Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q2 2016 Earnings Presentation
37 slides from Cno Financial's earnings presentation, Jul 27, 2016
Slide 1: 2Q16 Financial and operating results
2Q16 Financial and operating results for the period ended June 30, 2016 July 27, 2016 Unless otherwise specified, comparisons in this presentation are between 2Q16 and 2Q15. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 2 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 operati
Slide 3: Non-GAAP Measures
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 3 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 c
Slide 4: 27, 2016
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 4
Slide 5: 2Q16 Summary
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 5 CNO Operating Earnings Per Share Excluding Significant Items*** Operating Earnings Excl. Significant Items*** $66.6 $60.8 Weighted Average Shares Outstanding 198.1 180.3 2Q16 Summary * New Annualized Premium (“NAP”) includes 6% of annuity, 10%
Slide 6: 2Q16 Sales and Distribution Results: Bankers Life
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 6 2Q15 $61.3 3Q15 $59.9 4Q15 $69.1 1Q16 $60.3 2Q16 $58.5 $255.5 $282.1 $290.6 $294.5 $270.4 $348.4 $366.6 $363.9 $366.2 $357.8 2Q15 $603.9 3Q15 $648.7 4Q15 $654.5 1Q16 $660.7 2Q16 $628.2 First Year Premium Renewal Premium 2Q16 Sales and Distribut
Slide 7: 2Q16 Sales and Distribution Results: Washington National
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 7 $20.8 $20.2 $20.0 $20.1 $19.8 $141.1 $145.3 $143.6 $145.4 $145.4 2Q15 $161.9 3Q15 $165.5 4Q15 $163.6 1Q16 $165.5 2Q16 $165.2 First Year Premium Renewal Premium 2Q15 $25.7 3Q15 $25.8 4Q15 $26.3 1Q16 $23.4 2Q16 $24.2 Washington National 2Q16 Sale
Slide 8: 2Q16 Sales and Distribution Results: Colonial Penn
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 8 $12.8 $13.2 $12.9 $14.0 $13.8 $52.3 $53.5 $53.1 $56.1 $55.8 2Q15 $65.1 3Q15 $66.7 4Q15 $66.0 1Q16 $70.1 2Q16 $69.6 First Year Premium Renewal Premium 2Q16 Sales and Distribution Results Colonial Penn ($ millions) Collected Premiums Inforce Adju
Slide 9: 2Q Consolidated Financial Highlights
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 9 2Q Consolidated Financial Highlights CNO * A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Earnings Remain Strong ‒ Operating earnings per diluted share* of $0.35; $0.34 excluding significant items
Slide 10: 2Q16 Earnings: Segment Adjusted EBIT
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 10 $(5.0) $(4.4) $(4.9) $(5.1) $(7.0) $4.2 $0.6 $6.7 $(6.8) $3.0 $86.4 $79.8 $89.1 $69.9 $88.8 $29.1 $30.6 $31.3 $26.3 $21.5 2Q15 3Q15 4Q15 1Q16 2Q16 Corporate CP BLC WN ($ millions) * A non-GAAP measure. See the Appendix for a reconciliation to
Slide 11: Health Margins 2Q16 Highlights & Outlook
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 11 $134 $137 $138 $139 $141 65.7% 57.4% 57.5% 57.7% 61.6% 2Q15 3Q15 4Q15 1Q16 2Q16 Earned Premium Reported Benefit Ratio Adjusted Benefit Ratio** ($ millions) * Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for
Slide 12: Investment Results
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 12 $15.4 $30.3 $48.5 $93.1 $8.7 $7.9 $12.4 $18.3 $10.0 $13.6 Investment Results CNO ($ millions) Earned Yield*: 5.78% 5.68% 5.72% 5.47% 5.52% New Money Rate: 5.06% 5.21% 5.17% 4.90% 5.50% Average Invested Assets and Cash Realized Gains, Losses an
Slide 13: CNO Wrap-up
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 13 CNO Wrap-up Continued investments in growth & efficiency ‒ New products to better serve the customer ‒ Agent recruiting process changes ‒ Distribution technology ‒ Customer experience enhancements Diversification of business model enables
Slide 14: Questions and Answers
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 14 Questions and Answers
Slide 15: Appendix
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 15 Appendix
Slide 16: Energy Sector Overview
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 16 Energy Sector Overview June 30, 2016 Current exposure $1.4 billion compared to $1.6 billion at 12/31/15 Reasonably calibrated to enterprise capital, is highly diversified, and has improved risk characteristics Portfolio underwritten to w
Slide 17: Producing Agent Counts
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 17 Producing Agent Counts 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 6/30/2016 2,196 588 1,854 4,638 4,608 425 130 377 932 928 3/31/2016 2,182 626 1,895 4,703 4,548 418 117 372 907 904 12/31/2015 2,051 584 1
Slide 18: 2Q16 Holding Company Liquidity
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 18 2Q16 Holding Company Liquidity CNO ($ millions) 2Q16 YTD Cash and Investments Balance - Beginning $374.7 $382.2 Sources Net Dividends from Insurance Subsidiaries 41.9 130.6 Dividends from Non-insurance Subsidiaries 1.1 9.0 Interest/Earnings on
Slide 19: Leveraging Considerable Tax Assets
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 19 Non-Life $838 Life $4 Loss Carryforwards Valuation Allowance Leveraging Considerable Tax Assets CNO ($ millions) 2Q 2016 Loss Carryforwards $177** Outlook and Value v Expect modest future valuation allowance releases Life NOLs were substan
Slide 20: Significant items impact on 2Q2015 net operating income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 20 The table below summarizes the financial impact of significant items on our 2Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions).
Slide 21: Significant items impact on 3Q2015 net operating income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 21 The table below summarizes the financial impact of significant items on our 3Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions).
Slide 22: Significant items impact on 4Q2015 net operating income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 22 The table below summarizes the financial impact of significant items on our 4Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions).
Slide 23: Significant items impact on 1Q2016 net operating income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 23 The table below summarizes the financial impact of significant items on our 1Q2016 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions).
Slide 24: Significant items impact on 2Q2016 net operating income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 24 The table below summarizes the financial impact of significant items on our 2Q2016 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions).
Slide 25: Quarterly Earnings
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 25 Quarterly Earnings CNO *Management believes that an analysis of earnings before net realized investment gains (losses), fair value changes in embedded derivative liabilities, fair value changes related to the agent deferred compensation plan,
Slide 26: Additional information on non-GAAP measures
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 26 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 amou
Slide 27: Reconciliation of net income to net operating income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 27 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): 2Q15 3Q
Slide 28: Operating earnings per diluted share reconciliation
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 28 2Q15 3Q15 4Q15 1Q16 2Q16 Operating income 60.8$ 56.8$ 97.0$ 49.6$ 63.7$ Weighted average shares outstanding for basic earnings per share 195,857 190,259 185,608 180,350 178,323 Effect of dilutive securities on weighted average shares: Stock op
Slide 29: Book value per diluted share
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 29 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 converte
Slide 30: Interest-adjusted benefit ratio
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 30 Information Related to Certain Non-GAAP Financial Measures 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 backin
Slide 31: Operating return measures
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 31 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before the net loss on sale of CLIC and gain (loss) on reinsurance transactions,
Slide 32: Operating return on equity calculations
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 32 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) o
Slide 33: Operating earnings and significant items summary
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 33 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 (dollars in millions): Operating Op
Slide 34: Pretax operating earnings reconciliation to net income
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 34 Information Related to Certain Non-GAAP Financial Measures A reconciliation of pretax operating earnings (a non-GAAP financial measure) to net income is as follows (dollars in millions): 2Q15 3Q15 4Q15 1Q16 2Q16 Pretax operating earnings (a no
Slide 35: Consolidated capital reconciliation
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 35 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 sharehol
Slide 36: Consolidated capital reconciliation, trailing four quarter average
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 36 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 sharehol
Slide 37: Debt to capital ratio reconciliation
CNO Financial Group | 2Q2016 Earnings | July 27, 2016 37 Information Related to Certain Non-GAAP Financial Measures 2Q15 3Q15 4Q15 1Q16 2Q16 Corporate notes payable 909.2$ 909.8$ 911.1$ 911.5$ 912.0$ Total shareholders' equity 4,364.2 4,171.0 4,138.5 4,226.6 4,456.2 Total capital 5,273.4$ 5,080.8$ 5