Fitch Ratings Places Conseco & Subs On Rating Watch Negative.Business Editors CHICAGO--(BUSINESS WIRE)--March 18, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has placed all its Conseco-related corporate ratings on Rating Watch Negative. This action reflects today's announcement that Conseco is offering a debt exchange for substantially all of its public debt issues. Upon completion, Fitch expects to downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. the existing senior debt to reflect its structural subordination to the new notes. Resolution of Rating Watch on other entities and securities is dependent on Conseco entities receiving unqualified audit opinions, and Fitch's review of Conseco's and Conseco Finance's 10K filings. If Conseco or Conseco Finance receives a qualified audit opinion, Fitch may lower all Conseco-related corporate ratings. The new senior debt securities will have the same terms as the existing senior debt except for a maturity extension and a guarantee. Depending on the individual security, the new notes will extend maturities by one year to two-and-a-half years. The new debt will have a subordinated guarantee from CIHC CIHC Center for International Health and Cooperation , Incorporated. CIHC, Incorporated is the holding company for Conseco's insurance and finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. . Fitch does not view this offering as a distressed debt distressed debt Debt with low junk status and a market price substantially below par value, often pennies on the dollar. Investors sometimes buy distressed debt on the possibility that management can renegotiate loan agreements and keep the issuer out of exchange. Provisions of the offering that support this conclusion are the par-for-par exchange, no minimum participation required, and no amendments to covenants. In 2002, Conseco's and Conseco Finance's debt maturities exceed expected cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and cash on hand by approximately $350 million. The company is currently pursuing cash raising alternatives such as assets sales, reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. and refinancing Refinancing An extension and/or increase in amount of existing debt. to meet these maturities. Fitch believes these efforts will be challenging given the difficult economic environment and the company's limited financial flexibility. Fitch will continue to monitor progress on these initiatives. Entity/Issue/Type/Action/Rating Watch Conseco Inc. --Long-term rating 'B-', Rating Watch Negative; --Senior debt rating 'B-', Rating Watch Negative; --Short-term rating 'B', Rating Watch Negative; --Commercial paper rating 'B', Rating Watch Negative. Conseco Financing Trust I-VII --Preferred securities ratings 'CCC', Rating Watch Negative. Conseco Finance Corp. --Long-term rating 'CCC', Rating Watch Negative; --Short-term rating 'C', Rating Watch Negative. Bankers Life & Casualty Company Conseco Annuity Assurance Company Conseco Direct Life Insurance Company Conseco Health Insurance Company Conseco Life Insurance Company Conseco Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Conseco Medical Insurance Company Conseco Senior Health Insurance Company Conseco Variable Insurance Company Manhattan National Life Insurance Company Pioneer Life Insurance Company --Insurer financial strength 'BBB-', Rating Watch Negative. |
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