Conseco Puts Off Bond Interest Payments

Conseco believes it has more than enough cash to run its businesses as it restructures, and none of its operating subsidiaries "will be directly involved in the planned restructuring," Wendt said.

Conseco executives will be meeting with regulators, rating agencies and other stakeholders in the next few weeks to explain the restructuring, Wendt said.

Although Conseco has a legal right to use a 30-day grace period to postpone its upcoming bond interest payments, Standard & Poor's, New York, immediately put out a report changing the counterparty credit ratings of Conseco Inc. and its CIHC Inc. subsidiary to "SD," for selective default, from triple-C-plus.

S&P assigns an SD rating when it "believes that the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner," S&P says.

A week ago, before Conseco announced its use of the 30-day grace period, analysts at Moody's Investors Service, New York, argued that recent cuts in Conseco's insurance claims-paying ratings could hurt the company's ability to raise cash by selling and retaining insurance business.

Julie Burke, an analyst in the Chicago office of Fitch Ratings, leaves some room for optimism about Conseco's core insurance operations.

"We do still think the insurance companies have good capital and liquidity," Burke says.

But Burke says the parent company is suffering from a combination of an unforgiving financial climate and its own, company-specific credibility problems.

Although Conseco has cooperated with ratings analysts and others, "the company has never really reported a clean quarter of results in recent years," Burke says. "Every quarter had some kind of special charges."