Following the resignation of two key Conseco executives on Friday, A.M. Best has lowered the financial strength ratings for the company’s leading life and health subsidiaries to A-minus from A. The ratings will remain under review with negative implications.
A.M. Best will meet with the company’s interim management team to confirm the stability of its short-term funding sources and discuss the timing and likelihood of the sale of the finance operations.
Conseco also announced that its first quarter 2000 earnings were less than half of the anticipated results, a reflection of unfavorable underwriting performance in its life and accident and health operations, as well as increased amortization and operating expenses.
The ratings will remain under review pending completion of the sale of Conseco Financial Corp.formerly Green Tree Financial Corp.and A.M. Best’s assessment of the financial impact of the transaction and review of the underlying operating fundamentals of Conseco’s ongoing insurance operations.
In connection with this review, A.M. Best will consider the uncertainty surrounding the future strategic direction of the company under a new senior management team and the organization’s ability to minimize potential disruption to its remaining operating companies.
The revised ratings reflect A.M. Best’s view that the recent chain of events involving Conseco, together with its deteriorated operating performance in its insurance segments, has significantly reduced the organization’s overall financial flexibility.
It believes that Conseco maintains adequate liquidity to satisfy its scheduled debt-service requirements and to support the needs of its insurance and finance units through its anticipated sale of Conseco Financial. It is noted by A.M. Best, however, that there is potential for events outside the company’s control to interfere with the closing of the transaction.
Topics AM Best
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