Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q3 2018 Earnings Presentation
36 slides from Cno Financial's earnings presentation, Nov 1, 2018
Slide 1: Third Quarter 2018 Financial and operating results
Exhibit 99.1 Third Quarter 2018 Financial and operating results for the period ended September 30, 2018 November 1, 2018 Unless otherwise specified, comparisons in this presentation are between 3Q17 and 3Q18. CNO Financial Group | 2017 Investor Day | June 5, 2017 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about future results of operations and capital plans. We caution investors that these f
Slide 3: Non-GAAP Measures
Non-GAAP Measures This presentation contains the following financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP): operating earnings measures; book value, excluding accumulated other comprehensive income (loss) per share; operating return m
Slide 4: 1, 2018
CNO Financial Group | Third Quarter 2018 Earnings | November 1, 2018 4
Slide 5: Quarter in Review
Quarter in Review • All growth scorecard metrics up Operating • Sales increased in all segments Performance • Operating EPS up 18% Strong • Book value per diluted share (excluding AOCI)1 of $19.28 • Progress on growth initiatives • Closed long-term care reinsurance Building on transaction Track Reco
Slide 6: Growth Scorecard
Growth Scorecard ($ millions) All Growth Scorecard metrics positive compared to same quarter 2017 1Q 2Q 3Q 4Q 1Q 2Q 3Q Q/Q 1 New Annualized Premium Life Insurance $41.5 $36.02017 $34.3 $33.6 $36.92018 $36.9 $37.4% Change 9.0% Health Insurance 46.4 45.9 43.1 51.8 41.2 44.9 44.3 2.8% Total Life & Heal
Slide 7: Segment Update
Segment Update Key Initiatives Results • Life/Health NAP up 2% • Total collected premiums up 7% Reinvigorate growth • New/enhanced products moving from pilot to scale • Annuity first year collected premiums up 14% • Annuity account values increased 5% Expand to the Right • More than $1B total client
Slide 8: Segment Update
Segment Update Key Initiatives Results • Life/Health NAP up 2% Maintain growth momentum • Total collected premiums up 2% • NAP growth in 6 of last 7 quarters • $1.5M in sales from geographic expansion; Expand geographically $3.2M YTD • 14 state expansion • Life sales up 25% Enhance product portfolio
Slide 9: Segment Update
Segment Update Key Initiatives Results • NAP up 19% Continue sales growth • Total collected premium up 2% Expand web/digital • Web/Digital NAP up 40% sales capabilities Improve sales productivity • Ongoing benefits of technology and efficiency enhancements Enhance product portfolio • Pilot launches
Slide 10: Earnings Highlights
Earnings Highlights ($ millions, except per share data) Financial Highlights Financial Results 3Q17 3Q18 • Net loss per diluted share of $3.22 $0.53 • Loss on LTC reinsurance transaction of $0.45 $0.53 $4.01 per share $0.44 • Net operating income per diluted share1 of $0.53 Net Operating Income Per
Slide 11: Segment Results
1 Segment Results ($ millions) Segment Adjusted EBIT Excluding Significant Items2 3Q17 4Q17 1Q18 2Q18 3Q18 Segment Highlights • Bankers Life results reflect favorable $95.3 $88.6 $90.7 $94.4 mortality and investment results, offset Bankers Life $76.7 by lower Med Supp margins • Washington National r
Slide 12: Health Margins
Health Margins ($ millions) Bankers Life Medicare Bankers Life Long-term Care Washington National Supplement Benefit Ratio IABR1,2 Supplemental Health IABR1 $195 $193 $193 $192 $192 $147 $149 $151 $152 $152 75.6% 73.3% 73.1% 72.0% 70.7% $65 $65 $64 $64 $64 59.0% 56.6% 56.6% 56.9% 79.0% 54.4% 76.1% 7
Slide 13: Committed to Long-term Shareholder Value Creation
Committed to Long-term Shareholder Value Creation Continued progress on strategic initiatives Effectively deploy excess capital Extend depth and breadth of product offerings Leverage diverse distribution channels and unique product combination Expand to the Right Enhance customer experience Growth i
Slide 14: Questions and Answers
Questions and Answers CNO Financial Group | Third Quarter 2018 Earnings | November 1, 2018 14
Slide 15: Appendix
Appendix CNO Financial Group | Third Quarter 2018 Earnings | November 1, 2018 15
Slide 16: Investment Results
Investment Results ($ millions) Average Invested Assets and Cash Quarter Highlights $24,286 $24,580 $24,642 $24,823 $24,971 . New money rate of 4.82%, reflects continuation of up-in-quality strategy $325.9 $329.1 $325.1 $328.2 $332.0 . Strong alternatives performance Net Investment across the board
Slide 17: Agent Counts
Agent Counts Producing agent count returns to growth; 1 out of every 8 Bankers Life agents is a financial advisor 2017 2018 % Change Bankers Life 1Q 2Q 3Q 4Q 1Q 2Q 3Q Q/Q Total Quarterly Average Producing Agents 4,250 4,291 4,109 4,029 3,999 4,167 4,168 1.4% Total LTM Average Producing Agents 1 4,40
Slide 18: Broker-Dealer and Registered Investment Advisor Disclosures
Broker-Dealer and Registered Investment Advisor Disclosures ($ millions) 2017 2018 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net New Client Assets in Brokerage $4.2 $10.9 $4.7 $15.2 $12.2 $3.1 $26.3 Brokerage and Advisory 1 Advisory 17.9 26.7 32.3 39.1 50.5 49.1 44.2 Total $22.1 $37.6 $37.0 $54.3 $62.7 $52.2 $70.5 Clien
Slide 19: 3Q18 Holding Company Liquidity
3Q18 Holding Company Liquidity($ millions) 3Q18 FY18 Cash and Investments Balance - Beginning $376.0 $396.6 Sources Dividends from Insurance Subsidiaries 28.0 99.5 Dividends from Non-insurance Subsidiaries - 11.0 Management Fees 27.7 82.7 Surplus Debenture Interest 21.8 45.9 Earnings on Corporate In
Slide 20: Tax Asset Summary
Tax Asset Summary ($ millions) Loss Carryforwards Details $685 . Total estimated economic value of NOLs of $356 million @ 10% Life $195 discount rate (~$2.16 on per share basis) . Life NOLs are expected to offset Non‐Life $490 80% of life taxable income until fully utilized. Non-life NOLs are expect
Slide 21: 3Q17 Significant Items
3Q17 Significant Items The table below summarizes the financial impact of significant items on our 3Q17 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended September 30, 201
Slide 22: 4Q17 Significant Items
4Q17 Significant Items The table below summarizes the financial impact of significant items on our 4Q17 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended December 31, 2017
Slide 23: 1Q18 Significant Items
1Q18 Significant Items The table below summarizes the financial impact of significant items on our 1Q18 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended March 31, 2018 Ex
Slide 24: Quarterly Earnings
Quarterly Earnings ($ millions) 3Q17 4Q17 1Q18 2Q18 3Q18 Bankers Life $ 95.3 $ 99.4 $ 77.5 $ 90.7 $ 94.4 Washington National 27.5 23.7 34.3 25.4 30.3 Colonial Penn 9.0 5.9 (1.5) 5.4 6.1 Long-term care in run-off 10.6 10.9 12.0 8.5 2.1 Adjusted EBIT from business segments 142.4 139.9 122.3 130.0 132.
Slide 25: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes am
Slide 26: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income(loss) applicable to common stock to net operating income (and related per-share amounts) is as follows (dollars in millions, except per-share amounts): 3Q17 4Q17 1Q18 2Q18 3Q18 Net income(loss) applicable to co
Slide 27: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of operating income and shares used to calculate basic and diluted operating earnings per share is as follows (dollars in millions, except per-share amounts, and shares in thousands): 3Q17 4Q17 (a) 1Q18 2Q18 3Q18 (b) Operati
Slide 28: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised, restricted stock and performance units were vested and convertible securities were conver
Slide 29: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Interest-adjusted benefit ratios The interest-adjusted benefit ratio (a non-GAAP measure) is calculated by dividing the product's insurance policy benefits less imputed interest income on the accumulated assets backing the insurance liabilit
Slide 30: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before net realized investment gains or losses, fair value changes due to fluctuations in the interest rates used to discount embedded de
Slide 31: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The calculations of: (i) operating return on equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); (ii) operating return, excluding significant items, on equity,
Slide 32: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The following summarizes: (i) operating earnings; (ii) significant items; (iii) operating earnings, excluding significant items; and (iv) net income(loss) (dollars in millions): Net Operating Net Operating Income, income, excluding Net exclu
Slide 33: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of pretax operating earnings (a non-GAAP financial measure) to net income (loss) is as follows (dollars in millions): Twelve Months Ended 3Q17 4Q17 1Q18 2Q18 3Q18 Pretax operating earnings (a non-GAAP financial measure)$ 464
Slide 34: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of consolidated capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to common shareholders’ equity, is as follows (dollars in millions): 1Q16 2
Slide 35: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of consolidated capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to common shareholders’ equity, is as follows (dollars in millions): Traili
Slide 36: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Debt to capital ratio, excluding accumulated other comprehensive income (loss) The debt to capital ratio, excluding accumulated other comprehensive income (loss), differs from the debt to capital ratio because accumulated other comprehensive