Conseco Issues Memo No. 15
INDIANAPOLIS, Aug 13, 2001 (BUSINESS WIRE) -- The attached "NEW
Conseco Memo No. 15" from Conseco (CNC) CEO Gary C. Wendt was
posted on Conseco's web site for shareholders and/or electronically
distributed to them today.
NEW Conseco Memo No. 15To: Conseco ShareholdersFrom: Gary C.
Wendt, Chairman & CEODate: August 13, 2001
This is a follow-up note to last week's earnings release, and the subsequent
decline in our stock price.
I thought the market's first-day reaction to our earnings release was
predictable; the stock price adjusted by about the same amount as we
adjusted our 2001 earnings guidance. The decline since has been
exaggerated by short selling that has artificially increased the number of
sellers.
It is clear to us from the feedback we got last week that the overwhelming
majority of our investors understand the NEW Conseco story. Most
important, it is clear that they understand that nothing has changed in our
strategy and long-term expectations.
The value proposition of Conseco's turnaround is $2 to $3 in earnings per
share in 2004. That guidance, given last December remains unchanged. It is
based on three elements of value creation:
1. Reduced interest expense from debt reduction in 2001, 2002 and 2003. 2.
Rapid growth in on-balance-sheet receivables in the Finance company.
(Since our change from gain-on-sale accounting isn't even 2 years old, our
base of on-balance-sheet receivables is small compared to our origination
capacity.) 3. Managing the insurance businesses better and more
conservatively to produce operating earnings (before tax and goodwill charge)
that will exceed $1 billion by 2004.
These factors remain in place. And, hence, our assessment of the
economics of achieving $2 to $3 in EPS by 2004 remains unchanged.
The first stepping-stones along this path are already in place: The debt we
have reduced this year combined with the cost reductions that are already
being implemented should, by themselves, result in 20 cents per share in net
addition to earnings in 2002 (calculated on 380 million shares). And that's
before any plans for top line growth or the effect of productivity gains
implemented in the second half of this year.
Cleaning up the more volatile balance sheet items (e.g. I/O, TLCP, Major
Medical) may continue for a while longer. BUT, in time, the mess will be
gone. And certainly before 2004.
We will continue to keep you informed about the businesses. To that end,
and as promised, we have scheduled a daylong investor briefing about the
Finance Company on Thursday, September 20. To maximize attendance, we
will hold the meeting in New York, location to be announced. For those of you
who have a question or curiosity about this excellent business, this will be a
great opportunity to delve into the operations and financial fundamentals.
World Wide Web conseco.cominvestor Hotline
800.4.CONSECOFax-on-Demand 800.344.6452
Note on forward-looking statements: All statements, trend analyses and other
information contained in this release and elsewhere (such as in filings by
Conseco with the Securities and Exchange Commission, press releases,
presentations by Conseco or its management or oral statements) relative to
markets for Conseco's products and trends in Conseco's operations or
financial results, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," "should,"
"could," "goal," "target," "on track," "comfortable with," "optimistic" and other
similar expressions, constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
are subject to known and unknown risks, uncertainties and other factors
which may cause actual results to be materially different from those
contemplated by the forward-looking statements. Such factors include,
among other things: (1) general economic conditions and other factors,
including prevailing interest rate levels, stock and credit market performance
and health care inflation, which may affect (among other things) Conseco's
ability to sell its products, its ability to make loans and access capital
resources and the costs associated therewith, the market value of Conseco's
investments, the lapse rate and profitability of policies, and the level of
defaults and prepayments of loans made by Conseco; (2) Conseco's ability to
achieve anticipated synergies and levels of operational efficiencies; (3)
customer response to new products, distribution channels and marketing
initiatives; (4) mortality, morbidity, usage of health care services and other
factors which may affect the profitability of Conseco's insurance products; (5)
performance of our investments; (6) changes in the Federal income tax laws
and regulations which may affect the relative tax advantages of some of
Conseco's products; (7) increasing competition in the sale of insurance and
annuities and in the finance business; (8) regulatory changes or actions,
including those relating to 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; (9) the outcome of Conseco's efforts to
sell assets and reduce, refinance or modify indebtedness and the availability
and cost of capital in connection with this process; (10) actions by rating
agencies and the effects of past or future actions by these agencies on
Conseco's business; and (11) the risk factors or uncertainties listed from time
to time in Conseco's filings with the Securities and Exchange Commission.
CONTACT: Conseco News Media: Mark Lubbers, 317/817-4418 Investors:
Tammy Hill, 317/817-2893URL: businesswire.comtoday's News
On The Net - Business Wire's full file on the Internetwith Hyperlinks to your
home page.
Copyright (C) 2001 Business Wire. All rights reserved.
KEYWORD: INDIANAINDUSTRY KEYWORD: BANKING INSURANCE
SOURCE: Conseco
ART |
