CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Investor Presentation (May 2013)
27 slides from CNO Financial's investor presentation, May 13, 2013
Slide 1: CNO Overview
EF CNO FINANCIAL GROUP CNO Overview May 13, 2013
Slide 2: CNO Financial Group | CNO Overview | May 13, 2013
CNO Financial Group | CNO Overview | May 13, 2013 2
Slide 3: Forward-Looking Statements
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 operations and capital plans. We caution investors that these f
Slide 4: Non-GAAP Measures
Non-GAAP Measures This presentation contains financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP). Reconciliations between those non-GAAP GAAP measures and d th the comparable bl GAAP measures are iincluded l d d iin th the A Appendix. di
Slide 5: CNO Fundamentals
CNO Fundamentals Track record of strong execution Well positioned in the growing and underserved retirement and middle-income market Building core value drivers Well capitalized and generating significant excess capital CNO Financial Group | CNO Overview | May 13, 2013 5
Slide 6: Track Record of Execution
Track Record of Execution 123% Return Value Total Return To Shareholders Since YE2009* 63% Invest in Growth 49% Financial Foundation CNO Peer S&P Life & Group Health Insurance *As of market close on 3/29/13 Reset Business Mix Peers - AFL, AIZ, AMP, GNW, HIG, LNC, MET, PFG, PL, PNX, PRI, PRU, SFG, SY
Slide 7: What Differentiates CNO?
What Differentiates CNO? Focus on serving the needs of our retirement and middle- income target g market, a market that is fast g growing g and underserved Exclusive distribution Exclusive ‒ Consistent with market focus ‒ We have “pricing” influence ‒ Track record of stable customer base Alignmen
Slide 8: CNO's Target Market
CNO’s Target Market The Opportunity Fast Growing, Underserved and Unprepared “Over Over the past five years years, the missed opportunity in the middle market 200 for life insurers has grown significantly… In addition, the rising cost of Population Growth in Millions healthcare, may be an emerging,
Slide 9: Investment in the Business
Investment in the Business CNO ($ millions)) Investing in marketing, productivity and New Annualized Ne Ann Premium ali ed Premi m growth of the agent force $393.4 $395.3 Expanding presence by adding new locations and geographies $366.1 $375.1 Developing and launching new products to meet the
Slide 10: Segment Earnings Trend
Segment Earnings Trend ($ millions) Segment EBIT Excluding Significant Items* Notable Items $125.6 $129.3 Reflects expected seasonality Net investment income and annuityy $99.8 $34.6 margins remain strong $97.3 $33.9 $101.9 Favorable Med supp and $24.7 $33.9 $29.4 supplemental health benefit r
Slide 11: Capital Strategy
Capital Strategy ($ millions) Forward Capital Plan Key Capital & Liquidity Metrics Maintain capital p cushion to absorb 1Q2013 deployable capital of ~$100mm stress-test conditions 358% 367% 366% 332% $449* ‒ Leverage of 20% $423 ‒ Risk-based capital ratio of 350% $347 ‒ Holdco liquidity & investme
Slide 12: Capital Generation and Deployment
Capital Generation and Deployment CNO ($ in millions) 1Q13 Capital Generation 1Q13 Sources and Uses $122 Retained in Fees and Subs Interest $32 $9 Other $16 Interest Holdco Exp Fees and $8 Corporate & Other Interest Liquidity $7 $9 $53 Debt Tender Repayment Offer $14 Net $126 Statutory Net Dividends
Slide 13: Returning Capital to our Shareholders
Returning Capital to our Shareholders CNO Highlights Total Securities Repurchases by Quarter Since initiating the share buyback program, program repurchased equivalent of 80 ($ in millions) million shares, leading to a 26%* reduction in weighted average diluted shares outstanding Cumulative inve
Slide 14: CNO: 2013 Initiatives Support 2015 Milestones
CNO: 2013 Initiatives Support 2015 Milestones 2013 Initiatives 2015 Milestones Grow sales, premium, Invest $80-$85mm in strategic distribution and product portfolio business initiatives Drive toward efficiencies in Accelerate run-on and run-off operations and leveraging Enhance customer ex
Slide 15: Q&A
Q&A CNO Financial Group | CNO Overview | May 13, 2013 15
Slide 16: Appendix
A Appendix di CNO Financial Group | CNO Overview | May 13, 2013 16
Slide 17: Loss Recognition & Cash Flow Testing
Loss Recognition & Cash Flow Testing CNO 2012 GAAP Loss Recognition Testing 2012 Statutory Cash Flow Testing gg g Aggregate g margins testing g g remain strong Insurance Company margins consistent with Testing margin increased in 2012 prior years ↑ - ASU 2010-26 All insurance entities pass A
Slide 18: "Low-For-Long" Rates – Reserve Sensitivity
“Low-For-Long” Rates – Reserve Sensitivity 2012 Expanded New Money Rate (NMR) Stress Test • Moderate Stress: 4.75% NMR held flat for 5 years then recovering • Severe Stress: 50 basis point drop in NMR to 4.25% held flat indefinitely • 3Q assumption change: OCB interest sensitive life reserve charge
Slide 19: Product Level Risk Management
Product Level Risk Management Diversified product mix focused on protection needs Basic products that fit with exclusive distribution and meet the basic insurance needs of the middle market Life Insurance Annuities Attractive and more predictable return characteristics - price to unleveraged IRR
Slide 20: 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 21: 1Q12 Significant Items
1Q12 Significant Items CNO The table below summarizes the financial impact of significant items on our 1Q2012 net operating income. Management believes that id tif i th identifying the iimpactt off th these it items enhances h th the understanding d t di off our operating ti results lt (dollars (d l
Slide 22: 2Q12 Significant Items
2Q12 Significant Items CNO The table Th t bl b below l summarizes i th the fi financial i l iimpactt off significant i ifi t it items on our 2Q2012 nett operating ti income. i Management M t believes b li th thatt identifying the impact of these items enhances the understanding of our operating resu
Slide 23: 3Q12 Significant Items
3Q12 Significant Items CNO The table Th t bl b below l summarizes i th the fi financial i l iimpactt off significant i ifi t it items on our 3Q2012 nett operating ti income. i Management M t believes b li th thatt identifying the impact of these items enhances the understanding of our operating resu
Slide 24: 4Q12 Significant Items
4Q12 Significant Items CNO The table Th t bl b below l summarizes i th the fi financial i l iimpactt off significant i ifi t it items on our 4Q2012 nett operating ti income. i Management M t believes b li th thatt identifying the impact of these items enhances the understanding of our operating resu
Slide 25: 1Q13 Significant Items
1Q13 Significant Items CNO The ttable Th bl bbelow l summarizes i th the fi financial i l iimpactt off the th significant i ifi t it item on our 1Q2013 nett operating ti income. i Management M t believes b li that identifying the impact of this item enhances the understanding of our operating result
Slide 26: CNO Quarterly Earnings
Quarterlyy Earnings g CNO ($ millions) 1Q12 2Q12 3Q12 4Q12 1Q13 Bankers Life $ 70.5 $ 76.1 $ 80.6 $ 73.7 $ 62.1 Washington National 24.7 33.9 33.9 34.6 29.4 Colonial Penn ((9.8)) 0.6 ((2.6)) 3.2 ((5.4)) Other CNO Business (2.3) 1.9 (53.6) 5.2 3.6 EBIT* from business segments 83.1 112.5 58.3 116.7 89
Slide 27: 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) Th debt The d bt to t capital it l ratio, ti excluding l di accumulated l t d other th comprehensive h i income i (loss), (l ) diff differs ffrom th the d debt bt
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