NU Online News Service, Oct. 3, 10:38 a.m. – Conseco Inc., Carmel, Ind., says it will be taking about $475 million in “special charges” as a result of the U.S. economic slump.
The company will take $350 million in charges to reflect the effects of the slump on its investments in collateralized debt obligations, low-rated notes and bonds, and interest-only securities, according to a memo to shareholders from Conseco Chairman Gary Wendt.
Conseco will also spend $40 million to get out of the major medical insurance market; $40 million to back up loans that Conseco directors used to buy Conseco common stock; and $45 million to adjust the stated value of the Telecorp unit.
“It is important to note that none of these special charges changes our plan to reduce debt by $3.5 billion by the end of 2003 — $2.1 billion of which has already been completed,” Wendt says. “Projected operating cash flows will allow debt to be repaid as previously forecast. “
The change that will have the most direct effects on customers and producers will be the discontinuation of the major medical unit, which Conseco announced earlier this year.
Conseco wants to sell the unit, but it decided the unit was doing so poorly it would have to shut down two-thirds of the operations before it could find a buyer, Wendt says.