2008 Annual Report to Shareholders - Lincoln Financial Group

The Lincoln UK segment’s product revenues (in millions) were as follows:
For the Years Ended December 31,
2008 2007 2006
Product Revenues
Life products $ 106 $ 121 $ 95
Pension products 136 160 131
Other products 6 8 11
Total product revenues $ 248 $ 289 $ 237
Product revenues include premiums, fees and assessments for Lincoln UK’s products.
Our subsidiary in the U.K. has its balance sheets and income statements translated at the current spot exchange rate as of the yearend
and average spot exchange rate for the year, respectively.
Lincoln UK has an evergreen agreement to outsource its customer service and policy administration functions to Capita Life &
Pensions Services Limited, a subsidiary of Capita Group Plc (“Capita”). The purpose of the outsourcing is to reduce the
operational risk and variability of future costs associated with administering the business by taking advantage of Capita’s proven
expertise in providing outsourcing solutions to a variety of industries including insurance companies. To date, the relationship has
provided the segment with results in line with expectations.
Competition
The U.K. life insurance market is very competitive and consists of many companies, with no one company dominating the market
for all products. Lincoln UK markets a limited range of new unit-linked life and pension products through independent
intermediaries. The main factors upon which entities in this market compete are distribution access, product features, investment
choice, cost, customer service, brand recognition and financial strength.
OTHER OPERATIONS
Other Operations includes the results of operations that are not directly related to the business segments, unallocated corporate
items and the ongoing amortization of deferred gain on the indemnity reinsurance portion of the sale of our former reinsurance
segment to Swiss Re in the fourth quarter of 2001. Unallocated corporate items include investment income on investments related
to the amount of statutory surplus in our insurance subsidiaries that is not allocated to our business units and other corporate
investments, such as our remaining radio properties, interest expense on short-term and long-term borrowings, our closed block of
run-off pension business in the form of group annuity and insured funding-type of contracts with assets under management of
approximately $1.9 billion as of December 31, 2008, and certain expenses, including restructuring and merger-related expenses.
Other Operations also includes the eliminations of inter-company transactions and the inter-segment elimination of the investment
advisory fees for asset management services the Investment Management segment provides to Retirement Solutions and Insurance
Solutions.
Revenues (in millions) from Other Operations were as follows:
For the Years Ended December 31,
2008 2007 2006
Operating Revenues
Insurance premiums $ 4 $ 3 $ 9
Net investment income 358 372 373
Amortization of deferred gain on business
sold through reinsurance 74 74 75
Media revenues (net) 85 107 85
Other revenues and fees - 4 (1)
Inter-segment elimination of investment
advisory fees (82) (87) (97)
Total operating revenues $ 439 $ 473 $ 444
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