Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CNO Financial Group, Inc. | form8-k03312012earnings.htm |
| EX-99.1 - EXHIBIT 99.1 - CNO Financial Group, Inc. | exhibit991-03312012earnings.htm |
Exhibit 99.2
Quarterly Financial Supplement - | |||||
1Q2012 | |||||
April 30, 2012 | |||||
Page 1
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 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 | 16-18 | |||
Corporate Operations | 19 | |||
Premiums collected on insurance products: | ||||
Bankers Life | 20 | |||
Washington National | 21 | |||
Colonial Penn | 22 | |||
Other CNO Business | 23 | |||
New annualized premiums | 24 | |||
Statutory information | 25 | |||
Notes | 26 | |||
Adoption of New Accounting Standard
Effective January 1, 2012, we adopted ASU 2010-26 which modified the definition of the types of acquisition costs that can be deferred by insurance companies. We elected to adopt the new guidance on a retrospective basis. Accordingly, all prior periods presented have been retrospectively adjusted. The new guidance impacts the timing of the recognition of profits on our business, but has no impact on cash flows, statutory financial results or the ultimate profitability of the business.
Page 2
CNO Financial Group, Inc. | |||||||||||||||||
Consolidated balance sheet (in millions) | Mar-11 | Jun-11 | Sep-11 | Dec-11 | Mar-12 | ||||||||||||
Assets | |||||||||||||||||
Investments: | |||||||||||||||||
Fixed maturities, available for sale, at fair value | $ | 20,852.2 | $ | 21,622.9 | $ | 23,016.7 | $ | 23,516.0 | $ | 23,777.7 | |||||||
Equity securities at fair value | 105.4 | 129.6 | 164.3 | 175.1 | 176.5 | ||||||||||||
Mortgage loans | 1,751.3 | 1,752.8 | 1,648.2 | 1,602.8 | 1,546.7 | ||||||||||||
Policy loans | 281.6 | 279.5 | 279.6 | 279.7 | 277.8 | ||||||||||||
Trading securities | 403.1 | 83.5 | 81.8 | 91.6 | 122.3 | ||||||||||||
Investments held by variable interest entities | 401.6 | 414.0 | 453.5 | 496.3 | 564.7 | ||||||||||||
Other invested assets | 272.1 | 252.2 | 190.9 | 202.8 | 270.9 | ||||||||||||
Total investments | 24,067.3 | 24,534.5 | 25,835.0 | 26,364.3 | 26,736.6 | ||||||||||||
Cash and cash equivalents - unrestricted | 424.6 | 580.2 | 461.9 | 436.0 | 173.5 | ||||||||||||
Cash and cash equivalents held by variable interest entities | 27.1 | 25.3 | 19.7 | 74.4 | 65.8 | ||||||||||||
Accrued investment income | 336.7 | 314.3 | 301.2 | 288.7 | 313.6 | ||||||||||||
Present value of future profits | 970.1 | 936.5 | 714.2 | 697.7 | 675.4 | ||||||||||||
Deferred acquisition costs | 989.3 | 975.5 | 834.5 | 797.1 | 790.4 | ||||||||||||
Reinsurance receivables | 3,219.0 | 3,172.5 | 3,131.3 | 3,091.1 | 3,052.7 | ||||||||||||
Income tax assets, net | 1,090.4 | 998.4 | 918.4 | 865.4 | 819.9 | ||||||||||||
Assets held in separate accounts | 18.1 | 17.4 | 15.4 | 15.0 | 16.0 | ||||||||||||
Other assets | 413.0 | 323.6 | 289.6 | 292.2 | 402.3 | ||||||||||||
Total assets | $ | 31,555.6 | $ | 31,878.2 | $ | 32,521.2 | $ | 32,921.9 | $ | 33,046.2 | |||||||
Liabilities | |||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||
Interest-sensitive products | $ | 13,161.3 | $ | 13,152.8 | $ | 13,168.2 | $ | 13,165.5 | $ | 13,103.4 | |||||||
Traditional products | 10,357.9 | 10,424.4 | 10,444.8 | 10,482.7 | 10,517.9 | ||||||||||||
Claims payable and other policyholder funds | 979.0 | 978.0 | 985.5 | 1,034.3 | 1,000.8 | ||||||||||||
Liabilities related to separate accounts | 18.1 | 17.4 | 15.4 | 15.0 | 16.0 | ||||||||||||
Other liabilities | 651.8 | 712.2 | 585.2 | 556.3 | 721.0 | ||||||||||||
Investment borrowings | 1,203.8 | 1,305.3 | 1,509.1 | 1,676.5 | 1,684.9 | ||||||||||||
Borrowings related to variable interest entities | 354.4 | 317.3 | 405.6 | 519.9 | 519.9 | ||||||||||||
Notes payable - direct corporate obligations | 949.8 | 934.5 | 871.2 | 857.9 | 799.3 | ||||||||||||
Total liabilities | 27,676.1 | 27,841.9 | 27,985.0 | 28,308.1 | 28,363.2 | ||||||||||||
Shareholders' equity | |||||||||||||||||
Common stock | 2.5 | 2.5 | 2.4 | 2.4 | 2.4 | ||||||||||||
Additional paid-in capital | 4,426.1 | 4,414.3 | 4,379.4 | 4,361.9 | 4,345.6 | ||||||||||||
Accumulated deficit | (822.4 | ) | (776.0 | ) | (596.5 | ) | (532.1 | ) | (473.0 | ) | |||||||
Total shareholders' equity before accumulated other comprehensive income | 3,606.2 | 3,640.8 | 3,785.3 | 3,832.2 | 3,875.0 | ||||||||||||
Accumulated other comprehensive income | 273.3 | 395.5 | 750.9 | 781.6 | 808.0 | ||||||||||||
Total shareholders' equity | 3,879.5 | 4,036.3 | 4,536.2 | 4,613.8 | 4,683.0 | ||||||||||||
Total liabilities and shareholders' equity | $ | 31,555.6 | $ | 31,878.2 | $ | 32,521.2 | $ | 32,921.9 | $ | 33,046.2 | |||||||
1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | |||||||||||||
Book value per share at period-end (1) (2) | $ | 14.34 | $ | 14.60 | $ | 15.56 | $ | 15.88 | $ | 16.20 | |||||||
Book value per share assuming conversion of convertible securities (1) (3) | $ | 12.62 | $ | 12.79 | $ | 13.60 | $ | 13.87 | $ | 14.05 | |||||||
Page 3
CNO Financial Group, Inc. | ||||||||||||||||||
Consolidated statement of operations (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 667.2 | $ | 679.6 | $ | 673.5 | $ | 670.2 | $ | 2,690.5 | $ | 686.3 | ||||||
Net investment income (loss): | ||||||||||||||||||
General account assets | 336.1 | 342.2 | 338.2 | 344.2 | 1,360.7 | 345.2 | ||||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios | 37.4 | 3.1 | (54.9 | ) | 7.8 | (6.6 | ) | 65.6 | ||||||||||
Realized investment gains (losses): | ||||||||||||||||||
Net realized investment gains, excluding impairment losses | 18.4 | 13.0 | 33.5 | 31.5 | 96.4 | 30.8 | ||||||||||||
Other-than-temporary impairment losses: | ||||||||||||||||||
Total other-than-temporary impairment losses | (13.3 | ) | (10.1 | ) | (2.9 | ) | (13.6 | ) | (39.9 | ) | (7.9 | ) | ||||||
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | 5.3 | 5.3 | — | ||||||||||||
Net impairment losses recognized | (13.3 | ) | (10.1 | ) | (2.9 | ) | (8.3 | ) | (34.6 | ) | (7.9 | ) | ||||||
Total realized gains | 5.1 | 2.9 | 30.6 | 23.2 | 61.8 | 22.9 | ||||||||||||
Fee revenue and other income | 3.4 | 4.2 | 4.9 | 5.7 | 18.2 | 3.9 | ||||||||||||
Total revenues | 1,049.2 | 1,032.0 | 992.3 | 1,051.1 | 4,124.6 | 1,123.9 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 683.2 | 684.4 | 661.0 | 670.4 | 2,699.0 | 689.0 | ||||||||||||
Interest expense | 29.2 | 28.9 | 27.9 | 28.1 | 114.1 | 28.8 | ||||||||||||
Amortization | 94.9 | 70.6 | 58.6 | 73.3 | 297.4 | 86.6 | ||||||||||||
Loss on extinguishment of debt | 1.4 | 0.6 | 1.1 | 0.3 | 3.4 | 0.2 | ||||||||||||
Other operating costs and expenses | 170.1 | 175.7 | 182.0 | 176.7 | 704.5 | 227.0 | ||||||||||||
Total benefits and expenses | 978.8 | 960.2 | 930.6 | 948.8 | 3,818.4 | 1,031.6 | ||||||||||||
Income before income taxes | 70.4 | 71.8 | 61.7 | 102.3 | 306.2 | 92.3 | ||||||||||||
Income tax expense on period income | 25.0 | 25.4 | 25.2 | 37.9 | 113.5 | 33.2 | ||||||||||||
Valuation allowance for deferred tax assets | — | — | (143.0 | ) | — | (143.0 | ) | — | ||||||||||
Net income | $ | 45.4 | $ | 46.4 | $ | 179.5 | $ | 64.4 | $ | 335.7 | $ | 59.1 | ||||||
Page 4
CNO Financial Group, Inc. | ||||||||||||||||||
Operating results ($ in millions, except per share amounts) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
EBIT (4): | ||||||||||||||||||
Bankers Life | $ | 62.2 | $ | 72.1 | $ | 79.4 | $ | 77.2 | $ | 290.9 | $ | 70.5 | ||||||
Washington National | 24.3 | 21.8 | 21.2 | 28.8 | 96.1 | 24.7 | ||||||||||||
Colonial Penn | (5.7 | ) | 0.5 | (1.3 | ) | 1.8 | (4.7 | ) | (9.8 | ) | ||||||||
Other CNO Business | 7.4 | 5.1 | 2.8 | — | 15.3 | (2.3 | ) | |||||||||||
EBIT from business segments | 88.2 | 99.5 | 102.1 | 107.8 | 397.6 | 83.1 | ||||||||||||
Corporate operations, excluding corporate interest expense | (0.5 | ) | (11.3 | ) | (27.5 | ) | (8.4 | ) | (47.7 | ) | (1.8 | ) | ||||||
EBIT | 87.7 | 88.2 | 74.6 | 99.4 | 349.9 | 81.3 | ||||||||||||
Corporate interest expense | (20.6 | ) | (19.3 | ) | (18.7 | ) | (17.7 | ) | (76.3 | ) | (17.5 | ) | ||||||
Income before net realized investment gains (losses), fair value changes in embedded derivative liabilities and taxes | 67.1 | 68.9 | 55.9 | 81.7 | 273.6 | 63.8 | ||||||||||||
Tax expense on operating income | 23.9 | 24.4 | 23.1 | 30.7 | 102.1 | 23.2 | ||||||||||||
Net operating income (5) | 43.2 | 44.5 | 32.8 | 51.0 | 171.5 | 40.6 | ||||||||||||
Net realized investment gains (losses) (net of related amortization and taxes) | 3.1 | 2.3 | 17.3 | 14.0 | 36.7 | 14.1 | ||||||||||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | — | — | (12.9 | ) | (0.4 | ) | (13.3 | ) | 4.5 | |||||||||
Loss on extinguishment of debt, net of income taxes | (0.9 | ) | (0.4 | ) | (0.7 | ) | (0.2 | ) | (2.2 | ) | (0.1 | ) | ||||||
Net income before valuation allowance for deferred tax assets | 45.4 | 46.4 | 36.5 | 64.4 | 192.7 | 59.1 | ||||||||||||
Valuation allowance for deferred tax assets | — | — | 143.0 | — | 143.0 | — | ||||||||||||
Net income | $ | 45.4 | $ | 46.4 | $ | 179.5 | $ | 64.4 | $ | 335.7 | $ | 59.1 | ||||||
Per diluted share: | ||||||||||||||||||
Net operating income | $ | .15 | $ | .15 | $ | .12 | $ | .18 | $ | .61 | $ | .15 | ||||||
Net realized investment gains (losses), net of related amortization and taxes | .01 | .01 | .06 | .05 | .12 | .05 | ||||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization and taxes | — | — | (.04 | ) | — | (.04 | ) | .01 | ||||||||||
Loss on extinguishment of debt | — | — | — | — | (.01 | ) | — | |||||||||||
Valuation allowance for deferred tax assets | — | — | .47 | — | .47 | — | ||||||||||||
Diluted earnings per share | $ | .16 | $ | .16 | $ | .61 | $ | .23 | $ | 1.15 | $ | .21 | ||||||
Page 5
CNO Financial Group, Inc. | ||||||||||||
Computation of weighted average shares outstanding | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||
(000s) | ||||||||||||
Basic | ||||||||||||
Shares outstanding, beginning of period | 251,084.2 | 251,404.9 | 249,415.2 | 243,247.3 | 251,084.2 | 241,304.5 | ||||||
Weighted average shares issued during the period: | ||||||||||||
Shares repurchased | — | (590.3 | ) | (2,511.6 | ) | (720.5 | ) | (3,700.7 | ) | (470.7 | ) | |
Shares issued under stock option and restricted stock plans | 52.6 | 118.5 | 61.8 | 268.6 | 694.4 | 83.5 | ||||||
Shares withheld for the payment of taxes on the vesting of restricted stock | (16.3 | ) | — | (0.3 | ) | (6.2 | ) | (125.9 | ) | (22.2 | ) | |
Weighted average basic shares outstanding during the period | 251,120.5 | 250,933.1 | 246,965.1 | 242,789.2 | 247,952.0 | 240,895.1 | ||||||
Basic shares outstanding, end of period | 251,404.9 | 249,415.2 | 243,247.3 | 241,304.5 | 241,304.5 | 239,219.4 | ||||||
Diluted | ||||||||||||
Weighted average basic shares outstanding | 251,120.5 | 250,933.1 | 246,965.1 | 242,789.2 | 247,952.0 | 240,895.1 | ||||||
Common stock equivalent shares related to: | ||||||||||||
Convertible debentures | 53,366.9 | 53,366.9 | 53,366.9 | 53,366.9 | 53,366.9 | 53,366.9 | ||||||
Stock option and restricted stock plans | 2,748.3 | 3,035.8 | 2,352.9 | 1,914.6 | 2,512.9 | 2,582.2 | ||||||
Warrants | 262.4 | 712.4 | 22.9 | — | 249.4 | 498.6 | ||||||
Weighted average diluted shares outstanding during the period | 307,498.1 | 308,048.2 | 302,707.8 | 298,070.7 | 304,081.2 | 297,342.8 | ||||||
Diluted shares outstanding, end of period | 307,782.4 | 306,530.3 | 298,990.0 | 296,586.0 | 296,586.0 | 295,667.1 | ||||||
Page 6
EBIT from Business Segments Summarized by In-Force and New Business (6) | ||||||||||||||||||
(in millions) | ||||||||||||||||||
CNO Financial Group, Inc. | ||||||||||||||||||
EBIT from In-force Business | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 584.0 | $ | 594.3 | $ | 585.3 | $ | 583.6 | $ | 2,347.2 | $ | 597.0 | ||||||
Net investment income (loss) | 349.8 | 331.7 | 283.8 | 338.7 | 1,304.0 | 375.9 | ||||||||||||
Fee revenue and other income | 1.9 | 2.4 | 2.7 | 3.1 | 10.1 | 1.9 | ||||||||||||
Total revenues | 935.7 | 928.4 | 871.8 | 925.4 | 3,661.3 | 974.8 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 624.8 | 626.3 | 569.4 | 609.1 | 2,429.6 | 635.3 | ||||||||||||
Interest expense | 6.1 | 6.1 | 6.7 | 6.9 | 25.8 | 7.2 | ||||||||||||
Amortization | 85.3 | 61.9 | 55.5 | 63.4 | 266.1 | 73.1 | ||||||||||||
Other operating costs and expenses | 90.1 | 95.5 | 91.8 | 101.4 | 378.8 | 130.3 | ||||||||||||
Total benefits and expenses | 806.3 | 789.8 | 723.4 | 780.8 | 3,100.3 | 845.9 | ||||||||||||
EBIT from In-Force Business | $ | 129.4 | $ | 138.6 | $ | 148.4 | $ | 144.6 | $ | 561.0 | $ | 128.9 | ||||||
EBIT from New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 83.2 | $ | 85.3 | $ | 88.2 | $ | 86.6 | $ | 343.3 | $ | 89.3 | ||||||
Net investment income (loss) | 11.1 | 9.1 | 6.2 | 10.6 | 37.0 | 11.7 | ||||||||||||
Fee revenue and other income | .9 | 1.3 | 1.5 | 1.9 | 5.6 | 1.4 | ||||||||||||
Total revenues | 95.2 | 95.7 | 95.9 | 99.1 | 385.9 | 102.4 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 58.4 | 58.1 | 57.7 | 60.8 | 235.0 | 65.3 | ||||||||||||
Interest expense | — | — | — | — | — | — | ||||||||||||
Amortization | 9.2 | 9.3 | 13.3 | 8.1 | 39.9 | 7.7 | ||||||||||||
Other operating costs and expenses | 68.8 | 67.4 | 71.2 | 67.0 | 274.4 | 75.2 | ||||||||||||
Total benefits and expenses | 136.4 | 134.8 | 142.2 | 135.9 | 549.3 | 148.2 | ||||||||||||
EBIT from New Business | $ | (41.2 | ) | $ | (39.1 | ) | $ | (46.3 | ) | $ | (36.8 | ) | $ | (163.4 | ) | $ | (45.8 | ) |
EBIT from In-Force and New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 667.2 | $ | 679.6 | $ | 673.5 | $ | 670.2 | $ | 2,690.5 | $ | 686.3 | ||||||
Net investment income (loss) | 360.9 | 340.8 | 290.0 | 349.3 | 1,341.0 | 387.6 | ||||||||||||
Fee revenue and other income | 2.8 | 3.7 | 4.2 | 5.0 | 15.7 | 3.3 | ||||||||||||
Total revenues | 1,030.9 | 1,024.1 | 967.7 | 1,024.5 | 4,047.2 | 1,077.2 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 683.2 | 684.4 | 627.1 | 669.9 | 2,664.6 | 700.6 | ||||||||||||
Interest expense | 6.1 | 6.1 | 6.7 | 6.9 | 25.8 | 7.2 | ||||||||||||
Amortization | 94.5 | 71.2 | 68.8 | 71.5 | 306.0 | 80.8 | ||||||||||||
Other operating costs and expenses | 158.9 | 162.9 | 163.0 | 168.4 | 653.2 | 205.5 | ||||||||||||
Total benefits and expenses | 942.7 | 924.6 | 865.6 | 916.7 | 3,649.6 | 994.1 | ||||||||||||
EBIT from In-Force and New Business | $ | 88.2 | $ | 99.5 | $ | 102.1 | $ | 107.8 | $ | 397.6 | $ | 83.1 | ||||||
Page 7
CNO Financial Group, Inc. | ||||||||||||||||||
Bankers Life | ||||||||||||||||||
Analysis of income before taxes (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Insurance policy income | $ | 400.0 | $ | 409.6 | $ | 404.6 | $ | 398.2 | $ | 1,612.4 | $ | 406.5 | ||||||
Net investment income (loss): | ||||||||||||||||||
General account invested assets | 191.3 | 196.5 | 194.3 | 198.2 | 780.3 | 200.3 | ||||||||||||
Fixed index products | 18.3 | 0.4 | (36.3 | ) | 3.6 | (14.0 | ) | 34.6 | ||||||||||
Net realized investment gains (losses) | 6.6 | (1.8 | ) | 26.5 | 16.6 | 47.9 | 10.6 | |||||||||||
Fee revenue and other income | 2.3 | 3.3 | 3.6 | 4.6 | 13.8 | 2.9 | ||||||||||||
Total revenues | 618.5 | 608.0 | 592.7 | 621.2 | 2,440.4 | 654.9 | ||||||||||||
Insurance policy benefits | 337.6 | 351.3 | 333.6 | 339.2 | 1,361.7 | 335.2 | ||||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | — | — | 30.7 | 0.5 | 31.2 | (11.0 | ) | |||||||||||
Amounts added to policyholder account balances: | ||||||||||||||||||
Annuity products and interest-sensitive life products other than fixed index products | 40.8 | 40.5 | 40.0 | 39.9 | 161.2 | 38.5 | ||||||||||||
Fixed index products | 26.4 | 17.1 | (13.0 | ) | 16.7 | 47.2 | 47.2 | |||||||||||
Amortization related to operations | 68.5 | 46.9 | 44.1 | 46.8 | 206.3 | 56.9 | ||||||||||||
Amortization related to net realized investment gains (losses) | 0.8 | (0.3 | ) | 3.0 | 1.7 | 5.2 | 0.9 | |||||||||||
Amortization related to fair value changes in embedded derivative liabilities | — | — | (11.5 | ) | 0.1 | (11.4 | ) | 4.2 | ||||||||||
Interest expense on investment borrowings | 1.2 | 1.1 | 1.2 | 1.3 | 4.8 | 1.4 | ||||||||||||
Other operating costs and expenses | 75.2 | 80.8 | 80.9 | 83.5 | 320.4 | 94.6 | ||||||||||||
Total benefits and expenses | 550.5 | 537.4 | 509.0 | 529.7 | 2,126.6 | 567.9 | ||||||||||||
Income before income taxes | $ | 68.0 | $ | 70.6 | $ | 83.7 | $ | 91.5 | $ | 313.8 | $ | 87.0 | ||||||
Health underwriting margins (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Medicare supplement: | ||||||||||||||||||
Earned premium | $ | 181.0 | $ | 179.5 | $ | 179.2 | $ | 178.6 | $ | 718.3 | $ | 182.7 | ||||||
Benefit ratio | 67.2 | % | 69.8 | % | 68.4 | % | 70.5 | % | 69.0 | % | 64.5 | % | ||||||
Underwriting margin (earned premium less policy benefits) | $ | 59.3 | $ | 54.2 | $ | 56.7 | $ | 52.7 | $ | 222.9 | $ | 64.9 | ||||||
PDP: | ||||||||||||||||||
Earned premium | $ | 14.4 | $ | 16.7 | $ | 12.9 | $ | 10.5 | $ | 54.5 | $ | 10.8 | ||||||
Benefit ratio | 89.5 | % | 88.6 | % | 76.1 | % | 72.6 | % | 82.8 | % | 85.9 | % | ||||||
Underwriting margin (earned premium less policy benefits) | $ | 1.5 | $ | 1.9 | $ | 3.1 | $ | 2.9 | $ | 9.4 | $ | 1.6 | ||||||
PFFS: | ||||||||||||||||||
Earned premium | $ | — | $ | 3.6 | $ | — | $ | — | $ | 3.6 | $ | — | ||||||
Benefit ratio | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||
Underwriting margin (earned premium less policy benefits) | $ | 0.7 | $ | 3.7 | $ | 0.5 | $ | 0.3 | $ | 5.2 | $ | — | ||||||
Long-term care: | ||||||||||||||||||
Earned premium | $ | 144.4 | $ | 143.4 | $ | 142.0 | $ | 141.1 | $ | 570.9 | $ | 140.6 | ||||||
Benefit ratio before interest income on reserves | 113.4 | % | 115.0 | % | 109.7 | % | 112.1 | % | 112.6 | % | 110.9 | % | ||||||
Interest-adjusted benefit ratio | 70.8 | % | 71.6 | % | 65.5 | % | 67.3 | % | 68.8 | % | 65.5 | % | ||||||
Underwriting margin (earned premium plus interest income on reserves less policy benefits) | $ | 42.2 | $ | 40.7 | $ | 49.1 | $ | 46.1 | $ | 178.1 | $ | 48.5 | ||||||
Page 8
CNO Financial Group, Inc. | ||||||||||||||||||
Bankers Life | ||||||||||||||||||
Average liabilities for insurance products (in millions) (continued) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Annuities: | ||||||||||||||||||
Mortality based | $ | 245.9 | $ | 243.1 | $ | 240.0 | $ | 236.7 | $ | 241.4 | $ | 233.8 | ||||||
Fixed index | 2,147.7 | 2,268.3 | 2,412.9 | 2,573.0 | 2,350.5 | 2,707.4 | ||||||||||||
Deposit based | 4,832.4 | 4,793.2 | 4,750.5 | 4,699.6 | 4,768.9 | 4,644.9 | ||||||||||||
Medicare supplement and other supplemental health | 4,489.6 | 4,529.9 | 4,564.0 | 4,606.8 | 4,547.6 | 4,634.5 | ||||||||||||
Life: | ||||||||||||||||||
Interest sensitive | 420.5 | 425.2 | 431.8 | 437.1 | 428.6 | 441.4 | ||||||||||||
Non-interest sensitive | 397.8 | 416.8 | 437.7 | 460.5 | 428.2 | 483.0 | ||||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 12,533.9 | $ | 12,676.5 | $ | 12,836.9 | $ | 13,013.7 | $ | 12,765.2 | $ | 13,145.0 | ||||||
Present value of future profits (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 467.2 | $ | 442.7 | $ | 422.0 | $ | 208.9 | $ | 467.2 | $ | 201.8 | ||||||
Amortization related to operations | (24.6 | ) | (16.9 | ) | (14.3 | ) | (14.2 | ) | (70.0 | ) | (18.7 | ) | ||||||
Amortization related to net realized investment (gains) losses | (0.1 | ) | 0.1 | (0.2 | ) | (0.2 | ) | (0.4 | ) | (0.1 | ) | |||||||
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | 0.2 | (3.9 | ) | (198.6 | ) | 7.3 | (195.0 | ) | 6.8 | |||||||||
Balance, end of period | $ | 442.7 | $ | 422.0 | $ | 208.9 | $ | 201.8 | $ | 201.8 | $ | 189.8 | ||||||
Deferred acquisition costs (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 662.3 | $ | 657.7 | $ | 648.2 | $ | 527.1 | $ | 662.3 | $ | 491.0 | ||||||
Deferred acquisition expenses | 40.4 | 40.2 | 45.8 | 39.9 | 166.3 | 34.3 | ||||||||||||
Amortization related to operations | (43.9 | ) | (30.0 | ) | (29.8 | ) | (32.6 | ) | (136.3 | ) | (38.2 | ) | ||||||
Amortization related to net realized investment (gains) losses | (0.7 | ) | 0.2 | (2.8 | ) | (1.5 | ) | (4.8 | ) | (0.8 | ) | |||||||
Amortization related to fair value changes in embedded derivative liabilities | — | — | 11.5 | (0.1 | ) | 11.4 | (4.2 | ) | ||||||||||
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | (0.4 | ) | (19.9 | ) | (145.8 | ) | (41.8 | ) | (207.9 | ) | 4.4 | |||||||
Balance, end of period | $ | 657.7 | $ | 648.2 | $ | 527.1 | $ | 491.0 | $ | 491.0 | $ | 486.5 | ||||||
Page 9
Bankers Life Segment EBIT Summarized by In-Force and New Business (6) | ||||||||||||||||||
(in millions) | ||||||||||||||||||
CNO Financial Group, Inc. | ||||||||||||||||||
EBIT from In-force Business | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 338.8 | $ | 346.3 | $ | 339.0 | $ | 334.8 | $ | 1,358.9 | $ | 341.8 | ||||||
Net investment income (loss) | 198.5 | 187.8 | 151.8 | 191.2 | 729.3 | 223.2 | ||||||||||||
Fee revenue and other income | 1.4 | 2.0 | 2.1 | 2.7 | 8.2 | 1.5 | ||||||||||||
Total revenues | 538.7 | 536.1 | 492.9 | 528.7 | 2,096.4 | 566.5 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 356.9 | 361.3 | 313.7 | 346.1 | 1,378.0 | 367.4 | ||||||||||||
Interest expense | 1.2 | 1.1 | 1.2 | 1.3 | 4.8 | 1.4 | ||||||||||||
Amortization | 60.1 | 38.5 | 31.6 | 39.7 | 169.9 | 50.0 | ||||||||||||
Other operating costs and expenses | 33.8 | 36.6 | 34.8 | 38.9 | 144.1 | 50.6 | ||||||||||||
Total benefits and expenses | 452.0 | 437.5 | 381.3 | 426.0 | 1,696.8 | 469.4 | ||||||||||||
EBIT from In-Force Business | $ | 86.7 | $ | 98.6 | $ | 111.6 | $ | 102.7 | $ | 399.6 | $ | 97.1 | ||||||
EBIT from New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 61.2 | $ | 63.3 | $ | 65.6 | $ | 63.4 | $ | 253.5 | $ | 64.7 | ||||||
Net investment income (loss) | 11.1 | 9.1 | 6.2 | 10.6 | 37.0 | 11.7 | ||||||||||||
Fee revenue and other income | 0.9 | 1.3 | 1.5 | 1.9 | 5.6 | 1.4 | ||||||||||||
Total revenues | 73.2 | 73.7 | 73.3 | 75.9 | 296.1 | 77.8 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 47.9 | 47.6 | 46.9 | 49.7 | 192.1 | 53.5 | ||||||||||||
Interest expense | — | — | — | — | — | — | ||||||||||||
Amortization | 8.4 | 8.4 | 12.5 | 7.1 | 36.4 | 6.9 | ||||||||||||
Other operating costs and expenses | 41.4 | 44.2 | 46.1 | 44.6 | 176.3 | 44.0 | ||||||||||||
Total benefits and expenses | 97.7 | 100.2 | 105.5 | 101.4 | 404.8 | 104.4 | ||||||||||||
EBIT from New Business | $ | (24.5 | ) | $ | (26.5 | ) | $ | (32.2 | ) | $ | (25.5 | ) | $ | (108.7 | ) | $ | (26.6 | ) |
EBIT from In-Force and New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 400.0 | $ | 409.6 | $ | 404.6 | $ | 398.2 | $ | 1,612.4 | $ | 406.5 | ||||||
Net investment income (loss) | 209.6 | 196.9 | 158.0 | 201.8 | 766.3 | 234.9 | ||||||||||||
Fee revenue and other income | 2.3 | 3.3 | 3.6 | 4.6 | 13.8 | 2.9 | ||||||||||||
Total revenues | 611.9 | 609.8 | 566.2 | 604.6 | 2,392.5 | 644.3 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 404.8 | 408.9 | 360.6 | 395.8 | 1,570.1 | 420.9 | ||||||||||||
Interest expense | 1.2 | 1.1 | 1.2 | 1.3 | 4.8 | 1.4 | ||||||||||||
Amortization | 68.5 | 46.9 | 44.1 | 46.8 | 206.3 | 56.9 | ||||||||||||
Other operating costs and expenses | 75.2 | 80.8 | 80.9 | 83.5 | 320.4 | 94.6 | ||||||||||||
Total benefits and expenses | 549.7 | 537.7 | 486.8 | 527.4 | 2,101.6 | 573.8 | ||||||||||||
EBIT from In-Force and New Business | $ | 62.2 | $ | 72.1 | $ | 79.4 | $ | 77.2 | $ | 290.9 | $ | 70.5 | ||||||
Page 10
CNO Financial Group, Inc. | ||||||||||||||||||
Washington National | ||||||||||||||||||
Analysis of income before taxes (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Insurance policy income | $ | 145.4 | $ | 146.6 | $ | 145.9 | $ | 147.2 | $ | 585.1 | $ | 147.4 | ||||||
Net investment income (loss): | ||||||||||||||||||
General account invested assets | 46.3 | 46.7 | 47.3 | 49.1 | 189.4 | 50.0 | ||||||||||||
Trading account income related to reinsurer accounts | 0.3 | 0.7 | 2.6 | 0.2 | 3.8 | 0.1 | ||||||||||||
Change in value of embedded derivatives related to modified coinsurance agreements | (0.3 | ) | (0.7 | ) | (2.6 | ) | (0.1 | ) | (3.7 | ) | (0.1 | ) | ||||||
Net realized investment gains (losses) | (0.5 | ) | (0.5 | ) | 1.6 | 1.4 | 2.0 | 3.1 | ||||||||||
Fee revenue and other income | 0.3 | 0.2 | 0.4 | 0.1 | 1.0 | 0.2 | ||||||||||||
Total revenues | 191.5 | 193.0 | 195.2 | 197.9 | 777.6 | 200.7 | ||||||||||||
Insurance policy benefits | 112.2 | 118.3 | 119.0 | 115.0 | 464.5 | 115.7 | ||||||||||||
Amortization related to operations | 13.4 | 11.4 | 10.8 | 9.3 | 44.9 | 12.7 | ||||||||||||
Interest expense on investment borrowings | — | — | 0.2 | 0.5 | 0.7 | 0.7 | ||||||||||||
Other operating costs and expenses | 42.1 | 42.0 | 42.4 | 42.9 | 169.4 | 43.8 | ||||||||||||
Total benefits and expenses | 167.7 | 171.7 | 172.4 | 167.7 | 679.5 | 172.9 | ||||||||||||
Income before income taxes | $ | 23.8 | $ | 21.3 | $ | 22.8 | $ | 30.2 | $ | 98.1 | $ | 27.8 | ||||||
Health underwriting margins (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Medicare supplement: | ||||||||||||||||||
Earned premium | $ | 35.5 | $ | 34.9 | $ | 33.5 | $ | 32.6 | $ | 136.5 | $ | 30.8 | ||||||
Benefit ratio | 66.3 | % | 71.1 | % | 69.9 | % | 66.7 | % | 68.5 | % | 65.4 | % | ||||||
Underwriting margin (earned premium less policy benefits) | $ | 12.0 | $ | 10.1 | $ | 10.1 | $ | 10.8 | $ | 43.0 | $ | 10.7 | ||||||
Supplemental health: | ||||||||||||||||||
Earned premium | $ | 104.7 | $ | 106.9 | $ | 107.6 | $ | 110.0 | $ | 429.2 | $ | 111.6 | ||||||
Benefit ratio before interest income on reserves | 78.7 | % | 82.7 | % | 82.4 | % | 76.3 | % | 80.0 | % | 82.4 | % | ||||||
Interest-adjusted benefit ratio | 49.1 | % | 54.1 | % | 53.9 | % | 48.3 | % | 51.3 | % | 55.1 | % | ||||||
Underwriting margin (earned premium plus interest income on reserves less policy benefits) | $ | 53.3 | $ | 49.1 | $ | 49.6 | $ | 56.6 | $ | 208.6 | $ | 50.1 | ||||||
Page 11
CNO Financial Group, Inc. | ||||||||||||||||||
Washington National | ||||||||||||||||||
Average liabilities for insurance products (in millions) (continued) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Medicare supplement and other supplemental health | $ | 2,434.6 | $ | 2,437.1 | $ | 2,436.9 | $ | 2,436.1 | $ | 2,436.2 | $ | 2,429.6 | ||||||
Non-interest sensitive life | 205.2 | 202.2 | 198.7 | 199.6 | 201.4 | 200.4 | ||||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 2,639.8 | $ | 2,639.3 | $ | 2,635.6 | $ | 2,635.7 | $ | 2,637.6 | $ | 2,630.0 | ||||||
Present value of future profits (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 426.9 | $ | 418.5 | $ | 411.5 | $ | 406.0 | $ | 426.9 | $ | 402.0 | ||||||
Amortization related to operations | (8.4 | ) | (7.0 | ) | (5.5 | ) | (4.0 | ) | (24.9 | ) | (7.2 | ) | ||||||
Balance, end of period | $ | 418.5 | $ | 411.5 | $ | 406.0 | $ | 402.0 | $ | 402.0 | $ | 394.8 | ||||||
Deferred acquisition costs (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 126.8 | $ | 130.4 | $ | 135.0 | $ | 138.7 | $ | 126.8 | $ | 142.3 | ||||||
Deferred acquisition expenses | 8.6 | 9.0 | 9.0 | 8.9 | 35.5 | 9.1 | ||||||||||||
Amortization related to operations | (5.0 | ) | (4.4 | ) | (5.3 | ) | (5.3 | ) | (20.0 | ) | (5.5 | ) | ||||||
Balance, end of period | $ | 130.4 | $ | 135.0 | $ | 138.7 | $ | 142.3 | $ | 142.3 | $ | 145.9 | ||||||
Page 12
Washington National Segment EBIT Summarized by In-Force and New Business (6) | ||||||||||||||||||
(in millions) | ||||||||||||||||||
CNO Financial Group, Inc. | ||||||||||||||||||
EBIT from In-force Business | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 131.9 | $ | 133.5 | $ | 132.1 | $ | 133.2 | $ | 530.7 | $ | 133.0 | ||||||
Net investment income (loss) | 46.3 | 46.7 | 47.3 | 49.2 | 189.5 | 50.0 | ||||||||||||
Fee revenue and other income | 0.3 | 0.2 | 0.4 | 0.1 | 1.0 | 0.2 | ||||||||||||
Total revenues | 178.5 | 180.4 | 179.8 | 182.5 | 721.2 | 183.2 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 106.6 | 112.9 | 113.3 | 109.2 | 442.0 | 109.8 | ||||||||||||
Interest expense | — | — | 0.2 | 0.5 | 0.7 | 0.7 | ||||||||||||
Amortization | 12.7 | 10.6 | 10.2 | 8.6 | 42.1 | 12.0 | ||||||||||||
Other operating costs and expenses | 31.9 | 32.1 | 33.7 | 32.1 | 129.8 | 33.3 | ||||||||||||
Total benefits and expenses | 151.2 | 155.6 | 157.4 | 150.4 | 614.6 | 155.8 | ||||||||||||
EBIT from In-Force Business | $ | 27.3 | $ | 24.8 | $ | 22.4 | $ | 32.1 | $ | 106.6 | $ | 27.4 | ||||||
EBIT from New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 13.5 | $ | 13.1 | $ | 13.8 | $ | 14.0 | $ | 54.4 | $ | 14.4 | ||||||
Net investment income (loss) | — | — | — | — | — | — | ||||||||||||
Fee revenue and other income | — | — | — | — | — | — | ||||||||||||
Total revenues | 13.5 | 13.1 | 13.8 | 14.0 | 54.4 | 14.4 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 5.6 | 5.4 | 5.7 | 5.8 | 22.5 | 5.9 | ||||||||||||
Interest expense | — | — | — | — | — | — | ||||||||||||
Amortization | 0.7 | 0.8 | 0.6 | 0.7 | 2.8 | 0.7 | ||||||||||||
Other operating costs and expenses | 10.2 | 9.9 | 8.7 | 10.8 | 39.6 | 10.5 | ||||||||||||
Total benefits and expenses | 16.5 | 16.1 | 15.0 | 17.3 | 64.9 | 17.1 | ||||||||||||
EBIT from New Business | $ | (3.0 | ) | $ | (3.0 | ) | $ | (1.2 | ) | $ | (3.3 | ) | $ | (10.5 | ) | $ | (2.7 | ) |
EBIT from In-Force and New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 145.4 | $ | 146.6 | $ | 145.9 | $ | 147.2 | $ | 585.1 | $ | 147.4 | ||||||
Net investment income (loss) | 46.3 | 46.7 | 47.3 | 49.2 | 189.5 | 50.0 | ||||||||||||
Fee revenue and other income | 0.3 | 0.2 | 0.4 | 0.1 | 1.0 | 0.2 | ||||||||||||
Total revenues | 192.0 | 193.5 | 193.6 | 196.5 | 775.6 | 197.6 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 112.2 | 118.3 | 119.0 | 115.0 | 464.5 | 115.7 | ||||||||||||
Interest expense | — | — | 0.2 | 0.5 | 0.7 | 0.7 | ||||||||||||
Amortization | 13.4 | 11.4 | 10.8 | 9.3 | 44.9 | 12.7 | ||||||||||||
Other operating costs and expenses | 42.1 | 42.0 | 42.4 | 42.9 | 169.4 | 43.8 | ||||||||||||
Total benefits and expenses | 167.7 | 171.7 | 172.4 | 167.7 | 679.5 | 172.9 | ||||||||||||
EBIT from In-Force and New Business | $ | 24.3 | $ | 21.8 | $ | 21.2 | $ | 28.8 | $ | 96.1 | $ | 24.7 | ||||||
Page 13
CNO Financial Group, Inc. | ||||||||||||||||||
Colonial Penn | ||||||||||||||||||
Analysis of income (loss) before taxes (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Insurance policy income | $ | 50.3 | $ | 50.9 | $ | 50.8 | $ | 51.0 | $ | 203.0 | $ | 53.4 | ||||||
Net investment income on general account invested assets | 10.3 | 10.5 | 10.1 | 10.2 | 41.1 | 10.0 | ||||||||||||
Net realized investment gains | 1.1 | 0.2 | 3.5 | 1.0 | 5.8 | 2.6 | ||||||||||||
Fee revenue and other income | 0.2 | 0.2 | 0.2 | 0.3 | 0.9 | 0.2 | ||||||||||||
Total revenues | 61.9 | 61.8 | 64.6 | 62.5 | 250.8 | 66.2 | ||||||||||||
Insurance policy benefits | 38.5 | 37.8 | 35.7 | 37.2 | 149.2 | 41.9 | ||||||||||||
Amounts added to annuity and interest-sensitive life product account balances | 0.2 | 0.2 | 0.3 | 0.2 | 0.9 | 0.2 | ||||||||||||
Amortization related to operations | 4.0 | 3.5 | 3.5 | 4.0 | 15.0 | 3.7 | ||||||||||||
Other operating costs and expenses | 23.8 | 19.6 | 22.9 | 18.3 | 84.6 | 27.6 | ||||||||||||
Total benefits and expenses | 66.5 | 61.1 | 62.4 | 59.7 | 249.7 | 73.4 | ||||||||||||
Income (loss) before income taxes | $ | (4.6 | ) | $ | 0.7 | $ | 2.2 | $ | 2.8 | $ | 1.1 | $ | (7.2 | ) | ||||
Average liabilities for insurance products (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Annuities - mortality based | $ | 78.5 | $ | 77.8 | $ | 77.3 | $ | 77.1 | $ | 77.7 | $ | 77.0 | ||||||
Supplemental health | 16.6 | 16.3 | 16.1 | 15.8 | 16.2 | 15.4 | ||||||||||||
Life: | ||||||||||||||||||
Interest sensitive | 20.7 | 20.5 | 20.2 | 20.1 | 20.3 | 19.9 | ||||||||||||
Non-interest sensitive | 586.7 | 588.7 | 590.2 | 593.4 | 589.8 | 598.4 | ||||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 702.5 | $ | 703.3 | $ | 703.8 | $ | 706.4 | $ | 704.0 | $ | 710.7 | ||||||
Present value of future profits (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 81.7 | $ | 79.1 | $ | 76.9 | $ | 74.9 | $ | 81.7 | $ | 72.6 | ||||||
Amortization related to operations | (2.6 | ) | (2.2 | ) | (2.0 | ) | (2.3 | ) | (9.1 | ) | (2.4 | ) | ||||||
Balance, end of period | $ | 79.1 | $ | 76.9 | $ | 74.9 | $ | 72.6 | $ | 72.6 | $ | 70.2 | ||||||
Deferred acquisition costs (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 48.5 | $ | 49.4 | $ | 50.4 | $ | 51.2 | $ | 48.5 | $ | 51.5 | ||||||
Deferred acquisition expenses | 2.3 | 2.3 | 2.3 | 2.0 | 8.9 | 2.4 | ||||||||||||
Amortization related to operations | (1.4 | ) | (1.3 | ) | (1.5 | ) | (1.7 | ) | (5.9 | ) | (1.3 | ) | ||||||
Balance, end of period | $ | 49.4 | $ | 50.4 | $ | 51.2 | $ | 51.5 | $ | 51.5 | $ | 52.6 | ||||||
Page 14
Colonial Penn Segment EBIT Summarized by In-Force and New Business (6) | ||||||||||||||||||
(in millions) | ||||||||||||||||||
CNO Financial Group, Inc. | ||||||||||||||||||
EBIT from In-force Business | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 41.8 | $ | 42.0 | $ | 42.0 | $ | 41.8 | $ | 167.6 | $ | 43.2 | ||||||
Net investment income (loss) | 10.3 | 10.5 | 10.1 | 10.2 | 41.1 | 10.0 | ||||||||||||
Fee revenue and other income | 0.2 | 0.2 | 0.2 | 0.3 | 0.9 | 0.2 | ||||||||||||
Total revenues | 52.3 | 52.7 | 52.3 | 52.3 | 209.6 | 53.4 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 33.8 | 32.9 | 30.9 | 32.1 | 129.7 | 36.2 | ||||||||||||
Amortization | 3.9 | 3.4 | 3.3 | 3.7 | 14.3 | 3.6 | ||||||||||||
Other operating costs and expenses | 6.6 | 6.3 | 6.5 | 6.7 | 26.1 | 6.9 | ||||||||||||
Total benefits and expenses | 44.3 | 42.6 | 40.7 | 42.5 | 170.1 | 46.7 | ||||||||||||
EBIT from In-Force Business | $ | 8.0 | $ | 10.1 | $ | 11.6 | $ | 9.8 | $ | 39.5 | $ | 6.7 | ||||||
EBIT from New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 8.5 | $ | 8.9 | $ | 8.8 | $ | 9.2 | $ | 35.4 | $ | 10.2 | ||||||
Net investment income (loss) | — | — | — | — | — | — | ||||||||||||
Fee revenue and other income | — | — | — | — | — | — | ||||||||||||
Total revenues | 8.5 | 8.9 | 8.8 | 9.2 | 35.4 | 10.2 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 4.9 | 5.1 | 5.1 | 5.3 | 20.4 | 5.9 | ||||||||||||
Amortization | 0.1 | 0.1 | 0.2 | 0.3 | 0.7 | 0.1 | ||||||||||||
Other operating costs and expenses | 17.2 | 13.3 | 16.4 | 11.6 | 58.5 | 20.7 | ||||||||||||
Total benefits and expenses | 22.2 | 18.5 | 21.7 | 17.2 | 79.6 | 26.7 | ||||||||||||
EBIT from New Business | $ | (13.7 | ) | $ | (9.6 | ) | $ | (12.9 | ) | $ | (8.0 | ) | $ | (44.2 | ) | $ | (16.5 | ) |
EBIT from In-Force and New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 50.3 | $ | 50.9 | $ | 50.8 | $ | 51.0 | $ | 203.0 | $ | 53.4 | ||||||
Net investment income (loss) | 10.3 | 10.5 | 10.1 | 10.2 | 41.1 | 10.0 | ||||||||||||
Fee revenue and other income | 0.2 | 0.2 | 0.2 | 0.3 | 0.9 | 0.2 | ||||||||||||
Total revenues | 60.8 | 61.6 | 61.1 | 61.5 | 245.0 | 63.6 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 38.7 | 38.0 | 36.0 | 37.4 | 150.1 | 42.1 | ||||||||||||
Amortization | 4.0 | 3.5 | 3.5 | 4.0 | 15.0 | 3.7 | ||||||||||||
Other operating costs and expenses | 23.8 | 19.6 | 22.9 | 18.3 | 84.6 | 27.6 | ||||||||||||
Total benefits and expenses | 66.5 | 61.1 | 62.4 | 59.7 | 249.7 | 73.4 | ||||||||||||
EBIT from In-Force and New Business | $ | (5.7 | ) | $ | 0.5 | $ | (1.3 | ) | $ | 1.8 | $ | (4.7 | ) | $ | (9.8 | ) | ||
Page 15
CNO Financial Group, Inc. | ||||||||||||||||||
Other CNO Business | ||||||||||||||||||
Analysis of income (loss) before taxes (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Insurance policy income | $ | 71.5 | $ | 72.5 | $ | 72.2 | $ | 73.8 | $ | 290.0 | $ | 79.0 | ||||||
Net investment income (loss): | ||||||||||||||||||
General account invested assets | 88.2 | 87.6 | 85.4 | 85.7 | 346.9 | 84.0 | ||||||||||||
Fixed index products | 5.0 | (0.9 | ) | (8.4 | ) | 0.9 | (3.4 | ) | 6.8 | |||||||||
Trading account income related to policyholder accounts | 1.5 | — | (2.4 | ) | 1.5 | 0.6 | 1.9 | |||||||||||
Net realized investment gains (losses) | (1.0 | ) | 1.1 | 3.0 | 3.0 | 6.1 | 6.7 | |||||||||||
Total revenues | 165.2 | 160.3 | 149.8 | 164.9 | 640.2 | 178.4 | ||||||||||||
Insurance policy benefits | 88.8 | 85.9 | 86.7 | 88.7 | 350.1 | 83.0 | ||||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | — | — | 3.2 | — | 3.2 | (0.6 | ) | |||||||||||
Amounts added to policyholder account balances: | ||||||||||||||||||
Annuity products and interest-sensitive life products other than fixed index products | 31.6 | 30.3 | 28.9 | 29.6 | 120.4 | 29.7 | ||||||||||||
Fixed index products | 7.1 | 3.0 | (4.1 | ) | 3.4 | 9.4 | 9.2 | |||||||||||
Amortization related to operations | 8.6 | 9.4 | 10.4 | 11.4 | 39.8 | 7.5 | ||||||||||||
Amortization related to net realized investment gains (losses) | (0.4 | ) | (0.3 | ) | 0.9 | — | 0.2 | 0.2 | ||||||||||
Amortization related to fair value changes in embedded derivative liabilities | — | — | (2.6 | ) | — | (2.6 | ) | 0.5 | ||||||||||
Interest expense on investment borrowings | 4.9 | 5.0 | 5.3 | 5.1 | 20.3 | 5.1 | ||||||||||||
Other operating costs and expenses | 17.8 | 20.5 | 16.8 | 23.7 | 78.8 | 39.5 | ||||||||||||
Total benefits and expenses | 158.4 | 153.8 | 145.5 | 161.9 | 619.6 | 174.1 | ||||||||||||
Income before income taxes | $ | 6.8 | $ | 6.5 | $ | 4.3 | $ | 3.0 | $ | 20.6 | $ | 4.3 | ||||||
Health underwriting margins (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Long-term care: | ||||||||||||||||||
Earned premium | $ | 7.3 | $ | 7.0 | $ | 6.9 | $ | 6.4 | $ | 27.6 | $ | 6.6 | ||||||
Benefit ratio before interest income on reserves | 235.7 | % | 205.8 | % | 227.5 | % | 237.1 | % | 226.4 | % | 227.4 | % | ||||||
Interest-adjusted benefit ratio | 148.0 | % | 106.4 | % | 126.1 | % | 127.8 | % | 127.3 | % | 122.0 | % | ||||||
Underwriting margin (earned premium plus interest income on reserves less policy benefits) | $ | (3.5 | ) | $ | (0.5 | ) | $ | (1.8 | ) | $ | (1.9 | ) | $ | (7.7 | ) | $ | (1.5 | ) |
Page 16
CNO Financial Group, Inc. | ||||||||||||||||||
Other CNO Business | ||||||||||||||||||
Average liabilities for insurance products (in millions) (continued) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Annuities: | ||||||||||||||||||
Mortality based | $ | 207.8 | $ | 205.9 | $ | 218.9 | $ | 231.9 | $ | 216.1 | $ | 229.1 | ||||||
Fixed index | 652.1 | 632.1 | 607.6 | 577.9 | 617.4 | 553.8 | ||||||||||||
Deposit based | 692.0 | 687.4 | 666.5 | 645.0 | 672.7 | 638.4 | ||||||||||||
Separate accounts | 17.8 | 17.7 | 16.4 | 15.2 | 16.8 | 15.5 | ||||||||||||
Other health | 481.8 | 481.9 | 481.3 | 481.4 | 481.6 | 481.0 | ||||||||||||
Life: | ||||||||||||||||||
Interest sensitive | 2,527.4 | 2,506.1 | 2,484.6 | 2,456.6 | 2,493.7 | 2,416.9 | ||||||||||||
Non-interest sensitive | 805.6 | 790.9 | 780.6 | 774.0 | 787.8 | 766.5 | ||||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 5,384.5 | $ | 5,322.0 | $ | 5,255.9 | $ | 5,182.0 | $ | 5,286.1 | $ | 5,101.2 | ||||||
Present value of future profits (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 32.8 | $ | 29.8 | $ | 26.1 | $ | 24.4 | $ | 32.8 | $ | 21.3 | ||||||
Amortization related to operations | (2.4 | ) | (2.2 | ) | (1.1 | ) | (3.6 | ) | (9.3 | ) | (1.4 | ) | ||||||
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | (0.6 | ) | (1.5 | ) | (0.6 | ) | 0.5 | (2.2 | ) | 0.7 | ||||||||
Balance, end of period | $ | 29.8 | $ | 26.1 | $ | 24.4 | $ | 21.3 | $ | 21.3 | $ | 20.6 | ||||||
Deferred acquisition costs (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Balance, beginning of period | $ | 162.0 | $ | 151.8 | $ | 141.9 | $ | 117.5 | $ | 162.0 | $ | 112.3 | ||||||
Deferred acquisition expenses | 1.9 | 1.9 | 1.2 | 1.0 | 6.0 | 0.4 | ||||||||||||
Amortization related to operations | (6.2 | ) | (7.2 | ) | (9.3 | ) | (7.8 | ) | (30.5 | ) | (6.1 | ) | ||||||
Amortization related to net realized investment (gains) losses | 0.4 | 0.3 | (0.9 | ) | — | (0.2 | ) | (0.2 | ) | |||||||||
Amortization related to fair value changes in embedded derivative liabilities | — | — | 2.6 | — | 2.6 | (0.5 | ) | |||||||||||
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale | (6.3 | ) | (4.9 | ) | (18.0 | ) | 1.6 | (27.6 | ) | (0.5 | ) | |||||||
Balance, end of period | $ | 151.8 | $ | 141.9 | $ | 117.5 | $ | 112.3 | $ | 112.3 | $ | 105.4 | ||||||
Page 17
Other CNO Business Segment EBIT Summarized by In-Force and New Business (6) | ||||||||||||||||||
(in millions) | ||||||||||||||||||
CNO Financial Group, Inc. | ||||||||||||||||||
EBIT from In-force Business | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 71.5 | $ | 72.5 | $ | 72.2 | $ | 73.8 | $ | 290.0 | $ | 79.0 | ||||||
Net investment income (loss) | 94.7 | 86.7 | 74.6 | 88.1 | 344.1 | 92.7 | ||||||||||||
Fee revenue and other income | — | — | — | — | — | — | ||||||||||||
Total revenues | 166.2 | 159.2 | 146.8 | 161.9 | 634.1 | 171.7 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 127.5 | 119.2 | 111.5 | 121.7 | 479.9 | 121.9 | ||||||||||||
Interest expense | 4.9 | 5.0 | 5.3 | 5.1 | 20.3 | 5.1 | ||||||||||||
Amortization | 8.6 | 9.4 | 10.4 | 11.4 | 39.8 | 7.5 | ||||||||||||
Other operating costs and expenses | 17.8 | 20.5 | 16.8 | 23.7 | 78.8 | 39.5 | ||||||||||||
Total benefits and expenses | 158.8 | 154.1 | 144.0 | 161.9 | 618.8 | 174.0 | ||||||||||||
EBIT from In-Force Business | $ | 7.4 | $ | 5.1 | $ | 2.8 | $ | — | $ | 15.3 | $ | (2.3 | ) | |||||
EBIT from New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Net investment income (loss) | — | — | — | — | — | — | ||||||||||||
Fee revenue and other income | — | — | — | — | — | — | ||||||||||||
Total revenues | — | — | — | — | — | — | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | — | — | — | — | — | — | ||||||||||||
Interest expense | — | — | — | — | — | — | ||||||||||||
Amortization | — | — | — | — | — | — | ||||||||||||
Other operating costs and expenses | — | — | — | — | — | — | ||||||||||||
Total benefits and expenses | — | — | — | — | — | — | ||||||||||||
EBIT from New Business | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
EBIT from In-Force and New Business | ||||||||||||||||||
Revenues | ||||||||||||||||||
Insurance policy income | $ | 71.5 | $ | 72.5 | $ | 72.2 | $ | 73.8 | $ | 290.0 | $ | 79.0 | ||||||
Net investment income (loss) | 94.7 | 86.7 | 74.6 | 88.1 | 344.1 | 92.7 | ||||||||||||
Fee revenue and other income | — | — | — | — | — | — | ||||||||||||
Total revenues | 166.2 | 159.2 | 146.8 | 161.9 | 634.1 | 171.7 | ||||||||||||
Benefits and expenses | ||||||||||||||||||
Insurance policy benefits | 127.5 | 119.2 | 111.5 | 121.7 | 479.9 | 121.9 | ||||||||||||
Interest expense | 4.9 | 5.0 | 5.3 | 5.1 | 20.3 | 5.1 | ||||||||||||
Amortization | 8.6 | 9.4 | 10.4 | 11.4 | 39.8 | 7.5 | ||||||||||||
Other operating costs and expenses | 17.8 | 20.5 | 16.8 | 23.7 | 78.8 | 39.5 | ||||||||||||
Total benefits and expenses | 158.8 | 154.1 | 144.0 | 161.9 | 618.8 | 174.0 | ||||||||||||
EBIT from In-Force and New Business | $ | 7.4 | $ | 5.1 | $ | 2.8 | $ | — | $ | 15.3 | $ | (2.3 | ) | |||||
Page 18
CNO Financial Group, Inc. | ||||||||||||||||||
Corporate Operations | ||||||||||||||||||
Analysis of loss before taxes (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Net investment income (loss): | ||||||||||||||||||
General account invested assets | $ | — | $ | 0.9 | $ | 1.1 | $ | 1.0 | $ | 3.0 | $ | 0.9 | ||||||
Other special-purpose portfolios | 8.2 | (0.1 | ) | (13.7 | ) | (3.1 | ) | (8.7 | ) | 16.2 | ||||||||
Fee revenue and other income | 0.4 | 0.2 | 0.3 | 0.4 | 1.3 | 0.4 | ||||||||||||
Net operating results of variable interest entities | 2.0 | 0.2 | 3.8 | 1.5 | 7.5 | 2.2 | ||||||||||||
Interest expense on investment borrowings | — | — | (0.1 | ) | (0.1 | ) | (0.2 | ) | (0.1 | ) | ||||||||
Other operating costs and expenses | (11.1 | ) | (12.5 | ) | (18.9 | ) | (8.1 | ) | (50.6 | ) | (21.4 | ) | ||||||
Corporate operations, excluding corporate interest expense | (0.5 | ) | (11.3 | ) | (27.5 | ) | (8.4 | ) | (47.7 | ) | (1.8 | ) | ||||||
Interest expense on corporate debt | (20.6 | ) | (19.3 | ) | (18.7 | ) | (17.7 | ) | (76.3 | ) | (17.5 | ) | ||||||
Loss before income taxes | $ | (21.1 | ) | $ | (30.6 | ) | $ | (46.2 | ) | $ | (26.1 | ) | $ | (124.0 | ) | $ | (19.3 | ) |
Page 19
CNO Financial Group, Inc. | ||||||||||||||||||
Bankers Life | ||||||||||||||||||
Premiums collected on insurance products (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Annuities | ||||||||||||||||||
Fixed index (first-year) | $ | 148.2 | $ | 163.9 | $ | 208.0 | $ | 188.3 | $ | 708.4 | $ | 134.9 | ||||||
Other fixed rate (first-year) | 73.1 | 94.1 | 55.1 | 50.6 | 272.9 | 47.8 | ||||||||||||
Other fixed rate (renewal) | 0.9 | 1.1 | 1.0 | 1.2 | 4.2 | 2.0 | ||||||||||||
Subtotal - other fixed rate annuities | 74.0 | 95.2 | 56.1 | 51.8 | 277.1 | 49.8 | ||||||||||||
Total annuities | 222.2 | 259.1 | 264.1 | 240.1 | 985.5 | 184.7 | ||||||||||||
Health | ||||||||||||||||||
Medicare supplement (first-year) | 25.1 | 24.7 | 24.5 | 27.0 | 101.3 | 23.8 | ||||||||||||
Medicare supplement (renewal) | 153.7 | 144.3 | 146.8 | 155.1 | 599.9 | 151.1 | ||||||||||||
Subtotal - Medicare supplement | 178.8 | 169.0 | 171.3 | 182.1 | 701.2 | 174.9 | ||||||||||||
Long-term care (first-year) | 6.1 | 6.0 | 5.9 | 5.5 | 23.5 | 5.5 | ||||||||||||
Long-term care (renewal) | 138.8 | 136.9 | 131.9 | 130.8 | 538.4 | 131.2 | ||||||||||||
Subtotal - long-term care | 144.9 | 142.9 | 137.8 | 136.3 | 561.9 | 136.7 | ||||||||||||
PDP and PFFS (first-year) | 0.4 | 0.2 | 0.6 | 0.6 | 1.8 | 0.3 | ||||||||||||
PDP and PFFS (renewal) | 10.6 | 14.4 | 15.6 | 14.1 | 54.7 | 15.0 | ||||||||||||
Subtotal - PDP and PFFS | 11.0 | 14.6 | 16.2 | 14.7 | 56.5 | 15.3 | ||||||||||||
Other health (first-year) | 0.4 | 0.3 | 0.4 | 0.5 | 1.6 | 0.4 | ||||||||||||
Other health (renewal) | 2.5 | 2.3 | 2.3 | 2.3 | 9.4 | 2.2 | ||||||||||||
Subtotal - other health | 2.9 | 2.6 | 2.7 | 2.8 | 11.0 | 2.6 | ||||||||||||
Total health | 337.6 | 329.1 | 328.0 | 335.9 | 1,330.6 | 329.5 | ||||||||||||
Life insurance | ||||||||||||||||||
First-year | 24.7 | 29.4 | 30.9 | 30.8 | 115.8 | 32.8 | ||||||||||||
Renewal | 31.7 | 32.6 | 34.6 | 35.3 | 134.2 | 37.3 | ||||||||||||
Total life insurance | 56.4 | 62.0 | 65.5 | 66.1 | 250.0 | 70.1 | ||||||||||||
Collections on insurance products | ||||||||||||||||||
Total first-year premium collections on insurance products | 278.0 | 318.6 | 325.4 | 303.3 | 1,225.3 | 245.5 | ||||||||||||
Total renewal premium collections on insurance products | 338.2 | 331.6 | 332.2 | 338.8 | 1,340.8 | 338.8 | ||||||||||||
Total collections on insurance products | $ | 616.2 | $ | 650.2 | $ | 657.6 | $ | 642.1 | $ | 2,566.1 | $ | 584.3 | ||||||
Page 20
CNO Financial Group, Inc. | ||||||||||||||||||
Washington National | ||||||||||||||||||
Premiums collected on insurance products (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Health | ||||||||||||||||||
Medicare supplement (first-year) | $ | 0.6 | $ | 0.5 | $ | 0.4 | $ | 0.4 | $ | 1.9 | $ | 0.3 | ||||||
Medicare supplement (renewal) | 34.7 | 32.6 | 31.5 | 31.4 | 130.2 | 27.8 | ||||||||||||
Subtotal - Medicare supplement | 35.3 | 33.1 | 31.9 | 31.8 | 132.1 | 28.1 | ||||||||||||
Supplemental health (first-year) | 13.2 | 13.7 | 13.2 | 14.0 | 54.1 | 14.1 | ||||||||||||
Supplemental health (renewal) | 93.7 | 95.2 | 95.2 | 96.0 | 380.1 | 98.8 | ||||||||||||
Subtotal - supplemental health | 106.9 | 108.9 | 108.4 | 110.0 | 434.2 | 112.9 | ||||||||||||
Other health (all renewal) | 1.0 | 0.8 | 0.9 | 0.8 | 3.5 | 0.7 | ||||||||||||
Total health | 143.2 | 142.8 | 141.2 | 142.6 | 569.8 | 141.7 | ||||||||||||
Life insurance | ||||||||||||||||||
First-year | 0.4 | 0.3 | 0.4 | 0.1 | 1.2 | 0.2 | ||||||||||||
Renewal | 3.9 | 3.6 | 3.7 | 3.6 | 14.8 | 3.8 | ||||||||||||
Total life insurance | 4.3 | 3.9 | 4.1 | 3.7 | 16.0 | 4.0 | ||||||||||||
Collections on insurance products | ||||||||||||||||||
Total first-year premium collections on insurance products | 14.2 | 14.5 | 14.0 | 14.5 | 57.2 | 14.6 | ||||||||||||
Total renewal premium collections on insurance products | 133.3 | 132.2 | 131.3 | 131.8 | 528.6 | 131.1 | ||||||||||||
Total collections on insurance products | $ | 147.5 | $ | 146.7 | $ | 145.3 | $ | 146.3 | $ | 585.8 | $ | 145.7 | ||||||
Page 21
CNO Financial Group, Inc. | ||||||||||||||||||
Colonial Penn | ||||||||||||||||||
Premiums collected on insurance products (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Life insurance | ||||||||||||||||||
First-year | $ | 8.7 | $ | 8.6 | $ | 8.9 | $ | 9.2 | $ | 35.4 | $ | 10.4 | ||||||
Renewal | 40.7 | 39.9 | 40.3 | 40.1 | 161.0 | 42.2 | ||||||||||||
Total life insurance | 49.4 | 48.5 | 49.2 | 49.3 | 196.4 | 52.6 | ||||||||||||
Health (all renewal) | ||||||||||||||||||
Medicare supplement | 1.3 | 1.4 | 1.3 | 1.2 | 5.2 | 1.2 | ||||||||||||
Other health | 0.2 | 0.1 | 0.1 | 0.1 | 0.5 | 0.1 | ||||||||||||
Total health | 1.5 | 1.5 | 1.4 | 1.3 | 5.7 | 1.3 | ||||||||||||
Collections on insurance products | ||||||||||||||||||
Total first-year premium collections on insurance products | 8.7 | 8.6 | 8.9 | 9.2 | 35.4 | 10.4 | ||||||||||||
Total renewal premium collections on insurance products | 42.2 | 41.4 | 41.7 | 41.4 | 166.7 | 43.5 | ||||||||||||
Total collections on insurance products | $ | 50.9 | $ | 50.0 | $ | 50.6 | $ | 50.6 | $ | 202.1 | $ | 53.9 | ||||||
Page 22
CNO Financial Group, Inc. | ||||||||||||||||||
Other CNO Business | ||||||||||||||||||
Premiums collected on insurance products (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Annuities | ||||||||||||||||||
Fixed index (first-year) | $ | 2.7 | $ | 2.7 | $ | 2.2 | $ | 1.9 | $ | 9.5 | $ | — | ||||||
Fixed index (renewal) | 0.9 | 1.4 | 0.8 | 0.8 | 3.9 | 0.7 | ||||||||||||
Subtotal - fixed index annuities | 3.6 | 4.1 | 3.0 | 2.7 | 13.4 | 0.7 | ||||||||||||
Other fixed rate (first-year) | 0.4 | 1.6 | 0.1 | — | 2.1 | — | ||||||||||||
Other fixed rate (renewal) | 0.2 | 0.2 | 0.2 | 0.3 | 0.9 | 0.2 | ||||||||||||
Subtotal - other fixed rate annuities | 0.6 | 1.8 | 0.3 | 0.3 | 3.0 | 0.2 | ||||||||||||
Total annuities | 4.2 | 5.9 | 3.3 | 3.0 | 16.4 | 0.9 | ||||||||||||
Health | ||||||||||||||||||
Long-term care (all renewal) | 7.4 | 7.0 | 6.5 | 6.1 | 27.0 | 6.7 | ||||||||||||
Other health (all renewal) | 0.2 | 0.2 | 0.2 | 0.2 | 0.8 | 0.2 | ||||||||||||
Total health | 7.6 | 7.2 | 6.7 | 6.3 | 27.8 | 6.9 | ||||||||||||
Life insurance | ||||||||||||||||||
First-year | 0.4 | 0.9 | 0.3 | 0.5 | 2.1 | 0.6 | ||||||||||||
Renewal | 46.0 | 48.0 | 43.7 | 39.6 | 177.3 | 44.7 | ||||||||||||
Total life insurance | 46.4 | 48.9 | 44.0 | 40.1 | 179.4 | 45.3 | ||||||||||||
Collections on insurance products | ||||||||||||||||||
Total first-year premium collections on insurance products | 3.5 | 5.2 | 2.6 | 2.4 | 13.7 | 0.6 | ||||||||||||
Total renewal premium collections on insurance products | 54.7 | 56.8 | 51.4 | 47.0 | 209.9 | 52.5 | ||||||||||||
Total collections on insurance products | $ | 58.2 | $ | 62.0 | $ | 54.0 | $ | 49.4 | $ | 223.6 | $ | 53.1 | ||||||
Page 23
CNO Financial Group, Inc. | ||||||||||||||||||
New Annualized Premiums ("NAP") (in millions) | ||||||||||||||||||
Bankers Life | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | ||||||||||||
Medicare supplement | $ | 18.3 | $ | 18.6 | $ | 19.4 | $ | 31.5 | $ | 87.8 | $ | 19.5 | ||||||
Life | 16.6 | 18.6 | 18.2 | 17.0 | 70.4 | 20.3 | ||||||||||||
Long-term care | 6.9 | 7.3 | 7.3 | 7.0 | 28.5 | 7.9 | ||||||||||||
Annuity | 13.4 | 15.6 | 15.9 | 14.3 | 59.2 | 11.1 | ||||||||||||
Subtotal Bankers Life | 55.2 | 60.1 | 60.8 | 69.8 | 245.9 | 58.8 | ||||||||||||
Washington National | ||||||||||||||||||
Supplemental health | 15.7 | 17.9 | 18.6 | 18.9 | 71.1 | 17.6 | ||||||||||||
Medicare supplement | 0.5 | 0.4 | 0.3 | 0.3 | 1.5 | 0.3 | ||||||||||||
Life | 0.8 | 0.8 | 0.9 | 1.8 | 4.3 | 2.0 | ||||||||||||
Annuity | 0.2 | 0.3 | 0.2 | 0.2 | 0.9 | — | ||||||||||||
Subtotal Washington National | 17.2 | 19.4 | 20.0 | 21.2 | 77.8 | 19.9 | ||||||||||||
Colonial Penn | ||||||||||||||||||
Graded Life | 13.6 | 12.8 | 12.7 | 12.3 | 51.4 | 17.5 | ||||||||||||
Total NAP | $ | 86.0 | $ | 92.3 | $ | 93.5 | $ | 103.3 | $ | 375.1 | $ | 96.2 | ||||||
Page 24
CNO Financial Group, Inc. | ||||||||||||||||||
Statutory information - consolidated basis (7) (in millions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 (*) | ||||||||||||
Net gain from operations before interest expense and federal income taxes | $ | 114.0 | $ | 92.9 | $ | 91.9 | $ | 132.8 | $ | 431.6 | $ | 100.4 | ||||||
Interest expense on surplus debentures held by parent company | 12.0 | 12.2 | 22.7 | 12.3 | 59.2 | 12.1 | ||||||||||||
Net gain from operations before federal income taxes | 102.0 | 80.7 | 69.2 | 120.5 | 372.4 | 88.3 | ||||||||||||
Federal income tax expense (benefit) | 0.6 | 2.0 | 3.7 | 3.0 | 9.3 | 1.7 | ||||||||||||
Net gain from operations before net realized capital gains (losses) | 101.4 | 78.7 | 65.5 | 117.5 | 363.1 | 86.6 | ||||||||||||
Net realized capital gains (losses) | (15.0 | ) | 2.4 | 10.5 | 5.8 | 3.7 | 7.8 | |||||||||||
Net income | $ | 86.4 | $ | 81.1 | $ | 76.0 | $ | 123.3 | $ | 366.8 | $ | 94.4 | ||||||
Capital and surplus | $ | 1,567.4 | $ | 1,551.5 | $ | 1,553.1 | $ | 1,578.1 | $ | 1,578.1 | $ | 1,601.9 | ||||||
Asset valuation reserve (AVR) | 97.7 | 116.5 | 143.2 | 168.4 | 168.4 | 191.3 | ||||||||||||
Capital, surplus and AVR | 1,665.1 | 1,668.0 | 1,696.3 | 1,746.5 | 1,746.5 | 1,793.2 | ||||||||||||
Interest maintenance reserve (IMR) | 448.3 | 475.8 | 507.1 | 552.0 | 552.0 | 562.2 | ||||||||||||
Total statutory capital, surplus, AVR & IMR | $ | 2,113.4 | $ | 2,143.8 | $ | 2,203.4 | $ | 2,298.5 | $ | 2,298.5 | $ | 2,355.4 | ||||||
(*) Such amounts are preliminary as the statutory basis financial statements of our insurance subsidiaries for 1Q2012
will be filed with the respective insurance regulators on or about May 14, 2012.
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Notes
(1) Excludes accumulated other comprehensive income (loss).
(2) Shareholders' equity divided by common shares outstanding.
(3) Assumes conversion of all convertible securities.
(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, corporate interest expense, loss on extinguishment 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) loss on extinguishment of debt, net of income taxes; (ii) net realized investment gains or losses, net of related amortization and income taxes; and (iii) 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 income 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. The impact of fair value changes in embedded derivative liabilities caused by interest rate fluctuations was insignificant in prior periods. Prior to June 30, 2011, certain of our trading securities were held to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products. During 2Q2011, these securities were sold.
(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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