Conseco reports record operating EPS for fourth quarter, full year of 1996.

CARMEL, Ind.--(BUSINESS WIRE)--Feb. 18, 1997--

Highlights

-- Operating EPS jumps 35 percent for quarter, 50 percent for year

-- Equity market capitalization increases by $4.5 billion during 1996

-- Company targets operating EPS growth of at least 35 percent in 1997

Conseco, Inc. (NYSE:CNC) today reported record fourth quarter 1996 operating earnings per fully diluted share of 54 cents, up 35 percent over 40 cents per share in the fourth quarter of 1995. For the full year of 1996, operating earnings per share rose 50 percent, to a record $1.89, from $1.26 in 1995.

(Note to editors: As used throughout this release, "operating earnings" exclude investment gains (losses), restructuring income (losses) and extraordinary charge. "Operating earnings per fully diluted share" is the figure security analysts reference in their published earnings estimates. According to First Call, the consensus analyst estimate for Conseco's 4Q96 operating earnings per fully diluted share was 52 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, "We are proud of Conseco's performance in 1996. The company again demonstrated its skill in actively managing profitable internal growth as well as its unsurpassed ability to seek out, complete and consolidate accretive acquisitions. Based on our internal growth opportunities, and factoring in the expected earnings from our December 1996 acquisitions (these acquisitions had no impact on 4Q96 results) as well as earnings from other acquisitions currently pending, we believe we are on track to equal or exceed analyst estimates of $2.50-$2.75 of operating earnings per share in 1997, an increase of at least 35 percent over 1996."

Here are a few of Conseco's major accomplishments in 1996: Delivered a superior return to shareholders. In 1996, Conseco stock delivered a total return (stock price appreciation plus reinvested dividends) of 104 percent, compared to 23 percent for the Standard & Poor's 500 Index and 32 percent for its industry peer group, the Dow Jones Life Insurance index. Completed five acquisitions: Life Partners Group (August); the remaining 62 percent interest in American Life Holdings Inc.(September); American Travellers Corp. (December); Transport Holdings Inc. (December); and the remaining 10 percent interest in Bankers Life Holding Corp. (December). In addition, Conseco announced two other acquisitions which are expected to close in the first half of 1997: Pioneer Financial Services and Capitol American Financial Corp. These acquisitions solidify Conseco's leadership in long-term care insurance, agent-produced Medicare supplement insurance, cancer insurance, heart/stroke insurance, universal life insurance and retirement annuities.

Strengthened the balance sheet. Conseco issued $267 million of Preferred Redeemable Increased Dividend Equity Securities, 7% PRIDES Convertible Preferred Stock. In addition, Conseco Financing Trust I issued $275 million of 9.16% Trust Originated Preferred Securities(SM) (TOPrS(SM)) and Conseco Financing Trust II issued $325 million of 8.70% Capital Trust Pass-Through Securities (TruPS).

Issued a two-for-one stock split in April 1996, the company's third since 1991.

Received two ratings upgrades each from Standard & Poor's and Duff and Phelps on the company's senior debt and one upgrade from A.M. Best on the financial strength rating of our principal operating companies.

Joined the Fortune 500, Fortune magazine's ranking of the 500 largest U.S. corporations.

Increased the direct ownership of Conseco stock by directors and officers. Between May and September, directors and officers purchased a total of 4 million shares in the open market. Employees now own or control 24 percent of the company's fully diluted shares, and three-fourths of all employees own stock.

"1997 is off to a great start," Hilbert said. "In January, Conseco became a member of the Standard & Poor's 500 Index, widely considered a key barometer of stock market activity, and key executives purchased 100,000 equivalent Conseco shares from former shareholders of Transport Holdings Inc. In February 1997 the company distributed another two-for-one stock split.

"Conseco continues to redefine the standard for performance in the financial services industry," Hilbert said. "We are an organization driven to create value. Since our inception, our unwavering focus on operational excellence has fueled extraordinary returns for our shareholders. Conseco stock has posted an average total return (including dividends) of 48 percent per year since our 1985 initial public offering; an investment of $10,000 in Conseco's IPO is today worth more than $1 million, with dividends reinvested. The increase in our stock price, together with the issuance of stock in connection with our acquisitions and the conversion of convertible securities, created a $4.5 billion increase in Conseco's market capitalization during 1996.

"The value we are creating for shareholders is the direct result of our long-term relationships with customers, agents and employee associates," Hilbert said. "For customers, our goal is to deliver peace of mind--products to help preserve and grow the wealth they've built over a lifetime, supported by fast, personal, reliable service. For agents, our goal is to deliver a true partnership which recognizes their special role in serving customers, plus a long-term commitment to earning their business. For employees, we offer careers which provide the financial and psychic rewards which come from leading the process of change in the financial services industry.

"We are very excited about Conseco's future," Hilbert said. "Upon completion of our pending acquisitions, Conseco will have approximately $32 billion of investments under management, $29 billion of assets on its own balance sheet, $7.3 billion of annual premiums and revenues, $9 billion of equity market capitalization, and a book value of more than $18.00 per share, assuming conversion of our PRIDES securities. With a yearend 1996 debt/capital ratio of 23 percent, well below our targeted 30 percent-35 percent range, and $740 million of expected EBIT cash flow, we have unprecedented balance sheet flexibility. We can pursue additional cash acquisitions (financed with debt) as large as $2.2 billion; we can use our equity to accomplish strategic, accretive acquisitions; or we can buy back more than $1 billion of our own stock (financed with debt) and still maintain our targeted debt/capital ratio. We are committed to constantly evaluating our options for deploying our capital and investing where we will earn the greatest return."

In addition to Conseco's 1997 operating EPS target of $2.50-$2.75, Hilbert said that the company's other major goals for 1997 are: (1) to reduce the company's annual overhead expenses by at least $80 million through the consolidation and streamlining of acquired operations; (2) to integrate the company's 150,000 agents into a single-minded distribution system focused on the cross-marketing of its products; (3) to support that cross-marketing effort by launching Conseco brand advertising in the second half of the year; and (4) to continue to seek opportunities to supplement its growth through strategic, accretive acquisitions.

"As regulatory barriers continue to fall," Hilbert said, "the old distinctions between insurers and other financial service sectors are becoming obsolete. The companies who will thrive in tomorrow's financial services industry will have balanced, focused products, diversified distribution embracing non-traditional channels, disciplined expense management, sophisticated asset/liability management skill, hard-working capital, and an entrepreneurial spirit. I believe 1996 demonstrates that we are building that kind of company at Conseco. We are a leader in some of the most attractive insurance markets, a leader in industry consolidation, and we have one of the finest balance sheets in the industry."

Conseco has three primary business segments: life insurance, annuities, and supplemental health. Operating earnings increased in the fourth quarter of 1996 compared to the fourth quarter of 1995 primarily as a result of: (1) the acquisition of LPG; (2) Conseco's increased ownership of BLH and American Life Holdings; and (3) increased business in force.

Additional discussion

Invested Assets. At Dec. 31, 1996, Conseco's consolidated $19.6 billion investment portfolio consisted primarily of investment-grade, publicly traded debt securities. Only 2 percent of investments were mortgages, only 4 percent were high-yield bonds, and there were no significant nonperforming investments.

Net income. Fourth quarter 1996 net income of $77.9 million, or 49 cents per fully diluted share, also included: (1) net investment gains of $0.1 million, or nil per share; and (2) an extraordinary charge of $7.9 million, or 5 cents per share, related to early retirement of debt. Fourth quarter 1995 net income of $52.6 million, or 50 cents per share, included: (1) net investment gains of $0.5 million, or 1 cent per share; (2) restructuring income of $12.2 million, or 11 cents per share, as a result of the sale of Conseco's investment in Eagle Credit (a finance subsidiary of Harley-Davidson, Inc.); and (3) an extraordinary charge of $2.1 million, or 2 cents per share, related to early retirement of debt.

Full-year 1996 net income of $252.4 million, or $1.77 per fully diluted share, also included: (1) net investment losses of $6.2 million, or 5 cents per share; (2) restructuring income totalling $17.4 million, or 12 cents per share, arising from the previously discussed first quarter sale of Conseco's investment in Noble Broadcast Group, Inc.; and (3) an extraordinary charge of $26.5 million, or 19 cents per share, related to early retirement of debt. Full-year 1995 net income of $220.4 million, or $2.11 per fully diluted share, included: (1) net investment gains of $4.1 million, or 4 cents per share; (2) restructuring income of $87.1 million, or 83 cents per share, arising from the previously discussed release in the third quarter of deferred income taxes previously accrued on income related to CCP, and from the similar release in the second quarter of deferred income taxes on income related to Bankers Life Holding Corp. (such deferred tax was no longer required when Conseco reached 80 percent ownership of those companies); and (3) an extraordinary charge of $2.1 million, or 2 cents per share, related to early retirement of debt.

Shares outstanding. Weighted average shares outstanding (for the purposes of calculating fully diluted earnings per share) increased by 54 percent in the fourth quarter of 1996 over the prior year, primarily because of: (1) the company's August 1996 acquisition of LPG, in which 32.2 million Conseco shares were issued; and (2) the company's January 1996 offering of PRIDES, which are mandatorily convertible into shares of Conseco common stock. There were 167.1 million shares issued and outstanding at Dec. 31, 1996.

Conseco, headquartered in Carmel, Ind., is a financial services holding company. -0-

                      Conseco, Inc. (NYSE: CNC)
     Financial Highlights (in millions, except per-share amounts)

                            Quarter Ended Dec. 31:   Year Ended Dec. 31:
                                  1996    1995        1996        1995

Operating earnings (1)           $85.7   $42.0      $267.7      $131.3
Net investment gains (losses),
 net of related costs,
 amortization and taxes            0.1     0.5        (6.2)        4.1
Restructuring income               0.0    12.2        17.4        87.1
Extraordinary charge, net of tax  (7.9)   (2.1)      (26.5)       (2.1)
Net income                       $77.9   $52.6      $252.4      $220.4

Per common share-primary:
Weighted average shares
 (in millions)                   159.6    86.2       126.8        86.1
Operating earnings (1)           $0.54   $0.43       $2.03       $1.31
Net investment gains (losses),
 net of related costs,
 amortization and taxes           0.00    0.01       (0.05)       0.04
Restructuring income              0.00    0.14        0.14        1.01
Extraordinary charge, net of tax (0.05)  (0.03)      (0.21)      (0.02)
Net income                       $0.49   $0.55       $1.91       $2.34

Per common share-fully diluted:
Weighted average shares
 (in millions)                   160.5   104.5       142.5       104.5
Operating earnings (1)           $0.54   $0.40       $1.89       $1.26
Net investment gains (losses),
 net of related costs,
 amortization and taxes           0.00    0.01       (0.05)       0.04
Restructuring income              0.00    0.11        0.12        0.83
Extraordinary charge, net of tax (0.05)  (0.02)      (0.19)      (0.02)
Net income                       $0.49   $0.50       $1.77       $2.11

Excluding SFAS 115 (2):
Annualized operating return on
 common equity (1)                  18%     22%         21%         18%
Assets (in millions)                             $25,572.9   $16,963.2
Shareholders' equity and minority
 interest (in millions)                           $3,743.2    $1,402.4
Book value per share                                $16.62       $8.83
Book value per share, assuming
 conversion of PRIDES                               $16.73         N/A

(1) Excludes investment gains (losses), restructuring income 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.

                             Conseco, Inc.
               Consolidated Balance Sheet (in millions)

                                             At Dec. 31,   At Dec. 31,
                                                1996          1995
                                             (Unaudited)    (Audited)
Assets
Investments:
 Actively managed fixed maturities at
  fair value                                  $17,307.1     $12,963.3
 Equity securities at fair value                   99.7          36.6
 Mortgage loans                                   356.0         339.9
 Credit-tenant loans                              447.1         259.1
 Policy loans                                     542.4         307.6
 Other invested assets                            259.6          91.2
 Short-term investments                           281.6         189.9
 Assets held in separate accounts                 337.6         227.0
Total investments                              19,631.1      14,414.6
Accrued investment income                         296.9         207.8
Cost of policies purchased                      2,015.0       1,030.7
Cost of policies produced                         544.3         391.0
Reinsurance receivables                           504.2          84.8
Income taxes                                        8.8           0.0
Goodwill, net of accumulated amortization       2,200.8         894.1
Property and equipment, net of accumulated
 depreciation                                     110.5          88.7
Securities segregated for future redemption
 of preferred stock of a subsidiary                45.6          39.2
Other assets                                      255.5         146.6
Total assets                                  $25,612.7     $17,297.5

Liabilities and Shareholders' Equity
Liabilities
Insurance liabilities                         $19,304.3     $13,378.4
Income tax liabilities                              0.0          93.3
Investment borrowings                             383.4         298.1
Other liabilities                                 709.5         329.6
Liabilities related to separate accounts          337.6         227.0
Notes payable of Conseco                        1,094.9         871.4
Notes payable of affiliates, not direct
 obligations of Conseco                             0.0         584.7
Total liabilities                              21,829.7      15,782.5

Minority interest in consolidated subsidiaries
Company-obligated mandatorily redeemable
 preferred securities of subsidiary trusts       600.0           0.0
Common and preferred stock                        97.7         403.3
Total minority interest                          697.7         403.3

Shareholders' equity
Preferred stock                                  267.1        283.5
Common stock and additional paid-in capital    2,029.6        157.2
Unrealized appreciation (depreciation) of
 securities, net:
   Fixed maturities                              39.8        112.6
   Other investments                             (0.9)         0.1
Retained earnings                               749.7        558.3
Total shareholders' equity                    3,085.3      1,111.7

Total liabilities and shareholders' equity  $25,612.7    $17,297.5

                             Conseco, Inc.
          Consolidated Statement of Operations (in millions)

                              Quarter Ended Dec. 31:   Year Ended Dec. 31:
                                  1996      1995         1996       1995
Revenues
Insurance policy income         $461.0    $361.7     $1,654.2   $1,465.0
Net investment income            373.9     292.1      1,300.6    1,142.6
Net investment gains              20.6     108.3         30.4      188.9
Restructuring income               0.0      15.2         30.4       15.2
Fee revenue and other income      11.3      11.9         49.8       43.6
Total revenues                   866.8     789.2      3,065.4    2,855.3

Benefits and expenses
Insurance policy benefits        315.0      260.7     1,173.3    1,075.5
Change in future policy benefits   5.8        3.6        21.7       32.0
Interest expense on annuities
 and financial products          194.2      152.6       668.6      585.4
 Interest expense on
  notes payable                   23.5       35.5       108.1      119.4
Interest expense on short-term
 investment borrowings             5.0        3.0        20.1       22.2
 Amortization related
  to operations                   79.3       45.3       240.0      203.6
Amortization related to realized
 gains                            20.4       82.0        36.0      126.6
Other operating costs
 and expenses                     83.0       73.9       304.0      272.1
Total benefits and expenses      726.2      656.6     2,571.8    2,436.8

Income before income taxes,
 minority interest and
 extraordinary charge            140.6      132.6       493.6      418.5
Income tax expense                45.7       52.7       179.8       87.0
Income before minority interest
 and extraordinary charge         94.9       79.9       313.8      331.5
Minority interest                  9.1       25.2        34.9      109.0
Income before
 extraordinary charge             85.8       54.7       278.9      222.5
Extraordinary charge on
 extinguishment of debt, net of
 taxes and minority interest       7.9        2.1        26.5        2.1
Net income                        77.9       52.6       252.4      220.4
Less preferred stock dividends     4.7        4.6        27.4       18.4
Earnings applicable to common
 stock                           $73.2      $48.0      $225.0     $202.0

CONTACT: Jim Rosensteele

Vice President-Investor Relations

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