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

To: Tunica Albuginea who wrote (2265)	8/9/2000 12:02:05 PM
From: donjuan_demarco	Respond to of 4155

Tunica as a lawyer you make a good doctor.

To: Tunica Albuginea who wrote (2265)	8/16/2000 9:39:03 AM
From: Mr. Pink	Read Replies (1) \| Respond to of 4155

Tuniuca, how does it feel to have the walls of reason closing in all around you? Since you can not see the light through the holy and inspired teachings of HH (His Holiness) Mr. P$nk and you have chosen to ignore His infinite reason, wisdom and compassion, maybe you will head the word of this respected unbiased (not put out by prostitutes that are employed at such firms as Lehman Brothers who have conflicts of interest), you may read this and weep. When you are done, you may respectfully osculate his sphinctoria. To Wit: Gimme Credit ™ Finance August 16, 2000 Cash Guzzler þ The latest 10-Q filing from Conseco (B1/BB-) spells out what investors had already figured out for themselves. With $1.4 billion in debt and loan guarantees coming due by the end of September, CNC has little choice but to prostrate itself before its bankers and plead for loan extensions. Bondholders may blanch at the eye-popping fees collected by the investment bankers ($117 million and counting) as a condition of keeping CNC afloat so far. CNC has little bargaining leverage, and you already knew Wall Street wasn't pitching in out of the goodness of its heart, didn't you? þ In its filing, CNC makes the case for loan extensions. The bankers should be willing to play along, it implies, because over the next 12 to 15 months CNC expects to generate cash proceeds of about $2.0 billion. Though CNC Finance is no longer on the block, CNC still hopes to sell off segments of the business piecemeal, and to divest certain investments, notably its stakes in Tritel and its partnership stake in the Lawrenceberg riverboat casino. Even presuming CNC gets the banks to postpone the day of reckoning, however, the insurer is far from out of the woods. þ First, even if CNC raises $2.0 billion, it may not be able to upstream proceeds to the parent. Secondly, over the next 12 to 15 months, more debt comes due over and above the $1.4 billion. Under the terms of its financing agreement with Lehman Brothers, CNC must get the nod from LEH before it can upstream payments from the finance unit to the parent. This shouldn't be a surprise-- the LEH agreement was disclosed in last quarter's 10-Q and duly noted by us (GC Finance 5/16/00). It's also not clear how much flexibility CNC will have in tapping funds raised by cashing in investments. According to Tritel's SEC filings, CNC's shares are held by CIHC, an intermediate level holding company between the parent and the insurance subsidiaries. To the extent investments are supporting capital at the insurance company level, regulatory approval will be required for any dividends in excess of $97 million this year. We don't think regulators will be eager to approve a special dividend given the weakening operating performance of CNC's insurance units. þ Even if CNC can swing a transfer of funds up to the parent, it won't be enough to cover all the obligations coming due next year. In addition to the $1.4 billion, the parent has about $670 million in public debt maturing in June, and $425 million in stock loan guarantees maturing next August. Plus, there is a $500 million hybrid equity issue (FELINE PRIDES) subject to remarketing early next year. If the remarketing agent can't remarket the securities, current holders have the right to put the issue back to CNC. In other words, there is easily $3.0 billion of debt coming due against $2.0 billion in projected proceeds, even before considering ongoing interest expense, preferred dividend payments, and fees to investment bankers. þ There is no word on what progress CNC is making in lining up reinsurance to stem customer attrition-- already evident in its asset accumulation products. (The announcement of a similar reinsurance deal this week between Fremont General and XL Capital didn't help stave off another downgrade of FMT yesterday by S&P.) Loss ratios are eroding in the health insurance lines, and asset quality issues are cropping up in the investment portfolio. We would still steer clear of CNC. Kathy Shanley, CFA 847.920.9286 kshanley2@bloomberg.net ******************************************************* If this news leaves you feeling a bit limp, He is certain that you have some medication for a little "lift" since it might be a bit difficult via natural means given the stress you must be under. Mr. P$nk