A.M. Best Upgrades Conseco Inc.'s Principal Life Insurance Subsidiaries.

Business & Insurance Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 7, 2000

A.M. Best Co. has upgraded the financial strength ratings of Conseco Inc.'s principal life insurance subsidiaries to A- (Excellent) from B++ (Very Good) and removed the companies from under review.

The rating action reflects the continuing improvement in the liquidity profile of the parent holding company as well as further review of the valuation of assets and the level of ongoing operating earnings of its primary businesses necessary to provide adequate cash sources for the successful completion of its restoration program. While Conseco has demonstrated a strong ability to fund its obligations during the reconstruction period, A.M. Best is also satisfied that Conseco can secure bridge commitments, if necessary, to further insulate it from the possible affects of either asset valuation shortfalls or the timing of asset sales required to meet its outstanding repayment obligations through 2001. It is also A.M. Best's expectation that any potential shortfalls will not exceed $150 million, and , if needed, such commitments will be executed before the close of the first quarter, 2001.

On September 25, A.M. Best placed a positive outlook on the ratings following Conseco's successful renegotiation of the term structure of its bank debt. Under terms of the refinancing, Conseco paid down $650 million of its bank loans and extended its remaining September, 2000 bank maturities to December 31, 2001. The positive outlook also recognized initiatives underway to reposition the companies finance unit's operations to alleviate capital strain on the organization and steps taken by Conseco to improve underlying earnings performance and cash flow generation capabilities of its insurance subsidiaries. In addition, the positive outlook was supported by review of a study, requested by A.M. Best and completed by an independent third party actuarial firm, on the recoverability of intangible assets--cost of policies produced, cost of policies purchased and goodwill--on Conseco's balance sheet.

Conseco Inc.'s liquidity position has improved dramatically over the past several months as a result of the sale of several non-strategic businesses within its finance unit and actions taken to both downsize the scale and improve the efficiency of the finance unit's remaining businesses. A.M. Best believes this substantially reduced growth in managed receivables, mid-single digit growth versus 27% in 1999, will allow the company to better select credit quality. A.M. Best expects these actions, combined with expense reductions of approximately $150 million, will allow the finance unit to become cash flow positive to the parent company in 2001 and be sustained throughout its restoration process.

While the company's asset sales to date have been completed at or above anticipated pricing levels, A.M. Best believes some of the remaining assets to be sold as part of the company's capital restructuring program are subject to valuation volatility, particularly its investment in Tritel, Inc. However, A.M. Best believes the company has conservatively estimated the total value of these investments relative to its cash needs and also notes that the company has various alternative options available to it in raising cash. In addition, the company maintains other ancillary businesses or assets not presently targeted in its restructuring program that further enhances its financial flexibility.

The following insurance subsidiaries of Conseco, Inc. were upgraded to A- (Excellent) from B++ (Very Good) and removed from under review.

-- 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.

-- Frontier National Life Insurance Co.

-- Manhattan National Life Insurance Co.

-- Pioneer Life Insurance Co.

-- United Presidential Life Insurance Co.

-- Vulcan Life 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.