CNO Financial Group Inc.
) reported first-quarter 2013 adjusted operating earnings of 21
cents per share, in line with the Zacks Consensus Estimate.
Results surpassed 15 cents earned in the year-ago quarter.
Adjusted operating income in the quarter was $49.7 million, up
22% from $40.6 million in the first quarter of 2012.
Including net realized investment gains of $9.4 million, changes
in fair value of embedded derivative liabilities of $1.3 million,
loss on extinguishment of debt of $57.2 million, equity in
earnings of certain non-strategic investments and earnings
attributable to non-controlling interests of ($1.8 million) and
decrease in valuation allowance for deferred tax assets of $10.5
million, CNO Financial reported net income of $11.9 million or 5
cents per share, comparing unfavorably with net income of $59.1
million or 21 cents per share.
CNO Financial's revenues inched up 1.7% to $1.14 billion from
$1.12 billion in the prior-year quarter. Total revenue also
surpassed the Zacks Consensus Estimate of $1.04 billion. Total
new annualized premium increased 2% year over year to $98.1
million. Total benefits and expenses increased 7.4% year over
year to $1.11 billion.
Pre-tax operating earnings in the
segment declined 12% year over year to $62.1 million in the
's pre-tax operating earnings were $29.4 million in the quarter,
surging 19% from the year-ago quarter due to increase in
collected premiums and decline in the benefit ratio for the
supplemental health products.
Pre-tax operating loss of
narrowed to $5.4 million from $9.8 million in the comparable
quarter last year due to improved productivity and higher
Other CNO Business
reported pre-tax operating income of $3.6 million in the quarter,
against a pre-tax loss of $2.3 million in the year-ago quarter.
, which includes investment advisory subsidiary and corporate
expenses, bounced back to a pre-tax income of $3.0 million from
pre-tax loss of $1.8 million in the year-ago quarter, based on
improved investment income and reduced expenses.
During the first quarter of 2013, the consolidated statutory
risk-based capital ratio of CNO Financial's insurance
subsidiaries declined 1 percentage point to 366%, driven by
statutory earnings of $112.5 million and dividend of $81 million
paid to the holding company. Total dividend to holding company in
2013 is expected around $250-$300 million.
In addition, unrestricted cash and investments held by CNO
Financial's non-insurance subsidiaries decreased to $244.1
million as of Mar 31, 2013 from $294 million as of Dec 31, 2012
due to tender offers and debt repayment.
As of Mar 31, 2013, CNO Financial's debt-to-total capital ratio,
excluding accumulated other comprehensive income (loss), declined
120 basis points over 2012-end to 19.5% due to the company's
recapitalization plan. Book value per common share, excluding
accumulated other comprehensive income (loss), increased to
$16.57 as of Mar 31, 2013 from $16.21 as of Dec 31, 2012.
As of Mar 31, 2013, CNO Financial had total assets worth $34.9
billion and shareholder equity stood at $5.0 billion.
CNO Financial did not undertake any share buyback activity in the
reported quarter. However, the company spent $125 million to
repurchase convertible debentures during the quarter. The company
expects to spend another $125-$175 million on the repurchase of
securities in 2013, taking the total amount to $250-$300 million.
CNO Financial spent $4.4 million on dividend payment in the
CNO Financial carries a Zacks Rank #3 (Hold). Other multi-line
insurers worth considering are
Eastern Insurance Holdings, Inc.
) - Zacks Rank #1 (Strong Buy),
FBL Financial Group Inc.
) - Zacks Rank #1 (Strong Buy) and
American International Group, Inc.
) - Zacks Rank #2 (Buy).
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