CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Q1 2017 Earnings Presentation
42 slides from CNO Financial's earnings presentation, Apr 27, 2017
Slide 1: 1Q17 Financial and operating results
1Q17 Financial and operating results for the period ended March 31, 2017 April 27, 2017 Unless otherwise specified, comparisons in this presentation are between 1Q16 and 1Q17. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | First Quarter 2017 Earnings | April 27, 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 resul
Slide 3: Non-GAAP Measures
CNO Financial Group | First Quarter 2017 Earnings | April 27, 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 accumu
Slide 4: | April 27, 2017
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 4
Slide 5: 1Q17 in Review
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 5 1Q17 in Review Diversity of the franchise driving growth − Increases in most key metrics demonstrate the strength of our business model Solid results − Total collected premiums up 5% − Operating EPS increased 26% − Strong cash
Slide 6: Growth Scorecard
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 6 Growth Scorecard ($ millions) 1 Includes third party products sold. See the Appendix 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
Slide 7: 1Q17 Sales and Distribution Results: Bankers Life
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 7 $294.5 $270.4 $304.8 $342.1 $311.1 $366.2 $357.8 $361.1 $369.5 $376.7 $660.7 $628.2 $665.9 $711.6 $687.8 First Year Premium Renewal Premium 1Q17 Sales and Distribution Results Bankers Life 3 Measured as 100% of new term life and he
Slide 8: 1Q17 Sales and Distribution Results: Washington National
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 8 $20.1 $19.8 $19.0 $19.3 $20.5 $129.0 $130.3 $129.8 $131.0 $138.2 $16.4 $15.1 $14.6 $14.9 $14.4 $165.5 $165.2 $163.4 $165.2 $173.1 First Year Premium Renewal Premium Medicare Supplement Run-off Premium Total collected premiums up
Slide 9: 1Q17 Sales and Distribution Results: Colonial Penn
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 9 $14.0 $13.8 $13.8 $13.2 $13.7 $56.1 $55.8 $56.9 $56.6 $60.8 $70.1 $69.6 $70.7 $69.8 $74.5 First Year Premium Renewal Premium Total collected premiums up 6% due to steady sales growth and persistency – First year collected premium
Slide 10: 1Q17 Financial Results
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 10 $0.27 $0.34 $0.26 $0.35 Net Operating Income Per Share¹ Net Operating Income Per Share Excluding Significant Items¹ 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 1Q16 1Q17 1Q17 Fina
Slide 11: Segment Results
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 11 Segment Results ($ millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Segment Adjusted EBIT Excluding Significant Items1 Bankers Life results reflect higher Annuity, LTC and
Slide 12: Health Margins
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 12 $139 $141 $141 $144 $146 57.7% 61.6% 59.8% 57.0% 60.6% 1Q16 2Q16 3Q16 4Q16 1Q17 Earned Premium Reported Benefit Ratio ($ millions) 1 Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for the corresp
Slide 13: Investment Results
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 13 $93.1 $8.7 $13.2 $20.3 $3.5 $10.0 $13.6 $1.2 $7.5 $8.4 Investment Results ($ millions) Average Invested Assets and Cash Realized Gains, Losses and Impairments Gross Realized Gains Gross Realized Losses Impairments 1Q17 1Q16 2Q16 3
Slide 14: 1Q17 Capital & Liquidity Highlights
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 14 1Q17 Capital & Liquidity Highlights Continued strength 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 446% Le
Slide 15: Wrap Up
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 15 Wrap Up Focused on middle-income market key to our sustainable competitive advantage − Multiple channels to reach the market − Diversified products and services to meet customers’ needs Investor Day June 5th at the New York St
Slide 16: Questions and Answers
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 16 Questions and Answers
Slide 17: Appendix
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 17 Appendix
Slide 18: Growth Scorecard
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 18 Growth Scorecard ($ millions) 1 Includes third party products sold. See page 24 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 19: Average Producing Agent Counts
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 19 Average Producing Agent Counts1 1st Yr 2nd Yr 3rd Yr + Total 1st Yr 2nd Yr 3rd Yr + Total 3/31/2017 1,994 533 1,877 4,404 440 140 370 950 12/31/2016 2,037 567 1,875 4,478 435 132 373 940 9/30/2016 2,081 584 1,875 4,539 425 125 372
Slide 20: Bankers Life LTC - 2016 Testing Margins
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 20 Bankers Life LTC - 2016 Testing Margins $320 million of aggregate margin, however, the block has multiple product and issue year cohorts Four distinct product coverage categories: − Nursing Home − Comprehensive − Home Health C
Slide 21: Bankers Life LTC - Key Points of Differentiation
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 21 Bankers Life LTC - Key Points of Differentiation Sold primarily to middle-income individuals at/near retirement ‒ Results in higher average issue age (~67) and higher average attained age (~77) ‒ Assets and liabilities matched ‒
Slide 22: 1Q17 Holding Company Liquidity
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 22 1Q17 Holding Company Liquidity ($ millions) Cash and Investments Balance - December 31, 2016 $263.6 Sources Dividends from Insurance Subsidiaries 128.4 Service and Investment Fees, Net 17.0 Surplus Debenture Interest 12.0 Interest
Slide 23: Tax Asset Summary
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 23 Non- Life(1) $887 Loss Carryforwards Valuation Allowance Tax Asset Summary ($ millions) Loss Carryforwards Details Total estimated economic value of NOLs of $415 million @ 10% discount rate Increase in both tax asset and valua
Slide 24: Policies Inforce
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 24 Policies Inforce 1Q16 2Q16 3Q16 4Q16 1Q17 Policies inforce: Bankers Life 1,531,842 1,533,894 1,531,204 1,526,344 1,519,474 Washington National 958,833 961,003 959,867 961,689 964,642 C lonial Penn 851,138 851,789 852,305 846,372 8
Slide 25: 1Q16 Significant Items
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 25 The table below summarizes the financial impact of significant items on our 1Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in
Slide 26: 2Q16 Significant Items
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 26 The table below summarizes the financial impact of significant items on our 2Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in
Slide 27: 3Q16 Significant Items
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 27 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 in
Slide 28: 4Q16 Significant Items
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 28 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 in
Slide 29: 1Q17 Significant Items
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 29 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 30: Quarterly Earnings
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 30 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 defer
Slide 31: Non-GAAP measures additional information
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 31 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 32: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 32 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 amou
Slide 33: Operating income and diluted share reconciliation
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 33 1Q16 2Q16 3Q16 4Q16 1Q17 Operating income 49.6$ 63.7$ 64.3$ 84.9$ 59.8$ Weighted average shares outstanding for basic earnings per share 180,350 178,323 174,247 173,634 173,431 Effect of dilutive securities on weighted average sha
Slide 34: Book value per diluted share
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 34 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 35: Interest-adjusted benefit ratio
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 35 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 36: Operating return measures
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 36 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 37: Operating return on equity calculations
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 37 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 38: Operating earnings and significant items summary
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 38 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 39: Pretax operating earnings reconciliation
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 39 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): 1Q16 2Q16 3Q16 4Q16 1Q17 Pretax operating e
Slide 40: Consolidated capital reconciliation
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 40 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 41: Consolidated capital reconciliation
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 41 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 42: Debt to capital ratio
CNO Financial Group | First Quarter 2017 Earnings | April 27, 2017 42 Information Related to Certain Non-GAAP Financial Measures 1Q16 2Q16 3Q16 4Q16 1Q17 Corporate notes payable 911.5$ 912.0$ 912.5$ 912.9$ 913.4$ Total shareholders' equity 4,226.6 4,456.2 4,493.8 4,486.9 4,606.8 Total capital 5,138.