Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Investor Presentation (December 2020)
36 slides from Cno Financial's investor presentation, Dec 8, 2020
Slide 1: Investor Overview December 2020
Investor Overview December 2020 Exhibit 99.1
Slide 2: Important Legal Information
CNO Financial Group | Investor Overview | December 2020 2 Important Legal Information 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 oper
Slide 3: CNO Financial Group Overview
CNO Financial Group | Investor Overview | December 2020 3 Fixed index annuities 39% Fixed interest annuities 12% Other annuities 3% Long-term care 14% Supplemental health 16% Medicare supplement 1% Interest sensitive life 5% Traditional life 10% Annuities 30% Life 23% LTC 7% Med Supp 21% Supp Health
Slide 4: What Makes CNO Different
CNO Financial Group | Investor Overview | December 2020 4 What Makes CNO Different Exclusive Focus on Middle- Income America Our Diverse Distribution & Integrated Approach Health and Wealth Solutions Insurance and Securities Solutions Strong Cash Flow Generation
Slide 5: Well-Positioned in the Attractive Senior Middle Market
CNO Financial Group | Investor Overview | December 2020 5 Well-Positioned in the Attractive Senior Middle Market Extensive experience and understanding of the middle market Differentiated with our market vs. product focus Diversification of products and distribution provides sustainable compet
Slide 6: Highly Diversified Product Mix
CNO Financial Group | Investor Overview | December 2020 6 Highly Diversified Product Mix Mix of protection and accumulation products to serve varied customer needs Basic products that meet the insurance needs of the middle market Attractive and predictable return characteristics Low risk lon
Slide 7: Risk Management via Diversification and Natural Hedges
CNO Financial Group | Investor Overview | December 2020 7 Fixed Indexed Annuity Fixed Interest Annuity Trad Life Interest Sensitive Life Med Supp Supp Health LTC Mortality Morbidity Persistency Interest rate Equity Risk Management via Diversification and Natural Hedges Relative degree of risk presen
Slide 8: Unique Multi-Channel Operating Model
CNO Financial Group | Investor Overview | December 2020 8 Unique Multi-Channel Operating Model Consumer Division – Strong career agent franchise • Top distributor of health/wealth protection products through ~4,100 producing agents • More than 265 locations nationwide • “Kitchen-table” sales model
Slide 9: Strategic Initiatives Reinvigorating Growth; Momentum Sidelined by COVID
CNO Financial Group | Investor Overview | December 2020 9 Strategic Initiatives Successfully Reinvigorating Growth; Momentum Sidelined Temporarily by COVID (dollars in millions) $- $50.0 $100.0 $150.0 $200.0 2018 2019 YTD 3Q19 YTD 3Q20 Life NAP $- $50.0 $100.0 $150.0 $200.0 2018 2019 YTD 3Q19 YTD 3Q
Slide 10: Capital and Liquidity Overview
CNO Financial Group | Investor Overview | December 2020 10 Capital and Liquidity Overview * The ratio of the combined capital of the insurance companies to the minimum amount of capital appropriate to support the overall business operations, as determined based on the methodology developed by the Na
Slide 11: Cash Flow Profile
CNO Financial Group | Investor Overview | December 2020 11 Cash Flow Profile Strong free cash flow generation and conversion (dollars in millions) 1 A non-GAAP measure. See the Appendix for a reconciliation to the corresponding GAAP measure. 2 Cash flows exclude capital contributions to insurance su
Slide 12: Excess Capital Allocation Strategy
CNO Financial Group | Investor Overview | December 2020 12 Excess Capital Allocation Strategy Disciplined and opportunistic approach to maximize shareholder value Organic investments to sustain and grow the core businesses Return capital to shareholders • $50 million in share repurchases in 3Q20; $1
Slide 13: Portfolio Composition
CNO Financial Group | Investor Overview | December 2020 13 IG Corporates, 49.9% Non-Agency RMBS, 8.5% Mortgage Loans, 5.7% HY Corporates, 2.9% CMBS, 7.9% Municipals, 9.9% ABS, 4.3% Govts/Agency, 1.6% CLO, 1.7% Equities, 0.2% Other Invested Assets, 1.9% Alternatives, 2.2% Policy Loans, 0.5% Cash, 3.0
Slide 14: Modest net favorable 4Q financial impact from COVID
CNO Financial Group | Investor Overview | December 2020 14 Modest net favorable 4Q financial impact from COVID Scenario modeling – 2020 COVID impacts Prior (August) projections • Mortality • 150k – 400k U.S. COVID deaths • $20M – $52M net mortality impact • $130k per 1,000 deaths • Morbidity • Favor
Slide 15: Delivering On Our Commitments
CNO Financial Group | Investor Overview | December 2020 15 Delivering On Our Commitments Turnaround / De-risking Pivot to Growth Optimize Long- term Value Pre 2017 2017-2019 2020 2021 and Beyond • Reinsured life block (2009) • Recapitalized company (2012) • Initiated dividend (2012) • Sold Legacy Li
Slide 16: Appendix
CNO Financial Group | Investor Overview | December 2020 16 Appendix 1 Strong Operational Performance • Experienced Management Team Slide 17 • Agent Counts Slide 18 • Broker-Dealer/Registered Investment Advisor Slide 19 Building on Strong Track Record of Execution • Investment Portfolio Overview Slid
Slide 17: Experienced Management Team With a Proven Track Record
CNO Financial Group | Investor Overview | December 2020 17 Experienced Management Team With a Proven Track Record 10-year average tenure; 23-year average service in the insurance sector Name Title Years with CNO Years in Insurance Sector Age Gary C. Bhojwani Chief Executive Officer 4 30 52 Paul H. M
Slide 18: Agent Counts
CNO Financial Group | Investor Overview | December 2020 18 Agent Counts 1 Producing agents are agents that have submitted at least one policy in the month. 2 Financial representatives are agents who are licensed to sell certain securities brokerage products and services. 3 Quarterly average agent an
Slide 19: Broker-Dealer/Registered Investment Advisor
CNO Financial Group | Investor Overview | December 2020 19 Broker-Dealer/Registered Investment Advisor 1 Client assets include cash and securities in brokerage and managed advisory accounts. Net new client assets includes total inflows of cash and securities into brokerage and managed advisory accou
Slide 20: Investment Portfolio Overview – Sector Breakdown
CNO Financial Group | Investor Overview | December 2020 20 Generally underweight COVID-19 impacted sectors Investment Portfolio Overview – Sector Breakdown Sector Book Value Market Value Unrealized Gain Loss Portfolio% Average NAIC Over|Underweight Airlines 32.9 34.3 1.4 0.13% 1.5 Underweight Aircra
Slide 21: Investment Portfolio Overview: CLO Debt
CNO Financial Group | Investor Overview | December 2020 21 Investment Portfolio Overview: CLO Debt Key Portfolio Metrics Cumulative loss scenarios versus Break Points 100% AAA-A Significant cushion against stress scenarios Ratings Composition AAA 13.1% AA+ 2.4% AA 49.0% A+ 1.5% A 32.0% A- 2.2% AAA A
Slide 22: Investment Portfolio Overview: Commercial Mortgage Loans
CNO Financial Group | Investor Overview | December 2020 22 East 24.4% South 36.4% Centra l 13.4% Mountain 8.5% Pacific 17.3% Investment Portfolio Overview: Commercial Mortgage Loans Key Portfolio Facts Portfolio Geography Underlying Property Type Ratings Composition $1.5 billion of net invested asse
Slide 23: Investment Portfolio Overview: CMBS
CNO Financial Group | Investor Overview | December 2020 23 Agency Multifamily $317 mm, 16% SASB $649 mm, 32% Conduit $1.1 B, 52% Investment Portfolio Overview: CMBS Key Portfolio Facts Underlying Property Type SASB versus Conduit $2.0 billion of net invested assets 85.0% Rated AAA-A 61% Weighted Avg
Slide 24: 3Q20 New Money Summary
CNO Financial Group | Investor Overview | December 2020 24 IG Corporates, 44% Municipals, 33% Structured Securities, 14% HY Corporates, 5% Direct Investments, 4% 3Q20 New Money Summary Emphasis on high quality investments during third quarter 91% Investment Grade Allocation Third Quarter Investments
Slide 25: Tax Asset Summary
CNO Financial Group | Investor Overview | December 2020 25 Non-life NOLs $373 DTAs related to tax strategy $92 Value of NOLs and deferred tax assets (DTAs) related to tax strategy Details • Total estimated economic value of NOLs and DTAs related to tax strategy of approximately $380 million @ 10% di
Slide 26: Transformative LTC Reinsurance Transaction
CNO Financial Group | Investor Overview | December 2020 26 2018 Transformative LTC Reinsurance Transaction Divestiture of legacy LTC exposure significantly improves risk profile Fixed Annuities 49% Health 14% Life 13% LTC 24% In September 2018, Bankers Life entered into an agreement with Wilton Re
Slide 27: Retained Long-Term Care Insurance
CNO Financial Group | Investor Overview | December 2020 27 New sales (~$25 million annually) focused on short duration products – 98% of new sales for policies with 2 years or less in benefits – Average benefit period of 11 months – New business 25% reinsured since 2008 Reserve assumptions infor
Slide 28: Appendix 2: Financial Exhibits
CNO Financial Group | Investor Overview | December 2020 28 Appendix 2: Financial Exhibits • Non-GAAP Financial Measures Slides 29-36
Slide 29: 2Q20 Significant Items
CNO Financial Group | Investor Overview | December 2020 29 The table below summarizes the financial impact of significant items on our 2Q20 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 2Q20 Significant Items
Slide 30: 2Q20 Significant Items (Continued)
CNO Financial Group | Investor Overview | December 2020 30 2Q20 Significant Items (Continued from the previous page) (1) Given our expectation that interest rates will remain low for the long-term, we performed an actuarial unlocking exercise in the second quarter of 2020 to reflect our assumption t
Slide 31: 4Q19 Significant Items
CNO Financial Group | Investor Overview | December 2020 31 The table below summarizes the financial impact of significant items on our 4Q19 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. 4Q19 Significant Items
Slide 32: Quarterly Earnings
CNO Financial Group | Investor Overview | December 2020 32 Quarterly Earnings (dollars in millions) *Management believes that an analysis of earnings before net realized investment gains (losses) from sales, impairments and change in allowance for credit losses, net change in market value of investm
Slide 33: Information Related to Certain Non-GAAP Financial Measures
CNO Financial Group | Investor Overview | December 2020 33 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, fin
Slide 34: Reconciliation of Net Income to Net Operating Income
CNO Financial Group | Investor Overview | December 2020 34 Information Related to Certain Non-GAAP Financial Measures A reconciliation of net income (loss) applicable to common stock to net operating income (and related per-share amounts) is as follows: (dollars in millions, except per-share amounts
Slide 35: Operating Income and Shares for Operating EPS
CNO Financial Group | Investor Overview | December 2020 35 Information Related to Certain Non-GAAP Financial Measures A reconciliation of operating income and shares used to calculate basic and diluted operating earnings per share is as follows: (dollars in millions, except per-share amounts, and sh
Slide 36: Debt to Capital Ratio Excluding AOCI
CNO Financial Group | Investor Overview | December 2020 36 Information Related to Certain Non-GAAP Financial Measures Debt to capital ratio, excluding accumulated other comprehensive income (loss) The debt to capital ratio, excluding accumulated other comprehensive income (loss), differs from the de
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