Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Day (June 2017)
84 slides from Cno Financial's investor day presentation, Jun 5, 2017
Slide 1: 2017 Investor Day
2017 Investor Day June 5, 2017 Exhibit 99.1
Slide 2: Agenda
CNO Financial Group | 2017 Investor Day | June 5, 2017 2 Agenda TIME TOPIC SPEAKER 1:00 p.m. Welcome & Opening Comments Adam Auvil – Director, Investor Relations Ed Bonach – Chief Executive Officer 1:10 p.m. Positioned to Win in the Middle- Income Market Gary Bhojwani – President Gerardo Monroy – Ch
Slide 3: Forward-Looking Statements
CNO Financial Group | 2017 Investor Day | June 5, 2017 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 operat
Slide 4: Non-GAAP Measures
CNO Financial Group | 2017 Investor Day | June 5, 2017 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 ar
Slide 5: June 5, 2017
CNO Financial Group | 2017 Investor Day | June 5, 2017 5
Slide 6: Welcome & Opening Comments
CNO Financial Group | 2017 Investor Day | June 5, 2017 6 Welcome & Opening Comments
Slide 7: CEO Succession
CNO Financial Group | 2017 Investor Day | June 5, 2017 7 CEO Succession On 5/16/17, announced that CEO Ed Bonach will retire as CEO and from Board of Directors as of 12/31/17 Current President, Gary Bhojwani, named CEO successor effective 1/1/18 – Named to Board of Directors effective immediatel
Slide 8: Why Now?
CNO Financial Group | 2017 Investor Day | June 5, 2017 8 Delivered on “fix” and “focus” strategic priorities – Significantly de-risked balance sheet – Improved financial and operational performance – Extended customer reach – Enhanced shareholder value Well positioned for future success – Robust
Slide 9: Management Team
CNO Financial Group | 2017 Investor Day | June 5, 2017 9 Management Team Name Title Years with CNO Years in Insurance Sector Age Gary Bhojwani President 1 27 49 Erik Helding Chief Financial Officer 13 21 44 Eric Johnson Chief Investment Officer 20 20 56 Chris Nickele Chief Actuary 11 35 60 Bruce Bau
Slide 10: Strategic Priorities Unchanged
CNO Financial Group | 2017 Investor Day | June 5, 2017 10 Serving the middle-income market through a diverse set of distribution and products − Unique business model designed to reach our target market with a breadth of solutions Continue franchise growth and diversification through − New produc
Slide 11: Positioned to Win in the Middle-Income Market
CNO Financial Group | 2017 Investor Day | June 5, 2017 11 Positioned to Win in the Middle-Income Market
Slide 12: Committed to the Middle-Income Market
CNO Financial Group | 2017 Investor Day | June 5, 2017 12 Committed to the Middle-Income Market On average, 10,000 Americans turning 65 every day – US Census Data In 2017, oldest of the 75 million baby boomers must begin RMDs with many looking for reinvestment opportunities¹ – Wall Street Journal 20
Slide 13: CNO Diversified Business Model
CNO Financial Group | 2017 Investor Day | June 5, 2017 13 CNO Financial Group provides insurance solutions to middle-income working Americans and retirees through its family of established insurance brands: CNO Diversified Business Model Business Segment Strategy Bankers Life offers a broad selectio
Slide 14: CNO Diversified Business Model Strategy (cont.)
CNO Financial Group | 2017 Investor Day | June 5, 2017 14 • Maintains optionality against market disruption • Ability to sell products across multiple channels and avoid channel conflict • Supports an omni-channel strategy Advantages of this model Consumer- Facing Brands Channels Worksite Broker Dea
Slide 15: CNO Market Segmentation: Expand to the Right
CNO Financial Group | 2017 Investor Day | June 5, 2017 15 <$10K ≥$10K+ - <$100K ≥$100K+ - <$500K ≥$500K+ - <$1M ≥$1M <$30K ≥$30K <$75K ≥$75K Rents Home Owns Home Age Single “Single Starters” “Fast Risers” “Young & Wealthy” <= 39 Family “Near-Term Savers” Age Single “Single Starters” 40 – 54 Family “
Slide 16: CNO Market Segmentation
CNO Financial Group | 2017 Investor Day | June 5, 2017 16 BRAND Anxious in Retirement Tightrope Walkers Comfortable in Retirement Getting By Setting the Stage CUSTOMER SEGMENT Fruitful Family/ Castle Builders Other Segments Key Products in Current Portfolio Life Annuity Med-Supp Supp Health Other Pr
Slide 17: What Makes CNO Different
CNO Financial Group | 2017 Investor Day | June 5, 2017 17 What Makes CNO Different – Focus on middle-income America – Choice of distribution – Health & wealth solutions – Insurance & securities solutions 1 2 3 4
Slide 18: Strategic Marketing Focus
CNO Financial Group | 2017 Investor Day | June 5, 2017 18 Strategic Marketing Focus
Slide 19: Market Segmentation Helped Us Make Choices
CNO Financial Group | 2017 Investor Day | June 5, 2017 19 CNO Strategic Marketing Focus Market Segmentation – Helped Us Make Choices Target Market Identification Segment Attractiveness CNO “Right to Win” “Expand to The Right” Prioritizations Key Products Channel Focus Marketing Strate
Slide 20: Prioritized Market Segments
CNO Financial Group | 2017 Investor Day | June 5, 2017 20 CNO Strategic Marketing Focus Prioritized Market Segments “Anxious in Retirement” “Getting By” • High representation across all three CNO brands (>20% each) • Current product suite and service capabilities align well with needs / preferen
Slide 21: Opportunities to Sell More Products Across Channels
CNO Financial Group | 2017 Investor Day | June 5, 2017 21 CNO Strategic Marketing Focus Opportunities to Sell More Products Across Channels D2C 3 F2F – At Home Life MS / MA Securities & Inv. Products Total ~30 BD / RIA Supp Health Annuities 3 rd Party / Other Critical Illness Med Supp / Med Advantag
Slide 22: Leverage Multi-Media Expertise
CNO Financial Group | 2017 Investor Day | June 5, 2017 22 CNO Strategic Marketing Focus Leverage Multi-Media Expertise – More & Better Leads Direct Response Television (DRTV) Web / Social Media Direct Mail Prospects Digital / Email Direct Mail Customers Referrals Cross Sales Targeted Broad
Slide 23: Relevant and Actionable Market Intelligence
CNO Financial Group | 2017 Investor Day | June 5, 2017 23 CNO Strategic Marketing Focus Relevant and Actionable Market Intelligence COMPETITORS INDUSTRY NEW TRENDS / DISRUPTORS INTERNAL / UNIQUE MARKET INTELLIGENCE Products Channels LIMRA/LOMA American College Gartner ACLI Deloitte FinTech / InsureT
Slide 24: Integrated Marketing Process Supporting Growth
CNO Financial Group | 2017 Investor Day | June 5, 2017 24 CNO Strategic Marketing Focus Integrated Marketing Process Supporting Growth Data People Time Message Channel Use the Right To Connect with the Right At the Right With the Right In the Right OMNI CHANNEL CAMPAIGNS / DYNAMIC LEAD MAN
Slide 25: June 5, 2017
CNO Financial Group | 2017 Investor Day | June 5, 2017 25
Slide 26: Bankers Life Key Messages
CNO Financial Group | 2017 Investor Day | June 5, 2017 26 Bankers Life Key Messages Diverse product set; track record of premium and EBIT growth Growth in accumulation and longevity products Expanded platform with broker-dealer and registered investment advisor Reshaping the agency Ready f
Slide 27: Bankers Life Diversified Product Set
CNO Financial Group | 2017 Investor Day | June 5, 2017 27 Bankers Life Diversified product set; track record of premium and EBIT growth $301 $311 $387 $370 $398 2012 2013 2014 2015 2016 $2,348 $2,430 $2,482 $2,491 $2,666 2012 2013 2014 2015 2016 Health Annuities2 Life Fees $2.7 billion Collected Pre
Slide 28: Growth in Accumulation and Longevity Products: Annuities
CNO Financial Group | 2017 Investor Day | June 5, 2017 28 Bankers Life Growth in Accumulation and Longevity Products In mid-2016, introduced new guaranteed lifetime withdrawal benefit rider (“GLIA” product, simple design: no roll-up rate, no benefit base) Indexed annuity deposits up 23% in 2016
Slide 29: Growth in Accumulation and Longevity Products: Long-Term Care
CNO Financial Group | 2017 Investor Day | June 5, 2017 29 Bankers Life Growth in Accumulation and Longevity Products 88% of long-term care plans sold are max benefit of 12 months Average policy max benefit: $38,2001 Average age of purchaser: 671 1 Average policy benefit and age of purchaser ba
Slide 30: New: Broker-Dealer
CNO Financial Group | 2017 Investor Day | June 5, 2017 30 Bankers Life New: Broker-Dealer Launched in June 2016 Limited products; all non-proprietary Captive agents only Lower payouts than independent broker dealers Over $1B1 in client assets; greater than $10mm annual gross dealer concess
Slide 31: New: Registered Investment Advisor
CNO Financial Group | 2017 Investor Day | June 5, 2017 31 Bankers Life New: Registered Investment Advisor Expect most broker-dealer registered representatives to become dually registered as fee-based advisors Launched in June 2016 Powered by leading turnkey asset management program Recurring f
Slide 32: Producing Agent Count
CNO Financial Group | 2017 Investor Day | June 5, 2017 32 Bankers Life Producing Agent Count Average Producing Agents1 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 1st/2nd Year Agents 3+ Year Agents 1 As of the quarter ended March 31st for all years.
Slide 33: Reshaping the Agency
CNO Financial Group | 2017 Investor Day | June 5, 2017 33 Bankers Life Reshaping the Agency New Recruits Experienced Agents Financial Advisors 1st/2nd Year Agents Expectations 1. Targeted profiles 2. Preferred candidate sources 3. Personal referral program 4. Selective commission support 5. Higher f
Slide 34: June 5, 2017
CNO Financial Group | 2017 Investor Day | June 5, 2017 34
Slide 35: Washington National Business Overview
CNO Financial Group | 2017 Investor Day | June 5, 2017 35 Two sales distribution channels Inforce business includes legacy blocks acquired during 1990s Medicare supplement & annuity blocks in run-off Insurance Company 2016 Adjusted EBIT1 = $102.9 million Collected premiums = $659.3 million 962
Slide 36: Rural Market
CNO Financial Group | 2017 Investor Day | June 5, 2017 36 Rural Market Washington National Current Situation US farms show flat trend Clear opportunity in footprint
Slide 37: Worksite Market
CNO Financial Group | 2017 Investor Day | June 5, 2017 37 Washington National Current Situation Scale worksite support Continue brand awareness Leverage flexible distribution A- rating Worksite Market Growth in small businesses $1.9B market with right to win
Slide 38: Washington National Growth Strategy
CNO Financial Group | 2017 Investor Day | June 5, 2017 38 Hold Advantage in Rural/Small Town Markets Major Objectives Accelerate Worksite Growth Serve More of the Middle-Income Market The “What” Ke y Strategie s Diversify Product Offerings Broaden Geographic Reach Advance Worksite Capabilities Expan
Slide 39: June 5, 2017
CNO Financial Group | 2017 Investor Day | June 5, 2017 39
Slide 40: Colonial Penn Current Target Market and Alignment
CNO Financial Group | 2017 Investor Day | June 5, 2017 40 Target Market Customer Needs Product Offerings Life insurance Lower middle-income market Direct personalized advice (Phone / Mail / Web) Final expenses / funeral planning Easy-to-understand products Quick Claims Processing 55+ years o
Slide 41: How Customers Will Purchase Life Insurance
CNO Financial Group | 2017 Investor Day | June 5, 2017 41 40% 43% 47% 43% 46% 53% 55% 38% 39% 44% 42% 42% 51% 52% 11% 12% 19% 21% 22% 28% 32% 2011 2012 2013 2014 2015 2016 2017 Visited the website of a life insurance company Sought information about life insurance online Purchased/attempted to purch
Slide 42: Colonial Penn Expand to the Right Guiding Principles
CNO Financial Group | 2017 Investor Day | June 5, 2017 42 Be simple, easy to understand and purchase Extend Colonial Penn’s brand Have a simplified, largely automated underwriting process Be purchased online, through direct mail, or via a telesales agent Leverage internal lead-sharing and
Slide 43: New D2C Products Marketing / Sales Process
CNO Financial Group | 2017 Investor Day | June 5, 2017 43 Web Social Media Digital Direct Mail Media Channels Use Web/Digital and Direct Mail Marketing Strategies (no traditional Television advertising) Improved customer targeting -> better economics Telesales agents will primarily provide sal
Slide 44: Questions and Answers
CNO Financial Group | 2017 Investor Day | June 5, 2017 44 Questions and Answers
Slide 45: Managing our Long-Term Care Business
CNO Financial Group | 2017 Investor Day | June 5, 2017 45 Managing our Long-Term Care Business
Slide 46: Recent Bankers Life Long-Term Care Performance
CNO Financial Group | 2017 Investor Day | June 5, 2017 46 Recent Bankers Life Long-Term Care Performance Long-term care business performing as expected $118 $118 $117 $118 $116 75.3% 77.9% 77.7% 76.0% 72.5% 82.4% 82.1% 82.6% 78.4% 74.2% 1Q16 2Q16 3Q16 4Q16 1Q17 Earned Premium Reported IABR Adjusted
Slide 47: Active Risk Management of Bankers Life Long-Term Care
CNO Financial Group | 2017 Investor Day | June 5, 2017 47 Active Risk Management of Bankers Life Long-Term Care Holistic approach to managing long-term care business Proactive in-force management Since 2006, completed five rounds of actuarially justified rate increases Piloting and implementing
Slide 48: Long-Term Care Claims Initiatives
CNO Financial Group | 2017 Investor Day | June 5, 2017 48 Long-Term Care Claims Initiatives • Implementation of wellness programs Pre-Claim • Documentation and filing* • Care coordination • Enhanced care management for recovery* Start of Claim • Reduce leakage • Fraud Analytics • LTCFastpay* • Finan
Slide 49: Composition of the Bankers Life Block
CNO Financial Group | 2017 Investor Day | June 5, 2017 49 Composition of the Bankers Life Block $ in millions ~ < 2002 (Legacy) ~ 2003 - 2007 ~ 2008+ +5% Morbidity 5% level Int Rate Net GAAP Liability $474 $73 $31 $35 $7 $6 ($39) ($44) 85 80 74 Net GAAP Liability $2,342 $566 $334 $172 $55 $72 ($245)
Slide 50: Risk Reduction Options
CNO Financial Group | 2017 Investor Day | June 5, 2017 50 Risk Reduction Options • Traditional reinsurance • Stop-loss coverage where reinsurer provides first dollar costs • Catastrophic coverage where reinsurer provides coverage for the tail Sale or Transfer • A combination of actions may provide m
Slide 51: CNO LTC Risk Reduction Objectives
CNO Financial Group | 2017 Investor Day | June 5, 2017 51 CNO LTC Risk Reduction Objectives Overhang on CNO Increased cashflows 2 Higher quality of earnings & ROE Reduced balance sheet risk under stress scenarios Lower beta Higher ratings in time 1 3 4 5
Slide 52: Questions and Answers
CNO Financial Group | 2017 Investor Day | June 5, 2017 52 Questions and Answers
Slide 53: Investments & Finance
CNO Financial Group | 2017 Investor Day | June 5, 2017 53 Investments & Finance
Slide 54: Investments
CNO Financial Group | 2017 Investor Day | June 5, 2017 54 Investments
Slide 55: General Account Investments
CNO Financial Group | 2017 Investor Day | June 5, 2017 55 General Account Investments NAIC Ratings Distribution Asset Allocation P e rc e n t P e rc e n t P e rc e n t Position for later stages of credit cycle Sustain high new money rates Emphasize diversified / uncorrelated income No compro
Slide 56: What We Are Emphasizing Today
CNO Financial Group | 2017 Investor Day | June 5, 2017 56 What We Are Emphasizing Today Our View on The Investing Environment Esoteric ABS Spread premium to similarly-rated corporates Exposure to credits in secured, bankruptcy-remote structures Consumer ABS Consumer balance sheets are earlier
Slide 57: Finance
CNO Financial Group | 2017 Investor Day | June 5, 2017 57 Finance
Slide 58: Colonial Penn Valuation
CNO Financial Group | 2017 Investor Day | June 5, 2017 58 Colonial Penn Valuation $- $0.50 $1.00 $1.50 $2.00 $2.50 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 $55.0 $60.0 2012 2013 2014 2015 2016 E s tim a ted V a lue P er S har e In force A d jus ted E B IT Inforce Adjusted EBIT Estimated Value Per S
Slide 59: Return on Equity
CNO Financial Group | 2017 Investor Day | June 5, 2017 59 Return on Equity Expect modest organic ROE improvement over next several years Committed to achieving higher ROE over time Potential levers to accelerate ROE expansion include: ‒ Higher levels of sales growth ‒ Higher interest rates ‒ I
Slide 60: Questions and Answers
CNO Financial Group | 2017 Investor Day | June 5, 2017 60 Questions and Answers
Slide 61: Compelling Case for CNO
CNO Financial Group | 2017 Investor Day | June 5, 2017 61 Compelling Case for CNO
Slide 62: Timeline of Balance Sheet and Capital Actions
CNO Financial Group | 2017 Investor Day | June 5, 2017 62 2007 2008 2011 2012 2013 2009 2010 2014 Q3 2007 Sale of $3 billion annuity block 2007/2008 Sales & marketing rightsizing, and vacated excess Chicago space Q4 2008 Separation of closed block long-term care business Q3 2009 Reinsurance of life
Slide 63: Ongoing Corporate Priorities
CNO Financial Group | 2017 Investor Day | June 5, 2017 63 Ongoing Corporate Priorities Continue franchise growth and diversification ‒ Solid go-forward strategy to drive profitable growth Catalysts to drive future shareholder value ‒ Returning capital to shareholders ‒ Reducing long-term care ex
Slide 64: What Makes CNO Different
CNO Financial Group | 2017 Investor Day | June 5, 2017 64 What Makes CNO Different – Focus on middle-income America – Choice of distribution – Health & wealth solutions – Insurance & securities solutions 1 2 3 4
Slide 65: Questions and Answers
CNO Financial Group | 2017 Investor Day | June 5, 2017 65 Questions and Answers
Slide 66: Appendix
CNO Financial Group | 2017 Investor Day | June 5, 2017 66 Appendix
Slide 67: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2017 Investor Day | June 5, 2017 67 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 backi
Slide 68: 2016 Significant Items
CNO Financial Group | 2017 Investor Day | June 5, 2017 68 The table below summarizes the financial impact of significant items on our 2016 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions). 2
Slide 69: Earnings
CNO Financial Group | 2017 Investor Day | June 5, 2017 69 Earnings *Management believes that an analysis of Adjusted EBIT for Colonial Penn, separated between inforce and new business, provides increased clarity for this segment as the vast majority of the costs to generate new business in this segm
Slide 70: Additional Disclosures
CNO Financial Group | 2017 Investor Day | June 5, 2017 70 Bankers Life is the marketing brand of various affiliated companies of CNO Financial Group including, Bankers Life and Casualty Company, Bankers Life Securities, Inc., and Bankers Life Advisory Services, Inc. Non-affiliated insurance products
Slide 71: Executive Team Profiles
CNO Financial Group | 2017 Investor Day | June 5, 2017 71 Executive Team Profiles
Slide 72: Ed Bonach – Chief Executive Officer
CNO Financial Group | 2017 Investor Day | June 5, 2017 72 Ed Bonach – Chief Executive Officer Ed Bonach was appointed chief executive officer and a director of CNO Financial Group effective October 1, 2011. Ed formerly served as executive vice president and chief financial officer of CNO from May 20
Slide 73: Gary C. Bhojwani – President, CNO Financial Group
CNO Financial Group | 2017 Investor Day | June 5, 2017 73 Gary C. Bhojwani – President, CNO Financial Group Gary Bhojwani was named President of CNO Financial Group in April 2016. In this role, he oversees the profitable growth of CNO's three business segments: Bankers Life, Colonial Penn, and Washi
Slide 74: Erik Helding – Chief Financial Officer
CNO Financial Group | 2017 Investor Day | June 5, 2017 74 Erik Helding – Chief Financial Officer Erik Helding is Executive Vice President and Chief Financial Officer of CNO Financial Group. In this role he is responsible for all financial operations, including accounting, controls and reporting, fin
Slide 75: Eric Johnson – Chief Investment Officer
CNO Financial Group | 2017 Investor Day | June 5, 2017 75 Eric Johnson – Chief Investment Officer Eric Johnson was appointed chief investment officer of CNO Financial Group and president of 40|86 Advisors, Inc. in September 2003. Johnson joined CNO in 1997 and has served as an officer of the company
Slide 76: Chris Nickele – EVP, Chief Actuary
CNO Financial Group | 2017 Investor Day | June 5, 2017 76 Chris Nickele – EVP, Chief Actuary Chris Nickele was appointed chief actuary of CNO Financial Group in August 2014. In this role he is responsible for managing actuarial valuation as well as new product development and management on an enterp
Slide 77: Bruce Baude – Chief Operations and Technology Officer
CNO Financial Group | 2017 Investor Day | June 5, 2017 77 Bruce Baude – Chief Operations and Technology Officer Bruce Baude was named EVP, chief operations and technology officer of CNO Financial Group in July 2012. In this role, he provides strategic leadership over CNO’s operations and IT function
Slide 78: Matthew J. Zimpfer – EVP, General Counsel
CNO Financial Group | 2017 Investor Day | June 5, 2017 78 Matthew J. Zimpfer – EVP, General Counsel Matt Zimpfer was appointed executive vice president and general counsel of CNO Financial Group in June 2008. He served previously as the company's interim general counsel, as well as vice president an
Slide 79: Susan L. Menzel – EVP, Human Resources
CNO Financial Group | 2017 Investor Day | June 5, 2017 79 Susan L. Menzel – EVP, Human Resources Sue Menzel joined CNO Financial Group in May 2005 as executive vice president, human resources. Menzel is responsible for human resources across all of CNO's businesses, including Bankers Life, Colonial
Slide 80: John R. Kline – SVP, Chief Accounting Officer
CNO Financial Group | 2017 Investor Day | June 5, 2017 80 John R. Kline – SVP, Chief Accounting Officer John Kline was appointed chief accounting officer of CNO Financial Group in 2003. Since joining the company in 1990, he has served in various positions within the company's corporate finance depar
Slide 81: Gerardo Monroy – Chief Marketing Officer
CNO Financial Group | 2017 Investor Day | June 5, 2017 81 Gerardo Monroy – Chief Marketing Officer Gerardo Monroy was named chief marketing officer of CNO Financial Group in March 2017. In this role, he leads CNO's enterprise Marketing and Communications. Monroy served previously as president of Col
Slide 82: Scott Goldberg – President, Bankers Life
CNO Financial Group | 2017 Investor Day | June 5, 2017 82 Scott Goldberg – President, Bankers Life Scott Goldberg was appointed president of Bankers Life in September 2013. Goldberg began his career with CNO in 2004 as vice president of strategic planning. In 2007, he joined Bankers Life as vice pre
Slide 83: Mike Heard – President, Washington National
CNO Financial Group | 2017 Investor Day | June 5, 2017 83 Mike Heard– President, Washington National Mike Heard was appointed president of Washington National in March 2017. He served previously as senior vice president of enterprise operations for CNO Financial Group. Prior to joining CNO in 2013,
Slide 84: Joel Schwartz – President, Colonial Penn
CNO Financial Group | 2017 Investor Day | June 5, 2017 84 Joel Schwartz – President, Colonial Penn Joel Schwartz was appointed president of Colonial Penn in March 2017. He served previously as vice president, finance and administration for Colonial Penn. Prior to joining CNO in 2014, Schwartz spent