By J.K. Wall
Indystar.com
August 13, 2004

Shares of Conseco Inc. tumbled today to their lowest levels since the company emerged from bankruptcy in September, following the surprise resignation of Chief Executive William S. Shea.

William S. Kirsch, who was Conseco's general counsel, replaced Shea. Conseco's nonexecutive chairman, R. Glenn Hilliard, became executive chairman and vowed to take a more active role in the company.

Conseco's shares fell more than 9 percent in morning trading on the New York Stock Exchange, dropping as low as $15.45. The shares opened at $20 apiece back in September 2003.

That was just after a Chicago bankruptcy judge approved Conseco's reorganization plan and the Carmel-based insurer emerged from nine months of bankruptcy.

Shea, 56, was the man who guided Conseco's 4,100 employees through its reorganization. He also led the company to three straight profitable quarters following the bankruptcy.

In May, Shea personally visited many investors to sell another $1.6 billion in stock. About 44 million common shares sold at $18.25 apiece.

On Thursday, Conseco officials gave little indication of why Shea departed, other than to say that he "decided to leave."

Hilliard said it was a "natural" time to make a transition after Conseco had completed a restructuring of itself after bankruptcy.

Kirsch, who has been a partner at the firm of Kirkland & Ellis since 1986, began to represent Conseco in spring 2002. He remained in that role throughout Conseco's bankruptcy, and then became executive vice president and general counsel upon Conseco's emergence.

Conseco spokesman Jim Rosensteele said Shea supported the board's decision to name Kirsch his successor. "Bill (Shea) and the board really decided that a change in leadership was necessary in order for the company to hit the next series of targets," he said.

Those targets include achieving an "A" rating on its insurance units from the A.M. Best rating agency and investment grades on its bank debt. They also include streamlining operations, reducing costs, improving customer service and other initiatives designed to retain its roughly 5 million policyholders.

"Our major challenge now is to institutionalize this progress that we have made," Kirsch said during the conference call. "The only way to do that is to focus on operational excellence day in and day out."

Kirsch and Hilliard will try to do that from a distance. Kirsch will continue to live and work in the Chicago area, then commute to Conseco's Carmel headquarters and its operations in Philadelphia, as he needs to.

Hilliard, who lives in the Atlanta area, will continue to live there. But he said Thursday that he would be in Conseco's offices several days a week.

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