Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (March 2014)
35 slides from Cno Financial's investor presentation, Mar 26, 2014
Slide 1: CNO Overview
CNO Overview March 26, 2014 Exhibit 99.1
Slide 2: 26, 2014
CNO Financial Group | CNO Overview | March 26, 2014 2
Slide 3: Forward-Looking Statements
CNO Financial Group | CNO Overview | March 26, 2014 3 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 operation
Slide 4: Non-GAAP Measures
CNO Financial Group | CNO Overview | March 26, 2014 4 Non-GAAP Measures This presentation contains financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP). Reconciliations between those non-GAAP measures and the comparable GAAP measures are i
Slide 5: CNO Strategy & Execution
CNO Financial Group | CNO Overview | March 26, 2014 5 CNO Strategy & Execution Strategy to Build Long Term Shareholder Value Build on investment in the business Focus on sustainable profitable growth Increase operating effectiveness Enhance the Customer Experience Tactical deployment of ex
Slide 6: Key Initiatives Leveraging Middle Market Focus & Business Model
CNO Financial Group | CNO Overview | March 26, 2014 6 Agent productivity Branch and geographic expansion New product development Worksite platform Operating efficiencies Customer Experience Key Initiatives Leveraging Middle Market Focus & Business Model Investment Breakdown Plan to Inves
Slide 7: An Economic Exit: OCB Solutions – Strategic Considerations
CNO Financial Group | CNO Overview | March 26, 2014 7 An Economic Exit Favorable pro forma economic impact unlocking “trapped capital” for reinvestment Reduce “Beta” Reduces exposure to low-for-long rates, LTC volatility, and natural asset leverage Streamline & Simplify Reduces complexity associated
Slide 8: OCB Solutions - $4bn in Run-Off Reserves
CNO Financial Group | CNO Overview | March 26, 2014 8 Annuities & Deposits $705** Interest- Sensitive Life $2,232 LTC $525* Traditional Life $424 Annuities & Deposits $788 Other Health $7 Interest- Sensitive Life $166 OCB Solutions - $4bn in Run-Off Reserves 12/31/13 OCB Net Statutory Reserves Retai
Slide 9: Financial Plan Underpinnings
CNO Financial Group | CNO Overview | March 26, 2014 9 • Stepped-up investment in growth and platform initiatives with an incremental impact on expenses in 2014 of ~$10 million Investing to Drive Long-Term Growth • Value of new business governs the run-on of profitable business while recent transacti
Slide 10: Segment Earnings Strengths
CNO Financial Group | CNO Overview | March 26, 2014 10 $(2.7) $3.0 $(3.6) $(0.4) $3.8 $3.2 $(5.4) $1.2 $(4.2) $(4.1) $16.5 $3.6 $2.6 $6.1 $8.2 $77.7 $71.3 $76.6 $80.6 $79.8 $34.6 $29.4 $30.3 $28.1 $31.5 4Q12 1Q13 2Q13 3Q13 4Q13 Corporate CP OCB BLC WN ($ millions) * A non-GAAP measure. See the Appen
Slide 11: Capital Targets & Excess Capital Deployment
CNO Financial Group | CNO Overview | March 26, 2014 11 Capital Targets & Excess Capital Deployment 2013 2014 Outlook RBC 410% ~ 400% Liquidity $309mm ~ $434mm Leverage* 16.9% ~16% Investment-grade ratings dialed in while maintaining our tactical approach to deployment … 2014 Share Repurchases Guidan
Slide 12: ROE Development
CNO Financial Group | CNO Overview | March 26, 2014 12 ROE Development CNO Results reflect net favorable earnings performance offset by build in excess capital Sale of CLIC and reinsurance transactions add approximately 90 basis points to ROE on a pro forma basis Leverage continues to fall tow
Slide 13: CNO Moving Forward
CNO Financial Group | CNO Overview | March 26, 2014 13 CNO Moving Forward Financial Strength – Focus on sustainable, profitable growth while reshaping in-force driving a higher quality ROE Focused on Core Franchise Growth – Investments in distribution productivity and growth yielding top-tier in
Slide 14: Q&A
CNO Financial Group | CNO Overview | March 26, 2014 14 Q&A
Slide 15: Appendix
CNO Financial Group | CNO Overview | March 26, 2014 15 Appendix
Slide 16: Returning Capital to our Shareholders
CNO Financial Group | CNO Overview | March 26, 2014 16 $16.2 $39.5 $14.1 $18.9 $39.3 $41.4 $80.7 $50.0 $37.3 $31.1 $342.0 $124.8 $9.4 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Share Repurchases Convertible Repurchases Returning Capital to our Shareholders CNO Since initiating the
Slide 17: Loss Recognition & Cash Flow Testing
CNO Financial Group | CNO Overview | March 26, 2014 17 Loss Recognition & Cash Flow Testing 2013 Statutory Cash Flow Testing 2013 GAAP Loss Recognition Testing Aggregate margins remain strong at 14% of $25 billion in tested liabilities* Testing margin increased modestly in 2013 ↑ - Net growth in
Slide 18: Pro Forma Estimates
CNO Financial Group | CNO Overview | March 26, 2014 18 Pro Forma Estimates Financial Metric Pro Forma Estimates Purchase Price (1) $237mm Price to Statutory Capital & Surplus (1) 1.5x Estimated Increase to Holding Company Liquidity (2) $125mm Pro Forma GAAP Loss on Sale (3) $(303)mm Pro Forma GAAP B
Slide 19: OCB Solutions Reduce Capital-at-Risk
CNO Financial Group | CNO Overview | March 26, 2014 19 OCB Solutions Reduce Capital-at-Risk OCB Reserve Margins: Thin aggregate Loss Recognition Testing and Cash Flow Testing margins for OCB ISL and LTC (~1%) ISL and LTC blocks ($2.8bn in reserves) have experienced loss recognition charges and h
Slide 20: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | CNO Overview | March 26, 2014 20 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 amount
Slide 21: Quarterly Earnings
CNO Financial Group | CNO Overview | March 26, 2014 21 Quarterly Earnings CNO *Management believes that an analysis of earnings before loss related to reinsurance transaction, net realized investment gains (losses), fair value changes in embedded derivative liabilities, equity in earnings of certain
Slide 22: 4Q2012 Significant Items
CNO Financial Group | CNO Overview | March 26, 2014 22 The table below summarizes the financial impact of significant items on our 4Q2012 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Ne
Slide 23: 1Q2013 Significant Item
CNO Financial Group | CNO Overview | March 26, 2014 23 The table below summarizes the financial impact of the significant item on our 1Q2013 net operating income. Management believes that identifying the impact of this item enhances the understanding of our operating results (dollars in millions). N
Slide 24: 2Q2013 Significant Items
CNO Financial Group | CNO Overview | March 26, 2014 24 The table below summarizes the financial impact of the significant items on our 2Q2013 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions)
Slide 25: 3Q2013 Significant Items
CNO Financial Group | CNO Overview | March 26, 2014 25 The table below summarizes the financial impact of significant items on our 3Q2013 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Ne
Slide 26: 4Q2013 Significant Items
CNO Financial Group | CNO Overview | March 26, 2014 26 The table below summarizes the financial impact of significant items on our 4Q2013 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). Ne
Slide 27: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | CNO Overview | March 26, 2014 27 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before loss related to reinsurance transaction, net realized gains or losses, fair
Slide 28: Operating Return on Equity Calculations
CNO Financial Group | CNO Overview | March 26, 2014 28 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 measure); (ii) ope
Slide 29: Operating Earnings and Significant Items
CNO Financial Group | CNO Overview | March 26, 2014 29 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 Oper
Slide 30: Pretax Operating Earnings Reconciliation
CNO Financial Group | CNO Overview | March 26, 2014 30 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): 4Q12 1Q13 2Q13 3Q13 4Q13 Pretax operating earnings (a non-
Slide 31: Consolidated Capital Reconciliation
CNO Financial Group | CNO Overview | March 26, 2014 31 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 shareholde
Slide 32: Consolidated Capital Reconciliation, Trailing Four Quarter Average
CNO Financial Group | CNO Overview | March 26, 2014 32 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 shareholde
Slide 33: Debt to Capital Ratio, Excluding AOCI
CNO Financial Group | CNO Overview | March 26, 2014 33 Information Related to Certain Non-GAAP Financial Measures 4Q13 Corporate notes payable 856.4$ Total shareholders' equity 4,955.2 Total capital 5,811.6$ orporate debt to capital 14.7% Corporate notes payable 856.4$ Total shareholders' equity 4,9
Slide 34: Pro Forma Net Loss and Shareholders' Equity Impact
CNO Financial Group | CNO Overview | March 26, 2014 34 Pro forma net loss Loss on sale of CLIC: Cash proceeds received (a) 237$ Net assets sold (527)$ Subtotal (290)$ Reinsurance recapture: Amount paid by Bankers Life (28)$ Net assets received 29$ Subtotal 1$ Transaction expenses and other (9)$ Loss
Slide 35: Pro Forma Impact on Operating Earnings
CNO Financial Group | CNO Overview | March 26, 2014 35 Information Related to Certain Non-GAAP Financial Measures Pro forma impacts The following presents the pro forma impact on our operating earnings measures as if the sale of CLIC and the recapture of a traditional life block by Bankers Life had
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