Units of Conseco Inc. are sharing responsibility for about 104,000 life insurance policies with Wilton Reassurance Company through a coinsurance arrangement.

Wilton Reassurance, Plymouth, Minn. – a unit of Wilton Re Holdings Ltd., Wilton, Conn. — is paying a ceding commission of about $57.5 million, providing 100% coinsurance, and taking over responsibility for future administration of the coinsured policies, Conseco says.

The policies, written by Conseco’s Washington National Insurance Company and Conseco Insurance Company units, are non-core, and the units are transferring about $409 million in cash and policy loans and $466 million in reserves to Wilton Reassurance, Conseco says.

The deal has an effective date of Jan. 1, 2009.

The deal should increase Conseco’s third-quarter deferred tax valuation allowance by about $20 million, the company estimates. Conseco also expects to recognize a deferred gain of about $23 million over the remaining life of the block of policies.

“This transaction improves Conseco’s consolidated risk-based capital ratio and increases statutory capital,” Conseco Chief Executive James Prieur says in a statement. “In addition, it further simplifies our administrative operations as we focus on our core insurance businesses.”