Conseco's $51bn debt drives it into Chapter 11 bankruptcy
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The US insurance giant Conseco filed for Chapter 11 bankruptcy yesterday, crippled by $51bn (£31bn) of debt – making it the US's third biggest bankruptcy after Enron and WorldCom.
A 10-year spending spree that saw the company expand from personal insurance into lending through a series of acquisitions has left the company saddled with debts it cannot repay. The group has been trying to stave off bankruptcy procedures for the past two years.
Conseco began life in 1979 and throughout the 1990s, under the stewardship of founding chief executive Stephen Hilbert, aggressively expanded into high-risk lending. The purchase of Green Tree, a mobile home financier, for $6bn in 1998 became its undoing. As the US economy has gone into decline, customers have been unable to repay their loans, leaving Conseco with mounting bad debts.
The group's losses have continued to spiral and Conseco posted a third-quarter loss of $1.7bn, up from a $410m loss in the same period in the previous year and its sixth consecutive quarterly loss.
"Creating an insurance company through an aggressive acquisition policy will leave you exposed when market and economic conditions go against you," said Alec Foster, a fund manager at Hiscox Investment Management. "It is not surprising the group fell foul to these problems."
Mr Hilbert was ousted in 2000 and Gary Wendt was brought in from GE Capital with a golden hello in the region of $45m. Hopes were resting on the high-profile appointee to turn around the fortunes of the company but his attempts failed.
The company has had a junk bond rating from Standard & Poor's for the past two years, and went into default in October. An agreement with banks and bondholders has been agreed to restructure the group that should help reduce its debts.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments