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Conseco: Conseco Finance
built 647 days ago
Conseco played a pivotal role in the current structure of the credit default swap market. The restructuring settlement option was shown in 2000 to have major flaws when the bank debt of Conseco Finance was restructured, triggering CDS settlements even though the restructuring was not detrimental to investors. This led to the creation of a more restrictive restructuring definition.
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The Company’s finance subsidiary, Conseco Finance Corp. (CFC), continues to pursue the sale of its assets through the Chapter 11 process. The proceeds from this sale are expected to be used to satisfy the creditors of CFC. The final sale hearing is currently scheduled for March 5, 2003.
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Conseco has ... suffered a series of downgrades by Wall Street credit rating agencies. Those downgrades, combined with bankruptcy fears, have hurt the ability of Conseco's insurance and finance subsidiaries to keep existing customers and attract new ones.
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On March 31, 2000, Conseco announced it had hired Lehman Brothers to find a buyer for Green Tree, which had been renamed Conseco Finance. Analysts predicted the company would lose billions on any divestiture and Conseco's stock value continued to slide.
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Conseco was once a hugely profitable financial services company. Then it bought Green Tree, a finance company that specialized in trailer homes and that had followed disastrously loose lending policies (see story). Conseco experienced huge losses on the Green Tree portfolio and in 2002 filed for bankruptcy.
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While the turnaround process is not yet complete, a new direction is emerging for Conseco. Central to Wendt's strategic vision has been to protect the solvency and ratings of the insurance operating entities. A second major objective has been to curb the hemorrhaging from poor operating results in the finance unit and to reduce the burden of corporate debt. Conseco has retained the licenses to be formidable once again in insurance, finance, and banking. A solid bet is that the darkest days are over for the leaner and more focused Conseco. With management determined to stay off the acquisition trail and concentrate on the systematic building of business units capable of delivering reliable operating profits, Conseco is positioned to prove its critics once again wrong.
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