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A.M. Best Downgrades Ratings of Conseco Inc. and Its Subsidiaries; Places Ratings Under Review With Negative Implications


Posted on 05 Mar 2009

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OLDWICK, N.J. March 04 (BestWire) — A.M. Best Co. has downgraded financial strength rating (FSR) to B (Fair) from B+ (Good) and issuer credit ratings (ICR) to “bb” from “bbb-” for the key life/health subsidiaries of Conseco, Inc. (Conseco) (Carmel, IN) [NYSE: CNO]. Concurrently, A.M. Best has downgraded the ICR to “b-” from “b+” and all debt ratings of Conseco. All ratings have been placed under review with negative implications. (See below for detailed listing of the companies and ratings.)

The downgrades and under review status are largely based on Conseco’s announcement on March 2, 2009 that it plans to delay the filing of its Annual Report on Form 10-K until on or before March 17, 2009. Conseco said it needs additional time to finalize the analysis and disclosure related to its investment portfolio in light of unprecedented market conditions. Additionally, Conseco was informed by its independent auditors that the potential exists for their audit opinion to include an explanatory paragraph regarding Conseco’s ability to continue as a going concern.

The ratings will remain under review pending A.M. Best’s evaluation of additional information and analysis regarding Conseco’s liquidity and debt covenant margins, primarily those that could be impacted by a significant amount of additional realized losses in the company’s investment portfolio.

The FSR has been downgraded to B (Fair) from B+ (Good) and the ICRs to “bb” from “bbb-” for the following key life/health subsidiaries of Conseco, Inc.:

— Bankers Life and Casualty Company

— Colonial Penn Life Insurance Company

— Conseco Health Insurance Company

— Conseco Insurance Company

— Bankers Conseco Life Insurance Company

— Conseco Life Insurance Company

— Washington National Insurance Company

The following debt rating has been downgraded:

Conseco, Inc.—

— to “b-” from “b+” on $300 million 3.5% senior unsecured convertible debentures, due

2035 ($293 million in debentures outstanding)

The ICR has been downgraded to “b-” from “b+” for Conseco, Inc.

For Best’s Debt Ratings, all other Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.


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