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

To: Randy Schmid who wrote (691)	4/9/1998 10:18:00 PM
From: Ken Sammut	Read Replies (1) \| Respond to of 4155

Affirmed by S&P Re: Merger NEW YORK, April 9 /PRNewswire/ -- Standard & Poor's affirms the ratings of Conseco Inc. and Green Tree Financial Corp., in light of the announced merger of the two companies (see ratings list below). Standard & Poor's believes Conseco's overall capitalization will continue to support its current ratings, despite Green Tree's weak capitalization that will inevitably lead to capital infusions from Conseco. Although management views the primary economic benefit of the merger to be revenue growth rather than expense reduction, it remains to be seen how successful the planned cross-selling efforts will be. The extent to which expenses are reduced will primarily be through Conseco's ability to provide a lower cost of funding for Green Tree. Green Tree is the country's leading provider of manufactured housing financing as well as a top provider of home equity and home improvement loans. The company has a strong franchise and extensive experience at originating, underwriting, securitizing, and servicing consumer finance products of various types. Earnings and capital quality are low, as is the norm with all companies that employ gain-on-sale accounting. Over the past year, the company has had two gain-related adjustments totaling $390 million. Including Green Tree, Conseco's pro forma year-end 1998 debt to capital ratio is expected to be 26%, preferred to capital will be 17%, double leverage will be 120%, and fixed charge coverage is expected to be over 4 times, all of which support the current ratings. Standard & Poor's believes management remains committed to keeping debt to capital at or below 35%. While the merger with Green Tree is a departure from Conseco's traditional insurance business, it is not a surprising strategic move, given management's belief in the inevitable convergence of the various financial services sectors. This transaction further extends the company's product line-up, which has been occurring over the past two years as Conseco has begun offering supplemental health, long-term care, and cancer insurance, in addition to its retirement annuities and life insurance products. With Green Tree, Conseco's earnings are anticipated to be derived from consumer finance (31%), supplemental health (24%), life insurance (21%), and annuities (17%). OUTLOOK: STABLE Standard & Poor's anticipates Conseco will continue to generate strong profitability, capitalization at the holding company and its operating units will remain supportive of the current ratings, and management will continue to be opportunistic in evaluating potential acquisition/merger candidates. Green Tree's stable outlook continues to reflect the risks accompanying its rapid diversification strategy as well as its reliance on gain-on-sale accounting, which are mitigated by the company's dominant market position in the manufactured housing sector, Standard & Poor's said. -- CreditWire OUTSTANDING RATINGS AFFIRMED Rating Conseco Inc. Corporate credit rating BBB Senior debt BBB Preferred stock BBB- Commercial paper A-2 Green Tree Financial Corp. Corporate credit rating BBB- Senior debt BBB- Subordinated debt BB+ Commercial paper A-3 SOURCE Standard & Poor's Credit Rating Co. CO: Conseco Inc.; Green Tree Financial Corp. ST: New York IN: FIN SU: RTG 04/09/98 19:27 EDT prnewswire.com