NU Online News Service, Jan. 8, 11:53 a.m. – Indiana insurance regulators say they are watching the life insurance units at Conseco Inc., Carmel, Ind., but have no plans to plans to put the units in rehabilitation.

The Indiana Insurance Department has focused on the life companies at Conseco and has not yet received information about fourth-quarter 2001 manufactured housing delinquency rates at the Conseco finance unit, according to Mark Pufahl, chief examiner at the department.

Any information the department gets about company cash flows is confidential, Pufahl says.

But Conseco life insurance companies do have enough capital to meet risk-based capital requirements, Pufahl says

Greg Thomas, a chief deputy commissioner with the Indiana department, says the department is regularly monitoring Conseco. But putting the life insurance companies in rehabilitation is “definitely not on the table at this time,” Thomas says.

Last month, Conseco managers visited with regulators and presented a plan that “on paper seemed a doable thing,” Thomas says.

Colin Devine, an analyst at Salomon Smith Barney, New York, recently issued a report suggesting that Conseco might have financial problems because of problems with loans the finance unit made to buyers of manufactured homes.

Devine compares Conseco with Greenpoint Financial Corp., New York, a lender that recently announced it was getting out of the manufactured housing finance business and taking a $663 million after-tax charge on $5 billion in manufactured housing loan receivables.

Conseco had a portfolio of $25.8 billion in manufactured housing loan receivables Sept. 30, 2001, Devine notes.

“Were Conseco to reach Greenpoint Financial’s loss projection rates of 26.2%, a level more than double the company’s current assumed rate of 12.6%, this would imply potential additional future [manufactured housing] loan losses over and above those already assumed in” previously announced writedowns of $3.5 billion, Devine writes.

Devine sets a target price of only $1 for Conseco stock. “On a liquidation basis, we do not believe Conseco’s common shareholders would realize any value, although policyholders should be reasonably well protected by various state guaranty funds,” Devine writes.

But Mark Lubbers, a spokesman for Conseco, denies that the manufactured housing experience at Conseco resembles that of Greenpoint.

The data of the two companies do not mirror each other now and will not in the future, Lubbers writes in a letter challenging the Devine report.

Lubbers also calls the comments in the Devine report about “liquidation value” and “state guaranty” funds irresponsible.

Lubbers notes that Conseco insurance company subsidiaries have $25 billion in assets.

Conseco risk-based-capital ratios are “well in excess of prescribed levels,” Lubbers says. “The claims paying ability of this company is not in doubt.”

Although Lubbers challenges the conclusions in the Salomon report, he says the manufactured housing sector is facing pressure on earnings. “We are in a very difficult economy,” Lubbers says.