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Townsend: Conseco Insurance Subs OK

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NU Online News Service, Aug. 15, 2:12 p.m. – Conseco Inc., Carmel, Ind., is probably right when it says debt problems at the parent-company level will have little effect on the solvency of its insurance subsidiaries, according to analysts at Townsend & Schupp, Hartford.

The analysts at Townsend & Schupp, a unit of Insurance Research Group Inc., write in a commentary on Conseco’s recent problems that state insurance company capital laws and state limits on the amount of cash that insurance subsidiaries can send to their corporate parents should protect the capital at Conseco’s insurance subsidiaries.

Policy termination rates were reasonable in 2001, the analysts add.

The Townsend analysts cite a big, sudden, unexpected increase in interest rates as the most serious threat facing the Conseco insurance subsidiaries.

A big increase is unlikely, but, if rates did skyrocket and cash-surrender demands also increased sharply, Conseco could suffer big losses on the market value of its bond portfolios, the analysts write.