Conseco wannabes?

• Author: Mogollon, Carlos David
• Position: Standard Management Corp. and Circle Investors

Standard Management Corp., with offices at the fashionable Keystone at the Crossing complex on the north side of Indianapolis, might be called a "Conseco wannabe." Some have also applied the term to Circle Investors, a new financial-services firm launched in July by former Vice President Dan Quayle, though analysts say it differs from the "model."

Both companies seem to be patterning themselves upon what Carmel-based Conseco Inc. has raised to an art form: acquiring or investing in insurance companies, streamlining and consolidating their operations, expanding and adding profitable products and eliminating unprofitable ones.

"What Conseco does is acquire companies, be it Bankers Life in Chicago or Western National Life in Texas, go in and as CEO Steve Hilbert says, 'Not throw everything out with the bath water,' but streamline things and consolidate back-room operations where it makes the most sense," says Jeff Davis, a stock analyst for Raffensperger, Hughes & Co. in Indianapolis.

"Once the market on the company goes up, they sell interest to the public. They continue to retain about 40 percent, but through the remainder, reap millions and hundreds of millions."

Conseco's vice president of investor relations, Jim Rosensteele, notes that there really is nothing special to the Conseco "mystique." Buy low, make the company more efficient and profitable, sell high. Simple economics.

"It's flattery if the people who are running the companies and trying to build the operations are trying to pattern themselves after Conseco," Rosensteele says. "But there's no magic formula. It's really a simple business: Cash comes from annuity investments, cash goes out to pay policy benefits and key operating expenses and the cash that's left is your profit."

Rosensteele points out that investors who jumped on the Conseco bandwagon early and stayed on have found the ride lucrative. Through the end of 1992, Conseco had the third biggest gain of any Big Board stock following the October 1987 crash.

Ron Hunter, Standard Management's chief executive, was a Conseco vice president. He left in 1986 with a hefty sum to finance his own ventures after selling his equity in Conseco.

Hunter says the company, which went public last February, targets acquisitions among 1,700 of the 2,100 insurance firms in the United States whose assets are $500 million or less. The balance he sees as Conseco's ideal market. He doesn't see the two companies in competition with each other.

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