Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q3 2017 Earnings Presentation
39 slides from Cno Financial's earnings presentation, Oct 26, 2017
Slide 1: 3Q17 Financial and operating results
CNO Financial Group | 2017 Investor Day | June 5, 2017 1 3Q17 Financial and operating results for the period ended September 30, 2017 October 26, 2017 Unless otherwise specified, comparisons in this presentation are between 3Q16 and 3Q17. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 2 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 res
Slide 3: Non-GAAP Measures
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 3 Non-GAAP Measures This presentation contains the following financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP): operating earnings measures; book value, excluding accu
Slide 4: | October 26, 2017
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 4
Slide 5: 3Q17 in Review
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 5 3Q17 in Review Strong growth in earnings, free cash flow and capital – Operating EPS up 22% – Book value per diluted share up 11% Growth scorecard mixed – First year collected premium and new annualized premium down 5% and 10
Slide 6: 3Q17 Sales and Distribution Results Bankers Life
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 6 3Q17 Sales and Distribution Results Bankers Life 2 Measured as 100% of new term life and health annualized premiums and 10% of single premium whole life deposits. 3 Includes Medicare Advantage, Medicare supplement, PDP, Dental/Vi
Slide 7: 3Q17 Sales and Distribution Results Washington National
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 7 $19.0 $19.3 $20.5 $19.7 $18.9 $129.8 $131.0 $138.2 $135.2 $133.6 $14.6 $14.9 $14.4 $12.6 $11.7 First-Year Premium Renewal Premium Medicare Supplement Run-off Premium $164.2 Total collected premiums flat – First-year collected p
Slide 8: 3Q17 Sales and Distribution Results Colonial Penn
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 8 Total collected premiums up 3% – First-year collected premiums down 12% New annualized premium down 13% – Remain disciplined and opportunistic with television advertising spend Continued focus on diversifying sales generati
Slide 9: 3Q17 Financial Results
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 9 $0.37 $0.45 $0.35 $0.44 Net Operating Income Per Share¹ Net Operating Income Per Share Excluding Significant Items¹ 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 3Q16 3Q17 3Q17 Fin
Slide 10: Segment Results
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 10 Segment Results ($ millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Segment Adjusted EBIT Excluding Significant Items1 Segment Highlights 3Q16 4Q16 1Q17 2Q17 3Q17 $82.9 $90
Slide 11: Health Margins
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 11 $141 $144 $146 $146 $147 59.8% 57.0% 60.6% 60.4% 59.0% 3Q16 4Q16 1Q17 2Q17 3Q17 Earned Premium Reported Benefit Ratio ($ millions) 1 Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for the corre
Slide 12: Investment Results
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 12 $13.2 $20.3 $3.5 $10.9 $9.5 $1.2 $7.5 $8.4 $5.1 $4.7 $31.2 $14.2 $43.4 Investment Results ($ millions) Average Invested Assets and Cash Realized Gains, Losses and Impairments Impairments 3Q17 3Q16 4Q16 1Q17 $22,875 $23,736 $23,8
Slide 13: 3Q17 Capital & Liquidity Highlights
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 13 3Q17 Capital & Liquidity Highlights Strength & stability in key capital measures 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Estimated consolidated risk-based capital of 450%
Slide 14: Wrap Up
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 14 Wrap Up Making progress on long-term growth initiatives Remain committed to reducing our relative long-term care exposure Farewell to Ed – 13 ratings upgrades as CEO – Implemented common stock dividend in 2012; five subseq
Slide 15: Questions and Answers
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 15 Questions and Answers
Slide 16: Appendix
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 16 Appendix
Slide 17: Growth Scorecard
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 17 Growth Scorecard ($ millions) 1 Includes third party products sold. See page 21 for a reconciliation to total policies inforce. 2 Measured as 100% of new term life and health annualized premiums and 10% of single premium whole l
Slide 18: Average Producing Agents
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 18 Average Producing Agents1 1st Yr 2nd Yr 3rd Yr + Total 1st Yr 2nd Yr 3rd Yr + Total 9/30/2017 1,887 483 1,873 4,243 287 89 310 686 6/30/2017 1,941 503 1,880 4,324 285 91 308 684 3/31/2017 1,994 533 1,877 4,404 280 92 308 680 12/
Slide 19: 3Q17 Holding Company Liquidity
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 19 3Q17 Holding Company Liquidity ($ millions) 3Q17 YTD Cash and Investments Balance - Beginning $278.2 $263.6 Sources Dividends from Insurance Subsidiaries 109.8 286.8 Dividends from Non-insurance Subsidiaries - 5.8 Service and In
Slide 20: Tax Asset Summary
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 20 Loss Carryforwards Valuation Allowance Non- Life(1) $842 Tax Asset Summary ($ millions) Loss Carryforwards Details Total estimated economic value of NOLs of $400 million @ 10% discount rate (~$2.35 on per share basis) NOLs a
Slide 21: Policies Inforce
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 21 Policies Inforce 3Q16 4Q16 1Q17 2Q17 3Q17 Policies inforce: Bankers Life 1,531,204 1,526,344 1,519,474 1,515,445 1,510,160 Washington National 959,867 961,689 964,642 964,519 963,141 C lonial Penn 852,305 846,372 853,307 849,353
Slide 22: 3Q16 Significant Items
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 22 The table below summarizes the financial impact of significant items on our 3Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars i
Slide 23: 4Q16 Significant Items
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 23 The table below summarizes the financial impact of significant items on our 4Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars i
Slide 24: 1Q17 Significant Items
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 24 Net Operating Income: Bankers Life $ 89.7 $ 1.7 (1) $ 91.4 Washington National (2) Colonial Penn Long-term care in run-off 0.4 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adj
Slide 25: 2Q17 Significant Items
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 25 Net Operating Income: Bankers Life $ 112.6 $ (9.4) (1) $ 103.2 Washington National Colonial Penn Long-term care in run-off 1.7 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adj
Slide 26: 3Q17 Significant Items
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 26 Net Operating Income: Bankers Life $ 106.9 $ - $ 106.9 Washington National Colonial Penn (1) Long-term care in run-off (1.0) - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adjus
Slide 27: Quarterly Earnings
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 27 Quarterly Earnings *Management believes that an analysis of earnings before net realized investment gains (losses), fair value changes in embedded derivative liabilities, fair value changes and amendment related to the agent def
Slide 28: Non-GAAP Measures Information
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 28 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 o
Slide 29: Net Income to Net Operating Income Reconciliation
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 29 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 am
Slide 30: Operating Income and Shares Reconciliation
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 30 3Q16 4Q16 1Q17 2Q17 3Q17 Operating income 64.3$ 84.9$ 59.8$ 78.6$ 76.7$ Weighted average shares outstanding for basic earnings per share 174,247 173,634 173,431 170,556 168,684 Effect of dilutive securities on weighted average s
Slide 31: Book Value per Diluted Share
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 31 Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised, restricted stock and performance units were vested and convertible securitie
Slide 32: Interest-Adjusted Benefit Ratio
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 32 Information Related to Certain Non-GAAP Financial Measures 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 accumulate
Slide 33: Operating Return Measures
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 33 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before net realized investment gains or losses, fair value change
Slide 34: Operating Return on Equity Calculations
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 34 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 m
Slide 35: Operating Earnings and Significant Items Summary
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 35 Information Related to Certain Non-GAAP Financial Measures The following summarizes: (i) operating earnings; (ii) significant items; (iii) operating earnings, excluding significant items; and (iv) net income (dollars in millions
Slide 36: Pretax Operating Earnings Reconciliation
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 36 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): 3Q16 4Q16 1Q17 2Q17 3Q17 Pretax operating
Slide 37: Consolidated Capital Reconciliation
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 37 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
Slide 38: Consolidated Capital Reconciliation, Trailing Four Quarters
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 38 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
Slide 39: Debt to Capital Ratio Reconciliation
CNO Financial Group | Third Quarter 2017 Earnings | October 26, 2017 39 Information Related to Certain Non-GAAP Financial Measures 3Q16 4Q16 1Q17 2Q17 3Q17 Corporate notes payable 912.5$ 912.9$ 913.4$ 913.9$ 914.4$ Total shareholders' equity 4,493.8 4,486.9 4,606.8 4,779.3 4,881.7 Total capital 5,40