Financial services company with troubled past changes corporate name; 'new beginning'
In an apparent bid to distance itself from past troubles, Conseco Inc. yesterday changed its name to CNO Financial Group Inc.
Shareholders voted in favor of changing the company's name yesterday at Conseco's annual meeting. The CNO Financial moniker will apply to the parent company. The name change today kicked in on the company's website.
Changes are also ahead for the Conseco Insurance Group, which markets life insurance, annuities and disability coverage: Later this year, the unit will be split into two entities, with the active blocks of business going under the name Washington National, and the majority of the closed blocks being referred to as “Other CNO Business.”
Sister subsidiaries Bankers Life and Casualty Co. and Colonial Penn Life Insurance Co. will keep their names.
The name signals a new chapter for the carrier, which has only recently emerged from tough times. Conseco generated a profit in all four quarters last year, reinsured a few blocks of business —thus freeing up capital — and raised money through offering debt and stock. The carrier wrapped up the first quarter of 2010 in the black, with net income of $33.9 million, up 38% from the year ago period.
Barbara Ciesemier, CNO spokeswoman, said the new DBA marks a fresh start for the insurer. “We see it as more of a new beginning; we've put many of our legacy issues behind us,” she said. “We've had five consecutive profitable quarters, and we've made many improvements over the last several years.”
As recently as spring 2009, however, Conseco was staring at what would have been its second bankruptcy in the span of about seven years. At the time, the insurer was still reeling from a $1.13 billion loss in 2008. The results had raised fears among analysts that Conseco would violate a debt covenant on a loan facility.
A story in The New York Times in 2007 alleged that the insurer was denying claims for long-term health-care policies. An early player in the LTC product space, the company had sold low-cost coverage with liberal underwriting.
Those troubles came home to roost in 2008 when the company moved some 164,000 LTC policies under Conseco Senior Health Insurance Co. to an independent trust, which now operates as Senior Health Insurance Co. of Pennsylvania.
Advisers noted that the company has come a long way over the course of a year, but remain leery.
“I can't say that organizations can't change, but the historical record they have is guilty as charged,” said David W. Demming, senior financial planner at Demming Financial Services Corp. “We would be very skeptical about them now. It's not that people shouldn't try to do a better job, but culturally the organizations are so embedded with the way they do business.”
