Conseco Outlook Brightens

Best has assigned a rating of “BBB plus” to Conseco’s main insurance units, and it has assigned a rating of “BB plus” to Conseco’s recent $300 million offering of convertible debentures.

Conseco faces the same challenges in its Medicare supplement and long term care insurance businesses that all competitors in those markets face, Best says in a comment on its ratings decisions.

Meanwhile, Best says, “we believe additional work needs to be done to expand its distribution systems, particularly to broaden its independent marketing relationships, which remain highly concentrated but continue to produce sustainable revenues.”

Conseco’s refusal to award Conseco an “A” rating because of distribution concerns could actually cause distribution problems: Conseco’s lack of an “A” Best rating will limit independent agents’ willingness to promote the company’s brands, says Jukka Lipponen, an analyst in the Hartford office of Keefe, Bruyette & Woods Inc.

Among independent agents, “when you get to that “A minus” category, it makes a big difference, particularly in the middle market,” Lipponen says

But Lipponen is predicting that Conseco could move to the “A” level within a year.