Conseco Inc. continues to be plagued by bad financial news. This time, it is ratings downgrades from Moody's Investors Service and Fitch Ratings.Moody's downgraded Conseco's old senior debt rating to Caa1 from B2. Moody's stated that Conseco's slower than anticipated progress in generating cash from reinsurance and other transactions, coupled with its continued weak net income performance from its finance and insurance subsidiaries "leads Moody's to believe that the possible risks of bankrupcty for Conseco are more problematic." The rating agency stated that the uncertainty of the company's cash sources is heightened by the fragile economic environment.

In order to extend its bank facility to 2005, Conseco must make an optional bank payment of $193 million in September of 2002, Moody's noted. "Should Conseco fail to make this payment, payment maturities in 2003 increase from $599.6 million to $1.8 billion," the report states. The company is projecting slightly over $1 billion of cash flow sources for the year, including $386 million of prospective transactions.

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