Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q1 2016 Earnings Presentation
38 slides from Cno Financial's earnings presentation, Apr 28, 2016
Slide 1: 1Q16 Financial and Operating Results
1Q16 Financial and operating results for the period ended March 31, 2016 April 28, 2016 Unless otherwise specified, comparisons in this presentation are between 1Q16 and 1Q15. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | 1Q2016 Earnings | April 28, 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 operat
Slide 3: Non-GAAP Measures
CNO Financial Group | 1Q2016 Earnings | April 28, 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
Slide 4: 28, 2016
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 4
Slide 5: 1Q16 Summary
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 5 CNO Operating Earnings Per Share Excluding Significant Items* Operating Earnings Excl. Significant Items* $60.1 $46.6 Weighted Average Shares Outstanding 202.3 182.1 1Q16 Summary * A non-GAAP measure. Refer to the Appendix for a reconciliation
Slide 6: Tennenbaum Capital Partners (TCP) Investment
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 6 Tennenbaum Capital Partners (TCP) Investment Tennenbaum Capital Partners ‒ Asset manager specializing in middle market direct lending and special situations investing ‒ Experienced management with solid long-term track record ‒ Will continue
Slide 7: 1Q16 Sales and Distribution Results: Bankers Life
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 7 1Q16 Sales and Distribution Results Bankers Life * Third party sales are excluded from NAP in all periods. ** Includes Medicare Advantage, Medicare supplement, PDP, Dental/Vision and ACA products (prior periods have been restated to include AC
Slide 8: Washington National 1Q16 Sales and Distribution Results
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 8 Washington National 1Q16 Sales and Distribution Results ($ millions) Quarterly NAP Trailing 4-Quarters NAP $99.8 $100.2 $100.4 $100.4 $101.2 Supplemental Health Collected Premiums $132.7 $136.1 $138.6 $137.4 $141.1 1Q NAP up 4% ‒ Worksite sa
Slide 9: 1Q16 Sales and Distribution Results: Colonial Penn
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 9 1Q15 $21.1 2Q15 $18.5 3Q15 $18.9 4Q15 $15.6 1Q16 $24.1 1Q16 Sales and Distribution Results Colonial Penn ($ millions) Quarterly NAP Trailing 4-Quarters NAP $68.9 $70.9 $73.4 $74.1 $77.1 Collected Premiums $65.1 $65.1 $66.7 $66.0 $70.1 Inforce
Slide 10: 1Q Consolidated Financial Highlights
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 10 1Q Consolidated Financial Highlights CNO Earnings Remain Strong ‒ Operating earnings per diluted share* of $0.27; $0.26 excluding significant items ‒ Unfavorable alternative investment results ‒ Operating ROE* of 8.9%; 8.3% excluding signif
Slide 11: 1Q16 Segment Earnings
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 11 $(1.3) $(5.0) $(4.4) $(4.9) $(5.1) $(5.9) $4.2 $0.6 $6.7 $(6.8) $82.2 $86.4 $79.8 $89.1 $69.9 $28.5 $29.1 $30.6 $31.3 $26.3 1Q15 2Q15 3Q15 4Q15 1Q16 Corporate CP BLC WN ($ millions) * A non-GAAP measure. See the Appendix for a reconciliation
Slide 12: Health Margins 1Q16 Highlights & Outlook
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 12 $133 $134 $137 $138 $139 57.6% 65.7% 57.4% 57.5% 57.7% 1Q15 2Q15 3Q15 4Q15 1Q16 Earned Premium Reported Benefit Ratio Adjusted Benefit Ratio** ($ millions) * Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix fo
Slide 13: Investment Results
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 13 $21.3 $15.4 $30.3 $48.5 $93.1 $1.3 $7.9 $12.4 $18.3 $10.0 Investment Results CNO ($ millions) Earned Yield*: 5.81% 5.78% 5.68% 5.72% 5.47% New Money Rate: 5.36% 5.06% 5.21% 5.17% 4.90% Average Invested Assets and Cash Realized Gains, Losses a
Slide 14: CNO Wrap-up
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 14 CNO Wrap-up Committed to priorities and longer term objectives ‒ Re-energize growth, including ramp-up of BD/RIA ‒ Focus on ROE expansion ‒ Effective capital deployment ‒ Remain committed to reducing LTC exposure over time Executive leade
Slide 15: Questions and Answers
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 15 Questions and Answers
Slide 16: Appendix
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 16 Appendix
Slide 17: Energy Sector Overview
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 17 Energy Sector Overview March 31, 2016 18% 71% 8% 1% 2% A or Better BBB BB B CCC or Lower 51% 28% 6% 12% 3% Midstream Independent E&P Oilfield Services Integrated Other Overall exposure down $225 million (13%) from year-end 2015 due to portf
Slide 18: Producing Agent Counts
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 18 Producing Agent Counts 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 3/31/2016 2,182 626 1,895 4,703 4,548 418 117 372 907 904 12/31/2015 2,051 584 1,927 4,562 4,565 410 127 367 904 899 9/30/2015 2,077 601
Slide 19: 1Q16 Holding Company Liquidity
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 19 1Q16 Holding Company Liquidity CNO ($ millions) 1Q16 Cash and Investments Balance - Beginning $382.2 Sources Net Dividends from Insurance Subsidiaries 88.7 Dividends from Non-insurance Subsidiaries 7.9 Interest/Earnings on Corporate Investmen
Slide 20: Leveraging Considerable Tax Assets
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 20 Non-Life $846 Life $37 Loss Carryforwards Valuation Allowance Leveraging Considerable Tax Assets CNO ($ millions) 1Q 2016 Loss Carryforwards $177** Outlook and Value v Expect modest future valuation allowance releases Life NOL’s expected
Slide 21: Significant Items: 1Q2015 Net Operating Income
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 21 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 million
Slide 22: Significant Items: 2Q2015 Net Operating Income
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 22 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 million
Slide 23: Significant Items: 3Q2015 Net Operating Income
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 23 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 million
Slide 24: Significant Items: 4Q2015 Net Operating Income
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 24 The table below summarizes the financial impact of the significant item on our 4Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in million
Slide 25: Significant Items: 1Q2016 Net Operating Income
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 25 The table below summarizes the financial impact of the significant item on our 1Q2016 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in million
Slide 26: Quarterly Earnings
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 26 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 27: Additional Information on Non-GAAP Measures
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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 amo
Slide 28: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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): 1Q15 2
Slide 29: Operating Earnings Per Diluted Share Reconciliation
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 29 1Q15 2Q15 3Q15 4Q15 1Q16 Operating income 60.1$ 60.8$ 56.8$ 97.0$ 49.6$ Weighted average shares outstanding for basic earnings per share 200,491 195,857 190,259 185,608 180,350 Effect of dilutive securities on weighted average shares: Stock o
Slide 30: Book Value per Diluted Share
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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 securities
Slide 31: Interest-Adjusted Benefit Ratio
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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 backi
Slide 32: Operating Return Measures
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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 transactions
Slide 33: Operating Return on Equity Calculations
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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: Operating Earnings and Significant Items Summary
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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 O
Slide 35: Pretax Operating Earnings to Net Income Reconciliation
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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): 1Q15 2Q15 3Q15 4Q15 1Q16 Pretax operating earnings (a n
Slide 36: Consolidated Capital Reconciliation
CNO Financial Group | 1Q2016 Earnings | April 28, 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 shareho
Slide 37: Consolidated Capital Reconciliation 1Q15-1Q16
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 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 shareho
Slide 38: Debt to Capital Ratio Reconciliation
CNO Financial Group | 1Q2016 Earnings | April 28, 2016 38 Information Related to Certain Non-GAAP Financial Measures 1Q15 2Q15 3Q15 4Q15 1Q16 Corporate notes payable 761.8$ 909.2$ 909.8$ 911.1$ 911.5$ Total shareholders' equity 4,753.6 4,364.2 4,171.0 4,138.5 4,226.6 Total capital 5,515.4$ 5,273.4$