Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q3 2015 Earnings Presentation
38 slides from Cno Financial's earnings presentation, Oct 29, 2015
Slide 1: 3Q15 Financial and operating results
3Q15 Financial and operating results for the period ended September 30, 2015 October 29, 2015 Unless otherwise specified, comparisons in this presentation are between 3Q15 and 3Q14. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 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 oper
Slide 3: Non-GAAP Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 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 othe
Slide 4: 29, 2015
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 4
Slide 5: 3Q15 Summary
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 5 CNO Operating Earnings Per Share Excluding Significant Items* Operating Earnings Excl. Significant Items* $69.5 $64.3 Weighted Average Shares Outstanding 215.5 192.4 3Q15 Summary * A non-GAAP measure. Refer to the Appendix for a reconciliati
Slide 6: 3Q15 Sales and Distribution Results: Bankers Life
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 6 3Q15 Sales and Distribution Results Bankers Life * Third party sales are excluded from NAP in all periods ** Includes Medicare Advantage, Medicare supplement, PDP, Dental/Vision and ACA products (prior periods have been restated to include A
Slide 7: Washington National 3Q15 Sales and Distribution Results
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 7 Washington National 3Q15 Sales and Distribution Results ($ millions) Quarterly NAP Trailing 4-Quarters NAP $99.1 $99.2 $99.8 $100.2 $100.4 Supplemental Health Collected Premiums $127.1 $133.3 $132.7 $136.1 $138.6 Sales up 1% ‒ Worksite sal
Slide 8: 3Q15 Sales and Distribution Results: Colonial Penn
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 8 3Q14 $16.4 4Q14 $14.9 1Q15 $21.1 2Q15 $18.5 3Q15 $18.9 3Q15 Sales and Distribution Results Colonial Penn ($ millions) Quarterly NAP Trailing 4-Quarters NAP $63.7 $64.6 $68.9 $70.9 $73.4 Collected Premiums $61.9 $61.3 $65.1 $65.1 $66.7 Sale
Slide 9: 3Q Consolidated Financial Highlights
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 9 3Q Consolidated Financial Highlights CNO Earnings Remain Strong ‒ Operating earnings per diluted share of $0.30*; $0.33* excluding significant items ‒ Operating ROE excluding significant items of 8.7%* ‒ Benefit ratios largely in-line with
Slide 10: 3Q15 Earnings: Segment EBIT Excluding Significant Items
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 10 $(9.1) $(8.8) $(1.3) $(5.0) $(4.4) $0.4 $2.8 $(5.9) $4.2 $0.6 $98.3 $94.5 $82.2 $86.4 $79.8 $30.1 $30.2 $31.5 $29.1 $30.6 3Q14 4Q14 1Q15 2Q15 3Q15 Corporate CP BLC WN ($ millions) * A non-GAAP measure. See the Appendix for a reconciliation
Slide 11: Health Margins 3Q15 Highlights & Outlook
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 11 $126 $132 $133 $134 $137 56.0% 54.4% 57.6% 65.7% 57.4% 3Q14 4Q14 1Q15 2Q15 3Q15 Earned Premium Reported Benefit Ratio ($ millions) * Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for the corresponding GAA
Slide 12: Investment Results
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 12 $4.2 $4.2 $21.3 $15.4 $30.3 $12.6 $1.3 $7.9 $12.4 $42.7 $21,687 $21,852 $21,854 $21,956 $22,042 $300.1 $305.4 $300.1 $302.1 $298.2 3Q14 4Q14 1Q15 2Q15 3Q15 Net Investment Income Investment Results CNO ($ millions) Earned Yield*: 5.79% 5.83%
Slide 13: Bankers Life LTC Update
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 13 Bankers Life LTC Update CNO Continued progress on rate increases with filings/approvals running ahead of expectations September YTD incurred claims in-line with year-end 2014 loss recognition testing assumptions Claims management init
Slide 14: Wrap-up
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 14 Wrap-up CNO Strengthening the foundation of the franchise through business investments Focused on long-term profitable growth Continue to explore options to reduce LTC exposure CFO search progressing Expect to provide 2016 guidanc
Slide 15: Questions and Answers
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 15 Questions and Answers
Slide 16: Appendix
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 16 Appendix
Slide 17: 2015 Sales Guidance
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 17 2015 Sales Guidance Anticipate consolidated sales growth to be near low end of guidance of 1% - 3% Near low end of guidance of flat to -3% CNO Near low end of guidance of 3 to 5% Near high end of guidance of 12 to 15%
Slide 18: Producing Agent Counts
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 18 Producing Agent Counts 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 9/30/2015 2,077 601 1,871 4,549 4,693 411 115 365 891 892 6/30/2015 2,484 606 1,891 4,981 4,939 423 132 346 901 882 3/31/2015 2,468 657
Slide 19: 3Q15 Holding Company Liquidity
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 19 3Q15 Holding Company Liquidity CNO ($ millions) 3Q15 Cash and Investments Balance - Beginning $385.1 Sources Net Dividends from Insurance Subsidiaries 64.4 Interest/Earnings on Corporate Investments 4.2 Surplus Debenture Interest 24.2 Servi
Slide 20: Leveraging Considerable Tax Assets
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 20 Non-Life $861 Life $106 Loss Carryforwards Valuation Allowance Leveraging Considerable Tax Assets CNO ($ millions) 3Q 2015 Loss Carryforwards $233* Outlook and Value v Expect modest future valuation allowance releases as taxable income ha
Slide 21: Significant items impact on 3Q2014 net operating income
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 21 The table below summarizes the financial impact of significant items on our 3Q2014 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 4Q2014 net operating income
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 22 Net Operating Income: Bankers Life $ 103.5 $ (9.0) (1) $ 94.5 Washington National (2) Colonial Penn EBIT from business segments continuing after the CLIC sale Corporate Operations, excluding corporate interest expense EBIT from operations c
Slide 23: 1Q15 Significant Items
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 23 The table below summarizes the financial impact of the significant item on our 1Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in milli
Slide 24: 2Q15 Significant Items
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 24 The table below summarizes the financial impact of the significant item on our 2Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in milli
Slide 25: 3Q15 Significant Items
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 25 The table below summarizes the financial impact of the significant item on our 3Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in milli
Slide 26: Quarterly Earnings
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 26 Quarterly Earnings CNO *Management believes that an analysis of earnings before the net loss on sale of CLIC and gain (loss) on reinsurance transactions, net realized investment gains (losses), fair value changes in embedded derivative liab
Slide 27: Non-GAAP measures additional information
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 27 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 a
Slide 28: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 28 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): 3Q14
Slide 29: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 29 3Q14 4Q14 1Q15 2Q15 3Q15 Operating income 76.6$ 69.1$ 60.1$ 60.8$ 56.8$ Weighted average shares outstanding for basic earnings per share 210,525 204,298 200,491 195,857 190,259 Effect of dilutive securities on weighted average shares: Stock
Slide 30: Book value per diluted share
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 30 Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options and warrants were exercised, restricted stock and performance units were vested and convertible securiti
Slide 31: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 31 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 bac
Slide 32: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 32 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 transactio
Slide 33: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 33 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
Slide 34: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 34 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
Slide 35: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 35 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): 3Q14 4Q14 1Q15 2Q15 3Q15 Pretax operating earnings (a
Slide 36: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 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 share
Slide 37: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 37 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 share
Slide 38: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 3Q2015 Earnings | October 29, 2015 38 Information Related to Certain Non-GAAP Financial Measures 3Q14 4Q14 1Q15 2Q15 3Q15 Corporate notes payable 814.0$ 794.4$ 774.8$ 925.0$ 925.0$ Total shareholders' equity 4,722.0 4,688.2 4,753.6 4,364.2 4,171.0 Total capital 5,536.0$ 5,482.6