A large team of investment professionals has left

Conseco's

(CNC) - Get Report

fund-management unit, indicating that the battered insurance and finance firm is having trouble retaining key employees even after the arrival of its new CEO, Gary Wendt.

A group of 16 members from Conseco's bond funds, headed by Peter Andersen, are joining Philadelphia-based

Delaware Investments

, a fund-management arm of

Lincoln National

(LNC) - Get Report

, an insurance firm and Conseco rival.

Problems at Conseco were at least partly to blame for the team's departure, Andersen said in a press release. "Some well-publicized issues at our parent company were distracting," Andersen said. "It's unfortunate, because until recently, we'd had a great experience at

Conseco Capital Management

."

This is a blow for Conseco, since its fund arm is considered one of the few segments of the company that is doing well. Conseco's press office issued this statement: "We are sorry to lose any of our people, but turnover is a fact of life in the investment management business. Given Conseco Capital Management's outstanding track record, it's not surprising that our people are recruited by other investment management firms."

Conseco Crunch
Insurer's shares still near lows

Source: BigCharts

Netting an immediate $45 million cash payment, ex-

GE Capital

head Wendt joined

Conseco last month to head up efforts to revive the Carmel, Ind.-based firm. Earnings fell sharply in the first quarter, and analysts expect Conseco to report a large second-quarter loss when it releases results July 28. Due to fears about cash flow in its finance business and weaknesses in its insurance business, Conseco's stock has fallen 75% from its 52-week high, posted July 1999. The company's stock was down 1/8, or 1.5%, to 8 1/16 Friday.

But all the news at Conseco hasn't been dire: Wendt was able to announce this week that he had attracted some high-profile former colleagues to Conseco. Ex-GE Capital executives Paul Street, Michael Borom and Peter Keenoy have been "retained to provide special services" to Conseco, the company said in a press release.

Delaware Investments manages more than $43 billion in fixed-income assets, but more than $30 billion of that resides with

Lincoln Investment Management

, an affiliate based in Fort Wayne, Ind., that primarily runs money for insurance companies. Delaware plans to combine the two companies' fixed-income departments before the end of the year.

Traditionally known for running stock funds in the large-cap value style, Delaware isn't a major player in the retail mutual-fund market, where money has primarily flowed to growth-stock funds in recent years. Although the firm has rolled out several growth funds, it manages only $15.5 billion in stock-and-bond retail mutual-fund assets. That makes Delaware the U.S.'s 48th-largest fund shop, with a 0.3% share of the retail fund market, according to Boston fund consultant

Financial Research

.

Senior writer

Ian McDonald contributed to this story.