Tuesday, August 12, 2008

Conseco “Read the fine print”

Conseco reported Q2 results. Reading the press release just makes the hair on the back of your neck stand up. Clearly the business model is not executing according to plan. So this is what they have to say and this is maybe why investors should worry.

1. "Upon approval of our plans announced yesterday to transfer Conseco Senior Health Insurance Company to an independent trust, Conseco will have completed the most significant element of its program to pursue strategic alternatives," CEO Jim Prieur said. That’s sufficiently ambiguous to satisfy the lawyers. But if you are struggling with a buy/sell or hold decision the comment is not helpful.

2. “Our investment portfolio continues to perform, with earned yields meeting expectations and impairment losses significantly lower than for most life insurers on a percentage of assets basis," CFO Ed Bonach said. Given the tough news through out the financial community if someone has done something to enhance their yield above what their peers are attaining that certainly needs more explanation about just what is going on back at the shop.