Conseco to Acquire exlService.

Business Editors

INDIANAPOLIS--(BUSINESS WIRE)--April 23, 2001

Conseco, Inc. (NYSE:CNC) announced today that it has agreed to acquire 100% of exlService (Exl), a firm that specializes in customer service and backroom outsourcing with operations in India.

Conseco will acquire 11,937,993 shares of Exl in exchange for 3,410,854 shares of its common stock. The value attributed to Exl stock in the transaction was $4 per share. The value attributed to the Conseco stock in the transaction, $14 per share, was based on the closing price of the stock in the last 15 trading days prior to March 29. The acquisition also includes the conversion of management options in Exl resulting in a total value for the transaction of approximately $52.6 million.

Preliminary analysis by the outside advisors indicates a range of valuations significantly in excess of the acquisition price. The transaction is not dilutive to earnings in 2001. Conseco's internal analysis shows that the transaction should produce pre-tax profits of approximately 11 cents per common share as early as next year.

Conseco's Board of Directors approved the transaction, subject to concluding a definitive acquisition agreement, at its board meeting on Thursday, April 19, 2000. The transaction is expected to close before June 30. Exl shareholders have also approved the transaction.

Exl was founded in early 1999 by a group that included Gary Wendt, who had recently retired as head of GE Capital Corporation. While at GECC Wendt had been a pioneer in outsourcing business activities to India, generating significant added value from productivity gains and cost savings. He took the reins as Chairman and CEO of Conseco in mid-2000. Wendt and his wife own 20.3% of Exl; his relatives own an additional 9.4%.

Mr. Wendt's share of the consideration paid to Exl will be 696,602 shares of Conseco common stock ($9.75 million). However, Mr. Wendt will be prohibited from realizing the value of those shares unless Conseco recovers its $52.6 million acquisition price through cost savings achieved from the venture and/or profits from third party business managed by Exl. Furthermore, if the full value of the acquisition is not recovered prior to the end of Mr. Wendt's current contract in June 2005, his Conseco shares from the transaction will be forfeited, and Mr. Wendt will receive nothing.

Since its founding and initial capitalization, Exl has had two rounds of venture financing, the last of which was successfully solicited in the spring of 2000. That financing raised $8.1 million of new equity in exchange for 22% of the company. Following that financing, the "post-money" value of Exl was $3.27 per share. At that value, Mr. Wendt's ownership stake in Exl (2.42 million shares) was worth approximately $7.9 million.

Conseco's interaction with Exl began in the Fall of 2000 when the company began research into outsourcing customer service and backroom processing work. Conseco's research over several months since then indicated that Exl was Conseco's lowest cost, highest quality option. A special committee of the Conseco Board of Directors was formed to review any potential transaction with Exl. In early 2001, the economics of various outsourcing alternatives and potential relationships between Exl and Conseco were tested by management and subsequently reviewed by the Special Committee. Analysis indicated that an acquisition of Exl would produce the optimum value for Conseco and its shareholders.

Last week, Conseco told employees that it would be moving 2000 jobs to India over the next 21 months. The company said that the areas affected by this move have an average turnover of more than 30%, providing a constant challenge to improving productivity and the quality of customer service. Additionally, the company anticipates more than $30 million in annual cost savings from moving these operations.

Exl currently employs 315 people, 97% of whom are based in Delhi, India. The firm has several current customers and began generating revenue in 2000.

Advising the Special Committee of the Conseco Board in this matter have been the law firm of Lord, Bissell & Brook and the investment bank, Merrill Lynch, which has been engaged to render a fairness opinion.

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.

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