home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Conseco Announces 3Q01 Earnings

INDIANAPOLIS--(BUSINESS WIRE)--Oct. 30, 2001--The attached ``NEW Conseco Memo no. 17'' from Conseco CEO Gary C. Wendt was posted on Conseco's web site for shareholders and/or electronically distributed to them today.

To: Conseco Shareholders
From: Gary Wendt, Chairman & CEO
Date: October 30, 2001

There isn't much news left in reporting the financial results for the third quarter. You know from our statement last week that operating earnings per share for the quarter were 18 cents, up from 12 cents in the 3rd quarter a year ago. And, you know from my October 2 memo that we are taking substantial non-operating charges that will result in a net loss for the quarter.

In this memo, I will briefly summarize the quarter's operating results. As importantly, I want to address some recent comments about the company and to discuss where we are in the turnaround process.

Summary points

  • Operating earnings for the quarter were up 49% over the 3rd quarter a year ago, $60.6 million (18 cents per share) in 3Q01 vs. $40.8 million (12 cents per share) for 3Q00. For the first 3 quarters, 2001 operating earnings were $184.2 million compared with $110.7 million for 2000 - growth of 66%.
  • Various non-operating items resulted in a total after-tax charge of $471 million resulting in a net loss for the quarter of $411 million ($1.21 per share).
  • The Finance segment continued to show strong earnings growth on a year over year basis. Pretax operating income was $72.5 million for 3Q01, up 81% from $40.0 million in 3Q00. The 9-month year-to-date comparison of 2001 with 2000 shows pretax operating earnings growth of 108%. On a sequential quarter basis, 3rd quarter pretax operating earnings in the Finance segment declined $8 million due to a $23 million increase in the quarter for provision for loan loss expense.
  • Pretax operating earnings from the Insurance and fee-based segment were down 5% in 3Q01 vs. 3Q00 due to adverse mortality experience and the struggling market-linked annuity products. (Market-linked annuity products include variable and equity-indexed annuities, both of which are dependent to some extent on financial market performance.) Year-to-date, however, pretax operating earnings are up 4% for the first three quarters compared with 2000.
  • Interest and preferred dividend expense for the quarter was $33 million lower than 3Q00, a year over year reduction of 20%. Interest expense savings of nearly $70 million year-to-date in 2001 compared with 2000, have been achieved primarily through debt reduction under the turnaround plan.


                                Chart 1


                           3rd Quarter 2001


                       Earnings from Operations


                 $ millions, except per share amounts





                                                          Full Year


                  Q1 `00    Q2 `00    Q3 `00    Q4 `00      2000


                  ------    ------    ------    ------      ----


Insurance and


 fee based        $185.3    $211.7    $220.1    $226.6     $843.7


 Finance            35.8      28.0      40.0      53.0      156.8


                    ----      ----      ----      ----      -----


 Subtotal          221.1     239.7     260.1     279.6    1,000.5





Corporate:


 Interest and


  dividends       (158.4)   (167.4)   (164.0)   (162.0)    (651.8)





Expenses less


  chgs to subs     (15.8)     (7.3)    (23.9)    (20.5)     (67.5)





Int and div


 allocated to CFC   42.2      38.4      36.3      10.0      126.9


                    ----      ----      ----      ----      -----





Pre-tax             89.1     103.4     108.5     107.1      408.1





Taxes               33.6      37.8      39.9      39.3      150.6


                    ----      ----      ----      ----      -----





Total after-tax


 pre-goodwill       55.5      65.6      68.6      67.8      257.5





Goodwill


 amortization      (24.8)    (26.4)    (27.8)    (26.7)    (105.7)


                   ------    ------    ------    ------    -------





Operating earnings  30.7      39.2      40.8      41.1      151.8





Non-operating


 earnings, net


 of tax             42.5    (446.4)   (530.3)   (419.8)  (1,354.0)


                    ----    -------   -------   -------  ---------





Net income (loss)


 applicable


 to common stock   $73.2   ($407.2)  ($489.5)  ($378.7) ($1,202.2)


                   =====   ========  ========  ======== ==========





Operating earnings


 per share:


 Pre-goodwill       $0.17     $0.20     $0.21     $0.21      $0.79





 Post-goodwill      $0.10     $0.12     $0.12     $0.13      $0.47





Net income (loss)


per share           $0.22    ($1.25)   ($1.50)   ($1.16)    ($3.69)








                                Chart 1


                           3rd Quarter 2001


                       Earnings from Operations


                 $ millions, except per share amounts


                              (continued)





                    Q1 `01      Q2 `01      Q3 `01


                    ------      ------      ------


Insurance and


 fee based          $203.2      $231.6      $208.3


 Finance              63.6        80.1        72.5


                      ----        ----        ----


 Subtotal            266.8       311.7       280.8





Corporate:


 Interest and


  dividends         (152.3)     (138.2)     (130.8)





 Expenses less


  chgs to subs         8.5        (9.3)       (9.3)





Int and div


 allocated to CFC      5.5         1.9         0.0


                       ---         ---         ---





Pre-tax              128.5       166.1       140.7





Taxes                 47.7        68.1        51.8


                      ----        ----        ----





Total after-tax


 pre-goodwill         80.8        98.0        88.9





Goodwill


amortization         (26.8)      (28.4)      (28.3)





                     ------      ------      ------


 Operating earnings   54.0        69.6        60.6





Non-operating


 earnings, net


 of tax               26.2       (99.9)     (471.2)


                      ----       ------     -------





Net income (loss)


 applicable


 to common stock     $80.2      ($30.3)    ($410.6)


                     =====      =======    ========





Operating earnings


 per share:





 Pre-goodwill         $0.23       $0.29       $0.26





 Post-goodwill        $0.16       $0.21       $0.18





Net income (loss)


per share             $0.23      ($0.09)     ($1.21)

Finance Segment
  • Year-over-year quarterly pre-tax operating earnings improved 81%, driven by increased on-balance-sheet receivables, improved margins and lower operating costs. Specifically, the average on-balance-sheet portfolio from continuing operations grew 24%, margins improved 113 bps and quarterly operating costs declined $20 million.
  • On a sequential quarter basis, pre-tax operating earnings declined by $8 million or 9%. Although revenue increased 3% and margins improved 17 bps, these were more than offset by a $23 million increase in provision expense as the Finance Company strengthened
    reserves. Specifically on-balance-sheet loan reserves increased from $318 million to $355 million at the end of the quarter.
  • The Finance segment continued the process of growing and diversifying its on- balance-sheet portfolio of assets. Specifically, 3Q originations were $3.1 billion, driven by a 31% quarter-over-quarter increase in Home Equity lending. Manufactured Housing (MH) originations of $707 million represented only 23% of originations. Finally, the average on-balance-sheet portfolio of $17.5 billion grew approximately 5% in the quarter.
  • Delinquencies increased slightly in the quarter. Total managed 60+ delinquencies rose 11 bps to 1.89%. For MH, 60+ delinquencies and repo inventory increased 7 bps and 12 bps to 2.27% and 2.30%, respectively. Like any company in the finance business, we remain cautious about the overall direction of the economy and focused on managing portfolio performance in the slowing market.
  • Finally, new issuance spreads, net proceeds from securitizations and operating cash flow remain at or above 2Q01's strong levels. In addition, the Finance Company retired $24 million of 2002 public debt.
  • MH repo inventory increased during the quarter from 13,607 to 14,333 (up 5%) primarily due to slower sales than in previous quarters. Recovery rates held steady at 45%. 2001 repo sales are up 10% year-to-date over 2000, and new units repossessed quarterly are holding steady with the same periods last year. The chart below updates the data we have been providing to you since early this year.


                                Chart 2


                        MH Repossession Report


                            No. of MH units





                     3Q00     4Q00    1Q01     2Q01    3Q01


                     ----     ----    ----     ----    ----


Beginning Inventory  6,766    8,471  11,967  13,790   13,607


Incurs               7,485    9,656   8,452   6,468    6,833


Sales                5,780    6,160   6,629   6,651    6,107


Ending Inventory     8,471   11,967  13,790  13,607   14,333


Sales/Incurs Ratio   0.77     0.64    0.78    1.03     0.89

Insurance segment
  • Although year-to-date operating earnings in the Insurance segment have increased over the same period last year, variable and equity indexed annuity and life product earnings are below our expectations and prior year amounts. Year over year growth in fixed annuity sales reflects the product migration away from market-linked products. Volatility in the equity markets has had an adverse effect on the sale of and earnings from our market-linked products, and adverse mortality experience has decreased life earnings (including approximately $5 million in this quarter related to the September 11 attacks).
  • On a company-wide basis, the variable and equity-indexed annuity products continue to inhibit Insurance segment progress. Excluding these products, the insurance and fee-based segment has seen 7% growth in premiums over 3Q00 and is down 2% compared with the 2nd quarter of this year. Based on trends prior to and since the September 11 attacks, we believe that this quarterly collections data includes a temporary decline that can be isolated to those events.


                                  Total Collected Premium


                                         $ millions





                          3Q00   2Q01    3Q01   Change     Change


                                               3Q00-3Q01  2Q01-3Q01


                          -----------------------------------------





   Life                   240     237     233   (3) %      (2) %


   Long Term Care         203     218     218     7 %        --


   Med Sup                218     237     232     6 %      (2) %


   Specified Disease       87      93      90     3 %      (3) %


   Other Sup Health        24      30      21  (13) %     (30) %


      Sub-total           772     815     794     3 %      (3) %


   Fixed Annuities        176     217     218    24 %        --


      Sub-total           948    1032    1012     7 %      (2) %


   Variable Annuities     190     114      79  (58) %     (31) %


   Equity indexed


     annuities            114     100      94  (18) %      (6) %


   Total market-linked    304     214     173  (43) %     (19) %


       TOTAL             1252    1246    1185   (5) %      (5) %


                     -------------------------------------------------

Non-operating charges

The non-operating charges, which we estimated on October 2, were $471 million after taxes. For a description and explanation of these charges, you can refer to my Memo No.16. Listed below are the line items for the non-operating charges, the estimates we provided on October 2, and the actual after tax charge that was incurred.

                                                    $ Millions


                                                  (net of taxes)


                                                   ------------


                                              Estimate        Actual


                                              --------        ------


I/O Security                                   $225.0         $224.4


Realized losses in bond portfolio               125.0          113.9


Major Medical discontinuation and other          40.0           49.0


TeleCorp mark-to-market                          45.0           45.2


D & O plan reserve increase                      40.0           38.7


                                               -------        -------


                                               $475.0         $471.2

While there is no guarantee that these will be the last of such charges, we have taken steps to minimize them going forward.

For example, the volatility of the TeleCorp asset, which required a mark-to-market charge of $45 million this quarter, will soon be behind us. Now that AT&T Wireless has agreed to acquire TeleCorp, we have dramatically increased liquidity in our 17.2 million shares, and we should have no difficulty selling them at the appropriate time. Additionally, I should note that the value of the shares has increased by approximately $20 million (after tax) in the month since we closed the books on the 3rd quarter.

We should also see less volatility in the I/O asset as a result of a transaction completed this quarter that bundles all the I/O pools into a single security. Going forward, we will be able to net the increases and decreases in value across all I/O pools, reducing future charges to the income statement.

The Investor Supplement (available at the investor relations section of the Conseco.com website) provides much more detail than I have summarized here. I hope you will take time to review it. By the way, you will see that we have added a new disclosure category in this quarter's Supplement. In addition to providing credit quality data for the entire portfolio of managed receivables, we have broken out the data for the on-balance-sheet portfolio. This disclosure is in direct response to your requests for the information. It should now be easier for those of you who model our financials to make your own estimates about credit quality and reserve adequacy.

Recent comments
As I noted last week, recent public comments suggesting a liquidity crisis in 2002 were overstated. We expect to meet our debt payments in 2002 and beyond by managing our balance sheet to achieve needed cash flows. Taking into account the repurchase of $49 million of our public debt during the 3rd quarter, plus an additional $75 million repurchased during the past month, Conseco's 2002 public debt maturities and debt service commitments are as follows:

                                                    $ millions


                                                    -----------





Conseco Finance 10.25% sub notes due June 2002          149


Conseco Finance 6.5% notes due Sept  2002               206


Conseco 8.5% Notes due Oct  2002                        385


Optional Bank Payment                                   150


Interest & Preferred Dividends                          500


                                                    ----------


                                                       1,390


                                                    ==========








As sources of cash to meet this demand, we project the following


ranges of cash available for debt service:





                                                     $ millions


                                                    ------------





 Excess cash on hand                                 50  --   60


 Insurance segment                                  450  --  500


 Finance segment                                    310  --  340


 Corporate expenses                                 (30)    ( 30)


 Telecorp (net of associated debt)                  200  --  220


 Cash generation options, as necessary              300  --  410


                                                     ------------


                                                         1,390





Among the multiple options available for generating cash are:





    --  Changes to operations


    --  Reinsurance/coinsurance


    --  Refinancing


    --  Non-core asset sales


    --  Non-core business line sales


    --  Other capital market alternatives

In short, we have excellent and predictable cash flow from operations and we have multiple options to generate additional cash. We expect to meet our future debt obligations and, equally important, to provide sufficient cash to grow our businesses at targeted returns.

Credit Quality
On another subject, recent comments about credit quality have called into question the performance of 1999 and 2000 securitization pools because of their higher incidence of ``problem loans.'' It is true that partial information about these pools causes them to appear worse than pools securitized in the past. This is an inaccurate conclusion because the more recent pools contain up to 4 times the proportion of ``repo refis'' as are contained in older pools. Repo refi loans are 2.5 times more likely to end up in the problem loan category, but our approach toward actively managing the repo inventory - rather than selling it wholesale - is clearly positive for the company. It is also important to understand that these loans are priced with higher spread to balance the expected higher default rate. On a return-adjusted basis, the performance of the more recent pools is actually better than that of older pools.

This and other issues related to Conseco Finance will be discussed at length at the Investor Briefing that we postponed in September. That briefing will take place in New York on November 15, starting at 1 p.m. Registration information will be available tomorrow.

Where are we in the Turnaround process?

Our estimate today, is that 4th quarter operating earnings will be in the range of 17 cents to 20 cents per share, which will translate into 72 cents to 75 cents per share for the year.(1)

I am disappointed that our original earnings expectations turned out to be too optimistic. But our goals for the company are clearly achievable. We may be about twelve months behind the schedule outlined by our initial earnings projections, but we fully intend to achieve our long-term financial objectives. And, in all likelihood, we will make up some of the delay we've experienced this year.

From the standpoint of our Turnaround activities, the internal and external factors experienced this year caused me to recruit Bill Shea as our new President and Chief Operating Officer. It was clear to me that the strain on earnings growth caused by these factors called for close operating management by a seasoned turnaround veteran. After only a few weeks Bill is deeply engaged in this work.

In the next few weeks we will be building budgets and a financial plan for 2002. Bill has already begun to hammer out expense reductions. He has advanced the clock on the budget process by asking each business unit and staff area for expense reductions in November and December of the current year so that we get a flying start in 2002. He is making certain that the Process Excellence projects, the Cost Out projects and the India initiative are tied into the budget to assure that promised savings find their way to the bottom line.

It is important to note that the facts at Conseco still add up to creating substantial shareholder value. Even with some internal and external impediments, our operating earnings are expected to exceed 72 cents per share this year. Even with the pain of this quarter's large non-operating charge, we are making progress toward ``clean quarters''. And, most importantly to our strategic focus, we are producing strong cash flow to reduce the company's debt burden.

(1) The number of shares used in this calculation is dictated by GAAP. Since we will have a net loss for the year, we will be required to show EPS for the year based on basic shares outstanding. However, if the 4th quarter produces a net profit, as we anticipate, that would require a quarterly EPS calculation on a diluted basis. If we did not have the non-operating charges this year dragging us into a net loss position, the 72 cents to 75 cents operating earnings per share for the year would translate into 68 cents to 71 cents.

Financial Highlights





                              Quarter Ended          Nine Months Ended


                                 Sept. 30:               Sept. 30:


                              2001       2000          2001       2000


 ---------------------------------------------------------------------





Consolidated income


 analysis (in millions)


Operating earnings from


  continuing operations


  before goodwill


  amortization and taxes:





  Insurance and


   fee-based segment


   operating earnings        $208.3     $220.1       $643.1    $617.1





  Finance segment


   operating earnings          72.5       40.0        216.2     103.8


----------------------------------------------------------------------


       Subtotal               280.8      260.1        859.3     720.9


----------------------------------------------------------------------


Holding company activities:


   Corporate expenses,


   less charges to


   subsidiaries


   for services provided       (9.3)     (23.9)       (10.1)    (47.0)





Interest and dividends,


 net of corporate


 investment income           (130.8)    (164.0)      (421.3)   (489.8)





Allocation of interest


 and dividends to


 finance segment                0.0       36.3          7.4     116.9


----------------------------------------------------------------------


Pre-tax operating earnings


from continuing operations


  before goodwill


  amortization                140.7      108.5        435.3     301.0





Taxes                         (51.8)     (39.9)      (167.6)   (111.3)


----------------------------------------------------------------------


After-tax operating earnings


from continuing operations


before goodwill


amortization                   88.9       68.6        267.7     189.7





Goodwill amortization         (28.3)     (27.8)       (83.5)    (79.0)


----------------------------------------------------------------------


Operating earnings from


 continuing operations


 applicable to common


 stock                         60.6       40.8        184.2     110.7


----------------------------------------------------------------------


Non-operating items,


 net of tax


   Net realized losses       (113.9)     (42.7)      (195.0)   (127.3)


   Venture capital income


   (loss)                     (45.2)    (107.6)       (41.9)   (107.2)


   Gain on sale of interest


    in Riverboat                0.0        0.0        122.6       0.0


   Impairment charge


    related to


    interest-only


    securities               (224.4)    (129.2)      (250.4)   (136.8)


   Provision for losses


   related to loan guarantees (38.7)     (12.7)       (38.7)    (72.0)


   Discontinued lines and


    other non-recurring items (49.0)    (238.1)      (141.5)   (490.9)


   -------------------------------------------------------------------


   Total non-operating items,


    net of tax               (471.2)    (530.3)      (544.9)   (934.2)


----------------------------------------------------------------------


Net loss applicable


 to common stock            ($410.6)   ($489.5)     ($360.7)  ($823.5)


----------------------------------------------------------------------








Conseco, Inc. (NYSE: CNC - news)


Financial Highlights





                            Quarter Ended            Nine Months Ended


                               Sept. 30:                  Sept. 30:


                             2001       2000           2001       2000


----------------------------------------------------------------------


Earnings per diluted


 share analysis





Operating earnings per


 diluted share before


 goodwill amortization:


  Insurance and fee-based


  segment operating earnings  $0.39      $0.43        $1.20     $1.21





  Finance segment


   operating earnings          0.14       0.08         0.40      0.20


----------------------------------------------------------------------


Subtotal                       0.53       0.51         1.60      1.41


----------------------------------------------------------------------


Holding company activities:





   Corporate expenses,


   less charges to subsidiaries


   for services provided      (0.02)     (0.05)       (0.02)    (0.09)





   Interest and dividends,


   net of corporate investment


   income                     (0.25)     (0.32)       (0.79)    (0.97)





   Allocation of interest


   and dividends to finance


   segment                     0.00       0.07         0.01      0.23


----------------------------------------------------------------------


Operating earnings per


diluted share from


continuing operations


 before goodwill


  amortization                 0.26       0.21         0.80      0.58


 Goodwill amortization        (0.08)     (0.09)       (0.25)    (0.24)


----------------------------------------------------------------------


Operating earnings per


 diluted share from


 continuing operations


 applicable to


 common stock                  0.18       0.12         0.55      0.34


----------------------------------------------------------------------


Non-operating items,


 net of tax





 Net realized losses          (0.34)     (0.13)       (0.58)    (0.39)


   Venture capital loss       (0.13)     (0.33)       (0.12)    (0.33)





   Gain on sale of


   interest in Riverboat       0.00       0.00         0.36      0.00





   Impairment charge


   related to interest-only


   securities                 (0.66)     (0.40)       (0.74)    (0.42)





   Provision for losses


   related to loan


   guarantees                 (0.11)     (0.04)       (0.12)    (0.22)





   Discontinued lines


   and other non-recurring


   items                      (0.15)     (0.72)       (0.42)    (1.50)


   -------------------------------------------------------------------


   Total non-operating items,


   net of tax                 (1.39)     (1.62)       (1.62)    (2.86)


----------------------------------------------------------------------


Loss per diluted share       ($1.21)    ($1.50)      ($1.07)   ($2.52)


----------------------------------------------------------------------


Diluted common shares


 outstanding (in millions)   340.3      325.3        336.4     326.2


----------------------------------------------------------------------








Conseco, Inc.


Consolidated Balance Sheet (in millions)


                                            At             At


                                       Sept. 30, 2001  Dec. 31, 2000


----------------------------------------------------------------------





Assets


Investments:


   Actively managed fixed


   maturities at fair value                $22,734.2      $21,755.1





   Interest-only securities


   at fair value                               172.4          432.9





   Equity securities


   at fair value                               234.5          248.3





   Mortgage loans                            1,197.4        1,238.6





   Policy loans                                635.9          647.2





   Venture capital investment


   in TeleCorp PCS, Inc.                       174.6          258.6





  Other invested assets                        297.1          436.9


   -------------------------------------------------------------------


Total investments                           25,446.1       25,017.6





Cash and cash equivalents:


   Held by the parent company                  182.9          294.0


   Held by the parent company


    in segregated accounts                      52.4           81.9


   Held by subsidiaries                      1,307.4        1,287.7


Accrued investment income                      518.0          467.1


Finance receivables                          3,840.2        3,865.0


Finance receivables - securitized           13,750.6       12,622.8


Cost of policies purchased                   1,663.6        1,954.8


Cost of policies produced                    2,548.0        2,480.5


Reinsurance receivables                        609.1          669.4


Goodwill, net of accumulated amortization    3,729.9        3,800.8


Income tax assets                              700.5          647.2


Assets held in separate accounts


 and investment trust                        2,200.9        2,610.1


Cash held in segregated


 accounts for investors                        528.0          551.3


Cash held in segregated accounts


 related to servicing agreements and


 securitization transactions                   833.8          866.7


Other assets                                 1,715.4        1,372.3


----------------------------------------------------------------------


Total assets                                59,626.8       58,589.2


----------------------------------------------------------------------


Liabilities and shareholders' equity





Liabilities:





   Liabilities for insurance and


    asset accumulation products:


   Interest-sensitive products              15,846.9       16,123.2





   Traditional products                      8,118.2        7,875.1





   Claims payable and other


   policyholder funds                          976.1        1,026.1





   Liabilities related


   to separate accounts


   and investment trust                      2,200.9        2,610.1





   Liabilities related to


   certificates of deposit                   1,992.4        1,873.3





Investor payables                              528.0          551.3


Other liabilities                            1,854.4        1,565.5


Investment borrowings                          928.8          219.8


Notes payable:


   Direct corporate obligations              4,237.2        5,055.0


   Direct finance obligations:


      Master repurchase agreements           1,288.2        1,802.4


      Credit facility collateralized


      by retained interests


      in securitizations                       562.5          590.0


      Other borrowings                         393.8          418.5





 Related to securitized finance


 receivables structured as


 collateralized borrowings                  13,841.1       12,100.6


   -------------------------------------------------------------------


Total liabilities                           52,768.5       51,810.9


----------------------------------------------------------------------


Company-obligated mandatorily


  redeemable preferred securities


  of subsidiary trusts                       1,912.7        2,403.9


----------------------------------------------------------------------


Shareholders' equity:


Preferred stock                                498.4          486.8


Common stock and additional


 paid-in capital                             3,481.5        2,911.8


Accumulated other


 comprehensive loss                           (300.4)        (651.0)


Retained earnings                            1,266.1        1,626.8


----------------------------------------------------------------------


Total shareholders' equity                   4,945.6        4,374.4


----------------------------------------------------------------------


Total liabilities and shareholders' equity $59,626.8      $58,589.2


----------------------------------------------------------------------








Conseco, Inc.


Consolidated Statement of Operations (in millions)





                                   Quarter Ended     Nine Months Ended


                                      Sept. 30:           Sept. 30:


                                   2001       2000     2001       2000


----------------------------------------------------------------------


Revenues


Insurance policy income        1,005.2   $1,074.1  $3,058.0  $3,195.2


Net investment income            847.7      830.6   2,787.1   2,773.9


Gain on sale of


 finance receivables               6.0        1.9      21.6       4.5


Gain on sale of interest


 in Riverboat                      0.0        0.0     192.4       0.0


Net investment losses           (180.1)     (74.4)   (333.7)   (227.9)


Fee revenue and other income     107.4      123.1     340.8     380.7


----------------------------------------------------------------------


Total revenues                 1,786.2    1,955.3   6,066.2   6,126.4


----------------------------------------------------------------------





Benefits and expenses


Insurance policy benefits        836.0    1,000.0   2,611.1   3,086.7


Provision for losses             200.6      110.8     440.3     345.5


Interest expense                 397.5      410.2   1,223.5   1,006.5


Amortization                     212.8      128.7     641.5     512.2


Other operating costs


 and expenses                    345.0      418.9   1,044.3   1,234.9


Special charges                   14.7      253.3      70.5     580.5


Impairment charges               345.2      205.0     386.9     217.1


----------------------------------------------------------------------


Total benefits and expenses    2,351.8    2,526.9   6,418.1   6,983.4


----------------------------------------------------------------------


Loss before income taxes,


 minority interest, extraordinary


 gain (loss) and cumulative effect


 of accounting change           (565.6)    (571.6)   (351.9)   (857.0)


Income tax expense (benefit)    (186.5)    (179.8)    (97.2)   (212.7)


----------------------------------------------------------------------


Loss before minority interest,


 extraordinary gain (loss) and


 cumulative effect of


 accounting change              (379.1)    (391.8)   (254.7)   (644.3)


Minority interest - distributions


 on Company-obligated mandatorily


 redeemable preferred securities of


 subsidiary trusts, net of


 income taxes                     29.1       35.3      90.4     110.0


   -------------------------------------------------------------------


Loss before extraordinary


 gain (loss) and cumulative


 effect of  accounting change   (408.2)    (427.1)   (345.1)   (754.3)


Extraordinary (gain) loss on


 extinguishment of debt, net of


 income taxes                     (0.7)       4.9       4.0       5.0


Cumulative effect of accounting


 change, net of income taxes       0.0       55.3       0.0      55.3


----------------------------------------------------------------------


Net loss                        (407.5)    (487.3)   (349.1)   (814.6)


Less preferred


 stock dividends                   3.1        2.2      11.6       8.9


----------------------------------------------------------------------


Net loss applicable


 to common stock               ($410.6)   ($489.5)  ($360.7)  ($823.5)

MortgageDaily.com
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,'' ``projected,'' ``intend,'' ``should,'' ``could,'' ``goal,'' ``target,'' ``on track,'' `