Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (May 2021)
39 slides from Cno Financial's investor presentation, May 13, 2021
Slide 1: Investor Overview May 2021
Investor Overview May 2021 Exhibit 99.1
Slide 2: Important Legal Information
CNO Financial Group | Investor Overview | May 2021 2 Important Legal Information 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 operation
Slide 3: CNO Financial Group Overview
CNO Financial Group | Investor Overview | May 2021 3 Fixed index annuities 40% Fixed interest annuities 10% Other annuities 3% Long-term care 13% Supplemental health 17% Medicare supplement 1% Interest sensitive life 5% Traditional life 11% Annuities 33% Life 23% LTC 7% Med Supp 19% Supp Health 18%
Slide 4: What Makes CNO Different
CNO Financial Group | Investor Overview | May 2021 4 What Makes CNO Different Exclusive Focus on Middle- Income America Our Diverse Distribution & Integrated Approach Health and Wealth Solutions Insurance and Securities Solutions Strong Cash Flow Generation
Slide 5: Well-Positioned in the Attractive Senior Middle Market
CNO Financial Group | Investor Overview | May 2021 5 Well-Positioned in the Attractive Senior Middle Market Extensive experience and understanding of the middle market Differentiated with our market vs. product focus Diversification of products and distribution provides sustainable competitive
Slide 6: Highly Diversified Product Mix
CNO Financial Group | Investor Overview | May 2021 6 Highly Diversified Product Mix Mix of protection and accumulation products to serve varied customer needs Basic products that meet the insurance needs of the middle market Attractive and predictable return characteristics Low risk long-ter
Slide 7: Risk Management via Diversification and Natural Hedges
CNO Financial Group | Investor Overview | May 2021 7 Fixed Indexed Annuity Fixed Interest Annuity Trad Life Interest Sensitive Life Med Supp Supp Health LTC Mortality Morbidity Persistency Interest rate Equity Risk Management via Diversification and Natural Hedges Relative degree of risk present (be
Slide 8: Unique Multi-Channel Operating Model
CNO Financial Group | Investor Overview | May 2021 8 Unique Multi-Channel Operating Model Consumer Division – Strong exclusive agent franchise • Top distributor of health/wealth protection products through ~5,000 exclusive producing agents and financial representatives • More than 260 locations na
Slide 9: Strategic Initiatives Successfully Reinvigorating Growth
CNO Financial Group | Investor Overview | May 2021 9 Strategic Initiatives Successfully Reinvigorating Growth; Momentum Sidelined Temporarily by COVID (dollars in millions) $- $50.0 $100.0 $150.0 $200.0 2019 2020 1Q20 1Q21 Life NAP $- $50.0 $100.0 $150.0 $200.0 2019 2020 1Q20 1Q21 Health NAP $- $500
Slide 10: Capital and Liquidity Overview
CNO Financial Group | Investor Overview | May 2021 10 Capital and Liquidity Overview 1 The ratio of the combined capital of the insurance companies to the minimum amount of capital appropriate to support the overall business operations, as determined based on the methodology developed by the Nationa
Slide 11: Cash Flow Profile
CNO Financial Group | Investor Overview | May 2021 11 Cash Flow Profile Strong free cash flow generation and conversion (dollars in millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2 Cash flows exclude capital contributions to insurance subsidi
Slide 12: Excess Capital Allocation Strategy
CNO Financial Group | Investor Overview | May 2021 12 Excess Capital Allocation Strategy Disciplined and opportunistic approach to maximize shareholder value Return capital to shareholders • $100 million in share repurchases in 1Q21 • Continued capacity to repurchase shares Opportunistic transaction
Slide 13: Portfolio Composition: High quality, well-positioned
CNO Financial Group | Investor Overview | May 2021 13 IG Corporates, 50.5% Non-Agency RMBS, 7.8% Mortgage Loans, 5.1% HY Corporates, 3.1% CMBS, 8.0% Municipals, 9.8% ABS, 4.1% Govts/Agency, 1.3% CLO, 1.8% Equities, 0.6% Other Invested Assets, 2.3% Alternatives, 2.2% Policy Loans, 0.5% Cash, 2.8% Por
Slide 14: Outlook
CNO Financial Group | Investor Overview | May 2021 14 Outlook Base Case1 Adverse Case2 1 Assumes approximately 360k U.S. COVID deaths in 2021 with pandemic trailing off through 2021; economic growth and investment portfolio assumptions market consistent and in-line with base case assumptions from ra
Slide 15: Environmental, Social and Governance
CNO Financial Group | Investor Overview | May 2021 15 Environmental, Social and Governance Significant progress Environmental • Performed GHG emissions inventory • Established GHG emissions reduction target • Earmarked $100 million for new impact investments Social • Advanced DE&I programs • Linked
Slide 16: DirectPath Transaction
CNO Financial Group | Investor Overview | May 2021 16 DirectPath Transaction Acquisition enhances Worksite Division growth outlook (as of 12/31/2020) Strategic RationaleDirectPath Description • DirectPath is a leading national provider of year- round, technology-driven employee benefits management s
Slide 17: Delivering On Our Commitments
CNO Financial Group | Investor Overview | May 2021 17 Delivering On Our Commitments Turnaround / De-risking Pivot to Growth Optimize Long-term Value Pre 2017 2017 - 2019 2020 - 2021 Post COVID • Reinsured life block (2009) • Recapitalized company (2012) • Initiated dividend (2012) • Sold Legacy Life
Slide 18: Appendix
CNO Financial Group | Investor Overview | May 2021 18 Appendix 1 Strong Operational Performance • Experienced Management Team Slide 19 • Broker-Dealer/Registered Investment Advisor Slide 20 • Exclusive Agent Counts Slide 21 Building on Strong Track Record of Execution • New Money Summary Slide 22 •
Slide 19: Experienced Management Team
CNO Financial Group | Investor Overview | May 2021 19 Experienced Management Team With a Proven Track Record 10-year average tenure; 24-year average service in the insurance sector Name Title Years with CNO Years in Insurance Sector Age Gary C. Bhojwani Chief Executive Officer 4 31 53 Paul H. McDono
Slide 20: Broker-Dealer/Registered Investment Advisor
CNO Financial Group | Investor Overview | May 2021 20 Broker-Dealer/Registered Investment Advisor 1 Client assets include cash and securities in brokerage, broker/dealer customer account assets custodied directly at fund companies and insurance carriers, and assets under management in advisory accou
Slide 21: Exclusive Agent Counts
CNO Financial Group | Investor Overview | May 2021 21 2021 % Change Consumer 1Q 2Q 3Q 4Q 1Q Q/Q Producing Field Agents 1,3 4,531 4,066 4,448 4,539 4,389 -3% Producing Tele-Sales Agents 1,3 238 237 239 257 258 8% Total Producing Agents 1,3 4,769 4,303 4,687 4,796 4,647 -3% Registered Agents 2,3 609 6
Slide 22: New Money Summary
CNO Financial Group | Investor Overview | May 2021 22 IG Corporates 73% Structured Securities 13% Municipals 7% HY Corporates 5% CML 2% Direct investment 0.3% New Money Summary Emphasis on up-in-quality investments during first quarter 95% Investment Grade Allocation First Quarter Investments Alloca
Slide 23: Investment Overview: CLO Debt
CNO Financial Group | Investor Overview | May 2021 23 AAA 11.6%AA+ 3.7% AA 50.1% A 30.2% A- 2.2% Key Portfolio Metrics Cumulative loss scenarios versus Break Points 100% AAA-A Ratings Composition Portfolio Portfolio Index AAA 11.6% - - AA 53.8% - - A 34.6% - - BBB - N/A 5.0% BB - N/A 3.0% % of Ratin
Slide 24: Investment Overview: Commercial Mortgage Loans
CNO Financial Group | Investor Overview | May 2021 24 Eas t 25.6% South 34.5% Centra l 13.7% Mounta in 8.2% Pacific 17.9% CM1 78.3% CM2 21.7% Apartment 29.0% Industrial 20.0% Offi ce Building 18.5% Other commercial 12.0% Reta il 20.5% Key Portfolio Facts Portfolio Geography Underlying Property Type
Slide 25: Investment Overview: CMBS
CNO Financial Group | Investor Overview | May 2021 25 Conduit 50.9% Agency MF 15.6% SASB 33.5% Hotels 9.3% Retail 13.7% Office 30.0% Multi family 24.5% Industrial 11.1% Mixed Use 11.4% Key Portfolio Facts Underlying Property Type SASB versus Conduit $2.0 billion of net invested assets 78.0% Rated AA
Slide 26: Tax Asset Summary
CNO Financial Group | Investor Overview | May 2021 26 Non-life NOLs $322 DTAs related to tax strategy $119 Value of NOLs and deferred tax assets (DTAs) related to tax strategy Details • Total estimated economic value of NOLs and DTAs related to tax strategy of approximately $366 million @ 10% discou
Slide 27: 2018 Transformative LTC Reinsurance Transaction
CNO Financial Group | Investor Overview | May 2021 27 2018 Transformative LTC Reinsurance Transaction Divestiture of legacy LTC exposure significantly improves risk profile Fixed Annuities 49% Health 14% Life 13% LTC 24% In September 2018, Bankers Life entered into an agreement with Wilton Re to c
Slide 28: Long-Term Care Insurance
CNO Financial Group | Investor Overview | May 2021 28 New sales (~$25 million annually) focused on short duration products – 98% of new sales for policies with 2 years or less in benefits – Average benefit period of 11 months – New business 25% reinsured since 2008 Reserve assumptions informed b
Slide 29: Appendix 2: Financial Exhibits
CNO Financial Group | Investor Overview | May 2021 29 Appendix 2: Financial Exhibits • Non-GAAP Financial Measures Slides 30-39
Slide 30: 1Q21 Significant Items
CNO Financial Group | Investor Overview | May 2021 30 The table below summarizes the financial impact of significant items on our 1Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 1Q21 Significant Items (dol
Slide 31: 4Q20 Significant Items
CNO Financial Group | Investor Overview | May 2021 31 The table below summarizes the financial impact of significant items on our 4Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q20 Significant Items (dol
Slide 32: 2Q20 Significant Items
CNO Financial Group | Investor Overview | May 2021 32 The table below summarizes the financial impact of significant items on our 2Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 2Q20 Significant Items (dol
Slide 33: 2Q20 Significant Items (Continued)
CNO Financial Group | Investor Overview | May 2021 33 2Q20 Significant Items (Continued from the previous page) (1) Given our expectation that interest rates will remain low for the long-term, we performed an actuarial unlocking exercise in the second quarter of 2020 to reflect our assumption that a
Slide 34: 4Q19 Significant Items
CNO Financial Group | Investor Overview | May 2021 34 The table below summarizes the financial impact of significant items on our 4Q19 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q19 Significant Items (dol
Slide 35: Quarterly Earnings
CNO Financial Group | Investor Overview | May 2021 35 Quarterly Earnings (dollars in millions) * Management believes that an analysis of Net income applicable to common stock before: (i) net realized investment gains or losses from sales, impairments and the change in allowance for credit losses, ne
Slide 36: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | May 2021 36 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, financia
Slide 37: Reconciliation of Net Income to Net Operating Income
CNO Financial Group | Investor Overview | May 2021 37 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) 1Q2
Slide 38: Operating Income and Shares Reconciliation
CNO Financial Group | Investor Overview | May 2021 38 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
Slide 39: Debt to Capital Ratio Reconciliation
CNO Financial Group | Investor Overview | May 2021 39 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
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