Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q3 2011 Earnings Presentation
78 slides from Cno Financial's earnings presentation, Oct 26, 2011
Slide 1: 3Q11 Financial and Operating Results
3Q11 Financial and operating results for the period ended September 30, 2011 October 26, 2011 Unless otherwise specified, comparisons in this presentation are between 3Q11 and 3Q10. Exhibit 99.1
Slide 2: Forward-Looking Statements
CNO Financial Group 2 Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in these materials relative to markets for CNO Financial‟s products and trends in CNO Financial‟s operations or financial results
Slide 3: Non-GAAP Measures
CNO Financial Group 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 comprehensive income (loss) per sha
Slide 4: CNO Financial Group
E 3 CNO FINANCIAL GROUP CNO Financial Group
Slide 5: 3Q11: Summary
CNO Financial Group 5 3Q11: Summary CNO Net income increased to $196.0 million, from $49.4 million Net operating income* of $46.5 million, down 1% Operating EPS of 17 cents per diluted share, up from 16 cents Consolidated RBC at 359%, up 8 percentage points from 6/30/11 – Statutory earnings
Slide 6: 3Q11 Summary of Results
CNO Financial Group 6 3Q11 Summary of Results CNO ($ millions, except per-share amounts) *Management believes that an analysis of earnings before: (i) decreases in the valuation allowance for the deferred tax asset; (ii) loss on extinguishment of debt; (iii) net realized investment gains (losses); a
Slide 7: Quarterly Earnings
CNO Financial Group 7 Quarterly Earnings CNO *Management believes that an analysis of earnings before net realized investment gains (losses), corporate interest, loss on extinguishment of debt, fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilit
Slide 8: Operating ROE
CNO Financial Group 8 Operating ROE CNO Operating ROE*, Trailing 4 Quarters *Operating return excludes loss on extinguishment of debt, net realized investment gains (losses), fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our
Slide 9: Operating EPS (Diluted)
CNO Financial Group 9 Operating EPS* (Diluted) CNO Increased EPS reflects share buyback activity 2Q11 $0.20 3Q10 $0.16 4Q10 $0.18 1Q11 $0.18 3Q11 $0.17 * Operating earnings per share exclude loss on extinguishment of debt, net realized investment gains (losses), fair value changes due to fluctuati
Slide 10: Book Value
CNO Financial Group 10 Book Value CNO *See Appendix for a reconciliation to the corresponding GAAP measure. ($ millions, except per-share amounts) 09/30/10 12/31/10 03/31/11 06/30/11 09/30/11 Shareholders' Equity (Excluding AOCI/L) $3,916.2 $4,087.0 $4,142.8 $4,190.5 $4,351.5 Accumulated Other Compr
Slide 11: Pre/After Tax GAAP Operating Income
CNO Financial Group 11 Pre/After Tax GAAP Operating Income CNO ($ millions) $164.6 $181.9 $207.6 $87.7 $99.7 $117.7 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2009 2010 LTM as of 9/30/2011 Net Operating Income Tax Expense on Operating Income $252.3 $325.3 $281.6
Slide 12: Statutory Earnings Power
CNO Financial Group 12 Statutory Earnings Power CNO ($ millions) $269.5 $279.2 $348.5 $137.1 $132.4 $147.4 -$50.0 $50.0 $150.0 $250.0 $350.0 $450.0 $550.0 2009 2010 LTM as of 9/30/2011 Pre-Tax Operating Income Fees and Interest to Holding Company $406.6 $411.6 $495.9
Slide 13: Financial Strength
CNO Financial Group 13 3Q11 359%2Q11 351% 1Q11 341%4Q10 332% 3Q10 320% Financial Strength CNO RBC increased to 359% in 3Q11 – Positive impact reflects increase from Statutory income (+14 pts) – Partially offset by dividends paid up to the holding company (-6 pts) *Risk-Based Capital (“RBC”) requir
Slide 14: Growth in the CNO Franchise
CNO Financial Group 14 $11,478.0 $12,106.9 $12,836.9 $2,894.9 $2,676.8 $2,635.6 $698.0 $703.8 $693.6 2009 2010 3Q2011 Bankers Life Washington National Colonial Penn OCB Growth in the CNO Franchise ($ millions) $16,176.3 Average liabilities on actively marketed business segments are increasing, while
Slide 15: 3Q Summary: Bankers Life
CNO Financial Group 15 Earnings of $91.4 million, down 4% – $3 million reduction in earnings from PDP product sales; – 3Q10 earnings included $6.5 million of favorable PFFS developments (business assumed through reinsurance agreements with Coventry which expired on January 1, 2010); – Partially of
Slide 16: Sales and Distribution Results
CNO Financial Group 16 Sales and Distribution Results Strong sales results – Up 10% • Life sales up 12% • Med supp sales up 21% Bankers Life Quarterly NAP* *PFFS and PDP sales are not comparable and are excluded from NAP in all periods; in addition, we no longer assume any of the risks on PFFS con
Slide 17: Medicare Supplement Update
CNO Financial Group 17 Medicare Supplement Update Bankers Life Industry and Competition – Competitors continue to take rate increases in most markets – Received approval in 32 states for 4 tier product structure, offering gender specific and preferred rates – New pricing model includes lower rates
Slide 18: LTC Update
CNO Financial Group 18 LTC Update Bankers Life Stable financial results – Interest adjusted benefit ratio over the past several quarters in the 66 - 75% range, reflecting ongoing claims management improvements and successfully gaining approval for rate increases where necessary Rate increase acti
Slide 19: Quarterly Earnings: Bankers Life
CNO Financial Group 19 Quarterly Earnings 3Q10 4Q10 1Q11 2Q11 3Q11 Insurance policy income $405.1 $394.2 $400.0 $409.6 $404.6 Net investment income: General account assets 182.4 187.7 191.3 196.5 194.3 Other portfolios 26.1 16.3 18.3 0.4 (36.3) Fee revenue and other income 3.6 4.2 2.3 3.3 3.6 Total
Slide 20: 3Q Summary: Washington National
CNO Financial Group 20 3Q Summary Washington National Earnings of $22.1 million, down 19% – $6.0 million out-of-period adjustment in 3Q11 which reduced earnings; – Partially offset by $1.0 million of additional spread earnings in 3Q11 on investments purchased with the proceeds of increased borrowi
Slide 21: Washington National Sales Results
CNO Financial Group 21 Washington National $0.8 $0.4 $18.0 $0.3 $0.9 $18.6 Life Medicare Supplement Supplemental Health 3Q10 NAP 3Q11 NAP 3Q11 Sales Results ($ millions) Supplemental health sales up 3% Life sales up 3%
Slide 22: Quarterly Earnings: Washington National
CNO Financial Group 22 Quarterly Earnings Washington National Management believes that an analysis of income (loss) before net realized investment gains (losses), net of related amortization (a non-GAAP financial measure), is important to evaluate the financial performance of our business, and is a
Slide 23: 3Q Summary: Colonial Penn
CNO Financial Group 23 Earnings of $8.1 million, up 4% reflecting growth in the block Sales growth continues, NAP up 10% Robust lead generation activity continues 3Q Summary Colonial Penn
Slide 24: Quarterly Earnings: Colonial Penn
CNO Financial Group 24 Quarterly Earnings Colonial Penn 3Q10 4Q10 1Q11 2Q11 3Q11 Insurance policy income $48.8 $48.6 $50.3 $50.9 $50.8 Net investment income 9.9 10.0 10.3 10.5 10.1 Fee revenue and other income 0.2 0.2 0.2 0.2 0.2 Total revenues 58.9 58.8 60.8 61.6 61.1 Insurance policy benefits 36.1
Slide 25: Plans to Invest in Organic Growth
CNO Financial Group 25 Plans to Invest in Organic Growth New COO role will focus on optimizing growth initiatives across the segments and achieving operational efficiencies to support that growth In the process of launching several initiatives: –Bankers • Field Management Trainee Program • Top Gu
Slide 26: 3Q Summary: Other CNO Business
CNO Financial Group 26 Earnings of $2.0 million, compared to $24.4 million loss – Approximately $13 million improvement in margins in the interest- sensitive life block; – $4 million of reduced legal costs; – A $6.0 million write off of the present value of future profits related to this segment’s
Slide 27: Quarterly Earnings (Losses): Other CNO Business
CNO Financial Group 27 Quarterly Earnings (Losses) Other CNO Business 3Q10 4Q10 1Q11 2Q11 3Q11 Insurance policy income $75.7 $74.2 $71.5 $72.5 $72.2 Net investment income: General account assets 88.0 87.8 88.2 87.6 85.4 Other portfolios 8.5 7.3 6.5 (0.9) (10.8) Total revenues 172.2 169.3 166.2 159.2
Slide 28: Excess Capital
CNO Financial Group 28 3Q11 359% 2Q11 351% 1Q11 341% 4Q10 332% 3Q10 320% 3Q10 $190.1 4Q10 $161.1 1Q11 $169.0 2Q11 $234.0 3Q11 $168.9 Excess Capital Consolidated RBC Ratio Liquidity ($ millions) Approximately $41 million in excess of management target $68.9 million in excess of management target 350%
Slide 29: Excess Capital Utilization Opportunities
CNO Financial Group 29 Excess Capital Utilization Opportunities Debt Prepayment Share Buybacks Investing in Business for Additional Growth – Growth and expansion of distribution channels – Recapture reinsurance blocks Holding Company Investment Portfolio – Utilize non-life operating loss carry
Slide 30: Share Repurchase & Debt Payments
CNO Financial Group 30 Share Repurchase & Debt Payments 3Q Activity – Purchased 6.6 million shares during 3Q 2011 for $39.5 million – Average cost per share of $6.01 – 2.6% of outstanding shares at June 30, 2011 – Mandatory principal prepayment of $39.5 million made on Senior Secured Credit Facili
Slide 31: Valuation Allowance
CNO Financial Group 31 Valuation Allowance $558.0 Valuation Allowancy $353.1 Net $614.8 Net $311.5 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 Life Non-Life Capital Valuation Allowance for Loss Carryforwards Net Loss Carryforwards in Deferred Tax Asset Gross $614.8 Gross $353.1 Gross $869.5 GAAP Balan
Slide 32: GAAP Valuation Allowance Reduction
CNO Financial Group 32 GAAP Valuation Allowance Reduction ($ millions) CNO $143 million valuation allowance reduction in 3Q11; $95 million reduction in 4Q10 No longer in a 3-year cumulative loss position as of 9/30/2011 Achieved normalized taxable income in each of the last 12 quarters Abilit
Slide 33: GAAP Valuation Allowance Model
CNO Financial Group 33 GAAP Valuation Allowance Model ($ millions) CNO (1) Modeled future taxable earnings are based on the 3-year average normalized taxable income, which is assumed to grow by 5 percent per year in the next five years and then remain flat for the remaining years. Life NOLs Non-life
Slide 34: DAC Accounting Change: EITF-09G
CNO Financial Group 34 DAC Accounting Change: EITF-09G No change in the economics of our business – GAAP accounting change only – Will adopt retrospectively in 1Q2012 Where and why CNO is expected to be impacted disproportionately: – Direct marketing at Colonial Penn – Career distribution at Banke
Slide 35: DAC Accounting Change: Estimated Impact Illustration – Colonial Penn
CNO Financial Group 35 CNO DAC Accounting Change: Estimated Impact Illustration – Colonial Penn Reported Total In-force New business New annualized premiums 46.4$ 46.4$ -$ 46.4$ Premiums 193.5$ 193.5$ 161.2$ 32.3$ Investment/other income 41.5 41.5 41.5 - Benefits & change in reserves 144.9 144.9 126
Slide 36: DAC Accounting Change: Estimated Impact Illustration – Colonial Penn
CNO Financial Group 36 DAC Accounting Change: Estimated Impact Illustration – Colonial Penn CNO Acquisition expenses, net of deferrals & amortization: $50.7 $36.5 $43.9 Statutory pretax operating income: ($4.2) $14.1** $4.6 Colonial Penn - GAAP EBIT Restated for EITF-09G: New Business vs Inforce $(3
Slide 37: DAC Accounting Change: Estimated Impacts of EITF-09G
CNO Financial Group 37 DAC Accounting Change: Estimated Impacts of EITF-09G September 30, 2011 Pro Forma CNO Continue to evaluate the estimated impact Expect that we will be able to defer most commission payments plus other costs directly related to the production of new business Aggregate Per D
Slide 38: DAC Accounting Change: Potential Management Actions
CNO Financial Group 38 DAC Accounting Change: Potential Management Actions Business Model – Modify sales and marketing compensation (e.g. Bankers agents and Colonial Penn telemarketers) – Reinsurance and other transactions Develop Non-GAAP Measures to Disclose Impacts Planning to host a call in
Slide 39: Impact of Sustained Low-Interest Rate Environment
CNO Financial Group 39 Impact of Sustained Low-Interest Rate Environment CNO Factored into 3Q10 and 3Q11 loss recognition testing – Assumed continuation of current interest rates through the end of the next calendar year – Resulted in charges of approximately $13 million in both 2010 and 2011 St
Slide 40: Net Investment Income
CNO Financial Group 40 Net Investment Income CNO Relatively stable yield progression despite low interest rate environment Year over year increase in investment income primarily due to growth in assets including expanded FHLB floating rate program Linked quarter declines in investment income a
Slide 41: Realized Gains/Losses Recognized through Net Income
CNO Financial Group 41 Realized Gains/Losses Recognized through Net Income CNO 3Q10 4Q10 1Q11 2Q11 3Q11 Gross Gains $101.5 $138.8 $43.5 $29.7 $74.5 Gross Losses (73.4) (13.5) (25.1) (16.7) (41.0) Losses due to recognition of other-than-temporary impairments recognized in earnings (24.5) (77.1) (13.3
Slide 42: Unrealized Gain/Loss
CNO Financial Group 42 Unrealized Gain/Loss* CNO ($ millions) *Includes debt and equity securities classified as available for sale. Excludes investments from variable interest entities which we consolidate under GAAP. 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3
Slide 43: Impairments by Asset Class
CNO Financial Group 43 Time Warner Cable Home Depot, Inc. Ahold Lease USA, Inc. Heinz (H.J.) Company Cox Enterprises - 5.0 10.0 15.0 20.0 25.0 3Q10 4Q10 1Q11 2Q11 3Q11 Commercial Mortgage Loans Corporates Alt-A / Prime Jumbo ABS RMBS/ CMBS Subprime Municipals CDO Other CNO ($ millions) Impairments (
Slide 44: Commercial Mortgage Loans at 9/30/11
CNO Financial Group 44 Commercial Mortgage Loans at 9/30/11 By Vintage CNO By Property Type Current LTV of approximately 66.2% Average trailing debt service coverage ratio (DSCR) stable at approximately 1.45 As of 9/30/11, 0.66% delinquency rate 2008 18.8% 2007 20.2% 2006 17.8% 2005 9.3% 2004
Slide 45: Asset Allocation at 9/30/11
CNO Financial Group 45 Asset Allocation at 9/30/11* MTM reflects low market yields in most credit sectors $1,362 $466 $907 $1,959$1,434$957 $1,777 $14,875 $2,235 $1,405 $452 $904 $1,780 $1,393$1,003 $1,648 $2,139 $13,483 IG Corporates CMOs Mortgage Loans HY Corporates CMBS Municipals ABS Govts/Agenc
Slide 46: Investment Quality: Fixed Maturities
CNO Financial Group 46 Investment Quality: Fixed Maturities* CNO 92% investment grade Corporate bond ratings trending positive on fundamentals, offset by increase in M&A / corporate actions RMBS ratings erosion due to seasoning effect (limited NAIC RBC impact) Fixed Maturities, available for s
Slide 47: Holding Company Investments at 9/30/11
CNO Financial Group 47 Holding Company Investments at 9/30/11 CNO ($ millions) Alternatives & Equities (Balance) Fixed Income (net) $75 Cash & Money Market $25 Cash and Money Market $54.9 Fixed Income (net) 66.0 Equities 16.1 Alternatives 31.9 TOTAL $168.9 Long Term Target Allocation Current Investm
Slide 48: European Debt by Select Countries
CNO Financial Group 48 European Debt by Select Countries CNO Sovereigns Corporates Banks Total Market Portugal -$ -$ -$ -$ -$ Italy - 26.1 - 26.1 22.6 Greece - - - - - Spain - 63.9 42.1 106.0 98.9 Total -$ 90.0$ 42.1$ 132.1$ 121.5$ ($ millions)
Slide 49: Operating Return on Allocated Capital Proforma Impact Excluding OCB
CNO Financial Group 49 Operating Return on Allocated Capital Proforma Impact Excluding OCB (simplified illustration) (as of September 30, 2011) CNO * See Appendix slide 56 for computation of adjusted operating earnings and allocated capital for purposes of calculating Operating Return on Allocated C
Slide 50: Summary
CNO Financial Group 50 Summary Core business continues to perform well – Solid earnings continued in 3Q – Sales grew 8% Financial strength and credit profile continue to improve – Generating significant amounts of excess capital – Statutory capital and RBC continue to increase – Leverage at 18%
Slide 51: Questions and Answers
CNO Financial Group 51 Questions and Answers
Slide 52: Appendix
CNO Financial Group 52 Appendix
Slide 53: Covenant Metrics
CNO Financial Group 53 Covenant Metrics Interest Coverage Ratio RBC Ratio $1,522 $1,596 $1,665 $1,668 $1,696 0 500 1,000 1,500 2,000 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11 320% 341% 351% 359% 332% 200% 300% 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11 Statutory Surplus ($ millions) Debt to Capital* *
Slide 54: 3Q11 Holding Company Liquidity
CNO Financial Group 54 3Q11 Holding Company Liquidity CNO ($ millions) 3Q 2011 YTD 2011 Cash and Investments Balance - Beginning $234.0 $161.1 Sources Dividends from Insurance Subsidiaries 27.4 165.4 Dividends from Non-Life Affiliates 3.5 3.5 Surplus Debenture Interest 22.7 46.8 Service and Investme
Slide 55: Debt Maturity Profile
CNO Financial Group 55 $25 $25 $275 $275 $85 $34 $75 $55 $20 $293 $45 $80 $85 $327 $75 2011 2012 2013 2014 2015 2016 2017 2018 Debt Maturity Profile Term Loan Sr. Health Note Convertible 9% Notes (1) Conversion price is $5.49. CNO can force conversion after 6/30/13 if CNO stock trades above $7.69 fo
Slide 56: Operating Return on Allocated Capital Computation
CNO Financial Group 56 Operating Return on Allocated Capital Computation* Bankers Life Washington National Colonial Penn Other CNO Business Corporate Total For twelve months ended September 30, 2011 Segment pre-tax operating earnings (a non-GAAP financial measure) 311.4$ 98.7$ 26.9$ 19.9$ (131.6)$ 3
Slide 57: Prime Jumbo at 9/30/11
CNO Financial Group 57 Prime Jumbo at 9/30/11 CNO 3.9% of total invested assets 99.2% NAIC 1 classification Substantial proportion of investments purchased at discounts reflective of current market expectations for cash flows from collateral All securities evaluated using market-consistent e
Slide 58: CMBS at 9/30/11
CNO Financial Group 58 CMBS at 9/30/11 Our CMBS exposure is heavily weighted towards AAA-rated securities with substantial credit support, and seasoned vintages with relatively stronger qualitative characteristics. CNO AAA AA A BBB Pre-2004 186.8$ 23.9$ 25.0$ 2.0$ 2004 93.4 13.3 5.6 6.1 2005 256.8 2
Slide 59: CMBS at 9/30/11
CNO Financial Group 59 CMBS at 9/30/11 CNO 5.5% of invested assets 100% NAIC 1 classification Collateral performing materially better than overall CMBS collateral universe in terms of delinquency and cumulative loss All securities evaluated using market-consistent estimates of collateral per
Slide 60: Commercial Mortgage Loans: Geographic Distribution
CNO Financial Group 60 Commercial Mortgage Loans at 9/30/11 Geographic Distribution CNO Pacific 10.6% Mountain 10.8% West North Central 14.8% West South Central 6.4% East North Central 16.0% East South Central 3.0% New England 7.8% Middle Atlantic 8.4% South Atlantic 22.2%
Slide 61: Commercial Mortgage Loans: Remaining Principal Balance By Maturity
CNO Financial Group 61 Post 2025 $298 2025 $58 2024 $24 2023 $46 2022 $102 2021 $51 2020 $37 2019 $50 2018 $262 2017 $248 2016 $119 2014 $83 2011 $3 2012 $34 2013 $145 2015 $98 Commercial Mortgage Loans at 9/30/11 Remaining Principal Balance By Maturity CNO ($ millions)
Slide 62: Premiums Collected
CNO Financial Group 62 Premiums Collected CNO Trailing 4 quarters down 2% – Stable results at Bankers Life (excluding PFFS), Washington National, and Colonial Penn – Decline at OCB primarily due to continued run-off of inforce blocks, as expected CP Washington National Collected Premiums -Trailing
Slide 63: Premiums Collected – Med Supp
CNO Financial Group 63 Premiums Collected – Med Supp First-year premiums down 16% Med Supp – First-Year Premiums 3Q10 $29.3 4Q10 $30.5 1Q11 $25.1 2Q11 $24.7 3Q11 $24.5 Bankers Life ($ millions) Policies issued and not included in NAP (net of chargebacks, in thousands): PFFS policies issued: 0.1 0.
Slide 64: Premiums Collected – LTC
CNO Financial Group 64 Premiums Collected – LTC Net first-year premiums up 4%, reflecting reduction in new business reinsurance (Net) $5.7 (Net) $6.2 (Net) $6.1 (Net) $6.0 (Net) $5.9Long-Term Care – First-Year Premiums* *Includes $2.8 million in 3Q10, $2.0 million in 4Q10, $1.5 million in 1Q11, $1.
Slide 65: Premiums Collected – Life
CNO Financial Group 65 Premiums Collected – Life First-year premiums up 20% Life – First-Year Premiums SPWL Non- SPWL 1Q11 $24.7 $11.9 $13.9 3Q10 $25.8 $12.3 $14.6 4Q10 $26.9 $11.0 $15.1 Bankers Life ($ millions) 2Q11 $29.4 $13.7 $14.3 First-Year Prems – Tr. 4 Qtrs: $93.8 $97.7 $102.2 $106.8 $111.
Slide 66: Premiums Collected – Annuity
CNO Financial Group 66 Premiums Collected – Annuity First-year premiums down 1% 3Q10 $264.7 4Q10 $233.4 1Q11 $221.3 2Q11 $258.0 3Q11 $263.1 Annuity – First-Year Premiums Bankers Life ($ millions) First-Year Prems – Tr. 4 Qtrs: $965.1 $1,001.2 $999.4 $977.4 $975.8 Total Premiums - Quarterly: $265.8
Slide 67: Premiums Collected – Supplemental Health
CNO Financial Group 67 Premiums Collected – Supplemental Health Washington National First-year premiums up 2% 3Q10 $13.0 4Q10 $13.4 1Q11 $13.2 2Q11 $13.7 3Q11 $13.2 Supplemental Health – First-Year Premiums ($ millions) First-Year Prems – Tr. 4 Qtrs: $50.9 $52.0 $52.7 $53.3 $53.5 Total Premiums -
Slide 68: Premiums Collected – Life: Colonial Penn
CNO Financial Group 68 Premiums Collected – Life Colonial Penn First-year premiums up 10% 3Q10 $8.1 4Q10 $8.2 1Q11 $8.7 2Q11 $8.6 3Q11 $8.9 Life – First-Year Premiums ($ millions) First-Year Prems – Tr. 4 Qtrs: $31.6 $32.3 $33.1 $33.6 $34.4 Total Premiums - Quarterly: $46.9 $46.8 $49.4 $48.5 $49.2
Slide 69: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 69 Information Related to Certain Non-GAAP Financial Measures The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that
Slide 70: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 70 Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income applicable to common stock to net operating income (and related per-share amounts) is as follows (dollars in millions, except per-share amounts): 3Q10 4Q10 1Q11 2Q11 3Q11 Net income appli
Slide 71: 3Q10 4Q10 1Q11 2Q11 3Q11 Operating income 47.1$ 51.7$ 1.9$ 57.5$ 46.5$ Add: interest
CNO Financial Group 71 3Q10 4Q10 1Q11 2Q11 3Q11 Operating income 47.1$ 51.7$ 51.9$ 57.5$ 46.5$ Add: interest expense on 7.0% Convertible Senior Debentures due 2016, net of income taxes 3.7 3.6 3.7 3.7 3.7 Total adjusted operating income 50.8$ 55.3$ 55.6$ 61.2$ 50.2$ Weighted average shares outstandi
Slide 72: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 72 Information Related to Certain Non-GAAP Financial Measures Book value, excluding accumulated other comprehensive income (loss), per share This non-GAAP financial measure differs from book value per share because accumulated other comprehensive income (loss) has been excluded f
Slide 73: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 73 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 discoun
Slide 74: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 74 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, fo
Slide 75: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 75 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 September 30, 2011, is as follows (dollars
Slide 76: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 76 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 finan
Slide 77: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 77 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 (doll
Slide 78: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group 78 Information Related to Certain Non-GAAP Financial Measures A reconciliation of the debt to capital ratio to debt to capital, as defined in our Senior Secured Agreement is as follows (dollars in millions) 3Q10 4Q10 1Q11 2Q11 3Q11 Corporate notes payable 1,029.8$ 998.5$ 949.8$ 9