Conseco reported net income applicable to common stock of $76.9 million for the quarter ended December 31, 2004, up $27.3 million, or 55%, compared to the year-earlier quarter.
On a diluted per-share basis, net income was 46 cents for the quarter ended December 31, 2004. Results for the quarter included net after-tax realized investment gains of $7.3 million. Comparison of per-share results to the prior-year period is affected by the $1.6 billion equity offering and $800 million debt refinancing completed in mid-2004, which increased weighted average diluted shares outstanding by approximately 86%, compared to the year-earlier quarter. Earnings per diluted share in 4Q03 were 49 cents and included net realized investment gains and venture capital losses of $.8 million.
For the full year of 2004, Conseco reported net income applicable to common stock of $229.3 million, or $1.63 per diluted common share. Results for 2004 included net after-tax realized investment gains of $17.7 million. Results for full-year 2003 are not comparable because of the company’s reorganization and adoption of fresh-start accounting in the third quarter of 2003.
President and CEO William Kirsch said, “Conseco’s financial transformation was begun in September 2003 and successfully completed in 2004. Five consecutive quarters of solid earnings and strong cash flow since emerging from bankruptcy, together with our successful equity offering and debt refinancing, have enabled us to end 2004 with impressive financial strength. Our insurance subsidiaries’ consolidated Risk-Based Capital ratio (a non-GAAP measure) grew by year-end to 318%, compared to 287% at the end of 2003. Our year-end debt-to-total-capital ratio, excluding accumulated other comprehensive income, (a non-GAAP measure) of 18% reflects relatively low leverage compared to ratios of 20%-30% at peer insurance companies, reflecting our commitment to continue to operate from a strong financial foundation in order to compete effectively against companies with higher ratings. As a result, the company is positioned to achieve important future growth.
“As a consequence of our IRS closing agreement in 3Q04 and Conseco’s establishment of sustained operating earnings since emergence, we reduced by $947 million the valuation allowance on our deferred tax assets, thereby eliminating the Goodwill and Other intangible assets on our balance sheet. Year-end 2004 book value per share, excluding accumulated other comprehensive income, (a non-GAAP measure) increased to $19.18, from $17.09 at the end of 2003.
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