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Conseco Plans To Consolidate Insurance Subsidiaries To Build Capital

Conseco Insurance Company and Conseco Health Insurance Company would be merged into a third subsidiary, Washington National Insurance Company

Conseco has planned to consolidate three insurance companies within its Conseco Insurance Group segment.

Under the plan, two insurance subsidiaries – Conseco Insurance Company and Conseco Health Insurance Company, would be merged into a third subsidiary, Washington National Insurance Company (WNIC).

Subject to the approval of insurance regulators in Arizona, California and Illinois, Conseco expects to complete the merger in the fourth quarter of 2009.

Reportedly, the merger will provide an estimated $2.5 million of annual savings by: eliminating the costs to administer and file financial reports and related audits and examinations on two statutory companies, and by reducing overall premium tax payments.

Offsetting these savings would be approximately $8 million of one-time expenses over the next 12 months, including costs to update and restock forms, update IT systems, modify agent appointments, and complete other changes arising from the merger.

The merger intends to simplify the structure of Conseco Insurance Group, putting nearly half of its inforce business and all of its new sales activity into a single entity.

After the merger, WNIC (domiciled in Illinois) would have approximately $5.3 billion of statutory assets, 925,000 policies in force, $625 million of annual premiums, and $4.3 billion of statutory policy reserves.