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Non-Tech : Conseco Insurance (CNO) -- Ignore unavailable to you. Want to Upgrade?

To: Tunica Albuginea who wrote (2047)	7/28/2000 3:29:42 PM
From: donjuan_demarco	Read Replies (2) \| Respond to of 4155

Brother Tunica for your reading pleasure: Analyst Queries Conseco's 'Realignment With Reality' By ANN KEETON CHICAGO -- Gary Wendt, newly named chairman and chief executive at Conseco Inc. (CNC), may only have addressed the tip of the iceberg with his plans to restore the company to profitability, analysts said. Less that a month after he received a $45 million signing bonus from the troubled insurance and financial-holding company, Wendt Thursday presented analysts with an outline of plans to turn around both sides of the business, which he said would realign those operations "with reality." He likened the Conseco holding company to a barbell resting on the floor, saying that the two arms of the business - insurance and consumer finance - must "pick up the barbell." In the conference call, Wendt said the Carmel, Ind., company has assets to cover more than $1.3 billion of debt payments through 2001. After the market closed Thursday, Conseco reported a loss of 9 cents a share, excluding items, well below the 28 cents expected by analysts polled by First Call/Thomson Financial. Revenue fell to $1.9 billion, from $2 billion in the year-ago quarter. Wendt, a 25-year veteran of General Electric Co.'s G.E. Capital Services (GE), said he has brought in several colleagues from G.E. to help him execute turnaround plans more quickly. Plan Called 'Very Vague' Ira Zuckerman, an analyst with Nutmeg Securities in Westport, Conn., called the company's restructuring plan "very vague. I would have liked them to talk more specifically about problems in their insurance businesses and how they plan to deal with them." Wendt told analysts the company's lowered credit rating on its insurance, to "BB" by A.M Best, contributed to a 1% decline in insurance sales in July. In order to regain the confidence of insurance brokers and the public, Wendt said Conseco will buy "reinsurance" to boost the rating to an "A" rating. He said the company is considering several ways of getting the A rating on its products. Zuckerman said that would be a reasonable approach. "It's a way of borrowing money. You give up profits on your insurance business to pay for it." Zuckerman said he expects more write-offs in the insurance business. "In the conference call, Wendt talked about changes in accounting reporting. I think there's more to come out of that," he said. The company took heavy write-offs in the second quarter related to abandoning its "gain-on-sale" accounting method, which could increase near-term profits based on positive projections for future business. Most troublesome to Zuckerman is Conseco's finance business, a sore spot with investors since Conseco bought Greentree Financial, a lender to mobile-home buyers, in 1998. "I don't see how they can keep Greentree going," Zuckerman said. "If First Union couldn't operate The Money Store, there's no way Conseco can afford this business. They've tried to sell Greentree," he added. "Nobody wants it." In the conference call, Wendt said there were no plans to sell or wind down the consumer-finance business. He outlined cost-cutting plans, including shedding 2,000 jobs, nearly one-fourth of workers in the finance business. Shares of Conseco Thursday jumped 19.8% to close at 9 7/16. Recently the stock had given back much of that gain, trading at 8 1/4, down 1 3/16, or 12.6%. Shares hit a 12-month low of 4 1/2 in May, well off the high of 30 7/8 set a year ago. -By Ann Keeton, Dow Jones Newswires; 312-750-4120 Copyright, 2000, WSJ Interactive