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Conseco CEO Discusses New Roadmap

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NU Online News Service, Nov. 19, 2003, 3:05 p.m. EST – Back from bankruptcy, Conseco Inc. reported earnings and vowed to reclaim stronger ratings.

Its top priority will be to get its ratings raised, according to Bill Shea, CEO. A second, related priority will be to refinance current expensive debt with cheaper bank debt and preferred stock issues, Shea says.

An aggressive fix of the long term care business in Conseco’s Insurance Group business will be one of the ways that post-bankruptcy Conseco becomes a stronger company, he promises.

Shea distinguishes between the Insurance Group’s LTC business and the LTC business at its Bankers Life and Casualty unit, which he says is healthy business.

Indeed, in its 2003 earnings report for third quarter and nine months, Conseco says that projected LTC loss ratios at Bankers are 65% to 85%, compared with 100% to 120% at the Insurance Group over the next several years.

In its report, Conseco says that a blended LTC loss ratio for the two units was 96% for September 2003, 167% for the two months ending with Aug.31, 2003, and 145% for the three months ending with Sept. 30, 2002.

Net income using fresh-start accounting–required under generally accepted accounting principles when a company emerges from bankruptcy–was $18.9 million for September 2003 for post-bankruptcy. Earnings per common share were 19 cents.

Total collected premiums for the quarter, both pre- and post-bankruptcy, were $1 billion, compared with $1.1 billion in third quarter 2002.

By product line, collected premiums in third quarter 2003 vs. third quarter 2002 were as follows: $231 million vs. $270 million in annuity products; $578 million vs. $588 million in supplemental health products; and, $194 million in life and all other products vs. $243 million.

Fixes for the LTC business with the Insurance Group will include “significant” rate increases, replacement policies and claims adjudication, says Shea.

Additionally, Shea says that Conseco’s goal is to improve its risk-based capital ratio, currently 257%. The company wants the ratio to be in the 250% to 300% range, he says. The RBC ratio has increased significantly from a year-end 2002 level of 166%, according to Shea. The increase was due to a variety of factors, including the completion of Conseco’s sale of the GM building in New York.