Conseco

(CNC) - Get Report

announced a major restructuring plan Thursday, under which the insurance and financial services company will cast off five troubled business lines, pay off a large portion of its debt and reorganize its beleaguered

Conseco Finance

unit.

The restructuring will involve 2,000 job cuts. The Carmel, Ind.-based company expects to reduce costs by more than $150 million in an attempt to restore the Conseco Finance unit, and the overall company, to profitability.

The plan is the widely anticipated

brainchild of Conseco chairman and chief executive Gary C. Wendt, the former chief executive of GE who was

hired last month to turn the company around. As part of the plan, Wendt hired three former GE colleagues -- Paul Street, Mike Broom and Peter Keenoy -- to form a team of "restoration activists" for the company.

Conseco also reported a second-quarter operating loss, excluding investment losses and one-time charges, of $28.6 million, or 9 cents a diluted share, compared with operating earnings of $277.2 million, or 84 cents a share a year earlier. The net loss in the latest period totaled $407.2 million, or $1.25 a share.

The company said the restructuring effort is aimed at confronting three "near-term issues," which include repaying debt due over the next 12 months, restoring its

A.M. Best

credit rating and repositioning Conseco Finance to become profitable.

At the heart of the plan is an objective to sell or shutter several of the company's nonstrategic businesses. The units to be shed include assets acquired through

Conseco Private Capital

group, a sub-prime auto loan portfolio, several portions of its Conseco Finance financing arm, and several unprofitable insurance lines. The company also plans to use some assets held by Conseco Finance to produce immediate cash.

The move to resuscitate Conseco Finance is a reversal of strategy for Conseco. Before Wendt was hired, the company had said on several occasions that it intended to sell the troubled lending unit.

"It's our intention to hold and run off these assets or sell them in the ordinary course of business," Wendt said in a statement. "This is not a 'fire sale' situation.

Recently, Conseco sold off its bankcard portfolio to

Wells Fargo Bank

for $400 million. To date, Conseco says it has generated sufficient cash to prepay $300 million of debt due on Sept. 1. The company says the sale of assets should be sufficient to manage all debt due for the remainder of 2000.

The company also said that it will continue to tap reinsurance markets as a form of "rented equity" until it can restore its credit rating with

A.M. Best

, which fell to B++ during the second quarter.

The restructuring plan will attempt to cut $155 million a year, $137 million of which is associated with businesses that Conseco intends to keep. The savings will stem from cutting its number of trailer-home financing offices and home equity lending offices, as well as eliminating the 2,000 jobs over the next few months.

The plan is meant to reverse several years of ill performance for Conseco Finance, formerly

Green Tree Financial

, which Conseco bought in 1998. The acquisition of the company, which lends mainly to sub-prime borrowers and is the largest U.S. financier of manufactured trailer homes, has caused headache and heartache for the company and its shareholders via defaults and other credit problems, and is widely believed to have resulted in the

ouster of its founder and former chief executive, Stephen C. Hilbert.

"'Back to the Future' is a strange banner for a company beginning a new century," Wendt said. "But that's what we want our future to be. In 1997, both insurance and finance were highly profitable businesses and highly repected by investor markets. The 1998 merger -- no matter how well conceived -- led to a series of problems. Today, both businesses remain solid and easily have the capability to return to previous levels of profitability."

Shares of Conseco rose following the news, rising 5/8, or 7% to 9 3/8 in after hours trading, according to Instinet. The shares had ended the regular session up 7/8, or 11% at 8 3/4.