Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q1 2018 Earnings Presentation
36 slides from Cno Financial's earnings presentation, Apr 26, 2018
Slide 1: 1Q18 Financial and operating results
CNO Financial Group | 2017 Investor Day | June 5, 2017 1 1Q18 Financial and operating results for the period ended March 31, 2018 April 26, 2018 Unless otherwise specified, comparisons in this presentation are between 1Q17 and 1Q18. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 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 resul
Slide 3: Non-GAAP Measures
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 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 accumu
Slide 4: | April 26, 2018
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 4
Slide 5: Quarter in Review
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 5 Quarter in Review Strategic initiatives advancing – Moving several efforts from pilot to scale Solid earnings results and continued financial strength – Franchise diversity driving consistent and profitable growth – Operating E
Slide 6: Segment Update
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 6 Segment Update – Total collected premiums down 2% – Annuity account values increased 4% – Life and health NAP down 8% and 18%, respectively – Continued growth in BD/RIA customer assets – Fee revenue1 up 18% – Total average producin
Slide 7: Financial Results
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 7 $0.34 $0.44 $0.35 $0.43 Net Operating Income Per Share¹ Net Operating Income Per Share Excluding Significant Items¹ 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 1Q17 1Q18 Financial
Slide 8: Segment Results
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 8 Segment Results ($ 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 1Q17 2Q17 3Q17 4Q17 1Q18 $91.4 $103.2
Slide 9: Health Margins
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 9 $146 $146 $147 $149 $151 60.6% 60.4% 59.0% 56.6% 54.4% 1Q17 2Q17 3Q17 4Q17 1Q18 Earned Premium Reported Benefit Ratio ($ millions) 1 Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for the correspo
Slide 10: Priorities & Opportunities
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 10 Priorities & Opportunities Implementation and execution on strategic initiatives Reducing long-term care exposure Committed to effective capital deployment
Slide 11: Questions and Answers
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 11 Questions and Answers
Slide 12: Appendix
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 12 Appendix
Slide 13: Growth Scorecard
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 13 Growth Scorecard ($ millions) 1 Includes third party products sold. See page 18 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 lif
Slide 14: Investment Results
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 14 Investment Results ($ millions) Average Invested Assets and Cash $23,864 $23,982 $24,286 $24,580 $24,642 $312.0 $322.4 $325.9 $325.1 $329.1 1Q17 2Q17 3Q17 4Q17 1Q18 Net Investment Income 1 Earned Yield excludes assets held in our
Slide 15: Average Producing Agents
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 15 Average Producing Agents1 1st Yr 2nd Yr 3rd Yr + Total 1st Yr 2nd Yr 3rd Yr + Total 3/31/2018 1,808 453 1,847 4,108 285 85 316 686 12/31/2017 1,845 463 1,863 4,171 288 85 314 687 9/30/2017 1,887 483 1,873 4,243 287 89 310 686 6/30
Slide 16: 1Q18 Holding Company Liquidity
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 16 1Q18 Holding Company Liquidity ($ millions) Cash and Investments Balance - December 31, 2017 $396.6 Sources Dividends from Insurance Subsidiaries 20.0 Management Fees 26.7 Surplus Debenture Interest 12.0 Earnings on Corporate Inve
Slide 17: Tax Asset Summary
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 17 Loss Carryforwards Valuation Allowance Non- Life(1) $484 Tax Asset Summary ($ millions) Loss Carryforwards Details Total estimated economic value of NOLs of $265 million @ 10% discount rate (~$1.57 on per share basis) NOLs are
Slide 18: Policies Inforce
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 18 Policies Inforce 1Q17 2Q17 3Q17 4Q17 1Q18 Policies inforce: Bankers Life 1,519,474 1,515,445 1,510,160 1,500,573 1,485,235 Washington National 964,642 964,519 963,141 964,138 969,525 Colonial Penn 853,307 849,353 845,135 840,979 8
Slide 19: Net Operating Income: 1Q17
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 19 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 Adjus
Slide 20: Net Operating Income: 2Q17
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 20 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 Adjus
Slide 21: Net Operating Income: 3Q17
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 21 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 Adjuste
Slide 22: Net Operating Income: 4Q17
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 22 Net Operating Income: Bankers Life $ 109.7 $ (10.8) (1) $ 98.9 Washington National (1) Colonial Penn Long-term care in run-off 0.6 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense A
Slide 23: Net Operating Income: 1Q18
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 23 Net Operating Income: Bankers Life $ 89.5 $ (2.3) (1) $ 87.2 Washington National Colonial Penn (2) Long-term care in run-off - - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adjus
Slide 24: Quarterly Earnings
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 24 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 related to the agent deferred compensati
Slide 25: Additional information on non-GAAP measures
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 25 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
Slide 26: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 26 Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income(loss) applicable to common stock to net operating income (and related per-share amounts) is as follows (dollars in millions, except per-shar
Slide 27: Operating income and per-share reconciliation
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 27 1Q17 2Q17 3Q17 4Q17 (a) 1Q18 Operating income 59.8$ 78.6$ 76.7$ 85.8$ 73.9$ Weighted average shares outstanding for basic earnings per share 173,431 170,556 168,684 167,428 167,060 Effect of dilutive securities on weighted average
Slide 28: Book value per diluted share
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 28 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 securities
Slide 29: Interest-adjusted benefit ratio
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 29 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 accumulated
Slide 30: Operating return measures
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 30 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 changes
Slide 31: Operating return on equity calculations
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 31 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 mea
Slide 32: Operating earnings and significant items
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 32 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(loss) (dollars in mill
Slide 33: Pretax operating earnings reconciliation
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 33 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): 1Q17 2Q17 3Q17 4Q17 1Q18 Pretax operating e
Slide 34: Consolidated capital reconciliation
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 34 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 co
Slide 35: Consolidated capital reconciliation, trailing average
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 35 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 co
Slide 36: Debt to capital ratio
CNO Financial Group | First Quarter 2018 Earnings | April 26, 2018 36 Information Related to Certain Non-GAAP Financial Measures 1Q17 2Q17 3Q17 4Q17 1Q18 Corporate notes payable 913.4$ 913.9$ 914.4$ 914.6$ 915.1$ Total shareholders' equity 4,606.8 4,779.3 4,881.7 4,847.5 4,617.2 Total capital 5,520.