CARMEL, Ind., Feb. 13, 2018 /PRNewswire/ -- CNO Financial
Group, Inc. (NYSE: CNO) today announced a net loss for the fourth
quarter of 2017 of $70.9 million, or
42 cents per diluted share, compared
to net income of $234.2 million, or
$1.34 per diluted share, in the
fourth quarter of 2016. Results for both the fourth quarter
and full year of 2017 reflect the one-time unfavorable impact of
$172.5 million related to the Tax
Cuts and Jobs Act (the "Tax Reform Act") which was enacted in
December 2017. For the full year 2017, CNO reported net
income of $175.6 million, or
$1.02 per diluted share, compared to
$358.2 million, or $2.01 per diluted share in 2016.
The Tax Reform Act will be an ongoing benefit to the company,
with the estimated effective tax rate in the 21 to 23 percent
range. Excluding the one-time unfavorable impacts of the Tax
Reform Act, fourth quarter 2017 net income was $101.6 million, or 61
cents per diluted share, and full year 2017 net income was
$348.1 million, or $2.02 per diluted share.
CNO also announced that fourth quarter 2017 net operating income
(1) increased to $85.8 million, or
51 cents per diluted share, compared
to $84.9 million, or 49 cents per diluted share, in the fourth quarter
of 2016. For the full year 2017, CNO reported that net
operating income (1) increased to $300.9
million, or $1.75 per diluted
share, compared to $262.5 million, or
$1.47 per diluted share in 2016.
"CNO had another strong quarter, capping off a solid year
highlighted by a double digit increase in operating earnings,"
said Gary Bhojwani, chief executive officer of CNO. "We
experienced good asset growth in our accumulation businesses and
saw improvements in nearly all of our Growth Scorecard measures
across the firm. We are well positioned to build on our
momentum as we continue to implement strategic initiatives
that we expect will accelerate growth in our key production
metrics."
"While our fourth quarter earnings were negatively impacted by
the Tax Reform Act, we expect the ongoing improvements to our
income will more than offset the one-time accounting impacts."
Fourth Quarter 2017 Highlights
- First-year collected premiums: $357.3 million, down 5% from 4Q16
- Total collected premiums: $940.9
million, down 1% from 4Q16
- New annualized premium ("NAP") (2) for life and health
products: $85.4 million, down 5% from
4Q16
- Annuity collected premiums: $272.6
million, down 4% from 4Q16
- Annuity account values: $8.5
billion, up 4% from 4Q16
- Policies inforce of 3.5 million (including third party policies
inforce), down 1% from 4Q16
- Net income (loss) per diluted share: (42) cents in 4Q17 compared to $1.34 in 4Q16
- Net operating income (1) per diluted share: 51 cents in 4Q17 compared to 49 cents in 4Q16
- Book value per common share increased to $29.05 at December 31, 2017 from
$25.82 at December 31, 2016
- Book value per diluted share, excluding accumulated other
comprehensive income (loss) (3), was $21.43 at December 31, 2017 compared to
$22.02 at December 31, 2016
- Unrestricted cash and investments held by our holding company
were $397 million at
December 31, 2017 compared to $264
million at December 31, 2016
- Common stock repurchases of $27.0
million and dividends of $15.1
million in 4Q17
Full Year 2017 Highlights
- First-year collected premiums: $1,374.1 million, up 2% from 2016
- Total collected premiums: $3,688.3
million, up 2% from 2016
- NAP (2) for life and health products: $332.6 million, down 7% from 2016
- Annuity collected premiums: $1,031.5 million, up 6% from 2016
- Net income per diluted share: $1.02 in 2017 compared to $2.01 in 2016
- Net operating income (1) per diluted share: $1.75 in 2017 compared to $1.47 in 2016
- Common stock repurchases of $167.1
million and dividends of $59.6
million in 2017
- Consolidated risk-based capital ratio was estimated at 446% at
December 31, 2017, reflecting estimated statutory operating
earnings of $362 million and
insurance company dividends to the holding company of $357.7 million during 2017
Quarterly Segment
Operating Results
|
|
|
|
|
Three months
ended
|
|
December
31,
|
|
2017
|
|
2016
|
|
(Dollars in
millions,
except per share
data)
|
Adjusted EBIT
(4):
|
|
|
|
Bankers
Life
|
$
|
109.7
|
|
|
$
|
138.9
|
|
Washington
National
|
23.7
|
|
|
29.9
|
|
Colonial
Penn:
|
|
|
|
Inforce business
(5)
|
17.5
|
|
|
13.4
|
|
New business
(5)
|
(11.6)
|
|
|
(8.8)
|
|
Total Colonial
Penn
|
5.9
|
|
|
4.6
|
|
Long-term care in
run-off
|
.6
|
|
|
(3.9)
|
|
Adjusted EBIT from
business segments
|
139.9
|
|
|
169.5
|
|
Corporate Operations,
excluding corporate interest expense
|
(3.3)
|
|
|
(23.0)
|
|
Adjusted
EBIT
|
136.6
|
|
|
146.5
|
|
Corporate interest
expense
|
(11.7)
|
|
|
(11.5)
|
|
Operating earnings
before taxes
|
124.9
|
|
|
135.0
|
|
Tax expense on
operating income
|
39.1
|
|
|
50.1
|
|
Net operating income
(1)
|
85.8
|
|
|
84.9
|
|
Net realized
investment losses (net of related amortization)
|
(2.0)
|
|
|
(14.8)
|
|
Fair value changes in
embedded derivative liabilities (net of related
amortization)
|
5.5
|
|
|
46.2
|
|
Fair value changes
related to agent deferred compensation plan
|
1.2
|
|
|
15.1
|
|
Other
|
(4.2)
|
|
|
(.8)
|
|
Non-operating income
(loss) before taxes
|
.5
|
|
|
45.7
|
|
Income tax expense
(benefit):
|
|
|
|
On non-operating
income (loss)
|
.1
|
|
|
16.0
|
|
Valuation allowance
for deferred tax assets and other tax items
|
157.1
|
|
|
(119.6)
|
|
Net non-operating
income (loss)
|
(156.7)
|
|
|
149.3
|
|
Net income
(loss)
|
$
|
(70.9)
|
|
|
$
|
234.2
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
Net operating
income
|
$
|
.51
|
|
|
$
|
.49
|
|
Net realized
investment losses (net of related amortization and
taxes)
|
(.01)
|
|
|
(.06)
|
|
Fair value changes in
embedded derivative liabilities (net of related amortization and
taxes)
|
.02
|
|
|
.17
|
|
Fair value changes
related to agent deferred compensation plan (net of
taxes)
|
.01
|
|
|
.06
|
|
Valuation allowance
for deferred tax assets and other tax items
|
(.94)
|
|
|
.68
|
|
Other
|
(.01)
|
|
|
—
|
|
Net income
(loss)
|
$
|
(.42)
|
|
|
$
|
1.34
|
|
The following table summarizes the financial impact of
significant items on our 4Q17 net operating income (dollars in
millions, except per share
amounts):
|
Three months
ended
|
|
December 31,
2017*
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Net Operating Income
(1):
|
|
|
|
|
|
Bankers
Life
|
$
|
109.7
|
|
|
$
|
(10.8)
|
|
|
$
|
98.9
|
|
Washington
National
|
23.7
|
|
|
1.0
|
|
|
24.7
|
|
Colonial
Penn
|
5.9
|
|
|
—
|
|
|
5.9
|
|
Long-term care in
run-off
|
.6
|
|
|
—
|
|
|
.6
|
|
Adjusted EBIT from
business segments
|
139.9
|
|
|
(9.8)
|
|
|
130.1
|
|
Corporate Operations,
excluding corporate interest expense
|
(3.3)
|
|
|
—
|
|
|
(3.3)
|
|
Adjusted EBIT
(4)
|
136.6
|
|
|
(9.8)
|
|
|
126.8
|
|
Corporate interest
expense
|
(11.7)
|
|
|
—
|
|
|
(11.7)
|
|
Operating earnings
before taxes
|
124.9
|
|
|
(9.8)
|
|
|
115.1
|
|
Tax expense on
operating income
|
39.1
|
|
|
(3.4)
|
|
|
35.7
|
|
Net operating
income
|
$
|
85.8
|
|
|
$
|
(6.4)
|
|
|
$
|
79.4
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
$
|
.51
|
|
|
$
|
(.04)
|
|
|
$
|
.47
|
|
The significant items in 4Q17 included adjustments arising from
our comprehensive annual actuarial review of assumptions including
$10.8 million of favorable impacts in
the Bankers Life segment and $1.0
million of unfavorable impacts in the Washington National
segment.
* See page 10 for the table of Net Operating Income
Excluding Significant Items for the three months ended
December 31, 2016.
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. First-year
collected premiums in 4Q17 were $326.4
million, down 5 percent from 4Q16. First year
collected premiums in 2017 were $1,245.6
million, up 3 percent from 2016. NAP for life and
health products in 4Q17 was $43.5
million, down 9 percent compared to 4Q16. NAP for life
and health products in 2017 was $161.8
million, down 12 percent from 2016. Average producing
agents (over the last twelve months) were down 7 percent from
4Q16. Average producing agents in their third year of service
or later (over the last twelve months) in 4Q17 were down 1 percent
compared to 4Q16.
Total collected premiums in 4Q17 were $696.3 million, down 2 percent from 4Q16.
Total collected premiums in 2017 were $2,706.4 million, up 2 percent from 2016.
Annuity collected premiums in 4Q17 were $272.3 million, down 4 percent from 4Q16.
Annuity collected premiums in 2017 were $1,030.6 million, up 6 percent from 2016.
Annuity account values, on which spread income is earned, increased
5 percent to $8.2 billion in 4Q17
compared to 4Q16. Total policies inforce (including third
party policies inforce) decreased 1 percent and third party
policies inforce increased 7 percent from 4Q16.
Pre-tax operating earnings in 4Q17 compared to 4Q16 were down
$29.2 million, or 21 percent.
Pre-tax operating earnings in 4Q17 of $109.7
million included $10.8 million
of positive impacts from our comprehensive annual actuarial review
including the net impact of changes to mortality assumptions
related to interest-sensitive life products. Pre-tax
operating earnings in 4Q16 reflected $45.8
million of positive impacts from our comprehensive annual
actuarial review including the net impact of changes to spread and
persistency assumptions related to fixed index annuities. In
addition, our 4Q17 earnings reflected $5.2
million of higher income from call premiums and prepayments
compared to 4Q16.
The long-term care interest-adjusted benefit ratio was 73.1
percent in 4Q17, lower than the 4Q16 ratio of 76.0 percent.
The 4Q17 ratio reflects no increase to the future loss reserve,
given the outcome of the year-end 2016 actuarial review, compared
to a $7.6 million increase in
4Q16. The 4Q16 ratio was also impacted by $2.7 million of one-time reserve releases related
to policyholder decisions to surrender or reduce coverage following
rate increases. Such reserve releases in 4Q17 were not
significant. We currently expect the long-term care
interest-adjusted benefit ratio to be in the range of 75 percent to
80 percent during 2018.
Pre-tax operating earnings in 4Q17 reflected a Medicare
supplement benefit ratio of 70.7 percent, lower than the 4Q16 ratio
of 71.2 percent. We currently expect the Medicare supplement
benefit ratio to be in the range of 71 percent to 74 percent during
2018.
Washington National markets and distributes supplemental
health and life insurance to middle-income consumers through a
wholly-owned subsidiary and independent insurance agencies.
First-year collected premiums in 4Q17 were $19.3 million, flat with 4Q16. First year
collected premiums in 2017 were $78.4
million, essentially flat with 2016. NAP from
life and health products in 4Q17 was $27.1
million, up slightly from 4Q16. NAP for life and
health products in 2017 was $102.1
million, up 3 percent from 2016. The average number of
producing agents (over the last twelve months) in 4Q17 was up 1
percent compared to 4Q16.
Total collected premiums from the segment's supplemental health
block were up 4 percent in 4Q17 compared to 4Q16. Total
collected premiums from this block in 2017 were $589.1 million, up 4 percent from 2016.
Pre-tax operating earnings in 4Q17 compared to 4Q16 were down
$6.2 million, or 21 percent.
Pre-tax operating earnings in 4Q17 included higher expenses
compared to 4Q16 and $1 million of
unfavorable impacts from our comprehensive annual actuarial review
of assumptions primarily related to interest-sensitive life
products. The supplemental health interest-adjusted benefit
ratio was 56.6 percent and 57.0 percent in 4Q17 and 4Q16,
respectively. We currently expect the supplemental health
interest-adjusted benefit ratio to be in the range of 58 percent to
61 percent during 2018.
Colonial Penn markets primarily graded benefit and
simplified issue life insurance directly to customers through
television advertising, direct mail, the internet and
telemarketing. First-year collected premiums in 4Q17 were
$11.6 million, down 12 percent from
4Q16. First year collected premiums in 2017 were $50.1 million, down 9 percent from 2016.
NAP in 4Q17 was $14.8 million, up
slightly from 4Q16. NAP in 2017 was $68.7 million, down 10 percent from 2016.
Total collected premiums were up 3 percent in 4Q17 compared to
4Q16. Total collected premiums in 2017 were $291.6 million, up 4 percent from 2016.
Pre-tax operating earnings in 4Q17 were $5.9 million compared to $4.6 million in 4Q16. Full year 2017
pre-tax operating earnings were $22.6
million in 2017, compared to $1.7
million in 2016. Inforce adjusted EBIT in 4Q17 was
$17.5 million, up 31 percent from
4Q16. Full year 2017 inforce adjusted EBIT was $68.8 million, up 26 percent from 2016.
Pre-tax operating earnings and inforce adjusted EBIT in 2017 were
favorably impacted by $3.0 million
related to an out-of-period adjustment and refinement to
liabilities for insurance products recognized in 3Q17.
Pre-tax operating earnings and inforce adjusted EBIT in 4Q16 were
reduced by $2.5 million related to
the impact of loss recognition on a closed block of payout
annuities resulting from changes in long-term interest rates and
mortality assumptions. In addition, pre-tax operating
earnings were impacted by changes in marketing expenses which were
higher in 4Q17 compared to 4Q16, but lower for full year 2017
compared to 2016.
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 earnings
in 2018 in the range of $10 million
to $20 million, but because of the
seasonality of advertising spend, we expect a loss in the range of
$1 million to $3 million in 1Q18.
Long-term care in run-off only includes the long-term
care business that was recaptured in September 2016. This
segment recognized pre-tax operating earnings of $.6 million in 4Q17 compared to a loss of
$3.9 million in 4Q16. Such
losses in the 4Q16 period included the unfavorable impact of
$2.6 million related to the effect of
loss recognition on this closed block of long-term care
business. The interest-adjusted benefit ratio for this
long-term care block was 82.2 percent in 4Q17 compared to 213.5
percent in 4Q16. We expect this segment to report normalized
earnings before net realized investment gains (losses) of
approximately breakeven over the long-term. However, this
segment's quarterly results can be volatile given its relatively
low testing margins.
Corporate Operations includes our investment advisory
subsidiary and corporate expenses.
Pre-tax losses in 4Q17 were $3.3
million compared to $23.0
million of losses in 4Q16 primarily reflecting favorable
investment returns and lower expenses. Investment returns
were $11 million higher in 4Q17 as
compared to 4Q16 (including $8.1
million related to the change in value of investments
backing our Company-owned life insurance used as a vehicle to fund
Bankers Life's agent deferred compensation plan). Pre-tax
losses in 4Q16 included a $5.5
million increase to legal reserves related to legacy
business of our predecessor.
Non-Operating Items
Net realized investment losses in 4Q17 were $2.0 million (net of related amortization)
including other-than-temporary impairment losses of $4.6 million which were recorded in
earnings. Net realized investment losses in 4Q16 were
$14.8 million (net of related
amortization) including other-than-temporary impairment losses of
$7.5 million recorded in
earnings.
During 4Q17 and 4Q16, we recognized increases in earnings of
$5.5 million and $46.2 million, respectively, resulting from
changes in the estimated fair value of embedded derivative
liabilities related to our fixed index annuities, net of related
amortization. Such amounts include the impacts of changes in
market interest rates used to determine the derivative's estimated
fair value.
During 4Q17 and 4Q16, we recognized increases in earnings of
$1.2 million and $15.1 million, respectively, for the
mark-to-market change in the agent deferred compensation plan
liability which was impacted by changes in the underlying actuarial
assumptions used to value the liability. We recognize the
mark-to-market change in the estimated value of this liability
through earnings as assumptions change.
In 4Q17, the valuation allowance for deferred tax assets and
other tax items included: (i) a net increase to tax expense of
$172.5 million related to the impact
of the Tax Reform Act; partially offset by (ii) a $15.4 million reduction in the valuation
allowance for deferred tax assets primarily due to higher actual
income compared to the amount used in our deferred tax valuation
model.
In 4Q16, we previously disclosed we had reached a settlement
with the IRS related to the appropriate classification of the loss
recognized on our investment in Conseco Senior Health Insurance
Company when it was transferred to an independent trust in
2008. In addition, we had reached a settlement related to a
bad debt deduction with respect to a stock purchase loan made by
our Predecessor to a member of the Predecessor's board of
directors. The settlement resulted in the recognition of
additional life net operating loss carryforwards which offset
taxable income earned by our life insurance subsidiaries in the
third and fourth quarters of 2016 and the tax gain recognized on
the recapture of our long-term care reinsurance agreements.
The settlement resulted in a gain of $118.7
million in 4Q16.
Statutory (based on non-GAAP measures) and GAAP Capital
Information
Our consolidated statutory risk-based capital ratio was
estimated at 446% at December 31, 2017, reflecting: (i)
estimated 4Q17 and full-year 2017 statutory operating earnings of
$105 million and $362 million, respectively; (ii) a $46 million reduction of statutory admitted
deferred tax assets due to tax reform; and (iii) the payment of
insurance company dividends to the holding company of $70.9 million during 4Q17 and $357.7 million during 2017. Such risk-based
capital ratio was 459% at December 31,
2016.
During the fourth quarter of 2017, we repurchased $27.0 million of common stock under our
securities repurchase program (including $1.0 million of repurchases settled in
1Q18). We repurchased 1.1 million common shares at an average
cost of $24.38 per share.
During 2017, we repurchased 7.8 million common shares at a total
cost of $167.1 million. As of
December 31, 2017, we had 166.9 million shares outstanding and
had authority to repurchase up to an additional $385.6 million of our common stock. During
4Q17, dividends paid on common stock totaled $15.1 million.
Unrestricted cash and investments held by our holding company
were $397 million at
December 31, 2017, compared to $264
million at December 31, 2016, reflecting dividends from
subsidiaries, partially offset by common stock repurchases and
dividend payments.
Book value per common share was $29.05 and $25.82
at December 31, 2017 and 2016, respectively. Book value
per diluted share, excluding accumulated other comprehensive income
(loss) (3), was $21.43 at
December 31, 2017, compared to $22.02 at December 31, 2016.
The debt-to-capital ratio was 15.9 percent and 16.9 percent at
December 31, 2017 and 2016, respectively. Our
debt-to-total capital ratio, excluding accumulated other
comprehensive income (6) was 20.1 percent at December 31, 2017
compared to 19.1 percent at December 31, 2016.
CNO continues to expect free cash flow generation of
approximately $300 million per
year. The Company is committed to deploying 100 percent of
its free cash flow into investments to accelerate profitable
growth, funding potential long-term care risk reduction
transactions, common stock dividends and share repurchases.
The amount and timing of deployment will be based on business and
market conditions and other factors including, but not limited to,
the current price of our common stock, opportunities to invest in
our business, acquisition transactions or ceding commissions
related to reinsurance transactions.
Conference Call
The Company will host a conference call to discuss results on
February 14, 2018 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.
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEET
|
(Dollars in
millions)
|
(unaudited)
|
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Investments:
|
|
|
|
Fixed maturities,
available for sale, at fair value (amortized cost: 2017
-
$20,702.1; 2016 -
$19,803.1)
|
$
|
22,910.9
|
|
|
$
|
21,096.2
|
|
Equity securities at
fair value (cost: 2017 - $491.1; 2016 - $580.7)
|
511.7
|
|
|
584.2
|
|
Mortgage
loans
|
1,650.6
|
|
|
1,768.0
|
|
Policy
loans
|
116.0
|
|
|
112.0
|
|
Trading
securities
|
284.6
|
|
|
363.4
|
|
Investments held by
variable interest entities
|
1,526.9
|
|
|
1,724.3
|
|
Other invested
assets
|
853.4
|
|
|
589.5
|
|
Total
investments
|
27,854.1
|
|
|
26,237.6
|
|
Cash and cash
equivalents - unrestricted
|
578.4
|
|
|
478.9
|
|
Cash and cash
equivalents held by variable interest entities
|
178.9
|
|
|
189.3
|
|
Accrued investment
income
|
245.9
|
|
|
239.6
|
|
Present value of
future profits
|
359.6
|
|
|
401.8
|
|
Deferred acquisition
costs
|
1,026.8
|
|
|
1,044.7
|
|
Reinsurance
receivables
|
2,175.2
|
|
|
2,260.4
|
|
Income tax assets,
net
|
366.9
|
|
|
789.7
|
|
Assets held in
separate accounts
|
5.0
|
|
|
4.7
|
|
Other
assets
|
319.5
|
|
|
328.5
|
|
Total
assets
|
$
|
33,110.3
|
|
|
$
|
31,975.2
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Liabilities for
insurance products:
|
|
|
|
Policyholder account
balances
|
$
|
11,220.7
|
|
|
$
|
10,912.7
|
|
Future policy
benefits
|
11,521.3
|
|
|
10,953.3
|
|
Liability for policy
and contract claims
|
530.3
|
|
|
500.6
|
|
Unearned and advanced
premiums
|
261.7
|
|
|
282.5
|
|
Liabilities related
to separate accounts
|
5.0
|
|
|
4.7
|
|
Other
liabilities
|
751.8
|
|
|
611.4
|
|
Investment
borrowings
|
1,646.7
|
|
|
1,647.4
|
|
Borrowings related to
variable interest entities
|
1,410.7
|
|
|
1,662.8
|
|
Notes payable –
direct corporate obligations
|
914.6
|
|
|
912.9
|
|
Total
liabilities
|
28,262.8
|
|
|
27,488.3
|
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common stock ($0.01
par value, 8,000,000,000 shares authorized, shares
issued
and
outstanding: 2017 - 166,857,931; 2016 -
173,753,614)
|
1.7
|
|
|
1.7
|
|
Additional paid-in
capital
|
3,073.3
|
|
|
3,212.1
|
|
Accumulated other
comprehensive income
|
1,006.7
|
|
|
622.4
|
|
Retained
earnings
|
765.8
|
|
|
650.7
|
|
Total shareholders'
equity
|
4,847.5
|
|
|
4,486.9
|
|
Total liabilities and
shareholders' equity
|
$
|
33,110.3
|
|
|
$
|
31,975.2
|
|
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
(Dollars in millions,
except per share data)
|
(unaudited)
|
|
|
|
|
|
Three months
ended
|
|
Year ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
Insurance policy
income
|
$
|
660.1
|
|
|
$
|
654.1
|
|
|
$
|
2,647.3
|
|
|
$
|
2,601.1
|
|
Net investment
income:
|
|
|
|
|
|
|
|
General account
assets
|
325.1
|
|
|
315.6
|
|
|
1,285.4
|
|
|
1,204.1
|
|
Policyholder and
other special-purpose portfolios
|
94.1
|
|
|
38.4
|
|
|
265.9
|
|
|
121.1
|
|
Realized investment
gains (losses):
|
|
|
|
|
|
|
|
Net realized
investment gains (losses), excluding
impairment
losses
|
2.6
|
|
|
(7.5)
|
|
|
77.4
|
|
|
47.9
|
|
Other-than-temporary
impairments:
|
|
|
|
|
|
|
|
Total
other-than-temporary impairment losses
|
(4.6)
|
|
|
(11.1)
|
|
|
(21.9)
|
|
|
(35.9)
|
|
Change in
other-than-temporary impairment losses
recognized in
accumulated other comprehensive income
|
—
|
|
|
3.6
|
|
|
(.9)
|
|
|
3.6
|
|
Net impairment losses
recognized
|
(4.6)
|
|
|
(7.5)
|
|
|
(22.8)
|
|
|
(32.3)
|
|
Loss on dissolution
of variable interest entities
|
—
|
|
|
—
|
|
|
(4.3)
|
|
|
(7.3)
|
|
Total realized gains
(losses)
|
(2.0)
|
|
|
(15.0)
|
|
|
50.3
|
|
|
8.3
|
|
Fee revenue and other
income
|
12.8
|
|
|
11.8
|
|
|
48.3
|
|
|
50.5
|
|
Total
revenues
|
1,090.1
|
|
|
1,004.9
|
|
|
4,297.2
|
|
|
3,985.1
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
Insurance policy
benefits
|
661.1
|
|
|
529.3
|
|
|
2,602.7
|
|
|
2,390.5
|
|
Loss on reinsurance
transaction
|
—
|
|
|
—
|
|
|
—
|
|
|
75.4
|
|
Interest
expense
|
31.4
|
|
|
30.4
|
|
|
123.7
|
|
|
116.4
|
|
Amortization
|
58.0
|
|
|
71.7
|
|
|
239.3
|
|
|
253.3
|
|
Loss on
extinguishment of borrowings related to variable
interest
entities
|
4.0
|
|
|
—
|
|
|
9.5
|
|
|
—
|
|
Other operating costs
and expenses
|
210.2
|
|
|
192.8
|
|
|
841.5
|
|
|
796.3
|
|
Total benefits and
expenses
|
964.7
|
|
|
824.2
|
|
|
3,816.7
|
|
|
3,631.9
|
|
Income before income
taxes
|
125.4
|
|
|
180.7
|
|
|
480.5
|
|
|
353.2
|
|
Income tax expense
(benefit):
|
|
|
|
|
|
|
|
Tax expense on period
income
|
39.2
|
|
|
66.1
|
|
|
162.8
|
|
|
127.8
|
|
Valuation allowance
for deferred tax assets and other tax items
|
157.1
|
|
|
(119.6)
|
|
|
142.1
|
|
|
(132.8)
|
|
Net income
(loss)
|
$
|
(70.9)
|
|
|
$
|
234.2
|
|
|
$
|
175.6
|
|
|
$
|
358.2
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
167,428,000
|
|
|
173,634,000
|
|
|
170,025,000
|
|
|
176,638,000
|
|
Net income
(loss)
|
$
|
(.42)
|
|
|
$
|
1.35
|
|
|
$
|
1.03
|
|
|
$
|
2.03
|
|
Diluted:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
167,428,000
|
|
|
175,173,000
|
|
|
172,144,000
|
|
|
178,323,000
|
|
Net income
(loss)
|
$
|
(.42)
|
|
|
$
|
1.34
|
|
|
$
|
1.02
|
|
|
$
|
2.01
|
|
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
SEGMENT OPERATING
RESULTS
|
(Dollars in millions,
except per share data)
|
|
|
|
Year ended
|
|
December
31,
|
|
2017
|
|
2016
|
Adjusted EBIT
(4):
|
|
|
|
Bankers
Life
|
$
|
418.9
|
|
|
$
|
397.9
|
|
Washington
National
|
98.3
|
|
|
102.9
|
|
Colonial
Penn:
|
|
|
|
Inforce business
(5)
|
68.8
|
|
|
54.4
|
|
New business
(5)
|
(46.2)
|
|
|
(52.7)
|
|
Total Colonial
Penn
|
22.6
|
|
|
1.7
|
|
Long-term care in
run-off
|
1.7
|
|
|
(3.9)
|
|
Adjusted EBIT from
business segments
|
541.5
|
|
|
498.6
|
|
Corporate Operations,
excluding corporate interest expense
|
(40.3)
|
|
|
(42.5)
|
|
Adjusted
EBIT
|
501.2
|
|
|
456.1
|
|
Corporate interest
expense
|
(46.5)
|
|
|
(45.8)
|
|
Operating earnings
before taxes
|
454.7
|
|
|
410.3
|
|
Tax expense on
operating income
|
153.8
|
|
|
147.8
|
|
Net operating income
(1)
|
300.9
|
|
|
262.5
|
|
Net realized
investment gains (net of related amortization)
|
49.3
|
|
|
7.6
|
|
Fair value changes in
embedded derivative liabilities (net of related
amortization)
|
(2.5)
|
|
|
9.6
|
|
Fair value changes
and amendment related to agent deferred compensation
plan
|
(12.2)
|
|
|
3.1
|
|
Loss on reinsurance
transaction
|
—
|
|
|
(75.4)
|
|
Other
|
(8.8)
|
|
|
(2.0)
|
|
Non-operating income
(loss) before taxes
|
25.8
|
|
|
(57.1)
|
|
Income tax expense
(benefit):
|
|
|
|
On non-operating
income (loss)
|
9.0
|
|
|
(20.0)
|
|
Valuation allowance
for deferred tax assets and other tax items
|
142.1
|
|
|
(132.8)
|
|
Net non-operating
income (loss)
|
(125.3)
|
|
|
95.7
|
|
Net income
|
$
|
175.6
|
|
|
$
|
358.2
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
Net operating
income
|
$
|
1.75
|
|
|
$
|
1.47
|
|
Net realized
investment gains (net of related amortization and taxes)
|
.19
|
|
|
.03
|
|
Fair value changes in
embedded derivative liabilities (net of related
amortization and
taxes)
|
(.01)
|
|
|
.04
|
|
Fair value changes
and amendment related to agent deferred compensation
plan
(net of
taxes)
|
(.05)
|
|
|
.01
|
|
Loss on reinsurance
transaction (net of taxes)
|
—
|
|
|
(.27)
|
|
Valuation allowance
for deferred tax assets and other tax items
|
(.83)
|
|
|
.74
|
|
Other
|
(.03)
|
|
|
(.01)
|
|
Net income
|
$
|
1.02
|
|
|
$
|
2.01
|
|
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
NET OPERATING
INCOME EXCLUDING SIGNIFICANT ITEMS*
|
(Dollars in millions,
except per share data)
|
|
|
|
Three months
ended
|
|
December 31,
2016*
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Net Operating Income
(1):
|
|
|
|
|
|
Bankers
Life
|
$
|
138.9
|
|
|
$
|
(48.2)
|
|
|
$
|
90.7
|
|
Washington
National
|
29.9
|
|
|
—
|
|
|
29.9
|
|
Colonial
Penn
|
4.6
|
|
|
2.5
|
|
|
7.1
|
|
Long-term care in
run-off
|
(3.9)
|
|
|
2.6
|
|
|
(1.3)
|
|
Adjusted EBIT from
business segments
|
169.5
|
|
|
(43.1)
|
|
|
126.4
|
|
Corporate Operations,
excluding corporate interest expense
|
(23.0)
|
|
|
5.5
|
|
|
(17.5)
|
|
Adjusted EBIT
(4)
|
146.5
|
|
|
(37.6)
|
|
|
108.9
|
|
Corporate interest
expense
|
(11.5)
|
|
|
—
|
|
|
(11.5)
|
|
Operating earnings
before taxes
|
135.0
|
|
|
(37.6)
|
|
|
97.4
|
|
Tax expense on
operating income
|
50.1
|
|
|
(13.5)
|
|
|
36.6
|
|
Net operating
income
|
$
|
84.9
|
|
|
$
|
(24.1)
|
|
|
$
|
60.8
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
$
|
.49
|
|
|
$
|
(.14)
|
|
|
$
|
.35
|
|
* This table summarizes the financial impact of significant
items (as described in the segment results section of this press
release) on our 4Q16 net operating income.
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
FIRST-YEAR
COLLECTED PREMIUMS
|
(Dollars in
millions)
|
|
|
|
Three months
ended
|
|
December
31,
|
|
2017
|
|
2016
|
Bankers
Life:
|
|
|
|
Medicare
supplement
|
$
|
17.4
|
|
|
$
|
19.3
|
|
Long-term
care
|
3.9
|
|
|
4.2
|
|
Supplemental
health
|
1.2
|
|
|
1.4
|
|
Other
health
|
.2
|
|
|
.1
|
|
Life
|
32.9
|
|
|
33.7
|
|
Annuity
|
270.8
|
|
|
283.4
|
|
Total
|
326.4
|
|
|
342.1
|
|
Washington
National:
|
|
|
|
Supplemental health
and other health
|
18.1
|
|
|
17.7
|
|
Life
|
1.2
|
|
|
1.4
|
|
Annuity
|
—
|
|
|
.2
|
|
Total
|
19.3
|
|
|
19.3
|
|
Colonial
Penn:
|
|
|
|
Life
|
11.6
|
|
|
13.2
|
|
Total
|
11.6
|
|
|
13.2
|
|
Total first-year
collected premiums from segments
|
$
|
357.3
|
|
|
$
|
374.6
|
|
TOTAL COLLECTED
PREMIUMS
|
(Dollars in
millions)
|
|
|
|
Three months
ended
|
|
December
31,
|
|
2017
|
|
2016
|
Bankers
Life:
|
|
|
|
Medicare
supplement
|
$
|
190.8
|
|
|
$
|
191.2
|
|
Long-term
care
|
108.9
|
|
|
114.7
|
|
Supplemental
health
|
5.8
|
|
|
5.5
|
|
Other
health
|
1.5
|
|
|
1.5
|
|
Life
|
117.0
|
|
|
113.8
|
|
Annuity
|
272.3
|
|
|
284.9
|
|
Total
|
696.3
|
|
|
711.6
|
|
Washington
National:
|
|
|
|
Supplemental health
and other health
|
147.7
|
|
|
142.1
|
|
Medicare
supplement
|
12.9
|
|
|
14.9
|
|
Life
|
7.7
|
|
|
7.7
|
|
Annuity
|
.3
|
|
|
.5
|
|
Total
|
168.6
|
|
|
165.2
|
|
Colonial
Penn:
|
|
|
|
Life
|
71.5
|
|
|
69.2
|
|
Medicare supplement
and other health
|
.5
|
|
|
.6
|
|
Total
|
72.0
|
|
|
69.8
|
|
Long-term care in
run-off:
|
|
|
|
Long-term
care
|
4.0
|
|
|
4.7
|
|
Total
|
4.0
|
|
|
$
|
4.7
|
|
Total collected
premiums from segments
|
$
|
940.9
|
|
|
$
|
951.3
|
|
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
NEW ANNUALIZED
PREMIUMS FOR LIFE AND HEALTH PRODUCTS (2)
|
(Dollars in
millions)
|
|
|
|
Three months
ended
|
|
December
31,
|
|
2017
|
|
2016
|
Bankers
Life:
|
|
|
|
Medicare
supplement
|
$
|
20.0
|
|
|
$
|
23.9
|
|
Long-term
care
|
5.1
|
|
|
5.5
|
|
Supplemental health
and other health
|
1.9
|
|
|
1.6
|
|
Life
|
16.5
|
|
|
17.0
|
|
Total
|
43.5
|
|
|
48.0
|
|
Washington
National:
|
|
|
|
Supplemental
health
|
24.8
|
|
|
25.2
|
|
Life
|
2.3
|
|
|
1.8
|
|
Total
|
27.1
|
|
|
27.0
|
|
Colonial
Penn:
|
|
|
|
Life
|
14.8
|
|
|
14.7
|
|
Total
|
14.8
|
|
|
14.7
|
|
Total new annualized
premiums
|
$
|
85.4
|
|
|
$
|
89.7
|
|
ANNUITY ACCOUNT
VALUES
|
(Dollars in
millions)
|
|
|
|
December
31,
|
|
2017
|
|
2016
|
Bankers
Life
|
$
|
8,163.3
|
|
|
$
|
7,788.5
|
|
Washington
National
|
378.2
|
|
|
413.7
|
|
Total
|
$
|
8,541.5
|
|
|
$
|
8,202.2
|
|
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES
|
BENEFIT RATIOS ON
MAJOR HEALTH LINES OF BUSINESS
|
|
|
|
Three months
ended
|
|
December
31,
|
|
2017
|
|
2016
|
Bankers
Life:
|
|
|
|
Medicare
supplement:
|
|
|
|
Earned
premium
|
$193
million
|
|
$193
million
|
Benefit ratio
(7)
|
70.7
|
%
|
|
71.2
|
%
|
Long-term
care:
|
|
|
|
Earned
premium
|
$111
million
|
|
$118
million
|
Benefit ratio
(7)
|
135.3
|
%
|
|
134.7
|
%
|
Interest-adjusted
benefit ratio (a non-GAAP measure) (8)
|
73.1
|
%
|
|
76.0
|
%
|
Washington
National:
|
|
|
|
Medicare
supplement:
|
|
|
|
Earned
premium
|
$13
million
|
|
$15
million
|
Benefit ratio
(7)
|
67.0
|
%
|
|
64.8
|
%
|
Supplemental
health:
|
|
|
|
Earned
premium
|
$149
million
|
|
$144
million
|
Benefit ratio
(7)
|
80.7
|
%
|
|
81.0
|
%
|
Interest-adjusted
benefit ratio (a non-GAAP measure) (8)
|
56.6
|
%
|
|
57.0
|
%
|
Long-term care in
run-off:
|
|
|
|
Long-term
care:
|
|
|
|
Earned
premium
|
$4 million
|
|
$5 million
|
Benefit ratio
(7)
|
251.7
|
%
|
|
365.8
|
%
|
Interest-adjusted
benefit ratio (a non-GAAP measure) (8)
|
82.2
|
%
|
|
213.5
|
%
|
NOTES
(1) Management
believes that an analysis of Net income applicable to common stock
before: (i) net realized investment gains or losses, net of related
amortization and taxes; (ii) 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; (iii) fair value changes and amendment
related to the agent deferred compensation plan, net of taxes, (iv)
changes in the valuation allowance for deferred tax assets and
other tax items; and (v) other non-operating items consisting
primarily of earnings attributable to variable interest entities,
net of taxes ("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 9. 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 for life and health products, which includes 10%
of single premium whole life deposits and 100% of all other
premiums (excluding annuities). Medicare Advantage sales are
not comparable to other sales and are therefore excluded in all
periods.
(3) Book value per
diluted share reflects the potential dilution that could occur if
outstanding stock options were exercised, restricted stock and
performance units were vested and convertible securities were
converted. The dilution from options, 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 (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. In
addition, the value of capital used to calculate this non-GAAP
measure at December 31, 2017 is
reduced by the $205.4 million impact
recorded in retained earnings in the fourth quarter of 2017 from
the remeasurement of deferred tax liabilities originally recorded
in accumulated other comprehensive income. Management
believes this adjustment to the December 31,
2017 non-GAAP measure is useful because it removes the tax
effects stranded in accumulated other comprehensive income as a
result of accounting rules which require the effects of the Tax
Reform Act on deferred tax balances to be recorded in earnings,
even if the balance was originally recorded in accumulated other
comprehensive income.
(4) Management
believes that an analysis of earnings before 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, fair value
changes and amendment related to the agent deferred compensation
plan, other non-operating items, corporate interest expense and
taxes ("Adjusted 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
Adjusted EBIT to Net Income applicable to common stock is provided
in the tables on pages 2 and 9.
(5) Management
believes that an analysis of Adjusted EBIT for Colonial Penn,
separated between inforce and new business, provides increased
clarity for this segment as the vast majority of the costs to
generate new business in this segment are not deferrable and
Adjusted EBIT will fluctuate based on management's decisions on how
much marketing costs to incur in each period. Adjusted 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. Adjusted EBIT from inforce
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 inforce business is
based on estimates, which we believe are reasonable.
(6) 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. In
addition, the value of capital used to calculate this non-GAAP
measure at December 31, 2017 is
reduced by the $205.4 million impact
recorded in retained earnings in the fourth quarter of 2017 from
the remeasurement of deferred tax liabilities originally recorded
in accumulated other comprehensive income. Management
believes this adjustment to the December 31,
2017 non-GAAP measure is useful because it removes the tax
effects stranded in accumulated other comprehensive income as a
result of accounting rules which require the effects of the Tax
Reform Act on deferred tax balances to be recorded in earnings,
even if the balance was originally recorded in accumulated other
comprehensive income.
(7) The benefit ratio
is calculated by dividing the related product's insurance policy
benefits by insurance policy income.
(8) 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 (which is equal
to the tabular interest on the related insurance
liabilities). 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.
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 and uncertainties, 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) changes to our estimates of the impact of the Tax Cuts and
Jobs Act; (xii) our assumption that the positions we take on our
tax return filings will not be successfully challenged by the
Internal Revenue Service; (xiii) changes in accounting principles
and the interpretation thereof; (xiv) our ability to continue to
satisfy the financial ratio and balance requirements and other
covenants of our debt agreements; (xv) 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;
(xvi) performance and valuation of our investments, including the
impact of realized losses (including other-than-temporary
impairment charges); (xvii) 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; (xviii) our ability to
generate sufficient liquidity to meet our debt service obligations
and other cash needs; (xix) changes in capital deployment
opportunities; (xx) our ability to maintain effective controls over
financial reporting; (xxi) our ability to continue to recruit and
retain productive agents and distribution partners; (xxii) customer
response to new products, distribution channels and marketing
initiatives; (xxiii) 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;
(xxiv) regulatory changes or actions, including: those relating to
regulation of the financial affairs of our insurance companies,
such as the calculation of risk-based capital and minimum capital
requirements, and 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; (xxv) 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; (xxvi) availability and effectiveness of
reinsurance arrangements, as well as the impact of any defaults or
failure of reinsurers to perform; (xxvii) the amount we may need to
pay to a reinsurer and the earnings charge we may incur in
connection with a long-term care reinsurance transaction; (xxviii)
the performance of third party service providers and potential
difficulties arising from outsourcing arrangements; (xxix) the
growth rate of sales, collected premiums, annuity deposits and
assets; (xxx) interruption in telecommunication, information
technology or other operational systems or failure to maintain the
security, confidentiality or privacy of sensitive data on such
systems; (xxxi) events of terrorism, cyber attacks, natural
disasters or other catastrophic events, including losses from a
disease pandemic; (xxxii) ineffectiveness of risk management
policies and procedures in identifying, monitoring and managing
risks; and (xxxiii) the risk factors or uncertainties listed from
time to time in our filings with the Securities and Exchange
Commission. 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 written or oral forward-looking
statements attributable to us are expressly qualified in their
entirety by the foregoing cautionary statement. 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.
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SOURCE CNO Financial Group, Inc.