Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (March 2021)
39 slides from Cno Financial's investor presentation, Mar 10, 2021
Slide 1: Investor Overview March 2021
Investor Overview March 2021 Exhibit 99.1
Slide 2: Important Legal Information
CNO Financial Group | Investor Overview | March 2021 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 operati
Slide 3: CNO Financial Group Overview
CNO Financial Group | Investor Overview | March 2021 3 Fixed index annuities 39% Fixed interest annuities 12% Other annuities 3% Long-term care 14% Supplemental health 16% Medicare supplement 1% Interest sensitive life 5% Traditional life 10% Annuities 32% Life 23% LTC 7% Med Supp 20% Supp Health 18
Slide 4: What Makes CNO Different
CNO Financial Group | Investor Overview | March 2021 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
Slide 5: Well-Positioned in the Attractive Senior Middle Market
CNO Financial Group | Investor Overview | March 2021 5 Well-Positioned in the Attractive Senior Middle Market Extensive experience and understanding of the middle market Differentiated with our market vs. product focus Diversification of products and distribution provides sustainable competiti
Slide 6: Highly Diversified Product Mix
CNO Financial Group | Investor Overview | March 2021 6 Highly Diversified Product Mix Mix of protection and accumulation products to serve varied customer needs Basic products that meet the insurance needs of the middle market Attractive and predictable return characteristics Low risk long-t
Slide 7: Risk Management via Diversification and Natural Hedges
CNO Financial Group | Investor Overview | March 2021 7 Fixed Indexed Annuity Fixed Interest Annuity Trad Life Interest Sensitive Life Med Supp Supp Health LTC Mortality Morbidity Persistency Interest rate Equity Risk Management via Diversification and Natural Hedges Relative degree of risk present (
Slide 8: Unique Multi-Channel Operating Model
CNO Financial Group | Investor Overview | March 2021 8 Unique Multi-Channel Operating Model Consumer Division – Strong exclusive agent franchise • Top distributor of health/wealth protection products through ~5,000 exclusive producing agents and financial representatives • More than 260 locations
Slide 9: Strategic Initiatives Successfully Reinvigorating Growth
CNO Financial Group | Investor Overview | March 2021 9 Strategic Initiatives Successfully Reinvigorating Growth; Momentum Sidelined Temporarily by COVID (dollars in millions) $- $50.0 $100.0 $150.0 $200.0 2019 2020 4Q19 4Q20 Life NAP $- $50.0 $100.0 $150.0 $200.0 2019 2020 4Q19 4Q20 Health NAP $- $5
Slide 10: Capital and Liquidity Overview
CNO Financial Group | Investor Overview | March 2021 10 Capital and Liquidity Overview 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 Natio
Slide 11: Cash Flow Profile
CNO Financial Group | Investor Overview | March 2021 11 Cash Flow Profile Strong free cash flow generation and conversion (dollars in millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2 Cash flows exclude capital contributions to insurance subsi
Slide 12: Excess Capital Allocation Strategy
CNO Financial Group | Investor Overview | March 2021 12 Excess Capital Allocation Strategy Disciplined and opportunistic approach to maximize shareholder value Return capital to shareholders • $100 million in share repurchases in 4Q20; $263 million FY20 • Continued capacity to repurchase shares as c
Slide 13: Portfolio Composition
CNO Financial Group | Investor Overview | March 2021 13 IG Corporates, 50.6% Non-Agency RMBS, 8.0% Mortgage Loans, 5.2% HY Corporates, 3.1% CMBS, 7.7% Municipals, 9.7% ABS, 3.9% Govts/Agency, 1.4% CLO, 1.7% Equities, 0.6% Other Invested Assets, 2.1% Alternatives, 2.1% Policy Loans, 0.4% Cash, 3.6% P
Slide 14: 2021 Outlook
CNO Financial Group | Investor Overview | March 2021 14 2021 Outlook Base Case1: Sales • Continued positive momentum Earnings • Headwinds • COVID-related • Diminished favorable impact from deferral of healthcare • Net mortality/morbidity impact modestly favorable in 1H21; unfavorable in 2H21; neutra
Slide 15: DirectPath Transaction
CNO Financial Group | Investor Overview | March 2021 15 DirectPath Transaction Acquisition enhances Worksite Division growth outlook (as of 12/31/2020) Strategic RationaleDirectPath Description • DirectPath is a leading national provider of year- round, technology-driven employee benefits management
Slide 16: CNO Ventures
CNO Financial Group | Investor Overview | March 2021 16 CNO Ventures Minority stakes with strong growth potential, strategic proximity to CNO Representative Portfolio Companies • Strong standalone merits • Clear vision, strong management • Access to capital, realistic valuation • Leveraging balance
Slide 17: Delivering On Our Commitments
CNO Financial Group | Investor Overview | March 2021 17 Delivering On Our Commitments Turnaround / De-risking Pivot to Growth Optimize Long-term Value Pre 2017 2017 - 2019 2020 - 2021 Post COVID • Reinsured life block (2009) • Recapitalized company (2012) • Initiated dividend (2012) • Sold Legacy Li
Slide 18: Appendix
CNO Financial Group | Investor Overview | March 2021 18 Appendix 1 Strong Operational Performance • Experienced Management Team Slide 19 • Exclusive Agent Counts Slide 20 • Broker-Dealer/Registered Investment Advisor Slide 21 Building on Strong Track Record of Execution • Portfolio Overview Slides 2
Slide 19: Experienced Management Team With a Proven Track Record
CNO Financial Group | Investor Overview | March 2021 19 Experienced Management Team With a Proven Track Record 10-year average tenure; 24-year average service in the insurance sector Name Title Years with CNO Years in Insurance Sector Age Gary C. Bhojwani Chief Executive Officer 4 31 53 Paul H. McDo
Slide 20: Exclusive Agent Counts
CNO Financial Group | Investor Overview | March 2021 20 2019 % Change Consumer 4Q 1Q 2Q 3Q 4Q Q/Q Producing Field Agents 1,3 4,709 4,531 4,066 4,448 4,539 -4% Producing Tele-Sales Agents 1,3 211 238 237 239 257 22% Total Producing Agents 1,3 4,920 4,769 4,303 4,687 4,796 -3% Financial Representative
Slide 21: Broker-Dealer/Registered Investment Advisor
CNO Financial Group | Investor Overview | March 2021 21 Broker-Dealer/Registered Investment Advisor 1 Client assets include cash and securities in brokerage and managed advisory accounts. Net new client assets includes total inflows of cash and securities into brokerage and managed advisory accounts
Slide 22: Portfolio Overview – Sector Breakdown
CNO Financial Group | Investor Overview | March 2021 22 Positioning allows flexibility for opportunistic approach to changing conditions Portfolio Overview – Sector Breakdown Sector Book Value Market Value Unrealized Gain Loss Portfolio% Average NAIC Over|Underweight Airlines 42.3 45.8 3.5 0.17% 1.5
Slide 23: Portfolio Overview: CLO Debt
CNO Financial Group | Investor Overview | March 2021 23 Portfolio Overview: CLO Debt Key Portfolio Metrics Cumulative loss scenarios versus Break Points 100% AAA-A Significant cushion against stress scenarios Ratings Composition AAA 11.8% AA+ 2.2% AA 52.3% A 31.5% A- 2.2% AAA AA A Credit Support Por
Slide 24: Portfolio Overview: Commercial Mortgage Loans
CNO Financial Group | Investor Overview | March 2021 24 Apartment 31.1% Industrial 19.3% Offi ce Building 17.8% Other commercial 12.0% Reta il 19.9% Portfolio Overview: Commercial Mortgage Loans Key Portfolio Facts Portfolio Geography Underlying Property Type Ratings Composition $1.3 billion of net
Slide 25: Portfolio Overview: CMBS
CNO Financial Group | Investor Overview | March 2021 25 Hotels 9.6% Retail 13.5% Offi ce 31.1% Multi family 24.5% Industrial 9.8% Mixed Us e 11.4% Portfolio Overview: CMBS Key Portfolio Facts Underlying Property Type SASB versus Conduit $2.0 billion of net invested assets 82.0% Rated AAA-A 59% Weigh
Slide 26: New Money Summary
CNO Financial Group | Investor Overview | March 2021 26 New Money Summary Traditional, high quality fixed income investments during fourth quarter 94% Investment Grade Allocation Fourth Quarter Investments Allocation $ Allocation% Yield Average Rating Average Duration IG Corporates 452 50.9% 3.55% B
Slide 27: Tax Asset Summary
CNO Financial Group | Investor Overview | March 2021 27 Non-life NOLs $339 DTAs related to tax strategy $106 Value of NOLs and deferred tax assets (DTAs) related to tax strategy Details • Total estimated economic value of NOLs and DTAs related to tax strategy of approximately $380 million @ 10% disc
Slide 28: Transformative LTC Reinsurance Transaction
CNO Financial Group | Investor Overview | March 2021 28 2018 Transformative LTC Reinsurance Transaction Divestiture of legacy LTC exposure significantly improves risk profile Fixed Annuities 49% Health 14% Life 13% LTC 24% In September 2018, Bankers Life entered into an agreement with Wilton Re to
Slide 29: Retained Long-Term Care Insurance
CNO Financial Group | Investor Overview | March 2021 29 New sales (~$25 million annually) focused on short duration products – 98% of new sales for policies with 2 years or less in benefits – Average benefit period of 11 months – New business 25% reinsured since 2008 Reserve assumptions informed
Slide 30: Appendix 2: Financial Exhibits
CNO Financial Group | Investor Overview | March 2021 30 Appendix 2: Financial Exhibits • Non-GAAP Financial Measures Slides 31-39
Slide 31: 4Q20 Significant Items
CNO Financial Group | Investor Overview | March 2021 31 The table below summarizes the financial impact of significant items on our 4Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q20 Significant Items (d
Slide 32: 2Q20 Significant Items
CNO Financial Group | Investor Overview | March 2021 32 The table below summarizes the financial impact of significant items on our 2Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 2Q20 Significant Items (d
Slide 33: 2Q20 Significant Items (Continued)
CNO Financial Group | Investor Overview | March 2021 33 2Q20 Significant Items (Continued from the previous page) (1) Given our expectation that interest rates will remain low for the long-term, we performed an actuarial unlocking exercise in the second quarter of 2020 to reflect our assumption that
Slide 34: 4Q19 Significant Items
CNO Financial Group | Investor Overview | March 2021 34 The table below summarizes the financial impact of significant items on our 4Q19 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q19 Significant Items (d
Slide 35: Quarterly Earnings
CNO Financial Group | Investor Overview | March 2021 35 Quarterly Earnings (dollars in millions) 4Q19 1Q20 2Q20 3Q20 4Q20 Insurance product margin Annuity 60.5$ 59.5$ 123.8$ 45.3$ 68.1$ Health 93.0 86.9 95.5 152.2 125.2 Life 46.7 44.3 36.1 47.3 37.3 Total insurance product margin 200.2 190.7 255.4 2
Slide 36: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | March 2021 36 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, financ
Slide 37: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | March 2021 37 Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income (loss) applicable to common stock to net operating income (and related per-share amounts) is as follows: (dollars in millions, except per-share amounts) 4
Slide 38: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | March 2021 38 Information Related to Certain Non-GAAP Financial Measures A reconciliation of operating income and shares used to calculate basic and diluted operating earnings per share is as follows: (dollars in millions, except per-share amounts, and share
Slide 39: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | March 2021 39 Information Related to Certain Non-GAAP Financial Measures 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
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