According to the closing Order, dated August 7, 2002 from U.S. District Court for the Southern District of Indiana, the case was settled for $120 million. On January 10, 2002, Conseco, Inc. (the Company) entered into a Memorandum of Understanding (the "MOU") to settle the litigation. 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 and the MOU was terminated by the plaintiffs. On April 15, 2002, a new MOU was executed (the "April 15 MOU"). Pursuant to the April 15 MOU, $95 million was funded on April 25, 2002, with the remaining $25 million to await the outcome of the coverage litigation between the Company and certain of its directors' and officers' liability insurance carriers.

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. All of the Conseco's securities cases were consolidated into one case in the United States District Court for the Southern District of Indiana. The consolidated amended complaint 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 Conseco and Conseco Financing Trust VII. The Company filed a motion to dismiss the consolidated amended complaint on April 27, 2001.

Among the forty-five suits filed in 2000, nineteen cases were putative class actions on behalf of persons or entities that purchased Conseco, Inc.'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 Conseco, Inc.'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 Conseco, Inc., on Conseco, Inc.'s common stock during the same alleged class periods. One case was a putative class action on behalf of persons or entities that purchased Conseco, Inc.'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 Conseco, Inc. were named as defendants. In each case, the plaintiffs asserted 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 alleged that Conseco, Inc. 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 CFC (particularly with respect to performance of certain loan portfolios of CFC) which allegedly rendered Conseco, Inc.'s financial statements false and misleading.

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 CNC, the relevant trust (with two exceptions), two former officers/directors of Conseco, Inc, and underwriters for the particular issuance (with one exception). One complaint also named an officer and all of Conseco, Inc.'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 CFC (particularly with respect to performance of certain loan portfolios of CFC) which allegedly rendered the disclosure documents false and misleading.

The original complaint alleges that Conseco, certain of its officers, and several lead underwriters violated sections 11, 12(a), and 15 of the Securities Act of 1933 and sections 10(b) and 20 of the Securities Exchange Act of 1934. This action involves defendants' dissemination of materially false and misleading statements concerning, among other things: (1) artificially-inflated financial results for Green Tree (the finance segment of Conseco) and (2) Conseco's use of "gain-on-sale" accounting. On March 31, 2000, Conseco made the partial disclosure that it would take a charge of approximately $350 million because the value of Green Tree's interest-only securities had to be written down. This reduced Conseco's 1999 profit by one-third.