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Regulators Eye Old Conseco Variable Annuity Unit

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NU Online News Service, Jan. 31, 2004, 2:17 p.m. EST – Conseco Inc., Carmel, Ind., says regulators are looking at its old variable annuity operations.[@@]

The New York state attorney general and the U.S. Securities and Exchange Commission notified Conseco about a possible enforcement action earlier this month, Conseco says.

Conseco, which has disclosed the notification on the 117th page of a securities registration statement, says the enforcement action would focus on “alleged market timing on the part of holders of variable annuity policies issued by [Conseco Variable Insurance Company].”

Conseco sold the Conseco Variable unit to Inviva Inc., New York, in October 2002.

Conseco “and its affiliates have not issued any variable annuity policies since the sale of CVIC,” Conseco says in the registration statement.

Conseco owned Conseco Variable through its Conseco Life Insurance Company of Texas unit.

Conseco and Conseco Life believe, based on the information supplied by regulators, that Conseco Variable violated no federal or state law before the October 2002 sale, Conseco says.

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“The investigations are in a preliminary stage and their outcome cannot be predicted with certainty,” Conseco says. “The company and Conseco Life are cooperating fully with the attorney general and the SEC in these investigations.”

Conseco also notes that the New York attorney general and the SEC served Conseco Life with document subpoenas in late 2003.

The subpoenas concerned customer transfers between mutual fund subaccounts offered by Conseco Variable that occurred before the sale of Conseco Variable to Inviva, Conseco says.

“Certain of our employees have also received subpoenas regarding duties they previously performed in respect of annuity sales by CVIC,” Conseco says.

The purchase agreement under which Conseco Variable was sold “contains indemnification provisions with respect to certain liabilities relating to Conseco Life’s period of ownership, including provisions concerning certain business activities (including marketing activities) of CVIC,” Conseco says.

Conseco and its Conseco Life unit are cooperating with investigators and supplying the requested documents, Conseco says.

Conseco has posted a copy of the registration statement that includes the disclosure at http://www.shareholder.com/CNC/EdgarDetail.cfm?CompanyID=CNC&CIK=1224608&FID=950137-04-416&SID=04-00