Conseco Reports Record First Quarter Operating EPS.CARMEL Car·mel also Car·mel-by-the-Sea A city of western California on Carmel Bay at the southern end of the Monterey Peninsula. It is an artists' and writers' colony and a popular tourist spot. Population: 4,130. , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. .--(BUSINESS WIRE)--April 23, 1996--Conseco, Inc. today reported record first quarter 1996 operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of 82 cents, up 74 percent over 47 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. in the first quarter of 1995. (Note to editors: As used throughout this release, "operating earnings" exclude trading income (losses), realized investment gains (losses), restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). income and extraordinary charges. "Operating earnings per fully diluted share" is the figure security analysts reference in their published earnings estimates. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. First Call, the consensus analyst estimate for Conseco's 1Q96 operating earnings per fully diluted share was 82 cents. All share and per-share data in this release have been adjusted to reflect the two-for-one stock split distributed April 1, 1996.) Conseco Conseco (NYSE: CNO), originally Security Life of Indiana, is a financial services organization based in Carmel, Indiana. Conseco's insurance subsidiaries provide life insurance, annuity and supplemental health insurance products to more than 4 million customers in the Chairman Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and C. Hilbert Noun 1. Hilbert - German mathematician (1862-1943) David Hilbert said the company delivered both strong earnings and shareholder value in the first quarter. "Operating results put us on track to equal or exceed analyst estimates of $3.50-$3.65 of operating earnings per share in 1996, up more than 40 percent over 1995. Conseco stock in the first quarter generated a total return to investors (price appreciation plus reinvested dividends) of 15.6 percent, compared to 5.4 percent for the Standard & Poor's 500 and 4.2 percent for our peer group, the Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance Life Insurance Index. "Our pending merger with Life Partners Group, Inc. (NYSE NYSE See: New York Stock Exchange :LPG LPG: see liquefied petroleum gas. 1. LPG - Linguaggio Procedure Grafiche (Italian for "Graphical Procedures Language"). dott. Gabriele Selmi. Roughly a cross between Fortran and APL, with graphical-oriented extensions and several peculiarities. ), which we expect to complete by mid-year, will be additive additive In foods, any of various chemical substances added to produce desirable effects. Additives include such substances as artificial or natural colourings and flavourings; stabilizers, emulsifiers, and thickeners; preservatives and humectants (moisture-retainers); and to Conseco's earnings per share and will create a company with unexcelled product diversity and distribution strength," Hilbert said. "The combined organization will have stronger profitability, more diversified diversified (di·verˑ·s operations and greater financial flexibility than either company now enjoys. These benefits, we believe, will translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. over time into higher debt ratings for Conseco and higher claims-paying ratings for the life insurance operating companies operating company A business that engages in transactions with outsiders. . (Since the merger agreement was announced, Standard & Poor's and Duff & Phelps Phelps may refer to: In places in the US:
"Other highlights so far in 1996," Hilbert said, "include: (1) our January January: see month. offering of Preferred Redeemable Redeemable Eligible for redemption under the terms of an indenture. Increased Dividend Equity Securities (PRIDES) -- we used most of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to reduce bank debt, lowering our debt-to-capital ratio to .34-to-1; (2) our April 1 stock split -- Conseco's third two-for-one split within five years; and (3) our listing for the first time in the Fortune 500, Fortune magazine's ranking of the 500 largest U.S. corporations. We were especially pleased to note that, among all Fortune 500 companies, Conseco posted the second-highest 10-year total return to investors and the sixth-greatest 10-year growth in earnings per share. Among the 20 life/health insurance companies on the Fortune list, Conseco ranked first in both categories. "I feel that Conseco's earnings prospects, and therefore its appeal as an investment opportunity, are today as bright as ever," Hilbert said. "Conseco offers the following: (1) strong operating earnings growth; (2) a balanced product mix with diversified distribution channels; (3) a growing fee-revenue base; (4) a leading position as a consolidator in an industry ripe for consolidation; (5) significant management ownership to guarantee alignment Alignment is the adjustment of an object in relation with other objects, or a static orientation of some object or set of objects in relation to others.
"As more regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. barriers fall in the coming years," Hilbert said, "today's distinctions between life insurers and other types of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. companies will become obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. . Only those companies with strong distribution systems and diversified products can hope to compete. The Firemark Insurance Review (January 1996) stated that tomorrow's winners in the insurance business will have `a strong financial position, superior operating and financial management, value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: products and services, disciplined expense management, and a commitment to maximizing owners' wealth.' I believe that Conseco is just such a company." Business results Conseco conducts three business activities. Results from the first two -- (1) life insurance operations, including senior market, annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. , other life insurance and partnership activities; and (2) fee-based operations -- are included in operating earnings. Such operating earnings increased in 1996 compared to 1995 primarily as a result of: (1) Conseco's increased ownership of BLH BLH Baldwin-Lima-Hamilton (locomotive manufacturer) BLH Bellingham, Washington (border patrol station) BLH Bidirectional Long Haul , the former CCP (Certified Computer Professional) The award for successful completion of a comprehensive examination on computers offered by the ICCP. See ICCP and certification. . 1. (language) CCP - Concurrent Constraint Programming. 2. companies and American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Life Holdings, Inc.; and (2) increased business in force; offset by (3) greater interest expense on debt incurred to finance the increased ownership interests. Results from the third activity, restructuring, are excluded from operating earnings. In the first quarter of 1996, Conseco recognized restructuring income of $17.7 million, or 30 cents per fully diluted share, as the result of the sale of Conseco's investment in Noble Broadcast Group, Inc. Such income represents an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta return of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 230 percent. There was no income or loss from restructuring activities in the first quarter of 1995. All activities are described in detail in the supplement attached at the end of this release. Additional discussion Invested assets. At March 31, 1996, Conseco's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: $14 billion investment portfolio consisted primarily of investment-grade investment-grade Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. , publicly traded debt securities. Only 2 percent of investments were mortgages, only 5 percent were high-yield bonds High-yield bond See: Junk bond high-yield bond See junk bond. , and there were no significant nonperforming investments. Net income. First quarter 1996 net income of $46.3 million, or 78 cents per fully diluted share, also included: (1) trading losses The following contains a list of trading losses which eventually forced major corporations to go bankrupt or restructure parts of their organisation. This list is not exhaustive. of $2.2 million, or 4 cents per share; (2) net realized investment losses of $0.2 million, or nil per share; (3) the previously described restructuring income of $17.7 million, or 30 cents per share; and (4) an extraordinary charge of $17.4 million, or 30 cents per share, resulting from the early retirement of debt. First quarter 1995 net income of $24.4 million, or 45 cents per fully diluted share, included: (1) trading income of $0.7 million, or 1 cent per share; and (2) net realized investment losses of $1.5 million, or 3 cents per share. Shares outstanding. Weighted average fully diluted shares outstanding for the first quarter of 1996 increased by 35 percent over the prior year, primarily because: (1) the dilutive impact of Conseco's Series D 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". was excluded from the calculation of first quarter 1995 fully diluted shares outstanding (such inclusion would have resulted in higher earnings per share on a fully diluted basis than on a primary basis, so the primary calculation was required to be used); and (2) the January 1996 offering of PRIDES, which are mandatorily Adv. 1. mandatorily - in a manner that cannot be evaded; "the ministry considers that contributions to such a fund should be met from voluntary donations rather than from rates compulsorily levied." compulsorily, obligatorily convertible into shares of Conseco common stock. Conseco, headquartered in Carmel, Ind., is a financial services holding company. For more information Investor Hotline 1. (company) Hotline - Hotline Communications Ltd.. 2. (messaging) Hotline - Hotline Connect. - Call (800) 4-CONSECO (in Indianapolis Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. : 817-6777) to receive annual reports, 10-Ks, 10-Qs and other lengthy documents by mail, to be placed on our permanent mailing list An automated e-mail system on the Internet, which is maintained by subject matter. There are thousands of such lists that reach millions of individuals and businesses. New users generally subscribe by sending an e-mail with the word "subscribe" in it and subsequently receive all new , to hear prerecorded pre·re·cord tr.v. pre·re·cord·ed, pre·re·cord·ing, pre·re·cords To record (a television program, for example) at an earlier time for later presentation or use. Adj. 1. messages on a number of topics, including daily stock trading, news releases and financial results, or to speak with an investor relations Investor relations The process by which the corporation communicates with its investors. representative. Fax-on-Demand - Call (800) 344-6452 for a menu of Conseco news releases and other investor publications (including our investor guide, which contains additional statistical data) you can receive free via Fax. World Wide Web - Visit Conseco's site on the Internet's World Wide Web -- http://www.conseco.com -- to view corporate news and financial data (including the company's SEC filings), information about Conseco's people, products and services, and facts about Conseco employment opportunities and benefits. E-Mail - Contact us at ir@conseco.com to ask questions or request materials. -0-
Conseco, Inc. (NYSE: CNC)
Financial Highlights
Quarter Ended March 31:
1996 1995 (1)
In millions:
Operating earnings (2) $48.4 $25.2
Trading income (losses),
net of related costs and taxes (2.2) 0.7
Realized losses, net of related
costs, amortization and taxes (0.2) (1.5)
Restructuring income 17.7 0.0
Extraordinary charge, net of tax (17.4) 0.0
Net income $46.3 $24.4
Per common share-primary: Weighted average shares (in millions) 49.7 43.7 Operating earnings (2) $0.88 $0.47 Trading income (losses), net of related costs and taxes (0.04) 0.01 Realized losses, net of related costs, amortization and taxes 0.00 (0.03) Restructuring income 0.35 0.00 Extraordinary charge, net of tax (0.35) 0.00 Net income $0.84 $0.45 Per common share-fully diluted: Weighted average shares (in millions) 59.1 43.7 Operating earnings (2) $0.82 $0.47 Trading income (losses), net of related costs and taxes (0.04) 0.01 Realized losses, net of related costs, amortization and taxes 0.00 (0.03) Restructuring income 0.30 0.00 Extraordinary charge, net of tax (0.30) 0.00 Net income $0.78 $0.45 Excluding SFAS 115 (3) : Return on common equity 21% 14% Assets (in millions) $17,210.1 $16,976.5 Shareholders' equity (in millions) $1,291.2 $814.2 Book value per common share $17.90 $13.14 (1) 1Q95 primary shares and EPS are identical to the fully diluted figures because the assumed conversion of convertible preferred stock would have been antidilutive in that period. (2) Excludes trading income (losses), realized investment gains (losses), restructuring income and extraordinary charge. (3) The amounts disclosed below are before adjustments to record actively managed fixed maturity investments at fair value.
Conseco, Inc.
Consolidated Balance Sheet (in millions)
At March 31, At Dec. 31,
1996 1995
(Unaudited) (Audited)
Assets Investments:
Actively managed fixed maturities
at fair value $12,623.7 $12,963.3
Equity securities at fair value 32.3 36.6
Mortgage loans 325.3 339.9
Credit-tenant loans 284.0 259.1
Policy loans 306.3 307.6
Other invested assets 97.2 91.2
Trading account securities at
fair value 0.6 0.0
Short-term investments 105.8 189.9
Assets held in separate accounts 242.8 227.0
Total investments 14,018.0 14,414.6
Accrued investment income 226.6 207.8
Cost of policies purchased 1,174.7 1,030.7
Cost of policies produced 481.6 391.0
Reinsurance receivables 93.0 84.8
Income taxes 39.3 0.0
Goodwill, net of accumulated
amortization 913.5 894.1
Property and equipment, net of
accumulated depreciation 86.9 88.7
Securities segregated for future
redemption of preferred stock of a
subsidiary 39.9 39.2
Other assets 156.5 146.6
Total assets $17,230.0 $17,297.5
Liabilities and Shareholders' Equity Liabilities Insurance liabilities $13,502.9 $13,378.4 Income tax liabilities 0.0 93.3 Investment borrowings 285.1 298.1 Other liabilities 381.0 329.6 Liabilities related to separate accounts 242.8 227.0 Notes payable of Conseco 660.7 871.4 Notes payable of Bankers Life Holding Corp., not direct obligations of Conseco 299.9 301.5 Notes payable of Partnership II entities, not direct obligations of Conseco 283.5 283.2 Total liabilities 15,655.9 15,782.5 Minority interest 299.3 403.3
Shareholders' equity
Preferred stock 550.6 283.5
Common stock and additional
paid-in capital 145.4 157.2
Unrealized appreciation (depreciation)
of securities, net:
Fixed maturities (16.4) 112.6
Equity securities (0.5) 0.1
Retained earnings 595.7 558.3
Total shareholders' equity 1,274.8 1,111.7
Total liabilities and shareholders' equity $17,230.0 $17,297.5
Conseco, Inc.
Consolidated Statement of Operations (in millions)
Quarter Ended March 31:
1996 1995
Revenues
Insurance policy income $369.8 $367.6
Investment activity:
Net investment income 273.7 270.8
Net trading income (losses) (3.5) 1.8
Net realized gains 9.4 1.5
Fee revenue 10.1 7.9
Restructuring income 30.4 0.0
Other income 1.9 2.7
Total revenues 691.8 652.3
Benefits and expenses Insurance policy benefits 274.7 275.1 Change in future policy benefits 9.2 3.7 Interest expense on annuities and financial products 139.1 138.2 Interest expense on notes payable 28.4 26.2 Interest expense on short-term investment borrowings 3.7 3.4 Amortization related to operations 44.6 51.4 Amortization related to realized gains 9.1 2.7 Other operating costs and expenses 62.8 65.8 Total benefits and expenses 571.6 566.5 Income before income taxes, minority interest and extraordinary charge 120.2 85.8 Income tax expense 44.9 35.0 Income before minority interest and extraordinary charge 75.3 50.8 Minority interest 11.6 26.4 Income before extraordinary charge 63.7 24.4 Extraordinary charge, net of taxes and minority interest 17.4 0.0 Net income 46.3 24.4 Less preferred stock dividends 8.1 4.6 Earnings applicable to common stock $38.2 $19.8 -0- A supplement to Conseco's news release of April 23, 1996
Conseco, Inc.
Business Profile
Conseco conducts three business activities. Results from the first
two -- life insurance operations and fee-based operations -- are
included in operating earnings. Results in the third, restructuring
activities, are excluded from operating earnings.
Life insurance operations
Senior market operations include the activities of Bankers Life
Holding Corp. (NYSE:BLH), in which Conseco holds a 90.5 percent
equity interest. BLH's principal operating company, Bankers Life and
Casualty, provides Medicare supplement, long-term care, life
insurance, annuities and other health products to America's seniors.
Bankers distributes its products through approximately 200 branch
offices and 3,200 career agents.
Annuity operations include the activities of Great American
Reserve Insurance and Beneficial Standard Life. These companies
market their products through two distribution channels:
(1) approximately 3,000 educator market specialists, who sell
tax-qualified annuities and certain employee benefit-related
insurance products primarily to school teachers and administrators;
and (2) approximately 9,000 professional independent producers, who
sell various annuity and life insurance products aimed principally at
the retirement market.
Other life insurance operations include the activities of Conseco's
other wholly owned life insurance subsidiaries -- Bankers National
Life, National Fidelity Life and Lincoln American Life. These
companies have profitable in-force blocks of annuity and life
products, but do not currently market their products to new
customers.
Partnership operations include: (1) Conseco's share of the profits
of the life insurance companies owned by Conseco's acquisition
partnership (Partnership II); and (2) incentive compensation fees
payable to Conseco if Partnership II generates returns in excess of
prescribed targets. Partnership II acquired American Life Holdings,
Inc. (AGP) in September 1994. AGP's principal operating company,
American Life and Casualty, markets, issues and administers various
annuity and life insurance products aimed principally at the
retirement market through 25,000 professional independent producers.
Conseco terminated Partnership II on March 11, 1996, and intends to
manage Partnership II's investment in AGP to facilitate a
distribution to the limited partners as soon as is practicable.
Conseco Private Capital Group makes direct strategic investments
in growing companies, providing these firms with the capital or
financing they need to continue their growth, make acquisitions or
realize the potential of their businesses.
Fee-based operations
Conseco's subsidiaries provide various services to affiliated and
unaffiliated clients. Conseco Capital Management manages $24 billion
of invested assets. Bankmark provides marketing services to
financial institutions related to the distribution of insurance and
investment products. Conseco Risk Management distributes
property/casualty insurance products as an independent agency.
Conseco Mortgage Capital originates and services mortgages. Other
subsidiaries provide policy administration, data processing, product
marketing and executive management services, as well as financial
services to Partnership II.
CONTACT: Conseco, Inc. Jim Rosensteele, Vice President-Investor Relations (317) 817-2893 / E-Mail: ir@conseco.com |
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