Merrill Lynch downgraded Conseco (CNC ) to near term and long term reduce/sell from neutral.
Analyst Edward Spehar says news that the insurance company's new CFO is leaving the troubled company raises serious questions. The timing of the departure could be telling given the "deadline" management is trying to meet regarding plans to raise cash. He notes that Moody's indicated concern about the company's ability to get an unqualified auditor's opinion if certain cash generation actions are not definitively announced by Mar. 31.
Spehar says he thinks A.M. Best's downgrade could have a material adverse impact on the company's ability to attract new customers and keep existing policy holders. The stock trades at a 17% premium to book value excluding goodwill, he says.