Exhibit 99.1
NEWS
For Release Immediate
Contacts (News Media) Tony Zehnder, EVP, Corporate Communications
317.817.4409
(Investors) Lowell Short, SVP, Investor Relations
317.817.2893
Conseco Announces Tentative Litigation Settlement
and Resolution of Tax Matter
Carmel, Ind., August 1, 2006 - Conseco, Inc. (NYSE:CNO) announced today that it
has reached a tentative settlement in the class action litigation case referred
to as In Re Conseco Life Insurance Company Cost of Insurance Litigation. The
settlement, which involved policies sold by insurance companies that were
subsequently acquired by Conseco, is subject to a court fairness hearing and
other conditions. As a result of the settlement, the Company expects to record
additional expenses of approximately $100.3 million, after taxes, in the quarter
ended June 30, 2006. Conseco is scheduled to announce its quarterly earnings
results after the market closes on August 2, 2006.
James Hohmann, Conseco's interim CEO, said "implementation of this settlement
will resolve a significant historical issue and will allow our current
management team, our associates, our regulators and our rating agencies to focus
more fully on Conseco's progress toward becoming a leading provider of life
insurance, supplemental health insurance and annuities for middle America."
Despite this charge, the insurance subsidiaries continue to maintain a strong
capital position for the protection of all policyholders. Although we have not
completed our second quarter statutory financial statements, we estimate that
our consolidated risk-based capital ratio (a non-GAAP measure) will exceed 330%
as of June 30, 2006.
The Company also announced today that its previously announced tentative
settlement with the Internal Revenue Service has been finalized. As previously
disclosed, the settlement, which involved the characterization of the company's
net operating loss pertaining to its investment in Conseco Finance, was awaiting
approval of the related audit by the Joint Committee on Taxation. As a result of
this resolution, Conseco expects to reduce the valuation allowance on its
deferred income tax assets by approximately $260 million at June 30, 2006. The
change in the valuation allowance will not affect the Company's net income, but
will be a direct increase to shareholders' equity at June 30, 2006.
Collectively, the tentative litigation settlement charge and the deferred tax
valuation allowance adjustment will increase shareholders' equity by
approximately $160 million at June 30, 2006.
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Conseco (2)
August 1, 2006
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.
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 achieve an upgrade of 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 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) our ability to continue to recruit and retain productive
agents and distribution partners and 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 returns on and 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, such as 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.
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