Conseco Advisory.

Business Editors

INDIANAPOLIS--(BUSINESS WIRE)--Jan. 26, 2001

Several months ago, we announced our intention to retire $500 million of trust preferred securities following the settlement of the related $500 million of Income PRIDES(SM) in accordance with their terms.

The process for this transaction has now begun and is scheduled to be completed by early March. This advisory is intended to outline the expected process over the next five weeks.

The first step occurred this week when Conseco officially notified Merrill Lynch that it is exercising its right to cap the "reset rate" at 200 basis points over the benchmark rate -- 2 year treasury notes -- for the trust preferred securities that are a part of the Income PRIDES.

Under the requirements of the related stock purchase contract, Merrill Lynch will establish a new coupon rate for the trust preferred securities, subject to the cap, and will attempt to remarket the securities at par. Conseco believes that there will be no market for these securities.

At that point, Conseco would exercise its right to retain the trust preferred securities in full satisfaction of the Income PRIDES holders' obligations to purchase common stock under the related stock purchase contract. Conseco then intends to retire all the trust preferred securities. This anticipated result is in keeping with the company's stated intent to improve its leverage ratio.

Holders of the security will have been notified about their options for meeting the stock purchase obligation under the purchase contract. We anticipate that holders will do nothing, in effect allowing us to retain their trust preferred securities in exchange for Conseco common stock at the pre-established rate of $50 per 1.1268 shares (an effective price of $44.37 per common share). To reiterate, no action by holders will be necessary to allow this exchange. However, a holder could elect to meet the purchase obligation by paying cash for the Conseco common stock at the pre-established price, and retaining the trust preferred securities earning the below-market capped rate.

As articulated previously over the past several months, we expect that the net effect of this transaction on Conseco's balance sheet will be to exchange $500 million of trust preferred securities for $500 million of additional common equity. In addition to this improvement -- adding $1.05 per common share to Conseco's book value -- the retirement of the trust preferred securities will result in interest expense savings of $35 million per year.

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Note on forward-looking statements: All statements, trend analyses and other information contained in this release and elsewhere (such as in filings by Conseco with the Securities and Exchange Commission, press releases, presentations by Conseco or its management or oral statements) relative to markets for Conseco's products and trends in Conseco's operations or financial results, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic" and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, among other things: (1) general economic conditions and other factors, including prevailing interest rate levels, stock and credit market performance and health care inflation, which may affect (among other things) Conseco's ability to sell its products, its ability to make loans and access capital resources and the costs associated therewith, the market value of Conseco's investments, the lapse rate and profitability of policies, and the level of defaults and prepayments of loans made by Conseco; (2) Conseco's ability to achieve anticipated synergies and levels of operational efficiencies; (3) customer response to new products, distribution channels and marketing initiatives; (4) mortality, morbidity, usage of health care services and other factors which may affect the profitability of Conseco's insurance products; (5) performance of our investments; (6) changes in the Federal income tax laws and regulations which may affect the relative tax advantages of some of Conseco's products; (7) increasing competition in the sale of insurance and annuities and in the finance business; (8) regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; (9) the outcome of Conseco's efforts to sell assets and reduce, refinance or modify indebtedness and the availability and cost of capital in connection with this process; (10) actions by rating agencies and the effects of past or future actions by these agencies on Conseco's business; and (11) the risk factors or uncertainties listed from time to time in Conseco's filings with the Securities and Exchange Commission.