CARMEL, Ind. - Conseco Inc. said Friday that it has agreed to sell its Conseco Variable Insurance Co. to Inviva Inc. of New York, which owns American Life Insurance Co. of New York.
The deal, expected to close on Sept. 30, would reduce the number of businesses in Conseco's insurance group to 11. The company would not reveal the price.
The variable annuity deal would be one of six reinsurance or sale transactions initiated by Conseco as part of its ongoing debt reduction program. This month the consumer finance and insurance company announced a $48.5 million reinsurance transaction involving the life insurance business of CVIC.
On July 12 A.M. Best Co. downgraded all of the business in Conseco's insurance group, including CVIC, to B-plus-plus from A-minus.
In a report published Thursday, Colin Devine, a longtime Conseco critic, wrote that he expects Conseco to take a net loss when it reports second-quarter earnings next month. It would be Conseco's seventh quarterly loss since Gary Wendt was hired as its chairman and chief executive officer to orchestrate a turnaround.
"Deteriorating credit quality at its consumer finance unit; weak operating ratios" from life insurance, and its large debt all were exacerbated by the A.M. Best downgrade, Mr. Devine, an analyst at Citigroup Inc.'s Salomon Smith Barney, wrote in his report. Conseco probably will not "have sufficient cash to meet this fall's debt maturities," he wrote.
Mark Lubbers, a Conseco spokesman, retorted in an e-mail: "Sorry, [I] don't have time today to explain the usual list of mistakes and inaccuracies in Devine's 'research.' I do love his sense of timing - saying that our cash raising initiatives are languishing the same day we announce an important deal."
Conseco owes $1.5 billion to a consortium of bank lenders and at least $2.54 billion in public debt, $302.3 million of which is due in October.
