NU Online News Service, July 2, 2003, 12:08 p.m. EDT – Moody’s Investors Service, New York, says it is lowering the insurance financial strength ratings of the insurance subsidiaries of Conseco Inc., Carmel, Ind., to B2, from B3.
Moody’s is leaving Conseco Inc.’s senior debt rating at Ca.
“The downgrade primarily reflects the deterioration of statutory capital levels at many of Conseco’s insurance subsidiaries,” Moody’s says in a discussion of the rating changes.
Conseco Inc. filed for protection from creditors in December 2002 under Chapter 11 of the U.S. Bankruptcy Code, but the insurance subsidiaries are still solvent and were not part of the bankruptcy filing.
Conseco has cut costs and decided to focus on selling insurance products that require less capital than it needed for the products it used to sell, but a combination of capital losses, efforts to strengthen reserves and moves to transfer money from the subsidiaries to Conseco Inc. have hurt the subsidiaries’ capital levels, Moody’s says.
Challenging market conditions could handicap Conseco’s efforts to improve its capital levels any time soon, Moody’s says.