Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (December 2021)
39 slides from Cno Financial's investor presentation, Dec 9, 2021
Slide 1: Investor Overview December 2021
Investor Overview December 2021 Exhibit 99.1
Slide 2: Important Legal Information
CNO Financial Group | Investor Overview | December 2021 2 Important Legal Information 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 oper
Slide 3: CNO Financial Group Overview
CNO Financial Group | Investor Overview | December 2021 3 Fixed index annuities 41% Fixed interest annuities 10% Other annuities 3% Long-term care 13% Supplemental health 16% Medicare supplement 1% Interest sensitive life 5% Traditional life 11% Annuities 34% Life 23% LTC 7% Med Supp 18% Supp Health
Slide 4: What Makes CNO Different
CNO Financial Group | Investor Overview | December 2021 4 What Makes CNO Different Exclusive Focus on Middle- Income America Our Diverse Distribution & Integrated Approach Health and Wealth Solutions Insurance and Securities Solutions Strong Cash Flow Generation
Slide 5: Well-Positioned in the Attractive Senior Middle Market
CNO Financial Group | Investor Overview | December 2021 5 Well-Positioned in the Attractive Senior Middle Market Extensive experience and understanding of the middle market Differentiated with our market vs. product focus Diversification of products and distribution provides sustainable compet
Slide 6: Highly Diversified Product Mix
CNO Financial Group | Investor Overview | December 2021 6 Highly Diversified Product Mix Mix of protection and accumulation products to serve varied customer needs Basic products that meet the insurance needs of the middle market Attractive and predictable return characteristics Low risk lon
Slide 7: Risk management via diversification and natural hedges
CNO Financial Group | Investor Overview | December 2021 7 Fixed Indexed Annuity Fixed Interest Annuity Trad Life Interest Sensitive Life Med Supp Supp Health LTC Mortality Morbidity Persistency Interest rate Equity Risk Management via Diversification and Natural Hedges Relative degree of risk presen
Slide 8: Unique Multi-Channel Operating Model
CNO Financial Group | Investor Overview | December 2021 8 Unique Multi-Channel Operating Model Consumer Division – Strong exclusive agent franchise • Top distributor of health/wealth protection products through ~5,000 exclusive producing agents and financial representatives • More than 260 locatio
Slide 9: Strategic Initiatives Successfully Reinvigorating Growth
CNO Financial Group | Investor Overview | December 2021 9 Strategic Initiatives Successfully Reinvigorating Growth; Momentum Sidelined Temporarily by COVID (dollars in millions) $- $50.0 $100.0 $150.0 $200.0 2019 2020 YTD 3Q20 YTD 3Q21 Life NAP $- $50.0 $100.0 $150.0 $200.0 2019 2020 YTD 3Q20 YTD 3Q
Slide 10: Capital and Liquidity Overview
CNO Financial Group | Investor Overview | December 2021 10 Capital and Liquidity Overview 1 The ratio of the combined capital of the insurance companies to the minimum amount of capital appropriate to support the overall business operations, as determined based on the methodology developed by the Na
Slide 11: Cash Flow Profile
CNO Financial Group | Investor Overview | December 2021 11 Cash Flow Profile Strong free cash flow generation and conversion (dollars in millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2 Cash flows exclude acquisitions, dividend payments, stoc
Slide 12: Excess Capital Allocation Strategy
CNO Financial Group | Investor Overview | December 2021 12 Excess Capital Allocation Strategy Disciplined and opportunistic approach to maximize shareholder value Return capital to shareholders • Share repurchases: $115 million in 3Q21, $302 million YTD • Dividends: $16 million in 3Q21, $50 million
Slide 13: Investment Portfolio Composition
CNO Financial Group | Investor Overview | December 2021 13 IG Corporates, 51.7% Non-Agency RMBS, 7.2% Mortgage Loans, 4.6% HY Corporates, 3.0% CMBS, 8.2% Municipals, 10.3% ABS, 3.7% Govts/Agency, 1.3% CLO, 1.9% Equities, 0.5% Other Invested Assets, 2.1% Alternatives, 2.1% Policy Loans, 0.4% Cash, 2.
Slide 14: Outlook for 4Q 2021
CNO Financial Group | Investor Overview | December 2021 14 Outlook for 4Q 2021 Sales Modest growth in total Life & Health new annualized premiums and total collected premiums Earnings Free Cash Flow / Excess Capital Reduced dividends from operating companies due to impact of year-end 2021 change
Slide 15: Environmental, Social and Governance
CNO Financial Group | Investor Overview | December 2021 15 Environmental, Social and Governance Significant progress Environmental • Performed GHG emissions inventory • Established GHG emissions reduction target • Earmarked $100 million for new impact investments Social • Advanced DE&I programs • Li
Slide 16: Funding Agreement-Backed Notes (FABN) Program
CNO Financial Group | Investor Overview | December 2021 16 Funding Agreement-Backed Notes (FABN) Program Established in 3Q21 to leverage CNO’s core investment competencies; generating incremental earnings at an attractive return on the underlying capital Issuer CNO Global Funding, a Delaware statuto
Slide 17: DirectPath Transaction
CNO Financial Group | Investor Overview | December 2021 17 DirectPath Transaction February 2021 acquisition enhances Worksite Division growth outlook (as of 12/31/2020) Strategic RationaleDirectPath Description • DirectPath is a leading national provider of year- round, technology-driven employee be
Slide 18: Delivering On Our Commitments
CNO Financial Group | Investor Overview | December 2021 18 Delivering On Our Commitments Turnaround / De-risking Pivot to Growth Optimize Long-term Value Pre 2017 2017 - 2019 2020 - 2021 Post COVID • Reinsured life block (2009) • Recapitalized company (2012) • Initiated dividend (2012) • Sold Legacy
Slide 19: Appendix
CNO Financial Group | Investor Overview | December 2021 19 Appendix 1 Strong Operational Performance • Experienced Management Team Slide 20 • Broker-Dealer/Registered Investment Advisor Slide 21 • Exclusive Agent Counts Slide 22 Building on Strong Track Record of Execution • New Money Rate Walk Slid
Slide 20: Experienced Management Team With a Proven Track Record
CNO Financial Group | Investor Overview | December 2021 20 Experienced Management Team With a Proven Track Record 10-year average tenure; 24-year average service in the insurance sector Name Title Years with CNO Years in Insurance Sector Age Gary C. Bhojwani Chief Executive Officer 5 31 53 Paul H. M
Slide 21: Broker-Dealer/Registered Investment Advisor
CNO Financial Group | Investor Overview | December 2021 21 Broker-Dealer/Registered Investment Advisor 1 Client assets include cash and securities in brokerage, broker/dealer customer account assets custodied directly at fund companies and insurance carriers, and assets under management in advisory
Slide 22: Exclusive Agent Counts
CNO Financial Group | Investor Overview | December 2021 22 % Change Consumer 3Q 4Q 1Q 2Q 3Q Y/Y Producing Field Agents1,3 4,448 4,539 4,389 4,360 4,168 -6.3% Producing Tele-Sales Agents1,3 239 257 258 247 235 -1.7% Total Producing Agents1,3 4,687 4,796 4,647 4,607 4,403 -6.1% Registered Agents2,3 61
Slide 23: New Money Rate Walk
CNO Financial Group | Investor Overview | December 2021 23 New Money Rate Walk 3Q NMR up 17 bps QoQ due to selective direct investments, higher market yields
Slide 24: New Money Summary
CNO Financial Group | Investor Overview | December 2021 24 New Money Summary Continued up-in-quality bias during third quarter 93% Investment Grade Third Quarter Investments Allocation $ Allocation% Yield Average Rating Average Duration IG Corporates 366 43.1% 3.64% A- 16.6 Structured Securities 243
Slide 25: Tax Asset Summary
CNO Financial Group | Investor Overview | December 2021 25 Non-life NOLs $265 DTAs related to tax strategy $143 Value of NOLs and deferred tax assets (DTAs) related to tax strategy Details • Total estimated economic value of tax assets related to our NOLs and tax strategy of approximately $269 milli
Slide 26: 2018 Transformative LTC Reinsurance Transaction
CNO Financial Group | Investor Overview | December 2021 26 2018 Transformative LTC Reinsurance Transaction Divestiture of legacy LTC exposure significantly improves risk profile Fixed Annuities 49% Health 14% Life 13% LTC 24% In September 2018, Bankers Life entered into an agreement with Wilton Re
Slide 27: Long-Term Care Insurance
CNO Financial Group | Investor Overview | December 2021 27 New sales (~$25 million annually) focused on short duration products – 99% of new sales for policies with 2 years or less in benefits – Average benefit period of 12 months – New business 25% reinsured since 2008 Reserve assumptions infor
Slide 28: Appendix 2: Financial Exhibits
CNO Financial Group | Investor Overview | December 2021 28 Appendix 2: Financial Exhibits • Non-GAAP Financial Measures Slides 29-39
Slide 29: 3Q21 Significant Items
CNO Financial Group | Investor Overview | December 2021 29 The table below summarizes the financial impact of significant items on our 3Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 3Q21 Significant Items
Slide 30: 2Q21 Significant Items
CNO Financial Group | Investor Overview | December 2021 30 The table below summarizes the financial impact of significant items on our 2Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 2Q21 Significant Items
Slide 31: 1Q21 Significant Items
CNO Financial Group | Investor Overview | December 2021 31 The table below summarizes the financial impact of significant items on our 1Q21 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 1Q21 Significant Items
Slide 32: 4Q20 Significant Items
CNO Financial Group | Investor Overview | December 2021 32 The table below summarizes the financial impact of significant items on our 4Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q20 Significant Items
Slide 33: 2Q20 Significant Items
CNO Financial Group | Investor Overview | December 2021 33 The table below summarizes the financial impact of significant items on our 2Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 2Q20 Significant Items
Slide 34: 2Q20 Significant Items (Continued)
CNO Financial Group | Investor Overview | December 2021 34 2Q20 Significant Items (Continued from the previous page) (1) Given our expectation that interest rates will remain low for the long-term, we performed an actuarial unlocking exercise in the second quarter of 2020 to reflect our assumption t
Slide 35: 4Q19 Significant Items
CNO Financial Group | Investor Overview | December 2021 35 The table below summarizes the financial impact of significant items on our 4Q19 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q19 Significant Items
Slide 36: Quarterly insurance product margin and operating earnings
CNO Financial Group | Investor Overview | December 2021 36 3Q20 4Q20 1Q21 2Q21 3Q21 Insurance product margin Annuity 45.3$ 68.1$ 57.9$ 66.0$ 52.5$ Health 152.2 125.2 124.7 120.9 117.9 Life 47.3 37.3 27.1 39.7 53.2 Total insurance product margin 244.8 230.6 209.7 226.6 223.6 Allocated expenses (130.3
Slide 37: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | December 2021 37 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, fin
Slide 38: Net Income to Net Operating Income Reconciliation
CNO Financial Group | Investor Overview | December 2021 38 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-share amounts
Slide 39: Debt to Capital Ratio Reconciliation
CNO Financial Group | Investor Overview | December 2021 39 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 de
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