In order to eliminate redundancies and capitalize on newly acquired competencies and existing efficiencies, Hartford, Connecticut, became the platform for operating the segment's life insurance business, while the annuities operation remained in Fort Wayne, Indiana.
Although investment management has long been an area of expertise within LNC, the addition of Delaware in 1995 signaled LNC's intention to expand its role as a money manager and meet its objective of becoming a force in the financial services industry.
The acquisition and integration of CIGNA's ACCRU business increased the number of retail wholesalers to 51 as of December 31, 1998 from 37 as of December 31, 1997, strengthening Delaware's retail sales presence. The multi-manager ACCRU variable annuity product, which was re-launched in the 4th quarter of 1998 under the name Delaware-Lincoln ChoicePlus (Service Mark), has further broadened and diversified Delaware's product line.
Due to LNC's change in its business focus during the last few years (i.e., exited property-casualty business, added emphasis on annuities, life insurance and investment management) as well as the on-going and increasing competitive pressures within the business LNC operates in, the decision was made in 1998 to initiate an organizational/expense review. This review, which was completed in the fourth quarter of 1998, resulted in a one-time restructuring charge to earnings. The amount of the pre-tax charge was $22.0 million and the estimate of the reduction in future expenses once implementation is complete is $15-$20 million per year.
While it is management's judgement that, based on available information, the appropriate level of liabilities have been recorded, LNC has areas where changes in estimates of related liabilities required could occur in the near term. These areas include claims for disability income coverages, liabilities and recoveries related to inappropriate selling of products in the United Kingdom, liabilities for personal accident programs, liabilities for marketing and compliance issues and the reserve for the run-off of group pension annuities (see note 7 to the consolidated financial statements on page 54).
Real estate......................................... $ 51.0 $ 50.2 Property and equipment.............................. 222.1 155.9
For the year ended December 31, 1998, fixed maturity securities available-for-sale, mortgage loans on real estate and real estate investments which were non-income producing were not significant.
1999 - $100.2 2001 - $ .4 2003 - $ -- 2000 - .1 2002 - 100.0 Thereafter - 613.3
Finally, LNC maintains a revolving credit agreement with a group of domestic and foreign banks in the aggregate amount of $750,000,000. This agreement, which expires in October 2001, provides for interest on borrowings based on various money market indices. Under the terms of this agreement, LNC must maintain a prescribed level of adjusted consolidated net worth. At December 31, 1998, LNC had no outstanding borrowings under this agreement. During 1998, 1997 and 1996, fees paid for maintaining revolving credit agreements amounted to $662,000; $670,000 and $715,000, respectively.
Net Income from discontinued operations was as follows: Nine Months Year Ended Ended September December 31 (in millions) 30, 1997 1996 - -------------------------------------------------------------------------------- Revenue . . . . . . . . . . . . . . . . . $1,538.5 $1,987.7 Benefits and expenses.................... 1,363.6 1,799.0 ------- ------- Pre-tax net income.................... 174.9 188.7 Federal income taxes...................... 40.0 31.5 -------- -------- Net income............................ $ 134.9 $ 157.2