Conseco Obtains Financing

By Allison Bell

March 31, 2009 at 08:00 PM

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A Midwestern insurer has posted a large loss for the fourth quarter of 2008 but obtained relief from its lenders.

Conseco Inc., Carmel, Ind., is reporting a $452 million net loss for the fourth quarter of 2008 on $1 billion in revenue, compared with a $72 million net loss on $1 billion in revenue for the fourth quarter of 2007.

Conseco notes that it earned $78 million before including interest, taxes and results from discontinued operations, up from $65 million in the comparable quarter in 2007.

Conseco says much of the loss comes from a long term care insurance unit that has been turned over to an independent trust.

Conseco reports that it also has succeeded at completely previously announced efforts to amend its credit facility.

The amendment will permit the company to increase the maximum debt-to-capital ratio to 32.5%, until June 30, 2010, and decrease the minimum interest coverage ratio to 1.5x, from 2.0x, until June 30, 2010.

The lenders also have reduced the minimum risk-based capital ratio to 200%, from 250%.

Conseco had to increase the annual interest rate is paying to win the concessions.

The interest rate on the $912 million outstanding under the credit facility will increase to 7.5%, from about 2.6%, Conseco says.

"The amendment also places additional restrictions on the company's ability to incur certain additional indebtedness, among other restrictions," Conseco says. "The amendment made no changes to the amount borrowed under the credit facility, to the principal repayment schedule or to the collateral pledged as security for the facility."

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