Questions and answers for Conseco Insurance customers

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Carmel, Dec. 17 (AP) - Conseco Inc.'s financial problems and a widely expected bankruptcy filing have left many policyholders of the nation's seventh-largest insurer wondering how they will be affected.

State regulators and company officials say Conseco insurance customers are unlikely to experience any problems in receiving payments on claims, regardless of the outcome of Conseco's ongoing restructuring talks with creditors.

Conseco, based in the Indianapolis suburb of Carmel, is an insurance and consumer finance company with more than a dozen insurance subsidiaries offering a health, life, auto and other insurance products to customers nationwide. The subsidiaries are headquartered in Indiana, Arizona, Illinois, New York, Pennsylvania and Texas.

Here are answers to some of the questions that Conseco insurance policyholders may have.

Q: If Conseco ends up filing for bankruptcy, how could that affect the company's insurance operations?

A: Conseco officials have said that their insurance subsidiaries are unlikely to be affected by any Chapter 11 bankruptcy filing by  the parent company. They say that despite the parent's $6.5 billion debt load and problems at Conseco's consumer finance subsidiaries,the insurance operations remain sound.

Q: What are state regulators doing to protect Conseco policyholders?

A: Several states are monitoring Conseco's ability to fulfill obligations to policyholders. On Tuesday, Conseco disclosed that Texas' insurance commissioner issued a consent order to protect policyholders. The Oct. 30 order restricts the parent company's ability to siphon money from the insurance operations, and requires those operations to maintain employment levels during restructuring. States also have so-called "firewall" laws shielding insurance subsidiaries from their parent companies' financial problems.

Q: Who's in charge of regulatory oversight?

A: Texas is taking the lead regulatory role in overseeing Conseco's insurance operations because Conseco's insurance holding company is based in Amarillo, Texas.

Q: What if a Conseco bankruptcy filing leads to a wholesale dismantling of the company as it exists today?

A: That is considered unlikely. But if it occurs, other insurance companies likely would buy Conseco's insurance businesses, with policies transferred to the new owner. Also, states maintain emergency funds to compensate policyholders in case an insurer collapses.

Q: Agencies that rate companies' financial health have recently downgraded Conseco's insurance operations. Does that mean I should cancel my policy?

A: Regulators say the downgrades may hurt Conseco's ability to attract new customers, but are no cause for existing customers to cancel policies.

(Copyright 2002 by The Associated Press. All Rights Reserved.)