CNO Financial Group Inc.
) reported fourth-quarter 2012 adjusted operating earnings of 25
cents per share, surpassing the Zacks Consensus Estimate of 23
cents. Results also surpassed 18 cents earned in the year-ago
quarter. Adjusted operating income in the quarter was $60.0
million, up 18% from $51.0 million in the fourth quarter of
Apart from improved operating performance of most segments,
better-than-expected call and prepayment income and favorable
mortality in the universal life and traditional life businesses
drove operating earnings.
Including net realized investment gains of $10.8 million, fair
value changes in embedded derivative liabilities of $2.6 million,
loss on extinguishment of debt of $0.7 million and decrease in
valuation allowance for deferred tax assets of $25.8 million, the
company reported net income of $101.2 million or 41 cents per
share, comparing favorably with net income of $64.4 million or 23
cents per share.
CNO Financial's revenues inched up 1% to $1.06 billion from
$1.05 billion in the prior-year quarter. Total revenue also
surpassed the Zacks Consensus Estimate of $1.03 billion. Total
new annualized premium increased 2% year over year to $105.7
million. Total benefits and expenses declined 0.6% year over year
to $943.1 million.
Pre-tax operating earnings in the
segment declined 4.5% year over year to $73.7 million in the
's pre-tax operating earnings were $34.6 million in the quarter,
surging 20% from the year-ago quarter.
Pre-tax operating income of
increased to $3.2 million from $1.8 million in the comparable
quarter last year. The adoption of the new accounting standard
related to deferred acquisition costs had a material impact on
the results of this segment as CNO Financial could not defer the
segment's advertising costs. Consequently, the company expects a
pre-tax loss of $5-$10 million in 2013 based on its advertising
plan. Most of this loss is expected in the first quarter of
Other CNO Business
reported pre-tax operating income of $5.2 million in the
, which includes investment advisory subsidiary and corporate
expenses, narrowed pre-tax loss to $2.7 million from $8.4 million
in the year-ago quarter, on the basis of improved investment
Full Year 2012 Highlights
Full-year operating earnings came in at 69 cents, a cent ahead
of the Zacks Consensus Estimate of 68 cents and 13% above 61
cents earned in 2011. Operating earnings in 2012 were $180.4
million, up 19% over the prior year.
The company reported net income of $221.0 million or 83 cents
per share compared with $335.7 million or $1.15 per share in
Full-year revenue grossed $4.34 billion, increasing 5% over
2011. Total revenue also surpassed the Zacks Consensus Estimate
of $4.26 billion. Full-year total benefits and expenses increased
10% over 2011 to $4.2 billion.
During 2012, the consolidated statutory risk-based capital
ratio of CNO Financial's insurance subsidiaries increased 9
percentage points to 367%, driven by statutory earnings of $337
million and dividend of $265 million paid to non-insurance
In addition, unrestricted cash and investments held by CNO
Financial's non-insurance subsidiaries decreased to $294 million
as of Dec 31, 2012 from 313.6 million as of Sep 30, 2012 due to
share buyback, dividend payment and debt repayment.
CNO Financial bought back 21.5 million shares for $180 million
in 2012. The company also redeemed $200 million worth of
convertible debentures for $355 million during the year.
As of Dec 31, 2012, debt-to-total capital ratio, excluding
accumulated other comprehensive income (loss), increased 240
basis points over 2011 end to 20.7% due to the company's recent
recapitalization plan. Book value per common share, excluding
accumulated other comprehensive income (loss), increased to
$17.39 as of Dec 31, 2012 from $15.88 as of Dec 31, 2011.
As of Dec 31, 2012, CNO Financial had total assets worth $34.1
billion and shareholders' equity stood at $5.0 billion.
CNO Financial carries a Zacks Rank #3 (Hold). Other
multi-line insurers worth considering are
Assured Guaranty Ltd.
). All these companies carry a Zacks Rank #1 (Strong Buy).
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CNO FINL GRP (CNO): Free Stock Analysis
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