Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Corporate Update (April 2012)
20 slides from Cno Financial's corporate update, Apr 24, 2012
Slide 1: DAC Accounting Change: Impact of Implementing ASU 2010-26 on 2011 and Prior Periods
DAC Accounting Change Impact of Implementing ASU 2010-26 on 2011 and Prior Periods April 25, 2012 Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group 2 Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in these materials relative to markets for CNO Financial’s products and trends in CNO Financial’s operations or financial results
Slide 3: Non-GAAP Measures
CNO Financial Group 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 comprehensive income (loss) per sha
Slide 4: CNO Financial Group
E 3 CNO FINANCIAL GROUP CNO Financial Group
Slide 5: DAC Adoption Overview
CNO Financial Group 5 DAC Adoption Overview No change in the economics of our business – GAAP accounting change only – No change to statutory financials, cash flow, capital generation, or tax (NOL) position Change impacts GAAP results of each of our four business segments differently – Colonial
Slide 6: DAC Accounting Change Consolidated GAAP Impacts
CNO Financial Group 6 DAC Accounting Change Consolidated GAAP Impacts For the year ended December 31, 2011 CNO Net income Reduction of $47 million Operating earnings per diluted share Reduction of 15¢ per share Book value excluding AOCI Reduction of $575 million Book value per diluted share Reductio
Slide 7: No Economic Impact: Statutory Earnings and Cash Generation Unchanged
CNO Financial Group 7 $128.2 $137.7 $209.0 $180.5 $154.1 $128.2 $137.7 $209.0 $81.0 $81.0 $346.7 $209.2 Statutory Earnings Power Inflows to Holding Co Statutory Earnings Power Inflows to Holding Co Fees and Interest to Holding Company Net Dividends to Holding Company Net Gain From Operations Retaine
Slide 8: GAAP EBIT From Business Segments: New Business and In-force
CNO Financial Group 8 $(123.9) $456.8 $561.0 $332.9 $397.6 $(163.4) $(200.0) $(100.0) $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 EBIT from In-force EBIT from Business Segments EBIT From New Business DAC Change Impact EBIT from Business Segments ($ millions) GAAP EBIT From Business Segments Restate
Slide 9: DAC Change Impact CNO Consolidated
CNO Financial Group 9 DAC Change Impact CNO Consolidated ($ millions) Before DAC Change Total In-force New Business New annualized premiums 375.1$ 375.1$ -$ 375.1$ Insurance policy income 2,690.5$ 2,690.5$ 2,347.2$ 343.3$ Investment / other income 1,356.7 1,356.7 1,314.1 42.6 Benefits & changes in r
Slide 10: Change to Consolidated DAC Balance by DAC Component
CNO Financial Group 10 Change to Consolidated DAC Balance(1) - Summarized by DAC Component December 31, 2011 ($ millions) Before DAC Change Adjustments Restated for ASU 2010-26 Commissions 960$ (89)$ 871$ Overhead 357 (357) - Labor costs 289 (251) 38 Direct response advertising 179 (160) 19 Sales in
Slide 11: Summary of EBIT Impact by Segment
CNO Financial Group 11 Summary of EBIT Impact by Segment Year Ended December 31, 2011 ($ in millions) Before DAC Change Total In-force New Business Bankers Life 327.2$ 290.9$ 399.6$ (108.7)$ Washington National 99.2 96.1 106.6 (10.5) Colonial Penn 27.3 (4.7) 39.5 (44.2) Other CNO Business 13.4 15.3
Slide 12: Additional Disclosures
CNO Financial Group 12 Additional Disclosures Bifurcate results between in-force and new business – Bifurcation results in greater clarity around value drivers – New business results impacted by rate of sales, mix of business, and distribution channel – Bifurcated results included in press release
Slide 13: Key Takeaways
CNO Financial Group 13 Key Takeaways No change in the economics of our business - cash flow, capital generation and deployment strategy Impacts GAAP results of each business segment differently CNO disproportionately impacted - a timing of earnings issue Management exploring potential mitiga
Slide 14: Questions and Answers
Ei CNO FINANCIAL GROUP Questions and Answers
Slide 15: Appendix
Ei CNO FINANCIAL GROUP Appendix
Slide 16: Pro Forma Illustration – If PVFP were treated like DAC
CNO Financial Group 16 Pro Forma Illustration – If PVFP were treated like DAC (1) DAC and PVFP balances are before the impacts of unrealized appreciation of investments (2) Pro Forma assuming the balance of PVFP and amortization of PVFP is reduced by the same proportional decreases as DAC and DAC am
Slide 17: DAC Change Impact – Bankers Life
CNO Financial Group 17 Before DAC Change Total In-force New Business New annualized premiums 245.9$ 245.9$ -$ 245.9$ Insurance policy income 1,612.4$ 1,612.4$ 1,358.9$ 253.5$ Investment / other income 780.1 780.1 737.5 42.6 Benefits & changes in reserves (1,570.1) (1,570.1) (1,378.0) (192.1) Expense
Slide 18: DAC Change Impact – Washington National
CNO Financial Group 18 DAC Change Impact – Washington National ($ millions) Before DAC Change Total In-force New Business New annualized premiums 77.8$ 77.8$ -$ 77.8$ Insurance policy income 585.1$ 585.1$ 530.7$ 54.4$ Investment / other income 190.5 190.5 190.5 - Benefits & changes in reserves (464.
Slide 19: DAC Change Impact – Colonial Penn
CNO Financial Group 19 DAC Change Impact – Colonial Penn ($ millions) Before DAC Change Total In-force New Business New annualized premiums 51.4$ 51.4$ -$ 51.4$ Insurance policy income 203.0$ 203.0$ 167.6$ 35.4$ Investment / other income 42.0 42.0 42.0 - Benefits & changes in reserves (150.1) (150.1
Slide 20: DAC Change Impact – Other CNO Business
CNO Financial Group 20 DAC Change Impact – Other CNO Business ($ millions) Before DAC Change Total In-force New Business New annualized premiums -$ -$ -$ -$ Insurance policy income 290.0$ 290.0$ 290.0$ -$ Investment / other income 344.1 344.1 344.1 - Benefits & changes in reserves (479.9) (479.9) (4