Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — FBR Fall Investor Conference 2011
28 slides from Cno Financial's conference presentation, Nov 29, 2011
Slide 1: FBR Fall Investor Conference November 29, 2011
FBR Fall Investor Conference November 29, 2011 Exhibit 99.1
Slide 2: CNO Financial Group
E 3 CNO FINANCIAL GROUP CNO Financial Group
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; earnings before net realized investment gains (losses) and corporate intere
Slide 4: The Company: Focused on serving the protection needs of the middle income and senior markets
CNO Financial Group 4 The Company: CNO Financial Group Focused on serving the protection needs of the fast-growing but underserved middle income and senior markets Products include supplemental health, Medicare supplement, life, annuity and long-term care Products sold through efficient, growing
Slide 5: The Opportunity: Rapidly Growing, Underserved Market
CNO Financial Group 5 Value Through Growth and Execution The Opportunity: Rapidly Growing, Underserved Market Our focus is meeting the needs of fast-growing senior market Attractive demographics: Baby Boomers reaching retirement age – The first of Boomer population becoming Medicare-eligible thi
Slide 6: Broad Distribution Reach
CNO Financial Group 6 Broad Distribution Reach • Focused on middle-income working Americans in Worksite and Individual markets with supplemental health and life insurance products • Serving approximately 1 million policyholders and over 20,000 groups; e.g. small business, education, government, and
Slide 7: The right products and the right channels for today's middle-market consumer
CNO Financial Group 7 • Fixed and Fixed-Index Life and Annuity Products • Long-Term Care • Medicare Supplement • Whole and Universal life products • Final expense • Supplemental Health CNO can access consumers across multiple channels • With an Agent (Retail) • Bankers • Washington National • PMA (C
Slide 8: Bankers Long Term Care Insurance
CNO Financial Group 8 Bankers Long Term Care Insurance Sold through exclusive distribution – Aides in acceptance of rate increases – Decreases risk of anti-selection No group business which has limited to no underwriting Extended asset durations at the beginning of 2010 – Minimizes risk of rei
Slide 9: Few competitors in our target space
CNO Financial Group 9 Few competitors in our target space AEL AFL AIG Aviva USA DFG Gerber Life GAFRI GNW Guardian HIG ManuLife KCLI LNCMass Mutual MET Mut. Of Omaha NM NYL PFG PL PNX PLFE PRU WNIC SFG TMK UNM BLC CPL CNO PRI SYA Products C us to m er s More Affluent Less Affluent Protection Product
Slide 10: CNO's Stock Value Proposition
CNO Financial Group 10 CNO’s Stock Value Proposition Growth – Above average growth potential – Expected sales growth of 8-12% annually – On average, over 10,000 Americans will turn 65 each day through 2030 Capital – Strong capital position • 359% RBC and $169mm at holding company at 9/30/11 – Ex
Slide 11: CNO - Timeline of Management Actions
CNO Financial Group 11 CNO - Timeline of Management Actions Q4 2008 Separation of Closed Block LTC business Q4 2006 VNB introduced 2007/2008 CIG sales & marketing rightsizing - $6 million annual expense reduction 2008 Excess Chicago space vacated - $5 million annual expense save Q4 2007 Recapture of
Slide 12: Growth in the CNO Franchise
CNO Financial Group 12 $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) $16,176.3 Average liabilities on actively marketed business segments are increasing, while
Slide 13: Results Demonstrate CNO's Potential
CNO Financial Group 13 Results Demonstrate CNO’s potential (1) Risk-Based Capital (“RBC”) requirements provide a tool for insurance regulators to determine the levels of statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks. The RBC ratio is the rat
Slide 14: Pre/After Tax GAAP Operating Income
CNO Financial Group 14 Pre/After Tax GAAP Operating Income ($ 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 $281.6
Slide 15: Statutory Earnings Power
CNO Financial Group 15 Statutory Earnings Power ($ 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 16: Consolidated RBC Ratio, Liquidity and Excess Capital
CNO Financial Group 16 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 17: Excess Capital Utilization Opportunities
CNO Financial Group 17 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 18: Share Repurchase & Debt Payments
CNO Financial Group 18 Share Repurchase & Debt Payments $100mm share repurchase authorization effective in May 2011 Through September 30, 2011, purchased 8.8 million shares for $55.7 million – Average cost per share of $6.35 – 3.5% of outstanding shares at December 31, 2010 – Mandatory principal
Slide 19: Holding Company Investments at 9/30/11
CNO Financial Group 19 Holding Company Investments at 9/30/11 ($ 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 Investments
Slide 20: Loss Carryforwards – Gross vs. Net
CNO Financial Group 20 Valuation Allowance $558.0 Valuation Allowance $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 Allow ance for Loss Carryforw ards Net Loss Carryforw ards in Deferred Tax Asset Gross $614.8 Gross $353.1 Gross $869.5 GAAP B
Slide 21: GAAP Valuation Allowance Reduction
CNO Financial Group 21 GAAP Valuation Allowance Reduction ($ millions) $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 Ability to
Slide 22: Higher Capital, Improved Debt Maturity Profile
CNO Financial Group 22 CNO December 31, 2008 September 30, 2011 Higher Holding Company Capital Stronger Insurance Company Capital Improved Debt Maturity Profile Capital at the Holding Company - $59.0 RBC - 255% Statutory surplus of $1,366.5 Capital at the Holding Company - $168.9 (target = $
Slide 23: CNO's Stock Value Proposition
CNO Financial Group 23 CNO’s Stock Value Proposition Growth – Above average growth potential – Expected sales growth of 8-12% annually – On average, over 10,000 Americans will turn 65 each day through 2030 Capital – Strong capital position • 359% RBC and $169mm at holding company at 9/30/11 – Ex
Slide 24: Questions and Answers
Ei CNO FINANCIAL GROUP Questions and Answers
Slide 25: Appendix: Certain Non-GAAP Financial Measures
Appendix Certain Non-GAAP Financial Measures
Slide 26: Additional Information on Certain Non-GAAP Measures
CNO Financial Group 26 The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or
Slide 27: Information Related to Certain Non-GAAP Financial Measures: EBIT
CNO Financial Group 27 Information Related to Certain Non-GAAP Financial Measures A reconciliation of earnings before net realized investment gains (losses), fair value changes in embedded derivatives, corporate interest, loss on extinguishment or modification of debt and taxes (“EBIT”) to net incom
Slide 28: Information Related to Certain Non-GAAP Financial Measures: Debt to Capital
CNO Financial Group 28 Information Related to Certain Non-GAAP Financial Measures A reconciliation of the debt to capital ratio to debt to capital, as defined in our Senior Secured Agreement is as follows (dollars in millions) 3Q11 Corporate notes payable 871.2$ Total shareholders' equity 4,948.8 To
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