Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (March 2016)
38 slides from Cno Financial's investor presentation, Mar 30, 2016
Slide 1: Company Overview March 2016
Exhibit 99.1 C O iompany verv ew March 2016
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 GAAP d th bl GAAP i l d d i th A dinon- measures an e compara e measures are nc u e n e ppen x. While manageme
Slide 4: CNO Financial Group | Company Overview | March 2016 4
CNO Financial Group | Company Overview | March 2016 4
Slide 5: CNO Financial Group | Company Overview | March 2016 5
CNO Financial Group | Company Overview | March 2016 5
Slide 6: 2015 Milestones
2015 Milestones Established in 2013 2015 Milestones 2013-2015 Result Invest $80-$85mm in strategic business initiatives Accelerate run-on and run-off Invested ~$100mm Sold/Reinsured ~$4 billion in run- Enhance customer experience d i l ffi i off business; continued to grow core franchise
Slide 7: CNO Business Segment Strategy
CNO Business Segment Strategy Business Consumer Points of Product Design Each business segment uniquely reaches the middle market Segment Value Proposition Differentiation (Internal, Between Brands) Strategy Provider of affordable, high-quality life and health insurance to middle- income Americans n
Slide 8: 8* Including third party policies in-force sold by Bankers Life agents.
CNO Financial Group | Company Overview | March 2016 8* Including third party policies in-force sold by Bankers Life agents.
Slide 9: 2015 Year in Review
2015 Year in Review Mixed sales results; continued to grow the franchise − Collected premiums up 1%; policies issued up 3%; 3rd party fee income up 14% Strong performance at Colonial Penn resulting from successful execution and investments in our direct to consumer business − NAP up 15% and coll
Slide 10: 4Q Consolidated Financial Highlights
4Q Consolidated Financial Highlights Earnings Remain Strong ‒ Operating earnings per diluted share* of $0.52; $0.38 excluding significant items ‒ Operating ROE* of 9.2%; 8.8% excluding significant items ‒ Health benefit ratios in-line with expectations ‒ Favorable prepayment income in the quarterF
Slide 11: Segment Earnings
($ millions)Segment Earnings 4Q15 EarningsSegment EBIT Excluding Significant Items* $30.2 $29 1 $31.3 $118.7 $106.5 $114.7 $106.6 $122.2 Bankers Life results reflect incremental LTC FLR build in 4Q15 and favorable LTC claims experience in 4Q14 $31.5 . $30.6 laim experienc Q1 Washington National
Slide 12: Health Margins 4Q15 Highlights & Outlook
($ millions)Health Margins 4Q15 Highlights & Outlook Bankers Life Medicare Supplement Medicare supplement benefit ratio of 70 8% reflects $193 $193 $193 $193 $192 70 0% 68 7% 71.5% 70.8% . slightly higher claims experience, total year results of 69.6% in-line with expectations 2016 Outlook: Bene
Slide 13: Investment Results
Investment Results ($ millions) $ Gross Realized Gains Average Invested Assets and Cash Realized Gains, Losses and Impairments $21,852 $21,854 $21,956 $22,042 22,219 $305.4 $300.1 $302.1 $298.2 $303.2 Net Investment $18.3 Gross Realized Losses Impairments $66.8 $42.7 $51.0 Income $21 3 $30.3 $48.5 $
Slide 14: Bankers Life LTC Critical Points of Differentiation
Bankers Life LTC Critical Points of Differentiation Target Market Middle-market and older issue/attained age drives reduced tail risk New Business Significant claims data on older ages supports reliable studies and estimates Over 75% of new business is “short duration” (benefit period ≤ 1 year
Slide 15: Bankers Life LTC Strategic Focus
Bankers Life LTC Strategic Focus Short Range (1-2 yrs) Longer Range (3-6 yrs) Continued transparency on• performance and risk • Pursue rate actions if adverse experience develops • Reduce our relative economic exposure to LTC by ~50% through natural run-off and run-on as well as opportunistic reinsu
Slide 16: 2016 Priorities
2016 Priorities Re-energize growth in Bankers Life and Washington National Roll out of wholly owned Broker/Dealer and Registered Investment Advisor Transform and leverage data Reduce LTC exposure Corporate Development / M&A CNO Financial Group | Company Overview | March 2016 16
Slide 17: Appendix
Appendix CNO Financial Group | Company Overview | March 2016 17
Slide 18: Energy Sector Overview December 2015
Energy Sector Overview December 31 2015 , 18%7% 4% 1% $1.6 billion exposure is reasonably calibrated to enterprise capital, is highly diversified, and is liquid/transparent O 60 i di id l dit /i (73 i I d )A or Better BBB BB B − ver n v ua cre s ssuers n n ex − Net unrealized loss of ~$100 million
Slide 19: LTC - Margin & Sensitivity Testing
LTC - Margin & Sensitivity Testing Testing Results Limited benefit structure reduces volatility and overall tail risk Margin of ~$180mm or 4%, up from ~$100mm Run-on / Run-off : +$30mm, including FLR accrual Net experience related: +$60mm New money rates: $(10)mm Experience Assumptions 1-4 y
Slide 20: New Money Investment Rate Assumptions
New Money Investment Rate Assumptions Assumption Change: NMR’s reflect year- New Money Rates (NMR) AssumptionsLTC New Money Rate Scenarios end market conditions for 2015 with new money rate increases projected in 2014 largely flattened and pushed out one year LTC Margin Sensitivity: Moderate str
Slide 21: Producing Agent Counts
Producing Agent Counts 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 12/31/2015 2,051 584 1,927 4,562 4,565 410 127 367 904 899 Bankers Life (1) Washington National (2) 9/30/2015 2,077 601 1,871 4,549 4,693 411 115 365 891 892 6/30/2015 2,484 606 1,891 4,981 4,939
Slide 22: 4Q14 Significant Items
f f f Q201 4Q14 Significant Items Three months ended December 31, 2014 E l di The table below summarizes the inancial impact o the signi icant items on our 4 4 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (do
Slide 23: 1Q15 Significant Items
f f f 1Q201 1Q15 Significant Items The table below summarizes the inancial impact o the signi icant item on our 5 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended March 3
Slide 24: 2Q15 Significant Items
f f f 2Q201 2Q15 Significant Items The table below summarizes the inancial impact o the signi icant item on our 5 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended June 30
Slide 25: 3Q15 Significant Items
f f f 3Q201 3Q15 Significant Items The table below summarizes the inancial impact o the signi icant item on our 5 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended Septemb
Slide 26: 4Q15 Significant Items
f f f Q201 4Q15 Significant Items The table below summarizes the inancial impact o the signi icant item on our 4 5 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Three months ended Decemb
Slide 27: Quarterly Earnings
Quarterly Earnings 4Q14 1Q15 2Q15 3Q15 4Q15 Bankers Life 103.5$ 82.2$ 86.4$ 79.8$ 121.2$ Washington National 20 2 28 5 20 1 30 6 32 3 ($ millions) . . . . . Colonial Penn 2.8 (5.9) 4.2 0.6 6.7 EBIT from business segments continuing after the CLIC sale 126.5 104.8 110.7 111.0 160.2 Corporate operatio
Slide 28: 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 29: 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): 4Q14 1Q15 2Q15 3Q15 4Q15 Net income applicable to common stock 8
Slide 30: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of operating income and shares used to calculate basic and diluted operating earnings per share is as follows (dollars in millions, except per-share amounts, and shares in thousands): 4Q14 1Q15 2Q15 3Q15 4Q15 Operating incom
Slide 31: Information Related to Certain Non-GAAP Financial Measures
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 assets backing the insurance liabilities by insurance policy income. I
Slide 32: 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 net income applicable to common stock before the net loss on sale of CLIC and gain (loss) on reinsurance transactions, the earnings of CLIC prior to being sold, net realized g
Slide 33: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures Th l l ti f (i) ti t it l di l t d th h i i (l ) d te ca cu a ons o : (i opera ng re urn on equ y, exc u ng accumu a e o er compre ens ve ncome oss an ne operating loss carryforwards (a non-GAAP financial measure); (ii) operating return, exc
Slide 34: Information Related to Certain Non-GAAP Financial Measures
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): Operating Operating earnings, earnings, excluding Net excluding signi
Slide 35: 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): 4Q14 1Q15 2Q15 3Q15 4Q15 Twelve months ended Pretax operating earnings (a non-GAAP financial measure) 427.4$ 428.
Slide 36: 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): 1Q13 2
Slide 37: 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): 4Q14 1
Slide 38: 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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