CARMEL, Ind., June 25 /PRNewswire-FirstCall/ -- Conseco, Inc. (NYSE: CNO) today announced an agreement under which two insurance companies in its Conseco Insurance Group unit will coinsure, with an effective date of January 1, 2009, about 104,000 non-core life insurance policies with Wilton Reassurance Company ('Wilton Re'), a Minnesota reinsurance company.
'Completing this step is expected to increase Conseco's consolidated risk-based capital ratio by 8 percentage points, along with increasing statutory capital,' said Conseco CEO Jim Prieur. 'In addition, this transaction will further simplify our administrative operations as we focus on our core insurance businesses.'
In the transaction, Wilton Re will pay a ceding commission of approximately $57.5 million and 100% coinsure and administer these policies. The Conseco companies will transfer to Wilton Re approximately $409 million in cash and policy loans and $466 million of statutory policy and other reserves. The transaction, which is subject to the approval of insurance regulators in Illinois and Wisconsin, is expected to be completed in the third quarter of 2009.
Most of the policies involved in the transaction were issued by companies that were later acquired by Conseco. Approximately 70% of the policies being coinsured are from Washington National Insurance Company; the remainder are from Conseco Insurance Company.
As a result of the transaction, Conseco expects to record an increase to its deferred tax valuation allowance of approximately $18 million in the third quarter of 2009. Conseco also expects to record a deferred gain of approximately $25 million. In accordance with generally accepted accounting principles ('GAAP'), this gain will be recognized over the remaining life of the block. In the first quarter of 2009, the block being coinsured generated GAAP after-tax earnings before overhead of approximately $2.5 million.
About Conseco
Conseco, Inc.'s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, heart/stroke and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial futures.
