Conseco 4Q Loss Widens On Invest Losses, Warns Of Default

   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; [e-mail]