Lenders Change Conseco Facility Terms

Conseco now has to have a risk-based capital ratio of at least 200%, and that RBC ratio minimum is set to increase to 250% June 30, 2010.

Under the terms of the credit facility amendment, the minimum RBC ratio will stay at 200% until Dec. 31, 2010, then increase to 225% in 2011 and 250% in 2012.

Other covenant terms, such as the required minimum level of statutory capital and surplus, are on track to ease in a similar fashion.

The amendment also will change Conseco’s principal repayment schedule to eliminate any principal payments in 2010 and provides for principal payments of $35 million in 2011, $40 million in 2012 and $40 million in 2013.

Under the pre-amendment terms now in effect, Conseco is “required to make principal repayments equal to 1% of the initial principal balance each year, subject to certain adjustments, and to make additional principal repayments from excess cash flow,” the company says. “The current principal balance of the senior credit facility is $817.8 million, and the senior credit facility matures in October 2013.”

In related news, Conseco has predicted that it will generate about $145 million to $170 million in net operating income in 2010, with Bankers Life expected to earn more than $100 million and Conseco Insurance Group expected to earn more than $110 million.