UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 28, 2014
CNO Financial Group, Inc.
(Exact Name of Registrant as Specified in Charter)
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| | |
Delaware | 001-31792 | 75-3108137 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
11825 North Pennsylvania Street
Carmel, Indiana 46032
(Address of Principal Executive Offices) (Zip Code)
(317) 817-6100
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. | Results of Operations and Financial Condition. |
On July 28, 2014, CNO Financial Group, Inc. (the "Company") issued: (i) a press release announcing its financial results for the quarter ended June 30, 2014, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference; and (ii) additional information related to the Company's financial and operating results for the quarter ended June 30, 2014, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
The information contained under Item 2.02 in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section. The information contained in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
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Item 9.01(d). | Financial Statements and Exhibits. |
The following materials are furnished as exhibits to this Current Report on Form 8-K:
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99.1 | Press release dated July 28, 2014 related to financial results for the quarter ended June 30, 2014. |
99.2 | Quarterly Financial Supplement - 2Q2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | |
| CNO Financial Group, Inc. |
| |
Date: July 28, 2014 | |
| By: | /s/ John R. Kline | |
| | John R. Kline | |
| | Senior Vice President and Chief Accounting Officer | |
| | |
Exhibit 99.1
For Immediate Release
|
| |
Contact: | (News Media) Barbara Ciesemier +1.312.396.7461 |
| (Investors) Erik Helding +1.317.817.4760 |
CNO Financial Group Reports Second Quarter 2014 Results
Growth in Sales, Collected Premiums and Operating Earnings Per Diluted Share
Continued Strength in Key Capital Ratios
Carmel, Ind., July 28, 2014 - CNO Financial Group, Inc. (NYSE: CNO) today announced second quarter of 2014 operating earnings (1) of $63.7 million, or 29 cents per diluted share compared to $63.9 million, or 28 cents per diluted share, in the second quarter of 2013.
"CNO's middle-income market focus and ability to serve our customers continue to drive solid growth in revenues and profitability," said Ed Bonach, CEO of CNO. "Our investments in agent productivity, branch and geographic expansion, new product development, operating efficiencies and the customer experience are delivering results and driving growth above industry norms. Closing the sale of CLIC provides us with even sharper focus and lower volatility going forward."
Second Quarter 2014 Highlights
| |
• | Sales, as defined by total new annualized premium ("NAP") (2): $104.9 million, up 3% from 2Q13 |
| |
• | Collected premium from our continuing operating segments (3): $831.7 million up 2% from 2Q13 |
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• | Net income per diluted share: 35 cents in 2Q14 compared to 34 cents in 2Q13 |
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• | Net operating income (1) per diluted share: 29 cents in 2Q14 compared to 28 cents in 2Q13 |
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• | Unrestricted cash and investments held by our holding company were $277 million at June 30, 2014, after $130.8 million of common stock repurchases, dividends and debt payments in 2Q14 |
Six-month 2014 Highlights
| |
• | Sales, as defined by total NAP (2): $206.8 million, up 3% from the first six months of 2013 |
| |
• | Collected premium from our continuing operating segments (3): $1,647.4 million up 2% from the first six months of 2013 |
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• | Net income (loss) per diluted share: (69) cents in the first six months of 2014 (including $1.36 from the loss on the sale of Conseco Life Insurance Company ("CLIC")) compared to 38 cents in the first six months of 2013 |
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• | Net operating income (1) per diluted share: 56 cents in the first six months of 2014 compared to 47 cents in the first six months of 2013 |
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• | Consolidated risk-based capital ratio was 437% at June 30, 2014, reflecting statutory operating earnings of $225 million and net dividends to the holding company of $115.0 million during the first six months of 2014 |
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CNO Financial (2)
July 28, 2014
Quarterly Segment Operating Results
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| | | | | | | |
| Three months ended |
| June 30, |
| 2014 | | 2013 |
| (Dollars in millions, except per share data) |
EBIT (5): | | | |
Bankers Life | $ | 87.4 |
| | $ | 79.1 |
|
Washington National | 32.3 |
| | 35.8 |
|
Colonial Penn | 3.8 |
| | 1.2 |
|
Other CNO Business: | | | |
Loss from the long-term care business reinsured in 4Q13 | — |
| | (2.2 | ) |
Overhead expense of CLIC expected to continue after the sale | — |
| | (5.0 | ) |
EBIT from business segments continuing after the CLIC sale | 123.5 |
| | 108.9 |
|
Corporate Operations, excluding corporate interest expense | (15.5 | ) | | 2.4 |
|
EBIT from operations continuing after the CLIC sale | 108.0 |
| | 111.3 |
|
Corporate interest expense | (11.1 | ) | | (13.1 | ) |
Operating earnings before taxes | 96.9 |
| | 98.2 |
|
Tax expense on operating income | 33.2 |
| | 34.3 |
|
Net operating income (1) | 63.7 |
| | 63.9 |
|
Earnings of CLIC being sold (net of taxes) | 8.5 |
| | 4.8 |
|
Gain related to reinsurance transaction (net of taxes) | 2.5 |
| | — |
|
Net realized investment gains (net of related amortization and taxes) | 7.5 |
| | .8 |
|
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | (4.8 | ) | | 12.1 |
|
Equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities (net of taxes) | (2.9 | ) | | (2.7 | ) |
Loss on extinguishment or modification of debt (net of taxes) | (.4 | ) | | (6.8 | ) |
Valuation allowance for deferred tax assets and other tax items | 4.0 |
| | 5.0 |
|
Net income | $ | 78.1 |
| | $ | 77.1 |
|
| | | |
Per diluted share: | | | |
Net operating income | $ | .29 |
| | $ | .28 |
|
Earnings of CLIC being sold (net of taxes) | .04 |
| | .02 |
|
Gain related to reinsurance transaction (net of taxes) | .01 |
| | — |
|
Net realized investment gains (net of related amortization and taxes) | .03 |
| | .01 |
|
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | (.02 | ) | | .05 |
|
Equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities (net of taxes) | (.02 | ) | | (.01 | ) |
Loss on extinguishment or modification of debt (net of taxes) | — |
| | (.03 | ) |
Valuation allowance for deferred tax assets and other tax items | .02 |
| | .02 |
|
Net income | $ | .35 |
| | $ | .34 |
|
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CNO Financial (3)
July 28, 2014
The following table summarizes the financial impact of a significant item on our 2Q14 net operating income (dollars in millions, except per share amounts): |
| | | | | | | | | | | |
| Three months ended |
| June 30, 2014* |
| Actual results | | Significant item | | Excluding significant item |
Net Operating Income (1): | | | | | |
Bankers Life | $ | 87.4 |
| | $ | — |
| | $ | 87.4 |
|
Washington National | 32.3 |
| | — |
| | 32.3 |
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Colonial Penn | 3.8 |
| | — |
| | 3.8 |
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EBIT from business segments continuing after the CLIC sale | 123.5 |
| | — |
| | 123.5 |
|
Corporate Operations, excluding corporate interest expense | (15.5 | ) | | 11.8 |
| | (3.7 | ) |
EBIT from operations continuing after the CLIC sale (5) | 108.0 |
| | 11.8 |
| | 119.8 |
|
Corporate interest expense | (11.1 | ) | | — |
| | (11.1 | ) |
Operating earnings before taxes | 96.9 |
| | 11.8 |
| | 108.7 |
|
Tax expense on operating income | 33.2 |
| | 4.2 |
| | 37.4 |
|
Net operating income | $ | 63.7 |
| | $ | 7.6 |
| | $ | 71.3 |
|
| | | | | |
Net operating income per diluted share | $ | .29 |
| | $ | .03 |
| | $ | .32 |
|
The significant item in 2Q14 represents higher expenses related to the impact of lower interest rates on the values of liabilities for agent deferred compensation and former executive retirement annuities.
* See page 11 for the table of Net Operating Income Excluding Significant Items for the three months ended June 30, 2013.
Segment Results
Bankers Life markets and distributes a variety of insurance products to middle-income Americans at or near retirement through a dedicated field force of career agents. NAP in 2Q14 was $63.1 million, down $.1 million from 2Q13. Higher sales of life and annuity products were offset by lower sales of long-term care and Medicare supplement products. Collected premiums were up 2% in 2Q14 compared to 2Q13, driven by increased sales over the last 12 months and favorable persistency. Annuity account values, on which spread income is earned, increased 2% to $7.5 billion in 2Q14 compared to 2Q13. Increased agent productivity offset a 3% decrease in average agent count, reflecting our emphasis on increasing sales generated per agent.
Pre-tax operating earnings in 2Q14 compared to 2Q13 were up $8.3 million, or 10 percent. Earnings in 2Q14 reflect favorable annuity and long-term care margins.
Pre-tax operating earnings in 2Q14 included approximately $2 million of overhead expenses that were allocated to the Other CNO Business segment in quarters prior to 2014 and are expected to continue after the completion of the sale of CLIC.
Pre-tax operating earnings in 2Q13 of $79.1 million included: (i) approximately $6.5 million of favorable reserve developments in the Medicare supplement block; partially offset by (ii) refinements to the methodologies used to calculate health product reserves (primarily long-term care) of approximately $4.0 million.
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CNO Financial (4)
July 28, 2014
Washington National markets and distributes supplemental health and life insurance to middle-income consumers through a wholly-owned subsidiary and independent insurance agencies. NAP in 2Q14 was $25.3 million, up 9 percent from 2Q13 primarily driven by strong supplemental health sales in the individual market through Performance Matters Associates, our wholly-owned marketing organization. Collected premiums from the segment's supplemental health block were up 6 percent in 2Q14 compared to 2Q13, driven by strong sales and persistency.
Pre-tax operating earnings in 2Q14 compared to 2Q13 were down $3.5 million, or 10 percent, primarily resulting from elevated loss ratios in the supplemental health block and an increased allocation of overhead expenses; partially offset by favorable annuity margins. Given the elevated loss ratios we are experiencing in our supplemental health block, we currently expect that this blocks' interest-adjusted benefit ratio will be in the 54 percent range during 2014.
Pre-tax operating earnings in 2Q14 included approximately $2 million of overhead expenses that were allocated to the Other CNO Business segment in quarters prior to 2014 and are expected to continue after the completion of the sale of CLIC.
Pre-tax operating earnings in 2Q13 of $35.8 million included approximately $1.5 million of favorable reserve developments in the Medicare supplement block. The Medicare supplement block in this segment is in run-off, yet continues to outperform our expectations with favorable claims experience and persistency continuing in 2Q14.
Colonial Penn markets primarily graded benefit and simplified issue life insurance directly to customers through television advertising, direct mail, the internet and telemarketing. NAP in 2Q14 was $16.5 million, up 4 percent from 2Q13, reflecting increased sales of simplified issue life insurance policies, including an increase in sales through the internet. Collected premiums were up 6 percent in 2Q14 compared to 2Q13, driven by increased sales and steady persistency.
Pre-tax operating earnings in 2Q14 compared to 2Q13 reflect continued growth in the in-force block, favorable policy benefits and a modest increase in the deferral of acquisition costs due to a slight shift to deferrable direct mail marketing activities. In-force EBIT was $13.1 million, up 6 percent from 2Q13, reflecting the growth in the block.
Recognizing the accounting standard related to deferred acquisition costs, the amount of our investment in new business during a particular period will have a significant impact on this segment's results. We expect this segment to report approximately break-even results in 2014.
Corporate Operations includes our investment advisory subsidiary and corporate expenses.
This segment's earnings included favorable investment returns in both 2Q14 and 2Q13, reflecting market conditions. Pre-tax operating earnings in 2Q14 and 2Q13 also reflected an increase (decrease) in expenses of $11.8 million and $(6) million, respectively, related to the impact of changes in interest rates on the values of liabilities for agent deferred compensation and former executive retirement annuities. We have elected to recognize the change in the value of these liabilities through earnings as interest rates change.
Non-Operating Items Related to Operations of CLIC Being Sold
On July 1, 2014, we completed the previously announced sale of CLIC to Wilton Reassurance Company (“Wilton Re”). The transaction resulted in net proceeds of approximately $220 million based upon an estimated balance sheet of CLIC as of June 30, 2014 and after anticipated transaction costs and intercompany transactions completed in connection with the closing. In addition, Bankers Life paid $28 million to recapture a block of traditional life insurance that was previously reinsured to Wilton Re. In 1Q14, we recognized an estimated loss on the CLIC transaction of $298.0 million, net of income taxes.
The transaction met the criteria for held for sale accounting. As a result, the assets and liabilities of CLIC being sold are included as single line items in the asset and liability sections of our consolidated balance sheet as of June 30, 2014.
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CNO Financial (5)
July 28, 2014
The earnings related to the CLIC business being sold are also reflected as non-operating items. Such earnings, net of taxes, were $8.5 million in 2Q14 and $4.8 million in 2Q13. The higher earnings in 2Q14 were driven by overall favorable claim experience and investment results, along with certain other items recognized in the quarter.
Other Non-Operating Items
Net realized investment gains in 2Q14 were $7.5 million (net of related amortization and taxes). Net realized investment gains in 2Q13 were $.8 million (net of related amortization and taxes) including total other-than-temporary impairment losses of $.6 million recorded in earnings. There were no other-than-temporary impairments in 2Q14.
The results for 2Q14 include a $2.5 million gain related to the recapture of business previously ceded under a modified coinsurance agreement. The gain primarily consists of the release of an embedded derivative that is no longer required.
During 2Q14 and 2Q13, we recognized an increase (decrease) in earnings of $(4.8) million and $12.1 million, respectively, resulting from changes in the estimated fair value of embedded derivative liabilities related to our fixed index annuities, net of related amortization and income taxes. Such amounts reflect the changes in market interest rates used to determine the derivative's estimated fair value.
The results for 2Q14 include a $.4 million loss on the extinguishment or modification of debt resulting from: (i) expenses related to the amendment of the Senior Secured Credit Agreement in May 2014; and (ii) the repurchase of the remaining $3.5 million principal amount of the 7.0% Debentures for a purchase price of $3.7 million. The results for 2Q13 include a $6.8 million loss on extinguishment of debt, net of taxes, related to: (i) the amendment of the Senior Secured Credit Agreement and the write-off of unamortized discount and issuance costs associated with prepayments on the Senior Secured Credit Agreement; and (ii) the repurchase of 7.0% Debentures.
In 2Q14 and 2Q13, we reduced the valuation allowance for deferred tax assets by $4.0 million and $5.0 million, respectively, resulting from the realization of capital gains and utilization of loss carryforwards.
Statutory (based on non-GAAP measures) and GAAP Capital Information
Our consolidated statutory risk-based capital ratio was 437% at June 30, 2014, reflecting 2Q14 consolidated statutory operating earnings of $133 million and the payment of net dividends to the holding company of $75.0 million during the quarter and $115.0 million year-to-date.
During the second quarter of 2014, we repurchased $95.6 million of common stock under our securities repurchase program (including $3 million of repurchases settled in 3Q14). We repurchased 5.6 million common shares at an average cost of $16.97 per share. CNO anticipates repurchasing securities in the range of $350 million to $400 million during 2014, absent compelling alternatives. As of June 30, 2014, we had 213.8 million shares outstanding and had authority to repurchase up to an additional $260.8 million of our common stock.
During 2Q14, we also paid common stock dividends of $12.9 million.
Book value per diluted share, excluding accumulated other comprehensive income (loss) (6), was $17.85 at June 30, 2014, compared to $18.62 at December 31, 2013. The decrease primarily reflects the loss recognized on the transaction to sell CLIC, partially offset by our 2014 operating earnings.
Our debt-to-total capital ratio, excluding accumulated other comprehensive income (4) at June 30, 2014, was 17.4 percent, an increase of 50 basis points from December 31, 2013, reflecting the decrease to capital from the loss recognized on the transaction to sell CLIC and debt repayments of $29.8 million. Unrestricted cash and investments held by our holding company were $277 million at June 30, 2014, compared to $309 million at December 31, 2013.
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CNO Financial (6)
July 28, 2014
Conference Call
The Company will host a conference call to discuss results on July 29, 2014 at 11:00 a.m. Eastern Time. The webcast can be accessed through the Investors section of the company's website: http://ir.CNOinc.com. Participants should go to the website at least 15 minutes before the event to register and download any necessary audio software. During the call, we will be referring to a presentation that will be available the morning of the call at the Investors section of the company's website.
About CNO Financial Group
CNO Financial Group, Inc. (NYSE: CNO) is a holding company. Our insurance subsidiaries - principally Bankers Life and Casualty Company, Colonial Penn Life Insurance Company and Washington National Insurance Company - primarily serve middle-income pre-retiree and retired Americans by helping them protect against financial adversity and provide for a more secure retirement. For more information, visit CNO online at www.CNOinc.com.
- Tables Follow -
CNO Financial (7)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(unaudited)
|
| | | | | | | |
| June 30, 2014 | | December 31, 2013 |
ASSETS | | | |
Investments: | | | |
Fixed maturities, available for sale, at fair value (amortized cost: June 30, 2014 - $18,383.8; December 31, 2013 - $21,860.6) | $ | 20,533.6 |
| | $ | 23,178.3 |
|
Equity securities at fair value (cost: June 30, 2014 - $272.6; December 31, 2013 - $237.9) | 287.5 |
| | 249.3 |
|
Mortgage loans | 1,595.9 |
| | 1,729.5 |
|
Policy loans | 99.7 |
| | 277.0 |
|
Trading securities | 227.4 |
| | 247.6 |
|
Investments held by variable interest entities | 1,241.1 |
| | 1,046.7 |
|
Other invested assets | 426.1 |
| | 423.3 |
|
Total investments | 24,411.3 |
| | 27,151.7 |
|
Cash and cash equivalents - unrestricted | 378.8 |
| | 699.0 |
|
Cash and cash equivalents held by variable interest entities | 101.8 |
| | 104.3 |
|
Accrued investment income | 238.2 |
| | 286.9 |
|
Present value of future profits | 512.3 |
| | 679.3 |
|
Deferred acquisition costs | 698.9 |
| | 968.1 |
|
Reinsurance receivables | 2,892.9 |
| | 3,392.1 |
|
Income tax assets, net | 730.5 |
| | 1,147.2 |
|
Assets held in separate accounts | 9.4 |
| | 10.3 |
|
Other assets | 421.3 |
| | 341.7 |
|
Assets of subsidiary being sold | 4,518.9 |
| | — |
|
Total assets | $ | 34,914.3 |
| | $ | 34,780.6 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
Liabilities: | |
| | |
|
Liabilities for insurance products: | |
| | |
|
Policyholder account balances | $ | 10,649.7 |
| | $ | 12,776.4 |
|
Future policy benefits | 10,372.2 |
| | 11,222.5 |
|
Liability for policy and contract claims | 463.3 |
| | 566.0 |
|
Unearned and advanced premiums | 270.7 |
| | 300.6 |
|
Liabilities related to separate accounts | 9.4 |
| | 10.3 |
|
Other liabilities | 560.7 |
| | 590.6 |
|
Payable to reinsurer | — |
| | 590.3 |
|
Investment borrowings | 1,507.6 |
| | 1,900.0 |
|
Borrowings related to variable interest entities | 1,110.8 |
| | 1,012.3 |
|
Notes payable – direct corporate obligations | 827.3 |
| | 856.4 |
|
Liabilities of subsidiary being sold | 4,298.3 |
| | — |
|
Total liabilities | 30,070.0 |
| | 29,825.4 |
|
Commitments and Contingencies | | | |
Shareholders' equity: | |
| | |
|
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: June 30, 2014 – 213,755,190; December 31, 2013 – 220,323,823) | 2.1 |
| | 2.2 |
|
Additional paid-in capital | 3,963.9 |
| | 4,092.8 |
|
Accumulated other comprehensive income | 926.1 |
| | 731.8 |
|
Retained earnings (accumulated deficit) | (47.8 | ) | | 128.4 |
|
Total shareholders' equity | 4,844.3 |
| | 4,955.2 |
|
Total liabilities and shareholders' equity | $ | 34,914.3 |
| | $ | 34,780.6 |
|
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CNO Financial (8)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in millions, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | |
| Three months ended | | Six months ended |
| June 30, | | June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Revenues: | | | | | | | |
Insurance policy income | $ | 679.0 |
| | $ | 691.3 |
| | $ | 1,364.9 |
| | $ | 1,382.5 |
|
Net investment income: | | | | | | | |
General account assets | 347.4 |
| | 348.8 |
| | 695.5 |
| | 700.7 |
|
Policyholder and reinsurer accounts and other special-purpose portfolios | 47.2 |
| | 31.8 |
| | 68.1 |
| | 109.5 |
|
Realized investment gains (losses): | | | | | | | |
Net realized investment gains, excluding impairment losses | 12.4 |
| | 3.8 |
| | 47.7 |
| | 19.1 |
|
Other-than-temporary impairment losses: | | | | | | | |
Total other-than-temporary impairment losses | — |
| | (.6 | ) | | (11.9 | ) | | (.6 | ) |
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income | — |
| | — |
| | — |
| | — |
|
Net impairment losses recognized | — |
| | (.6 | ) | | (11.9 | ) | | (.6 | ) |
Total realized gains (losses) | 12.4 |
| | 3.2 |
| | 35.8 |
| | 18.5 |
|
Fee revenue and other income | 7.0 |
| | 6.4 |
| | 13.4 |
| | 12.9 |
|
Total revenues | 1,093.0 |
| | 1,081.5 |
| | 2,177.7 |
| | 2,224.1 |
|
Benefits and expenses: | | | | | | | |
Insurance policy benefits | 691.1 |
| | 673.2 |
| | 1,381.4 |
| | 1,427.3 |
|
Loss on sale of subsidiary | — |
| | — |
| | 278.6 |
| | — |
|
Gain related to reinsurance transaction | (3.8 | ) | | — |
| | (3.8 | ) | | — |
|
Interest expense | 24.3 |
| | 26.9 |
| | 48.9 |
| | 54.2 |
|
Amortization | 64.9 |
| | 79.2 |
| | 131.6 |
| | 158.5 |
|
Loss on extinguishment or modification of debt | .6 |
| | 7.7 |
| | .6 |
| | 65.4 |
|
Other operating costs and expenses | 201.5 |
| | 179.8 |
| | 395.6 |
| | 369.4 |
|
Total benefits and expenses | 978.6 |
| | 966.8 |
| | 2,232.9 |
| | 2,074.8 |
|
Income (loss) before income taxes | 114.4 |
| | 114.7 |
| | (55.2 | ) | | 149.3 |
|
Income tax expense (benefit): | | | | | | | |
Tax expense on period income | 40.3 |
| | 42.6 |
| | 79.3 |
| | 75.8 |
|
Valuation allowance for deferred tax assets and other tax items | (4.0 | ) | | (5.0 | ) | | 15.4 |
| | (15.5 | ) |
Net income (loss) | $ | 78.1 |
| | $ | 77.1 |
| | $ | (149.9 | ) | | $ | 89.0 |
|
Earnings per common share: | | | | | | | |
Basic: | | | | | | | |
Weighted average shares outstanding | 216,538,000 |
| | 220,498,000 |
| | 218,422,000 |
| | 221,290,000 |
|
Net income (loss) | $ | .36 |
| | $ | .35 |
| | $ | (.69 | ) | | $ | .40 |
|
Diluted: | | | | | | | |
Weighted average shares outstanding | 222,108,000 |
| | 230,893,000 |
| | 218,422,000 |
| | 237,180,000 |
|
Net income (loss) | $ | .35 |
| | $ | .34 |
| | $ | (.69 | ) | | $ | .38 |
|
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CNO Financial (9)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
EBIT FROM BUSINESS SEGMENTS
SUMMARIZED BY IN-FORCE AND NEW BUSINESS (7)
(Dollars in millions)
|
| | | | | | | | | | | | | | | |
| Three months ended | | Six months ended |
| June 30, | | June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
EBIT (5) from In-force and New Business | | | | | | | |
Bankers Life segment: | | | | | | | |
In-Force Business | $ | 124.3 |
| | $ | 109.6 |
| | $ | 246.7 |
| | $ | 205.7 |
|
New Business | (36.9 | ) | | (30.5 | ) | | (75.1 | ) | | (64.5 | ) |
Total | $ | 87.4 |
| | $ | 79.1 |
| | $ | 171.6 |
| | $ | 141.2 |
|
| | | | | | | |
Washington National segment: | | | | | | | |
In-Force Business | $ | 34.8 |
| | $ | 37.9 |
| | $ | 68.7 |
| | $ | 75.2 |
|
New Business | (2.5 | ) | | (2.1 | ) | | (5.3 | ) | | (5.4 | ) |
Total | $ | 32.3 |
| | $ | 35.8 |
| | $ | 63.4 |
| | $ | 69.8 |
|
| | | | | | | |
Colonial Penn segment: | | | | | | | |
In-Force Business | $ | 13.1 |
| | $ | 12.4 |
| | $ | 23.4 |
| | $ | 21.2 |
|
New Business | (9.3 | ) | | (11.2 | ) | | (25.8 | ) | | (25.4 | ) |
Total | $ | 3.8 |
| | $ | 1.2 |
| | $ | (2.4 | ) | | $ | (4.2 | ) |
| | | | | | | |
Other CNO Business: | | | | | | | |
In-Force Business | $ | — |
| | $ | (7.2 | ) | | $ | — |
| | $ | (14.5 | ) |
New Business | — |
| | — |
| | — |
| | — |
|
Total | $ | — |
| | $ | (7.2 | ) | | $ | — |
| | $ | (14.5 | ) |
| | | | | | | |
Total Business segments: | | | | | | | |
In-Force Business | $ | 172.2 |
| | $ | 152.7 |
| | $ | 338.8 |
| | $ | 287.6 |
|
New Business | (48.7 | ) | | (43.8 | ) | | (106.2 | ) | | (95.3 | ) |
Total EBIT from business segments continuing after the CLIC sale | $ | 123.5 |
| | $ | 108.9 |
| | $ | 232.6 |
| | $ | 192.3 |
|
-more-
CNO Financial (10)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
SEGMENT OPERATING RESULTS
(Dollars in millions, except per share data)
|
| | | | | | | |
| Six months ended |
| June 30, |
| 2014 | | 2013 |
| (Dollars in millions, except per share data) |
EBIT (5): | | | |
Bankers Life | $ | 171.6 |
| | $ | 141.2 |
|
Washington National | 63.4 |
| | 69.8 |
|
Colonial Penn | (2.4 | ) | | (4.2 | ) |
Other CNO Business: | | | |
Loss from the long-term care business reinsured in 4Q13 | — |
| | (4.9 | ) |
Overhead expense of CLIC expected to continue after the sale | — |
| | (9.6 | ) |
EBIT from business segments continuing after the CLIC sale | 232.6 |
| | 192.3 |
|
Corporate Operations, excluding corporate interest expense | (21.5 | ) | | 5.4 |
|
EBIT from operations continuing after the CLIC sale | 211.1 |
| | 197.7 |
|
Corporate interest expense | (22.2 | ) | | (28.2 | ) |
Operating earnings before taxes | 188.9 |
| | 169.5 |
|
Tax expense on operating income | 65.3 |
| | 60.0 |
|
Net operating income (1) | 123.6 |
| | 109.5 |
|
Earnings of CLIC being sold (net of taxes) | 15.2 |
| | 10.3 |
|
Loss on operations of CLIC being sold (including impact of taxes) | (298.0 | ) | | — |
|
Gain related to reinsurance transaction (net of taxes) | 2.5 |
| | — |
|
Net realized investment gains (net of related amortization and taxes) | 21.1 |
| | 8.8 |
|
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | (12.0 | ) | | 13.4 |
|
Equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities (net of taxes) | (5.9 | ) | | (4.5 | ) |
Loss on extinguishment or modification of debt (net of taxes) | (.4 | ) | | (64.0 | ) |
Valuation allowance for deferred tax assets and other tax items | 4.0 |
| | 15.5 |
|
Net income (loss) | $ | (149.9 | ) | | $ | 89.0 |
|
| | | |
Per diluted share: | | | |
Net operating income | $ | .56 |
| | $ | .47 |
|
Earnings of CLIC being sold (net of taxes) | .07 |
| | .04 |
|
Loss on operations of CLIC being sold (including impact of taxes) | (1.36 | ) | | — |
|
Gain related to reinsurance transaction (net of taxes) | .01 |
| | — |
|
Net realized investment gains (net of related amortization and taxes) | .10 |
| | .04 |
|
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | (.06 | ) | | .06 |
|
Equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities (net of taxes) | (.03 | ) | | (.02 | ) |
Loss on extinguishment or modification of debt (net of taxes) | — |
| | (.27 | ) |
Valuation allowance for deferred tax assets and other tax items | .02 |
| | .06 |
|
Net income (loss) | $ | (.69 | ) | | $ | .38 |
|
CNO Financial (11)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NET OPERATING INCOME EXCLUDING SIGNIFICANT ITEMS*
(Dollars in millions, except per share data)
|
| | | | | | | | | | | |
| Three months ended |
| June 30, 2013* |
| Actual results | | Significant items | | Excluding significant items |
Net Operating Income (1): | | | | | |
Bankers Life | $ | 79.1 |
| | $ | (2.5 | ) | | $ | 76.6 |
|
Washington National | 35.8 |
| | (1.5 | ) | | 34.3 |
|
Colonial Penn | 1.2 |
| | — |
| | 1.2 |
|
Other CNO Business: | | | | | |
Losses from the long-term care business reinsured effective December 31, 2013 | (2.2 | ) | | — |
| | (2.2 | ) |
Overhead expense of CLIC expected to continue after the completion of the sale | (5.0 | ) | | — |
| | (5.0 | ) |
EBIT from business segments continuing after the CLIC sale | 108.9 |
| | (4.0 | ) | | 104.9 |
|
Corporate Operations, excluding corporate interest expense | 2.4 |
| | (6.0 | ) | | (3.6 | ) |
EBIT from operations continuing after the CLIC sale (5) | 111.3 |
| | (10.0 | ) | | 101.3 |
|
Corporate interest expense | (13.1 | ) | | — |
| | (13.1 | ) |
Operating earnings before taxes | 98.2 |
| | (10.0 | ) | | 88.2 |
|
Tax expense on operating income | 34.3 |
| | (3.5 | ) | | 30.8 |
|
Net operating income | $ | 63.9 |
| | $ | (6.5 | ) | | $ | 57.4 |
|
| | | | | |
Net operating income per diluted share | $ | .28 |
| | $ | (.03 | ) | | $ | .25 |
|
* This table summarizes the financial impacts of significant items (as described in the segment results section of this press release) on our 2Q13 net operating income.
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CNO Financial (12)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
COLLECTED PREMIUMS
FROM CONTINUING OPERATING SEGMENTS
(Dollars in millions)
|
| | | | | | | |
| Three months ended |
| June 30, |
| 2014 | | 2013 |
Bankers Life segment: | | | |
Medicare supplement | $ | 177.8 |
| | $ | 176.1 |
|
Long-term care | 126.2 |
| | 133.2 |
|
PDP and other health | 2.1 |
| | 13.1 |
|
Supplemental health | 4.0 |
| | 2.2 |
|
Life | 101.5 |
| | 91.1 |
|
Annuity | 200.8 |
| | 183.7 |
|
Total | 612.4 |
| | 599.4 |
|
Washington National segment: | | | |
Supplemental health and other health | 129.7 |
| | 122.7 |
|
Medicare supplement | 21.7 |
| | 25.0 |
|
Life | 6.4 |
| | 6.3 |
|
Annuity | .6 |
| | 1.4 |
|
Total | 158.4 |
| | 155.4 |
|
Colonial Penn segment: | | | |
Life | 60.0 |
| | 56.4 |
|
Supplemental health | .9 |
| | 1.0 |
|
Total | 60.9 |
| | 57.4 |
|
Total collected premiums from continuing operating segments | $ | 831.7 |
| | $ | 812.2 |
|
NEW ANNUALIZED PREMIUMS (2)
(Dollars in millions)
|
| | | | | | | |
| Three months ended |
| June 30, |
| 2014 | | 2013 |
Bankers Life segment: | | | |
Medicare supplement | $ | 17.6 |
| | $ | 19.0 |
|
Long-term care | 4.7 |
| | 6.5 |
|
Supplemental health | 1.8 |
| | 2.7 |
|
Life | 27.1 |
| | 24.2 |
|
Annuity | 11.9 |
| | 10.8 |
|
Total | 63.1 |
| | 63.2 |
|
Washington National segment: | | | |
Supplemental health | 23.9 |
| | 21.3 |
|
Life | 1.3 |
| | 1.9 |
|
Annuity | .1 |
| | .1 |
|
Total | 25.3 |
| | 23.3 |
|
Colonial Penn segment: | | | |
Life | 16.5 |
| | 15.8 |
|
Total | 16.5 |
| | 15.8 |
|
Total new annualized premiums | $ | 104.9 |
| | $ | 102.3 |
|
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CNO Financial (13)
July 28, 2014
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
BENEFIT RATIOS ON MAJOR HEALTH LINES OF BUSINESS
|
| | | | | |
| Three months ended |
| June 30, |
| 2014 | | 2013 |
Bankers Life segment: | | | |
Medicare Supplement: | | | |
Earned premium | $193 million |
| | $189 million |
|
Benefit ratio (8) | 69.5 | % | | 67.2 | % |
Long-Term Care: | | | |
Earned premium | $127 million |
| | $134 million |
|
Benefit ratio (8) | 131.2 | % | | 129.5 | % |
Interest-adjusted benefit ratio (a non-GAAP measure) (9) | 79.2 | % | | 81.4 | % |
Washington National segment: | | | |
Medicare Supplement: | | | |
Earned premium | $22 million |
| | $26 million |
|
Benefit ratio (8) | 61.7 | % | | 65.5 | % |
Supplemental health (10): | | | |
Earned premium | $127 million |
| | $120 million |
|
Benefit ratio (8) | 80.3 | % | | 79.6 | % |
Interest-adjusted benefit ratio (a non-GAAP measure) (9) | 54.8 | % | | 53.5 | % |
-more-
CNO Financial (14)
July 28, 2014
NOTES
| |
(1) | Management believes that an analysis of Net income applicable to common stock before: (i) the loss on the operations of CLIC being sold; (ii) the earnings of CLIC being sold; (iii) loss on reinsurance transaction; (iv) net realized investment gains or losses, net of related amortization and taxes; (v) fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, net of related amortization and taxes; (vi) equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities, net of taxes; (vii) loss on extinguishment or modification of debt, net of taxes; and (viii) changes in the valuation allowance for deferred tax assets ("Net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry. Management uses this measure to evaluate performance because the items excluded from net operating income can be affected by events that are unrelated to the company's underlying fundamentals. Net realized investment gains or losses include: (i) gains or losses on the sales of investments; (ii) other-than-temporary impairments recognized through net income; and (iii) changes in fair value of certain fixed maturity investments with embedded derivatives. A reconciliation of Net operating income to Net income applicable to common stock is provided in the tables on pages 2 and 10. Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available in the "Investors - SEC Filings" section of CNO's website, www.CNOinc.com. |
| |
(2) | Measured by new annualized premium, which includes 6% of annuity and 10% of single premium whole life deposits and 100% of all other premiums. Medicare Advantage sales are not comparable to other sales and are therefore excluded in all periods. |
| |
(3) | Collected premiums from our core operating segments include premiums collected in our Bankers Life, Washington National and Colonial Penn segments. Collected premiums from all sources (including CLIC operations held for sale and the reinsured long-term care business included in the former Other CNO Business segment) were $866.7 million in 2Q14, up 1% from 2Q13. |
| |
(4) | The calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. The corresponding GAAP measures for debt-to-total capital were 14.6% and 14.7% at June 30, 2014 and December 31, 2013, respectively. |
| |
(5) | Management believes that an analysis of earnings before the loss on the operations of CLIC being sold, the earnings of CLIC being sold, loss on reinsurance transaction, net realized investment gains (losses), fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities, corporate interest expense, loss on extinguishment or modification of debt and taxes ("EBIT," a non-GAAP financial measure) provides a clearer comparison of the operating results of the company quarter-over-quarter because these items are unrelated to the company's underlying fundamentals. A reconciliation of EBIT to Net Income applicable to common stock is provided in the tables on pages 2 and 10. |
| |
(6) | Book value per diluted share reflects the potential dilution that could occur if outstanding stock options and warrants were exercised, restricted stock and performance units were vested and convertible securities were converted. The dilution from options, warrants, restricted shares and performance units is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the closing market price on the last day of the period. The dilution from convertible securities is calculated assuming the securities were converted on the last day of the period. In addition, the calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. The corresponding GAAP measures for book value per common share were $22.66 and $22.49 at June 30, 2014 and December 31, 2013, respectively. |
| |
(7) | Management believes that an analysis of EBIT, separated between in-force and new business provides increased clarity around the value drivers of our business, particularly since the new business results are significantly impacted by the rate of sales, mix of business and the distribution channel through which new sales are made. EBIT from new business includes pre-tax revenues and expenses associated with new sales of our insurance products during the first year after the sale is completed. EBIT from in-force business includes all pre-tax revenues and expenses associated with sales of insurance products that were completed more than one year before the end of the reporting period. The allocation of certain revenues and expenses between new and in-force business is based on estimates, which we believe are reasonable. |
| |
(8) | The benefit ratio is calculated by dividing the related product's insurance policy benefits by insurance policy income. |
-more-
CNO Financial (15)
July 28, 2014
| |
(9) | The interest-adjusted benefit ratio (a non-GAAP measure) is calculated by dividing the product's insurance policy benefits less imputed interest income on the accumulated assets backing the insurance liabilities by insurance policy income. Interest |
income is an important factor in measuring the performance of longer duration health products. The net cash flows generally cause an accumulation of amounts in the early years of a policy (accounted for as reserve increases), which will be paid out as benefits in later policy years (accounted for as reserve decreases). Accordingly, as the policies age, the benefit ratio will typically increase, but the increase in the change in reserve will be partially offset by the imputed interest income earned on the accumulated assets. The interest-adjusted benefit ratio reflects the effects of such interest income offset. Since interest income is an important factor in measuring the performance of these products, management believes a benefit ratio, which includes the effect of interest income, is useful in analyzing product performance. Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available in the "Investors - SEC Filings" section of CNO Financial's website, www.CNOinc.com.
| |
(10) | We have consolidated a small block of health related business with this supplemental health block for simplicity of reporting. All prior periods have been revised to conform to the current presentation. |
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 statements, contain forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by the use of terms such as "anticipate," "believe," "plan," "estimate," "expect," "project," "intend," "may," "will," "would," "contemplate," "possible," "attempt," "seek," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic," "guidance," "outlook" and similar words, although some forward-looking statements are expressed differently. You should consider statements that contain these words carefully because they describe our expectations, plans, strategies and goals and our beliefs concerning future business conditions, our results of operations, financial position, and our business outlook or they state other ''forward-looking'' information based on currently available information. Assumptions and other important factors that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, among other things: (i) changes in or sustained low interest rates causing reductions in investment income, the margins of our fixed annuity and life insurance businesses, and sales of, and demand for, our products; (ii) expectations of lower future investment earnings may cause us to accelerate amortization, write down the balance of insurance acquisition costs or establish additional liabilities for insurance products; (iii) general economic, market and political conditions, including the performance and fluctuations of the financial markets which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so; (iv) the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; (v) our ability to make anticipated changes to certain non-guaranteed elements of our life insurance products; (vi) our ability to obtain adequate and timely rate increases on our health products, including our long-term care business; (vii) the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; (viii) mortality, morbidity, the increased cost and usage of health care services, persistency, the adequacy of our previous reserve estimates and other factors which may affect the profitability of our insurance products; (ix) changes in our assumptions related to deferred acquisition costs or the present value of future profits; (x) the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value; (xi) our assumption that the positions we take on our tax return filings will not be successfully challenged by the Internal Revenue Service; (xii) changes in accounting principles and the interpretation thereof (including changes in principles related to accounting for deferred acquisition costs); (xiii) our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; (xiv) our ability to achieve anticipated expense reductions and levels of operational efficiencies including improvements in claims adjudication and continued automation and rationalization of operating systems, (xv) performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); (xvi) our ability to identify products and markets in which we can compete effectively against competitors with greater market share, higher ratings, greater financial resources and stronger brand recognition; (xvii) our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; (xviii) our ability to maintain effective controls over financial reporting; (xix) our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products, distribution channels and marketing initiatives; (xx) our ability to achieve additional upgrades of the financial strength ratings of CNO Financial and our insurance company subsidiaries as well as the impact of our ratings on our business, our ability to access capital and the cost of capital; (xxi) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission; (xxii) regulatory changes or actions, including those relating to regulation of the financial affairs of our insurance companies, such as the payment of dividends and surplus debenture interest to us, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; (xxiii) determination of the final sales price and net proceeds for the sale of Conseco Life Insurance Company; and (xxiv) changes in the Federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products or affect the value of our deferred tax assets. Other factors and assumptions not identified above are also relevant to the forward-looking statements, and if they prove incorrect, could also cause actual results to differ materially from those projected. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Our forward-looking statements speak only as of the date made. We assume no obligation to update or to publicly announce the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements.
- # # # # -
Exhibit 99.2
|
| | | | | |
| | | | | |
| | | | | |
Quarterly Financial Supplement - 2Q2014 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
July 28, 2014 | | | | | |
| | | | | |
|
| | | | |
Table of Contents | | | | Page |
| | | | |
Consolidated balance sheet | | | | 3 |
Consolidated statement of operations | | | | 4 |
Operating results | | | | 5 |
Computation of weighted average shares outstanding | | | | 6 |
EBIT from Business Segments Continuing After the CLIC Sale Summarized by In-Force and New Business | | | | 7 |
Analyses of income before taxes and selected data: | | | | |
Bankers Life | | | | 8-10 |
Washington National | | | | 11-13 |
Colonial Penn | | | | 14-15 |
Other CNO Business | | | | 16 |
Corporate Operations | | | | 17 |
Premiums collected on insurance products: | | | | |
Bankers Life | | | | 18 |
Washington National | | | | 19 |
Colonial Penn | | | | 20 |
New Annualized Premiums | | | | 21 |
Statutory information | | | | 22 |
Amounts related to CLIC being sold | | | | 23-24 |
Notes | | | | 25 |
|
| | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | |
Consolidated balance sheet (in millions) | Mar-13 | Jun-13 | Sep-13 | Dec-13 | Mar-14 | Jun-14 |
| | | | | | |
Assets | | | | | | |
Investments: | | | | | | |
Fixed maturities, available for sale, at fair value | $ | 24,894.5 |
| $ | 23,623.0 |
| $ | 23,497.7 |
| $ | 23,178.3 |
| $ | 20,143.8 |
| $ | 20,533.6 |
|
Equity securities at fair value | 216.9 |
| 241.3 |
| 262.0 |
| 249.3 |
| 277.6 |
| 287.5 |
|
Mortgage loans | 1,639.8 |
| 1,692.2 |
| 1,635.1 |
| 1,729.5 |
| 1,501.7 |
| 1,595.9 |
|
Policy loans | 271.5 |
| 269.1 |
| 267.5 |
| 277.0 |
| 102.6 |
| 99.7 |
|
Trading securities | 229.8 |
| 241.0 |
| 246.6 |
| 247.6 |
| 235.5 |
| 227.4 |
|
Investments held by variable interest entities | 1,009.9 |
| 1,087.9 |
| 1,080.7 |
| 1,046.7 |
| 1,134.1 |
| 1,241.1 |
|
Other invested assets | 309.7 |
| 312.6 |
| 330.6 |
| 423.3 |
| 409.5 |
| 426.1 |
|
Total investments | 28,572.1 |
| 27,467.1 |
| 27,320.2 |
| 27,151.7 |
| 23,804.8 |
| 24,411.3 |
|
Cash and cash equivalents - unrestricted | 251.6 |
| 280.0 |
| 376.7 |
| 699.0 |
| 285.4 |
| 378.8 |
|
Cash and cash equivalents held by variable interest entities | 462.2 |
| 210.7 |
| 85.1 |
| 104.3 |
| 140.3 |
| 101.8 |
|
Accrued investment income | 315.8 |
| 294.8 |
| 306.2 |
| 286.9 |
| 259.3 |
| 238.2 |
|
Present value of future profits | 606.6 |
| 591.6 |
| 578.9 |
| 679.3 |
| 527.7 |
| 512.3 |
|
Deferred acquisition costs | 654.4 |
| 762.1 |
| 846.0 |
| 968.1 |
| 740.4 |
| 698.9 |
|
Reinsurance receivables | 2,879.5 |
| 2,838.0 |
| 2,822.4 |
| 3,392.1 |
| 3,072.8 |
| 2,892.9 |
|
Income tax assets, net | 708.5 |
| 931.2 |
| 1,135.7 |
| 1,147.2 |
| 870.7 |
| 730.5 |
|
Assets held in separate accounts | 15.5 |
| 15.0 |
| 13.3 |
| 10.3 |
| 10.0 |
| 9.4 |
|
Other assets | 433.0 |
| 385.1 |
| 432.6 |
| 341.7 |
| 401.0 |
| 421.3 |
|
Assets of subsidiary being sold | — |
| — |
| — |
| — |
| 4,346.3 |
| 4,518.9 |
|
Total assets | $ | 34,899.2 |
| $ | 33,775.6 |
| $ | 33,917.1 |
| $ | 34,780.6 |
| $ | 34,458.7 |
| $ | 34,914.3 |
|
Liabilities | | | | | | |
Liabilities for insurance products: | | | | | | |
Policyholder account balances | $ | 12,833.4 |
| $ | 12,774.4 |
| $ | 12,766.1 |
| $ | 12,776.4 |
| $ | 10,625.3 |
| $ | 10,649.7 |
|
Future policy benefits | 11,311.7 |
| 11,017.9 |
| 11,058.3 |
| 11,222.5 |
| 10,138.6 |
| 10,372.2 |
|
Liability for policy and contract claims | 563.5 |
| 554.2 |
| 551.7 |
| 566.0 |
| 482.2 |
| 463.3 |
|
Unearned and advanced premiums | 285.7 |
| 278.5 |
| 274.5 |
| 300.6 |
| 279.5 |
| 270.7 |
|
Liabilities related to separate accounts | 15.5 |
| 15.0 |
| 13.3 |
| 10.3 |
| 10.0 |
| 9.4 |
|
Other liabilities | 903.0 |
| 626.8 |
| 712.7 |
| 590.6 |
| 727.4 |
| 560.7 |
|
Payable to reinsurer | — |
| — |
| — |
| 590.3 |
| — |
| — |
|
Investment borrowings | 1,880.2 |
| 1,878.0 |
| 1,850.2 |
| 1,900.0 |
| 1,499.4 |
| 1,507.6 |
|
Borrowings related to variable interest entities | 1,143.4 |
| 1,143.7 |
| 1,035.1 |
| 1,012.3 |
| 1,019.4 |
| 1,110.8 |
|
Notes payable - direct corporate obligations | 934.2 |
| 905.7 |
| 868.6 |
| 856.4 |
| 844.1 |
| 827.3 |
|
Liabilities of subsidiary being sold | — |
| — |
| — |
| — |
| 4,122.6 |
| 4,298.3 |
|
Total liabilities | 29,870.6 |
| 29,194.2 |
| 29,130.5 |
| 29,825.4 |
| 29,748.5 |
| 30,070.0 |
|
Shareholders' equity | | | | | | |
Common stock | 2.2 |
| 2.2 |
| 2.2 |
| 2.2 |
| 2.2 |
| 2.1 |
|
Additional paid-in capital | 4,173.2 |
| 4,128.2 |
| 4,121.3 |
| 4,092.8 |
| 4,054.7 |
| 3,963.9 |
|
Retained earnings (accumulated deficit) | (317.5 | ) | (247.1 | ) | 29.1 |
| 128.4 |
| (112.9 | ) | (47.8 | ) |
Total shareholders' equity before accumulated other comprehensive income | 3,857.9 |
| 3,883.3 |
| 4,152.6 |
| 4,223.4 |
| 3,944.0 |
| 3,918.2 |
|
Accumulated other comprehensive income | 1,170.7 |
| 698.1 |
| 634.0 |
| 731.8 |
| 766.2 |
| 926.1 |
|
Total shareholders' equity | 5,028.6 |
| 4,581.4 |
| 4,786.6 |
| 4,955.2 |
| 4,710.2 |
| 4,844.3 |
|
Total liabilities and shareholders' equity | $ | 34,899.2 |
| $ | 33,775.6 |
| $ | 33,917.1 |
| $ | 34,780.6 |
| $ | 34,458.7 |
| $ | 34,914.3 |
|
| | | | | | |
| | | | | | |
| | | | | | |
| 1Q13 | 2Q13 | 3Q13 | 4Q13 | 1Q14 | 2Q14 |
| | | | | | |
Book value per share at period-end (1) (2) | $ | 17.26 |
| $ | 17.70 |
| $ | 18.70 |
| $ | 19.17 |
| $ | 17.99 |
| $ | 18.33 |
|
| | | | | | |
Book value per diluted share (1) (3) | $ | 16.57 |
| $ | 17.01 |
| $ | 18.24 |
| $ | 18.62 |
| $ | 17.52 |
| $ | 17.85 |
|
| | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Consolidated statement of operations (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 691.2 |
| $ | 691.3 |
| $ | 686.1 |
| $ | 676.1 |
| $ | 2,744.7 |
| $ | 685.9 |
| $ | 679.0 |
|
Net investment income (loss): | | | | | | | |
General account assets | 351.9 |
| 348.8 |
| 350.7 |
| 354.4 |
| 1,405.8 |
| 348.1 |
| 347.4 |
|
Policyholder and reinsurer accounts and other special-purpose portfolios | 77.7 |
| 31.8 |
| 49.0 |
| 99.7 |
| 258.2 |
| 20.9 |
| 47.2 |
|
Realized investment gains (losses): | | | | | | | |
Net realized investment gains, excluding impairment losses | 15.3 |
| 3.8 |
| 2.8 |
| 23.1 |
| 45.0 |
| 35.3 |
| 12.4 |
|
Other-than-temporary impairment losses: | | | | | | | |
Total other-than-temporary impairment losses | — |
| (0.6 | ) | (2.9 | ) | (8.1 | ) | (11.6 | ) | (11.9 | ) | — |
|
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Net impairment losses recognized | — |
| (0.6 | ) | (2.9 | ) | (8.1 | ) | (11.6 | ) | (11.9 | ) | — |
|
Total realized gains (losses) | 15.3 |
| 3.2 |
| (0.1 | ) | 15.0 |
| 33.4 |
| 23.4 |
| 12.4 |
|
Fee revenue and other income | 6.5 |
| 6.4 |
| 8.1 |
| 13.0 |
| 34.0 |
| 6.4 |
| 7.0 |
|
Total revenues | 1,142.6 |
| 1,081.5 |
| 1,093.8 |
| 1,158.2 |
| 4,476.1 |
| 1,084.7 |
| 1,093.0 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 754.1 |
| 673.2 |
| 702.2 |
| 710.2 |
| 2,839.7 |
| 690.3 |
| 691.1 |
|
Loss on sale of subsidiary | — |
| — |
| — |
| — |
| — |
| 278.6 |
| — |
|
(Gain) loss related to reinsurance transaction | — |
| — |
| — |
| 98.4 |
| 98.4 |
| — |
| (3.8 | ) |
Interest expense | 27.3 |
| 26.9 |
| 25.8 |
| 25.3 |
| 105.3 |
| 24.6 |
| 24.3 |
|
Amortization | 79.3 |
| 79.2 |
| 61.4 |
| 76.4 |
| 296.3 |
| 66.7 |
| 64.9 |
|
Loss on extinguishment or modification of debt | 57.7 |
| 7.7 |
| — |
| — |
| 65.4 |
| — |
| 0.6 |
|
Other operating costs and expenses | 189.6 |
| 179.8 |
| 190.0 |
| 206.8 |
| 766.2 |
| 194.1 |
| 201.5 |
|
Total benefits and expenses | 1,108.0 |
| 966.8 |
| 979.4 |
| 1,117.1 |
| 4,171.3 |
| 1,254.3 |
| 978.6 |
|
| | | | | | | |
Income (loss) before income taxes | 34.6 |
| 114.7 |
| 114.4 |
| 41.1 |
| 304.8 |
| (169.6 | ) | 114.4 |
|
Income tax expense on period income | 33.2 |
| 42.6 |
| 38.1 |
| 14.4 |
| 128.3 |
| 39.0 |
| 40.3 |
|
Valuation allowance for deferred tax assets and other tax items | (10.5 | ) | (5.0 | ) | (206.7 | ) | (79.3 | ) | (301.5 | ) | 19.4 |
| (4.0 | ) |
Net income (loss) | $ | 11.9 |
| $ | 77.1 |
| $ | 283.0 |
| $ | 106.0 |
| $ | 478.0 |
| $ | (228.0 | ) | $ | 78.1 |
|
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Operating results ($ in millions, except per share amounts) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
EBIT (4): | | | | | | | |
Bankers Life | $ | 62.1 |
| $ | 79.1 |
| $ | 86.3 |
| $ | 83.0 |
| $ | 310.5 |
| $ | 84.2 |
| $ | 87.4 |
|
Washington National | 34.0 |
| 35.8 |
| 33.0 |
| 37.8 |
| 140.6 |
| 31.1 |
| 32.3 |
|
Colonial Penn | (5.4 | ) | 1.2 |
| (4.2 | ) | (4.1 | ) | (12.5 | ) | (6.2 | ) | 3.8 |
|
Other CNO Business: | | | | | | | |
Losses from the long-term care business reinsured effective December 31, 2013 | (2.7 | ) | (2.2 | ) | (1.0 | ) | (2.1 | ) | (8.0 | ) | — |
| — |
|
Overhead expense of CLIC allocated to other segments effective January 1, 2014 | (4.6 | ) | (5.0 | ) | (4.7 | ) | (5.3 | ) | (19.6 | ) | — |
| — |
|
EBIT from business segments continuing after the CLIC sale | 83.4 |
| 108.9 |
| 109.4 |
| 109.3 |
| 411.0 |
| 109.1 |
| 123.5 |
|
Corporate operations, excluding corporate interest expense | 3.0 |
| 2.4 |
| 9.4 |
| 3.8 |
| 18.6 |
| (6.0 | ) | (15.5 | ) |
EBIT from operations continuing after the CLIC sale | 86.4 |
| 111.3 |
| 118.8 |
| 113.1 |
| 429.6 |
| 103.1 |
| 108.0 |
|
Corporate interest expense | (15.1 | ) | (13.1 | ) | (11.7 | ) | (11.4 | ) | (51.3 | ) | (11.1 | ) | (11.1 | ) |
Operating earnings before taxes | 71.3 |
| 98.2 |
| 107.1 |
| 101.7 |
| 378.3 |
| 92.0 |
| 96.9 |
|
Tax expense on operating income | 25.7 |
| 34.3 |
| 34.4 |
| 35.5 |
| 129.9 |
| 32.1 |
| 33.2 |
|
Net operating income (5) | 45.6 |
| 63.9 |
| 72.7 |
| 66.2 |
| 248.4 |
| 59.9 |
| 63.7 |
|
Earnings of CLIC being sold (net of taxes) | 5.5 |
| 4.8 |
| 5.5 |
| 9.7 |
| 25.5 |
| 6.7 |
| 8.5 |
|
Loss on operations of CLIC being sold (including impact of taxes) | — |
| — |
| — |
| — |
| — |
| (298.0 | ) | — |
|
Gain (loss) related to reinsurance transaction (net of taxes) | — |
| — |
| — |
| (63.3 | ) | (63.3 | ) | — |
| 2.5 |
|
Net realized investment gains (losses) (net of related amortization and taxes) | 8.0 |
| 0.8 |
| (1.1 | ) | 9.1 |
| 16.8 |
| 13.6 |
| 7.5 |
|
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | 1.3 |
| 12.1 |
| 2.2 |
| 7.4 |
| 23.0 |
| (7.2 | ) | (4.8 | ) |
Equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities (net of taxes) | (1.8 | ) | (2.7 | ) | (3.0 | ) | (2.4 | ) | (9.9 | ) | (3.0 | ) | (2.9 | ) |
Loss on extinguishment or modification of debt (net of taxes) | (57.2 | ) | (6.8 | ) | — |
| — |
| (64.0 | ) | — |
| (0.4 | ) |
Valuation allowance for deferred tax assets and other tax items | 10.5 |
| 5.0 |
| 206.7 |
| 79.3 |
| 301.5 |
| — |
| 4.0 |
|
Net income (loss) | $ | 11.9 |
| $ | 77.1 |
| $ | 283.0 |
| $ | 106.0 |
| $ | 478.0 |
| $ | (228.0 | ) | $ | 78.1 |
|
| | | | | | | |
Per diluted share: | | | | | | | |
Net operating income | $ | .19 |
| $ | .28 |
| $ | .32 |
| $ | .29 |
| $ | 1.07 |
| $ | .27 |
| $ | .29 |
|
Earnings of CLIC being sold (net of taxes) | .02 |
| .02 |
| .02 |
| .04 |
| .11 |
| .03 |
| .04 |
|
Loss on operations of CLIC being sold (including impact of taxes) | — |
| — |
| — |
| — |
| — |
| (1.35 | ) | — |
|
Gain (loss) related to reinsurance transaction (net of taxes) | — |
| — |
| — |
| (.28 | ) | (.27 | ) | — |
| .01 |
|
Net realized investment gains (losses) (net of related amortization and taxes) | .04 |
| .01 |
| (.01 | ) | .04 |
| .08 |
| .06 |
| .03 |
|
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | .01 |
| .05 |
| .01 |
| .04 |
| .10 |
| (.03 | ) | (.02 | ) |
Equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities (net of taxes) | (.01 | ) | (.01 | ) | (.01 | ) | (.01 | ) | (.04 | ) | (.01 | ) | (.02 | ) |
Loss on extinguishment or modification of debt (net of taxes) | (.24 | ) | (.03 | ) | — |
| — |
| (.28 | ) | — |
| — |
|
Valuation allowance for deferred tax assets and other tax items | .04 |
| .02 |
| .90 |
| .35 |
| 1.29 |
| — |
| .02 |
|
Net income (loss) | $ | .05 |
| $ | .34 |
| $ | 1.23 |
| $ | .47 |
| $ | 2.06 |
| $ | (1.03 | ) | $ | .35 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Computation of weighted average shares outstanding | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 (a) | 2Q14 |
(000s) | | | | | | | |
| | | | | | | |
Basic | | | | | | | |
Shares outstanding, beginning of period | 221,502.4 |
| 223,502.1 |
| 219,378.7 |
| 222,007.2 |
| 221,502.4 |
| 220,323.8 |
| 219,266.9 |
|
Weighted average shares issued during the period: | | | | | | | |
Shares repurchased | — |
| (3,161.2 | ) | (809.7 | ) | (1,024.5 | ) | (4,105.8 | ) | (343.6 | ) | (2,802.5 | ) |
Conversion of 7.0% convertible debentures | — |
| — |
| 4,103.3 |
| — |
| 2,210.5 |
| — |
| — |
|
Stock options exercised and vested restricted and performance stock | 678.8 |
| 157.6 |
| 204.9 |
| 80.4 |
| 2,307.6 |
| 393.4 |
| 73.8 |
|
Shares withheld for the payment of taxes on the vesting of restricted stock | (100.0 | ) | (0.1 | ) | (1.2 | ) | (7.1 | ) | (286.8 | ) | (67.1 | ) | (0.6 | ) |
Weighted average basic shares outstanding during the period | 222,081.2 |
| 220,498.4 |
| 222,876.0 |
| 221,056.0 |
| 221,627.9 |
| 220,306.5 |
| 216,537.6 |
|
Basic shares outstanding, end of period | 223,502.1 |
| 219,378.7 |
| 222,007.2 |
| 220,323.8 |
| 220,323.8 |
| 219,266.9 |
| 213,755.2 |
|
Diluted | | | | | | | |
Weighted average basic shares outstanding | 222,081.2 |
| 220,498.4 |
| 222,876.0 |
| 221,056.0 |
| 221,627.9 |
| 220,306.5 |
| 216,537.6 |
|
Common stock equivalent shares related to: | | | | | | | |
7.0% convertible debentures | 16,590.4 |
| 5,692.2 |
| 838.7 |
| — |
| 5,780.3 |
| — |
| — |
|
Stock options, restricted stock and performance units | 2,828.3 |
| 2,410.8 |
| 2,858.6 |
| 3,005.2 |
| 2,775.7 |
| — |
| 2,390.4 |
|
Warrants | 1,967.2 |
| 2,291.4 |
| 2,773.8 |
| 3,039.7 |
| 2,518.1 |
| — |
| 3,180.0 |
|
Weighted average diluted shares outstanding during the period | 243,467.1 |
| 230,892.8 |
| 229,347.1 |
| 227,100.9 |
| 232,702.0 |
| 220,306.5 |
| 222,108.0 |
|
Diluted shares outstanding, end of period | 234,865.1 |
| 229,928.4 |
| 227,693.4 |
| 226,867.8 |
| 226,867.8 |
| 225,106.7 |
| 219,536.1 |
|
| | | | | | | |
(a) Equivalent common shares of 5,803.0 were not included in the diluted weighted average shares outstanding due
to the net loss recognized in 1Q14.
|
| | | | | | | | | | | | | | | | | | | | | |
EBIT from Business Segments Continuing After the CLIC Sale Summarized by In-Force and New Business (6) | | | | | | | |
(in millions) | | | | | | | |
| | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
| | | | | | | |
EBIT from In-Force Business | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 535.0 |
| $ | 539.6 |
| $ | 537.9 |
| $ | 534.6 |
| $ | 2,147.1 |
| $ | 541.6 |
| $ | 534.9 |
|
Net investment income | 348.2 |
| 309.0 |
| 316.9 |
| 361.4 |
| 1,335.5 |
| 297.7 |
| 320.2 |
|
Fee revenue and other income | 2.6 |
| 2.9 |
| 4.0 |
| 3.8 |
| 13.3 |
| 4.7 |
| 5.2 |
|
Total revenues | 885.8 |
| 851.5 |
| 858.8 |
| 899.8 |
| 3,495.9 |
| 844.0 |
| 860.3 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 595.9 |
| 557.0 |
| 557.9 |
| 577.1 |
| 2,287.9 |
| 532.9 |
| 542.5 |
|
Interest expense | 1.9 |
| 2.2 |
| 2.3 |
| 2.2 |
| 8.6 |
| 2.3 |
| 2.4 |
|
Amortization | 68.6 |
| 57.6 |
| 50.3 |
| 59.8 |
| 236.3 |
| 61.6 |
| 58.6 |
|
Other operating costs and expenses | 84.5 |
| 82.0 |
| 87.1 |
| 96.4 |
| 350.0 |
| 80.6 |
| 84.6 |
|
Total benefits and expenses | 750.9 |
| 698.8 |
| 697.6 |
| 735.5 |
| 2,882.8 |
| 677.4 |
| 688.1 |
|
EBIT from In-Force Business | $ | 134.9 |
| $ | 152.7 |
| $ | 161.2 |
| $ | 164.3 |
| $ | 613.1 |
| $ | 166.6 |
| $ | 172.2 |
|
| | | | | | | |
| | | | | | | |
EBIT from New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 99.0 |
| $ | 96.7 |
| $ | 92.7 |
| $ | 90.9 |
| $ | 379.3 |
| $ | 90.8 |
| $ | 91.6 |
|
Net investment income | 9.7 |
| 5.7 |
| 9.6 |
| 15.4 |
| 40.4 |
| 6.4 |
| 9.7 |
|
Fee revenue and other income | 1.5 |
| 1.5 |
| 2.3 |
| 2.1 |
| 7.4 |
| 1.0 |
| 1.1 |
|
Total revenues | 110.2 |
| 103.9 |
| 104.6 |
| 108.4 |
| 427.1 |
| 98.2 |
| 102.4 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 70.9 |
| 63.9 |
| 64.3 |
| 68.0 |
| 267.1 |
| 58.6 |
| 61.4 |
|
Interest expense | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Amortization | 6.7 |
| 8.0 |
| 7.5 |
| 8.4 |
| 30.6 |
| 6.9 |
| 6.6 |
|
Other operating costs and expenses | 84.1 |
| 75.8 |
| 84.6 |
| 87.0 |
| 331.5 |
| 90.2 |
| 83.1 |
|
Total benefits and expenses | 161.7 |
| 147.7 |
| 156.4 |
| 163.4 |
| 629.2 |
| 155.7 |
| 151.1 |
|
EBIT from New Business | $ | (51.5 | ) | $ | (43.8 | ) | $ | (51.8 | ) | $ | (55.0 | ) | $ | (202.1 | ) | $ | (57.5 | ) | $ | (48.7 | ) |
| | | | | | | |
| | | | | | | |
EBIT from In-Force and New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 634.0 |
| $ | 636.3 |
| $ | 630.6 |
| $ | 625.5 |
| $ | 2,526.4 |
| $ | 632.4 |
| $ | 626.5 |
|
Net investment income | 357.9 |
| 314.7 |
| 326.5 |
| 376.8 |
| 1,375.9 |
| 304.1 |
| 329.9 |
|
Fee revenue and other income | 4.1 |
| 4.4 |
| 6.3 |
| 5.9 |
| 20.7 |
| 5.7 |
| 6.3 |
|
Total revenues | 996.0 |
| 955.4 |
| 963.4 |
| 1,008.2 |
| 3,923.0 |
| 942.2 |
| 962.7 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 666.8 |
| 620.9 |
| 622.2 |
| 645.1 |
| 2,555.0 |
| 591.5 |
| 603.9 |
|
Interest expense | 1.9 |
| 2.2 |
| 2.3 |
| 2.2 |
| 8.6 |
| 2.3 |
| 2.4 |
|
Amortization | 75.3 |
| 65.6 |
| 57.8 |
| 68.2 |
| 266.9 |
| 68.5 |
| 65.2 |
|
Other operating costs and expenses | 168.6 |
| 157.8 |
| 171.7 |
| 183.4 |
| 681.5 |
| 170.8 |
| 167.7 |
|
Total benefits and expenses | 912.6 |
| 846.5 |
| 854.0 |
| 898.9 |
| 3,512.0 |
| 833.1 |
| 839.2 |
|
EBIT from In-Force and New Business | $ | 83.4 |
| $ | 108.9 |
| $ | 109.4 |
| $ | 109.3 |
| $ | 411.0 |
| $ | 109.1 |
| $ | 123.5 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Bankers Life | | | | | | | |
Analysis of income before taxes (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Insurance policy income | $ | 418.0 |
| $ | 419.1 |
| $ | 407.4 |
| $ | 404.2 |
| $ | 1,648.7 |
| $ | 416.3 |
| $ | 408.1 |
|
Net investment income (loss): | | | | | | | |
General account invested assets | 212.8 |
| 211.0 |
| 212.4 |
| 217.8 |
| 854.0 |
| 219.8 |
| 220.5 |
|
Fixed index products | 48.9 |
| 15.6 |
| 23.0 |
| 64.2 |
| 151.7 |
| 4.6 |
| 27.1 |
|
Fee revenue and other income | 3.7 |
| 4.0 |
| 5.8 |
| 5.5 |
| 19.0 |
| 5.3 |
| 5.8 |
|
Total revenues | 683.4 |
| 649.7 |
| 648.6 |
| 691.7 |
| 2,673.4 |
| 646.0 |
| 661.5 |
|
| | | | | | | |
Insurance policy benefits | 373.8 |
| 370.4 |
| 357.0 |
| 346.3 |
| 1,447.5 |
| 365.7 |
| 356.0 |
|
Amounts added to policyholder account balances: | | | | | | | |
Cost of interest credited to policyholders | 35.9 |
| 36.0 |
| 35.3 |
| 34.7 |
| 141.9 |
| 32.9 |
| 32.2 |
|
Cost of options to fund index credits, net of forfeitures | 11.8 |
| 11.9 |
| 11.7 |
| 12.0 |
| 47.4 |
| 12.0 |
| 12.1 |
|
Market value changes credited to policyholders | 49.0 |
| 15.8 |
| 23.3 |
| 63.8 |
| 151.9 |
| 4.4 |
| 27.6 |
|
Amortization related to operations | 54.5 |
| 45.7 |
| 39.7 |
| 47.6 |
| 187.5 |
| 48.2 |
| 45.4 |
|
Interest expense on investment borrowings | 1.4 |
| 1.7 |
| 1.8 |
| 1.8 |
| 6.7 |
| 1.9 |
| 1.9 |
|
Other operating costs and expenses | 94.9 |
| 89.1 |
| 93.5 |
| 102.5 |
| 380.0 |
| 96.7 |
| 98.9 |
|
Total benefits and expenses | 621.3 |
| 570.6 |
| 562.3 |
| 608.7 |
| 2,362.9 |
| 561.8 |
| 574.1 |
|
EBIT (4) | $ | 62.1 |
| $ | 79.1 |
| $ | 86.3 |
| $ | 83.0 |
| $ | 310.5 |
| $ | 84.2 |
| $ | 87.4 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Health underwriting margins (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Medicare supplement: | | | | | | | |
Earned premium | $ | 188.4 |
| $ | 189.2 |
| $ | 190.7 |
| $ | 190.3 |
| $ | 758.6 |
| $ | 194.5 |
| $ | 193.2 |
|
Benefit ratio | 68.5 | % | 67.2 | % | 67.0 | % | 65.7 | % | 67.1 | % | 67.7 | % | 69.5 | % |
Underwriting margin (earned premium less policy benefits) | $ | 59.4 |
| $ | 62.0 |
| $ | 62.9 |
| $ | 65.3 |
| $ | 249.6 |
| $ | 62.9 |
| $ | 59.0 |
|
| | | | | | | |
PDP: | | | | | | | |
Earned premium | $ | 8.9 |
| $ | 10.8 |
| $ | — |
| $ | — |
| $ | 19.7 |
| $ | 6.8 |
| $ | — |
|
Benefit ratio | 74.9 | % | 85.2 | % | N/A |
| N/A |
| 80.5 | % | 77.9 | % | N/A |
|
Underwriting margin (earned premium less policy benefits) | $ | 2.2 |
| $ | 1.6 |
| $ | — |
| $ | — |
| $ | 3.8 |
| $ | 1.5 |
| $ | — |
|
| | | | | | | |
Long-term care: | | | | | | | |
Earned premium | $ | 135.3 |
| $ | 134.1 |
| $ | 132.6 |
| $ | 130.9 |
| $ | 532.9 |
| $ | 129.1 |
| $ | 127.4 |
|
Benefit ratio before interest income on reserves | 129.4 | % | 129.5 | % | 128.4 | % | 130.0 | % | 129.3 | % | 131.9 | % | 131.2 | % |
Interest-adjusted benefit ratio | 81.7 | % | 81.4 | % | 79.4 | % | 80.0 | % | 80.6 | % | 81.0 | % | 79.2 | % |
Underwriting margin (earned premium plus interest income on reserves less policy benefits) | $ | 24.8 |
| $ | 25.0 |
| $ | 27.3 |
| $ | 26.1 |
| $ | 103.2 |
| $ | 24.5 |
| $ | 26.5 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Bankers Life | | | | | | | |
Average liabilities for insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Fixed index annuities | $ | 3,038.8 |
| $ | 3,132.2 |
| $ | 3,224.6 |
| $ | 3,347.7 |
| $ | 3,185.8 |
| $ | 3,462.8 |
| $ | 3,575.7 |
|
Deferred annuities | 4,245.7 |
| 4,162.1 |
| 4,091.9 |
| 4,049.0 |
| 4,137.2 |
| 3,983.1 |
| 3,889.6 |
|
SPIAs and supplemental contracts: | | | | | | | |
Mortality based | 229.2 |
| 227.2 |
| 223.3 |
| 206.5 |
| 221.5 |
| 203.1 |
| 206.5 |
|
Deposit based | 158.6 |
| 157.9 |
| 156.2 |
| 153.4 |
| 156.5 |
| 150.1 |
| 148.1 |
|
Health: | | | | | | | |
Long-term care | 4,837.7 |
| 4,651.7 |
| 4,507.3 |
| 4,532.0 |
| 4,632.2 |
| 4,568.0 |
| 4,682.5 |
|
Medicare supplement | 337.4 |
| 333.3 |
| 326.6 |
| 332.3 |
| 332.4 |
| 338.2 |
| 330.6 |
|
Other health | 45.1 |
| 45.3 |
| 45.3 |
| 45.7 |
| 45.4 |
| 46.5 |
| 47.1 |
|
Life: | | | | | | | |
Interest sensitive | 467.6 |
| 480.3 |
| 497.4 |
| 516.2 |
| 490.4 |
| 533.2 |
| 552.5 |
|
Non-interest sensitive | 570.5 |
| 598.1 |
| 624.3 |
| 649.5 |
| 610.6 |
| 672.4 |
| 693.6 |
|
Total average liabilities for insurance products, net of reinsurance ceded | $ | 13,930.6 |
| $ | 13,788.1 |
| $ | 13,696.9 |
| $ | 13,832.3 |
| $ | 13,812.0 |
| $ | 13,957.4 |
| $ | 14,126.2 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Present value of future profits (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 168.8 |
| $ | 159.9 |
| $ | 155.6 |
| $ | 152.5 |
| $ | 168.8 |
| $ | 263.2 |
| $ | 137.7 |
|
Amortization related to operations | (16.6 | ) | (11.5 | ) | (10.6 | ) | (10.1 | ) | (48.8 | ) | (11.4 | ) | (10.5 | ) |
Amortization related to net realized investment (gains) losses | (0.1 | ) | — |
| — |
| — |
| (0.1 | ) | — |
| — |
|
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | 7.8 |
| 7.2 |
| 7.5 |
| 120.8 |
| 143.3 |
| (114.1 | ) | 4.9 |
|
Balance, end of period | $ | 159.9 |
| $ | 155.6 |
| $ | 152.5 |
| $ | 263.2 |
| $ | 263.2 |
| $ | 137.7 |
| $ | 132.1 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Deferred acquisition costs (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 332.8 |
| $ | 350.8 |
| $ | 439.5 |
| $ | 514.5 |
| $ | 332.8 |
| $ | 627.8 |
| $ | 440.8 |
|
Deferred acquisition expenses | 37.7 |
| 37.1 |
| 38.4 |
| 44.9 |
| 158.1 |
| 39.6 |
| 41.8 |
|
Amortization related to operations | (37.9 | ) | (34.2 | ) | (29.1 | ) | (37.5 | ) | (138.7 | ) | (36.8 | ) | (34.9 | ) |
Amortization related to net realized investment (gains) losses | (0.6 | ) | (0.4 | ) | — |
| (0.1 | ) | (1.1 | ) | — |
| (0.1 | ) |
Amortization related to fair value changes in embedded derivative liabilities | (1.1 | ) | (9.1 | ) | (1.6 | ) | (5.1 | ) | (16.9 | ) | 3.8 |
| 2.3 |
|
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | 19.9 |
| 95.3 |
| 67.3 |
| 111.1 |
| 293.6 |
| (193.6 | ) | (52.3 | ) |
Balance, end of period | $ | 350.8 |
| $ | 439.5 |
| $ | 514.5 |
| $ | 627.8 |
| $ | 627.8 |
| $ | 440.8 |
| $ | 397.6 |
|
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
Bankers Life Segment EBIT Summarized by In-Force and New Business (6) | | | | | | | |
(in millions) | | | | | | | |
| | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
EBIT from In-Force Business | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 345.8 |
| $ | 349.4 |
| $ | 341.8 |
| $ | 341.0 |
| $ | 1,378.0 |
| $ | 354.2 |
| $ | 346.2 |
|
Net investment income (loss) | 252.0 |
| 220.9 |
| 225.8 |
| 266.6 |
| 965.3 |
| 218.0 |
| 237.9 |
|
Fee revenue and other income | 2.2 |
| 2.5 |
| 3.5 |
| 3.4 |
| 11.6 |
| 4.3 |
| 4.7 |
|
Total revenues | 600.0 |
| 572.8 |
| 571.1 |
| 611.0 |
| 2,354.9 |
| 576.5 |
| 588.8 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 412.8 |
| 383.4 |
| 376.3 |
| 402.2 |
| 1,574.7 |
| 370.1 |
| 380.7 |
|
Interest expense | 1.4 |
| 1.7 |
| 1.8 |
| 1.8 |
| 6.7 |
| 1.9 |
| 1.9 |
|
Amortization | 48.7 |
| 38.7 |
| 33.2 |
| 40.3 |
| 160.9 |
| 42.5 |
| 40.0 |
|
Other operating costs and expenses | 41.0 |
| 39.4 |
| 40.9 |
| 48.7 |
| 170.0 |
| 39.6 |
| 41.9 |
|
Total benefits and expenses | 503.9 |
| 463.2 |
| 452.2 |
| 493.0 |
| 1,912.3 |
| 454.1 |
| 464.5 |
|
EBIT from In-Force Business | $ | 96.1 |
| $ | 109.6 |
| $ | 118.9 |
| $ | 118.0 |
| $ | 442.6 |
| $ | 122.4 |
| $ | 124.3 |
|
| | | | | | | |
| | | | | | | |
EBIT from New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 72.2 |
| $ | 69.7 |
| $ | 65.6 |
| $ | 63.2 |
| $ | 270.7 |
| $ | 62.1 |
| $ | 61.9 |
|
Net investment income (loss) | 9.7 |
| 5.7 |
| 9.6 |
| 15.4 |
| 40.4 |
| 6.4 |
| 9.7 |
|
Fee revenue and other income | 1.5 |
| 1.5 |
| 2.3 |
| 2.1 |
| 7.4 |
| 1.0 |
| 1.1 |
|
Total revenues | 83.4 |
| 76.9 |
| 77.5 |
| 80.7 |
| 318.5 |
| 69.5 |
| 72.7 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 57.7 |
| 50.7 |
| 51.0 |
| 54.6 |
| 214.0 |
| 44.9 |
| 47.2 |
|
Interest expense | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Amortization | 5.8 |
| 7.0 |
| 6.5 |
| 7.3 |
| 26.6 |
| 5.7 |
| 5.4 |
|
Other operating costs and expenses | 53.9 |
| 49.7 |
| 52.6 |
| 53.8 |
| 210.0 |
| 57.1 |
| 57.0 |
|
Total benefits and expenses | 117.4 |
| 107.4 |
| 110.1 |
| 115.7 |
| 450.6 |
| 107.7 |
| 109.6 |
|
EBIT from New Business | $ | (34.0 | ) | $ | (30.5 | ) | $ | (32.6 | ) | $ | (35.0 | ) | $ | (132.1 | ) | $ | (38.2 | ) | $ | (36.9 | ) |
| | | | | | | |
| | | | | | | |
EBIT from In-Force and New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 418.0 |
| $ | 419.1 |
| $ | 407.4 |
| $ | 404.2 |
| $ | 1,648.7 |
| $ | 416.3 |
| $ | 408.1 |
|
Net investment income (loss) | 261.7 |
| 226.6 |
| 235.4 |
| 282.0 |
| 1,005.7 |
| 224.4 |
| 247.6 |
|
Fee revenue and other income | 3.7 |
| 4.0 |
| 5.8 |
| 5.5 |
| 19.0 |
| 5.3 |
| 5.8 |
|
Total revenues | 683.4 |
| 649.7 |
| 648.6 |
| 691.7 |
| 2,673.4 |
| 646.0 |
| 661.5 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 470.5 |
| 434.1 |
| 427.3 |
| 456.8 |
| 1,788.7 |
| 415.0 |
| 427.9 |
|
Interest expense | 1.4 |
| 1.7 |
| 1.8 |
| 1.8 |
| 6.7 |
| 1.9 |
| 1.9 |
|
Amortization | 54.5 |
| 45.7 |
| 39.7 |
| 47.6 |
| 187.5 |
| 48.2 |
| 45.4 |
|
Other operating costs and expenses | 94.9 |
| 89.1 |
| 93.5 |
| 102.5 |
| 380.0 |
| 96.7 |
| 98.9 |
|
Total benefits and expenses | 621.3 |
| 570.6 |
| 562.3 |
| 608.7 |
| 2,362.9 |
| 561.8 |
| 574.1 |
|
EBIT from In-Force and New Business | $ | 62.1 |
| $ | 79.1 |
| $ | 86.3 |
| $ | 83.0 |
| $ | 310.5 |
| $ | 84.2 |
| $ | 87.4 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Washington National | | | | | | | |
Analysis of income before taxes (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Insurance policy income | $ | 152.9 |
| $ | 153.1 |
| $ | 159.2 |
| $ | 156.3 |
| $ | 621.5 |
| $ | 155.6 |
| $ | 156.7 |
|
Net investment income (loss): | | | | | | | |
General account invested assets | 69.8 |
| 68.3 |
| 69.1 |
| 67.8 |
| 275.0 |
| 68.2 |
| 67.6 |
|
Fixed index products | 6.8 |
| 1.6 |
| 2.6 |
| 6.9 |
| 17.9 |
| 0.9 |
| 2.8 |
|
Trading account income related to reinsurer accounts | (0.4 | ) | (2.5 | ) | (0.5 | ) | (0.3 | ) | (3.7 | ) | 1.6 |
| (0.2 | ) |
Change in value of embedded derivatives related to modified coinsurance agreements | 0.4 |
| 2.5 |
| 0.5 |
| 0.3 |
| 3.7 |
| (1.6 | ) | 0.2 |
|
Trading account income related to policyholder accounts | 1.3 |
| (0.1 | ) | 1.2 |
| 1.6 |
| 4.0 |
| (0.1 | ) | 1.4 |
|
Fee revenue and other income | 0.2 |
| 0.2 |
| 0.3 |
| 0.2 |
| 0.9 |
| 0.2 |
| 0.2 |
|
Total revenues | 231.0 |
| 223.1 |
| 232.4 |
| 232.8 |
| 919.3 |
| 224.8 |
| 228.7 |
|
| | | | | | | |
Insurance policy benefits | 123.6 |
| 123.3 |
| 132.6 |
| 118.3 |
| 497.8 |
| 126.0 |
| 123.3 |
|
Amounts added to policyholder account balances: | | | | | | | |
Cost of interest credited to policyholders | 3.8 |
| 3.9 |
| 3.4 |
| 3.6 |
| 14.7 |
| 3.4 |
| 4.0 |
|
Cost of options to fund index credits, net of forfeitures | 1.9 |
| 1.4 |
| 1.5 |
| 1.3 |
| 6.1 |
| 1.5 |
| 1.4 |
|
Market value changes credited to policyholders | 8.4 |
| 1.7 |
| 4.1 |
| 8.6 |
| 22.8 |
| 0.9 |
| 4.1 |
|
Amortization related to operations | 17.1 |
| 16.2 |
| 14.4 |
| 17.2 |
| 64.9 |
| 16.3 |
| 16.0 |
|
Interest expense on investment borrowings | 0.5 |
| 0.5 |
| 0.5 |
| 0.4 |
| 1.9 |
| 0.4 |
| 0.5 |
|
Other operating costs and expenses | 41.7 |
| 40.3 |
| 42.9 |
| 45.6 |
| 170.5 |
| 45.2 |
| 47.1 |
|
Total benefits and expenses | 197.0 |
| 187.3 |
| 199.4 |
| 195.0 |
| 778.7 |
| 193.7 |
| 196.4 |
|
EBIT (4) | $ | 34.0 |
| $ | 35.8 |
| $ | 33.0 |
| $ | 37.8 |
| $ | 140.6 |
| $ | 31.1 |
| $ | 32.3 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Health underwriting margins (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Medicare supplement: | | | | | | | |
Earned premium | $ | 26.8 |
| $ | 25.9 |
| $ | 25.2 |
| $ | 24.4 |
| $ | 102.3 |
| $ | 23.1 |
| $ | 22.1 |
|
Benefit ratio | 65.0 | % | 65.5 | % | 64.3 | % | 63.6 | % | 64.6 | % | 63.9 | % | 61.7 | % |
Underwriting margin (earned premium less policy benefits) | $ | 9.4 |
| $ | 8.9 |
| $ | 9.0 |
| $ | 8.9 |
| $ | 36.2 |
| $ | 8.3 |
| $ | 8.5 |
|
| | | | | | | |
Supplemental health and other (a): | | | | | | | |
Earned premium | $ | 118.7 |
| $ | 119.8 |
| $ | 121.8 |
| $ | 124.4 |
| $ | 484.7 |
| $ | 125.8 |
| $ | 126.8 |
|
Benefit ratio before interest income on reserves | 79.8 | % | 79.6 | % | 81.7 | % | 76.7 | % | 79.4 | % | 78.9 | % | 80.3 | % |
Interest-adjusted benefit ratio | 53.6 | % | 53.5 | % | 55.1 | % | 50.6 | % | 53.2 | % | 53.0 | % | 54.8 | % |
Underwriting margin (earned premium plus interest income on reserves less policy benefits) | $ | 55.1 |
| $ | 55.7 |
| $ | 54.7 |
| $ | 61.5 |
| $ | 227.0 |
| $ | 59.1 |
| $ | 57.4 |
|
| | | | | | | |
| |
(a) | We have consolidated a small block of health related business with this supplemental health block for simplicity of |
reporting. All prior periods have been revised to conform to the current presentation.
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Washington National | | | | | | | |
Average liabilities for insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Fixed index annuities | $ | 474.2 |
| $ | 462.1 |
| $ | 451.1 |
| $ | 442.3 |
| $ | 457.4 |
| $ | 433.7 |
| $ | 426.3 |
|
Deferred annuities | 157.0 |
| 151.2 |
| 143.3 |
| 136.9 |
| 147.1 |
| 134.4 |
| 131.4 |
|
SPIAs and supplemental contracts: | | | | | | | |
Mortality based | 250.9 |
| 248.2 |
| 248.2 |
| 248.2 |
| 248.9 |
| 245.5 |
| 242.9 |
|
Deposit based | 241.9 |
| 245.9 |
| 248.1 |
| 247.6 |
| 245.9 |
| 249.5 |
| 252.3 |
|
Separate Accounts | 15.2 |
| 15.3 |
| 14.2 |
| 11.8 |
| 14.1 |
| 10.2 |
| 9.7 |
|
Health: | | | | | | | |
Supplemental health | 2,212.0 |
| 2,224.5 |
| 2,237.1 |
| 2,250.2 |
| 2,231.0 |
| 2,265.3 |
| 2,415.7 |
|
Medicare supplement | 40.4 |
| 39.0 |
| 37.7 |
| 37.7 |
| 38.7 |
| 36.8 |
| 36.0 |
|
Other health | 12.9 |
| 12.3 |
| 12.1 |
| 11.7 |
| 12.3 |
| 11.1 |
| 16.8 |
|
Life: | | | | | | | |
Interest sensitive | 167.1 |
| 166.7 |
| 164.9 |
| 166.3 |
| 166.2 |
| 165.8 |
| 160.3 |
|
Non-interest sensitive life | 197.2 |
| 202.6 |
| 198.9 |
| 196.4 |
| 198.8 |
| 194.2 |
| 192.6 |
|
Total average liabilities for insurance products, net of reinsurance ceded | $ | 3,768.8 |
| $ | 3,767.8 |
| $ | 3,755.6 |
| $ | 3,749.1 |
| $ | 3,760.4 |
| $ | 3,746.5 |
| $ | 3,884.0 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Present value of future profits (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 375.9 |
| $ | 367.7 |
| $ | 359.8 |
| $ | 352.2 |
| $ | 375.9 |
| $ | 344.3 |
| $ | 336.2 |
|
Amortization related to operations | (8.4 | ) | (8.7 | ) | (7.7 | ) | (8.0 | ) | (32.8 | ) | (7.9 | ) | (7.6 | ) |
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | 0.2 |
| 0.8 |
| 0.1 |
| 0.1 |
| 1.2 |
| (0.2 | ) | (0.5 | ) |
Balance, end of period | $ | 367.7 |
| $ | 359.8 |
| $ | 352.2 |
| $ | 344.3 |
| $ | 344.3 |
| $ | 336.2 |
| $ | 328.1 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Deferred acquisition costs (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 195.2 |
| $ | 201.5 |
| $ | 219.2 |
| $ | 228.0 |
| $ | 195.2 |
| $ | 232.2 |
| $ | 230.8 |
|
Deferred acquisition expenses | 12.3 |
| 12.8 |
| 12.7 |
| 12.8 |
| 50.6 |
| 13.2 |
| 13.8 |
|
Amortization related to operations | (8.7 | ) | (7.5 | ) | (6.7 | ) | (9.2 | ) | (32.1 | ) | (8.4 | ) | (8.4 | ) |
Amortization related to net realized investment (gains) losses | (0.1 | ) | — |
| (0.1 | ) | (0.2 | ) | (0.4 | ) | (0.4 | ) | — |
|
Amortization related to fair value changes in embedded derivative liabilities | 0.1 |
| (1.4 | ) | 0.1 |
| (0.9 | ) | (2.1 | ) | 0.4 |
| 0.4 |
|
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | 2.7 |
| 13.8 |
| 2.8 |
| 1.7 |
| 21.0 |
| (6.2 | ) | (5.7 | ) |
Balance, end of period | $ | 201.5 |
| $ | 219.2 |
| $ | 228.0 |
| $ | 232.2 |
| $ | 232.2 |
| $ | 230.8 |
| $ | 230.9 |
|
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
Washington National Segment EBIT Summarized by In-Force and New Business (6) | | | | | | | |
(in millions) | | | | | | | |
| | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
EBIT from In-Force Business | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 137.4 |
| $ | 137.6 |
| $ | 143.3 |
| $ | 139.7 |
| $ | 558.0 |
| $ | 138.1 |
| $ | 138.5 |
|
Net investment income (loss) | 77.9 |
| 69.8 |
| 72.9 |
| 76.3 |
| 296.9 |
| 69.0 |
| 71.8 |
|
Fee revenue and other income | 0.2 |
| 0.2 |
| 0.3 |
| 0.2 |
| 0.9 |
| 0.2 |
| 0.2 |
|
Total revenues | 215.5 |
| 207.6 |
| 216.5 |
| 216.2 |
| 855.8 |
| 207.3 |
| 210.5 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 131.0 |
| 123.7 |
| 134.8 |
| 124.7 |
| 514.2 |
| 124.5 |
| 125.2 |
|
Interest expense | 0.5 |
| 0.5 |
| 0.5 |
| 0.4 |
| 1.9 |
| 0.4 |
| 0.5 |
|
Amortization | 16.3 |
| 15.3 |
| 13.5 |
| 16.2 |
| 61.3 |
| 15.2 |
| 14.9 |
|
Other operating costs and expenses | 30.4 |
| 30.2 |
| 32.6 |
| 33.3 |
| 126.5 |
| 33.3 |
| 35.1 |
|
Total benefits and expenses | 178.2 |
| 169.7 |
| 181.4 |
| 174.6 |
| 703.9 |
| 173.4 |
| 175.7 |
|
EBIT from In-Force Business | $ | 37.3 |
| $ | 37.9 |
| $ | 35.1 |
| $ | 41.6 |
| $ | 151.9 |
| $ | 33.9 |
| $ | 34.8 |
|
| | | | | | | |
| | | | | | | |
EBIT from New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 15.5 |
| $ | 15.5 |
| $ | 15.9 |
| $ | 16.6 |
| $ | 63.5 |
| $ | 17.5 |
| $ | 18.2 |
|
Net investment income (loss) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Fee revenue and other income | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Total revenues | 15.5 |
| 15.5 |
| 15.9 |
| 16.6 |
| 63.5 |
| 17.5 |
| 18.2 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 6.7 |
| 6.6 |
| 6.8 |
| 7.1 |
| 27.2 |
| 7.3 |
| 7.6 |
|
Interest expense | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Amortization | 0.8 |
| 0.9 |
| 0.9 |
| 1.0 |
| 3.6 |
| 1.1 |
| 1.1 |
|
Other operating costs and expenses | 11.3 |
| 10.1 |
| 10.3 |
| 12.3 |
| 44.0 |
| 11.9 |
| 12.0 |
|
Total benefits and expenses | 18.8 |
| 17.6 |
| 18.0 |
| 20.4 |
| 74.8 |
| 20.3 |
| 20.7 |
|
EBIT from New Business | $ | (3.3 | ) | $ | (2.1 | ) | $ | (2.1 | ) | $ | (3.8 | ) | $ | (11.3 | ) | $ | (2.8 | ) | $ | (2.5 | ) |
| | | | | | | |
| | | | | | | |
EBIT from In-Force and New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 152.9 |
| $ | 153.1 |
| $ | 159.2 |
| $ | 156.3 |
| $ | 621.5 |
| $ | 155.6 |
| $ | 156.7 |
|
Net investment income (loss) | 77.9 |
| 69.8 |
| 72.9 |
| 76.3 |
| 296.9 |
| 69.0 |
| 71.8 |
|
Fee revenue and other income | 0.2 |
| 0.2 |
| 0.3 |
| 0.2 |
| 0.9 |
| 0.2 |
| 0.2 |
|
Total revenues | 231.0 |
| 223.1 |
| 232.4 |
| 232.8 |
| 919.3 |
| 224.8 |
| 228.7 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 137.7 |
| 130.3 |
| 141.6 |
| 131.8 |
| 541.4 |
| 131.8 |
| 132.8 |
|
Interest expense | 0.5 |
| 0.5 |
| 0.5 |
| 0.4 |
| 1.9 |
| 0.4 |
| 0.5 |
|
Amortization | 17.1 |
| 16.2 |
| 14.4 |
| 17.2 |
| 64.9 |
| 16.3 |
| 16.0 |
|
Other operating costs and expenses | 41.7 |
| 40.3 |
| 42.9 |
| 45.6 |
| 170.5 |
| 45.2 |
| 47.1 |
|
Total benefits and expenses | 197.0 |
| 187.3 |
| 199.4 |
| 195.0 |
| 778.7 |
| 193.7 |
| 196.4 |
|
EBIT from In-Force and New Business | $ | 34.0 |
| $ | 35.8 |
| $ | 33.0 |
| $ | 37.8 |
| $ | 140.6 |
| $ | 31.1 |
| $ | 32.3 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Colonial Penn | | | | | | | |
Analysis of income (loss) before taxes (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Insurance policy income | $ | 56.9 |
| $ | 58.0 |
| $ | 58.1 |
| $ | 59.1 |
| $ | 232.1 |
| $ | 60.5 |
| $ | 61.7 |
|
Net investment income on general account invested assets | 9.9 |
| 9.9 |
| 10.2 |
| 10.0 |
| 40.0 |
| 10.7 |
| 10.5 |
|
Fee revenue and other income | 0.2 |
| 0.2 |
| 0.2 |
| 0.2 |
| 0.8 |
| 0.2 |
| 0.3 |
|
Total revenues | 67.0 |
| 68.1 |
| 68.5 |
| 69.3 |
| 272.9 |
| 71.4 |
| 72.5 |
|
| | | | | | | |
Insurance policy benefits | 42.8 |
| 41.1 |
| 39.6 |
| 41.5 |
| 165.0 |
| 44.5 |
| 43.1 |
|
Amounts added to annuity and interest-sensitive life product account balances | 0.2 |
| 0.1 |
| 0.2 |
| 0.2 |
| 0.7 |
| 0.2 |
| 0.1 |
|
Amortization related to operations | 3.7 |
| 3.7 |
| 3.7 |
| 3.4 |
| 14.5 |
| 4.0 |
| 3.8 |
|
Other operating costs and expenses | 25.7 |
| 22.0 |
| 29.2 |
| 28.3 |
| 105.2 |
| 28.9 |
| 21.7 |
|
Total benefits and expenses | 72.4 |
| 66.9 |
| 72.7 |
| 73.4 |
| 285.4 |
| 77.6 |
| 68.7 |
|
EBIT (4) | $ | (5.4 | ) | $ | 1.2 |
| $ | (4.2 | ) | $ | (4.1 | ) | $ | (12.5 | ) | $ | (6.2 | ) | $ | 3.8 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Average liabilities for insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
SPIAs - mortality based | $ | 74.8 |
| $ | 74.4 |
| $ | 73.5 |
| $ | 71.3 |
| $ | 73.5 |
| $ | 69.4 |
| $ | 68.8 |
|
Health: | | | | | | | |
Medicare supplement | 9.6 |
| 9.3 |
| 9.1 |
| 8.9 |
| 9.2 |
| 8.6 |
| 8.3 |
|
Other health | 4.8 |
| 4.8 |
| 4.7 |
| 4.6 |
| 4.7 |
| 4.5 |
| 4.5 |
|
Life: | | | | | | | |
Interest sensitive | 17.7 |
| 17.7 |
| 17.4 |
| 17.1 |
| 17.5 |
| 17.1 |
| 17.1 |
|
Non-interest sensitive | 618.1 |
| 629.9 |
| 631.7 |
| 637.8 |
| 629.4 |
| 644.5 |
| 648.2 |
|
Total average liabilities for insurance products, net of reinsurance ceded | $ | 725.0 |
| $ | 736.1 |
| $ | 736.4 |
| $ | 739.7 |
| $ | 734.3 |
| $ | 744.1 |
| $ | 746.9 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Present value of future profits (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 63.6 |
| $ | 61.6 |
| $ | 59.6 |
| $ | 57.7 |
| $ | 63.6 |
| $ | 55.7 |
| $ | 53.8 |
|
Amortization related to operations | (2.0 | ) | (2.0 | ) | (1.9 | ) | (2.0 | ) | (7.9 | ) | (1.9 | ) | (1.7 | ) |
Balance, end of period | $ | 61.6 |
| $ | 59.6 |
| $ | 57.7 |
| $ | 55.7 |
| $ | 55.7 |
| $ | 53.8 |
| $ | 52.1 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Deferred acquisition costs (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 57.5 |
| $ | 59.1 |
| $ | 60.7 |
| $ | 61.7 |
| $ | 57.5 |
| $ | 67.4 |
| $ | 68.8 |
|
Deferred acquisition expenses | 3.3 |
| 3.3 |
| 2.8 |
| 3.1 |
| 12.5 |
| 3.5 |
| 3.7 |
|
Amortization related to operations | (1.7 | ) | (1.7 | ) | (1.8 | ) | (1.4 | ) | (6.6 | ) | (2.1 | ) | (2.1 | ) |
Other | — |
| — |
| — |
| 4.0 |
| 4.0 |
| — |
| — |
|
Balance, end of period | $ | 59.1 |
| $ | 60.7 |
| $ | 61.7 |
| $ | 67.4 |
| $ | 67.4 |
| $ | 68.8 |
| $ | 70.4 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
Colonial Penn Segment EBIT Summarized by In-Force and New Business (6) | | | | | | | |
(in millions) | | | | | | | |
| | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
EBIT from In-Force Business | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 45.6 |
| $ | 46.5 |
| $ | 46.9 |
| $ | 48.0 |
| $ | 187.0 |
| $ | 49.3 |
| $ | 50.2 |
|
Net investment income (loss) | 9.9 |
| 9.9 |
| 10.2 |
| 10.0 |
| 40.0 |
| 10.7 |
| 10.5 |
|
Fee revenue and other income | 0.2 |
| 0.2 |
| 0.2 |
| 0.2 |
| 0.8 |
| 0.2 |
| 0.3 |
|
Total revenues | 55.7 |
| 56.6 |
| 57.3 |
| 58.2 |
| 227.8 |
| 60.2 |
| 61.0 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 36.5 |
| 34.6 |
| 33.3 |
| 35.4 |
| 139.8 |
| 38.3 |
| 36.6 |
|
Amortization | 3.6 |
| 3.6 |
| 3.6 |
| 3.3 |
| 14.1 |
| 3.9 |
| 3.7 |
|
Other operating costs and expenses | 6.8 |
| 6.0 |
| 7.5 |
| 7.4 |
| 27.7 |
| 7.7 |
| 7.6 |
|
Total benefits and expenses | 46.9 |
| 44.2 |
| 44.4 |
| 46.1 |
| 181.6 |
| 49.9 |
| 47.9 |
|
EBIT from In-Force Business | $ | 8.8 |
| $ | 12.4 |
| $ | 12.9 |
| $ | 12.1 |
| $ | 46.2 |
| $ | 10.3 |
| $ | 13.1 |
|
| | | | | | | |
| | | | | | | |
EBIT from New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 11.3 |
| $ | 11.5 |
| $ | 11.2 |
| $ | 11.1 |
| $ | 45.1 |
| $ | 11.2 |
| $ | 11.5 |
|
Net investment income (loss) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Fee revenue and other income | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Total revenues | 11.3 |
| 11.5 |
| 11.2 |
| 11.1 |
| 45.1 |
| 11.2 |
| 11.5 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 6.5 |
| 6.6 |
| 6.5 |
| 6.3 |
| 25.9 |
| 6.4 |
| 6.6 |
|
Amortization | 0.1 |
| 0.1 |
| 0.1 |
| 0.1 |
| 0.4 |
| 0.1 |
| 0.1 |
|
Other operating costs and expenses | 18.9 |
| 16.0 |
| 21.7 |
| 20.9 |
| 77.5 |
| 21.2 |
| 14.1 |
|
Total benefits and expenses | 25.5 |
| 22.7 |
| 28.3 |
| 27.3 |
| 103.8 |
| 27.7 |
| 20.8 |
|
EBIT from New Business | $ | (14.2 | ) | $ | (11.2 | ) | $ | (17.1 | ) | $ | (16.2 | ) | $ | (58.7 | ) | $ | (16.5 | ) | $ | (9.3 | ) |
| | | | | | | |
| | | | | | | |
EBIT from In-Force and New Business | | | | | | | |
| | | | | | | |
Revenues | | | | | | | |
Insurance policy income | $ | 56.9 |
| $ | 58.0 |
| $ | 58.1 |
| $ | 59.1 |
| $ | 232.1 |
| $ | 60.5 |
| $ | 61.7 |
|
Net investment income (loss) | 9.9 |
| 9.9 |
| 10.2 |
| 10.0 |
| 40.0 |
| 10.7 |
| 10.5 |
|
Fee revenue and other income | 0.2 |
| 0.2 |
| 0.2 |
| 0.2 |
| 0.8 |
| 0.2 |
| 0.3 |
|
Total revenues | 67.0 |
| 68.1 |
| 68.5 |
| 69.3 |
| 272.9 |
| 71.4 |
| 72.5 |
|
| | | | | | | |
Benefits and expenses | | | | | | | |
Insurance policy benefits | 43.0 |
| 41.2 |
| 39.8 |
| 41.7 |
| 165.7 |
| 44.7 |
| 43.2 |
|
Amortization | 3.7 |
| 3.7 |
| 3.7 |
| 3.4 |
| 14.5 |
| 4.0 |
| 3.8 |
|
Other operating costs and expenses | 25.7 |
| 22.0 |
| 29.2 |
| 28.3 |
| 105.2 |
| 28.9 |
| 21.7 |
|
Total benefits and expenses | 72.4 |
| 66.9 |
| 72.7 |
| 73.4 |
| 285.4 |
| 77.6 |
| 68.7 |
|
EBIT from In-Force and New Business | $ | (5.4 | ) | $ | 1.2 |
| $ | (4.2 | ) | $ | (4.1 | ) | $ | (12.5 | ) | $ | (6.2 | ) | $ | 3.8 |
|
| | | | | | | |
| | | | | | | |
|
|
There is no Other CNO Business segment beginning in 1Q14. |
|
| | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | |
Other CNO Business | | | | | |
Analysis of loss before taxes (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 |
| | | | | |
Insurance policy income | $ | 6.2 |
| $ | 6.1 |
| $ | 5.9 |
| $ | 5.9 |
| $ | 24.1 |
|
Net investment income on general account invested assets | 8.4 |
| 8.4 |
| 8.0 |
| 8.5 |
| 33.3 |
|
Total revenues | 14.6 |
| 14.5 |
| 13.9 |
| 14.4 |
| 57.4 |
|
| | | | | |
Insurance policy benefits | 15.6 |
| 15.3 |
| 13.5 |
| 14.8 |
| 59.2 |
|
Other operating costs and expenses: | | | | | |
Related to long-term care block reinsured effective December 31, 2013 | 1.7 |
| 1.4 |
| 1.4 |
| 1.7 |
| 6.2 |
|
Overhead expense of CLIC expected to continue after the completion of the sale | 4.6 |
| 5.0 |
| 4.7 |
| 5.3 |
| 19.6 |
|
Total benefits and expenses | 21.9 |
| 21.7 |
| 19.6 |
| 21.8 |
| 85.0 |
|
EBIT (4) | $ | (7.3 | ) | $ | (7.2 | ) | $ | (5.7 | ) | $ | (7.4 | ) | $ | (27.6 | ) |
| | | | | |
| | | | | |
| | | | | |
Health underwriting margins (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 |
| | | | | |
Long-term care: | | | | | |
Earned premium | $ | 6.2 |
| $ | 6.1 |
| $ | 5.9 |
| $ | 5.9 |
| $ | 24.1 |
|
Benefit ratio before interest income on reserves | 252.2 | % | 251.0 | % | 227.5 | % | 252.0 | % | 245.7 | % |
Interest-adjusted benefit ratio | 140.7 | % | 137.6 | % | 111.6 | % | 134.4 | % | 131.2 | % |
Underwriting margin (earned premium plus interest income on reserves less policy benefits) | $ | (2.5 | ) | $ | (2.3 | ) | $ | (0.7 | ) | $ | (2.0 | ) | $ | (7.5 | ) |
| | | | | |
| | | | | |
|
| | | | | | | | | | | | | | | |
| | | | | |
| | | | | |
Average liabilities for insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 |
| | | | | |
Average liabilities for long-term care products, net of reinsurance ceded | $ | 468.0 |
| $ | 468.0 |
| $ | 467.3 |
| $ | 466.4 |
| $ | 467.4 |
|
| | | | | |
| | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Corporate Operations | | | | | | | |
Analysis of loss before taxes (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Net investment income (loss): | | | | | | | |
General investment portfolio | $ | 1.1 |
| $ | 1.5 |
| $ | 1.2 |
| $ | 1.6 |
| $ | 5.4 |
| $ | 1.8 |
| $ | 1.7 |
|
Other special-purpose portfolios | 9.0 |
| 3.0 |
| 9.8 |
| 12.6 |
| 34.4 |
| 5.2 |
| 4.0 |
|
Fee revenue and other income | 1.7 |
| 1.5 |
| 1.7 |
| 1.3 |
| 6.2 |
| 1.4 |
| 1.3 |
|
Interest expense on investment borrowings | (0.1 | ) | — |
| — |
| — |
| (0.1 | ) | — |
| — |
|
Other operating costs and expenses | (8.7 | ) | (3.6 | ) | (3.3 | ) | (11.7 | ) | (27.3 | ) | (14.4 | ) | (22.5 | ) |
Corporate operations, excluding corporate interest expense | 3.0 |
| 2.4 |
| 9.4 |
| 3.8 |
| 18.6 |
| (6.0 | ) | (15.5 | ) |
Interest expense on corporate debt | (15.1 | ) | (13.1 | ) | (11.7 | ) | (11.4 | ) | (51.3 | ) | (11.1 | ) | (11.1 | ) |
Loss before net realized investment gains (losses), equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities, loss on extinguishment or modification of debt and income taxes | $ | (12.1 | ) | $ | (10.7 | ) | $ | (2.3 | ) | $ | (7.6 | ) | $ | (32.7 | ) | $ | (17.1 | ) | $ | (26.6 | ) |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Bankers Life | | | | | | | |
Premiums collected on insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Annuities | | | | | | | |
| | | | | | | |
Fixed index (first-year) | $ | 126.6 |
| $ | 143.4 |
| $ | 143.3 |
| $ | 153.5 |
| $ | 566.8 |
| $ | 147.3 |
| $ | 166.6 |
|
| | | | | | | |
Other fixed rate (first-year) | 37.2 |
| 38.5 |
| 45.3 |
| 49.6 |
| 170.6 |
| 41.4 |
| 32.2 |
|
Other fixed rate (renewal) | 1.8 |
| 1.8 |
| 1.6 |
| 1.5 |
| 6.7 |
| 1.8 |
| 2.0 |
|
Subtotal - other fixed rate annuities | 39.0 |
| 40.3 |
| 46.9 |
| 51.1 |
| 177.3 |
| 43.2 |
| 34.2 |
|
| | | | | | | |
Total annuities | 165.6 |
| 183.7 |
| 190.2 |
| 204.6 |
| 744.1 |
| 190.5 |
| 200.8 |
|
| | | | | | | |
Health | | | | | | | |
| | | | | | | |
Medicare supplement (first-year) | 22.7 |
| 22.7 |
| 22.3 |
| 24.4 |
| 92.1 |
| 21.2 |
| 22.3 |
|
Medicare supplement (renewal) | 162.5 |
| 153.4 |
| 159.7 |
| 177.6 |
| 653.2 |
| 158.2 |
| 155.5 |
|
Subtotal - Medicare supplement | 185.2 |
| 176.1 |
| 182.0 |
| 202.0 |
| 745.3 |
| 179.4 |
| 177.8 |
|
| | | | | | | |
Long-term care (first-year) | 5.7 |
| 5.4 |
| 5.1 |
| 5.0 |
| 21.2 |
| 4.4 |
| 4.2 |
|
Long-term care (renewal) | 129.7 |
| 127.8 |
| 126.0 |
| 129.3 |
| 512.8 |
| 119.3 |
| 122.0 |
|
Subtotal - long-term care | 135.4 |
| 133.2 |
| 131.1 |
| 134.3 |
| 534.0 |
| 123.7 |
| 126.2 |
|
| | | | | | | |
PDP (first-year) | 0.1 |
| — |
| — |
| — |
| 0.1 |
| — |
| — |
|
PDP (renewal) | 10.1 |
| 10.5 |
| (2.5 | ) | — |
| 18.1 |
| 6.8 |
| — |
|
Subtotal - PDP | 10.2 |
| 10.5 |
| (2.5 | ) | — |
| 18.2 |
| 6.8 |
| — |
|
| | | | | | | |
Supplemental health (first-year) | 1.6 |
| 2.0 |
| 2.3 |
| 2.4 |
| 8.3 |
| 2.1 |
| 2.0 |
|
Supplemental health (renewal) | — |
| 0.2 |
| 0.5 |
| 0.9 |
| 1.6 |
| 1.5 |
| 2.0 |
|
Subtotal - supplemental health | 1.6 |
| 2.2 |
| 2.8 |
| 3.3 |
| 9.9 |
| 3.6 |
| 4.0 |
|
| | | | | | | |
Other health (first-year) | 0.3 |
| 0.4 |
| 0.3 |
| 0.3 |
| 1.3 |
| 0.2 |
| 0.2 |
|
Other health (renewal) | 2.4 |
| 2.2 |
| 2.2 |
| 2.3 |
| 9.1 |
| 1.8 |
| 1.9 |
|
Subtotal - other health | 2.7 |
| 2.6 |
| 2.5 |
| 2.6 |
| 10.4 |
| 2.0 |
| 2.1 |
|
| | | | | | | |
Total health | 335.1 |
| 324.6 |
| 315.9 |
| 342.2 |
| 1,317.8 |
| 315.5 |
| 310.1 |
|
| | | | | | | |
Life insurance | | | | | | | |
| | | | | | | |
First-year | 42.4 |
| 41.0 |
| 41.7 |
| 38.2 |
| 163.3 |
| 38.2 |
| 39.2 |
|
Renewal | 47.1 |
| 50.1 |
| 52.5 |
| 55.3 |
| 205.0 |
| 55.8 |
| 62.3 |
|
| | | | | | | |
Total life insurance | 89.5 |
| 91.1 |
| 94.2 |
| 93.5 |
| 368.3 |
| 94.0 |
| 101.5 |
|
| | | | | | | |
Collections on insurance products | | | | | | | |
| | | | | | | |
Total first-year premium collections on insurance products | 236.6 |
| 253.4 |
| 260.3 |
| 273.4 |
| 1,023.7 |
| 254.8 |
| 266.7 |
|
Total renewal premium collections on insurance products | 353.6 |
| 346.0 |
| 340.0 |
| 366.9 |
| 1,406.5 |
| 345.2 |
| 345.7 |
|
| | | | | | | |
Total collections on insurance products | $ | 590.2 |
| $ | 599.4 |
| $ | 600.3 |
| $ | 640.3 |
| $ | 2,430.2 |
| $ | 600.0 |
| $ | 612.4 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Washington National | | | | | | | |
Premiums collected on insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Annuities | | | | | | | |
| | | | | | | |
Fixed index (first-year) | $ | 0.2 |
| $ | 0.1 |
| $ | 0.1 |
| $ | — |
| $ | 0.4 |
| $ | 0.1 |
| $ | — |
|
Fixed index (renewal) | 0.6 |
| 1.3 |
| 1.0 |
| 0.5 |
| 3.4 |
| 0.4 |
| 0.4 |
|
Subtotal - fixed index annuities | 0.8 |
| 1.4 |
| 1.1 |
| 0.5 |
| 3.8 |
| 0.5 |
| 0.4 |
|
| | | | | | | |
Other fixed rate (all renewal) | 0.1 |
| — |
| 0.2 |
| 0.2 |
| 0.5 |
| 0.1 |
| 0.2 |
|
| | | | | | | |
Total annuities | 0.9 |
| 1.4 |
| 1.3 |
| 0.7 |
| 4.3 |
| 0.6 |
| 0.6 |
|
| | | | | | | |
Health | | | | | | | |
| | | | | | | |
Medicare supplement (first-year) | 0.2 |
| — |
| — |
| 0.1 |
| 0.3 |
| — |
| — |
|
Medicare supplement (renewal) | 26.4 |
| 25.0 |
| 24.2 |
| 26.0 |
| 101.6 |
| 21.1 |
| 21.7 |
|
Subtotal - Medicare supplement | 26.6 |
| 25.0 |
| 24.2 |
| 26.1 |
| 101.9 |
| 21.1 |
| 21.7 |
|
| | | | | | | |
Supplemental health (first-year) | 15.6 |
| 16.3 |
| 16.1 |
| 16.7 |
| 64.7 |
| 16.7 |
| 18.5 |
|
Supplemental health (renewal) | 104.7 |
| 105.6 |
| 106.6 |
| 109.7 |
| 426.6 |
| 109.2 |
| 110.6 |
|
Subtotal - supplemental health | 120.3 |
| 121.9 |
| 122.7 |
| 126.4 |
| 491.3 |
| 125.9 |
| 129.1 |
|
Other health (first-year) | — |
| — |
| 0.1 |
| 0.1 |
| 0.2 |
| — |
| 0.1 |
|
Other health (renewal) | 0.8 |
| 0.8 |
| 0.5 |
| 0.8 |
| 2.9 |
| 0.6 |
| 0.5 |
|
Subtotal - other health | 0.8 |
| 0.8 |
| 0.6 |
| 0.9 |
| 3.1 |
| 0.6 |
| 0.6 |
|
| | | | | | | |
Total health | 147.7 |
| 147.7 |
| 147.5 |
| 153.4 |
| 596.3 |
| 147.6 |
| 151.4 |
|
| | | | | | | |
Life insurance | | | | | | | |
| | | | | | | |
First-year | 1.2 |
| 1.1 |
| 1.0 |
| 1.3 |
| 4.6 |
| 1.1 |
| 1.5 |
|
Renewal | 5.1 |
| 5.2 |
| 5.1 |
| 6.5 |
| 21.9 |
| 5.4 |
| 4.9 |
|
| | | | | | | |
Total life insurance | 6.3 |
| 6.3 |
| 6.1 |
| 7.8 |
| 26.5 |
| 6.5 |
| 6.4 |
|
| | | | | | | |
Collections on insurance products | | | | | | | |
| | | | | | | |
Total first-year premium collections on insurance products | 17.2 |
| 17.5 |
| 17.3 |
| 18.2 |
| 70.2 |
| 17.9 |
| 20.1 |
|
Total renewal premium collections on insurance products | 137.7 |
| 137.9 |
| 137.6 |
| 143.7 |
| 556.9 |
| 136.8 |
| 138.3 |
|
| | | | | | | |
Total collections on insurance products | $ | 154.9 |
| $ | 155.4 |
| $ | 154.9 |
| $ | 161.9 |
| $ | 627.1 |
| $ | 154.7 |
| $ | 158.4 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Colonial Penn | | | | | | | |
Premiums collected on insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Life insurance | | | | | | | |
| | | | | | | |
First-year | $ | 11.4 |
| $ | 11.4 |
| $ | 11.4 |
| $ | 11.0 |
| $ | 45.2 |
| $ | 11.3 |
| $ | 11.3 |
|
Renewal | 44.7 |
| 45.0 |
| 46.2 |
| 46.5 |
| 182.4 |
| 48.8 |
| 48.7 |
|
| | | | | | | |
Total life insurance | 56.1 |
| 56.4 |
| 57.6 |
| 57.5 |
| 227.6 |
| 60.1 |
| 60.0 |
|
| | | | | | | |
Health (all renewal) | | | | | | | |
| | | | | | | |
Medicare supplement | 1.0 |
| 0.9 |
| 0.9 |
| 0.9 |
| 3.7 |
| 0.8 |
| 0.8 |
|
| | | | | | | |
Other health | 0.1 |
| 0.1 |
| 0.1 |
| 0.1 |
| 0.4 |
| 0.1 |
| 0.1 |
|
| | | | | | | |
Total health | 1.1 |
| 1.0 |
| 1.0 |
| 1.0 |
| 4.1 |
| 0.9 |
| 0.9 |
|
| | | | | | | |
Collections on insurance products | | | | | | | |
| | | | | | | |
Total first-year premium collections on insurance products | 11.4 |
| 11.4 |
| 11.4 |
| 11.0 |
| 45.2 |
| 11.3 |
| 11.3 |
|
Total renewal premium collections on insurance products | 45.8 |
| 46.0 |
| 47.2 |
| 47.5 |
| 186.5 |
| 49.7 |
| 49.6 |
|
| | | | | | | |
Total collections on insurance products | $ | 57.2 |
| $ | 57.4 |
| $ | 58.6 |
| $ | 58.5 |
| $ | 231.7 |
| $ | 61.0 |
| $ | 60.9 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
New Annualized Premiums ("NAP") (in millions) | | | | | | | |
| | | | | | | |
| | | | | | | |
Bankers Life | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Medicare supplement | $ | 19.1 |
| $ | 19.0 |
| $ | 18.7 |
| $ | 31.5 |
| $ | 88.3 |
| $ | 19.0 |
| $ | 17.6 |
|
Long-term care | 6.1 |
| 6.5 |
| 6.2 |
| 5.7 |
| 24.5 |
| 4.6 |
| 4.7 |
|
Supplemental health | 2.8 |
| 2.7 |
| 2.6 |
| 2.2 |
| 10.3 |
| 2.2 |
| 1.8 |
|
Life | 22.5 |
| 24.2 |
| 23.5 |
| 22.4 |
| 92.6 |
| 26.0 |
| 27.1 |
|
Annuity | 10.0 |
| 10.8 |
| 11.5 |
| 12.1 |
| 44.4 |
| 11.3 |
| 11.9 |
|
Subtotal Bankers Life | 60.5 |
| 63.2 |
| 62.5 |
| 73.9 |
| 260.1 |
| 63.1 |
| 63.1 |
|
| | | | | | | |
| | | | | | | |
Washington National | | | | | | | |
| | | | | | | |
Supplemental health | 19.2 |
| 21.3 |
| 22.5 |
| 24.8 |
| 87.8 |
| 21.3 |
| 23.9 |
|
Life | 1.4 |
| 1.9 |
| 1.3 |
| 1.4 |
| 6.0 |
| 0.7 |
| 1.3 |
|
Annuity | — |
| 0.1 |
| 0.1 |
| — |
| 0.2 |
| — |
| 0.1 |
|
Subtotal Washington National | 20.6 |
| 23.3 |
| 23.9 |
| 26.2 |
| 94.0 |
| 22.0 |
| 25.3 |
|
| | | | | | | |
| | | | | | | |
Colonial Penn | | | | | | | |
| | | | | | | |
Graded Life | 17.0 |
| 15.8 |
| 15.4 |
| 14.0 |
| 62.2 |
| 16.8 |
| 16.5 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total NAP | $ | 98.1 |
| $ | 102.3 |
| $ | 101.8 |
| $ | 114.1 |
| $ | 416.3 |
| $ | 101.9 |
| $ | 104.9 |
|
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Statutory information - consolidated basis (7) (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 (a) |
| | | | | | | |
Net gain from operations before interest expense and federal income taxes | $ | 123.4 |
| $ | 115.4 |
| $ | 109.4 |
| $ | 80.4 |
| $ | 428.6 |
| $ | 104.3 |
| $ | 147.1 |
|
Interest expense on surplus debentures held by parent company | 12.0 |
| 12.2 |
| 27.2 |
| 12.3 |
| 63.7 |
| 12.0 |
| 12.1 |
|
| | | | | | | |
Net gain from operations before federal income taxes | 111.4 |
| 103.2 |
| 82.2 |
| 68.1 |
| 364.9 |
| 92.3 |
| 135.0 |
|
Federal income tax expense (benefit) | (1.1 | ) | 1.1 |
| 0.8 |
| (3.4 | ) | (2.6 | ) | 0.1 |
| 2.3 |
|
| | | | | | | |
Net gain from operations before net realized capital gains (losses) | 112.5 |
| 102.1 |
| 81.4 |
| 71.5 |
| 367.5 |
| 92.2 |
| 132.7 |
|
Net realized capital gains (losses) | 9.7 |
| 4.1 |
| 5.3 |
| (0.1 | ) | 19.0 |
| (8.9 | ) | 3.8 |
|
| | | | | | | |
Net income | $ | 122.2 |
| $ | 106.2 |
| $ | 86.7 |
| $ | 71.4 |
| $ | 386.5 |
| $ | 83.3 |
| $ | 136.5 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Capital and surplus | $ | 1,579.8 |
| $ | 1,626.8 |
| $ | 1,660.6 |
| $ | 1,711.9 |
| $ | 1,711.9 |
| $ | 1,769.8 |
| $ | 1,827.9 |
|
Asset valuation reserve (AVR) | 234.3 |
| 238.1 |
| 240.9 |
| 233.9 |
| 233.9 |
| 227.8 |
| 229.2 |
|
| | | | | | | |
Capital, surplus and AVR | 1,814.1 |
| 1,864.9 |
| 1,901.5 |
| 1,945.8 |
| 1,945.8 |
| 1,997.6 |
| 2,057.1 |
|
| | | | | | | |
Interest maintenance reserve (IMR) | 587.2 |
| 586.1 |
| 579.8 |
| 582.5 |
| 582.5 |
| 593.1 |
| 590.6 |
|
| | | | | | | |
Total statutory capital, surplus, AVR & IMR | $ | 2,401.3 |
| $ | 2,451.0 |
| $ | 2,481.3 |
| $ | 2,528.3 |
| $ | 2,528.3 |
| $ | 2,590.7 |
| $ | 2,647.7 |
|
| | | | | | | |
| | | | | | | |
(a) Such amounts are preliminary as the statutory basis financial statements of our insurance subsidiaries for 2Q14
will be filed with the respective insurance regulators on or about August 15, 2014.
|
|
The statutory information above includes CLIC. |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Amounts related to CLIC being sold | | | | | | | |
Analysis of income (loss) before taxes (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Insurance policy income | $ | 57.2 |
| $ | 55.0 |
| $ | 55.5 |
| $ | 50.6 |
| $ | 218.3 |
| $ | 53.5 |
| $ | 52.5 |
|
Net investment income (loss): | | | | | | | |
General account invested assets | 53.2 |
| 52.9 |
| 52.0 |
| 52.1 |
| 210.2 |
| 51.0 |
| 49.7 |
|
Fixed index products | 2.2 |
| 0.8 |
| 1.3 |
| 3.6 |
| 7.9 |
| (0.1 | ) | 1.4 |
|
Fee revenue and other income | — |
| — |
| — |
| 5.1 |
| 5.1 |
| — |
| — |
|
Total revenues | 112.6 |
| 108.7 |
| 108.8 |
| 111.4 |
| 441.5 |
| 104.4 |
| 103.6 |
|
| | | | | | | |
Insurance policy benefits | 64.6 |
| 57.3 |
| 60.7 |
| 57.0 |
| 239.6 |
| 61.7 |
| 54.1 |
|
Amounts added to policyholder account balances: | | | | | | | |
Cost of interest credited to policyholders | 23.3 |
| 22.7 |
| 22.5 |
| 21.7 |
| 90.2 |
| 21.6 |
| 21.6 |
|
Cost of options to fund index credits, net of forfeitures | 0.4 |
| 0.3 |
| 0.4 |
| 0.3 |
| 1.4 |
| 0.4 |
| 0.4 |
|
Market value changes credited to policyholders | 2.1 |
| 1.0 |
| 1.3 |
| 3.5 |
| 7.9 |
| (0.1 | ) | 1.0 |
|
Amortization related to operations | 2.2 |
| 2.7 |
| 2.0 |
| 1.9 |
| 8.8 |
| 2.0 |
| 2.3 |
|
Interest expense on investment borrowings | 4.8 |
| 4.8 |
| 4.8 |
| 4.9 |
| 19.3 |
| 4.7 |
| 4.4 |
|
Other operating costs and expenses | 8.9 |
| 14.1 |
| 10.2 |
| 7.8 |
| 41.0 |
| 5.8 |
| 7.5 |
|
Total benefits and expenses | 106.3 |
| 102.9 |
| 101.9 |
| 97.1 |
| 408.2 |
| 96.1 |
| 91.3 |
|
Income before net realized investment gains and income taxes | 6.3 |
| 5.8 |
| 6.9 |
| 14.3 |
| 33.3 |
| 8.3 |
| 12.3 |
|
Net realized investment gains | 2.1 |
| 1.6 |
| 1.6 |
| 0.7 |
| 6.0 |
| 2.1 |
| 0.7 |
|
Amortization related to net realized investment gains | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Net realized investment gains, net of related amortization | 2.1 |
| 1.6 |
| 1.6 |
| 0.7 |
| 6.0 |
| 2.1 |
| 0.7 |
|
Income before income taxes | 8.4 |
| 7.4 |
| 8.5 |
| 15.0 |
| 39.3 |
| 10.4 |
| 13.0 |
|
Income tax expense on period income | 2.9 |
| 2.6 |
| 3.0 |
| 5.3 |
| 13.8 |
| 3.7 |
| 4.5 |
|
Net income | $ | 5.5 |
| $ | 4.8 |
| $ | 5.5 |
| $ | 9.7 |
| $ | 25.5 |
| $ | 6.7 |
| $ | 8.5 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
CNO Financial Group, Inc. | | | | | | | |
Amounts related to CLIC being sold | | | | | | | |
Average liabilities for insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Fixed index annuities | $ | — |
| $ | 0.8 |
| $ | 0.8 |
| $ | 0.8 |
| $ | 0.6 |
| $ | 0.8 |
| $ | 0.8 |
|
Deferred annuities | 151.9 |
| 148.9 |
| 147.3 |
| 145.3 |
| 148.4 |
| 143.9 |
| 142.9 |
|
SPIAs and supplemental contracts: | | | | | | | |
Mortality based | 40.3 |
| 39.4 |
| 38.8 |
| 38.2 |
| 39.2 |
| 37.7 |
| 36.9 |
|
Deposit based | 111.4 |
| 109.6 |
| 105.1 |
| 100.6 |
| 106.7 |
| 96.7 |
| 94.4 |
|
Health: | | | | | | | |
Supplemental health | 153.6 |
| 149.0 |
| 145.0 |
| 140.4 |
| 146.9 |
| 136.3 |
| — |
|
Medicare supplement | 2.5 |
| 2.2 |
| 2.1 |
| 2.0 |
| 2.2 |
| 1.9 |
| — |
|
Other health | 6.8 |
| 6.7 |
| 6.7 |
| 6.7 |
| 6.7 |
| 6.8 |
| — |
|
Life: | | | | | | | |
Interest sensitive | 2,354.0 |
| 2,333.9 |
| 2,305.8 |
| 2,277.4 |
| 2,317.8 |
| 2,253.8 |
| 2,233.3 |
|
Non-interest sensitive | 439.9 |
| 433.0 |
| 429.2 |
| 426.4 |
| 432.1 |
| 421.2 |
| 415.4 |
|
Total average liabilities for insurance products, net of reinsurance ceded | $ | 3,260.4 |
| $ | 3,223.5 |
| $ | 3,180.8 |
| $ | 3,137.8 |
| $ | 3,200.6 |
| $ | 3,099.1 |
| $ | 2,923.7 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Present value of future profits (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 17.7 |
| $ | 17.4 |
| $ | 16.6 |
| $ | 16.5 |
| $ | 17.7 |
| $ | 16.1 |
| $ | 15.8 |
|
Amortization related to operations | (0.7 | ) | (0.8 | ) | (0.2 | ) | (0.6 | ) | (2.3 | ) | (0.3 | ) | (0.3 | ) |
Amortization related to net realized investment (gains) losses | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | 0.4 |
| — |
| 0.1 |
| 0.2 |
| 0.7 |
| — |
| — |
|
Balance, end of period | $ | 17.4 |
| $ | 16.6 |
| $ | 16.5 |
| $ | 16.1 |
| $ | 16.1 |
| $ | 15.8 |
| $ | 15.5 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
Deferred acquisition costs (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Balance, beginning of period | $ | 44.2 |
| $ | 43.0 |
| $ | 42.7 |
| $ | 41.8 |
| $ | 44.2 |
| $ | 40.7 |
| $ | 39.0 |
|
Deferred acquisition expenses | 0.3 |
| 0.6 |
| 0.7 |
| 0.2 |
| 1.8 |
| 0.4 |
| 0.9 |
|
Amortization related to operations | (1.5 | ) | (1.9 | ) | (1.8 | ) | (1.3 | ) | (6.5 | ) | (1.7 | ) | (2.0 | ) |
Amortization related to net realized investment (gains) losses | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | — |
| 1.0 |
| 0.2 |
| — |
| 1.2 |
| (0.4 | ) | (0.3 | ) |
Balance, end of period | $ | 43.0 |
| $ | 42.7 |
| $ | 41.8 |
| $ | 40.7 |
| $ | 40.7 |
| $ | 39.0 |
| $ | 37.6 |
|
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
Premiums collected on insurance products (in millions) | 1Q13 | 2Q13 | 3Q13 | 4Q13 | 2013 | 1Q14 | 2Q14 |
| | | | | | | |
Annuities | | | | | | | |
| | | | | | | |
Other fixed rate (all renewal) | $ | 0.1 |
| $ | 0.1 |
| $ | 0.1 |
| $ | — |
| $ | 0.3 |
| $ | — |
| $ | 0.2 |
|
| | | | | | | |
Life insurance | | | | | | | |
| | | | | | | |
First-year | — |
| 0.2 |
| 0.1 |
| — |
| 0.3 |
| — |
| — |
|
Renewal | 38.4 |
| 36.4 |
| 35.0 |
| 31.9 |
| 141.7 |
| 36.2 |
| 34.8 |
|
| | | | | | | |
Total life insurance | 38.4 |
| 36.6 |
| 35.1 |
| 31.9 |
| 142.0 |
| 36.2 |
| 34.8 |
|
| | | | | | | |
Collections on insurance products | | | | | | | |
| | | | | | | |
Total first-year premium collections on insurance products | — |
| 0.2 |
| 0.1 |
| — |
| 0.3 |
| — |
| — |
|
Total renewal premium collections on insurance products | 38.5 |
| 36.5 |
| 35.1 |
| 31.9 |
| 142.0 |
| 36.2 |
| 35.0 |
|
| | | | | | | |
Total collections on insurance products | $ | 38.5 |
| $ | 36.7 |
| $ | 35.2 |
| $ | 31.9 |
| $ | 142.3 |
| $ | 36.2 |
| $ | 35.0 |
|
| | | | | | | |
Notes
(1) Excludes accumulated other comprehensive income.
(2) Shareholders' equity divided by common shares outstanding.
(3) Book value per diluted share reflects the potential dilution that could occur if outstanding stock options and warrants were exercised, restricted stock and performance units were vested and convertible securities were converted. The dilution from options, warrants, restricted shares and performance units is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the closing market price on the last day of the period. The dilution from convertible securities is calculated assuming the securities were converted on the last day of the period.
(4) Management believes that an analysis of earnings before the loss on the operations of CLIC being sold, the earnings of CLIC being sold, loss related to reinsurance transaction, net realized investment gains (losses), fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, corporate interest expense, equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities, loss on extinguishment or modification of debt and taxes (“EBIT,” a non-GAAP financial measure) provides a clearer comparison of the operating results of the company quarter-over-quarter because these items are unrelated to the company's underlying fundamentals.
(5) Management believes that an analysis of Net income applicable to common stock before: (i) the loss on the operations of CLIC being sold, including impact of taxes; (ii) the earnings of CLIC being sold, net of taxes; (iii) loss related to reinsurance transaction, net of taxes; (iv) net realized investment gains or losses, net of related amortization and taxes; (v) fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, net of related amortization and taxes; (vi) equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities, net of taxes; (vii) loss on extinguishment or modification of debt, net of taxes; and (viii) changes in the valuation allowance for deferred tax assets (“Net operating income,” a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry. Management uses this measure to evaluate performance because the items excluded from net operating income can be affected by events that are unrelated to the company's underlying fundamentals.
(6) Management believes that an analysis of EBIT, separated between in-force and new business provides increased clarity around the value drivers of our business, particularly since the new business results are significantly impacted by the rate of sales, mix of business and the distribution channel through which new sales are made. EBIT from new business includes pre-tax revenues and expenses associated with new sales of our insurance products during the first year after the sale is completed. EBIT from in-force business includes all pre-tax revenues and expenses associated with sales of insurance products that were completed more than one year before the end of the reporting period. The allocation of certain revenues and expenses between new and in-force business is based on estimates, which we believe are reasonable.
(7) Based on statutory accounting practices prescribed or permitted by regulatory authorities for CNO Financial's insurance subsidiaries after appropriate elimination of intercompany accounts among such subsidiaries. Such accounting practices differ from GAAP.
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