Conseco Inc.'s second-quarter earnings showed signs that its $6 billion purchase of Green Tree Financial Corp. last year is beginning to pay off in a big way.

Indianapolis-based Conseco expanded beyond insurance into investment services and loan products with the purchase of the St. Paul manufactured housing giant. But Conseco's stock plummeted when it took a $498 million charge in the second quarter of last year.

This week the company reported first-half net income of $594 million- against a loss of $91.2 million in last year's the first half, when it took charges for the deal.

Second quarter-net income this year totaled $297.5 million, against a $303.8 million loss in the same period last year.

Operating earnings rose 36% in the half, to $619 million, including a second-quarter increase of 41%, to $316 million. The figures include $430.7 million in the half from the finance business, up 137%, and $225.5 million in the second quarter, up 185%.

Conseco's chief financial officer, Rollin Dick, said Green Tree has been performing "exactly according to plan," even in the home equity business, where other lenders have faltered.

"We see the turmoil that has taken place in that industry as a big plus for us, because it has taken competitors out of the picture," he said.

The company has raised loan prices as interest rates have risen "so we can maintain the same profit spread," Mr. Dick said.

David W. MacGown, a Morgan Stanley Dean Witter analyst, said both the insurance and finance businesses are operating as expected-and in some cases better than expected.

"When Green Tree was an independent company, it had problems," Mr. MacGown said, "but Conseco has proven to be better managers of the business."

Mr. MacGown said he expects double-digit growth for the rest of the year in Conseco's operating earnings, driven by solid growth on the insurance side of the company and more rapid growth in finance.

"Management continues to target higher bond ratings because they believe that will lower their funding costs," Mr. MacGown said. "That translates into higher net income."

Standard & Poor's upgraded Conseco bonds on Tuesday to BBB-plus from BBB, another vote of confidence. Nik Fiskin, an analyst at Stephens Inc., said the strong second quarter had provided "further evidence that Green Tree was a good deal, even though there are still skeptics out there.

"Conseco said it was not interested in buying any other insurance or consumer finance originators," Mr. Fisken said. "They are pretty much 100% focused on getting ratings upgrades. Because they issue so much asset- backed paper, upgrades can mean a lot added to the bottom line."

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