CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Investor Day (December 2012)
88 slides from CNO Financial's investor day presentation, Dec 13, 2012
Slide 1: 2012 CNO Investor Day
2012 CNO Investor Day December 13 13, 2012
Slide 2: Agenda
Agenda Time Topic Speaker 12:15 Introductions Erik Helding – SVP Investor Relations & Treasury 12:20 CNO Strategy Ed Bonach – CEO 12:50 Segment Growth Strategy Scott Perry – CBO 1:05 Target Market & Distribution Scott Perry – CBO & President, Bankers Life Mike Buckley – SVP Sales, Bankers Life Steve
Slide 3: CNO Financial Group | Investor Day | December 13, 2012
CNO Financial Group | Investor Day | December 13, 2012 3
Slide 4: 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 5: 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 Appendix. A di
Slide 6: CNO Strategy
CNO Strategy gy Ed Bonach - CEO CNO Financial Group | Investor Day | December 13, 2012 6
Slide 7: Ed Bonach – Chief Executive Officer
Ed Bonach – Chief Executive Officer Ed Bonach (58) was appointed chief executive officer and a director of CNO Financial Group effective October 1, 2011. Ed formerly served as executive vice president and chief financial officer of CNO from May 2007 through September 2011. His areas of responsibilit
Slide 8: Track Record of Execution
Track Record of Execution 86% Return Value To Shareholders Stock Performance Since YE2009* Invest in Growth 26% 15% Financial Foundation CNO Peers S&P Insurance *As As of market close on 12/07/12 Reset Business Mix Peers - AFL, AIZ, AMP, GNW, HIG, LNC, MET, PFG, PL, PNX, PRI, PRU, SFG, SYA, TMK, UNM
Slide 9: What Differentiates CNO?
What Differentiates CNO? Focus on serving the needs of our middle-income target g market Exclusive distribution ‒ Consistent with market focus ‒ We have “pricing” influence ‒ Track record of stable customer base Alignment Distribution Products Service Culture CNO Financial Group | Investor Day |
Slide 10: CNO's Target Market
CNO’s Target Market We enrich lives by providing financial security to middle-income American working families and retirees. 200 s Millions Population Growth in 180 Our Market 160 140 120 The Opportunity 100 Fast Growing 80 Underserved Unprepared for Retirement 60 0 40 20 0 2010 2020 2030 2040
Slide 11: Strategic Investment – Driving ROE
Strategic Investment – Driving ROE Investing in our business segments Agent Growth and Development Distribution Growth New Markets Office Locations Worksite Platform Expanded Products Investingg in the Customer Experience p and operational p efficiency ‒ Hired Bruce Baude to head IT &
Slide 12: Focused On Customer Service and Operational Effectiveness
Focused On Customer Service and Operational Effectiveness Where We Have Opportunity... Sourcing Rationalization Fundamentals F d t l off Great G t Service S i InI a Business Like Ours Additional Platform Consolidation/Optimization Consistency “I know what to expect and my expectations are met” Lever
Slide 13: CNO: Value Proposition
CNO: Value Proposition Uniquely Reinvesting in Positioned Business Business Growth Model O Opportunities t iti Capital Management Generating Stabilized Significant Run-Off Engineering Earnings & Excess Operational Efficiencies Capital Rapidly Growing G Target C it l Capital Market Distribut
Slide 14: Next Steps – 2015 Milestones
Next Steps – Continue to Drive Shareholder Value 2015 Milestones Capitalize on Opportunities Invest $80-$85mm in strategic business initiatives Accelerate run-on run on and run-off run off Enhance customer experience and operational efficiency ROE run-rate of 9% Drive to investment grade
Slide 15: Q&A
Q&A CNO Financial Group | Investor Day | December 13, 2012 15
Slide 16: Segment Growth Strategy
Segment Growth Strategy Scott Perry - CBO CNO Financial Group | Investor Day | December 13, 2012 16
Slide 17: Scott Perry – Chief Business Officer
Scott Perry – Chief Business Officer Scott Perry (50) is chief business officer of CNO Financial Group, Inc. and continues to hold the title of president for Bankers Life and Casualty Company. Perry joined Bankers as a field vice president and has held the titles of senior vice president of distribu
Slide 18: CNO: Distribution Strategy to Reach Middle Market
CNO: Distribution Strategy to Reach Middle Market CNO Financial Group | Investor Day | December 13, 2012 18
Slide 19: Bankers Life Growth Levers
Bankers Life Growth Levers Career Agents Agent g Retention/ Productivity Agent Recruiting Manager Trainee Program Satellite Expansion Medicare Cross-Sales Supplement Prospecting Life Insurance Brand Building Medium-Term Care Affinity Medicare Marketing Partnerships CNO Financial Group | Investor Day
Slide 20: Washington National Growth Levers
Washington National Growth Levers PMA and WN Independent Partners Workplace Solutions Worksite Agencies WNezBillSM Expand Sales Management & St State t EExpansion i WNezApp2.0SM Increase Active Care Recruiting Capacity Enhance Claims Processing Award-winning Website Washington National Institute for
Slide 21: Colonial Penn Growth Levers
Colonial Penn Growth Levers Direct to Consumer Lead Mix (higher % non-TV) Sales Productivity Additional Sales / Cross-Sell (CRM & Others) Hispanic Market New Term Life Product Younger New Whole Life Product Web Expansion CNO Financial Group | Investor Day | December 13, 2012 21
Slide 22: LTC Strategy
LTC Strategy Keys for Success Conservative and affordable product design Ability to underwrite Pricing, re-pricing and ALM discipline Active risk management and stable reinsurance partnerships Business model affords ability to strike this balance with exclusive distribution and focus on mi
Slide 23: Healthcare Reform - CNO Well Positioned
Healthcare Reform - CNO Well Positioned Healthcare Reform CNO Impact Does not apply to Med Supp, LTC, Specified “Excepted Benefits” Disease, Critical Illness are not directly impacted Attempts to reduce fraud May see favorable Medigap and waste and promote claims experience in time wellness in Medic
Slide 24: Target Market & Distribution
Target Market & Distribution Scott S tt Perry P – CBO, CBO President, P id t B Bankers k Lif Life Mike Buckley – SVP Sales, Bankers Life Steve Stecher – President, President Washington National Gerardo Monroy – President, Colonial Penn CNO Financial Group | Investor Day | December 13, 2012 24
Slide 25: Three distinct franchises with unique value propositions and distribution models
Three distinct franchises with unique value l propositions ii and d di distribution ib i models d l • Focuses on middle-income • Focuses on middle-income • Focuses on lower to middle- Boomers and retirees working Americans income urban/metro retirees • Offers Medicare Supplement, life, • Offers supp
Slide 26: Mike Buckley – SVP Sales, Bankers Life and Casualty
Mike Buckley – SVP Sales, Bankers Life and Casualty Michael Buckley (61) joined Bankers Life in 2004 as territory vice The image cannot be display ed. Your computer may not hav e enough memory to open the image, or the image may hav e been corrupted. Restart y our computer, and then open the file ag
Slide 27: Bankers Life – Target Market and Alignment
Bankers Life – Target Market and Alignment Target Customer Product Market Needs Offering g Middle Market Personalized Advice at Life, Health and Annuities Home • Near and In-Retirement • Retirement Planning • Life Insurance • Middle Income • Medicare Planning • Fixed Annuities ($25k - $75k) • Final
Slide 28: Bankers Life – Distribution Model
Bankers Life – Distribution Model • Management Employees • Career Agents Managers • Customer Access Processes Branch and Manager Satellite Development • Face-to-Face Advice and Counsel Expansion • Service and Relationship Skills Bankers Life Locations Agents Customer Source of New Sales Direct Marke
Slide 29: Bankers Life Key Value Drivers
Bankers Life Key Value Drivers Selling Locations Agents 300 CAGR: +4% 275 CAGR: +3% 250 223 6,000 5,200 5,000 4,482 200 4,000 150 3 000 3,000 100 2,000 50 1,000 0 - 2007 2008 2009 2010 2011 YTD2012 2007 2008 2009 2010 2011 YTD2012 52 additional locations over five years Higher successful new agent c
Slide 30: Steve Stecher – President, Washington National
Steve Stecher – President, Washington National Steven M. Stecher (52) joined CNO as executive vice president of operations and information technology for the Conseco Insurance Group in September 2004. He became chief operating officer for the company's Carmel-based insurance companies in February 20
Slide 31: Washington National – Target Market and Distribution
Washington National – Target Market and Distribution *Source: Eastbridge Consulting CNO Financial Group | Investor Day | December 13, 2012 31
Slide 32: Washington National Key Value Drivers
Washington National Key Value Drivers • Expanded product availability % = Growth over same quarter prior year • Collected premium from 560 new worksite groups YTD 2012 18% 14% 9% 20% • Added PMA sales leaders to support sales expansion in nine 14%* underserved states • Increased agent recruiting cap
Slide 33: Gerardo Monroy – President, Colonial Penn
Gerardo Monroy – President, Colonial Penn Gerardo Monroy (45) was named president of CNO’s Colonial Penn business segment in August 2012, after serving as the vice president of long-term care for CNO’s Bankers Life business segment since 2008. Monroy began his career with CNO in 2001 as a vice presi
Slide 34: Colonial Penn – Target Market and Alignment
Colonial Penn – Target Market and Alignment Target Customer Product Market Needs Offering Middle – Low-Mid Market Over the phone personalized Life Insurance advice • Seniors • Final Expenses / Funeral Planning p • Final Expense Insurance • Average 65 years old • Easy to understand products • Term Li
Slide 35: Colonial Penn Integrated Marketing and Sales Process
Colonial Penn Integrated Marketing and Sales Process Buyers Additional Sales R Reactivate ti t Reactivate Campaigns Leads Prospects CPL Sales Customer Non Buyers Non-Buyers Referrals Service (shared with BLC Agents) • DRTV / Direct Mail / Web leads New e Sales Sa es • CPL Telesales connect with most
Slide 36: Colonial Penn Key Value Drivers
Colonial Penn Key Value Drivers Acquisition Cost/NAP Ratios Leads by Source 1,000,000 961,000 909,356 1.19 1.20 1.10 1.07 0.97 732,981 750,000 0.80 538,561 500,000 0.40 250,000 ‐ ‐ 2009 2010 2011 2012 F 2009 2010 2011 2012 F TV Leads DM Leads Web Leads Phone Contact Rate 100% Increasing I i iinves
Slide 37: Executing on Strategies Projected to Lead to 8-10% Growth in Sales
Executing on Strategies Projected to Lead to 8-10% Growth in Sales ($ in millions) Sales - 7% CAGR* Across All Segments since 2010 $245.4 $245.9 $245.7 $199.8 $184.7 $186.7 * $83.6 $70.5 $75.4 $60.5 $46.3 $51.4 2010 2011 LTM 3Q2012 2010 2011 LTM 3Q2012 2010 2011 LTM 3Q2012 4% CAGR* 9% CAGR** 14% CAG
Slide 38: Q&A
Q&A CNO Financial Group | Investor Day | December 13, 2012 38
Slide 39: Investments
Investments Eric Johnson – CIO & President, 40|86 CNO Financial Group | Investor Day | December 13, 2012 39
Slide 40: Eric Johnson – Chief Investment Officer & President, 40|86
Eric Johnson – Chief Investment Officer & President, 40|86 Eric R. Johnson President, 40|86 Advisors, Inc. Chief Investment Officer, CNO Financial Group, p INC Eric Johnson (52) has been the President of 40|86 Advisors (CNO’s registered investment adviser subsidiary) for 9 years. He has more than 20
Slide 41: Key Takeaways
Key Takeaways Disciplined approach to investing and asset-liability management Emphasis on stable and predictable investment performance meeting corporate objectives Current tactical priority: sustaining book yield and investment income Active risk management Investments are a key CNO core
Slide 42: Culture Leads to Quality and Competency
Culture Leads to Quality and Competency Experience and track record Strong CNO Breadth of investment portfolio capabilities quality Active Strong alignment with Management business strategies C lt Culture Disciplined approach to Core CNO investing and asset- competency li bilit managementt liability
Slide 43: Cycle of Low Yields
Cycle of Low Yields The Fed is likely to continue to provide substantial liquidity The choices in the bond market The ECB and other are more about relative value instrumentalities have rather than absolute returns committed to ‘do what it takes’ to support an orderly Euro Virtuous circle of low yiel
Slide 44: Strategic Insights
Strategic Insights Modestly increase risk – “Compression Trade” Emphasize U.S. domestic sectors Transition from macro (correlated) to micro market Call on housing market bottom Energy as a beneficiary of global demand CNO Financial Group | Investor Day | December 13, 2012 44
Slide 45: Our Outlook
Our Outlook 6% 10 Y Yr. U U.S. S TTreasury Risky credit has outperformed as Fed policy 4% has diminished returns on risk-free assets and pushed investors out on the risk curve 2% An environment of modest growth with household and business deleveraging is not 0% inhospitable to the credit markets
Slide 46: Our Asset Allocation
Our Asset Allocation (($ millions)) $24 8bn of Invested Assets* $24.8bn CLO Highly diversified Govt/Agency 1.4% CMO Cash & 3.7% Other Ot e 90% investment grade 4.8% ABS 3.4% < 0.72% equity Municipals Integrated with Asset-Liability Asset Liability 7.3% 7 3% Management discipline (i.e. CMBS d
Slide 47: Investment Ratings Profile
Investment Ratings Profile CCC and Lower Allocation to ‘High Risk’ Assets* 3% B 2% AAA 15.98% BB 10% 13.29% 5% 12.61% 12.20% 11.77% AA 9% 2008 2009 2010 2011 YTD-3Q12 A BIG** Equity Real Estate BIG Ratio 23% BBB 48% 90% investment grade Yields successfully defended while overall quality sustaine
Slide 48: Corporate Securities
Corporate Securities $14.6bn of Invested Assets* $ 14.8% Energy/Pipelines 10.5% Overweights: Utilities 11.8% 7.9% Energy/Pipelines Insurance 5.7% 9 2% 9.2% 9.0% Utilities Telecom & Media 10.3% 7.4% Food/Beverage Insurance Healthcare & 5.2% 7.1% 7 1% Pharmaceuticals 7.3% Food/Beverage Banks
Slide 49: Structured Securities
Structured Securities $5.4bn of Invested Assets* 3.0% 76% investment grade Agency CMO 9.3% 91% NAIC 1 rated Non- 8.2% Strong analytical disciplines around Agency RMBS 4.1% collateral and cash flow 5.8% Structured Securities Invested Assets ($mm) CMBS 5.9% $5 232 $5,232 $4,762 $4,260 3.4% $3,46
Slide 50: RMBS
RMBS $2bn of Invested Assets* 8.2% of invested assets 98% NAIC 1 rated 61% BIG NRSRO ratings; purchased at significant discount to opportunistically capture yield Alt A Alt-A Stable collateral performance trends 22% Strong analytical process to stress test collateral, Prime Jumbo using mar
Slide 51: CMBS
CMBS $1.4bn of Invested Assets* Stable, highly rated portfolio Agency 2% 100% investment grade: 87% AAA/AA AJ 0% 98% NAIC 1 Mezz 14% Long-term buy and hold strategy based on property fundamentals Senior 49% Very strong collateral performance AM 35% Average delinquency rate of 7% compared
Slide 52: CLOs Are a Significant Commitment & Opportunity
CLOs Are a Significant Commitment & Opportunity $0.4bn of Owned Assets* 3 CLOs with $0.8bn AUM • 40|86 acts as asset manager AAA on three th sponsoredd CLO’s CLO’ 9% AA • Leverages CLO competency 61% NR 16% • Drives corporate fee income • CNO investment $79mm CCC 3% A B 6% 1% BB Mill Creek - $273m
Slide 53: Commercial Mortgage Loans
Commercial Mortgage Loans $1.6bn of Invested Assets* Focus on ‘A’ quality properties which are diversified by Other Multi-Family 4% 6% geography and sector Mixed Use 3% q y investments, construction No’s: mezzanine or real estate equity or condo loans, pro-forma underwriting Industrial Retail 17
Slide 54: Peripheral Europe
Peripheral Europe* ($ millions) Total Book Fair Value Value Financials $- $59 8 $59.8 $27 9 $27.9 $87 7 $87.7 $94 9 $94.9 Utilities - 30.1 - 30.1 29.6 Industrials - 61.1 - 61.1 66.0 Telephone 26.1 - 64.6 90.7 82.3 Total $26.1 $151.0 $92.5 $269.6 $272.8 * As of 9/30/12 CNO Financial Group | Investor
Slide 55: Declining Impairment Losses
Declining Impairment Losses* ($ in millions) $195.4 $162.3 $79.2 $23.1 $8.5 2008 2009 2010 2011 YTD - 3Q12 Corporates Structured Securities Commercial Real Estate Other *Excludes net investment income losses and impairments related to IGA legacy investments CNO Financial Group | Investor Day | Decem
Slide 56: Dealing with Low Interest Rates
Dealing with Low Interest Rates Credit at short end of curve (includes CLOs, Non-Agency RMBS, Esoteric ABS, selected High Yield) Quality at long end of curve – take advantage of significant LTC duration (includes US Corporates, Core EM IG Corporates) Slowing portfolio turnover – each reduction
Slide 57: Our HoldCo Investment Strategy
Our HoldCo Investment Strategy HoldCo 3 CLO structures in place p totaling ace tota $829mm g $8 9 Returns on alternative Returns on corporate AUM investments liquidity $47mm invested in Cash equivalents, Investment advisory CLO equity, liquid core and core plus and success fees equity, q y, private
Slide 58: Q&A
Q&A CNO Financial Group | Investor Day | December 13, 2012 58
Slide 59: Financial Overview
Financial Overview Fred Crawford – CFO CNO Financial Group | Investor Day | December 13, 2012 59
Slide 60: Fred Crawford – Chief Financial Officer
Fred Crawford – Chief Financial Officer Frederick J. Crawford EVP and Chief Financial Officer Fred Crawford ((49)) was named executive vice p president and chief financial officer for CNO Financial Group, Inc., effective January 23, 2012. Crawford formerly served as executive vice president and head
Slide 61: CNO's Financial Strategy
CNO’s Financial Strategy Grow Earnings & ROE • Investments in distribution and p p product expansion • Diverse margins drive stable growth • Active in-force management Optimize Cash Flows • Balanced mix of protection business with disciplined return hurdles • Maximize value of significant tax assets
Slide 62: Segment Earnings Trend - Stable & Growing
Segment Earnings Trend - Stable & Growing ($ millions)) Segment EBIT Excluding Significant Items* $344.3 $309.4 $322.7 Tailwinds $106.6 $248.8 $100.4 $92.5 • Favorable health benefit ratios $73.3 • Annuity persistency & spreads • Corporate investment results $250.2 • Free cash flow & capital deploym
Slide 63: Diverse Health Underwriting Margins
Diverse Health Underwriting Margins ($ millions) $713 $718 $731 Conditions & Outlook Conditions: 70 9% 70.9% • 1% change g in benefit ratio = $7mm EBIT Bankers Life 69.0% 68.7% • 2010-11 normalized benefit ratio** range 70-73% Medicare Supplement 2013 Outlook: • Premium growth of 2-3% • Benefit rati
Slide 64: Long Term Care – In Force Dynamics & Outlook
Long Term Care – In Force Dynamics & Outlook ($ millions) Health Actively Managing Risk $2,813.5 08 Senior Health transaction ’08 Annuity A it BLC C LTCC Long removed $3.0bn in reserves $9,076.5 $3,770.3 Term Care $4,805.6 Rating actions taken on 75% of the remaining reserves BLC HHC Life $403.7
Slide 65: Management Actions to Defend Yields & Spreads
Management Actions to Defend Yields & Spreads Management Actions • Timely annuity reinsurance (2007) and LTC divestiture (2008) - $6.0 billion of reserves • ALM standards t d d and d lower l turnover t rates t reduce d investable i t bl cashh flows fl • New business pricing and In-force management t
Slide 66: "Low-For-Long" Rates – Reserve Sensitivity
“Low-For-Long” Rates – Reserve Sensitivity 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 - $28
Slide 67: Colonial Penn - Building Long-Term Value
Colonial Penn - Building Long-Term Value ($ millions) Investments Yield Growth Considerations & Outlook $60 $58 $53 $55 • GAAP accounting distorts true value $50 $44 • Developing new markets and products $43 $40 • Pace of investment impacts EBIT $40 In-Force EBIT 9.2% CAGR • In-force I f earnings i
Slide 68: OCB – Optimizing Run-Off Insurance Blocks
OCB – Optimizing Run-Off Insurance Blocks Other A&H $13.2 Earnings Profile & Outlook LTC serves* $466.4 Traditional Interest-Sensitive Life (ISL): Life age GAAP Res $782 1 $782.1 Earnings sensitive to rates and addressing non-guaranteed elements (2013 EBIT range = -$5mm to +$5mm) Annuities Tradition
Slide 69: NOL Tax Assets – Unlocking Economic Value
NOL Tax Assets – Unlocking Economic Value Strategy for Maximizing Tax Asset Values: Growing life earnings is top priority Maximize non-life income while remaining true to core business Explore strategies to utilize capital loss carryforwards Continue to work towards resolving disputed items
Slide 70: Recapitalization & Capital Strategy
Recapitalization & Capital Strategy ($ millions) Successful Recapitalization Key Capital & Liquidity Metrics • Cost of debt down 211 basis points 3Q2012 deployable capital of $150mm • Reduced diluted share count by 12% 358% 361% 332% • Boost to pro pro-forma forma EPS & ROE 309% $347 • Up-sized for
Slide 71: Stable Capital Generation – Free Cash Flow Building
Stable Capital Generation – Free Cash Flow Building ($ millions) Free Cash Flow YTD 9/30: 2012 Full Year Forecast Uses Common Stock Di id d Dividend $13.7 Financing Stock Costs Buybacks $24.0 $180 0 $180.0 Debt Payments $111.7 • $50-$75mm of capital retained to support growth 2013 Guidance: • Statut
Slide 72: Driving Shareholder Value
Driving Shareholder Value Organic ROE Build Additional Potential ROE Catalysts 9% 1.5% (1.0%) • Run-on / Run-off business engineering 7%(1) 1.5% Impacts ROE, BV and “Beta” • Recapitalization “The Sequel” 2015 leverage in the 16% range • Operating effectiveness CBA-supported IRR’s 2012 B Busine
Slide 73: Q&A
Q&A CNO Financial Group | Investor Day | December 13, 2012 73
Slide 74: Concluding Remarks
Concluding g Remarks Ed Bonach - CEO CNO Financial Group | Investor Day | December 13, 2012 74
Slide 75: CNO: Value Proposition
CNO: Value Proposition Uniquely Reinvesting in Positioned Business Business Growth Model O Opportunities t iti Capital Management Generating Stabilized Significant Run-Off Engineering Earnings & Excess Operational Efficiencies Capital Rapidly Growing G Target C it l Capital Market Distribut
Slide 76: Next Steps – Continue to Drive Shareholder Value
Next Steps – Continue to Drive Shareholder Value 2015 Milestones Capitalize on Opportunities Invest $80-$85mm in strategic business initiatives Accelerate run-on and run-off Enhance customer experience and operational efficiency ROE run-rate run rate of 9% Drive to investment grade Opportu
Slide 77: Appendix
Appendix CNO Financial Group | Investor Day | December 13, 2012 77
Slide 78: 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 79: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The table below summarizes the financial impact of significant items on our 2010 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results during 2010 (dollars in
Slide 80: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The table below summarizes the financial impact of significant items on our 2011 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results during 2011 (dollars in
Slide 81: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The table below summarizes the financial impact of significant items on our YTD 3Q11 net operating income. Management believes that identifying the impact of these items enhances the understanding of our YTD 3Q11 operating results (dollars i
Slide 82: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The table below summarizes the financial impact of significant items on our YTD 3Q12 net operating income. Management believes that identifying the impact of these items enhances the understanding of our YTD 3Q12 operating results (dollars i
Slide 83: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The table below summarizes the financial impact of significant items on our twelve months ended 3Q12 net operating income. Management believes that identifying the impact of these items enhances the understanding of our twelve months ended 3
Slide 84: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Management believes that an analysis of earnings before net realized investment gains (losses), (losses) corporate interest interest, loss on extinguishment of debt, fair value changes due to fluctuations in the interest rates used to discou
Slide 85: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Interest-adjusted benefit ratios The interest-adjusted benefit ratio (a non-GAAP measure) is calculated by dividing the product's insurance policy benefits less imputed interest income on the accumulated assets backing the insurance liabilit
Slide 86: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of return before loss on extinguishment of debt, net realized gains or losses, fair value changes due to fluctuations in the interest rates used to discount embedded derivative l
Slide 87: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The calculations of: (i) operating return on equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); and (ii) return on equity, for the twelve months ended Septembe
Slide 88: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of consolidated capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to common shareholders’ equity, is as follows (dollars in millions): 3Q11 4