Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Conseco — KBW 2008 Insurance Conference
22 slides from Cno Financial's conference presentation, Sep 3, 2008
Slide 1: KBW 2008 Insurance Conference
KBW 2008 Insurance Conference September 4, 2008
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
Slide 3: Non-GAAP Measures
Non-GAAP Measures This presentation contains certain financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP). Reconciliations between such non-GAAP measures and the comparable GAAP measures are included in the Appendix. While management belie
Slide 4: Conseco Today
Conseco Today Old Conseco New Conseco Pursued roll-up strategy of insurance Focused provider of supplemental health, companies in the 1990s protection and accumulation products to the Twelve acquisitions for a combined underserved senior middle market with over consideration of $5.4Bn between 1990 a
Slide 5: Creating Value at Conseco: Fix, Focus, Grow
Creating Value at Conseco: Fix, Focus, Grow Fix Focus Grow Stabilize, then substantially Use “Value of New Focus on fast growing eliminate run-off LTC Business” metric to guide market segments where exposure marketing and sales efforts Conseco has the appropriate capabilities Improve CIG profitabili
Slide 6: Fixing LTC Run-off: The Separation of CSHI
Fixing LTC Run-off: The Separation of CSHI Run-off Segment Pre-Tax Operating Earnings ($MM) (a) Management Actions Taken Prior to Separation Stabilized LTC business Strengthened reserves by $200MM over the last 18 months Installed experienced management team focused exclusively on LTC Pursued premiu
Slide 7: CSHI Separation Transaction Overview
CSHI Separation Transaction Overview Key Transaction Terms CSHI (which houses 87% of run-off LTC business) to be transferred for no consideration to not-for-profit business trust set up to own and operate the business for the benefit of its LTC policyholders Pre-separation capital contribution of $1
Slide 8: Aggressively Pursuing Expense Reduction Opportunities
Aggressively Pursuing Expense Reduction Opportunities Back-office consolidation and elimination of excess office space completed; expected to produce run-rate savings of $25 million annually by year-end 2008 Approximately $11 million in savings realized in 2007 Additional $9 million expected in 2008
Slide 9: Focusing on the Fast Growing, Underserved Middle Income Senior Market
Focusing on the Fast Growing, Underserved Middle Income Senior Market Growth of Population 2007-2017E (Million people) Primary Insurance Product Needs Age Cohort CAGR 0.1% Life, disability Annuities, 401(k), mutual funds 1.1% Senior health, critical illness, final 3.9% need, long term care, annuitie
Slide 10: Few Competitors in Our Target Space
Few Competitors in Our Target Space (Relative company size based on total assets) More Affluent PNX Mass LNC NW Mutual NFS MET HIG State Farm Allstate KCLI GFR AIG Banner NY Life PRU SFG PFG Guardian UNM PL Legend Mutual CIG Stock Life GNW P&C AFL CNO Aviva PLFE MOO UHCO USA BLC TMK Combined Less Af
Slide 11: We Offer a Unique Value Proposition Aligned to Important Trends
We Offer a Unique Value Proposition that is Closely Aligned to Important Trends in Our Target Market Strong Trends Are Impacting Conseco Has Expertise Middle Market Consumers Across Important Middle Able to Access Consumers Market Products Across Multiple Channels Rising medical costs Specified Dise
Slide 12: Exceptional Customer Reach
Exceptional Customer Reach Over 4 million Conseco policyholders Powerful Bankers career agent force Over 5,000 contracted agents spread across 230 locations 70 million Americans in broad target market; 2/3 live within 25 miles of a Bankers branch 3 million annual home visits to prospects and 18 mill
Slide 13: Conseco at a Glance: Collected Premiums and Pre-tax Income
Conseco at a Glance: Collected Premiums and Pre-tax Income 6/30/08 Last Twelve Months (“LTM”) 6/30/08 LTM Collected Premiums by Collected Premiums by Product (a) Distribution Channel (a) CIG Medicare Life 26.2% Supplement 15.2% 20.5% Bankers Colonial Penn 70.0% 3.8% LTC Annuities 15.0% 28.4% 6/30/08
Slide 14: Conseco at a Glance: New Annualized Premiums
Conseco at a Glance: New Annualized Premiums (“NAP”) 6/30/08 LTM NAP by Product 6/30/08 LTM NAP by Distribution Channel Medicare Supplement CIG 20.4% 18.0% Life 26.3% LTC Colonial Penn 10.6% 11.9% Bankers 70.1% Annuities PDP & PFFS 17.9% 14.0% Specified Disease 10.8% Total NAP: $403.2MM 14
Slide 15: Bankers Life Overview
Bankers Life Overview New Annualized Premiums ($MM) Solid business with expanding low cost distribution $ 294.4 $ 282.8 $ 268.4 Focused on the middle-class senior market with $233.6 $218.4 Medicare supplement, life, annuity, LTC, Medicare Part D and Medicare Advantage products “Kitchen-table” sales
Slide 16: Colonial Penn Overview
Colonial Penn Overview New Annualized Life Premiums ($MM) Focuses on lower middle-income retirees with simple, low cost life insurance products Direct response model with media and mail based lead generation with robust telemarketing support Well positioned in unique market niche with strong growth
Slide 17: CIG Overview
CIG Overview New Annualized Premiums ($MM) Focused on middle income working Americans and $ 99.2 retirees with suppl. health and protection products $ 78.8 Distribution through 2,600 independent producers, $ 68.8 $ 72.5 including 590 from Performance Matters Associates $ 56.4 (“PMA”), a wholly-owned
Slide 18: Limited Exposure to Troubled Asset Classes
Limited Exposure to Troubled Asset Classes Composition of Investments as of 6/30/08 Structured securities represent 24% of total Other 9.8% actively managed fixed maturity securities CMOs 16.2% Over 89% AAA rated ABS Over 40% agency CMOs 1.7% Investment Grade 11% Alt-A Assets (99% AAA rated) Commerc
Slide 19: Conseco Today
Conseco Today A turnaround story Strategic separation of most of LTC run-off nearing completion Progress on improving profitability Strategic focus on senior middle market Defined by our markets, not our products Little competition in target segment Above average growth and profit potential Demograp
Slide 20: Appendix
5 CONSECO. Appendix
Slide 21: 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 a
Slide 22: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non- GAAP Financial Measures A reconciliation of EBIT to net income applicable to common stock is as follows (dollars in millions): 22