Conseco to write off $475 million
Associated Press
Published Oct 4 2001
CARMEL, IND. -- Conseco Inc. said it will write off $475
million during its third quarter because of problems that were
aggravated by the economic impact of the Sept. 11 terrorist
attacks.
The attacks "took a slow quarter for the American economy
and made a bad situation worse," Conseco Chairman and CEO
Gary Wendt said in a memorandum to investors.
The company warned investors of the write-off Tuesday.
Conseco is to report its third-quarter earnings Oct. 30.
A review of Conseco's balance sheet in the weeks after the
attacks revealed what Wendt called "disappointing" losses, but
he said they were not substantial enough to threaten the
insurance and financial company's goals.
Conseco aims to clear $3.5 billion of debt by 2003 -- $2.1
billion of which already has been completed.
The housing market was the biggest factor in Conseco's adjusted
outlook. Interest-only securities fueled a $225 million charge
after taxes.
The value of Conseco's manufactured housing unit, formerly
Green Tree Financial of St. Paul, plunged 89 percent -- from
$263 million as of June 30 to $30 million as of Sept. 30.
Over the same time, home-equity and home improvement
financing dropped from $187 million to $155 million in value,
while the value of Conseco's consumer and equipment unit
dipped from $9 million to $8 million.
The stock market's drop after Sept. 11 affected Conseco's $25
billion investment portfolio as well, resulting in a $125 million
write-off, Wendt said. Conseco's stock price also declined,
forcing the company to give a $40 million boost to a fund that
guarantees bank loans to company officers and directors.
Conseco also forecast third-quarter losses of $45 million from
its holdings in Telecorp PCS, a wireless communications
company in which Conseco holds 17 million shares.
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