After almost two years of restructuring and losses, Conseco's CNO third straight quarter of profits demonstrates that the firm is executing on its turnaround plans. Because much of the firm's value is tied up in net operating loss carryforwards which will only be valuable if they can offset earnings at Conseco, it is important that the firm stabilizes its earnings before these credits expire. For the third quarter, Conseco earned net income of $0.08 per diluted share, but on an operating basis, the results were not as favorable compared with those of the 2008 third quarter. Per diluted share, the firm earned $0.29 in operating income, a 6% decrease from that of a year ago, as the firm's interest expense increased with renegotiations of its covenant agreements earlier this year. As previously announced, Conseco is issuing additional shares to work on reducing its leverage, which we think is a necessary step to ensure that the firm remains on solid financial footing, but will necessarily further reduce shareholders' existing stake. We continue to be extremely hesitant to recommend Conseco to investors as the firm's high leverage makes it difficult to forecast its future with any degree of reliability. Our fair value estimate remains unchanged.

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