CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Debt Investor Presentation (September 2012)
24 slides from CNO Financial's debt investor presentation, Sep 5, 2012
Slide 1: Overview of Recapitalization Plan
Overview of Recapitalization Plan September 5, 2012
Slide 2: 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 3: Non-GAAP Measures
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 debt to capital ratios, excluding accumulated other comprehensive
Slide 4: Strong Performance Sets Stage for Recapitalization
Strong Performance Sets Stage for CNO 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 1H2011 – Operating earnings for 1H2012 up 8% over 1H2011 Co
Slide 5: CNO Recapitalization Plan: Strategic Rationale
CNO Recapitalization Plan CNO Strategic Rationale Raising $900 million to pay off senior secured debt and repurchase majority of the convertible debentures CNO performance, ratings momentum, and favorable market conditions coming together – Market is open and attractively priced – Opportunity to l
Slide 6: Capital Strategy
CNO Recapitalization Plan CNO 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 million Maintain positive ratings profile with goal of achieving
Slide 7: Recapitalization Advances Shareholder Value
Recapitalization Advances Shareholder Value CNO ~8% $0.66 Operating EPS* $0.61 $0.52 $0.50 ~9% $0.38 Expected to reduce the weighted $0.35 average cost of debt by 160 bps Leveraging lowers cost of capital; interest expense to remain relatively flat 2009 2010 2011 PF 2011 YTD PF YTD 2Q12 2Q12 A
Slide 8: Strong and Improving Credit Profile
Strong and Improving Credit Profile CNO Positive Ratings Momentum S&P Senior Secured Rating BB- Today Dec. 21 st , 2010 Positive Outlook Improved financial flexibility: successful repayment of 2013 B+ credit facility & replacement with 9.0% senior secured notes B Aug. 4 th , 2011 Improved capital po
Slide 9: Financing Summary - $900 Million
Management Recapitalization Plan Financing Summary - $900 Million CNO Refinancing Summary Refinancing – Sources/Uses ($ in millions) The recapitalization plan includes New senior secured credit agreement Sources consisting of a $250 million 4 yr term loan Proceeds from 4 Yr Term Loan $ 250.0 and a
Slide 10: Indicative Pro Forma Capitalization
Indicative Pro Forma Capitalization CNO As of June 30, 2012 ($ in millions) Changes Amount Pro Forma (+/-) Holding Company Cash and Investments (1) $ 198 $ (15) $ 183 Senior Secured Debt 499 (499) - New Senior Secured Debt - 900 900 Convertible Senior Unsecured Debentures 293 (200) 93 Unamortized Di
Slide 11: Improved Pro Forma Debt Profile
Improved Pro Forma Debt Profile CNO ($ in millions) Current Maturity Profile1 Pro Forma Maturity Profile2 $ 379 $293 $275 $250 $ 93 $75 $74 $ 79 $55 $ 54 $ 60 $ 60 $20 $4 $ 14 2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020 Term Loan Senior Secured Notes Con
Slide 12: Free Cash Flow
Free Cash Flow CNO Sources Building While Recurring Uses Moderating ($ in millions) 2011 Capital Generation & Free Cash Flow $501 > $100mm retained for RBC Observations on 2011 $154 Build in 2011 RBC $97 million above 350% RBC target (2) $347 ~ $360 Over $100 million used to build RBC in 2011
Slide 13: CNO – Track Record of Strong Execution
CNO – Track Record of Strong Execution CNO Q4 2008 Q1 2011 Separation of Closed Pre-paid $50 million on Block LTC business Senior Credit Facility Q2 2011 Q3 2007 Q4 2009 Began buying back stock Sale of $3 billion Refinanced convertible under repurchase plan Q3 2012 annuity block debentures putable i
Slide 14: Key Takeaways
Key Takeaways CNO CNO franchise well positioned to grow with strong underlying catalysts and alignment of markets-distribution-products-shared services platform – Reinvestment back into expanded distribution driving sales growth with a stable earnings track record over the past 3 years Financial
Slide 15: Q&A
Q&A CNO Financial Group | Investor Presentation | September 5, 2012 15
Slide 16: Appendix
Appendix CNO Financial Group | Investor Presentation | September 5, 2012 16
Slide 17: Information Related to Certain Non-GAAP Financial Measures
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). In addition, the pro forma amounts reflect the impact of our rec
Slide 18: Information Related to Certain Non-GAAP Financial Measures
Information Related to Certain Non-GAAP Financial Measures A reconciliation of operating income and shares used to calculate basic and diluted operations earnings per share is as follows (dollars in millions, except per-share amounts, and shares in thousands). In addition, the pro forma amounts refl
Slide 19: 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 20: Information Related to Certain Non-GAAP Financial Measures
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 financial measure); and (ii) return on equity are as follows (dollars in m
Slide 21: Information Related to Certain Non-GAAP Financial Measures
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 common shareholders’ equity, is as follows (dollars in millions). In a
Slide 22: 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). In ad
Slide 23: 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). In ad
Slide 24: 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) This non-GAAP financial measure differs from the debt to capital ratio because accumulated other comprehensive (income) loss has been excluded from the value of c
CNO Financial Group — Debt Investor Presentation (September 2012) on 6ix