CNO Financial Group Reports Second Quarter 2015 Results
"We continue to strike a balance between sales growth and pricing discipline, while producing quality earnings and strong cash flows," said
Second Quarter 2015 Highlights
- Sales, as defined by total new annualized premium ("NAP") (2):
$105.5 million , up 1% from 2Q14 - Collected premium from our continuing operating segments (3):
$830.9 million down slightly from 2Q14 - Net income per diluted share:
24 cents in 2Q15 (including11 cents from the loss on extinguishment of debt) compared to35 cents in 2Q14 - Net operating income (1) per diluted share:
31 cents in 2Q15 compared to32 cents in 2Q14 - Unrestricted cash and investments held by our holding company were
$385 million atJune 30, 2015 - Common stock repurchases and dividends were
$115 million in 2Q15
Six-month 2015 Highlights
- Sales, as defined by total NAP (2):
$210.8 million , up 2% from the first six months of 2014 - Collected premium from our continuing operating segments (3):
$1,638.9 million down 1% from the first six months of 2014 - Net income (loss) per diluted share:
50 cents in the first six months of 2015 (including11 cents from the loss on extinguishment of debt) compared to(69) cents in the first six months of 2014 (including$1.35 from the loss on the sale ofConseco Life Insurance Company ("CLIC") and gain on reinsurance transaction) - Net operating income (1) per diluted share:
61 cents in the first six months of 2015 compared to60 cents in the first six months of 2014 - Consolidated risk-based capital ratio was estimated at 443% at
June 30, 2015 , reflecting estimated statutory operating earnings of$170 million and insurance company dividends to the holding company of$112.8 million during the first six months of 2015
Quarterly Segment Operating Results
Three months ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
(Dollars in millions, except per share data) |
|||||||
EBIT (5): |
|||||||
Bankers Life |
$ |
86.4 |
$ |
87.4 |
|||
|
20.1 |
32.3 |
|||||
Colonial Penn |
4.2 |
3.8 |
|||||
EBIT from business segments |
110.7 |
123.5 |
|||||
Corporate Operations, excluding corporate interest expense |
(5.0) |
(3.7) |
|||||
EBIT |
105.7 |
119.8 |
|||||
Corporate interest expense |
(11.9) |
(11.1) |
|||||
Operating earnings before taxes |
93.8 |
108.7 |
|||||
Tax expense on operating income |
33.0 |
37.4 |
|||||
Net operating income (1) |
60.8 |
71.3 |
|||||
Earnings of CLIC prior to being sold (net of taxes) |
— |
8.5 |
|||||
Gain related to reinsurance transaction (net of taxes) |
— |
2.5 |
|||||
Net realized investment gains (losses) (net of related amortization and taxes) |
(6.8) |
7.5 |
|||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) |
16.8 |
(4.8) |
|||||
Fair value changes related to agent deferred compensation plan (net of taxes) |
— |
(7.6) |
|||||
Loss on extinguishment or modification of debt (net of taxes) |
(21.3) |
(.4) |
|||||
Valuation allowance for deferred tax assets and other tax items |
— |
4.0 |
|||||
Other |
(2.7) |
(2.9) |
|||||
Net income |
$ |
46.8 |
$ |
78.1 |
|||
Per diluted share: |
|||||||
Net operating income |
$ |
.31 |
$ |
.32 |
|||
Earnings of CLIC prior to being sold (net of taxes) |
— |
.04 |
|||||
Gain related to reinsurance transaction (net of taxes) |
— |
.01 |
|||||
Net realized investment gains (losses) (net of related amortization and taxes) |
(.03) |
.03 |
|||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) |
.08 |
(.02) |
|||||
Fair value changes related to agent deferred compensation plan (net of taxes) |
— |
(.03) |
|||||
Loss on extinguishment or modification of debt (net of taxes) |
(.11) |
— |
|||||
Valuation allowance for deferred tax assets and other tax items |
— |
.02 |
|||||
Other |
(.01) |
(.02) |
|||||
Net income |
$ |
.24 |
$ |
.35 |
The following table summarizes the financial impact of a significant item on our 2Q15 net operating income (dollars in millions, except per share amounts):
Three months ended |
|||||||||||
|
|||||||||||
Actual results |
Significant item |
Excluding significant item |
|||||||||
Net Operating Income (1): |
|||||||||||
Bankers Life |
$ |
86.4 |
$ |
— |
$ |
86.4 |
|||||
|
20.1 |
9.0 |
29.1 |
||||||||
Colonial Penn |
4.2 |
— |
4.2 |
||||||||
EBIT from business segments |
110.7 |
9.0 |
119.7 |
||||||||
Corporate Operations, excluding corporate interest expense |
(5.0) |
— |
(5.0) |
||||||||
EBIT (5) |
105.7 |
9.0 |
114.7 |
||||||||
Corporate interest expense |
(11.9) |
— |
(11.9) |
||||||||
Operating earnings before taxes |
93.8 |
9.0 |
102.8 |
||||||||
Tax expense on operating income |
33.0 |
3.2 |
36.2 |
||||||||
Net operating income |
$ |
60.8 |
$ |
5.8 |
$ |
66.6 |
|||||
Net operating income per diluted share |
$ |
.31 |
$ |
.03 |
$ |
.34 |
The significant item in 2Q15 of
* There were no significant items for the three months ended
Segment Results
Bankers Life markets and distributes a variety of insurance products to middle-income Americans at or near retirement through a dedicated field force of career agents. NAP in 2Q15 was
Collected premiums were down 1 percent in 2Q15 compared to 2Q14, primarily driven by a reduction in premiums from fixed interest annuity products reflecting the low interest rate environment in recent periods. Annuity account values, on which spread income is earned, increased 1 percent to
Pre-tax operating earnings in 2Q15 compared to 2Q14 were down
Collected premiums from the segment's supplemental health block were up 5 percent in 2Q15 compared to 2Q14, driven by strong sales and persistency.
Pre-tax operating earnings in 2Q15 compared to 2Q14 were down
Colonial Penn markets primarily graded benefit and simplified issue life insurance directly to customers through television advertising, direct mail, the internet and telemarketing. NAP in 2Q15 was
Collected premiums were up 7 percent in 2Q15 compared to 2Q14, driven by increased sales and steady persistency.
Pre-tax operating earnings in 2Q15 were
Recognizing the accounting standard related to deferred acquisition costs, the amount of our investment in new business during a particular period will have a significant impact on this segment's results. We expect this segment to report
Corporate Operations includes our investment advisory subsidiary and corporate expenses.
Pre-tax losses in 2Q15 were
Non-Operating Items
Net realized investment losses in 2Q15 were
During 2Q15 and 2Q14, we recognized increases (decreases) in earnings of
The results for 2Q15 include the previously disclosed
Other non-operating items in 2Q15 also include the previously disclosed
The results for 2Q14 reflected a loss of
The earnings related to the CLIC business prior to being sold are also reflected as non-operating items. Such earnings, net of taxes, were
In 2Q14, we reduced the valuation allowance for deferred tax assets by
Statutory (based on non-GAAP measures) and GAAP Capital Information
Our consolidated statutory risk-based capital ratio was estimated at 443% at
During the second quarter of 2015, we repurchased
Book value per diluted share, excluding accumulated other comprehensive income (loss) (6), was
Our debt-to-total capital ratio, excluding accumulated other comprehensive income (4) at
Conference Call
The Company will host a conference call to discuss results on
About
|
|||||||
CONSOLIDATED BALANCE SHEET |
|||||||
(Dollars in millions) |
|||||||
(unaudited) |
|||||||
2015 |
2014 |
||||||
ASSETS |
|||||||
Investments: |
|||||||
Fixed maturities, available for sale, at fair value (amortized cost: |
$ |
20,224.8 |
$ |
20,634.9 |
|||
Equity securities at fair value (cost: |
433.3 |
419.0 |
|||||
Mortgage loans |
1,665.5 |
1,691.9 |
|||||
Policy loans |
108.1 |
106.9 |
|||||
Trading securities |
257.5 |
244.9 |
|||||
Investments held by variable interest entities |
1,565.6 |
1,367.1 |
|||||
Other invested assets |
435.4 |
443.6 |
|||||
Total investments |
24,690.2 |
24,908.3 |
|||||
Cash and cash equivalents - unrestricted |
453.9 |
611.6 |
|||||
Cash and cash equivalents held by variable interest entities |
150.6 |
68.3 |
|||||
Accrued investment income |
240.4 |
242.9 |
|||||
Present value of future profits |
465.1 |
489.4 |
|||||
Deferred acquisition costs |
877.4 |
770.6 |
|||||
Reinsurance receivables |
2,925.0 |
2,991.1 |
|||||
Income tax assets, net |
827.8 |
758.7 |
|||||
Assets held in separate accounts |
5.4 |
5.6 |
|||||
Other assets |
413.2 |
337.7 |
|||||
Total assets |
$ |
31,049.0 |
$ |
31,184.2 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Liabilities: |
|||||||
Liabilities for insurance products: |
|||||||
Policyholder account balances |
$ |
10,689.3 |
$ |
10,707.2 |
|||
Future policy benefits |
10,588.9 |
10,835.4 |
|||||
Liability for policy and contract claims |
484.5 |
468.7 |
|||||
Unearned and advanced premiums |
268.6 |
291.8 |
|||||
Liabilities related to separate accounts |
5.4 |
5.6 |
|||||
Other liabilities |
742.5 |
587.6 |
|||||
Investment borrowings |
1,518.9 |
1,519.2 |
|||||
Borrowings related to variable interest entities |
1,461.7 |
1,286.1 |
|||||
Notes payable – direct corporate obligations |
925.0 |
794.4 |
|||||
Total liabilities |
26,684.8 |
26,496.0 |
|||||
Commitments and Contingencies |
|||||||
Shareholders' equity: |
|||||||
Common stock ( outstanding: June 30, 2015 – 193,467,712; |
1.9 |
2.0 |
|||||
Additional paid-in capital |
3,554.9 |
3,732.4 |
|||||
Accumulated other comprehensive income |
605.0 |
825.3 |
|||||
Retained earnings |
202.4 |
128.5 |
|||||
Total shareholders' equity |
4,364.2 |
4,688.2 |
|||||
Total liabilities and shareholders' equity |
$ |
31,049.0 |
$ |
31,184.2 |
|
|||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS |
|||||||||||||||
(Dollars in millions, except per share data) |
|||||||||||||||
(unaudited) |
|||||||||||||||
Three months ended |
Six months ended |
||||||||||||||
|
|
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Revenues: |
|||||||||||||||
Insurance policy income |
$ |
640.1 |
$ |
679.0 |
$ |
1,276.6 |
$ |
1,364.9 |
|||||||
Net investment income: |
|||||||||||||||
General account assets |
302.1 |
347.4 |
602.2 |
695.5 |
|||||||||||
Policyholder and reinsurer accounts and other special- purpose portfolios |
11.8 |
47.2 |
28.4 |
68.1 |
|||||||||||
Realized investment gains (losses): |
|||||||||||||||
Net realized investment gains (losses), excluding impairment losses |
(2.2) |
12.4 |
(3.3) |
47.7 |
|||||||||||
Net impairment losses recognized (a) |
(7.9) |
— |
(9.2) |
(11.9) |
|||||||||||
Gain on dissolution of a variable interest entity |
— |
— |
11.3 |
— |
|||||||||||
Total realized gains |
(10.1) |
12.4 |
(1.2) |
35.8 |
|||||||||||
Fee revenue and other income |
15.6 |
7.0 |
31.8 |
13.4 |
|||||||||||
Total revenues |
959.5 |
1,093.0 |
1,937.8 |
2,177.7 |
|||||||||||
Benefits and expenses: |
|||||||||||||||
Insurance policy benefits |
568.3 |
691.1 |
1,174.3 |
1,381.4 |
|||||||||||
Loss on sale of subsidiary, gain on reinsurance transaction and transition expenses |
4.5 |
(3.8) |
9.0 |
274.8 |
|||||||||||
Interest expense |
25.3 |
24.3 |
46.8 |
48.9 |
|||||||||||
Amortization |
73.7 |
64.9 |
139.8 |
131.6 |
|||||||||||
Loss on extinguishment or modification of debt |
32.8 |
.6 |
32.8 |
.6 |
|||||||||||
Other operating costs and expenses |
182.2 |
201.5 |
380.1 |
395.6 |
|||||||||||
Total benefits and expenses |
886.8 |
978.6 |
1,782.8 |
2,232.9 |
|||||||||||
Income (loss) before income taxes |
72.7 |
114.4 |
155.0 |
(55.2) |
|||||||||||
Income tax expense (benefit): |
|||||||||||||||
Tax expense on period income |
25.9 |
40.3 |
55.4 |
79.3 |
|||||||||||
Valuation allowance for deferred tax assets and other tax items |
— |
(4.0) |
— |
15.4 |
|||||||||||
Net income (loss) |
$ |
46.8 |
$ |
78.1 |
$ |
99.6 |
$ |
(149.9) |
|||||||
Earnings per common share: |
|||||||||||||||
Basic: |
|||||||||||||||
Weighted average shares outstanding |
195,857,000 |
216,538,000 |
198,174,000 |
218,422,000 |
|||||||||||
Net income (loss) |
$ |
.24 |
$ |
.36 |
$ |
.50 |
$ |
(.69) |
|||||||
Diluted: |
|||||||||||||||
Weighted average shares outstanding |
198,073,000 |
222,108,000 |
200,174,000 |
218,422,000 |
|||||||||||
Net income (loss) |
$ |
.24 |
$ |
.35 |
$ |
.50 |
$ |
(.69) |
______________
(a) No portion of the other-than-temporary impairments recognized in the periods were included in other comprehensive income.
|
|||||||||||||||
EBIT FROM BUSINESS SEGMENTS |
|||||||||||||||
SUMMARIZED BY IN-FORCE AND NEW BUSINESS (7) |
|||||||||||||||
(Dollars in millions) |
|||||||||||||||
Three months ended |
Six months ended |
||||||||||||||
|
|
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
EBIT (5) from In-force and New Business |
|||||||||||||||
Bankers Life segment: |
|||||||||||||||
In-Force Business |
$ |
121.5 |
$ |
124.3 |
$ |
243.8 |
$ |
246.7 |
|||||||
New Business |
(35.1) |
(36.9) |
(75.2) |
(75.1) |
|||||||||||
Total |
$ |
86.4 |
$ |
87.4 |
$ |
168.6 |
$ |
171.6 |
|||||||
|
|||||||||||||||
In-Force Business |
$ |
21.7 |
$ |
34.8 |
$ |
53.5 |
$ |
68.7 |
|||||||
New Business |
(1.6) |
(2.5) |
(4.9) |
(5.3) |
|||||||||||
Total |
$ |
20.1 |
$ |
32.3 |
$ |
48.6 |
$ |
63.4 |
|||||||
Colonial Penn segment: |
|||||||||||||||
In-Force Business |
$ |
13.3 |
$ |
13.1 |
$ |
23.9 |
$ |
23.4 |
|||||||
New Business |
(9.1) |
(9.3) |
(25.6) |
(25.8) |
|||||||||||
Total |
$ |
4.2 |
$ |
3.8 |
$ |
(1.7) |
$ |
(2.4) |
|||||||
Total Business segments: |
|||||||||||||||
In-Force Business |
$ |
156.5 |
$ |
172.2 |
$ |
321.2 |
$ |
338.8 |
|||||||
New Business |
(45.8) |
(48.7) |
(105.7) |
(106.2) |
|||||||||||
Total EBIT from business segments |
$ |
110.7 |
$ |
123.5 |
$ |
215.5 |
$ |
232.6 |
|
|||||||
SEGMENT OPERATING RESULTS |
|||||||
(Dollars in millions, except per share data) |
|||||||
Six months ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
EBIT (5): |
|||||||
Bankers Life |
$ |
168.6 |
$ |
171.6 |
|||
|
48.6 |
63.4 |
|||||
Colonial Penn |
(1.7) |
(2.4) |
|||||
EBIT from business segments |
215.5 |
232.6 |
|||||
Corporate Operations, excluding corporate interest expense |
(6.3) |
(9.7) |
|||||
EBIT |
209.2 |
222.9 |
|||||
Corporate interest expense |
(22.4) |
(22.2) |
|||||
Operating earnings before taxes |
186.8 |
200.7 |
|||||
Tax expense on operating income |
65.9 |
69.5 |
|||||
Net operating income (1) |
120.9 |
131.2 |
|||||
Earnings of CLIC prior to being sold (net of taxes) |
— |
15.2 |
|||||
Net loss on sale of CLIC and gain on reinsurance transaction (including impact of taxes) |
— |
(295.5) |
|||||
Net realized investment gains (losses) (net of related amortization and taxes) |
(8.2) |
21.1 |
|||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) |
8.5 |
(12.0) |
|||||
Fair value changes related to agent deferred compensation plan (net of taxes) |
— |
(7.6) |
|||||
Loss on extinguishment or modification of debt (net of taxes) |
(21.3) |
(.4) |
|||||
Valuation allowance for deferred tax assets and other tax items |
— |
4.0 |
|||||
Other |
(.3) |
(5.9) |
|||||
Net income (loss) |
$ |
99.6 |
$ |
(149.9) |
|||
Per diluted share: |
|||||||
Net operating income |
$ |
.61 |
$ |
.60 |
|||
Earnings of CLIC prior to being sold (net of taxes) |
— |
.07 |
|||||
Net loss on sale of CLIC and gain on reinsurance transaction (including impact of taxes) |
— |
(1.35) |
|||||
Net realized investment gains (losses) (net of related amortization and taxes) |
(.04) |
.10 |
|||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) |
.04 |
(.06) |
|||||
Fair value changes related to agent deferred compensation plan (net of taxes) |
— |
(.04) |
|||||
Loss on extinguishment or modification of debt (net of taxes) |
(.11) |
— |
|||||
Valuation allowance for deferred tax assets and other tax items |
— |
.02 |
|||||
Other |
— |
(.03) |
|||||
Net income (loss) |
$ |
.50 |
$ |
(.69) |
|
|||||||
COLLECTED PREMIUMS |
|||||||
FROM CONTINUING OPERATING SEGMENTS |
|||||||
(Dollars in millions) |
|||||||
Three months ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
Bankers Life segment: |
|||||||
|
$ |
176.3 |
$ |
177.8 |
|||
Long-term care |
119.6 |
126.2 |
|||||
Other health |
1.8 |
2.1 |
|||||
Supplemental health |
4.8 |
4.0 |
|||||
Life |
114.3 |
101.5 |
|||||
Annuity |
187.1 |
200.8 |
|||||
Total |
603.9 |
612.4 |
|||||
|
|||||||
Supplemental health and other health |
136.7 |
129.7 |
|||||
|
17.1 |
21.7 |
|||||
Life |
7.0 |
6.4 |
|||||
Annuity |
1.1 |
.6 |
|||||
Total |
161.9 |
158.4 |
|||||
Colonial Penn segment: |
|||||||
Life |
64.3 |
60.0 |
|||||
Supplemental health |
.8 |
.9 |
|||||
Total |
65.1 |
60.9 |
|||||
Total collected premiums from continuing operating segments |
$ |
830.9 |
$ |
831.7 |
NEW ANNUALIZED PREMIUMS (2) |
|||||||
(Dollars in millions) |
|||||||
Three months ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
Bankers Life segment: |
|||||||
|
$ |
16.3 |
$ |
17.6 |
|||
Long-term care |
5.6 |
4.7 |
|||||
Supplemental health |
1.9 |
1.8 |
|||||
Life |
26.4 |
27.1 |
|||||
Annuity |
11.1 |
11.9 |
|||||
Total |
61.3 |
63.1 |
|||||
|
|||||||
Supplemental health |
23.9 |
23.9 |
|||||
Life |
1.8 |
1.3 |
|||||
Annuity |
— |
.1 |
|||||
Total |
25.7 |
25.3 |
|||||
Colonial Penn segment: |
|||||||
Life |
18.5 |
16.5 |
|||||
Total |
18.5 |
16.5 |
|||||
Total new annualized premiums |
$ |
105.5 |
$ |
104.9 |
|
|||||
BENEFIT RATIOS ON MAJOR HEALTH LINES OF BUSINESS |
|||||
Three months ended |
|||||
|
|||||
2015 |
2014 |
||||
Bankers Life segment: |
|||||
Medicare Supplement: |
|||||
Earned premium |
|
|
|||
Benefit ratio (8) |
68.7% |
69.5% |
|||
|
|||||
Earned premium |
|
|
|||
Benefit ratio (8) |
140.7% |
131.2% |
|||
Interest-adjusted benefit ratio (a non-GAAP measure) (9) |
84.6% |
79.2% |
|||
|
|||||
Medicare Supplement: |
|||||
Earned premium |
|
|
|||
Benefit ratio (8) |
64.6% |
61.7% |
|||
Supplemental health: |
|||||
Earned premium |
|
|
|||
Benefit ratio (8) |
90.3% |
80.3% |
|||
Interest-adjusted benefit ratio (a non-GAAP measure) (9) |
65.7% |
54.8% |
NOTES
(1) |
Management believes that an analysis of Net income applicable to common stock before: (i) the net loss on the sale of CLIC and gain (loss) on reinsurance transactions; (ii) the earnings of CLIC prior to being sold; (iii) net realized investment gains or losses, net of related amortization and taxes; (iv) 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; (v) fair value changes related to the agent deferred compensation plan, net of taxes, (vi) loss on extinguishment or modification of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets; and (viii) other non-operating items consisting primarily of equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities, net of taxes ("Net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry. Management uses this measure to evaluate performance because the items excluded from net operating income can be affected by events that are unrelated to the company's underlying fundamentals. Net realized investment gains or losses include: (i) gains or losses on the sales of investments; (ii) other-than-temporary impairments recognized through net income; and (iii) changes in fair value of certain fixed maturity investments with embedded derivatives. A reconciliation of Net operating income to Net income applicable to common stock is provided in the tables on pages 2 and 9. Additional information concerning this non-GAAP measure is included in our periodic filings with the |
(2) |
Measured by new annualized premium, which includes 6% of annuity and 10% of single premium whole life deposits and 100% of all other premiums. Medicare Advantage sales are not comparable to other sales and are therefore excluded in all periods. |
(3) |
Collected premiums from our core operating segments include premiums collected in our Bankers Life, |
(4) |
The calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. The corresponding GAAP measures for debt-to-total capital were 17.5% and 14.5% at |
(5) |
Management believes that an analysis of earnings before the net loss on the sale of CLIC and gain (loss) on reinsurance transactions, the earnings of CLIC prior to being sold, net realized investment gains (losses), fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, fair value changes related to the agent deferred compensation plan, loss on extinguishment or modification of debt, other non-operating items, corporate interest expense and taxes ("EBIT," a non-GAAP financial measure) provides a clearer comparison of the operating results of the company quarter-over-quarter because these items are unrelated to the company's underlying fundamentals. A reconciliation of EBIT to Net Income applicable to common stock is provided in the tables on pages 2 and 9. |
(6) |
Book value per diluted share reflects the potential dilution that could occur if outstanding stock options and warrants were exercised, restricted stock and performance units were vested and convertible securities were converted. The dilution from options, warrants, restricted shares and performance units is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the closing market price on the last day of the period. The dilution from convertible securities is calculated assuming the securities were converted on the last day of the period. In addition, the calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. The corresponding GAAP measures for book value per common share were |
(7) |
Management believes that an analysis of EBIT, separated between in-force and new business provides increased clarity around the value drivers of our business, particularly since the new business results are significantly impacted by the rate of sales, mix of business and the distribution channel through which new sales are made. EBIT from new business includes pre-tax revenues and expenses associated with new sales of our insurance products during the first year after the sale is completed. EBIT from in-force business includes all pre-tax revenues and expenses associated with sales of insurance products that were completed more than one year before the end of the reporting period. The allocation of certain revenues and expenses between new and in-force business is based on estimates, which we believe are reasonable. |
(8) |
The benefit ratio is calculated by dividing the related product's insurance policy benefits by insurance policy income. |
(9) |
The interest-adjusted benefit ratio (a non-GAAP measure) is calculated by dividing the product's insurance policy benefits less imputed interest income on the accumulated assets backing the insurance liabilities by insurance policy income. Interest income is an important factor in measuring the performance of longer duration health products. The net cash flows generally cause an accumulation of amounts in the early years of a policy (accounted for as reserve increases), which will be paid out as benefits in later policy years (accounted for as reserve decreases). Accordingly, as the policies age, the benefit ratio will typically increase, but the increase in the change in reserve will be partially offset by the imputed interest income earned on the accumulated assets. The interest-adjusted benefit ratio reflects the effects of such interest income offset (which is equal to the tabular interest on the related insurance liabilities). Since interest income is an important factor in measuring the performance of these products, management believes a benefit ratio, which includes the effect of interest income, is useful in analyzing product performance. Additional information concerning this non-GAAP measure is included in our periodic filings with the |
Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in this press release relative to markets for
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cno-financial-group-reports-second-quarter-2015-results-300120742.html
SOURCE
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News