Conseco Discontinues Gain-on-Sale Transactions.

CARMEL, Ind.--(BUSINESS WIRE)--Sept. 8, 1999--

Conseco, Inc. (NYSE:CNC) said today that, effective immediately, it is discontinuing the use of financing transactions that result in gain-on-sale revenues. Conseco will use the portfolio method to account for all future financings that support its lending activities, whether accomplished through modified loan securitizations or other means.

Conseco Chairman Stephen C. Hilbert said the change reflects the company's desire to more effectively utilize a broader range of financing methods to support its lending activities, and recognizes the clear preference of investors for the portfolio method. "After extensive analysis (a process we referred to in recent reports), we have decided that this change is the right thing to do in order to maximize the long-term value of our enterprise," Hilbert said. "We believe it will help investors focus on what our business is really all about and what we do best: building and managing profitable assets."

Conseco Executive Vice President and Chief Financial Officer Rollin M. Dick said moving to the portfolio method to account for new loans will have no retroactive effect, and will have no impact on the company's overall cash flow or on the underlying economics of its lending businesses. "Nor will it change our operating and marketing disciplines -- such as our 'best-in-class' credit scoring, origination platforms, customer service and operating efficiency -- that have made our lending group so successful," Dick said.

"The change should neither increase nor decrease the total profit we recognize over the life of each new loan," Dick said, "but it will change the timing of profit recognition. Under the portfolio method, we will recognize earnings over the life of a new loan as it generates interest. As a result, our reported earnings from each new loan under the portfolio method will be lower in the period it is securitized (compared to our historical method) and higher in later periods, as interest is earned on the loan.

"Accordingly, we expect that operating earnings per diluted share for the full year 1999 (including two quarters of results under our historical method and excluding the revenues from securitizations already completed on a gain-on-sale basis this quarter) will be approximately $2.95," Dick said. "In 2000, the first full fiscal year after the change, we expect operating earnings per diluted share of approximately $3.00. Our long-term objective for operating EPS growth remains the same -- to exceed 15 percent annually -- and we believe we will substantially exceed that rate for several years beginning in 2001 as our portfolio assets and related income build rapidly off a relatively small base. We expect cash flow from operations (after tax and interest) to be approximately $1.5 billion, or $4.50 per share, in 1999, and to increase by approximately 15 percent in 2000.

"We believe that this change will simplify the tasks of analyzing and projecting Conseco's lending results, and comparing them to the results of other industry leaders who principally use the portfolio method," Dick said. "This is an important step toward improved investor confidence in Conseco's future earnings quality and visibility. In addition, portfolio accounting is the method preferred by the credit rating agencies.

"We plan to use the asset-backed securities market as our primary funding source," Dick said, "while we expand the use of alternative funding sources, such as short- and long-term corporate debt, certificates of deposit issued by Conseco Bank, Inc., and other funding mechanisms. This should allow us to improve our financial flexibility while retaining the excellent risk management benefits afforded by our market-leading securitization programs. This improved flexibility should also be viewed positively by the rating agencies."

Conseco's lending subsidiary, with $42 billion of managed finance receivables as of June 30, 1999, is one of the nation's largest consumer finance organizations. It was a pioneer in creating this innovative financing market more than a decade ago and remains a leader, with $38 billion of asset-backed securities outstanding at June 30, 1999.

Conseco also announced today that it has adopted a new program under which executive officers and directors are authorized to purchase 4 to 6 million shares of Conseco common stock in the open market, under terms substantially similar to three previous purchase programs.

Headquartered in Carmel, Ind., Conseco is one of middle America's leading sources for insurance, investment and lending products. Through its subsidiaries and a nationwide network of insurance agents and finance dealers, Conseco provides solutions for both wealth protection and wealth creation to 12 million customers.

An analyst briefing relating to this press release will be available beginning at 5:00 p.m. New York time today at Conseco's Web site (click "CNC Shareholders/Analyst Presentation"), and from the company's Fax-on-Demand service (document No. 9502).

World Wide Web http://www.conseco.com Investor Hotline 800.4.CONSECO Fax-on-Demand 800.344.6452

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," 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) changes in the Federal income tax laws and regulations which may affect the relative tax advantages of some of Conseco's products; (6) increasing competition in the sale of insurance and annuities and in the finance business; (7) 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; (8) the ability of Conseco and its vendors and other external parties to achieve Year 2000 readiness for significant systems and operations on a timely basis; (9) the availability and terms of future acquisitions; and (10) the risk factors or uncertainties listed from time to time in Conseco's filings with the Securities and Exchange Commission.