Conseco Up On Capital Raise, Paulsen Investment

NEW YORK (AP) — Shares of insurer Conseco Inc. soared to a 12-month high Wednesday after it announced measures to significantly strengthen its balance sheet, including an $77.9 million investment from prominent hedge fund Paulson & Co.

While the moves will dilute existing shareholders they will allow Conseco to retire debt and could help offset credit losses, FBR Capital Markets analyst Randy Binner said in a note to investors Wednesday. He upgraded Conseco to "outperform" from "market price" and raised his target price to $9 from $4.

Analysts had said Conseco needed to find a solution to its $293 million in debt due in Sept. 2010, with one saying in April that the company might have to seek bankruptcy protection if unable to do so.

On Tuesday night, Conseco announced a three-part plan to shore up its capital base. The Carmel, Ind.-based insurer will:

— sell Paulson 16.4 million common shares and warrants to purchase 5 million additional shares for $77.9 million. That give Paulson a 9.9 percent stake in Conseco.