(Source: PRNewswire)
CARMEL, Ind., Sept. 8 /PRNewswire-FirstCall/ -- Conseco, Inc. (NYSE: CNO) today announced that it has received the required regulatory approvals for the previously announced transaction under which two insurance companies in its Conseco Insurance Group are coinsuring, with an effective date of January 1, 2009, approximately 104,000 non-core life insurance policies with Wilton Reassurance Company ("Wilton Re"), a Minnesota reinsurance company.
"This transaction improves Conseco's consolidated risk-based capital ratio and increases statutory capital," said Conseco CEO Jim Prieur. "In addition, it further simplifies our administrative operations as we focus on our core insurance businesses."
In the transaction, Wilton Re is paying a ceding commission of approximately $57.5 million, 100% coinsuring the policies, and will take over responsibility for future administration of the coinsured policies. The Conseco companies are transferring to Wilton Re approximately $409 million in cash and policy loans and approximately $466 million of statutory policy and other reserves.
As previously disclosed, 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 and 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 $20 million in the third quarter of 2009. Conseco also expects to record a deferred gain of approximately $23 million. In accordance with generally accepted accounting principles ("GAAP"), this gain will be recognized over the remaining life of the block. In the first six months of 2009, the coinsured block generated GAAP after- tax earnings before overhead of approximately $5.0 million.
Conseco, Inc.'s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, critical illness and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial futures. For more information, visit Conseco's website at www.conseco.com.
Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in this press release relative to markets for Conseco's products and trends in Conseco's operations or financial results, as well as other statements, contain forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995.
