CARMEL, Ind., Nov. 12 IN-Conseco-transfer
CARMEL, Ind., Nov. 12 /PRNewswire-FirstCall/ -- Conseco, Inc. (NYSE: CNO)
announced today that it completed the previously announced transfer of Senior
Health Insurance Company of Pennsylvania, formerly known as Conseco Senior
Health Insurance Company ("Senior Health"), to Senior Health Care Oversight
Trust, an independent trust (the "Trust"). In connection with the completion
of the transfer, Conseco contributed $175 million to the capital of Senior
Health and the Trust, as follows:
-- A 6% Senior Note due 2013 in the principal amount of $125 million, the
principal of which is payable in five equal annual installments.
-- A contribution of $11 million to the Trust to provide working capital
and to fund future operating expenses of the Trust.
-- Cash and cash equivalents of $39 million, including a ceding commission
of $35.7 million paid by Conseco Life Insurance Company, in connection with
the assignment by Senior Health of its non-long term care business to Conseco
Life Insurance Company.
The transaction was subject to approval by the Pennsylvania Insurance
Department, which issued its order approving the transfer of ownership earlier
today.
"The completion of this transfer and the formation of the independent
trust is a balanced solution for all of Conseco's constituents and Senior
Health's long-term care policyholders," Conseco CEO Jim Prieur said. "The
trust will operate Senior Health for the exclusive benefit of the
policyholders, without a profit motive, and will be governed by a highly
qualified board of trustees under the oversight of the Pennsylvania Insurance
Department. In addition, we expect that Conseco will benefit from both
reduced earnings volatility and better allocation of management resources on
its core businesses going forward."
As previously announced, Conseco expects to record accounting charges of
approximately $1.1 billion related to the transaction, of which $503.7 million
was recognized in the second quarter of 2008, $155.0 million was recognized in
the third quarter of 2008, and approximately $400 million is expected to be
recognized in the fourth quarter of 2008.
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 these materials
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 our existing indebtedness; (ii) our
ability to obtain adequate and timely rate increases on our supplemental
health products including our long-term care business; (iii) 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; (iv) changes in our
assumptions related to the cost of policies produced or the value of policies
inforce at the effective date of our emergence from bankruptcy; (v) the
recoverability of our deferred tax asset and the effect of potential tax rate
changes on its value; (vi) changes in accounting principles and the
interpretation thereof; (vii) 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; (viii) performance and valuation of our investments, including the
impact of realized losses (including other-than-temporary impairment charges);
(ix) 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; (x) the ultimate
outcome of lawsuits filed against us and other legal and regulatory
proceedings to which we are subject; (xi) our ability to remediate the
material weakness in internal controls over the actuarial reporting process
that we identified at year-end 2006 and to maintain effective controls over
financial reporting; (xii) our ability to continue to recruit and retain
productive agents and distribution partners and customer response to new
products, distribution channels and marketing initiatives; (xiii) 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 rating
downgrades on our business; (xiv) the risk factors or uncertainties listed
from time to time in our filings with the Securities and Exchange Commission;
(xv) our ability to continue to satisfy the financial ratio and balance
requirements and other covenants of our debt agreements; (xvi) 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; and (xvii) 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.
SOURCE Conseco, Inc.
