Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Credit Suisse Financial Services Forum 2012
27 slides from Cno Financial's conference presentation, Feb 8, 2012
Slide 1: Credit Suisse Financial Services Forum February 8, 2012
Credit Suisse Financial Services Forum February 8, 2012 Exhibit 99.1
Slide 2: CNO Financial Group
E 3 CNO FINANCIAL GROUP CNO Financial Group
Slide 3: Forward-Looking Statements
CNO Financial Group 3 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 4: Non-GAAP Measures
CNO Financial Group 4 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 intere
Slide 5: CNO Fundamentals
CNO Financial Group 5 CNO Fundamentals Well positioned in the market Track record of strong execution Building core value drivers Strong risk management Well capitalized and generating significant excess capital
Slide 6: The right products and the right channels for today's middle-market consumer
CNO Financial Group 6 • Fixed and Fixed-Index Life and Annuity Products • Long-Term Care • Medicare Supplement • Whole and Universal life products • Final expense • Supplemental Health CNO can access consumers across multiple channels • With an Agent (Retail) • Bankers • Washington National • PMA (C
Slide 7: Few competitors in our target space
CNO Financial Group 7 Few competitors in our target space AEL AFL AIG Aviva USA DFG Gerber Life GAFRI GNW Guardian HIG ManuLife KCLI LNCMass Mutual MET Mut. Of Omaha NM NYL PFG PL PNX PLFE PRU WNIC SFG TMK UNM BLC CPL CNO PRI SYA Products C us to m er s More Affluent Less Affluent Protection Product
Slide 8: CNO – Track Record of Strong Execution
CNO Financial Group 8 CNO – Track Record of Strong Execution Q4 2008 Separation of Closed Block LTC business Q4 2006 VNB introduced 2007/2008 CIG sales & marketing rightsizing - $6 million annual expense reduction 2008 Excess Chicago space vacated - $5 million annual expense save Q4 2007 Recapture o
Slide 9: Growth in the CNO Franchise
CNO Financial Group 9 $11,478.0 $12,106.9 $12,836.9 $2,894.9 $2,676.8 $2,635.6 $698.0 $703.8 $693.6 2009 2010 3Q2011 Bankers Life Washington National Colonial Penn OCB Growth in the CNO Franchise ($ millions) $16,176.3 Average liabilities on actively marketed business segments are increasing, while
Slide 10: Pre/After Tax GAAP Operating Income
CNO Financial Group 10 Pre/After Tax GAAP Operating Income ($ millions) $164.6 $181.9 $207.6 $87.7 $99.7 $117.7 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2009 2010 LTM as of 9/30/2011 Net Operating Income Tax Expense on Operating Income $252.3 $325.3 $281.6
Slide 11: Product Level Risk Management
CNO Financial Group 11 Product Level Risk Management Diversified product mix focused on protection needs Emphasize products with attractive return characteristics Actively managed inforce block Long-Term Care – Durations matched through ALM • Shorter liability durations than the industry – New
Slide 12: Statutory Earnings Power and Cash Generation
CNO Financial Group 12 $129.2 $139.8 $128.2 $142.6 $20.0 $35.0 $166.0 $180.4 $87.0 $234.5 $113.3 $168.3 $129.2 $139.8 $128.2 $142.6 $20.0 $35.0 $166.0 $180.4 $323.0 $294.2 $174.8 $149.2 Statutory Earnings Power Inflows to Holding Co Statutory Earnings Power Inflows to Holding Co Statutory Earnings P
Slide 13: Excess Capital
CNO Financial Group 13 3Q11 359% 2Q11 351% 1Q11 341% 4Q10 332% 3Q10 320% 3Q10 $190.1 4Q10 $161.1 1Q11 $169.0 2Q11 $234.0 3Q11 $168.9 Excess Capital Consolidated RBC Ratio Liquidity ($ millions) Approximately $41 million in excess of management target $68.9 million in excess of management target 350%
Slide 14: Excess Capital Utilization Opportunities
CNO Financial Group 14 Excess Capital Utilization Opportunities Share Buybacks Debt Prepayments Investing in Business for Additional Growth – Growth and expansion of distribution channels – Recapture reinsurance blocks Holding Company Investment Portfolio – Utilize non-life operating loss car
Slide 15: CNO Value Proposition
CNO Financial Group 15 CNO Value Proposition Competitive Advantage Exclusive, growing distribution Target market focus, with growth as Baby Boomers turn 65 Sustainable with barriers to entry Products Diversified product suite focused on protection needs Actively managed inforce block Foc
Slide 16: Questions and Answers
Ei CNO FINANCIAL GROUP Questions and Answers
Slide 17: Appendix
Ei CNO FINANCIAL GROUP Appendix
Slide 18: Improved capital, leverage and debt maturity profile since 2008
CNO Financial Group 18 CNO December 31, 2008 September 30, 2011 Higher Holding Company Capital Stronger Insurance Company Capital Improved Debt Maturity Profile Capital at the Holding Company - $59.0 RBC - 255% Statutory surplus of $1,366.5 Capital at the Holding Company - $168.9 (target = $
Slide 19: Corporate Liquidity Trend
CNO Financial Group 19 $149.2 $174.8 $294.2 $323.0 $141.5$139.1 $207.0 $92.6 2008 2009 2010 LTM as of 9/30 Corporate Liquidity Trend Recurring Sources and Uses Including Dividends and Scheduled Debt Payments ($ in millions) Recurring Sources Dividends Recurring Uses* Scheduled Debt Payments Made** $
Slide 20: Loss Carryforwards – Gross vs. Net
CNO Financial Group 20 Valuation Allowance $558.0 Valuation Allowance $353.1 Net $614.8 Net $311.5 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 Life Non- Life Capital Valuation Allow ance for Loss Carryforw ards Net Loss Carryforw ards in Deferred Tax Asset Gross $614.8 Gross $353.1 Gross $869.5 GAAP B
Slide 21: Estimated Consolidated Impact of ASU 2010-26 DAC Accounting Change
CNO Financial Group 21 Estimated Consolidated Impact of ASU 2010-26 DAC Accounting Change September 30, 2011 Pro Forma Aggregate Per Diluted Share Annual Net Income Reduction of $29 million to $34 million 9¢ to 12¢ Book Value excluding AOCI Reduction of $465 million to $510 million (10% - 12%) $1.50
Slide 22: Holding Company Investments at 9/30/11
CNO Financial Group 22 Holding Company Investments at 9/30/11 ($ millions) Alternatives & Equities (Balance) Fixed Income (net) $75 Cash & Money Market $25 3Q11 Cash and Money Market $54.9 Fixed Income (net) 66.0 Equities 16.1 Alternatives 31.9 TOTAL $168.9 Long Term Target Allocation Current Invest
Slide 23: Bankers Long Term Care Insurance
CNO Financial Group 23 Bankers Long Term Care Insurance Sold through exclusive distribution – Aides in acceptance of rate increases – Decreases risk of anti-selection No group business which has limited to no underwriting Extended asset durations at the beginning of 2010 – Minimizes risk of re
Slide 24: Certain Non-GAAP Financial Measures
Certain Non-GAAP Financial Measures
Slide 25: Additional information regarding certain non-GAAP measures
CNO Financial Group 25 The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or
Slide 26: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 26 Information Related to Certain Non-GAAP Financial Measures A reconciliation of earnings before net realized investment gains (losses), fair value changes in embedded derivatives, corporate interest, loss on extinguishment or modification of debt and taxes (“EBIT”) to net incom
Slide 27: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 27 Information Related to Certain Non-GAAP Financial Measures A reconciliation of the debt to capital ratio to debt to capital, as defined in our Senior Secured Agreement is as follows (dollars in millions) 3Q11 Corporate notes payable 871.2$ Total shareholders' equity 4,948.8 To
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