<font color=red>S&P REMOVES CONSECO FROM WATCH AND AFFIRMS CONSECO RATINGS
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S&P Removes From Watch and Affirms Conseco Ratings
NEW YORK, Sta & Poor's (BUSINESS WIRE) -- Sept. 26, 2000--
Standard & Poor's today removed from CreditWatch and
affirmed its ratings on Conseco Inc. and related entities (see list).
The outlook is stable.
Standard & Poor's had placed its ratings on Conseco Inc. and Conseco Inc.'s insurance subsidiaries on CreditWatch with negative implications on April 7, 2000. The ratings on Conseco Finance Corp. (Conseco Finance) were placed on CreditWatch with developing implications on March 31, 2000.
Standard & Poor's removed all these ratings from CreditWatch as a result of the successful completion of negotiations between Conseco Inc.'s management and its banks. These negotiations have resulted in a debt restructuring plan that provides for the retirement of more than $2 billion of debt using the proceeds from various nonstrategic asset sales, which will occur through 2001. More than $750 million of sale proceeds have already been realized. The plan places a high priority on the timely payment of all publicly held debt maturities and provides for the timely payment of interest as well as the dividend payments on the company's trust-preferred securities.
Standard & Poor's continues to believe that Conseco Inc.'s current capital structure and ongoing operating earnings are supportive of the ratings. Standard & Poor's projects that by year-end 2000, debt-to-capital at the holding company will be about 40%, and GAAP fixed-charge coverage provided by ongoing operating earnings for the year will be approximately 2.6 times. Conseco Inc.'s insurance/consumer finance mix of earnings from ongoing operations is expected to shift from approximately 85%/15% in 2000 to about 60%/40% by 2003.
The triple-'B' financial strength ratings on Conseco Inc.'s life insurance subsidiaries reflect what Standard & Poor's believes is an appropriate level of capitalization and a good level of liquidity. Standard & Poor's also believes the earnings performance of the insurance operations has stabilized. A study recently conducted by an actuarial consulting firm yielded favorable results concerning the adequacy of reserves as well as the recoverability of deferred acquisition costs and goodwill.
The ratings on Conseco Finance continue to reflect Standard & Poor's concern pertaining to the underlying credit quality of this unit's receivables. The debt-restructuring plan calls for a significant reduction in the growth of this operation, which should bode well for the credit quality of loans generated going forward. However, because of the rapid growth in Conseco Finance's loan origination activity from the mid-1990s to early 2000, the credit quality of these receivables could prove problematic.
OUTLOOK: STABLE
Any favorable adjustment to the ratings on Conseco Inc. or the related entities is contingent on the successful execution of the company's debt-reduction plan. Although no specific benchmarks have been established, Standard & Poor's will periodically review management's success in implementing the plan, and it will take rating actions as warranted by the performance of the company's insurance and consumer-finance operations. ---CreditWire
OUTSTANDING RATINGS REMOVED FROM CREDITWATCH AND AFFIRMED
Conseco Inc.
Counterparty credit rating BB-/Stable
Senior debt rating BB-
Preferred stock rating B-
Commercial paper rating B
CONSECO INC.'S INSURANCE SUBSIDIARIES
Bankers Life & Casualty Co.
Conseco Annuity Assurance Co.
Conseco Direct Life Insurance Co.
Conseco Health Insurance Co.
Conseco Life Insurance Co.
Conseco Life Insurance Co. of NY
Conseco Medical Insurance Co.
Conseco Senior Health Insurance Co.
Conseco Variable Insurance Co.
Manhattan National Life Insurance Co.
Pioneer Life Insurance Co.
Counterparty credit rating BBB/Stable
Financial strength rating BBB
Conseco Finance Corp
Long-term counterparty credit rating B-/Stable
Short-term counterparty credit rating B
Senior unsecured debt B-
Subordinated debt CCC
Contact:
Jon Reichert, New York, 212/438-7234
Daniel Martin, New York, 212/438-7390
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