Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q2 2015 Earnings Presentation
41 slides from Cno Financial's earnings presentation, Jul 30, 2015
Slide 1: 2Q15 Financial and operating results
2Q15 Financial and operating results for the period ended June 30, 2015 July 30, 2015 Unless otherwise specified, comparisons in this presentation are between 2Q15 and 2Q14. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 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 results of operati
Slide 3: Non-GAAP Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 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 accumulated other c
Slide 4: 30, 2015
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 4
Slide 5: 2Q15 Summary
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 5 CNO Operating Earnings Per Share Excluding Significant Items* Operating Earnings Excl. Significant Items* $71.3 $66.6 Weighted Average Shares Outstanding 222.1 198.1 2Q15 Summary * A non-GAAP measure. Refer to the Appendix for a reconciliation
Slide 6: 2Q15 Sales and Distribution Results: Bankers Life
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 6 2Q14 $63.1 3Q14 $61.8 4Q14 $73.6 1Q15 $61.6 2Q15 $61.3 2Q15 Sales and Distribution Results Bankers Life * MA/PDP sales are excluded from NAP in all periods ** Includes Medicare Advantage, Medicare supplement, PDP and Dental/Vision products ($ m
Slide 7: Washington National 2Q15 Sales and Distribution Results
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 7 Washington National 2Q15 Sales and Distribution Results ($ millions) Quarterly NAP Trailing 4-Quarters NAP $97.4 $99.1 $99.2 $99.8 $100.2 Supplemental Health Collected Premiums $129.1 $127.1 $133.3 $132.7 $136.1 * Total producing agents include
Slide 8: 2Q15 Sales and Distribution Results: Colonial Penn
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 8 2Q14 $16.5 3Q14 $16.4 4Q14 $14.9 1Q15 $21.1 2Q15 $18.5 2Q15 Sales and Distribution Results Colonial Penn ($ millions) Quarterly NAP Trailing 4-Quarters NAP $62.7 $63.7 $64.6 $68.9 $70.9 Collected Premiums $60.9 $61.9 $61.3 $65.1 $65.1 2Q sale
Slide 9: 2Q Consolidated Financial Highlights
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 9 2Q Consolidated Financial Highlights CNO Earnings Remain Strong ‒ Normalized operating EPS up 6% ‒ Medicare supplement, annuity, life and investment results continue to drive favorable results ‒ Long-term care results in-line with expectation
Slide 10: Segment Earnings
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 10 $(3.7) $(9.1) $(8.8) $(1.3) $(5.0) $3.8 $0.4 $2.8 $(5.9) $4.2 $87.4 $98.3 $94.5 $82.2 $86.4 $32.3 $30.1 $30.2 $31.5 $29.1 2Q14 3Q14 4Q14 1Q15 2Q15 Corporate CP BLC WN ($ millions) * A non-GAAP measure. See the Appendix for a reconciliation to
Slide 11: Health Margins
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 11 $127 $126 $124 $123 $121 79.2% 70.5% 77.8% 83.0% 84.6% 2Q14 3Q14 4Q14 1Q15 2Q15 $127 $126 $132 $133 $134 54.8% 56.0% 54.4% 57.6% 65.7% 2Q14 3Q14 4Q14 1Q15 2Q15 Earned Premium Reported Benefit Ratio ($ millions) * Interest-adjusted benefit rati
Slide 12: Investment Results
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 12 $21,687 $21,852 $21,854 $21,956 $347.4 $300.1 $305.4 $300.1 $302.1 2Q14 3Q14 4Q14 1Q15 2Q15 Net Investment Income $24,853 $3,492 $4.9 $4.2 $4.2 $21.3 $15.4 $2.8 $12.6 $1.3 $7.9 Investment Results CNO ($ millions) Earned Yield*: 5.83% 5.79% 5.8
Slide 13: May 2015 Refinancing
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 13 May 2015 Refinancing CNO Capitalized on favorable conditions and locked in an investment grade debt structure ‒ Moved to traditional unsecured structure ‒ Extended maturities ‒ Minimal financial covenants ‒ Enhanced financial flexibility by
Slide 14: Capital Targets & Excess Capital Deployment
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 14 v Capital Targets & Excess Capital Deployment CNO 2014 2Q15 2015 Y.E. Outlook RBC Ratio 431% 443% ~ 425% Liquidity $345mm $385mm > $300mm Leverage* 17.1% 19.7% ~ 20% Key Capital Ratios 2015 Capital Utilization (in millions) * A non-GAAP measur
Slide 15: ROE Development
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 15 ROE Development CNO Notable Items Normalized Operating ROE* * A non-GAAP measure. Refer to the Appendix for a reconciliation to the corresponding GAAP measure. Operating earnings exclude the results of CLIC prior to being sold. Operating ROE*:
Slide 16: Wrap-up
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 16 Wrap-up CNO Investing in growth & productivity Continued strength in cash flow and capital generation Continued ratings momentum; achieving investment grade remains a priority CFO search underway
Slide 17: Questions and Answers
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 17 Questions and Answers
Slide 18: Appendix
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 18 Appendix
Slide 19: 2015 Sales Outlook
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 19 2015 Sales Outlook Consolidated sales growth guidance adjusted to 1% - 3% Sales guidance adjusted to flat to -3% Sales growth guidance adjusted to 3-5% Sales growth guidance increased to 12-15% CNO
Slide 20: Producing Agent Counts
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 20 Producing Agent Counts 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 1st Yr 2nd Yr 3rd Yr + Total Qtr Avg (3) 6/30/2015 2,484 606 1,891 4,981 4,939 423 132 346 901 882 3/31/2015 2,468 657 1,894 5,019 4,850 344 127 340 811 830 12/31/2014 2,258 664 1
Slide 21: 2Q15 Holding Company Liquidity
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 21 2Q15 Holding Company Liquidity CNO ($ millions) 2Q15 Cash and Investments Balance - Beginning $311.0 Sources Net Dividends from Insurance Subsidiaries 37.3 Dividends from Non-insurance Subsidiaries 5.3 Interest/Earnings on Corporate Investment
Slide 22: Debt Maturity Profile
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 22 Debt Maturity Profile ($ millions) CNO $325 $500 $100 2015 »» 2019 2020 »» 2025 Senior Unsecured Notes Revolver Reflects May 2015 refinancing
Slide 23: Leveraging Considerable Tax Assets
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 23 Non-Life $871 Life $130 Loss Carryforwards Valuation Allowance Leveraging Considerable Tax Assets CNO ($ millions) 2Q 2015 Loss Carryforwards $233* 2015 Outlook and Value v Annual cash flows are expected to be reduced by $50 million in 2016
Slide 24: Significant items: 2Q2014 net operating income
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 24 Net Operating Income: Bankers Life $ 87.4 $ - $ 87.4 Washington National Colonial Penn EBIT from business segments continuing after the CLIC sale Corporate Operations, excluding corporate interest expense EBIT from operations continuing after
Slide 25: Significant items: 3Q2014 net operating income
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 25 The table below summarizes the financial impact of significant items on our 3Q2014 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions).
Slide 26: Significant items: 4Q2014 net operating income
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 26 Net Operating Income: Bankers Life $ 103.5 $ (9.0) (1) $ 94.5 Washington National (2) Colonial Penn EBIT from business segments continuing after the CLIC sale Corporate Operations, excluding corporate interest expense EBIT from operations cont
Slide 27: 1Q15 Significant Items
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 27 The table below summarizes the financial impact of the significant item on our 1Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions
Slide 28: 2Q15 Significant Items
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 28 The table below summarizes the financial impact of the significant item on our 2Q2015 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions
Slide 29: Quarterly Earnings
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 29 Quarterly Earnings CNO *Management believes that an analysis of earnings before the net loss on sale of CLIC and gain (loss) on reinsurance transactions, the earnings of CLIC prior to being sold, net realized investment gains (losses), fair va
Slide 30: Non-GAAP measures: additional information
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 30 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 amou
Slide 31: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 31 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 amounts): 2Q14 3Q
Slide 32: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 32 2Q14 3Q14 4Q14 1Q15 2Q15 Operating income 71.3$ 76.6$ 69.1$ 60.1$ 60.8$ Weighted average shares outstanding for basic earnings per share 216,538 210,525 204,298 200,491 195,857 Effect of dilutive securities on weighted average shares: Stock op
Slide 33: Book value per diluted share
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 33 Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options and warrants were exercised, restricted stock and performance units were vested and convertible securities
Slide 34: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 34 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 backin
Slide 35: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 35 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before the net loss on sale of CLIC and gain (loss) on reinsurance transactions,
Slide 36: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 36 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) o
Slide 37: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 37 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 Op
Slide 38: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 38 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): 2Q14 3Q14 4Q14 1Q15 2Q15 Pretax operating earnings (a no
Slide 39: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 39 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 sharehol
Slide 40: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 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 common sharehol
Slide 41: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | 2Q2015 Earnings | July 30, 2015 41 Information Related to Certain Non-GAAP Financial Measures 2Q14 3Q14 4Q14 1Q15 2Q15 Corporate notes payable 827.3$ 814.0$ 794.4$ 774.8$ 925.0$ Total shareholders' equity 4,844.3 4,722.0 4,688.2 4,753.6 4,364.2 Total capital 5,671.6$ 5,536.0$ 5