CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Investor Presentation (August 2013)
32 slides from CNO Financial's investor presentation, Aug 12, 2013
Slide 1: CNO Overview
CNO Overview August 12, 12 2013
Slide 2: CNO Financial Group | CNO Overview | August 12, 2013
CNO Financial Group | CNO Overview | August 12, 2013 2
Slide 3: 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 4: 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 non-GAAP GAAP measures and d th the comparable bl GAAP measures are iincluded l d d iin th the A Appendix. di
Slide 5: CNO Fundamentals
CNO Fundamentals Track record of strong execution Well positioned in the growing and underserved retirement and middle-income market Building core value drivers Well capitalized and generating significant excess capital CNO Financial Group | CNO Overview | August 12, 2013 5
Slide 6: Track Record of Execution
Track Record of Execution 194% Return Value Total Return To Shareholders Since YE2009* 73% 69% Invest in Growth Financial Foundation CNO Peer Group S&P Life and Health *As of market close on 8/2/13 Reset Business Mix Peers - AFL, AIZ, AMP, GNW, HIG, LNC, MET, PFG, PL, PNX, PRI, PRU, SFG, SYA, TMK, U
Slide 7: What Differentiates CNO?
What Differentiates CNO? Focus on serving the needs of our retirement and middle- income target g market, a market that is fast g growing g and underserved Exclusive distribution Exclusive ‒ Consistent with market focus ‒ We have “pricing” influence ‒ Track record of stable customer base Alignmen
Slide 8: CNO's Target Market
CNO’s Target Market The Opportunity Fast Growing, Underserved and Unprepared “Over Over the past five years years, the missed opportunity in the middle market 200 for life insurers has grown significantly… In addition, the rising cost of Population Growth in Millions healthcare, may be an emerging,
Slide 9: Investment in the Business
Investment in the Business CNO ($ millions)) Investing in marketing, productivity and New Annualized Ne Ann Premium ali ed Premi m growth of the agent force $400.2 $393.4 Expanding presence by adding new locations and geographies $375 1 $375.1 $366.1 Developing and launching new products to me
Slide 10: CNO's Financial Strategy
CNO’s Financial Strategy Grow Earnings & ROE • Investments in distribution and p p product expansion • Diverse margins drive stable growth • Active in-force management Optimize Cash Flows • Balanced mix of protection business with disciplined return hurdles • Maximize value of significant tax assets
Slide 11: Segment Earnings
Segment Earnings CNO ($ millions) Segment EBIT Excluding Significant Items* Notable Items $125.6 $129.3 Reflects expected seasonality Net investment income and annuity $99.8 $34.6 $107.1 $33.9 $101.9 margins remain strong $33.9 $29.4 $30.3 Favorable Med supp and supplemental pp health benefit
Slide 12: Capital Strategy
Capital Strategy ($ millions) Forward Capital Plan Key Capital & Liquidity Metrics Minimum capital requirements under 2Q2013 deployable capital of ~$80mm stress conditions: 376% 367% 358% ‒ Leverage of 20% 332% $445 * $423 ‒ Risk-based capital ratio of 350% ‒ Holdco liquidity & investments of $347
Slide 13: 2Q13 Capital Generation and Deployment
2Q13 Capital Generation and Deployment CNO ($ in millions) LTM 2Q13 Capital Generation 2Q YTD Sources and Uses $513 Retained in Subs $68 Fees and Interest Holdco Exp & Interest $25 Other $49 $10 Net Other Statutory St t t $ $24 Dividends Debt $301 Repayment / Securities Financing Net Statutory Decre
Slide 14: Returning Capital to our Shareholders
Returning Capital to our Shareholders CNO Highlights Total Securities Repurchases by Quarter Since initiating the share buyback program, repurchased equivalent of 85 ($ in millions) million shares, leading to a 28%* reduction in weighted average diluted shares outstanding Cumulative investment o
Slide 15: ROE Progression
ROE Progression CNO Notable Items Reported Operating ROE* 2Q13 Q Calculated on a trailing 4 quarter 6.8% 2Q12 basis and excluding AOCI and 6.0% NOL 2Q13 ROE includes the impact from 3Q12 charges related to litigation and interest rates 2Q annualized li d and d normalized li d results illustrat
Slide 16: 2013 Initiatives Support 2015 Milestones
CNO: 2013 Initiatives Support 2015 Milestones 2013 Initiatives 2015 Milestones Grow sales, premium, Invest $80-$85mm in strategic distribution and p product p portfolio business initiatives Drive toward efficiencies in Accelerate run-on and run-off operations and leveraging expertise across
Slide 17: Q&A
Q&A CNO Financial Group | CNO Overview | August 12, 2013 17
Slide 18: Appendix
A Appendix di CNO Financial Group | CNO Overview | August 12, 2013 18
Slide 19: Loss Recognition & Cash Flow Testing
Loss Recognition & Cash Flow Testing CNO 2012 GAAP Loss Recognition Testing 2012 Statutory Cash Flow Testing gg g Aggregate g margins testing g g remain strong Insurance Company margins consistent with Testing margin increased in 2012 prior years ↑ - ASU 2010-26 All insurance entities pass A
Slide 20: 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 21: 2Q12 Significant Items
2Q12 Significant Items CNO The table Th t bl b below l summarizes i th the fi financial i l iimpactt off significant i ifi t it items on our 2Q2012 nett operating ti income. i Management M t believes b li th thatt identifying the impact of these items enhances the understanding of our operating resu
Slide 22: 3Q12 Significant Items
3Q12 Significant Items CNO The table Th t bl b below l summarizes i th the fi financial i l iimpactt off significant i ifi t it items on our 3Q2012 nett operating ti income. i Management M t believes b li th thatt identifying the impact of these items enhances the understanding of our operating resu
Slide 23: 4Q12 Significant Items
4Q12 Significant Items CNO The table Th t bl b below l summarizes i th the fi financial i l iimpactt off significant i ifi t it items on our 4Q2012 nett operating ti income. i Management M t believes b li th thatt identifying the impact of these items enhances the understanding of our operating resu
Slide 24: 1Q13 Significant Items
1Q13 Significant Items CNO The ttable Th bl bbelow l summarizes i th the fi financial i l iimpactt off the th significant i ifi t it item on our 1Q2013 nett operating ti income. i Management M t believes b li that identifying the impact of this item enhances the understanding of our operating result
Slide 25: 2Q13 Significant Items
2Q13 Significant Items CNO Th ttable The bl bbelow l summarizes i th the fi financial i l iimpactt off the th significant i ifi t it items on our 2Q2013 nett operating ti income. i M Managementt believes b li that identifying the impact of these items enhances the understanding of our operating resu
Slide 26: Quarterly Earnings
Quarterlyy Earnings g CNO ($ millions) 2Q12 3Q12 4Q12 1Q13 2Q13 Bankers Life $ 76.1 $ 80.6 $ 73.7 $ 62.1 $ 79.1 Washington National 33.9 33.9 34.6 29.4 31.8 Colonial Penn 0.6 ((2.6)) 3.2 ((5.4)) 1.2 Other CNO Business 1.9 (53.6) 5.2 3.6 2.6 EBIT* from business segments 112.5 58.3 116.7 89.7 114.7 Co
Slide 27: 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) Th debt The d bt to t capital it l ratio, ti excluding l di accumulated l t d other th comprehensive h i income i (loss), (l ) diff differs ffrom th the d debt bt
Slide 28: 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 return before loss on extinguishment of debt, net realized gains or losses, fair value changes due to fluctuations in the interest rates used to discount embedded derivative l
Slide 29: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures The calculations of: (i) operating return on allocated capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); and (ii) return on equity, for the twelve months end
Slide 30: 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 segment operating return (loss) and consolidated net income (loss) for the twelve months ended June 30, 2013, is as follows (dollars in millions): Bankers Washin
Slide 31: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of average allocated capital (for the purpose of determining return on allocated capital), excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to averag
Slide 32: 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): (Conti
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