Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (February 2022)
47 slides from Cno Financial's investor presentation, Feb 22, 2022
Slide 1: Investor Overview February 2022
Investor Overview February 2022 Exhibit 99.1
Slide 2: Important Legal Information
CNO Financial Group | Investor Overview | February 2022 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 oper
Slide 3: CNO Financial Group Overview
CNO Financial Group | Investor Overview | February 2022 3 Fixed index annuities 41% Fixed interest annuities 10% Other annuities 3% Long-term care 13% Supplemental health 16% Medicare supplement 1% Interest sensitive life 5% Traditional life 11% Annuities 35% Life 23% LTC 7% Med Supp 18% Supp Health
Slide 4: What Makes CNO Different
CNO Financial Group | Investor Overview | February 2022 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 | February 2022 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 compet
Slide 6: Highly Diversified Product Mix
CNO Financial Group | Investor Overview | February 2022 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 lon
Slide 7: Risk Management via Diversification and Natural Hedges
CNO Financial Group | Investor Overview | February 2022 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 presen
Slide 8: Unique Multi-Channel Operating Model
CNO Financial Group | Investor Overview | February 2022 8 Unique Multi-Channel Operating Model Consumer Division – Strong exclusive agent franchise • Top distributor of health/wealth protection products through ~4,200 exclusive producing agents and financial representatives • More than 250 locatio
Slide 9: Strategic Initiatives Successfully Reinvigorating Growth
CNO Financial Group | Investor Overview | February 2022 9 Strategic Initiatives Successfully Reinvigorating Growth; Momentum Interrupted Temporarily by COVID (dollars in millions) $- $50.0 $100.0 $150.0 $200.0 2019 2020 2021 Life NAP $- $50.0 $100.0 $150.0 $200.0 2019 2020 2021 Health NAP $- $500.0
Slide 10: Capital and Liquidity Overview
CNO Financial Group | Investor Overview | February 2022 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 Na
Slide 11: Cash Flow Profile
CNO Financial Group | Investor Overview | February 2022 11 Cash Flow Profile 4Q free cash flow reflects impact from NAIC changes; FABN issuance (dollars in millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2 Cash flows exclude acquisitions, divi
Slide 12: Excess Capital Allocation Strategy
CNO Financial Group | Investor Overview | February 2022 12 Excess Capital Allocation Strategy Disciplined and opportunistic approach to maximize shareholder value Return capital to shareholders • Share repurchases: $100 million in 4Q21, record $402 million in 2021 • Dividends: $16 million in 4Q21, $
Slide 13: Portfolio Composition and Investment Highlights
CNO Financial Group | Investor Overview | February 2022 13 IG Corporates, 51.1% Non-Agency RMBS, 7.4% Mortgage Loans, 4.5% HY Corporates, 3.0% CMBS, 8.3% Municipals, 10.5% ABS, 4.1% Govts/Agency, 1.3% CLO, 2.1% Equities, 0.5% Other Invested Assets, 2.1% Alternatives, 2.1% Policy Loans, 0.4% Cash, 2.
Slide 14: 2022 Outlook
CNO Financial Group | Investor Overview | February 2022 14 2022 Outlook Sales Continued positive momentum Earnings Free Cash Flow / Excess Capital Free cash flow expected to be lower than recent trend reflecting diminishing COVID impacts and alternative investment returns, capital strain from ne
Slide 15: Environmental, Social and Governance
CNO Financial Group | Investor Overview | February 2022 15 Environmental, Social and Governance Significant progress in 2020; 2021 accomplishments to be published in 1H22 Environmental • Performed GHG emissions inventory • Established GHG emissions reduction target • Earmarked $100 million for new i
Slide 16: Funding Agreement-Backed Notes (FABN) Program
CNO Financial Group | Investor Overview | February 2022 16 Funding Agreement-Backed Notes (FABN) Program Established in 3Q21 to leverage CNO’s core investment competencies; generating incremental earnings at an attractive return on the underlying capital Issuer CNO Global Funding, a Delaware statuto
Slide 17: DirectPath Transaction
CNO Financial Group | Investor Overview | February 2022 17 DirectPath Transaction February 2021 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 be
Slide 18: Delivering on our Commitments
CNO Financial Group | Investor Overview | February 2022 18 Delivering on our Commitments Turnaround / De-risking Pivot to Growth Optimize Long-term Value Pre 2017 2017 – 2019 2020 – ? Ongoing • Reinsured life block (2009) • Recapitalized company (2012) • Initiated dividend (2012) • Sold Legacy Life
Slide 19: Appendix
CNO Financial Group | Investor Overview | February 2022 19 Appendix 1 Strong Operational Performance • Experienced Management Team Slide 20 • Broker-Dealer/Registered Investment Advisor Slide 21 • Exclusive Agent Counts Slide 22 Building on Strong Track Record of Execution • New Money Rate Walk Slid
Slide 20: Experienced Management Team With a Proven Track Record
CNO Financial Group | Investor Overview | February 2022 20 Experienced Management Team With a Proven Track Record 12-year average tenure; 23-year average service in the insurance sector Name Title Years with CNO Years in Insurance Sector Age Gary C. Bhojwani Chief Executive Officer 6 32 54 Paul H. M
Slide 21: Broker-Dealer/Registered Investment Advisor
CNO Financial Group | Investor Overview | February 2022 21 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
Slide 22: Exclusive Agent Counts
CNO Financial Group | Investor Overview | February 2022 22 2020 % Change Consumer 4Q 1Q 2Q 3Q 4Q Y/Y Producing Field Agents1,3 4,539 4,389 4,360 4,168 4,008 -11.7% Producing Tele-Sales Agents1,3 257 258 247 235 220 -14.4% Total Producing Agents1,3 4,796 4,647 4,607 4,403 4,228 -11.8% Registered Agen
Slide 23: New Money Rate Walk
CNO Financial Group | Investor Overview | February 2022 23 New Money Rate Walk 4Q NMR up 12 bps QoQ due to selective direct investments, higher market yields
Slide 24: New Money Summary
CNO Financial Group | Investor Overview | February 2022 24 IG Corporates 38% Structured Securities 30% Municipals 18% HY Corporates 4% CML 6% Direct investment 4% Allocation $ Allocation% Yield Average Rating Average Duration IG Corporates 262 38.3% 3.36% BBB+ 15.8 Structured Securities 203 29.7% 3.
Slide 25: Tax Asset Summary as of December 31, 2021
CNO Financial Group | Investor Overview | February 2022 25 Non-Life NOLs $242 DTAs related to tax strategy $158 Value of NOLs and deferred tax assets (DTAs) related to tax strategy Details • Total estimated economic value of tax assets related to our NOLs and tax strategy of approximately $263 milli
Slide 26: 2018 Transformative LTC Reinsurance Transaction
CNO Financial Group | Investor Overview | February 2022 26 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
Slide 27: Long-Term Care Insurance
CNO Financial Group | Investor Overview | February 2022 27 New sales (~$30 million annually) focused on short duration products – 99% of new sales for policies with 2 years or less in benefits – Average benefit period of 12 months – New business 25% reinsured since 2008 Reserve assumptions infor
Slide 28: Appendix 2: Financial Exhibits
CNO Financial Group | Investor Overview | February 2022 28 Appendix 2: Financial Exhibits • Non-GAAP Financial Measures Slides 29-47
Slide 29: 4Q21 Significant Items
CNO Financial Group | Investor Overview | February 2022 29 The table below summarizes the financial impact of significant items on our 4Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q21 Significant Items
Slide 30: 3Q21 Significant Items
CNO Financial Group | Investor Overview | February 2022 30 The table below summarizes the financial impact of significant items on our 3Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 3Q21 Significant Items
Slide 31: 2Q21 Significant Items
CNO Financial Group | Investor Overview | February 2022 31 The table below summarizes the financial impact of significant items on our 2Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 2Q21 Significant Items
Slide 32: 1Q21 Significant Items
CNO Financial Group | Investor Overview | February 2022 32 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
Slide 33: 4Q20 Significant Items
CNO Financial Group | Investor Overview | February 2022 33 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
Slide 34: 2Q20 Significant Items
CNO Financial Group | Investor Overview | February 2022 34 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
Slide 35: 2Q20 Significant Items (Continued)
CNO Financial Group | Investor Overview | February 2022 35 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 t
Slide 36: Quarterly Insurance Product Margin and Operating Earnings
CNO Financial Group | Investor Overview | February 2022 36 4Q20 1Q21 2Q21 3Q21 4Q21 Insurance product margin Annuity 68.1$ 57.9$ 66.0$ 52.5$ 93.9$ Health 125.2 124.7 120.9 117.9 129.5 Life 37.3 27.1 39.7 53.2 30.4 Total insurance product margin 230.6 209.7 226.6 223.6 253.8 Allocated expenses (162.7
Slide 37: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | February 2022 37 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, fin
Slide 38: Net Income to Net Operating Income Reconciliation
CNO Financial Group | Investor Overview | February 2022 38 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
Slide 39: Operating Income and Share Reconciliation
CNO Financial Group | Investor Overview | February 2022 39 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 sh
Slide 40: Book Value per Diluted Share
CNO Financial Group | Investor Overview | February 2022 40 Information Related to Certain Non-GAAP Financial Measures 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 performan
Slide 41: Operating Return Measures
CNO Financial Group | Investor Overview | February 2022 41 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before net realized investment gains or losses from sales, impairments and cha
Slide 42: Operating Return on Equity Calculations
CNO Financial Group | Investor Overview | February 2022 42 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 43: Operating Earnings and Significant Items Summary
CNO Financial Group | Investor Overview | February 2022 43 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 (loss): (dollars in millions) Net
Slide 44: Operating Return on Equity Calculations (Continued)
CNO Financial Group | Investor Overview | February 2022 44 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 45: Consolidated Capital Reconciliation 2018-2019
CNO Financial Group | Investor Overview | February 2022 45 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 shareh
Slide 46: Consolidated Capital Reconciliation 2020-2021
CNO Financial Group | Investor Overview | February 2022 46 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 shareh
Slide 47: Debt to Capital Ratio Reconciliation
CNO Financial Group | Investor Overview | February 2022 47 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 de
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