Carmel, Ind. — Conseco Inc. completed the previously announced transfer of Senior Health Insurance Co. of Pennsylvania, formerly known as Conseco Senior Health Insurance Co., to Senior Health Care Oversight Trust (the "Trust"), an independent trust. In connection with the completion of the transfer, Conseco contributed $175 million to the capital of Senior Health and the Trust, as follows:
• A 6% senior note due 2013 in the principal amount of $125 million, the principal of which is payable in five equal annual installments
• A contribution of $11 million to the Trust to provide working capital, and to fund future operating expenses of the Trust
• Cash and cash equivalents of $39 million, including a ceding commission of $35.7 million paid by Conseco, in connection with the assignment by Senior Health of its non-long-term care business to Conseco
The transaction was approved by the Pennsylvania Insurance Department.
"The completion of this transfer and the formation of the independent trust is a balanced solution for all of Conseco's constituents and Senior Health's long-term care policyholders," Conseco CEO Jim Prieur says. "The trust will operate Senior Health for the exclusive benefit of the policyholders, without a profit motive, and will be governed by a highly qualified board of trustees under the oversight of the Pennsylvania Insurance Department. In addition, we expect that Conseco will benefit from both reduced earnings volatility and better allocation of management resources on its core businesses going forward."
As previously announced, Conseco expects to record accounting charges of approximately $1.1 billion related to the transaction, of which $503.7 million was recognized in the second quarter of 2008, $155.0 million was recognized in the third quarter of 2008, and approximately $400 million is expected to be recognized in the fourth quarter of 2008.
Source: Conseco Inc.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access