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8-K - FORM 8-K - CNO Financial Group, Inc. | form8-k.htm |
Exhibit 99.1
For
Release Immediate
Contacts (News Media) Tony Zehnder,
Corporate Communications 312.396.7086
(Investors) Scott Galovic, Investor Relations 317.817.3228
Conseco
Completes Reinsurance Transaction
Carmel, Ind., January 26, 2010
– Conseco, Inc. (NYSE:CNO) said today that it received the necessary regulatory
approvals and completed the previously announced transaction under which its
Bankers Life and Casualty Company subsidiary (“Bankers Life”) coinsured, with an
effective date of October 1, 2009, about 234,000 life insurance policies with
Wilton Reassurance Company (“Wilton Re”). At closing, Wilton Re paid
Bankers Life a ceding commission of approximately $44 million and 50% coinsured
these policies, which Bankers Life will continue to service and
administer.
“This
transaction is expected to increase Conseco’s consolidated risk-based capital
ratio by 9 percentage points, along with increasing statutory capital by the
amount of the ceding commission,” said Conseco CEO Jim Prieur.
As part
of the transaction, Bankers Life transferred to Wilton Re approximately $73
million in investment securities and policy loans and $117 million of statutory
policy and other liabilities.
As
previously announced, Conseco expects to record (as a result of the transaction)
an increase to its deferred tax valuation allowance of approximately $18 million
in the fourth quarter of 2009. Conseco also expects to record a
pre-tax deferred cost of reinsurance of approximately $30 million, which, in
accordance with generally accepted accounting principles (“GAAP”), will be
amortized over the life of the underlying policies, reducing quarterly pre-tax
income from operations by approximately $0.5 million. In addition,
Conseco’s future GAAP income from operations will be reduced by the earnings
from the portion of the block that is coinsured; such pre-tax earnings before
overhead were approximately $2 million in the third quarter of
2009.
About
Conseco
Conseco,
Inc.’s insurance companies help protect working American families and seniors
from financial adversity: Medicare supplement, long-term care, cancer, critical
illness and accident policies protect people against major unplanned expenses;
annuities and life insurance products help people plan for their financial
futures. For more information, visit Conseco’s website at www.conseco.com.
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Conseco
(2)
January
26, 2010
Cautionary
Statement Regarding Forward-Looking Statements. Our statements, trend analyses and
other information contained in this press release relative to markets for
Conseco’s products and trends in Conseco’s operations or financial results, as
well as other statements, contain forward-looking statements within the meaning
of the federal securities laws and the Private Securities Litigation Reform Act
of 1995. Forward-looking statements typically are identified by the
use of terms such as “anticipate,” “believe,” “plan,” “estimate,” “expect,”
“project,” “intend,” “may,” “will,” “would,” “contemplate,” “possible,”
“attempt,” “seek,” “should,” “could,” “goal,” “target,” “on track,” “comfortable
with,” “optimistic” and similar words, although some forward-looking statements
are expressed differently. You should consider statements that contain these
words carefully because they describe our expectations, plans, strategies and
goals and our beliefs concerning future business conditions, our results of
operations, financial position, and our business outlook or they state other
‘‘forward-looking’’ information based on currently available information.
Assumptions and other important factors that could cause our actual results to
differ materially from those anticipated in our forward-looking statements
include, among other things: (i) our ability to continue to satisfy the
financial ratio and balance requirements and other covenants of our debt
agreements; (ii) general economic, market and political conditions, including
the performance and fluctuations of the financial markets which may affect our
ability to raise capital or refinance existing indebtedness and the cost of
doing so; (iii) our ability to generate sufficient liquidity to meet our debt
service obligations and other cash needs; (iv) our ability to obtain adequate
and timely rate increases on our supplemental health products, including our
long-term care business; (v) the receipt of any required regulatory approvals
for dividend and surplus debenture interest payments from our insurance
subsidiaries; (vi) mortality, morbidity, the increased cost and usage of health
care services, persistency, the adequacy of our previous reserve estimates and
other factors which may affect the profitability of our insurance products;
(vii) changes in our assumptions related to the cost of policies produced or the
value of policies in force at the effective date; (viii) the recoverability of
our deferred tax assets and the effect of potential ownership changes and tax
rate changes on its value; (ix) our assumption that the positions we take on our
tax return filings, including our position that our 7.0% convertible senior
debentures due 2016 will not be treated as stock for purposes of Section 382 of
the Internal Revenue Code of 1986, as amended, and will not trigger an ownership
change, will not be successfully challenged by the Internal Revenue Service; (x)
changes in accounting principles and the interpretation thereof; (xi) our
ability to achieve anticipated expense reductions and levels of operational
efficiencies including improvements in claims adjudication and continued
automation and rationalization of operating systems, (xii) performance and
valuation of our investments, including the impact of realized losses (including
other-than-temporary impairment charges); (xiii) our ability to identify
products and markets in which we can compete effectively against
competitors with greater market share, higher ratings, greater financial
resources and stronger brand recognition; (xiv) the ultimate outcome of lawsuits
filed against us and other legal and regulatory proceedings to which we are
subject; (xv) our ability to complete the remediation of the material
weakness in internal controls over our actuarial reporting process and to
maintain effective controls over financial reporting; (xvi) our ability to
continue to recruit and retain productive agents and distribution partners and
customer response to new products, distribution channels and marketing
initiatives; (xvii) our ability to achieve eventual upgrades of
the financial strength ratings of Conseco and our insurance company
subsidiaries as well as the impact of rating downgrades on our business and our
ability to access capital; (xviii) the risk factors or uncertainties listed from
time to time in our filings with the Securities and Exchange Commission; (xix)
regulatory changes or actions, including those relating to regulation of the
financial affairs of our insurance companies, such as the payment of dividends
and surplus debenture interest to us, 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; and (xx) changes in the Federal
income tax laws and regulations which may affect or eliminate the relative tax
advantages of some of our products. Other factors and assumptions not
identified above are also relevant to the forward-looking statements, and if
they prove incorrect, could also cause actual results to differ materially from
those projected. All forward-looking statements are expressly qualified in their
entirety by the foregoing cautionary statements. Our forward-looking
statements speak only as of the date made. We assume no obligation to
update or to publicly announce the results of any revisions to any of the
forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements.
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