Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q4 2017 Earnings Presentation
38 slides from Cno Financial's earnings presentation, Feb 14, 2018
Slide 1: 4Q17 Financial and operating results
CNO Financial Group | 2017 Investor Day | June 5, 2017 1 4Q17 Financial and operating results for the period ended December 31, 2017 February 14, 2018 Unless otherwise specified, comparisons in this presentation are between 4Q16 and 4Q17. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 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 r
Slide 3: Non-GAAP Measures
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 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 ac
Slide 4: | February 14, 2018
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 4
Slide 5: 2017 Year in Review
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 5 2017 Year in Review Solid earnings results and continued financial strength – Operating EPS up 19% for the full year – Capital metrics remained strong throughout the year – Strong cash flow generation, returned $227 million t
Slide 6: Segment Results
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 6 Segment Results Bankers Life – Total collected premium down 2%, full year up 2% – Annuity account values increased 5% – Life and health NAP down 3% and 13%, respectively – Full year Life and health NAP decreased 15% and 9%, r
Slide 7: 4Q17 Financial Results
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 7 $0.49 $0.51 $0.35 $0.47 Net Operating Income Per Share¹ Net Operating Income Per Share Excluding Significant Items¹ 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 4Q16 4Q17 4Q17 F
Slide 8: Segment Results
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 8 Segment Results ($ millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. Segment Adjusted EBIT Excluding Significant Items1 Segment Highlights 4Q16 1Q17 2Q17 3Q17 4Q17 $90.7 $9
Slide 9: 2017 GAAP Loss Recognition Testing Results
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 9 2017 GAAP Loss Recognition Testing Results Aggregate GAAP margins − Margins increased by approximately $165 million to $4.2 billion primarily driven by new business − Testing margins steady at 22% of net GAAP liabilities − No
Slide 10: Impact of Tax Reform
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 10 Impact of Tax Reform 4Q17 Impacts GAAP charge of $172 million, components include – $224 million due to write-down of deferred tax assets – ($52) million valuation allowance release $2.23 decrease to book value per diluted
Slide 11: Priorities & Opportunities
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 11 Priorities & Opportunities Continue franchise growth and diversification through − Launching new products and services − Expanding to the „right‟ − Enhancing customer experience Reducing long-term care exposure Committed
Slide 12: Questions and Answers
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 12 Questions and Answers
Slide 13: Appendix
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 13 Appendix
Slide 14: Growth Scorecard
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 14 Growth Scorecard ($ millions) 1 Includes third party products sold. See page 20 for a reconciliation to total policies inforce. 2 Measured as 100% of new term life and health annualized premiums and 10% of single premium whole
Slide 15: Health Margins
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 15 $144 $146 $146 $147 $149 57.0% 60.6% 60.4% 59.0% 56.6% 4Q16 1Q17 2Q17 3Q17 4Q17 Earned Premium Reported Benefit Ratio ($ millions) 1 Interest-adjusted benefit ratio (IABR); a non-GAAP measure. Refer to the Appendix for the cor
Slide 16: Investment Results
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 16 Investment Results ($ millions) Average Invested Assets and Cash $23,736 $23,864 $23,982 $24,286 $24,580 $315.6 $312.0 $322.4 $325.9 $325.1 4Q16 1Q17 2Q17 3Q17 4Q17 Net Investment Income 1 Earned Yield excludes assets held in
Slide 17: Average Producing Agents
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 17 Average Producing Agents1 1st Yr 2nd Yr 3rd Yr + Total 1st Yr 2nd Yr 3rd Yr + Total 12/31/2017 1,845 463 1,863 4,171 288 85 314 687 9/30/2017 1,887 483 1,873 4,243 287 89 310 686 6/30/2017 1,941 503 1,880 4,324 285 91 308 684
Slide 18: 4Q17 Holding Company Liquidity
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 18 4Q17 Holding Company Liquidity ($ millions) 4Q17 2017 Cash and Investments Balance - Beginning $379.8 $263.6 Sources Dividends from Insurance Subsidiaries 70.9 357.7 Dividends from Non-insurance Subsidiaries - 5.8 Service and
Slide 19: Tax Asset Summary
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 19 Loss Carryforwards Valuation Allowance Non- Life(1) $490 Tax Asset Summary ($ millions) Loss Carryforwards Details Total estimated economic value of NOLs of $265 million @ 10% discount rate (~$1.56 on per share basis) NOLs
Slide 20: Policies Inforce
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 20 Policies Inforce 4Q16 1Q17 2Q17 3Q17 4Q17 Policies inforce: Bankers Life 1,526,344 1,519,474 1,515,445 1,510,160 1,500,573 Washington National 961,689 964,642 964,519 963,141 964,138 Colonial Penn 846,372 853,307 849,353 845,1
Slide 21: 4Q16 Significant Items
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 21 The table below summarizes the financial impact of significant items on our 4Q16 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars
Slide 22: 1Q17 Significant Items
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 22 Net Operating Income: Bankers Life $ 89.7 $ 1.7 (1) $ 91.4 Washington National (2) Colonial Penn Long-term care in run-off 0.4 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense A
Slide 23: 2Q17 Significant Items
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 23 Net Operating Income: Bankers Life $ 112.6 $ (9.4) (1) $ 103.2 Washington National Colonial Penn Long-term care in run-off 1.7 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense A
Slide 24: 3Q17 Significant Items
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 24 Net Operating Income: Bankers Life $ 106.9 $ - $ 106.9 Washington National Colonial Penn (1) Long-term care in run-off (1.0) - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expense Adj
Slide 25: 4Q17 Significant Items
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 25 Net Operating Income: Bankers Life $ 109.7 $ (10.8) (1) $ 98.9 Washington National (1) Colonial Penn Long-term care in run-off 0.6 - Adjusted EBIT from business segments Corporate Operations, excluding corporate interest expen
Slide 26: Quarterly Earnings
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 26 Quarterly Earnings *Management believes that an analysis of earnings before net realized investment gains (losses), fair value changes in embedded derivative liabilities, fair value changes and amendment related to the agent d
Slide 27: Non-GAAP measures information
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 27 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
Slide 28: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 28 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-
Slide 29: Operating income and diluted share reconciliation
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 29 4Q16 1Q17 2Q17 3Q17 4Q17 (a) Operating income 84.9$ 59.8$ 78.6$ 76.7$ 85.8$ Weighted average shares outstanding for basic earnings per share 173,634 173,431 170,556 168,684 167,428 Effect of dilutive securities on weighted ave
Slide 30: Book value per diluted share
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 30 Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised, restricted stock and performance units were vested and convertible securit
Slide 31: Interest-adjusted benefit ratio
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 31 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 accumula
Slide 32: Operating return measures
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 32 Information Related to Certain Non-GAAP Financial Measures Operating return measures Management believes that an analysis of net income applicable to common stock before net realized investment gains or losses, fair value chan
Slide 33: Operating return on equity calculations
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 33 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
Slide 34: Operating earnings and significant items summary
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 34 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 millio
Slide 35: Pretax operating earnings reconciliation
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 35 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): 4Q16 1Q17 2Q17 3Q17 4Q17 Pretax operati
Slide 36: Consolidated capital reconciliation
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 36 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) t
Slide 37: Consolidated capital reconciliation
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 37 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) t
Slide 38: Debt to capital ratio
CNO Financial Group | Fourth Quarter 2017 Earnings | February 14, 2018 38 Information Related to Certain Non-GAAP Financial Measures 4Q16 1Q17 2Q17 3Q17 4Q17 Corporate notes payable 912.9$ 913.4$ 913.9$ 914.4$ 914.6$ Total shareholders' equity 4,486.9 4,606.8 4,779.3 4,881.7 4,847.5 Total capital 5,