Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q2 2017 Earnings Presentation
40 slides from Cno Financial's earnings presentation, Jul 27, 2017
Slide 1: 2Q17 Financial and operating results
CNO Financial Group | 2017 Investor Day | June 5, 2017 1 2Q17 Financial and operating results for the period ended June 30, 2017 July 27, 2017 Unless otherwise specified, comparisons in this presentation are between 2Q16 and 2Q17. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 2 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 resul
Slide 3: Non-GAAP Measures
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 3 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; book value, excluding accumu
Slide 4: | July 27, 2017
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 4
Slide 5: 2Q17 in Review
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 5 2Q17 in Review Franchise diversity driving consistent and profitable growth − Continue disciplined business approach Strong & stable results − Total collected premiums up 7% − First-year collected premiums up 16% − Annuity acco
Slide 6: 2Q17 Sales and Distribution Results: Bankers Life
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 6 2Q17 Sales and Distribution Results Bankers Life 2 Measured as 100% of new term life and health annualized premiums and 10% of single premium whole life deposits. 3 Includes Medicare Advantage, Medicare supplement, PDP, Dental/Visi
Slide 7: 2Q17 Sales and Distribution Results: Washington National
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 7 Total collected premiums up 1% – First-year collected premiums flat – Collected premiums for supplemental health up 4% Total life and health new annualized premium up 6% – Worksite up 15% – Individual flat Average Producing A
Slide 8: 2Q17 Sales and Distribution Results: Colonial Penn
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 8 Total collected premiums up 4% First-year collected premiums down 8% and new annualized premium down 16% – Remain disciplined and opportunistic with television advertising spend Continue to diversify lead generation away from
Slide 9: 2Q17 Financial Results
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 9 $0.35 $0.45 $0.34 $0.42 Net Operating Income Per Share¹ Net Operating Income Per Share Excluding Significant Items¹ 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2Q16 2Q17 2Q17 Finan
Slide 10: Segment Results
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 10 Segment Results ($ millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Segment Adjusted EBIT Excluding Significant Items1 Segment Highlights 2Q16 3Q16 4Q16 1Q17 2Q17 $88.8 $82.9
Slide 11: Health Margins
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 11 $141 $141 $144 $146 $146 61.6% 59.8% 57.0% 60.6% 60.4% 2Q16 3Q16 4Q16 1Q17 2Q17 Earned Premium Reported Benefit Ratio ($ millions) 1 Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for the corresp
Slide 12: Investment Results
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 12 $8.7 $13.2 $20.3 $3.5 $10.9 $13.6 $1.2 $7.5 $8.4 $5.1 $31.2 $16.0 Investment Results ($ millions) Average Invested Assets and Cash Realized Gains, Losses and Impairments Gross Realized Gains Gross Realized Losses Impairments 2Q17
Slide 13: 2Q17 Capital & Liquidity Highlights
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 13 2Q17 Capital & Liquidity Highlights Strength & stability in key capital measures 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Estimated consolidated risk-based capital of 458%
Slide 14: Wrap Up
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 14 Wrap Up CEO succession on-track Strategic priorities unchanged − Serving the middle-income market − Continued franchise growth and diversification − Maintain business discipline − Reducing our relative long-term care exposure
Slide 15: Questions and Answers
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 15 Questions and Answers
Slide 16: Appendix
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 16 Appendix
Slide 17: Growth Scorecard
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 17 Growth Scorecard ($ millions) 1 Includes third party products sold. See page 22 for a reconciliation to total policies inforce. 2 Measured as 100% of new term life and health annualized premiums and 10% of single premium whole lif
Slide 18: Average Producing Agents
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 18 Average Producing Agents1 1st Yr 2nd Yr 3rd Yr + Total 1st Yr 2nd Yr 3rd Yr + Total 6/30/2017 1,941 503 1,880 4,324 285 91 308 684 3/31/2017 1,994 533 1,877 4,404 280 92 308 680 12/31/2016 2,037 567 1,875 4,479 279 89 308 677 9/30
Slide 19: Active Risk Management of Bankers Life Long-Term Care
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 19 Active Risk Management of Bankers Life Long-Term Care Holistic approach to managing long-term care business Proactive in-force management Since 2006, completed five rounds of actuarially justified rate increases Piloting and i
Slide 20: 2Q17 Holding Company Liquidity
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 20 2Q17 Holding Company Liquidity ($ millions) 2Q17 YTD Cash and Investments Balance - Beginning $313.6 $263.6 Sources Dividends from Insurance Subsidiaries 48.6 177.0 Dividends from Non-insurance Subsidiaries 5.8 5.8 Service and Inv
Slide 21: Tax Asset Summary
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 21 Non- Life(1) $866 Loss Carryforwards Valuation Allowance Tax Asset Summary ($ millions) Loss Carryforwards Details Total estimated economic value of NOLs of $410 million @ 10% discount rate NOLs are expected to offset 100% of
Slide 22: Policies Inforce
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 22 Policies Inforce 2Q16 3Q16 4Q16 1Q17 2Q17 Policies inforce: Bankers Life 1,533,894 1,531,204 1,526,344 1,519,474 1,515,445 Washington National 961,003 959,867 961,689 964,642 964,519 C lonial Penn 851,789 852,305 846,372 853,307 8
Slide 23: 2Q16 Significant Items
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 23 The table below summarizes the financial impact of significant items on our 2Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in
Slide 24: 3Q16 Significant Items
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 24 The table below summarizes the financial impact of significant items on our 3Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in
Slide 25: 4Q16 Significant Items
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 25 The table below summarizes the financial impact of significant items on our 4Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in
Slide 26: 1Q17 Significant Items
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 26 Net Operating Income: Bankers Life $ 89.7 $ 1.7 (1) $ 91.4 Washington National (2) Colonial Penn Long-term care in run-off 0.4 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adjus
Slide 27: 2Q17 Significant Items
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 27 Net Operating Income: Bankers Life $ 112.6 $ (9.4) (1) $ 103.2 Washington National Colonial Penn Long-term care in run-off 1.7 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adjus
Slide 28: Quarterly Earnings
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 28 Quarterly Earnings *Management believes that an analysis of earnings before net realized investment gains (losses), fair value changes in embedded derivative liabilities, fair value changes and amendment related to the agent defer
Slide 29: Non-GAAP Measures Additional Information
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 29 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
Slide 30: Net Income to Net Operating Income Reconciliation
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 30 Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income applicable to common stock to net operating income (and related per-share amounts) is as follows (dollars in millions, except per-share amou
Slide 31: Operating Income and Shares Reconciliation
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 31 2Q16 3Q16 4Q16 1Q17 2Q17 Operating income 63.7$ 64.3$ 84.9$ 59.8$ 78.6$ Weighted average shares outstanding for basic earnings per share 178,323 174,247 173,634 173,431 170,556 Effect of dilutive securities on weighted average sha
Slide 32: Book Value per Diluted Share
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 32 Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised, restricted stock and performance units were vested and convertible securities
Slide 33: Interest-Adjusted Benefit Ratio
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 33 Information Related to Certain Non-GAAP Financial Measures 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
Slide 34: Operating Return Measures
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 34 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before net realized investment gains or losses, fair value changes
Slide 35: Operating Return on Equity Calculations
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 35 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 mea
Slide 36: Operating Earnings and Significant Items Summary
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 36 Information Related to Certain Non-GAAP Financial Measures The following summarizes: (i) operating earnings; (ii) significant items; (iii) operating earnings, excluding significant items; and (iv) net income (dollars in millions):
Slide 37: Pretax Operating Earnings to Net Income
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 37 Information Related to Certain Non-GAAP Financial Measures A reconciliation of pretax operating earnings (a non-GAAP financial measure) to net income is as follows (dollars in millions): 2Q16 3Q16 4Q16 1Q17 2Q17 Pretax operating e
Slide 38: Consolidated Capital Reconciliation
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 38 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 co
Slide 39: Consolidated Capital Reconciliation (Trailing Four Quarter Average)
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 39 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 co
Slide 40: Debt to Capital Ratio Reconciliation
CNO Financial Group | Second Quarter 2017 Earnings | July 27, 2017 40 Information Related to Certain Non-GAAP Financial Measures 2Q16 3Q16 4Q16 1Q17 2Q17 Corporate notes payable 912.0$ 912.5$ 912.9$ 913.4$ 913.9$ Total shareholders' equity 4,456.2 4,493.8 4,486.9 4,606.8 4,779.3 Total capital 5,368.