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Lincoln National Corporation

150 N. Radnor-Chester Road

Radnor, PA  19087

phone 484-583-1430

May 19, 2009

Mr. Jim Rosenberg

Senior Assistant Chief Accountant

Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

Re: Lincoln National Corporation

Form 10-K for the Fiscal Year Ended December 31, 2008

Filed February 27, 2009

File Number 1-06028

Dear Mr. Rosenberg:

This letter is in response to the staff of the Division of Corporation Finance’s (the “Staff”) letter of April 21, 2009 concerning Lincoln National Corporation’s (“LNC” or the “Company”) Form 10-K for the year ended December 31, 2008.  Our reply refers to the specific comments in the
Staff’s letter.  In responding to the Staff’s comments, we acknowledge the following:

·      the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·      Staff comments or changes to disclosure in response to Staff comments do not foreclose the commission from taking any action with respect to the filing; and

·      the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The following are the Staff’s comments and our responses:

Item 1. Business, page 1 Reinsurance, page 19

1.      You disclose that Swiss Re represents your largest reinsurance exposure.  In addition, on page 40 you disclose that "a reinsurer's insolvency, inability or unwillingness to make payments under the terms of a reinsurance contract, especially Swiss Re, could have a material adverse effect on our
results of operations and financial condition."  It appears that the reinsurance agreement with Swiss Re is material to your business. Please revise to provide a description of each of the material terms of the agreement, including, but not limited to any payment provisions, rights obtained, material obligations that must be met to keep the agreement in place, term and termination provisions.  In addition, please file a copy of the agreement as an exhibit.

Alternatively, please provide us with a detailed analysis which supports your apparent conclusion that you are not substantially dependent on this reinsurance agreement pursuant to Item 601(b)(10)(ii)(B) of Regulation S-K.

Page 2

May 19, 2009

Re: Lincoln National Corp

Response:

As disclosed on page 1 of the 2008 Form 10-K, we sold our former reinsurance segment to Swiss Re Life & Health America Inc. (“Swiss Re”) in 2001.  We sold the business to Swiss Re pursuant to the Stock and Asset Purchase Agreement by and among Lincoln National Corporation, The Lincoln National Life Insurance Company,
Lincoln National Reinsurance Company (Barbados) Limited and Swiss Re Life & Health America Inc., dated July 27, 2001 (the “Swiss Re Agreement”), which is filed as Exhibit 10.63 to the Form 10-K.  The transaction was both a stock and asset sale. The transaction included the sale of both legal entities and blocks of business on the books of the insurance companies retained by LNC.  Typically, blocks of insurance business are sold through indemnity reinsurance arrangements, which
was how the blocks of insurance business were sold to Swiss Re.  For the blocks of business sold to Swiss Re, Swiss Re paid a ceding commission and agreed to indemnify us and our subsidiaries for 100% of claims and expenses related to the business assumed by Swiss Re until all claims have been paid.  There are no ongoing payment provisions or termination provisions under the agreements.  From our standpoint, the most significant ongoing obligation of Swiss Re was its ongoing obligation
to place assets in trust to support the business sold to Swiss Re if its ratings were to drop below either S&P “AA-“ or A.M. Best “A”, or its NAIC RBC ratio were to fall below 250%.  In addition, we hold certain assets in support of reserves under funds withheld reinsurance structures as we disclose on pages 40 and 205 of the Form 10-K.

As stated above, we filed the Swiss Re Agreement, which was the material contract for the transaction not made in the ordinary course of our business under Item 601 (b)(10)(i) , as Exhibit 10.63.  On the other hand, reinsurance transactions occur in the ordinary course of our business, and although Swiss Re represents our largest
reinsurance exposure, our business is not substantially dependent upon this reinsurance arrangement, which we believe is the appropriate standard under Item 601(b)(10)(ii)(B) of Regulation S-K.  The business transferred under the Swiss Re agreement represents closed blocks of our prior reinsurance business, and we do not currently have ongoing reinsurance operations.  Furthermore, as disclosed on page 140 of
the Form 10-K, at December 31, 2008, we had a $4.5 billion reinsurance receivable from Swiss Re of which $1.9 billion was supported by assets in trust.  We also have funds withheld arrangements covering $2.0 billion related to the reinsurance receivable, and the reinsurance arrangements provide for Swiss Re to deposit assets in trust for the balance of the reinsurance receivable upon the ratings triggers described above being tripped.

Supplementally, we wish to inform the Staff that on February 25, 2009, Swiss Re informed Lincoln that their S&P rating had fallen below “AA-“ and that they are now required to place assets into a trust to support the business purchased from Lincoln.  Lincoln anticipates that trust will be funded during the second
quarter of 2009.  The amount of the trust will be approximately $1.9 billion based on December 31, 2008 balances.

As a result, we have a $4.5 billion reinsurance receivable from Swiss Re supported by approximately $3.8 billion of trust assets and $2.0 billion of funds withheld.  Therefore, even if Swiss Re could not pay its claims, we believe we would have sufficient assets to pay the claims on the business assumed by Swiss Re.

Page 3

May 19, 2009

Re: Lincoln National Corp

Item 1A. Risk Factors, page 28

2.      You state on page 143 that you anticipate that "unless market conditions improve, the dividend capacity of our insurance subsidiaries will be substantially constrained in 2009." Please revise to include a risk factor which appropriately discloses the risks associated with your holding company structure
and the ability of your operating subsidiaries to dividend payments to you. Also, consider the need to expand the disclosure on page 143 to include the consequences that a constrained dividend capacity of your insurance subsidiaries in 2009 could have on your financial position, results of operations and cash flows as may be required by Financial Reporting Codification Section 501.02.

Response:

We believe that the current risk factors adequately disclose the risks of our holding company structure and the ability of our operating subsidiaries to make dividend payments to the holding company.  On page 28 of the Form 10-K, the risk factor titled—“Adverse capital and credit market conditions may significantly affect
our ability to meet liquidity needs, access to capital and cost of capital”—provides:

We need liquidity to pay our operating expenses, interest on our debt and dividends on our capital stock, to maintain our securities lending activities and to replace certain maturing liabilities. Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. As a holding company with no direct operations,
our principal asset is the capital stock of our insurance and investment management subsidiaries. Our ability to meet our obligations for payment of interest and principal on outstanding debt obligations, including the $500 million of senior securities due in April 2009, and to pay dividends to shareholders and corporate expenses depends significantly upon the surplus and earnings of our subsidiaries and the ability of our subsidiaries to pay dividends or to advance or repay funds to us. Payments of dividends
and advances or repayment of funds to us by our insurance subsidiaries are restricted by the applicable laws and regulations of their respective jurisdictions, including laws establishing minimum solvency and liquidity thresholds. Changes in these laws can constrain the ability of our subsidiaries to pay dividends or to advance or repay funds to us in sufficient amounts and at times necessary to meet our debt obligations and corporate expenses. For our insurance and other subsidiaries, the principal sources of
our liquidity are insurance premiums and fees, annuity considerations, investment advisory fees, and cash flow from our investment portfolio and assets, consisting mainly of cash or assets that are readily convertible into cash. At the holding company level, sources of liquidity in normal markets also include a variety of short- and long-term instruments, including credit facilities, commercial paper and medium- and long-term debt.

However, to address the Staff’s comment, we included a new risk factor in Item 1A of Part II of our Form 10-Q for the quarter ended March 31, 2009, which reads as follows:

Because we are a holding company with no direct operations, the inability of our subsidiaries to pay dividends to us in sufficient amounts would harm our ability to meet our obligations.

We are a holding company, and we have no direct operations.  Our principal assets are the capital stock of our insurance subsidiaries.

Page 4

May 19, 2009

Re: Lincoln National Corp

At the holding company level, sources of liquidity in normal markets include a variety of short-term and long-term instruments, including credit facilities, commercial paper and medium-term and long-term debt.  However, our ability to meet our obligations for payment of interest and principal on outstanding debt obligations and
to pay dividends to shareholders, repurchase our securities and pay corporate expenses depends primarily on the ability of our subsidiaries to pay dividends or to advance or repay funds to us.  Under Indiana laws and regulations, our Indiana insurance subsidiaries, including our primary insurance subsidiary, The Lincoln National Life Insurance Company, may pay dividends to us without prior approval of the Indiana Insurance Commissioner (the “Commissioner”) up to a certain threshold, or must
receive prior approval of the Commissioner to pay a dividend if such dividend, along with all other dividends paid within the preceding twelve consecutive months exceed the statutory limitation.  The current Indiana statutory limitation is the greater of 10% of the insurer’s contract holders’ surplus, as shown on its last annual statement on file with the Commissioner or the insurer’s statutory net gain from operations for the prior calendar year.

In addition, payments of dividends and advances or repayment of funds to us by our insurance subsidiaries are restricted by the applicable laws of their respective jurisdictions requiring that our insurance subsidiaries hold a specified amount of minimum reserves in order to meet future obligations on their outstanding policies.  These
regulations specify that the minimum reserves shall be calculated to be sufficient to meet future obligations, giving consideration for required future premiums to be received, are based on certain specified mortality and morbidity tables, interest rates and methods of valuation, which are subject to change.  In order to meet their claims-paying obligations, our insurance subsidiaries regularly monitor their reserves to ensure we hold sufficient amounts to cover actual or expected contract and claims
payments.  At times, we may determine that reserves in excess of the minimum may be needed to ensure sufficiency.

Changes in these laws can constrain the ability of our subsidiaries to pay dividends or to advance or repay funds to us in sufficient amounts and at times necessary to meet our debt obligations and corporate expenses.  For example, in September of 2008, the National Association of Insurance Commissioners adopted a new statutory
reserving method known as Commissioners Annuity Reserve Valuation Method for Variable Annuities (“VACARVM”), which will be effective as of December 31, 2009.

VACARVM has the potential to require statutory reserves well in excess of current levels for certain variable annuity riders sold by us.  Requiring our insurance subsidiaries to hold additional reserves could constrain their ability to pay dividends to the holding company.

Assets in the investment general accounts of our insurance subsidiaries support their reserve liabilities.  As of March 31, 2009, 74.6% of investment general account assets are AFS fixed maturity securities of various holdings, types and maturities.  These investments are subject to general credit, liquidity, market and
interest rate risks.  Beginning in 2008 and continuing into 2009, the capital and credit markets have experienced an unusually high degree of volatility.

As a result, the market for fixed income securities has experienced illiquidity, increased price volatility, credit downgrade events and increased expected probability of default.  Securities that are less liquid are more difficult to value and may be hard to sell, if desired.  These market disruptions have led to increased
impairments of securities in the general accounts of our insurance subsidiaries, thereby reducing contract holders’ surplus.

Page 5

May 19, 2009

Re: Lincoln National Corp

The earnings of our insurance subsidiaries also impact contract holders’ surplus.  Principal sources of earnings are insurance premiums and fees, annuity considerations, investment advisory fees, and income from our investment portfolio and assets, consisting mainly of cash or assets that are readily convertible into cash.  Recent
economic conditions have resulted in lower earnings in our insurance subsidiaries.  Lower earnings constrain the growth in the insurance subsidiaries’ capital, and therefore, the payment of dividends and advances or repayment of funds to us.

In addition, the amount of surplus that our insurance subsidiaries could pay as dividends is constrained by the amount of surplus they hold to maintain their financial strength ratings, to provide an additional layer of margin for risk protection and for future investment in our businesses.  Notwithstanding the foregoing, we believe
that our insurance subsidiaries have sufficient liquidity to meet their policy holder obligations and maintain their operations.

The result of the difficult economic and market conditions in reducing the contract holders’ surplus of our insurance subsidiaries has affected our ability to pay shareholder dividends and to engage in share repurchases.  We have taken actions to reduce the holding company’s liquidity needs, including reducing our quarterly
common dividend to $0.01 per share and retiring long-term debt and outstanding commercial paper in order to reduce our short-term borrowing needs.  Notwithstanding that the contract holders’ surplus of our insurance subsidiaries may limit the amount of dividends and funds they can transfer to the holding company, we believe that the holding company’s ongoing cash needs will continue to be met with a combination of commercial paper as available and a contractual inter-company borrowing facility
of up to $1 billion as well as access, if necessary, to $1 billion in bank credit lines, none of which are currently drawn.  However, a further downgrade of our short-term credit ratings by Standard & Poor’s, Moody’s or Fitch may limit our ability to access the commercial paper market and cause us to lean more heavily on our inter-company borrowing facility and to access our bank credit lines.  In the event that current resources do not satisfy our current needs, we may have
to seek additional financing, which may not be available or only available with unfavorable terms and conditions.  For a furth