<< Back
CNO Reports 20% Increase in Second Quarter 2010 Net Income and Continued Sales Growth

CARMEL, Ind., Aug 03, 2010 /PRNewswire via COMTEX/ --

CNO Financial Group, Inc. (NYSE: CNO) today announced results for the second quarter of 2010. "Sales across all three of our segments continued to be strong during the second quarter," CEO Jim Prieur said. "Earnings for the quarter also were strong, with net operating income of 16 cents per diluted share ahead of our expectations."

Second Quarter Results

  • Net income of $33.1 million, up 20% over 2Q09 (including $11.8 million of net realized investment losses and loss on extinguishment of debt in 2Q10 vs. $13.2 million of net realized investment losses in 2Q09)
  • Net income per diluted share of 12 cents, compared to 15 cents in 2Q09 (reflecting dilution of 5 cents per share related to the issuance of common stock and convertible debentures; and including 4 cents of net realized investment losses and loss on extinguishment of debt in 2Q10 vs. 7 cents of net realized investment losses in 2Q09) (1)
  • $89.7 million of income before net realized investment losses, corporate interest and taxes ("EBIT") (2), up 3% compared to $86.7 million in 2Q09
  • Net operating income (3) of $44.9 million, up 10% compared to $40.8 million in 2Q09
  • Net operating income per diluted share: 16 cents, compared to 22 cents in 2Q09 (reflecting dilution of 7 cents per share related to the issuance of common stock and convertible debentures) (1)
  • Total new annualized premium ("NAP") excluding Private-Fee-For-Service ("PFFS") and Prescription Drug Plan ("PDP") (4): $95.3 million, up 5% from 2Q09, with growth in all three segments

Six-Month Results

  • Net income of $67.0 million, up 29% compared to the first six months of 2009 (including $16.1 million of net realized investment losses and loss on extinguishment of debt in the first six months of 2010 vs. $26.2 million of net realized investment losses and loss on modification of debt in the first six months of 2009)
  • Net income per diluted share of 25 cents, compared to 28 cents in the first six months of 2009 (including 5 cents of net realized investment losses and loss on extinguishment of debt in the first six months of 2010 vs. 14 cents of net realized investment losses and loss on modification of debt in the first six months of 2009) (1)
  • $168.9 million of income before net realized investment losses, corporate interest and taxes ("EBIT") (2), up 6% compared to the first six months of 2009
  • Net operating income (3) of $83.1 million, up 6% compared to the first six months of 2009
  • Net operating income per diluted share: 30 cents, compared to 42 cents in the first six months of 2009 (1)
  • NAP excluding PFFS and PDP (4): $182.6 million, up 4% from the first six months of 2009, with growth in all three segments

Financial Strength at June 30, 2010

  • Including an 8 point decrease from the adoption of the new Mortgage Experience Adjustment Factors, the combined statutory risk-based capital ratio of our insurance subsidiaries decreased 1 percentage point to 318% in 2Q10
  • Debt-to-total capital ratio, excluding accumulated other comprehensive income (loss) (5), improved to 21.0% from 21.5% at December 31, 2009
  • Book value per common share, excluding accumulated other comprehensive income (loss) (5), increased to $15.39 from $15.14 at December 31, 2009
  • Accumulated other comprehensive income (loss) improved in 2Q10 by $421.8 million, to accumulated other comprehensive income of $318.8 million, reflecting the increase in estimated fair value of our actively managed fixed maturity investments

    Quarterly Segment Operating Results

                                                      Three months ended
                                                           June 30,
                                                           --------
                                                 2010              2009
                                                 ----              ----
                                                     ($ in millions, except
                                                        per-share data)
    EBIT (2):
      Bankers Life                              $64.0             $63.3
      Colonial Penn                               7.6              11.0
      Conseco Insurance Group                    29.9              21.2
      Corporate Operations, excluding
       corporate interest expense              (11.8)              (8.8)
                                                -----              ----
       EBIT                                      89.7              86.7
    Corporate interest expense                 (19.8)            (23.9)
                                                -----             -----
       Income before loss on extinguishment or
        modification of debt, net realized
        investment losses and taxes              69.9              62.8
    Tax expense on operating income              25.0              22.0
                                                 ----              ----
       Net operating income (3)                  44.9              40.8
    Loss on extinguishment or modification
     of debt, net of income taxes                 (.6)                -
    Net realized investment losses (net of
     related amortization and taxes and the
     establishment of a valuation allowance
     for deferred tax assets related to
     such losses) (6)                          (11.2)    (13.2)
                                                -----             -----

       Net income applicable to common stock    $33.1             $27.6
                                                =====             =====
    Per diluted share (1):
      Net operating income                       $.16              $.22
      Net realized investment losses, net of
       related amortization and taxes            (.04)             (.07)
                                                 ----              ----
       Net income                                $.12              $.15
                                                 ====              ====



Segment Results

Bankers Life: Pre-tax operating earnings were $64.0 million in 2Q10, essentially flat with earnings in 2Q09.

Colonial Penn: Pre-tax operating earnings were $7.6 million in 2Q10 down 31% compared to 2Q09. Excluding the impact of a $3 million gain in 2Q09 related to the termination of a group insurance pool, Colonial Penn's results were essentially flat with prior-period earnings.

Conseco Insurance Group: Pre-tax operating earnings were $29.9 million in 2Q10 up 41% compared to 2Q09. Results for the second quarter of 2010 were driven by higher investment spreads resulting from bond prepayment income, along with higher book yields on our investment portfolio, and improved annuity persistency.

Corporate Operations (including our investment advisory subsidiary and corporate expenses): Results for 2Q10 compared to 2Q09 reflect increased expenses, including $2 million related to a terminated lease obligation and rebranding expenses.

Results for 2Q10 included the recognition of a $0.6 million extinguishment loss, net of income taxes, related to the repurchase of $52.5 million aggregate principal amount of 3.5% convertible senior debentures.

Investment Results

Net realized investment losses in 2Q10 were $11.2 million (net of related amortization and taxes), including total other-than-temporary impairment losses of $29.3 million, of which $27.9 million was recorded in earnings and $1.4 million in accumulated other comprehensive income (loss). Net realized investment losses in 2Q09 of $13.2 million (net of related amortization and taxes and the establishment of a valuation allowance for deferred tax assets related to such losses), including: (i) total other-than-temporary impairment losses of $53.7 million, of which $36.6 million was recorded in earnings and $17.1 million in accumulated other comprehensive income (loss); and (ii) $4.6 million increase to the deferred tax valuation allowance.

Sales Results

At Bankers Life (career distribution), total NAP (excluding PFFS and PDP) in 2Q10 was $64.0 million, up 3% from 2Q09.

At Colonial Penn (direct distribution), total NAP was $12.2 million, up 16% from 2Q09.

At Conseco Insurance Group (independent distribution), total NAP was $19.1 million, up 6% from 2Q09.

Accounting Matters

Effective January 1, 2010, we adopted authoritative guidance requiring us to consolidate a variable interest entity. At that date, the cumulative effect of this accounting change was a decrease to shareholders' equity of $15.9 million, including $6.2 million included in accumulated other comprehensive income (loss).

Conference Call

The Company will host a conference call to discuss results on August 4, 2010 at 10:00 a.m. Eastern Daylight Time. The webcast can be accessed through the Investors section of the company's website: http://investor.CNOinc.com. Participants should go to the website at least 15 minutes before the event to register and download any necessary audio software. During the call, we will be referring to a presentation that will be available this morning at the Investors section of the company's website.

About CNO

CNO is a holding company. Our insurance subsidiaries - principally Bankers Life and Casualty Company, Colonial Penn Life Insurance Company and Washington National Insurance Company - serve working American families and seniors by helping them protect against financial adversity and provide for a more secure retirement. For more information, visit CNO online at www.CNOinc.com.

  1. Net income per diluted share and operating income per diluted share for 2Q2010 and the first six months of 2010 reflect the dilution from the issuance of 65.9 million shares of common stock and $293.0 million of convertible debentures.
  2. Management believes that an analysis of earnings before net realized investment gains (losses), corporate interest expense, loss on extinguishment or modification of debt and taxes ("EBIT," a non-GAAP financial measure) provides a clearer comparison of the operating results of the company quarter-over-quarter because it excludes: (i) corporate interest expense; (ii) loss on extinguishment or modification of debt; and (iii) net realized investment gains (losses) that 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 8.
  3. Management believes that an analysis of Net income applicable to common stock before: (i) loss on extinguishment or modification of debt, net of income taxes; and (ii) net realized investment gains or losses, net of related amortization and income 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 loss on extinguishment of debt and realized investment gains or losses can be affected by events that are unrelated to the company's underlying fundamentals. A reconciliation of Net operating income to Net income applicable to common stock is provided in the tables on pages 2 and 8. Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available in the "Investors - SEC Filings" section of CNO's website, www.CNOinc.com.
  4. Measured by new annualized premium, which includes 6% of annuity and 10% of single premium whole life deposits and 100% of all other premiums. PDP and PFFS sales are not comparable to other sales and are therefore excluded in all periods. Effective January 1, 2010, we no longer assume any of the risks of PFFS business through reinsurance.
  5. 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 and book value per common share were 19.7% and $16.66, respectively, at June 30, 2010, and 22.7% and $14.09, respectively, at December 31, 2009.
  6. Amount in the second quarter of 2009 reflects a deferred tax valuation allowance of $4.6 million as it is more likely than not that tax benefits related to investment losses will not be utilized to offset future taxable income.

Cautionary Statement Regarding Forward-Looking Statements.Our statements, trend analyses and other information contained in this press release relative to markets for CNO Financial's products and trends in CNO Financial's operations or financial results, as well as other statements, contain forward-looking statements within the meaning of thefederal securities laws and the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by the use of terms such as "anticipate," "believe," "plan," "estimate," "expect," "project," "intend," "may," "will," "would," "contemplate," "possible," "attempt," "seek," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic" and similar words, although some forward-looking statements are expressed differently. You should consider statements that contain these words carefully because they describe our expectations, plans, strategies and goals and our beliefs concerning future business conditions, our results of operations, financial position, and our business outlook or they state other ''forward-looking'' information based on currently available information. Assumptions and other important factors that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, among other things: (i) our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; (ii) general economic, market and political conditions, including the performance and fluctuations of the financial markets which may affect our ability to raise capital or refinance existing indebtedness and the cost of doing so; (iii) our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; (iv) our ability to obtain adequate and timely rate increases on our supplemental health products, including our long-term care business; (v) the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; (vi) mortality, morbidity, the increased cost and usage of health care services, persistency, the adequacy of our previous reserve estimates and other factors which may affect the profitability of our insurance products; (vii) changes in our assumptions related to the cost of policies produced or the value of policies in force at the effective date; (viii) the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on its value; (ix) our assumption that the positions we take on our tax return filings, including our position that our 7.0% convertible senior debentures due 2016 will not be treated as stock for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, and will not trigger an ownership change, will not be successfully challenged by the Internal Revenue Service; (x) changes in accounting principles and the interpretation thereof; (xi) our ability to achieve anticipated expense reductions and levels of operational efficiencies including improvements in claims adjudication and continued automation and rationalization of operating systems, (xii) performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); (xiii) our ability to identify products and markets in which we can compete effectively against competitors with greater market share, higher ratings, greater financial resources and stronger brand recognition; (xiv) the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; (xv) our ability to complete the remediation of the material weakness in internal controls over our actuarial reporting process and to maintain effective controls over financial reporting; (xvi) our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products, distribution channels and marketing initiatives; (xvii) our ability to achieve eventual upgrades of the financial strength ratings of CNO Financial and our insurance company subsidiaries as well as the impact of rating downgrades on our business and our ability to access capital; (xviii) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission; (xix) regulatory changes or actions, including those relating to regulation of the financial affairs of our insurance companies, such as the payment of dividends and surplus debenture interest to us, regulation of financial services affecting (among other things) bank sales and underwriting of insurance products, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; and (xx) changes in the Federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products. Other factors and assumptions not identified above are also relevant to the forward-looking statements, and if they prove incorrect, could also cause actual results to differ materially from those projected. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Our forward-looking statements speak only as of the date made. We assume no obligation to update or to publicly announce the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements.



                                - Tables Follow -



                         CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEET
                                    (Dollars in millions)

                                                                  December
                                                      June 30,       31,
                                                            2010       2009
                                                            ----       ----
    ASSETS                                           (unaudited)
    Investments:
       Actively managed fixed maturities at fair
        value (amortized cost:                         $19,935.7  $18,528.4
    June 30, 2010 -$19,280.3; December 31,
     2009 -$18,998.0)
       Equity securities at fair value (cost:
        June 30, 2010 -$30.7; December 31, 2009
        -$30.7)                                             31.0       31.0
       Mortgage loans                                    1,948.1    1,965.5
       Policy loans                                        292.9      295.2
       Trading securities                                  360.7      293.3
       Investments held by securitization
        entities (1)                                       478.4          -
       Securities lending collateral                        77.6      180.0
       Other invested assets                               167.2      236.8
                                                           -----      -----
          Total investments                             23,291.6   21,530.2
    Cash and cash equivalents - unrestricted               323.7      523.4
    Cash and cash equivalents held by
     securitization entities (1)                            13.5        3.4
    Accrued investment income                              323.1      309.0
    Value of policies inforce at the Effective
     Date                                                1,077.3    1,175.9
    Cost of policies produced                            1,700.0    1,790.9
    Reinsurance receivables                              3,357.2    3,559.0
    Income tax assets, net                                 769.0    1,124.0
    Assets held in separate accounts                        15.6       17.3
    Other assets                                           349.8      310.7
                                                           -----      -----
          Total assets                                 $31,220.8  $30,343.8
                                                       =========  =========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Liabilities:
      Liabilities for insurance products:
       Interest-sensitive products                     $13,177.8  $13,219.2
       Traditional products                             10,199.7   10,063.5
       Claims payable and other policyholder
        funds                                              946.0      994.0
       Liabilities related to separate accounts             15.6       17.3
      Other liabilities                                    683.6      610.4
      Investment borrowings                                454.2      683.9
      Borrowings related to securitization
       entities (1)                                        449.7          -
      Securities lending payable                            82.0      185.7
      Notes payable - direct corporate
       obligations                                       1,029.4    1,037.4
                                                         -------    -------
          Total liabilities                             27,038.0   26,811.4
                                                        --------   --------
    Commitments and Contingencies
    Shareholders' equity:
       Common stock ($0.01 par value,
        8,000,000,000 shares authorized, shares
        issued and outstanding:  June 30, 2010 -
        251,044,745; December 31, 2009
        -250,786,216)                                        2.5     2.5
      Additional paid-in capital                         4,418.8    4,408.8
      Accumulated other comprehensive income
       (loss)                                              318.8     (264.3)
      Accumulated deficit                                 (557.3)    (614.6)
                                                          ------     ------
          Total shareholders' equity                     4,182.8    3,532.4
                                                         -------    -------
          Total liabilities and shareholders' equity   $31,220.8  $30,343.8
                                                       =========  =========





    (1)  In the first quarter of 2010, the Company began reporting assets
    and liabilities related to securitization entities required to be
    consolidated under a new accounting standard effective January 1,
    2010.

                     CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF OPERATIONS
                    (Dollars in millions, except per share data)
                                     (unaudited)

                                              Three months ended
                                                   June 30,
                                                   --------
                                                2010              2009
                                                ----              ----

    Revenues:
      Insurance policy income                 $667.9            $791.3
      Net investment income (loss):
       General account assets                  321.1             308.5
       Policyholder and reinsurer
        accounts and other special-
        purpose portfolios                     (22.7)              9.0
      Realized investment gains
       (losses):
       Net realized investment gains,
        excluding impairment losses             11.2              20.3
       Other-than-temporary
        impairment losses:
        Total other-than-temporary
         impairment losses                     (29.3)            (53.7)
          Change in other-than-
           temporary impairment losses
           recognized in accumulated
           other comprehensive income
           (loss)                                1.4           17.1
                                                 ---              ----
       Net impairment losses
        recognized                             (27.9)            (36.6)
                                               -----             -----
      Total realized gains (losses)            (16.7)            (16.3)
                                               -----             -----
      Fee revenue and other income               3.6               3.1
                                                 ---               ---

       Total revenues                          953.2           1,095.6
                                               -----           -------

    Benefits and expenses:
      Insurance policy benefits                651.0             781.1
      Interest expense                          28.7              32.7
      Amortization                              96.6             101.8
      Loss on extinguishment or
       modification of debt                       .9                 -
      Other operating costs and
       expenses                                124.2             130.4
                                               -----             -----

       Total benefits and expenses             901.4           1,046.0
                                               -----           -------

        Income before income taxes              51.8              49.6

    Income tax expense:

       Tax expense on period income             18.7              17.4
       Valuation allowance for
        deferred tax assets                        -               4.6
                                                 ---               ---

         Net income                            $33.1             $27.6
                                               =====             =====

    Earnings per common share:
      Basic:
        Weighted average shares
         outstanding                     250,994,000       184,820,000
                                         ===========       ===========

          Net income                            $.13              $.15
                                                ====              ====

      Diluted:
        Weighted average shares
         outstanding                     302,648,000       185,229,000
                                         ===========       ===========

          Net income                            $.12              $.15
                                                ====              ====



                                              Six months ended
                                                  June 30,
                                                  --------
                                                2010             2009
                                                ----             ----

    Revenues:
      Insurance policy income               $1,332.5         $1,574.1
      Net investment income (loss):
       General account assets                  636.3            617.3
       Policyholder and reinsurer
        accounts and other special-
        purpose portfolios                       1.3             (9.2)
      Realized investment gains
       (losses):
       Net realized investment gains,
        excluding impairment losses             26.6            105.4
       Other-than-temporary
        impairment losses:
        Total other-than-temporary
         impairment losses                     (47.0)          (161.8)
          Change in other-than-
           temporary impairment losses
           recognized in accumulated
           other comprehensive income
           (loss)                               (1.2)          33.2
                                                ----             ----
       Net impairment losses
        recognized                             (48.2)          (128.6)
                                               -----           ------
      Total realized gains (losses)            (21.6)           (23.2)
                                               -----            -----
      Fee revenue and other income               7.1              6.1
                                                 ---              ---

       Total revenues                        1,955.6          2,165.1
                                             -------          -------

    Benefits and expenses:
      Insurance policy benefits              1,350.0          1,534.6
      Interest expense                          56.2             55.9
      Amortization                             199.2            222.6
      Loss on extinguishment or
       modification of debt                      2.7              9.5
      Other operating costs and
       expenses                                242.6            250.7
                                               -----            -----

       Total benefits and expenses           1,850.7          2,073.3
                                             -------          -------

        Income before income taxes             104.9             91.8

    Income tax expense:

       Tax expense on period income             37.9             32.7
       Valuation allowance for
        deferred tax assets                        -              7.0
                                                 ---              ---

         Net income                            $67.0            $52.1
                                               =====            =====

    Earnings per common share:
      Basic:
        Weighted average shares
         outstanding                     250,891,000      184,787,000
                                         ===========      ===========

          Net income                            $.27             $.28
                                                ====             ====

      Diluted:
        Weighted average shares
         outstanding                     297,364,000      184,993,000
                                         ===========      ===========

          Net income                            $.25             $.28
                                                ====             ====



                      CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
                                   Operating Results
                     (Dollars in millions, except per-share data)

                                                       Six months ended
                                                           June 30,
                                                           --------
                                                   2010            2009
                                                   ----            ----
    EBIT (2):
      Bankers Life                               $117.2          $108.0
      Colonial Penn                                12.9            16.1
      Conseco Insurance Group                      55.6            52.4
      Corporate Operations, excluding corporate
       interest expense                          (16.8)          (17.5)
                                                  -----           -----
       EBIT                                       168.9           159.0
    Corporate interest expense                   (39.3)          (37.6)
                                                  -----           -----
       Income before loss on extinguishment or
        modification of debt, net realized
        investment losses and taxes               129.6           121.4
    Tax expense on operating income                46.5            43.1
                                                   ----            ----
       Net operating income (3)                    83.1            78.3
    Loss on extinguishment or modification of
     debt, net of income taxes                     (1.8)           (6.1)
    Net realized investment losses (net of
     related amortization and taxes and the
     establishment of a valuation allowance for
     deferred tax assets related to such losses) (14.3)          (20.1)
                                                  -----           -----

       Net income applicable to common stock      $67.0           $52.1
                                                  =====           =====
    Per diluted share (1):
      Net operating income                         $.30            $.42
      Loss on extinguishment or modification of
       debt, net of income taxes                      -            (.03)
      Net realized investment losses, net of
       related amortization and taxes              (.05)           (.11)
                                                   ----            ----
       Net income                                  $.25            $.28
                                                   ====            ====



         CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
                     COLLECTED PREMIUMS
                   (Dollars in millions)

                                              Three months
                                                 ended
                                               June 30,
                                               --------
                                            2010      2009
                                            ----      ----
    Bankers Life segment:
      Annuity                             $281.1    $275.4
      Supplemental health                  332.4     422.0
      Life                                  52.1      55.3
                                            ----      ----
       Total collected premiums           $665.6    $752.7
                                          ======    ======
    Colonial Penn segment:
      Life                                 $46.7     $45.8
      Supplemental health                    1.7       2.1
                                             ---       ---
       Total collected premiums            $48.4     $47.9
                                           =====     =====
    Conseco Insurance Group segment:
      Annuity                               $4.2     $22.3
      Supplemental health                  148.1     149.3
      Life                                  50.7      62.4
                                            ----      ----
       Total collected premiums           $203.0    $234.0
                                          ======    ======




    BENEFIT RATIOS ON MAJOR SUPPLEMENTAL HEALTH LINES OF BUSINESS

                                                  Three months ended
                                                       June 30,
                                                       --------
                                                    2010               2009
                                                    ----               ----
    Bankers Life segment:
    Medicare Supplement:
      Earned premium                        $178 million       $166 million
      Benefit ratio(a)                              70.7%              68.6%
    PDP and PFFS:
      Earned premium                         $19 million       $119 million
      Benefit ratio(a)                              68.8%              94.3%
    Long-Term Care:
      Earned premium                        $145 million       $152 million
      Benefit ratio(a)                             113.0%             103.2%
      Interest-adjusted benefit ratio (a
       non-GAAP measure)(b)                         71.9%              66.4%
    Conseco Insurance Group (CIG)
     segment:
    Medicare Supplement:
      Earned premium                         $40 million        $46 million
      Benefit ratio(a)                              65.8%              71.2%
    Specified Disease:
      Earned premium                         $99 million        $95 million
      Benefit ratio(a)                              83.2%              83.3%
      Interest-adjusted benefit ratio (a
       non-GAAP measure)(b)                         52.0%              49.7%
    Long-Term Care:
      Earned premium                          $8 million         $8 million
      Benefit ratio(a)                             212.9%             182.2%
      Interest-adjusted benefit ratio (a
       non-GAAP measure)(b)                        128.0%             103.1%




    (a) The benefit ratio is calculated by dividing the related product's
    insurance policy benefits by insurance policy income.
    (b) The interest-adjusted benefit ratio (a non-GAAP measure) is
    calculated by dividing the product's insurance policy benefits less
    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 interest income
    earned on the accumulated assets.  The interest-adjusted benefit
    ratio reflects the interest income offset.  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 Securities and Exchange Commission
    that are available in the "Investors - SEC Filings" section of CNO
    Financial's website, www.CNOinc.com.


SOURCE CNO Financial Group, Inc.

Could not find file '\\us1p-ccsfs01a\Content3\IRXMLDATA\98\98529\Disclaimers.xml'.