DOW JONES NEWSWIRES
Conseco Inc. (CNO) swung to a second-quarter profit as the
insurer's investment losses shrank from a year earlier.
Shares jumped 8.1% to $3.89 in after-hours trading as the
earnings matched the top of the company's guidance.
The life-insurance sector has been hurt by the market turmoil,
which has damaged many insurers' financial flexibility and
decreased their ability to access the credit markets. Earlier this
year, Conseco found some breathing room by amending its credit pact
after it said its auditor expressed doubts about its ability to
continue as a going concern.
"Core sales remain strong in a declining market, and our Bankers
Life business, which had record agent recruitment, reported
excellent results both over the seasonally weak first quarter and
over the prior year's second quarter," said Chief Executive Jim
Prieur.
The company posted a profit of $27.6 million, or 15 cents a
share, compared with a year-earlier loss of $488.5 million, or
$2.65 a share. The latest results included $13.2 million of net
realized investment losses, compared with losses of $513.7 million
a year earlier.
Operating earnings, excluding investment gains and losses, rose
to 22 cents a share from 13 cents. The company had said last week
it expected to report earnings of 9 cents to 15 cents a share.
Revenue rose 0.1% to $1.1 billion.
Profit at Bankers Life soared 83%, while Conseco's insurance
group, which works through independent insurance agents, posted a
34% drop in earnings. Profit at Colonial Penn - which distributes
insurance through television, Internet and direct mail - climbed
33%.
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.
-By Kathy Shwiff and Kerry Grace Benn, Dow Jones Newswires;
212-416-2353; kerry.benn@dowjones.com