Absent that special charge, the Carmel-based insurer would have swung to a profit compared with a loss in the same quarter a year earlier.
For the three months ended June 30, Conseco lost $487 million, or $2.64 cents a share. In the same quarter last year, the company lost $60 million, or 35 cents a share.
Revenue for the second quarter fell 14 percent, to $1 billion, down from $1.17 billion a year ago.
Conseco announced yesterday that it will transfer ownership of 142,000 long-term care policies to a newly created independent trust. The $500 million charge came because Conseco transferred deferred tax assets and losses on investments to the new entity.
Conseco's decision to unload most of its old long-term care policies comes just as the business returned to profitability - for the first time in two years.
Conseco's "closed" business - which are older policies that it administers but no longer sells - had lost money for seven straight quarters for a combined loss of $218 million. But that block of business, which is made up primarily of long-term care policies, posted a $12 million profit in Conseco's most recent quarter.
Without the charges, Conseco would have earned $33.4 million in the second quarter, or 18 cents a share. Wall Street analysts forecast earnings of 22 cents a share, according to a survey by Thomson Financial.
In the same quarter a year ago, Conseco lost $49.7 million, or 29 cents a share.
"Conseco's financial performance continued to stabilize in the second quarter," CEO said Jim Prieur in a statement, "as the company reported profits in all four business segments."
Conseco shares fell 27 cents today to trade at $8.85.