Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (September 2012)
24 slides from Cno Financial's investor presentation, Sep 5, 2012
Slide 1: Overview of Recapitalization Plan
Overview of Recapitalization Plan September 5, 2012 Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group | Investor Presentation | September 5, 2012 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
Slide 3: Non-GAAP Measures
CNO Financial Group | Investor Presentation | September 5, 2012 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; operating return measures; and
Slide 4: Strong Performance Sets Stage for Recapitalization
CNO Financial Group | Investor Presentation | September 5, 2012 4 Strong Performance Sets Stage for Recapitalization Continued focus on the underserved and growing senior middle-income market – Profitable organic growth a priority Business continues to perform well – Sales grew 9% in 1H2012 over
Slide 5: CNO Recapitalization Plan Strategic Rationale
CNO Financial Group | Investor Presentation | September 5, 2012 5 CNO Recapitalization Plan Strategic Rationale CNO performance, ratings momentum, and favorable market conditions coming together – Market is open and attractively priced – Opportunity to lower run-rate cost of capital Pro forma EP
Slide 6: CNO Recapitalization Plan Capital Strategy
CNO Financial Group | Investor Presentation | September 5, 2012 6 CNO Recapitalization Plan Capital Strategy Maintain capital cushion to absorb stress-test conditions – Leverage in the 20% range with consolidated RBC > 350% – Interest coverage of at least 5x – Holding company liquidity > $100 mill
Slide 7: Recapitalization Advances Shareholder Value
CNO Financial Group | Investor Presentation | September 5, 2012 7 4.5% 5.4% 6.1% 6.5% 6.0% 6.4% 2009 2010 2011 PF 2011 YTD 2Q12 PF YTD 2Q12 $0.52 $0.50 $0.61 $0.66 $0.35 $0.38 2009 2010 2011 PF 2011 YTD 2Q12 PF YTD 2Q12 Operating EPS* Recapitalization Advances Shareholder Value Expected to reduce
Slide 8: Strong and Improving Credit Profile
CNO Financial Group | Investor Presentation | September 5, 2012 8 Strong and Improving Credit Profile Positive Ratings Momentum On September 4, 2012, A.M. Best announced an upgrade from B+ to B++ in the financial strength ratings of our core operating companies CNO Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'1
Slide 9: Recapitalization Plan Financing Summary - $900 Million
CNO Financial Group | Investor Presentation | September 5, 2012 9 Management Recapitalization Plan Financing Summary - $900 Million Refinancing Summary Refinancing – Sources/Uses ($ in millions) New senior secured credit agreement consisting of a $250 million 4 yr term loan and a $400 million 6 yr
Slide 10: Indicative Pro Forma Capitalization
CNO Financial Group | Investor Presentation | September 5, 2012 10 Indicative Pro Forma Capitalization As of June 30, 2012 ($ in millions) (1) Includes $76.0 million of cash and money market, $75.7 million of liquid fixed income investments and $46.0 million of alternative investments. (2) Change in
Slide 11: Improved Pro Forma Debt Profile
CNO Financial Group | Investor Presentation | September 5, 2012 11 $ 14 $ 54 $ 60 $ 79 $ 60 $ 4 $ 379 $250 $ 93 2012 2013 2014 2015 2016 2017 2018 2019 2020$20 $55 $75 $74 $275 $293 2012 2013 2014 2015 2016 2017 2018 2019 2020Improved Pro Forma Debt Profile ($ in millions) Extend maturities to 202
Slide 12: Free Cash Flow Sources Building While Recurring Uses Moderating
CNO Financial Group | Investor Presentation | September 5, 2012 12 Free Cash Flow Sources Building While Recurring Uses Moderating ($ in millions) Observations on 2011 RBC $97 million above 350% RBC target Over $100 million used to build RBC in 2011 Modest capital required to support business
Slide 13: CNO – Track Record of Strong Execution
CNO Financial Group | Investor Presentation | September 5, 2012 13 Q2 2012 Initiation of dividend program CNO – Track Record of Strong Execution Q4 2008 Separation of Closed Block LTC business 2007/2008 CIG sales & marketing rightsizing, and vacated excess Chicago space - $11 million annual expense
Slide 14: Key Takeaways
CNO Financial Group | Investor Presentation | September 5, 2012 14 Key Takeaways Strategic recapitalization plan – Opportunity to lower run-rate cost of capital – Market is open and attractively priced – Improved financial flexibility – Convertible overhang reduced – Meaningful “stair-step” for EP
Slide 15: Q&A
CNO Financial Group | Investor Presentation | September 5, 2012 15 Q&A
Slide 16: Appendix
CNO Financial Group | Investor Presentation | September 5, 2012 16 Appendix
Slide 17: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 17 Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income applicable to common stock to net operating income (and related per-share amounts) is as follows (dollars in millions, except per-share amounts
Slide 18: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 18 Pro forma Pro forma YTD YTD 2011 Adjustments 2011 6/30/2012 Adjustments 6/30/2012 Operating income 171.5$ -$ 171.5$ 94.8$ -$ 94.8$ Add: interest expense on 7.0% Convertible Senior Debentures due 2016, net of income taxes 14.7 (10.0)
Slide 19: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 19 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 fluctu
Slide 20: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 20 Information Related to Certain Non-GAAP Financial Measures The calculations of: (i) operating return on average capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financi
Slide 21: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 21 Information Related to Certain Non-GAAP Financial Measures A reconciliation of average capital excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to average com
Slide 22: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 22 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 comm
Slide 23: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 23 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 comm
Slide 24: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Presentation | September 5, 2012 24 Information Related to Certain Non-GAAP Financial Measures A reconciliation of the debt to capital ratio to debt to capital, excluding AOCI is as follows (dollars in millions). In addition, the pro forma amounts reflect the impact of
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