DOW JONES NEWSWIRES
Conseco Inc.'s (CNO) preliminary fourth-quarter net loss widened
on larger net realized investment losses as the insurance company
warned of a possible default on its senior credit line if auditors
cast doubt on its ability to continue as a going concern.
Conseco also announced an up-to-two-week delay in filing its
annual report as it finishes analysis and disclosure related to its
investment portfolio.
The company noted its accounting firm said that without more
information to satisfy auditors' concerns about Conseco's liquidity
and debt covenant margins, the audit will include an analysis of
the company's ability to continue as a going concern. If such
language ends up questioning its going-concern ability, that would
constitute a default on Conseco's senior credit facility.
The life-insurance sector has been hurt by the market turmoil,
which has hurt many insurers' financial flexibility and decreased
and their ability to access the credit markets.
The company posted a net loss of $406.8 million, or $2.20 a
share, compared with a year-earlier net loss of $71.5 million, or
38 cents a share. Excluding the investment losses and reduction in
deferred-tax assets, earnings rose to 26 cents from 15 cents.
Analysts polled by Thomson Reuters expected 29 cents.
Conseco didn't provide revenue figures.
In the Bankers Life business, which distributes insurance
through career Bankers insurance agents, sales rose 25% as profits
fell 31%. Conseco's insurance group, which works through
independent insurance agents, saw sales fall 9% as earnings more
than tripled on prior-year amortization costs.
Sales at Colonial Penn - which distributes insurance through
television, Internet and direct mail - jumped 16% as the segment
swung to a profit amid 2007 charges related to its Medicare
Advantage products.
S&P last week cut its counterparty credit ratings on Conseco
four notches further into junk territory to CCC, or highly
speculative territory, amid a broader cut of life insurers.
In December, Conseco finished transferring many of its long-term
care policies to a new state-supervised nonprofit trust, Senior
Health Insurance Co. of Pennsylvania, allowing it to concentrate on
its core business. The policies were a drag on earnings because
they were underpriced and required continued capital infusions to
meet policyholders' long-term needs.
Conseco's shares closed Friday at $1.21 and haven't traded
premarket. The stock has lost more than three-quarters of its value
so far this year.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com