Cno Financial Group, Inc. · NYSE:CNO

Cno Financial — Investor Presentation (February 2023)

41 slides from Cno Financial's investor presentation, Feb 28, 2023

  1. Slide 1: Investor Overview February 2023

    CNO Financial Group 1 Investor Overview February 2023 Exhibit 99.1

  2. Slide 2: Important Legal Information

    CNO Financial Group 2 Important Legal Information 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

  3. Slide 3: CNO Financial Group Overview

    CNO Financial Group 3 Focused on serving the protection needs of the fast-growing but underserved middle-income American market CNO Financial Group Overview  Manufactured products include life, fixed annuities, Medicare supplement, supplemental health and limited benefit duration long-term care (LT

  4. Slide 4: What Makes CNO Different

    CNO Financial Group 4 What Makes CNO Different Exclusive Focus on Middle-Income America Our Diverse Distribution & Integrated Approach Health and Wealth Solutions Insurance and Securities Solutions Strong Cash Flow Generation

  5. Slide 5: Well-Positioned in the Attractive Senior Middle Market

    CNO Financial Group 5 ~45% of middle-income households have no life insurance1; ~55% of baby boomers lack financial advisors2 Well-Positioned in the Attractive Senior Middle Market  Extensive experience and understanding of the middle market  Differentiated with our market vs. product focus  Dive

  6. Slide 6: Unique Multi-Channel Operating Model

    CNO Financial Group 6 Leveraging products and brands across channels, completing the important “last mile” of sales and service delivery Unique Multi-Channel Operating Model  Consumer Division ⁃ Strong exclusive agent franchise  Top distributor of health/wealth protection products through ~4,300 e

  7. Slide 7: Evolving to a More Modern Experience

    CNO Financial Group 7 Using sophisticated digital platforms to create customer-centric experiences Evolving to a More Modern Experience Enablers  Robotics Process Automation (RPA)  Business Process Automation (BPA)  Cloud computing  Low code / no code  Artificial intelligence  Agile framework

  8. Slide 8: Highly Diversified Product Mix

    CNO Financial Group 8 Broad & balanced portfolio focused on protection needs Highly Diversified Product Mix Key PointsProduct Offering  Mix of protection and accumulation products to serve varied customer needs  Basic products that meet the insurance needs of the middle market  Attractive and pre

  9. Slide 9: Risk Management via Diversification and Natural Hedges

    CNO Financial Group 9 Relative degree of risk present (before mitigation) within each product Risk Management via Diversification and Natural Hedges Fixed Indexed Annuity Fixed Interest Annuity Trad Life Interest Sensitive Life Med Supp Supp Health LTC Mortality Morbidity Persistency Interest rate E

  10. Slide 10: Strategic Initiatives Successfully Reinvigorating Growth

    CNO Financial Group 10 Strategic Initiatives Successfully Reinvigorating Growth (dollars in millions) $- $50.0 $100.0 $150.0 $200.0 2021 2022 4Q21 4Q22 Life NAP $- $50.0 $100.0 $150.0 $200.0 2021 2022 4Q21 4Q22 Health NAP $- $500.0 $1,000.0 $1,500.0 2021 2022 4Q21 4Q22 Annuity Collected Premiums $-

  11. Slide 11: Debt to Capital and Consolidated RBC Ratio

    CNO Financial Group 11 1 The ratio of the combined capital of the insurance companies to the minimum amount of capital appropriate to support the overall business operations, as determined based on the methodology developed by the National Association of Insurance Commissioners. 2 Excluding accumula

  12. Slide 12: Excess Capital Allocation Strategy

    CNO Financial Group 12  Agent pilots, technology-driven customer experience enhancements  Hybrid distribution  Worksite B2B marketing, lead generation  Share repurchases: $10 million in 4Q22, $180 million in 2022  Dividends: $16 million in 4Q22; $65 million in 2022 Return capital to shareholder

  13. Slide 13: Portfolio Composition: $24 billion of Invested Assets

    CNO Financial Group 13 High quality, stable core returns, continued up-in-quality bias Portfolio Composition $24 billion of Invested Assets Highlights (Fair Value as of 12/31/2022) General Approach  Positioned for stable performance across credit cycles  Focus on quality - margin against adverse d

  14. Slide 14: Institutional Funding Program Proven Track Record

    CNO Financial Group 14 Institutional Funding Program Proven Track Record  $1.65b total FHLB borrowings from inception to 12/31/2022. Longstanding strong relationships with FHLB Chicago, FHLB Indianapolis, and FHLB Pittsburgh.  FHLB program successfully transitioned through CNO ratings upgrades. 

  15. Slide 15: 2023 Outlook

    CNO Financial Group 15 2023 Outlook1 1Applying LDTI, the new FIA operating income methodology, and excluding significant items. Free Cash Flow / Excess Capital Earnings  375% consolidated RBC ratio target  Target leverage of 25.0% - 28.0%  $170M - $200M of excess cash flow to holdco  EPS range o

  16. Slide 16: Environmental, Social and Governance

    CNO Financial Group 16 Environmental Significant progress in 2022; CSR Report published August 2022 Environmental, Social and Governance  Performed second GHG emissions inventory  Funded $167 million in new impact investments, exceeding our goal of $100 million Social Governance  Developed Respon

  17. Slide 17: Resuming Our Growth Momentum

    CNO Financial Group 17 Resuming Our Growth Momentum Turnaround / De-risking Pivot to Growth Pre-2017 2017 to 2019 2020 to 2022 COVID-19 Accelerate Profitable Growth  Optimize customer-centric business alignment  Expand omnichannel delivery model focused on “last-mile” sales and service  Extract p

  18. Slide 18: Why Invest in CNO

    CNO Financial Group 18 Why Invest in CNO Exclusive focus on underserved middle market Favorable demographic tailwinds Diverse and integrated “last mile” virtual and in-person model Sustainable growth initiatives in place Strong balance sheet and solid free cash flow generation

  19. Slide 19: Appendix

    CNO Financial Group 19 Appendix 1 Strong Operational Performance Experienced Management Team Slide 20 The Optavise Solution Slide 21 Cash Flow Profile Slide 22 Broker-Dealer/Registered Investment Advisor Slide 23 Exclusive Agent Counts Slide 24 Building on Strong Track Record of Execution New Money

  20. Slide 20: Experienced Management Team With a Proven Track Record

    CNO Financial Group 20 11-year average tenure; 25-year average service in the insurance sector Experienced Management Team With a Proven Track Record Name Title Years with CNO Years in Insurance Sector Age Gary C. Bhojwani Chief Executive Officer 6 33 55 Paul H. McDonough Chief Financial Officer 3 2

  21. Slide 21: The Optavise Solution: Educate and Protect Year Round

    CNO Financial Group 21 Year-Round ApproachOPTAVISE COMMUNICATIONS Year-round, targeted messaging for the multigenerational workforce. OPTAVISE BENEFITS ADMINISTRATION A multimodule benefits system to enroll employees in the benefits process and provide system of record for employer. OPTAVISE ADVOCAC

  22. Slide 22: Cash Flow Profile

    CNO Financial Group 22 Cash Flow Profile 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2 Cash flows exclude acquisitions, dividend payments, stock repurchases, and financing transactions. (dollars in millions) 4Q21 4Q22 4Q21 4Q22 Net Operating Income1

  23. Slide 23: Broker-Dealer/Registered Investment Advisor

    CNO Financial Group 23 Account values down 9% YoY; $2.6 billion in client assets Broker-Dealer/Registered Investment Advisor 1 Client assets include cash and securities in brokerage, broker/dealer customer account assets custodied directly at fund companies and insurance carriers, and assets under m

  24. Slide 24: Exclusive Agent Counts

    CNO Financial Group 24 Softening macro environment helping recruiting, veteran agent retention strong Exclusive Agent Counts 1 Producing agents represent the monthly average of exclusive agents that have submitted at least one policy in the month. 2 Registered agents are dually licensed as insurance

  25. Slide 25: New Money Rate Walk

    CNO Financial Group 25 Significant NMR increase reflects higher market yields New Money Rate Walk 5.36% 5.96% 0.32% 0.08% 0.20% 0.00%

  26. Slide 26: New Money Summary

    CNO Financial Group 26 Strategically harvesting rising market yields, in the context of up-in-quality strategy New Money Summary 4Q General Account New Money Purchases $ % GAAP YTM Duration IG Corp AAA-A 87.6 15.42% 5.63% 9.4 IG Corp BBB 16.0 2.81% 7.97% 8.5 HY Corp 5.3 0.93% 7.04% 5.1 Municipals 72

  27. Slide 27: Funding Agreement-Backed Notes (FABN) Program

    CNO Financial Group 27 Established in 3Q21 to leverage CNO’s core investment competencies; generating incremental earnings at an attractive return on the underlying capital Funding Agreement-Backed Notes (FABN) Program CNO Global Funding (Trust) Institutional Investors Funding Agreement FABN Cash Ca

  28. Slide 28: Tax Asset Summary as of December 31, 2022

    CNO Financial Group 28 Non-Life NOLs $166 DTAs related to tax strategy $215 Value of NOLs and deferred tax assets (DTAs) related to tax strategy Details  Total estimated economic value of tax assets related to our NOLs and tax strategy of approximately $211 million @ 10% discount rate ($1.81 on a p

  29. Slide 29: Long-Term Care Insurance

    CNO Financial Group 29 New sales (~$25 million annually) focused on short duration products  98% of new sales for policies with 2 years or less in benefits  Average benefit period of 11 months  New business 25% reinsured since 2008 Reserve assumptions informed by historical experience  No morbid

  30. Slide 30: 2018 Transformative LTC Reinsurance Transaction

    CNO Financial Group 30 Divestiture of legacy LTC exposure significantly improves risk profile 2018 Transformative LTC Reinsurance Transaction  In September 2018, Bankers Life entered into an agreement with Wilton Re to cede 100% of Bankers Life legacy (prior to 2003) comprehensive and nursing home

  31. Slide 31: Appendix 2: Financial Exhibits Non-GAAP Financial Measures

    CNO Financial Group 31 Appendix 2: Financial Exhibits Non-GAAP Financial Measures Slides 32-41

  32. Slide 32: Insurance product margin, three months ended June 30, 2022

    CNO Financial Group 32 Insurance product margin Annuity 37.1$ -$ 37.1$ Health 113.4 - 113.4 Life 56.8 - 56.8 Total insurance product margin 207.3 - 207.3 Allocated expenses (152.2) - (152.2) Income from insurance products 55.1 - 55.1 Fee income 3.2 - 3.2 Investment income not allocated to product li

  33. Slide 33: 4Q21 Significant Items

    CNO Financial Group 33 (1) Adjustments arising from our comprehensive annual actuarial review of assumptions. (2) A non-GAAP measure. See pages 37 and 39 for a reconciliation to the corresponding GAAP measure. The table below summarizes the financial impact of significant items on our 4Q21 net opera

  34. Slide 34: Three months ended September 30, 2021

    CNO Financial Group 34 (1) Comprised of $3.0 million from legal and regulatory matters. (2) A non-GAAP measure. See pages 37 and 39 for a reconciliation to the corresponding GAAP measure. Insurance product margin Annuity 52.5$ -$ 52.5$ Health 117.9 - 117.9 Life 53.2 - 53.2 Total insurance product ma

  35. Slide 35: Three months ended June 30, 2021

    CNO Financial Group 35 Insurance product margin Annuity 66.0$ -$ 66.0$ Health 120.9 - 120.9 Life 39.7 - 39.7 Total insurance product margin 226.6 - 226.6 Allocated expenses (141.6) - (141.6) Income from insurance products 85.0 - 85.0 Fee income 6.6 - 6.6 Investment income not allocated to product li

  36. Slide 36: Three months ended March 31, 2021

    CNO Financial Group 36 Insurance product margin Annuity 57.9$ -$ 57.9$ Health 124.7 - 124.7 Life 27.1 - 27.1 Total insurance product margin 209.7 - 209.7 Allocated expenses (141.1) - (141.1) Income from insurance products 68.6 - 68.6 Fee income 7.3 - 7.3 Investment income not allocated to product li

  37. Slide 37: Net operating income definition

    CNO Financial Group 37 (dollars in millions) * Management believes that an analysis of Net income applicable to common stock before: (i) net realized investment gains or losses from sales, impairments and the change in allowance for credit losses, net of related amortization and taxes; (ii) net chan

  38. Slide 38: Information Related to Certain Non-GAAP Financial Measures

    CNO Financial Group 38 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

  39. Slide 39: Net income to net operating income reconciliation

    CNO Financial Group 39 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 amounts) Information Related to Certain Non-GAAP Financial Measures 4Q21 1Q22 2Q22 3Q22 4Q22 Net income appli

  40. Slide 40: Operating return on equity reconciliation

    CNO Financial Group 40 The calculations of: (i) operating return on equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); (ii) operating return, excluding significant item, on equity, excluding accumulated other comprehen

  41. Slide 41: Debt to capital ratio excluding AOCI

    CNO Financial Group 41 Debt to capital ratio, excluding accumulated other comprehensive income (loss) The debt to capital ratio, excluding accumulated other comprehensive income (loss), differs from the debt to capital ratio because accumulated other comprehensive income (loss) has been excluded fro

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