Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (September 2011)
25 slides from Cno Financial's investor presentation, Sep 9, 2011
Slide 1: CNO Financial Group: An Overview
Exhibit 99.1 CNO Financial Group: An Overview September 13, 2011
Slide 2: CNO Financial Group
oa 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: CNO: 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 middle consumers across middle-market consumers -market products multiple channels • Rising medical costs • Fixed and Fixed-Index • With an Ag
Slide 8: Few competitors in our target space
Few competitors in our target space Relative company size based on total admitted assets as of 12/31/10 More Affluent SFG @ 7) DFG Guardian o E O 2 © oy Mut. Of Omaha s (s) 5 wes @ e Aviva USA roe WNit e @ oO e Gerber Life CNO 6 Qin PRI cPL Less Affluent Protection Asset Product Products Accumulatio
Slide 9: CNO - Timeline of Management Actions
CNO - Timeline of Management Actions Q3 2007 Completed Q2 2011 consolidation Q4 2009 Amended Senior Q1 2009 of shared Q4 2008 Q4 2009 Renegotiated Credit Facility Renegotiated Q4 2010 services in Q4 2007 Separation Reinsurance of Senior Credit to credit facility Refinanced Q4 2006 Carmel, Sale Recap
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 Management Target = 300% Management Target = $100 Approximately $241 million in excess $134 million in excess of of management target management target CNO Financial Group 11
Slide 12: Statutory Earnings Power
Statutory Earnings Power ($ millions) $600.0 $500.2 $500.0 $406.6 $411.6 $400.0 $300.0 $200.0 $100.0 $0.0 2009 2010 LTM as of 6/30/2011 CNO Financial Group 12 Pre-Tax Operating Income mw Fees and Interest to Holding Company
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 and Money Market $130.9 Fixed Income (net) 17.6 Equities 12.9 Alternatives* 72.6 TOTAL $234.0 * Includes $25 Paulson investment made 7/1/2011; excluded from cash and money market CNO Financial Group 15
Slide 16: GAAP Balances for Deferred Tax Asset as of 6/30/11: Loss Carryforwards
GAAP Balances for Deferred Tax Asset as of 6/30/11: Loss Carryforwards - Gross1 vs. Net2 ($ millions) Totals Gross Loss Carryforwards Valuation Allowance Net Loss Carryforwards Valuation Allowance Analysis: • June 30, 2011 - Considers the cumulative losses we have incurred over the last 3 years • Se
Slide 17: Pre/After Tax GAAP Operating Income
eee Pre/After Tax GAAP Operating Income ($ millions) $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $0.0 2009 2010 LTM as of 6/30/2011 CNO Financial Group O Net Operating Income @ Tax Expense on Operating Income 7
Slide 18: Growth in Business
Growth ($ 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 CNO Financial Group 18
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
io CNO FINANCIAL GROUP Questions and Answers 44 »
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): CNO Financial Group 23
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
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