Exhibit 99.1
NEWS
For Release Immediate
Contacts (News Media) Tony Zehnder, EVP, Corporate Communications
312.396.7086
(Investors) Tammy Hill, SVP, Investor Relations
317.817.2893
Conseco Reports Fourth Quarter and Year-end Results
o Fourth quarter 2004 net income applicable to common stock: $76.9
million, up 55% over 4Q03
o Fourth quarter 2004 pretax earnings: $130.0 million, up 16% over 4Q03
o Fifth consecutive quarter of solid earnings
o Financial transformation completed during 2004
o Book value per share, excluding accumulated other comprehensive
income, (a non-GAAP measure) increased to $19.18(a) at year-end 2004,
from $17.09(a) at year-end 2003
Carmel, Ind., March 14, 2005 -- Conseco, Inc. (NYSE: CNO) today reported net
income applicable to common stock of $76.9 million for the quarter ended
December 31, 2004, up $27.3 million, or 55%, compared to the year-earlier
quarter.
On a diluted per-share basis, net income was 46 cents for the quarter ended
December 31, 2004. Results for the quarter included net after-tax realized
investment gains of $7.3 million. Comparison of per-share results to the
prior-year period is affected by the $1.6 billion equity offering and $800
million debt refinancing completed in mid-2004, which increased weighted average
diluted shares outstanding by approximately 86%, compared to the year-earlier
quarter. Earnings per diluted share in 4Q03 were 49 cents and included net
realized investment gains and venture capital losses of $.8 million.
For the full year of 2004, Conseco reported net income applicable to common
stock of $229.3 million, or $1.63 per diluted common share. Results for 2004
included net after-tax realized investment gains of $17.7 million. Results for
full-year 2003 are not comparable because of the company's reorganization and
adoption of fresh-start accounting in the third quarter of 2003.
Financial transformation complete
President and CEO William Kirsch said, "Conseco's financial transformation was
begun in September 2003 and successfully completed in 2004. Five consecutive
quarters of solid earnings and strong cash flow since emerging from bankruptcy,
together with our successful equity offering and debt refinancing, have enabled
us to end 2004 with impressive financial strength. Our insurance subsidiaries'
consolidated Risk-Based Capital ratio (a non-GAAP measure) grew by year-end to
318%, compared to 287% at the end of 2003. Our year-end debt-to-total-capital
ratio, excluding accumulated other comprehensive income, (a non-GAAP measure) of
18%(b) reflects relatively low leverage compared to ratios of 20%-30% at peer
insurance companies, reflecting our commitment to continue to operate from a
strong financial foundation in order to compete effectively against companies
with higher ratings. As a result, the company is positioned to achieve important
future growth.
Book value increase
"As a consequence of our IRS closing agreement in 3Q04 and Conseco's
establishment of sustained operating earnings since emergence, we reduced by
$947 million the valuation allowance on our deferred tax assets, thereby
eliminating the Goodwill and Other intangible assets on our balance sheet.
Year-end 2004 book value per share, excluding accumulated other comprehensive
income, (a non-GAAP measure) increased to $19.18(a), from $17.09(a) at the end
of 2003.
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Conseco (2)
March 14, 2005
2004: significant progress on many transformational initiatives
"Heading into 2004," Kirsch said, "the challenge was to complete Conseco's
financial restructuring and to build a platform for sustainable earnings growth,
with substantial competitive advantages. Conseco's distribution partners and our
4,350 officers, managers and employees successfully met that challenge with
enthusiasm and resolve. As pleased as I am to report another solid quarter of
financial results, I am even more pleased that the Conseco team in 2004
delivered impressive results by:
o Completing our financial restructuring
o Delivering a record sales year at Bankers Life
o Implementing administrative system conversions
o Entering into the IRS closing agreement
o Demonstrating compliance with the control standards required by
Sarbanes-Oxley
o Focusing on operational excellence and accelerating expense reductions
I sincerely appreciate the extra effort and the good teamwork by all of our
dedicated associates and distribution partners who contributed to make 2004 a
year of important transformation."
Operational excellence moving rapidly
"Conseco is a very different company from a year ago," said Kirsch, "and we are
well positioned to accelerate our pace of productivity. Our mission is to
continue to take the tough actions and to make the investments necessary to earn
an 'A' category financial strength rating as soon as possible, in a manner which
positions us to grow shareholder value over the long term. Tight management of
our business initiatives will enable us to fulfill our vision to make Conseco a
premier insurance company providing life and supplemental health insurance
products to middle America. We have been very focused on delivering continued
progress on each of these initiatives:
o Sales and revenue growth. We are building distribution in products
where we can compete profitably today, and which will serve as the
foundation for a family of products and distribution upon which we can
continue to build after we achieve `excellent' ratings. Bankers Life
(captive and direct distribution) had a record sales year, achieving
an 8% overall increase versus 2003. Life and health new annualized
premium of $189 million represented an increase of 10% versus $171
million in 2003. First-year annuity deposits of $949 million were
virtually flat with 2003. Another important milestone for Bankers in
2004 was the expansion of its distribution reach with sales offices in
new geographic markets, increasing the total number of Bankers
branches to 158. As part of its growth strategy, Bankers invested in
its existing branches by replacing many under-performing branch
managers, and by increasing its new agent recruitment by 13% compared
to 2003. Sales at Conseco Insurance Group (independent distribution)
for 2004 included $54 million in new annualized life and health
premium, and $39 million in first-year annuity deposits, reflecting
the challenges of rebuilding independent distribution. To address this
challenge, Conseco Insurance Group introduced a major new cancer
product in the last half of 2004, four new products in the first
quarter of 2005 (Medicare Supplement, bonus equity-indexed annuity,
universal life and equity-indexed universal life), and plans two more
new products (worksite universal life and a proprietary equity-indexed
annuity) in the second quarter of 2005. Conseco Insurance Group is
actively recruiting new agents in the health and annuity lines that
are expected to fuel near-term sales growth.
o Operational excellence. We are implementing a best-in-class operating
platform that provides excellent customer service in a scalable,
low-cost environment. Our goal is to attain operational excellence
with back office efficiency that can process existing business more
efficiently and achieve best-in-class customer service in a low-cost
environment by upgrading management talent, investing in systems and
engineering enhanced productivity through more effective workflow and
business processes. In technology, we are consolidating and
simplifying our data
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Conseco (3)
March 14, 2005
processing and management systems in order to provide fast, real-time
access to our policyholders and distribution partners, reducing
redundancy, and thereby eliminating impediments to scale. At Conseco
Insurance Group, we have reduced our administrative systems from 33 in
April 2003 to 23 currently; we expect to convert or eliminate another
four systems by early April. We are applying rigorous cost/benefit
analysis to all remaining conversions to make sure they will improve
service as well as reduce costs and accommodate scale. Typical of all
large systems projects, investments precede savings. However, we are
highly confident that we will meet our long-term expectations
regarding cost and customer service.
o Expense reductions and in-force management. Until we earn higher
ratings, earnings growth will be supported by our ability to
effectively manage our expenses and maximize the profitability of our
in-force blocks. We are therefore aggressively eliminating
non-strategic costs, rationalizing organizational redundancies,
streamlining back office operations, and improving claims adjudication
processes, especially in our closed block long-term care business.
Despite our substantial investments in talent, Sarbanes-Oxley
compliance, systems simplification, new products and other business
initiatives, we hit our goal for expense savings in 2004, and we are
highly confident that we will achieve or exceed our previously
expressed savings goal of $30 million for 2005.
o Best practices in governance and compliance. Sarbanes-Oxley 404
compliance was exceptionally challenging for Conseco, due in large
part to our legacy of prior acquisitions, which had not been
integrated. Achieving SOX 404 compliance demonstrated Conseco's
resolve to embrace compliance and to maintain the strong internal
controls required in the new governance environment. We are leveraging
our Sarbanes Oxley activities to go beyond simple compliance and
proliferate best practices throughout the organization.
o A unified performance culture. We are upgrading management talent
throughout the organization. The 15 senior operating officers added
since August 2004 have, in the aggregate, nearly 300 years of relevant
experience in financial services. Our management team shares the
vision of transforming Conseco into the premier insurance company
serving middle America with life and supplemental health products. We
are working together to instill a unified, performance-based culture
at all levels of our company by aligning individual goals with our
business priorities and by linking rewards to individual and business
segment performance.
2005 outlook
"In 2005, we are determined to continue to do the hard work and make the
investments in new products, operations, systems and compliance necessary to
maximize shareholder value over the long term," Kirsch said. "At Conseco
Insurance Group, this will include: supporting new product launches,
strengthening our worksite platform and product offerings, building our
marketing and distribution capability (adding more "feet on the street"),
enhancing agent care and policyholder service, further strengthening our call
center and continuing our systems simplification initiatives. At Bankers Life,
this will include leveraging our investments in new 2004 branches and branch
managers, rolling out new products to meet the needs of policyholders, and
completing our initiatives to streamline policy issue and achieve customer
service excellence.
"For 2005, our priority will be to maximize long-term value by investing in
future growth opportunities. We remain confident that our earnings for 2005 will
at least meet the lower end of the current 2005 analyst estimates published by
First Call of $1.68 of net income per share, based on our year-end 2004 diluted
shares outstanding. This outlook is based on numerous assumptions and factors.
If they prove incorrect, actual earnings could differ materially from estimates.
The company's guidance excludes the impact of realized investment gains or
losses." (See note on forward-looking statements below).
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Conseco (4)
March 14, 2005
Operating results
Results for the full year of 2004 are not comparable to 2003 because of the
company's reorganization and adoption of fresh-start accounting in the third
quarter of 2003. Results by segment for the periods indicated were as follows ($
in millions):
Three Months Ended Three Months Ended Three Months Ended
December 31, 2004 September 30, 2004 December 31, 2003
----------------- ------------------ -----------------
Earnings before taxes:
Bankers Life $ 63.0 $ 55.8 $ 60.0
Conseco Insurance Group 61.0 67.6 68.8
Other Business in Run-off 18.8 16.5 10.7
Corporate Operations (24.1) (34.8) (29.0)
Realized gains (losses), net of related amortization,
and venture capital income (loss) 11.3 (0.2) 1.2
------ ------ ------
Earnings before taxes 130.0 104.9 111.7
Tax expense 43.6 37.6 39.6
------ ------ ------
Net income 86.4 67.3 72.1
Preferred stock dividends:
10.50% Class A convertible exchangeable preferred
stock (retired June 11, 2004) - - 22.5
5.50% Class B mandatorily convertible preferred
stock (issued May 12, 2004) 9.5 9.4 -
------ ------ ------
Net income applicable to common stock $ 76.9 $ 57.9 $ 49.6
====== ====== ======
Earnings before realized gains and income taxes for the fourth quarter of 2004
in our Bankers Life segment were $63.0 million and included favorable annuity
results. Also, Bankers Life's net investment income included prepayment income
on fixed maturity investments and favorable income on non-traditional invested
assets totaling approximately $2 million.
Earnings before realized gains and income taxes in our Conseco Insurance Group
segment totaled $61.0 million in the fourth quarter. Conseco Insurance Group's
results included lower margins due to a $5 million adjustment from lower than
expected persistency in Medicare supplement, and adjustments arising from our
annual review of estimates of the cost of reinsurance ($3 million) and
amortization of the value of policies in force ($5 million). These unfavorable
items were partially offset by prepayment income on fixed maturity investments
and favorable income on non-traditional invested assets totaling approximately
$4 million, and an $8 million reduction to operating expenses related to an
actuarial gain from changes made to a post-retirement health plan at one of our
life insurance subsidiaries.
Earnings before realized gains and income taxes in our Other Business in Run-off
segment were $18.8 million, reflecting improved long-term care benefit ratios
arising from our claims adjudication initiatives.
Corporate Operations include "40|86 Advisors," our investment advisory
subsidiary, and the expenses of our corporate operations. Corporate Operations
included approximately $12 million of interest expense on our bank debt for the
fourth quarter of 2004. Corporate operations for the fourth quarter also
reflected a $3 million reduction to expenses related to the favorable outcome of
a legal dispute. As previously reported, Corporate Operations included $13.5
million of severance and other transition costs in the quarter ended September
30, 2004, related to the management change announced in August.
Our effective income tax rate for the fourth quarter of 33.5% included the
effect of certain permanent differences and a small adjustment to state income
taxes.
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Conseco (5)
March 14, 2005
Income tax assets
Upon our emergence from bankruptcy on September 10, 2003, we established a
valuation allowance for the entire balance of our net deferred tax assets. As of
December 31, 2004, based on the completion of five quarters with operating
earnings and other criteria required by generally accepted accounting
principles, we reduced a portion of the valuation allowance on our net deferred
tax assets. This adjustment had the following impact on our December 31, 2004
balance sheet: 1) increased Income tax assets by $947 million; 2) eliminated
Goodwill and Other intangible assets; and 3) increased Additional paid-in
capital in Shareholders' equity by approximately $62 million. The adjustment had
no effect on net income. We continue to have a valuation allowance on the
remainder of our net deferred tax assets in the amount of approximately $1.6
billion at December 31, 2004.
Fourth quarter sales
Fourth quarter new annualized premium sales of supplemental health and life
products at Bankers Life totaled $46 million, up 7% compared to 4Q03. Fourth
quarter sales of supplemental health and life products at Conseco Insurance
Group totaled $12 million, down 43% from 4Q03, driven primarily by a $6 million
decrease in Medicare supplement sales through independent agents. This decrease
in sales resulted from implementation of rate increases early in the year on
both new business and inforce policies. First-year annuity deposits for the
quarter were $288 million at Bankers Life, up 52% compared to 4Q03. At Conseco
Insurance Group, first-year annuity deposits for the quarter were $13 million,
compared to $5 million in 4Q03.
About Conseco
Conseco, Inc.'s insurance companies help protect working American families and
seniors from financial adversity: Medicare supplement, long-term care, cancer,
heart/stroke and accident policies protect people against major unplanned
expenses; annuities and life insurance products help people plan for their
financial futures. For more information, visit Conseco's web site at
www.conseco.com.
(a) These book value per share amounts exclude accumulated other comprehensive
income from the value of capital used to determine this measure.
Accordingly, such non-GAAP measure differs from the GAAP book value per
share measures of $21.41 per share at year-end 2004 and $19.28 per share at
year-end 2003. Management believes this non-GAAP measure is useful, because
it removes the volatility from changes in accumulated other comprehensive
income (loss) in the value of capital. Such volatility is often caused by
changes in the estimated fair value of our investment portfolio resulting
from changes in general market interest rates rather than the business
decisions made by management. However, the non-GAAP measure does not
replace the corresponding GAAP measure.
(b) This debt-to-total-capital ratio excludes accumulated other comprehensive
income from the value of capital used to determine this measure.
Accordingly, such non-GAAP measure differs from the GAAP debt-to-total
capital ratio of 16% at year-end 2004. Management believes this non-GAAP
measure is useful for the same reasons as summarized above in note (a).
However, the non-GAAP measure does not replace the corresponding GAAP
measure.
Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend
analyses and other information contained in this press release relative to
markets for Conseco's products and trends in Conseco's operations or financial
results, as well as other statements, contain forward-looking statements within
the meaning of the federal securities laws and the Private Securities Litigation
Reform Act of 1995. Forward-looking statements typically are identified by the
use of terms such as "anticipate," "believe," "plan," "estimate," "expect,"
"project," "intend," "may," "will," "would," "contemplate," "possible,"
"attempt," "seek," "should," "could," "goal," "target," "on track," "comfortable
with," "optimistic" and similar words, although some forward-looking statements
are expressed differently. You should consider statements that contain these
words carefully because they describe our expectations, plans, strategies and
goals and our beliefs concerning future business conditions, our results of
operations, financial position, and our business outlook or they state other
"forward-looking" information based on currently available information.
Assumptions and other important factors that could cause our actual results to
differ materially from those anticipated in our forward-looking statements
include, among other things: (i) our ability to improve the financial strength
ratings of our insurance company subsidiaries and the impact of prior rating
downgrades on our business; (ii) the ultimate outcome of lawsuits filed against
us and other legal and regulatory proceedings to which we are subject; (iii) our
ability to
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Conseco (6)
March 14, 2005
obtain adequate and timely rate increases on our supplemental health products
including our long-term care business; (iv) mortality, morbidity, usage of
health care services, persistency and other factors which may affect the
profitability of our insurance products; (v) our ability to achieve anticipated
expense reductions and levels of operational efficiencies; (vi) the adverse
impact of our Predecessor's bankruptcy proceedings on our business operations,
and relationships with our customers, employees, regulators, distributors and
agents; (vii) performance of our investments; (viii) customer response to new
products, distribution channels and marketing initiatives; (ix) the risk factors
or uncertainties listed from time to time in our filings with the Securities and
Exchange Commission; (x) 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) our ability to
sell products and access capital on acceptable terms, the market value of our
investments, and the lapse rate and profitability of policies; (xi) changes in
the Federal income tax laws and regulations which may affect or eliminate the
relative tax advantages of some of our products; and (xii) regulatory changes or
actions, including those relating to regulation of the financial affairs of our
insurance companies, including the payment of dividends to us, 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.
Other factors and assumptions not identified above are also relevant to the
forward-looking statements, and if they prove incorrect, could also cause actual
results to differ materially from those projected. All written or oral
forward-looking statements attributable to us are expressly qualified in their
entirety by the foregoing cautionary statement. Our forward-looking statements
speak only as of the date made. We assume no obligation to update or to publicly
announce the results of any revisions to any of the forward-looking statements
to reflect actual results, future events or developments, changes in assumptions
or changes in other factors affecting the forward-looking statements.
- Tables Follow -
Conseco (7)
March 14, 2005
Product loss ratios on major supplemental health lines of business:
Three Months Three Months Three Months
Ended Ended Ended
December 31, 2004 September 30, 2004 December 31, 2003
----------------- ------------------ -----------------
Bankers Life segment:
Medicare Supplement:
Earned premium $160 million $160 million $159 million
Loss ratio 70.99% 70.19% 61.56%
Long-Term Care:
Earned premium $136 million $135 million $130 million
Loss ratio 89.75% 89.10% 85.48%
Interest-adjusted loss ratio (a non-GAAP measure)(a) 62.12% 62.01% 59.27%
Conseco Insurance Group segment:
Medicare Supplement:
Earned premium $80 million $87 million $98 million
Loss ratio 65.67% 63.41% 66.02%
Specified Disease:
Earned premium $89 million $91 million $91 million
Loss ratio 72.46% 76.98% 61.92%
Other Business in Run-off segment:
Earned premium $94 million $98 million $109 million
Loss ratio 99.00% 97.93% 99.07%
Interest-adjusted loss ratio (a non-GAAP measure)(a) 52.32% 56.45% 64.45%
<FN>
- -----------------
(a) The interest-adjusted loss ratio (a non-GAAP measure) is calculated by
dividing the product's insurance policy benefits less interest income on
the accumulated assets backing the insurance liabilities by insurance
policy income. Interest income is an important factor in measuring the
performance of longer duration health products. The net cash flows
generally cause an accumulation of amounts in the early years of a policy
(accounted for as reserve increases), which will be paid out as benefits in
later policy years (accounted for as reserve decreases). Accordingly, as
the policies age, the loss ratio will typically increase, but the increase
in the change in reserve will be partially offset by interest income earned
on the accumulated assets. The interest-adjusted loss ratio reflects the
interest income offset. Since interest income is an important factor in
measuring the performance of these products, management believes a loss
ratio, which includes the effect of interest income, is useful in analyzing
product performance.
</FN>
Collected premiums ($ in millions):
Three Months Three Months Three Months
Ended Ended Ended
December 31, 2004 September 30, 2004 December 31, 2003
----------------- ------------------ -----------------
Bankers Life segment:
Annuity products $288.6 $254.2 $190.3
Supplemental health products 297.9 294.3 311.3
Life products 50.4 46.4 46.6
------ ------ -------
Total collected premiums $636.9 $594.9 $548.2
====== ====== ======
Conseco Insurance Group segment:
Annuity products $18.3 $ 16.1 $ 12.9
Supplemental health products 176.6 180.3 207.0
Life products 86.6 93.7 97.0
------ ------ ------
Total collected premiums $281.5 $290.1 $316.9
====== ====== ======
Other Business in Run-off segment:
Long-term care products $96.7 $92.7 $104.5
Major medical products 0.8 3.6 21.4
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Conseco (8)
March 14, 2005
CONSECO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2004 and 2003
(Dollars in millions)
2004 2003
---- ----
ASSETS
Investments:
Actively managed fixed maturities at fair value (amortized cost:
2004 - $20,985.8; 2003 - $19,470.7)................................................ $21,599.0 $19,840.1
Equity securities at fair value (cost: 2004 - $62.3; 2003 - $71.8).................. 68.3 74.5
Mortgage loans....................................................................... 1,123.8 1,139.5
Policy loans......................................................................... 448.5 503.4
Trading securities................................................................... 902.3 915.1
Other invested assets ............................................................... 164.4 324.1
--------- ---------
Total investments.................................................................. 24,306.3 22,796.7
Cash and cash equivalents:
Unrestricted......................................................................... 776.6 1,228.7
Restricted........................................................................... 18.9 31.9
Accrued investment income................................................................. 308.4 315.5
Value of policies in force at the Effective Date.......................................... 2,629.6 2,949.5
Cost of policies produced................................................................. 409.1 101.8
Reinsurance receivables................................................................... 975.7 983.9
Income tax assets......................................................................... 967.2 24.6
Goodwill.................................................................................. - 952.2
Other intangible assets................................................................... - 182.7
Assets held in separate accounts.......................................................... 32.9 37.7
Other assets.............................................................................. 330.8 368.3
--------- ---------
Total assets....................................................................... $30,755.5 $29,973.5
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Liabilities for insurance and asset accumulation products:
Interest-sensitive products........................................................ $12,508.2 $12,480.4
Traditional products............................................................... 11,679.0 11,485.2
Claims payable and other policyholder funds........................................ 942.1 892.3
Liabilities related to separate accounts........................................... 32.9 37.7
Other liabilities.................................................................... 498.3 573.0
Investment borrowings................................................................ 433.9 387.3
Notes payable - direct corporate obligations......................................... 758.9 1,300.0
--------- ---------
Total liabilities................................................................ 26,853.3 27,155.9
--------- ---------
Commitments and Contingencies
Shareholders' equity:
Preferred stock...................................................................... 667.8 887.5
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued
and outstanding: 2004 - 151,057,863; 2003 - 100,115,772)........................... 1.5 1.0
Additional paid-in capital........................................................... 2,597.8 1,641.9
Accumulated other comprehensive income............................................... 337.3 218.7
Retained earnings.................................................................... 297.8 68.5
--------- ---------
Total shareholders' equity....................................................... 3,902.2 2,817.6
--------- ---------
Total liabilities and shareholders' equity......................................... $30,755.5 $29,973.5
========= =========
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Conseco (9)
March 14, 2005
CONSECO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in millions, except per share data)
(unaudited)
Three months Three months
ended ended
December 31, December 31,
2004 2003
---- ----
Revenues:
Insurance policy income........................................................... $ 726.1 $ 749.6
Net investment income:
General account assets........................................................ 334.4 321.0
Policyholder and reinsurer accounts........................................... 33.0 55.2
Venture capital loss related to investment in AT&T Wireless Services, Inc..... - (2.8)
Net realized investment gains................................................... 13.1 5.1
Fee revenue and other income.................................................... 4.4 11.1
-------- --------
Total revenues................................................................ 1,111.0 1,139.2
-------- --------
Benefits and expenses:
Insurance policy benefits....................................................... 720.6 724.6
Interest expense ............................................................... 14.4 29.8
Amortization.................................................................... 98.8 106.0
Other operating costs and expenses.............................................. 147.2 167.1
-------- --------
Total benefits and expenses................................................... 981.0 1,027.5
-------- --------
Income before income taxes.................................................... 130.0 111.7
Income tax expense on period income.................................................. 43.6 39.6
-------- --------
Net income.................................................................... 86.4 72.1
Preferred stock dividends............................................................ 9.5 22.5
-------- --------
Net income applicable to common stock......................................... $ 76.9 $ 49.6
======== ========
Earnings per common share:
Basic:
Weighted average shares outstanding........................................... 151,073,000 100,114,000
=========== ===========
Net income.................................................................... $.51 $.50
==== ====
Diluted:
Weighted average shares outstanding........................................... 186,944,000 100,258,000
=========== ===========
Net income.................................................................... $.46 $.49
==== ====
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Conseco (10)
March 14, 2005
CONSECO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS, continued(1)
(Dollars in millions, except per share data)
(unaudited)
Successor Predecessor
--------------------------------- --------------
Year Four months Eight months
ended ended ended
December 31, December 31, August 31,
2004 2003 2003
---- ---- ----
Revenues:
Insurance policy income............................................. $2,949.3 $1,005.8 $ 2,204.3
Net investment income:
General account assets.......................................... 1,294.5 427.0 928.4
Policyholder and reinsurer accounts............................. 24.1 53.1 30.1
Venture capital income (loss) related to investment in
AT&T Wireless Services, Inc................................... - (5.5) 10.5
Net realized investment gains (losses)............................ 40.6 11.8 (5.4)
Fee revenue and other income...................................... 21.5 13.3 35.5
-------- -------- ---------
Total revenues.................................................. 4,330.0 1,505.5 3,203.4
-------- -------- ---------
Benefits and expenses:
Insurance policy benefits......................................... 2,795.2 967.9 2,136.4
Provision for losses.............................................. - - 55.6
Interest expense (contractual interest of $268.5 for the eight
months ended August 31, 2003)................................... 79.5 36.8 202.5
Amortization...................................................... 371.2 132.9 343.7
Gain on extinguishment of debt.................................... (2.8) - -
Other operating costs and expenses................................ 632.8 218.4 423.5
Reorganization items.............................................. - - (2,130.5)
-------- -------- ---------
Total benefits and expenses..................................... 3,875.9 1,356.0 1,031.2
-------- -------- ---------
Income before income taxes and discontinued operations.......... 454.1 149.5 2,172.2
Income tax expense (benefit) on period income.......................... 159.3 53.2 (13.5)
-------- -------- ---------
Income before discontinued operations........................... 294.8 96.3 2,185.7
Discontinued operations, net of income taxes........................... - - 16.0
-------- -------- ---------
Net income...................................................... 294.8 96.3 2,201.7
Preferred stock dividends.............................................. 65.5 27.8 -
-------- -------- ---------
Net income applicable to common stock........................... $ 229.3 $ 68.5 $ 2,201.7
======== ======== =========
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Conseco (11)
March 14, 2005
CONSECO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS, continued(1)
(Dollars in millions, except per share data)
(unaudited)
Successor
--------------------------------
Year Four months
ended ended
December 31, December 31,
2004 2003
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Earnings per common share:
Basic:
Weighted average shares outstanding............................ 132,280,000 100,110,000
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Net income..................................................... $1.73 $.68
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Diluted:
Weighted average shares outstanding............................ 155,930,000 143,486,000
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Net income..................................................... $1.63 $.67
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<FN>
- -------------
(1) The company emerged from Chapter 11 bankruptcy on September 10, 2003.
Results for periods following the emergence from Chapter 11 reflect
fresh-start accounting adjustments as required by generally accepted
accounting principles. Accordingly, financial results for periods following
the company's emergence from bankruptcy are not comparable to results prior
to emergence. Activity of the company for periods after September 1, 2003
is included in the post-bankruptcy or "successor company" financial
statements. Activity of the company for periods prior to September 1, 2003
is included in the pre-bankruptcy or "predecessor company" financial
statements.
</FN>
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