Exhibit 99.1
NEWS
For Release Immediate
Contacts (News Media) Tony Zehnder, Corporate Communications 312.396.7086
(Investors) Scott Galovic, Investor Relations 317.817.3228
Conseco Announces Reinsurance Transaction to Build Capital
Carmel, Ind., June 25, 2009 - Conseco, Inc. (NYSE:CNO) today announced an
agreement under which two insurance companies in its Conseco Insurance Group
unit will coinsure, with an effective date of January 1, 2009, about 104,000
non-core life insurance policies with Wilton Reassurance Company ("Wilton Re"),
a Minnesota reinsurance company.
"Completing this step is expected to increase Conseco's consolidated risk-based
capital ratio by 8 percentage points, along with increasing statutory capital,"
said Conseco CEO Jim Prieur. "In addition, this transaction will further
simplify our administrative operations as we focus on our core insurance
businesses."
In the transaction, Wilton Re will pay a ceding commission of approximately
$57.5 million and 100% coinsure and administer these policies. The Conseco
companies will transfer to Wilton Re approximately $409 million in cash and
policy loans and $466 million of statutory policy and other reserves. The
transaction, which is subject to the approval of insurance regulators in
Illinois and Wisconsin, is expected to be completed in the third quarter of
2009.
Most of the policies involved in the transaction were issued by companies that
were later acquired by Conseco. Approximately 70% of the policies being
coinsured are from Washington National Insurance Company; the remainder are from
Conseco Insurance Company.
As a result of the transaction, Conseco expects to record an increase to its
deferred tax valuation allowance of approximately $18 million in the third
quarter of 2009. Conseco also expects to record a deferred gain of approximately
$25 million. In accordance with generally accepted accounting principles
("GAAP"), this gain will be recognized over the remaining life of the block. In
the first quarter of 2009, the block being coinsured generated GAAP after-tax
earnings before overhead of approximately $2.5 million.
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 website at
www.conseco.com.
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Conseco (2)
June 25, 2009
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) general economic, market and political
conditions, including the performance and fluctuations of the financial markets
which may affect our ability to raise capital or refinance existing indebtedness
and the cost of doing so; (ii) our ability to continue to satisfy the financial
ratio and balance requirements and other covenants of our debt agreements; (iii)
our ability to generate sufficient liquidity to meet our debt service
obligations and other cash needs; (iv) our ability to obtain adequate and timely
rate increases on our supplemental health products including our long-term care
business; (v) the receipt of required regulatory approvals for dividend and
surplus debenture interest payments from our insurance subsidiaries; (vi)
mortality, morbidity, the increased cost and usage of health care services,
persistency, the adequacy of our previous reserve estimates and other factors
which may affect the profitability of our insurance products; (vii) changes in
our assumptions related to the cost of policies produced or the value of
policies in force at the effective date of our emergence from bankruptcy; (viii)
the recoverability of our deferred tax asset and the effect of potential tax
rate changes on its value; (ix) changes in accounting principles and the
interpretation thereof; (x) our ability to achieve anticipated expense
reductions and levels of operational efficiencies including improvements in
claims adjudication and continued automation and rationalization of operating
systems, (xi) performance and valuation of our investments, including the impact
of realized losses (including other-than-temporary impairment charges); (xii)
our ability to identify products and markets in which we can compete effectively
against competitors with greater market share, higher ratings, greater financial
resources and stronger brand recognition; (xiii) the ultimate outcome of
lawsuits filed against us and other legal and regulatory proceedings to which we
are subject; (xiv) our ability to complete the remediation of the material
weakness in internal controls over our actuarial reporting process and to
maintain effective controls over financial reporting; (xv) our ability to
continue to recruit and retain productive agents and distribution partners and
customer response to new products, distribution channels and marketing
initiatives; (xvi) our ability to achieve eventual upgrades of the financial
strength ratings of Conseco and our insurance company subsidiaries as well as
the potential impact of ratings downgrades on our business; (xvii) the risk
factors or uncertainties listed from time to time in our filings with the
Securities and Exchange Commission; (xviii) regulatory changes or actions,
including those relating to regulation of the financial affairs of our insurance
companies, such as the payment of dividends and surplus debenture interest 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; and (xix) changes in the Federal income tax laws and regulations which
may affect or eliminate the relative tax advantages of some of our 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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