CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — J.P. Morgan 2013 Insurance Conference
25 slides from CNO Financial's conference presentation, Mar 21, 2013
Slide 1: J.P. Morgan 2013 Insurance Conference
J.P. Morgan 2013 Insurance Conference March 21 21, 2013
Slide 2: CNO Financial Group | J.P. Morgan 2013 Insurance Conference | March 21, 2013
CNO Financial Group | J.P. Morgan 2013 Insurance Conference | March 21, 2013 2
Slide 3: 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 4: 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 A Appendix. di
Slide 5: CNO Fundamentals
CNO Fundamentals Well positioned in the growing and underserved senior and middle iddl iincome marketk t Track record of strong execution Building core value drivers Strong risk management Well capitalized and generating significant excess capital CNO Financial Group | J.P. Morgan 2013 Insuranc
Slide 6: What Differentiates CNO?
What Differentiates CNO? Focus on serving the needs of our middle-income target market, a market that is fast g growing g and underserved Exclusive distribution ‒ Consistent with market focus ‒ We have “pricing” influence ‒ Track record of stable customer base Alignment Distribution Products Serv
Slide 7: Track Record of Execution
Track Record of Execution 88% Return Value To Shareholders Total Return Since YE2009* Invest in Growth 26% 16% Financial Foundation CNO Peer S&P Group Insurance *As of market close on 12/31/12 Reset Business Mix Peers - AFL, AIZ, AMP, GNW, HIG, LNC, MET, PFG, PL, PNX, PRI, PRU, SFG, SYA, TMK, UNM CN
Slide 8: Investment in the Business
Investment in the Business CNO ($ millions)) Core Sales Excluding Bankers Annuities* - 8% Consolidated CAGR Since 2010 Investing in productivity and growth of the agent force $350.0 $313.5 $301 5 $301.5 Expanding E di presence b by adding ddi new llocations ti and geographies Developing and la
Slide 9: Growth in the CNO Franchise
Growth in the CNO Franchise ($ millions) Avg. Liabilities on Core Business Segments Growing; Other CNO Business is Shrinking $16,662.8 $15,481.7 $15 481 7 $16,106.8 $704.0 $714.8 Investing in organic growth $698.0 $2,618.8 opportunities and layering on $2,637.6 new business $2,676.8 ‒ Expanding lo
Slide 10: Segment Earnings Trend - Stable & Growing
Segment Earnings Trend - Stable & Growing ($ millions)) Segment EBIT Excluding Significant Items* $452.0 2012 Tailwinds Favorable health benefit ratios $344.3 $127.1 Annuity persistency & spreads $309.4 Corporate investment results $ $106.6 Free F cashh flow fl and d capital it l $100.4 depl
Slide 11: Loss Recognition & Cash Flow Testing
Loss Recognition & Cash Flow Testing CNO 2012 GAAP Loss Recognition Testing 2012 Statutory Cash Flow Testing gg g Aggregate g margins testing g g remain strong Insurance Company margins consistent with Testing margin Increased in 2012 prior years ↑ - ASU 2010-26 All insurance entities pass A
Slide 12: "Low-For-Long" Rates – Reserve Sensitivity
“Low-For-Long” Rates – Reserve Sensitivity 2012 Expanded New Money Rate (NMR) Stress Test • Moderate Stress: 4.75% NMR held flat for 5 years then recovering • Severe Stress: 50 basis point drop in NMR to 4.25% held flat indefinitely • 3Q assumption change: OCB interest sensitive life reserve charge
Slide 13: Capital Strategy
Capital Strategy ($ millions) Forward Capital Plan Key Capital & Liquidity Metrics Maintain capital cushion to absorb YE2012 deployable capital of ~$150mm $150mm stress-test conditions 358% 367% 332% ‒ Leverage of 20% 309% $423 ‒ Risk-based capital ratio of 350% $347 ‒ Holdco liquidity & investmen
Slide 14: 2012 Capital Generation – Free Cash Flow Building
2012 Capital Generation – Free Cash Flow Building ($ millions) Free Cash Flow 2012 2012 Full Year Uses* Financing Costs $23 1 $23.1 Common Stock Dividends Stock $13.9 Buybacks $180.2 Debt Payments $111 8 $111.8 • $50-$75mm of capital retained to support growth 2013 Guidance: • Statutory dividend ran
Slide 15: CNO: Near Term Goals Lead to Long Term Value
CNO: Near Term Goals Lead to Long Term Value Near Term Objectives 2015 Milestones Grow sales, distribution and Invest $80-$85mm in strategic p oduct po product to o portfolio business initiatives Increase operational Accelerate run-on and run-off effectiveness Enhance customer experience p
Slide 16: Q&A
Q&A CNO Financial Group | J.P. Morgan 2013 Insurance Conference | March 21, 2013 16
Slide 17: Appendix
A Appendix di CNO Financial Group | J.P. Morgan 2013 Insurance Conference | March 21, 2013 17
Slide 18: The right products and the right channels for today's middle-market consumer
CNO: The right products and the right channels for today’s today s middle-market consumer CNO has expertise CNO can access Strong trends are driving across important consumers across iddl k consumers middle-market middle-market products multiple channels • Rising medical costs • Fixed and Fixed-Inde
Slide 19: Product Level Risk Management
Product Level Risk Management Diversified product mix focused on protection needs Basic products that fit with exclusive distribution and meet the basic insurance needs of the middle market Life Insurance Annuities Attractive and more predictable return characteristics - price to unleveraged IRR
Slide 20: 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 21: 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 22: 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 23: 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 2012 net operating income. Management believes that identifying the impact of these items enhances the understanding of our 2012 operating results (dollars in millio
Slide 24: 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 25: 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) Th debt The d bt to t capital it l ratio, ti excluding l di accumulated l t d other th comprehensive h i income i (loss), (l ) diff differs ffrom th the d debt bt
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