CNO Financial Group, Inc. · NYSE:CNO

CNO Financial — Conseco — Q1 2010 Earnings Presentation

65 slides from CNO Financial's earnings presentation, May 5, 2010

  1. Slide 1: First Quarter 2010 Financial and Operating Results

    First Quarter 2010 Financial and Operating Results For the period ended March 31, 2010 Conseco, Inc. May 5, 2010 Unless otherwise specified, the periods cited in our performance comparisons are Q1 2010 vs Q1 2009.

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in these materials relative to markets for Conseco’s products and trends in Conseco’s operations or financial results, as well as other statements, con

  3. 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

  4. Slide 4: Q1 2010 Summary CNO

    Q1 2010 Summary CNO ƒ Core sales* of $87 million, up 4% ƒ Net operating income** $38.2 million, up 2% • 14 cents per diluted share • Reflects dilution from the issuance of shares of common stock and convertible debentures ƒ Consolidated RBC up 10 points to 319% ƒ Holding company liquidity: $131.2 mi

  5. Slide 5: CIG Segmentation

    CIG Segmentation CIG ƒ Splitting into two segments: • Other CNO Business • Washington National ƒ Other CNO Business comprised primarily of closed blocks from CIG • Will be separately managed from current/growing business • Accounts for about two-thirds of CIG’s capital ƒ Segmentation is another step

  6. Slide 6: Collected Premiums

    Collected Premiums CNO ($ millions) Collected Premiums-Trailing 4 Quarters ƒ Total collected premiums for trailing 4 quarters down Q1 2009 Q2 2009 Q3 2009 $4,549.3 $4,494.9 $4,423.1 13% Q4 2009 Q1 2010 $4,114.8 ƒ Decline at Bankers due to $3,937.2 CIG termination of PFFS reinsurance contracts and CP

  7. Slide 7: Q1 2010 Summary of Results

    Q1 2010 Summary of Results CNO ($ millions, except per-share amounts) Pre-Tax After Tax EPS Bankers Life $53.2 Colonial Penn 5.3 Conseco Insurance Group 25.7 Corporate operations and interest expense (24.5) Income before net realized investment losses and valuation allowance for deferred tax assets*

  8. Slide 8: Quarterly Earnings CNO Consolidated

    Quarterly Earnings CNO Consolidated ($ millions) Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Bankers Life $44.7 $63.3 $85.4 $84.6 $53.2 Colonial Penn 5.1 11.0 7.4 5.9 5.3 Conseco Insurance Group 31.2 21.2 21.6 (6.7) 25.7 Corporate operations, excluding interest expense (8.7) (8.8) (7.4) (12.8) (5.0) Tot

  9. Slide 9: Operating ROE

    Operating ROE CNO Operating ROE*, Trailing 4 Quarters Q2 2009 Q3 2009 Q4 2009 Q1 2010 6.6% 6.6% 6.5% Q1 2009 6.2% 5.7% Average common shareholders’ equity, excluding AOCL and net operating loss $2,702.0 $2,574.1 $2,503.9 $2,551.1 $2,679.2 carryforwards, trailing 4 quarters ($ millions): *Operating r

  10. Slide 10: Operating EPS (Diluted)

    Operating EPS (Diluted)* CNO ƒ Q1 2010 reflects dilution from Q3 2009 issuance of 65.9 million shares $0.29 of common stock and $240.5 Q1 2009 $0.20 Q2 2009 $0.22 million of convertible Q4 2009 $0.15 Q1 2010 $0.14 debentures Weighted average diluted shares (in millions): 184.8 185.2 185.8 217.5 292.

  11. Slide 11: Book Value

    Book Value CNO ($ millions, except per-share amounts) 3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 Shareholders’ Equity (excluding AOCL) $3,431.7 $3,461.9 $3,479.7 $3,796.7 $3,823.1 Accumulated Other Comprehensive Loss (1,840.5) (1,046.9) (146.0) (264.3) (103.0) Total Shareholders’ Equity $1,591.2 $2,41

  12. Slide 12: Consolidated RBC Ratio

    Consolidated RBC Ratio* CNO ƒ RBC ratio continues to improve Q1 2010 Q4 2009 ƒ Primarily driven by Q1 2010 Q2 2009 Q3 2009 309% 319% statutory earnings Q1 2009 230% 247% 252% *Risk-Based Capital (“RBC”) requirements provide a tool for insurance regulators to determine the levels of statutory capital

  13. Slide 13: Q1 Summary Bankers

    Q1 Summary Bankers ƒ Earnings of $53.2 million, up 19% • Higher Life income due to: • Favorable mortality (+$5 million) • Reserve changes from Q1 2009 (+$5 million) • Lost earnings from blocks reinsured in 2009 (-$3 million) • Higher PFFS/PDP income due to: • Favorable PFFS IBNR development (+$2 mil

  14. Slide 14: Bankers Sales & Distribution Results

    Sales & Distribution Results Bankers ($ millions) Quarterly NAP* ƒ NAP up 1% Q4 2009 • Increases in Life (+25%), LTC (+14%) $91.3 and Med Supp (+5%), offset by Q2 2009 Q3 2009 • Lower sales of Annuities (-25%), Q1 2009 $56.8 $62.4 $61.8 Q1 2010 $57.5 consistent with overall industry results and driv

  15. Slide 15: Medicare Sales Update

    Medicare Sales Update Bankers Issued Policies ƒ Strong growth in Med Supp/ Med Advantage sales for Q4 Q4 2008- Q4 2009- Q1 2009 Q1 2010 2009-Q1 2010 period vs Q4 2008-Q1 2009 • Med Supp issued policies up 79% Medicare 43,086 +79% • Med Advantage/PFFS up 15% 24,120 Supplement • PDP down 53% Med Advan

  16. Slide 16: Q1 Earnings Bankers

    Q1 Earnings Bankers ($ millions) Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Insurance policy income $491.5 $497.6 $493.1 $477.0 $396.2 Net investment income: General account assets 155.4 160.2 162.2 165.8 172.2 Other portfolios (13.2) 3.4 37.4 6.9 13.7 Fee revenue and other income 1.4 1.6 2.4 4.8 2.3 T

  17. Slide 17: Q1 Summary Colonial Penn

    Q1 Summary Colonial Penn ƒ Earnings of $5.3 million, up 4% • Primarily due to favorable mortality and growth in our block of life insurance policies ƒ Sales (NAP) up 7% • Lead generation momentum building following 2009 capital limitations • Increased lead activity will drive return to pre-2009 sale

  18. Slide 18: Q1 Earnings Colonial Penn

    Q1 Earnings Colonial Penn ($ millions) Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Insurance policy income $47.1 $52.7 $48.4 $47.9 $48.2 Net investment income 9.8 9.8 9.5 9.6 9.7 Fee revenue and other income 0.2 0.2 0.2 0.3 0.2 Total revenues 57.1 62.7 58.1 57.8 58.1 Insurance policy benefits 36.1 36.0

  19. Slide 19: Q1 Summary CIG

    Q1 Summary CIG ƒ NAP of $16.7 million, up 12% • Third consecutive quarter of positive sales comparisons ƒ Strong sales growth in both CIG Sales and PMA ƒ Strong recruiting results ƒ Earnings of $25.7 million, down 18% • Lower Specified Disease income due primarily to reserve releases in Q1 2009 (-$5

  20. Slide 20: Q1 2010 Sales Results CIG

    Q1 2010 Sales Results CIG ($ millions) ƒ Specified Disease sales up 28% $14.6 ƒ New worksite groups up 64% $11.5 Q1 2009 Q1 2010 $1.7 $1.2 $1.1 $0.4 $0.7 $0.3 Life Annuities Medicare Supplement Specified Disease 20

  21. Slide 21: Q1 Earnings CIG

    Q1 Earnings CIG ($ millions) Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Insurance policy income $244.2 $241.0 $230.5 $222.6 $220.2 Net investment income: General account assets 143.4 138.5 134.5 131.9 133.3 Other portfolios (9.1) 2.6 15.7 3.3 4.7 Fee revenue and other income 0.7 0.4 0.5 (0.1) 0.3 Total

  22. Slide 22: Realized Gains/Losses Recognized Through Net Income

    Realized Gains/Losses Recognized Through Net Income CNO ($ millions) Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Gross gains $89.5 $83.6 $99.5 $110.5 $50.9 Gross losses (4.4) (63.3) (84.1) (96.4) (35.5) Losses due to recognition of other-than-tempor- ary impairments recognized in earnings (92.0) (36.6)

  23. Slide 23: Unrealized Gain/Loss

    Unrealized Gain/Loss* CNO ($ millions) % of Invested Assets Unrealized Loss 3,500 16.0% 3,000 Unrealized Loss 14.0% % of Invested Assets 12.0% 2,500 10.0% 2,000 8.0% 1,500 6.0% 1,000 4.0% 500 2.0% 0 0.0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 *Includes debt and equity securities classified as avail

  24. Slide 24: Q1 2010 Impairments

    Q1 2010 Impairments CNO ($ millions) Amount Recognized through Accumulated Gross Other Comprehensive Amount Recognized Amounts Loss through Net Income Corporates $1.2 $0.0 $1.2 Alt-A 3.1 (1.9) 5.0 Prime Jumbos 0.0 (0.7) 0.7 Commercial Mortgage Loans 10.9 0.0 10.9 Other 2.5 0.0 2.5 Total $17.7 $(2.6)

  25. Slide 25: Asset Allocation at 3/31/10

    Asset Allocation at 3/31/10* CNO ($ millions) MTM reflects low market yields in $13,482$13,286 most credit sectors Market Value Book Value $1,976 $1,937 $1,834 $1,809 $1,103 $1,023 $1,184 $1,037 $968 $969 $531 $1,177 $909 $255 $538 $231 er s s BS s s S s cy te O al an te th AB M M ip n ra ra O Lo ge

  26. Slide 26: Investment Quality: Fixed Maturities

    Investment Quality: Fixed Maturities* CNO Actively Managed Fixed Maturities by Rating at 3/31/10 (Market Value) ƒ 93% investment grade: • Essentially unchanged <BBB • Continue to see slowing in 7% AAA 12% AA ratings migration 7% BBB 43% A 31% 3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 % of Bonds which

  27. Slide 27: Alt-A at 3/31/10

    Alt-A at 3/31/10 CNO ($ millions) Market Book % of Avg. Avg. Avg. 60+ Avg. Accum. % of Rating Value (mil.) Value (mil.) Alt-A* FICO Support Delinq. Loss Portfolio* AAA $4.2 $4.2 2.0% 720 10.9% 6.5% 0.3% 0.02% AA $53.9 $56.9 25.0% 707 13.0% 9.0% 0.7% 0.24% A $16.2 $16.5 7.5% 721 9.8% 8.7% 0.3% 0.07%

  28. Slide 28: Prime Jumbo at 3/31/10

    Prime Jumbo at 3/31/10 CNO ($ millions) % of Market Book Prime Avg. Avg. Avg. 60+ Avg. Accum. % of Rating Value (mil.) Value (mil.) Jumbo* FICO Support Delinq. Loss Portfolio* AAA $129.7 $141.0 21.0% 736 6.6% 2.7% 0.07% 0.59% AA $73.0 $76.6 11.8% 744 7.6% 5.2% 0.36% 0.33% A $161.1 $176.6 26.0% 740 8

  29. Slide 29: CMBS at 3/31/10

    CMBS at 3/31/10 CNO (GAAP book value - $ millions) Our CMBS exposure is heavily weighted toward securities with high ratings and seasoned vintages with relatively stronger qualitative characteristics 2009 7.0% AAA AA A BBB <BBB 2007 17.3% Pre-2004 Pre-2004 $200.8 $26.3 $37.4 $5.9 $0.0 26.4% 2004 $13

  30. Slide 30: CMBS at 3/31/10

    CMBS at 3/31/10 CNO ($ millions) Market Book % of Avg. Avg. 60+ Avg. Cum. % of Rating Value (mil.) Value (mil.) CMBS* Support Del. & FCR Loss Portfolio* AAA $833.9 $818.2 86.1% 30.7% 3.4% 0.32% 3.78% AA $62.8 $73.1 6.5% 20.7% 1.3% 0.09% 0.29% A $39.3 $53.9 4.1% 8.4% 1.1% 0.15% 0.18% BBB $25.6 $54.4

  31. Slide 31: Commercial Mortgage Loans at 3/31/10

    Commercial Mortgage Loans at 3/31/10 CNO By Vintage By Property Type 2009 0.4% Other Indus. 0.8% 2008 15.3% 17.1% 2004 and Before 29.6% Office 37.8% 2007 20.6% Retail 2005 12.0% 41.2% 2006 20.3% Multi-Family 4.9% ƒ Current LTV of approximately 63% ƒ Trailing debt service coverage ratio (DSCR) stable

  32. Slide 32: CNO Summary

    CNO Summary CNO ƒ Core sales and lead generation continue to be strong ƒ Impact of health care reform • Medicare Supplement and Medicare Advantage • Potential opportunities in Supplemental Health market ƒ Demographics are trending favorably • First of Boomer population will become Medicare-eligible

  33. Slide 33: Questions and Answers

    S CONSECO. Questions and Answers 33

  34. Slide 34: Appendix

    S CONSECO. Appendix 34

  35. Slide 35: Covenant Metrics

    Covenant Metrics CNO Prior Amendment Level New 2011 Level* New 2012 Level Debt to Capital** Interest Coverage 3.3x 35% 3.1x 3.1x 32.5% 3.0x 30% 30.0% 2.4x 25% 27.9% 27.0% 26.8% 20% 2.0x 1.7x 2.0x 21.6% 21.6% 1.75x 15% 1.5x 10% 1.0x 5% 0% 0.0x 3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 3/31/09 6/30/09

  36. Slide 36: Q1 2010 Liquidity

    Q1 2010 Liquidity CNO ($ millions) Cash Balance 12/31/09 $146.1 Sources Dividends from insurance subsidiary $25.0 Net Proceeds from New Convertible Debentures 61.4 Surplus Debenture Interest 12.0 Management and Investment Fees and Other 6.9 Total Sources 105.3 Uses Interest 15.5 Debt Repayments: Ret

  37. Slide 37: Net Investment Income

    Net Investment Income CNO ($ millions) General Account Investment Income ƒ Q1 2010 increase in yield due Q4 2009 Q1 2010 Q1 2009 Q2 2009 Q3 2009 primarily to higher call $308.6 $308.0 $306.8 $308.9 $315.4 premiums on fixed maturities Yield: 5.67% 5.65% 5.63% 5.66% 5.76% 37

  38. Slide 38: Commercial Mortgage Loans at 3/31/10

    Commercial Mortgage Loans at 3/31/10 CNO Geographic Distribution New England 9.2% Pacific Middle 9.4% West North Atlantic Central East North 6.4% 11.9% Central Mountain 22.1% 9.4% East South South Central Atlantic 5.4% 20.3% West South Central 5.9% 38

  39. Slide 39: Commercial Mortgage Loans at 3/31/10

    Commercial Mortgage Loans at 3/31/10 CNO ($ millions) By Maturity 2018 2017 $331 $323 Post 2024 $285 2013 $159 2015 2016 $150 $153 2014 2022 2011 $93 2019 $106 2010 $75 $81 2012 2020 2023 $52 $47 $43 $49 2024 2021 $25 $12 39

  40. Slide 40: Expenses

    Expenses CNO ($ millions) Adjusted Operating Expenses* ƒ Q1 2010 expenses returned Q2 2009 Q3 2009 Q4 2009 to a more stable level after Q1 2009 $94.4 $99.7 $96.0 $98.3 Q1 2010 $95.0 higher expense in Q4 2009 due to litigation cost, IT expense and investment in Operations re-engineering *Adjusted ope

  41. Slide 41: Segment Performance Bankers

    Segment Performance Bankers ($ millions) Pre-Tax Operating Income* ƒ Earnings up 19%, positively affected by: Q3 2009 $85.4 Q4 2009 $84.6 • Higher Life income due to Q2 2009 $63.3 Q1 2010 favorable mortality and reserve Q1 2009 $44.7 $53.2 changes • Higher PFFS/PDP income due to favorable IBNR devel

  42. Slide 42: Premiums – Medicare Supplement Bankers

    Premiums – Medicare Supplement Bankers Medicare Supplement – First-Year Premiums ($ millions) Q4 2009 $28.2 Q1 2010 $27.2 ƒ First-year premiums up 38% Q2 2009 Q3 2009 $22.7 Q1 2009 $21.1 $19.7 Med. Supp. First-Year Prems.-Tr. 4 Qtrs: $81.9 $83.6 $86.5 $91.7 $99.2 Med. Supp. Total Premiums-Quarterly:

  43. Slide 43: Premiums – Long-Term Care Bankers

    Premiums – Long-Term Care Bankers ($ millions) Long-Term Care – First-Year Premiums* ƒ First-year premiums up 14% Q4 2009 Q1 2010 Q2 2009 Q3 2009 Q1 2009 (Direct) (Direct) (Direct) (Direct) (Direct) $9.8 $9.8 $9.1 $9.5 $8.6 (Net) (Net) $5.9 (Net) (Net) $4.8 $4.7 $4.2 (Net) $2.9 First-Year Prems.-Tr.

  44. Slide 44: Premiums – Life Insurance Bankers

    Premiums – Life Insurance Bankers ($ millions) Life – First-Year Premiums Q3 2009 Q4 2009 $23.4 ƒ Fluctuations in first-year Q2 2009 $23.0 Q1 2010 premiums primarily reflect Q1 2009 $19.4 $20.2 variance in sales of $16.8 $10.5 $10.8 single-premium policies $7.8 $9.6 SPWL $6.2 ƒ Non-SPWL premiums eve

  45. Slide 45: Premiums – Annuity Bankers

    Premiums – Annuity Bankers ($ millions) Annuity – First-Year Premiums ƒ First-year premiums down 26% as result of current Q1 2009 $301.1 Q2 2009 Q3 2009 interest rate environment $274.7 $284.0 Q1 2010 Q4 2009 $223.1 $197.3 First-Year Prems.-Tr. 4 Qtrs: $1,294.1 $1,308.7 $1,270.3 $1,057.1 $979.1 Tota

  46. Slide 46: Annuity Surrenders Bankers

    Annuity Surrenders Bankers IA Surrenders ƒ Surrenders: both indexed and non- (annualized quarterly rate) indexed annuity surrenders lower Q4 2008 Q12009 Q2 2009 12.4% Q3 2008 10.9% than prior year Q12008 9.0% Q2 2008 8.6% 9.8% 10.5% Q3 2009 9.1% Q4 2009 8.3% Q12010 9.2% ƒ Total account value: • IAs

  47. Slide 47: Benefit Ratio – PDP Bankers

    Benefit Ratio* – PDP Bankers ƒ Down 7%, impacted by Q2 2009 Q1 2009 improved pricing and plan 95.5% 97.1% Q1 2010 88.7% design changes Q3 2009 Q4 2009 68.0% 68.4% *We calculate benefit ratios by dividing insurance policy benefits by insurance policy income. 47

  48. Slide 48: Benefit Ratio – Medicare Supplement Bankers

    Benefit Ratio* – Medicare Supplement Bankers ƒ Q1 2010 impacted by higher incurred claims Q1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2009 70.2% 72.4% 71.7% 72.8% 68.6% *We calculate benefit ratios by dividing insurance policy benefits by insurance policy income. 48

  49. Slide 49: Interest-Adjusted Benefit Ratio – Long Term Care Bankers

    Interest-Adjusted Benefit Ratio* – Long Term Care Bankers ƒ Q1 2009 impacted by prior- Q1 2010 period rate increase activity Q1 2009 Q2 2009 Q3 2009 Q4 2009 75.2% 68.6% 70.4% affecting lapses 66.4% 66.4% Trailing 4 Quarter Avg.: 71.4% 67.6% 68.2% 67.9% 69.6% Qtrly. non-int. adjusted: 105.1% 103.2% 1

  50. Slide 50: Segment Performance Colonial Penn

    Segment Performance Colonial Penn ($ millions) Pre-Tax Operating Income* ƒ Earnings up 4% Q2 2009 $11.0 • Primarily due to favorable mortality and growth in our block Q3 2009 of life insurance policies $7.4 Q4 2009 Q1 2009 $5.9 Q1 2010 $5.1 $5.3 PTOI-Trailing 4 Quarters: $26.6 $29.3 $30.2 $29.4 $29.

  51. Slide 51: Premiums – Life Insurance Colonial Penn

    Premiums – Life Insurance Colonial Penn ($ millions) Life – First-Year Premiums Q1 2009 ƒ Sales (NAP) up 7% $9.2 Q2 2009 $8.4 Q3 2009 Q1 2010 Q4 2009 $7.9 $7.9 • Lead generation momentum $7.5 building following 2009 capital limitations • Increased lead activity will drive return to pre-2009 sales le

  52. Slide 52: Segment Performance CIG

    Segment Performance CIG ($ millions) Pre-Tax Operating Income (loss)* ƒ Earnings down 18% • Lower Specified Disease income Q1 2009 $31.2 due primarily to reserve releases in Q2 2009 Q3 2009 Q1 2010 $25.7 $21.2 $21.6 Q1 2009 • Lower Life income due primarily to lost earnings on blocks reinsured in 20

  53. Slide 53: Premiums - Medicare Supplement CIG

    Premiums - Medicare Supplement CIG ($ millions) Medicare Supplement – First-Year Premiums ƒ First-year collections down 20% • Focus on core products (i.e., Specified Disease) Q3 2009 Q2 2009 $2.2 Q4 2009 Q1 2009 $1.9 $1.5 $1.6 Q1 2010 $1.2 First-Year Prems.-Tr. 4 Qtrs: $8.3 $7.9 $8.0 $7.2 $6.9 Total

  54. Slide 54: Premiums – Specified Disease CIG

    Premiums – Specified Disease CIG ($ millions) Specified Disease – First-Year Premiums Q4 2009 Q1 2010 Q3 2009 ƒ NAP up 28% $12.3 $12.5 Q2 2009 $11.8 Q1 2009 $11.1 • Increased focus on Specified $10.2 Disease products • Momentum increasing in Worksite market First-Year Prems.-Tr. 4 Qtrs: $40.2 $41.5

  55. Slide 55: Premiums – Annuity CIG

    Premiums – Annuity CIG ($ millions) Annuity – First-Year Premiums ƒ First-year collections down 79% Q3 2009 $23.4 Q2 2009 • Increased focus on core products Q1 2009 $20.6 $17.8 Q4 2009 $10.0 Q1 2010 $3.7 First-Year Prems.-Tr. 4 Qtrs: $98.5 $84.7 $83.0 $71.8 $57.7 Total Premiums-Quarterly: $19.5 $22.

  56. Slide 56: Interest-Adjusted Benefit Ratio – Specified Disease CIG

    Interest-Adjusted Benefit Ratio* – Specified Disease CIG ƒ Up 17% vs Q1 2009, which was Q2 2009 49.7% Q4 2009 49.1% Q1 2010 49.4% Q3 2009 impacted by reserve releases Q1 2009 42.2% 42.9% Trailing 4 Quarter Avg.: 41.8% 42.6% 41.2% 46.0% 47.8% Qtrly. non-int. adjusted: 76.0% 83.3% 76.6% 82.0% 82.3% *W

  57. Slide 57: 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

  58. Slide 58: Information Related to Certain Non-GAAP Financial Measures

    Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income applicable to common stock to net operating income (and related per-share amounts) is as follows (dollars in millions, except per-share amounts): Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Net income applicable to

  59. Slide 59: Information Related to Certain Non-GAAP Financial Measures

    Information Related to Certain Non-GAAP Financial Measures Book value, excluding accumulated other comprehensive income, per share This non-GAAP financial measure differs from book value per share because accumulated other comprehensive income has been excluded from the book value used to determine

  60. Slide 60: 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 return before loss on extinguishment or modification of debt, net realized gains or losses, and increases to our valuation allowance for deferred tax assets (“net operating in

  61. Slide 61: Information Related to Certain Non-GAAP Financial Measures

    Information Related to Certain Non-GAAP Financial Measures A reconciliation of return on common equity to operating return on common equity (excluding accumulated other comprehensive income (loss) and net operating loss carryforwards) is as follows (dollars in millions, except per share amounts): Q1

  62. Slide 62: 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 segment operating income (loss) and consolidated net income (loss) for the quarter ended March 31, 2010, is as follows (dollars in millions): CIG Bankers Colonia

  63. Slide 63: Information Related to Certain Non-GAAP Financial Measures

    Information Related to Certain Non-GAAP Financial Measures A reconciliation of common shareholders’ equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to common shareholders’ equity at March 31, 2010, is as follows (dol

  64. Slide 64: Information Related to Certain Non-GAAP Financial Measures

    Information Related to Certain Non-GAAP Financial Measures A reconciliation of average common shareholders’ equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to average common shareholders’ equity at March 31, 2010, is

  65. Slide 65: 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) This non-GAAP financial measure differs from the debt to capital ratio because accumulated other comprehensive income has been excluded from the value of capital

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