Quarterly Financial Supplement - 2Q09
Table of Contents
Page
Consolidated balance sheet
2
Consolidated statement of operations
3
Earnings per share analysis
4
Computation of weighted average shares outstanding
5
Analyses of income before taxes and selected data:
Bankers Life
6-7
Colonial Penn
8
Conseco Insurance Group
9-10
Premiums collected on insurance products:
Bankers Life
11
Colonial Penn
12
Conseco Insurance Group
13
Statutory information
14
Notes
15
Conseco, Inc.
Consolidated balance sheet (in millions)
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Assets
Investments:
Actively managed fixed maturities at fair value
$17,531.1
$17,552.1
$16,641.7
$15,277.0
$15,396.8
$16,876.2
Equity securities at fair value
34.4
34.3
34.2
32.4
32.5
32.3
Mortgage loans
1,908.1
1,976.3
2,047.3
2,159.4
2,140.5
2,094.1
Policy loans
367.0
364.3
362.0
363.5
361.3
361.9
Trading securities
361.2
266.5
280.5
326.5
280.3
258.9
Securities lending collateral
387.7
295.9
282.0
393.7
243.9
259.9
Other invested assets
86.6
86.6
90.8
95.0
101.6
131.6
Total investments
20,676.1
20,576.0
19,738.5
18,647.5
18,556.9
20,014.9
Cash and cash equivalents - unrestricted
505.4
297.7
307.9
894.5
769.6
881.3
Cash and cash equivalents - restricted
36.5
21.5
12.0
4.8
4.5
3.7
Accrued investment income
304.4
288.4
306.7
298.7
312.5
302.9
Value of policies inforce at the Effective Date
1,529.5
1,492.8
1,493.7
1,477.8
1,425.5
1,335.1
Cost of policies produced
1,549.4
1,658.7
1,859.0
1,812.6
1,874.5
1,874.9
Reinsurance receivables
3,432.9
3,366.6
3,303.9
3,284.8
3,155.3
3,049.8
Income tax assets, net
1,732.0
1,532.9
1,772.8
2,047.7
2,068.6
1,607.3
Assets held in separate accounts
25.0
24.6
22.0
18.2
17.0
18.5
Other assets
337.1
329.7
326.1
276.7
322.9
345.1
Assets of discontinued operations
3,556.6
3,412.6
3,225.1
0.0
0.0
0.0
Total assets
33,684.9
33,001.5
32,367.7
28,763.3
28,507.3
29,433.5
Liabilities
Liabilities for insurance products:
Interest-sensitive products
13,119.5
13,105.0
13,175.6
13,332.8
13,215.3
13,124.1
Traditional products
9,638.0
9,713.9
9,841.3
9,828.7
9,864.3
9,913.4
Claims payable and other policyholder funds
926.1
953.2
873.1
1,008.4
987.8
972.4
Liabilities related to separate accounts
25.0
24.6
22.0
18.2
17.0
18.5
Other liabilities
531.6
478.1
422.8
457.4
506.5
715.9
Investment borrowings
848.3
824.2
823.9
767.5
758.3
747.6
Securities lending payable
394.0
300.2
290.7
408.8
256.4
267.3
Notes payable - direct corporate obligations
1,167.7
1,167.9
1,168.0
1,311.5
1,310.5
1,259.3
Liabilities of discontinued operations
3,080.0
3,038.7
3,034.0
0.0
0.0
0.0
Total liabilities
29,730.2
29,605.8
29,651.4
27,133.3
26,916.1
27,018.5
Shareholders' equity
Common stock
1.9
1.9
1.9
1.9
1.9
1.9
Additional paid-in capital
4,098.5
4,101.6
4,104.0
4,104.0
4,105.6
4,108.2
Retained earnings (accumulated deficit)
419.9
(68.6)
(251.9)
(705.2)
(675.8)
(648.2)
Total shareholders' equity before accumulated other comprehensive loss
4,520.3
4,034.9
3,854.0
3,400.7
3,431.7
3,461.9
Accumulated other comprehensive loss
(565.6)
(639.2)
(1,137.7)
(1,770.7)
(1,840.5)
(1,046.9)
Total shareholders' equity
3,954.7
3,395.7
2,716.3
1,630.0
1,591.2
2,415.0
Total liabilities and shareholders' equity
$33,684.9
$33,001.5
$32,367.7
$28,763.3
$28,507.3
$29,433.5
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Book value per share at period-end (1) (2)
$24.48
$21.84
$20.86
$18.41
$18.57
$18.72
Book value per share assuming conversion of convertible securities (1) (3)
$24.48
$21.84
$20.86
$18.41
$18.57
$18.68
Conseco, Inc.
Consolidated statement of operations (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Revenues
Insurance policy income
$785.1
$830.0
$821.8
$816.7
$3,253.6
$782.8
$791.3
Net investment income (loss):
General account assets
310.0
311.9
312.8
319.8
1,254.5
308.6
308.0
Policyholder and reinsurer accounts and other special-purpose portfolios
(26.0)
(21.6)
(24.3)
(3.8)
(75.7)
(18.0)
9.5
Realized investment gains (losses):
Net realized investment gains (losses), excluding impairment losses
(4.3)
(4.5)
(43.2)
(48.1)
(100.1)
85.1
20.3
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses
(41.3)
(26.0)
(50.1)
(44.9)
(162.3)
(108.1)
(53.7)
Other-than-temporary impairment losses recognized in other comprehensive loss
0.0
0.0
0.0
0.0
0.0
16.1
17.1
Net impairment losses recognized
(41.3)
(26.0)
(50.1)
(44.9)
(162.3)
(92.0)
(36.6)
Total realized gains (losses)
(45.6)
(30.5)
(93.3)
(93.0)
(262.4)
(6.9)
(16.3)
Fee revenue and other income
4.0
4.9
4.9
5.9
19.7
3.0
3.1
Total revenues
1,027.5
1,094.7
1,021.9
1,045.6
4,189.7
1,069.5
1,095.6
Benefits and expenses
Insurance policy benefits
767.7
815.9
797.0
831.9
3,212.5
753.5
781.1
Interest expense
30.8
25.1
24.6
26.0
106.5
23.2
32.7
Amortization
109.8
101.5
77.6
79.0
367.9
120.8
101.8
Gain on extinguishment of debt
0.0
0.0
0.0
(21.2)
(21.2)
0.0
0.0
Expenses related to debt modification
0.0
0.0
0.0
0.0
0.0
9.5
0.0
Other operating costs and expenses
131.1
136.1
117.0
136.1
520.3
120.3
130.4
Total benefits and expenses
1,039.4
1,078.6
1,016.2
1,051.8
4,186.0
1,027.3
1,046.0
Income (loss) before income taxes and discontinued operations
(11.9)
16.1
5.7
(6.2)
3.7
42.2
49.6
Income tax expense (benefit) on period income
(4.2)
8.3
1.6
3.7
9.4
15.3
17.4
Valuation allowance for deferred tax assets
0.0
298.0
30.0
75.9
403.9
2.4
4.6
Income (loss) before discontinued operations
(7.7)
(290.2)
(25.9)
(85.8)
(409.6)
24.5
27.6
Discontinued operations, net of income taxes
0.5
(198.3)
(157.4)
(367.5)
(722.7)
0.0
0.0
Net income (loss)
($7.2)
($488.5)
($183.3)
($453.3)
($1,132.3)
$24.5
$27.6
Conseco, Inc.
Earnings per share analysis ($ in millions, except per share amounts)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Income (loss) before net realized investment losses,
net of related amortization and income taxes:
Bankers Life
$29.1
$34.6
$67.8
$40.0
$171.5
$44.7
$63.3
Colonial Penn
3.7
8.3
6.5
6.7
25.2
5.1
11.0
Conseco Insurance Group
23.3
32.3
34.2
31.5
121.3
31.2
21.2
Corporate operations:
Interest expense on debt
(18.5)
(16.1)
(15.8)
(17.5)
(67.9)
(13.7)
(23.9)
Gain on extinguishment of debt
0.0
0.0
0.0
21.2
21.2
0.0
0.0
Expenses related to debt modification
0.0
0.0
0.0
0.0
0.0
(9.5)
0.0
Other corporate expenses, net
(6.7)
(16.2)
(3.7)
(0.1)
(26.7)
(8.7)
(8.8)
Net realized investment losses, net of related amortization
(42.8)
(26.8)
(83.3)
(88.0)
(240.9)
(6.9)
(13.2)
Income (loss) before taxes and discontinued operations
(11.9)
16.1
5.7
(6.2)
3.7
42.2
49.6
Taxes
(4.2)
8.3
1.6
3.7
9.4
15.3
17.4
Valuation allowance for deferred tax assets
0.0
298.0
30.0
75.9
403.9
2.4
4.6
Income (loss) before discontinued operations
(7.7)
(290.2)
(25.9)
(85.8)
(409.6)
24.5
27.6
Discontinued operations, net of income taxes
0.5
(198.3)
(157.4)
(367.5)
(722.7)
0.0
0.0
Net income (loss)
($7.2)
($488.5)
($183.3)
($453.3)
($1,132.3)
$24.5
$27.6
Diluted earnings (loss) per share
($0.04)
($2.65)
($0.99)
($2.45)
($6.13)
$0.13
$0.15
Net realized investment losses, net of related amortization and taxes, per share
($0.15)
($0.09)
($0.45)
($0.48)
($1.18)
($0.04)
($0.07)
Valuation allowance for deferred tax assets
$0.00
($1.61)
$0.00
($0.24)
($1.86)
$0.00
$0.00
Discontinued operations
$0.00
($1.08)
($0.85)
($1.99)
($3.91)
$0.00
$0.00
Diluted earnings (loss) per share, excluding net realized investment losses,
valuation allowance for deferred tax assets and discontinued operations
$0.11
$0.13
$0.31
$0.26
$0.82
$0.17
$0.22
Conseco, Inc.
Computation of weighted average shares outstanding
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
(000s)
Basic
Shares outstanding, beginning of period
184,652.0
184,655.5
184,725.9
184,725.9
184,652.0
184,753.8
184,758.8
Weighted average shares issued during the period:
Shares issued under stock option and restricted stock plans
1.4
29.5
0.0
36.5
57.3
0.3
60.8
Shares withheld for the payment of the exercise price of stock options and taxes
(0.4)
(0.6)
0.0
(10.7)
(5.5)
0.0
0.0
Weighted average basic shares outstanding during the period
184,653.0
184,684.4
184,725.9
184,751.7
184,703.8
184,754.1
184,819.6
Basic shares outstanding, end of period
184,655.5
184,725.9
184,725.9
184,753.8
184,753.8
184,758.8
184,886.2
Diluted
Weighted average basic shares outstanding
184,653.0
184,684.4
184,725.9
184,751.7
184,703.8
184,754.1
184,819.6
Common stock equivalent shares related to:
Stock option and restricted stock plans
0.0
0.0
0.0
0.0
0.0
2.1
409.3
Weighted average diluted shares outstanding during the period
184,653.0
184,684.4
184,725.9
184,751.7
184,703.8
184,756.2
185,228.9
Diluted shares outstanding, end of period
184,681.2
184,792.3
184,761.1
184,755.7
184,755.7
184,760.9
185,295.5
Conseco, Inc.
Bankers Life
Analysis of income before taxes (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Insurance policy income
$497.0
$543.4
$537.7
$531.8
$2,109.9
$491.5
$497.6
Net investment income (loss):
General account invested assets
149.4
153.5
155.2
159.0
617.1
155.4
160.2
Equity-indexed products
(17.3)
(17.5)
(14.0)
(0.6)
(49.4)
(13.5)
(2.5)
Other special-purpose portfolios
(2.8)
(0.8)
(2.9)
(3.0)
(9.5)
0.3
5.9
Net realized investment losses
(19.3)
(12.1)
(48.4)
(36.9)
(116.7)
(1.9)
(14.9)
Fee revenue and other income
1.6
2.1
3.1
4.2
11.0
1.4
1.6
Total revenues
608.6
668.6
630.7
654.5
2,562.4
633.2
647.9
Insurance policy benefits
434.9
497.2
470.3
477.5
1,879.9
429.6
422.9
Amounts added to policyholder account balances:
Annuity products and interest-sensitive life products other than equity-indexed products
44.2
43.5
43.1
44.9
175.7
45.9
48.2
Equity-indexed products
0.6
(6.3)
3.1
37.4
34.8
(8.3)
16.0
Amortization related to operations
75.0
66.6
53.5
39.7
234.8
75.6
63.1
Amortization related to net realized investment losses
(2.5)
(1.9)
(8.0)
(3.4)
(15.8)
0.5
(1.6)
Other operating costs and expenses
44.1
45.1
41.3
51.9
182.4
47.6
49.3
Total benefits and expenses
596.3
644.2
603.3
648.0
2,491.8
590.9
597.9
Income before income taxes
$12.3
$24.4
$27.4
$6.5
$70.6
$42.3
$50.0
Supplemental health product underwriting margins (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Medicare supplement:
Earned premium
$161.4
$157.8
$159.9
$159.9
$639.0
$165.3
$165.6
Benefit ratio
64.6%
71.3%
72.5%
74.7%
70.8%
70.2%
68.6%
Underwriting margin (earned premium less policy benefits)
$57.1
$45.4
$43.9
$40.3
$186.7
$49.3
$52.0
PDP and PFFS:
Earned premium
$118.7
$171.5
$165.6
$153.7
$609.5
$122.6
$118.9
Benefit ratio
93.9%
94.0%
95.1%
100.8%
96.0%
94.4%
94.3%
Underwriting margin (earned premium less policy benefits)
$7.2
$10.2
$8.2
$(1.2)
$24.4
$6.9
$6.7
Long-term care:
Earned premium
$156.2
$156.3
$156.2
$155.6
$624.3
$150.7
$152.0
Benefit ratio before interest income on reserves
111.6%
114.7%
102.1%
102.2%
107.6%
105.1%
103.2%
Interest-adjusted benefit ratio
79.0%
81.4%
68.1%
67.4%
74.0%
68.6%
66.4%
Underwriting margin (earned premium plus interest income
on reserves less policy benefits)
$32.8
$29.1
$49.8
$50.7
$162.4
$47.3
$51.0
Conseco, Inc.
Bankers Life
Average liabilities for insurance products (in millions) (continued)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Annuities:
Mortality based
$250.3
$253.2
$254.2
$253.8
$252.9
$252.9
$250.7
Equity-indexed
1,043.6
1,147.1
1,255.8
1,365.7
1,203.0
1,426.4
1,464.4
Deposit based
4,445.9
4,419.8
4,442.8
4,548.8
4,464.3
4,678.2
4,754.7
Health
3,768.1
3,848.8
3,921.2
3,983.8
3,880.5
4,050.4
4,090.0
Life:
Interest sensitive
380.1
382.8
387.5
393.4
385.9
397.6
399.4
Non-interest sensitive
335.9
351.0
365.7
378.3
357.8
396.5
415.0
Total average liabilities for insurance products, net of reinsurance ceded
$10,223.9
$10,402.7
$10,627.2
$10,923.8
$10,544.4
$11,202.0
$11,374.2
Analysis of income before taxes (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Value of policies in force at the effective date
Balance, beginning of period
$781.6
$761.7
$745.3
$759.6
$781.6
$761.7
$727.6
Amortization related to operations
(36.2)
(29.4)
(16.7)
(19.3)
(101.6)
(31.8)
(26.7)
Amortization related to net realized investment (gains) losses
0.4
0.3
1.0
0.6
2.3
(0.1)
0.1
Adjustment related to unrealized (gain) or loss on actively
managed fixed maturities
15.9
12.7
30.0
20.8
79.4
(2.2)
(44.5)
Balance, end of period
$761.7
$745.3
$759.6
$761.7
$761.7
$727.6
$656.5
Cost of policies produced
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Balance, beginning of period
$941.6
$1,025.9
$1,103.9
$1,264.3
$941.6
$1,216.2
$1,259.8
Deferred acquisition expenses
80.5
74.8
85.7
65.2
306.2
76.7
72.4
Amortization related to operations
(38.8)
(37.2)
(36.8)
(20.4)
(133.2)
(43.8)
(36.4)
Amortization related to net realized investment (gains) losses
2.1
1.6
7.0
2.8
13.5
(0.4)
1.5
Adjustment related to unrealized (gain) or loss on actively
managed fixed maturities
40.5
38.8
104.5
(95.7)
88.1
11.1
(39.7)
Balance, end of period
$1,025.9
$1,103.9
$1,264.3
$1,216.2
$1,216.2
$1,259.8
$1,257.6
Conseco, Inc.
Colonial Penn
Analysis of income before taxes (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Insurance policy income
$44.4
$47.5
$46.4
$46.5
$184.8
$47.1
$52.7
Net investment income (loss):
General account invested assets
9.7
10.1
10.1
10.2
40.1
9.8
9.8
Trading account income related to reinsurer accounts
(0.5)
0.0
0.0
0.0
(0.5)
0.0
0.0
Net realized investment gains (losses)
(0.6)
0.7
(1.5)
(0.2)
(1.6)
0.1
1.1
Fee revenue and other income
0.3
0.5
0.5
0.5
1.8
0.2
0.2
Total revenues
53.3
58.8
55.5
57.0
224.6
57.2
63.8
Insurance policy benefits
35.0
35.5
33.9
33.8
138.2
36.1
36.0
Amounts added to annuity and interest-sensitive life product account balances
0.3
0.3
0.3
0.3
1.2
0.3
0.2
Amortization related to operations
7.4
7.4
9.2
8.0
32.0
8.4
8.0
Other operating costs and expenses
7.5
6.6
7.1
8.4
29.6
7.2
7.5
Total benefits and expenses
50.2
49.8
50.5
50.5
201.0
52.0
51.7
Income (loss) before income taxes
$3.1
$9.0
$5.0
$6.5
$23.6
$5.2
$12.1
Average liabilities for insurance products (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Annuities - mortality based
$87.2
$86.5
$85.6
$84.4
$85.9
$83.4
$82.1
Health
21.5
20.9
20.5
20.2
20.7
19.7
19.2
Life:
Interest sensitive
25.0
25.1
25.0
24.7
25.0
24.1
23.3
Non-interest sensitive
561.4
561.9
562.8
565.4
562.9
568.6
569.1
Total average liabilities for insurance products, net of reinsurance ceded
$695.1
$694.4
$693.9
$694.7
$694.5
$695.8
$693.7
Analysis of income before taxes (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Value of policies in force at the effective date
Balance, beginning of period
$119.4
$115.5
$112.1
$108.7
$119.4
$105.3
$101.6
Amortization related to operations
(3.9)
(3.4)
(3.4)
(3.4)
(14.1)
(3.7)
(3.2)
Balance, end of period
$115.5
$112.1
$108.7
$105.3
$105.3
$101.6
$98.4
Cost of policies produced
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Balance, beginning of period
$130.4
$147.8
$159.7
$169.8
$130.4
$174.8
$183.9
Deferred acquisition expenses
20.9
15.9
15.9
9.6
62.3
13.8
10.9
Amortization related to operations
(3.5)
(4.0)
(5.8)
(4.6)
(17.9)
(4.7)
(4.8)
Balance, end of period
$147.8
$159.7
$169.8
$174.8
$174.8
$183.9
$190.0
Conseco, Inc.
Conseco Insurance Group
Analysis of income (loss) before taxes (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Insurance policy income
$243.7
$239.1
$237.7
$238.4
$958.9
$244.2
$241.0
Net investment income (loss):
General account invested assets
149.4
147.3
146.4
149.6
592.7
143.4
138.5
Equity-indexed products
(10.5)
(10.0)
(6.8)
(1.1)
(28.4)
(7.0)
(0.4)
Trading account income related to policyholder and reinsurer accounts
(4.2)
(0.1)
(8.3)
(5.9)
(18.5)
(2.3)
5.7
Change in value of embedded derivatives related to modified coinsurance agreements
1.4
1.5
2.7
1.1
6.7
0.2
(2.7)
Net realized investment gains (losses)
(9.1)
(15.2)
(38.8)
(30.2)
(93.3)
2.7
(4.7)
Fee revenue and other income
0.8
0.5
0.1
0.3
1.7
0.7
0.4
Total revenues
371.5
363.1
333.0
352.2
1,419.8
381.9
377.8
Insurance policy benefits
209.1
208.6
203.6
199.6
820.9
214.1
215.1
Amounts added to policyholder account balances:
Annuity products and interest-sensitive life products other than equity-indexed products
40.5
37.9
38.4
36.8
153.6
36.0
35.8
Equity-indexed products
3.1
(0.8)
4.3
1.6
8.2
(0.2)
6.9
Amortization related to operations
30.2
31.2
24.9
36.3
122.6
36.8
33.8
Amortization related to net realized investment losses
(0.3)
(1.8)
(2.0)
(1.6)
(5.7)
(0.5)
(1.5)
Interest expense on investment borrowings
5.8
5.5
5.6
5.5
22.4
5.2
5.2
Other operating costs and expenses
68.6
63.6
60.8
71.1
264.1
56.1
64.5
Total benefits and expenses
357.0
344.2
335.6
349.3
1,386.1
347.5
359.8
Income (loss) before income taxes
$14.5
$18.9
($2.6)
$2.9
$33.7
$34.4
$18.0
Supplemental health product underwriting margins (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Medicare supplement:
Earned premium
$53.7
$51.2
$50.3
$49.2
$204.4
$47.3
$45.9
Benefit ratio
65.8%
71.9%
73.0%
62.8%
68.4%
67.3%
71.2%
Underwriting margin (earned premium less policy benefits)
$18.4
$14.3
$13.6
$18.3
$64.6
$15.4
$13.2
Specified disease:
Earned premium
$92.0
$92.0
$92.4
$94.0
$370.4
$93.8
$94.7
Benefit ratio before interest income on reserves
81.7%
80.4%
82.6%
63.8%
77.1%
76.0%
83.3%
Interest-adjusted benefit ratio
48.1%
46.7%
48.5%
30.1%
43.3%
42.2%
49.7%
Underwriting margin (earned premium plus interest income
on reserves less policy benefits)
$47.7
$49.1
$47.6
$65.8
$210.2
$54.2
$47.7
Long-term care:
Earned premium
$8.8
$8.7
$8.6
$8.5
$34.6
$8.3
$8.1
Benefit ratio before interest income on reserves
136.4%
133.8%
193.5%
216.9%
169.6%
210.1%
182.2%
Interest-adjusted benefit ratio
66.4%
57.0%
115.2%
137.4%
93.5%
132.0%
103.1%
Underwriting margin (earned premium plus interest income
on reserves less policy benefits)
$3.0
$3.7
$(1.3)
$(3.2)
$2.2
$(2.7)
$(0.2)
Conseco, Inc.
Conseco Insurance Group
Average liabilities for insurance products (in millions) (continued)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Annuities:
Mortality based
$223.5
$221.1
$219.8
$218.3
$220.7
$217.2
$215.8
Equity-indexed
889.9
895.9
893.9
884.4
891.0
836.5
773.6
Deposit based
788.4
767.5
741.3
713.0
752.6
688.8
669.6
Separate accounts
26.2
24.8
23.3
20.1
23.6
17.6
17.7
Health
2,978.0
2,989.6
3,000.4
3,004.5
2,993.1
2,991.9
3,003.5
Life:
Interest sensitive
2,963.0
2,954.3
2,937.5
2,927.2
2,945.5
2,906.2
2,860.8
Non-interest sensitive
1,420.7
1,402.7
1,381.8
1,369.8
1,393.8
1,360.2
1,344.9
Total average liabilities for insurance products, net of reinsurance ceded
$9,289.7
$9,255.9
$9,198.0
$9,137.3
$9,220.3
$9,018.4
$8,885.9
Analysis of income (loss) before taxes (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Value of policies in force at the effective date
Balance, beginning of period
$672.6
$652.3
$635.4
$625.4
$672.6
$610.8
$596.3
Amortization related to operations
(22.7)
(19.6)
(15.1)
(16.8)
(74.2)
(15.4)
(10.8)
Amortization related to net realized investment (gains) losses
(0.1)
0.1
0.1
0.2
0.3
(0.8)
0.4
Adjustment related to unrealized (gain) or loss on actively managed fixed maturities
2.5
2.6
5.0
3.2
13.3
1.7
(5.7)
Other
0.0
0.0
0.0
(1.2)
(1.2)
0.0
0.0
Balance, end of period
$652.3
$635.4
$625.4
$610.8
$610.8
$596.3
$580.2
Cost of policies produced
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Balance, beginning of period
$351.0
$375.7
$395.1
$424.9
$351.0
$421.6
$430.8
Deferred acquisition expenses
21.9
21.1
20.4
27.2
90.6
15.3
15.9
Amortization related to operations
(7.5)
(11.6)
(9.8)
(19.5)
(48.4)
(21.4)
(23.0)
Amortization related to net realized investment (gains) losses
0.4
1.7
1.9
1.4
5.4
1.3
1.1
Adjustment related to unrealized (gain) or loss on actively managed fixed maturities
9.9
8.2
17.3
(12.4)
23.0
14.0
2.5
Balance, end of period
$375.7
$395.1
$424.9
$421.6
$421.6
$430.8
$427.3
Conseco, Inc.
Bankers Life
Premiums collected on insurance products (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Annuities
Equity-indexed (first-year)
$132.3
$132.8
$150.1
$107.6
$522.8
$73.1
$90.8
Other fixed (first-year)
95.3
127.3
172.3
302.9
697.8
228.0
183.9
Other fixed (renewal)
1.1
1.0
0.7
0.7
3.5
1.0
0.7
Subtotal - other fixed annuities
96.4
128.3
173.0
303.6
701.3
229.0
184.6
Total annuities
228.7
261.1
323.1
411.2
1,224.1
302.1
275.4
Supplemental health
Medicare supplement (first-year)
19.1
19.4
19.8
23.0
81.3
19.7
21.1
Medicare supplement (renewal)
140.8
131.2
134.0
149.3
555.3
136.1
134.1
Subtotal - Medicare supplement
159.9
150.6
153.8
172.3
636.6
155.8
155.2
Long-term care (first-year)
11.0
10.6
10.8
10.3
42.7
4.2
4.7
Long-term care (renewal)
145.6
144.6
144.0
148.8
583.0
141.7
147.2
Subtotal - long-term care
156.6
155.2
154.8
159.1
625.7
145.9
151.9
PDP and PFFS (first-year)
70.4
116.1
86.2
80.6
353.3
16.2
22.2
PDP and PFFS (renewal)
46.0
46.3
81.2
87.2
260.7
103.0
89.7
Subtotal - PDP and PFFS
116.4
162.4
167.4
167.8
614.0
119.2
111.9
Other health (first-year)
0.4
0.5
0.6
0.6
2.1
0.6
0.7
Other health (renewal)
2.2
2.1
2.1
2.2
8.6
2.3
2.3
Subtotal - other health
2.6
2.6
2.7
2.8
10.7
2.9
3.0
Total supplemental health
435.5
470.8
478.7
502.0
1,887.0
423.8
422.0
Life insurance
First-year
18.5
22.5
19.5
20.2
80.7
16.8
19.4
Renewal
29.5
31.3
32.4
35.5
128.7
32.1
35.9
Total life insurance
48.0
53.8
51.9
55.7
209.4
48.9
55.3
Collections on insurance products
Total first-year premium collections on insurance products
347.0
429.2
459.3
545.2
1,780.7
358.6
342.8
Total renewal premium collections on insurance products
365.2
356.5
394.4
423.7
1,539.8
416.2
409.9
Total collections on insurance products
$712.2
$785.7
$853.7
$968.9
$3,320.5
$774.8
$752.7
Conseco, Inc.
Colonial Penn
Premiums collected on insurance products (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Life insurance
First-year
$8.4
$8.9
$8.8
$8.9
$35.0
$9.2
$8.4
Renewal
34.5
34.9
34.8
34.9
139.1
37.8
37.4
Total life insurance
42.9
43.8
43.6
43.8
174.1
47.0
45.8
Supplemental health (all of which are renewal premiums)
Medicare supplement
2.1
2.1
2.0
1.9
8.1
1.7
1.9
Other health
0.2
0.2
0.2
0.2
0.8
0.2
0.2
Total supplemental health
2.3
2.3
2.2
2.1
8.9
1.9
2.1
Collections on insurance products
Total first-year premium collections on insurance products
8.4
8.9
8.8
8.9
35.0
9.2
8.4
Total renewal premium collections on insurance products
36.8
37.2
37.0
37.0
148.0
39.7
39.5
Total collections on insurance products
$45.2
$46.1
$45.8
$45.9
$183.0
$48.9
$47.9
Conseco, Inc.
Conseco Insurance Group
Premiums collected on insurance products (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09
Annuities
Equity-indexed (first-year)
$38.2
$33.4
$23.7
$20.8
$116.1
$17.7
$20.5
Equity-indexed (renewal)
1.8
2.1
1.8
1.9
7.6
1.4
1.4
Subtotal - equity-indexed annuities
40.0
35.5
25.5
22.7
123.7
19.1
21.9
Other fixed (first-year)
1.0
1.0
1.4
0.4
3.8
0.1
0.1
Other fixed (renewal)
0.6
0.6
0.5
0.6
2.3
0.3
0.3
Subtotal - other fixed annuities
1.6
1.6
1.9
1.0
6.1
0.4
0.4
Total annuities
41.6
37.1
27.4
23.7
129.8
19.5
22.3
Supplemental health
Medicare supplement (first-year)
2.8
2.3
2.1
2.4
9.6
1.5
1.9
Medicare supplement (renewal)
50.3
47.3
46.4
50.2
194.2
41.3
42.5
Subtotal - Medicare supplement
53.1
49.6
48.5
52.6
203.8
42.8
44.4
Specified disease (first-year)
9.4
9.8
9.7
10.5
39.4
10.2
11.1
Specified disease (renewal)
84.8
82.7
82.6
85.1
335.2
82.8
84.0
Subtotal - specified disease
94.2
92.5
92.3
95.6
374.6
93.0
95.1
Long-term care (all of which are renewal)
8.8
8.8
8.1
8.0
33.7
8.4
8.0
Other health (first-year)
0.0
0.0
0.1
0.0
0.1
0.0
0.0
Other health (renewal)
2.4
2.3
2.5
2.4
9.6
2.0
1.8
Subtotal - other health
2.4
2.3
2.6
2.4
9.7
2.0
1.8
Total supplemental health
158.5
153.2
151.5
158.6
621.8
146.2
149.3
Life insurance
First-year
0.7
1.2
2.0
0.4
4.3
0.5
0.5
Renewal
71.2
65.7
65.8
62.8
265.5
63.9
61.9
Total life insurance
71.9
66.9
67.8
63.2
269.8
64.4
62.4
Collections on insurance products
Total first-year premium collections on insurance products
52.1
47.7
39.0
34.5
173.3
30.0
34.1
Total renewal premium collections on insurance products
219.9
209.5
207.7
211.0
848.1
200.1
199.9
Total collections on insurance products
$272.0
$257.2
$246.7
$245.5
$1,021.4
$230.1
$234.0
Conseco, Inc.
Statutory information - consolidated basis (4) (in millions)
1Q08
2Q08
3Q08
4Q08
2008
1Q09
2Q09 (*)
Net gain (loss) from operations before interest expense
and federal income taxes
$12.8
$20.8
$69.8
$60.0
$163.4
$53.1
$84.0
Interest expense on surplus debentures held by parent company
16.3
12.4
12.8
14.9
56.4
10.1
9.7
Net gain (loss) from operations before federal income taxes
(3.5)
8.4
57.0
45.1
107.0
43.0
74.3
Federal income tax expense (benefit)
(1.3)
1.4
(0.2)
(13.1)
(13.2)
(0.7)
0.1
Net gain (loss) from operations before net realized capital gains (losses)
(2.2)
7.0
57.2
58.2
120.2
43.7
74.2
Net realized capital losses
(7.2)
(21.1)
(87.5)
(101.3)
(217.1)
(69.0)
(80.2)
Net loss
($9.4)
($14.1)
($30.3)
($43.1)
($96.9)
($25.3)
($6.0)
Capital and surplus
$1,326.6
$1,310.2
$1,330.8
$1,311.5
$1,311.5
$1,268.1
$1,254.0
Asset valuation reserve (AVR)
162.2
155.7
99.3
55.0
55.0
32.9
24.9
Capital, surplus and AVR
1,488.8
1,465.9
1,430.1
1,366.5
1,366.5
1,301.0
1,278.9
Interest maintenance reserve (IMR)
208.5
194.9
179.1
147.7
147.7
215.8
274.0
Total statutory capital, surplus, AVR & IMR
$1,697.3
$1,660.8
$1,609.2
$1,514.2
$1,514.2
$1,516.8
$1,552.9
* Such amounts are preliminary as the statutory basis financials statements of our insurance subsidiaries for 2Q09 will be filed with the respective insurance
regulators on or about August 14, 2009.
Notes
(3) Assumes conversion of all convertible securities.
(4) Based on statutory accounting practices prescribed or permitted by regulatory authorities for Conseco's insurance subsidiaries after appropriate elimination of
intercompany accounts among such subsidiaries. Such accounting practices differ from GAAP.
(1) Excludes accumulated other comprehensive loss.
(2) Shareholders' equity (excluding preferred stock) divided by common shares outstanding.