Conseco Gets Approval to Leave Bankruptcy

• Lori Chordas
• November 2003
• 

Conseco Inc.'s plan for reorganization has been approved by the court, paving the way for the company to come out of bankruptcy as an insurance-only operation.

Conseco reported the U.S. Bankruptcy Court confirmed the company's sixth amended joint plan of reorganization on Sept. 9, permitting Chapter 11 status, the company said.

William J. Shea, Conseco's president and chief executive officer, said Conseco would emerge as a re-energized company with greatly reduced debt and a single business focus because of the team effort in working through this process.

The reorganization eliminates about $5.2 billion of debt and trust preferred securities, the company said. "As we emerge, we intend to apply the same effort to building our capital and growing profitably," Shea said.

Conseco filed for federal bankruptcy protection under Chapter 11 in December 2002. Under the plan of reorganization, the company's existing bank debt is to be canceled as of the effective date in favor of a new credit facility, Conseco said.

The company's outstanding bonds, trust preferred securities and common stock also will be canceled.

Shares of new common stock, new preferred stock and new warrants are to be issued by the company's successor--Conseco Inc., a Delaware corporation--and distributed to classes of the company's creditors, Conseco said.

Brown & Brown Continues to Expand With Acquisitions

Brown & Brown Inc. continued its string of 2003 acquisitions, announcing the purchase of Canfield and Associates Inc., Canfield Insurance Services Inc., and Washington Insurance Services Inc. The acquisitions are Brown & Brown's 11th and 12th so far this year.

The Canfield and Washington Insurance Services acquisitions were effective Sept. 1. Both entities are based in Washington state. Terms of the sales were not disclosed.

Brown & Brown said in a statement that the acquisitions will further expand the reach of its Program Management Services Inc. subsidiary, which focuses on the government sector in the West and Northwest.

Woodinville, Wash.-based Washington Insurance Services, which has annual revenue of approximately $2.2 million, provides underwriting and insurance brokerage services to government and commercial clients in Washington and throughout the West.

Canfield and Associates Inc. and Canfield Insurance Services Inc., provide third-party administration and risk-management consulting to governmental and quasi-governmental clients in Washington state. The Canfield firms bring in annual revenues of about $4.4 million.

American Equity Investment Marks Growth With IPO

Life and annuity insurer American Equity Investment Life Holding Co. has registered a $247 million initial public offering of common stock with the U.S. Securities and Exchange Commission, planning to contribute to the capital and surplus of its insurance subsidiaries.

Merrill Lynch & Co. will act as the book-running manager for the offering with Advest Inc. acting as co-managing underwriter, American Equity said in a statement.

The registration statement has been filed with the SEC but has not yet become effective, the company said. The company's stock will trade on the New York Stock Exchange under symbol "AEL," according to the filing.

TIAA-CREF Announces Restructuring, Lays Off 500

As part of a broad restructuring plan designed to help it keep pace with for-profit competitors, Teachers Insurance & Annuity Association of America said it would lay off 500 workers, representing roughly 8% of its 6,000 employees.

The news comes in concert with a plan for the association, which is the largest U.S. provider of individual pension products to colleges and universities through its TIAA-CREF subsidiary, to open a series of "store front" offices near major university centers.

"This is a one-time, companywide restructuring, and while there were jobs that were eliminated, we feel confident that it will improve our efficiency, as well as our ability to serve our customers," TIAA-CREF spokeswoman Stephanie Cohen Glass said, adding that the layoffs weren't "directly related" to the new regional offices.

According to Glass, most of the job cuts have come through "eliminating the company's large back office operation" and shifting to a greater emphasis on customer service and a more streamlined information-technology system. Most of the cuts are concentrated near the company's New York base of operations, Glass said.

MetLife to Sell Property In L.A. for $225 Million

Metropolitan Life Insurance Co. has agreed to sell a California property from its equity portfolio to Maguire Properties Inc. for about $225 million.

The principal operating unit of MetLife Inc. is selling 1 California Plaza in Los Angeles, located at 300 South Grand Avenue in the Bunker Hill submarket downtown. It's located across from Maguire's Wells Fargo Center, Maguire said.

MetLife has a very active equity portfolio in the field of real estate investment, said MetLife spokeswoman Jennie Morgan. This transaction is just part of the diversification of that portfolio, she said.

The purchase price of $225 million will be funded through cash on hand and a $146.3 million, seven-year mortgage loan at a fixed interest rate of 4.73% provided by Metropolitan Life, with the acquisition expected to close in November, said Maguire, a real estate investment trust.

In late August, MetLife bucked the trend of life insurers dumping their major "trophy" real estate holdings by acquiring the Sears Tower in Chicago, the tallest building in North America. Under terms of the agreement, MetLife's subsidiary Metropolitan Insurance & Annuity Co., which already holds the 110-story building's first mortgage, was to purchase an equity stake in the building and the right to assume title from real estate trust Trizec Properties in a $9 million transaction.

Bermuda-Based Aspen Insurance Planning U.S. IPO

Aspen Insurance Holdings Ltd. has asked the U.S. Securities and Exchange Commission for permission to make an initial public offering of its ordinary shares.

The timing of the offering, number of shares, and initial value of the IPO will be determined later, Aspen officials said. According to a spokesman for the firm, which intends to apply to list its shares on the New York Stock Exchange, proceeds from the IPO would go toward "general corporate purposes."

A Bermuda-based reinsurer, Aspen said it wanted to expand into the U.S. excess and surplus lines business when it acquired Dakota Specialty Insurance Co. from the Insurance Corporation of New York in early September.

AIG Buys Stake in Chinese Property/Casualty Insurer

American International Group Inc. will invest in the initial public offering of Hong Kong-based PICC Property & Casualty Co. Ltd., marking further inroads by a western insurer into the burgeoning Chinese market.

PICC, whose parent is the quasi-governmental People's Insurance Company of China, is the largest nonlife insurer in the country. AIG said it would take a 9.9% stake in the company, as well as provide reinsurance for some of its accident and supplemental health insurance businesses. Terms of the transaction weren't disclosed. However, the Chinese government planned to sell as much as 30% of PICC in a late October IPO expected to raise between $500 million and $750 million, which would put the AIG stake at between $150 million and $300 million.

Other western financial-services companies to take shares of Chinese insurers include the U.K.-based bank HSBC Holdings plc, which bought a $600 million stake in life insurer Ping An Insurance Co. in October 2002, representing 10% of the company's equity. Goldman Sachs and Morgan Stanley also have stakes in Ping An.

Fifteen new foreign-capital insurance companies were granted licenses to operate in China in the past two years. Recent entrants include broker Aon Corp., which was granted a license for a joint-venture brokerage. ING Group gained a license for a life insurance joint venture in Dalian, its second insurance foray into China. Cigna Corp. also launched a life insurance joint venture, in the city of Shenzhen.

Prudential Relaunches Foreign Equity Business

Prudential Financial Inc. is rolling out the relaunch of its foreign financial-management business under the new name Dryden Wealth Management Ltd., the company said.

Dryden, previously known as Prudential-Bache Ltd, will provide both investment management and advice to private clients in Europe and Asia, as well as private banking services through Dryden Bank SA in Geneva.

The business is named for Prudential Insurance Co.'s founder, John F. Dryden, who started the company in 1875. Prudential's European global derivatives and institutional investor operations will continue to operate as Prudential-Bache.

According to Carol Robbins, chairman and chief executive officer of Dryden Wealth Management, the new launch is a part of Prudential's plan to move its foreign operations away from the traditional U.S. retail stock-brokerage model and refocus instead on a private wealth-management business.

By Lori Chordas, senior associate editor, Best's Review: Lori.Chordas@ambest.com