CFO's Departure Spurs Another Conseco Selloff

Updated from 12:31 p.m. EST.

Conseco (CNC Quote) plunged anew Wednesday as the company's financial chief left without explanation after just a year on the job.

The stock fell 21% Wednesday afternoon as the Carmel, Ind., insurer and lender told investors CFO Chuck Chokel would depart to "pursue other interests." Operating chief Bill Shea will replace Chokel till a permanent replacement can be found, the company said.

Chokel's departure hit Conseco investors with a second blow after a selloff Wednesday morning. Earlier, rating agency Moody's questioned Conseco's ability to handle its massive $6.1 billion debt load. Reversing a two-day rally spurred in part by the company's retirement of some debt, Conseco shares dropped 92 cents to $3.50.

Moody's said there "remains little room for error" regarding the company's plans to meet 2002 obligations, which total some $1.4 billion. The rating agency said Conseco would face a debt downgrade if it doesn't receive an unqualified auditor's opinion on its 2001 financial statements; to receive such a thumbs-up, Conseco will have to lay out "a viable plan" showing it can pay all its bills, Moody's said. On that front, Moody's indicated that "the fragile economic environment" could easily keep Conseco from raising all the cash it has said it needs.

Conseco has said it needs to raise between $300 million and $410 million this year through various noncore business alternatives, including asset sales and capital markets activity. TheStreet.com's Peter Eavis has contended that the company could easily miss its cash-raising targets, a view the debt-rating agency essentially endorsed Wednesday. And if Moody's does indeed downgrade Conseco's debt, the higher borrowing costs can only tighten the cash squeeze the company is already feeling.

Conseco shares rallied Monday and Tuesday as the Carmel, Ind., company completed a $76 million debt tender offer, lightening its debt burden. The stock has lost some 80% over the last year as CEO Gary Wendt's turnaround plan has failed to satisfy investors that the company can free itself of its mountainous obligations.