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
Morgan Stanley Financials Conference June 13, 2012
Slide 2: CNO Financial Group
ao CNO FINANCIAL GROUP CNO Financial Group
Slide 3: Forward-Looking Statements
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, as well as other sta
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 these non-GAAP measures and the comparable GAAP measures are included in the Appendix. While management believes the
Slide 5: CNO Fundamentals
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 CNO Financial Group 5
Slide 6: The right products and the right channels for today's middle-market consumer
CNO: The right products and the right channels for today’s middle-market consumer CNO has expertise CNO can access Strong trends are driving across important consumers across middle-market consumers middle-market products multiple channels • Rising medical costs • Fixed and Fixed-Index • With an Age
Slide 7: We have few competitors and a defensible position
We have few competitors and a defensible position Relative company size based on total admitted assets as of 12/31/11 More Affluent Mass LNC PNX NM Mutual SFG ManuLife MET HIG KCLI GAFRI AIG NYL DFG PRU Guardian Customers PFG PL UNM SYA Mut. Of Omaha GNW Aviva USA PLFE AEL WNIC BLC AFL CNO Gerber Li
Slide 8: Product Level Risk Management
Product Level Risk Management Diversified product mix focused on protection needs Basic products that fit our exclusive distribution and meet the basic Life Annuities insurance needs of the middle market Insurance Attractive and more predictable return characteristics - price to unleveraged Reti
Slide 9: Bankers Life Long Term Care
Long Term Care Bankers Life Proactive management of risk and profitability resulting in continued stability in our LTC business… Bankers utilizes exclusive distribution with a focus on middle income 65+ target market; lower risk profile – no group business Since 2006, have implemented 4 rounds o
Slide 10: CNO – Track Record of Strong Execution
CNO – Track Record of Strong Execution Q3 2011 Q4 2007 Q4 2008 Q4 2010 Emergence Recapture of Separation of Refinanced from 3 year Colonial Penn Closed Block $650 million cumulative Life Block LTC business of debt loss Q1 2009 Q4 2009 Q4 2009 Q2 2011 Q3 2007 Renegotiated Reinsurance of Renegotiated
Slide 11: Growth in the CNO Franchise
Growth ($ millions) in the CNO Franchise Average liabilities on core business segments are increasing, while OCB is shrinking $16,106.8 $16,485.7 $15,481.7 $710.7 $704.0 $698.0 $2,630.0 $2,637.6 $2,676.8 $12,765.2 $13,145.0 $12,106.9 $5,511.5 $5,286.1 $5,101.2 2010 2011 1Q2012 CNO Financial Group 11
Slide 12: Segment EBIT
Segment EBIT Excluding Significant Items* CNO ($ millions) $80.3 CNO’s Earnings Engine $69.7 $12.7 Growth in in-force EBIT driven by $7.4 $24.7 favorable persistency and insurance $24.3 benefit ratios In-force margin improvement through crediting rate actions, LTC $59.5 $50.2 rate increases, and
Slide 13: Statutory Earnings Power and Cash Generation
Statutory Earnings Power and Cash Generation ($ millions) 2008 2009 2010 2011 LTM 1Q12 $154.1 $154.3 $346.7 $335.7 $95.5 $294.2 $229.0 $209.0** $209.0 $194.0 $194.0 $166.0 $166.0 $100.2 $174.8 $149.2 $35.0 $35.0 $20.0 $20.0 $129.2 $129.2 $139.8 $139.8 $128.2 $128.2 $137.7 $137.7 $141.7 $141.7 Statut
Slide 14: Excess Capital Position Trending Upward
Excess ($ millions) Capital Position Trending Upward RBC and liquidity up even after spending almost $300 million on debt prepayments and share buybacks since 2010 Consolidated RBC Ratio Liquidity 2011 1Q12 2010 358% 360% 2011 332% 202.8 2009 309% 1Q12 2008 350%* 2010 171.9 2009 161.1 255% Managemen
Slide 15: Excess Capital Utilization Opportunities
Excess Capital Utilization Opportunities Share Buybacks – Excess capital redeployment biased 2011 Capital Generation* $500m towards repurchase of stock Allocation Debt Prepayments & RBC Build Retained in Insurance $155m – Voluntary de-leveraging and RBC build Subsidiaries (Growth & RBC) now comp
Slide 16: CNO Value Proposition
CNO Value Proposition Above average growth potential; expected sales growth of 8-12% annually – Percentage of the population 65 years old and older projected to increase by 50% in Growth twenty years Well – On average, over 10,000 Americans will turn 65 each day through 2030 Positioned in Broad
Slide 17: Questions and Answers
E| CNO FINANCIAL GROUP Questions and Answers
Slide 18: Appendix
E| CNO FINANCIAL GROUP Appendix
Slide 19: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes am
Slide 20: 1Q2012 Significant Items CNO
1Q2012 ($ millions) Significant Items CNO 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 the understanding of our
Slide 21: 1Q2012 Significant Items CNO
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 supplement and long-ter
Slide 22: 1Q2011 Significant Items CNO
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 the understanding of our
Slide 23: 1Q2011 Significant Items CNO
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 supplement and long-ter
Slide 24: Quarterly Earnings CNO
Quarterly Earnings CNO ($ millions) 1Q11 1Q12 Bankers Life $ 62.2 $ 70.5 Washington National 24.3 24.7 Colonial Penn (5.7) (9.8) Other CNO Business 7.4 (2.3) Corporate operations, excluding interest expense (0.5) (1.8) Total EBIT* 87.7 81.3 Corporate interest expense (20.6) (17.5) Income before net
Slide 25: Information Related to Certain Non-GAAP Financial Measures
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 stock $ 45.4 $ 59.1 Ne
Slide 26: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures 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 inte
Slide 27: Information Related to Certain Non-GAAP Financial Measures
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, 2011 and 2010 is as fo
Slide 28: 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) This non-GAAP financial measure differs from the debt to capital ratio because accumulated other comprehensive (income) loss has been excluded from the value of c
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