CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Barclays conference 2011
24 slides from CNO Financial's conference presentation, Sep 13, 2011
Slide 1: CNO Financial Group: An Overview
CNO Financial Group: An Overview September 13, 2011
Slide 2: CNO Financial Group
ao CNO FINANCIAL GROUP CNO Financial Group
Slide 3: Non-GAAP Measures
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; earnings before net realized investment gains (losses) and corporate interest and taxes; and debt
Slide 4: The Company: CNO Financial Group
The Company: CNO Financial Group Focused on serving the protection needs of the fast-growing but underserved middle income and senior markets Products include supplemental health, Medicare supplement, life, annuity and long-term care Products sold through efficient, growing distribution channe
Slide 5: Value Through Growth and Execution
Value Through Growth and Execution The Opportunity: Rapidly Growing, Underserved Market Our focus is meeting the needs of fast-growing senior market Attractive demographics: Baby Boomers reaching retirement age – The first of Boomer population becoming Medicare-eligible this year – In twenty yea
Slide 6: Broad Distribution Reach
Broad Distribution Reach Career PMA/Independent Direct • Focused on middle-income senior • Focused on middle-income • Focused on lower middle-income market with Medicare supplement, working Americans in Worksite retirees with simple, low-cost life life, annuity, LTC, Medicare Part D and Individual m
Slide 7: The right products and the right channels for today's middle-market consumer
CNO: The right products and the right channels for today’s middle-market consumer CNO has expertise CNO can access Strong trends are driving across important consumers across middle-market consumers middle-market products multiple channels • Rising medical costs • Fixed and Fixed-Index • With an Age
Slide 8: Customers
Few competitors in our target space Relative company size based on total admitted assets as of 12/31/10 More Affluent Mass LNC PNX NM Mutual SFG ManuLife MET HIG KCLI GAFRI AIG NYL DFG PRU Guardian Customers PFG PL SYA UNM Mut. Of Omaha GNW PLFE AEL Aviva USA WNIC BLC AFL Gerber Life CNO TMK PRI CPL
Slide 9: CNO - Timeline of Management Actions
CNO - Timeline of Management Actions Q3 2007 Completed Q2 2011 consolidation Q4 2009 Amended Senior Q4 2008 Q1 2009 Q4 2009 of shared Renegotiated Q4 2010 Credit Facility to Q4 2007 Separation Renegotiated Reinsurance of services in Senior Credit Refinanced allow for more Recapture of of Closed cred
Slide 10: Results Demonstrate CNO's potential
Results Demonstrate CNO’s potential 2Q2011 marks tenth consecutive quarter of GAAP net income Statutory Operating Earnings (net of tax): – $180.1 million for the first half of 2011 – Up 111% over 1H2010 Financial strength as of 6/30/2011: – Consolidated RBC* at 351% – Liquidity at the holding
Slide 11: Excess Capital
Excess ($ millions) Capital Approximately $375 million total excess capital as of 6/30/11 Consolidated RBC Ratio Liquidity 2Q11 4Q10 1Q11 3Q10 351% 2Q10 332% 341% 2Q11 318% 320% $234.0 3Q10 $190.1 1Q11 Management Target = 300% 4Q10 $169.0 $161.1 2Q10 $129.9 Management Target = $100 Approximately $24
Slide 12: Statutory Earnings Power
Statutory Earnings Power ($ millions) $600.0 $500.2 $500.0 $406.6 $411.6 $135.6 $400.0 $137.1 $132.4 $300.0 $200.0 $364.6 $269.5 $279.2 $100.0 $0.0 2009 2010 LTM as of 6/30/2011 CNO Financial Group Pre-Tax Operating Income Fees and Interest to Holding Company 12
Slide 13: Excess Capital Utilization Opportunities
Excess Capital Utilization Opportunities Debt Prepayment Share Buybacks Investing in Business for Additional Growth – Growth and expansion of distribution channels – New COO role to leverage organic growth opportunities – Recapture reinsurance blocks Build Holding Company Investment Portfoli
Slide 14: Share Repurchase & Debt Prepayment
Share Repurchase & Debt Prepayment 2Q Activity – Purchased 2.2 million shares during 2Q 2011 for $16.2 million – Average cost per share of $7.35 – 0.9% of outstanding shares at March 31, 2011 – Principal prepayment of $16.2 million made on Senior Secured Credit Facility on June 30, 2011 • Payment
Slide 15: Holding Company Investments at 6/30/11
Holding ($ millions) Company Investments at 6/30/11 Current Investments Target Allocation Cash & Cash and Money Market $130.9 Money Market Fixed Income (net) 17.6 $25 Fixed Income Equities 12.9 (net) Alternatives* 72.6 $75 TOTAL $234.0 Alternatives & Equities (Balance) * Includes $25 Paulson investm
Slide 16: GAAP Balances for Deferred Tax Asset as of 6/30/11
GAAP Balances for Deferred Tax Asset as of 6/30/11: Loss Carryforwards – Gross1 vs. Net2 ($ millions) Totals $1,000.0 Gross $874.7 Gross Loss Carryforwards $1,873.6 Net $800.0 Valuation Allowance (1,063.0) Gross $157.7 $652.9 Net Loss Carryforwards $810.6 $600.0 Valuation Allowance Gross Valuation A
Slide 17: Pre/After Tax GAAP Operating Income
Pre/After Tax GAAP Operating Income ($ millions) $350.0 $321.7 $300.0 $281.6 $252.3 $113.5 $250.0 $99.7 $200.0 $87.7 $150.0 $100.0 $208.2 $181.9 $164.6 $50.0 $0.0 2009 2010 LTM as of 6/30/2011 Net Operating Income Tax Expense on Operating Income CNO Financial Group 17
Slide 18: Growth in Business
Growth ($ millions) in Business Total assets continue to grow with a CAGR of 4.5% since 12/31/2009 $32,396.6 $31,899.6 $30,343.8 $16,150.0 $16,634.2 $14,503.8 $4,070.7 $4,033.7 $3,993.7 $971.4 $999.3 $1,024.8 $9,254.6 $8,999.5 $9,009.1 $1,543.3 $1,717.1 $1,734.8 2009 2010 2Q2011 Corporate OCB Coloni
Slide 19: Summary
Summary Core business continues to perform well – Solid, stable, growing earnings – Key measures of financial strength continue to improve CEO transition and new COO role Capital generation creates unique opportunities – Generating significant amounts of excess capital – Moving more excess cap
Slide 20: Questions and Answers
E| CNO FINANCIAL GROUP Questions and Answers
Slide 21: Appendix: Certain Non-GAAP Financial Measures
Appendix Certain Non-GAAP Financial Measures
Slide 22: 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 am
Slide 23: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of earnings before net realized investment gains (losses), corporate interest, loss on extinguishment or modification of debt and taxes (“EBIT”) to net income is as follows (dollars in millions): Six Months Ended Six Months
Slide 24: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Debt to capital ratio, excluding accumulated other comprehensive income (loss) This non-GAAP financial measure differs from the debt to capital ratio because accumulated other comprehensive (income) loss has been excluded from the value of c