Yesterday, the board of directors of
CNO Financial Group Inc.
) approved a hike of $300 million in the buyback program. The
company had an outstanding balance of $60 million in its old
program. Thus, the approval takes the total balance in the
buyback program to $360 million.
CNO Financial can use the balance in the buyback program to
repurchase its outstanding stock, warrants and convertible
debentures. The company follows an active capital deployment
policy through share buybacks and dividend payments. It projects
the total amount spent on share buybacks in 2012 to be near the
high end of the $150-$170 million range, as revealed on Sep 28,
Toward this goal, CNO Financial has already repurchased 12.89
million shares at an average price of $7.72 in the first three
quarters of 2012. This corresponds to 5.3% of the outstanding
shares at the end of the 2011. Further, between Oct 1, 2012 and
Dec 12, 2012, the company repurchased about 7.55 million shares
at an average price of $9.32 per share.
CNO Financial also revealed that it is likely to spend
$250-$300 million each on share buybacks and dividend payment in
2013. This is higher than the estimated $200-$275 million to be
spent on dividend payments in 2012 as well as the 2012 share
CNO Financial's strong organic growth and excess capital
generation allows it to constantly return capital to
shareholders. This is the second increase in the repurchase
program this year. The company had announced a $100 million hike
in its share repurchase authorization in February as well.
CNO Financial's dividend policy was initiated in May this
year. Thereafter, the company paid its first quarterly dividend
of 2 cents per share in June and the second one in September. The
third quarterly cash dividend will be paid on Dec 24, 2012, to
shareholders of record as of Dec 10, 2012.
CNO Financial carries a Zacks #3 Rank (Hold). We maintain a
long-term 'Neutral' recommendation on the stock. Peer
Prudential Financial, Inc.
) carries a Zacks #2 Rank (Buy).
CNO FINL GRP (CNO): Free Stock Analysis
PRUDENTIAL FINL (PRU): Free Stock Analysis
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