UPDATE 1-Lincoln Financial raises $2.1 bln, boosts capital

* Completes capital-raising plan

* Takes $950 million from TARP; issues stock, bonds

* Shares fall 3.8 percent

NEW YORK, July 10 (Reuters) - Lincoln Financial Group (LNC.N) said it has raised $2.1 billion of capital to shore up its finances, after investment losses made it harder for the life insurer to meet its obligations to policyholders.

The Radnor, Pennsylvania-based company said that on Friday it sold $950 million of preferred shares to the government under the Troubled Asset Relief Program. It also issued $690 million of common stock and $500 million of senior notes.

Lincoln was one of six large insurers that received government permission in May to participate in TARP, which was originally intended for traditional banks. Among the other insurers, only Hartford Financial Services Group Inc (HIG.N) took government money, accepting $3.4 billion.

Lincoln said it has contributed $1 billion of its new capital to its main insurance unit, Lincoln National Life Insurance Co. It has said it would use the remainder for general corporate purposes, including repaying debt.

Chief Executive Dennis Glass in a statement said the completed capital plan solidifies Lincoln's finances, even if market conditions were to worsen.

The company in February cut its dividend by 95 percent, and last month it said it would sell a British subsidiary to Canada's Sun Life Financial Inc (SLF.TO) for 195 million pounds ($315 million).

In afternoon trading, Lincoln shares were down 58 cents at $14.74 on the New York Stock Exchange. Through Thursday, the shares were down 19 percent this year, matching the decline in the Dow Jones U.S. life insurance index .DJUSIL. (1 British pound = US$1.617) (Reporting by Jonathan Stempel and Chavon Sutton; editing by John Wallace)