Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Morgan Stanley Financials Conference 2012
28 slides from Cno Financial's conference presentation, Jun 13, 2012
Slide 1: Morgan Stanley Financials Conference June 13, 2012
Morgan Stanley Financials Conference June 13, 2012 Exhibit 99.1
Slide 2: CNO Financial Group
E 3 CNO FINANCIAL GROUP CNO Financial Group
Slide 3: Forward-Looking Statements
CNO Financial Group 3 Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in these materials relative to markets for CNO Financial’s products and trends in CNO Financial’s operations or financial results
Slide 4: Non-GAAP Measures
CNO Financial Group 4 Non-GAAP Measures This presentation contains financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP). Reconciliations between these non-GAAP measures and the comparable GAAP measures are included in the Appendix. While m
Slide 5: CNO Fundamentals
CNO Financial Group 5 CNO Fundamentals Well positioned in the growing and underserved senior and middle income market Strong risk management Track record of strong execution Building core value drivers Well capitalized and generating significant excess capital
Slide 6: The right products and the right channels for today's middle-market consumer
CNO Financial Group 6 • Fixed and Fixed-Index Life and Annuity Products • Long-Term Care • Medicare Supplement • Whole and Universal life products • Final expense • Supplemental Health CNO can access consumers across multiple channels • With an Agent (Retail) • Bankers Career Force • Washington Nati
Slide 7: We have few competitors and a defensible position
CNO Financial Group 7 AEL AFL AIG Aviva USA DFG Gerber Life GAFRI GNW Guardian HIG ManuLife KCLI LNCMass Mutual MET Mut. Of Omaha NM NYL PFG PL PNX PLFE PRU WNIC SFG TMK UNM BLC CPL CNO PRI SYA Products C us to m er s More Affluent Less Affluent Protection Product Asset Accumulation Relative company
Slide 8: Product Level Risk Management
CNO Financial Group 8 Product Level Risk Management Diversified product mix focused on protection needs Retirement Security Medicare Annuities Supplemental Health Long-Term Care Life Insurance Basic products that fit our exclusive distribution and meet the basic insurance needs of the middle marke
Slide 9: Long Term Care Bankers Life: LTC and STC Sales Mix
CNO Financial Group 9 LTC (LTC and HHC) and STC Sales Mix 19% 29% 33% 36% 41% 48% 81% 71% 67% 64% 59% 52% 2006 2007 2008 2009 2010 2011 STC (Short Term Care) LTC (Long Term Care and Home Health Care) Long Term Care Bankers Life Bankers utilizes exclusive distribution with a focus on middle income
Slide 10: CNO – Track Record of Strong Execution
CNO Financial Group 10 CNO – Track Record of Strong Execution Q4 2008 Separation of Closed Block LTC business Q4 2006 VNB introduced 2007/2008 CIG sales & marketing rightsizing - $6 million annual expense reduction 2008 Excess Chicago space vacated - $5 million annual expense save Q4 2007 Recapture
Slide 11: Growth in the CNO Franchise
CNO Financial Group 11 $12,106.9 $12,765.2 $13,145.0 $2,676.8 $2,637.6 $2,630.0 $704.0 $710.7 $698.0 Growth in the CNO Franchise ($ millions) $16,485.7 Average liabilities on core business segments are increasing, while OCB is shrinking $15,481.7 $16,106.8 2010 2011 1Q2012 $5,511.5 $5,286.1 $5,101.2
Slide 12: CNO's Earnings Engine
CNO Financial Group 12 $50.2 $59.5 $24.3 $24.7 $12.7 $(5.7) $(9.8) $(6.5) $(6.8) $7.4 1Q2011 1Q2012 BLC WN OCB CP Corporate Segment EBIT Excluding Significant Items* CNO ($ millions) * A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. $80.3 $69.7 CNO’s Earn
Slide 13: Statutory Earnings Power and Cash Generation
CNO Financial Group 13 $129.2 $139.8 $128.2 $137.7 $141.7 $20.0 $35.0 $166.0 $209.0 $194.0 $100.2 $229.0 $95.5 $154.1 $154.3 $129.2 $139.8 $128.2 $137.7 $141.7 $20.0 $35.0 $166.0 $209.0 $194.0 $335.7 $346.7 $294.2 $174.8 $149.2 Statutory Earnings Power Inflows to Holding Co Statutory Earnings Power
Slide 14: Excess Capital Position Trending Upward
CNO Financial Group 14 2008 255% 2009 309% 2010 332% 2011 358% 1Q12 360% 2008 $59.0 2009 $146.1 2010 161.1 2011 202.8 1Q12 171.9 Excess Capital Position Trending Upward Consolidated RBC Ratio Liquidity ($ millions) Approximately $50 million in excess of management target at 3/31/12 $72.0 million in
Slide 15: Excess Capital Utilization Opportunities
CNO Financial Group 15 Excess Capital Utilization Opportunities Share Buybacks – Excess capital redeployment biased towards repurchase of stock Debt Prepayments & RBC Build – Voluntary de-leveraging and RBC build now completed Investing in Business for Additional Growth – Expand distribution a
Slide 16: CNO Value Proposition
CNO Financial Group 16 CNO Value Proposition Competitive Advantage Exclusive, growing distribution Target market focus, with growth as Baby Boomers turn 65 Sustainable with barriers to entry Products Diversified product suite focused on protection needs Actively managed inforce block Foc
Slide 17: Questions and Answers
Ei CNO FINANCIAL GROUP Questions and Answers
Slide 18: Appendix
Ei CNO FINANCIAL GROUP Appendix
Slide 19: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 19 The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or
Slide 20: 1Q2012 Significant Items
CNO Financial Group 20 1Q2012 Significant Items CNO ($ millions) The table below summarizes the financial impact of several significant items on our 1Q12 net operating income. Such items are summarized on the following slide. Management believes that identifying the impact of these items enhances th
Slide 21: 1Q2012 Significant Items
CNO Financial Group 21 1Q2012 Significant Items CNO ($ millions) The following summarizes items that management believes are significant in understanding our 1Q2012 results: (1) Pre-tax earnings in the Bankers Life segment included the following items: Favorable reserve developments in the Medicare
Slide 22: 1Q2011 Significant Items
CNO Financial Group 22 1Q2011 Significant Items CNO ($ millions) The table below summarizes the financial impact of several significant items on our 1Q11 net operating income. Such items are summarized on the following slide. Management believes that identifying the impact of these items enhances th
Slide 23: 1Q2011 Significant Items
CNO Financial Group 23 1Q2011 Significant Items CNO ($ millions) The following summarizes items that management believes are significant in understanding our 1Q2011 results: (1) Pre-tax earnings in the Bankers Life segment included the following items: Favorable reserve developments in the Medicare
Slide 24: Quarterly Earnings
CNO Financial Group 24 Quarterly Earnings CNO *Management believes that an analysis of earnings before net realized investment gains (losses), corporate interest, loss on extinguishment of debt, fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabili
Slide 25: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 25 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 amounts): 1Q11 1Q12 Net income applicable to common
Slide 26: Operating earnings measures
CNO Financial Group 26 Operating earnings measures Management believes that an analysis of net income applicable to common stock before loss on extinguishment or modification of debt, net realized gains or losses, fair value changes due to fluctuations in the interest rates used to discount embedded
Slide 27: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 27 Information Related to Certain Non-GAAP Financial Measures A reconciliation of earnings before net realized investment gains (losses), fair value changes in embedded derivative liabilities, loss on extinguishment of debt and taxes to net income for the years ended December 31,
Slide 28: Debt to capital ratio, excluding accumulated other comprehensive income
CNO Financial Group 28 Information Related to Certain Non-GAAP Financial Measures A reconciliation of the debt to capital ratio to debt to capital, excluding AOCI is as follows (dollars in millions) 1Q12 Corporate notes payable 799.3$ Total shareholders' equity 4,683.0 Total capital 5,482.3 Corporat
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