NU Online News Service, Aug. 13, 5:19 p.m. – Conseco Inc. executives are telling insurance regulators that the Carmel, Ind., financial-services company’s life and health insurance subsidiaries are solid.
Regulators in California, Florida, Illinois, Texas and Conseco’s home state, Indiana, say they are confident that the insurance subsidiaries are meeting state solvency standards.
“The insurance companies are solvent and profitable,” says Greg Thomas, chief deputy commissioner of the Indiana Department of Insurance. “It is the parent company that is really the problem.”
But Conseco has not yet addressed the possible effects of ratings changes on producers’ willingness to place business with the Conseco insurance units, regulators say.
Conseco announced plans Aug. 9 to exercise a 30-day grace period on upcoming bond payments, and to hire an investment bank, Lazard Freres & Company L.L.C., New York, and a law firm, Kirkland & Ellis, to help it work with debt holders to restructure the parent company’s finances.
Although Moody’s Investors Service, New York, has left the ratings of most of Conseco’s insurance units unchanged at B2, and Standard & Poor’s, New York, has kept the insurance units’ ratings at B+-negative, the ratings are lower than they used to be.
Fitch Ratings, Chicago, responded to the Aug. 9 announcement by lowering its insurance ratings to B, from BB.
Regulators say Conseco has tried to keep them informed about the status of the insurance operations, and about the nature of the parent company’s second-quarter earnings, which are supposed to be released Wednesday.
In Florida, for example, all 12 Conseco units that operate in the state are in good standing, according to Beth Vecchioli, deputy director of insurance services with the Florida Department of Insurance.
“Conseco has been really good about reaching out,” Vecchioli says.