CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Investor Presentation (December 2013)
27 slides from CNO Financial's investor presentation, Dec 18, 2013
Slide 1: 2014 Outlook Call
2014 Outlook Call December 18, 2013
Slide 2: 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 3: 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 measures and the comparable GAAP measures are included in the Appendix. While management believes the
Slide 4: CNO Financial Group | Outlook Call | December 18, 2013
CNO Financial Group | Outlook Call | December 18, 2013 4
Slide 5: CNO Strategy
CNO Strategy Continue to Build Long Term Shareholder Value Build on investment in the business Focus on sustainable profitable growth Increase operating effectiveness Enhance the Customer Experience Tactical deployment of excess capital Accelerate run-on and run-off Serving the needs of
Slide 6: Trends and Market Observations
Trends and Market Observations Continued growth in the underserved middle-income population The middle-income population is unprepared for retirement $21 trillion of retirement assets in motion The Affordable Care Act and insurance marketplaces have expanded opportunities in the individual m
Slide 7: Key Initiatives
Key Initiatives Leveraging Middle Market Focus & Business Model Plan to Invest $45 - $55 million in Key Initiatives in 2014 to Drive Above Industry Growth Rates Investment Breakdown Key Initiatives Customer Agent Growth Experience / Brand and Expansion Awareness Agent productivity Branch and geo
Slide 8: Bankers Life
Bankers Life Update on 4Q Expectations Now at 300* locations Continued strength in life insurance sales 2014 Growth Initiatives Strong Medicare annual open enrollment Sales force automation and new 2014 Outlook CRM tools YTD 2014 Advanced life sales training 3Q2013 Net new locations 19 15
Slide 9: Washington National
Washington National Update on 4Q Expectations PMA recruiting and geographic expansion leading to strong sales 2014 Growth Initiatives Continued strength in supplemental health sales Increase in worksite enrollments Worksite distribution expansion – Private exchange platform – Group underwrit
Slide 10: Colonial Penn
Colonial Penn Update on 4Q Expectations Improved sales Elevated ad spend 2014 Growth Initiatives Launched enhanced bilingual direct mail Patriot program growth 2014 Outlook Lead generation diversification YTD 2014 Web/digital strategy 3Q2013 Growth in sales Flat 6% - 9% Hispanic market
Slide 11: Tracking 4Q Expectations
Tracking 4Q Expectations CNO Core Earnings: - Health benefit ratios and annuity spreads consistent with 3rd quarter results - Colonial Penn 4Q EBIT will reflect a $5 million incremental increase in ad spend - Strategic investments drive sequential expense increase of approximately $5 million Cap
Slide 12: Financial Plan Underpinnings
Financial Plan Underpinnings Investing to Drive Long-Term Growth • Stepped-up investment in growth and platform initiatives with an incremental impact on expenses in 2014 of ~$10 million Reshaping In-Force & Building Economic Value • Value of new business governs the run-on of profitable business wh
Slide 13: Key Earnings Drivers – Health and Annuity
Key Earnings Drivers – Health and Annuity CNO Health Interest Spreads – Annuity, EIA, UL ($ billions) 3Q 2013 2014 EBIT $10.3 $10.3 $10.2 Benefit Ratio Normalized Outlook Sensitivity +/- 1% Bankers Med 70% ~70% range $7mm supp Account Value 2.61% 2.65% 2.70% Bankers LTC * 79% ~79% range $5mm Spread
Slide 14: Capital Targets & Excess Capital Deployment
Capital Targets & Excess Capital Deployment CNO 3Q 2013 2014 Outlook Dialing in metrics that support investment- RBC 392% ~ 400% range grade ratings while taking a tactical approach to deployment ...... Liquidity $292mm ~ $300mm range Leverage 17.3%* ~16% range Share Repurchases v 2014 guidance of $
Slide 15: Leveraging Considerable Tax Assets
Leveraging Considerable Tax Assets CNO ($ millions) 3Q 2013 Loss Carryforwards Assuming no change in IRS position or current business model...... $1,523 GAAP Expectations Life $271 vExpect modest future valuation allowance releases as taxable income stabilizes Cash Flow Non-Life $974 vAnnual cash fl
Slide 16: Driving CNO's Valuation
Driving CNO’s Valuation CNO Quality Operating ROE growth while building book value per share and lowering our cost of Industry Value Map capital...... Quality Operating ROE* Price to Book (Ex AOCI) v Operating at the 8% range with capacity to generate 9% by the end of 2015 into 2016 Regression Line
Slide 17: Closing Remarks
Closing Remarks CNO Consolidated sales growth of 6%-8% in 2014 and 8%-10% in 2015 and 2016 Investing in the back office to support business growth Accelerate run-on and run-off Enhancing the Customer Experience Continue to generate significant capital with disciplined approach to deploymen
Slide 18: Questions and Answers
Questions and Answers CNO Financial Group | Outlook Call | December 18, 2013 18
Slide 19: Appendix
Appendix CNO Financial Group | Outlook Call | December 18, 2013 19
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 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 22: 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 23: 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); (ii) operating return, excluding significant items, on equity,
Slide 24: Information Related to Certain Non-GAAP Financial Measures
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): Twelve months ended 3Q13 Pretax operating earnings (a non-GAAP financial measure) $ 393.8 Income tax (expense) be
Slide 25: 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): 3Q12 4
Slide 26: 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), fair value changes in embedded derivative liabilities, equity in earnings of certain non-strategic investments and earnings attributable to non-c
Slide 27: 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) The debt to capital ratio, excluding accumulated other comprehensive income (loss), differs from the debt to capital ratio because accumulated other comprehensive
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