For Release Immediate
Contacts (News Media) Mark Lubbers, EVP, External Relations 317.817.4418
(Investors) Tammy Hill, SVP, Investor Relations 317.817.2893
Conseco announces 1Q01 earnings
Indianapolis, Ind.: April 24, 2001 - The attached "NEW Conseco Memo #11"
from Conseco CEO Gary C. Wendt was posted on Conseco's web site for shareholders
and/or electronically distributed to them today.
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NEW Conseco Memo
#11
To: Conseco Shareholders
From: Gary Wendt
Date: April 24, 2001
Re: 1st Quarter Earnings
Hello 2001
The short story on our 1st Quarter earnings is:
1) we came in at the high end of our earnings target: 16(cent);
2) we have a one-time gain from the sale of the riverboat;
3) we further strengthened the balance sheet;
4) the net effect of items 2 and 3 add 7(cent)to 1st quarter
earnings; and
5) our productivity and cost savings initiatives are starting to
bloom.
First, a reminder about the NEW Conseco. We are building shareholder value
by running the businesses, not via acquisition which was the "old" Conseco. We
are focused on building management systems and processes to engineer earnings
growth through active management of the businesses. Even the little acquisition
we announced this week was exclusively aimed at this objective. ExlService will
give us the tools and talent to improve the quality and productivity of our
customer service and backroom activities, as well as provide a stand-alone new
business serving 3rd party customers.
The appropriate depiction of Conseco, as we now will run it!
A Group of Finance Co.
Insurance Cos. -------------------
--------------
Strengths Strengths
--------- ---------
Building . Disciplined credit risk and
. Valuable distribution Shareholder pricing philosophies
. #1 in agent-produced Value By . 30% market share in
medicare supplement Focusing on manufacturing housing
insurance Middle . Growing position in less
. #2 in long-term care America competitive home equity market
insurance . Sophisticated target marketing
. #3 in equity-indexed and segmentation
annuities
. Solid RBC (2.59x at 9/30/00)
. Highly liquid investment-grade
portfolio
Holding Co.
---------------------------------------------------
. Manage down debt
. Provide supervision, support and assistance to business units
. Provide information to various audiences
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Conseco (2)
April 24, 2001
1st Quarter Earnings
In our earnings guidance for 2001, we set a first quarter target for
operating earnings from continuing operations of 13 to 16 cents per share. Our
first quarter actual was $54.0 million, 16 cents per common share.
Chart 1
1st Quarter 2001 Earnings from Operations
(Dollars in millions, except per share amounts)
Full Year
Q1 '00 Q2 '00 Q3 '00 Q4 '00 2000 Q1 '01
------ ------ ------ ------ ---- ------
Insurance and fee based $ 185.3 $ 186.1 $ 220.1 $ 226.6 $ 818.1 $ 203.2
Finance 35.8 28.0 40.0 53.0 156.8 63.6
------- ------- ------- ------- ------- -------
Subtotal 221.1 214.1 260.1 279.6 974.9 266.8
Corporate (132.0) (136.3) (151.6) (172.5) (592.4) (138.3)
------- ------- ------- ------- ------- -------
Pre-tax 89.1 77.8 108.5 107.1 382.5 128.5
Taxes @ 36.00% 33.6 28.8 39.9 39.3 141.6 47.7
------- ------- ------- ------- ------- -------
Total after-tax pre-goodwill 55.5 49.0 68.6 67.8 240.9 80.8
Goodwill (24.8) (26.4) (27.8) (26.7) (105.7) (26.8)
------- ------- ------- ------- ------- -------
Operating earnings $ 30.7 $ 22.6 $ 40.8 $ 41.1 $ 135.2 $ 54.0
======= ======= ======= ======= ======= =======
Per share
Pre-goodwill $ 0.17 $ 0.15 $ 0.21 $ 0.21 $ 0.74 $ 0.23
Post-goodwill $ 0.10 $ 0.07 $ 0.12 $ 0.13 $ 0.42 $ 0.16
First quarter operating income (pre taxes and goodwill) from all operations
was $266.8 million, up 21% over 1Q00. Although Insurance segment earnings were
up nicely in this same period comparison, the strength of our operating earnings
growth is in the Finance Company. We have explained this phenomenon at length
over the past few months, including why this trend will continue over the next
several years. Additionally, we benefited from lower interest rates on our
floating rate bank debt.
First quarter operating income (pre taxes and goodwill) from the Insurance
segment was up 10% over 1Q00 but down 10% over 4Q00, as anticipated due to the
seasonal nature of both sale of insurance products and mortality and morbidity
experience. It is worth noting that total collected premium in the first
quarter, excluding variable annuities, increased 7% over 4Q00.
In our Finance Company, first quarter operating income (pre taxes and
goodwill) was up 78% over 1Q00 and up 20% over 4Q00.
Total operating earnings from continuing operations was $54.0 million for
the quarter, up 76% over 1Q00 and up 31% over 4Q00.
With our claims paying rating from A.M.Best restored to the A- (Excellent)
category, we are seeing significant sales growth momentum in several key
insurance lines. Our Bankers Life SBU had double digit growth in new sales over
1Q00 in all three key lines of business: Medicare supplement insurance is up
28%, long term care insurance is up 13% and life insurance is up 29%. Medicare
supplement insurance sales were also up strongly in our Supplemental Health SBU
with the introduction of a new product boosting sales more than 10% over 4Q00.
In our Life Insurance SBU, 1st quarter new sales were up 13% over 4Q00. This
reverses the quarterly sales declines experienced in 2000 due to the loss of our
A.M.Best A- (Excellent) rating for 7 months in 2000.
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Conseco (3)
April 24, 2001
One of the challenges in the insurance group was in the Retirement Services
SBU, which houses the bulk of our annuity operations. Compared to 1Q00, sales
here were down 37%, (although down only 16% over 4Q00). In large measure, this
is an industry phenomenon with indexed and variable annuities suffering due to
stock market performance over the last several months. Over the past 5 years,
Conseco has been the #1 writer of equity-indexed annuities. New product
introductions that are responsive to a more volatile stock market are showing
promising early results. On a more positive note, we saw an increase in
non-indexed fixed annuity sales in the period.
In the Finance Company, the improvement in earnings was driven by the
natural shift from off-book (gain-on-sale) to on-book receivables. Positive
operating trends included growth in on-balance-sheet receivables, expanding net
interest margins, and improving credit quality. Additionally, we are realizing
savings from the cost cutting actions taken last summer.
Loan originations from Finance Company continuing businesses were $2.2
billion for the quarter compared to $2.4 billion in 4Q00. As intended, they are
half of originations in 1Q00, reflecting our decision to slow the receivables
growth in the Finance Company so we can generate cash to pay down debt.
Manufactured Housing retail originations were $514.1 million for the
quarter compared to $625.9 million in 4Q00. Floorplan first quarter 2001
originations of $462.8 million were $175 million lower than 4Q00. The reductions
in both these products were expected and are due to the roughly 20% drop in
quarter over quarter industry shipments.
Mortgage Services loan originations increased 13% over 4Q00, from $499.4
million to $563.7 million. This was due to continued focus and productivity
improvements within our sales channel.
We continue to experience favorable spreads within our key Manufactured
Housing and Home Equity receivables product lines. The spread on our
manufactured housing securitization during the quarter was 6.13% which is 36 bps
wider than our 4Q00 securitization and 189 bps better than 1Q00 securitization.
Spreads within our Home Equity business also continue to expand. Our 1Q01
securitization achieved a 7.35% spread, which is 33 bps higher than 4Q00 and 104
bps higher than 1Q00's securitization. These positive trends in spread will
strengthen future profitability.
Securitization Spreads
Manufactured Housing Spreads Mortgage Services Spreads
---------------------------- -------------------------
1998 1999 CFC 2000-5 CFC 2000-6 CFC 2001-1 1998 1999 HE-2000-D HE-0000-F HE-2001-A
---- ---- ---------- ---------- ---------- ---- ---- --------- --------- ---------
Customer Rate: 9.50% 9.94% 11.85% 12.48% 12.74% 11.44% 11.50% 12.78% 12.88% 12.84%
COF: 6.68% 7.51% 8.36% 7.76% 7.55% 6.67% 7.67% 8.78% 8.06% 7.59%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
ABS Spread: 2.82% 2.43% 3.49% 4.72% 5.19% 4.77% 3.83% 4.00% 4.82% 5.25%
Net pts/prem Yield: .61% 1.05% 1.21% 1.05% .94% .73% 1.27% 2.05% 2.20% 2.10%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL SPREAD: 3.43% 3.48% 4.70% 5.77% 6.13% 5.50% 5.10% 6.05% 7.02% 7.35%
<FN>
Note: COF assumes retained certificates issued at market yield for all periods.
Improved Pricing Leverage in Difficult Environment
</FN>
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Conseco (4)
April 24, 2001
Net interest margin within our continuing Finance Company businesses
improved $11.4 million or 17 bps over 4Q00 and was up over $81 million from
1Q00. The growth in margins is being experienced across all of our Finance
Company business lines with particular expansion occurring within manufactured
housing and mortgage services.
As we noted late last year, although we intend to only slowly grow our
on-book receivables, we will attempt to leverage our market leadership to
generate the sale of whole loans for additional fee income. We generated $8.9
million in income during the quarter from the sale of whole loans.
Provision for loan losses of $121.4 million increased slightly over 4Q00
amount of $120.2 million, while doubling 1Q00's amount of $58.6 million. The
first quarter provision expense was positively impacted by our reduction in
manufactured housing delinquency. Manufactured Housing managed 60+ delinquency
of 1.96% decreased 24 bps from the 12/31/00 level of 2.20%, and balances in all
delinquency categories are significantly less than they were at year-end 2000.
Chart 2
MHD - Delinquency
(Decrease)
12/00
03/01 vs. 3/01
----- --------
30 Days Delinquent
$000's $286,771 $(160,527)
$% 1.12% (.61)%
60+ Days Delinquent
$000's $501,436 $(67,505)
$% 1.96% (.24)%
You should also know that we believe our repo inventory peaked in March.
The level of "incurs" in the first quarter has dropped 12.4% over 4Q00, and we
continue to project decreases in the months to come. We now have 30
contractually exclusive or owned lots and over 1000 dealers aiding us in our
disposition efforts. Approximately 200 of these dealers exclusively sell our
repo inventory. As I have noted in previous Memos, we are dedicated to getting
the highest possible recovery rate on our repo inventory. Several of our
competitors are relieving their repo inventory by selling most of their units
wholesale. 75% of our repo disposition is retail. This approach has resulted in
a 170 basis point improvement in recovery rates from January to March 2001 and
helped us hold average recovery rates right at 46% from 4Q00 to 1Q01.
Chart 3
Manufactured Housing Repossessions
Actual Forecast
1Q00 4Q00 1Q01 2000 2001
---- ---- ----- ---- ----
Repos incurred
during period 5,506 9,656 8,452 28,466 26,433
Repo Sales 5,900 6,154 6,596 23,641 27,800
Inventory at period end 6,863 11,967 13,790 11,967 10,600
Recovery rate 47.9% 45.8% 45.9% 47.0% 46.0%
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Conseco (5)
April 24, 2001
Non-operating items
- -------------------
The chart below summarizes the special items. The largest item is the
one-time gain resulting from the sale of Conseco's stake in the Argosy Gaming
riverboat, an after-tax gain of $122.6 million. The net effect of the riverboat
sale and all charges is $25.9 million or 7 cents per share for the quarter.
Chart 4
Special Items, Net of Taxes - 1Q2001
(Dollars in millions)
Amount Per Share
------ ---------
1. Gain on sale of riverboat $122.6 $ 0.33
------ -------
2. Legacy items:
a.TeleCorp value change (17.5) (0.05)
b.Interest-only securities revaluation (5.0) (0.01)
c.Tax adjustments 15.4 0.04
------ -------
Sub-total of legacy items (7.1) (0.02)
------ -------
3. Discontinued operations:
a.Operating loss (5.1) (0.01)
b.Writedown of receivable and settlement of lawsuit (5.5) (0.02)
------ -------
Sub-total of discontinued operations (10.6) (0.03)
------ -------
4. Realized losses from investments:
a.Net realized losses from investments (24.4) (0.07)
b.Private equity investment portfolio revaluation (34.7) (0.09)
------ -------
Sub-total of realized losses (59.1) (0.16)
------ -------
5. Organizational restructuring:
a.Severance benefits (9.8) (0.03)
b.Office closings and sale of artwork (4.4) (0.01)
c.Loss related to sale of certain finance receivables (5.7) (0.01)
------ -------
Sub-total of organization restructuring (19.9) (0.05)
------ -------
Total credits (96.7) (0.26)
------ -------
Grand total of special items $ 25.9 $ 0.07
====== =======
As you can see, our "legacy" charges this quarter are small by comparison
to the previous two quarters. Two points are worth special attention here.
First, the interest-only (IO) assets have been the subject of much speculation
and considerable rumor over the past several months; this quarter we took a $5
million after tax charge. You should know, however, that of the 90-some IO
pools, each with its own set of assumptions and economic modeling, only 29%
performed adverse to plan this quarter. The balance, 71%, performed equal to or
better than plan by $38 million. Under GAAP accounting rules, however, we are
required to take any charge when performance is worse than assumed. BUT
performance better than plan is recognized over the life of the pool as an
adjustment to yield. This is one of the anomalies of gain-on-sale accounting
that you have heard us discuss at length.
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Conseco (6)
April 24, 2001
Once again you see that our Telecorp (TLCP) asset is subject to market
volatility. The price of this investment was down at the end of March. We have
marked it down to $12.29 per share. Yesterday's closing price was $14.90 making
our 17.2 million shares worth approximately $45 million more than the first
quarter valuation. We will continue to see this item bounce around until we
conclude our sale of these shares.
The discontinued operations category is our major medical business, which
we intend to sell.
We recognized net investment losses of $24.4 million on sales of
investments, principally fixed maturity securities. These securities were sold
in response to changes in the investment environment that created opportunities
we believe will enhance the total return of the investment portfolio.
Additionally, we are taking an after-tax charge of $34.7 million for the
value of our private equity investment portfolio. Several financial service
companies have taken similar charges in recent days. We have decided to sell
several of these investments and in keeping with generally accepted accounting
principles, are recognizing the loss when that decision is made. With respect to
the assets we are holding, if the market recovers for these non-public
investments, our future earnings could be positively impacted.
Finally, with respect to the restructuring charges ($14.2 million
after-tax), these are for accruals related to (1) moving 2000 customer service
and backroom processing jobs to India over the next 21 months; (2) the further
reduction of our workforce by 1000 positions; and (3) closing unutilized space
and selling unneeded artwork and furniture. Job actions were communicated to our
employees nationwide this past week. As we have emphasized for the past several
months, it is imperative for our business units to improve their productivity
and the quality of their customer service. This is THE SINGLE MOST IMPORTANT
task for NEW Conseco in 2001.
Each business unit is attacking these issues individually. But we are
providing leadership in this process from our corporate staff. Mike Borom, who
you will recall is one of the "Restoration Activists who helped us market
non-core assets last year, is leading a "Cost-Out" team, looking for ways to
immediately reduce costs without impairing customer service. We hope to realize
$50 million in savings this year from Mike's activities.
More important to our long term profitability, Ruth Fattori is leading our
Process Excellence efforts - our implementation of the Six Sigma methodology. I
believe it is fair to say that Ruth has been overwhelmed with the opportunities
for profit improvement here at Conseco. As I have said to you before, the old
Conseco model for building shareholder value made running the businesses a
secondary activity. Instead, acquisition was the profit driver. Ruth is
experiencing the pent up demand for productivity improvement.
In her brief three months with us, she is off to a fast start. She has
already initiated 31 projects that promise $8 million in annual profit
enhancement, with another 25 projects identified. The culture is already
starting to change as Ruth trains the first recruits in our Process Excellence
army. So far, 208 senior executives have been been through the week-long
intensive Champion training. They are now positioned to support -- to champion -
the project teams. Leading the first project teams will be 21 "Master Black
Belts" who are well into their 8 weeks of extensive training in the Six Sigma
process. Each one of them will lead teams of 10 "Black Belts" and will be
responsible for producing $5 million in productivity gains each. Those 21 teams
times $5 million per team will generate $100 million in annualized profit
enhancement over the next year. We anticipate realizing $25 million from these
efforts in 2001.
By far the largest single productivity and customer service quality project
is our movement of 2000 customer service and backroom positions to India. We
will not over-reduce, but build higher quality into our customer service
operations - an absolute must in an increasingly competitive financial services
market.
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Conseco (7)
April 24, 2001
The jobs that we are moving to India are not highly coveted in the US, as
is evidenced by our 30%+ average annual turnover rate in these jobs. In some
areas, turnover is above 40% per year. It is simply not possible to ever reach a
high quality plateau when 3 of every ten employees leave each year and the
average length of service is less than three years. In India, these are highly
coveted jobs. They will be staffed almost exclusively by college graduates. And
at the same time as quality goes up, our cost for these operations will be
reduced by more than 40%. As I said, we can't move fast enough.
Yes, we're off to a good financial start in 2001, but, more importantly,
we're off to a start in improving productivity and customer service, which is an
essential element in building long-term SHAREHOLDER VALUE!
While it won't influence profits much either way, we intend to lead the
productivity movement by example. Consequently, we are selling the artwork and
antique furniture acquired by previous management. Also, we have decided to
dramatically reduce our private plane fleet from six to three over the next few
months. This alone will save $3 million per year in operating expenses.
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Conseco (8)
April 24, 2001
Conseco, Inc. (NYSE: CNC) Quarter Ended
Financial Highlights March 31:
---------------
2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Consolidated income analysis (in millions)
Operating earnings from continuing operations
before goodwill amortization and taxes:
Insurance and fee-based segment operating earnings $203.2 $185.3
Finance segment operating earnings 63.6 35.8
- ----------------------------------------------------------------------------------------------------------------------------
Subtotal 266.8 221.1
- ----------------------------------------------------------------------------------------------------------------------------
Holding company activities:
Corporate expenses, less charges to subsidiaries for services provided 8.5 (15.8)
Interest and dividends, net of corporate investment income (152.3) (158.4)
Allocation of interest and dividends to finance segment 5.5 42.2
- ----------------------------------------------------------------------------------------------------------------------------
Pre-tax operating earnings from continuing operations
before goodwill amortization 128.5 89.1
Taxes (47.7) (33.6)
- -----------------------------------------------------------------------------------------------------------------------------
After-tax operating earnings from continuing operations
before goodwill amortization 80.8 55.5
Goodwill amortization (26.8) (24.8)
- -----------------------------------------------------------------------------------------------------------------------------
Operating earnings from continuing operations
applicable to common stock 54.0 30.7
- ----------------------------------------------------------------------------------------------------------------------------
Non-operating items, net of tax
Net realized losses (59.1) (13.2)
Venture capital income (loss) (17.5) 47.9
Gain on sale of interest in Riverboat 122.6 0.0
Impairment charge related to interest-only securities (5.0) (1.6)
Provision for losses related to loan guarantees 0.0 (14.7)
Special charges (4.5) 0.0
Discontinued lines and other non-recurring items (10.3) 24.1
- ----------------------------------------------------------------------------------------------------------------------------
Net income applicable to common stock $80.2 $73.2
- ----------------------------------------------------------------------------------------------------------------------------
Note on forward-looking statements: All statements, trend analyses and other
information contained in this release and elsewhere (such as in filings by
Conseco with the Securities and Exchange Commission, press releases,
presentations by Conseco or its management or oral statements) relative to
markets for Conseco's products and trends in Conseco's operations or financial
results, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," "should," "could," "goal,"
"target," "on track," "comfortable with," "optimistic" and other similar
expressions, constitute forward-looking statements under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
known and unknown risks, uncertainties and other factors which may cause actual
results to be materially different from those contemplated by the
forward-looking statements. Such factors include, among other things: (1)
general economic conditions and other factors, including prevailing interest
rate levels, stock and credit market performance and health care inflation,
which may affect (among other things) Conseco's ability to sell its products,
its ability to make loans and access capital resources and the costs associated
therewith, the market value of Conseco's investments, the lapse rate and
profitability of policies, and the level of defaults and prepayments of loans
made by Conseco; (2) Conseco's ability to achieve anticipated synergies and
levels of operational efficiencies; (3) customer response to new products,
distribution channels and marketing initiatives; (4) mortality, morbidity, usage
of health care services and other factors which may affect the profitability of
Conseco's insurance products; (5) performance of our investments; (6) changes in
the Federal income tax laws and regulations which may affect the relative tax
advantages of some of Conseco's products; (7) increasing competition in the sale
of insurance and annuities and in the finance business; (8) regulatory changes
or actions, including those relating to regulation of financial services
affecting (among other things) bank sales and underwriting of insurance
products, regulation of the sale, underwriting and pricing of products, and
health care regulation affecting health insurance products; (9) the outcome of
Conseco's efforts to sell assets and reduce, refinance or modify indebtedness
and the availability and cost of capital in connection with this process; (10)
actions by rating agencies and the effects of past or future actions by these
agencies on Conseco's business; and (11) the risk factors or uncertainties
listed from time to time in Conseco's filings with the Securities and Exchange
Commission.
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Conseco (9)
April 24, 2001
Conseco, Inc. (NYSE: CNC) Quarter Ended
Financial Highlights March 31:
---------------
2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Earnings per diluted share analysis
Operating earnings per diluted share before goodwill amortization:
Insurance and fee-based segment operating earnings $0.35 $0.33
Finance segment operating earnings 0.11 0.07
- -----------------------------------------------------------------------------------------------------------------------------
Subtotal 0.46 0.40
- -----------------------------------------------------------------------------------------------------------------------------
Holding company activities:
Corporate expenses, less charges to subsidiaries for services provided 0.01 (0.03)
Interest and dividends, net of corporate investment income (0.25) (0.28)
Allocation of interest and dividends to finance segment 0.01 0.08
- -----------------------------------------------------------------------------------------------------------------------------
Operating earnings per diluted share from continuing operations
before goodwill amortization 0.23 0.17
Goodwill amortization (0.07) (0.07)
- ------------------------------------------------------------------------------------------------------------------------------
Operating earnings per diluted share from continuing operations
applicable to common stock 0.16 0.10
- -----------------------------------------------------------------------------------------------------------------------------
Non-operating items, net of tax
Net realized losses (0.16) (0.04)
Venture capital income (loss) (0.05) 0.14
Gain on sale of interest in Riverboat 0.33 0.00
Impairment charge related to interest-only securities (0.01) 0.00
Provision for losses related to loan guarantees 0.00 (0.05)
Special charges (0.01) 0.00
Discontinued lines and other non-recurring items (0.03) 0.07
- -----------------------------------------------------------------------------------------------------------------------------
Earnings per diluted share $0.23 $0.22
- -----------------------------------------------------------------------------------------------------------------------------
Diluted common shares outstanding (in millions) 372.7 357.3
- -----------------------------------------------------------------------------------------------------------------------------
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Conseco (10)
April 24, 2001
Conseco, Inc.
Consolidated Balance Sheet (in millions) At At
March 31, 2001 Dec. 31, 2000
- ----------------------------------------------------------------------------------------------------------------------------
Assets
Investments:
Actively managed fixed maturities at fair value $22,544.5 $21,755.1
Interest-only securities at fair value 456.4 432.9
Equity securities at fair value 235.4 248.3
Mortgage loans 1,194.5 1,238.6
Policy loans 642.9 647.2
Venture capital investment in TeleCorp PCS, Inc. 211.5 258.6
Other invested assets 295.9 436.9
- ----------------------------------------------------------------------------------------------------------------------------
Total investments 25,581.1 25,017.6
Cash and cash equivalents:
Held by the parent company 371.5 294.0
Held by the parent company for the payment of debt 464.6 81.9
Held by subsidiaries 898.9 1,287.7
Accrued investment income 480.2 467.1
Finance receivables 3,332.8 3,865.0
Finance receivables - securitized 12,718.9 12,622.8
Cost of policies purchased 1,847.9 1,954.8
Cost of policies produced 2,625.5 2,480.5
Reinsurance receivables 651.6 669.4
Goodwill, net of accumulated amortization 3,744.7 3,800.8
Income tax assets 484.2 647.2
Assets held in separate accounts and investment trust 2,367.5 2,610.1
Cash held in segregated accounts for investors 638.3 551.3
Cash held in segregated accounts related to servicing agreements and
securitization transactions 585.1 866.7
Other assets 1,666.6 1,372.3
- ----------------------------------------------------------------------------------------------------------------------------
Total assets 58,459.4 58,589.2
- ----------------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Liabilities:
Liabilities for insurance and asset accumulation products:
Interest-sensitive products 15,944.5 16,123.2
Traditional products 7,968.4 7,875.1
Claims payable and other policyholder funds 1,006.7 1,026.1
Liabilities related to separate accounts and investment trust 2,367.5 2,610.1
Liabilities related to certificates of deposit 1,712.3 1,873.3
Investor payables 638.3 551.3
Other liabilities 1,885.2 1,565.5
Investment borrowings 489.8 219.8
Notes payable and commercial paper:
Direct corporate obligations 4,925.0 5,055.0
Direct finance obligations:
Master repurchase agreements 1,020.6 1,802.4
Credit facility collateralized by retained interests in securitizations 562.5 590.0
Other borrowings 417.1 418.5
Related to securitized finance receivables stuctured as collateralized borrowings 12,396.1 12,100.6
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 51,334.0 51,810.9
- ----------------------------------------------------------------------------------------------------------------------------
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts 1,909.4 2,403.9
- ----------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock 490.6 486.8
Common stock and additional paid-in capital 3,415.3 2,911.8
Accumulated other comprehensive loss (396.9) (651.0)
Retained earnings 1,707.0 1,626.8
- ----------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,216.0 4,374.4
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $58,459.4 $58,589.2
- ----------------------------------------------------------------------------------------------------------------------------
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Conseco (11)
April 24, 2001
Conseco, Inc. Quarter Ended
Consolidated Statement of Operations (millions) March 31:
---------------
2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Revenues
Insurance policy income $1,029.2 $1,048.7
Net investment income 901.5 1,060.9
Gain on sale of finance receivables 8.9 0.0
Gain on sale of interest in Riverboat 192.4 0.0
Net investment losses (113.3) (35.3)
Fee revenue and other income 117.9 131.6
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues 2,136.6 2,205.9
- ----------------------------------------------------------------------------------------------------------------------------
Benefits and expenses
Insurance policy benefits 875.0 1,067.5
Provision for losses 121.4 82.0
Interest expense 419.0 257.7
Amortization 152.5 198.3
Other operating costs and expenses 346.9 406.1
Special charges 39.6 0.0
Impairment charge 7.9 2.5
- ----------------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 1,962.3 2,014.1
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes, minority interest
and extraordinary charge 174.3 191.8
Income tax expense 58.3 75.4
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Income before minority interest and extraordinary charge 116.0 116.4
Minority interest - distributions on Company-obligated mandatorily
redeemable preferred securities of subsidiary trusts 32.2 39.0
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Income before extraordinary charge 83.8 77.4
Extraordinary gain on extinguishment of debt, net of income taxes 0.3 0.0
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Net income 84.1 77.4
Less preferred stock dividends 3.9 4.2
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Net income applicable to common stock $80.2 $73.2
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