A.M. Best Downgrades Ratings of Conseco; Revises Outlook to Negative.OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) to B+ (Good) from B++ (Good) and the issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) to "bbb-"from "bbb+" of Conseco, Inc.'s (Conseco) (Carmel, IN) (NYSE NYSE See: New York Stock Exchange :CNO CNO abbr. chief of naval operations ) core insurance subsidiaries. Concurrently, A.M. Best has downgraded the ICR and the senior debt rating to "bb-" from "bb+" of Conseco. Additionally, A.M. Best has downgraded the FSR to C++ (Marginal) from B- (Fair) and the ICR to "b" from "bb-" of Conseco Senior Health Insurance Company (CSH csh - C shell ) (Pennsylvania). The outlook for all ratings has been revised to negative from stable. (See below for a detailed listing of the companies and ratings.) CSH houses the majority of Conseco's run-off long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. (LTC LTC abbr. lieutenant colonel ) block and continues to exhibit volatile operating results, exemplified by the second quarter 2007 claim reserve strengthening of $110 million. This was Conseco's second significant run-off LTC claim reserve strengthening in six months, following the fourth quarter 2006 charge of $54 million. CSH's ratings recognize that it is capitalized at regulatory minimums, incorporating substantial capital infusions from Conseco over the last two years. The rating actions reflect the impact of these charges, which exceeded A.M. Best's expectations, on the overall financial strength of the organization. A.M. Best remains cautious regarding the future performance of the run-off LTC block given the significance of the most recent reserve strengthening. In addition, the recent reoccurrence of "one-time" charges related to cost of insurance litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , data refinements, valuation error corrections and back office consolidation/reorganization has diminished A.M. Best's confidence with respect to Conseco's ability to generate consistent, sustainable earnings in the near to medium term. These factors, coupled with unfavorable operating trends at Conseco Insurance Group, reduced holding company flexibility and elevated regulatory risk erode Conseco's overall business profile, a key contributor to a company's long-term financial strength. The FSR has been downgraded to B+ (Good) from B++ (Good) and ICRs to "bbb-" from "bbb+" for the following core insurance subsidiaries of Conseco, Inc.: * Bankers Life and Casualty Bankers Life and Casualty is primarily a health insurance company in the United States. It was founded in 1879 and was previously known as White Cross. It was formerly owned by millionaire investor John D. 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 "bb-" from "bb+" on $300 million 3.5% senior unsecured convertible debentures, due 2035 Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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