A.M. Best Downgrades 14 Life and Health Units of Conseco Inc.

Business Editors & Insurance Writers

OLDWICK, N.J.--(BUSINESS WIRE)--June 15, 2000

A.M. Best Co. has downgraded the financial strength ratings of 14 life and health insurance subsidiaries of Conseco Inc., Carmel, Ind., to B++ (Very Good) from A- (Excellent). The financial strength ratings of Frontier National Life Insurance Co. (B++) and Continental Life Insurance Co. (B+--Very Good) are unaffected. 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.

The ratings reflect A.M. Best's concerns regarding Conseco Inc.'s current overall financial flexibility as well as the uncertainties associated with the potential impact of the organization's recent problems on the future operating performance of its insurance subsidiaries. A.M. Best expected Conseco Inc. to have reached a definitive agreement for the sale of Conseco Finance by this time. A.M. Best believes the level of uncertainty surrounding Conseco Inc.'s ability to fund its outstanding commitments increases as the Conseco Finance sales process becomes protracted. In its decision to reduce the ratings of the Conseco Inc. insurance subsidiaries to A- (Excellent) on April 28, 2000, A.M. Best stated that the ratings would be lowered further if there were "...adverse developments in the timing or amount of proceeds from the sale of Conseco Finance."

The ratings also reflect the insurance subsidiaries' weaker than expected performance through the first quarter of 2000 due to unfavorable trends in health insurance margins. In addition, A.M. Best believes that events outside of the organization's control pose additional risks. The existence of numerous shareholder lawsuits, combined with the uncertainty of the realizable values of the significant levels of intangible assets on Conseco Inc.'s balance sheet, could adversely impact the future financial condition.

The maintenance of the "Secure" financial strength ratings of Conseco's insurance subsidiaries anticipates that the sale of the finance unit will be announced in the next several weeks. In addition, A.M. Best believes that Conseco is taking appropriate steps to ensure that it will have more than sufficient liquidity to support its outstanding obligations and scheduled debt maturities well into 2001.

A.M. Best will continue to closely monitor the status of Conseco Inc.'s efforts to stabilize its current financial condition, to improve the operational performance of its insurance operations and to minimize the potential disruption from recent events of its ongoing activities. Evidence of progress in these areas will be viewed positively and will likely be reflected in future rating movements.

The 14 life and health subsidiaries of Conseco Inc. affected by this action are:

-- Conseco Annuity Assurance Co.;

-- Conseco Direct Life Insurance Co.;

-- Conseco Variable Insurance Co.;

-- Conseco Medical Insurance Co.;

-- Conseco Life Insurance Co.;

-- Conseco Senior Health Insurance Co.;

-- Conseco Health Insurance Co.;

-- Conseco Life Insurance Company of New York;

-- Bankers Life & Casualty Co.;

-- Manhattan National Life Insurance Co.;

-- Pioneer Life Insurance Co.;

-- United Presidential Life Insurance Co.;

-- Vulcan Life Insurance Co.;

-- Washington National Insurance Co.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.