Conseco Inc. has rejected an investment partnership’s proposal to increase its ownership share in the insurer.

Conseco, Carmel, Ind., declined to support the bid from Steel Partners II Ltd., New York, which wanted to raise its share of the company from 10% to as high as 22%. (See NU, May 26.)

In rejecting the proposal, Conseco contended that under IRS rules, it could lose valuable tax-loss carryovers if it underwent a significant “change of ownership.”

In addition, Conseco’s directors “believe it is inappropriate to give preference to one shareholder over others,” wrote Conseco CEO James Prieur in a letter to Steel Partners’ chairman John Howard.

Prieur also said Conseco is reviewing strategic alternatives to enhance shareholder value and that company executives “strongly disagree with” suggestions to the contrary Howard made in a May 19 letter to Prieur.

In that letter, Howard asserted Conseco’s board has been too slow to carry out a strategic review of operations to find ways to improve the company’s return on equity.

A spokesman for Steel Partners declined to comment on Conseco’s refusal.