Form 8-K 09.30.2011 earnings

0001224608-11-000066.txt : 20111025 0001224608-11-000066.hdr.sgml : 20111025 20111025170025 ACCESSION NUMBER: 0001224608-11-000066 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20111025 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20111025 DATE AS OF CHANGE: 20111025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNO Financial Group, Inc. CENTRAL INDEX KEY: 0001224608 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 753108137 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31792 FILM NUMBER: 111157202 BUSINESS ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 BUSINESS PHONE: 3178176100 MAIL ADDRESS: STREET 1: 11825 NORTH PENNSYLVANIA STREET CITY: CARMEL STATE: IN ZIP: 46032 FORMER COMPANY: FORMER CONFORMED NAME: CONSECO INC DATE OF NAME CHANGE: 20030326 8-K 1 form8-k09302011earnings.htm FORM 8-K Form 8-K 09.30.2011 earnings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 25, 2011

CNO Financial Group, Inc.

(Exact Name of Registrant as Specified in Charter)



Delaware	001-31792	75-3108137
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

11825 North Pennsylvania Street

Carmel, Indiana 46032

(Address of Principal Executive Offices) (Zip Code)

(317) 817-6100

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02.	Results of Operations and Financial Condition.

On October 25, 2011, CNO Financial Group, Inc. (the “Company”) issued: (i) a press release announcing its financial results for the quarter ended September 30, 2011, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference; and (ii) additional financial information related to the Company's financial and operating results for the quarter ended September 30, 2011, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The information contained under Item 2.02 in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.



Item 9.01(d).	Financial Statements and Exhibits.

The following materials are furnished as exhibits to this Current Report on Form 8-K:



99.1	Press release dated October 25, 2011 related to financial results for the quarter ended September 30, 2011.
99.2	Quarterly Financial Supplement - 3Q2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	CNO Financial Group, Inc.

Date: October 25, 2011
	By:	/s/ John R. Kline
		John R. Kline
		Senior Vice President and Chief Accounting Officer

EX-99.1 2 exhibit991-09302011earnings.htm EXHIBIT 99.1 Exhibit 99.1 - 09.30.2011 earnings

Exhibit 99.1

For Immediate Release



Contact:	(News Media) Tony Zehnder +1.312.396.7086
	(Investors) Scott Galovic +1.317.817.3228

CNO reports third quarter 2011 net income of

$196.0 million, or 66 cents per share

Carmel, Ind. October 25, 2011 - CNO Financial Group, Inc. (NYSE: CNO) today announced results for the third quarter of 2011. “CNO continued to generate earnings growth, with business segment operating earnings increasing 16%,” said CEO Ed Bonach. “Net income in the quarter was $196.0 million, almost a fourfold increase from the third quarter of 2010 and our investment results were solid despite the low interest rate environment,” Bonach said.

“Our net income was driven in part by the release of $143 million of tax valuation allowance, enabled by our improved financial performance as our franchise continues to grow through both sales and earnings,” Bonach said. “CNO's capital strength also remained strong, with growth in both our statutory capital and risk-based capital ratio,” he added.

“CNO's third quarter sales grew in all three of our segments that actively market business,” COO Scott Perry said. “Overall, sales increased by 8% year-over-year, with sales at Bankers Life and Colonial Penn each increasing 10%. Sales at Washington National grew by 3%,” Perry said.

The Corporate Operations segment and the non-operating results for 3Q11 were negatively impacted by mark-to-market accounting requirements which reflected the financial environment that existed at the end of the quarter.

Third Quarter Results


•	Net income increased to $196.0 million, compared to $49.4 million in 3Q10


•	Net income per diluted share of 66 cents, compared to 17 cents in 3Q10


•	$96.1 million of income before net realized investment gains, corporate interest and taxes (“EBIT”) (1), up 2% compared to $93.8 million in 3Q10


•	Net operating income (2) of $46.5 million, down 1% compared to $47.1 million in 3Q10


•	Net operating income per diluted share: 17 cents, compared to 16 cents in 3Q10


•	Total new annualized premium (“NAP”) excluding Private-Fee-For-Service (“PFFS”) and Prescription Drug Plan (“PDP”) (3): $94 million, up 8% from 3Q10

Nine-Month Results


•	Net income increased to $309.4 million, compared to $116.4 million in the first nine months of 2010


•	Net income per diluted share of $1.05, compared to 42 cents in the first nine months of 2010


•	$305.7 million of income before net realized investment gains, corporate interest and taxes (“EBIT”) (1), up 16% compared to $262.7 million in the first nine months of 2010


•	Net operating income (2) of $155.9 million, up 20% compared to $130.2 million in the first nine months of 2010


•	Net operating income per diluted share: 55 cents, compared to 46 cents in the first nine months of 2010


•	NAP excluding PFFS and PDP (3): $272 million, up 1% from the first nine months of 2010

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CNO Financial (2)

October 25, 2011

Financial Strength at September 30, 2011


•	The consolidated statutory risk-based capital ratio of our insurance subsidiaries increased 8 percentage points to 359% in 3Q11, driven by improved asset quality and statutory earnings of $65.5 million partially offset by $27.4 million of dividend payments to our holding company

•

Unrestricted cash and investments held by our non-insurance subsidiaries decreased by $65.1 million to $168.9 million during 3Q11, primarily reflecting $39.5 million for share repurchases and $39.5 million of commensurate prepayment of debt, as well as $25.0 million early payment on the Senior Health Note. These outflows were partially offset by the aforementioned dividend payments, surplus debenture interest and management and investment fees


•	Debt-to-total capital ratio, as defined in our senior secured credit facility (4), reduced to 18.0% from 20.0% at December 31, 2010


•	Book value per common share, excluding accumulated other comprehensive income (loss) (5), increased to $17.89 from $16.28 at December 31, 2010

Quarterly Segment Operating Results



	Three months ended
	September 30,
	2011			2010
	(Dollars in millions, except per-share data)
EBIT (1):
Bankers Life	$	91.4		$	95.5
Washington National	22.1			27.2
Colonial Penn	8.1			7.8
Other CNO Business	2.0			(24.4		)
EBIT from business segments	123.6			106.1
Corporate Operations, excluding corporate interest expense	(27.5		)	(12.3		)
EBIT	96.1			93.8
Corporate interest expense	(18.7		)	(20.0		)
Income before net realized investment gains (losses), fair value changes in embedded derivative liabilities and taxes	77.4			73.8
Tax expense on operating income	30.9			26.7
Net operating income (2)	46.5			47.1
Net realized investment gains (losses) (net of related amortization and taxes)	16.6			2.3
Fair value changes in embedded derivative liabilities (net of related amortization and taxes)	(9.4		)	—
Loss on extinguishment of debt, net of income taxes	(.7		)	—
Net income before valuation allowance for deferred tax assets	53.0			49.4
Decrease in the valuation allowance for deferred tax assets	143.0			—
Net income	$	196.0		$	49.4
Per diluted share:
Net operating income	$	.17		$	.16
Net realized investment gains (losses), net of related amortization and taxes	.05			.01
Fair value changes in embedded derivative liabilities, net of related amortization and taxes	(.03		)	—
Valuation allowance for deferred tax assets	.47			—
Net income	$	.66		$	.17

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CNO Financial (3)

October 25, 2011

The following summarizes the financial impact of several significant items (described in the segment results) on our 3Q11 earnings (dollars in millions, except per share amounts):



	Three months ended September 30, 2011
	Actual results			Significant items			Excluding significant items

EBIT (1):
Bankers Life	$	91.4		$	(14.0	)	$	77.4
Washington National	22.1			6.0			28.1
Colonial Penn	8.1			—			8.1
Other CNO Business	2.0			—			2.0
EBIT from business segments	123.6			(8.0		)	115.6
Corporate Operations, excluding corporate interest expense	(27.5		)	19.3			(8.2		)
EBIT (or "pre-tax operating earnings")	96.1			11.3			107.4
Corporate interest expense	(18.7		)	—			(18.7		)
Income before net realized investment gains (losses), fair value changes in embedded derivative liabilities and taxes	77.4			11.3			88.7
Tax expense on operating income	30.9			4.1			35.0
Net operating income	46.5			7.2			53.7
Net realized investment gains (losses) (net of related amortization and taxes)	16.6			(16.6		)	—
Fair value changes in embedded derivative liabilities (net of related amortization and taxes)	(9.4		)	9.4			—
Loss on extinguishment of debt, net of income taxes	(.7		)	.7			—
Net income before valuation allowance for deferred tax assets	53.0			.7			53.7
Decrease in the valuation allowance for deferred tax assets	143.0			(143.0		)	—
Net income	$	196.0		$	(142.3	)	$	53.7
Per diluted share:
Net operating income	$	.17		$	.02		$	.19
Non-operating items	.49			(.49		)	—
Net income	$	.66		$	(.47	)	$	.19

Segment Results

Bankers Life: Pre-tax operating earnings in 3Q11 of $91.4 million included approximately $14 million of favorable reserve developments in the long-term care and Medicare supplement blocks.

Pre-tax operating earnings in 3Q10 of $95.5 million included approximately $10 million of favorable reserve developments in the long-term care and Medicare supplement blocks and $6.5 million of favorable claim developments from PFFS business assumed through reinsurance agreements with Coventry (the last of which expired on January 1, 2010).

Pre-tax operating earnings in 3Q11 compared to 3Q10 were down $4.1 million, or 4 percent. Such decrease reflects: (i) a $3.0 million reduction in earnings from the sale of PDP products; (ii) earnings in 3Q10 include the $6.5 million of favorable claim developments from PFFS business described above; partially offset by (iii) an increase in favorable reserve developments in the long-term care and Medicare supplement blocks of approximately $4 million.

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CNO Financial (4)

October 25, 2011

Washington National: Pre-tax operating earnings in 3Q11 of $22.1 million included a $6.0 million out-of-period adjustment which reduced earnings.

Pre-tax operating earnings in 3Q11 compared to 3Q10 were down $5.1 million, or 19 percent. Such decrease reflects the aforementioned $6.0 million out-of-period adjustment, partially offset by $1.0 million of additional spread earnings in 3Q11 on investments purchased with the proceeds of increased borrowings from expanding the Federal Home Loan Bank to Washington National.

Colonial Penn: Pre-tax operating earnings in 3Q11 were up 4 percent compared to 3Q10, reflecting growth in the block.

Other CNO Business: Pre-tax operating earnings in 3Q11 of $2.0 million were up $26.4 million, compared to 3Q10. Such increase reflects approximately $13 million improvement in margins in the interest-sensitive life block, $4.0 million of reduced legal costs and a $6.0 million write off of the present value of future profits related to this segment's long-term care insurance block taken in 3Q10. Results in both 3Q11 and 3Q10 reflect a reduction in earnings of approximately $13 million primarily due to the impact of decreased projected future investment yield assumptions related to interest-sensitive insurance products.

Corporate Operations (including our investment advisory subsidiary and corporate expenses): Net expenses, excluding corporate interest expense in 3Q11 compared to 3Q10 were up $15.2 million. Such increase primarily reflects: (i) a loss of $10.4 million related to the impact of market value fluctuations on assets backing Company-owned life insurance policies purchased as an investment vehicle for agent deferred compensation benefits; and (ii) a loss of $8.9 million related to the impact of lower interest rates on the value of liabilities for agent deferred compensation and former executive retirement benefits.

Non-Operating Items

Net realized investment gains in 3Q11 were $16.6 million (net of related amortization and taxes), including total other-than-temporary impairment losses of $2.9 million, all of which were recorded in earnings. Net realized investment gains in 3Q10 were $2.3 million (net of related amortization and taxes), including total other-than-temporary impairment losses of $22.8 million, of which $24.5 million was recorded in earnings and $(1.7) million in accumulated other comprehensive income (loss).

During 3Q11, we recognized a $9.4 million decrease to earnings resulting from an increase in the estimated fair value of embedded derivative liabilities related to our fixed index annuities, net of related amortization and income taxes. Such charge reflects the reduction in market interest rates used to determine the derivative's estimated fair value.

The results for 3Q11 include a $.7 million loss on extinguishment of debt, net of income taxes, related to the prepayment of $39.5 million principal amount outstanding under our senior secured credit agreement.

The results for 3Q11 reflect a $143.0 million reduction to the deferred tax valuation allowance primarily resulting from our recent higher levels of operating income when projecting future taxable income.

Sales Results

At Bankers Life (career distribution), total NAP (excluding PFFS and PDP) in 3Q11 was $60.8 million, up 10% from 3Q10.

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CNO Financial (5)

October 25, 2011

At Washington National (independent distribution), total NAP in 3Q11 was $20.0 million, up 3% from 3Q10.

At Colonial Penn (direct distribution), total NAP in 3Q11 was $12.7 million, up 10% from 3Q10.

Conference Call

The Company will host a conference call to discuss results on October 26, 2011 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 the morning of the call 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, Washington National Insurance Company and Colonial Penn Life 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)

Management believes that an analysis of earnings before net realized investment gains (losses), fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, corporate interest expense, loss on extinguishment 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 these items 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 9.

(2)

Management believes that an analysis of Net income applicable to common stock before: (i) loss on extinguishment of debt, net of income taxes; (ii) net realized investment gains or losses, net of related amortization and income taxes; and (iii) fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, 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 the items excluded from net operating income can be affected by events that are unrelated to the company's underlying fundamentals. The impact of fair value changes in embedded derivative liabilities caused by interest rate fluctuations was insignificant in prior periods. Prior to June 30, 2011, certain of our trading securities were held to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products. During 2Q2011, these securities were sold. A reconciliation of Net operating income to Net income applicable to common stock is provided in the tables on pages 2 and 9. 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.


(3)	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.

(4)

The calculation of this non-GAAP measure differs from the corresponding GAAP measure because: (i) debt is defined as par value plus accrued interest and unused letters of credit; and (ii) 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 as the level of such ratio impacts certain provisions in our senior secured credit facility. The corresponding GAAP measures for debt-to-total capital were 15.0% and 18.8% at September 30, 2011 and December 31, 2010, respectively.

(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 book value per common share were $20.34 and $17.23 at September 30, 2011 and December 31, 2010, respectively.

-more-

CNO Financial (6)

October 25, 2011

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 the federal 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) changes in or sustained low interest rates causing a reduction in investment income, the margins of our fixed annuity and life insurance businesses, and sales of, and demand for, our products; (ii) general economic, market and political conditions, including the performance and fluctuations of the financial markets which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so; (iii) the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; (iv) our ability to make changes to certain non-guaranteed elements of our life insurance products; (v) our ability to obtain adequate and timely rate increases on our health products, including our long-term care business; (vi) the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; (vii) 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; (viii) changes in our assumptions related to deferred acquisition costs or the present value of future profits; (ix) the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value; (x) 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; (xi) changes in accounting principles and the interpretation thereof (including changes in principles related to accounting for deferred acquisition costs); (xii) our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; (xiii) 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, (xiv) performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); (xv) 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; (xvi) our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; (xvii) our ability to maintain effective controls over financial reporting; (xviii) our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products, distribution channels and marketing initiatives; (xix) 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 our ratings on our business, our ability to access capital and the cost of capital; (xx) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission; (xxi) 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 the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; and (xxii) changes in the Federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products or affect the value of our deferred tax assets. 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 (7)

October 25, 2011

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Dollars in millions)



	September 30, 2011			December 31, 2010
	(unaudited)
ASSETS
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: September 30, 2011 - $21,347.7; December 31, 2010 - $20,155.8)	$	23,016.7		$	20,633.9
Equity securities at fair value (cost: September 30, 2011 - $167.0; December 31, 2010 - $68.2)	164.3			68.1
Mortgage loans	1,648.2			1,761.2
Policy loans	279.6			284.4
Trading securities	81.8			372.6
Investments held by securitization entities	453.5			420.9
Other invested assets	190.9			240.9
Total investments	25,835.0			23,782.0
Cash and cash equivalents - unrestricted	461.9			571.9
Cash and cash equivalents held by securitization entities	19.7			26.8
Accrued investment income	301.2			327.8
Present value of future profits	714.2			1,008.6
Deferred acquisition costs	1,444.7			1,764.2
Reinsurance receivables	3,131.3			3,256.3
Income tax assets, net	687.2			839.4
Assets held in separate accounts	15.4			17.5
Other assets	314.9			305.1
Total assets	$	32,925.5		$	31,899.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Liabilities for insurance products:
Interest-sensitive products	$	13,168.2		$	13,194.7
Traditional products	10,444.8			10,307.6
Claims payable and other policyholder funds	985.5			968.7
Liabilities related to separate accounts	15.4			17.5
Other liabilities	576.9			496.3
Investment borrowings	1,509.1			1,204.1
Borrowings related to variable interest entities	405.6			386.9
Notes payable – direct corporate obligations	871.2			998.5
Total liabilities	27,976.7			27,574.3
Commitments and Contingencies
Shareholders' equity:
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: September 30, 2011 – 243,247,260; December 31, 2010 – 251,084,174)	2.4			2.5
Additional paid-in capital	4,379.4			4,424.2
Accumulated other comprehensive income	597.3			238.3
Accumulated deficit	(30.3		)	(339.7		)
Total shareholders' equity	4,948.8			4,325.3
Total liabilities and shareholders' equity	$	32,925.5		$	31,899.6

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CNO Financial (8)

October 25, 2011

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in millions, except per-share data)

(unaudited)



	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Revenues:
Insurance policy income	$	673.5		$	674.5		$	2,020.3		$	2,007.0
Net investment income:
General account assets	338.2			326.5			1,016.5			962.8
Policyholder and reinsurer accounts and other special-purpose portfolios	(54.9		)	43.3			(14.4		)	44.6
Realized investment gains (losses):
Net realized investment gains, excluding impairment losses	33.5			28.1			64.9			54.7
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses	(2.9		)	(22.8		)	(26.3		)	(69.8		)
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income	—			(1.7		)	—			(2.9		)
Net impairment losses recognized	(2.9		)	(24.5		)	(26.3		)	(72.7		)
Total realized gains (losses)	30.6			3.6			38.6			(18.0		)
Fee revenue and other income	4.9			4.6			12.5			11.7
Total revenues	992.3			1,052.5			3,073.5			3,008.1
Benefits and expenses:
Insurance policy benefits	661.0			700.0			2,028.6			2,050.0
Interest expense	27.9			28.4			86.0			84.6
Amortization	87.2			118.6			325.4			317.8
Loss on extinguishment of debt	1.1			—			3.1			2.7
Other operating costs and expenses	127.6			128.2			367.1			370.8
Total benefits and expenses	904.8			975.2			2,810.2			2,825.9
Income before income taxes	87.5			77.3			263.3			182.2
Income tax expense:
Tax expense on period income	34.5			27.9			96.9			65.8
Valuation allowance for deferred tax assets	(143.0		)	—			(143.0		)	—
Net income	$	196.0		$	49.4		$	309.4		$	116.4
Earnings per common share:
Basic:
Weighted average shares outstanding	246,965,000			251,045,000			249,673,000			250,942,000
Net income	$	.79		$	.20		$	1.24		$	.46
Diluted:
Weighted average shares outstanding	302,708,000			306,040,000			306,085,000			300,256,000
Net income	$	.66		$	.17		$	1.05		$	.42

-more-

CNO Financial (9)

October 25, 2011

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Operating Results

(Dollars in millions, except per-share data)



	Nine months ended
	September 30,
	2011			2010
EBIT (1):
Bankers Life	$	240.0		$	212.7
Washington National	70.0			75.9
Colonial Penn	21.1			20.7
Other CNO Business	13.9			(17.5		)
EBIT from business segments	345.0			291.8
Corporate Operations, excluding corporate interest expense	(39.3		)	(29.1		)
EBIT	305.7			262.7
Corporate interest expense	(58.6		)	(59.3		)
Income before net realized investment gains (losses), fair value changes in embedded derivative liabilities and taxes	247.1			203.4
Tax expense on operating income	91.2			73.2
Net operating income (2)	155.9			130.2
Net realized investment gains (losses) (net of related amortization and taxes)	21.9			(12.0		)
Fair value changes in embedded derivative liabilities (net of related amortization and taxes)	(9.4		)	—
Loss on extinguishment of debt, net of income taxes	(2.0		)	(1.8		)
Net income before valuation allowance for deferred tax assets	166.4			116.4
Decrease in the valuation allowance for deferred tax assets	143.0			—
Net income	$	309.4		$	116.4
Per diluted share:
Net operating income	$	.55		$	.46
Net realized investment gains (losses), net of related amortization and taxes	.07			(.04		)
Fair value changes in embedded derivative liabilities, net of related amortization and taxes	(.03		)	—
Loss on extinguishment of debt, net of income taxes	(.01		)	—
Valuation allowance for deferred tax assets	.47			—
Net income	$	1.05		$	.42

-more-

CNO Financial (10)

October 25, 2011

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

COLLECTED PREMIUMS

(Dollars in millions)



	Three months ended
	September 30,
	2011		2010
Bankers Life segment:
Annuity	$	264.1	$	265.8
Medicare supplement and other supplemental health	328.0		333.4
Life	65.5		54.8
Total collected premiums	$	657.6	$	654.0
Washington National segment:
Medicare supplement and other supplemental health	$	141.2	$	140.7
Life	4.1		3.8
Total collected premiums	$	145.3	$	144.5
Colonial Penn segment:
Life	$	49.2	$	46.9
Supplemental health	1.4		1.5
Total collected premiums	$	50.6	$	48.4
Other CNO Business segment:
Annuity	$	3.3	$	3.6
Other health	6.7		7.6
Life	44.0		47.8
Total collected premiums	$	54.0	$	59.0

-more-

CNO Financial (11)

October 25, 2011

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

BENEFIT RATIOS ON MAJOR HEALTH LINES OF BUSINESS



	Three months ended
	September 30,
	2011		2010
Bankers Life segment:
Medicare Supplement:
Earned premium	$179 million		$178 million
Benefit ratio^(a)	68.4	%	69.5	%
PDP and PFFS:
Earned premium	$13 million		$19 million
Benefit ratio^(a)	72.3	%	29.5	%
Long-Term Care:
Earned premium	$142 million		$147 million
Benefit ratio^(a)	109.7	%	114.2	%
Interest-adjusted benefit ratio (a non-GAAP measure)^(b)	65.5	%	73.2	%
Washington National segment:
Medicare Supplement:
Earned premium	$33 million		$39 million
Benefit ratio^(a)	69.9	%	67.0	%
Supplemental health:
Earned premium	$108 million		$101 million
Benefit ratio^(a)	82.4	%	81.3	%
Interest-adjusted benefit ratio (a non-GAAP measure)^(b)	53.9	%	50.5	%
Other CNO Business segment:
Long-Term Care:
Earned premium	$7 million		$7 million
Benefit ratio^(a)	227.5	%	201.7	%
Interest-adjusted benefit ratio (a non-GAAP measure)^(b)	126.1	%	116.9	%

____________________________________________________________________________________



(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.

- # # # # -

EX-99.2 3 exhibit992-09302011investo.htm EXHIBIT 99.2 Exhibit 99.2 - 09.30.2011 investor supplement

Exhibit 99.2





Quarterly Financial Supplement -
3Q2011



October 25, 2011

Page 1



Table of Contents				Page

Consolidated balance sheet				3
Consolidated statement of operations				4
Earnings per share analysis				5
Computation of weighted average shares outstanding				6
Analyses of income before taxes and selected data:
Bankers Life				7-8
Washington National				9-10
Colonial Penn				11
Other CNO Business				12-13
Premiums collected on insurance products:
Bankers Life				14
Washington National				15
Colonial Penn				16
Other CNO Business				17
New annualized premiums				18
Statutory information				19
Notes				20

Page 2



CNO Financial Group, Inc.
Consolidated balance sheet (in millions)	Mar-10			Jun-10			Sep-10			Dec-10			Mar-11			Jun-11			Sep-11			Dec-11

Assets
Investments:
Fixed maturities, available for sale, at fair value	$	18,813.8		$	19,935.7		$	21,007.5		$	20,633.9		$	20,852.2		$	21,622.9		$	23,016.7
Equity securities at fair value	31.1			31.0			41.1			68.1			105.4			129.6			164.3
Mortgage loans	1,936.6			1,948.1			1,825.6			1,761.2			1,751.3			1,752.8			1,648.2
Policy loans	294.0			292.9			290.9			284.4			281.6			279.5			279.6
Trading securities	332.0			360.7			389.7			372.6			403.1			83.5			81.8
Investments held by variable interest entities	511.7			478.4			454.8			420.9			401.6			414.0			453.5
Securities lending collateral	147.4			77.6			—			—			—			—			—
Other invested assets	236.3			167.2			189.5			240.9			272.1			252.2			190.9
Total investments	22,302.9			23,291.6			24,199.1			23,782.0			24,067.3			24,534.5			25,835.0
Cash and cash equivalents - unrestricted	321.1			323.7			548.8			571.9			424.6			580.2			461.9
Cash and cash equivalents held by variable interest entities	24.3			13.5			18.3			26.8			27.1			25.3			19.7
Accrued investment income	334.0			323.1			345.3			327.8			336.7			314.3			301.2
Present value of future profits	1,133.2			1,077.3			1,028.3			1,008.6			970.1			936.5			714.2
Deferred acquisition costs	1,788.0			1,700.0			1,612.7			1,764.2			1,766.1			1,762.6			1,444.7
Reinsurance receivables	3,444.1			3,357.2			3,315.7			3,256.3			3,219.0			3,172.5			3,131.3
Income tax assets, net	1,021.9			769.0			536.7			839.4			798.9			703.5			687.2
Assets held in separate accounts	17.0			15.6			16.7			17.5			18.1			17.4			15.4
Other assets	398.4			349.8			352.0			305.1			439.9			349.8			314.9
Total assets	$	30,784.9		$	31,220.8		$	31,973.6		$	31,899.6		$	32,067.8		$	32,396.6		$	32,925.5
Liabilities
Liabilities for insurance products:
Interest-sensitive products	$	13,217.7		$	13,177.8		$	13,217.6		$	13,194.7		$	13,161.3		$	13,152.8		$	13,168.2
Traditional products	10,137.6			10,199.7			10,253.0			10,307.6			10,357.9			10,424.4			10,444.8
Claims payable and other policyholder funds	969.4			946.0			939.4			968.7			979.0			978.0			985.5
Liabilities related to separate accounts	17.0			15.6			16.7			17.5			18.1			17.4			15.4
Other liabilities	583.6			683.6			833.9			496.3			643.1			703.7			576.9
Investment borrowings	454.5			454.2			653.9			1,204.1			1,203.8			1,305.3			1,509.1
Borrowings related to variable interest entities	495.4			449.7			425.0			386.9			354.4			317.3			405.6
Securities lending payable	152.4			82.0			—			—			—			—			—
Notes payable - direct corporate obligations	1,037.2			1,029.4			1,029.8			998.5			949.8			934.5			871.2
Total liabilities	27,064.8			27,038.0			27,369.3			27,574.3			27,667.4			27,833.4			27,976.7
Shareholders' equity
Common stock	2.5			2.5			2.5			2.5			2.5			2.5			2.4
Additional paid-in capital	4,411.0			4,418.8			4,421.6			4,424.2			4,426.1			4,414.3			4,379.4
Accumulated deficit	(590.4		)	(557.3		)	(507.9		)	(339.7		)	(285.8		)	(226.3		)	(30.3		)
Total shareholders' equity before accumulated other comprehensive income (loss)	3,823.1			3,864.0			3,916.2			4,087.0			4,142.8			4,190.5			4,351.5
Accumulated other comprehensive income (loss)	(103.0		)	318.8			688.1			238.3			257.6			372.7			597.3
Total shareholders' equity	3,720.1			4,182.8			4,604.3			4,325.3			4,400.4			4,563.2			4,948.8
Total liabilities and shareholders' equity	$	30,784.9		$	31,220.8		$	31,973.6		$	31,899.6		$	32,067.8		$	32,396.6		$	32,925.5



	1Q10			2Q10			3Q10			4Q10			1Q11			2Q11			3Q11			4Q11

Book value per share at period-end (1) (2)	$	15.24		$	15.39		$	15.60		$	16.28		$	16.48		$	16.80		$	17.89

Book value per share assuming conversion of convertible securities (1) (3)	$	13.68		$	13.52		$	13.70		$	14.23		$	14.37		$	14.58		$	15.49

Page 3



CNO Financial Group, Inc.
Consolidated statement of operations (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Revenues
Insurance policy income	$	664.6		$	667.9		$	674.5		$	663.0		$	2,670.0		$	667.2		$	679.6		$	673.5
Net investment income (loss):
General account assets	315.2			321.1			326.5			332.2			1,295.0			336.1			342.2			338.2
Policyholder and reinsurer accounts and other special-purpose portfolios	24.0			(22.7		)	43.3			27.3			71.9			37.4			3.1			(54.9		)
Realized investment gains (losses):
Net realized investment gains, excluding impairment losses	15.4			11.2			28.1			125.3			180.0			18.4			13.0			33.5
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses	(17.7		)	(29.3		)	(22.8		)	(77.0		)	(146.8		)	(13.3		)	(10.1		)	(2.9		)
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss)	(2.6		)	1.4			(1.7		)	(0.1		)	(3.0		)	—			—			—
Net impairment losses recognized	(20.3		)	(27.9		)	(24.5		)	(77.1		)	(149.8		)	(13.3		)	(10.1		)	(2.9		)
Total realized gains (losses)	(4.9		)	(16.7		)	3.6			48.2			30.2			5.1			2.9			30.6
Fee revenue and other income	3.5			3.6			4.6			5.1			16.8			3.4			4.2			4.9
Total revenues	1,002.4			953.2			1,052.5			1,075.8			4,083.9			1,049.2			1,032.0			992.3

Benefits and expenses
Insurance policy benefits	699.0			651.0			700.0			673.7			2,723.7			683.2			684.4			661.0
Interest expense	27.5			28.7			28.4			28.6			113.2			29.2			28.9			27.9
Amortization	102.6			96.6			118.6			126.0			443.8			136.7			101.5			87.2
Loss on extinguishment of debt	1.8			0.9			—			4.1			6.8			1.4			0.6			1.1
Other operating costs and expenses	118.4			124.2			128.2			132.1			502.9			115.1			124.4			127.6
Total benefits and expenses	949.3			901.4			975.2			964.5			3,790.4			965.6			939.8			904.8

Income before income taxes	53.1			51.8			77.3			111.3			293.5			83.6			92.2			87.5
Income tax expense on period income	19.2			18.7			27.9			38.1			103.9			29.7			32.7			34.5
Valuation allowance for deferred tax assets	—			—			—			(95.0		)	(95.0		)	—			—			(143.0		)
Net income	$	33.9		$	33.1		$	49.4		$	168.2		$	284.6		$	53.9		$	59.5		$	196.0

Page 4



CNO Financial Group, Inc.
Earnings per share analysis ($ in millions, except per share amounts)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Income (loss) before net realized investment losses, net of related amortization and income taxes:
Bankers Life	$	53.2		$	64.0		$	95.5		$	71.4		$	284.1		$	63.9		$	84.7		$	91.4

Washington National	27.6			21.1			27.2			28.7			104.6			25.2			22.7			22.1

Colonial Penn	5.3			7.6			7.8			5.8			26.5			5.4			7.6			8.1

Other CNO Business	(1.9		)	8.8			(24.4		)	6.0			(11.5		)	7.1			4.8			2.0

Corporate operations:
Interest expense on debt	(19.5		)	(19.8		)	(20.0		)	(20.0		)	(79.3		)	(20.6		)	(19.3		)	(18.7		)
Loss on extinguishment of debt	(1.8		)	(0.9		)	—			(4.1		)	(6.8		)	(1.4		)	(0.6		)	(1.1		)
Other corporate expenses, net	(5.0		)	(11.8		)	(12.3		)	(13.7		)	(42.8		)	(0.5		)	(11.3		)	(27.5		)

Net realized investment gains (losses), net of related amortization	(4.8		)	(17.2		)	3.5			37.2			18.7			4.5			3.6			25.7
Fair value changes in embedded derivative liabilities, net of related amortization	—			—			—			—			—			—			—			(14.5		)


Income before taxes	53.1			51.8			77.3			111.3			293.5			83.6			92.2			87.5

Taxes	19.2			18.7			27.9			38.1			103.9			29.7			32.7			34.5
Valuation allowance for deferred tax assets	—			—			—			(95.0		)	(95.0		)	—			—			(143.0		)
Net income	$	33.9		$	33.1		$	49.4		$	168.2		$	284.6		$	53.9		$	59.5		$	196.0






Diluted earnings per share	$	0.13		$	0.12		$	0.17		$	0.56		$	0.99		$	0.19		$	0.21		$	0.66

Net realized investment gains (losses), net of related amortization and taxes	(0.01		)	(0.04		)	0.01			0.08			0.04			0.01			0.01			0.05

Fair value changes in embedded derivative liabilities, net of related amortization and taxes	—			—			—			—			—			—			—			(0.03		)

Valuation allowance for deferred tax assets	—			—			—			0.31			0.31			—			—			0.47

Loss on extinguishment of debt	—			—			—			(0.01		)	(0.01		)	—			—			—

Diluted earnings per share, excluding net realized investment gains (losses), fair value changes in embedded derivative liabilities, valuation allowance for deferred tax assets and loss on extinguishment of debt	$	0.14		$	0.16		$	0.16		$	0.18		$	0.65		$	0.18		$	0.20		$	0.17

Page 5



CNO Financial Group, Inc.
Computation of weighted average shares outstanding	1Q10		2Q10		3Q10	4Q10		2010		1Q11		2Q11		3Q11		4Q11	2011
(000s)

Basic
Shares outstanding, beginning of period	250,786.2		250,929.8		251,044.7	251,046.4		250,786.2		251,084.2		251,404.9		249,415.2
Weighted average shares issued during the period:
Shares repurchased	—		—		—	—		—		—		(590.3	)	(2,511.6	)
Shares issued under stock option and restricted stock plans	2.3		67.8		0.1	18.2		240.0		52.6		118.5		61.8
Shares withheld for the payment of the exercise price of stock options and taxes	(0.7	)	(3.4	)	—	(0.5	)	(53.5	)	(16.3	)	—		(0.3	)
Weighted average basic shares outstanding during the period	250,787.8		250,994.2		251,044.8	251,064.1		250,972.7		251,120.5		250,933.1		246,965.1
Basic shares outstanding, end of period	250,929.8		251,044.7		251,046.4	251,084.2		251,084.2		251,404.9		249,415.2		243,247.3
Diluted
Weighted average basic shares outstanding	250,787.8		250,994.2		251,044.8	251,064.1		250,972.7		251,120.5		250,933.1		246,965.1
Common stock equivalent shares related to:
Convertible debentures	39,532.4		49,793.3		53,363.6	53,366.9		49,014.1		53,366.9		53,366.9		53,366.9
Stock option and restricted stock plans	1,760.3		1,860.6		1,631.2	2,231.1		1,870.8		2,748.3		3,035.8		2,352.9
Warrants	—		—		—	—		—		262.4		712.4		22.9
Weighted average diluted shares outstanding during the period	292,080.5		302,648.1		306,039.6	306,662.1		301,857.6		307,498.1		308,048.2		302,707.8
Diluted shares outstanding, end of period	296,498.0		306,268.9		306,044.5	306,682.1		306,682.1		307,782.4		306,530.3		298,990.0

Page 6



CNO Financial Group, Inc.
Bankers Life
Analysis of income before taxes (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Insurance policy income	$	396.2		$	400.7		$	405.1		$	394.2		$	1,596.2		$	400.0		$	409.6		$	404.6
Net investment income (loss):
General account invested assets	172.2			177.0			182.4			187.7			719.3			191.3			196.5			194.3
Fixed index products	12.1			(15.3		)	21.9			13.9			32.6			18.3			0.4			(36.3		)
Other special-purpose portfolios	1.6			(1.2		)	4.2			2.4			7.0			—			—			—
Net realized investment gains (losses)	(3.0		)	(10.3		)	18.3			57.1			62.1			6.6			(1.8		)	26.5
Fee revenue and other income	2.3			2.7			3.6			4.2			12.8			2.3			3.3			3.6
Total revenues	581.4			553.6			635.5			659.5			2,430.0			618.5			608.0			592.7

Insurance policy benefits	350.6			344.2			341.8			339.9			1,376.5			337.6			351.3			333.6
Insurance policy benefits - fair value changes in embedded derivative liabilities	—			—			—			—			—			—			—			30.7
Amounts added to policyholder account balances:
Annuity products and interest-sensitive life products other than fixed index products	43.8			44.1			43.3			44.1			175.3			40.8			40.5			40.0
Fixed index products	22.1			(5.6		)	17.0			22.0			55.5			26.4			17.1			(13.0		)
Amortization related to operations	67.0			70.6			76.4			76.5			290.5			101.9			69.7			67.2
Amortization related to net realized investment gains (losses)	0.5			(0.5		)	1.4			8.8			10.2			1.0			(0.4		)	3.9
Amortization related to fair value changes in embedded derivative liabilities	—			—			—			—			—			—			—			(16.4		)
Interest expense on investment borrowings	—			—			—			1.0			1.0			1.2			1.1			1.2
Other operating costs and expenses	47.7			46.6			43.2			47.5			185.0			40.1			45.4			45.8
Total benefits and expenses	531.7			499.4			523.1			539.8			2,094.0			549.0			524.7			493.0
Income before income taxes	$	49.7		$	54.2		$	112.4		$	119.7		$	336.0		$	69.5		$	83.3		$	99.7



Health underwriting margins (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Medicare supplement:
Earned premium	$	178.8		$	178.5		$	178.2		$	177.4		$	712.9		$	181.0		$	179.5		$	179.2
Benefit ratio	72.8		%	70.7		%	69.5		%	70.7		%	70.9		%	67.2		%	69.8		%	68.4		%
Underwriting margin (earned premium less policy benefits)	$	48.6		$	52.3		$	54.4		$	52.0		$	207.3		$	59.3		$	54.2		$	56.7

PDP:
Earned premium	$	18.0		$	19.7		$	19.3		$	10.8		$	67.8		$	14.4		$	16.7		$	12.9
Benefit ratio	88.7		%	89.8		%	64.4		%	60.7		%	77.7		%	89.5		%	88.6		%	76.1		%
Underwriting margin (earned premium less policy benefits)	$	2.0		$	2.0		$	6.9		$	4.2		$	15.1		$	1.5		$	1.9		$	3.1

PFFS:
Earned premium	$	(0.1	)	$	(0.3	)	$	(0.4	)	$	0.2		$	(0.6	)	$	—		$	3.6		$	—
Benefit ratio	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A
Underwriting margin (earned premium less policy benefits)	$	5.0		$	4.0		$	6.5		$	2.0		$	17.5		$	0.7		$	3.7		$	0.5

Long-term care:
Earned premium	$	149.1		$	144.6		$	146.8		$	145.4		$	585.9		$	144.4		$	143.4		$	142.0
Benefit ratio before interest income on reserves	114.4		%	113.0		%	114.2		%	113.3		%	113.7		%	113.4		%	115.0		%	109.7		%
Interest-adjusted benefit ratio	75.2		%	71.9		%	73.2		%	71.5		%	73.0		%	70.8		%	71.6		%	65.5		%
Underwriting margin (earned premium plus interest income on reserves less policy benefits)	$	36.9		$	40.6		$	39.4		$	41.5		$	158.4		$	42.2		$	40.7		$	49.1

Page 7



CNO Financial Group, Inc.
Bankers Life
Average liabilities for insurance products (in millions) (continued)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Annuities:
Mortality based	$	251.8		$	250.7		$	249.4		$	248.5		$	250.1		$	245.9		$	243.1		$	240.0
Fixed index	1,685.0			1,769.7			1,871.3			2,008.3			1,833.6			2,147.7			2,268.3			2,412.9
Deposit based	4,905.3			4,905.5			4,905.2			4,882.8			4,899.7			4,832.4			4,793.2			4,750.5
Medicare supplement and other supplemental health	4,275.6			4,337.4			4,376.8			4,431.4			4,355.3			4,489.6			4,529.9			4,564.0
Life:
Interest sensitive	407.8			412.2			414.0			417.6			412.9			420.5			425.2			431.8
Non-interest sensitive	331.4			346.9			363.4			379.5			355.3			397.8			416.8			437.7
Total average liabilities for insurance products, net of reinsurance ceded	$	11,856.9		$	12,022.4		$	12,180.1		$	12,368.1		$	12,106.9		$	12,533.9		$	12,676.5		$	12,836.9



Present value of future profits (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	569.5		$	539.1		$	495.3		$	465.7		$	569.5		$	467.2		$	442.7		$	422.0
Amortization related to operations	(22.5		)	(21.5		)	(19.1		)	(16.9		)	(80.0		)	(24.6		)	(16.9		)	(14.3		)
Amortization related to net realized investment (gains) losses	—			—			(0.1		)	(0.4		)	(0.5		)	(0.1		)	0.1			(0.2		)
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale	(7.9		)	(22.3		)	(10.4		)	18.8			(21.8		)	0.2			(3.9		)	(198.6		)
Balance, end of period	$	539.1		$	495.3		$	465.7		$	467.2		$	467.2		$	442.7		$	422.0		$	208.9



Deferred acquisition costs (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	1,179.1		$	1,171.3		$	1,089.6		$	1,011.4		$	1,179.1		$	1,149.5		$	1,146.2		$	1,139.9
Deferred acquisition expenses	72.0			78.5			77.5			77.7			305.7			76.6			76.6			81.9
Amortization related to operations	(44.5		)	(49.1		)	(57.3		)	(59.6		)	(210.5		)	(77.3		)	(52.8		)	(52.9		)
Amortization related to net realized investment (gains) losses	(0.5		)	0.5			(1.3		)	(8.4		)	(9.7		)	(0.9		)	0.3			(3.7		)
Amortization related to fair value changes in embedded derivative liabilities	—			—			—			—			—			—			—			16.4
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale	(34.8		)	(111.6		)	(97.1		)	128.4			(115.1		)	(1.7		)	(30.4		)	(345.2		)
Balance, end of period	$	1,171.3		$	1,089.6		$	1,011.4		$	1,149.5		$	1,149.5		$	1,146.2		$	1,139.9		$	836.4

Page 8



CNO Financial Group, Inc.
Washington National
Analysis of income before taxes (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Insurance policy income	$	145.4		$	144.7		$	144.9		$	146.0		$	581.0		$	145.4		$	146.6		$	145.9
Net investment income (loss):
General account invested assets	45.5			45.8			46.2			46.7			184.2			46.3			46.7			47.3
Trading account income related to reinsurer accounts	0.8			1.1			1.6			(1.0		)	2.5			0.3			0.7			2.6
Change in value of embedded derivatives related to modified coinsurance agreements	(0.9		)	(1.0		)	(1.4		)	2.0			(1.3		)	(0.3		)	(0.7		)	(2.6		)
Net realized investment gains (losses)	(1.2		)	—			(2.3		)	(3.9		)	(7.4		)	(0.5		)	(0.5		)	1.6
Fee revenue and other income	0.3			0.2			0.3			0.3			1.1			0.3			0.2			0.4
Total revenues	189.9			190.8			189.3			190.1			760.1			191.5			193.0			195.2

Insurance policy benefits	112.5			116.7			112.4			109.0			450.6			112.2			118.3			119.0
Amortization related to operations	14.8			13.1			14.4			14.6			56.9			16.1			14.0			13.9
Interest expense on investment borrowings	—			—			—			—			—			—			—			0.2
Other operating costs and expenses	36.2			39.9			37.6			41.7			155.4			38.5			38.5			38.4
Total benefits and expenses	163.5			169.7			164.4			165.3			662.9			166.8			170.8			171.5
Income before income taxes	$	26.4		$	21.1		$	24.9		$	24.8		$	97.2		$	24.7		$	22.2		$	23.7



Health underwriting margins (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Medicare supplement:
Earned premium	$	41.6		$	40.2		$	39.1		$	37.5		$	158.4		$	35.5		$	34.9		$	33.5
Benefit ratio	65.7		%	65.8		%	67.0		%	70.9		%	67.3		%	66.3		%	71.1		%	69.9		%
Underwriting margin (earned premium less policy benefits)	$	14.2		$	13.8		$	12.9		$	10.9		$	51.8		$	12.0		$	10.1		$	10.1

Supplemental health:
Earned premium	$	98.0		$	99.1		$	100.6		$	103.1		$	400.8		$	104.7		$	106.9		$	107.6
Benefit ratio before interest income on reserves	82.3		%	83.2		%	81.3		%	75.0		%	80.4		%	78.7		%	82.7		%	82.4		%
Interest-adjusted benefit ratio	49.4		%	52.0		%	50.5		%	45.0		%	49.2		%	49.1		%	54.1		%	53.9		%
Underwriting margin (earned premium plus interest income on reserves less policy benefits)	$	49.6		$	47.6		$	49.7		$	56.8		$	203.7		$	53.3		$	49.1		$	49.6

Page 9



CNO Financial Group, Inc.
Washington National
Average liabilities for insurance products (in millions) (continued)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Medicare supplement and other supplemental health	$	2,530.1		$	2,485.5		$	2,432.4		$	2,432.5		$	2,470.1		$	2,434.6		$	2,437.1		$	2,436.9
Non-interest sensitive life	206.8			206.5			207.8			205.7			206.7			205.2			202.2			198.7
Total average liabilities for insurance products, net of reinsurance ceded	$	2,736.9		$	2,692.0		$	2,640.2		$	2,638.2		$	2,676.8		$	2,639.8		$	2,639.3		$	2,635.6



Present value of future profits (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	455.1		$	447.6		$	440.7		$	433.8		$	455.1		$	426.9		$	418.5		$	411.5
Amortization related to operations	(7.5		)	(6.9		)	(6.9		)	(6.9		)	(28.2		)	(8.4		)	(7.0		)	(5.5		)
Balance, end of period	$	447.6		$	440.7		$	433.8		$	426.9		$	426.9		$	418.5		$	411.5		$	406.0



Deferred acquisition costs (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	185.4		$	190.2		$	196.4		$	206.7		$	185.4		$	212.3		$	216.8		$	222.3
Deferred acquisition expenses	12.1			12.4			17.8			13.3			55.6			12.2			12.5			13.0
Amortization related to operations	(7.3		)	(6.2		)	(7.5		)	(7.7		)	(28.7		)	(7.7		)	(7.0		)	(8.4		)
Balance, end of period	$	190.2		$	196.4		$	206.7		$	212.3		$	212.3		$	216.8		$	222.3		$	226.9

Page 10



CNO Financial Group, Inc.
Colonial Penn
Analysis of income before taxes (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Insurance policy income	$	48.2		$	49.3		$	48.8		$	48.6		$	194.9		$	50.3		$	50.9		$	50.8
Net investment income on general account invested assets	9.7			9.7			9.9			10.0			39.3			10.3			10.5			10.1
Net realized investment gains	0.5			—			2.0			4.1			6.6			1.1			0.2			3.5
Fee revenue and other income	0.2			0.1			0.2			0.2			0.7			0.2			0.2			0.2
Total revenues	58.6			59.1			60.9			62.9			241.5			61.9			61.8			64.6

Insurance policy benefits	36.4			35.2			36.1			36.1			143.8			38.5			37.8			35.7
Amounts added to annuity and interest-sensitive life product account balances	0.3			0.2			0.3			0.2			1.0			0.2			0.2			0.3
Amortization related to operations	8.7			8.8			7.0			8.8			33.3			9.0			8.6			9.3
Other operating costs and expenses	7.4			7.3			7.7			7.9			30.3			7.7			7.4			7.7
Total benefits and expenses	52.8			51.5			51.1			53.0			208.4			55.4			54.0			53.0
Income before income taxes	$	5.8		$	7.6		$	9.8		$	9.9		$	33.1		$	6.5		$	7.8		$	11.6



Average liabilities for insurance products (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Annuities - mortality based	$	79.9		$	79.3		$	79.2		$	79.2		$	79.4		$	78.5		$	77.8		$	77.3
Supplemental health	18.3			17.7			17.5			17.1			17.6			16.6			16.3			16.1
Life:
Interest sensitive	21.9			21.6			21.1			20.7			21.3			20.7			20.5			20.2
Non-interest sensitive	576.6			578.2			580.3			583.6			579.7			586.7			588.7			590.2
Total average liabilities for insurance products, net of reinsurance ceded	$	696.7		$	696.8		$	698.1		$	700.6		$	698.0		$	702.5		$	703.3		$	703.8



Present value of future profits (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	92.4		$	89.4		$	86.6		$	84.0		$	92.4		$	81.7		$	79.1		$	76.9
Amortization related to operations	(3.0		)	(2.8		)	(2.6		)	(2.3		)	(10.7		)	(2.6		)	(2.2		)	(2.0		)
Balance, end of period	$	89.4		$	86.6		$	84.0		$	81.7		$	81.7		$	79.1		$	76.9		$	74.9



Deferred acquisition costs (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	199.8		$	211.0		$	217.0		$	223.7		$	199.8		$	226.5		$	238.5		$	246.6
Deferred acquisition expenses	16.9			12.0			11.1			9.3			49.3			18.4			14.5			17.5
Amortization related to operations	(5.7		)	(6.0		)	(4.4		)	(6.5		)	(22.6		)	(6.4		)	(6.4		)	(7.3		)
Balance, end of period	$	211.0		$	217.0		$	223.7		$	226.5		$	226.5		$	238.5		$	246.6		$	256.8

Page 11



CNO Financial Group, Inc.
Other CNO Business
Analysis of income (loss) before taxes (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Insurance policy income	$	74.8		$	73.2		$	75.7		$	74.2		$	297.9		$	71.5		$	72.5		$	72.2
Net investment income (loss):
General account invested assets	87.8			88.5			88.0			87.8			352.1			88.2			87.6			85.4
Fixed index products	3.9			(6.5		)	6.2			6.2			9.8			5.0			(0.9		)	(8.4		)
Trading account income related to policyholder accounts	0.9			(1.6		)	2.3			1.1			2.7			1.5			—			(2.4		)
Net realized investment gains (losses)	0.1			(5.0		)	(13.0		)	(9.7		)	(27.6		)	(1.0		)	1.1			3.0
Total revenues	167.5			148.6			159.2			159.6			634.9			165.2			160.3			149.8

Insurance policy benefits	90.3			84.3			110.4			82.6			367.6			88.8			85.9			86.7
Insurance policy benefits - fair value changes in embedded derivative liabilities	—			—			—			—			—			—			—			3.2
Amounts added to policyholder account balances:
Annuity products and interest-sensitive life products other than fixed index products	32.4			31.4			32.4			31.4			127.6			31.6			30.3			28.9
Fixed index products	10.6			0.5			6.3			8.4			25.8			7.1			3.0			(4.1		)
Amortization related to operations	12.2			3.6			20.7			15.1			51.6			9.1			9.9			11.3
Amortization related to net realized investment gains (losses)	(0.6		)	1.0			(1.3		)	2.2			1.3			(0.4		)	(0.3		)	1.0
Amortization related to fair value changes in embedded derivative liabilities	—			—			—			—			—			—			—			(3.0		)
Interest expense on investment borrowings	5.0			5.0			5.1			4.9			20.0			4.9			5.0			5.3
Other operating costs and expenses	18.8			20.0			21.7			20.9			81.4			17.6			20.3			16.7
Total benefits and expenses	168.7			145.8			195.3			165.5			675.3			158.7			154.1			146.0
Income (loss) before income taxes	$	(1.2	)	$	2.8		$	(36.1	)	$	(5.9	)	$	(40.4	)	$	6.5		$	6.2		$	3.8



Health underwriting margins (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Long-term care:
Earned premium	$	7.7		$	7.5		$	7.5		$	7.2		$	29.9		$	7.3		$	7.0		$	6.9
Benefit ratio before interest income on reserves	187.2		%	212.9		%	201.7		%	243.0		%	210.8		%	235.7		%	205.8		%	227.5		%
Interest-adjusted benefit ratio	96.8		%	128.0		%	116.9		%	155.1		%	123.8		%	148.0		%	106.4		%	126.1		%
Underwriting margin (earned premium plus interest income on reserves less policy benefits)	$	0.2		$	(2.1	)	$	(1.2	)	$	(4.0	)	$	(7.1	)	$	(3.5	)	$	(0.5	)	$	(1.8	)

Page 12



CNO Financial Group, Inc.
Other CNO Business
Average liabilities for insurance products (in millions) (continued)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Annuities:
Mortality based	$	212.0		$	210.9		$	209.8		$	209.2		$	210.5		$	207.8		$	205.9		$	218.9
Fixed index	743.6			728.1			705.5			678.0			713.8			652.1			632.1			607.6
Deposit based	620.0			659.6			705.0			698.8			670.9			692.0			687.4			666.5
Separate accounts	17.1			16.3			16.2			17.1			16.7			17.8			17.7			16.4
Other health	480.9			480.1			479.4			479.8			480.0			481.8			481.9			481.3
Life:
Interest sensitive	2,607.2			2,593.7			2,581.0			2,560.1			2,585.5			2,527.4			2,506.1			2,484.6
Non-interest sensitive	844.9			839.9			831.2			820.5			834.1			805.6			790.9			780.6
Total average liabilities for insurance products, net of reinsurance ceded	$	5,525.7		$	5,528.6		$	5,528.1		$	5,463.5		$	5,511.5		$	5,384.5		$	5,322.0		$	5,255.9



Present value of future profits (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	58.9		$	57.1		$	54.7		$	44.8		$	58.9		$	32.8		$	29.8		$	26.1
Amortization related to operations	(1.3		)	(1.6		)	(9.7		)	(7.1		)	(19.7		)	(2.4		)	(2.2		)	(1.1		)
Amortization related to net realized investment (gains) losses	—			—			0.1			—			0.1			—			—			—
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale	(0.5		)	(0.8		)	(0.3		)	(4.9		)	(6.5		)	(0.6		)	(1.5		)	(0.6		)
Balance, end of period	$	57.1		$	54.7		$	44.8		$	32.8		$	32.8		$	29.8		$	26.1		$	24.4



Deferred acquisition costs (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11			3Q11			4Q11	2011

Balance, beginning of period	$	226.6		$	215.5		$	197.0		$	170.9		$	226.6		$	175.9		$	164.6		$	153.8
Deferred acquisition expenses	8.0			2.3			1.8			2.1			14.2			2.1			2.1			1.3
Other adjustments	—			(3.9		)	(6.8		)	—			(10.7		)	—			—			—
Amortization related to operations	(10.9		)	(2.0		)	(11.0		)	(8.0		)	(31.9		)	(6.7		)	(7.7		)	(10.2		)
Amortization related to net realized investment (gains) losses	0.6			(1.0		)	1.2			(2.2		)	(1.4		)	0.4			0.3			(1.0		)
Amortization related to fair value changes in embedded derivative liabilities	—			—			—			—			—			—			—			3.0
Adjustment related to unrealized (gain) or loss on fixed maturities, available for sale	(8.8		)	(13.9		)	(11.3		)	13.1			(20.9		)	(7.1		)	(5.5		)	(22.3		)
Balance, end of period	$	215.5		$	197.0		$	170.9		$	175.9		$	175.9		$	164.6		$	153.8		$	124.6

Page 13



CNO Financial Group, Inc.
Bankers Life
Premiums collected on insurance products (in millions)	1Q10		2Q10		3Q10		4Q10		2010		1Q11		2Q11		3Q11		4Q11	2011

Annuities

Fixed index (first-year)	$	104.0	$	146.9	$	146.3	$	180.5	$	577.7	$	148.2	$	163.9	$	208.0

Other fixed rate (first-year)	119.1		133.1		118.4		52.9		423.5		73.1		94.1		55.1
Other fixed rate (renewal)	1.1		1.1		1.1		1.0		4.3		0.9		1.1		1.0
Subtotal - other fixed rate annuities	120.2		134.2		119.5		53.9		427.8		74.0		95.2		56.1

Total annuities	224.2		281.1		265.8		234.4		1,005.5		222.2		259.1		264.1

Health

Medicare supplement (first-year)	27.2		29.4		29.3		30.5		116.4		25.1		24.7		24.5
Medicare supplement (renewal)	149.4		139.4		140.8		151.8		581.4		153.7		144.3		146.8
Subtotal - Medicare supplement	176.6		168.8		170.1		182.3		697.8		178.8		169.0		171.3

Long-term care (first-year)	4.8		5.5		5.7		6.2		22.2		6.1		6.0		5.9
Long-term care (renewal)	144.7		141.1		139.3		137.3		562.4		138.8		136.9		131.9
Subtotal - long-term care	149.5		146.6		145.0		143.5		584.6		144.9		142.9		137.8

PDP and PFFS (first-year)	1.4		0.7		0.6		1.0		3.7		0.4		0.2		0.6
PDP and PFFS (renewal)	16.7		13.4		15.0		17.6		62.7		10.6		14.4		15.6
Subtotal - PDP and PFFS	18.1		14.1		15.6		18.6		66.4		11.0		14.6		16.2

Other health (first-year)	0.6		0.5		0.5		0.5		2.1		0.4		0.3		0.4
Other health (renewal)	2.3		2.4		2.2		2.3		9.2		2.5		2.3		2.3
Subtotal - other health	2.9		2.9		2.7		2.8		11.3		2.9		2.6		2.7

Total health	347.1		332.4		333.4		347.2		1,360.1		337.6		329.1		328.0

Life insurance

First-year	20.2		24.8		25.8		26.9		97.7		24.7		29.4		30.9
Renewal	26.3		27.3		29.0		29.3		111.9		31.7		32.6		34.6

Total life insurance	46.5		52.1		54.8		56.2		209.6		56.4		62.0		65.5

Collections on insurance products

Total first-year premium collections on insurance products	277.3		340.9		326.6		298.5		1,243.3		278.0		318.6		325.4
Total renewal premium collections on insurance products	340.5		324.7		327.4		339.3		1,331.9		338.2		331.6		332.2

Total collections on insurance products	$	617.8	$	665.6	$	654.0	$	637.8	$	2,575.2	$	616.2	$	650.2	$	657.6

Page 14



CNO Financial Group, Inc.
Washington National
Premiums collected on insurance products (in millions)	1Q10		2Q10		3Q10		4Q10		2010		1Q11		2Q11		3Q11		4Q11	2011

Health

Medicare supplement (first-year)	$	1.2	$	1.1	$	0.7	$	0.8	$	3.8	$	0.6	$	0.5	$	0.4
Medicare supplement (renewal)	39.5		37.6		37.2		36.7		151.0		34.7		32.6		31.5
Subtotal - Medicare supplement	40.7		38.7		37.9		37.5		154.8		35.3		33.1		31.9

Supplemental health (first-year)	12.5		13.1		13.0		13.4		52.0		13.2		13.7		13.2
Supplemental health (renewal)	87.1		87.1		88.5		90.8		353.5		93.7		95.2		95.2
Subtotal - supplemental health	99.6		100.2		101.5		104.2		405.5		106.9		108.9		108.4
Other health (all renewal)	1.1		1.0		1.3		1.2		4.6		1.0		0.8		0.9

Total health	141.4		139.9		140.7		142.9		564.9		143.2		142.8		141.2

Life insurance

First-year	0.2		0.1		0.1		0.4		0.8		0.4		0.3		0.4
Renewal	4.2		3.7		3.7		3.8		15.4		3.9		3.6		3.7

Total life insurance	4.4		3.8		3.8		4.2		16.2		4.3		3.9		4.1

Collections on insurance products

Total first-year premium collections on insurance products	13.9		14.3		13.8		14.6		56.6		14.2		14.5		14.0
Total renewal premium collections on insurance products	131.9		129.4		130.7		132.5		524.5		133.3		132.2		131.3

Total collections on insurance products	$	145.8	$	143.7	$	144.5	$	147.1	$	581.1	$	147.5	$	146.7	$	145.3

Page 15



CNO Financial Group, Inc.
Colonial Penn
Premiums collected on insurance products (in millions)	1Q10		2Q10		3Q10		4Q10		2010		1Q11		2Q11		3Q11		4Q11	2011

Life insurance

First-year	$	7.9	$	8.1	$	8.1	$	8.2	$	32.3	$	8.7	$	8.6	$	8.9
Renewal	39.4		38.6		38.8		38.6		155.4		40.7		39.9		40.3

Total life insurance	47.3		46.7		46.9		46.8		187.7		49.4		48.5		49.2

Health (all renewal)

Medicare supplement	1.5		1.6		1.4		1.5		6.0		1.3		1.4		1.3

Other health	0.1		0.1		0.1		0.1		0.4		0.2		0.1		0.1

Total health	1.6		1.7		1.5		1.6		6.4		1.5		1.5		1.4

Collections on insurance products

Total first-year premium collections on insurance products	7.9		8.1		8.1		8.2		32.3		8.7		8.6		8.9
Total renewal premium collections on insurance products	41.0		40.3		40.3		40.2		161.8		42.2		41.4		41.7

Total collections on insurance products	$	48.9	$	48.4	$	48.4	$	48.4	$	194.1	$	50.9	$	50.0	$	50.6

Page 16



CNO Financial Group, Inc.
Other CNO Business
Premiums collected on insurance products (in millions)	1Q10		2Q10		3Q10		4Q10		2010		1Q11		2Q11		3Q11		4Q11	2011

Annuities

Fixed index (first-year)	$	3.5	$	2.0	$	2.4	$	2.4	$	10.3	$	2.7	$	2.7	$	2.2
Fixed index (renewal)	1.2		1.5		0.9		1.0		4.6		0.9		1.4		0.8
Subtotal - fixed index annuities	4.7		3.5		3.3		3.4		14.9		3.6		4.1		3.0

Other fixed rate (first-year)	0.2		0.5		0.2		—		0.9		0.4		1.6		0.1
Other fixed rate (renewal)	0.2		0.2		0.1		0.1		0.6		0.2		0.2		0.2
Subtotal - other fixed rate annuities	0.4		0.7		0.3		0.1		1.5		0.6		1.8		0.3

Total annuities	5.1		4.2		3.6		3.5		16.4		4.2		5.9		3.3

Health

Long-term care (all renewal)	7.7		7.5		7.1		6.9		29.2		7.4		7.0		6.5
Other health (all renewal)	0.7		0.7		0.5		0.6		2.5		0.2		0.2		0.2

Total health	8.4		8.2		7.6		7.5		31.7		7.6		7.2		6.7

Life insurance

First-year	0.6		0.7		0.6		0.4		2.3		0.4		0.9		0.3
Renewal	49.6		46.2		47.2		46.3		189.3		46.0		48.0		43.7

Total life insurance	50.2		46.9		47.8		46.7		191.6		46.4		48.9		44.0

Collections on insurance products

Total first-year premium collections on insurance products	4.3		3.2		3.2		2.8		13.5		3.5		5.2		2.6
Total renewal premium collections on insurance products	59.4		56.1		55.8		54.9		226.2		54.7		56.8		51.4

Total collections on insurance products	$	63.7	$	59.3	$	59.0	$	57.7	$	239.7	$	58.2	$	62.0	$	54.0

Page 17



CNO Financial Group, Inc.
New Annualized Premiums ("NAP") (in millions)


Bankers Life	1Q10		2Q10		3Q10		4Q10		2010		1Q11		2Q11		3Q11		4Q11	2011

Medicare supplement	$	19.4	$	21.0	$	16.0	$	31.8	$	88.2	$	18.3	$	18.6	$	19.4
Life	15.8		17.3		16.3		15.9		65.3		16.6		18.6		18.2
Long-term care	8.6		8.7		7.2		6.7		31.2		6.9		7.3		7.3
Annuity	13.7		17.0		15.8		14.2		60.7		13.4		15.6		15.9
Subtotal Bankers Life	57.5		64.0		55.3		68.6		245.4		55.2		60.1		60.8


Washington National

Supplemental health	14.6		17.5		18.0		17.5		67.6		15.7		17.9		18.6
Medicare supplement	1.1		0.7		0.4		0.8		3.0		0.5		0.4		0.3
Life	0.7		0.7		0.8		0.7		2.9		0.8		0.8		0.9
Annuity	0.3		0.2		0.2		0.2		0.9		0.2		0.3		0.2
Subtotal Washington National	16.7		19.1		19.4		19.2		74.4		17.2		19.4		20.0


Colonial Penn

Graded Life	13.1		12.2		11.5		9.5		46.3		13.6		12.8		12.7



Total NAP	$	87.3	$	95.3	$	86.2	$	97.3	$	366.1	$	86.0	$	92.3	$	93.5

Page 18



CNO Financial Group, Inc.
Statutory information - consolidated basis (4) (in millions)	1Q10			2Q10			3Q10			4Q10			2010			1Q11			2Q11		3Q11(*)		4Q11	2011

Net gain from operations before interest expense and federal income taxes	$	55.6		$	66.0		$	97.3		$	109.1		$	328.0		$	114.0		$	92.9	$	91.9
Interest expense on surplus debentures held by parent company	12.0			12.2			12.2			12.3			48.7			12.0			12.2		22.7

Net gain from operations before federal income taxes	43.6			53.8			85.1			96.8			279.3			102.0			80.7		69.2
Federal income tax expense (benefit)	4.3			7.6			1.6			4.3			17.8			0.6			2.0		3.7

Net gain from operations before net realized capital gains (losses)	39.3			46.2			83.5			92.5			261.5			101.4			78.7		65.5
Net realized capital gains (losses)	(13.5		)	(10.2		)	(10.3		)	(45.6		)	(79.6		)	(15.0		)	2.4		10.5

Net income	$	25.8		$	36.0		$	73.2		$	46.9		$	181.9		$	86.4		$	81.1	$	76.0



Capital and surplus	$	1,418.5		$	1,434.7		$	1,443.1		$	1,525.1		$	1,525.1		$	1,567.4		$	1,551.5	$	1,553.1
Asset valuation reserve (AVR)	46.0			61.9			78.6			71.3			71.3			97.7			116.5		143.2

Capital, surplus and AVR	1,464.5			1,496.6			1,521.7			1,596.4			1,596.4			1,665.1			1,668.0		1,696.3

Interest maintenance reserve (IMR)	308.6			319.5			343.9			428.1			428.1			448.3			475.8		507.1

Total statutory capital, surplus, AVR & IMR	$	1,773.1		$	1,816.1		$	1,865.6		$	2,024.5		$	2,024.5		$	2,113.4		$	2,143.8	$	2,203.4

* Such amounts are preliminary as the statutory basis financial statements of our insurance subsidiaries for 3Q11 will be filed with the respective insurance regulators on or about November 15, 2011.

Page 19

Notes

(1) Excludes accumulated other comprehensive income (loss).

(2) Shareholders' equity divided by common shares outstanding.

(3) Assumes conversion of all convertible securities.

(4) Based on statutory accounting practices prescribed or permitted by regulatory authorities for CNO Financial's insurance subsidiaries after appropriate elimination of intercompany accounts among such subsidiaries. Such accounting practices differ from GAAP.

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