Conseco Reports Record Operating Earnings and EPS for Fourth Quarter and Full Year of 1997 Highlights.

CARMEL, Ind.--(BUSINESS WIRE)--Feb. 25, 1998--

-- Fourth quarter operating earnings jump 95 percent; operating EPS 

46 percent -- 1997 operating earnings rise by 115 percent; operating EPS

42 percent -- Company targets 24 percent operating EPS growth in 1998 -- Consumer advertising program begins tomorrow

Conseco, Inc. (NYSE:CNC) today reported fourth quarter 1997 operating earnings of $167.0 million, or 79 cents per diluted share, increases of 95 percent and 46 percent, respectively, over fourth quarter 1996. Operating earnings for the full year of 1997 were $574.9 million, or $2.74 per share, up 115 percent and 42 percent, respectively, over 1996. All four figures were records.

(Note to editors: As used throughout this release, "operating earnings" exclude investment gains (losses), nonrecurring items and extraordinary charges. "Operating earnings per diluted share" is the figure security analysts reference in their published earnings estimates. According to First Call, the consensus analyst estimate for Conseco's 4Q97 operating earnings per diluted share was 77 cents. All share and per-share data in this release have been adjusted to reflect the two-for-one stock splits distributed April 1, 1996, and Feb. 11, 1997.)

Conseco Chairman Stephen C. Hilbert said, "I congratulate our employee associates and agents for a great job during 1997. I am especially pleased to report that, in addition to exceeding our 40 percent targeted growth in operating earnings per share, we achieved all four of the other key 1997 goals we set for ourselves one year ago:

-- Conseco reduced its annual overhead expenses by approximately $100

million (exceeding its goal of an $80 million

reduction) by consolidating and streamlining its acquired operations.

-- Conseco began the process of integrating the company's extensive

agent force under Conseco Marketing, LLC,

focused on the cross-marketing of products from the Conseco companies.

-- Conseco continued to seek opportunities to supplement its growth

through strategic acquisitions, completing four transactions: Capitol 

American Financial Corp. (March), Pioneer Financial Services, Inc.

(May), the Colonial Penn group (September), and the Washington

National group (December). In the process, we solidified Conseco's

leadership in several key products--long-term care insurance,

agent-produced Medicare supplement insurance, cancer insurance,

heart/stroke insurance, universal life insurance and retirement

annuities--and we expanded our distribution capability by adding one

of the industry's foremost direct marketing organizations.

-- Conseco launched a corporate branding campaign designed to

raise agent and consumer awareness of Conseco. In mid-October, the new

brand and new corporate logo (the Conseco "performance mark") were

introduced to Conseco's employee associates. On October 23, Conseco

started introducing the Conseco brand in nationwide print ads aimed at

current and prospective agents.

"In addition," Hilbert said, "there were a few other significant achievements during the year:

-- Conseco delivered a superior return to shareholders. In 1997,

Conseco stock delivered a total return (stock price appreciation plus

reinvested dividends) of 44 percent, compared to 33 percent for the

Standard & Poor's 500 Index. In 12 years as a public company

(1985-1997), Conseco has delivered a total shareholder return of

10,800 percent, or an average total return of 48 percent per year over

the period. $10,000 invested in Conseco's initial public offering

(November 1985) had grown to $1.1 million by yearend 1997.

-- Conseco strengthened its balance sheet. By redeeming subsidiary

debt and preferred stock, issuing Capital Securities and FELINE 

PRIDESSM (units consisting of trust preferred securities and stock

purchase contracts under which the holders will purchase common stock

from Conseco in February of 2001) from subsidiary trusts, and

implementing a commercial paper program, Conseco reduced the coupon

rate on its debt and preferred stock by 69 basis points while

significantly increasing its financial flexibility.

-- Conseco issued a two-for-one stock split, the company's fourth

split since 1991.

-- Conseco increased its quarterly cash dividend by 300 percent,

from 3-1/8 cents to 12-1/2 cents.

-- Conseco joined the Standard & Poor's 500, an elite group of

industry and stock market leaders widely considered

to be a key barometer of stock market activity.

-- Officers and directors increased their direct ownership of

Conseco stock. Between August and October, 37 directors and officers

purchased a total of 4 million shares in the open market, under a

program originally implemented in 1996. Under the program, which is

designed to encourage long-term shareholdings by directors and

officers of the company, purchases are financed with personal bank

loans. Conseco guarantees the loans, but is indemnified by the

participants. Employees now own or control nearly one-fourth of the

company's diluted shares, and nearly all employees are stockholders.

-- Conseco increased total collected premiums for the year by 3

percent, despite extensive product restructuring at several of the

acquired companies and the other agent distractions which normally

accompany acquisitions. As reported by the company on January 27,

total collected premiums, including both first-year premiums and

renewals, reached a record $1.4 billion for the fourth quarter and a

record $5.4 billion for the full year 1997. (Premium amounts

cited include, in all periods, premiums collected by all

companies owned by Conseco at December 31, 1997 with the exception

of the subsidiaries of Washington National Corp. which were

acquired late in 1997.)

"1998 promises to be just as eventful," Hilbert said. "In January, Conseco issued $250 million of five-year notes, giving us further balance sheet flexibility. Earlier this month, Moody's Investors Service upgraded its rating of Conseco's senior debt and its financial strength ratings of several of our operating companies. And tomorrow (February 26), we'll launch the next phase of our Conseco brand campaign-consumer advertising. This phase will include both television and print ads designed to increase Conseco's profile and positive perception among consumers. The campaign uses creative storytelling to set up the increasingly complex needs facing today's financial services customers and unveils a new brand positioning: Conseco's goal to both protect wealth, and create wealth, for life. We're out to make it even more productive for our agents to approach their prospects and customers with products from the Conseco companies.

In addition to the successful launch of our consumer advertising, we have several other major goals for 1998:

-- Increase operating earnings per share by 24 percent. The

consensus analyst estimate (according to First Call) for Conseco's

1998 operating earnings per share is $3.40, compared to the $2.74

reported in 1997.

-- Continue to streamline our operations and reduce our unit costs.

-- Continue to integrate our marketing channels and, by providing

the resources our agents need to help their customers, to earn an

increasing share of their business, targeting an 8 to 10 percent

increase in total collected premiums for the year. Conseco Marketing,

under President Don Gongaware, continues to make significant progress

in tapping the potential of our extensive agent force.

-- Continue to create new products to meet market needs and

fine-tune existing products for greater profitability.

-- Continue to lead the consolidation of the industry by being

selective and disciplined--knowing when to acquire and when, because

of inflated valuations, to stay on the sidelines.

-- Complete our year 2000 projects. Conseco has a corporate-wide

program designed to assure that its computer-controlled,

date-dependent systems and devices will function properly in the year

2000. We started our program in 1995 and completed our first year 2000

system upgrade in 1996.

"Conseco's strong results in 1997 again demonstrate the value of: (1) our strong market presence in diverse product lines, which allows us to actively manage product profitability; and (2) our ability to successfully seek out, complete and consolidate acquisitions.

"In the coming quarters," Hilbert said, "our opportunity will be to use Conseco's enormous product and distribution strength to build even greater value for our shareholders, customers, agents and employees. As we build on our position as one of the leading providers of products that both protect and create wealth, we couldn't be more excited about the future. Conseco now has $36 billion of assets on its own balance sheet and $8 billion of annual premiums and revenues. With a yearend 1997 debt/capital ratio below our target, we have the financial flexibility to continue pursuing the most profitable opportunities we can find.

"As always," Hilbert said, "we'll rely on the business disciplines that have made Conseco one of America's best-performing public companies over the past decade: efficient operations, active investment and capital management, high-quality customer service, and a bottom-line focus."

Fourth quarter results. Conseco has four primary business segments: life insurance, annuities, supplemental health and individual and group major medical. Fourth quarter operating earnings increased in 1997 primarily as a result of the acquisitions completed in late 1996 and 1997, and increased business in force.

Invested Assets. At Dec. 31, 1997, Conseco's consolidated $27 billion investment portfolio consisted primarily of investment-grade, publicly traded debt securities. Only 2 percent of investments were mortgages, only 6 percent were high-yield bonds, and there were no significant nonperforming investments. Conseco Capital Management, Conseco's wholly owned investment adviser, had $32 billion of assets under management at yearend 1997.

Net income. Fourth quarter 1997 net income of $171.4 million, or 81 cents per diluted share, also included: (1) net investment gains of $5.1 million, or 2 cents per share; and (2) an extraordinary charge of $0.7 million, or nil per share, related to early retirement of debt. Fourth quarter 1996 net income of $77.9 million, or 49 cents per share, included an extraordinary charge of $7.9 million, or 5 cents per share, related to early retirement of debt.

Full-year 1997 net income of $567.3 million, or $2.64 per diluted share, also included: (1) net investment gains of $44.1 million, or 21 cents per share; (2) an extraordinary charge of $6.9 million, or 3 cents per share, related to early retirement of debt; (3) a charge of 7 cents per share related to the induced conversion of preferred stock (treated as a preferred stock dividend); and (4) nonrecurring charges totaling $44.8 million, or 21 cents per share, related to previously disclosed items in the second and third quarter. Full-year 1996 net income of $252.4 million, or $1.82 per share, included: (1) net investment gains of $11.2 million, or 8 cents per share; and (2) an extraordinary charge of $26.5 million, or 19 cents per share, related to early retirement of debt.

Shares outstanding. Weighted average shares outstanding (the figure used in calculating diluted earnings per share) were 210.2 million for 1997, up 51 percent over 1996. Conseco's 1996 and 1997 acquisitions resulted in the issuance of 89.2 million Conseco common and common equivalent shares. Partially offsetting these issuances, Conseco purchased in the open market a total of 12.1 million of its common shares in 1997 (at an average price of $39.64). There were 186.7 million Conseco common shares issued and outstanding at Dec. 31, 1997.

Conseco, headquartered in Carmel, Ind., is a financial services holding company.

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Conseco, Inc. (NYSE: CNC)             Quarter Ended    Year Ended
Financial Highlights                    Dec. 31:        Dec. 31:
                                      1997     1996   1997    1996
In millions:
Operating earnings(1)              $167.0   $85.7    $574.9  $267.7
Net investment gains,
 net of related costs,
 amortization and taxes               5.1      0.1      44.1   11.2
Nonrecurring items, net of tax        0.0      0.0     (44.8)   0.0
Extraordinary charge, net of tax     (0.7)    (7.9)     (6.9) (26.5)
Net income                          $171.4   $77.9    $567.3  $252.4
Per common share-basic:
Weighted average shares
 (in millions)                       188.2    134.0    185.8    104.6
Operating earnings(1)                $0.88    $0.61    $3.05    $2.30
Net investment gains,
 net of related costs,
 amortization and taxes               0.03     0.00    0.24     0.10
Nonrecurring items, net of tax        0.00     0.00   (0.24)    0.00
Charge related to
 induced conversion of
  preferred stock                     0.00     0.00   (0.07)    0.00
Extraordinary charge, net of tax     (0.01)   (0.06)  (0.04)   (0.25)
Net income                           $0.90    $0.55    $2.94   $2.15
Per common share-diluted:
Weighted average shares
 (in millions)                       211.5    159.6    210.2    138.9
Operating earnings(1)                $0.79    $0.54    $2.74    $1.93
Net investment gains,
 net of related costs,
  amortization and taxes              0.02     0.00     0.21     0.08
Nonrecurring items, net of tax        0.00     0.00    (0.21)    0.00
Charge related to induced
 conversion of preferred stock        0.00     0.00    (0.07)    0.00
Extraordinary charge, net of tax      0.00    (0.05)   (0.03)   (0.19)
Net income                           $0.81    $0.49    $2.64    $1.82
Excluding SFAS 115(2):
Annualized operating
  return on common equity(1)           19%      18%      17%      21%
Assets (in millions)                                 $35,721.9  $25,572.9
Shareholders' equity and
  minority interest (in millions)                     $5,084.2   $3,743.2
Book value per common share                             $19.20     $16.62
Book value per common share,
  assuming conversion of all
  convertible securities
  and purchase of shares
  under stock purchase contracts                        $20.90     $16.73

(1) Excludes investment gains, nonrecurring items and extraordinary
    charge.

(2) Before adjusting for the fair value of fixed maturity investments.

All share and per-share amounts have been adjusted to reflect the
two-for-one stock splits distributed April 1, 1996, and Feb.  11,
1997.

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Conseco, Inc. Consolidated Balance Sheet (in millions) At At

Dec. 31, 1997 Dec. 31, 1996

(Unaudited) (Audited)

Assets Investments: Actively managed fixed maturities at fair value $22,773.7 $17,307.1 Equity securities at fair value 228.9 99.7 Mortgage loans 516.2 356.0 Credit-tenant loans 558.6 447.1 Policy loans 692.4 542.4 Other invested assets 518.1 259.6 Short-term investments 990.5 281.6 Assets held in separate accounts 682.8 337.6 Total investments 26,961.2 19,631.1 Accrued investment income 379.3 296.9 Cost of policies purchased 2,543.5 2,015.0 Cost of policies produced 915.2 544.3 Reinsurance receivables 849.1 504.2 Income taxes 59.3 8.8 Goodwill, net of accumulated amortization 3,575.2 2,200.8 Property and equipment,

net of accumulated depreciation  171.6 110.5 Other assets  449.1 301.1 Total assets $35,903.5 $25,612.7 Liabilities and shareholders' equity Liabilities: Insurance liabilities: Interest-sensitive products $17,357.6 $14,795.5 Traditional products 5,784.8 3,251.5 Claims payable and other

policyholder funds 1,670.8 984.9 Unearned premiums 406.1 272.4 Investment borrowings 1,389.5 383.4 Other liabilities  995.6 709.5 Liabilities related to separate accounts 682.8 337.6 Commercial paper 448.2 0.0 Notes payable 1,906.7 1,094.9 Total liabilities 30,642.1 21,829.7 Minority interest in consolidated subsidiaries Company-obligated mandatorily redeemable  preferred securities of subsidiary trusts 1,383.9 600.0 Mandatorily redeemable preferred stock 0.0 97.0 Common stock 0.7 0.7 Shareholders' equity Preferred stock 115.8 267.1 Common stock and additiona

paid-in capital  2,368.7 2,029.6 Unrealized appreciation (depreciation) of investments, net: Fixed maturities 177.2 39.8 Other investments 4.8 (0.9) Retained earnings  1,210.3 749.7 Total shareholders' equity 3,876.8 3,085.3 Total liabilities and shareholders' equity $35,903.5 $25,612.7

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Conseco, Inc. Quarter Ended Year Ended Consolidated Statement Dec. 31: Dec. 31: of Operations (in millions) 1997 1996 1997 1996

Revenues Insurance policy income Traditional products $851.1 $350.9 $2,972.5 $1,384.3 Interest sensitive products 118.8 110.1 438.3 269.9 Net investment income 510.6 375.8 1,825.3 1,302.5 Net investment gains 129.2 20.6 266.5 60.8 Fee revenue and other income 15.7 11.3 65.8 49.8 Total revenues 1,625.4 868.7 5,568.4 3,067.3 Benefits and expenses Insurance policy benefits 604.0 315.0 2,185.7 1,173.3 Change in future policy benefits 77.4 5.8 182.6 21.7 Amounts added to annuities and financial policyholder account balances 218.1 194.2 806.7 668.6 Interest expense on notes payable 33.4 23.5 109.4 108.1 Interest expense on short-term investment borrowings 24.3 6.9 42.0 22.0 Amortization related to operations 98.0 79.3 408.8 240.0 Amortization related to investment gains 110.8 20.4 181.2 36.0 Nonrecurring charges 0.0 0.0 71.7 0.0 Other operating costs and expenses 158.1 83.0 577.2 304.0 Total benefits and expenses 1,324.1 728.1 4,565.3 2,573.7 Income before income taxes,

minority interest

and extr. charge 301.3 140.6 1,003.1 493.6 Income tax expense 114.8 45.7 376.6 179.8 Income before minority interest and extraordinary charge 186.5 94.9 626.5 313.8 Minority interest: Distributions on company-obligated mandatorily

redeemable preferred securities of subsidiary trusts 14.4 3.6 49.0 3.6 Dividends on preferred stock of subsidiaries 0.0 1.5 3.3 8.9 Equity in earnings of subsidiary 0.0 4.0 0.0 22.4 Income before extraordinary charge 172.1 85.8 574.2 278.9 Extraordinary charge on extinguishment of debt, net of

taxes and minority interest 0.7 7.9 6.9 26.5 Net income 171.4 77.9 567.3 252.4 Less amounts applicable to preferred stock: Charge related to induced conversions 0.0 0.0 13.2 0.0 Preferred stock dividends 2.0 4.7 8.7 27.4 Earnings applicable to

common stock $169.4 $73.2 $545.4 $225.0

Note on forward-looking statements: All statements, trend analyses and other information contained in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission, press releases, presentations by the Company or its management or oral statements) relative to markets for the Company's products and trends in the Company's operations or financial results, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," 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: (i) general economic conditions and other factors, including prevailing interest rate levels, stock market performance and health care inflation, which may affect the ability of the Company to sell its products, the market value of the Company's investments and the lapse rate and profitability of the Company's policies; (ii) the Company's ability to achieve anticipated levels of operational efficiencies at recently acquired companies, as well as through other cost-saving initiatives; (iii) customer response to new products, distribution channels and marketing initiatives; (iv) mortality, morbidity, usage of health care services and other factors which may affect the profitability of the Company's insurance products, (v) changes in the federal income tax laws and regulations which may affect the relative tax advantages of some of the Company's products; (vi) increasing competition in the sale of the Company's products; (vii) 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 insurance products, and health care regulation affecting the Company's health insurance products; (viii) the availability and terms of future acquisitions; and (ix) the risk factors or uncertainties listed from time to time in the Company's other filings with the Securities and Exchange Commission.

CONTACT: Jim Rosensteele

Senior Vice President

Corporate Communications 

317/817-2893