Conseco's President Quits Suddenly

“Bill Shea provided strong leadership for Conseco through a difficult transitional period, and the board greatly appreciates the contributions he made in positioning Conseco for future growth,” Hilliard continued. “His leadership was critical in restoring Conseco to profitability, completing our recapitalization and earning ratings upgrades.”

But industry analyst Andrew S. Kligerman, UBS Warburg LLC, New York, observed that Hilliard declined to say whether Shea had quit on his own or was fired.

In a statement, Shea said only that “this was a natural time for me to move on.”

The development came just weeks after the company announced Shea would stand for reelection to the company board at a meeting of shareholders set for Aug. 24. In its statement about his departure, it specifically said he had resigned from the board and would not stand as a candidate for reelection.

The company acknowledged that Shea’s severance package would have an impact on its net income.

It adjusted its financial guidance for the second half of this year to reflect Shea’s $10 million severance package. Conseco now forecasts its net income for the year in the range of $200 million to $210 million, rather than the $210 million to $220 million it had estimated in a report on Aug. 4.

Kligerman of UBS Warburg says he was “surprised and concerned” by Shea’s sudden departure.

“We thought Shea would lead Conseco for 2 more years or at least until it achieved its ?A’ A.M. Best ratings goal,” Kligerman says. “If not, we would have expected Conseco to have forewarned investors during its spring equity offering road show.”

The analyst also points out that the company did not state how long it had been looking for Shea’s replacement, although it mentioned that it had looked at 17 candidates before picking Kirsch. In a teleconference call with analysts, Hilliard declined to comment on whether Shea’s departure was voluntary, Kligerman notes.

Kligerman also said he was uneasy about Kirsch’s “relatively limited” experience with insurance. He noted, however, that Hilliard has over 30 years of insurance industry and executive experience.