NU Online News Service, Dec. 5, 2003, 8:16 p.m. EST – Moody’s Investors Service, New York, says it has raised the insurance financial strength ratings of all insurance subsidiaries of Conseco Inc., Carmel, Ind., except Conseco Senior Health Insurance Company, to Ba3, from B3.[@@]

The rating agency has cut the rating of Conseco Senior to Caa1, from B3.

The agency also increased the rating on Conseco’s bank debt to Caa1, from Caa2.

Moody’s says it upgraded the bank debt rating and most of the insurance subsidiary ratings because of Conseco’s recent emergence from bankruptcy reorganization proceedings and Conseco’s successful efforts to sell its stake in the General Motors Building, a well-known office building in New York.

Improvements in Conseco’s investment portfolio, a significant decline in annuity surrenders and a decision to focus on selling more profitable, less capital-intensive insurance products also helped, Moody’s says.

But Moody’s says it is still worried about Conseco’s weak statutory earnings and low insurance company capital levels.

Moody’s notes that one covenant with lenders could cause severe problems for Conseco if the company’s major insurance subsidiaries fail to obtain A.M. Best ratings of A- or better by Dec. 31, 2005.

Moody’s says it lowered the rating of Conseco Senior because of Conseco Senior’s operating losses, low capital level and problems with a block of home health care business acquired from another company. Conseco is talking to state insurance departments about potential remedies for the unit, Moody’s says.

In related news, Conseco has filed a universal shelf registration with the U.S. Securities and Exchange Commission that will give it the authority to sell up to $3 billion in securities.