A.M. Best Takes Various Rating Actions on Conseco Insurance Companies.OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength ratings of Conseco, Inc.'s (CNO CNO abbr. chief of naval operations ) (Carmel, IN) (NYSE NYSE See: New York Stock Exchange : CNO) core insurance subsidiaries to B++ (Very Good) from B (Fair). In addition, A.M. Best has affirmed the financial strength rating of B (Fair) of Conseco Senior Health Insurance Company (CSH csh - C shell ) and has upgraded the financial strength rating of Conseco Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , a subsidiary of CSH, to B+ (Very Good) from B (Fair). Concurrently, A.M. Best has assigned an issuer crediting rating of "bb" to CNO and a rating of "b+" on CNO's mandatory convertible Mandatory Convertible A type of convertible bond that has a required conversion or redemption feature. Either on or before a contractual conversion date, the holder must convert the mandatory convertible into the underlying common stock. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . The outlook on all ratings is stable. These rating actions reflect CNO's substantial recapitalization of its balance sheet, significantly improved absolute and risk-adjusted capital on a statutory basis and improving operating fundamentals. A.M. Best views favorably CNO's capital refinancing, the final phase in its two-year bankruptcy and restructuring plan, which has effectively delevered its GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). balance sheet, improved interest coverage and substantially reduced capital financing costs, all of which should contribute to improving operating fundamentals on a future basis. A.M. Best notes that CNO's balance sheet continues to have a high amount of intangible assets relative to its equity base; however, intangibles are expected to decrease over time through the realization of deferred tax assets currently fully reserved on the GAAP balance sheet. A.M. Best also notes the organization's significantly improved statutory capital on both a risk-adjusted and absolute basis, reflecting capital appreciation, reduced risk in CNO's investment portfolios, which have been effectively restructured over the last two years, and an overall improvement in the quality of statutory capital, which is less dependent upon surplus notes. The rating actions also recognize the recent regulatory order from the state of Florida, which will provide some measure of relief to the organization related to CSH's challenged Florida home health care business. A.M. Best notes that the recent regulatory order, coupled with refinement of claims adjudication The legal process of resolving a dispute. The formal giving or pronouncing of a judgment or decree in a court proceeding; also the judgment or decision given. The entry of a decree by a court in respect to the parties in a case. practices, will improve results within CSH's Florida home health care business, although the amount of any financial benefit is not determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. at the present time. A.M. Best believes that CNO will face ongoing challenges in rebuilding its independent distribution platform within its Conseco Insurance Group (CIG CIG Ceiling (height above ground level to base of clouds) CIG Conference Intergouvernementale (French: Intergovermental Conference) CIG Conservation Innovation Grants (USDA NRCS) ) segment, revitalizing and diversifying its revenue base, integrating its technology platforms and system infrastructure and refreshing its product manufacturing capabilities going forward, while effectively managing its strained Florida home health care operation. However, A.M. Best believes that CNO's core businesses (life, annuity, medical supplement and non Florida long-term care) are profitable and recognizes early gains related to management initiatives to improve its administrative infrastructure. A.M. Best expects that CNO will continue to make strides toward re-establishing its core insurance franchise--supported by the renewed strength of the organization's balance sheet, the resilience of its core insurance businesses and the depth of its management team. The financial strength rating has been upgraded to B++ (Very Good) from B (Fair) for the following insurance subsidiaries of Conseco, Inc.: --Bankers Life and Casualty Company --Conseco Insurance Company --Conseco Life Insurance Company --Conseco Health Insurance Company --Washington National Insurance Company --Colonial Penn Insurance Company An issuer credit rating of "bb" has been assigned to Conseco, Inc. A rating of "b+" has been assigned to the following: Conseco Inc-- --$690 million 5.5% convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". , due 2007. For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debtratings/. 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. |
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