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A large team of investment professionals has left


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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

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, 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."

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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.