Exhibit 99.2
CONSECO LOGO
Security Analysts Update
COMPREHENSIVE DEBT
RESTRUCTURING PROGRAM
Restores responsible debt levels and stability to the balance
sheet and in the operating Businesses.
<PAGE>
Forward-Looking Statement Conseco Logo
Note on forward-looking statements: All statements, trend analyses and other
information contained in this release and elsewhere (such as in filings by
Conseco with the Securities and Exchange Commission, press releases,
presentations by Conseco or its management or oral statements) relative to
markets for Conseco's products and trends in Conseco's operations or financial
results, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," "will," "should," "could,"
"goal," "target," "on track," "comfortable with," "optimistic" and other similar
expressions, constitute forward-looking statements under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
known and unknown risks, uncertainties and other factors which may cause actual
results to be materially different from those contemplated by the
forward-looking statements. Such factors include, among other things: (1)
general economic conditions and other factors, including prevailing interest
rate levels, stock and credit market performance and health care inflation,
which may affect (among other things) Conseco's ability to sell its products,
its ability to make loans and access capital resources and the costs associated
therewith, the market value of Conseco's investments, the lapse rate and
profitability of policies, and the level of defaults and prepayments of loans
made by Conseco; (2) Conseco's ability to achieve anticipated synergies and
levels of operational efficiencies; (3) customer response to new products,
distribution channels and marketing initiatives; (4) mortality, morbidity, usage
of health care services and other factors which may affect the profitability of
Conseco's insurance products; (5) performance of our investments; (6) changes in
the Federal income tax laws and regulations which may affect the relative tax
advantages of some of Conseco's products; (7) increasing competition in the sale
of insurance and annuities and in the finance business; (8) regulatory changes
or actions, including those relating to regulation of financial services
affecting (among other things) bank sales and underwriting of insurance
products, regulation of the sale, underwriting and pricing of products, and
health care regulation affecting health insurance products; (9) the outcome of
Conseco's efforts to sell assets and reduce, refinance or modify indebtedness
and the availability and cost of capital in connection with this process; (10)
actions by rating agencies and the effects of past or future actions by these
agencies on Conseco's business; and (11) the risk factors or uncertainties
listed from time to time in Conseco's filings with the Securities and Exchange
Commission.
2
<PAGE>
The Market's View of Conseco? Conseco Logo
Image of a weight lifter with the word FINANCE written on his left arm and the
word INSURANCE written on his right struggling to lift a dumbbell that has the
word HOLDING on it
3
<PAGE>
What is Conseco? Conseco Logo
The appropriate depiction of Conseco, as we see it.
Insurance Co's Finance Co
-------------- ----------
Strengths Strengths
--------- ---------
o Valuable distribution o Disciplined credit risk and
-#1 in agent-produced medial pricing philosophies
supplement insurance o 30% market share in manufactured
-#2 in long-term care insurance housing
-#3 in equity-indexed annuities o Growing position in less
o Solid RBC (2.58 at 6/30/00) competitive home equity market
o Highly liquid investment-grade bond o Sophisticated target marketing
portfolio and segmentation
o Emerging Conseco Capital Mgt.
Holding Co.
-----------
o Bloated debt
o "Corporate" expenses
o Non-strategic equity inv.
4
<PAGE>
Conseco Parent:
Debt and Trust Preferred Securities
(Accumulation Period) Conseco Logo
(MM)
Outstandings Bar Chart Graphic demonstrating levels of Public
------------ Debt, Bank Debt and Trust Preferreds.
Total
Debt
+
Preferreds
<TABLE>
<CAPTION>
1st 1/2
1996 1997 1998 1999 2000
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH Inflow From Operating Activities
--------------------------------
Insurance Companies $ 221.2 $ 326.0 $ 277.7 $ 361.8 $ 225.0
Finance Company - - (1,971.0) (1,246.0) (284.0)(1)
Other 1.6 (19.9) 17.6 (23.3) 28.5
----------------------------------------------------------------------
Total Operating Cash Flow $ 222.8 $ 306.1 $ (1,675.7) $ (907.5) $ (30.5)
======================================================================
CASH Outflow to Service H.C. Debt
----------------------------
Bank and Public Debt Interest $ 78.6 $ 143.9 $ 236.3 $ 345.5 $ 222.8
Preferred Dividends 2.9 65.7 132.6 193.7 115.6
----------------------------------------------------------------------
Total Fixed Charges $ 81.5 $ 209.6 $ 368.9 $ 539.2 $ 338.4
======================================================================
</TABLE>
(1) Does not include proceeds to parent from whole loan sale in May 2000
Two Issues: 1. Total Debt 2. Finance Cash Flow
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<PAGE>
New Team Assembled In Early July Faced Conseco Logo
Immediate Motivating "Total Debt" Issue
June 29, 2000 July 10, 2000 July 10, 2000
------------- ------------- -------------
1)Gary Wendt employed 2)Street, Keenoy, Borom employed 3)Tom Hagerty employed
as CEO as "Restoration Activists" as acting CFO
July 2000
Debt Maturities 2000 and 2001 (excluding Officer & Director Guarantees)
-----------------------------------------------------------------------
Bank Debt 9/22/00 $1,221.0
Public Debt 12/15/00 131.5
Subtotal 2000 $1,352.5
==============
Public Debt Due June, 2001 $668.9
Total $2,021.4
==============
Objective: Find a Solution that Looks Beyond "Sept 01"
-------------------------------------------------------
6
<PAGE>
Responsive Actions Began Immediately Conseco Logo
Objective: Reduce debt to responsible levels without disrupting income
producing activities
June 29, 2000 July 10, 2000 July 10, 2000
------------- ------------- -------------
1)Gary Wendt employed 2)Street, Keenoy, Borom employed 3)Tom Hagerty employed
as CEO as "Restoration Activists" as acting CFO
July 2000
New Management lifted the bar with two actions:
Graphic of dumbbell the length of the page
Nonstrategic assets Major restructuring of Conseco Finance underway "rounded up"
and - 5 business activities to be sold/closed; sales underway - 15 branches
in MH being closed;
- 31 branches in home equity being closed;
- 2000 total employees laid off;
- $150 million expense reductions
- Plus: Slow the Growth
Actions would provide $2 billion for debt repayment over the next five quarters
and stop the need to invest more in Finance without changing strategic position
7
<PAGE>
Solved By Proposing a Comprehensive Program Conseco Logo
For Debt Reduction: Years 2000 and 2001
------------- -------------- -----------
Parent Co.
Insurance Cos. Private Equity Finance Co.
Investments
------------- -------------- -----------
| | | |
| | | |
| | | |
| | Non-strategic | Non-strategic |
| ------------------- | --------------
| assets | | | assets
| | | |
| \|/ \|/ \|/
| -------------------------------
| "The Box"
|Cash from
|reinsurance 1. Assets to be sold/run down
------------------- in non-fire sale mode
proceeds, 2. All cash to be used to pay
if necessary debt
-------------------------------
/\
/ \
/ \
/ \
/ \
Pay public debt Reduce bank debt
as required ($1.2 billion repaid by the
($800 million due end of 2001)
2000 and 2001)
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<PAGE>
Significant Non-Strategic Assets Were Identified That Conseco Logo
Would Result in Significant Cash Proceeds and
Elimination of Expenses
Progress in Restoration Activities Taken Thus Far Is Very Positive:
<TABLE>
<CAPTION>
Net Cash Potential When
Item: Proceeds Change Expected Comments on Potential Upside
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sub Prime Auto Receivables $ 150 mm DONE
VISA/MC Portfolio 150 + 32 DONE Projected collections on delinquent
A/R not sold as part of transaction
Identify Ineligible Inventory 25 DONE
Move Credit Card to CNC Bank 245 + 33 DONE Incremental PLCC available to be
Refinancing of B-2's 80 + 20 AGREED transferred Part of Lehman agreement
ABL Portfolio 40 + 3 DONE Completed
LOC for Servicer Advances 30
Champion Home 30
Fleetwood/Palm Harbor 100 + 10 Incremental overconcentration from
Renegotiate Repo Lines with Merrill Lynch 45 + 7 WORK Patriot Homes Merrill proposal to
Financing/Sale of Insurance Receivables 90 UNDER increase advance rates
Argosy Riverboat 225 + 65 WAY Appraisals support higher valuation
Vendor Services 110 + 10 Fifteen oral indications of interest.
Tritel 500
Major Medical Line 150
Truck Portfolio 50 + 30 New strategy to sell truck lease
------------ ---------- portfolio; run-off loans
SUBTOTAL -Sales/Restructurings $ 2,020 mm $ 210
Apply Cash Available 155
------------
TOTAL $ 2,175 mm
============
</TABLE>
--------------------------------
No fire sales! Strategy works!
--------------------------------
9
<PAGE>
Operating "The Box" - 2000 / 2001 Conseco Logo
<TABLE>
<S> <C> <C>
Cash at Closing Status
--------------- ------
MC Visa Cash $150 mm - Done $700mm [$650 TO BANKS]
Subprime Auto Cash $150 - Done ------->
Private Label Credit Card $245 - Done [$50 TO BANKS
Cash on Hand $155 FOR D&O
---- COLLATERAL]
$700
--------------------------------------------------------------------------------
Expected 2000 Asset Sales Status
------------------------- ------
ABL Portfolio $ 40 - Done
Ineligible Inventory $ 25 - Done
B-2's $ 80 - Agreement from Lehman
Palm Harbor/Fleetwood $100 - Oral Agreement to Repay $800mm [$100 TO CNC]
Servicer Advances $ 30 - Discussions Commenced -------> [$100 TO BANKS]
Renegotiate Repo lines $ 45 - Oral Agreement with ML [$600 FOR PUBLIC DEBT]
Monetize Insurance Rec. $ 90 - Process Underway
Champion Homes $ 30 - Company In Agreement to Repay
Argosy $225 - Appraisals Received
Vendor Services $110 - Preliminary Bids Due 9/15
Truck Leasing $ 25
-----
$800
--------------------------------------------------------------------------------
Expected 2001 Asset Sales Status
------------------------- ------
Monetize Tritel $500 - Discussions Underway $675mm [$200 FOR PUBLIC DEBT]
Insurance Lines $150 - Offering Memo Complete -------> [$475 TO BANKS]
Truck Leasing $ 25 - Run-off
----
$675
</TABLE>
10
<PAGE>
Why Conseco Finance Now Cash Positive Conseco Logo
O DRAMATIC REDUCTION IN GROWTH
o $20 billion managed receivable growth mid 1998-2000
o Restructured business plan assumes managed receivables growth
thru 2004 grows less than $5 billion
O OVER $1 BILLION IN B-2 PIECE MID 1998-2000
o Prior strategy was to retain assets which yielded above cost
of borrowing
o Now selling of B-2's as part of plan - - consistent with past
practices
O EXPENSE IMPLICATIONS OF RESTRUCTURED BUSINESS PLAN
o Significantly downsized expense structure results in $150
million ongoing expense savings
o Elimination of sub-scale/unprofitable business lines (e.g.
Truck and ABL)
O RECENT FINANCING TRANSACTIONS O CORPORATE TAX STATUS UPDATE
o Recent securitizations require o Completion of 1999 returns
5% cash vs. 7% cash in business indicates ongoing NOL's.
model.
o Warehouse efficiencies and line o Intercompany tax sharing
reduction will free up working payments are well in
capital. excess of corporate tax
obligations.
O COMPETITIVE ENVIRONEMNT
o Decreased competition will allow for whole loan sales.
o Better spreads available for retained business.
11
<PAGE>
Progress in Restructuring The Finance Company Conseco Logo
<TABLE>
<S> <C> <C>
- 5 BUSINESS ACTIVITIES TO BE - 31 BRANCHES IN HOME EQUITY - $150 MILLION EXPENSE
SOLD/CLOSED; BEING CLOSED; REDUCTIONS ;
- 15 BRANCHES IN MH BEING CLOSED; - 2000 TOTAL EMPLOYEES LAID OFF; - SLOW THE GROWTH
</TABLE>
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ORIGINATION POTENTIAL ($16.6B IN 1999) $15.0 BILLION $15.0 BILLION $15.0 BILLION $15.0 BILLION $15.0 BILLION
ORIGINATIONS SOUGHT $10.0 BILLION $10.0 BILLION $11.0 BILLION $12.0 BILLION $12.0 BILLION
USED TO REPLACE/BUILD $9.9 BILLION $7.5 BILLION $7.5 BILLION $7.5 BILLION $8.0 BILLION
------------- ------------- ------------- ------------- -------------
Available for outplacement $.1 Billion $2.5 Billion $3.5 Billion $4.5 Billion $4.0 Billion
Operating cash flows $ 404 $ 507 $ 544 $ 653 $ 713
=====================================================================================
REQUIRED FOR DEBT REPAYMENT @ CORP. NA $ 250 $ 335 $ 385 $ 450
============= ============= ============= ============= =============
</TABLE>
12
<PAGE>
Insurance Operating Results -
GAAP Basis Conseco Logo
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 2004
----------- ----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Insurance policy income $ 3,149.3 $ 3,291.8 $ 3,446.6 $ 3,672.8 $ 3,866.8 $ 4,164.5
Net investment income 1,819.5 1,809.3 1,818.5 1,863.1 1,940.1 2,091.5
Other income - 1.2 - -
----------- ----------- ------------ ---------- ---------- -----------
Total revenue $ 4,968.8 $ 5,102.3 $ 5,265.1 $ 5,535.9 $ 5,806.9 $ 6,256.0
=========== =========== ============ ========== ========== ===========
Cash to Parent $ 361.8 $ 450.0 $ 450.0 $ 475.0 $ 510.0 $ 510.0
=========== =========== ============ ========== ========== ===========
</TABLE>
o Aggressive expense management and staff reductions
o Review of operating process to improve productivity
o Focus on most profitable products - add to product offerings where
appropriate
o Target revenue growth of 5 - 6% per year
Note: Projections exclude major medical.
13
<PAGE>
Comprehensive Debt Restructuring
Debt Repayment 2000-2003; 2005 Conseco Logo
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Sept.-Dec.
Sept.-Dec.
2000 2001 2002 2003
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash Sources:
Cash on Hand $ 280 $ 330 $ 420 $ 263
Operating Cash:
Insurance 160 450 475 510
Finance 73 250 335 385
-------------- --------------- -------------- --------------
Subtotal Operating Cash 233 700 810 895
CNC "Box" Participation 130 - 90 -
-------------- --------------- -------------- --------------
Total Cash Sources 643 1,030 1,320 1,158
-------------
SEE THE "BOX" Prepay $90 ------>
-------------
Cash Uses:
Principal Payments:
Banks 60 150
Public 450 310
Interest 163 430 375 315
Dividends 95 180 172 172
Fees 55 - - -
-------------- --------------- -------------- --------------
Total Cash Uses 313 610 1,057 947
-------------- --------------- -------------- --------------
Ending Cash $ 330 $ 420 $ 263 $ 211
============== =============== ============== ==============
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
'03 OPTION GRANTED BY BANKS TO COMPANY
EXTEND 12/31/03 MATURITY TO 3/31/05
- Libor plus 250
- 3.5% fee (added to loan amount)
--------------------------------------------------------------------------------
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<PAGE>
Liquidity Overview at Closing Conseco Logo
<TABLE>
<CAPTION>
HOLDING FINANCE
($'S IN MILLIONS) COMPANY COMPANY TOTAL
------------- ------------- --------------
<S> <C> <C> <C>
CASH/LIQUIDITY-PRE CLOSE $ 1,165 $ 100 $ 1,265
REPAYMENTS OF DEBT (650) - (650)
D&O COLLATERAL (50) - (50)
------------- ------------- --------------
TOTAL LIQUIDITY AFTER CLOSING $ 465 $ 100 $ 565
============= ============= ==============
</TABLE>
--------------------------------------------------------------------------------
ALREADY HAVE CASH TO PAY DEC. '00 DEBT OF $131 MILLION AND $175
MILLION TOWARDS JUNE '01 MATURITY, WHILE MAINTAINING IN EXCESS OF
$200 MILLION OF OVERALL LIQUIDITY.
--------------------------------------------------------------------------------
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<PAGE>
Restoration Program Outcome Conseco Logo
- Debt and preferred paydown exceed $3.5 billion under plan
- Lowest debt/equity ratio since 1996 by end of 2003
<TABLE>
<CAPTION>
----------------
DEBT
($'s in millions) 12/31/97 12/31/98 12/31/99 6/30/00 12/31/00 12/31/01 12/31/02 12/31/03 PAID DOWN
--------------------------------------------- --------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank debt $ 1,850 $ 2,280 $ 2,180 $ 2,720 $ 1,970 $ 1,500 $ 1,350 $ 1,200 $ 1,520
Public debt 500 1,540 2,660 3,180 3,040 2,380 1,930 1,620 1,560
--------------------------------------------- --------------------------------------------- ----------------
Total debt 2,350 3,820 4,840 5,900 5,010 3,880 3,280 2,820 $ 3,080
================
Trust preferreds 1,400 2,130 2,680 2,430 2,430 1,930 1,930 1,930 $ 500
----------------
Common equity 5,220 5,300 6,330 5,890 5,890 6,900 7,420 7,950 $3,580
--------------------------------------------- ---------------------------------------------
Total capital $ 8,970 $ 11,250 $ 13,850 $ 14,220 $ 13,330 $ 12,710 $ 12,630 $ 12,700 = TOTAL PAYDOWNS
============================================= ============================================= ----------------
----------------
Debt to total capital 26.2% 34.0% 34.9% 41.5% 37.6% 30.5% 26.0% 22.2%
</TABLE>
-------------------------------------
At Close, Net Debt = $4,941 mm Debt Service = $500 mm
Running Rate '01 Cash from Operations = $700 mm
Coverage on Bank & Public Debt = 1.4X Total Coverage =
1.1X
-------------------------------------
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<PAGE>
Strong Operating Businesses Will Cover Fixed Charges Conseco Logo
During '01 (first time since '97)
Debt and Trust Preferred Paydown Plan
Bar Chart Graphic demonstrating levels of Public Debt, Bank Debt and Trust
Preferreds.
<TABLE>
<CAPTION>
First Half
CASH INFLOWS 1996 1997 1998 1999 2000
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Insurance Companies $221.2 $326.0 $ 277.7 $ 361.8 $225.0
Finance Company - - (1,971.0) (1,246.0) (284.0)
Other 1.6 (19.9) 17.6 (23.3) 28.5
---------------------------------------------------------------------------------
Total Operating Cash Flow $222.8 $306.1 $(1,675.7) $ (907.5) $(30.5)
=================================================================================
Second Half
CASH INFLOWS 2000 2001 2002 2003
---------------------------------------------------------------------
Insurance Companies $ 225.0 $450.0 $475.0 $510.0
Finance Company 50.0 250.0 335.0 385.0
Other - - - -
---------------------------------------------------------------------
Total Operating Cash Flow $ 275.0 $700.0 $810.0 $895.0
=====================================================================
</TABLE>
17
<PAGE>
Conclusion Conseco Logo
o The Company Has Achieved the First Major Stride in Its "Restoration
Plan"
o Restructuring:
o Manage Holding Company Debt
-- Agreements in Place
o Disposing of or Closing Non-Strategic Assets
--Well Underway
o Realignment
o Cost Reductions
--Executed at Finance
--Begun Process at Insurance Operations
o Setting Responsible - but Stretch Goals
--Done
o Pay for Performance
--In Process
o Reinvigoration
o Quality
o Productivity
o Growth
18
<PAGE>
How to View the New Conseco! Conseco Logo
Image of a weight lifter with the word FINANCE written on his left arm and the
word INSURANCE written on his right easily lifting a dumbbell that has the word
HOLDING on it.
Left side of weight lifter image:
"Middle Market" - with arrow pointing to right arm.
Sales Focus
- several strong positions
- non-insurance company efficiencies
Positive Cash - with arrow pointing to dumbbell
Minimum expenses - with arrow pointing to dumbbell
Right side of weight lifter image:
Market Leaders in
- M.H. financing - with arrow pointing to left arm
- Home improvement financing - with arrow pointing to left arm
Positive Cash - with arrow pointing to dumbbell
Responsible Debt - with arrow pointing to dumbbell
19
