A recent announcement in the insurance space that is making
headlines is the closure of the sale of Conseco Life Insurance
Company (CLIC) by
CNO Financial Group, Inc.
). The company has vended the business to Wilton Reassurance
Company (Wilton Re) for a net proceed of $220 million.
The deal was announced in March this year and was awaiting
regulatory approval. The GAAP net loss related to the sale of CLIC
was $298 million in the first quarter of 2014.
Concurrently, Bankers Life and Casualty Company ("Bankers Life"),
another life insurance subsidiary of CNO Financial paid $28 million
to acquire approximately $160 million of a traditional life
insurance business that was reinsured to Wilton Re earlier.
CNO Financial has been focused on de-risking its legacy block of
business (due to its volatility) to concentrate on core operations.
As CLIC is a low-return and volatile block of business, its
divestiture, along with the LTC reinsurance agreement with Wilton
Re, is expected to help the company in realizing this goal.
Increased attention to core businesses should help the company in
capitalizing on opportunities provided by the rapidly growing and
underserved middle market. Overall, the deals will reduce the risk
profile of CNO Financial and increase return on equity (ROE).
Apart from boosting core operations, the divestiture is expected to
free up deployable capital that can be used in inorganic growth
initiatives or for efficient capital management.
CNO Financial currently has a Zacks Rank #2 (Buy). Other players in
the industry that look attractive at current levels include
Radian Group Inc.
). While Radian Group sports a Zacks Rank #1 (Strong Buy), Assurant
and AXA Group have the same Zacks Rank as CNO Financial.
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