	%		0.03	%	(4	)
Alternative investments		0.00	%		-0.02	%		-0.02	%		-0.01	%		-0.08	%	(8	)		0.01	%		-0.03	%	(4	)
Net investment income yield on reserves		6.23	%		6.21	%		6.21	%		6.05	%		6.02	%	(21	)		6.33	%		6.13	%	(20	)

⁽¹⁾ Sales consist of first year commissionable premiums of UL and VUL, including COLI and BOLI, plus 5% of excess premiums received, including an adjustment for internal replacements at approximately 50% of target; first year paid premiums for whole life and term products; and 15% of premium deposits for linked-benefit products.

⁽²⁾ COLI and BOLI are interest-sensitive and contain both UL and VUL products.

⁽³⁾ Includes UL, interest-sensitive whole life and the fixed investment option of variable universal life products.

⁽⁴⁾ 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.

⁽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 December 31, 2008, interest-sensitive products represented approximately 85% of total interest-sensitive and traditional earning assets.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 23

Insurance Solutions - Group Protection

Income Statements and Operational Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec.			March			June			Sept.			Dec.			%		Dec.			Dec.			%
	2007			2008			2008			2008			2008			Change		2007			2008			Change
Operating Revenues
Insurance premiums	$	349.7		$	370.4		$	393.0		$	370.6		$	382.9		9.5	%	$	1,379.2		$	1,516.9		10.0	%
Mortality assessments		—			—			—			—			0.1		NM			0.1			0.1		0.0	%
Net investment income		29.5			27.7			30.5			30.8			28.2		-4.4	%		115.3			117.2		1.6	%
Other revenues and fees		1.4			1.3			1.4			1.4			1.3		-7.1	%		5.0			5.4		8.0	%
Total Operating Revenues		380.6			399.4			424.9			402.8			412.5		8.4	%		1,499.6			1,639.6		9.3	%
Operating Expenses
Interest credited		—			0.2			0.3			0.5			0.6		NM			0.2			1.6		NM
Benefits		252.1			269.1			285.7			268.8			283.1		12.3	%		999.2			1,106.7		10.8	%
Underwriting, acquisition, insurance and other expenses		85.1			89.6			89.3			91.8			100.4		18.0	%		325.4			371.1		14.0	%
Total Operating Expenses		337.2			358.9			375.3			361.1			384.1		13.9	%		1,324.8			1,479.4		11.7	%
Income from operations before federal income tax expense		43.4			40.5			49.6			41.7			28.4		-34.6	%		174.8			160.2		-8.4	%
Federal income tax expense		15.2			14.2			17.4			14.5			10.0		-34.2	%		61.3			56.1		-8.5	%
Income from Operations	$	28.2		$	26.3		$	32.2		$	27.2		$	18.4		-34.8	%	$	113.5		$	104.1		-8.3	%
Effective Tax Rate		35.0	%		35.1	%		35.1	%		34.8	%		35.2	%				35.1	%		35.0	%
Average Equity	$	956.4		$	975.8		$	985.3		$	1,001.0		$	1,002.3				$	931.3		$	991.1
Return on Average Equity		11.8	%		10.8	%		13.1	%		10.9	%		7.3	%				12.2	%		10.5	%
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	43.1		$	43.5		$	43.7		$	44.3		$	47.2		9.5	%	$	164.3		$	178.7		8.8	%
General and administrative expenses		42.8			41.7			40.8			42.4			51.4		20.1	%		150.9			176.3		16.8	%
Taxes, licenses and fees		6.2			10.0			9.0			9.0			10.6		71.0	%		33.5			38.6		15.2	%
Total commissions and expenses incurred		92.1			95.2			93.5			95.7			109.2		18.6	%		348.7			393.6		12.9	%
Less: commissions and expenses capitalized		(16.7	)		(13.7	)		(13.0	)		(13.1	)		(18.5	)	-10.8	%		(54.4	)		(58.3	)	-7.2	%
Amortization of DAC and VOBA, net of interest		9.7			8.1			8.8			9.2			9.7		0.0	%		31.1			35.8		15.1	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	85.1		$	89.6		$	89.3		$	91.8		$	100.4		18.0	%	$	325.4		$	371.1		14.0	%
General and Administrative Expenses as a
Percentage of Premiums		12.2	%		11.3	%		10.4	%		11.4	%		13.4	%				10.9	%		11.6	%
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	116.4		$	123.4		$	129.0		$	133.2		$	137.1				$	137.6		$	123.4
Cumulative effect of adoption of SOP 05-1		—			—			—			—			—					(37.5	)		—
Deferrals		16.7			13.7			13.0			13.1			18.5					54.4			58.3
Amortization, net of interest		(9.7	)		(8.1	)		(8.8	)		(9.2	)		(9.7	)				(31.1	)		(35.8	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		7.0			5.6			4.2			3.9			8.8					23.3			22.5
Balance at End-of-Period	$	123.4		$	129.0		$	133.2		$	137.1		$	145.9				$	123.4		$	145.9
Annualized Sales by Product Line
Life	$	53.9		$	21.3		$	23.4		$	30.6		$	49.9		-7.4	%	$	122.3		$	125.2		2.4	%
Disability		72.1			24.9			29.9			29.8			63.6		-11.8	%		160.0			148.2		-7.4	%
Dental		16.6			7.9			11.3			8.0			15.5		-6.6	%		43.8			42.7		-2.5	%
Total	$	142.6		$	54.1		$	64.6		$	68.4		$	129.0		-9.5	%	$	326.1		$	316.1		-3.1	%
Insurance Premiums by Product Line
Life	$	126.5		$	132.9		$	133.8		$	135.7		$	138.8		9.7	%	$	493.5		$	541.2		9.7	%
Disability		155.2			163.2			167.0			168.4			173.1		11.5	%		601.5			671.7		11.7	%
Dental		35.2			36.5			37.4			38.0			37.9		7.7	%		135.7			149.8		10.4	%
Other		32.8			37.8			54.8			28.5			33.1		0.9	%		148.5			154.2		3.8	%
Total	$	349.7		$	370.4		$	393.0		$	370.6		$	382.9		9.5	%	$	1,379.2		$	1,516.9		10.0	%
Income from Operations by Product Line
Life	$	11.2		$	10.1		$	11.4		$	8.9		$	3.8		-66.1	%	$	40.8		$	34.2		-16.2	%
Disability		13.7			15.4			19.9			16.0			13.1		-4.4	%		63.9			64.4		0.8	%
Dental		2.1			(0.3	)		(0.4	)		1.2			0.8		-61.9	%		3.5			1.3		-62.9	%
Other		1.2			1.1			1.3			1.1			0.7		-41.7	%		5.3			4.2		-20.8	%
Total	$	28.2		$	26.3		$	32.2		$	27.2		$	18.4		-34.8	%	$	113.5		$	104.1		-8.3	%
Loss Ratios by Product Line
Life		72.1	%		71.9	%		72.3	%		74.0	%		77.3	%				73.0	%		73.9	%
Disability		69.1	%		68.1	%		66.1	%		68.6	%		68.7	%				67.5	%		67.9	%
Dental		73.1	%		80.8	%		81.1	%		75.9	%		75.6	%				76.6	%		78.3	%
Combined Loss Ratios		70.7	%		71.0	%		70.2	%		71.6	%		72.8	%				70.7	%		71.4	%

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 24

Investment Management

Income Statements and Operational Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Operating Revenues
Investment advisory fees—external	$	87.7		$	76.2		$	75.8		$	67.7		$	48.4		-44.8	%	$	359.7		$	268.1		-25.5	%
Investment advisory fees—inter-segment		20.3			20.0			20.6			20.6			20.3		0.0	%		87.1			81.5		-6.4	%
Other revenues and fees		31.0			24.1			27.9			21.6			14.5		-53.2	%		143.4			88.1		-38.6	%
Total Operating Revenues		139.0			120.3			124.3			109.9			83.2		-40.1	%		590.2			437.7		-25.8	%
Operating Expenses
Operating and administrative expenses		96.8			101.1			100.8			101.8			89.5		-7.5	%		470.5			393.2		-16.4	%
Total Operating Expenses		96.8			101.1			100.8			101.8			89.5		-7.5	%		470.5			393.2		-16.4	%
Income (loss) from operations before federal income tax expense (benefit)		42.2			19.2			23.5			8.1			(6.3	)	NM			119.7			44.5		-62.8	%
Federal income tax expense (benefit)		15.2			7.1			8.5			2.8			(2.0	)	NM			43.3			16.4		-62.1	%
Income (Loss) from Operations	$	27.0		$	12.1		$	15.0		$	5.3		$	(4.3	)	NM		$	76.4		$	28.1		-63.2	%
Effective Tax Rate		36.0	%		37.0	%		36.2	%		34.6	%		31.7	%				36.2	%		36.9	%
Pre-Tax Operating Margin		30.4	%		16.0	%		18.9	%		7.4	%		-7.6	%				20.3	%		10.2	%
After-Tax Operating Margin		19.4	%		10.1	%		12.1	%		4.8	%		-5.2	%				12.9	%		6.4	%
Operating and Administrative Expenses
General and administrative expenses	$	81.0		$	87.6		$	85.9		$	90.3		$	79.7		-1.6	%	$	404.8		$	343.5		-15.1	%
Depreciation and amortization		2.3			2.2			2.1			1.7			1.7		-26.1	%		9.9			7.7		-22.2	%
Sub-advisory fees		8.1			7.2			7.4			6.5			4.4		-45.7	%		34.2			25.5		-25.4	%
Total general and administrative expenses		91.4			97.0			95.4			98.5			85.8		-6.1	%		448.9			376.7		-16.1	%
Taxes, licenses and fees		4.0			3.6			4.9			2.9			3.3		-17.5	%		16.0			14.7		-8.1	%
Amortization of intangibles		1.4			0.5			0.5			0.4			0.4		-71.4	%		5.6			1.8		-67.9	%
Total Operating and Administrative Expenses	$	96.8		$	101.1		$	100.8		$	101.8		$	89.5		-7.5	%	$	470.5		$	393.2		-16.4	%

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 25

Investment Management

Assets Under Management Roll Forward

Unaudited (in billions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Retail Fixed
Balance at beginning-of-period	$	13.014		$	13.463		$	14.168		$	14.398		$	14.335		10.2	%	$	10.993		$	13.463		22.5	%
Sales (1)		1.635			1.981			1.533			1.618			1.844		12.8	%		5.961			6.976		17.0	%
Redemptions		(1.330	)		(1.395	)		(1.238	)		(1.292	)		(2.246	)	-68.9	%		(4.361	)		(6.171	)	-41.5	%
Exchanges		0.017			0.054			0.030			0.098			0.028		64.7	%		0.053			0.210		296.2	%
Net flows		0.322			0.640			0.325			0.424			(0.374	)	NM			1.653			1.015		-38.6	%
Net investment gains and change in market value		0.145			0.065			(0.095	)		(0.487	)		(0.299	)	NM			0.723			(0.816	)	NM
Transfer of assets to a third-party (2)		(0.018	)		—			—			—			—		100.0	%		(0.072	)		—		100.0	%
Transfer of assets from an inter-company manager (3)		—			—			—			—			—		NM			0.166			—		-100.0	%
Balance at End-of-Period (4)	$	13.463		$	14.168		$	14.398		$	14.335		$	13.662		1.5	%	$	13.463		$	13.662		1.5	%
Retail Equity
Balance at beginning-of-period	$	38.166		$	36.250		$	31.463		$	29.770		$	24.741		-35.2	%	$	39.627		$	36.250		-8.5	%
Sales (1)		1.957			1.514			1.063			1.080			0.750		-61.7	%		7.318			4.407		-39.8	%
Redemptions		(2.903	)		(2.752	)		(2.292	)		(2.832	)		(2.453	)	15.5	%		(9.929	)		(10.329	)	-4.0	%
Exchanges		(0.025	)		(0.057	)		(0.033	)		0.002			(0.029	)	-16.0	%		(0.069	)		(0.117	)	-69.6	%
Net flows		(0.971	)		(1.295	)		(1.262	)		(1.750	)		(1.732	)	-78.4	%		(2.680	)		(6.039	)	NM
Net investment gains and change in market value		(0.915	)		(3.492	)		(0.431	)		(3.279	)		(5.171	)	NM			2.483			(12.373	)	NM
Transfer of assets to a third-party (2)		(0.030	)		—			—			—			—		100.0	%		(0.129	)		—		100.0	%
Transfer of assets to an inter-company manager (3)		—			—			—			—			—		NM			(3.051	)		—		100.0	%
Balance at End-of-Period (4)	$	36.250		$	31.463		$	29.770		$	24.741		$	17.838		-50.8	%	$	36.250		$	17.838		-50.8	%
Total Retail
Balance at beginning-of-period	$	51.180		$	49.713		$	45.631		$	44.168		$	39.076		-23.6	%	$	50.620		$	49.713		-1.8	%
Retail sales—annuities		0.953			1.562			0.786			1.075			1.032		8.3	%		4.046			4.455		10.1	%
Retail sales—mutual funds		2.241			1.592			1.407			1.303			1.337		-40.3	%		7.433			5.639		-24.1	%
Retail sales—managed accounts and other		0.398			0.341			0.403			0.320			0.225		-43.5	%		1.800			1.289		-28.4	%
Total retail sales (1)		3.592			3.495			2.596			2.698			2.594		-27.8	%		13.279			11.383		-14.3	%
Redemptions		(4.233	)		(4.147	)		(3.530	)		(4.124	)		(4.699	)	-11.0	%		(14.290	)		(16.500	)	-15.5	%
Exchanges		(0.008	)		(0.003	)		(0.003	)		0.100			(0.001	)	87.5	%		(0.016	)		0.093		NM
Net flows		(0.649	)		(0.655	)		(0.937	)		(1.326	)		(2.106	)	NM			(1.027	)		(5.024	)	NM
Net investment gains and change in market value		(0.770	)		(3.427	)		(0.526	)		(3.766	)		(5.470	)	NM			3.206			(13.189	)	NM
Transfer of assets to a third-party (2)		(0.048	)		—			—			—			—		100.0	%		(0.201	)		—		100.0	%
Transfer of assets to an inter-company manager (3)		—			—			—			—			—		NM			(2.885	)		—		100.0	%
Balance at End-of-Period (4)	$	49.713		$	45.631		$	44.168		$	39.076		$	31.500		-36.6	%	$	49.713		$	31.500		-36.6	%
Institutional Fixed
Balance at beginning-of-period	$	24.837		$	12.746		$	12.409		$	12.070		$	11.928		-52.0	%	$	22.841		$	12.746		-44.2	%
Inflows (1)		0.577			0.242			0.330			0.592			0.432		-25.1	%		5.884			1.596		-72.9	%
Withdrawals/terminations		(0.673	)		(0.638	)		(0.556	)		(1.152	)		(0.924	)	-37.3	%		(3.730	)		(3.270	)	12.3	%
Exchanges		0.138			0.002			—			(0.108	)		0.001		-99.3	%		0.137			(0.105	)	NM
Net flows		0.042			(0.394	)		(0.226	)		(0.668	)		(0.491	)	NM			2.291			(1.779	)	NM
Net investment gains and change in market value		0.180			0.057			(0.113	)		(0.258	)		(0.064	)	NM			0.707			(0.378	)	NM
Transfer of assets to a third-party (5)		(12.313	)		—			—			—			—		100.0	%		(12.313	)		—		100.0	%
Transfer of assets (to) from an inter-company manager (3)		—			—			—			0.784			—		NM			(0.780	)		0.784		200.5	%
Balance at End-of-Period (4)	$	12.746		$	12.409		$	12.070		$	11.928		$	11.373		-10.8	%	$	12.746		$	11.373		-10.8	%
Institutional Equity
Balance at beginning-of-period	$	23.699		$	22.898		$	20.498		$	19.453		$	15.595		-34.2	%	$	23.845		$	22.898		-4.0	%
Inflows (1)		1.653			0.986			0.580			0.698			0.754		-54.4	%		4.588			3.018		-34.2	%
Withdrawals/terminations		(1.996	)		(1.100	)		(0.889	)		(1.984	)		(1.457	)	27.0	%		(7.224	)		(5.430	)	24.8	%
Exchanges		(0.001	)		(0.002	)		—			(0.053	)		—		100.0	%		(0.001	)		(0.055	)	NM
Net flows		(0.344	)		(0.116	)		(0.309	)		(1.339	)		(0.703	)	NM			(2.637	)		(2.467	)	6.4	%
Net investment gains and change in market value		(0.457	)		(2.284	)		(0.736	)		(2.470	)		(3.223	)	NM			2.053			(8.713	)	NM
Transfer of assets to a third-party (5)		—			—			—			(0.065	)		—		NM			—			(0.065	)	NM
Transfer of assets (to) from an inter-company manager (3)		—			—			—			0.016			—		NM			(0.363	)		0.016		104.4	%
Balance at End-of-Period (4)	$	22.898		$	20.498		$	19.453		$	15.595		$	11.669		-49.0	%	$	22.898		$	11.669		-49.0	%
Total Institutional
Balance at beginning-of-period	$	48.536		$	35.644		$	32.907		$	31.523		$	27.523		-43.3	%	$	46.686		$	35.644		-23.7	%
Inflows (1)		2.230			1.228			0.910			1.290			1.186		-46.8	%		10.472			4.614		-55.9	%
Withdrawals/terminations		(2.669	)		(1.738	)		(1.445	)		(3.136	)		(2.381	)	10.8	%		(10.954	)		(8.700	)	20.6	%
Exchanges		0.137			—			—			(0.161	)		0.001		-99.3	%		0.136			(0.160	)	NM
Net flows		(0.302	)		(0.510	)		(0.535	)		(2.007	)		(1.194	)	NM			(0.346	)		(4.246	)	NM
Net investment gains and change in market value		(0.277	)		(2.227	)		(0.849	)		(2.728	)		(3.287	)	NM			2.760			(9.091	)	NM
Transfer of assets to a third-party (5)		(12.313	)		—			—			(0.065	)		—		100.0	%		(12.313	)		(0.065	)	99.5	%
Transfer of assets (to) from an inter-company manager (3)		—			—			—			0.800			—		NM			(1.143	)		0.800		170.0	%
Balance at End-of-Period (4)	$	35.644		$	32.907		$	31.523		$	27.523		$	23.042		-35.4	%	$	35.644		$	23.042		-35.4	%
Total Retail and Institutional—At End-of-Period (4)	$	85.357		$	78.538		$	75.691		$	66.599		$	54.542		-36.1	%	$	85.357		$	54.542		-36.1	%
General Account Assets—At End-of-Period	$	67.417		$	67.339		$	65.997		$	63.531		$	65.680		-2.6	%	$	67.417		$	65.680		-2.6	%
Total Assets Under Management at End-of-Period	$	152.774		$	145.877		$	141.688		$	130.130		$	120.222		-21.3	%	$	152.774		$	120.222		-21.3	%
Total Retail and Institutional—Net Flows	$	(0.951	)	$	(1.165	)	$	(1.472	)	$	(3.333	)	$	(3.300	)	NM		$	(1.373	)	$	(9.270	)	NM
Sub-Advised Assets, Included in Assets Under Management Above
Retail	$	16.219		$	14.212		$	13.651		$	11.168		$	8.047		-50.4	%	$	16.219		$	8.047		-50.4	%
Institutional		4.570			4.071			3.794			3.035			2.180		-52.3	%		4.570			2.180		-52.3	%
Total Sub-Advised Assets	$	20.789		$	18.283		$	17.445		$	14.203		$	10.227		-50.8	%	$	20.789		$	10.227		-50.8	%

⁽¹⁾ Includes dividend reinvestments.

⁽²⁾ Reflects assets transferred to a third-party manager (Upromise) as a result of Delaware’s decision to exit the 529 Plan business.

⁽³⁾ Reflects assets that were transferred to an inter-company manager, which did not impact Lincoln’s consolidated assets under management.

⁽⁴⁾ Includes inter-segment and external assets under management.

⁽⁵⁾ In the fourth quarter of 2007, we sold a portion of our institutional fixed-income business to an unaffiliated investment management company. In the third quarter of 2008, a portion of our institutional equity business related to Lincoln’s 401(k) plan was transferred to a third-party.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 26

Investment Management

Assets Under Management Roll Forward (Continued) ⁽¹⁾

Unaudited (in billions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Inter-Segment Assets—Retail and Institutional
Balance at beginning-of-period	$	10.175		$	9.672		$	9.191		$	8.995		$	8.937		-12.2	%	$	13.729		$	9.672		-29.6	%
Sales/inflows		0.743			0.718			0.375			0.812			0.829		11.6	%		2.495			2.734		9.6	%
Redemptions/withdrawals/terminations		(1.148	)		(0.679	)		(0.543	)		(0.866	)		(0.973	)	15.2	%		(3.402	)		(3.061	)	10.0	%
Exchanges		0.133			—			—			(0.162	)		—		-100.0	%		0.133			(0.162	)	NM
Net flows		(0.272	)		0.039			(0.168	)		(0.216	)		(0.144	)	47.1	%		(0.774	)		(0.489	)	36.8	%
Net investment gains and change in market value		(0.231	)		(0.520	)		(0.028	)		(0.551	)		(0.825	)	NM			0.745			(1.924	)	NM
Transfer of assets to a third-party		—			—			—			(0.075	)		—		NM			—			(0.075	)	NM
Transfer of assets (to) from an inter-company manager		—			—			—			0.784			—		NM			(4.028	)		0.784		119.5	%
Balance at End-of-Period	$	9.672		$	9.191		$	8.995		$	8.937		$	7.968		-17.6	%	$	9.672		$	7.968		-17.6	%
Inter-Segment Assets—General Account at End-of-Period	$	67.417		$	67.339		$	65.997		$	63.531		$	65.680		-2.6	%	$	67.417		$	65.680		-2.6	%
Total Inter-Segment Assets at End-of-Period	$	77.089		$	76.530		$	74.992		$	72.468		$	73.648		-4.5	%	$	77.089		$	73.648		-4.5	%
Total External
Balance at beginning-of-period (2)	$	89.541		$	75.686		$	69.346		$	66.696		$	57.662		-35.6	%	$	83.577		$	75.686		-9.4	%
Sales/inflows		5.081			4.004			3.132			3.176			2.951		-41.9	%		21.257			13.263		-37.6	%
Redemptions/withdrawals/terminations		(5.754	)		(5.207	)		(4.433	)		(6.393	)		(6.107	)	-6.1	%		(21.843	)		(22.140	)	-1.4	%
Exchanges		(0.004	)		(0.003	)		(0.002	)		0.101			—		100.0	%		(0.012	)		0.096		NM
Net flows		(0.677	)		(1.206	)		(1.303	)		(3.116	)		(3.156	)	NM			(0.598	)		(8.781	)	NM
Net investment gains and change in market value		(0.817	)		(5.134	)		(1.347	)		(5.944	)		(7.932	)	NM			5.221			(20.357	)	NM
Transfer of assets (to) from a third-party		(12.361	)		—			—			0.010			—		100.0	%		(12.514	)		0.010		100.1	%
Transfer of assets from an inter-company manager		—			—			—			0.016			—		NM			—			0.016		NM
Balance at End-of-Period	$	75.686		$	69.346		$	66.696		$	57.662		$	46.574		-38.5	%	$	75.686		$	46.574		-38.5	%

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

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 27

Lincoln UK

Income Statements and Operational Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Operating Revenues
Insurance premiums	$	21.2		$	19.0		$	26.4		$	18.9		$	14.0		-34.0	%	$	95.3		$	78.3		-17.8	%
Mortality assessments		9.1			9.1			9.1			8.7			7.4		-18.7	%		37.1			34.3		-7.5	%
Expense assessments		46.5			37.1			42.6			31.1			26.2		-43.7	%		156.6			137.0		-12.5	%
Net investment income		21.5			20.3			19.8			21.1			16.8		-21.9	%		81.1			78.0		-3.8	%
Other revenues and fees		—			0.1			—			—			—		NM			0.1			0.1		0.0	%
Total Operating Revenues		98.3			85.6			97.9			79.8			64.4		-34.5	%		370.2			327.7		-11.5	%
Operating Expenses
Benefits		36.9			30.7			30.2			26.5			19.9		-46.1	%		137.5			107.3		-22.0	%
Underwriting, acquisition, insurance and other expenses		41.9			38.5			40.0			34.4			30.0		-28.4	%		162.6			142.9		-12.1	%
Total Operating Expenses		78.8			69.2			70.2			60.9			49.9		-36.7	%		300.1			250.2		-16.6	%
Income from operations before federal income tax expense		19.5			16.4			27.7			18.9			14.5		-25.6	%		70.1			77.5		10.6	%
Federal income tax expense		6.8			5.7			9.7			6.6			5.1		-25.0	%		24.5			27.1		10.6	%
Income from Operations	$	12.7		$	10.7		$	18.0		$	12.3		$	9.4		-26.0	%	$	45.6		$	50.4		10.5	%
Effective Tax Rate		34.9	%		34.8	%		35.0	%		34.9	%		35.2	%				35.0	%		35.0	%
Average Equity	$	368.5		$	375.7		$	384.6		$	385.7		$	392.1				$	380.0		$	384.6
Return on Average Equity		13.8	%		11.4	%		18.7	%		12.8	%		9.6	%				12.0	%		13.1	%
Underwriting, Acquisition, Insurance and Other Expenses
Commissions	$	1.5		$	1.0		$	1.0		$	1.0		$	1.1		-26.7	%	$	4.9		$	4.1		-16.3	%
General and administrative expenses		28.1			26.6			25.9			21.9			21.5		-23.5	%		108.3			95.9		-11.4	%
Total commissions and expenses incurred		29.6			27.6			26.9			22.9			22.6		-23.6	%		113.2			100.0		-11.7	%
Less: commissions and expenses capitalized		(1.4	)		(0.6	)		(0.7	)		(0.8	)		(0.8	)	42.9	%		(4.0	)		(2.9	)	27.5	%
Amortization of DAC and VOBA, net of interest		13.7			11.5			13.8			12.3			8.2		-40.1	%		53.4			45.8		-14.2	%
Total Underwriting, Acquisition, Insurance and Other Expenses	$	41.9		$	38.5		$	40.0		$	34.4		$	30.0		-28.4	%	$	162.6		$	142.9		-12.1	%
Roll Forward of DAC and VOBA
Balance at beginning-of-period	$	807.3		$	772.1		$	760.4		$	749.9		$	658.3				$	809.0		$	772.1
Deferrals		1.4			0.6			0.7			0.8			0.8					4.0			2.9
Amortization, net of interest:
Unlocking		(0.9	)		1.3			(0.3	)		(1.5	)		1.0					(1.2	)		0.5
Other amortization		(12.8	)		(12.8	)		(13.5	)		(10.8	)		(9.3	)				(52.2	)		(46.4	)
Deferrals, net of amortization included in underwriting, acquisition, insurance and other expenses		(12.3	)		(10.9	)		(13.1	)		(11.5	)		(7.5	)				(49.4	)		(43.0	)
Foreign currency translation adjustment		(22.9	)		(0.8	)		2.6			(80.1	)		(117.3	)				12.5			(195.6	)
Balance at End-of-Period	$	772.1		$	760.4		$	749.9		$	658.3		$	533.5				$	772.1		$	533.5
Roll Forward of DFEL
Balance at beginning-of-period	$	398.2		$	379.3		$	371.5		$	366.8		$	323.8				$	404.5		$	379.3
Deferrals		0.9			0.9			0.6			0.8			0.9					3.3			3.2
Amortization, net of interest:
Unlocking		(1.0	)		(0.5	)		1.2			0.4			(0.2	)				(5.2	)		0.9
Other amortization		(7.5	)		(7.7	)		(7.9	)		(4.9	)		(4.8	)				(29.7	)		(25.3	)
Deferrals, net of amortization included in expense assessments		(7.6	)		(7.3	)		(6.1	)		(3.7	)		(4.1	)				(31.6	)		(21.2	)
Foreign currency translation adjustment		(11.3	)		(0.5	)		1.4			(39.3	)		(57.5	)				6.4			(95.9	)
Balance at End-of-Period	$	379.3		$	371.5		$	366.8		$	323.8		$	262.2				$	379.3		$	262.2
Unit-Linked Assets
Balance at beginning-of-period	$	9.192		$	8.850		$	8.079		$	7.833		$	6.585		-28.4	%	$	8.757		$	8.850		1.1	%
Deposits		0.075			0.060			0.101			0.081			0.057		-24.0	%		0.323			0.299		-7.4	%
Withdrawals (including charges) and deaths		(0.227	)		(0.213	)		(0.227	)		(0.189	)		(0.138	)	39.2	%		(0.969	)		(0.767	)	20.8	%
Net flows		(0.152	)		(0.153	)		(0.126	)		(0.108	)		(0.081	)	46.7	%		(0.646	)		(0.468	)	27.6	%
Investment income and change in market value		0.070			(0.608	)		(0.150	)		(0.304	)		(0.462	)	NM			0.601			(1.524	)	NM
Foreign currency adjustment		(0.260	)		(0.010	)		0.030			(0.836	)		(1.064	)	NM			0.138			(1.880	)	NM
Balance at End-of-Period	$	8.850		$	8.079		$	7.833		$	6.585		$	4.978		-43.8	%	$	8.850		$	4.978		-43.8	%
Individual Life In Force	$	19.022		$	18.283		$	18.009		$	15.605		$	12.284		-35.4	%	$	19.022		$	12.284		-35.4	%
Exchange Rate—Dollars to Pounds
For-the-period		2.051			1.987			1.986			1.897			1.590		-22.5	%		2.007			1.865		-7.1	%
End-of-period		1.987			1.985			1.992			1.778			1.459		-26.6	%		1.987			1.459		-26.6	%

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 28

Other Operations ⁽¹⁾

Unaudited (in millions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Operating Revenues
Insurance premiums	$	0.7		$	1.4		$	1.7		$	0.6		$	0.3		-57.1	%	$	3.5		$	4.0		14.3	%
Net investment income		101.3			98.6			87.1			90.8			81.9		-19.2	%		372.5			358.4		-3.8	%
Amortization of deferred gain on business sold through reinsurance (2)		18.6			18.5			18.4			18.4			18.4		-1.1	%		74.5			73.7		-1.1	%
Other revenues and fees		1.2			(2.3	)		0.6			1.1			(1.1	)	NM			3.1			(1.7	)	NM
Communications revenues		26.5			21.7			22.9			21.5			19.4		-26.8	%		106.8			85.5		-19.9	%
Inter-segment elimination of investment advisory fees		(20.3	)		(20.0	)		(20.6	)		(20.6	)		(20.3	)	0.0	%		(87.1	)		(81.5	)	6.4	%
Total Operating Revenues		128.0			117.9			110.1			111.8			98.6		-23.0	%		473.3			438.4		-7.4	%
Operating Expenses
Interest credited		47.8			45.8			41.8			42.6			40.7		-14.9	%		184.4			170.9		-7.3	%
Benefits		36.4			27.8			29.0			30.7			25.7		-29.4	%		146.4			113.2		-22.7	%
Underwriting, acquisition, insurance and other expenses		55.2			34.9			46.7			31.6			44.0		-20.3	%		163.5			157.2		-3.9	%
Taxes, licenses and fees		5.1			2.1			1.1			2.6			1.4		-72.5	%		12.9			7.2		-44.2	%
Interest and debt expenses		80.3			75.4			64.8			68.6			72.3		-10.0	%		284.0			281.1		-1.0	%
Communications expenses		13.5			15.5			15.4			14.2			14.7		8.9	%		56.5			59.8		5.8	%
Inter-segment elimination of investment advisory fees		(20.3	)		(20.0	)		(20.6	)		(20.6	)		(20.3	)	0.0	%		(87.1	)		(81.5	)	6.4	%
Total Operating Expenses		218.0			181.5			178.2			169.7			178.5		-18.1	%		760.6			707.9		-6.9	%
Loss from operations before federal income tax benefit		(90.0	)		(63.6	)		(68.1	)		(57.9	)		(79.9	)	11.2	%		(287.3	)		(269.5	)	6.2	%
Federal income tax benefit		(30.7	)		(21.3	)		(23.7	)		(18.4	)		(25.1	)	18.2	%		(114.0	)		(88.4	)	22.5	%
Loss From Operations	$	(59.3	)	$	(42.3	)	$	(44.4	)	$	(39.5	)	$	(54.8	)	7.6	%	$	(173.3	)	$	(181.1	)	-4.5	%
Run Off Institutional Pensions Account Values - Balance at End-of-Period	$	2.094		$	2.074		$	2.051		$	2.010		$	1.941		-7.3	%	$	2.094		$	1.941		-7.3	%
Discontinued Operations Unaudited (in millions)
	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Discontinued Operations Before Disposal
Income from discontinued operations before federal income tax expense	$	13.9		$	7.4		$	—		$	—		$	—		-100.0	%	$	45.7		$	7.4		-83.8	%
Federal income tax expense		4.8			2.6			—			—			—		-100.0	%		16.0			2.6		-83.8	%
Income From Discontinued Operations Before Disposal		9.1			4.8			—			—			—		-100.0	%		29.7			4.8		-83.8	%
Disposal
Gain (loss) on disposal before federal income tax expense (benefit)		57.1			(12.3	)		(0.4	)		(0.2	)		0.6		-98.9	%		57.1			(12.2	)	NM
Federal income tax expense (benefit)		193.0			(3.3	)		(0.1	)		0.8			0.2		-99.9	%		193.0			(2.4	)	NM
Gain (Loss) on Disposal		(135.9	)		(9.0	)		(0.3	)		(1.0	)		0.4		100.3	%		(135.9	)		(9.8	)	92.8	%
Income (Loss) From Discontinued Operations	$	(126.8	)	$	(4.2	)	$	(0.3	)	$	(1.0	)	$	0.4		100.3	%	$	(106.2	)	$	(5.0	)	95.3	%

⁽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.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 29

Consolidated Domestic Deposits, Account Balances, and Net Flows

Unaudited (in billions)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Deposits
Retirement Solutions:
Annuities—fixed annuities (1)	$	1.288		$	1.160		$	1.371		$	1.276		$	1.233		-4.3	%	$	4.322		$	5.040		16.6	%
Defined Contribution—fixed annuities		0.267			0.332			0.280			0.290			0.279		4.5	%		1.104			1.181		7.0	%
Annuities—variable annuities		2.594			1.866			2.065			1.672			1.087		-58.1	%		9.135			6.690		-26.8	%
Defined Contribution—variable products (2)		0.997			1.219			1.141			1.044			0.962		-3.5	%		4.445			4.366		-1.8	%
Insurance Solutions—Life Insurance		1.194			1.132			1.062			1.082			1.217		1.9	%		4.413			4.493		1.8	%
Investment Management:
Annuities		0.953			1.562			0.786			1.075			1.032		8.3	%		4.046			4.455		10.1	%
Mutual funds		2.241			1.592			1.407			1.303			1.337		-40.3	%		7.433			5.639		-24.1	%
Managed accounts and other		0.398			0.341			0.403			0.320			0.225		-43.5	%		1.800			1.289		-28.4	%
Consolidating adjustments		(0.926	)		(1.494	)		(0.776	)		(1.061	)		(1.019	)	-10.0	%		(3.493	)		(4.350	)	-24.5	%
Total Gross Retail Deposits		9.006			7.710			7.739			7.001			6.353		-29.5	%		33.205			28.803		-13.3	%
Investment Management—institutional		2.230			1.228			0.910			1.290			1.186		-46.8	%		10.472			4.614		-55.9	%
Consolidating adjustments		(0.192	)		(0.092	)		(0.034	)		(0.052	)		(0.109	)	43.2	%		(0.521	)		(0.287	)	44.9	%
Total Gross Deposits	$	11.044		$	8.846		$	8.615		$	8.239		$	7.430		-32.7	%	$	43.156		$	33.130		-23.2	%
	As of
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change
Account Balances
Retirement Solutions:
Annuities—fixed annuities (1)	$	16.470		$	16.395		$	16.544		$	16.493		$	16.530		0.4	%
Defined Contribution—fixed annuities		10.889			11.217			11.294			11.418			11.638		6.9	%
Annuities—variable annuities		58.643			54.966			55.854			49.982			40.925		-30.2	%
Defined Contribution—variable products (2)		25.169			23.547			23.748			21.155			17.240		-31.5	%
Insurance Solutions—Life Insurance		32.558			32.341			32.603			32.283			31.753		-2.5	%
Investment Management:
Annuities		12.282			11.697			11.700			10.952			9.377		-23.7	%
Mutual funds		19.793			18.690			18.176			16.699			14.021		-29.2	%
Managed accounts and other		17.638			15.244			14.292			11.425			8.102		-54.1	%
Consolidating adjustments		(11.798	)		(11.264	)		(11.286	)		(10.590	)		(9.086	)	23.0	%
Total Retail Account Balances		181.645			172.832			172.925			159.817			140.500		-22.7	%
Investment Management—institutional		35.644			32.907			31.523			27.523			23.042		-35.4	%
Consolidating adjustments		(2.357	)		(2.208	)		(2.124	)		(2.423	)		(2.143	)	9.1	%
Total Account Balances	$	214.931		$	203.531		$	202.323		$	184.917		$	161.399		-24.9	%
	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Net Flows
Retirement Solutions:
Annuities	$	1.809		$	1.181		$	1.589		$	0.944		$	0.376		-79.2	%	$	4.991		$	4.090		-18.1	%
Defined Contribution		(0.091	)		0.280			0.237			0.093			0.171		287.9	%		0.337			0.781		131.8	%
Insurance Solutions—Life Insurance		0.782			0.651			0.677			0.690			0.804		2.8	%		2.645			2.822		6.7	%
Investment Management—retail		(0.649	)		(0.655	)		(0.937	)		(1.326	)		(2.106	)	NM			(1.027	)		(5.024	)	NM
Consolidating adjustments		0.140			(0.098	)		(0.075	)		(0.025	)		0.071		-49.3	%		0.537			(0.127	)	NM
Total Retail Net Flows		1.991			1.359			1.491			0.376			(0.684	)	NM			7.483			2.542		-66.0	%
Investment Management—institutional		(0.302	)		(0.510	)		(0.535	)		(2.007	)		(1.194	)	NM			(0.346	)		(4.246	)	NM
Consolidating adjustments		0.132			0.030			0.052			0.253			0.130		-1.5	%		0.282			0.465		64.9	%
Total Net Flows	$	1.821		$	0.879		$	1.008		$	(1.378	)	$	(1.748	)	NM		$	7.419		$	(1.239	)	NM

⁽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.

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 30

Consolidated Investment Data - Assets Managed

Unaudited (in billions)

	As of
	Dec. 2007		March 2008		June 2008		Sept. 2008		Dec. 2008		% Change
Assets Managed by Source
LNC’s investments and cash:
Available-for-sale fixed maturity securities	$	56.276	$	55.624	$	54.518	$	51.931	$	48.934	-13.0	%
Available-for-sale equity securities		0.518		0.474		0.465		0.493		0.289	-44.2	%
Trading securities		2.730		2.714		2.551		2.393		2.333	-14.5	%
Other investments		12.449		12.794		12.720		13.140		15.786	26.8	%
Total LNC investments		71.973		71.606		70.254		67.957		67.342	-6.4	%
Separate accounts		91.113		84.703		85.295		74.971		60.633	-33.5	%
Cash and invested cash		1.666		2.447		1.921		2.160		5.926	255.7	%
Total LNC		164.752		158.756		157.470		145.088		133.901	-18.7	%
Non-affiliate assets managed		71.975		66.020		63.197		54.419		44.107	-38.7	%
Total Assets Managed	$	236.727	$	224.776	$	220.667	$	199.507	$	178.008	-24.8	%
Assets Managed by Advisor
Investment Management segment (1)	$	85.357	$	78.538	$	75.691	$	66.599	$	54.542	-36.1	%
Delaware Investment Advisers (2)		67.417		67.339		65.997		63.531		65.680	-2.6	%
Lincoln UK (excluding policy loans)		10.243		9.442		9.176		7.772		5.978	-41.6	%
Policy loans		2.886		2.855		2.852		2.870		2.923	1.3	%
Non-LNC affiliates		70.824		66.602		66.951		58.735		48.885	-31.0	%
Total Assets Managed	$	236.727	$	224.776	$	220.667	$	199.507	$	178.008	-24.8	%

⁽¹⁾ See page 25 for additional detail.

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

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

12/31/2008 PAGE 31

Consolidated Investment Data - Other Investment Data

Unaudited (millions of dollars)

	For the Three Months Ended																	For the Years Ended
	Dec. 2007			March 2008			June 2008			Sept. 2008			Dec. 2008			% Change		Dec. 2007			Dec. 2008			% Change
Net Investment Income
Available-for-sale fixed maturity securities	$	868.4		$	858.0		$	855.2		$	856.1		$	840.8		-3.2	%	$	3,411.3		$	3,410.1		0.0	%
Available-for-sale equity securities		10.4			9.1			7.8			7.0			5.2		-50.0	%		41.2			29.1		-29.4	%
Trading securities		42.4			42.5			42.1			41.0			40.3		-5.0	%		176.1			165.9		-5.8	%
Mortgage loans on real estate		122.0			121.6			128.6			121.2			122.1		0.1	%		507.4			493.5		-2.7	%
Real estate		13.3			8.0			6.4			6.0			5.2		-60.9	%		56.5			25.6		-54.7	%
Policy loans		44.6			44.6			43.2			46.1			45.4		1.8	%		174.5			179.3		2.8	%
Invested cash		20.4			18.9			15.3			12.2			16.4		-19.6	%		72.6			62.8		-13.5	%
Other investments		17.4			(2.9	)		9.5			29.0			(68.4	)	NM			123.9			(32.8	)	NM
Investment income		1,138.9			1,099.8			1,108.1			1,118.6			1,007.0		-11.6	%		4,563.5			4,333.5		-5.0	%
Investment expense		(45.2	)		(34.4	)		(31.3	)		(29.6	)		(30.1	)	33.4	%		(185.3	)		(125.4	)	32.3	%
Net Investment Income	$	1,093.7		$	1,065.4		$	1,076.8		$	1,089.0		$	976.9		-10.7	%	$	4,378.2		$	4,208.1		-3.9	%
Average Invested Assets (Amortized Cost)	$	70,987.4		$	71,195.4		$	71,438.8		$	71,269.9		$	70,666.6				$	70.632.9		$	71,142.7
Ratio of Net Investment Income Over Average Invested Assets		6.16	%		5.99	%		6.03	%		6.11	%		5.53	%				6.20	%		5.92	%
Realized Loss Related to Investments
Available-for-sale fixed maturity securities:
Gross gains	$	16.7		$	9.1		$	21.7		$	26.8		$	16.4		-1.8	%	$	124.6		$	74.0		-40.6	%
Gross losses		(87.7	)		(100.0	)		(137.8	)		(380.1	)		(527.6	)	NM			(184.9	)		(1,145.5	)	NM
Equity securities:
Gross gains		0.3			2.7			0.3			1.1			0.7		133.3	%		7.7			4.8		-37.7	%
Gross losses		(110.9	)		—			(7.0	)		(26.0	)		(131.0	)	-18.1	%		(111.4	)		(164.0	)	-47.2	%
Gain (loss) on other investments		11.5			25.1			3.1			(0.9	)		5.5		-52.2	%		18.4			32.8		78.3	%
Associated amortization of DAC, VOBA, DSI, DFEL and changes in other contract holder funds and funds withheld reinsurance liabilities		65.2			25.1			24.2			95.1			116.6		78.8	%		29.3			261.0		NM
Total realized loss on investments, excluding trading securities		(104.9	)		(38.0	)		(95.5	)		(284.0	)		(519.4	)	NM			(116.3	)		(936.9	)	NM
Loss on certain derivative instruments		(4.1	)		(3.1	)		(29.1	)		(29.9	)		(50.1	)	NM			(10.8	)		(112.2	)	NM
Associated amortization of DAC, VOBA, DSI, DFEL and changes in other contract holder funds		0.2			—			—			—			—		-100.0	%		0.6			—		-100.0	%
Total, pre-tax		(108.8	)		(41.1	)		(124.6	)		(313.9	)		(569.5	)	NM			(126.5	)		(1,049.1	)	NM
Income taxes		(37.4	)		(14.0	)		(44.0	)		(109.9	)		(199.4	)	NM			(44.1	)		(367.3	)	NM
Total, After-Tax	$	(71.4	)	$	(27.1	)	$	(80.6	)	$	(204.0	)	$	(370.1	)	NM		$	(82.4	)	$	(681.8	)	NM

	As of December 31, 2008				As of December 31, 2007
	Amount		% of Total		Amount		% of Total
Available-for-Sale and Trading Securities
Fixed maturity securities (fair value)	$	51,265.4	99.4	%	$	59,003.9	99.1	%
Fixed maturity securities (amortized cost)		57,498.6	99.2	%		58,578.9	99.1	%
Equity securities (fair value)		290.0	0.6	%		520.1	0.9	%
Equity securities (amortized cost)		468.1	0.8	%		549.9	0.9	%
% of Available-for-Sale Fixed Maturity Securities (Based on Fair Value)
Treasuries and AAA			24.5	%			23.1	%
AA or better			30.9	%			32.9	%
BB or less			4.5	%			5.1	%
General Account Investments
	As of December 31, 2008				As of December 31, 2007
	Amount		% of Total		Amount		% of Total
Fixed Maturities—Security Sector:
Corporate bonds	$	36,710.4	75.0	%	$	44,147.9	78.5	%
U.S. Government bonds		245.9	0.5	%		222.0	0.4	%
Foreign government bonds		760.8	1.5	%		1,037.5	1.8	%
Mortgage-backed securities		10,129.6	20.7	%		10,604.6	18.8	%
State and municipal bonds		125.4	0.3	%		153.1	0.3	%
Preferred stocks—redeemable		962.3	2.0	%		110.7	0.2	%
Total	$	48,934.4	100.0	%	$	56,275.8	100.0	%

	As of
	Dec. 2007		March 2008		June 2008		Sept. 2008		Dec. 2008		% Change
Composition of Investment Portfolio
Available-for-sale securities, at fair value:
Fixed maturity	$	56,275.8	$	55,624.0	$	54,517.6	$	51,931.1	$	48,934.4	-13.0	%
Equity		518.0		474.4		464.6		492.6		288.5	-44.3	%
Trading securities		2,730.2		2,713.6		2,550.5		2,393.4		2,332.5	-14.6	%
Mortgage loans on real estate and real estate		7,681.0		7,707.2		7,813.6		7,815.0		7,840.8	2.1	%
Policy loans		2,885.4		2,854.8		2,852.5		2,870.1		2,923.3	1.3	%
Derivative investments		807.1		1,091.1		889.9		1,262.2		3,397.2	NM
Other investments		1,075.0		1,141.0		1,163.5		1,193.0		1,624.2	51.1	%
Total	$	71,972.5	$	71,606.1	$	70,252.2	$	67,957.4	$	67,340.9	-6.4	%

This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

EX-99.3

Exhibit 99.3

Lincoln Financial Group

December 31, 2008

General Account Supplement

This document is dated February 9, 2009. The data contained in this document may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

Lincoln Financial Group

Available For Sale (AFS) by Industry Classifications

Amounts in Millions

	As of 12/31/2008							As of 09/30/2008
AFS - Fixed Maturities	Amortized Cost	Unrealized Gains	Unrealized (Losses)		Fair Value	% Fair Value		Amortized Cost	Unrealized Gains	Unrealized (Losses)		Fair Value	% Fair Value
Corporate
Financial Services	8,564	75	(1,264	)	7,375	15.1	%	9,044	42	(1,105	)	7,981	15.4	%
Basic Industry	2,247	15	(353	)	1,909	3.9	%	2,339	14	(155	)	2,198	4.2	%
Capital Goods	2,668	34	(222	)	2,480	5.1	%	2,675	24	(116	)	2,583	5.0	%
Communications	2,609	44	(222	)	2,431	5.0	%	2,637	22	(170	)	2,489	4.8	%
Consumer Cyclical	2,878	33	(460	)	2,451	5.0	%	2,954	15	(273	)	2,696	5.2	%
Consumer Non-Cyclical	4,296	88	(206	)	4,178	8.5	%	4,248	37	(166	)	4,119	7.9	%
Energy	2,972	48	(246	)	2,774	5.7	%	2,937	47	(143	)	2,841	5.5	%
Technology	766	9	(71	)	704	1.4	%	737	4	(32	)	709	1.4	%
Transportation	1,237	22	(119	)	1,140	2.3	%	1,271	25	(72	)	1,224	2.4	%
Industrial Other	718	16	(38	)	696	1.4	%	670	7	(22	)	665	1.3	%
Utilities	8,207	104	(678	)	7,633	15.6	%	8,344	71	(471	)	7,944	15.3	%
Asset-Backed Securities (“ABS”)
Collaterized Debt Obligations (“CDO”) / Credit-Linked Notes (“CLN”) [1]	796	7	(630	)	173	0.4	%	797	7	(460	)	344	0.7	%
Commercial Real Estate (“CRE”) CDO	60	—	(23	)	37	0.1	%	61	—	(12	)	49	0.1	%
Credit Card	165	—	(73	)	92	0.2	%	165	—	(23	)	142	0.3	%
Home Equity	1,107	1	(411	)	697	1.4	%	1,183	1	(316	)	868	1.7	%
Manufactured Housing	148	2	(28	)	122	0.2	%	151	4	(9	)	146	0.3	%
Other	196	1	(18	)	179	0.4	%	204	1	(9	)	196	0.4	%
Commercial Mortgage-Backed Securities (“CMBS”)
Non-Agency Backed	2,535	9	(625	)	1,919	3.9	%	2,588	10	(280	)	2,318	4.5	%
Collaterized Mortgage Obligations (“CMO”)
Agency Backed	5,068	180	(29	)	5,219	10.7	%	4,902	50	(54	)	4,898	9.4	%
Non-Agency Backed	1,996	1	(746	)	1,251	2.6	%	2,146	—	(568	)	1,578	3.0	%
Mortgage Pass Throughs
Agency Backed	1,619	55	—		1,674	3.4	%	1,756	20	(6	)	1,770	3.4	%
Non-Agency Backed	141	—	(47	)	94	0.2	%	147	—	(26	)	121	0.2	%
Municipals
Taxable	110	4	(1	)	113	0.2	%	113	4	(1	)	116	0.2	%
Tax-Exempt	3	—	—		3	—		5	—	—		5	—
Government/Government Agencies
United States	1,148	167	(25	)	1,290	2.6	%	1,170	91	(14	)	1,247	2.4	%
Foreign	1,377	97	(135	)	1,339	2.7	%	1,421	49	(67	)	1,403	2.7	%
Preferred Stock Redeemable & Hybrids [2]	1,563	6	(607	)	962	2.0	%	1,546	11	(266	)	1,291	2.5	%
AFS - Fixed Maturities	55,194	1,018	(7,277	)	48,935	100.0	%	56,211	556	(4,836	)	51,931	100.0	%
AFS - Equities	466	9	(187	)	288			612	9	(128	)	493
Total AFS Securities	55,660	1,027	(7,464	)	49,223			56,823	565	(4,964	)	52,424
Trading Securities [3]	2,307	255	(229	)	2,333			2,363	193	(162	)	2,393
Total AFS & Trading Securities	57,967	1,282	(7,693	)	51,556			59,186	758	(5,127	)	54,817

[1] Includes amortized cost of $600 million as of 12/31/08 and 9/30/2008 respectively, related to Credit-Linked Notes. For additional information, see “Credit-Linked Notes (CLN)” disclosure starting on page 113 of the 2007 Form 10-K.

[2] During 4Q08, $1.4 billion amortized cost of Hybrid Preferred Securities were reclassified from the Corporate Bond holdings to this line item. In addition, 3Q08 was restated to reflect the Hybrid reclassification.

[3] 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 12/31/2008

Amounts in Millions

	Total		Prime/Agency		Prime/Non-Agency		Alt-A		Subprime
	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost
Type
CMO & Pass Throughs	8,238	8,824	6,819	6,595	912	1,477	507	752	—	—
ABS Home Equity	698	1,108	—	—	—	—	253	363	445	745
Total	8,936	9,932	6,819	6,595	912	1,477	760	1,115	445	745
Rating
AAA	8,222	8,558	6,780	6,556	658	936	484	642	300	424
AA	249	448	20	20	108	184	69	126	52	118
A	134	283	19	18	59	163	38	69	18	33
BBB	174	325	—	—	63	117	47	78	64	130
BB and below	157	318	—	1	24	77	122	200	11	40
Total	8,936	9,932	6,819	6,595	912	1,477	760	1,115	445	745
Origination Year
2004 and prior	4,208	4,396	3,342	3,246	326	423	302	392	238	335
2005	1,456	1,745	904	879	195	281	212	326	145	259
2006	784	1,135	372	359	140	264	210	361	62	151
2007	1,805	1,996	1,518	1,451	251	509	36	36	—	—
2008	683	660	683	660	—	—	—	—	—	—
Total	8,936	9,932	6,819	6,595	912	1,477	760	1,115	445	745

Note: This table does not include the fair value of trading securities totaling $187 million which support our Modco reinsurance agreements since investment results for these agreements are passed directly to the reinsurers.

The $187 million in trading securities consisted of $155 million prime, $19 million alt-a, and $13 million subprime.

Lincoln Financial Group

AFS - Asset-Backed Securities - Consumer Loan

As of 12/31/2008

Amounts in Millions

	Total		Credit Card [1]
	Fair Value	Amortized Cost	Fair Value	Amortized Cost
Rating
AAA	77	139	77	139
BBB	15	26	15	26
Total	92	165	92	165

[1] - Additional indirect credit card exposure through structured securities is excluded from this table. See “Credit-Linked Notes (CLN)” disclosure starting on page 113 of the 2007 Form 10-K.

Note: This table does not include the fair value of trading securities totaling $1 million which support our Modco reinsurance agreements since investment results for these agreements are passed directly to the reinsurers. The $1 million in trading securities consisted of $1 million credit card securities.

Lincoln Financial Group

AFS - Commercial Mortgage-Backed Securities

As of 12/31/2008

Amounts in Millions

	Total		Multiple Property		Single Property		CRE CDOs
	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost
Type
CMBS	1,919	2,535	1,831	2,388	88	147	—	—
CRE CDOs	37	60	—	—	—	—	37	60
Total	1,956	2,595	1,831	2,388	88	147	37	60
Rating
AAA	1,461	1,708	1,386	1,601	56	69	19	38
AA	276	420	275	417	—	—	1	3
A	132	258	86	172	29	67	17	19
BBB	70	168	67	157	3	11	—	—
BB and below	17	41	17	41	—	—	—	—
Total	1,956	2,595	1,831	2,388	88	147	37	60
Origination Year
2004 and prior	1,423	1,680	1,334	1,580	71	78	18	22
2005	266	445	243	369	16	61	7	15
2006	156	286	143	255	1	8	12	23
2007	111	184	111	184	—	—	—	—
Total	1,956	2,595	1,831	2,388	88	147	37	60

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

Commercial Mortgage Loan Portfolio, Net of Reserves

As of 12/31/2008

Amounts in Millions

LNC MORTGAGE LOAN DISTRIBUTION

Property Type	Amt $	%
Office Building	2,625	34	%
Industrial	2,004	26	%
Retail	1,834	24	%
Apartment	725	9	%
Hotel/Motel	287	4	%
Mixed Use	135	2	%
Other Commercial	105	1	%
Total	7,715	100	%

Geographic Region	Amt $	%
Pacific	2,050	27	%
South Atlantic	1,808	23	%
East North Central	803	10	%
Mountain	743	10	%
West South Central	706	9	%
Middle Atlantic	514	7	%
East South Central	457	6	%
West North Central	418	5	%
New England	216	3	%
Total	7,715	100	%

State	Amt $	%
CA	1,614	21	%
TX	656	9	%
MD	439	6	%
FL	341	4	%
TN	322	4	%
NC	321	4	%
AZ	318	4	%
VA	311	4	%
WA	297	4	%
IL	284	3	%
GA	250	3	%
PA	237	3	%
NV	214	3	%
OH	202	3	%
IN	192	2	%
MN	159	2	%
MA	159	2	%
NJ	146	2	%
SC	136	2	%
NY	131	2	%
All other states below 2%	986	13	%
Total	7,715	100	%

Lincoln Financial Group

Additional Disclosure of Insured Bonds and Direct Exposure

As of 12/31/2008

Amounts in Millions

Monoline Name	Direct Exposure	Insured Bonds [1]	Total Amortized Cost	Total Unrealized Gain	Total Unrealized (Loss)		Total Fair Value
AMBAC	—	268	268	6	(66	)	208
ASSURED GUARANTY LTD	30	—	30	—	(14	)	16
FGIC	—	97	97	1	(38	)	60
FSA	—	68	68	1	(11	)	58
MBIA	12	114	126	2	(31	)	97
MGIC	12	7	19	—	(4	)	15
PMI GROUP INC	27	—	27	—	(13	)	14
RADIAN GROUP INC	19	—	19	—	(11	)	8
SECURITY CAPITAL ASSURANCE LTD	1	—	1	—	(1	)	—
XL CAPITAL LTD	72	73	145	2	(36	)	111
Total	173	627	800	12	(225	)	587

[1] - Additional direct exposure through Credit Default Swaps with a notional totaling $50 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 113 of the 2007 Form 10-K.

Note: This table does not include the fair value of trading securities totaling $28 million which support our Modco reinsurance agreements since investment results for these agreements are passed directly to the reinsurers.

The $28 million in trading securities consisted of $8 million of Direct Exposure and $20 million of Insured Exposure.

This table also excludes insured exposure totaling $15 million for a guaranteed investment tax credit partnership.