EX-99.2 3 exhibit992-09302019inv.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2



cnologosupp.jpg


 
 
 
 
 
 
 
 
 
 
 
 
Quarterly Financial Supplement - 3Q2019
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
November 5, 2019
 
 
 
 
 
 
 
 
 
 
 




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
Analyses of income before taxes and selected data:
 
 
 
 
     Bankers Life
 
 
 
7-9
     Washington National
 
 
 
10-12
     Colonial Penn
 
 
 
13-14
     Long-term care in run-off
 
 
 
15
     Corporate Operations
 
 
 
15
Premiums collected on insurance products:
 
 
 
 
     Bankers Life
 
 
 
16
     Washington National
 
 
 
17
     Colonial Penn
 
 
 
18
     Long-term care in run-off
 
 
 
18
First-Year Collected Premiums and New Annualized Premiums
 
 
 
19
Statutory information
 
 
 
20
Notes
 
 
 
21





Page 2



CNO Financial Group, Inc.
 
 
 
 
 
 
 
Consolidated balance sheet (in millions)
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
  Fixed maturities, available for sale, at fair value
$
22,375.5

$
22,080.9

$
18,512.4

$
18,447.7

$
19,468.4

$
20,437.2

$
21,089.2

  Equity securities at fair value
498.7

366.1

335.5

291.0

40.8

38.8

39.3

  Mortgage loans
1,601.2

1,649.4

1,680.6

1,602.1

1,626.1

1,596.5

1,561.7

  Policy loans
116.0

116.0

117.4

119.7

121.3

121.6

122.8

  Trading securities
289.6

254.2

239.0

233.1

237.9

248.3

247.3

  Investments held by variable interest entities
1,583.9

1,543.3

1,550.5

1,468.4

1,241.4

1,215.2

1,204.2

  Other invested assets
951.1

946.0

920.0

833.4

943.3

1,018.8

1,070.9

  Total investments
27,416.0

26,955.9

23,355.4

22,995.4

23,679.2

24,676.4

25,335.4

Cash and cash equivalents - unrestricted
610.8

639.3

539.2

594.2

621.6

557.4

760.3

Cash and cash equivalents held by variable interest entities
115.6

106.4

56.4

62.4

69.7

50.5

61.7

Accrued investment income
268.1

252.5

224.7

205.2

214.8

211.2

212.7

Present value of future profits
350.4

345.5

351.6

343.6

333.6

299.3

284.0

Deferred acquisition costs
1,083.6

1,237.4

1,291.1

1,322.5

1,289.1

1,253.2

1,138.8

Reinsurance receivables
2,153.5

2,127.4

4,946.3

4,925.4

4,879.7

4,829.4

4,802.4

Income tax assets, net
450.4

484.8

577.8

630.0

479.9

348.3

241.5

Assets held in separate accounts
4.7

4.8

5.1

4.4

4.9

4.9

4.2

Other assets
356.0

318.2

299.6

356.7

741.9

485.4

438.8

Total assets
$
32,809.1

$
32,472.2

$
31,647.2

$
31,439.8

$
32,314.4

$
32,716.0

$
33,279.8

Liabilities
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
  Policyholder account balances
$
11,254.5

$
11,349.7

$
11,449.7

$
11,594.1

$
11,658.2

$
11,758.5

$
11,845.5

  Future policy benefits
11,312.2

11,268.5

11,140.5

11,082.4

11,252.9

11,407.2

11,576.6

  Liability for policy and contract claims
509.1

499.5

513.4

521.9

521.0

517.8

508.9

  Unearned and advanced premiums
270.3

260.5

249.2

253.9

255.9

248.1

242.8

  Liabilities related to separate accounts
4.7

4.8

5.1

4.4

4.9

4.9

4.2

Other liabilities
869.0

654.2

689.5

632.4

804.0

740.2

762.0

Investment borrowings
1,646.5

1,646.3

1,646.1

1,645.8

1,645.5

1,645.2

1,644.8

Borrowings related to variable interest entities
1,410.5

1,418.1

1,417.6

1,417.2

1,416.8

1,153.6

1,153.0

Notes payable - direct corporate obligations
915.1

915.7

916.2

916.8

917.3

988.3

988.7

Total liabilities
28,191.9

28,017.3

28,027.3

28,068.9

28,476.5

28,463.8

28,726.5

Shareholders' equity
 
 
 
 
 
 
 
Common stock
1.6

1.6

1.6

1.6

1.6

1.6

1.5

Additional paid-in capital
3,075.6

3,021.9

3,030.0

2,995.0

2,952.2

2,903.2

2,834.6

Retained earnings
645.7

731.2

184.8

196.6

229.2

249.2

274.3

Total shareholders' equity before accumulated other comprehensive income
3,722.9

3,754.7

3,216.4

3,193.2

3,183.0

3,154.0

3,110.4

Accumulated other comprehensive income
894.3

700.2

403.5

177.7

654.9

1,098.2

1,442.9

Total shareholders' equity
4,617.2

4,454.9

3,619.9

3,370.9

3,837.9

4,252.2

4,553.3

Total liabilities and shareholders' equity
$
32,809.1

$
32,472.2

$
31,647.2

$
31,439.8

$
32,314.4

$
32,716.0

$
33,279.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
 
 
 
 
 
 
 
 
Book value per common share
$
27.59

$
27.09

$
21.99

$
20.78

$
23.99

$
27.12

$
29.92

 
 
 
 
 
 
 
 
Book value per common share, excluding accumulated other comprehensive income (1) (2)
$
22.25

$
22.83

$
19.54

$
19.69

$
19.90

$
20.12

$
20.44

 
 
 
 
 
 
 
 
Book value per diluted share (1) (3)
$
21.94

$
22.62

$
19.28

$
19.52

$
19.76

$
20.00

$
20.30

 
 
 
 
 
 
 
 





Page 3



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Consolidated statement of operations (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Insurance policy income
$
659.9

$
659.8

$
656.9

$
616.5

$
2,593.1

$
619.3

$
618.3

$
620.0

Net investment income:
 
 
 
 
 
 
 
 
   General account assets
329.1

328.2

332.0

290.4

1,279.7

270.6

286.7

275.9

Policyholder and other special-purpose portfolios
12.8

35.7

85.8

(107.8
)
26.5

85.2

47.8

23.6

Realized investment gains (losses):
 
 
 
 
 
 
 
 
Net realized gains on the transfer of assets related to reinsurance transaction
—

—

363.4

—

363.4

—

—

—

Other net realized investment gains (losses), excluding impairment losses
(15.2
)
11.0

33.3

(37.8
)
(8.7
)
18.3

5.3

5.7

Other-than-temporary impairments:
 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses
—

—

(2.1
)
(0.5
)
(2.6
)
(2.2
)
—

(3.4
)
Change in other-than-temporary impairment losses recognized in accumulated other comprehensive income
—

—

—

—

—

—

—

—

Net impairment losses recognized
—

—

(2.1
)
(0.5
)
(2.6
)
(2.2
)
—

(3.4
)
Total realized gains (losses)
(15.2
)
11.0

394.6

(38.3
)
352.1

16.1

5.3

2.3

Fee revenue and other income
21.2

11.6

11.9

17.4

62.1

31.8

21.7

22.2

Total revenues
1,007.8

1,046.3

1,481.2

778.2

4,313.5

1,023.0

979.8

944.0

 
 
 
 
 
 
 
 
 
Benefits and expenses
 
 
 
 
 
 
 
 
Insurance policy benefits
586.6

618.2

646.9

426.9

2,278.6

623.5

610.4

582.8

Loss related to reinsurance transaction
—

—

1,067.6

—

1,067.6

—

—

—

Interest expense
33.6

37.7

38.8

39.7

149.8

41.0

38.6

37.5

Amortization
71.9

61.0

62.4

69.0

264.3

58.2

46.2

51.6

Loss on extinguishment of debt
—

—

—

—

—

—

7.3

—

Loss on extinguishment of borrowings related to variable interest entities
—

3.8

—

—

3.8

—

—

—

Other operating costs and expenses
207.6

195.8

205.3

205.5

814.2

234.7

229.6

218.6

Total benefits and expenses
899.7

916.5

2,021.0

741.1

4,578.3

957.4

932.1

890.5

 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
108.1

129.8

(539.8
)
37.1

(264.8
)
65.6

47.7

53.5

Income tax expense (benefit) on period income (loss)
23.8

27.6

(114.8
)
5.8

(57.6
)
13.8

10.1

11.5

Valuation allowance for deferred tax assets and other tax items
—

—

104.8

3.0

107.8

—

—

—

Net income (loss)
$
84.3

$
102.2

$
(529.8
)
$
28.3

$
(315.0
)
$
51.8

$
37.6

$
42.0

 
 
 
 
 
 
 
 
 







Page 4



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Operating results ($ in millions, except per share amounts)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Adjusted EBIT (4):
 
 
 
 
 
 
 
 
   Bankers Life
$
77.5

$
90.7

$
94.4

$
78.0

$
340.6

$
63.1

$
86.4

$
78.9

   Washington National
34.3

25.4

30.3

31.9

121.9

30.5

25.9

26.8

   Colonial Penn
(1.5
)
5.4

6.1

4.8

14.8

(1.4
)
5.8

3.7

   Long-term care in run-off
12.0

8.5

2.1

0.3

22.9

2.5

3.2

3.6

Adjusted EBIT from business segments
122.3

130.0

132.9

115.0

500.2

94.7

121.3

113.0

Corporate operations, excluding corporate interest expense
(15.5
)
(14.0
)
(11.8
)
(29.7
)
(71.0
)
0.8

(12.0
)
(11.2
)
Adjusted EBIT
106.8

116.0

121.1

85.3

429.2

95.5

109.3

101.8

Corporate interest expense
(11.9
)
(11.9
)
(12.1
)
(12.1
)
(48.0
)
(12.1
)
(12.6
)
(13.9
)
Operating earnings before taxes
94.9

104.1

109.0

73.2

381.2

83.4

96.7

87.9

Tax expense on operating income
21.0

22.2

21.5

13.4

78.1

17.6

20.3

18.7

Net operating income (5)
73.9

81.9

87.5

59.8

303.1

65.8

76.4

69.2

Net realized investment gains (losses) from sales and impairments (net of related amortization)
0.5

10.9

37.0

(10.5
)
37.9

(0.7
)
(1.7
)
(2.6
)
Net change in market value of investments recognized in earnings
(15.7
)
(0.3
)
(5.3
)
(27.5
)
(48.8
)
16.6

6.8

4.7

Fair value changes in embedded derivative liabilities (net of related amortization)
25.1

8.3

22.9

(0.8
)
55.5

(29.6
)
(35.9
)
(29.3
)
Fair value changes related to agent deferred compensation plan
—

11.0

—

0.9

11.9

(5.3
)
(11.6
)
(6.0
)
Loss related to reinsurance transaction
—

—

(704.2
)
—

(704.2
)
—

—

—

Loss on extinguishment of debt
—

—

—

—

—

—

(7.3
)
—

Other
3.3

(4.2
)
0.8

1.8

1.7

1.2

0.7

(1.2
)
Non-operating income (loss) before taxes
13.2

25.7

(648.8
)
(36.1
)
(646.0
)
(17.8
)
(49.0
)
(34.4
)
Income tax expense (benefit):
 
 
 
 

 
 
 
On non-operating income (loss)
2.8

5.4

(136.3
)
(7.6
)
(135.7
)
(3.8
)
(10.2
)
(7.2
)
Valuation allowance for deferred tax assets and other tax items
—

—

104.8

3.0

107.8

—

—

—

Net non-operating income (loss)
10.4

20.3

(617.3
)
(31.5
)
(618.1
)
(14.0
)
(38.8
)
(27.2
)
Net income (loss)
$
84.3

$
102.2

$
(529.8
)
$
28.3

$
(315.0
)
$
51.8

$
37.6

$
42.0

 
 
 
 
 
 
 
 
 
Per diluted share:
 
 
 
 
 
 
 
 
Net operating income
$
.44

$
.49

$
.53

$
.36

$
1.83

$
.41

$
.48

$
.45

Net realized investment gains (losses) from sales and impairments (net of related amortization and taxes)
—

.05

.18

(.05
)
.18

—

(.01
)
(.01
)
Net change in market value of investments recognized in earnings (net of taxes)
(.07
)
—

(.03
)
(.13
)
(.23
)
.08

.04

.02

Fair value changes in embedded derivative liabilities (net of related amortization and taxes)
.12

.04

.11

—

.27

(.15
)
(.18
)
(.15
)
Fair value changes related to agent deferred compensation plan (net of taxes)
—

.05

—

—

.06

(.03
)
(.06
)
(.03
)
Loss related to reinsurance transaction (net of taxes)
—

—

(4.01
)
—

(4.00
)
—

—

—

Loss on extinguishment of debt (net of taxes)
—

—

—

—

—

—

(.03
)
—

Valuation allowance for deferred tax assets and other tax items
—

—

—

(.02
)
(.02
)
—

—

—

Other
.01

(.02
)
—

.01

.01

.01

—

(.01
)
Net income (loss)
$
.50

$
.61

$
(3.22
)
$
.17

$
(1.90
)
$
.32

$
.24

$
.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Page 5




CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Computation of weighted average shares outstanding
1Q18
2Q18
3Q18 (a)
4Q18
2018 (b)
1Q19
2Q19
3Q19
(000s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
Shares outstanding, beginning of period
166,857.9

167,354.3

164,433.1

164,634.4

166,857.9

162,201.7

159,955.2

156,768.0

Weighted average shares issued during the period:
 
 
 
 
 
 
 
 
Shares repurchased
—

(1,300.5
)
—

(549.2
)
(1,961.5
)
(1,485.6
)
(1,238.1
)
(2,585.5
)
Amounts related to employee benefit plans
307.6

66.7

119.7

35.6

813.8

320.9

127.3

76.6

Shares withheld for the payment of the exercise price and taxes related to employee benefit plans
(105.9
)
(22.0
)
(1.4
)
(2.7
)
(253.3
)
(88.7
)
(28.3
)
(2.1
)
Weighted average basic shares outstanding during the period
167,059.6

166,098.5

164,551.4

164,118.1

165,456.9

160,948.3

158,816.1

154,257.0

Basic shares outstanding, end of period
167,354.3

164,433.1

164,634.4

162,201.7

162,201.7

159,955.2

156,768.0

152,183.5

Diluted
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
167,059.6

166,098.5

164,551.4

164,118.1

165,456.9

160,948.3

158,816.1

154,257.0

Common stock equivalent shares related to:
 
 
 
 
 
 
 
 
Employee benefit plans
2,617.8

1,879.5

—

1,771.7

—

1,240.7

918.7

1,002.7

Weighted average diluted shares outstanding during the period
169,677.4

167,978.0

164,551.4

165,889.8

165,456.9

162,189.0

159,734.8

155,259.7

Diluted shares outstanding, end of period
169,705.4

165,971.0

166,823.4

163,593.2

163,593.2

161,123.2

157,662.5

153,242.8

 
 
 
 
 
 
 
 
 

(a) Equivalent common shares of 2,145.7 were not included in the diluted weighted average shares outstanding
due to the net loss recognized in 3Q18.

(b) Equivalent common shares of 2,103.7 were not included in the diluted weighted average shares outstanding
due to the net loss recognized in 2018.











Page 6





CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Bankers Life
 
 
 
 
 
 
 
 
Analysis of income before taxes (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Insurance policy income
$
365.4

$
366.1

$
364.0

$
363.0

$
1,458.5

$
365.2

$
362.5

$
364.1

Net investment income (loss):
 
 
 
 
 
 
 
 
   General account invested assets
196.3

200.7

200.9

206.5

804.4

189.6

204.9

196.0

   Fixed index products
(5.2
)
12.5

56.0

(104.8
)
(41.5
)
41.2

21.9

3.7

Fee revenue and other income
19.6

10.6

10.7

11.0

51.9

25.8

12.7

12.2

   Total revenues
576.1

589.9

631.6

475.7

2,273.3

621.8

602.0

576.0

 
 
 
 
 
 
 
 
 
Insurance policy benefits
302.2

294.3

290.9

287.9

1,175.3

289.6

290.4

292.2

Amounts added to policyholder account balances:
 
 
 
 
 
 
 
 
Cost of interest credited to policyholders
24.9

24.6

24.4

24.2

98.1

23.6

23.6

23.4

Cost of options to fund index credits, net of forfeitures
17.1

20.3

19.4

24.6

81.4

25.3

24.6

25.3

Market value changes credited to policyholders
(4.6
)
11.2

55.8

(105.3
)
(42.9
)
41.8

22.3

3.8

Amortization related to operations
44.4

37.7

37.3

51.9

171.3

46.5

37.2

39.0

Interest expense on investment borrowings
6.1

7.5

7.9

8.2

29.7

8.7

8.6

8.0

Commission expense and distribution fees
22.3

12.7

13.1

12.8

60.9

26.2

14.7

13.4

Other operating costs and expenses
86.2

90.9

88.4

93.4

358.9

97.0

94.2

92.0

   Total benefits and expenses
498.6

499.2

537.2

397.7

1,932.7

558.7

515.6

497.1

Adjusted EBIT (4)
$
77.5

$
90.7

$
94.4

$
78.0

$
340.6

$
63.1

$
86.4

$
78.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Health underwriting margins (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Medicare supplement:
 
 
 
 
 
 
 
 
   Earned premium
$
192.6

$
192.3

$
192.2

$
190.5

$
767.6

$
191.4

$
190.6

$
190.3

   Benefit ratio
73.3
%
73.1
%
75.6
%
76.0
%
74.5
%
72.3
%
74.0
%
74.9
%
Underwriting margin (earned premium less policy benefits)
$
51.4

$
51.7

$
46.9

$
45.8

$
195.8

$
53.1

$
49.6

$
47.8

 
 
 
 
 
 
 
 
 
Long-term care:
 
 
 
 
 
 
 
 
   Earned premium
$
64.2

$
64.0

$
63.7

$
63.8

$
255.7

$
63.7

$
63.5

$
63.7

Benefit ratio before interest income on reserves
116.3
%
119.3
%
122.5
%
117.9
%
119.0
%
120.6
%
122.1
%
123.6
%
   Interest-adjusted benefit ratio
73.9
%
76.3
%
79.0
%
74.7
%
76.0
%
77.2
%
77.5
%
78.7
%
Underwriting margin (earned premium plus interest income on reserves less policy benefits)
$
16.8

$
15.1

$
13.4

$
16.2

$
61.5

$
14.5

$
14.3

$
13.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 7




CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Bankers Life
 
 
 
 
 
 
 
 
Average liabilities for insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Fixed index annuities
$
5,564.6

$
5,693.6

$
5,869.1

$
6,028.3

$
5,788.9

$
6,224.8

$
6,490.2

$
6,746.9

Fixed interest annuities
2,713.7

2,630.3

2,548.5

2,467.7

2,590.1

2,385.1

2,305.2

2,231.2

SPIAs and supplemental contracts:
 
 
 
 
 
 
 
 
Mortality based
152.4

148.3

145.9

144.9

147.9

143.2

140.9

138.1

Deposit based
144.9

144.9

144.3

142.5

144.1

142.2

140.9

140.3

Health:
 
 
 
 
 
 
 
 
Long-term care
1,868.1

1,893.5

1,920.0

1,946.7

1,907.1

1,972.5

1,999.0

2,025.3

Medicare supplement
324.6

311.6

307.1

314.0

314.3

316.5

308.5

303.7

Other health
58.8

59.5

60.2

60.8

59.8

61.2

62.1

63.1

Life:
 
 
 
 
 
 
 
 
   Interest sensitive
808.5

821.7

837.8

848.3

829.1

858.4

873.9

888.0

   Non-interest sensitive
1,134.7

1,151.3

1,168.1

1,185.0

1,159.8

1,201.9

1,216.7

1,230.6

Total average liabilities for insurance products, net of reinsurance ceded
$
12,770.3

$
12,854.7

$
13,001.0

$
13,138.2

$
12,941.1

$
13,305.8

$
13,537.4

$
13,767.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annuities - account value rollforwards (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Fixed index annuities
 
 
 
 
 
 
 
 
Balance as of the beginning of the period
$
5,410.7

$
5,549.6

$
5,740.1

$
5,930.3

$
5,410.7

$
6,176.6

$
6,346.1

$
6,548.0

Gross deposits
235.4

273.9

260.2

342.8

1,112.3

299.8

325.2

310.9

Withdrawals
(138.5
)
(128.5
)
(122.5
)
(136.9
)
(526.4
)
(147.0
)
(145.7
)
(143.7
)
Returns reinvested
42.0

45.1

52.5

40.4

180.0

16.7

22.4

11.4

Balance as of the end of the period
$
5,549.6

$
5,740.1

$
5,930.3

$
6,176.6

$
6,176.6

$
6,346.1

$
6,548.0

$
6,726.6

 
 
 
 
 
 
 
 
 
Fixed interest annuities
 
 
 
 
 
 
 
 
Balance as of the beginning of the period
$
2,752.6

$
2,671.6

$
2,585.8

$
2,507.9

$
2,752.6

$
2,424.1

$
2,342.5

$
2,264.3

Gross deposits
14.2

10.7

9.2

9.3

43.4

13.5

14.3

11.8

Withdrawals
(112.7
)
(113.6
)
(103.8
)
(109.5
)
(439.6
)
(110.7
)
(107.8
)
(96.8
)
Returns reinvested
17.5

17.1

16.7

16.4

67.7

15.6

15.3

15.1

Balance as of the end of the period
$
2,671.6

$
2,585.8

$
2,507.9

$
2,424.1

$
2,424.1

$
2,342.5

$
2,264.3

$
2,194.4

 
 
 
 
 
 
 
 
 
Total annuities
 
 
 
 
 
 
 
 
Balance as of the beginning of the period
$
8,163.3

$
8,221.2

$
8,325.9

$
8,438.2

$
8,163.3

$
8,600.7

$
8,688.6

$
8,812.3

Gross deposits
249.6

284.6

269.4

352.1

1,155.7

313.3

339.5

322.7

Withdrawals
(251.2
)
(242.1
)
(226.3
)
(246.4
)
(966.0
)
(257.7
)
(253.5
)
(240.5
)
Returns reinvested
59.5

62.2

69.2

56.8

247.7

32.3

37.7

26.5

Balance as of the end of the period
$
8,221.2

$
8,325.9

$
8,438.2

$
8,600.7

$
8,600.7

$
8,688.6

$
8,812.3

$
8,921.0

 
 
 
 
 
 
 
 
 


Page 8




CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Bankers Life
 
 
 
 
 
 
 
 
Present value of future profits (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
81.1

$
77.8

$
76.8

$
88.8

$
81.1

$
86.5

$
84.3

$
70.5

Amortization related to operations
(4.7
)
(3.9
)
(3.4
)
(2.2
)
(14.2
)
(4.2
)
(3.2
)
(3.1
)
Amortization related to net realized investment (gains) losses
—

—

—

—

—

—

—

—

Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale
1.4

2.9

15.4

(0.1
)
19.6

2.0

(10.6
)
(7.0
)
Balance, end of period
$
77.8

$
76.8

$
88.8

$
86.5

$
86.5

$
84.3

$
70.5

$
60.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
606.5

$
651.6

$
792.1

$
839.4

$
606.5

$
863.2

$
830.8

$
802.1

Deferred acquisition expenses
40.2

46.2

43.1

55.9

185.4

49.7

54.5

54.2

Amortization related to operations
(39.7
)
(33.8
)
(33.9
)
(49.7
)
(157.1
)
(42.3
)
(34.0
)
(35.9
)
Amortization related to net realized investment (gains) losses
—

(0.4
)
0.4

0.3

0.3

(0.2
)
(0.3
)
(0.2
)
Amortization related to fair value changes in embedded derivative liabilities
(5.3
)
(1.8
)
(4.8
)
0.2

(11.7
)
7.3

9.1

7.6

Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale
49.9

130.3

42.5

17.1

239.8

(46.9
)
(58.0
)
(143.4
)
Balance, end of period
$
651.6

$
792.1

$
839.4

$
863.2

$
863.2

$
830.8

$
802.1

$
684.4

 
 
 
 
 
 
 
 
 





Page 9




CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Washington National
 
 
 
 
 
 
 
 
Analysis of income before taxes (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Insurance policy income
$
171.0

$
171.0

$
170.8

$
174.8

$
687.6

$
173.8

$
174.7

$
174.9

Net investment income (loss):
 
 
 
 
 
 
 
 
   General account invested assets
65.4

63.4

66.9

65.4

261.1

63.6

64.3

63.2

Fixed index products
(0.4
)
0.9

3.0

(5.0
)
(1.5
)
1.6

0.5

—

Trading account income related to policyholder accounts
0.4

(0.2
)
—

—

0.2

—

—

—

Fee revenue and other income
0.2

0.3

0.2

0.2

0.9

0.2

3.3

4.4

   Total revenues
236.6

235.4

240.9

235.4

948.3

239.2

242.8

242.5

 
 
 
 
 
 
 
 
 
Insurance policy benefits
134.1

136.7

136.4

133.7

540.9

134.5

138.4

138.6

Amounts added to policyholder account balances:
 
 
 
 
 
 
 
 
Cost of interest credited to policyholders
3.1

3.2

3.3

3.2

12.8

3.3

3.2

3.1

Cost of options to fund index credits, net of forfeitures
0.9

1.3

1.1

1.3

4.6

1.3

1.0

1.0

Market value changes credited to policyholders
(0.4
)
1.3

2.7

(5.4
)
(1.8
)
1.8

0.7

(0.1
)
Amortization related to operations
14.5

14.4

14.0

12.9

55.8

14.8

14.9

14.9

Interest expense on investment borrowings
2.1

2.7

3.0

3.0

10.8

3.3

3.3

3.0

Commission expense
17.8

18.7

18.3

19.1

73.9

21.1

21.5

20.6

Other operating costs and expenses
30.2

31.7

31.8

35.7

129.4

28.6

33.9

34.6

   Total benefits and expenses
202.3

210.0

210.6

203.5

826.4

208.7

216.9

215.7

Adjusted EBIT (4)
$
34.3

$
25.4

$
30.3

$
31.9

$
121.9

$
30.5

$
25.9

$
26.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Health underwriting margins (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Supplemental health and other:
 
 
 
 
 
 
 
 
Earned premium
$
151.3

$
151.8

$
152.2

$
156.0

$
611.3

$
155.6

$
156.7

$
157.6

Benefit ratio before interest income on reserves
78.3
%
80.7
%
81.3
%
77.7
%
79.5
%
77.6
%
80.2
%
79.5
%
Interest-adjusted benefit ratio
54.4
%
56.6
%
56.9
%
53.8
%
55.4
%
53.4
%
56.2
%
55.4
%
Underwriting margin (earned premium plus interest income on reserves less policy benefits)
$
69.0

$
65.8

$
65.6

$
72.1

$
272.5

$
72.4

$
68.7

$
70.4

 
 
 
 
 
 
 
 
 
Medicare supplement:
 
 
 
 
 
 
 
 
Earned premium
$
12.6

$
12.1

$
11.5

$
11.4

$
47.6

$
10.8

$
10.3

$
9.8

Benefit ratio
66.5
%
74.0
%
64.3
%
70.8
%
68.9
%
66.0
%
69.8
%
75.5
%
Underwriting margin (earned premium less policy benefits)
$
4.2

$
3.2

$
4.1

$
3.3

$
14.8

$
3.7

$
3.1

$
2.4

 
 
 
 
 
 
 
 
 



Page 10



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Washington National
 
 
 
 
 
 
 
 
Average liabilities for insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Fixed index annuities
$
295.4

$
286.5

$
279.7

$
271.6

$
283.3

$
263.2

$
256.7

$
248.4

Fixed interest annuities
93.8

91.4

88.9

87.0

90.3

85.3

82.9

80.4

SPIAs and supplemental contracts:
 
 
 
 
 
 
 
 
Mortality based
226.9

221.2

216.6

213.3

219.5

213.2

214.2

213.4

Deposit based
269.8

270.3

271.3

271.0

270.6

271.1

272.3

272.3

Separate Accounts
4.8

4.8

5.0

4.8

4.8

4.6

4.9

4.5

Health:
 
 
 
 
 
 
 
 
Supplemental health
2,814.7

2,849.8

2,885.5

2,920.0

2,867.5

2,954.4

2,989.1

3,023.0

Medicare supplement
22.1

21.0

20.1

19.6

20.7

18.9

17.8

17.3

Other health
12.5

11.9

11.5

11.2

11.8

10.8

10.2

9.8

Life:
 
 
 
 
 
 
 
 
Interest sensitive
149.5

149.4

149.7

148.4

149.2

147.9

149.0

149.5

Non-interest sensitive
174.4

166.9

163.3

161.8

166.6

160.6

160.4

163.6

Total average liabilities for insurance products, net of reinsurance ceded
$
4,063.9

$
4,073.2

$
4,091.6

$
4,108.7

$
4,084.3

$
4,130.0

$
4,157.5

$
4,182.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annuities - account value rollforwards (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Fixed index annuities
 
 
 
 
 
 
 
 
Balance as of the beginning of the period
$
284.0

$
276.1

$
268.7

$
264.1

$
284.0

$
257.3

$
248.6

$
239.5

Gross deposits
0.3

0.3

0.3

0.1

1.0

0.3

0.2

0.2

Withdrawals
(10.7
)
(10.9
)
(8.6
)
(8.8
)
(39.0
)
(9.9
)
(10.8
)
(10.4
)
Returns reinvested
2.5

3.2

3.7

1.9

11.3

0.9

1.5

1.0

Balance as of the end of the period
$
276.1

$
268.7

$
264.1

$
257.3

$
257.3

$
248.6

$
239.5

$
230.3

 
 
 
 
 
 
 
 
 
Fixed interest annuities
 
 
 
 
 
 
 
 
Balance as of the beginning of the period
$
94.2

$
92.0

$
89.5

$
86.5

$
94.2

$
85.2

$
83.3

$
80.9

Gross deposits
0.1

0.1

—

0.1

0.3

0.1

—

—

Withdrawals
(3.4
)
(3.7
)
(3.8
)
(2.1
)
(13.0
)
(2.7
)
(3.1
)
(3.0
)
Returns reinvested
1.1

1.1

0.8

0.7

3.7

0.7

0.7

0.7

Balance as of the end of the period
$
92.0

$
89.5

$
86.5

$
85.2

$
85.2

$
83.3

$
80.9

$
78.6

 
 
 
 
 
 
 
 
 
Total annuities
 
 
 
 
 
 
 
 
Balance as of the beginning of the period
$
378.2

$
368.1

$
358.2

$
350.6

$
378.2

$
342.5

$
331.9

$
320.4

Gross deposits
0.4

0.4

0.3

0.2

1.3

0.4

0.2

0.2

Withdrawals
(14.1
)
(14.6
)
(12.4
)
(10.9
)
(52.0
)
(12.6
)
(13.9
)
(13.4
)
Returns reinvested
3.6

4.3

4.5

2.6

15.0

1.6

2.2

1.7

Balance as of the end of the period
$
368.1

$
358.2

$
350.6

$
342.5

$
342.5

$
331.9

$
320.4

$
308.9

 
 
 
 
 
 
 
 
 





Page 11



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Washington National
 
 
 
 
 
 
 
 
Present value of future profits (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
243.7

$
238.9

$
236.1

$
231.4

$
243.7

$
226.9

$
220.3

$
215.8

Amortization related to operations
(5.2
)
(4.9
)
(4.7
)
(4.6
)
(19.4
)
(4.5
)
(4.6
)
(4.3
)
Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale
0.4

2.1

—

0.1

2.6

(2.1
)
0.1

(0.1
)
Balance, end of period
$
238.9

$
236.1

$
231.4

$
226.9

$
226.9

$
220.3

$
215.8

$
211.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
310.8

$
320.2

$
331.6

$
336.0

$
310.8

$
342.7

$
338.4

$
339.9

Deferred acquisition expenses
14.2

14.3

13.5

14.1

56.1

13.3

13.7

13.5

Amortization related to operations
(9.3
)
(9.5
)
(9.3
)
(8.3
)
(36.4
)
(10.3
)
(10.3
)
(10.6
)
Amortization related to net realized investment (gains) losses
—

—

0.1

—

0.1

—

0.1

—

Amortization related to fair value changes in embedded derivative liabilities
(0.5
)
(0.3
)
(0.5
)
0.2

(1.1
)
0.5

0.6

0.3

Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale
5.0

6.9

0.6

0.7

13.2

(7.8
)
(2.6
)
(2.1
)
Balance, end of period
$
320.2

$
331.6

$
336.0

$
342.7

$
342.7

$
338.4

$
339.9

$
341.0

 
 
 
 
 
 
 
 
 


Page 12



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Colonial Penn
 
 
 
 
 
 
 
 
Analysis of income (loss) before taxes (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Insurance policy income
$
74.1

$
74.5

$
75.1

$
74.9

$
298.6

$
76.7

$
77.6

$
77.5

Net investment income on general account invested assets
11.0

11.3

11.1

11.2

44.6

10.7

10.8

10.4

Fee revenue and other income
0.5

0.4

0.5

0.4

1.8

0.5

0.4

0.3

   Total revenues
85.6

86.2

86.7

86.5

345.0

87.9

88.8

88.2

 
 
 
 
 
 
 
 
 
Insurance policy benefits
56.5

50.5

49.6

50.0

206.6

56.1

52.3

50.6

Amounts added to annuity and interest-sensitive life product account balances
0.2

0.1

0.2

0.1

0.6

0.1

0.2

0.1

Amortization related to operations
4.6

4.1

4.2

4.9

17.8

4.5

3.6

5.4

Interest expense on investment borrowings
0.3

0.4

0.3

0.4

1.4

0.4

0.4

0.4

Commission expense
0.3

0.3

0.4

0.4

1.4

0.3

0.4

0.3

Other operating costs and expenses
25.2

25.4

25.9

25.9

102.4

27.9

26.1

27.7

   Total benefits and expenses
87.1

80.8

80.6

81.7

330.2

89.3

83.0

84.5

Adjusted EBIT (4)
$
(1.5
)
$
5.4

$
6.1

$
4.8

$
14.8

$
(1.4
)
$
5.8

$
3.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average liabilities for insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
SPIAs - mortality based
$
71.8

$
70.1

$
68.8

$
67.7

$
69.6

$
67.6

$
68.9

$
68.9

Health:
 
 
 
 
 
 
 
 
Medicare supplement
5.3

5.1

4.9

4.6

5.0

4.5

4.2

4.0

Other health
3.9

3.8

3.6

3.5

3.7

3.4

3.3

3.2

Life:
 
 
 
 
 
 
 
 
   Interest sensitive
15.2

15.0

14.7

13.8

14.7

12.6

12.1

11.7

   Non-interest sensitive
732.7

736.0

741.7

748.9

739.8

756.9

751.6

744.9

Total average liabilities for insurance products, net of reinsurance ceded
$
828.9

$
830.0

$
833.7

$
838.5

$
832.8

$
845.0

$
840.1

$
832.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Present value of future profits (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
34.8

$
33.7

$
32.6

$
31.4

$
34.8

$
30.2

$
29.0

$
13.0

   Amortization related to operations
(1.1
)
(1.1
)
(1.2
)
(1.2
)
(4.6
)
(1.2
)
(0.4
)
(0.8
)
Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale
—

—

—

—

—

—

—

—

Other (a)
—

—

—

—

—

—

(15.6
)
—

Balance, end of period
$
33.7

$
32.6

$
31.4

$
30.2

$
30.2

$
29.0

$
13.0

$
12.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
109.5

$
111.8

$
113.7

$
115.7

$
109.5

$
116.6

$
119.9

$
111.2

Deferred acquisition expenses
5.8

4.9

5.0

4.6

20.3

6.6

5.2

6.8

Amortization related to operations
(3.5
)
(3.0
)
(3.0
)
(3.7
)
(13.2
)
(3.3
)
(3.2
)
(4.6
)
Other (a)
—

—

—

—

—

—

(10.7
)
—

Balance, end of period
$
111.8

$
113.7

$
115.7

$
116.6

$
116.6

$
119.9

$
111.2

$
113.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(a) These adjustments were recognized in conjunction with the conversion to a new valuation software system for the
non-interest sensitive life insurance business in this segment. The adjustments had no impact on net income since
comparable reductions in insurance policy liabilities were also recognized in conjunction with the conversion.


Page 13



Colonial Penn Segment Adjusted EBIT
 
 
 
 
 
 
 
 
Summarized by Inforce and New Business (6)
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Adjusted EBIT from Inforce Business
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Insurance policy income
$
62.5

$
62.9

$
63.3

$
62.9

$
251.6

$
64.0

$
64.3

$
64.5

Net investment income
11.0

11.3

11.1

11.2

44.6

10.7

10.8

10.4

Fee revenue and other income
0.5

0.4

0.5

0.4

1.8

0.5

0.4

0.3

Total revenues
74.0

74.6

74.9

74.5

298.0

75.2

75.5

75.2

 
 
 
 
 
 
 
 
 
Benefits and expenses
 
 
 
 
 
 
 
 
Insurance policy benefits
49.7

43.5

42.6

42.8

178.6

48.2

44.1

42.5

Interest expense
0.3

0.4

0.3

0.4

1.4

0.4

0.4

0.4

Amortization
4.4

4.0

4.0

4.8

17.2

4.1

3.2

5.0

Other operating costs and expenses
8.5

8.6

9.2

8.7

35.0

8.3

8.1

8.2

Total benefits and expenses
62.9

56.5

56.1

56.7

232.2

61.0

55.8

56.1

Adjusted EBIT from Inforce Business
$
11.1

$
18.1

$
18.8

$
17.8

$
65.8

$
14.2

$
19.7

$
19.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBIT from New Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Insurance policy income
$
11.6

$
11.6

$
11.8

$
12.0

$
47.0

$
12.7

$
13.3

$
13.0

Net investment income
—

—

—

—

—

—

—

—

Fee revenue and other income
—

—

—

—

—

—

—

—

Total revenues
11.6

11.6

11.8

12.0

47.0

12.7

13.3

13.0

 
 
 
 
 
 
 
 
 
Benefits and expenses
 
 
 
 
 
 
 
 
Insurance policy benefits
7.0

7.1

7.2

7.3

28.6

8.0

8.4

8.2

Interest expense
—

—

—

—

—

—

—

—

Amortization
0.2

0.1

0.2

0.1

0.6

0.4

0.4

0.4

Other operating costs and expenses
17.0

17.1

17.1

17.6

68.8

19.9

18.4

19.8

Total benefits and expenses
24.2

24.3

24.5

25.0

98.0

28.3

27.2

28.4

Adjusted EBIT from New Business
$
(12.6
)
$
(12.7
)
$
(12.7
)
$
(13.0
)
$
(51.0
)
$
(15.6
)
$
(13.9
)
$
(15.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBIT from Inforce and New Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Insurance policy income
$
74.1

$
74.5

$
75.1

$
74.9

$
298.6

$
76.7

$
77.6

$
77.5

Net investment income
11.0

11.3

11.1

11.2

44.6

10.7

10.8

10.4

Fee revenue and other income
0.5

0.4

0.5

0.4

1.8

0.5

0.4

0.3

Total revenues
85.6

86.2

86.7

86.5

345.0

87.9

88.8

88.2

 
 
 
 
 
 
 
 
 
Benefits and expenses
 
 
 
 
 
 
 
 
Insurance policy benefits
56.7

50.6

49.8

50.1

207.2

56.2

52.5

50.7

Interest expense
0.3

0.4

0.3

0.4

1.4

0.4

0.4

0.4

Amortization
4.6

4.1

4.2

4.9

17.8

4.5

3.6

5.4

Other operating costs and expenses
25.5

25.7

26.3

26.3

103.8

28.2

26.5

28.0

Total benefits and expenses
87.1

80.8

80.6

81.7

330.2

89.3

83.0

84.5

Adjusted EBIT from Inforce and New Business
$
(1.5
)
$
5.4

$
6.1

$
4.8

$
14.8

$
(1.4
)
$
5.8

$
3.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 14



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Long-term care in run-off
 
 
 
 
 
 
 
 
Analysis of income (loss) before taxes (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Insurance policy income
$
49.4

$
48.2

$
47.0

$
3.8

$
148.4

$
3.6

$
3.5

$
3.5

Net investment income on general account invested assets
55.2

54.9

54.1

8.5

172.7

8.2

8.4

8.3

   Total revenues
104.6

103.1

101.1

12.3

321.1

11.8

11.9

11.8

 
 
 
 
 
 
 
 
 
Insurance policy benefits
83.5

85.1

91.3

11.4

271.3

8.7

8.1

7.6

Amortization related to operations
2.6

2.3

2.1

—

7.0

—

—

—

Commission expense
0.4

0.4

0.4

0.1

1.3

0.1

0.1

0.1

Other operating costs and expenses
6.1

6.8

5.2

0.5

18.6

0.5

0.5

0.5

   Total benefits and expenses
92.6

94.6

99.0

12.0

298.2

9.3

8.7

8.2

Adjusted EBIT (4)
$
12.0

$
8.5

$
2.1

$
0.3

$
22.9

$
2.5

$
3.2

$
3.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average liabilities for insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
Health:
 
 
 
 
 
 
 
 
Long-term care
$
3,750.3

$
3,599.3

$
3,548.2

$
532.9

$
2,857.7

$
540.1

$
563.0

$
586.0

Total average liabilities for insurance products
$
3,750.3

$
3,599.3

$
3,548.2

$
532.9

$
2,857.7

$
540.1

$
563.0

$
586.0

 
 
 
 
 
 
 
 
 



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Corporate Operations
 
 
 
 
 
 
 
 
Analysis of loss before taxes (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Net investment income (loss):
 
 
 
 
 
 
 
 
   General investment portfolio
$
2.2

$
1.3

$
2.0

$
1.1

$
6.6

$
1.5

$
0.8

$
1.6

   Other special-purpose portfolios
(1.0
)
2.7

6.0

(19.9
)
(12.2
)
20.2

6.8

2.7

Fee revenue and other income
1.8

1.5

1.6

1.8

6.7

1.6

1.5

1.2

Other operating costs and expenses
(18.5
)
(19.5
)
(21.4
)
(12.7
)
(72.1
)
(22.5
)
(21.1
)
(16.7
)
Corporate operations, excluding corporate interest expense
(15.5
)
(14.0
)
(11.8
)
(29.7
)
(71.0
)
0.8

(12.0
)
(11.2
)
Interest expense on corporate debt
(11.9
)
(11.9
)
(12.1
)
(12.1
)
(48.0
)
(12.1
)
(12.6
)
(13.9
)
Operating loss before taxes
$
(27.4
)
$
(25.9
)
$
(23.9
)
$
(41.8
)
$
(119.0
)
$
(11.3
)
$
(24.6
)
$
(25.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 







Page 15



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Bankers Life
 
 
 
 
 
 
 
 
Premiums collected on insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Annuities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed index (first-year)
$
235.4

$
273.9

$
260.2

$
342.5

$
1,112.0

$
300.0

$
325.1

$
311.0

 
 
 
 
 
 
 
 
 
Other fixed interest (first-year)
14.5

12.1

9.0

10.2

45.8

14.2

14.3

12.9

Other fixed interest (renewal)
1.5

1.0

1.3

1.6

5.4

1.1

1.6

1.1

  Subtotal - other fixed interest annuities
16.0

13.1

10.3

11.8

51.2

15.3

15.9

14.0

 
 
 
 
 
 
 
 
 
      Total annuities
251.4

287.0

270.5

354.3

1,163.2

315.3

341.0

325.0

 
 
 
 
 
 
 
 
 
Health
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare supplement (first-year)
15.4

15.5

15.2

15.8

61.9

14.3

14.9

14.9

Medicare supplement (renewal)
172.9

161.3

164.2

174.0

672.4

169.7

161.7

164.3

  Subtotal - Medicare supplement
188.3

176.8

179.4

189.8

734.3

184.0

176.6

179.2

 
 
 
 
 
 
 
 
 
Long-term care (first-year)
3.7

3.7

3.9

4.3

15.6

4.4

4.7

4.8

Long-term care (renewal)
61.1

60.0

59.1

59.3

239.5

59.4

58.4

58.6

  Subtotal - long-term care
64.8

63.7

63.0

63.6

255.1

63.8

63.1

63.4

 
 
 
 
 
 
 
 
 
Supplemental health (first-year)
1.1

1.1

1.0

1.2

4.4

1.1

1.1

1.1

Supplemental health (renewal)
4.7

4.8

4.8

4.9

19.2

4.9

5.1

5.1

  Subtotal - supplemental health
5.8

5.9

5.8

6.1

23.6

6.0

6.2

6.2

 
 
 
 
 
 
 
 
 
Other health (first-year)
0.2

0.2

0.2

0.2

0.8

0.2

0.1

0.2

Other health (renewal)
1.3

1.3

1.3

1.3

5.2

1.3

1.3

1.2

  Subtotal - other health
1.5

1.5

1.5

1.5

6.0

1.5

1.4

1.4

 
 
 
 
 
 
 
 
 
    Total health
260.4

247.9

249.7

261.0

1,019.0

255.3

247.3

250.2

 
 
 
 
 
 
 
 
 
Life insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traditional (first-year)
18.5

19.0

17.2

16.9

71.6

16.3

15.9

16.9

Traditional (renewal)
55.7

55.9

55.7

56.3

223.6

55.9

56.0

56.3

  Subtotal - traditional
74.2

74.9

72.9

73.2

295.2

72.2

71.9

73.2

 
 
 
 
 
 
 
 
 
Interest-sensitive (first-year)
10.7

12.8

12.2

13.3

49.0

9.6

12.8

11.5

Interest-sensitive (renewal)
30.3

30.8

30.4

30.3

121.8

31.5

32.2

32.9

  Subtotal - interest-sensitive
41.0

43.6

42.6

43.6

170.8

41.1

45.0

44.4

 
 
 
 
 
 
 
 
 
    Total life insurance
115.2

118.5

115.5

116.8

466.0

113.3

116.9

117.6

 
 
 
 
 
 
 
 
 
Collections on insurance products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total first-year premium collections on insurance products
299.5

338.3

318.9

404.4

1,361.1

360.1

388.9

373.3

Total renewal premium collections on insurance products
327.5

315.1

316.8

327.7

1,287.1

323.8

316.3

319.5

 
 
 
 
 
 
 
 
 
    Total collections on insurance products
$
627.0

$
653.4

$
635.7

$
732.1

$
2,648.2

$
683.9

$
705.2

$
692.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Page 16



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Washington National
 
 
 
 
 
 
 
 
Premiums collected on insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Health
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare supplement (renewal)
$
12.5

$
11.5

$
10.9

$
11.4

$
46.3

$
10.6

$
10.1

$
9.7

 
 
 
 
 
 
 
 
 
Supplemental health (first-year)
18.3

17.7

17.1

17.1

70.2

16.6

16.7

16.8

Supplemental health (renewal)
136.9

134.4

131.1

138.7

541.1

140.0

140.2

140.0

  Subtotal - supplemental health
155.2

152.1

148.2

155.8

611.3

156.6

156.9

156.8

 
 
 
 
 
 
 
 
 
Other health (first-year)
0.1

0.1

—

—

0.2

0.1

0.1

—

Other health (renewal)
0.4

0.3

0.4

0.4

1.5

0.3

0.3

0.4

  Subtotal - other health
0.5

0.4

0.4

0.4

1.7

0.4

0.4

0.4

 
 
 
 
 
 
 
 
 
    Total health
168.2

164.0

159.5

167.6

659.3

167.6

167.4

166.9

 
 
 
 
 
 
 
 
 
Life insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traditional (first-year)
0.1

0.2

0.1

0.2

0.6

0.1

0.2

0.2

Traditional (renewal)
2.5

2.4

2.3

2.3

9.5

2.4

2.2

2.2

  Subtotal - traditional
2.6

2.6

2.4

2.5

10.1

2.5

2.4

2.4

 
 
 
 
 
 
 
 
 
Interest-sensitive (first-year)
1.2

1.4

1.3

1.5

5.4

1.8

2.0

2.0

Interest-sensitive (renewal)
3.8

4.4

4.0

4.5

16.7

4.5

4.9

4.6

  Subtotal - interest-sensitive
5.0

5.8

5.3

6.0

22.1

6.3

6.9

6.6

 
 
 
 
 
 
 
 
 
    Total life insurance
7.6

8.4

7.7

8.5

32.2

8.8

9.3

9.0

 
 
 
 
 
 
 
 
 
Annuities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed index (first-year)
—

—

—

0.1

0.1

—

—

—

Fixed index (renewal)
0.3

0.4

0.2

0.1

1.0

0.3

0.2

0.2

  Subtotal - fixed index annuities
0.3

0.4

0.2

0.2

1.1

0.3

0.2

0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other fixed interest (renewal)
0.1

—

0.1

—

0.2

0.1

—

—

 
 
 
 
 
 
 
 
 
      Total annuities
0.4

0.4

0.3

0.2

1.3

0.4

0.2

0.2

 
 
 
 
 
 
 
 
 
Collections on insurance products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total first-year premium collections on insurance products
19.7

19.4

18.5

18.9

76.5

18.6

19.0

19.0

Total renewal premium collections on insurance products
156.5

153.4

149.0

157.4

616.3

158.2

157.9

157.1

 
 
 
 
 
 
 
 
 
    Total collections on insurance products
$
176.2

$
172.8

$
167.5

$
176.3

$
692.8

$
176.8

$
176.9

$
176.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Page 17



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Colonial Penn
 
 
 
 
 
 
 
 
Premiums collected on insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Life insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traditional (first-year)
$
11.9

$
11.3

$
11.7

$
12.0

$
46.9

$
12.8

$
13.1

$
13.0

Traditional (renewal)
62.9

62.0

61.8

62.8

249.5

63.9

63.2

63.8

  Subtotal - traditional
74.8

73.3

73.5

74.8

296.4

76.7

76.3

76.8

 
 
 
 
 
 
 
 
 
Interest-sensitive (all renewal)
—

0.1

0.1

—

0.2

0.1

—

0.1

 
 
 
 
 
 
 
 
 
    Total life insurance
74.8

73.4

73.6

74.8

296.6

76.8

76.3

76.9

 
 
 
 
 
 
 
 
 
Health (all renewal)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare supplement
0.4

0.4

0.4

0.3

1.5

0.3

0.4

0.2

 
 
 
 
 
 
 
 
 
Other health
0.1

—

—

0.1

0.2

0.1

—

—

 
 
 
 
 
 
 
 
 
    Total health
0.5

0.4

0.4

0.4

1.7

0.4

0.4

0.2

 
 
 
 
 
 
 
 
 
Collections on insurance products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total first-year premium collections on insurance products
11.9

11.3

11.7

12.0

46.9

12.8

13.1

13.0

Total renewal premium collections on insurance products
63.4

62.5

62.3

63.2

251.4

64.4

63.6

64.1

 
 
 
 
 
 
 
 
 
    Total collections on insurance products
$
75.3

$
73.8

$
74.0

$
75.2

$
298.3

$
77.2

$
76.7

$
77.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Long-term care in run-off
 
 
 
 
 
 
 
 
Premiums collected on insurance products (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Long-term care (renewal)
$
49.6

$
47.6

$
44.9

$
3.7

$
145.8

$
3.6

$
3.4

$
3.3

 
 
 
 
 
 
 
 
 
    Total collections on insurance products
$
49.6

$
47.6

$
44.9

$
3.7

$
145.8

$
3.6

$
3.4

$
3.3

 
 
 
 
 
 
 
 
 



Page 18



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
First-year collected premiums (in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bankers Life
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Medicare supplement
$
15.4

$
15.5

$
15.2

$
15.8

$
61.9

$
14.3

$
14.9

$
14.9

Long-term care
3.7

3.7

3.9

4.3

15.6

4.4

4.7

4.8

Supplemental health and other health
1.3

1.3

1.2

1.4

5.2

1.3

1.2

1.3

Life
29.2

31.8

29.4

30.2

120.6

25.9

28.7

28.4

Annuity
249.9

286.0

269.2

352.7

1,157.8

314.2

339.4

323.9

   Subtotal Bankers Life
299.5

338.3

318.9

404.4

1,361.1

360.1

388.9

373.3

 
 
 
 
 
 
 
 
 
Washington National
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental health and other health
18.4

17.8

17.1

17.1

70.4

16.7

16.8

16.8

Life
1.3

1.6

1.4

1.7

6.0

1.9

2.2

2.2

Annuity
—

—

—

0.1

0.1

—

—

—

   Subtotal Washington National
19.7

19.4

18.5

18.9

76.5

18.6

19.0

19.0

 
 
 
 
 
 
 
 
 
Colonial Penn
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life
11.9

11.3

11.7

12.0

46.9

12.8

13.1

13.0

 
 
 
 
 
 
 
 
 
Total first-year collected premiums
$
331.1

$
369.0

$
349.1

$
435.3

$
1,484.5

$
391.5

$
421.0

$
405.3

 
 
 
 
 
 
 
 
 

CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Life and Health New Annualized Premiums ("NAP") (in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bankers Life
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
 
 
 
 
 
 
 
 
 
Medicare supplement
$
12.9

$
14.3

$
13.9

$
17.9

$
59.0

$
12.4

$
14.5

$
14.2

Long-term care
5.0

5.3

6.5

7.4

24.2

5.8

6.4

6.4

Supplemental health and other health
1.3

1.4

1.1

2.0

5.8

1.2

1.4

1.4

Life
16.5

17.9

15.8

14.9

65.1

14.1

17.1

15.3

   Subtotal Bankers Life
35.7

38.9

37.3

42.2

154.1

33.5

39.4

37.3

 
 
 
 
 
 
 
 
 
Washington National
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental health
22.0

23.9

22.8

26.0

94.7

20.7

23.5

24.7

Life
1.8

2.1

2.5

4.1

10.5

3.2

2.7

2.8

   Subtotal Washington National
23.8

26.0

25.3

30.1

105.2

23.9

26.2

27.5

 
 
 
 
 
 
 
 
 
Colonial Penn
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life
18.6

16.9

19.1

17.3

71.9

22.4

19.6

19.2

 
 
 
 
 
 
 
 
 
Total NAP
$
78.1

$
81.8

$
81.7

$
89.6

$
331.2

$
79.8

$
85.2

$
84.0

 
 
 
 
 
 
 
 
 



Page 19



CNO Financial Group, Inc.
 
 
 
 
 
 
 
 
Statutory information - consolidated basis (7) (in millions)
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19 (a)
 
 
 
 
 
 
 
 
 
Net gain (loss) from operations before interest expense and federal income taxes
$
65.1

$
80.5

$
(491.1
)
$
21.4

$
(324.1
)
$
97.8

$
86.0

$
62.1

Interest expense on surplus debentures held by parent company
12.0

12.2

21.7

12.3

58.2

12.6

12.3

22.7

 
 
 
 
 
 
 
 
 
Net gain (loss) from operations before federal income taxes
53.1

68.3

(512.8
)
9.1

(382.3
)
85.2

73.7

39.4

Federal income tax expense (benefit)
1.6

(2.5
)
(23.9
)
(20.4
)
(45.2
)
1.9

(5.4
)
(4.5
)
 
 
 
 
 
 
 
 
 
Net gain (loss) from operations before net realized capital gains (losses)
51.5

70.8

(488.9
)
29.5

(337.1
)
83.3

79.1

43.9

Net realized capital gains (losses)
3.7

2.7

41.3

(3.9
)
43.8

(9.9
)
(3.6
)
(0.1
)
 
 
 
 
 
 
 
 
 
Net income (loss)
$
55.2

$
73.5

$
(447.6
)
$
25.6

$
(293.3
)
$
73.4

$
75.5

$
43.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital and surplus
$
1,918.9

$
1,952.0

$
1,781.6

$
1,652.8

$
1,652.8

$
1,717.4

$
1,698.5

$
1,695.3

Asset valuation reserve (AVR)
264.7

258.4

283.6

233.3

233.3

248.0

254.5

261.0

 
 
 
 
 
 
 
 
 
  Capital, surplus and AVR
2,183.6

2,210.4

2,065.2

1,886.1

1,886.1

1,965.4

1,953.0

1,956.3

 
 
 
 
 
 
 
 
 
Interest maintenance reserve (IMR)
479.4

492.0

439.8

425.0

425.0

418.3

415.4

415.1

 
 
 
 
 
 
 
 
 
  Total statutory capital, surplus, AVR & IMR
$
2,663.0

$
2,702.4

$
2,505.0

$
2,311.1

$
2,311.1

$
2,383.7

$
2,368.4

$
2,371.4

 
 
 
 
 
 
 
 
 
Risk-based capital ratio
427
%
444
%
452
%
393
%
393
%
416
%
409
%
405
%
 
 
 
 
 
 
 
 
 

(a)  Such amounts are preliminary as the statutory basis financial statements of our insurance subsidiaries for 3Q19
will be filed with the respective insurance regulators on or about November 15, 2019.

























Page 20



Notes

(1) Excludes accumulated other comprehensive income. 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.

(2) Shareholders' equity divided by common shares outstanding.

(3) Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised and restricted stock and performance units were vested. 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.

(4) Management believes that an analysis of earnings before net realized investment gains (losses) from sales and impairments, net change in market value of investments recognized in earnings, 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 related to the agent deferred compensation plan, loss related to reinsurance transaction, loss on extinguishment of debt, 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.

(5) Management believes that an analysis of Net income applicable to common stock before: (i) net realized investment gains or losses from sales and impairments, net of related amortization and taxes; (ii) net change in market value of investments recognized in earnings, net of taxes; (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 taxes; (iv) fair value changes related to the agent deferred compensation plan, net of taxes; (v) loss related to reinsurance transaction, net of taxes; (vi) loss on extinguishment of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets and other tax items; and (viii) 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.

(6) 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.

(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.




Page 21