A.M. Best Co. has downgraded the financial strength ratings of 14 life and health insurance subsidiaries of Conseco Inc., based in Carmel, Ind., to B++ from A-. The financial strength ratings of Frontier National Life Insurance Co. and Continental Life Insurance Co. were unaffected by the downgrades. All ratings will remain under review, but implications have been changed to “developing” from “negative.”
The change is due to the lack of a definitive agreement regarding the sale of Conseco Finance Corp. (formerly Green Tree Financial Corp.) On March 31, 2000 Conseco Inc. announced its intention to divest its consumer finance subsidiary and focus on its core insurance and asset accumulation businesses.
The April 1998 acquisition of Conseco Finance Corp. was intended to have advanced Conseco Inc.’s strategy to serve the insurance, savings and finance needs of its primary customers – middle income individuals in the United States.
David V. Harkins, chairman and CEO of Conseco, was disappointed by the rating company’s action. “Regrettably, in our view, it was triggered more by timing issues relating to the sale of our finance unit than by any fundamental change at Conseco,” Harkins said.
“We agree with A.M. Best that the sale of our finance unit and the strengthening of our capital structure are very important. They have been my top priorities ever since I became chairman on April 28. We continue to be optimistic that we will reach a definitive agreement on an acceptable sale during the third quarter.”
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