S&P removes Conseco, units from watch

Standard & Poor's said it has removed from CreditWatch its counterparty credit rating on Conseco Inc. and raised it to B- from CCC+.

S&P also said it has removed from CreditWatch its counterparty credit and financial strength ratings on Bankers Life & Casualty Co., Colonial Penn Life Insurance Co., Conseco Annuity Assurance Co., Conseco Health Insurance Co., Conseco Life Insurance Co., and Conseco Life Insurance Co. of NY and raised them to BB- from B+.

The outlook is stable.

"The upgrades primarily stem from Conseco's receipt of $1.4 billion from the sale of the GM Building," explained S&P credit analyst Jon Reichert. "This resulted in an increase in operating capital of about $420 million and an accompanying increase in the consolidated insurance group's NAIC risk-based capital ratio to more than 250% from 166% at year-end 2002."

The ratings primarily reflect Conseco's current capital structure and what S&P projects to be a statutory fixed-charge coverage run rate of about 1.3x in 2004.

"Standard & Poor's continues to view Conseco as a somewhat fragile enterprise, not yet fully in control of its own destiny," Reichert added.

The company remains under regulatory monitoring regarding the level of monies that can be distributed as dividends to the holding company from the insurance operations. Although S&P said it believes that management's sole focus on running Conseco's insurance operations effectively should help bring stability to the enterprise, further upgrades will be contingent upon management establishing a track record of successfully executing its plans for generating profitable, organic sales growth.

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