Conseco Inc. (CNO) swung to a first-quarter profit amid smaller
net realized investment losses, helped by profits at its three
insurance businesses.
The company's shares were up 26% at $3.40 in recent premarket
trading. The stock is down by roughly a three quarters since last
year, though it has soared since hitting an all-time low in
March.
The life-insurance sector has been hurt by the market turmoil,
which has hurt many insurers' financial flexibility and decreased
their ability to access the credit markets. In March, Conseco found
some breathing space by amending its credit agreement. The new
arrangement came after the company said its auditor had expressed
doubts about its ability to continue as a going concern.
Chief Executive Jim Prieur said the quarter, a seasonally weak
one for Conseco's earnings, saw records for new agent contracts in
Conseco's wholly owned distribution channels. New agency
appointments rose 73% in its independent channel, he said.
The company swung to a profit of $24.5 million, or 13 cents a
share, from a year-earlier loss of $7.2 million, or 4 cents a
share. The latest period included 4 cents in net investment losses,
down from 15 cents a year earlier.
The quarter also included a $108.1 million write-down related to
accounting standards.
Revenue rose 4.1% to $1.07 billion.
Analysts surveyed by Thomson Reuters forecast earnings,
excluding items, of 20 cents a share on revenue of $1.14
billion.
In the Bankers Life business, which distributes insurance
through career Bankers insurance agents, sales fell 18% as profits
rose 54%.
Conseco's insurance group, which works through independent
insurance agents, saw sales fall 10% as earnings rose 34%. Sales at
Colonial Penn - which distributes insurance through television,
Internet and direct mail - fell 29% while profit rose 38%.
In December, Conseco finished transferring many of its long-term
care policies to a new state-supervised nonprofit trust, Senior
Health Insurance Co. of Pennsylvania, allowing it to concentrate on
its core business. The policies were a drag on earnings because
they were underpriced and required continued capital infusions to
meet policyholders' long-term needs.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com