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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

     [X] Annual report pursuant to Section
         13 or 15(d) of the Securities Exchange Act
         of 1934 For the fiscal year ended December
         31, 2001 or

     [ ] Transition report pursuant to Section 13 or 15(d)of
         the Securities Exchange Act of 1934 [No Fee Required]

                    For the transition period from      to
                                                   -----   -----
                         Commission file number: 1-9250
                                  Conseco, Inc.
          Indiana                                        No. 35-1468632
  ----------------------                         ------------------------------
  State of Incorporation                         IRS Employer Identification No.

11825 N. Pennsylvania Street
  Carmel, Indiana  46032                                (317) 817-6100
----------------------------                            --------------
Address of principal executive offices                     Telephone

           Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
      Title of each class                              on which registered
      -------------------                             ---------------------
  Common Stock, No Par Value                       New York Stock Exchange, Inc.
 8-1/8% Senior Notes due 2003                      New York Stock Exchange, Inc.
 10-1/2% Senior Notes due 2004                     New York Stock Exchange, Inc.
9.16% Trust Originated Preferred Securities        New York Stock Exchange, Inc.
8.70% Trust Originated Preferred Securities        New York Stock Exchange, Inc.
   9% Trust Originated Preferred Securities        New York Stock Exchange, Inc.
9.44% Trust Originated Preferred Securities        New York Stock Exchange, Inc.

           Securities registered pursuant to Section 12(g)of the Act:

                           Common Stock, No Par Value

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days: Yes [X] No [ ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

      Aggregate market value of common stock held by nonaffiliates (computed as
of March 22, 2002): $1,269,203,288

      Shares of common stock outstanding as of March 22, 2002: 346,002,814

      DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's
definitive proxy statement for the 2002 annual meeting of shareholders are
incorporated by reference into Part III of this Report.

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                                     PART I

ITEM 1. BUSINESS OF CONSECO.

          Conseco, Inc. ("we", "Conseco", or the "Company") is a financial
services holding company with subsidiaries operating throughout the United
States. Our insurance subsidiaries develop, market and administer supplemental
health insurance, annuity, individual life insurance and other insurance
products. We are one of the largest life and health insurance companies in
America, with over $5.5 billion of annual premium and asset accumulation product
collections during 2001 (excluding discontinued lines of business) and more than
$24 billion of insurance related investments at December 31, 2001. Our finance
subsidiaries originate, securitize and service manufactured housing, home equity
and retail credit extension. Conseco Finance Corp. ("Conseco Finance"), our
subsidiary, is one of America's largest consumer finance companies, with leading
market positions in manufactured housing lending, retail home equity mortgages,
home improvement loans and private label credit cards. At December 31, 2001, we
had managed finance receivables of $43.0 billion. We are currently in the
process of exiting the major medical insurance business as well as reducing the
size of our floorplan lending business. Conseco's operating strategy is to grow
its business by focusing its resources on the development and expansion of
profitable products and strong distribution channels, to seek to achieve
superior investment returns through active asset management and to control
expenses.

          During the last two years, Conseco has taken a number of actions
designed to reduce parent company debt and increase the efficiency of our
business operations. The actions with respect to Conseco Finance include: (i)
the sale, closing or runoff of several business units (including asset-based
lending, vendor leasing, bankcards, transportation and park construction and
floorplan lending); (ii) monetization of certain on-balance sheet financial
assets through sales or as collateral for additional borrowings; and (iii) cost
savings and restructuring of ongoing businesses such as streamlining of credit
origination operations in the manufactured housing and home equity divisions. In
early 2002, Conseco Finance announced its decision to reduce the size of its
floorplan lending business. The actions with respect to our life insurance
segment include: (i) the planned sale, reinsurance or other transactions with
respect to our variable insurance business; (ii) planned reinsurance
transactions of various insurance blocks; and (iii) the division of our
insurance segment into two operating groups: the first, based in Carmel,
Indiana, includes our professional independent producer distribution channel and
the other, based in Chicago, Illinois, includes our career agents and direct
marketing distribution channels. With respect to all of our business segments,
we have initiated actions to improve productivity and quality through our
"Process Excellence" program. Through a combination of reduced expenses, revenue
enhancement projects and better deployment of capital, the Process Excellence
improvements are intended to help us achieve our financial goals. Other planned
changes include moving a significant number of jobs to India, where a
highly-educated, low-cost, English-speaking labor force is available. We have
also completed the sale of certain non-strategic assets, such as our interest in
the riverboat casino in Lawrenceburg, Indiana and our subprime auto loan
portfolio.

          Our recent efforts have been primarily focused on generating cash to
meet our 2002 debt service commitments. We believe that our existing available
cash and the cash flow to be generated from operations and other transactions
will be sufficient to allow us to meet our debt obligations through 2002. We
have taken a number of actions over the last two years to reduce parent company
debt and increase the efficiency of our business operations. However, our
results for future periods are subject to numerous uncertainties. Our current
debt service obligations (including scheduled principal payments) may exceed the
cash flows available to the parent. We may not be able to improve or sustain
positive cash flows from operations or to continue to generate cash from other
transactions such as asset sales, reinsurance transactions or financing
transactions, which could significantly affect our liquidity. Failure to
generate sufficient cash flows from operations, asset sales or financing
transactions could have a material adverse effect on our liquidity.

          Conseco was organized in 1979 as an Indiana corporation and commenced
operations in 1982. Our executive offices are located at 11825 N. Pennsylvania
Street, Carmel, Indiana 46032, and our telephone number is (317) 817-6100.

          Data in Item 1 are provided as of December 31, 2001, or for the year
then ended (as the context implies), unless otherwise described.

          MARKETING AND DISTRIBUTION

          Insurance

          Our insurance products are sold through three primary distribution
channels - professional independent producers (many of whom sell one or more of
our product lines exclusively), career agents and direct marketing.

          Conseco seeks to retain the loyalty of its agency force by providing
marketing and sales support; electronic and automated access to account and
commission information; and marketing and training tools. We also have
introduced new

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products like equity-indexed annuities (1996) and multibucket flexible premium
annuities (which provide for various earnings strategies under one product)
(1999). We are also seeking to reduce our agents' administrative burden,
increase their productive sales time and get them the information they need
faster and more reliably. The Conseco Online Information System ("COINS")
enables agents to track policy and commission information and order materials at
their convenience. Many of our marketing companies and agents use COINS.

          Our insurance subsidiaries collectively hold licenses to market our
insurance products in all fifty states, the District of Columbia, and certain
protectorates of the United States. Sales to residents of the following states
accounted for at least 5 percent of our 2001 collected premiums: California (9.0
percent), Florida (8.3 percent), Illinois (7.8 percent), Texas (7.3 percent) and
Michigan (5.1 percent).

          We believe that people purchase most types of life insurance, accident
and health insurance and annuity products only after being contacted and
solicited by an insurance agent. Accordingly, the success of our distribution
system is largely dependent on our ability to attract and retain agents who are
experienced and highly motivated. A description of the primary distribution
channels is as follows:

          Professional Independent Producers. This distribution channel consists
of a general agency and insurance brokerage distribution system comprised of
independent licensed agents doing business in all fifty states, the District of
Columbia, and certain protectorates of the United States. In 2001, this channel
accounted for $3,881.6 million, or 67 percent, of our total collected premiums.
If a significant number of agents changed to other providers, it would have a
material adverse effect on our business.

          Professional independent producers are a diverse network of
independent agents, insurance brokers and marketing organizations. Marketing
companies typically recruit agents for Conseco by advertising our products and
commission structure through direct mail advertising or through seminars for
insurance agents and brokers. These organizations bear most of the costs
incurred in marketing our products. We compensate the marketing organizations by
paying them a percentage of the commissions earned on new sales generated by the
agents recruited by such organizations. Certain of these marketing organizations
are specialty organizations that have a marketing expertise or a distribution
system relating to a particular product, such as flexible-premium annuities for
educators. During 1999 and 2000, Conseco purchased four organizations that
specialize in marketing and distributing supplemental health products. In 2001,
these four organizations accounted for $246.7 million, or 4.3 percent, of our
total collected premiums.

          Career Agents. This agency force of approximately 4,700 agents working
from 165 branch offices, permits one-on-one contacts with potential
policyholders and promotes strong personal relationships with existing
policyholders. The career agents sell primarily Medicare supplement and
long-term care insurance policies, senior life insurance and annuities. In 2001,
this distribution channel accounted for $1,709.6 million, or 30 percent, of our
total collected premiums. These agents sell only Conseco policies and typically
visit the prospective policyholder's home to conduct personalized "kitchen-
table" sales presentations. After the sale of an insurance policy, the agent
serves as a contact person for policyholder questions, claims assistance and
additional insurance needs.

          Direct Marketing. This distribution channel is engaged primarily in
the sale of "graded benefit life" insurance policies. In 2001, this channel
accounted for $187.2 million, or 3 percent, of our total collected premiums.
During 2000, we reacquired the name "Colonial Penn" (the former brand name these
products were sold under prior to our acquisition of this business), which we
now use to market these products.

          Finance

          Our finance group, with nationwide operations and managed finance
receivables of $43.0 billion at December 31, 2001, is one of America's largest
consumer finance companies, with leading market positions in retail home equity
mortgages, home improvement loans, private label credit cards and manufactured
housing credit. Originations to customers in the following states accounted for
at least 5 percent of our 2001 originations: Texas (8.5 percent), California
(8.2 percent), Florida (6.4 percent) and Michigan (5.2 percent). Unless
otherwise noted, references to loans we have made may include the purchase by us
of credit contracts between dealers and buyers.

          During 2001, 43 percent of our finance products came indirectly from
customers through intermediary channels such as dealers, contractors, retailers
and correspondents. The remaining products were marketed directly to our
customers through our regional offices and service centers. A description of the
primary distribution channels is as follows:

          Dealers, Contractors, Retailers and Correspondents. Manufactured
housing, home improvement and home equity receivables are purchased from and
originated by selected dealers and contractors after being underwritten and
analyzed via one of the Company's automated credit scoring systems at one of our
regional service centers. During 2001, these

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marketing channels accounted for the following percentages of total loan
originations: 93 percent of manufactured housing, 72 percent of home improvement
and 6 percent of home equity.

          Regional Service Centers, Retail Satellite Offices and Telemarketing
Center. We market and originate manufactured housing loans through 33 regional
offices and 3 origination and processing centers. We originate home equity loans
through a system of 128 retail satellite offices and 6 regional centers. We also
market private label retail credit products through selected retailers and
process the contracts through Conseco Bank, Inc. ("Conseco Bank"), a Utah
industrial loan company, and through Green Tree Retail Services Bank, Inc.
("Retail Bank"), a South Dakota limited purpose credit card bank, both of which
are subsidiaries of the Company. We also utilize direct mail to originate home
improvement loans and home equity loans. During 2001, these marketing channels
accounted for the following percentages of total loan originations: 7 percent of
manufactured housing, 28 percent of home improvement, 94 percent of home equity
and 100 percent of retail credit contracts.

          Insurance Products

          Supplemental Health

          Supplemental health products include Medicare supplement, long-term
care and specified-disease insurance products distributed through our career
agency force and professional independent producers. During 2001, we collected
Medicare supplement premiums of $975.1 million, long-term care premiums of
$888.3 million, specified-disease premiums of $374.8 million and other
supplemental health premiums of $109.3 million. Medicare supplement, long-term
care, specified disease and other supplemental health premiums represented 17
percent, 15 percent, 7 percent and 2 percent, respectively, of our total
premiums collected in 2001.

          The following describes the major supplemental health products:

          Medicare supplement. Medicare is a two-part federal health insurance
program for disabled persons and senior citizens (age 65 and older). Part A of
the program provides protection against the costs of hospitalization and related
hospital and skilled nursing home care, subject to an initial deductible,
related coinsurance amounts and specified maximum benefit levels. The deductible
and coinsurance amounts are subject to change each year by the federal
government. Part B of Medicare covers doctors bills and a number of other
medical costs not covered by Part A, subject to deductible and coinsurance
amounts for "approved" charges.

          Medicare supplement policies provide coverage for many of the medical
expenses which the Medicare program does not cover, such as deductibles,
coinsurance costs (in which the insured and Medicare share the costs of medical
expenses) and specified losses which exceed the federal program's maximum
benefits. Our Medicare supplement plans automatically adjust coverage to reflect
changes in Medicare benefits. In marketing these products, we concentrate on
individuals who have recently become eligible for Medicare by reaching the age
of 65. We offer a higher first-year commission for sales to these policyholders
and competitive premium pricing. Approximately 27 percent of new sales of
Medicare supplement policies are to individuals who are reaching the age of 65.

          Long-term care. Long-term care products provide coverage, within
prescribed limits, for nursing home, home healthcare, or a combination of both
nursing home and home healthcare expenses. The long-term care plans are sold
primarily to retirees and, to a lesser degree, to older self-employed
individuals and others in middle-income levels.

          Current nursing home care policies cover incurred and daily
fixed-dollar benefits available with an elimination period (which, similar to a
deductible, requires the insured to pay for a certain number of days of nursing
home care before the insurance coverage begins), subject to a maximum benefit.
Home healthcare policies cover the usual and customary charges after a
deductible and are subject to a daily or weekly maximum dollar amount, and an
overall benefit maximum. We monitor the loss experience on our long-term care
products and, when necessary, apply for rate increases in the jurisdictions in
which we sell such products. We depend on regulatory approval to increase our
premiums on these products. If we are unable to raise premiums, it could have a
material adverse effect on our business.

          Specified-disease products. These policies generally provide fixed or
limited benefits. Cancer insurance and heart/stroke products are guaranteed
renewable individual accident and health insurance policies. Payments under
cancer insurance policies are generally made directly to, or at the direction
of, the policyholder following diagnosis of, or treatment for, a covered type of
cancer. Heart/stroke policies provide for payments directly to the policyholder
for treatment of a covered heart disease, heart attack or stroke. The benefits
provided under the specified-disease policies do not necessarily reflect the
actual cost incurred by the insured as a result of the illness; benefits are not
reduced by any other medical insurance payments made to or on behalf of the
insured.


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          Approximately 74 percent of our specified-disease policies inforce
(based on a count of policies) are sold with return of premium or cash value
riders. The return of premium rider generally provides that after a policy has
been inforce for a specified number of years or upon the policyholder reaching a
specified age, the Company will pay to the policyholder, or a beneficiary under
the policy, the aggregate amount of all premiums paid under the policy, without
interest, less the aggregate amount of all claims incurred under the policy.



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          Annuities

          Annuity products include equity-indexed annuity, variable annuity,
traditional fixed rate annuity and market value-adjusted annuity products sold
through both career agents and professional independent producers. During 2001,
we collected annuity premiums of $1,744.2 million, or 30 percent of our total
premiums collected. Sales of annuities are affected by the financial strength
ratings assigned to our insurance subsidiaries by independent rating agencies.
See "Competition" below.

          The following describes the major annuity products:

          Equity-indexed annuity products. These products accounted for $381.6
million, or 7 percent, of our total premiums collected in 2001. The accumulation
value of these annuities is credited with interest at an annual minimum
guaranteed average rate over the term of the contract of 3 percent (or,
including the effect of applicable sales loads, a 1.7 percent compound average
interest rate over the term of the contracts), but the annuities provide for
potentially higher returns based on a percentage (the "participation rate") of
the change in the Standard & Poor's Corporation ("S&P") 500 Index during each
year of their term. The Company has the discretionary ability to annually change
the participation rate which currently ranges from 55 percent to 80 percent and
may include a first-year "bonus", similar to the bonus interest described below
for traditional fixed rate annuity products, which generally ranges from 20
percent to 55 percent. The minimum guaranteed values are equal to: (i) 90
percent of premiums collected for annuities for which premiums are received in a
single payment (single premium deferred annuities "SPDAs"), or 75 percent of
first year and 87.5 percent of renewal premiums collected for annuities which
allow for more than one payment (flexible premium deferred annuities "FPDAs");
plus (ii) interest credited on such percentage of the premiums collected at an
annual rate of 3 percent. The annuity provides for penalty-free withdrawals of
up to 10 percent of premium in each year after the first year of the annuity's
term. Other withdrawals from SPDA products are generally subject to a surrender
charge of 9 percent over the eight year contract term at which time the contract
must be renewed or withdrawn. Other withdrawals from FPDA products are subject
to a surrender charge of 12 percent to 20 percent in the first year, declining
1.2 percent to 1.3 percent each year, to zero over a 10 to 15 year period,
depending on issue age. We purchase S&P 500 Index Call Options ("S&P 500 Call
Options") in an effort to hedge potential increases to policyholder benefits
resulting from increases in the S&P 500 Index to which the product's return is
linked.

          Other fixed rate annuity products. These products include SPDAs, FPDAs
(excluding the equity-indexed products) and single-premium immediate annuities
("SPIAs"). These products accounted for $954.0 million, or 17 percent, of our
total collected premiums in 2001. Our SPDAs and FPDAs typically have an interest
rate (the "crediting rate") that is guaranteed by the Company for the first
policy year, after which we have the discretionary ability to change the
crediting rate to any rate not below a guaranteed minimum rate. The guaranteed
rate on annuities written recently ranges from 3.0 percent to 4.0 percent, and
the rate on all policies inforce ranges from 3.0 percent to 6.0 percent. The
initial crediting rate is largely a function of: (i) the interest rate we can
earn on invested assets acquired with the new annuity fund deposits; (ii) the
costs related to marketing and maintaining the annuity products; and (iii) the
rates offered on similar products by our competitors. For subsequent adjustments
to crediting rates, we take into account the yield on our investment portfolio,
annuity surrender assumptions, competitive industry pricing and the crediting
rate history for particular groups of annuity policies with similar
characteristics.

          Approximately 61 percent of our new annuity sales have been "bonus"
products. The initial crediting rate on these products specifies a bonus
crediting rate ranging from 1 percent to 7 percent of the annuity deposit for
the first policy year only. After the first year, the bonus interest portion of
the initial crediting rate is automatically discontinued, and the renewal
crediting rate is established. As of December 31, 2001, crediting rates on our
outstanding traditional annuities were at an average rate, excluding bonuses, of
4.4 percent.

          The policyholder is typically permitted to withdraw all or part of the
premium paid plus the accumulated interest credited to his or her account (the
"accumulation value"), subject in virtually all cases to the assessment of a
surrender charge for withdrawals in excess of specified limits. Most of our
traditional annuities provide for penalty-free withdrawals of up to 10 percent
of the accumulation value each year, subject to limitations. Withdrawals in
excess of allowable penalty-free amounts are assessed a surrender charge during
a penalty period which generally ranges from five to 12 years after the date a
policy is issued. The initial surrender charge is generally 6 percent to 12
percent of the accumulation value and generally decreases by approximately 1 to
2 percentage points per year during the penalty period. Surrender charges are
set at levels to protect the Company from loss on early terminations and to
reduce the likelihood of policyholders terminating their policies during periods
of increasing interest rates. This practice is intended to lengthen the
effective duration of policy liabilities and enable the Company to maintain
profitability on such policies.

          SPIAs accounted for $70.5 million, or 1.2 percent, of our total
collected premiums in 2001. SPIAs are designed to provide a series of periodic
payments for a fixed period of time or for life, according to the policyholder's
choice at the

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time of issue. Once the payments begin, the amount, frequency and length of time
for which they are payable are fixed. SPIAs often are purchased by persons at or
near retirement age who desire a steady stream of payments over a future period
of years. The single premium is often the payout from a terminated annuity
contract. The implicit interest rate on SPIAs is based on market conditions when
the policy is issued. The implicit interest rate on the Company's outstanding
SPIAs averaged 6.7 percent at December 31, 2001.

          The Company also offers its multibucket annuity product which provides
for different rates of cash value growth based on the experience of a particular
market strategy. Earnings are credited to this product based on the market
activity of a given strategy, less management fees, and funds may be moved
between cash value strategies. Portfolios available include high-yield bond,
investment-grade bond, convertible bond and guaranteed-rate portfolios. During
2001, this product accounted for $181.7 million, or 3.1 percent, of our total
collected premiums.

          Variable annuity products. Variable annuities accounted for $408.6
million, or 7 percent, of our total premiums collected in 2001. Variable
annuities, sold on a single-premium or flexible-premium basis, differ from fixed
annuities in that the principal value may fluctuate, depending on the
performance of assets allocated pursuant to various investment options chosen by
the contract owner. Variable annuities offer contract owners a fixed or variable
rate of return based upon the specific investment portfolios into which premiums
may be directed.

          Life

          Life products include traditional, universal life and other life
insurance products. These products are currently sold through career agents,
professional independent producers and direct response marketing. During 2001,
we collected $949.6 million, or 16 percent, of our total collected premiums from
life products. Sales of certain life products are affected by the financial
strength ratings assigned to our insurance subsidiaries by independent rating
agencies. See "Competition" below.

          Interest-sensitive life products. These products include universal
life products that provide whole life insurance with adjustable rates of return
related to current interest rates. They accounted for $510.0 million, or 8.8
percent, of our total collected premiums in 2001 and are marketed through
professional independent producers and, to a lesser extent, career agents. The
principal differences between universal life products and other
interest-sensitive life insurance products are policy provisions affecting the
amount and timing of premium payments. Universal life policyholders may vary the
frequency and size of their premium payments, and policy benefits may also
fluctuate according to such payments. Premium payments under other
interest-sensitive policies may not be varied by the policyholders, and as a
result, are designed to reduce the administrative costs typically associated
with monitoring universal life premium payments and policy benefits.

          Traditional life. These products accounted for $439.6 million, or 7.6
percent, of our total collected premiums in 2001. Traditional life policies,
including whole life, graded benefit life and term life products, are marketed
through professional independent producers, career agents and direct response
marketing. Under whole life policies, the policyholder generally pays a level
premium over an agreed period or the policyholder's lifetime. The annual premium
in a whole life policy is generally higher than the premium for comparable term
insurance coverage in the early years of the policy's life, but is generally
lower than the premium for comparable term insurance coverage in the later years
of the policy's life. These policies, which continue to be marketed by the
Company on a limited basis, combine insurance protection with a savings
component that increases in amount gradually over the life of the policy. The
policyholder may borrow against the savings generally at a rate of interest
lower than that available from other lending sources. The policyholder may also
choose to surrender the policy and receive the accumulated cash value rather
than continuing the insurance protection. Term life products offer pure
insurance protection for a specified period of time - typically 5, 10 or 20
years.

          Traditional life products also include graded benefit life insurance
products. Graded benefit life products accounted for $107.6 million, or 1.9
percent, of our total collected premiums in 2001. Graded benefit life insurance
products are offered on an individual basis primarily to persons age 50 to 80,
principally in face amounts of $350 to $10,000, without medical examination or
evidence of insurability. Premiums are paid as frequently as monthly. Benefits
paid are less than the face amount of the policy during the first two years,
except in cases of accidental death. Graded benefit life policies are marketed
using direct response marketing techniques. New policyholder leads are generated
primarily from television and print advertisements.

          Individual and Group Major Medical

          Sales of our individual and group major medical health insurance
products are targeted to self-employed individuals, small business owners, large
employers and early retirees. Various deductible and coinsurance options are

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available, and most policies require certain utilization review procedures. The
profitability of this business depends largely on the overall persistency of the
business inforce, claim experience and expense management. We have previously
announced our intent to sell or exit these lines of business. During 2001, we
collected $737.1 million, or 13 percent, of our total collected premiums from
these products.

          Finance Products

          Manufactured Housing. Our finance subsidiaries provide financing for
consumer purchases of manufactured housing. During 2001, we originated $2.5
billion of contracts for manufactured housing purchases, or 22 percent of our
total originations. At December 31, 2001, our managed receivables included $25.6
billion of contracts for manufactured housing purchases, or 59 percent of total
managed receivables. A manufactured home is a structure, transportable in one or
more sections, designed to be a dwelling with or without a permanent foundation.
Manufactured housing does not include either modular housing (which typically
involves more sections, greater assembly and a separate means of transporting
the sections) or recreational vehicles.

          Through our regional service centers, we purchase manufactured housing
contracts from dealers located throughout the United States. Our regional
service center personnel solicit dealers in their region. If the dealer wishes
to utilize our financing, the dealer completes an application. Upon approval, a
dealer agreement is executed. We also originate manufactured housing installment
loan agreements directly with customers. For the year ended December 31, 2001,
93 percent of our manufactured housing loan originations were purchased from
dealers and 7 percent were originated directly by us.

          Our manufactured housing contracts are secured by either the
manufactured home or, in the case of land-and-home contracts, by a lien on the
real estate where the manufactured home is permanently affixed. In 2001,
approximately 27 percent of our manufactured housing originations were for
land-and-home contracts. Customers who finance their homes with us are required
to make a minimum down payment of 5 percent. For manufactured housing
originations, the average loan-to-value ratio was approximately 88 percent in
2001.

          Customers' credit applications for new manufactured homes are reviewed
in our service centers. If the application meets our guidelines, we generally
purchase the contract after the customer has moved into the manufactured home.
We use a proprietary automated credit scoring system to evaluate manufactured
housing contracts. The scoring system is statistically based, quantifying
information using variables obtained from customer credit applications and
credit reports. We perform monthly audits on samples of new loan originations to
measure adherence to our underwriting policies and procedures.

          Mortgage Services. Products within this category include home equity
and home improvement loans. During 2001, we originated $3.0 billion of contracts
for these products, or 27 percent of our total originations. At December 31,
2001, our managed receivables included $11.9 billion of contracts for home
equity and home improvement loans, or 28 percent of total managed receivables.

          We originate home equity loans through 128 retail satellite offices
and 6 regional centers, and through a network of correspondent and broker
originators throughout the United States. The retail offices are responsible for
originating, processing and funding the loan transaction. Underwriting of the
application is handled through central locations. Subsequently, loans are
re-underwritten on a test basis by a third party to ensure compliance with our
credit policy. After the loan has closed, the loan documents are forwarded to
our loan servicing center. The servicing center is responsible for handling
customer service and performing document handling, custodial, quality control
and collection functions.

          During 2001, approximately 94 percent of our home equity finance loans
were originated directly with the borrower. The remaining finance volume was
originated through a few correspondent lenders. The Company decreased the volume
of loans originated through the correspondent channel in 2000.

          Typically, home equity loans are secured by first or second liens.
Homes used for collateral in securing home equity loans may be either
residential or investor owned, one-to-four-family properties having a minimum
appraised value of $25,000. During 2001, approximately 81 percent of the loans
originated were secured by first liens. The average loan to value for loans
originated in 2001 was approximately 90 percent. Approximately 97 percent of our
home equity loan originations during 2001 were fixed rate closed-end loans.

          We originate the majority of our home improvement loan contracts
indirectly through a network of home improvement contractors located throughout
the United States. We review the financial condition, business experience and
qualifications of all contractors through which we obtain loans.


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       We finance conventional home improvement contracts generally secured by
first, second or, to a lesser extent, third liens on the improved real estate.
We also finance unsecured conventional home improvement loans (generally from
$2,500 to $15,000).

          Typically, an approved contractor submits the customer's credit
application and construction contract to our centralized service center where an
analysis of the creditworthiness of the customer is made using a proprietary
credit scoring system. If it is determined that the application meets our
underwriting guidelines, we typically purchase the contract from the contractor
when the customer verifies satisfactory completion of the work.

          We also originate home improvement loans directly with borrowers.
After receiving a mail solicitation, the customer calls our telemarketing center
and our sales representative explains the available financing plans, terms and
rates depending on the customer's needs. The majority of the loans are secured
by a second or third lien on the real estate of the customer. Direct
distribution accounted for approximately 28 percent of the home improvement loan
originations during 2001.

          The types of home improvements we finance include exterior renovations
(such as windows, siding and roofing); pools and spas; kitchen and bath
remodeling; and room additions and garages. We may also extend additional credit
beyond the purchase price of the home improvement for the purpose of debt
consolidation.

          Private Label Credit Card. During 2001, we originated $3.6 billion of
private label credit card receivables primarily through our bank subsidiaries,
or 32 percent of our total originations. At December 31, 2001, our managed
receivables included $2.7 billion of contracts for credit card loans, or 6
percent of total managed receivables.

          We originate private label credit card receivables through contractual
relationships with selected retailer and dealer partners. Our core relationships
are with retailers and dealers of home improvement products, powersports
vehicles (motorcycles, all-terrain-vehicles, snowmobiles and personal
watercraft) and outdoor power equipment.

          We perform an initial review on all retailer and dealer partners as
well as periodic monitoring of their financial condition. Credit card
applications are generated primarily through retail and dealer outlets and the
internet. We utilize a proprietary automated credit scoring system to review the
credit of individual customers seeking credit cards. We periodically monitor
payment behavior trends within our credit card portfolio through the use of
automated portfolio management tools. If we make poor credit decisions with
respect to our partners and borrowers, it could have a material adverse effect
on our business.

          ACQUISITIONS

          Since 1982, Conseco has acquired 19 insurance groups and related
businesses and Green Tree Financial Corporation (renamed "Conseco Finance
Corp.") These acquisitions have been responsible for the Company's growth in
recent years. The Company's current plans are to grow and improve the
profitability of its businesses, rather than grow through acquisitions.

          INVESTMENTS

          Conseco Capital Management, Inc. ("CCM"), a registered investment
adviser wholly owned by Conseco, manages the investment portfolios of Conseco's
subsidiaries. CCM had approximately $32.6 billion of assets (at fair value)
under management at December 31, 2001, of which $24.3 billion were assets of
Conseco's subsidiaries and $8.3 billion were assets owned by other parties. Our
investment philosophy is to maintain a largely investment-grade fixed-income
portfolio, provide adequate liquidity for expected liability durations and other
requirements and maximize total return through active investment management. We
are subject to the risk that our investments will decline in value. This has
occurred in the past and may occur again. During 2001, we recognized other than
temporary declines in value on our investments in Sunbeam Corp., Enron Corp.,
Crown Cork & Seal Company Inc., Global Crossing Ltd., and KMart Corp., among
others.

          Investment activities are an integral part of our business; investment
income is a significant component of our total revenues. Profitability of many
of our insurance products is significantly affected by spreads between interest
yields on investments and rates credited on insurance liabilities. Although
substantially all credited rates on SPDAs and FPDAs may be changed annually,
changes in crediting rates may not be sufficient to maintain targeted investment
spreads in all economic and market environments. In addition, competition and
other factors, including the impact of the level of surrenders and withdrawals,
may limit our ability to adjust or to maintain crediting rates at levels
necessary to avoid narrowing of spreads under certain market conditions. As of
December 31, 2001 the average yield, computed on the cost basis of our
investment portfolio, was 7.0 percent, and the average interest rate credited or
accruing to our total insurance liabilities (excluding interest rate bonuses for
the first policy year only and excluding the effect of credited rates
attributable to variable or equity-indexed products) was 5.0 percent.

                                        9
<PAGE>

          We manage the equity-based risk component of our equity-indexed
annuity products by: (i) purchasing S&P 500 Call Options in an effort to hedge
such risk; and (ii) adjusting the participation rate to reflect the change in
the cost of such options (such cost varies based on market conditions).
Accordingly, we are able to focus on managing the interest rate spread component
of these products.

          We seek to balance the duration of our invested assets with the
expected duration of benefit payments arising from our insurance liabilities. At
December 31, 2001, the adjusted modified duration of fixed maturities and
short-term investments was approximately 6.7 years and the duration of our
insurance liabilities was approximately 6.5 years.

          For information regarding the composition and diversification of the
investment portfolio of our subsidiaries, see "Management's Discussion and
Analysis of Consolidated Financial Condition and Results of Operations -
Investments" and the notes to our consolidated financial statements.

          COMPETITION

          Each of the markets in which we operate is highly competitive. The
financial services industry consists of a large number of companies, some of
which are larger and have greater capital, technological and marketing
resources, access to capital at a lower cost, broader and more diversified
product lines and larger staffs than those of Conseco. An expanding number of
banks, securities brokerage firms and other financial intermediaries also market
insurance products or offer competing products, such as mutual fund products,
traditional bank investments and other investment and retirement funding
alternatives. We also compete with many of these companies and others in
providing services for fees. In most areas, competition is based on a number of
factors, including pricing, service provided to distributors and policyholders
and ratings. Conseco's subsidiaries must also compete with their competitors to
attract and retain the allegiance of dealers, vendors, contractors,
manufacturers, retailers and agents.

          In the finance industry, operations are affected by consumer demand
which is influenced by regional trends, economic conditions and personal
preferences. Competition in the finance industry is primarily among finance
companies, commercial banks, thrifts, other financial institutions, mortgage
brokers, credit unions and manufacturers and vendors. Competition is based on a
number of factors, including service, the credit review process, the integration
of financing programs and the ability to manage the servicing portfolio in
changing economic environments.

          In the individual health insurance business, insurance companies
compete primarily on the basis of marketing, service and price. The provisions
of the Omnibus Budget Reconciliation Act of 1984 and the work of the National
Association of Insurance Commissioners ("NAIC") (an association of state
regulators and their staffs) have resulted in standardized policy features for
Medicare supplement products. This increases the comparability of such policies
and has intensified competition based on factors other than product features.
See "Underwriting" and "Governmental Regulation." In addition to the products of
other insurance companies, commercial banks, thrifts, mutual funds and broker
dealers, our insurance products compete with health maintenance organizations,
preferred provider organizations and other health care-related institutions
which provide medical benefits based on contractual agreements.

          An important competitive factor for life insurance companies is the
ratings they receive from nationally recognized rating organizations. Agents,
insurance brokers and marketing companies who market our products and
prospective purchasers of our products use the ratings of our insurance
subsidiaries as one factor in determining which insurer's products to market or
purchase. Ratings have the most impact on our annuity and interest-sensitive
life insurance products. Our principal insurance subsidiaries are currently
rated "A-(Excellent)" by A.M. Best Company, and Standard & Poor's Corporation
has given our principal insurance subsidiaries a claims-paying ability rating of
"BB+(Marginal)." A.M. Best ratings for the industry currently range from
"A++(Superior)" to "F (In Liquidation)" and some companies are not rated. A.M.
Best's ratings and Standard & Poor's claims-paying ability ratings are based
upon factors relevant to policyholders, agents and intermediaries and are not
directed toward the protection of investors. Such ratings are not
recommendations to buy, sell or hold securities. A.M. Best and Standard & Poor's
each reviews its ratings from time to time. On October 3, 2001, A.M. Best placed
our insurance subsidiaries' ratings "under review with negative implications."
We cannot provide any assurance that the ratings of our insurance subsidiaries
will remain at their current level. If such ratings are downgraded, sales of our
insurance products could fall significantly and existing policy holders may
redeem or lapse their policies, causing a material and adverse impact on our
financial results and liquidity.

          We believe that we are able to compete effectively because: (i) we
emphasize a number of specialized distribution channels, where the ability to
respond rapidly to changing customer needs yields a competitive edge; (ii) we
are experienced in establishing and cultivating relationships with the unique
distribution networks and the independent marketing companies operating in these
specialized markets; (iii) we can offer competitive rates as a result of our
operating efficiencies and higher-than-average investment yields achieved by
applying active investment portfolio management

                                       10
<PAGE>

techniques; and (iv) we have reliable policyholder administrative services,
supported by customized information technology systems.

          INSURANCE UNDERWRITING

          Under regulations promulgated by the NAIC and adopted as a result of
the Omnibus Budget Reconciliation Act of 1990, we are prohibited from
underwriting our Medicare supplement policies for certain first-time purchasers.
If a person applies for insurance within six months after becoming eligible by
reason of age, or disability in certain limited circumstances, the application
may not be rejected due to medical conditions. Some states prohibit underwriting
of all Medicare supplement policies. For other prospective Medicare supplement
policyholders, such as senior citizens who are transferring to Conseco's
products, the underwriting procedures are relatively limited, except for
policies providing prescription drug coverage.

          Before issuing long-term care or comprehensive major medical products
to individuals and groups, we generally apply detailed underwriting procedures
designed to assess and quantify the insurance risks. We require medical
examinations of applicants (including blood and urine tests, where permitted)
for certain health insurance products and for life insurance products which
exceed prescribed policy amounts. These requirements are graduated according to
the applicant's age and may vary by type of policy or product. We also rely on
medical records and the potential policyholder's written application. In recent
years, there have been significant regulatory changes with respect to
underwriting individual and group major medical plans. An increasing number of
states prohibit underwriting and/or charging higher premiums for substandard
risks. We monitor changes in state regulation that affect our products, and
consider these regulatory developments in determining where we market our
products.

          Most of our life insurance policies are underwritten individually,
although standardized underwriting procedures have been adopted for certain low
face-amount life insurance coverages. After initial processing, insurance
underwriters review each file and obtain the information needed to make an
underwriting decision (such as medical examinations, doctors' statements and
special medical tests). After collecting and reviewing the information, the
underwriter either: (i) approves the policy as applied for, or with an extra
premium charge because of unfavorable factors; or (ii) rejects the application.
We underwrite group insurance policies based on the characteristics of the group
and its past claim experience. Graded benefit life insurance policies are issued
without medical examination or evidence of insurability. There is minimal
underwriting on annuities.

          REINSURANCE

          Consistent with the general practice of the life insurance industry,
our subsidiaries enter into both facultative and treaty agreements of indemnity
reinsurance with other insurance companies in order to reinsure portions of the
coverage provided by our insurance products. Indemnity reinsurance agreements
are intended to limit a life insurer's maximum loss on a large or unusually
hazardous risk or to diversify its risk. Indemnity reinsurance does not
discharge the original insurer's primary liability to the insured. The Company's
reinsured business is ceded to numerous reinsurers. We believe the assuming
companies are able to honor all contractual commitments, based on our periodic
review of their financial statements, insurance industry reports and reports
filed with state insurance departments.

          As of December 31, 2001, the policy risk retention limit was generally
$.8 million or less on the policies of our subsidiaries. Reinsurance ceded by
Conseco represented 21 percent of gross combined life insurance inforce and
reinsurance assumed represented 2.2 percent of net combined life insurance
inforce. At December 31, 2001, the total ceded business inforce of $26.4 billion
was primarily ceded to insurance companies rated "A- (Excellent)" or better by
A.M. Best. Our principal reinsurers at December 31, 2001 were American Founders
Life Insurance Company, American Long Term Care Reinsurance Group, Connecticut
General Life Insurance Company, Employers Reassurance Corporation, General &
Cologne Life Re of America, Gerling Global Life Reinsurance Company, Lincoln
National Life Insurance Company, Munich American Reassurance Company, Reliance
Standard Life Insurance Company, RGA Reinsurance Company, Scottish Re US, Inc.,
Security Life of Denver Insurance Company and Swiss Re Life and Health America
Inc. No other single reinsurer assumes greater than 2 percent of the total ceded
business inforce.

          In the first quarter of 2002, we completed a reinsurance agreement
pursuant to which we are ceding 80 percent of the inforce traditional life
business of our subsidiary, Bankers Life & Casualty Company, to Reassure America
Life Insurance Company (rated A++ by A.M. Best). The total insurance liabilities
ceded pursuant to the contract are approximately $400 million. The reinsurance
agreement and the related dividends of $110.5 million have been approved by the
appropriate state insurance departments and will be paid to the parent company.
The ceding commission approximated the amount of the cost of policies purchased
and cost of policies produced related to the ceded business.


                                       11
<PAGE>



          We have also entered into a reinsurance agreement pursuant to which we
are ceding 100 percent of the traditional life and interest-sensitive life
insurance business of our subsidiary, Conseco Variable Insurance Company, to
Protective Life Insurance Company (rated A+ by A.M. Best). The total insurance
liabilities ceded pursuant to the contract are approximately $470 million. The
agreement is subject to regulatory approval. Upon receipt of all regulatory
approvals, our insurance subsidiary will receive a ceding commission of $49.5
million. The ceding commission approximated the amount of the cost of policies
purchased and the cost of policies produced related to the ceded business.

          We are currently exploring possible reinsurance transactions related
to other blocks of our insurance business to generate additional cash to meet
our debt obligations in 2002 and beyond.

          EMPLOYEES

          At December 31, 2001, Conseco, Inc. and its subsidiaries had
approximately 14,300 employees, including: (i) 5,500 employees supporting our
insurance operations; (ii) 7,200 employees supporting our finance operations;
and (iii) 1,600 employees in India (who provide services to our insurance and
finance operations and third party clients). None of our employees is covered by
a collective bargaining agreement. We believe that we have excellent relations
with our employees.

          GOVERNMENTAL REGULATION

          Our finance and insurance businesses are subject to extensive
regulation and supervision in the jurisdictions in which we operate. Such
regulation and supervision is primarily for the benefit and protection of our
customers, and not for the benefit of our investors or creditors. Our finance
operations are subject to regulation by federal, state and local government
authorities, as well as to various laws and judicial and administrative
decisions, that impose requirements and restrictions affecting, among other
things, our loan originations, credit activities, maximum interest rates,
finance and other charges, disclosure to customers, the terms of secured
transactions, collection, repossession and claims-handling procedures, multiple
qualification and licensing requirements for doing business in various
jurisdictions, and other trade practices. Although we believe that we are in
compliance in all material respects with applicable local, state and federal
laws, rules and regulations, it is possible that more restrictive laws, rules or
regulations will be adopted in the future that could make compliance more
difficult or expensive, restrict our ability to originate or sell loans, further
limit or restrict the amount of interest and other charges earned on loans
originated by us, further limit or restrict the terms of loan agreements, or
otherwise adversely affect our business or prospects.

          The Financial Services Modernization Act of 1999 contains privacy
provisions and introduces controls over the transfer and use of individuals'
nonpublic personal data by financial institutions, including finance companies,
insurance companies and insurance agents. Consumer privacy laws containing
expanded provisions also have been adopted, or are under consideration, in a
number of states.

          Insurance

          Our insurance subsidiaries are subject to regulation and supervision
by the insurance regulatory agencies of the jurisdictions in which they transact
business. State laws generally establish supervisory agencies with broad
regulatory authority, including the power to: (i) grant and revoke business
licenses; (ii) regulate and supervise trade practices and market conduct; (iii)
establish guaranty associations; (iv) license agents; (v) approve policy forms;
(vi) approve premium rates for some lines of business; (vii) establish reserve
requirements; (viii) prescribe the form and content of required financial
statements and reports; (ix) determine the reasonableness and adequacy of
statutory capital and surplus; (x) perform financial, market conduct and other
examinations; (xi) define acceptable accounting principles; (xii) regulate the
type and amount of permitted investments; and (xiii) limit the amount of
dividends and surplus debenture payments that can be paid without obtaining
regulatory approval. Because of limits on the payment of dividends and surplus
debenture payments from our insurance subsidiaries, not all of our consolidated
cash flows from operations are available to the parent company to service its
debt. Our insurance subsidiaries are subject to periodic examinations by state
regulatory authorities. We do not expect the results of any ongoing examinations
to have a material effect on the Company's financial condition.

          Most states have also enacted regulations on the activities of
insurance holding company systems, including acquisitions, extraordinary
dividends, the terms of surplus debentures, the terms of affiliate transactions
and other related matters. Currently, the Company and its insurance subsidiaries
have registered as holding company systems pursuant to such legislation in the
domiciliary states of the insurance subsidiaries (Arizona, Illinois, Indiana,
New York, Pennsylvania and Texas), and they routinely report to other
jurisdictions.

                                       12
<PAGE>



          Most states have either enacted legislation or adopted administrative
regulations which affect the acquisition (or sale) of control of insurance
companies as well as transactions between insurance companies and persons
controlling them. The nature and extent of such legislation and regulations vary
from state to state. These regulations require the acquirer to file detailed
information concerning the acquiring parties and the plan of acquisition, and to
obtain administrative approval prior to the acquisition. In many states,
however, an insurance authority may determine that control does not exist, even
in circumstances in which a person owns or controls 10 percent or a greater
amount of securities.

          The NAIC has adopted a revised manual of statutory accounting
principles in a process referred to as codification. Such principles are
summarized in the Accounting Practices and Procedures Manual. The revised manual
was effective January 1, 2001. The domiciliary states of our insurance
subsidiaries have adopted the provisions of the revised manual or, with respect
to some states, adopted the manual with certain modifications. The revised
manual has changed, to some extent, prescribed statutory accounting practices
and resulted in changes to the accounting practices that our insurance
subsidiaries use to prepare their statutory-basis financial statements. The
impact of these changes increased our insurance subsidiaries' statutory-based
capital and surplus by approximately $198 million as of January 1, 2001.

          The federal government does not directly regulate the insurance
business. However, federal legislation and administrative policies in several
areas, including pension regulation, age and sex discrimination, financial
services regulation, securities regulation, privacy laws and federal taxation,
do affect the insurance business. Legislation has been introduced from time to
time in Congress that could result in the federal government assuming some role
in regulating the companies or allowing combinations between insurance
companies, banks and other entities.

          On the basis of statutory statements filed with state regulators
annually, the NAIC calculates certain financial ratios to assist state
regulators in monitoring the financial condition of insurance companies. A
"usual range" of results for each ratio is used as a benchmark. In the past,
variances in certain ratios of our insurance subsidiaries have resulted in
inquiries from insurance departments to which we have responded. Such inquiries
did not lead to any restrictions affecting our operations.

          Model laws and regulations of the NAIC include: (i) investment reserve
requirements; (ii) risk-based capital ("RBC") standards; (iii) codification of
insurance accounting principles; (iv) additional investment restrictions; (v)
restrictions on an insurance company's ability to pay dividends; and (vi)
product illustrations. The NAIC is currently developing new model laws or
regulations, including product design standards and reserve requirements.

          The RBC standards establish capital requirements for insurance
companies based on the ratio of the company's total adjusted capital (defined as
the total of its statutory capital, surplus, asset valuation reserve and certain
other adjustments) to its RBC (such ratio is referred to herein as the "RBC
ratio"). The standards are designed to help identify companies which are under
capitalized and require specific regulatory actions in the event an insurer's
RBC ratio falls below specified levels. Each of our life insurance subsidiaries
has more than enough statutory capital to meet the standards as of December 31,
2001. The aggregate RBC ratio for our insurance subsidiaries was greater than
235 percent at December 31, 2001.

          The NAIC has adopted model long-term care policy language providing
nonforfeiture benefits and has proposed a rate stabilization standard for
long-term care policies. Various bills are proposed from time to time in the
U.S. Congress which would provide for the implementation of certain minimum
consumer protection standards for inclusion in all long-term care policies,
including guaranteed renewability, protection against inflation and limitations
on waiting periods for pre-existing conditions. Federal legislation permits
premiums paid for qualified long-term care insurance to be treated as tax-
deductible medical expenses and for benefits received on such policies to be
excluded from taxable income.

          In addition, our insurance subsidiaries are required under guaranty
fund laws of most states in which we transact business, to pay assessments up to
prescribed limits to fund policyholder losses or liabilities of insolvent
insurance companies. Assessments can be partially recovered through a reduction
in future premium taxes in some states.

          Most states mandate minimum benefit standards and loss ratios for
accident and health insurance policies. We are generally required to maintain,
with respect to our individual long-term care policies, minimum anticipated loss
ratios over the entire period of coverage of not less than 60 percent. With
respect to our Medicare supplement policies, we are generally required to attain
and maintain an actual loss ratio, after three years, of not less than 65
percent. We provide, to the insurance departments of all states in which we
conduct business, annual calculations that demonstrate compliance with required
minimum loss ratios for both long-term care and Medicare supplement insurance.
These calculations are prepared utilizing statutory lapse and interest rate
assumptions. In the event that we fail to maintain minimum mandated loss ratios,
our insurance subsidiaries could be required to provide retrospective refunds
and/or prospective rate reductions. We believe that our insurance subsidiaries
currently comply with all applicable mandated minimum loss ratios.


                                       13

<PAGE>

          NAIC model regulations, adopted in substantially all states, created
10 standard Medicare supplement plans (Plans A through J). Plan A provides the
least extensive coverage, while Plan J provides the most extensive coverage.
Under NAIC regulations, Medicare insurers must offer Plan A, but may offer any
of the other plans at their option. Our insurance subsidiaries currently offer
nine of the model plans. We have declined to offer Plan J, due in part to its
high benefit levels and, consequently, high costs to the consumer.

          Numerous proposals to reform the current health care system (including
Medicare) have been introduced in Congress and in various state legislatures.
Proposals have included, among other things, modifications to the existing
employer-based insurance system, a quasi-regulated system of "managed
competition" among health plans, and a single-payer, public program. Changes in
health care policy could significantly affect our business. For example, Federal
comprehensive major medical or long-term care programs, if proposed and
implemented, could partially or fully replace some of Conseco's current
products.

          During recent years, the health insurance industry has experienced
substantial changes, primarily caused by healthcare legislation. Recent federal
and state legislation and legislative proposals relating to healthcare reform
contain features that could severely limit or eliminate our ability to vary our
pricing terms or apply medical underwriting standards with respect to
individuals which could have the effect of increasing our loss ratios and
decreasing our profitability. In particular, Medicare reform and legislation
concerning prescription drugs could affect our ability to price or sell our
products.

          In addition, proposals currently pending in Congress and some state
legislatures may also affect our financial results. These proposals include the
implementation of minimum consumer protection standards for inclusion in all
long term care policies, including: guaranteed premium rates; protection against
inflation; limitations on waiting periods for pre-existing conditions; setting
standards for sales practices for long term care insurance; and guaranteed
consumer access to information about insurers, including lapse and replacement
rates for policies and the percentage of claims denied. Enactment of any of
these proposals could affect our financial results.

          The United States Department of Health and Human Services has issued
regulations under the Health Insurance Portability and Accountability Act
("HIPAA") relating to standardized electronic transaction formats, code sets and
the privacy of member health information. These regulations and any
corresponding state legislation, will affect the Company's administration of
health insurance.

          A number of states have passed or are considering legislation that
would limit the differentials in rates that insurers could charge for health
care coverages between new business and renewal business for similar demographic
groups. State legislation has also been adopted or is being considered that
would make health insurance available to all small groups by requiring coverage
of all employees and their dependents, by limiting the applicability of
pre-existing conditions exclusions, by requiring insurers to offer a basic plan
exempt from certain benefits as well as a standard plan, or by establishing a
mechanism to spread the risk of high risk employees to all small group insurers.
Congress and various state legislators have from time to time proposed changes
to the health care system that could affect the relationship between health
insurers and their customers, including external review.

          We cannot predict with certainty the effect that any proposals, if
adopted, or legislative developments could have on our insurance businesses and
operations.

          Finance

          The Company's finance operations are subject to regulation by certain
federal and state regulatory authorities. A substantial portion of the Company's
consumer loans and assigned sales contracts are originated or purchased by
finance subsidiaries licensed under applicable state law. The licensed entities
are subject to examination by and reporting requirements of the state
administrative agencies issuing such licenses. The finance subsidiaries are
subject to state laws and regulations which in certain states: limit the amount,
duration and charges for such loans and contracts; require disclosure of certain
loan terms and regulate the content of documentation; place limitations on
collection practices; and govern creditor remedies. The licenses granted are
renewable and may be subject to revocation by the respective issuing authority
for violation of such state's laws and regulations. Some states have adopted or
are considering the adoption of consumer protection laws or regulations that
impose requirements or restrictions on lenders who make certain types of loans
secured by real estate.

          In addition to the finance companies licensed under state law, both
Conseco Bank and Retail Bank, both of which are wholly owned subsidiaries of
Conseco, are under the supervision of, and subject to examination by, the
Federal Deposit Insurance Corporation. Conseco Bank is also supervised and
examined by the Utah Department of Financial Institutions. Retail Bank is
supervised and examined by the South Dakota Department of Banking. The ownership
of these entities does

                                       14
<PAGE>

not subject the Company to regulation by the Federal Reserve Board as a bank
holding company. Conseco Bank has the authority to engage generally in the
banking business and may accept all types of deposits, other than demand
deposits. Retail Bank is limited by its charter to engage in the credit card
business and may issue only certificates of deposit in denominations of $100,000
or greater. Conseco Bank and Retail Bank are subject to regulations relating to
capital adequacy, leverage, loans, loss reserves, deposits, consumer protection,
community reinvestment, payment of dividends and transactions with affiliates.

          A number of states have usury and other consumer protection laws which
may place limitations on the amount of interest and other charges and fees
charged on loans originated in such state. Generally, state law has been
preempted by federal law under the Depositary Institutions Deregulation and
Monetary Control Act of 1980 ("DIDA") which deregulates the rate of interest,
discount points and finance charges with respect to first lien residential
loans, including manufactured home loans and real estate secured mortgage loans.
As permitted under DIDA, a number of states enacted legislation timely opting
out of coverage of either or both of the interest rate and/or finance charge
provisions of the Act. States may no longer opt out of the interest rate
provisions of the Act, but could in the future opt out of the finance charge
provisions. To be eligible for federal preemption for manufactured home loans,
the Company's licensed finance companies must comply with certain restrictions
providing protection to consumers. In addition, another provision of DIDA
applicable to state-chartered insured depository institutions permits both
Conseco Bank and Retail Bank to export interest rates, finance charges and
certain fees from the states where they are located to all other states, with
the exception of Iowa which opted out of the Act during the permitted time
period. Interest rates, finance charges and fees in Utah and South Dakota are,
for the most part, unregulated.

          The Company's operations are subject to Federal regulation under other
applicable federal laws and regulations, the more significant of which include:
the Truth in Lending Act ("TILA"); the Equal Credit Opportunity Act ("ECOA");
the Fair Credit Reporting Act ("FCRA"); the Real Estate Settlement and
Procedures Act ("RESPA"); the Home Mortgage Disclosure Act ("HMDA"); the Home
Owner Equity Protection Act ("HOEPA"); DIDA; and certain rules and regulations
of the Federal Trade Commission ("FTC Rules").

          TILA and Regulation Z promulgated thereunder contain certain
disclosure requirements designed to provide consumers with uniform,
understandable information with respect to the terms and conditions of
extensions of credit and the ability to compare credit terms. TILA also provides
consumers with certain substantive protection such as a three day right to
cancel certain credit transactions, including certain of the loans originated by
the Company.

          ECOA requires certain disclosures to applicants for credit concerning
information that is used as a basis for denial of credit and prohibits
discrimination against applicants with respect to any aspect of a credit
transaction on the basis of sex, race, color, religion, national origin, age,
marital status, derivation of income from a public assistance program or the
good faith exercise of a right under TILA. ECOA also requires that adverse
action notices be given to applicants who are denied credit.

          FCRA regulates the process of obtaining, using and reporting of credit
information on consumers. This Act also regulates the use of credit information
among affiliates.

          RESPA regulates the disclosure of information to consumers on loans
involving a mortgage on real estate. The Act and related regulations also govern
payment for and disclosure of payments for settlement services in connection
with mortgage loans and prohibits the payment of referral fees for the referral
of a loan or related services.

          HMDA requires reporting of certain information to the Department of
Housing and Urban Development, including the race and sex of applicants in
connection with mortgage loan applications. A lender is required to obtain and
report such information if the application is made in person, but is not
required to obtain such information if the application is taken over the
telephone.

          HOEPA provides for additional disclosure and regulation of certain
consumer mortgage loans which are defined by the Act as "Covered Loans." A
Covered Loan is a mortgage loan (other than a mortgage loan to finance the
initial purchase of a dwelling, a reverse mortgage transaction, or an open-end
credit plan) which (1) has total origination fees in excess of the greater of
eight percent of the loan amount, or $480, or (2) has an annual percentage rate
of more than ten percent higher than comparably maturing United States treasury
obligations. A number of the Company's home equity and home improvement loans
are Covered Loans under the Act.

          The FTC Rules provide, among other things, that in connection with the
purchase of consumer sales finance contracts from dealers, the holder of the
contract is subject to all claims and defenses which the consumer could assert
against the dealer, but the consumer's recovery under such provisions cannot
exceed the amount paid under the sales contract.

                                       15
<PAGE>



          In the judgment of the Company, existing federal and state law and
regulations have not had a material adverse effect on the finance operations of
the Company. It is possible that more restrictive laws, rules or regulations
will be adopted in the future and will place additional burdens on the Company's
finance operations.

          The Company's commercial lending operations are not subject to
material regulation in most states, although certain states do require
licensing. In addition, certain provisions of ECOA apply to commercial loans to
small businesses.

          We have internal controls designed to manage the risks associated with
our finance activities. However, there is a risk that one employee or more will
circumvent these controls, as has occurred at other financial institutions.


                                       16

<PAGE>



          FEDERAL INCOME TAXATION

          The annuity and life insurance products marketed and issued by our
insurance subsidiaries generally provide the policyholder with an income tax
advantage, as compared to other savings investments such as certificates of
deposit and bonds, in that income taxation on the increase in value of the
product is deferred until it is received by the policyholder. With other savings
investments, the increase in value is taxed as earned. Annuity benefits and life
insurance benefits, which accrue prior to the death of the policyholder, are
generally not taxable until paid. Life insurance death benefits are generally
exempt from income tax. Also, benefits received on immediate annuities (other
than structured settlements) are recognized as taxable income ratably, as
opposed to the methods used for some other investments which tend to accelerate
taxable income into earlier years. The tax advantage for annuities and life
insurance is provided in the Internal Revenue Code (the "Code"), and is
generally followed in all states and other United States taxing jurisdictions.
In addition, the interest paid on home equity and home improvement loans by
customers of Conseco Finance are generally tax deductible for individuals who
itemize their tax deductions.

          Recently, Congress enacted legislation to lower marginal tax rates,
reduce the federal estate tax gradually over a ten-year period, with total
elimination of the federal estate tax in 2010, and increase contributions that
may be made to individual retirement accounts and 401(k) accounts. While these
tax law changes will sunset at the beginning of 2011 absent future congressional
action, they could in the interim diminish the appeal of our annuity and life
insurance products. Additionally, Congress has considered, from time to time,
other possible changes to the U.S. tax laws, including elimination of the tax
deferral on the accretion of value within certain annuities and life insurance
products. It is possible that further tax legislation will be enacted which
would contain provisions with possible adverse effects on our annuity and life
insurance products.

          Our insurance company subsidiaries are taxed under the life insurance
company provisions of the Code. Provisions in the Code require a portion of the
expenses incurred in selling insurance products to be deducted over a period of
years, as opposed to immediate deduction in the year incurred. This provision
increases the tax for statutory accounting purposes, which reduces statutory
earnings and surplus and, accordingly, decreases the amount of cash dividends
that may be paid by the life insurance subsidiaries.

          In certain securitization transactions, Conseco Finance utilizes a
special tax structure referred to as a Real Estate Mortgage Investment Conduit
("REMIC"). When this tax structure is used, the Company is required to account
for the transfer of the finance receivables into the securitization trust as a
sale (although for GAAP reporting purposes such transfers are accounted for as
collateralized borrowings). Additionally, since the Company retains the residual
interests of the REMIC, the REMIC tax rules require the Company to pay a minimum
amount of tax each year based on the taxable income of the retained residual
interest.

          At December 31, 2001, Conseco had net federal income tax loss
carryforwards of $1,176.3 million available (subject to various statutory
restrictions) for use on future tax returns. These carryforwards will expire as
follows: $2.4 million in 2003; $11.2 million in 2004, $4.9 million in 2005; $.7
million in 2006; $7.9 million in 2007; $7.5 million in 2008; $10.5 million in
2009; $4.6 million in 2010; $5.7 million in 2011; $10.1 million in 2012; $43.9
million in 2013; $6.9 million in 2014; $144.7 million in 2016; $24.0 million in
2017; $242.0 million in 2018; $159.1 million in 2019; and $490.2 million in
2020. The following restrictions exist with respect to the utilization of
portions of the loss carryforwards: (i) $142.8 million attributable to certain
acquired companies, may be used only to offset the taxable income of those
companies; and (ii) $1,033.5 million is available to offset income from certain
life insurance subsidiaries, our finance subsidiaries and other non-life
insurance subsidiaries. We believe that the Company will be able to fully
utilize the net federal income tax loss carryforwards before they expire. None
of the carryforwards is available to reduce the future tax provision for
financial reporting purposes.

          No valuation allowance has been established since it is more likely
than not that the Company will obtain full benefit of all deferred income tax
assets based on our evaluation of the Company's anticipated future taxable
income.

          ITEM 2. PROPERTIES.

          Headquarters. Our headquarters is located on a 172-acre corporate
campus in Carmel, Indiana, immediately north of Indianapolis. The 11 buildings
on the campus contain approximately 919,000 square feet of space and house
Conseco's executive offices and certain administrative operations of its
subsidiaries.

          Insurance operations. Our professional independent producer
distribution channel operations are administered from our Carmel, Indiana
headquarters. Our career agent operations are primarily administered from a
single facility of 300,000 square feet in downtown Chicago, Illinois, leased
under an agreement having a remaining life of seven years. We also lease
approximately 130,000 square feet of warehouse space in a second Chicago
facility; this lease has a remaining life of

                                       17

<PAGE>



approximately 18 months. Conseco owns an office building (currently listed for
sale) in Kokomo, Indiana (93,000 square feet), and two office buildings
(currently listed for sale) in Rockford, Illinois (total of 169,000 square
feet), which serve as administrative centers for portions of our insurance
operations. Conseco owns one office building in Philadelphia, Pennsylvania
(127,000 square feet), which serves as the administrative center for our direct
response life insurance operations; approximately 60 percent of this space is
occupied by the Company, with the remainder leased to tenants. Conseco also
leases 231 sales offices in various states totaling approximately 503,750 square
feet; these leases are short-term in length, with remaining lease terms ranging
from one to six years.

          Finance operations. Our finance operations are headquartered in St.
Paul, Minnesota in a building owned by the Company (120,000 square feet of which
are occupied by the Company). We lease additional space in downtown St. Paul
(185,000 square feet), which is used by our mortgage services and private credit
card divisions. We own a building in Rapid City, South Dakota (137,000 square
feet), which is used by our manufactured housing services units. We also lease
office space in Rapid City (75,000 square feet) which is used by our private
label credit card and retail bank servicing units. We also lease buildings in
Tempe, Arizona (200,000 square feet) and Atlanta, Georgia (96,000 square feet)
which serve as collection and service centers. Our finance operations lease 33
regional manufactured housing division offices and 128 mortgage services branch
offices across the United States; the lease terms generally range from three to
five years.

          India operations. Our subsidiary in India (which specializes in
customer service and backroom outsourcing for our insurance and finance
operations and third party clients) currently has two operational buildings in
Noida, India, and one more under construction in Noida. One building has
approximately 40,000 square feet, and the second building has approximately
42,000 square feet. The building under construction is expected to contain
approximately 68,000 square feet.

          ITEM 3. LEGAL PROCEEDINGS.

          We and our subsidiaries are involved on an ongoing basis in lawsuits
(including purported class actions) relating to our operations, including with
respect to sales practices, and we and current and former officers and directors
are defendants in pending class action lawsuits asserting claims under the
securities laws and derivative lawsuits. The ultimate outcome of these lawsuits
cannot be predicted with certainty.

          Conseco Finance was served with various related lawsuits filed in the
United States District Court for the District of Minnesota. These lawsuits were
generally filed as purported class actions on behalf of persons or entities who
purchased common stock or options to purchase common stock of Conseco Finance
during alleged class periods that generally run from July 1995 to January 1998.
One action (Florida State Board of Admin. v. Green Tree Financial Corp., et. al,
Case No. 98-1162) was brought not on behalf of a class, but by the Florida State
Board of Administration, which invests and reinvests retirement funds for the
benefit of state employees. In addition to Conseco Finance, certain current and
former officers and directors of Conseco Finance are named as defendants in one
or more of the lawsuits. Conseco Finance and other defendants obtained an order
consolidating the lawsuits seeking class action status into two actions, one of
which pertains to a purported class of common stockholders (In re Green Tree
Financial Corp. Stock Litig., Case No. 97-2666) and the other of which pertains
to a purported class of stock option traders (In re Green Tree Financial Corp.
Options Litig., Case No. 97-2679). Plaintiffs in the lawsuits assert claims
under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the
Securities Exchange Act of 1934. In each case, plaintiffs allege that Conseco
Finance and the other defendants violated federal securities laws by, among
other things, making false and misleading statements about the current state and
future prospects of Conseco Finance (particularly with respect to prepayment
assumptions and performance of certain loan portfolios of Conseco Finance) which
allegedly rendered Conseco Finance's financial statements false and misleading.
On August 24, 1999, the United States District Court for the District of
Minnesota issued an order dismissing with prejudice all claims alleged in the
lawsuits. The plaintiffs subsequently appealed the decision to the U.S. Court of
Appeals for the 8th Circuit. A three judge panel issued an opinion on October
25, 2001, reversing the United States District Court's dismissal order and
remanding the actions to the United States District Court. Pretrial discovery is
expected to commence in all three lawsuits approximately in April 2002. The
Company believes that the lawsuits are without merit and intends to continue to
defend them vigorously. The ultimate outcome of these lawsuits cannot be
predicted with certainty.

          A total of forty-five suits were filed in 2000 against the Company in
the United States District Court for the Southern District of Indiana. Nineteen
of these cases were putative class actions on behalf of persons or entities that
purchased the Company's common stock during alleged class periods that generally
run from April 1999 through April 2000. Two cases were putative class actions on
behalf of persons or entities that purchased the Company's bonds during the same
alleged class periods. Three cases were putative class actions on behalf of
persons or entities that purchased or sold option contracts, not issued by the
Company, on the Company's common stock during the same alleged class periods.
One case was a putative class action on behalf of persons or entities that
purchased the Company's "FELINE PRIDES" convertible preferred stock instruments
during the same alleged class periods. With four exceptions, in each of these
twenty-five cases

                                       18

<PAGE>



two former officers/directors of the Company were named as defendants. In each
case, the plaintiffs assert claims under Sections 10(b) (and Rule 10b-5
promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934. In
each case, plaintiffs allege that the Company and the individual defendants
violated the federal securities laws by, among other things, making false and
misleading statements about the current state and future prospects of Conseco
Finance (particularly with respect to performance of certain loan portfolios of
Conseco Finance) which allegedly rendered the Company's financial statements
false and misleading. The Company believes that these lawsuits are without merit
and intends to defend them vigorously. The ultimate outcome of these lawsuits
cannot be predicted with certainty.

          Eleven of the cases in the United States District Court for the
Southern District of Indiana were filed as purported class actions on behalf of
persons or entities that purchased preferred securities issued by various
Conseco Financing Trusts, including Conseco Financing Trust V, Conseco Financing
Trust VI, and Conseco Financing Trust VII. Each of these complaints named as
defendants the Company, the relevant trust (with two exceptions), two former
officers/directors of the Company, and underwriters for the particular issuance
(with one exception). One complaint also named an officer and all of the
Company's directors at the time of issuance of the preferred securities by
Conseco Financing Trust VII. In each case, plaintiffs asserted claims under
Section 11 and Section 15 of the Securities Act of 1933, and eight complaints
also asserted claims under Section 12(a)(2) of that Act. Two complaints also
asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and one complaint also asserted a claim under Section 10(b) of that Act.
In each case, plaintiffs alleged that the defendants violated the federal
securities laws by, among other things, making false and misleading statements
in Prospectuses and/or Registration Statements related to the issuance of
preferred securities by the Trust involved regarding the current state and
future prospects of Conseco Finance (particularly with respect to performance of
certain loan portfolios of Conseco Finance) which allegedly rendered the
disclosure documents false and misleading.

          All of the Conseco, Inc. securities cases have been consolidated into
one case in the United States District Court for the Southern District of
Indiana, captioned: "In Re Conseco, Inc. Securities Litigation", Case number
IP00-C585-Y/S. An amended complaint was filed on January 12, 2001, which asserts
claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,
and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, with respect to
common stock and various other securities issued by the Company and Conseco
Financing Trust VII. The Company filed a motion to dismiss the amended complaint
on April 27, 2001. On January 10, 2002, the Company entered into a Memorandum of
Understanding (the "MOU") to settle the consolidated securities cases that are
pending in the United States District Court for the Southern District of Indiana
for $120 million subject to court approval. Under the MOU, as amended on
February 12, 2002, $106 million was required to be placed in escrow by March 8,
2002; the remaining $14 million was to be paid in two installments: $6 million
by April 1, 2002, and $8 million by October 1, 2002 (all payments with interest
from January 25, 2002). The $106 million due on March 8, 2002, was not paid, for
reasons set forth in the following paragraph, and the MOU has expired by its
terms. Accordingly, and unless we are able to revive the settlement, the Company
intends to defend the securities lawsuit vigorously. The ultimate outcome cannot
be predicted with certainty.

          We maintained certain directors' and officers' liability insurance
that was inforce at the time the Indiana securities and derivative litigation
(the derivative litigation is described below) was commenced and, in our view,
applies to the claims asserted in that litigation. The insurers denied coverage
for those claims, so we commenced a lawsuit against them on June 13, 2001, in
Marion County Circuit Court in Indianapolis, Indiana (Conseco, Inc., et. al. v.
National Union Fire Insurance Company of Pittsburgh, PA., Royal Insurance
Company of America, Westchester Fire Insurance Company, RLI Insurance, Greenwich
Insurance Company and Certain Underwriters at Lloyd's of London, Case No.
49C010106CP001467) seeking, among other things, a judicial declaration that
coverage for those claims exists. The primary insurance carrier, National Union
Fire Insurance Co. of Pittsburgh, PA, has paid its full $10 million in policy
proceeds toward the settlement of the securities litigation; in return, National
Union has been released from the coverage litigation pending in state court in
Marion County, Indiana. The first excess insurance carrier, Royal Insurance
Company ("Royal"), placed its full $15 million in policy proceeds into an escrow
under Royal's control, but reserved rights to continue to litigate coverage and
imposed an unacceptable condition on releasing the funds. The second excess
insurance carrier, Westchester Fire Insurance Company, committed to pay its full
$15 million in policy proceeds toward the settlement without a reservation of
rights, on condition that certain impairments to its subrogation rights be
removed from the MOU. The third excess insurance carrier, RLI Insurance Company
("RLI"), committed to pay its full $10 million in policy proceeds toward the
settlement subject to a reservation of rights, and on condition that Conseco
give RLI any security for its reservation of rights that Conseco gives to Royal.
The fourth excess insurance carrier, Greenwich Insurance Company, committed to
pay its full $25 million in policy proceeds toward the settlement without a
reservation of rights. In addition, the funding commitments of Westchester, RLI
and Greenwich were conditioned on each of the excess carriers below them paying
their respective policy limits in full toward the settlement. The final excess
carrier, Certain Underwriters at Lloyd's of London, refused to pay or to escrow
its $25 million in policy proceeds toward the settlement, although it has
advised the Company that it is continuing to investigate the Company's claim.
There can be no assurance that the insurance carriers, other than the primary
carrier, will in fact pay their policy proceeds toward the settlement even if
the case could still be settled on the terms reflected in the MOU. Because they
did not do so by March 8, 2002, the MOU described in the immediately preceding
paragraph expired. Should the settlement embodied in the MOU be lost, there can

                                       19

<PAGE>



be no assurance that the securities litigation can be resolved for $120 million,
and the Company will proceed with its coverage litigation in Marion County,
Indiana, against those carriers that caused the settlement to terminate. We
intend to pursue our coverage rights vigorously. However, the ultimate outcome
cannot be predicted with certainty.

          Nine shareholder derivative suits were filed in 2000 in the United
States District Court for the Southern District of Indiana. The complaints named
as defendants the current directors, certain former directors, certain
non-director officers of the Company (in one case), and, alleging aiding and
abetting liability, certain banks that allegedly made loans in relation to the
Company's "Stock Purchase Plan" (in three cases). The Company is also named as a
nominal defendant in each complaint. Plaintiffs allege that the defendants
breached their fiduciary duties by, among other things, intentionally
disseminating false and misleading statements concerning the acquisition,
performance and proposed sale of Conseco Finance, and engaged in corporate waste
by causing the Company to guarantee loans that certain officers, directors and
key employees of the Company used to purchase stock under the Stock Purchase
Plan. These cases have now been consolidated into one case in the United States
District Court for the Southern District of Indiana, captioned: "In Re Conseco,
Inc. Derivative Litigation", Case Number IP00655-C-Y/S. An amended complaint
was filed on April 12, 2001, making generally the same allegations and
allegations of violation of the Federal Reserve Board's margin rules. Three
similar cases have been filed in the Hamilton County Superior Court in Indiana.
Schweitzer v. Hilbert, et al., Case No. 29D01-0004CP251; Evans v. Hilbert, et
al., Case No. 29D01-0005CP308 (both Schweitzer and Evans name as defendants
certain non-director officers); Gintel v. Hilbert, et al., Case No.
29003-0006CP393 (naming as defendants, and alleging aiding and abetting
liability as to, banks that allegedly made loans in relation to the Stock
Purchase Plan). The cases filed in Hamilton County have been stayed pending
resolution of the derivative suits filed in the United States District Court.
The Company believes that these lawsuits are without merit and intends to defend
them vigorously. The ultimate outcome of these lawsuits cannot be predicted with
certainty.

          Conseco Finance is a defendant in two arbitration proceedings in South
Carolina (Lackey v. Green Tree Financial Corporation, n/k/a Conseco Finance
Corp. and Bazzle v. Green Tree Financial Corporation, n/k/a Conseco Finance
Corp.) where the arbitrator, over Conseco Finance's objection, allowed the
plaintiffs to pursue purported class action claims in arbitration. The two
purported arbitration classes consist of South Carolina residents who obtained
real estate secured credit from Conseco Finance's Manufactured Housing Division
(Lackey) and Home Improvement Division (Bazzle) in the early and mid 1990s, and
did not receive a South Carolina specific disclosure form relating to selection
of attorneys and insurance agents in connection with the credit transactions.
The arbitrator, in separate awards issued on July 24, 2000, awarded a total of
$26.8 million in penalties and attorneys' fees. The awards were confirmed as
judgments in both Lackey and Bazzle. These cases have been consolidated into one
case and are currently on appeal before the South Carolina Supreme Court. Oral
argument was heard on March 21, 2002. Conseco Finance has posted appellate
bonds, including $20 million of cash, for these cases. Conseco Finance intends
to vigorously challenge the awards and believes that the arbitrator erred by,
among other things, conducting class action arbitrations without the authority
to do so and misapplying South Carolina law when awarding the penalties. The
ultimate outcome of this proceeding cannot be predicted with certainty.

          On January 15, 2002, Carmel Fifth, LLC ("Carmel"), an indirect, wholly
owned subsidiary of the Company, exercised its rights, pursuant to the Limited
Liability Company Agreement of 767 LLC, to require 767 Manager, LLC ("Manager"),
an affiliate of Donald J. Trump, to elect within 60 days, either to acquire
Carmel's interests in 767 LLC for $499.4 million, or sell its interests in 767
LLC to Carmel for $15.6 million (the "Buy/Sell Right"). 767 LLC is a Delaware
limited liability company that owns the General Motors Building, a 50-story
office building in New York, New York. 767 LLC is owned by Carmel and Manager.
On February 6, 2002, Mr. Trump commenced a civil action against the Company,
Carmel and 767 LLC in New York State Supreme Court, entitled Donald J. Trump v.
Conseco, Inc., et al. Plaintiff claims that the Company and Carmel breached an
agreement, dated July 3, 2001, to sell Carmel's interests to plaintiff for $295
million on or before September 15, 2001 (the "July 3rd Agreement").
Specifically, plaintiff claims that the Company and Carmel improperly refused to
accept a reasonable guaranty of plaintiff's payment obligations, refused to
complete the sale of Carmel's interest before the September 15, 2001 deadline,
repudiated an oral promise to extend the September 15 deadline indefinitely and
repudiated the July 3rd Agreement by exercising Carmel's Buy/Sell Right.
Plaintiff asserts claims for breach of contract, breach of the implied covenant
of good faith and fair dealing, promissory estoppel, unjust enrichment and
breach of fiduciary duty. Plaintiff is seeking compensatory and punitive damages
of approximately $1 billion and declaratory and injunctive relief blocking
Carmel's Buy/Sell Right. The Company believes that this lawsuit is without merit
and intends to defend it vigorously.

          We have received a claim from the heirs of a former officer, Lawrence
Inlow, asserting that unvested options to purchase 756,248 shares of our common
stock should have been vested at Mr. Inlow's death. If such options had been
vested, the heirs claim that the options would have been exercised, and the
resulting shares of common stock would have been sold for a gain of
approximately $30 million based upon a stock price of $58.125 per share, the
highest stock price during the alleged exercise period of the options. We
believe the claim of the heirs is without merit. If the heirs proceed with their
claim, we will defend it vigorously.


                                       20

<PAGE>



          On March 27, 2002, seven holders of our bank debt filed a lawsuit in
the United States District Court for the Northern District of Illinois (AG
Capital Funding Partners LP, et al. v. Conseco, Inc., Case No. 02C2236). On
March 20, 2002, we amended our credit facilities to provide, in part, that in
the event of certain asset sales, we are not obligated to prepay amounts
borrowed under the credit agreement until we have received in excess of $352
million of net proceeds from those sales. The holders assert that 100% of the
holders of the bank debt must vote in favor of an amendment of the provisions
relating to the triggering of mandatory prepayments. We believe that the
amendment of the mandatory prepayment provisions of the credit agreement
complied with the terms of the credit agreement and we believe this lawsuit is
without merit and intend to defend this lawsuit vigorously. The ultimate outcome
of these proceedings cannot be predicted with certainty. Except with respect to
the mandatory prepayment provisions of the credit agreement, this lawsuit does
not challenge any other portion of the March 20, 2002 amendment to the credit
agreement.

          In addition, the Company and its subsidiaries are involved on an
ongoing basis in other lawsuits (including purported class actions) related to
their operations. These actions include a purported nationwide class action
regarding the marketing, sale and renewal of home health care and long term care
insurance policies that has been settled (along with two related California-only
purported class actions) pending final approval by the court, one action brought
by the Texas Attorney General regarding long term care policies, three purported
nationwide class actions involving claims related to "vanishing premiums," and
two purported nationwide class actions involving claims related to "modal
premiums" (the alleged imposition and collection of insurance premium surcharges
in excess of stated annual premiums). The ultimate outcome of all of these other
legal matters pending against the Company or its subsidiaries cannot be
predicted, and, although such lawsuits are not expected to individually have a
material adverse effect on the Company, such lawsuits could have, in the
aggregate, a material adverse effect on the Company's consolidated financial
condition, cash flows or results of operations.


                                       21

<PAGE>



          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

          None.


                                       22

<PAGE>



          Optional Item. Executive Officers of the Registrant.
<TABLE>
<CAPTION>

      Officer                                              Positions with Conseco, Principal
    Name and Age (a)                  Since             Occupation and Business Experience (b)
    ----------------                  -----             --------------------------------------
    <S>                               <C>            <C>
    Gary C. Wendt, 60...............  2000           Since June 2000, Chairman and Chief Executive
                                                     Officer of Conseco; from 1999 to 2000, associated with
                                                     Global Opportunity Advisors (a private equity investment
                                                     fund); from 1986 to 1998, Chairman and Chief
                                                     Executive Officer of GE Capital Services; from 1984
                                                     to 1986, President and Chief Operations Officer of
                                                     GE Credit Corp.

    William J. Shea, 54.............  2001           Since September 2001, President and Chief Operating Officer of
                                                     Conseco.  Since March 6, 2002, acting Chief Financial Officer of
                                                     Conseco.  From 1998 to 2001, Chairman of the Board of Demoulas
                                                     Supermarkets, Inc.; from 1999 to 2000, CEO of View Tech, Inc.
                                                     (integrated videoconferencing); and from 1993 to 1998, Vice Chairman
                                                     and Chief Financial Officer of BankBoston Corporation.

    David K. Herzog, 46.............  2000           Since September 2000, Executive Vice President,
                                                     General Counsel and Secretary of Conseco; from
                                                     1980 to 2000, attorney with Baker & Daniels (law firm).

    James S. Adams, 42..............  1997           Since 1997, Senior Vice President, Chief Accounting Officer and
                                                     Treasurer of Conseco; from 1989 to present, Senior Vice President and
                                                     Treasurer of various Conseco subsidiaries.

    Maxwell E. Bublitz, 46..........  1998           Since 1998, Senior Vice President, Investments of Conseco; from 1994
                                                     to present, President and Chief Executive Officer of Conseco Capital
                                                     Management, Inc., a subsidiary of Conseco.

    David Gubbay, 49................  2001           Since March 2001, Executive Vice President-Strategic Business
                                                     Development of Conseco; from 1999 to 2000, Executive Vice President-
                                                     Operations for Norwegian Cruise Line Ltd.; from 1997 to 1998, Senior
                                                     Vice President-Corporate Development/Mergers and Acquisitions for
                                                     Fortis, Inc.; from 1989 to 1996, Chairman and Chief Executive Officer of
                                                     Whitehall Group.

<FN>

-------------------
(a)  The executive officers serve as such at the discretion of the Board of
     Directors and are elected annually.

(b)  Business experience is given for at least the last five years.
</FN>
</TABLE>




                                       23

<PAGE>



                                     PART II

          ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
                  MATTERS.

          MARKET INFORMATION

          The common stock of Conseco (trading symbol "CNC") has been listed for
trading on the New York Stock Exchange (the "NYSE") since 1986. The following
table sets forth the quarterly dividends paid per share and the ranges of high
and low sales prices per share on the NYSE for the last two fiscal years, based
upon information supplied by the NYSE.

<TABLE>
<CAPTION>

Period                                                             Market price
------                                                         ------------------            Dividend
                                                               High           Low              paid
                                                               ----           ---              ----
<S>                                                           <C>            <C>              <C>
2000:
    First Quarter  .........................................  $18.50         $10.31           $.1500
    Second Quarter..........................................   10.81           4.50            .0500
    Third Quarter  .........................................   11.69           7.00            .0500
    Fourth Quarter .........................................   13.38           4.94            .0000

2001:
    First Quarter.........................................    $18.60         $11.69           $.0000
    Second Quarter........................................     20.20          13.05            .0000
    Third Quarter.........................................     16.20           5.25            .0000
    Fourth Quarter........................................      7.40           2.51            .0000

</TABLE>




          The closing market price for a share of our common stock on March 22,
2002 was $3.76. As of March 22, 2002, there were approximately 166,100 holders
of the outstanding shares of common stock, including individual participants in
securities position listings.

          DIVIDENDS

          The Company does not anticipate declaring or paying dividends on its
common stock in the foreseeable future.

          We have paid all distributions on our Company-obligated mandatorily
redeemable preferred securities of subsidiary trusts when due. We are prohibited
from paying common stock dividends if such payments are not current. Certain
Conseco financing agreements require the Company to maintain financial ratios
which limit our ability to pay dividends. Such financing agreements also
restrict our ability to repurchase common stock. Dividends on our Series F
Preferred Stock are paid in additional shares of Series F Preferred Stock during
periods dividends on common stock are not paid.

          Our ability to pay dividends depends primarily on the receipt of cash
dividends and other cash payments from our finance and life insurance company
subsidiaries. Our life insurance companies are organized under state laws and
are subject to regulation by state insurance departments. These laws and
regulations limit the ability of insurance subsidiaries to make cash dividends,
loans or advances to a holding company such as Conseco. However, these laws
generally permit the payment out of the subsidiary's earned surplus, without
prior approval, of dividends for any 12-month period which in the aggregate do
not exceed the greater of (or in a few states, the lesser of): (i) the
subsidiary's prior year net gain from operations; or (ii) 10 percent of surplus
attributable to policyholders at the prior year-end, both computed on the
statutory basis of accounting prescribed for insurance companies.





                                       24

<PAGE>



          ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (a).
<TABLE>
<CAPTION>

                                                                                  Years ended December 31,
                                                                ---------------------------------------------------------
                                                                2001          2000         1999         1998         1997
                                                                ----          ----         ----         ----         ----
                                                                       (Amounts in millions, except per share data)
<S>                                                           <C>         <C>           <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA
Insurance policy income.....................................  $4,065.7    $ 4,220.3     $4,040.5     $3,948.8     $3,410.8
Gain on sale of finance receivables (b).....................      26.9          7.5        550.6        745.0        779.0
Net investment income.......................................   3,794.9      3,920.4      3,411.4      2,506.5      2,171.5
Net realized investment gains (losses) .....................    (413.7)      (358.3)      (156.2)       208.2        266.5
Total revenues..............................................   8,108.1      8,296.4      8,335.7      7,760.2      6,872.2
Interest expense:
  Corporate.................................................     369.6        438.4        249.1        182.2        109.4
  Finance and investment borrowings.........................   1,239.6      1,014.7        312.6        258.3        202.9
Total benefits and expenses.................................   8,527.5      9,658.2      7,184.8      6,714.5      5,386.5
Income (loss) before income taxes, minority interest,
  extraordinary gain (loss) and cumulative effect of
  accounting change.........................................    (419.4)    (1,361.8)     1,150.9      1,045.7      1,485.7
Extraordinary gain (loss) on extinguishment of debt,
  net of income tax.........................................      17.2         (5.0)         -          (42.6)        (6.9)
Cumulative effect of accounting change, net of income tax...       -           55.3          -            -            -
Net income (loss) (c).......................................    (405.9)    (1,191.2)       595.0        467.1        866.4
Preferred stock dividends ..................................      12.8         11.0          1.5          7.8         21.9
Net income (loss) applicable to common stock................    (418.7)    (1,202.2)       593.5        459.3        844.5

PER SHARE DATA (d)
Net income (loss), basic....................................    $(1.24)      $(3.69)       $1.83        $1.47        $2.72
Net income (loss), diluted..................................     (1.24)       (3.69)        1.79         1.40         2.52
Dividends declared per common share.........................       -           .100         .580         .530         .313
Book value per common share outstanding.....................     12.34        11.95        15.50        16.37        16.45
Shares outstanding at year-end..............................     344.7        325.3        327.7        315.8        310.0
Weighted average shares outstanding for diluted earnings....     338.1        326.0        332.9        332.7        338.7

BALANCE SHEET DATA - PERIOD END
Total investments........................................... $25,027.2    $25,017.6    $26,431.6    $26,073.0    $26,699.2
Goodwill....................................................   3,695.4      3,800.8      3,927.8      3,960.2      3,693.4
Total assets................................................  61,392.3     58,589.2     52,185.9     43,599.9     40,679.8
Notes payable and commercial paper:
  Corporate.................................................   4,087.6      5,055.0      4,624.2      3,809.9      2,354.9
  Finance...................................................   2,527.9      2,810.9      2,540.1      1,511.6      1,863.0
  Related to securitized finance receivables structured
     as collateralized borrowings...........................  14,484.5     12,100.6      4,641.8          -            -
Total liabilities...........................................  54,724.8     51,810.9     43,990.6     36,229.4     34,082.0
Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts..............   1,914.5      2,403.9      2,639.1      2,096.9      1,383.9
Shareholders' equity .......................................   4,753.0      4,374.4      5,556.2      5,273.6      5,213.9

OTHER FINANCIAL DATA (d) (e)
Premium and asset accumulation product collections (f)......  $6,247.1    $ 7,158.6     $6,986.0     $6,051.3     $5,075.6
Operating earnings (g)......................................     218.0        151.8        749.2        841.1        991.8
Managed finance receivables.................................  43,002.3     46,585.9     45,791.4     37,199.8     27,957.1
Total managed assets (at fair value) (h)....................  94,567.7     95,471.7     98,561.8     87,247.4     70,259.8
Shareholders' equity, excluding accumulated other
  comprehensive income (loss)...............................   5,192.0      5,025.4      6,327.8      5,302.0      5,013.3
Book value per common share outstanding, excluding
  accumulated other comprehensive income (loss).............     13.61        13.95        17.85        16.46        15.80
Delinquencies greater than 60 days as a percentage of
  managed finance receivables...............................     2.10%        1.76%        1.42%        1.19%        1.08%
Net credit losses as a percentage of average managed
  finance receivables.......................................     2.41%        1.79%        1.31%        1.03%        1.05%






                                       25

<PAGE>

<FN>
--------------------------

(a)  Comparison of selected supplemental consolidated financial data in the
     table above is significantly affected by the following business
     combinations accounted for as purchases: Washington National Corporation
     (effective December 1, 1997); Colonial Penn Life Insurance Company and
     Providential Life Insurance Company (September 30, 1997); Pioneer Financial
     Services, Inc. (April 1, 1997); and Capitol American Financial Corporation
     (January 1, 1997). All financial data have been restated to give
     retroactive effect to the merger with Conseco Finance accounted for as a
     pooling of interests.

(b)  Subsequent to September 8, 1999, we no longer structure the securitizations
     of the loans we originate in a manner that results in gain-on-sale
     revenues. After that date, the gains we recognize are generally related to
     the sale of the entire loan (with no interests retained by the Company).
     For more information on this change, see "Management's Discussion and
     Analysis of Consolidated Financial Condition and Results of Operations -
     Finance Segment - General."

(c)  Net income (loss) includes the following:
</FN>

</TABLE>

<TABLE>
<CAPTION>

                                                                2001          2000         1999         1998         1997
                                                                ----          ----         ----         ----         ----
                                                                                   (Dollars in millions)
       <S>                                                      <C>         <C>          <C>          <C>         <C>
       Net investment gains (losses), net of income tax
          and other items...................................    $(242.8)    $(198.1)     $(111.9)     $ (32.8)    $   44.1
       Impairment charge, net of income tax.................     (250.4)     (324.9)      (349.2)      (355.8)      (117.8)
       Special charges and additional amortization,
          net of income tax.................................     (123.5)     (534.9)         -         (148.0)         -
       Gain on sale of interest in riverboat, net of income
          tax...............................................      122.6         -            -            -            -
       Provision for losses related to loan guarantees,
          net of income tax.................................     (110.2)     (150.0)       (11.9)         -            -
       Venture capital income (loss), net of expenses and
          taxes.............................................      (15.2)      (99.4)       170.0          -            -
       Amounts related to discontinued businesses and
          other non-recurring items, net of income tax......      (34.4)       13.6        147.3        205.2        (44.8)
       Cumulative effect of accounting change, net of
          income tax........................................        -         (55.3)         -            -            -
       Extraordinary gain (loss) on extinguishment of debt,
          net of income tax.................................       17.2        (5.0)         -          (42.6)        (6.9)
<FN>

     Refer to "Management's Discussion and Analysis of Consolidated Financial
     Condition and Results of Operations" and the notes to the consolidated
     financial statements for additional discussion of the above items.

(d)  All share and per-share amounts have been restated to reflect the
     two-for-one stock split paid on February 11, 1997.

(e)  Amounts under this heading are included to assist the reader in analyzing
     the Company's financial position and results of operations. Such amounts
     are not intended to, and do not, represent insurance policy income, net
     income, shareholders' equity or book value per share prepared in accordance
     with generally accepted accounting principles ("GAAP").

(f)  Includes premiums received from universal life products and products
     without mortality or morbidity risk. Such premiums are not reported as
     revenues under GAAP and were $2,267.2 million in 2001; $2,731.1 million in
     2000; $3,023.3 million in 1999; $2,585.7 million in 1998; and $2,099.4
     million in 1997. Also includes deposits in mutual funds totaling $468.7
     million in 2001; $794.2 million in 2000; $479.3 million in 1999; $87.1
     million in 1998.; and $19.9 million in 1997. Also includes premiums related
     to our discontinued major medical business, totaling $737.1 million in
     2001; $910.6 million in 2000; $855.7 million in 1999; $878.2 million in
     1998; and $744.0 million in 1997.

(g)  Represents net income excluding the items described in note (c) above. See
     our description of the criteria we use to identify the items excluded from
     operating earnings in "Management's Discussion and Analysis of Consolidated
     Financial Condition and Results of Operations."

(h)  Includes: (i) all of the Company's assets; (ii) the total finance
     receivables managed by Conseco Finance applicable to the holders of
     asset-backed securities sold by Conseco Finance in securitizations
     structured in a manner that resulted in gain-on-sale revenue (adjusted for
     the interests retained by the Company); and (iii) the total market value of
     the


                                       26
<PAGE>



          investment portfolios managed by the Company for others of $8.3
          billion, $7.2 billion, $11.4 billion, $11.2 billion and $5.1 billion
          at December 31, 2001, 2000, 1999, 1998 and 1997, respectively.
</FN>
</TABLE>


                                       27

<PAGE>



          ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.

          In this section, we review the consolidated financial condition of
Conseco at December 31, 2001 and 2000, the consolidated results of operations
for the three years ended December 31, 2001, and where appropriate, factors that
may affect future financial performance. Please read this discussion in
conjunction with the accompanying consolidated financial statements, notes and
selected consolidated financial data.

          All statements, trend analyses and other information contained in this
report and elsewhere (such as in filings by Conseco with the Securities and
Exchange Commission, press releases, presentations by Conseco or its management
or oral statements) relative to markets for Conseco's products and trends in
Conseco's operations or financial results, as well as other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect," "project,"
"intend," "may," "will," "would," "contemplate," "possible," "attempts,"
"seeks," "should," "could," "goal," "target," "on track," "comfortable with,"
"optimistic" and other similar expressions, constitute forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to known and unknown risks, uncertainties
and other factors which may cause actual results, performance or achievements to
be materially different from the future results, performance or achievements
expressed or implied by the forward-looking statements. Assumptions and other
important factors that could cause our actual results to differ materially from
those anticipated in our forward-looking statements include, among other things:
(i) general economic conditions and other factors, including prevailing interest
rate levels, stock and credit market performance and health care inflation,
which may affect (among other things) Conseco's ability to sell its products,
its ability to make loans and access capital resources and the costs associated
therewith, the market value of Conseco's investments, the lapse rate and
profitability of policies, and the level of defaults and prepayments of loans
made by Conseco; (ii) Conseco's ability to achieve anticipated synergies and
levels of operational efficiencies, including from our process excellence
initiatives; (iii) customer response to new products, distribution channels and
marketing initiatives; (iv) mortality, morbidity, usage of health care services
and other factors which may affect the profitability of Conseco's insurance
products; (v) performance of our investments; (vi) changes in the Federal income
tax laws and regulations which may affect the relative tax advantages of some of
Conseco's products; (vii) increasing competition in the sale of insurance and
annuities and in the finance business; (viii) regulatory changes or actions,
including those relating to regulation of financial services affecting (among
other things) bank sales and underwriting of insurance products, regulation of
the sale, underwriting and pricing of products, and health care regulation
affecting health insurance products; (ix) the outcome of Conseco's efforts to
sell assets and reduce, refinance or modify indebtedness and the availability
and cost of capital in connection with this process; (x) actions by rating
agencies and the effects of past or future actions by these agencies on
Conseco's business; (xi) the ultimate outcome of lawsuits filed against Conseco;
and (xii) the risk factors or uncertainties listed from time to time in
Conseco's filings with the Securities and Exchange Commission. Other factors and
assumptions not identified above are also relevant to the forward-looking
statements, and if they prove incorrect, could also cause actual results to
differ materially from those projected.

          All written or oral forward-looking statements attributable to us are
expressly qualified in their entirety by the foregoing cautionary statement. Our
forward-looking statements speak only as of the date made. We assume no
obligation to update or to publicly announce the results of any revisions to any
of the forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements.

          Consolidated results and analysis

          The net loss applicable to common stock of $418.7 million in 2001, or
$1.24 per diluted share, included the following amounts, all presented net of
tax: (i) net investment losses (net of related costs and amortization) of $242.8
million, or 72 cents per share; (ii) a loss of $15.2 million, or 4 cents per
share, related to our venture capital investment in TeleCorp PCS, Inc.
("TeleCorp"); (iii) the gain on the sale of our interest in a riverboat of
$122.6 million, or 36 cents per share; (iv) an impairment charge of $250.4
million, or 74 cents per share, related to the Company's interest-only
securities and servicing rights; (v) the provision for loss of $110.2 million,
or 33 cents per share, related to the Company's guarantee of bank loans to
current and former directors, officers and key employees to purchase shares of
Conseco common stock; (vi) special charges, amounts related to discontinued
lines and other non-recurring items of $157.9 million, or 46 cents per share, as
summarized in the notes to the consolidated financial statements; and (vii) an
extraordinary gain of $17.2 million, or 5 cents per share, related to the early
retirement of debt.

          The net loss applicable to common stock of $1,202.2 million in 2000,
or $3.69 per diluted share, included the following amounts, all presented net of
tax: (i) net investment losses (net of related costs and amortization) of $198.1
million, or 61 cents per share; (ii) an impairment charge of $324.9 million, or
$1.00 per share, related to the Company's interest-only securities and servicing
rights; (iii) special charges of $521.3 million, or $1.60 per share, as
summarized in the notes to the consolidated financial statements; (iv) the
provision for loss of $150.0 million, or 46 cents per share, related to

                                       28

<PAGE>


the Company's guarantee of bank loans made to current and former directors,
officers and key employees to purchase shares of Conseco common stock; (v) a
loss of $99.4 million, or 31 cents per share, related to our venture capital
investment in TeleCorp; (vi) the cumulative charge related to an accounting
change of $55.3 million, or 17 cents per share, related to new requirements for
the valuation of interest-only securities; and (vii) an extraordinary charge of
$5.0 million, or 1 cent per share, related to the early retirement of debt.

       Net income applicable to common stock of $593.5 million in 1999, or $1.79
per diluted share, included the following amounts, all presented net of tax: (i)
net investment losses (net of related costs and amortization) of $111.9 million,
or 34 cents per share; (ii) an impairment charge of $349.2 million, or $1.05 per
share, to reduce the value of interest-only securities and servicing rights;
(iii) the provision for loss of $11.9 million, or 3 cents per share, related to
the Company's guarantee of bank loans made to current and former directors,
officers and key employees to purchase shares of Conseco common stock; (iv) a
gain of $170.0 million, or 51 cents per share, related to our venture capital
investment in TeleCorp; and (v) the net income of $147.3 million, or 44 cents
per share, related to the discontinued major medical business and other
non-recurring items. The aforementioned special and impairment charges are
explained in more detail in the notes to the accompanying consolidated financial
statements.

          We evaluate performance and determine future earnings goals based on
operating earnings which we define as income before: (i) net investment gains
(losses)(less that portion of amortization of cost of policies purchased and
cost of policies produced and income taxes relating to such gains (losses));
(ii) the venture capital income (loss) related to our investment in TeleCorp;
(iii) the gain on the sale of our interest in a riverboat; (iv) special items
not related to the continuing operations of our businesses (including impairment
charges to reduce the value of interest-only securities and servicing rights,
special charges and the provision for losses related to loan guarantees); (v)
the effect on amortization of the cost of policies purchased and produced of
significant changes in assumptions used to estimate future gross profits of
insurance businesses; (vi) the net income (loss) related to the discontinued
major medical business; and (vii) the effect of accounting changes and
extraordinary gain (loss) on extinguishment of debt. The criteria used by
management to identify the items excluded from operating earnings include
whether the item: (i) relates to other than the continuing operations of our
businesses; (ii) is infrequent; (iii) is material to net income (loss); (iv)
results from restructuring activities; (v) results from a change in the
regulatory environment; and/or (vi) relates to the sale of an investment or the
change in estimated market value of our venture capital investments. The
non-operating items which may occur will vary from period to period and since
these items are determined based on management's discretion, inconsistencies in
the application of the criteria may exist. Operating earnings are determined by
adjusting GAAP net income for the above mentioned items. While these items may
be significant components in understanding and assessing our consolidated
financial performance, we believe that the presentation of operating earnings
enhances the understanding of our results of operations by highlighting net
income attributable to the normal, recurring operations of the business and by
excluding events that materially distort trends in net income. However,
operating earnings are not a substitute for net income (loss) determined in
accordance with GAAP.


                                       29

<PAGE>



          Results of operations by segment for the three years ended December
31, 2001:

          The following tables and narratives summarize our operating results by
business segment.
<TABLE>
<CAPTION>

                                                                                  2001             2000              1999
                                                                                  ----             ----              ----
                                                                                           (Dollars in millions)
<S>                                                                             <C>           <C>               <C>
Operating earnings from continuing operations before taxes and goodwill
   amortization:
     Insurance and fee-based segment operating
       earnings......................................................           $ 843.2       $   843.7         $ 1,187.6
     Finance segment operating earnings..............................             243.2           156.8             588.3
                                                                                -------       ---------         ---------

       Subtotal......................................................           1,086.4         1,000.5           1,775.9
                                                                                -------       ---------         ---------

Holding company activities:
   Corporate expenses, less charges to subsidiaries for services
     provided........................................................             (20.0)          (67.5)            (64.4)
   Interest and dividends, net of corporate investment income........            (549.0)         (651.8)           (451.6)
   Allocation of net interest to finance segment.....................               6.5           126.9              63.1
                                                                                -------       ---------         ---------

       Operating earnings from continuing operations before taxes
         and goodwill amortization...................................             523.9           408.1           1,323.0

Taxes  ..............................................................            (194.1)         (150.6)           (476.9)
                                                                                -------       ---------         ---------

       Operating earnings from continuing operations before
         goodwill amortization.......................................             329.8           257.5             846.1

Goodwill amortization................................................            (111.8)         (105.7)            (96.9)
                                                                                -------       ---------         ---------

       Operating earnings from continuing operations
         applicable to common stock..................................             218.0           151.8             749.2
                                                                                -------       ---------         ---------

Non-operating items, net of tax:
     Net realized losses.............................................            (242.8)         (198.1)           (111.9)
     Venture capital income (loss)...................................             (15.2)          (99.4)            170.0
     Gain on sale of interest in riverboat...........................             122.6              -                 -
     Impairment charge...............................................            (250.4)         (324.9)           (349.2)
     Provision for losses related to loan guarantees.................            (110.2)         (150.0)            (11.9)
     Special charges, discontinued lines and other non-recurring
       items.........................................................            (157.9)         (521.3)            147.3
     Extraordinary gain (loss) on extinguishment of debt ............              17.2            (5.0)               -
     Cumulative effect of accounting change..........................                -            (55.3)               -
                                                                                -------       ---------         ---------

       Total non-operating items, net of tax.........................            (636.7)       (1,354.0)           (155.7)
                                                                                -------       ---------         ---------
Net income (loss) applicable to common stock.........................          $ (418.7)      $(1,202.2)        $   593.5
                                                                               ========       =========         =========
</TABLE>


          CRITICAL ACCOUNTING POLICIES

          The accounting policies described below require management to make
significant estimates and assumptions using information available at the time
the estimates are made. Such estimates and assumptions significantly affect
various reported amounts of assets and liabilities. Management has made
estimates in the past that we believed to be appropriate but were subsequently
revised to reflect actual experience. If our future experience differs
materially from these estimates and assumptions, our results of operations and
financial condition could be affected. Accordingly, we consider them to be
critical in preparing our consolidated financial statements. A more detailed
description of our accounting policies is included in the notes to our
consolidated financial statements.



                                       30

<PAGE>


          Investments

          At December 31, 2001, the carrying value of our investment portfolio
was $25.0 billion. The accounting risks associated with these assets relate to
the recognition of income, our determination of other-than-temporary impairments
and our estimation of fair values.

          We defer any fees received or costs incurred when we originate
investments. We amortize fees, costs, discounts and premiums as yield
adjustments over the contractual lives of the investments. We consider
anticipated prepayments on mortgage-backed securities in determining estimated
future yields on such securities.

          When we sell a security (other than trading securities or venture
capital investments), we report the difference between the sale proceeds and
amortized cost (determined based on specific identification) as an investment
gain or loss.

          We regularly evaluate all of our investments for possible impairment
based on current economic conditions, credit loss experience and other
investee-specific developments. If there is a decline in a security's net
realizable value that is other than temporary, the decline is recognized as a
realized loss and the cost basis of the security is reduced to its estimated
fair value.

          Our evaluation of investments for impairment requires significant
judgments to be made including: (i) the identification of potentially impaired
securities; (ii) the determination of their estimated fair value; and (iii)
assessment of whether any decline in estimated fair value is other than
temporary. If new information becomes available or the financial condition of
the investee changes, our judgments may change resulting in the recognition of
an investment loss at that time. At December 31, 2001, our accumulated other
comprehensive loss included unrealized losses on investments of $816 million; we
consider all such declines in estimated fair value to be temporary.

          Estimated fair values for our investments are determined based on
estimates from nationally recognized pricing services, broker-dealer market
makers, and internally developed methods. Our internally developed methods
require us to make judgments about the security's credit quality, liquidity and
market spread.

          We seek to closely match the estimated duration of our invested assets
to the expected duration of our liabilities. When the estimated durations of
assets and liabilities are similar, exposure to interest rate risk is minimized
because a change in the value of assets should be largely offset by a change in
the value of liabilities. A mismatch of the durations of invested assets and
liabilities could have a significant impact on our results of operations and
financial position.

          Interest-Only Securities

          Interest-only securities represent the right to receive certain future
cash flows from securitization transactions structured prior to September 8,
1999, and totaled $141.7 million at December 31, 2001. Such cash flows generally
are equal to the value of the principal and interest to be collected on the
underlying financial contracts of each securitization in excess of the sum of
the principal and interest to be paid on the securities sold and contractual
servicing fees. We carry interest-only securities at estimated fair value. We
determine fair value by discounting the projected cash flows over the expected
life of the receivables sold using current estimates of future prepayment,
default, loss and interest rates. We record any unrealized gain or loss
determined to be temporary, net of tax, as a component of shareholders' equity.
Declines in value are considered to be other than temporary when: (i) the fair
value of the security is less than its carrying value; and (ii) the timing
and/or amount of cash expected to be received from the security has changed
adversely from the previous valuation which determined the carrying value of the
security. When declines in value considered to be other than temporary occur, we
reduce the amortized cost to estimated fair value and recognize a loss in the
statement of operations. The assumptions used to determine new values are based
on our internal evaluations and consultation with external advisors having
significant experience in valuing these securities.

          The determination of the value of our interest-only securities
requires significant judgment. The Company has recognized significant impairment
charges when the interest-only securities did not perform as well as anticipated
based on our assumptions and expectations.

          Our current valuation of interest-only securities may prove inaccurate
in future periods. In the securitizations to which these interest-only
securities relate, our finance subsidiary has retained certain contingent risks
in the form of guarantees of certain lower rated securities issued to third
parties by the securitization trusts. As of December 31, 2001, the total amount
of these guarantees was $1.5 billion. If we have to make more payments on these
guarantees than anticipated, or we experience higher than anticipated rates of
loan prepayments, including those due to foreclosures or charge-offs, or any

                                       31
<PAGE>



adverse changes in our other assumptions used for such valuation (such as
interest rates and our loss mitigation policies), we could be required to
recognize additional impairment charges (including potential payments related to
$1.5 billion of guarantees) which could have a material adverse effect on our
financial condition or results of operations. We consider any estimated payments
related to these guarantees in the projected cash flows used to determine the
value of our interest-only securities.

          Finance Receivables

          At December 31, 2001, the balance of our finance receivables was $18.0
billion. This value is significantly affected by our assessment of the
collectibility of the receivables, servicing actions and the provision for
credit losses that we establish.

          The provision for credit losses charged to expense is based upon an
assessment of current and historical loss experience, loan portfolio trends, the
value of collateral, prevailing economic and business conditions, and other
relevant factors. We reduce the carrying value of finance receivables to net
realizable value at the earlier of: (i) six months of contractual delinquency;
or (ii) when we take possession of the property securing the finance receivable.
Estimates of the provision are revised each period, and changes are recorded in
the period they become known. A significant change in the level of collectible
finance receivables would have a significant adverse effect on our results of
operations and financial position in future periods.

          Cost of Policies Purchased and Cost of Policies Produced

          At December 31, 2001, the combined balance of our cost of policies
purchased and cost of policies produced was $4.2 billion. The recovery of these
costs is dependent on the future profitability of the related business.

          Each year, we evaluate the recoverability of the unamortized balance
of the cost of policies purchased and the cost of policies produced. We consider
estimated future gross profits or future premiums, expected mortality or
morbidity, interest earned and credited rates, persistency and expenses in
determining whether the balance is recoverable. If we determine a portion of the
unamortized balance is not recoverable, it is charged to amortization expense.

          The assumptions we use to amortize and evaluate the recoverability of
the cost of policies produced and cost of policies purchased involve significant
judgment. A revision to these assumptions could have a significant adverse
effect on our results of operations and financial position in future periods.

          Goodwill

          At December 31, 2001, the balance of our goodwill was $3.7 billion.
The recovery of this asset is dependent on the fair value of the life insurance
business to which it relates. (The acquisition of Conseco Finance was accounted
for as a pooling of interests: accordingly, there is no goodwill associated with
our finance segment). Under generally accepted accounting principles in effect
through December 31, 2001, these assets were generally amortized over a 40-year
period, and were tested periodically to determine if they were recoverable from
projected undiscounted net cash flows from earnings of the subsidiaries over the
remaining amortization period. Effective in 2002, goodwill will no longer be
amortized but will be subject to annual (or under certain circumstances more
frequent) impairment tests based on the estimated fair value of the business
units which comprise our insurance segment. There are numerous assumptions and
estimates underlying the determination of the estimated fair value of these
businesses. Different valuation methods and assumptions can produce
significantly different results which could affect the amount of any potential
impairment charge that might be required to be recognized.

          The Company is currently evaluating the carrying value of goodwill
under the new impairment test effective in 2002. We expect to record some level
of impairment of goodwill in 2002 as a result of adopting this standard;
however, the amount of such impairment, which could be material, is unknown at
this time and is dependent upon the estimated fair market value of the insurance
segment, which is currently in process. If we determine that an impairment
charge is necessary based on our initial test, the rules require that we
recognize the charge in the first quarter of 2002 (through restatement of first
quarter results, if such impairment test is completed subsequent to March 31,
2002, as permitted by the transition provisions of the new rules). Although this
standard will increase the Company's results of operations in the future due to
the elimination of goodwill amortization from our statement of operations, any
impairments would result in a charge. See "Consolidated Financial Condition" and
the notes to our consolidated financial statements for further description of
the new impairment test.



                                       32

<PAGE>




          Income Taxes

          Our income tax expense includes deferred income taxes arising from
temporary differences between the financial reporting and tax bases of assets
and liabilities and net operating loss carryforwards. These amounts are
reflected in the balance of our income tax assets which totaled $678.1 million
at December 31, 2001. In assessing the realization of our deferred income tax
assets, we consider whether it is more likely than not that the deferred income
tax assets will be realized. The ultimate realization of our deferred income tax
assets depends upon generating future taxable income during the periods in which
our temporary differences become deductible and before our net operating loss
carryforwards expire. We evaluate the recoverability of our deferred income tax
assets by assessing the need for a valuation allowance on a quarterly basis. If
we determine that it is more likely than not that our deferred income tax assets
will not be recovered, a valuation allowance will be established against some or
all of our deferred income tax assets. This could have a significant effect on
our future results of operations and financial position.

          No valuation allowance has been provided on our deferred income tax
assets at December 31, 2001, as we believe it is more likely than not that all
such assets will be realized. We reached this conclusion after considering the
availability of taxable income in prior carryback years, tax planning
strategies, and the likelihood of future taxable income exclusive of reversing
temporary differences and carryforwards. Differences between forecasted and
actual future operating results could adversely impact our ability to realize
our deferred income tax assets.

          To utilize all of our net operating loss carryforwards before
expiration, we would need to generate minimum taxable income by group of:

     o $201.4 million before 2016 in our insurance subsidiaries;

     o $142.8million before 2018 in certain of our acquired companies; and

     o $832.1 million before 2020 in our finance subsidiaries, certain insurance
       subsidiaries and corporate operations.

          In recent years, we have had losses before income taxes for financial
reporting purposes. However, we believe that existing levels of income from our
continuing operations coupled with changes in our operations that either have
taken place or will take place are sufficient to generate the minimum amounts of
taxable income set forth above to utilize our net operating loss carryforwards
before they expire. Such changes include: (i) reduction in corporate
obligations; (ii) various cost saving initiatives; (iii) transfer of certain
customer service and backroom operations to our India subsidiary; (iv) the
discontinuation of certain unprofitable businesses, such as major medical
insurance; and (v) other changes in an effort to increase the efficiency of our
business operations.


                                       33

<PAGE>



          The following chart reconciles our income (loss) before taxes for
financial statement purposes to our taxable income (loss) for income tax
purposes:

<TABLE>
<CAPTION>

                                                                 2001          2000        1999
                                                                 ----          ----        ----
                                                                     (Dollars in millions)
<S>                                                            <C>         <C>           <C>
Income (loss) before income taxes, minority interest,
    extraordinary gain (loss) and cumulative effect of
    accounting change........................................  $(419.4)    $(1,361.8)    $1,150.9
Adjustments to determine taxable income:
    Net investment income - finance segment assets...........    (37.2)         81.0        257.5
    Venture capital income related to investment
       in TeleCorp PCS, Inc..................................     42.9         199.5       (354.8)
    Gain on sale of finance receivables......................       -             -        (550.6)
    Provision for losses.....................................    284.2         331.3         64.3
    Amortization.............................................    109.6         105.7         96.9
    Special charges..........................................       -          256.9           -
    Impairment charges.......................................    386.9         515.7        554.3
    Distributions on Company-obligated mandatorily
       redeemable preferred securities of subsidiary trusts..   (183.8)       (223.5)      (204.3)
    Extraordinary gain (loss) on extinguishment of debt......     26.5          (7.7)          -
    Cumulative effect of accounting change...................       -           85.1           -
    Tax benefit related to issuance of shares under stock
       option plans..........................................    (68.0)        (18.9)       (71.4)
    Net operations loss deduction............................    (89.9)           -        (489.8)
    Other....................................................    113.6          74.3         43.6
                                                               -------     ---------     --------

       Taxable income for income tax purposes................  $ 165.4     $    37.6     $  496.6
                                                               =======     =========     ========
</TABLE>


          At December 31, 2001, Conseco had federal income tax loss
carryforwards of $1,176.3 million available (subject to various statutory
restrictions) for use on future tax returns. These carryforwards will expire as
follows: $2.4 million in 2003; $11.2 million in 2004; $4.9 million in 2005; $.7
million in 2006; $7.9 million in 2007; $7.5 million in 2008; $10.5 million in
2009; $4.6 million in 2010; $5.7 million in 2011; $10.1 million in 2012; $43.9
million in 2013; $6.9 million in 2014; $144.7 million in 2016; $24.0 million in
2017; $242.0 million in 2018; $159.1 million in 2019; and $490.2 million in
2020.

          Based on our projections of future taxable income, we expect to
utilize the largest portion of our net operating loss carryforwards relating to
our non-life insurance companies of $832.1 million over the next four to five
years. Approximately, 90 percent of our net operating loss carryforwards do not
begin to expire until 2016. Finally, based on our projections of future
financial reporting income and assuming that our deferred income tax assets and
liabilities reverse to the extent of future projected financial reporting
income, we expect to utilize all of our net deferred income tax assets of $662.7
million over the next four or five years.


                                       34

<PAGE>



          Liabilities for Insurance Products

          At December 31, 2001, the total balance of our liabilities for
insurance and asset accumulation products was $29.1 billion. These liabilities
are often payable over an extended period of time and the profitability of the
related products is dependent on the pricing of the products and other factors.
Differences between what we expected when we sold these products and actual
experience could result in future losses.

          We calculate and maintain reserves for the estimated future payment of
claims to our policyholders based on actuarial assumptions. For our health
insurance business, we establish an active life reserve plus a liability for due
and unpaid claims, claims in the course of settlement and incurred but not
reported claims, as well as a reserve for the present value of amounts not yet
due on claims. Many factors can affect these reserves and liabilities, such as
economic and social conditions, inflation, hospital and pharmaceutical costs,
changes in doctrines of legal liability and extra contractual damage awards.
Therefore, the reserves and liabilities we establish are necessarily based on
extensive estimates, assumptions and historical experience. Establishing
reserves is an uncertain process, and it is possible that actual claims will
materially exceed our reserves and have a material adverse effect on our results
of operations and financial condition. Our financial results depend
significantly upon the extent to which our actual claims experience is
consistent with the assumptions we used in determining our reserves and pricing
our products. If our assumptions with respect to future claims are incorrect,
and our reserves are insufficient to cover our actual losses and expenses, we
would be required to increase our liabilities, negatively affecting our
operating results.

          Liabilities for Loss Contingencies Related to Lawsuits and Our
          Guarantees of Bank Loans and Related Interest Loans

          We are involved on an ongoing basis in lawsuits relating to our
operations, including with respect to sales practices, and we and current and
former officers and directors are defendants in pending class action lawsuits
asserting claims under the securities laws and in derivative lawsuits. The
ultimate outcome of these lawsuits cannot be predicted with certainty. We
recognize an estimated loss from these loss contingencies when we believe it is
probable that a loss has been incurred and the amount of the loss can be
reasonably estimated. However, it is difficult to measure the actual loss that
might be incurred related to litigation. The ultimate outcome of these lawsuits
could have a significant impact on our results of operations and financial
position.

          We also establish a liability for potential losses related to our
guarantees of bank loans and the related interest loans to approximately 155
current and former directors, officers and key employees for the purchase of
Conseco common stock. This liability is based on an assessment of the value of
collateral held for the loans, the personal wealth of the participants in the
stock purchase plan, and other factors (such as current and expected future
earnings of the participants) which could affect the participants' ability to
repay the loans. As of December 31, 2001, we had guaranteed loans totaling
$545.4 million. In addition, Conseco has provided loans to participants for
interest on the bank loans totaling $143.6 million. At December 31, 2001, we had
recognized a reserve liability of $420.0 million based on our estimate. A
significant change in the ability of participants to meet their obligations
related to the bank loans and related interest loans would have a significant
effect on our results of operations and financial position.



                                       35

<PAGE>
Insurance and fee-based operations:
<TABLE>
<CAPTION>



                                                                                      2001         2000          1999
                                                                                      ----         ----          ----
                                                                                             (Dollars in millions)
<S>                                                                                  <C>          <C>          <C>
Premiums and asset accumulation product collections:
   Annuities......................................................................   $ 1,744.2    $ 2,255.7    $ 2,473.7
   Supplemental health............................................................     2,347.5      2,263.9      2,206.6
   Life...........................................................................       949.6        934.2        970.7
                                                                                     ---------    ---------    ---------

       Collections on insurance products from continuing operations...............     5,041.3      5,453.8      5,651.0

   Major medical..................................................................       737.1        910.6        855.7
                                                                                     ---------    ---------    ---------

       Total collections on insurance products....................................     5,778.4      6,364.4      6,506.7

   Mutual funds...................................................................       468.7        794.2        479.3
                                                                                     ---------    ---------    ---------

       Total premiums and asset accumulation product collections..................   $ 6,247.1    $ 7,158.6    $ 6,986.0
                                                                                     =========    =========    =========

Average liabilities for insurance and asset accumulation products (excluding
   discontinued major medical business):
     Annuities:
       Mortality based............................................................   $   425.0    $   454.6    $   600.3
       Equity-linked..............................................................     2,632.2      2,550.6      1,710.1
       Deposit based..............................................................     8,756.0      9,618.1     10,864.7
       Separate accounts and investment trust liabilities.........................     2,401.6      2,684.1      1,717.4
     Health.......................................................................     5,106.3      4,753.9      4,326.1
     Life:
       Interest sensitive.........................................................     4,305.0      4,264.0      4,121.6
       Non-interest sensitive.....................................................     2,691.0      2,682.8      2,799.9
                                                                                     ---------    ---------    ---------

       Total average liabilities for insurance and asset accumulation products,
         net of reinsurance ceded.................................................   $26,317.1    $27,008.1    $26,140.1
                                                                                     =========    =========    =========

Revenues:
   Insurance policy income........................................................   $ 3,313.5    $ 3,315.0    $ 3,174.3

   Net investment income:
     General account invested assets..............................................     1,788.7      1,882.7      1,959.5
     Equity-indexed products based on the change in value of the S&P 500
       Call Options...............................................................      (114.2)      (111.0)        46.0
     Separate account assets......................................................      (172.2)       246.0        172.8
   Fee revenue and other income...................................................       101.1        129.0        111.7
                                                                                     ---------    ---------    ---------

       Total revenues (a).........................................................     4,916.9      5,461.7      5,464.3
                                                                                     ---------    ---------    ---------

Expenses:
   Insurance policy benefits......................................................     2,457.0      2,440.9      2,176.0
   Amounts added to policyholder account balances:
     Annuity products and interest-sensitive life products other than those
       listed below...............................................................       578.1        615.2        666.4
     Equity-indexed products based on S&P 500 Index...............................          .8         11.4        141.3
     Separate account liabilities.................................................      (172.2)       246.0        172.8
   Amortization related to operations.............................................       592.2        596.0        495.1
   Interest expense on investment borrowings......................................        33.8         18.6         57.9
   Other operating costs and expenses.............................................       584.0        689.9        567.2
                                                                                     ---------    ---------    ---------

       Total benefits and expenses (a)............................................     4,073.7      4,618.0      4,276.7
                                                                                     ---------    ---------    ---------

       Operating income before goodwill amortization, income taxes and
         minority interest........................................................       843.2        843.7      1,187.6

Goodwill amortization.............................................................      (111.8)      (105.7)       (96.9)
Net investment losses, including related costs and amortization...................      (373.4)      (304.9)      (172.1)
Special charges and additional amortization.......................................       (56.5)       (25.6)          -
                                                                                     ---------    ---------    ---------

       Income before income taxes and minority interest...........................  $    301.5    $   407.5    $   918.6
                                                                                     =========    =========    =========
</TABLE>

                                   (continued)

                                       36
<PAGE>
                                         (continued from previous page)
<TABLE>
<CAPTION>

                                                                                        2001          2000         1999
                                                                                        ----          ----         ----
                                                                                             (Dollars in millions)

<S>                                                                                   <C>          <C>          <C>
Ratios:
   Investment income, net of interest credited on annuities and universal life
     products and interest expense on investment borrowings, as a percentage of
     average liabilities for insurance and asset accumulation
     products (b)...................................................................      4.45%        4.59%        4.52%
   Operating costs and expenses (excluding amortization of cost of policies
     produced and cost of policies purchased) as a percentage of average
     liabilities for insurance and asset accumulation products......................      2.22%        2.55%        2.17%

Health loss ratios:
   All health lines:
     Insurance policy benefits......................................................  $1,750.4     $1,741.1     $1,502.5
     Loss ratio.....................................................................     74.28%       76.21%       68.61%

   Medicare supplement:
     Insurance policy benefits......................................................    $635.9       $675.5       $638.1
     Loss ratio.....................................................................     65.25%       71.60%       68.95%

   Long-term care:
     Insurance policy benefits......................................................    $762.7       $691.5       $545.0
     Loss ratio.....................................................................     86.39%       84.17%       71.98%
     Interest-adjusted loss ratio...................................................     67.32%       66.77%       51.10%

   Specified disease:
     Insurance policy benefits......................................................    $250.9       $256.4       $232.9
     Loss ratio.....................................................................     67.35%       69.00%       62.03%

   Other:
     Insurance policy benefits......................................................    $100.9       $117.7        $86.5
     Loss ratio.....................................................................     79.66%       79.53%       65.58%
<FN>

--------------------
(a)  Revenues exclude net investment gains (losses); benefits and expenses
     exclude amortization related to realized gains and goodwill amortization
(b)  Investment income includes income from general account assets only. Average
     insurance liabilities exclude liabilities related to separate accounts,
     investment trust and reinsurance ceded.
</FN>
</TABLE>



          General: Conseco's life insurance subsidiaries develop, market and
administer annuity, supplemental health, individual life insurance and other
insurance products. We distribute these products through a career agency force,
professional independent producers and direct response marketing. This segment
excludes our discontinued major medical business.

          Collections on insurance products from continuing operations in 2001
were $5.0 billion, down 7.6 percent from 2000. Such collections in 2000 were
$5.5 billion, down 3.5 percent from 1999. Sales of our equity-indexed and
variable annuity products were adversely affected by the stock market
performance in 2001. Declines in our financial strength ratings during 2000 and
2001 adversely affected the marketing of our insurance products.

          See "Premium and Asset Accumulation Product Collections" for further
analysis.

          Average liabilities for insurance and asset accumulation products, net
of reinsurance receivables, were $26.3 billion in 2001, down 2.6 percent from
2000, and $27.0 billion in 2000, up 3.3 percent over 1999. Such decrease in 2001
reflects: (i) the decreased sales of interest-sensitive products (surrenders
exceeded new sales in 2001); and (ii) the decreased value of the separate
account assets which are equal to the liabilities related to our variable
insurance products.

          Insurance policy income is comprised of: (i) premiums earned on
policies which provide mortality or morbidity coverage; and (ii) fees and other
charges made against other policies. Such income has been relatively stable over
the last three years. See "Premium and Asset Accumulation Product Collections"
for further analysis.

                                       37

<PAGE>

          Net investment income on general account invested assets (which
excludes income on separate account assets related to variable annuities; and
the income (loss), cost and change in the fair value of S&P 500 Call Options
related to equity-indexed products) decreased by 5.0 percent, to $1,788.7
million, in 2001, and by 3.9 percent, to $1,882.7 million, in 2000. The average
balance of general account invested assets increased by .8 percent in 2001 to
$25.7 billion and decreased by 1.3 percent in 2000 to $25.5 billion. The yield
on these assets was 7.0 percent in 2001, 7.4 percent in 2000 and 7.6 percent in
1999. The decrease reflects general decreases in investment interest rates
between periods, and the lower general account invested assets due to decreased
sales and higher surrenders.

          Net investment income related to equity-indexed products based on the
change in value of the S&P 500 Call Options represents the change in the
estimated fair value of our S&P 500 Index Call Options which are purchased in an
effort to cover certain benefits accruing to the policyholders of our
equity-indexed products. Our equity-indexed products are designed so that the
investment income spread earned on the related insurance liabilities should be
more than adequate to cover the cost of the S&P 500 Call Options and other costs
related to these policies. Option costs that are attributable to benefits
provided were $119.0 million, $123.9 million and $96.3 million in 2001, 2000 and
1999, respectively. These costs are reflected in the change in market value of
the S&P 500 Call Options included in the investment income amounts. Net
investment income related to equity-indexed products before this expense was
$4.8 million, $12.9 million and $142.3 million in 2001, 2000 and 1999,
respectively. Such amounts were substantially offset by the corresponding charge
to amounts added to policyholder account balances for equity-indexed products of
$.8 million, $11.4 million and $141.3 million in 2001, 2000 and 1999,
respectively. Such income and related charge fluctuated based on the value of
options embedded in the Company's equity-indexed annuity products policyholder
account balance subject to this benefit and to the performance of the S&P 500
Index to which the returns on such products are linked.

          Net investment income (loss) from separate account assets is offset by
a corresponding charge (credit) to amounts added to policyholder account
balances for separate account liabilities. Such income (loss) and related charge
(credit) fluctuated in relationship to total separate account assets and the
return earned on such assets.

          Fee revenue and other income includes: (i) revenues we receive for
managing investments for other companies; and (ii) fees received for marketing
insurance products of other companies. This amount decreased in 2001 primarily
as a result of a decrease in the market value of investments managed for others,
upon which these fees are based. This amount increased in 2000 primarily due to
the revenues of an insurance marketing company purchased in 2000.

          Insurance policy benefits increased in 2001 and 2000 as a result of
the factors summarized in the explanations for loss ratios related to specific
products which follow. Loss ratios are calculated by taking the related
insurance product's: (i) policy benefits; divided by (ii) policy income.

          The loss ratio for Medicare supplement products improved in 2001
primarily because: (i) our estimate of the 2000 year end reserve proved to be
higher than necessary to cover pre-2001 claims; and (ii) were lower than
expected claim costs resulting from new government regulations related to
amounts due on hospital outpatient claims. Such ratio increased in 2000, for the
following reasons: (i) our estimate of 1999 year end reserves proved to be less
than necessary to cover pre-2000 claims; (ii) the mix of our Medicare
supplement business in 2000 includes a higher percentage of less profitable
standard Medicare supplement policies than the prior year (and a lower
percentage of more profitable nonstandard policies that we are no longer able to
offer to new policyholders); and (iii) a larger portion of certain older blocks
of our Medicare supplement business has remained inforce longer than we
expected. While the Company benefits from the additional profits earned on the
larger blocks of business, the loss ratio will generally increase since the
older policies have higher claim costs. Governmental regulations generally
require us to attain and maintain a loss ratio, after three years, of not less
than 65 percent.

          The loss ratios for long-term care products increased in 2001 and
2000, reflecting: (i) unfavorable claims experience; (ii) refinements made to
the reserve estimation process; and (iii) the effects of the asset accumulation
phase of these products. The net cash flows from our long-term care products
generally result in the accumulation of amounts in the early years of a policy
(accounted for as reserve increases) which will be paid out as benefits in later
policy years (accounted for as reserve decreases). Accordingly, during the asset
accumulation phase of these policies, the loss ratio will increase, but the
increase in the change in reserve will be partially offset by investment income
earned on the assets which have accumulated. The interest-adjusted loss ratio
for long-term care products is calculated by taking the insurance product's (i)
policy benefits less interest income on the accumulated assets which back the
insurance liabilities; divided by (ii) policy income. In order to improve the
profitability of the long-term care product line, we are currently selling
products with higher margins and we have continued to apply for appropriate rate
increases on older blocks of business.


                                       38
<PAGE>

          Our general expectation is for the loss ratio for specified disease
products to be approximately 65 percent. The 2001 and 1999 loss ratio for
specified disease products were generally within our expectations. The higher
loss ratio in 2000 reflects changes in estimates of period end claim
liabilities.

          The loss ratios on our other products will fluctuate due to the
smaller size of these blocks of business. The loss ratios on this business have
generally been within our expectations during 2001 and 2000.

          Amounts added to policyholder account balances for annuity products
decreased by 6.0 percent, to $578.1 million, in 2001, and 7.7 percent, to $615.2
million, in 2000. These decreases reflect a smaller block of this type of
annuity business inforce, on the average, over the last 3 years. Average
liabilities for these products were $13.1 billion in 2001, down 5.9 percent from
2000, and $13.9 billion in 2000, down 7.4 percent from 1999. The weighted
average rate of interest we credit to these annuity liabilities was
approximately 4.5 percent during 2001, 2000 and 1999.

          Amounts added to equity indexed products and separate account
liabilities correspond to the related investment income accounts described
above. Such amount includes the decline in the value of S&P 500 Call Options
embedded in the Company's equity-indexed products policyholder account balance.

          Amortization related to operations includes amortization of: (i) the
cost of policies produced; and (ii) the cost of policies purchased. Generally,
amortization fluctuated in relationship to the total account balances subject to
amortization.

          Interest expense on investment borrowings increased in 2001 along with
our investment borrowing activities. Average investment borrowings were $1,029.7
million during 2001, compared to $324.4 million during 2000 and $1,081.1 million
during 1999. The weighted average interest rate on such borrowings was 3.3
percent, 5.7 percent and 5.4 percent during 2001, 2000 and 1999, respectively.
Investment borrowings fluctuate based on the market conditions for these
transactions.

          Other operating costs and expenses decreased in 2001 consistent with
our cost cutting programs and the current business plans for the segment. The
increase in such expenses in 2000 was primarily the result of our increased
business and marketing initiatives. The fluctuations in expenses are reflected
in the ratio of operating expenses (excluding amortization of cost of policies
produced and cost of policies purchased) as a percentage of average liabilities
for insurance and asset accumulation products (2.22 percent for 2001, compared
to 2.55 percent for 2000 and 2.17 percent for 1999).

          Net investment gains (losses), including related costs and
amortization fluctuate from period to period. During 2001, 2000 and 1999, we
recognized net investment losses of $413.7 million, $358.3 million and $156.2
million, respectively. The net investment losses during 2001 included: (i)
$141.9 million to recognize the impact of higher default rate assumptions on
certain structured investments; (ii) $62.4 million to recognize losses on
investments held in our private equity portfolio; (iii) $184.8 million to write
down lower-rated securities to fair value due to an other-than-temporary decline
in fair value or the Company's plan to sell the securities in connection with
investment restructuring activities (including purchases of investment grade
securities which were subsequently downgraded to below-investment grade: Sunbeam
Corp., Enron Corp., Crown Cork & Seal Company Inc., Global Crossing Ltd. and K
Mart Corp.); and (iv) $24.6 million of losses from the sales of investments
(primarily fixed maturities) which generated proceeds of $24.2 billion. During
2000, we recorded $189.3 million of writedowns; $109.8 million of losses from
the sales of investments; and a $59.2 million loss related to the termination of
certain swap agreements. During 1999, we recorded $27.8 million of writedowns
and $128.4 million of losses from the sales of investments.

          When we sell securities at a gain (loss) and reinvest the proceeds at
a different yield, we increase (reduce) the amortization of cost of policies
purchased and cost of policies produced in order to reflect the change in future
yields. Sales of fixed maturity investments resulted in a reduction in the
amortization of the cost of policies purchased and the cost of policies produced
of $40.3 million in 2001 and $53.4 million in 2000 and an increase in such
amortization in 1999 of $15.9 million.

          Special charges in 2001 were $21.5 million. Such charges primarily
relate to severance benefits and costs incurred in conjunction with the transfer
of certain customer service and backroom operations to our India subsidiary.
These charges are described in greater detail in the notes to the accompanying
consolidated financial statements.

          Additional amortization in the insurance segment represents the
amortization of the cost of policies produced and cost of policies purchased as
a result of changes in our assumptions used to estimate the future gross profits
of our annuity business. The cost of policies produced and the cost of policies
purchased are amortized in relation to the estimated gross profits to be earned
over the life of our annuity products. As a result of economic developments,
actual experience of our products and changes in our expectations, we changed
our investment yield assumptions used in calculating the estimated

                                       39
<PAGE>



gross profits to be earned on our annuity products. Such changes resulted in
additional amortization of the cost of policies produced and cost of policies
purchased of $35.0 million and $25.6 million in 2001 and 2000, respectively.


                                       40

<PAGE>


Finance operations:
<TABLE>
<CAPTION>


                                                                                      2001         2000          1999
                                                                                      ----         ----          ----
                                                                                           (Dollars in millions)
<S>                                                                               <C>          <C>            <C>
Contract originations:
   Manufactured housing.........................................................  $ 2,499.5    $ 4,395.8      $ 6,607.3
   Mortgage services............................................................    3,043.7      4,448.3        6,745.8
   Retail credit................................................................    3,585.8      2,582.1        2,036.0
   Consumer finance - closed-end................................................        -          544.6          790.7
   Floorplan....................................................................    2,101.5      3,950.4        5,559.1
   Discontinued.................................................................       86.8        969.1        3,370.1
                                                                                  ---------    ---------      ---------

     Total......................................................................  $11,317.3    $16,890.3      $25,109.0
                                                                                  =========    =========      =========

Sales of finance receivables:
   Manufactured housing.........................................................  $     3.6    $   600.7      $ 5,598.2
   Mortgage services............................................................      833.8        913.1        3,748.4
   Floorplan....................................................................         -            -           117.7
   Retained bonds...............................................................         -            -          (379.7)
   Discontinued lines...........................................................      802.3      1,174.9          574.5
                                                                                  ---------    ---------      ---------

     Total......................................................................  $ 1,639.7    $ 2,688.7      $ 9,659.1
                                                                                  =========    =========      =========

Managed receivables (average):
   Manufactured housing.........................................................  $25,979.1    $25,700.4      $22,899.2
   Mortgage services............................................................   12,555.5     13,254.6       10,237.5
   Retail credit................................................................    2,248.0      1,523.0          937.9
   Consumer finance - closed-end................................................    1,735.2      2,173.1        2,121.6
   Floorplan...................................................................     1,181.7      2,070.4        2,098.4
   Discontinued lines...........................................................      674.7      2,700.3        3,469.2
                                                                                  ---------    ---------      ---------

     Total......................................................................  $44,374.2    $47,421.8      $41,763.8
                                                                                  =========    =========      =========

Revenues:
   Net investment income:
     Finance receivables and other..............................................  $ 2,260.2    $ 1,933.8      $   647.1
     Interest-only securities...................................................       51.5        106.6          185.1
   Gain on sale of finance receivables..........................................       26.9          7.5          550.6
   Fee revenue and other income.................................................      345.0        369.0          372.7
                                                                                  ---------    ---------      ---------

     Total revenues.............................................................    2,683.6      2,416.9        1,755.5
                                                                                  ---------    ---------      ---------

Expenses:
   Provision for losses.........................................................      563.6        354.2          128.7
   Finance interest expense.....................................................    1,234.4      1,152.4          341.3
   Other operating costs and expenses...........................................      642.4        753.5          697.2
                                                                                  ---------    ---------      ---------

     Total expenses.............................................................    2,440.4      2,260.1        1,167.2
                                                                                  ---------    ---------      ---------

     Operating income before impairment charges, special charges, income
       taxes and extraordinary charge...........................................      243.2        156.8          588.3

Impairment charges..............................................................      386.9        515.7          554.3
Special charges.................................................................       21.5        394.3             -
                                                                                  ---------    ---------      ---------

     Income (loss) before income taxes and extraordinary charge.................  $  (165.2)   $  (753.2)     $    34.0
                                                                                  =========    =========      =========
</TABLE>




                                       41

<PAGE>

          General: Conseco's finance subsidiaries provide financing for
manufactured housing, home equity, home improvements, consumer products and
equipment, and provide consumer and commercial revolving credit. Finance
products include both fixed-term and revolving loans and leases. Conseco also
markets physical damage and other credit protection relating to the loans it
services.

          After September 8, 1999, we no longer structure our securitizations in
a manner that results in recording a sale of the loans. Instead, new
securitization transactions are being structured to include provisions that
entitle the Company to repurchase assets transferred to the special purpose
entity when the aggregate unpaid principal balance reaches a specified level.
Until these assets are repurchased, however, the assets are the property of the
special purpose entity and are not available to satisfy the claims of creditors
of the Company. In addition, our securitization transactions are structured so
that the Company, as servicer for the loans, is able to exercise significant
discretion in making decisions about the serviced portfolio. Pursuant to
Financial Accounting Standards Board Statement No. 140, "Accounting for the
Transfer and Servicing of Financial Assets and Extinguishments of Liabilities"
("SFAS 140"), such securitization transactions are accounted for as secured
borrowings whereby the loans and securitization debt remain on the balance
sheet, rather than as sales.

          The change to the structure of our new securitizations has no effect
on the total profit we recognize over the life of each new loan, but it changes
the timing of profit recognition. Under the portfolio method (the accounting
method required for our securitizations which are structured as secured
borrowings), we recognize: (i) earnings over the life of new loans as interest
revenues are generated; (ii) interest expense on the securities which are sold
to investors in the loan securitization trusts; and (iii) provisions for losses.
As a result, our reported earnings from new loans securitized in transactions
accounted for under the portfolio method are lower in the period in which the
loans are securitized (compared to our historical method) and higher in later
periods, as interest spread is earned on the loans.

          During 2000 and 2001, we completed several actions with respect to
Conseco Finance, including: (i) the sale, closing or runoff of several units
(including asset-based lending, vendor leasing, bankcards, transportation and
park construction); (ii) monetization of certain on-balance sheet financial
assets through sales or as collateral for additional borrowings; and (iii) cost
savings and restructuring of ongoing businesses such as streamlining of loan
origination operations in the manufactured housing and home equity divisions.
These courses of action and the change to the portfolio method of accounting
have caused significant fluctuations in account balances as further described
below. In early 2002, we announced our decision to reduce the size of our
floorplan lending business.

          The risks associated with our finance business become more acute in
any economic slowdown or recession. Periods of economic slowdown or recession
may be accompanied by decreased demand for consumer credit and declining asset
values. In the home equity mortgage and manufactured housing businesses, any
material decline in real estate values reduces the ability of borrowers to use
home equity to support borrowing and increases the loan-to-value ratios of loans
previously made, thereby weakening collateral coverage and increasing the size
of losses in the event of a default. Delinquencies, foreclosures and losses
generally increase during economic slowdowns or recessions. Proposed changes to
the federal bankruptcy laws applicable to individuals would make it more
difficult for borrowers to seek bankruptcy protection, and the prospect of these
changes may encourage certain borrowers to seek bankruptcy protection before the
law changes become effective, thereby increasing delinquencies. For our finance
customers, loss of employment, increases in cost-of-living or other adverse
economic conditions would impair their ability to meet their payment
obligations. Higher industry inventory levels of repossessed manufactured homes
may affect recovery rates and result in future impairment charges and provision
for losses. In addition, in an economic slowdown or recession, our servicing and
litigation costs increase. Any sustained period of increased delinquencies,
foreclosures, losses or increased costs would adversely affect our financial
condition and results of operations.

          Loan originations in 2001 were $11.3 billion, down 33 percent from
2000. Loan originations in 2000 were $16.9 billion, down 33 percent from 1999.
The primary reason for the decrease was our decision to no longer originate
certain lines of business and to manage our growth consistent with our revised
business plan. This strategy allowed the finance segment to enhance net interest
margins, to reduce the amount of cash required for new loan originations, and to
transfer cash to the parent company.

          Sales of finance receivables have decreased since 1999 as a result of
the change in the structure of our securitizations. The sales of finance
receivables in 2001 and 2000 are further explained below under "Gain on sale of
finance receivables".

          Managed receivables include finance receivables recorded on our
consolidated balance sheet and those managed by us but applicable to holders of
asset-backed securities sold in securitizations structured in a manner that
resulted in gain-on-

                                       42
<PAGE>
sale revenue. Average managed receivables decreased to $44.4 billion in 2001,
down 6.4 percent from 2000, and increased to $47.4 billion in 2000, up 14
percent over 1999.

          Net investment income on finance receivables and other consists of:
(i) interest earned on finance receivables; and (ii) interest income on
short-term and other investments. Such income increased by 17 percent, to
$2,260.2 million, in 2001 and by 199 percent, to $1,933.8 million, in 2000,
consistent with the increases in average on-balance sheet finance receivables
following the September 8, 1999 change in the manner in which we structure our
securitizations as described above. The weighted average yields earned on
finance receivables and other investments were 12.8 percent, 13.0 percent and
11.1 percent during 2001, 2000 and 1999, respectively. As a result of the change
in the structure of our securitizations, future interest earned on finance
receivables should increase as our average on-balance sheet finance receivables
increase.

          Net investment income on interest-only securities is the income
recognized on the interest-only securities we retain after we sell finance
receivables. Such income decreased by 52 percent, to $51.5 million, in 2001 and
by 42 percent, to $106.6 million, in 2000. These fluctuations are consistent
with the change in the average balance of interest-only securities. The weighted
average yields earned on interest-only securities were 13.2 percent, 13.4
percent and 14.6 percent during 2001, 2000 and 1999, respectively. As a result
of the change in the structure of our securitizations, our securitizations are
accounted for as secured borrowings and we do not recognize gain-on-sale revenue
or additions to interest-only securities from such transactions. Accordingly,
future investment income accreted on the interest-only security will decrease,
as cash remittances from the prior gain-on-sale securitizations reduce the
interest-only security balances. In addition, the balance of the interest-only
securities was reduced by $533.8 million in 1999, $504.3 million in 2000
(including $70.2 million due to the accounting change described in note 1 to the
accompanying consolidated financial statements) and $264.8 million in 2001 due
to impairment charges. Impairment charges are further explained below.

          Gain on sales of finance receivables resulted from various loan sale
transactions in 2001 and 2000. During 2001, we sold $1.6 billion of finance
receivables which included: (i) our $802.3 million vendor services loan
portfolio (which was marked-to-market in the fourth quarter of 2000 and no
additional gain or loss was recognized in 2001); (ii) $568.4 million of
high-loan-to-value mortgage loans; and (iii) $269.0 million of other loans.
These sales resulted in net gains of $26.9 million. The Company entered into a
servicing agreement on the high-loan-to-value mortgage loans sold. Pursuant to
the servicing agreement, the servicing fees payable to the Company are senior to
all other payments of the trust which purchased the loans. The Company also
holds a residual interest in certain other cash flows of the trust. The Company
did not provide any guarantees with respect to the performance of the loans
sold. In 2000, we sold approximately $147.1 million of finance receivables in
whole-loan sales resulting in net gains of $7.5 million. Gain on sales of
finance receivables in 2000 excludes the gain realized on the sale of our
bankcard portfolio which is included in special charges.

          During 1999, the Company sold $9.7 billion of finance receivables in
securitizations structured as sales and recognized gains of $550.6 million.
During 2001 and 2000, we recognized no gain on sale related to securitized
transactions.

          Fee revenue and other income includes servicing income, commissions
earned on insurance policies written in conjunction with financing transactions
and other income from late fees. Such income decreased by 6.5 percent, to $345.0
million, in 2001 and by 1.0 percent, to $369.0 million, in 2000. Such decreases
are primarily due to decreases in commission income as a result of reduced
origination activities and the termination of sales of single premium credit
life insurance. In addition, as a result of the change in the structure of our
securitizations, we no longer record an asset for servicing rights at the time
of our securitizations, nor do we record servicing fee revenue; instead, the
entire amount of interest income is recorded as investment income. The amount of
servicing income (which is net of the amortization of servicing assets and
liabilities) was $115.3 million in 2001, $108.2 million in 2000 and $165.3
million in 1999. However, we expect servicing income to decline in future
periods as the managed receivables in these securitizations are paid down. In
2000, the decrease in servicing income was partially offset by higher
commissions and late fee income.

          Provision for losses related to finance operations increased by 59
percent, to $563.6 million, in 2001 and by 175 percent, to $354.2 million, in
2000. These amounts relate to our on-balance sheet receivables. The increase is
principally due to the increase in loans held on our balance sheet and an
increase in delinquencies. In 2001, on-balance sheet finance receivables
increased 9.2 percent to $18.0 billion as compared to 2000. At December 31, 2001
and 2000, the 60-days-and-over delinquencies as a percentage of on-balance
sheet finance receivables were 2.19 percent and 1.48 percent, respectively.
Under the portfolio method, we estimate an allowance for credit losses based
upon our assessment of current and historical loss experience, loan portfolio
trends, the value of collateral, prevailing economic and business conditions,
and other relevant factors. Increases in our allowance for credit losses are
recognized as expense based on our current assessments of such factors. For
loans previously recorded as sales, the anticipated discounted credit losses
over the expected life of the loans were reflected through a reduction in the
gain-on-sale revenue recorded at the time of securitization.

                                       43
<PAGE>

          Our credit losses as a percentage of related loan balances for our
on-balance sheet portfolio have been increasing over the last several quarters
(1.69 percent, 1.96 percent, 2.25 percent, 2.39 percent and 2.50 percent for the
quarters ended December 31, 2000, March 31, 2001, June 30, 2001, September 30,
2001 and December 31, 2001, respectively). We believe such increases reflect:
(i) the natural increase in delinquencies in some of our products as they age
into periods at which we have historically experienced higher delinquencies;
(ii) the increase in retail credit receivables which typically experience higher
credit losses; (iii) economic factors which have resulted in an increase in
defaults; and (iv) a decrease in the recovery rates when repossessed properties
are sold given current industry levels of repossessed assets.

          At December 31, 2001, the Company had a total of 24,131 unsold
properties (15,531 of which relate to our off-balance sheet securitizations) in
repossession or foreclosure, compared to 20,110 properties at December 31, 2000.
We reduce the value of repossessed property to our estimate of net realizable
value upon foreclosure. With respect to our managed manufactured housing
portfolio, we liquidated 25,750 units at an average loss severity rate (the
ratio of the loss realized to the principal balance of the foreclosed loan) of
57 percent in 2001 compared to 23,861 units at an average loss severity rate of
54 percent in 2000. The loss severity rate related to our on-balance sheet
manufactured housing portfolio was 49 percent in 2001, compared to 48 percent in
2000. We believe the higher average severity rate in 2001 related to our
on-balance sheet manufactured housing portfolio is consistent with the aging of
such portfolio. The higher industry levels of repossessed manufactured homes
which we believe existed in the marketplace at December 31, 2001, may adversely
affect recovery rates, specifically wholesale severity, as other lenders
(including lenders who have exited the manufactured home lending business) have
acted to more quickly dispose of repossessed manufactured housing inventory.
Additionally, the higher levels of repossessed inventory that currently exists
in the marketplace may make it more difficult for us to liquidate our inventory
at or near historical recovery rates. In order to maintain recovery levels, we
may decide to hold inventory longer potentially causing our repossessed
inventory level to temporarily grow. We believe that our severity rates are
positively impacted by our use of retail channels to dispose of repossessed
inventory (where the repossessed units are sold through: (i) Company-owned sales
lots; or (ii) our dealer network). We currently liquidate approximately 70
percent of our repossessed units through the retail channel; thus, we rely less
on the wholesale channel (through which recovery rates are typically lower). We
intend to continue to focus on the retail channel in an effort to maximize our
recovery rates.

          The Company believes that its historical loss experience has been
favorably affected by various loss mitigation policies. Under one such policy,
the Company works with the defaulting obligor and its dealer network to find a
new buyer who meets our underwriting standards and is willing to assume the
defaulting obligor's loan. Under other loss mitigation policies, the Company may
permit qualifying obligors (obligors who are currently unable to meet the
obligations under their loans, but are expected to be able to meet them in the
future under modified terms) to defer scheduled payments or the Company may
reduce the interest rate on the loan, in an effort to avoid loan defaults.

          Due to the prevailing economic conditions in 2001, the Company
increased the use of the aforementioned mitigation policies. Based on past
experience, we believe these policies will reduce the ultimate losses we
recognize. If we apply loss mitigation policies, we generally reflect the
customer's delinquency status as not being past due. Accordingly, the loss
mitigation policies favorably impact our delinquency ratios. We attempt to
appropriately reserve for the effects of these loss mitigation policies when
establishing loan loss reserves. These policies are also considered when we
determine the value of our retained interests in securitization trusts
(including interest-only securities). Loss mitigation policies were applied to
8.8 percent of average managed accounts in 2001 compared to 7.0 percent in 2000.
Such loss mitigation policies were applied to 1.3 percent, 1.5 percent, 2.9
percent and 3.1 percent of average managed accounts during the first, second,
third and fourth quarters of 2001, respectively.

          Finance interest expense represents interest expense incurred by the
finance segment. This interest expense increased by 7.1 percent, to $1,234.4
million, in 2001 and by 238 percent, to $1,152.4 million, in 2000. Such
fluctuations were the net result of: (i) increased borrowings to fund the
increased finance receivables; and (ii) different average borrowing rates. Our
average borrowing rate was 7.0 percent, 7.7 percent and 5.8 percent during 2001,
2000 and 1999, respectively. The decrease in average borrowing rates in 2001 as
compared to 2000 is primarily due to the decrease in the general interest rate
environment between periods.

          Under the portfolio method, we recognize interest expense on the
securities issued to investors in the securitization trusts. These securities
typically have higher interest rates than our other debt. However, the decrease
in the average borrowing rate in 2001 was favorably impacted by the decrease in
the general interest rate environment. The average borrowing rate during 1999
was favorably impacted by the use of relatively lower rate borrowings from the
parent company to fund finance receivables of Conseco Finance. (Given the
liquidity needs of the parent, its inability to access lower interest rate
borrowings, and bank loan restrictions, the parent was unable to loan additional
amounts to the finance segment during most of 2000 and 2001).


                                       44
<PAGE>



          Other operating costs and expenses include the costs associated with
servicing our managed receivables, and non-deferrable costs related to
originating new loans. Such expense decreased by 15 percent, to $642.4 million,
in 2001 and increased by 8.1 percent, to $753.5 million, in 2000. In 2001, we
began to realize the cost savings from the previously announced restructuring of
Conseco Finance. In 2000, such costs increased consistent with the prior
business plans for the segment, partially offset by cost savings from the
restructuring of Conseco Finance. Other operating costs and expenses decreased
$62.5 million to $345.5 million in the second half of 2000, as compared to the
first half of 2000.

          Impairment charges represent reductions in the value of our retained
interests in securitization trusts (including interest-only securities and
servicing rights) recognized as a loss in the statement of operations. We carry
interest-only securities at estimated fair value, which is determined by
discounting the projected cash flows over the expected life of the receivables
sold using current prepayment, default, loss and interest rate assumptions. We
consider any potential payments related to the guarantees of certain lower rated
securities issued by the securitization trusts in the projected cash flows used
to determine the value of our interest-only securities. When declines in value
considered to be other than temporary occur, we reduce the amortized cost to
estimated fair value and recognize a loss in the statement of operations. The
assumptions used to determine new values are based on our internal evaluations
and consultation with external advisors having significant experience in valuing
these securities. Under current accounting rules (pursuant to EITF 99-20) which
we adopted effective July 1, 2000, declines in the value of our interest-only
securities are recognized when: (i) the fair value of the security is less than
its carrying value; and (ii) the timing and/or amount of cash expected to be
received from the security has changed adversely from the previous valuation
which determined the carrying value of the security. When both occur, the
security is written down to fair value.

          We recognized an impairment charge of $386.9 million in 2001 which
included an impairment charge of $264.8 million related to our interest-only
securities. During 2001, our interest-only securities did not perform as well as
anticipated. In addition, our expectations regarding future economic conditions
changed. Accordingly, we increased our default and severity assumptions related
to the performance of the underlying loans to be consistent with our
expectations. The impairment charge also included a $122.1 million increase in
the valuation allowance related to our servicing rights as a result of the
changes in assumptions. Such assumptions reflect the subordination of the
servicing fees to other cash flows in certain securitization transactions. We
carry our servicing rights at the lower of carrying value or estimated fair
value. Refer to "Finance Receivables and Retained Interests in Securitization
Trusts --- Retained Interests in Securitization Trusts" for additional
discussion of the impairment charge and interest-only securities.

          During 2000, actual default and loss trends were worse than our
previous estimates. In light of these trends, management analyzed the
assumptions used to determine the estimated fair value of the interest-only
securities and made changes to the credit loss assumptions and the discount rate
used to determine the value of our securities. These changes also reflected
other economic factors and further methodology enhancements made by the Company.
As a result, the expected future cash flows from interest-only securities
changed adversely from previous estimates. Pursuant to the requirements of EITF
99-20, the effect of these changes was reflected immediately in earnings as an
impairment charge. The effect of the impairment charge and adjustments to the
value of our interest-only securities and servicing rights totaled $515.7
million ($324.9 million after the income tax benefit) for 2000 (in addition to
the cumulative effect of adopting EITF 99-20 of $70.2 million, or $45.5 million
after the income tax benefit).

          In addition, during 1999 and early 2000, the Company reevaluated its
interest-only securities and servicing rights, including the underlying
assumptions, in light of loss experience exceeding previous expectations. The
principal change in the revised assumptions resulting from this process was an
increase in expected future credit losses, relating primarily to reduced
assumptions as to future housing price inflation, recent loss experience and
refinements to the methodology of the valuation process. The effect of this
change was offset somewhat by a revision to the estimation methodology to
incorporate the value associated with the cleanup call rights held by the
Company in securitizations. We recognized a $554.3 million impairment charge
($349.2 million after tax) in 1999 to reduce the book value of the interest-only
securities and servicing rights.

          Special charges in the finance segment for 2001 include: (i) the loss
related to the sale of certain finance receivables of $11.2 million; (ii)
severance benefits, litigation reserves and other restructuring charges of $12.8
million; (iii) a $7.5 million charge related to the decision to discontinue the
sale of certain types of life insurance in conjunction with lending
transactions; and (iv) a $10.0 million benefit due to the reduction in the value
of the warrant held by Lehman to purchase five percent of Conseco Finance which
was caused by a decrease in the value of Conseco Finance. Special charges
recorded in 2000 include: (i) the $103.3 million reduction in the value of
finance receivables identified for sale; (ii) the $53.0 million loss on the sale
of asset-based loans; (iii) $29.5 million of costs related to closing offices
and streamlining businesses; (iv) $35.8 million related to the abandonment of
computer processing systems; (v) $30.3 million of fees paid to Lehman Brothers,
Inc. and its affiliates (collectively "Lehman") including a $25.0 million fee
paid in conjunction with the sale of $1.3 billion of finance receivables to
Lehman; (vi) the issuance of a warrant valued at $48.1 million related to the

                                       45

<PAGE>



modification of the Lehman master repurchase financing facilities; (vii) the
$51.0 million loss on sale of transportation loans and vendor services financing
business; (viii) a $48.0 million increase in the allowance for loan losses at
our bank subsidiary; and (ix) $4.7 million of net gains related to the sale of
certain lines of business, net of other items. These charges are described in
greater detail in the note to the accompanying financial statements entitled
"Special Charges".

                                       46

<PAGE>



Corporate operations:
<TABLE>
<CAPTION>

                                                                                    December 31
                                                                           ------------------------------
                                                                           2001        2000          1999
                                                                           ----        ----          ----
                                                                                (Dollars in millions)
<S>                                                                        <C>        <C>           <C>
   Interest expense on corporate debt, net of investment
       income on cash and cash equivalents....................             $(352.2)   $  (417.1)    $(245.9)
   Allocation of net interest expense to the finance segment..                 6.5        126.9        63.1
   Investment income..........................................                 4.4         31.3        32.3
   Other items................................................               (24.5)       (16.6)       67.9
                                                                           -------    ---------     -------

       Operating loss before non-operating items, income
         taxes, minority and extraordinary gain (loss)........              (365.8)      (275.5)      (82.6)

   Provision for losses and expense related to stock purchase
     plan.....................................................              (169.6)      (231.5)      (18.9)
   Venture capital income (loss) related to investment in
     TeleCorp, net of related expenses........................               (23.4)      (152.8)      261.5
   Discontinued major medical business and other..............               (53.0)       (51.3)       38.3
   Gain on sale of interest in riverboat......................               192.4           -           -
   Special charges and additional amortization................              (136.3)      (305.0)         -
                                                                           -------    ---------     -------

       Income (loss) before income taxes and minority
         interest.............................................             $(555.7)   $(1,016.1)    $ 198.3
                                                                           =======    =========     =======
</TABLE>


          Interest expense on corporate debt, net of investment income on cash
and cash equivalents has decreased as a result of the repayment of debt. Amounts
allocated to the finance segment have decreased as Conseco Finance has repaid
debt owed to the parent and as a result of the conversion of $750 million of an
intercompany note to preferred stock in 2000. The average debt outstanding was
$4.5 billion, $5.2 billion and $4.1 billion in 2001, 2000 and 1999,
respectively. The average interest rate on such debt was 8.2 percent, 8.4
percent and 6.1 percent in 2001, 2000 and 1999, respectively. In addition, the
margin to LIBOR on our bank credit facilities increased when we renegotiated
that debt in 2000.

          Investment income includes the income from our investment in a
riverboat casino (prior to its sale) and miscellaneous other income.

          Other items include general corporate expenses, net of amounts charged
to subsidiaries for services provided by the corporate operations.

          Provision for losses and expense related to stock purchase plan
represents the non-cash provision we established in connection with: (i) our
guarantees of bank loans to approximately 155 current and former directors,
officers and key employees and our related loans for interest; and (ii) the
liability related to the pay for performance benefits related to the loan
program. The funds from the bank loans were used by the participants to purchase
approximately 18.0 million shares of Conseco common stock. In 2001, 2000 and
1999, we established provisions of $169.6 million, $231.5 million and $18.9
million, respectively, in connection with these guarantees and loans. At
December 31, 2001, the reserve for losses on the loan guarantees and the
liability related to the pay for performance benefits totaled $420.0 million and
the outstanding balance on the bank loans was $545.4 million. In addition,
Conseco has provided loans to participants for interest on the bank loans
totaling $143.6 million.

          Venture capital income (loss) relates to our investment in TeleCorp, a
company in the wireless communication business. Our investment in TeleCorp is
carried at estimated fair value, with changes in fair value recognized as
investment income. The market values of TeleCorp and many other companies in
this sector have declined significantly in recent periods. In the first quarter
of 2002, AT&T Wireless Services, Inc. ("AWE") completed its merger with
TeleCorp. This transaction is described in greater detail in the notes to the
consolidated financial statements.

          The discontinued major medical business includes individual and group
major medical health insurance products. These lines of business had losses of
$53.0 million and $51.3 million in 2001 and 2000, respectively, and income of
$38.3 million in 1999.


                                       47
<PAGE>



          Gain on sale of interest in riverboat represents the gain recognized
as a result of our sale of our 29 percent ownership interest in the riverboat
casino in Lawrenceberg, Indiana, for $260 million.

          Special charges in corporate operations for 2001 include: (i)
litigation accrual and expenses of $23.8 million; (ii) severance benefits of
$2.9 million; (iii) losses related to office closings and the sale of artwork
totaling $6.8 million; (iv) losses related to disputed reinsurance balances
totaling $8.5 million; and (v) other losses totaling $16.9 million. Special
charges in 2000 include: (i) advisory and professional fees related to debt
restructuring of $9.9 million; (ii) a portion of the loss on the sale of
asset-backed loans (excluding loss related to loans held by the finance segment)
of $15.2 million; (iii) advisory fees paid to investment banks of $44.0 million;
(iv) the loss related to our exit from the subprime automobile business of $71.6
million; (v) the amount paid to a terminated executive pursuant to his
employment agreement of $72.5 million; (vi) the amount paid to the newly hired
Chief Executive Officer of $45.0 million; (vii) the value of warrants issued to
release the newly hired Chief Executive Officer from a noncompete provision of a
prior agreement of $21.0 million; and (viii) other charges of $25.8 million.
These charges are described in greater detail in the note to the accompanying
consolidated financial statements entitled "Special Charges".

          Additional amortization in the corporate operations represents
unrecoverable cost of policies produced and cost of policies purchased related
to the major medical business we are not renewing. The additional amortization
recognized in 2001 was $77.4 million.

          PREMIUM AND ASSET ACCUMULATION PRODUCT COLLECTIONS

          In accordance with GAAP, insurance policy income as shown in our
consolidated statement of operations consists of premiums earned for policies
that have life contingencies or morbidity features. For annuity and universal
life contracts without such features, premiums collected are not reported as
revenues, but as deposits to insurance liabilities. We recognize revenues for
these products over time in the form of investment income and surrender or other
charges.

          Agents, insurance brokers and marketing companies who market our
products and prospective purchasers of our products use the ratings of our
insurance subsidiaries as an important factor in determining which insurer's
products to market or purchase. Ratings have the most impact on our annuity and
interest-sensitive life insurance products. During 2000, rating agencies lowered
their financial strength ratings of our insurance companies, and many were
placed on review as the agencies analyzed the impact of the events which
occurred during 2000. Such rating actions adversely affected the marketing and
persistency of our insurance products and other asset accumulation products. On
November 7, 2000, A.M. Best upgraded the financial strength ratings of our
principal insurance subsidiaries to A- (Excellent) from B++ (Very Good). On
October 3, 2001, A.M. Best placed the Company's principal insurance subsidiaries
"under review with negative implications" following our announcement regarding
charges to be taken in the third quarter of 2001. We are not able to predict
whether the Company's principal insurance subsidiaries will maintain their
current A- ratings. If such ratings are downgraded, sales of our insurance
products could fall significantly and existing policyholders may redeem or lapse
their policies, causing a material and adverse impact on our financial results
and liquidity.

          We set the premium rates on our health insurance policies based on
facts and circumstances known at the time we issue the policies and on
assumptions about numerous variables, including the actuarial probability of a
policyholder incurring a claim, the severity, and the interest rate earned on
our investment of premiums. In setting premium rates, we consider historical
claims information, industry statistics, premiums charged by competitors and
other factors. If our actual claims experience proves to be less favorable than
we assumed and we are unable to raise our premium rates, our financial results
will be adversely affected. We generally cannot raise our premiums in any state
unless we first obtain the approval of the insurance regulator in that state. We
review the adequacy of our premium rates regularly and file requests for rate
increases on our products when we believe existing premium rates are too low. It
is possible that we will not be able to obtain approval for premium rate
increases from currently pending requests or requests filed in the future. If we
are unable to raise our premium rates because we fail to obtain approval for a
rate increase in one or more states, our financial results will be adversely
affected. If we are successful in obtaining regulatory approval to raise premium
rates due to unfavorable actual claims experience, the increased premium rates
may reduce the volume of our new sales and cause existing policyholders to allow
their policies to lapse. This would reduce our premium income in future periods.
Increased lapse rates also could require us to expense all or a portion of the
cost of policies produced or the cost of policies purchased relating to lapsed
policies in the period in which those policies lapse, adversely affecting our
financial results in that period.


                                       48
<PAGE>



          Total premiums and accumulation product collections were as follows:
<TABLE>
<CAPTION>

                                                                                      2001         2000          1999
                                                                                      ----         ----          ----
                                                                                            (Dollars in millions)
<S>                                                                                   <C>          <C>          <C>
Premiums collected by our insurance subsidiaries:
   Annuities:
     Equity-indexed (first-year)....................................................  $  348.3     $  602.9     $  871.9
     Equity-indexed (renewal).......................................................      33.3         40.6         39.9
                                                                                      --------     --------     --------
       Subtotal - equity-indexed annuities..........................................     381.6        643.5        911.8
                                                                                      --------     --------     --------
     Other fixed (first-year).......................................................     914.5        679.4        896.4
     Other fixed (renewal)..........................................................      39.5         61.3         62.1
                                                                                      --------     --------     --------
       Subtotal - other fixed annuities.............................................     954.0        740.7        958.5
                                                                                      --------     --------     --------
     Variable (first-year)..........................................................     313.5        747.8        519.1
     Variable (renewal).............................................................      95.1        123.7         84.3
                                                                                      --------     --------     --------
       Subtotal - variable annuities................................................     408.6        871.5        603.4
                                                                                      --------     --------     --------

         Total annuities............................................................   1,744.2      2,255.7      2,473.7
                                                                                      --------     --------     --------

   Supplemental health:
     Medicare supplement (first-year)...............................................     121.4        101.9        106.8
     Medicare supplement (renewal)..................................................     853.7        829.1        808.8
                                                                                      --------     --------     --------
       Subtotal - Medicare supplement...............................................     975.1        931.0        915.6
                                                                                      --------     --------     --------
     Long-term care (first-year)....................................................     105.2        119.2        127.1
     Long-term care (renewal).......................................................     783.1        716.8        666.4
                                                                                      --------     --------     --------
       Subtotal - long-term care....................................................     888.3        836.0        793.5
                                                                                      --------     --------     --------
     Specified disease (first-year).................................................      45.1         39.1         39.0
     Specified disease (renewal)....................................................     329.7        332.0        337.3
                                                                                      --------     --------     --------
       Subtotal - specified disease.................................................     374.8        371.1        376.3
                                                                                      --------     --------     --------
     Other health (first-year)......................................................      11.5         29.9         23.8
     Other health (renewal).........................................................      97.8         95.9         97.4
                                                                                      --------     --------     --------
         Total - other health.......................................................     109.3        125.8        121.2
                                                                                      --------     --------     --------

         Total supplemental health..................................................   2,347.5      2,263.9      2,206.6
                                                                                      --------     --------     --------

   Life insurance:
     First-year.....................................................................     198.3        186.6        211.5
     Renewal........................................................................     751.3        747.6        759.2
                                                                                      --------     --------     --------

       Total life insurance.........................................................     949.6        934.2        970.7
                                                                                      --------     --------     --------

       Collections on insurance products from continuing operations.................   5,041.3      5,453.8      5,651.0
                                                                                      --------     --------     --------

   Individual and group major medical:
     Individual (first-year)........................................................     112.8        161.1         96.4
     Individual (renewal)...........................................................     253.4        246.2        233.3
                                                                                      --------     --------     --------
       Subtotal - individual........................................................     366.2        407.3        329.7
                                                                                      --------     --------     --------
     Group (first-year).............................................................      16.4         80.1         53.0
     Group (renewal)................................................................     354.5        423.2        473.0
                                                                                      --------     --------     --------
       Subtotal - group.............................................................     370.9        503.3        526.0
                                                                                      --------     --------     --------

         Total major medical........................................................     737.1        910.6        855.7
                                                                                      --------     --------     --------

   Total first-year premium collections on insurance products.......................   2,187.0      2,748.0      2,945.0
   Total renewal premium collections on insurance products..........................   3,591.4      3,616.4      3,561.7
                                                                                      --------     --------     --------

         Total collections on insurance products....................................  $5,778.4     $6,364.4     $6,506.7
                                                                                      ========     ========     ========

Mutual funds (excludes variable annuities)..........................................  $  468.7     $  794.2     $  479.3
                                                                                      ========     ========     ========
</TABLE>


          Annuities include equity-indexed annuities, other fixed annuities and
variable annuities sold through both career agents and professional independent
producers.

                                       49

<PAGE>



          We introduced our first equity-indexed annuity product in 1996. The
accumulation value of these annuities is credited with interest at an annual
guaranteed minimum rate of 3 percent (or, including the effect of applicable
sales loads, a 1.7 percent compound average interest rate over the term of the
contracts). These annuities provide for potentially higher returns based on a
percentage of the change in the S&P 500 Index during each year of their term. We
purchase S&P 500 Call Options in an effort to hedge increases to policyholder
benefits resulting from increases in the S&P 500 Index. Total collected premiums
for this product decreased by 41 percent, to $381.6 million, in 2001 and by 29
percent, to $643.5 million, in 2000. The decrease can be attributed to the
general stock market performance which has made other investment products more
attractive.

          Other fixed rate annuity products include SPDAs, FPDAs and SPIAs,
which are credited with a declared rate. The demand for traditional fixed-rate
annuity contracts has increased in 2001 as such products became more attractive
than equity-indexed or variable annuity products due to the general stock market
performance. SPDA and FPDA policies typically have an interest rate that is
guaranteed for the first policy year, after which we have the discretionary
ability to change the crediting rate to any rate not below a guaranteed rate.
The interest rate credited on SPIAs is based on market conditions existing when
a policy is issued and remains unchanged over the life of the SPIA. Annuity
premiums on these products increased by 29 percent, to $954.0 million, in 2001
and decreased by 23 percent, to $740.7 million, in 2000. Fixed annuity
collections in 1999 included $208.8 million of premiums on reinsurance contracts
entered into during the year.

          Variable annuities offer contract holders the ability to direct
premiums into specific investment portfolios; rates of return are based on the
performance of the portfolio. In 1996, we began to offer more investment options
for variable annuity deposits, and we expanded our marketing efforts, resulting
in increased collected premiums. Our profits on variable annuities come from the
fees charged to contract holders. Variable annuity collected premiums decreased
by 53 percent, to $408.6 million, in 2001 and increased by 44 percent, to $871.5
million, in 2000. The 2001 decrease can be attributed to the general stock
market performance, which has made other investment products more attractive.

          Supplemental health products include Medicare supplement, long-term
care, specified disease and other insurance products distributed through a
career agency force and professional independent producers. Our profits on
supplemental health policies depend on the overall level of sales, the length of
time the business remains inforce, investment yields, claim experience and
expense management.

          Collected premiums on Medicare supplement policies increased by 4.7
percent, to $975.1 million, in 2001 and by 1.7 percent, to $931.0 million, in
2000. Sales of Medicare supplement policies have been affected by increased
premium rates and sales volume.

          Premiums collected on long-term care policies increased by 6.3
percent, to $888.3 million, in 2001 and by 5.4 percent, to $836.0 million, in
2000 due to increases in premium rates and increased sales volume.

          Premiums collected on specified disease products were comparable in
2001, 2000 and 1999.

          Other health products include: (i) various health insurance products
that are not currently being actively marketed; and (ii) in 1999, certain
specialty health insurance products sold to educators. Premiums collected in
2001 were $109.3 million, down 13 percent from 2000. Premiums collected in 2000
were $125.8 million, up 3.8 percent over 1999. Since we no longer actively
market these products, we expect collected premiums to decrease in future years.
The in-force business continues to be profitable.

          Life products are sold through career agents, professional independent
producers and direct response distribution channels. Life premiums collected in
2001 were $949.6 million, up 1.6 percent over 2000. Life premiums collected in
2000 were $934.2 million, down 3.8 percent from 1999. Collections in 1999
included $49.2 million of premiums on reinsurance contracts entered into during
the year.

          Individual and group major medical products include major medical
health insurance products sold to individuals and groups. In the second half of
2001, we began the process of non-renewing a large portion of our major medical
business. In early 2002, we decided to non-renew all inforce individual and
small group business and discontinue new sales. Group premiums decreased by 26
percent, to $370.9 million, in 2001 and by 4.3 percent, to $503.3 million, in
2000. Individual health premiums decreased by 10 percent, to $366.2 million, in
2001 and increased by 24 percent, to $407.3 million, in 2000. These premiums
will decrease substantially in 2002 and subsequent periods.

          Mutual fund sales decreased 41 percent, to $468.7 million in 2001, and
increased 66 percent, to $794.2 million, in 2000. Mutual fund sales have been
adversely affected by the recent performance of the stock market.

                                       50

<PAGE>



          INVESTMENTS

          Our investment strategy is to: (i) maintain a predominately
investment-grade fixed income portfolio; (ii) provide adequate liquidity to meet
our cash obligations to policyholders and others; and (iii) maximize current
investment income and total investment return through active investment
management. Consistent with this strategy, investments in fixed maturity
securities, mortgage loans and policy loans made up 97 percent of our $25.0
billion investment portfolio at December 31, 2001. The remainder of the invested
assets were interest-only securities, equity securities, venture capital
investments and other invested assets.

          Insurance statutes regulate the type of investments that our insurance
subsidiaries are permitted to make and limit the amount of funds that may be
used for any one type of investment. In light of these statutes and regulations
and our business and investment strategy, we generally seek to invest in United
States government and government-agency securities and corporate securities
rated investment grade by established nationally recognized rating organizations
or in securities of comparable investment quality, if not rated.

          The following table summarizes investment yields earned over the past
three years on the general account invested assets of our insurance subsidiaries
(excluding the investment income from our discontinued major medical business).
General account investments exclude our venture capital investment in TeleCorp,
separate account assets, the value of S&P 500 call options and the investments
held by our finance segment.

<TABLE>
<CAPTION>

                                                                                        2001          2000        1999
                                                                                        ----          ----        ----
                                                                                              (Dollars in millions)
<S>                                                                                  <C>           <C>         <C>
Weighted average general account invested assets as defined:
       As reported ................................................................. $24,844.1     $24,009.7   $24,986.2
       Excluding unrealized depreciation (a)........................................  25,662.0      25,461.3    25,785.6
Net investment income on general account invested assets............................   1,786.2       1,882.7     1,959.6

Yields earned:
       As reported..................................................................       7.2%          7.8%        7.8%
       Excluding unrealized depreciation (a) .......................................       7.0%          7.4%        7.6%
<FN>

--------------------
(a)       Excludes the effect of reporting fixed maturities at fair value as
          described in note 1 to the consolidated financial statements.
</FN>
</TABLE>


          Although investment income is a significant component of total
revenues, the profitability of certain of our insurance products is determined
primarily by the spreads between the interest rates we earn and the rates we
credit or accrue to our insurance liabilities. At December 31, 2001, the average
yield, computed on the cost basis of our actively managed fixed maturity
portfolio, was 7.0 percent, and the average interest rate credited or accruing
to our total insurance liabilities (excluding interest rate bonuses for the
first policy year only and excluding the effect of credited rates attributable
to variable or equity-indexed products) was 5.0 percent.


                                       51

<PAGE>



          Actively managed fixed maturities

          Our actively managed fixed maturity portfolio at December 31, 2001,
included primarily debt securities of the United States government, public
utilities and other corporations, and mortgage-backed securities.
Mortgage-backed securities included collateralized mortgage obligations ("CMOs")
and mortgage-backed pass-through securities.

          At December 31, 2001, our fixed maturity portfolio had $240.1 million
of unrealized gains and $1,020.9 million of unrealized losses, for a net
unrealized loss of $780.8 million. Estimated fair values for fixed maturity
investments were determined based on estimates from: (i) nationally recognized
pricing services (77 percent of the portfolio); (ii) broker-dealer market
makers (16 percent of the portfolio); and (iii) internally developed methods (7
percent of the portfolio).

          At December 31, 2001, approximately 7.3 percent of our invested assets
(8.1 percent of fixed maturity investments) were fixed maturities rated
below-investment grade by nationally recognized statistical rating organizations
(or, if not rated by such firms, with ratings below Class 2 assigned by the
NAIC). We plan to maintain approximately the present level of
below-investment-grade fixed maturities. These securities generally have greater
risks than other corporate debt investments, including risk of loss upon default
by the borrower, and are often unsecured and subordinated to other creditors.
Below-investment-grade issuers usually have higher levels of indebtedness and
are more sensitive to adverse economic conditions, such as recession or
increasing interest rates, than are investment-grade issuers. We are aware of
these risks and monitor our below-investment-grade securities closely. At
December 31, 2001, our below-investment-grade fixed maturity investments had an
amortized cost of $2,242.0 million and an estimated fair value of $1,815.6
million.

          We periodically evaluate the creditworthiness of each issuer whose
securities we hold. We pay special attention to those securities whose market
values have declined materially for reasons other than changes in interest rates
or other general market conditions. We evaluate the realizable value of the
investment, the specific condition of the issuer and the issuer's ability to
comply with the material terms of the security. Information reviewed may include
the recent operational results and financial position of the issuer, information
about its industry, recent press releases and other information. Conseco employs
a staff of experienced securities analysts in a variety of specialty areas who
compile and review such data. If evidence does not exist to support a realizable
value equal to or greater than the carrying value of the investment, and such
decline in market value is determined to be other than temporary, we reduce the
carrying amount to its net realizable value, which becomes the new cost basis.
We report the amount of the reduction as a realized loss. We recognize any
recovery of such reductions in the cost basis of an investment only upon the
sale, repayment or other disposition of the investment. In 2001, we recorded
writedowns of fixed maturity investments, equity securities and other invested
assets totaling $395.9 million. Our investment portfolio is subject to the risks
of further declines in realizable value. However, we attempt to mitigate this
risk through the diversification and active management of our portfolio.

          As of December 31, 2001, our fixed maturity investments in substantive
default (i.e., in default due to nonpayment of interest or principal) or
technical default (i.e., in default, but not as to the payment of interest or
principal) had an amortized cost of $249.1 million and a carrying value of
$209.0 million. There were no other fixed maturity investments about which we
had serious doubts as to the ability of the issuer to comply on a timely basis
with the material terms of the instrument.

          When a security defaults, our policy is to discontinue the accrual of
interest and eliminate all previous interest accruals, if we determine that such
amounts will not be ultimately realized in full. Investment income forgone due
to defaulted securities was $17.6 million, $15.3 million and $8.7 million for
the years ended December 31, 2001, 2000 and 1999, respectively.

          At December 31, 2001, fixed maturity investments included $8.1 billion
of mortgage-backed securities (or 36 percent of all fixed maturity securities).
CMOs are backed by pools of mortgages that are segregated into sections or
"tranches" that provide for reprioritizing of retirement of principal.
Pass-through securities receive principal and interest payments through their
regular pro rata share of the payments on the underlying mortgages backing the
securities. The yield characteristics of mortgage-backed securities differ from
those of traditional fixed-income securities. Interest and principal payments
for mortgage-backed securities occur more frequently, often monthly.
Mortgage-backed securities are subject to risks associated with variable
prepayments because borrowers are generally allowed to pre-pay their mortgages
without penalty. Prepayment rates are influenced by a number of factors that
cannot be predicted with certainty, including: the relative sensitivity of the
underlying mortgages backing the assets to changes in interest rates; a variety
of economic, geographic and other factors; and the repayment priority of the
securities in the overall securitization structures.

          In general, prepayments on the underlying mortgage loans and the
securities backed by these loans increase when prevailing interest rates decline
significantly relative to the interest rates on such loans. The yields on
mortgage-backed securities purchased at a discount to par will increase when the
underlying mortgages prepay faster than expected. The yields on mortgage-backed
securities purchased at a premium will decrease when they prepay faster than
expected. When

                                       52

<PAGE>



interest rates decline, the proceeds from the prepayment of mortgage-backed
securities are likely to be reinvested at lower rates than we were earning on
the prepaid securities. When interest rates increase, prepayments on
mortgage-backed securities decrease, as fewer underlying mortgages are
refinanced. When this occurs, the average maturity and duration of the
mortgage-backed securities increase, which decreases the yield on
mortgage-backed securities purchased at a discount, because the discount is
realized as income at a slower rate, and increases the yield on those purchased
at a premium as a result of a decrease in the annual amortization of the
premium.

          The following table sets forth the par value, amortized cost and
estimated fair value of mortgage-backed securities, summarized by interest rates
on the underlying collateral at December 31, 2001:

<TABLE>
<CAPTION>


                                                                                  Par        Amortized      Estimated
                                                                                 value         cost        fair value
                                                                                 -----         ----        ----------
                                                                                       (Dollars in millions)
<S>                                                                             <C>           <C>           <C>
Below 7 percent..............................................................   $5,736.0      $5,688.2      $5,648.8
7 percent - 8 percent........................................................    1,508.7       1,499.3       1,525.2
8 percent - 9 percent........................................................      293.8         294.8         270.6
9 percent and above..........................................................      787.2         789.6         615.0
                                                                                --------      --------      --------

          Total mortgage-backed securities (a)...............................   $8,325.7      $8,271.9      $8,059.6
                                                                                ========      ========      ========
<FN>

--------------------
(a)       Includes below-investment grade mortgage-backed securities with an
          amortized cost and estimated fair value of $783.8 million and $563.0
          million, respectively.

          The amortized cost and estimated fair value of mortgage-backed
          securities at December 31, 2001, summarized by type of security, were
          as follows:

</FN>
</TABLE>


<TABLE>
<CAPTION>


                                                                                                  Estimated Fair Value
                                                                                               --------------------------
                                                                                                            Percent of
                                                                                Amortized                      fixed
Type                                                                              Cost         Amount       maturities
----                                                                              ----         ------       ----------
                                                                                 (Dollars in millions)

<S>                                                                             <C>            <C>                <C>

Pass-throughs and sequential and targeted amortization classes...............   $5,065.7       $5,068.3           23%
Planned amortization classes and accretion-directed bonds....................    1,806.8        1,805.0            8
Commercial mortgage-backed securities........................................      250.4          256.2            1
Subordinated classes and mezzanine tranches..................................    1,113.1          893.9            4
Other........................................................................       35.9           36.2            -
                                                                                --------       --------           ---

   Total mortgage-backed securities (a)......................................   $8,271.9       $8,059.6           36%
                                                                                ========       ========           ===
<FN>

--------------------
(a)   Includes below-investment grade mortgage-backed securities with an
      amortized cost and estimated fair value of $783.8 million and $563.0
      million, respectively.
</FN>
</TABLE>


          Pass-throughs and sequential and targeted amortization classes have
similar prepayment variability. Pass-throughs historically provide the best
liquidity in the mortgage-backed securities market. Pass-throughs are also used
frequently in the dollar roll market and can be used as the collateral when
creating collateralized mortgage obligations. Sequential classes are a series of
tranches that return principal to the holders in sequence. Targeted amortization
classes offer slightly better structure in return of principal than sequentials
when prepayment speeds are close to the speed at the time of creation.

          Planned amortization classes and accretion-directed bonds are some of
the most stable and liquid instruments in the mortgage-backed securities market.
Planned amortization class bonds adhere to a fixed schedule of principal
payments as long as the underlying mortgage collateral experiences prepayments
within a certain range. Changes in prepayment rates are first absorbed by
support or companion classes. This insulates the planned amortization class from
the consequences of both faster prepayments (average life shortening) and slower
prepayments (average life extension).

          Commercial mortgage-backed securities ("CMBS") are bonds secured by
commercial real estate mortgages. Commercial real estate encompasses income
producing properties that are managed for economic profit. Property types
include multi-family dwellings including apartments, retail centers, hotels,
restaurants, hospitals, nursing homes, warehouses, and office buildings. Most
CMBS have strong call protection features where borrowers are locked out from

                                       53

<PAGE>



prepaying their mortgages for a stated period of time. If the borrower does
prepay any or all of the loan, they will be required to pay prepayment
penalties.

          Subordinated and mezzanine tranches are classes that provide credit
enhancement to the senior tranches. The rating agencies require that this credit
enhancement not deteriorate due to prepayments for a period of time, usually
five years of complete lockout followed by another period of time where
prepayments are shared pro rata with senior tranches. The credit risk of
subordinated and mezzanine tranches is derived from owning a small percentage of
the mortgage collateral, while bearing a majority of the risk of loss due to
property owner defaults. Subordinated bonds can be anything rated "AA" or lower,
while typically we do not buy anything lower than "BB". We retained certain
lower-rated securities that are senior in payment priority to the interest-only
securities from the securitization transactions completed by our finance segment
prior to September 8, 1999. These securities are classified as subordinated
class and mezzanine tranche type securities and have an amortized cost and
estimated fair value of $704.9 million and $528.5 million, respectively, at
December 31, 2001.

          During 2001, we sold $24.2 billion of investments (primarily fixed
maturities), resulting in $319.4 million of investment gains and $354.5 million
of investment losses (both before related expenses, amortization and taxes).
Such securities were sold in response to changes in the investment environment,
which created opportunities to enhance the total return of the investment
portfolio without adversely affecting the quality of the portfolio or the
matching of expected maturities of assets and liabilities. As discussed in the
notes to the consolidated financial statements, the realization of gains and
losses affects the timing of the amortization of the cost of policies produced
and the cost of policies purchased related to universal life and investment
products.

          Venture capital investment in TeleCorp

          Our venture capital investment in TeleCorp was made by our subsidiary
which engages in venture capital investment activity. TeleCorp is a company in
the wireless communication business. Our investment in TeleCorp (currently AWE
as described in the following paragraph) is carried at estimated fair value,
with changes in fair value recognized as investment income (loss). We held 12.6
million shares of TeleCorp common stock with a fair value of $157.5 million at
December 31, 2001 ($12.49 per share). The market values of many companies in
TeleCorp's business sector have been subject to volatility in recent periods. We
recognized venture capital investment income (loss) of $(42.9) million, $(199.5)
million and $354.8 million in 2001, 2000 and 1999, respectively, primarily
related to this investment.

          In the first quarter of 2002, AWE acquired TeleCorp. Pursuant to the
merger agreement, our shares of TeleCorp were converted into 11.4 million shares
of AWE. Upon the completion of the merger, there are no restrictions on our
ability to sell our interest in AWE. We expect to sell (or monetize through
borrowing and forward sale transactions) our remaining interest in AWE during
2002, in conjunction with our plans to meet our debt obligations.

          At March 18, 2002, our holdings of AWE common stock included: 10.3
million shares valued at $102.2 million (which shares have not been monetized);
and 1.1 million shares which are held as collateral for a $12.1 million
investment borrowing transaction and are subject to a forward sale contract
pursuant to which the Company has agreed to sell between .6 million and 1.1
million shares of AWE common stock for $15.5 million on November 15, 2006. The
number of shares purchased will be based on the $15.5 million purchase price and
the price of AWE common stock at the purchase date. However, such price will be
no lower than $14.9862 per share and no higher than $24.3527 per share pursuant
to the terms of the forward sale contract.

          The forward contract is a derivative that is required to be
marked-to-market each period. Since the hedged asset (i.e., a portion of the
shares of TeleCorp we own) is required to be carried at market value, the hedge
rules of Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", are not applicable. However,
since the value of the derivative will fluctuate in relation to the change in
value of the related TeleCorp common stock, we expect the forward contract to
act as a hedge and reduce earnings volatility associated with the TeleCorp
common stock. At December 31, 2001, the value of the derivative was not
significant.

          During the fourth quarter of 2001, we sold 4.6 million shares of
TeleCorp common stock to certain investment trusts for $60.3 million. Conseco
and its subsidiaries hold all of the debt securities issued by the trusts; a
third party owns the equity securities. The trusts are further described in note
3 to the consolidated financial statements.


                                       54
<PAGE>



          Other investments

          At December 31, 2001, we held mortgage loan investments with a
carrying value of $1,228.0 million (or 4.9 percent of total invested assets) and
a fair value of $1,210.7 million. Mortgage loans were substantially comprised of
commercial loans. Noncurrent mortgage loans were insignificant at December 31,
2001. Realized losses on mortgage loans were not significant in any of the past
three years. At December 31, 2001, we had a mortgage loan loss reserve of $3.8
million. Properties located in Florida, New York, Ohio and Pennsylvania each
represent 7 percent of the mortgage loan balance. In addition, properties
located in Texas, Massachusetts, California and Maine each represent 5 percent
of the mortgage loan balance. No other state accounted for more than 4 percent
of the mortgage loan balance.

          At December 31, 2001, we held $4.0 million of trading securities; they
are included in other invested assets. Trading securities are investments we
intend to sell in the near term. We carry trading securities at estimated fair
value; changes in fair value are reflected in the statement of operations.

          Other invested assets also include: (i) S&P 500 Call Options; and (ii)
certain nontraditional investments, including investments in limited
partnerships, mineral rights and promissory notes.

          As part of our investment strategy, we enter into reverse repurchase
agreements and dollar-roll transactions to increase our return on investments
and improve our liquidity. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that the repurchase involves securities that are only substantially the
same as the securities sold. We enhance our investment yield by investing the
proceeds from the sales in short-term securities pending the contractual
repurchase of the securities at discounted prices in the forward market. We are
able to engage in such transactions due to the market demand for mortgage-backed
securities to form CMOs. At December 31, 2001, we had investment borrowings of
$2,242.7 million. Such investment borrowings averaged $1,029.7 million during
2001 and were collateralized by investment securities with fair values
approximately equal to the loan value. The weighted average interest rate on
such borrowings was 3.3 percent in 2001. The primary risk associated with
short-term collateralized borrowings is that the counterparty might be unable to
perform under the terms of the contract. Our exposure is limited to the excess
of the net replacement cost of the securities over the value of the short-term
investments (which was not material at December 31, 2001). We believe that the
counterparties to our reverse repurchase and dollar-roll agreements are
financially responsible and that counterparty risk is minimal.

          FINANCE RECEIVABLES AND RETAINED INTERESTS IN SECURITIZATION TRUSTS

          Finance receivables

          Finance receivables, including receivables which serve as collateral
for the notes issued to investors in securitization trusts of $14,198.5 million
and $12,622.8 million at December 31, 2001 and 2000, respectively, summarized by
business line and categorized as either: (i) a part of continuing lines; or (ii)
a part of our discontinued lines, were as follows:


                                       55

<PAGE>

<TABLE>
<CAPTION>


                                                                                                December 31,
                                                                                           ---------------------
                                                                                           2001             2000
                                                                                           ----             ----
                                                                                           (Dollars in millions)
<S>                                                                                      <C>             <C>
Continuing lines:
   Manufactured housing...............................................................   $ 7,549.7       $ 5,865.1
   Mortgage services..................................................................     6,787.1         6,499.1
   Retail credit......................................................................     2,690.0         1,763.9
   Consumer finance - closed-end......................................................       587.1           822.4
   Floorplan (a)......................................................................       436.9           637.0
                                                                                         ---------       ---------

                                                                                          18,050.8        15,587.5
   Less allowance for credit losses...................................................       408.3           266.2
                                                                                         ---------       ---------

     Net finance receivables - for continuing lines...................................    17,642,5        15,321.3
                                                                                         ---------       ---------

Discontinued lines....................................................................       379.7         1,207.1
   Less allowance for credit losses...................................................        13.0            40.6
                                                                                         ---------       ---------

     Net finance receivables - for discontinued lines.................................       366.7         1,166.5
                                                                                         ---------       ---------

     Total finance receivables........................................................   $18,009.2       $16,487.8
                                                                                         =========       =========
<FN>


------------------
(a)       We decided to reduce the size of our floorplan lending business in
          early 2002.
</FN>
</TABLE>



          Subsequent to September 8, 1999, we are using the portfolio method
(the accounting method required for securitizations which are now structured as
secured borrowings) to account for securitization transactions. Our
securitizations are now structured in a manner that requires them to be
accounted for under the portfolio method, whereby the loans and securitization
debt remain on our balance sheet pursuant to SFAS 140.

          The change to the structure of our new securitizations has no effect
on the total profit we recognize over the life of each new loan, but it changes
the timing of profit recognition. Under the portfolio method (the accounting
method required for our securitizations which are structured as secured
borrowings), we recognize: (i) earnings over the life of new loans as interest
revenues are generated; (ii) interest expense on the securities which are sold
to investors in the loan securitization trusts; and (iii) provisions for losses.
As a result, our reported earnings from new loans securitized in transactions
accounted for under the portfolio method are lower in the period in which the
loans are securitized (compared to our historical method) and higher in later
periods, as interest spread is earned on the loans.

          The securitizations structured prior to our September 8, 1999,
announcement met the applicable criteria to be accounted for as sales. At the
time the loans were securitized and sold, we recognized a gain and recorded our
retained interest represented by the interest-only security. The interest-only
security represents the right to receive, over the life of the pool of
receivables: (i) the excess of the principal and interest received on the
receivables transferred to the special purpose entity over the principal and
interest paid to the holders of other interests in the securitization; and (ii)
contractual servicing fees. We consider any potential payments related to the
guarantees of certain lower rated securities issued by the securitization trusts
in the projected cash flows used to determine the value of our interest-only
securities. In some of those securitizations, we also retained certain
lower-rated securities that are senior in payment priority to the interest-only
securities. Such retained securities had a par value, fair market value and
amortized cost of $753.5 million, $528.5 million and $704.9 million,
respectively, at December 31, 2001, and were classified as actively managed
fixed maturity securities.

          We completed various loan sale transactions in 2001 and 2000. During
2001, we sold $1.6 billion of finance receivables which included: (i) our $802.3
million vendor services loan portfolio (which was marked-to-market in the fourth
quarter of 2000 and no additional gain or loss was recognized in 2001); (ii)
$568.4 million of high-loan-to-value mortgage loans; and (iii) $269.0 million of
other loans. These sales resulted in net gains of $26.9 million. The Company
entered into a servicing agreement on the high-loan-to-value mortgage loans
sold. Pursuant to the servicing agreement, the servicing fees payable to the
Company are senior to all other payments of the trust which purchased the loans.
The Company also holds a residual interest in certain other cash flows of the
trust. In the future, the Company will sell this interest, if it can be sold at
a reasonable price. The Company did not provide any guarantees with respect to
the performance of the loans sold. In 2000, we sold approximately $147.1 million
of finance receivables in whole-loan sales resulting in net gains of $7.5
million.


                                       56
<PAGE>



          We expect to continue to utilize the Company's infrastructure to
originate certain types of finance receivables for sale to other parties, when
such sales can be completed profitably.

          We service for a fee all of the finance receivables we previously sold
in securitization transactions accounted for as sales. We collect, in the
special purpose securitization entity, loan payments, and where applicable,
other payments from borrowers and remit principal and interest payments to
holders of the securities backed by the finance receivables we have sold. The
cash applicable to the servicing fee and residual interest is remitted from the
special purpose entity to the Company, after payment of all required principal,
interest and reserve fund requirements.

       Managed finance receivables by loan type were as follows:

<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                                ------------------
                                                                                2001          2000
                                                                                ----          ----
                                                                               (Dollars in millions)
<S>                                                                          <C>           <C>
Continuing lines:
   Fixed term............................................................    $39,092.4     $41,871.3
   Revolving credit......................................................      3,625.5       3,030.7
Discontinued lines.......................................................        284.4       1,683.9
                                                                             ---------     ---------

     Total...............................................................    $43,002.3     $46,585.9
                                                                             =========     =========

Number of contracts serviced:
   Fixed term contracts - continuing lines...............................    1,164,000     1,286,000
   Revolving credit accounts - continuing lines..........................    1,486,000       972,000
   Discontinued lines....................................................       12,000       285,000
                                                                             ---------     ---------

     Total...............................................................    2,662,000     2,543,000
                                                                             =========     =========
</TABLE>

          At December 31, 2001, no single state accounted for more than 9
percent of the contracts we serviced. In addition, no single contractor, dealer
or vendor accounted for more than 1 percent of the total contracts we
originated.



                                       57

<PAGE>



          The credit quality of managed finance receivables was as follows:
<TABLE>
<CAPTION>


                                                                                       December 31,
                                                                                  ---------------------
                                                                                  2001             2000
                                                                                  ----             ----
<S>                                                                              <C>               <C>
60-days-and-over delinquencies as a percentage of managed finance
   receivables at period end:
     Manufactured housing....................................................    2.45%             2.20%
     Mortgage services (a)...................................................    1.23               .93
     Retail credit...........................................................    3.39              3.04
     Consumer finance - closed-end...........................................    1.08               .67
     Floorplan...............................................................     .58               .31
     Discontinued lines......................................................    3.50              1.70
       Total.................................................................    2.10%             1.76%

Net credit losses incurred during the last twelve months as a percentage of
   average managed finance receivables during the period:
     Manufactured housing....................................................    2.14%             1.61%
     Mortgage services.......................................................    1.95              1.17
     Retail credit...........................................................    7.80              5.30
     Consumer finance - closed-end...........................................    2.50              2.02
     Floorplan...............................................................    1.00               .31
     Discontinued lines......................................................    5.73              5.34
       Total.................................................................    2.41%             1.79%

Repossessed collateral inventory as a percentage of managed finance receivables
   at period end (b):
     Manufactured housing....................................................    2.45%             1.73%
     Mortgage services (c)...................................................    4.07              2.97
     Retail credit...........................................................     .13               -
     Consumer finance - closed-end...........................................    1.03               .96
     Floorplan...............................................................     .69               .44
     Discontinued lines......................................................    4.20              5.39
       Total.................................................................    2.68%             2.08%

<FN>

--------------------
(a)       60-days-and-over delinquencies exclude loans in foreclosure.

(b)       Ratio of: (i) outstanding loan principal balance related to the
          repossessed inventory (before writedown) to: (ii) total receivables.
          We writedown the value of our repossessed inventory to estimated
          realizable value at the time of repossession.

(c)       Repossessed collateral inventory includes loans in the process of
          foreclosure.
</FN>
</TABLE>


                                       58

<PAGE>

          The credit quality of on-balance sheet finance receivables was as
follows:
<TABLE>
<CAPTION>


                                                                                       December 31,
                                                                                   -------------------
                                                                                   2001           2000
                                                                                   ----           ----
<S>                                                                               <C>             <C>
60-days-and-over delinquencies as a percentage of on-balance sheet
   finance receivables at period end:
     Manufactured housing....................................................     3.08%           2.08%
     Mortgage services (a)...................................................      .94             .75
     Retail credit...........................................................     3.39            3.04
     Consumer finance - closed-end...........................................     1.33             .61
     Floorplan...............................................................      .58             .31
     Discontinued lines......................................................     2.72            2.09
       Total.................................................................     2.19%           1.48%

Net credit losses incurred during the last twelve months as a percentage of
   average on-balance sheet finance receivables during the period:
     Manufactured housing....................................................     1.87%            .88%
     Mortgage services.......................................................     1.53             .55
     Retail credit...........................................................     7.80            5.47
     Consumer finance - closed-end...........................................     2.02             .99
     Floorplan...............................................................     1.00             .18
     Discontinued lines......................................................     4.66            5.39
       Total.................................................................     2.50%           1.69%

Repossessed collateral inventory as a percentage of on-balance sheet finance
   receivables at period end (b) (c):
     Manufactured housing....................................................     2.41%           1.18%
     Mortgage services (d)...................................................     3.50            1.28
     Retail credit...........................................................      .13             -
     Consumer finance - closed-end...........................................     1.15             .76
     Floorplan...............................................................      .69             .44
     Discontinued lines......................................................     2.92            5.65
       Total.................................................................     2.37%           1.35%

<FN>

--------------------
(a)       60-days-and-over delinquencies exclude loans in foreclosure.

(b)       Ratio of: (1) outstanding loan principal balance related to the
          repossessed inventory (before writedown) to: (2) total receivables.

(c)       Although the ratio is calculated using the outstanding loan principal
          balance related to the repossessed inventory, the repossessed
          inventory is written down to net realizable value at the time of
          repossession or completed foreclosure. (d) Repossessed collateral
          inventory includes loans in foreclosure.

</FN>
</TABLE>

          These ratios increased during 2001 primarily as a result of: (i) the
increases in delinquencies and credit losses as the portfolios age; (ii) changes
in the mix of managed receivables; and (iii) underlying loss experience. Such
ratios were favorably impacted by our various loss mitigation policies. If we
apply loss mitigation policies, we generally reflect the customer's delinquency
status as not being past due. We believe our loss experience has deteriorated in
recent periods due, in part, to general economic factors. See provision for
losses related to finance operations for further discussion of our recent
experience and loss mitigation strategies.

          Delinquencies on loans held in our portfolio and our ability to
recover collateral and mitigate loan losses can be adversely impacted by a
variety of factors, many of which are outside our control. For example, proposed
changes to the federal bankruptcy laws applicable to individuals would make it
more difficult for borrowers to seek bankruptcy protection, and the prospect of
these changes may encourage certain borrowers to seek bankruptcy protection
before the law changes become effective, thereby increasing delinquencies. When
loans are delinquent and we foreclose on the loan, our ability to sell
collateral to recover or mitigate our loan losses is subject to the market value
of such collateral. In manufactured housing, those values may be affected by the
available inventory of manufactured homes on the market, a factor over which we
have no control. It is also dependent upon demand for new homes, which is tied
to economic factors in the general economy. In addition, repossessed collateral
is generally in poor condition, which reduces its value.

          Recently, many consumer lenders have stopped or significantly scaled
back their consumer finance operations in the manufactured housing sector. These
lenders began to foreclose on collateral pledged to secure loans at a more
aggressive rate. We may face increased competition from such lenders in
disposing of collateral pledged to secure our loans. Often

                                       59
<PAGE>

collateral is in similar forms. There is a limited number of buyers and the
exiting consumer lenders may be willing to sell their foreclosed collateral at
prices significantly below fair value. As a result, collateral recovery rates we
can realize may fall, which could have an adverse effect on our financial
position and results of operations.

          Retained Interests in Securitization Trusts

          Our retained interests in the securitization transactions structured
prior to September 8, 1999, include interest-only securities, certain
subordinated securities (which are senior to the interest-only securities) and
servicing rights. The interest-only securities and subordinated securities are
carried at estimated fair value. On a quarterly basis, we estimate the fair
value of these securities by discounting the projected future cash flows using
current assumptions. If we determine that the differences between the estimated
fair value and the book value of these securities is a temporary difference we
adjust shareholders' equity. At December 31, 2001, this adjustment increased the
carrying value of the interest-only securities by $10.4 million to $141.7
million. Declines in value are considered to be other than temporary when: (i)
the fair value of the security is less than its carrying value; and (ii) the
timing and/or amount of cash expected to be received from the security has
changed adversely from the previous valuation which determined the carrying
value of the security. When both occur, the security is written down to fair
value.

          The assumptions we use to determine new values are based on our
internal evaluations and consultation with external advisors having significant
experience in valuing these securities. Although we believe our methodology is
reasonable, many of the assumptions and expectations underlying our
determinations are not possible to predict with certainty and may change
adversely in the future for reasons beyond our control. Largely as a result of
adverse changes in the underlying assumptions, we recognized impairment charges
of $386.9 million ($250.4 million after tax) in 2001, $515.7 million ($324.9
million after tax) in 2000 and $554.3 million ($349.2 million after tax) in 1999
to reduce the book value of interest-only securities and servicing rights as
described above under "Finance Operations."

          In conjunction with the sale of certain finance receivables, our
finance subsidiary provided guarantees related to the principal and interest
payments of certain lower rated securities issued to third parties by the
securitization trusts. Such securities had a total principal balance outstanding
of $1.5 billion at December 31, 2001. We consider any potential payments related
to these guarantees in the projected cash flows used to determine the value of
our interest-only securities. At December 31, 2001, the value of our
interest-only securities of $141.7 million, reflected estimated guarantee
payments related to bonds held by others of $39.8 million.

          Based on our current assumptions and expectations as to future events
related to the loans underlying our retained interests, we have projected that
the adverse loss experience in 2001 will continue into 2002 and then improve
over time. As a result of these assumptions, we project that payments related to
the guarantees (including the guarantee payments described in the preceding
paragraph and guarantee payments related to the subordinated securities we hold)
will exceed the gross cash flows from the interest-only securities by
approximately $90 million in 2002 and $60 million in 2003. We project that the
gross cash flows from the interest-only securities will exceed the payments
related to guarantees issued in conjunction with the sales of certain finance
receivables by approximately $5 million and $15 million in 2004 and 2005,
respectively, and by approximately $580 million in all years thereafter.

          Effective September 30, 2001, we transferred substantially all of our
interest-only securities into a trust. No gain or loss was recognized upon such
transfer. In return, we received a trust security representing an interest in
the trust equal to 85 percent of the estimated future cash flows of the
interest-only securities held in the trust. Lehman purchased the remaining 15
percent interest. The value of the interest purchased was $55.2 million at
December 31, 2001. The Company continues to be the servicer of the finance
receivables underlying the interest-only securities transferred to the trust.
Lehman has the ability to accelerate the principal payments related to their
interest after a stated period. Until such time, Lehman is required to maintain
a 15 percent interest in the estimated future cash flows of the trust. By
aggregating the interest-only securities into one structure, the impairment test
for these securities will be conducted on a single set of cash flows
representing the Company's 85 percent interest in the trust. Accordingly,
adverse changes in cash flows from one interest-only security may be offset by
positive changes in another. The new structure will not avoid an impairment
charge if sufficient positive cash flows in the aggregate are not available.
Further, increases in cash flows above the adverse cash flows cannot be
recognized in earnings.

          We carry our servicing rights at the lower of carrying value or
estimated fair value stratified by product type and year of securitization. To
the extent the recorded amount exceeds the fair value for a given strata, we
establish a valuation allowance through a charge to earnings. Such valuation
allowance increased by $122.1 million and $81.6 million in 2001 and 2000,
respectively. The fees we receive for servicing the securitized portfolio are
often subordinate to the interests of other security holders in the trusts.


                                       60
<PAGE>

          No assurances can be given that our current valuation of retained
interests will prove accurate in future periods. In addition, we have retained
certain contingent risks in the form of guarantees of certain lower rated
securities issued by the securitization trusts. If we have to make more payments
on these guarantees than we anticipate, we may be required to recognize
additional impairment charges or to make payments on the guarantees, which, in
turn, could have a material adverse effect on our financial condition or results
of operations.

          CONSOLIDATED FINANCIAL CONDITION

          Changes in the consolidated balance sheet of 2001 compared with 2000

          Changes in our consolidated balance sheet between December 31, 2001
and December 31, 2000, reflect: (i) our operating results; (ii) our origination
of finance receivables; (iii) the transfer of finance receivables to
securitization trusts and sale of notes to investors in transactions accounted
for as secured borrowings; (iv) changes in the fair value of actively managed
fixed maturity securities and interest-only securities; and (v) various
financing transactions. Financing transactions (described in the notes to our
consolidated financial statements) include: (i) the issuance of common stock
pursuant to the stock purchase contract component of the FELINE PRIDES; and (ii)
the issuance and repayment of notes payable.

          In accordance with GAAP, we record our actively managed fixed maturity
investments, interest-only securities, equity securities and certain other
invested assets at estimated fair value with any unrealized gain or loss
(excluding impairment losses which are recognized through earnings), net of tax
and related adjustments, recorded as a component of shareholders' equity. At
December 31, 2001, we decreased the carrying value of such investments by $816.0
million as a result of this fair value adjustment. The fair value adjustment
resulted in a $1,241.9 million decrease in carrying value at year-end 2000.

          Total capital shown below excludes debt of the finance segment used to
fund finance receivables. Total capital, before the fair value adjustment
recorded in accumulated other comprehensive loss, decreased $1,290.2 million, or
10 percent, to $11.2 billion. The decrease is primarily due to our reduction of
corporate notes payable and our operating results for 2001.

<TABLE>
<CAPTION>


                                                                           2001            2000
                                                                           ----            ----
                                                                          (Dollars in millions)
<S>                                                                     <C>            <C>
Total capital, excluding accumulated other comprehensive loss:
    Corporate notes payable............................................ $ 4,087.6      $ 5,055.0

    Company-obligated mandatorily redeemable preferred
       securities of subsidiary trusts.................................   1,914.5        2,403.9

    Shareholders' equity:
       Preferred stock.................................................     499.6          486.8
       Common stock and additional paid-in capital.....................   3,484.3        2,911.8
       Retained earnings...............................................   1,208.1        1,626.8
                                                                        ---------      ---------

          Total shareholders' equity, excluding accumulated
             other comprehensive loss..................................   5,192.0        5,025.4
                                                                        ---------      ---------

          Total capital, excluding accumulated other
             comprehensive loss........................................  11,194.1       12,484.3

       Accumulated other comprehensive loss............................    (439.0)        (651.0)
                                                                        ---------      ---------

          Total capital................................................ $10,755.1      $11,833.3
                                                                        =========      =========
</TABLE>



          Corporate notes payable decreased during 2001 primarily due to the
repayment of notes payable using the proceeds from our asset sales (including
the sale of our interest in the riverboat and sale of our vendor services
financing business).

          Shareholders' equity, excluding accumulated other comprehensive loss,
increased by $166.6 million in 2001, to $5.2 billion. Significant components of
the increase included: (i) the issuance of 11.4 million shares of Conseco common
stock pursuant to the stock purchase contract component of the FELINE PRIDES
with a carrying amount of $496.6 million; and (ii) the issuance of 3.4 million
shares of Conseco common stock with a value of $52.1 million in conjunction with
the acquisition of ExlService.com, Inc.. These increases were partially offset
by our net loss of $405.9 million. The

                                       61
<PAGE>


accumulated other comprehensive loss decreased by $212.0 million, principally
related to the increase in the fair value of our insurance companies' investment
portfolio.

          Book value per common share outstanding increased to $12.34 at
December 31, 2001, from $11.95 a year earlier. Such change was primarily
attributable to the factors discussed in the previous paragraph. Excluding
accumulated other comprehensive loss, book value per common share outstanding
was $13.61 at December 31, 2001, and $13.95 at December 31, 2000.

          Goodwill (representing the excess of the amounts we paid to acquire
companies over the fair value of net assets acquired in transactions accounted
for as purchases) was $3,695.4 million and $3,800.8 million at December 31, 2001
and 2000, respectively. Goodwill as a percentage of shareholders' equity was 78
percent and 87 percent at December 31, 2001 and 2000, respectively. Goodwill as
a percentage of total capital, excluding accumulated other comprehensive loss,
was 33 percent and 30 percent at December 31, 2001 and 2000, respectively. We
believe that the life of our goodwill is indeterminable and, therefore, have
generally amortized its balance over 40 years as permitted by generally accepted
accounting principles. Amortization of goodwill totaled $109.6 million, $112.5
million, and $110.1 million during 2001, 2000 and 1999, respectively. If we had
determined the estimated useful life of our goodwill was less than 40 years,
amortization expense would have been higher.

          We monitor the value of our goodwill based on our best estimates of
future earnings considering all available evidence. Pursuant to current
generally accepted accounting principles, we determine whether goodwill is fully
recoverable from projected undiscounted net cash flows from earnings of the
business acquired over the remaining amortization period. Recent evaluations of
goodwill indicate it is recoverable. The Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 141, "Business
Combinations", and No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets"
in June 2001. Under the new rules, intangible assets with an indefinite life
will no longer be amortized in periods subsequent to December 31, 2001, but will
be subject to annual impairment tests (or more frequent under certain
circumstances) as specified in the new guidance, effective January 1, 2002. The
Company has determined that all of its goodwill has an indefinite life and is
therefore subject to the new rules. Application of the nonamortization
provisions is expected to improve our financial results by approximately $110
million (approximately $.29 per share based on diluted shares outstanding for
the year ended December 31, 2001, without adjustment for antidilution) in the
year ended December 31, 2002.

          Pursuant to SFAS 142, the goodwill impairment test has two steps. For
Conseco, the first step consists of determining the estimated fair value of the
business units comprising our insurance segment. The acquisition of Conseco
Finance was accounted for as a pooling of interests: accordingly, there is no
goodwill associated with our finance segment. The estimated fair value will be
compared to the unit's book value. If the fair value exceeds the carrying
amount, the test is complete and goodwill is not impaired. If the estimated fair
value is less than the carrying value, the second step of the impairment test
must be performed. Although SFAS 142 is required to be adopted as of January 1,
2002, the transition provision gives the Company until June 30, 2002 to complete
the first step of the initial impairment test. The significant factors used to
determine the estimated fair value of our insurance business includes analyses
of industry market valuations, historical and projected performance of the
Company, discounted cash flow analysis and the current market value of our
common stock. Conseco expects to complete step 1 prior to the June 30, 2002
deadline. At December 31, 2001, the closing market price of a share of Conseco
common stock was $4.46 compared to the book value per common share, excluding
accumulated other comprehensive income (loss), of $13.61. Pursuant to the
guidance in SFAS 142, quoted market prices in active markets are the best
evidence of fair value and shall be used as the basis for measurement, if
available. However, the market value of our common stock is only partially based
on the value of our insurance segment, and therefore, need not be the sole basis
of the determination of the fair value of the insurance segment. Although all of
the analyses required to complete step 1 have not yet been completed, Conseco
believes that the carrying value of the business units comprising our insurance
segment will exceed their estimated fair value and that we will be required to
complete the second step, which must be completed by the end of 2002. This step
is more complex than the first step because it involves the valuation of all
assets and liabilities, and then comparison of the business unit's "implied
goodwill" with the carrying value of its goodwill. If the carrying value exceeds
the implied value in the initial application of this standard, an impairment
loss is recognized as a cumulative effect of a change in accounting standard.
Subsequent impairments, if any, would be classified as an operating expense.

          The Company is currently evaluating the carrying value of goodwill
under this standard and expects to be able to meet the transitional time line
described above. We expect to record some level of impairment of goodwill in
2002 as a result of adopting this standard; however, the amount of such
impairment, which could be material, is unknown at this time and is dependent
upon the estimated fair market value of the insurance segment, which is
currently in process. If we determine that an impairment charge is necessary
based on our initial test, the rules require that we recognize the charge in the
first quarter of 2002 (through restatement of first quarter results, if such
impairment test is completed subsequent to

                                       62
<PAGE>



March 31, 2002, as permitted by the transition provisions of the new rules).
Although this standard will increase the Company's results of operations in the
future due to the elimination of goodwill amortization from our statement of
operations, any impairments would result in a charge calculated as discussed in
the preceding paragraphs. In the first quarter of 2002, our bank credit
facilities were amended so that any charges taken to write off goodwill to the
extent required by SFAS 142 will be excluded from the various financial ratios
and covenants we are required to meet or maintain.

          During 2000, we recognized a special charge and reduced goodwill by
$20.3 million, representing the difference between: (i) the carrying value of
the net assets of the vendor services financing business; and (ii) the
anticipated proceeds from the sale of such business, which was completed in the
first quarter of 2001.

<TABLE>
<CAPTION>


          Financial ratios

                                                                        2001       2000       1999       1998       1997
                                                                        ----       ----       ----       ----
<S>                                                                     <C>        <C>        <C>        <C>       <C>
Book value per common share:
   As reported......................................................... $12.34     $11.95     $15.50     $16.37    $16.45
   Excluding accumulated other comprehensive income (loss) (a).........  13.61      13.95      17.85      16.46     15.80
   Excluding goodwill and accumulated other comprehensive
     income (loss) (a).................................................   2.89       2.27       5.86       3.91      3.88

Ratio of earnings to fixed charges:
   As reported.........................................................    (f)        (h)      2.98x      3.30x     5.55x
   Excluding interest expense on direct third party debt of
     Conseco Finance and investment borrowings (b).....................    (f)        (h)      5.27x      6.30x    13.00x

Ratio of operating earnings to fixed charges (c):
     As reported.......................................................  1.26x      1.21x      3.11x      4.00x     6.09x
     Excluding interest expense on direct third party
       debt of Conseco Finance and investment borrowings (b)...........  2.09x      1.68x      5.56x      7.94x    14.43x

Ratio of earnings to fixed charges, preferred stock dividends and
     distributions on Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts:
       As reported.....................................................    (g)        (i)      2.20x      2.47x     4.10x
       Excluding interest expense on direct third party
         debt of Conseco Finance and investment borrowings (b).........    (g)        (i)      2.98x      3.55x     6.72x

Ratio of operating earnings to fixed charges, preferred stock dividends
     distributions on Company-obligated mandatorily redeemable
     and preferred securities of subsidiary trusts (c):
       As reported.....................................................  1.12x      1.04x      2.29x      3.00x     4.49x
       Excluding interest expense on direct third party
         debt of Conseco Finance and investment borrowings (b).........  1.37x      1.10x      3.14x      4.47x     7.45x

Rating agency ratios (a) (d) (e):
   Corporate debt to total capital.....................................    37%        40%        34%        34%       27%
   Corporate debt and Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts to total capital........    54%        60%        54%        53%       43%
<FN>

-------------------
(a)       Excludes accumulated other comprehensive income (loss).

(b)       We include these ratios to assist you in analyzing the impact of
          interest expense on debt related to finance receivables and other
          investments (which is generally offset by interest earned on finance
          receivables and other investments financed by such debt). Such ratios
          are not intended to, and do not, represent the following ratios
          prepared in accordance with GAAP: the ratio of earnings and operating
          earnings to fixed charges; or the ratio of earnings and operating
          earnings to fixed charges, preferred stock dividends and distributions
          on Company-obligated mandatorily redeemable preferred securities of
          subsidiary trusts.

(c)       Such ratios exclude the following items from earnings: (i) net
          investment gains (losses)(less that portion of amortization of cost of
          policies purchased and cost of policies produced and income taxes
          relating to such gains (losses)); (ii) the venture capital income
          (loss) related to our investment in TeleCorp; (iii) the gain on the
          sale of our interest in a riverboat; (iv) special items not related to
          the continuing operations of our businesses (including


                                       63
<PAGE>



          impairment charges to reduce the value of interest-only securities and
          servicing rights, special charges and the provision for losses related
          to loan guarantees); (v) the effect on amortization of the cost of
          policies purchased and produced of changes in assumptions used to
          estimate future gross profits of insurance businesses; and (vi) the
          net income (loss) related to the discontinued major medical business.
          Operating earnings are determined by adjusting GAAP net income (loss)
          for the above mentioned items. While these items may be significant
          components in understanding and assessing our consolidated financial
          performance, we believe that the presentation of operating earnings
          enhances the understanding of our results of operations by
          highlighting net income attributable to the normal, recurring
          operations of the business and by excluding events that materially
          distort trends in net income (loss).

          These ratios are not intended to, and do not, represent the following
          ratios prepared in accordance with GAAP: the ratio of earnings to
          fixed charges; or the ratio of earnings to fixed charges, preferred
          stock dividends and distributions on Company-obligated mandatorily
          redeemable preferred securities of subsidiary trusts.

(d)       Excludes the direct debt of the finance segment used to fund finance
          receivables and investment borrowings of the insurance segment.

(e)       These ratios are calculated in a manner discussed with rating
          agencies.

(f)       For such ratios, adjusted earnings were $419.4 million less than fixed
          charges. Adjusted earnings for the year ended December 31, 2001,
          included: (i) special and impairment charges of $488.8 million; and
          (ii) provision for losses related to loan guarantees of $169.6
          million, as described in greater detail in the notes to the
          accompanying consolidated financial statements.

(g)       For such ratios, adjusted earnings were $623.1 million less than fixed
          charges. Adjusted earnings for the year ended December 31, 2001,
          included: (i) special and impairment charges of $488.8 million; and
          (ii) provision for losses related to loan guarantees of $169.6
          million, as described in greater detail in the notes to the
          accompanying consolidated financial statements.

(h)       For such ratios, adjusted earnings were $1,361.8 million less than
          fixed charges. Adjusted earnings for the year ended December 31, 2000,
          included: (i) special and impairment charges of $1,215.0 million; and
          (ii) provision for losses related to loan guarantees of $231.5
          million, as described in greater detail in the notes to the
          accompanying consolidated financial statements.

(i)       For such ratios, adjusted earnings were $1,602.4 million less than
          fixed charges. Adjusted earnings for the year ended December 31, 2000,
          included: (i) special and impairment charges of $1,215.0 million; and
          (ii) provision for losses related to loan guarantees of $231.5
          million, as described in greater detail in the notes to the
          accompanying consolidated financial statements.
</FN>
</TABLE>


          Liquidity for insurance and fee-based operations

          Our insurance operating companies generally receive adequate cash flow
from premium collections and investment income to meet their obligations. Life
insurance and annuity liabilities are generally long-term in nature.
Policyholders may, however, withdraw funds or surrender their policies, subject
to any applicable surrender and withdrawal penalty provisions. We seek to
balance the duration of our invested assets with the estimated duration of
benefit payments arising from contract liabilities.

          Only a small portion of our insurance liabilities have a time for
contractual payment; the majority of such liabilities are payable upon
occurrence of the insured event or upon surrender. Of our total insurance
liabilities at December 31, 2001, approximately 19 percent could be surrendered
by the policyholder without a penalty. Approximately 66 percent could be
surrendered by the policyholder subject to penalty or the release of an
insurance liability in excess of surrender benefits paid. The remaining 15
percent do not provide a surrender benefit.

          Approximately 44 percent of insurance liabilities were subject to
interest rates that may be reset annually; 31 percent have a fixed explicit
interest rate for the duration of the contract; 20 percent have credited rates
which approximate the income earned by the Company; and the remainder have no
explicit interest rate.


                                       64
<PAGE>



          Insurance liabilities for interest-sensitive products by credited rate
(excluding interest rate bonuses for the first policy year only) at December 31,
2001 were as follows (dollars in millions):

<TABLE>
<CAPTION>

       <S>                                                                               <C>        <C>
       Below 4.00 percent.............................................................   $ 4,843.7  (a)
       4.00 percent - 4.50 percent....................................................     3,455.3
       4.50 percent - 5.00 percent....................................................     4,730.8
       5.00 percent - 5.50 percent....................................................     1,659.6
       5.50 percent and above.........................................................     1,098.3
                                                                                         ---------

             Total insurance liabilities on interest-sensitive products...............   $15,787.7
                                                                                         =========
<FN>

------------------
(a)       Includes liabilities related to our equity-indexed annuity products of
          $2,561.7 million. The accumulation value of these annuities is
          credited with interest at an annual guaranteed minimum rate of 3
          percent (or, including the effect of applicable sales loads, a 1.7
          percent compound average interest rate over the term of the contract).
          These annuities provide for potentially higher returns based on a
          percentage of the change in the S&P 500 Index during each year of
          their term. We purchase S&P 500 Call Options in an effort to hedge
          increases to insurance liabilities resulting from increases in the S&P
          500 Index.

</FN>
</TABLE>

          On October 3, 2001, A.M. Best placed our insurance subsidiaries "under
review with negative implications" with respect to their ratings of our life
insurance subsidiaries. We cannot provide any assurance that the ratings of our
insurance subsidiaries will remain at their current level. If such ratings are
downgraded, sales of our insurance products could fall significantly and
existing policyholders may redeem their policies, causing a material and adverse
impact on our financial results and liquidity.

          We believe that the diversity of our investment portfolio and the
concentration of investments in high-quality, liquid securities provide
sufficient liquidity to meet foreseeable cash requirements. At December 31,
2001, we held $2.4 billion of cash and cash equivalents and $17.5 billion of
publicly traded investment grade bonds. Although there is no present need or
intent to dispose of such investments, our life insurance subsidiaries could
readily liquidate portions of their investments, if such a need arose. In
addition, investments could be used to facilitate borrowings under
reverse-repurchase agreements or dollar-roll transactions. Such borrowings have
been used by the life insurance companies from time to time to increase their
return on investments and to improve liquidity.

          Liquidity for finance operations

          Our finance operations require cash to originate finance receivables.
Our primary sources of cash are: (i) the collection of receivable balances; (ii)
proceeds from the issuance of debt, certificates of deposit and securitization
and sales of loans; and (iii) cash provided by operations. During 2001 and the
last half of 2000, the finance segment significantly slowed the origination of
finance receivables. This strategy allowed the finance segment to enhance net
interest margins, to reduce the amount of cash required for new loan
originations, and to transfer cash to the parent company.

          The liquidity needs of our finance operations could increase in the
event of an extended economic slowdown or recession. Loss of employment,
increases in cost-of-living or other adverse economic conditions could impair
the ability of our customers to meet their payment obligations. Higher industry
levels of repossessed manufactured homes may affect recovery rates and result in
decreased cash flows. In addition, in an economic slowdown or recession, our
servicing and litigation costs would probably increase. Any sustained period of
increased delinquencies, foreclosures, losses or increased costs would have an
adverse effect on our liquidity.

          The most significant source of liquidity for our finance operations
has been our ability to finance the receivables we originate in the secondary
markets through loan securitizations. Adverse changes in the securitization
market could impair our ability to originate, purchase and sell loans or other
assets on a favorable or timely basis. Any such impairment could have a material
adverse effect upon our business and results of operations. The securitization
market is sensitive to the credit ratings of Conseco Finance in connection with
our securitization program. A negative change in the credit ratings of Conseco
Finance could have a material adverse effect on our ability to access capital
through the securitization market. Factors considered by the rating agencies in
assigning such ratings include corporate guarantees, payment priority, current
and anticipated credit enhancement levels, quality of the current and expected
servicing, as well as additional factors associated with each distinct asset
type. Market participants' concerns with Conseco Finance's limited financial
flexibility, as reflected by the current senior unsecured ratings, may have an
effect on liquidity in future securitization transactions. In addition, certain
manufactured housing transactions have had ratings actions that have either
lowered the original ratings or placed on credit watch certain debt classes.
These rating actions could have an effect on Conseco Finance's access to
liquidity in the securitization market in the future. In addition, the
securitization market for many types of assets is

                                       65

<PAGE>



relatively undeveloped and may be more susceptible to market fluctuations or
other adverse changes than more developed capital markets. Although we have
alternative sources of funding, principally warehouse and bank credit facilities
as well as loan sales, these alternatives may not be sufficient for us to
continue to originate loans at our current origination levels.

          Under certain securitization structures, we have provided a variety of
credit enhancements, which have taken the form of corporate guarantees (although
we have not provided such guarantees during 2001 and the last half of 2000), but
have also included bank letters of credit, surety bonds, cash deposits and
over-collateralization or other equivalent collateral. When choosing the
appropriate structure for a securitization of loans, we analyze the cash flows
unique to each transaction, as well as its marketability and projected economic
value. The structure of each securitized transaction depends, to a great extent,
on conditions in the fixed-income markets at the time the transaction is
completed, as well as on cost considerations and the availability and
effectiveness of the various enhancement methods.

          During 2001, we completed ten transactions, securitizing over $5.0
billion of finance receivables. Such securitizations were generally executed
under favorable market conditions. Adverse changes in the securitization market
could impair our ability to originate, purchase and sell loans or other assets
on a favorable or timely basis and could have an adverse effect on our
liquidity. We continue to be able to finance loans through: (i) our warehouse
and bank credit facilities; (ii) the sale of securities through securitization
transactions; or (iii) whole-loan sales.

          The market for securities backed by receivables is a cost-effective
source of funds. Conditions in the credit markets during certain prior periods
resulted in less-attractive pricing of certain lower-rated securities typically
included in loan securitization transactions. As a result, we chose to hold
rather than sell some of the securities in the securitization trusts,
particularly securities having corporate guarantee provisions.

          Market conditions in the credit markets for loan securitizations and
loan sales change from time to time. Changes in market conditions could affect
the interest rate spreads we earn on the loans we originate and the cash
provided by our finance operations. We adjust interest rates on our lending
products to strive to maintain our targeted spread in the current interest rate
environment.

          At March 19, 2002, we had $4.0 billion (of which $2.1 billion is
committed) in master repurchase agreements, commercial paper conduit facilities
and other facilities with various banking and investment banking firms for the
purpose of financing our consumer and commercial finance loan production. If we
were unable to securitize our finance receivables, our capacity under these
facilities would have to increase for our loan originations to continue. These
facilities typically provide financing of a certain percentage of the underlying
collateral and are subject to the availability of eligible collateral and, in
many cases, the willingness of the banking firms to continue to provide
financing. Some of these agreements provide for annual terms which are extended
either quarterly or semi-annually by mutual agreement of the parties for an
additional annual term based upon receipt of updated quarterly financial
information. One of our master repurchase agreements (with a committed capacity
of $400.0 million) expires on May 3, 2002. As of December 31, 2001, we had $66.1
million outstanding under this facility. We are in the process of negotiating a
renewal of this facility. Although we expect to be able to obtain replacement
financing when our current facilities expire, there can be no assurance that
financing will be obtainable on favorable terms, if at all. To the extent that
we are unable to arrange any third party or other financing, our loan
origination activities would be adversely affected, which could have a material
adverse effect on our operations, financial results and cash position. At
December 31, 2001, we had borrowed $2.2 billion under these agreements, leaving
$1.8 billion available to borrow (of which approximately $.4 billion is
committed). The average interest rate incurred under such agreements during 2001
was 6.0 percent.

          Our finance segment had senior subordinated notes and medium term
notes with a par value of $201.5 million which mature in 2002 (reflecting debt
repurchases through March 18, 2002). In March 2002, Conseco Finance completed a
tender offer for $75.8 million par value of its senior subordinated notes. In
February 2002, Conseco Finance offered to purchase $167 million of medium term
notes due in September 2002 and $3.7 million due in April 2003 pursuant to a
tender offer. The purchase price for each of the tender offers was 100 percent
of the principal amount of the notes plus accrued interest.

          We continually investigate and pursue alternative and supplementary
methods to finance our lending operations. In late 1998, we began issuing
certificates of deposit through our bank subsidiary. At December 31, 2001, we
had $1,790.3 million of such deposits outstanding which are recorded as
liabilities related to certificates of deposit. The average annual rate paid on
these deposits was 6.0 percent during 2001. We use the proceeds from the
issuance of the certificates of deposit to fund the origination of certain
consumer/credit card finance receivables.

          Our finance segment generated cash flows from operating activities of
$516.7 million during 2001. Such cash flows include cash received from the
securitization trusts of $86.0 million in 2001, including servicing fees of
$71.7 million and

                                       66
<PAGE>



net cash flows from interest-only securities of $14.3 million. Total cash
received from the securitization trusts during 2000 was $311.4 million.

          Based on our current assumptions and expectations as to future events
related to the loans underlying our interest-only securities, we have projected
that the adverse credit loss experience in 2001 will continue into 2002 and then
improve over time. As a result of these assumptions, we project that payments
related to guarantees issued in conjunction with the sales of certain finance
receivables will exceed the gross cash flows from the interest-only securities
by approximately $90 million in 2002 and $60 million in 2003. We project the
gross cash flows from the interest-only securities to exceed the payments
related to guarantees issued in conjunction with the sales of certain finance
receivables by approximately $5 million in 2004, $15 million in 2005, and by
approximately $580 million in all years thereafter. These projected payments are
considered in the projected cash flows we use to value our interest-only
securities. See note 8 to our consolidated financial statements for additional
information about the guarantees.

          In the first quarter of 2002, we entered into various transactions
with Lehman pursuant to which Lehman extended the terms of Conseco Finance's:
(a) warehouse line of $1.2 billion from September 2002 to September 2003, (b)
borrowings with respect to approximately $90 million of miscellaneous assets
("Miscellaneous Borrowings") from January 31, 2002 to June 2003, and (c)
residual line of $.6 billion from February 2003 to February 2004 under which
financing is being provided on our interest-only securities, servicing rights
and retained interests in other subordinated securities issued by the
securitization trusts. We agreed to an amortization schedule by which the
outstanding balance under the Miscellaneous Borrowings is required to be paid by
June 2003. We also entered into a revised agreement governing the movement of
cash from Conseco Finance to the parent company. Conseco Finance and Lehman have
agreed to amend the agreement such that Conseco Finance must maintain liquidity
(i.e., cash and available borrowings, as defined) of at least: (i) $50 million
until March 31, 2003; and (ii) $100 million from and after April 1, 2003.
However, Conseco Finance no longer must meet a minimum liquidity requirement of
$250 million before making interest, principal, dividend or redemption payments
to the parent company.

          Independent rating agencies, financial institutions, analysts and
other interested parties monitor the leverage ratio of our finance segment. Such
ratio (calculated, as discussed with independent rating agencies, as the ratio
of debt to equity of our finance subsidiary calculated on a pro forma basis as
if we had accounted for the securitizations of our finance receivables as
financing transactions throughout the Company's history) was 19-to-1 at December
31, 2001 and 21-to-1 at December 31, 2000.


                                       67

<PAGE>

         Liquidity of Conseco (parent company)

          We have substantial indebtedness. At December 31, 2001, the par value
of our notes payable was $4.1 billion and the par value of Company-obligated
mandatorily redeemable preferred securities of subsidiary trusts was $1.9
billion. We have a recent history of net losses. For the year ended December 31,
2001, on a consolidated basis we had a net loss applicable to common stock of
$418.7 million and interest expense of $1,609.2 million. For the year ended
December 31, 2000, on a consolidated basis, we had a net loss applicable to
common stock of $1,202.2 million and interest expense of $1,453.1 million. Our
earnings before fixed charges, preferred stock dividends and distributions on
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts were inadequate to cover fixed charges by $623.1 million and $1,602.4
million for the years ended December 31, 2001 and 2000, respectively.

          We are a holding company with no business operations of our own. We
depend on our operating subsidiaries for cash to make principal and interest
payments on our debt (including payments to subsidiary trusts to be used for
distributions on Company-obligated mandatorily redeemable preferred securities),
to pay administrative expenses and income taxes. The cash we receive from our
subsidiaries consists of fees for services provided, tax sharing payments,
dividends and surplus debenture interest and principal payments. A deterioration
in any of our significant subsidiaries' financial condition, earnings or cash
flows could limit such subsidiary's ability to pay cash dividends or make other
payments to us, which in turn, would limit our ability to meet our debt service
requirements and satisfy other parent company financial obligations; we do not
anticipate any such deterioration.

          The ability of our insurance subsidiaries to pay dividends is subject
to state insurance department regulations. These regulations generally permit
dividends to be paid from earned surplus of the insurance company for any
12-month period in amounts equal to the greater of (or in a few states, the
lesser of): (i) net gain from operations for the prior year; or (ii) 10 percent
of surplus as of the end of the preceding year. Any dividends in excess of these
levels require the approval of the director or commissioner of the applicable
state insurance department. During the first quarter of 2002, we received
approval from various insurance regulatory authorities to pay dividends to
Conseco of $225.5 million. During the remainder of 2002, we expect to request
permission from the regulatory authorities to pay additional extraordinary
dividends, substantially all of which are related to planned reinsurance
transactions. Such dividends and any other additional dividend payments during
2002 will require the permission of the regulatory authorities.

          In the first quarter of 2002, we amended the credit agreements related
to our $1.5 billion bank credit facility including the changes described below:

          (i)  Financial covenants in the credit agreements require us to
               maintain various financial ratios and balances. These
               requirements were relaxed in the amended agreement. In addition,
               such agreements were amended so that any charges taken to write
               off goodwill to the extent required by SFAS 142 will be excluded
               from the various financial ratios and covenants that we are
               required to meet or maintain. See note 7 to the consolidated
               financial statements for further information on such ratios and
               covenants.

          (ii) The manner in which the proceeds from certain asset sales will be
               used was changed to allow us to make payments on our 2002
               obligations prior to making any principal payments under the bank
               credit agreements. The first $352 million of such proceeds may be
               retained by the Company and will be available to be used to meet
               our other debt obligations. The next $313 million will be applied
               pro rata to the principal payments on the bank credit facility
               and to a segregated cash account to be held as collateral for our
               guarantee of certain bank loans to current and former directors,
               officers and key employees (the "D&O loans"). The next $250
               million will be divided equally between the Company and to pay
               pro rata the principal payments on the bank credit facility and
               the D&O loans. Proceeds in excess of $915 million and all
               proceeds during the period December 31, 2003 through March 31,
               2004, will be divided as follows: (i) 25 percent to be retained
               by the Company; and (ii) 75 percent to pay pro rata the principal
               payments on the bank credit facility and the D&O loans.

          As further described under "Legal Proceedings", seven holders of our
bank debt have challenged the validity of the amendment to the credit agreement
that changes provisions related to mandatory prepayments.


                                       68


<PAGE>



          The $1.5 billion bank credit facility is due December 31, 2003;
however, subject to the absence of any default, the Company may further extend
its maturity to March 31, 2005, provided that: (i) Conseco pays an extension fee
of 3.5 percent of the amount extended; (ii) cumulative principal payments of at
least $200 million have been paid by September 30, 2002 and at least $500
million by September 30, 2003; and (iii) our interest coverage ratio for the
four quarters ended September 30, 2003 is greater than or equal to 2.25 to 1.

          We agreed to a number of covenants and other provisions that restrict
our ability to borrow money and pursue some operating activities without the
prior consent of the lenders under the credit agreements. Those provisions
restrict our ability to use the proceeds of asset sales. We agreed to meet or
maintain various financial ratios and balances. Our ability to meet these
financial tests and maintain ratings may be affected by events beyond our
control. Our credit agreements also limit our ability to issue additional debt,
incur additional contingent obligations, grant liens, dispose of assets, enter
into transactions with affiliates, make certain investments, including in
existing and new businesses, change our businesses, and modify our outstanding
debt and preferred stock. Although we were in compliance with these provisions
as of December 31, 2001, these provisions represent significant restrictions on
the manner in which we may operate our business. If we default under any of
these provisions, the lenders could declare all outstanding borrowings, accrued
interest and fees to be due and payable. If that were to occur, no assurance can
be given that we would have sufficient liquidity to repay our bank indebtedness
in full or any of our other debts.

          In the first quarter of 2002, we entered into various transactions
with Lehman which are described above under "Liquidity for finance operations".
We also entered into a revised agreement governing the movement of cash from
Conseco Finance to the parent company. Conseco Finance and Lehman have agreed to
amend the agreement such that Conseco Finance must maintain liquidity (i.e.,
cash and available borrowings, as defined) of at least: (i) $50 million until
March 31, 2003; and (ii) $100 million from and after April 1, 2003.

          The following summarizes our parent company debt service commitments
at December 31, 2001 (excluding the senior subordinated notes and medium term
notes of our finance segment) (dollars in millions):
<TABLE>
<CAPTION>
                                                                                        Required       Optional
                                                                                        payments       payments     Total
                                                                                        --------       --------    -------
<S>                                                                                        <C>         <C>        <C>

     Conseco 8.5% notes due October 2002.........................................         $302         $ -          $302
     Estimated interest payments on parent company debt..........................          310           -           310
     Distributions on Company-obligated mandatorily redeemable preferred .....
       securities of subsidiary trust (a)........................................           42           130         172
     Optional bank credit facility payment to extend its maturity date payable
       September 2002 (b)........................................................          -             193         193
                                                                                          ----          ----        ----

     Total debt service obligations in 2002......................................         $654          $323        $977
                                                                                          ====          ====        ====
<FN>
-----------------
(a)       Conseco has the right to defer distributions on the preferred
          securities. During the deferral period, distributions continue to
          accumulate on the par amount plus any unpaid distributions at the
          stated distribution rate. We plan to pay distributions of $42.6
          million on April 1, 2002.

(b)       As described elsewhere herein, the 2002 bank credit facility payment
          is optional, but it is one of the requirements to extend the maturity
          date of the facility to March 31, 2005. In addition, the Company would
          be required to make payments pursuant to the credit facility
          agreements based on the proceeds from certain asset sales as described
          above.
</FN>
</TABLE>

                                       69

<PAGE>




          The following is our current plan summarizing the sources of cash
which we expect to have to service our parent company debt and certain other
obligations (net of amounts required to repay the senior notes and medium term
notes of our finance segment due in 2002) during 2002 (dollars in millions):
<TABLE>
<CAPTION>

                                                                                  From our
                                                                                operations or
                                                                                transactions       In process
                                                                                  completed        or planned
                                                                                 and approved     transactions      Total
                                                                                 ------------     ------------    ---------
<S>                                                                                  <C>             <C>            <C>
       Parent company cash on hand at December 31, 2001......................        $152            $ -          $  152
       Insurance and other operations, net of corporate expense..............         300              25            325
       Finance operations (net of debt repayments)...........................          50              -              50
       Reinsurance and sales of certain insurance business...................         110             270            380
       Other non-core asset sales and other..................................          70              23             93
                                                                                     ----            ----          -----
       Total net cash expected to be available to service our debt...........        $682            $318         $1,000
                                                                                     ====            ====         ======
</TABLE>

          We are continuing to access a variety of different options to meet our
2002 obligations. While we currently believe the plan summarized above includes
our best options, we may find other alternatives more appropriate. Therefore,
our plan is subject to change.

          We completed several transactions summarized in the above plan during
the first quarter of 2002. Our insurance subsidiaries received approval from the
appropriate insurance departments to pay to Conseco: (i) dividends of $115
million; and (ii) a dividend of $110.5 million primarily related to a
reinsurance agreement pursuant to which we are ceding 80 percent of the
traditional life business of our subsidiary, Bankers Life & Casualty Company. We
have also entered into a reinsurance agreement pursuant to which we are ceding
100 percent of the traditional and interest-sensitive life insurance business of
our subsidiary, Conseco Variable Insurance Company. Upon receipt of all
regulatory approvals, our insurance subsidiary will receive a ceding commission
of $49.5 million. We also entered into an agreement to sell one of our non-core
insurance subsidiaries. Upon receipt of regulatory approval, another insurance
subsidiary will receive $48.5 million proceeds from the sale.

          Our current plan anticipates that the parent company will receive $50
million from Conseco Finance during 2002. At December 31, 2001, Conseco Finance
had $138.7 million par value of senior notes due in June 2002 and $186.0 million
par value of medium term notes due in September 2002. In March 2002, Conseco
Finance completed a tender offer pursuant to which it purchased $75.8 million
par value of its subordinated notes due June 2002. Also during the first quarter
of 2002, Conseco Finance announced it was tendering all of its remaining public
debt - $167 million due in September 2002 and $4 million due in April 2003. Such
offer expires on April 12, 2002. We believe that the cash flows to be generated
from Conseco Finance's operations and other transactions will be sufficient to
allow them to meet their debt obligations and transfer at least $50 million to
the parent company.

          We believe that the existing cash available to the parent and the cash
flows to be generated from operations and the other transactions summarized
above will be sufficient to allow us to meet our debt obligations through 2002.
We have taken a number of actions over the past two years to reduce parent
company debt and increase the efficiency of our business operations. However,
our results for future periods beyond 2002 are subject to numerous
uncertainties. Our future debt service requirements (including principal
maturities) may exceed cash flows available to the parent from the operations of
our subsidiaries. We may not be able to improve or sustain positive cash flows
from operations. Our liquidity could be significantly affected if improvements
do not occur. Failure to generate sufficient cash flows from operations, asset
sales or financing transactions to meet all of our long-term debt service
requirements would have a material adverse effect on liquidity.

          We have undertaken additional initiatives in 2002 to extend maturities
on our public debt as well as pursue the sale of our investment in the General
Motors Building and other assets. These additional initiatives are not
considered above. We believe the cash estimated to be available at December 31,
2002, plus cash flows to be generated from operations and from these additional
2002 initiatives will permit us to repay our debt maturities in 2003.

                                       70
<PAGE>


          The maturities of the direct debt of the parent company including
amounts related to the Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts at December 31, 2001, (assuming the Company: (i)
does not make the optional debt payments required to extend the maturity date of
the $1.5 billion bank credit facility; and (ii) does make the optional debt
payments required to extend such maturity date) were as follows (dollars in
millions):
<TABLE>
<CAPTION>

                                                                                       (i)                  (ii)
                                                                                    Maturity              Maturity
                                                                                    date not                date
                                                                                    extended              extended
                                                                                    --------              --------
<S>                                                                                <C>                    <C>
2002............................................................................   $  304.1               $  497.4
2003............................................................................    1,806.8                  613.5
2004............................................................................      812.5                  812.5
2005............................................................................      250.0                1,250.0
2006............................................................................      550.0                  550.0
Thereafter......................................................................    2,330.8                2,330.8
                                                                                   --------               --------
    Total par value at December 31, 2001........................................   $6,054.2               $6,054.2
                                                                                   ========               ========
</TABLE>

          The table above excludes any amounts related to our guarantees of bank
loans totaling $545.4 million as of December 31, 2001, to approximately 155
current and former directors, officers and key employees. Such bank loans are
due on December 31, 2003. The funds were used by the participants to purchase
approximately 18.0 million shares of our common stock in open market or
negotiated transactions with independent parties. Such shares are held by the
banks as collateral for the loans. In addition, we have provided loans to
participants for interest on the bank loans totaling $143.6 million. We have
established a non-cash reserve for the exposure we have in connection with such
guarantees and interest loans. At December 31, 2001, our reserve for losses on
the loan guarantees and the interest loans totaled $420.0 million based upon the
value of the collateral and the creditworthiness of the participants. At
December 31, 2001, the guaranteed bank loans and interest loans exceeded the
value of the collateral held and the reserve for losses by approximately $180
million. If we are required to pay on the guarantees when the bank loans become
due on December 31, 2003, it could have a material adverse impact on our
liquidity position.

          The degree of our leverage could have material adverse consequences to
us and the holders of our debt, including the following: (i) our ability to
obtain additional financing in the future for working capital, capital
expenditures or other purposes may be impaired; (ii) a substantial portion of
our cash flow from operations will be required to be dedicated to the payment of
interest expense and principal repayment obligations; (iii) higher interest
rates will cause the interest expense on our variable rate debt to be higher;
(iv) we may be more highly leveraged than other companies with which we compete,
and this may place us at a competitive disadvantage; (v) our degree of leverage
will make us more vulnerable to a downturn in our business or in the general
economy; (vi) our degree of leverage may adversely affect the ratings of our
insurance company subsidiaries which in turn may adversely affect their
competitive position and ability to sell products; and (vii) the ability of our
finance operations to finance the receivables we originate in the secondary
markets through loan securitizations may be impaired.

          Our cash flow may be affected by a variety of factors, many of which
are outside of our control, including insurance and banking regulatory issues,
competition, financial markets and other general business conditions. No
assurance can be given that we will possess sufficient income and liquidity to
meet all of our long-term debt service requirements and other obligations.

          The ratings assigned to Conseco's senior debt and trust preferred
securities are important factors in determining Conseco's ability to access the
public capital markets for additional liquidity. In recent periods, rating
agencies have lowered their ratings on Conseco's senior debt and trust preferred
securities and placed the ratings on review for potential downgrades. As of
March 22, 2002, the rating agencies had assigned the following ratings, all of
which are currently placed on review for potential downgrades: (i) Standard &
Poor's has assigned a "B" rating to Conseco's senior debt and a "CCC" rating to
trust preferred securities; (ii) Fitch Rating Company has assigned a "B-" rating
to Conseco's senior debt and a "CCC" rating to trust preferred securities; and
(iii) Moody's Investor Services has assigned a "B2" rating to Conseco's senior
debt and a "caa2" rating to trust preferred securities. These ratings make it
difficult for Conseco to issue additional securities in the public markets.

          INFLATION

          Inflation does not have a significant effect on our balance sheet; we
have minimal investments in property, equipment or inventories. To the extent
that interest rates may change to reflect inflation or inflation expectations,
there would be an effect on our balance sheet and operations. Lower interest
rates will typically result in increased value of our fixed maturities
investment and may have increased the amount of new finance receivables
originated. Lower rates may also make it more difficult to issue new fixed rate
annuities and may accelerate prepayments of finance receivables. Rising interest
rates will typically result in decreased value of our fixed maturities
investments and may slow the issuance of new finance receivables and the
prepayment of existing finance receivables. Changes in interest rates can also
affect the value of the finance receivables we hold.

          Medical cost inflation has had a significant impact on our
supplemental health operations. Generally, these costs have increased more
rapidly than the Consumer Price Index. Medical costs will likely continue to
rise. The impact of medical cost inflation on our operations depends on our
ability to increase premium rates. Such increases are subject to approval by
state insurance departments. We seek to price our new standardized supplement
plans to reflect the impact of these filings and the lengthening of the period
required to implement rate increases.



                                       71

<PAGE>

          MARKET-SENSITIVE INSTRUMENTS AND RISK MANAGEMENT

          Insurance and fee-based

          Our spread-based insurance business is subject to several inherent
risks arising from movements in interest rates, especially if we fail to
anticipate or respond to such movements. First, interest rate changes can cause
compression of our net spread between interest earned on investments and
interest credited on customer deposits, thereby adversely affecting our results.
Second, if interest rate changes produce an unanticipated increase in surrenders
of our spread-based products, we may be forced to sell investment assets at a
loss in order to fund such surrenders. At December 31, 2001, approximately 19
percent of our total insurance liabilities (or approximately $4.8 billion) could
be surrendered by the policyholder without penalty. Finally, changes in interest
rates can have significant effects on the performance of our mortgage-backed
securities portfolio, including collateralized mortgage obligations, as a result
of changes in the prepayment rate of the loans underlying such securities. We
follow asset/liability strategies that are designed to mitigate the effect of
interest rate changes on our profitability. However, there can be no assurance
that management will be successful in implementing such strategies and achieving
adequate investment spreads.

          We seek to invest our available funds in a manner that will maximize
shareholder value and fund future obligations to policyholders and debtors,
subject to appropriate risk considerations. We seek to meet this objective
through investments that: (i) have similar characteristics to the liabilities
they support; (ii) are diversified among industries, issuers and geographic
locations; and (iii) make up a predominantly investment-grade fixed maturity
securities portfolio. Many of our products incorporate surrender charges, market
interest rate adjustments or other features to encourage persistency.

          We seek to maximize the total return on our investments through active
investment management. Accordingly, we have determined that our entire portfolio
of fixed maturity securities is available to be sold in response to: (i) changes
in market interest rates; (ii) changes in relative values of individual
securities and asset sectors; (iii) changes in prepayment risks; (iv) changes in
credit quality outlook for certain securities; (v) liquidity needs; and (vi)
other factors. From time to time, we invest in securities for trading purposes,
although such investments account for a relatively small portion of our total
portfolio.

          The profitability of many of our products depends on the spreads
between the interest yield we earn on investments and the rates we credit on our
insurance liabilities. In addition, changes in competition and other factors,
including the impact of the level of surrenders and withdrawals, may limit our
ability to adjust or to maintain crediting rates at levels necessary to avoid
narrowing of spreads under certain market conditions. Approximately 44 percent
of our insurance liabilities were subject to interest rates that may be reset
annually; 31 percent have a fixed explicit interest rate for the duration of the
contract; 20 percent have credited rates which approximate the income earned by
the Company; and the remainder have no explicit interest rates. As of December
31, 2001, the average yield, computed on the cost basis of our investment
portfolio, was 7.0 percent, and the average interest rate credited or accruing
to our total insurance liabilities (excluding interest rate bonuses for the
first policy year only and excluding the effect of credited rates attributable
to variable or equity-indexed products) was 5.0 percent.

          We use computer models to simulate the cash flows expected from our
existing insurance business under various interest rate scenarios. These
simulations help us to measure the potential gain or loss in fair value of our
interest rate-sensitive financial instruments. With such estimates, we seek to
closely match the duration of our assets to the duration of our liabilities.
When the estimated durations of assets and liabilities are similar, exposure to
interest rate risk is minimized because a change in the value of assets should
be largely offset by a change in the value of liabilities. At December 31, 2001,
the adjusted modified duration of our fixed maturity securities and short-term
investments was approximately 6.7 years and the duration of our insurance
liabilities was approximately 6.5 years. We estimate that our fixed maturity
securities and short-term investments (net of corresponding changes in the value
of cost of policies purchased, cost of policies produced and insurance
liabilities) would decline in fair value by approximately $555 million if
interest rates were to increase by 10 percent from their December 31, 2001
levels. This compares to a decline in fair value of $590 million based on
amounts and rates at December 31, 2000. The calculations involved in our
computer simulations incorporate numerous assumptions, require significant
estimates and assume an immediate change in interest rates without any
management of the investment portfolio in reaction to such change. Consequently,
potential changes in value of our financial instruments indicated by the
simulations will likely be different from the actual changes experienced under
given interest rate scenarios, and the differences may be material. Because we
actively manage our investments and liabilities, our net exposure to interest
rates can vary over time.

          The operations of the Company are subject to risk resulting from
fluctuations in market prices of our equity securities and venture-capital
investments. In general, these investments have more year-to-year price
variability than our

                                       72
<PAGE>



fixed maturity investments. However, returns over longer time frames have been
consistently higher. We manage this risk by limiting our equity securities and
venture-capital investments to a relatively small portion of our total
investments.

          Our investment in S&P 500 Call Options is closely matched with our
obligation to equity-indexed annuity holders. Market value changes associated
with that investment are substantially offset by an increase or decrease in the
amounts added to policyholder account balances for equity-indexed products.

          Finance

          Profitability may be directly affected by the level of and
fluctuations in interest rates which affect our ability to earn a spread between
interest received on loans and the costs of liabilities. While we monitor the
interest rate environment, our financial results could be adversely affected by
changes in interest rates. During periods of increasing interest rates, we
generally experience market pressure to reduce servicing spreads in our
financing operations. In addition, an increase in interest rates may decrease
the demand for consumer credit. A substantial and sustained increase in interest
rates could, among other things: (i) adversely affect our ability to purchase or
originate loans or other assets; (ii) reduce the average size of loans
underwritten; and (iii) increase securitization funding costs. A significant
decline in interest rates could decrease the size of our loan servicing
portfolio by increasing the level of loan prepayments, thereby shortening the
life and impairing the value of our interest-only securities. Fluctuating
interest rates also may affect our net interest income earned resulting from the
difference between the yield to us on loans held pending securitization and the
cost of funds obtained by us to finance such loans.

          We substantially reduce interest rate risk of our finance operations
by funding most of the loans we make through securitization transactions. The
finance receivables transferred in these transactions and the asset-backed
securities purchased by investors generally both have fixed rates. Principal
payments on the assets are passed through to investors in the securities as
received, thereby reducing interest rate exposure in these transactions that
might otherwise arise from maturity mismatches between debt instruments and
assets.

          Subsequent to September 8, 1999, we no longer structure the
securitizations of the loans we originate in a manner that results in
gain-on-sale revenues. Our new securitizations are being structured as secured
borrowings. Prior to September 8, 1999, we retained interests in the finance
receivables sold through investments in interest-only securities that are
subordinated to the rights of other investors. Interest-only securities do not
have a stated maturity or amortization period. The expected amount of the cash
flow as well as the timing depends on the performance of the underlying
collateral supporting each securitization. The actual cash flow of these
instruments could vary substantially if performance is different from our
assumptions. We develop assumptions to value these investments by analyzing past
portfolio performance, current loan characteristics, current and expected market
conditions and the expected effect of our actions to mitigate adverse
performance. Assumptions used as of December 31, 2001, are summarized in the
notes to the consolidated financial statements.

          We use computer models to simulate the cash flows (including any
potential payments related to the guarantees of certain lower rated securities
issued by the securitization trusts) expected from our retained interests in
securitization trusts (including interest-only securities) under various
interest rate scenarios. These simulations help us to measure the potential gain
or loss in fair value of these financial instruments, including the effects of
changes in interest rates on prepayments. We estimate that our retained
interests would decline in fair value by approximately $60 million if interest
rates were to decrease by 10 percent from their December 31, 2001 levels. This
compares to a decline in fair value of approximately $70 million based on
amounts and rates at December 31, 2000. The calculations involved in our
computer simulations incorporate numerous assumptions, require significant
estimates and assume an immediate change in interest rates without any
management of the interest-only securities in reaction to such change.
Consequently, potential changes in value of our retained interests indicated by
the simulations will likely be different from the actual changes experienced
under given interest rate scenarios, and the differences may be material. See
the note to the consolidated financial statement entitled "Finance Receivables
and Retained Interests in Securitization Trusts" for a summary of the key
economic assumptions used to determine the estimated fair value of all of our
retained interests in securitizations and the sensitivity of the current fair
value of cash flows to immediate 10 percent and 20 percent changes in those
assumptions.

          We estimate that our finance receivables (including both "finance
receivables" and "finance receivables-securitized") would decline in fair value
by approximately $362.3 million if interest rates were to increase by 10 percent
from their December 31, 2001 levels. This compares to a decline in fair value of
$308.8 million based on amounts and rates at December 31, 2000. The increase in
the estimated decline corresponds with the increase to our finance receivable
balances.

          Our finance receivables are primarily funded with the fixed rate
asset-backed securities purchased by investors in our securitizations and
floating-rate debt. Such borrowings included bank credit facilities, master
repurchase agreements and

                                       73

<PAGE>



the notes payable related to securitized finance receivables structured as
collateralized borrowings ($12.0 billion of which was at fixed rates and $5.1
billion of which was at floating rates). Based on the interest rate exposure and
prevalent rates at December 31, 2001, a relative 10 percent decrease in interest
rates would increase the fair value of the finance segment's fixed-rate borrowed
capital by approximately $262.6 million. The interest expense on this segment's
floating-rate debt will fluctuate as prevailing interest rates change. The
Company is exposed to market risk from the time a loan is originated to the time
the loan is financed in a securitization transaction as interest rates may
fluctuate during such period of time.

          Corporate

          We manage the ratio of borrowed capital to total capital and the
portion of our outstanding capital subject to fixed and variable rates, taking
into consideration the current interest rate environment and other market
conditions. Our borrowed capital at December 31, 2001, included notes payable
and Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts totaling $6.1 billion ($4.6 billion of which is at fixed rates and $1.5
billion of which is at floating rates). Based on the interest rate exposure and
prevalent rates at December 31, 2001, a relative 10 percent decrease in interest
rates would increase the fair value of our fixed-rate borrowed capital by
approximately $13 million. This compares to a $38 million increase based on our
borrowed capital and prevalent rates at December 31, 2000. Our interest expense
on floating-rate debt will fluctuate as prevailing interest rates change.

          The fair value of our borrowed capital also varies with credit ratings
and other conditions in the capital markets. Following the events that occurred
during 2000 and 2001 concerning plans to explore the sale of Conseco Finance and
other events described elsewhere herein, the capital markets reacted by lowering
the value of our publicly traded securities. In addition, the capital markets
have also lowered the value of the securities issued in previous securitization
transactions of Conseco Finance.


          ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

          The information included under the caption "Market-Sensitive
Instruments and Risk Management" in "Item 7. Management's Discussion and
Analysis of Consolidated Financial Condition and Results of Operations" is
incorporated herein by reference.



                                       74

<PAGE>



          ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                   Index to Consolidated Financial Statements
<TABLE>
<CAPTION>


                                                                                                                       Page
                                                                                                                       ----
<S>                                                                                                                     <C>

Report of Independent Accountants.......................................................................................76

Consolidated Balance Sheet at December 31, 2001 and 2000................................................................77

Consolidated Statement of Operations for the years ended
    December 31, 2001, 2000 and 1999....................................................................................79

Consolidated Statement of Shareholders' Equity
    for the years ended December 31, 2001, 2000 and 1999................................................................81

Consolidated Statement of Cash Flows for the years ended
    December 31, 2001, 2000 and 1999....................................................................................84

Notes to Consolidated Financial Statements..............................................................................85
</TABLE>





                                       75

<PAGE>












                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors
  and Shareholders of
  Conseco, Inc.


          In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, shareholders' equity and cash
flows present fairly, in all material respects, the financial position of
Conseco, Inc. and subsidiaries at December 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

          As discussed in note 1 to the consolidated financial statements, the
Company adopted EITF Issue No. 99-20, "Recognition of Interest Income and
Impairment on Purchased and Retained Beneficial Interests in Securitized
Financial Assets" in 2000.


                                         /s/ PricewaterhouseCoopers LLP
                                        ---------------------------------
                                             PricewaterhouseCoopers LLP



Indianapolis, Indiana
March 29, 2002


















                                       76


<PAGE>
                         CONSECO, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                           December 31, 2001 and 2000
                              (Dollars in millions)


                                     ASSETS

<TABLE>
<CAPTION>



                                                                                            2001              2000
                                                                                            ----              ----
<S>                                                                                      <C>               <C>

Investments:
    Actively managed fixed maturities at fair value (amortized cost:
       2001 - $23,127.8; 2000 - $22,930.2).............................................  $22,347.0         $21,755.1
    Interest-only securities at fair value (amortized cost: 2001 - $131.3;
       2000 - $431.2)..................................................................      141.7             432.9
    Equity securities at fair value (cost: 2001 - $257.3; 2000 - $286.8)...............      227.0             248.3
    Mortgage loans.....................................................................    1,228.0           1,238.6
    Policy loans.......................................................................      635.8             647.2
    Venture capital investment in TeleCorp PCS, Inc.
       (cost: 2001 - $39.0; 2000 - $53.2)..............................................      155.3             258.6
    Other invested assets .............................................................      292.4             436.9
                                                                                         ----------        ---------

          Total investments............................................................   25,027.2          25,017.6

Cash and cash equivalents:
    Held by the parent company.........................................................      152.2             294.0
    Held by the parent company in segregated accounts..................................       54.7              81.9
    Held by subsidiaries...............................................................    2,853.9           1,287.7
Accrued investment income..............................................................      688.6             643.3
Finance receivables....................................................................    3,810.7           3,865.0
Finance receivables - securitized......................................................   14,198.5          12,622.8
Cost of policies purchased.............................................................    1,657.8           1,954.8
Cost of policies produced..............................................................    2,570.2           2,480.5
Reinsurance receivables................................................................      663.0             669.4
Goodwill...............................................................................    3,695.4           3,800.8
Income tax assets......................................................................      678.1             647.2
Assets held in separate accounts and investment trust..................................    2,376.3           2,610.1
Cash held in segregated accounts for investors.........................................      550.2             551.3
Cash held in segregated accounts related to servicing agreements and
    securitization transactions........................................................      994.6             866.7
Other assets...........................................................................    1,420.9           1,196.1
                                                                                         ---------         ---------

          Total assets.................................................................  $61,392.3         $58,589.2
                                                                                         =========         =========
</TABLE>



                            (continued on next page)









                   The accompanying notes are an integral part
                    of the consolidated financial statements.


                                       77

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEET (Continued)
                           December 31, 2001 and 2000
                              (Dollars in millions)


                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>



                                                                                            2001              2000
                                                                                            ----              ----
<S>                                                                                      <C>               <C>

Liabilities:
    Liabilities for insurance and asset accumulation products:
       Interest-sensitive products.....................................................  $15,787.7         $16,123.2
       Traditional products............................................................    8,172.8           7,875.1
       Claims payable and other policyholder funds.....................................    1,005.5           1,026.1
       Liabilities related to separate accounts and investment trust...................    2,376.3           2,610.1
       Liabilities related to certificates of deposit..................................    1,790.3           1,873.3
    Investor payables..................................................................      550.2             551.3
    Other liabilities..................................................................    1,699.3           1,565.5
    Investment borrowings..............................................................    2,242.7             219.8
    Notes payable:
       Direct corporate obligations....................................................    4,087.6           5,055.0
       Direct finance obligations:
          Master repurchase agreements.................................................    1,670.8           1,802.4
          Credit facility collateralized by retained interests in securitizations......      507.3             590.0
          Other borrowings.............................................................      349.8             418.5
       Related to securitized finance receivables structured as collateralized
          borrowings...................................................................   14,484.5          12,100.6
                                                                                         ---------         ---------

            Total liabilities..........................................................   54,724.8          51,810.9
                                                                                         ---------         ---------

Minority interest:
    Company-obligated mandatorily redeemable preferred securities
       of subsidiary trusts............................................................    1,914.5           2,403.9

Shareholders' equity:
    Preferred stock....................................................................      499.6             486.8
    Common stock and additional paid-in capital (no par value, 1,000,000,000 shares
       authorized, shares issued and outstanding: 2001 - 344,743,196;
       2000 - 325,318,457).............................................................    3,484.3           2,911.8
    Accumulated other comprehensive loss...............................................     (439.0)           (651.0)
    Retained earnings..................................................................    1,208.1           1,626.8
                                                                                         ---------         ---------

            Total shareholders' equity.................................................    4,753.0           4,374.4
                                                                                         ---------         ---------

            Total liabilities and shareholders' equity.................................  $61,392.3         $58,589.2
                                                                                         =========         =========
</TABLE>










                   The accompanying notes are an integral part
                    of the consolidated financial statements.


                                       78

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
              for the years ended December 31, 2001, 2000 and 1999
                  (Dollars in millions, except per share data)

<TABLE>
<CAPTION>


                                                                           2001              2000             1999
                                                                           ----              ----             ----
<S>                                                                      <C>             <C>                <C>


Revenues:
    Insurance policy income............................................  $4,065.7        $ 4,220.3          $4,040.5
    Net investment income:
       Insurance and fee-based segment general account assets..........   1,811.2          1,919.6           1,987.8
       Finance segment assets..........................................   2,292.1          2,013.5             817.7
       Equity-indexed and separate account products....................    (286.4)           135.0             218.8
       Venture capital income (loss) related to investment
          in TeleCorp PCS, Inc.........................................     (42.9)          (199.5)            354.8
       Other ..........................................................      20.9             51.8              32.3
    Gain on sale of finance receivables................................      26.9              7.5             550.6
    Gain on sale of interest in riverboat..............................     192.4             -                  -
    Net realized investment losses.....................................    (413.7)          (358.3)           (156.2)
    Fee revenue and other income.......................................     441.9            506.5             489.4
                                                                         --------        ---------          --------

          Total revenues...............................................   8,108.1          8,296.4           8,335.7
                                                                         --------        ---------          --------

Benefits and expenses:
    Insurance policy benefits..........................................   3,506.8          4,071.0           3,815.9
    Provision for losses...............................................     733.2            585.7             147.6
    Interest expense...................................................   1,609.2          1,453.1             561.7
    Amortization.......................................................     800.5            687.2             752.1
    Other operating costs and expenses.................................   1,389.0          1,646.2           1,353.2
    Special charges....................................................     101.9            699.3                -
    Impairment charges.................................................     386.9            515.7             554.3
                                                                         --------        ---------          --------

           Total benefits and expenses.................................   8,527.5          9,658.2           7,184.8
                                                                         --------        ---------          --------

           Income (loss) before income taxes, minority interest, extraordinary
              gain (loss) and cumulative effect of
              accounting change........................................    (419.4)        (1,361.8)          1,150.9

Income tax expense (benefit)...........................................    (115.8)          (376.2)            423.1
                                                                         --------        ---------          --------

           Income (loss) before minority interest, extraordinary
              gain (loss) and cumulative effect of accounting change...    (303.6)          (985.6)            727.8

Minority interest:
    Distributions on Company-obligated mandatorily redeemable
       preferred securities of subsidiary trusts, net of income taxes..     119.5            145.3             132.8
                                                                         --------        ---------          --------

           Income (loss) before extraordinary gain (loss) and
              cumulative effect of accounting change ..................    (423.1)        (1,130.9)            595.0

Extraordinary gain (loss) on extinguishment of
    debt, net of income taxes..........................................      17.2             (5.0)               -
Cumulative effect of accounting change, net of income taxes............        -             (55.3)               -
                                                                         ---------       ---------          --------

           Net income (loss)...........................................    (405.9)        (1,191.2)            595.0

Preferred stock dividends..............................................      12.8             11.0               1.5
                                                                         --------        ---------          --------

           Net income (loss) applicable to common stock................  $ (418.7)       $(1,202.2)         $  593.5
                                                                         ========        =========          ========
</TABLE>

                                   (continued)


                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       79

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF OPERATIONS (Continued)
              for the years ended December 31, 2001, 2000 and 1999
                  (Dollars in millions, except per share data)
<TABLE>
<CAPTION>


                                                                           2001            2000             1999
                                                                           ----            ----             ----
<S>                                                                   <C>              <C>               <C>

Earnings per common share:
    Basic:
       Weighted average shares outstanding........................... 338,145,000      325,953,000       324,635,000
       Income (loss) before extraordinary gain (loss) and cumulative
         effect of accounting change ................................      $(1.29)          $(3.51)            $1.83
       Extraordinary gain (loss) on extinguishment of debt...........         .05             (.01)              -
       Cumulative effect of accounting change........................         -               (.17)              -
                                                                           ------           ------             -----

         Net income (loss)...........................................      $(1.24)          $(3.69)            $1.83
                                                                           ======           ======             =====

    Diluted:
       Weighted average shares outstanding........................... 338,145,000      325,953,000       332,893,000
       Income (loss) before extraordinary gain (loss) and cumulative
         effect of accounting change.................................      $(1.29)          $(3.51)            $1.79
       Extraordinary gain (loss) on extinguishment of debt ..........         .05             (.01)              -
       Cumulative effect of accounting change........................         -               (.17)              -
                                                                           ------           ------             -----

         Net income (loss)...........................................      $(1.24)          $(3.69)            $1.79
                                                                           ======           ======             =====
</TABLE>
































                   The accompanying notes are an integral part
                    of the consolidated financial statements.


                                       80

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)
<TABLE>
<CAPTION>



                                                                                   Common stock     Accumulated other
                                                                       Preferred  and additional      comprehensive   Retained
                                                              Total      stock    paid-in capital         loss        earnings
                                                              -----      -----    ---------------         ----        --------
<S>                                                        <C>            <C>         <C>                <C>           <C>


Balance, December 31, 1998 ............................... $5,273.6       $105.5      $2,736.5           $ (28.4)      $2,460.0

   Comprehensive loss, net of tax:
     Net income...........................................    595.0                                                       595.0
     Change in unrealized depreciation
       of investments (net of applicable income tax
       benefit of $427.4).................................   (743.2)          -             -              (743.2)           -
                                                           --------

         Total comprehensive loss.........................   (148.2)

   Issuance of common shares..............................    209.6           -          209.6                -              -
   Issuance of convertible preferred shares...............    478.4        478.4            -                 -
   Tax benefit related to issuance of shares under
     stock option plans...................................     25.0           -           25.0                -              -
   Conversion of preferred stock into common
     shares...............................................       -        (105.5)        105.5                -              -
   Cost of shares acquired................................    (89.5)          -          (89.5)               -              -
   Dividends on preferred stock...........................     (1.5)          -             -                 -            (1.5)
   Dividends on common stock..............................   (191.2)          -             -                 -          (191.2)
                                                           --------       ------      --------           -------       --------

Balance, December 31, 1999................................ $5,556.2       $478.4      $2,987.1           $(771.6)      $2,862.3
</TABLE>



                          (continued on following page)





















                   The accompanying notes are an integral part
                    of the consolidated financial statements.


                                       81

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Continued)
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)
<TABLE>
<CAPTION>



                                                                                   Common stock     Accumulated other
                                                                       Preferred  and additional      comprehensive   Retained
                                                              Total      stock    paid-in capital         loss        earnings
                                                              -----      -----    ---------------         ----        --------
<S>                                                         <C>           <C>         <C>               <C>           <C>

Balance, December 31, 1999 (carried forward
   from prior page).......................................  $5,556.2      $478.4      $2,987.1          $(771.6)     $ 2,862.3

   Comprehensive loss, net of tax:
     Net loss.............................................  (1,191.2)         -             -                -        (1,191.2)
     Change in unrealized depreciation
       of investments (net of applicable income tax
       expense of $72.0)..................................     120.6          -             -             120.6             -
                                                            --------

         Total comprehensive loss.........................  (1,070.6)

   Issuance of common shares for stock options and for
     employee benefit plans...............................       6.6          -            6.6               -              -
   Issuance of convertible preferred shares...............       8.4         8.4            -                -              -
   Issuance of warrants...................................      21.0          -           21.0               -              -
   Settlement of forward contract.........................     (90.5)         -          (90.5)              -              -
   Cost of shares acquired................................     (12.4)         -          (12.4)              -              -
   Dividends on preferred stock...........................     (11.0)         -             -                -           (11.0)
   Dividends on common stock..............................     (33.3)         -             -                -           (33.3)
                                                            --------      ------      --------          --------     ---------

Balance, December 31, 2000................................  $4,374.4      $486.8      $2,911.8           $(651.0)    $ 1,626.8
</TABLE>




                          (continued on following page)






















                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       82

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Continued)
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)

<TABLE>
<CAPTION>



                                                                               Common stock      Accumulated other
                                                                   Preferred  and additional       comprehensive     Retained
                                                          Total      stock    paid-in capital          loss          earnings
                                                          -----      -----    ---------------          ----          --------
<S>                                                    <C>          <C>         <C>                <C>               <C>


Balance, December 31, 2000 (carried forward
       from prior page)..............................  $4,374.4     $486.8      $2,911.8           $(651.0)          $1,626.8

   Comprehensive loss, net of tax:
     Net loss........................................    (405.9)        -             -                 -              (405.9)
     Change in unrealized depreciation of
       investments (net of applicable income tax
       expense of $121.8)............................     212.0         -             -              212.0                 -
                                                       --------

         Total comprehensive loss....................    (193.9)

   Issuance of shares pursuant to stock purchase
     contracts related to FELINE PRIDES..............     496.6         -          496.6                -                  -
   Issuance of shares pursuant to acquisition of
     ExlService.com, Inc.............................      52.1         -           52.1                -
   Issuance of shares for stock options and for
     employee benefit plans..........................      23.8         -           23.8                -                  -
   Payment-in-kind dividends on convertible
     preferred stock.................................      12.8       12.8            -                 -                  -
   Dividends on preferred stock......................     (12.8)        -             -                 -               (12.8)
                                                       --------     ------      --------           -------           --------

Balance, December 31, 2001...........................  $4,753.0     $499.6      $3,484.3           $(439.0)          $1,208.1
                                                       ========     ======      ========           =======           ========
</TABLE>

























                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       83

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)

<TABLE>
<CAPTION>


                                                                                             2001          2000         1999
                                                                                             ----          ----         ----
<S>                                                                                       <C>           <C>           <C>

Cash flows from operating activities:
   Insurance policy income.............................................................  $  3,518.8     $  3,634.4   $  3,635.4
   Net investment income...............................................................     3,930.3        3,870.2      2,872.0
   Points and origination fees.........................................................          -              -         390.0
   Fee revenue and other income........................................................       398.3          522.1        499.9
   Insurance policy benefits...........................................................    (2,792.8)      (2,686.5)    (2,675.8)
   Interest expense....................................................................    (1,570.5)      (1,331.6)      (533.6)
   Policy acquisition costs............................................................      (667.0)        (794.2)      (819.4)
   Special charges.....................................................................       (29.5)        (216.3)       (20.9)
   Other operating costs...............................................................    (1,492.7)      (1,751.2)    (1,306.3)
   Taxes...............................................................................        29.8          (41.6)      (252.7)
                                                                                         ----------     ----------   ----------

       Net cash provided by operating activities.......................................     1,324.7        1,205.3      1,788.6
                                                                                         ----------     ----------   ----------

Cash flows from investing activities:
   Sales of investments................................................................    24,179.7        6,987.5     15,811.6
   Maturities and redemptions of investments...........................................     1,381.4          825.5      1,056.8
   Purchases of investments............................................................   (25,509.5)      (7,952.6)   (18,957.4)
   Cash received from the sale of finance receivables, net of expenses.................       867.2        2,501.2      9,516.6
   Principal payments received on finance receivables..................................     8,611.3        8,490.1      7,402.4
   Finance receivables originated......................................................   (12,320.3)     (18,515.9)   (24,650.5)
   Other...............................................................................      (136.7)        (165.2)        36.8
                                                                                         ----------     ----------   ----------

       Net cash used by investing activities ..........................................    (2,926.9)      (7,829.4)    (9,783.7)
                                                                                         ----------     ----------   ----------

Cash flows from financing activities:
   Amounts received for deposit products...............................................     4,204.8        4,966.7      3,935.0
   Withdrawals from deposit products...................................................    (4,489.4)      (4,545.9)    (3,029.6)
   Issuance of notes payable and commercial paper......................................    12,160.5       22,548.9     21,219.7
   Payments on notes payable and commercial paper......................................   (10,480.5)     (14,416.2)   (14,657.5)
   Change in cash held in restricted accounts for settlement of borrowings.............      (241.8)        (689.7)       (76.8)
   Investment borrowings...............................................................     2,022.9         (609.1)      (127.3)
   Issuance of Company-obligated mandatorily redeemable preferred securities of
     subsidiary trusts.................................................................          -              -         534.3
   Repurchase of Company-obligated mandatorily redeemable preferred
     securities of subsidiary trusts...................................................          -          (250.0)         -
   Issuance of common and convertible preferred shares.................................         4.1             .8        588.4
   Payments for settlement of forward contract and to repurchase equity securities.....          -          (102.6)       (29.5)
   Dividends on common and preferred shares and distributions on
     Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts.........................................      (181.2)        (302.1)      (379.4)
                                                                                         ----------     ----------   ----------

       Net cash provided by financing activities.......................................     2,999.4        6,600.8      7,977.3
                                                                                         ----------     ----------   ----------

       Net increase (decrease) in cash and cash equivalents............................     1,397.2          (23.3)       (17.8)

Cash and cash equivalents, beginning of year...........................................     1,663.6        1,686.9      1,704.7
                                                                                         ----------     ----------   ----------

Cash and cash equivalents, end of year.................................................  $  3,060.8     $  1,663.6   $  1,686.9
                                                                                         ==========     ==========   ==========
</TABLE>




                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       84

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:

          Description of Business

          Conseco, Inc. ("we", "Conseco" or the "Company") is a financial
services holding company with subsidiaries operating throughout the United
States. Our insurance subsidiaries develop, market and administer supplemental
health insurance, annuity, individual life insurance and other insurance
products. Our finance subsidiaries originate, securitize and service
manufactured housing, home equity, home improvement, retail credit and floorplan
loans made by the Company (references to loans made by the Company include both
cash advances and purchases of obligations). Conseco's operating strategy is to
grow its business by focusing its resources on the development and expansion of
profitable products and strong distribution channels, to seek to achieve
superior investment returns through active asset management and to control
expenses.

          During the last two years, Conseco has taken a number of actions
designed to reduce parent company debt and increase the efficiency of our
business operations. The actions with respect to Conseco Finance Corp. ("Conseco
Finance", formerly Green Tree Financial Corporation prior to its name change in
November 1999), a wholly owned subsidiary of Conseco, include: (i) the sale,
closing or runoff of several business units (including asset-based lending,
vendor leasing, bankcards, transportation and park construction and floorplan
lending); (ii) monetization of certain on-balance sheet financial assets through
sales or as collateral for additional borrowings; and (iii) cost savings and
restructuring of ongoing businesses such as streamlining of loan origination
operations in the manufactured housing and home equity divisions. In early 2002,
Conseco Finance announced its decision to reduce the size of its floorplan
lending business. The actions with respect to our life insurance segment
include: (i) the planned sale of our variable insurance business, which has been
designated for sale because of its lack of synergy with our targeted middle
market consumer; (ii) planned reinsurance transactions of various insurance
blocks; and (iii) the division of our insurance segment into two operating
units: the first, based in Carmel, Indiana, includes our professional
independent producer distribution channel and the other, based in Chicago,
Illinois, includes our career agents and direct marketing distribution channels.
With respect to all of our business segments, we have initiated actions to
improve productivity and quality through our "Process Excellence" program.
Through a combination of reduced expenses, revenue enhancement projects and
better deployment of capital, the Process Excellence improvements are intended
to help us achieve our financial goals. Other planned changes include moving a
significant number of jobs to India, where a highly-educated, low-cost,
English-speaking labor force is available. We have also completed the sale of
certain non-strategic assets, such as our interest in the riverboat casino in
Lawrenceburg, Indiana and our subprime auto loan portfolio. Our recent efforts
have been focused primarily on generating cash to meet our 2002 debt service
commitments. See note 2 for a discussion of the current business conditions and
liquidity considerations of the Company.

          During 2001 and 2002, we began the process of non-renewing our major
medical lines of business. These lines of business are referred to herein as the
"discontinued major medical business". These actions had a significant effect on
the Company's operating results during 2001 and 2000. These lines had pre-tax
losses of $130.4 million in 2001 (including a write off of $77.4 million of the
cost of policies produced and the cost of policies purchased related to this
business that is not recoverable) and $51.3 million in 2000.

          Basis of Presentation

          The following summary explains the significant accounting policies we
use to prepare our financial statements. We prepare our financial statements in
accordance with generally accepted accounting principles ("GAAP"). We follow the
accounting standards established by the Financial Accounting Standards Board
("FASB"), the American Institute of Certified Public Accountants and the
Securities and Exchange Commission.

          Consolidation issues. On July 31, 2001, we completed the acquisition
of ExlService.com, Inc. ("Ex1"), a firm that specializes in customer service and
backroom outsourcing with operations in India. We issued 3.4 million shares of
our common stock in exchange for Ex1's common stock. The total value of the
transaction is approximately $52.1 million. The Conseco Board of Directors
(without Gary C. Wendt, the Company's Chief Executive Officer, voting) approved
the transaction, after receiving the recommendation of a special committee of
outside directors. Mr. Wendt was one of the founders of Exl. Mr. Wendt and his
wife owned 20.3 percent of Exl and his other relatives owned an additional 9.4
percent. Mr. Wendt and his wife received 692,567 shares of Conseco common stock
in the transaction (worth approximately $9.7 million at the time the agreement
was negotiated). However, these shares remain restricted until Conseco recovers
its $52.1

                                       85

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


million acquisition price through cost savings achieved by transferring work to
Exl and/or pre-tax profits from services provided to third parties by Exl. The
shares also become unrestricted upon a change of control of 51 percent of the
outstanding shares of Conseco common stock.

          Statement of Financial Accounting Standards No. 141, "Business
Combinations" ("SFAS 141") eliminates the pooling-of-interests method of
accounting for business combinations initiated after July 1, 2001 and also
changes the criteria used to recognize intangible assets apart from goodwill. We
were required to apply these new rules in accounting for the Exl acquisition.
Pursuant to these rules, in the Exl acquisition Conseco acquired: (i) goodwill
with a value of $38.6 million, which has an indeterminate life; and (ii) other
intangible assets with a value of $7.5 million, which are expected to have an
average life of approximately 5 years. Pursuant to SFAS 141 and Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
("SFAS 142") described below under "Recently Issued Accounting Standards", this
goodwill is not amortized but is subject to annual impairment tests, effective
January 1, 2002.

          Our consolidated financial statements exclude the results of material
transactions between us and our consolidated affiliates, or among our
consolidated affiliates. We reclassified certain amounts in our 2000 and 1999
consolidated financial statements and notes to conform with the 2001
presentation. These reclassifications have no effect on net income (loss) or
shareholders' equity.


                                       86

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Investments

          Fixed maturities are securities that mature more than one year after
issuance and include bonds, certain notes receivable and redeemable preferred
stock. Fixed maturities that we may sell prior to maturity are classified as
actively managed and are carried at estimated fair value, with any unrealized
gain or loss, net of tax and related adjustments, recorded as a component of
shareholders' equity. Fixed maturity securities that we intend to sell in the
near term are classified as trading and included in other invested assets. We
include any unrealized gain or loss on trading securities in net investment
losses.

          Interest-only securities represent the right to receive certain future
cash flows from securitization transactions structured prior to our September 8,
1999 announcement (see "Revenue Recognition for Sales of Finance Receivables and
Amortization of Servicing Rights" below). Such cash flows generally are equal to
the value of the principal and interest to be collected on the underlying
financial contracts of each securitization in excess of the sum of the principal
and interest to be paid on the securities sold and contractual servicing fees.
We carry interest-only securities at estimated fair value. We determine fair
value by discounting the projected cash flows over the expected life of the
receivables sold using current prepayment, default, loss and interest rate
assumptions. We determine the appropriate discount rate to value these
securities based on our estimates of current market rates of interest for
securities with similar yield, credit quality and maturity characteristics. The
discount rate was 16 percent at December 31, 2001, compared to 15 percent at
December 31, 2000. We record any unrealized gain or loss determined to be
temporary, net of tax, as a component of shareholders' equity. With the adoption
of EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on
Purchased and Retained Beneficial Interests in Securitized Financial Assets"
("EITF 99-20") on July 1, 2000, declines in value are considered to be other
than temporary when: (i) the fair value of the security is less than its
carrying value; and (ii) the timing and/or amount of cash expected to be
received from the security has changed adversely from the previous valuation
which determined the carrying value of the security. When declines in value
considered to be other than temporary occur, we reduce the amortized cost to
estimated fair value and recognize a loss in the statement of operations. The
assumptions used to determine new values are based on our internal evaluations
and consultation with external advisors having significant experience in valuing
these securities. See note 4 for additional discussion of gain on sale of
receivables and interest-only securities.

          Equity securities include investments in common stocks and
non-redeemable preferred stock. We carry these investments at estimated fair
value. We record any unrealized gain or loss, net of tax and related
adjustments, as a component of shareholders' equity.

          Mortgage loans held in our investment portfolio are carried at
amortized unpaid balances, net of provisions for estimated losses.

          Policy loans are stated at their current unpaid principal balances.

          Venture capital investment in TeleCorp PCS, Inc. ("TeleCorp") was made
by our subsidiary which engages in venture capital investment activity. TeleCorp
is a company in the wireless communication business. Our investment in TeleCorp
(currently AWE as described in the following paragraph) is carried at estimated
fair value, with changes in fair value recognized as investment income (loss).
We held 12.6 million shares of TeleCorp common stock with a fair value of $157.5
million at December 31, 2001 ($12.49 per share). In the first quarter of 2002,
AT&T Wireless Services, Inc. ("AWE") acquired TeleCorp. Pursuant to the merger
agreement, our shares of TeleCorp were converted into 11.4 million shares of
AWE. Upon the completion of the merger, there are no restrictions on our ability
to sell our interest in AWE. We expect to sell (or monetize through borrowing
and forward sale transactions) our remaining interest in AWE during 2002, in
conjunction with our plans to meet our debt obligations.

          At March 18, 2002, our holdings of AWE common stock included: 10.3
million shares valued at $102.2 million (which shares have not been monetized);
and 1.1 million shares which are held as collateral for a $12.1 million
investment borrowing transaction and are subject to a forward sale contract
pursuant to which the Company has agreed to sell between .6 million and 1.1
million shares of AWE common stock for $15.5 million on November 15, 2006. The
number of shares purchased will be based on the $15.5 million purchase price and
the price of AWE common stock at the purchase date. However, such price will be
no lower than $14.9862 per share and no higher than $24.3527 per share pursuant
to the terms of the forward sale contract.

                                       87

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          The forward contract is a derivative that is required to be
marked-to-market each period. Since the hedged asset (i.e., a portion of the
shares of TeleCorp we own) is required to be carried at market value, the hedge
rules of SFAS 133 (as defined under the caption "Accounting for Derivatives")
are not applicable. However, since the value of the derivative will fluctuate in
relation to the change in value of the related TeleCorp common stock, we expect
the forward contract to act as a hedge and reduce earnings volatility associated
with the TeleCorp common stock. At December 31, 2001, the value of the
derivative was not significant.

          The market values of many companies in TeleCorp's business sector have
declined significantly in recent periods. We recognized venture capital
investment income (loss) of $(42.9) million, $(199.5) million and $354.8 million
in 2001, 2000 and 1999, respectively, primarily related to this investment.

          During the fourth quarter of 2001, we sold 4.6 million shares of
TeleCorp common stock to certain investment trusts for $60.3 million. Conseco
and its subsidiaries hold all of the debt issued by the trusts; a third party
owns the equity securities. The trusts are further described in note 3.

          Other invested assets include: (i) trading securities; (ii) Standard &
Poor's 500 Call Options ("S&P 500 Call Options"); and (iii) certain
non-traditional investments. Trading securities are carried at market value with
the change in value recognized as a charge to net income (loss). These
securities are expected to be sold in the near term or relate to our multibucket
annuity products as described under "Multibucket Annuity Product" below. We
carry the S&P 500 Call Options at estimated fair value as further described
below under "Accounting for Derivatives". Non-traditional investments include
investments in certain limited partnerships, mineral rights and promissory
notes; we account for them using either the cost method, or for investments in
partnerships over whose operations the Company exercises significant influence,
the equity method.

          We defer any fees received or costs incurred when we originate
investments. We amortize fees, costs, discounts and premiums as yield
adjustments over the contractual lives of the investments. We consider
anticipated prepayments on mortgage-backed securities in determining estimated
future yields on such securities.

          When we sell a security (other than trading securities or venture
capital investments), we report the difference between the sale proceeds and
amortized cost (determined based on specific identification) as an investment
gain or loss.

          We regularly evaluate all of our investments based on current economic
conditions, credit loss experience and other investee-specific developments. If
there is a decline in a security's net realizable value that is other than
temporary, we treat it as a realized loss and reduce the cost basis of the
security to its estimated fair value.

          Cash and Cash Equivalents

          Cash and cash equivalents include commercial paper, invested cash and
other investments purchased with original maturities of less than three months.
We carry them at amortized cost, which approximates estimated fair value.

          Finance Receivables

          Finance receivables include manufactured housing, home equity, home
improvement, retail credit and floorplan loans. We carry finance receivables at
amortized cost, net of an allowance for credit losses.

          We defer fees received and costs incurred when we originate finance
receivables. We amortize deferred fees, costs, discounts and premiums over the
estimated lives of the receivables. We include such deferred fees or costs in
the amortized cost of finance receivables.

          We generally stop accruing investment income on finance receivables
after three consecutive months of contractual delinquency.

          Finance receivables transferred to securitization trusts in
transactions structured as securitized borrowings are classified as finance
receivables - securitized. These receivables are held as collateral for the
notes issued to investors in the

                                       88

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


securitization trusts. Finance receivables held by us that have not been
securitized are classified as finance receivables.

          Provision for Losses

          The provision for credit losses charged to expense is based upon an
assessment of current and historical loss experience, loan portfolio trends,
prevailing economic and business conditions, and other relevant factors. In
management's opinion, the provision is sufficient to maintain the allowance for
credit losses at a level that adequately provides for losses inherent in the
portfolio.

          We reduce the carrying value of finance receivables to net realizable
value at the earlier of: (i) six months of contractual delinquency; or (ii) when
we take possession of the property securing the finance receivable.

          In addition, during 2001, 2000 and 1999, we established a provision
for losses related to our guarantees of bank loans and the related interest
loans to approximately 155 current and former directors, officers and key
employees for the purchase of Conseco common stock (see note 8 for additional
information on this provision).

          Cost of Policies Produced

          The costs that vary with, and are primarily related to, producing new
insurance business are referred to as cost of policies produced. We amortize
these costs using the interest rate credited to the underlying policy: (i) in
relation to the estimated gross profits for universal life-type and
investment-type products; or (ii) in relation to future anticipated premium
revenue for other products.

          When we realize a gain or loss on investments backing our universal
life or investment-type products, we adjust the amortization to reflect the
change in estimated gross profits from the products due to the gain or loss
realized and the effect of the event on future investment yields. We also adjust
the cost of policies produced for the change in amortization that would have
been recorded if actively managed fixed maturity securities had been sold at
their stated aggregate fair value and the proceeds reinvested at current yields.
We include the impact of this adjustment in accumulated other comprehensive
income (loss) within shareholders' equity.

          When we replace an existing insurance contract with another insurance
contract with substantially different terms, all unamortized cost of policies
produced related to the replaced contract is immediately written off. When we
replace an existing insurance contract with another insurance contract with
substantially similar terms, we continue to defer the cost of policies produced
associated with the replaced contract. Such costs related to the replaced
contracts which continue to be deferred were $10.0 million, $5.6 million and
$8.6 million in 2001, 2000 and 1999, respectively.

          Each year, we evaluate the recoverability of the unamortized balance
of the cost of policies produced. We consider estimated future gross profits or
future premiums, expected mortality or morbidity, interest earned and credited
rates, persistency and expenses in determining whether the balance is
recoverable. If we determine a portion of the unamortized balance is not
recoverable, it is charged to amortization expense.

          Cost of Policies Purchased

          The cost assigned to the right to receive future cash flows from
contracts existing at the date of an acquisition is referred to as the cost of
policies purchased. We also defer renewal commissions paid in excess of ultimate
commission levels related to the purchased policies in this account. The balance
of this account is amortized, evaluated for recovery, and adjusted for the
impact of unrealized gains (losses) in the same manner as the cost of policies
produced described above.

          The discount rate we use to determine the value of the cost of
policies purchased is the rate of return we need to earn in order to invest in
the business being acquired. In determining this required rate of return, we
consider many factors including: (i) the magnitude of the risks associated with
each of the actuarial assumptions used in determining expected future cash
flows; (ii) the cost of our capital required to fund the acquisition; (iii) the
likelihood of changes in projected future cash flows that might occur if there
are changes in insurance regulations and tax laws; (iv) the acquired company's
compatibility with other Conseco activities that may favorably affect future
cash flows; (v) the complexity of the acquired company; and

                                       89

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


(vi) recent prices (i.e., discount rates used in determining valuations) paid by
others to acquire similar blocks of business.

          Goodwill

          Goodwill is the excess of the amount we paid to acquire a company over
the fair value of its net assets. Our analysis of acquired businesses indicates
that the anticipated ongoing cash flows from the earnings of the purchased
businesses extend beyond the maximum 40-year period allowed for goodwill
amortization. Accordingly, we have amortized goodwill on a straight-line basis
generally over a 40-year period. The total accumulated amortization of goodwill
was $613.3 million and $503.7 million at December 31, 2001 and 2000,
respectively. Pursuant to generally accepted accounting principles in effect at
December 31, 2001, we have determined that goodwill is fully recoverable from
projected undiscounted net cash flows from earnings of the subsidiaries over the
remaining amortization period. If we had determined that the undiscounted
projected cash flows no longer supported the recoverability of goodwill over the
remaining amortization period, we would have reduced its carrying value with a
corresponding charge to expense or shortened the amortization period. Cash flows
considered in such an analysis are those of the business acquired, if separately
identifiable, or the product line that acquired the business, if such earnings
are not separately identifiable. See "Recently Issued Accounting Standards"
below for a discussion of new accounting standards applicable to goodwill which
are effective beginning on January 1, 2002.

          Assets Held in Separate Accounts and Investment Trust

          Separate accounts are funds on which investment income and gains or
losses accrue directly to certain policyholders. The assets of these accounts
are legally segregated. They are not subject to the claims that may arise out of
any other business of Conseco. We report separate account assets at market
value; the underlying investment risks are assumed by the contractholders. We
record the related liabilities at amounts equal to the market value of the
underlying assets. We record the fees earned for administrative and
contractholder services performed for the separate accounts in insurance policy
income.

          In addition, we hold investments in a trust for the benefit of the
purchasers of certain products of our asset management subsidiary; this amount
is offset by a corresponding liability account, the value of which fluctuates in
relation to changes in the values of these investments. Because we hold the
residual interests in the cash flows from the trust and actively manage its
investments, we are required to include the accounts of the trust in our
consolidated financial statements. We record the fees earned for investment
management and other services provided to the trust as fee revenue.

          Recognition of Insurance Policy Income and Related Benefits and
Expenses on Insurance Contracts

          Generally, we recognize insurance premiums for traditional life and
accident and health contracts as earned over the premium-paying periods. We
establish reserves for future benefits on a net-level premium method based upon
assumptions as to investment yields, mortality, morbidity, withdrawals and
dividends. We record premiums for universal life-type and investment-type
contracts that do not involve significant mortality or morbidity risk as
deposits to insurance liabilities. Revenues for these contracts consist of
mortality, morbidity, expense and surrender charges. We establish reserves for
the estimated present value of the remaining net costs of all reported and
unreported claims.

          Liabilities Related to Certificates of Deposit

          These liabilities relate to the certificates of deposits issued by our
bank subsidiaries. The liability and interest expense account are also increased
for the interest which accrues on the deposits. At December 31, 2001 and 2000,
the weighted average interest crediting rate on these deposits was 4.7 percent
and 6.9 percent, respectively.

          Reinsurance

          In the normal course of business, we seek to limit our exposure to
loss on any single insured or to certain groups of policies by ceding
reinsurance to other insurance enterprises. We currently retain no more than $.8
million of mortality risk on any one policy. We diversify the risk of
reinsurance loss by using a number of reinsurers that have strong claims-paying
ratings. If any reinsurer could not meet its obligations, the Company would
assume the liability. The likelihood of a material loss being incurred as a
result of the failure of one of our reinsurers is considered remote. The cost of
reinsurance is recognized over the life of the reinsured policies using
assumptions consistent with those used to account for the underlying

                                       90

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


policy. The cost of reinsurance ceded totaled $253.7 million, $248.3 million and
$418.6 million in 2001, 2000 and 1999, respectively. A receivable is recorded
for the reinsured portion of insurance policy benefits paid and liabilities for
insurance products. Reinsurance recoveries netted against insurance policy
benefits totaled $205.9 million, $283.2 million and $392.0 million in 2001, 2000
and 1999, respectively.

          From time-to-time, we assume insurance from other companies. Any costs
associated with the assumption of insurance are amortized consistent with the
method used to amortize the cost of policies produced described above.
Reinsurance premiums assumed totaled $147.0 million, $305.4 million and $547.8
million in 2001, 2000 and 1999, respectively.

          Income Taxes

          Our income tax expense includes deferred income taxes arising from
temporary differences between the tax and financial reporting bases of assets
and liabilities and net operating loss carryforwards. In assessing the
realization of deferred income tax assets, we consider whether it is more likely
than not that the deferred income tax assets will be realized. The ultimate
realization of deferred income tax assets depends upon generating future taxable
income during the periods in which temporary differences become deductible and
net operating loss carryforwards expire. If future income is not generated as
expected, a valuation allowance will be established.

          Investment Borrowings

          As part of our investment strategy, we may enter into reverse
repurchase agreements and dollar-roll transactions to increase our investment
return or to improve our liquidity. We account for these transactions as
collateral borrowings, where the amount borrowed is equal to the sales price of
the underlying securities. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that, with dollar rolls, the repurchase involves securities that are only
substantially the same as the securities sold. Such borrowings averaged $1,029.7
million during 2001 and $324.4 million during 2000. These borrowings were
collateralized by investment securities with fair values approximately equal to
the loan value. The weighted average interest rate on short-term collateralized
borrowings was 3.3 percent and 5.7 percent in 2001 and 2000, respectively. The
primary risk associated with short-term collateralized borrowings is that a
counterparty will be unable to perform under the terms of the contract. Our
exposure is limited to the excess of the net replacement cost of the securities
over the value of the short-term investments (such excess was not material at
December 31, 2001). We believe the counterparties to our reverse repurchase and
dollar-roll agreements are financially responsible and that the counterparty
risk is minimal.

          Use of Estimates

          When we prepare financial statements in conformity with GAAP, we are
required to make estimates and assumptions that significantly affect various
reported amounts of assets and liabilities, and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting periods. For example, we use significant estimates
and assumptions in calculating values for the cost of policies produced, the
cost of policies purchased, interest-only securities, certain investments,
servicing rights, goodwill, liabilities for insurance and asset accumulation
products, liabilities related to litigation, guaranty fund assessment accruals,
liabilities related to guarantees of securitized debt issued in conjunction with
certain sales of finance receivables and liabilities related to guarantees of
bank loans and the related interest loans to certain current and former
directors, officers and key employees, gain on sale of finance receivables,
allowance for credit losses on finance receivables and the reliance on
generating adequate future taxable income to support deferred income tax assets.
If our future experience differs materially from these estimates and
assumptions, our financial statements would be affected.

          Accounting for Derivatives

          Our equity-indexed annuity products provide a guaranteed base rate of
return and a higher potential return linked to the performance of the Standard &
Poor's 500 Index ("S&P 500 Index") based on a percentage (the participation
rate) over an annual period. At the beginning of each policy year, a new index
period begins. The Company is able to change the participation rate at the
beginning of each index period, subject to contractual minimums. We buy S&P 500
Call Options in

                                       91

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


an effort to hedge potential increases to policyholder benefits resulting from
increases in the S&P 500 Index to which the product's return is linked. We
include the cost of the S&P 500 Call Options in the pricing of these products.
Policyholder account balances for these annuities fluctuate in relation to
changes in the values of these options. We reflect changes in the estimated
market value of these options in net investment income. Option costs that are
attributable to benefits provided were $119.0 million, $123.9 million and $96.3
million during 2001, 2000 and 1999, respectively. These costs are reflected in
the change in market value of the S&P 500 Call Options included in investment
income. Net investment income related to equity-indexed products before this
expense was $4.8 million, $12.9 million and $142.3 million in 2001, 2000 and
1999, respectively. Such amounts were substantially offset by the corresponding
charge to insurance policy benefits. The estimated fair value of the S&P 500
Call Options was $49.8 million and $30.4 million at December 31, 2001 and 2000,
respectively. We classify such instruments as other invested assets. The Company
accounts for the options issued to the policyholder for the estimated life of
the annuity contract as embedded derivatives as defined by Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by Statement of Financial Accounting Standards No. 137,
"Deferral of the Effective Date of FASB Statement No. 133" and Statement of
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities" (collectively referred to as "SFAS
133"). The Company records the change in the fair values of the embedded
derivatives in current earnings as a component of policyholder benefits. The
fair value of these derivatives, which are classified as "liabilities for
interest-sensitive products" was $491.2 million at December 31, 2001.

          On June 29, 2001, we entered into interest rate swap agreements to
convert the fixed rate on our senior notes (10.75 percent) to a variable rate
based on LIBOR plus 4.75 percent. In accordance with the requirements of SFAS
133, the change in the fair value of the interest rate swap and the gain or loss
on the hedged senior notes attributable to the hedged interest rate risk are
recorded in current-period earnings. Because the terms of the interest rate swap
agreements substantially match the terms of the senior notes, the gain or loss
on the swap and the senior notes will generally be equal and offsetting
(although the effective interest rate on our debt will be affected).

          In early October 2001, we terminated these interest rate swap
agreements for cash proceeds of $19.0 million (the value of the terminated swap
agreements). No gain was recognized upon the termination of the interest rate
swap agreements. Instead, the change in the fair value of the senior notes
recorded while the interest rate swaps were outstanding will be amortized as a
reduction to interest expense over the remaining life of our senior notes.

          In October 2001, we also entered into new interest rate swap
agreements to replace the terminated agreements which convert the fixed rate on
our 10.75% senior notes to a variable rate based on LIBOR plus 5.7525 percent
(currently 7.62 percent). At December 31, 2001, "notes payable-direct corporate
obligations" was decreased by $13.5 million to reflect the estimated fair value
of such interest rate swap agreements.

          If the counterparties for the S&P 500 Call Options or the interest
rate swap agreements fail to meet their obligations, Conseco may have to
recognize a loss. Conseco limits its exposure to such a loss by diversifying
among several counterparties believed to be strong and creditworthy. At December
31, 2001, all of the counterparties were rated "A" or higher by Standard &
Poor's Corporation.

          In the past, we have used interest-rate swaps to hedge the interest
rate risk associated with our borrowed capital. These agreements were terminated
during 2000. We realized a net investment loss of $38.6 million (net of an
income tax benefit of $20.6 million) related to such terminations during 2000.

          The Company entered into a forward sale contract related to a portion
of its venture capital investment in TeleCorp. Such contract is carried at
market value, with the change in such value being recognized as venture capital
income (loss). The value of the derivative fluctuates in value in relation to
the TeleCorp common stock it relates to. See "Venture capital investment in
TeleCorp" above for additional information.

          Multibucket Annuity Product

          The Company's multibucket annuity is a fixed annuity product that
credits interest based on the experience of a particular market strategy.
Policyholders allocate their annuity premium payments to several different
market strategies based on different asset classes within the Company's
investment portfolio. Interest is credited to this product based on the market

                                       92

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


return of the given strategy, less management fees, and funds may be moved
between different strategies. The Company guarantees a minimum return of premium
plus approximately 3 percent per annum over the life of the contract. The
investments backing the market strategies of these products are designated by
the Company as trading securities. The change in the fair value of these
securities is included in investment income which is substantially offset by the
change in insurance policy benefits for these products.

          Revenue Recognition for Sales of Finance Receivables and Amortization
          of Servicing Rights

          Subsequent to September 8, 1999, we are using the portfolio method
(the accounting method required for securitizations which are now structured as
secured borrowings) to account for securitization transactions. Our
securitizations are now structured in a manner that requires them to be
accounted for under the portfolio method, whereby the loans and securitization
debt remain on our balance sheet pursuant to Financial Accounting Standards
Board Statement No. 140, "Accounting for the Transfer and Servicing of Financial
Assets and Extinguishments of Liabilities" ("SFAS 140").

          For securitizations structured prior to September 8, 1999, we
accounted for the transfer of finance receivables as sales. In applying
generally accepted accounting principles to our securitized sales, we recognized
a gain, representing the difference between the proceeds from the sale (net of
related sale costs) and the carrying value of the component of the finance
receivable sold. We determined such carrying value by allocating the carrying
value of the finance receivables between the portion we sold and the interests
we retained (generally interest-only securities, servicing rights and, in some
instances, other securities), based on each portion's relative fair values on
the date of the sale.

          During 1999, the Company sold $9.7 billion of finance receivables in
securitizations structured as sales and recognized gains of $550.6 million. The
gains recognized were dependent in part on the previous carrying value of the
finance receivables included in the securitization transactions, allocated
between the assets sold and our retained interests based on their relative fair
value at the date of transfer. To obtain fair values, quoted market prices were
used if available. However, quotes were generally not available for retained
interests, so we estimated the fair values based on the present value of future
expected cash flows using our estimates of the key assumptions - credit losses,
prepayment speeds, forward yield curves, and discount rates commensurate with
the risks involved.

          We amortize the servicing rights we retain after the sale of finance
receivables, in proportion to, and over the estimated period of, net servicing
income.

          We evaluate servicing rights for impairment on an ongoing basis,
stratified by product type and securitization period. To the extent that the
recorded amount exceeds the fair value for any strata, we establish a valuation
allowance through a charge to earnings. If we determine, upon subsequent
measurement of the fair value of these servicing rights, that the fair value
equals or exceeds the amortized cost, any previously recorded valuation
allowance would be deemed unnecessary and restored to earnings.

                                       93

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Fair Values of Financial Instruments

          We use the following methods and assumptions to determine the
          estimated fair values of financial instruments:

          Investment securities. For fixed maturity securities (including
          redeemable preferred stocks) and for equity and trading securities, we
          use quotes from independent pricing services, where available. For
          investment securities for which such quotes are not available, we use
          values obtained from broker-dealer market makers or by discounting
          expected future cash flows using a current market rate appropriate for
          the yield, credit quality, and (for fixed maturity securities) the
          maturity of the investment being priced.

          Interest-only securities. We discount future expected cash flows over
          the expected life of the receivables sold using current estimates of
          future prepayment, default, loss severity and interest rates. We
          consider any potential payments related to the guarantees of certain
          lower rated securities issued by the securitization trusts in the
          projected cash flows used to determine the value of our interest-only
          securities.

          Venture capital investment in TeleCorp. We carry this investment at
          estimated fair value based on quoted market prices.

          Cash and cash equivalents. The carrying amount for these instruments
          approximates their estimated fair value.

          Mortgage loans and policy loans. We discount future expected cash
          flows for loans included in our investment portfolio based on interest
          rates currently being offered for similar loans to borrowers with
          similar credit ratings. We aggregate loans with similar
          characteristics in our calculations. The market value of policy loans
          approximates their carrying value.

          Other invested assets. We use quoted market prices, where available.
          When quotes are not available, we estimate the fair value based on:
          (i) discounted future expected cash flows; or (ii) independent
          transactions which establish a value for our investment. When we are
          unable to estimate a fair value, we assume a market value equal to
          carrying value.

          Finance receivables. The estimated fair value of finance receivables,
          including those that have been securitized, is determined based on
          general market transactions which establish values for similar loans.

          Insurance liabilities for interest-sensitive products. We discount
          future expected cash flows based on interest rates currently being
          offered for similar contracts with similar maturities.

          Liabilities related to certificates of deposit. We estimate the fair
          value of these liabilities using discounted cash flow analyses based
          on current crediting rates. Since crediting rates are generally not
          guaranteed beyond one year, market value approximates carrying value.

          Investment borrowings and notes payable. For publicly traded debt, we
          use current market values. For other notes, we use discounted cash
          flow analyses based on our current incremental borrowing rates for
          similar types of borrowing arrangements.

          Company-obligated mandatorily redeemable preferred securities of
          subsidiary trusts. We use quoted market prices.


                                       94

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Here are the estimated fair values of our financial instruments:

<TABLE>
<CAPTION>


                                                                           2001                           2000
                                                              ----------------------------   -----------------------------
                                                               Carrying            Fair        Carrying            Fair
                                                                Amount             Value        Amount             Value
                                                                ------             -----        ------             -----
                                                                                  (Dollars in millions)
<S>                                                            <C>              <C>             <C>             <C>

Financial assets:
   Actively managed fixed maturities.......................... $22,347.0        $22,347.0       $21,755.1       $21,755.1
   Interest-only securities...................................     141.7            141.7           432.9           432.9
   Equity securities .........................................     227.0            227.0           248.3           248.3
   Mortgage loans.............................................   1,228.0          1,210.7         1,238.6         1,197.7
   Policy loans...............................................     635.8            635.8           647.2           647.2
   Venture capital investment in TeleCorp.....................     155.3            155.3           258.6           258.6
   Other invested assets......................................     292.4            292.4           436.9           626.9
   Cash and cash equivalents..................................   3,060.8          3,060.8         1,663.6         1,663.6
   Finance receivables (including finance
     receivables-securitized).................................  18,009.2         18,376.7        16,487.8        17,108.7

Financial liabilities:
   Insurance liabilities for interest-sensitive products (1)..  15,787.7         15,787.7        16,123.2        16,123.2
   Liabilities related to certificates of deposit.............   1,790.3          1,790.3         1,873.3         1,873.3
   Investment borrowings......................................   2,242.7          2,242.7           219.8           219.8
   Notes payable and commercial paper:
     Corporate................................................   4,087.6          2,866.1         5,055.0         4,394.9
     Finance..................................................   2,527.9          2,455.2         2,810.9         2,734.0
     Related to securitized finance receivables structured
       as collateralized borrowings...........................  14,484.5         14,774.3        12,100.6        12,323.8
   Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts................   1,914.5          1,206.5         2,403.9         1,290.3
<FN>

--------------------

     (1)  The estimated fair value of the liabilities for interest-sensitive
          products was approximately equal to its carrying value at December 31,
          2001 and 2000. This was because interest rates credited on the vast
          majority of account balances approximate current rates paid on similar
          products and because these rates are not generally guaranteed beyond
          one year. We are not required to disclose fair values for insurance
          liabilities, other than those for interest-sensitive products.
          However, we take into consideration the estimated fair values of all
          insurance liabilities in our overall management of interest rate risk.
          We attempt to minimize exposure to changing interest rates by matching
          investment maturities with amounts due under insurance contracts.
</FN>
</TABLE>


          Cumulative Effect of Accounting Change

          During the third quarter of 2000, the Emerging Issues Task Force of
the Financial Accounting Standards Board issued EITF 99-20, a new accounting
requirement for the recognition of impairment on interest-only securities and
other retained beneficial interests in securitized financial assets.

          Under the prior accounting rule, declines in the value of our
interest-only securities and other retained beneficial interests in securitized
financial assets were recognized in the statement of operations when the present
value of estimated cash flows discounted at a risk-free rate using current
assumptions was less than the carrying value of the interest-only security.

          Under the new accounting rule, declines in value are recognized when:
(i) the fair value of the retained beneficial interests are less than their
carrying value; and (ii) the timing and/or amount of cash expected to be
received from the retained beneficial interests have changed adversely from the
previous valuation which determined the carrying value of the retained
beneficial interests. When both occur, the retained beneficial interests are
written down to fair value.


                                       95

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          We adopted the new accounting rule on July 1, 2000. The cumulative
effect of the accounting change for periods prior to July 1, 2000 was a charge
to the statement of operations of $55.3 million (net of an income tax benefit of
$29.9 million), or $.17 per diluted share. The cumulative effect of the
accounting change includes: (i) $45.5 million (net of an income tax benefit of
$24.7 million) related to interest-only securities; and (ii) $9.8 million (net
of an income tax benefit of $5.2 million) related to other retained beneficial
interests in securitized financial assets held by our insurance segment.

          Impairment Charge

          During 2001 and 2000, our interest-only securities did not perform as
well as anticipated. In addition, our expectations regarding future economic
conditions changed. Accordingly, we changed various underlying assumptions
(including default, severity, credit loss and discount rate assumptions) related
to the future performance of the underlying loans to be consistent with our
expectations. As a result, the expected future cash flows (including any
potential payments related to the guarantees of certain lower rated securities
issued by the securitization trusts) from interest-only securities changed
adversely from previous estimates. Pursuant to the requirements of EITF 99-20
(described above under "Cumulative Effect of Accounting Change"), the effect of
these changes was reflected immediately in earnings as an impairment charge. In
2001, we recognized an impairment charge of $264.8 million ($171.3 million after
the income tax benefit) related to our interest-only securities. We also
recognized a $122.1 million ($79.1 million after the income tax benefit)
increase in the valuation allowance related to our servicing rights as a result
of the changes in assumptions in 2001. In 2000, the effect of the impairment
charge and adjustments to the value of our interest-only securities and
servicing rights totaled $515.7 million ($324.9 million after the income tax
benefit) in addition to the cumulative effect of adopting EITF 99-20 of $70.2
million ($45.5 million after the income tax benefit).

          In addition, during 1999 and early 2000, the Company reevaluated its
interest-only securities and servicing rights, including the underlying
assumptions, in light of loss experience exceeding previous expectations. The
principal change in the revised assumptions resulting from this process was an
increase in expected future credit losses, relating primarily to reduced
assumptions as to future housing price inflation, recent loss experience and
refinements to the methodology of the valuation process. The effect of this
change was offset somewhat by a revision to the estimation methodology to
incorporate the value associated with the cleanup call rights held by the
Company in securitizations. We recognized a $554.3 million impairment charge
($349.2 million after tax) in 1999 to reduce the book value of the interest-only
securities and servicing rights.

          Recently Issued Accounting Standards

          The FASB issued Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment of Long-Lived Assets" ("SFAS 144") in August
2001. This standard addresses the measurement and reporting for impairment of
all long-lived assets. It also broadens the definition of what may be presented
as a discontinued operation in the consolidated statement of operations to
include components of a company's business segments. SFAS 144 requires that
long-lived assets currently in use be written down to fair value when considered
impaired. Long-lived assets to be disposed of are written down to the lower of
cost or fair value less the estimated cost to sell. The Company is required to
implement this standard beginning January 1, 2002. We do not expect that the
adoption of this standard will have a material effect on our financial position
or results of operations.

          The FASB issued Statement of Financial Accounting Standards No. 141,
"Business Combinations", and No. 142, "Goodwill and Other Intangible Assets" in
June 2001. Under the new rules, intangible assets with an indefinite life will
no longer be amortized in periods subsequent to December 31, 2001, but will be
subject to annual impairment tests (or more frequent under certain
circumstances), effective January 1, 2002. The Company has determined that all
of its goodwill has an indefinite life and is therefore subject to the new
rules. Application of the nonamortization provisions is expected to improve our
financial results by approximately $110 million (approximately $.29 per share
based on diluted shares outstanding for the year ended December 31, 2001,
without adjustment for antidilution) in the year ended December 31, 2002.

          SFAS 141 requires that all business combinations initiated after June
30, 2001 be accounted for using the purchase method, and prospectively prohibits
the use of the pooling-of-interests method. Conseco accounted for its 1998
acquisition of Green Tree Financial Corporation (subsequently renamed "Conseco
Finance") using the pooling-of-interests method. The new rules do not permit us
to change the method of accounting for previous acquisitions accounted for using
the pooling-of-interests method.

                                       96

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Pursuant to SFAS 142, the goodwill impairment test has two-steps. For
Conseco, the first step consists of determining the estimated fair value of the
business units comprising our insurance segment (since all of our goodwill
relates to the insurance segment, the goodwill impairment test is not relevant
to the finance business). The estimated fair value will be compared to the
unit's book value. If the estimated fair value exceeds the carrying amount, the
test is complete and goodwill is not impaired. If the fair value is less than
the carrying value, the second step of the impairment test must be performed.
Although SFAS 142 is required to be adopted as of January 1, 2002, the
transition provision gives the Company until June 30, 2002 to complete the first
step of the initial impairment test. The significant factors used to determine
the estimated fair value of our insurance business include analyses of industry
market valuation, historical and projected performance of the Company,
discounted cash flow analysis and the current market value of our common stock.
Conseco expects to complete step 1 prior to the June 30, 2002 deadline. At
December 31, 2001, the closing market price of a share of Conseco common stock
was $4.46 compared to the book value per common share, excluding accumulated
other comprehensive income (loss), of $13.61. Pursuant to the guidance in SFAS
142, quoted market prices in active markets are the best evidence of fair value
and shall be used as the basis for measurement, if available. However, the
market value of our common stock is only partially based on the value of our
insurance segment, and therefore, need not be the sole basis of the
determination of the fair value of the insurance segment. Although all of the
analyses required to complete step 1 have not yet been completed, Conseco
believes that the carrying value of the business units comprising our insurance
segment will exceed their estimated fair value and that we will be required to
complete the second step, which must be completed by the end of 2002. This step
is more complex than the first because it involves the valuation of all assets
and liabilities, and then comparison of the business unit's "implied goodwill"
with the carrying value of its goodwill. If the carrying value exceeds the
implied value in the initial application of this standard, an impairment loss is
recognized as a cumulative effect of a change in accounting standard. Subsequent
impairments, if any, would be classified as an operating expense.

          The Company is currently evaluating the carrying value of goodwill
under this standard and expects to be able to meet the transitional time line
described above. We expect to record some level of impairment of goodwill in
2002 as a result of adopting this standard; however, the amount of such
impairment, which could be material, is unknown at this time and is dependent
upon the estimated fair market value of the insurance segment, which is
currently in process. If we determine that an impairment charge is necessary
based on our initial test, the rules require that we recognize the charge in the
first quarter of 2002 (through restatement of first quarter results, if such
impairment test is completed subsequent to March 31, 2002, as permitted by the
transition provisions of the new rules). Although this standard will increase
the Company's results of operations in the future due to the elimination of
goodwill amortization from our statement of operations, any impairments would
result in a charge calculated as discussed in the preceding paragraphs. In the
first quarter of 2002, our bank credit facilities were amended so that any
charges taken to write off goodwill to the extent required by SFAS 142 will be
excluded from the various financial ratios and covenants we are required to meet
or maintain.

          The FASB issued SFAS 140, which is a replacement for Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities"; and a related
implementation guide in September 2000. SFAS 140 and the implementation guide
have changed the criteria that must be met for securitization transactions to be
recorded under the portfolio method. We did not need to make any significant
changes to our securitization structures to meet the new criteria which are
effective for securitization transactions completed after March 31, 2001. We
first adopted the SFAS 140 requirement for additional disclosures on
securitization in our December 31, 2000, consolidated financial statements.

          SFAS 133 requires all derivative instruments to be recorded on the
balance sheet at estimated fair value. Changes in the fair value of derivative
instruments are to be recorded each period either in current earnings or other
comprehensive income (loss), depending on whether a derivative is designated as
part of a hedge transaction and, if it is, on the type of hedge transaction. We
adopted SFAS 133 on January 1, 2001. The initial adoption of the new standard
did not have a material impact on the Company's financial position or results of
operations and there was no cumulative effect of an accounting change related to
its adoption.


                                       97

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Warrant for Five Percent of the Common Stock of Conseco Finance

          As partial consideration for a financing transaction, Conseco Finance
issued a warrant which permits the holder to purchase 5 percent of Conseco
Finance at a nominal price. The holder of the warrant or Conseco Finance may
cause the warrant and any stock issued upon its exercise to be purchased for
cash at an appraised value in May 2003. Additionally, until May 2003, the holder
has the right (subject to certain terms and conditions) to convert the warrant
into convertible preferred stock of Conseco (see note 16). Since the warrant
permits cash settlement at fair value at the option of the holder of the
warrant, it has been included in other liabilities and is measured at fair
value, with changes in its value reported in earnings. The estimated fair value
of the warrant at December 31, 2001 was $38.1 million. The estimated value was
determined based on discounted cash flow and market multiple valuation
techniques. During 2001, we recognized a $10.0 million benefit as a result of
the decreased value of the warrant (which was classified as a reduction to
special charges - see note 9).

                                       98
<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          2. BUSINESS CONDITIONS AND LIQUIDITY CONSIDERATIONS:

          We have substantial indebtedness. At December 31, 2001, the par value
of our notes payable was $4.1 billion and the par value of Company-obligated
mandatorily redeemable preferred securities of subsidiary trusts was $1.9
billion. We have a recent history of net losses. For the year ended December 31,
2001, on a consolidated basis we had a net loss applicable to common stock of
$418.7 million and interest expense of $1,609.2 million. For the year ended
December 31, 2000, on a consolidated basis, we had a net loss applicable to
common stock of $1,202.2 million and interest expense of $1,453.1 million. Our
earnings before fixed charges, preferred stock dividends and distributions on
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts were inadequate to cover fixed charges by $623.1 million and $1,602.4
million for the years ended December 31, 2001 and 2000, respectively.

          We are a holding company with no business operations of our own. We
depend on our operating subsidiaries for cash to make principal and interest
payments on our debt (including payments to subsidiary trusts to be used for
distributions on Company-obligated mandatorily redeemable preferred securities),
to pay administrative expenses and income taxes. The cash we receive from our
subsidiaries consists of fees for services provided, tax sharing payments,
dividends and surplus debenture interest and principal payments. A deterioration
in any of our significant subsidiaries' financial condition, earnings or cash
flows could limit such subsidiary's ability to pay cash dividends or make other
payments to us, which in turn, would limit our ability to meet our debt service
requirements and satisfy other parent company financial obligations; we do not
anticipate any such deterioration.

          The ability of our insurance subsidiaries to pay dividends is subject
to state insurance department regulations. These regulations generally permit
dividends to be paid from earned surplus of the insurance company for any
12-month period in amounts equal to the greater of (or in a few states, the
lesser of): (i) net gain from operations for the prior year; or (ii) 10 percent
of surplus as of the end of the preceding year. Any dividends in excess of these
levels require the approval of the director or commissioner of the applicable
state insurance department. During the first quarter of 2002, we received
approval from various insurance regulatory authorities to pay dividends to
Conseco of $225.5 million. During the remainder of 2002, we expect to request
permission from the regulatory authorities to pay additional extraordinary
dividends, substantially all of which are related to planned reinsurance
transactions. Such dividends and any other additional dividend payments during
2002 will require the permission of the regulatory authorities.

          We have taken a number of actions designed to restructure our debt and
increase the efficiency of our business operations. The actions with respect to
Conseco Finance include: (i) the sale, closing or runoff of several business
units (including asset-based lending, vendor leasing, bankcards, transportation
and park construction and floorplan lending); (ii) monetization of certain
on-balance sheet financial assets through sales or as collateral for additional
borrowings; and (iii) cost savings and restructuring of ongoing businesses such
as streamlining of loan origination operations in the manufactured housing and
home equity divisions. In early 2002, Conseco Finance announced its decision to
reduce the size of its floorplan lending business. The actions with respect to
our insurance segment include: (i) the planned sale, reinsurance or other
transactions with respect to our variable insurance business; (ii) planned
reinsurance transactions of various insurance blocks and sale of our non-core
insurance subsidiaries; and (iii) the division of our insurance segment into two
operating groups: the first, based in Carmel, Indiana, includes our professional
independent producer distribution channel and the other, based in Chicago,
Illinois, includes our career agents and direct marketing distribution channels.
With respect to all of our business segments, we have initiated actions to
improve productivity and quality through our "Process Excellence" program.
Through a combination of reduced expenses, revenue enhancement projects and
better deployment of capital, the Process Excellence improvements are intended
to help us achieve our financial goals. Other planned changes include moving a
significant number of jobs to India, where a highly-educated, low-cost,
English-speaking labor force is available. We have also completed the sale of
certain non-strategic assets, such as our interest in the riverboat casino in
Lawrenceburg, Indiana and our subprime auto loan portfolio.

          In the first quarter of 2002, we amended the credit agreements related
to our $1.5 billion bank credit facility including the changes described below:

          (i)  Financial covenants in the credit agreements require us to
               maintain various financial ratios and balances. These
               requirements were relaxed in the amended agreement. In addition,
               such agreements were amended so that any charges taken to write
               off goodwill to the extent required by SFAS 142 will be excluded
               from the various financial ratios and covenants that we are
               required to meet or maintain. See note 7 to the consolidated
               financial statements for further information on such ratios and
               covenants.

          (ii) The manner in which the proceeds from certain asset sales will be
               used was changed to allow us to make payments on our 2002
               obligations prior to making any principal payments under the bank
               credit agreements. The first $352 million of such proceeds may be
               retained by the Company and will be available to be used to meet
               our other debt obligations. The next $313 million will be applied
               pro rata to the principal payments on the bank credit facility


                                       99
<PAGE>

                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


               and to a segregated cash account to be held as collateral for our
               guarantee of certain bank loans to current and former directors,
               officers and key employees (the "D&O loans"). The next $250
               million will be divided equally between the Company and to pay
               pro rata the principal payments on the bank credit facility and
               the D&O loans. Proceeds in excess of $915 million and all
               proceeds during the period December 31, 2003 through March 31,
               2004, will be divided as follows: (i) 25 percent to be retained
               by the Company; and (ii) 75 percent to pay pro rata the principal
               payments on the bank credit facility and the D&O loans.

          As further described in note 8 under "litigation", seven holders of
our bank debt have challenged the validity of the amendment to the credit
agreement that changes provisions related to mandatory prepayments.

          The $1.5 billion bank credit facility is due December 31, 2003;
however, subject to the absence of any default, the Company may further extend
its maturity to March 31, 2005, provided that: (i) Conseco pays an extension fee
of 3.5 percent of the amount extended; (ii) cumulative principal payments of at
least $200 million have been paid by September 30, 2002 and at least $500
million by September 30, 2003; and (iii) our interest coverage ratio for the
four quarters ended September 30, 2003 is greater than or equal to 2.25 to 1.

          In the first quarter of 2002, we entered into various transactions
with Lehman which are described in note 16. We also entered into a revised
agreement governing the movement of cash from Conseco Finance to the parent
company. Conseco Finance and Lehman have agreed to amend the agreement such that
Conseco Finance must maintain liquidity (i.e., cash and available borrowings, as
defined) of at least: (i) $50 million until March 31, 2003; and (ii) $100
million from and after April 1, 2003.

          The following summarizes our parent company debt service commitments
at December 31, 2001 (excluding the senior subordinated notes and medium term
notes of our finance segment) (dollars in millions):
<TABLE>
<CAPTION>

                                                                                        Required       Optional
                                                                                        payments       payments      Total
                                                                                        --------       --------    ---------
     <S>                                                                                  <C>           <C>          <C>

     Conseco 8.5% notes due October 2002.........................................         $302          $ -          $302
     Estimated interest payments on parent company debt..........................          310            -           310
     Distributions on Company-obligated mandatorily redeemable preferred .....
       securities of subsidiary trust (a)........................................           42           130          172
     Optional bank credit facility payment to extend its maturity date payable
       September 2002 (b)........................................................          -             193          193
                                                                                          ----          ----         ----
     Total debt service obligations in 2002......................................         $654          $323         $977
                                                                                          ====          ====         ====
<FN>
-----------------
(a)       Conseco has the right to defer distributions on the preferred
          securities. During the deferral period, distributions continue to
          accumulate on the par amount plus any unpaid distributions at the
          stated distribution rate. We plan to pay distributions of $42.6
          million on April 1, 2002.

(b)       As described elsewhere herein, the 2002 bank credit facility payment
          is optional, but it is one of the requirements to extend the maturity
          date of the facility to March 31, 2005. In addition, the Company would
          be required to make payments pursuant to the credit facility
          agreements based on the proceeds from certain asset sales as described
          above.
</FN>
</TABLE>

                                       100

<PAGE>

                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------




          The following is our current plan summarizing the sources of cash
which we expect to have to service our parent company debt and certain other
obligations (net of amounts required to repay the senior notes and medium term
notes of our finance segment due in 2002) during 2002 (dollars in millions):
<TABLE>
<CAPTION>

                                                                                  From our
                                                                                operations or
                                                                                transactions       In process
                                                                                  completed        or planned
                                                                                 and approved     transactions      Total
                                                                                 ------------     ------------    ---------
<S>                                                                                  <C>              <C>         <C>
       Parent company cash on hand at December 31, 2001......................        $152             $ -         $  152
       Insurance and other operations, net of corporate expense..............         300               25           325
       Finance operations (net of debt repayments)...........................          50               -             50
       Reinsurance and sales of certain insurance business...................         110              270           380
       Other non-core asset sales and other..................................          70               23            93
                                                                                     ----             ----        ------
       Total net cash expected to be available to service our debt...........        $682             $318        $1,000
                                                                                     ====             ====        ======
</TABLE>

          We are continuing to access a variety of different options to meet our
2002 obligations. While we currently believe the plan summarized above includes
our best options, we may find other alternatives more appropriate. Therefore,
our plan is subject to change.

          We completed several transactions summarized in the above plan during
the first quarter of 2002. Our insurance subsidiaries received approval from the
appropriate insurance departments to pay to Conseco: (i) dividends of $115
million; and (ii) a dividend of $110.5 million primarily related to a
reinsurance agreement pursuant to which we are ceding 80 percent of the
traditional life business of our subsidiary, Bankers Life & Casualty Company. We
have also entered into a reinsurance agreement pursuant to which we are ceding
100 percent of the traditional and interest-sensitive life insurance business of
our subsidiary, Conseco Variable Insurance Company. Upon receipt of all
regulatory approvals, our insurance subsidiary will receive a ceding commission
of $49.5 million. We also entered into an agreement to sell one of our non-core
insurance subsidiaries. Upon receipt of regulatory approval, another insurance
subsidiary will receive $48.5 million of proceeds from the sale.

          Our current plan anticipates that the parent company will receive $50
million from Conseco Finance during 2002. At December 31, 2001, Conseco Finance
had $138.7 million par value of senior notes due in June 2002 and $186.0 million
par value of medium term notes due in September 2002. In March 2002, Conseco
Finance completed a tender offer pursuant to which it purchased $75.8 million
par value of its subordinated notes due June 2002. Also during the first quarter
of 2002, Conseco Finance announced it was tendering all of its remaining public
debt - $167 million due in September 2002 and $4 million due in April 2003. Such
offer expires on April 12, 2002. We believe that the cash flows to be generated
from Conseco Finance's operations and other transactions will be sufficient to
allow them to meet their debt obligations and transfer at least $50 million to
the parent company.

          We believe that the existing cash available to the parent and the cash
flows to be generated from operations and the other transactions summarized
above will be sufficient to allow us to meet our debt obligations through 2002.
We have taken a number of actions over the past two years to reduce parent
company debt and increase the efficiency of our business operations. However,
our results for future periods beyond 2002 are subject to numerous
uncertainties. Our future debt service requirements (including principal
maturities) may exceed cash flows available to the parent from the operations of
our subsidiaries. We may not be able to improve or sustain positive cash flows
from operations. Our liquidity could be significantly affected if improvements
do not occur. Failure to generate sufficient cash flows from operations, asset
sales or financing transactions to meet all of our long-term debt service
requirements would have a material adverse effect on our liquidity.

          We have undertaken additional initiatives in 2002 to extend maturities
on our public debt as well as pursue the sale of our investment in the General
Motors Building and other assets. These additional initiatives are not
considered above. We believe the cash estimated to be available at December 31,
2002, plus cash flows to be generated from operations and from these additional
2002 initiatives will permit us to repay our debt maturities in 2003.

          The maturities of the direct debt of the parent company including
amounts related to the Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts at December 31, 2001, (assuming the Company: (i)
does not make the optional debt payments required to extend the maturity date of
the $1.5 billion bank credit facility; and (ii) does make the optional debt
payments required to extend such maturity date) were as follows (dollars in
millions):

                                      101

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------

<TABLE>
<CAPTION>


                                                                                       (i)                (ii)
                                                                                    Maturity            Maturity
                                                                                    date not              date
                                                                                    extended            extended
                                                                                    --------            --------
<S>                                                                               <C>                    <C>
2002............................................................................  $   304.1              $  497.4
2003............................................................................    1,806.8                 613.5
2004............................................................................      812.5                 812.5
2005............................................................................      250.0               1,250.0
2006............................................................................      550.0                 550.0
Thereafter......................................................................    2,330.8               2,330.8
                                                                                   --------              --------

    Total par value at December 31, 2001........................................   $6,054.2              $6,054.2
                                                                                   ========              ========
</TABLE>

          The table above excludes any amounts related to our guarantees of bank
loans totaling $545.4 million as of December 31, 2001, to approximately 155
current and former directors, officers and key employees. Such bank loans are
due on December 31, 2003. The funds were used by the participants to purchase
approximately 18.0 million shares of our common stock in open market or
negotiated transactions with independent parties. Such shares are held by the
banks as collateral for the loans. In addition, we have provided loans to
participants for interest on the bank loans totaling $143.6 million. We have
established a reserve for the exposure we have in connection with such
guarantees. At December 31, 2001, our reserve for losses on the loan guarantees
and the interest loans totaled $420.0 million based upon the value of the
collateral and the creditworthiness of the participants. At December 31, 2001,
the guaranteed bank loans and interest loans exceeded the value of the
collateral held and the reserve for losses by approximately $180 million. If we
are required to pay on the guarantees when the bank loans become due on December
31, 2003, it could have a material adverse impact on our liquidity position.


                                       102

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          3. INVESTMENTS:

          At December 31, 2001, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:

<TABLE>
<CAPTION>

                                                                                        Gross         Gross      Estimated
                                                                         Amortized   unrealized    unrealized      fair
                                                                           cost         gains        losses        value
                                                                           ----         -----        ------        -----
                                                                                       (Dollars in millions)
<S>                                                                     <C>            <C>          <C>        <C>

Investment grade:
   Corporate securities................................................ $12,827.2      $121.5     $  501.1     $12,447.6
   United States Treasury securities and obligations of
     United States government corporations and agencies................     240.9        11.8          1.0         251.7
   States and political subdivisions...................................     225.7         5.0          2.0         228.7
   Debt securities issued by foreign governments.......................     103.9         3.8           .9         106.8
   Mortgage-backed securities .........................................   7,488.1        82.8         74.3       7,496.6
Below-investment grade (primarily corporate securities)................   2,242.0        15.2        441.6       1,815.6
                                                                        ---------      ------     --------     ---------

     Total actively managed fixed maturities........................... $23,127.8      $240.1     $1,020.9     $22,347.0
                                                                        =========      ======     ========     =========

Equity securities...................................................... $   257.3      $  6.0     $   36.3     $   227.0
                                                                        =========      ======     ========     =========
</TABLE>


          At December 31, 2000, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:

<TABLE>
<CAPTION>
                                                                                        Gross         Gross      Estimated
                                                                         Amortized   unrealized    unrealized      fair
                                                                           cost         gains        losses        value
                                                                           ----         -----        ------        -----
                                                                                         (Dollars in millions)
<S>                                                                     <C>           <C>        <C>           <C>

Investment grade:
   Corporate securities................................................ $13,098.9      $ 72.6     $  715.5     $12,456.0
   United States Treasury securities and obligations of
     United States government corporations and agencies................     303.4        11.4           .5         314.3
   States and political subdivisions...................................     142.9         2.1          2.6         142.4
   Debt securities issued by foreign governments.......................     183.1         1.3          6.6         177.8
   Mortgage-backed securities .........................................   6,794.2        53.5         71.0       6,776.7
Below-investment grade (primarily corporate securities)................   2,407.7         6.2        526.0       1,887.9
                                                                        ---------      ------     --------     ---------

     Total actively managed fixed maturities........................... $22,930.2      $147.1     $1,322.2     $21,755.1
                                                                        =========      ======     ========     =========

Equity securities......................................................    $286.8        $6.2        $44.7        $248.3
                                                                           ======        ====        =====        ======
</TABLE>


          Accumulated other comprehensive loss is primarily comprised of
unrealized losses on actively managed fixed maturity investments. Such amounts,
included in shareholders' equity as of December 31, 2001 and 2000, were as
follows:
<TABLE>
<CAPTION>


                                                                                                       2001       2000
                                                                                                       ----       ----
                                                                                                    (Dollars in millions)
<S>                                                                                                  <C>       <C>


Unrealized losses on investments.................................................................    $(816.0)  $(1,241.9)
Adjustments to cost of policies purchased and cost of policies produced..........................      133.9       219.7
Deferred income tax benefit......................................................................      249.6       371.4
Other............................................................................................       (6.5)        (.2)
                                                                                                     -------   ---------

       Accumulated other comprehensive loss......................................................    $(439.0)  $  (651.0)
                                                                                                     =======   =========
</TABLE>




                                       103

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------



          The following table sets forth the amortized cost and estimated fair
value of actively managed fixed maturities at December 31, 2001, by contractual
maturity. Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties. Most of the mortgage-backed securities shown below
provide for periodic payments throughout their lives.
<TABLE>
<CAPTION>


                                                                                                                 Estimated
                                                                                                 Amortized         fair
                                                                                                   cost            value
                                                                                                   ----            -----
                                                                                                   (Dollars in millions)
<S>                                                                                              <C>           <C>

Due in one year or less........................................................................  $   169.7     $   167.1
Due after one year through five years..........................................................    1,290.2       1,286.7
Due after five years through ten years.........................................................    4,789.9       4,694.1
Due after ten years............................................................................    8,606.1       8,139.5
                                                                                                 ---------     ---------

    Subtotal...................................................................................   14,855.9      14,287.4
Mortgage-backed securities (a).................................................................    8,271.9       8,059.6
                                                                                                 ---------     ---------

        Total actively managed fixed maturities ...............................................  $23,127.8     $22,347.0
                                                                                                 =========     =========
<FN>


--------------------

     (a)  Includes below-investment grade mortgage-backed securities with an
          amortized cost and estimated fair value of $783.8 million and $563.0
          million, respectively.

          Net investment income consisted of the following:
</FN>
</TABLE>

<TABLE>
<CAPTION>


                                                                                          2001         2000         1999
                                                                                          ----         ----         ----
                                                                                               (Dollars in millions)
<S>                                                                                    <C>           <C>         <C>

Insurance and fee-based operations:
    Fixed maturities.................................................................  $1,601.0      $1,647.6    $1,641.0
    Venture capital investment income (loss).........................................     (42.9)       (199.5)      354.8
    Equity securities................................................................      18.5          37.3        85.1
    Mortgage loans...................................................................      97.6         105.1       106.4
    Policy loans.....................................................................      40.5          38.4        44.5
    Equity-indexed products..........................................................    (114.2)       (111.0)       46.0
    Other invested assets............................................................      25.0          93.7        91.5
    Cash and cash equivalents........................................................      63.2          63.4        60.2
    Separate accounts................................................................    (172.2)        246.0       172.8
                                                                                       --------      --------    --------

       Gross investment income.......................................................   1,516.5       1,921.0     2,602.3
Less investment expenses.............................................................      13.7          14.1         8.6
                                                                                       --------      --------    --------

       Net investment income earned by insurance and fee-based operations............   1,502.8       1,906.9     2,593.7

Finance operations:
    Finance receivables and other....................................................   2,240.6       1,906.9       632.6
    Interest-only securities.........................................................      51.5         106.6       185.1
                                                                                       --------      --------    --------

          Net investment income......................................................  $3,794.9      $3,920.4    $3,411.4
                                                                                       ========      ========    ========
</TABLE>


          The carrying value of fixed maturity investments and mortgage loans
not accruing investment income totaled $146.4 million, $98.4 million and $48.3
million at December 31, 2001, 2000 and 1999, respectively.



                                       104

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Investment losses, net of related investment expenses, were included
in revenue as follows:
<TABLE>
<CAPTION>


                                                                                           2001         2000         1999
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
<S>                                                                                     <C>          <C>          <C>

Fixed maturities:
    Gross gains........................................................................ $ 312.4     $   89.2      $ 121.1
    Gross losses.......................................................................  (273.6)      (166.9)      (168.4)
    Other than temporary decline in fair value.........................................  (318.3)      (143.6)       (24.1)
                                                                                        -------     --------      -------

         Net investment losses from fixed maturities before expenses...................  (279.5)      (221.3)       (71.4)

Equity securities......................................................................    (1.8)        17.6         10.2
Mortgages..............................................................................    (2.3)        (3.2)         (.8)
Other than temporary decline in fair value of equity securities and
    other invested assets..............................................................   (77.6)       (45.7)        (3.7)
Loss related to termination of interest rate swap agreements...........................     -          (59.2)         -
Other..................................................................................   (10.6)        (2.1)       (20.7)
                                                                                        -------     --------      -------

         Net investment losses before expenses.........................................  (371.8)      (313.9)       (86.4)
Investment expenses....................................................................    41.9         44.4         69.8
                                                                                        -------     --------      -------

         Net investment losses......................................................... $(413.7)     $(358.3)     $(156.2)
                                                                                        =======      =======      =======

</TABLE>


          Fixed Maturity Investments of Trusts

          Conseco holds $537.2 million of fixed maturity investments issued by
non-affiliated special purpose entities (the "trusts"). The trusts were
established to invest in various assets and issue debt and equity securities as
permitted by the trusts' indentures. The accounting policies of the trusts are
similar to ours. Conseco and its subsidiaries hold all of the debt issued by the
trusts; a nonaffiliated party owns the equity securities. The trusts are not
permitted to incur additional debt and do not hold derivative instruments.

          At December 31, 2001, the carrying value of the investments on the
trusts' books approximates the value of the fixed maturity investments held by
Conseco's subsidiaries. Approximately 25 percent of the trusts' investments are
held in zero-coupon government bonds, 33 percent are held in other fixed
maturity investments, 21 percent are held in various limited partnership
investments, 11 percent are held in the common stock of TeleCorp, 7 percent are
held in mortgage loans and 3 percent are held in other investments.

          Investment in General Motors Building

          At December 31, 2001, Conseco holds $289.1 million of investments
related to a 50 story office building in New York City known as the General
Motors Building. Such investments are primarily held in our fixed maturity
investment portfolio. In January 2002, Conseco exercised its right to purchase
the interest of the other investor in the building, who may counter Conseco's
offer and purchase Conseco's interest at an amount that would exceed the current
carrying value.

          Pursuant to generally accepted accounting principles, Conseco's future
earnings on these investments are limited to amounts which are based on the
actual earnings related to the operation of the building (including adjustments
to reflect Conseco's actual cost basis). These earnings are not expected to be
material in 2002; accordingly, our income from these investments will be less
than the stated return on the investment of 12.7 percent.

          The other investor in the building has filed a lawsuit against Conseco
which is described in note 8.

          Mortgage Loans

          At December 31, 2001, the mortgage loan balance was primarily
comprised of commercial loans. Properties in Florida, New York, Ohio and
Pennsylvania each represent 7 percent of the mortgage loan balance. In addition,
properties located in Texas, Massachusetts, California and Maine each represent
5 percent of the mortgage loan balance. No other state

                                       105

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


comprised greater than 4 percent of the mortgage loan balance. Less than 1
percent of the mortgage loan balance was noncurrent at December 31, 2001. Our
allowance for loss on mortgage loans was $3.8 million at both December 31, 2001
and 2000, respectively.

          Other Investment Disclosures

          Life insurance companies are required to maintain certain investments
on deposit with state regulatory authorities. Such assets had an aggregate
carrying value of $186.4 million at December 31, 2001.

          Conseco had no investments in any single entity in excess of 10
percent of shareholders' equity at December 31, 2001, other than investments
issued or guaranteed by the United States government or a United States
government agency.

          4. FINANCE RECEIVABLES AND RETAINED INTERESTS IN SECURITIZATION
             TRUSTS:

          Subsequent to September 8, 1999, we are using the portfolio method to
account for securitization transactions. Our securitizations are now structured
in a manner that requires them to be accounted for under the portfolio method,
whereby the loans and securitization debt remain on our balance sheet, rather
than as sales, pursuant to SFAS 140.

          We classify the finance receivables transferred to the securitization
trusts and held as collateral for the notes issued to investors as "finance
receivables-securitized". The average interest rate on these receivables was
12.5 percent and 12.2 percent at December 31, 2001 and 2000, respectively. We
classify the notes issued to investors in the securitization trusts as "notes
payable related to securitized finance receivables structured as collateralized
borrowings".


                                       106

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          The following table summarizes our finance receivables - securitized
by business line and categorized as either: (i) a part of our continuing lines;
or (ii) a part of the business units we have decided to sell, close or runoff
(the "discontinued lines"):

<TABLE>
<CAPTION>


                                                                                                December 31,
                                                                                           ---------------------
                                                                                           2001             2000
                                                                                           ----             ----
                                                                                           (Dollars in millions)
<S>                                                                                      <C>              <C>

Continuing lines:
   Manufactured housing...............................................................   $ 6,940.4        $ 5,602.1
   Mortgage services..................................................................     5,658.2          5,126.0
   Retail credit......................................................................       878.9            653.8
   Consumer finance - closed-end......................................................       580.8            247.3
   Floorplan (a)......................................................................       436.9            637.0
                                                                                         ---------        ---------

                                                                                          14,495.2         12,266.2
   Less allowance for credit losses...................................................       296.7            167.9
                                                                                         ---------        ---------

     Net finance receivables - securitized for continuing lines.......................    14,198.5         12,098.3
                                                                                         ---------        ---------

Discontinued lines....................................................................          -             531.0
   Less allowance for credit losses...................................................          -               6.5
                                                                                         ---------        ---------

     Net finance receivables - securitized for discontinued lines.....................          -             524.5
                                                                                         ---------        ---------

     Total finance receivables - securitized..........................................   $14,198.5        $12,622.8
                                                                                         =========        =========
<FN>

------------------

(a) We have recently decided to reduce the size of our floorplan lending business.
</FN>
</TABLE>

          The following table summarizes our other finance receivables by
business line and categorized as either: (i) a part of our continuing lines; or
(ii) a part of our discontinued lines:

<TABLE>
<CAPTION>


                                                                                                December 31,
                                                                                           -----------------------
                                                                                           2001             2000
                                                                                           ----             ----
                                                                                           (Dollars in millions)
<S>                                                                                     <C>               <C>

Continuing lines:
   Manufactured housing...............................................................  $  609.3          $  263.0
   Mortgage services..................................................................   1,128.9           1,373.1
   Retail credit......................................................................   1,811.1           1,110.1
   Consumer finance closed-end........................................................       6.3             575.1
                                                                                        --------          --------

                                                                                         3,555.6           3,321.3
   Less allowance for credit losses...................................................     111.6              98.3
                                                                                        --------          --------

     Net other finance receivables for continuing lines...............................   3,444.0           3,223.0
                                                                                        --------          --------

Discontinued lines....................................................................     379.7             676.1
   Less allowance for credit losses...................................................      13.0              34.1
                                                                                        --------          --------

     Net other finance receivables for discontinued lines.............................     366.7             642.0
                                                                                        --------          --------

     Total other finance receivables..................................................  $3,810.7          $3,865.0
                                                                                        ========          ========
</TABLE>



                                       107

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------



          The changes in the allowance for credit losses included in finance
receivables were as follows:
<TABLE>
<CAPTION>


                                                                                   2001          2000         1999
                                                                                   ----          ----         ----
                                                                                         (Dollars in millions)
<S>                                                                                <C>           <C>          <C>


Allowance for credit losses, beginning of year..................................   $306.8        $ 88.4       $ 43.0
Additions to the allowance:
   Provision for losses.........................................................    563.6         354.2        128.7
   Provision for losses related to discontinued lines (included in
     special charges - see note 9)..............................................       -           45.9           -
   Provision for losses related to regulatory changes related to our bank
     subsidiary (included in special charges - see note 9)......................       -           48.0           -
   Change in allowance due to purchases and sales of certain
     finance receivables........................................................      (.1)         24.7           -
Credit losses...................................................................   (449.0)       (254.4)       (83.3)
                                                                                   ------        ------       ------

Allowance for credit losses, end of year........................................   $421.3        $306.8       $ 88.4
                                                                                   ======        ======       ======

</TABLE>

          The securitizations structured prior to September 8, 1999, met the
applicable criteria to be accounted for as sales. At the time the loans were
securitized and sold, we recognized a gain and recorded our retained interest
represented by the interest-only security. The interest-only security represents
the right to receive, over the life of the pool of receivables: (i) the excess
of the principal and interest received on the receivables transferred to the
special purpose entity over the principal and interest paid to the holders of
other interests in the securitization; and (ii) contractual servicing fees. In
some of those securitizations, we also retained certain lower-rated securities
that are senior in payment priority to the interest-only securities. Such
retained securities (classified as actively managed fixed maturity securities)
had a par value, fair value and amortized cost of $753.5 million, $528.5 million
and $704.9 million, respectively, at December 31, 2001, and had a par value,
fair value and amortized cost of $769.8 million, $494.6 million and $716.8
million, respectively, at December 31, 2000.

          We completed various loan sale transactions in 2001 and 2000. During
2001, we sold $1.6 billion of finance receivables which included: (i) our $802.3
million vendor services loan portfolio (which was marked-to-market in the fourth
quarter of 2000 and no additional gain or loss was recognized in 2001); (ii)
$568.4 million of high-loan-to-value mortgage loans; and (iii) $269.0 million of
other loans. These sales resulted in net gains of $26.9 million. The Company
entered into a servicing agreement on the high-loan-to-value mortgage loans
sold. Pursuant to the servicing agreement, the servicing fees payable to the
Company are senior to all other payments of the trust which purchased the loans.
The Company also holds a residual interest in certain other cash flows of the
trust. In the future, the Company will sell this interest, if it can be sold at
a reasonable price. The Company did not provide any guarantees with respect to
the performance of the loans sold. In 2000, we sold approximately $147.1 million
of finance receivables in whole-loan sales resulting in net gains of $7.5
million.

          During 1999, the Company sold $9.7 billion of finance receivables in
securitizations structured as sales and recognized gains of $550.6 million.
During 2001 and 2000, we recognized no gain on sale related to securitized
transactions.

          The interest-only securities on our balance sheet represent an
allocated portion of the cost basis of the finance receivables in the
securitization transactions accounted for as sales related to transactions
structured prior to September 8, 1999. Our interest-only securities and other
retained interests in those securitization transactions are subordinate to the
interests of other investors. Their values are subject to credit, prepayment,
and interest rate risk on the securitized finance receivables. We determine the
appropriate discount rate to value these securities based on our estimates of
current market rates of interest for securities with similar yield, credit
quality and maturity characteristics. We include the difference between
estimated fair value and the amortized cost of the interest-only securities
(after adjustments for impairments required to be recognized in earnings) in
"accumulated other comprehensive loss, net of taxes."

          As described in note 1 under the caption entitled "Impairment Charge",
the Company adopted the requirements of EITF 99-20 effective July 1, 2000.
During 2001 and 2000, our interest-only securities did not perform as well as
anticipated. As a

                                       108

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


result, we changed various underlying assumptions (including default, severity,
credit loss and discount rate assumptions) which are used to determine the value
of the interest-only securities. These changes were made as a result of: (i) the
adverse default and loss trends that were experienced; and (ii) our expectations
regarding future economic conditions. As a result of these changes, the cash
flows from interest-only securities changed adversely from previous estimates.
Pursuant to the requirements of EITF 99-20, the effect of these changes were
reflected immediately in earnings as an impairment charge. The effect of the
impairment charge and adjustments to the value of our interest-only securities
and servicing rights totaled $386.9 million ($250.4 million after the income tax
benefit) for 2001 and $515.7 million ($324.9 million after the income tax
benefit) for 2000 (in addition to the cumulative effect of adopting EITF 99-20
of $70.2 million ($45.5 million after the income tax benefit)).

          Increases in the estimated fair value of our interest-only securities
which result from favorable changes in the expected timing and/or amount of cash
flows from our previous valuation estimates are recognized as adjustments to
shareholders' equity, which are recognized as a yield adjustment in income over
the life of the interest-only security. Such favorable changes resulted in
increases in unrealized appreciation of $8.7 million and $12.9 million during
2001 and 2000, respectively.

          The following table summarizes certain cash flows received from and
paid to the securitization trusts during 2001 and 2000 (dollars in millions):
<TABLE>
<CAPTION>


                                                                                          2001                    2000
                                                                                    ----------------       -----------------
<S>                                                                                    <C>                     <C>

Servicing fees received.........................................................       $    71.7               $   123.8
Cash flows from interest-only securities, net...................................            14.3                   187.6
Cash flows from retained bonds..................................................            82.8                    69.9
Servicing advances paid.........................................................          (677.0)               (1,056.1)
Repayment of servicing advances.................................................           665.2                 1,063.5

</TABLE>


          We have projected that the adverse loss experience in 2001 will
continue into 2002 and then improve over time. As a result of these assumptions,
we project that payments related to guarantees issued in conjunction with the
sales of certain finance receivables will exceed the gross cash flows from the
interest-only securities by approximately $90 million in 2002 and $60 million in
2003. We project the gross cash flows from the interest-only securities to
exceed the payments related to guarantees issued in conjunction with the sales
of certain finance receivables by approximately $5 million in 2004 and $15
million in 2005 and by approximately $580 million in all years thereafter. These
projected payments are considered in the projected cash flows we use to value
our interest-only securities. See note 8 for additional information about the
guarantees.

          Effective September 30, 2001, we transferred substantially all of our
interest-only securities into a trust. No gain or loss was recognized upon such
transfer. In return, we received a trust security representing an interest in
the trust equal to 85 percent of the estimated future cash flows of the
interest-only securities held in the trust. Lehman Brothers, Inc. and
affiliates (collectively "Lehman") purchased the remaining 15 percent interest.
The value of the interest purchased was $55.2 million at December 31, 2001. The
Company continues to be the servicer of the finance receivables underlying the
interest-only securities transferred to the trust. Lehman has the ability to
accelerate the principal payments related to their interest after a stated
period. Until such time, Lehman is required to maintain a 15 percent interest in
the estimated future cash flows of the trust. By aggregating the interest-only
securities into one structure, the impairment test for these securities will be
conducted on a single set of cash flows representing the Company's 85 percent
interest in the trust. Accordingly, adverse changes in cash flows from one
interest-only security may be offset by positive changes in another. The new
structure will not avoid an impairment charge if sufficient positive cash flows
in the aggregate are not available. Further, increases in cash flows above the
adverse cash flows cannot be recognized in earnings.

          At December 31, 2001, key economic assumptions used to determine the
estimated fair value of our retained interests in securitizations and the
sensitivity of the current fair value of residual cash flows to immediate 10
percent and 20 percent changes in those assumptions are as follows:


                                       109

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------

<TABLE>
<CAPTION>


                                                                            Home equity/                 Interest    Interest
                                                             Manufactured       home           Consumer/  held by    held by
                                                                housing      improvement       equipment  others      Conseco
                                                                -------     ------------       ---------  ------      -------
                                                                                    (Dollars in millions)
<S>                                                           <C>           <C>             <C>          <C>       <C>

Carrying amount/fair value of retained interests:

     Interest-only securities...............................     $ 32.3       $155.8           $ 8.8     ($55.2)      $141.7
     Servicing assets (liabilities).........................      (22.2)         6.4            (1.9)       -          (17.7)
     Bonds..................................................      274.8        233.7            20.0        -          528.5
                                                                  -----       ------           -----     ------       ------

         Total retained interests...........................     $284.9       $395.9           $26.9     ($55.2)      $652.5
                                                                 ======       ======           =====     ======       ======

Cumulative principal balance of sold finance
     receivables............................................  $17,732.2     $4,947.4        $1,210.1               $23,889.7
Weighted average life in years..............................        7.0          3.9             2.6                     6.2
Weighted average stated customer interest rate
     on sold finance receivables............................        9.8%        12.0%           10.6%                   10.3%
Assumptions to determine estimated fair value
     and impact of favorable and adverse changes:

Expected prepayment speed as a percentage
     of principal balance of sold finance receivables (a)...        7.1%        17.4%           18.8%                    9.8%

     Impact on fair value of 10 percent favorable change....      $10.9        $15.6             $.8                   $27.3

     Impact on fair value of 20 percent favorable change....       20.5         34.8             1.7                    57.0

     Impact on fair value of 10 percent adverse change......       (5.7)       (15.0)            (.6)                  (21.3)

     Impact on fair value of 20 percent adverse change......      (12.7)       (23.6)           (1.2)                  (37.5)

Expected future nondiscounted credit losses as a
     percentage of principal of related finance
     receivables (a)........................................       11.7%         7.4%            6.1%                   10.6%

     Impact on fair value of 10 percent favorable change....     $131.2        $30.3            $5.5                  $167.0

     Impact on fair value of 20 percent favorable change....      230.4         73.2            11.1                   314.7

     Impact on fair value of 10 percent adverse change......     (122.5)       (14.9)           (4.1)                 (141.5)

     Impact on fair value of 20 percent adverse change......     (239.5)       (29.2)           (8.3)                 (277.0)

Residual cash flow discount rate (annual)...................       16.0%        16.0%           16.0%                   16.0%

     Impact on fair value of 10 percent favorable change....      $37.6        $28.1            $1.7                   $67.4

     Impact on fair value of 20 percent favorable change....       81.7         59.7             3.4                   144.8

     Impact on fair value of 10 percent adverse change......      (29.6)       (24.5)           (1.5)                  (55.6)

     Impact on fair value of 20 percent adverse change......      (55.4)       (46.2)           (3.5)                 (105.1)






                                       110

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------

<FN>

---------------------

     (a)  The valuation of interest-only securities is affected not only by the
          projected level of prepayments of principal and net credit losses, but
          also by the projected timing of such prepayments and net credit
          losses. Should such timing differ materially from our projections, it
          could have a material effect on the valuation of our interest-only
          securities. Additionally, such valuation is determined by discounting
          cash flows over the entire expected life of the receivables sold.
</FN>
</TABLE>


          These sensitivities are hypothetical and should be used with caution.
As the figures indicate, changes in fair value based on a 10 percent variation
in assumptions generally cannot be extrapolated because the relationship of the
change in assumption to the change in fair value may not be linear. Also, in
this table, the effect of a variation in a particular assumption on the fair
value of the retained interest is calculated without changing any other
assumption; in reality, changes in one factor may result in changes in another
(for example, increases in market interest rates may result in lower prepayments
and increased credit losses), which might magnify or counteract the
sensitivities.




                                       111

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          The following table summarizes quantitative information about
delinquencies, net credit losses, and components of managed finance receivables:

<TABLE>
<CAPTION>


                                                                            Principal balance
                                                                             60 days or more             Net credit
                                                   Principal balance            past due                   losses
                                                -----------------------  ----------------------            ------
                                                                                                     for the year ended
                                                                at December 31,                          December 31,
                                           --------------------------------------------------------   -----------------
                                                2001           2000           2001        2000        2001         2000
                                                ----           ----           ----        ----        ----         ----
                                                                            (Dollars in millions)
<S>                                          <C>             <C>             <C>         <C>       <C>            <C>

Type of finance receivables

Manufactured housing......................   $25,575.1       $26,314.4       $610.5      $569.3    $  555.5       $413.9
Home equity/home improvement..............    11,851.4        13,307.0        139.9       120.5       244.4        154.6
Consumer..................................     4,198.8         3,887.4        112.6        76.4       225.5        181.0
Commercial................................     1,377.0         3,077.1         16.2        35.2        38.3         95.5
                                             ---------       ---------       ------      ------    --------       ------

Total managed receivables.................    43,002.3        46,585.9        879.2       801.4     1,063.7        845.0

Less finance receivables securitized......    24,297.3        29,636.0        464.9       536.6       614.7        590.6
                                             ---------       ---------       ------      ------    --------       ------

Finance receivables held on balance sheet
   before allowance for credit losses and
   deferred points and other, net.........    18,705.0        16,949.9       $414.3      $264.8    $  449.0       $254.4
                                                                             ======      ======    ========       ======

Less allowance for credit losses..........       421.3           306.8

Less deferred points and other, net.......       274.5           155.3
                                             ---------       ---------

Finance receivables held on
   balance sheet..........................   $18,009.2       $16,487.8
                                             =========       =========
</TABLE>


          Activity in the interest-only securities account during 2001, 2000 and
1999 is as follows:
<TABLE>
<CAPTION>


                                                                                        2001         2000        1999
                                                                                        ----         ----        ----
                                                                                             (Dollars in millions)
<S>                                                                                    <C>        <C>          <C>


Balance, beginning of year...........................................................  $432.9     $ 905.0      $1,305.4
   Additions resulting from securitizations during the year..........................      -           -          393.9
   Additions resulting from clean-up calls (a).......................................    45.3       100.3            -
   Investment income.................................................................    51.5       106.6         185.1
   Cash paid (received):
     Gross cash received.............................................................   (89.2)     (210.8)       (442.6)
     Guarantee payments related to bonds held by others..............................    32.7        22.3            -
     Guarantee payments related to retained bonds (included in actively
       managed fixed maturities).....................................................    42.2          .9            -
   Impairment charge to reduce carrying value........................................  (264.8)     (434.1)       (533.8)
   Sale of securities related to a discontinued line.................................   (12.4)         -             -
   Interest purchased by Lehman in conjunction with securitization transaction.......   (55.2)         -             -
   Transfer to servicing rights in conjunction with securitization transaction.......   (50.0)         -             -
   Cumulative effect of change in accounting principle...............................     -         (70.2)           -
   Change in unrealized appreciation (depreciation) recorded in shareholders' equity.     8.7        12.9          (3.0)
                                                                                       ------     -------      --------

Balance, end of year.................................................................  $141.7     $ 432.9      $  905.0
                                                                                       ======     =======      ========



                                       112

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------
<FN>


-----------------------

     (a)  During 2001 and 2000, clean-up calls were exercised for certain
          securitizations that were previously recognized as sales. The
          interest-only securities related to these securitizations had
          previously been separately securitized with other interest-only
          securities in transactions recognized as sales. The repurchase of the
          collateral underlying these securitizations triggered a requirement
          for the Company to repurchase a portion of the interest-only
          securities and to deposit into the securitization trust additional
          cash in excess of the collateral amount.


</FN>
</TABLE>
                                       113

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          5. LIABILITIES FOR INSURANCE AND ASSET ACCUMULATION PRODUCTS:

          These liabilities consisted of the following:
<TABLE>
<CAPTION>


                                                                                    Interest
                                                         Withdrawal    Mortality      rate
                                                         assumption   assumption   assumption      2001            2000
                                                         ----------   ----------   ----------      ----            ----
                                                                                                   (Dollars in millions)
   <S>                                                  <C>           <C>              <C>      <C>            <C>

   Future policy benefits:
     Interest-sensitive products:
       Investment contracts............................      N/A          N/A          (c)      $11,117.1      $11,502.9
       Universal life-type contracts...................      N/A          N/A          N/A        4,670.6      ---------

         Total interest-sensitive products.............                                          15,787.7       16,123.2
                                                                                                ---------      ---------
     Traditional products:
       Traditional life insurance contracts............    Company        (a)          6%         2,091.5        2,082.4
                                                         experience

       Limited-payment contracts.......................    Company        (b)          7%           869.9          877.2
                                                         experience,
                                                        if applicable

       Individual and group accident and health .......    Company     Company         6%         5,211.4        4,915.5
                                                                                                ---------      ---------
                                                         experience   experience

         Total traditional products....................                                           8,172.8        7,875.1
                                                                                                ---------      ---------

   Claims payable and other policyholder funds ........      N/A          N/A          N/A        1,005.5        1,026.1
   Liabilities related to separate accounts and
     investment trust..................................      N/A          N/A          N/A        2,376.3        2,610.1
   Liabilities related to certificates of deposit......      N/A          N/A          N/A        1,790.3        1,873.3
                                                                                                ---------      ---------

       Total...........................................                                         $29,132.6      $29,507.8
                                                                                                =========      =========
<FN>


--------------------

(a)  Principally, modifications of the 1965 - 70 and 1975 - 80 Basic, Select and
     Ultimate Tables.

(b)  Principally, the 1984 United States Population Table and the NAIC 1983
     Individual Annuitant Mortality Table.

(c)  In both 2001 and 2000: (i) approximately 96 percent of this liability
     represented account balances where future benefits are not guaranteed; and
     (ii) approximately 4 percent represented the present value of guaranteed
     future benefits determined using an average interest rate of approximately
     6 percent.
</FN>
</TABLE>



                                       114

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          6. INCOME TAXES:

          Our income tax expense includes deferred income taxes arising from
temporary differences between the financial reporting and tax bases of assets
and liabilities and net operating loss carryforwards. These amounts are
reflected in the balance of our income tax assets which totaled $678.1 million
at December 31, 2001. In assessing the realization of our deferred income tax
assets, we consider whether it is more likely than not that the deferred income
tax assets will be realized. The ultimate realization of our deferred income tax
assets depends upon generating future taxable income during the periods in which
our temporary differences become deductible and before our net operating loss
carryforwards expire. We evaluate the realizability of our deferred income tax
assets by assessing the need for a valuation allowance on a quarterly basis. If
we determine that it is more likely than not that our deferred income tax assets
will not be recovered, a valuation allowance will be established against some or
all of our deferred income tax assets. This could have a significant effect on
our future results of operations and financial position. The components of the
Company's income tax assets and liabilities were as follows:
<TABLE>
<CAPTION>


                                                                                                 2001          2000
                                                                                                 ----          ----
                                                                                               (Dollars in millions)
<S>                                                                                         <C>    <C>    <C>    <C>    <C>    <C>


Deferred tax assets:
    Net operating loss carryforwards..................................................        $   411.7     $  393.2
    Deductible timing differences:
       Actively managed fixed maturities..............................................            124.9         70.3
       Interest-only securities.......................................................              -           32.2
       Insurance liabilities..........................................................            827.5      1,031.8
       Allowance for loan losses......................................................            148.2        116.6
       Reserve for loss on loan guarantees............................................            147.0         87.6
       Unrealized depreciation........................................................            247.1        371.4
                                                                                              ---------     --------

         Total deferred tax assets....................................................          1,906.4      2,103.1
                                                                                              ---------     --------

Deferred tax liabilities:
       Venture capital income (loss)..................................................            (36.7)       (67.9)
       Interest-only securities.......................................................            (75.2)         -
       Cost of policies purchased and cost of policies produced.......................         (1,075.6)    (1,128.0)
       Other..........................................................................            (56.2)      (293.6)
                                                                                              ---------     --------

         Total deferred tax liabilities...............................................         (1,243.7)    (1,489.5)
                                                                                              ---------     --------

Current income taxes prepaid..........................................................             15.4         33.6
                                                                                              ---------     --------

         Net income tax assets........................................................        $   678.1     $  647.2
                                                                                              =========     ========
</TABLE>


          At December 31, 2001, Conseco had federal income tax loss
carryforwards of $1,176.3 million available (subject to various statutory
restrictions) for use on future tax returns. These carryforwards will expire as
follows: $2.4 million in 2003; $11.2 million in 2004; $4.9 million in 2005; $.7
million in 2006; $7.9 million in 2007; $7.5 million in 2008; $10.5 million in
2009; $4.6 million in 2010; $5.7 million in 2011; $10.1 million in 2012; $43.9
million in 2013; $6.9 million in 2014; $144.7 million in 2016; $24.0 million in
2017; $242.0 million in 2018; $159.1 million in 2019; and $490.2 million in
2020.


                                       115

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Income tax expense (benefit) was as follows:
<TABLE>
<CAPTION>


                                                                                               2001       2000       1999
                                                                                               ----       ----       ----
                                                                                                  (Dollars in millions)
<S>                                                                                          <C>        <C>         <C>


Current tax provision.....................................................................   $ 136.8    $  70.9     $270.3
Deferred tax provision (benefit)..........................................................    (252.6)    (447.1)     152.8
                                                                                             -------    -------     ------

         Income tax expense (benefit).....................................................   $(115.8)   $(376.2)    $423.1
                                                                                             =======    =======     ======
</TABLE>

          A reconciliation of the U.S. statutory corporate tax rate to the
effective rate reflected in the consolidated statement of operations is as
follows:
<TABLE>
<CAPTION>


                                                                                                2001       2000       1999
                                                                                                ----       ----       ----
<S>                                                                                            <C>         <C>        <C>


U.S. statutory corporate rate.............................................................     (35.0)%     (35.0)%    35.0%
Nondeductible goodwill amortization.......................................................      10.0         2.9       3.3
Other nondeductible expenses..............................................................       (.5)        2.2        -
State taxes...............................................................................       2.1          .4        .9
Settlement of tax issues..................................................................        -           -       (2.6)
Provision for tax issues and other........................................................      (4.2)        1.9        .2
                                                                                               -----       -----      ----

         Effective tax rate...............................................................     (27.6)%     (27.6)%    36.8%
                                                                                               =====       =====      ====
</TABLE>


          No valuation allowance has been provided on our deferred income tax
assets at December 31, 2001, as we believe it is more likely than not that all
such assets will be realized. We reached this conclusion after considering the
availability of taxable income in prior carryback years, tax planning
strategies, and the likelihood of future taxable income exclusive of reversing
temporary differences and carryforwards. Differences between forecasted and
actual future operating results could adversely impact our ability to realize
our deferred income tax assets.

          To utilize all of our net operating loss carryforwards before
expiration, we would need to generate minimum taxable income by group of:

     o    $201.4 million before 2016 in our insurance subsidiaries;

     o    $142.8 million before 2018 in certain of our acquired companies; and

     o    $832.1 million before 2020 in our finance subsidiaries, certain
          insurance subsidiaries and corporate operations.

          In recent years, we have had losses before income taxes for financial
reporting purposes. However, we believe that existing levels of income from our
continuing operations coupled with changes in our operations that either have
taken place or will take place are sufficient to generate the minimum amounts of
taxable income set forth above to utilize our net operating loss carryforwards
before they expire. Such changes are: (i) reduction in interest expense related
to corporate obligations; (ii) various cost saving initiatives; (iii) transfer
of certain customer service and backroom operations to our India subsidiary;
(iv) the discontinuation of certain unprofitable businesses, major medical
insurance; and (v) other changes in an effort to increase the efficiency of our
business operations.


                                       116

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          The following chart reconciles our income (loss) before taxes for
financial statement purposes to our taxable income (loss) for income tax
purposes:
<TABLE>
<CAPTION>


                                                                 2001          2000        1999
                                                                 ----          ----        ----
                                                                     (Dollars in millions)
<S>                                                            <C>         <C>           <C>

Income (loss) before income taxes, minority interest,
    extraordinary gain (loss) and cumulative effect of
    accounting change........................................  $(419.4)    $(1,361.8)    $1,150.9
Adjustments to determine taxable income:
    Net investment income - finance segment assets...........    (37.2)         81.0        257.5
    Venture capital income related to investment
       in TeleCorp PCS, Inc..................................     42.9         199.5       (354.8)
    Gain on sale of finance receivables......................       -             -        (550.6)
    Provision for losses.....................................    284.2         331.3         64.3
    Amortization.............................................    109.6         105.7         96.9
    Special charges..........................................       -          256.9           -
    Impairment charges.......................................    386.9         515.7        554.3
    Distributions on Company-obligated mandatorily
       redeemable preferred securities of subsidiary trusts..   (183.8)       (223.5)      (204.3)
    Extraordinary gain (loss) on extinguishment of debt......     26.5          (7.7)          -
    Cumulative effect of accounting change...................       -           85.1           -
    Tax benefit related to issuance of shares under stock
       option plans..........................................    (68.0)        (18.9)       (71.4)
    Net operations loss deduction............................    (89.9)           -        (489.8)
    Other....................................................    113.6          74.3         43.6
                                                               -------     ---------     --------

       Taxable income for income tax purposes................  $ 165.4     $    37.6     $  496.6
                                                               =======     =========     ========
</TABLE>


          Based on our projections of future taxable income, we expect to
utilize the largest portion of our net operating loss carryforwards relating to
our non-life insurance companies of $832.1 million over the next four to five
years. Approximately, 90 percent of our net operating loss carryforwards do not
begin to expire until 2016. Finally, based on our projections of future
financial reporting income and assuming that our deferred income tax assets and
liabilities reverse to the extent of future projected financial reporting
income, we expect to utilize all of our net deferred income tax assets of $662.7
million over the next four or five years.


                                       117

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          7. NOTES PAYABLE:

          Direct Corporate Obligations

          Notes payable, representing direct corporate obligations at December
31, 2001 and 2000, were as follows (interest rates as of December 31, 2001):

<TABLE>
<CAPTION>


                                                                                  2001             2000
                                                                                  ----             ----
                                                                                  (Dollars in millions)
<S>                                                                            <C>                <C>


$1.5 billion bank credit facility (5.32%)....................................  $1,493.3           $1,500.0
Other bank credit facilities.................................................        -               551.2
7.6% senior notes due 2001...................................................        -               118.9
6.4% Mandatory Par Put Remarketed Securities.................................        -               550.0
8.5% notes due 2002..........................................................     302.3              450.0
6.4% notes due 2003..........................................................     250.0              250.0
8.75% notes due 2004.........................................................     788.0              788.0
6.8% senior notes due 2005...................................................     250.0              250.0
9.0% notes due 2006..........................................................     550.0              550.0
10.75% senior notes due 2008.................................................     400.0                -
Other........................................................................      90.6               92.1
                                                                               --------           --------

     Total principal amount..................................................   4,124.2            5,100.2
Unamortized net discount related to issuance of notes payable................     (42.1)             (45.2)
Mark-to-market adjustment related to hedging transactions (as described in
   note 1 under the caption "Accounting for Derivatives")....................       5.5                -
                                                                               --------           --------

     Direct corporate obligations............................................  $4,087.6           $5,055.0
                                                                               ========           ========
</TABLE>


          On June 29, 2001, the Company completed the public offering of $400.0
million of senior notes with a stated rate of 10.75 percent (the "10.75% Notes")
due June 15, 2008. We entered into interest rate swap agreements to convert the
fixed rate on these notes to a weighted average variable rate based on LIBOR
plus approximately 5.75 percent (currently 7.62 percent). The indenture for the
10.75% Notes limits our ability to, among other things (all as described in the
indenture): (i) incur additional debt and issue preferred stock; (ii) make loans
and investments; (iii) pay dividends; (iv) create additional loans on our
assets; (v) engage in transactions with our affiliates; (vi) consolidate, merge
or transfer all or substantially all our assets; or (vii) change lines of
business. Most of the foregoing restrictions will expire if the 10.75% Notes
have been rated as investment grade securities by either S & P or Moody's. The
10.75% Notes are unsecured and rank equally with all other unsecured senior
indebtedness of Conseco. Proceeds from the offering of approximately $385.9
million (after underwriting discounts and estimated offering expenses) were used
to reduce amounts outstanding under our credit facilities. As a result, we
recognized an extraordinary charge of $.4 million (net of an income tax benefit
of $.2 million) in 2001.

          Effective March 20, 2002, Conseco reached agreement with the
participating banks in our bank credit facility to modify certain terms and
conditions within the $1.5 billion bank agreement (referred to herein as "the
amended credit facility"). The most significant changes in the amended credit
facility include (i) a change in financial covenant requirements; (ii) a change
in the distribution of proceeds on asset sales; (iii) a reduction in the minimum
liquidity requirement at the holding company necessary to pay trust preferred
dividends; and (iv) a provision permitting the Company to exchange up to $2.54
billion aggregate principal amount of newly issued notes guaranteed by our
wholly owned subsidiary, CIHC, Incorporated. The new notes will be structurally
senior to the existing notes, but subordinated to the CIHC guarantee of the bank
credit facility.

          The amended credit facility is due December 31, 2003; however, subject
to the absence of any default, we may further extend its maturity to March 31,
2005, provided that: (i) we pay an extension fee of 3.5 percent of the amount
extended; (ii) cumulative principal payments of at least $200 million have been
paid by September 30, 2002 and at least $500 million by September 30, 2003; and
(iii) the interest coverage ratio for the four quarters ended

                                       118

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


September 30, 2003 shall be greater than or equal to 2.25:1.0.

          Pursuant to our amended credit facility, we have agreed that any
amounts received from asset sales (including our TeleCorp investment) occurring
after March 20, 2002 (with certain exceptions), would be applied: (a) 100
percent up to $352 million to be retained by Conseco; (b) 100 percent of the
next $313 million to repay the $1.5 billion bank credit facility and to fund a
segregated cash account to provide collateral for Conseco's guarantee related to
the directors, officers and key employee stock purchase program (based on the
relative balance due under each facility); (c) of the next $250 million received
on or before December 31, 2003, 50 percent would be retained by Conseco and 50
percent would be used to repay the $1.5 billion bank credit facility and to fund
a segregated cash account to provide collateral for Conseco's guarantee related
to the directors, officers and key employee stock purchase program (based on the
relative balance due under each facility); (d) proceeds that either exceed $915
million or are received after December 31, 2003 and prior to April 1, 2004 would
be applied 25 percent to Conseco and 75 percent to repay the $1.5 billion bank
credit facility and to fund a segregated cash account to provide collateral for
Conseco's guarantee related to the directors, officers and key employee stock
purchase program (based on the relative balance due under each facility; and (e)
proceeds received after March 31, 2004 are applied 50 percent to Conseco and 50
percent to repay the $1.5 billion bank credit facility and to fund a segregated
cash account to provide collateral for Conseco's guarantee related to the
directors, officers and key employee stock purchase program (based on the
relative balance due under each facility) No assurance can be provided as to the
timing, proceeds, or other terms related to any potential asset sale or
financing transaction.

          Our amended credit facility requires the Company to maintain various
financial ratios and balances, as defined in the agreement including: (i) a
debt-to-total capitalization ratio of less than .400:1.0 at December 31, 2001
and decreasing over time, as defined in the agreement, to 0.300:1.0 at March 31,
2004 and thereafter (such ratio was .359:1.0 at December 31, 2001); (ii) an
interest coverage ratio greater than 1.20:1.0 for the year ending December 31,
2001 and increasing over time, as defined in the agreement, to 2.50:1.0 for the
four quarters ending June 30 , 2004 and thereafter (such ratio was 1.69:1.0 for
the year ended December 31, 2001); (iii) adjusted earnings, as defined in the
agreement, of at least $1,600.0 million for the year ending December 31, 2001
and changing over time, as defined in the agreement, to $1,700.0 million for the
four quarters ending September 30, 2004 (the adjusted earnings for the year
ended December 31, 2001 were $1,624.8 million); (iv) Conseco Finance tangible
net worth, as defined in the agreement, of at least $1.2 billion at December 31,
2001; and $1.6 billion at March 31, 2005 (such tangible net worth exceeded $1.4
billion at December 31, 2001); and (v) the ratio of aggregate total adjusted
capital to aggregate authorized control level risk-based capital (as defined by
the National Association of Insurance Commissioners) with respect to our
insurance subsidiaries of at least 200 percent (such ratio was greater than 470
percent at December 31, 2001). Effective March 20, 2002, such ratio requirement
was increased to 250 percent. Our amended bank credit facility provides that any
charges taken to write off goodwill to the extent required by SFAS 142 will be
excluded from the various financial ratios and covenants that we are required to
meet or maintain.

          The amended credit facility reduces the 90-day moving average cash
balance requirement from $100 million to $50 million. The Company is required to
have at least $50 million of cash on hand immediately after making a trust
preferred dividend payment in addition to the 90-day moving average requirement.
The amended agreement also states that in the event one of Conseco's significant
insurance subsidiaries is rated B or below by A.M. Best, the Company must take
certain actions to generate liquidity and accelerate the repayment of the bank
credit facility.

          The amended credit facility prohibits the payment of cash dividends on
our common stock until the Company has received investment grade ratings on its
outstanding public debt. Such agreement also prohibits the repurchase of our
common stock. The amended credit agreement limits the issuance of additional
debt, contingent obligations, liens, asset dispositions, other restrictive
agreements, affiliate transactions, change in business and modification of terms
of debt or preferred stock, all as defined in the agreements. The obligations
under our credit facility are guaranteed by CIHC, Incorporated, a wholly owned
subsidiary of Conseco, and the ultimate holding company for Conseco's principal
operating subsidiaries.

          The interest rate on the credit facilities is based on an IBOR rate
plus a margin of 2.5 percent. Effective March 20, 2002 such margin has been
increased to 3.25 percent. Borrowings under our bank credit facilities averaged
$1,743.6 million during 2001, at a weighted average interest rate of 7.1
percent.

                                       119

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          During 2001, we repurchased: (i) $64.6 million par value of the 7.6%
senior notes due June 2001 (resulting in an extraordinary gain of $.3 million,
net of income taxes of $.2 million); and (ii) $147.7 million par value of the
8.5% notes due 2002 (resulting in an extraordinary gain of $15.8 million, net of
income taxes of $8.5 million).

          Pursuant to the terms of the Mandatory Par Put Remarketed Securities,
the Company elected to redeem the notes at a redemption price defined in the
remarketing agreement. As a result, the Company recognized an extraordinary
charge of $4.6 million (net of an income tax benefit of $2.5 million) in the
second quarter of 2001.

          Borrowings under our commercial paper program averaged $337.3 million,
at a weighted average interest rate of 6.1 percent during 2000. The actions by
rating agencies which occurred after March 31, 2000 affected our ability to
issue commercial paper.

          On February 7, 2000, the Company completed the public offering of
$800.0 million of 8.75 percent notes due February 9, 2004. The notes are
unsecured and rank equally with all other unsecured senior indebtedness of
Conseco. Proceeds from the offering of approximately $794.3 million (after
underwriting discounts and estimated offering expenses) were used to repay
outstanding indebtedness.

          During 2000, we repurchased: (i) $18.5 million par value of the 7.875
percent notes due 2000 for $16.7 million; and (ii) $12 million par value of the
8.75 percent notes due 2004 for $8.7 million. We recognized an extraordinary
gain of $3.2 million (net of income taxes of $1.7 million) related to these
repurchases. In addition, during 2000, the Company repurchased $250 million of
notes payable due 2003. We recognized an extraordinary loss of $4.9 million (net
of income taxes of $2.6 million) related to this repurchase.


                                       120

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Notes payable, representing direct finance obligations (excluding
          notes payable related to securitized finance receivables structured as
          collateralized borrowings)

          Notes payable representing direct finance obligations (excluding notes
payable related to securitized finance receivables structured as collateralized
borrowings) at December 31, 2001 and 2000, were as follows (interest rates as of
December 31, 2001):

<TABLE>
<CAPTION>

                                                                                  2001               2000
                                                                                  ----               ----
                                                                                   (Dollars in millions)
<S>                                                                            <C>                <C>

Master repurchase agreements due on various dates in
   2002 and 2003 (2.7%)......................................................  $1,679.0           $1,806.9
Credit facility collateralized by retained interests in securitizations
   due 2003 (3.9%)...........................................................     507.3              590.0
Medium term notes due September 2002 and April 2003 (6.54%)..................     189.7              223.7
10.25% senior subordinated notes due June 2002...............................     138.2              193.6
Other........................................................................      22.5                3.2
                                                                               --------           --------

     Total principal amount..................................................   2,536.7            2,817.4

Unamortized net discount and deferred fees...................................      (8.8)              (6.5)
                                                                               --------           --------

     Direct finance obligations..............................................  $2,527.9           $2,810.9
                                                                               ========           ========
</TABLE>


          Amounts borrowed under master repurchase agreements have decreased due
to repayments using the proceeds received from various asset sales. At March 19,
2002, we had $4.0 billion (of which $2.1 billion is committed) in master
repurchase agreements, commercial paper conduit facilities and other facilities
with various banking and investment banking firms for the purpose of financing
our consumer and commercial finance loan production. These facilities typically
provide financing of a certain percentage of the underlying collateral and are
subject to the availability of eligible collateral and, in some cases, the
willingness of the banking firms to continue to provide financing. Some of these
agreements provide for annual terms which are extended either quarterly or
semi-annually by mutual agreement of the parties for an additional annual term
based upon receipt of updated quarterly financial information. At December 31,
2001, we had borrowed $2.2 billion under these agreements, leaving $1.8 billion
available to borrow (of which approximately $.4 billion is committed). One of
our master repurchase agreements (with a committed capacity of $400.0 million)
expires on May 3, 2002. As of December 31, 2001, we had $66.1 million
outstanding under this facility. We are in the process of negotiating a renewal
of this facility.

          During 2001, Conseco Finance repurchased $55.4 million par value of
its 10.25% senior subordinated notes due June 2002 for $51.9 million (resulting
in an extraordinary gain of $2.1 million, net of income taxes of $1.3 million).
Also during 2001, Conseco Finance repurchased $34.0 million par value of its
6.5% medium term notes due September 2002 for $27.5 million (resulting in an
extraordinary gain of $4.0 million, net of income taxes of $2.5 million).

          During 2000, the Company amended an agreement with Lehman related to
certain master repurchase agreements and the collateralized credit facility.
Such amendment significantly reduced the restrictions on intercompany payments
from Conseco Finance to Conseco as required by the previous agreement. In
conjunction with the amendment, Conseco agreed to convert $750 million principal
balance of its intercompany note due from Conseco Finance to $750 million stated
value of Conseco Finance 9% redeemable cumulative preferred stock (the
"intercompany preferred stock"). During 2001, Conseco Finance made payments to
Conseco totaling $537.2 million reducing the intercompany note balance to $249.5
million at December 31, 2001.

          Pursuant to the amended agreement, Conseco Finance may make the
following payments to Conseco: (i) interest on the intercompany note; (ii)
payments for products and services provided by Conseco; and (iii) intercompany
tax sharing payments. Conseco Finance may also make the following payments to
Conseco provided the minimum liquidity requirements defined in the amended
agreement are met and the cash payments are applied in the order summarized: (i)
unpaid interest on the intercompany note; (ii) prepayments of principal on the
intercompany note or repayments of any increase to the intercompany receivable
balance; (iii) dividends on the intercompany preferred stock; (iv) redemption of
the intercompany preferred stock;

                                       121

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


and (v) common stock dividends. The liquidity test of the amended agreement
requires Conseco Finance to have minimum levels of liquidity both before and
after giving effect to such payments to Conseco. Liquidity, as defined, includes
unrestricted cash and may include up to $150 million of liquidity available at
Conseco Finance's bank subsidiaries and the aggregate amount available to be
drawn under Conseco Finance's credit facilities (where applicable, based on
eligible excess collateral pledged to the lender multiplied by the appropriate
advance rate). The minimum liquidity must equal or exceed $250 million, plus:
(i) 50 percent of cash up to $100 million generated by Conseco Finance
subsequent to September 21, 2000; and (ii) 25 percent of cash generated by
Conseco Finance in excess of $100 million, provided the total minimum cash
liquidity shall not exceed $350 million and the cash generated by Conseco
Finance (used in the calculation to increase the minimum) will exclude operating
cash flows and the net proceeds received from certain asset sales and other
events listed in the amended agreement (which are consistent with the courses of
actions we have previously announced).

          The amended agreement requires Conseco Finance to maintain various
financial ratios, as defined in the agreement. These ratios include: (i) an
adjusted tangible net worth of at least $1.95 billion (such amount was $2.04
billion at December 31, 2001); (ii) a fixed charge coverage ratio of not less
than 1.0:1.0 for the year ending December 31, 2001, and defined periods
thereafter (such ratio was 1.20:1.0 for the year ended December 31, 2001); (iii)
a ratio of net worth to total managed receivables of not less than 4:100 (such
ratio was 4.49:100 at December 31, 2001); and (iv) a ratio of total
non-warehouse debt less finance receivables and certain other assets, as defined
in the agreement, to net worth of less than 1.0:2.0 (such ratio was .28:2.0 at
December 31, 2001).

          In early 2002, Conseco Finance entered into various new financing
arrangements with Lehman which either amend or replace the prior arrangements.
Also, in early 2002, Conseco Finance tendered for all its remaining public debt
(i.e., its medium term notes due September 2002 and April 2003 and its 10.25%
Senior Subordinated Notes due June 2002). Refer to note 16 for further
discussion of such items.

          The maturities of notes payable (excluding notes payable related to
securitized finance receivables structured as collateralized borrowings)
reflecting the amendments to our bank credit facility made in March 2002 at
December 31, 2001, were as follows (dollars in millions):

<TABLE>
<CAPTION>


                                                                               Direct         Direct
                                                                              corporate       finance
                                                                             obligations    obligations       Total
                                                                             -----------    -----------       -----
<S>                                                                           <C>             <C>            <C>

Bank credit facilities, master repurchase agreements and similar credit
   facilities that are used for short-term funding:
     2002................................................................     $  193.3        $1,116.8       $1,310.1
     2003................................................................        300.0         1,090.5        1,390.5
     2005................................................................      1,000.0              -         1,000.0


Term debt:
     2002................................................................        304.1           324.2          628.3
     2003................................................................        313.5             5.0          318.5
     2004................................................................        812.5              -           812.5
     2005................................................................        250.0              .2          250.2
     2006................................................................        550.0              -           550.0
     Thereafter..........................................................        400.8              -           400.8
                                                                              --------        --------       --------

           Total par value at December 31, 2001..........................     $4,124.2        $2,536.7       $6,660.9
                                                                              ========        ========       ========
</TABLE>



                                       122

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Notes Payable Related to Securitized Finance Receivables Structured as
Collateralized Borrowings

          Notes payable related to securitized finance receivables structured as
collateralized borrowings were $14,484.5 million and $12,100.6 million at
December 31, 2001 and 2000, respectively. The principal and interest on these
notes are paid using the cash flows from the underlying finance receivables
which serve as collateral for the notes. Accordingly, the timing of the
principal payments on these notes is dependent on the payments received on the
underlying finance receivables which back the notes. In some instances, the
Company is required to advance principal and interest payments even though the
payments on the underlying finance receivables which back the notes have not yet
been received. The average interest rate on these notes was 6.4 percent and 7.7
percent at December 31, 2001 and 2000, respectively.

          8. OTHER DISCLOSURES:

          Leases

          The Company rents office space, equipment and computer software under
noncancellable operating leases. Rental expense was $66.2 million in 2001, $70.6
million in 2000 and $61.5 million in 1999. Future required minimum rental
payments as of December 31, 2001, were as follows (dollars in millions):

<TABLE>
<CAPTION>

<S>                                                                            <C>

2002   ....................................................................    $ 63.8
2003   ....................................................................      51.4
2004   ....................................................................      35.9
2005   ....................................................................      27.2
2006   ....................................................................      20.0
Thereafter.................................................................      41.0
                                                                               ------

        Total..............................................................    $239.3
                                                                               ======
</TABLE>


          Pension and Postretirement Plans

          The Company provides certain pension, health care and life insurance
benefits for certain eligible retired employees under partially funded and
unfunded plans in existence at the date on which certain subsidiaries were
acquired. Certain postretirement benefit plans are contributory, with
participants' contributions adjusted annually. Amounts related to the pension
and postretirement benefit plans were as follows:


                                       123

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


<TABLE>
<CAPTION>

                                                                                     Postretirement
                                                         Pension benefits               benefits
                                                       -------------------        --------------------
                                                        2001         2000           2001        2000
                                                        ----         ----           ----        ----
                                                                    (Dollars in millions)
<S>                                                    <C>          <C>           <C>         <C>


Benefit obligation, beginning of year..............    $17.9        $20.6        $ 21.1       $ 21.9
    Interest cost..................................      1.1          1.4           1.5          1.5
    Plan participants' contributions...............       -            -            1.1          1.3
    Amendments to plan.............................       -            -             -            .4
    Actuarial loss (gain)..........................       .6          1.8           3.1         (1.2)
    Benefits paid..................................     (4.8)        (5.9)         (2.3)        (2.8)
                                                       -----        -----        ------       ------

Benefit obligation, end of year....................    $14.8        $17.9        $ 24.5       $ 21.1
                                                       =====        =====        ======       ======

Fair value of plan assets, beginning of year.......    $19.9        $18.8        $  3.0       $  4.3
    Actual return on plan assets...................     (1.4)         (.4)           .3           .4
    Employer contributions.........................       .5          6.9            -            -
    Benefits paid..................................     (4.8)        (5.4)         (1.3)        (1.7)
                                                       -----        -----        ------       ------

Fair value of plan assets, end of year.............    $14.2        $19.9         $ 2.0       $  3.0
                                                       =====        =====         =====       ======

Funded status......................................    $ (.6)       $ 2.0        $(22.5)      $(18.1)
Unrecognized net actuarial loss (gain).............      6.5          4.6          (7.6)       (12.1)
Unrecognized prior service cost....................       -            -           (1.6)        (1.8)
                                                       -----        -----        ------       ------

       Prepaid (accrued) benefit cost..............    $ 5.9        $ 6.6        $(31.7)      $(32.0)
                                                       =====        =====        ======       ======
</TABLE>


          We used the following weighted average assumptions to calculate
benefit obligations for our 2001 and 2000 valuations: discount rate of
approximately 6.8 percent and 7.1 percent, respectively; an expected return on
plan assets of approximately 8.5 percent and 8.4 percent, respectively.
Beginning in 2000, as a result of plan amendments, no assumption for
compensation increases was required. For measurement purposes, we assumed a 12.0
percent annual rate of increase in the per capita cost of covered health care
benefits for 2002, decreasing gradually to 5.0 percent in 2015 and remaining
level thereafter. During 2000, we amended the pension plans of recently acquired
companies to reduce future benefits accruing under such plans. These changes
resulted in the actuarial, settlement and curtailment gains summarized above.

          Components of the cost we recognized related to pension and
postretirement plans were as follows:
<TABLE>
<CAPTION>

                                                                                              Postretirement
                                                             Pension benefits                     benefits
                                                      ----------------------------------------------------------------
                                                        2001       2000       1999      2001       2000       1999
                                                        ----       ----       ----      ----       ----       ----
                                                                           (Dollars in millions)
<S>                                                  <C>         <C>         <C>       <C>         <C>         <C>


Service cost.......................................  $   -       $  -       $ 7.3      $  -        $ -         $ -
Interest cost......................................     1.1        1.4        3.0        1.5        1.5         1.6
Expected return of plan assets.....................    (1.5)      (1.7)      (1.4)       (.1)       (.2)        (.2)
Amortization of prior service cost.................      -          -          -        (1.0)       (.9)        (.8)
Settlement (gain) loss.............................     1.3        (.3)        -          -          -           -
Recognized net actuarial loss......................      .3         -         1.0        (.1)       -            -
                                                      -----      -----      -----      -----       ----        ----

       Net periodic cost (benefit).................   $ 1.2      $ (.6)     $ 9.9      $  .3       $ .4        $ .6
                                                      =====      =====      =====      =====       ====        ====
</TABLE>


          A one-percentage-point change in the assumed health care cost trend
rates would have an insignificant effect on the net periodic benefit cost of our
postretirement benefit obligation.

          The Company has qualified defined contribution plans for which
substantially all employees are eligible. Company

                                       124

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


contributions, which match certain voluntary employee contributions to the plan,
totaled $4.7 million in 2001, $9.1 million in 2000, and $10.3 million in 1999.
Matching contributions are required to be made either in cash or in Conseco
common stock.

          Litigation

          We and our subsidiaries are involved on an ongoing basis in lawsuits
(including purported class actions) relating to our operations, including with
respect to sales practices, and we and current and former officers and directors
are defendants in pending class action lawsuits asserting claims under the
securities laws and derivative lawsuits. The ultimate outcome of these lawsuits
cannot be predicted with certainty.

          Conseco Finance was served with various related lawsuits filed in the
United States District Court for the District of Minnesota. These lawsuits were
generally filed as purported class actions on behalf of persons or entities who
purchased common stock or options to purchase common stock of Conseco Finance
during alleged class periods that generally run from July 1995 to January 1998.
One action (Florida State Board of Admin. v. Green Tree Financial Corp., et. al,
Case No. 98-1162) was brought not on behalf of a class, but by the Florida State
Board of Administration, which invests and reinvests retirement funds for the
benefit of state employees. In addition to Conseco Finance, certain current and
former officers and directors of Conseco Finance are named as defendants in one
or more of the lawsuits. Conseco Finance and other defendants obtained an order
consolidating the lawsuits seeking class action status into two actions, one of
which pertains to a purported class of common stockholders (In re Green Tree
Financial Corp. Stock Litig., Case No. 97-2666) and the other of which pertains
to a purported class of stock option traders (In re Green Tree Financial Corp.
Options Litig., Case No. 97-2679). Plaintiffs in the lawsuits assert claims
under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the
Securities Exchange Act of 1934. In each case, plaintiffs allege that Conseco
Finance and the other defendants violated federal securities laws by, among
other things, making false and misleading statements about the current state and
future prospects of Conseco Finance (particularly with respect to prepayment
assumptions and performance of certain loan portfolios of Conseco Finance) which
allegedly rendered Conseco Finance's financial statements false and misleading.
On August 24, 1999, the United States District Court for the District of
Minnesota issued an order dismissing with prejudice all claims alleged in the
lawsuits. The plaintiffs subsequently appealed the decision to the U.S. Court of
Appeals for the 8th Circuit. A three judge panel issued an opinion on October
25, 2001, reversing the United States District Court's dismissal order and
remanding the actions to the United States District Court. Pretrial discovery is
expected to commence in all three lawsuits approximately in April 2002. The
Company believes that the lawsuits are without merit and intends to continue to
defend them vigorously. The ultimate outcome of these lawsuits cannot be
predicted with certainty.

          A total of forty-five suits were filed in 2000 against the Company in
the United States District Court for the Southern District of Indiana. Nineteen
of these cases were putative class actions on behalf of persons or entities that
purchased the Company's common stock during alleged class periods that generally
run from April 1999 through April 2000. Two cases were putative class actions on
behalf of persons or entities that purchased the Company's bonds during the same
alleged class periods. Three cases were putative class actions on behalf of
persons or entities that purchased or sold option contracts, not issued by the
Company, on the Company's common stock during the same alleged class periods.
One case was a putative class action on behalf of persons or entities that
purchased the Company's "FELINE PRIDES" convertible preferred stock instruments
during the same alleged class periods. With four exceptions, in each of these
twenty-five cases two former officers/directors of the Company were named as
defendants. In each case, the plaintiffs assert claims under Sections 10(b) (and
Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of
1934. In each case, plaintiffs allege that the Company and the individual
defendants violated the federal securities laws by, among other things, making
false and misleading statements about the current state and future prospects of
Conseco Finance (particularly with respect to performance of certain loan
portfolios of Conseco Finance) which allegedly rendered the Company's financial
statements false and misleading. The Company believes that these lawsuits are
without merit and intends to defend them vigorously. The ultimate outcome of
these lawsuits cannot be predicted with certainty.

          Eleven of the cases in the United States District Court for the
Southern District of Indiana were filed as purported class actions on behalf of
persons or entities that purchased preferred securities issued by various
Conseco Financing Trusts, including Conseco Financing Trust V, Conseco Financing
Trust VI, and Conseco Financing Trust VII. Each of these complaints named as
defendants the Company, the relevant trust (with two exceptions), two former
officers/directors of the Company, and underwriters for the particular issuance
(with one exception). One complaint also named an officer and all of

                                       125

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


the Company's directors at the time of issuance of the preferred securities by
Conseco Financing Trust VII. In each case, plaintiffs asserted claims under
Section 11 and Section 15 of the Securities Act of 1933, and eight complaints
also asserted claims under Section 12(a)(2) of that Act. Two complaints also
asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and one complaint also asserted a claim under Section 10(b) of that Act.
In each case, plaintiffs alleged that the defendants violated the federal
securities laws by, among other things, making false and misleading statements
in Prospectuses and/or Registration Statements related to the issuance of
preferred securities by the Trust involved regarding the current state and
future prospects of Conseco Finance (particularly with respect to performance of
certain loan portfolios of Conseco Finance) which allegedly rendered the
disclosure documents false and misleading.

          All of the Conseco, Inc. securities cases have been consolidated into
one case in the United States District Court for the Southern District of
Indiana, captioned: "In Re Conseco, Inc. Securities Litigation", Case number
IP00-C585-Y/S. An amended complaint was filed on January 12, 2001, which asserts
claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,
and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, with respect to
common stock and various other securities issued by the Company and Conseco
Financing Trust VII. The Company filed a motion to dismiss the amended complaint
on April 27, 2001. On January 10, 2002, the Company entered into a Memorandum of
Understanding (the "MOU") to settle the consolidated securities cases that are
pending in the United States District Court for the Southern District of Indiana
for $120 million subject to court approval. Under the MOU, as amended on
February 12, 2002, $106 million was required to be placed in escrow by March 8,
2002; the remaining $14 million was to be paid in two installments: $6 million
by April 1, 2002, and $8 million by October 1, 2002 (all payments with interest
from January 25, 2002). The $106 million due on March 8, 2002, was not paid, for
reasons set forth in the following paragraph, and the MOU has expired by its
terms. Accordingly, and unless we are able to revive the settlement, the Company
intends to defend the securities lawsuit vigorously. The ultimate outcome cannot
be predicted with certainty.

          We maintained certain directors' and officers' liability insurance
that was inforce at the time the Indiana securities and derivative litigation
(the derivative litigation is described below) was commenced and, in our view,
applies to the claims asserted in that litigation. The insurers denied coverage
for those claims, so we commenced a lawsuit against them on June 13, 2001, in
Marion County Circuit Court in Indianapolis, Indiana (Conseco, Inc., et. al. v.
National Union Fire Insurance Company of Pittsburgh, PA., Royal Insurance
Company of America, Westchester Fire Insurance Company, RLI Insurance, Greenwich
Insurance Company and Certain Underwriters at Lloyd's of London, Case No.
49C010106CP001467) seeking, among other things, a judicial declaration that
coverage for those claims exists. The primary insurance carrier, National Union
Fire Insurance Co. of Pittsburgh, PA, has paid its full $10 million in policy
proceeds toward the settlement of the securities litigation; in return, National
Union has been released from the coverage litigation pending in state court in
Marion County, Indiana. The first excess insurance carrier, Royal Insurance
Company ("Royal"), placed its full $15 million in policy proceeds into an escrow
under Royal's control, but reserved rights to continue to litigate coverage and
imposed an unacceptable condition on releasing the funds. The second excess
insurance carrier, Westchester Fire Insurance Company, committed to pay its full
$15 million in policy proceeds toward the settlement without a reservation of
rights, on condition that certain impairments to its subrogation rights be
removed from the MOU. The third excess insurance carrier, RLI Insurance Company
("RLI"), committed to pay its full $10 million in policy proceeds toward the
settlement subject to a reservation of rights, and on condition that Conseco
give RLI any security for its reservation of rights that Conseco gives to Royal.
The fourth excess insurance carrier, Greenwich Insurance Company, committed to
pay its full $25 million in policy proceeds toward the settlement without a
reservation of rights. In addition, the funding commitments of Westchester, RLI
and Greenwich were conditioned on each of the excess carriers below them paying
their respective policy limits in full toward the settlement. The final excess
carrier, Certain Underwriters at Lloyd's of London, refused to pay or to escrow
its $25 million in policy proceeds toward the settlement, although it has
advised the Company that it is continuing to investigate the Company's claim.
There can be no assurance that the insurance carriers, other than the primary
carrier, will in fact pay their policy proceeds toward the settlement even if
the case could still be settled on the terms reflected in the MOU. Because they
did not do so by March 8, 2002, the MOU described in the immediately preceding
paragraph expired. Should the settlement embodied in the MOU be lost, there can
be no assurance that the securities litigation can be resolved for $120 million,
and the Company will proceed with its coverage litigation in Marion County,
Indiana, against those carriers that caused the settlement to terminate. We
intend to pursue our coverage rights vigorously. However, the ultimate outcome
cannot be predicted with certainty.

          Nine shareholder derivative suits were filed in 2000 in the United
States District Court for the Southern District of Indiana. The complaints named
as defendants the current directors, certain former directors, certain
non-director officers of

                                       126

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


the Company (in one case), and, alleging aiding and abetting liability, certain
banks that allegedly made loans in relation to the Company's "Stock Purchase
Plan" (in three cases). The Company is also named as a nominal defendant in each
complaint. Plaintiffs allege that the defendants breached their fiduciary duties
by, among other things, intentionally disseminating false and misleading
statements concerning the acquisition, performance and proposed sale of Conseco
Finance, and engaged in corporate waste by causing the Company to guarantee
loans that certain officers, directors and key employees of the Company used to
purchase stock under the Stock Purchase Plan. These cases have now been
consolidated into one case in the United States District Court for the Southern
District of Indiana, captioned: "In Re Conseco, Inc. Derivative Litigation",
Case Number IP00655-C-Y/S. An amended complaint was filed on April 12, 2001,
making generally the same allegations and allegations of violation of the
Federal Reserve Board's margin rules. Three similar cases have been filed in the
Hamilton County Superior Court in Indiana. Schweitzer v. Hilbert, et al., Case
No. 29D01-0004CP251; Evans v. Hilbert, et al., Case No. 29D01-0005CP308 (both
Schweitzer and Evans name as defendants certain non-director officers); Gintel
v. Hilbert, et al., Case No. 29003-0006CP393 (naming as defendants, and
alleging aiding and abetting liability as to, banks that allegedly made loans in
relation to the Stock Purchase Plan). The cases filed in Hamilton County have
been stayed pending resolution of the derivative suits filed in the United
States District Court. The Company believes that these lawsuits are without
merit and intends to defend them vigorously. The ultimate outcome of these
lawsuits cannot be predicted with certainty.

          Conseco Finance is a defendant in two arbitration proceedings in South
Carolina (Lackey v. Green Tree Financial Corporation, n/k/a Conseco Finance
Corp. and Bazzle v. Green Tree Financial Corporation, n/k/a Conseco Finance
Corp.) where the arbitrator, over Conseco Finance's objection, allowed the
plaintiffs to pursue purported class action claims in arbitration. The two
purported arbitration classes consist of South Carolina residents who obtained
real estate secured credit from Conseco Finance's Manufactured Housing Division
(Lackey) and Home Improvement Division (Bazzle) in the early and mid 1990s, and
did not receive a South Carolina specific disclosure form relating to selection
of attorneys and insurance agents in connection with the credit transactions.
The arbitrator, in separate awards issued on July 24, 2000, awarded a total of
$26.8 million in penalties and attorneys' fees. The awards were confirmed as
judgments in both Lackey and Bazzle. These cases have been consolidated into one
case and are currently on appeal before the South Carolina Supreme Court. Oral
argument was heard on March 21, 2002. Conseco Finance has posted appellate
bonds, including $20 million of cash, for these cases. Conseco Finance intends
to vigorously challenge the awards and believes that the arbitrator erred by,
among other things, conducting class action arbitrations without the authority
to do so and misapplying South Carolina law when awarding the penalties. The
ultimate outcome of this proceeding cannot be predicted with certainty.

          On January 15, 2002, Carmel Fifth, LLC ("Carmel"), an indirect, wholly
owned subsidiary of the Company, exercised its rights, pursuant to the Limited
Liability Company Agreement of 767 LLC, to require 767 Manager, LLC ("Manager"),
an affiliate of Donald J. Trump, to elect within 60 days, either to acquire
Carmel's interests in 767 LLC for $499.4 million, or sell its interests in 767
LLC to Carmel for $15.6 million (the "Buy/Sell Right"). 767 LLC is a Delaware
limited liability company that owns the General Motors Building, a 50-story
office building in New York, New York. 767 LLC is owned by Carmel and Manager.
On February 6, 2002, Mr. Trump commenced a civil action against the Company,
Carmel and 767 LLC in New York State Supreme Court, entitled Donald J. Trump v.
Conseco, Inc., et al. Plaintiff claims that the Company and Carmel breached an
agreement, dated July 3, 2001, to sell Carmel's interests to plaintiff for $295
million on or before September 15, 2001 (the "July 3rd Agreement").
Specifically, plaintiff claims that the Company and Carmel improperly refused to
accept a reasonable guaranty of plaintiff's payment obligations, refused to
complete the sale of Carmel's interest before the September 15, 2001 deadline,
repudiated an oral promise to extend the September 15 deadline indefinitely and
repudiated the July 3rd Agreement by exercising Carmel's Buy/Sell Right.
Plaintiff asserts claims for breach of contract, breach of the implied covenant
of good faith and fair dealing, promissory estoppel, unjust enrichment and
breach of fiduciary duty. Plaintiff is seeking compensatory and punitive damages
of approximately $1 billion and declaratory and injunctive relief blocking
Carmel's Buy/Sell Right. The Company believes that this lawsuit is without merit
and intends to defend it vigorously.

          We have received a claim from the heirs of a former officer, Lawrence
Inlow, asserting that unvested options to purchase 756,248 shares of our common
stock should have been vested at Mr. Inlow's death. If such options had been
vested, the heirs claim that the options would have been exercised, and the
resulting shares of common stock would have been sold for a gain of
approximately $30 million based upon a stock price of $58.125 per share, the
highest stock price during the alleged exercise period of the options. We
believe the claim of the heirs is without merit. If the heirs proceed with their
claim, we will defend it vigorously.


                                       127

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          On March 27, 2002, seven holders of our bank debt filed a lawsuit in
the United States District Court for the Northern District of Illinois (AG
Capital Funding Partners LP, et al. v. Conseco, Inc., Case No. 02C2236). On
March 20, 2002, we amended our credit facilities to provide, in part, that in
the event of certain asset sales, we are not obligated to prepay amounts
borrowed under the credit agreement until we have received in excess of $352
million of net proceeds from those sales. The holders assert that 100% of the
holders of the bank debt must vote in favor of an amendment of the provisions
relating to the triggering of mandatory prepayments. We believe that the
amendment of the mandatory prepayment provisions of the credit agreement
complied with the terms of the credit agreement and we believe this lawsuit is
without merit and intend to defend this lawsuit vigorously. The ultimate outcome
of these proceedings cannot be predicted with certainty. Except with respect to
the mandatory prepayment provisions of the credit agreement, this lawsuit does
not challenge any other portion of the March 20, 2002 amendment to the credit
agreement.

          In addition, the Company and its subsidiaries are involved on an
ongoing basis in other lawsuits (including purported class actions) related to
their operations. These actions include a purported nationwide class action
regarding the marketing, sale and renewal of home health care and long term care
insurance policies that has been settled (along with two related California-only
purported class actions) pending final approval by the court, one action brought
by the Texas Attorney General regarding long term care policies, three purported
nationwide class actions involving claims related to "vanishing premiums," and
two purported nationwide class actions involving claims related to "modal
premiums" (the alleged imposition and collection of insurance premium surcharges
in excess of stated annual premiums). The ultimate outcome of all of these other
legal matters pending against the Company or its subsidiaries cannot be
predicted, and, although such lawsuits are not expected to individually have a
material adverse effect on the Company, such lawsuits could have, in the
aggregate, a material adverse effect on the Company's consolidated financial
condition, cash flows or results of operations.

          Guaranty Fund Assessments

          The balance sheet at December 31, 2001, includes: (i) accruals of
$18.7 million, representing our estimate of all known assessments that will be
levied against the Company's insurance subsidiaries by various state guaranty
associations based on premiums written through December 31, 2001; and (ii)
receivables of $8.0 million that we estimate will be recovered through a
reduction in future premium taxes as a result of such assessments. At December
31, 2000, such guaranty fund assessment related accruals were $20.4 million and
such receivables were $11.9 million. These estimates are subject to change when
the associations determine more precisely the losses that have occurred and how
such losses will be allocated among the insurance companies. We recognized
expense for such assessments of $7.6 million in 2001, $8.4 million in 2000 and
$5.0 million in 1999.

          Guarantees

          In conjunction with certain sales of finance receivables, our finance
subsidiary provided guarantees aggregating approximately $1.5 billion at
December 31, 2001. We consider any potential payments related to these
guarantees in the projected net cash flows used to determine the value of our
interest-only securities. During 2001 and 2000, advances of interest and
principal payments related to such guarantees on bonds held by others totaled
$32.7 million and $22.3 million, respectively.

          We have guaranteed bank loans totaling $545.4 million to approximately
155 current and former directors, officers and key employees. The funds were
used by the participants to purchase approximately 18.0 million shares of
Conseco common stock in open market or negotiated transactions with independent
parties. Such shares are held by the bank as collateral for the loans. In
addition, Conseco has provided loans to participants for interest on the bank
loans totaling $143.6 million. During the third quarter of 2000, the Company
negotiated a new guarantee with the banks which expires on December 31, 2003,
and made it available to participants who qualified and chose to participate in
a new lending program. A key goal of the program is to reduce the balance of
each participant's bank and interest loans to $25 per share of stock purchased
through the program. Such reductions are to occur through cash payments and pay
for performance programs. In order to receive the pay for performance program
benefits, participants in the new program are required to put to the Company, 75
percent of the value in excess of $25 per share of the shares purchased through
this program, as determined on December 31, 2003. A subsidiary of Conseco has
pledged $54.7 million of cash collateral in conjunction with the guarantee of a
portion of the bank loans.

                                       128

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


Conseco also granted a security interest in most of its assets in conjunction
with the guarantee of a portion of the bank loans. In 2001, 2000 and 1999, we
established a noncash provision in connection with these guarantees and loans of
$169.6 million, $231.5 million and $18.9 million, respectively. Such provision
is included as a component of the provision for losses. At December 31, 2001,
the reserve for losses on the loan guarantees and the liability related to the
pay for performance benefits totaled $420.0 million. At December 31, 2001, the
guaranteed bank loans and interest loans exceeded the value of the collateral
held (primarily the value of the common stock purchased) and the reserve for
losses and the liability related to the pay for performance benefits by
approximately $180 million. All participants have agreed to indemnify Conseco
for any loss incurred on their loans. We regularly evaluate these guarantees and
loans in light of the collateral and the creditworthiness of the participants.


                                       129

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Company-Obligated Mandatorily Redeemable Preferred Securities of
          Subsidiary Trusts

          Certain wholly owned subsidiary trusts have issued preferred
securities in public offerings. The trusts used the proceeds from these
offerings to purchase subordinated debentures from Conseco. The terms of the
preferred securities parallel the terms of the debentures, which account for
substantially all trust assets. The preferred securities are to be redeemed on a
pro rata basis, to the same extent as the debentures are repaid. Under certain
circumstances involving a change in law or legal interpretation, the debentures
may be distributed to the holders of the preferred securities. Our obligations
under the debentures and related agreements, taken together, provide a full and
unconditional guarantee of payments due on the preferred securities. The
debentures issued to the subsidiary trusts and the common securities purchased
by Conseco from the subsidiary trusts are eliminated in the consolidated
financial statements.

          On February 16, 2001, the trust preferred securities component of the
FELINE PRIDES were retained by the Company (and subsequently retired) as payment
under the stock purchase contract in accordance with their terms and, as a
result, we issued 11.4 million shares of Conseco common stock to the holders of
the FELINE PRIDES. The $496.6 million carrying value of the FELINE PRIDES that
were retired (and used for payment pursuant to the stock purchase contracts) was
transferred from minority interest to common stock and additional paid-in
capital.

          In April 2000, the Company and the holder of the Redeemable Hybrid
Income Overnight Shares ("RHINOS") issued in 1999 agreed to the repurchase by
the Company of the RHINOS at their $250 million par value. The Company
recognized an extraordinary loss of $3.3 million (net of income taxes of $1.8
million) in the second quarter of 2000 related to the redemption.

          Company-obligated mandatorily redeemable preferred securities of
subsidiary trusts at December 31, 2001, were as follows:
<TABLE>
<CAPTION>


                                                        Year                  Carrying   Distribution     Earliest/mandatory
                                                       issued     Par value     value        rate          redemption dates
                                                       ------     ---------     -----        ----          ----------------
                                                                 (Dollars in millions)
<S>                                                     <C>     <C>           <C>           <C>            <C>


Trust Originated Preferred Securities................   1999    $   300.0     $  294.5      9.44%          2004/2029  (b)
Trust Originated Preferred Securities ...............   1998        500.0        493.4      8.70           2003/2028  (b)
Trust Originated Preferred Securities................   1998        230.0        226.6      9.00           2003/2028  (b)
Capital Securities (a)...............................   1997        300.0        300.0      8.80                2027
Trust Originated Preferred Securities................   1996        275.0        275.0      9.16           2001/2026  (b)
Capital Trust Pass-through Securities (a)............   1996        325.0        325.0      8.70                2026
                                                                ---------       ------

                                                                $1,930.0      $1,914.5
                                                                =========     ========
<FN>

---------------

(a)  These securities may be redeemed anytime at: (i) the principal balance;
     plus (ii) a premium equal to the excess, if any, of the sum of the
     discounted present value of the remaining scheduled payments of principal
     and interest using a current market interest rate over the principal amount
     of securities to be redeemed.

(b)  The mandatory redemption dates of these securities may be extended for up
     to 19 years.
</FN>
</TABLE>


          So long as no event of default under the debentures has occurred and
is continuing, Conseco has the right to defer interest payments on the
subordinated debentures for up to 20 consecutive quarters, but not beyond the
maturity date of the subordinated debentures. If Conseco defers interest
payments on the subordinated debentures, the trust will also defer distributions
on the preferred securities. During the deferral period, distributions continue
to accumulate on the par amount plus any unpaid distributions at the stated
distribution rate. The deferral of such distributions could have an adverse
effect on our ability to access the capital markets and on our ratings.

          Reclassification Adjustments Included in Comprehensive Income

          The changes in unrealized appreciation (depreciation) included in
comprehensive income are net of reclassification adjustments for after-tax net
gains (losses) from the sale of investments included in net income (loss) of
approximately $240 million, $220 million and $(25) million for the years ended
December 31, 2001, 2000 and 1999, respectively.

                                       130

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Sale of Interest in Riverboat

          In the first quarter of 2001, the Company sold its 29 percent
ownership interest in the riverboat casino in Lawrenceberg, Indiana, for $260
million. We recognized a net gain on the sale of $192.4 million.

          9. SPECIAL CHARGES

          2001

          The following table summarizes the special charges incurred by the
Company during 2001, which are further described in the paragraphs which follow
(dollars in millions):

<TABLE>
<CAPTION>

<S>                                                                                          <C>

Organizational restructuring:
   Severance benefits....................................................................    $ 17.2
   Office closings and sale of artwork...................................................       7.9
   Loss related to sale of certain finance receivables...................................      11.2
Amounts related to disputed reinsurance balances.........................................       8.5
Litigation expenses......................................................................      30.4
Other items..............................................................................      26.7
                                                                                             ------

   Special charges before income tax benefit.............................................    $101.9
                                                                                             ======
</TABLE>



          Severance benefits

          During 2001, Conseco developed plans to change the way it operates.
Such changes are being undertaken in an effort to improve the Company's
operations and profitability. The planned changes included moving a significant
number of jobs to India, where a highly-educated, low-cost, English-speaking
labor force is available. Pursuant to GAAP, the Company is required to recognize
the costs associated with most restructuring activities as the costs are
incurred. However, costs associated with severance benefits are required to be
recognized when the costs are: (i) attributable to employees' services that have
already been rendered; (ii) relate to obligations that accumulate; and (iii) are
probable and can be reasonably estimated. Since the severance costs associated
with our planned activities meet these requirements, we recognized a charge of
$17.2 million in 2001.

          Office closings and sale of artwork

          In conjunction with our restructuring activities, we closed certain
offices, which resulted in the abandonment of certain leasehold improvements.
Further, certain antiques and artwork, formerly displayed in the Company's
executive offices, have been or are in the process of being sold. We recognized
a charge of $7.9 million related to these assets in 2001.

          Loss related to the sale of certain finance receivables

          During 2001, we recognized a loss of $2.2 million on the sale of $11.2
million of finance receivables. Also, during 2001, the purchaser of certain
credit card receivables returned certain receivables pursuant to a return of
accounts provision included in the sales agreement. Such returns and the
associated losses exceeded the amounts we initially anticipated when the
receivables were sold. We recognized a loss of $9.0 million related to the
returned receivables.


                                       131

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Amounts related to disputed reinsurance balances

          During 2001, we discontinued marketing certain medical insurance
products. Several reinsurers who assumed most of the risks associated with these
products have disputed the reinsurance receivables due to us. We have
established an allowance of $8.5 million for disputed balances that may not be
collected.

          Litigation expenses

          Litigation expenses primarily include the cost and proposed settlement
related to our securities litigation class action lawsuit. Such lawsuit is
further discussed in note 8 under the caption "Litigation".

          Other items

          Other items include expenses incurred: (i) in conjunction with the
transfer of certain customer service and backroom operations to our India
subsidiary; (ii) for consulting fees with respect to services provided related
to various debt and organizational restructuring transactions; (iii) pursuant to
the terms of the employment agreement for our chief executive officer; (iv)
related to discontinuing the sale of certain types of life insurance in
conjunction with lending transactions; and (v) for other items which are not
individually significant, net of a $10.0 million reduction in the value of the
warrant to purchase five percent of Conseco Finance (see note 1).

          2000

          The Company incurred significant special charges during 2000,
primarily related to the restructuring of our debt, restructuring of our finance
business and payments made pursuant to employment contracts. The following table
summarizes the special charges, which are further described in the paragraphs
which follow (dollars in millions):

<TABLE>
<CAPTION>

<S>                                                                             <C>

Advisory and professional fees related to debt restructuring................    $  9.9

Restructuring of finance business:
     Lower of cost or market adjustment for finance receivables
       identified for sale..................................................     103.3
     Loss on sale of transportation loans and vendor services
       financing business...................................................      51.0
     Loss on sale of asset-based loans......................................      68.2
     Loss on sale of subprime automobile and bankcard business, net.........      61.9
     Costs related to closing offices and streamlining businesses...........      31.2
     Abandonment of computer processing systems.............................      35.8
     Advisory fees and warrant paid and/or issued to Lehman
       and other investment banks...........................................     122.4

Executive contracts:
     Executive termination payment .........................................      72.5
     Chief Executive Officer signing payment................................      45.0
     Warrants issued to General Electric Company............................      21.0

Reserve methodology change at bank subsidiary...............................      48.0
Other items.................................................................      29.1
                                                                                ------

         Special charges before income tax benefit..........................    $699.3
                                                                                ======
</TABLE>



          Advisory and professional fees related to debt restructuring

          During 2000, we incurred $9.9 million of non-deferrable advisory and
professional fees primarily related to the restructuring of our bank credit
facilities.


                                       132

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Lower of cost or market adjustment for finance receivables identified
          for sale

          On July 27, 2000, we announced several courses of action to
restructure our finance business, including the sale or runoff of the finance
receivables of several business lines. The carrying value of the loans held for
sale was reduced to the lower of cost or market, consistent with our accounting
policy for such loans. The reduction in value of these loans of $103.3 million
(including a $45.9 million increase to the allowance for credit losses)
primarily related to transportation finance receivables (primarily loans for the
purchase of trucks and buses). These loans had experienced a significant
decrease in value as a result of the adverse economic effect that increases in
oil prices and competition had on borrowers in the transportation business
during 2000.

          Loss on sale of transportation loans and vendor services financing
          business

          During the fourth quarter of 2000, we sold transportation loans with a
carrying value of $566.0 million (after the market adjustment described above)
in whole loan sale transactions. We recognized an additional loss of $30.7
million on the sale. During 2000, we recognized a special charge and reduced
goodwill by $20.3 million, representing the difference between: (i) the carrying
value of the net assets of the vendor services financing business; and (ii) the
anticipated proceeds from the sale of such business, which was completed in the
first quarter of 2001.

          Loss on sale of asset-based loans

          During the third quarter of 2000, we sold asset-based loans with a
carrying value of $216.1 million in whole loan sale transactions. We recognized
a loss of $68.2 million on these sales.

          Loss on sale of subprime automobile and bankcard business

          During the second quarter of 2000, we sold all of the finance
receivables of our subprime automobile financing and servicing companies and
terminated their operations. In addition, the Company sold substantially all of
its bankcard (Visa and Mastercard) portfolio. We recognized a net loss on these
sales of $61.9 million.

          Costs related to closing offices and streamlining businesses

          Our restructuring activities included the closing of several branch
offices and streamlining our businesses. These activities included a reduction
in the work force of approximately 1,700 employees. The Company incurred a
charge of $8.6 million related to severance costs paid to terminated employees
in 2000. The Company also incurred lease termination and direct closing costs of
$12.3 million associated with the branch offices closed in conjunction with the
restructuring activities. In addition, fixed assets and leasehold improvements
of $10.3 million were abandoned when the branch offices were closed.

          Abandonment of computer processing systems

          We recorded a $35.8 million charge in 2000 to write off the carrying
value of capitalized computer software costs for projects that have been
abandoned in conjunction with our restructuring. These costs are primarily
associated with: (i) computer processing systems under development that would
require significant additional expenditures to complete and that are
inconsistent with our current business plan; and (ii) computer systems related
to the lines of business discontinued by the Company and therefore are no longer
required.

          Advisory fees and warrant paid and/or issued to Lehman and other
          investment banks

          In May 2000, we sold approximately $1.3 billion of finance receivables
to Lehman and its affiliates for cash and a right to share in future profits
from a subsequent sale or securitization of the assets sold. We paid a $25.0
million transaction fee to Lehman in conjunction with the sale, which was
included in special charges. Such loans were sold to Lehman at a value which
approximated net book value, less the fee paid to Lehman.

          During the second and third quarters of 2000, we repurchased a
significant portion of the finance receivables sold to Lehman. These finance
receivables were subsequently included in securitization transactions structured
as financings. The

                                       133

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


cost of the finance receivables purchased from Lehman did not differ materially
from the book value of the loans prior to their sale to Lehman.

          Lehman also amended its master repurchase financing facilities with
our finance operations to expand the types of assets financed. As partial
consideration for the financing transaction, Lehman received a warrant, with a
nominal exercise price, for five percent of the common stock of Conseco Finance.
The initial $48.1 million estimated value of the warrant was recognized as an
expense during the second quarter of 2000.

          We also paid Lehman $20.0 million in fees for its efforts to form an
investor group to purchase Conseco Finance. In addition, the Company paid other
investment banks and financial institutions $24.0 million in advisory fees
related to the potential sale of Conseco Finance and consultation regarding
various other transactions.

          We also paid Lehman $5.3 million in advisory fees related to the
finance business and debt restructuring.

          Executive Terminations

          On April 28, 2000, Conseco and Stephen C. Hilbert, the Company's
former Chairman and Chief Executive Officer, entered into an agreement pursuant
to which Mr. Hilbert's employment was terminated. As contemplated by the terms
of his employment agreement, Mr. Hilbert received: (i) $72.5 million (prior to
required withholdings for taxes), an amount equal to five times his salary and
the non-discretionary bonus amount (as defined in his employment agreement) for
2000; less (ii) the amount due under a secured loan of $23 million, plus accrued
interest, made to Mr. Hilbert on April 6, 2000. Mr. Hilbert also received the
bonus of $3,375,000 payable under his employment agreement for the first quarter
of 2000. Conseco agreed to continue to treat Mr. Hilbert as though he were an
employee/participant for purposes of the guaranteed bank loans and the loans for
interest on such loans pursuant to the stock purchase program. Conseco also
entered into a consulting agreement with Mr. Hilbert pursuant to which Mr.
Hilbert agreed to provide consulting services up to an average of 25 hours per
month for a period of three years. Mr. Hilbert also agreed not to compete with
Conseco during the term of the consulting agreement. On April 27, 2000, Mr.
Hilbert was granted options to purchase an aggregate of 2,000,000 shares of
Conseco common stock at a price of $5.75 per share (the average of the high and
low sales prices on the New York Stock Exchange on such date). The options
expire on April 26, 2003.

          On April 28, 2000, Conseco and Rollin M. Dick, the Company's former
Chief Financial Officer, entered into an agreement pursuant to which Mr. Dick's
employment was terminated. As contemplated by the terms of his employment
agreement, Conseco agreed to pay Mr. Dick his salary of $250,000 per year
through December 31, 2001, and he also received the bonus of $187,500 payable
under his employment agreement for the first quarter of 2000. Conseco also
agreed to continue to treat Mr. Dick as though he were an employee/participant
for purposes of the guaranteed bank loans and the loans for interest on such
loans pursuant to the stock purchase program. Conseco also entered into a
consulting agreement with Mr. Dick pursuant to which Mr. Dick agreed to provide
consulting services up to an average of 25 hours per month for a period of three
years. Mr. Dick also agreed not to compete with Conseco during the term of the
consulting agreement. On April 27, 2000, Mr. Dick was granted options to
purchase an aggregate of 600,000 shares of Conseco common stock at a price of
$5.75 per share. The options expire on April 26, 2003.

          Executive Hiring

          On June 28, 2000, the Company hired Gary C. Wendt as its Chief
Executive Officer. Pursuant to the terms of his employment agreement, Mr. Wendt
received a payment of $45 million (prior to required withholdings for taxes) and
was granted options to purchase an aggregate of 10,000,000 shares of Conseco
common stock at a price of $5.875 per share (the average of the high and low
sales price on the New York Stock Exchange on the date on which the substantial
terms of Mr. Wendt's employment were agreed to). The options vest over five
years and expire on June 28, 2010. The Company also issued 3,200,000 shares of
restricted stock to Mr. Wendt. The restrictions on the stock lapse if Mr. Wendt
remains employed by Conseco through June 30, 2002, or upon a "change in control"
of the Company. The value of the restricted shares ($18.8 million) will be
recognized as an expense to the Company over the two year period ending June 30,
2002. Mr. Wendt is also being provided certain supplemental retirement,
insurance and other benefits under the terms of his employment agreement.


                                       134

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          In conjunction with Mr. Wendt's hiring and his release from noncompete
provisions of a prior agreement, the Company issued a warrant to a subsidiary of
General Electric Company to purchase 10,500,000 shares of Conseco common stock
at a purchase price of $5.75 per share. The estimated value of the warrant
($21.0 million) was recognized as a special charge.

          Reserve Methodology Change at Bank Subsidiary

          During the fourth quarter of 2000, we increased the allowance for
credit losses related to credit card receivables held by our bank subsidiary. We
implemented a more conservative approach pursuant to a recent regulatory
examination, which resulted in this special charge.

          10. SHAREHOLDERS' EQUITY:

          We are authorized to issue up to 20 million shares of preferred stock.
On December 15, 1999, we issued $500.0 million (2.6 million shares) of Series F
Common-Linked Convertible Preferred Stock (the "Series F Preferred Stock") to
Thomas H. Lee Company and affiliated investors. The Series F Preferred Stock is
convertible into Conseco common stock at a common equivalent rate of $19.25 per
share. The Series F Preferred Stock pays a 4 percent dividend, of which an
amount at least equal to the common dividend will be payable in cash, and the
remainder may be paid in additional Series F shares valued at a common
equivalent rate of $19.25 per share. In September 2000, we suspended the payment
of common stock dividends and, as a result, all dividend payments since that
date have been paid in additional Series F shares (the carrying value of such
additional shares is determined based on the fair value of the equivalent number
of Conseco common shares that such shares are convertible into as of the date
the dividend is paid). The Series F Preferred Stock ranks senior to the common
stock outstanding and has a liquidation preference of $192.50 per share plus all
declared and unpaid dividends.

          In February 1999, we redeemed all $105.5 million (carrying value) of
outstanding shares of Preferred Redeemable Increased Dividend Equity Securities,
7% PRIDES Convertible Preferred Stock ("PRIDES") in exchange for 5.9 million
shares of Conseco common stock.

       Changes in the number of shares of common stock outstanding during the
years ended December 31, 2001, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>

                                                                                       2001           2000          1999
                                                                                       ----           ----          ----
                                                                                              (Shares in thousands)
<S>                                                                                   <C>            <C>           <C>


Balance, beginning of year..........................................................  325,318        327,679       315,844
    Stock options exercised.........................................................      424             94         5,130
    Stock warrants exercised........................................................    3,327            -             -
    Shares issued in conjunction with the acquisition of Exl........................    3,411            -             -
    Shares issued pursuant to stock purchase contracts related to the
       FELINE PRIDES................................................................   11,351            -             -
    Issuance of shares..............................................................      -              -           3,582
    Common shares converted from PRIDES.............................................      -              -           5,904
    Shares issued under employee benefit compensation plans:
       Deferred compensation plan of former Chairman and Chief
          Executive Officer.........................................................      -            1,491           -
       Other........................................................................      912            301           126
    Settlement of forward contract and common stock acquired........................       -          (4,247)       (2,907)
                                                                                      -------        -------       -------

Balance, end of year................................................................  344,743        325,318       327,679
                                                                                      =======        =======       =======

</TABLE>


          In February 2001, the Company issued 11.4 million shares of Conseco
common stock pursuant to stock purchase contracts related to the FELINE PRIDES.
This transaction is discussed in further detail in note 8 above under the
caption "Company-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts".

          Dividends declared on common stock for 2000 and 1999, were $.10 and
$.580 per common share, respectively. As part of our plan to strengthen our
capital structure, the Board of Directors reduced the cash dividend on our
common stock to

                                       135

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


a quarterly rate of 5 cents per share, which was paid in April and July of 2000.
In September 2000, cash dividend payments on our common stock were suspended.
The amended bank credit facilities prohibit the payment of cash dividends on our
common stock until the Company has received investment grade ratings on its
outstanding public debt.

          During 1999, we sold 3.6 million shares of our common stock to an
unaffiliated party (the "Buyer"). Simultaneous with the issuance of the common
stock, we entered into a forward transaction with the Buyer to be settled at
$29.0625 per share in a method of our choosing (i.e., cash settlement, transfer
of net shares to or from the Buyer, or transfer of net cash to or from the
Buyer). We settled the contract in March 2000 by repurchasing 3.6 million shares
held by the Buyer.

          Conseco's 1994 Stock and Incentive Plan authorizes the granting of
options to employees and directors of the Company to purchase up to 24 million
shares of Conseco common stock at a price not less than its market value on the
date the option is granted. In 1997, the Company adopted the 1997 Non-qualified
Stock Option Plan, which authorizes the granting of non-qualified options to
employees of the Company to purchase shares of Conseco common stock. The
aggregate number of shares of common stock for which options may be granted
under the 1997 plan, when added to all outstanding, unexpired options under the
Company's employee benefit plans, shall not exceed 20 percent of the total of
shares of common stock outstanding plus the number of shares issuable upon
conversion of any outstanding convertible security on the date of grant
(calculated in the manner set forth in the 1997 plan). The options may become
exercisable immediately or over a period of time. The 1994 plan also permits
granting of restricted stock, stock appreciation rights and certain other
awards.


                                       136

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          A summary of the Company's stock option activity and related
information for the years ended December 31, 2001, 2000 and 1999, is presented
below (shares in thousands):

<TABLE>
<CAPTION>


                                                   2001                         2000                         1999
                                          --------------------------------------------------------------------------
                                                        Weighted                  Weighted                  Weighted
                                                         average                   average                   average
                                                        exercise                  exercise                  exercise
                                          Shares          price      Shares         price      Shares         price
                                          ------          -----      ------         -----      ------         -----
<S>                                       <C>           <C>         <C>           <C>           <C>           <C>


Outstanding at the beginning of year....  36,107        $18.38       33,750       $32.15        32,085        $30.91

Options granted (a).....................   8,609          6.32       18,404         7.10         7,725         26.37

Exercised...............................    (432)         9.88          (95)        8.15        (5,130)        15.83
Forfeited or terminated.................  (3,992)        27.27      (15,952)       34.56          (930)        30.37
                                          ------                    -------                     ------

Outstanding at the end of the year......  40,292         15.01       36,107        18.38        33,750         32.15
                                          ======                    =======                     ======

Options exercisable at year-end.........  13,591                     13,905                     19,937
                                          ======                    =======                     ======

Available for future grant............    34,903                     34,853                     37,290
                                          ======                    =======                     ======
<FN>


--------------------

(a)  Options granted during 2001 include options to purchase 1,000,000 shares of
     Conseco common stock at a price of $13.89 per share issued to a former
     Chief Financial Officer, expiring in March 2011. Options granted during
     2000 included: (i) options to purchase 2,000,000 shares of Conseco common
     stock at a price of $5.75 per share issued to the former Chairman and Chief
     Executive Officer, expiring in April 2003; (ii) options to purchase 600,000
     shares of Conseco common stock at a price of $5.75 per share issued to a
     former Chief Financial Officer, expiring in April 2003; and (iii) options
     to purchase 10,000,000 shares of Conseco common stock at a price of $5.875
     per share issued to the new Chief Executive Officer, expiring June 2010.

</FN>
</TABLE>


          The following table summarizes information about stock options
outstanding at December 31, 2001 (shares in thousands):

<TABLE>
<CAPTION>


                                                      Options outstanding                    Options exercisable
                                            ---------------------------------------------------------------------
                                                            Weighted        Weighted                    Weighted
                                                             average         average                     average
Range of                                      Number        remaining       exercise      Number        exercise
exercise prices                             outstanding  life (in years)      price     exercisable       price
---------------                             -----------  ---------------      -----     -----------       -----
  <S>         <C>                           <C>              <C>            <C>           <C>            <C>


  $1.51-      16.57......................   26,556            7.7           $  6.97        4,884         $8.79
  17.63-      26.19......................    5,616            6.2             23.44        3,333         24.04
  27.19-      30.41......................    1,980           11.6             30.12          805         29.72
  30.81-      45.44.....................     5,300            5.1             35.09        4,221         35.08
  46.71-      51.28.....................       840            6.3             50.64          348         50.56
                                           -------                                        ------

                                            40,292                                        13,591
                                            ======                                        ======
</TABLE>



                                       137

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          We apply Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for our
stock option plans. Since the amount an employee must pay to acquire the stock
is equal to the market price of the stock on the grant date, no compensation
cost has been recognized for our stock option plans. Had compensation cost been
determined based on the fair value at the grant dates for awards granted after
January 1, 1995, consistent with the method of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", the Company's pro
forma net income (loss) and pro forma earnings (loss) per share for the years
ended December 31, 2001, 2000 and 1999 would have been as follows:
<TABLE>
<CAPTION>


                                                   2001                           2000                            1999
                                         ----------------------------------------------------------------------------------
                                         As reported     Pro forma   As reported     Pro forma     As reported    Pro forma
                                         -----------     ---------   -----------     ---------     -----------    ---------
                                                            (Dollars in millions, except per share amounts)
<S>                                      <C>            <C>         <C>             <C>              <C>           <C>


Net income (loss).....................   $(405.9)       $(434.1)    $(1,191.2)      $(1,218.3)       $595.0        $559.9
Basic earnings (loss) per share.......     (1.24)         (1.32)        (3.69)          (3.77)         1.83          1.73
Diluted earnings (loss) per share.....     (1.24)         (1.32)        (3.69)          (3.77)         1.79          1.69
</TABLE>


          We estimated the fair value of each option grant used to determine the
pro forma amounts summarized above using the Black-Scholes option valuation
model with the following weighted average assumptions for 2001, 2000 and 1999:
<TABLE>
<CAPTION>


                                                     2001 Grants               2000 Grants               1999 Grants
                                                     -----------               -----------               -----------
<S>                                                 <C>                        <C>                      <C>


Weighted average risk-free interest rates......           4.8%                       6.3%                   5.6%
Weighted average dividend yields...............           0.0%                       2.4%                   2.2%
Volatility factors.............................            40%                        40%                    35%
Weighted average expected life.................     6.4 years                  6.1 years                4 years
Weighted average fair value per share..........         $3.04                      $2.84                  $7.34
</TABLE>


          At December 31, 2001, a total of 118 million shares of common stock
were reserved for issuance under stock options, stock bonus and deferred
compensation plans, Series F Preferred Stock, warrants to buy 700,000 shares of
Conseco common stock for $19.71 per share at anytime through September 29, 2006
and warrants to buy 5,250,000 shares of Conseco common stock for $5.75 at any
time through June 2005.

          At December 31, 2001, a total of 3.8 million shares of restricted
common shares issued pursuant to employment agreements were outstanding. The
restrictions on such shares will expire at various times through March 2006.


                                       138

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          A reconciliation of net income (loss) and shares used to calculate
basic and diluted earnings per share is as follows:
<TABLE>
<CAPTION>


                                                                                 2001          2000           1999
                                                                                 ----          ----           ----
                                                                           (Dollars in millions and shares in thousands)
<S>                                                                           <C>          <C>                <C>

Net income (loss):
   Net income (loss)...................................................       $(405.9)     $(1,191.2)         $595.0
   Preferred stock dividends...........................................          12.8           11.0             1.5
                                                                              -------      ---------          ------

     Income (loss) applicable to common ownership for basic
       earnings per share..............................................        (418.7)      (1,202.2)          593.5

   Effect of dilutive securities:
     Preferred stock dividends.........................................           -              -               1.5
                                                                              -------      ---------          -------

     Income (loss) applicable to common ownership and assumed
       conversions for diluted earnings per share......................       $(418.7)     $(1,202.2)         $595.0
                                                                              =======      =========          ======

Shares:
   Weighted average shares outstanding for basic earnings per share....       338,145        325,953         324,635
   Effect of dilutive securities on weighted average shares:
     Stock options.....................................................           -              -             2,231
     Employee benefit plans............................................           -              -             2,064
     PRIDES............................................................           -              -             1,643
     Convertible securities............................................           -              -             1,959
     Forward purchase agreement........................................           -              -               361
                                                                              -------      ---------         -------

       Dilutive potential common shares................................           -              -             8,258
                                                                              -------      ---------         -------

         Weighted average shares outstanding for diluted earnings
           per share...................................................       338,145        325,953         332,893
                                                                              =======        =======         =======
</TABLE>


          There were no dilutive common stock equivalents during 2001 and 2000
because of the net loss realized by the Company.




                                       139

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          11. OTHER OPERATING STATEMENT DATA:

          Insurance policy income consisted of the following:
<TABLE>
<CAPTION>


                                                                                           2001         2000         1999
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
<S>                                                                                     <C>           <C>         <C>

Traditional products:
    Direct premiums collected.........................................................  $5,885.1      $6,307.3    $6,377.5
    Reinsurance assumed...............................................................     147.0         305.4       547.8
    Reinsurance ceded.................................................................    (253.7)       (248.3)     (418.6)
                                                                                        --------      --------    --------

          Premiums collected, net of reinsurance......................................   5,778.4       6,364.4     6,506.7
    Change in unearned premiums.......................................................       1.9           1.1        (3.9)
    Less premiums on universal life and products
       without mortality and morbidity risk which are
       recorded as additions to insurance liabilities ................................  (2,267.2)     (2,731.1)   (3,023.3)
                                                                                        --------      --------    --------
          Premiums on traditional products with mortality or morbidity risk,
             recorded as insurance policy income......................................   3,513.1       3,634.4     3,479.5
Fees and surrender charges on interest-sensitive products.............................     552.6         585.9       561.0
                                                                                        --------      --------    --------

          Insurance policy income.....................................................  $4,065.7      $4,220.3    $4,040.5
                                                                                        ========      ========    ========
</TABLE>


          The five states with the largest shares of 2001 collected premiums
were California (9.0 percent), Florida (8.3 percent), Illinois (7.8 percent),
Texas (7.3 percent), and Michigan (5.1 percent). No other state accounted for
more than 5 percent of total collected premiums.

          Other operating costs and expenses were as follows:
<TABLE>
<CAPTION>


                                                                                           2001        2000          1999
                                                                                           ----        ----          ----
                                                                                                (Dollars in millions)
<S>                                                                                     <C>          <C>          <C>


Commission expense..................................................................    $  221.0     $  273.6     $  249.2
Salaries and wages..................................................................       564.1        680.3        542.0
Other...............................................................................       603.9        692.3        562.0
                                                                                        --------     --------     --------

       Total other operating costs and expenses.......................................  $1,389.0     $1,646.2     $1,353.2
                                                                                        ========     ========     ========
</TABLE>




                                       140

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Changes in the cost of policies purchased were as follows:

<TABLE>
<CAPTION>

                                                                                           2001         2000         1999
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
<S>                                                                                     <C>          <C>         <C>


Balance, beginning of year............................................................  $1,954.8     $2,258.5    $2,425.2
    Additional acquisition expense on acquired policies...............................      12.5         14.6        17.9
    Amortization......................................................................    (249.9)      (275.4)     (437.2)
    Amounts related to fair value adjustment of actively managed fixed maturities.....     (55.0)       (78.9)      203.3
    Balance sheet reclassification adjustments........................................        -          49.3         -
    Other.............................................................................      (4.6)       (13.3)       49.3
                                                                                        --------     --------    --------

Balance, end of year..................................................................  $1,657.8     $1,954.8    $2,258.5
                                                                                        ========     ========    ========
</TABLE>


          Based on current conditions and assumptions as to future events on all
policies inforce, the Company expects to amortize approximately 13 percent of
the December 31, 2001, balance of cost of policies purchased in 2002, 11 percent
in 2003, 8 percent in 2004, 10 percent in 2005 and 7 percent in 2006. The
discount rates used to determine the amortization of the cost of policies
purchased averaged 6 percent in 2001 and averaged 7 percent in 2000 and 1999.

          Changes in the cost of policies produced were as follows:

<TABLE>
<CAPTION>


                                                                                           2001         2000         1999
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
<S>                                                                                     <C>          <C>         <C>


Balance, beginning of year............................................................  $2,480.5     $2,087.4    $1,453.9
   Additions..........................................................................     654.5        779.7       799.0
   Amortization.......................................................................    (420.5)      (286.8)     (242.1)
   Amounts related to fair value adjustment of actively managed fixed maturities......     (30.7)         7.4        77.4
   Balance sheet reclassification adjustments.........................................       -          (87.9)         -
   Reinsurance and other..............................................................    (113.6)       (19.3)        (.8)
                                                                                        --------     --------    --------

Balance, end of year..................................................................  $2,570.2     $2,480.5    $2,087.4
                                                                                        ========     ========    ========
</TABLE>


          The Company has previously announced its intent to sell and/or cancel
its major medical lines of business. In 2001, the Company began a process of not
renewing portions of this business in several unprofitable states in accordance
with the contractual terms of the policies. As a result, we determined that
approximately $77.4 million of the cost of policies produced and the cost of
policies purchased would not be recoverable. Such amount is recorded as
amortization in the accompanying statement of operations.

          The cost of policies produced and the cost of policies purchased are
amortized in relation to the estimated gross profits to be earned over the life
of our annuity products. As a result of economic developments, actual experience
of our products and changes in our expectations, we changed our investment yield
assumptions used in calculating the estimated gross profits to be earned on our
annuity products. Such changes resulted in additional amortization of the cost
of policies produced and the cost of policies purchased of $35.0 million and
$25.6 million in 2001 and 2000, respectively.


                                       141

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          12. CONSOLIDATED STATEMENT OF CASH FLOWS:

          The following disclosures supplement our consolidated statement of
cash flows:
<TABLE>
<CAPTION>

                                                                                           2001         2000         1999
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
<S>                                                                                       <C>          <C>         <C>

Non-cash items not reflected in the investing and financing activities section
   of the consolidated statement of cash flows:
     Issuance of common stock under stock option and employee benefit plans.............  $ 19.7       $  5.8      $  28.2
     Issuance of convertible preferred shares...........................................    12.8          8.4           -
     Value of FELINE PRIDES retired and transferred from minority interest to
       common stock and additional paid-in capital......................................   496.6           -            -
     Issuance of common stock in connection with the acquisition of Exl.................    52.1           -            -
     Decrease in notes payable-direct corporate obligations and increase in other
       liabilities reflecting the estimated fair value of interest rate swap agreements.    13.5           -            -
     Issuance of warrants to Lehman.....................................................      -          48.1           -
     Issuance of warrants to General Electric Company...................................      -          21.0           -
     Tax benefit related to the issuance of common stock under employee benefit plans...      -            -          25.0
     Conversion of preferred stock and convertible debentures into common stock.........      -            -         105.5
</TABLE>









                                       142

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          The following reconciles net income (loss) to net cash provided by
operating activities:
<TABLE>
<CAPTION>


                                                                                             2001          2000         1999
                                                                                             ----          ----         ----
                                                                                                   (Dollars in millions)
<S>                                                                                        <C>           <C>           <C>

Cash flows from operating activities:
   Net income (loss)...................................................................    $ (405.9)     $(1,191.2)    $  595.0
   Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:
       Interest-only securities investment income......................................       (51.5)        (106.6)      (185.1)
       Cash received from interest-only securities, net................................        14.3          187.6        442.6
       Servicing income................................................................      (115.3)        (108.2)      (165.3)
       Cash received from servicing activities.........................................        71.7          123.8        175.7
       Provision for losses............................................................       733.2          585.7        147.6
       Gain on sale of finance receivables.............................................       (26.9)          (7.5)      (550.6)
       Points and origination fees received............................................         -              -          390.0
       Amortization and depreciation...................................................       848.0          745.9        844.3
       Income taxes....................................................................      (140.7)        (531.1)       191.3
       Insurance liabilities...........................................................       334.4          539.7        516.3
       Accrual and amortization of investment income...................................        80.5          168.5       (578.2)
       Deferral of cost of policies produced and purchased.............................      (667.0)        (794.3)      (816.9)
       Gain on sale of interest in riverboat...........................................      (192.4)           -            -
       Impairment charges..............................................................       386.9          515.7        554.3
       Special charges.................................................................        72.4          483.1         (7.6)
       Cumulative effect of change in accounting.......................................         -             85.2          -
       Minority interest...............................................................       183.9          223.5        204.2
       Net investment losses...........................................................       413.7          358.3        156.2
       Extraordinary (gain) loss on extinguishment of debt.............................       (26.9)           7.7          -
       Other...........................................................................      (187.7)         (80.5)       (40.1)
       Payment of taxes in settlement of prior years...................................         -              -          (85.1)
                                                                                           --------      ---------     --------

         Net cash provided by operating activities.....................................    $1,324.7      $ 1,205.3     $1,788.6
                                                                                           ========      =========     ========
</TABLE>


          13. STATUTORY INFORMATION:

          Statutory accounting practices prescribed or permitted by regulatory
authorities for the Company's insurance subsidiaries differ from GAAP. Our
insurance subsidiaries reported the following amounts to regulatory agencies,
after appropriate elimination of intercompany accounts:
<TABLE>
<CAPTION>

                                                                                                      2001          2000
                                                                                                      ----          ----
                                                                                                    (Dollars in millions)
<S>                                                                                                 <C>          <C>


Statutory capital and surplus....................................................................   $1,678.8     $1,881.8
Asset valuation reserve..........................................................................      105.1        266.8
Interest maintenance reserve.....................................................................      379.3        381.0
                                                                                                    --------     --------

      Total......................................................................................   $2,163.2     $2,529.6
                                                                                                    ========     ========
</TABLE>



                                       143

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          The statutory capital and surplus shown above included investments in
up-stream affiliates, all of which were eliminated in the consolidated financial
statements prepared in accordance with GAAP, as follows:

<TABLE>
<CAPTION>
                                                                                                      2001          2000
                                                                                                      ----          ----
                                                                                                     (Dollars in millions)
<S>                                                                                                   <C>          <C>


Securitization debt issued by special purpose entities and guaranteed by our
   finance subsidiary, all of which was purchased by our insurance subsidiaries
   prior to the
      acquisition of Conseco Finance (a)...........................................................   $ 71.7       $ 72.1
Preferred and common stock of intermediate holding company.........................................    145.9        192.7
Common stock of Conseco (39.8 million shares)......................................................     14.9         44.1
Other..............................................................................................      2.5          2.5
                                                                                                      ------       ------

      Total........................................................................................   $235.0       $311.4
                                                                                                      ======       ======
<FN>

--------------------

(a)  Total par value, amortized cost and fair value of securities issued by
     special purpose entities which hold loans originated by our finance
     subsidiary (including the securities that are not guaranteed by Conseco
     Finance, and therefore are not considered affiliated investments) were
     $281.9 million, $277.6 million and $243.4 million, respectively.
</FN>
</TABLE>

          The statutory net income (loss) of our life insurance subsidiaries was
$(109.6) million, $(70.8) million and $181.1 million in 2001, 2000 and 1999,
respectively. Included in such net income (loss) are net realized capital gains
(losses), net of income taxes, of ($188.0) million, ($200.8) million and $1.2
million in 2001, 2000 and 1999, respectively. In addition, the insurance
subsidiaries pay fees and interest to Conseco or its non-life subsidiaries; such
amounts totaled $279.2 million, $264.4 million and $274.3 million in 2001, 2000
and 1999, respectively.

          State insurance laws generally restrict the ability of insurance
companies to pay dividends or make other distributions. In 2002, our insurance
subsidiaries may pay dividends to Conseco of $230.8 million without permission
from state regulatory authorities. During 2001, our insurance subsidiaries paid
dividends to Conseco totaling $192.3 million.

          The National Association of Insurance Commissioners adopted codified
statutory accounting principles in a process referred to as codification. Such
principles are summarized in the Accounting Practices and Procedures Manual. The
revised manual was effective January 1, 2001. The domiciliary states of our
insurance subsidiaries have adopted the provisions of the revised manual or,
with respect to some states, adopted the manual with certain modifications. The
revised manual has changed, to some extent, prescribed statutory accounting
practices and resulted in changes to the accounting practices that our insurance
subsidiaries use to prepare their statutory-basis financial statements. The
impact of these changes increased our insurance subsidiaries' statutory-based
capital and surplus as of January 1, 2001, by approximately $198 million.

          14. BUSINESS SEGMENTS:

          We manage our business operations through two segments, based on the
products offered in addition to the corporate segment.

          Insurance and fee-based segment. Our insurance and fee-based segment
provides supplemental health, annuity and life insurance products to a broad
spectrum of customers through multiple distribution channels, each focused on a
specific market segment. These products are primarily marketed through career
agents, professional independent producers and direct marketing. Fee-based
activities include services performed for other companies, including: (i)
investment management; and (ii) insurance product marketing.

          Finance segment. Our finance segment provides a variety of finance
products including: loans for the purchase of manufactured housing, home
improvements and various consumer products, home equity loans, private label
credit card programs, and floorplan financing. These products are primarily
marketed through intermediary channels such as dealers, vendors, contractors and
retailers.


                                       144

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Corporate and other segment. Our corporate segment includes certain
investment activities, such as our venture capital investment in the wireless
communication company, TeleCorp, and, prior to its sale, our ownership interest
in the riverboat casino in Lawrenceberg, Indiana. In addition, the corporate
segment includes interest expense related to the Company's corporate debt,
special corporate charges, income (loss) from the discontinued major medical
business and other income and expenses. Corporate expenses are net of charges to
our subsidiaries for services provided by the corporate operations.




                                       145

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


          Segment operating information was as follows:
<TABLE>
<CAPTION>


                                                                                  2001         2000         1999
                                                                                  ----         ----         ----
                                                                                       (Dollars in millions)
<S>                                                                           <C>           <C>           <C>

Revenues:
   Insurance and fee-based segment:
     Insurance policy income:
       Annuities............................................................. $   123.6     $  137.5     $   102.5
       Supplemental health...................................................   2,229.9      2,136.6       2,058.1
       Life  ................................................................     833.3        892.8         881.7
       Other.................................................................     126.7        148.1         132.0
     Net investment income (a)...............................................   1,502.3      2,017.7       2,178.3
     Fee and other revenue (a)...............................................     101.1        129.0         111.7
     Net investment losses (a)...............................................    (413.7)      (358.3)       (156.2)
                                                                              ---------     --------     ---------

       Total insurance and fee-based segment revenues........................   4,503.2      5,103.4       5,308.1
                                                                              ---------     --------     ---------

   Finance segment:
     Net investment income:
       Interest-only securities (a)..........................................      51.5        106.6         185.1
       Manufactured housing..................................................     866.8        538.6         101.1
       Mortgage services.....................................................     802.3        672.1         158.7
       Consumer/credit card..................................................     457.9        365.2         199.6
       Commercial............................................................     120.8        261.4         112.3
       Other (a).............................................................      12.4         96.5          75.4
     Gain on sale:
       Securitization transactions:
         Manufactured housing................................................        -            -          307.8
         Mortgage services...................................................        -            -          196.2
         Consumer/credit card................................................        -            -           13.6
         Commercial..........................................................        -            -           27.2
         Other...............................................................        -            -            5.8
       Whole-loan sales......................................................      26.9          7.5            -
     Fee revenue and other income............................................     345.0        369.0         372.7
                                                                              ---------     --------     ---------

       Total finance segment revenues........................................   2,683.6      2,416.9       1,755.5
                                                                              ---------     --------     ---------

   Corporate and other:
     Net investment income...................................................      20.9         51.8          32.3
     Venture capital income (loss) related to investment in TeleCorp.........     (42.9)      (199.5)        354.8
     Gain on sale of interest in riverboat...................................     192.4           -             -
     Revenue from discontinued major medical lines...........................     777.6        946.3         900.4
     Other income............................................................        .9          6.7           6.1
                                                                              ----------    --------     ---------

       Total corporate segment revenues......................................     948.9        805.3       1,293.6
                                                                              ---------     --------     ---------

   Eliminations..............................................................    (27.6)        (29.2)        (21.5)
                                                                              ---------     --------     ---------

       Total revenues........................................................   8,108.1      8,296.4       8,335.7
                                                                               --------     --------     ---------

Expenses:
   Insurance and fee-based segment:
     Insurance policy benefits...............................................   2,863.7      3,313.5       3,156.5
     Amortization............................................................     698.7        673.9         607.9
     Interest expense on investment borrowings...............................      33.8         18.6          57.9
     Other operating costs and expenses......................................     584.0        689.9         567.2
     Special charges.........................................................      21.5           -             -
                                                                              ---------     --------     ---------

       Total insurance and fee-based segment expenses........................   4,201.7      4,695.9       4,389.5
                                                                                -------     --------     ---------
</TABLE>


                          (continued on following page)

                                       146

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------

<TABLE>
<CAPTION>

                                                                                  2001         2000         1999
                                                                                  ----         ----         ----
                                                                                       (Dollars in millions)
                                                                                    (continued from previous page)
<S>                                                                            <C>           <C>           <C>

   Finance segment:
     Provision for losses....................................................     563.6        354.2         128.7
     Interest expense........................................................   1,234.4      1,152.4         341.3
     Special charges.........................................................      21.5        394.3           -
     Impairment charges......................................................     386.9        515.7         554.3
     Other operating costs and expenses......................................     642.4        753.5         697.2
                                                                               --------    ---------      --------

       Total finance segment expenses........................................   2,848.8      3,170.1       1,721.5
                                                                               --------    ---------      --------

Corporate and other:
   Interest expense on corporate debt........................................     362.3        310.7         182.8
   Provision for losses......................................................     169.6        231.5          18.9
   Expenses from discontinued major medical lines............................     908.0        997.6         862.1
   Special charges and other corporate expenses, less charges to
     subsidiaries for services provided......................................      64.7        281.6          31.5
                                                                               --------    ---------      --------

       Total corporate segment expenses......................................   1,504.6      1,821.4       1,095.3
                                                                               --------    ---------      --------

   Eliminations..............................................................     (27.6)       (29.2)        (21.5)
                                                                               --------    ---------      --------

       Total expenses........................................................   8,527.5      9,658.2       7,184.8
                                                                               --------    ---------      --------

Income (loss) before income taxes, minority interest and extraordinary gain
   (loss):
     Insurance and fee-based operations......................................     301.5        407.5         918.6
     Finance operations......................................................    (165.2)      (753.2)         34.0
     Corporate interest and other expenses...................................    (555.7)    (1,016.1)        198.3
                                                                               --------    ---------      --------

       Income (loss) before income taxes, minority interest,
         extraordinary gain (loss) and cumulative
         effect of accounting change.........................................  $ (419.4)   $(1,361.8)     $1,150.9
                                                                               ========    =========      ========
</TABLE>

          Segment balance sheet information was as follows:

<TABLE>
<CAPTION>

                                                                                    2001          2000
                                                                                    ----          ----
                                                                                  (Dollars in millions)
<S>                                                                                <C>          <C>

Assets:
   Insurance and fee-based.................................................        $38,768.2    $37,274.7
   Finance.................................................................         22,228.0     20,838.0
   Corporate...............................................................         11,740.0     12,641.5
   Eliminate intercompany amounts..........................................        (11,343.9)   (12,165.0)
                                                                                   ---------    ---------

        Total assets.......................................................        $61,392.3    $58,589.2
                                                                                   =========    =========

Liabilities:
   Insurance and fee-based.................................................        $30,128.5    $28,439.6
   Finance.................................................................         20,278.5     18,748.8
   Corporate...............................................................          5,072.5      5,863.2
   Eliminate intercompany amounts..........................................           (754.7)    (1,240.7)
                                                                                   ---------    ---------

        Total liabilities..................................................        $54,724.8    $51,810.9
                                                                                   =========    =========










                                       147

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------
<FN>


--------------------

(a)  It is not practicable to provide additional components of revenue by
     product or services.
</FN>
</TABLE>




          15. QUARTERLY FINANCIAL DATA (UNAUDITED):

          We compute earnings per common share for each quarter independently of
earnings per share for the year. The sum of the quarterly earnings per share may
not equal the earnings per share for the year because of: (i) transactions
affecting the weighted average number of shares outstanding in each quarter; and
(ii) the uneven distribution of earnings during the year.




<TABLE>
<CAPTION>


                                                                  1st Qtr.(a)        2nd Qtr.(a)   3rd Qtr.(a)  4th Qtr.(a)
                                                                  -----------        -----------   -----------  -----------
                                                                        (Dollars in millions, except per share data)
<S>                                                                 <C>             <C>               <C>            <C>


2001
   Revenues......................................................   $2,136.6        $2,143.4          $1,786.2       $2,041.9
   Income (loss) before income taxes, minority interest and
     extraordinary gain (loss) on extinguishment of debt.........      174.3            39.4            (565.6)         (67.5)
   Net income (loss).............................................       84.1           (25.7)           (407.5)         (56.8)

   Net income (loss) per common share:
     Basic:
       Income (loss) before extraordinary gain (loss) on
          extinguishment of debt.................................       $.24           $(.08)           $(1.21)         $(.23)
       Extraordinary gain (loss).................................        -              (.01)              -              .06
                                                                        ----           -----            ------          -----

          Net income (loss)......................................       $.24           $(.09)           $(1.21)         $(.17)
                                                                        ====           =====            ======          =====


     Diluted:
       Income (loss) before extraordinary gain (loss) on
          extinguishment of debt.................................       $.23           $(.08)           $(1.21)         $(.23)
       Extraordinary gain (loss).................................        -              (.01)              -              .06
                                                                        ----           -----            ------          -----

          Net income (loss)......................................       $.23           $(.09)           $(1.21)         $(.17)
                                                                        ====           =====            ======          =====
</TABLE>



                                       148

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------
<TABLE>
<CAPTION>


                                                                           1st Qtr.(b) 2nd Qtr.(b)  3rd Qtr.(b)  4th Qtr.(b)
                                                                           ----------- -----------  -----------  -----------
                                                                             (Dollars in millions, except per share  data)
<S>                                                                          <C>         <C>          <C>          <C>


2000
   Revenues................................................................. $2,205.9    $1,965.2     $1,955.3     $2,170.0
   Income (loss) before income taxes, minority interest, extraordinary
     charge and cumulative effect of accounting change .....................    191.8      (477.2)      (571.6)      (504.8)
   Net income (loss)........................................................     77.4      (404.7)      (487.3)      (376.6)

   Net income (loss) per common share:
     Basic:
       Income (loss) before extraordinary charge and cumulative effect
          of accounting change .............................................     $.22      $(1.25)      $(1.32)      $(1.16)
       Extraordinary charge.................................................      -           -           (.01)         -
       Cumulative effect of accounting change...............................      -           -           (.17)         -
                                                                                 ----      ------       ------       ------

          Net income (loss).................................................     $.22      $(1.25)      $(1.50)      $(1.16)
                                                                                 ====      ======       ======       ======
     Diluted:
       Income (loss) before extraordinary charge and cumulative effect
          of accounting change..............................................     $.22      $(1.25)      $(1.32)      $(1.16)
       Extraordinary charge.................................................       -           -          (.01)         -
       Cumulative effect of accounting change...............................       -           -          (.17)         -
                                                                                 ----      ------       ------       ------

          Net income (loss).................................................     $.22      $(1.25)      $(1.50)      $(1.16)
                                                                                 ====      ======       ======       ======
<FN>


--------------------

(a)  Included in the first, second, third and fourth quarters of 2001 are the
     following items:

</FN>
</TABLE>

<TABLE>
<CAPTION>

                                                                                    2001
                                                              ------------------------------------------------
                                                              1st Qtr.      2nd Qtr.     3rd Qtr.     4th Qtr.
                                                              --------      --------     --------     --------
                                                                            (Dollars in millions)
<S>                                                               <C>         <C>         <C>          <C>

       Impairment charges:
         Before tax.........................................     $ 7.9        $33.8       $345.2       $   -
         After tax..........................................       5.0         20.9        224.4           -

       Special charges:
         Before tax.........................................      39.6         91.2         52.1         31.4
         After tax..........................................      10.0         59.2         33.9         20.4

       Provision for losses related to loan guarantees:
         Before tax.........................................        -            -          59.6        110.0
         After tax..........................................        -            -          38.7         71.5

       Venture capital (income) loss, net of amortization
         and expenses:
           Before tax.......................................     (26.9)        32.0        (69.6)        41.1
           After tax........................................     (17.5)        20.8        (45.2)        26.7




                                       149

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------

<FN>


---------------------

(b)  Included in the first, second, third and fourth quarters of 2000 are the
     following items:

</FN>
</TABLE>

<TABLE>
<CAPTION>


                                                                                    2000
                                                              1st Qtr.      2nd Qtr.     3rd Qtr.     4th Qtr.
                                                              --------      --------     --------     --------
                                                                                (Dollars in millions)
       <S>                                                       <C>         <C>          <C>          <C>

       Impairment charges:
         Before tax.........................................     $ 2.5       $  9.6       $205.0       $298.6
         After tax..........................................       1.6          6.0        129.2        188.1

       Special charges:
         Before tax.........................................       -          327.2        253.3        118.8
         After tax..........................................       -          254.0        178.7         85.6

       Provision for losses related to loan guarantees:
         Before tax.........................................      23.4         68.6         19.5        120.0
         After tax..........................................      14.7         44.6         12.7         78.0

       Venture capital (income) loss, net of amortization
         and expenses:
           Before tax.......................................     (76.1)        75.5        165.5        (12.0)
           After tax........................................     (47.9)        47.5        107.6         (7.8)

</TABLE>



          16. SUBSEQUENT EVENTS:

          Public Debt Exchange Offer

          On March 18, 2002, Conseco offered to exchange up to $2.54 billion
aggregate principal amount of newly issued notes for our outstanding senior
unsecured notes held by "qualified institutional buyers," institutional
"accredited investors", or non-U.S. persons in transactions outside the United
States. The bonds to be exchanged will have identical principal amounts, but the
new bonds would have extended maturities in exchange for an enhanced ranking in
the Company's capital structure.

          Specifically, we are offering the following exchange:

          $1,000 principal amount of new 8.5% Guaranteed Senior Notes due
             October 2003 for each $1,000 principal amount of 8.5% Senior Notes
             due October 2002;

          $1,000 principal amount of new 6.4% Guaranteed Senior Notes due
             February 2004 for each $1,000 principal amount of 6.4% Senior Notes
             due February 2003;

          $1,000 principal amount of new 8.75% Guaranteed Senior Notes due
             August 2006 for each $1,000 principal amount of 8.75% Senior Notes
             due February 2004;

          $1,000 principal amount of new 6.8% Guaranteed Senior Notes due June
             2007 for each $1,000 principal amount of 6.8% Senior Notes due June
             2005;

          $1,000 principal amount of new 9% Guaranteed Senior Notes due April
             2008 for each $1,000 principal amount of 9% Senior Notes due
             October 2006; and

          $1,000 principal amount of new 10.75% Guaranteed Senior Notes due June
             2009 for each $1,000 principal amount of 10.75% Senior Notes due
             June 2008.


                                       150

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------



          The purpose of the exchange offer is to extend the maturity profile of
the existing notes in order to improve our financial flexibility and to enhance
our future ability to refinance public debt.

          The new notes will be guaranteed on a senior subordinated basis by
CIHC, Incorporated, the holding company of our principal operating subsidiaries,
including the subsidiaries that engage in our insurance and finance businesses.
As a result, the new notes will be structurally senior to the existing notes.

          The existing notes consist of $2,540.3 million aggregate principal
amount of senior unsecured notes with outstanding balances as follows (dollars
in millions):
<TABLE>

         <S>                                         <C>
         8.5% Senior Notes due 2002                  $302.3
         6.4% Senior Notes due 2003                  $250.0
         8.75% Senior Notes due 2004                 $788.0
         6.8% Senior Notes due 2005                  $250.0
         9% Senior Notes due 2006                    $550.0
         10.75% Senior Notes due 2008                $400.0
</TABLE>


          The new notes will not, upon issuance, be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an exemption from registration. However, we will
enter into a registration rights agreement for the benefit of each exchange
participant in which we will agree to file an exchange offer registration
statement with the SEC with respect to the new notes.

          Modifications to Borrowing Agreements - Finance Operations

          In the first quarter of 2002, we entered into various transactions
with Lehman and its affiliates pursuant to which Lehman extended the terms of
Conseco Finance's: (a) warehouse line from September 2002 to September 2003, (b)
borrowings with respect to approximately $90 million of miscellaneous assets
("Miscellaneous Borrowings") from January 31, 2002 to June 2003, and (c)
residual line from February 2003 to February 2004 under which financing is being
provided on our interest-only securities, servicing rights and retained
interests in other subordinated securities issued by the securitization trusts.
We agreed to an amortization schedule by which the outstanding balance under the
Miscellaneous Borrowings is required to be repaid by June 2003. We also entered
into a revised agreement governing the movement of cash from Conseco Finance to
the parent company. Conseco Finance and Lehman have agreed to amend the
agreement such that Conseco Finance must maintain liquidity (cash and available
borrowings, as defined) of at least (i) $50 million until March 31, 2003; and
(ii) $100 million from and after April 1, 2003. However, Conseco Finance no
longer must meet a minimum liquidity requirement of $250 million before making
interest, principal, dividend or redemption payments to the parent company.

          Pursuant to the new arrangements, Lehman may exchange their existing
Warrant to purchase 5 percent of the common stock of Conseco Finance until May
2003 and receive in its place 500,000 shares of Series G Convertible Redeemable
Preferred Stock of Conseco (the "Series G Preferred Stock") at a $100 stated
value per share, having the following general terms:


                                       151

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------



(a)  No dividend;

(b)  Convertible to Conseco common stock at $10 per share;

(c)  Voting rights on an as converted basis;

(d)  Mandatorily redeemable by Conseco in January 2012 at the stated value;

(e)  Pari passu with the Series F Preferred Stock if, and only if, a majority of
     the holders of Conseco's Series E Preferred Stock and Series F Preferred
     Stock consent, and otherwise pari passu with the Series E Preferred Stock
     and junior to the Series F Preferred Stock; and

(f)  The right to cause Conseco to register the Series G Preferred Stock within
     one year after electing to surrender the Warrant in exchange for the Series
     G Preferred Stock.

          Tender Offers to Purchase Outstanding Debt

          In March 2002, Conseco Finance completed a tender offer pursuant to
which it purchased $75.8 million par value of its senior subordinated notes due
June 2002. The purchase price was equal to 100 percent of the principal amount
of the notes plus accrued interest. The remaining principal amount outstanding
of the senior subordinated notes after giving effect to the tender offer and
other debt repurchases completed prior to the tender offer is $34.7 million.
Also, during the first quarter of 2002, Conseco Finance announced it was
tendering for all its remaining public debt - $167 million due in September 2002
and $4 million due in April 2003. (Such amounts reflect all 2002 debt
repurchases completed prior to announcing the tender offer). Such offer expires
on April 12, 2002. The tender offer price is equal to 100 percent of the
principal amount of the notes plus accrued interest.

          Market for Repossessed Manufactured Homes

          On January 2, 2002, GreenPoint Financial Corp. ("GreenPoint"), a
competitor of Conseco Finance, announced its intention to cease the origination
of loans secured by manufactured homes. In conjunction with this announcement,
GreenPoint indicated its objective to quickly liquidate its repossessed
inventory at below market prices in the wholesale market. This announcement may
have a significant impact on the wholesale market for manufactured homes through
which the company generally sells 30 percent of its manufactured housing
repossessed inventory. We believe that our net recovery is maximized through a
retail (resale either through Company owned sales lots or our dealer network)
exit strategy. We generally liquidate approximately 70 percent of our
repossessed units through the retail channel; thus, we are much less reliant on
the wholesale channel.

          Modifications to Bank Credit Facility

          In the first quarter of 2002, we amended the credit agreements related
to our $1.5 billion bank credit facility including the changes described below:

          (i)  Financial covenants in the credit agreements require us to
               maintain various financial ratios and balances. These
               requirements were relaxed in the amended agreement. In addition,
               such agreements were amended so that any charges taken to write
               off goodwill to the extent required by SFAS 142 will be excluded
               from the various financial ratios and covenants that we are
               required to meet or maintain. See note 7 to the consolidated
               financial statements for further information on such ratios and
               covenants.

          (ii) The manner in which the proceeds from certain asset sales and
               refinancing transactions will be used was changed to allow us to
               make payments on our 2002 obligations prior to making any
               principal payments under the bank credit agreements. The first
               $352 million of such proceeds may be retained by the Company and
               will be available to be used to meet our other debt obligations.
               The next $313 million will be applied pro rata to the principal
               payments on the bank credit facility and to a segregated cash
               account to be held as collateral for our guarantee of certain
               bank loans to current and former directors, officers and key
               employees (the "D&O loans"). The next $250 million will be
               divided equally between the Company and to pay pro rata the
               principal payments on the bank credit facility and the D&O loans.
               Proceeds in excess of $915 million and all proceeds during the
               period December 31, 2003 through March 31, 2004, will be divided
               as follows: (i) 25 percent to be retained by the Company; and
               (ii) 75 percent to pay pro rata the principal

                                       152

<PAGE>


                         CONSECO, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           --------------------------


              payments on the bank credit facility and the D&O loans.

          Reinsurance Agreements

          In the first quarter of 2002, we completed a reinsurance agreement
pursuant to which we are ceding 80 percent of the inforce traditional life
business of our subsidiary, Bankers Life & Casualty Company, to Reassure America
Life Insurance Company (rated A++ by A.M. Best). The total insurance liabilities
ceded pursuant to the contract are approximately $400 million. The reinsurance
agreement and the related dividends of $110.5 million have been approved by the
appropriate state insurance departments and will be paid to the parent company.
The ceding commission approximated the amount of the cost of policies purchased
and cost of policies produced related to the ceded business.

          We have also entered into a reinsurance agreement pursuant to which we
are ceding 100 percent of the traditional life and interest-sensitive life
insurance business of our subsidiary, Conseco Variable Insurance Company, to
Protective Life Insurance Company (rated A+ by A.M. Best). The total insurance
liabilities ceded pursuant to the contract are approximately $470 million. The
agreement is subject to regulatory approval. Upon receipt of all regulatory
approvals, our insurance subsidiary will receive a ceding commission of $49.5
million. The ceding commission approximated the amount of the cost of policies
purchased and the cost of policies produced related to the ceded business.


                                       153

<PAGE>



          ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

          None.

                                    PART III

          The information required by Part III is hereby incorporated by
reference from the Registrant's definitive proxy statement to be filed with the
Commission pursuant to Regulation 14A within 120 days after December 31, 2001
except that the information required by Item 10 regarding Executive Officers is
included herein under a separate caption at the end of Part I.

                                     PART IV

          ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
          8-K.

  (a)     1. Financial Statements. See Index to Consolidated Financial
             Statements on page 75 for a list of financial statements included
             in this Report.

          2. Financial Statement Schedules. The following financial statement
             schedules are included as part of this Report immediately following
             the signature page:

             Schedule II -- Condensed Financial Information of Registrant
             (Parent Company)

             Schedule IV -- Reinsurance

          All other schedules are omitted, either because they are not
applicable, not required, or because the information they contain is included
elsewhere in the consolidated financial statements or notes.

          3. Exhibits. See Exhibit Index immediately preceding the Exhibits
             filed with this report


  (b)     Reports on Form 8-K

          A report on Form 8-K dated October 2, 2001, was filed with the
          Commission to report under Item 5, a memorandum issued by the
          Registrant's Chairman and Chief Executive Officer to the Company's
          shareholders and other interested parties summarizing information
          about the Company.

          A report on Form 8-K dated October 30, 2001, was filed with the
          Commission to report under Item 5, a memorandum issued by the
          Registrant's Chairman and Chief Executive Officer to the Company's
          shareholders and other interested parties summarizing information
          about the Company.


                                       154

<PAGE>




                                   SIGNATURES

          Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, this 29th day of March,
2002.

                                  CONSECO, INC.

                                  By: /s/ WILLIAM J. SHEA
                                     ------------------------------------
                                         William J. Shea, President, Chief
                                           Operating Officer and Acting Chief
                                           Financial Officer


          Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>


Signature                                        Title (Capacity)                                Date
---------                                        ----------------                                ----
<S>                                              <C>                                             <C>



/s/ GARY C. WENDT                                Chairman of the Board,                          March 29, 2002
--------------------------------
Gary C. Wendt                                    Chief Executive Officer and
                                                 Director (Principal Executive
                                                 Officer)

/s/ WILLIAM J. SHEA                              President, Chief Operating Officer              March 29, 2002
---------------------------------                and Acting Chief Financial Officer
William J. Shea                                  (Principal Financial Officer)


/s/ JAMES S. ADAMS                               Senior Vice President, Chief                    March 29, 2002
---------------------------------                Accounting Officer and Treasurer
James S. Adams                                   (Principal Accounting Officer)


/s/ LAWRENCE M. COSS                             Director                                        March 29, 2002
-----------------------------
Lawrence M. Coss

/s/ THOMAS M. HAGERTY                            Director                                        March 29, 2002
---------------------------
Thomas M. Hagerty

/s/ M. PHIL HATHAWAY                             Director                                        March 29, 2002
-----------------------------
M. Phil Hathaway

/s/ JOHN M. MUTZ                                 Director                                        March 29, 2002
----------------------------------
John M. Mutz

/s/ ROBERT S. NICKOLOFF                          Director                                        March 29, 2002
----------------------------
Robert S. Nickoloff

/s/ DAVID V. HARKINS                             Director                                        March 29, 2002
-------------------------------
David V. Harkins

/s/ JULIO A. BAREA                               Director                                        March 29, 2002
-----------------------------------
Julio A. Barea

/s/ CAROL BELLAMY                                Director                                        March 29, 2002
--------------------------------
Carol Bellamy

/s/ SAMME THOMPSON                               Director                                        March 29, 2002
------------------------------
Samme Thompson
</TABLE>



                                       155

<PAGE>














                        REPORT OF INDEPENDENT ACCOUNTANTS
                        ON FINANCIAL STATEMENT SCHEDULES





To the Shareholders and
Board of Directors
Conseco, Inc.


          Our report on the consolidated financial statements of Conseco, Inc.
and subsidiaries is included on page 76 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedules listed in the index on page 154 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

          As discussed in note 1 to the consolidated financial statements, the
Company adopted EITF Issue No. 99-20, "Recognition of Interest Income and
Impairment on Purchased and Retained Beneficial Interests in Securitized
Financial Assets" in 2000.


                                        /s/ PricewaterhouseCoopers LLP
                                       -----------------------------------
                                            PricewaterhouseCoopers LLP




Indianapolis, Indiana
March 29, 2002



                                       156

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

         Condensed Financial Information of Registrant (Parent Company)
                                  Balance Sheet
                        as of December 31, 2001 and 2000
                              (Dollars in millions)

                                     ASSETS

<TABLE>
<CAPTION>

                                                                                                  2001           2000
                                                                                                  ----           ----
<S>                                                                                             <C>          <C>


Cash and cash equivalents.................................................................      $   152.2   $    294.0
Cash held in segregated accounts for the payment of debt..................................           54.7         81.9
Other invested assets.....................................................................           15.3        102.5
Investment in wholly owned subsidiaries (eliminated in consolidation).....................        9,528.5      9,825.7
Notes receivable from Conseco Finance (eliminated in consolidation).......................          249.5        786.7
Receivable from subsidiaries (eliminated in consolidation)................................        1,207.9      1,202.7
Income tax assets.........................................................................          521.2        301.4
Other assets..............................................................................           10.7         46.6
                                                                                                ---------    ---------

          Total assets....................................................................      $11,740.0    $12,641.5
                                                                                                =========    =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Notes payable and commercial paper....................................................      $ 4,087.6    $ 5,055.0
    Notes payable to subsidiaries (eliminated in consolidation)...........................          353.5        353.5
    Payable to subsidiaries (eliminated in consolidation).................................           41.9         58.2
    Other liabilities.....................................................................          589.5        396.5
                                                                                                ---------    ---------

          Total liabilities...............................................................        5,072.5      5,863.2
                                                                                                ---------    ---------

Company-obligated mandatorily redeemable preferred securities of subsidiary trusts........        1,914.5      2,403.9

Shareholders' equity:
    Preferred stock.......................................................................          499.6        486.8
    Common stock and additional paid-in capital (no par value, 1,000,000,000
       shares authorized, shares issued and outstanding: 2001 - 344,743,196;
        2000 - 325,318,457) ..............................................................        3,484.3      2,911.8
    Accumulated other comprehensive loss..................................................         (439.0)      (651.0)
    Retained earnings.....................................................................        1,208.1      1,626.8
                                                                                                ---------    ---------

          Total shareholders' equity......................................................        4,753.0      4,374.4
                                                                                                ---------    ---------

          Total liabilities and shareholders' equity......................................      $11,740.0    $12,641.5
                                                                                                =========    =========
</TABLE>











                   The accompanying notes are an integral part
                     of the condensed financial information.

                                       157

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II
         Condensed Financial Information of Registrant (Parent Company)
                             Statement of Operations
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)
<TABLE>
<CAPTION>

                                                                                        2001          2000         1999
                                                                                        ----          ----         ----
<S>                                                                                    <C>        <C>            <C>

Revenues:
   Net investment income..........................................................     $ 29.9    $    77.3       $  65.6
   Dividends from subsidiaries (eliminated in consolidation)......................      216.3        178.0         294.7
   Fee and interest income from subsidiaries (eliminated in consolidation)........      170.2        347.3         242.3
   Net investment losses..........................................................      (53.5)       (66.8)         (5.4)
   Gain on sale of interest in riverboat..........................................      192.4          -              -
   Other income...................................................................        1.6          7.6           7.5
                                                                                       ------    ---------       -------

       Total revenues.............................................................      556.9        543.4         604.7
                                                                                       ------    ---------       -------

Expenses:
   Interest expense on notes payable..............................................      369.5        438.4         249.1
   Provision for loss.............................................................      169.6        231.5          18.9
   Intercompany expenses (eliminated in consolidation)............................       21.0         28.0          39.4
   Operating costs and expenses...................................................       53.8         37.0          33.2
   Special charges................................................................       49.6        281.6            -
                                                                                       ------    ---------       -------

       Total expenses.............................................................      663.5      1,016.5         340.6
                                                                                       ------    ---------       -------

       Income (loss) before income taxes, equity in undistributed earnings of
         subsidiaries, distributions on Company-obligated mandatorily redeemable
         preferred securities of subsidiary trusts, extraordinary gain (loss)
         and
         cumulative effect of accounting change...................................     (106.6)      (473.1)        264.1

Income tax benefit................................................................     (115.6)      (185.7)         (5.2)
                                                                                       ------    ---------       -------

       Income (loss) before equity in undistributed earnings of subsidiaries,
         distributions on Company-obligated mandatorily redeemable preferred
         securities of subsidiary trusts, extraordinary gain (loss) and
         cumulative
         effect of accounting change..............................................        9.0       (287.4)        269.3

Equity in undistributed earnings (loss) of subsidiaries before extraordinary
   gain (loss) and cumulative effect of accounting change (eliminated in
   consolidation).................................................................     (312.6)      (698.2)        458.5
                                                                                       ------    ---------        ------

       Income (loss) before distributions on Company-obligated mandatorily
         preferred securities of subsidiary trusts, extraordinary gain (loss)
         and cumulative effect of accounting change...............................     (303.6)      (985.6)        727.8

Distributions on Company-obligated mandatorily redeemable preferred securities
   of subsidiary trusts...........................................................      119.5        145.3         132.8
                                                                                       ------    ---------        ------

       Income (loss) before extraordinary gain (loss) and cumulative effect
         of accounting change.....................................................     (423.1)    (1,130.9)        595.0

Extraordinary gain (loss) on extinguishment of debt, net of income taxes:
   Parent company.................................................................       11.1         (5.0)           -
   Subsidiary.....................................................................        6.1           -             -
Cumulative effect of accounting change, net of income taxes, of subsidiaries.......         -         (55.3)           -
                                                                                      -------    ---------        ------

       Net income (loss)..........................................................     (405.9)    (1,191.2)        595.0

Preferred stock dividends.........................................................       12.8         11.0           1.5
                                                                                      -------    ---------        ------

       Earnings (loss) applicable to common stock.................................    $(418.7)   $(1,202.2)       $593.5
                                                                                      =======    =========        ======
</TABLE>



                   The accompanying notes are an integral part
                     of the condensed financial information.

                                       158

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

         Condensed Financial Information of Registrant (Parent Company)

                             Statement of Cash Flows
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)
<TABLE>
<CAPTION>

                                                                                           2001         2000         1999
                                                                                           ----         ----         ----
<S>                                                                                      <C>        <C>           <C>

Cash flows from operating activities:
     Net income (loss)..............................................................     $(405.9)   $(1,191.2)    $  595.0
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Equity in undistributed earnings of consolidated subsidiaries *............       312.6        698.2       (458.5)
         Provision for loss on loan guarantees......................................       169.6        231.5         18.9
         Net investment losses......................................................        53.5         66.8          5.4
         Income taxes ..............................................................       (80.1)      (351.7)       (81.5)
         Extraordinary charge on extinguishment of debt.............................       (26.9)         7.7           -
         Cumulative effect of change in accouting...................................         -           85.2           -
         Distributions on Company-obligated mandatorily redeemable preferred
           securities of subsidiary trusts..........................................       183.9        223.5        204.2
         Special charges............................................................        41.9        112.1           -
         Gain on sale of interest in riverboat......................................      (192.4)         -             -
         Other......................................................................        71.8        (19.9)         (.7)
                                                                                        --------    ---------     --------

         Net cash provided (used) by operating activities...........................       128.0       (137.8)       282.8
                                                                                        --------    ---------     --------

Cash flows from investing activities:
   Sales and maturities of investments..............................................       375.9        228.2        187.9
   Investments and advances to consolidated subsidiaries *..........................          -      (1,427.2)    (1,806.3)
   Purchases of investments.........................................................       (50.1)      (220.0)      (203.3)
   Payments from subsidiaries *.....................................................       535.9      2,218.0         62.1
                                                                                        --------    ---------     --------

         Net cash provided (used) by investing activities...........................       861.7        799.0     (1,759.6)
                                                                                        --------    ---------     --------

Cash flows from financing activities:
   Issuance of common and convertible preferred shares..............................         4.1           .8        588.4
   Issuance of Company-obligated mandatorily redeemable preferred securities
     of subsidiary trusts...........................................................          -            -         534.3
   Repurchase of Company-obligated mandatorily redeemable preferred
     securities of subsidiary trusts................................................          -        (250.0)          -
   Issuance of notes payable and commercial paper...................................       410.8      3,537.2      4,090.2
   Payments on notes payable........................................................    (1,349.4)    (3,114.6)    (3,279.0)
   Payments on notes payable to affiliates *........................................          -          (3.1)          -
   Payments to repurchase equity securities of Conseco, Inc.........................          -        (102.6)       (29.5)
   Dividends to subsidiaries *......................................................       (43.0)       (52.8)       (66.0)
   Dividends and distributions on Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts......................................      (181.2)      (302.1)      (379.4)
                                                                                        --------    ---------     --------

         Net cash provided (used) by financing activities...........................    (1,158.7)      (287.2)     1,459.0
                                                                                        --------    ---------     --------

         Net increase (decrease) in cash and cash equivalents.......................      (169.0)       374.0        (17.8)

   Cash and cash equivalents, beginning of year.....................................       375.9          1.9         19.7
                                                                                        --------    ---------     --------

   Cash and cash equivalents, end of year...........................................    $  206.9    $   375.9     $    1.9
                                                                                        ========    =========     ========

*    Eliminated in consolidation
</TABLE>


                   The accompanying notes are an integral part
                     of the condensed financial information.

                                       159

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                    Notes to Condensed Financial Information

1.        Basis of Presentation

          The condensed financial information should be read in conjunction with
the consolidated financial statements of Conseco, Inc. ("Conseco"). The
condensed financial information includes the accounts and activity of the parent
company and its wholly owned non-insurance subsidiaries which act as the holding
companies for the Company's life insurance subsidiaries.

2.        Condensed Consolidating Financial Information

          The obligations under our current bank credit facilities, which had a
principal balance of $1,493.3 million at December 31, 2001, are guaranteed by
CIHC, Incorporated, ("CIHC") a wholly owned subsidiary of Conseco, and the
ultimate holding company for Conseco's principal operating subsidiaries. In
addition, CIHC has guaranteed up to $250 million of debt of Conseco Finance
Corp. ("Conseco Finance"), and up to $545.4 million of bank loans to certain of
our current and former directors, officers and key employees which were used to
purchase shares of our common stock.

          As described in note 16 to the consolidated financial statements of
Conseco, Conseco has offered to exchange up to $2.54 billion aggregate principal
amount of newly issued notes for outstanding senior unsecured notes held by
"qualified institutional buyers," institutional "accredited investors," or non
U.S. persons in transactions outside the United States. The notes to be
exchanged would have identical principal amounts, but the notes would have
extended maturities and would be guaranteed on a senior subordinated basis by
CIHC. Such guarantee would be subordinated to the guarantees of CIHC summarized
in the preceding paragraph. The guarantee would be on parity with CIHC's senior
subordinated debt including a $177.4 million note to CFIHC, Inc. and a $353.5
million note to Conseco Finance. Both CFIHC, Inc. and Conseco Finance are
subsidiaries of CIHC.

          The following condensed consolidating financial information as of
December 31, 2001 and 2000, and for the three years ended December 31, 2001,
summarizes the accounts of CIHC, Conseco and other holding companies which
comprise the parent company. Such condensed consolidating financial information
should be read in conjunction with the consolidated financial statements of
Conseco.




                                       160

<PAGE>




                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                                  Balance Sheet
                             as of December 31, 2001

                              (Dollars in millions)

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations   company)
                                                                    -----------------     ---------  ------------   --------
<S>                                                                    <C>            <C>           <C>             <C>



Cash and cash equivalents.........................................     $     1.0      $   151.2     $       -       $   152.2
Cash held in segregated accounts for the payment of debt..........            -            54.7             -            54.7
Other invested assets.............................................           3.5           11.8             -            15.3
Investment in wholly owned subsidiaries
    (eliminated in consolidation).................................      10,240.6       10,166.6      (10,878.7)       9,528.5
Notes receivable from Conseco Finance (eliminated in consolidation)        249.5             -              -           249.5
Receivable from subsidiaries (eliminated in consolidation)........       1,390.9        1,754.8       (1,937.8)       1,207.9
Income taxes......................................................        (210.8)         648.8           83.2          521.2
Other assets......................................................           1.0            9.7             -            10.7
                                                                       ---------      ---------     ----------      ---------

          Total assets............................................     $11,675.7      $12,797.6     $(12,733.3)     $11,740.0
                                                                       =========      =========     ==========      =========



                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Notes payable.................................................     $      -       $ 4,087.6     $       -       $ 4,087.6
    Notes payable to subsidiaries (eliminated in consolidation)...       1,279.8           77.0       (1,003.3)         353.5
    Payable to subsidiaries (eliminated in consolidation).........         168.4          163.7         (290.2)          41.9
    Other liabilities.............................................          35.7          553.8             -           589.5
                                                                       ---------      ---------     ----------      ---------

          Total liabilities.......................................       1,483.9        4,882.1       (1,293.5)       5,072.5
                                                                       ---------      ---------     ----------      ---------

Company-obligated mandatorily redeemable preferred securities
     of subsidiary trusts.........................................            -         1,914.5            -          1,914.5

Shareholders' equity:
    Preferred stock...............................................         250.8        1,399.6       (1,150.8)         499.6
    Common stock and additional paid-in capital...................       8,763.4        3,789.0       (9,068.1)       3,484.3
    Accumulated other comprehensive loss..........................        (478.2)        (438.9)         478.1         (439.0)
    Retained earnings.............................................       1,655.8        1,251.3       (1,699.0)       1,208.1
                                                                       ---------      ---------     ----------      ---------

          Total shareholders' equity..............................      10,191.8        6,001.0      (11,439.8)       4,753.0
                                                                       ---------      ---------     ----------      ---------

          Total liabilities and shareholders' equity..............     $11,675.7      $12,797.6     $(12,733.3)     $11,740.0
                                                                       =========      =========     ==========      =========
</TABLE>



                                       161

<PAGE>




                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                                  Balance Sheet
                             as of December 31, 2000

                              (Dollars in millions)

                                     ASSETS
<TABLE>
<CAPTION>


                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations   company)
                                                                    -----------------     ---------  ------------   --------
<S>                                                                    <C>            <C>           <C>             <C>



Cash and cash equivalents.........................................     $     -        $   294.0     $      -        $   294.0
Cash held in segregated accounts for the payment of debt..........           -             81.9            -             81.9
Other invested assets.............................................            .4          102.1            -            102.5
Investment in wholly owned subsidiaries
    (eliminated in consolidation).................................      10,345.0        9,970.9      (10,490.2)       9,825.7
Notes receivable from Conseco Finance (eliminated in consolidation)        786.7            -              -            786.7
Receivable from subsidiaries (eliminated in consolidation)........       1,468.4        2,597.6       (2,863.3)       1,202.7
Income taxes......................................................        (202.6)         535.7          (31.7)         301.4
Other assets......................................................           2.5           44.1            -             46.6
                                                                       ---------      ---------     ----------      ---------

          Total assets............................................     $12,400.4      $13,626.3     $(13,385.2)     $12,641.5
                                                                       =========      =========     ==========      =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Notes payable.................................................     $      -       $ 5,055.0     $       -       $ 5,055.0
    Notes payable to subsidiaries (eliminated in consolidation)...       2,215.6           75.0       (1,937.1)         353.5
    Payable to subsidiaries (eliminated in consolidation).........         128.3          174.6         (244.7)          58.2
    Other liabilities.............................................          39.6          356.9            -            396.5
                                                                       ---------      ---------     ----------      ---------

          Total liabilities.......................................       2,383.5        5,661.5       (2,181.8)       5,863.2
                                                                       ---------      ---------     ----------      ---------

Company-obligated mandatorily redeemable preferred securities
     of subsidiary trusts.........................................            -         2,403.9             -         2,403.9

Shareholders' equity:
    Preferred stock...............................................         234.9        1,386.8       (1,134.9)         486.8
    Common stock and additional paid-in capital...................       8,762.4        3,216.6       (9,067.2)       2,911.8
    Accumulated other comprehensive loss..........................        (695.7)        (645.9)         690.6         (651.0)
    Retained earnings.............................................       1,715.3        1,603.4       (1,691.9)       1,626.8
                                                                       ---------      ---------     ----------      ---------

          Total shareholders' equity..............................      10,016.9        5,560.9      (11,203.4)       4,374.4
                                                                       ---------      ---------     ----------      ---------

          Total liabilities and shareholders' equity..............     $12,400.4      $13,626.3     $(13,385.2)     $12,641.5
                                                                       =========      =========     ==========      =========
</TABLE>





                                       162

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                             Statement of Operations
                      for the year ended December 31, 2001

                              (Dollars in millions)

<TABLE>
<CAPTION>


                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations  company)
                                                                    -----------------     ---------  ------------  --------
<S>                                                                       <C>            <C>           <C>          <C>

Revenues:
    Net investment income.........................................        $   .7         $ 29.2        $    -       $    29.9
    Dividends from subsidiaries (eliminated in consolidation).....         192.3           24.0             -           216.3
    Fee and interest income from subsidiaries
       (eliminated in consolidation)..............................         172.5          180.4         (182.7)         170.2
    Net investment gains (losses).................................           4.3          (57.8)            -           (53.5)
    Gain on sale of interest in riverboat.........................            -           192.4             -           192.4
    Other income..................................................            -             1.6             -             1.6
                                                                          ------         ------        -------      ---------

          Total revenues..........................................         369.8          369.8         (182.7)         556.9
                                                                          ------         ------        -------      ---------

Expenses:
    Interest expense on notes payable.............................           2.6          369.2           (2.3)         369.5
    Provision for loss............................................           -            169.6             -           169.6
    Intercompany expenses (eliminated in consolidation)...........         122.0            5.3         (106.3)          21.0
    Operating costs and expenses..................................           2.5           70.4          (19.1)          53.8
    Special charges...............................................            .2           36.9           12.5           49.6
                                                                          ------         ------        -------      ---------

          Total expenses..........................................         127.3          651.4         (115.2)        663.5
                                                                          ------         ------        -------      ---------

          Income (loss) before income taxes, equity in undistributed
             earnings of subsidiaries, distributions on
             Company-obligated mandatorily redeemable preferred
             securities of subsidiary trusts and extraordinary
             gain.................................................         242.5         (281.6)         (67.5)      (106.6)

Income tax expense (benefit)......................................          16.3         (107.5)         (24.4)      (115.6)
                                                                          ------         ------        -------      -------

       Income (loss) before equity in undistributed earnings
             of subsidiaries, distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts and extraordinary gain.............         226.2         (174.1)         (43.1)        9.0

Equity in undistributed earnings of subsidiaries before
    extraordinary gain (eliminated in consolidation)..............        (300.6)         (78.3)          66.3      (312.6)
                                                                          ------         ------        -------      -------

       Income (loss) before distributions on Company-obligated
             mandatorily preferred securities of subsidiary trusts
             and extraordinary gain...............................         (74.4)        (252.4)          23.2      (303.6)

Distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................            -           119.5             -         119.5
                                                                          ------         ------        -------      -------

       Income (loss) before extraordinary gain....................         (74.4)        (371.9)          23.2      (423.1)

Extraordinary gain on extinguishment of debt, net of tax:
    Parent company................................................            -            11.1             -          11.1
    Subsidiary....................................................           6.1             -              -           6.1
                                                                           -----         ------        -------      -------

       Net income (loss)..........................................         (68.3)        (360.8)          23.2      (405.9)

Preferred stock dividends.........................................            -            12.8             -         12.8
                                                                           -----         ------        -------      -------

       Income (loss) applicable to common stock...................        $(68.3)       $(373.6)       $  23.2     $(418.7)
                                                                          ======        =======        =======      =======
</TABLE>



                                       163

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                             Statement of Operations
                      for the year ended December 31, 2000

                              (Dollars in millions)

<TABLE>
<CAPTION>
                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations  company)
                                                                    -----------------     ---------  ------------  --------
<S>                                                                    <C>            <C>              <C>          <C>

Revenues:
    Net investment income.........................................       $    -       $    77.3        $    -       $    77.3
    Dividends from subsidiaries (eliminated in consolidation).....         178.0             -              -           178.0
    Fee and interest income from subsidiaries
       (eliminated in consolidation)..............................         197.4          335.3         (185.4)         347.3
    Net investment gains (losses).................................           2.7          (69.5)            -           (66.8)
    Other income..................................................            -             7.6             -             7.6
                                                                         -------      ---------         ------      ---------

          Total revenues..........................................         378.1          350.7         (185.4)         543.4
                                                                         -------      ---------         ------      ---------

Expenses:
    Interest expense on notes payable.............................          12.5          425.9             -           438.4
    Provision for loss............................................            -           231.5             -           231.5
    Intercompany expenses (eliminated in consolidation)...........         198.9           11.6         (182.5)          28.0
    Operating costs and expenses..................................           6.9           30.1             -            37.0
    Special charges...............................................            -           281.6             -           281.6
                                                                         -------      ---------        -------      ---------

          Total expenses..........................................         218.3          980.7         (182.5)       1,016.5
                                                                         -------      ---------        -------      ---------

          Income (loss) before income taxes, equity in
             undistributed earnings of subsidiaries, distributions
             on Company-obligated mandatorily redeemable preferred
             securities of subsidiary trusts, extraordinary charge
             and cumulative effect of accounting change...........         159.8         (630.0)          (2.9)        (473.1)

Income tax expense (benefit)......................................          (2.6)        (182.1)          (1.0)        (185.7)
                                                                         -------      ---------        -------      ---------

       Income (loss) before equity in undistributed earnings of
             subsidiaries, distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts, extraordinary charge
             and cumulative effect of accounting change...........         162.4         (447.9)          (1.9)        (287.4)

Equity in undistributed earnings of subsidiaries before cumulative
    effect of accounting change
    (eliminated in consolidation).................................        (703.0)        (584.4)         589.2         (698.2)
                                                                         -------      ---------        -------      ---------

       Loss  before distributions on Company-obligated mandatorily
             preferred securities of subsidiary trusts extraordinary
             charge and cumulative effect of accounting change....        (540.6)      (1,032.3)         587.3         (985.6)

Distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................            -           145.3             -           145.3
                                                                         -------      ----------       -------      ---------

       Loss before extraordinary charge and cumulative effect
         of accounting change.....................................        (540.6)      (1,177.6)         587.3       (1,130.9)

Extraordinary charge on extinguishment of debt, net of tax........          (4.9)           (.1)            -            (5.0)
    Cumulative effect of accounting change, net of tax, of
    subsidiaries..................................................         (55.3)            -              -           (55.3)
                                                                         -------      ---------        -------      ---------

       Net loss...................................................        (600.8)      (1,177.7)         587.3       (1,191.2)

Preferred stock dividends.........................................            -            11.0            -             11.0
                                                                         -------      ---------        -------      ---------

       Loss applicable to common stock............................       $(600.8)     $(1,188.7)       $ 587.3      $(1,202.2)
                                                                         =======      =========        =======      =========
</TABLE>

                                       164

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                             Statement of Operations
                      for the year ended December 31, 1999

                              (Dollars in millions)
<TABLE>
<CAPTION>


                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations  company)
                                                                    -----------------     ---------  ------------  --------
<S>                                                                       <C>            <C>           <C>              <C>

Revenues:
    Net investment income.........................................        $ 28.8         $ 36.8        $    -          $ 65.6
    Dividends from subsidiaries (eliminated in consolidation).....          36.6          258.1             -           294.7
    Fee and interest income from subsidiaries
       (eliminated in consolidation)..............................         193.3          215.2         (166.2)         242.3
    Net investment gains (losses).................................          (7.6)           2.2             -            (5.4)
    Other income..................................................            .2            7.3             -             7.5
                                                                          ------         ------        -------         ------

          Total revenues..........................................         251.3          519.6         (166.2)         604.7
                                                                          ------         ------        -------         ------

Expenses:
    Interest expense on notes payable.............................          15.6          233.5             -           249.1
    Provision for loss............................................           -             18.9             -            18.9
    Intercompany expenses (eliminated in consolidation)...........         154.0           17.9         (132.5)          39.4
    Operating costs and expenses..................................           8.1           32.3           (7.2)          33.2
                                                                          ------         ------        -------         ------

          Total expenses..........................................         177.7          302.6         (139.7)         340.6
                                                                          ------         ------        -------         ------

          Income before income taxes, equity in undistributed
             earnings of subsidiaries and distributions on
             Company-obligated mandatorily redeemable preferred
             securities of subsidiary trusts....... ..............          73.6          217.0          (26.5)         264.1

Income tax expense (benefit)......................................          15.1          (11.3)          (9.0)          (5.2)
                                                                          ------         ------        -------         ------

       Income before equity in undistributed earnings of
             subsidiaries and distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts....................................          58.5          228.3          (17.5)         269.3

Equity in undistributed earnings of subsidiaries
    (eliminated in consolidation).................................         666.6          555.3         (763.4)         458.5
                                                                          ------         ------        -------         ------

       Income before distributions on Company-obligated
             mandatorily preferred securities of subsidiary trusts         725.1          783.6         (780.9)         727.8

Distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................            -           132.8             -           132.8
                                                                          ------         ------        -------         ------

       Net income.................................................         725.1          650.8         (780.9)         595.0

Preferred stock dividends.........................................            -             1.5             -             1.5
                                                                          ------         ------        -------         ------

       Income applicable to common stock..........................        $725.1         $649.3        $(780.9)        $593.5
                                                                          ======         ======        =======         ======
</TABLE>



                                       165

<PAGE>



                         CONSECO, INC. AND SUBSIDIARIES


                                   SCHEDULE IV

                                   Reinsurance
              for the years ended December 31, 2001, 2000 and 1999
                              (Dollars in millions)

<TABLE>
<CAPTION>


                                                                           2001             2000              1999
                                                                           ----             ----              ----
<S>                                                                    <C>              <C>               <C>

Life insurance inforce:
   Direct............................................................  $121,953.5       $123,713.6        $126,826.7
   Assumed...........................................................     2,199.0          5,097.2           5,414.2
   Ceded.............................................................   (26,417.3)       (27,530.2)        (27,687.5)
                                                                       ----------       ----------        ----------

         Net insurance inforce.......................................   $97,735.2       $101,280.6        $104,553.4
                                                                        =========       ==========        ==========

         Percentage of assumed to net................................         2.2%             5.0%              5.2%
                                                                              ===              ===               ===

Premiums recorded as revenue for generally accepted accounting principles:
     Direct..........................................................     3,619.8         $3,577.3          $3,350.3
     Assumed.........................................................       147.0            305.4             547.8
     Ceded...........................................................      (253.7)          (248.3)           (418.6)
                                                                        ---------         --------          --------

         Net premiums................................................   $ 3,513.1         $3,634.4          $3,479.5
                                                                        =========         ========          ========

         Percentage of assumed to net................................         4.2%             8.4%             15.7%
                                                                              ===              ===              ====
</TABLE>





                                       166

<PAGE>
<TABLE>
<CAPTION>

Exhibit
No.                                             Document
-------                                         --------
<S>               <C>
3.1               Amended and Restated Articles of Incorporation and Articles of
                  Amendment thereto of the Registrant were filed with the
                  Commission as Exhibit 3.1 to the Registrant's Registration
                  Statement on Form S-3 (No. 333-94683), and are incorporated
                  herein by this reference.

3.2               Amended and Restated By-Laws of the Registrant.

4.22.6            First Supplemental Indenture dated June 29, 2001 was filed
                  with the Commission as Exhibit 4.1 to the Registrant's Report
                  on Form 8-K, dated June 29, 2001, and is incorporated herein
                  by this reference.

4.30.1            Warrant No. 2000-2, dated September 5, 2000, issued to GE
                  Capital Equity Investments, Limited was filed as Exhibit
                  4.30.1 to the Registrant's Report on Form 10-K for the year
                  ended December 31, 2000 and is incorporated herein by this
                  reference.

4.30.2            Warrant No. 2000-3, dated September 5, 2000, issued to
                  Westport Insurance Corporation was filed as Exhibit 4.30.2 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2000 and is incorporated herein by this
                  reference.

4.31.1            First Amendment to the Five-Year Credit Agreement dated as of
                  September 22, 2000 was filed with the Commission as Exhibit
                  4.1 to the Registrant's Report on Form 8-K/A, dated September
                  28, 2000, and is incorporated herein by this reference.

4.31.13           Second Amendment to Five-Year Credit Agreement, dated as of
                  May 30, 2001, by and among Conseco, Inc., the various
                  financial institutions signatory thereto and Bank of America,
                  N.A.

4.31.14           Third Amendment to Five-Year Credit Agreement, dated as of
                  March 20, 2002, by and among Conseco, Inc., the various
                  financial institutions signatory thereto and Bank of America,
                  N.A.

There have not been filed as exhibits to this Form 10-K certain long-term debt
instruments, none of which relates to authorized indebtedness that exceeds 10%
of the consolidated assets of the Registrant. The Registrant agrees to furnish
the Commission upon its request a copy of any instrument defining the rights of
holders of long-term debt of the Company and its consolidated subsidiaries.

10.1.13           Employment Agreement, dated February 9, 1996 between Green
                  Tree and Lawrence Coss and related Noncompetition agreement
                  dated February 9, 1996, as amended by the Amendment Agreement
                  dated April 6, 1998 were filed with the Commission as an
                  exhibit to Green Tree's Registration Statement on Form S-3,
                  and are incorporated herein by this reference.
<PAGE>


10.1.14           Employment Agreement, amended and restated as of December 15,
                  1999, between the Registrant and Maxwell E. Bublitz was filed
                  with the Commission as Exhibit 10.1.14 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 1999 and
                  is incorporated herein by this reference.

10.1.15           Employment Agreement, amended and restated as of December 15,
                  1999, between the Registrant and James S. Adams was filed with
                  the Commission as Exhibit 10.1.15 to the Registrant's Report
                  on Form 10-K for the year ended December 31, 1999 and is
                  incorporated herein by this reference.

10.1.16           Description of incentive compensation and severance
                  arrangement with Edward M. Berube was filed with the
                  Commission as Exhibit 10.1.16 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.1.24           Second Amendment Agreement, dated as of November 1, 1999,
                  between Conseco Finance Corp. and Lawrence M. Coss was filed
                  with the commission as Exhibit 10.1.24 to the Registrant's
                  Report on Form 10-K/A for the year ended December 31, 1999,
                  and is incorporated herein by this reference.

10.1.27           Employment Agreement by and between Gary C. Wendt and Conseco,
                  Inc., dated as of June 28, 2000 was filed as Exhibit 10.1.27
                  to the Registrant's Report on Form 8-K, dated July 10, 2000,
                  and is incorporated herein by this reference.

10.1.28           Nonqualified Stock Option Agreement by and between Gary C.
                  Wendt and Conseco, Inc., dated as of June 28, 2000 was filed
                  as Exhibit 10.1.28 to the Registrant's Report on Form 8-K,
                  dated July 10, 2000, and is incorporated herein by this
                  reference.

10.1.29           Restricted Stock Agreement by and between Gary C. Wendt and
                  Conseco, Inc., dated as of June 28, 2000 was filed as Exhibit
                  10.1.29 to the Registrant's Report on Form 8-K, dated July 10,
                  2000, and is incorporated herein by this reference.

10.1.30           Employment Agreement by and between David K. Herzog and
                  Conseco, Inc., dated as of August 11, 2000, was filed as
                  Exhibit 10.1.11 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2000 and is incorporated
                  herein by this reference.

10.1.31           Supplemental Retirement Agreement dated as of August 16, 2000,
                  between Conseco, Inc. and Gary C. Wendt was filed as Exhibit
                  10.1.31 to the Registrant's Report on Form 10-Q for the
                  quarter ended September 30, 2000 and is incorporated herein by
                  this reference.


<PAGE>



10.1.32           Guaranty dated as of August 16, 2000, between Bankers Life and
                  Casualty Company as Guarantor, and Gary C. Wendt was filed as
                  Exhibit 10.1.32 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2000 and is incorporated
                  herein by this reference.

10.1.34           Employment Agreement by and between David Gubbay and Conseco,
                  Inc., dated as of February 21, 2001, was filed with the
                  Commission as Exhibit 10.1.34 to the Registrant's Report on
                  Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.35           Restricted Stock Agreement by and between David Gubbay and
                  Conseco, Inc., dated as of March 13, 2001, was filed with the
                  Commission as Exhibit 10.1.35 to the Registrant's Report on
                  Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.36           Employment Agreement by and between Charles B. Chokel and
                  Conseco, Inc., dated as of March 16, 2001, was filed with the
                  Commission as Exhibit 10.1.36 to the Registrant's Report on
                  Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.37           Restricted Stock Agreement by and between Charles B. Chokel
                  and Conseco, Inc., dated as of March 16, 2001, was filed with
                  the Commission as Exhibit 10.1.37 to the Registrant's Report
                  on Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.38           Employment Agreement between William J. Shea and Conseco,
                  Inc., dated as of September 10, 2001, was filed with the
                  Commission as Exhibit 10.1.38 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2001 and is
                  incorporated herein by this reference.

10.1.39           Restricted Stock Agreement dated as of September 17, 2001
                  between Conseco, Inc. and William J. Shea was filed with the
                  Commission as Exhibit 10.1.39 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2001 and is
                  incorporated herein by this reference.

10.8              The Registrant's Stock Option Plan was filed with the
                  Commission as Exhibit B to its definitive Proxy Statement
                  dated December 10, 1983; Amendment No. 1 thereto was filed
                  with the Commission as Exhibit 10.8.1 to its Report on Form
                  10-Q for the quarter ended June 30, 1985; Amendment No. 2
                  thereto was filed with the Commission as Exhibit 10.8.2 to its
                  Registration Statement on Form S-1, No. 33-4367; Amendment No.
                  3 thereto was filed with the Commission as Exhibit 10.8.3 to
                  the Registrant's Annual Report on Form 10-K for 1986;
                  Amendment No. 4 thereto was filed with the Commission as
                  Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
                  for 1987; Amendment No. 5 thereto was filed with the
                  Commission as Exhibit 10.8 to the Registrant's Report on Form
                  10-Q for the quarter ended September 30, 1991; and are
                  incorporated herein by this reference.

<PAGE>

10.8.3            The Registrant's Cash Bonus Plan was filed with the Commission
                  as Exhibit 10.8.3 to the Registrant's Report on Form 10-Q for
                  the quarter ended March 31, 1989, and is incorporated herein
                  by this reference.

10.8.4            Amended and Restated Conseco Stock Bonus and Deferred
                  Compensation Program was filed with the Commission as Exhibit
                  10.8.4 to the Registrant's Annual Report on Form 10-K for
                  1992, and is incorporated herein by this reference.

10.8.6            Conseco Performance-Based Compensation Plan for Executive
                  Officers was filed with the Commission as Exhibit 10.8.15 to
                  the Registrant's Report on Form 10-Q for the quarter ended
                  March 31, 1998, and is incorporated herein by this reference.

10.8.7            Conseco, Inc. Amended and Restated Deferred Compensation Plan
                  was filed with the Commission as Exhibit A to the Registrant's
                  definitive Proxy Statement dated April 26, 1995, and is
                  incorporated herein by this reference.

10.8.8            Amendment to the Amended and Restated Conseco Stock Bonus and
                  Deferred Compensation Program was filed with the Commission as
                  Exhibit 10.8.8 to the Registrant's Annual Report on Form 10-K
                  for 1994, and is incorporated herein by this reference.

10.8.9            Conseco Amended and Restated 1994 Stock and Incentive Plan.

10.8.10           Amendment Number 2 to the Amended and Restated Conseco Stock
                  Bonus and Deferred Compensation Program was filed with the
                  Commission as Exhibit 10.8.10 to the Registrant's Annual
                  Report on Form 10-K for 1995 and is incorporated herein by
                  reference.

10.8.11           Amended and Restated Director, Officer and Key Employee Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.11 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999, and is incorporated
                  herein by this reference.

10.8.13           Form of Promissory Note payable to the Registrant relating to
                  the Registrant's Director, Officer and Key Employee Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.13
                  to the Registrant's Annual Report on Form 10-K for the year
                  ended December 31, 1998, and is incorporated herein by
                  reference.
<PAGE>

10.8.14           Conseco, Inc. Amended and Restated 1997 Non-qualified Stock
                  Option Plan.

10.8.21           Amended and Restated 1999 Director and Executive Officer Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.21 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999 and is incorporated
                  herein by this reference.

10.8.22           Guaranty regarding 1999 Director and Executive Officer Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.22
                  to the Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 1999 and is incorporated herein by this
                  reference.

10.8.23           Form of Borrower Pledge Agreement dated as of September 15,
                  1999 with The Chase Manhattan Bank relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.23 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.24           Form of note payable to the Registrant relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.24 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.25           Conseco, Inc. 2000 Employee Stock Purchase Program Work-Down
                  Plan was filed with the Commission as Exhibit 10.8.25 to the
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2000 and is incorporated herein by this
                  reference.

10.8.26           Conseco, Inc. 2000 Non-Employee Stock Purchase Program
                  Work-Down Plan was filed with the Commission as Exhibit
                  10.8.26 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.27           Guaranty, dated as of November 22, 2000 between Conseco, Inc.,
                  as Guarantor, and Bank of America, National Association, as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000, made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and Form of Credit
                  Agreement, dated as of November 22, 2000 among the Borrowers,
                  the other financial institutions party thereto and Bank of
                  America, National Association, as Administrative Agent
                  (Relating to Refinancing of certain Loans under that certain
                  Credit Agreement, dated as of August 21, 1998) was filed with
                  the Commission as Exhibit 10.8.27 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.
<PAGE>

10.8.28           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor,and Bank of America, National Association,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated,as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  Bank of America, National Association, as Administrative Agent
                  (Relating to the Refinancing of Certain Loans under that
                  certain Amended and Restated Credit Agreement, dated as of
                  August 26, 1997) was filed with the Commission as Exhibit
                  10.8.28 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.29           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor, and The Chase Manhattan Bank,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of The Chase
                  Manhattan Bank, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  The Chase Manhattan Bank, as Administrative Agent (Relating to
                  the Refinancing of Certain Loans under that certain Credit
                  Agreement, dated as of September 15, 1999, as terminated and
                  replaced by that certain Termination and Replacement
                  Agreement, dated as of May 30, 2000) was filed with the
                  Commission as Exhibit 10.8.29 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.8.30           Forms of note payable to Conseco Services, LLC regarding the
                  2000 Work-Down Plans, Form of Unconditional Guarantee and Form
                  of Indemnification Agreement was filed with the Commission as
                  Exhibit 10.8.30 to the Registrant's Annual Report on Form 10-K
                  for the year ended December 31, 2000 and is incorporated
                  herein by this reference.
<PAGE>

10.8.31           First Stage Amendment and Agreement re: Non-Refinanced 1998
                  D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
                  CDOC, Inc., CIHC, Incorporated, Bank of America, N.A. and the
                  various financial institutions parties thereto.

10.8.32           First Stage Amendment and Agreement re: 1997 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto.

10.8.33           Cash Collateral Pledge Agreement among CDOC, Inc. and JP
                  Morgan Chase Bank, dated as of March 20, 2002.

10.8.34           First Stage Amendment and Agreement Re: 1998 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto.

10.8.35           Amended and Restated Collateral Agreement made by Conseco,
                  Inc. and CIHC, Incorporated in form of JP Morgan Chase Bank,
                  dated as of March 20, 2002.

10.8.36           First Stage Amendment and Agreement re: 1999 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, JPMorgan Chase Bank and the various financial
                  institutions parties thereto.

10.43             Amended and Restated Securities Purchase Agreement dated as of
                  December 15, 1999 between the Registrant and the purchasers
                  named therein was filed with the Commission as Exhibit 10.43
                  to the Registrant's Report on Form 8-K dated December 15,
                  1999, and is incorporated herein by this reference.

10.45.1           Warrant to Purchase Common Stock of Conseco Finance Corp.,
                  dated May 11, 2000, by and between Conseco Finance Corp. and
                  Lehman Brothers Holdings Inc. was filed with the Commission as
                  Exhibit 10.45 to the Registrant's Report on Form 10-Q for the
                  quarter ended June 30, 2000 and is incorporated herein by this
                  reference.

10.45.2           Exchange Agreement by and between Lehman Brothers Holdings
                  Inc. and Conseco, Inc., dated January 30, 2002.

10.46.1           Amended and Restated Agreement dated January 30, 2002, by and
                  among Conseco Finance Corp., Conseco, Inc., CIHC,
                  Incorporated, Green Tree Residual Finance Corp. I, Green Tree
                  Finance Corp. - Five and Lehman Brothers Holdings Inc.

10.46.2           Amended and Restated Master Repurchase Agreement dated as of
                  April 5, 2001 between Merrill Lynch Mortgage Capital Inc. and
                  Green Tree Finance Corp. - Three was filed with the Commission
                  as Exhibit 10(a) to the Conseco Finance Corp. Report on Form
                  10-K for the years ended December 31, 2001 and is incorporated
                  herein by reference.
<PAGE>

10.46.3           Second Amended and Restated Master Repurchase Agreement dated
                  January 30, 2002 between Lehman Commercial Paper Inc. and
                  Green Tree Finance Corp.-Five was filed with the Commission as
                  Exhibit 10(b) to the Conseco Finance Corp. Report on Form 10-K
                  for the year ended December 31, 2001 and is incorporated
                  herein by reference.

10.46.4           Asset Assignment Agreement dated as of February 13, 1998
                  between Green Tree Residual Finance Corp. I and Lehman
                  Commercial Paper, Inc. (incorporated by reference to the
                  Conseco Finance Corp. Quarterly Report on Form 10-Q for the
                  quarterly period ended March 31, 1998; File No. 1-08916);
                  Amendment to the First Residual Facility, dated as of
                  September 22, 2000, by and among Lehman ALI Inc. and Green
                  Tree Residual Finance Corp. I (incorporated by reference to
                  Exhibit 10(c) to Conseco Finance Corp.'s Annual Report on Form
                  10-K for the year ended December 31, 2000); Amendment, dated
                  January 30, 2002, by and between Lehman ALI Inc. and Green
                  Tree Residual Finance Corp. was filed with the Commission as
                  Exhibit 10(c) to the Conseco Finance Corp. Report on Form 10-K
                  for the year ended December 31, 2001 and is incorporated
                  herein by reference.

10.46.5           Insurance Agreement by and between Registrant and Gary C.
                  Wendt 2000 Irrevocable Insurance Trust dated 11/22/00 ("Wendt
                  Trust"), dated December 1, 2000 and Collateral Assignment by
                  Wendt Trust in favor of Registrant dated December 1, 2000 was
                  filed with the Commission as Exhibit 10.47 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.48             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.48 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.49             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.49 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.50             Agreement and Plan of Merger dated as of July 27, 2001 by and
                  among Conseco, Inc., Noida Acquisition Corp. and
                  ExlService.com, Inc. was filed with the Commission as Exhibit
                  10.50 to the Registrant's Report on Form 10-Q for the quarter
                  ended June 30, 2001 and is incorporated herein by this
                  reference.
<PAGE>

10.51             Restricted Stock Agreement dated as of July 31, 2001, between
                  Conseco, Inc., Gary Wendt and Rosemarie Wendt was filed with
                  the Commission as Exhibit 10.51 to the Registrant's Report on
                  Form 10-Q for the quarter ended June 30, 2001 and is
                  incorporated herein by this reference.

12.1              Computation of Ratio of Earnings to Fixed Charges, Preferred
                  Dividends and Distributions on Company-Obligated Mandatorily
                  Redeemable Preferred Securities of Subsidiary Trusts.

21                List of Subsidiaries.

23.1              Consent of PricewaterhouseCoopers LLP with respect to the
                  financial statements of Conseco, Inc.

COMPENSATION PLANS AND ARRANGEMENTS.


10.1.13           Employment Agreement, dated February 9, 1996 between Green
                  Tree and Lawrence Coss and related Noncompetition agreement
                  dated February 9, 1996, as amended by the Amendment Agreement
                  dated April 6, 1998 were filed with the Commission as an
                  exhibit to Green Tree's Registration Statement on Form S-3,
                  and are incorporated herein by this reference.

10.1.14           Employment Agreement, amended and restated as of December 15,
                  1999, between the Registrant and Maxwell E. Bublitz was filed
                  with the Commission as Exhibit 10.1.14 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 1999 and
                  is incorporated herein by this reference.

10.1.17           Employment Agreement, amended and restated as of December 15,
                  1999, between the Registrant and James S. Adams was filed with
                  the Commission as Exhibit 10.1.15 to the Registrant's Report
                  on Form 10-K for the year ended December 31, 1999 and is
                  incorporated herein by this reference.

10.1.18           Description of incentive compensation and severance
                  arrangement with Edward M. Berube was filed with the
                  Commission as Exhibit 10.1.16 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.1.24           Second Amendment Agreement, dated as of November 1, 1999,
                  between Conseco Finance Corp. and Lawrence M. Coss was filed
                  with the commission as Exhibit 10.1.24 to the Registrant's
                  Report on Form 10-K/A for the year ended December 31, 1999,
                  and is incorporated herein by this reference.
<PAGE>

10.1.27           Employment Agreement by and between Gary C. Wendt and Conseco,
                  Inc., dated as of June 28, 2000 was filed as Exhibit 10.1.27
                  to the Registrant's Report on Form 8-K, dated July 10, 2000,
                  and is incorporated herein by this reference.

10.1.28           Nonqualified Stock Option Agreement by and between Gary C.
                  Wendt and Conseco, Inc., dated as of June 28, 2000 was filed
                  as Exhibit 10.1.28 to the Registrant's Report on Form 8-K,
                  dated July 10, 2000, and is incorporated herein by this
                  reference.

10.1.29           Restricted Stock Agreement by and between Gary C. Wendt and
                  Conseco, Inc., dated as of June 28, 2000 was filed as Exhibit
                  10.1.29 to the Registrant's Report on Form 8-K, dated July 10,
                  2000, and is incorporated herein by this reference.

10.1.30           Employment Agreement by and between David K. Herzog and
                  Conseco, Inc., dated as of August 11, 2000, was filed as
                  Exhibit 10.1.11 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2000 and is incorporated
                  herein by this reference.

10.1.31           Supplemental Retirement Agreement dated as of August 16, 2000,
                  between Conseco, Inc. and Gary C. Wendt was filed as Exhibit
                  10.1.31 to the Registrant's Report on Form 10-Q for the
                  quarter ended September 30, 2000 and is incorporated herein by
                  this reference.

10.1.32           Guaranty dated as of August 16, 2000, between Bankers Life and
                  Casualty Company as Guarantor, and Gary C. Wendt was filed as
                  Exhibit 10.1.32 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2000 and is incorporated
                  herein by this reference.

10.1.40           Employment Agreement by and between David Gubbay and Conseco,
                  Inc., dated as of February 21, 2001, was filed with the
                  Commission as Exhibit 10.1.34 to the Registrant's Report on
                  Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.41           Restricted Stock Agreement by and between David Gubbay and
                  Conseco, Inc., dated as of March 13, 2001, was filed with the
                  Commission as Exhibit 10.1.35 to the Registrant's Report on
                  Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.42           Employment Agreement by and between Charles B. Chokel and
                  Conseco, Inc., dated as of March 16, 2001, was filed with the
                  Commission as Exhibit 10.1.36 to the Registrant's Report on
                  Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.
<PAGE>

10.1.43           Restricted Stock Agreement by and between Charles B. Chokel
                  and Conseco, Inc., dated as of March 16, 2001, was filed with
                  the Commission as Exhibit 10.1.37 to the Registrant's Report
                  on Form 10-Q for the quarter ended March 31, 2001 and is
                  incorporated herein by this reference.

10.1.44           Employment Agreement between William J. Shea and Conseco,
                  Inc., dated as of September 10, 2001, was filed with the
                  Commission as Exhibit 10.1.38 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2001 and is
                  incorporated herein by this reference.

10.1.45           Restricted Stock Agreement dated as of September 17, 2001
                  between Conseco, Inc. and William J. Shea was filed with the
                  Commission as Exhibit 10.1.39 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2001 and is
                  incorporated herein by this reference.

10.8              The Registrant's Stock Option Plan was filed with the
                  Commission as Exhibit B to its definitive Proxy Statement
                  dated December 10, 1983; Amendment No. 1 thereto was filed
                  with the Commission as Exhibit 10.8.1 to its Report on Form
                  10-Q for the quarter ended June 30, 1985; Amendment No. 2
                  thereto was filed with the Commission as Exhibit 10.8.2 to its
                  Registration Statement on Form S-1, No. 33-4367; Amendment No.
                  3 thereto was filed with the Commission as Exhibit 10.8.3 to
                  the Registrant's Annual Report on Form 10-K for 1986;
                  Amendment No. 4 thereto was filed with the Commission as
                  Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
                  for 1987; Amendment No. 5 thereto was filed with the
                  Commission as Exhibit 10.8 to the Registrant's Report on Form
                  10-Q for the quarter ended September 30, 1991; and are
                  incorporated herein by this reference.

10.8.3            The Registrant's Cash Bonus Plan was filed with the Commission
                  as Exhibit 10.8.3 to the Registrant's Report on Form 10-Q for
                  the quarter ended March 31, 1989, and is incorporated herein
                  by this reference.

10.8.4            Amended and Restated Conseco Stock Bonus and Deferred
                  Compensation Program was filed with the Commission as Exhibit
                  10.8.4 to the Registrant's Annual Report on Form 10-K for
                  1992, and is incorporated herein by this reference.

10.8.6            Conseco Performance-Based Compensation Plan for Executive
                  Officers was filed with the Commission as Exhibit 10.8.15 to
                  the Registrant's Report on Form 10-Q for the quarter ended
                  March 31, 1998, and is incorporated herein by this reference.
<PAGE>

10.8.7            Conseco, Inc. Amended and Restated Deferred Compensation Plan
                  was filed with the Commission as Exhibit A to the Registrant's
                  definitive Proxy Statement dated April 26, 1995, and is
                  incorporated herein by this reference.

10.8.8            Amendment to the Amended and Restated Conseco Stock Bonus and
                  Deferred Compensation Program was filed with the Commission as
                  Exhibit 10.8.8 to the Registrant's Annual Report on Form 10-K
                  for 1994, and is incorporated herein by this reference.

10.8.9            Conseco Amended and Restated 1994 Stock and Incentive Plan.

10.8.10           Amendment Number 2 to the Amended and Restated Conseco Stock
                  Bonus and Deferred Compensation Program was filed with the
                  Commission as Exhibit 10.8.10 to the Registrant's Annual
                  Report on Form 10-K for 1995 and is incorporated herein by
                  reference.

10.8.11           Amended and Restated Director, Officer and Key Employee Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.11 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999, and is incorporated
                  herein by this reference.

10.8.13           Form of Promissory Note payable to the Registrant relating to
                  the Registrant's Director, Officer and Key Employee Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.13
                  to the Registrant's Annual Report on Form 10-K for the year
                  ended December 31, 1998, and is incorporated herein by
                  reference.

10.8.14           Conseco, Inc. Amended and Restated 1997 Non-qualified Stock
                  Option Plan.

10.8.21           Amended and Restated 1999 Director and Executive Officer Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.21 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999 and is incorporated
                  herein by this reference.

10.8.22           Guaranty regarding 1999 Director and Executive Officer Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.22
                  to the Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 1999 and is incorporated herein by this
                  reference.
<PAGE>

10.8.23           Form of Borrower Pledge Agreement dated as of September 15,
                  1999 with The Chase Manhattan Bank relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.23 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.24           Form of note payable to the Registrant relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.24 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.25           Conseco, Inc. 2000 Employee Stock Purchase Program Work-Down
                  Plan was filed with the Commission as Exhibit 10.8.25 to the
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2000 and is incorporated herein by this
                  reference.

10.8.26           Conseco, Inc. 2000 Non-Employee Stock Purchase Program
                  Work-Down Plan was filed with the Commission as Exhibit
                  10.8.26 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.27           Guaranty, dated as of November 22, 2000 between Conseco, Inc.,
                  as Guarantor, and Bank of America, National Association, as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000, made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and Form of Credit
                  Agreement, dated as of November 22, 2000 among the Borrowers,
                  the other financial institutions party thereto and Bank of
                  America, National Association, as Administrative Agent
                  (Relating to Refinancing of certain Loans under that certain
                  Credit Agreement, dated as of August 21, 1998) was filed with
                  the Commission as Exhibit 10.8.27 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.8.28           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor,and Bank of America, National Association,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated,as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  Bank of America, National Association, as Administrative Agent
                  (Relating to the Refinancing of Certain Loans under that
                  certain Amended and Restated Credit Agreement, dated as of
                  August 26, 1997) was filed with the Commission as Exhibit
                  10.8.28 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.
<PAGE>

10.8.29           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor, and The Chase Manhattan Bank,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of The Chase
                  Manhattan Bank, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  The Chase Manhattan Bank, as Administrative Agent (Relating to
                  the Refinancing of Certain Loans under that certain Credit
                  Agreement, dated as of September 15, 1999, as terminated and
                  replaced by that certain Termination and Replacement
                  Agreement, dated as of May 30, 2000) was filed with the
                  Commission as Exhibit 10.8.29 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.8.30           Forms of note payable to Conseco Services, LLC regarding the
                  2000 Work-Down Plans, Form of Unconditional Guarantee and Form
                  of Indemnification Agreement was filed with the Commission as
                  Exhibit 10.8.30 to the Registrant's Annual Report on Form 10-K
                  for the year ended December 31, 2000 and is incorporated
                  herein by this reference.

10.8.31           First Stage Amendment and Agreement re: Non-Refinanced 1998
                  D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
                  CDOC, Inc., CIHC, Incorporated, Bank of America, N.A. and the
                  various financial institutions parties thereto.

10.8.32           First Stage Amendment and Agreement re: 1997 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto.

10.8.33           Cash Collateral Pledge Agreement among CDOC, Inc. and JP
                  Morgan Chase Bank, dated as of March 20, 2002.

10.8.34           First Stage Amendment and Agreement Re: 1998 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto.

10.8.35           Amended and Restated Collateral Agreement made by Conseco,
                  Inc. and CIHC, Incorporated in form of JP Morgan Chase Bank,
                  dated as of March 20, 2002.
<PAGE>

10.8.36           First Stage Amendment and Agreement re: 1999 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, JPMorgan Chase Bank and the various financial
                  institutions parties thereto.

10.48             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.48 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.49             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.49 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.


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