Conseco Inc., a life and health insurer, said Monday that its purchase of manufactured home lender Green Tree Financial Corp. will strip $498 million from second-quarter earnings.
Conseco said $350 million of the charge came from securities Green Tree created from its loans that were paid off earlier than expected as interest rates fell.
The remaining $148 million was related to severance costs and the investment banking, legal and accounting fees from its $5.76 billion purchase of St. Paul-based Green Tree on June 30.
“They got caught with rates coming down,” said Colin Devine, an analyst at Salomon Smith Barney Inc.
He had expected a $450 million charge, though he said the Conseco write-off was “within the range” of Wall Street forecasts.
Chairman Stephen Hilbert, who built the Carmel-based Conseco using 20 acquisitions during the past 16 years, said he expects the purchase of Green Tree to add to third- and fourth-quarter earnings and to boost next year’s profit by as much as 3.5 percent.
Conseco fell 6 cents a share to $50 as about 1.76 million shares changed hands, in line with the daily average volume for the past three months.
