CNO Financial Group, Inc. · NYSE:CNO
CNO Financial — Investor Presentation (April 2012)
20 slides from CNO Financial's investor presentation, Apr 25, 2012
Slide 1: DAC Accounting Change
DAC Accounting Change Impact of Implementing ASU 2010-26 on 2011 and Prior Periods April 25, 2012
Slide 2: Forward-Looking Statements
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, as well as other sta
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; book value, excluding accumulated other comprehensive income (loss) per share; operating return m
Slide 4: CNO Financial Group
ao CNO FINANCIAL GROUP CNO Financial Group
Slide 5: DAC Adoption Overview
DAC Adoption Overview No change in the economics of our business – GAAP accounting change only – No change to statutory financials, cash flow, capital generation, or tax (NOL) position Change impacts GAAP results of each of our four business segments differently – Colonial Penn significantly imp
Slide 6: DAC Accounting Change: Consolidated GAAP Impacts
DAC Accounting Change CNO Consolidated GAAP Impacts For the year ended December 31, 2011 Net income Reduction of $47 million Operating earnings per diluted share Reduction of 15¢ per share Book value excluding AOCI Reduction of $575 million Book value per diluted share Reduction of $1.93 per share O
Slide 7: No Economic Impact
No Economic Impact ($ millions) Statutory earnings and cash Impacts GAAP only generation remain unchanged 2010 2011 2010 2011 $343.1 $281.6 $273.6 $154.1 $346.7 $210.8 $180.5 $209.2 $209.0 ** $209.0 $81.0 $81.0 $128.2 $128.2 $137.7 $137.7 Statutory Earnings Power Inflows to Holding Co Statutory Earn
Slide 8: DAC Change Impact: EBIT from Business Segments
DAC Change Impact EBIT from Business Segments ($ millions) GAAP EBIT From Business Segments Restated for ASU 2010-26: New Business and In-force $600.0 $561.0 Δ $104.2 $500.0 $456.8 $397.6 $400.0 Δ $64.7 $332.9 EBIT from In‐force $300.0 $200.0 EBIT from Business Segments $100.0 $- EBIT From New Busin
Slide 9: DAC Change Impact: CNO Consolidated
DAC Change Impact CNO Consolidated Year Ended December 31, 2011 ($ millions) Restated for ASU 2010-26 Before DAC New Change Total In-force Business New annualized premiums $ 375.1 $ 375.1 $ - $ 375.1 Insurance policy income $ 2,690.5 $ 2,690.5 $ 2,347.2 $ 343.3 Investment / other income 1,356.7 1,35
Slide 10: Change to Consolidated DAC Balance by DAC Component
Change to Consolidated DAC Balance(1) - Summarized by DAC Component December 31, 2011 ($ millions) Before DAC Restated for Change Adjustments ASU 2010-26 Commissions $ 960 $ (89) $ 871 Overhead 357 (357) - Labor costs 289 (251) 38 Direct response advertising 179 (160) 19 Sales inducements and other
Slide 11: Summary of EBIT Impact by Segment
Summary of EBIT Impact by Segment Year Ended December 31, 2011 ($ in millions) Year Ended December 31, 2011 Restated for ASU 2010-26 Before DAC New Change Total In-force Business Bankers Life $ 327.2 $ 290.9 $ 399.6 $ (108.7) Washington National 99.2 96.1 106.6 (10.5) Colonial Penn 27.3 (4.7) 39.5 (
Slide 12: Additional Disclosures
Additional Disclosures Bifurcate results between in-force and new business – Bifurcation results in greater clarity around value drivers – New business results impacted by rate of sales, mix of business, and distribution channel – Bifurcated results included in press release, quarterly financial s
Slide 13: Key Takeaways
Key Takeaways No change in the economics of our business - cash flow, capital generation and deployment strategy Impacts GAAP results of each business segment differently CNO disproportionately impacted - a timing of earnings issue Management exploring potential mitigation actions CNO will
Slide 14: Questions and Answers
E| CNO FINANCIAL GROUP Questions and Answers
Slide 15: Appendix
E| CNO FINANCIAL GROUP Appendix
Slide 16: Pro Forma Illustration – If PVFP were treated like DAC
Pro Forma Illustration – If PVFP were treated like DAC ($ millions, except per share amounts) 12/31/2011 Balance Sheet Impact DAC PVFP Balance (1) Balance (1) Book value would decrease by Before DAC change $1,950.4 $912.5 an additional $259 million Restated for ASU 2010-26 1,086.4 912.5 Pro Forma
Slide 17: DAC Change Impact – Bankers Life
DAC Change Impact – Bankers Life ($ millions) Year Ended December 31, 2011 Restated for ASU 2010-26 Before DAC New Change Total In-force Business New annualized premiums $ 245.9 $ 245.9 $ - $ 245.9 Insurance policy income $ 1,612.4 $ 1,612.4 $ 1,358.9 $ 253.5 Investment / other income 780.1 780.1 73
Slide 18: DAC Change Impact – Washington National
DAC Change Impact – Washington National ($ millions) Year Ended December 31, 2011 Restated for ASU 2010-26 Before DAC New Change Total In-force Business New annualized premiums $ 77.8 $ 77.8 $ - $ 77.8 Insurance policy income $ 585.1 $ 585.1 $ 530.7 $ 54.4 Investment / other income 190.5 190.5 190.5
Slide 19: DAC Change Impact – Colonial Penn
DAC Change Impact – Colonial Penn ($ millions) Year Ended December 31, 2011 Restated for ASU 2010-26 Before DAC New Change Total In-force Business New annualized premiums $ 51.4 $ 51.4 $ - $ 51.4 Insurance policy income $ 203.0 $ 203.0 $ 167.6 $ 35.4 Investment / other income 42.0 42.0 42.0 - Benefi
Slide 20: DAC Change Impact – Other CNO Business
DAC Change Impact – Other CNO Business ($ millions) Year Ended December 31, 2011 Restated for ASU 2010-26 Before DAC New Change Total In-force Business New annualized premiums $ - $ - $ - $ - Insurance policy income $ 290.0 $ 290.0 $ 290.0 $ - Investment / other income 344.1 344.1 344.1 - Benefits &
CNO Financial Group — Investor Presentation (April 2012) on 6ix