Conseco Inc. (CNO) expects to report profits in the second quarter of 2009, based on strong growth in the Bankers Life segment and lower investment losses.

Conseco expects to report second-quarter net operating income (before net realized investment losses, valuation allowance for deferred tax assets and discontinued operations) of $40.8 million, or $0.22 per share, up 69.2% compared to $25.2 million, or $0.13 per share, in the prior-year quarter.

Net income is expected to be in the range of $15.8 million to $27.8 million, or 9 cents to 15 cents per share, for the quarter ended Jun 30. This compares to a net loss of $488.5 million, or $2.65 per share, in the year-ago period. According to the company, net income will include net realized investment losses in the range of $13 million to $25 million, compared to $513.7 million in the year-ago quarter.

In the Bankers Life segment, Conseco recorded pre-tax operating earnings of $63.3 million, up 83% year-over-year. Whereas in the Colonial Penn segment and Conseco Insurance Group segment, pre-tax operating earnings were $11.0 million (up 33% year-over-year) and $21.2 million (down 34% year-over-year) for the quarter ended Jun 30.

Conseco is scheduled to release its second quarter 2009 results on Aug. 4, 2009 and host a conference call on the following day to discuss the results.

While the expected upside to the upcoming quarterly results indicate that potential losses may be lower in the coming quarters, we still remain concerned about Conseco’s reduced financial flexibility and recent rating downgrades. However, we think these concerns are already reflected in the current share price and, thus, maintain our Hold recommendation on the shares.

Read the full analyst report on “CNO”
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