CNO Financial Group, Inc. · NYSE:CNO

CNO Financial — Investor Presentation (October 2010)

23 slides from CNO Financial's investor presentation, Oct 28, 2010

  1. Slide 1: CNO Segmentation

    CNO Segmentation October 28, 2010

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in this press release relative to markets for CNO Financial’s products and trends in CNO Financial’s operations or financial results, as well as other

  3. Slide 3: Non-GAAP Measures

    Non-GAAP Measures This presentation contains certain financial measures that differ from the comparable measures under Generally Accepted Accounting Principles (GAAP). Reconciliations between those non-GAAP measures and the comparable GAAP measures are included in the Appendix, or on the page such m

  4. Slide 4: Splitting the CIG Segment

    Splitting the CIG Segment  Two new segments, consistent with how we are managing our business – Washington National (primarily actively sold lines of business) – Other CNO Business - “OCB” (primarily closed blocks of business)  Another step toward increased transparency – Provides greater visibili

  5. Slide 5: Operating Return on Allocated Capital

    Operating Return on Allocated Capital  Capital allocation to insurance segments based on 275% RBC – Return on allocated capital is consistent with how the company manages its capital – Consistent with the company’s intent to hold excess capital in our non- life holding company – Consolidated 300% R

  6. Slide 6: Relative Size

    Relative Size Average Liabilities for Insurance Products * Interest Non-Interest ($ millions) Sensitive Life Sensitive Life Annuities Health Total Washington - $206.5 - $2,485.5 ** $2,692.0 National OCB $2,593.7 $839.9 $1,614.9 $480.1 *** $5,528.6 Total $2,593.7 $1,046.4 $1,614.9 $2,965.6 $8,220.6 *

  7. Slide 7: Re-Segmented Quarterly Earnings Washington National

    Re-Segmented Quarterly Earnings Washington National ($ millions) 2Q09 3Q09 4Q09 1Q10 2Q10 Insurance policy income $150.3 $149.7 $146.9 $145.4 $144.7 Net investment income: General account assets 48.8 47.8 45.6 45.5 45.8 Other portfolios 0.1 0.2 (1.1) (0.1) 0.1 Fee revenue and other income 0.4 0.5 (0

  8. Slide 8: Re-Segmented Quarterly Earnings OCB

    Re-Segmented Quarterly Earnings OCB ($ millions) 2Q09 3Q09 4Q09 1Q10 2Q10 Insurance policy income $90.7 $80.8 $75.7 $74.8 $73.2 Net investment income: General account assets 89.7 86.7 86.3 87.8 88.5 Other portfolios 2.5 15.5 4.4 4.8 (8.1) Total revenues 182.9 183.0 166.4 167.4 153.6 Insurance policy

  9. Slide 9: Operating Return on Allocated Capital Computation

    Operating Return on Allocated Capital Computation* Adjusted operating earnings for the purpose of calculating operating return on allocated capital is determined as follows: Washington Colonial Other CNO Bankers Life National Penn Business Corporate Total For twelve months ended June 30, 2010 Segmen

  10. Slide 10: 2Q10 Operating Return on Allocated Capital vs. Previous Return on Equity Calculation

    2Q10 Operating Return on Allocated Capital vs. Previous Return on Equity Calculation Bankers Colonial Washington Life Penn National OCB Corp Total Trailing 4 Quarter Operating 12.3% 7.7% 9.9% -5.0% -12.4% 6.0% Return on Allocated Capital Trailing 4 Quarter Operating 11.6% 12.0% CIG -1.0% 6.0% Return

  11. Slide 11: Terminology Changes

    Terminology Changes We will also be making the following terminology changes in our financial reports to more accurately describe our business and/or for consistency with industry peers. Former term Current term Actively managed fixed maturities = Fixed maturities, available for sale Cost of policie

  12. Slide 12: Summary

    Summary  The split of CIG into two segments: – Consistent with how we are managing our business – Gives greater line of sight into the performance of currently sold lines of business – Sharpens focus on improving results of closed blocks  Moving to an operating return on allocated capital will pro

  13. Slide 13: Questions and Answers

    Questions and Answers CNO Financial Group 13

  14. Slide 14: Appendix

    Appendix CNO Financial Group 14

  15. Slide 15: 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 or modification of debt, net realized gains or losses, and increases to our valuation allowance for deferred tax assets (“net operating in

  16. Slide 16: 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

  17. Slide 17: 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, 2010, is as follows (dollars in millions): Bankers Washin

  18. Slide 18: 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

  19. Slide 19: 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): (Cont

  20. Slide 20: Re-Segmented Financial Supplement – Washington National

    Re-Segmented Financial Supplement – Washington National Analysis of income before taxes (in millions) 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 Insurance policy income $151.0 $150.3 $149.7 $146.9 $597.9 $145.4 $144.7 Net investment income (loss): General account invested assets 49.0 48.8 47.8 45.6 191.2 45

  21. Slide 21: Re-Segmented Financial Supplement – Washington National

    Re-Segmented Financial Supplement – Washington National (Continued from previous page) Premiums collected on insurance products (in millions) 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 Health Medicare supplement (first-year) $1.5 $1.9 $2.2 $1.6 $7.2 $1.2 $1.1 Medicare supplement (renewal) 41.3 42.5 44.7 42.

  22. Slide 22: Re-Segmented Financial Supplement – OCB

    Re-Segmented Financial Supplement – OCB Analysis of income (loss) before taxes (in millions) 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 Insurance policy income $93.2 $90.7 $80.8 $75.7 $340.4 $74.8 $73.2 Net investment income (loss): General account invested assets 94.4 89.7 86.7 86.3 357.1 87.8 88.5 Fixed i

  23. Slide 23: Re-Segmented Financial Supplement – OCB

    Re-Segmented Financial Supplement – OCB (Continued from previous page) Premiums collected on insurance products (in millions) 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 Annuities Fixed index (first-year) $17.7 $20.5 $22.9 $9.9 $71.0 $3.5 $2.0 Fixed index (renewal) 1.4 1.4 1.5 1.3 5.6 1.2 1.5 Subtotal - fixe

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